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The Geithner Paradox: Unregulated Institutions Bailing Out Regulated Ones
Tweet Share on Facebook March 24, 2009 Comment (19)By Michael Barone, Thomas Jefferson Street blog
I haven't commented on Timothy Geithner's plan, the one promised for February 10 and delivered on March 23, to clear out the toxic waste assets from the banks and other financial institutions that hold them. I hope it works, and I fear that it won't. But this isn't my area of expertise and I'm not confident enough to make any predictions. I note with interest that it's being attacked, and being defended, by people on the left and people on the right.
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Investing Without Political Risk
Tweet Share on Facebook March 23, 2009 Comment (7)By Michael Barone, Thomas Jefferson Street blog
I don't give investment advice, but for those who want to avoid political risk, a portfolio manager named Eric Singer has created Congressional Effect Management, a mutual fund that trades only when Congress is out of session. Singer says that his fund has outperformed the market this year and last. Warning: outperformed the market this year and last means losing less than the market has.
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The Fall of Democratic Political Consultant Hank Morris
Tweet Share on Facebook March 23, 2009 Comment (1)By Michael Barone, Thomas Jefferson Street blog
I had lost track of Democratic political consultant Hank Morris some time ago; I knew him as a Democratic campaign consultant in the 1970s and 1980s, and one who always seemed reasonably honest and candid. So I was shocked to see this. Morris's lawyer says he's innocent. I find that hard to believe, but I also find it hard to believe that Morris would be involved in a scam like this. Though $30 million is a lot of money. What could have been going on in his mind?
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Republicans Aren't Doing Better--Democrats Are Doing Worse
Tweet Share on Facebook March 23, 2009 Comment (45)By Michael Barone, Thomas Jefferson Street blog
Last Wednesday, I noted that Republicans are now running even or slightly ahead in the generic vote for Congress in two respected national polls. On Friday, Charlie Cook noted the same results. He pointed out that the NPR survey shows Independents favoring Republicans 38-24 percent and that Republican pollster Glen Bolger says this is the first time Independents have favored Republicans since 2004.
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A Correction to My Blog Post On Young Downscale Voters
Tweet Share on Facebook March 20, 2009 Comment (6)By Michael Barone, Thomas Jefferson Street blog
In looking at the 2008 exit poll today, I noticed a material error (since corrected) in this recent blog post. There I said that voters under-30 were 10 percent of the electorate; the actual percentage in the 2008 exit poll was 18 percent. I must have been looking at the percentage of those 19-24, which was 10 percent. There's still a difference between the 18 percent of the electorate that was under-30 and the 22 percent of the over-18 population which is under-30. And there's no significant difference between the under-30's share of the electorate in the 2008 exit poll (18 percent) and the 2004 exit poll (17 percent). Which means, I think, that the point I was trying to make—that young downscale whites didn't vote at high levels—is still true. But the numbers I mistakenly used overstated the point substantially. Sorry.
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The AIG Bonus Tax Stench: The House Made It Harder to Fix the Financial System
Tweet Share on Facebook March 20, 2009 Comment (16)By Michael Barone, Thomas Jefferson Street blog
This Washington Post editorial gets it right. "The House had the feel of a mob scene," when it passed a 90 percent tax on bonuses paid by AIG and other firms which have received more than $5 billion in TARP money. This was a moment of panic for House Democrats. Almost all of them, and not a single House Republican, had voted for the stimulus package which specifically authorized such bonus payments. A bill that no one was given the opportunity to actually read. You don't have to be a political genius to see what peril that poses for just about every Democratic incumbent and the opportunity it presents for every Republican candidate. But they evidently felt they couldn't just pass a confiscatory tax on the bonuses only at AIG, since that would violate the Constitution's prohibition of bills of attainder—not to mention notions of basic fairness, as Majority Leader Steny Hoyer and Ways and Means Chairman Charles Rangel noted when they were first asked about proposals for a 100 percent tax on AIG bonuses. So now this will apply to other firms, including those like JPMorganChase which took TARP money though it didn't want it, because Treasury Secretary Henry Paulson said that otherwise there would be a stigma on those firms which did take TARP money.
This confiscatory tax has the smell of something that will not finally make it into law. But in the meantime the stench is pretty strong. The House has just made it a lot harder to repair the financial system, as Charles Krauthammer demonstrates. Appalling.
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Congress's Labor-Driven Refusal to OK the Colombia Free Trade Pact Is Shameful
Tweet Share on Facebook March 19, 2009 Comment (3)By Michael Barone, Thomas Jefferson Street blog
Yesterday I argued that the Obama administration has been disrespecting the leaders of Brazil and Mexico. For much more on what is going on in Latin America, please read Mario Loyola's article in National Review. He highlights the growing ties between Iran and Russia with the leaders of Venezuela, Ecuador, Bolivia, and Nicaragua and the dangers they pose. All the more reason that the United States should cooperate with the constructive leaders of Brazil and Mexico, the two most populous countries in Latin America. And why it is shameful that Congress, at the behest of labor unions, refuses to ratify the free trade agreement with Colombia, the third-most-populous country in Latin America and one under attack from the authoritarian demagogue Hugo Chavez of Venezuela. Let's show a little respect for our friends and neighbors!
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Why Did AIG's Counterparties Get 100 Percent Repayment?
Tweet Share on Facebook March 19, 2009 Comment (4)By Michael Barone, Thomas Jefferson Street blog
Congress has been bellowing about the bonuses paid to AIG-FP personnel, and Sen. Christopher Dodd is in deep, deep doo-doo for having inserted into the stimulus package language that guaranteed them. Dodd's defense is that he wasn't aware of AIG's bonuses. Huh? He was Chairman of the Senate Banking Committee.
But there's a larger issue, one involving 1,000 times as much money as the AIG bonuses: Why didn't AIG's counterparties have to take a haircut? We should be less interested in AIG's bonuses than in the 99.91 percent of the money that has been passed through to its counterparties, none of whom seem to be at systemic risk. Why didn't the people who set up the AIG bailout—which would be then-Treasury Secretary Henry Paulson, Federal Reserve Chairman Ben Bernanke and New York Federal Reserve President and current Treasury Secretary Timothy Geithner, require that AIG's counterparties take a haircut?
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Republicans Show Startling Strength in Race for Michigan Governor
Tweet Share on Facebook March 19, 2009 Comment (35)By Michael Barone, Thomas Jefferson Street blog
Yesterday I noted that Republicans are doing better in polls on the generic ballot question—which party's candidate would you vote for in congressional races—better, Scott Rasmussen tells me, in his polls than they have done since January 2004. Now I see that Republican candidates lead in Bill Ballenger's Inside Michigan Politics poll for governor of Michigan. This is at least a little startling. Barack Obama carried Michigan 57-41 percent and in 2006 Democratic Gov. Jennifer Granholm, ineligible to run in 2010, won her second term in 2006 by a margin of 56-42 percent and Democratic Sen. Debbie Stabenow was reelected by a margin of 57-41 percent: a pretty clear pattern. But now Democratic Lt. Gov. John Cherry seems to be running behind Republicans like Attorney General Mike Cox and Rep. Pete Hoekstra—with none of the three particularly well known to most Michigan voters.
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Obama's 21st Century Campaign Is Stuck In the Mid-20th Century
Tweet Share on Facebook March 18, 2009 Comment (2)By Michael Barone, Thomas Jefferson Street blog
That's the theme of my column in today's Examiner. I'm not writing regularly for them, but I'm happy to be in the company of their regular and of terrific new hires like Byron York and Noemie Emery.
