I was one of the Taibbi complainers, once, but the original link is down and I can't remember what the "meth-addict pope" thing was about. But in general, it's not the content of his writing that bugs me so much as the too-precious-by-half style.
By conspiring to lower the interest rates that towns earn on these investments...
I thought towns paid interest on municipal bonds.
Taibbi's reporting is solid. IIRC, the complaints here seemed to mostly relate to a preference for dry, bloodless prose (and so Charlie Pierce received similar disdain).
"Municipal bonds Ted, I'm talking double A rating. . . the best investment in America."
The thing that pisses me off is that the financial services companies who pulled this shit aren't going to be required to pay back the money they ripped off. There will be some fine which goes to the federal government and that's it, and the fine will be an order of magnitude less than the amount stolen, if not even less.
2 was my reaction. But his reporting on the bankrupting of Montgomery seemed solid.
Alabama is pretty much Alabama regardless.
||
Trauma Spring continues: My uncle is on his way out. He will be the first of my parents' siblings to die. The silver lining is that he is the one who got esoph. cancer in his 30s, so the last 25 years or so have kinda been gravy, as I think the survival rate for that cancer was pretty minimal back then.
Also, that's fucked up about Lonesome George the tortoise dying. What the fuck is wrong with our species that we have to destroy and destroy and destroy, long past any point at which it even benefits us?
||>
8: Did you see where the Port Authority of Allegheny County was one of the marks?
Oh, of course: they do pay interest, but they still get a big pot of money up front that can earn interest until spent.
10: I guess I assumed the city would be the mark, locally.
10: I assume that was for the project where they spent something like $300,000,000 on a mile-long tunnel under the river, in the midst of the annual ritual of announcing that they were going to cut 50 bus routes to save a desperately needed $10,000,000 and then delighting us all by only cutting 10 bus routes.
9 cont.: I just wish my uncle had had a happier life. He certainly wasn't a bad guy at all, but he screwed a lot of stuff up, mostly to his own detriment. A lot of his pain was pretty class-based too. A middle-class guy could have bounced back a bit better, I think, but given his severe health problems and his need to make money mostly by doing fairly physical jobs (house painter, ship's cook, restaurant cook, etc.) he spent far too much time in poverty. I know he really cared about his nuclear family and the rest of us, but he was just carrying around too much pain to be able to be the kind of person he could have been. We'll understand it better by and by, I guess.
From the article:
The "simple fraud" Waszmer described centered around public borrowing. Say your town wants to build a new elementary school. So it goes to Wall Street, which issues a bond in your town's name to raise $100 million, attracting cash from investors all over the globe. Once Wall Street raises all that money, it dumps it in a tax-exempt account, which your town then uses to pay builders, plumbers, the chalkboard company and whoever else winds up working on the project.
But here's the catch: Most towns, when they raise all that money, don't spend it all at once. Often it takes years to complete a construction project, and the last contractor isn't paid until long after the original bond is issued. While that unspent money is sitting in the town's account, local officials go looking for a financial company on Wall Street to invest it for them.
To do that, officials hire a middleman firm known as a broker to set up a public auction and invite banks to compete for the town's business. For the $100 million you borrowed on your elementary school bond, Bank A might offer you 5 percent interest. Bank B goes further and offers 5.25 percent. But Bank C, the winner of the auction, offers 5.5 percent.
In most cases, towns and cities, called issuers, are legally required to submit their bonds to a competitive auction of at least three banks, called providers. The scam Wall Street cooked up to beat this fair-market system was to devise phony auctions. Instead of submitting competitive bids and letting the highest rate win, providers like Chase, Bank of America and GE secretly divvied up the business of all the different cities and towns that came to Wall Street to borrow money. One company would be allowed to "win" the bid on an elementary school, the second would be handed a hospital, the third a hockey rink, and so on.
How did they rig the auctions? Simple: By bribing the auctioneers, those middlemen brokers hired to ensure the town got the best possible interest rate the market could offer. Instead of holding honest auctions in which none of the parties knew the size of one another's bids, the broker would tell the prearranged "winner" what the other two bids were, allowing the bank to lower its offer and come in with an interest rate just high enough to "beat" its supposed competitors. This simple but effective cheat - telling the winner what its rivals had bid - was called giving them a "last look." The winning bank would then reward the broker by providing it with kickbacks disguised as "fees" for swap deals that the brokers weren't even involved in.
13: I think it was closer to $700 million by the end.
11, 15: Thanks. I guess I think too simply about fraud and assumed they were rigging the bids to sell the bond.
The best part of the article is the emphasis on how this is what every capitalist wants to do. Not have competitors. Not have negotiations. Start a cartel and set prices. The government isn't supposed to help them do that, god damnit.
19 is what the experts like Eliot Spitzer say in the article. However, here the participants in the cartel are competing with each other to a surprising extent, though just by competing to give bribes to the middleman who is supposedly representing the rubes who are forced to deal with the cartel.
Natilo, very sorry to hear about your uncle.
Mumble the US municipal bond market mumble can't comment for professional reasons mumble.
3: I thought I was the only person who disliked Pierce (monotony, moral superiority, lack of range, etc.). I don't even feel bad about it anymore.
23: There's something you don't like? A startling development.
I don't even feel bad about it anymore.
23: No reason to feel bad about the gusty bus.
Presumably municipalities can start suing banks over this, yes? Some settlement money to local governments might be pretty helpful right now, especially if it comes out of the pockets of Wall Street bankers.
27: I wonder if there might be some little-known law that significantly limits the liability of the banks for the illegal actions of their employees. I mean, if I was a big Wall St. bank, I would certainly have paid many millions of dollars in order to have such a law passed.
21: Thanks, Moby. Just got the email from my mother that he is already gone. Let it serve as a good reminder to make the lives of people around us happier.
Presumably municipalities can start suing banks over this, yes? Some settlement money to local governments might be pretty helpful right now, especially if it comes out of the pockets of Wall Street bankers.
Hopefully some of the $673 million restitution money (from cooperating banks) has already flowed to those local and state involved, though there might be more that didn't participate in this particular action.
Natilo, I'm sorry to hear about that. I appreciate that you share this sort of thing.
Oh, I'm sorry, Natilo.
Someone dear to me just got the news that her mother has cancer somewhere in the gut. The initial tests are pretty promising as this goes -- no sign of metastasizing or adhesions -- and there aren't any unfinished agonies in the family, but still.
Thanks. I believe the esophageal survival rate is much better now. It was kind of a miracle that he pulled through, although he was pretty young, so I'm sure that helped. It's sad to see people have that much pain in their lives, so at least for my uncle the cessation of that pain was something. He was a very generous person, despite being broke his whole life.
Folks will have seen that the SC just declined, 5-4, an opportunity to revisit Citizens United. If I hear someone use the phrase 'other than judicial appointments' when talking about electoral politics over the next few days, I swear I'm going to punch them in the mouth.
I'm sorry to hear that Nat.
I just lost an old family friend to breast cancer yesterday. I knew her since I was a kid. Our dads grew up together in Brooklyn. The funeral is tomorrow. She was 45.
Scalia demonstrated all of his vast wisdom and consistency in his AZ dissent, too.
A cancer and SCOTUS thread: could there be anything more depressing?
COMBINING THE TWO.
Ugh, grammar on 37. I should of previewed. (That last was a joke).
I've long prided myself on acceptance of cynicism/legal realism about judicial results, and you'd think that the lesson would be obvious after Bush v. Gore, but I have to say that if the SCOTUS strikes down the health care mandate I will kind of feel like the entire profession is pure politics and part of my life has been a total waste. Oh but that's only true for the big constitutional cases, you will say, the business cases are technical matters that are boring and decided according to the law, and I will laugh at you.
41 to "That was Bush v. Gore. And I was able to internalize that by saying they only had a few minutes to think about it and they leapt to the wrong conclusion. If they decide this by 5-4, then yes, it's disheartening to me, because my life was a fraud. Here I was, in my silly little office, thinking law mattered, and it really didn't. What mattered was politics, money, party, and party loyalty."
Has Scalia always been like this, and his reputation as a deep thinker (if a doctrinaire and right wing one) just myth-making on the part of the Federalist Society and the Very Serious? Or has he gotten to be like this over the past decade?
43 -- I think it was always there, but tended to be buried in the more "boring" cases. Also he did have some pretty cutting criticisms of some woolly Warren/Burger court precedent that was superficially appealing.
I just threw an Arizona thread up, if you all would like to discuss that as well.
I'm sorry to hear about your uncle, Natilo, and about Barry Freed's family friend.
41, 42: I shouldn't be commenting, but having arrived at this level of cynicism a while back is why I've never been able to get terribly interested in theoretical law, and never had a lot of hope that fighting issues through the courts was going to get us anything that the electoral process wouldn't. (I don't mean to denigrate people who try -- it's often important -- I just think it's hopeless where the elected branches aren't already going in the same direction).
I do kind of think that judges, at least the ones I've been before, are pretty fair and rule-bound in the sort of cases that are unimportant to everyone but the parties involved, which is most of them -- I don't think the legal system is useless. But as a means of creating or preventing political change, I have no faith in it at all, and I have no belief in it as a theoretically consistent structure, rather than a big pile of adhockery.
I would have thought the essentially arbitrary and political nature of the law would have been realized with the first failures of computational linguistics, but then I would, wouldn't I.
43. He's always been an intellectual fraud. There was a case 30 years ago in which he managed to piss off George Will and Stephen J Gould in equal measure, which must have taken a bit of effort.
Condolences to Natilo and Barry. It's a bitch.
I wasn't a fan of Taibbi's writing style (back in the day - the stuff he writes about has gotten depressing enough that I haven't read him recently) but his reporting has always seemed fine. Oddly enough, I'm not a fan of dry, bloodless prose either.
Yeah, I've long been cynical. But there are degrees of transparent political hackery that I (perhaps naively) do not intuitively expect from the federal judiciary but have been seeing more of recently. Everyone expects political or ideological readings of contested law in areas that are genuinely ambiguous -- that's the way the system works. But the easy questions are not supposed to be political, and the constitutionality of the health care mandate under commerce clause jurisprudence is a really easy legal question.
I've never been able to tell if Taibbi's style brings more attention to underdiscussed issues, or if it discredits them. I suspect it's the former, but I don't know how one could tell.
47: Really well summarized. My job has required me to look at policy-relevant legal rulings more carefully than I ever have before. I always figured law was political but I've been shocked by how transparently the judges seem to just fish around for some ad hoc justification for what they wanted to do anyway (with what they wanted to do anyway being highly predictable by their political affiliation).
I'm not sure that renders lawyers role useless...judges political power is buttressed by the legal theatre, and you all are important and necessary actors.
But the easy questions are not supposed to be political, and the constitutionality of the health care mandate under commerce clause jurisprudence is a really easy legal question.
Not if you want to revive the Lochner era. Then it's an intriguing opportunity.
Well, if the Court wants to return to the Lochner era, it should declare a constitutional revolution. There have been a few in the history of the Supreme Court, but they have generally been explicit and recognized as such, and have decreed a general change in an entire area of law. For example, Marbury v. Madison, or the post-1937 commerce clause cases. The problem is, in this particular instance, there is no indication whatsoever that the Supreme Court (aside from Clarence Thomas, who to his credit has been consistent on this point) want to eliminate the post-New Deal commerce clause jurisprudence generally; that would eliminate too many programs the Court has liked.
Instead, the Court has clung to the entirely made up, and completely fatuous, distinction between regulating activity and mandating activity that was invented by Randy Barnett out of whole cloth. Applying that distinction without overruling existing precedent is a nakedly political act -- in many ways, similar to Bush v. Gore -- and very unusually so.
I should say "appears to have clung." We of course have no idea what the decision will say.
I know what it says but I won't tell.
||
Tim Burke has some thoughts about how universities can respond to the current era of limited budgets.
I think he's too optimistic in his hope that fights over money can be something other than painful but that may just be cynicism on my part (though the first comment is smart on that point).
But, as always, he takes the question seriously and has interesting ideas.
|>
My sympathies for Natilo as well.
I'm relieved (I guess?) to hear that the article is apparently grounded in fact.
And Natilo, I'm so sorry to hear it.
To 58, I have to admit I was boggled by two things early on in his post: First, apparently faculty don't routinely see budgets for their departments? Wow. I was really naive.
And second:
Wealthy institutions tend to have spent up to the limits of their wealth, just like struggling colleges and universities are generally straining against the limits of what's possible. There may be other things to do with that wealth than what's being done with it, but generally there isn't a secret pile of cash just sitting in the basement.
I think this kind of misses the point that at least for some people, the issue is that they correctly perceive that a $50 million or $200 million or $1 billion institution could relatively easily find $20,000 somewhere. And that all too often, getting that $20,000 (or heck, that $200) is about turning around three times and throwing salt over your shoulder and then mysteriously getting (or not) that money. I.e., it FEELS like there is just a secret pile of cash sitting somewhere that someone either benevolently or maliciously does or does not dole out to you.
I think these two issues are connected but darned if I know what to do about them. I do grasp that it would be silly to have every instructor micromanaging an institution-wide budget.
Natilo, and Barry F: so sorry. Condolences.