Fire!

Paul Krugman says we are suffering from a giant bank run

albeit on financial institutions that aren’t called banks — and aren’t regulated like banks.

Bank runs come in two kinds.

In some cases, the bank run is a pure self-fulfilling prophecy: the bank is “fundamentally sound,” but a panic by depositors forces a too-hasty liquidation of its assets, and it goes bust. It’s as if someone calls “fire!” in a crowded theater, provoking a stampede that kills many people, even though there wasn’t actually a fire.
In other cases, the bank is fundamentally unsound — but the bank run magnifies its losses. It’s as if someone calls “Fire!” in a crowded theater, and there really is a fire — but the stampede kills people who would have survived an orderly evacuation.
We’re in the second case. The Fed has spent the last 7 months trying to assure people that there isn’t any fire. But there is.
Worse yet, thanks to decades of deregulation, the theater doesn’t have a sprinkler system - and the town the theater is in doesn’t have a fire department.

And now we have to put together an emergency response.

The Center doesn't exist

Who ya gonna call? - Paul Krugman - Op-Ed Columnist - New York Times Blog: "Things fall apart, and the center doesn’t exist."

Crisis of the US Financial System

Speculative Onslaught. Crisis of the World Financial System: The Financial Predators had a Ball

Depressing

digby at Hullabaloo on FISA and telecom immunity: "I see no evidence from the presidential campaigns that Bush abuses will be confronted in the next congress either. Indeed, I suspect this was the last gasp of outrage at the constitutional shredding of the Bush administration."

Telecom immunity serves no function other than to prevent the Constitution from working, both in the sense of stripping Americans of Constitutional rights, and in the sense, that the system of checks and balances is stayed, preventing any kind of judicial scrutiny for Bush Administration law-breaking.

"I'm sorry to be so depressing about all this, but I just see no evidence that Democrats care about this very much. The usurpation of democracy and the constitution doesn't rate very high on their list of priorities . . . "

What's at Stake

Tim Burke on what is at stake:

The first job for the next President is not Iraq and not the economy. I
don’t really hear any of the candidates talking to the key priority as forthrightly as I might like, . . . Look around at the mounting evidence of relentless and reckless misuse of executive power in the last eight years. . . . Not went wrong in Iraq, or with subprime mortgages, or anything else, though those failures are a good demonstration . . .

This is the crisis that is still unfolding, to which I see no easy
resolution. Everything that works about institutional life rests on the habitus of professionals, bureaucrats, experts, on whether they are stewards or parasites, whether they recognize the fragile possibility of a better world or are just looting the till, whether they are humble in the face of wider and more distributed experience and knowledge or whether they are contemptuous of
anything besides their own immediate power. We all know it: this is Arendt’s banality of evil. We do not need to fear the person at the top, but instead the mass force of institutional action. The libertarian answer, to sweep away all institutions (save those of private capital: a blind spot that I still find baffling), is no answer at all, any more than jumping off a cliff is a way to prevent being in an automobile accident.

Once the world all knew that this was the danger we faced, after 1945 (and have had it demonstrated repeatedly since), there has been no way to trust that some day the state or other institutions could be continually perfected until the danger would pass for all time. It will never pass, it can never pass. For the last eight years in the United States, we’ve gotten a reminder of just how close and ominously it lurks.

Institutional failure is also the theme of this article from Wired, TED 2008: How Good People Turn Evil, From Stanford to Abu Ghraib Zimbardo emphasizes the role of heroes, in a way that resonates with Tim Burke, above, but, curiously (to me), does not address the responsibilities of leadership. It would seem an obvious point, to hold those responsible, . . . responsible.

Tanta, reporting on Calculated Risk, on how Fannie Mae may soom re-write the ruleson how appraisals are done, exposes in a very interesting (to me) way, how corporate conglomeration tended to undermine professional responsibility in the complex business of real estate transactions. (Again, curiously missing is any awareness that some elite managers and executives walked away with millions, for making this mess, and those perverse incentives, and not just the perverse incentives of the small fry trapped in the system, might have something to do with the outcome.)

Jay Rosen tackled the disservice done by political journalism in Tomgram: Jay Rosen, Mindlessness in the Media, Campaign 2008 It is a brilliant essay, incorporating a sophisticated understanding of institutional role-playing and routines, but, once again, no awareness that the Cossacks Work for the Czar. The hullabaloo over the McCain/Iseman article in the N.Y. Times drew attention to the cluelessness of the N.Y. Times editors, Bill Keller and Jill Abramson, but I don't see their role anticipated in his analysis. Jay Rosen does not ask if just possibly, say, the Politico.com reflects the politics, not just of its nominally non-political hackish principals, but of its wealthy publisher, Robert Allbritton.

The political storm has failed to come. Not with Iraq. Not with Abu Ghraib. Not with the U.S. Attorneys firings. Not with contempt of Congress. Not with Katrina, although that was close. Huge shifts in income and wealth have not done it. The insolvency of the banks hasn't done it.

The punditocrisy of Maureen Dowds and Tim Russerts continue to dominate the public discourse with their ignorance and their complacent self-satisfaction, and the great majority of the public remain "low-information" voters, swayed by bumper stickers.

Now, it is all invested in the election, in the person of Barack Obama -- a messiah to redeem us.

I've seen this movie. It did not end well.

Yes, they can

Dan Froomkin: "Can White House officials coast all the way to Jan. 20 without being exposed in such a way that the press and the public take full notice of what they've done?"

Why there is no Storm

You want to know why there is no Storm, no outrage over Republican corruption and incompetence?

Look no further than this week's New York Times story on John McCain's cozy relationship with lobbyists.

Todd Gitlin summarizes the mess, which appeared on the front page of the NY Times:

what was it about? (1) Intimations of an Iseman affair, or the "appearance" of an affair, that his aides tried to scotch? (2) McCain's entanglements with lobbyists who cared a good deal about what he did as chairman of the Senate Commerce Committee? Uncertain which way to turn, having not much of a story about (1) and (on the strength of the evidence they published) no smoking gun about (2), they squared the potato and ran with the hodgepodge.

Matthew Yglesias summarizes the story the country needs to have told, the Real Story:

Basically, in exchange for money and freebies, McCain sought to intervene in a federal regulatory process in favor of a company that had provided him with tens of thousands of dollars in cash and services. He could try to plead naiveté, but in light of the hot water he got into with the Keating Five affair, which had the exactly same structure, he clearly knew what he was doing and knew that it was wrong. Now whether or not some guy gets to buy some TV station in Pittsburgh or not isn't a big deal as such, but it's an example of how dubious McCain's "straight talk" persona is. What's more, I think we can all agree that the subversion of the basic functioning of the federal government (see, e.g., US Attorneys scandal, FEMA, etc.) has been a major problem during the Bush years and we see here that McCain takes a Bush-like attitude to the integrity of these processes.

But, of course, it is the sexual innuendo, mostly unfounded (in the story as reported at least), which got the story on the front page of the New York Times.

Only after McCain had secured the Republican nomination, of course. Reportedly, the story was largely finished in December, but had to wait . . . for no particular reason.

And, the take-away from the Editor of Newsweek?

Jon Meacham: "Let us be honest: without the allegations about sex, there was no Times story. (McCain's FCC efforts and links to the communications company had been previously reported.) No suggestion of sex, no front page; no suggestion of sex, no right-wing rally to McCain's side against the Times. It is, as Margaret Thatcher used to say, a funny old world."

Funny old world, indeed. By, all means let's be honest. McCain as a corrupt liar -- well, that's all been reported, even it was only on Page 37. Boring. McCain has a penis -- that's news!

McCain's whole career is founded on the decision to leave his wife, the mother of his children, for a much younger, more beautiful woman, who just happened to be heir to a substantial fortune. But, that's old news, too.

The sex angle has opened the door to questions about McCain's ethics, character and participation in a corrupt system. But, look at how bizarre are the standards of Bill Keller, N.Y. Times editor, or Jon Meacham, Newsweek editor, and weep.

It should be noted, in passing, that this story was not a Democratic attack on McCain. Left blogosphere comment has centered on just how bad the N.Y. Times is. If anything, this story from the Grey Lady progenitor of Whitewater and WMD in Iraq, is further evidence that the Republican Right and the Complacent Muddled Middle really do not want to elect a Republican President in this round.