News Today

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Okay down to business, well sort of at least.

A lot of people have been wondering what’s going on with entrecard. I’ve been hesitant to give answers that were asked in my last post because it was kind of a confusing subject for me as well.

Well, today in the forums the admins announced that we can indeed keep our entrecard widgets on our blogs and can continue to drop away. However we are not allowed to accept paid advertisements.

I want to thank the today.com staff and the entrecard staff for listening to all of the today.com bloggers concerns and working something out. This is a good compromise that allows all sides to get what they want. I’m not sure if I’ll remain as active as I was with entrecard (likely no more 300 drop days), but I will definitely keep the widget up and continue to visit my favorite blogs.

I think this is an example of the change that people thought they were voting for in November.

The Obama’s have decided to pay for the renovations and redecorating of the White House out of their own pocket, rather than use the $100,000 in federal funds available to them. They also refused funding from the White House Historical Association (who had purchased the Bush family a nice $75,000 China set).

This was a very smart move by the president. The Obama’s made a little over $2 million last year, mostly from book revenue, and can probably afford the renovations pretty easily. Rather than fall under criticism for making lavish upgrades with taxpayer money (something that Obama has had to criticize CEO’s of ailing companies for) in a time of economic crisis Obama is showing responsibility and restraint here.

The administration has charged Michael Smith to head the renovation project. Smith said the affordability would be one of the “guiding principles” in his work.

“The family’s casual style, their interest in bringing 20th Century American artists to the forefront and utilizing affordable brands and products will serve as our guiding principles as we make the residence feel like their home,” said Smith.

General Motors CEO Rick Wagoner has resigned from his position. However, the real interesting part of this story is not the what but the why. Wagoner stepped down because Barack Obama asked him to.

The White House confirmed the story earlier today.

“I can confirm that [General Motor’s CEO Rick] Wagoner was asked to and agreed to step down,” said a White House official through e-mail.

The announcement comes a day before President Barack Obama unveils his new plan for the automobile industry. Apparently Wagoner did not fit the bill for those plans. The CEO has come under fire from the Obama camp before for two reasons.

The first, his company has had to receive more federal aid ($26 billion) than either Ford Motor Company or Chrysler. Secondly, Wagoner has been the CEO since 2000 and was directly in charge of GM’s decision to produce more trucks and SUV’s rather than Hybrids or fuel-efficient cars.

But Louisiana governor Bobby Jindal has to be regretting this one. Remember that Republican Response to Obama’s first press conference? The one where Jindal made a fool out of himself left and right?

Well I’ve already documented the stupidity of Bobby Jindal’s response, but one phrase in particular stuck out with me today. As Jindal struggled to find examples of wasteful government spending in the stimulus bill (which seriously is not as difficult a task as he made it out to be) he made the following comment:

“It includes … $140 million for something called volcano monitoring,” sneered Jindal.

Eat your words, Bobby. Does hypocrisy and stupidity taste good ba-you?

The Mount Redoubt volcano in Alaska is spewing ash clouds over 65,000 feet into the air right now. Towns near the volcano like Kenai, Ninilchik and Homer are literally covered in ash right now.

But silly us for trying to better understand and protect our citizens from this type of thing. I’ve said it once and I’ll say it again, Bobby Jindal you’re an idiot. I don’t know what republicans see in you, but I imagine it’s the same type of thing they saw in George W. Bush.

That ad cracks me up.

“Sit back and rest on our laurels… With over $700 billion in assets, $50 million customers and 85 years of experience, you’ll rest easier knowing that we have the strength and experience to help secure your family’s financial future. AIG - We Know Money.”

Incredible.

The current economic crisis is a very complicated issue so it’s often kind of difficult to understand, much less write about. Summing up all the steps that led us into this mess is not an easy task. Anyways, I’ll quit complaining. Today I wanted to take an in-depth look at AIG and the role that they played in the financial crisis.

Okay we’ve heard a lot about “credit default swaps,” or CDS’s. Now CDS’s are classified as a form of insurance, but that’s a very loose definition. What happened is AIG, for a price, would offer to guarantee the investments of a particular company. In reality this type of “insurance” is a lot closer to gambling, because AIG is betting that the investment won’t fail. In fact the companies needed to pass a law in 2000 to “exempt” them from gaming laws in order to make these CDS’s legal.

Now Goldman Sachs, at $20 billion, was actually AIG’s biggest customer on these CDS’s, so we’ll use them as an example. Goldman Sachs was a key player in the housing market with mortgages. What happened with these CDS’s is Goldman Sachs would go to AIG and pay a premium each month to have AIG insure their investments in case they went default. If it didn’t go default, fine AIG collected their premium. If it did though, AIG would have to pay off the entire mortgage. Starting to make a little sense now?

Congress’s role in the crisis becomes more clear here too. In 2000 a Phil Gramm sponsored law called the Commodity Futures Modernization Act allowed these CDS’s to be completely unregulated. What this means is that a company could legally purchase as many CDS’s as they wanted without actually putting money down. This law opened the floodgates for companies like AIG. But this wasn’t the first action that Congress took in allowing this situation to spin out of control.

The Gramm-Leach-Bliley Act of 1999, which had bipartisan support (It was originally of Republican sponsorship but was signed into law by Bill Clinton and received support from democratic leaders in Congress as well) overturned the depression-era Glass-Steagall Act and allowed all of these financial institutions to merge together. This is how an insurance company was able to turn itself into an international investment firm and hedge fund.

Let’s shift our focus to one specific part of AIG that you may have heard about, AIG Financial Products, or AIGFP. There are two AIGFP offices, one in Connecticut and one in London, with a total of 377 employees.

These were the guys that were in control of the credit default swaps. These were the guys that managed to gamble away $500 billion of money (by the way that’s $1,326,259,946.95 per employee) by “purchasing” these CDS’s. I put “purchasing” in quotes because thanks to our congressional leaders AIGFP didn’t have to actually put any money down to “purchase” these CDS’s. These guys were the reason AIG needed government assistance.

Oh and just what happened to the man who was in charge of this section of AIG? Well his name was Joe Cassano and he made almost $300 million off of these CDS’s. See, for every dollar that AIG made with these CDS’s, Joe and his buddies got to keep 30 cents. Now Cassano was “fired” from his position in 2008 after the proverbial shit began hitting the fan, but he managed to retain $34 million in bonuses and was kept on as a consultant for AIG for the measly price of $1 million per month.

Amazing isn’t it? I swear, the more I learn about AIG, the more pissed off it makes me.

House rep. Eric Cantor speaks under the watchful eye of House Minority leader John Boehner.

Earlier in the week President Barack Obama called out the G.O.P. leadership on National TV for roundly criticizing his budget proposal without offering an alternate proposal of their own. In an attempted response House minority leader John Boehner announced the guidelines of the Republican proposal in a press conference today.

The proposal, called “The Republican Road to Recovery,” is a whopping nineteen pages long (including the cover page and a blank page at the end) and contains much more criticism of the President’s budget than it does solutions or details. The few details that are included are often repeated from page to page.

It is in stark contrast to the 142 page budget proposal offered by President Barack Obama.

“This is a blueprint,” Boehner responded, noting that House Republicans will bring their specific budget figures to the floor next week. “Wait till next week.”

The White House was quick to criticize the proposal.

“It took me several minutes to read it,” said Press Secretary Robert Gibbs, noting that Obama was “absolutely” disappointed at the lack of detail in the proposal.

“I think the ‘party of no’ has become the party of no new ideas,” Gibbs added.

The proposal has even caused some infighting in the G.O.P., with House Minority Whip Eric Cantor and Wisconsin representative Paul Ryan both raising objections to the budget blueprint.

Cantor and Ryan said they were “embarrassed” by the proposal, noting that it would be better to absorb a week of criticism from the democrats than to fail to produce a detailed and thoughtful alternative.

Other republican leaders were quick to silence the criticism.

“It’s categorically untrue,” said Mike Pence spokesman Matt Lloyd. “Cantor as well as Ryan and the rest of the leadership have been part of this process for weeks. They not only signed off on it, but their staffs helped edit it.”

United States Secretary of State Hillary Clinton traveled to Mexico City, Mexico and pledged U.S. support for Mexico as the drug cartel violence worsens. Over 1,000 people have died in Mexico from the violence this year so far, and it appears to be spreading into the U.S.

The demand is definitely coming from the U.S., as well as the guns that the cartels are using to fight Mexican authorities. Clinton did acknowledge this in her press conference.

“Our insatiable demand for illegal drugs fuels the drug trade,” Clinton said. “Our inability to prevent weapons from being illegally smuggled across the border to arm these criminals causes the deaths of police officers, soldiers and civilians.”

This is a pretty big break from the previous administration, who acknowledged that there was a problem but mostly called it Mexico’s problem. I think, along with Mexican President Felipe Calderon, that we are Mexico’s problem.

“We know that the vast majority, 90 percent of that (weaponry), comes from our country, we’re going to try to stop it from getting there in the first place,” Clinton said.

Clinton pledged financial support, noting that the Obama administration was working with congress to provide $80 million to buy U.S. made blackhawk style helicopters for the Mexican government.

Here’s my issue. We have a huge demand for drugs in this country. All of the financial support in the world is not going to change that fact. The distribution of these drugs is completely unrelegated and the profits are going right to these drug cartels. They are making a ton of money off of this! It’s a monopoly. They have enough money to practically wage a revolution against the Mexican government. Furthermore, in many regions of Mexico they are winning.

The “war on drugs” is fueling this latest drug war. It’s high time (pun intended) that we take a look at our prohibition style system, which obviously isn’t working, and make some changes. No I’m not saying start selling heroin to kids at the local 7-11 gas station. Some drugs are best left illegal. However there are some changes that are long overdue.

Furthermore, we’re making a prison-state. Look at the statistics. One in a hundred U.S. adults are incarcerated right at this moment. In my home state of Ohio that number jumps to one out of twenty-five. Throw race into the equasion and the picture gets way uglier.

Most of these criminals are in jail for non-violent drug related charges. Rather than make rehabilitation a focus, we’ve gone in the opposite direction - Mandatory minimum sentencing. The fact remains though, this isn’t cutting down on the demand. When there’s a demand that big, someone is always going to be ready to supply it. Should we really keep funding these violent drug lords?

I had a feeling this would happen. It is with great sadness that I am saying goodbye to Entrecard. Not because I want to mind you.

The new changes that EC announced last week violated Today.com’s terms of service, so all of the today.com blogs will have to be leaving EC as well. All week we waited to see whether an agreement could be reached between the two, that agreement apparently never came. If any of you today.com blogs hadn’t seen it yet, this was posted in the forums by the admins:

- Excerpt from today.com forum was requested to be taken down by today.com administrators -

I will let the ads I have set to run on my site still go, but I will not be accepting any new ones. I will also reach out to the blogs that I really loved looking at, hopefully we can stay in contact.

One of the biggest players in President Barack Obama’s administration is Timothy Geithner, Obama’s Secretary of the Treasury. Geithner has come under a lot of fire in the secretary position already, starting before his official nomination. So I figured we’d take a second and examine Timothy Geithner.

Geithner was born in Brooklyn but spent most of his childhood in foreign countries, such as Zimbabwe, India and Thailand. His father was the director of the Asian market for Ford Motor Company, and actually worked with Barack Obama’s mother Ann Dunham-Seotoro in Indonesia through the Ford Foundation.

In college Geithner earned his Bachelor’s degree in Asian Studies at Dartmouth (1983) and received his Masters in international economics and East Asian studies from Johns Hopkins University School of Advanced International Studies (1985).

From there Geithner went on to serve a number of international positions. Three years after moving to Washington he signed on at International Affairs division of the U.S. Treasury Department (1988). From there he moved to the U.S. Embassy in Tokyo where he served various high ranking financial positions. In 2001 he became a Senior Fellow in the International Economics department for the Council on Foreign Relations and also worked for the International Monetary Fund.

In 2003 Giethner was named President of the Federal Reserve Bank of New York, where he served until Obama’s nomination. As president Geithner played a huge role in the decision to let Lehman Brother’s fail, the rescue and sell-off of Bear Stearns, and the government bailout for A.I.G.

Before his nomination was approved Geithner came under fire after it was revealed that he owed $35,000 in self employment taxes for several years. Still, on January 26, 2009 the U.S. Senate approved of Geithner’s nomination on a tight 60-34 line.

Now, as President of the Federal Reserve Bank of New York, where this whole Wall Street crisis was centered around, Geithner played a key role in the A.I.G. bailouts. After the recent bonus controversy with A.I.G. Geithner claimed that he had no knowledge of A.I.G.’s “retention” bonuses. There seem to be two possible scenarios here, either Geithner knew about them and didn’t think it was going to be an issue, or Geithner didn’t bother to look into it. His Treasury Department is still missing several key positions, including his top deputy.

Republicans called for Geithner’s resignation over the bonus fiasco but Obama has stood by his Treasury Secretary, saying that if Geithner had offered it Obama would have replied “sorry buddy, but the job is still yours.”

Now to be fair the stock market has shown some signs of relief. The Dow Jones went up almost 500 points today on the news of the Treasury Department’s $1 trillion plan to clear toxic loans and asset-backed securities from ailing banks and financial firms. It marked the U.S. market’s steepest two-week gain since 1938. We still have a long way to go, the S&P 500 is down 47 percent from the October 2007 record point, but the market is definitely showing some signs of stabilizing.

Geithner has predicted, along with many other economists, that the market will balance out and begin gaining by the end of 2009. No one is really sure, but if these rallies are any indication Geithner and company might be right. For Wall Street at least.

Now about that $11 trillion dollar deficit… I suppose that will have to be a later post.

I had to follow up on this from yesterday. Iran’s supreme leader Ayatollah Ali Khamenei rejected President Barack Obama’s offer for a “new beginning” in relations between Iran and the United States.

Khamenei noted that there would have to be drastic changes in United States foreign policy before the two countries could begin to see eye to eye. Among these included calls to drop “unconditional support” for Israel and criticisms of Iran’s nuclear ambitions.

“Have you released Iranian assets? Have you lifted oppressive sanctions? Have you given up mudslinging and making accusations against the great Iranian nation and its officials?” Khamenei said in a speech in the northeastern city of Mashhad. “He (Obama) insulted the Islamic Republic of Iran from the first day. If you are right that change has come, where is that change? What is the sign of that change? Make it clear for us what has changed.”

I’m not quite sure what Khamenei meant when he said that Obama insulted Iran on day one. Perhaps it was about that letter that Iran sent the Obama administration congratulating him for his victory. If I remember correctly Obama didn’t respond to the letter.

Khamenei left the idea open of opening up to the United States, although by the time he got through blasting the United States and its actions the crowd was chanting “Death to America.”

“Should you change, our behavior will change, too, ” said Khamenei.

So that’s where this one stands apparently. There doesn’t appear to be much room for compromise on either side. The U.S. certainly won’t do everything Iran wants us to do, and it appears that they’re not interested in doing anything with us if we don’t. I don’t really trust their government (to be fair I don’t really trust mine either) and it’s obvious they don’t trust us. All in all it’s another sticky situation that Obama may possibly have to deal with in the future.

I hope I’m wrong on that.