Today's Daily Double From The NY Fishwrap: The Flatster & The Cobra!

The world is becomeing a very scary place. The Flatster leaves us with the line used by blackjack dealers in Las Vegas as they sweep away all of the chips lost by the suck, er, customers: "Thank you for playing, ladies and gentlemen." This blogger's retirement system just lost $50M in Lehman Brothers stock. "Thank you for playing, ladies and gentlemen." O well, it's only money. Then, The Cobra leaves us with the assessment of The Mighty Q by a retired Alaska school principal: "It’s taking us back to junior high school. She’s one of the popular girls, but one of the mean girls." What a perfect description of The Mighty Q: Mean Girl. If this is (fair & balanced) fear and loathing in Vegas and Up North, so be it.

Again, the spirit of Vannevar Bush lives in the hyperplinks provided below. Click on the bracketed numeral to go directly to that column.

[1] The Flatster
[2] The Cobra


[x NY Fishwrap

[1]
Keep It In Vegas
By Thomas L. Friedman

Watching some financial stocks just get wiped out in recent months, I often hear a voice in the back of my head, and it is the same voice as one of those dealers in Las Vegas who coolly tells you as he sweeps up your chips after you’ve busted in blackjack: “Thank you for playing, ladies and gentlemen.”

That’s what happens when bubbles burst. You feel wiped out, and the coolness with which the dealers — in this case the markets — sweep away all your chips is unnerving. It’s easy to over-react, and it is important that we don’t. Now is the time for coolly sorting out what markets can do best and what governments need to do better.

Let’s understand what happened here. Wall Street — the financial industry — became a bubble in recent years thanks to an excess of liquidity and the oldest bubble maker in history: greed. Some of the smartest people forgot one of the oldest rules of investing: There is no such thing as a risk-free return. When you reach too far for yield, sooner or later you get burned.

In the ’90s, the no-lose, risk-free, high-yield return was supposed to be dot-com stocks. This decade’s version are subprime mortgages and financial stocks. Just like the dot-comers in the 1990s, the financial stocks got inflated to ridiculous levels and salaries for Wall Street executives reached ridiculous heights. You are now watching live and in color that bubble burst: “Thank you for playing, Lehman Brothers.” That’s really sad for a 158-year-old company.

The market is now consolidating this industry, with the strong eating the weak, which will impose its own fiscal discipline. Good. Maybe then more of our next generation of math geniuses will think about going into engineering the next great global industry — energy technology — rather engineering derivatives.

But we also need to understand the uniqueness of this bubble in order to identify where smart government needs to step in. One reason this financial bubble got so big is now well known: you and your neighbor went out and got subprime mortgages, which enabled many more people to become homeowners — a real blessing. Your local finance company or bank, which extended those mortgages, later resold them to an aggregator who put them into big packages with thousands of other subprime mortgages. Then those loan packages were chopped up and sold in small pieces as corporate bonds to all kinds of institutions, who were reaching for extra yield. Your subprime mortgage payments went to pay the interest on those bonds.

But as the housing market collapsed, and people couldn’t cover their mortgages or sell their houses, the bonds lost value and, therefore, the banks that held them lost capital, and the whole pyramid started to crumble. This infected the entire housing market, so banks no longer knew the value of their mortgage-backed assets. The result? They stopped lending. Hence, the current credit crunch. This credit crunch is what makes this crisis so lethal. We can’t tolerate a prolonged situation where banks won’t lend to good companies.

That’s why Congress needs to create another Resolution Trust Corporation like we used to get out of the savings-and-loan crisis of the 1980s. As then, so now, we need a government agency to buy the toxic mortgages off the banks’ balance sheets, hold them and sell them in an orderly way later. That would prevent a fire sale of homes and mortgages now and restore confidence to banks so they start lending again.

In the long run, though, regulators need to find ways to limit the amount of leverage investment banks or insurance companies can take on at any one time, because given how intertwined they all are in today’s global economy, one bank blowing up can now take down many.

“We are at the end of an era — the end of ‘leave it to the markets’ and of the great cop-out that less government is always better government,” argues David Rothkopf, a former Commerce Department official in the Clinton administration and author of a book about the world’s financial leaders who brought about this crisis: Superclass: The Global Power Elite and the World They Are Making. "I think, however, it is important to stress the difference between smart government and simply more government.... We do not need a regulatory ‘surge’ on Wall Street,” he added. “We need a complete rethinking of how we make global financial markets more transparent and how we ensure that the risks within those markets — many of which are new and many of which are not well understood even by the experts — are managed and monitored properly."

In sum, government’s job is to police that fine line between the necessary risk-taking that drives an innovation economy and crazy gambling with other people’s savings in ways that threaten us all. We need to make sure that what happens in Vegas stays in Vegas — and doesn’t come to Main Street. We need to get back to investing in our future and not just betting on it.

[Thomas L. Friedman (3-time Pulitzer Prize winner: 1983, 1988, and 2002) is an op-ed contributor to The New York Times, whose column appears twice weekly and mainly addresses topics on foreign affairs. Friedman is known for supporting a compromise resolution to the Israeli-Palestinian conflict, modernization of the Arab world, environmentalism and globalization. His books discuss various aspects of international politics from a neoliberal perspective on the American political spectrum. In 1975, Friedman received a bachelor of arts in Mediterranean studies from Brandeis University in 1973. He then attended St Antony's College at the University of Oxford on a Marshall Scholarship, earning a master of arts in Middle Eastern studies.]

___________________________________________________________________
[2]
"Barbies for War!"
By Maureen Dowd

Carly Fiorina, the woman John McCain sent out to defend Sarah Palin and rip anyone who calls her a tabula rasa on foreign policy and the economy, admitted Tuesday that Palin was not capable of running Hewlett-Packard.

That’s pretty damning coming from Fiorina, who also was not capable of running Hewlett-Packard.

Carly helpfully added that McCain (not to mention Obama and Biden) couldn’t run a major corporation. He couldn’t get his immigration bill passed either, but now he’s promising to eliminate centuries of greed on Wall Street.

The Wall Street Journal reported that McCain was thinking about taking Palin to the U.N. General Assembly next week so she can shake hands with some heads of state. You can’t contract foreign policy experience like a rhinovirus. To paraphrase the sniffly Adelaide in “Guys and Dolls,” a poy-son could develop a cold war.

The latest news from Alaska is that the governor keeps a tanning bed in the Juneau mansion. As The Los Angeles Times pointed out, when Palin declared May 2007 Skin Cancer Awareness Month in Alaska, the press release explained that skin cancer was caused by “the sun and from tanning beds.”

I sautéed myself in Sarahville last week.

I wandered through the Wal-Mart, which seemed almost as large as Wasilla, a town that is a soulless strip mall without sidewalks set beside a soulful mountain and lake.

Wal-Mart has all the doodads that Sarah must need in her career as a sportsman — Remingtons and “torture tested” riflescopes, game bags for caribou, machines that imitate rabbits and young deer and coyotes to draw your quarry in so you can shoot it, and machines to squish cows into beef jerky.

I talked to a Wal-Mart mom, Betty Necas, 39, wearing sweatpants and tattoos on her wrists.

She said she’s never voted, and was a teenage mom “like Bristol.” She likes Sarah because she’s “down home” but said Obama “gives me the creeps. Nothing to do with the fact that he’s black. He just seems snotty, and he looks weaselly.”

Ten Obama supporters in Wasilla braved taunts and drizzle to stand on a corner between McDonald’s and Pizza Hut. They complained that Sarah runs government like a vengeful fiefdom and held up signs. A guy with a bullhorn yelled out of a passing red car: “Go back to the city, you liberal Communists!”

At gatherings in The Last Frontier, pastors pray for reporters, drilling evokes cheers and Todd Palin is hailed as a guy who likes to burn fossil fuels.

I had many “Sarahs,” as her favorite skinny white mocha is now called, at the Mocha Moose. “I’ve seen her at 4 a.m. with no makeup,” said manager Karena Forster, “and she’s just as beautiful.”

I stopped by Sarah’s old Pentecostal church, the Wasilla Assembly of God, and perused some books: “The Bait of Satan,” “Deliverance from PMS,” and “Kissed the Girls and Made them Cry: Why Women Lose When They Give In.” (Author Lisa Bevere advises: “Run to the arms of your prince and enter your dream.”)

In Anchorage Saturday, I went by a conference conducted by James Dobson’s Focus on the Family and supported by Sarah’s current church, the Wasilla Bible Church, about how to help gays and lesbians “journey out” of same-sex attraction.

(As The Times reported recently, in 1995, Palin, then a city councilwoman, told colleagues she had seen “Daddy’s Roommate” on the shelf of the library and did not approve. The Wasilla Assembly of God tried to ban “Pastor, I Am Gay” by Howard Bess, a liberal Christian preacher in nearby Palmer.)

Anne Heche’s mother, Nancy, talked about her distress when her daughter told her she was involved with Ellen. Jeff Johnston told me he had “a struggle” with homosexuality “for a season,” but is now “happily married with three boys.” (Books for sale there included “Mommy, Why Are They Holding Hands?” and “You Don’t Have to Be Gay.”)

I covered a boisterous women against Palin rally in Anchorage, where women toted placards such as “Fess up about troopergate,” “Keep your vows off my body,” “Barbies for war!” “Sarah, please don’t put me on your enemies list,” and “McCain and Palin = McPain.”

A local conservative radio personality, Eddie Burke, who had lambasted the organizers as “a bunch of socialist, baby-killing maggots,” was on hand with a sign reading “Alaska is not Frisco.”

“We are one Supreme Court justice away from overturning Roe v. Wade,” he excitedly told me.

R. D. Levno, a retired school principal, flew in from Fairbanks. “She’s a child, inexperienced and simplistic,” she said of Sarah. “It’s taking us back to junior high school. She’s one of the popular girls, but one of the mean girls. She is seductive, but she is invented.”

[Maureen Dowd is a Washington D.C.-based op-ed columnist for The New York Times. She has worked for the Times since 1983, when she joined as a metropolitan reporter. In 1999, Dowd was awarded a Pulitzer Prize for her series of columns on the Monica Lewinsky scandal. Dowd received a B.A. in English from Catholic University in Washington, D.C.]

Copyright © 2008 The New York Times Company

Get an RSS (Really Simple Syndication) Reader at no cost from Google. Another free Reader is available at RSS Reader.