The hard part of rewriting history is getting your story straight. By now, most Americans realize that Saddam Hussein was not involved in the 9/11 attacks on the World Trade Center and the Pentagon, although this certainly wasn't the case a few years ago.
To make the rewrite of history complete, however, it's important to "erase" the idea that the Bush administration ever implied that Saddam Hussein was involved. George Bush got the ball rolling in a speech to the Saban Center for Middle East Policy last December:
"It is true, as I have said many times, that Saddam Hussein was not connected to the 9/11 attacks. But the decision to remove Saddam from power cannot be viewed in isolation from 9/11."
This is a good start. I especially like the part about the "many times" he's made this statement. But it falls short of saying that he never said there was a connection between Saddam and 9/11.
For that we had to wait for former secretary of state Condoleezza Rice's interview with PBS’s Charlie Rose a couple of days ago:
ROSE: But you didn’t believe it had anything to do with 9/11
RICE: No. No one was arguing that Saddam Hussein somehow had something to do with 9/11.
ROSE: No one.
RICE: I was certainly not. The President was certainly not. … That’s right. We were not arguing that.
The puzzled look on her face is a nice touch; kind of like saying "where did you ever get such a ridiculous idea?" By now, you may even be wondering how you ever came up with idea that Saddam was involved in 9/11. Could it have been the left wing media?
It would take too long to list the statements that might have led you astray, but you can sort through the collection of misleading statements found on the website, "Iraq on the Record" and find a few.
Still, the rewrite of history is going along pretty well, except former press secretary Ari Fleischer apparently didn't get the memo that they're not using the fictitious Saddam story anymore. On MSNBC's Hardball with Chris Matthews last week, Fleischer made it very clear that Saddam was involved in the 9/11 attack:
"After September 11th having been hit once how could we take a chance that Saddam might strike again? And that's the threat that has been removed and I think we are all safer with that threat removed."
Like I said, the hard part is getting your story straight
Friday, March 20, 2009
Tuesday, March 10, 2009
Uptick Update
Last July, I wrote about a little known rule, the "uptick rule," used to regulate short selling of securities (Selling Fannie and Freddie Short). The rule was put in place after the Crash of 1929 to prevent fear from creating a stampede of selling and another stock market crash.
The rule was eliminated by the SEC, effective July 6, 2007, and my question at the time was: "why would the SEC eliminate a rule that was put in place more than 70 years ago to prevent another market crash?"
The stock market (S&P 500 index) is down about 46% since I wrote the article, and 57% since the rule was eliminated:
As I said at the time, eliminating the uptick rule didn't "cause" the mess we're in, but by helping short sellers drive down the price of stocks, it made it more difficult for businesses (especially banks) to attract new capital to deal with the housing crisis, and ultimately put the economy as a whole at risk.
A couple of weeks ago, in testimony before the House Financial Services Committee, Fed Chairman Ben Bernanke said restoring the rule “might have had some benefit.” Yesterday on CNBC, legendary investor Warren Buffett said "probably the uptick rule is a good idea." And today, Rep. Barney Frank said he has spoken to the SEC, and is "hopeful the uptick rule will be restored within a month," sending markets higher (when something is obvious to Barney Frank, it's obvious to just about everyone).
The truth is that no one really knows how much impact reinstating this rule this will have, and by now it may be too late: trillions of dollars have been lost, and the recovery will take years. The special interests that lobbied to have this rule eliminated have made their fortunes selling America short. Some, like John Paulson of the Paulson & Co. hedge fund will walk away with billions in profits.
This is little more than a footnote in the history of our current economic crisis, but in catering to special interests at the expense of the American people, it says a lot about President Bush's cavalier view of the importance of government regulation, and whose interests he really cared about.
The rule was eliminated by the SEC, effective July 6, 2007, and my question at the time was: "why would the SEC eliminate a rule that was put in place more than 70 years ago to prevent another market crash?"
The stock market (S&P 500 index) is down about 46% since I wrote the article, and 57% since the rule was eliminated:
As I said at the time, eliminating the uptick rule didn't "cause" the mess we're in, but by helping short sellers drive down the price of stocks, it made it more difficult for businesses (especially banks) to attract new capital to deal with the housing crisis, and ultimately put the economy as a whole at risk.
A couple of weeks ago, in testimony before the House Financial Services Committee, Fed Chairman Ben Bernanke said restoring the rule “might have had some benefit.” Yesterday on CNBC, legendary investor Warren Buffett said "probably the uptick rule is a good idea." And today, Rep. Barney Frank said he has spoken to the SEC, and is "hopeful the uptick rule will be restored within a month," sending markets higher (when something is obvious to Barney Frank, it's obvious to just about everyone).
The truth is that no one really knows how much impact reinstating this rule this will have, and by now it may be too late: trillions of dollars have been lost, and the recovery will take years. The special interests that lobbied to have this rule eliminated have made their fortunes selling America short. Some, like John Paulson of the Paulson & Co. hedge fund will walk away with billions in profits.
This is little more than a footnote in the history of our current economic crisis, but in catering to special interests at the expense of the American people, it says a lot about President Bush's cavalier view of the importance of government regulation, and whose interests he really cared about.
Monday, March 9, 2009
Hedge Hogs - Part II
After a failed attempt by the SEC to regulate the growing number of hedge funds (Hedge Hogs - Part I), the Bush administration sent a clear message in early 2007; something like "this is part of my plan to deregulate financial markets entirely: leave hedge funds alone."
Apparently Sen. Chuck Grassley (R-IA) wasn't paying attention. More likely, "Iowa’s favorite curmudgeon" understood the importance of regulating hedge funds, and he has an annoying habit of doing what he believes is right.
So Grassley attempted to bring hedge funds under SEC oversight a few months later. Realizing that the SEC needed Congressional action to begin the process by registering hedge funds, he sponsored the "Hedge Fund Registration Act of 2007" (S.1402). In his May 15, 2007 announcement, Sen. Grassley said:
Considering that hedge funds controlled up to $3 trillion in assets last year, requiring that they register with the SEC doesn't seem like a bad idea. Hedge funds control almost a third of the stock market trading activity, and it seems like we should spend at least as much time regulating them as we spend on, say, fishing licenses.
Grassley's bill was read twice on the Senate floor, and referred to the Senate Committee on Banking, Housing, and Urban Affairs where Chris Dodd (D-CT) and Richard Shelby (R-AL) immediately recognized the importance of this legislation and sprung into action. Just kidding: the Committee website shows a list of all they accomplished...nothing. No hearings; no expert testimony; no referral to the SEC for comment. It's called "killed in committee."
I can understand Richard Shelby toeing the Republican party line, but Chris Dodd is a Democrat. There must have been something else going behind the scenes. One possibility might be that Dodd was too busy counting his political contributions... from hedge funds.
According to opensecrets.org, Sen. Dodd received $693,250 in contributions from hedge funds in 2008; more than many politicians running for the Presidency. Not bad for someone whose 6 year term expires in 2011, and isn't even running for reelection. It's called "payoff."
Last month Sen. Grassley again introduced a bill to require hedge funds to register with the SEC, the Hedge Fund Transparency Act. (S.344) Needless to say, he won't be getting campaign contributions from hedge funds when he runs for reelection in a couple of years.
Grassley's latest effort has again been referred to the Senate Committee on Banking, Housing, and Urban Affairs. This one is worth keeping an eye on.
Apparently Sen. Chuck Grassley (R-IA) wasn't paying attention. More likely, "Iowa’s favorite curmudgeon" understood the importance of regulating hedge funds, and he has an annoying habit of doing what he believes is right.
So Grassley attempted to bring hedge funds under SEC oversight a few months later. Realizing that the SEC needed Congressional action to begin the process by registering hedge funds, he sponsored the "Hedge Fund Registration Act of 2007" (S.1402). In his May 15, 2007 announcement, Sen. Grassley said:
The goal of my initiative is to make our financial markets more transparent. Openness is key to trust in those markets.
Considering that hedge funds controlled up to $3 trillion in assets last year, requiring that they register with the SEC doesn't seem like a bad idea. Hedge funds control almost a third of the stock market trading activity, and it seems like we should spend at least as much time regulating them as we spend on, say, fishing licenses.
Grassley's bill was read twice on the Senate floor, and referred to the Senate Committee on Banking, Housing, and Urban Affairs where Chris Dodd (D-CT) and Richard Shelby (R-AL) immediately recognized the importance of this legislation and sprung into action. Just kidding: the Committee website shows a list of all they accomplished...nothing. No hearings; no expert testimony; no referral to the SEC for comment. It's called "killed in committee."
I can understand Richard Shelby toeing the Republican party line, but Chris Dodd is a Democrat. There must have been something else going behind the scenes. One possibility might be that Dodd was too busy counting his political contributions... from hedge funds.
According to opensecrets.org, Sen. Dodd received $693,250 in contributions from hedge funds in 2008; more than many politicians running for the Presidency. Not bad for someone whose 6 year term expires in 2011, and isn't even running for reelection. It's called "payoff."
Last month Sen. Grassley again introduced a bill to require hedge funds to register with the SEC, the Hedge Fund Transparency Act. (S.344) Needless to say, he won't be getting campaign contributions from hedge funds when he runs for reelection in a couple of years.
Grassley's latest effort has again been referred to the Senate Committee on Banking, Housing, and Urban Affairs. This one is worth keeping an eye on.
Friday, March 6, 2009
Hedge Hogs - Part I
As conservatives busily rewrite the history of our current financial crisis, and insist that they never intended deregulation to prevent the Securities and Exchange Commission (SEC) from doing it's job, I hope they don't forget to include role of hedge funds.
Traditionally the province of wealthy clients and institutional investors, hedge funds use a variety of derivatives and investment strategies (including short selling). On any given day, hedge funds account for about a third of transactions, so their impact on the markets is huge. Their investors are often willing to accept returns on a "no questions asked" basis, and since they are not regulated, they make great Ponzi schemes (just ask Bernie Madoff).
A few years ago, in a fit of regulatory zeal, then SEC Chairman William Donaldson decided to attempt to regulate hedge funds, saying they had been central figures in a variety of market trading abuses and that registration was at least a way for regulators to begin to understand them. He wanted to shine a light in what he described as a "dark corner" of the market. So the SEC issued a ruling in December 2004 requiring that hedge funds register by February 1, 2006 (this even caused Bernie Madoff to register).
So much for William Donaldson. He resigned "following repeated criticism from the two other Republican members of the agency and from some business groups and administration officials that his enforcement and policy decisions had been too aggressive," according to a New York Times report at the time.
The U.S. Court of Appeals for the District of Columbia overturned the regulation in June, 2006 and sent it back to the SEC to be reviewed. For technical reasons, Congress would need to pass a law to give the SEC oversight of hedge funds. But by then, President Bush had finally found what he had been looking for; an SEC Chairman, Christopher Cox, who understood the meaning of "deregulation." So the SEC regulation was dropped.
In February, 2007, the New York Times reported that the Bush administration said that there was "no need for greater government oversight of the rapidly growing hedge fund industry and other private investment groups to protect the nation’s financial system. Instead, the administration, in an agreement it reached with the independent regulatory agencies, announced that investors, hedge fund companies and their lenders could adequately take care of themselves by adhering to a set of nonbinding principles."
Within six months (July, 2007), two Bear Stearns hedge funds had collapsed. In announcing SEC plans to prosecute fraud in the case of these funds almost a year later, SEC Chairman Cox stated "hedge funds are by no means unregulated when it comes to fraud. Those who commit fraud at the expense of investors will always be the target of a relentless SEC."
It may be that Cox was beginning to understand that the point wasn't to protect hedge fund companies themselves, but to protect their clients (and financial markets) from the hedge funds. He may have even realized the absurdity of the idea that "nonbinding principles" would be adequate. But his reference to a "relentless SEC" makes me believe he was overmedicated.
The collapse of the Bear Stearns hedge funds was followed by the Bear Stearns bailout...and eventually Fannie and Freddie. The rest, as they say, is history.
Traditionally the province of wealthy clients and institutional investors, hedge funds use a variety of derivatives and investment strategies (including short selling). On any given day, hedge funds account for about a third of transactions, so their impact on the markets is huge. Their investors are often willing to accept returns on a "no questions asked" basis, and since they are not regulated, they make great Ponzi schemes (just ask Bernie Madoff).
A few years ago, in a fit of regulatory zeal, then SEC Chairman William Donaldson decided to attempt to regulate hedge funds, saying they had been central figures in a variety of market trading abuses and that registration was at least a way for regulators to begin to understand them. He wanted to shine a light in what he described as a "dark corner" of the market. So the SEC issued a ruling in December 2004 requiring that hedge funds register by February 1, 2006 (this even caused Bernie Madoff to register).
So much for William Donaldson. He resigned "following repeated criticism from the two other Republican members of the agency and from some business groups and administration officials that his enforcement and policy decisions had been too aggressive," according to a New York Times report at the time.
The U.S. Court of Appeals for the District of Columbia overturned the regulation in June, 2006 and sent it back to the SEC to be reviewed. For technical reasons, Congress would need to pass a law to give the SEC oversight of hedge funds. But by then, President Bush had finally found what he had been looking for; an SEC Chairman, Christopher Cox, who understood the meaning of "deregulation." So the SEC regulation was dropped.
In February, 2007, the New York Times reported that the Bush administration said that there was "no need for greater government oversight of the rapidly growing hedge fund industry and other private investment groups to protect the nation’s financial system. Instead, the administration, in an agreement it reached with the independent regulatory agencies, announced that investors, hedge fund companies and their lenders could adequately take care of themselves by adhering to a set of nonbinding principles."
Within six months (July, 2007), two Bear Stearns hedge funds had collapsed. In announcing SEC plans to prosecute fraud in the case of these funds almost a year later, SEC Chairman Cox stated "hedge funds are by no means unregulated when it comes to fraud. Those who commit fraud at the expense of investors will always be the target of a relentless SEC."
It may be that Cox was beginning to understand that the point wasn't to protect hedge fund companies themselves, but to protect their clients (and financial markets) from the hedge funds. He may have even realized the absurdity of the idea that "nonbinding principles" would be adequate. But his reference to a "relentless SEC" makes me believe he was overmedicated.
The collapse of the Bear Stearns hedge funds was followed by the Bear Stearns bailout...and eventually Fannie and Freddie. The rest, as they say, is history.
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