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Tuesday, September 23, 2008
The solution to our gas shortage
The Atlanta Journal-Constitution
An emailer — call him JW from Roswell — sent this proposal to me for addressing the rolling gasoline shortage, and damned if it doesn’t sound like an intelligent solution:
“I am old enough to have gone through the national gas shortage in the 1970s, and the cause of the shortage then is the same as now: drivers topping off their tanks.
In essence, our gasoline inventory is in millions of individual gas tanks instead of in gas stations. Gas stations attempted to solve the problem then in the same way some are doing now, by setting a maximum gallon limit per purchase. While that seems to make sense, it is exactly the opposite of what needs to be done.
Setting a maximum encourages people to top off; setting a MINIMUM (of eight gallons, say), means that the driver must pay for the minimum whether he or she pumps that much or not, therefore making topping off very expensive.”
Like I said, sounds good to me.
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10 years ago today, Molly Ivins said….
The Atlanta Journal-Constitution
I’ve been watching Henry Paulson and Ben Bernanke testify about the proposed $700 billion bailout before the Senate Banking Committee. Paulson has been pretty candid that without this assistance, the financial system is likely to collapse, and he concedes that there are no guarantees even if it does become law.
Given all that, I thought I’d post large excerpts of a column by the late Molly Ivins, which the AJC published 10 years ago to the day — Sept. 23, 1998. Her subject was a proposal to deregulate the banking industry.
“AUSTIN - Watch the House pass a bad bill. Watch the Senate make it worse. Watch the banking industry dig its own grave. Watch supposedly smart people set up a financial disaster. Can we see President Clinton veto this mess? Veto, Clinton, veto.
Not since Congress passed the Garn-St. Germain bill in 1981 - the one that deregulated the S&Ls and unleashed a half-a-trillion-dollar disaster, which the taxpayers of this country wound up paying for - has there been a move to match this for pure folly.
In May, the House passed (by one vote) a bill to eliminate barriers between banks, brokerage firms and insurance companies. This sets up financial holding companies that can offer all three types of services simultaneously. The most obvious risk is that a blunder in the insurance or brokerage end of the business could bring down a bank, putting insured deposits at risk. The taxpayers, of course, then wind up with the tab, as we did with the savings-and-loan mess.
The bill contains some requirements to mitigate this risk; each branch of a financial holding company will have to maintain a separate cushion against losses, which cannot be used to shore up the other branches. Although this provision somewhat lessens the risk, it does not eliminate it.
The purpose of this bill, long sought by the financial industry, is to legalize such mergers as the proposed Citicorp-Travelers Insurance mega-merger. Many experts believe the effect will be the emergence of nine or ten enormous institutions after the consolidation of hundreds of insurance companies, banks and brokerage firms.
Even before this consequence comes to pass, it is apparent that the bill will harm consumers. Last week - on a straight party-line vote of 12-10 in the Senate Banking Committee, all the Republicans against all the Democrats - consumer protections were stripped out of the bill….
The Senate committee … weakened House-version provisions to (1) ensure that customers are informed when financial products are not FDIC-insured or they are subject to risk and (2) to require some clear separation of insured-deposit activities from non-insured-deposit activities. And the Senate created more exemptions from securities laws that help guard investors.
In addition, Sen. Phil Gramm of Texas is on a jihad against the Community Reinvestment Act, which is designed to make more loans available to low-income borrowers. He’s trying to strip those provisions out of the bill.
Now, see if you can follow this bouncing ball of news, because it’s a triple carom shot that sets up the aforementioned financial nightmare.
According to a report released Friday by federal banking regulators, banks are lowering commercial lending standards, even though the risk that business borrowers will default on a loan is rising.
According to The Washington Post, “The four-year trend is causing concern among regulators that the nation’s banks will be hit by a wave of sour domestic loans over the next 18 months.”
The Office of the Comptroller of the Currency reported: “Projecting risk over the next 12 months, credit risk is expected to further increase in all commercial portfolios. Banks are leaving themselves with fewer options to control the risks associated with commercial lending should the economy falter. “
Next step: Will the economy falter? According to reporting in Friday’s Christian Science Monitor, to cite just one of many such warning articles: “Concern is growing in the top echelons of Wall Street and Washington that cheap exports from overseas may drive down the American economy. The R word — recession — is now being heard more often. “
So what we have here is (1) increasing likelihood of recession dead ahead, (2) banks already looking at serious trouble because of stupid lending policies, and (3) a bill that effectively further deregulates the banks and hurts consumers, making it even more likely that banks will get themselves into serious trouble. And we’re telling other countries how to fix their banking systems?
Veto, veto, veto.”
Clinton didn’t veto.
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John McCain, the aviator-president
The Atlanta Journal-Constitution
I grew up on and around military bases, and one of the things you learn in that environment is that fighter pilots are a different, more volatile breed.
A certain type of person is drawn to that line of work — aggressive, quick to act and often quick to anger — and those traits are heightened by intensive training and the demands of the job. Fighter jocks don’t have the luxury of time to think things through. At Mach speed, they have to react by instinct to what’s going on around them, and the guy who responds more quickly than his opponent — the guy who gets inside the other guy’s decision loop, as the expression goes — is the guy who survives.
You see those traits still in John McCain, which helps explain why he seems different from other politicians. It also helps explain why the answer he gives you today can be very different from the answer you got a year ago. He responds to issues from gut instinct, not from some consistent philosophical approach or time spent thinking things through.
In that sense, McCain is somewhat like George W. Bush, although with McCain it is more authentic. Having grown up around the real thing, I always thought Bush came off as a wannabe, as a poser, and never more so than on the flight deck of the USS Abraham Lincoln in that “Mission Accomplished” fiasco. For McCain that comes naturally.
However, one of the questions before the voters this year is whether the traits and instincts that make a good aviator translate well into the presidency. Thad Cochran, a Republican from Mississippi who has served with McCain in the Senate for more than 20 years, has expressed serious doubts.
“The thought of his being president sends a cold chill down my spine,” Cochran told a reporter in January. “He is erratic. He is hotheaded. He loses his temper and he worries me.”
Washington Post columnist George Will expresses similar reservations in today’s column, headlined “McCain loses his head.” Will criticizes McCain for his quick, seemingly off-the-cuff demand that SEC Chairman Chris Cox be fired in response to the Wall Street meltdown, seeing it as emblematic of McCain’s larger approach.
Will writes:
“For McCain, politics is always operatic, pitting people who agree with him against those who are ‘corrupt’ or ‘betray the public’s trust,’ two categories that seem to be exhaustive — there are no other people.”
And Will’s conclusion?
“It is arguable that, because of his inexperience, Obama is not ready for the presidency. It is arguable that McCain, because of his boiling moralism and bottomless reservoir of certitudes, is not suited to the presidency. Unreadiness can be corrected, although perhaps at great cost, by experience. Can a dismaying temperament be fixed?”
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