Tuesday’s Forum

FILED UNDER: Open Forum
Steven L. Taylor
About Steven L. Taylor
Steven L. Taylor is Professor of Political Science and Dean of the College of Arts and Sciences at Troy University. His main areas of expertise include parties, elections, and the institutional design of democracies. His most recent book is the co-authored A Different Democracy: American Government in a 31-Country Perspective. He earned his Ph.D. from the University of Texas and his BA from the University of California, Irvine. He has been blogging since 2003 (originally at the now defunct Poliblog). Follow Steven on Twitter

Comments

  1. Teve says:

    @gregpmiller

    EXCLUSIVE: The CIA secretly owned the world’s leading supplier of encryption systems to other countries.

    Crypto AG sold rigged machines to more than 100 nations, including Iran, India, Egypt, Italy…

    “It was the intelligence coup of the century.”

    WaPo story

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  2. OzarkHillbilly says:

    @Teve: A beacon of democracy….

  3. Kathy says:

    Trump can best be summed up paraphrasing a quote missattributed to Talleyrand: “He has learned nothing and forgotten nothing.”

  4. Michael Reynolds says:

    @Teve:
    The intelligence coup of the century was Putin electing Trump. But this ain’t bad as intelligence coups go.

    Of course, almost by definition, we may never know what greater intel coup was pulled off.

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  5. Kit says:

    @Teve: I’ve long harbored a suspicion that VPN providers have a similar ownership.

  6. Daryl and his brother Darryl says:

    Last night an audio tape of Bloomberg supporting Stop-and-Frisk, in pretty racist terms, surfaced.
    As someone who was starting to seriously consider Bloomberg, this is something I need to work thru in my mind.
    But in the meantime Trump comes out blasting Bloomberg for being racist.
    The irony is that TRUMP SUPPORTS THIS POLICY to this day.
    You cannot make this shit up.

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  7. Kathy says:

    Michael Lewis’ book on the housing crisis, The Big Short, features credit default swaps as the instrument to “bet” against the sub prime mortgage securities.

    The way Lewis explains them, credit default swaps are insurance on such securities. You buy one (unclear on what this means), and pay a tiny percentage of the value of the security as a premium. So for a $100 million security, say, you may pay 0.75%, or $750,000 in premiums. But if the security tanks (loses all its value) when enough of the borrowers bundled in it default, you get paid the value insured.

    Ok. This is sensible. I recall once when I was offered a car loan, it included a small monthly premium for “life insurance.” This was insurance taken by the bank, to the effect that if I died before paying off the loan, the insurer would cover it.

    But why would a $100 million security issued by, say Goldman Sachs be insured by a credit default swap issued by American Insurance Group, and bought by Michael Burry’s Scion Capital?

    Well, in the book All The Devils Are Here by Bethany McLean and Joe Nocera, we get an origin story for them.

    The first, so the books claims, was issued by an investment bank, I forget which one, when they loaned Exxon $5 billion at the time of the Exxon Valdez debacle. See, the bank had to hold capital in reserve equal to a percentage of the loans made according to their risk. Such capital couldn’t be loaned or invested, so it was unproductive.

    The bank in question thought up credit default swaps. they offered it and some institution took it. A loan to Exxon wasn’t risky at all, so if the bank wanted to pay a premium to the institution, it was like getting free money.

    Ah, but the bank could claim there was no risk now at all. Wither Exxon would pay their loan, or the institution receiving the credit default swap premium would. that frees up capital from the reserve.

    It didn’t happen at once. Regulators had to be convinced. So it took some years, presumably Exxon paid off in the meantime. But it worked.

    The books doesn’t go on to say, at least not yet, why credit default swaps could then involve parties without skin in the game. Burry’s Scion Capital pretty much paid insurance premiums on debt they did not hold, kind of like me paying the insurance for your car, and being able to collect if you total it.

    I assume the risk was take out if anyone paid the premiums. I might be wrong. This would explain why third parties could take them on. the issuer of the mortgage backed security had his capital reserve offset without having to pay the credit default swap premiums. But when the bubble burst, those holding the debt had no insurance.

    It’s really sad when you realize the world is really this screwed up.

  8. OzarkHillbilly says:

    @Kathy:

    The books doesn’t go on to say, at least not yet, why credit default swaps could then involve parties without skin in the game.

    I have a vague recollection of a similar arrangement in a different market. Don’t hold your breath. I might have to reread The Big Short to tease that memory back up and I am way behind on my reading already. But if it does come to me I’ll let you know.

  9. OzarkHillbilly says:

    @Kathy:

    Ok. This is sensible. I recall once when I was offered a car loan, it included a small monthly premium for “life insurance.” This was insurance taken by the bank, to the effect that if I died before paying off the loan, the insurer would cover it.

    Ball clubs do this too, taking out insurance on their athletes. If they are unable to finish the season due to injury, the insurance covers their contract.

    Not that that is not what I was speaking of above.

  10. Kathy says:

    @OzarkHillbilly:

    One problem with reading audiobooks while driving, or cooking, is I will lose focus on a tricky crossing now and then. usually I can rewind 30 seconds and catch up, but not always.

    Also, with unfamiliar subjects it’s easy not to remember some technicality later on.

    take the two above and the answer may be lost there 🙂

    I do recall many credit default swaps Burry got came from AIG (American Insurance Group). this makes sense: an insurance company insuring a security, but getting a third party, Scion Capital, to pay the premiums on it. The point isn’t the insurance, but easing the capital reserve requirements.

  11. Mike in Arlington says:

    @Kathy: I read the big short too, and I thought it was a great read. I can’t remember if he explained that one of the problems with CDSs is that while they *act* like insurance, they were designed to not fall under insurance regulations. Those regulations have requirements for reserve amounts and diversification. Because of this, AIG didn’t keep adequate reserves to cover the payments when those CDSs came due. The only way they could pay those debts was to dip into the reserves for their actual insurance, screwing people who have insurance (or are reinsured) through AIG. This is why the banks were able to pay back their TARP loans early, but not AIG. AIG underwrote the CDSs that the big banks had to cover their losses, and if AIG went, the banks would go too.

    But I thought his description of synthetic RBMSs was great and really explained why the entire house of cards collapsed when they did (something the movie didn’t do nearly as well).

  12. Daryl and his brother Darryl says:

    DOJ makes a sentence recommendation in the Roger Stone Case; 7-9 years for perjury, obstruction, and witness tampering.
    Trump Tweets that it is too harsh, calling it a mis-carriage of Justice.
    DOJ changes it mind, and will be revising it’s recommendation downward.
    This is how the Justice System operates, now, in Trumpistan.

  13. Jen says:

    @Daryl and his brother Darryl: Just came here to comment on the exact same thing (link to WaPo story for anyone interested).

    This is so appalling, and yet–just another day ending in Y with this administration.

  14. Scott says:

    Is nothing sacred to this profane, godless, and corrupt president?

    Native burial sites blown up for US border wall

    Answer: No

  15. Daryl and his brother Darryl says:

    @Scott:
    If it’s not a white burial site it means nothing to Trump.
    Remember…he tried to prosecute people for leaving water, for other people (presumably brown skinned people), in the desert.

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  16. MarkedMan says:

    There are basically two ways to obtain elected office, or really, to obtain power in any system of governance where the consent of at least some of the governed matters. You can lay out plans and convince people you will be effective in following those plans and the results will be beneficial to them. Or you can identify enemies, real or imagined, and tell them all their problems are due to these enemies, and promise to smite them.

    The modern Republican Party is 100% in on the second method.

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  17. Daryl and his brother Darryl says:

    @Daryl and his brother Darryl:
    @Jen:
    But wait…it gets even better.
    Baghdad Barr gave a speech…just this morning…slamming local prosecutors for not throwing the book at defendants. He said lenient sentences…

    “actually lead to more criminality”.

    Again…you cannot make this shit up.

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  18. gVOR08 says:

    @Daryl and his brother Darryl: And a Barr buddy just replaced the prosecutor in the Stone case. And filed for a delay on a Sunday. Coincidence, no doubt.

  19. CSK says:

    According to Fox, Biden isn’t sticking around NH to wait for the results; he’s heading to So. Carolina tonight.

  20. Moosebreath says:

    @Daryl and his brother Darryl: @Jen:

    As some wag commented on the DOJ reversing its stance on Roger Stone’s sentence, “A banana republic, if you can keep it.”

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  21. Just Another Ex-Republican says:

    @Michael Reynolds: Different centuries. The Crypto story is (primarily) in the 20th 🙂

  22. DrDaveT says:

    @gVOR08:

    And a Barr buddy just replaced the prosecutor in the Stone case. And filed for a delay on a Sunday. Coincidence, no doubt.

    THIS is what the Democratic candidates should be hammering on the most, every day. If you can’t get swing voters and lukewarm D-leaners excited about co-opting the justice system for partisan/personal gain*, you’re not trying.

    *You know, the thing they kept falsely accusing Obama of…?

  23. Jen says:

    @CSK:

    According to Fox, Biden isn’t sticking around NH to wait for the results; he’s heading to So. Carolina tonight.

    Yes, this headline has been on the front page/site carousel of our main TV station all day with the headline “Joe Biden to travel to South Carolina before NH primary results are in.” Not even trying to hide the fact he’s written off the state.

    On the Crypto topic–I thought that story was fascinating.

  24. CSK says:

    With 1% of the precincts reporting, it’s Klobuchar, Sanders, Warren, Yang, Biden, and Buttigieg.

  25. Mike in Arlington says:

    Apparently the AUSA prosecuting Stone resigned. He filed a motion for withdrawal with a footnote noting his resignation, effective immediately.
    https://talkingpointsmemo.com/edblog/breaking-113

  26. Daryl and his brother Darryl says:

    @Daryl and his brother Darryl:
    @gVOR08:
    @Jen:
    Breaking…Apparently the Prosecutor, Zelinsky, submitted a Motion to Withdraw from the Stone Case and then resigned from the DOJ.

  27. Daryl and his brother Darryl says:

    @Mike in Arlington:
    beat me to it…

  28. Kathy says:

    @Mike in Arlington:
    @Daryl and his brother Darryl:

    The government could use more people of his caliber.

  29. CSK says:

    @Daryl and his brother Darryl:
    Update: He resigned from the D.C. post, not the DOJ, according to Josh Marshall.

  30. Daryl and his brother Darryl says:

    Another AUSA on the Stone Case has resigned.
    Jonathon Kravis

    “…has resigned as an AUSA and therefore no longer represents the Government in this case”.

  31. EddieInCA says:

    File this under… “Duh!”

    https://www.businessinsider.com/andrew-yang-staffers-furious-over-layoffs-chaotic-campaign-culture-2020-2?op=1

    Andrew Yang built his long-shot candidacy into a grassroots movement by advocating for a humane capitalism that leaves no worker behind, but some of his employees now say that behind the scenes that’s exactly what his campaign just did.

    Last week his campaign began layoffs after his disastrous showing at the Iowa caucuses, moves that the campaign characterized to Insider at the time as planned. Still, Yang’s staff said they were blindsided by the sudden staff cuts.

    Color me not surprised. And I suck as a human because I have absolutely no sympathy for these people.

  32. Daryl and his brother Darryl says:

    @Daryl and his brother Darryl:
    And a third AUSA has removed himself from the Stone Case…Adam Jed…although it does not appear that he has resigned.

  33. Jen says:

    Okay, all of these AUSA removing themselves from the case–am I correct in understanding that regardless of what the DOJ recommends, the judge can still hand down whatever sentence she feels is needed?

    Meaning, the DOJ’s decision isn’t binding on the sentencing judge, is it?

  34. MarkedMan says:

    @EddieInCA: So they work on a political campaign and their candidate is not gaining traction and so is downsizing and preparing for an exit? And the campaign workers call this being blindsided? Did they think the campaign would go on forever regardless of how he did?

  35. Kathy says:

    @Jen:

    Looks like Dennison got his Saturday night massacre on Tuesday.

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  36. Gustopher says:

    @Scott:

    Native burial sites blown up for US border wall

    Wasn’t this basically the setup to the movie Poltergeist?

    I suppose a haunted wall will be a more effective deterrent.

  37. Gustopher says:

    @Daryl and his brother Darryl: I miss Doug. I hope he’s ok.

  38. Kathy says:

    @MarkedMan:

    Well, yes. but what kind of benefits did they have while employed, what kind of severance package did they get, are any of their benefits like insurance paid for the year anyway, did Yang try to place them in other campaigns, etc.

  39. Moosebreath says:

    @Kathy:

    “Looks like Dennison got his Saturday night massacre on Tuesday.”

    He already had one on Friday as well. I guess Trump likes reruns.

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  40. EddieInCA says:

    @MarkedMan:

    @EddieInCA: So they work on a political campaign and their candidate is not gaining traction and so is downsizing and preparing for an exit? And the campaign workers call this being blindsided? Did they think the campaign would go on forever regardless of how he did?

    This is just further evidence of how Democrats are screwed. Reading that, and other articles, on the Yang campaign underscores how ridiculous some voters are viewing 2020. If you truly thought Andrew Yang could be elected president, then of course you believe you’re entitled to a whole bunch of free shit when his campaign implodes. Ugh. The sense of entitlement is… shockingly ironic.

  41. Mister Bluster says:

    PETA Says We Should Stop Using The Word ‘Pet’ Because It’s Derogatory To Animals
    “Referring to an animal as a ‘pet’ or as ‘it’ reduces a sentient being with a personality and emotions to an inanimate object—a possession to be used in any way the ‘owner’ wishes,” PETA President Ingrid Newkirk wrote in a statement to People magazine.

    I’ve had at least 15+ cats over the years and every one of them owned me. At one time or another I called all of them “Boss”.

  42. Daryl and his brother Darryl says:

    @Daryl and his brother Darryl:
    Another one removes himself from the case…Michael Marando.

  43. Teve says:

    Any Dem with their hair on fire right now needs some weed and/or pills.

  44. Daryl and his brother Darryl says:

    @Daryl and his brother Darryl:
    That makes four of four on the Stone Prosecution.
    I wonder if Susan Collins is concerned and/or disappointed?

  45. Daryl and his brother Darryl says:

    @Guarneri:

    This is why I mock commenters here.

    We mock what we are incapable of understanding.

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  46. Kathy says:

    @Moosebreath:

    What? You don’t think he’s running his own stupid reality show? 🙂

    BTW, positive development at the office has me soooooo de-stressed right now. 😀

  47. Jen says:

    @Teve: *insert why not both gif* here.

    @Daryl and his brother Darryl: She is Very Disappointed, I’m sure.

  48. Daryl and his brother Darryl says:

    @Guarneri:
    Hate crimes reached a 16 year high in 2018.
    This is a after a similar spike in 2017.
    You have latched onto one false report by someone who is clearly a nut-job.
    Good work, Columbo.

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  49. OzarkHillbilly says:

    @Guarneri:

    This is why I mock commenters here. You obviously do not understand it, but there is no free lunch in an orderly market. Ultimately, those underwriting the insured securities are liable. Just because this is complicated doesn’t mean sophisticated people don’t know what they are doing.

    And this is why we mock you: You actually think the sophisticated people involved in this clusterfuck knew what they were doing.

  50. CSK says:

    Sanders is walking away with it.

  51. Kathy says:

    @OzarkHillbilly:

    You know, I regard the trolls as the horoscope in the newspaper: a permanent fixture not worth spending a microsecond reading.

    Some people read the horoscopes for fun, though.

  52. CSK says:

    Andrew Yang is dropping out of the race.

  53. Mike in Arlington says:

    And I read that a fourth prosecutor quit the stone case. WaPo is now reporting that Kravis quit the DOJ entirely, but I don’t know if that’s accurate.
    https://www.washingtonpost.com/national-security/justice-dept-to-reduce-sentencing-recommendation-for-trump-associate-roger-stone-official-says-after-president-calls-it-unfair/2020/02/11/ad81fd36-4cf0-11ea-bf44-f5043eb3918a_story.html

    Ok, I was about to hit post comment, and I made the mistake of checking twitter and found this:
    https://www.nbcnews.com/politics/justice-department/barr-takes-control-legal-matters-interest-trump-including-stone-sentencing-n1135231

  54. Tyrell says:

    Bill Goldberg is taking on Bray Wyatt (The Fiend). This is a one match deal – Goldberg is not coming back. Bill better watch it. Fiend is rough. He signed a contract in using his blood the other week.

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  55. Tyrell says:

    Bill Goldberg is taking on Bray Wyatt (The Fiend). This is a one match deal – Goldberg is not coming back. Bill better watch it. Fiend is rough. He signed a contract using his blood the other week.

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  56. DrDaveT says:

    @Mike in Arlington: After all these years, the US finally has a Mouthpiece General in the cabinet.

  57. Gustopher says:

    @Guarneri:

    A valid criticism would have been that institutions engaged in this activity slough off the liabilities – their underwriting errors – on taxpayers. That’s the problem. Talk to your precious government about that.

    Did you just come out in favor of strong regulation for the derivatives market?

    Because it sounds like you did. That or you wanted the government to let the economy slide into a second Great Depression.

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  58. Gustopher says:

    @CSK: with 55% reporting, it’s Sanders 27%, Buttigieg 24% and Klobuchar 20%. I wouldn’t call that “walking away with it”.

    So far, it looks bad for Warren and Biden, both in single digits. But, with 45% out there, and having no idea what New Hampshire precincts should do what… perhaps things will be radically different soon.

    I’m not worried, because I’m fine with most of them.

  59. CSK says:

    @Gustopher: When I made the comment 2 hours ago Sanders was about eight points in the lead. Certainly it’s narrowed since then. But at the time, he was waaaay out in front.

  60. Mister Bluster says:

    @Zippy:..Donald Trump, your precious pervert, is the government.

  61. Just nutha ignint cracker says:

    @Tyrell: Is your real-life name “Mark” by any chance?