Dangerous, Dirty, and Unfun

# A miraculous solution to a problem you may not be aware that you had.

# I’ll try not to be a Matt Taibbi link whore, but this post is good at elucidating the twin problems of wealth-coddling status quo-ism and acquiescent, uncritical royal courtier journalism.

# Very rarely do you come across a video that speaks to a generation like this one does. Never have I come closer on more occasions to strangling one of my own kin with the cord of a Nintendo controller.

So I just got back from an author event at the Brookline Booksmith. Matt Taibbi was doing a signing for his new book, Griftopia: Bubble Machines, Vampire Squids, and the Long Con That Is Breaking America. A lot of mainstream progressive commentators will talk about how entertaining they find Taibbi to be, but there’ll also be some sort of qualifier about how hyperbolic and moralistic he is, how he fudges facts, how he contributes to a radical discourse. I won’t do that. If the dude is right about even half the stuff he writes about, we’re doomed.

It was a thoroughly depressing evening. (Taibbi even relayed the anecdote that when he was writing the book, his editor asked him to put together a “but here’s the good news,” which turned out to be so unconvincing as to be axed from the book altogether.) There are many reasons, but the overarching one is something he outlines in the book’s first chapter:

Our world isn’t about ideology anymore. It’s about complexity. We live in a complex bureaucratic state with complex laws and complex business practices, and the few organizations with the corporate will power to master these complexities will inevitably own the political power.

The financial crisis in particular, and the economy and power structures that enabled it in general, are just too damn complicated for the average person to comprehend. And that’s not me thinking the average person is a moron. It’s just huge, complicated, abstract, esoteric stuff. I don’t know if it’s fair to say that we can’t be blamed for ignoring it and allowing ourselves to be played by moneyed elites, but it’s certainly understandable that things like credit default swaps and collateralized debt obligations would go over most of our heads. How are we supposed to know what to do and how to act when even the people we elect to represent us don’t grasp the problem?

I obviously don’t have the answers. But I’m trying. There’s a short bit about securitization in a recent Rolling Stone piece that Taibbi wrote that I think is very helpful, and might help you intuitively think through some of the more insidious things at play in the world today. Some of you might be more familiar with the concept of securitization, but it’s at the heart of our recent crisis. Here’s the way it used to be:

In the old days, when you took out a mortgage, it was probably through a local bank or a credit union, and whoever gave you your loan held on to it for life. If you lost your job or got too sick to work and suddenly had trouble making your payments, you could call a human being and work things out. It was in the banker’s interest, as well as yours, to make a modified payment schedule. From his point of view, it was better that you pay something than nothing at all.

Once it became possible for thousands of individual mortgages to be packaged into AAA-rated securities, though, lenders began selling mortgages to banks, who pooled them together and sold them to institutional investors. Point being, the bond between lender and borrower was broken.

In many cases, banks like JP Morgan are merely the servicers of all these home loans, charged with collecting your money every month and paying every penny of it into the trust, which is the real owner of your mortgage. If you pay less than the whole amount, JP Morgan is now obligated to pay the trust the remainder out of its own pocket. When you fall behind, your bank falls behind, too. The only way it gets off the hook is if the house is foreclosed on and sold.

That’s what this foreclosure crisis is all about: fleeing the scene of the crime.

To make a long story short, the incentives are fucked. In the halcyon days of Mayberry, if you couldn’t pay your full monthly rate, it was in the bank’s best interest for you to pay whatever you could. Today, if you can’t pay your full monthly rate, it’s in the bank’s best interest to get you out and get someone in who can pay. If you clicked through and read the Rolling Stone piece, you’ll see that it’s become insanely easy for that to happen. Just imagine what kind of bad behavior that could encourage.

I’m working a sorta kinda large-ish project, but in the meantime, here’s a couple cool things that I think you guys would really enjoy!

# A great little essay on dumplings, social networks, and the paradox of cool.

# Here’s Matt Taibbi with a typically smart take on organized labor, using the NFL Players Union, of all things, as his example.

# If you think this isn’t my new favorite song, you obviously haven’t been reading this blog for very long. [Via]

# Some people will be standing in line at the Post Office on April 15. Odds are, I’ll be standing in line at Brookline Booksmith.

I don’t mean to be flip in that title. Health care reform IS a big effing deal. I haven’t written much about Congress’s effort to pass comprehensive health care reform because honestly, things are changing every day, and while I get worked up about every little development in real life, I don’t feel compelled to expose you, my precious and treasured readers, to that sort of madness.

But it’s definitely worth taking a step back and looking at the larger effort, how it’s progressed, and what the consequences are. This is where my ambivalence comes in. Because, on the one hand, it’s become painfully apparent to liberal supporters of reform that most of the store has been compromised away. Even though any reasonable objective observer will recognize that a Canadian-style single payer system would be the most effective way to achieve both universality AND cost control (notice I said “reasonable objective observer,” which disqualifies pretty much every Republican critic of reform), that idea wasn’t even put forward as a serious starting point for debate. Consequently, the so-called public option, the next-most-progressive idea for reform, got whittled down and exposed to ridiculous right wing obfuscation and misinformation, to the point that even the most feckless shadow of the public option became anathema for conservative and moderate Democrats. Here’s the inimitable and heroic Matt Taibbi discussing the latest compromise, a proposed expansion of Medicare to folks age 55 and over:

I get that some people think this is a good idea, and it’s hard to argue that any kind of expansion of Medicare is a bad thing, given that the program has been popular and successful throughout its history. But this move just smacks of the bass-ackwards Solomonesque bargaining that has marked this whole health care effort from the start. If expanding Medicare is good for people aged 55 and up, why isn’t it good for everybody? Why isn’t it a good idea to provide cheaper insurance for people in their preventive care years, so that they cost Medicare less as they do get older?

Answer: because it’s a political non-starter, because hospitals and doctors won’t tolerate having to take Medicare rates from everyone, nor will the pharma companies or the insurance companies tolerate having to compete with Medicare for their most profitable customers.

So what they’ll do instead is expand Medicare for people aged 55 and up in exchange for the preservation of subsidies everywhere else in the system, as well as an individual mandate that increases the revenue flow for private insurers by forcing millions of new (and relatively young and healthy) customers their way. This isn’t a health care strategy, it’s a big baby that’s been hacked up into parts and fed in descending size order to the administration’s weightiest political lobbies. I almost can’t wait to see what the next “compromise” is.

It’s hard to argue here. If you start from a position where you have to appease doctors, insurers, the pharmaceutical industry, and the conservative members of your own party, it’s very difficult to construct meaningful, coherent reform.

But then you’ve got the equally inimitable Ezra Klein taking a different sort of long view, and discussing liberal ends versus liberal means:

The first year of the Obama presidency has been a long tutorial on the difference between liberal ends and liberal means. If I told you America has a president determined to pass large amounts of Keynesian stimulus spending (that’s particularly concentrated in impoverished areas), a near-universal health-care plan, and a bill addressing climate change, you’d say liberals had recaptured the White House. Ambitious liberals, even.

But though Obama’s program is quite liberal, he doesn’t seem to care much how it’s achieved. A public option would be nice, but if it’s not there, then that’s fine, too. Full auction of permits is a good idea, but if most get given away to corporations, then that’s how it goes. Infrastructure spending is good, but if tax cuts are the price of passage, then tax cuts there shall be. The best description of the administration’s ideology probably came from Rahm Emanuel when he said, “The only nonnegotiable principle here is success.”

He’s sort of right. The stimulus may not have been everything liberals hoped for, but it passed. Health care reform will pass, and while it may not include a state-run system, it will result in meaningful regulation of the insurance industry and coverage for millions more Americans. I’m a zealot, so I want the most liberal possible program with a trail of broken Republicans behind it. But at the end of the day, Obama is enacting a pretty liberal agenda. This is not to say that we should just sit back and be satisfied; Obama is a pragmatist who needs to be prodded from the left at every turn. But things might not be as bad as we think.

In the meantime, it’s important to look for silver linings wherever we can. In that spirit, here’s another writer with upper management written all over him, Atul Gawande, writing about how the Senate draft of health care reform, with its mish-mash of pilot programs and wacky ideas, might actually succeed in controlling the cost of health care. It’s not much, but it’s a tiny ray of hope. We’ll see what happens.