Hold on to your Teabags

Teabag protests are breaking out all over the country as Obama's support dips. And everything else that actually happened today.

First, let's look at news that slipped under the radar with the AIG debacle:

Secretary Gates has signaled an end to Stop-loss policy in the Military - this means that the military is actually going to start upholding its contract with military personnel regarding the length of their duty and will pay those it must hold an additional stipend for extended duty.

The GIVE act passes - Almost perfectly along partisan lines, but this legislation has moved out of the House to reauthorize and reform national service laws.

The RNC has seen a dip in Fundraising - But not in a really significant way suggesting that Michael Steele has had no real effect, or rather no overwhelming effect on RNC fundraising.

Attorney General Eric Holder makes a couple big announcements - including a shift in position on marijuana prosecution and a consideration of lessening regulation of anti-trust laws for newspapers.

The Pope says no to condoms while en route to Africa

Gay Rights Ban Signed by U.S. - So while we are debating the legality of it here in the United States, we are proud to say it's not okay to discriminate gays if you're not the U.S.

But most of these stories were overshadowed by the stories surrounding AIG and CEO Liddy's testimony regarding the bonuses that have now been paid out. Of course there are great stories that are riding along with the AIG mess including the new chic teabagging that is happening around the country which will culminate on April 15th. The Nationwide Tax Day Tea Party organized by New American Tea Party promises to be a very interesting event as we have already seen instances of people teabagging their local water sources in protest. These teabaggers are getting quite the media coverage for their antics. Bob Cesca, has published a fantastic little explanation of why that is a little funny.

It is always interesting to me when groups of people get together to throw little protests like throwing tea into the river because they don't agree with the administration. Just a quick question: Do you think throwing tea into a body of water is going to get your Representative or Senator to change their minds? As though they are sitting in their office on Capitol Hill going, "My goodness, my constituents sure have dumped a lot of tea into Lake __. I better ask Liddy questions harder before they get really angry."

This situation with AIG and Bank of America and all of the other banks is a real tragedy and those on the Hill and in the White House are working really hard to fix the problem. You dumping tea into the Potomac is not going to fix it. Neither is mailing it to the White House. And your protests are going to lead to panic, which as I explained yesterday, is exactly what we DO NOT NEED in this crisis. So let the boys and girls in D.C. do their work to try to solve this issue and stop protesting. You're not helping the matter any.

Obama came out with a very measured response to this ridiculousness on the Hill and ya'll should take a hint from him. It's time to take a little responsibility and get through this, not point fingers and whine.

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Today's Quote
"Though dissenters seem to question everything in sight, they are actually bundles of dusty answers and never conceived a new question."
- Eric Hoffer, Reflections on the Human Condition (1973)

AIG: Ain't It Grand

Financial Crises lead to Financial Arms Race. But who will have the bigger guns?

AIG is the topic of today with many stories popping up from the news to the blogs for the overwhelming response from pundits and politicians regarding salary bonuses to executives of the company - bonuses that were promised last year, before the company ended up being owned by the U.S. Government. Freshman Representative Peters of Michigan has proposed legislation that would effectively tax those bonuses at 95%, with the remaining 5% to be taxed by state and local government nixing those bonuses in their entirety. Which has caused other financial institutions to consider pay loopholes that will help their executives dodge dealing with this abusive taxation of bonuses.

At the same time, a document is floating around Washington, and now on the web, that ties the potential risks of an AIG collapse to the global financial system (wonderfully recapped by the NYT). In this document, AIG lays out a doomsday scenario for its collapse that could nearly be set off by a sneeze in Asia, and end in the collapse of many Nations' Financial Markets. This is more-or-less simplified by two different scenarios began by the same lack of confidence.
1. Investor Confidence drops - In this case, a government cashes in on AIG's holdings and in the face of being accountable for the insurance written in that state, AIG is forced to cut itself into oblivion.
2. Policy-Holder Confidence drops - In this case, life-insurance policy holders cash in on their policies at a rate too high for AIG to handle at the present moment, leaving AIG in a position where it would have to liquidate subsidiaries to payout to policy holders.

I was in a bank in September where a woman was desperately trying to pull the money out of her bank account because she thought the bank was going to collapse.

Here's what we're talking about: A Financial Arms Race
To discuss Arms Races, you can use some great little tools that have been developed, namely, Game Theory's Prisoner's Dilemma. What we are seeing right now is an iterated non-zero sum game in which one player (in this case there are a very many players that act independently, though often in the same ways essentially being balanced with the U.S. Government / The People on one side and The Financial Institutions on the other) responds to the other in a reciprocated fashion in order to either punish or subvert the other player in the hopes of eventually pushing the loser into a stalemate or checkmate (the case where one player has no potential reciprocation for your opponents' last and final play).

Potential devastations of Arms Races, as demonstrated abundently during the Cold War, include Mutually Assured Destruction MAD which is the basis of the movie Wargames. The basis of MAD is that when a game is played out over and over again the players will continue to arm themselves to the teeth in anticipation of, and because of rumors that there will be, a threatening action by the opponent. So the government is threatening to restrict pay, the companies change pay structure. Eventually, however, one of two things will be reached:
1. the Equilibrium - This would be the point where delicately balanced relationship between the two sides leads to a mutual benefit
2. the Devastating Global Collapse - basically, all of the worst parts of the AIG Paper.

So let's put the two pieces together from above and think about what is coming in the next few weeks / months and consider that maybe it's time we reconsider our stances on things to reach that equilibrium instead of focusing on punishment and working towards a devastating collapse

The Opinion:
1. People: Do not try to cash out your life-insurance policy
2. Countries: Do not attempt to seize AIG's Assets in your country
3. AIG: Renegotiate and stop doing things that are going to piss off your stock holders
read here: the U.S. Government / The People
4. Realize that this game doesn't have a particular end in sight, so stop trying to make the final move and thus escalating the fight more quickly but instead realize that if we do lose, it's going to be a really big loss. So let's compromise a little bit so we can all get through this. Someone's gotta be the bigger man here and step down a little bit.

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Today's List
Here's a List of Games in Game Theory. When you think about the choices you make in your life, it's amazing how most of them can be simplified to one of these.

Party Plasticity

Steele Continues to get Pounded, Obama Meets with "New Democrats," Senate Dems Waver in Support of EFCA, and Arlen Specter Might Become a Democrat!

Well, it's for sure been an exciting week for politics. The GOP is not alone in its quest to redefine itself as President Obama finally identifies himself as a New Democrat. This paves the way for unifying a party that has such broad boundary lines, that lying somewhere in the middle will help bring together a party that's definition at this point in time is not the Republicans.

So what else is going on while Obama tries to win over centrist Dems in the House? Centrist Dems in the Senate, not actually paying attention to the legislation that they are debating (like Kent Conrad, Ben Nelson, and Mark Udall) are stalling on legislation like EFCA. EFCA, is good legislation that, while painful for Republicans and union-busting businesses, is good for the working class (see my previous posting on benefits of EFCA). It's a little frustrating when your party has started to ignore its loyalists in pursuit of the middle. It would help if we got that third party now!

But the greatest news of the day comes from a wrap-up put together by DailyKos suggesting that Arlen Specter may switch parties for EFCA. Now, clearly there are places where Democrats and Specter have disagreed in the past, but all-in-all, during the last half of his 28 years in the Senate, Specter has made some bold moves against his own party's stances and if you look at his key issues, he's more liberal than many of our sitting Democrats.

So, on behalf of the Democrats, I welcome you Senator. Please come join us in 2010 and we promise we'll keep you in your seat! You should see what happens when you have Union money behind your campaign! Especially in PA!

Meanwhile, GOP Chairman Michael Steele is getting slammed again. This time for wavering on Abortion (see: Here, here, here, here, here, here, here and here). And of course this posting that covers how the Republicans would oust him, and there are many more. Steele...I think it may be the end of the line for you.

I will be out of town for the next couple of days to return on Tuesday

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Today's Political Thought
Even if Specter moves to the left on EFCA, it will take 60 votes to end a Republican Filibuster...
You do the math on EFCA, here's 2007's votes
Even if we get Franken in MN, look at the 2 Colorado Senators, Conrad and Nelson above. EFCA isn't looking healthy!