Why Does Anyone Listen to S&P?

S&PFor decades, I’ve wondered just why we have credit ratings agencies. They clearly aren’t good at their jobs. There is no real reason that we should listen to them. There is a real chicken and egg aspect of it. We seem to invest confidence in them because we invest confidence in them. Of course, over the last decade it has been so much worse. First, they all gave AAA ratings to garbage mortgage backed securities. After the financial crisis showed them for the useless institutions they are, they all sat in front of Congress saying that it wasn’t their fault; they were just expressing an opinion. Fair enough. But then everyone went back to pretending that they actually knew something and weren’t just exercising their First Amendment right to talk out their asses.

The second big event was in August 2011, when S&P downgraded the US federal government’s credit rating. It was a funny thing, because at first it was based on some bad math by S&P. When the government pointed out the error, S&P decided to downgrade the credit rating anyway. It showed that the downgrade wasn’t about reality so much as S&P sending some kind of a message to the world. But here’s the funny thing about that downgrade: it didn’t seem to change the cost of borrowing for the US — at all. It is as though bond buyers — who have actual money on the line — knew that S&P was full of shit.

Well, as you may have heard, last week, S&P downgraded France. Paul Krugman wrote an excellent article about this on Friday. He argues quite convincingly that the issue here is not economics at all, but rather politics. Looking at France’s economy, all he sees is that it is doing rather well — better than countries that have a AAA credit rating with S&P. In fact, France has also brought down its deficit. The problem, for the standpoint of S&P and others, is that France didn’t do it the right way:

Two months ago Olli Rehn, Europe’s commissioner for economic and monetary affairs — and one of the prime movers behind harsh austerity policies — dismissed France’s seemingly exemplary fiscal policy. Why? Because it was based on tax increases rather than spending cuts — and tax hikes, he declared, would “destroy growth and handicap the creation of jobs.”

In other words, never mind what I said about fiscal discipline, you’re supposed to be dismantling the safety net.

He even quotes the S&P justification and, although it is written in finance jargon, it says the same thing. Not that it matters. Again bondholders don’t seem to care. The French government can borrow at pretty much the same rate as they could before.

But I have a broader question. All the credit ratings agencies seems to be useless. S&P in particular seems to have some kind of conservative ax to grind in addition to being useless. Actual buyers of bonds indicate that they know the credit ratings agencies are useless. So why do we still grant them any respect? Why do we allow banks to use them to justify their actions? And most of all, and to the point, why is a ratings change from S&P given any more credence than an RNC announcement?

Frankly Curious Four Year Anniversary

Frankly CuriousToday is the four year anniversary of Frankly Curious. On this day those many years ago, I wrote, Everything Interesting for Everyone Interesting. The next day I wrote an article about kitchen knives. And then I waited another month before I posted anything else. I was exhausted! Then there were a couple of months of binge posting. And then the blog came almost to a standstill. Then I discovered politics. Through the 2010 election, I did a news roundup every day. And then I stopped. I was exhausted! But it did up my productivity to 10-15 articles per month.

Things went on like that. I continued to get more comfortable with the format. Also, I stopped explicitly marking my political rants as such. I had always felt that writing about politics was slumming. This strikes me as strange, given that everything I was doing was slumming. Looking back, I’m shocked that I was writing so little. Just what was I doing with my time? Well, actually, I know: I was reading books. But even still, it seems strange to me now that I didn’t find it necessary to write about the books I was reading. Now I can hardly move to a different room without writing about it.

Something strange happened on the morning of 8 July 2012. I was reading Crooks & Liars as I did every morning at that time. And then in the morning blog roundup was, “Frankly Curious evaluates the very serious Ezra Klein.” I was shocked. No one had ever linked to me before. I had never commented on the site. I still have no idea why they noticed me. But it did encourage me along the path of political writing. So if you don’t like my political focus, you can blame it on Crooks & Liars.

What I find amazing about the whole process of running this blog for the past four years is how the work gets better over time. In the early days, I fretted over every article. They took lots of thought and lots of time. And when I go back and read them, they are weak. And even more, they are thin. An early article that I quite liked at the time was, The Sound of One Hand Clapping. But there’s almost nothing to it. It strikes me as a bad freshman essay. The tone is wrong, for one thing. But more important: it touches on issues without getting into them. It deserves 10,000 words, not 500. But clearly, I didn’t see that at the time.

Now I dash off stuff that is far better than things I worked very hard on even a year ago. And I hope I’m able to say that next year and four years from now. Because as much as my work is better now that it has been, I still think that much of it is dreck. I often finesse articles into a presentable state that ought to be either abandoned or reworked. So I look forward to reading this article sometime and thinking, “Yikes!”

I have a feeling that I’ve taken this blog as far as I can. At this point, I really need to publish a book that will give me a wider audience and credibility beyond being yet another blogging ranter. And I am working on a book. It’s political, of course. And it brings together a lot of my thinking from writing this blog over the years. It is also making me do work that I do not feel comfortably doing—like actual political science. But it could be good. I’m just not sure my style, which could be charming over the course of 500 words, is all that readable over an entire book.

Regardless, thanks to all of your who have been around these last four years and who have put up with all this. I assume you all must have a good sense of humor…

Why Are Republicans the Wrecking Crew?

The Wrecking CrewAfter reading a lot of nonfiction books — especially on politics — I’m not clear what I’m supposed to have learned. I’ll often go back through the book to figure out the theme. Part of this is just that I’m a bit scattered, and I’m very good at putting new data into an existing (or if the book is really good) alerted narrative. But it’s also the case that most books aren’t that well written. People do not make clear and direct arguments. And they often write 300 pages when 100 would have done the trick.

One writer I never have this problem with if Thomas Frank. Whereas other writers may see themselves as constructing an intricate web, Frank is a man with a hammer who is going to bang on the same issue page after page. Now, that would be tiring coming from a dull writer, but Frank is constantly smart and funny. And the fact that he tends to see the world the way I do probably doesn’t hurt.

I just read his 2008 book, The Wrecking Crew. He starts the book with the observation that Republicans manage the nation really badly whenever they’re in power. And his thesis is that they do this on purpose so that when the Democrats are in power, they won’t have the time or resources to enact any liberal policies. What’s more, the Democrats will be too focus on cleaning up the Republicans’ mess to do anything else.

It’s a compelling thesis. But I don’t really buy it. It sounds too much like what Republicans tell themselves about their policy failures. I think the situation is far more simple: Republicans are lousy at the jobs we elect them to do. And I believe the reason this is so is the same reason that our federal politics are so much more conservative than the people would want: our two-party constitutional democracy.

One person I greatly respect thinks this is rubbish: Jonathan Bernstein. He claims that the problem is simply that the Republicans have become a radical party. I think we can all agree on that. But the question is why. And I believe the answer is because our system does not force accountability. Neither party ever gets to run the government they way they really want to. During Obama’s first two years, even with overwhelming majorities, the bills that got passed were watered down almost to the point of uselessness.

The reason I think the Republicans have become radicalized and the Democrats have not is because the Republicans have a built in advantage in rural areas and the south. This has pushed the party more and more to the right. But since their policy choices have never been given a clear test, they can maintain plausible deniability. And even more important, the Democratic policies have never been given a clear test to show that they work. So we muddle on and there is no reason for the Republicans to moderate.

Along with the extremism in the Republicans Party has come incompetence. For one thing, a true conservative would find a very nice home in the Democratic Party. So the more reasonable Republicans just become Democrats. Even more important, a Republican who just wants his taxes kept low but doesn’t go along with the other stuff probably won’t even run, but would lose in a primary anyway. So you end up with ideologues who neither care about actual governance nor have the skills for it anyway.

There is one reason in particular that I think that the Republicans screw up government because they are incompetent rather than as an actual policy: Iraq. The Bush administration didn’t care at all that the people they were sending to rebuild the country were hopeless. In 2006, Rajiv Chandrasekaran wrote, Ties to GOP Trumped Know-How Among Staff Sent to Rebuild Iraq. For example, “A 24-year-old who had never worked in finance — but had applied for a White House job — was sent to reopen Baghdad’s stock exchange.”

Admittedly, this incompetence is at least partially the result of not caring. But even that pushes against the idea that the Republicans are evil geniuses who are wrecking the country to harm the Democratic Party. There is a powerful lesson here, though. The end result is the same. And we have seen it during Obama’s presidency. He is the first president since Johnson to pass even the mildest of liberal legislation. And this has been met with cries of, “Socialism!” But it is a reminder that the whole process of cleaning up after the Republicans is a bad strategy that only makes the Republicans stronger. Half of Obama’s time in office was spent obsessing about the federal deficit. No time in Reagan and Bush Jr’s terms was spent worrying about the debt. We need to be more like that.

Food stamps pay for themselves!

Lara Logan’s Benghazi Ax

Lara LoganI’ve written a bit about Lara Logan’s dreadful 60 Minutes segment on Benghazi and how it has been shown to be totally wrong. But Digby puts it all in historical context, Lara Logan in her own words 10/2/2012. It seems that just one month after the attack, Logan was ranting about it. Her response to the attack brings back nightmares of 2002. In reference to the government sending FBI agents to investigate, she said, “I hope to God that you are sending in your best clandestine warriors to exact revenge and let the world know that the United States will not be attacked on its own soil, its ambassadors will not be murdered and the United States will not stand by and do nothing about it.” [My emphasis. -FM]

It would seem that Logan is not exactly objective, especially in reference to this issue. In fact, she sounds very much like John McCain who seems to think every real or imagined attack on the United States should be responded to by attacking Iran. “Bomb, Bomb, Bomb, Bomb, Bomb Iran.” There is nothing wrong with having opinions. Everyone has opinions, and I think we get worse reporting with this pretense of objectivity. But the situation is especially bad here. Logan looks like she would be a perfect fit at Fox News. And on this story, it was a perfect storm of bias and laziness. Digby explains:

Needless to say, the fact that she fell for such a clearly ridiculous hoax was due to her biases. She shows in that speech that she had already made up her mind about what happened. And 60 Minutes should have been professionally skeptical of her story because of that. Logan’s agenda blinded her to the fact that she was being played.

This was well on display Friday on CBS This Morning when Logan officially apologized for the report. One of the hosts, Norah O’Donnell, asks, “How did you vet [Dylan Davies, the basis of the whole story]?” It’s actually a really good question coming from a morning fluff show. Even still, Logan must have known it was coming. But her response was terrible. “We verified and confirmed that he was who he said he was—that he was working for the State Department at the time—that he was in Benghazi at the special mission compound the night of the attack… He gave us access to communications he had with the US government officials… We used US government reports and congressional testimony to verify many of the details of his story. And everything checked out!”

This is all just a defensive way of saying that she had a preexisting narrative that Davies fit, so she believed him. But notice the great Dick Cheney trick that is going on here. This was something Cheney did in the lead up to the Iraq War. His staff would leak information to the New York Times, which would print it. Then Cheney would do an interview where he talked about the very same “intelligence.” And to bolster his case, he would say, “It’s not just me; the liberal New York Times just reported the same thing.” In this case, Logan had a narrative based on the Republican show hearings going on at the House of Representatives. Everyone knows about those, most especially the guy who is writing a book that is trying to leverage those hearings for a quick buck. So we have an echo chamber that Logan thought was independent confirmation. Or at least that’s what she said happened.

The truth is that I don’t believe Lara Logan was especially trying to push her conservative narrative. She was just looking for a great old-style 60 Minutes scoop. The truth is that the show is mostly useless anymore. Their other big scoop recently was how disability fraud was killing us. That too was just another Republican talking point whipped up into a story of outrage. Since the show doesn’t seem to care much about journalism anymore, they might as well go for eye candy. And Logan is as close as they get to it.

Update (10 November 2013 3:38 pm)

Jay Rosen wrote an excellent timeline of the CBS response, Will CBS News Apologize for the Reckless Denials Before its Benghazi Story Collapsed? He brings up one especially good point:

CBS was not just wrong, it was wrong about an explosive and highly contentious story in which extra care should have been taken because of the risk that a faulty report will be instantly politicized.

Even worse, for about a week after the segment aired, Lara Logan claimed that the reason people were raising questions was because of the politicized atmosphere. Of course, her report was the reason that the Benghazi story came roaring back.

Update (10 November 2013 7:57 pm)

At the end of 60 Minutes, Lara Logan came on for roughly two minutes with a “correction.” All she mentioned was the questions about Davies. Nothing was said about the conflict of interest between the book publisher and CBS. And nothing was said about CBS’s stonewalling for almost two weeks as more and more questions were raised. She also made it sound like just one person in the report was misleading. Nothing was said about the fact that he was the whole thing or that the other two interviewed for the episode were well know hacks who have been everywhere making the same claims. As little as I think of 60 Minutes, I’m still shocked at just how poorly they handled this “correction.”

Ennio Morricone and His Musical Whips

Ennio MorriconeOn this day in 1483, the religious reformer Martin Luther was born. I actually see him as a villain. Here I’m not just talking about his antisemitic views, which in fairness, were typical of the time. The whole protestant reform movement has done far more harm than good for the world. The Catholic Church of that time was hopelessly corrupt. But the fundamental idea of Luther that the religion was the Bible is an extremely dangerous thing. It naturally leads to fundamentalism. If there is no authority but the Bible, what are people to believe but that what it literally says (a fool’s errand regardless) is what it means. And what it leads to is things like the Jehovah’s Witnesses: a religion that started with a bunch of amateurs trying to figure out the Bible only to have their work ossify into a religion that is far less flexible than the Catholic Church. It also leads to a certain level of terror among Christians who feel they must be the ones to defend their faith—a task they are hopelessly unqualified for. Nonetheless, Martin Luther clearly had good intentions, but we all know where that paved road leads.

Mikhail Kalashnikov is 94 today. He is the inventor of the AK-47, probably the most important gun of the 20th century. It’s a dubious distinction given that almost unimaginable harm that has been done with the gun. On the other hand, if it hadn’t been the AK-47, it would have been some other gun. After all, guns don’t kill people; bullets kill people. In this case, the 7.62×39mm.

Other birthday: the novelist Winston Churchill (1871); actor Claude Rains (1889); actor Richard Burton (1925); songwriter Marilyn Bergman (84); actor Roy Scheider (1932); songwriter Tim Rice (69); film director Roland Emmerich (58); and comedian Tracy Morgan (45).

The day, however, belongs to the great composer Ennio Morricone who is 85 today. He is best known for his film scores of the Sergio Leone spaghetti westerns. Of course, like most film composers, wrote the music for many films. Although it includes short films, the Internet Movie Database lists 517 films he has worked on. Here is the title sequence of A Fistfull of Dollars, which is just great:

Happy birthday Ennio Morricone!