A. I. G. bailout

The Federal bailout of AIG, the insurance giant, was not just for AIG, but for all of the banks that held their derivative securities.

"E-mail messages made public in recent days show that A.I.G. sought the New York Fed’s advice on the contents of its filings about the bailout to the Securities and Exchange Commission. The New York Fed crossed out certain passages, including references to the fact that A.I.G.’s trading partners would get 100 cents on the dollar on their soured derivatives trades." NYT 27 Jan 2010.

Goldman Sachs came out smelling like a rose and could pay back its direct grant from the government. Given the fact that they were not required to share any of the AIG losses, it is hard to believe that they were not favorably treated.

Electric Power Grid & Wind

"Adding wind gets progressively more difficult as the amount used rises because of wind’s intermittent nature and the need for back-up power generation, according to the study, which was prepared for the National Renewable Energy Laboratory. Without a better (electric) grid, the system would often waste large amounts of wind power because at many times during the year, the power grid would not be able to handle the traffic." New York Times, 20 january 2010
The country needs a modern electric power grid. The present one was built largely a piece at a time by different companies. It reminds me of the telegraph in its early days. Lots of pieces that connect two points here and there, but no cross country lines and connections, We could use some national planning and both private and public investment within it. Now, with high unemployment would be a good time for major investment in our infrastructure.
The country could also use a national system of high-speed trains, we are pathetic compared to other western countries.

for related view see, www.modernizethegrid.com

Haiti

If the U.S. would spend half as much on helping Haiti and other poor countries as we spend fighting in Iraq and Afghanistan, we would be betterloved instead of hated. Benevolence would remove some of the motivation for terrorism.

Bank tales

The following appeared today in the Washington Post:
JPMorgan Chase received $25 billion in bailout money in the fall of 2008 at the peak of the credit crisis. It paid back that money in the middle of 2009.
Goldman Sachs didi much the same. Don't you wonder how they earned so much in such a short time. Are they making the same risky investments that got them into trouble in the first place? Certainly the absurd bonuses paid to investment bankers provide the incentives for it.

Reported 20 Jan 2010
Morgan Stanley, revealed today it had set aside $14.4bn for pay and bonuses in 2009 despite showing a net loss

Too Big To Fail

Kudos to Senators McCain and Mark Cantwell who have introduced legislation to breakup large financial organizations. I am quite tired of Too Big to Fail. If that is true, they are simply too big.
McCain would restore the Glass-Steagall law prohibiting banks being in the brokerage business. This was a lesson we learned in the Great Depression and then forgot it under the slogan of one-stop shopping. It is time to restore it before the next financial crisis hits us again.

Old growth forests

Good news!
December 17, 2009, New York Times
Foes Unite to Support Bill on Old-Growth Forests

By LESLIE KAUFMAN
Calling a truce in a long and bitter battle, timber executives and environmentalists united Wednesday in supporting legislation to codify and expand current protections for old-growth forests on federal land in eastern Oregon.

After nearly eight months of talks, representatives of both groups joined Senator Ron Wyden, Democrat of Oregon, at a news conference in Washington as he introduced a bill that would ban cutting of trees more than 21 inches in diameter and protect delicate watershed areas.

Such prohibitions are already in place in many forests but are administrative in nature rather than mandated by law, and subject to rollback at any time.

In return for their support for such limits, which they had previously fought, timber groups were promised steady, unimpeded access to younger trees as part of a broader program to assure the health of the forests and fire prevention.

The bill will also limit construction of permanent and temporary roads, while seeking to cut the overall number in forested areas. The legislation applies to six national forests spanning nearly 10 million acres east of the Cascades.

Environment & jobs

The standard response to proposed environmental improvement such as CO-2 limits, is that it raises cost and reduces jobs. Cost of any action is always there, and new laws don't create them, they just change who bears them. As for jobs, markets are designed to allocate resources to their best use. We have been substituting natural resources for labor for a long time. If we increase the cost of natural resources, it should result in more demand for labor over time.