Margin Calling

 A common feature of both the 1929 Crash and the unnameable financial crisis of 2008 is a high volume of margin calls on highly  leveraged securities portfolios.  This time it's hedge funds that have done the excessively leveraged buying.  As the prices of the securities the hedge funds bought at a high margin plummet, the hedge funds need put up more cash collateral to their lenders to replace the lost collateral represented by the plunge in value of the security bought on margin.  This forces the excessively leveraged hedge fund to sell shares, driving prices down.  Forced sales to meet ever increasing margin calls creates a vicious cycle that leads to a market plunge.  This is what has been repeatedly happening in the markets  lately and was a key factor in the 1929 collapse.   An important provision of the Securities and Exchange Act of 1934 allows the Federal Reserve to set margin limits on the amount of leverage used to purchase securities.   The Federal Reserve does this through Regulation T.  But Hedge Funds exploit an exception in the Investor's Company Act of 1940 that allow investment entities comprised of sophisticated investors (investors holding more assets than most people have, no Mom & Pop investors need apply) to avoid margin regulations.  The exception was not meant to apply on the scale it is being exploited by Hedge Funds today.  No one foresaw the hedge fund explosion and how it would introduce the same systematic risk caused by over leveraged equity purchasing that proved so fatal in the fall of 1929.  Yet here we are again.  Despite the earnest arguments that hedge funds should be unfettered in order to take risks that are net beneficial for the economy, it makes no sense to allow them to engage in the same unregulated margin purchasing that destabilized the financial system in 1929 and now again in 2008.  The systematic risk from over leveraged security purchasing has nothing to do with the sophistication of the investor, rather it arises from the aggregate actions of a number of risk taking investors.  It is naive a la Greenspan to think that because someone is a  sophisticated investor they won't take on risk that when aggregated with that taken on by other sophisticated investors  proves disastrous.  This notion has been proven false now twice.  The loophole that hedge funds exploit to escape margin requirements needs to be closed.  This would be one small step to restoring sanity to our markets.       

I'm Shocked, Shocked, To Find That Gambling Is Going On In Here

Like Claude Rains' Captain Renault in Casablanca, Alan Greenspan is all of a sudden shocked to find out gambling has been going on. Like Captain Renault, Greenspan knew it was going on all around him but thought nothing of it. And also like the Captain, Greenspan had an interest in ignoring the gambling because it rewarded him well. Greenspan was worshipped as a policy genius while the economy seemingly prospered from ever riskier behavior predicated on the belief that derivatives had ameliorated systemic market risk. Greenspan encouraged this risk by opposing regulation. The free market, he maintained, could regulate itself.

Greenspan believed a lending institution's self interest in protecting shareholder equity would prevent the institution from taking on risk that would damage that equity. But he implicitly made two theoretical assumptions that the markets have now proven wrong.

The first was assuming that the self interested behaviour of agents in the marketplace could never lead to a systemic financial collapse. Underlying this assumption was the belief that the agent's self interest in protecting shareholder equity would prevent bet the farm behavior that could lead to financial collapse. But the present crisis presents a prime example of marketplace agents self interested behavior leading to a financial collapse. And while the actions of individual marketplace agents in this case did not necessarily endanger business entities on their micro economic level, the sum of the self interested behavior has led us to our present financial collapse on the macroeconomic level. The sum is greater than the whole in this instance.

Most of the agents in the marketplace, acting out of self interest, bought insurance in the credit default swap market (CDS) on their risky bets and then went on to engage in even riskier behaviour because they thought their previous risky behavior was hedged. But because so many agents thought they were hedged against losses and then went on to engage in riskier behavior that didn't pan out, the trouble started. The failure of the agents' riskiest bets led to the collapse of the agents' previous hedging strategies, which resulted in a lot of market players going into a financial tailspin. What Greenspan didn't count on was self interested agents thinking they had hedged their bets when in reality they were engaging in willful blindness as to the risks they had incurred. Very few CDS market players inquired into the liabilities their insurers were carrying and what would happen if there were large scale defaults that required the insurers to pay out more than they had bargained for. And the insurers did not count on large scale defaults occurring. See AIG. Something similar happened in the securitized mortgage market. Thus the failure of marketplace agents riskiest bets led to a failure, or at least the perception of a possible failure (after all a lot of this crisis is a crisis of faith), and behavior that was previously believed to be hedged became suspect.

Greenspan's second and worse theoretical mistake was anthropomorphizing business entities through inapplicable metaphors. Inanimate objects do not have self interests, no matter how useful it may be to sometimes speak as if they do. And it is quite often convenient and harmless to talk as if inanimate objects like banks intentionally do things such as entering into contracts. But this is just a convenient short hand for discussing the behavior of the human agents who actually control the business entity in question, and it is a mistake to think that somehow the business entity has intentional psychological states that only belong to conscious animals. To say a bank's self interest will mitigate its risk taking is to attribute an intentional psychology to an inanimate object.

In terms of analyzing the self interest of agents in a marketplace a better place to start is with the agents who have the real psychological intentional states, the humans that run the entity. Once you start to look at the self interests of the intentional agents you can see how those self interests may cause them to make the entity take actions not in the entity's best interest. Stock options provide incentives to pump up stock prices and executive pay packages often include perverse incentives for the executive to act against the company's best interest. This is nothing new, but there seems to be a naive belief with many free marketers that business entities have intentional states such as self interest that exist independently of the human agents that run the entities, and this leads the free marketers to be shocked at behavior that is obvious to anyone who just takes a look around them.

God is Dead!

Isn't Alan Greenspan admitting that free markets need regulation to avoid collapse a little like the Pope admitting God is dead? I believe in free markets, but as I've said before equating freedom with anarchy is a mistake. And this is precisely the mistake that Milton Friedman and Alan Greenspan made. No rational person wants to live in a lawless society precisely because their freedoms become subject to the whims of the more powerful. It is the rule of law that is the basis of our freedom, not the lack of law. Some laws may be misguided, vindictive, or even irrational, but that is an argument for changing those laws and not for throwing out the entire legal system. Likewise, what has just happened in the markets is an argument for reforming the regulation of capitalism, not for abandoning capitalism for its empirically proven worse alternatives.

Milton Friedman We Hardly Knew You

Alan Greenspan just admitted that his central assumption regarding financial institutions, that they could take care of themselves without government regulation, was wrong. Pretty big mistake Alan. More on this later, I'm at work, but reading this admission from such a devout Friedman disciple made my jaw drop. Most economists strike me as naive in the sense that they generally don't have much real world experience that can temper their abstractions, and in this case we're paying a monumental price for the free market naivete of the Ayn Rand school.

Cry Havoc, and Release Henry Waxman!

Like a shark in the water I smell blood looking at the latest presidential polls.  The deal ain't sealed until the electorate speaks, but things look good for Obama right now.    I trust him to be restrained to our adversaries if he wins the election, but emotionally I need some payback after all the smack the other side has talked the last eight years.  I need some smackdown to demonstrate to the arrogant why arrogance is such a bad move in the first place:  You are either with us or against us.  Mission Accomplished.    John Ashcroft. John Roberts.  Samuel Alito.  Guantanamo Bay.  Iraq.  Torture. Faith Based Initiatives.  Valerie Palme.  Karl Rove.  Dick Cheney.  Donald Rumsfeld.  John Bolton.  Tom Delay.  Half a trillion dollar budget deficit.  Deregulation of Derivatives Leading to the Financial Crisis.  Decline in real wages.  Negotiating is for pussies war is for real.  The list goes on. How are you sleeping Karl Rove?  Probably in a fat bed paid for by your spoils.  Don't get too comfortable.      

Master of the Senate

Is it too much to ask that  our candidates have  read the Constitution?  You can't really display a greater ignorance of the Constitution than to state like Sarah Palin did that the Vice President is master of the Senate.  Clueless.  The Vice President is ceremonial president of the Senate and can only vote as a tiebreaker.  The Senate is not merely an appendage of the executive branch.  There is something disturbing about this basic failure to understand the separation of powers at the foundation of our republic.  Does she think Senator McCain answers to Dick Cheney?  Has no one yet explained to her the functions of the Vice President since July when she stated she didn't know what the Vice President did?  I thought she was a quick study?  Then why does she still not know the job description she's running for?  I think the Constitution should be amended to require all candidates for federal office to have read the Constitution in order to run.

Joe's Pipe Dreams

Joe the plumber is worried that Obama is going to tax his dreams.  Joe doesn't make the $250,000 plus a year where Obama's tax increase would kick in, and he doesn't own the plumbing business he's trying to buy that allegedly has a taxable net of $250k plus a year.  He doesn't even have a plumbers license nor is the plumbing business he aspires to buy licensed.  Yet he's worrying about a 3% tax increase on money he isn't making from a business he doesn't own.  If he's smart, he'll save the extra money he gets from Obama's tax break on his actual income now and use it towards a down payment on his dream business.    

Bring Me the Head of the Architect!

Karl Rove thinks Obama hasn't closed the deal yet.  Duh. No politician closes the deal with the American electorate until election night.  Obama knows this, and that's why he's on the offensive in traditionally Republican states.  Turd blossom needs to remind himself that there is a chance the Democrats won't control both the Executive and Congress after the election to allay his fears of what non-Republican obstructed investigations of his activities during the Bush years will reveal.  Mr. Rove needs to provide some answers about his role in the apparent political firing and hiring of United States District Attorneys in violation of federal law. Ditto for the Plame affair.  Indeed, the architect of the Bush years has much to answer for, and the thought of a Democratic landslide no doubt troubles his sleep.  Hence Wall Street Journal opinion page columns hoping for the best.

Or Maybe Not

Hard to tell what is going on in the credit default market. Some argue that there is no significant risk of things spinning out of control because the parties that insured Lehman's bonds were forced to pony up collateral as Lehman's bonds precipitously fell in price (CDS contracts have margin call clauses activated by price drops) and that this payment of collateral has already been written down on the parties balance sheets. Sounds plausible. Others are not so sure. But what scares me about those who say this is no big deal is that they are prefacing their statements with words like "probably" or phrases like "no one really knows." Which brings us back to the central fact that no ones knows WTF is going on in the markets right now. I doubt our wild ride is over.

The Next Wave

We are truly experiencing a post modern financial crisis. Uncertainty abounds. No one knows when the next wave is going to hit, or how big it's going to be. A front runner for churning out the next financial tsunami is the turbulence in the credit default swap market caused by the Lehman Brothers bankruptcy. Credit default swaps are a form of insurance sold to protect the buyer of a fixed income product from a default. In Lehman's case a buyer of Lehman's bonds could, as many apparently did, buy credit default swaps to insure against a Lehman default. By declaring bankruptcy Lehman has essentially defaulted on its bonds and the parties that insured those bonds now have to pay up. But no one knows how big a payment those parties have to make or whether they have the money.

This unknown liability on the part of the insuring parties could in turn set off a chain reaction of defaults by the parties if the combination of their credit default swap liabilities and their other liabilities exceed their assets and they are unable to get credit to meet their obligations because the credit markets are frozen. And if those defaulting counter parties' liabilities are in turn insured by credit default swaps, the next wave is going to get bigger. Lehman's default could lead to the default of parties that insured the Lehman debt, and the default of those parties could lead to the default of additional parties who insured the debts of the Lehman parties. This is one of the reasons the government is bailing out AIG: the concern that the failure of one party in the credit default swap market would lead to a wave of defaults .

It doesn't help that you don't have to own the underlying bond to buy a credit default swap for it. This fact results in the possibility that the liabilities of the Lehman credit default swap counter parties could be greater than the actual debt that Lehman issued if more than one party bought a credit default swap on the same bond.

What makes this whole thing post modern is that no one knows the extent of the Lehman credit default swap party liability because there is no central clearinghouse for credit default swaps that can provide this information. Essentially the credit default market as a whole behaved irrationally in that it acted as if the possibility of a large scale default was non-existent, and thus the necessary market mechanisms to cope with a large scale default never emerged. This was a direct result of a lack of regulation of the derivative markets.

McCain Über Alles!

Palin's historical ignorance leads her to rabble rouse.  This type of rabble rousing with calls for killing your political opponent have a long history of turning into violent bloodshed.  This is true in America as it is in the world.  But American political discourse should be above this.  I disagree with John McCain, but that doesn't make me want to kill him.  He's still my fellow citizen exercising his rights to democratic political action.  I'm just not going to vote for him.  Calling for the death of your political opponent is as uncivilized as it is dangerous.  Educated people know better.  Palin's advisors would do well to give her some history lessons.

As I was Saying: Hamilton v. Jefferson Redux Part II

Good op ed piece in today's Wall Street Journal regarding the Hamiltonian and Jeffersonian divide.

Risk Management Failure

The New York Times has a good article outlining the opposition to derivative regulation during the last couple of decades.  It's particularly damning to Alan Greenspan, and Robert Rubin, two avid proponents of not regulating derivatives.  For them and other free marketeers  derivatives had  dispersed risk among investors to a level that made the risk negligible.  Greenspan believed that derivatives were the ultimate hedge and used his stature to prevent derivative regulation on the grounds that doing so would damage the markets.  On the Oracle Greenspan's bidding, the Republican Congress legislatively blocked derivative regulation, and a lame duck President Clinton signed derivative deregulation into law.  High finance had solved the vexing problem of capitalism's cyclical credit crises.  

Events have revealed the extent of this hubris.  Irony has turned into tragedy.  The ultimate hedge spawned into viral risk spreading swiftly as the plague through the entwined parties and counterparties.  Now the best we can do is try to stanch the mortality rate while madly searching for a cure.  Take up the bodies.  

Hamilton v. Jefferson Redux

Pardon my disappearance, work has been hectic, to say nothing of the financial markets.  My 401(k) is down 30%.  Viva la bourgeoisie!  We will survive like cockroaches.

I digress.  My only comment for the moment is that the factions in this financial crisis have split  along the historical divide of the high finance Hamiltonians versus the Central Bank Hating Jeffersonians.  The Jeffersonians are rightfully angry at the Hamiltonians for delivering a gargantuan credit crisis.  Hamiltonian play in the field of derivatives exacerbated the  inevitable cyclical credit bust that is a given with capitalism.  The fact of this cyclical credit collapse is what justifies regulation with the aim of transparency and mitigation of leverage.  The margin requirements for the purchase of equities imposed by the securities laws of the 30's have done us well.  The current crisis is not an equity market crisis.  The traditional equity markets are certainly feeling the effects, but these effects are the result of collapses in the derivative markets, particularly securitized mortgages and mortgage backed collateral debt obligations (CDOs).  As Obama aptly said in the debate last night, we have 20th century securities laws for a 21st century market.  But I digress.

A Con Law Geek Moment

A quick note that the Senate is constitutionally stuck with the House's bailout bill and can only propose amendments to it.  Article I, section 7 of the Constitution requires that all revenue bills originate in the House and that the Senate can only propose or concur with amendments.  That's why the bailout bill in the Senate right now is an amendment to the House bail out bill, and also why the Senate could not have acted on this matter before the House.

Why Originalists are Annoying

The problem with asserting that originalism is the proper way to interpret the U.S. Constitution is that there is no evidence for this proposition in the Constitution.  There is no "original interpretation" clause in the U.S. Constitution.  Textualism does not support originalism, and a priori pronouncements as to correct interpretative methodologies are arbitrary.  Beyond the document itself, what originalist evidence is there for the originalist position?  Nothing jumps to mind.  Any dogmatic pronouncements about how the document should be interpreted are nothing more than speculation.  I can just as easily argue that "We the People" means "We the Living People" just as easily as someone can argue it means "We the Dead People" (which is essentially the originalist position).  There is no definitive method with which to interpret the Constitution, despite the cravings of those on both sides of the political spectrum for an absolute fixed point from which to anchor their ideological interpretations. Originalism is one useful tool with which to interpret the Constitution, but to maintain that it is the only dispositive one is dangerously simplistic given how much more complex our society and its institutions have grown since the framing of that venerable document.

Crisis of Faith

It all comes down to what you believe.  If you believe something has value you might decide to exchange something for it.  If you're unsure if something has value, or worse, suspect that something may be garbage, you're not going to be inclined to trade for it.  Often nothing physical has changed in the object of your valuation when you or the market decides to change your valuation.  Only your mental belief as to that objects valuation-utilitarian, fiscal or otherwise- has changed.  Your belief that your bank will be able to pay you your money that you gave it.  The belief that you are sufficiently capitalized because of new and exotic asset backed securities whose value has never been tested before.  The belief that securitization has ameliorated market risk to a negligible level.  (Despite the fact that every previous  iteration of the idea that some financial innovation has effectively extinguished risk has gone down in flames.) The belief that credit ratings are accurate.  

It was defaults on securitized mortgages that heralded the ascent of our current crisis of fiscal faith.  When this happened, no one believed the valuations of the underlying assets anymore.  Arguably this is irrational as a certain amount of default in a mortgage backed security shouldn't impair the value of the security because it is still backed by real estate that can be sold to compensate the security holder.  But when it dawned on the market that securitization provided an incentive to lenders to lend recklessly because they could bundle and sell their risk to third parties, the market realized that securization also provided an incentive for false valuations.  That is because securitization removes risk from the original risk taker thereby encouraging them to play longer odds.  And when faith was lost in the original valuation, the market in securitized mortgages went belly up.  The disbelief then spread to the other derivatives markets. 

Hey Hey Hayek

You have to admit it's funny that only the government can save the free market from itself now. A state in command of the economy--anathema to red blooded free marketers.  Yet I don't  hear any of them arguing against state intervention.  They just want to do it the free market way, as if that's a tenable position after this mess.  Let's solve the problem by doing what caused the problem?  No thanks.  

The only efficient markets are disciplined markets.  A market that collapses because of its activity cannot be said to be efficient.  The derivative markets lacked discipline in the form of proper regulation of valuation and leverage and collapsed as a result.  The collapse resulted in part because of inflated valuations of assets underlying mortgage backed securities used as cash and collateral for lines of credit.  The ready supply of these mortgage based derivatives and the seemingly liquid market for them led to the type of overleveraging that is the hallmark of all credit bubbles. The investment banks and AIG treated their overinflated mortgage based securities as cash, using it for collateral to justify risky behaviour.  The higher the risk, the greater the return.  And when everyone had faith in the value of the assets underlying the securities underlying the leveraging, all was good.  

Then, lo, one day everyone discovered that they couldn't sell their mortgage based securities that they'd treated as cash because no one trusted the valuations of the mortgages underlying securities.  The underlying mortgages had begun to default, and no one knew how many would default.   And one of those entities that had treated its mortgage based securities as cash was AIG, which just so happened to be one of the biggest players in the credit default swap market (a market that sells default insurance).  So when everyone began to default because they were overleveraged, they turned to their default insurer only to find that the insurer was overleveraged too.

Just as the securities laws of the 30's and 40's and the SEC was borne of the carnage of the Depression, a new derivative regulatory framework should rise from these ashes.  To not do so would be to act foolishly in the face of clear empirical evidence that an unregulated derivative  market will eventually seize up.   

Johnny Come Lately

John McCain adds nothing to the bailout negotiations.  The Keating Five affair is reflective of his judgment in financial affairs and crises.   And his alleged campaign pause to return to Washington to save the day is a cynical move that has disrupted the deal at hand.  If the Republicans cut a deal before he shows up, he will look irrelevant.  Thus they're stalling the deal until McCain can play his role.  

Show Me the Money

A $700 billion dollar bailout request from the executive branch sketched out on a couple of pieces of paper?  Carte Blanche to spend as they see fit, with no oversight or judicial review? Ain't gonna happen, not with their fiscal record.  And if we're talking about putting out my tax dollars to pay for some one else's fuck up, then I want an equity stake in whatever toxic sludge laden financial institution my tax money is bailing out.  That way if any of these firms recover from this deregulated disaster we get our money back, maybe even with a return.  It's the capitalist way.  Let's not abandon it now that our system has failed us.  And as for the panic ridden who want to rush a bailout bill through with little consideration, they're just going to have to wait a moment for cooler heads to prevail.  Lack of foresight got us into this mess, and it certainly won't get us out of it.  

The Dukes of Moral Hazard

So the Federal Reserve, whose powers have been traditionally limited to the banking system, has now decided essentially to buy AIG and become the insurer of last resort for the credit default swap market.  This means that you and I, fellow taxpayer, are now on the hook for the irresponsible, irrational, and down right greedy behaviour of huge swaths of the market that wanted nothing to do with government regulation when the getting was good but who now are lined up at the governments door with cup in hand now that the risks have come home to roost.

This is a bad move, and one that it's not clear  the Fed can even afford to do, given the fact that the Treasury is now, wait for it, issuing more debt to insure that the Fed has sufficient liquidity in the days to come.  After re-establishing the moral hazard involved with trading exotic and convoluted credit derivatives by hanging Lehman Brothers out to dry, Paulson and company decide that it shouldn't apply to anyone who bought insurance for their derivative sludge.  But these weren't mom and pop investors who were buying this insurance in the form of credit default swaps, these were sophisticated investors who, if they'd paused for a moment and done their due diligence, should have realized that they were buying insurance from a speculator in the credit default swap market.  And that speculation was centered on the belief that there wouldn't be a systemic collapse in the credit markets.  Well, surprise surprise, yet another credit bubble has burst.  And the taxpayer is now footing the bill again.  

The sophisticated investors should be forced to take their losses.  The only people who should be bailed out are the mom and pop investors who stand to lose their retirement savings because of events they can't understand.  It'd be cheaper that way, and much more morally satisfying.

Dominoes

I wonder if AIG is going to make it.  The house is burning down and now it looks like there ain't gonna be any insurance payment.  What are the virtues of an unregulated credit default swap market again?  Systemic dispersion of the risk? Looks like that's working great right now.  I wonder what kind of financial legislation is going to emerge from this muck. 

Whistling Past the Graveyard

Is this the final financial derivative wave crashing down on Wall Street?  Will all now be washed clean again?  Or are we on the verge of financial catastrophe?  Maybe I'm just scared because I know more about Wall Street now than when I was younger, but banks are going under right and left and major companies are struggling to shore up their capital.  It's going to be an interesting week. Adios Lehman Brothers, Merrill, we hardly knew ye.  AIG, you're not looking too good there, fella. You look like you need some more capital.  Best of luck at the Fed money spigot.  There's no consequences to the Fed extending all this credit, right?

A Melancholy Day

September 11th will always be a melancholy day for New Yorkers at least until the last living memory of the day passes.  A  crystalline fall day savaged by history.  Even those in the heartland who condemn New York for its delightful and diverse iniquity were with us on that day.  Now, however, the boys and girls from the heartland have taken the day from us and used it to spin their incessant fear mongering that cloaks  their will to power.

Any chance that someone could convince me that President Bush deserved his title collapsed like the twin towers that day.  His feeble uncomprehending expression in the school classroom when he was told of the attacks is etched into my mind as indelibly as any horror from that day.  When I wanted John Wayne from Stage Coach I got Elmer Fudd from Bugs Bunny instead.  When thousands of innocent people are slaughtered and the heart of American capitalism is attacked, he decides to keep reading a children's book.  Then he got on a plane to run away and hide like a fucking pussy.  Instead of standing up and taking control of the situation he let the situation control him.  

Let his apologists coo and spew what a virile leader he is, and how he has saved the Republic from the ravages of our enemies.  All I know is that seven years later Osama Bin Laden is still being hosted by the Taliban in Pakistan, whose tribal autonomous zone is the first place this New Yorker would have invaded after locking down Afghanistan.  Iraq has been a waste of time and money.  Explain to me the logic of going after religious extremists by attacking a secular state.  A New Yorker wouldn't have wasted time with Iraq and would have pursued the Taliban and Osama Bin Laden into Pakistan as relentlessly as Patton did the Germans.  But, alas, we were fated to have a half witted faux Texan as our leader, and our enemy is still with us.

Everything You Know is Wrong! The Vice President is Not Part of the Executive!

Vice President Richard ("Dick") Cheney maintains that the Vice President is not part of the executive branch.  This is a bizarre claim never before made in the almost 220 years of our Republic's existence, and one has to wonder how an alleged originalist such as Dick can make it with a straight face.  It certainly doesn't pass the laugh test, but one's laughter fades into melancholy as you realize that this is just another manifestation of the rampant constitutional revisionism that has served this administration's need to coat their often questionable actions in a veneer of legalist rhetoric.

The purpose of the argument is clear.  Dick doesn't want anyone to know dick.  The bad faith argument's purpose is to shield his papers from public scrutiny via the Presidential Records Act, which provides for public access to executive branch records with certain reasonable restrictions for national security and the like.  The basis for his argument, however, is only clear in its asininity.

Dick maintains that because of his constitutional role as President of the Senate, he is actually an appendage of the legislative branch. Granted, he is President of the Senate (a largely ceremonial position) and the Senate does pay his salary and that of most of his staff.  And he does get to vote in the Senate when there's a tie. See U.S. Const. Art. 1, cl. 4 & 5.  But why, if as a matter of originalism the framers thought of the Vice President as a creature of the legislature and not the executive, did they provide for his election alongside the President and not the Senate?  Why, originally, did the winner of the most electoral votes become President and the runner up become Vice President? See U.S. Const. Art. II.  Is Dick maintaining that originally Presidential candidates were running for an executive branch position with a legislative branch position as a consolation prize?  Does Dick seriously think the framers and ratifiers thought of the Vice President as a special legislative officer who just happened to be elected in the same way as the President and serve the same term as the President?  No, he doesn't, he's just doing anything he can to avoid public scrutiny of his public office.  Being President of the Senate no more removes the Vice President from the executive branch than the power of the President to veto legislation makes the President a legislator.

 

The Surge

Isn't saying that the "Surge" is a success a bit like saying you got an A on a test that you were allowed to take over and over again?  Isn't the "Surge" what General Shinseki suggested we do in the first place, a.k.a. send in a large number of troops to pacify a fractious nation whose fissures were going to be ripped asunder by our invasion?  Thousands of U.S. soldiers lives lost, tens of thousands of Iraqi civilians killed, billions of dollars spent, all because of the arrogance of a few with little or no military training who thought they knew better than our military professionals.  The surge isn't a success because it's what should have been done in the first place.  It's nothing more than a do over writ in blood.  I'm glad it's working, but it is fatuous and deceptive to claim success after a carnage that could have been avoided by using the strategy that is the basis of the "success" in the first place. 

What are they afraid of?

If Sarah Palin is a pitbull with lipstick, why is she such a pussy-cat when it comes to the press?