What to Do with Excess Financiers?

A hilarious outburst of frustration from Stormy at the Angry Bear blog:

I still think nationalizing the banking system is a clean solution. No more fancy derivatives or CDO's. Let's have an old-fashion banking system. Sideline the money boys. Send them off to China or Sudan. Let them watch ice melt in the Arctic. Count polar bears. Have them do something useful.

Borrowings of Depository Institutions from the Federal Reserve

The credit crisis just keeps escalating. A picture is worth a thousand words:

New York Times: Let's Make up Charges for "Heinous Terrorists"

New York Times wrote in its Sunday editorial about the "problems" of closing the Guantánamo prison camp.

Even with all those demands, there is one thing Mr. Obama must do quickly to begin to repair this nation’s image and restore its self-respect: announce a plan for closing Mr. Bush’s outlaw prison at Guantánamo Bay.

The prison is the premier example of the disdain shown by Mr. Bush and Vice President Dick Cheney for the Constitution, federal law and international treaties. Most sensible governments cannot see past Guantánamo to even recall America’s long history as a defender of human rights and democratic values.

We are under no illusions. Closing the prison will not be easy, or quick, but it can be done. It does not mean that the United States will set free heinous terrorists. But it may mean that these prisoners will have to be tried on other very serious charges than the ones supposedly for which they were sent to Guantánamo.

Hmm... So Times is proposing made-up charges? A majority of the detainees do not fit under the description of "heinous terrorists". If there's no concrete evidence, why should the US government try to squeeze out a conviction.

Does this mean that truly dangerous men will be set free, to go back to plotting more attacks against America? No. But it will require smart legal thinking by the new administration.

Oh, those very dangerous people. Time for a reality check. Releasing a few people with evil intentions is a big thing in comparison to keeping possibly innocent people detained for seven years, and tortured as well. Those "heinous terrorists", against which there just doesn't happen to be much evidence, can surely be kept under check after release, and captured, if they actually take up arms again.

Normal Level of Lending?

A quote from a Bloomberg article about the ongoing discussions in the US Congress:

Federal Reserve Chairman Ben S. Bernanke told lawmakers at the hearing that using the TARP for buying stakes in banks is ``critical for restoring confidence and promoting the return of credit markets to more normal functioning.'' He warned that lending in the U.S. is ``still far from normal.''

Quite true, Chairman Bernanke. Lending is far from normal in the US. It has only just started to come down to normal levels after 30 years of excess.

An honest analysis would discuss ways of slowing down the return to norm. Even more important would be measures that would help people and businesses to adjust to smaller levels of lending and debt.

Interfluidity: If only We Had a Financial System...

Steve Randy Waldman of the Interfluidity blog has posted a great piece of common sense, titled "If only we had a financial system...":

The elephant that is not in the room is a financial system. By a financial system, I don't mean the tottering cartel of banks and insurers loudly sucking newly printed cash into "collateral postings" and "deleveragings" and other meaningless nonactivities. That is no financial system at all. It is an ecology of intestines and tapeworms, tubes through which dollars flow and are skimmed en route to destinations about which the tripe-creatures have little interest or concern.

The post is a polemic for a financial system that doesn't think it can create wealth on its own, independently of the actual economy of manufacturing and trade. Read the whole thing. It's a great post.

Electronic Voting Stupidity in Finland

The Electronic Frontier Finland (EFFI) organization has published a highly critical press release of the electronic voting problems in three small Finnish communities.

It seems that the system required the voter to insert a smart card to identify the voter, type in their selected candidate number, then press "ok", check the candidate details on the screen, and then press "ok" again. Some voters did not press "ok" for the second time, but instead removed their smart card from the voting terminal prematurely, causing their ballots not to be cast.

Here, the issue is one of usability. 232 votes were ignored because of the missing press on the OK button. The number might seem small, but taking into account the small scale of this trial, the number adds up to about 2 percent of the whole electoral roll in the small communities that participated in the trial.

The most amazing thing is that even though the authorities admit that there was a usability problem, there will be no repeat of the vote.

It is very strange, though, that there is no mention in the EFFI press release about voter confidentiality issues, even though administration officials have admitted that they know the exact identity of each person that left an uncounted ballot because of this issue. There is no mention of verifiability of counting either.

EFFI does make a strong statement for abandoning such stupid experiments. A purposefully simplified and transparent voting procedure is an aim in itself. Traditionally, this has meant a paper ballot, into which a number is written with a pen. The vote counting is left to teams of voluntary people from all parties in each voting location. Even with such a system, the full count is usually achieved in hours. The additional good that is supposed to be provided by a computerized ballot is a complete mystery to me.

New Targets for IMF "Bail-outs"

The UK Telegraph writes under a headline: "Pakistan to receive $9bn from IMF in fight against bankruptcy".

Pakistan is to receive a $9bn (£5.5bn) bail-out loan from the International Monetary Fund as the country has three weeks to stave off bankruptcy.

Sound more like a bail-out of Pakistan's creditors. Pakistan will have just as much trouble paying to IMF as it has to its current creditors, and even more so after its public infrastructure, especially education, has been demolished by IMF demand. The same goes for Iceland and the others. Many earlier IMF clients would probably have done better by going bankrupt.

Now that the IMF is "aiding" both developed and developing countries at the same time, it will be most interesting to see it the same standards and conditions are applied for all, or if its demands for "tough medicine" are for developing countries only.

The demand for 18% interest rates for Iceland does seem to be quite insane tough. Expect a very hard landing indeed for the Icelandic economy. I guess the people in IMF will never learn from their experiences. What these countries need is debt relief and negotiations with creditors. Bailing out the creditors will just make sure that the same thing happens again and again and again...