The Federal Reserve Does Not Buy Mortgage-Backed Securities

When I saw the following story in the New York Times on Friday (Peters, Jeremy W. and Wayne Arnold, “Stocks Are Volatile After Global Sell-Off,” 10 August 2007) I fucking freaked:

The E.C.B. injected another 61 billion euros ($84 billion) into the banking system, after providing 95 billion euros the day before. The Federal Reserve today added $19 billion to the system through the purchase of mortgage-backed securities, then another $19 billion in three-day repurchase agreements. The Fed added $24 billion on Thursday.

It’s not the amounts of money that are unusual. Yes, this indicates a fairly aggressive attempt to preserve liquidity in financial markets and it is definitely earning the headlines it is getting in The Financial Times and The Wall Street Journal. But that the Federal Reserve might engage in the direct purchase of $19 billion worth of mortgage-backed securities would indicate a real problem and the adoption of extraordinary, panic measures on the part of the Federal Reserve. On Friday I was thinking how I might reinvest my 401k into gold doubloons.

Thankfully, on Saturday Dean Baker pointed out (“The Fed Does Not Buy Mortgage-Backed Securities!!!!!!,” Beat the Press, 11 August 2007) that this was just incompetence on the part of the economic reporting at The New York Times and The Washington Post (who also reported the story). That what really happed was that the Federal Reserve made a more routine loan through the discount window and accepted the $19 billion in mortgage-backed securities as collateral for the loan.

While you’re there, his post (“Tell The Post: The Problem Isn’t Subprime,” Press, 11 August 2007) pointing out that the cause of our current financial woes is not the subrime market (dirty, irresponsible poor people) is a useful reminder. The real problem is the bursting of the housing bubble more generally. The subprime market is just the first place it’s really being felt.

Friday Cat Blogging: Too Hot for Kitty

7 August 2007, Washington, D.C., lethargic Mowgli

The weather has been unbearably hot here in D.C. — though not yet topping out the thermostat for the region in August. I’ve often wondered how an animal with a fur coat permanently affixed to his back copes with this heat. It’s never seemed to pose a problem for kitty. I guess that he has a much smaller mass-surface area ratio than me. But this year even he seems to be feeling it. He has been doing a lot of flopping, laying around and generally looking miserable.

Where Your Boots Go, There Your Mind Will Be As Well

I think the proper way to think about our situation in Iraq is this. It may be true that many vile consequences may ensue in Iraq should the United States withdraw. But the options aren’t that the U.S. armed forces save Iraq from itself versus U.S. soldiers go back to sipping cool lemonade in the backyard. It’s entirely possible that the choice is between staying in Iraq or preventing the next September 11th.

Al Qaeda and their ilk have a grand strategy. They are not going to match their weakness against our strength. This is not the Fedayeen Saddam. They are not about to try to engage the Fourth Mechanized Infantry in Toyota pickup trucks. The Liliputian terrorists will bind Gulliver, overwhelm us with distractions, mire us in a series of diversions. Having no commitments, no obligations of their own, they will then match the nimbleness of al Qaeda against the encumberment of the United States. As Osama bin Laden himself has said, “All that we have to do is to send two Mujahideen to the furthest point East to raise a piece of cloth on which is written al-Qaida, in order to make the generals race there to cause America to suffer human, economic, and political losses without their achieving for it anything of note …”

My ever so slight sampling of the zeitgeist says that we are working our way toward a condition — material and of mind — not unlike that in the late 1990s and early 2000s as the country slouched toward September 11th. Dangerous and anarchic regions of the world are spreading, extremists are gathering strength, plots — one can imagine — are unfolding. Nothing less than the most recent NIE has suggested that the terrorist threat is growing, not waning, and that al Qaeda is gaining strength. Just as after the Cold War the United States was unable to heed the warning of both events and the prognostications of certain elites, so George Bush has the put the country into a trance of Iraq focus. Despite a changing threat profile, we can’t think about anything else. Already al Qaeda and Co. have pivoted. New threats are in the making, but mired in the thought of post-September 11th and Iraq — the irony here is too much — we are incapable of conceptualizing or doing anything to prevent the next September 11th.

The right has argued that in the post September 11th world, the old Cold War system of long-term alliances like NATO is obsolete, that the United States needs to remain nimble, to rely on ad hoc coalitions of the willing. And yet in Iraq the United States has permanently bound itself in a coalition of the compulsory. That broken statue of Hussein was the signing ceremony and there is no nullification clause in the treaty. In Iraq the United States stepped into a bear trap and it closed on our foot. It’s going to hurt and it’s going to be bloody, but its time to gnaw that foot off and hobble free — before the trapper comes to claim our pelt.

Seize the Opportunity to Throw One Back

I’m considering educating myself a little on Graham Greene and so, at the inspiration of a passage posted by Andrew Sullivan (“‘The Torturable Class’,” The Daily Dish, 26 July 2007), purchased a copy of Our Man in Havana. Christopher Hitchens wrote the introduction and — apropos an earlier post (“Booz-Hound Christopher Hitchens,” 28 June 2007) — he tells the following tale:

Graham Greene famously subdivided his fictions into ‘novels’ and ‘entertainments’ …

I should like to propose a third, or subcategory: the whisky (as opposed to the nonwhisky) fictions. Alcohol is seldom far from the reach of Greene’s characters, and its influence was clearly some kind of daemon in his work and in his life. A stanza of that witty and beautiful poem ‘On the Circuit,’ written in 1963, registers W. H. Auden’s dread at the thought of lecturing on a booze-free American campus and asks, anxiously and in italics:

Is this my milieu where I must
How grahamgreeneish! How infra dig!
Snatch from the bottle in my bag
An analeptic swig?

Describing a visit to a 1987 conference of ‘intellectuals’ in Moscow in the early Gorbachev years, both Gore Vidal and Fay Weldon were to record Green making exactly this dive into his bottle-crammed briefcase.

Makes me think, as Nietzsche said, that all writing is autobiographical of a sort.

Cool Dude

With the publication of his latest, Thomas Paine’s Rights of Man, Christopher Hitchens has acceded to the rank of author whose photograph is promoted from the back inside flap to displace a more topical graphic from the cover. Some authors you can understand why they go on the cover. Ann Coulter is at least hot (as right wingers go) and can be expected to move some copies, more to be admired than read. Christopher Hitchens, on the other hand, is like the Archie Bunker of the left. But I guess he’s a man whose image is an icon at this point though.

Bad Words

Dan Savage on the juvenile refusal of naughty words among mainstream publications (“Don’t Be Such a Fucking Pansy, David,” SLOG, 6 August 2007):

Oh, David. Newspapers are for adults. Blogs are for adults. And adults use words like “fuck” all the time. Certainly newspaper writers and editors do — at weeklies and dailies. Even the President and Vice President use profanity, as the Second Circuit Court of Appeals recently noted. So why are daily newspapers written and edited as if their readers are a bunch of prissy ol’ clenchbutts?

I don’t think that your average paper should be written in the tone of The Stranger, but it’s more professional to report a quote as it was spoken than to refer to some hackneyed euphemism cribbed from one of your grandmothers old-time stories. If it includes a swear word, print the swear word.

Recently I went to see Robert Dallek talk on his book, Nixon and Kissinger: Partners in Power at Politics & Prose. Now Politics & Prose is what they call a family store: for their author talks a van from an area assisted living facility regularly disgorges a mob of gray-hairs. And Mr. Dallek isn’t a young scholar anymore. But to hear Mr. Dallek rattle off excerpts from the Nixon transcripts — forget Oliver Stone, the ones who should make a film about Nixon should be the Cohen brothers (need a clue? Try the The Big Lebowski: The Fucking Short Version). And if we made it through the actual Nixon administration we can make it through a few reanimated recitals of his vulgar ramblings.

As that brilliant, closing line from Apocalypse Now goes, “We train young men to drop fire on people, but their commanders won’t allow them to write ‘fuck’ on their airplanes because it’s obscene.”

Mr. Savage follows it up with a few more words on this issue: “Ruffians?,” and “Necessary Profanity.”