Paul Krugman:

The Geithner plan has now been leaked in detail. It’s exactly the plan that was widely analyzed — and found wanting — a couple of weeks ago. The zombie ideas have won. The Obama administration is now completely wedded to the idea that there’s nothing fundamentally wrong with the financial system — that what we’re facing is the equivalent of a run on an essentially sound bank. As Tim Duy put it, there are no bad assets, only misunderstood assets. And if we get investors to understand that toxic waste is really, truly worth much more than anyone is willing to pay for it, all our problems will be solved.

. . . [T]hese funds will have skewed incentives. In effect, Treasury will be creating — deliberately! — the functional equivalent of Texas S&Ls in the 1980s: financial operations with very little capital but lots of government-guaranteed liabilities. For the private investors, this is an open invitation to play heads I win, tails the taxpayers lose. So sure, these investors will be ready to pay high prices for toxic waste. After all, the stuff might be worth something; and if it isn’t, that’s someone else’s problem.

But we must protect the "Masters of The Universe." This is truly outrageous.

Speaking for me only

Kevin Drum thinks so:

Taxing the million-dollar bonuses is one thing — I may be a little ambivalent about that, but overall I don't think it's all that problematic — but the bill that passed last night taxes away bonuses from anyone with a household income over $250,000. That's a couple of mid-level analysts. This is likely to hit tens of thousands of fairly ordinary workers who had nothing to do with AIG's troubles and who simply don't deserve this kind of treatment.

Memo to Kevin, these "ordinary" AIG employees who make over 250,000 a year would be out of a job if the federal government had not bailed out AIG. The unemployment rate in the country is 8.2% and climbing. Believe me, there are better examples for your concern. Oh by the way, this newfound concern for those ordinary $250K/year earners? Does that mean you now support the Bush tax cuts? Do you oppose rolling them back? Migawd, some of the things we are reading now are just incredible. Finally, if there is a good policy purpose to not taxing the lower ends of the rich employees of AIG, then let's hear it. But to expect sobbing over people who have jobs, who make $250k/yr and who have their jobs thanks to incredible amounts of government money, well, that's just too much.

Out of touch is the proper description of what this exemplifies.

Speaking for me only

Unlike Jeralyn, my distaste for Ward Churchill was manifest. I did not care for his grandstanding and, imo, imbecilic statements about 9/11. Of course, the defenders of the Bush Administration's disastrous Iraq Debacle would use Ward Churchill as a way to demonize all opposers of their catastrophic policies. Today in the NYTImes, Joe Nocera plays a similar game, this time over AIG:

Yes, the $165 million in bonuses handed out to executives in the financial products division of American International Group was infuriating. . . . But death threats? “All the executives and their families should be executed with piano wire — my greatest hope,” wrote one person in an e-mail message to the company.

What is Nocera's motivation in this? To marginalize objection to the financial bailouts and leave the discussion to "Serious People." Of course death threats are outrageous and I will go one further than Nocera - prosecute the e-mailer. But an idiotic e-mail has nothing to do with the real discussion going on here. It is a cheap trick from Nocera. Does he have a point to all this? As best I can make out, it is this:

Yesterday, I wrote about the deportation of former Nazi Guard Josias Kumph, now 83. Having lost his years of appeals in the U.S., ICE officials removed him from his Wisconsin home and deported him to Austria.

Today, Austria says it has freed Kumph:

Austrian justice ministry spokeswoman Katharina Swoboda said Vienna had warned U.S. authorities in the past that Austria would be unable to prosecute Kumpf because the statute of limitations relating to his crimes had expired. The main reason was that Kumpf was younger than 20 at the time of the crimes.

"We have always pointed out to the United States that he cannot be charged here with the crimes of which he is accused," Swoboda said.

Kumph is not a citizen of Austria. He was born in Serbia. He came to the U.S. from Austria. Even though he will be considered an "illegal alien" in Austria, he will be allowed to stay because he cannot be extradited to another country.

Tonight is my turn to talk about TV. I'll be watching the BSG finale tonight. Anybody else watching?

Bernie Madoff will stay in jail pending sentencing. The Second Circuit Court of Appeals today refused to reverse the trial court's order denying bond. The ruling is here (pdf.)

It appears Madoff, facing a probable sentence that will exceed his life span, will leave prison only when he's dead.

Since the Government can continue the investigation into his relatives and friends, it's hard to figure why his lawyers didn't draw out the process, insisting on an Indictment. He would have had the protection of the 5th amendment until his appeals of any conviction were done and been able to sleep at his Park Ave. penthouse rather than MCC or an FCI for at least two more years. [More...]

While CNBC continues to protest that it does too cover Wall Street critically, CNBC host Mark Haines is still selling the "Indispensable Men" theory. Via TPM:

CNBC, the Fox News for Wall Street's "Masters of the Universe." Kudos to Rep. Brad Sherman (D-CA) for pushing back.

Speaking for me only

I'm off to a roaring start in the tourney, hitting on most of my upset picks with my brackets intact (Mich. State, Villanova, Syracuse, Memphis.)

How are you doing in your March Madness pools?

Kevin Drum quoting DeGaulle - "The cemeteries of the world are full of indispensable men." The point is getting through:

A substantial swathe of policy elites, starting with Hank Paulson and Ben Bernanke and George Bush and now evidently including Timothy Geithner and Larry Summers and Barack Obama really do seem to think that saving the firms is the key. That the world as it existed in the years 1996 to 2006 represents some kind of ideal of economic activity, and that the[ir] job is to put humpty-dumpty back together again. . . . [T]hat’s not what we ought to be trying to do . . .

Brian Buetler finds support from Paul Krugman:

But not over the bonuses. NYTimes:

While the American International Group comes under fire from Congress over executive bonuses, it is quietly fighting the federal government for the return of $306 million in tax payments, some related to deals that were conducted through offshore tax havens. A.I.G. sued the government last month in a bid to force it to return the payments, which stemmed in large part from its use of aggressive tax deals, some involving entities controlled by the company’s financial products unit in the Cayman Islands, Ireland, the Dutch Antilles and other offshore havens.

[AIG is suing, in part, over] deals involv[ing] A.I.G. offshore entities whose function centers on executive compensation and include C. V. Starr & Company, a closely held concern controlled by Maurice R. Greenberg, A.I.G.’s former chairman, and the Starr International Company, a privately held enterprise incorporated in Panama, and commonly known as SICO.

What a world.

Six years ago today:

The biggest American strategic blunder of the last century.

Speaking for me only

Your turn.

This is an Open Thread.