These articles are among the most useful I have seen this week. Excerpts are below the fold.
1. Professionals at work: See how Congress has modified the Paulson Plan. Originally 2 pages, now 451+ pages. This excerpt shows an important addition (perhaps omitted due to an oversight by Secretary Paulson), that illustrates an important aspect of our political regime.
2. “Senate bailout bill keeps growing“, Politico, 1 October 2008 — Amazing things added to the bill.
3. “High stakes in Canada’s vast oil-sands fields“, Christian Science Monitor, 30 September 2008 — “Trillions of dollars’ worth of oil are present, but the environmental costs are high, too – and growing.” The best general media article I have seen about Alberta’s oil sands.
4. E pluribus hokum or When the gamblers bail out the casino“, Spengler, Asia Times, 23 September 2008 — A typically insightful analysis by Spengler.
Excerpts
1. An ammendment to the Paulson Plan (hat tip to Calculated Risk).
Why did a congressperson or staffer insert this text? I leave it to your imagination, Doing this in such a vital and urgent piece of legislation reveals much about the true values of our representatives. (source)
SEC. 503. EXEMPTION FROM EXCISE TAX FOR CERTAIN WOODEN ARROWS DESIGNED FOR USE BY CHILDREN.
(a) IN GENERAL.-Paragraph (2) of section 4161(b) is amended by redesignating subparagraph (B) as subparagraph (C) and by inserting after subparagraph (A) the following new subparagraph:
(B) EXEMPTION FOR CERTAIN WOODEN ARROW SHAFTS.-Subparagraph (A) shall not apply to any shaft consisting of all natural wood with no laminations or artificial means of enhancing the spine of such shaft (whether sold separately or incorporated as part of a finished or unfinished product) of a type used in the manufacture of any arrow which after its assembly:
(i) measures 5⁄16 of an inch or less in diameter and
(ii) is not suitable for use with a bow described in paragraph (1)(A).(b) EFFECTIVE DATE.-The amendments made by this section shall apply to shafts first sold after the date of enactment of this Act.
2. “Senate bailout bill keeps growing“, Politico, 1 October 2008 — Amazing things added to the bill. Excerpt:
The Senate hopes to revive Treasury’s $700 billion financial rescue plan Wednesday night by packaging it together with more than $100 billion in popular tax breaks as well as aid to rural schools important to House Republicans.
To calm voters fearful of bank failures, the $100,000 cap on federal insurance for deposits would also be raised to $250,000-a concession backed by both parties but also aimed at community banks who can be helpful in building small town support for the larger bill.
With each permutation, the bill has steadily grown in size. Treasury’s initial plan was about three pages long. The House version, which failed, stretched to 110. The Senate substitute now runs over 450 pages. And tucked away in the tax provisions is a landmark health care provision demanding that insurance companies provide coverage for mental health treatment-such as hospitalization-on parity with physical illnesses.
Really a bill onto itself, the mental health parity measure has been a bipartisan priority for top lawmakers in both chambers but has stalled because of disagreements again over how to pay for its estimated $3.8 billion five-year cost. In the current climate, that seems to be no longer a stumbling block, and if the Treasury plan becomes law, it will also.
3. “High stakes in Canada’s vast oil-sands fields“, Christian Science Monitor, 30 September 2008 — Excerpt:
The relentless search for oil has led explorers to the boreal forest of northeastern Alberta, among the jack pines and black spruce trees an hour’s drive from the boom town of Fort McMurray. Kelly Hansen, operations manager at ConocoPhillips’s $1 billion Surmont oil-sands plant, holds up the prize: a beaker of sticky black “synbit,” a 50-50 blend of bitumen (a viscous, tarlike petroleum) and synthetic oil.
“The Athabasca oil sands contain the equivalent of 1.7 trillion barrels of oil,” Mr. Hansen says. “About 20 percent of that total can be produced, using current technology” – namely, surface mining and steam extraction underground.
… At the same time, Syncrude – a joint venture that includes Canadian Oil Sands Ltd., Imperial Oil (an ExxonMobil subsidiary), Petro-Canada, Nexen, ConocoPhillips, and others – is Canada’s largest single emitter of greenhouse gas, since it must burn 750 cubic feet of natural gas to generate the steam needed to produce a barrel of bitumen. That’s the equivalent of burning one barrel of oil for every eight barrels produced.
… Two tons of loose rock and soil and two tons of ore have to be moved to produce a single barrel of oil. Surface mining also uses from 2 to 4-1/2 barrels of water per barrel of oil. The water is pumped from the nearby Athabasca River to produce steam, which helps separate sand and bitumen. Much of the water is recycled, but some is left to settle in highly toxic tailings ponds.
… Some aboriginal communities downstream are worried that contaminated water will seep back into the river and affect the drinking water and fish they depend on. This fall, the Alberta government is due to release a long-awaited report on the impact of oil-sands wastes on public health in the communities.
… Compared with surface mining, {in situ, or subsurface, mining} uses far less water – 1/4 barrel of water per barrel of oil.
4. “E pluribus hokum or When the gamblers bail out the casino“, Spengler, Asia Times, 23 September 2008 — A typically insightful analysis by Spengler.
America will give between US$700-$800 billion to the Treasury to buy any bank assets it wants, on any terms, with no possible legal recourse. It is an invitation to abuse of power unparalleled in American history, in which ill-paid civil servants will set prices on the portfolios of the banking system with no oversight and no threat of legal penalty.
Why are the voices raised in protest so shrill and few? Why will Americans fall on their fountain-pens for their bankers? If America is to adopt socialism, why not have socialism for the poor, rather than for the rich? Why should American households that earn $50,000 a year subsidize Goldman Sachs partners who earn $5 million a year?
Believe it or not, there is a rational explanation, and quite in keeping with America’s national motto, E pluribus hokum. Part of the problem is that Wall Street, like the ethnic godfather in the old joke, has made America an offer it can’t understand. The collapsing the mortgage-backed securities market embodies a degree of complexity that mystifies the average policy wonk. But that is a lesser, superficial side of the story.
Paulson’s dreadful scheme will become law, because Americans love their bankers. The bankers enable their collective gambling habit. Think of America as a town with one casino, in which the only economic activity is gambling. Most people lose, but the casino keeps lending them more money to play. Eventually, of course, the casino must go bankrupt. At this point, the townspeople people vote to tax themselves in order to bail out the casino. Collectively, the gamblers cannot help but lose; individually they nonetheless hope to win their way out of the hole.
Afterword
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