Treasury Secretary Tim Geithner has been a busy man. Besides the ill-conceived PPIP and TARP-forever resolution authority he laid out a few weeks back, he also proposed some legislation purporting to strengthen financial regulation. And, per the usual, I don’t think it’ll work; his focus on “systemic risk“ is troubling, because it ignores the central problem.

Consider that there are three major ways to regulate a financial institution: limit systemic risk, limit internal complexity or limit size. Let’s look at each.

Systemic risk basically means that a firm like AIG has so many counterparties and so many investments that if it went down, it would take everyone else *cough* Goldman Sachs *cough* down with it.

Internal complexity, on the other hand, explains why CEOs are unable to tell Congress what their company even does; they have so many things going on in so many markets that it’s functionally impossible for them to comprehend their overall risk exposure.

Then we get to size; if a large firm fails, there’s simply too much at stake on a national level and socially important investors, e.g. pension funds, can be wiped out. In addition, a large firm will have undue clout in Washington, giving banks excessive influence on the rules that govern their operations.

Now, if you simply regulate systemic risk, you can’t effectively stop a firm from developing crippling internal complexity or from using its size and clout to relax regulations. In the same way, if you limit internal complexity there is still a high level of systemic risk and regulations can still be pared back.

The only way to effectively regulate financial institutions is to ensure that they cannot become too big to fail. This has the added benefit of making it far less likely that a firm will become too complex or systematically vital. So in the event of a bankruptcy, there’s no macroeconomic threat; other firms can fill the niche.

In calling for a new “systemic risk“ regulator, Geithner misses another key point; that we already have one (see, Federal Reserve).

Furthermore, regulators already have immense power. They can literally tell a firm it no longer exists, which is exactly what the FDIC does about once a week these days.

This is key. The problem lies not so much in the current structure of regulation, but in its implementation. Geithner’s new regime misses that these banks did have regulators; it’s just that regulators didn’t do their job.

And there are plenty of reasons. Regulators weren’t capable (remember internal complexity?); didn’t have the resources (conservatives cut their budgets and staff, and the FBI diverted over 500 agents away from its financial fraud division to investigate hippies after 9/11); didn’t see a problem (Greenspan); had friends in finance (Larry Summers, more on him in a bit); or engaged directly in fraud (failed bank IndyMac’s head regulator actively coordinated with the bank to cook its books, a move that ended up costing the FDIC $10.7 billion).

But that’s not all. Many regulators generate fees from the banks they oversee, which incentivizes them to regulate a lot of banks. But banks have the ability to choose their regulator, which incentivizes them to select the most forgiving one. Thus, in the build up to this crisis, regulators offered less comprehensive oversight in order to attract “clients.“

Then there was the ideological aversion to regulation, which led lawmakers to actively deregulate the industry. Besides Greenspan, another prime example is Neal Wolin, Geithner’s recent nominee for the treasury’s number two spot and was an integral author of deregulatory legislation in the 90s.

Finally, there’s the revolving door of finance and government. And for that, we need look no farther than Larry Summers, Obama’s lead economic advisor.

Summers was most recently a “part-time director“ of the world’s sixth largest hedge fund, D.E. Shaw and Co., before joining up with Obama. For his trouble, that is, for showing up once a week, Summers was paid $5.2 million in 2008. It seems D.E. Shaw and Co. was either buying access to power or just saying thanks for Summer’s tenure as treasury secretary where, from 1999 to 2001, he too pushed hard for increased deregulation of financial markets.

Summers also took part in the most transparent racket in America: the speaker circuit. This is where powerful political elites command fees greater than the yearly income of two-thirds of American households (about 60 grand) to talk to small groups of really rich people. It’s basically a legal way to bribe and launder money, and serves again to either buy access for future handouts, show thanks for previous handouts or, in the case of Summers, both.

The man raked in over $2.7 million in 2008 just for talking, taking payment from the likes of Citigroup ($99,000), American Express ($67,500), Goldman Sachs ($202,500), JPMorgan Chase ($67,500) and Lehman Brothers ($135,000). These companies have received a combined $83.4 billion from the TARP alone, not counting various guarantees and other support programs.

And while the administration claims that Summer’s payolas “long pre-date“ his work for Obama, it’s hard to imagine how they could justify that; his last paid speaking engagement was on Nov. 11, a week after the election and just two weeks before being appointed to his current post.

Summer’s situation has eerie, though less sinister, parallels with Dick Cheney’s Halliburton scandal. In case you forgot, Cheney was sitting on $34 million in “retirement“ money (yet another large thank you for his stint as defense secretary under Bush I) as he made energy policy behind closed doors with executives from companies like Enron and ExxonMobile.

I mean, I guess it’s an improvement that Obama’s recent kumbaya with the most unrepentant and fraudulent executives in capitalism, at which Summers and Geithner were present, was public knowledge; and at least the man who is one of the chief architects of the administration’s economic policy only made $8 million from the industry he’s currently working with; but come on.…

Summer’s tale is just one among many, which is why Geithner’s regulatory proposals fall short. Creating more underfunded, understaffed regulators cut from the same cloth as the men they’re supposed to regulate won’t do the trick.

With no serious attempt to include transparency for the resolution authority, to increase regulatory manpower and funding, to subsequently oversee those regulators, to undo Washington’s revolving door, to get regulators off the dole of the banks they regulate and to crack down on fraudulent rating agencies, there’s no real fix involved; just a consolidation of power among the financial elite at our expense. As I said last week, the fuck-you is in the fine print.

I hope you brought your reading glasses.

K.C. CODY is tired of talking about the banks. Give him something else to complain about at kccody@ucdavis.edu.

Super Senior,

What are the important dates coming up in spring quarter?

Workin For The Weekend

Ah yes, spring quarter. When the nights are short and the skirts are shorter. Generally speaking, the next two to three months will be the most rockin‘ two to the three months of the year. Almost every weekend has something going on that’s either fun to watch, fun to do or fun hear other people tell you about how much fun you seemed to have watching or doing. Here are the obvious standouts in very particular, some might even say chronological, order:

Picnic Day: 4/18. I know a guy who woke up at 5:30 a.m., passed out at 9 a.m., woke up at noon, passed out again at 4 p.m., woke up a third time at 7, and rallied until midnight. He is a champion. You, too, can be a champion.

4/20: 4/20. No, we’re not commemorating Columbine, we’re all just college students with glaucoma.

Rec Pool: 4/25 to whenever. Two points. One: Kudos to whoever designed the ads for this thing, they’re catchy as all hell (though I will say that I think Apple and the X-Men guys might want some credit). Two: Looking back to 4/18, this will likely cap the most baller week ever.

Cinco de Mayo: 5/5. Crack a Modelo Negro (anyone I see drinking Corona will get the ShamWow treatment), do some tequila body shots, drink the worm, pick some grapes for cash under the table, whatever.

The Whole Earth Festival: 5/8 to 5/10. This holds all the potential of the previous four events wrapped up in a tidy little hemp knapsack. Thankfully, you have three days to do it. Jump in on a drum circle, go to the hippie raves, get a henna tattoo, and for you conservative types, just sit back and laugh at all the blind fools not maximizing their utility.

Houseboats: 5/22 to 5/25. Work out really, really hard for the next six weeks to build your body up so that after you spend four days absolutely obliterating it you’ll be right back where you started. I think I remember this weekend being important for some other reason, something to do with memorials or something.

Anyhow, that about wraps it up. After Houseboats it’s a long, slow and likely scorchingly hot death until finals week. So if you get bored, I guess you could either study in the air-conditioned library or walk off someplace and drop acid. Your choice.

Super Senior,

Do you have any significant disagreements with the Aggie’s “Best of” edition this year? I think there’s a conspiracy against Ali Baba’s for best burger.

Owner of Ali Baba’s

Yeah, I’ve got some disagreements with the list, but on the whole I think it captured the zeitgeist of the town. You’re absolutely right about Ali Baba’s though; their burgers and fries put Burgers ‘n Brew to shame and make In-N-Out’s standard fare look like McDonald‘s (animal-style and 4×4 excepted).

But my biggest beef comes in the best bar category. How could Café/Bar Bernardo, with their signature, night capping/weekend ruining Wicky-Wacky-Woo, not make the list? That The G Street Pub made it is equally absurd; just looking at the place makes me feel like I need a shower.

I would like to add a category though; best leftovers. I get to-go boxes all the time, and there are definitely some places that do better than others out of the box the next day. I’m sure the various pizza joints would scuffle with the Chinese restaurants over this one, though you could make a case for Guad. That said, there will always be a special place in my heart for three day old Papa John’s.

Super Senior,

What is the absolute worst class you ever took at Davis?

Asker of the Most Benign Question Ever

That’s a toss up between Chemistry 118A – Organic Chemistry for Health and Life Sciences and Wildlife Fish and Conservation Biology 110 Lab – Ecology and Conservation of Wild Mammals.

In the case of the former, unless you are absolutely, positively certain that you are going to be a doctor, take the Chemistry 8 series. There is no reason on God’s Green Earth to subject yourself to material that is both conceptually difficult and that you will never, ever in your life use for any purpose. The class burned me so bad that I took a full year off from chemistry, after which I begrudgingly enrolled in CHE 8B, got a B and called it even.

In the case of the latter course, if you’re all pro at turning your brain into Wikipedia, go for it. If you’re like the rest of us who understand that doing a Google has made the ability to spontaneously recall random information from one’s own brain obsolete, this class is not for you. Sample problem: From a jaw bone, give the full scientific name, date of family divergence, geographic distribution, defining characters, habitat and ecological niche of the species. Repeat 128 times.

I guess the point is, if you can avoid it, you don’t want to take any class that you know from the outset will be totally irrelevant to your future. That’s why I suggest, in all seriousness, that you take fly fishing. It’s rewarding, it’s relaxing and if the economy continues to sour, it’s potentially your only source of food.

K.C. CODY is sad that this is his last spring quarter. Cheer him up at kccody@ucdavis.edu.

The deep interplay between language and power blurs the distinction between the two. To control how something is spoken about is to control how something is perceived.

As with any source of power, such as money, drugs and the capacity to really fuck you up, language has been heavily politicized.

The government of every nation is guilty to a greater and lesser extent of manipulating public perception through language, but nowhere in the world would more inspire George Orwell to sequelize 1984 than right here in the U.S. of A.

In the first months of the Obama administration, a disquieting trend has emerged: wrapping up ugly political truths in shiny new language to bury or beautify the negative connotations and public opinion they carry.

Perhaps most notable is the renaming of the “War on Terror” to “Overseas Contingency Operation.” No joke. The “OCO“ is the official new title of the Middle East carnage that was the ideological mainstay of Bush foreign policy. The “War on Terror“ was itself an abuse of language to power, using words that create an absolutist and cavalier mode of thinking.

To help me decipher the complex illusion of semantics and political doublespeak we’ve been subjected to lately, I enlisted the help of UC Davis communication professor John Theobald.

First up: the “War on Terror.“

“It created this salivating kind of response to go in and kick ass,” he said. “It understates what we’re involved in the Middle East – to dismiss fanatics as terrorists is to miss the point.“

By contrast, the “Overseas Contingency Operation“ is bamboozlingly bureaucratic, pushing out the red-toothed fervor of “War“ in favor of gray, wordy and forgettable phraseology.

Even Theobald was a bit confounded. “I don’t know the intent or effect of renaming,” he said, “but it substitutes a language of policing for military invention.“

Soldiers and civilians keep on dying just the same though. Obama is at present promising an upscale of troop commitment in Afghanistan that puts the Iraq “surge“ to shame, while at the same time increasing remote bombing of Pakistan by joystick-twiddling drone pilots (and giving the poor bastards a whole new kind of PTSD). And those are just the campaigns we know about.

You’ve assuredly heard about “toxic assets,“ those bad loans and loan-based financial products that wrecked the New York Stock Exchange. See, when the housing bubble collapsed, it made “toxic“-holding fraudulent creditors realize that lies lose their value when the lights come on. Fortunately, the Obama administration has sanitized this language, replacing “toxic assets” with the aristocratic “legacy assets.“

Speaking Obamese, predatory lenders and securities/derivatives movers played the game wrong, but rather than “toxifying“ the economic environment, they merely left behind a “legacy” … of costly, costly fraud.

“This happens all the time in marketing,” Theobald said. “During the 1990 to 2006 housing bubble, it was a good time to buy. Now, with falling prices, it’s still a good time to buy.“

Again, words were used to put a silver lining around something vile – and erect a barrier of misunderstanding between the public and the government.

Tweaking public opinion with language is no new trick for the Obama PR team. Barrages of “hope” and “change“ dressed up Obama’s every move in Galahad’s white armor and supportive media entities weren’t hesitant to use the word “Messiah.“ These words are intensely subjective and this buzz-word sloganeering dropped psychological seeds and led the voting public to fill in the gaps.

And it goes on and on.

“‘Green solutions‘ refer to corn ethanol – an alternative to fossil fuels that has been panned by everyone but politicians and corn farmers,” Theobald said.

The plan is impossible due to issues of food prices, waste products and, most importantly, the inability to supplant demand, a situation Theobald described as “a complete boondoggle.“

“Ethanol takes just about as mush fossil fuel energy to produce and yields a lousy fuel relative to gas,” he said.

Neither green nor a solution, but boy does it sound good.

“Clean cars“ are just as mislabled, Theobald said. “Calling something a ‘clean car‘ creates these perceptions that are kind of laughable. Is it running on air?”

“Accountability“ means letting the outgoing administration get away with burning the Constitution, just like every other executive offender. Maybe the next guy will be accountable.

“Socialism“ creates the false image of an absolute anti-American who would send this country spiraling into shortage and strife through nationalization of product. This is in opposition to the humanistic goals that socialism is actually based on and skirts the truth – that we’re already experiencing the worst side of socialism through the bailout of failing banks and industries. Privatize the benefits, socialize the losses. The people who benefit from this scheme are numerically so few it’s mathematically sound to say they don’t exist. Everyone loses!

“Tax reform“ means letting the Bush tax cuts, obscene concessions to the wealthiest 1 percent, expire back to their Clintonian levels. What change!

The linguistic differences between Bush and Obama reveal the different styles of control the two employ. Bush wanted you to cower dumbfounded at the feet of a cowboy, whereas Obama would prefer you to slog confusedly on in service to a well-dressed bore who knows a ton more than you.

When a public’s language is continually redefined to further private ends, the intended result is essentially an illiterate public – a public only fluent in the language of the Party’s choosing. To penetrate through the linguistic haze, Americans need to be awake, skeptical and discerning. “The defense for doublespeak is to know the facts,” Theobald said. “We need to know what underlies the story.” Don’t let yourself be told in what language to object. Observe, then define.

Some say the totalitarian culture of 1984 is overdue. I say it’s just hiding behind the words.

CHEYA CARY wracked his brain to make a reference to the Junior Anti-Sex League, but it just didn’t happen. Send your dystopian laments to cheya.cary@gmail.com.