Thursday, December 18, 2008

Warren No Peace

Obama's choice of avowed bigot Pastor Rick Warren for his invocation has raised a couple of excellent responses from the Left, like Kos and John Aravosis.
Markos makes an excellent point, that goes far beyond the Warren controversy.
Obama wouldn't be out there making perhaps the strongest statement in support of gays and lesbians by a president (though he's still not technically one, I know) if it wasn't for the sturm and drang this choice generated. It is precisely this backlash that has forced Obama to clearly affirm his commitment to equality. And it will be continued pressure that will force him to do the right thing on the issue.

If we shut up, he'll take the path of least resistance. And that path of least resistance is kowtowing to the conservative media, the clueless punditocracy, and bigots like Warren.
First off, Markos is correct. The sad lesson we're learning is that we're not going to get squat, any of us, gay or straight, if we don't beat the crap out of our elected officials on a regular basis.
I'm in total agreement with the both of them, of course. In the end, Obama is a politician. Politicians make calcuated political manuevers all the time, it's what they do. Obama's no different in that respect. Nobody ends up President who isn't a political animal, through and through.

I like the guy. But "better than Bush" is not acceptable. Not after the sheer level of damage wrought to our country, damage that will take decades if not longer to recover from. Obama is being held to a higher standard, fair or not. The situation dictates that he absolutely has to be, or America isn't going to make it. Period. The pressure on him is crushing. But he ran for the office and was elected, knowing full well all the work that has to be done for the good of the country right now.

So yes, when Obama or any other politician makes such a crude, stupid move, they get called on they should.

Get To Dah Choppah!

Roubini vs. Helicopter Ben's Zero Interest Rate Policy (ZIRP)!

Round One.

The Fed decision to cut the target for the Fed Funds rate to the 0% to 0.25% range is just underwriting what was already obvious and happening in reality: While the target Fed Funds was until Tuesday still 1%, in the last few weeks--following the massive increase in liquidity by the Fed--the actual Fed Funds was already trading at a level literally close to 0%.

So the Fed just formalized what had already been happening for weeks now, i.e., that the Fed Funds rate was already zero and that the Fed had already moved to quantitative and qualitative easing (QE) in the form of a massive increase in the monetary base and aggressive use of monetary policy to reduce short-term and long-term market rates that are stubbornly high in a sign that the credit crunch is severe and worsening.

I predicted early in 2008 that the Fed Funds rate "would be closer to 0% than to 1%" in the midst of a severe recession. Now, 12 months into this severe recession--a recession that will last at least another 12 months (if not, as is possible, much longer)--the Fed Funds rate is already down to 0% (the beginning of the zero-interest-rate-policy, or ZIRP, for the U.S.) and the Fed has moved into uncharted unorthodox monetary policy as a severe stag-deflation is taking place.

And, as predicted by me over a month ago, the Fed is now committed to keep the Fed Funds rate close to zero for a long time (as a way to push lower long term Treasury yields); purchasing agency debt and agency MBS in massive amounts; and even considering purchasing long-term Treasuries as a way to push lower long-term government bond yields that are already falling sharply.

More aggressive policy actions may be undertaken by the Fed as a severe credit crunch shows no signs of relenting. In a 2002 speech on deflation, Ben Bernanke spoke even of helicopter drops of money, monetizing fiscal deficits and even buying equities.

The latter actions have already been partially undertaken: The Fed is effectively already monetizing U.S. fiscal deficits as the purchase of markets assets is financed with the Fed printing presses rather than the TARP program. And now, with the Fed considering the purchase of long-term Treasuries, such monetization of deficits will be made more formal.

Also, since the TARP has been turned into a program to recapitalize financial institutions (and thus boost their capital and market value), the U.S. has already effectively intervened indirectly in the equity market (by partially nationalizing a good part of the financial system). Once the Fed starts to buy the long-term Treasuries financing the TARP program, this indirect Fed purchase of U.S. equities will be even clearer.

While Fed actions to reduce mortgage rates--via purchases of agency debt and agency MBS--are partially successful as long-term mortgage rates are falling, most of the Fed purchases of private assets have been so far limited to very high-grade securities.

Thus, the gap between the yield on high-grade commercial paper purchased by the Fed and the one that the Fed is not purchasing is sharply rising; ditto for the gap between agency MBS and private label MBS. Also, while long-term Treasury yields are sharply falling, the spread of corporate bonds--both high-yield and high-grade--relative to Treasuries remains huge as a sign of a severe credit crunch.

Thus, as a next step, the Fed may be soon forced to walk down the credit curve and start buying private short-term and long-term securities with lower credit ratings. That would mean the Fed will take on even more credit risk than it is already taking on today while purchasing illiquid private assets. But desperate times lead to desperate actions by desperate policy makers.

Not good. In other words, the Fed plan is this:

  1. Lower interest rates to zero.
  2. Make shit up as we go along and hope it works.
  3. Profit!
Which is a friggin' great plan, if, you know, you're not the central bank of the largest economy on Earth.

We're currently on Step 2 up there. We'll be there for quite some time.

More Tortured Logic

Via BooMan, we discover the NY Times Editorial Board has a problem with people who torture.
Most Americans have long known that the horrors of Abu Ghraib were not the work of a few low-ranking sociopaths. All but President Bush’s most unquestioning supporters recognized the chain of unprincipled decisions that led to the abuse, torture and death in prisons run by the American military and intelligence services.

Now, a bipartisan report by the Senate Armed Services Committee has made what amounts to a strong case for bringing criminal charges against former Defense Secretary Donald Rumsfeld; his legal counsel, William J. Haynes; and potentially other top officials, including the former White House counsel Alberto Gonzales and David Addington, Vice President Dick Cheney’s former chief of staff.
That's no joke, folks, when the Gray Lady is calling for criminal charges against cabinet members. The Senate report itself is pretty damning.
"The abuse of detainees in U.S. custody cannot simply be attributed to the actions of 'a few bad apples' acting on their own," the report states. "The fact is that senior officials in the United States government solicited information on how to use aggressive techniques, redefined the law to create the appearance of their legality, and authorized their use against detainees."

The report is the most direct refutation to date of the administration's rationale for using aggressive interrogation tactics -- that inflicting humiliation and pain on detainees was legal and effective, and helped protect the country. The 25-member panel, without one dissent among the 12 Republican members, declared the opposite to be true.

The administration's policies and the resulting controversies, the panel concluded, "damaged our ability to collect accurate intelligence that could save lives, strengthened the hand of our enemies, and compromised our moral authority."

The panel drew from congressional testimony and official documents, many of which were previously released during a nearly two-year probe. While many of the underlying facts were known, the report represented the most significant attempt by Congress to assess one of the defining controversies of the Bush presidency.

"These policies are wrong and must never be repeated," McCain said in a statement.

Rumsfeld seems to get the most of the criticism and deservedly so. Of course, he denies everything and blames Congress for even daring to investigate this sort of thing.
Rumsfeld, who served as defense secretary from 2001 to 2006, rejected the report's conclusions and said it was the committee, particularly Levin, that had sullied the nation's image.

"It's regrettable that Senator Levin has decided to use the committee's time and taxpayer dollars to make unfounded allegations against those who have served our nation," said Keith Urbahn, an aide to Rumsfeld. He accused Levin of pursuing a politically motivated "false narrative" that is "unencumbered by the preponderance of the facts."

So the real question is will Bush pardon these assholes on the way out the door? I think it's a distinct possibility, because come January 20, the Democrats will have the leverage needed to start some real fireworks.

Besides, I'm thinking Senate Armed Services Committee chair Carl Levin, Michigan's senior Senator, may be looking for a little payback for the GOP at this point.

Dear America:

"Obama's crackpot 'green energy' plan? Are you kidding? Every President since Johnson has tried and failed miserably to get us off foreign oil. He's crazy, I tell you! TAXES! TAXES! JOB LOSS! BLAH BLAH BLOOGITY BLAH TAAAAAAAAAXES! HE MIGHT CAUSE A RECESSION!"

--Arthur Laffer, Wall Street Journal

Merry Christmas, You Unionized Bastards

Looks like the White House might now get around to a bailout decision before Christmas Day.
The White House and the Treasury are deep into negotiations with General Motors and Chrysler over reorganization plans that could result in freeing up more than $14 billion in emergency loans to keep the companies afloat through the first quarter of 2009, according to industry executives and a senior administration official.

The Bush administration appears to want an agreement with the automakers before Dec. 25. It was unclear, however, when all of the particulars might be worked out, said the senior official, who spoke on the condition of anonymity because of the delicate nature of the negotiations.

But the official indicated that the administration was inclined to do more than just keep G.M. and Chrysler alive until President-elect Barack Obama takes office, saying, “Giving them enough money to limp along doesn’t solve anything.”

In the negotiations, the Treasury secretary, Henry M. Paulson Jr., is effectively taking on the role of “auto czar,” which was envisioned in the carmakers rescue bill written by the White House and Congressional Democrats and approved by the House but blocked by Senate Republicans.

In the days since the White House said it would step in to prevent the collapse of G.M. and Chrysler, Treasury officials have been poring over detailed financial data in a meticulous exercise that one G.M. executive likened to “putting on the aqualung” and diving deep into the companies’ books.

One has to wonder if Citigroup, AIG, and the rest of the financials that quietly took hundreds of billions had anybody dive into THEIR books before they got any cash.

As one commenter said yesterday, "...I definitely lean towards survival of the fittest and seeing that they brought this on themselves in many ways. Bailing out might help (might!), but so would better practices and less waste." That's true. But my gut feeling is that the damage is done, and that the US auto industry won't be around in a couple of years in any form. I honestly forsee Big Three plants broken up, sold to foreign companies and liquidated. There may not be anything Obama can do to save them short of nationalizing the industry. I doubt even Obama is willing to make UAW workers into Federal employees.

As I've said, America in early 2011 is going to look a lot different from America early 2008.


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