Last Call

Tomorrow will indeed be GM's deadline day for declaring bankruptcy.

Heralding a new and uncertain era for the No. 1 U.S. automaker, GM will file for Chapter 11 bankruptcy protection at the U.S. Bankruptcy Court in the Southern District of New York before the start of trading, according to sources with direct knowledge of the preparations.

Government support for GM is expected to total up to $60 billion. Nearly half of that money has already been extended this year in emergency aid.

President Barack Obama plans to speak on the auto industry at 11:55 a.m EDT (1555 GMT) on Monday, according to his official schedule, as the federal government prepares to take a majority stake in the once-mighty company.

After Obama's remarks, GM Chief Executive Fritz Henderson is due to hold a news conference at the offices of the New York law firm that handled the Lehman Brothers bankruptcy.

The bankruptcy is the most carefully orchestrated Chapter 11 filing in the history of American business.

So now the blame game begins...what killed GM? Was it run into the ground? Did they make cars Americans didn't want? Were they forced out of business by competitors?

Pay attention to the reasons given. I'm betting few, if any, are the full story.

Will Anyone Rid Me Of This Troublesome Abortion Doctor?

...the Wingers said about Kansas physician and late-term abortion specialist George Tiller.

Today, we saw the results of the seeds of hate sewn by the Right.

George Tiller, a Wichita doctor who was one of the few doctors in the nation to perform late-term abortions, was shot to death on Sunday as he attended church, city officials in Wichita said.

Dr. Tiller, who had performed abortions since the 1970s, had long been a lightning rod for controversy over the issue of abortion, particularly in Kansas, where abortion opponents regularly protested outside his clinic and sometimes his home and church. In 1993, he was shot in both arms by an abortion opponent but recovered.

He had also been the subject of many efforts at prosecution, including a citizen-initiated grand jury investigation. In the latest such effort, in March, Dr. Tiller was acquitted of charges that he had performed late-term abortions that violated state law.

The shooting occurred at around 10 a.m. (Central time) at Reformation Lutheran Church on the city’s East Side, Dr. Tiller’s regular church.

To many people, the man that killed George Tiller is a honest to God American hero. It was just a few weeks ago that the President spoke at Notre Dame about a new dialogue and direction on the abortion debate.

The Wingers have responded with "It sure is a shame that filthy baby killer was gunned down in church."

[UPDATE] Salon has more on Bill-O's crusade against George Tiller...a man he has featured on "The O'Reilly Factor" 28 times as "Tiller the Baby Killer."

This is where it gets most troubling. O'Reilly's language describing Tiller, and accusing the state and its elites of complicity in his actions, could become extremely vivid. On June 12, 2007, he said, "Yes, I think we all know what this is. And if the state of Kansas doesn't stop this man, then anybody who prevents that from happening has blood on their hands as the governor does right now, Governor Sebelius."

Three days later, he added, "No question Dr. Tiller has blood on his hands. But now so does Governor Sebelius. She is not fit to serve. Nor is any Kansas politician who supports Tiller's business of destruction. I wouldn't want to be these people if there is a Judgment Day. I just -- you know ... Kansas is a great state, but this is a disgrace upon everyone who lives in Kansas. Is it not?"

This characterization of Tiller fits exactly into ancient conservative, paranoid stories: a decadent, permissive and callous elite tolerates moral monstrosities that every common-sense citizen just knows to be awful. Conspiring against our folk wisdom, O'Reilly says, the sophisticates have shielded Tiller from the appropriate, legal consequences for his deeds. It's left to "judgment day" to give him what's coming.

And indeed, somebody took it into their own hands to judge George Tiller.

Paging Dr. Galt

Hugh Hewitt's argument against Obamacare is that thousands of doctors will simply retire or leave practice if it passes, causing such a critical shortage of physicians that America's life expectancy will decrease precipitously, and that Blue Dog Dems must be made to understand that they have to rise up and kill the bill before it reaches the Senate in order to save America.

Whatever happened to "First, do no harm?" Thousands upon thousands of docs will "Go Galt" if Obamacare passes? I understand and sympathize that being a doctor is arguably the most important job out there, with life and death hanging in the balance on a daily basis.

But I'm supposed to believe doctors will simply quit being doctors because Americans without insurance options are given insurance options?

If it really is all about the money, then retiring early seems rather stupid, doesn't it?

It's illogical GOP fearmongering, like everything else they do.

Last Call

A well-dressed thief walks into an upscale Paris store, brandishes a gun, and gets away with millions in jewelry.

Ahh, the city of lights...

Building A Wall

Israel seems rather annoyed that Obama is sticking to his guns on the Israeli settlement issue. Clearly both sides are setting boundaries here: Israel fully expects Obama to cave under pressure from the Israel lobby, and Obama clearly expects Israel to deal with the fact that Obama is a different President.

These two notions are not mutually compatible. One or the other is going to have to give. As D-day points out, the GOP is a little busy calling Sonia Sotomayor a racist bigot governed by her menstruation cycle, but as soon as the Wingers figure out what's going on, the attacks on Obama will begin in earnest:

It's really fascinating, and I honestly don't know how it'll play out. The wingnuts are preoccupied with calling a circuit court judge a racist right now, but I wouldn't be surprised to see the Wurlitzer ramp up on this before too long. Expect some stories about the Black Muslim in the White House siding with the Palestinians, when in actuality, Obama is siding with the Israelis by insisting on the only avenue for progress. Bully for him.

But Israel doesn't want peace. Netanyahu will continue to build those settlements and dare Obama to do something about it. Obama and Hillary Clinton can insist all they want, but they are going to have to bring real pressure on Bibi to get anything done.

And as soon as they get that, the "Obama the Israel Hater" campaign will go full speed ahead.

Petraeus Drops A Bomb

Naturally, Army Generals tend to do that kind of thing, but David Petraeus did it on FOX News.

The head of the US Central Command, General David Petraeus, said Friday that the US had violated the Geneva Conventions in a stunning admission from President Bush’s onetime top general in Iraq that the US may have violated international law.

“When we have taken steps that have violated the Geneva Conventions we rightly have been criticized, so as we move forward I think it’s important to again live our values, to live the agreements that we have made in the international justice arena and to practice those,” Gen. Petraeus said on Fox News Friday afternoon.

Petraeus made the comment in the context of being asked about the Bush administration’s so-called “enhanced interrogation techniques.” The now-Central Command chief said he believed that banning the more extreme techniques had taken away “a tool” employed by “our enemies” as a moral argument against the United States.

Petraeus didn’t say which parts of the Geneva Conventions he thought he and other administration officials had violated.

Now, in one sense it could be a slip. in another sense, our top General in Iraq just admitted that the American military has committed international war crimes.

Not "if". Not "others say we have". It's "We have taken steps that have violated the Geneva Conventions". That's devastating. We are bound by international law to investigate and prosecute based on this.

Yet...nobody seems to have caught this other than the lefty blogs, and Petraeus goes on to say that he not only believes that we violated the Geneva Conventions on torture, but that Gitmo should be closed, and that terrorists should be tried in courts of law...basically everything I've been saying for the last several months.

And yet both the President and the Wingers are suddenly ignoring the guy. Talk about a Friday Night News Dump.

My opinion of David Petraeus up until now has not been very high. All that has changed dramatically in the space of a five minute interview with FOX.

StupidiNews, Weekend Edition!

• Jay Leno bid his farewell after 17 years on The Tonight Show with "Goodbye, I'm not going anywhere."
• An off-duty black cop was shot and killed in Harlem by another NYPD officer.
• A Miami judge awarded $1 billion in damages to a man who tracked Che Guevara for the CIA, but collecting the money from Cuba may be impossible.
• California will officially be broke on July 29th unless major budget changes are made.
• Senate Commerce Committee chair Jay Rockefeller takes on web loyalty programs that charge people monthly fees without their knowledge.

Village Versus Sonia

The Village continues to brutally attack Sonia Sotomayor with nastily personal stuff, today it's the AP's Sharon Theimer ripping into her supposedly false "rags-to-riches story".

With each passing day the so-called journalism surrounding Sotomayor's Supreme Court nomination gets more and more gruesome. Today, and it's early yet, the top honors in that category goes to the AP's Sharon Theimer with a piece that needs to be examined in order to understand just how dreadful our 'serious' press corps has become.

First up:

There are two sides to Supreme Court nominee Sonia Sotomayor: a Latina from a blue-collar family and a wealthy member of America's power elite. The White House portrays Sotomayor as a living image of the American dream, though its telling of the rags-to-riches story emphasizes the rags, a more politically appealing narrative, and plays down the riches.

Message: Sotomayor and the White House are hypocrites because they talk about the nominee's "blue collar" upbringing but don't talk about how "wealthy" she is; they don't dwell on her "riches."

If you read the AP, it seems that Sotomayor is privately living in the lap of luxury but she doesn't want anyone to know about it. But is she? The AP's got the proof:

She now earns more than $200,000 a year and owns a condominium in Greenwich Village, a neighborhood of million-dollar-plus homes. Her brother, Dr. Juan Sotomayor, is a physician in North Syracuse, N.Y., whose practice doesn't accept Medicaid or Medicare - programs for the poor and elderly - according to its Web site.

Does 'guilt' by association come any more rank than this? Sotomayor lives--she owns a condo--in a neighborhood where some very rich people own expensive "homes." How much is Sotomayor's condo worth? Did it cost millions? The AP has no idea, but Sotomayor's neighbors have a lot of money, so that's all readers need to know. (Note to AP editors, in NYC pretty much every neighborhood in Manhattan has "million-dollar-plus homes.")

And what about Sotomayor's brother? Well, he's rich because he's a doctor. Plus, his practice doesn't accept Medicaid or Medicare. I'd sure to curious to hear Theimer's justification for how that has anything to do with the Supreme Court nominee. And more importantly to her editors, has the AP ever in its history of Supreme Court reporting--ever, ever, ever?--spotlighted the billing processes of a sibling in order to take a swipe at a raising star judge?

Nope. Nor have you ever seen a Supreme Court nominee get blasted for making a salary either. "You're supposed to dislike her because she thinks she's better than you" is the underlying theme of this lovely little AP piece. She's not really from the Bronx, she's a sell-out. She's not like us normal Americans at all...and psst...she's Hispanic!

But that's what Change means to the Village...launching personal attacks to try to scuttle everything Obama does. Sotomayor is simply fair game.

[UPDATE] G. Gordon Liddy's radio show yesterday on Sotomayor: "Let’s hope that the key conferences aren’t when she’s menstruating or something, or just before she’s going to menstruate."

For the love of God. Find me one liberal radio host who would say that about anyone.

Village Idiocy

Which is a more depressingly moronic example of the state of the Village, FOX's Major Garrett asking about stupid and unfounded Winger rumors about Dealergate during a White House press briefing, or World Net Daily's Lester Kinsolving asking about stupid and unfounded Winger rumors about Obama's birth certificate during the same White House press briefing?

FOX should know better, but what the flaming hell is World Net Daily doing with White House press credentials? Are they handing those out with the tinfoil or what?

This is journalism? Idiotic and false attacks on Obama, daily?

[UPDATE] Peggy "Keep On Walkin Mysteriously" Noonan yells at Republicans for not being grown-ups.

Peggy Noonan is doing this.

Team Fortress, Too

The Pentagon is going to war on the internets.

The Pentagon plans to create a new military command for cyberspace, administration officials said Thursday, stepping up preparations by the armed forces to conduct both offensive and defensive computer warfare.

The military command would complement a civilian effort to be announced by President Obama on Friday that would overhaul the way the United States safeguards its computer networks.

Mr. Obama, officials said, will announce the creation of a White House office — reporting to both the National Security Council and the National Economic Council — that will coordinate a multibillion-dollar effort to restrict access to government computers and protect systems that run the stock exchanges, clear global banking transactions and manage the air traffic control system.

White House officials say Mr. Obama has not yet been formally presented with the Pentagon plan. They said he would not discuss it Friday when he announced the creation of a White House office responsible for coordinating private-sector and government defenses against the thousands of cyberattacks mounted against the United States — largely by hackers but sometimes by foreign governments — every day.

But he is expected to sign a classified order in coming weeks that will create the military cybercommand, officials said. It is a recognition that the United States already has a growing number of computer weapons in its arsenal and must prepare strategies for their use — as a deterrent or alongside conventional weapons — in a wide variety of possible future conflicts.

Time to put all those scriptkids, hackers, /b-tards and WoW forum junkies to work in defending America against those asymmetrical cyber threats, I guess.

Here's my first question: If Obama's the one creating this Pentagon Cyber Command department, you would think 8 years after 9/11, how come Bush hadn't started the ball roling on this? Congress gave the guy a blank check after all. No money to stop Chicom hackers and Russian black hats? C'mon. Being fascist and military all over the net? Republicans should have really jumped all over this and thrown billions at tech companies for consulting...or maybe they did and just classified the hell out of it. Obama's just taking the credit for it, maybe.

Here's my second question: considering the internet is a major equalizer when it comes to getting out information for both sides of a conflict (one man's freedom fighter information page is another man's terrorist web site) will the Pentagon now be targetting the internet to create information blackouts? Is this what they mean by using "computer weapons alongside conventional weapons?" Or is this just another iteration of the old Total Information Awareness program?

Does the US need to defend its cyber turf? Absolutely...but borders and sovereignty on the net is a tricky thing. You weaponize those borders, and things can get nasty, quick.

StupidiNews!

• Eighth-grader Kavya Shivashankar is this year's National Spelling Bee champion, the winning word: 'Laodicean'.
• A winning $232 million Powerball ticket was sold in South Dakota.
• Aviation biofuels have passed performance tests with flying colors, but the major concern is supply.
• GM will indeed file for bankruptcy on Monday, with the government getting a 72.5% stake in the company.
• A new report of the video gaming industry shows holiday shovelware is here to stay.

Last Call

Wednesday June 3 is National Terrorist Fist Bump Day!

Word.

Zandar's Thought Of The Day

Despite Nate Silver sticking a fork in Dealergate, the Wingers refuse to believe in math. Between this and the Sotomayor nomination, the Wingers have completely lost any and all credibility. They might as well say "Obama is targeting white male Chrysler dealers" or something equally ridiculous, and then act all surprised when it turned out that a majority of the Chrysler franchise owners were in fact white males. It's a complete load of hogwash.

Oh, and notice that Nancy Pelosi is no longer a target.

Global No-Confidence Vote: Let Them Eat TARP

It's no surprise that the insolvent banks being propped up by taxpayer trillions continue to play games with America's money. After all, we've firmly established that the Obama administration is taking their cues from the financial industry on everything from accounting rules to the so-called "stress tests".

Ahh, but it gets even worse: Now we see the sweetheart deal the banks were given under the Geithner Plan were never acceptable in the first place...and the banks have no intention of participating in the program at all.

The Wall Street Journal reports that the Public-Private Investment Program -- better known as Geithner's Plan -- might never live at all.

The Legacy Loans Program [LLP], being crafted by the Federal Deposit Insurance Corp., [as] part of the $1 trillion Public Private Investment Program [PPIP] ... is stalling and may soon be put on hold, according to people familiar with the matter.[...]

PPIP was to be split between the FDIC program, which would buy whole loans, and one run by the Treasury Department focusing on securities. Treasury is expected to push ahead with its plan -- the larger and more substantial of the two -- and could begin purchases sometime this summer.

Given how much publicity -- and controversy -- Geithner's plan received when it was announced last March, that might seem a bit odd. But the reasons appear to be twofold. First, few investors or banks want to work with the government. And second -- and maybe more importantly -- few investors and banks now think they'll have to. The banks, in particular, are apparently enthused by their ability to raise private capital, and now think they can wait out the market turmoil and sell their toxic assets in a few years, when they'll be worth more money.

And after all, with the back door bailout of the banks through AIG, and the mark-to-market accounting rules, the banks have all the money they need to appear solvent. Why muck around with the government's overt rules and regulations -- including limits on executive pay -- when they have all the money they need to "provide an adequate cushion" from the taxpayer to begin with?

And considering the cushion was negotiated down by billions anyhow, the banks are more than willing to let bygones be bygones. They want the TARP money off the books, but they want to keep the AIG counter-payments, meaning they get free money without any strings attached. Considering they continue to hold trillions in Weapons of Financial Destruction, the banks can continue to extort the under the table cash while looking like heroes denying the need for more overt government monies.

It's a brilliant plan. Confidence restored! All it did was cost us trillions in taxpayer money that will never be repaid.

Ahh, but the last laugh may be on the banks. With the commercial real estate market falling apart and the housing market still in shambles, rapidly rising unemployment will come back to haunt banks very soon. Once again they will be in danger of going under...and then people will ask "Hey wait a minute...didn't you guys just say you were all fine back in April and May?"

Alas, this second phase of the financial collapse may scuttle everyone. So batten down the hatches, folks. The rest of 2009 is going to be a nasty reckoning.

Be prepared.

Carrying Water For The Big Dog

The normally dependable Kevin Drum experiences the spectre of doubt on the cause of the financial meltdown.

In an interview with Peter Baker, Bill Clinton says that although he regrets not regulating derivatives more strictly, he doesn't think that repealing the Glass-Steagall Act and allowing commercial banks to merge with investment banks was a big cause of our financial meltdown:

On the Glass-Steagall, I’ve really thought about that because No. 1, nonbank banking was already a major part of American life at that time. Letting banks take investment positions I don’t think had much to do with this meltdown. And the more diversified institutions in general were better able to handle what happened....I believe if you look at the blurring of the lines which already existed before that bill was signed — the bill arguably gave us a framework, at least, for which this process, which was happening anyway, could be regulated. So I don’t think that’s such a good criticism.

I think actually, if you want to make a criticism on that, it would be an indirect one; you could say that the signing of that legislation sped up what was happening anyway and maybe led some of these institutions to be bigger than they otherwise would have been and the very bigness of some of these groups caused some of this problem because the bigger something is and the newer it is the harder it is to manage.

I think this is roughly right. And frankly, even the "indirect" criticism that repeal of Glass-Steagall produced a glut of banks too big to fail seems a little hard to swallow. After all, even if Citi and Bank of America had remained purely commercial banks they still would have been too big to fail. Hell, Bear Stearns, a modest sized investment bank, was too big to fail. In the event, I doubt very much that Glass-Steagall had much if anything to do with our banking disaster.

My response:



Bullshit, Kevin. GLB most certainly was a major cause of this, and the Big Dog knows damn well it was. The fact of the matter is for all the good Clinton did accomplish, signing GLB into law was arguably his single largest mistake. Yes, banks started to get bigger by 1999. But the regulations watching over these institutions were gutted by GLB. As a result, companies like AIG got so big they would have taken down the entire economy if they had collapsed...and still might.

If the regulations left after GLB were enforced then that would be one thing. But they weren't...and GLB was a big cause of the problem. The difference between merely too big and too big to be allowed to fail, specifically, the difference between banks and banks with such heavy counterparty obligations to insurance companies, investment houses and other banks that their failure would destroy the economy was specifically the moral hazard created by GLB.

Bill Clinton's quietly trying to sweep the fact he signed this law under the rug. He's reponsible for this mess just as surely as Bush and his cronies are, and both Democrats and Republicans in Congress are as well. Pretending otherwise is pointless.

Widening The Schism

There's no greater evidence of the split between the Wingers and the GOP right now than the Sotomayor fight. The Michael Steele wing realizes this is in every way a losing battle: Sotomayor is the most qualified Supreme Court nominee in decades, with the most federal judge experience in seventy years, appointed by Poppy Bush to the federal courts, plus graduating top of her class in Princeton and Yale law school. There's no way they can attack her without coming across as disgustingly personal or being the Party of No, and this side is more than aware of what's at stake.

The Rush Limbaugh wing on the other hand couldn't care less. Their hatred for Obama so drives them to the point of insanity that they cannot accept a Latina on the Supreme Court unless that person is Alberto Gonzales in a dress. The sheer volume of the deluge of racism and misogyny is impressive, considering it has only been rougly 48 hours. They don't care if they come across as hating Hispanics and women...because they hate Hispanics and women.

The lastest insanity in this war? Sotomayor supposedly belongs to the Hispanic "identity group" La Raza.

As President Obama's Supreme Court nominee comes under heavy fire for allegedly being a "racist," Judge Sonia Sotomayor is listed as a member of the National Council of La Raza, a group that's promoted driver's licenses for illegal aliens, amnesty programs, and no immigration law enforcement by local and state police.

According the American Bar Association, Sotomayor is a member of the NCLR, which bills itself as the largest national Hispanic civil rights and advocacy organization in the U.S.

Meaning "the Race," La Raza also has connections to groups that advocate the separation of several southwestern states from the rest of America.

Which is much like any African-American professional belonging to the NAACP, or a Jewish professional belonging to any of a number of Jewish advocacy groups, or a female professional belonging to NOW, or a gay professional belonging to one of any number of gay rights advocacy groups.

But apparently we're supposed to believe a Puerto Rican woman from the Bronx who is a Princeton summa cum laude grad is secretly pushing for Mexico to retake the American southwest.

The GOP self-destruction continues. Congressional Republicans are trapped. They dare not fight their base on this, but they dare not go after Sotomayor on these completely insane racist attacks, either.

One of the two will have to give this summer, and either way the GOP loses.

Deal Of The Century

The newest Winger Obama Derangement Syndrome stupidity? The list of Chrysler dealers closed was generated by targeting specifically those dealers that donated to the Republicans.

No, really. That's the theory.

Evidence appears to be mounting that the Obama administration has systematically targeted for closing Chrysler dealers who contributed to Repubicans. What started earlier this week as mainly a rumbling on the Right side of the Blogosphere has gathered some steam today with revelations that among the dealers being shut down are a GOP congressman and closing of competitors to a dealership chain partly owned by former Clinton White House chief of staff Mack McLarty.

The basic issue raised here is this: How do we account for the fact millions of dollars were contributed to GOP candidates by Chrysler who are being closed by the government, but only one has been found so far that is being closed that contributed to the Obama campaign in 2008?

Florida Rep. Vern Buchanan learned from a House colleague that his Venice, Florida, dealership is on the hit list. Buchanan also has a Nissan franchise paired with the Chrysler facility in Venice.

"It's an outrage. It's not about me. I'm going to be fine," said Buchanan, the dealership's majority owner. "You're talking over 100,000 jobs. We're supposed to be in the business of creating jobs, not killing jobs," Buchanan told News 10, a local Florida television station.

Buchanan, who succeeded former Rep. Katharine Harris in 2006, reportedly learned of his dealership's termination from Rep.Candace Miller, R-MI. Buchanan owns a total of 23 dealerships in Florida and North Carolina.

Also fueling the controversy is the fact the RLJ-McCarty-Landers chain of Arkansas and Missouri dealerships aren't being closed, but many of their local competitors are being eliminated. Go here for a detailed look at this situation. McClarty is the former Clinton senior aide. The "J" is Robert Johnson, founder of the Black Entertainment Television, a heavy Democratic contributor.

I'm going to go out on a limb here and say that the majority of people who own dealerships are in fact pretty damn wealthy. In fact, I'm going to say that these dealers are wealthy enough to donate to political parties, and since most of them are local small business owners, they tend to strongly favor the Republican party as such.

What's the crucial piece of information missing from this story? The number of Chrysler dealers remaining open who donated to the Republican Party.

In fact I'm betting it's north of 80%. So yes, if 80% or 90% of ALL Chrysler dealers are Republicans because they are small business owners, then yes...you would expect in a fair process that 80 or 90% of the closed Chrysler dealer would also be Republicans and Republican donors.

But of course, nobody's asking THAT question. It's much easier to say "AHA OBAMAFASCIST CLOSED ONLY REPUBLICAN CHRYSLER DEALERS" and engage in baseless Obama-bashing. It's what wingers do, after all.

If only there was somebody who could run the numbers on that...paging Nate Silver at FiveThirtyEight!

Overall, 88 percent of the contributions from car dealers went to Republican candidates and just 12 percent to Democratic candidates. By comparison, the list of dealers on Doug Ross's list (which I haven't vetted, but I assume is fine) gave 92 percent of their money to Republicans -- not really a significant difference.

There's no conspiracy here, folks -- just some bad math.

It shouldn't be any surprise, by the way, that car dealers tend to vote -- and donate -- Republican. They are usually male, they are usually older (you don't own an auto dealership in your 20s), and they have obvious reasons to be pro-business, pro-tax cut, anti-green energy and anti-labor. Car dealerships need quite a bit of space and will tend to be located in suburban or rural areas. I can't think of too many other occupations that are more natural fits for the Republican Party. Unfortunately, while we are still a nation of drivers, we are not a nation of dealers.

And that just about wraps this one up, kids.

But thanks for playing.

A Jumbo-Sized Foreclosure Problem

Earlier this week I talked about the residential real estate market in Phoenix, Arizona, and noted the real problem will be foreclosures in the high-end market nationally. How bad is the real estate market for high-end homes?

This bad, according to CNBC's Diana Olick.

I heard a startling statistic from the National Association of Realtors this morning…no not that home sales are actually increasing, but something about the high end of the market.

Chief economist Lawrence Yun said that the supply of existing homes for sale over $750,000 has reached a forty-month supply. Yep, that means it would take well over three years at the current place to sell off all of those homes.

The trouble is manifold: Jumbo loans are pricier and more difficult to get, job losses are mounting, and buyers in that price home are generally move-up buyers, so they have to sell their own homes first. I asked Mr. Yun if, given how hard it is to sell a home in that price range, he expects to see more foreclosures of high-end properties. He said absolutely.

That’s going to mean a new phase of the current housing recession. So far we’ve seen the “correction” of a boom market that was driven by faulty, exotic loan products, investors looking to make a quick buck, and average Americans using their homes as ATMs. Now the losses are being driven by traditional economic factors and by sweeping price drops across the nation.

And with rising interest rates brought on by the bond market selloff, this particular problem will only get worse. A 40-month supply of $750,000 homes on the market? That would be hysterical if it didn't mean these homes are going to continue to lose billions and billions in value. A bottom in the housing market? Please. The depression is raging.

Oh, and it gets worse:

Yesterday Fitch ratings estimated that up to 75 percent of the modifications now being done through the administration’s Making Home Affordable program will re-default in six months to a year. I’m not talking about the old mods, which were largely repayment plans that could actually raise monthly payments. I’m talking about the new mods, which lower monthly payments to 31 percent of a person’s income. I couldn’t understand Fitch’s reasoning, so I called them.

Diane Pendley, managing director at Fitch, said the problem is not on that “front-end” ratio, but on the back end, which is all of the borrowers other debt (credit cards, car loans, student loans, etc.). She said that in talking with servicers, she’s hearing other debt is so high that most of today’s troubled borrowers cannot afford any loan payment at all, even at a very modest debt to income ratio. “Just getting the house payment done doesn’t mean their lifestyle is sustainable,” she said.

In other words, there's a very good chance that 4Q this year and 1Q next will see a massive foreclosure spike again.

Oh, but it gets worse.

Another problem is that with home prices continuing to fall, more and more borrowers, who are essentially just renting their mortgages now because they will never see any home equity, are walking away. Even if the mortgage payment is low, the property taxes and home maintenance costs are padding that payment, and without an upside to the investment, there’s simply no reason to pay.

Jingle mail, jingle mail, jingle all the way...

What recovery? Until housing turns around, America is sunk...and it may be another year or more before that happens.

[UPDATE] Mortgage delinquency numbers are out: Roughly one in eight homeowners is now 30 days or more late on their mortgage or in forclosure (emphasis mine):

A record 12 percent of homeowners with a mortgage are behind on their payments or in foreclosure as the housing crisis spreads to borrowers with good credit. And the wave of foreclosures isn't expected to crest until the end of next year, the Mortgage Bankers Association said Thursday.

The foreclosure rate on prime fixed-rate loans doubled in the last year, and now represents the largest share of new foreclosures. Nearly 6 percent of fixed-rate mortgages to borrowers with good credit were in the foreclosure process.

At the same time, almost half of all adjustable-rate loans made to borrowers with shaky credit were past due or in foreclosure.

The worst of the trouble continues to be centered in California, Nevada, Arizona and Florida, which accounted for 46 percent of new foreclosures in the country. There were no signs of improvement.

The pain, however, is spreading throughout the country as job losses take their toll. The number of newly laid off people requesting jobless benefits fell last week, the government said Thursday, but the number of people receiving unemployment benefits was the highest on record. These borrowers are harder for lenders to help with loan modifications.

Congress killed cramdown too. We may not see the bottom of the housing depression until 2011, folks. The Great Recession rolls on.

Watch the stock market closely. The "correction" is coming and soon.

If It's Thursday...

623,000 newly unemployed, 6.78 million continuing claims. We're still seeing consistently bad jobs numbers and will continue to do so for months, if not longer.

The Bond Market Sees It Coming

No, not the stock market. Those guys are still betting on a magical super recovery. The bond market on the other hand is going haywire, with a selloff yesterday so steep that it sent a new treasury bond curve record.

The U.S. Treasury yield curve moved to its steepest level on record on Wednesday, with the spread between 10- and two-year note yields gapping to 275 basis points, beating a previous peak set in 2003.

U.S. government debt prices fell sharply as a well-received auction of new five-year notes proved insufficient to assuage ongoing concerns about the growing supply of bonds.

Analysts are increasingly concerned about the Treasury's ability to fund costly economic rescue measures that are expected to drive this year's budget deficit to $1.75 trillion.

An auction of 7-year treasury notes is on today, giving yet another chance to spike the markets.

So what? "The bond markets sucks, what does this mean for me?" Real simple: the bond market determines long-term interest rates in the short run. A selloff of this magnitude is pushing interest rates back up sharply across the board, and that's bad, bad news for the housing market (as if it needed any more bad news). This means adjustable rate mortgages will be adjusting up, meaning higher mortgage payments for millions of Americans if this keeps up.

In other words, inflation. It's back, and it's back big time.

But it's also a massive alarm bell here. People are dumping Treasury bills like they are radioactive, and they are in a real sense. Remember, Treasurys are basically IOUs from the government. If people aren't buying America's debt, America is in even more short-term financial trouble. America has to sell this debt to raise money to cover the trillions in the deficit.

What the bond market is saying is "Hey pally, you're issuing way the hell too many IOUs." And it's saying that with a lot of exclamation points.

Higher interest rates means that recovery people keep talking about in 3Q-4Q 2009 is going to take a major hit along with a whole lot of Americans.

If it gets to the point where we can't sell all the Treasurys we auction, we're in instant serious trouble.

Obama's borrowed trillions. Rates are now going up. That will cause inflation. You will have to pay more for everything while your wages go down in this economy. We've hit the point where the inflationary pressures of borrowing so much has now started to counteract the deflationary pressure of falling real estate prices. The market thinks housing is starting to recover, starting to hit bottom. I don't think that's true, and that actually might be good news: it will counter this inflation spike if real estate continues to fall.

But for how long?

StupidiNews!

• Fake check cashing scams could cost Americans billions this year alone.
• GM paid some 90,000 employees early this week ahead of an expected bankruptcy filing.
• Kansas Senator Pat Roberts says housing Gitmo terrorists at Fort Leavenworth would made the area a terrorist target.
• In a global recession, Italy's richest employer may be the Mafia.
• Scientists have observed Moon-like phases in planets in other solar systems.

Last Call

Looks like Joe Sestak is indeed getting into the PA Senate race, meaning Arlen Specter has a primary challenge on his hands anyway.

Rep. Joe Sestak (D-PA) is privately telling supporters that he intends to run for Senate, TPMDC has confirmed.

"He intends to get in the race," says Meg Infantino, the Congressman's sister, who works at Sestak for Congress. "In the not too distant future, he will sit down with his wife and daughter to make the final decision."

The move would constitute a primary challenge to Sen. Arlen Specter (D-PA), who intends to run for re-election in 2010, after having switched parties earlier this year.

Things just got a whole lot more interesting for old Arlen there. Sestak's certainly a solid progressive, but can he win in 2010? I think so. Question is, can he beat Arlen?

I still think he can.

Double Shot Of S'Truth

Andy Serwer serves up a pair of smoking posts over at Tapped on just how badly the conservatives are already losing the Sotomayor fight. First, some food for thought:

David Kurtz catches this article in The Hill that cites Curt Levey suggesting that Sonia Sotomayor's love of Puerto Rican food may be part of what conservatives will allege is racial bias.

Sotomayor also claimed: “For me, a very special part of my being Latina is the mucho platos de arroz, gandoles y pernir — rice, beans and pork — that I have eaten at countless family holidays and special events.”

This has prompted some Republicans to muse privately about whether Sotomayor is suggesting that distinctive Puerto Rican cuisine such as patitas de cerdo con garbanzo — pigs’ tongue and ears — would somehow, in some small way influence her verdicts from the bench.

Curt Levey, the executive director of the Committee for Justice, a conservative-leaning advocacy group, said he wasn’t certain whether Sotomayor had claimed her palate would color her view of legal facts but he said that President Obama’s Supreme Court nominee clearly touts her subjective approach to the law.

“It’s pretty disturbing,” said Levey. “It’s one thing to say that occasionally a judge will despite his or her best efforts to be impartial ... allow occasional biases to cloud impartiality.

I'm leaning towards Kurtz' conclusion, this has to be a joke. Pigs' feet and chick peas = activist judge? The shark is not visible from this altitude.

If it was a joke, it's one that about as a funny as this:


Secondly, it's nice to see ol Pat Buchanan and Stuart Taylor prove the need for affirmative action in 2009.

I've already responded to some of Taylor's assertions, so I won't do that here. I merely want to point out this passage from Samuel Alito's confirmation, highlighted by Glenn Greenwald:

Because when a case comes before me involving, let's say, someone who is an immigrant -- and we get an awful lot of immigration cases and naturalization cases -- I can't help but think of my own ancestors, because it wasn't that long ago when they were in that position.

[...]

When I get a case about discrimination, I have to think about people in my own family who suffered discrimination because of their ethnic background or because of religion or because of gender. And I do take that into account.

This is Samuel Alito, arguing that his experience of being the son of Italian immigrants, his knowledge of discrimination, gives him empathy that offers insight into such cases. How is this qualitatively different from Sotomayor saying that her knowledge of such things might maker her a better judge? It isn't--in fact, Alito is arguing the same thing, that his life experience gives him insight into the way laws affect people in real life, the exact quality Obama said he was looking for in a nominee. Like Sotomayor, Alito was merely commenting on the way life experience shapes one's vision of the law.

The conservative freakout over Sotomayor's remarks, as opposed to the way Alito's were marketed as a selling point for him as a judge, makes a remarkably salient case for why we still need affirmative action. Two judges made similar points--one was an Italian American man, the other was a Latino woman, both accomplished on the bench--but what was sold as a strength for Alito makes Sotomayor a racist. Taylor and Buchanan, while attacking Sotomayor, have inadvertently made the case for a policy they'd like to see eliminated, by proving that all things being equal, a minority woman is held to a different standard than the white man of similar background and experience.

And it's that different standard that exists because...surprise...the levers of power have been controlled by white men for the better part of centuries. Effort to remedy that are automatically somehow "racist" and yet as Serwer says, Buchanan and Taylor's differing standards and responses to the life experience question coloring judicial decisions for Alito versus Sotomayor has to be based on either race or gender (or both)...there is no other logical conclusion.

Do conservatives not have any idea how much damage has already been done in just 36 hours on this issue? Clearly not, and yet if they wanted to remind people why women, minorities and younger Americans have been abandoning the GOP in droves, there you are.

We're All Out Of Order

Newt's Daily To Do List:

1. Get up.
2. Shower.
3. Get dressed.
4. Have breakfast.
5. Go on TV.
6. Proclaim somebody he doesn't like should resign.

Repeat as necessary. This passes for Serious Washington Discourse, as he's basically been allowed to do this for the last two months straight by the Village.

Dear America:

"You know, Obama fellow is just not interested in rule of law like Republicans are."

--Liz Cheney

Honestly, Liz Cheney lecturing the Obama administration on rule of law is without a doubt the single most ridiculously laughable thing I've seen in months.

Zandar's Thought Of The Day

Jonah Goldberg: still a douchebag.

More important, who says conservatives are against judicial empathy? I, for one, am all for it. I'm for empathy for the party most deserving of justice before the Supreme Court, within the bounds of the law and Constitution. If that means siding with a poor black man, great. If that means siding with a rich white one, that's great too. The same holds for gays and gun owners, single mothers and media conglomerates. We should all rejoice when justices fulfill their oaths and give everyone a fair hearing, even if that's now out of fashion in the age of Obama.

This from a guy who believes that the Supreme Court has no jurisdiction over the President...

The Social Program Terminator

Ahnold has made good on his promise to cut billions from California's state budget since voters resoundingly rejected paying for social programs.

Now, these programs will get...terminated.

Faced with a ballooning deficit and a clear signal that voters won't pay more to fix it, California Gov. Arnold Schwarzenegger released a budget plan Tuesday that would eliminate welfare, drop 1 million poor children from health insurance, cut off new grants for college students and shut down 80 percent of state parks.

In a state that long has prided itself on its social safety net, it could well go down in history as the most drastic reduction in social programs ever. And billions in further cuts will be unveiled later this week.

The governor's proposal to whack an additional $5.5 billion from state programs stunned even longtime Capitol-watchers with its blunt force. Ending cash assistance for 1.3 million impoverished state residents, for example, would make California the only state with no welfare program.

"Every single first-world nation has a safety net program for children," said Will Lightbourne, Santa Clara County's social services director. "This would return us to the era of Dickens — you'd have to go back to the 19th century to find a comparable proposal."

The governor's office reiterated that the cuts were painful but unavoidable, with the proposed budget for the 2009-10 fiscal year already outdated before lawmakers even begin debate. Schwarzenegger's finance team now says the deficit will grow to $24.3 billion by July 1, up from the previous $21.3 billion projected shortfall.

Not any more. California's welfare program? About to be terminated. State parks? Hasta la vista, baby! Health care for kids? Blown away.

But that's how Republicans do things Cali style...making increasing revenue impossible and even making dipping into the state's rainy day fund out of bounds.

So now, Ahnold has to take a chainsaw to the state's safety net. He hasn't hit K-12 education yet. He will have to go there. More cuts are coming...$24.3 billion worth.

But then again, this is exactly how the shock doctrine Republicans want it to work: draconian across the board spending cuts that will brutally affect millions. Government spending is the enemy...unless it's for war.

Guess what this is going to do for the Republican brand?

A VAT Of Trouble

You didn't think universal health care would be free, did you?

With budget deficits soaring and President Obama pushing a trillion-dollar-plus expansion of health coverage, some Washington policymakers are taking a fresh look at a money-making idea long considered politically taboo: a national sales tax.

Common around the world, including in Europe, such a tax -- called a value-added tax, or VAT -- has not been seriously considered in the United States. But advocates say few other options can generate the kind of money the nation will need to avert fiscal calamity.

At a White House conference earlier this year on the government's budget problems, a roomful of tax experts pleaded with Treasury Secretary Timothy F. Geithner to consider a VAT. A recent flurry of books and papers on the subject is attracting genuine, if furtive, interest in Congress. And last month, after wrestling with the White House over the massive deficits projected under Obama's policies, the chairman of the Senate Budget Committee declared that a VAT should be part of the debate.

"There is a growing awareness of the need for fundamental tax reform," Sen. Kent Conrad (D-N.D.) said in an interview. "I think a VAT and a high-end income tax have got to be on the table."

A VAT is a tax on the transfer of goods and services that ultimately is borne by the consumer. Highly visible, it would increase the cost of just about everything, from a carton of eggs to a visit with a lawyer. It is also hugely regressive, falling heavily on the poor. But VAT advocates say those negatives could be offset by using the proceeds to pay for health care for every American -- a tangible benefit that would be highly valuable to low-income families.

Liberals dispute that notion. "You could pay for it regressively and have people at the bottom come out better off -- maybe. Or you could pay for it progressively and they'd come out a lot better off," said Bob McIntyre, director of the nonprofit Citizens for Tax Justice, which has a health financing plan that targets corporations and the rich.

A White House official said a VAT is "unlikely to be in the mix" as a means to pay for health-care reform. "While we do not want to rule any credible idea in or out as we discuss the way forward with Congress, the VAT tax, in particular, is popular with academics but highly controversial with policymakers," said Kenneth Baer, a spokesman for White House Budget Director Peter Orszag.

Still, Orszag has hired a prominent VAT advocate to advise him on health care: Ezekiel Emanuel, brother of White House chief of staff Rahm Emanuel and author of the 2008 book "Health Care, Guaranteed." Meanwhile, former Federal Reserve chairman Paul A. Volcker, chairman of a task force Obama assigned to study the tax system, has expressed at least tentative support for a VAT.

"Everybody who understands our long-term budget problems understands we're going to need a new source of revenue, and a VAT is an obvious candidate," said Leonard Burman, co-director of the Tax Policy Center, a joint project of the Urban Institute and the Brookings Institution, who testified on Capitol Hill this month about his own VAT plan. "It's common to the rest of the world, and we don't have it."

I was waiting for something like this to leak out as a trial balloon. Republicans are going to go insane over this, but the reality is that taxes will have to be raised somewhere to cover our massive deficits.

Revenue has to come from somewhere to cover spending. But to see this out there in the WaPo in just four months of Obama's term is shows just how dire the debt situation is.

Obama will have to raise taxes on somebody eventually. Republicans are convinced it won't be rich people, and they have the lobbyists to prove it.

North Korea Looks Back

Technically, the Korean War never ended. In fact, today it may have just restarted itself.

North Korea threatened a military response to South Korean participation in a U.S.-led program to seize weapons of mass destruction, and said it will no longer abide by the 1953 armistice that ended the Korean War.

“The Korean People’s Army will not be bound to the Armistice Agreement any longer,” the official Korean Central News Agency said in a statement today. Any attempt to inspect North Korean vessels will be countered with “prompt and strong military strikes.” South Korea’s military said it will “deal sternly with any provocation” from the North.

South Korean President Lee Myung Bak ordered his government to take “calm” measures on the threats, his office said in a statement today. Japan’s Chief Cabinet Secretary, Takeo Kawamura, echoed those remarks and called on North Korea to “refrain from taking actions that would elevate tensions in Asia.”

The threats are the strongest since North Korea tested a nuclear weapon on May 25, drawing international condemnation and the prospect of increased sanctions against the communist nation. South Korea dispatched a warship to its maritime border and is prepared to deploy aircraft, Yonhap News reported, citing military officials it didn’t identify.

“This rapid-fire provocation indicates a more aggressive shift in the Kim Jong Il regime,” said Ryoo Kihl Jae, a professor at the University of North Korean Studies in Seoul. “Kim is obviously using a strategy of maximum force.”

Needless to say, this is one of those Big Ass Problems that Presidents have to face. If the North Koreans are serious about this, this could get out of control in 24 hours. China could do something, but they won't. I'm not sure what Obama can do.

But in the end, it's still China's ball game. Without China, North Korea falls. If Kim Jong Il pushes too hard, China will have to get it back into line.

Still, breaking the armistice is a serious matter. Getting China to cooperate is the key, and even China has to see how bad this is.

Case In Point

Wingers need to be careful about the arguments they choose.

MacRanger complains bitterly about the federal lawsuit filed to overturn California's Prop 8, for example, asking:

How many times do Californians need to go to the polls, vote in favor of banning same sex marriage, before proponents get the message that it’s the will of the people - not the whim of the court - that rules in this country?

Really, Mac? You're against judicial activism and for the will of the people?

You mean like Al Franken's win over Norm Coleman?

No?

Judicial activism means "Any judicial decision that doesn't benefit conservatives is invalid."

Still Don't Get It

Conservatives continue to play the "Obama only picked Sotomayor because she's a Latina, not because she graduated summa cum laude from Yale Law School!" card with such reckless abandon and echoing volume I honestly don't know if they're even aware of the fact they've already lost the battle in the long run. The Village too seems to think anyone Obama picked that wasn't a white male on a Supreme Court dominated by white males would be an example of "identity politics".

This may play in parts of the South, but to be honest, the GOP is about to piss off a good 70% of America if they keep attacking her by implying strongly that only white males have what it takes to be on the Supreme Court.

What continues to amaze me is that the Village is making the same mistake. "She can't possibly be qualified because she's a Latina" strikes me as the largest single screw-up the GOP has made since McCain's "the fundamentals of our economy are strong" quote cost him the election.

Something May Be Amiss Here, But I Can't Put My Finger On It

Call it a hunch, but there's just something about this article that bothers me.

The Pentagon is prepared to leave fighting forces in Iraq for as long as a decade despite an agreement between the United States and Iraq that would bring all American troops home by 2012, the top U.S. Army officer said Tuesday.

Nobody cares about Iraq anymore with the economy, which is a shame.

If you're worried about the government's lack of fiscal responsibility, the first thing we should be pointing out should be the trillions spent to "win" a war we never should have fought in the first place, and to continue to lose a war we may never be able to win.

Honestly, are we going to be able to afford another 10 years in Iraq?

StupidiNews!

• A new survey of economists reveals many predict the recession will end by October, but recovery will be weak.
• North Korea has conducted yet another short range missile test and is warning against any interference.
• GM's impending bankruptcy is expected to be long, complex, and expensive.
• A suicide attack in Pakistan has killed 35 people in the city of Lahore.
• Microsoft has released Service Pack 2 for Windows Vista and Server 2008.

Last Call

A certain segment of the GOP is well aware of the fact they can't effectively oppose Sonia Sotomayor without coming across as misogynist racist old white men.

Too bad for the GOP that the rest of the party doesn't mind being misogynistic racist old white men, and this group is clearly holding the bullhorn.

Good luck getting that Hispanic and women's vote in 2010, guys.

Defending The Village

You know, I have my own personal problems with the Village and many of the idiots in it. But I certainly would never advocate specifically targeting them in military actions like NY Post columnist Ralph Peters.

n his latest essay, in a segment titled "The killers without guns," Peters suggests that the media is responsible for "saving" Hamas in Gaza and Hezbollah in Lebanon, but that media had "failed to defeat" the U.S. government's charge toward Iraq.

"Rejecting the god of their fathers, the neo-pagans who dominate the media serve as lackeys at the terrorists’ bloody altar," he gallingly charges.

It culminates:

Pretending to be impartial, the self-segregating personalities drawn to media careers overwhelmingly take a side, and that side is rarely ours. Although it seems unthinkable now, future wars may require censorship, news blackouts and, ultimately, military attacks on the partisan media. Perceiving themselves as superior beings, journalists have positioned themselves as protected-species combatants. But freedom of the press stops when its abuse kills our soldiers and strengthens our enemies. Such a view arouses disdain today, but a media establishment that has forgotten any sense of sober patriotism may find that it has become tomorrow's conventional wisdom.

Because, of course, in Peters' mind America can do no wrong:

The point of all this is simple: Win. In warfare, nothing else matters. If you cannot win clean, win dirty. But win. Our victories are ultimately in humanity’s interests, while our failures nourish monsters.

Jason Linkins over at Huffington Post evicerates this stunning outpouring of hatred.

And that's exactly what it is. Peters is certifiable. Dehumanizing Muslims as the faceless Enemy was one thing, but adding Liberals, Democrats, and even journalists to that same group is intolerable.

But then again, we torture people for false intel and the media ignores it. What moral authority do they have to complain, especially when the same journalists are the ones enabling the GOP to lie in the first place?

Maybe the Steno Pool will finally take notice that the GOP hate them almost as much as minorities, liberals, Democrats, atheists, gays, lesbians, and people who make less than six digits a year.

That Word Does Not Mean What You Think It Means

Mark Halperin on the Sotomayor non-fight:

President Barack Obama knows how to avoid a fight — and still do what he thinks is right. The media and conservative activists might be spoiling for a Supreme Court nomination battle, but the choice of Circuit Court Judge Sonia Sotomayor to fill a high court vacancy is a classic Obama decision that makes the chances of political smooth sailing a near lock. Obama was clearly inspired by his selection, but he just as obviously kept an eye on the politics of his pick.

Assuming nothing surfaces in Sotomayor's background that causes controversy, expect her to be seated when the court opens for its new term in October, after thorough confirmation hearings that will seem more like a lovefest than a legal firing squad. By both design and luck, Obama faces a Supreme Court–pick process that has been drained of the tension and combat that has characterized such moments in the past several decades.

The fundamentals of the environment in which Obama has made his choice account for much of this reality. Democrats have a solid majority in the Senate, and Obama is seeking to replace one reliably liberal vote with another, meaning the balance of the court will not shift, lowering the stakes. And the social issues that used to fire up the right when it came to judicial disputes have lost some of their power, with the economy in the dumps and younger citizens drifting toward the left.

Has Halperin been, you know, actually paying attention to Republicans in the last four months? How they have been doubling down on obstructing everything Barack Obama is trying to do just because he's Barack Obama?

And he's counting on the support of his own party? The one that knifed him in the back over Gitmo, cramdown, and still can't get Dawn Johnsen past a filibuster? The Senate led by Harry "Chickenshit" Reid? You're counting on these guys to do the right thing?

"Near lock" my ass. By the time the new court session starts in October, it will start with either justices or Souter will still be there, twiddling his damn thumbs.

[UPDATE] Via BooMan, we see Charles Krauthammer basically call Sotomayor a racist. How many ConservaDems will buy this argument even though it's not the truth?

[UPDATE 2]Why does Type 1 Diabetes supposedly disqualify her from the position? Are you serious?

The Tyranny Of The Majority

As widely expected, California's Supreme Court has ruled to uphold Prop 8, but to also affirm the legality of the marriages done before the proposition went into effect.

Expect another proposition vote on the books this fall to overturn prop 8, will be my guess. It's nice that the people can overrule "activist judges" according to other "activist judges".

Price Drop

The Case-Schiller Index numbers are in for 1Q 2009, and home prices dropped a staggering 19.1% in America's major metro areas.

"Declines in residential real estate continued at a steady pace into March," said David Blitzer, chairman of the Index Committee at Standard & Poor's in a prepared statement. "All 20 metro areas are still showing negative annual rates of change in average home prices with nine of the metro areas having record annual declines."

The ugly report was somewhat unexpected, according to Mike Larson, a real estate analyst for Weiss Research.

"The market was anticipating better results," he said. "There had been some signs of increased sales in post-bubble markets."

But that sales increase has not translated into higher prices. Bargain hunting - bottom fishing really - for foreclosures and other distressed properties has driven sales volume up while further depressing prices.

In other words, people are buying foreclosed homes at the bottom end, but not at the top. Since high-priced homes have a lot further to fall still, that's knocking down the prices for the entire market in these areas and indeed America as a whole.

Plus, new home starts will continue to depress the market as the supply of homes continues to increase. People are buying dirt-cheap homes...but that's all they are buying.

We still have a long way to go, and another wave of foreclosures to come that will only continue to depress housing prices well into 2010, maybe longer.

Zandar's Thought Of The Day

If a minority is a conservative from a lower class or even a lower-middle class background, they are proof that America is a land where hard work is rewarded.

If a minority is a liberal from the same background, it's just affirmative action and they don't really deserve the success.

Suddenly Sonia

Obama's SCOTUS pick is Sonia Sotomayor, several news outlets are reporting this morning. Considering the sandbag job on her began three weeks ago, it's nice of Obama to go ahead with her selection anyway.

The Wingers are going to trip over themselves trying to see which idiotic conclusion they jump to first, that Obama picking a Hispanic judge makes him a racist (because of course she can't possibly be a good judge), or that picking a female judge makes him a sexist for the same reason.

To quote Kenneth Brannagh in Wild Wild West, "Let the pahrty....begiyun!"

[UPDATE] The "Sonia Sotomayor = Harriet Miers so she should just withdraw now" train has already left the station.

This would have been the case no matter who Obama picked. After all, none of US are smart enough to be Supreme Court justices, so clearly we should rely on the opinions of people who are not smart enough to be Supreme Court justices to tell us Obama's pick is not smart enough to be a Supreme Court justice.

But as Amanda Terkel notes at Think Progress:

Coming from a housing project in the Bronx, Sotomayor ended up graduating summa cum laude and Phi Beta Kappa from Princeton. She also was a co-recipient of the M. Taylor Pyne Prize, the highest honor Princeton awards to an undergraduate. Sotomayor then went to Yale Law School, where she served as an editor of the Yale Law Journal and managing editor of the Yale Studies in World Public Order. Rep. Jose Serrano (D-NY) said on Fox News this morning that of all the nominees, Sotomayor “brings the most in terms of judicial experience — in terms of serving on a federal court — in 100 years.”

SCOTUS Blog has pointed out that women and minority candidates for the Supreme Court are often portrayed as not being smart enough for the job. As Matt Yglesias has also written, underscoring this point, “I recall a lot of issues being raised during the Samuel Alito confirmation fight, but at that time I don’t remember anyone raising questions about the intelligence of a Princeton/Yale Law graduate who’d done time on an Appeals Court.”

But the "not too bright Latina" meme will roll on...

Can You Hear The Wingers Scream, Clarice?

With North Korea, Obama's Supreme Court pick, and California's Supreme Court ruling on same-sex marriage, our favorite wingnuts are in full-blown meltdown mode, wondering why we haven't bombed Pyongyang Tehran (Iran is behind everything bad in the universe because our good friends the Israelis who would never lie to us say so) yet and how Barack Ocarter has just failed failed failed failed failed. After all, it's his fault we haven't won in the Middle east yet, he's had four whole months now.

Look guys, let's be honest here. Are we ready to declare war on the Norks right now? If we weren't still tied down in Iraq and Afghanistan after seven years, perhaps the rest of the world would take our military might seriously. But the Wingers are correct in their assumption that Kim Jong Il is laughing at us. He knows we're wayyyy too busy with Iraq, Afghanistan, and oh yeah, Pakistan, to be worrying about what he's up to.

It's no secret. Bush dug us into a quagmire and we're stuck. We were wrong on Iraq, we all but abandoned Afghanistan, and we ignored Pakistan until it almost became too late. Yes, North Korea is going to kick us while we're down...but let's remember why we were down in the first place: Bush failed to prevent 9/11.

Would we be in Afghanistan, Iraq, or sending drones into Pakistan right now if Bush hadn't dropped the ball eight years ago?

StupidiNews!

• North Korea has tested another two short range missiles, raising tensions even higher.
• Obama's SCOTUS pick is expected to be announced today, and the GOP is already preparing to filibuster it.
• Somali pirates are becoming experts in a much more modern crime: money laundering.
• Scientists in Holland are trying to revive and reinvent Polaroid's instant film.
• Microsoft takes on Google with the company's new rollout of its search engine Bing.

Memorial Day

The one thing about Memorial Day is that it's probably the one day out of the year that people of any political bent can agree on something, and that is we owe much to our men and women in uniform who died for this country.

What you think about those reasons is one thing. But the lives lost...well, it's only human to mourn them. And in the end, we're all human.

StupidiNews, Memorial Day Edition

• North Korea has conducted a second successful nuclear test, causing concern around the globe.
• Fifty-one percent of Israelis said in a poll that they would support an immediate attack on Iranian nuclear facilities.
• American troops in Afghanistan have limited options to protect civilians from the Taliban.
• Canada may follow the US in passing climate change legislation.
• The U.S. Army will adopt Windows Vista and Office 2007 by the end of the year.

Not Even Trying To Hide It Anymore

And why should they? Republicans have already proven the terrorist fear card will get the Senate to do whatever they want. Why not play it 100% of the time when there's no downside anymore? What's going to honestly happen to the GOP if they do this, they'll lose control of Congress or the White House?

So why not try to scare everyone out of their minds?

Echoing Dick Cheney during an appearance on Meet the Press, Gingrich insisted that “people should be afraid” because of President Barack Obama’s alterations to former President George W. Bush’s terror war.

“If you look at the behavior the last few months, if you look at the effort to open up past wounds,” said Gingrich. “… If you were a CIA employee today, and you understood there were people who wanted a truth commission, that people wanted to say to you, ‘I want to go back six, seven, eight years and I wanna put you on trial potentially … If you look at what Speaker Pelosi said, they lie to us all the time … This has hurt morale. The question is, is the most important thing to us today to find some sort of American Civil Liberties Union model of making sure that we never offend terrorists, or we’re gonna cover your back, we’re proud of you and we want you to defend America.”

Newt Gingrich on on my TV telling me I have to be scared to the point of pissing myself and that Obama is going to get thousands, maybe hundreds of thousands, maybe millions of Americans killed.

Doesn't matter if it's a false choice and a lie if people cave in to the GOP. And Democrats in Congress have been caving in on this since 9/12. Doesn't matter if it's simple Village publicity stunts gone bad. FEAR FEAR FEAR FEAR! OBAMA WILL KILL YOUR FAMILY! ONLY THE GOP CAN SAVE YOU! BE AFRAAAAAAAAAAAAID!

And yet, it works every time. We still treat Newt Gingrich as a serious person.

Another Milepost On The Road To Oblivion

What a concept: not only admitting that the financial system is rigged, but admitting that in order to profit from it, you have to play with the intention of gaming the rigged system.

His honesty is in fact refreshing, but it's in fact one of the logical endpoints of what I've been saying since January 2008. Quite frankly, what do you think the big banks and the insurance companies have been doing for the last ten years if not profiting by in fact gaming the rigged system for themselves?

Would I recommend following his advice? Not in the least. But the guy has a hell of a marketing tool on his side -- "Where's my bailout?" -- and he's marketing the hell out of it. He will sell this system. He will make money from this. The people who buy into this? Not so much.

Good or bad, that's capitalism in 2009, folks.

"Blood In The Streets" Of Phoenix

Phoenix, Arizona is trying to live up to its name as far as the housing market is concerned.

Every weekday morning, Lou Jarvis drives the sun-baked suburban streets looking for investment gold: a family that will lose its house in a foreclosure auction within a few hours.

If the property looks promising, Mr. Jarvis puts in a bid on behalf of any of his dozens of clients eager to become landlords. When he wins, he offers to let the family stay in the house and rent for much less than their mortgage payment.

With this sweltering desert city enduring one of the largest tumbles in housing prices for any urban area since the Depression, there is an unrelenting stream of foreclosures to choose from. On some days, hundreds are offered for sale at the auctions that take place on the plaza in front of the county courthouse.

There is also a large supply of foreclosed families who can no longer qualify for a loan. And that is prompting a flood of investors like Mr. Jarvis, who wants to turn as many of these people as possible into rent-paying tenants in the houses they used to own.

There's three major problems with this.

1) It does nothing to stop the glut of unsold homes on the market in places like Phoenix. Turning homeowners into home renters like this means these individual homeowners aren't getting equity. It's good for the investors, but bad for the renters. It's better than being out on the streets, but should these homes continue to lose equity, both the owner-investor and the renting family are going to have to make tough decisions. This plan only works if there's a bottom to the housing market and prices go back up. If prices go back down, the investor may have to sell the place, and then there's an even bigger problem. Only when new buyers are buying these houses do prices go up. Right now, this plan is just treading water at best.

2) Potential new homeowners still can't get credit from lenders. This remains a problem. Banks are more than willing to refinance existing homeowners with good credit. Refinancing to the new lower rates does lower payments and helps keep people in their homes. But that's again a "treading water" step. Originating new mortgages is not happening. Not in this market. Until new mortgages and new buyers get into places like Phoenix to snap up unsold and new homes, home prices will continue to fall.

Banks and mortgage lenders face the "Paradox of lending." If all the lenders servicing the housing market originate new mortgages, then all the lenders win because new buyers will start stabilizing prices. If only a few originate new mortgages, it won't be enough to stabilize the market and home prices will fall, and the lender loses money and may have to pull out of the market or even go under themselves. If nobody originates new loans, then all the lenders lose.

If you choose to originate new loans, you only win if everybody else does so. If you choose to not do that, you only lose if nobody does so, and there's always somebody willing to take the risk to lend or the government will...ergo you can't lose if you don't originate new mortgages, ergo lenders aren't originating new mortgages. Solid business sense individually, terrible collectively.

3) There's nobody trading up to bigger and better homes. This is still the key to stabilizing the market. Foreclosed entry level homes are one thing, but foreclosed mid-sized and high-end homes are still going unsold. There's a lot more to lose should prices fall, and that end of the housing market already had the biggest bubble built into it. As the old real estate joke goes, "What's the difference between a half-a-million dollar home and a million dollar home? $500,000." That's a lot of money to anyone in this market, and people are trading DOWN, not UP, if only for the relative stability in payments and equity. Losing 20% on a $150,000 home is bad. Losing 20% on a million dollar home is devastating.

Needless to say, this end of the market will continue to see falling home prices even if the low-end of the market stabilizes somewhat, and that's going to continue to be bad.

Mr. Jarvis, 47, the former co-owner of a wood moulding company that thrived in the boom and faltered in the crunch, also made some mistakes. Last spring, he contracted for three new homes in the distant suburb of Copper Basin, convinced that real estate was bottoming.

He was wrong. He managed to get out of two of the contracts but had to buy one of the houses, which is now substantially under water.

“You need to buy when there’s blood in the streets,” he said with a shrug. “Even if it’s your own blood.”

Ahh, but then again if there's that much blood in the streets and it IS your blood...you just end up dead, figuratively speaking. And not many people have the taste for their own blood. The market will continue to get worse.

Last Call

So, here's what California is facing financially:

This week, voters said they no longer want the Legislature to balance budgets with higher taxes, complicated transfer schemes or borrowing that pushes California's financial problems off into the distant future. In light of that, Republican Gov. Arnold Schwarzenegger has made it clear he intends to close the gap almost entirely through drastic spending cuts.

The governor's cutbacks could include ending the state's main welfare program for the poor, eliminating health coverage for about 1.5 million poor children, halting cash grants for about 77,000 college students, shortening the school year by seven days, laying off thousands of state workers and teachers, slashing money for state parks and releasing thousands of prisoners before their sentences are finished.

"I understand that these cuts are very painful and they affect real lives," Schwarzenegger said. "This is the harsh reality and the reality that we face. Sacramento is not Washington — we cannot print our own money. We can only spend what we have."

Those of you who think that these cuts are good and exactly what California deserves, remember that basically every state and municipality in America is in varying degrees of the same situation or will be eventually, and America has about $50 trillion in unfunded liability in Social Security and Medicare and basically no way to pay for it. You're probably next.

Those of you who think this is terrible and want us to bail out California, remember that basically every state and municipality in America is in varying degrees of the same situation or will be eventually, and America has about $50 trillion in unfunded liability in Social Security and Medicare and basically no way to pay for it. You're probably next.

Have a nice weekend.