Spies Like Us

Olbermann is talking to former NSA analyst Russell Tice about Bush's wiretappalooza. Now that Bush is gone, Tice is coming forward with details of the NSA wiretap program.

Turns out the NSA pretty much put everyone's communications in a huge basket and fished through it 24/7/365, specifically "news journalists and reporters" under the guise of "Well, we're collecting this pile of communications so that we spcifically won't look through it" when it turned out that was the pile they were saving.

Somebody needs to put this guy in front of a big Congressional hearing immediately. I kinda feel bad for him. The Right is going have a field day with him. Still...you don't have to wield a gun to be a patriot.

Not According To Plan

Teevee is telling me Caroline Kennedy has withdrawn her name from consideration for Hillary's old Senate seat, and that Obama retook the oath of office that Chief Justice Roberts helped him flub. Two steps forward, three steps back...

[UPDATE] And now MSNBC is saying Caroline Kennedy did NOT withdraw her name. Geez. Somebody's ass needs to be fired.

Crackberry

Obama's keeping his Blackberry, it seems.

I wonder who's doing the tech support on that.

Speaking Of Gitmo

And Obama's already under fire from 9/11 families for calling a 120-day freeze on Gitmo proceedings. If you're damned if you do and damned if you don't, you still need to make the honorable choice.

[UPDATE] News outlets are reporting Obama will close Gitmo within one year, or sooner.

Locked Up Inside

Over at Hullabaloo, dday argues that the admission of torture by Bush's crew wasn't just "nyah-nyah whatcha gonna do, prosecute us?" but in fact a neat little box that may assure Obama can never close Gitmo.

This is why I'm finding that leak to Bob Woodward of Susan Crawford's position on the torture of Mohammed al-Qahtani so disturbing. Crawford, a lifelong Republican, made the very specific point that she stopped Qahtani's military commission trial because he was tortured. By extension, he could never receive a fair trial in the US for this reason. And yet Crawford was insistent that Qahtani was one of the "worst of the worst" and that he should not be released. This is an argument for maintaining Gitmo, and I'm not the only one who thinks it's a trap.

GUDE: It does look very much as if the Obama is going to favor prosecutions in US courts, and any question about the psychological competence of the defendants could call into question those prosecutions. When you look at it in the bigger picture –- when you combine this statement by Crawford, her first ever interview, just days before the end of the Bush administration -– when you combine that with the story out of the Pentagon that they have upped the number of detainees that they claim have returned to the battlefield from 30 to 61, more than 10 percent of the detainees who have been released from Guantanamo since it opened in 2002, this looks like a coordinated effort to tie the hands of the Obama team, to make it much more difficult for the Obama administration to pursue its own policies on Guantanamo, and perhaps even down the road to undermine the Obama administration as it pursues its activities to close Guantanamo, pursue trials in US courts, and release some detainees either back to their home countries or transfer them to other countries for further incarceration.

DUSS: So, in your view, is this Dick Cheney, in his last moments in power, trying to lock in his methods, and his policies?

GUDE: You’ve seen in the numerous exit interviews that both he [Cheney] and Bush have been giving, they have been talking about this very issue about how they view that Guantanamo is going to be very hard. It’s going to be very hard to close, we’ve done what we could, and the reason why we’ve done what we could is because this is such a hard issue. And Susan Crawford used to work for Dick Cheney and a lot of people are saying, “you see, even Susan Crawford, who used to work for Dick Cheney, has seen the light and she’s admitting to torture.” Well, I choose to view it in a different way. And perhaps I have too negative a view of these things, but she’s still doing Dick Cheney’s work in my view. She is making it much more difficult now. This revelation makes it much more difficult to pursue the policy that the Obama team would like to pursue.

It's not just Qahtani, who is probably incapacitated, but Crawford is basically alluding to others who may be capable enough, but the torture of whom would allow them to be acquitted and released, perhaps because the evidence against them is tainted, or the fact of their torture would be grounds for mistrial. And you know that the right will be calling Obama a terrorist sympathizer if one of these guys were set free through no fault of his own. The Crawford interview did change everything, but maybe not in the way a lot of people think. She may have extended the lifespan of Guantanamo by months, years, or even indefinitely. Let's be cautious about today's good news.

In other words, Obama can't close Gitmo because if he tries the terror suspects there, the fact they were tortured throws all the evidence against them in doubt. The practical result would be acquittal...and if the 9/11 terrorists or any terrorists have to be released out on the streets because we can't convict them, the wingnuts will indeed have their "final proof" that Obama is "soft on terror" and assault him for the rest of his Presidency.

I pointed out last week that the "Gitmo trap" argument was bullshit when BooMan made it.

I'm going to have to respectfully disagree with you on this one, BooMan.

I can appreciate the complexity of the situation before Obama on Gitmo. But the notion that he is going to "take a little time" rings absolutely hollow when we've had this problem for seven years now. Surely Obama's legal brain trust, and especially Barack Obama himself, a trained Constitutional Law professor and lawyer, has had time to come up with a solution to this problem.

The solution to the problem is to try these folks under the rule of law, if only to prove the rule of law in the United States will still even exist under President Obama.

It's not a question of working through all the nuances and legal pitfalls. It's a matter of restoring world trust in what has been for the last seven years, the most dangerous rogue country on the planet. Only Nixon could go to China, only Obama can close Gitmo.

It's one of the many tough choices he's going to have to make, or the rest of the world will be through with America...and they may very well decide to take things into their own hands.

As you've said, failure to adhere to basic principles of human decency is posing a massive security threat to our country. We have given the world a very good reason to hate us. Obama has the power to reverse that but only if he acts soon.

There's some things where you cannot split the difference. This is one of them. He needs to close Gitmo as soon as humanly possible. We have a narrow window to earn the world's trust again. If Obama blows it, America may never recover.

In fact, it was Digby who pointed out that not closing Gitmo was the real trap.

But I would suggest that Obama contemplate one little thing before he decides to try to find "middle ground" on torture. It is a trap. If he continues to torture in any way or even tacitly agrees to allow it in certain circumstances, the intelligence community will make sure it is leaked. They want protection from both parties and there is no better way to do it than to implicate Obama. And the result of that will be to destroy his foreign policy.

I'm solidly in the Greenwald camp on this issue: there's not really a choice here. Either Obama closes Gitmo and does the right thing, or he's admitting that torture is okay, and that the solution to torture is keeping the victims in jail forever because we don't have the evidence to actually, lawfully convict them in a court of law. Since that's the case, we've got not choice but to close Gitmo. Period.

Dear America:

"Barack Obama will probably destroy the country by giving Americans horrible things like 'health care' and 'collective bargaining rights', taking only two years to do what George Bush and the Republicans tried to do in eight. Clearly then the country will rush to put the Republicans back in power in 2010."

--Dick Morris, RCP

Global No Confidence Vote: New Boss, Same Problem

While the euphoria of Obama's inauguration is still in the air, the cold, hard reality is our financial system is a walking corpse. Even worse, Obama's plan to fix the economy is more of the same bungled policies that failed to get Bush's economy out of the black hole it's trapped in.

President Barack Obama's economic team is pushing to complete a bank-rescue plan that can be twinned with the $825 billion stimulus package being negotiated with Congress to alleviate the rapidly deepening financial crisis.

While full details of the rescue haven't been settled yet, people familiar with the deliberations said the package is likely to include a $50 billion-plus program to stem foreclosures, fresh injections of capital into the banks and steps to deal with toxic assets clogging lenders' balance sheets.

While that's certainly a step in the right direction, the plan itself is much, much too small to effectively deal with the tens of trillions in toxic derivative debt on their books. Roubini explains the crux of the problem in the article:

American banks are reluctant or unable to lend after suffering more than $700 billion in writedowns and credit losses since the collapse of the market for subprime U.S. mortgages 18 months ago. The slump in lending, even after the government has pumped billions into the nation's banks, is exacerbating the worst recession since the 1980s.

U.S. financial losses may reach $3.6 trillion, suggesting the banking system is "effectively insolvent," New York University Professor Nouriel Roubini, told a conference in Dubai on Jan. 20. Obama will have to use as much as $1 trillion of public funds to bolster the capitalization of the industry, he estimates.

In other words, there's a very good chance we have a good $3 trillion in losses in just the financial sector to deal with. Where are the rest of these losses coming from?
Just like the subprime mortgage market, commercial mortgages, credit card debt, auto loans, and other residential and commercial loans were securitized and packaged into toxic waste derivatives. These particular securitized products have yet to fully collapse into losses. Collectively they dwarf the mortgage losses banks have already suffered. $700 billion in writedowns have ravaged the sector. What will more than four times those losses do?
Yesterday the Dow sank under 8,000 again. Banks took a massive hit across the board. Citigroup and Bank of America are not solvent companies. As Paul Krugman explains, they are "zombie banks".

To explain the issue, let me describe the position of a hypothetical bank that I'll call Gothamgroup, or Gotham for short.
On paper, Gotham has $2 trillion in assets and $1.9 trillion in liabilities, so that it has a net worth of $100 billion. But a substantial fraction of its assets -- say, $400 billion worth -- are mortgage-backed securities and other toxic waste. If the bank tried to sell these assets, it would get no more than $200 billion.
So Gotham is a zombie bank: it's still operating, but the reality is that it has already gone bust. Its stock isn't totally worthless -- it still has a market capitalization of $20 billion -- but that value is entirely based on the hope that shareholders will be rescued by a government bailout.

The reality is that an overwhelming majority of the banks in this country, right now, at this moment, are zombie banks. They are insolvent because not only are the toxic derivative assets they have are virtually worthless, but the coming tsunami of losses from the rest of the massive collapse of securitized loan products will assure they are wiped out.
We'll need a trillion dollars more just to begin to fix the problem in the financial sector alone. And that's if they survive at all.
And that brings us to Obama. His plan to fix the problem? The same thing the Bush crew rejected as unworkable, the so called "bad bank" strategy.

Ben Bernanke, Federal Reserve chairman, argues that dealing with toxic assets through purchases of these assets, insurance-style guarantees or one or more bad banks would help banks to lend and raise new capital. Policymakers used the insurance model for Citi and BofA. It directly addresses the so-called "tail risk" of extreme loss, but lacks the finality of taking the assets off balance sheet.

It is not easy for either the Fed or Treasury to provide the insurance - the Fed has problems with credit risk and its balance sheet, Treasury has accounting issues.

There is more enthusiasm for an "aggregator bank" through which, for instance, $100bn of Tarp equity could be geared up five times to provide $600bn of purchasing power. The aggregator bank would issue its own long term debt - probably with a guarantee from the FDIC or Treasury.

The big challenge would be how to value illiquid assets. Officials in the Paulson Treasury say they made real progress on this, but outsiders are sceptical.

In other words, Obama's boys are leaning towards a plan that would dump trillions of dollars of long-term debt on a government bank...a government bank whose debt would then weigh down the country like a stone and transfer the burden of insolvency from the banks to the taxpayers. If they pay too much for these toxic assets, the taxpayer will foot a bill for trillions. If pay too little, the banks will collapse. And even if they pay the right amount, the US taxpayer just bought enough worthless derivative crap to sink the entire country. Who will buy it from America? Do you think China will magically step in and give us trillions for worthless IOUs?

Even better, Team Obama plans to use the "full faith and credit" of our country to back a time bomb of trillions upon trillions of additional debt. Instead of the financial system being insolvent...the United States will be insolvent. Not only will we be dealing with the massive financial sector losses, but the losses in every other sector of the economy as well. A $700 billion loss in banks put us on life support. Another $3 trillion will not only kill us, it'll disintegrate the corpse.

There's a cheery thought. While the country parties hard and is glad to see Bush gone, the reality is we've only faced a small fraction of the economic nuclear blast so far. When the rest of the shock waves reach us, the reality of America as a third-world economic pariah will crush us.

Time is almost up. Yesterday's bank sector hit put many of the remaining banks in our country on knife's edge. Another round of massive financial bailouts will be on the way and much sooner than you think. All the progressive legislation that many of us dream of will not happen. It will get smashed by the tsunami of financial reality.

The reality is America is already insolvent. Bush bankrupted us. The bill is past due already. 2009 is going to be a hideous year, and despite all of Obama's abilities, not even he will be able to fix things. We're too far gone at this point.

Be prepared, for what it's worth.

StupidiNews!

• Obama's first major act: a 120-day moratorium on Gitmo prosecutions.
• Senator Ted Kennedy has recovered from his seizure yesterday, doctors blame fatigue.
• Hamas is declaring victory in Gaza by virtue of surviving Israel's assault.
• The global recession has spread to the Asian Tigers including Singapore.
• A potential leak of 100 million credit card numbers could explain December's record card fraud figures.