Monday, January 26, 2009

Dear America:

"Since the Obamessiah has had his six whole days to create the universe and hasn't even fixed the economy yet, I declare him to be the worst President ever."

--Jennifer Rubin, Commentary

NIMBY'd To Death

The GOP is playing games outright now with Obama's plan to close Gitmo. The maneuver? The notion that there's nowhere in America that Obama can put these supervillains without them breaking out of prison and killing millions of Americans.

No. Seriously.
Ft. Leavenworth, Kansas, is the military's only maximum-security prison, making it a strong option for the Obama administration during deliberations on the future of Guantanamo's 240 or so remaining occupants. But not if Sen. Sam Brownback has anything to say about it. He and three House Republicans from the state already have introduced bills in Congress that would bar the government from moving detainees from Cuba to Kansas.

But Brownback isn't the only Republican taking a pre-emptive cue from Rove and offering bills to close off Obama's possible Guantanamo alternatives.

Lawmakers from South Carolina are promising a similar NIMBY fight over the Charleston Naval Brig, and California Republicans are kicking and screaming over transferring detainees to Camp Pendleton in their state.

It gets even more silly. Apparently not even the Supermax prison in Colorado can contain a Muslim guy with a box cutter.
Maybe Brownback can have a chat with Colorado Republican Rep. Doug Lamborn and Mike Coffman, since they're threatening to prevent Guantanamo detainees from being transferred to Supermax. After all, a spokesman for Colorado's Democratic governor, Bill Ritter, told the AP that "there's no reason to take a 'not in my backyard' approach."

But let's not hold our breath. It looks like Republicans are having too much fun planning their obstructionist tactics on Guantanamo.

But it's clear what the plan is: convincing your grandmother that Obama plans to put these Lex Luthor-class masterminds in her neighborhood, guaranteeing her as collateral damage for the secret Islamodeath ray the Great Brown Beturbaned Horde is building in the mountains of Afghanipakiranistan.

Of course, if we're that scared of guys with box cutters and funny names that we can't put them in Fort Leavenworth or Supermax, then in all honesty we're going to all die on Tuesday when the Legion of Doom teams up with the Brotherhood of Evil Mutants and breaks all the prisoners loose. After all, Islamofascists are the most powerful beings in the universe, they're all from Krypton and our yellow sun allows them to go back in time and kill our ancestors unless we keep Gitmo open at all costs.


Bloody Monday

It's earnings layoffs season on Wall Street this week, and the numbers are horribad. Caterpillar 20k layoffs, Sprint Nextel 8k layoffs, Home Depot 7k layoffs. That's just today. Wait until the retail stores start throwing around closing numbers.

Millions more on the way, folks.

Further Investigation May Be Needed

Apparently I'm not the only guy to notice Politico's sole raison d'etre at this point is to be the Village bullhorn complaining about why Obama just won't let the GOP do whatever they want.

From TPM Reader JEM ...

I'm starting to get really annoyed with most news outlets, particularly Politico, which seems to be auditioning for the role of Drudge 2.0, portraying Obama's pledge to be more bipartisan as some sort of political straight jacket. Apparently, Obama has to completely transform all of his ideas and proposals to whatever the Republicans demand if he hopes to live up to his 'promise' of bipartisanship. I hope these articles conclude that he's broken his promise by the time the stimulus passes (with more than 60 votes, mind you), just so I don't have to endure them for the next four years.

I'm not sure I'd say I'm annoyed because I'm not really surprised. But I do think it's an example of the continuing Republican tilt of much of the Capital press corps. Not in ideological terms perhaps, but in terms of whose opinions carry weight, whose matter and whose do not.

Drudge 2.0 certainly seems to fit Politico's angle these days, if not full-blown Village 2.0. It's like the site is possessed by an AI copy of Cokie Roberts and David Brooks. It really takes some work to put that much scorn into reporting everything Obama is trying to do without actually coming out and saying "We don't care very much for the man."

Government On Ice

Reports coming in this morning that Iceland's government has collapsed and has resigned in disgrace -- not just the PM mind you, the entire government -- not three months after that country's massive bank collapse.
Prime Minister Geir Haarde announced the immediate resignation of his cabinet, after talks with coalition partners failed.

Iceland's financial system collapsed in October under the weight of debt built up during years of rapid growth.

The currency has since plummeted, with unemployment soaring. The economy is forecast to shrink by 9.6% this year.

In a series of protests, demonstrators have accused the government of leading the country to ruin.

Mr Haarde told reporters on Monday: "I really regret that we could not continue with this coalition. I believe that that would have been the best result."

That would make Iceland the second country's government to fail as a result of the financial crisis, the first of course being the GOP here.

Iceland is pretty much considered to be "worst case scenario" as far as the global economic crisis on individual countries so far. The key words there are so far. There will be more Icelands out there in 2009 and 2010.

There could be a lot more.

The Next Bubble

Helicopter Ben Bernanke isn't capable of learning, I'm beginning to believe. After his predecessor Alan Greenspan created the largest bubble in history with the housing disaster in order to get us out of the post 9/11 recession, Bernanke is actually considering an even larger, even more fundamental bubble in order to get us out of this mess.
Federal Reserve Chairman Ben S. Bernanke and his colleagues may try once again to cure the aftermath of a bubble in one kind of asset by overheating the market for another.

Fed policy makers meeting tomorrow and the day after are exploring the purchase of longer-dated Treasury securities in an effort to push up their price and bring down their yield. Behind the potential move: a desire to reduce long-term borrowing costs at a time when the Fed can’t lower short-term interest rates any further because they are effectively at zero.

The risk is that central bankers will end up distorting the Treasury market, triggering wild swings in prices -- and long-term interest rates -- as investors react to what they say and do. “It sets forth a speculative dynamic that is very unstable,” says William Poole, former president of the Federal Reserve Bank of St. Louis and now a senior fellow at the Cato Institute in Washington.

The Treasury market has “some bubble characteristics,” Bill Gross, the manager of Newport Beach, California-based Pacific Investment Management Co.’s $132 billion Total Return Fund, said in December on Bloomberg Television. He echoed that sentiment last week.

“I will say, and I have said for the past three months, the governments are very overvalued,” Gross said in a Jan. 20 interview. Treasuries last year returned 14 percent, according to Merrill Lynch & Co.’s Treasury Master Index, their best performance since 1995.

In other words, whatever treasuries the US government buys will become the only game in town for investors. They will flock to them, as they already have been. But the Magic ATM of the US Government will flood the bond markets with cash. Bond prices will skyrocket. Yields will push towards zero.

The the problem starts. As investors flood the same market and push the price up even higher, the government loses control over the price. Wild swings in the bond market could lead to devastating consequences for investors, particularly long term investors. Remember folks, treasuries are what foreign investors are buying from us: the promise the Treasury department will pay them back later. If the prices go all over the place and the bond market goes nuts, we run the risk of a 1929 style crash in the bond market...and that could devastate the US economy even more.

In other words, Bernanke is playing with a flamethrower in a fireworks factory. So many mutual funds and 401(k) plans and of course foreign investors are in Tresuries right now that it's already causing a bubble. If Bernanke lets loose with the full power of the Magic ATM, we'll see another massive bubble much sooner...and the corresponding crash will be much, much worse.

But Obama can't can Bernanke now. It's far too late. Bernanke's fate is Obama's fate...and our fate as well.

Chinese Fire Drill

Roubini calls bullshit on the reports that China's economy grew at 6.8% in 4Q 2008.
The Chinese came out today with their 6.8% estimate of Q4 2008 growth. China publishes its quarterly GDP figure on a year over year basis, differently from the U.S. and most other countries that publish their GDP growth figure on a quarter on quarter annualized seasonally adjusted (SAAR) basis.

When growth is slowing down sharply the Chinese way to measure GDP is highly misleading as quarter on quarter growth may be negative while the year over year figure is positive and high because of the momentum of the previous quarters’ positive growth.

Indeed if one were to convert the 6.8% y-o-y figure in the more standard quarter over quarter annualized figure Chinese growth in Q4 would be close to zero if not negative.

Worse, China's Q1 2009 numbers will be negative. The last real bastion of positive economic growth in the global economy is about to be turned off for 2009, just when the world needs it the most.

2009 will be economic legend, like 1929 or 1945.


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