Thursday, February 12, 2009

Last Call

Nearly two-thirds of Americans want some kind of investigation into Bush's torture regime. After all, we killed people doing this.
The American Civil Liberties Union has released previously classified excerpts of a government report on harsh interrogation techniques used in Iraq, Afghanistan and Guantanamo Bay. These previously unreported pages detail repeated use of "abusive" behavior, even to the point of prisoner deaths.

The documents, obtained by the ACLU under a Freedom of Information Act request, contain a report by Vice Admiral Albert T. Church, who was tapped to conduct a comprehensive review of Defense Department interrogation operations. Church specifically calls out interrogations at Bagram Air base in Afghanistan as "clearly abusive, and clearly not in keeping with any approved interrogation policy or guidance."

The two unredacted pages from the Church report may be found here.

The ACLU's release comes on the same day as a major FOIA document dump by three other leading human rights groups: Documents which reveal the Pentagon ran secret prisons in Bagram and Iraq, that it cooperated with the CIA's "ghost detention" program and that Defense personnel delayed a prisoner's release to avoid bad press.
Understand that? People died. We tortured them to death. Bush is a war criminal.

But Obama wants to be magnanimous. He wants to be Lincolnesque, forgiving the Confederate Army after Lee's surrender. He wants to forge a lasting, bipartisan legacy. He wants votes from the GOP.

How long will it take Obama to realize they want to destroy him?

Ask Lincoln.

Your AFOP Update Of The Day

Three weeks and 2 days into the Obama Era, and you'll be glad to know the most corrupt Presidency ever is pretty much over if you're a regular DC Examiner reader.

(Psst, remember the GOP plan? Destroy Obama? Keep with the tour, please. The tram moves fast.)

Nuts To You

So, it turns out it's not just salmonella in peanut butter in the last couple of weeks, but dead mice and rats, bird feathers, and animal droppings in peanut butter in the last four years.
The Texas Department of State Health Services on Thursday ordered the recall of all products ever shipped from the Peanut Corporation of America's plant in Plainview, Texas, after discovering dead rodents, rodent excrement and bird feathers in the plant.

The order, which applies to products shipped since the plant opened nearly four years ago, came a day after the discovery of filth in a crawl space above a production area during a health services inspection, the department said in a news release.

Inspectors also reported that the plant's ventilation system was pulling debris "from the infested crawl space into production areas of the plant resulting in the adulteration of exposed food products," the release said.

The Bushies reduced the FDA budget time and time again. They made it impossible to effectively do the job of protecting the nation's food and drugs, and then blamed the agency for failing to do its job, with critics saying the failures were then proof agency was useless and that food and drug companies could police themselves. Sound familiar?

It's the same playbook the Bushies used to take apart banking regulation, environmental regulation, work safety regulation, and the list goes on and on.

So much work has to be done.

Nobody Could Have Predicted Judd Gregg, Etc.

Sully on Gregg:
I have to say even I am a little taken aback by the force of the Republican assault. Even in a downturn as swift and alarming as this one, even after an election that clearly favored one approach over another, even after the most conciliatory efforts by an incoming president in memory, these people have gone to war against the president.
Dude, Sullivan, have you been paying attention for the last eight years? Have you been paying attention for the last eight months?

Josh Marshall too is scratching his head over Gregg.

Guys, this is a group of people who four months ago were calling Barack Obama a traitor, saying he's not an American citizen, saying he's secretly a Muslim extremist, saying just in the last few days that he's planning a Nazi-like takeover of health care IT, guys.

For the last time, this is a group of people willing to do anything --ANYTHING -- to ruin Obama, the economy, and the American people in order to get back in power. If Obama pulls this off, the Democrats own this country for a generation. If he fails, the GOP does. It really is that f'ckin simple, folks.

Everything they do is motivated by scoring political points. They don't care if they lost in 2006 and lost badly in 2008. They plan on getting it all back in 2010 and 2012 if America is reduced to a third-world economy and they can pin it all on Barack and Nancy.

Destroy. Obama.

That is the entire plan in all of its fever-bright glory.

Everything you see the GOP do over the next four years needs to go back to the context of that two word plan.

Remember it.

PS, as I said, can we officially bury bipartisanship and say screw the GOP?

The Loan Arranger Rides Again

Stock market reacted positively to the "third leg" of Obama's...three legged...stool...of financial stability, or whatever. The plan? Direct mortgage assistance from the government to struggling homeowners.
The Obama administration is hammering out a program to subsidize mortgage payments for troubled homeowners who have gone through a standardized re-appraisal and affordability test, sources familiar with the plan said on Thursday.

The program would be a major break from existing aid programs, which are triggered once homeowners fall into arrears.

Under the plan being contemplated, mortgage companies would use a uniform eligibility test even before a borrower becomes delinquent, sources said.

The administration hopes the mortgage industry will soon agree to a set of standards that will allow it to move quickly to modify many home loans.

Dow erased a 200 point loss in the last hour on news of the plan, and frankly it's the first really strong plan Obama and Geithner have pulled out of their hat.

Soft-Boiled Gregg

Judd Gregg is out.
“I want to thank the President for nominating me to serve in his Cabinet as Secretary of Commerce. This was a great honor, and I had felt that I could bring some views and ideas that would assist him in governing during this difficult time. I especially admire his willingness to reach across the aisle.

“However, it has become apparent during this process that this will not work for me as I have found that on issues such as the stimulus package and the Census there are irresolvable conflicts for me. Prior to accepting this post, we had discussed these and other potential differences, but unfortunately we did not adequately focus on these concerns. We are functioning from a different set of views on many critical items of policy.

“Obviously the President requires a team that is fully supportive of all his initiatives."

Bipartisanship my ass.

Biggest loser in all this? NH Gov. "I'm appointing a Republican" John Lynch.

[UPDATE] Doug at Balloon Juice points out Gregg asked Obama for the job, then poured gasoline all over the bridge and burned it for maximum effect.

Can we put an end to the fantasy bullshit of bipartisanship now?

The other side is staffed completely by The Really Rottens, after all.

How Plan N Might Go Down

Eric Dash at the NY Times posits that Timmy's "bank stress test" could be cover for Plan N.
Regulators plan to assess the potential losses a bank could face over the next two years, rather than the typical one year, according to government officials close to the situation. They are also expected to look at banks’ exposure to derivatives and other assets normally carried off their balance sheets, and make sure that banks also carry an additional capital cushion. Their assumptions will be guided on a “worst case” basis.

The exams could be used not only to determine which large banks would receive additional aid but also to help weed out small, unhealthy banks, hastening consolidation in the industry.

Analysts said the program hints at a creeping nationalization of the banking industry. “There is no way you can survive the failure of the stress test without having the government inject large amounts of taxpayer money,” said Jaret Seiberg, a policy analyst at the Stanford Group in Washington. “That means the government will own a majority of the bank.”

Paul J. Miller, a longtime banking analyst with Friedman Billings Ramsey, said the test might provide the government with political cover to take a more heavy-handed approach. “It gives them the mechanism they need to take giant steps with capital infusions,” he said.

“Maybe the thought is that we will put in so much capital that even under these stringent circumstances, this bank will not fail,” added Martin Lowy, a banking lawyer who advised the Federal Deposit Insurance Corporation on troubled banks during the savings and loan crisis of 20 years ago.

“That will take a huge amount of capital if they are going to do it honestly,” he said. “Why that is different from nationalizing, I don’t know.”
This does seem to be a logical way to implement Plan N from both a political standpoint as well as a financial one. Over at CalcRisk there's an excellent argument as to why the key to Plan N is to both complete the "stress test" quickly (in say 30 days) and then publicly announce the results:
Just to repeat, the key lesson in crisis resolution is transparency. I hope the results of the bank stress test will be made public, and the zombie banks clearly identified.
There's the rub. Will it be politically feasible to publicly call out America's largest banks as zombies? I don't think there's any other way to do it, and that actually might be Obama's trump card.

If Obama keeps the results of these stress tests secret, then the rumors will leak and seriously harm the banks. If however he releases the results for all banks simultaneously, he can then implement Plan N on the worst offenders while identifying "safe" banks at the same time.

If either the list of safe banks or the list of truly insolvent ones leaks before the other, the markets will eat all the banks alive.

This would at least give Obama cover for Plan N.

If It's Thursday...

It's time for another 623K new jobless claims and another 23-year high on the 4 week jobless average.

Job losses are accelerating dramatically, folks.

Roubini And Plan N

Nouriel Roubini lays out the most coherent and intelligent argument yet that Obama will have no choice but to nationalize insolvent banks before the end of the year. The most interesting passage is why Roubini believes Obama hasn't made the move to do so yet: (emphasis moi)
So why is the US government temporizing and avoiding doing the right thing, i.e. take over the insolvent banks? There are two reasons. First, there is still some small hope and a small probability that the economy will recover sooner than expected, that expected credit losses will be smaller than expected and that the current approach of recapping the banks and somehow working out the bad assets will work in due time. Second, taking over the banks – call is nationalization or, in a more politically correct way, “receivership” – is a radical action that requires most banks be clearly beyond pale and insolvent to be undertaken. Today Citi and Bank of America clearly look like near-insolvent and ready to be taken over but JPMorgan and Wells Fargo do not yet. But with the sharp rise in delinquencies and charge-off rates that we are experiencing now on mortgages, commercial real estate and consumer credit in a matter of six to twelve months even JPMorgan and Wells will likely look as near-insolvent (as suggested by Chris Whalen, one of the leading independent analysts of the banking system).

Thus, if the government were to take over only Citi and Bank of America today (and wipe out common and preferred shareholders and also force unsecured creditors to take a haircut) a panic may ensue for other banks and the Lehman fallout that resulted from having unsecured creditors taking losses on their bonds will be repeated again. Instead if, as likely, the current fudging strategy - of temporizing and hoping that things will improve for the economy and the banks - does not work and in 6-12 months most banks (the major four and the a good part of the remaining regional banks) all look like clearly insolvent you can then take them all over, wipe out common shareholders and preferred shareholders and even force unsecured creditors to accept losses ( in the form of a conversion of debt into equity and/or haircut on the face value of their bond claims) as the losses will be so large that not treating such unsecured creditors would be fiscally too expensive.

So, the current strategy – Plan A - may not work and the Plan B (or better Plan N for nationalization) may end up the way to go later this year. Wasting another 6-12 months to do the right thing may be a mistake but the political constrains facing the new administration – and the remaining small probability that the current strategy may by some miracle or luck work – suggest that Plan A should be first exhausted before there is a move to Plan N. Wasting another 6-12 months may risk turning a U-shaped recession into an L-shaped near depression but currently Plan N is not yet politically feasible.

And that's the bottom line: Obama can't nationalize now or the panic will wipe out the financial system. However, by delaying nationalization now, he is effectively assuring that major national banks and almost all the regional banks will be taken over before the end of the year, or by early 2010 at the latest.

I call that one the "Deep Impact" quandry. In that movie where an asteroid is hurtling towards the Earth, the President, played by Morgan Freeman, can't tell the world that a rogue asteroid is going to destroy much of the life on Earth, but if he does, the economic and political impact of the resulting panic will result directly in death...and there's always a chance the NASA guys could be off by enough that the asteroid could do less damage than expected.

Obama's facing a similar situation with our banking system. It's going to get wiped out within a year most likely, but admitting that it's going to happen means the banking system will be wiped out now instead.

Obama's going for the current plan on the .01% chance it'll work, because Plan N involves admitting a massive problem and then trying to fix it in the middle of a huge financial panic. We're insolvent, but people aren't aware of it yet. Obama pulls the trigger on Plan N, and everyone will know.

Bank runs? Stock crashes? Looting? Who knows? 300 million people, some of them are likely to start doing something stupid.

So, when does Plan N become politically viable? That's the quadrillion-dollar question.

New tag to follow the path of world bank nationalization: Plan N.

Oh And For The Record

I'm completely sane compared to these guys (h/t Balloon Juice):
But tax cuts actually are the answer. The economic weakness is a forgone conclusion, because it results from de-leveraging. You can’t put that genie back in the bottle.

The most radical, and effective, thing we could do for the economy right now is this: Stop collecting all forms of Federal business, income and payroll tax. EVERY PENNY OF IT. RIGHT NOW.

Gasp! Yes, I said it, and I meant it. Go on an absolute, 100% Federal tax holiday. That’s a real shot in the arm that would suddenly inflate the economy by a solid $1.5 trillion or more per year.

Anyone out there in comments want to take this one? I've got about 48712 responses in my head to this and they're all piled up like a huge, multi-car freeway accident.

At least 32,000 of those responses involve the term "exciting new paradigms in douchebaggery".

Object Lesson

Couple of observations:

One, even in the Age of Democrats, a Senate bill like the stimulus never gets "filibustered by Republicans" in the Village media. Instead, it "needs 60 votes to pass". It does not. It needs 60 votes to stop Senate Republicans from blocking the bill with a filibuster. But even with Democrats running the show, the Village continues to cover for the GOP at nearly every turn.

Two, Remember if Democrats had taken it upon themselves to seat Al Franken and Judd Gregg's replacement had been a Democrat, we wouldn't of had to see Susan Collins get to strip a whistleblower protection provision from the bill, Olympia Snowe remove executive pay limits from the bill, and Arlen Specter cutting $30 billion in spending from the bill.

As Digby says, Obama's sharing his leadership duties with Republican moderates (and Ben Nelson). Pray we can make some serious inroads in 2010. BooMan's got an early handicap of that race, and once again Ohio and Kentucky are prime targets for the Dems.

Of course, by November 2010 the economic picture is going to be much, much worse. It may be all the Dems can do just to hold on.


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