Friday, February 13, 2009

Even A Broken Grandfather Clock...

Politico: Nobody Could Have Predicted(tm) that the House GOP would unanimously vote against the stimulus bill!

You know, except that I predicted it.
I've said time and time again that the House GOP never had any intention of voting for Obama's plan to fix the economy whatsoever. They were always going to oppose it, they were always going to obstruct it, they were always going to do everything they can to sink it with the intention that they fully expected the economy to come apart at the seams.
Not holding my breath for Politico to give me a job or even acknowledge I exist. I'm a fourteenth-string blogger with a readership of, well, you three.

But, you know, I was right. Suppose mathematically I had to be eventually.

[UPDATE] Looking over the last couple weeks, a lot of folks thought the Republicans were going to cave in the House, including BooMan.
When the House votes on final passage of the stimulus bill, somewhere near two dozen Republicans are going to vote for it. That was the point, despite the fact that no one gives a shit what the House Republicans think. We care about what the public thinks. And Obama is already talking to the people by blasting Republicans with ads in their districts. Yesterday's vote was not the final vote.
Hate to say I told ya so, bro, but...there you are.

The problem is you can't keep assigning logical characteristics to GOP behavior when you should be assigning mental illnesses from the DSM-IV.

One Last Step Before The Journey

Stimulus passes the Senate, 60-38, or will as soon as Ohio's Sherrod Brown arrives from his mother's funeral. Wingnuts are already predicting the end of America's economy and a GOP sweep in 2010.

Gonna file THAT prediction away.

Definition Of Insanity

Albert Einstein is credited with the saying "The definition of insanity is doing the same thing over and over again and expecting different results." Think Progress catalogs Obama's growing insanity over bipartisanship:

– What Obama did: Trusted Judd Gregg when he indicated that, “despite past disagreements about policies, he would support, embrace and move forward with the president’s agenda.”

– What Obama got in return: A “change of heart” from Gregg, who said that he “couldn’t be Judd Gregg” at Commerce.

– What Obama did: Reached out to have dinner with right-wing pundits Bill Kristol, Charles Krauthammer, and David Brooks.

– What Obama got in return: A ripping from his right-wing friends, who called it the worst in “galactic history.”

– What Obama did: Tried to work with the House GOP by preemptively including tax cuts, stripping stimulative spending proposals, and attending their conference meeting.

– What Obama got in return: Zero votes (and a bunch of false myths about his plan)

– What Obama did: Tried to reach out to John McCain to work together on “solving our financial crisis.”

– What Obama got in return: Nothing. McCain voted against the legislation, and even went so far as to call it “generational theft” and hypocritically complained that it contained “corporate giveaways.”

Obama got burned every single time he tried, and this was just in the span of roughly three weeks. The good news is Obama has learned his lesson. Now the hard part begins.

A Little Exposition Music, Please

If you're just joining us, here's the plan for Team Obama:
  1. The Bank Bailout Plan
  2. The Stimulus Bill
  3. The Foreclosure Relief Package
Obama is counting on a combination of all three to get us out of the mess. First, the bailout. This is the part I like the least, as the total cost of it seems to be around $2.5 trillion and nobody seems to be sure exactly what it does. We do have some broad details, like that the plan contains an effort to assess how strong the remaining banks are and determine what needs to be done to save each bank, if anything.

It's this part of the bank plan that actually may be the true thrust of the effort to save the banks. The theory is that banks found wanting will be dealt with harshly, while at the same time announcing which banks are healthy will assure the public. It's a possible road to Plan N, the nationalization of the banks. It's also the first real inkling we have that Obama and Geithner may be ready to make tough decisions about which banks stay and which are gone. My only real problem is that I don't think any of the banks are solvent at this point, certainly not Citi or Bank of America, and certainly not any of the regional banks like Regions Bank, SunTrust, or Fifth Third. A lot of banks are going to go away very soon regardless. Jury's still way out on this one.

Second is the stimulus bill. This one will most likely be on the President's desk on Monday, he'll sign it, and we'll get started. My major issue is that the spending part of the bill is far, far too small (especially after anti-stimulus tax cuts.) However, economists say there will be 3 to 4 million additional jobs created from this bill. That's good news, because we've already lost 3.6 million jobs since December 2007, and 2.6 million in just the last five months alone.

But that's assuming the pace of the job creation will be able to overcome the job losses period. We're up to the point of losing 600,000 jobs a month now, and the stimulus is expected to work over a period of two years. Granted, it'll help, but the reality is it'll be a while before this bill starts kicking in the jobs and slowing down the rate of losses. Will it be enough?

Finally, the foreclosure package. Details on this get announced Wednesday, but the gist is a standardized process to get homeowners payment relief and the chance to refinance to a rate both banks and homeowners can live with. There's pretty widespread support for this, mainly because the banks don't want to get stuck with foreclosed homes they can't sell that are falling in value any more than homeowners want to get kicked out on the streets. Foreclosures are lose-lose for everybody right now.

The good news is that even the GOP would be mega stupid to block this, which means they will, saying that all the people that will benefit are poor broke-ass minorities or something that will knock another 10% off their already sub 35% ratings. The bad news? This is something that needed to have been done a year ago. Now it's still critical, but it may again be too late.

We'll see what happens.

Screw It, Let's Go Get A Burger

Josh Marshall tosses in the towel on this whole bipartisanship garbage.
So John McCain says that Obama needs to work on bipartisanship, which is about par for the course from McCain and for other Republicans these days. I just heard a reporter on MSNBC say that the Republicans have emerged from this battle with their reputation for fiscal discipline strengthened while Obama has had his reputation for bipartisanship tarnished.
Josh, compadre, two things:
  1. Fifteen years ago a generation of reporters made their bones off the backs of making Bill Clinton's life miserable. Clinton played the bipartisanship card, the GOP kicked him square in the balls, and the Village chimed in at the right times and pointed and laughed. Since then they've been the cool kids. They stick with what they know, and what they know is the GOP will bend over backwards to utilize them as power brokers.
  2. And they like being the cool kids. Once you point out the Village doesn't matter, all the cool vanishes. They see Obama's Youtubery and transparency and intertoob useage as a direct threat to their gatekeeper status of What America Is Thinking. They keep telling the masses what they should think, but the masses already read the story in three different places on the 'net this morning and are going "Man, this guy is full of crap."
They hate being left out of the loop.
For my part, I don't think there's any problem with having party line votes where both parties really fundamentally disagree on the policy question at hand. But to the extent that there's a question of who's making an effort to operate in a bipartisan manner, this one is really not even close. Reporters' idea that the entire 'bipartisan' enterprise is Obama's responsibility, as though Republicans, in their depleted state, actually get to dictate the content of bills -- I don't think people buy that. Which is probably why Obama's still really popular and congressional Republicans are extremely unpopular.
You think the Village will catch on that they are backing the losing side? I don't. I think the Village enjoys the fact that they need the GOP as much as the GOP needs the Village. The Democrats? They don't depend on the Village nearly enough.

Better to help the GOP and maintain the power structure of the Village than to help Obama and get bypassed by the net.

Zandar's Thought Of The Day

I had great respect for Chuck Todd as NBC's political analyst during the campaign.

I have zero respect for Chuck Todd as NBC's whiny ass White House correspondent.

Tick, Tick, Tick

Remember kids, it's not just huge banks like Citi and BoA that are insolvent. They're big enough politically to be saved. A lot of large regional banks however are done for.
A Bernstein Research analyst on Friday called Fifth Third Bancorp "un-investable," and noted that the regional bank will likely need more capital.

Shares of the Cincinnati-based bank recently traded down 21 cents, or 10 percent, to $1.99.

In a note to clients, senior analyst Kevin St. Pierre said more details are needed on how the government plans to administer its "stress test" on banks with assets over $100 billion. This will determine not only if Fifth Third needs more capital, which he believes it does, but will also provide more insight on how much its shares could be diluted from further government investment.

As part of the government's overhaul of the $700 billion financial bailout package passed last fall, the Treasury Department has proposed a "stress test" for the nation's largest banks to determine whether they can make loans on their own or need further government aid.

"Upon release of the details of the test and the minimum capital levels desired by the government, we will be better equipped to evaluate the viability of Fifth Third and the potential dilution involved with further injection of capital by the government," St. Pierre wrote. Until then, the bank is "un-investable," he said.

There are a solid dozen banks out there like Fifth Third across the country. They're not going to survive, most of them. Plan N might save them if implemented now. When Obama's hand is forced however, he's going to have to draw a line.

All the banks below that line are dead. Save what you can. Abandon what you can't. Banks like this will be chopped up and sold...or more likely, will just disappear as Americans realize they don't need all these banks anymore.

Wall Of No

As I predicted, the stimulus bill passed the final House vote today with a grand total of zero Republican votes.
The compromise plan was approved by a vote of 246-183 but no Republicans voted for it, dashing President Barack Obama's quest for bipartisan support that he had hoped would break the gridlock that has gripped Congress for years.

House Majority Leader Steny Hoyer chastised Republicans, saying they were sticking to the same prescription for the economy that had proved a failure during eight years of leadership from President George W. Bush.

Steny doesn't get it either. They are proud of this "no donkees in the klubhowse" style of resistance. They don't care. They're betting on failure, folks. They want our economy to crumble. They are betting the entire political future of the party on rooting for you to lose your job, and doing everything in their power to obstruct, obfuscate, and annoy the economy to death. Then, they figure you'll vote for them after that.

You lose your job because the stimulus bill wasn't big enough to save the economy and the GOP was responsible for cutting spending on new jobs, you going to feel like voting Republican because of it?

Another Voice In The Choir

Add Arianna Huffington to those wondering aloud why Obama will not pull the trigger on Plan N.
The big problem is Geithner is acting as if the crisis we are facing is a crisis of liquidity when, in fact, it's a crisis of insolvency. As Ann Pettifor puts it on HuffPost: "Much of Wall Street is effectively insolvent. It's not that these banks lack cash or capital -- it's just that they're never going to meet all their financial liabilities -- i.e. repay their debts. Ever."

Trying to prop these zombies up, as Geithner seems intent on doing, will lead to what Roubini calls "a royal rip-off of the taxpayer" and the risk of "turning a U-shaped recession into an L-shaped near-depression."

President Obama has made it unambiguous that he understands what is at stake -- both for the country, and for himself politically. On Tuesday, he said that if his economic plan doesn't work, "a few years from now, you'll have a new president."

And we know that many within his administration -- including senior advisor David Axelrod - favor a strategy that may be harder on Wall Street but will more quickly revive the U.S. economy.

So it's time to take off the kid gloves Geithner and Larry Summers are using to handle Wall Street and pull the plug on Geithner's deeply flawed plan.

Amen to that. The sooner, the better.

Or is it better to be held hostage by the zombie banks?

Also The Sun Is Hot And Burns Stuff

The First Read crew at NBC has come to (for them) a gobsmacking, earth-shaking, brave new world realization (h/t AmericaBlog):
Perhaps the biggest fallout from yesterday’s Gregg news is the realization that outside Collins, Snowe, and Specter, Obama isn’t going to receive much support from Republicans, no matter how many of them he tries to appoint to his cabinet, how many times he has them over for drinks at the White House, and how many times he meets with their conference.
Well no shit, guys. They want to destroy his ass. They want to wreck the economy to get back in power.

What took you so long?

Hostage Situation On Wall Street

The gang at TPM Muckracker have gotten a hold of an internal memo from Deutsche Bank that details an interesting plan: convince Treasury to either overpay for toxic assets or face the consequences.
In the memo -- one of Deutsche's daily "Economic Notes" sent out to the firm's clients, and to some members of the press -- Joseph LaVorgna, the bank's chief US economist, essentially, appears to warn that if the government doesn't pay high prices for the toxic assets on the books of Deutsche and other big firms, there will be massive consequences for the US economy.

Writes LaVorgna:

One main stumbling block to the purchasing of troubled assets has been pricing, specifically how does the government price a diverse set of assets in a way that does not put the taxpayer on the hook. However, this should not be the standard by which we judge the efficacy of the plan, because a more prolonged deterioration in the
economy will result in a higher terminal unemployment rate and a greater deterioration of the tax base. As such, the decline in tax revenues will crimp many of the essential services provided by the government. Ultimately, the taxpayer will pay one way or another, either through greatly diminished job prospects and/or significantly higher taxes down the line to pay for the massive debt issuance required to fund current and prospective fiscal spending initiatives.

We think the government should do the following: estimate the highest price it can pay for the various toxic assets residing on financial institution balance sheets which would still return the principal to taxpayers.

One leading economist described the memo to TPMmuckraker as a "ransom note" to the US government. And David Kotok of Cumberland Advisors, who writes such research memos for his own clients, acknowledged that the memo, like all such communications, could be interpreted as an attempt to influence policy-makers.

It's the notion that Treasury has no choice but to overpay for these assets or face a "prolonged deterioration in the economy" that bothers me. The banksters take no responsibility for the situation, instead smugly inferring that Treasury will magically fix everything and let the banks operate as normal or face a situation where impending collapse will ruin the country.

The teeth-grinding truth is the way Treasury is playing the game right now, LaVorgna is 100% correct. As long as Obama refuses to consider Plan N, the other options on the table are overpay for toxic crap, or let the banks collapse. Collapse of course is the least politically and economically tenable situation, so that leaves giving banks the money or else.

Does this not mean that the inherent moral hazard of Treasury buying toxic assets now makes Plan N absolutely necessary?

Plan N Goes Mainstream

The NY Times' Steve Lohr provides a solid primer for movement towards Plan N. Seeing the Times take this seriously is somewhat sobering, they even quote Roubini.
Some of the nation’s large banks, according to economists and other finance experts, are like dead men walking.

A sober assessment of the growing mountain of losses from bad bets, measured in today’s marketplace, would overwhelm the value of the banks’ assets, they say. The banks, in their view, are insolvent.

None of the experts’ research focuses on individual banks, and there are certainly exceptions among the 50 largest banks in the country. Nor do consumers and businesses need to fret about their deposits, which are federally insured. And even banks that might technically be insolvent can continue operating for a long time, and could recover their financial health when the economy improves.

But without a cure for the problem of bad assets, the credit crisis that is dragging down the economy will linger, as banks cannot resume the ample lending needed to restart the wheels of commerce. The answer, say the economists and experts, is a larger, more direct government role than in the Treasury Department’s plan outlined this week.
It's worth reading the whole thing if you're still doubting Plan N. Nationalization of many of the mega-banks and regional banks in America is where we will eventually end up. Obama will have no other choice.

Another Sees The Light

Yesterday I wondered if Andrew Sullivan had been paying attention to the GOP after he was mystified over Judd Gregg. Last night, it turns out he indeed has seen the light.
This much is now clear. Their clear and open intent is to do all they can, however they can, to sabotage the new administration (and the economy to boot). They want failure. Even now. Even after the last eight years. Even in a recession as steeply dangerous as this one. There are legitimate debates to be had; and then there is the cynicism and surrealism of total political war. We now should have even less doubt about what kind of people they are. And the mountain of partisan vitriol Obama will have to climb every day of the next four or eight years.
In other words it can be boiled down to two words:

Destroy. Obama.

More and more folks are coming around to the realization that the election of 2008 did absolutely nothing to change the Republicans. They still believe after eight years that their ideas worked and will work in the future, after eight years of Bush lying, cheating, stealing, killing, and wreacking America's economy. They are denying 2001-2008 even existed, that somehow the economic crisis we have sprang into existence only after January 20, 2009 at 120:01 PM. They honestly believe that Obama is to blame for our economy right now.

When Republicans lose, they double down on their mistakes. They have been doing that for the last several years now. Why is any logical, intelligent human being even remotely surprised that this is the GOP plan? Pretend the last eight years were fine, declare Obama's Presidency to be failed at every turn, and vow revenge in 2010 and 2012.

You can't argue with fanatics in denial. You can't argue with people who believe Obama wasn't bipartisan enough because he didn't give the GOP 100% of exactly what they wanted. You can't reason with people who wholly believe the major problem in America is the President, the policies, and the actions of the last three and half weeks and not the President, the policies, and the actions of the preceding eight years.

They hated him from January 20. They vowed to destroy him. They will take the country down with them in the effort. They truly believe that after only 24 days, Obama is in freefall, doomed to one-term Carterism and that Judd Gregg is somehow the magical last straw that will turn the people against Obama and make them demand...what, impeachment? Tar and feathering? Any day now.

And when this groundswell of Obama hate fails to materialize and America is caught giving Obama a fair chance with positive approval ratings among a majority, the GOP will turn against the people as well, saying that they deserve their economic Armageddon for aiding and abetting this...this...Democrat.

It's about that point when the American people will switch off the GOP's bullhorn, tell them to shut up, and give Obama even more of a congressional majority.

But we're in for at least four years of hysterical, fever-bright, fanatical, venom-dripping hatred for Obama. They're out to annihilate him and anyone on his side, and increasingly that will mean the American people.

Never forget that.

[UPDATE] The GOP isn't even denying anymore that this is the plan. (h/t Digby)
More interesting, Vitter offered up a few specifics about the opposition party's political strategy given its diminished congressional power. Vitter said defeating the stimulus bill was never the goal; changing public opinion about it was. "We may have lost the vote, but we collectively have won the debate," he said, claiming that the public now perceived that the bill as evidence that the Obama administration was not bringing real change to Washington, but rather just engaging in the same old wasteful government spending. (Congressional Democrats have been disseminating polls showing that the stimulus plan is backed by a majority of the public.) "We're getting back to our roots," Vitter said of congressional Republicans.

According to Vitter, the GOP is basically betting the farm that the stimulus package is going to fail, and the party wants Democrats to go down with it. "Our next goal is to make President Obama and liberal Democrats in Congress own it completely," he said. Instead of coming up with serious measures to save the economy, the party intends to devote its time to an "we told you so" agenda that will include GOP-only hearings on the bill's impact in the coming months to highlight the bill's purportedly wasteful elements and shortcomings.
Here endeth the lesson.


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