Sunday, February 22, 2009

Last Call

So, another round of Deal or No Deal, this time with Citigroup as the contestant. Seems the government is trying for a 40% stake in the bank's stock, along with investment from foreign governments. (h/t Yglesias)
The move wouldn’t cost taxpayers additional money, but other Citigroup shareholders would see their shares diluted. A larger ownership stake by the federal government could fuel speculation that other troubled banks will line up for similar agreements. […] As part of the plan, Citigroup officials hope to persuade private investors that have bought preferred shares — such as the Government of Singapore Investment Corp., Abu Dhabi Investment Authority and Kuwait Investment Authority — to follow the government’s lead in converting some of those stakes into common stock, according to people familiar with the matter. That would further bolster an obscure but increasingly pivotal measure of banks’ capital known as “tangible common equity,” or TCE.
To me, this looks like a prelude to implementing Plan N on a large scale, especially if a number of banks line up for the stock plans. Citigroup won't be the last bank that the taxpayer has a 40% share in. Not by a long shot.

We'll see how this deal shakes out. Bottom line, it means the government is deciding which banks it now has to save (or the stock becomes worthless) and which ones it can let die, and it's doing so with our tax money. Of course, when Obama has no choice but to pull the plug, that common stock the taxpayer owns guessed it! Worthless!

Which was the whole point of the preferred stock in the first place. The real point is to prop up the stock price so that the TCE mentioned up there is healthy enough so that the Obama administration doesn't fail Citigroup on the stress test.

It knows Citi is going to fail. So it's propping them up now. Then, when the stress tests are done, voila! All the banks pass! Crisis over! We win! Nobody has to be "nationalized" and the banks get all the billions they want through the back door manipulation of common stock.

It's a pretty good scam.

It won't save the financial system.

Kids Playing Tea Party

The latest delusion from our friends on the Right is that just underneath the surface of the American public, there's a massive, Obama-hating, anti-government populist revolt just begging to be tapped into and mobilized to bring the Republican Party thundering back into power to continue the Reagan Revolution. They imagine that there's a huge reservoir of untapped anti-stimulus, anti-spending, anti-tax, anti-everything-Obama-does wellspring out there that just needs a leader.

They call this movement the "Tea Party", after the Boston Tea Party, where they honestly believe millions of Americans will imminently rise up and overthrow the hated, failed, criminal, corrupt, evil Obama administration and replace it with God-fearing, Muslim-hating, border-patrolling, tax-cutting, gay-bashing, gun-toting folks beholden to small business owners, megachurches, and Our Founding Fathers.

The movement is ridiculous on its face, of course. Somebody should informed these small minded idiots that after one month of Barack Obama, they're reduced to following Rick Santelli, Malkinvania, and El Rushbo while having fever dreams of overthrowin' that damn Muslim President out on their paintball survivalist weekends.

Somebody should also inform them America already had a populist movement back on November 4 and kicked all these morons to the curb.

But as we've seen this weekend, these infantile jagoffs love playing tea party and freedom fighter and state's rights and other silly, childish games while the country is slipping away, indulging their escapist, paranoid fantasies, and in the end blaming everyone but their own greed for the problems we're in.

That leaves the grown-ups to determine the country's true fate, I suppose.

The Most Pious Of Neighbors

As I expected, other GOP governors are following suit on Bobby Jindal's "noble" efforts to turn down stimulus cash in a clear game of political "me too".
Though they support some federal action to help their states recover from the recession, several Republican governors said Sunday they plan to turn down a portion of what's offered in the stimulus bill that President Obama signed last week.

"If we were to take the unemployment reform package that they have, it would cause us to raise taxes on employment when the money runs out -- and the money will run out in a couple of years," Mississippi Gov. Haley Barbour told CNN's "State of the Union" on Sunday.

The Republican governors of Idaho, Alaska, Texas, South Carolina and Louisiana have expressed similar concerns.

In a couple of years of course is when the 2012 GOP primary will start to heat up. No serious GOP candidate can ever raise taxes for any reason, lest they become anathema. Screw the people who need help right now, anyway: if being unemployed is truly a problem for them, then they're likely to be Democrats anyway. Those with Presidential ambitions for the Party of No have to have the theme song down pat. Those without, however...well they can actually act on conscience.
But one of their colleagues, California Gov. Arnold Schwarzenegger, had a message for them Sunday on ABC's "This Week."

When asked about broader complaints from lawmakers such as South Carolina Governor Mark Sanford about the debt that the stimulus package will lead to, Schwarzenegger responded, "I am more than happy to take his money or [that of] any other governor in this country that doesn't want to take this money. I take it because I think California needs it."

Schwarzenegger called it "a terrific package," and said he does not foresee a need for a tax hike in the future to sustain the unemployment provisions.

A leading Democrat, meanwhile, said he does see a potential problem.
"I'm not sure that we can, over the long run, cope with the high unemployment compensation standard that this mandates for states," Pennsylvania Gov. Ed Rendell, the head of the National Governor's Association, told "Fox News Sunday."

"But I don't care. My people are suffering," he added. "They need that extra money. And right now that's paramount in my mind."

So yeah, live in the South in a state with a GOP governor? Unemployed? Sorry, your Governor has Presidential aspirations. Screw you.

Remember that plan where the Dems were supposed to take full responsibility for the "Obama Depression?" That one just died on the altar of political stupidity...and now these governors have a huge weakness in any general election in 2012...or re-election for that matter.

The NY Times has more, as does Steve Benen. Remember folks, this plan only works for the GOP if they stay united, and right now they aren't...not by a long shot.


The Double G lays into the WOLVEREEEEEEEEEEENS! with both barrels, and especially their leader, former CNN loudmouth and now FOX Noise hate-machine Glenn Beck. Beck apparently is actually "war gaming" out the scenario of the right-wing militia movement in open, armed revolt versus the Obama government. Guess which side Beck's on?
But now, only four weeks into the presidency of Barack Obama, they are back -- angrier and more chest-beating than ever. Actually, the mere threat of an Obama presidency was enough to revitalize them from their eight-year slumber, awaken them from their camouflaged, well-armed suburban caves. The disturbingly ugly atmosphere that marked virtually every Sarah Palin rally had its roots in this cultural resentment, which is why her fear-mongering cultural warnings about his exotic, threatening otherness -- he's a Muslim-loving, Terrorist-embracing, Rev.-Wright-following Marxist: who is the real Barack Obama? -- resonated so stingingly with the rabid lynch mobs that cheered her on.

With Obama now actually in the Oval Office -- and a financial crisis in full force that is generating the exact type of widespread, intense anxiety that typically inflames these cultural resentments -- their mask is dropping, has dropped, and they've suddenly re-discovered their righteous "principles." The week-long CNBC Revolt of the Traders led by McCain voter Rick Santelli and the fledgling little Tea Party movement promoted by the Michelle Malkins of the world are obvious outgrowths of this 1990s mentality, now fortified by the most powerful fuel: deep economic fear. But as feisty and fire-breathing as those outbursts are, nothing can match -- for pure, illustrative derangement -- the discussion below from Glenn Beck's new Fox show this week, in which he and an array of ex-military and CIA guests ponder (and plot and plan) "war games" for the coming Civil War against Obama-led tyranny. It really has to be seen to be believed.

Having predicted this level of reaction from the right-wing nutjobs since before the election I'm not surprised in the least by this. Really do check out the entire article and the video clips Double G presents. It's borderline insanity, folks.

The militia whackjobs are gearing up for war against Obama openly. Glenn Beck is going through the scenarios where Mexico falls and becomes a lawless "narco-state" and requires armed militas to resist the endless flow of terrorists from the south because Obama won't stop them, requiring Israel to go to war with Iran, or those same militias go to war against the US government itself. This is crazy, end times stuff here, and Fox is openly fomenting these ideas. As Greenwald concludes:

But it's now inflamed by declining imperial power, genuine economic crises, an exotic Other occupying the White House, and potent technology harnessed by right-wing corporations such as Fox News to broadcast and disseminate it widely and continuously. At the very least, it's worth taking note of. And I wonder what would happen if MSNBC broadcast a similar discussion of leftists plotting and planning the imminent, violent Socialist Revolution against the U.S. Government.
Why, those folks at MSNBC would be called traitors. But you know, our Liberal Media doesn't have any problem with the Right spreading this kind of insanity on the airwaves to millions worldwide.

[UPDATE] Whenever the blowhards at Hot Air and the crackpots at Little Green Footballs disavow you, you have lost the Wingnuts for good, Mr. Beck.

In Which Zandar Answers Your Burning Questions

Josh Marshall asks:
Alright, how long do you give Burris?
As dolphy pointed out in the comments of my last Burris post, there's a decent argument for "January 2011".
The problem now is that because of the lack of full disclosure the pressure is on acting governor Pat Quinn to hold a special election thereby allowing a Republican, most likely my representative Mark Kirk a Republican they try to package as an independent even though he voted with Bush around 90-95% of the time, a chance to grab the seat. Pat Quinn has stated he is in favor of a special election even though he has every legal right to appoint a Democrat! HOW DUMB ARE THESE GUYS!! If the roles were reversed do you think the Republicans would allow an election that might put a Democrat in when they were under no legal obligation to do so?
And you know, that's a very decent point. This whole mess started with the Law of Unintended Consequences. A special election could very well put a Republican in the Senate right now from Illinois.

Pat Quinn really can't appoint anybody now after saying he favors a special election. The GOP would absolutely jump on the chance to take Obama's old Senate would be a massive symbolic victory for them. Short term, Pat Quinn looks very much like he's doing the right thing. Long term? I guarantee you the Village and the GOP will mobilize for all out war to take this seat. Better to contest it in 2010 when the GOP has so many other seats they have to try to keep then allow them to focus 100% on Illinois.

The just thing to do is for Burris to resign and Pat Quinn to appoint a new Senator, that's the law. The right thing to do is for Burris to resign and a special election to be held, what the law should be. The necessary thing to do is for Burris to stay in the Senate, and that's just political realism.

Which choice will be made is not up to me, and I'm not sure I could make it.

Fifty Percent Off Sale

Ahead of Tuesday night's de facto State of the Union address before Congress, Barack Obama announced his budget plans for his first term, saying he plans to slash the deficit roughly in half by 2013 in an announcement tomorrow.
President Obama is putting the finishing touches on an ambitious first budget that seeks to cut the federal deficit in half over the next four years, primarily by raising taxes on businesses and the wealthy and by slashing spending on the wars in Iraq and Afghanistan, administration officials said.

In addition to tackling a deficit swollen by the $787 billion stimulus package and other efforts to ease the nation's economic crisis, the budget blueprint will press aggressively for progress on the domestic agenda Obama outlined during the presidential campaign. This would include key changes to environmental policies and a major expansion of health coverage that he hopes to enact later this year.

A summary of Obama's budget request for the fiscal year that begins in October will be delivered to Congress on Thursday, with the complete, multi-hundred-page document to follow in April. But Obama plans to unveil his goals for scaling back record deficits and rebuilding the nation's costly and inefficient health care system tomorrow, when he addresses lawmakers and budget experts at a White House summit on restoring "fiscal responsibility" to Washington.

Obama's taking over the fiscal responsibility label from the Republicans, or trying to. After all, nobody can really argue that Bush did a real good job on that, adding $5 trillion to the national debt in 8 years. The problem is even if Obama manages to actually somehow do this, the national debt is still going to go up another $3-$4 trillion in four years if I'm reading this plan correctly. It's still going to be fugly for our economy. How's he going to do it?
To get there, Obama proposes to cut spending and raise taxes. The savings would come primarily from "winding down the war" in Iraq, a senior administration official said. The budget assumes continued spending on "overseas military contingency operations" throughout Obama's presidency, the official said, but that number is lower than the nearly $190 billion budgeted for Iraq and Afghanistan last year.

Obama also seeks to increase tax collections, mainly by making good on his promise to eliminate some of the temporary tax cuts enacted in 2001 and 2003. While the budget would keep the breaks that benefit middle-income families, it would eliminate them for wealthy taxpayers, defined as families earning more than $250,000 a year. Those tax breaks would be permitted to expire on schedule in 2011. That means the top tax rate would rise from 35 percent to 39.6 percent, the tax on capital gains would jump to 20 percent from 15 percent for wealthy filers and the tax on estates worth more than $3.5 million would be maintained at the current rate of 45 percent.

Obama also proposes "a fairly aggressive effort on tax enforcement" that would target corporate loopholes, the official said. And Obama's budget seeks to tax the earnings of hedge fund managers as normal income rather than at the lower 15 percent capital gains rate.

Overall, tax collections under the plan would rise from about 16 percent of the economy this year to 19 percent in 2013, while federal spending would drop from about 26 percent of the economy, another post-World War II high, to 22 percent.

Republicans, who are already painting Obama as a profligate spender, are laying plans to attack him on taxes as well. Even some nonpartisan observers question the wisdom of announcing a plan to raise taxes in the midst of a recession. But senior White House adviser David Axelrod said in an interview that the proposals reflect the ideas that won the election.

Well, basically, everybody's going to hate this budget plan for one reason or another. Republicans are going to be screaming about taxes, but Axelrod's right: Obama did win the election and made it clear from the beginning he was going to let the Bush tax cuts expire. This isn't news to the people. We'll see how it works out.

Swiss Army Knife

Now, here's an interesting story. It seems after last week's debacle with Swiss bank UBS copping to $780 million in fines and turning over names of Americans who allegedly used the banks to defraud the United States out of paying billions in taxes, thus breaking the secrecy of the Swiss bank account, the Swiss right-wing party has called for an economic war against the US.
The right-wing Swiss People's Party (SVP) called on Saturday for retaliation against the United States over a U.S. tax probe into the country's biggest bank UBS that threatens prized banking secrecy.

The populist SVP, the country's biggest party, said Switzerland should not take in any detainees from the U.S. prison for terrorism suspects at Guantanamo Bay in Cuba, which the Swiss government said last month it could consider to help shut the camp down.

Switzerland should also reconsider its policy of representing the United States in countries where it has no diplomatic presence, the parliamentary SVP said in a statement.

The SVP said gold stored by the Swiss National Bank in the United States should be repatriated and Switzerland should ban the sale of U.S. funds in the country to protect Swiss investors after the failure of U.S. regulators.

The SVP has one minister in the seven-member Swiss government which is made up of the biggest four parties, but its populist policies have shaken up usually consensual Swiss politics.

As such, the Senate hearing on the UBS tax haven scam scheduled for Tuesday has been mysteriously postponed until March.

Not sure what to make of this. The Swiss could really throw a sabot in the gears for Obama and the US if they chose to, but the Swiss, well, are the Swiss. On the other hand, going after the privacy and secrecy of the Swiss bank system is a major blow to Switzerland in general. It's something they've been using for centuries, and in this world where the global banking system is falling apart, an attack of that magnitude on Swiss banks is going to provoke a response from those who wish to see it as an economic attack on the country.

This seems to be political posturing to me. But that's just something you don't see every day, Swiss political posturing.

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