Thursday, March 12, 2009

Last Call

The parent company of Six Flags theme parks is on the verge of bankruptcy. (h/t TPM).
New York-based Six Flags said this week that it may need to file for Chapter 11 bankruptcy if it can't reach a deal to restructure almost $300 million in preferred stock, which is due in August.

A bankruptcy filing would allow the company to continue to operate while it works to improve its financial footing. But the discussion of bankruptcy, laid out this week in a filing with the U.S. Securities and Exchange Commission, shows the company is feeling the stress of the declining economy and the slow credit markets.

"The options are not particularly pretty," said Andy Liu, an analyst with Standard & Poor's in Chicago.

What happened to escapism?

Oh yes...we can't afford that any longer. However public libraries are still a great resource and they're a hell of a lot cheaper.

That is as long as counties still have the tax money to operate them. You'd better hurry on that. If it comes down to libraries versus, say, fire stations, police coverage, trash pickup and county emergency operations, the library is going to lose that battle. Remember folks, property taxes are based on how much your property is worth. Plummeting home prices means lower tax revenues across the board. Add to that plummeting commercial real estate values, and that means your county is facing budget cuts no matter where you are. It's all interconnected, folks.

Enjoy the library while you can.

Trying To Out-Asshole The Neighbors

Because South Carolina's Gov. Rick Sanford can't have a monopoly on teh st00pid, Texas Gov. Rick Perry is upping the ante in this little poker game by raising Sanford's plan to use $700 million to pay down state debts with the discretionary part of his state's stimulus package with Perry's own plan to outright reject $555 million in actual unemployment benefits.

Gov. Rick Perry set up a possible battle with the Legislature today by rejecting about $555 million from the federal government for expanded aid to unemployed Texans on grounds that the money would come attached with too many costly obligations.

Perry announced his refusal of the funds in Houston at a Bering’s Hardware store near the Galleria, where a store official said accepting that share of the nation’s so-called stimulus package might mean having to pay an additional $12,000 a year in unemployment insurance.

"Employers who have to pay more taxes have less money to make their payroll" and would have to raise prices on their products, the governor said. "The calls to take the (stimulus) money and sort out the consequences later are quite troubling to me."

To get the stimulus money, Texas would have to extend unemployment benefits to those who lost their jobs and now are seeking part-time work -- an idea that Perry said Texas has rejected repeatedly, partly because it might discourage people from seeking full-time employment. The White House also want states to expand benefits to more low-pay workers.

What a super guy! Actually screwing over out-of-work people in his own state now because businesses might have to pay higher unemployment insurance in three or four years.

Needless to say, the Lone Star State's legislature has promptly told Perry to go to hell.

The stimulus package signed by President Barack Obama allows for state legislatures to bypass the type of rejection Perry made today. Around the time of the Republican governor’s announcement, Republican Jim Pitts of Waxahachie, chairman of the Texas House Appropriations Committee, voted to accept the half billion dollars in unemployment aid.

He was joined by four Democratic state representatives at an Austin meeting of a legislative committee studying the stimulus aid. Rep. Myra Crownover, R-Denton voted no.

Waco-based economist Ray Perryman today told the committee, headed by Democrat Jim Dunnam of Waco, that "we’re probably better off taking the money."

Without the funds, Perryman said the state’s unemployment fund is projected to run dry this year, possibly triggering higher unemployment insurance levies on employers even without the state’s acceptance of federal funds.

So, now that Perry's stated reason for turning down the money and screwing over thousands of Texans in a down economy has been explosed as complete and utter bullshit, what's the real reason Rick Perry did this?

I think he owes Texas that much, at least.

We know the answer of course: he's angling for the GOP ticket in 2012, just like Sanford. But Perry is taking money directly out of the hands of the unemployed for his little martyrdom dog and pony show, unlike Sanford.

Any folks from Texas out there feel like rewarding Rick Perry for this decision?

I Hate Me Some Stupid

There's a reason I'm a registered Independent, folks. There's plenty of stupid on both sides. Democrats and Republicans are both capable of good ideas, but mostly we see forced choices between various bad ones. Democrats need to be careful. "Slightly better than Bush" is NOT a viable strategy for long term management, and I've called out the current administration multiple times for refusing to part ways with some of Bush's bad, bad ideas -- ideas that aren't just bad, but illegal and immoral.

Having said that, the GOP is just failing to make itself a responsible opposition party when the best ideas they can come up with for saving the country is crap like this.
If you missed last night's episode of Sean Hannity's Fox News show, you missed a fascinating "discussion" between Hannity, Rep. John Shadegg (R-Ariz.) and Sen. David Vitter (R-La.). As the Fox News personality explained, Shadegg and Vitter have come up with a "stimulus" plan that costs "zero dollars," and "promises to create two million new jobs without any of your money."

Shadegg explained this visionary approach to economic growth:

"With unemployment rates going up how can we produce American jobs? And the answer is we have had a non-energy policy in this country for a very long time. The reality is we are giving jobs to oil fieldworkers and natural gas fieldworkers in Russia and Saudi Arabia and Venezuela, when we should be putting those people to work here in the United States.

"Now Senator Vitter and I have drafted a bill that says let's put Americans to work, let's pursue the fight we had last summer of an all of the above energy strategy, let's clear the bureaucracy out of the way, and let's move forward with American jobs, producing American energy.... And we can also reduce the absurd regulations that go way too far."

And from there, the three of them spent the rest of the interview trying to undermine confidence in the economy, bashing Nancy Pelosi, and questioning the concept of economic stimulus.

It was one of those odd interviews in which members of Congress present a "plan" without actually talking about -- or even hearing any questions on -- what the "plan" is.

Apparently, Shadegg and Vitter, two of Congress' most right-wing members, believe they can address the severe, global economic downturn and create 2 million jobs by opening up additional coastal areas for oil drilling and stripping oil companies of federal regulations. This is their "stimulus" plan. They're so proud of it, they went on national television to boast about their ingenuity.

Despite everything that has happened in the last six months, the GOP still hasn't gotten past Drill Baby Drill. Throw out all the regs and rip up America's coastline and wilderness for oil. This is quite literally the best plan they have right now.

The Democrats aren't too much better. But they are better. At least we have a coherent, forward thinking plan to at least begin to tackle this problem. I shudder to think where we would be under President McCain right now: we'd be stuck with no stimulus, no bank plan, no budget (he would have vetoed it and instituted a spending freeze in the middle of a massive recession) and right now we'd be gridlocked on an express elevator to depression, if not a full blown financial collapse.

We still may be headed down that path, frankly. But President McCain would have upped the odds significantly of chaos.

Egg, Meet Face

Wingnuts are in a tizzy over this Ben Smith Politico hit job on the Obama administration, breathlessly implying the office of Obama's Chief Technology Officer has been raided by the FBI.
The outgoing Chief Technology Officer, Vivek Kundra, was appointed last week Chief Information Officer by the Obama administration. His last day at the city government office was March 4, a spokeswoman for D.C. Mayor Adrian Fenty, Leslie Kershaw, said. He was appointed to the Washington post in 2007, and held it when Bansal's contract was awarded.
Only one problem: it's not the truth. Vivek Kundra is NOT the target of the raid.
An official in the D.C. government's office of the chief technology officer has been arrested in a federal bribery sting, according to law enforcement sources. The FBI has raided the technology office this morning and agents are continuing to search for evidence, sources said.

Yusuf Acar, 40, was taken into custody this morning by FBI agents at his home in Northwest Washington, the sources said. The nature of the charges could not be determined. Channing Phillips, a spokesman for the U.S. Attorney's Office, declined to comment on the arrest, saying the case "is under seal."

Federal authorities also arrested a second person, Sushil Bansal, 41, of Fairfax County, in the sting operation this morning. According to his company's website, Bansal used to work in the D.C. government and later founded Advanced Integrated Technologies Corporation, an information technology consulting firm based in the District. That company has several contracts with D.C. government agencies, including the technology office and the Department of Motor Vehicles. Last August, the D.C. chapter of the Association of Indians in America awarded him its Entrepreneur of the Year Award.
In other words, these guys are Washington D.C. city employees, NOT Obama Administration *anything*.

But that hasn't stopped the Wingnuts from running with a complete lie. Now, these D.C. guys are clearly in trouble. But they aren't Obama employees. Kundra should come forward with whatever info he may have on this. Perhaps he's the whistleblower. But the cries of "Most corrupt Democrat ever!" (I swear to the Flying Spaghetti Monster that Jennifer Rubin is the most useless hack ever) are nothing more than ODS.

Anyone surprised that Ben Smith and Politico are running a hatchet job on this, trying to tie this into the Obama administration? I'm not.

Applied Lying For Dummies, Con't

If you're wondering about this week's sucker's rally in the Dow, don't be surprised. Bank of America says it'll magically be profitable again by the end of the year just like Citigroup, and the government is making definite plans to change mark-to-market accounting.

All this boils down to one thing: lying on Wall Street is back in fashion. Instead of actually fixing the problem, lying about it turns out to be so much easier.

So for now, the markets are rallying. Good times, right? Recession over?

Magic 8-Ball says "Signs Point To No."

What John Cole Said

Read it. Also, JP Morgan Chase CEO Jaime Dimon is the biggest douchebag in the douchebag factory, and that's being horribly unfair and misogynist towards feminine hygiene products and the manufacturing industry in general. For this I apologize.

Still, it has to be said.

Stained Steele

TPM runs down the list of Mike Steele's new troubles this week stemming from a GQ interview that implied that Steele might not be 100% pro-life.
Tony Perkins of the Family Research Council is aghast at Steele's apparently pro-choice comments to GQ, comments which Steele has tried to walk back.

Ken Blackwell, Steele's former rival for RNC chair, saw fit to chime in, saying Steele "needs to get to work -- or get out of the way."

Mike Huckabee called Steele's pro-choice comments "a violation of the most basic of human rights."

GOP dirty trickster Roger Stone tells TPMDC that the GQ interview was "one more nail in the coffin" for Steele.

Even if Steele were to immediately cease sticking his foot in his own mouth, are there any other ticking time bombs like the GQ interview that have yet to go off?

I'm not sure, and while Steele might have survived so far, his odds of keeping his job have gone from 50-50 to much, much less.

He's in real trouble, and the self-immolation of Steele is just indicitive of the deep and divisive problems inside the modern, post-Obama GOP.

If It's Thursday...

...It must be time for more record unemployment numbers. 654,000 new jobless claims is bad enough, but continuing jobless claims have now topped 5.34 million, a new record. As more and more people are laid off and the stimulus bill extends unemployment benefits, those continuing claims are going to skyrocket.

Retail sales showed a small gain excluding autos, but the real killer was a massive 9% drop in household wealth in 4th quarter 2008. That alone assures 2009 is going to be dismal.

Time To Check Your Lottery Tickets

...for the Dean of the Village Idiots himself, David Broder, is defending Chas Freeman, and taking Obama to task for refusing to stand up for him.

Had the lobbyists not prevailed, Freeman would have assigned the intelligence analysts this week to figure out why the Chinese provoked a naval incident off their coast and what lessons we could draw from the mixed reactions of other nations.

Over time, he said, he would have challenged analysts to remember that "it is not how highly classified information is, but how reliable, even if it's on the front page of the newspaper." He would have undermined the insularity of the intelligence world by asking members to meet with outside experts whose insights "may be worth more than security clearances." And he would have turned them loose even on "domestic" questions such as: "If we are 38th in the world in health, what could we learn from the other 37?"

All of this now gone, because, as Speaker Nancy Pelosi told Blair, Freeman's views are "beyond the pale."

Blair said that the White House told him that if he wanted Freeman, he'd have to fight for him himself. When I asked the White House on Tuesday if Obama supported Freeman, a National Security Council spokesman said he would check, but he never got back to me. Freeman vanished without a squawk from Obama.

And as much as it is generating a huge grinding noise inside my own chest to even consider this next sentence I still must say it: David Broder is absolutely correct.

It'll most likely neven happen again, but I can't argue with him for once. Obama left Freeman out to dry, didn't back up his own DNI in Dennis Blair, and totally folded without a whimper when both Republicans and Democrats swore fealty not to America, but to Israel.

AIPAC runs our foreign policy on the Middle East, plain and simple. Even David Broder can see it.

Bernie Madoff Burned Us All

Having plead guilty to all 11 counts today in a Manhattan courtroom, Bernie Madoff is back in jail and awaiting sentencing. He could be looking at 150 years in prison, and will almost certainly spend the rest of his natural life behind bars.

Madoff admitted that he never invested his clients' money, and that he deposited the funds into a "Chase Manhattan" bank.

"When money was requested, I paid it out from the Chase account," he said.

As Madoff wrung his hands and made other nervous gestures, the judge suggested that he pour himself a glass of water.

Madoff created a decades-long scheme in which new investments were used to fund payoffs to earlier investors, to falsely create the appearance of legitimate returns.

Richard Friedman, an accountant who said he lost $3.1 million to Madoff, told CNN that he hopes Madoff is sentenced to the full 150 years and that he "lives a very long life" in prison.

"The crime is really unimaginable," said Friedman. "It's not just a typical Ponzi scheme. It affects society as a whole. You don't just have to be a Madoff investor to be affected by this."

Which is the real problem. Although it's a drop in the bucket compared to the trillions the banks have lost, Bernie's $50 billion scheme still hurt the economy. Of course he's not going to be able to pay anybody back...just like the banks won't be able to pay the taxpayers back either.

And so it goes. The Madoff mess is just a smaller microcosm of the entire financial system meltdown. There are lessons to be drawn, pure greed, lack of oversight by a compliant regulation system, refusal to admit mistakes, a plan that got away from him and went totally awry until it turned into a multi-billion dollar monster.

Every bank that took TARP money is just another Bernie Madoff. There's hundreds of them, costing us trillions and trillions. And yet, we keep on paying. In a very real sense, we Madoffed the entire planet with our own greed.

Now everyone has to pay up and will have to for a long, long time.

The Second Iteration

More on those very worrisome foreclosure numbers today. If you've been an avid reader, you wouldn't be surprised at all to learn that despite big bank moratoriums on foreclosures in February, the number of foreclosures continues to rise across the country.
More than 74,000 homes were lost to bank repossessions during the month, up from 67,000 in January, according to a regular monthly report from RealtyTrac, the online marketer of foreclosed properties. Nearly 1.2 million have been lost since the foreclosure crisis hit in August 2007.

The number of foreclosure filings rose 6% during the month after falling 10% in January. Worse, filings leaped nearly 30% compared with February 2008. And the results confounded expectations: A downtrend had been expected due to the numerous foreclosure moratoriums in effect during the month.

Why expect a downtrend at all? Home prices are still falling. Unemployment rose sharply in January and February. ARM loans are resetting to higher rates across the country.
Many states that had previously escaped the worst ravages of the foreclosure plague have started to feel the effects. In South Carolina, foreclosure filings, which include notices of default, notices of foreclosure sale and bank repossessions, skyrocketed 254% compared with last February. The state recorded a filing for every 818 households, the 20th highest rate among the states.

As foreclosures soared, so did South Carolina's unemployment. By January, that had reached 10.4%, the second highest rate, after Michigan, in the nation. It rose 1.6 percentage points higher than December, the biggest increase in any state, and it jumped 4.7 percentage points over the past 12 months, also more than anywhere else.

According to the Neighborhood Assistance Corporation of America CEO, Bruce Marks, poorly underwritten mortgages is still the main source of foreclosures in the state. "It continues to be problem mortgages," he said, "loans that were unaffordable from the start. But unemployment is adding to that."

In other words, we're seeing the second iteration of foreclosure activity, and it's large enough to swamp even moratoriums on foreclosures. This second wave of foreclosures is being powered by rapidly rising unemployment rather than shoddy lending practices. We're seeing the resonating effects of the housing death spiral now, and have more empirical evidence that it's feeding into itself, like Oroboros swallowing its own tail.

Falling housing prices have wrecked spending. That was stage one, in 2007. In turn, stage two saw lowered spending has wrecked the economy as consumption fell in 2008. The failing economy has wrecked employment as in stage three employers cut back over the last six months. Now we're seeing brutal evidence of that fatal fourth, recursive stage in 2009: Unemployment is in turn wrecking housing prices as people cannot pay their mortgages, leading to more foreclosures lowering housing prices, leading to more spending cutbacks by consumers, leading to more employment cutbacks as demand falls...

You get the picture. We're trapped now unless Obama's plans can stabilize housing prices. We are now fully locked into the death spiral of this recession, and are now facing the reality of a multi-year depression.

Each iteration of the cycle will only get worse from here on out. Keep in mind two things: One, the GOP thinks the economy can correct itself. Two, the speed at which the system breaks down will only increase.

Pray Obama's stimulus and foreclosure relief measures are enough to stabilize the tailspin we're in now. I don't think they are. I think more will be needed to stop the cycle of destruction. Much more. But sadly, it looks like Obama has no more political capital. Talk of another stimulus has been quickly quashed and lawmakers are content to just sit around.

Any hope of recovery in 2009 died last year. We were playing for 2010, and right now that's looking very much like we're running out of time. The next few months will tell the tale. If we're still looking at increasing foreclosures and unemployment when July rolls around, all bets are off.

I'm becoming more and more convinced now that we're over the cliff at this point.


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