Tuesday, April 14, 2009

New York State Of Mind

Looks like Gov. Paterson is going to be putting forth legislation to make New York the fifth state to legalize gay marriage. However, the bill may come under heavy fire from legislators from the upstate.
The fact that Mr. Paterson is introducing a bill does not, however, mean that action in the Legislature is imminent. It could take months — even longer — before the bill makes its way through the appropriate committees and onto the floor of the Senate and the Assembly.

“This is not a guarantee of anything,” said Assemblyman Micah Z. Kellner, a Democrat from the Upper East Side who noted that it took two months for legislation legalizing same-sex marriage to get through the Assembly in 2007 before it ultimately stalled. The Senate never acted on the bill.

The legislation is likely to have an especially bumpy ride in the Senate, where more lawmakers oppose same-sex marriage than support it. Gay rights advocates are now actively seeking more senators, both Democrats and Republicans, to vote for the bill.

While Mr. Paterson has said he would like to see lawmakers “fight it out” and debate the bill on the floor of both houses even if it fails, Albany tradition dictates that the bill is likely to come to a vote only when it has enough support to pass. Senator Thomas K. Duane, a Democrat and the bill’s chief supporter in the Senate, has said he opposes the governor’s notion of fast-tracking it. And the Senate majority leader, Malcolm A. Smith, has said he would bring the bill to the floor when it has enough support.
I'm with Ben Smith on this one. Paterson's numbers are so bad, this is worth the risk politically.

Oh, yeah...and the fact it's the right thing to do is secondary, apparently. Go fig.

Wells Fargo Is Broke

Wells Fargo made close to $3 billion last quarter, supposedly, so all is well with the banking sector according to the happy-face guys. The reality however isn't so good for Wells Fargo or America.

Wells Fargo may have posted a record profit recently, but it’s important to note that left to its own devices the bank would have gone out of business already and not be posting any profits at all. Indeed, it appears to be undercapitalized by tens of billions of dollars:

Wells Fargo & Co., the second- biggest U.S. home lender, may need $50 billion to pay back the federal government and cover loan losses as the economic slump deepens, according to KBW Inc.’s Frederick Cannon.

KBW expects $120 billion of “stress” losses at Wells Fargo, assuming the recession continues through the first quarter of 2010 and unemployment reaches 12 percent, Cannon wrote today in a report. The San Francisco-based bank may need to raise $25 billion on top of the $25 billion it owes the U.S. Treasury for the industry bailout plan, he wrote.

This is why nothing you near from the financial sector about how all’s well should be taken too seriously. It’s true that given very bank-friendly monetary policy it’s easy for banks to run an operating profit. But most of these large banks are zombies—insolvent. They’re only able to run an operating profit because they’re not going out of business and being liquidated. And the reason they’re not being liquidated is government guarantees. It’s as if I had a profitable business selling cookies, except I didn’t actually have any cookies to sell and was just putting government-provided cookies in boxes, then bragging about how profitable my company is and how the government should stop hassling me about paying myself a bonus.

So, it made $3 billion when it owes $25 billion, and could end up owing tens of billions more...and Wells Fargo is held up as an example of a profitable, stable bank.

The whole system is rotten. The reality is that pretending the banks are solvent will only lead to crushing losses in the trillions before all is said and done. Wall Street is currently living a fantasy, and so is the global financial system. The banks are insolvent, our financial system is insolvent, and our country is insolvent.

When this last bubble pops, it'll take our country with it. Even Plan N may not be enough, but it's our only real hope right now. Sadly, Obama has no intention of implementing it, today he was arguing that he's saving the taxpayer money by not doing it.

On the other hand, there have been some who don’t dispute that we need to shore up the banking system, but suggest that we have been too timid in how we go about it. They say that the federal government should have already preemptively stepped in and taken over major financial institutions the way that the FDIC currently intervenes in smaller banks, and that our failure to do so is yet another example of Washington coddling Wall Street. So let me be clear – the reason we have not taken this step has nothing to do with any ideological or political judgment we’ve made about government involvement in banks, and it’s certainly not because of any concern we have for the management and shareholders whose actions have helped cause this mess.

Rather, it is because we believe that preemptive government takeovers are likely to end up costing taxpayers even more in the end, and because it is more likely to undermine than to create confidence. Governments should practice the same principle as doctors: first do no harm. So rest assured – we will do whatever is necessary to get credit flowing again, but we will do so in ways that minimize risks to taxpayers and to the broader economy. To that end, in addition to the program to provide capital to the banks, we have launched a plan that will pair government resources with private investment in order to clear away the old loans and securities – the so-called toxic assets – that are also preventing our banks from lending money.

If President Obama truly believes this, then Plan N is not going to happen. As such, our economy is now fully vested in the Geithner Plan. Pray it works. I don't think it will.

When and if it fails, America is in dire danger.

[UPDATE] At Big Picture, Barry Ritholtz explains how Goldman Sachs did mostly the same thing with fake earnings numbers by smiply ignoring all their December losses.

Maul Of America

General Growth Properties is about to be sued by its bondholders for defaulting. (h/t Atrios)
Citing people familiar with the matter, the newspaper said law firm Wilmer Cutler Pickering Hale and Dorr LLP sent a letter to General Growth saying it represents holders of 25 percent of its $395 million in bonds that were due last March 16 and weren't paid. The bondholders are seeking to have their trustee, Bank of New York Mellon Corp (BK.N), sue General Growth for payment, in a step that could push the company closer to bankruptcy, The Wall Street Journal said.

General Growth, which owns more than 200 U.S. malls, has defaulted on several mortgages as well as a series of bonds. The company has been negotiating with its creditors for months, and has said that if it was unable to refinance its maturing debt, it might have to file for bankruptcy protection.

Let that sink in for a sec. The owner of 200 malls across the country, GGP, is basically broke and on the verge of bankruptcy. A whole lot of these malls are losing money so badly right now that they will have no choice but to close a whopping number of them. Internet sales and the economy are killing these places. Commercial real estate is a disaster right now, and it's basically the next bomb to drop on our already floundering economy.

Will Obama bail out the malls too? How much of our retail sector will vanish when retail sales continue to plummet? Those jobs are going to vanish, folks. For the most part, they're not coming back. The world is changing, and fast.

Teabaggin' It Across The USA

HuffPo's Stuart Whatley argues the Teabaggers are just the natural extension of the GOP's deep-seated anti-intellectual movement.

Anti-intellectualism is defined by, inter alia, abject paranoia of the perceived educated elite -- which, in the US, is a group that's been growing for decades alongside steady economic growth, fueled by innovation. Granted, this is all very simplified, few would deny that the driving force for America's economic growth now is educated innovators. This, sure enough, will drive any future economic growth as well. Manufacturing has moved across seas, and regrettably much of American brainpower in the past few decades has been directed towards the financial sector. But that may be set to change, and the alternative is not retrogression towards willful ignorance or a widespread, intentional drop in college enrollment -- it is simply a shift in focus towards science, math and technology, whereby education remains as important as ever.

Granted, the geniuses in the financial sector who got us into this mess are a valid seed for this type of movement. Never trust anyone smarter than you, they say. Reject knowledge, embrace faith instead. That'll keep America competitive globally!
The sad fact is that there is simply no place for this type of wretched anti-intellectualism in America anymore. It can be expected from the margins, but it's troubling to see it embraced and validated by more mainstream entities. This movement represents the lost and left-behind. And, pitifully, it's a one-way street. It is not as though there are educated or "intellectual" people who crave ignorance and despise knowledge. Anti-intellectualism is a purely circumstantial outlook, whereas education or knowledge acquisition is indisputably a normative societal goal. Thus, it is no surprise that anti-intellectualism is promptly defenestrated as soon as alternative options become available. It is, in short, a last resort, knee-jerk reaction to abject desperation.
And that's really the key. The GOP is almost done for in this country as a credible party. The last time this happened, FDR and the Dems forged a generational shift that gave the Democrats control of Congress for more than fifty years. They're playing the last card they have: paranoia.

And when that fails, well, then things get ugly. That's when the fringes of what's left of the GOP is backed into a tight corner and have nothing left to lose.

[UPDATE] TPM DC's Brian Beutler covers the Teabaggers' million-dollar Astroturfing efforts from the FreedomWorks group.

Republicans Are Lawless

If Republicans see a court ruling they don't like, they ignore it or declare they won't enforce it. After all, what are the courts going to do, as Steve Benen explains.
I can appreciate the fact that some Iowa Republicans are unhappy with the fact that consenting adults can now get married in their state. But that's no excuse for nonsense like this. (thanks to readers B.D. and M.M.)

"If I have the opportunity to serve as your next governor," Bob Vander Plaats told a crowd of about 350 people at a rally, "and if no leadership has been taken to that point, on my first day of office I will issue an executive order that puts a stay on same-sex marriages until the people of Iowa vote, and when we vote we can affirm and amend the Constitution."

When told that governors don't have that kind of legal authority, Vander Plaats, in the midst of his third gubernatorial campaign, said he would defy the courts anyway: "I believe it is fully within the governor's rights and as a matter fact, it's his responsibility to step forward to issue an executive order to say we're going to take a time out until the people have an opportunity to vote."

It's a genuine shame this is necessary, but let's go ahead and take a moment to remind our right-wing friends about a concept they should have learned in junior-high civics class: Governors can veto legislation passed by state legislatures; governors cannot veto rulings from state Supreme Courts. State officials can't pick and choose, following court rulings they like, nullifying court rulings they don't.

Bush did it for years. Now the rest of the GOP will do it because Bush got away with it.

Will Democrats do anything about this? Probably not.

Al Versus Norm, Part 698

Norm Coleman's case has been dismissed and Al Franken has won the race, but the legal wrangling is just getting started.
Yesterday, 161 days after the 2008 elections, Al Franken was declared the winner of the Minnesota Senate race. Former senator Norm Coleman pressed every angle he could in front of a bipartisan three-member election court, and the end result was that Franken's lead grew about 100 votes, leading the court to rule that Franken is indeed the winner and ought to be seated. "Enough is enough," said DNC chair Tim Kaine, who urged Coleman to concede so that Minnesota could have two votes in the Senate. (The GOP has been silent on the ruling.)

Coleman, of course, has no intention of heeding Kaine's advice. He plans on appealing to the Minnesota state supreme court, and to SCOTUS if necessary. As many have pointed out, the longer Coleman ties Franken up in legal challenges, the longer the Senate Democrats have to scrap and hustle to find an extra vote on all of their major priorities.

But despite Coleman being painted into a corner on this, he has one major ally: Minnesota's GOP governor, Tim Pawlenty.
While most of the attention has focused on the courts in recent weeks, it's clear that there could be a larger cast of characters in the five-month-long drama to determine who won Minnesota's U.S. Senate race.

Key among them is Republican Gov. Tim Pawlenty. Democrats contend he's required to issue and sign the election certificate once all of the appeals are exhausted in state court.

For weeks, Pawlenty has said he would take direction from the courts, but is now suggesting that he could wait beyond the conclusion of state appeals if the case heads to federal court.

"I don't know whether [the certificate] would be required to be issued. I think it could be issued at that time," said Pawlenty. "I'm not saying I wouldn't issue the certificate. I'm just saying we should have all of the facts in front of us before we precommit to something like that."

Let me just make this clear: Pawlenty has no intention of certifying Franken before Coleman's state and federal appeals are fully exhausted. Al Franken won't be seated for several months at the minimum, and the case could drag on possibly for months.

Democrats are going to have to try to do something, or else Franken may never get seated this year.

The Peasants Are Revolting, Sir

Malkinvania is completely stunned at the fact that Homeland Security is looking into right-wing domestic terrorism.
The Department of Homeland Security is warning law enforcement officials about a rise in "rightwing extremist activity," saying the economic recession, the election of America's first black president and the return of a few disgruntled war veterans could swell the ranks of white-power militias.

A footnote attached to the report by the Homeland Security Office of Intelligence and Analysis defines "rightwing extremism in the United States" as including not just racist or hate groups, but also groups that reject federal authority in favor of state or local authority.

"It may include groups and individuals that are dedicated to a single-issue, such as opposition to abortion or immigration," the warning says.

The White House has distanced itself from the analysis. When asked for comment on its contents, White House spokesman Nick Shapiro said, "The President is focused not on politics but rather taking the steps necessary to protect all Americans from the threat of violence and terrorism regardless of its origins. He also believes those who serve represent the best of this country, and he will continue to ensure that our veterans receive the respect and benefits they have earned."

The wingers are going more or less crazy, accusing the DHS of propaganda and painting all the loyal opposition to Obama as racist nutjobs.

Now, I wonder why anyone would think that about the right-wing media.

These same people told us we had to have this oppressive gulag-era secret police wiretapping and security apparatus in place to protect us from the Great Beturbaned Brown Horde. The fact that the apparatus still exists is a problem, of course. But it's now it's feeling out the same whackos that gave birth to it.

Only now, in the last 24 hours, is this all a bad thing to these idiots. They didn't care if Bush used it on Americans, as long as those Americans weren't conservative Republicans, the rest of the effing country was fair game. Anyone who wasn't a conservative Rebpulican was of course a suspect Muslim terrorist sympathizer.

The mere possibility that the tables have been turned and Bushenstein's Monster has turned on its creators had never, ever, ever, occured to them.

It's all Obama's fault, of course. Bush would never use that kind of power unethically, after all. Only Democrats can actually break laws. Republicans simply heroically resist unjust and activist legislation.

And while the report itself does somewhat unfairly single out Iraq and Afghanistan vets as being potential recruits, the same was said about Gulf War vets 15 years ago...and more than a few of those ended up going bad because they didn't get the mental health care they badly needed. Sadly, there's plenty of evidence that's still going on today.

So what's the difference, you say? Obama's still using wiretapping against his political enemies just like Bush did. The difference is those like myself called out both men on it. The wingnuts only figured out it was ripe for abuse when they were unfairly smeared with the Tim McVeigh brush.

Sale Of The Century

Retail sales down sharply in March, always bad news in a consumer-driven economy.
Sales at U.S. retailers unexpectedly fell in March, snapping two months of increases, as motor vehicle and electronic good purchases declined, according to a government report on Tuesday that indicated subdued consumer spending amid rising unemployment.

The Commerce Department said total retail sales dropped 1.1 percent after rising by a revised 0.3 percent in February, previously reported as a 0.1 percent fall.

Excluding motor vehicles and parts, sales fell 0.9 percent in March, compared to a 1 percent gain the prior month. The data highlighted the continuing problems in the U.S. auto industry, with vehicle and parts sales dropping 2.3 percent after a 3 percent decline in February.

Analysts polled by Reuters had forecast retail sales rising 0.3 percent in March. Excluding motor vehicles, sales had been predicted to be flat.

Despite the Dow's big jump in the last five weeks, consumers are dealing with the reality of a stumbling economy. Couple of nasty data points:
Gasoline sales fell 1.6 percent in March after increasing by 3.1 percent the previous month. Sales of electronic goods tumbled 5.9 percent, versus a 0.7 percent gain in February, while building materials eased 0.6 percent after slipping 0.5 percent.
Kinda explains that record trade deficit collapse if Americans aren't buying electronics imports from Asia, and that means stores that sell electronics and countries that manufacture them are going to continue to hurt for a long, long time. We're the engine that drives the world economy, and that engine is slowing down in a major way.

Going Gonzo In Spain

The Daily Beast is reporting that Spain is indeed planning to announce criminal indictments today against six Bush administration officials, but there could be a change in the judge presiding over the case.
The six defendants—in addition to Gonzales, Federal Appeals Court Judge and former Assistant Attorney General Jay Bybee, University of California law professor and former Deputy Assistant Attorney General John Yoo, former Defense Department general counsel and current Chevron lawyer William J. Haynes II, Vice President Cheney’s former chief of staff David Addington, and former Undersecretary of Defense Douglas J. Feith—are accused of having given the green light to the torture and mistreatment of prisoners held in U.S. detention in “the war on terror.” The case arises in the context of a pending proceeding before the court involving terrorism charges against five Spaniards formerly held at Guantánamo. A group of human-rights lawyers originally filed a criminal complaint asking the court to look at the possibility of charges against the six American lawyers. Baltasar Garzón Real, the investigating judge, accepted the complaint and referred it to Spanish prosecutors for a view as to whether they would accept the case and press it forward. “The evidence provided was more than sufficient to justify a more comprehensive investigation,” one of the lawyers associated with the prosecution stated.

But prosecutors will also ask that Judge Garzón, an internationally known figure due to his management of the case against former Chilean dictator Augusto Pinochet and other high-profile cases, step aside. The case originally came to Garzón because he presided over efforts to bring terrorism charges against the five Spaniards previously held at Guantánamo. Spanish prosecutors consider it “awkward” for the same judge to have both the case against former U.S. officials based on the possible torture of the five Spaniards at Guantánamo and the case against those very same Spaniards. A source close to the prosecution also noted that there was concern about the reaction to the case in some parts of the U.S. media, where it had been viewed, incorrectly, as a sort of personal frolic of Judge Garzón. Instead, the prosecutors will ask Garzón to transfer the case to Judge Ismail Moreno, who is currently handling an investigation into kidnapping charges surrounding the CIA’s use of facilities as a safe harbor in connection with the seizure of Khalid el-Masri, a German greengrocer who was seized and held at various CIA blacksites for about half a year as a result of mistaken identity. The decision on the transfer will be up to Judge Garzón in the first instance, and he is expected to make a quick ruling. If he denies the request, it may be appealed.

Spanish federal judicial politics aside, this is deadly serious. Spain cannot go too far down this road without eventually asking the US to extradite the six to Spain to face the trial or after being convicted in absentia. Should the latter happen, that will put Obama in a bind. He's most certainly not going to have Gonzo rounded up and shipped off to Madrid, but the legal opinions and procedures that Obama is currently borrowing from the Bushies will certainly come into play.
Both Washington and Madrid appear determined not to allow the pending criminal investigation to get in the way of improved relations, which both desire, particularly in regard to coordinated economic policy to confront the current financial crisis and a reshaped NATO mandate for action in Afghanistan. With the case now proceeding, that will be more of a challenge. The reaction on American editorial pages is divided—some questioning sharply why the Obama administration is not conducting an investigation, which is implicitly the question raised by the Spanish prosecutors. Publications loyal to the Bush team argue that the Spanish investigation is an “intrusion” into American affairs, even when those affairs involve the torture of five Spaniards on Cuba.
Things could get very, very interesting.


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