Saturday, April 25, 2009

Last Call

The banking crisis is far from over.
Regulators met top executives from the 19 banks behind closed doors at the Federal Reserve Bank of New York on Friday, and at some of the 12 other regional Fed Bank offices, to review the preliminary results of the tests and inform bankers how much additional capital they must raise.

The information will not be publicly released until May 4, although the banks have the next several days to dispute any of the findings of the tests.

On Friday, Morgan Stanley came forward with its own analysis of which banks might need to raise capital, the latest in a series of private estimates being tallied to allow gambling investors to position themselves to profit from fluctuations in the stock prices of the banks.

The report identified SunTrust, KeyCorp and Regions Financial — all major regional banks — as those that the government would probably determine needed billions in additional capital. Bank of America and Wells Fargo fall into a “gray zone,” the report said. Earlier this week, Keefe, Bruyette & Woods, a boutique investment bank, said all of the 19 banks might need a total of $1 trillion of fresh capital.

And of course, they will get it from Helicopter Ben's magic printing press, and everything will be just fine!

But I have to ask, since we've determined that the Big 19 will not be allowed to fail, then what happens to the twentieth largest bank on the list, I wonder? And #21? And #22? If the big banks need another trillion to survive, what about the medium banks? What happens to them?

The Big 19 banks account for half the loans in this country. What about the banks that hold the other half? What will Obama do for them?

You have a loan out with a bank not on this list? I'd be worried if I were you.

Very worried.

The Problem With The Village

David Broder scolds Obama for even possibly leaving the door open for torture prosecutions.
If ever there were a time for President Obama to trust his instincts and stick to his guns, that time is now, when he is being pressured to change his mind about closing the books on the "torture" policies of the past.

Obama, to his credit, has ended one of the darkest chapters of American history, when certain terrorist suspects were whisked off to secret prisons and subjected to waterboarding and other forms of painful coercion in hopes of extracting information about threats to the United States.

He was right to do this. But he was just as right to declare that there should be no prosecution of those who carried out what had been the policy of the United States government. And he was right when he sent out his chief of staff, Rahm Emanuel, to declare that the same amnesty should apply to the lawyers and bureaucrats who devised and justified the Bush administration practices.

But now Obama is being lobbied by politicians and voters who want something more -- the humiliation and/or punishment of those responsible for the policies of the past. They are looking for individual scalps -- or, at least, careers and reputations.

Their argument is that without identifying and punishing the perpetrators, there can be no accountability -- and therefore no deterrent lesson for future administrations. It is a plausible-sounding rationale, but it cloaks an unworthy desire for vengeance.

When you have done nothing but cover politicians in Washington for 40 years, everything is political. The fact that the President as a human being may actually be bothered to want to do the right thing as millions of people outside Washington may want him to do hasn't even occurred to Broder: it is simply "populism" and populism by default should be ridiculed and dismissed in Broder's worldview. Should populism be acknowledged at all, it simply hides the crassly political. It is the ultimate Villager view: the voters aren't smart enough to know how the real world works, and the real world is Washington. Everything outside it consists of the great unwashed masses, teeming with naivete' and banal emotional responses like "accountability". Only the Villagers, especially Dean Broder here, are qualified to make Solomonic proclamations that wisely maintain the status quo and power of the Village. What the people want doesn't matter, unless it happens to be what the Village wants as well.

You could slip and break your neck on the thick pool of condescension dripping from Broder's column. How dare the rabble demand their leaders be accountable? People like David Broder made Washington, and no lesser, filthy leftists are allowed in. Obama is only as useful as he continues to see the status quo served, and that status quo consists of the Village telling Washington what to do and what to think, and Washington executing those orders, with the Village sages wisely running the country and the world. Accountability would damage the very fabric of the Villagers' power.

In other words, see Double G's Three Rules Of The Village. The GOP aren't the only enemies democracy has in our nation's capital. Not by a long shot.


The Mexico/US border area outbreak of Swine Flu has gotten extremely serious.
The swine flu outbreak in Mexico and the United States could develop into a pandemic, the head of the World Health Organization said Saturday.

The outbreak involves "an animal strain of the H1N1 virus, and it has pandemic potential," director general Margaret Chan said, adding that it is too early to say whether a pandemic will actually occur.

To contain the outbreak, Mexico City Mayor Marcelo Ebrard announced on Saturday the cancellation of all public events for 10 days.

The World Health Organization has advised countries around the world to look out for similar outbreaks following the discovery of related strains on both sides of the Mexico-U.S. border.

At least 62 people in Mexico have died from pneumonia after contracting a flu-like virus. WHO said some tested positive for a strain that sickened at least seven in the southwestern United States. No deaths have been reported in the U.S.

That's a serious problem. This one could be bad, folks. Keep an eye on this outbreak.

The Village Doesn't Get The GOP Plan

An unsigned editorial from the NY Times takes aim at Republicans blocking foreclosure and bankruptcy reform.
The House passed reform legislation more than a month ago. Senate Democratic leaders say that nearly all 58 members of their caucus are on board. Republican leaders say all 41 of their senators will block a vote. If they hold ranks, it would mean that senators from states hardest hit by foreclosures would help to ensure the bill’s failure — including John McCain and Jon Kyl of Arizona and John Ensign of Nevada.

Republican opposition appears to have more to do with fund-raising than principle. The American Bankers Association and other lobbies remain opposed to the fix. Sam Geduldig, a lobbyist for several banking trade associations, recently told The Times’s Stephen Labaton and Eric Dash that as a minority party, Republicans will get “professional donors and lobbyists to look at them in a different light,” if they show they can affect policy.

There might be some good news. Several powerhouse banks, including JPMorgan Chase, Bank of America and Wells Fargo, have been talking with Democratic leaders in recent days about crafting a bankruptcy fix. Democrats hope the big banks can rope in a few Republicans. The danger is the bill could be watered down.

And while all that is true, the Times then reveals the entire editorial board hasn't been paying a lick of attention to the Republican party's goals in the last 100 days.
The Obama administration, which is propping up the banks, should put more pressure on them to support a robust bankruptcy reform.

If that doesn’t work, there’s always the appeal to reason.

Republican senators need to understand that a vote against this reform is a vote against economic recovery. As foreclosures add to the glut of unsold homes, house prices will continue to fall. That will lead to more foreclosures — declining equity is a risk factor for default — and more defaults and foreclosures will hamper the banks’ recovery and further constrain credit. And so on.
Hey, brilliant journalists at the NY Times...what the hell makes you think that the Republican party wants economic recovery?

Now I have my doubts about Obama's methods for recovery, but I know for sure he wants the country to start recovering. There's a small chance Obama's plans may work, and the GOP can't risk it. It's politically advantageous for them to want the entire economy to fail so they can blame Obama for it...which is why they are obstructing everything Obama is trying to do in order to fix the economy. If the economy recovers, the Democrats will continue to hold power. If the economy fails, the GOP can say "I told you so" and regain status. Since everything to the hyper-politicized GOP is just the calculus of power in Washington and the calculus says that if the GOP helps the country recover by allowing Obama's legislation to become law, the Democrats will get the credit for it, the Republicans are willing to destroy the country's economy for their own political ends. I've said this since it became clear late last year. Every day since then has simply borne out the truth in that accusation. The NY Times still hasn't figured this out yet. They have gotten to the what of the story (Republicans will try to filibuster any Democratic legislation that could fix the economy) but not the more-important why (they want to wreck the economy, blame Obama, and retake Washington.)

To his credit, the President no longer sees the GOP as willing to negotiate in good faith. Obama indeed does get it, that the GOP will in fact do everything they can to destroy Obama's legislative priorities. The President is starting to turn to his own party to get things done, which the left has been suggesting he do for quite some time now.

But as you can see from the Times, the Village still seems mystified as to why the GOP is obstructing everything at best, and at worst, it's buying into the Winger spin that Obama is now a brutal dictator.
While some Democratic senators were reluctant to embrace the arrangement, Mr. Obama made clear at a White House session on Thursday afternoon that he favored it, people with knowledge of the session said.

Mr. Obama has given way in some battles with Congress, but the new stance suggests he may be much less willing to compromise when it comes to health care, his top legislative priority, even if it means a bitter partisan fight.

The no-filibuster arrangement is fiercely opposed by Republican leaders, who say health care is too important to be exempted from the Senate rules that usually mean major bills must win support from 60 senators.
That's a Senate rule? Really? You need a super-majority to pass legislation? Could have fooled me.

It's Senate rules to have two Senators from each state too, but the Republicans don't seem to be too concerned over that either.

Obama gets it. The American people certainly get it. The Democrats get it. The Village? Still purposely clueless as to the GOP Plan after months...or aiding and abetting it.

Just A Reminder

The job picture is pretty bad here in the US, but it's much worse in places like Spain, where the national jobless rate is already a whopping 17.4%.
In the past year, two million people have lost their jobs taking the total out of work to just over four million.

The Bank of Spain recently predicted the jobless rate would reach 19.4% in 2010, as the recession took hold.

"It is a terrible figure," Octavio Granado, secretary of state for social security told state television.

He said the first quarter of any year was traditionally bad for employment in Spain.

Mr Granado also said that 2009 was expected to be the worst part of the economic downturn.

"So we are in the epicentre of the crisis. We are in the eye of the perfect storm," he said.

I think quite a few countries are going to top the 20-25% official unemployment rate nationally, along with the U-6 rate here in stateside (currently 15.6% and rising).

There's no sign of improvement in the unemployment picture at all, if anything it's looking to get far worse according to government data.

Employers took 2,933 mass layoff actions in March that resulted in the separation of 299,388 workers, seasonally adjusted, as measured by initial claims for unemployment insurance benefits filed during the month. Layoff events and initial claims rose to their highest levels on record, with data available back to 1995.

The number of mass layoff events in March increased by 164 from the prior month, while the number of associated initial claims increased by 3,911. Over the year, the number of mass layoff events increased by 1,348, and the number of associated initial claims increased by 137,891.

In March 2009, the manufacturing sector experienced 1,259 mass layoff events, seasonally adjusted, resulting in 155,909 claims. Over the month, mass layoff events in manufacturing increased by 24, and initial claims increased by 3,291. Layoff events in the manufacturing sector reached its highest level on record in March.

The government defines mass layoff as 50 or more from one company at one time, and more and more companies are going to be slashing big numbers over the next year at the minimum. In other words, companies are no longer nickel and diming a few positions here or there. They are laying off hundreds of people at a time. It's not just small businesses that are hurting but big ones too. That will only continue to accelerate as the consumer economy grinds to a halt.

Banks still aren't lending at the consumer level. Do you see any banks offering protection plans on homes or credit card purchases like car companies are doing if you lose your job? They're getting money in from the government of course, but they know more and more Americans are major credit risks now, just a couple of lost paychecks or a layoff away from falling completely behind on bills. Without consumers buying homes, cars, vacations and big ticket items, there will be no recovery no matter what signs of life are seen in the markets. And without recovery stabilizing the unemployment market, there will be no confidence to buy or lend. It's a nasty catch-22, and we're all stuck in the middle.

StupidiNews, Weekend Edition

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