Monday, January 11, 2010

Last Call

Via Steve Benen, Fareed Zakaria's article in the WaPo brings up a point nobody else has as far as I know about Crotch Bomber and the Warren Terrah (emphasis mine):
Overreacting to terrorist attacks plays into al-Qaeda's hands. It also provokes responses that are likely to be large-scale, expensive, ineffective and possibly counterproductive. More screening for every passenger makes no sense. When searching for needles in haystacks, adding hay doesn't help. What's needed is a larger, more robust watch list that is instantly available to all relevant government agencies. Almost 2 million people travel on planes in the United States every day. We need to isolate the tiny percentage of suspicious characters and search them, not cause needless fear in everyone else.

As for the calls to treat the would-be bomber as an enemy combatant, torture him and toss him into Guantanamo, God knows he deserves it. But keep in mind that the crucial intelligence we received was from the boy's father. If that father had believed that the United States was a rogue superpower that would torture and abuse his child without any sense of decency, would he have turned him in? To keep this country safe, we need many more fathers, uncles, friends and colleagues to have enough trust in America that they, too, would turn in the terrorist next door.
Honestly, that's the best argument I've read in some time against the notion of "enhanced interrogation."  Would you turn in your own son to stop a terror attack if you knew he would be waterboarded, sleep deprived, and basically tortured and kept in Gitmo or a CIA black site forever?  How many terror plots or valuable pieces of intel could have been gained if, as Zakaria says, more fathers, uncles, friends and colleagues trusted the Bush administration to follow through with observing human rights?

We may never know.  But the fact that Obama is not Bush may have played a factor in the elder Abdul Mutallab's decision to inform American officials about his son.

That is worth thinking about tonight.

A Friend Makes It Big

Although I'm remiss in saying this, Matt Osborne's blog, Osborne Ink, has gotten a facelift and Matt himself has made HuffPo.  Congrats on that, man.

If you haven't checked out his stuff recently, do so.

Deep In The Tea Party Of Texas

The Lone Star State is turning into Teabagger central, and they have their sights set not on Democrats, but on incumbent House Republicans.
"The Tea Partiers, the 912ers and the Libertarians all need to come together and work together," said Adrian Murray, an organizer with the 912 Project Fort Worth. "It’s the outcome of those primaries that are going to determine what kind of support the Republican Party gets" in November.

They aren’t endorsing candidates, but the anti-incumbent sentiment at rallies last year was palpable and is playing a role in local races. Several Republican challengers in races for Congress and the state Legislature say their appeal to those protesters fed up with the status quo will lead them to a primary win in March.

"A lot of people think that these are Republican groups, but they’re not. They’re actually as mad at Republicans as they are Democrats," said conservative activist Bill Burch, who is running against former Arlington City Councilwoman Barbara Nash in the Republican primary for the state House seat held by Rep. Paula Pierson, D-Arlington.
There will be no backing away from the Birthers, the Flat Earthers, and the Wingnuts here.  Why are they mad at incumbent Republicans?
Representatives from local Tea Party groups and the 912 Project Fort Worth say they will remain nonpartisan while encouraging voters to back candidates who support certain principles, including limited government and personal liberty.

"There’s nothing more powerful, we feel, than an informed voter," said Angela Cox, founder of the Burleson Tea Party.

John Spivey, Tarrant County Libertarian Party chairman, said many Tea Party and 912 Project members lean Libertarian and predicted that they will support the GOP only if Republican incumbents are replaced in the primary with "true conservatives."

"I’m looking forward to post-primary that we may see some support from them for some of our candidates," Spivey said.

Leaders with the 912 Project Fort Worth and the Burleson Tea Party expressed doubt that supporting third-party candidates is a viable option.

Burch predicted that conservative grassroots voters would support the Republican ticket no matter who wins the primary.

"If they make it through the primary, your choice is no longer for the individual," Burch said. "Your choice is . . . freedom or socialism."
Socialism as being defined as "the government we have now and anybody in it" of course.  Conservative voters may want the teabaggers, but what about the moderates in a district where you know the Republican in the primary is going to be a winner?  You really want dozens of Michele Bachmanns making your decisions for you in Washington?

The Hoffman Effect rolls on.

Dear America:

"If Scott Brown wins next week, the Obama Presidency is over and the GOP wins.  But in the off-chance that a Democrat wins in the bluest state in the nation like my friend Scott Rasmussen says could theoretically happen, the Obama Presidency is over and the GOP wins."

--AJ Strata, The Strata-Sphere

Reduction Deduction

Our old friend Steven Goldsmith rattles off a nice long article on the economy, but the meat of the matter is what he doesn't say about fixing state budgets.  See if you can figure out what he's dancing around as he lists these "five failed economic strategies":
  1. More Federal aid
  2. More state borrowing
  3. More taxes
  4. More delaying tough decisions
  5. More stop-gap cuts
Now class, if you remove the ability to increase any revenue, and chide states for not making tough decisions and making cuts, what's left to do?

Why gosh, that would mean only thing left is the wholesale elimination of social programs, infrastructure projects and the jobs and services they provide, does it not?

Meet the 2010 GOP economic solution.

The Reid/Lott Disconnect

No, Harry Reid's gaffe was nowhere near that of Trent Lott.  Reid screwed up, yes, but Lott really is a racist.

There's two problems here I have with the Reid situation.

One, he's been a lousy Senate Majority Leader.  He's been ineffective for three years now.  I would actually like to see him replaced.

Two, if you have to carefully explain why you're not a racist, you've lost the public opinion battle anyway.   Stop trying.

The Kroog Versus Useful Idiots

Oh my.  Seems Paul Krugman has called out Marcy Wheeler of FDL, which is a bit like the lefty blog equivalent of pro sports players calling each other out, only without Jim Rome being involved.

Oy. I sort of missed the controversy over Jon Gruber and his contract with HHS. For those who haven’t been following this, Gruber — who is one of the three or four top health care economists in the nation — turns out to have a large research grant from the Department of Health and Human Services, for modeling the consequences of various reform plans. This has led some people, mainly Marcy Wheeler at Firedoglake, to question Gruber’s objectivity.

The truth is that this is no big deal. Gruber’s grant is from HHS, not the West Wing; it’s basically the same kind of thing as, say, an epidemiologist receiving a grant from the National Institutes of Health. You wouldn’t ordinarily say that this tarnishes the epidemiologist’s credentials as an independent analyst on infectious diseases, unless you want to say that nobody receiving a research grant can be considered independent.
Makes sense to me, I didn't pay much attention to the Gruber matter either.  Krugman goes on to explain why it's standard practice.  But then Paul draws a line in the sand at the end:
What the folks at Firedoglake should ask themselves is this: do you really want to become just like the right-wingers with their endless supply of fake scandals?
Ouija mama. That'll leave a mark.  It's the kind of thing that's even got BooMan backing The Kroog.
This could be handled by disclosing it below the body of the piece, so I don't think Krugman really explains away the problem that he acknowledges. But, in any case, this is an issue for Gruber and his publishers, not the Obama administration. Hamsher makes it sound like there has been an ethical breach on the part of the administration for failing to disclose that someone they have cited as an expert has a research grant from the government. I don't have to tell you how that standard would work if applied universally. Suddenly, being expert enough to get a research grant would render you non-credible as an expert. Moreover, the government pays the Congressional Budget Office (CBO) for their non-partisan analysis and quote them as inerrant scripture. There is no principle that is being violated here in hiring an expert and then quoting their analysis.

Marcy Wheeler uncovered something interesting and possibly disconcerting in Gruber's contract and lack of disclosure. Jane Hamsher has turned that into yet another broadside, ridiculous, factually-challenged attack on the Obama administration.
Double Ouija mama.  I'm with BooMan and Kroog here.

Number one, we have enough factually challenged attacks from the Right on the Obama administration.  Loading up the crap cannons from the Left doesn't make any sense unless you really, really would like to see the Obama administration neutered in favor of some truly dangerous idiots in the GOP taking over.

Number two, there are plenty of factual attacks you can be making on Obama, mainly his economic crew and the stories we keep finding out about how we got played for fools...and we're likely headed back in the ditch as a result.  Try looking into those, guys.

As the primaries reminded us, Obama Derangement Syndrome isn't the exclusive property of conservatives, Wingnuts, or Republicans.

Zandar's Thought Of The Day

Why do we need a conservative version of the Daily Beast again when the Daily Beast does such a bang-up job of being the conservative/firebagger version of the Huffington Post, anyway?

Epic Money Shot Fail

Yves Smith is shocked that nobody's brought this up before about Andrew Ross Sorkin's book Too Big To Fail, but what it means about AIG is that former CEO Hank Greenberg could have been sitting on billions...with a B, unaccounted slush money.
So the story thus far is that AIG is a great big mess that will bring everyone down if it goes. Got that. Geithner accepts that picture, persuades Bernanke. AIG is on the verge of bankruptcy, according to Sorkin, mere “minutes away” (p. 399). The Fed agrees to extend a $14 billion loan to get it through the trading day but it wants collateral. Collateral? From a broke company? How is that going to happen?
Then we get this bit:
Wilmustad understandably wondered how they were supposed to come up with $14 billion in the next several minutes. Then it dawned on them: the unofficial vaults. The bankers ran downstairs and found a room with a lock and a cluster of cabinets containing bonds – tens of billions of dollars’ worth, dating mostly from the Greenberg era. They began rifling through the cabinets, picking through fistfuls of securities that they guessed had gone untouched for years. In an electronic age, the idea of keeping bonds on hand was a disconcerting but welcome throwback. (p. 400)
WTF? This is a company about to go out of business, then it suddenly remembers it has a secret stash….worth at least 1/6 of the initial government rescue commitment? $14 billion was only what they coughed up to satisfy the Fed. How much more was left in those cabinets?

And more important, WHO SUPPOSEDLY OWNED THIS PAPER? This wasn’t held by the subsidiaries; otherwise, AIG would not have been able to pledge it to the Fed. And if it was a parent company holding, why wasn’t it repoed or sold earlier? What entity took the semi-annual interest payments? Take the $14 billion we know about, and assume a 5% interest rate. That’s $700 million. Where did it go? Was it reinvested? Disbursed?

The language further suggests that bonds in this secret trove, while mainly accumulated under Greenberg, had more recent additions, presumably under Martin Sullivan, perhaps Wilmustad. This “unofficial vaults” designation strongly implies this was a secret, off balance sheet cache that threw off a hefty amount of annual income by virtue of its staggering size. That would mean it could be used by the CEO at his sole discretion, for anything from bribes to unreported executive payments that might then be used to open foreign bank accounts or pay for personal or business expenses.
WTF indeed. I mean honestly, guys?  Now we have a secret vault downstairs with tens of billions in off the books stuff in a secret vault and the Fed was okay with this?
Perhaps there is an innocent explanation for this huge stash. However, but in all my years in financial services (and having had billionaire clients who would be completely within their rights to run their enterprises as personal cookie jars to the extent the law allows), I have never heard of anything remotely this suspect. Given AIG’s history, there is every reason to believe this is what is appears to be: a slush fund created for Greenberg’s personal use that was never accounted for properly.

The simple test of whether this arrangement is proper or not is whether the cache was fully accounted for on AIG’s balance sheet. If not, no wonder Greenberg had to go to such lengths to boost reported earnings. He would have needed to hide the truly remarkable amount of skimming needed to put these reserves aside.
Well gosh, graft of that magnitude strongly implies that somebody upstairs in Treasury looked the other way on this.  Just how much of this secret stash is there?  Is it still there while Americans are paying for billions in AIG bailouts?

Where the hell is Geithner and Bernanke on this?  Jesus, like we needed another reason to get rid of the Helicopter Ben and Timmy Show?

EPIC FAIL.  To the tune of tens of billions.  Secret vault my ass.

We're On A Moose-sion From God

Moose Lady apparently thought the big guy upstairs wanted her to run for the GOP ticket.  It was really Steve Schmidt, and even he has second thoughts about it, mainly because his choice of Joe F'ckin Lieberman leaked and could have ruined his campaign.  Instead, Johnny Volcano turned to Moose Lady and it did ruin his campaign.
Sarah Palin believed that Sen. John McCain chose her to be his running mate in the 2008 presidential race because of "God's plan," according to a top political strategist in the Arizona Republican's campaign.

In an interview with the CBS news magazine "60 Minutes," Steve Schmidt described Palin as "very calm -- nonplussed" after McCain met with her at his Arizona ranch just before putting her on the Republican ticket. McCain had planned to name Sen. Joseph I. Lieberman (I-Conn.) as his choice until word leaked, sparking what Schmidt called political blowback over selecting the 2000 Democratic vice presidential nominee.

Schmidt, McCain's chief campaign adviser, said he asked Palin about her serenity in the face of becoming "one of the most famous people in the world." He quoted her as saying, "It's God's plan." Palin has not ruled out a run for the presidency.
God has a hell of a sense of humor, what with platypi, flesh-eating bacteria, and political campaigns. Is it still God's plan when you lose?

[UPDATE 1:40 PM] Speaking of your standard deific sense of humor, Moose Lady has just signed a mutli-year deal with FOX.

Depressing Depression

Ambrose Evans-Pritchard has an extremely grim take on 2010's economy for America.
US house prices have eked out five months of gains on the Case-Shiller index, but momentum stalled in October in half the cities even before the latest surge of 40 basis points in mortgage rates. Karl Case (of the index) says prices may sink another 15pc. "If the 2008 and 2009 loans go bad, then we're back where we were before – in a nightmare."

David Rosenberg from Gluskin Sheff said it is remarkable how little traction has been achieved by zero rates and the greatest fiscal blitz of all time. The US economy grew at a 2.2pc rate in the third quarter (entirely due to Obama stimulus). This compares to an average of 7.3pc in the first quarter of every recovery since the Second World War.

Fed hawks are playing with fire by talking up about exit strategies, not for the first time. This is what they did in June 2008. We know what happened three months later. For the record, manufacturing capacity use at 67.2pc, and "auto-buying intentions" are the lowest ever.

The Fed's own Monetary Multiplier crashed to an all-time low of 0.809 in mid-December. Commercial paper has shrunk by $280bn ($175bn) in since October. Bank credit has been racing down a hair-raising black run since June. It has dropped from $10.844 trillion to $9.013 trillion since November 25. The MZM money supply is contracting at a 3pc annual rate. Broad M3 money is contracting at over 5pc.

Professor Tim Congdon from International Monetary Research said the Fed is baking deflation into the pie later this year, and perhaps a double-dip recession. Europe is even worse.

This has not stopped an army of commentators is trying to bounce the Fed into early rate rises. They accuse Ben Bernanke of repeating the error of 2004 when the Fed waited too long. Sometimes you just want to scream. In 2004 there was no housing collapse, unemployment was 5.5pc, banks were in rude good health, and the Fed Multiplier was 1.73.

How anybody can see imminent inflation in the dying embers of core PCE, just 0.1pc in November, is beyond me.
Pritchard and others like him, along with David Rosenberg and Nouriel Roubini, have been warning of a double-dip recession for quite some time now.   The only thing keeping us above water right now is the supposedly "failed" Obama stimulus, which Republicans are hovering around like buzzards, waiting for the kill.  They are demanding we stop spending.  The results will be not a double-dip recession, but a full-blown depression if that happens.

As it is, unless we see some sort of major jobs stimulus in 2010, states are going to lay off hundreds of thousands of government workers.  Real unemployment is only going to go up as the year goes on.  It may hit 20% nationally.  That means there are pockets now where this U-6 number is 25 or 30% or worse.

If Congress cuts the stimulus spigot, the Dems are done.  Republicans will regain control and insist that we "live within our means" and will do to the Federal budget what they have done to California and all but eliminate social programs while saying we need to cut taxes, cut taxes, cut taxes.  The results will be catastrophic.

As bad as things are now, we're very close to a point of no return where we slide down into the pit for a long, long time.

Three Dollar Gas Is Back

Gas prices have staged an almost summer-like rally on cold temps in the U.S. as oil prices have shot up from $70 to close to $85 a barrel and are rallying as the dollar continues to weaken.
Gas prices continued to climb higher, rising for a fifth consecutive day and coming closer to $3 a gallon.

The average cost of a gallon of regular gasoline rose slightly on Sunday to $2.747, from $2.743 the day before, according to motorist group AAA. Nationwide, gas prices have increased eight cents over the last five days.
In fact around Kentucky and Ohio, gas prices have shot up by about 20 cents a gallon in the last three weeks.  $3 a gallon gas in the spring does not bode well for the summer or for the economy recovering.  It's also going to be another problem the Dems are going to get blamed for.

Safe Hoeven

North Dakota's GOP governor John Hoeven is expected to announce he's running for Democrat Byron Dorgan's Senate seat today.
Hoeven's announcement will come just six days after Democratic Sen. Byron Dorgan said he would retire rather than seek a fourth term in 2010.

Hoeven's entry into the race is no surprise. A Rasmussen Reports poll conducted last month showed Hoeven lead Dorgan by 22 percentage points. Dorgan's abrupt and unexpected exit from the campaign made the race even more appealing to the widely popular three-term governor.

In recent days, top Republicans, including 2008 presidential candidate Mike Huckabee, have encouraged Hoeven to make the run in a contest in which he's presumed to be the favorite.

Hoeven, the nation's longest-serving governor, is expected to begin speaking to the Bismarck Republican District Convention around 6:00 p.m. Monday in order to snag live coverage from the local evening newscasts.
All indications are with Dorgan gone, Hoeven will have a rather easy path to a GOP pickup in 2010, but there are plenty of opportunities for the Dems to pick another Republican seat back up to replace it, mainly Roy Blunt's seat in Missouri.  Blunt is an incumbent Congressman running for an open Senate seat who is polling under 50% in a year where incumbents are not going to do well.

We'll see.  I still don't see the Dems losing a total of more than 2 or 3 seats max right now, but I do see plenty of trading parties where both sides pick up 3-7 seats.  The endgame of that will determine where the new Dem number lies.


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