Sunday, June 6, 2010

Last Call

Nikkei down almost 4% in early Monday trading in Japan.  Dow futures already off 100+, Euro under $1.19 and falling.

It's gonna be another ugly week for your 401(k), folks.  You know, those of you that have one.

Agent Kay Explains It All

Over at NMMNB (where I'm helping out this week again as Steve M.'s away), Aimai makes probably the best argument I've seen about Obama looking and acting like he's taking charge of the situation in the Gulf, by employing, of all things, the wisdom of Tommy Lee Jones from Men in Black:
A person is smart. People are dumb, panicky dangerous animals and you know it.
Aimai applies this rather brilliantly to the Obama administration's response on the Gulf.
Obama and his whole team--and this includes Gibbs--have to start to grasp that they have a duty to set the narrative the voters want if they want the voters to support what they are doing. Its great that we have the world's smartest, coolest, most sciency President. I really mean that. He suits me to a T. But I'm not the median voter. I'm not a swing voter. Lots of other people are. Getting the people to continue supporting you and your party is not a distraction from the job, it is the job. There's no other way to be in office than to run for office constantly. You don't get to relax and just be yourself. Give the voters what they want emotionally while doing what you have decided to do rationally. If you want people to feel good about what you are doing you need to market it agressively. You need to demonstrate it any way you can because the people you are talking to--the voters--are really busy, really stupid, really anxious, really indifferent. So do it, already. Use words, pictures, semaphore, morse code, cave paintings, puppets, or interpretive fucking dance. But however you need to do it, for different constituences, go ahead and do it.
And Aimai's got it down cold. Do yourself a favor and read the whole thing.

It's not a question of "Is Obama angry enough?" or not. It's "Has Obama made the case politically as to why they are responding in this way, and why this is the best real response to the problem?" The answer to that question on a visceral level is "no". I understand it's absolutely impossible to "win" the 48 hour political news cycle when you're into day 48 of the crisis. The Village assures that.

But you damn well better be trying harder than this.

The Tony Awards For Chutzpah

BP CEO Tony Hayward?  Not gonna quit, nope.
BP PLC chief executive Tony Hayward said Sunday he won't step down over the Gulf of Mexico oil spill, and predicted his company will recover from the disaster.
Hayward told BBC television's "Andrew Marr Show" that he would not quit, and he had the "absolute intention of seeing this through to the end."

"We are going to stop the leak. We're going to clean up the oil, we're going to remediate any environmental damage and we are going to return the Gulf coast to the position it was in prior to this event," Hayward said. "That's an absolute commitment, we will be there long after the media has gone, making good on our promises."
Somehow I'm betting the percentage of people who believe Hayward's statement here is equal to two things: the percentage of people who believe Hayward will still be BP's CEO in twelve months, and the percentage of people who thought Hot Tub Time Machine represented actual science.

On the other hand, what do people expect Hayward to say?  "I'm a complete bastard, I take full responsibility for this catastrophe, it's my fault as the man behind BP's corporate culture of cutting safety corner to make a profit and I'm resigning immediately out of shame and hope only that whatever higher power out there sees fit to forgive me as I spend the rest of my natural life trying to make amends, starting with donating my salary for this year to the clean-up effort"?

Sure.  Lemme just start up this hot tub and see if I end up in 1986.

Sunday Funnies: Israeli A Bad Situation Here Edition

Bobblespeak Translations.  Making Sunday bearable again, one idiot at a time.
Tapper: ok let’s move on to something less contentious like Israel killing American citizens
in international waters

Cornyn: oh come on that American provoked Israel by sailing international waters toward another nation with baby food

Tapper: but Hamas was elected in an election Bush supported

Cornyn: whatever - the ship launched an unprovoked attack on Israel by trying to bring aid into Gaza - it was like Pearl Harbor with wheelchairs

Tapper: but Hamas controls Gaza

Cornyn: but Israel controls the sea

Kerry: Israel has the right to prevent dangerous items from being brought into Gaza

Tapper: what’s dangerous about pasta??

Kerry: hey a fusilli can put your eye out!

Tapper: scary

Kerry: Iran is trying to start a war in the Middle East

Tapper: attacking aid-bringing ships in international waters will surely put a stop to that

Cornyn: right!
Man, what if the boats had donkeys on board?  It would have been the Maginot Line all over again, only with...donkeys.  I love how the most Westernized, modernized nation in the Middle East is terrified of Palestinians getting their hands on concrete and donkeys like every single Palestinian is Leonardo da Vinci, MacGyver, the Mythbusters and the entire A-Team rolled into one.  All one point five million of them.  On the other hand... can do a lot of damage with concrete donkeys.

I'm Shocked, Shocked I Tell You...

I'm just shocked that an AP analysis of the folks overseeing the legal action against BP finds fully half of the judges overseeing oil spill cases have connections to the oil industry...really...nobody could have guessed, etc.
More than half of the federal judges in districts where the bulk of Gulf oil spill-related lawsuits are pending have financial connections to the oil and gas industry, complicating the task of finding judges without conflicts to hear the cases, an Associated Press analysis of judicial financial disclosure reports shows.

Thirty-seven of the 64 active or senior judges in key Gulf Coast districts in Louisiana, Texas, Alabama, Mississippi and Florida have links to oil, gas and related energy industries, including some who own stocks or bonds in BP PLC, Halliburton or Transocean — and others who regularly list receiving royalties from oil and gas production wells, according to the reports judges must file each year. The AP reviewed 2008 disclosure forms, the most recent available.
Gosh, it's almost like there's a pattern here of judges in Gulf Coast states having financial ties to the energy industry, and not just the industry but specifically BP, Halliburton, and Transocean. Not like anything untoward is going on here.
Some judges have close ties to the energy industry that aren't for financial gain, but could still raise questions of potential bias.

The judge BP wants to hear all of the spill-related cases, U.S. District Judge Lynn Hughes of Houston, for the past two years has been a "distinguished lecturer" focusing on ethical issues for the 35,000-member American Association of Petroleum Geologists.

Hughes is not paid a fee but does receive reimbursements for travel, food and lodging, said association spokesman Larry Nation. Hughes has appeared at petroleum geologist meetings in several Texas cities, in New Orleans and also in Cape Town, South Africa. He is scheduled to give a lecture later this month in Calgary, Canada, the oil and gas capital of that country.
Now, why would BP want this particular judge to hear every single oil-spill related case, just because he goes flying around North America giving lectures on behalf of an oil-industry group?  Not like there's tens of billions of dollars at stake here or anything and BP's trying to get the friendliest possible judge to give them the smallest possible fine.


The Kroog Versus Even More Neo-Hooverism

He certainly gets the results of what would happen if we made massive spending cuts in the middle of terrible unemployment, but he doesn't understand the political reasons as to why it's being done.  To whit:
But don’t we need to worry about government debt? Yes — but slashing spending while the economy is still deeply depressed is both an extremely costly and quite ineffective way to reduce future debt. Costly, because it depresses the economy further; ineffective, because by depressing the economy, fiscal contraction now reduces tax receipts. A rough estimate right now is that cutting spending by 1 percent of GDP raises the unemployment rate by .75 percent compared with what it would otherwise be, yet reduces future debt by less than 0.5 percent of GDP.

The right thing, overwhelmingly, is to do things that will reduce spending and/or raise revenue after the economy has recovered — specifically, wait until after the economy is strong enough that monetary policy can offset the contractionary effects of fiscal austerity. But no: the deficit hawks want their cuts while unemployment rates are still at near-record highs and monetary policy is still hard up against the zero bound.

But what about Greece and all that? Look, right now sovereign debt problems are taking place in countries with a very specific problem: they’re part of the euro zone, AND they’re badly overvalued thanks to huge capital inflows in the good years; as a result they’re facing years of grinding deflation. Counties not in that situation are not facing any pressure from the markets for immediate cuts; as of this morning, 10-year bonds were yielding 3.51 in Britain, 3.21 in the US, 1.27 in Japan.
So far, so good.  Spending cuts into a deflationary spiral is how Japan fell apart in the 90's, and they had one of the highest savings rates on the planet.  If we tried that here, it would be an unmitigated disaster.  Krugman is spot on here.

It's the "why" where he goes astray.
Yet the conventional wisdom now is that these countries must nonetheless cut — not because the markets are currently demanding it, not because it will make any noticeable difference to their long-run fiscal prospects, but because we think that the markets might demand it (even though they shouldn’t) sometime in the future.
Umm, Big Kroog?  Buddy?  It's not the markets demanding this.  It's the Teabaggers and their Republican allies, and the Village enablers.  They are the ones saying "We'll turn into Greece overnight!" and are demanding we balance the budget through more tax cuts for the rich and trillions in spending cuts to eliminate as much government as possible.

Have you not noticed the campaign to demonize the federal government as the root of all evil by the Club For Growth gang?  Have we not seen the crusade to de-fund health care reform's provisions and the number of Teapublican candidates out there pledging not a dime for the provisions should they take over the House?

Combined with the continuing efforts to make any recipients of government money as the bad guys (that includes government employees but strangely enough not members of Congress or Social Security or Medicare recipients...yet) the deficit hawks are out in force, and if they get their way there's going to be a whole hell of a lot of people suffering.

Just not the ones at the top.  You think the GOP will limit de-funding to just "Obamacare" if they take over?  You think the pressure on Obama to make huge spending cuts will end after the November elections?  We're just getting started on this one.

Digby has more on this, but the bottom line is we're lining up to cut our own throats.

Movin' On Up

By complete accident the blog has somehow made Technorati's Top 100 US Politics blogs.

Which is rather damn cool.  (#88 as of this morning).

Thanks for reading!

Scorched Earth Campaign

And this is why the Dems backing Charlie Crist's independent bid is a stupid, stupid idea.
Gov. Charlie Crist personally signed off on his former Republican Party chairman's confidential fundraising role with the state party, according to Jim Greer's attorney, whose allegation contradicts the governor's statement that he "didn't know anything" about the deal now part of a criminal investigation.

State investigators say Greer and the party's former executive director, Delmar W. Johnson III, secretly set up a shell company called Victory Strategies to divert party money and enrich themselves. Greer was charged Wednesday with fraud and money laundering.

But Greer's attorney, Damon Chase, said Saturday that the deal giving them a 10 percent cut of party donations was legal. What's more, Chase said Crist's former right-hand man, now U.S. Sen. George LeMieux, first proposed the idea that they earn a fundraising commission to save the party money and replace the $30,000-a-month contract with fundraiser Meredith O'Rourke.

"You guys work hard. You deserve it," Chase said Greer was told by the governor as they played pool in February 2009 at a Palm Beach golf tournament.

Crist, an independent candidate for Florida's open U.S. Senate seat, said Saturday that he didn't know about Victory Strategies until after Greer resigned in January. He said he knew Greer wanted to replace O'Rourke with Johnson, but was unaware that they set up a separate company and that Greer had a stake in it.

"Jim thought a change would be a good idea, and I said, 'Whatever you think needs to be done, and if you need to bring in Delmar, that's fine,' " Crist said.

How could he not have known about Victory Strategies as the head of the party? "I'm the guy in charge of the state," said Crist, who was in Pensacola on Saturday responding to the Gulf Coast oil spill. "I've got a state to run, and that's my focus."
If what Jim Greer is saying is true, then the GOP machine in Florida is about to get dismantled with dynamite and sledgehammers.  Crist may be in real trouble here.  The smart play here for the Dems is to back Kendrick Meek big time and go on the attack, saying the entire Republican apparatus in Florida is corrupt as hell (and that is looking more and more like the truth daily).  Jim Greer is flailing around in his political death throes and he's knocking out the supports underneath both Crist and Rubio.  Clearly he's not going down alone.

Worst case scenario is Rubio wins because Meek doesn't have the resources to show why Crist's backers should vote for him...because the Dems were too busy sinking those dollars into Crist's campaign.  This has all the makings of a Martha Coakley screw-up all over again unless somebody in the White House gets the fact that it doesn't matter what kind of deals Crist cut to caucus with the Dems in the Senate if Marco Rubio wins the election.

Wake up, guys.  Charlie Crist is looking worse every day here.

Legal Eagles (And Otters, Pelicans, Shellfish And Dolphins)

Fortune's Roger Parloff has a good primer on the legal liabilities that BP faces because of the oil spill.  He notes that the big question -- does that $75 million liability cap mean BP walks away with a slap on the wrist -- depends on what the DoJ finds.
Is BP really protected by a $75 million cap on damages?

Probably not. In the wake of the Exxon Valdez oil spill of 1989, Congress passed the Oil Pollution Act of 1990, known as OPA (pronounced like 'Oprah' without the 'r'). For leaks from offshore oil rigs like this one, OPA limits the liability of the responsible party -- BP in this instance -- to $75 million in economic damages, but there are several mammoth exceptions. To begin with, the limitation does not apply to any of BP's liability for state and federal cleanup costs, for which BP  is 100% responsible. As of early June, these costs had already come to about $990 million, according to BP, and the company seems to be just getting started. (BP has also committed to spending another $360 million to fund the building of barrier islands off the coast of Louisiana.)

But the key, ginormous loophole in the $75 million OPA limit is that BP isn't allowed to take advantage of it if the company -- or any of its contractors, Kende stresses -- acted with gross negligence or violated any federal safety law or regulation. In other words, if either BP or rig-owner Transocean Ltd., or cement contractor Halliburton Energy Services , or the blowout preventer manufacturer Cameron International violated some safety rule -- the limit vanishes. (If a subcontractor is the one responsible, BP might then be able to go after that company for contribution or indemnification.)

"I think there are enough regulations in this area," says Kende, "that something was probably done wrong" by someone, though he acknowledges that that's speculation on his part.
Considering the musical chairs of blame game that we've seen from the beginning on this, it's clear that somebody was negligent and violated one or more regulations.  If that's true, then BP is on the hook for all of it:  the state and municipality claims for lost tax revenue from lost tourism, the individual claims for the destruction of the fishing industry and tourism industry along the coast, the criminal claims for causing the deaths of the rig workers, the direct cost of the cleanup, plus whatever federal penalties can be assessed under the Clean Water Act, which in the case of negligence, would be $4300 per barrel of oil spilled.

That works out to $102 a gallon, kids.  We're well over 22 million gallons as of this morning and that cap is still spewing out oil.  That's two billion and some change if you believe the 12,000 barrels of oil a day number, and the number itself is probably multiple times that, which would multiply the fine.

Now imagine this mess keeps going for another eight weeks.

Now imagine this mess keeps going for another eight months.  Those fines just from the Clean Water Act could total tens of billions.  And that's before the lawyers.

I don't see how BP survives without filing for bankruptcy.  I believe it will happen sooner rather than later, too.

No Longer Hyperbole

The notion that all the people aboard last week's ill-fated flotilla bound for Gaza were "terrorists" seems to be par for the course in the over-the-top rhetoric war that has accompanied the response to the deadly Israeli raid.  Indeed, the inflammatory hyperbole that all on board were Hamas operatives who had to be shown lethal force rang out loudly from all of the usual suspects.

It's one thing to have that kind of binary worldview ("You're either with Israel or a terrorist!") on a newspaper op-ed or a blog.  It's something far more horrifying to see that logic being transformed into legal punitive action by a member of the House...especially when that member of the House is a Democrat.
A Democratic member of the US House of Representatives says he wants to see US citizens aboard the Gaza flotilla prosecuted for providing aid to terrorists.

In a conference call organized by The Israel Project, Rep. Brad Sherman (D-CA) told reporters that activists participating in the flotilla were aiding Hamas and therefore breaking US law.

“The Antiterrorism and Effective Death Penalty Act of 1996 makes it absolutely illegal for any American to give food, money, school supplies, paper clips, concrete or weapons to Hamas or any of its officials,” Sherman said, as quoted at Jim Lobe's foreign policy blog. "And so I will be asking the Attorney General to prosecute any American involved in what was clearly an effort to give items of value to a terrorist organization.”

TalkingPointsMemo's M.J. Rosenberg, a frequent writer on Middle East issues, describes Sherman as "the most pro-Likud Democratic member of Congress," referring to Israel's most prominent conservative political party. "But this is crazy even for Sherman."

Sherman's declaration has taken heat from conservative commentators as well. Writing at The American Conservative, Kelley Vlahos declares that "the overall reaction to the abuse of our citizens has been strangely muted and flaccid — whether at the White House, Capitol Hill or in the corporate media."

Writes Vlahos: "Instead of demanding an accounting — you know, like Turkey is doing for its own citizens — we have elected leaders trying to put Americans on that flotilla in jail."
I cannot imagine Eric Holder agreeing to prosecute the Americans who survived the trip as terrorists.  And yet given the climate in Washington surrounding Israel right now, it will be very difficult for the Obama administration to not agree to Sherman's request if this becomes a "bipartisan" pile-on to demand Holder do just that.

Combined with the continued demonization of Turkey over the week by the Village, the criminalization of disagreement with Israel in the United States is growing to fever pitch levels.  That's something that should really give all of us pause.

It is no longer hyperbole.
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