Monday, June 14, 2010

Last Call

This will play well in Nevada.
In an interview from three weeks before the Nevada Republican primary, Sharron Angle made it clear that getting rid of Medicare and Social Security is a non-negotiable issue for her.

Greg Sargent reports that in a radio interview with a local Nevada NPR affiliate on May 19, Angle talked about how the VA and Medicare were not covering medications for her father -- and she suggested that they shouldn't, "not if you're working towards a privatized system."

Going on in the interview, Angle talks about how as a Senator she would work with other legislators to formulate a proper solution for her idea, haggling over the details and implementation of privatization without giving up on the main idea itself: "The idea of privatizing and getting out of Medicare and Social Security is not up for grabs."
Suddenly I'm far, far less worried than I was about the Tea Party, the Republicans, or Harry Reid losing his seat.

Before Zee Germans Get Here, Part 3

The Merkel coalition government in Germany is starting to look a bit on the wobbly side, thanks to Austerity Hysteria.
Criticised at home and abroad for mishandling the euro crisis, Merkel's latest political headache is the four-year €80bn (£67bn) austerity package passed last week in an attempt to reduce Germany's deficit. Many of Merkel's own CDU MPs fear a voter backlash after growing criticism that the cuts are socially imbalanced. Almost 80% believe the cuts to be socially unfair, while 67% want an increase in the top rate of tax, which Merkel has strongly resisted. Public anger at the package spilled over at the weekend when thousands of demonstrators took to the streets.

The package has also stoked the anger of Merkel's French counterpart, Nicolas Sarkozy, who has accused the Germans of creating an atmosphere that will stifle growth in Europe at a time when it should be stimulated. Sarkozy arrived in Berlin for talks with Merkel tonight – a meeting which the German leader cancelled at the last minute a week ago, adding to speculation that relations between the two politicians are at an all-time low.

The recent departure of CDU heavyweight Roland Koch, the state premier of Hessen, and the unexplained resignation of Horst Köhler, another CDU man, from the post of president have also left Merkel looking increasingly exposed. Two further ministers have covertly expressed their desire to quit Merkel's government, including its most popular politician, defence minister Karl-Theodor Guttenberg of the CDU, who has faced a backlash over his attempts to scrap compulsory military service, and Philip Rössler, the FDP health minister, whose efforts to reform the health system have been rejected by parts of the bickering government.

The chaos has led commentators to refer to Merkel's administration as a "constipated institution". Writing in the Süddeutsche Zeitung, commentator Daniel Brössler said: "Governments need to be steered, but the Merkel cabinet is no longer steering. It resembles a car where the only thing that's working is the brakes."
Even the Germans understand that austerity right now is a load of crap.  It's not going to work in Greece, it's not going to work in Britain, it's not going to work in Germany, and hey, guess what?  It won't work here in our consumer-driven economy.  If Cameron really is going to make the kind of cuts I think he is, I don't see his coalition lasting much longer either.

The people can see it coming a mile away, and it won't work here either.  The second you start messing with Medicare, Social Security, and start saying "corporate tax cuts" on top of that, you're going to have riots on your hands.

Let's not go there.  It is a silly place.

The Mask Slips Again

No surprise that it's Rep. Steve King, either.
Rep. Steve King (R-IA) appeared on the G. Gordon Liddy Show this morning to discuss Arizona's controversial immigration law and accused Attorney General Eric Holder and President Barack Obama — both critics of the legislation — of harboring animosity towards white Americans.  Specifically, he accused Obama of having a "default mechanism" that favors "the black person."
King: When you look at this administration, I'm offended by Eric Holder and the President also, their posture.  It looks like Eric Holder said that white people in America are cowards when it comes to race.  And I don't know what the basis of that is but I'm not a coward when it comes to that and I'm happy to talk about these things and I think we should.  But the President has demonstrated that he has a default mechanism in him that breaks down the side of race — on the side that favors the black person.
Like D-Day said earlier today:
"This is why unemployment is 16% in A-A community. They can't take all this favoritism!"
Also, did you know know Obama married an African-American woman?  He loves them!  Clearly favortism, as now African-Americans own majority stakes in every business, every state and local government, and also have superpowers after just 18 months of Shabazz Obama X's plan to Stick It To Whitey.  Soon we'll be rounding up the people who can't recognize a cast photo of "What's Happening!" for the Dr. William H. Cosby Jr. Re-education Camps.


We will replace Beastmaster and Red Dawn with nothing but Barry Gordy's The Last Dragon on every single cable channel.  Your suffering will be exquisite.

World Cupdate

A Hamlet-style Danish tragedy played out in Group E as an own goal by Simon Poulsen off the backside of Daniel Agger was about as tragic as it gets as Poulsen made a terrible mistake clearing a back post shot.  The Big Orange made a game of it by scoring close to the end, but the game was over long before as Denmark never got it together, the Dutch won 2-0.

Japan pulled the upset of the day as Keisuke Honda took advantage of a bad defensive choice by Cameroon's Mbia to back off, and blew one past keeper Hamidou and the Samurai Blue held on to win as they bunkered up.  Cameroon missed several chances late however and that may haunt them.  Japan suddenly has an outstanding chance to advance out of Group E along with the Orange, and you have to like their odds after the 1-0 win.

Italy's muddy play in the rains of Cape Town against Paraguay was no shocker.  The defending World Cup champs are nowhere near the same team they were in 2006 and it showed in a swampy slog where Paraguay busted out to a 1-0 lead on Antonin Alcaraz's beautiful header.  The Azzurri manged to knot it up late as they switched to 4-4-2 and finally played like a Cup contender, but luck is on their side, this was their toughest match of the group and they will still advance.

Eighty Percent Chance Of Screwed

The Zero Hedge crew flags David Rosenberg's latest advice that the numbers show an 80% chance of a double-dip recession.
Last week, we pointed out that the ECRI Leading Index dipped to negative for the first time in over a year, which on a historical basis tends to predict a recession with surprising regularity. Today, David Rosenberg takes this data and expands on his views of the probability of a double dip. An interesting observation: when the ECRI drops to -10 (from the current -3.5, and plunging at the fastest rate in history), the economy has gone into a recession 100% of the time, based on 42 years of data. At the current rate of collapse, this means in two months we should know with certainty if the double dip has now arrived.

From this morning's < ahref=""Breakfast with Dave:

The smoothed ECRI leading economic index fell in the opening week in June for the fifth week in a row and now down in nine of the past ten. The index, went from +0.3% to -3.5%, the weakest it has been in a year. After predicting the V-shaped recovery we got briefly in the inventory-led GDP data when the index soared off the bottom in late 2008, at -3.5%, we can safely say that this barometer is now signalling an 80% chance of a double-dip recession. It is one thing to slip to or fractionally below the zero line, but a -3.5% reading has only sent off two head-fakes in the past, while accurately foreshadowing seven recessions — with a three month lag. Keep your eye on the -10 threshold, for at that level, the economy has gone into recession … only 100% of the time (42 years of data).
In other words, if the ECRI Leading Index drops any more from -3.5%, we're in massive trouble.  If it hits -10%, we screwed within months.  Personally, I think we will be in a double-dip recession before the end of the year, the question is simply going to be how bad it will be and how long it will last.  if the deficit hawks get control, it could be a full-blown depression.  We'll see.

Extracting That Pound Of Flesh

Senate Dems are playing hardball with BP now and are making the "request" for BP to place $20 billion in an escrow account in order to fund liabilities and claims against it much more than a "request".  Greg Sargent:
Senate Dems have sent a harshly-worded letter to BP execs demanding the money, and note the barb directed at BP over its public relations push:
In order to ensure BP fully and quickly covers the costs of this disaster, we are calling on BP to immediately establish a special account of $20 billion, administered by an independent trustee, to be used for payment of economic damages and clean-up costs. Establishment of this account would serve as an act of good faith and as a first step towards ensuring that there will be no delay in payments or attempt to evade responsibility for damages. Although creating this account at this level in no way limits BP's liability, we believe it will do more to improve BP's public image than the costly public relations campaign your company has launched.
We appreciate your interest in fully and quickly reimbursing those who have been injured by your actions. We believe the establishment of the $20 billion account to compensate victims and provide for clean-up is a useful first step for demonstrating that BP intends to meet its commitments. In light of the urgency of this matter we ask the courtesy of your response no later than June 18, 2010.
The letter is signed by virtually the entire Dem caucus. It's a sign that Dems -- perhaps belatedly -- are displaying some real anger here and are keeping the spotlight on BP and the need to hold it accountable.

The House GOP leadership has now endorsed lifting the liability cap, but Republicans have repeatedly blocked efforts to lift it in the Senate. Dem Senate leaders, it seems, recognize they have a winning issue on their hands and intend to press the point.
Senate Dems aren't asking BP to do this, folks.  They're telling them.  You wanted them to do something about it?  Here you go.

Note the words "first step".  That part actually made me smile.  But not as much as the argument that making the $20 billion fund would do a better job than BP's current PR efforts, that one's classic.  Obama may be okay playing it cool, but the Senators up for reelection are motivated to say the least to take action.

Another Milepost On The Road To Oblivion

And this commercial for Teapublican candidate Rick Barber in AL-2 sums up everything wrong with the Tea Party movement in just 60 seconds.

The campaign platform is insanity.

You Were Always On My Mine

Reaction this morning to last night's "Oh yes, and Afghanistan's sitting on a trillion buck in minerals" story has been interesting.

Spencer Ackerman correctly proclaims this to be old news and wonders what the new endgame is.
So if you were still operating on the presumption that the real reason we remain at war after nine years is something to do with the world’s least efficient way to establish and control an oil pipeline, you’re so 2000-and-late. What, you thought it was a coincidence that the Center for a New American Security established its natural-resources/defense program so soon after the first wave of its leadership entered the Obama Pentagon and State Department? It’s a shame we can’t manufacture cellphone batteries from your vast deposits of naivete.
Betty Cracker is...curiously hopeful.
Seriously, as a final gesture, the US should try to help the Karzai government set up a mining infrastructure that encourages international investment and has mechanisms to distribute the wealth to all Afghans, not just the corrupt elites. (I know—hahahaha!) And then get the hell out. This kind of deus ex machina doesn’t come along every day. 
Mistermix is not.
Maybe it’s just my sour nature and dim view of humanity, but I fail to see why the discovery of trillions of dollars of minerals in Afghanistan is Good News for America®. Is it because mining companies will stuff more cash in Karzai’s pockets, so he can continue with the good works and generosity that have characterized his benevolent rule? Or is it because the Taliban will give up the fight now that the land they hold is full of precious metal?
But it's Steve M. who nails it:
Maybe the story is a signal to the Chinese (identified by Risen as the West's big rivals for these Afghan resources) that the treasure isn't going to be ceded without a fight. Maybe it's a signal that the administration, now momentarily identified with BP-bashing, isn't really anti-corporate. Whatever's going on, the story doesn't seem intended to mollify political enemies or the public at large, unless the Obamaites are really, really tone-deaf.
It's less conspiracy theory as it is "Here's how the next nine years will go."  And, as Steve points out, it's not like there was any chance of us leaving Afghanistan during this administration anyway, the GOP will never leave tehmselves, and they will never let a Democrat leave.  In the meantime, we have to keep the mines away from the Taliban, corrupt Afghan officials, and the Chinese.  Or something.  Forever.

Everything's Fine, We're Fine Here, How Are You?

St. Louis Fed chief James Bullard wants you to know everything's fine, Europe is fine, the debt crisis is fine, the banks are fine, and the economy is doing great!
The U.S. recovery is likely to continue and private-sector job creation will start to pick up in the summer, causing the jobless rate to gradually fall this year, Bullard said.

Some economists may have an overly pessimistic view of the U.S. labour market as they are excluding the number of temporary jobs created, he said.

U.S. consumer prices unexpectedly fell in April for the first time in a year, with the core annual rate recording its smallest gain since 1966, data showed last month.

Core consumer price data could be distorted by a weak housing market and if this factor is excluded the data would show prices of other goods are rising, Bullard said.

Bullard was among three Fed officials who sought an increase in the Fed's discount rate in April. The  discount rate, currently at 0.75 percent, is the rate the Fed charges commercial banks for loans.
Sure, let's just ignore the housing market, call it the Specter of Inflation, and raise interest rates as Europe's financial problems are putting a credit squeeze on all of us. Gotta stop that inflation, folks!  You know, the inflation that doesn't exist.  But it might, so we have to cut spending!  That will stimulate growth and the Invisible Hand Of The Free Market will make more jobs, or something.

We'll be fine!

Meanwhile, Over There...

Iraq's new Parliament convenes (finally) after March's elections, but if anything the situation in Baghdad is even more unstable.
The inaugural parliamentary session more than three months after the March 7 vote was a major step toward the establishment of a government but it appeared likely it would still take weeks for political factions to agree on a choice of prime minister.

Sunni Islamist insurgents have sought to exploit the sectarian tensions generated by the extended political vacuum through bombings and assassinations.

Recent weeks have also seen a spate of raids on banks and gold markets blamed by the authorities on insurgents seeking funds. But Shi'ite militia groups that took up arms after the invasion have also turned to crime as sectarian warfare fades.

The number of civilians killed each month since March has increased slowly but steadily, raising questions about whether the U.S. government can stick to its plan to end combat operations in August ahead of a full withdrawal in 2011.

Suicide bombers and gunmen on Sunday stormed the heavily-guarded central bank in Baghdad, killing 15 people and wounding dozens. They did not gain access to the vaults where piles of Iraqi dinars and U.S. dollars are stored, but fought an hour-and-a-half-long gunbattle with Iraqi security forces.
With no strong Prime Minister that's acceptable to the people as leader and the US needing to leave on time or risk destabilizing everything, I don't envy anyone trying to wrangle this country back into shape.  The reality is however that we're not going to be able to leave, and that most likely we never will.

We're trapped for a long, long time.

The Kroog Versus The Confidence Game

Paul Krugman takes a look at the austerity hysteria from another angle:  if we did cut spending in order to satisfy the bond markets, would the bond markets even notice?
Consider, if you will, the comparative cases of Ireland and Spain.

Both countries appeared, on the surface, to be fiscally responsible until the crisis hit, with balanced budgets and relatively low debt. Both discovered that this was an illusion: revenues were buoyed by immense real estate bubbles, and when the bubbles burst they plunged into deficit — and found themselves potentially on the hook for large bank losses.

The countries responded differently, however. Ireland quickly embraced harsh austerity; Spain has had to be dragged into austerity, and still faces major political unrest.

So, how’s it going? This article is typical of what you read: it describes the Irish as doing what has to be done, while the Spaniards dither. And it has good things to say about how the Irish response is working:
Much bitterness but also stoicism; markets impressed by Irish resolve to bite the austerity bullet.
Well, I guess that’s right — if by “markets impressed” you mean a CDS spread of 226 basis points, compared with 206 points for Spain; not to mention a 10-year bond rate of 5.11 percent, compared with 4.46 percent for Spain.

So, I’m glad to hear that Ireland’s stoic acceptance of austerity is reassuring markets; it must be true, because that’s what everyone says. Because if I didn’t know that, I might look at the data and conclude that markets actually have less confidence in Ireland than they do in Spain, and that austerity in the face of a deeply depressed economy doesn’t actually reassure markets at all.
Surprise surprise:  Ireland's austerity actually has it in worse shape than Spain is right now and investors find the Emerald Isle an even tougher sell to invest in, because austerity means crippled growth.  The reason we've been told austerity has to happen is because the markets will demand it.  The evidence points to the opposite of that.

The reality is that austerity is political, especially in the US.  The goal of creating a permanent underclass in the US means we have to cut spending on social and jobs programs so that the rich can recover from the recession quickly and the rest of us can...well, it really doesn't matter to them, does it?  Never waste a crisis, as the saying goes.  Always time to make the inequality curve that much worse through destroying the social compact.  England is heading there next with David Cameron in charge.

Krugman's coming around, slowly.  But he's coming around.


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