Friday, July 16, 2010

Last Call

Macroeconomics 101:  Money is only an acceptable means of legal tender if everyone has confidence in it.  When people collectively stop believing money is worth anything, they start obtaining resources they know are worthwhile.  Case in point:  Greeks are starting to hoard olive oil.
In an unexpected spin-off from the Eurozone contagion hitting Mediterranean countries, Greek producers uncertain about the future of the debt-laden state are hoarding stocks of olive oil rather than selling them on the open market.

As a result, and because of growing demand for olive oil worldwide, prices have risen 20 per cent in a year, according to Britain's biggest olive oil brand, Filippo Berio. Its managing director, Walter Zanre, warned there would be further increases in the cost of the oil, widely used by Britons for frying and as a salad dressing. Greece is the world's third-largest olive oil producer, after Spain and Italy. "Greek growers consider stocks of olive oil in tanks to be a safer bet than cash in a Greek bank," Mr Zanre told The Grocer magazine.

"Greece is a source of high quality extra virgin oil and this is putting additional pressure on prices. At some point the oil will have to be sold but in the short term it could cause a spike in prices."

A spokeswoman for Filippo Berio's distributors, RH Amar, said: "The economic climate in Spain is unstable and if the growers decide they can afford to use their oil as cash in the bank, prices are likely to spike as a result."
There's a cheery thought.  Olive oil being a safer bet than Greek banks.  How quaint, you think.  And then you read that eight more U.S. banks were closed today, bringing the total number of failed banks this year to 96, and putting us on pace for another 80 or so before the end of the year.  And that's if things don't get worse, which I'm now positive they will.

Just some food for thought with your olive oil.

Bust a Cap In It, Part 2

BP well cap tests aren't going as well as we'd hoped.
Pressure readings have been less than ideal from the new cap shutting oil into BP's busted well, but the crude will remain locked in while engineers look for evidence of whether there is an undiscovered leak, the federal pointman for the disaster said Friday.

Retired Coast Guard Adm. Thad Allen said on a conference call that pressure readings from the cap have not reached the level that would show there are no new leaks in the well.
Allen said BP's test of the cap, which started 24 hours previously by shutting three valves and stopping the flow of oil into the water, would continue for at least 6 hours. It was scheduled to last up to 48 hours.
He said the developments were "generally good news" but needed close monitoring.
Allen said there are two possible reasons being debated by scientists on the project for why the pressure hasn't risen as high as desired: The reservoir that is the source of the oil could be depleting after a three-month spill, or there could be an undiscovered leak somewhere down in the well.
"We don't know because we don't know the exact condition of the well bore," Allen said.
He said the test will go ahead for another 6-hour period before being reassessed to see if BP needs to reopen the cap and go back to piping some of the oil to ships on the surface.
If it were reopened, Allen said, "There's no doubt there would be some discharge into the environment."
In other words, unless you believe that the oil under the ocean is depleted to the point where the pressure's gone (and yet had enough pressure to spew tens of thousands of gallons of oil, 24 hours a day for 87 days) there's another leak out there somewhere in the pipeline.  Odds are very good now that by capping this wellhead, that pressure is now be transferred to the leak point or points, and it's in the process of ripping them open wider too, meaning all the oil being capped here is coming out, we just can't see it because it's under a mile of ocean somewhere.

Frankly, this means that there's a very good chance that this cap is a failure, and that the only solutions now are that relief well working or waiting until enough oil really has spilled out to lower the pressure to the point where we can plug it.  Option one may take weeks to months and several tries, option two may take much, much longer.

Either way, this isn't over.  Not by a long shot.

Well That Explains A Lot

Atrios catches this anecdote from Ryan Lizza's piece on Larry Summers, Christina Romer and the financial crisis in the New Yorker:
Romer had run simulations of the effects of stimulus packages of varying sizes: six hundred billion dollars, eight hundred billion dollars, and $1.2 trillion. The best estimate for the output gap was some two trillion dollars over 2009 and 2010. Because of the multiplier effect, filling that gap didn’t require two trillion dollars of government spending, but Romer’s analysis, deeply informed by her work on the Depression, suggested that the package should probably be more than $1.2 trillion. The memo to Obama, however, detailed only two packages: a five-hundred-and-fifty-billion-dollar stimulus and an eight-hundred-and-ninety-billion-dollar stimulus. Summers did not include Romer’s $1.2-trillion projection. The memo argued that the stimulus should not be used to fill the entire output gap; rather, it was “an insurance package against catastrophic failure.” At the meeting, according to one participant, “there was no serious discussion to going above a trillion dollars.”
Wow, good thing Summers was right and drew the line at $890 billion (and then the stimulus got cut down to $787 billion by Arlen Specter and friends) and that was enough money otherwise we might have seen unemployment over eight percent or something really unimaginably bad like nine percent or something.

Oh wait.


[UPDATE]  The Kroog finds this interview with outgoing House Dem and Appropriations Committee Chair David Obey:
The problem for Obama, he wasn’t as lucky as Roosevelt, because when Obama took over we were still in the middle of a free fall. So his Treasury people came in and his other economic people came in and said "Hey, we need a package of $1.4 trillion." We started sending suggestions down to OMB waiting for a call back. After two and a half weeks, we started getting feedback. We put together a package that by then the target had been trimmed to $1.2 trillion. And then [White House Chief of Staff] Rahm Emanuel said to me, "Geez, do you really think we can afford to come in with a package that big, isn’t it going to scare people?" I said, "Rahm, you will need that shock value so that people understand just how serious this problem is." They wanted to hold it to less than $1 trillion. Then [Pennsylvania Senator Arlen] Specter and the two crown princesses from Maine [Sens. Olympia Snowe and Susan Collins] took it down to less than $800 billion. Spread over two and a half years, that’s a hell of a lot of money, but spread over two and a half years in an economy this large, it doesn’t have a lot of fiscal power.
So $1.4 trillion, which is what we needed,  got cut nearly in half.  The result?  Boy, we could sure use that other $700 billion or so.  Too bad it went to the banks instead.

What's In The Box? Nothing!

So what's the Republican solution to all the massive problems that we have?  What smart governance will they implement to deal with the economy, jobs, the oil geyser's effects in the Gulf, and all the other domestic problems we have right now?  John "Orange Julius" Boehner has a game plan for the American people.
"I think having a moratorium on new federal regulations is a great idea it sends a wonderful signal to the private sector that they're going to have some breathing room."
Errrmm...say what there, OJ?
"I think there's probably a way to do this with an exemption for emergency regulations that may be needed for some particular agency or another. But if the American people knew there was going to be a moratorium in effect for a year that the federal government wasn't going to issue thousands more regulations, it would give them some breathing room."
So faced with all the problems that America is facing right now, the Orange Julius Solution offered for the 2010 election do nothing.  Stick your head in the sand.  Don't even try to regulate ANYTHING.  Let the free market just run around naked for a year with guns and booze and hump everybody who walks by.  For an entire year.  This is your solution.  Repeal the laws you don't like and keep the government from issuing regulations for a yeah while we're heading over the waterfall.  The best part is Obama's still there so you can blame him when this doesn't work.  Brilliant.

Abdicate responsibility through applied nihilism.  I even have the perfect campaign commercial for this.

Yes voters, you can keep the Democratic red snapper or you can go for the Republican solution in the box. What's in the box? NOTHING!  STUPID!  YOU SO STUPID!

Why, what did you think the Republican solution would be?  Vote for us, we're going to do nothing!  There's your choice in 2010.  And hey, firebag on Obama some more while you're at it, because America's pretty damn close to choosing the box over the most productive red snapper this country has seen in decades.

But Obama hasn't fixed everything yet!  Let's put the Nothing in charge again.  Won't that be better?

Another Milepost On The Road To Oblivion

Zero Hedge reminds us that every time ECRI Leading Economic Index has hit -10% or worse, we have had a recession.  Today's weekly reading?  -9.8%. Tyler Durden:
The ECRI Leading Economic Index just dropped to a fresh reading of 120.6 (flat from a previously revised 121.5 as the Columbia profs scramble to create at least a neutral inflection point): this is now a -9.8 drop, and based on empirical evidence presented previously by David Rosenberg, and also confirming all the macro economic data seen in the past two months, virtually assures that the US economy is now fully in a double dip recession scenario.
It's no longer a question of if we'll be facing the double-dip scenario, but when the Power That Be will admit we're now in a long-term depression and have been since December 2007, and that we need to take drastic action to get out.  The alarm bells at the fire station are now ringing, and the firemen are being told to conserve water because the town reservoir is low and to start praying for the next hard rain to put out the blaze.

Meanwhile, here's even worse news from Ezra Klein:

That's job growth per month on the X axis, and how many months that level of job growth would take to get us back to pre-recession levels on the Y axis. Notice that adding new jobs at a rate of 200,000 a month would take us 150 months -- or 12.5 years -- to get back to normalcy. So far, only April has seen more than 200,000 in non-census jobs growth -- and even then, just barely.
Beautiful.  Lost decade, here the hell we come.  Taking all that together, it's looking like very soon we're going to be in a situation where we're going to need ol' Helicopter Ben's printing press to try to save the economy.  The jobs aren't coming back for a long long time...if ever.

I'd say this is the new normal, but something tells me we're in for a hell of a lot worse.

In Which Zandar Answers Your Burning Questions

Peggy Noonan asks:
On the Internet, you read the fierce posts of political and ideological writers and wonder, Why do so many young bloggers sound like hyenas laughing in the dark? Maybe it’s because there’s no old hand at the next desk to turn and say, “Son, being an enraged, profane, unmoderated, unmediated, hit-loving, trash-talking rage monkey is no way to go through life.”
I don't know.  Why do so many old crochety newspaper columnists write inane drivel that sounds like it came from your average high school civics teacher after half-a-dozen margaritas at lunch?  Maybe it's because there's nobody brutally honest at the desk to turn and say "Will you just shut the hell up already?  Complaining about bloggers is sooooooo 2004.  My god, how are you still relevant?"

Maybe fierce and ideological is better than the same old centrist Village bullshit we get every week.  Keeeeeerist.

Suck It Up And Roll It Out

Eugene Robinson has some damn good advice for the Dems in 2010:
After rising from the ashes of 2008 by uniting in opposition to anything Obama and the Democrats tried to do, Republicans are defined more by the word "no" than by anything else. They have a rallying cry but not a program. Are the populist, Tea Party types really going to accept the fat-cat economic philosophy of the GOP congressional leadership? Is "drill, baby, drill" a viable energy strategy after the BP disaster? Is Sen. Lindsey Graham the voice of the party on Afghanistan, or is Michael Steele?

That's a lot for Democrats to work with. I happen to believe that Obama and his party have established a remarkable record of achievement. Many Americans do not agree, however, and the thing for Democrats to do is not to sulk and feel mis-understood but to go out and change people's minds.

Democrats need to get over themselves. And then they need to get busy. 
And this goes back directly to the White House messaging shop.  Where is it?  Who's in charge of it?  Where are the commercials and the pressers and the "We're #1" giant foam fingers?  Yes, the Bush spin machine was a bit overbearing ("Mission Accomplished", anyone?) but they did not lack enthusiasm in playing the game.  The White house seems content to let stand the merits of their own accomplishments, which is great if you're writing a doctoral thesis for Poli Sci but not so great if you're trying to not lose the House to the likes of Michele Bachmann and Virginia Foxx.

Look at Harry Reid.  (Yes, I'm using Harry Reid as a positive example.)  He's pounded Sharron Angle on "Here's what I have done for Nevada and the country, and here is what Sharron Angle would have done if she were Senator."  As a result he's up seven points now in five weeks.  We need that on a national scale, on a massive level.

Here's what we have accomplished.  Here's what the Republicans would have done instead.  Do you want to go back to that?  Hit them on that, time and time and time and time again.  Make them believe what you did is good and is helping, because right now the only message people are hearing is that of the loudest fringe in the Republican minority calling Obama a much so that the label is sticking with a majority of Americans.

Dems, you're losing the message war.  Go out there and fix that.

Playing The Paranoia Angle, Part 6

The two competing main narratives of the 2010 election season are at play in Nevada, where if the Republicans are correct and voters now hate the Democrats and want to punish them severely for opposing the will of the people, then Senate Majority Leader Harry Reid should be in dire trouble.  Likewise, if the Democrats are right and the extreme views of the GOP have only become even more extreme due to the frothing fringe taking over as the Tea Party, then Sharron Angle would be the one in trouble.

The newest Las Vegas Journal/Mason-Dixon poll?  Reid up by seven points.
The Las Vegas Review-Journal/Mason-Dixon poll shows that, if the election was held today, Reid would defeat Angle 44-37 percent. Ten percent were undecided and five percent did not choose a candidate.

Reid's lead comes after a week in which he slammed the Tea Party-backed Angle in a new television ad. The ad alleges that Angle would have opted to kill jobs in Las Vegas by killing a large construction project and says she is too extreme.

In previous Mason-Dixon polls, Reid and Angle have been statistically tied, making it the first time the Democrat took the lead over the Republican. Here is more from the LVRJ:

He's had five perfect weeks," said Brad Coker of Mason-Dixon Polling & Research, which conducted the survey. "The race has been all about her, and he's been doing a good job of pounding her."

Yet Coker said it's too soon to write off Angle. More than one-quarter of the nonpartisan swing voters who probably will decide the Nov. 2 election haven't jumped to the still-unpopular Reid but instead are undecided or in the "other" or "none of these candidates" columns, the poll showed.

"I wouldn't write her obituary just yet," Coker said, noting it's a long way to November. "Three and a half months is a lifetime, and at some point she's going to be able to start fighting back."

Reid and Angle were just about neck-and-neck in second quarter fundraising, but Reid spent $3 million in television ads during that span, part of a flurry of spening against his opponent. 
Still, if Democrats are doomed and the GOP is taking back the House and the Senate somehow, Sharron Angle has to beat Harry Reid.  If Reid can survive, then you have to figure that other Democrats will weather the storm too.  Right now there's no bigger electoral target to topple than Reid for the Republicans in 2010.  If the Tea Party can't beat Harry Reid, they're in trouble.

This Week In Village Idiocy

Silly me, and here I thought the kerfluffle over the recess appointment of Dr. Donald Berwick as head of Medicare/Medicaid was pretty much dead.  Apparently the folks over at WSJ spun the Wheel Of Obama Derangement for story ideas again and this Daniel Henninger column is the result.
There is no need to rehearse the analogies in literature and social thought that Dr. Berwick's ideas summon. That the Obama White House would try to push this past public scrutiny with a recess appointment says more about Barack Obama than it does Dr. Berwick.

Vilifying Dr. Berwick alone for his views is in a way beside the point. Within Mr. Obama's circle they all think like this. Defeat Dr. Berwick, and they will send up 50 more who would pursue the same goals.

If the American people want the world Dr. Berwick wishes to give them, that's their choice. But they must be given that choice with full, televised confirmation hearings.

Barack Obama, Donald Berwick and the rest may fancy themselves philosopher kings who know what we need without the need to inform or persuade us first. That's not how it works here. That is Sen. Baucus's point.

It should be clear why Berwick is bigger than Kagan. We need a large public debate over these views, over what Mr. Obama has said his health plan would and would not do. We need to find out if every Democrat in Congress and every Democrat writing newspaper columns and blogs agrees with Dr. Berwick about clinical and individual autonomy and about leaders with plans.

Then we need to build an election around whether we want to go down the road Dr. Berwick has planned for us, or start dismantling the one that President Obama paved through Congress on a partisan vote.
Because we didn't have any debate whatsoever over health care reform, and none of it was televised, and it all happened over one weekend at Jack Kevorkian's house where the entire health care reform bill was fashioned by Obama, Bill Ayers, and Nancy Pelosi playing Mad Libs while hopped up on Nyquil.

This is the best they've got?  A bunch of out-of-context quotes and some indignation?  Ezra Klein clears all this up:
Let's get the obvious out of the way: If not for health-care reform, Don Berwick's nomination to head the Center for Medicaid and Medicare Services would not be so controversial. As Thomas Scully, who headed CMS under George W. Bush, says: "He's universally regarded and a thoughtful guy who is not partisan. I think it's more about ... the health-care bill. You could nominate Gandhi to be head of CMS and that would be controversial right now."

But conservatives are making a serious mistake by forcing the administration to rely on a recess appointment for Berwick. Ultimately, what weakens Berwick weakens them, as Berwick, whether they know it or not, is one of the best friends they could have in the administration. That's because insofar as Berwick is a radical, he's a radical in favor of a patient-centered health-care system -- a position that has traditionally been associated with conservatives, not liberals.
Berwick is all about increasing quality of care, and strongly supports a "Patient's Bill of Rights" approach to health care.  Bringing that approach to Medicare and Medicaid seems like a good idea to me, especially given the increase in the numbers of people who will be on Medicare and Medicaid over the next twenty years.

Republicans meanwhile don't have any solutions to this crisis other than to yell and scream and to have Village Idiots like Henninger here call Berwick the greatest threat to American lives since Hitler's army of anthrax-spewing zombie cyborg velociraptors crossed the Rubicon, or whatever.  Repeal!  Repeal!

And then what, guys?  What then?

Well, the Republicans haven't quite gotten to that part yet, you know, working out the long, difficult solutions and making the tough choices involved in actual governance.  But you should vote for them anyway in November because they are really good at yelling and incompetence!

The Newest Socialist: Uncle Alan

How long will it take for Republicans to turn on Alan Greenspan over his latest pronouncement?  Steve Benen:
One of the week's more relevant political debates has been over tax policy -- specifically the Republican argument that Bush's tax cuts for the wealthy have to be extended. Pressed on how those cuts would be paid for, the Republican leadership has insisted, evidence be damned, that tax cuts don't need to be offset by anything.

Alan Greenspan is rarely helpful in debates like these, which is why it came as something of a pleasant surprise to see him reject the entire Republican line of thinking. (via Atrios)
Former Federal Reserve Chairman Alan Greenspan, whose endorsement of George W. Bush's 2001 tax cuts helped persuade Congress to pass them, said lawmakers should allow the cuts to expire at the end of the year.
"They should follow the law and let them lapse," Greenspan said in an interview on Bloomberg Television's "Conversations with Judy Woodruff," citing a need for the tax revenue to reduce the federal budget deficit.
It's worth noting that when it comes to tax cuts, Greenspan went even further than most Democrats want to go, arguing that all of Bush's tax cuts have to expire on schedule, including those for the middle class.

The former Fed chairman said he wants to see tax rates return to '90s levels in order to curtail the deficit.

I guess he hasn't heard the news about tax cuts paying for themselves?
I guess not.  Didn't stop him from suggesting we needed those tax cuts and that they would pay for themselves when Bush talked Congress into enacting them, in fact Greenspan's testimony was repeatedly cited by Republicans and Democrats and the President and the Village that they tax cuts would pay for themselves, which they most certainly did not.

All of a sudden, Greenspan wants all the tax cuts to expire.

Funny how that works.

StupidiNews Focus: Manchinian Candidate Edition

Who will West Virginia Dem Gov. Joe Manchin choose to fill Robert Byrd's seat?    The names I keep hearing thrown around are:

Anne Barth, the Democrat who ran against Republican Rep. Shelly Moore Capito in WV-2 in 2008 and lost, Barth was Robert Byrd's political director for a time.

Carte Goodwin,  Manchin's former chief legal counsel, who has his own plans for Congress in the future.

Former WV Dem Gov. Gaston Caperton, currently President of the College Board.

Of the three, Goodwin seems to be the best choice for not interfering with Manchin's planned run later this year in the special Election for Byrd's seat.  Since Manchin seems to be going around the South Pole and back to get Byrd's seat but not to appoint himself to it, the smart money seems to be on Goodwin.

Barth would probably be the most progressive choice, while Caperton would be the elder statesman of the selections.  Other names are:

Nick Casey, the former head of the West Virgina Democratic Party, but he's currently up for a federal judgeship.

Bob Wise, the Dem Governor who preceded Manchin, and

Larry Puccio, current head of the WV Democratic Party since Casey stepped down to pursue the judgeship.

My money's on Goodwin, followed by Barth.

The Washington Independent's Jimm Phillips has more.


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