Thursday, October 7, 2010

Last Call

The first substantive decision in the many, many cases against health care reform goes to the Obama administration.

A federal judge on Thursday upheld the authority of the federal government to require everyone to have health insurance, dealing a setback to groups seeking to block the new national health care plan.

The ruling came in a lawsuit filed in Michigan by a Christian legal group and four people who claimed lawmakers exceeded their power under the Constitution's commerce clause, which authorizes Congress to regulate trade.

But Judge George Caram Steeh in Detroit said the mandate to get insurance by 2014 and the financial penalty for skipping coverage are legal. He said Congress was trying to lower the overall cost of insurance by requiring participation.

"Without the minimum coverage provision, there would be an incentive for some individuals to wait to purchase health insurance until they needed care, knowing that insurance would be available at all times," the judge said.

"As a result, the most costly individuals would be in the insurance system and the least costly would be outside it," Steeh said. "In turn, this would aggravate current problems with cost-shifting and lead to even higher premiums."

There's no doubt that this will eventually end up before the Supreme Court.  By then it may be 2014.  Of course, all bets are off if the Republicans get control of Congress and simply refuse to budget any money for the programs, and even now they can muster 41 votes in the Senate to shut down the Government if they so choose.

War's far from over, but the first battle has been won.

The Harmony of Cognitive Dissonance

Matt Osborne has the Tea Party schtick down cold, especially Rand Paul.

Rand Paul would like to raise medicare reimbursement rates. Half of his patients are Medicare recipients, after all, and physicians (he says) should be "allowed to make a comfortable living." Which is what Paul actually means when promising to apply "real free market principles" to fix our broken health care system. To wit:
If you argue that healthcare providers alone are not expected to pay for everyone's health care, then whom? The taxpayers? But who are the taxpayers? They are your neighbors. If you maintain a right to healthcare or housing, you must argue that your belief, which you call a "right," is sufficient to send armed tax collectors to your neighbors house to expropriate that "right."
See, taxing Americans for health care is wrong until it benefits Rand Paul. Since Kentucky Medicaid probably doesn't pay for adults to visit his office, it's no wonder he calls the program "intergenerational warfare." The senior citizens patronizing his libertarian opthalmology practice don't benefit from a program that keeps 18 million American children healthy, either; no wonder we've seen grandma telling Obama to keep his hands off her Medicare.

After all, Medicaid is for the deservedly poor (i.e., Wal-Mart employees). So what if they're children? They're not your grandchildren, why should you pay taxes to keep American children alive? As religious conservatives march into the tea party, a new cognitive dissonance forms with the decidedly non-Christian ethos of resentment. The "right to life," it seems, ends at birth; and this has nothing to do with race except that it does

And that's what makes the Tea Party work:  convincing downtrodden, screwed over Americans that everyone else except them is the problem, and that when social spending is cut, entitlements will be taken away from everybody except them because after all, they're the ones that got Tea Party Candidate X elected, right?  So there's no way they are going to touch their entitlements...just the elimination "waste and fraud" that constitutes "them" getting entitlements, them being (insert scapegoat here), from African-Americans to Latinos to gays to Muslims to whomever.

And of course the Republicans and Big Business are glad to see people willing to twist the knife into the backs of their fellow Americans, because the Tea Party wants theirs, dammit...and they will sacrifice anyone who gets in their way.

And yeah, that means everyone else but themselves.

Turn On The Lights, Watch The Roaches Scatter, Part 12

That's how fast this story's moving folks, I have to write multiple posts on the issue a day.  Congressional Dems are now calling for that national moratorium on foreclosures as predicted. On the House Dem side, the battle is being led by Alan Grayson, who launched another broadside against the banks today.  His letter to the Obama economic team:

"So far, banks are claiming that the many forged documents uncovered by courts and attorneys represent a simple 'technical problem' with foreclosure processes.  This is not true.  What is happening is fraud to cover up fraud... The banks didn't keep good records, and there is good reason to believe in many if not virtually all cases during this period, failed to transfer the notes, which is the borrower IOUs in accordance with the requirements of their own pooling and servicing agreements. As a result, the notes may be put out of eligibility for the trust under New York law, which governs these securitizations. Potential cures for the note may, according to certain legal experts, be contrary to IRS rules governing REMICs. As a result, loan servicers and trusts simply lack standing to foreclose. The remedy has been foreclosure fraud, including the widespread fabrication of documents.  There are now trillions of dollars of securitizations of these loans in the hands of investors. The trusts holding these loans are in a legal gray area, as the mortgage titles were never officially transferred to the trusts... The liability here for the major banks is potentially enormous, and can lead to a systemic risk." 

Grayson pulls no punches here.   Notice he summons the magical attention-getting words "systemic risk".  He knows how to speak banker, does our Alan.  But look at what he says elsewhere:  "forged documents",  "fraud to cover up fraud", "lack standing to foreclose", and my favorite, "trillions of dollars of securitizations" which should make any long-time reader here reach for your hard liquor of choice.

In a very real sense we're right back in virtually the same boat we were in October 2008.  In a lot of ways it's worse, too.  Grayson knows this, and wants Helicopter Ben and Timmy to know he knows this, and is anybody still wondering why Larry Summers and Christina Romer put in their notice?

On the Senate side, the state hardest-hit by foreclosures in the last three years is finally weighing in:  Sen. Harry Reid of Nevada.  He too is calling for a foreclosure moratorium, and given Nevada's massive foreclosure rate that leads the nation, the fact he's Senate majority leader, and his own tight race for re-election, Reid had no choice in the matter.

"It is only fair to Nevada home owners, consequently, that you also suspend foreclosures in our state until you complete a review of your processes that ensures a home owner’s loan documents are being adequately analyzed to properly determine the best, individualized loss-mitigation solution. It is my belief and hope that once such a system is in place, more Nevadans will avoid foreclosure and remain in their homes. This is the goal of the Obama Administration’s various Making Home Affordable programs, and should be the goal of a servicer acting as a fiduciary to investors."

The number of AG's and members of Congress asking for state and now a national foreclosure moratorium is reaching critical mass.  Democrats see an issue here that they have no choice but to pursue.  Notice that Republicans in Congress -- even the ones in hard-hit states like Florida and Nevada -- have been virtually silent on this.  I don't expect that to continue for much longer.

I expect that national moratorium by next week at the latest.  meanwhile, Jim Cramer says the housing market is better than you think, which is how I know we are truly screwed.

Big Dog's Bluegrass Bash

As Jack Conway creeps closer to Rand Paul, Bill Clinton is set to stump for Kentucky Dems on Monday.

Clinton’s close friend, Lexington businessman Jerry Lundergan, confirmed that Clinton is scheduled to visit the state on Monday. Lundergan said the location of Clinton’s visit has not yet been finalized.

Clinton’s appearance in the state would be designed to help offset an enthusiasm gap between Democrats and Republicans. Polls have consistently shown that Republicans say they’re more likely to vote in the Nov. 2 election than Democrats.

Until recently, polls have shown Conway, the state’s attorney general, generally trailing tea party favorite and Republican Rand Paul, an eye surgeon who is making his first bid for public office.

As of mid-September, Democrats outnumber Republicans in the state 1,627,673 to 1,064,962. A total of 192,798 Kentuckians were registered as independents or with other parties.

A recent Wall Street Journal/NBC poll showed Clinton as the most popular politician in the country.

Big Dog still has a lot of pull around here, despite my love/hate political relationship grousing about the man.   If he can keep Rand Paul out of the Senate, then more power to him.  We need every boost we can get and if that means Bill, then so be it.

Orchestrate Illusions, Super-Pareto

You remember our old friend Pareto, yes?  A Pareto distribution is any economy where the wealthiest 20% of the population controls 80% of the wealth.

The United States of America has now gone Super-Pareto.

Researchers from Harvard and Duke Universities surveyed a group of Americans on the subject of income inequality and found people’s preferred model of wealth distribution was that of the Swedes—after being given the choice of sticking with what the United States has to offer these days.
When shown the wealth distribution of the U.S. and Sweden’s (without labels), 92% of respondents chose the Swedish one.
The research also revealed that Americans “vastly underestimated the actual level of wealth inequality in the United States,” believing that the wealthiest 20% of the population currently controls about 59% of the wealth, when the actual number is closer to 84%.
When asked how much of the country’s wealth the richest 20% should hold, respondents said no more than 32%.

You read that right.  The latest numbers on wealth inequality shows that the top 20% of the country now controls 84% of the nation's wealth.  That full study is here, more on the inequality numbers here.

Those surveyed were equally wide of the mark when it comes to the poor. They estimated that the poorest 20 percent have about 3 percent of the wealth. The actual amount is 0.1 percent. The poorest 40 percent of the population holds just 0.3 percent of the nation's wealth; the poorest 60 percent, about 5 percent.

Mr. King would be shocked to learn that the wealthiest 1 percent of Americans today control about a quarter of the nation's riches. That's a 66 percent greater share than they controlled at the close of the Gilded Age - the age of Cornelius Vanderbilt, John D. Rockefeller and the so-called Robber Barons.

The US is a banana republic.  Meanwhile, Republicans complain that Obama is a redistributionist and the "American free market" has done a bang-up job of distributing all this country's wealth to the richest 20%.

Now Republicans want to continue this with even more tax cuts for the wealthy and for corporations.  Nice, huh.

[UPDATESteven D has more on this, including this gobsmacker of a chart:

As you can see, group after group had guessed that the wealthiest 20% of Americans had 55-60% of the wealth in this country and the bottom 40% had about 10% total. They also thought the middle and upper middle class of the country had some 30% of the wealth.

The reality, that the upper class have 84% of the wealth and 180 million or so of us are left fighting over just 4% of the wealth is the kind of thing you'd expect to find in Zimbabwe or Saudi Arabia or Venezuela.

Obama's Got A Pocket (Veto) Full Of Sunshine

ABC's Jake Tapper is reporting that President Obama will pocket veto the foreclosure bill I talked about earlier today that would allow the banks to get away with the foreclosure disaster of their own creation.

ABC News has learned that President Obama will not sign – or “pocket veto” -- a bill that sailed through Congress that consumer groups warn would make it easier for banks to foreclose on homeowners.

The purpose of the “Interstate Recognition of Notarizations (IRON) Act -- written by Rep. Robert Aderholt, R-Al., and currently sitting on the president’s proverbial desk -- is to streamline the recognition of notarizations across state lines.  Aderholt said in a statement that the legislation “will help businesses around the nation by eliminating the confusion which arises when states refuse to acknowledge the integrity of documents notarized out-of-state. This issue continues to be a problem for businesses and individuals who engage in business across state lines.”

The bill passed the House in April and sailed through the Senate without debate at the end of September, as Congress adjourned for the Fall recess.

But consumer groups and some state officials noted that the legislation could have the unintended consequence of exacerbating an ugly trend of unfair home foreclosures. By requiring the acceptance of out-of-state notarizations, the bill could make it more difficult for homeowners to challenge improper foreclosure attempts.

On Thursday morning, White House officials held meetings to review the legislation, with the president ultimately deciding that however well-intentioned the bill may have been, it might create too much potential for harm to homeowners at a time of economic tough times, and in the wake of a major controversy over waves of questionable foreclosures by Bank of America, JPMorgan and other big lenders.

Not that Obama had much of a choice.  Signing this bill would have been a total disaster across the board for him.  By kicking it back to Congress in the lame duck session he can effectively force a mulligan on the legislation.  He can't really attack Republicans on this because it was a unanimous consent maneuver on the part of the Senate, so he's just washing his hands of it and slapping "return to sender" on it.

That still leaves however the foreclosure mess smoking on the White House's doorstep.  Better than stepping in it, I guess.

More Food Stamps For Thought

Continuing the discussion on SNAP from yesterday and food assistance programs in general, Newt Gingrich is embarrassing himself calling the Dems "the party of food stamps" and the Republicans "the party of paychecks".

With a month to go before the election, Gingrich brought his branding effort to Minnesota on Wednesday. He raised money for Republican gubernatorial nominee Tom Emmer and the state GOP during a private fundraiser.

He told reporters later that Republicans can campaign as the party of opportunity.

"Most Americans would like to get a paycheck," Gingrich said. "Most Americans would not like to be forced to have food stamps handed out by liberal Democrats."

Gingrich is considering a run for president in 2012 and is about to head off on a 12-city "Jobs Here, Jobs Now" tour with stops in South Carolina, Georgia, Iowa and Wisconsin, among other places.

Gingrich this week distributed a memo to Republican hopefuls saying they should use the final month to stress tax and spending cuts as a way to spur job growth while attacking Democratic policies as detrimental that effort.

Yay!  Tax and spending cuts to stimulate job growth!  Let's talk about job growth under Republicans since 1980, shall we?

So, if you total up the jobs created/lost since 1980, Democrats and Republicans are about even.  The thing is under Clinton we created those jobs in just eight years, while under an additional 12 years after Reagan of Bush and son, just 4 million jobs were created.  Also, you can see the job loss early in Obama's term was from Bush's policies, but even being generous to the Republicans, it took them 20 years to create the jobs that Democrats did in 10.

So honestly and objectively, which party would you want in charge of job creation?  Both sides created 18 million net jobs, the Dems did it twice as fast however.

Newt says the answer should be the Republicans.  Really?

Math doesn't exactly bear that out.  Want to get Americans off SNAP?  We need jobs.  The policies of Bush 43?  Not exactly heavy on the job creation.

Additionally, that article I commented on yesterday from the NY Times and this map showing numbers from last year, which I would expect would be higher now, shows that yes, food stamp usage is up substantially.  But it's the rural eastern counties along Appalachia where the highest percentage of country residents are on assistance.  Some 49% of residents in Owsley County, Kentucky were on SNAP as of June 2009.  I'm sure that number is above 50% now.  Another dozen plus counties have numbers above 25%, and given Kentucky's low African-American population, the overwhelming majority of total residents on SNAP are white.

That's a far cry from the counties of Northern Kentucky near Cincy, where Boone, Kenton, and Campbell Counties have SNAP rates of 7%, 12%, and 11%.  And yes, there are a higher percentage of blacks on that but still the total population is low.  Even in urban Hamilton County, Ohio where Cincinnati proper is, the rate is only 12%.

Grocers in these rural Kentucky counties absolutely count on the business from SNAP.  These dollars go right into community stores.

"I think with the economy the way it is today and the high unemployment rate, with the increasing cost of college and people getting an education to get better jobs, I really think we're going to see an increase in the program," said Jennifer Adkins of the Health and Family Services.

Adkins says the numbers in eastern Kentucky haven't jumped significantly, even though the total number of households using SNAP, or Supplemental Nutritional Assistance Program, have increased by more than ten percent.

"It has a big impact. The first ten days of the month, we'll do probably one hundred and eighty to two hundred and thirty transactions a day, on the cards. It's a big part of our business," said Mike Ritchie of Slone's Market in Jackson.

So yes, not only is it effective direct stimulus, but it benefits both people on the program and local merchants.  Times are tough and this program is one of the more effective and targeted ones, especially since transactions can be monitored electronically.

Why Newtie wants to attack rural, white Kentucky voters, I don't know.  Of course these people want paychecks, but after ten years of seeing their jobs vanish and Bush doing nothing for them, the GOP wants to cut their lifeline because these folks are somehow lazy parasites?

Try telling that to the people of Owsley County, Newt.

Will The Real Johnny Volcano Please Stand Up?

Alas, John Sidney McCain, we hardly knew ye.  Literally.

The prevailing question about John McCain this year is: What happened? What happened to that other John McCain, the refreshingly unpredictable figure who stood apart from his colleagues and seemed to promise something better than politics as usual? The question may miss the point. It’s quite possible that nothing at all has changed about John McCain, a ruthless and self-centered survivor who endured five and a half years in captivity in North Vietnam, and who once told Torie Clarke that his favorite animal was the rat, because it is cunning and eats well. It’s possible to see McCain’s entire career as the story of a man who has lived in the moment, who has never stood for any overriding philosophy in any consistent way, and who has been willing to do all that it takes to get whatever it is he wants. He himself said, in the thick of his battle with Hayworth, “I’ve always done whatever’s necessary to win.” Maybe the rest of us just misunderstood.

McCain has always lived for the fight, and he has defined himself most clearly in opposition to an enemy, whether that enemy was the rule-bound leadership of the United States Naval Academy, his North Vietnamese captors, the hometown Arizona press corps that never much liked him, his Republican congressional colleagues, the Reverend Jerry Falwell, George W. Bush, Donald Rumsfeld, Barack Obama, or J. D. Hayworth. He has always been more of an existential politician than a consequential one, in the sense that his influence has derived not from steady, unswerving pursuit of philosophical goals or legislative achievements but from the series of unpredictable—and sometimes spectacular—fights he has chosen to pick. As his daughter Meghan recently wrote, he has always been more of a craps guy than a strategic poker player. He has never been a party leader, like his old friend Bob Dole, of Kansas, or a wise elder, like his colleague Dick Lugar, of Indiana, or a Republican moderate, like Susan Collins and Olympia Snowe, of Maine. He flies solo, first, last, and always, and his paramount cause has always been his own. That is the bracing reality of John McCain. It is the tragedy, too.

I don't think Vanity Fair's Todd Purdum is going to be invited to play on Johnny's tire swing anytime soon.  But the fact is somebody in the Village is finally saying how they miss the old Maverick McCain.  I'm betting that I agree with the view that McCain is one of the most skilled political opportunists of our age, he'll flip-flop-flip-flop again and turn back into Good Ol' Reaching Across The Aisle McCain, especially since the Democratic margin in the Senate come November will be much narrower.

He'll slide right back into being the guy in the middle that the Village knows and loves now that he's gotten his primary opponent out of the way and is favored heavily to win.  Another six years of this guy throwing barbecues and pool parties is just what the Village wants, you know.

And hey, this article gives him cover (sort of).  Now the mercurial McCain can go back to being the old man from 2008, although it seems Purdum and Vanity Fair have gotten a pound of flesh or so.

Such are the trials and tribulations of the Gospel according to St. John The Centrist as he puts the 2008 campaign behind him.

If It's Thursday...

New jobless claims down to 455k (yet another upward revision of last week's numbers) and continuing claims down to 4.46 million, down 48k.

450k new jobless claims a week is right about the break even number on jobs created for the month these days.  We need to get significantly below that, south of 300k.  Even then, growth models mean we're short hundreds of thousands of jobs each month.

I don't see than happening of course.  Not anytime soon.

Turn On The Lights, Watch The Roaches Scatter, Part 11

OK.  Now things are getting really, really interesting.  Turns out that before Congress left town, the Senate immediately fast-tracked a bill that the House had passed some time ago, but was sitting in committee.  The Senate put the bill on the floor and passed it by unanimous consent with no debate and no warning.  The bill, the "Interstate Recognition of Notarizations Act," was designed to be one of those little things that make things easier, in this case recognizing notarized documents between states. 

You know, notarized documents like, say, foreclosure paperwork.

See where this is going?

Some House and Senate staffers said the Senate committee had let the bills languish because of concerns that they would interfere with individual state's rights to regulate notarizations.

Senate staffers familiar with the judiciary committee's actions said the latest one passed by the House seemed destined for the same fate. But shortly before the Senate's recess, Judiciary Committee Chairman Patrick Leahy pressed to have the bill rushed through the special procedure, after Leahy "constituents" called him and pressed for passage.

The staffers said they didn't know who these constituents were or if anyone representing the mortgage industry or other interests had pressed for the bill to go through.

These staffers said that, in an unusual display of bipartisanship, Senator Jeff Sessions, the committee's senior Republican, also helped to engineer the Senate's unanimous consent for the bill.

Neither Leahy's nor Session's offices responded to requests for comment Wednesday.

So again, what would this law do?   I'll let Tyler take it from here.

In summary, the bill requires all federal and state courts to recognize notarizations made in other states. That's the theoretical definition: the practical one - the legislation, if enacted, could protect bank and mortgage processors from liability for false or improperly prepared documents. In other words, with one simple signature Obama has the capacity to prevent tens of billions in damages to banks from legal fees, MBS deficiency claims, unwound sales, and to formally make what started this whole mess: Court Fraud perpetrated by banks, a legal act, and to finally trample over the constitution. Will Obama do it?

Potentially - the banking lobby certainly has enough power over him and his superiors, the members of the FOMC. On the other hand, the populist revolt that will surely follow the enactment of such a law will certainly end any dreams of a second term, and potentially of a completed first one. The drama is now on: will Obama openly side on behalf of the bankers (without a "blame the republicans" fall back this time) or of the foreclosure "victims" (granted, the bulk of whom are deadbeat homeowners who should never have owned a home to begin with). We doubt a decision will be reached before the midterms, although quite a bit now hangs in the balance. 

This law would in effect correct the interstate part of the foreclosure fraud mess and leave the banks free and clear.  The lower standard on notarizations means the states would have to accept the robo-signed foreclosure documents as legitimate.  It would eliminate liability from the banks.

They would get away with it.  And all Obama would have to do is sign the bill into law to make it happen.  It's already on his desk.

We'll see how this goes.

Gold Rush, Part 17

Gold tripped $1,360 this morning and continues its parabolic rise as everyone now expects QE2 just after election day.

Gold rose to a third successive record high on Thursday, putting it on track for its strongest weekly performance in six months, as expectations for the Federal Reserve to prop up the economy undermined the dollar.

The Fed is widely expected to resume quantitative easing — in which the central bank would buy government bonds for example and pump extra cash into the financial system to keep interest rates low — which has pushed the dollar down 7 percent against a basket of currencies in the last month.

Gold, which usually benefits from dollar weakness due to its inverse relation with the U.S. currency, has gained nearly 10 percent in the same period.

A 10% gain in a commodity like gold is one of those economic equivalents of a herd of velociraptors parachuting into a day-care filled with tasty three year old kids.  Very shortly there will be a colossal amount of blood, screaming, and things getting eaten.

She Moves In Moose-terious Ways

Moves downward in the polls, that is.  CBS's latest numbers on Sarah Palin find that she has about the same popularity as Bush did at the end of his second term:  22% favorability.


Palin is viewed favorably by just 22 percent of Americans, according to the poll - including less than half (44 percent) of Republicans. Twenty-one percent of independents and 6 percent of Democrats view her favorably.

Forty-eight percent of Americans have an unfavorable view of Palin. That includes 73 percent of Democrats, 44 percent of independents and 22 percent of Republicans.

Twenty-nine percent said they are undecided or not sure how they feel about Palin, including about one in three Republicans and independents.

Palin's numbers are far better among Americans who have a favorable view of the Tea Party movement. Sixty-one percent of that group views her favorably, while just 14 percent view her unfavorably. One in four aren't sure.

Best part? That same 22% number is the percentage of Americans who have a favorable view of the Tea Party overall.  She's about as popular outside the Tea Party as moose scat in the punchbowl.  So please, by all means, run in 2012, Sarah.


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