Friday, October 8, 2010

Last Call

Need to singlehandedly destroy the tech sector?  Yeah, there's an app for that.

The iPad’s destructive reach seems to be extending further and faster. Apple’s tablet is taking off at a breakneck rate. Analysts now predict up to 40 million will be sold in 2011. With personal incomes and spending stagnant, it’s looking like a zero-sum game in consumer electronics. Forget PCs and netbooks. The iPad will eat into camera and GPS device sales too.

How well the touch-screen gadget is really doing will become clear later this month when Apple reports its next set of quarterly results. But there are growing signs the company is selling way more of them than anyone outside Apple, or maybe even among Steve Jobs’ inner circle, had been anticipating. It’s clear the mini notebook computer market is being throttled. Netbook unit sales had been growing at more than 30 percent annually before the iPad was unleashed. Sales are now shrinking, according to market research firm NPD Group.

The iPad is something I thought nobody would care about 12 months ago, especially given the economy.  Now it's pretty much decimating the gadget market by itself.  Hell, even I have one.

With so many iPads flying off the shelves, however, it’s more than likely they’re not just being purchased by the well-heeled and the geeks. Instead, a wider array of consumers is probably spending its money on iPads instead of other gadgets. Sanford Bernstein analysts have noticed, for example, that digital camera sales started falling sharply around the time of the iPad introduction. Those of LCD televisions actually went negative.

It’s possible it’s just the weak economy cutting into these other gadget sales. But Apple’s iPad is increasingly looking like the real culprit.

Is there any wonder why the only tech stock really kicking ass right now is Apple?  Stock's up 50% in the last 12 months, from 190 to 285.  Rest of the market?  Not so much.  We've gone from junk bonds to M&A to dot come to housing to...iPads.

Somewhere, Hayek is laughing his ass off.

Epic Hey Yo Chris, About That Freakin' Tunnel Thing Win

For New Jersey's Republican Gov. Chris Christie, something funny happened on the way to cancel that tunnel project to Manhattan...something called One Pissed Off Senator Frank Lautenberg laying down how things are going to be, Tony Soprano-like.

Today, U.S. Sen. Frank Lautenberg (D-NJ) reacted to New Jersey Governor Chris Christie’s reversal of yesterday’s decision to kill the ARC tunnel project and news that he will restart negotiations for an additional two weeks. The reversal comes following a meeting between Governor Christie and U.S. Department of Transportation Secretary Ray LaHood.

“I expect the Governor to now work in good faith with the federal government to move this project forward,” Lautenberg said. “Governor Christie needs to put politics aside and work on behalf of New Jersey commuters to get this tunnel back on track.”

The ARC Tunnel is slated to receive $3 billion in federal funds, the largest federal contribution to a mass transit project in the history of the nation, and $3 billion from the Port Authority of New York and New Jersey. Senator Lautenberg yesterday made it clear that the $3 billion in federal funding slated for the ARC project cannot be redirected to New Jersey projects and will go to other states if the project is halted.

“The Secretary was clear with Governor Christie: if this tunnel doesn't get built, the three billion dollars will go to other states. We can’t allow that to happen,” Lautenberg said.

Emphasis Sen. Lautenberg's own press release.  "Now, you want to complete this tunnel, Chris.  It's in your own best interests, capiche?  Have a nice freakin' day."  And wouldn't you know it?  Now Chris is "reconsidering his options" after that little visit from Frank and Transportation Secretary Ray LaHood.

Infrastructure plus Jersey Style for the EPIC WIN.

Turn On The Lights, Watch The Roaches Scatter, Part 14

Ezra Klein talks to Janet Tavakoli, one of the people who called this housing disaster years ago, and Tavakoli's words are nothing short of stunning in their candor.

This is the biggest fraud in the history of the capital markets. And it’s not something that happened last week. It happened when these loans were originated, in some cases years ago. Loans have representations and warranties that have to be met. In the past, you had a certain period of time, 60 to 90 days, where you sort through these loans and, if they’re bad, you kick them back. If the documentation wasn’t correct, you’d kick it back. If you found the incomes of the buyers had been overstated, or the houses had been appraised at twice their worth, you’d kick it back. But that didn’t happen here. And it turned out there were loan files that were missing required documentation. Part of putting the deal together is that the securitization professional, and in this case that’s banks like Goldman Sachs and JP Morgan, has to watch for this stuff. It’s called perfecting the security, and it’s not optional. 

What people forget about this issue is not that the banks just lost the paperwork over the last two years to cut corners and signed out these foreclosure titles en masse.  It's the much bigger fact that these mortgage mill banks have been defrauding the American taxpayer and their own investors for years.  These banks did everything they possibly could to get one thing and one thing only:  close the sale.

The entire point of turning these mortgages into financial cole slaw was volume and quantity, not quality, of the mortgage loan.  The banks just needed the raw financial biomass of mortgages to chop up and throw into the pot and say "it's all AAA ingredients here!" like putting formaldehyde into bathtub rotgut or sawdust into dog food.  It just has to look like a mortgage to work.

As long as nobody questioned the millions of individual mortgages, everything would have been fine.  The problem is those individual mortgages, especially the subprime adjustable ones, went into default.  A lot of them.  Enough of them in fact for people to notice "Hey, these securitized mortgages are all total filler and no steak."  So people started taking a closer look, especially people like state Attorneys General who had Governors asking them "Hey, why are our state property tax revenues going to hell?"

The thing to remember is that the banks have been doing since since well before the crisis hit.  Institutionalized fraud, the excuse of "well everyone in the industry is looking the other way" was the entire point.  If everyone was guilty of fraud, there's no way to single out one bank or one loan officer or one mortgage broker for it.  Besides, the entire industry was getting rich, and had the money to donate to Washington to keep the gravy train rolling.

No different than an episode of Boardwalk Empire, only writ large across the entire country.

So here we are, everyone suddenly realizing that the entire last seven years of economic activity was in fact faked.  it wasn't just foreclosure paperwork.  It wasn't just securitization.  It wasn't just the housing bubble.  it was the entire economy, predicated on pretend money.  So yes, it's all come crashing down right now.  The pain we refused to take by going after Wall Street two years ago is now threatening to wipe out the American dream for pretty much all of us.

EK: Given that our financial system is still fragile, isn’t that a disaster for the economy? Will credit freeze again?

JT: I disagree. In order to make the financial system healthy, we need to recognize the extent of our losses and begin facing the fraud. Then the market will be trustworthy again and people will start to participate.

EK: It sounds almost like you’re saying we still need to go through the end of our financial crisis.

JT: Yes, but I wouldn’t say crisis. This can be done with a resolution trust corporation, the way we cleaned up the S&Ls. The system got back on its feet faster because we grappled with the problems. The shareholders would be wiped out and the debt holders would have to take a discount on their debt and they’d get a debt-for-equity swap. Instead we poured TARP money into a pit and meanwhile the banks are paying huge bonuses to some people who should be made accountable for fraud. The financial crisis was a product of our irrational reaction, which protected crony capitalism rather than capitalism. In capitalism, the shareholders who took the risk would be wiped out and the debt holders would take a discount but banking would go on.

There's a way out if we have the courage to take it.   Another TARP bailout here won't cut it.  The monster is just too big.

[UPDATE] And now Sen. Harry Reid has called for a foreclosure halt by all the major mortgage lenders in all 50 states.  I expect we will see compliance on this within the next few days.

We Don't Need No Stinking Consequences

For anyone rolling their eyes at the Glibertarian/Wingnut response to yesterday's judicial decision that yes, the health care reform insurance mandate is legal and clearly covered by the Commerce Clause, Maha skillfully puts a number of arguments to bed here.

One of the reasons the mandate is important is that it reduces the amount we’ll all pay for our insurance. This will be especially critical when insurers will no longer be able to refuse to insure people with pre-existing conditions. Obviously, the young and healthy would have no incentive to purchase insurance until they need it. Then the cost of insurance will be a great deal more burdensome to everyone else.

The “uncompensated care” link leads to an argument that the costs to the health care system of people who can’t pay for their care are relatively small. I don’t buy it, but I don’t have time to check the research now. The point is, again, that we’re not just talking about the costs of taking care of the uninsured.

As Jonathan Cohn wrote, “it’s not possible to regulate the insurance industry, in a way that would make coverage available to all people, without compelling every person to get coverage.”

The final argument from the Right is that all decisions to purchase or not purchase anything has an impact on the cost of that thing; lots of people buying toasters enables lowering the price of toasters. I assume that would be true, since manufacturing and shipping probably would have lower per-unit costs. That works for books, anyway, which is the one thing I know about manufacturing.

However, having to pay a couple of bucks more to purchase a toaster is not a burden to everyone in the same way a large, uninsured population is a burden to everyone — including libertarians, although they’re too blinkered by their beloved ideology to see it. 

Meanwhile, the Wingers are trying to convince everyone they can that this decision is the darkest day in American history and that the Constitution is now dead, which is a level of wailing and teeth gnashing that should be saved for the inevitable Supreme Court decision.

A Real Lou-Lou Of A Debut

If you haven't been tuning in to CNBC's newest show after Maddow, The Last Word with Lawrence O'Donnell, you're missing some good stuff so far.  Lou Dobbs got his ass handed to him by Nation reporter Isabel McDonald, whose story on Dobbs -- a man who built a cable TV news career on bashing undocumented immigrants -- showed Dobbs himself hired undocumented immigrants as workers.

Dobbs and McDonald faced off on Last Word last night, and it was a hell of a thing.  Glenn Davis at Mediaite:

O’Donnell strictly mediated – this was Dobbs vs. McDonald. And the first thing to jump out about this segment: it was long, taking up half the program. McDonald thought Dobbs was “holding [him]self to a completely different standard than the standards that [he's] held all other American employers to,” while Dobbs thought her piece was “a hit job.” At the center of the debate was, seemingly, semantics: Dobbs seemed to be out to prove that he never “directly, knowingly employed any undocumented worker” (and MacDonald admitted she didn’t have evidence as such), while The Nation’s point wasn’t so much that Dobbs even indirectly employing undocumented workers would make him a hypocrite. (It’s even right in the title.)
In fact, as O’Donnell himself said to Dobbs at one point:
“Well, what they’re calling you on this case is a hypocrite if you did that. You do, what I’m agreeing to is you absolutely didn’t commit a crime if you did that. I’m agreeing to that. But when you take to the pulpit and preach what you preached you got to be, you got to understand why people think this is a hypocritical outcome.”
This gets at the heart of it: Dobbs at one point said, “If you want to hold me to…a different and higher standard, you go right ahead.” And that “different and higher standard” is the price of making illegal immigration a pet cause for so long. Dobbs also mentioned during the interview his ultimate goal is a “rational, effective, humane immigration policy.” That’s a tall order, and after The Nation’s piece – “hit job” or not – the pressure is on for him to contribute significant ideas toward just that.

Video here.  Not sure how long O'Donnell can keep up the fireworks at this level, but so far whoever's booking his show deserves a raise.  Worth staying up for after Rachel, if only to see O'Donnell take on everyone from Levi Johnston to Michael Steele...folks Olbermann and Maddow wouldn't be able to get as easily.

Jonesing For The Exit

As expected, President Obama's National Security Adviser, Gen. Jim Jones, is leaving the White House.

Gen. James Jones, President Barack Obama's national security adviser, is stepping down and will be replaced by his top deputy Tom Donilon, two senior administration officials told The Associated Press on Friday.

Obama will announce the change in a Rose Garden ceremony on Friday with both men. Jones' resignation will take effect in two weeks.

The move, though expected, is the latest high-profile departure among Obama's leadership team. Chief of staff Rahm Emanuel left just last week, and the president is expected to see more change at the top as Obama's tenure nears the two-year mark and the grinding pace of the White House takes a toll.

Jones, who retired from active duty in February 2007 after more than 40 years of uniformed service, had planned all along to leave the national security adviser's post within two years, said one official. The officials spoke on condition of anonymity because the president had not yet announced the decisions.

Again, this was widely expected, although right before the election seems a bit odd...then again...Rahmbo.

Jacking Up Rand

Jack Conway continues to pound on Rand Paul for his statement that what Medicare needs is a $2,000 deductible, and Paul doesn't really have a defense for this one.

Polls have tightened significantly in the last three weeks and instead of being a cakewalk for Paul, Conway has made real headway by going after Paul's own statements.

Believe me when I say here in Kentucky this ad is straight poison for Rand Paul.

The Conway ad that started the fight focused on a speech Paul made in 2009 to a conservative group in Lexington in which he said, “The real answer to Medicare would be a $2,000 deductible.”

Paul responded last week by calling the ad a “lie,” and on Tuesday he began airing an ad that says, “Jack Conway is deliberately distorting Rand Paul’s views. Rand Paul has never supported higher Medicare deductibles for seniors.”

But in a meeting with The Courier-Journal’s editorial board, Conway said Paul should be careful with his denials. Conway said his campaign had produced a video of Paul calling for an increase in the Medicare deductible — the amount a recipient would have to pay out of pocket — seven times in recent years.

Conway needs to ride this one hard and hold on tight. Rand Paul is in trouble here and he knows it.

Birtherism With A Monocle

Dinesh D'Souza takes his "Obama is a Kenyan Anti-Colonialist" dog whistle garbage all the way to the Washington Post opinion pages, where he displays his unique misunderstanding of the fact surrounding President Obama and his father.

But who was Barack Obama Sr., and what did he want? Do the views of the senior Obama help clarify what the junior Obama is doing in the Oval Office? Let's begin with President Obama, who routinely castigates investment banks and large corporations, accusing them of greed and exploitation. Obama's policies have established the heavy hand of government control over Wall Street and the health-care, auto and energy industries.

President Obama also regularly flays the rich, whom he accuses of not paying their "fair share." This seems odd, given that the top 10 percent of earners pay about 70 percent of all income taxes. Yet the president would like this group to pay more.

Some have described the president as being a conventional liberal or even a socialist. But liberals and socialists are typically focused on poverty and social equality; Obama rarely addresses these issues, and when he does so, it is without passion. Pretty much the only time Obama raises his voice is when he is expressing antagonism toward the big, bad corporations and toward those earning more than $250,000 a year. I believe the most compelling explanation of Obama's actions is that he is, just like his father, an anti-colonialist.

Anti-colonialism is the idea that the rich countries got rich by looting the poor countries, and that within the rich countries, plutocratic and corporate elites continue to exploit ordinary citizens.

I know about anti-colonialism because I grew up in India in the decades after that country gained its independence from Britain. And Barack Obama Sr. became an anti-colonialist as a consequence of growing up in Kenya during that country's struggle for independence from European rule. Obama Sr. also became an economist and embraced a form of socialism that fit in well with his anti-colonialism. All of this is relevant and helpful in understanding his son's policies. 

Never mind the fact that Obama's father left him leaving him to be raised by his mother and her family, making me wonder just exactly how much influence his father's economic positions from 1965 had on Obama the younger.

Never mind that the banks and corporations that Obama unfairly "castigates" in D'Souza's view cost this country and its taxpayers trillions of dollars in bailouts and are on the edge of collapse again while they are literally stealing houses from Americans.  Why would any thinking American, D'Souza argues, believe that American corporations are greedy exploiters of the populace?

Never mind we're still fighting two wars where we, as a rich, powerful country, are doing everything we can to exploit the poorer and weaker Iraq and Afghanistan in order to secure their oil and minerals.  Ask the families of the Iraqis and Afghans we have killed how they feel about American "colonialism" and how we've exploited them, or the millions of Americans who want to stop the war for humanitarian, moral, social, economic, and yes, even religious and spiritual reasons.

But no, the only possible explanation is that Obama is anti-colonialist, anti-American, and not even an American, influenced by his Kenyan roots...and where have we heard that argument before?

This argument is constructed to do one thing:  to sell the notion of President Obama as The Other to the Washington Post crowd, scaring the crap out of the Beltway elite.  It's Birtherism with a monocle, and D'Souza should be ashamed of himself if he was capable of it.

The real transgressor here is of course the Washington Post itself.  This crap wasn't true when it was excreted last month at Newt Gingrich's outfit at Human Events, and it's not any better congealed into book format either.

Why the WaPo feels it needs to sell Regnery books I couldn't tell you, save that our "liberal media" certainly doesn't seem that liberal to me.

Turn On The Lights, Watch The Roaches Scatter, Part 13

Ohio Secretary of State Jennifer Brunner and author Karl Denniger explain the Foreclosure Freakout on Dylan Ratigan's show.

Dylan explains more here.

[UPDATE] CNBC is reporting that Bank of America has voluntarily stopped foreclosures in all 50 states. It's all coming unglued here, folks. Expect the other banks to follow suit and then of course when their stocks crater, it'll be TARP 2: Economic Boogaloo.

Count on it.

[UPDATE 2]  CNBC also reporting PNC Bank is halting foreclosures in 23 states.   Dominos are falling if the regional banks are getting involved.


Loss of 95,000 jobs for September, most of those losses temp jobs, private sector employment up 64k.  Unemployment rate still 9.6%.  Not good news, but not as bad as it could be.

Things aren't improving any however.

[UPDATE] As Ezra points out, private sector up 64k but the massive public sector losses weren't just census jobs, there were 76,000 local government workers who lost their jobs this month too.

Tunnel Of No Love

New Jersey Republican Gov. Chris Christie has pulled the plug on the Hudson River Tunnel project, saying the state can't afford its share of the project that would have doubled train traffic from New Jersey to Manhattan, despite the fact that the Feds were putting up $3 billion to help cover the costs.

The governor, a Republican, said he decided to withdraw his support for the project on Thursday after hearing from state transportation officials that the project would cost at least $2.5 billion more than its original price of $8.7 billion. He said that New Jersey would have been responsible for the overrun and that he could not put the taxpayers of the state “on what would be a never-ending hook.”

In scrapping the project, Mr. Christie is forfeiting the $3 billion from the federal government and jeopardizing as much from the Port Authority of New York and New Jersey. The state may also have to repay the federal government for its share of the $600 million that has already been spent on the tunnel.

The tunnel, which would have stretched under the Hudson from North Bergen, N.J., to a new station deep below 34th Street in Manhattan, was intended to double the number of trains that could enter the city from the west each day. The project’s planners said the additional trains would alleviate congestion on local roads, reduce pollution, help the growth of the region’s economy and raise property values for suburban homeowners.

The tunnel was also supposed to provide jobs for 6,000 construction workers just as some other big transit infrastructure projects in the city, like the Second Avenue subway, were winding down.

Instead, the contractors hired to dig the tunnel will soon start laying off workers.

Takes infrastructure money to make infrastructure money, but not for New Jersey.  After all, Republicans hate would actually prove government can have a beneficial purpose by investing in the state, and we can't have that.  The Kroog is pissed.

The story seems to be that Christie wants to divert the funds to road and bridge repair; but in so doing he would (a) lose huge matching funds from the Port Authority and the Feds (b) delay indefinitely a project NJ needs desperately ASAP. He could avoid these consequences by raising gasoline taxes. But no, taxes must never be raised, no matter what the tradeoffs.

And it’s a social bad too: now is very much the time when we should be ramping up infrastructure spending, not cutting it.


And yes, if anyone should mention it, I am a resident of New Jersey who often visits Manhattan, and therefore has a personal stake in this project. You got a problem with that?

Hey, Kroog's willing to pay more for infrastructure improvements, but Christie's more than willing to pass up the federal and NY funds and scrap 6,000 construction jobs and up to 38,000 more transit, support, and maintenance jobs that went with it.  Oh I know, these are jobs Obama lost, right?

That's what's in store for all of us under more Republican rule:  stagnation and decay...and job losses.


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