Wednesday, July 13, 2011

Last Call

Just in case we were still unclear on the answer to the whole "So is Wall Street going to let this default happen?" question:

The United States may lose its top-notch credit rating in the next few weeks if lawmakers fail to increase the country's debt ceiling, forcing the government to miss debt payments, Moody's Investors Service warned Wednesday.

Moody's was the first among the big-three rating agencies to place the United States' Aaa rating on review for a possible downgrade, which means a negative rating action is impending.

In a statement, Moody's said it sees a "rising possibility that the statutory debt limit will not be raised on a timely basis, leading to a default on U.S. Treasury debt obligations." 

The move wasn't completely unexpected: The credit-rating agency had warned in early June that a ratings review was likely in mid-July if there wasn't "meaningful progress" in discussions to raise the debt limit. 

And now Wall Street is pissed.   Expect a deal sooner rather than later, as long as Obama continues to be smart enough to let the GOP save face.

So Very Not Miller Time

The Minnesota shutdown's latest casualty?  Miller Lite.

Miller Lite beer fans better stock up while they can.

The MillerCoors brewing company will soon be forced to pull 39 brands of beers from every restaurant, bar and liquor store in the state of Minnesota.

It's all because the company wasn't able to renew their brand label registration far enough in advance before the state's government shut down.

"What that means is they're not able to either distribute or sell their product in this state," said Doug Neville, spokesperson for the Minnesota Department of Public Safety.

Neville said the bare-bones staff of the state Alcohol and Gambling Enforcement department have reached out to MillerCoors for a removal plan, so he said it will likely be a day or two before the company begins pulling the product.

Granted, Minnesota may later thank the beer gods for getting rid of Miller Lite and Coors for a while, but something tells me this is exactly the six-pack straw that broke the shutdown's back.   We'll see.

Obama Cashes In

Meanwhile, despite all the right-wing noise that Jewish donors are "abandoning Obama in droves" and that "Wall Street hates the President" and are now backing the GOP, President Obama's fundraising efforts in the second quarter of this year took in $86 million: more than double the entire GOP haul for April, May, and June.

President Obama's vast campaign operation raked in $86 million for his re-election and for the Democratic party during the last three months, breaking previous records with a total far greater than that posted by his Republican opponents for  the 2012 election.

Initially, the Obama campaign had set a goal of raising $60 million. Republican candidates combined are expected to raise less than $35 million this quarter.

The Obama amount points to the advantages of incumbency in fundraising, and to the staggering cost of the coming election, which this year will feature a new, powerful role for independent groups that can raise unlimited sums. This year, those groups could out-raise and outspend the parties and the candidates.

The dollar total for Obama this quarter, announced by his campaign manager in a video message to supporters this morning, reflects $47 million raised for the Obama for America presidential campaign and an additional $38 million raised jointly with the Democratic National Committee.

That is an important caveat to watch.  Advocacy groups, lobbyists, industry groups and PACs can give unlimited funds this time around, and that's where the real money will be raised and spent in 2012.  But to still outraise the entire GOP field by more than 2 to 1 is just staggering. 

Obama still has the fundraising chops, that's for sure.

Election Special

Some election results for you yesterday:  in California's special election for Democrat Jane Harman's seat, Democrat Janice Hahn easily defeated Republican Craig Huey by 10 points.

Hahn, a Los Angeles City Councilwoman and member of a political dynasty, earned about 55% of the vote to Huey's 45% when all ballots were counted late Tuesday.

She succeeds Democrat Jane Harman, who resigned to run a Washington think tank, in California's 36th District.

For a special election whose outcome would have little impact on the partisan balance in the U.S. House, the run-off race between Hahn and Huey at times turned nasty.

A conservative super PAC ran an ad depicting Hahn as a stripper that also used racist imagery and language. Hahn called Huey, a businessman who publishes Christian voter guides, "extreme" for his views on issues such as abortion. Huey tried to portray Hahn as a career politician, and tapped Tea Party support in the campaign.

After the vote, Hahn vowed to press for more jobs and aid for veterans. "When they come home, we have to do a better job making sure they get their health benefits. They deserve that and we owe it to them," she's quoted as saying in The Daily Breeze.

And in Wisconsin's recall primary,  Democrats beat back six Republican primary challengers in order to secure Democratic opponents for the six GOP state senators facing a recall challenge.

Party-backed candidates won in each of six state Senate districts in Tuesday's vote, essentially a Democratic primary but with an odd twist that took place ahead of a formal August recall vote.

The candidates had to beat back unusual primary challenges from six Republicans who ran as Democrats in order to give the targeted Republican incumbents more time to campaign, raise money and maintain their party's hold on the state Senate.

Unofficial results posted on websites run by election officials in the counties where the six races were run showed the Democratic Party-backed candidates won all six races, and Democrats declared victory.

Running tallies late on Tuesday showed double-digit Democratic leads in all but one race, where the Democratic candidate led by a smaller but still substantial margin.

Things all went the Dems' way last night, so of course it "doesn't mean anything" as far as 2012 is concerned, according the right.

Google Plus = Huge Potential

I've just recently joined Google+ and I'm really enjoying it so far.  There is a load of potential, but I don't know how they plan to seriously compete with Facebook in the long run.  It's still bare bones right now, but I like what I see.  Like many, I was afraid this was a recycled effort to bring back Buzz, but for once Google applied feedback and put out a fully developed launch.  The most impressive thing is how they allow you to sort friends into circles.  You can control who sees what, but most importantly you can finally filter your feed quickly by clicking on the circle.  Now best friends, coworkers, family and clubs can be sorted easily.  I only have a few friends who have been able to get in (the waiting list is long) but I love the idea of going right to the category I'm interested in.  The way it is set up is both intuitive and truly useful.

My main concerns is with privacy.  Like Facebook, Google has been plagued with privacy complaints and issues.  However, the basic setup is straightforward and easy to organize, which capitalizes on one of Google's greatest strengths while highlighting a famed Facebook weakness.  Another massive strength is the integration.  Google may not control social networking but the Gmail and YouTube users will find a handy way to share without any real effort on their part.  I have moved my website, music, writing and social activities to Google.  This is the perfect way to bring it together, and that is something Facebook doesn't offer.  The fact that my Android phone can now be an extension of my Google activity is yet another perk that Facebook can offer but not quite match as effectively.

The +1 seems to be the equivalent of the Facebook "like" but without enough activity it is difficult to tell how this will work.  You can broadcast by webcam for different circles, and show up in their feed.  I prefer this to the Skype potential, but without more friends to try it with, I can't be sure.  With the YouTube integration I can see how the ten person limit for a hangout will give way to channels and webcasts and camblogs.

I will definitely update as more becomes available.  In the meantime, are any of you on there?  If so, what do you think? I'm not saying Facebook is licked by any means, but I think they may have some real competition here.  In the long run I won't maintain two accounts, but I can't say which will win... my investment in Facebook or the complete integration Google offers.  The real test for success will be when the public floods in and gives it a test drive.

My friend Sir Mud has written a handy how-to on getting started.  It's perfect for an intro to the basic features and how you may get the most benefit out of them.

Why Bon Feels Mighty Sorry For A Cop

Lately the police have annoyed me more than impressed, but even I have to feel sorry for this guy.  Can you imagine performing a routine traffic stop only to realize you have "The" Rodney King on your hands?

Los Angeles (CNN) -- Rodney King, whose videotaped beating by police ultimately led to the 1992 Los Angeles riots, was arrested on suspicion of driving under the influence on Tuesday, police said.
King was behind the wheel of a 1994 Mitsubishi when he was pulled over in Moreno Valley, in Southern California's Riverside County, the city's police department reported. Officers saw King -- who has acknowledged a longstanding drinking problem -- commit "several traffic violations," a police statement said.

No Dealing On The Debt Ceiling, Part 33

A big clue to the endgame on the debt limit hostage scenario comes from today's Wall Street Journal editorial board article selling Mitch McConnell's "escape hatch" to conservatives.

The hotter precincts of the blogosphere were calling this a sellout yesterday, though they might want to think before they shout. The debt ceiling is going to be increased one way or another, and the only question has been what if anything Republicans could get in return. If Mr. Obama insists on a tax increase, and Republicans won't vote for one, then what's the alternative to Mr. McConnell's maneuver?

Republicans who say they can use the debt limit to force Democrats to agree to a balanced budget amendment are dreaming. Such an amendment won't get the two-thirds vote to pass the Senate, but it would give every Democrat running for re-election next year a chance to vote for it and claim to be a fiscal conservative. 

Now this is clearly the Wall Street wing of the GOP telling the Tea Party wing to sit the hell down and shut the hell up.  Remember, the Tea Party position is that there's no valid reason to raise the debt ceiling at all.   The insistence here that it will be raised anyway, and the cynical admission that the Republicans were holding the country hostage in order to try to extort concessions out of President Obama and the Democrats, is not something that the Republicans would admit to unless they had lost the game.

We agree with those who say that Treasury Secretary Tim Geithner can cut other federal spending before he allows a technical default on U.S. debt. No doubt that is what he will do. We'd even support a showdown over technical default if we thought it might yield some major government reforms. But Mr. Obama clearly has no such intention.

Instead he and Mr. Geithner will gradually shut down government services, the more painful the better. The polls that now find that voters oppose a debt-limit increase will turn on a dime when Americans start learning that they won't get Social Security checks. Republicans will then run like they're fleeing the Pamplona bulls, and chaotic retreats are the ugliest kind. By then they might end up having to vote for a debt-limit increase and a tax increase.

The tea party/talk-radio expectations for what Republicans can accomplish over the debt-limit showdown have always been unrealistic. As former Senator Phil Gramm once told us, never take a hostage you're not prepared to shoot. Republicans aren't prepared to stop a debt-limit increase because the political costs are unbearable. Republicans might have played this game better, but the truth is that Mr. Obama has more cards to play

And this right here folks is a full-on white flag surrender.  I've long said that Wall Street would never let the Tea Party wreck their bond market ZIRP gravy train, and this is the clearest indication yet that the powers that be in Manhattan's towering edifices aren't about to let the teahadists crap the bed.

The Tea Party reaction to this is not pleasant.  Erick Erickson at Red State lost his marbles over McConnell's proposal.  Think tanks like the Heritage Foundation are screaming bloody murder.  But with conservatives like Jennifer Rubin at the Washington Post, Fred Barnes at the Weekly Standard, Andrew Stiles at the National Review, and John Podhoretz at Commentary Magazine all selling the McConnell Plan as the only way out of this mess, the Republican retreat is on.

Wall Street has had enough.  The Tea Party just got cut off at the knees.  And Obama?  Still looks like the smartest guy in the room.

Irish Eyes Are Crying, Part 12

Moody's has downgraded Ireland's credit status to junk and is warning the country will need another bailout due to the abject failure of austerity measures there (as I predicted long ago).

Moody's now rates Ireland Ba1, one notch below former financial market pariah Colombia and two notches below Brazil, and has kept a negative outlook, meaning further downgrades are likely in the next 12 to 18 months.

Ireland's rating is still one notch above Portugal and six above Greece. Both Standard & Poor's and Fitch Ratings have Ireland at BBB-plus, three notches above junk status, with S&P's outlook stable and Fitch on outlook negative meaning it does not expect a downgrade in the short-term.

Moody's move, however, will likely put pressure on the other ratings as the downgrade forces some investors to dump Irish bonds because they no longer enjoy a clean investment-grade sweep of the three major ratings agencies.

"It's amazing to me that Ireland was still investment grade," said Suvrat Prakash, interest rate strategist at BNP Paribas in New York.

"A lot of people assume that these rating agencies tend to move with a lag so there could be more downgrades to come.

Ireland's borrowing costs are already at levels once thought unimaginable, with five-year paper yielding over 15 percent on the secondary market and 10-year paper close to euro-era highs of 13.86 percent.

When Ireland agreed an 85 billion euros ($119 billion) bailout package with the European Union and the International Monetary Fund last November -- a move designed to soothe market fears -- its 10-year paper was yielding around 9.5 percent, a level viewed as shocking at the time.

Yeah, let's recap here.  Irish austerity has failed so badly that Irish debt is now 4 whole percentage points higher than the "crisis" level that austerity was supposed to solve.  The latest Greek bailout nonsense has wrecked Italy on Monday, and hit Ireland on Tuesday.

When you make massive government spending cuts in a recession, the recession gets worse.  Britain, Ireland, Greece, Spain...all are in serious trouble now.  And here in the States, Republicans want to cut trillions in spending.  The results will be an order of magnitude worse here should that happen.  Republicans are trying to destroy the economy for political gain.  We know what happens when you make massive government spending cuts in a weak economy.  Austerity hasn't helped any country since the crisis began in 2008.

But we're told if we don't cut spending, we'll go bankrupt or some idiocy.  We'll go right into a recession, if not a full blown depression, if we do.  As it is, ending the stimulus is about to do just that.

But that's okay with our masters.

The Netflix Conundrum, Part 3

Netflix is splitting its streaming and DVD services into two separate charges, meaning a substantial monthly price hike for a majority of customers...and they're not happy about it.

So the new plan is going to be $7.99 for unlimited streaming or unlimited DVDs every month, (or $11.99 for two DVDs rented at a time) every month. If subscribers want both, they're going to just have to pay double.

Some subscribers reacted angrily to the change in the blogs' comments section, while Ryan Lawler over at GigaOm noted that the change would help the company break out its financials more easily for investors to see how it really makes money.

Given that there's only a limited selection of movies available for streaming, it's not surprising that there's a continued demand for DVDs.

As many of the commenters noted on Netflix's blog, the change alters the value of the service -- which is convenience.

It was convenient to have an unlimited streaming account with the option of occasionally ordering a DVD for a title couldn't otherwise be accessed. 

Netflix I think is in real trouble here.  I know personally I like their streaming service a lot, but I'll definitely scale back on the DVDs now.  Maybe that's what they want, I don't know.  I do know that Google's on-demand movie rental service through YouTube and Apple's iMovies service are both looking like a better idea to me as a consumer now, especially for what Netflix will be charging for streaming and DVDs.

Or better, I just cancel the DVDs part, and Netflix loses revenue on me.  We'll see.


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