Friday, August 26, 2011

Last Call

With Qaddafi in no position to defend his broken regime, the most urgent matter in Libya is now ending the fighting among pockets of pro-Qaddafi forces and restoring order to the war-torn country as the attention shifts from Tripoli to the UN.

In New York, U.N. Secretary-General Ban Ki-moon said he had talked with heads of such organizations.

"All agreed that the crisis in Libya has entered a new and decisive phase," he said. "All agreed, as well, on the importance of a smooth transition."

That transition must be based on inclusiveness, reconciliation and national unity, he said.

"Fighting goes on in many parts of the country," Ban said. "There is an urgent need to put an end to the conflict and restore order and stability. All agreed that, if the Libyan authorities request, we should be prepared to help develop police capacity, bearing in mind that the country is awash with small arms."

The effect of the fighting has been profound, he said. "There are widespread shortages of fuel, food and medical supplies. Reports on the ground suggest that the water supply to the capital and surrounding region may be in danger, putting several million people or more at risk."

Friday's meeting participants agreed that the international community "must come together with an effective, well-coordinated program of action," Ban said.

Over the longer term, they emphasized early support for elections, transitional justice and policing, and help in social-economic recovery, rule of law and institution-building, Ban added.

He called Thursday's action by the Security Council in unfreezing $1.5 billion in Libyan assets "a welcome step" but said Friday's participants agreed that more must be done to ensure a stable transition of power.

So the question is who will be running Libya now?   Traditionally, temporary power-sharing arrangements among several disparate factions that are only united in order to overthrow a dictator rarely last, and almost always end bloodily.  The real question is ultimately, who will fill the power vacuum?

I honestly haven't heard much other than "the rebel council" so any information on who would be nice.

Brooks And Undone

I didn't think it would take very long, but just a month after ripping into the Tea Party over holding the country hostage on the debt ceiling, it looks like David Brooks has returned to form, chasing the shiny object known as Rick Perry's Inconsequential America.

The events of 2009 and 2010 also concentrated the Republican mind. It used to be that there were many themes in the Republican hymnal. Now there is only one: Government is too big, and it needs to be brought under control. It used to be there were many threats on the horizon. Now there is only one: the interlocking oligarchy of politicians, academics, journalists, consultants and financiers who live along the Acela corridor want to rip America from its traditional moorings.

Perry is benefiting from these shifts. He does best among the most conservative voters. He has a simple and fashionable message: I will bring government under control. His persona is perfectly tuned to offend people along the Acela corridor and to rally those who oppose those people. He does very well with the alternative-reality right — those who don’t believe in global warming, evolution or that Obama was born in the U.S.

So, yes, it is time to take Perry seriously as a Republican nominee and even as a potential president. Until a few weeks ago, Perry trailed Obama in general election matchups. But as Perry’s name recognition has increased, that has changed. He and Obama are neck and neck in a recent Gallup poll.

The question is, what are his rivals going to do about him? Right now, the Romney camp is passively hoping he implodes. That seems unlikely. The gaffes that create media frenzies are unlikely to bother Republican primary voters. Perry’s campaign message is so simple it doesn’t take Einstein to keep repeating it from now until Election Day. 

Boy, where to begin...really, the entire column boils down to David Brooks admitting that Rick Perry may very well end up our next President, and then completely ignoring the role of Villagers like himself in creating the Republican "alternative reality right" monster in the first place.  Even worse is that he freely admits the issue and then chooses to do nothing to correct it, he just accepts the fact that Rick Perry could get elected because he pisses liberals off and is from Texas, which is all that matters in the end.  It's simply a given in Bobo's world.

If there's such a thing as criminal lack of self-awareness, Brooks wins the title.

The Race From Here

Everything you need to know about Pew Research's pretty detailed 2012 poll comes from these two charts, first the party/demographic breakdown chart of President Obama's approval ratings:


Whites and people 50 and older really, really do not like President Obama, at about the same rate, mid 30's for, mid 50's against.   But a funny thing happens when you ask them to actually choose a Republican to vote for:


Mitt Romney has the smallest albatross around his neck with 42% of voters saying they'd never vote for the guy. The rest of the Republican field is basically completely unelectable. The best Rick Perry could hope for is 50% of the vote and change.

So no, right now I'm still not worried about President Obama losing.

Well Isn't That Ironic

A recent CNN article says that the divorce rate is higher in the Bible Belt than in the Northeast.  Thank goodness they kept gays from marrying, because that's the real threat to marriage, right?  It surely can't be that now that people have options about choosing their spouse that adults might change their minds.  Despite the fact that some groups want to keep the gay population hidden from view, that hasn't stopped successful marriages from shrinking in number.

I know.  Let's give the holy rollers what they want.  Let's outlaw divorce altogether, so people have to stay married until they die.  I wonder how many of the righteous would be happy with that.

Humming A Different Tune

Folk musician Vance Gilbert on Tuesday posted a lengthy open letter on his website about a recent experience on a flight from Boston to Washington, DC he claims left him “frightened” and “humilated."

His offense? Reading a book about planes.  From the 1940s.  He was motioned off the plane and questioned about his books referring to planes from WWI and WWII.  This was their reason for pulling him off the plane.  This isn't quite as bad a harassing mentally challenged passengers, but it's still an appalling sign that TSA doesn't get it.  And at this point, I feel safe calling that they never will.


Cuppa Joe Mama!

If you thought oil futures speculation was fun, check out the newest commodity hedge game:  coffee.

Grocery shoppers have seen whopping increases this year in the price of a can of ordinary coffee, whether it's a generic store brand or better-known ones such as Folgers and Maxwell House. Since spring, coffee has been selling at $7 to $8 a can in many parts of the country, or about twice the price of a gallon of gas.

The retail price of coffee in July was up 20.7 percent over the same month last year, according to the Bureau of Labor Statistics, which tracks changes in grocery store prices. Big coffee marketers have trimmed prices a bit for consumers in recent weeks, but the price of contracts for future delivery of coffee continues to rise unabated.

What gives?

Coffee-industry veterans blame financial speculators. They say they're taking advantage of global supply hiccups to drive up coffee prices by adding volatility to the trading of contracts for future delivery of coffee. It's not as debilitating to family income as high crude oil prices, but the phenomenon is the same.

"It's definitely not purely supply and demand; it's way too volatile," said Shawn Hamilton, the vice president of operations and a veteran coffee buyer for Java City in Sacramento, Calif., a national wholesaler of coffee and a midsize regional coffee roaster.

Any port in a storm, even coffee.  A 20% hike from this time last year?  I don't drink Java myself, but I'm thinking that level of price jacking has to come from our friends the speculators.  We'll see how this plays out, but if you thought America hated Wall Street's Big Casino games before, you have no idea.

This could get really ugly.

Wizards And Lizards

The Wizard of Omaha, Warren Buffett, felt the need to personally save Bank of America by fronting the hemorrhaging bank $5 billion in cash...and the stock recovered more than half of its losses since the S and P downgrade, turning the Wiz a tidy profit.

Warren Buffett may have earned $1.3 billion in one day on his $5 billion investment in Bank of America Corp. (BAC)

The preferred shares Buffett’s Berkshire Hathaway Inc. (BRK/A) bought are worth about $3.53 billion, Phil Jacoby, chief investment officer at Spectrum Asset Management Inc. in Stamford, Connecticut, estimated. Warrants included in the deal are worth about $2.73 billion, based on Bank of America’s share price of $7.65 as of 4:15 p.m. in New York trading, said Clay Struve, a partner with Chicago-based CSS LLC.

The 25 percent first-day return -- more than 9,000 percent on an annualized basis -- shows the premium Bank of America Chief Executive Officer Brian T. Moynihan was willing to pay to attract Buffett as an investor. As Berkshire’s CEO, Buffett has garnered a reputation as one of the world’s best investors, with shareholder returns over the past decade that are more than double those of the Standard & Poor’s 500 Index.

“I’m sure Warren cut a pretty good deal,” said Linus Wilson, assistant professor of finance at the University of Louisiana at Lafayette. “For Bank of America, you get the endorsement of Warren Buffett, and it’s going to make it a lot easier if Bank of America wants to raise more capital from other investors.”

The bigger question of course is "Why did BofA need $5 billion in liquid cash badly enough to approach Warren Buffett?" Even bigger, does this mean that the Fed discount window is now permanently closed to the Too Big To Fail banks?  If the Fed's closed, and we're to the point where Warren Buffett has to step in, then something is fundamentally broken.

The exposure of US banks to European debt counterparties means that leverage and liquidity are the keys to the kingdom.  Small losses in Euro banks means big losses in the people that are leveraging the debts of these banks, and BofA is leveraged to the hilt again, expecting the Feed to bail them out again.

Only this time the Fed said "no".

Warren Buffett stepped in out of enlightened self-interest.  How long this capital will keep BofA afloat, I have no idea.  With Greek bonds crashing and taking German banks with them, and by proxy BofA, the dominoes are being held up by force of will alone at this point.

It's all going to come down very soon folks.  Very, very soon.  And when it does, look out.

Home, Home I'm Deranged, Part 26

Finally the Obama administration is considering doing something about the largest single sticking point in our economy:  the millions of homeowners trapped in underwater mortgages.

The Obama administration is considering further actions to strengthen the housing market, but the bar is high: plans must help a broad swath of homeowners, stimulate the economy and cost next to nothing.

One proposal would allow millions of homeowners with government-backed mortgages to refinance them at today’s lower interest rates, about 4 percent, according to two people briefed on the administration’s discussions who asked not to be identified because they were not allowed to talk about the information.

A wave of refinancing could be a strong stimulus to the economy, because it would lower consumers’ mortgage bills right away and allow them to spend elsewhere. But such a sweeping change could face opposition from the regulator who oversees Fannie Mae and Freddie Mac, and from investors in government-backed mortgage bonds.

Administration officials said on Wednesday that they were weighing a range of proposals, including changes to its previous refinancing programs to increase the number of homeowners taking part. They are also working on a home rental program that would try to shore up housing prices by preventing hundreds of thousands of foreclosed homes from flooding the market. That program is further along — the administration requested ideas for execution from the private sector earlier this month.

But refinancing could have far greater breadth, saving homeowners, by one estimate, $85 billion a year. Despite record low interest rates, many homeowners have been unable to refinance their loans either because they owe more than their houses are now worth or because their credit is tarnished.   

Yggy says this would literally be a capital idea and it's something that Republicans couldn't block:

I know some progressives are already looking beyond this leak to poo-poo the impact of refinancing and talk about the need for principle write-downs. That’s fine. But I do urge people to pay attention to the precise veto points in the system. Right now there’s an idea — mass mortgage refinancing — that will help millions of households and stimulate the economy. By stimulating the economy, it will make it easier to advance progressive goals on every single front. And it will be done if FHFA Acting Director Edward DeMarco decides that it’s a good idea. Persuading FHFA Acting Director Edward DeMarco to do this will make it happen. But if he’s not persuaded, it won’t happen. So for the moment, at least, I would really urge people to focus their energies on this point. The FHFA has conveniently put contact information for key officials on its website if you want to let people know how you feel. 

Sounds like a winning plan to me.


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