A Second Chance For The Big Three's Second Chance

I had pegged the bailout of the auto industry as all but dead, but it seems that today's dismal job numbers with over half a million jobs lost in November alone has spurred both the GOP and Democrats into action on the Big Three automakers.

Efforts to provide emergency loans to struggling U.S. automakers gained momentum on Friday after a grim U.S. jobs report spurred talks between congressional leaders and the White House.

U.S. House Speaker Nancy Pelosi has dropped her insistence that the money come from the $700 billion financial bailout fund that the Bush administration had refused to use on automakers, said a congressional aide familiar with the discussions.

Another congressional source said Pelosi was open to the idea of tapping the existing $25 billion advanced energy technology loan fund to help auto companies - an idea the White House has promoted.

Such a move would likely build bipartisan support in Congress for a bill that could be signed into law by President George W. Bush.

So far, this is being spun as a victory for the GOP, but the reality is just a bit further down the article...

Congress and the White House are anxious to prevent the threatened near-term collapse of one or more of the Detroit Three - which directly employ 250,000 people.

Somebody in the White House has apparently told Bush that if his final month in office leads to the death of the American Car, well history is really, really not going to look kindly upon him. Not that history had any other place for him but dead last of 44, but apparently that's too much for even Bush to handle.

The fact of the matter is the effective unemployment rate, the rate that includes all the folks who have stopped looking for work, or are scraping by on part-time work, has now reached 12.5%. That means one in eight American workers don't have a full-time job right now, and since December 2007, America has lost 2.7 million jobs.

Neither side wants to take credit for losing millions more should the auto industry fold. In a matter of about 8 hours today, both Obama and Congress have swung into action and the White House has done a complete 180.

By next week, an auto industry bailout could be on Bush's desk.

What a difference a day makes.

Operation Big Payback

After I outlined the GOP plan for the next four years yesterday, the always dependably awesome Digby gives us specifics of how the GOP will execute that plan to make sure Obama Is Worse Than Bush Ever Was In All Things, starting with Bush appointed US Attorney Mary Beth Buchanan basically daring Obama to fire her.

When the US Attorney scandal broke, you'll recall that there was a lot of wingnut chatter saying that because Bill Clinton had asked for the resignations of all US Attorney's at the beginning of his term, Bush had a perfect right to fire US Attorneys who refused to do political dirty work. They set the stage for this at the time. It was entirely predictable that the new administration would be held to a completely new standard --- he would not be allowed to fire any US Attorney who had been appointed by Bush for any reason at all or risk being accused of using the Justice department for partisan gain. It's how they roll.

US Attorneys should be apolitical as much as possible. They most certainly should NOT be hyper political actors as this person was, working closely with a disgraced Attorney General and involved in the scandals. It's outrageous that anyone like her would even still be in the Justice Department today under Mukasey.

If she stays, she will be working against the Obama administration from within. There are probably many others like her at all levels, some burrowed very deeply. After all, the US Attorneys were fired for refusing to go along with political prosecutions or to make way for political friends. You have to wonder about those who weren't fired.

Keep in mind no matter what Obama does, the GOP will say he's Worse Than Bush(tm). The Village Idiots are already setting the public up for this. It's the battle cry for the next four years.

Count on it. The only way the GOP gets back into power this generation is to do everything they can to assure Obama is Worse Than Bush(tm). This means relentless opposition to anything and everything Obama does in an effort to politicize it and to compare it to Bush. There will not be any magical migration of GOP moderates to help Obama. The pressure the moderates will be under from the far right will be crushing. GOP moderates will play ball with a lockstep assault or they will be replaced in primaries by those who will in 2010 and 2012.

Obama must go down as the worst President in modern American history, replacing Bush and Nixon, or the GOP is done for a generation or more. They know this. They will regroup, redouble their efforts, and resume the assault.

The era of hyper-partisan politics is just beginning.

Zandar's Thought Of The Day

The same Village Idiot Happy Face economic experts who told us the Bush economy was the greatest story never told by the Evil Liberal Media are the same ones who have been saying the markets will hit bottom any time now and are the same ones saying after today's devastating job loss numbers that once again...the worst is over.

Do you believe the worst is over?

You willing to bet your job on that?

The Ten Percent Solution

To go along with the worst lob losses since the year before I was born, we now have news that one in ten Americans are at least one month behind on their mortgage payments.

A record one in 10 American homeowners with a mortgage were either at least a month behind on their payments or in foreclosure at the end of September as the source of housing market pressure shifted to the crumbling U.S. economy.

The Mortgage Bankers Association said Friday the percentage of loans at least a month overdue or in foreclosure was up from 9.2 percent in the April-June quarter, and up from 7.3 percent a year earlier.

Distress in the home loan market started about two years ago as increasing numbers of adjustable-rate loans reset to higher interest rates. But the latest wave of delinquencies is coming from the surge in unemployment.

And things are only going to get worse. Even if the housing market hits bottom...who is going to have the down payment and the creditworthiness to get a mortgage, a car loan, or any other major bank loan?

Banks are sitting on hundreds of billions, and they aren't loaning it out. The real problem isn't even the housing collapse anymore, but the collapse of the American middle class economy. With no middle class conusmers to consume, and no manufacturing base to rebuild a middle class, America's economic woes could very well last for a very, very long time.

Snow Job

Economists are predicting November was the worst job loss month in 26 years, an estimated 335,000 jobs went bye bye, the educated guess is unemployment at 6.8%. The real numbers will be out at 8:30.

I'm expecting them to be significantly worse.

[UPDATE] "Significantly worse" indeed. A staggering 533,000 jobs lost in November to a 6.7% unemployment rate, the worst single month since 1974. The newly revised numbers for September and October mean a heart-stopping one-and-a-quarter million jobs lost in the last three months alone.

Almost 2 million jobs now lost in 2008. December's numbers will certainly put us over that mark. The pain is just beginning, folks. No bottom is visible. 2009 could actually be worse.

The Big Three's Last Shot

Today the CEOs of the Big Three automakers go before the House to plead their case one last time, but the reality is Democrats don't have the votes in either chamber of Congress to pass anything.

With time fast running out, Congress and the Bush administration will wrestle again today over whether to lend $34 billion to Detroit automakers, even after senators heard grim warnings that their failure could cost 2.5 million jobs and the liquidation of three iconic U.S. companies: General Motors, Ford Motor Co. and Chrysler Corp.

Mark Zandi, chief economist at Moody's Economy.com, told the Senate Banking Committee on Thursday that even the $34 billion that the executives of the three companies pleaded for would hardly be enough. Detroit eventually would need $75 billion to $125 billion to avoid almost certain liquidation over the next two years.

Still, Zandi told senators that the automakers' failure would be "so damaging to the economy, you don't have the choice."

Bailout fatigue among the public and lawmakers is blocking the money in Congress. Lacking votes in both chambers, House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid are preparing to blame the Bush administration for letting Detroit go under. Reid said Treasury Secretary Henry Paulson could "with the stroke of a pen" save the automakers by tapping the $700 billion financial rescue Congress passed in October.

Michigan Democratic Sen. Carl Levin saw in Thursday's testimony a new path to do just that.

Ford and GM executives pointed to an estimate by J.P. Morgan that the automakers' failure could trigger $1 trillion in losses to the banking system. Levin described that scary figure as key to persuading Paulson to allow automakers access to the $700 billion.

But President Bush said in an interview with NBC News, "No matter how important the autos are to our economy, we don't want to put good money after bad. In other words, we want to make sure that the plan they develop is one that ensures their long-term viability for the sake of the taxpayer."

It's pretty clear that the bailout is just not going to pass. It's even clearer that GOP lawmakers in states outside the Big Three's home of Michigan, Ohio Pennsylvania and Indiana have no interest in saving GM, Ford and Chrysler when their own states plan to benefit from foreign automakers having plants in those states outside the Rust Belt. And it's even more clear that the President will simply veto anything that comes down the pike.

The GOP is bound and determined to kill the Big Three in order to kill the UAW, plain and simple. Obama could step in at this point and promise something in January, but that may be too late.

We'll see.

StupidiNews!

• US car dealers are getting creative...and desperate...to sell cars.
• Blackwater security operatives in Iraq could now face up 30 years in prison for killing Iraqi civilians.
• Canada faces a constitutional crisis as PM Steven Harper has suspended Parliament until next year.
• The entire National Mall will be opened to the public for Obama's Inaguration ceremony.
• The FBI warns a nationwide wave of copper theft has put US infrastructure at risk.

The GOP Game Plan

Ed Kilgore at The Democratic Strategist asks the mutli-trillion dollar question:

After watching a media appearance by Fred Thompson, Josh Marshall poses a very good question: do conservatives and/or Republicans actually favor a deep recession as a way to purge the economy of speculative excesses and debt?

While I am quite sure that Republicans are not about to hoist banners reading "Deflation Now!" a look back at the conflicts over the first "bailout" package and some of the GOP rhetoric surrounding the presidential campaign should make it clear that there is in fact a strong undercurrent of conservative hostility to any sort of relief measures that don't simply involve tax cuts or deregulation. Those who convinced themselves that the mortgage crisis was caused by ACORN and poor and minority borrowers certainly are in no hurry to succor such Obama-supporting miscreants. More generally, there's always been a large faction of conservatives who favored the occasional "healthy" recession to wring "excess demand" out of the economy. One of the innovations associated with the GOP's embrace of supply-side economics was a partial abandonment of that point of view as "root canal" or "Hooverism." But in the face of an actual recession, like the one St. Ronald Reagan presided over in 1981-83, there was no notable conservative support for any economic stimulus that didn't focus on high-end or corporate tax cuts.

At Open Left today, Matt Stoller argues that conservatives aren't that interested in economic stimulus because creditors actually benefit from debtors in a deflationary climate. That's true so far as it goes, though it's not clear the rank-and-file base of the GOP can currently be described as the "creditor class." But I think there is a large and important kernal of truth in Matt's analysis, not on economic grounds, but on moral grounds: conservatives like to think of themselves as sober and self-reliant people who don't get themselves into the kind of financial trouble that merits government intervention. For those who don't immediately face personal financial calamity in the current economy, it's easy and very seductive to think of "economic stimulus" as identical to moral hazard, and deeply resent the use of tax dollars to relieve less worthy citizens of the consequences of their risky behaviors, particularly if a recession is thought of as good for the economy in the long run.

While this is excellent analysis, the reality is much simpler if you go on psychology of Republicans rather than economic theory:

1. The Republicans just got their asses kicked in the elections.
   
2. They want to get back in power.
3. The easiest way to get back in power is to blame the economy on Obama.
4. Therefore, the GOP will do everything in their power to obstruct Obama's economic policy and then blame the Democrats.

That's it. That's the next two years, if not four years of GOP policy: stop the Democrats from passing any legislation, then blame the Dems when things go to shit. If it's anything like the last two years, the Dems will promptly fold time and time again and give in to nearly every GOP concession, and then get donkey punched in the back of the head anyway when the GOP then turns around and blames the Dems for the weak, incremental legislation that gets passed as a result.

The GOP will run Washington and will do so with help from the Village Idiot class, who will helpfully launch "The Economy Was Better Under Bush!" articles left and right.

That's it. That's the plan. You don't need to understand economics. Hell, the GOP doesn't understand economics at all, that's how we go into this. The Right Wing Noise Machine doesn't understand a damn thing about economics. But they understand spin.

They will ruthlessly attack Obama and the Dems. It's nothing more than obstruct legislation, force concessions, claim victory, blame the Dems, repeat.

The GOP doesn't have any solutions to this mess. They simply want to paint anything Obama does as bad and will as a result blame him for everything bad that will happen over the next two years, and then hold up "The Librul Media's Treatment Of Bush" as their argument that payback is a bitch.

Then they figure they'll swoop in and sharply reduce the Democrat's margins in Congress in 2010 and outright take back Congress and the White House in 2012, and Obama will go down as The Worst President Ever Because He's Worse Than Bush Was.

That's it. That's the entire plan, folks.

And unless the Dems finally find their spine and fight back, it will play out exactly like above. I guarantee it.

Rates Near Historic Lows! ACT NOW!

...because Treasury wants to cut the rates on new mortgages to 4.5% as I pointed out this morning. The questions about the plan are thus: Cui bono? Who benefits from the leak of this plan? Not the mortgage industry. Home sales this week have dried up as buyers are now backing out, waiting for this new lower rate. Not Treasury, because now they have to do this or else. I can't see a reason to do this, especially when the plan itself is still in the larval stage.

The other question is "Will it work?" Remember how we got into this mess? Historically low interest rates and easy credit after the 2002 recession when Alan Greenspan lowered the Fed rate to 1% and mortgage rates dropped. Everyone and their mom bought a home...and now Treasury wants to drive those rates even lower. Stop and think about that for a second. Greenspan dropped rates so low that everyone bought homes on easy credit and cheap financing and it created a massive multi trillion dollar housing bubble. When it popped, BOOM went the entire global economy.

So, somebody explain to me how the best plan for stabilizing the housing market is to destabilize the housing market into an even larger housing bubble than before, will ya? This is like fighting fire with lava.

The Stupidity Will Not Die

The wingnuts' favorite Obama Conspiracy Theory is that he's not a natural-born citizen of the US. Lawsuits in fact were filed in order to try to stop the election to prevent Obama from becoming President and handing us all over to one billion Muslim killers riding cyborg velociraptors armed with heat-seeking laser pods and fusion-powered jump jets.

Despite the fact that the state of Hawaii's Republican governor has produced a birth certificate and the most egregious lawsuit, Donofrio v. Wells, was summarily dismissed as frivolous time-wasting crapola, Clarence Thomas (yes that Clarence Thomas) apparently thinks it would be a good idea to at least discuss the "merits" of the case. With the Supreme Court. Of the United States. Of America.

No, seriously.

The U.S. Supreme Court's justices will discuss at their Friday conference tomorrow the Obama's-not-a-natural-born-citizen lawsuit known as Donofrio v. Wells.

As Chicago Tribune reporter James Janega writes:

The suit originally sought to stay the election, and was filed on behalf of Leo Donofrio against New Jersey Secretary of State Nina Mitchell Wells.

Legal experts say the appeal has little chance of succeeding, despite appearing on the court's schedule. Legal records show it is only the tip of an iceberg of nationwide efforts seeking to derail Obama's election over accusations that he either wasn't born a U.S. citizen or that he later renounced his citizenship in Indonesia.

In one of those delicious ironies that makes life so interesting, the justice who distributed the case to his colleagues was none other than Clarence Thomas, only the second African American to sit on the high court. I can only assume the justice saw some potentially interesting legal issue in the lawsuit.

I for one welcome our mysteriously competent Chief Executive. Clearly he's not a product of American education, he's far too intelligent. Ergo, he must be an Indonesian Muslim sleeper agent who will take our guns and kill us all in our sleep, but not if we band together to fight him WOLVEREEEEEEEENS!

The Stupid, it hurts.

I'm Just Blown Away

It seems every six months or so we see a leak to the Jerusalem Post from Israeli defense officials stating plans to attack Iran. This time around the difference is that Israel is openly saying it's not going to wait for the US to approve of an attack.

Israel is drawing up plans to attack Iran's nuclear facilities and is prepared to launch a strike without backing from the US, it has been reported.

Officials in the Israeli Defence Ministry told the Jerusalem Post that while they prefer to act in consultation with the US, they were preparing plans that would allow them to act in isolation.

"It is always better to coordinate," a senior Defence Ministry official told the newspaper. "But we are also preparing options that do not include coordination."

Will Israel go off the reservation, or is that the plan all along?

Dear America:

"Let's just exterminate a billion Muslims. That'll fix em."

--Ben Shapiro

...No seriously. He said this.

Our enemies are determined. They will not quit just because we offer them Big Macs, Christina Aguilera CDs, or even the freedom to vote. They will not quit just because we ensure that they have Korans in their Guantanamo cells, or because we offer to ban “The Satanic Verses” (as India did). They will only quit when they are dead. It is our job to make them so, and to eliminate every obstacle to their destruction.

This is what passes for international discourse in 2008...the open advocacy of genocide.

Thursday Job Numbers

Weekly unemployment figures dropped a smidge to 509,000 this week, but AT&T just announced it's eliminating 12,000 jobs.

Not good. If even AT&T is cutting back five figures on layoffs, we're in for a brutal year in 2009.

Banking On Bankruptcy

Yesterday I discussed my reasons for believing that the Big 3 automakers weren't going to make it, bailout or no bailout. This morning comes the news that GM and Chrysler may indeed be considering bankruptcy in order to secure a bailout.

General Motors Corp and Chrysler LLC are considering accepting a pre-arranged bankruptcy as the last-resort price of getting a multi-billion dollar government bailout, Bloomberg reported, citing a person familiar with internal discussions.

In response to automakers' bailout plea, staff for three members of Congress have asked restructuring experts if a pre-arranged bankruptcy -- negotiated with workers, creditors and lenders -- could be used to reorganize the sector without liquidation, Bloomberg said.

General Motors and Chrysler could not be immediately reached for comment by Reuters.

Industry executives and analysts say the immediate carnage from a bankruptcy of General Motors Corp, Ford Motor Co or Chrysler would spread throughout an industry that is bleeding cash in a global slowdown.

All three automakers have urged Congress to authorize $34 billion in loans and credit lines, saying they will restructure, and cut models, jobs and executive pay to remain viable.

My argument stands: would you buy a car from GM or Chrysler right now knowing the company is going to be facing bankruptcy?

I'm betting the answer to that is no. We're looking at the end of an industry here.

StupidiNews!

• Canadian PM Steven Harper faces a no confidence vote Monday.
• Which US state is the healthiest?
• The Treasury department could take action to lower new mortgage rates to 4.5%.
• Lawmakers are keeping their cards close to the vest on today's auto bailout hearings.
• Britain cut interest rates a full point to a nearly six decade low of 2%.