If all printers were determined not to print anything till they were sure it would offend nobody, there would be very little printed. -- Benjamin Franklin
If we need to keep evidence of torture, like photographs, secret, to protect our troops, doesn't that suggest that torture isn't a great way to keep them or us safe?Yes, you are correct.
"I'm afraid a little Round-Up has been sprayed on the 'green shoots' of the recovery", said Lee Olver, fixed income strategist at SMH Capital in Houston, Texas.You don't say.
In its first detailed effort to overhaul financial regulations, the Obama administration on Wednesday sought new authority over the complex financial instruments, known as derivatives, that were a major cause of the financial crisis and have gone largely unregulated for decades.Which is amusing, asThe administration asked Congress to move quickly on legislation that would allow federal oversight of many kinds of exotic instruments, including credit-default swaps, the insurance contracts that caused the near-collapse of the American International Group.
The Treasury secretary, Timothy F. Geithner, said the measure should require swaps and other types of derivatives to be traded on exchanges or clearinghouses and backed by capital reserves, much like the capital cushions that banks must set aside in case a borrower defaults on a loan. Taken together, the rules would probably make it more expensive for issuers, dealers and buyers alike to participate in the derivatives markets.
The proposal will probably force many types of derivatives into the open, reducing the role of the so-called shadow banking system that has arisen around them.
“This financial crisis was caused in large part by significant gaps in the oversight of the markets,” Mr. Geithner said in a briefing. He said the proposal was intended to make the trading of derivatives more transparent and give regulators the ability to limit the amount of derivatives that any company can sell, or that any institution can hold.
The initiative was well received by senior Democrats in Congress with jurisdiction over the issue. The proposal had been expected, but some lawmakers, impatient with the pace of the new administration’s efforts, had begun moving ahead themselves.
Hinting at a lobbying campaign to come, Robert Pickel, the chief executive of the International Swaps and Derivatives Association, a trade group, said his organization “looked forward to working with policy makers to ensure these reforms help preserve the widespread availability of swaps and other important risk management tools.”
But some in the financial industry say that regulation is inevitable. “Nobody is in a ‘just say no’ mode,” said Steven A. Elmendorf, a former aide to the House Democratic leadership who represents several major financial institutions and groups. “Everybody understands that we’ve been through a financial crisis and that change has to happen. And the only question is how the change happens.”
Yes, because Americans have clearly completely forgotten how their friends the Republicans and their buddies in the oil business speculated America right into $5 a gallon gas last summer, so Republicans have a clear advantage on energy...Republicans believe that rising gas prices are their trump card against a Democratic-sponsored climate change bill.
The GOP is struggling to regain footing after two successive electoral blowouts, but party leaders are relishing an opportunity to debate what they call a “national energy tax.”
The Democrats’ plan of moving a cap-and-trade bill this summer plays into GOP hands because as the cost of gasoline spikes, so does the public’s awareness of energy prices, Republican leadership aides say.
Rep. Adam Putnam (R-Fla.), the former House GOP conference chairman, said that the cost of gas is not likely to hit last summer’s national high of $4 a gallon, but he noted that oil prices have been creeping up recently.
Putnam said most Americans want to increase oil production, not restrict consumption, adding, “At some point, gas prices become a very potent political weapon again.”
Troy Green, spokesman for AAA, said that the cost of gas generally rises in the summer: “This is typically the time of year when we see the price of gas rise — the spring/summer run-up.”
Last month the national average price per gallon of self-serve gas was $2.05; now it is $2.27.
Republicans, who have been playing defense on housing, credit card reform and healthcare, claim they have a huge political advantage on energy.
Rep. John Shadegg (R-Ariz.) said, “As news comes in that arctic sea ice is at an eight-year record high and the trend of cooling in the Northern Hemisphere extends, it would appear the climate for the Democrats’ cap-and-trade bill isn’t very good. Timing the vote to coincide with the beginning of the summer spike in vacation travel and gas prices is just as logical. The issue is, can Democrat leaders convince [the] rank and file to vote irrationally?”
Republicans are widely viewed by the public as less competent than Democrats to handle issue ranging from health care to education and energy, according to internal polling presented to top GOP officials in Congress.The GOP's own poll numbers show that Democrats have a nearly 2 to 1 advantage on energy among voters and enjoy a major advantage on nearly everything else.The same survey found President Barack Obama holds the support of a significant minority of self-described conservative, independent voters.
The Associated Press obtained partial results of the survey, which was conducted in late March by New Models, a firm with close ties to Republicans. GOP lawmakers in Congress have generally opposed Obama's early legislative agenda, voting with near unanimity against economic stimulus legislation and unanimously against a White House-backed budget that cleared Congress on Wednesday.
The survey found the public holds greater confidence in Democrats than in Republicans in handling most of the issues that are involved in Obama's legislative agenda.
Democrats were favored by a margin of 61 percent to 29 percent on education; 59 percent to 30 percent on health care and 59 percent to 31 percent on energy. Congress is expected to consider major legislation later this year in all three areas.
Democats were also viewed with more confidence in handling taxes, long a Republican strong suit. The only issue among nine in the survey where the two parties were rated as even was in the war on terror.
But the Republicans are still convinced "Drill baby drill" is going to win for them, thanks to the power of gas that might hit $3 a gallon. They are convinced that pretending global warming is a myth is still going to win them over young voters, smart voters, and environmentally concerned religious voters.
Even funnier, it's the fiscally concerned House Republicans pushing the actual carbon tax as a bi-partisan effort.
They still have no clue.
[UPDATE] Cap-and-trade legislation is back on the table moving ahead out of the negotiation phase and into a final House bill phase.
Yesterday Zero Hedge's anonymous lead blogger, who goes by the name Tyler Durden, received a Digital Millennium Copyright Act Takedown Notice for six posts in which he cites Merrill Lynch reports authored by Rosenberg or his staff. The reports are indeed proprietary—but for journalists and bloggers, their widespread distribution has long been a helpful way to decode movements in the markets. "It's their prerogative to impugn that there has been infringment," Durden told me. "But there are intangibles. Rosenberg is leaving the company and is soon to be replaced by someone who has a slightly more upbeat feel."Now BoA/Merrill is bringing in the copyright goons to attack anyone who has Rosenberg's information up, because after all, it's all about the appearance of solvency these days.As a journalist, I've never had any trouble getting the contents of a report for a story I was working on. Indeed, press officials at banks have often seemed pleased or at least placated by the attribution that comes with citing their reports in a story. That said, James Ledbetter, The Big Money's editor, was turned down last October when he asked for this Web site to be added to a weekly distribution list of the Rosenberg report. "Our goal is to keep it proprietary for our clients," he was told by Merrill Lynch media relations. The reports can sometimes be tough for media to subscribe to (as opposed to making requests on a one-off basis).
Rosenberg's reports are different than those of the typical investment bank economist. The bearish, even cynical reports issued from his desk have been serving as a rallying cry for financial bloggers who don't believe that the economy is recovering as fast as financial cable networks, the mainstream media, the Obama administration, and, indeed, the investment banks themselves seem to suggest. "I would imagine that they would not be too happy with this kind of stuff floating around, especially the fact that he got more bearish towards the end of his tenure," said Durden.
Our entire financial system runs on faith, and the keepers of that faith have been exposed as trillion dollar scam artists. The internet and econ bloggers have gone a long way towards getting the truth out to you. I try to follow as nothing more than a concerned American, given the power to try to make a difference. Forewarned is forearmed in this economy.
Guess Merrill should add me to the list. Rosenberg's reports are all over the web. But they went after Zero Hedge for a reason: the bear bloggers were right, and the multi-billion dollar trading giants were wrong. Payback is a bitch.
Never forget that. Oh, and Rosenberg? He's now chief economist at Toronto's Gluskin Sheff + Associates, and will continue to distribute his famed Rosenberg Report.
And the truth will set you free. Or, in this case, save you a few trillion.
Nice. Obama has determined there's nothing to gain from this politically and everything to lose, which means the photos themselves must be very, very damning evidence against the Bush torture regime. The photos are apparently so inflammatory that Obama has no choice but to adopt Bush legal arguments and prevent the photos from coming out.President Obama met with White House counsel Greg Craig and other members of the White House counsel team last week and told them that he had second thoughts about the decision to hand over photographs of detainee abuse to the ACLU, per a judge's order, and had changed his mind.
The president "believes their release would endanger our troops," a White House official says, adding that the president "believes that the national security implications of such a release have not been fully presented to the court."
At the end of that meeting, the president directed Craig to object to the immediate release of the photos on those grounds. In an Oval Office meeting with Iraq Commander General Ray Odierno, the president told him of his decision to argue against the release of the photographs.
The move is a complete 180. In a letter from the Justice Department to a federal judge on April 23, the Obama administration announced that the Pentagon would turn over 44 photographs showing detainee abuse of prisoners in Afghanistan and Iraq during the Bush administration.
The photographs are part of a 2003 Freedom of Information Act request by the ACLU for all information relating to the treatment of detainees -- the same battle that led to President Obama's decision to release memos from the Bush Justice Department's Office of Legal Counsel providing legal justifications for brutal interrogation methods, many of which the International Committee of the Red Cross calls torture."The reversal is another indication of a continuance of the Bush administration policies under the Obama administration," ACLU attorney Amrit Singh told ABC News. "President Obama's promise of accountability is meaningless, this is inconsistent with his promise of transparency, it violates the government's commitment to the court. People need to examine these abusive photographs, but also the government officials need to be held accountable."
It's unclear what step the White House will now take, whether the administration will challenge the release in appellate court with new arguments or whether it will take the case to the Supreme Court.
Sales at U.S. retailers fell for a second straight month in April as cash-strapped consumers held back on some purchases, according to a government report on Wednesday that dealt a blow to hopes the economy was beginning to improve.Gosh Robert, you think? With unemployment rising and people scared to make big ticket purchases because they don't know if they'll have a job six months from now, you think that would have a negative effect on consumer spending?
The Commerce Department said total retail sales slipped 0.4 percent after falling by 1.3 percent in March. Excluding motor vehicles and parts, sales dipped 0.5 percent in April, compared to a 1.2 percent decline the prior month.Economists had expected retail sales to be flat in April.
While the pace of decline in retail sales slowed from the prior month, the report dampened expectations of a quick end to the nation's deep recession.
"I would say the likelihood is growing that second quarter consumption in the U.S. is going to be negative," said Robert Blake, senior currency strategist at State Street Global Markets in Boston.
Go figure.
Oh please, please, please let them do this. While the Democrats are confronting the crumbling economy and weighing the questions of torture, the environment, our continuing wars, and the general instability of the world, let the Republican Party ignore all that and instead take up the crucial subject of discussing whether or not Republicans should officially have to refer to the Dems as Socialist poopyheads.Well, ask and ye shall receive:
A member of the Republican National Committee told me Tuesday that when the RNC meets in an extraordinary special session next week, it will approve a resolution rebranding Democrats as the “Democrat Socialist Party.”The lunatics are truly in charge of the asylum now. The civil war in the GOP is truly on. Michael Steele has lost control of the party, and it has descended into anarchy.
When I asked if such a resolution would force RNC Chairman Michael Steele to use that label when talking about Democrats in all his speeches and press releases, the RNC member replied: “Who cares?”
Which pretty much sums up the attitude some members of the RNC have toward their chairman these days.
Steele wrote a memo last month opposing the resolution. Steele said that while he believes Democrats “are indeed marching America toward European-style socialism,” he also said in a (rare) flash of insight that officially referring to them as the Democrat Socialist Party “will accomplish little than to give the media and our opponents the opportunity to mischaracterize Republicans.”
Two other resolutions — to urge Republican lawmakers to reject earmarks and to commend them for opposing “bailouts and reckless spending bills” — are also on the agenda, but language that would have denounced Sen. Arlen Specter, a Republican turned Democrat, and Republican Sens. Olympia Snowe and Susan Collins for voting for President Obama’s stimulus package has been dropped.
Steele didn’t want the special session to be held at all. The RNC will hold its regular summer meeting in July, and all matters could have waited until then. But the special session is being viewed by some in the party as a “comeuppance” for Steele and an implied criticism of his performance and behavior in his first 100 days in office.
The Obama administration has begun serious talks about how it can change compensation practices across the financial-services industry, including at companies that did not receive federal bailout money, according to people familiar with the matter.While this is certainly controversial, it's the following chart that actually is pretty mind boggling:The initiative, which is in its early stages, is part of an ambitious and likely controversial effort to broadly address the way financial companies pay employees and executives, including an attempt to more closely align pay with long-term performance.
Administration and regulatory officials are looking at various options, including using the Federal Reserve's supervisory powers, the power of the Securities and Exchange Commission and moral suasion. Officials are also looking at what could be done legislatively.
Among ideas being discussed are Fed rules that would curb banks' ability to pay employees in a way that would threaten the "safety and soundness" of the bank -- such as paying loan officers for the volume of business they do, not the quality. The administration is also discussing issuing "best practices" to guide firms in structuring pay.
At the same time, House Financial Services Committee Chairman Barney Frank (D., Mass.) is working on legislation that could strengthen the government's ability both to monitor compensation and to curb incentives that threaten a company's viability or pose a systemic risk to the economy.
Which if I'm reading this chart correctly, with total bonuses pretty much matching the chart of average bonuses, it means the number of actual people making those bonuses hasn't really changed in years, and that number is roughly equal to 200,000 people.
It's those 200,000 people who are raking in bonuses totalling tens of billions of dollars. Since your bonus was only as good as your last year, you have every incentive to make that bonus as high as possible by selling as many financial products as possible. The "boiler room" mentality ruled Wall Street for decades and still does. To be good enough to make that list of 200,000 you had to be the best, otherwise you're just another wage slave.
And let's remember Pareto's 80-20 rule applied here: 80% of the bonuses were earned by the top 20% of the bonus earners. In a year like 2006 where $34 billion in bonuses were given out, Pareto tells us the top 40,000 bigwigs would have averaged $680,000, the top 8,000 titans would have avereaged out about $2.7 million each, and the cream of the crop, the top 1,600 financial geniuses, would have made out to the tune of ten million plus.
The true Masters of the Universe? The roughly 320 executives with Chief and Officer in their job titles? Those guys were pulling in $43.5 million a piece. The various CEOs and whatnot, the guys running the show? About 64 of them, Pareto's Law puts their take at $174 million each.
So yeah. Greed ruled. And it ruled us right into the ground. The more risk they took, the richer they got, the worse things got for the rest of us.
Absolutely. Change the system, Obama.
In a Senate where the Democratic caucus now stands at 59 votes, this is just ridiculous.No Steve, Harry Reid is letting Dawn Johnsen's nomination die on the vine because she's going to be kicking over rocks and shining light in on torture investigations and who knew what when.As Senate Majority Leader Harry Reid (D-Nev.) moves to ease a backlog of executive branch nominations, he suggested on Tuesday that he does not have the votes to bring up President Barack Obama's pick to run the Department of Justice's Office of Legal Counsel.
"Right now we're finding out when to do that," Reid said, responding to a question about the status of Indiana University law professor Dawn Johnsen's nomination to the Justice post. "We need a couple Republican votes until we can get to 60."
Let's acknowledge at the outset that allowing a shrinking Senate minority to mandate 60 votes for confirmation is itself absurd. No president in American history has had to deal with this kind of obstructionism to put together the team he wants, staffing relatively unknown administration posts. It's obstructionism on an unprecedented scale and it's an unsustainable way for the political process to operate.
Let's also take a moment to note that Johnsen is an exceptional nominee, who is unquestionably qualified, and clearly deserves confirmation.
That said, what kind of show is Harry Reid running here? His caucus has 59 members, and Sen. Dick Lugar of Indiana, a conservative Republican, has already endorsed Johnsen's nomination. We have Democratic senators who won't even let the president's choice for the OLC get a vote because she's pro-choice?
Both Democrats and Republicans are right to fear her. That is why you see both Democrats and Republicans filibustering her and they will continue to do so. Her views on abortion are a complete smokescreen and always have been.
Harry's dragging his feet on Dawn Johnsen because he's being told to do so. Odds are pretty good Nancy Pelosi's current predicament has everything to do with Dawn Johnsen's predicament.
Democrats charged Tuesday that the CIA has released documents about congressional briefings on harsh interrogation techniques in order to deflect attention and blame away from itself.1) Sow the wind, reap the whirlwind.
“I think there is so much embarrassment in some quarters [of the CIA] that people are going to try to shift some of the responsibility to others — that’s what I think,” said Sen. Carl Levin (D-Mich.), who sat on the Senate Intelligence Committee and was briefed on interrogation techniques five times between 2006 and 2007.
Illinois Sen. Dick Durbin, the No. 2 Democrat in the Senate, said he finds it “interesting” that a document detailing congressional briefings was released just as “some of the groups that have been responsible for these interrogation techniques were taking the most criticism.”
Asked whether the CIA was seeking political cover by releasing the documents, Intelligence Committee Chairwoman Dianne Feinstein (D-Calif.) said: “Sure it is.”
The CIA has long been on the receiving end of harsh rebukes from Congress — on intelligence failures leading up to the war in Iraq, on secret prisons abroad and on the harsh interrogation techniques used on terrorism suspects. But with the release of records showing that it briefed members of Congress along the way, the CIA has effectively put lawmakers on the defensive.
Intelligence officials insist it wasn’t intentional and have not taken responsibility for publicly releasing the documents.
The lion's share of April's filings were ones in the early stages of the process, such as notices of default, according to James Saccacio, RealtyTrac's CEO.In other words, these foreclosures are new, not just delayed ones from late 2008. These are second-wave foreclosures, ones spawned by rising unemployment and adjusting mortgage options. These will continue to rise. There will not be a recovery in the housing market soon. That V-shaped recovery is a myth.Bank repossessions actually fell 11% for the month, compared with March. That's due, according to Saccacio, to the many legislative and company moratoriums that have prevented the foreclosure process from starting on delinquent loans.
Because fewer loans entered the process in past months, there had been fewer getting all the way to repossession. But now that those moratoriums are over, the volume of foreclosure filings is increasing.
"It's likely that we'll see a corresponding spike in [repossessed properties] as these loans move through the foreclosure process over the next few months," Saccacio said in a prepared statement.
That's not happening. Numbers both yesterday and today show home prices are continuing to drop sharply and foreclosures continue to rise. There's no bottom in the housing market in sight, let alone one coming in the next six weeks.
On to point two:
Ten states accounted for 75% of all foreclosure activity, and they fell generally into two categories: one-time bubble markets and the rust belt. California, which easily outpaced every other state with with 96,560 filings. Other hard-hit former boom towns were Florida (64,588), Nevada (16,266) and Arizona (16,244).In other words, there's a lot more foreclosures to come outside California, Nevada, Florida, and Arizona. States that have been rocked by unemployment like Indiana, North and South Carolina, Alaska, and Oregon will be the new source of growing foreclosure numbers in 2009 and well into 2010. That means home prices will be dropping in cities like Charlotte, Indianapolis, Charleston, Portland and Anchorage. While there may be slight improvements in the most ravaged cities like Las Vegas, San Bernardino, Miami and Detroit, there are plenty of other cities that will feel this second wave of foreclosure action.Those rust belts towns with the most filings were Illinois (13,647), Ohio (12,324) and Michigan (10,830). Georgia (11,521), Texas (11,314) and Virginia (6,254) filled out the rest of the top 10 list.
The final point may be the scariest:
The loss of home values put many more mortgage borrowers underwater, meaning they owe more on their loans than their homes are worth. That increases foreclosure rates in two ways: Underwater borrowers have no home equity to draw on should to pay for unexpected expenses such as big medical bills or major car or home repairs. That's makes them more likely to miss payments. And when home values fall far below mortgage balances, homeowners often walk away from their loans.More and more Americans will mail in their keys to the bank, aka "jingle mail", and walk away from their underwater homes. One in five homeowners are now underwater on their mortgages, and that number will soon reach one in four. This is a disaster for our economy. Back in February 2008, Roubini predicted as many as 10 to 15 million homeowners would take the jingle mail route that would blow up the system. It turned out that there were plenty of other possible triggers that exploded into the economic disaster of 2008, but the jingle mail time bomb is still out there. And the banks, already insolvent, will not survive the detonation when millions of homeowners stick them with the bills."There has been much more 'deed-in-lieu-of foreclosure' activity lately," said Sharga. This is a transaction in which borrowers simply tell their banks that they're not going to pay their mortgage and hand back their keys, and deeds, to their lenders.
"People are making the rational financial decision to walk away from underwater homes," he said.
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