Dear America:

"Since the Obamessiah has had his six whole days to create the universe and hasn't even fixed the economy yet, I declare him to be the worst President ever."

--Jennifer Rubin, Commentary

NIMBY'd To Death

The GOP is playing games outright now with Obama's plan to close Gitmo. The maneuver? The notion that there's nowhere in America that Obama can put these supervillains without them breaking out of prison and killing millions of Americans.

No. Seriously.

Ft. Leavenworth, Kansas, is the military's only maximum-security prison, making it a strong option for the Obama administration during deliberations on the future of Guantanamo's 240 or so remaining occupants. But not if Sen. Sam Brownback has anything to say about it. He and three House Republicans from the state already have introduced bills in Congress that would bar the government from moving detainees from Cuba to Kansas.

But Brownback isn't the only Republican taking a pre-emptive cue from Rove and offering bills to close off Obama's possible Guantanamo alternatives.

Lawmakers from South Carolina are promising a similar NIMBY fight over the Charleston Naval Brig, and California Republicans are kicking and screaming over transferring detainees to Camp Pendleton in their state.

It gets even more silly. Apparently not even the Supermax prison in Colorado can contain a Muslim guy with a box cutter.

Maybe Brownback can have a chat with Colorado Republican Rep. Doug Lamborn and Mike Coffman, since they're threatening to prevent Guantanamo detainees from being transferred to Supermax. After all, a spokesman for Colorado's Democratic governor, Bill Ritter, told the AP that "there's no reason to take a 'not in my backyard' approach."

But let's not hold our breath. It looks like Republicans are having too much fun planning their obstructionist tactics on Guantanamo.

But it's clear what the plan is: convincing your grandmother that Obama plans to put these Lex Luthor-class masterminds in her neighborhood, guaranteeing her as collateral damage for the secret Islamodeath ray the Great Brown Beturbaned Horde is building in the mountains of Afghanipakiranistan.

Of course, if we're that scared of guys with box cutters and funny names that we can't put them in Fort Leavenworth or Supermax, then in all honesty we're going to all die on Tuesday when the Legion of Doom teams up with the Brotherhood of Evil Mutants and breaks all the prisoners loose. After all, Islamofascists are the most powerful beings in the universe, they're all from Krypton and our yellow sun allows them to go back in time and kill our ancestors unless we keep Gitmo open at all costs.

Idiots.

Bloody Monday

It's earnings layoffs season on Wall Street this week, and the numbers are horribad. Caterpillar 20k layoffs, Sprint Nextel 8k layoffs, Home Depot 7k layoffs. That's just today. Wait until the retail stores start throwing around closing numbers.

Millions more on the way, folks.

Further Investigation May Be Needed

Apparently I'm not the only guy to notice Politico's sole raison d'etre at this point is to be the Village bullhorn complaining about why Obama just won't let the GOP do whatever they want.

From TPM Reader JEM ...

I'm starting to get really annoyed with most news outlets, particularly Politico, which seems to be auditioning for the role of Drudge 2.0, portraying Obama's pledge to be more bipartisan as some sort of political straight jacket. Apparently, Obama has to completely transform all of his ideas and proposals to whatever the Republicans demand if he hopes to live up to his 'promise' of bipartisanship. I hope these articles conclude that he's broken his promise by the time the stimulus passes (with more than 60 votes, mind you), just so I don't have to endure them for the next four years.

I'm not sure I'd say I'm annoyed because I'm not really surprised. But I do think it's an example of the continuing Republican tilt of much of the Capital press corps. Not in ideological terms perhaps, but in terms of whose opinions carry weight, whose matter and whose do not.

Drudge 2.0 certainly seems to fit Politico's angle these days, if not full-blown Village 2.0. It's like the site is possessed by an AI copy of Cokie Roberts and David Brooks. It really takes some work to put that much scorn into reporting everything Obama is trying to do without actually coming out and saying "We don't care very much for the man."

Government On Ice

Reports coming in this morning that Iceland's government has collapsed and has resigned in disgrace -- not just the PM mind you, the entire government -- not three months after that country's massive bank collapse.

Prime Minister Geir Haarde announced the immediate resignation of his cabinet, after talks with coalition partners failed.

Iceland's financial system collapsed in October under the weight of debt built up during years of rapid growth.

The currency has since plummeted, with unemployment soaring. The economy is forecast to shrink by 9.6% this year.

In a series of protests, demonstrators have accused the government of leading the country to ruin.

Mr Haarde told reporters on Monday: "I really regret that we could not continue with this coalition. I believe that that would have been the best result."

That would make Iceland the second country's government to fail as a result of the financial crisis, the first of course being the GOP here.

Iceland is pretty much considered to be "worst case scenario" as far as the global economic crisis on individual countries so far. The key words there are so far. There will be more Icelands out there in 2009 and 2010.

There could be a lot more.

The Next Bubble

Helicopter Ben Bernanke isn't capable of learning, I'm beginning to believe. After his predecessor Alan Greenspan created the largest bubble in history with the housing disaster in order to get us out of the post 9/11 recession, Bernanke is actually considering an even larger, even more fundamental bubble in order to get us out of this mess.

Federal Reserve Chairman Ben S. Bernanke and his colleagues may try once again to cure the aftermath of a bubble in one kind of asset by overheating the market for another.

Fed policy makers meeting tomorrow and the day after are exploring the purchase of longer-dated Treasury securities in an effort to push up their price and bring down their yield. Behind the potential move: a desire to reduce long-term borrowing costs at a time when the Fed can’t lower short-term interest rates any further because they are effectively at zero.

The risk is that central bankers will end up distorting the Treasury market, triggering wild swings in prices -- and long-term interest rates -- as investors react to what they say and do. “It sets forth a speculative dynamic that is very unstable,” says William Poole, former president of the Federal Reserve Bank of St. Louis and now a senior fellow at the Cato Institute in Washington.

The Treasury market has “some bubble characteristics,” Bill Gross, the manager of Newport Beach, California-based Pacific Investment Management Co.’s $132 billion Total Return Fund, said in December on Bloomberg Television. He echoed that sentiment last week.

“I will say, and I have said for the past three months, the governments are very overvalued,” Gross said in a Jan. 20 interview. Treasuries last year returned 14 percent, according to Merrill Lynch & Co.’s Treasury Master Index, their best performance since 1995.

In other words, whatever treasuries the US government buys will become the only game in town for investors. They will flock to them, as they already have been. But the Magic ATM of the US Government will flood the bond markets with cash. Bond prices will skyrocket. Yields will push towards zero.

The the problem starts. As investors flood the same market and push the price up even higher, the government loses control over the price. Wild swings in the bond market could lead to devastating consequences for investors, particularly long term investors. Remember folks, treasuries are what foreign investors are buying from us: the promise the Treasury department will pay them back later. If the prices go all over the place and the bond market goes nuts, we run the risk of a 1929 style crash in the bond market...and that could devastate the US economy even more.

In other words, Bernanke is playing with a flamethrower in a fireworks factory. So many mutual funds and 401(k) plans and of course foreign investors are in Tresuries right now that it's already causing a bubble. If Bernanke lets loose with the full power of the Magic ATM, we'll see another massive bubble much sooner...and the corresponding crash will be much, much worse.

But Obama can't can Bernanke now. It's far too late. Bernanke's fate is Obama's fate...and our fate as well.

Chinese Fire Drill

Roubini calls bullshit on the reports that China's economy grew at 6.8% in 4Q 2008.

The Chinese came out today with their 6.8% estimate of Q4 2008 growth. China publishes its quarterly GDP figure on a year over year basis, differently from the U.S. and most other countries that publish their GDP growth figure on a quarter on quarter annualized seasonally adjusted (SAAR) basis.

When growth is slowing down sharply the Chinese way to measure GDP is highly misleading as quarter on quarter growth may be negative while the year over year figure is positive and high because of the momentum of the previous quarters’ positive growth.

Indeed if one were to convert the 6.8% y-o-y figure in the more standard quarter over quarter annualized figure Chinese growth in Q4 would be close to zero if not negative.

Worse, China's Q1 2009 numbers will be negative. The last real bastion of positive economic growth in the global economy is about to be turned off for 2009, just when the world needs it the most.

2009 will be economic legend, like 1929 or 1945.

StupidiNews!

• A new survey of economists show only 22% think the economy will grow in 2009.
• The BBC has a controversial new documentary that takes on the dismal state of health care...in the US.
• Under Obama, states can impose tougher emission standards soon.
• Drug maker Pfizer is buying Wyeth in a $68 billion dollar deal that will cut thousands of jobs and five plants.
• The long, strange, and scary story of the Ghostbusters video game continues.

Hell Week

While last week's numbers on Wall Street were dismal, this week's earnings and 4th quarter GDP figures are going to have the market testing those late 2002 market lows.

Only 10% of the 85 S&P 500 companies that have reported so far have topped forecasts. Another 60% have met estimates and another 30% have missed, according to Thomson Reuters.

"We're in the process of absorbing just how bad the fourth quarter was," said Bernard McGinn, CEO of McGinn Investment Management. "We had a feeling things were terrible, now we're getting proof of it. The question is 'where do we go now?"

This week also brings the latest Fed policy meeting - although it's likely to be less influential than usual since the central bankers are expected to keep interest rates unchanged near zero, said Kenny Landgraf, principal and founder at Kenjol Capital Management

Investors will also digest reports on housing, consumer confidence and leading economic indicators early in the week. The end of the week brings the fourth-quarter gross domestic product (GDP) report. It's expected to have fallen by an annual rate of 5.2%, it biggest plunge in 26 years.

I honestly think the GDP numbers will be worse than this, in the neighborhood of a 6% drop or more. If that happens, we could see numbers under 7,000 very soon on the Dow.

And let's not forget, the week after will bring the January unemployment numbers.

The Sun Is Still On Fire And Hot Too

And John McCain juuuuuust can't bring himself to vote for the stimulus plan, either because it doesn't have enough tax cuts for the rich.

Sen. John McCain, Obama's opponent in the November presidential contest, said he did not believe the stimulus package did enough to create jobs.

"There have to be major rewrites if we want to stimulate the economy... . As it stands now I can't vote for it," McCain said on Fox television.

He also continued a theme from his campaign, declaring that the former Bush administration tax cuts, that were particularly beneficial to high-earning Americans, should be made permanent. The measure expires next year and Obama has said he will not seek their renewal.

Gee there's a shocker. Look for 40 other Republican Senators to do the exact same thing and blame Obama for giving them something they just can sign in good conscience. That's okay though, because the Village loves their Maverick McMaverick, all is forgiven, and he's fighting for the American people against that nasty, socialist Obama guy.

Granted, Obama just needs to flip a couple. But that's of course if Obama can keep them all on his side, which I doubt. BooMan has a pretty good theory which boils down to "the safer the district is for the Dems, the more they will support Obama." Makes sense to me.

The Senate however is a bit more complex. Many of them on both sides of the aisle will be looking to take the McCain route out...especially the ones up for re-election in 2010.

Golden State Deadbeats

Turns out the state of California is so broke, it's down to the point of actively choosing to miss payments on the billions it has borrowed over the last 18 months. (h/t Atrios):

The state's cash situation is somewhat analogous to your family emptying its checking account, drawing down the savings account to cover checks, and only having enough left to pay either the mortgage or the utility bill.

Of course you could then file for bankruptcy protection. Under federal law, the state can't do that, but it can do something you can't: Issue IOUs.

Known formally as "registered warrants," the state's IOUs are just that. Someone – a vendor, a landlord, the water company – who is owed money by a California government agency gets a piece of paper that says the state owes them money, and will pay them the amount plus interest at some point in the future.

The only time since the Great Depression that the state has issued IOUs was in 1992, and it wasn't a pretty sight. About 1.6 million of them, worth a total of $3.8 billion, were issued during a two-month budget tiff between then-Gov. Pete Wilson and legislators.

Instead of paychecks, about 100,000 state workers got IOUs, which proved somewhat harder to cash. After the first month, many of the state's major banks quit accepting the warrants, saying the 5 percent interest they were paid wasn't worth the arduous processing needed to redeem them.

And after state employees sued, a federal judge ruled that paying workers with IOUs violated federal labor law. The state agreed in 1996 to give the affected workers extra paid vacation to compensate.

If IOUs are issued this year, they won't go to state workers. They also might not be accepted by many banks.

Beth Mills, a spokeswoman for the California Bankers Association, said the group's members still had "a lot of technical and operational questions we're trying to get some resolution on" about IOUs.

Banks aren't going to want to touch these things. Not when they know California may just decide "Hey. we're a state government and we're going to decide just not to pay you."

I'm wondering how many states will have to be bailed out over the next couple of years, how many state employees will be laid off as services are curtailed or eliminated.

There are plenty of states in dire trouble where Republicans are in charge, and their solution is going to be to privatize or eliminate as many state services as humanly possible. That means a whole hell of a lot of jobs are going to be lost, despite Obama's promises to fund "shovel-ready" projects.

Of Financial Oversight, Meteor Strikes, And Modern Barn Construction

Up late tonight, but noticed this over at Atrios's place:

The Obama administration plans to move quickly to tighten the nation’s financial regulatory system.

Officials say they will make wide-ranging changes, including stricter federal rules for hedge funds, credit rating agencies and mortgage brokers, and greater oversight of the complex financial instruments that contributed to the economic crisis.

This should have been done, oh, never because this never should have been needed to be done in the first place. Remember kids, this all started with Citigroup and the Gramm-Leach-Bliley Act, which overturned Glass-Steagall, which allowed this mess to happen in the first place.

Clinton signed it into law. Bush removed nearly all the oversight from what was left in the system. It's badly needed regulatory oversight, but it's not just closing the barn door after the horses have escaped the barn, worrying about regulatory oversight right now is the equivalent of rebuilding the barn door just so you can close the damn thing at some unspecified point in the future after the barn has been hit by a meteor and not only killed the horses but flattened every building in the county.

Yes, at some point that barn door will be needed again. That's step #22,347 at this point. Step #1 is realizing that there is no barn anymore. Either Obama doesn't understand that, or he understands it all too well and he's doing what he's capable of doing at this point and getting it out of the way now.

And really, the scary part is that the horses being the financial institutions to be regulated at this point, it's really like the meteor was an evil necromantic meteor that killed the horses and raised them from the dead as Zombie Bank Horses. Zombie Bank Horses that hunger for billions in bailout money (and maybe brains.)

Yeah, I'm going to bed.

Circling The Wagons

For eight long years we've seen the GOP on the attack, time and time again. Democrats have been on the defense, but so far it's worked out: after all, Obama is President, and the Dems run both chambers of Congress. To borrow a video game term, the Dems have expertly "turtled up".

Now however, Obama understands the value of changing tactics to keep the other side off balance. He's going on the offensive, something long overdue. Earlier this week he took it straight to the GOP on his stimulus plan.

Now he's taken a shot against the bow of the big GOP boys. No, not anyone in Washington, but the Right Wing gasbag himself, El Rushbo.

Mr Obama has told Republicans in Washington to stop listening to the right-wing talk show host Rush Limbaugh, risking a new culture war with conservative voters.

His exhortation came as he enraged other Republicans by reversing George W Bush's ban on funding international aid to charities that perform or provide information about abortions.

After less than a week in office, Mr Obama's presidency is already encountering the very partisan bickering he had pledged to stamp out during his first 100 days.

He faces mounting criticism over his $825 billion economic stimulus plan, from Republican leaders who say the legislation has been drawn up without the input which Mr Obama had promised to allow them.

The president responded with a clear signal that he is prepared to ram the bill through without the bipartisan consensus he promised to construct, telling Republican leaders from the House of Representatives: "I won. I'm the president."

He then told them to break free of the confrontational mindset epitomised by Mr Limbaugh, the highest paid talk show host in America. "You can't just listen to Rush Limbaugh and get things done," Mr Obama said.

His comments followed a blunt attack on him by Mr Limbaugh, who declared on air that he hoped Mr Obama would fail as president because otherwise it will usher in socialism.

It's got the GOP on the run. Today they are scrambling to counterattack Obama, because the wingnuts know that if the GOP follows Obama's advice on this, they are done. Needless to say, the wingers are coming out swinging. Hard.

There are two things going on here. One prong of the Great Unifier's plan is to isolate elected Republicans from their voters and supporters by making the argument about me and not about his plan. He is hoping that these Republicans will also publicly denounce me and thus marginalize me. And who knows? Are ideological and philosophical ties enough to keep the GOP loyal to their voters? Meanwhile, the effort to foist all blame for this mess on the private sector continues unabated when most of the blame for this current debacle can be laid at the feet of the Congress and a couple of former presidents. And there is a strategic reason for this.

The reason is Obama is striking at the head of the snake while he has a nearly 70% approval rating. That rating has to include a fair number of Republicans...and they are ones who are probably not really happy with Rush and his buddies.

There are those that say that the more Obama attacks Rush, the more the President legitimizes Rush at a time when wingnuts are reeling and looking for a rallying point to regroup around. Obama is taking that risk.

But Rush has been around long enough that he has those who will follow him regardless. By shying away from his attacks, Obama just invites more. But by sticking it to him with a logical argument -- the argument that following El Rushbo has been fundamentally bad for the GOP -- Obama is hoping to peel off that support.

Not even Rush can say that losing the White House and Congress to the Democrats with an unbeatable margin the House and an all but unbeatable margin in the Senate has been good for the Republicans. They were beaten soundly and there is no argument here: the GOP lost.

If moderate Republicans that support Obama -- and that 68% approval rating by mathematical dint has to include millions of Republicans that support Obama -- start buying the very logical and practical argument that the tactics of Rush Limbaugh and his ilk are one of the main reason why the GOP lost in November, then Obama and the Democrats will profit in the end.

Let's face it, folks. The tactics of the GOP during the campaign season rang hollow with many Republicans and independent voters. Rush opened himself up to this counter-attack by declaring he wished Obama would fail.

It has clearly occured to a great many Republicans that if Obama fails, then America is in grievous trouble. And eight years of the Bush economy has led to not one, but two recessions now...the second of which may be another Great Depression. Obama's plan is to reach out to the Republicans who have doubts about the way the GOP handled the campaign with brutally ugly lies about Obama, and have the irrefutable evidence of the economy to back up the theory that the GOP has no right being in charge.

All I have to say is "about damn time."

Smart Bombed

BooMan analyzes good ol' Sen. Mitch McConnell's reaction to the idea of "smart power": the notion that America can project power through cultural, social, and diplomatic means (and not just military ones.) As BooMan points out:

I was watching Minority Leader Mitch McConnell answer questions from the audience yesterday during his appearance at the National Press Club. [I'm hoping to get a transcript, but you can watch the video at CSPAN] And someone in the audience submitted a question (at minute 53:15, if you're watching the video) that asked McConnell 'what is your understanding of the foreign policy concept of Smart Power?'

McConnell took a moment to collect his thoughts, and then responded:

"I'm not sure I know what that means. [It's] probably in the eye of the beholder. Um...I'm not sure I know exactly what that means. I assume it probably means...um...be careful when you..um...decide to attack, and I think most everybody would agree with that."

That was the sum total of Mitch McConnell's response.

Now, it's obvious that McConnell wasn't familiar with the term 'smart power', and he was therefore quite hamstrung in his ability to answer the question. We've all been there. Your options are to admit that you don't know the answer to the question or to engage in some bullshit. McConnell chose both options.

When you first seek to engage in some bullshit, you have to engage your imagination. In this case, McConnell had to think about what the likely source of the term 'Smart Power' might be and what they probably meant by it. We all know that attacking Iraq wasn't a 'smart' thing to do. And that seems to be about as far as McConnell's imagination could go.

It's almost a cliche, almost cartoonish. McConnell is so single-mindedly belligerent that he can't fathom America using anything other than military power for any reason.

Honestly, let's think about this. Arguably, as Senate majority leader, Mitch is the most powerful Republican out there. And yet, to Republicans, America will always be a military empire where might makes right. It's so ingrained into the Republican hawk mindset that literally, McConnell cannot even make the obvious connection about what "smart power" is, despite having been in Washington for decades, his wife being Labor Secretary and both of them being well-connected in D.C. circles.

That's the mindset of the GOP, period. Diplomacy isn't even an option, other than as something to use to cover for more military action. That's how Bush used it for eight years.

No wonder Condi Rice was considered a joke, and a former general was Bush's other Secretary of State, Colin Powell's only job was to sell the Iraq War.

It's truly an incomprehensible concept to these folks.

Money Plays, Money Pays

Obama's weekly YouTube is once again pretty dire. The President warned that his stimulus package needs to pass, or America's in trouble.

"We begin this year and this administration in the midst of an unprecedented crisis that calls for unprecedented action," he said in his weekly radio and Internet address.

"Just this week, we saw more people file for unemployment than at any time in the last 26 years, and experts agree that if nothing is done, the unemployment rate could reach double digits," Obama said.

The president pleaded for urgent action, saying, "if we do not act boldly and swiftly, a bad situation could become dramatically worse."

Obama's remarks came as he is lobbying for a quick congressional passage of a $825 billion dollar stimulus package to pump up the economy.

Obama's been repeating this almost daily now. Does it matter in the end?



The rhetoric is right, the scope is too small. We'll see.