A Pretty Impressive Level Of Broke

One Alabama county is so strapped for cash that it has no choice but to basically shut down the county government.

Alabama’s most populous county is preparing to stop road maintenance, close courthouses and shutter services for the elderly after a court struck down taxes that pay for about 35 percent of its budget.

Jefferson County, which includes Birmingham, released a plan to cut $52 million from its budget as it appeals the ruling against its business and occupational taxes to the Alabama Supreme Court. Without that revenue, the county has said it is at risk of running out of money as soon as this month.

The loss of the tax money was another blow to a county that has been struggling to avoid bankruptcy since last year, when Wall Street’s financial crisis caused its interest bills to soar on more than $3 billion of bonds.

The county's bid to raise taxes was struck down by the state's courts, so it has no choice but to suspend country services as it's basically broke.

Jefferson County, Alabama is only the beginning, folks. You'll see plenty of other municipalities, counties, towns, and cities go under financially in the months ahead. Those that do survive will be forced to pay the piper one way or the other, through loss of services or raising taxes.

StupidiNews, Weekend Edition!

• The world pauses to remember the 65th anniversary of D-Day in France.
• Phil Mudd, a Bush holdover nominated by Obama to be intel chief at Homeland Security, has withdrawn his nomination.
• Murdered late-term abortion doctor George Tiller told his colleagues weeks before his murder that "something was coming".
• Chrysler's creditors plan to appeal the planned sale of the company to Fiat all the way to the US Supreme Court.
• Louisiana legislators are considering a 15-cent a month internet service tax to fight cybercrime.

Honestly, I'm Just As Qualified As Liz Cheney

As Steve Benen points out, I'm apparently just as qualified as Liz Cheney to discuss national policy issues on TV.

Liz Cheney made four television appearances yesterday, showing up on all three major cable networks. She's made seven national appearances since Monday. Media Matters updated its comprehensive list, and found that Liz Cheney has been on national television 22 times in the last 24 days.

Mind you, Liz Cheney is not a journalist or a media professional. She's not a celebrity or a candidate for public office. She doesn't work for a news outlet, government agency, party, think tank, or activist organization. She isn't known for saying anything especially provocative, amusing, counter-intuitive, or thought-provoking.

Liz Cheney is given a media platform, over and over again, to defend her father, attack the president, and repeat transparently ridiculous Republican talking points. None of the networks that has featured her on-air "analysis" seem to find it at all strange that they're seeking political commentary on Dick Cheney's national security efforts from his own daughter.

Hey, I meet those requirements too! I should be on TV. So should you for that matter...

Jim Inhofe Finally Jumps The Shark

Oklahoma Republican Sen. Jim Inhofe has finally lost it. Obama's speech drove him so crazy, he's now openly questioning the President's patriotism.

Reacting to President Obama’s outreach to the Muslim world yesterday, Sen. James Inhofe (R-OK) decried the president’s speech as “un-American” and even suggested Obama might be on the side of terrorists:

Sen. Jim Inhofe said today that President Barack Obama’s speech in Cairo was “un-American” because he referred to the war in Iraq as “a war of choice” and didn’t criticize Iran for developing a nuclear program.

Inhofe, R-Tulsa, also criticized the president for suggesting that torture was conducted at the military prison in Guantanamo, saying, “There has never been a documented case of torture at Guantanamo.”

“I just don’t know whose side he’s on,” Inhofe said of the president.

Unsurprisingly, actual Iraqis and Iranians — a couple of the key audiences for Obama’s speech — viewed it far more favorably than Inhofe. Iraqi government spokesman Ali al-Dabbagh said the speech reflected greater understanding of Mideast culture and “reduces the chance of growth of extremist ideas that are trying to tarnish the image of Islam in the world.” “Obama’s speech was extraordinary. I loved it,” said 24-year old Iranian Morteza Sinaie. “I wish every Iranian would hear it. I think it would dramatically change their opinion about Obama and the United States.”

At what point does Oklahoma get rid of this national embarassment? Honestly? A sitting member of the Senate acting like this? There's no excuse.

Questioning The Worst-Kept Secret

People are beginning to ask questions about how the banks are magically fine after needing a trillion dollars earlier this year.

Big banks in the U.S. say they’re on the mend. The five largest were profitable in the first quarter, rebounding from record losses for the industry in the fourth quarter. Share prices have jumped, with the KBW Bank Index doubling since March 6.

Treasury Secretary Timothy Geithner, after “stress testing” 19 banks on their ability to withstand a worsening economy, declared in early May that Americans can be confident in the banks’ stability and resilience. Wells Fargo & Co. and Morgan Stanley were among banks raising $43 billion in new capital since then through share sales.

“With our capital and assets, stressed as they have been, we can go back to focusing all our attention on managing our business and restoring value,” Citigroup Inc. Chief Executive Officer Vikram Pandit said after Geithner’s examinations were completed.

The revival may be short-lived. Analysts who have examined the quarterly profits and government tests say that accounting rule changes and rosy assumptions are making the institutions look healthier than they are.

The government probably wants to win time for the banks, keeping them alive as they struggle to earn their way out of the mess, says economist Joseph Stiglitz of Columbia University in New York. The danger is that weak banks will remain reluctant to lend, hobbling President Barack Obama’s efforts to pull the economy out of recession.

‘Bogus’ Profit

Citigroup’s $1.6 billion in first-quarter profit would vanish if accounting were more stringent, says Martin Weiss of Weiss Research Inc. in Jupiter, Florida. “The big banks’ profits were totally bogus,” says Weiss, whose 38-year-old firm rates financial companies. “The new accounting rules, the stress tests: They’re all part of a major effort to put lipstick on a pig.”

Further deterioration of loans will eventually force banks to recognize losses that their bookkeeping lets them ignore for now, says David Sherman, an accounting professor at Northeastern University in Boston. Janet Tavakoli, president of Tavakoli Structured Finance Inc. in Chicago, says the government stress scenarios underestimate how bad the economy may get.

The accounting rule changes that matter most for the banks came on April 2, when the Financial Accounting Standards Board gave companies greater latitude in how they establish the fair value of assets. Lawmakers, including Representative Paul Kanjorski, a member of the House Financial Services Committee, had complained that existing mark-to-market standards worsened the financial crisis.

But hey, pretending we're alright is fun! The Dow's up 40% since March 2 and we're in a bull market and everything's great!

Until this bubble too pops.

Jobapalooza

Good news, everyone! We only lost 345,000 jobs in May! Of course, that puts the unemployment rate at a revised 9.4%, and the U-6 at a lovely 16.4%.

One in six workers is out of a job or only working part-time. It's still bad, but not as bad as it could be.

Reactions And Overreactions To Obama's Cairo Speech

After 24 hours, the reactions to Obama's speech at Cairo University were mostly positive...unless you were a conservative pro-Israeli pundit, apparently. Then it was the worst speech ever given.

Ira Stoll @ Commentary:

During the campaign I had actually defended Obama against those who felt he would be a disaster for Israel. This speech makes me think that may have been a mistake. The only chance now is that this speech will be mere rhetoric, like so much in the Middle East, intended only for public consumption. But if Obama really means it, it is bad news for the Jews in Israel and America, not to mention for American national security.

Michael Rubin @ National Review:

Obama studiously avoids the word democracy. Instead, he declared, "That does not lessen my commitment, however, to governments that reflect the will of the people." Dictators of the world, relax: Stage a spontaneous demonstration to demonstrate popular adulation; don't worry about those pesky votes.

Stephen Hayes @ Weekly Standard:

What's so vexing about Obama's gleeful rejection of American exceptionalism (again) in the context of American power is that he embraces it in other ways. The United States, he frequently argues, must lead by example. Americans must close Guantanamo and end torture, he says, because "we must never alter our principles" or "act contrary to our ideals." And those principles and ideals make America something worth emulating -- they make it exceptional.

Caroline Glick @ National Review:

From an Israeli perspective, Pres. Barack Obama’s speech today in Cairo was deeply disturbing. Both rhetorically and programmatically, Obama’s speech was a renunciation of America’s strategic alliance with Israel.

If you're taking all this from a speech Obama gave, you're trying to dislike him too hard, guys. But as honest as their disagreement with the President is, it's tame compared to some opinions of Obama's speech in Cairo.

Let's not forget how some Israelis and American Jews on the street in Jerusalem feel about our President, either (language warning, NSFW.)

The battle is just beginning. Obama will no longer give Israel a blank check, and the backlash will only get worse. That video is pretty shocking and as always, stuff like that is supposed to supply badly needed perspective and exposure.

Seeing educated American kids like that throw around such brutal hate is eye-opening...but not surprising. I've been warning about this for months now. There are people who so hate Barack Obama they will never listen to him, and never allow him to press for peace in the Middle East.

StupidiNews!

• Actor David Carradine was found dead in a Bangkok hotel yesterday, his manager suspects foul play.
• House Democrats have thrown out President Obama's request for the money to close Gitmo.
• Alaska lawmakers say they have the votes to override Gov. Sarah Palin's stimulus funding veto.
• Apple's big announcement on Monday is expected to include a new iPhone and the return of Steve jobs.
• Big E3 buzz about the new Tony Hawk Ride, a virtual skateboard controller you can stand on to play skating games.

Last Call

The Democrats are saying that the health care legislation they will soon propose will have a public health care plan option in it.

The top Democrat on the Senate Finance Committee — a moderate who is seen as the leading figure on Congressional proposals to create a national healthcare mandate — says that his bill is almost certain to include a public healthcare option, in a blow to the managed care industry and a possible major victory for progressives.

“I think a bill that passes the Senate will have some version of a public option,” said Montana Sen. Max Baucus, the Senate Finance Chairman. His remarks come two days after President Barack Obama signaled in a letter that a public competitor to the private health insurance companies was a key part of his agenda.

Of course, the measure will still have to pass the full Senate. Republicans are vehemently opposed to a public healthcare plan, saying it will interfere with the markets and handicap existing private insurance companies.

“Despite the happy talk from the four Senators about progress and compromise, Baucus’ concession that a government-run, public insurance option will likely be included in the reform bill could sink its bipartisan support,” Roll Call’s David Drucker wrote late Thursday. “Additional items are also making compromise difficult, including the issues of government mandates and how to pay for it.”

“Our caucus is very much against [a public plan.] It’s kind of a litmus test,” ranking Senate Finance Committee Republican Chuck Grassley (R-IA) said. “That’s all you can say. There’s no follow-up question that you can ask me. There’s no further statement I can make about it.”

The creation of a public healthcare option could revolutionize health care in America.

The real fight is on. There are enough health care groups and Republicans out there to sink this. The GOP knows if this passes, they are done. They will do everything they can to stop it. Likewise, if Obama has to shelve this, the Democrats are in deep trouble.

We'll see if the Democrats and Obama are willing to do what it takes to pass this.

Zandar's Thought Of The Day

When did Liz Cheney become Our Lady Of Regurgitating GOP Talking Points, anyhow?

Extraordinary

Obama's speech in Cairo was nothing short of breathtaking, and on top of that it was politically brilliant. His message boiled down to "We're ready to talk, but you must be ready to listen."

But Atlantic's Jeffrey Goldberg sums it up the best:

An African-American President with Muslim roots stands before the Muslim world and defends the right of Jews to a nation of their own in their ancestral homeland, and then denounces in vociferous terms the evil of Holocaust denial, and right-wing Israelis go forth and complain that the President is unsympathetic to the housing needs of settlers. Incredible, just incredible.

Of course. Obama is the enemy, don't you know.

You thought the Winger hate was bad before. We've gone straight to unhinged. I honestly am worried about the man's safety now. The next year or so will test us like never before, people.

Pray we pass.

RIP Geithner Plan

Since I explained last week how the banks didn't need the Geithner Plan in order to keep up the illusion of solvency, it appears this week that the Geithner Plan is now quietly being shelved.

The Federal Deposit Insurance Corporation indefinitely postponed a central element of the Obama administration’s bank rescue plan on Wednesday, acknowledging that it could not persuade enough banks to sell off their bad assets.

In a move that confirmed the suspicions of many analysts, the agency called off plans to start a $1 billion pilot program this month that was intended to help banks clean up their balance sheets and eventually sell off hundreds of billions of dollars worth of troubled mortgages and other loans.

Many banks have refused to sell their loans, in part because doing so would force them to mark down the value of those loans and book big losses. Even though the government was prepared to prop up prices by offering cheap financing to investors, the prices that banks were demanding have remained far higher than the prices that investors were willing to pay.

In a statement, the F.D.I.C. acknowledged that it had not been able to get banks interested in its so-called Legacy Loans Program. Scheduled to start later this month, the pilot program was aimed at selling off $1 billion in troubled home mortgages.

F.D.I.C. officials portrayed the change as a sign that banks were returning to health on their own.

That's funny, because the FDIC clearly went to all this trouble to make the banks look solvent. The issue was that the real measures the Fed and FDIC took to prop up the banks (AIG counterparty loans) worked too well. Now the banks want nothing to do with the government anymore other than to keep feeding them money under the table while they pretend the recession is over.

We're suddenly supposed to believe that the banks are so magically solvent now they went from needing a trillion dollars more in loans to not needing a dime?

And to boot, those toxic assets are still on the books of the banks. We were told this program was critical to the economy, a trillion dollars worth of critical. Now, it's no longer needed. The banks are suddenly fine!

And they'll continue to be fine right before the next wave of the recession crashes down upon their heads and ours, too.

Do you believe our banks are solvent?

You're already betting your livelihood on it.

I called this back in February. I said that the no right price problem would kill any program like this. I was correct in saying the Fed, Treasury, and the FDIC were wasting America's time and money with it.

Surprise, surprise. And now we're back to pretending everything's fine again.

[UPDATE] Much more on this from Baseline, Naked Cap, Calc Risk, and Ezra Klein.

Metagaming The Village

E.J. Dionne of Der Village has apparently come to the conclusion that even in the Age of Obama (or strictly because of that) the Republicans run the media.

A media environment that tilts to the right is obscuring what President Obama stands for and closing off political options that should be part of the public discussion.

Yes, you read that correctly: If you doubt that there is a conservative inclination in the media, consider which arguments you hear regularly and which you don't. When Rush Limbaugh sneezes or Newt Gingrich tweets, their views ricochet from the Internet to cable television and into the traditional media. It is remarkable how successful they are in setting what passes for the news agenda.

The power of the Limbaugh-Gingrich axis means that Obama is regularly cast as somewhere on the far left end of a truncated political spectrum. He's the guy who nominates a "racist" to the Supreme Court (though Gingrich retreated from the word yesterday), wants to weaken America's defenses against terrorism and is proposing a massive government takeover of the private economy. Steve Forbes, writing for his magazine, recently went so far as to compare Obama's economic policies to those of Juan Peron's Argentina.

Democrats are complicit in building up Gingrich and Limbaugh as the main spokesmen for the Republican Party, since Obama polls so much better than either of them. But the media play an independent role by regularly treating far-right views as mainstream positions and by largely ignoring critiques of Obama that come from elected officials on the left.

This was brought home at this week's annual conference of the Campaign for America's Future, a progressive group that supports Obama but worries about how close his economic advisers are to Wall Street, how long our troops will have to stay in Afghanistan and how much he will be willing to compromise to secure health-care reform.

In other words, they see Obama not as the parody created by the far right but as he actually is: a politician with progressive values but moderate instincts who has hewed to the middle of the road in dealing with the economic crisis, health care, Guantanamo and the war in Afghanistan.

Well gosh, it's almost like some of us called that a while back there E.J. my friend.

Still, he has a point. It's good to start seeing journalists actually question the practice of stenography of Republicans. Only took them what, 16 years?

Rush Limbaugh Fails At Reverse Psychology

So, Rush Limbaugh is willing to support the "racist" Sotomayor if she turns out to be a reliable pro-life vote based on her Catholic upbringing. Rush is expecting her backers to suddenly pull their support and say "But what if she overturns Roe v. Wade?!?" and try to scuttle her nomination, saving him some work.

It's about as transparent as air, and the White House has already come out to say that line of questioning her is full of crap. But I guess Rush is now expecting everyone on Sotomayor's side to panic or overreact. "If Rush likes her she's secretly a conservative!"

People aren't that stupid, are they? (The again, Limbaugh has a hell of an audience.)

If It's Thursday...

...for once, NOT a new record in continuing unemployment claims.

The number of U.S. workers filing new claims for jobless benefits fell for a third straight week last week, government data showed on Thursday, indicating some loss of force in the pace of the labor market's deterioration.

Initial claims for state unemployment insurance benefits fell 4,000 to a seasonally adjusted 621,000 in the week ended May 30, the Labor Department said. The week covered the Memorial Day holiday, which could have had an impact on the data.

Analysts polled by Reuters had forecast new claims slipping to 620,000 from a previously reported count of 623,000.

The number of people staying on the benefit rolls after collecting an initial week of aid fell 15,000 to 6.74 million in the week ended May 23, the latest week for which the data is available.

Still, as long as we remain over 600k new jobless claims each week, we're still in deep. Unemployment is powering a new wave of foreclosures and will continue to dampen growth. Tomorrow we'll see the monthly numbers, and I just don't see any sort of major recovery in the cards.

Welcome to the new normal.