It's A Locke

Lots of news racing around that Obama has decided on Commerce Secretary nominee #3, former Washington Gov. Gary Locke.

Locke, 57, was the country's first Chinese-American governor, elected to lead Washington in 1996 and re-elected in 2000.

Prior to becoming governor, the Democrat served five terms in the U.S. House of Representatives and one term as executive of King County, Washington. He was chairman of the House Appropriations Committee from 1989 to 1994.

Locke's pretty well-respected and a solid progressive choice...so far. We'll see what the microscope finds on his record.

The Good Lord Helps Those Who Aren't Complete Assholes

...like Gov. Mark Sanford (SC-Douchenozzle).

On C-SPAN’s Washington Journal this morning, Sanford received a call from a Charleston resident who said he lost his job because he has been taking care of mother and sister, both of whom have serious illnesses. The caller told Sanford he is “wrong” to decline the money. “A lot of people in South Carolina are hurting. And if this money can come and help us out we need it.” In response, Sanford could offer him only his prayers:

CALLER: I hope you all are not playing politics with this. People in South Carolina are hurting. You know how unemployment rates are high right now and going up higher. We are running out of money in the unemployment bank — we need money for that, the people that need help. And I’m one of them, I can’t get no help. […]

SANFORD: Well I’d say hello to Charleston because its home and I’d say hello to this fellow this morning and say that my prayers are going to be with him and his family because it sounds like he is in an awfully tough spot.

What a guy. Prayers! I wonder if the good Governor knows anyone who would be in a position to help that caller.

You know, like whatever Democrat the voters get to replace this jackass.

Zandar's Thought Of The Day

So, guys...really...about this whole government stake in financials thing...

American Insurance Group, the insurance giant that is 80-percent owned by the US government, is in discussions with the government to secure additional funds so it can keep operating after next Monday, when it will report the largest loss in U.S. corporate history, CNBC has learned.

Largest loss in US corporate history...$60 billion...and you and I own 80% of the company.

And this is what they want to do with all the banks?

The Village Anti-Reality Bubble

The Village? They don't exist in our dimension. (h/t Balloon Juice) The Star-Tribune on the Minnesota Senate race:

A series of court rulings have dealt the Republican long odds for overturning DFLer Al Franken's 225-vote lead. The three judges hearing the case have been only partly receptive to Coleman's bid to expand the field of ballots as he seeks more votes, and they brushed aside his claim of systemic problems with Minnesota elections.

Coleman once wanted to examine up to 11,000 rejected absentee ballots in hope that enough might eventually be opened and counted to help him overtake Franken. Now he's looking at opening perhaps a couple of thousand ballots. And the number could turn out to be even smaller.

"It's very hard, the way it's set up right now, for him to be able to win," said David Schultz, a Hamline University law professor specializing in elections.

"Very slim," was how Duke University law Prof. Guy-Uriel Charles characterized Coleman's current chances.

"Coleman is in a bubble running out of oxygen," said Lawrence Jacobs, a University of Minnesota political science professor.

Washington Post reporter Shaliegh Murray on the Minnesota Senate race:

Baltimore, Md.: Speaking of junior senators, do you see Al Franken being seated anytime before 2010?

Shailagh Murray: Perhaps, but it seems more and more likely that the Minnesota race will wind up as a re-vote. At this point it seems like the quickest way to resolve the situation.

Al Franken Revote Really?: Star Tribune just published an article on the front page which discusses Coleman's dwindling chances. The Politico last week published an article discussing Coleman's need for a miracle. Election experts from Minnesota are discussing the math which makes a Coleman comeback extremely difficult and the higher courts taking this case an unlikely prospect. How did you arrive at this recount theory? I think the only folks advocating this are a FEW Republicans who see this as Coleman's only realistic hope for overturning the results of November.

Shailagh Murray: I don't have a revote "theory." I'm just wondering how long this is going to sit in the court system. If Coleman looks desperate, why not just hold another election and beat him handily?

But there's a process in place here, and we can only assume both parties will abide by it.

So, since the Republican is going to lose a very close race, clearly we're headed towards a re-vote according to the Village. You see, it's a waste of time because the Village will never accept Franken, the Democrat, as legitimate in such a close race. Why not hold another election then?

Of course it was fine when Coleman was ahead.

It's 1994!

The logical endpoint of the Right's mass delusionary populist anti-Obama uprising is of course the ironclad belief that this imaginary uprising will mean that voters will magically vindicate them at the polls and sweep the Republicans into power in Congress in 2010.

Republicans are hatching a political comeback by dusting off a strategic playbook written nearly two decades ago.

Its themes: Unite against Democrats’ economic policy, block and counter health care reform and tar them with spending scandals.

Those represent the political trifecta that former House Speaker Newt Gingrich bet on in 1994 to produce a historic Republican takeover of Congress.

Now, some Republicans believe President Barack Obama’s one-two push on the economy and health care reform is setting the stage for a new round of significant gains, if not a total takeover.

And of course, the Village Idiots are there to help the GOP along, still believing totally that the country will have forgotten the entire Bush administration by 2010 and that the same economic plan they had that got us into this mess is the plan America wants them to use to get us out.

In other words, they're clinically insane. But watch...the Village will push the GOP Takeover Of Congress as not only possible in 2010, but that it's the expected conventional wisdom.

Moved The Decimal Point Over One

Citigroup's market cap, the total value of its common stock, is roughly $11.5 billion or so right now.

Citigroup wants the government to pay $45 billion for 40% stake for converting the stock, where a 40% stake of common stock should be worth...$4.5 billion.

So...yeah, that seems to me to be a typo of some sort. Because Citigroup can't honestly expect the government to pay $21.50 a share for a stock trading at $2.15.

Right? Because otherwise, this means either Citigroup has the worst accountants in the history of the universe and should be allowed to die, or Obama's about to pay 10x what the stock is worth and waste, oh, $40.5 billion.

Either option is, how shall I say, completetly f'ckin criminal.

As The Kroog says, just nationalize the banks already.

Conversion Convention

Building off last night's post on the government converting its stake in Citigroup from preferred to common stock as a back door for Plan N, this article in Bloomberg News takes a look at several scenarios for Plan N's implementation.

The Obama administration, which says it doesn’t want to nationalize U.S. banks, may find itself taking another step in that direction if it converts the government’s preferred shares in Citigroup Inc. into common equity to help the firm withstand losses.

Citigroup and rival Bank of America Corp., beaten down in New York trading last week on U.S.-takeover speculation, are among more than 20 lenders that could wind up majority-owned by the government if such conversions took place. Executives at New York-based Citigroup have discussed the change as a way to quell concerns about capital adequacy while heading off all-out nationalization, according to a person familiar with the matter.

U.S. regulators led by the Treasury Department announced today that the government stands ready to take bigger bank stakes in the form of shares that “would be converted only as needed over time.” To analysts including Paul Miller of Friedman, Billings, Ramsey Group Inc., nationalization of some of the nation’s largest lenders appears well under way. The government already holds $52 billion of preferred shares in Citigroup, five times the bank’s market value as of Feb. 20.

“We’re already in the nationalization phase,” Miller said today on Bloomberg Television. “We already own a chunk of Citigroup and Bank of America. The problem is that the government is dancing around this nationalization issue. They do not want to do it.”

Of course they don't want to do it. But I've been saying they have no choice now for months. So, what happens if the TARP funds Citigroup and other banks have been given were converted to common stock for the government?

The stock is more senior in the capital structure than common shares, so “loan-loss reserves and tangible common equity are the first line of defense,” he said.

If the U.S. were to convert all of its holdings into common shares, it would own more than 80 percent of the company.

Charlotte, North Carolina-based Bank of America, which has received $45 billion in TARP funds in exchange for preferred shares and warrants, would be 66 percent owned by the government if its entire stake were converted to common equity, according to data compiled by KBW Inc., a New York-based investment bank. The figure would be 69 percent at Regions Financial Corp. in Birmingham, Alabama, which has received $3.5 billion from the U.S. It would be 83 percent at Fifth Third Bancorp, the largest Ohio-based lender, which got $3.4 billion.

KBW calculated the government stakes based on a conversion price of 80 percent of the stock’s value as of Feb. 5.

Voila. Nationalization through the back door. It's going to have to be done. Looks like majority government ownership of the banks, temporary as it may be for now, is imminent.

Here's the real question: How will the government be able to re-privatize the company without annhiliating the stock price and the value of the company? It's not going to able to do so. For the most part, when the government takes over, it's going to have no choice but to break up the banks it eats.

None of these nationalized banks will survive. Assets will be sold off to those banks that are above water...the real problem is that the banks that are above water now won't be for much longer as housing prices, commercial real estate prices, and mortgage defaults continue to pile up, and the rest of the economy tanks.

It's not that some banks are good and others bad, it's that some are clearly insolvent and some haven't collapsed yet, but will over the course of the next year.

Another Milepost On The Road To Oblivion

Fannie Mae and Freddie Mac debt? No longer acceptable to Asian investors without full faith and credit guaranteed payback.

The risks are too great without a pledge that the U.S. will repay the debt no matter what, according to Hideo Shimomura, chief fund investor in Tokyo for Mitsubishi UFJ Asset Management Co., and other bondholders and analysts in Japan, China and South Korea interviewed by Bloomberg. Overseas resistance may hamper U.S. efforts to hold down home-loan rates and shore up the nation’s largest mortgage-finance companies.

Even after President Barack Obama vowed on Feb. 18 to sink as much as $400 billion of capital into Fannie Mae and Freddie Mac, double the original commitment, “there is still a concern that there is no guarantee” from the government, said Shimomura, who oversees $4 billion in non-yen bonds for the arm of Japan’s largest bank.

“Looking at the risk, they’re not so attractive,” he said. “We need a guarantee before we’ll buy.”

You see, if the guys holding all our debt as a nation become convinced we'll never pay them back...they'll start selling off that debt. Fast. In a f'ckin tsunami. In a f'cking tsunami that will pretty much turn the dollar into a third world currency overnight.

This would be one of those Bad Things You Hear About. I expect some sort of guarantee before the end of the week on Fannie and Freddie debt.

One Bunning Bobble Too Far

Seems that KY Republican Sen. Jim Bunning's wildly inappropriate comments this weekend about predicting Supreme Court Justice Ruth Bader Ginbburg's death within nine months might have been the proverbial straw that broke the Bluegrass State GOP's back. Bunning has a long history of being a total whackjob (which is fine with the GOP) with unpredictably bad message discipline (which is not fine with the GOP.) But it seems now they want Bunning OUT.

A political bombshell this weekend from several well-placed GOP sources, in Frankfort and Washington: State senate President David Williams met with officials at the National Republican Senatorial Committee (NRSC) on Friday to discuss his interest in running for the U.S. Senate seat currently held by Jim Bunning. Williams, in town for the National Governor's Association winter meeting, impressed GOP officials, who called his interest "serious."

GOP leaders -- in Kentucky and D.C. -- continue to work fervently to nudge Bunning, who they believe is too weak to run, from the race. The NRSC recently commissioned a poll to assess Bunning's standing; sources say the numbers are brutal for the junior Senator, with his bottom line totals falling WELL-short of 50 percent (it isn't known whether Bunning has seen the complete poll tabs and, if he has, what affect it will have on his decision to run). Another recent poll, done by the liberal Web site DailyKos, was more favorable to Bunning.

Bunning's seat is being targeted by the Democrats by popular former Lt. Gov. Dan Mongiardo, among others. But a serious primary challenge from Dave Williams on the GOP side would make this seat competitive again for the Republicans. Bunning's war chest is nowhere near what it needs to be to stave off a challenge from Mongiardo, and Bunning is just nuts enough *not* to drop out in a bad situation.

But it certainly looks like Dave Williams is being set up as Plan B for the KY GOP.

StupidiNews!

• "Slumdog Millionaire", Sean Penn, Kate Winslet, and the late Heath Ledger took home Oscars last night.
• The country's 20 largest banks will get a thorough health examination over the next several weeks.
• AG Eric Holder takes on the legal quandaries surrounding those held at Gitmo.
• Tzipi Livni says no dice to Benjamin Netanyahu's new Israeli government.
• Methanol fuel cell technology could give soldiers wearable power packs in the field.

Last Call

So, another round of Deal or No Deal, this time with Citigroup as the contestant. Seems the government is trying for a 40% stake in the bank's stock, along with investment from foreign governments. (h/t Yglesias)

The move wouldn’t cost taxpayers additional money, but other Citigroup shareholders would see their shares diluted. A larger ownership stake by the federal government could fuel speculation that other troubled banks will line up for similar agreements. […] As part of the plan, Citigroup officials hope to persuade private investors that have bought preferred shares — such as the Government of Singapore Investment Corp., Abu Dhabi Investment Authority and Kuwait Investment Authority — to follow the government’s lead in converting some of those stakes into common stock, according to people familiar with the matter. That would further bolster an obscure but increasingly pivotal measure of banks’ capital known as “tangible common equity,” or TCE.

To me, this looks like a prelude to implementing Plan N on a large scale, especially if a number of banks line up for the stock plans. Citigroup won't be the last bank that the taxpayer has a 40% share in. Not by a long shot.

We'll see how this deal shakes out. Bottom line, it means the government is deciding which banks it now has to save (or the stock becomes worthless) and which ones it can let die, and it's doing so with our tax money. Of course, when Obama has no choice but to pull the plug, that common stock the taxpayer owns becomes...you guessed it! Worthless!

Which was the whole point of the preferred stock in the first place. The real point is to prop up the stock price so that the TCE mentioned up there is healthy enough so that the Obama administration doesn't fail Citigroup on the stress test.

It knows Citi is going to fail. So it's propping them up now. Then, when the stress tests are done, voila! All the banks pass! Crisis over! We win! Nobody has to be "nationalized" and the banks get all the billions they want through the back door manipulation of common stock.

It's a pretty good scam.

It won't save the financial system.

Kids Playing Tea Party

The latest delusion from our friends on the Right is that just underneath the surface of the American public, there's a massive, Obama-hating, anti-government populist revolt just begging to be tapped into and mobilized to bring the Republican Party thundering back into power to continue the Reagan Revolution. They imagine that there's a huge reservoir of untapped anti-stimulus, anti-spending, anti-tax, anti-everything-Obama-does wellspring out there that just needs a leader.

They call this movement the "Tea Party", after the Boston Tea Party, where they honestly believe millions of Americans will imminently rise up and overthrow the hated, failed, criminal, corrupt, evil Obama administration and replace it with God-fearing, Muslim-hating, border-patrolling, tax-cutting, gay-bashing, gun-toting folks beholden to small business owners, megachurches, and Our Founding Fathers.

The movement is ridiculous on its face, of course. Somebody should informed these small minded idiots that after one month of Barack Obama, they're reduced to following Rick Santelli, Malkinvania, and El Rushbo while having fever dreams of overthrowin' that damn Muslim President out on their paintball survivalist weekends.

Somebody should also inform them America already had a populist movement back on November 4 and kicked all these morons to the curb.

But as we've seen this weekend, these infantile jagoffs love playing tea party and freedom fighter and state's rights and other silly, childish games while the country is slipping away, indulging their escapist, paranoid fantasies, and in the end blaming everyone but their own greed for the problems we're in.

That leaves the grown-ups to determine the country's true fate, I suppose.

The Most Pious Of Neighbors

As I expected, other GOP governors are following suit on Bobby Jindal's "noble" efforts to turn down stimulus cash in a clear game of political "me too".

Though they support some federal action to help their states recover from the recession, several Republican governors said Sunday they plan to turn down a portion of what's offered in the stimulus bill that President Obama signed last week.

"If we were to take the unemployment reform package that they have, it would cause us to raise taxes on employment when the money runs out -- and the money will run out in a couple of years," Mississippi Gov. Haley Barbour told CNN's "State of the Union" on Sunday.

The Republican governors of Idaho, Alaska, Texas, South Carolina and Louisiana have expressed similar concerns.

In a couple of years of course is when the 2012 GOP primary will start to heat up. No serious GOP candidate can ever raise taxes for any reason, lest they become anathema. Screw the people who need help right now, anyway: if being unemployed is truly a problem for them, then they're likely to be Democrats anyway. Those with Presidential ambitions for the Party of No have to have the theme song down pat. Those without, however...well they can actually act on conscience.

But one of their colleagues, California Gov. Arnold Schwarzenegger, had a message for them Sunday on ABC's "This Week."

When asked about broader complaints from lawmakers such as South Carolina Governor Mark Sanford about the debt that the stimulus package will lead to, Schwarzenegger responded, "I am more than happy to take his money or [that of] any other governor in this country that doesn't want to take this money. I take it because I think California needs it."

Schwarzenegger called it "a terrific package," and said he does not foresee a need for a tax hike in the future to sustain the unemployment provisions.

A leading Democrat, meanwhile, said he does see a potential problem.

"I'm not sure that we can, over the long run, cope with the high unemployment compensation standard that this mandates for states," Pennsylvania Gov. Ed Rendell, the head of the National Governor's Association, told "Fox News Sunday."

"But I don't care. My people are suffering," he added. "They need that extra money. And right now that's paramount in my mind."

So yeah, live in the South in a state with a GOP governor? Unemployed? Sorry, your Governor has Presidential aspirations. Screw you.

Remember that plan where the Dems were supposed to take full responsibility for the "Obama Depression?" That one just died on the altar of political stupidity...and now these governors have a huge weakness in any general election in 2012...or re-election for that matter.

The NY Times has more, as does Steve Benen. Remember folks, this plan only works for the GOP if they stay united, and right now they aren't...not by a long shot.

WOLVEREEEEEEEEEEENS!

The Double G lays into the WOLVEREEEEEEEEEEENS! with both barrels, and especially their leader, former CNN loudmouth and now FOX Noise hate-machine Glenn Beck. Beck apparently is actually "war gaming" out the scenario of the right-wing militia movement in open, armed revolt versus the Obama government. Guess which side Beck's on?

But now, only four weeks into the presidency of Barack Obama, they are back -- angrier and more chest-beating than ever. Actually, the mere threat of an Obama presidency was enough to revitalize them from their eight-year slumber, awaken them from their camouflaged, well-armed suburban caves. The disturbingly ugly atmosphere that marked virtually every Sarah Palin rally had its roots in this cultural resentment, which is why her fear-mongering cultural warnings about his exotic, threatening otherness -- he's a Muslim-loving, Terrorist-embracing, Rev.-Wright-following Marxist: who is the real Barack Obama? -- resonated so stingingly with the rabid lynch mobs that cheered her on.

With Obama now actually in the Oval Office -- and a financial crisis in full force that is generating the exact type of widespread, intense anxiety that typically inflames these cultural resentments -- their mask is dropping, has dropped, and they've suddenly re-discovered their righteous "principles." The week-long CNBC Revolt of the Traders led by McCain voter Rick Santelli and the fledgling little Tea Party movement promoted by the Michelle Malkins of the world are obvious outgrowths of this 1990s mentality, now fortified by the most powerful fuel: deep economic fear. But as feisty and fire-breathing as those outbursts are, nothing can match -- for pure, illustrative derangement -- the discussion below from Glenn Beck's new Fox show this week, in which he and an array of ex-military and CIA guests ponder (and plot and plan) "war games" for the coming Civil War against Obama-led tyranny. It really has to be seen to be believed.

Having predicted this level of reaction from the right-wing nutjobs since before the election I'm not surprised in the least by this. Really do check out the entire article and the video clips Double G presents. It's borderline insanity, folks.

The militia whackjobs are gearing up for war against Obama openly. Glenn Beck is going through the scenarios where Mexico falls and becomes a lawless "narco-state" and requires armed militas to resist the endless flow of terrorists from the south because Obama won't stop them, requiring Israel to go to war with Iran, or those same militias go to war against the US government itself. This is crazy, end times stuff here, and Fox is openly fomenting these ideas. As Greenwald concludes:

But it's now inflamed by declining imperial power, genuine economic crises, an exotic Other occupying the White House, and potent technology harnessed by right-wing corporations such as Fox News to broadcast and disseminate it widely and continuously. At the very least, it's worth taking note of. And I wonder what would happen if MSNBC broadcast a similar discussion of leftists plotting and planning the imminent, violent Socialist Revolution against the U.S. Government.

Why, those folks at MSNBC would be called traitors. But you know, our Liberal Media doesn't have any problem with the Right spreading this kind of insanity on the airwaves to millions worldwide.

[UPDATE] Whenever the blowhards at Hot Air and the crackpots at Little Green Footballs disavow you, you have lost the Wingnuts for good, Mr. Beck.

In Which Zandar Answers Your Burning Questions

Josh Marshall asks:

Alright, how long do you give Burris?

As dolphy pointed out in the comments of my last Burris post, there's a decent argument for "January 2011".

The problem now is that because of the lack of full disclosure the pressure is on acting governor Pat Quinn to hold a special election thereby allowing a Republican, most likely my representative Mark Kirk a Republican they try to package as an independent even though he voted with Bush around 90-95% of the time, a chance to grab the seat. Pat Quinn has stated he is in favor of a special election even though he has every legal right to appoint a Democrat! HOW DUMB ARE THESE GUYS!! If the roles were reversed do you think the Republicans would allow an election that might put a Democrat in when they were under no legal obligation to do so?

And you know, that's a very decent point. This whole mess started with the Law of Unintended Consequences. A special election could very well put a Republican in the Senate right now from Illinois.

Pat Quinn really can't appoint anybody now after saying he favors a special election. The GOP would absolutely jump on the chance to take Obama's old Senate seat...it would be a massive symbolic victory for them. Short term, Pat Quinn looks very much like he's doing the right thing. Long term? I guarantee you the Village and the GOP will mobilize for all out war to take this seat. Better to contest it in 2010 when the GOP has so many other seats they have to try to keep then allow them to focus 100% on Illinois.

The just thing to do is for Burris to resign and Pat Quinn to appoint a new Senator, that's the law. The right thing to do is for Burris to resign and a special election to be held, what the law should be. The necessary thing to do is for Burris to stay in the Senate, and that's just political realism.

Which choice will be made is not up to me, and I'm not sure I could make it.