Last Call

And it looks like with 100% of the precincts counted in the NY-20 special election that Democrat Scott Murphy has edged out Republican Jim Tedesco by a scant 65 votes, with 6,000 absentee ballots still left to be counted.

I wonder, should the final count favor Murphy, will Jim Tedisco keep an eternal recount going all the way until November 2010?

And does anybody else find it rather odd that Tedisco was basically at the courthouse motioning for an emergency court order to prevent Murphy from being declared the winner some nine hours before the polls closed, as if he knew this election would be contested?

Maybe that's just a fabulous coincidence.

Maybe fully grown palm trees come flying out of my ass every Thursday at a quarter to seven, too.

Al Versus Norm, Part 513

As expected, Norm Coleman's shot at catching Al Franken's 225-vote lead just got a stake through the heart.

The court will now review these 400 ballots to make sure they met every single requirement of the law. Some of them will definitely be counted, but an unknown number are simply being reviewed because the court needs the genuine article to figure out an ambiguous point.

Looking at the math, it's very bad for Norm Coleman. Even if all 400 ballots were counted and went more to Coleman, it probably wouldn't produce enough swing to overturn Franken's 225-vote lead. A more likely guess would be that some percentage are counted, and they break to Franken -- after all, the court systematically rejected Coleman's pleas for lenient standards.

Two weeks ago, Norm Coleman's lead trial lawyer predicted that the trial would likely end with Al Franken winning, and with a slightly larger lead than before -- then come the appeals. This new court order certainly seems to corroborate that prediction.

Of course, all this legal kabuki is pointless. We all knew this was going to federal court and to the Supreme Court if Coleman doesn't win. It never mattered if Minnesota was represented by two senators. It only matters that the GOP gets a Supreme Court level legal precedent on voting that favors them.

At worst for the GOP, they cost the Dems a vital vote in the Senate until further notice. If the Dems try to seat Franken, the GOP will go to the mattresses and will force a Constitutional crisis into the Supreme Court's hands anyway, and with the GOP guaranteed at least 4 votes in their favor on any voting precedent, they're willing to risk it.

There's no way Obama can make the Republicans pay on this. It's all win for them. If Al Franken would be the 60th vote overcoming a filibuster on health care, climate change, EFCA (unlikely) or even the budget, then the GOP have scored a huge victory. They win. Only the voters can make the Republicans pay, and the Republicans are doing everything they can to make sure the voters have as little to do with the outcome of an election as humanly possible.

Even if Franken is seated, even if the Supreme Court refuses to hear Coleman's case, I fully believe the GOP would in fact do everything they can to disrupt, stall, and gridlock the Senate until Franken was removed...I can even see GOP governors like Bobby Jindal and Rick Perry and Mark Sanford refuse to comply with any laws passed with Franken in the Senate. The GOP will never accept Franken as legitimate. Ever.

They will attack him and attack him. They will demand he resign and a special election be called. They will attack the Democrats as evil fascists. The rhetoric will run lava hot. And I can see, in that climate of hate and fear and anger, I can see something truly horrendous and tragic happening as a result of a person taking these words too far.

Now, maybe I'm nuts. This is certainly a worst-case scenario. But given where we are in 2009, I think expecting the worst-case scenario is entirely justified.

The Anti-Fix Is In

Here's how Republicans operate in 2009, folks. In New York state, Hillary Clinton's Senate replacement is NY-20 Congressional Democrat Kirsten Gillibrand. Gillibrand's now vacant House seat is up for election today, and Republican Jim Tedisco filed an ex parte motion to try to overturn the election's results a good seven hours before the polls have even closed!

Beyond the standard practice of seeking to impound machines, determine validity of affidavit ballots, etc., the Tedisco campaign goes for this grand overreach--and does so hours before the polls even close. (I am not a lawyer, but the ones we have here tell me this is not standard operating procedure--this is a desperate play.)

This filing come on the heels of a report that Tedisco’s own polling has him losing to Democrat Scott Murphy by a narrow margin.

The race has national implications, especially for the Republicans, who see this as an early test of new RNC Chair Michael Steele’s leadership.

For Democrats, a Murphy victory would hold the seat vacated by the promotion of Kirsten Gillibrand to the US Senate.

In other words, Tedisco clearly believes he's going to lose the election before the voting is even over, and is in fact already preparing the Norm Coleman eternal recount playbook, ostensibly to deny anyone the seat until the election goes to the Supreme Court. And should this process take "years" then so be it! Democrats can't win an election fairly, you know. Murphy clearly stole the election, and of course that's a great way to raise doubts in the minds of the still voting residents of NY District 20.

That's how Republicans roll, baby. Either they win or everybody loses. This is so laughable on its face that it's pathetic. Dday adds:

Why not? It's working for Norm Coleman. In fact, given that success I'd be surprised if Republicans acknowledge losing an election ever again.

TAXEN CUTTEN RECOUNTEN UBER ALLES!

The Guy Nicknamed "Bibi" Wears The Pants In This Relationship

I could have told you this was coming quite some time ago, but now our wonderful Israeli Prime Minister friend is telling our President exactly what the hell he needs to be doing.

In an interview conducted shortly before he was sworn in today as prime minister of Israel, Benjamin Netanyahu laid down a challenge for Barack Obama. The American president, he said, must stop Iran from acquiring nuclear weapons—and quickly—or an imperiled Israel may be forced to attack Iran’s nuclear facilities itself.

“The Obama presidency has two great missions: fixing the economy, and preventing Iran from gaining nuclear weapons,” Netanyahu told me. He said the Iranian nuclear challenge represents a “hinge of history” and added that “Western civilization” will have failed if Iran is allowed to develop nuclear weapons.

In unusually blunt language, Netanyahu said of the Iranian leadership, “You don’t want a messianic apocalyptic cult controlling atomic bombs. When the wide-eyed believer gets hold of the reins of power and the weapons of mass death, then the entire world should start worrying, and that is what is happening in Iran.”

History teaches Jews that threats against their collective existence should be taken seriously, and, if possible, preempted, he suggested. In recent years, the Iranian president, Mahmoud Ahmadinejad, has regularly called for Israel to be “wiped off the map,” and the supreme Iranian leader, Ayatollah Khamenei, this month called Israel a “cancerous tumor.”

But Netanyahu also said that Iran threatens many other countries apart from Israel, and so his mission over the next several months is to convince the world of the broad danger posed by Iran. One of his chief security advisers, Moshe Ya’alon, told me that a nuclear Iran could mean the end of American influence in the Middle East. “This is an existential threat for Israel, but it will be a blow for American interests, especially on the energy front. Who will dominate the oil in the region—Washington or Tehran?”

So, we arrive at the impasse, the heart and soul of Obama's Presidency outside the US: Either Barack Obama is in charge of our foreign policy in the Middle East, or Benjamin Netanyahu is.

Which is it Mr. President? The fact that an honest observer of American/Israeli relations would have to stop and ask themselves that question at this point is the problem.

[UPDATE] Matt Yglesias sums up the problem:

You can’t fly from Israel to Iran without going over Turkey, Saudi Arabia, or Iraq and every discussion of this I’ve ever heard specifically says the Israelis would need to go through Iraq. It would of course be possible for Israel to do that without American approval. But none of those three countries would conceivably give Israel permission to use their airspace for this mission and the United States is committed to the defense of all three. In practice, the fact of an Israeli attack would be read throughout the region as proof of an American green light, especially were the attack not swiftly followed-up by a sharp curtailment of American aid. And for Americans, that’s really the point—as long as Israel is the biggest winner in the U.S. aid sweepstakes, Israeli actions are inevitably seen as the actions of American proxies, and if we can’t get Israel to respect our interests then we need to revisit that relationship.

Understand also that the second Israel does this (and the timeframe Israel is talking about is in "months") our gains in Iraq and Afghanistan evaporate in a matter of hours. Baghdad and Kabul will fall overnight. The Al-Malaki government in Iraq and the Karzai government in Afghanistan will collapse, and quite frankly the act almost certainly will destabilize Pakistan President Zardari's fragile government as well, and "destabilized nuclear Muslim country" is exactly the nightmare we're trying so badly to prevent. Even Dubya understood this and refused to green light Israel.

India will not allow nuclear Pakistan to fall apart, and they have nukes too. Same goes for China and Russia...and things start to get really, really ugly from there.

Somebody needs to make it plain to Israel that they're risking WW III here. So why is he doing it? There's not a winning play to be made by bluffing here, not after rattling the sword for the last two years.

Which honestly leads me to believe that he's not bluffing. He's either crazy or stupid, and either one should scare the shit out of all of us.

What Are We Doing Tonight, Brain?

Conversation overheard at GOP HQ: "Well, we're not making a lot of headway against Obama here. We need to attack the President harder!"

"Oh I know! Let's go with the Scary Obama Cult meme again only this time we'll implicate Dubya too cause everybody hates him now and we'll show how Obama is WORSE THAN BUSH!"

(Le sigh.)

Zandar's Thought Of The Day

If I'm a GOP strategist, I'm telling my clients to keep their mouth shut on the automakers until Obama makes his decisions. Fair or unfair, there's no way GM and Chrysler can come out of this without shedding tens of thousands of union jobs and auto dealership workers in Blue and Purple states -- job losses that now will be laid at Obama's feet. State GOP officials in Pennsylvania, Michigan, Ohio and Indiana have to be salivating at this point.

The Right Thing To Do

Both fiscally and socially, more and more companies are doing the right thing. Walgreens is offering free health clinic care to the uninsured:

Walgreen's said patients who lose their job and health insurance after March 31 will be able to get free treatment at its in-store Take Care clinics for respiratory problems, allergies, infections and skin conditions, among other ailments. Typically those treatments cost $59 or more for patients with no insurance.

Hal Rosenbluth, chairman of the Take Care Health Systems division, described the plan as something close to an experiment: He said Walgreen isn't sure of patient demand or how much providing the services might cost the company.

It's likely to generate more attention for the clinics, however. Rosenbluth said a typical Take Care patient tells eight other people about his or her experience. So far, about 30 percent of Take Care patients were new customers to Walgreen.

The program is expected to last through the end of 2009. Walgreen runs 341 Take Care clinics in 35 markets around the country, including Chicago, Atlanta, Miami and Cleveland.

And Ford and GM are following Hyundai's lead to help unemployed keep their cars.

Ford Motor Co. and General Motors Corp. are offering payment protection plans to help reassure consumers who may be putting off buying a new car because of worries about losing their job.

The offers come as auto sales have been battered by the recession and tight credit, reaching their lowest levels in 27 years.

Ford said Tuesday it will cover payments of up to $700 each month for up to a year on any new Ford, Lincoln or Mercury vehicle if consumers lose their jobs. The program runs until June 1.

Hours later, GM said it will make a similar offer. GM's new CEO, Fritz Henderson, said the company will make up to nine car payments of $500 each for customers who have lost their jobs through no fault of their own.

Customers must qualify for state unemployment to be eligible for the program. The program starts April 1 and runs until April 30.

I'm hoping to see more and more companies take the lead in becoming good corporate citizens. These are the companies people will choose to do business with when the economy finally does stabilize.

Pile Of Crap

More dim economic news out today on housing and consumer confidence. The Case-Schiller index hit a new monthly and yearly decline record in home prices for January, and consumer confidence is still in a deep, deep hole at an index of 26. It's looking more and more like Helicopter Ben's efforts to re-inflate the housing bubble is failing due to all the holes in the balloon.

“It’s wrong to place too much hope on what the Fed would be able to accomplish in pushing rates lower,” says economist Dean Baker, co-director of the Center for Economic and Policy Research. “There’s a limit to what they can realistically do.”

That’s apparent in what some call the inevitable bounce back in rates since the Fed's announcement at the March 19 FOMC meeting that it would increase its planned purchase of GSE and MBS debt as well as finally begin buying longer-term Treasuries.

The yield on the 10-year note went from roughly 3.00 percent down to 2.50 percent, but has slowly climbed back to around 2.75 percent. Thirty-year mortgage rates, which track the 10-year yield, have moved accordingly.

“Rates are historically low, but the expectation is that interest rates should be much lower than they are,” says Manhattan Mortgage Company CEO Melissa Cohn.

Then again, Nouriel Roubini actually sounded almost...positive today.

Things might only be somewhat horrendous instead of biblically disastrous.

The Village Car Tune Caper

Needless to say, most pundits agree that GM and Chrysler should have faced bankruptcy back in the Bush administration, but since Barack Obama actually did something about it, the Village now hates his ass more than ever, staring with the LA Times:

President Obama's plan to save failing U.S. automakers -- and make them the instruments for creating a cleaner, greener transportation system -- marked a major step across the line that traditionally separates government from private industry.

His announcement Monday of a new position on bailing out Detroit went beyond a desire to be sure tax dollars were not wasted in bailing out struggling companies. It put the Obama administration squarely in the position of adopting a so-called industrial policy, in which government officials, not business executives or the free market, decided what kinds of products a company would make and how it would chart its future.

The Wall Street Journal:

GM's CEO Rick Wagoner got the Presidential boot over the weekend, and GM was given two months to reorganize, or get forced into a "quick and surgical" bankruptcy. For once, we agree with Michigan Governor Jennifer Granholm, who called Mr. Wagoner "a sacrificial lamb." The Administration needed someone to take the fall to sate the anticorporate furies it has helped to unleash. Mr. Wagoner wasn't solely responsible for GM's bad business decisions, but only recently did he promote the kind of radical restructuring the company has long needed. We only wish someone in Washington would also be shown the door, starting with those at the Federal Reserve whose oil-price bubbles also helped to break the car makers.

Sacking a CEO for appearance sake was the easy part. Good luck trying to get the unions to make concessions on wages and legacy costs, and bondholders to agree to reduce the debt burden. A senior Treasury official told us the Administration isn't holding its breath and considers "surgical bankruptcy" the likeliest outcome. In that event, "a shiny new GM" would emerge, said the official, who didn't want to be identified. Asked why GM wasn't forced into Chapter 11 immediately, the official said the Administration wanted to avoid "years of uncontrolled chaos" and needed time to set the stage for "the more surgical process."

David Brooks in the NY Times:

And yet by enmeshing the White House so deeply into G.M., Obama has increased the odds that March’s menacing threat will lead to June’s wobbly wiggle-out. The Obama administration and the Democratic Party are now completely implicated in the coming G.M. wreck. Over the next few months, the White House will be subject to a gigantic lobbying barrage. The Midwestern delegations, swing states all, will pull out all the stops to prevent plant foreclosures. Unions will be furious if the Obama-run company rips up the union contract. Is the White House ready for the headline “Obama to Middle America: Drop Dead”? It would take a party with a political death wish to see this through.

USA Today:

But critics said the president overstepped by forcing Wagoner out.

Sen. Bob Corker, R-Tenn., said the move was "a power grab." That level of federal control over GM "should send a chill to the people in this country," he said.

GM should never have gone to the government asking for help, said Gerald Meyers, former CEO of American Motors.

"It was a terrible mistake, pleading poverty and going to Washington asking for money," Meyers said.

The company could have survived without government help if Wagoner had been willing to search out alternative forms of financing, similar to the recent investments in Daimler by the sovereign fund of Abu Dhabi, he said.

Dana Milbank at the Washington Post:

When Obama, preceded by a sales team of a dozen economic aides, entered the Grand Foyer yesterday morning, he offered assurances that "we have no intention of running GM." But, in the rest of his 18-minute speech, he sounded as if he was doing just that. He ordered up "a better business plan" from GM and asserted that "Chrysler needs a partner to remain viable." In both cases, the restructuring "may mean using our bankruptcy code."

The idea of bankruptcy may be "unsettling," Obama allowed -- so he came equipped with a sales pitch worthy of Madison Avenue. "Some of the cars made by American workers right now are outperforming the best cars made abroad," Obama declared, tossing in phrases such as "unsurpassed around the world" and "some of the finest cars the world has ever known."

No credit? No problem. "We are working intensively with the auto finance companies to increase the flow of credit to both consumers and dealers," Obama pledged.

The Village universally hates it. It's funny. Of the five articles tearing into Obama as the First Used Car Salesman, only one bothers to mention Bush's December 2008 bailout of the auto industry and his requisite punt to Obama, and that was, ironically enough, the WSJ. Folks, Obama got stuck with this mess and is trying to do what he can to clean it up.

Let him work.

The New Reality

Despite wishful thinking from wingnuts, the reality is that Americans are not blaming Obama for the economy's problems, and in fact overwhelmingly approve of his efforts to fix it.

When it comes to assessing responsibility for the nation's economic plight, 80 percent said they put a "great deal" or a "good amount" of blame on banks and other financial institutions for taking unnecessary risks. The same percentage said they blame large corporations for poor management decisions. About seven in 10 blame consumers for overextending themselves with debt and the Bush administration for not vigorously regulating the financial industry.

Criticism of the banks, large corporations and consumers is roughly comparable across the political spectrum. But there is clear disagreement over whether Obama bears any of the blame, with Republicans far more likely to say yes than are Democrats or independents. Republicans, however, were as apt to blame the Bush administration for lax regulation as they were to target Obama for not doing enough to fix the problems.

Obama maintains a strong hand in his dealings with congressional Republicans. The public prefers his approach to that of the Republicans by more than two to one. But the percentage of independents siding with Obama has dropped 12 points, to 50 percent. Many of those independents in the new poll said neither has the upper hand in the economic debate. About a quarter of independents align with the Republicans on this question.

I wonder offhand just how many of these "independents"are in fact just disillusioned Republicans who have bolted from the Big Stupid Tent since the last election?

I'm guessing there's a lot more of them than there were six months ago. Even the die hard lifer Republicans have turned against Dubya, pretty much assuring that his legacy is that of "The Asshole Who Wrecked America" and will be for a long, long time.

This is also a big fat warning to Evan Bayh and his Sensible Centrist obstructionist buddies trying to wreck Obama's budget: the people prefer Obama by 2 to 1 to the Republicans. You'd better think about picking the right side in this fight, and soon.

[UPDATE] Bonus wingnut stupidity: Why should we care what America thinks when only Wall Street's opinions should matter?

The Road To Car Tomb, Part 3

It took less than 24 hours for Chrysler and GM to telegraph their moves in the post-Obama auto industry. Chrysler is making every effort to join with Italian automaker Fiat, but many analysts remain skeptical, and even the Obama administration is hinting strongly that Chrysler will be opting for bankruptcy reorganization:

Chrysler LLC may face an “impossible goal” in completing an alliance with Fiat SpA and meeting an Obama administration deadline to erase debt and win more union concessions by April 30.

Chrysler got its blueprint for the next month yesterday from President Barack Obama’s task force, which said that $6 billion in new aid hinges on “extinguishing the vast majority” of outstanding secured debt and new givebacks from the United Auto Workers.

Meeting those requirements would require help from lenders, which haven’t negotiated in the three months since Chrysler got its U.S. loans and have little incentive to do so because they would be paid off first in bankruptcy. Even Obama’s autos panel suggested Chrysler might fare better by reorganizing in court.

“It is an impossible goal,” said Sheldon Stone, a partner at Amherst Partners LLC, a restructuring firm in Birmingham, Michigan. “The likelihood is that the 30-day period is going to allow Chrysler to get their house in order for a bankruptcy.”

Meanwhile, GM's new CEO is making no effort to hide where he sees the company going in 60 days: straight to bankruptcy court.

General Motors's new chief executive told CNBC that filing for Bankruptcy may be the best option for the struggling automaker.

In a taped interview to be aired tonight on NBC Nightly News, Fritz Henderson said that because of greater demands from the Obama administration to restructure, GM is considering the bankruptcy option. The auto giant previously had ruled out such a move, saying it would discourage people from buying GM cars.

Henderson's comments came after President Obama bluntly rejected turnaround plans by GM and Chrysler and demanded that both companies make fresh concessions in order to get more federal aid.

Henderson, who was GM's president and chief operating officer, was named the new CEO after the government forced the resignation of CEO Rick Wagoner on Sunday. GM's board is also being restructured.

Henderson told reporters that the company would still prefer to restructure outside of court, but the level of support Washington is offering would help the company quickly restructure through bankruptcy.

So, that's basically it then. It's looking like the Big Three will become the Big One in a couple months, and the irony is government restructuring to make GM and Chrysler leaner and meaner could actually end up putting Ford at a major disadvantage:

Ford Motor Co., the only U.S. automaker not taking federal aid, could lose its competitive edge if President Barack Obama is successful in slimming down General Motors Corp. with lower labor costs, debt and dealers.

Obama gave GM 60 days to come up with a new strategy to cut costs with its union, slash debt with bondholders and reduce dealers and brands. If GM does all that, it may have significantly lower costs than Ford, said Lexington, Massachusetts-based auto analyst John Wolkonowicz of IHS Global Insight.

“This really pulled the rug out from under Ford,” said Wolkonowicz, a former Ford product planner. “The government wants to have GM survive as a leaner and greener company and Ford is going to need further restructuring in order to compete.”

It's conceivable that there may not be any major American automakers by the end of the year. What will replace the Detroit automakers? How will it affect the rest of the US car and truck market? This is uncharted stuff here, folks. Then again, these days there's a lot of uncharted stuff going on.

StupidiNews!

• Another food recall, this time it's pistachio nuts.
• French President Sarkozy warns he'll walk out of the G20 summit if global financial regulations aren't toughened.
• Welcome to Mendota, California: a city with 41% unemployment.
• AT&T and Verizon want nothing to do with over $7 billion in broadband internet stimulus.
• NetFlix is upping the charges for renting Blu-Ray discs as the economy continues to weaken.

Dear America:

"Obama's use of the first-person pronoun 'I' is unequivocal and indefatigable proof that he not only owns all of Bush's failures in totality, but it also proves beyond a shadow of a doubt that he is a Socialist dictator."

--Victor Davis Hanson, The Corner

Banks Versus Automakers

Politico explores the real reason behind why banks got trillions, and automakers got the back of Obama's hand.

This is the hard reality facing automakers: their failure would be devastating to their executives, workers and suppliers - but probably not to the broader U.S. economy.

Obama is convinced that if AIG or some of the big banks collapsed, the economy could go down with them. That’s not the case with Chrysler, for sure, and probably GM, too.

The president’s budget plan is focused on building a new transportation system, one dominated by a new brand of vehicles running on new kinds of fuels. The U.S. auto industry has gotten its clock cleaned when it comes to producing hybrid cars Americans are willing to buy. The Obama plan forces both companies to move faster to catch up.

“While the impact of the auto industry is huge, it doesn’t touch everyone who needs to get credit or hire someone, like the banks do,” said the Democrat close to the White House. “The optics aren’t good, but the autos are a more discrete problem that can be dealt with on a targeted basis.”

Automakers and the couple million or so jobs they represent are apparently expendable compared to the entire financial system collapsing. Nice of Bush to leave that problem to Obama. Amputation vs. fatal infection is always a fun choice to make.

Banks on the other hand? Too Big To Fail. One would imagine that it would be time to break the banks up if they are that large.

Some Good News

On why Obama is still a thousand times better than McCain:

Conservationists claimed one of their most significant victories of the new administration Monday as President Barack Obama signed sweeping land reform legislation designating two million additional acres of public wilderness areas.

The federal wilderness designation provides the highest level of government protection from logging and other forms of commercial use and development.

As opposed to drilling, blasting, and burning the hell out of it like the GOP would do with every inch of Federal land if possible.

Who Is Left Holding The Bag?

If this wasn't so depressing, I'd be laughing my ass off (emphasis mine)

City officials and housing advocates here and in cities as varied as Buffalo, Kansas City, Mo., and Jacksonville, Fla., say they are seeing an unsettling development: Banks are quietly declining to take possession of properties at the end of the foreclosure process, most often because the cost of the ordeal — from legal fees to maintenance — exceeds the diminishing value of the real estate.

The so-called bank walkaways rarely mean relief for the property owners, caught unaware months after the fact, and often mean additional financial burdens and bureaucratic headaches. Technically, they still owe on the mortgage, but as a practicality, rarely would a mortgage holder receive any more payments on the loan. The way mortgages are bundled and resold, it can be enormously time-consuming just trying to determine what company holds the loan on a property thought to be in foreclosure.

In Ms. James’s case, the company that was most recently servicing her loan is now defunct. Its parent company filed for bankruptcy and dissolved. And the original bank that sold her the loan said it could not find a record of it.

“It is what some of us think is the next wave of the crisis,” said Kermit Lind, a clinical professor at the Cleveland-Marshall College of Law and an expert on foreclosure law.

The real estate market has gotten so bad that the costs of foreclosing on some houses now exceeds the value of the house. The owner has walked away, the bank is walking away, and due to the maze of arcane bullshit that is your average CDO, nobody seems to know who actually holds the title to the home.

The practical upshot? The city/county taxpayer gets stuck with the bill and an eyesore of a vandalized, broken down property they can't move and they have to maintain, losing money off of it. Now multiply that by thousands nationwide, and you're beginning to see why we're only beginning down the steep slope to hell.

The commercial real estate crash is bad enough, but the residential real estate crash still has a long, long way to go.

Slipped And Told The Truth

GOP Senator John Cornyn vows Al Franken will never be seated before every conceivable avenue has been exhausted for Norm Coleman to try to steal it back, a process Cornyn anticipates taking "years".

Texas Sen. John Cornyn is threatening “World War III” if Democrats try to seat Al Franken in the Senate before Norm Coleman can pursue his case through the federal courts.

Cornyn, the chairman of the National Republican Senatorial Committee, acknowledges that a federal challenge to November’s elections could take “years” to resolve. But he’s adamant that Coleman deserves that chance — even if it means Minnesota is short a senator for the duration.

Eric Kleefield at TPM has more.

TPM asked DSCC communications director Eric Schultz for comment. "Republicans have made it clear they will hold this Senate seat hostage in order to pursue their political agenda - at the hefty expense of Minnesota having full representation in Congress," said Schultz. "We're all awaiting the three-judge panel to return its verdict, and once they do, we will have yet another confirmation that Al Franken won the election - and hopefully he can get to Washington to do the job he was elected to do."

Little chance of that, it seems. Hello, Democrats? Your Big Fat Party Of No Issue is calling.

Zandar's Thought Of The Day

Jon Chait has a valid point:(emphasis mine)

George W. Bush came to office having lost the popular vote, with only 50 Republicans in the Senate. After his disputed election, pundits insisted Bush would have to scale back his proposed massive tax cuts for the rich. Instead, Bush managed to enact several rounds of tax cuts that substantially exceeded those in his campaign platform, along with two war resolutions, a Medicare prescription drug benefit designed to maximize profits for the health care industry, energy legislation, education reform, and sundry other items. Whatever the substantive merits of this agenda, its passage represented an impressive feat of political leverage, accomplished through near-total partisan discipline.

Obama has come into office having won the popular vote by seven percentage points, along with a 79-seat edge in the House, a 17-seat edge in the Senate, and massive public demand for change. But it's already clear he is receiving less, not more, deference from his own party. Democrats have treated Obama with studied diffidence, both in their support for the substance of his agenda and (more importantly) their willingness to support it procedurally.

What's wrong with the Democratic Party in 2009?

Two words:

Evan Bayh.

Here endeth the lesson.

The Road To Car Tomb, Part 2

More details about GM and Chrysler are out today, and they aren't good news at all. Bottom line: both companies failed Obama's test fantastically and are now paying the price.

GM will get 60 days and Chrysler 30 days in which to make a final push toward proving they can run viable businesses. If Chrysler succeeds, it will receive a $6 billion loan. In GM's case, the officials would not specify how much money the carmaker might receive.

In the case of both companies, the officials said, stakeholders - and particularly debt holders in both companies - had not done enough to relieve the automakers of ongoing financial burdens.

"We have made very clear that we expect a very, very substantial reduction in liability for both companies," one official said.

The administration also said a structured bankruptcy is possible.

"While Chrysler and GM are different companies with different paths forward, both have unsustainable liabilities and both need a fresh start," according to an administration document. "Their best chance at success may well require utilizing the bankruptcy code in a quick and surgical way."

In order to help assuage consumer fears about buying cars from these companies as they restructure, the government is also setting aside funds to back up warranties on vehicles GM and Chrysler sell.

So Chrysler has until April 30 and GM May 30 to turn it around, or the Big 3 is the Big One: Ford. Oh yes, this is a disaster of a mess of a screw-up...but it's yet another mess Obama inherited from Bush. Let's not forget this. An orderly bankruptcy six months ago would have solved the problem. Now? Bush punted because he didn't want to be the President that had to make the tough calls on automakers.

How long will it take I wonder before the wingnuts call for Obama to completely dissolve the UAW in order to save these companies? They're already comparing him to Hugo Chavez. How quickly the wingers forget Saint Ronnie fired 11,000 air traffic controllers and Reagan and the Bushes spent 20 years busting unions afterwards, but American workers are supposed to feel fear and dread at this "unprecedented" interference in the workplace for canning a CEO.

You get bailout money, you get rules.

StupidiNews!

• Eight people were killed in a shooting rampage at a nursing home in NC.
• Economists predict nearly all the G8 countries could be facing double-digit unemployment by the end of 2010.
• Insurance companies are seemingly blacklisting millions of people with common ailments.
• A second terrorist attack this month in Lahore leaves 22 dead in Pakistan.
• A new study shows playuing video games may improve your vision.

The Road To Car Tomb

Today, the day before the auto companies' deadline with the government, where President Obama announced that the carmakers were "not there yet", we have sudden news that GM CEO Rick Wagoner has stepped down.

It is unclear if Wagoner's resignation is one of the stipulations for the federal government to lend billions more to GM. But sources close to the talks say tough conditions will be attached to any future aid.

President Obama will update the public on the Treasury Department’s next step in helping GM and Chrysler on Monday afternoon.

A senior White House official did not deny to CNBC that the Obama administration influenced Wagoner's departure.

Asked if the administration forced him out, the senior official replied, "'forced' is a little strong."

Odds of this being a coincidence roughly equal the odds GM can make it without government help. Smart money has to be on GM's "orderly bankruptcy" now proceeding. The CEO leaving at this juncture strongly suggests the tough new restrictions go far beyond forcing Wagoner's resignation. Bloomberg notes that as recently as ten days ago, Wagoner had no intention of resigning. There has to be a CEO to run the company, and the government asking GM to change the CEO without forcing a bankruptcy seems pointless. Regardless of the deal involving bankruptcy or not, a deal has been struck, and part of that deal is Wagoner's resignation.

If only Obama would attach the same caveats to all the bank bailout money and bank CEOs.

[UPDATE] The NY Times reports:

A person with direct involvement in the auto bailout discussions said the administration would set a new deadline of April 30 for the automakers to come to terms with the bondholders and the union.

“Thirty days from now, there will either be a bankruptcy or the naming of a chief restructuring officer who will have government authority to ‘knock heads together,’ ” this person said. In addition, the government must come up with a backup guarantee on loan for G.M. to operate during bankruptcy because the banks will not do it.

So that's it then: it's either nationalization or bankruptcy for GM.

More tomorrow.

Timmy On The Teevee

Dday gives us the rundown on Geithner's appearances today on the Sunday shows.

On both shows, Geithner was asked about the potential flaw in the plan for toxic assets, that the banks simply won't sell at the prices set by private investors, because taking losses would reveal the banks to be insolvent. Geithner didn't have the best answer for this other than to urge the banks to "take risk again." Indeed, there is no mechanism to force the banks to sell.

Once again, the No Right Price Problem says the Geithner Plan can't work on the truly insolvent banks -- there's no right price that meets both the criteria of "high enough so the banks will sell" and "low enough that the buyers will make any money buying", but No Right Price is only part of the real issue:

On some other fronts, however, Geithner displayed a definite concern to reel in the massive financial sector and build a broad-based economy that can better manage systemic risk. Here is an answer from Meet the Press on his regulatory proposals:

SEC'Y GEITHNER: Core thing is to make sure that the institutions at the center of our financial system are subject to much more conservative, much tougher requirements on capital and leverage that are applied more evenly and more effectively, frankly. We need to make sure that hedge funds and derivatives come within a framework of oversight so we protect the system from the risks they may present. And we need to make sure the government has the authority it needs to come in more quickly, to help contain the damage, restructure the system, so we can have a stronger system going forward [...] We need a better model. What we're proposing to do is use a model that exists for small banks that was designed by the Congress in the wake of the S&L crisis, build on that model and give the government a capacity to act more quickly, more effectively to contain the damage at least risk to the taxpayer and the economy as a whole.

Certainly, over-leveraging caused a good deal of this crisis; other countries where the banks are leveraged more conservatively are in better shape. Obviously, the devil is in the details - there are currently no capital requirements for hedge funds in the Geithner proposal, for example, and the real issue is whether the regulation will be strictly enforced. Our experience with bank regulators who are too cozy with the subjects they regulate recently suggest that the real problem is a lack of will.

Regulations will have to be enforced at this point, but you notice Geithner keeps falling back on Congress for not having provided him with the authority needed to deal with the issue. It seems to me that Geithner is passing the buck to Congress, and Congress has no real intention of giving Geithner any more powers.

So yeah, Geithner raised many more questions than answers. He certainly talks the talk, but his actions leave much to be desired so far.

In Which Zandar Answers Your Burning Questions

So, nothing good can really come of our new Pakistan policy, which is basically our old Pakistan policy:

President Obama said Sunday that his administration remains prepared to order strikes against "high-value" targets within Pakistan.

Obama reiterated a previous assertion that the U.S. military would pursue extremists within Pakistan's borders after consulting with the Pakistani government.

The U.S. policy doesn't change American recognition of Pakistan's "sovereign government," Obama said during an appearance on CBS's "Face the Nation." But the United States needs to hold that government "more accountable."

"This is going to be hard," he added. "I'm under no illusions."

Obama said his administration remains determined to weaken or destroy al Qaeda until it no longer presents a threat to the United States.

He added that his administration is prepared to continually adjust its strategy in Pakistan and Afghanistan as necessary.

So the Progressive Realist asks two really good questions:

If we're at war in Pakistan, who authorized it?

and

Is anyone going to call President Barack Obama on this?

To which the answers are "nobody did" and "hell no" respectively. Bottom line is now we're fighting three wars: Iraq, Afghanistan, and now Pakistan to boot.

You know, at least the nice upcoming financial collapse will stop us from sending so much blood and treasure overseas.

Has Cramer Seen The Light?

Well damn. I dunno who kidnapped the old Jim Cramer, but this new guy is actually making a modicum of sense.

Executives padded their paychecks for President George W. Bush’s entire term, Cramer said Friday, but these critics were silent the whole time. Plus, there were tax cuts for the rich, wholesale deregulation, unchecked short selling – how come there were no congressional hearings then?

Well, Congress is the epicenter of this class war now, Cramer said. Just look at that bonus-tax bill. Executives of TARP-participating companies who make more than $250,000 have to pay 90% of their bonuses to the government. Strange, though, that not a hearing took place prior to the financial crisis. There was little regulation during the run-up to the meltdown, and even less enforcement of what rules there were.

Well now. Welcome to the party, Jim. Glad you could finally join those of us who have been asking that question for a very, very long time now.

Video below:

Dear America:

"Hey Liberals! Yeah I'm talking to YOU, pal! Listen up! Here's the deal! Since you, as a Liberal, don't spend four hours a day every weekday listening to Rush Limbaugh, you cannot judge anything he says! If you do, you're a liar and taking out of context! So listen to Rush's show or you're just as small-minded as you proclaim he is! Try to argue your way out of that! Hah!"

--Andrew Klavan, LA Times

Bonus Verbatim Stupid: "Now let me tell you the real answer: You're a lowdown, yellow-bellied, lily-livered intellectual coward. You're terrified of finding out he makes more sense than you do.

I listen to Limbaugh every chance I get, and I have never heard the man utter a single racist, hateful or stupid word. Do I always agree with him? Of course not. I'm a conservative; I think for myself. But Limbaugh, by turns insightful, satiric, raucously funny and wise, is one of the best voices talking about first principles and policy in the country today."

Remember, this isn't racist, hateful, or stupid at all or anything, so if you overlook the fact it took me all of 15 seconds on Google to completely annihilate Klavan's argument, and you ignore the racist, hateful, and stupid things that Limbaugh says on an almost daily basis, Klavan's 100% right!

To Sarah Palin's Credit...

...she was the last one into the pool on the whole "Let's reject as much of the stimulus DREAD PORKULUS as possible! GOP GOVERNORS GOOOOOOO!" thing.

The bad news for her was that she had the worst excuse of the bunch and now it's coming back to majorly bite her in the ass via the Politico Sunday Hack Job.

A seemingly unending series of public relations gaffes has Sarah Palin loyalists frustrated and worried she is diminishing her stature. And they blame an inner circle they say is composed of not-ready-for-primetime players.

Interviews with Alaska and Washington-based GOP political professionals who are familiar with the Palin operation describe the governor’s team as a gang that couldn’t shoot straight, a staff whose failure to execute basic political maneuvers too often entangles the governor in awkward and embarrassing situations that could have easily been avoided.

The state of confusion is compounded by two separate Palin spheres that don’t communicate with each other, one based in the governor’s office and another based in the D.C.-area, where Palin’s political action committee is located—and the incongruous presence of a high-profile Democratic trial lawyer among her political advisers.

The lawyer, John Coale, is a former supporter of Hillary Clinton’s presidential campaign who became a Palin confidante as his wife, Fox News host Greta Van Susteren, interviewed the former GOP vice presidential nominee and her family numerous times during and after the election.

Their presence around Palin has become Topic A among many of her allies as well as other Republican insiders who are mystified as to why an anti-abortion rights conservative who ran against Washington elites is now turning to a pair of capital insiders for counsel.

Because she really, really, really wants to be President, you twits...and the sooner she gets out of this Alaska dump, the happier she will be. She's hedging her bets on her advisors, folks. I don't blame her, it's not like the ones in 2008 gave her good advice or anything.

Of course, now Alaskans are increasingly pissed at her for rejecting stimulus money and at least she's picking up on that now, which once again seems to put her light years ahead of her fellow GOP governors. Figure that one out.

Know Your Role And Shut Your Mouth

Here's Nia-Malika Henderson over at Politico (natch!) doing a great disservice to both African-Americans and to women by implying very strongly that Michelle Obama is above her station:

Traditional? Hardly. In fact, Obama’s approach so far is decidedly different from the usual model of the modern first lady — pick a platform of two or three issues and stick to it, by and large, for four years.

She’s become the spokeswoman for all sorts of issues and topics — from fitness, parenting, the environment and women’s rights, to redefining images of black women in American culture and promoting self-esteem for young girls.

Yet in the midst of all those themes, it isn’t yet clear whether her self-described core messages — about military families, volunteerism, and helping working women balance work and family life – are truly breaking through. Some wonder if she’s spreading herself too thin to emerge in the public mind as a leading voice on those topics.

Give me an almighty break. If Michelle Obama was nothing more than a feel-good accoutrement on the arm of the President, I swear conservatives would be attacking her for "not doing enough given all the problems facing the average American family these days".

Yet here we have an accomplished, intelligent African-American woman in her own right as First Lady and the charges leveled against her are "she's trying to do too much." That smacks of the code word "uppity", a double foul against a black woman, charges being tossed at her by another black woman, as it somehow makes it all okay.

It does not. Only at the end of the article does Nia-Malika Henderson grudgingly admit that the First Lady's approval ratings are in the mid-60's and that she's "connecting" with Americans.

Those Obamas. Trying to do too much in an age where Presidents and their spouses are apparently supposed to do nothing but demogogue and snatch at low hanging fruit.

New long overdue tags: Michelle Obama and Gender Stupidity.

It's Always The Quiet Ones

Another must read article on the financial industry, this time from Atlantic's Simon Johnson: "The Quiet Coup".(emphasis mine)

In its depth and suddenness, the U.S. economic and financial crisis is shockingly reminiscent of moments we have recently seen in emerging markets (and only in emerging markets): South Korea (1997), Malaysia (1998), Russia and Argentina (time and again). In each of those cases, global investors, afraid that the country or its financial sector wouldn’t be able to pay off mountainous debt, suddenly stopped lending. And in each case, that fear became self-fulfilling, as banks that couldn’t roll over their debt did, in fact, become unable to pay. This is precisely what drove Lehman Brothers into bankruptcy on September 15, causing all sources of funding to the U.S. financial sector to dry up overnight. Just as in emerging-market crises, the weakness in the banking system has quickly rippled out into the rest of the economy, causing a severe economic contraction and hardship for millions of people.

But there’s a deeper and more disturbing similarity: elite business interests—financiers, in the case of the U.S.—played a central role in creating the crisis, making ever-larger gambles, with the implicit backing of the government, until the inevitable collapse. More alarming, they are now using their influence to prevent precisely the sorts of reforms that are needed, and fast, to pull the economy out of its nosedive. The government seems helpless, or unwilling, to act against them.

Top investment bankers and government officials like to lay the blame for the current crisis on the lowering of U.S. interest rates after the dotcom bust or, even better—in a “buck stops somewhere else” sort of way—on the flow of savings out of China. Some on the right like to complain about Fannie Mae or Freddie Mac, or even about longer-standing efforts to promote broader homeownership. And, of course, it is axiomatic to everyone that the regulators responsible for “safety and soundness” were fast asleep at the wheel.

But these various policies—lightweight regulation, cheap money, the unwritten Chinese-American economic alliance, the promotion of homeownership—had something in common. Even though some are traditionally associated with Democrats and some with Republicans, they all benefited the financial sector. Policy changes that might have forestalled the crisis but would have limited the financial sector’s profits—such as Brooksley Born’s now-famous attempts to regulate credit-default swaps at the Commodity Futures Trading Commission, in 1998—were ignored or swept aside.

And that's really the heart and soul of the problem and why I'm so frustrated that Geithner, Bernanke, and Obama continue to fail to see it for what it is: The financial industry created this collapse, and yet we continue to reward the people who created the collapse with leadership roles in solving the crisis.

Obama is now going out of his way to assure the banksters that the government and the American people aren't going to be picking on them anymore. Geithner and Bernanke continue to run almost the exact same Paulson/Greenspan playbook. The GOP continues to say that over-regulation caused the problem in the first place. Everything our government is doing seems to be first making sure the financial medevac helicopter teams are attending the banksters and seeing they aren't injured by the crash while the American economy lies bleeding from the carotid on the pavement.

The call for regulatory power is almost an afterthought...and I'd bet large amounts of money that like the AIG bonus tax, Congress will wait until the Village is looking the other way and then kill the legislation. As I said on Tuesday, "The banksters know they're still holding all the cards: if they don't want to lend, the economy crumbles." Despite Obama laying down the law on the banksters on Friday, they now know they can operate with virtual impunity.

Honestly, what's Obama going to actually do that won't run into the Sensible Centrist Senate buzzsaw? The Senate's bought and paid for by the banks and has been for almost 30 years now.

Throughout the crisis, the government has taken extreme care not to upset the interests of the financial institutions, or to question the basic outlines of the system that got us here. In September 2008, Henry Paulson asked Congress for $700 billion to buy toxic assets from banks, with no strings attached and no judicial review of his purchase decisions. Many observers suspected that the purpose was to overpay for those assets and thereby take the problem off the banks’ hands—indeed, that is the only way that buying toxic assets would have helped anything. Perhaps because there was no way to make such a blatant subsidy politically acceptable, that plan was shelved.

Instead, the money was used to recapitalize banks, buying shares in them on terms that were grossly favorable to the banks themselves. As the crisis has deepened and financial institutions have needed more help, the government has gotten more and more creative in figuring out ways to provide banks with subsidies that are too complex for the general public to understand. The first AIG bailout, which was on relatively good terms for the taxpayer, was supplemented by three further bailouts whose terms were more AIG-friendly. The second Citigroup bailout and the Bank of America bailout included complex asset guarantees that provided the banks with insurance at below-market rates. The third Citigroup bailout, in late February, converted government-owned preferred stock to common stock at a price significantly higher than the market price—a subsidy that probably even most Wall Street Journal readers would miss on first reading. And the convertible preferred shares that the Treasury will buy under the new Financial Stability Plan give the conversion option (and thus the upside) to the banks, not the government.

And this will continue until we insist that it changes. It's clear at this point until the system explodes completely and Obama has no other choice, that the same financial industry will be preying on us until we have nothing left.

The way out? Plan N.

To break this cycle, the government must force the banks to acknowledge the scale of their problems. As the IMF understands (and as the U.S. government itself has insisted to multiple emerging-market countries in the past), the most direct way to do this is nationalization. Instead, Treasury is trying to negotiate bailouts bank by bank, and behaving as if the banks hold all the cards—contorting the terms of each deal to minimize government ownership while forswearing government influence over bank strategy or operations. Under these conditions, cleaning up bank balance sheets is impossible.

Nationalization would not imply permanent state ownership. The IMF’s advice would be, essentially: scale up the standard Federal Deposit Insurance Corporation process. An FDIC “intervention” is basically a government-managed bankruptcy procedure for banks. It would allow the government to wipe out bank shareholders, replace failed management, clean up the balance sheets, and then sell the banks back to the private sector. The main advantage is immediate recognition of the problem so that it can be solved before it grows worse.

The government needs to inspect the balance sheets and identify the banks that cannot survive a severe recession. These banks should face a choice: write down your assets to their true value and raise private capital within 30 days, or be taken over by the government. The government would write down the toxic assets of banks taken into receivership—recognizing reality—and transfer those assets to a separate government entity, which would attempt to salvage whatever value is possible for the taxpayer (as the Resolution Trust Corporation did after the savings-and-loan debacle of the 1980s). The rump banks—cleansed and able to lend safely, and hence trusted again by other lenders and investors—could then be sold off.

Cleaning up the megabanks will be complex. And it will be expensive for the taxpayer; according to the latest IMF numbers, the cleanup of the banking system would probably cost close to $1.5trillion (or 10percent of our GDP) in the long term. But only decisive government action—exposing the full extent of the financial rot and restoring some set of banks to publicly verifiable health—can cure the financial sector as a whole.

This may seem like strong medicine. But in fact, while necessary, it is insufficient. The second problem the U.S. faces—the power of the oligarchy—is just as important as the immediate crisis of lending. And the advice from the IMF on this front would again be simple: break the oligarchy.

That's change I can believe in. Until we get it, we're just a violently armed third world banana republic with an unstable currency. Plan N is needed not only to solve the financial issues, but to bust the trusts.

It's us or the oligarchy, Mr. President. Choose one.

What Digby Said

Yep.

I used to think the political media was as bad as it gets, with their high school kewl kid mentality and their boundless lack of self-awareness. The financial media make them look like sober, mature professionals by comparison.

I mean honestly, in what other field can your widely disseminated advice be wrong to the tune of losing billions of dollars and yet you're still considered an expert about it on the teevee?

Our Lady Of Guada-Loopy

Now, I come from a pretty long line of New York state Irish Catholic Dems, myself. I'm nowhere near as spiritual as my parents are, but I respect them for it. The point is however, if you're the Secretary of State for the US, the country's top diplomat, you're in heavily, heavily Catholic Mexico, you are visiting the Basilica of Our Lady of Guadalupe, one of the more famous Catholic shrines in North America, you should probably read up on it first.

This saves you from asking embarrassing questions like "Who painted it?"

The image of Our Lady of Guadalupe was miraculously imprinted by Mary on the tilma, or cloak, of St. Juan Diego in 1531. The image has numerous unexplainable phenomena, such as the appearance on Mary’s eyes of those present in the room when the tilma was opened and the image’s lack of decay.

Mrs. Clinton was received on Thursday at 8:15 a.m. by the rector of the Basilica, Msgr. Diego Monroy.

Msgr. Monroy took Mrs. Clinton to the famous image of Our Lady of Guadalupe, which had been previously lowered from its usual altar for the occasion.

After observing it for a while, Mrs. Clinton asked “who painted it?” to which Msgr. Monroy responded “God!”

Obama has enough of a problem with Catholics these days anyway, Madam Secretary. And you're not helping him. Whether or not you personally believe in the Miracle of Our Lady of Guadalupe, Clinton as a diplomat shouldn't have asked that and implied a question in their beliefs right in front of a whole hell of a lot of people who obviously do believe.

On the other hand, the Pope has enough of a problem with science too. Which one's more embarrassing?

An Evolving Position

A follow-up on Monday's post on the Texas Board of Education voting on removing evolution from the state's science textbooks. The good news, evolution stays. The bad news, science textbooks in Texas have regressed about 150 years to where evolution is just another competing theory with intelligent design.

The new standards remove current requirements that students be taught the "strengths and weaknesses" of scientific theories. Instead, teachers will be required to have students scrutinize "all sides" of the theories.

The new standards will determine what will be included in science textbooks in Texas. Because of its size, Texas could influence what publishers print in books used in other states. Friday's adoption comes after many months of debate over drafts for the standards, which were last revised in 1998.

On the one hand, the standards encourage questions about certain evolutionary concepts, satisfying those who are critical of the theory. But those supportive of evolution were partly mollified because calls to teach "insufficiencies" or "weaknesses" of the theory were rejected.

The Discovery Institute, which encourages teaching that the universe is the product of an intelligent designer, called the vote "a huge victory for those who favor teaching the scientific evidence for and against evolution."

So starting in 2011, Texas teachers must now openly question evolution's worth, viability, and accuracy and give equal time to the "scientific" evidence that God just made the planet 10,000 years ago and put fossils there to test us. You stay classy, Lone Brain Cell State!

I can't be too hard on Texas however. Northern Kentucky has the Creation Museum, and it's about 25 minutes from my friggin' apartment.

[UPDATE]Christopher Hitchens in Newsweek:

The Texas anti-Darwin stalwarts also might want to beware of what they wish for. The last times that evangelical Protestantism won cultural/ political victories—by banning the sale of alcohol, prohibiting the teaching of evolution and restricting immigration from Catholic countries—the triumphs all turned out to be Pyrrhic. There are some successes that are simply not survivable. If by any combination of luck and coincidence any religious coalition ever did succeed in criminalizing abortion, say, or mandating school prayer, it would swiftly become the victim of a backlash that would make it rue the day. This will apply with redoubled force to any initiative that asks the United States to trade its hard-won scientific preeminence against its private and unofficial pieties. This country is so constituted that no one group, and certainly no one confessional group, is able to dictate its own standards to the others. There are days when I almost wish the fundamentalists could get their own way, just so that they would find out what would happen to them.

I can sort of see that (see Jeff Amestoy's California's Prop 8 argument) but it seems altogether weird to me.

Still, having to codify this stuff into law means the laws can then be challenged.

How To Spot Bad Policy

Over at Political Animal, Publius gives us an easy, easy way to spot bad Obama policy.

Count me among the skeptical of Obama's new Afghanistan strategy. What really worries me is what I'll call the "reverse canary" problem. Simply put, the wrong people are too happy.

You're all familiar with the phrase "canary in the coal mine." The idea was that miners would bring canaries down into the mines as warning signals. When the air became toxic, the canaries would be affected first -- thus warning the miners of imminent danger.

With respect to the Afghanistan policy, the problem isn't that the "signaling" canaries are dropping dead. The problem is that they're too happy -- they're chirping with excessive mirth. Specifically, when Max Boot, Robert Kagan, Bill Kristol, and the Post editorial board are all excited about the policy.... well, it might be time to get out of the mine.

And that's the major, major problem with Obama's "We will defeat Al-Qaeda " policy in Afghanistan: it can't work. It weds us to another four, if not eight years in Afghanistan with precisely zero progress to show for it. The same idiotic "benchmarks" are in play, the same "surge" strategy is underway now, and the simple fact of the matter is Obama is running the Bush playbook in Kabul.

The difference now is we have a huge financial crisis on our hands, and there's simply no reason for us to be wasting time, money, and blood in Afghanistan anymore. The real problem is Pakistan, and will continue to be Pakistan, no matter what we do in Afghanistan.

Eventually somebody's going to come up with the observation that we're spending money rebuilding Afghanistan that we should be spending rebuilding America.

And So It Begins

Spain does what Obama so far has refused to do: it has opened a criminal probe into Bush-era torture policy targeting John Yoo, Doug Feith, Gonzo, and others.

The case was opened in the Spanish national security court, the Audencia Nacional. In July 2006, the Spanish Supreme Court overturned the conviction of a former Spanish citizen who had been held in Guantánamo, labeling the regime established in Guantánamo a “legal black hole.” The court forbade Spanish cooperation with U.S. authorities in connection with the Guantánamo facility. The current criminal case evolved out of an investigation into allegations, sustained by Spain’s Supreme Court, that the Spanish citizen had been tortured in Guantánamo.

The Spanish criminal court now may seek the arrest of any of the targets if they travel to Spain or any of the 24 nations that participate in the European extraditions convention (it would have to follow a more formal extradition process in other countries beyond the 24). The Bush lawyers will therefore run a serious risk of being apprehended if they travel outside of the United States.

Would that it only included Dick Cheney and George W. Bush. The same judge that brought Pinochet to justice is the same one presiding over this case. It will not be thrown aside. Spain is deadly serious about this, and it will not be the first country to want to lock up these war criminals...for that is what John Yoo and his ilk are: war criminals.

How will Obama respond to a NATO ally's extradition demands? Hopefully by having Eric Holder open his own criminal probe. Dday and Andrew Sullivan have more, and Double G has more on Britain's torture case against the CIA.

[UPDATE] Sunday's WaPo front-pager reveals that the torture regime failed miserably and completely at getting any useful intelligence.

In the end, though, not a single significant plot was foiled as a result of Abu Zubaida's tortured confessions, according to former senior government officials who closely followed the interrogations. Nearly all of the leads attained through the harsh measures quickly evaporated, while most of the useful information from Abu Zubaida -- chiefly names of al-Qaeda members and associates -- was obtained before waterboarding was introduced, they said.

Torture failed. The people who did it will be punished sooner or later. Obama should rid himself of the John Yoo playbook now before he ends up sharing the author's eventual fate.

Why Kroog Attacking Obama From The Left Is Important

Doug from Balloon Juice nails it:

What’s most important about Krugman right now isn’t whether he’s right or wrong but that he’s starting to get traction attacking Obama from the left. Obama’s stimulus package was, in my view, not as large as it should have been in large part because the debate was all about whether or not it was too big. The Geithner bank plan is drawing little scrutiny from the cable chatterers because Wall Street seems to like it and the Republicans are yet to produce their own alternative 19 page flow chart on the subject. In effect, for now, the economic debate in the mainstream media ranges from Geithner-Summers banksterism to Bachmann-Santelli-Shelby currency craziness/tax holiday idiocy/”let them fail” know nothingism. That is not a healthy situation.

I would go even further, right now the public discourse is limited to a Hobson's choice between Geithner's woefully incomplete bad bailout plan and fever-bright GOP insanity on the intellectual level of "glossolalia as financial policy". Needless to say, we need a third f'ckin choice, and that's where the Kroog comes in.

Is Krugman right? Is the Obama administration too beholden to Wall Street and to the status quo, trying to save a system that is beyond salvation? Does Obama have—despite the brayings of the right—too much faith in the markets at a time when prudence suggests that they cannot rescue themselves? We do not know yet, and will not for a while to come. But as Evan—hardly a rabble-rousing lefty—writes, a lot of people have a ‘creeping feeling’ that the Cassandra from Princeton may just be right. After all, the original Cassandra was.”

If Krugman's ideas start getting play, not only can the case be made for Plan N more succinctly, but as a useful comparison it only emphasizes how utterly useless (if not borderline absurdist) the Republican party really is right now. The ideas that Obama should be drawing from are coming from guys like Krugman on the Left, not the gaping maw of failure that is the Right in 2009.

Krugman gives the Left the credit and heft it has so sorely needed at a time when serious ideas are badly required, and serves to further expose the barking lunacy of the intellectually bankrupt Right.

[UPDATE] Dday is right on the money: "Krugman is fulfilling that role, opening what many have called the Overton window, moving the conversation away from the failed conservative ideas of the past."

[UPDATE 2] Oliver Willis adds:

It’s also worth noting what it takes for an outspoken liberal to get on the cover of a newsweekly. You have to be on a different side of an issue than a Democratic president.

So say we all.

Global No Confidence Vote: The Next Wave

The Dow has come roaring back 20% in the last three weeks and economic data on home sales, durable goods, consumer spending and retail sales have gotten better rather than worse. More than a few prognosticators believe March 2009 now represents the bottom of this recession, and that from here on out it's slow recovery...but recovery nonetheless.

Most analysts now agree, however, that there are some encouraging shafts of light after months of pitch-black news.

"The best news now is that despite the worst . . . daily litany of horrible news, the strongest renewed bank fears, despite all of that, we've got stocks today essentially where they were in October," said James Paulsen, chief investment strategist for Wells Capital Management, owned by the giant bank Wells Fargo.

In October, all three asset classes — stocks, bonds and commodities such as oil and farm products — were in freefall. Today, stocks are up roughly 20 percent in the past two weeks, the biggest such short-term rally since 1938.

"Despite some of the worst news, stocks have stopped deteriorating and have put in what I think is a relatively strong bottom," Paulsen said.

He's not alone in spying a glimmer of hope.

"I think the worst is behind us," said James Dunigan, the managing director of investment for PNC Wealth Management in Pittsburgh.

Dunigan points to recent better-than-expected data on retail sales, which bumped up in January and held in February, as well as an unexpected February increase in sales of existing homes. New data this week showed a 3.4 percent February increase in orders of durable goods — big-ticket expenditures — which added a dose of feel-good.

"You are starting to get some whiffs of that in some of the indicators that are starting to come out. . . . All of the news isn't as consistently bad as we saw," Dunigan said. "I don't think we need to get a lot of good news. We need to get some consistently less-bad news."

If you're willing to go with that theory, then good luck to you. All this month represents is a pause before the next phase of the storm: commercial real estate.

With loan defaults rising, analysts say the struggling commercial real estate industry is poised to fall into the worst crisis since the last great property bust of the early 1990s.

Delinquency rates on loans for hotels, offices, retail and industrial buildings have risen sharply in recent months and are likely to soar through the end of 2010 as companies lay off workers, downsize or shut their doors.

This is the true heart of the problem. The residential real estate crash has triggered massive unemployment and a commercial real estate crash, giving us another roller coaster to ride downwards over the next two years. Banks and retailers damaged by the current economy most likely will not survive this second phase, especially since the residential market has another 15-20% drop in prices to go. The commercial real estate crash will only be the second tidal wave to hit America just as we've struggled to the surface for oxygen.

Deutsche Bank's Richard Parkus projects delinquency rates will keep soaring to more than 3.5 percent by year-end and as high as 6 percent by late 2010. He says the industry's woes will be "at least of a similar magnitude as those that the commercial real estate faced in the early 1990s."

Drops in property values of 45 percent from a peak in late 2007 are possible, Parkus said, exceeding those of the early 1990s, as demand for office, retail and other commercial space plummets amid a worsening economy.

Adding credence to those gloomy predictions, the government said Thursday that the U.S. economy shrank at a 6.3 percent annual pace at the end of 2008, the worst showing in a quarter-century.

Funding for commercial loans virtually shut down last year as the financial system unraveled.

There was $12.2 billion in commercial mortgage debt issued last year, the lowest figure since 1991 and down 95 percent from 2007, according to a report by Reis.

Making matters worse, about $216 billion in loans are coming due through 2012.

When the companies can't make those payments anymore, they'll get foreclosed on too, driving values down for the rest of the country's offices, factories, hotels and strip malls. More and more companies will go under. This second crash will finish off a great many businesses already on the edge...and truly put us into a depressionary scenario. Seven states are now facing double-digit unemployment, and U-6 "real" unemployment estimates ranging from 18-21%. A great many local and state economies are already so weakened by the current situation that another wave will absolutely capsize them. The banks will take another mortal blow as they lose billions on commercial real estate, throttling any nascent recovery for the financial sector in its crib. That means more bailouts, more spending, more legislation, more pain.

And the real problem is that the local banks that have kept their noses clean on subprimes are the ones that will be rocked the hardest by the global commercial real estate collapse. They're the ones that invested in the strip malls and hotels and business parks because at the time they were safe bets. Now, they'll be cutting back on loans and dealing with foreclosures just like the big boys just when the country needs those loans the most to restart the economy. The disease will be spreading. The results will be devastating. Solid banks now will become weakened. Weakened banks now will become insolvent. Insolvent zombie banks now will become more multi-billion dollar albatrosses around our necks.

The bottom? We're going to wish that March 2009 was the bottom here very, very shortly. Alas, nothing could be further from the truth. Any chance we had at recovery is about to get hit by a tsunami of commercial real estate foreclosures, skyrocketing unemployment, and a long-term depression.

Buckle in kids. As bad as it's been, it will absolutely get worse from here.

Be prepared.