Last Call

Dear Kentucky readers:

We currently have a statewide unemployment rate of 10.4%.  Our senators, Mitch McConnell and Jim Bunning, have filibustered federal unemployment benefits three times each.  The people we sent to Washington DC to represent us are telling us that with a 10.4% unemployment rate there's nothing they can do to help.

Do you think Rand Paul will be any different?  Do you really believe the Republican line that the problem right now is that everyone you know who lost their job and still hasn't found one yet is a lazy parasite?

Think about that.  Go to the polls.  Vote in November.

Huckleberry Maverick

Looks like the Village has found their McCain replacement in the Maverick category:  Lindsey Graham.

In years past, Graham’s deal-making forays typically featured his close friend, Senator John McCain of Arizona, as the frontman. Nowadays McCain has shucked his maverick ways in order to court his state’s G.O.P. primary voters, while Graham’s reflexive displays of bipartisanship have made him something of a scourge among South Carolina Tea Partiers. Harry Kibler fingered Graham as major prey in Kibler’s “RINO hunt” (Republicans in Name Only). The South Carolina chapter of Resist.net warns constituents that Graham “is up to his old reach-across-the-aisle tricks again!” Among the conservative activists who have called for censuring Graham as a quisling of the right is the state’s G.O.P. gubernatorial nominee and Tea Party favorite, Nikki Haley.

“Everything I’m doing now in terms of talking about climate, talking about immigration, talking about Gitmo is completely opposite of where the Tea Party movement’s at,” Graham said as Cato drove him to the city of Greenwood, where he was to give a commencement address at Lander University later that morning. On four occasions, Graham met with Tea Party groups. The first, in his Senate office, was “very, very contentious,” he recalled. During a later meeting, in Charleston, Graham said he challenged them: “ ‘What do you want to do? You take back your country — and do what with it?’ . . . Everybody went from being kind of hostile to just dead silent.”

In a previous conversation, Graham told me: “The problem with the Tea Party, I think it’s just unsustainable because they can never come up with a coherent vision for governing the country. It will die out.” Now he said, in a tone of casual lament: “We don’t have a lot of Reagan-type leaders in our party. Remember Ronald Reagan Democrats? I want a Republican that can attract Democrats.” Chortling, he added, “Ronald Reagan would have a hard time getting elected as a Republican today.” 

To recap, the biggest prima-donna in the Senate, a man who not only threatened to vote against his own legislation if Democrats dared to take on immigration, but admitted that he would never vote for it now just told the Tea Party to screw off and is whining the GOP is bereft of ideas...all while contributing nothing to the solution.

He's a better John McCain than McCain.  And the Village is celebrating him.

I can't stop laughing.

Will BPs Impending Collapse Be Worse Than Lehman Brothers?

Long-time readers will recall that when Lehman went under, their counterparty derivative load broke the back of AIG less than 48 hours later.  Over at Zero Hedge, Gordon Long asks the same question about BP.  If BP does go under, who are the counterparties that would be on the hook?

As horrific as the gulf environmental catastrophe is, an even more intractable and cataclysmic disaster may be looming. The yet unknowable costs associated with clean-up, litigation and compensation damages due to arguably the world’s worst environmental tragedy, may be in the process of triggering a credit event by British Petroleum (BP) that will be equally devastating to global over-the-counter (OTC) derivatives. The potential contagion may eventually show that Lehman Bros. and Bear Stearns were simply early warning signals of the devastation lurking and continuing to grow unchecked in the $615T OTC Derivatives market. What is yet unknowable is what the reality is of BP’s off-balance sheet obligations and leverage positions. How many Special Purpose Entities (SPEs) is it operating? Remember, during the Enron debacle Andrew Fastow, the Enron CFO, asserted in testimony nearly 10 years ago that GE had 2500 such entities already in existence. BP has even more physical assets than Enron and GE. Furthermore, no one knows the true size of BP’s OTC derivative contracts such as Interest Rate Swaps and Currency Swaps. Only the major international banks have visibility to what the collateral obligations associated with these instruments are, their credit trigger events and who the counter parties are. They are obviously not talking, but as I will explain, they are aggressively repositioning trillions of dollars in global currency, swap, derivative, options, debt and equity portfolios. 

Translation:  BP, being an oil company with billions of barrels of oil in proven reserves, has a whole lot of counterparty clout in the global domino game.  They have even larger exposure to counterparty default swaps than Lehman did...because a whole crapload of companies basically took out insurance that BP was Too Big To Fail and counted that insurance as a a phantom asset.  So if BP actually goes under, so many companies would be owed so much that the economy would basically implode.  It wouldn't just be bailing out the banks.  It would be bailing out...pretty much every major company on Earth.

You get the picture.

Another Milepost On The Road To Oblivion

A grim milestone indeed this time as June set a record number of military coalition troop deaths in Afghanistan.

As the Afghan war's bloodiest month for Western forces drew to a close Wednesday, the widening scope and relentless tempo of battlefield casualties pointed to a formidable challenge for U.S. Army Gen. David H. Petraeus, the incoming commander.

At least 102 coalition troops were killed in June in Afghanistan, according to the independent website icasualties.org, far surpassing the previous highest monthly total of 76 military fatalities in August 2009.

In a reflection of the increasingly American face of the war as the summer's troop buildup presses ahead, at least 60 of those killed were U.S. service members, including a soldier killed by small-arms fire Wednesday in eastern Afghanistan. The previous highest monthly death toll for American forces was in October 2009, when 59 were killed.

Buried roadside bombs continued to cause the majority of fatalities, despite what the military has described as some success using electronic surveillance to spot insurgents planting explosives and to stage raids on bomb-making rings.

But a plethora of other hazards have pushed to the fore as Petraeus, who was confirmed Wednesday by the Senate, 99-0, takes command in Afghanistan. Firefights, helicopter crashes, ambushes, sniper fire and complex coordinated assaults — such as Wednesday's attempt by insurgents to fight their way onto NATO's largest airbase in eastern Afghanistan — have also exacted a significant toll in deaths and injuries.

As the pattern of fatalities shows, it is a war with a widening geographical reach. The country's east and south, the traditional Taliban strongholds, predictably saw the heaviest fighting, but a swath of the north became increasingly restive as well.

A day in which a Western military death does not occur somewhere in Afghanistan has become rare. And fatalities in clusters of four or more in a single incident have become increasingly common. On two days in June, the daily tallies reached nine and 10.

And of course this isn't counting the civilian deaths in Afghanistan either.  Those are orders of magnitude worse.

How's that whole surge thing working out for you there, Mr. President?  And why the hell are we still in this hellhole?

Pulling The Plug

The quest to deny anything and everything to illegal immigrants in Arizona in order to turn everyone in the state into deputy ICE continues unabated.  This week, it's cutting the power.

Barry Wong (R-AZ), a candidate for the Arizona Corporation Commission — which is responsible for final decisions on granting or denying utility rate adjustment, among other things — wants to save utility customers from future rate hike by shutting off the power, and other utilities, to undocumented immigrants. Wong, who is the grandson of Chinese immigrants, explained that his plan would require utility companies to verify the immigration status of new customers and weed out existing customers in the country illegally:

“We shoulder and we all share the costs,” said Wong, who is running for a seat on the Arizona Corporation Commission. “Granted they pay for it, but as we use more electricity overall then utilities will have to eventually build more power plants.” [...] “The [state] constitution gives the Corporation Commission specific authority to deal with rate-making which is setting the price that we pay for the electric, natural gas, telephone service, private water companies,” Wong said. [...]

Wong said he would give customers plenty of advance noticed before any utilities are shut off. “You wouldn’t shut down somebody’s power the next day. You put people on notice,” Wong said. “I think they have to make their own decisions. It’s an individual responsibility of how they’re going to take care of it themselves without the utility.”

So now Arizona's power companies are expected to serve as immigration cops even though they have no training, no plan, and no legal way to verify immigration status.  Also, who's going to pay for the training and implementation of the Power Cop Plan here?  Arizona taxpayers, Arizona power customers, or both?

At what point do we draw the line on drafting people to verify immigration status before selling goods and services to Arizonans?  The Public Library?  Paramedics and hospitals?  Schools?  What about ice cream vendors?  They use public utilities and power to keep their ice cream cool, there's a taxpayer interest in drafting them to police Arizona's population, right?  Pizza delivery chains?  Grocery stores?  Gas stations?

Why not go all the way and implement a steep fine for knowingly providing a good or service to an illegal immigrant?  That way everybody has to show papers for everything, every time, right?  That'll solve your problem!

That's the most egalitarian way to do it, right?

Why go half-ass on the police state fascism here?  Which one of Arizona's "Real Americans" will stand up for "Real Arizonans" and push a law like that?

Home, Home I'm Deranged Part 5

The residential real estate market is dying, folks.  Forget the double dip recession, we never left the first one.

The number of buyers who signed contracts to purchase homes tumbled in May, a sign the housing recovery can't survive without government incentives.

The National Association of Realtors said Thursday its seasonally adjusted index of sales agreements for previously occupied homes dropped 30 percent in May from April. The index fell to 77.6 from 110.9. May's reading was the lowest dating back to 2001.

The index also was down 15.9 percent from the same month a year earlier.

The reading provides an early measurement of sales activity because there is usually a one- to two-month lag between a sales contract and a completed deal.

The sharp declines were widespread. Pending sales dropped by 33.3 percent in the South, by 32.1 percent in the Midwest, by 31.6 percent in the Northeast, and by 20.9 percent in the West.

Yeah, you read that right:  pending home sales are now down 16% under last May's numbers.  The only reason we had an inkling of a recovery was due to the stimulus and the housing tax credit.  Both of those programs are running out (because they were far too small in the first place) and now the deficit hawks are assuring we burn as a result.

The housing market is going to crash again here before the end of the year, and it's going to take our economy with it.  And this time there's no interest rates to cut.

Tick.  Tick.  Boom.  it's okay, because Uncle Alan says so.

Former Federal Reserve Chairman Alan Greenspan said that the recent stock market decline is "typical" of a recovery, and that international instability has more to do with the recent decline than problems in the United States. 

Sure, everything's fine.  We're all fine here.  How are you?

It's Steve Jobs's World, You Just Live There

Two tech stories today highlight Apple's increasing product dominance, for better or for worse they're driving the smartphone and e-book reader markets right now.  First, Apple's iPhone has killed the Microsoft KIN...

Microsoft said on Wednesday it had canceled plans to sell its "Kin" phones in Europe this Fall. The company added the internal team working on the Kin phones would be combined with the group working on Microsoft's forthcoming Windows Phone 7 software. 

"We will continue to work with Verizon in the U.S. to sell current Kin phones," Microsoft said in an emailed statement.

The move underscores the challenges facing Microsoft, whose software is used on the vast majority of the world's PCs, as it strives to adapt to consumers' growing taste for handheld Internet-connected gadgets like smartphones.

In April, Microsoft said it was shelving an internal project to develop a tablet PC similar to Apple's iPad.

...while Amazon has made a major price cut on the Kindle DX in the wake of being outsold by the Apple iPad.

Amazon's new Kindle DX, which sports a higher-quality 9.7-inch screen, will sell for $379, down from $489, and have free 3G wireless connection with no monthly bills or annual contracts, the company said.

It was the second price cut for Amazon in as many weeks. Responding to the threat from the iPad, Amazon cut the Kindle with a 6-inch screen to $189, hours after book-selling rival Barnes & Noble Inc lowered the price on its "Nook" to $199. Both had cost $259.

At stake is market share for e-books, the fastest-growing segment in a moribund bookselling industry. In addition to the iPad, the Nook and Kindle also compete with Sony's Reader device. Industry experts and rivals say the field will get even busier, with more e-readers expected this year.

Apple's iPad, launched in April at a starting price of $499, can function as an e-reader, but unlike competing models, it has a color screen and can be used as a full computer. It sold more than 2 million units in its first 60 days and its own e-bookstore has quickly won market share, putting pressure on rival readers like Kindle and Barnes & Noble's Nook.

I own an older Kindle 2 myself as well as an iPhone 3G, but when it comes time to upgrade, let's just say I'm not looking at Apple's competition.  Which is ironic, up until these two products came out, you couldn't have paid me to own an Apple anything.

Now they're in the driver's seat.  Go figure.

Reduce, Reuse, Recycle

Via Balloon Juice this morning comes this NY Times story about toxic levels of irony:  cleanup workers defending Gulf Coast beaches from poisonous oil goop heavily seasoned with deadly dispersants need someplace to stay, and more and more of them are ending up in -- you got it -- those toxic Katrina-era FEMA trailers that still contain potentially lethal levels of formaldehyde.

They have been showing up in mobile-home parks, open fields and local boatyards as thousands of cleanup workers have scrambled to find housing.

Ron Mason, owner of a disaster contracting firm, Alpha 1, said that in the past two weeks he had sold more than 20 of the trailers to cleanup workers and the companies that employ them in Venice and Grand Isle, La.
Even though federal regulators have said the trailers are not to be used for housing because of formaldehyde’s health risks, Mr. Mason said some of these workers had bought them so they could be together with their wives and children after work.

“These are perfectly good trailers,” Mr. Mason said, adding that he has leased land in and around Venice for 40 more trailers that are being delivered from Texas in the coming weeks. “Look, you know that new car smell? Well, that’s formaldehyde, too. The stuff is in everything. It’s not a big deal.”

Not everyone agreed. “It stunk to high heaven,” said Thomas J. Sparks, a logistics coordinator for the Marine Spill Response Corporation, as he stood in front of the FEMA trailer that was provided to him by a company working with his firm. Mr. Sparks said the fumes in the trailer from formaldehyde, a widely used chemical in building materials like particle board, were so strong that he had asked his employer to provide him with a non-FEMA trailer.

The trailers — which are being resold for $2,500 and up — started down their road to infamy after Hurricane Katrina in August 2005, when FEMA officials ordered nearly $2.7 billion worth of trailers and mobile homes to house victims of the storm.

Within months, some of these residents began complaining about breathing problems and burning eyes, noses and throats. One man who had complained about fumes was found dead in his trailer in June 2006.

Federal officials later discovered that formaldehyde — an industrial chemical that can cause nasal cancer, aggravates respiratory problems and may be linked to leukemia — was present in many of these housing units in amounts that exceeded federal limits. Scientists have since concluded that the high levels of formaldehyde found in the trailers probably resulted from cheap wood and poor ventilation. FEMA has produced other models and later batches of the trailers that do not have the health risks that the trailers built for Hurricane Katrina victims did.

But federal officials have struggled to figure out what to do with the contaminated trailers, which have cost nearly $130 million a year to store and maintain, according to federal records. As a result, the government decided to sell the trailers in 2006.

The trailers have found a ready market in the gulf. 

Thank you, corporate America, for yet another excuse to poison Americans.  It's all so wonderfully perfect I don't feel the need to add much of anything...other than these same FEMA trailers are now ending up in reservations in the Dakotas too.

Reduce undesirables, Reuse poison trailers, Recycle the pain.

The Right To Keep And Bear Arms

The most interesting opinion on the McDonald v. Chicago ruling from the Supreme Court on Monday actually came down from Justice Clarence Thomas, as the WaPo's Courtland Milloy documents.

Referring to the disarming of blacks during the post-Reconstruction era, Thomas wrote: "It was the 'duty' of white citizen 'patrols to search negro houses and other suspected places for firearms.' If they found any firearms, the patrols were to take the offending slave or free black 'to the nearest justice of the peace' whereupon he would be 'severely punished.' " Never again, Thomas says.

In a scorcher of an opinion that reads like a mix of black history lesson and Black Panther Party manifesto, he goes on to say, "Militias such as the Ku Klux Klan, the Knights of the White Camellia, the White Brotherhood, the Pale Faces and the '76 Association spread terror among blacks. . . . The use of firearms for self-defense was often the only way black citizens could protect themselves from mob violence."

This was no muttering from an Uncle Tom, as many black people have accused him of being. His advocacy for black self-defense is straight from the heart of Malcolm X. He even cites the slave revolts led by Denmark Vesey and Nat Turner -- implying that white America has long wanted to take guns away from black people out of fear that they would seek revenge for centuries of racial oppression.

Of course, Thomas's references to historic threats posed by white militias might have been dismissed if not for a resurgence of such groups in the year after Barack Obama's election as the nation's first black president.

And if their behavior turns as violent as their racist rhetoric often threatens, then Thomas will almost certainly go down in history as the nation's foremost black radical legal scholar.

Thomas, the only black justice, sided with the court's conservative majority in a 5 to 4 vote to give Otis McDonald, a 76-year-old black man from Chicago, the right to buy a handgun. In his lawsuit to repeal Chicago's restrictive handgun law, McDonald said he needed a gun to protect himself -- not from a white mob but from young black "gangbangers" who were terrorizing his suburban Chicago neighborhood.

Thomas agreed with McDonald, concluding that owning a gun is a fundamental part of a package of hard-won rights guaranteed to black people under the 14th Amendment. And just because some hooligans in Chicago or D.C. misuse firearms is no reason to give it up.

"In my view, the record makes plain that the Framers of the Privileges or Immunities Clause and the ratifying-era public understood -- just as the Framers of the Second Amendment did -- that the right to keep and bear arms was essential to the preservation of liberty," Thomas wrote. "The record makes equally plain that they deemed this right necessary to include in the minimum baseline of federal rights that the Privileges or Immunities Clause established in the wake of the War over slavery." 

Even I have to admit I'm actually impressed by Thomas's argument here.  Many people completely overlook the entire reason for the case was that an elderly black man wanted to buy a gun to protect himself from gangs and couldn't.  Nobody in the legal analyst circles I've read even brought up Thomas's opinion.  And yet reading it, I cannot disagree with the man at all.

It's a bit shocking to see Thomas argue that owning a firearm is not just a Second Amendment issue, but a Fourteenth Amendment issue as well.  However, he's absolutely right.  As I've said before I don't own a handgun, but I support the right of people to make the choice to be able to own them.  It's my choice not to have one, and if I reach age 76 like Mr. McDonald here, maybe I would change my mind at some point.

But I would have the choice to do so.  And yes,  this means I'm admitting Clarence Thomas was actually correct about something.

Please check your lottery tickets.  Now, having said that:

I do have a problem with Milloy's near hagiography of Thomas here.  This one decision falls far, far short of rehabilitating one of the most mindlessly conservative anti-freedom hacks the bench has ever seen.  His opinions are almost universally dismal...this just happens to be one of the "almosts".  It's also mildly disingenuous:  I don't understand why the Second Amendment relates so clearly in Thomas's mind to the Fourteenth, but not the Fourth, for instance.  Thomas has all but gutted that over the years.  He's clearly doing this to serve the narrow interests of striking down Chicago's gun ban.  Why he's trying to pad his race cred, I don't know.  It clearly hasn't bothered him up until now.

The right opinion for the wrong reasons is still wrong.

If It's Thursday...

New jobless claims up 13K to 472K, continuing claims up 43K to 4.6 million, but 376,000 people lost their extended claims thanks to the Senate.

Pretty lousy news ahead of tomorrow's monthly numbers, and Republicans have every political reason to keep them lousy.

Manual Workaround

The new permanent underclass is great for businesses, and not so great for actual workers.

The 6.8 million Americans out of work for 27 weeks or longer -- a record 46 percent of all the unemployed -- are providing U.S. companies with an eager, skilled and cheap labor pool. This is allowing businesses to retool their workforces, boosting efficiency and profits following the deepest recession since the 1930s, and contributing to a 61 percent rise in the Standard & Poor’s 500 Index since March 2009.

“Companies are getting higher-productivity employees for the same or lower wage rate they were paying a marginal employee,” said James Paulsen, who helps oversee about $375 billion as chief investment strategist at Wells Capital Management in Minneapolis. “Not only are employees higher skilled, you have a better skill match. You have a more productive and more adaptive labor force.” 

Translation:  "People are so desperate they're taking entry level jobs. for a 70% pay cut, and the competition for those jobs is so fierce we can take whomever we want and pay them at temp worker wages.  As far as the younger workers trying to get into the market right now?  I understand Mom and Dad's basement is nice this time of year."

The Boomers have been squeezing out Gen X for years now, but times were good enough that there were jobs for all.  That's dead and gone for good now.  The new normal?  Now Gen X is squeezing out Gen Y taking both middle management AND entry positions, and the Millennials still in school now?  Forget it.  They are the underclass.  How do you compete when there's six applicants for every job and every one of them has years of real world experience and is willing to work for pocket change?

Wage pressure is heading downwards, wages are shrinking as people lose overtime and bonuses, and that's leading to increased deflation risk as trillions of dollars vanish from the economy as real estate and wages crash.  Even better, the Serious People in charge are saying we need to cut spending, cut spending, cut spending or we're doomed...even though 10-year T-Notes are down to 2.93% and falling.

The lost decade may be a lot longer than a decade at this rate.

A Tortured Explanation

Double G latches on to a new Harvard study that strongly suggests the Village media redefined torture away from waterboarding once it became clear we were doing it to terror suspects.

As always, the American establishment media is simply following in the path of the U.S. Government (which is why it's the "establishment media"): the U.S. itself long condemned waterboarding as "torture" and even prosecuted it as such, only to suddenly turn around and declare it not to be so once it began using the tactic.  That's exactly when there occurred, as the study puts it, "a significant and sudden shift in how newspapers characterized waterboading."  As the U.S. Government goes, so goes our establishment media.

None of this is a surprise, of course.  I and others many times have anecdotally documented that the U.S. media completely changes how it talks about something (or how often) based on who is doing it ("torture" when the Bad Countries do it but some soothing euphemism when the U.S. does it; continuous focus when something bad is done to Americans but a virtual news blackout when done by the U.S., etc.).  Nor is this an accident, but is quite deliberate:  media outlets such as the NYT, The Washington Post and NPR explicitly adopted policies to ban the use of the word "torture" for techniques the U.S. Government had authorized once government officials announced it should not be called "torture."

We don't need a state-run media because our media outlets volunteer for the task:  once the U.S. Government decrees that a technique is no longer torture, U.S. media outlets dutifully cease using the term.  That compliant behavior makes overtly state-controlled media unnecessary. 

And thus torture became just waterboarding which became "enhanced interrogation techniques" instead because the Bushies said so, and the Village followed right along.  It made it even easier for Obama and Eric Holder to say "Hey let's not look backwards at this" and swept the whole thing under the rug, despite the fact we tortured suspects.

That would not have been possible without a compliant media, and this study more or less proves it.

StupidiNews!

• Hurricane Alex has made landfall along the Mexican coast, causing widespread damage and some flooding.
• Democrats fell one vote shy for beating a Republican filibuster on jobs legislation.
• The World Trade Organization has ruled against European aerospace giant Airbus saying the company has received illegal subsidies for 40 years.
• Financial regulation legislation has passed the House, but is now stalled in the Senate until after July 4.
• The EU becomes the latest group to look into net neutrality.