Last Call

Been a while since I've talked about the commercial real estate market, but that's only because the residential one is so horrible still.  The commercial one however continues to collapse.

Office vacancies in the U.S. rose to the highest level since 1993 in the second quarter as the sluggish economic recovery damps demand from corporate tenants, Reis Inc. said in a report.

The vacancy rate climbed to 17.4 percent from 16 percent a year earlier and 17.3 percent in the first quarter, the New York-based research company said today in a statement. Effective rents, the amount tenants actually pay landlords, fell 5.7 percent from a year earlier and 0.9 percent from the previous three months, according to Reis.

That's staggering.  More than one in six office spaces in this country are vacant right now.  There is nothing that indicates that this will improve anytime soon and more than enough evidence to assume that this may jump to 19 or 20% soon.  Rents are down big time because of the oversupply...so why are these office spaces empty?

We built too many of them during the housing boom, simple.  Same goes for hotels...and even apartment vacancies are up now, people are trading down from condos to good apartments, from good apartments to decent ones, from decent apartments to lousy ones, and from lousy ones to the couch in Mom's basement...or worse.

The deflationary death spiral continues unabated.

Great Idea, They'll Hate It

Kevin Drum comes up with a very good solution to our stimulus impasse.

Actually, I think there's an easy solution to this quite aside from automatic stabilizers like extended unemployment insurance, which will automatically come down as the recession eases. And that solution is: a temporary payroll tax holiday paid out of the general fund. At this point, if we're going to pass a second stimulus I think it needs to be something that takes effect quickly, and a payroll tax holiday is about the fastest possible stimulus you could ask for. What's more, it's pretty effective, since the benefits primarily go to middle and working class families, who are more likely to spend it than rich families. And making it credibly temporary isn't hard either. Just set it on autopilot with a gradual phaseout: maybe a full holiday for two quarters, followed by a 75% holiday, a 50% holiday, and finally a 25% holiday. Or something like that. That would be easy to stick to and would avoid the problem of withdrawing all the stimulus at once just as the economy was starting to seriously pick up steam.

Would Republicans agree to this? Probably not. But some of them might, and public opinion would probably be pretty favorable even among the tea partiers, who prefer tax cuts to deficit reduction by a margin of 49%-42%.

Republicans would "probably not" agree to this, he says.  That is so terribly precious.

Hey K-Drum, bro?  What part of "Republicans will never, never, never agree to anything that will help the economy and allow President Obama to take credit for passing something usefully bipartisan before the midterm elections" do you not get?

Now January rolls around, I guarantee you a payroll tax holiday is the first damn idea you'll see out of the GOP, but if Obama and the Democrats suggest it, the Republicans will filibuster the hell out of it.

Hot Child In The City

That heat wave in the Northeast (and it's supposed to be worse tomorrow) brings up a question:  global warming aside, our infrastructure needs some help, and part of that is America's power grid.

"We are anticipating a potential record breaking day for electric usage," said John Miksad, senior vice president with Consolidated Edison Inc of New York. "It's not a record we're hoping to break and we are encouraging conservation among all of our customers."

Even though generation supplies were more than ample to meet forecast demand, heavy usage of some power plants and distribution lines could leave some stewing in the heat without power.

Con Ed, with more than 3.2 million customers, had about 1,500 homes and businesses without service earlier Tuesday as the temperature topped 100 degrees Fahrenheit (38 degrees C).

Miksad pointed out his company has about 93,000 miles of underground cable that can be vulnerable to damage caused by heat trapped underground.

The state-owned New York Power Authority (NYPA), meanwhile, activated its demand response program, which pays large business and government customers, like Citibank and New York City, to cut back on energy usage during heat waves. In that way, the power grid doesn't come under too much stress which can cause blackouts.

"(NYPA) has taken the steps necessary for ensuring that we're prepared to meet the challenges of the summer when the gap between demand for power and available generating supplies narrows the most, and generating and transmission facilities are most heavily utilized," NYPA President and CEO Richard Kessel said in a release.

But remember, we can't spend money on this because it might hurt the bond traders or something.  Meanwhile, record power consumption continues.  If only there was a large entity that could regulate power across all 50 states...

World Cupdate

And the Semifinals got underway this evening in Cape Town, South Africa, with Uruguay taking on the Netherlands.  Both teams were down key players from bookings and injuries, La Celeste missing Luis Suarez and Jorge Fucile, while the Oranje were down Gregory van der Wiel and Nigel de Jong.  uruguay took a 4-4-2 attack into the match with Edinson Cavani replacing Suarez and Diego Forlan expected to carry the load, while Holland fronted a 4-2-3-1 formation led by the ever-present Robin van Persie.  The Dutch, the orange-clad Denver Broncos of the FIFA world, were still looking for their first ever World Cup finals win, and were hoping van Persie would have his John Elway moment after having come so very close a number of times.  Uruguay meanwhile was hoping to continue their record of spoiler, the team that found a way to win even if it played an ugly game.  Both teams were content to squat early and counter-attack, but that meant neither squad was taking the forefront.  Holland finally dithered around in the corner enough so that Giovanni von Bronckhorst was able to set up a nuclear strike from the far turf, and it found its way into the back of the goal at 18' putting Holland up 0-1.  Suddenly Uruguay were in real trouble, but they didn't seem to want to up the attack too much...or maybe without Luis Suarez, they couldn't.  More trench warfare continued in the half, but Diego Forlan stepped up and ripped one in at 41' to equalize. 

Suddenly we had a game on our hands.  In the second half both squads went back to the trenches to try to tease another goal out, but it was a controversial goal at 70' by Holland's Wesley Sniejder that put Holland up, despite what looked like van Persie being offsides.  That controversy vanished a few minutes later however as Arjen Robben headed in a shot at 73'.  uruguay however was not done, and that offsides goal may go down as one of the great "What ifs?" in World Cup history as Maxi Periera banged one in at 90'+1 to make it a 2-3 game, but time expired and Holland will play for all the marbles on Sunday.  Will they face Spain or Germany?  We'll see tomorrow...

Zandar's Thought Of The Day

Expanding on the KY Senate race, Public Policy Polling notes that Paul and Conway are tied at 43%.  The real point however is that Jack Conway has become irrelevant to the race:  It's between who Kentuckians hate more, Rand Paul or Barack Obama...and it's a near thing. Tom Jensen:

Jack Conway has almost the same level of favorability as Paul- 31%- with much lower negatives at 29%. Usually you would expect a candidate with a +2 favorability to be defeating one with a -8. But Rand Paul's greatest asset in this race is Barack Obama. The President has only a 37% approval rating in Kentucky with 58% of voters disapproving of him. For the most part Democrats aren't going to be winning any seats they don't currently hold where the President's that unpopular but Paul's relative weakness is making this race more competitive than perhaps it should be.

Paul is winning 72% of the Republican vote to Conway's 65% of the Democratic vote. Kentucky may have the most conservative Democratic voters in the country. If Conway can get more than 80% of the vote from within his own party he'll more than likely win this race, but that may be a tall order when only 58% even of Democrats approve of the President's job performance.

The Kentucky Senate race may end up being decided by whether voters in the state find Barack Obama or Rand Paul more unpalatable- it should be a close one.

We'll see. This is still a state that McCain-Palin won by double-digits. if it comes down to who people hate more, it'll be close as he says.

Behold, The Anti-Kroog Walks Among Us

For if Paul Krugman has a nemesis, it's Harvard man Niall Ferguson, who's flat out warning that if Obama listens to Krugman and provides any more stimulus, the bond market will implode and throw us into a hyperinflation crisis.

"Is it going to be inflation or is it going to be default. Right now there is no sign of inflation. We have monetary contraction at an alarming rate, and zero inflation in terms of core CPI, so the option of inflating this debt away doesn't seem to be there right now. What you are left with is therefore default. And I think it is a fair debt that US will default at least on the unfunded liabilities of Social Security and Medicare at some point in the foreseeable future. What the Greeks discovered you are fine until you are not fine with the bond market and if you have a non-credible fiscal strategy of borrowing a $1 trillion a year for the rest of time, never ever again running a balanced budget, at some point the markets are going to get spooked, and I think that point is nearer than Paul Krugman believes. Nothing would spook the markets more than for Paul Krugman's advice to be accepted by the Obama administration. That might well be the trigger." 

In other words, we can't afford stimulus because it'll hurt the bond traders.  We'll go straight from deflation to hyperinflation you see...sure that's possible, but if we do nothing, then that deflationary spiral will only get worse...and that's assured.

We're more scared of possible inflation than we are actual occurring deflation...which is a lot like worrying about the water damage to your house when it's engulfed in flames and saying "Well we can't spray water on it, it might ruin the carpeting!"

This is what passes for conservative economics these days.  I mean, just because Paul Krugman's been right about the last decade or so doesn't mean he's right now...

The Lesser Of Two Evils

Voters in nearby KY-6 have a choice between Democrat Ben Chandler and Republican Andy Barr.  unfortunately, there's very little difference between the two.  Chandler was part of the Blue Dog Stupak coalition that almost scuttled health care reform, and, well...Andy Barr has his own optics problems.

Until last year, the Idle Hour Country Club in Lexington, Kentucky, had no African American members. Now lifetime member and 6th Congressional District Republican nominee Andy Barr is finding himself in the awkward position of explaining his connection to what was until very recently an all-white club -- in the middle of a hotly contested election campaign against incumbent Rep. Ben Chandler (D).

Politico's Alex Isenstadt reports the Republican's campaign has confirmed that Barr -- a top-tier NRCC "Young Gun" -- and his family are "active in the club." As the Lexington Herald-Leader reported last year when former Kentucky college star and NBA player Sam Bowie was accepted as the club's first black member, Idle Hour has "remained a symbol of exclusivity and old divisions based on race and class in Lexington" even as the state has become more accepting of diversity in the workplace and private life.

Barr's campaign told Politico that news of his lifetime membership at Idle Hour was nothing but the Chandler camp "resorting to cheap, personal attacks," in the words of Barr's campaign manager. 

A cheap personal attack it may be, but as a person running as Congressman for all of KY-6 (and not just presumably the white part) Barr still owes voters a real big explanation as to why he's a lifetime member.  On the other hand, Ben Chandler is still leading Barr, but...he's still a Blue Dog, and one of the most annoying ones at that.

Your choices are someone who's going to vote against Obama 99% of the time and 80% of the time.  Not much of a choice, like I said.

The Kroog Versus Confidence Fairies

Hey, I'm not calling them confidence fairies, Krugman is.

I was on Good Morning America this not-so-good morning, doing what I could. But I was struck by something that George Stephanopoulos said: he claimed to have been speaking to an administration official who asserted that what we need to get businesses investing is for business to know that the government has stopped — presumably, that means no new spending, no new regulation, whatever.

GS is a careful guy, so this must be true. And it’s shocking — not that people are saying this, but that someone inside the administration is saying it.

It’s garbage, of course: businesses are refusing to invest because they don’t see enough demand for their products. And administration economists know that it’s garbage. But obviously some people in the WH — I’m guessing a political person, but who knows — have bought the right-wing line hook, line, and sinker.

We’ll never know what might have happened if Obama and co. had actually had the courage of their convictions; what we do know is that they have undermined their own message at every turn.

It's 1994 all over again.  The message here is government should do nothing and leave everything to the free market.  The funny part is we did that from 1996-2008 in a blood-soaked orgy of deregulation, and the result was a massive financial crisis. 

The lesson everyone has chosen to learn from this is...that government should do nothing and leave everything to the free market.  I wonder how that will turn out?

So what's the free market solution to create enough demand to sustain real economic growth, aka spending?  I know, cut spending and take more money out of the economy.  That will fix everything!

A Grade Of "Does Not Meet Expectations"

BP's not getting the job done. 

In the 77 days since oil from the ruptured Deepwater Horizon began to gush into the Gulf of Mexico, BP has skimmed or burned about 60 percent of the amount it promised regulators it could remove in a single day.

The disparity between what BP promised in its March 24 filing with federal regulators and the amount of oil recovered since the April 20 explosion underscores what some officials and environmental groups call a misleading numbers game that has led to widespread confusion about the extent of the spill and the progress of the recovery.

"It's clear they overreached," said John F. Young Jr., council chairman in Louisiana's Jefferson Parish. "I think the federal government should have at the very least picked up a phone and started asking some questions and challenged them about the accuracy of that number and tested the veracity of that claim." 

People want the federal government to do something?  I thought the government was incapable of policing the free market because the government doesn't have oil experts.  Why would anyone question what America's corporations are telling us?  After all, doesn't the free market know best about everything?

In Debt, In Jail

Via Jim F. over at BooMan's place comes this story about the rise of arrest warrants being served against people who owe credit card debt.

As a sheriff's deputy dumped the contents of Joy Uhlmeyer's purse into a sealed bag, she begged to know why she had just been arrested while driving home to Richfield after an Easter visit with her elderly mother.

No one had an answer. Uhlmeyer spent a sleepless night in a frigid Anoka County holding cell, her hands tucked under her armpits for warmth. Then, handcuffed in a squad car, she was taken to downtown Minneapolis for booking. Finally, after 16 hours in limbo, jail officials fingerprinted Uhlmeyer and explained her offense -- missing a court hearing over an unpaid debt. "They have no right to do this to me," said the 57-year-old patient care advocate, her voice as soft as a whisper. "Not for a stupid credit card."

It's not a crime to owe money, and debtors' prisons were abolished in the United States in the 19th century. But people are routinely being thrown in jail for failing to pay debts. In Minnesota, which has some of the most creditor-friendly laws in the country, the use of arrest warrants against debtors has jumped 60 percent over the past four years, with 845 cases in 2009, a Star Tribune analysis of state court data has found.

Not every warrant results in an arrest, but in Minnesota many debtors spend up to 48 hours in cells with criminals. Consumer attorneys say such arrests are increasing in many states, including Arkansas, Arizona and Washington, driven by a bad economy, high consumer debt and a growing industry that buys bad debts and employs every means available to collect.

The Coalition of the Mean has decided it's cheaper to throw you in the county lock-up for 48 hours than extend unemployment benefits.  It's also easier to pay the state to rough up your more financially delinquent clients and hope they get the message.  And you though mob loan sharks and bookies were a tough bunch.

After all, there are people who want that 48 hour maximum to go away.



Minimum security debtor's prisons owned and operated by private companies...that's the kind of thing I see coming very, very soon. What better way to terrify the country into thinking the national debt is our most dreaded crisis in 2010 than to criminalize personal debt?

Specifically Not Feelin' Randy, Part 9

Now that Rand Paul has made the jump from outsides primary hopeful to GOP candidate, he's breaking a lot of promises in order to get elected.  Don't think the people of Kentucky haven't noticed, either.

Last year, with the primary election still months away, Paul pledged not to accept contributions from any senator who voted for a federal bailout of the banking industry.

That was in response to plans by Paul's main opponent, Secretary of State Trey Grayson, to attend a Washington fund-raiser hosted by Republican U.S. Sen. Mitch McConnell and others who voted to shore up giant banks with taxpayer money.

Paul has been sharply critical of the bailout, citing it as a reason he got into the race.
After trouncing Grayson, however, Paul benefited from a $1,000-a-person fund-raiser June 24 in Washington hosted by McConnell and attended by senators who voted for the bailout.

Attorney General Jack Conway, Paul's Democratic opponent, said the move showed Paul had become part of the very thing he railed against in the primary, and Conway accused him of hypocrisy.

Paul's camp disagreed with Conway's assessment.

The GOP primary was a battle for the direction of the party, and Paul won it with his platform of requiring balanced budgets and complete opposition to bailouts, said his campaign manager, Jesse Benton.

"Dr. Paul accepts financial support from anyone who wants to support his ideas of limited government, term limits, balanced budgets and real reform but makes it clear to them that money will not influence his votes or positions," Benton said.

It's difficult this early in the general election to gauge how Paul's decision to get cozier with the establishment he criticized in the primary will affect voters Nov. 2.

David Roos, a retired minister in Murray who has been active in the Tea Party movement, said it didn't escape notice in his circle that Paul had, as he put it, "capitulated to the establishment."

That makes sense, because if you remove all the libertarian window-dressing, Rand Paul's nothing more than your standard GOP Wingnut and always has been.  That's not any advantage for Jack Conway however:  Tea Party voters are also nothing more than standard Republicans with a fresh coat of paint.

Conway's real problem however is that the biggest thing going for him right now is that he's not Rand Paul.  He needs to stop trying to be Paul.

StupidiNews!

• Triple digit heat is expected to scorch the Northeast over the next several days.
• Tarballs have been found now as far westward as Galveston, Texas, and that has Lone Star State residents worried there may be more.
• Israel has relaxed the Gaza blockade somewhat ahead of today's meeting between President Obama and Israeli PM Nethanyahu.
• Rough times may be ahead for the Euro as some analysts see parity with the dollar.
• With the US government getting out of the helium business, stockpiles could shrink and prices shoot up like, well, a balloon.