Last Call

The oil is still in the Gulf along with toxic dispersants and all kids of other mess, and guess what?  It's still killing things.

Thousands of fish have turned up dead at the mouth of Mississippi River, prompting authorities to check whether oil was the cause of mass death, local media reports said Monday.

The fish were found Sunday floating on the surface of the water and collected in booms that had been deployed to contain oil that leaked from the BP spill in the Gulf of Mexico, the Times-Picayune reported.

"By our estimates there were thousands, and I'm talking about 5,000 to 15,000 dead fish," St Bernard Parish President Craig Taffaro was quoted as saying in a statement.

He said crabs, sting rays, eel, drum, speckled trout and red fish were among the species that turned up dead.

Taffaro said there was some recoverable oil in the area, and officials from the state's wildlife and fisheries division were sampling the water.

Expect more of this...a lot more.  Until I start seeing BP execs and members of Congress eat freshly caught and prepared seafood from the Gulf Coast, I think I have the right to say "Hey wait a minute" here on what I eat.

On Firebaggers And King

Blog friend Matt Osborne has really upped his game as of late and is writing the good fight over at Crooks & Liars.  Today he takes aim squarely at the "professional left" and sinks a few battleships.

I know better: if there hasn't been a progressive march on DC yet, it's because the Democrats, liberals, and progressives with the fancy websites and big organizations haven't made it happen. I keep saying that reform is hard -- that progress will be slow -- but mostly see the online left engaging in firebaggery because they're the cool kids and Obama's too square to get it done for them.

There's another analogy in Martin Luther King, who was too square for the more radical elements of the era. But unlike even Malcolm X, the "professional left" has utterly abandoned America's democratic showcase to teabaggers. Last time I checked, it took lots of us to have democracy. Heck, even with King you needed tens of thousands of people to make the Civil Rights Era happen.

And that's just it.  More than anyone else I can remember, Obama believes in the "arc bends towards justice" theory of Dr. King.  The distance we have to cover is massive, but Obama at least moves forwards.  It's not fast enough for some people and a lot of things are out of his hands and his control right now.  What a concept:  Matt's asking for people to make constructive changes.

The president has applied the King formula to build a consensus for reform on health care and consumer financial protection. The left sneers at these achievements because the president hasn't farted a global green-energy socialist paradise out of his armpit. Obama does not write legislation with his veto pen because he is a constitutional law professor; indeed, he understands his appointed role only too well.

He's not enough change from the unitary executive to bother getting excited about. That seems to be the perspective of the opinion-leaders, anyway, who don't see Obama as a president with limited powers. They do not accept that against a center-right legislature he does not control, his powers are limited. That he respects those limits simply earns him no cred with teabaggers or firebaggers.

It's easy...so very easy...to attack Obama over what he does not control.  I've laid into Obama but when I do it's over executive branch issues:  the HAMP program, his decisions on Af-Pak, his decisions on the Fed and Treasury and his economic team, his decisions on Bush-era executive decisions on terrorism, and his decisions when and how to use the bully pulpit.  These are things Obama can and should control and when I disagree with him I state my case and spell out how he could improve the situation.

But Congress and legislation is not something he has any control over and should not.  He gets a veto check on the Legislative and can appoint the Judicial, subject to confirmation by the Senate.  That's it.

He has even less control over the Village, too.  That's what really bothers me about firebagging in general...it plays right into the Village's hands and they never miss an opportunity to make Obama look ineffective.  That doesn't help.

Matt's right:  the Right gets angry, it mobilizes.  The Left gets angry, it recriminates.

Well Now Here's Your Problem

Via TPM, the problem with our economy in the last 50 years:



We're now down to just 8% of America's jobs being in the manufacturing sector, down from a high of 38% during WWII.

Manufacturing jobs and home ownership created the middle class. Both are dwindling rapidly now...along with the middle class. The problem certainly predates Obama, this decline has been going on since Ike first pointed out the military-industrial complex.

But as we went away from making things to a consumer-based service economy, we became more and more vulnerable to a housing bubble. before we still had enough of a manufacturing base to produce our way our of recessions like we did in the 70's and 80's.

Now? Not so much.

In Which Zandar Answers Your Burning Questions

Steve M. points out GOP Rep. Paul Ryan's Medicare and Social Security killing budget plan and wants to know why the Dems aren't jumping all over this:

The "roadmap" destroys Social Security and Medicare, lowers taxes on the rich, raises taxes on the non-rich, and doesn't balance the budget. Of course Republicans don't want to sign on to it. But only D.C. insiders and political mavens know that Republicans are simultaneously singing Ryan's praises and shunning his actual plan.

So if Republicans want reflected glory from Ryan's plan but are afraid to make the effort to put the plan before the American people, why don't Democrats do it instead?

Real simple answer to this one, bro.  Because it'll make Obama look bad when his Catfood Commission proposes drastic cuts and raising taxes.

In addition to raising the retirement age, which is now set to reach age 67 in 2027, specific cuts under consideration include lowering benefits for wealthier retires and trimming annual cost-of-living increases, perhaps only for wealthier retirees, people familiar with the talks said.

On the tax side, the leading idea is to increase the share of earned income that is subject to Social Security taxes, officials said. Under current law, income beyond $106,000 is exempt. Another idea is to increase the tax rate itself, said a Democrat on the commission.

And of course there's no way Republicans on the CC are going to agree to any tax increases whatsoever, so it's going to have to be all cuts.

So no, Democrats can't say word one about Paul Ryan's plan being bad because the Democratic solution is pretty lousy as well.

Besides, Village douchebags like Mark Halperin are making sure the Dems can't use Social Security as an issue because it hurts bipartisanship:

It is hard to imagine that Obama can be the leader of such a process in 2011 if he takes the current, sky-high level of personal and political mistrust and elevates it further by using Social Security as a weapon of distortion in September and October. And yet it appears that the White House believes there is no contradiction or connection between those two sequential presidential goals. Obama may be a hyper-rational guy, but his current rhetoric on Social Security defies logic if he wants to have a productive 2011.

So no, Dems aren't going to do jack squat about this.  Saturday's trial balloon attack just got gunned down for a reason, and now the administration will plead bipartisanship when people ask them why they're not attacking harder on it.

That's the point.

Cutting The Wheat From The Chaff...With A Flamethrower

In baseball the eternal "which is better" war is pinch hitters versus pitchers that hit, in cooking it's butter versus margarine, and in economics the battle is the Austrian school versus the Keynesians.  They must fight, it is the way of all things, grasshopper.

This week the Austrians are trying to make the case that Keynesian economics has failed, and it's time to try the Austrian approach.  We're past the point of saving businesses and homeowners, the Austrians say, and for the good of the economy we need to shed those on the margins only by the grace of the taxpayers and free up those economic resources to be used by those who are making it.  With the annual Fed conference at Jackson Hole, Wyoming coming up on Thursday, the economic theory ammunition is already flying and the Austrians are making their move.

Raghuram Rajan accurately warned central bankers in 2005 of a potential financial crisis if banks lost confidence in each other. Now the International Monetary Fund’s former chief economist says the Federal Reserve should consider raising rates, even as almost 10 percent of the U.S. workforce remains unemployed.

Interest rates near zero risk fanning asset bubbles or propping up inefficient companies, say Rajan and William White, former head of the Bank for International Settlements’ monetary and economic department. After Europe’s debt crisis recedes, Fed Chairman Ben S. Bernanke should start increasing his benchmark rate by as much as 2 percentage points so it’s no longer negative in real terms, Rajan says.

“Low rates are not a free lunch, but people are acting as though they are,” said White, 67, who retired in 2008 from the Basel, Switzerland-based BIS and now chairs the Economic Development and Review Committee at the Paris-based Organization for Economic Cooperation and Development. “There will be pressure on central banks to follow an expansionary monetary policy, and I worry that one can see the benefits, but what people inadequately appreciate are the downsides.” 

Raise interest rates two full percentage points or more, time to jettison the weak and the feeble and let the strong survive.  Never mind that this would almost certainly drive unemployment into the stratosphere and make things infinitely worse for 95% of the country.  Paul Krugman, arguably the most visible Keynesian today, seems to think Rajan and White are just literally making stuff up, but I think Krugman is being naive here.  These guys know exactly what jacking up interest rates 200 BP would do to the economy.

It's separating the wheat from the chaff with a flamethrower, it's curing a staph infection with a chainsaw.  They want to burn and cut away those who are unable to function without these low rates and force everyone into a deep thrift mode, bringing our economy to a dead halt.

Clear the playing board and start over.  Reboot the machine.  Flush the system.  They know what this would entail, and they figure it's going to happen anyway, so you might as well make it a controlled burn.  The problem of course is "it could happen, so let's make sure it happens" isn't a very good way to go when the "happening" in question is a massive economic depression.

Odds a very good it will happen anyway given where housing is.  But raising rates that much would make it a certainty, and nobody should be willing to do that.

It Depends On Your Definition Of Success

Steve Waldman at Interfluidity gives a pretty detailed and exhaustively long recounting of last week's Treasury Department meetings with econ bloggers (as econ bloggers are wont to do) but Atrios flags down this paragraph in Waldman's story that really does explain a lot.

The conversation next turned to housing and HAMP. On HAMP, officials were surprisingly candid. The program has gotten a lot of bad press in terms of its Kafka-esque qualification process and its limited success in generating mortgage modifications under which families become able and willing to pay their debt. Officials pointed out that what may have been an agonizing process for individuals was a useful palliative for the system as a whole. Even if most HAMP applicants ultimately default, the program prevented an outbreak of foreclosures exactly when the system could have handled it least. There were murmurs among the bloggers of “extend and pretend”, but I don’t think that’s quite right. This was extend-and-don’t-even-bother-to-pretend. The program was successful in the sense that it kept the patient alive until it had begun to heal. And the patient of this metaphor was not a struggling homeowner, but the financial system, a.k.a. the banks. Policymakers openly judged HAMP to be a qualified success because it helped banks muddle through what might have been a fatal shock. I believe these policymakers conflate, in full sincerity, incumbent financial institutions with “the system”, “the economy”, and “ordinary Americans”. Treasury officials are not cruel people. I’m sure they would have preferred if the program had worked out better for homeowners as well. But they have larger concerns, and from their perspective, HAMP has helped to address those.

To recap, the Home Affordable Modification Program was a success as far as Treasury was concerned because it helped the banks, despite the fact that by any measure it was a massive failure as far as actual homeowners were concerned.  It didn't keep people in their homes, it didn't make them more affordable, and it didn't modify mortgage terms.  Millions dropped out of the program and will most likely lose their homes now because now the banks can afford to repossess when they couldn't in 2009.

Great for banks.  Not so good for homeowners.  Terrible for taxpayers.  Obama and Timmy really, really botched this one from start to finish.

Marcy Wheeler and David Dayen have a pair of excellent pieces on HAMP as well.  As I said over a year ago, cramdown would have been an infinitely better solution to helping howeowners...but the HAMP program was never about helping homeowners, now was it?

Pay No Attention To Iraq Please

"The last combat brigade has left Iraq" will join "Read my lips, no new taxes", "Mission accomplished" and "The fundamentals of our economy are sound" in the annals of infamy.

The US military and the Obama administration loudly trumpeted the withdrawal of the "last combat brigade" from Iraq last week, but news reports suggest the move is purely semantic: The combat brigades are still there, but under a different name.

The Army Times reported on Saturday that the US still has seven combat brigades inside Iraq, but they have been renamed "advise and assist brigades." The name change will reportedly change little in terms of the duties the brigades carry out:

The Army selected brigade combat teams as the unit upon which to build advisory brigades partly because they would be able to retain their inherent capability to conduct offensive and defensive operations, according to the Army’s security force assistance field manual, which came out in May 2009. This way, the brigade can shift the bulk of its operational focus from security force assistance to combat operations if necessary.

In Sunday's Washington Post, Kenneth M. Pollack argues that the claim there are no more US combat troops in Iraq is "not even close."

50,000 combat troops still remain, they're just not called combat troops.  And the actual combat troops could be headed back into Iraq at any given moment:

The commander of US forces in Iraq doesn't foresee the need for US to resume combat missions in Iraq but isn't entirely ruling it out either.

"We have several different contingency plans for support, but it would have to be something that would change the strategic dynamic here for us to move back to combat operations," Gen. Ray Odierno told CNN's Candy Crowley Sunday.

"Can you define that for me?" asked Crowley. "What is a strategic dynamic that could change?"
"Well, if, for example, you had a complete failure of the security forces. If you had some political divisions within the political forces that caused them to fracture," Odierno replied.

Gosh, what are the odds of a complete crack-up of Iraqi forces?

We're not leaving Iraq or Afghanistan anytime soon, folks.  We'll be there until our economy collapses and we need troops on the ground keeping order here rather than over there.  That may come sooner rather than later...

A Nearly Fatal Lack Of Self-Awareness

MoDo the Red writes her best AbFab freak out column yet.  The core of it is actually accurate:

The dispute over the Islamic center has tripped some deep national lunacy. The unbottled anger and suspicion concerning ground zero show that many Americans haven’t flushed the trauma of 9/11 out of their systems — making them easy prey for fearmongers.

Many people still have a confused view of Muslims, and the president seems unable to help navigate the country through its Islamophobia.

It is a prejudice stoked by Rush Limbaugh, who mocks “Imam Obama” as “America’s first Muslim president,” and by the evangelist Franklin Graham, who bizarrely told CNN’s John King: “I think the president’s problem is that he was born a Muslim. His father was a Muslim. The seed of Islam is passed through the father, like the seed of Judaism is passed through the mother.”

Graham added: “The teaching of Islam is to hate the Jew, to hate the Christian, to kill them. Their goal is world domination.” 

And it would be a powerful observation if it hasn't been directly preceded by this:

The country is having some weird mass nervous breakdown, with the right spreading fear and disinformation that is amplified by the poisonous echo chamber that is the modern media environment.  

Of which MoDo the Red completely disavows any personal knowledge of, you see.  You know, despite laying into Obama because he's too smart and not empathic enough, and laying into Obama because he's not smart enough and too empathic, and laying into Obama because he's not as clever as Bugs Bunny or...something...I think.

This is her classic MO, she says a couple of good core things and then drowns it in rampant Obama bashing, then denies she's any part of the "poisonous echo chamber".

It would be hysterical if it wasn't so pathetic.

Wave Goodbye To The Middle Class, Folks

NY Times econ reporter David Streitfeld notes the biggest fallout of the housing collapse:  the end of the American middle class.

Housing will eventually recover from its great swoon. But many real estate experts now believe that home ownership will never again yield rewards like those enjoyed in the second half of the 20th century, when houses not only provided shelter but also a plump nest egg.

The wealth generated by housing in those decades, particularly on the coasts, did more than assure the owners a comfortable retirement. It powered the economy, paying for the education of children and grandchildren, keeping the cruise ships and golf courses full and the restaurants humming.

More than likely, that era is gone for good. 

Understand that the housing market in America post-WWII created the baby boomer's middle class in this country.  Housing was the one asset that middle-class Americans could count on to go up.  That's gone now, and gone for good.  Using houses as ATMs created our consumer economy and in turn it powered the global economy.

Our turn on top has ended.  More than likely the Chinese will replace us soon.  We lost trillions off of our real estate.  Those trillions aren't coming back, not for a long, long time if ever.  My generation is in real trouble, our middle-class dream is fading fast.  We're not going to be better off than our parents, and we're not going to be able to pass on much to our kids.  Gen Y after me is in dire straits.  Their middle-class dream is all but gone.

In just two years America has fallen apart.  And things are about to get worse...much worse.

Ride The Missile, Baby

Over at Rumproast, NYC resident Mrs. Polly has an informative pictorial report on the anti-mosque protest over the weekend.

To the left, a couple of missile mock-ups proved that even protesting on Hallowed Ground didn’t mean it couldn’t be FUN.

Do go read the whole thing, some of these pictures are hysterically funny...and some are actually rather depressing.

The Kroog Versus The Bush Tax Cuts

Paul Krugman reminds us that Members of Congress complaining about budget deficits don't seem to mind extending the Bush tax cuts...to themselves.

So what’s the choice now? The Obama administration wants to preserve those parts of the original tax cuts that mainly benefit the middle class — which is an expensive proposition in its own right — but to let those provisions benefiting only people with very high incomes expire on schedule. Republicans, with support from some conservative Democrats, want to keep the whole thing.

And there’s a real chance that Republicans will get what they want. That’s a demonstration, if anyone needed one, that our political culture has become not just dysfunctional but deeply corrupt.

What’s at stake here? According to the nonpartisan Tax Policy Center, making all of the Bush tax cuts permanent, as opposed to following the Obama proposal, would cost the federal government $680 billion in revenue over the next 10 years. For the sake of comparison, it took months of hard negotiations to get Congressional approval for a mere $26 billion in desperately needed aid to state and local governments.

And where would this $680 billion go? Nearly all of it would go to the richest 1 percent of Americans, people with incomes of more than $500,000 a year. But that’s the least of it: the policy center’s estimates say that the majority of the tax cuts would go to the richest one-tenth of 1 percent. Take a group of 1,000 randomly selected Americans, and pick the one with the highest income; he’s going to get the majority of that group’s tax break. And the average tax break for those lucky few — the poorest members of the group have annual incomes of more than $2 million, and the average member makes more than $7 million a year — would be $3 million over the course of the next decade. 

Last I checked over 40% of Congress qualifies for millionaire status and dozens have yearly incomes in the $500,000 plus range, so yes, Obama's basically telling Congress to raise taxes on many of its own members.  Sen. John Kerry is by far the wealthiest member of Congress, he'd take a major tax hit but he's willing to pay it.  Republicans in that range, not so much.

In other words, the majority of the tax breaks aren't going to go to "small business owners and family farms" like Republicans complain about, but corporate heirs and financial mega-players who make millions and stand to save millions if the Bush tax cuts are extended to them.  Some two-thirds of a trillion dollars will be given away and nearly all of it to the richest one-tenth of Americans.

Fiscally responsible Republicans are perfectly fine with that.  They want the money to come from social cuts from the poor and middle class Americans instead.

That's how they roll.

StupidiNews!

• 33 Chilean miners are alive inside a shelter in a collapsed mine, but it may take literally months to reach them.
• UK's Defense Minister is the latest official to weigh in on EA's controversial "Medal of Honor" game featuring the Taliban.
• California is under increasing pressure to sell state park land to real estate developers to close its massive budget gap and to relieve urban growth strain.
• Some investors fear a massive bond market bubble is forming that may cause untold havoc when bursting.
• Most migrating animals are just playing follow the leader, meaning that knowing when to go means being in charge.