Last Call

The subtle art of the deal, as presented by Orange Julius.

House Speaker John Boehner said on Thursday that Republicans will not vote to raise the debt limit without budget reforms and spending cuts totaling trillions of dollars.

Boehner said he was optimistic that bipartisan talks led by Vice President Joe Biden would "lead somewhere" in an effort to allow the government to continue its borrowing activity, while keeping the rapidly growing debt load at a manageable level.

Trillions in spending cuts (and tax breaks for the rich) or the country defaults on its debt.  So the Republicans are offering a choice between massive suffering for 90% of the country as social programs are eliminated and the economy implodes, or massive suffering for 90% of the country as borrowing costs skyrocket and the economy implodes.  Eric Cantor chimes in on the other end, saying that the Republicans will refuse to allow even one dime of tax increases.

This is their opening position, he demands.

But something's fishy.  Orange Julius and Cantor talk tough, but behind the scenes...

U.S. budget negotiators are considering, as one option, a straight up-or-down vote on increasing the country's borrowing authority, without spending cuts attached, a Republican aide said on Thursday.

"It is being considered among a lot of options. It hasn't been taken off the table," said Brad Dayspring, a spokesman for House Majority Leader Eric Cantor. Under such a scenario, there could be separate but parallel legislation on cutting spending.

How quickly will the cries come from the Tea Party to primary their hero Cantor?

Another Milepost On The Road To Oblivion

Hey look, Texas again.

A ninth grade algebra teacher was suspended from a Texas school district after making offensive comments to a Muslim student in front of the entire class.

"The teacher told the student that 'I bet you're grieving,'" the mother of a student in the same class told ABC13. "And she basically looked at him and said what are you talking about? And he said I heard about your uncle's death and she said wow, because she understood that he was referring about Osama bin Laden being killed and was racially profiling her."

She added that the teacher "just kind of smirked and giggled and walked away" after the Muslim student ended up crying over the comments.

But note the reaction of the Houston Muslim community:  not anger, just a resigned sadness that I personally understand all too well.

Aziz Siddiqi, president of the Islamic Society of Greater Houston, said he believed the offensive remarks were an isolated incident.

"It's just one individual," he said. "A lot of people suffer because of the actions of one individual. This little girl suffered. The teacher is going to suffer. I think every society has some people who are a little off. He may be one of those."

Not anger, but pity the for the ignorant.  When you've seen incidents like this happen to others and have walked in that girl's shoes yourself for more than a few miles, I can tell you anger becomes far too exhausting and you only really have energy left for some pity before you move on to the next asshole's display of ignorance.

Also, a teacher? Really?

Pop Goes The Bubble Cause The Bubble Goes POP

That wet ripping sound you heard coming from the direction of Wall Street was the bottom coming out of the commodities market this afternoon.  Good ol' Asariel documents the atrocities at the Great Redoubt:

So, what happened?  We'll turn to Reuters first for some ideas.  In Oil plummets 8 percent as commodities battered, the article quotes Chris Jarvis, senior analyst for Caprock Risk Management, for some theories.  "Crude oil is selling off sharply for two primary reasons:  QE2 is coming to an end in June and without a QE3 behind it, it will take liquidity out of the market, hurting risky asset classes such as commodities....  With Osama bin Laden dead, the market is adjusting the geopolitical risk premium down accordingly.  Given this, speculative money is being taken off the table."

 

Silver took a beating  because the Chicago Mercantile Exchange Group is raising margin requirements for the 5000-ounce COMEX silver futures, according to Silver deepens dive to 5-week low, gold slips.  The margin requirement was $11,745 per contract.  Starting May 9, it will go to $21,600 per contract.

 

If you don't follow commodities much (and I don't), that's comparable to taking the house requirement for a stock from 30% to 55%.

 

Michael Shaoul, chairman of Marketfield Asset management, chalks it up to panic in Commodities Sink Most Since 2009 as Stocks Fall.  "You have those super crowded trades.  Now you're in liquidation mode.  There's nothing to do with weak US economic data.  It's not a global financial crisis.  It's  a classic liquidation move in a crowded trade."

 

One final piece of the puzzle:  the dollar was up against the euro, the British pound, the yen, and the Australian dollar.  Since commodities are traded in dollars, a strengthening dollar will help push commodity prices down.

 

Makes sense to me.  Silver's gone from $20 in January to $48 last week, dropping to $36 today.  Speculation, much?  Oil too burst, dropping a whole ten bucks today.  See if that does anything to gasoline prices where you live.

The flight to safety in recent months has been not to the dollar, but to silver, oil, gold, just about any commodity speculators could get their hands on the futures contracts for, and as the dollar continued to fall against the Euro, people bid up the prices of everything.  But today, Jean Claude Trichet of the European Central Bank mentioned the dreaded "R" word..."responsibility".

In a dinner speech at a central banking conference organized by the Bank of Finland in Helsinki, Trichet told his audience that Europe's monetary union must allow countries that have pursued sound policies to reap the benefit of them, while others pay for their own mistakes.

His remarks came on the same day that the EU and International Monetary Fund formally unveiled a EUR78 billion rescue package for Portugal, the third debt-laden member of the euro zone to seek assistance from its partners in less than a year.

Portugal's bailout means that euro-zone and other EU governments have now committed more than EUR250 billion in aid to economies that have failed to live with the constraints of the common currency, a trend that was largely responsible for the dramatic increase in support for a previously marginal right-wing party in Finland's parliamentary elections in April. 

With Trichet signaling that the Europeans are cutting off the Eurozone version of Helicopter Ben's magic printing press, the dollar's plummet against the Euro reversed itself big time today.  And as Asariel correctly notes, a stronger dollar means lower commodity prices.  Likewise, a sharply stronger dollar means sharply lower commodity prices, and that was enough to pop the bubble across the board on commodity's Big Casino game as everyone got spooked and headed for the exits.

We'll see where the commodity markets head after this, but this bubble was due to burst some time ago, and until the dollar starts weakening again, commodity traders will be seeing red.  It doesn't hurt that dropping commodity prices on things like oil and grain right now will only help the US economy, which was in real danger of locking up due to extended high gas prices.  I'm hoping this will cause a steady drop this month depending on how long the dollar rally lasts.

Having said that, can QE3 be too far around the corner?

They Have A Taco Bar?

And now, a Cinco de Mayo message from former President Bush 43.

President Bush Reacts to Osama Bin Laden's Death with Will Ferrell from Will Ferrell
 

Meanwhile, the actual Dubya is way too busy being pissed off that Obama won't give him credit for finding bin Laden (after of course Bush shut down the program that was hunting him in 2006) to join President Obama in Manhattan today, mainly because it would take away from Dubya's "me" time.

Enough Already, Part II

The article from this morning had me reading up on my drug facts yet again.  I will pick up where I left off, and make a related but different point.

Law enforcement is exhausted?  Prisons are overflowing?  States are going bankrupt supporting prisoners?  Budgets are hungry for tax money? Drug dealers making billions of dollars selling pot to everyday folks?

Enough already. Legalize pot.  Bankrupt the petty drug dealers, take them out with one move.  Hey, tax the crap out of it and get thousands out of prison while you're at it, and take a huge load off law enforcement.  Just for kicks and giggles, let's free up some courts and reduce the strain on multiple budgets across all branches of government.  Then police can stop chasing in circles and go after the real problems like meth and the increases in thefts and violent crime.  It would stop their cash cow and force them to go in a new direction, but that is the reality for many of us.  

This isn't a perfect solution, but there is no perfect solution.  This option would at least make a difference, something the (coughcough) war on drugs has so far failed to do.  The people who don't want to legalize pot may just have to make decisions for themselves and not enforce it on others, heaven forbid.  They can exercise their right to choose not to participate, just like nonsmokers and nondrinkers do every day.  If that isn't enough for them, there's always Planned Parenthood or juicy books in high schools to keep the judgmental busy.

To keep control over a substance that isn't even that potent, are states willing to starve while a perfectly good cash crop puts money in the hands of the criminals?  Let's face it, just about everyone alive knows a drunk and a pothead for comparison.  I've known drunks who forgot their name, wore vomit-encrusted shirts and in one case killed innocent people from sheer stupidity.  I've watched stoners turn pizza love into an art form and lose their car keys. Oh, and don't forget the giggles.  Those damned giggles.  Sarcasm aside, for every one marijuana smoker I know that takes it to extremes, I know a dozen who abuse alcohol and drink themselves into utter oblivion.  People who cannot or prefer not to drink (like me) are caught in the middle.  I obey the law, but because of my diabetes alcohol is not an option for me.  My choices are to risk blindness or going into a coma, or risk jail or worse by using an illegal and unregulated system.  Not really much of a choice, and without any real justification.

I realize I might be missing something.  So I'll put out a challenge, because if there is another choice that makes more sense I want to hear it and understand it.  The challenge: tell me why we shouldn't do the above.  However, "because I don't like it" and "I think I have the right to tell adults they cannot use a substance that has yet to produce an overdose" are not acceptable reasons.  The fact that it isn't good for you also is not an option, because alcohol is proven beyond the shadow of a doubt to be more abusable, more commonly abused, more likely to impair judgment.  It fries your liver and kidneys while enjoying a perfectly legal status, and doesn't contribute to helpful things like tolerating chemotherapy.

It's time to put judgment down and look at facts and be creative.  What other solutions can address so many different problems and direct the money and choices back to the best possible places?  I have mulled this over and read many opinions, and the best I can tell this makes perfect sense.  The best anti-pot arguments I have heard amount to personal judgment and trumped up symptoms.  The best pro-pot arguments make economic and judicial sense and don't seem to reply on hyperbole to make their point.  Even if there is an overdose I can't find, it is safe to say more people die from Tylenol overdoses.  Millions have died as the result of drunk driving or alcohol poisoning, which we do with the government's blessing.  Prohibition failed for logical reasons, and this is the same principle except "Jesus smoked a joint, so I'm sure this is okay" can't be called into play.

I will try to leave this alone, but it bugs the hell out of me, and occasionally I spout off.  If it were legal, I'd enjoy a weekend indulgence here and there.  I think a lot of people would, on a responsible and occasional basis.  There will be those who abuse it, but those guys are already paying their money.  It's just being used to buy guns and heroin instead of helping keep states afloat.  This is a logical way to kill 20 birds with one stone.

Enough Already Part I

JEFFERSON CITY, Mo. — The Missouri House has narrowly endorsed legislation requiring prescriptions for some cold and allergy medicines containing a key ingredient in the illegal drug methamphetamine.

Missouri already requires pharmacies to keep nonprescription remedies containing the decongestant pseudoephedrine (soo-doh-eh-FEHD'-rihn) behind the counter. Buyers have to sign logs and can only purchase limited amounts at a time.

I understand meth is a problem.  A big problem.   The solution is not restricting law-abiding citizens.  The criminals are not suffering, but people who cannot afford a doctor visit are already forced to go through hoops.  If this passes, those who can't afford a prescription will be collateral damage in a fruitless war.

What is going to happen when other perfectly legal items become a nuisance to law enforcement, or serve as a moral whipping stick for the enlightened?

Because of dyes and different reasons, some patients cannot use liquid gels.  From experience, I can tell you that the differences in how pills are metabolized creates a need for choice.  Because of my health issues, a rapid release drug of just about any kind causes symptoms worse than what drove me to the medicine in the first place. and my circumstances are not rare.  This is a blow to people who need affordable medicine.  Devastating consequences but the wrong target, fellas.

More about my thoughts on the war on drugs is coming this afternoon.

It's Not About Race, They Tell Me, Part 2

Anyone who actually thought the Birther thing was actually about the President's long-form birth certificate and not about justification for covert (and increasingly overt) racism, please take note.

Sixteen percent of all voters and 30% of Republicans do not believe President Barack Obama has proven he was born in the U.S., even after release of his long-form birth certificate, a new IBOPE Zogby interactive survey finds.


These results are from an IBOPE Zogby interactive poll conducted April 29-May 2, which was after Obama released the birth certificate and addressed the news media on the topic.

Demographic groups besides Republicans expressing the highest levels of doubt about Obama's birth in the U.S. are conservatives (34%), and those without a college degree (21%) vs. those with a degree (11%).

Yeah, that's right.  There's that twenty-sevenish percent number firmly ensconced in our national debate.  No matter what the President does, about that percentage will continue to publicly insist he's not really their President cause he wasn't born here, so he doesn't count.  Releasing the long-form birth certificate did precisely nothing to tamp down the crazy on that end of the spectrum, as I predicted last week.  Since they're riled up right now, it's actually a bit more than the 27% too.

So yeah, the racist assholes will see what they want to see, and hear the dog whistles they want to hear, and share the "code" that Obama's "not one of us" to their heart's content no matter what the President does.  Same goes for the Deather polls you'll see in the next couple of days/weeks:  I'm betting at least 27% of Republicans will end up saying bin Laden is still alive.

Knocking Out The Supports

Cincinnati is a good example of how the Tea Party's success at the state and especially the local level is wrecking state's future.  A number of school districts have seen property tax levy measures defeated roundly, the efforts to do so led by Tea Party Republicans who vow to rid the state of anyone who supports raising taxes in any way.

The results are that as the suburbs of the city are growing, the school budgets are taking millions of cuts and have finally gotten to the point where school districts are facing bankruptcy. 

After a three hour budget meeting with his staff Wednesday morning, West Clermont Superintendent Gary Brooks was preparing to call the State. He needs to discuss the process of entering fiscal emergency. Even with an additional 5 million dollars in budget cuts, the district will still be in the red by the end of the year. West Clermont’s 7.9 mill levy was voted down decidedly.

“We agree with the sentiment of the voters that the system for funding public schools is broken, that taxing people on the basis of their property values is an unfair and inadequate way of funding public schools. We don’t disagree with that. We understand their frustration with higher taxes and will certainly work with them to try to change that funding formula.”

Brooks says West Clermont will put another levy on the ballot this fall. Little Miami has already fallen into a fiscal emergency. Its 8th levy attempt in 3 years failed, this time by just 143 votes. Also Lebanon, Batavia and Deer Park levies failed. Norwood and Loveland levies passed. 

This is happening all over the country.  Local school districts and school levies and bonds are being ripped at every opportunity by Tea Party faithful, and the results are schools that have to cut deeply and even close schools in order to balance their dwindling budgets.  Without the resources they need, the schools continue to struggle to produce prepared students, and the nation falls further and further behind countries in Asia and Europe who are increasing their investment in schools.  The Tea Party then says the remedy to the situation is to cut more funding from "failing" schools.

It's a vicious cycle that will continue to damage our country for a very long time.

An Early Throw At The Dartboard

Dartmouth's Harry Enten takes a top-down approach to the Senate numbers next year and makes the case that given the economy, the number of Senate seats that the Democrats have to defend in 2012, and the history of the last 15 Senate elections, that they will almost certainly lose control of the Senate.

Employing this data, we can estimate that at this point the model projects the Democrats will only win about 49%, or about 16, of the Senate seats up this cycle. If correct, this loss of seven seats would flip the Senate to the Republicans. The loss would parallel the Republican loss in 2008 of 8 seats.
But should the model’s results be believed?

On the one hand, the model does explain a relatively high percentage (87%) of the variation between Senate results since 1952. Within the model’s dataset, the margin of error with 95% confidence is only about three seats. If the model were instituted before the 2008 election, it would have correctly projected an eight-seat Republican loss. And although a seven-seat loss would be on the high end of the spectrum of the very early seat-by-seat analyses, it is not a great outlier.

On the other hand, the model only takes into account data from 15 elections. It is quite possible that the 2012 election ends up being unique in some unforeseen way. The Democrats may recruit unusually strong Senate candidates that stem the national tide. President Obama may win a large victory and have abnormally long coattails. The model cannot account for any of these possibilities.

Another possibility is that the real DPI forecast is too pessimistic. If, somehow, Obama experienced Reagan-like growth in the final seven quarters of his first term, the model would predict Democrats to win about 57%, or 19, of the Senate seats up this cycle. While that would still leave them short of a majority, they would be close enough to be well within the model’s in-dataset margin of error. For this reason alone, the model will need updating as we get actual (not forecasted) economic data from the Bureau of Economic Analysis.

It's that last paragraph that's a bit of an eye opener.  Even if the economy completely turned around, the model suggests that the Dems would still lose the Senate 51-49 to the GOP.  Given that's simply not going to happen, it may be a very long slog for the Dems over the next 18 months.  If the economy gets worse, there's a decent chance that the Republicans could end up with control of the whole ball of wax.  Like it or not, bin Laden's death isn't going to help the Dems much (it may help Obama, but not Congressional Dems.)

Having said that, both parties understand that the economy will be the key to 2012.  And as long as the GOP does everything they can to assure the economy will not improve for 95% of America, they will benefit from blaming Obama and Harry Reid.

That is unless the Dems somehow start doing a much better job of pointing out the GOP is trying to skunk the economy in order to win.  So far?  Not happening.

StupidiNews, Cinco De Mayo Edition

• President Obama will travel to the site of the World Trade Center in New York City today to mark the death of Osama bin Laden.
• Pakistani PM Yusuf Gilani is angrily defending his country's intelligence service and military against US questions about bin Laden's location.
• Vice President Joe Biden will lead a new round of talks involving the debt ceiling and the deficit, but no breakthroughs are expected.
• Officials in Portugal expect the country's steep austerity cuts will contract the economy by 2% or more this year.
• Intel's new technology has "reinvented the transistor" and the chip-maker is hoping to stay on top on the market for a long time with it.