Retest And Re-Fail

Keep an eye on the markets today. The magic numbers for the Dow are 8,000 and 820 for the S&P 500. If the markets close under those numbers this week, we're in a lot of trouble. Last Thursday the markets hit those numbers during the day and then made a major rally up off of them. Over the last two days however that rally has evaporated.

We'll see what happens over the next day or two. Futures are at "meh" right now. Could be another bear market rally day, could be a cliff, could be just a day.

The Game Is Rigged

The Village is doing everything it can to limit the power of Obama, and they are doing it by forcing his hand on decisions in the Court of Public Opinion.

Both Joe Lieberman's expected survival as Senate Homeland Security chairman and Hillary Clinton's appointment to SecState are done deals now according to the Village, and it's as if they are daring Obama to do something about it.

With the auto industry bailout all but dead at this point, Obama's not looking like he's in charge of much of anything right now.

Then again...Bush is president right now, not Obama. And Obama doesn't seem to have any inclination to assert himself as the top dog in Washington.

The more things change...

StupidiNews!

• A new study shows half of primary care physicians want out of the business due to red tape.
• The biggest obstacle to Hillary Clinton's Secretary of State appointment? Bill Clinton.
• Sales of holiday gift cards are down sharply as consumers wonder if the companies will honor them should they go bankrupt.
• The Big 3 carmaker bailout seems to be out of gas.
• Movie pirates in China have cracked Blu-Ray disc's "unbreakable" copy protection.

About Face On The Bailout

The White House has all but ended any chance of saving the US auto industry, now saying it's opposed to the Big 3 bailout because the industry is no longer worth saving because the industry is no longer "viable".

The White House Monday came out swinging against a Democratic plan to aid America's ailing auto industry, as the Senate prepared to debate a $25 billion package.

"We believe that this assistance should come from the program created by Congress that was specifically designed to assist the automakers -- from the $25 billion Department of Energy loan program," said White House spokeswoman Dana Perino in a lengthy statement.

Senate Democrats want to use a different $25 billion from the financial rescue package passed last month. The White House wants to use the same amount from a loan, passed in September, to help carmakers improve fuel efficiency.

"We should not seek ADDITIONAL funding while $25 billion sits available in a program that was designed for automakers. Congress should instead amend the Department of Energy's loan program to ease the availability of those funds and relax restrictions on their use -- as long as qualifying firms make the difficult decisions to demonstrate their viability going forward," she said in a statement.

Democrats contend the fuel efficiency money was meant to help carmakers for that purpose, not to help them survive financially.

But, Perino said, there's also a philosophical argument for not allocating $25 billion from last month's program.

"Taxpayers should not be asked to subsidize private companies that are unwilling to show that they can be viable. It is clear that U.S. automakers must restructure in order to be viable," she said.

Saving white collar executive jobs at America's financial instututions? Vital to the American way of life. Saving millions of blue collar union jobs? The industry is not viable.

Republicans hate blue collar workers. They don't care if Joe the Auto Plant Worker loses his job at all. Joe the Hedge Fund Manager? We need to spend $4 TRILLION NOW, and any more would be fiscally irresponsible.

Given the speed at which the federal government is throwing money at the financial crisis, the average taxpayer, never mind member of Congress, might not be faulted for losing track.

CNBC, however, has been paying very close attention and keeping a running tally of actual spending as well as the commitments involved.

Try $4.28 trillion dollars. That's $4,284,500,000,000 and more than what was spent on WW II, if adjusted for inflation, based on our computations from a variety of estimates and sources*.

Not only is it a astronomical amount of money, its' a complicated cocktail of budgeted dollars, actual spending, guarantees, loans, swaps and other market mechanisms by the Federal Reserve, the Treasury and other offices of government taken over roughly the last year, based on government data and new releases. Strictly speaking, not every cent is directed a result of what's called the financial crisis, but it arguably related to it.

If the White House can go out of its way to see the last major unionized industry destroyed and the jobs laid on Obama's doorstep, so be it.

Bad News, Bears

That grim economic data I mentioned down below starts off with Citigroup's expected move to lay off anywhere from 35,000 to 50,000 employees.

Citigroup Inc plans to shed about 10 percent of its global workforce, a person familiar with the matter said Friday, as the bank tries to return to profitability and faces mounting criticism of Chief Executive Vikram Pandit.

The cuts could result in a loss of roughly 35,000 jobs, based on the bank's reported 352,000-person workforce as of Sept 30. The cuts will be on top of the 23,000 jobs Citigroup has already slashed this year.

Additional reductions would come from layoffs, the sale of units and attrition, said the person.

The financial sector is getting gutted. It won't be the only sector of the economy that takes massive job loss numbers either. The stubborn belief this will be a short recession, with predictions of an unemployment rate peak of 7.5% and a recovering economy in summer 2009 are downright silly.

This is a consumer-driven recession. It will be long and painful because the US consumer drives not only the US economy but increasingly the global economy as well. If the US consumer isn't consuming stuff...who will? We don't have the money for stuff, we're tapped out, credit is drying up and we have no more money to spend.

And as US consumers save money and spend less, the recession will get worse and worse as more businesses that depend on consumption go under, taking more money out of the economy. There's no real hope for any serious recovery until the housing depression ends. That may not happen until 2010.

And by then it may very well be too late. But all that is Obama's problem now. If he's still listening to the same economists that got us into this, we're doomed.

Even so, there's little Obama will be able to do other than turn on the inflationary printing presses. When that happens, all bets are off. Bush has done too much damage to the economy. In reality the damage to our economy started with Reagan, but some say even earlier when we went off the gold standard with Nixon, and some say even earlier then that with FDR and the New Deal.

The specter of global depression is becoming increasingly likely with each week that passes.

StupidiNews!

• A week full of grim economic reports could have the markets testing new lows.
• Chinese and Indian students set record enrollment numbers in US universities this year.
• Congress and the Bush White House are headed for an interstate pile-up on the auto bailout.
• Are the Feds tracking cell phones without informing telco providers?
• NASCAR's Jimmie Johnson takes his third straight Nextel Cup.

New Day In Iraq (Again)

The Iraqis have agreed in principle to a June 30, 2009 withdrawal back to US bases and a December 31, 2011 withdrawal date of all US troops, the trick is if the Iraqi Parliament will pass the agreement or not.

The agreement sets June 30, 2009, as the deadline for U.S. troops to withdraw from all Iraqi cities and towns, Iraqi government spokesman Ali al-Dabbagh said.

The date for all troops to leave Iraq will be December 31, 2011, he said.

These dates are "set and fixed" and are "not subject to the circumstances on the ground," he said.

Twenty-seven of the 40 Cabinet members in attendance voted in favor of the agreement, said Iraqi Foreign Minister Hoshyar Zebari. One minister abstained.

The Cabinet consists of the prime minister, two deputy prime ministers, and 37 other ministers.

The approved draft will be sent to the 275-seat Parliament later Sunday, where it will be put to another vote. "There is great optimism that they will pass it," said Industry Minister Fawzi Hariri.

It's a start...but it still means another threeyears of the Iraq War for Obama. He has every reason now to speed this up as much as possible.

Spam, Spam, Recession and Spam

I'll have my Spam without so much recession in it, thank you.

The economy is in tatters and, for millions of people, the future is uncertain. But for some employees at the Hormel Foods Corporation plant here, times have never been better. They are working at a furious pace and piling up all the overtime they want.

The workers make Spam, perhaps the emblematic hard-times food in the American pantry.

Through war and recession, Americans have turned to the glistening canned product from Hormel as a way to save money while still putting something that resembles meat on the table. Now, in a sign of the times, it is happening again, and Hormel is cranking out as much Spam as its workers can produce.

In a factory that abuts Interstate 90, two shifts of workers have been making Spam seven days a week since July, and they have been told that the relentless work schedule will continue indefinitely.

Funny, our recession comes with Viking Hordes too.

Fireside Youtubes

Barack Obama continues to leverage the internet as the first true digital President, delivering the weekly Democratic radio address via YouTube:



It's something he plans to continue to do as President, and frankly it's a fantastic idea. In the address he talks about the need for a stimulus package and unemployment insurance benefit extensions, but the main focus is the fact he's using the term "recession" already.

The Bushies will be quick to point out we're not in a recession because we've only had one quarter of contraction (and of course they will revise that upwards to make sure the "recession" all falls on Obama's head) as if that makes a difference magically.

Obama at least acknowledges there's a problem.

Looking Ahead To Monday

Dow futures are down big time, off 459 right now. The limit down number is 550, which we hit on October 24. Three times the Dow has crossed under the 8k mark in intra-day trading since falling under the 10k floor on October 6. So far that number has held as the markets have rallied back each time. But each time the market has failed to climb back above the 10k mark that would signify a major rally.

Monday may be the day the 8k floor breaks. If it does, all bets are off where we end up. We're in a bad recession, bordering on depression. One of those borders is the markets. A break below 8k would mean a new floor for the Dow, maybe 7k, maybe lower.

Last time the Dow futures hit limit down, the markets rallied by sheer will.

That will again will be tested Monday.

The Dark Side Of The Election

We've seen a lot of jubilation and joy as Barack Obama's historic election changed America and the world. But one of those changes has been the racism backlash against African-Americans across the country.

Cross burnings. Schoolchildren chanting "Assassinate Obama." Black figures hung from nooses. Racial epithets scrawled on homes and cars.

Incidents around the country referring to President-elect Barack Obama are dampening the postelection glow of racial progress and harmony, highlighting the stubborn racism that remains in America.

From California to Maine, police have documented a range of alleged crimes, from vandalism and vague threats to at least one physical attack. Insults and taunts have been delivered by adults, college students and second-graders.

There have been "hundreds" of incidents since the election, many more than usual, said Mark Potok, director of the Intelligence Project at the Southern Poverty Law Center, which monitors hate crimes.

One was in Snellville, Ga., where Denene Millner said a boy on the school bus told her 9-year-old daughter the day after the election: "I hope Obama gets assassinated." That night, someone trashed her sister-in-law's front lawn, mangled the Obama lawn signs and left two pizza boxes filled with human feces outside the front door, Millner said.

She described her emotions as a combination of anger and fear.

"I can't say that every white person in Snellville is evil and anti-Obama and willing to desecrate my property because one or two idiots did it," said Millner, who is black. "But it definitely makes you look a little different at the people who you live with, and makes you wonder what they're capable of and what they're really thinking."

Potok, who is white, said he believes there is "a large subset of white people in this country who feel that they are losing everything they know, that the country their forefathers built has somehow been stolen from them."

That's pretty disturbing, both the "more than usual" and the "stolen from them" part.

These will not be the last incidents. Like lancing a boil, all of the hatred below the surface is erupting over this. It's going to require a lot of patience on both sides to get us through this, especially with tensions so high on the average American due to the economy.

When you feel like life is spiraling out of control, there are those who will lash out. What form will these outbursts will take? Vandalism? Threats? Or will there be something far more sinister?

StupidiNews, Weekend Bailout Edition

• G20 leaders continue to meet in Washington to come up with a plan for the continuing economic crisis.
• Michael Moore's latest film will take on the economy.
• State governments are looking for their own federal bailouts.
• Failure to approve the $25 billion bailout to GM may cost taxpayers $200 billion in the long run.
• Even Pakistan needs a bailout these days.

Consumers, Recession, and You

October's retail sales numbers were utterly dismal, a record 2.8% drop in sales is just the beginning for the GDP meltdown. Once again, Nouriel Roubini has valuable information about the economic ruin ahead.

To bring back the household savings rate to the level of a decade ago (about 6% of GDP) consumption will have to fall – relative to current GDP levels – by almost a trillion dollars. If all of this adjustment were to occur in 12 months GDP would contract directly by 7% and indirectly (including the further collapse of residential and corporate capex spending in a severe recession) by 10%, an exemplification of the Keynesian “paradox of thrift”. If such an adjustment were to occur over 24 months rather than 12 months you would still have negative GDP growth of 5% for two years in a row with a cumulative fall in GDP from its peak of 10% (note that in the worst US recession since WWII such cumulative fall in GDP was only 3.7% in 1957-58). One can thus only hope that this adjustment of consumption and savings rates occurs only slowly over time – four years rather than two. Even in that scenario the cumulative fall of GDP could be of the order of 4-5%, i.e. the worst US recession since WWII. Note that the cumulative fall in GDP in the 2001 recession was only 0.4% and in the 1990-9 recession was only 1.3%. So, the current recession may end up being three times as long and at least three times as deep (in terms of output contraction) than the last two and worse than any other post WWII recession.

Any way you slice it, the economy is going to be very, very bad. Unemployment is going to skyrocket, possibly even double.

Obama will certainly take the brunt of the blame.

StupidiNews!

• Astronomers are zeroing in on planets outside our solar system.
• Iraq War vet Tammy Duckworth could be Obama's replacement in the Senate.
• A German politician wants to raise that country's top tax rate to 80%.
• The federal government plans to drill off the coast of Virginia.
• Nintendo once again leads the fight against used games sales and the consumers who want them.

From The "You Have To Be Effing Kidding Me" Department

...Is the big shiny WaPo leak by Al Kamen and Philip Rucker proclaiming the newest nugget out of Obama's team: Hillary as Secretary Of State.

There's increasing chatter in political circles that the Obama camp is not overly happy with the usual suspects for secretary of state these days and that the field might be expanding somewhat beyond Sen. John Kerry (D-Mass.), Gov. Bill Richardson (D-N.M.), Sen. Chuck Hagel (R-Neb.) and maybe former Democratic senator Sam Nunn of Georgia.

There's talk, indeed, that Sen. Hillary Rodham Clinton (D-N.Y.) may now be under consideration for the post. Her office referred any questions to the Obama transition; Obama spokesman Tommy Vietor declined to comment.

The pick of the former presidential contender and Senate Armed Services Committee member would go a long way toward healing any remaining divisions within the Democratic Party after the divisive primaries. Also, Clinton has long been known for her work on international women's issues and human rights. The former first lady could also enhance Obama's efforts to restore U.S. standing amongst allies worldwide.

And Obama could put her in his speed-dial for a 3 a.m. phone call every morning.

So I'm sitting here watching Rachel Maddow and Andrea Mitchell discuss how bad it would be for Obama if this isn't true, that it would be a "slap in the face" to Hillary for her not to get this position now after a leak like this, and for the first time I want to throw something at Rachel Maddow for giving into this Village garbage and I'd like her to tell Andrea Mitchell to go intercourse herself with a power tool of her choice.

Ladies and gentlemen, I can honestly say that I cannot think of a worse person for Sec State for Obama to pick than Hillary Rodham Clinton...which makes me think the quid pro quo on this was sealed months ago. This means Obama's idea of foreign policy is Bush, Only Competent! Joy!

We now know Hillary's price for her and Big Dog campaigning for Obama, and the other shoe has dropped on all these Clinton folks in the transition team. The usual Hillbloggers are already saying that she'd be perfect for the position, when in fact she would absolutely assure that America's foreign policy would continue to be the same abysmal mess we're in right now, and that Israel would be the chief architect of our "diplomacy".

Quite frankly, the trap's been closed on Obama on this one. My major beef with Obama has always been his depressingly Bush-like foreign policy, and the fact it was marginally better than Clinton's even more Bush-like foreign policy was the decider for me in the primaries...at least Obama wanted out of Iraq.

Then again, Obama's too smart for this to really be a trap: Hillary was promised this all along, and this is the pound of flesh she got for not being VP. You'd better believe Big Dog will be all over this too.

So hooray, our foreign policy is officially a shitburger! This right here? This is Obama's first major screw-up, and he's still 68 friggin days from being inaugurated. Should have know it was coming, things were going too well for him.

Meet the new boss, same as the old boss. Jesus.