Another Look At Obama's Team

HuffPo's Robert Kuttner takes a pretty detailed look at Obama's economic plan from a progressive's point of view.

As progressives, we can view President-Elect Obama's emerging economic team in one of two ways. Either he has disappointed us by picking a group of Clinton retreads--the very people who brought us the deregulation that produced the financial collapse; the fiscal conservatives who in the 1990s put budget balance ahead of rebuilding public institutions. Or we can conclude that he has very shrewdly named a team of technically competent centrists so that he can govern as a progressive in pragmatist's clothing--as he moves the political center to the left.

My fears of course are of the former, especially with Tim Geithner as SecTreas. He's constrained of course by *not* having Hank Paulson's job right now, and still having to deal with Bush's plans. But to fix this problem both Geithner and the rest of Obama's economic team are going to have to completely change gears.

I just don't see that happening. As Kuttner says, these are the same people that worked to come up with the Gramm-Leach-Bliley Act, the legislation that massively deregulated the financial industry. Clinton signed it into law and it passed with broad bipartisan support in both houses of Congress.

To his credit, Geithner has been a voice for more regulation. But nobody's talking about repealing GLB, which should be among the first of the major consequences the financial sector should have to accept for taking trillions of taxpayer dollars in corporate welfare.

Still, Kuttner has more confidence than I do.

In fairness, adults are not merely tools of their patrons. In recent months, Larry Summers has disagreed with Rubin on the scale of the needed stimulus. Tim Geithner is for far more regulation than Rubin. Jason Furman, though suggested by Rubin for his campaign post of economic policy director, actually spent more of his career working for Joseph Stiglitz than for Robert Rubin. Peter Orszag has done a fine job as director of the Congressional Budget Office, and is not averse to large scale public spending.

Obama is the president, and he will do what he deems necessary. In my writings during the campaign, I sometimes found myself second-guessing Obama's strategy--and he invariably turned out to be smarter than I was.

Obama is also famous for listening to a wide variety of views. Others among his senior staff, such as legislative director Phil Schiliro, are further to the left. But this economic team will have influence--in posing options, playing the role of gatekeeper, writing position papers, and serving as an echo chamber of each other's advice.

Obama is intelligent enough to reach his own conclusions, and they are likely to produce far more heartburn for conservative Republicans than for those who worked so hard to elect him. But it would be helpful if his senior economic team included even one person who was not a member of the same centrist club - a Joseph Stiglitz, a Jamie Galbraith, a Jared Bernstein or a Sheila Bair. We shall soon see whether the most interesting team of rivals in the Obama White House will be the president and his own economic advisers.

We'll see, indeed. Radical, earthshaking action will be needed to save our economy from depression over the next several months. Will Obama's team, as Obama has said, "do what will be necessary" to save the US economy?

I'm still not so sure. Obama will have to pleasantly surprise me.

Home, Home I'm Deranged

Where the fear and the antipathy play...

The pace of sales of existing homes in the United States fell 3.1 percent in October to a 4.98 million-unit annual rate, while the median home price dropped to its lowest in more than four years, a National Association of Realtors report showed on Monday.

Economists polled by Reuters were expecting home resales to set a 5.00 million-unit pace. September's figure was revised downwards to 5.14 million from 5.18 million.

"Many potential home buyers appear to have withdrawn from the market due to the stock market collapse and deteriorating economic conditions,'' said Lawrence Yun, NAR chief economist.

The inventory of existing homes for sale slipped 0.9 percent to 4.23 million from 4.27 million in September. The median national home price declined 11.3 percent from a year ago to $183,300, the lowest since March 2004 when the median price was $183,200.

The percentage drop in prices was the biggest since the NAR started keeping records in 1968.

"We have favorable affordable conditions, but we need more than that to give buyers with jobs the confidence they need. Without home price stabilization, there will not be an economic recovery,'' Yun told reporters.

Ding ding ding!

Smartest piece of economic analysis you'll hear all year, right there.

Without home price stabilization, there will not be an economic recovery.

And as long as home prices continue to fall month after month, we're trapped in a deflationary spiral. Who's going to buy a home if the price is falling at 15-20% per year, guaranteeing negative equity in a few months and seeing an underwater mortgage in a year?

The problem is deflation now, not inflation. Particularly on long-term borrowing, deflation is going to be a killer on the markets. Less demand leads to price deflation, leading to higher unemployment as people are laid off, leading to even lower demand: the classic deflationary spiral.

The housing collapse is leading to trillions in deflationary pressure. Until housing stops falling, we're in trouble. The housing depression has gone on so long it's becoming self-perpetuating now, and that's the real danger.

Unless Obama can stabilize housing prices, everything else is spitting in the wind.

Team Obamanomics

Obama officially named his economic team today.

President-elect Barack Obama said Monday that the country is facing an "economic crisis of historic proportions," and unveiled the team he has chosen to help get the economy back on track.

Obama said he sought leaders who share his fundamental belief that "we cannot have a thriving Wall Street without a thriving Main Street."

Obama has tapped New York Federal Reserve President Tim Geithner as treasury secretary and former Treasury Secretary Larry Summers as chief of the National Economic Council.

Geithner helped manage Wall Street's financial meltdown earlier this year, overseeing the acquisition of Bear Stearns by JPMorgan Chase, the bailout of AIG and the collapse of Lehman Brothers. He was appointed as the New York Federal Reserve president in November 2003.

Summers served as treasury secretary in the Clinton administration. He was the chief economist of the World Bank from 1991 through 1993. Prior to his career in government, Summers taught economics at Harvard.

University of California-Berkeley economics professor Christina Romer has been chosen to be the chair of the President's Council of Economic Advisers.

The Council of Economic Advisers is a group of economists --including three who are appointed by the president and need Senate confirmation -- that advise the president on economic policy.

Obama also announced Melody Barnes as director of the Domestic Policy Council and Heather Higginbottom as deputy director of the Domestic Policy Council.

So far, nothing about this team makes me think they can handle this crisis any better than the current administration.

I fully expect to see bailout after bailout over the next several months. With today's Citigroup bailout, we're already approaching the $5 trillion $7.7 trillion mark in total loan guarantees, direct intervention, and stock purchases for the financial sector alone.

Citigroup: The Morning After

As noted, Citigroup will get $20 billion in cash and $300 billion more in guarantees.

Citigroup Inc., facing the threat of a breakup or sale, received $306 billion of U.S. government guarantees for troubled mortgages and toxic assets to stabilize the bank after its stock fell 60 percent last week.

Citigroup also will get a $20 billion cash injection from the Treasury Department, adding to the $25 billion the company received last month under the Troubled Asset Relief Program. In return for the cash and guarantees, the government will get $27 billion of preferred shares paying an 8 percent dividend. Citigroup rose as much as 41 percent in German trading today.

The Treasury, Federal Reserve and Federal Deposit Insurance Corp. said in a joint statement that the move aims to bolster financial-market stability and help restore economic growth. The decision came after New York-based Citigroup’s tumbling share price sparked concern that depositors might pull their money and destabilize the company, which has $2 trillion of assets and operations in more than 100 countries.

“It really was a must-do thing,” said Nader Naeimi, a Sydney-based strategist at AMP Capital Investors, which manages about $85 billion. “If they’d let Citigroup go, that would’ve been disastrous.”

Citigroup’s stock plunged 83 percent this year and dropped below $5 last week for the first time since 1995. The shares were up $1.26 at $5.03 in Germany in recent trading.

If the government had not taken action last night, Citigroup stock would have likely dropped to under $2 a share. Citibank's major depositors would have lined up around the block today to get money out of the bank.

The one thing we've been able to avoid so far is a confidence breaking and very visible public bank run on one of these financial institutions. Imagine what video of Citibank customers lined up around to block to get their money would do to the markets and to the country, when every bank in the country has less than 1% of deposits available on hand as a business decision.

Imagine what would happen if Citibank branches were turning people away, saying "we don't have any more cash right now." Imagine ATMs emptied out across the country.

Panic. Pure, adrenaline fueled national panic.

And it would get worse from there.

That's why Citigroup gets $20 billion in a weekend, and the auto industry will most likely go under as the Big 3 are forced to reorganize under Chapter 11.

StupidiNews!

• Citigroup is saved to the tune of $20 billion and $300 plus billion in loan guarantees.
• Democrats are planning a massive new stimulus package to be signed into law by Obama on January 20.
• Venezuala's Hugo Chavez scored significant wins in national elections last night.
• The world's biggest cruise ship takes to the seas in Finland.
• The MPAA is looking to handcuff tens of millions of HDTVs by forcing secure digital cable output only, rendering HD antennas worthless.

Deal Or No Deal

As expected, the Sunday Night Deal to save Citigroup is a go.

Citigroup Inc is looking at putting risky assets in a "bad bank" -- a step to reassure investors that the rest of its assets were safe, the Wall Street Journal reported on Sunday.

The "bad bank" might take on some of Citigroup's more than $1.23 trillion of off-balance sheet assets. Citigroup might bear the initial losses on the assets, and the government might cover losses beyond a particular threshold, the newspaper reported, citing people familiar with the matter.

U.S. financial markets are waiting for some sort of Citigroup announcement this weekend, and if nothing happens, the bank's stock is likely to plunge further on Monday, analysts said.

Let me emphasize that one more time so that it sinks in: Citigroup has more than $1.23 trillion of off-balance sheet assets. One and a quarter trillion (with a T!) in toxic derivatives as "assets" means this bank is effectively insolvent. It means our entire economy is effectively insolvent, because the second Citigroup goes under, those "assets" which are nothing more than fancy IOUs get called into question.

Citigroup is just one bank. It holds well over one trillion in IOUs. The IOUs are accepted as having worth because of the confidence that those IOUs will be paid, and every bank it sitting on a pile of them.

Globally those IOUs, these derivatives, are valued at over a quadrillion dollars...a thousand trillion. One million billion dollars.

If Citigroup goes under, then it will take this entire system down with it. More banks will fail. Their chunk of the derivative nightmare will fail too. If those IOUs are being defaulted on, then they become worthless. Only the agreed upon value of these derivatives gives them value. If the confidence that these IOUs have value evaporates, then the actual value of the derivatives evaporates as well.

One quadrillion dollars of theoretical global money vanishing.

Poof. And our global financial system poofs along with it. Yes, this is some scary stuff.

Citigroup is now on the clock. The stock will drop low enough to force another bailout worth tens of billions if not more. If Citigroup fails, it will take the global system with it.

Deal or No Deal. No Deal here means the end of the game.

And so more billions will be thrown to the banks. And the underlying rot at the foundation, the toxic weight of tens upon hundreds of trillions in derivatives, will continue to crush the financial sector. More banks will fail. More will be spent to save them.

Eventually, another Lehman Brothers will happen. Obama can't stop it. His hands are tied. There's nothing he can do, and his choice of Tim Geithner as Treasury Secretary strongly suggests he has chosen to continue the path of bailouts and more bailouts.

But Obama will have to end the bailouts eventually. He will be forced to do so when China and Saudi Arabia can no longer afford to front us the cash.

When that happens, all bets are off.

[UPDATE] The US government and Citigroup are frantically trying to seal the deal before the markets open tomorrow.

The U.S. government and Citigroup are working feverishly to hammer out a rescue plan for the beleaguered bank. If all goes according to plan, there will likely be an announcement of some type of plan in a couple of hours.

The exact nature of plan remains unclear, but the government is leaning towards some sort of cash infusion into Citigroup. The plan will probably be a multi-layered one, which means the government could backstop losses on Citigroup's troubled assets as well. In exchange, Citi may issue preferred stock to the government

Sources with knowledge of the negotiations say "everything is on the table", meaning that even the government plan of buying the troubled assets could be revived.

The problem with buying the assets from Citi is political: People close to the deal know that other firms will line up and ask the government to purchase their troubled assets as well. Brokerage stocks got crushed when Treasury Secretary Hank Paulson reversed his plan on the TARP to direct capital infusions to the banks and away from buying troubled assets.

The Bottom line: This is very fluid and the situation may change again. But as of now, the government is getting cold feet on plan to buy troubled assets, which leaves direct capital infusion on the table.

They have no choice.

They will have no choice when the next major bank goes under.

And the next.

And the next.

[UPDATE 2] The Citigroup deal is expected to be a direct cash infusion of $10-$20 billion for starters, CNBC reports.

A Taxing Problem

Turns out Obama has no intention of rolling back the Bush tax cuts just yet.

President-elect Barack Obama may delay the rollback of high-income tax cuts for the wealthiest Americans, two of his aides said Sunday.

The tax cuts were instated by President Bush and discontinuing them was a key promise of Obama's campaign for the presidency.

Obama's political strategist David Axelrod was asked by Fox News's Chris Wallace if the measure could be allowed to expire on schedule after 2010 and avoid an immediate repeal.

"Those considerations will be made," said Axelrod, who has been selected as Obama's senior White House adviser.

Bill Daley, an adviser to Obama and commerce secretary under former President Bill Clinton, said on NBC's "Meet the Press" that the 2010 scenario "looks more likely than not," Reuters reported.

The change in policy may suggest that Obama is wary of imposing more taxes during a financial crisis or that he is looking to boost Republican support for his recovery measures.

Or that the people running his financial program have no more idea how to fix the problem than the current occupants.

Obama has no need for the Left now. He's running for 2012 as a moderate Republican before he's even sworn in as a Democrat.

The Reality Of Obama's Foreign Policy

I've said on a number of occasions that my biggest problem with Obama is foreign policy. He never saw the US war on Iraq as wrong on moral reasons, but on strategic ones. No person allowed to win the Presidency and the role of Commander-in-Chief would ever tell America that using military force is morally wrong.

Obama sees Bush policy for the most part as incompetent and poorly executed, not wrong. Obama plans to do everything that Bush couldn't do: catch Bin Laden, draw down the "wrong" war in Iraq, and concentrate on the "right" war in Afghanistan and Pakistan. Same quagmire, different location.

Which brings us to the grim realization that -- surprise! Obama's a Clintonian interventionist centrist.

Mr Obama has moved quickly in the last 48 hours to get his cabinet team in place, unveiling a raft of heavyweight appointments, in addition to Hillary Clinton as his Secretary of State.

But his preference for General James Jones, a former Nato commander who backed John McCain, as his National Security Adviser and Arizona Governor Janet Napolitano, a supporter of the war, to run the Homeland Security department has dismayed many of his earliest supporters.

The likelihood that Mr Obama will retain George W Bush's Defence Secretary, Robert Gates, has reinforced the notion that he will not aggressively pursue the radical withdrawal of all combat troops from Iraq over the next 16 months and engagement with rogue states that he has pledged.

Chris Bowers of the influential OpenLeft.com blog complained: "That is, over all, a centre-right foreign policy team. I feel incredibly frustrated. Progressives are being entirely left out of Obama's major appointments so far."

Markos Moulitsas, founder of the Daily Kos site, the in-house talking shop for the anti-war Left, warned that Democrats risk sounding "tone deaf" to the views of "the American electorate that voted in overwhelming numbers for change from the discredited Bush policies."

A spokesman for the President-elect was forced to confirm that Mr Obama holds to his previous views. "His position on Iraq has not changed and will not change."

But the growing disillusionment underlines the fine line Mr Obama must walk between appearing to reach out to former opponents and keeping his grassroot supporters happy.

Mr Obama seems conscious of the need to move fast, to reassure a watching world that he will be ready to hit the ground running on foreign and economic policy.

He will wait until Friday before formally announcing his national security team, but he will on Monday formally unveil his economic team, with New York Federal Reserve bank chairman Timothy Geithner as Treasury Secretary and the New Mexico Governor, Bill Richardson, in the Commerce portfolio.

There's a pretty large difference between "better than McCain" and "change we can believe in." Hillary, the word has it, is already cleaning house of the folks who actually thought Obama was going to keep his word to progressives on the war.

Before Hillary Clinton has been formally offered the job as Secretary of State, a purge of Barack Obama's top foreign policy team has begun.

The advisers who helped trash the former First Lady's foreign policy credentials on the campaign trail are being brutally shunted aside, as the price of her accepting the job of being the public face of America to the world. In negotiations with Mr Obama this week before agreeing to take the job, she demanded and received assurances that she alone should appoint staff to the State Department. She also got assurances that she will have direct access to the President and will not have to go through his foreign policy advisers on the National Security Council, which is where many of her critics in the Obama team are expected to end up.

The first victims of Mrs Clinton's anticipated appointment will be those who defended Mr Obama's flanks on the campaign trail. By mocking Mrs Clinton's claims to have landed under sniper fire in Bosnia or pouring scorn on her much-ballyhooed claim to have visited 80 countries as First Lady they successfully deflected the damaging charge that he is a lightweight on international issues.

Foremost among the victims of the purges is her old Yale Law School buddy Greg Craig, a man who more than anyone led the rescue of his presidency starting the very night Kenneth Starr's lurid report into the squalid details of the former president's sex scandal with Monica Lewinsky were published on the internet in 1998. Despite his long and loyal friendship with the Clintons, Mr Craig threw his lot in with Mr Obama at an early stage in the presidential election campaign. As if that betrayal to the cause of the Clinton restoration was not enough, Mr Craig did more to undermine Mrs Clinton's claims to be a foreign policy expert than anyone else in the some of the ugliest exchanges of the battle for the Democratic nomination.

Underneath the catty sniping is the truth: Obama's foreign policy won't differ from Bush or Clinton. Hillary must have realized that her best shot at the White House isn't around Obama...but through him.

The wars will rage on until economic circumstances force something else.

StupidiNews, Weekend Edition

• Obama's weekly address outlines a 2.5 million job public works program.
• Could Janet Jackson's famous Super Bowl "wardrobe malfunction" case hit the Supreme Court?
• The Saudis declare war on Somali Pirates.
• The one Dow stock that's really cooking in this "soup line" economy? Campbell Soup.
• Apple's iPhone 2.2 OS is out with some new Google Maps love.

It's Geithner

NBC is leaking that NY Fed Chair Tim Geithner is Obama's pick for SecTreas.

Barring last minute changes, the nominee for Treasury Secretary will be NY Fed President Tim Geithner -- a career Treasury official under both Bob Rubin and Larry Summers -- who actually had worked at the Treasury in three administrations under five Secretaries -- going back to 1988.

Geithner has been a key player in the current economic crisis -- helping Treasury Secretary Hank Paulson and his team manage the wall street bailout.

Former Treasury Secretary Summers -- also considered for the post -- might still play a major future role in the Obama administration, according to sources. Summers came under fire from women's groups because of controversial comments he made about gender issues while President of Harvard, but sources say the decision to choose Geithner had more to do with Obama's interest in "change" and getting someone new on the team.

Also expected Monday -- an announcement that former U.N. Ambassador and Energy Secretary in the Clinton administration, New Mexico Governor Bill Richardson, will be Commerce Secretary.

How BAD is this pick?

The Dow shot up almost 500 points on the news in the last hour of trading.

I can't get over how hideous of a pick this is. You might as well leave Hank Paulson in charge. There will be no appreciable change in economic policy in the Obama administration, more bailouts for Wall Street, more money thrown down the rabbit hole.

Geithner is literally the worst pick Obama could have made short of letting Paulson keep his job. Not only is he part of the same Ben Bernanke/Alan Greenspan Fed team that got us into this mess, as New York Fed Chairman, there's no single bigger government cheerleader for Wall Street itself than this man.

Obama's message is clear: Wall Street, not Main Street. I hope this is wrong. Honestly, I do. Because if this is true, Obama just sold America down the river, and he most likely has no intention of making the hard choices that have to be made in order to save the economy. Geithner's been the point man for the bailout on the Treasury/Fed side of the deal and while he has made noises about the US economic position being in trouble, his actions speak to supporting the same useless Fed actions that produced this debacle. If anything, Geithner was showing Bernanke "the ropes" 16 months ago.

Among executives of the district banks, Geithner, 46, has the most extensive background in responding to upheavals. During the Clinton years, he was an aide to Robert Rubin and Lawrence Summers, who both served as Treasury secretary. In that role, Geithner helped broker emergency loans for Thailand, Indonesia, South Korea, Russia and Brazil when their currencies sagged. While he was at the Treasury, the U.S. participated in interventions to strengthen the yen in 1998, and the euro in 2000.

``It is a team that is new to the challenge, but it is a pretty smart group,'' said Harris. Bernanke ``really studied for the job. He is familiar with the history of the Fed, the policy errors, and he is a Great Depression buff.'' Bernanke contributed to Depression research with a 1999 paper co-authored with Mark Gertler and Simon Gilchrist on how financial markets can worsen economic downturns.

With Friday's action, Bernanke and his colleagues have ``tip-toed in'' and are ``trying to strike the right balance between doing nothing and riding to the rescue,'' said Gary Schlossberg, senior economist at Wells Fargo Capital Management in San Francisco, which oversees $200 billion in assets. ``They've left the door open to a full-blown easing of monetary policy. The results are mixed so far, and early returns suggest we're not out of the woods yet.''

That worked out well, huh guys?

Geithner's a clueless twit, just like the rest of the Fed crew. Obama's just hung a sign on Wall Street this afternoon: "Under New Management, Same Old Business."

Clinton is arguably strike one, but Geithner is definately strike two for Obama. Two and a half weeks and he's already showing major signs that "Change you can believe in" is the same goddamn thing as Bush.

I am pissed.

[UPDATE]More Geithner is Great! quotes...

I would say the market is going to like it," said James Awad, managing director of Zephyr Capital. "[Former Clinton Treasury Secretary Larry] Summers was more controversial. People will view it as a safe choice, an experienced guy.

"There's a little bit of a question because he's associated with the bailout," Awad added, "and that's still a work in progress and not totally successful. There will be a few who'll be upset because he's associated with the TARP."

"Geithner is a solid choice. He has shown more independent thinking," said Former Sen. Don Riegle, who chaired the Senate Banking Committee during the savings and loan crisis. "He has also seen this financial system meltdown from the inside ... he can offer highly skilled and pragmatic advice to Obama."

"He will understand the urgent necessity of assembling a world class team at Treasury ... and be able to attract the talents he needs," Riegle continued. "This choice will also facilitate close cooperation between the Treasury Department and the Federal Reserve, [which is] much-needed given the increasing scale of the economic crisis."

"He is battle-tested with Rubin and Summers and has done an excellent job orchestrating the Fed's response to the worst financial crisis since the Great Depression," said Chris Rupkey, economist at Bank of Tokyo-Mitsubishi. "A crisis manager par excellence who will hit the ground running, as he has been on the case since the Global funding crisis began way back in July 2007. I cannot think of a better choice who will mesh seamlessly with the Fed and FDIC."

If you actually think the Fed has done a excellent job in any way, shape, or form, then yes, Geithner's your man.

Spin Citi

No go on the Citigroup rebound. Stock's down another 20% to around $4 a share and falling here at 10:45 AM or so. Dan Wilchins at Reuters is already running down the list of what the Gubment can do, which boils down to four choices:

1. Government buys a crapload MORE of Citi preferred stock,
2. An AIG style multi-billion "loan",
3. An FDIC liquidation, WaMu style,
4. Government guarantees all Citigroup debts and derivative obligations.

Number 2 is the most likely, 3 cannot be allowed to happen, but I'm assuming the government will screw around with 1 first.

Which means of course option 4, the option that would actually work, won't be considered. Once the government starts acting as derivative counterparty for Citi, every bank in the country will want the same exact guarantee, period. It's the derivative obligations that are going to kill the banks, and they both know it...but eventually this is what will be have to be done. Banks still refuse to come clean on derivative debt and the fact the banks are basically insolvent because of it.

So yeah, we'll stick with 2. Big old loans. They've worked GREAT so far. Obama's Treasury Secretary is going to be the worst job on Earth.

But at least it's a job.

Dear America:

"Quit complaining about the economy. We'll be fine, just as soon as you realize there's nothing fundamentally wrong with the global financial picture and you get your ass to Wal-Mart like you've been doing and deal with the fact Obama's going to fail to keep any of his domestic spending promises and will have to slash spending across the board like McCain was going to do anyway."

--Irwin Stelzer

The Enemy Of My Enemy

Seems the universe has an unlikely ally in fighting those pesky Somali pirates off the Horn of Africa: militant Somali Islamists.

Dozens of Somali Islamist insurgents entered a port on Friday in search of the pirate group behind the seizure of a Saudi supertanker that was the world's biggest hijack, a local elder said.

Separately, police in the capital Mogadishu said they ambushed and shot dead 17 Islamist militants, in the latest illustration of the chaos in the Horn of Africa country that has fueled a dramatic surge in piracy.

The Sirius Star -- a Saudi vessel with a $100 million oil cargo and 25-man crew from the Philippines, Saudi Arabia, Croatia, Poland and Britain -- is believed anchored offshore near Haradheere, about half-way up Somalia's long coastline.

"Saudi Arabia is a Muslim country and hijacking its ship is a bigger crime than other ships," Sheikh Abdirahim Isse Adow, an Islamist spokesman, told Reuters. "Haradheere is under our control and we shall do something about that ship," he said.

Islamists on one side, pirates on the other, and we're stuck in the middle. Lovely.

I'm assuming then standard US operating procedure and asking "So, which side do we start bribing first to kill the other?"

A Smidge Of Good News On Housing

As Fannie and Freddie are suspending foreclosures until after the New Year.

The six-week halt will begin Nov. 26, a day before the U.S. Thanksgiving holiday, and last through Jan. 9, the companies said in separate statements today. The hiatus is designed to give servicers more time to implement a streamlined loan modification program for struggling borrowers.

“It’s a giant time out,” Paul Miller, an analyst at FBR Capital Markets in Arlington, Virginia, said today in a Bloomberg Television interview. “I wouldn’t be surprised to see this across the board.”

Fannie and Freddie, government-sponsored enterprises that own or guarantee $5.2 trillion of the $12 trillion U.S. home mortgage market, were placed under federal control Sept. 6. They have since been pushed to work harder at modifying troubled single-family and multifamily mortgages to curtail foreclosures.

Better than nothing, especially if other mortgage lenders follow suit. But six weeks from now, folks will still be underwater on their mortgages and out on the streets in January.

And a hell of a lot more people will follow over the next 18 months.

StupidiNews!

• Attorney General Michael Mukasey collapsed after a speech last night and has been hospitalized.
• Obama's personal cell phone records have been compromised by Verizon employees.
• Hillary Clinton will indeed be named Secretary of State next week.
• US military contractors in Iraq could soon be facing charges under the new agreement worked out this month.
• Will California soon be testing a statewide electric car charging grid?