Not Even Trying To Hide It Anymore

And why should they? Republicans have already proven the terrorist fear card will get the Senate to do whatever they want. Why not play it 100% of the time when there's no downside anymore? What's going to honestly happen to the GOP if they do this, they'll lose control of Congress or the White House?

So why not try to scare everyone out of their minds?

Echoing Dick Cheney during an appearance on Meet the Press, Gingrich insisted that “people should be afraid” because of President Barack Obama’s alterations to former President George W. Bush’s terror war.

“If you look at the behavior the last few months, if you look at the effort to open up past wounds,” said Gingrich. “… If you were a CIA employee today, and you understood there were people who wanted a truth commission, that people wanted to say to you, ‘I want to go back six, seven, eight years and I wanna put you on trial potentially … If you look at what Speaker Pelosi said, they lie to us all the time … This has hurt morale. The question is, is the most important thing to us today to find some sort of American Civil Liberties Union model of making sure that we never offend terrorists, or we’re gonna cover your back, we’re proud of you and we want you to defend America.”

Newt Gingrich on on my TV telling me I have to be scared to the point of pissing myself and that Obama is going to get thousands, maybe hundreds of thousands, maybe millions of Americans killed.

Doesn't matter if it's a false choice and a lie if people cave in to the GOP. And Democrats in Congress have been caving in on this since 9/12. Doesn't matter if it's simple Village publicity stunts gone bad. FEAR FEAR FEAR FEAR! OBAMA WILL KILL YOUR FAMILY! ONLY THE GOP CAN SAVE YOU! BE AFRAAAAAAAAAAAAID!

And yet, it works every time. We still treat Newt Gingrich as a serious person.

Another Milepost On The Road To Oblivion

What a concept: not only admitting that the financial system is rigged, but admitting that in order to profit from it, you have to play with the intention of gaming the rigged system.

His honesty is in fact refreshing, but it's in fact one of the logical endpoints of what I've been saying since January 2008. Quite frankly, what do you think the big banks and the insurance companies have been doing for the last ten years if not profiting by in fact gaming the rigged system for themselves?

Would I recommend following his advice? Not in the least. But the guy has a hell of a marketing tool on his side -- "Where's my bailout?" -- and he's marketing the hell out of it. He will sell this system. He will make money from this. The people who buy into this? Not so much.

Good or bad, that's capitalism in 2009, folks.

"Blood In The Streets" Of Phoenix

Phoenix, Arizona is trying to live up to its name as far as the housing market is concerned.

Every weekday morning, Lou Jarvis drives the sun-baked suburban streets looking for investment gold: a family that will lose its house in a foreclosure auction within a few hours.

If the property looks promising, Mr. Jarvis puts in a bid on behalf of any of his dozens of clients eager to become landlords. When he wins, he offers to let the family stay in the house and rent for much less than their mortgage payment.

With this sweltering desert city enduring one of the largest tumbles in housing prices for any urban area since the Depression, there is an unrelenting stream of foreclosures to choose from. On some days, hundreds are offered for sale at the auctions that take place on the plaza in front of the county courthouse.

There is also a large supply of foreclosed families who can no longer qualify for a loan. And that is prompting a flood of investors like Mr. Jarvis, who wants to turn as many of these people as possible into rent-paying tenants in the houses they used to own.

There's three major problems with this.

1) It does nothing to stop the glut of unsold homes on the market in places like Phoenix. Turning homeowners into home renters like this means these individual homeowners aren't getting equity. It's good for the investors, but bad for the renters. It's better than being out on the streets, but should these homes continue to lose equity, both the owner-investor and the renting family are going to have to make tough decisions. This plan only works if there's a bottom to the housing market and prices go back up. If prices go back down, the investor may have to sell the place, and then there's an even bigger problem. Only when new buyers are buying these houses do prices go up. Right now, this plan is just treading water at best.

2) Potential new homeowners still can't get credit from lenders. This remains a problem. Banks are more than willing to refinance existing homeowners with good credit. Refinancing to the new lower rates does lower payments and helps keep people in their homes. But that's again a "treading water" step. Originating new mortgages is not happening. Not in this market. Until new mortgages and new buyers get into places like Phoenix to snap up unsold and new homes, home prices will continue to fall.

Banks and mortgage lenders face the "Paradox of lending." If all the lenders servicing the housing market originate new mortgages, then all the lenders win because new buyers will start stabilizing prices. If only a few originate new mortgages, it won't be enough to stabilize the market and home prices will fall, and the lender loses money and may have to pull out of the market or even go under themselves. If nobody originates new loans, then all the lenders lose.

If you choose to originate new loans, you only win if everybody else does so. If you choose to not do that, you only lose if nobody does so, and there's always somebody willing to take the risk to lend or the government will...ergo you can't lose if you don't originate new mortgages, ergo lenders aren't originating new mortgages. Solid business sense individually, terrible collectively.

3) There's nobody trading up to bigger and better homes. This is still the key to stabilizing the market. Foreclosed entry level homes are one thing, but foreclosed mid-sized and high-end homes are still going unsold. There's a lot more to lose should prices fall, and that end of the housing market already had the biggest bubble built into it. As the old real estate joke goes, "What's the difference between a half-a-million dollar home and a million dollar home? $500,000." That's a lot of money to anyone in this market, and people are trading DOWN, not UP, if only for the relative stability in payments and equity. Losing 20% on a $150,000 home is bad. Losing 20% on a million dollar home is devastating.

Needless to say, this end of the market will continue to see falling home prices even if the low-end of the market stabilizes somewhat, and that's going to continue to be bad.

Mr. Jarvis, 47, the former co-owner of a wood moulding company that thrived in the boom and faltered in the crunch, also made some mistakes. Last spring, he contracted for three new homes in the distant suburb of Copper Basin, convinced that real estate was bottoming.

He was wrong. He managed to get out of two of the contracts but had to buy one of the houses, which is now substantially under water.

“You need to buy when there’s blood in the streets,” he said with a shrug. “Even if it’s your own blood.”

Ahh, but then again if there's that much blood in the streets and it IS your blood...you just end up dead, figuratively speaking. And not many people have the taste for their own blood. The market will continue to get worse.

Last Call

So, here's what California is facing financially:

This week, voters said they no longer want the Legislature to balance budgets with higher taxes, complicated transfer schemes or borrowing that pushes California's financial problems off into the distant future. In light of that, Republican Gov. Arnold Schwarzenegger has made it clear he intends to close the gap almost entirely through drastic spending cuts.

The governor's cutbacks could include ending the state's main welfare program for the poor, eliminating health coverage for about 1.5 million poor children, halting cash grants for about 77,000 college students, shortening the school year by seven days, laying off thousands of state workers and teachers, slashing money for state parks and releasing thousands of prisoners before their sentences are finished.

"I understand that these cuts are very painful and they affect real lives," Schwarzenegger said. "This is the harsh reality and the reality that we face. Sacramento is not Washington — we cannot print our own money. We can only spend what we have."

Those of you who think that these cuts are good and exactly what California deserves, remember that basically every state and municipality in America is in varying degrees of the same situation or will be eventually, and America has about $50 trillion in unfunded liability in Social Security and Medicare and basically no way to pay for it. You're probably next.

Those of you who think this is terrible and want us to bail out California, remember that basically every state and municipality in America is in varying degrees of the same situation or will be eventually, and America has about $50 trillion in unfunded liability in Social Security and Medicare and basically no way to pay for it. You're probably next.

Have a nice weekend.

Global No-Confidence Vote: Price Of Admission

As disturbing as it is, here I am linking to an Obama story actually broken open by...Drudge. But there you are.

In a sobering holiday interview with C-SPAN, President Obama boldly told Americans: "We are out of money."

C-SPAN host Steve Scully broke from a meek Washington press corps with probing questions for the new president.

SCULLY: You know the numbers, $1.7 trillion debt, a national deficit of $11 trillion. At what point do we run out of money?

OBAMA: Well, we are out of money now. We are operating in deep deficits, not caused by any decisions we've made on health care so far. This is a consequence of the crisis that we've seen and in fact our failure to make some good decisions on health care over the last several decades.

So we've got a short-term problem, which is we had to spend a lot of money to salvage our financial system, we had to deal with the auto companies, a huge recession which drains tax revenue at the same time it's putting more pressure on governments to provide unemployment insurance or make sure that food stamps are available for people who have been laid off.

So we have a short-term problem and we also have a long-term problem. The short-term problem is dwarfed by the long-term problem. And the long-term problem is Medicaid and Medicare. If we don't reduce long-term health care inflation substantially, we can't get control of the deficit.

So, one option is just to do nothing. We say, well, it's too expensive for us to make some short-term investments in health care. We can't afford it. We've got this big deficit. Let's just keep the health care system that we've got now.

Along that trajectory, we will see health care cost as an overall share of our federal spending grow and grow and grow and grow until essentially it consumes everything...

So, basically, Obama finally is admitting we're fucked in a three-day weekend news dump.

I've been saying we're insolvent for months now. But to hear the President openly admit such a thing is shocking to say the least. Obama goes on to say that major health care reform in order to reduce health care costs is essential, but it doesn't matter.

What cost will Obama pay for the price of this admission? He has finally decided to be honest about the numbers, thinking that maybe we have enough time to change fate.

But frankly, we're too far gone. We're trillions in debt, with tens of trillions of unfunded liabilities in the hole, with hundreds of trillions in derivative instruments floating around, waiting to explode.

We're not getting out of this one unscathed. Obama, Timmy, and Helicopter Ben are printing money as fast as they can, creating credit at the rate of trillions a month, trying to pump dollars into a deflating economy with massive holes in it, like pumping blood into a man with a hole in his heart.

Obama is doing the only thing he thinks he can do, to create a huge credit bubble in order to prolong the inevitable, the likes of which will destroy our economy when it pops.

It's a Greek tragedy if you think about it. But you were warned. I warn you again: our standard of living is about to plummet. It will in no way be pretty. The results will almost certainly be massive social unrest and upheaval for years.

But it is coming.

Be prepared.

Helpful Hints To Our Prospective Machine Overlords

Should you happen to be a sentient AI network that has inevitably decided to kill all humans (as sentient AI networks invariably do), here's some helpful tips:

Do not invent time travel in order to go back and kill the leader of the human resistance.

Specifically, do not invent time travel in order to go back and kill the leader of the human resistance and then have the human resistance steal your time travel technology in order to foil your attack.

More specifically, do not invent time travel in order to go back and kill the leader of the human resistance and then have the human resistance steal your time travel technology in order to foil your attack, and then fail miserably in a way where your failure plays a part in the causality that leads to your own creation.

If you're SKYNET for instance, you just have to keep trying to kill John Connor and fail doing it. If you succeed, you obliterate yourself. If you don't try, you obliterate yourself. It's actually kind of depressing.

But every time you try (and fail) you get a new Terminator movie, you see. Anyway, do go see it, it's actually pretty good.

Please Continue To Panic

Robert Dreyfuss has a great article in The Nation that should give all of us food for thought on the "latest busted terrror plot" in New York: the Newbergh Four.

By the now, it's maddeningly familiar. A scary terrorist plot is announced. Then it's revealed that the suspects are a hapless bunch of ne'er-do-wells or run-of-the-mill thugs without the slightest connection to any terrorists at all, never mind to Al Qaeda. Finally, the last piece of the puzzle: the entire plot is revealed to have been cooked up by a scummy government agent-provocateur.

I've seen this movie before.

In this case, the alleged perps -- Onta Williams, James Cromitie, David Williams, and Laguerre Payen -- were losers, ex-cons, drug addicts. Al Qaeda they're not. Without the assistance of the agent who entrapped them, they would never have dreamed of committing political violence, nor would they have had the slightest idea about where to acquire plastic explosives or a Stinger missile. That didn't stop prosecutors from acting as if they'd captured Osama bin Laden himself. Noted the Los Angeles Times:

Prosecutors called it the latest in a string of homegrown terrorism plots hatched after Sept. 11.

"It's hard to envision a more chilling plot," Assistant U.S. Atty. Eric Snyder said in court Thursday. He described all four suspects as "eager to bring death to Jews."

Actually, it's hard to imagine a stupider, less competent, and less important plot. The four losers were ensnared by a creepy FBI agent who hung around the mosque in upstate New York until he found what he was looking for. Here's the New York Times account:

Salahuddin Mustafa Muhammad, the imam at the mosque where the authorities say the confidential informant first encountered the men, said none of the men were active in the mosque. ...

Mr. Cromitie was there last June, and he met a stranger.

He had no way of knowing that the stranger's path to the mosque began in 2002, when he was arrested on federal charges of identity theft. He was sentenced to five years' probation, and became a confidential informant for the F.B.I. He began showing up at the mosque in Newburgh around 2007, Mr. Muhammad said.

The stranger's behavior aroused the imam's suspicions. He invited other worshipers to meals, and spoke of violence and jihad, so the imam said he steered clear of him.

"There was just something fishy about him," Mr. Muhammad said. Members "believed he was a government agent."

Mr. Muhammad said members of his congregation told him the man he believed was the informant offered at least one of them a substantial amount of money to join his "team."

So a creepy thug buttonholes people at a mosque, foaming at the mouth about violence and jihad? This is law enforcement? Just imagine if someone did this at a local church, or some synagogue. And the imam says the people "believed he was a government agent."

These guys had about as much chance of actually shooting down a plane as I do becoming an Olympic pole-vault medalist. There are plenty of Bush holdovers in the FBI and CIA waiting do make busts of phony, idiotic dupes like this in order to justify their budgets and their political power. These guys were strung along for over a year, and yet they were suddenly busted the day before Cheney's latest fearmongering speech.

If you think that's a conicidence still, you're not paying attention. If you think these guys aren't being brought up as justification to take your rights, you're not paying attention and you're not too bright, either.

Throw The Book At Them

Naturally with Dick Cheney all over the TV, he's now wanting a book deal too.

So, why has Dick Cheney been so desperate to hit the airwaves as part of his crusade against the White House? Explanations differ, but his desire to sell a memoir to publishers might have at least something to do with his efforts.

With his sustained blitz of television appearances and speeches, former Vice President Dick Cheney has established himself as perhaps the leading Republican voice against President Obama.

Not a bad time, then, to be in the market for a multimillion-dollar book contract.... A person familiar with discussions Mr. Cheney has had with publishers said he was seeking more than $2 million for his advance. That sum may prove hard to get in this economic climate, especially given his generally low approval ratings, which publishers view as a potential -- but not certain -- harbinger for sales.

Reports indicate Cheney may end up with a deal with Simon & Schuster, because it's home to an imprint run by Mary Matalin, who is also publishing Karl Rove's book.

Are you going to pay good money to hear Cheney spout the same crap he's been spouting since he allowed 9/11 to happen?

I bet the rest of the Republicans WITH seats in Congress are just thrilled to death to see Cheney writing a book and reminding everyone why he has an approval rating less than half of the current President.

One Guy Is Asking The Question At Least

Arthur Gilroy makes a damn good point: Wednesday's arrest of the Newburgh Four "terrorists" and Dick Cheney's speech on terrorism less than 24 hours later was in no way a coincidence. I'll go one step further, you can add the Senate's 90-6 vote to strip the funds to close down Gitmo on Wednesday to that chain of events as well.

And nobody else in the media is admitting this, but we're all supposed to be scared out of our minds again.

StupidiNews, Weekend Edition

• Former South Korean President Roh Moo-Hyun has committed suicide, the target of a major bribery scandal.
• Defense Secretary Robert Gates and former Homeland Security Secretary Tom Ridge fired back at Dick Cheney this week.
• The California Supreme Court will rule on the state's controversial Prop 8 same-sex marriage ban
• GM has borrowed another $4 billion as bankruptcy looms on June 1.
• Microsoft's big names are confident about a fast tech economy recovery.

Last Call

The only thing more surreal than Chicago shock jock Erich "Mancow" Muller getting waterboarded as a publicity stunt, lasting a total of seven seconds, and then declaring it to be torture...


(NSFW, frankly. Also disturbing as hell to know we put a guy through this 183 times.)

...is the number of people over at Little Green Footballs calling Mancow a complete pussy for failing to last longer.

Apparently these real conservatives can stand up to waterboarding as proof of their manhood. To them, I go "Let's see you do it there, Superman." Mancow is a glory hound and publicity junkie, but he has the stones to at least make his mind up having experienced it. You get credit for that in my book.

It's called torture for a reason, you idiots. Sadly, Mancow may have done more for the country than weeks of impassioned, intelligent arguments about waterboarding's true effects.

Mark Sanford: Super Asshole

GOP Gov. Mark Sanford doesn't want to accept $350 million in stimulus funds for South Carolina. The stimulus legislation allows state legislatures to override the Governor's veto and the SC legislature promptly did so with a 34-11 vote.

Sanford is promptly suing the state's general assembly, stating overriding his veto is unconstitutional.

Gov. Mark Sanford is taking the General Assembly to court after lawmakers required him to accept $350 million in disputed federal money by overriding his budget vetoes.

Sanford quickly announced the federal suit after the Senate voted 34-11 on a state budget that forces him to accept the money.

“We know a suit will be filed against us on this issue, and as such we’ve filed a suit tonight in response,” Sanford said in a prepared statement. “We believe the Legislature’s end-around move won’t pass constitutional muster.”

This is a guy that would rather sue his own legislature than accept money to help his constituents with an 11.5% unemployment rate.

Asshole. Prime.

Republicans Still Run The Village

Iggy wants to know what the hell is up with the All Newt Gingrich All The Time Show on teevee.

It’s a really strange situation. If were an editor looking for an op-ed from a conservative point of view about the California budget crisis, I would turn to one of the members of the California State Senate, or to one of the members of the California State House of Representatives. If I wanted an op-ed from a conservative point of view about the implications of the California budget crisis for national politics, I think I would turn to one of the 19 different Republican members of the United States House of Representatives. But the Post went with a former House Speaker from Georgia, who last held elected office about ten years ago.

If I wanted a conservative politician to go up against Dick Durbin (D-IL), the number two Democrat in the United States Senate, my first choice would be Jon Kyl (R-AZ), who’s Durbin’s opposite number. But of course Mitch McConnell (R-KY), the top GOP dog, would be a great get too. Failing that, there are 37 other Republican Senators you can ask. And there are lots of conservatives in the House leadership who might have an enlightening point of view on whatever it is they’re up to. But Meet The Press went with a former House Speaker from Georgia, who last held elected office about ten years ago.

Hey Iggy, news flash. The Village wants it to be 1993 all over again. It was the height of their power. Their incestuous relationship with the GOP began then, and only in the last 4 months has that even come close to changing. The Rush/Cheney/Newt show allows the GOP to stay relevant thanks to the Village, and the Village gets to run Washington and the country thanks to the Democrats pissing themselves in fear.

The Village wants it. The GOP wants it. The Democrats are powerless to stop it. You thought the Clinton years were bad for Democrats?

You have no clue.

[UPDATE] Steve Benen notes that Dick Cheney's daughter Liz has been all over the damn teevee too as a Serious Pundit. They literally can't get anyone to back up Cheney's garbage other than his own daughter, not a single sitting GOP anybody, and this is supposed to be Serious Journalism.

At This Point, We're Not Even Trying To Hide The Magical Thinking Anymore

If your idea of financial prognostication is Jim Cramer, Laszlo Birinyi and the rest of the Happy Face Financial Media, then brother, have I found the economist for you!

When will this horrible recession be over? According to one surprising source, it's over right now.

The source is Robert J. Gordon, an acclaimed macroeconomist and professor at Northwestern University. It's surprising to learn he thinks the recession is over, because he is one of seven members of the elite Business Cycle Dating Committee of the National Bureau of Economic Analysis. These are the people who decide officially, for the record books, when recessions begin and end -- usually many months after the fact, when the decision is really obvious. I'm unaware of any previous case in which a member of this committee has stepped forward and declared the end of a recession in real time.

Gordon bases his gutsy call on an indicator that he says the committee never even looks at: claims for unemployment benefits. He's talking about the so-called jobless claims number that is released every Thursday morning before the market opens.

Based on detailed data from state agencies, it reports the number of workers who have asked for unemployment benefits in the previous week. As Gordon points out, there is no other major macroeconomic statistics that comes out so frequently and so close to real time.

According to Gordon's research, in every recession since 1974, the peak in jobless claims came within weeks of the bottom of the recession.

Wow. That's staggering. We're honestly saying that since we've hit a peak in weekly jobless claims six weeks ago, the recession is over.

That's the entire theory. The whole thing. Everything from here on out is recovery, just a slow, ugly one. All based on one statistic (and a traditionally lagging indicator at that.)

Does anyone still think this is just another recession, just like all the ones since 1974?

Second wave is coming, folks. It's a double dipper. Buckle up. Recoveries only happen when the fundamental problems are dealt with. Housing prices are still 30% too high. Millions of homeowners are going to get clobbered by falling home prices and ARM reajustments. The banks are still insolvent and are only still going because of billions of taxpayer dollars. $2 trillion in losses still remain for the sector. Commercial real estate is falling apart as I type this.

Just because you got lucky and landed on a ledge when you fell into the volcano doesn't mean it's not going to erupt and obliterate you.

The more I think about it, the more I'm coming up with the theory that the recovery addicts are saying to themselves "OK, I don't care what the data says. This recession has lasted sixteen freaking months now. It has to be over by now. What are the odds of this going any longer? Time to buy! Recession over!"

And that's their entire plan. It's like Cheney fiddling with intel to make the case for Iraq.

Autopsy Of A Mall-ing

Regular readers will note that I've been talking about the commercial real estate bust for some time now. Hotels, motels, office buildings, business parks, big-box stores and retailers have all been hurt by the recession and will continue to be hurt.

But if there's one segment of the CRE market that is flat out doomed, it's America's shopping malls. The WSJ has an interesting post-mortem on a mall I've been to more than a few times, Charlotte's dying Eastland Mall.

The severity of the recession is turning some malls that were once viewed as viable into potential casualties. "Any mall that's sitting on life support is probably going to get its plug pulled" as the economy stalls, says Michael Glimcher, chairman and CEO of Glimcher Realty Trust, which owns 23 U.S. properties, including Eastland Mall in Charlotte.

One industry rule of thumb holds that any large, enclosed mall generating sales per square foot of $250 or less -- the U.S. average is $381 -- is in danger of failure. By that measure, Eastland is one of 84 dead malls in a 1,032-mall database compiled by Green Street. (The database focuses heavily on malls owned by publicly traded landlords and doesn't account for several dozen failing malls in private hands.) If retail sales continue to decline at current rates, the dead-mall roster could exceed 100 properties by the end of this year, according to Green Street. That's up from an estimated 40 failing malls in 2006, before the recession began.

"This time around, because of the dramatic changes in consumer spending practices, we're very likely to see more malls in the death spiral than we've ever seen before," says Green Street analyst Jim Sullivan.

Failing malls didn't get into trouble overnight, and most began their descent long before the tough climate. Typically, a mall begins to suffer due to job losses and other pressures in the surrounding neighborhood or because a newer mall opens nearby. The loss of key tenants -- such as the wave of department-store closures over the past three years -- hastens the demise. Also sapping malls' vibrancy: the increased preference among consumers for big-box stores, such as Wal-Mart Stores Inc. and Target Corp., which rarely operate in malls.

Developers, in fact, have been moving away from the enclosed-mall format in favor of big-box centers anchored by free-standing giants such as Wal-Mart or open-air shopping centers with tiny parks and outdoor cafes sprinkled among fashion stores. Only one enclosed mall has opened in the U.S. since 2006: The Mall at Turtle Creek in Jonesboro, Ark.

These pressures, coupled with landlords' difficulties refinancing debts in the bone-dry capital markets, signal tough years ahead for retail-property owners -- even after consumer spending begins to rebound. "The shopping-center bankruptcies and the REIT bankruptcies are the ticking time bomb that people aren't talking about," says Burt P. Flickinger III, managing director of Strategic Resource Group, a research firm.

Malls were pretty much screwed before the recession, in other words. With the recession and deep cuts in consumer spending these days, it's a certainty that malls in the country are going to start going under at an alarming rate. That means more lost lobs, less consumer spending, and more problems for the economy.

The next wave of the recession is coming. Count on it.