Zandar's Thought Of The Day

I had great respect for Chuck Todd as NBC's political analyst during the campaign.

I have zero respect for Chuck Todd as NBC's whiny ass White House correspondent.

Tick, Tick, Tick

Remember kids, it's not just huge banks like Citi and BoA that are insolvent. They're big enough politically to be saved. A lot of large regional banks however are done for.

A Bernstein Research analyst on Friday called Fifth Third Bancorp "un-investable," and noted that the regional bank will likely need more capital.

Shares of the Cincinnati-based bank recently traded down 21 cents, or 10 percent, to $1.99.

In a note to clients, senior analyst Kevin St. Pierre said more details are needed on how the government plans to administer its "stress test" on banks with assets over $100 billion. This will determine not only if Fifth Third needs more capital, which he believes it does, but will also provide more insight on how much its shares could be diluted from further government investment.

As part of the government's overhaul of the $700 billion financial bailout package passed last fall, the Treasury Department has proposed a "stress test" for the nation's largest banks to determine whether they can make loans on their own or need further government aid.

"Upon release of the details of the test and the minimum capital levels desired by the government, we will be better equipped to evaluate the viability of Fifth Third and the potential dilution involved with further injection of capital by the government," St. Pierre wrote. Until then, the bank is "un-investable," he said.

There are a solid dozen banks out there like Fifth Third across the country. They're not going to survive, most of them. Plan N might save them if implemented now. When Obama's hand is forced however, he's going to have to draw a line.

All the banks below that line are dead. Save what you can. Abandon what you can't. Banks like this will be chopped up and sold...or more likely, will just disappear as Americans realize they don't need all these banks anymore.

Wall Of No

As I predicted, the stimulus bill passed the final House vote today with a grand total of zero Republican votes.

The compromise plan was approved by a vote of 246-183 but no Republicans voted for it, dashing President Barack Obama's quest for bipartisan support that he had hoped would break the gridlock that has gripped Congress for years.

House Majority Leader Steny Hoyer chastised Republicans, saying they were sticking to the same prescription for the economy that had proved a failure during eight years of leadership from President George W. Bush.

Steny doesn't get it either. They are proud of this "no donkees in the klubhowse" style of resistance. They don't care. They're betting on failure, folks. They want our economy to crumble. They are betting the entire political future of the party on rooting for you to lose your job, and doing everything in their power to obstruct, obfuscate, and annoy the economy to death. Then, they figure you'll vote for them after that.

You lose your job because the stimulus bill wasn't big enough to save the economy and the GOP was responsible for cutting spending on new jobs, you going to feel like voting Republican because of it?

Another Voice In The Choir

Add Arianna Huffington to those wondering aloud why Obama will not pull the trigger on Plan N.

The big problem is Geithner is acting as if the crisis we are facing is a crisis of liquidity when, in fact, it's a crisis of insolvency. As Ann Pettifor puts it on HuffPost: "Much of Wall Street is effectively insolvent. It's not that these banks lack cash or capital -- it's just that they're never going to meet all their financial liabilities -- i.e. repay their debts. Ever."

Trying to prop these zombies up, as Geithner seems intent on doing, will lead to what Roubini calls "a royal rip-off of the taxpayer" and the risk of "turning a U-shaped recession into an L-shaped near-depression."

President Obama has made it unambiguous that he understands what is at stake -- both for the country, and for himself politically. On Tuesday, he said that if his economic plan doesn't work, "a few years from now, you'll have a new president."

And we know that many within his administration -- including senior advisor David Axelrod - favor a strategy that may be harder on Wall Street but will more quickly revive the U.S. economy.

So it's time to take off the kid gloves Geithner and Larry Summers are using to handle Wall Street and pull the plug on Geithner's deeply flawed plan.

Amen to that. The sooner, the better.

Or is it better to be held hostage by the zombie banks?

Also The Sun Is Hot And Burns Stuff

The First Read crew at NBC has come to (for them) a gobsmacking, earth-shaking, brave new world realization (h/t AmericaBlog):

Perhaps the biggest fallout from yesterday’s Gregg news is the realization that outside Collins, Snowe, and Specter, Obama isn’t going to receive much support from Republicans, no matter how many of them he tries to appoint to his cabinet, how many times he has them over for drinks at the White House, and how many times he meets with their conference.

Well no shit, guys. They want to destroy his ass. They want to wreck the economy to get back in power.

What took you so long?

Hostage Situation On Wall Street

The gang at TPM Muckracker have gotten a hold of an internal memo from Deutsche Bank that details an interesting plan: convince Treasury to either overpay for toxic assets or face the consequences.

In the memo -- one of Deutsche's daily "Economic Notes" sent out to the firm's clients, and to some members of the press -- Joseph LaVorgna, the bank's chief US economist, essentially, appears to warn that if the government doesn't pay high prices for the toxic assets on the books of Deutsche and other big firms, there will be massive consequences for the US economy.

Writes LaVorgna:

One main stumbling block to the purchasing of troubled assets has been pricing, specifically how does the government price a diverse set of assets in a way that does not put the taxpayer on the hook. However, this should not be the standard by which we judge the efficacy of the plan, because a more prolonged deterioration in the
economy will result in a higher terminal unemployment rate and a greater deterioration of the tax base. As such, the decline in tax revenues will crimp many of the essential services provided by the government. Ultimately, the taxpayer will pay one way or another, either through greatly diminished job prospects and/or significantly higher taxes down the line to pay for the massive debt issuance required to fund current and prospective fiscal spending initiatives.

We think the government should do the following: estimate the highest price it can pay for the various toxic assets residing on financial institution balance sheets which would still return the principal to taxpayers.

One leading economist described the memo to TPMmuckraker as a "ransom note" to the US government. And David Kotok of Cumberland Advisors, who writes such research memos for his own clients, acknowledged that the memo, like all such communications, could be interpreted as an attempt to influence policy-makers.

It's the notion that Treasury has no choice but to overpay for these assets or face a "prolonged deterioration in the economy" that bothers me. The banksters take no responsibility for the situation, instead smugly inferring that Treasury will magically fix everything and let the banks operate as normal or face a situation where impending collapse will ruin the country.

The teeth-grinding truth is the way Treasury is playing the game right now, LaVorgna is 100% correct. As long as Obama refuses to consider Plan N, the other options on the table are overpay for toxic crap, or let the banks collapse. Collapse of course is the least politically and economically tenable situation, so that leaves giving banks the money or else.

Does this not mean that the inherent moral hazard of Treasury buying toxic assets now makes Plan N absolutely necessary?

Plan N Goes Mainstream

The NY Times' Steve Lohr provides a solid primer for movement towards Plan N. Seeing the Times take this seriously is somewhat sobering, they even quote Roubini.

Some of the nation’s large banks, according to economists and other finance experts, are like dead men walking.

A sober assessment of the growing mountain of losses from bad bets, measured in today’s marketplace, would overwhelm the value of the banks’ assets, they say. The banks, in their view, are insolvent.

None of the experts’ research focuses on individual banks, and there are certainly exceptions among the 50 largest banks in the country. Nor do consumers and businesses need to fret about their deposits, which are federally insured. And even banks that might technically be insolvent can continue operating for a long time, and could recover their financial health when the economy improves.

But without a cure for the problem of bad assets, the credit crisis that is dragging down the economy will linger, as banks cannot resume the ample lending needed to restart the wheels of commerce. The answer, say the economists and experts, is a larger, more direct government role than in the Treasury Department’s plan outlined this week.

It's worth reading the whole thing if you're still doubting Plan N. Nationalization of many of the mega-banks and regional banks in America is where we will eventually end up. Obama will have no other choice.

Another Sees The Light

Yesterday I wondered if Andrew Sullivan had been paying attention to the GOP after he was mystified over Judd Gregg. Last night, it turns out he indeed has seen the light.

This much is now clear. Their clear and open intent is to do all they can, however they can, to sabotage the new administration (and the economy to boot). They want failure. Even now. Even after the last eight years. Even in a recession as steeply dangerous as this one. There are legitimate debates to be had; and then there is the cynicism and surrealism of total political war. We now should have even less doubt about what kind of people they are. And the mountain of partisan vitriol Obama will have to climb every day of the next four or eight years.

In other words it can be boiled down to two words:

Destroy. Obama.

More and more folks are coming around to the realization that the election of 2008 did absolutely nothing to change the Republicans. They still believe after eight years that their ideas worked and will work in the future, after eight years of Bush lying, cheating, stealing, killing, and wreacking America's economy. They are denying 2001-2008 even existed, that somehow the economic crisis we have sprang into existence only after January 20, 2009 at 120:01 PM. They honestly believe that Obama is to blame for our economy right now.

When Republicans lose, they double down on their mistakes. They have been doing that for the last several years now. Why is any logical, intelligent human being even remotely surprised that this is the GOP plan? Pretend the last eight years were fine, declare Obama's Presidency to be failed at every turn, and vow revenge in 2010 and 2012.

You can't argue with fanatics in denial. You can't argue with people who believe Obama wasn't bipartisan enough because he didn't give the GOP 100% of exactly what they wanted. You can't reason with people who wholly believe the major problem in America is the President, the policies, and the actions of the last three and half weeks and not the President, the policies, and the actions of the preceding eight years.

They hated him from January 20. They vowed to destroy him. They will take the country down with them in the effort. They truly believe that after only 24 days, Obama is in freefall, doomed to one-term Carterism and that Judd Gregg is somehow the magical last straw that will turn the people against Obama and make them demand...what, impeachment? Tar and feathering? Any day now.

And when this groundswell of Obama hate fails to materialize and America is caught giving Obama a fair chance with positive approval ratings among a majority, the GOP will turn against the people as well, saying that they deserve their economic Armageddon for aiding and abetting this...this...Democrat.

It's about that point when the American people will switch off the GOP's bullhorn, tell them to shut up, and give Obama even more of a congressional majority.

But we're in for at least four years of hysterical, fever-bright, fanatical, venom-dripping hatred for Obama. They're out to annihilate him and anyone on his side, and increasingly that will mean the American people.

Never forget that.

[UPDATE] The GOP isn't even denying anymore that this is the plan. (h/t Digby)

More interesting, Vitter offered up a few specifics about the opposition party's political strategy given its diminished congressional power. Vitter said defeating the stimulus bill was never the goal; changing public opinion about it was. "We may have lost the vote, but we collectively have won the debate," he said, claiming that the public now perceived that the bill as evidence that the Obama administration was not bringing real change to Washington, but rather just engaging in the same old wasteful government spending. (Congressional Democrats have been disseminating polls showing that the stimulus plan is backed by a majority of the public.) "We're getting back to our roots," Vitter said of congressional Republicans.

According to Vitter, the GOP is basically betting the farm that the stimulus package is going to fail, and the party wants Democrats to go down with it. "Our next goal is to make President Obama and liberal Democrats in Congress own it completely," he said. Instead of coming up with serious measures to save the economy, the party intends to devote its time to an "we told you so" agenda that will include GOP-only hearings on the bill's impact in the coming months to highlight the bill's purportedly wasteful elements and shortcomings.

Here endeth the lesson.

StupidiNews!

• A commuter plane crashed near Buffalo last night, killing all aboard and one on the ground.
• Leon Panetta has been confirmed as CIA director.
• Scientists are looking at the genome of the Neanderthal in nearly 40,000 year old bones.
• G7 ministers are meeting in Rome to discuss the economic crisis.
• At the Silicon Flatirons conference, the discussion rages over the doom of Wikipedia.

Last Call

Nearly two-thirds of Americans want some kind of investigation into Bush's torture regime. After all, we killed people doing this.

The American Civil Liberties Union has released previously classified excerpts of a government report on harsh interrogation techniques used in Iraq, Afghanistan and Guantanamo Bay. These previously unreported pages detail repeated use of "abusive" behavior, even to the point of prisoner deaths.

The documents, obtained by the ACLU under a Freedom of Information Act request, contain a report by Vice Admiral Albert T. Church, who was tapped to conduct a comprehensive review of Defense Department interrogation operations. Church specifically calls out interrogations at Bagram Air base in Afghanistan as "clearly abusive, and clearly not in keeping with any approved interrogation policy or guidance."

The two unredacted pages from the Church report may be found here.

The ACLU's release comes on the same day as a major FOIA document dump by three other leading human rights groups: Documents which reveal the Pentagon ran secret prisons in Bagram and Iraq, that it cooperated with the CIA's "ghost detention" program and that Defense personnel delayed a prisoner's release to avoid bad press.

Understand that? People died. We tortured them to death. Bush is a war criminal.

But Obama wants to be magnanimous. He wants to be Lincolnesque, forgiving the Confederate Army after Lee's surrender. He wants to forge a lasting, bipartisan legacy. He wants votes from the GOP.

How long will it take Obama to realize they want to destroy him?

Ask Lincoln.

Your AFOP Update Of The Day

Three weeks and 2 days into the Obama Era, and you'll be glad to know the most corrupt Presidency ever is pretty much over if you're a regular DC Examiner reader.

(Psst, remember the GOP plan? Destroy Obama? Keep with the tour, please. The tram moves fast.)

Nuts To You

So, it turns out it's not just salmonella in peanut butter in the last couple of weeks, but dead mice and rats, bird feathers, and animal droppings in peanut butter in the last four years.

The Texas Department of State Health Services on Thursday ordered the recall of all products ever shipped from the Peanut Corporation of America's plant in Plainview, Texas, after discovering dead rodents, rodent excrement and bird feathers in the plant.

The order, which applies to products shipped since the plant opened nearly four years ago, came a day after the discovery of filth in a crawl space above a production area during a health services inspection, the department said in a news release.

Inspectors also reported that the plant's ventilation system was pulling debris "from the infested crawl space into production areas of the plant resulting in the adulteration of exposed food products," the release said.

The Bushies reduced the FDA budget time and time again. They made it impossible to effectively do the job of protecting the nation's food and drugs, and then blamed the agency for failing to do its job, with critics saying the failures were then proof agency was useless and that food and drug companies could police themselves. Sound familiar?

It's the same playbook the Bushies used to take apart banking regulation, environmental regulation, work safety regulation, and the list goes on and on.

So much work has to be done.

Nobody Could Have Predicted Judd Gregg, Etc.

Sully on Gregg:

I have to say even I am a little taken aback by the force of the Republican assault. Even in a downturn as swift and alarming as this one, even after an election that clearly favored one approach over another, even after the most conciliatory efforts by an incoming president in memory, these people have gone to war against the president.

Dude, Sullivan, have you been paying attention for the last eight years? Have you been paying attention for the last eight months?

Josh Marshall too is scratching his head over Gregg.

Guys, this is a group of people who four months ago were calling Barack Obama a traitor, saying he's not an American citizen, saying he's secretly a Muslim extremist, saying just in the last few days that he's planning a Nazi-like takeover of health care IT, guys.

For the last time, this is a group of people willing to do anything --ANYTHING -- to ruin Obama, the economy, and the American people in order to get back in power. If Obama pulls this off, the Democrats own this country for a generation. If he fails, the GOP does. It really is that f'ckin simple, folks.

Everything they do is motivated by scoring political points. They don't care if they lost in 2006 and lost badly in 2008. They plan on getting it all back in 2010 and 2012 if America is reduced to a third-world economy and they can pin it all on Barack and Nancy.

Destroy. Obama.

That is the entire plan in all of its fever-bright glory.

Everything you see the GOP do over the next four years needs to go back to the context of that two word plan.

Remember it.

PS, as I said, can we officially bury bipartisanship and say screw the GOP?

The Loan Arranger Rides Again

Stock market reacted positively to the "third leg" of Obama's...three legged...stool...of financial stability, or whatever. The plan? Direct mortgage assistance from the government to struggling homeowners.

The Obama administration is hammering out a program to subsidize mortgage payments for troubled homeowners who have gone through a standardized re-appraisal and affordability test, sources familiar with the plan said on Thursday.

The program would be a major break from existing aid programs, which are triggered once homeowners fall into arrears.

Under the plan being contemplated, mortgage companies would use a uniform eligibility test even before a borrower becomes delinquent, sources said.

The administration hopes the mortgage industry will soon agree to a set of standards that will allow it to move quickly to modify many home loans.

Dow erased a 200 point loss in the last hour on news of the plan, and frankly it's the first really strong plan Obama and Geithner have pulled out of their hat.

Soft-Boiled Gregg

Judd Gregg is out.

“I want to thank the President for nominating me to serve in his Cabinet as Secretary of Commerce. This was a great honor, and I had felt that I could bring some views and ideas that would assist him in governing during this difficult time. I especially admire his willingness to reach across the aisle.

“However, it has become apparent during this process that this will not work for me as I have found that on issues such as the stimulus package and the Census there are irresolvable conflicts for me. Prior to accepting this post, we had discussed these and other potential differences, but unfortunately we did not adequately focus on these concerns. We are functioning from a different set of views on many critical items of policy.

“Obviously the President requires a team that is fully supportive of all his initiatives."

Bipartisanship my ass.

Biggest loser in all this? NH Gov. "I'm appointing a Republican" John Lynch.

[UPDATE] Doug at Balloon Juice points out Gregg asked Obama for the job, then poured gasoline all over the bridge and burned it for maximum effect.

Can we put an end to the fantasy bullshit of bipartisanship now?


The other side is staffed completely by The Really Rottens, after all.