May Want To Put The Corks Back In On That Champagne

Turning back to the Palmetto State, the fact that Nikki Haley won the GOP gubernatorial primary means she's already won in November, yes?  Not so fast...

South Carolina business leaders are sticking with a decision not to endorse state GOP gubernatorial nominee Rep. Nikki Haley as her campaign Wednesday called the South Carolina Chamber of Commerce "a big fan of bailouts and corporate welfare."

State chamber board member Ted Speth said Wednesday that he's backing Democrat Vincent Sheheen because the next governor needs to get along with the GOP-controlled Legislature, something that has been missing for eight years under Republican Gov. Mark Sanford. They "certainly have not had much harmony there within the past eight years," said Speth, managing shareholder in Ogletree Deakins, one of the state's largest law firms.

The chamber endorsed Sheheen, who won the Democratic nomination, earlier this year along with Republican U.S. Rep. Gresham Barrett. On June 18, days before Barrett lost a runoff with Haley, the chamber decided it would stick with that decision even if Haley won. This year's endorsements were the first ever in a governor's race for the state chamber.

"These candidates had a particularly favorable focus on business," said Reed Byrum of The Byrum Innovation Group Inc. in Greenville.

Part of Haley's campaign stump talk has been that she would go into legislators' districts and hold them accountable with their voters if they didn't go along with reforms she seeks.

"I just don't think that's going to bring the type of cooperation that we need," said Otis Rawl, the chamber's chief executive officer. "That's a slippery slope when you're talking about getting things done."

Not all the chamber's members are happy with the ongoing Sheheen endorsement.

For instance, Mark Buyck Jr., a Florence lawyer who runs one of the state's oldest law firms, resigned his chamber membership. "We cannot lend our name to an organization which behaves as the chamber did in this endorsement without input from its membership," said Buyck. He said the decisions were made by the board, not the chamber's membership.

Haley's campaign shrugged off the endorsement.

"The state Chamber is a big fan of bailouts and corporate welfare, so it's no surprise that they would prefer a liberal like Vincent Sheheen over a conservative like Nikki Haley," Haley spokesman Rob Godfrey said.

The fact of the matter is your average state, local, or nation Chamber of Commerce really is a fan of corporate welfare and big bailouts.  Haley's people are correct.  But the SC Chamber backing Democrat Shaheen means he's not out of the race, and I think you're going to see a lot more of this disconnect where Country Club and Chamber of Commerce Republicans are going to be fed to the Tea Party buzzsaw and will have to turn more and more to the Democrats for support.

I'm not saying that's a good thing.  Politics makes strange bedfellows however.  The Hoffman Effect is making the Mitt Romney wing of the GOP persona non grata, and at this point the Dems need all the help they can get.

I Disbelieve The Economy

Via John Cole comes this Henry Blodget piece on our old friend commercial Real Estate, and why the collapse isn't quite happening yet but may soon will.

Most experts agree that one reason Japan's economy has taken so long to recover from its bubble crash is that Japan's banks spent the first decade in denial.

Specifically, when loans went bad, the banks didn't write the loans off--they lent the bankrupt borrowers more money so the borrowers could keep paying interest on the original loan. Thus, the bank and the borrower could pretend that everything was hunky dory.

Except it wasn't. Because the borrowers were bankrupt. And, eventually, everyone figured that out. And, finally, more than a decade into the collapse, the banks began owning up to reality and writing off some of the bad loans.

This practice, "extend and pretend," isn't always a bad strategy. If the economy recovers strongly and quickly, sometimes banks can make more money (or at least lose less) by working with with troubled borrowers who will eventually make good on their debts.  This is what most of the ideas to "save the housing market" have been about--encouraging banks to restructure mortgages to keep borrowers in their homes.  And sometimes, it actually works.

But, usually it doesn't--especially when practiced on an industry-wide scale, and especially when borrowers aren't just temporarily strapped. When banks "extend and pretend" just to avoid write-offs and protect their capital, they're just delaying the inevitable.  And the financial health they're bragging about in the quarterly reports becomes bogus.

And that's what appears to be happening in the commercial real-estate market right now.

Applied denial as lending policy.  The banks, flush with taxpayer money, are playing Big Casino again with the CRE market to keep the band playing.  Once the music stops however, the explosion is going to pretty much cripple our economy.  Basically the banks are throwing money at commercial real estate hoping magically that the market will turn around and that everything will be fine.

The irony of course is that businesses are doing everything they can to screw over their employees in this economy, and that's cutting their own throats on demand.  People are cutting back.  Meanwhile, banks are making the same bet with construction companies, building more commercial properties in the hope that the market will come roaring back.

All of this is going to detonate in our faces spectacularly and soon.  The question is when and how ruthless it will be when it happens.  The answer of course is that we'll have no choice but to bail out the banks again to the tune of trillions...again...and that cost will get squeezed out of every American.

The next decade or so looks really, really bad.  Standing around trying to disbelieve it will not solve the problem.

If It's Thursday...

New jobless claims actually down somewhat this week to 454K, continuing claims down big to 4.41 million.  This is actually good news, but I have to ask how much of that drop is coming from people simply too discouraged to care any more.

Still, we have to get under 400K a week to have any shot at getting our heads above water.

Another Milepost On The Road To Oblivion

Exactly why does there need to be a law allowing guns in churches in Louisiana, anyway?

Gov. Bobby Jindal has signed into law one of the more controversial bills from the recent legislative session, one allowing guns to be carried into houses of worship.

Including the "gun-in-church" bill, House Bill 1272 by Rep. Henry Burns, R-Haughton, Jindal has signed into law 940 of the 1,067 bills the Legislature sent him, vetoed 12, and used his pen to line-item spending measures in four different budget bills.

Burns' bill would authorize persons who qualified to carry concealed weapons having passed the training and background checks to bring them to churches, mosques, synagogues or other houses of worship as part of a security force.

The pastor or head of the religious institution must announce verbally or in weekly newsletters or bulletins that there will be individuals armed on the property as members of the security force. Those chosen have to undergo eight hours of tactical training each year.

Security forces.  In churches.  And somebody thought this was a good idea?  Eight hours of tactical training a year, huh?

Oy.

Never Waste A Crisis

The Rahm Emanuel phrase is turning into the Washington operating manual these days, and in this case the target is changing Social Security.  Republicans have been licking their chops for years now to try to seriously wreck the program for everyone after the Baby Boomers, and now they are being aided and abetted by the Dems.  Brian Beutler:

House Majority Leader Steny Hoyer explicitly put the idea on the table as well in a speech last month. "We should consider a higher retirement age or one pegged to lifespan," Hoyer said.

He echoed House Majority Whip James Clyburn, who put it this way: "With minor changes to the program such as raising the salary cap and raising the retirement age by one month every year, the program could become solvent for the next 75 years." One month a year may not sound like much, but if you're 30 years away from retirement, that adds up to almost three years.

In the House, though, Nancy Pelosi is the linchpin, and she's not nearly as enthusiastic as her colleagues. But, notwithstanding the enthusiasm gap, she also left the possibility of raising the retirement age on the table. When asked about it by TPMDC at her press conference last week, she criticized the plan, but mainly to say she disagrees with putting Social Security on the chopping block ahead of other measures. "Why they would start talking about a place that could be harmful to our seniors -- 70 is a relative age," Pelosi said. "Around here, there's not a lot of outdoor work or heavy lifting. But for some people it is, and 70 means something different to them. So in any event let's talk about growth, lets talk about how we can reduce spending, lets put everything, those initiatives: promoting growth, tightening the belt, looking at entitlements. But let's not start on the backs of our seniors."

There's one catch, though. Last week, Democrats included a rider to the supplemental war spending bill that will likely force the House to vote on a forthcoming fiscal reform plan, if the Senate passes it first. That package is being put together by President Obama's deficit and debt commission, and will be ready to go after the midterms. Pelosi had already pledged to give the package a vote, so perhaps nothing has really changed. But in a way, she also tied her own hands: if the Senate passes a broad tax-and-entitlement reform package at the end of this Congress and her own caucus is willing, she'll be hard-pressed to stop the Social Security reforms she thinks should come last.

Of course, that puts the onus on the Senate, which can't pass much of anything these days, especially if it includes tax hikes -- and any serious effort to pull the country back from the brink of fiscal crisis will have to include some of those. But if there's a fluke, or an unexpected decision on the part of 60 senators to hold hands and jump together, it could happen swiftly, with very little notice.

And once again this raises the specter of Obama's deficit commission making some tough choices on an America headed down the road of a depression that will certainly prolong the misery.  There's a reason Digby's been calling the group the "Catfood Commission" because it's what we're going to be reduced to eating here, and she's been on this one for over a year now.

It's becoming painfully clear that Washington's solution to our little Depression problem is to make Hoovervilles out of America, but as eager as the Republicans are to redistribute the wealth upwards, they can't do it without Obama's consent.

StupidiNews!

• Another tropical depression is heading for the Texas/Mexico border, only days after Hurricane Alex drenched the area.
• The NSA is supposedly working on a massive domestic infrastructure spy program called "Perfect Citizen".
• Billions may be tuning in worldwide to the FIFA World Cup, but not Americans.
• The Big Apple is getting baked under day 5 of record heat, but relief may finally be in sight this weekend.
• Microsoft security researchers are out with a list of flaws that the Big M has overlooked, but nearly all are small potatoes.

Last Call

Max Baucus.  Still a lousy Democrat.

Senate Finance Committee Chairman Max Baucus is the first Democrat to express displeasure with President Obama's recess appointment of Dr. Donald Berwick to head the agency overseeing Medicare and Medicaid.


"I'm troubled that, rather than going through the standard nomination process, Dr. Berwick was recess appointed. Senate confirmation of presidential appointees is an essential process prescribed by the Constitution that serves as a check on executive power and protects Montanans and all Americans by ensuring that crucial questions are asked of the nominee – and answered," the Montana senator said in a statement.

Yeah, because Bush never made any, and Clinton, and Bush Sr, and Reagan, oh wait they all did.  Obama's still made the fewest number of them.  I understand old Maxie thought he wasn't getting enough attention in the press sticking a knife in Obama's back since the health care debate, I guess he was bored.  That means Joe F'ckin Lieberman is about due too.

Another Milepost On The Road To Oblivion

If it's July, it means the Aspen Ideas Festival, a place where people with too much money and power get together to complain about the rest of us schlubs.  Chrystia Freeland of Reuters reports:

Yet one of the most interesting threads running through the conversation Tuesday, the first full day of the Aspen Ideas Festival (underwritten in part by Thomson Reuters, where I work) is the fear that America’s days as the land of opportunity, particularly for the middle class, may be numbered.

The first warning came at 7:45 am – a typical start for the wonkish crowd assembled here – from Michael Splinter, CEO of Applied Materials. Splinter was full of Silicon Valley enthusiasm for his company and its prospects: “it very much is the frontier … this really is rocket science.”

But he wasn’t nearly as cheery about the state of his nation. Asked by moderator David Bradley, chairman of Atlantic Media and one of the festival’s hosts, how many of his employees would be in America if he were starting with a blank slate, Splinter said just 20 per cent. “90 per cent of our sales will be outside the U.S.,” he said. “The pull is to be close to our customers. The challenge is how to get jobs in the U.S.”

Splinter said he was worried about America’s deficit and the tax increases he believes will inevitably be required to pay it off. He was tough on the Obama administration – even though he is among the favored CEOs who have been invited to the White House to offer advice.

Splinter had good things to say about corporate sessions with the President. He said that behind closed doors CEOs “were quite honest” in expressing their views, and that the president was “forthcoming.” But, asked a visibly frustrated Splinter, “what are the results?” He wants more R&D spending, a better educational system and – the familiar CEO lament – a more pro-business attitude from Washington.

Yet Splinter’s critique contained its own contradictions: on one hand, he called on the government to spend more on R&D and education, but his chief complaint was that “frankly, our tax rate is not competitive” and that it was likely to increase.

Here's a guy who honestly admits that in exchange for the government lowering or even eliminating corporate taxes and lavishing subsidies upon them, he wants to move 80% of his employees offshore.  He really doesn't understand why Obama just doesn't get it, either and wants to know why the hell this person wants to make his company pay more in taxes.

If I worked for this guy, I'd be looking for another job.  Now.  Get a head start, Applied Materials employees.

And you wonder why we're in a deflationary depression right now after the financial industry nearly eradicated our economy...and still might.

Zandar's Thought Of The Day

Louis Uchitelle, NY Times, has this report on the travails of unemployment.

After breakfast, his parents left for their jobs, and Scott Nicholson, alone in the house in this comfortable suburb west of Boston, went to his laptop in the living room. He had placed it on a small table that his mother had used for a vase of flowers until her unemployed son found himself reluctantly stuck at home.


The daily routine seldom varied. Mr. Nicholson, 24, a graduate of Colgate University, winner of a dean’s award for academic excellence, spent his mornings searching corporate Web sites for suitable job openings. When he found one, he mailed off a résumé and cover letter — four or five a week, week after week.

Over the last five months, only one job materialized. After several interviews, the Hanover Insurance Group in nearby Worcester offered to hire him as an associate claims adjuster, at $40,000 a year. But even before the formal offer, Mr. Nicholson had decided not to take the job.

Rather than waste early years in dead-end work, he reasoned, he would hold out for a corporate position that would draw on his college training and put him, as he sees it, on the bottom rungs of a career ladder.

“The conversation I’m going to have with my parents now that I’ve turned down this job is more of a concern to me than turning down the job,” he said. 

No really, travails.  It is so very, very hard being a gangsta pimp like Scott here.   I don't know why we need a 4-page expose' on people who are turning down $40k jobs because they're not good enough, but somebody needs to be delivering pizza in a ten-year old Canadian Subaru with no heater for a while to earn some perspective.

You know, if the pizza places were hiring.  Jesus.

World Cupdate

And the second Semifinal game got underway this evening as Germany took on Spain to see who would play Holland in the Finals.  Both teams went with 4-2-3-1 lineups, Zee Germans featuring Miroslav Klose (but missing Thomas Muller) and La Furia Roja with David Villa on point and Torres on the bench in favor of Pedro.  Both teams opened up very cautiously, not wanting to be on the downside of an early goal.  Spanish pride and German precision simply wouldn't allow it, but the Germans had to be thinking of Spain's 1-0 victory over this squad in the Euro 2008 finals where the Germans were unable to find any mistakes in the Spanish passing game and simply ran out the clock on themselves.  Germany were not a team that responded well to being down early, and the Reds were able to play their game in the opening stanza.  Zee Germans had to be even more worried about the fact that Paul the Psychic German World Cup Octopus picked La Furia Roja to win the match as well.  Spain continued to dominate possession in the first half but the German panzer pouncing on each Spanish less-than-perfect pass began to result in more German opportunities.  If anything, Spain seemed to be too frightened of a massive German counter-attack to really commit to anything less than the perfect goal.  In the second half it was more of the same.  Germany gambled on making some substitutions to finally adjust to Spain's passing game.  Both sides got some of their best chances yet to score as defenses begin to weaken in the late game, but it was Carlos Puyol with the running header dash at 72' to put Spain up 0-1.  Germany then completely panicked and Spain almost made it 0-2 in as many minutes.  Germany completely gave up the midfield in order to try to go on a full break stampede and crush the ball in, but the clock was their enemy and the Spaniards finally broke Zee Germans with it...and an octopus named Paul.

Your World Cup Finals will be Holland and Spain, the Eighty Years' War may have ended in 1648 but it begins again in 2010...

It's A Nuclear Melt-Up

And the Dow gains 274 points for no apparent reason.  None.  All the news was dismal today, and the markets gained nearly 3% just for the hell of it.  This is actually worse than the market falling 274 points, because at least that would have made sense. 

You know how if you're in a boat, and you keep pushing on one side, the boat will wobble but it won't capsize, right?  But if you rock the boat back and forth repeatedly, the thing's going to eventually flip?  Yeah, we're at the "rocking back and forth" part of the chaotic systemic variation right before the stock market goes BOOM, just like back in August 2008 when the market was all over the damn place.

The measure of that rocking back and forth, the VIX volatility index, has been floating around between 25 and 45 for the last two months.  This is bad, that much wobble in a system is going to eventually put cracks in the wheels.  When the volatility measure has that much volatility in it, that's...not good.  We're now getting into the point where chaos controls the market and not traders.

Buckle up, kids.  Second half 2010 is going to be a mite bumpy.

The GOP Plan Is Working Perfectly

And Obama is falling right into the trap.

Thirty-eight percent of independents approve of the job Barack Obama is doing as president, the first time independent approval of Obama has dropped below 40% in a Gallup Daily tracking weekly aggregate. Meanwhile, Obama maintains the support of 81% of Democrats, and his job approval among Republicans remains low, at 12%.

Over the past year, Obama has lost support among all party groups, though the decline has been steeper among independents than among Republicans or Democrats. Today's 38% approval rating among independents is 18 percentage points lower than the 56% found July 6-12, 2009. During the same period, his support has fallen nine points among Democrats (from 90% to 81%) and eight points among Republicans (from 20% to 12%).

Overall, 46% of Americans approve of the job Obama is doing as president in the June 28-July 4 aggregate, one point above his lowest weekly average. Obama's average weekly job approval rating has not been above 50% since Feb. 8-14, though it reached the 50% mark as recently as May 3-9.

Obama's lower ratings come amid a still-struggling economy, the ongoing difficulties presented by the oil spill in the Gulf of Mexico, and the recent change of command in the war in Afghanistan. Underscoring the challenge at hand, Obama's 44% approval rating in July 2-5 polling (Gallup did not interview July 4) ties his lowest three-day average to date.

The plan is as elegant as it is simple:  make sure nothing passes in the Senate and blame Obama when the country continues to fall apart, then make gains in November.  Repeat until you control Congress and the White House.  Now Obama's in a situation where by giving away everything to Republicans up front in order to secure their votes, they've simply stabbed him in the back and blocked everything anyway.  Only an amazing effort of will got health care reform through, and the President is unwilling (and now unable with only 59 Senate votes) to get anything else passed.  Now is when he needs Republican help the most, and now is when the Republicans he thought he could work with will oppose him straight down the line.

And he has no one to blame other than himself for believing for a second that the GOP wasn't out to destroy him or the country at the expense of winning in 2010 and 2012.  Been saying that for well over a year now.  All Republicans have to do is run out the clock until Labor Day, and they win.  It really is that simple, folks.  It's a damn shame Team Obama couldn't have figured this out, say, January 20, 2009.

Damn shame.

Really, Hawaii Dems?

OK, so Hawaii Gov. Linda Lingle is a Republican, and she vetoed the state's civil unions law (Via Balloon Juice.)  Not a gay marriage law, but a civil unions law.  That's pretty sad, even in 2010.

"There has not been a bill I have contemplated more or an issue I have thought more deeply about during my eight years as governor than House Bill 444 and the institution of marriage," Lingle said at a news conference.

"I have been open and consistent in my opposition to same-sex marriage, and find that House Bill 444 is essentially same-sex marriage by another name."

The bill would have granted gay and lesbian couples the same rights and benefits the state provides to married couples.

She said voters, not politicians, should decide the fate of civil unions.

"It would be a mistake to allow a decision of this magnitude to be made by one individual or a small group of elected officials," she said.

Sure, unless it's massive social program spending cuts, immigration laws or going to war.  In which case, only lawmakers know best.   But that's not what pisses me off.  Let's consider for a fact that Democrats in Hawaii have a 45-6 majority in the state House, and easily passed this bill in the first place...but will not override the Governor's veto because House Speaker Calvin Say already dismissed that option before Lingle's veto.

In a prepared statement, Say said he, along with members of the House leadership, decided that the governor’s veto list, released on June 21, did not warrant overrides because of the following:

• It does not appear to have the requisite two-thirds vote in both chambers necessary to override a veto;

• It does not rise to a sufficient level of statewide concern to warrant the extraordinary action of a legislative override;

• The governor’s preliminary objections to the bill have sufficient merit deserving of further evaluation; and

• Although the bill was intended to enhance state revenue to balance the budget when passed during the session, it is now no longer necessary because of the Council on Revenue’s improved revenue projection.

“It’s my personal belief that simply because we have the legislative super-majority to override is not justification for us to do so,” Say said in the statement. “Partisan politics should not be a consideration or basis for any policy decision. The House should be proud of the work accomplished during the regular session — including balancing the state’s budget without increasing the general excise tax, without increasing income taxes on low- and moderate-income families, and without scooping the counties’ hotel tax share.”

Right, but hey, why do anything about civil unions?  Nice work, Dems.  Nice work indeed on playing your cards.

Be Careful What You Wish For, Tea Party

You wanted smaller government?  You wanted state budget cuts?  You wanted to deal with "overpaid government drones"?  You got it.

Up to 400,000 workers could lose jobs in the next year as states, counties and cities grapple with lower revenue and less federal funding, says Mark Zandi, chief economist for Moody's Economy.com.

The development could slow an already lackluster recovery. Friday, the Labor Department said employers cut 125,000 jobs, mostly because 225,000 temporary U.S. Census workers completed their stints. The private sector added 83,000 jobs, fewer then expected, as the jobless rate fell to 9.5% from 9.7%.

Layoffs by state and local governments moderated in June, with 10,000 jobs trimmed. That was down from 85,000 job losses the first five months of the year and about 190,000 since June 2009.

But the pain is likely to worsen. States face a cumulative $140 billion budget gap in fiscal 2011, which began July 1 for most, says the Center on Budget and Policy Priorities.

While general-fund tax revenue is projected to rise 3.7% as the economy rebounds in the coming year, it still will be 8%, or $53 billion, below fiscal 2008 levels, according to the National Association of State Budget Officers.

Meanwhile, federal aid is shrinking. Money for states from the economic stimulus is expected to fall by $55 billion, says the National Governors Association. And the Senate last week failed to pass a measure to provide states $16 billion for extra Medicaid funding, an initiative that would have extended benefits from last year's stimulus. The House approved $25 billion in enhanced Medicaid funding.

Philippa Dunne, who surveys state financial officials for a newsletter, the Liscio Report, says most plan to intensify layoffs the coming year after relying largely on furloughs.

"The downturn has gone on so long, all the low-hanging fruit has been taken," says Scott Pattison, head of the state budget officers group.

So, another 400k jobs lost over the next year or so as FY 2011 turns into a bloodbath, and FY 2012 will be even worse come next July and onwards.

What's the plan to get these folks jobs, then?  The private sector should be eager to snap up qualified cops, firefighters, budget directors, city planners, and administrators, yes?  I mean since the private sector does everything better and more efficiently and all...

Because otherwise we've got 400,000 more Americans unemployed because Republicans refuse to fund these governments in trouble, and I'd like to know how that's going to help the economy.

Oh Look, It Gets Even Worse In The Gulf

So, apparently the AP's been checking around with all those other wells out in the Gulf of Mexico, and it turns out...well...nobody seems to know exactly what's going on with any of them.

More than 27,000 abandoned oil and gas wells lurk in the hard rock beneath the Gulf of Mexico, an environmental minefield that has been ignored for decades. No one — not industry, not government — is checking to see if they are leaking, an Associated Press investigation shows.

The oldest of these wells were abandoned in the late 1940s, raising the prospect that many deteriorating sealing jobs are already failing.

The AP investigation uncovered particular concern with 3,500 of the neglected wells — those characterized in federal government records as "temporarily abandoned."

Regulations for temporarily abandoned wells require oil companies to present plans to reuse or permanently plug such wells within a year, but the AP found that the rule is routinely circumvented, and that more than 1,000 wells have lingered in that unfinished condition for more than a decade. About three-quarters of temporarily abandoned wells have been left in that status for more than a year, and many since the 1950s and 1960s — eveb though sealing procedures for temporary abandonment are not as stringent as those for permanent closures.

As a forceful reminder of the potential harm, the well beneath BP's Deepwater Horizon rig was being sealed with cement for temporary abandonment when it blew April 20, leading to one of the worst environmental disasters in the nation's history. BP alone has abandoned about 600 wells in the Gulf, according to government data.

So, if I'm reading this right, there are hundreds, potentially thousands more Deepwater Horizon time bombs down there, and we have no clue what the status on them is.  None.  Zilch.  Bupkus.  And nobody's watching them to check.

And this has been going on for years, a graveyard of old, leaky cement plugged old wells.  Yes, these wells aren't filled with millions of gallons of oil anymore, but that doesn't mean they're safe, either.  The ones being slated for temporary abandonment that still DO contain oil...like Deepwater Horizon...are still out there and primed like land mines.

Great.  I needed some good news today.