Last Call

Dennis Kucinich feels like a man with a bullseye on his forehead.  As they say, it's not paranoia if they really are out to get you.

The state of Ohio will lose two congressional seats thanks to the latest U.S. Census figures, and liberal stalwart Dennis Kucinich is worried his seat is on the chopping block.


In an e-mail to supporters Wednesday, the seven-term Democratic congressman and two-time presidential candidate says the Republican-controlled Ohio legislature is likely to eliminate his heavily Democratic Cleveland-area district.

But Kucinich says he’s not just going to stand by while that happens.

“I will not wait until a new Ohio map is produced to begin this crucial discussion of the consequences of congressional redistricting,” writes Kucinich. “I will not wait until the Ohio Legislature produces a new map to start thinking of the options. The question will not be: Who is my opponent? The question will be: Where is my district? Seriously.”

If Ohio was going to lose only one district, I figured Kucinich would actually be okay.  (First target would actually be Tim Ryan in OH-17), but with two going, Kucinich's digs will be folded into Marcia Fudge's heavily urban Cleveland district, OH-11 and you have to figure Betty Sutton and Tim Ryan will see theirs folded together too.

No doubt in my mind that Ohio will get rid of two Democrats, and phasing out Kucinich would be a big symbolic head to collect.

Turn On The Lights, Watch The Roaches Scatter, Part 54

Today's Foreclosuregate story comes from Barry Ritholtz.

In one of the more bizarre foreclosure cases, Bank of America is threatening to throw a West Hartford family out of their home even though the couple never missed a mortgage payment.

The largest bank in the United States earlier this month notified Shock Baitch and his wife Lisa (Friedman) Baitch that foreclosure action will start today – Christmas eve – unless the couple agrees to put their home up for a forced sale.

Why? Because another unit of Bank of America erroneously reported to credit agencies that the family was seeking a loan modification, ruining their credit rating and as the result putting their mortgage into default.

All this is happening even though the bank – after admitting it erred and sent a letter of apology in September – handed this case to a special unit at Bank of America that is charged with dealing with severe customer issues. It promised to notify the credit reporting agencies that the couple were not deadbeats, but were good credit risks.

This is the nightmare scenario for both the banks and for mortgage holders.  Banks foreclosing on people on Christmas Eve because the bank can't get their own paperwork straight?  Exactly how many people will that motivate to try to buy or sell a home in 2011?  Would you, knowing that foreclosure paperwork is so badly fraudulent that a bank will foreclose on somebody who was never even late on a payment?

Barry breaks down the cause of the problem quite effectively:

The obvious answer is the illegal processing of foreclosures. When lawyers, bank executives and there outside contractors are paid to violate the law, the local State Attorney General needs to prosecute these felons. Where Lawyers perjure themselves, swearing they have verified, reviewed and confirmed foreclosure files they never so much have looked at, they need to be disbarred.

Its called the rule of law, and its long past time we actually enforced it.

The legal and economic chain reaction from Foreclosuregate is the number one reason why 2011 is going to be a nightmare year for a whole lot of Americans.  It's always darkest just before it goes pitch black.  No wonder today's third quarter 2010 foreclosure numbers are so dismal.

Newly initiated foreclosures increased to 382,000 in the third quarter, a 31.2 percent jump over the previous quarter and a 3.7 percent rise from a year ago, the Office of the Comptroller of the Currency and the Office of Thrift Supervision said in their quarterly mortgage report.

The number of foreclosures in process increased to 1.2 million, a 4.5 percent increase from the second quarter and a 10.1 percent increase from a year ago, according to the regulators. 

The housing depression continues unabated. Gary Shilling now says another 20% housing price drop is in the works by 2012.  If he's right, America is in serious trouble.  You think there'd be a sense of urgency in Washington but...naah.

The Bite Was Worse, Actually

In the New York Times, Michael Shear hails Obama for thanking the Eagles for giving Michael Vick a second chance.  Vick did his time, and this was a public demonstration of forgiveness to those who have paid their debt to society.  It is not clear whether Obama knew his words would be published (though I'm sure he realized the likelihood).  The article praises Obama for speaking up on social issues, even awkward ones that may not benefit him.  I agree that this is a good thing, and Obama did it in a way that did not trivialize the seriousness of Vick's crimes, but focused on the positive.

Let me be perfectly clear when I say I am an animal lover.  I've sacrificed to feed and heal animals who have been mistreated.  My husband lovingly refers to our property as "Bambi's hideout" because I feed squirrels and birds, and make sure the bunnies have food in the winter.  I felt sick to my stomach when I watched Vick's half-assed-at-best "apology" before he was sentenced to do time.  But when he came out, he was different. Not a changed man, no complete reform or grand awakening.  But he had finally realized the seriousness of his actions, and showed a little humility and compassion in following interviews.  It's hard to tell truth from publicity, but it even appears he has gone above what was required of him to speak out about animal cruelty and make amends.  The self-serving guy who wasn't sorry, just sorry he got caught seemed changed.

Should Vick have a second chance?  Yes.  When you pay your debt, you owe no more.  I'm of the opinion that he owed more, considering the crimes he committed, but I also keep in mind that his crime was in no way relevant to his job.  If he had owned a kennel, it would be different.  Vick is where he should be, and Obama did a good thing for the social stigma of having been in jail, something that touches an astonishing number of families.  PETA will be ticked, and I can't say that I blame them for that.  In the end, this whole situation has shed light on a troubling problem, and I think the publicity from Vick's fall from grace did a lot of good for the cause.  Now Vick gets a second chance.  I hope for his sake that he makes the most of it.

By The Time I Get Out Of Arizona

Looks like Republican Gov. Jan Brewer's immigration law has cost the state hundreds of millions in federal dollars as the state's 2010 Census numbers are far below predictions, meaning less federal money for the Grand Canyon State.

Michael McDonald of George Mason University explains.

The federal government uses these population counts to distribute federal dollars to the states. According to Andrew Reamer at the Brookings Institution, in 2008 the federal government distributed $866.5 billion in funds to the states based on the census population counts. Your state gets its share of the federal pie based on the number of people that are counted by the census. If there were $866.5 billion in funds to disperse in 2010, each person would be worth $2,807 in federal money to your state.

Note that I say "people" not "citizens." This is where Arizona may have lost as much as three-quarters of a billion dollars annually in federal funding. The Arizona state government could have easily put this money to good use, as according to the New York Times, the state faced a $2.6 billion shortfall in fiscal year 2011.

I come to this conclusion by comparing what the Census Bureau expected Arizona's population to be and what it really was -- or at least who was counted. Throughout the decade, the Census Bureau demographers estimate each state's population. The most recent estimates give a sense of what the Census Bureau thought the April 1, 2010, population of Arizona would be.

So, the Census Bureau demographers projected Arizona's population to be 6,668,079 but the actual number was 6,392,017 or 276,062 fewer people than what the Census Bureau expected to find. This was the largest shortfall of any state in absolute numbers. Since Arizona is a mid-sized state, as a percentage of the population this shortfall was nearly twice that of the next nearest state, Georgia.

So why was the Census Bureau wrong? Or were they wrong? It is not unreasonable to surmise one of two things were contributing factors: Either Arizona's undocumented population did not want to stick around in the state or they did not think it was wise to fill out a government form -- even if their confidentiality is strictly guarded by the U.S. Census Bureau. If the shortfall was due to the latter, then at $2,708 a person, Arizona lost out on $775 million in federal grants per year.

Arizona's Census estimates were short by more than twice any other state?  Seems to me the state just found out the price for driving people away with an odious, draconian law.  And considering Arizona's $2.6 billion budget hole, well this is bad, bad news.

So who's going to pay the price for Arizona's immigration law?  Arizona taxpayers just lost $120 in federal dollars per person.

How's that "tough law" working out for you guys now?

Dreams Of A Moose Cut Loose

From the Well Duh department:


Washington (CNN) – As the start of the next presidential campaign nears, a new national poll suggests that President Barack Obama's tax-cut compromise with congressional Republicans did not hurt his standing among Democrats, while former Alaska Gov. Sarah Palin may be dropping in the eyes of Republicans.


To which I can only say hallelujah, there is a glimmer of hope for us, ladies and gentlemen.  Obama is miles from perfect, but he's accomplished a hell of a lot in his time in office.  Palin is a quacking, evil little troll whose popularity depends on spin doctors and controlled interviews.


And by God, some people can see the difference.

Five. Five Dollar. Five Dollar Gas Bomb.

Former Shell Oil exec John Hofmeister is warning of $5 a gallon gas before the next Presidential election.

"I'm predicting actually the worst outcome over the next two years which takes us to 2012 with higher gasoline prices," John Hofmeister said in a recent interview with Platts Energy Week television.

Tom Kloza, chief oil analyst with Oil Price Information Service, agreed that Americans would see $5 a gallon gas but told CNN that he did not believe it would happen in 2012. "That wolf is out there and it's going to be at the door...I agree with him that we'll see those numbers at some point this decade but not yet."

"The demand is still sluggish enough in some of the mature economies," he said.

Hofmeister also predicted that demand would outstrip supply before the end of the decade.

"When supplies run low and the demand is still high, many areas will start to run out, with gas stations having no supplies," World News Insight observed. "Ultimately rationing could then come into force. We could be looking at a return to the 1970's."

Scary stuff, but personally all I think $5 gas would do is lead directly to another economic crash.  It's no coincidence that $4.25 gas in July 2008 preceded the September 2008 meltdown by a matter of just months.  High gas prices took out billions from disposable income, which had a major ripple effect.  We're starting to see that same bubble build up again.  Granted, to get to $5 gas around here in the Cincy area, we'd have to see oil hit $175 a barrel or so.  Still, gas and oil prices have only gone up this winter, topping $90 a barrel on the way to $100.

We'll see where this goes.

The Future Of Israel

The Atlantic's Jeffrey Goldberg explores the endgame of the current political position of Israel towards Palestine, where a two-state solution is unacceptable.  What happens to the Palestinians absorbed by Israel's expansion into the West Bank and other areas?

Is it actually possible that one day Israelis -- Jewish Israelis -- would choose to give up democracy in order to maintain Israel's Jewish voting majority? Some people, of course, argue that Israel has ceased to be a democracy, because there is nothing temporary about the 43-year-old occupation of the West Bank. I believe it is premature to talk about the end of Israel as a democratic state -- mainly because the disposition of the West Bank is still undecided --  but I can't say that the thought hasn't crossed my mind that one day Israelis will make the conscious, active decision to preserve the state's Jewish character instead of its democratic character (I use the word "Jewish" in the demographic sense, not the moral sense, obviously).

As I wrote last week, there's very little Israel's right-wing government has done in the past year or so to suggest that it is willing to wean itself from its addiction to West Bank settlements, and the expansion of settlements bodes ill for the creation of a Palestinian state -- and the absence of Palestinian statehood means that Israel will one day soon confront this crucial question concerning its democratic nature: Will it grant West Bank Arabs the right to vote, or will it deny them the vote? If it grants them the vote, this will be the end of Israel as a Jewish state; if it denies them the vote in perpetuity, it will cease to be a democratic state.

The fact that anyone in the Village is even asking this question is something of a revelation.   It's such a basic, simple question that nobody bothers to ask it.  What democratic rights do Palestinians have in Israel?  If Israel refuses to even consider a two-state solution, then what of those rights?  Goldberg goes on to say that he believes that Israel will continue down this path, and may even declare that Palestinians are citizens of Jordan, and can vote there.

But for the life of me, I can't remember when any columnist in an American magazine actively questioned Israel's democratic future.  Commentary's Alana Goodman dismisses Goldberg's concerns about Israeli Foreign Minister Avigdor Lieberman, rumored to be Israel's next hard-line PM.

Say what you will about Lieberman but, actually, his position has always been that some Arab towns and villages that are part of Israel should be given to a Palestinian state while Jewish settlement blocs are annexed to Israel. That may not be what the Palestinians want or even what many Israelis want but the outcome Lieberman desires would be a democratic and Jewish state.

Which would be true, but again, that would involve the creation of a Palestinian state.  So far, that hasn't happened.  And I don't see it happening anytime soon, either.

StupidiNews!

• A federal judge has dismissed Joe Miller's recall lawsuit against Sen. Lisa Murkowski, clearing the way for her election certification tomorrow.
• Iraqi PM Nouri al-Maliki says he wants US troops out of Iraq by the end of 2011.
• Sarah Palin's emails as Governor of Alaska may not be released for another six months as Alaska Republicans continue to delay release requests.
• US corporations want President Obama to give them a tax holiday on nearly a trillion dollars worth offshore earnings, taxes that most corporations avoid anyway.
• Apple faces a California lawsuit saying that its iOS system collects enough data on users in order to be able to identify them.

Last Call

The one thing that Foreclosuregate has really done is rip the cover off of the secret fraud factory the banks have been running for years in the mortgage business.  Now the institutional investors that bought this toxic mess are suing to get their losses back.  It's one thing when a small company does it, but when the nation's biggest auto insurance company weighs in with a big-ass lawsuit against the nation's biggest bank over this, you know it's about to get ugly.

Allstate has sued Bank of America and 18 other defendants over losses it said it suffered on more than $700 million of mortgage debt it bought from Countrywide Financial.

In a complaint filed Monday in Manhattan federal court, Allstate, the largest publicly traded U.S. home and auto insurer, alleged that Countrywide misled it into believing the securities it bought were safe, and that the quality of residential home loans backing them was high.

"Defendants knew the loans offloaded onto Allstate were a toxic mix of loans given to borrowers that could not afford the properties, and thus were highly likely to default," the complaint said. Allstate suffered "significant losses" as a result, the complaint said. 

Among the defendants are several former Countrywide officials, including long-time Chief Executive Angelo Mozilo. 

Allstate won't be the last company to sue the banks over subprime losses either.  And these two corporate heavyweights have the money and the muscle to make this a full 15-round fight.  But it looks like the tale of the tape strongly favors Allstate.  Tyler Durden:

Allstate's sample sizes of Mortgage Loans are more than sufficient to provide statistically-significant data to demonstrate the degree of misrepresentation of the Mortgage Loan characteristics. Analyzing data for each Mortgage Loan in each Offering would have been cost-prohibitive and unnecessary. Statistical sampling is an accepted method of establishing reliable conclusions about broader data sets, and is routinely used by courts, government agencies, and private business. As the sample size increases, the reliability of its estimations of the total population increase as well. Experts in RMBS cases have found that a sample size of just 400 loans can provide statistically significant data, regardless the size of the actual loan pool, because it is unlikely that so large a sample would yield results vastly different from results fro the entire population.

In other words, Allstate used statistical analysis to show that no matter what random package of loans that Countrywide sold them, the loans themselves were all fudged.  In the most damning evidence, Countrywide claimed that 0% of the instruments they sold Allstate contained any mortgages that were underwater, i.e. not a single mortgage loan packaged for investment had a homeowner who owed more than the home was worth.

That of course was complete bull.  Every single tranche of mortgages that Allstate inspected had at least some underwater mortgages in it.

Every. Single. One. Ranging from 3.3% to 14.5%.

Let's say you are a major investor and are looking for something to sink capital into. I come to you and say "I have a chain of used car lots I would like you to invest in." You say, "Okay, let's see your inventory."

I show you all this paperwork that says these cars are popular and will sell well. I say to you "I promise that zero of these cars are defective." You go "Okay, let's invest."

And then you lose your shirt, and you find out later that I was lying about the car's prices and values, and you do some digging on your own and find out from a random audit of my car lots that 3.3% to 14.5% of the cars sold from my lot were lemons. You'd want your damn money back.

Something pretty similar happened here. Allstate is suing to get its money back and they have a pretty devastating case, according to the filing. Countrywide flat out lied.

Mmm, fraudtastic.  This one's going to get nasty, folks.

Stupidinews: Deadly Serious

Eight people were killed in a New Orleans fire.  The building was abandoned, and the people are thought to be homeless folks taking shelter from a rare blast of freezing weather.  While there has always been a large homeless population in New Orleans, this will hopefully drive more people to take advantage of shelters, where they are safer on many levels.

Five teenagers died of carbon monoxide poisoning after leaving a car running in a closed garage below the room they were using.  This is still being investigated, but it seems to be a mistake that took the worst turn possible.  They had come together to celebrate the 19th birthday of one of the people present.

Oklahoma resident Mark Sedille is facing murder charges after fatally shooting his wife in the head.  According to Sedille, they routinely used a gun in their fantasy play in the bedroom.  This time the gun was loaded, and Rebecca Sedille died when the gun discharged.  Sedille is currently held, but formal charges have not been filed because the police report has not reached the prosecutor.

Home, Home I'm Deranged Part 13

The double dip housing depression continues.  Good ol' Asariel snags the Case Shiller numbers for October.

Arriving in the howling arctic wastes that were once the eastern seaboard of the United States of America, the S&P/Case-Shiller Home Price Index is out. The 10-City Composite increased (barely) 0.2% while the 20-City Composite fell 0.8%, and home prices fell in all 20 metropolitan areas covered by the index.

Pay attention to that chart in the PDF:  home prices are officially on the decline as the 20-city composite is negative and the Case Shiller numbers are always 3 months behind.  The real extent of the damage won't be known for some time, but it's going to be fugly.  Remember, for a vast majority of the American people, what little wealth they have is represented by their homes.

That wealth is vanishing as home prices are back into plunge mode.

As bad as 2010 was, 2011 is going to be friggin' brutal.

Double G Has To Regulate Once Again

I may not always agree with Glenn Greenwald, but the dude can shut people down when he kicks in the Indignation Overthruster.  Respect.



Here he dismantles CNN's Fran Townsend (and later, Jessica Yellin) over the issue of Julian Assange and WikiLeaks.  Professor Greenwald teaches some people badly in need of some basic lessons in journalistic integrity and the role of the adversarial press.

Best line:  "Good investigative journalists – maybe CNN doesn’t do it – but good investigative journalists work their sources all the time."

Regulators, mount up.

Depends On What You Mean By "Deficit Control"

House Republicans plan to change budget reconciliation (you remember that, right?  The process that Republicans used many, many times before and brutally attacked during the health care debate as tyrannical?)
in order to use the procedure to prevent spending increases from adding to the deficit...but tax cuts that add to the deficit are 100% okay!

The Center on Budget and Policy Priorities examined the GOP's proposed new rules for the House, and here's what they found.

The new rules would stand the reconciliation process on its head, by allowing the House to use reconciliation to push through bills that greatly increase deficits as long as the deficit increases result from tax cuts, while barring the use of reconciliation in the House for legislation that reduces the deficit if that legislation contains a net increase in spending (no matter how small) that is more than offset by revenue-raising provisions.

To translate: Bush tax cuts are fine, but, say, paying for infrastructure projects by taxing carbon would be forbidden, even if the net result would be a reduction in the deficit.

This is just one key feature of the GOP's playbook: CUT/GO. Under CUT/GO, all new spending has to be paid for, but tax cuts do not. Additionally any new spending must be paid for with parallel spending cuts elsewhere in the budget -- not with tax hikes. So unemployment benefits couldn't be paid for by closing a corporate tax loophole. But a corporate tax loophole could be widened without requiring any offsets.

The practical implications for now are nil. The Democrats still control the Senate, and, even if they didn't, the Senate's rules are more arcane and harder to change. But Democrats are currently weighing a few modest changes to other Senate rules, and you could imagine Republicans in a future Congress taking steps to make tax cuts even easier to pass.

The CUT/GO era is upon us.  Republicans plan to pay for tax cuts for the wealthy -- or pretend to pay for them -- by cutting as much social spending as possible.  Anyone who voted Republicans in to be fiscally responsible really needs to have their head examined, because they are telegraphing their moves to pile on the deficit months in advance.

Epic Governing The Jersey Way Fail

Profiles in leadership time as New Jersey's GOP Gov. Chris Christie and Democratic Mayor of Newark Cory Booker demonstrate what to do in case a major blizzard hits the Garden State...and what not to do.

Following up on an item from yesterday, New Jersey Gov. Chris Christie (R) and his lieutenant governor were told Sunday about the blizzard barreling down on the Garden State. Soon after, they left town at the same time, with Lt. Gov. Kim Guadagno (R) and her family flying to Mexico, and Christie and his family going to Disney World in Florida.


It left state Senate President Stephen Sweeney (D) in charge as the acting governor, and by all appearances, he's handling everything fine -- he declared a state of emergency, dispatched road crews, coordinated with state agencies, and activated the National Guard. The response seems to have gone fairly well, and Sweeney lifted the state of emergency this morning.

But there's still the political fallout to consider. Many are questioning why the Christie administration allowed both the governor and lieutenant governor to go on vacation at the same time, despite warnings about the impending storm. Others have noted that the governor isn't bothering to rush home to deal with the situation.

So both the Governor and the Lt. Gov. were told over the weekend that the state was going to get nailed Sunday night by a major snowstorm, and both of them left town as fast as they could for sunny points south of there.  Nice.

So what did Mayor Booker of Newark do in contrast?

Perhaps even more interesting was how Cory Booker spent his day. Booker, the Democratic mayor of Newark and likely gubernatorial candidate in 2013, grabbed a shovel to help seniors and the disabled, delivered diapers to a housebound mother, helped dig out a stuck police car, and tended to a woman in labor who was waiting on an EMS team to arrive.

So the Republicans bolt town and leave the Democrats to do the responsible governing part of the Governor's job when a mess comes barreling down the pike, and they come through admirably.  Meanwhile, Gov. Christie might be back by the end of the week from Disney World and the important things:  gym, tan, laundry.

Hey, governing is freakin' hard.

EPIC FAIL.

A Whole Wide World Of Bank Bailouts

Boy, we sure are generous as Americans, taking it on the chin here at home while taxpayers helped to bail out non-US banks.  CNBC and the Financial Times:

More than half of lending under the Fed’s term auction facility – the largest of its crisis programs – went to foreign banks. Details of the varied uses to which they put it may add to political criticism of the Fed.

The Taf was set up in December 2007 to provide one-month loans to creditworthy banks as markets dried up for lending longer than overnight. In August 2008, it began offering three-month loans as well.

Rabobank of the Netherlands and Toronto-Dominion of Canada, two of the only banks in the world with triple A credit ratings, used more than $20 billion in cumulative Taf loans.

Ed Clark, TD chief executive, said that using Taf was logical even though his bank never had a liquidity problem. “That wasn’t how we made a lot of money. But you make a dollar here, you make a dollar there. What’s the spread you make on a billion dollars?” he said.

In the summer of 2008, TD was borrowing $1 billion from TAF at rates of between 2 and 2.5 percent. For that borrowing it used the lowest quality – and hence highest yielding – collateral acceptable to the Fed.

More than 80 percent of its collateral had a triple B credit rating at a time when such bonds yielded about 7 percent. TD could therefore have made a notional gross spread of about $4m a month during 2008.

So not only were the big US banks making money off this scheme, taking worthless commercial paper, giving it to the Fed at face value as collateral, and getting cheap loans back in return, but overseas and Canadian banks were taking advantage of the TAF as well.

Keep in mind this all happened in early 2008, too -- before Obama took office, this was all Hank Paulson's idea -- and ask yourselves why the same Republicans who are looking to make Americans eat billions in spending cuts are the same guys who had no problem giving away taxpayer dollars to banks in Canada and Europe.

Think about that the next time a Bush-era Republican launches into another tirade about how we must control spending.