Also The Sun Is Hot And Burns Stuff

New frontiers in hard-hitting journalism:

With the unemployment rate at a 25-year high, employers indicate that hiring isn't likely to pick up anytime soon, according to a staffing firm survey released Tuesday.

Well no shit, Sherlock.

The Strange Case Of Chas Freeman

You'd think Poppy Bush's choice as Saudi Ambassador would be acceptable to all sides as a bipartisan foreign policy expert and as Obama's nomination as National Intelligence Council chair. You would however be screamingly incorrect.

The GOP is attacking Freeman on his "lack of experience" but the real reason is that the neocons believe Freeman is too close to the Saudis in particular, and not close enough to Israel, not to mention the larger goal of derailing Hillary Clinton as SecState. The Israel lobby in the US has targeted Chas Freeman for destruction as a result and are bringing enormous pressure to bear from the right.

But the stroke that may end Chas Freeman's career is coming from, of all places, the Left.

One new development, revealed here for the first time, which is likely to further damage Freeman's already battered standing is that the former ambassador advocated creating a national identity system in the US as a part of the war on terror. During a 9/11 Commission interview, Freeman remarked that of three major changes the US government should make to effectively combat terror, one was that "the United States should implement a national identity system, so we better know who is who."

This development could raise fresh objections to Freeman from both Republicans advocating leaner and less involved approaches to government and Democrats pushing for more robust civil liberty protections. Additionally, revelation that Freeman advocated putting a national identity system in place might also raise questions from the few remaining left-of-center commentators and outlets which support Freeman's appointment.

Now, that's a hit job if I've ever seen one, and for the HuffPo to go along says to me that the Israel lobby has plenty of neocon friends on the Left, too.

And it seems nobody in Washington is willing to come to Freeman's defense, either. The rancor against Freeman shouldn't be surprising, as far as the Israel lobby is concerned, he doesn't past the loyalty test and might actually tell Obama things about Tel Aviv that could almost be considered the truth.

But with the coming Netanyahu administration in Israel, Freeman will almost immediately become a point of contention. They don't like him, and the irony is apparently lost on everyone that an American foreign policy adviser is being accused of being under undue foreign influence by another foreign country who clearly means to bring undue foreign influence to bear on his appointment.

StupidiNews!

• A study of homelessness shows that 1 in 50 kids are without a home in the US.
• President Obama has asked all Federal agencies to review any signing statements by Bush.
• The five largest US banks could face hundreds of billions in additional derivatives losses.
• Ultra-right wing racists are gaining political power in Britain with the economic crisis.
• Homeland Security's top cybersecurity expert has resigned, stating a lack of funding and NSA interference.

The GOP Plan, Con't

The Plan is not to save the country. The Plan is to bring down the Democrats. And we have confirmation of that by none other than my favorite GOP person ever, The Odious Patrick McHenry.

McHenry’s description is buried in this new article from National Journal (sub. only):

“We will lose on legislation. But we will win the message war every day, and every week, until November 2010,” said Rep. Patrick McHenry, R-N.C., an outspoken conservative who has participated on the GOP message teams. “Our goal is to bring down approval numbers for [Speaker Nancy] Pelosi and for House Democrats. That will take repetition. This is a marathon, not a sprint.”

McHenry’s spokesperson, Brock McCleary, tells me his boss is standing by the quote.

So yes, the Republican Party has no intention of working with the administration in order to solve any of the problems we all face together as Americans. The Odious Patrick McHenry would in fact rather attack the Democrats over and over and over and over and over again until the next mid-term election.

That's his idea of representing NC District 10. Not solving the double-digit unemployment problem in Catawba, Lincoln, Gaston, and surrounding counties in the greater Hickory area (where Zandarparents live and work and where I grew up). No, his goal is attacking Nancy Pelosi's approval ratings while the furniture plants and cable mills lay off more and more people.

My god, there has to be somebody who can run against this idiot.

Defending Timmy The Invisible Boy

Over at The New Yorker, James Surowiecki defends Timmy.

Secretary of the Treasury Tim Geithner’s job is not getting any easier. Geithner has yet to have any of his seventeen deputies confirmed, and yesterday two expected nominees for Treasury positions withdrew themselves from consideration. The withdrawals seem to have been in part because of frustration with the elaborate vetting process that the Obama Administration has put in place, as well as concern over anticipated attacks from Congressional Republicans. But I have to wonder also whether the withdrawals, and the difficulty Obama is having filling these jobs, aren’t also the result of the endless and vituperative stream of attacks on Treasury in general and Geithner in particular, attacks that are coming from both the left and the right.

Point there. The GOP is indeed trying to sabotage Timmy as much as they can so they can say Obama failed. Part of that is refusing to allow any deputies to be nominated at a time where Timmy is sailing the ship by himself. Would you want to work for Geithner right now?

On the other hand, the rest of Jim's thesis is pure bullshit:

Geithner has been Treasury Secretary for little more than a month, yet the calls for his resignation are already coming fast and furious. More important, the attacks on him don’t, for the most part, take the form of reasoned disagreement. Instead, they assume, and assert, that if, say, Geithner is against nationalizing the banks, he is either stupid or corrupt, when it seems more likely that he’s just reached a different conclusion about the risks and rewards of nationalization. (Henry Blodget’s call, today, for Geithner’s resignation ultimately boils down to saying that Geithner should go because he doesn’t agree with Blodget about the virtues of nationalization.) Treating disagreements over policy issues as prima facie evidence of evil intentions, or as a reason for firing, creates an environment for policymaking that’s toxic, and makes it harder to get good people to work in the public sector. And at a time when we need government more than ever, that’s just not a good thing.

The reasons I'm calling for Timmy to go away is that we don't know what his conclusions about anything are. He keeps trying the same exact plan over and over again, which is attempt to magically remove all the bad debt from banks without sticking the taxpayer with it, and somehow allowing the banks and stockholders to keep all the good assets for themselves, and he can't do it. The reason he can't do it is because he's trying to do something impossible and he keeps wasting America's time trying to come up with new and exciting ways to give the banks all their money and fuck the taxpayer over, and he's hoping nobody will notice.

People then actually notice that whatever plan he pops out every couple of weeks looks suspiciously like allowing the banks to keep all their assets and the taxpayer getting stuck with mountains of toxic debt. Then they call him out on it. Then he says "We're working on it" and floats a new trial balloon that then manages to once again look suspiciously like allowing the banks to keep all their assets and the taxpayer getting stuck with mountains of toxic debt.

It's ludicrous. It's like a teenager coming up with plan after plan to convince Dad to let him borrow the Audi A8 to go to Vegas. It's not going to happen, but the teenager plugs along anyway, operating on the theory that if he just hits the right balance, he can get Dad to totally go along with it.

We don't have time for this bullshit. If Geithner can't come up with a better plan, then replace him with somebody who can. And the person who needs to ultimately make that call is Barack Obama.

Otherwise, yeah, it really will be the Obama Depression. Dig?

The Costs On Plan N

Matt Yglesias theorizes the reason why Obama and Timmy The Invisible Boy haven't pulled the trigger on Plan N yet is because they know it'll cost trillions of dollars, and Congress isn't about to give that to them.

Nationalizing banks would mean nationalizing the banks’ losses. That would cost a ton of money. Money that congress would need to authorize. If I were a member of congress, I would gladly vote to appropriate the funds. But would the actual members of congress? You can see where doubts might creep in. Indeed, where I giving the president advice on legislative matters I would say, at a minimum, that if it’s at all possible it would be better to just keep delaying on the bank issue until the 2009 appropriations bill and the 2010 budget have both passed, lest the price tag of the banking fix drag the rest of the administration’s agenda down with it.

Which is a good point. The problem is the "keep delaying on the bank issue" part, which is rapidly becoming a non-viable option. At some point the clock becomes the enemy in this game (and increasingly becomes the friend of the GOP). Obama's got one last real shot at this before Congress tells him no more money, and he has to make it count. I appreciate the situation. But if he doesn't act soon, he'll no longer have the luxury of choice.

Oh Yeah, And On Top Of All This

Scientists are growing increasingly worried that carbon reduction efforts will have at best a "50/50 chance" of keeping global temperatures under the point of no return.(h/t BooMan Tribune)

The chilling forecast from the supercomputer climate model of the Met Office's Hadley Centre for Climate Prediction and Research will provide a sobering wake-up call for governments around the world, who will begin formally negotiating three weeks today the new international treaty on tackling global warming, which is due to be signed in Copenhagen in December.

The treaty, which is due to replace the 1997 Kyoto Protocol, is widely seen as the Last Chance Saloon for the community of nations to take effective action against the greatest threat the world has ever faced. But the Met Office's new prediction hits directly at the principle guiding all those hoping for an effective agreement, with the European Union in the lead: that of stopping the warming at two degrees Centigrade above the "pre-industrial" level (the level of average world temperature pertaining two hundred years ago).

Today, world average temperatures stand at about 0.75C above the pre-industrial, and many scientists and politicians agree that further increases have to be stopped at 2C if catastrophic impacts from the warming are to be avoided, ranging from widespread agricultural failure and worldwide sea level rise, to countless species extinctions and irreversible melting of the world's great ice sheets.

But the Hadley Centre's simulation indicates that even if global emissions of carbon dioxide, the main greenhouse gas causing the warming, were to be slashed at a very high rate the chances of holding the rise at the C threshold are no better than even. The scenario, prepared for Britain's Climate Change Committee, the body recommending the UK's future carbon "budgets", visualises world CO2 emissions peaking in 2015, and then falling at a top rate of 3 per cent a year, to reach emissions of 50 per cent below 1990 levels by 2050.

At the moment, global emissions are thought to be rising at nearly 3 per cent a year – so turning that into a 3 per cent annual cut would be a gigantic slashing of what the earth's factories and motor vehicles are pumping into the atmosphere. There is as yet nothing remotely like that on the table for potential agreement in Copenhagen, and if a deal of this ambition were to be done, it would be regarded as a triumph.

Yet even with that, the Hadley Centre research suggests, the chances of keeping the rise down to about 2C by 2100 would be only 50-50. Furthermore, the simulations suggest that there is a worst-case scenario – about a 10 per cent chance – of the rise by the end of the current century reaching, even with these drastic cuts, a level of 2.8C above the pre-industrial, which is well into disaster territory.

There's a cheery thought, eh? As Steven D points out, banks don't matter if they're underwater.

Literally.

The Next Tsunami

I've been talking about the coming commercial real estate disaster for some time now. It's no longer "coming" but very much here now.(emphasis me)

Cleveland and Detroit lead the U.S. in commercial mortgage delinquencies, a sign the housing crisis that brought down Wall Street is spreading beyond the residential market.

Office, retail, apartment and industrial properties with mortgage payments 60 days late or more rose to 3.93 percent as of March in the Cleveland area and to 3.75 percent in the Detroit area, according to data compiled by Bloomberg. The North American commercial property delinquency rate is 1.1 percent, according to Standard & Poor’s.

“There is really no part of the country being spared,” said Robert Bach, chief economist at Santa Ana, California-based broker Grubb & Ellis Co. “Cleveland and Detroit are just the first to feel the stress. They’re the canaries in the coal mine.”

The second year of the U.S. recession is reducing demand for commercial real estate after prices hit a record in 2007. The slump in housing and rising unemployment will probably take a toll on retail and office landlords, Bach said.

Loans secured by properties that were written assuming rental growth have been unable to meet targets, leading to increased defaults. The delinquency rate for North American commercial real estate loans in mortgage backed securities may triple in 2009 as loans default, Standard & Poor’s credit analyst Eric Thompson said in a Feb. 17 statement.

Circuit City left behind 18 million square feet of empty retail space when it closed its doors for good yesterday, not to mention another 34,000 jobs lost. That will be repeated in empty malls, vacant strip storefronts, unused offices and hotels across the country at the retail-driven consumer economy grinds to a halt.

Space for rent signs will be popping up like weeds as the commercial real estate crashes and stores fold. Entire malls will go under as enough shops close to make the rest of the mall unprofitable as empty space goes unused. Millions of jobs will be lost as the retail sector disintegrates, causing more stores to close, etc.

In other words, the next stage of the recession/depression is upon us now. 10% U-3 and 20% U-6 by the end of the year are very, very conservative estimates.

A Graduate Course In Extortion

AIG is conducting a graduate course in extortion, costing you, me, and the government billions of dollars. If AIG is allowed to collapse, it could lead to global systemic meltdown of the world's financial systems, and they know it.

AIG warned of turmoil around the globe if the government allowed the insurer to fail, adding “it is questionable whether the economy could tolerate another shock to the system that a failure of AIG would produce.” The value of the U.S. dollar might fall, Treasury borrowing costs could rise and the agency would face “doubts about the ability of the U.S. to support its banking system,” according to the presentation, parts of which were reported earlier by the New York Times.

Under the scenarios sketched by AIG, European banks that bought credit-default swaps might need to raise $10 billion in capital and could face rating downgrades. Life insurance customers, their faith shaken in the industry, would redeem some of their $19 trillion in U.S. policies, overwhelming firms already weakened by the credit crisis, AIG said.

The $38 billion in support provided by the firm to money- market funds would be in jeopardy, AIG said, possibly forcing some to “break the buck.’’ The term refers to a money fund that suffers losses so large that it must pay investors less than the traditional $1-a-share value that gives the short-term funds their reputation for safety.

It would be the collapse of Lehman, only much, much worse. The longer Obama refuses to pull the plug however, the worse the results will be when AIG finally gives out under its own weight of debt. Eventually, Congress will revoke Obama's credit limit for bailing out AIG, and when that happens...

Outside the U.S., where AIG operates in more than 140 countries, a collapse could lead to the “immediate seizure’’ of its businesses by regulators and could impair “the entire insurance industry within certain regions,’’ the presentation said, which added that its conclusions were “speculative’’ and a matter of judgment.

“Who knows if what they’re saying is true?’’ said Phillip Phan, professor of management at the Johns Hopkins Carey Business School in Baltimore. “A lot of it sounds like conjecture, that if AIG collapses the rest of the industry will, too. It’s a way of creating a crisis atmosphere and the sense you have to respond quickly.’’

Ahh, but investigating if AIG's collapse would indeed cause a global meltdown would reveal to the world that the global financial system itself is already insolvent. But Obama is running out of plays to call. In fact he's down to three, Muddle Along, Plan N, and Let 'Em Fail. Muddle Along is rapidly approaching the point where it's no longer a going concern. Congress will start demanding one of the two other actions. That leaves Plan N and Let 'Em Fail.

Democrats want Plan N. As we saw this weekend, the GOP wants Let Em' Fail. Now, remember the GOP plan: Destroy Obama, regain power. If Obama indeed lets AIG go under, and it nukes the financial system, they win. Of course they want the big banks to fail. They know doing so will take Obama with them.

So that really leaves Plan N, which the Republicans will now fight with every breath in order to either play out the clock with obstructionism so that something fails anyway, or force a failure by populist dint.

While AIG is certainly showing the government a graduate level course in extortion, the GOP is running a post-doctorate thesis in the long con, one where Obama gets pinned with the collapse of the banking system that they created themselves and Obama then inherited from Bush.

Thus, Obama has to risk the rest of his political capital on Plan N almost immediately. If he doesn't make the bold play, the GOP will eventually cut him off at the knees and the whole system will go under. Shelby doesn't want the banks to fail. He wants Obama to fail. The GOP is counting on an ignorant, angry populace to call for these taxpayer supported zombie banks to be put down the hard way, which would of course collapse it all and become Obama's Depression overnight.

Of course, the whole system might go under anyway. But Plan N is Obama's best (and only viable) option...and that goes for the rest of the world as well.

StupidiNews!

• President Obama plans to reverse Bush executive orders limiting stem-cell research, Republicans call it a "distraction."
• The World Bank says developing nations may have a $700 billion shortfall this year.
• Afghanistan's copper deposits may be the economic key to that country's future.
• Pharmaceutical giant Merck is buying fellow drug maker Schering-Plough for $41.1 billion.
• The RIAA continues to target individuals in music sharing lawsuits.

Last Call

K Drum on Plan N:

So: the FDIC can't run Citigroup and nobody in their right mind wants to buy them. On the other hand, with Citi's stock hovering around a dollar, their shareholders have already lost nearly their entire investment. Allowing Citi to fail would hardly cause them any more damage than they've already suffered. So why not just let them go under, as Shelby wants?

The answer is that we could do this. This was the gamble Ben Bernanke and Henry Paulson took last September when they allowed Lehman Brothers to fail — dammit, it's time to enforce some market discipline on these guys! — and their gamble failed spectacularly. The global financial system nearly collapsed even though Lehman wasn't all that big.

But hey — maybe Lehman taught everyone a lesson. Maybe all of Citgroup's creditors and counterparties have already priced in the possibility of default. You never know. And maybe if Citigroup fails, and they all end up with a bunch of worthless notes, they'll just shrug and go about their business.

Then again, maybe not. Maybe Citigroup really is too big to fail. And maybe if they fail, and all their creditors and noteholders and counterparties are stiffed, maybe they'll all fail too. And then all of their creditors and noteholders and counterparties will also fail. Etc. And then it's back to the dark ages for all of us.

Which is it? I don't know. All I can say is: Richard Shelby has way bigger balls than I do. Call me a wuss if you must, but I'm really not willing to gamble on nuclear meltdown, especially since I think the odds are pretty strongly in favor of Citigroup having the ability to take all the rest of us down with them if they collapse. Shelby, however, the ranking Republican member of the Senate Banking Committee, guardian of the nation's financial health, is apparently willing to just say "fuck it," roll the dice, and hope against hope for snake eyes.

Of course, this is precisely the kind of imbecilic, high-stakes gambling that got us into this mess in the first place. Maybe Shelby ought to think twice before deciding that the hair of the dog might get us out.

The really scary part is not that Kevin is right, it's that the time is rapidly approaching where we won't be able to save Citigroup, AIG, GM, GE, Bank of America, etc. and will indeed have to let them fail.

The spectacularly scary part is most likely a major counter-party bank in Europe is going to fail first, saving us the trouble of letting Shelby push the Big Red Button. The tsunami from the European banking system going under will then force Obama's hand one way or another. After all, AIG had to be saved because if it didn't, Europe would have folded and we would have followed.

But the banks are dying. They will not survive the year assuredly, and odds are pretty good they won't make it to July 4th. Many of those European banks are going to collapse sooner. They will take many of ours with it. It's just a matter of time, now. Europe, especially Eastern Europe and the Mediterranean countries like Italy and Greece, are on the verge of complete financial collapse. With one of those countries with the Euro as currency goes under, the Euro goes along with it, the European banks with the Euro, and then the whole ball of wax.

Checkmate.

Push The Button, Frank

Zandardad sent me this HuffPo article from former GOP operative Frank Schaeffer as he excoriates his former party completely and thoroughly, and it's pretty explosive stuff.

How can anyone who loves our country support the Republicans now? Barry Goldwater, William F. Buckley and Ronald Reagan defined the modern conservatism that used to be what the Republican Party I belonged to was about. Today no actual conservative can be a Republican. Reagan would despise today's wholly negative Republican Party. And can you picture the gentlemanly and always polite Ronald Reagan, endorsing a radio hate-jock slob who crudely mocked a man with Parkinson's and who now says he wants an American president to fail?!

With people like Limbaugh as the loudmouth image of the Republican Party -- you need no enemies. But something far more serious has happened than an image problem: the Republican Party has become the party of obstruction at just the time when all Americans should be pulling together for the good of our country. Instead, Republicans are today's fifth column sabotaging American renewal.

President Obama has been in office barely 45 days and the Republican Party has the nerve to blame him for the economic and military cataclysm he inherited. I say economic and military cataclysm because without the needless war in Iraq you all backed we would not be in the economic mess we're in today. If that money had been spent here at home on renovating our infrastructure, taking us toward a green economy, putting our health-care system in order we'd be a very different situation.

As the father of a Marine who served in George W. Bush's misbegotten wars let me say this: if President Obama's strategy to repair our economy, infrastructure and healthcare fails that will put our troops at far greater risk because the world will become a far more dangerous place. So for all you flag-waving Republicans who are trying to undermine the President at home -- if you succeed more of our troops will be killed abroad.

When your new leader Rush Limbaugh calls for President Obama to fail he's calling for more flag-draped coffins. Limbaugh is the new "Hanoi Jane."

Do read the entire thing, it's breathtaking, no-holds-barred stuff...and it's 100% correct. The GOP has reduced itself to a cheap parody of a responsible opposition party. It has so utterly failed at its own ideals that it doesn't represent anything anymore other than contrarian reactionary drivel. It is the party of insulting, childish paranoia, a group so steeped in its own delusionary hatred that it cannot see that it is tearing the country apart.

But what did you expect?

Old, Tired Thinking

After 9/11, Republicans repeatedly accused Democrats of having a "pre-9/11 mindset" that didn't take into account how the world had fundamentally changed as a result of September 11, 2001. I'm glad to see somebody is calling out Republicans (and more than a few Democrats) for now having a "pre-recession mindset."

What are we left with? Republicans are pushing the same tax cuts they wanted before the recession. They're making the same arguments about spending they offered before the recession. They're engaged in the same petty games they enjoyed before the recession. In the midst of "an all-hands-on-deck emergency that's as trying as war," and in "the throes of a catastrophic economic crisis," the failed minority party, ignoring the election results, public opinion, and everything we know about economics, have the same approach to the economy that they had at this point a year ago. And the year before that. And the year before that.

In fairness, the administration is not without fault. Too many Treasury Department offices are empty, in large part because of the administration's vetting process. For that matter, administration officials, as Paul Krugman explained this morning, "don't want to face up to the dire state of major financial institutions because it's very hard to rescue an essentially insolvent bank without, at least temporarily, taking it over. And temporary nationalization is still, apparently, considered unthinkable."

But at least the president and his team recognize the crisis for what it is. Perhaps, one of these days, Republicans will shake their "pre-recession mindset" and improve the government's ability to respond to the economic 9/11.

And that's true, all the way across the board. It's time for Plan N, guys.

Bite the bullet and do it.

Can't Have It Both Ways

John Cole comes up with a very good point today:

I don’t get it. The Republicans and some in the media are calling this the Obama recession and the Obama bear market and the Obama economy, but this says it will be the longest recession on record. Yet Obama has only been President for a few weeks. The math just doesn’t seem to work.

Sometimes I think the media and the Republicans are just making shit up.

Well of course they are. That's the whole point of the goddamn Village. You see, it's both the longest recession ever and it's all Obama's fault for not fixing it in his first six weeks in office.

Clearly we should impeach. After all, six weeks is just too much time to waste by giving it to the apparently intellectually inferior and narcoleptic Obama.

Zandar's Thought Of The Day

Brad at Sadly, No!:

Here’s the deal, dudes: if the economy is not recovering by mid-2010, you can kiss the Democrats’ hold on the House of Representatives bye-bye. If the problem persists beyond that, you can say hello to President Moose-Eater in 2012.

The point is, cleaning up the banking system has to be the Obama administration’s #1 priority. If they fail at that, then every other worthwhile initiative — from national health care to investments in green energy — will fall by the wayside and the country will be even worse off than it is right now.

And he's right.

And you know what? With the Helicopter Ben and Timmy The Invisible Boy show going on, Obama will never be able to fix the economy. These guys are recycling the same ideas that failed six months ago, and it's so obvious even the morons on Wall Street can figure it out. And what are Democrats in Congress doing? Holding hearings on whether or not banks should be allowed to lie about how much their toxic assets are worth and should be able to overvalue them in order to restore confidence in the financial system.

Lying to restore confidence. What a brilliant idea. Here's your plan.

1. Get rid of Geithner, Bernanke, and Larry Summers. One possible replacement, KC Fed President Tom Hoenig.
2. Enact Plan N.
3. Get the rest of the world to go along with Plan N. (Hey, the UK's not ruling out Plan N, kids.)
4. Reconstruct the financial system minus the idiots who lost us trillions.

Only then will we be able to climb out of this mess.

[UPDATE] At this point, GOP Senators are calling publicly to let big banks fail rather than keep propping them up with money.

Sen. Richard Shelby, R-Ala., ranking member on the Banking Committee, said the United States should not mimic Japan, which in the 1990s propped up failing banks and prolonged its economic downturn.

"Close them down, get them out of business. If they're dead, they ought to be buried," Shelby told ABC's "This Week" program. "We bury the small banks. We've got to bury some big ones and send a strong message to the market."

Financial authorities have been under increasing fire as hundreds of billions of dollars of loans and capital infusions into distressed institutions have failed to halt the economic downturn, which has only accelerated in recent weeks.

Sen. John McCain, R-Ariz., who remains a party leader after losing the 2008 White House race to President Obama, criticized the new administration's response to the banks.

"I don't think they made the hard decision and that is to let these banks fail," McCain told "Fox News Sunday."

These are tremendous words. There's no doubt in my mind that the political viability window for Plan N is now wide open.

Time to do it.