Last Call

Add Oklahoma to the list of states where GOP lawmakers are pushing "sovereignty resolutions" and other WE HATE THE GUBMENT crap.

Last month, when teabaggers were rampant and the Governor of Texas was threatening to secede, we brought you the story of a movement--with roots in right wing separatism--making its way through conservative states.

That movement has resulted in the Georgia Senate, the South Dakota House, and both chambers of the Oklahoma legislature passing resolutions affirming their sovereignty and affirming their belief that the federal government stands in violation of the Constitution. The Georgia resolution in particular held that if the U.S. Congress were to pass, say, an assault-weapons ban, then "all powers previously delegated to the United States of America by the Constitution for the United States shall revert to the several States individually." In other words, in the eyes of the Georgia legislature, the union would cease to exist!

The Oklahoma resolution is significantly milder, but the state's governor Brad Henry vetoed it anyway. That's not stopping the legislature, though, which is set to override the veto and put Washington on notice.

This doesn't really change anything in a legal sense, but it's interesting inasmuch as it tells us whom Oklahoma's elected officials take their cues from.

By all means. Pull the trigger on one of these resolutions. Sign it into law. Get on the floor of your statehouses and say "We want to secede from this union." If you hate Barack Obama and the Democrats that much that you are passing resolutions declaring all Federal rules and regs not strictly in the Constitution null and void, then leave already. Be real men and women. Withdraw from the United States. Govern yourselves. Join with other like minded states and go your own way.

Otherwise, what you are doing now is useless posturing and worthless chest-beating from a group of cowardly idiots. Put your state where your words are, gentlemen. Return all Federal dollars. Close your borders. Print your own currency. Govern yourselves.

Go. Secede.

Otherwise, stop whining.

I mean honestly, these are people who cannot stand the idea of a black President to the point they would actually legislate not recognizing the government he heads.

That is true Obama Derangement Syndrome to the point where it is endangering the public good. These people are clinically insane. None of Bush's dictatorial power grabs were willing to cause you to try to declare the Federal government illegal. You loved it. You embraced the fascism. But a black man in the White House? You are reduced to the arguments of Jefferson Davis and John Calhoun overnight.

Get thee hence.

Epic Relative Bigotry Fail

When you come off as more of a bigot than Jeff Sessions, you are full of fail.

Sen. Jeff Sessions (Ala.), the ranking Republican on the Senate Judiciary Committee, said Wednesday he could consider a gay nominee for the nation’s highest court.

“I’m not inclined to think that’s an automatic disqualification,” Sessions said of a gay nominee. He said he intends to consider only the nominee’s legal judgment when deciding his support for Justice David Souter’s proposed replacement.

“I may disagree with some legal opinion on those issues, but I think fundamentally it will be up to the president to submit somebody who would unite the country and would be a clear statement of a mainstream judge who commits himself to the law,” said Sessions, who will have a key role in any confirmation debate.

Gay-rights groups have voiced hope that Obama will select the first openly gay Supreme Court nominee, and the Gay and Lesbian Victory Fund has offered two suggestions: Kathleen Sullivan, a former Stanford Law School dean, and Pam Karlan, another Stanford professor.

But conservative leaders have warned the nomination of a gay or lesbian justice could complicate Obama’s effort to confirm a replacement for Souter, and another Republican senator on Wednesday warned a gay nominee would be too polarizing.

“I know the administration is being pushed, but I think it would be a bridge too far right now,” said GOP Chief Deputy Whip John Thune. “It seems to me this first pick is going to be a kind of important one, and my hope is that he'll play it a little more down the middle. A lot of people would react very negatively.”

Understand that this guy just played the bigot card that Jeff Sessions would not touch.

And the GOP wonders why it keeps losing.

EPIC FAIL.

The Marriage Maine Stream

Maine becomes the fifth state to allow gay marriage.

Maine's Gov. John Baldacci signed a bill into law allowing same-sex marriage in his state. Maine becomes the fifth state to do so. The other four: Connecticut, Iowa, Massachusetts and Vermont.

"In the past, I opposed gay marriage while supporting the idea of civil unions," Baldacci said in a statement. "I have come to believe that this is a question of fairness and of equal protection under the law, and that a civil union is not equal to civil marriage."

There is serious legislative activity to approve gay marriage in DC (where last night the city council voted to recognize same-sex marriages performed elsewhere), New Jersey, New Hampshire and New York.

Also, in California, there’s a state Supreme Court challenge to Prop. 8.

As we wrote this morning, it's example #457 that we’re long removed from 2004.

And as more younger Americans continue to become involved politically, we're seeing more and more change towards equality. To me it's always been "Why go out of your way to outlaw it out of spite and hatred?"

Marry someone you love. Seems simple to me. When I was born, there were still states where my biological parents would not have been allowed to marry. That's stunning to me.

Go Maine.

Crunchy Numbers

D-Day does the math on Bank of America.

It really has been comical to see the leaks of the stress tests trickle out, first with full confidence in the strength of the banks, then less, then less, and now a situation where Bank of America needs $34 billion dollars. Their total market capitalization right now is only $70 billion. The word "insolvent" comes to mind.

The government has told Bank of America it needs $33.9 billion in capital to withstand any worsening of the economic downturn, according to an executive at the bank.

If the bank is unable to raise the capital cushion by selling assets or stock, it would have to rely on the government, which has provided $45 billion in capital through the Troubled Asset Relief Program.

It could satisfy regulators’ demands simply by converting non-voting preferred shares it gave the government in return for the capital, into common stock.

But that would make the government one of the bank’s largest shareholders.

The company has certain assets they could sell, if anyone's in the market for a bank right now. But the most likely scenario makes the US government a near-controlling interest in Bank of America. Citigroup, which already has converted government preferred shares to common stock, needs an additional $10 billion or so, according to this report. It's not all that reassuring to hear BofA spokesmen claim that they'll be able to make $30 billion a year in income once the recession clears, which I think is more than Exxon.

In other words, BoA is worth $70 billion. It already owes $45 billion in taxpayer TARP funds. It needs $34 more billion from somewhere to continue to operate. Last time I checked, that means Bank of America owes $9 billion more than the entire company is worth.

This makes the largest bank in America basically insolvent right now...and yet the bank's stock is actually up over 10% right now, giving it an extra $7 billion on its market cap. People see a bank that is insolvent as a buying opportunity. After all, it can't fail. The government will throw money at it until the end of time. You can't lose, and everyone else is buying because they know they can't lose, and the stock price magically goes up.

This is now the basis of our economy. The Yahoo Tech Ticker guys explain the shell game.

If this all sounds like something out of Superman's Bizarro world, well...it is! But wait, there's more.

Since the capital BofA needs is less than the government's pledge, the bank would be left with an $11 billion "surplus" that it would seek to use to pay back its TARP loans, Alphin tells The Times.

So in sum, in all makes perfect sense: the government will use the TARP to help the bank repay its TARP loans. Peter, meet Paul. Paul, meet Peter.

But it's nothing but good news for an insolvent bank.

Another Milepost On The Road To Oblivion

Indiana Republican Mike Pence.



This man makes laws for 300,000,000 Americans.

I weep for our country.

Missing The Forest For The Mustard Plants

Wingers are just dumb.

MSNBC, Obama's favorite network, reported on Obama's trip with Joe Biden to get a burger. Just two wild and crazy guys out for some red meat. Andrea Mitchell (does she have nothing else to do?) reported that Obama ordered a burger and mustard. Sounds like it had that "real guy kind of quality."

Mitchell even noted that Obama left a $5 tip in the tip jar. But she didn't mention one arugula-like fact, and you couldn't hear it on the MSNBC video because Andrea and her correspondent Kelly O'Donnel (they needed two people to cover this story) were talking so much.

NBC's regular news reported Obama's order as follows: ""I'm going to have a basic cheddar cheese burger, medium well, with mustard," Obama said. "Do you have spicy mustard? I'll take that."

Actually, the quote was "you got a spicy mustard or something like that, or a Dijon mustard, something like that" (at 0.55 of the unedited video below without Mitchell's talkover).

Obama ordered his burger with DIJON MUSTARD! Bet he had to seek John Kerry's counsel on that.

This blogger, William A. Jacobson, has a law degree. He is a tenured law professor. He is blogging about Obama wanting dijon mustard on his hamburger, and how MSNBC is trying to cover up this fact as some sort of proof that the media is in the tank for him, and this is a scandal of some sort. He feels the need to do this as a service to the country by mocking the President's choice of burger condiments as unacceptably metrosexually elitist or something.

Wingers. Are. Stupid.

Also, Zandardad likes dijon mustard too.

The Worst Kept Secret In The Universe

Israel's nuclear weapon arsenal is arguably the worst kept secret in the world. There seems little logical point to continue to pretend you don't have them after forty years. The Israeli Lobby is screaming bloody murder anyway, because the Obama administration wants Israel to admit is has nukes and wants it to sign the Nuclear Non-Proliferation Treaty.

President Obama's efforts to curb the spread of nuclear weapons threaten to expose and derail a 40-year-old secret U.S. agreement to shield Israel's nuclear weapons from international scrutiny, former and current U.S. and Israeli officials and nuclear specialists say.

The issue will likely come to a head when Israeli Prime Minister Benjamin Netanyahu meets with Mr. Obama on May 18 in Washington. Mr. Netanyahu is expected to seek assurances from Mr. Obama that he will uphold the U.S. commitment and will not trade Israeli nuclear concessions for Iranian ones.

Assistant Secretary of State Rose Gottemoeller, speaking Tuesday at a U.N. meeting on the nuclear Non-Proliferation Treaty (NPT), said Israel should join the treaty, which would require Israel to declare and relinquish its nuclear arsenal.

"Universal adherence to the NPT itself, including by India, Israel, Pakistan and North Korea, ... remains a fundamental objective of the United States," Ms. Gottemoeller told the meeting, according to Reuters.

Which makes sense to me. However, Israel and its supporters see this as akin to the most foul betrayal imaginable by Obama, and are readily making it known that this will never, never happen.

Mr. Netanyahu, whose meeting with Mr. Obama on May 18 will be the first since both took office, raised the issue of the nuclear understanding during a previous tenure as prime minister.

Israeli journalists and officials said Mr. Netanyahu asked for a reaffirmation and clarification of the Nixon-Meir understanding in 1998 at Wye River, where the U.S. mediated an agreement between Israel and the Palestinians. Mr. Netanyahu wanted a personal commitment from President Clinton because of concerns about a treaty that Mr. Clinton supported to bar production of fissile materials that can be used to make weapons. Israel was worried that the treaty would apply to de facto nuclear states, including Israel, and might oblige it to allow inspections of Dimona.

In 2000, Israeli journalist Aluf Benn disclosed that Mr. Clinton at Wye River promised Mr. Netanyahu that "Israels nuclear capability will be preserved." Mr. Benn described as testy an exchange of letters between the two leaders over the Fissile Material Cut-Off Treaty. He said Mr. Netanyahu wrote Mr. Clinton: "We will never sign the treaty, and do not delude yourselves - no pressure will help. We will not sign the treaty because we will not commit suicide."

The Bush administration largely dropped the treaty in its first term and reopened negotiations in its second term with a proposal that did not include verification.

It will be interesting nonetheless. But at every turn Israel has won every concession it has demanded from the US, despite strong language from the Obama White House. Israel certainly has every right to exist as a sovereign country and to defend itself. But let's be honest...the country has nukes and refuses to admit them, just as it accuses Iran of doing.

Don't Crap Where You Eat, Arlen

If Arlen Specter's going to act like a Republican, root for Republicans, and vote like a Republican in the Senate, then his new Democratic Party buddies are going to treat him like a Republican.

The Senate dealt a blow tonight to Sen. Arlen Specter's hold on seniority in several key committees, a week after the Pennsylvanian's party switch placed Democrats on the precipice of a 60-seat majority.

In a unanimous voice vote, the Senate approved a resolution that added Specter to the Democratic side of the dais on the five committees on which he serves, an expected move that gives Democrats larger margins on key panels such as Judiciary and Appropriations.

But Democrats placed Specter in one of the two most junior slots on each of the five committees for the remainder of this Congress, which goes through December 2010. Democrats have suggested that they will consider revisiting Specter's seniority claim at the committee level only after the midterm elections next year.

"This is all going to be negotiated next Congress," Jim Manley, spokesman for Senate Majority Leader Harry M. Reid (D-Nev.), said tonight.

Specter's office declined to comment.

Nor would I expect them to have anything to say other than "Well damn, we certainly screwed up, didn't we?" Specter managed to piss off the entire Senate Democratic Caucus in the space of a week. Not even Joe F'ckin Lieberman managed to gather up that much hate.

StupidiNews!

• Comic actor Dom DeLuise has passed at age 75.
• Bank of America may need as much as $34 billion in additional capital.
• The Taliban has captured Mingora, the Swat valley's main town, causing thousands to flee in Pakistan.
• H1N1 Swine Flu has claimed its first US adult death as 1,500 cases have been confirmed in over 20 countries.
• Google's settlement with book publishers over out-of-print material has raised a new foe: Librarians.

Walk Away Mysteriously

The NY Times is reporting that the DoJ's draft report on the torture memos will recommend a grand total of zero prosecutions.

An internal Justice Department inquiry into the conduct of Bush administration lawyers who wrote secret memorandums authorizing brutal interrogations has concluded that the authors committed serious lapses of judgment but should not be criminally prosecuted, according to government officials briefed on a draft of the findings.

The report by the Office of Professional Responsibility, an internal ethics unit within the Justice Department, is also likely to ask that state bar associations consider possible disciplinary action, including reprimands or even disbarment, for some of the lawyers involved in writing the legal opinions, the officials said.

The conclusions of the 220-page draft report are not final and have not yet been approved by Attorney General Eric H. Holder Jr. The officials said it is possible the final report might be subject to revision, but they did not expect major alterations in its main findings or recommendations.

Reprimands! Why that'll teach them.

Look, disbarment is the absolute minimum these scumbags should face, and in the case of Jay Bybee, impeachment and then disbarment. But for the most part these guys will walk, just like the rest of the Bushies. Washington doesn't care and never will. Obama will continue to cite "moving forward".

And we torture people and reserve the right to do so again.

Great country we live in, huh?

Obamasocialfascilsm

It's just not fair. Mean old Obama is apparently threatening Chrysler's creditors with political retribution if they don't accept taking pennies on the dollar and keeping the company going.

The sources, who represent creditors to Chrysler, say they were taken aback by the hardball tactics that the Obama administration employed to cajole them into acquiescing to plans to restructure Chrysler. One person described the administration as the most shocking "end justifies the means" group they have ever encountered. Another characterized Obama was "the most dangerous smooth talker on the planet- and I knew Kissinger." Both were voters for Obama in the last election.

One participant in negotiations said that the administration's tactic was to present what one described as a "madman theory of the presidency" in which the President is someone to be feared because he was willing to do anything to get his way. The person said this threat was taken very seriously by his firm.

The White House has denied the allegation that it threatened Perella Weinberg.

Gosh, Obama's just the worst excuse for a human being ever picking on those poor, defenseless corporate bondholders.

Only one problem. The story's completely fabricated rumor-mongering.

This morning, ThinkProgress documented a series of facts about how right-wing radio helped push a false political attack against President Obama. The attack began with a false assertion made by a corporate lawyer named Tom Lauria who appeared on a conservative radio show. The comment was taken up by a right-wing radio host who works for ABC. The story then got the attention of ABC’s Jake Tapper who took it to the White House for comment (the White House denied it). And finally, it ended up on Drudge. An ABC News spokesperson issued a statement to ThinkProgress denying that Tapper first learned of the story from a right-wing radio host. ABC explains that Tapper simply “overheard” an unnamed radio reporter talking about the matter:

Your assertion that Jake reported on this matter because he was encouraged to do so by conservative talk radio hosts or their listeners is inaccurate. No one pressured him, no one peddled anything to him, and no one reached out to him to cover this. Indeed, the first he heard of Mark Levin pushing this story was in your post.

Jake first heard of this story when he overheard a radio reporter talking about Mr. Lauria’s interview with WJR-AM. Having covered the Chrysler deal for ABC News, and having spoken to many Obama administration officials about the hedge funds whom President Obama disparaged, Jake was also interested in hearing the other side of the story.

He did due diligence on Lauria, found he was a leading bankruptcy attorney who represents players in this debate, with no discernible partisan bias, and called him up. He also reached out to the White House and got its denial of the story. Your implication is completely different from what actually happened.

By reporting the story, Tapper chose to accept the validity of Lauria’s claim that the White House could get “the full force of the White House press corps” to threaten a private company. Despite the fact that the parties with direct knowledge — the White House and Perella Weinberg — denied to ABC that any threats were made, Tapper still reported Lauria’s false accusation on his “Political Punch” blog. Drudge and other right-wing outlets are glad he did.

The Chrysler creditor arm-twisting story is pretty much a lie, denied by all parties involved. but it hasn't stopped more vicious rumors from magically coming forth from the Wingerverse, not to mention brutal attacks on President Obama from the usual suspects.

After all, Barack is just a horrible person for making business follow the rules.

[UPDATE] But let's not kid ourselves, Chrysler's creditors are after money, money, money and have every reason to try to slime the White House to divert the narrative.

I Do Not Believe That Word Means What You Think It Means

Steve Benen nails the GOP/Village Idiot definition of "bipartisan" cold (emphasis mine):

Karen Tumulty shares an important anecdote about negations over health care reform.

When Barack Obama informed congressional Republicans last month that he would support a controversial parliamentary move to protect health-care reform from a filibuster in the Senate, they were furious. That meant the bill could pass with a simple majority of 51 votes, eliminating the need for any GOP support for the bill. Where, they demanded, was the bipartisanship the President had promised? So, right there in the Cabinet Room, the President put a proposal on the table, according to two people who were present. Obama said he was willing to curb malpractice awards, a move long sought by the Republicans and certain to bring strong opposition from the trial lawyers who fund the Democratic Party.

What, he wanted to know, did the Republicans have to offer in return?

Nothing, it turned out. Republicans were unprepared to make any concessions, if they had any to make.

So far, we've seen quite a bit of this when the president and the shrinking congressional minority disagree. President Obama sought a stimulus package, for example, and hoped to win over Republicans with a healthy dose of tax cuts. What did Republicans respond with? Nothing, except a counter-proposal with nothing but huge tax cuts.

The president also wants health care reform. He doesn't want to curb malpractice awards, but he's willing to compromise and make concessions to win over Republicans. What is the GOP willing to compromise on? Not a thing. They want the folks who won the elections and are pushing a popular idea to move closer to them -- in exchange for nothing.

As Matt Yglesias explained, "I think it makes a certain amount of sense for a battered minority party to say to hell with bipartisan compromise, now it's your turn to govern by your ideas and pay the consequences when they fail. But that's not really what's happening here. Instead the minority whines that White House isn't doing enough to compromise, but doesn't actually want any kind of compromises."

Compromise is a two-way street. Time and time again Obama offers to do X or Y, and the Republicans respond by saying "Well, you're a bit closer to our position now. Keep going."

The Village is just as bad, all the screaming and pearl-clutching about sensible centrism that you hear from cement-headed old fools like David Broder, Charles Krauthammer, Ross Douthat, George Will, Cokie Roberts, etc. are just filled with this kind of nonsense. They keep saying how wonderful the universe would be if Obama stopped trying to do silly things like give 45 million Americans health care and instead just let the Republicans keep running the country with the great ideas they have had for the last eight years.

Bipartisan has always been code for "let the GOP win."

Only problem is, the GOP lost. So yes, after 100 days of the Republicans unanimously telling the President to go screw himself and his compromises, now Obama is playing hardball. And the GOP isn't invited.

Making Things Right

The problem with the Village whenever it gets around to SCOTUS pickin' time is that the argument is constantly put forward from the Wingers and Village Idiots that any effort to correct racism and misogyny is in and of itself racist and misogynistic.

With the election of Obama, the pressure to make sure Obama nominates a white guy to replace Souter is doubly on, since of course the "most qualified nominee" would have to be a white male, and any effort Obama makes to nominate anyone else will be seen as playing the race card or gender/sexual preference card or whatever.

The reality is this:

Affirmative action was installed as a corrective against bigotry, a way to ensure qualified people were not passed over because of arbitrary conditions of their race or gender -- not as a "punishment" for whites, although it's not surprising to me that Cohen sees it that way. The fact that white women have been the greatest beneficiaries of affirmative action goes unmentioned because it's harder to make the case that "white people" have been hurt, because in the end, "white people" have benefited more than anyone else. "There's no need to cling to such a remedy anymore," says Cohen, who shares the WaPo op-ed page with a single black columnist.

The reaction to Sonia Sotomayor makes the perfect case for why we still need affirmative action. She's been a federal judge since the early 1990s, she served as an ADA in Manhattan, she's worked in private practice. On paper, she's qualified, but yesterday Jeffrey Rosen, admittedly knowing next to nothing about her, wrote that the summa cum laude from Yale Law School might not be "that smart." The folks at National Review got the signal. "So she's dumb and obnoxious. Got it," wrote Mark Hemingway. Responded John Derbyshire, "Judge Sotomayor may indeed be dumb and obnoxious; but she's also female and Hispanic and those are the things that count nowadays." This from someone who believes that social statistics prove that whites as a group are smarter than say, black people. Mark Krikorian concluded that "I'm sure Mark H. is right about Sotomayor's being dumb and obnoxious, just as Derb is right about her being female and Hispanic is all the matters," but that "an Hispanic Supreme Court justice is an almost mandatory consolation prize for the amnesty folks."

In short, everyone agrees that Sotomayor is an idiot, based on an anonymous quote solicited by Rosen, who admits that he hasn't "read enough of Sonia Sotomayor’s opinions to have a confident sense of them," and that he hasn't "talked to enough of Sonia Sotomayor’s detractors and supporters to get a fully balanced picture of her strengths."

This is exactly what affirmative action is meant to correct: People coming to the arbitrary conclusion that someone is "an idiot" despite all evidence to the contrary, except if you consider not being a white man evidence. Sotomayor's detractors see themselves as Frank Riccis, white men whose greatness isn't recognized because we're too busy giving brown people who can't tie their shoes certificates of achievement. But the truth is that in life and in employment, discrimination rarely manifests itself the way it did against Ricci, as something as easy to quantify as an unfair test. It's far more insidious -- a rumor, a feeling, a notion that the person standing in front of you who doesn't look like you is just "dumb and obnoxious." So you throw their resume in the "no" pile because you don't like their name, you seat them in the back of the class, you promote another person. You just can't really explain why. It's... just a feeling.

But it's so badly stacked against white men in Washington, it's just a crime.

[UPDATE] The Double G drops the hammer on Jeffrey Rosen's profile of Sonia Sotomayor. It is breathtaking, the carnage. Almost exquisite.

Winners And Losers

Via CalcRisk, we get a pretty deep legal perspective on the Chrysler bankruptcy and how it very well may set a strong legal precedent for years to come:

One thing's for sure, Chrysler's (and soon GM's) court battles will afford us a rare opportunity to witness one of bankruptcy law's most fundamental questions being litigated in the highest stakes battles of all time, that being:

When does the "absolute priority rule" (compare FRB-Cleveland's strict construction of the rule back in 1996 here with US Government's position today), which establishes a hierarchy of recovery rights among creditor classes, take a back seat to the "fresh start," rehabilitative policy of chapter 11?

Chrysler's opening memorandum touched upon this question by focusing on the US Supreme Court's classic pronouncement in NLRB v. Bildisco & Bildisco, 465 U.S. 513, 528 (1984), where the Court stated that the "fundamental purpose of reorganization is to prevent the debtor from going into liquidation, with an attendant loss of jobs and possible misuse of economic resources." This principle, Chrysler argues, is paramount and (quoting NY's judicial patriarch, Bankruptcy Judge Lifland, in the old Eastern Airlines case) "all other bankruptcy policies are subordinated" to it. (Mem. at 4).

Many, however, will surely disagree with Judge Lifland's statement from 20 years ago that all bankruptcy policies should be subordinated to the reorganization objectives of the Bankruptcy Code. Indeed, even on a very practical level, as the authors of this 1997 article entitled "Chapter 11's Failure in the Case of Eastern Airlines" note, such a policy is a failure:

Eastern Airlines' bankruptcy illustrates the devastating effect of court-sponsored asset stripping-using creditors' collateral to invest in negative net present value "lottery ticket" investments-on firm value. During bankruptcy, Eastern's value dropped over 50%. We show that a substantial portion of this value decline occurred because an over-protective court insulated Eastern from market forces and allowed value-destroying operations to continue long after it was clear Eastern should be shut down.

Relying on Bildisco to establish an unwavering rule of law is also risky because Supreme Court jurisprudence on bankruptcy matters is anything but a seamless web. Indeed, Ken Klee points out in his remarkable new book, Bankruptcy and the Supreme Court, Justice Rehnquist once wrote to Justice Stevens: "I do not feel that I am qualified to make any sort of exegesis on the meaning of the Bankruptcy Code." (Klee, p. 48).

In other words, there's two sides in this battle. On one, is Chrysler, the UAW, Fiat, and the Obama administration. They are arguing that Chrysler's case represents a unique situation that demands that the company and its jobs be kept intact so it can be sold to Fiat and the UAW.

On the other side are Chrysler's creditors. They are arguing that if the bankruptcy courts start making exceptions for Chrysler, then any company will want to make the same argument. The specific reason that the Obama administration didn't want this to go to bankruptcy court is that a precedent would be established either way that could end up hurting the country down the road.

If the court decide to side with Chrysler, then creditors are going to want a lot more up front knowing that companies can pull the "Chrysler Rule" and get out of paying creditors should things go bad. It would be a devastating precedent on the part of corporate bondholders, and investment in corporate bonds will dry up overnight, recreating the credit crisis. Who as a creditor will want to invest in a risky company knowing you're going to lose 80 cents on the dollar if things go bad?

Likewise, should the court decide to side with the creditors, the Chrysler sale is doomed, Fiat will pull out, and the company will be liquidated, wiping out tens of thousands (if not hundreds of thousands) of jobs, again setting a brutal precedent and all but assuring that GM's creditors will demand the same liquidation. Both companies will be annihilated and perhaps a million jobs or more along with them.

Somebody has to win, and somebody has to lose here. Either way, it's going to be a major knock on the economy and could decide the fate of companies for years.

Al Versus Norm, Part 1065

The GOP is more determined than ever to keep Al Franken from ever being seated now that Franken would represent the 60th Democratic Senator.

“This makes it pretty darn important,” said Sen. John Cornyn (R-Texas), chairman of the National Republican Senatorial Committee, of the race following Specter’s switch. “I expect they will pursue the appeals until they are exhausted, whenever that may be. … I would assume if they were unsuccessful in the Minnesota Supreme Court, there may very well be an appeal to the United States Supreme Court.”

Democrats, meanwhile, are planning a full-scale public pressure campaign to force Coleman to concede should the court affirm a three-judge panel’s ruling that Al Franken is the winner. Democrats have already begun using the race’s elevated importance to raise money, and they’re mounting a fresh campaign to pressure Minnesota Gov. Tim Pawlenty, a Republican, to sign an election certificate once the state Supreme Court rules.

And once again, Gov. Pawlenty is the key to what happens from here. No matter what, if he doesn't sign the certificate (and there is zero reason to expect he will when Franken's win is upheld and Coleman goes to federal court) Franken won't be seated. Forcing it through would be ham-handed, tone-deaf, and pretty stupid on the part of the Dems. But Franken's team is smart.

Pawlenty’s role is central to the dispute, and the question of whether Pawlenty must sign the election certificate after the ruling by the state’s highest court is unclear. Coleman’s lawyers say there is a legal gray area as to whether Pawlenty should sign the certificate if there is a federal appeal pending, and the governor – who is eying a run for the White House in 2012 — says that he’ll follow the direction of the courts.

Pawlenty’s handling of the matter could endear him to the GOP base, but it might also infuriate some Minnesota voters if he seeks reelection as governor next year.

Pawlenty, however, may have no choice in the matter. As part of the fight before the state’s high court, where oral arguments are scheduled for June 1, Franken’s team is likely to ask for a ruling on whether Pawlenty is required to sign an election certificate even if the loser appeals the case to federal court, according to Sen. Robert Menendez, chairman of the Democratic Senatorial Campaign Committee.

“If the court does that, there would be no opportunity for circumvention by Pawlenty,” Menendez said Thursday.

Should the courts rule in favor of Franken on both the win and the certificate, Franken could be seated next month. If not, this could drag on for months, if not years.

Your Morning Roubini

In the WSJ this morning, Nouriel Roubini and Matthew Richardson once again make the case for Plan N, given their belief that the stress tests are useless (emphasis mine)

...it is highly likely that some of these large banks will be insolvent, given the various estimates of aggregate losses. The government has got to come up with a plan to deal with these institutions that does not involve a bottomless pit of taxpayer money. This means it will have the unenviable tasks of managing the systemic risk resulting from the failure of these institutions and then managing it in receivership. But it will also mean transferring risk from taxpayers to creditors. This is fair: Metaphorically speaking, these are the guys who served alcohol to the banks just before they took off down the highway.

And we shouldn't hear one more time from a government official, "if only we had the authority to act . . ."

We were sympathetic to this argument on March 16, 2008 when Bear Stearns ran aground; much less sympathetic on Sept. 15 and 16, 2008 when Lehman and A.I.G. collapsed; and now downright irritated seven months later. Is there anything more important in solving the financial crisis than creating a law (an "insolvency regime law") that empowers the government to handle complex financial institutions in receivership? Congress should pass such legislation -- as requested by the administration -- on a fast-track basis.

The mere threat of this law could be a powerful catalyst in aligning incentives. As the potential costs of receivership are quite high, it would obviously be optimal if the bank's liabilities could be restructured outside of bankruptcy. Until recently, this would have been considered near impossible. However, in 2008 there was a surge in distressed exchanges of debt for equity or preferred equity.

Still, the recent negotiations with Chrysler's creditors suggest large obstacles. The size and complexity of large banks' capital structures make debt-for-equity exchanges an even taller task, particularly because creditors will want to hold out for a full bailout along the lines they have been receiving.

The government should be able to dangle an insolvency law as an incentive to cooperate. This will result in a $1 trillion game of chicken. But given the size of the stakes, and the alternative of the taxpayers continuing to foot the bill, it's the best way forward.

Just so. So far, this very legislation that we need -- legislation for receivership powers that FDIC chair Sheila Bair had asked for six weeks ago and something she said the FDIC needed to have back last June -- has all but been forgotten. The stress tests and the Obama declaration that Too Big To Fail means just that has pretty much scuttled any Plan N implementation.

Which is a shame. As long as the government lacks the power to beat Too Big To Fail, the banks will continue to extort the American taxpayer to the tune of trillions. Given the fact that the banking industry continues to own Congress however, the odds of this happening will continue to be slim to none.

StupidiNews!

• Mexico City reopens for business as Cinco de Mayo celebrations across Mexico are canceled.
• A Japanese scientist is looking to turn sheep into walking human organ banks.
• Pakistan's army is on the move in the Buner district but many civilians in the army's wake are unhappy.
• The three-month LIBOR rate has dropped under 1%, signaling the credit crisis may be over.
• Amazon is expected to announce a big-screen Kindle on Wednesday.

The Party Of No Huffs And Puffs

Knowing that the best way to kill climate change legislation is to swamp it in "emissions", the Party of No gears up to prove if you can't dazzle them with logic, bury them in bovine excrement.

Former President George W. Bush, urged on by some industry groups, opposed U.S. participation in global efforts to cut greenhouse gas emissions. Many House Republicans are carrying on that fight, saying the Democrats' climate-change bill will hurt consumers at a time when the United States is struggling with an economic recession.

"American families are struggling to make ends meet, yet Democrat leaders in Washington want to tax them for using the only energy sources available to them," said Representative Tom Price of Georgia, who heads a group of House conservatives.

Democrats have countered that they will try to reimburse consumers for higher energy costs associated with reducing carbon emissions. Those higher costs could hit Midwestern and Southeastern states, which rely heavily on coal to drive electricity production, particularly hard.

According to lobbyists and congressional aides, House Republicans have prepared well over 100 amendments to the bill, which likely would slow committee work on it.

Still unknown was whether Waxman and Markey had successfully negotiated demands by some fellow Democrats that all or a portion of pollution permits be given to U.S. industries, instead of sold to them.

Giving away the credits would save polluters money at first. But some opponents fear firms might raise energy rates on consumers anyway while at the same time holding permits that will gain value for them in the future if they want to trade them away.

The carbon tax argument is baloney. By and large the cost of carbon emissions can be neutralized by switching to greener energy sources: solar, wind, and biomass. But the Republicans are trying to kill this bill with the same false arguments that killed universal health care 16 years ago: "It'll double your bill every month!" No, it won't. We've already been through the lies on this, but the media repeats them as fact anyway. It's beginning to take its toll at the latest Gallup poll on global warming found.

Although a majority of Americans believe the seriousness of global warming is either correctly portrayed in the news or underestimated, a record-high 41% now say it is exaggerated. This represents the highest level of public skepticism about mainstream reporting on global warming seen in more than a decade of Gallup polling on the subject.

The younger you are, the more you believe something needs to be done about global warming, the Gallup poll also found. But of course, the GOP wants to block all that. After all, this is a country where a third of us still believes Saddam caused 9/11 and had WMDs (including the woman who would have been our Vice-President), and less than half of us believe in evolution.

Can't account for the crazy factor.

More Ammunition For The CNN Irresponsible Journalism Argument

CNN has another breathless "OBAMA WILL TAKE YOUR GUNS BUY NOW!" story.

Gun shops across the country are reporting a run on ammunition, a phenomenon apparently driven by fear that the Obama administration will increase taxes on bullets or enact new gun-control measures.

"In the last two months it's gotten very, very difficult to find ammunition," says Richard Taylor, manager of The Firing Line, a gun shop and shooting range in the Denver, Colorado, suburbs.

"There are a lot of rumors floating around that the present government would like to increase taxes on ammunition. I think [there is] just a lot of panicked buying going on."

Now, that's twice in three paragraphs we get the "increased taxes on bullets" rumor. CNN does nothing to quash this. Then they go on feeding the beast.

While campaigning for the White House, Obama supported re-enacting the now-expired ban on assault weapons. But there is no indication that the administration will take up that measure -- or any other gun-control initiative --anytime soon.

It was nice of CNN to be responsible and mention that the unsubstantiated and patently false rumor in the lead paragraph was actually unsubstantiated and false...three paragraphs later.

If you think that's bad, check out CNN's report on Homeland Security Secretary Janet Napolitano defending the report that right-wing domestic terrorists may pose a threat to the country. You get no mention that Obama has no plans for gun control legislation at all, only that the report "warned that the groups may use proposed restrictions on firearms" as "recruiting tools" without mentioning that there basically ARE no proposed additional gun control laws at this time. Then you get several paragraphs of verbatim Rush Limbaugh and Michael Savage spouting lies, plus some pretty brutal attacks on Napolitano by the American Legion. Only at the very end of the article do you get the truth:

The Obama administration in January issued a warning about left-wing extremists. Both reports were initiated during the administration of President George W. Bush.

But CNN seems dumbfounded about why people are buy ammo by the caseload. 1,700+ news articles about the "Obama gun ban" in Google News search, over a 100 articles on the "Obama ammo tax", like this doozy from, of all places, KHON in Honolulu.

Across the nation, ammunition has been selling like emergency supplies before a hurricane.

"All the national stores are being cleared out," said Art Ong, Magnum Firearms Owner.

Ong saw it coming.

"Fortunately I've been able to locate supplies from the west coast and east coast and have been shipping in large quantities," said Ong.

But once these are gone, there could be a long wait.

Suppliers have said there's a six month to a year and a half long backorder for ammunition.

Ever since President Obama was elected, ammo sales have skyrocketed, fueled by fears of higher taxes.

"We have a lot of people purchasing ammunition in large quantities in anticipation of a large excise tax of 500-1000%. Kind of like the cigarette buyers, before the big tax stamp was put on the cigarettes probably were hoarding cigarettes the same way," said Ong.

It of course hasn't occurred to any of the crack journalists in our country that gun store owners, gun makers, and ammo makers are making a killing (literally) on this stuff, and have every reason to perpetuate these rumors for as long as they continue to profit madly on them, flooding the country with new guns and more and more ammo.

But that of course would never raise the danger of anyone getting hurt or using this stuff in anger, and I'm 100% sure the NRA will personally make sure all these new gun owners are properly trained on firearm storage, safety, and usage. So there's no problem here!

[UPDATE] Bonus FOX News subliminal messaging!

The New Bubble

The new stock market bubble is in full effect.

Wall Street rose Monday, pushing the major gauges to multi-month highs, as a better-than-expected housing market report intensified hopes that the economy is closer to stabilizing.

The Dow Jones industrial average (INDU) gained 214 points, or 2.6%, according to early tallies, ending at the highest point since Jan. 13. The S&P 500 (SPX) index added nearly 30 points or 3.4%, ending above 900 for the first time since Jan. 8 and turning higher for the year.

The Nasdaq composite (COMP) rose 44 points, or 2.6% and ended at the highest point since Nov. 4.

Stocks have been surging over the last two months on bets that the worst for the economy is over. Those bets were furthered Monday by the day's economic reports.

But that's just it...the worst isn't over. We still have 14 million homeowners underwater and that's going to get worse. Unemployment continues to rise with 600,000 jobs a month being lost, and that will continue. Home prices still are falling, and there's a load of ARM that are primed to reset in 2009. The cramdown provision failed in the Senate, meaning it will be harder for Americans to keep their homes. The commercial real estate tsunami is just beginning...and all of it will only make any hope of recovery much dimmer, not much more likely. You can't have a recovering consumer-driven economy when wages are falling, inflation is on the way up and unemployment is rising. That's a recipe for another Japanese-style Lost Decade.

Yet the stock market has roared into a 30% gain in the last 2 months. The markets are betting hard on everything being over and America recovering like nothing bad happened. But the reality is nothing could be further from the truth. This is all a massive speculatory bubble. The slightest bit of news that shows that the economy isn't plummeting into freefall means BUY BUY BUY.

We're looking at one of the great Dead Cat Bounces in history here. The S&P 500 has gone from 670 to 900 in less than 60days. At this rate we'll indeed be back in Bush Boom territory by the end of the year. At 225 points in 60 days, we'd be close to 1,700 by 2010. That's impossible.

This one's going to pop, folks. It's not a correction. It's not a new bull market. It's a bubble, plain and simple. When this one goes, it'll flatten the economy.