Zandar's Thought Of The Day

Republicans may have better lawyers, but Democrats have better writers.

Global No Confidence Vote: Stress Test Shell Game

So, America got the "good" news on Thursday: the banks are fine! Everything is fine! The financial sector passed the stress tests with flying colors! Indeed, Friday was a banner day for bank stocks across the board. Wells Fargo stock was up 14%. PNC was up 19% and change. Regions Financial leapt up bu almost 25%. And Fifth Third Bank stock gained nearly 60% on the news that it only needed $1.1 billion in capital to meet the government's strict requirements for a capital cushion.

Jim Cramer has declared the financial crisis all but over as a result.

Investors can buy almost any bank for the next week, Cramer said, as this group emerges from the black hole into which the credit crisis had pulled it. In fact, he called this a once in a lifetime move in the financials.

What’s happening? The stress tests, that’s what. The Treasury Department released its test results, and this sector is on much more solid footing than anyone had thought. Turns out Armageddon is no longer an option. Banks won’t be nationalized. The worst-case scenario that the most ferocious of bears warned against is off the table. With confidence restored, Wall Street is rushing back into these stocks.

Confidence in the system! Crisis averted! Tim Geithner is a hero! The banks passed the stress tests easily, and credibility has been restored in our financial system! The bears were wrong!

...or were they?

The Federal Reserve significantly scaled back the size of the capital hole facing some of the nation's biggest banks shortly before concluding its stress tests, following two weeks of intense bargaining.

In addition, according to bank and government officials, the Fed used a different measurement of bank-capital levels than analysts and investors had been expecting, resulting in much smaller capital deficits.

The overall reaction to the stress tests, announced Thursday, has been generally positive. But the haggling between the government and the banks shows the sometimes-tense nature of the negotiations that occurred before the final results were made public.

Government officials defended their handling of the stress tests, saying they were responsive to industry feedback while maintaining the tests' rigor.

When the Fed last month informed banks of its preliminary stress-test findings, executives at corporations including Bank of America Corp., Citigroup Inc. and Wells Fargo & Co. were furious with what they viewed as the Fed's exaggerated capital holes. A senior executive at one bank fumed that the Fed's initial estimate was "mind-numbingly" large. Bank of America was "shocked" when it saw its initial figure, which was more than $50 billion, according to a person familiar with the negotiations.

At least half of the banks pushed back, according to people with direct knowledge of the process. Some argued the Fed was underestimating the banks' ability to cover anticipated losses with revenue growth and aggressive cost-cutting. Others urged regulators to give them more credit for pending transactions that would thicken their capital cushions.

At times, frustrations boiled over. Negotiations with Wells Fargo, where Chairman Richard Kovacevich had publicly derided the stress tests as "asinine," were particularly heated, according to people familiar with the matter. Government officials worried San Francisco-based Wells might file a lawsuit contesting the Fed's findings.

What? You mean the results were rigged? The Fed folded its hand? Several banks failed even the far less than stressful tests and negotiated down their capital requirements even further? Well, gosh, that explains why the results were "far better than expected". No wonder the banks made out like bandits Friday in the markets!

Why, no one could have predicted that the stress tests were nothing but a PR scam to buy time, or that the delay from Monday to Thursday would be used to fudge the numbers! Nobody could have foreseen that the tests were designed to lull Americans to sleep while Obama declared the country's largest banks to be Too Big To Fail! Surely nobody foresaw the game plan was to reinflate another stock bubble to cover up the continuing collapse of our economy and to give the banksters every concession they ever wanted as Democrats and Republicans alike caved in to the people really running the country!

And yet, that's exactly what happened. From the get-go, Obama was faced with an enormous problem made worse by the Bush reponse to it. But given the opportunity, Obama showed his true colors, preferring to put his trust in the people who got us into this mess. And surprise, surprise...the stress test was a sham from the beginning.

Total losses from the financial crisis will range around $3 trillion dollars or more, depending on who you talk to. We still have $2 trillion in losses to go.

The Fed says the banks will only need $75 billion more to survive these losses. The banksters were willing to sue if the Fed said they needed more. These lies are staggering, and the stress tests' so called worst-case scenarios have already been broken.

The banks are insolvent. The losses will continue to pile up. It's not a matter if if this will blow up in our faces, but when.

Be prepared.

Commissioning A Failure

If there's one trick the Obama administration has learned from the Bushies, it's the art of the Friday Night News Dump. This week, it's the fact that Obama is bringing back the Bushies' failed system of military commissions to try terror suspects.

The military commissions have allowed the trial of terrorism suspects in a setting that favors the government and protects classified information, but they were sharply criticized during the administration of President George W. Bush. "By any measure, our system of trying detainees has been an enormous failure," then-candidate Barack Obama said in June 2008.

In one of its first acts, the Obama administration obtained a 120-day suspension of the military commissions; that will expire May 20. Human rights groups had interpreted the suspension as the death knell for military commissions and expected the transfer of cases to military courts martial or federal courts.

Officials said yesterday that the Obama administration will seek a 90-day extension of the suspension as early as next week. It would subsequently restart the commissions on American soil, probably at military bases, according to a lawyer briefed on the plan.

"This is an extraordinary development, and it's going to tarnish the image of American justice again," said Tom Parker, a counterterrorism specialist at Amnesty International.

A White House official said no final decision has been made, and one source involved in the discussions said the plan awaits Obama's approval.

I'm going to go to the right for criticism of this, starting with Andy McCarthy from the Corner:

The Obama campaign slandered the commissions, just like it slandered Gitmo, military detention, coercive interrogations, the state secrets doctrine, extraordinary rendition, and aggressive national-security surveillance. Gitmo is still open (and Obama and Holder now admit it's a first-rate facility), we are still detaining captives (except when Obama releases dangerous terrorists), the Obama Justice Department has endorsed the Bush legal analysis of torture law in federal court, and Obama has endorsed state secrets, extraordinary rendition, and national-security surveillance (and the Bush stance on surveillance has since been reaffirmed by the federal court created to rule on such issues).

Do these people ever get called on their hypocrisy?

It's necessary to point out that Obama capaigned to end all of the above, and then turned out to expand every instance of Bush's system, and yes, this most certainly makes Obama a hypocrite of the first order. However, it's important to notice that Obama is certainly being attacked on the left on this, most notably by Marcy Wheeler:

So, to wind this toward a conclusion, this Obama gussied up swine of military commissions is a pig that ain't gonna fly. It is a patina of change on that which is not. And it is a sham; because there is no need for it, traditional criminal courts are situated to handle these matters just fine once you get past the Republican hysterical shrieking. Traditional courts have handled Zacharias Moussaoui, Jose Padilla, the Blind Sheik Abdel-Rahman, John Walker Lindh and numerous others. Criminal courts have the CIPA process to deal with classified information in a professional and equitable manner. Have there been errors and problems in some of the cases to date; yes, absolutely, but almost all were the fault of malicious and unethical prosecutors, not the inability of the system to handle the matters. Lastly, traditional courts have at least the appearance of neutrality, a concept that simply is absent in the tribunals run by the American military out of the Pentagon.

The bottom line is that no matter how you shine it up, military tribunals are wrong, convey the wrong message to the rest of the world and are nothing but a lazy dodge by an American government complicit in an eight year litany of wrongful acts. President Obama should stop the madness right here and now, try the detainees in a just system for the world to see and start reclaiming the high ground.

I personally don't understand it. Candidate Obama clearly laid out what was wrong with the system. President Obama is bringing it back in almost unaltered form.

It's another strike against this President. In many ways he is a vital improvement, but in other ways he really is worse than Bush.

The Republican Alternative To Obamacare

As Kimberly Strassel opines in the WSJ with a fatalistic air of inevitability, there is no GOP alternative plan.

Listen. That sound of silence? That's what's known as the united Republican response to President Barack Obama's drive to socialize health care.

The president has a plan, and he's laid it on the table. The industry groups that once helped Republicans beat HillaryCare are today sitting at that table. Unions are mobilized. A liberal umbrella group, Health Care for American Now, is spending $40 million to get a "public option," a new federal entitlement that would kill off private insurance. Democrats passed a budget blueprint that will allow them to cram through that "public option" with just 51 votes.

Republicans? They're trying to figure out what they think.

It boggles my mind that Republicans (being all about choice as a factor to drive prices down) are suddenly afraid of competition. The two biggest complaints about health care in the US is cost and availability, not quality. "The government will put private insurers out of business and we'll all be on six-month waits to see a nurse!" Yes, because insurance companies would never want to compete for tens of billions of health care dollars each year.

The current plan of "private insurers driving up costs at roughly three times the rate of inflation" isn't working. Maybe somebody should step in and lower costs. What do the Republicans have for an alternative?

The White House is targeting folks like Chuck Grassley, Orrin Hatch and other Senate Republicans who back in 1997 voted for the State Children's Health Insurance Program, which was pitched by Democrats at the time as a modest program to help poor kids. It has, of course, become exactly what Democrats always intended it to be: a ballooning federal entitlement that is today transferring middle-class children from private insurance onto the federal rolls. This might be thought of as a teachable moment. But now Republican "moderates" are all ears for the administration's soothing suggestions that perhaps the "public option" can be "structured" so as to protect private insurance. Uh-huh.

Another group of Republicans are still going 50 rounds over taxes -- namely, whether a deduction isn't a more principled and cleaner way than credits to equalize the tax treatment of insurance. This is a legitimate debate, but one that should've been had 10 years ago when Republicans were in the majority. While the GOP fiddled, Democrats focused the argument on "uninsureds," which has made a tax deduction (which would only cover those who pay taxes) even less politically palatable.

Still mind-boggling. Republicans think the government providing health care for kids is a bad idea, and they're still complaining about tax credits versus deductions when 45 million Americans have no health care and when they get sick, they go to hospital emergency rooms and get taxpayer-provided care anyway.

Republicans still think health care is a privilege only of those who can afford it, and there are tens of millions of Americans who can't afford it.

When the GOP was in power, they did everything they could to kill universal health care. If we had put a plan in place 15 years ago, it would have been much cheaper and much more effective now. We've been waiting since 1994 for the great GOP alternative to universal health care. They've done nothing.

Now the Democrats get a chance.

The Huckster And The Con Man

One is GOP former Gov. Mike Huckabee, the other is a term for a rip-off artist, but the Republicans might want to take note of what he has to say anyway.

Days after national Republicans launched a new campaign to broaden the party's outreach, former upstart presidential candidate Mike Huckabee says the GOP is at risk of becoming "irrelevant as the Whigs."

In an interview with the California newspaper The Visalia Times-Delta, Huckabee said the GOP would only further decline in influence should it alienate social conservatives — largely considered the most energetic and loyal faction of the party.

"Throw the social conservatives the pro-life, pro-family people overboard and the Republican party will be as irrelevant as the Whigs," he said in reference to the American political party that largely disbanded in the mid 1800s.

"They'll basically be a party of gray-haired old men sitting around the country club puffing cigars, sipping brandy and wondering whatever happened to the country. That will be the end of the party," he said in the interview published Thursday.

Huckabee's comments come the same day former Vice President Dick Cheney warned his party's leaders not to moderate their views as they launch an effort to regain control in the nation's Capitol.

"The idea that we ought to moderate basically means we ought to fundamentally change our philosophy," Cheney also said. "I for one am not prepared to do that, and I think most of us aren’t," he told conservative talk-radio host Scott Hennen.

Yeah, because if the GOP doesn't somehow become the party of religious intolerance, social bigotry, draconian spending cuts and irrational hatred of moderates, they just might fail politically, independent voters will reject them wholesale and the Democrats will end up controlling Washington or something...

StupidiNews, Mother's Day Edition

• A mother of a wildfire continues to rage near Santa Barbara, California.
• Necessity is the mother of invention for automated drug smuggling efforts by Colombian cartels.
• Pakistan's army has given birth to a full-out assault on the Taliban.
• Obama's Supreme Court nominee short list contains a diverse group...all women.
• California kids are looking to get open source textbooks, but obstacles threaten to ground the plan.

Last Call

Go see the new Star Trek movie.

Trust me.

(What, I can't do political blogging all the time.)

A Place Of Our Own

Over at Hullabaloo, Digby pens a must-read article explaining the GOP state sovereignty movement.

Trying to keep up with GOP hypocrisy is difficult even in the best of times, but these days it's so pervasive it will give you a migraine just trying to sort out the most egregious from the merely laughable. The examples are flowing now that their eight year reign is over. I think one of the most interesting is their retreat to states' rights after the greatest expanse of not just Federal, but executive, power in history. It's quite a leap in just a few months, but they seem to be making the seamless transition that only a truly incoherent movement can make --- no shame or even awareness of their hypocrisy plagues them.

The New York Times touches on this rebuilding of the states' rights and secession movement today, indicating that it's having some problems since most people don't know what in the hell these weirdos are going on about. But it's an old old strain in American politics that asserts itself when the Conservative Southern Party shrinks to its essence.(Conservative isn't really the right word, of course, but it's the oxymoronic label most people now attach to this political rump. These people are radicals, always have been.)

The thing to remember is that this is the same party that demanded just months ago that we give unquestioning loyalty to Bush because he was President of OUR United States of America, but now that Barack Obama is in charge, the Government is the incarnation of everything evil. The rampant spending Bush demanded has now become "wasteful porkulus". The powers Bush told us we needed to let him have are now proof of the "Fascist Obama State". The best part is the same Republicans who didn't bat an eyelash when Bush did these things are now in screaming apoplexy about Obama.

The deranged, irrational hatred these people have for Democrats is stunning. They hate Barack Obama so much that they are willing to risk splitting the union because they don't like him.

Bush on the other hand? The Great Uniter.

Flight Cancelled

I said last week that the White House dipstick in charge of the low-flyover of an Air Force One copy (complete with escort jets) over New York City that panicked a healthy chunk of downtown Manhattan needed to have his ass fired.

Today, the nimrod in question, Louis Caldera, resigned.

President Obama has accepted the resignation of Louis Caldera, the director of the White House Military Office responsible for the controversial low-altitude flyover of New York by a 747 plane used as Air Force One, the White House said Friday.

The photo shoot, which President Obama said he was "furious" with, happened on April 27. The image of a low-flying plane accompanied by an F-16 fighter jet sent some New Yorkers into the streets and into a panic -- reminding them of the tragic 9/11 attacks on the city. Building evacuations also took place across the Hudson River in Jersey City, New Jersey.

Bye, Louis.

Rachel Maddow Versus Supervillain Fearing Republicans

Because at this point, the Republicans literally have no argument other than FEAR FEAR NINE ELEVEN KILLERS IN YOUR NEIGHBORHOOD YOUR FAMILY WILL DIE UNLESS YOU OBEY THE GOP ONLY WE CAN SAVE YOU

No really.

That's their new slogan this week.

Republicans are complete pussies.

Good Old Fashioned Blackmail

The GOP is playing hardball on killing all Congressional torture investigations:

At a hearing today with Attorney General Eric Holder, Republican members of a Senate Appropriations subcommittee suggested that any potential criminal investigation into the CIA's harsh interrogation methods might not easily be contained.

Both Lamar Alexander of Tennessee and Richard Shelby of Alabama pressed Holder on the CIA's "rendition" program that moved terrorism suspects from one country to another.

Didn't that happen during the Clinton administration?
Yes, Holder said.

"How many did you approve?" they asked.
Holder said he'd check the record.

The clear suggestion was, if any criminal investigation is opened, Republicans would push to get it expanded beyond events during the Bush administration. Alexander, for example, asked several times whether members of Congress, who were told about the interrogation methods, should also be investigated.

The warning is loud and clear. "If you pull the trigger on this, we will make sure Democrats suffer for this as much or more than the Republicans. You don't want this. Trust me."

This is what passes for rule of law if you're a Republican senator: threatening scorched earth tactics if you dare to lift the rotting log and shine a flashlight under there.

California Roll

With a special election on the docket for California, a raft of budget propositions face long odds at the voting booth. Lawmakers warn if the measures do not pass, the state could find itself $23 billion in the hole for 2009.

California could run out of money as soon as July, the Legislature's chief budget analyst warned Thursday, as a new poll showed voters poised to reject five budget-related measures on the May 19 ballot.

If the propositions do not pass, the state could find itself as much as $23 billion short of the money it needs to pay its bills over the next year, according to a new forecast by Legislative Analyst Mac Taylor. The poll, from the Public Policy Institute of California, found that even as voter interest in the ballot measures rises, all are trailing except the sixth one -- Proposition 1F, which would bar pay hikes for lawmakers in deficit years.

The other measures would provide the state with as much as $6 billion in the coming year through borrowing against the California State Lottery and temporarily reducing some social services.

One proposition, 1A, which barely one in three likely voters supports, the poll shows, would extend recently enacted tax hikes until 2013, plumping state coffers by another $16 billion.

All of the proposals were placed on the ballot by the governor and lawmakers as part of a February budget agreement. That plan was intended to keep the state solvent well into next year, but it was quickly knocked out of balance by the deteriorating economy.

Adding to the fiscal woes, the Obama administration is threatening to pull $6.8 billion in stimulus funds from California in a dispute over an earlier state budget cut.

It just keeps getting worse for California too. Several other states are in a similar situation, and it's only going to continue to go downhill.

Jobapalooza

Jobbity job numbers are out, 539k jobs lost. Better than 600k for sure, but it's still more than half a million jobs lost every month for the last seven months, folks. Wall Street was betting on under 500k, so we'll see what that means. U-1 number up to 8.9% as expected.

If there's a smidge of real good news here, it's that the U-6 number rose only two tenths of a percent to 15.8%, and that's actually a decent sign if the rise of the U-6 rate is slowing.

The bad news? The jobs picture continues on its paradigm shift to temp jobs. Companies are hiring, but they are much more likely to only be hiring temp workers these days with little to no benefits, no health care, and no 401k. For purposes of spending and stabilizing the housing market, they might as well be unemployed.

Temp workers don't buy houses, folks. More and more people are being converted from permanent to temporary workers after a long layoff drains their savings. They have to rent. They don't purchase big ticket items that require manufacturing. They don't gain equity to use down the road. In short, we're going to be in real economic trouble for years.

Welcome to the new normal.

A Nancy Drew Mystery

House Speaker Nancy Pelosi vehemently denied knowing anything about waterboarding. Only it turns out she's been caught red-handed in a massive lie.

ABC News’ Rick Klein reports: House Speaker Nancy Pelosi was briefed on the use of “enhanced interrogation techniques” on terrorist suspect Abu Zubaydah in September 2002, according to a report prepared by the Director of National Intelligence’s office and obtained by ABC News.

The report, submitted to the Senate Intelligence Committee and other Capitol Hill officials Wednesday, appears to contradict Pelosi’s statement last month that she was never told about the use of waterboarding or other special interrogation tactics. Instead, she has said, she was told only that the Bush administration had legal opinions that would have supported the use of such techniques.

The report details a Sept. 4, 2002 meeting between intelligence officials and Pelosi, then-House intelligence committee chairman Porter Goss, and two aides. At the time, Pelosi was the top Democrat on the House intelligence committee.

The meeting is described as a “Briefing on EITs including use of EITs on Abu Zubaydah, background on authorities, and a description of particular EITs that had been employed.”

EITs stand for “enhanced interrogation techniques,” a classification of special interrogation tactics that includes waterboarding.

Pelosi, D-Calif., sharply disputed suggestions last month that she had been told about waterboarding having taken place.

“In that or any other briefing . . . we were not, and I repeat, were not told that waterboarding or any of these other enhanced interrogation techniques were used," Pelosi said at a news conference in April. "What they did tell us is that they had some legislative counsel . . . opinions that they could be used, but not that they would."

Brendan Daly, a Pelosi spokesman, said Pelosi’s recollection of the meeting is different than the way it is described in the report from the DNI’s office.

“The briefers described these techniques, said they were legal, but said that waterboarding had not yet been used,” Daly said.

Daly pointed out that the report backs up Pelosi’s contention that she was briefed only once on “enhanced interrogation techniques.” Her name does not appear elsewhere in the report.

"As this document shows, the speaker was briefed only once, in September 2002," Daly said.

And while this is important, this is also a clear effort by the Right to frame the argument solely on Pelosi's role in being informed on torture when the real argument is several members of Congress in both parties knew about the fact we tortured people and did nothing. They continue to do nothing about it.

More than ever we need an independent investigation to get to the bottom of all this. There was both Democratic and Republican complicity in these acts. Those who knew and did nothing must be held accountable in some way.

We are either a nation of laws, or we are lawless.

StupidiNews!

• Wildfires continue to rage near Santa Barbara, threatening thousands of homes.
• NY Fed Chairman Stephen Friedman has resigned effective immediately after stock purchase questions arose.
• Pakistan's army has declared a full-scale war against Taliban insurgents.
• Toyota is on the road to a nearly $7 billion yearly loss in 2009.
• With game developer 3D Realms shutting down, what will become of its nearly ten-year project Duke Nukem Forever?