Tuesday: Springtime for the NYTimes and Big Lies

It’s been really cold in NJ this spring.  Yep, I know it’s still early but I wore the liner of my trenchcoat yesterday and could see my breath in the chilly rain.  I’m thoroughly sick of it.  If you in the midwest are holding onto the zephyrs, please let them go already.  I feel like I’ll never be warm again.

In the meantime, the NYTimes have two interesting articles up today.  Surprise!  We feel good about the economy since Obama took office. Well, no one *I* know feels good about it but they probably didn’t get polled.  But for the rest of the country who live on some mythical Disneyesque Main Street, it is the triumph of hope over inexperience.

Americans have grown more optimistic about the economy and the direction of the country in the 11 weeks since President Obama was inaugurated, suggesting that he is enjoying some success in his critical task of rebuilding the nation’s confidence, according to the latest New York Times/CBS News poll.

These sometimes turbulent weeks — marked by new initiatives by Mr. Obama, attacks by Republicans and more than a few missteps by the White House — do not appear to have hurt the president. Americans said they approved of Mr. Obama’s handling of the economy, foreign policy, Iraq and Afghanistan; fully two-thirds said they approved of his overall job performance.

I find his job performance clearly lacking in tangible results, especially when it comes to the economy.  But the propaganda campaign is in full swing and many of my colleagues and friends feel absolutely powerless against the wealthy elite who run our companies and steal our money. (Wait a second. Wasn’t it the NYTimes that helped get us into the Iraq War in the first place? Hmmm…) I suppose the public is feeling that Obama will make them use plenty of lube and make it less painful than it was under the GOP.  Actually, I still sense a great deal of anger over this perceived powerlessness but the anger is directed at the finance industry than the administration right now.  That will change and we will do our best to speed things along.

The other article is all about the newly unemployed who are persisting in their old routines.  It’s a matter of pride, which psychologists suggest could be a good thing.  People who are laid off have lost some of their sense of identity when they lose their jobs.  So, they refuse to give in:

The Wall Street type in suspenders, with his bulging briefcase; the woman in pearls, thumbing her BlackBerry; the builder in his work boots and tool belt — they could all be headed for the same coffee shop, or bar, for the day.

“I have a new client, a laid-off lawyer, who’s commuting in every day — to his Starbucks,” said Robert C. Chope, a professor of counseling at San Francisco State University and president of the employment division of the American Counseling Association. “He gets dressed up, meets with colleagues, networks; he calls it his Western White House. I have encouraged him to keep his routine.”

No doubt, they are equally confident in Obama’s ability to revive the economy.

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Conflucians Say: The Dark Side of the economic meltdown

Like there’s a good side, right?

From Market-Ticker: What’s Dead (Short Answer: All Of It)

Just so you have a short list of what’s at stake if Washington DC doesn’t change policy here and now (which means before the collapse in equities comes, which could start as soon as today, if the indicators I watch have any validity at all. For what its worth, those indicators are painting a picture of the Apocalypse that I simply can’t believe, and they’re showing it as an imminent event – like perhaps today imminent.)

• All pension funds, private and public, are done. If you are receiving one, you won’t be. If you think you will in the future, you won’t be. PBGC will fail as well. Pension funds will be forced to start eating their “seed corn” within the next 12 months and once that begins there is no way to recover.
• All annuities will be defaulted to the state insurance protection (if any) on them. The state insurance funds will be bankrupted and unable to be replenished. Essentially, all annuities are toast. Expect zero, be ecstatic if you do better. All insurance companies with material exposure to these obligations will go bankrupt, without exception. Some of these firms are dangerously close to this happening right here and now; the rest will die within the next 6-12 months. If you have other insured interests with these firms, be prepared to pay a LOT more with a new company that can’t earn anything off investments, and if you have a claim in process at the time it happens, it won’t get paid. The probability of you getting “boned” on any transaction with an insurance company is extremely high – I rate this risk in excess of 90%.
• The FDIC will be unable to cover bank failure obligations. They will attempt to do more of what they’re doing now (raising insurance rates and doing special assessments) but will fail; the current path has no chance of success. Congress will backstop them (because they must lest shotguns come out) with disastrous results. In short, FDIC backstops will take precedence even over Social Security and Medicare.

And that’s just the first half of the list.

The President is thinking about ways to save money:

Why Would the Obama Administration Want to Make Vets Buy Private Insurance for Their Health Care?

I am not a health care wonk but some of my good friends are, so I’ll refrain from pretending I can construct a health care argument whereby this makes sense (or doesn’t, for that matter). Instead, as a moral matter, veterans deserve free, government-provided health care. As a political matter, why the Obama administration would want to squander its good will in the military community is completely beyond me. Murray calls the plan DOA, as she should. But why should it be considered seriously in the first place?

Has lying become the underlying theme?  More from Market Ticker:

“The Bezzle” Defined

Here are some examples of “The Bezzle”:

• Liar loans: The borrower can’t possibly pay off the loan on the original agreed terms and the institution that makes the loan “passes it” to an investor fully aware that the borrower almost certainly lied about credit capacity.
• Overly-rosy projections about growth in property values: The speaker is either incompetent (doesn’t understand exponents – a fundamental mathematical concept) or is intentionally deceiving people.
• Overly-rosy projections about the stock market: “The market always comes back” and “over long periods of time it outperforms other investments.”  Both true, but both misleading; if you’re 18 you might be able to wait for it to come back, but the market has remained flat to down from a given level for more than 20 years before.  How long did you say it was before you intended to retire?
• “The Internet is doubling every three months!”:  It was – for about six months.  But that got embedded into the business plans of thousands of businesses, long after the growth rate had started to slow down to something more sustainable.  Oh by the way, the fundamental lie of that claim is that in 7 years  the Internet would have gone from its original two people to covering more than the entire population of the planet, including the rice farmer in China and the starving child in Bangladesh.

In short The Bezzle is ”the lie” that is always present in business.

The truth is always some degree of lying in business transactions – always has been, always will be.  And so long as The Bezzle doesn’t become the underlying theme in business, it simply bankrupts the people who try to run it when they get discovered.

But when The Bezzle becomes the underlying premise and basis for business transactions that entire segment of the market is doomed.

All this and more will be discussed tonight on Conflucians Say: The Dark Side of the economic meltdown

Conflucians Say tonight at 10PM EDT

Please join me (Katiebird), BostonBoomer, and Dakinikat at Conflucians Say:
Time: 10pm Eastern
Call-in Number: (347) 539-5420

Comments closed until after the show

Bad Bank, Bad Bank! Or I’m not an economist, but this sounds REALLY Bad to me

Does the idea of a Bad Bank have anything to do with this  story from a couple of days ago?  And can they REALLY be thinking of a $4 Trillion Bailout?  For Banks?  Well, remembering this:

Schumer’s $3-4 Trillion Horror Story

While questioning Treasury nominee Tim Geithner at his confirmation hearing this morning, Sen. Chuck Schumer said he spent some time calling around Wall Street this weekend, and what he heard was that if the government wants to clean out all the toxic assets from the financial system, it will cost some three to four trillion dollars. Which is to say, an order of magnitude larger than the second $350 billion in TARP money the Senate just approved.

That’s pretty daunting stuff when you consider that the banking system probably won’t recover until most of this bad debt gets cleaned up. And that the economy won’t recover till the banking system does. Alas, the only thing worse than spending $3 trillion to clean up the banks may be not doing it.

That doesn’t sound like a joke.  Then today  via Calculated Risk we learn that the idea of a Bad Bank is close to a sure thing:

The Obama administration is close to deciding on a plan to purchase bad—or non-performing and illiquid—assets from banks, according to industy sources. The plan could be announced early next week.

The so-called “bad bank” plan, would address the key problem of how to price the assets by using a model-pricing mechanism.

The model would take account of the government’s ability to hold onto assets, even to maturity, and pay for the them with cheap funding. Result: the government might end up paying more than current market prices for the securities.

. . .

Clearly, the idea of a “bad bank” is gaining momentum. On Capitol Hill today, Senate Banking Chairman Chris Dodd said he was aware the idea is under discussion and “it makes some sense to me.”

The move toward a bad bank concept comes amid growing speculation that banks may need another government bailout.

Jesus! No wonder they’re so sure we can’t finance Health Care For Everyone.  We’ll be lucky to buy toilet paper when this is all over.

No Republican Left Behind

Suckas!

Well, I don’t know about you, but I am simply THRILLED with the liberal slant of Barack Obama’s economic policy. As you know, I’ve been a tad…put off, shall we say, by some of his nods in the conservative direction. You know, what with anti-choice CDS sufferer Tom Daschle being put in charge of things like HHS and health care reform, and that Rick Warren invocation brouhaha, and the whole Sanjay Gupta “I Lie About Our Health Care System On The Teevee” Surgeon General thing,  and elevating anti-choice/anti-gay marriage Tim Kaine to the head of the DNC, and staying the course with Robert Gates…and that’s just in the past few weeks! I’ve hardly had time to freak out about the Middle East, Russia, Caroline Kennedy or the coming Depression, what with all this tsuris!

So, our President-Elect is on the socially conservative side, and well, he might not “end the war in Iraq” after all. But who cares? As we know, those issues are quite unimportant when you consider that Obama really knows how to fix the economy. I am sure he will seize this unique opportunity to shore up the ravaged institutions of FDR’s New Deal and begin to rebuild a strong middle class and fill in the Reaganite holes in the social safety net. After all, that’s what Democrats do!

Ahhhh, who the fuck am I kidding?

Did you read what he said today? Did you? I swear to the Giant Green Lizard, my liberal eyeballs were bleeding by the time I was finished. Misery loves company, so let’s take a closer look. We’ll skip all the Orwellian nonsense at the beginning about changing and believing, yada yada yada (wonder if the Groper, Jon Favreau, wrote it?).

Here’s what he says about health care reform:

To improve the quality of our health care while lowering its cost, we will make the immediate investments necessary to ensure that within five years all of America’s medical records are computerized. This will cut waste, eliminate red tape, and reduce the need to repeat expensive medical tests. But it just won’t save billions of dollars and thousands of jobs, it will save lives by reducing the deadly but preventable medical errors that pervade our health care system.

Um, huh? Is that it? Modernizing computer records? I’m sorry, but could he think ANY SMALLER? Do we really need to discuss the massive problems our health care system faces? And how will this cover the 47 million without health care now? Besides…is it me, or is this idea kind of, um, unoriginal?

In 2003, President Bush said he wanted most Americans’ medical records to be computerized within 10 years. The savings from moving away from paper could rise into the hundreds of millions a year, the president said. And electronic records can reduce medical errors, proponents said.

Could it get any worse? Oh, Yes, it can! The words of our Glorious Leader on education:

To give our children the chance to live out their dreams in a world that’s never been more competitive, we will equip tens of thousands of schools, community colleges and public universities with 21st-century classrooms, labs and libraries. We’ll provide new computers, new technology, and new training for teachers so that students in Chicago and Boston can compete with kids in Beijing for the high-tech, high-wage jobs of the future.

Chicago and Boston, huh? Gosh, wonder why he picked those areas out as examples. I’ll tell you something, the inner city schools in many other ares of the country need help too…but then again, Obama needs to keep his patrons in his home city and Uncle Teddy’s home city fat and happy!

Anywho, that stuff about new technology and the jobs of the future sounds kinda familiar. Where have I heard it before?

For Immediate Release
Office of the Press Secretary
January 21, 2004

Fact Sheet: Jobs for the 21st Century

Presidential Action:

In his State of the Union Address, President Bush announced Jobs for the 21st Century — a comprehensive plan to better prepare workers for jobs in the new millennium by strengthening post-secondary education and job training and improving high school education. This plan includes over $500 million in new funding for education and job training programs.

(snip)

Improving High School Education: The President’s plan will also improve the quality of education at our Nation’s high schools and better prepare students for success in higher education and the job market — including $100 million to help striving readers and $120 million to improve math education.

Leedurshipp: Ur Doing It Rong

more animals

I tell you, it’s a good thing nothing important is going on in America right now, because otherwise, this news would bother me just a tad.

CHICAGO (Reuters) – President-elect Barack Obama said on Thursday he would resign his U.S. Senate seat effective Sunday, which means he will not participate in next week’s post-election session that could address the ailing economy and struggling auto industry.

(snip)

Obama, who will be sworn in as president on January 20, said he would step down from his Senate seat to focus on the transition to the White House.

This would explain Team Obama’s coyness when reporters repeatedly asked whether more economic legislation would be passed by the Congress before the inauguration. For example, during the press conference which caused me to dub him “President-Elect Treebeard,” this exchange occurred:

Q Sir, there’s been some suggestion from House Democrats that the stimulus package may be in trouble, that it’s going to be a hard time getting it out of a lame-duck session.

Are you still confident that you would be able to get something done before you actually take office?

PRESIDENT-ELECT OBAMA: I want to see a stimulus package sooner rather than later. If it does not get done in the lame-duck session, it will be the first thing I get done as president of the United States.

Obviously, the President-Elect never planned on using his power as the new head of the Democratic Party in the Senate during this incredibly crucial time.  Economy, ecshmonomy! Obama’s going to be busy picking his new Cabinet and staffing all the departments that Bush filled with underqualified graduates of Liberty University. While this is, admittedly, a big job, one would think that with 450 people working on it. Obama could afford to spend a few days helping push his economic vision through Congress.

Faster, Economy. Fail! Fail! Fail!???

Dammit, I Coulda Fixed This Mess!

Oh dear, oh dear. Is our post-Chicago School neo-liberal deregulated greed-is-good utopia showing the cracks in its free-for-all facade?

NEW YORK – When Wall Street woke up Monday morning, two more of its storied firms had vanished.

Lehman Brothers, burdened by $60 billion in soured real-estate holdings, said it is filing for Chapter 11 bankruptcy after attempts to rescue the 158-year-old firm failed.

Bank of America Corp. said it is snapping up Merrill Lynch & Co. Inc. in an $50 billion all-stock transaction.

The demise of the independent Wall Street institutions came as shock waves from the 14-month-old credit crisis roiled the U.S. financial system six months after the collapse of Bear Stearns.

The world’s largest insurance company, American International Group Inc., also was forced into a restructuring.

But are we panicking? Heck no! The Murkin economy is strong and secure! The fundamentals are sound! Pay no attention to that man behind the curtain!

Well, maybe we’re panicking a little bit.

And a global consortium of banks, working with government officials in New York, announced a $70 billion pool of funds to lend to troubled financial companies.

The aim, according to participants who spoke to The Associated Press, was to prevent a worldwide panic on stock and other financial exchanges.

Ten banks – Bank of America, Barclays, Citibank, Credit Suisse, Deutsche Bank, Goldman Sachs, JP Morgan, Merrill Lynch, Morgan Stanley and UBS – each agreed to provide $7 billion “to help enhance liquidity and mitigate the unprecedented volatility and other challenges affecting global equity and debt markets.”

In a way, I think this was the point of globalization – to get us all so dependent on each other that no large country’s economy could be allowed to fail. Unfortunately, there is a lot of good faith assumed under this idea - good faith which we, as a nation, did not practice. We allowed our banking institutions to make extremely risky investments and deregulated our credit industries, and now both our economy and the economies of other nations around the world are being adversely affected.

Making Government Smaller Through Proper Regulation: A Liberal Point of View

I Screwed Up, So You Pay Up!

Remember when Grover Norquist said he wanted to shrink government so small that it could be drowned in a bathtub? And conservatives cheered, sneering at big-government liberals who want to steal money out of the pockets of the honest American businessman and give it to welfare queens so they can drive their Cadillacs and feed their 900 children?

After eight years of Norquist’s Party running Washington, how’s that working out for us?

The Bush administration seized control of the nation’s two largest mortgage finance companies on Sunday, seeking to shrink drastically their outsize influence on Wall Street and on Capitol Hill while at the same time counting on them to pull the nation out of its worst housing crisis in decades.

The bailout plan for the companies, Fannie Mae and Freddie Mac, a seismic event in a year of repeated financial crises followed by aggressive federal intervention, places the companies in a government conservatorship, much like a bankruptcy reorganization. The plan also replaces the management of the companies.

Whhhhhaaaaaaattttt? Isn’t this the mighty hand of Uncle Sam, reaching out to, gasp, REGULATE these corporations? But-but-but, I thought we had a free market here! I mean, since those companies were managed poorly and cannot meet their obligations, obviously they should fail. You snooze, you lose, greed is good, shit happens, right, Ronnie Raygun/Bush Part Deux?

[Treasury Secretary] Paulson said Sunday that it was important to rescue the mortgage giants because a failure of either company would cause turmoil in financial markets in the United States and around the world.

“This turmoil would directly and negatively impact household wealth: from family budgets, to home values, to savings for college and retirement,” he said. “A failure would affect the ability of Americans to get home loans, auto loans and other consumer credit and business finance. And a failure would be harmful to economic growth and job creation.”

Uh-HUH. In other words, the institutions were allowed to get too big to fail, and the American people will have to pay the price of corporate mismanagement once again. Call me crazy, but I don’t think that’s shrinking government at all.

Tuesday- tasty tidbits

Hi guys, I have teleconfernces this morning. But I have found some interesting things to chew on and mull over in the meantime.

• There is a reason why we don’t let children vote. It’s because they seem to treat candidates like teen idols. In the New York Times this morning, there is a piece on how children have persuaded their parents to register as Democrats and vote for Obama in Obama’s Young Backer’s Twist Parents’ Arms. And these parents have relinquished all parental responsibility and are following their children’s directions. Bad, bad, bad. It is time we re-established our parental authority and told our kids to eat their vegetables and clean up their rooms.
• This American Life had a recent podcast you may want to listen to. The Audacity of Government tells the stories of several people who were directly affected by the Bush Administration’s grab for power. This will leave you bewildered at what is motivating their decisions. And disturbed.
• Terry Gross, the best interviewer on radio, has had a number of superb podcasts lately that I highly recommend. Find out about derivatives and “instruments” that are screwing up our economy in Our Confusing Economy, Explained. In “Bush’s Law”, Secret Surveillance Efforts Revealed, Eric Lichtblau details what the Bushies were up to with the FISA court. Black Liberation Theology, In its Founder’s Words, defines and explains what it’s all about and what is really going in in Obama’s church. Very informative and highly recommended.
• Eriposte at TheLeftCoaster provides more evidence that the progressive blogosphere 1.0 is less about pro-Obama and more about anti-Clinton in Stories of Love and Hate.  Is this a real political difference with Clinton or is it indicative of the higher number of men in the blogosphere and therefore, a greater propensity to support one of their own?  And if it’s the latter, isn’t “progressive” a misnomer?