Month: December 2009

Pushback on the House on Healthcare Reform

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Rep. Louise Slaughter (D-NY), Chairman of the House Rules Committee, has said that the Senate version of the bill is so flawed that the whole bill should be killed, in an OP/Ed that she wrote for CNN.

In addition to a lack of a public option, she lists:

  • The Senate bill keeping the insurance companies’ antitrust exemption.
  • Allowing much higher rates to be charged with older people and people with preexisting conditions.
  • Fewer incentives/penalties on employers who do not supply insurance.
  • The anti-abortion language, which will have the effect of eliminating abortion coverage in insurance nation wide.

It’s unclear as to whether or not she is suggesting reconciliation or not.

Additionally, Representatives Barbara Lee, head of the CBC, and Lynn Woolsey, head of the CPC, are lobbying to kill the bill without a public option.

I would note that part of the dynamic is a push-back against the proposition that the Senate is calling the shots here.

The Senate Passes Obama’s Healthcare Bill

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The vote was 60-39.

Say what you will, but it’s been clear from the start that what Barack Obama and Rahm Emanuel have been interested in is Barack Obama signing a bill called “Healthcare Reform,” whether it helped ordinary people or not, and the Senate version fits the description to a “T”.

Obama has already made it clear that he wants the Senate bill to be the one out of committee, as shown by his full throated support of the tax on “Cadillac” insurance plan tax.

It means that, in addition to everything else, the bill is anti-union too, because protecting health care for their workers has been the Unions rear guard action for the past 28 years, ever since Reagan made union-busting cool with PATCO.

So, we will now allow insurance companies to levy a tax on ordinary Americans, and Rahmbama just loves that.

I had rather hoped that a few of the Senate Democrats, and those who caucus with them (I’m talking to you Bernie Sanders) would have had the guts to vote for cloture but against the bill, but no such luck.

At the rate things are going, we will get someone even more batsh%$ insane than George W. Bush in 2012, because there is no Republican on the national scene who is saner than he is right now.

Tyler Durden of Zero Hedge Spots Something Odd

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Past 3 Months


From March, when the Rally Started

For the past few months, the market runup has almost entirely happened after hours, when the markets are closed.

In fact, as he (or they, Tyler Durden is a nom de plume) note, “All the upside since September 14th has come exclusively from after hours action.” (emphasis original)

The money quote is:

The observant among you will immediately realize what this implies: not only is there no volume breadth to the recent move in the markets, but the actual push higher likely occurs on at most tens of thousands of futures contracts on a daily/weekly basis. The fact that literally several blocks of AH trades, used persistently, can move the market higher by 6% over the past 3 months, even as regular trading accounts for absolutely no part of this move, and that the SEC finds nothing troubling about this phenomenon, should be sufficiently telling about how “efficient” US markets have become.

If someone wanted to manipulate huge markets, they would do it at 3 in the morning, when the markets are small, and no one is watching for the last few months.

He thinks that it’s the, “HFT brigade to come in and scalp their trillions of pennies while leaving the market unchanged, then at 4pm handing it off again to leveraged futures manipulation and dark pools,” better known as, “That great vampire squid wrapped around the face of humanity,* Goldman Sachs.”

*Alas, I cannot claim credit for this bon mot, it was coined by the great Matt Taibbi, in his article on the massive criminal conspiracy investment firm, The Great American Bubble Machine.

Talk About the Odd Couple

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I’m talking about Jane Hamsher Grover Norquis. who have jointly penned a letter calling for the Attorney General to investigate Rahm Emanuel’s activities at Freddie Mac, as well as his role while in congress in obstructing investigations there, with the likely goal of pushing any revelations about his activities beyond the 10 year statute of activities.

Her bill of particulars:

  • That while on the board at Freddie Mac, Emanuel signed off regarding gross financial irregularities.
  • Participating in actions by Freddie Mac to make illegal in-kind contributions to politicians in the form of hosting fundraisers, including one Rahm Emanuel.
  • Writing a law allowing the Office of Federal Housing Enterprise Oversight (OFHEO) to fire its inspector general by dissolving the organization and replacing it, as well as the the Federal Housing Finance Board (FHFB), with the Federal Housing Finance Agency (FHFA).
    • It should be noted that the Obama administration has refused to appoint a new IG to its successor organization, and the Obama administration has refused a Freedom of Information Act (FOIA) request on Freddie claiming that, the report from the fired IG was “commercial information”.

Now, I understand that Grover Norquist is an bad guy, but you get coverage by getting a diverse coverage for such things, as Hamshire makes clear when she looks at some similar efforts, such as the CAF letter to delay confirmation of Bernanke until there was an audit of the Fed, which was signed by a diverse group of people including, Chris Bowers, Dean Baker, Mark Calabria, James Kenneth Galbraith, Matt Kibbe, Grover Norquist, Phyllis Schlafly (WTF?!?!?), Robert Weissman, and John Whitehead. (Neanderthals in italics)

I’ve always known that Rahm is intellectually corrupt, his actions. During the Obama and Clinton administrations, as well as his time head of the DCCC show a real hostility to anything but the most corporate of corporatist Democrats, and he has always exhibited a tremendous hostility to liberals.

Now appears that he may be legally corrupt too, but I don’t think that Obama would get rid of him short of an indictment, because the President thinks that he needs Rahm to keep the DFHs* in line.

*Dirty F%$#ing Hippies
Full letter after break:

December 23, 2009

Attorney General of the United States of America
U.S. Department of Justice
950 Pennsylvania Avenue, NW
Washington, DC 20530-0001

Dear Attorney General Holder:

We write to demand an immediate investigation into the activities of White House Chief of Staff Rahm Emanuel. We believe there is an abundant public record which establishes that the actions of the White House have blocked any investigation into his activities while on the board of Freddie Mac from 2000-2001, and facilitated the cover up of potential malfeasance until the 10-year statute of limitations has run out.

The purpose of this letter is to connect the dots to establish both the conduct of Mr. Emanuel and those working with him to thwart inquiry, and to support your acting speedily so that the statute of limitations does not run out before the Justice Department is able to empanel a grand jury.

The New York Times reports that the administration is negotiating to double the commitments to Fannie and Freddie for a total of $800 billion by December 31, in order to avoid the congressional approval that would be needed after that date. But there currently is no Inspector General exercising independent oversight of these entities. Acting Inspector General Ed Kelly was stripped of his authority earlier this year by the Justice Department, relying on a loophole in a bill Mr. Emanuel cosponsored and pushed through Congress shortly before he left for the White House. This effectively ended Mr. Kelly’s investigation into what happened at Fannie and Freddie.

Since that time, despite multiple warnings by Congress that having no independent Inspector General for a federal agency that oversees $6 trillion in mortgages is a serious oversight, the White House has not appointed one.

We recognize that these are extremely serious accusations, but the stonewalling by Mr. Emanuel and the White House has left us with no other redress. A 2003 report by Freddie Mac’s regulator indicated that Freddie Mac executives had informed the board of their intention to misstate the earnings to insure their own bonuses during the time Mr. Emanuel was a director. But the White House refused to comply with a Freedom of Information Act request from the Chicago Tribune for those board minutes on the grounds that Freddie Mac was a “commercial” entity, even though it was wholly owned by the government at the time the request was made.

If the Treasury approves the $800 billion commitment to Fannie and Freddie by the end of the year, it will mean that under the influence of Rahm Emanuel, the White House is moving a trillion-dollar slush fund into corruption-riddled companies with no oversight in place. This will allow Fannie and Freddie to continue to purchase more toxic assets from banks, acting as a back-door increase of the TARP without congressional approval.

Before the White House commits any more money to Fannie and Freddie, we call on the Public Integrity Section in the Justice Department to begin an investigation into the cause of Fannie and Freddie’s conservatorship, into Rahm Emanuel’s activities on the board of Freddie Mac (including any violations of his fiduciary duties to shareholders), into the decision-making behind the continued vacancy of Fannie and Freddie’s Inspector General post, and into potential public corruption by Rahm Emanuel in connection with his time in Congress, in the White House, and on the board of Freddie Mac.

We also call for the immediate appointment of an Inspector General with a complete remit to go after this information.

We both come from differing political ideologies. One of us is the conservative head of a transparency foundation, and the other is the publisher of a liberal political blog. But we make common cause today out of grave concern for the future of our country in the wake of corruption-riddled bailouts. These bailouts continue to rob Main Street to benefit Wall Street, and, because of that, we together demand the resignation of Mr. Emanuel, a man who has steadfastly worked to obstruct both oversight and inquiry into the matter. Rahm Emanuel’s conflicts of interest render him far too compromised to serve as gatekeeper to the President of the United States.

We will lay out the details further below, and are available at your earliest convenience to meet with you directly.

Sincerely,

Positively Nixonian

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It’s Called Lying Like a Rug

In support the idea that he will put his name to anything marked healthcare reform, barack Obama gave an interview to the Washington Post, and he told a complete and utter lie:

Those elements are in the House and Senate versions of the legislation; their competing proposals will have to be reconciled in conference committee next year. The House bill includes a government-run insurance plan favored by progressive Democrats; the Senate version does not. “I didn’t campaign on the public option,” Obama said in the interview.

(emphasis mine)

It takes about 15 minutes on Google and Youtube to see that it’s a lie, see the video on the right.

It certainly wasn’t something that he pushed hard during the campaign, unlike, for example, his support for repealing Don’t Ask Don’t Tell, and family benefits for gay couples, where his administration is now aggressively fighting to prevent real progress.

With this level of hypocrisy, it’s no wonder that Drew Westen, a psychologist, neuroscientist, and political scientist whose book The Political Brain was widely considered to be the bible of the Obama campaign just wrote a scathing article condemning Obama’s unwillingness to lead:

As the president’s job performance numbers and ratings on his handling of virtually every domestic issue have fallen below 50 percent, the Democratic base has become demoralized, and Independents have gone from his source of strength to his Achilles Heel, it’s time to reflect on why. The conventional wisdom from the White House is those “pesky leftists” — those bloggers and Vermont Governors and Senators who keep wanting real health reform, real financial reform, immigration reform not preceded by a year or two of raids that leave children without parents, and all the other changes we were supposed to believe in.

Somehow the president has managed to turn a base of new and progressive voters he himself energized like no one else could in 2008 into the likely stay-at-home voters of 2010, souring an entire generation of young people to the political process. It isn’t hard for them to see that the winners seem to be the same no matter who the voters select (Wall Street, big oil, big Pharma, the insurance industry). In fact, the president’s leadership style, combined with the Democratic Congress’s penchant for making its sausage in public and producing new and usually more tasteless recipes every day, has had a very high toll far from the left: smack in the center of the political spectrum.

What’s costing the president and courting danger for Democrats in 2010 isn’t a question of left or right, because the president has accomplished the remarkable feat of both demoralizing the base and completely turning off voters in the center. If this were an ideological issue, that would not be the case. He would be holding either the middle or the left, not losing both.

What’s costing the president are three things: a laissez faire style of leadership that appears weak and removed to everyday Americans, a failure to articulate and defend any coherent ideological position on virtually anything, and a widespread perception that he cares more about special interests like bank, credit card, oil and coal, and health and pharmaceutical companies than he does about the people they are shafting.

………

Leadership means heading into the eye of the storm and bringing the vessel of state home safely, not going as far inland as you can because it’s uncomfortable on the high seas. This president has a particular aversion to battling back gusting winds from his starboard side (the right, for the nautically challenged) and tends to give in to them. He just can’t tolerate conflict, and the result is that he refuses to lead.

………

What’s they’re seeing is weakness, waffling, and wandering through the wilderness without an ideological compass. That’s a recipe for going nowhere fast — but getting there by November.

(emphasis mine)

As I’ve said before, the problem is that he believes that he is likable enough that he can bring people together even when there is no common ground, and the idea of people actually having honest differences of opinion, or of having legitimate political reasons for opposing his policies, appears to be completely beyond him.

Not Enough Bullets: AIG Again

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Remember earlier this year, when, after news of massive bonuses to the executives who bankrupted AIG, they promised to return $45 million in bonuses.

Well, once again, we got punk’d by Wall Street:

When word spread earlier this year that American International Group had paid more than $165 million in retention bonuses at the division that had precipitated the company’s downfall, outrage erupted, with employees getting death threats and President Obama urging that every legal avenue be pursued to block the payments.

New York Attorney General Andrew M. Cuomo threatened to publicize the recipients’ names, prompting executives at AIG Financial Products to hastily agree to return about $45 million in bonuses by the end of the year.

But as the final days of 2009 tick away, a majority of that money remains unpaid. Only about $19 million has been given back, according to a report by the special inspector general for the government’s bailout program.

Promises, I guess, are for peasants.

Economics Update

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New Home Sales Not Just Ugly, but Fugly!
h/t Calculated Risk

Yesterday, I noted the jump in existing home sales, and posited that this was almost entirely due to people rushing to get in under the wire on the new home buyer house credit, well today, we have the new home sales numbers, and they plunged by 11.3%, which validates my thesis.

Basically, existing home sales numbers are recorded at closing, while new home sales are recorded when the contract is signed, which means that the new home sales numbers lead existing home sales by 30-60 days, so we have a snapshot of what happens when people rushing to secure a tax credit stop rushing, and it ain’t pretty.

It also explains why home mortgage application volume fell.

As I’ve said before, real estate won’t lead us out of a recession, it will follow.

On the other hand, personal income and spending rose in November, which is a sign of improvement, and the latest CNN/Opinion Research and Reuters/University of Michigan surveys show an improvement in consumer sentiment, though of the “slightly less suckage” rather than the “going well” variety..

One interesting development in the 3rd quarter of this year was that central banks have cut purchases of dollars for reserves to a record low, “30 percent of new foreign-exchange reserves,” which implies a slow walk away from the dollar by central banks.

Even so, the dollar rose today, and Oil also rose on a surprise drop in inventories………Which raises the question, why are inventories always surprising folks?

London Bankers Discover Taxes in Switzerland Too

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Yes, all those bankers who are trying to move to Geneva to avoid the UK Bonus tax have discovered that Switzerland has a 44% tax rate, and that the posh private schools for their kids are already full:

Geneva, touted as a haven for London bankers facing heavier U.K. taxes, may lure fewer than predicted thanks to a housing shortage, crowded schools and a 44 percent income-tax rate.

Barclays Plc President Robert Diamond this month joined a chorus of financial leaders in arguing that the U.K.’s 50 percent tax on bonuses would drive bankers away from London. The Swiss Private Bankers Association said the “arbitrary” tax will boost the allure of Geneva, whose bankers oversee about 10 percent of the world’s foreign-held private wealth.

“It’s a joke, it’s lobbying,” said Tim Dawson, an analyst at Geneva-based brokerage Helvea AG. “People are dreaming if they think the London investment banking world is going to move. There is more office space in Canary Wharf than in the whole of Switzerland,” he said, referring to London’s second financial district.

I also think that the bankers “misunderestimate” the degree to which people actually want them there, making city centers prohibitively expensive for ordinary people while they make demands for subsidies from lawmakers.

If there is a lesson from the Minaret fiasco in Switzerland, it’s that they don’t like foreigners there, whether they are hard working immigrants from the Middle East, or parasites from London.

Whiskey Tango Foxtrot?

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Remember Parker Griffith, the DINO Congressman who turned ‘Phant today? (link)

Well he, donated $1,500.00 to Howard Dean in 2004.

He also donated a grand to Harry Reid in 2003, and $500 to Evan Bayh in 2006, and $500 to Harold Ford in 2005.

And yes, I am banging my head against the keyboard over this.

For the other three, I can kind of get, but for Howard Dean, the candidate from the Democratic Wing of the Democratic Party?

I is confused.

Economics Update

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H/t Barry Ritholtz

New home sales, effect of tax credit h/t Barry Ritholtz basic graph h/t Calculated Risk


H/t Calculated Risk

So, we have another revision of the GDP numbers for the 3rd quarter, and the GDP number falls again, down from an initial estimate of 3.5% to the first official figures of 2.8%, and now it has been revealed that the GDP grew at just 2.2%. (top pic)

The more accurate data that comes in, the worse the news.

As an aside, the US Bureau of Economic Analysis always does this, that is to say that the numbers get worse when better data comes in, which implies a systemic problem that needs to be fixed.

On the other hand, the UK initial numbers were revised in the opposite direction, with a contraction of -0.2%, up from the initial estimate of -0.3%.

The news from down under is not grand either, with the New Zealand economy’s GDP missing forecasts.

Still, the Philadelphia Bank of the Federal Reserve’s State Coincident Index looks better (bottom pic), with at least marginal levels of growth in 1/3 of the states.

On the other hand, we had some good news in real estate, where the National Association of Realtors has reported existing home sales rose 7.4%, to the highest level since February 2007:, though even the NAR admits that this is largely due to people rushing to buy houses before the home buyer tax credit expires.

As both CR and Barry Ritholtz note (2nd pic), this a function of changes and/or perceived changes in tax policy, so December will give a real picture of where the housing market is.

It should be noted that a remarkably unpleasant milestone was passed though with, the number of mortgages in national banks, which report to the OCC, reporting that for the first time ever, over one million mortgages were in foreclosure in the 3rd quarter.

Additionally, we are seeing signs of problems among small banks and businesses, with more small bank TARP recipients not paying dividends [on edit: a clarification, they are not paying dividents on their RARP money, so they are technically in default], and small business bankruptcies are up 81% YoY in California.

In energy, OPEC kept oil production levels flat, but has promised to more rigorously enforce the current limits, which is a de facto (but rather small) cut in production, which drove oil higher, even though the dollar rose on the surprisingly strong home sale report.

Good Riddance to Bad Rubbish

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What Republicans Said About Griffith in 2008

So, a DINO who said that he would not vote for Pelosi as speaker in 2010, Representative Parker Griffith (AL-5), just made it official and declared himself a Republican.

My guess is that he expects the ‘Phants to win in 2010, and in any case, he won a 52-48 bright red district, and so his reelection is easier.

The Democrats should run the ads that the Republicans ran against him in 2008……over……and over……and over again.

Now to get the rest of the Blue Dog coalition and New Democrats to leave the party……If only 1/3 of them lose reelection as ‘Phants, the Dems stay in control, and the party doesn’t have to deal with those reactionary corporatist whores.

[on edit]
It looks like the Republican running for the seat,Les Phillip, is staying in the race too, so expect a primary fight.

[another edit]It looks like the DCCC dropped $1,076,370 on this moron in 2008.

Seriously, nice job Rahm Emanuel and Chris Van Hollen, this one stinks almost as bad as spending millions to muscle out Christine Cegelis and run the hapless Tammy Duckworth up against Pete Roskam in 2006.

News Flash: Bernanke is an Idiot

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The Kaplan Test Prep Company Washington Post actually does some reasonably good news gathering now and again, even if their OP/EDs are complete crap.

Case in point is this history of the Federal Reserve’s mis-steps in dealing with the housing bubble and the related sub-prime debacle.

Their lede is a speech that Bernenke gave in 2007, where he, “Assured the bankers and businessmen gathered at the Westin Hotel on Michigan Avenue that their prosperity was not threatened by the plight of borrowers struggling to repay high-cost subprime loans,” because, most banks were not involved at all with sub-prime lending, which was false, and transparently so:

He was wrong. Five of the 10 largest subprime lenders during the previous year were banks regulated by the Fed. Even as Bernanke spoke, the spillover from subprime lending was driving the banking industry into a historic crisis that some firms would not survive. And the upheaval would shove the economy into recession.

Just as the Fed had failed to protect borrowers from the consequences of subprime lending, so too had it failed to protect banks.

(emphasis mine)

So, it’s clear that the Fed, and Ben Bernanke were clueless, but it gets worse:

A warning ignored

In January 2005, National City’s chief economist had delivered a prescient warning to the Fed’s board of governors: An increasingly overvalued housing market posed a threat to the broader economy, not to mention his own bank and others deeply involved in writing mortgages.

The message wasn’t well received. One board member expressed particular skepticism — Ben Bernanke.

“Where do you think it will be the worst?” Bernanke asked, according to people who attended the meeting, one in a series of sessions the Fed holds with economists.

“I would have to say California,” said the economist, Richard Dekaser.

“They have been saying that about California since I bought my first house in 1979,” Bernanke replied.

This time the warnings were correct, and the collapse of the California real estate market would bring down the nation’s fourth-largest bank, the largest casualty of the financial crisis.

(emphasis original)

This is egregious enough that one of Bernanke’s most stalwart supporters, Paul Krugman calls him out, with charts:

The point is that there was indeed a huge CA bubble in the 80s, which burst painfully. Nor was this an obscure bit of knowledge: in fact, people like Calculated Risk and yours truly were quite explicitly using the great California bubble of the 80s as a model for what was going to happen nationally.

This whole episode makes me think considerably worse of my former department head.

(emphasis mine)

Bernanke was saying that there had never been a housing bubble and crash in California, despite the fact that there had been one that popped and bottomed out just 10 years before.

This man should not be in charge of a pastry shop, much less the Federal Reserve Bank of the United States of America. I’m not sure how he even became the head of the econ department at Princeton….He seems far to feckless for that.