Year: 2009

What Prima Donnas

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Well, it appears that Senator Evah Bahy’s (DINO-IN) new moderate caucus is getting some pushback from their constituents, and they are crying like a bunch of “girlie men”, to quote the governator.

It appears that Rachel Maddow covered this, and called them “conservadems”, and they are getting some calls from voters in their states telling them to get with the program.

How many calls are they getting?

Maddow’s five-minute “conservadem” segment last Thursday provoked at least 20 calls Monday to Udall’s office and more than a dozen e-mails to Democratic Party headquarters in Colorado.

So now they are crying about how awful people are to them.

Seriously, these folks are used to obstructing progressive programs, and then getting a pat on the head from villagers inside the beltway, but now, with someone pointing them out as trying to stifle change, they get 20 phone calls and more than a dozen emails, and they are whining about how people are mean to them.

Listen, if you suck up to Wall Street, who destroyed our 401(k)s, and you suck up to large food processors, who put poison in our peanuts, because they contribute to your campaign, you deserve whatever flak that you catch.

Cry me a fracking river.

Economics Update

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So, the commodities markets surged as a result of the Fed’s quantitative easing, which means that they are expecting inflation there, which has, among other things, put oil at a 4-month high,

The fact that the 2009 US budget deficit has just been revised higher may also be contributing to traders’ positions.

Of course, Bernanke is primarily interested in preventing deflation, so this is a good thing, though I wonder how effective he will be.

Case in point: investors requested only $4.7 billion out of $200 billion available for the Fed small business and consumer lending program, the TALF.

It’s a confidence problem, and I really think that the first step to restoring confidence needs to be removing the malefactors in finance who screwed this up in the first place.

The dollar rose today, largely on the belief that yesterday’s drop indicated a time for profit taking.

And Some Public Floggings Would Be Nice Too

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Yves Smith at Naked Capitalism calls for aggressive criminal investigations, and I agree.

It’s clear that there was a lot of outright criminality, and the broken window theory of law enforcement works with white collar criminals too:

Of course, it isn’t clear whether deterrence works against white collar criminals, but the flip side is William Bratton style zero tolerance policing was successful in seemingly ungovernable New York. The theory was that allowing minor infractions, like window breaking, to go unpunished sent a very visible signal that misdeeds were tolerated. Of course, zero tolerance wasn’t the only technique used by Bratton (he also was big on flexible deployment, shifting officers to neighborhoods that suffered an increase in crime), but it is considered to be an effective policing tool. And Wall Street is so far from having any meaningful policing that it’s a joke.

It seems anything short of regulatory or legal moves that limit career options (read future earning power) is an insufficient disincentive to risky trader and investor behavior.

I would argue that the Wall Street crooks have more to lose than a corner dope dealer.

After all, if they get caught, thrown in jail, and their assets,and possibly those of their spouses and perhaps their children’s college funds, are forfeit, that’s a lot more to lose than getting 3 to 5 in a prison when you had nothing before.

Geithner Fesses Up

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Well, I suppose that it’s an improvement that we now have people in cabinet positions who, when caught in a bald faced lie, will, when absolutely forced to, tell the truth.

Compared to Dick Cheney, or Alberto Gonzalez, the fact that Timothy Geithner is now admitting that it was the Treasury that demanded the bonus loophole is a step forward.

Of course, this followed 24 hours of “pin the bonus on Chris Dodd,” and only when people went back to contemporaneous news reports, and his fellow senators pushed back against the smear, did they change their tune, but considering the fact that Ari Fleischer accused Saddam Hussein of planning 911 just 6 days ago, this is a step forward, but still, Geithner needs to realize that he works for Barack Obama, who works for us, and not the banks.

House Passes Bonus Tax Bill

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Just over half of the ‘Phants voted against it, and all but 6 Democrats (I’ll post who and what should be done later) voted for a 90% tax on bonuses of companies getting bailed out by the government.

On some level I understand just how this is really a very small part of the bailout, but from news, to outrage, to bill passing the house is about 4 days, and it means something, though I’m not sure who gets that yet.

More Nails in Eddie Haskell’s Coffin

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I think that Geithner will be gone by June….He should have rented a house, because we now have a report that Treasury was informed of the bonuses two weeks before Geithner says that he knew, which makes him either a liar, or incompetent.

Me, I’ll go with liar, as it is clear that the Obama administration is lying their asses off about Dodd’s role in proposed bonus restrictions in the bailout legislation, and the logical people lying about it right now are all on the Geithner/Summers “axis of weasels”:

After the recent furor relating to the AIG payments, lawmakers returned to make a forensic examination of the provision seeking to assign blame for what some called a secret agreement to spare the tottering insurance giant, which has received more than $170 billion in federal aid. The provision and its genesis consumed Capital Hill Wednesday.

“The president goes out and says this is not acceptable and then some backroom deal gets cut to let these things get paid out anyway,” said Sen. Ron Wyden, (D., Ore.), author of an earlier, alternative pay amendment, told the Associated Press.

The Obama administration had not tried to hide its concern about the moves to clamp down on executive compensation. Both Treasury Secretary Timothy Geithner and National Economic Council Director Lawrence Summers lobbied Mr. Dodd to make changes.

Administration officials said the Treasury didn’t suggest any language or say how the amendment should be changed. They said they noted legal issues that could likely lead to challenges, but was the end of their involvement. The official said Mr. Dodd and Congress made the final changes on their own.

At issue were competing provisions in the stimulus bill that capped executive compensation for recipients of bailout funds. One, drafted by Sens. Wyden and Olympia J. Snowe (R, Maine), would have capped bonuses at $100,000, retroactive to 2008. Companies awarding bonuses above that level would face the choice of returning those funds to the Treasury or having them taxed at 35%.

“Administration Officials” means someone under Geithner’s or Summers’ control here.

What’s more, the rest of the world does not have any confidence in Geithner either, as evidenced by the IMF criticizing his plan as “lacking detail.”

The IMF never criticizes a Secretary of the Treasury, and the fact that they are now indicates that there are a number of foreign nations that are sick of him, and signed off on this statement.

We need someone who will hold the financial industry to account, and Geithner still has knee pads on.

I’d Say It’s Self-Evident, Only Not

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Nemo at Self Evident makes a convincing case that Bernanke and Geithner are not doing anything but trying to protect the incumbent banking giants.

I agree. While we need a functioning credit system, there is no need for the current banks to continue to exist in their current form, and the Fed and Treasury’s frantic effort to keep these banks on life support is a detriment to the rest of the economy:

If I were in charge and I wanted to prevent banks from failing at all costs, what might I do?

I might relax mark-to-market accounting. This would allow assets to be carried at inflated valuations, both for purposes of regulatory capital requirements and for purposes of getting loans from the Fed.

I might provide non-recourse loans to private equity to create inflated marks where mark-to-market still applies.

I might try to convince the FDIC to exercise forbearance in seizing banks. Of course, the primary day-to-day mission of the folks at FDIC is to preserve the integrity of their insurance fund. So they might object to my suggestion. I might have to give them assurances that they will have the necessary resources should my great plan fail. A $500 billion credit line from the Treasury, say.

If the FDIC agreed, they might suddenly go from 3-4 bank seizures per week to 0-1 per week.

Once my plan leaked to certain troubled banks, they might suddenly halt their attempts to raise capital at $0.20/share.

And of course, once Wall Street got wind of it, shares in financial companies would rocket higher.

Let me know if you notice anything like this happening.

Good point, and good snark.

What Have They Got To Hide

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In this case, it’s the Federal Aviation Administration, which has a proposed rule to block public access to raw bird strike data:

The FAA says requests for data from the public “have typically been for specific data fields, individual airports or detailed portions of the database” and that responses from the agency “have addressed each request individually and adequately”.

However, the agency cautions public analysis of bits and pieces of the data could lead to inaccurate portrayals of airports and airlines, which could have a negative impact on their participation in reporting bird strikes.

So, they are saying that think that ordinary people are too stupid to understand the data.

More likely, they are covering something up, like certain airports being having a lot more problems with bird strikes, and the FAA, which is tasked with both regulating and promoting aviation, finds this information inconvenient.

Economics Update

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Thursday is new jobless day, and the numbers suck with new claims falling to a still very high 646,000 and continuing claims hitting a new record of 5.47 million, which is a new record….Again.

This implies that people are still unable to find jobs, but, for a while, at least, employers have run out of people to lay off….Delightful.

We also had the Leading Economic Indicators falling, though not as badly as the consensus prediction, and the Philadelphia Fed Business Outlook Survey for March remained awful, from -41.3 in February to -35.0 this month, so we are still seeing a contraction.

In the auto industry, the bailout has been extended to parts suppliers, to the tune of %5 billion.

In real estate, it looks like Moody’s might cut the ratings on some $241 billion of debt for jumbo mortgages, which means that it must suck to live in a high cost real estate area right now.

In the world of the here and now, Moody’s did downgrade insurance company Prudential, and I’m wondering how long before the rest of the insurance industry looks like AIG.

In any case, it appears that the Fed’s decision to start quantitative easing (printing money) is having an effect, with the cost of borrowing falling, with 30-year fixed mortgages falling to 4.98%.

The Fed has also driven the US dollar lower, with the dollar hitting $1.36:€1.00 for the first time since January.

We are also hearing rumors that Citi is considering a reverse stock split, my guess is that this is how they want to address the worry that they might become a penny stock.

In energy, oil broke $50/bbl for the first time this year, on the falling dollar and reports that OPEC members are more-or-less keeping to their quotas.

Have I Mentioned that I Love Barney Frank?

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In a completely heterosexual kind of way, as the General would say.

In any case, the distinguished gentleman from Massachusetts asks, “Is There an Antidote to the Republican Amnesia?“

Memory eventually fails us all, but apparently the decline strikes one party far more than the other.

In recent weeks, my friends across the aisle have expended a lot of breath proclaiming that the Democrats caused the present financial crisis by failing to pass legislation to regulate financial services companies in the years 1995 through 2006.

There is only small one problem with this story — throughout this entire period the Republicans were in complete charge of the House and for the most critical years they controlled the House, the Senate, and the Presidency.

In the House of Representatives, the majority party has almost unlimited power over the minority party. The majority party owns the committee chairmanships; it controls what bills come to a vote; and it is under no obligation to consider the ideas of the beleaguered minority. When the Republicans were in the majority they ruled with an iron first; it is no accident that Tom DeLay was known as “The Hammer.”

That is why I find it particularly flattering the Republicans now claim that in the years 1995 to 2006 I personally possessed supernatural powers which enabled me to force mighty Republican leaders to do my bidding. Choose your comic book hero — I was all of them.

…..

Brutal and very funny.