Year: 2009

Stimulus Bill Draft Released By Democrats in Congress

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You can find the full text here.

My quick take, is that I would like to see:

  • More rail investment.
  • More mass transit investment.
  • That the $32 billion for, “to transform the nation’s energy transmission, distribution, and production systems by allowing for a smarter and better grid,” sounds like a giveaway to the electric utilities.
  • The money for broad band should be better defined, so that it goes to public and cooperatively owned agencies and infrastructure only….We already threw billions at the incumbent telcos in the late 1990s/early 2000s with little in the way of results.
  • Flood control is almost always a synonym for pork.
  • The spending on schools should target the poorest districts.
  • The increases in unemployment benefits are the most bang for the buck in generating economic activity, and the increase in food stamps is a close second.
  • I think that the tax cuts are a lose.

That’s based on a 15 minute read of the summary, though.

Election Update

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I have no clue as to what Norm Coleman and His Evil Minions&trade are trying, but the schedule his proposed to the judges who have been assigned to his challenge mean that it would be at least 6 weeks before they finish.

That seems to me to be a good way to piss off said judges.

If he actually thought that he really won, I would imaging that he would be trying to move this along quickly.

I have no clue as to what is going on, except that perhaps Republicans are paying him a lot of money to keep this up so that Franken does not vote in the Senate.

Economics Update

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Well, weekly first time jobless claims at rose to 524,000, and the 4 week moving average was down 8000 to 518,500, and continued claims fell slightly, from 4.6 to 4.5 million. (Scary graph pr0n on right)

I’m not sure how much of this is being effected by the short weeks of Christmas and new years, but it should sort out in the next few weeks.

Not unsurprisingly, the Federal Reserve’s Beige Book, a collection of anecdotal economic information reported by the various Federal Reserve banks, was really quote grim.

Unsurprising, considering that foreclosure filings rose 81% in 2008 over 2007.

Housing is not recovering in the near term, even with mortgage rates hitting another record low.

One of the reasons that there will not be a recovery is that commercial real estate is imploding right now, with the volume of loans for office space and rental properties defaulting or becoming delinquent expected to triple in 2009.

In international finance, S&P downgraded Greek sovereign debt, from A to A-, and the ECB cut its benchmark rate to 2%, an all time low.

Not surprisingly, both of these pushed the dollar up today.

The juxtaposition of economic weakness with a stronger dollar drove oil down too.

Confirmation Hearings Today

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I’m not following this particularly closely, as I believe that the overarching policy will be coming from Barack Obama, but we had the two big ones today, Holder and Clinton.

Regarding Holder, he has said that he will review the determination not to prosecute Bradley Schlozman, who clearly lied to Congress, though I would still expect not to see a prosecution.

More heartening is that he explicitly said that water-boarding is torture.

I expect the Republicans to continue to fling poo, but I think that he will be approved.

Also, the Foreign Relations Committee voted for Clinton as Secretary of State 16-1 with Senator “Diaper” Vitter voting against.

Upgrading Freight Rail as Stimulus

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Phillip Longman makes the very good point that while people are talking up bullet trains, they are ignoring freight rail infrastructure.

I used to work as an engineer at GE Transportation Systems* on their locomotives, I was Lead Engineer on the Blower Cab Structure on the AC6000 Locomotive, and as a result, I consider myself to have some background in this industry.

Simply put, it is easier, cheaper, and faster to upgrade or repair existing for rail, and medium speed (say less than 150 km/h) rail than it is to construct new rail for what Atrios calls “Supertrains”.

Cargo transport is energy inefficient in the US, and the upgraded infrastructure would increase speeds, even for short haul passenger rail, and reduce accidents.

Best of all, this is all shovel ready, you don’t need an environmental impact statement, or to go before a planning board, or to seize land by eminent domain to repair and upgrade rail lines.

*Yes, I have worked everywhere. Maybe I can’t hold down a job, but more likely this has been my role as “technical hit man”, where you are parachuted in to take care of a specific need.

Senior Bush DoJ Official Called Perjurer by IG

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The Department of Justice’s report on Bradley Schlozman is absolutely scathing, saying that he:

  • Illegally applied political standards to career attorney hirings.
  • Lied about it to the Senate Judiciary Committee.

But 2 weeks before the new administration, no charges will be filed.

So, we have a flat out statement that he committed perjury, you know the things that the Republicans went Jihad over with Bill Clinton when it was: (a) Arguable, depending on your definition of sex, and (b) Not related to his official duties.

Even so, because Bush and His Evil Minions™ have thoroughly polluted the Justice Department, so the U.S. Attorney’s Office for the District of Columbia has declined to prosecute him.

If anyone out there lives in Kansas, how about filing a complaint with the disciplinary authorities there, because that is where he is practicing law. (more contact information at the link)

Reid Finally Wins One

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Every 2 years, both houses of Congress need to pass an organizing resolution, which specifies things like committee members for the various parties.

Because the Senate is a continuing body, only 1/3 are reelected at a time, and this organizing resolution is subject to filibuster, I was fully expecting the ‘Phants to do Harry Reid like a two dollar whore.

I’m pleasantly surprised that Reid got exactly what he wanted, with no filibuster.

The Democrats gets +3 on most committees, +4 on the Appropriations and Armed Services committees, +1 on the Intel Committee (decreed by statute), +2 on the Joint Economic Committee, and even membership on the Ethics Committee (which is standard).

The reason that this happened, I think, is that if they had continued to operate under the old organizing resolution, the Dems would have been at +5 on Appropriations, which would have made things rather tough for the ‘Phants.

Jesse Jackson, Jr. Just Threw His Hat Into the Ring For Senate in 2010

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Here is the money quote:

Jackson supported Burris’ effort to claim the seat to which he was appointed by Illinois Gov. Rod Blagojevich but criticized him for allowing his supporters to play the race card. This “racialization of the Senate seat is going to be a profound problem for Democrats,” Jackson told Politico.

While I agree with the sentiment, this is Representative Jackson’s first salvo in a primary battle.

Gaza Update

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Israel continues its advance into Gaza city, and Aviation Week has an analysis of the tactics of the the ground assault on Gaza by the Israelis (paid subscription required) and it appears that the tactics were a surprise to Hamas, which is a very real difference from what happened in 2006 against Hezbollah.

They were expecting an incursion from the north, and by attacking from the east, they cut both the supply and communications to the militias who had moved north to face an assault that never happened.

In 2006, the IDF, under the command of a Chief who was an Air Force General, showed none of this initiative, because, big surprise here, the Air force always thinks that it can win a war on its own.

An interesting bit of technology has entered the fray, a FLIR with automatic gain control, which can give near-instantaneous BDA while the fireball is still present.

That being said, for all the tactical and technological skills on display here, I still don’t see a strategic goal in anything done so far, with the possible exception of the seizure of Hamas broadcasting facilities.

There are reports that Hamas is now calling for a week long cease fire, and they are demanding an Israeli troop pullout as a part of this.

I am not sure if this is a sign of weakness or strength on the part of Hamas, or just some sort of theater.

It’s Official, It’s Torture

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So says Bush administration official Susan Crawford, the convening authority for the military kangaroo court at Gitmo:

“We tortured [Mohammed al-]Qahtani,” said Susan J. Crawford, in her first interview since being named convening authority of military commissions by Defense Secretary Robert M. Gates in February 2007. “His treatment met the legal definition of torture. And that’s why I did not refer the case” for prosecution.

Now could we please get Barack Obama to assign Patrick Fitzgerald to investigate this?

Election Update

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In Minnesota, we have about 365 Franken voters filing suit so that they can get their votes counted, and Franken has answered Coleman’s suit with one of his own.

Basically he is arguing that Minnesota elections law requires that Franken now be certified the winner by the Secretary of State and Governor, and they are claiming that a different section of that law forbids it.

Hopefully, this is all over in weeks, rather than months.

Meanwhile, in Rahm Emanuel’s old seat, the Chicago machine cannot decide who to get behind, which gives Tom Geoghegan, who is the only one credible candidate outside the Chicago machine a leg up in the special election.

Geoghegan is a long time labor lawyer and activist, and he is the best candidate running.

There is Only One Side Here Acting Like a Thief

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And it is not the Russians.

So we have an “agreement” 2 days ago, and Russia puts a little gas into the system, in order to verify that the Ukrainians are not tapping the gas going to Europe, and they get the following:

Ukraine’s state energy firm said it could not ship the gas without cutting off several of its own regions.

So, why do I believe that this points a finger at Naftogaz and the Ukrainians?

Because rerouting some of the gas in one direction, and some in another is how these networks are supposed to function.

I would also add that the fact that the Ukrainians are refusing to route the gas to Europe and refusing to allow monitors into dispatching centers and control rooms as agreed to by both sides.

This is not how an honest broker behaves.

Meanwhile, the governments on the EU side of the pipeline are freaking out, and Medvedev has called for an emergency summit on this in 3 days in Moscow.

Economics Update

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It’s official: retail sales just cratered. Retail sales fell 2.7% from November to December, and this is after November was adjusted down to 2.1 from the previously reported as a 1.8% drop.

It’s a 9.8% year over year drop, but adjusting for inflation declined by 11.3%. It’s a record, and a very scary one.

It’s why Nissan is moving its Auto plants to a 4-day week. No one is buying anything.

Expect to see more bankruptcies increasing in retail.

The department store Gottschalks and the clothing store Goody’s are filing for bankruptcy.

We will see more of this as retailers realize realize that the Christmas season did them in.

Also, note that part of the reason for this is that the credit crunch appears to be easing, which means that getting debtor in possession financing, which allows continuing operations under reorg, is easier, which makes bankruptcy easier.

That being said, the bankruptcy filing by Nortel still surprises me.

I’m not sure how much of this is the economy, how much is that it never recovered from the dot-bomb collapse in 2000, and how much is that it’s still very much a telephone equipment company.

In real estate foreclosure activity just spiked again in California, they recently passed a law to delay foreclosures by 45 days, and the 60 days are up now.

Even with low rates, which drove refinancing to a 5½ year record last week, are no help for homeowners who are under water.

In energy, oil fell on reports of large stockpiles.

In currency, the dollar was mixed, and the Ruble was devalued again on reports of a continued impasse in the Russia/Ukraine spat.

So, We Got Another Conspiracy Theory

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And Old Pinko drops me an email, because it’s about economics, and I post a fair amount about this, but I’m not an economist.

On Truthout, we have an article written by Joshua Holland, Was the “Credit Crunch” a Myth Used to Sell a Trillion-Dollar Scam?.

The thesis here is that there wasn’t a credit crunch, but rather that it was all smoke and mirrors in order to steal $350 billion to $750 billion and siphon it off to their friends.

I think that this is wrong for a number of reasons. It’s like saying that 911 was a DoJ covert operation, because they wanted toe Patriot act passed.

The DoJ had the Patriot act on their wish list waiting for the right time, just as the Financial industry, in this personified by Henry “Hank” Paulson, is always on the lookout for a big score with other people’s money.

I would suggest that this was rather more like Naomi Kline’s thesis in The Shock Doctrine, where there is a statistical certainty that something bad will happen somewhere, and the people most interested in enriching themselves have contingencies to both personally profit from the system, and further the cause of Friedman/Rand free marketeers.

The first thing to understand is that even before massive deregulation and the rise of the shadow banking system, fractional reserve banking is a lot like juggling.

Your basic bank has far less money in its accounts that what the account balances say, the rest is out in the form of loans to other people.

It’s why even a relatively small run can take a bank down. They borrow short term from their depositors who can generally withdraw money at any time, and lend long term on things like business loans (5 or so years) and mortgages (30 years).

This is very much like juggling, and when you start dropping balls, it’s game over.

He contradicts himself, saying that the increase in wealth was false, but the reduction in lending was false.

So, if we don’t have a credit crunch, what is all this?

Well, Mr. Holland maintains that:

  • Bush and His Evil Minions™ are lying sacks of sh$@.
    • Yeah, I agree with this one. You would have to be blind not to.
  • He quotes Dean Baker, who suggests that the real problem is that the American people have lost $6 trillion in home equity and $8 trillion in investments.
    • I actually agree here with Mr. Baker. This is the real problem: Phony gains and bubbles created through a shell game that conspicuously resembles the activities of one Charles Ponzi.
    • The problem is that the banks bought into this phony economy too, and did not just bankrupt consumers, they bankrupted themselves. As Nouriel Roubini frequently notes, thee regulatory authorities are at least, are addressing a liquidity problem, where the issue is that the cash is just not here at this time, to an insolvency problem, where there are simply no assets of any value to ever dig one’s self out.
  • He then suggests that there has been no real pullback in loan making, with banks not even loaning to each other.
    • This one is just flat out false. As anyone who has been reading my blog regularly notes, there have been pullbacks in lending across the board. The most basic of metrics on the willingness to financial institutions to loan, the TED spread, the difference between what banks charge each other for 3 month loans and what the 3 month Treasury note gets, has been at historical highs. The historical rate has been about 30 basis points (.3%), and just today it went below 100 basis points (1.0%) for the first time since August 15. The spread for much of that time was well over 200 basis points (2%). This is a very real increase in risk aversion by the banking industry.

While I agree that with Mr. Holland’s prescription, specifically that any aid should be directed toward financial institutions, as opposed to the financial industry (I have suggested that the financial industry is the gangrenous limb of the body economic, and so should be amputated), I think that discussions of a vast conspiracy distract from the solutions, and make the speaker look like a complete tool.

Henry Paulson and his associates are not predators, they are opportunistic scavengers, and they keep things like this in their back pocket for when the inevitable crisis.

These people don’t create a crisis to put forward their agenda, that would be an expensive and risky endeavor. They get their ducks in a row, and wait for a crisis, and then step in with a “solution” that is really a wish list.

This distinction matters, because the vision of the grand criminal mastermind distracts us from the very real activities of the banal vulture.

We are dealing but with Professor Moriarty but rather Chauncey Gardner.