The Big Lies of 2009

• The Check is in the mail.
  
• It's not about the money.
  
• This won't hurt a bit.
  
• Honey, I won't come in your mouth.
  
• I'll respect you in the morning.
  
• Goldman, JPMorgan, Morgan Stanley will be paying back the TARP Money
  

Yes, they are....Only, there's no mention of repaying the FDIC insured loans, and they are trying to weasel out from their obligations in the stock warrants that they issued to the US Government at the time they got the money, which could cost taxpayers billions of dollars.

I expect the Treasury to act in a way that benefits the banks at the expense of the taxpayers, since that's what Geithner has been doing his whole career.

In any case, it appears that the Fed has set a timetable of around June 8 for a response, and there are restrictions on paying back the money, including another "stress test" and getting off the FDIC gravy train, because, of course, senior executives think that their own inflated paychecks are more important than the health and well being of their banks.

More Bank Failure Fridays Not On Friday

Well, there were no bank failures on last Friday, but we have the continuing saga of BankUnited, which regulators have called "critically undercapitalized":

WL Ross & Co. and private-equity firms including Carlyle Group made a bid to buy BankUnited Financial Corp. assets provided they are put into receivership by the U.S. government, a person familiar with the matter said.

So it seems to me that it is time to put a fork in BankUnited, it's done.

Well, He'd Have My Vote

srlly, if I lived in the area I'd vote for him:



I approve of this message.

Wanker of the Day

Senator Wyden who is leading the charge to strip the public option out of health care, because he has set his heart on, "Finding a legislative solution that can win at least 70 votes in the Senate."

Dude, if you come up with a solution that works, it condemns the Republicans to at least 40 years in the wilderness, so the only thing that they will support will be something that doesn't work.

Both ideologically and tactically, it is against their interests to pass comprehensive health care reform.

The stimulus package passed with 3 Republican votes in the entire congress, Social Security passed without a single Republican vote, and you think that somehow getting 12 Republicans to vote you way is going to happen with any proposal with real merit.

You sir, are an idiot.

Senate Passes Credit Card Bill

It was an overwhelming vote, 90-5 in favor, which indicates that a lot of 'Phant Senators got calls from outraged constituents.

It's a bit weaker than the House version, and contains that dumb ass "guns in national parks" provision.

We'll see what comes out of conference committee.

Still, this is not something that I expected to see in my lifetime.

Economics Update

Well, out in the real world, housing starts and housing permits both fell unexpectedly, and industrial production fell ½%, which looks bad, while the Baltic Dry Index, an index of ship activity, hit a 7 month high, mostly on Chinese demand for iron ore.

Note that the fall in housing starts and building premits was almost entirely related to a drop in construction of condominiums and apartments.

In the long run, this may be good news, as it means that the supply of new housing units is finally being outstripped by demand, as anemic as it is, which is a first step to recovery.

Note also, however, that housing starts is a leading indicator, and as such this does not speak well for "green shoots" in the economy.

My guess would be that that condos are driving this, as they used to be a step up to a stand alone house, but now people realize that a condo is as hard to get rid of as a case of herpes.

In the delusional world of bankers the news is fairly good, with the LIBOR hitting a to a 4 month low, the Volatility Index (VIX) below 30 for the first time since Lehman imploded, and >Barry Ritholtz's semi regular credit crisis watch is showing signs of thawing in a number of metrics.

So at this point, the problem may be more the real economy than it is the banks, and the fact that Norway, the outlier in so many good ways, like its lack of corruption in a petro state, has finally joined the rest of Europe in a recession.

Meanwhile, it looks like Allstate and Ameriprise will not be among insurance companies taking TARP money.

I'm not sure if it's the potential for pay limits, or the stigma, or the fact that they think that Geithner is a turd.

Meanwhile, in currency, the good news in the credit market pushed the dollar down on reduced demand for a safe haven.

Oil broke the $60/bbl barrier in interday trading, before settling at $59.65/bbl, largely on yet another refinery fire....Is it me, or is this beginning to sound awfully convenient?

I'm wondering if they timed it so that deferred maintenance would kick in just before the start of the Summer driving season.

An Idea So Good, that It Can't Happen Here

But it appears that the EU is getting ready to give people the same basic rights with software as they have with other consumer products:

Software companies could be held responsible for the security and efficacy of their products, if a new European Commission consumer protection proposal becomes law.

Commissioners Viviane Reding and Meglena Kuneva have proposed that EU consumer protections for physical products be extended to software. The suggested change in the law is part of an EU action agenda put forward by the commissioners after identifying gaps in EU consumer protection rules.

This would invalidate the bullsh$# license provisions which say, "What, you expected this sh#$ to work? Your problem!"

It would, of course, put Microflaccid out of business.

A Big Story on the Nuclear Non Proliferation Front

The U.S. National Nuclear Security Administration has requested no funds for the reliable replacement warhead program, which means that Barack Obama has largely eschewed a reeplenishment and update of the US nuclear arsenal.

They are seeking $143 to develop advanced validation methods of existing warheads, but one of the promises inherent in the Nuclear Non-Proliferation Treaty was that the nuclear powers would gradually denuclearize themselves, and it appears that this is a big step towards this.

The Word for This is Bald Faced Lie

OK, that's three words, but the study by the National Association of Homebuilders and Wells Fargo Bank saying that houses are the most affordable in since the housing opportunity index started is 6 pounds of fertilizer in a 5 pounds bag.

Houses are still above historical trends, as are the rent/own ratio.

Don't trust any numbers from homebuilders or realtors organizations.

The Collapse of Chinese Rural Healthcare

I remember reading about the "Barefoot Doctors", paramedics sent out by Mao Zedong to address the lack of healthcare in the the rural regions, and now, with the Chinese Communist Party's aggressive focus on economic development in urban areas, their rural healthcare system has been systematically dismantled:

Tan Zhengrui serves some 700 people in China’s rural Miyun county, making doctor’s rounds on his motorcycle with a stethoscope, thermometer and blood-pressure gauge -- the sum total of his medical equipment.

Just 80 kilometers (50 miles) from central Beijing, Tan’s clinic in Peng He Yan village consists of a bed, a bench and a couple of desks. He doesn’t even have a scale to weigh patients.

The focus of the article is on the worries that if Swine Flu "goes viral"^* in the rural areas, there will be nothing to arrest its spread.

Note that Tan Zhengrui, who started his career as one of Mao's "Barefoot Doctors," is due to retire, and there is no replacement in sight, and he suggests a return to the old ways, "We need a policy like Mao’s, to order people out to the countryside."

Certainly, requiring a year of internship in the rural areas as a part of a doctor's education would not be a bad thing.

^*Sorry for the pun.^†
†OK, I'm not really sorry for the pun, I'm an invertebrate punster, so slug me.^‡
†Not sorry for that one either.

Adventures in Aircraft Recognition

Remember my post a few hours ago regarding a photograph of a mystery aircraft photographed over Afghanistan?

I'm almost ready to call it a hoax.

To refresh your memory, here is the photo (top), and here is a photo of the LongEZ modified by the AFRL to test pulse detonation propulsion
mystery aircraft, and below it are three photographs the first one from Wiki, and the next two from Mojave Skies (I've mirrored and cropped them to more closely match match the orientation of the mystery pic).

The similarities, cranked wing, large boxy structure under the fuselage, location of the canopy, are all rather striking.

What is missing are the canards, wingtip rudders, and the pulse detonation tubes sticking out the back, but with photoshop/GIMP and some reduction in resolution, I think that the conclusion that it is a faked photograph may be higher on the list.

The aircraft only flew at the Mojave airport, and now sits at the National Museum of the U.S. Air Force at Wright-Patterson Air Force Base outside of Dayton, Ohio, and it clearly never shared even the same hemisphere as Afghanistan.

(click pics for full size images)

The Fall of the House of Hank Greenberg

The Times of London has a very good account of what took down AIG, and it predates Joseph Cassano, the head of its Financial Products Unit, and it makes it clear that the insurance giant was on shaky ground, with the active participation of its founder Hank Greenberg, for at least a decade previous.

It also notes how Brooksley Born, who was purged by Fed Chairman Alan "Bubbles" Greenspan and Treasury Secretary Robert "Why am I not Under Indictment for Insider Trading" Rubin, knew about the problem, and that it was systemic, and tried to do something about it.

It's a good read, and highly recommended.

Huh, My Bad

Actually, as lot of people's "my bad", because that picture I posted as a "mystery UAV", was the wrong picture, as Stephen Trimble observes.

The previous photo was apparently the wrong one, and I posted it in error.

If this one is accurate, and it is almost as bad as the other one, It looks like a slightly cranked wing, and maybe a radome underneath, and a canopy, or maybe air intake above.

In any case, I'm confused, and have no clue as to what is in the air over Afghanistan.

Economics Update

Well, we have another expert on the economy saying that the so-called green shoots are not real, the Postmaster General of the United States, John Potter, is saying that mail volume continues to fall, and in these days of email, increasingly mail volume is driven by, and so is a a very good indicator of, the state of the mail order business.

On the other hand, the banks have continued loosening short term credit, with
the LIBOR dropping sharply again, indicating that bank to bank lending is getting healther, and the National Association of Homebuilder confidence index rose to 16 from 14, though with neutral being 50, this is a change from "end of the world bad" to "beins strapped in a chair and forced to watch the Ben Affleck Jennifer Lopez movie Gigli" bad.

It doesn't help that the situation for the GSEs, Fannie and Freddie, is looking increasingly dire, with further losses into the tens, if not hundreds of billions forecast, and one wonders if at some point, a decision is made to wind them down, which would eliminate much of the available financing available for mortgages in the US.

I would also note that, with the big banks concentrating on buying up other banks, the fact that the smaller US look to need an additional $24 billion in capital does not bode well for the finance needs for much of our economy.

While we're at it, let's note that the real estate crash is now firmly hitting the higher end of the market, as people purchase those homes as "trade ups," and they have run out of rubes people with sufficient equity in the old homes to do so.

And in the old standbys, energy and currency, rose by the most in a month, on concerns about Nigerian unrest, a fire at a refinery in Pennsylvania, and concerns about the start of the Summer driving season, while dollar rose on comments by the Japanese Finance Ministry that they needed to work to keep the Yen from appreciating too much.

What the Hell Are They Flying in Afghanistan?

OK, so we now have a picture to go along with the reports of a stealthy UAV operating in Pakistan and Afghanistan.

So, you have the grainy picture, and the artist's conception.

The thing is, it doesn't make any sense to use stealth in Afghanistan.

The Taliban does not have any air defense radars operating, so why work on a specialized stealth shape?

I can see aural stealth (noise), and IR stealth, and visual stealth, but using a radar avoiding platform where there is no radar just makes no sense.

[on edit]
I just came across the BAE Corax (Raven in Greek) as a possible answer.

It's a British system, and it matches the general configuration, including the long wing, though the photo seems to show a lot more wing sweep.

More Scramjet News

While DARPA's Blackswift hypersonic , the dual mode turbojet/scramjet Falcon combined-cycle engine technology (FACET)soldiers on, (paid subscription required) and has actually successfully completed tests up to Mach 4 in a wind tunnel.

The technology used a turbojet to get to high supersonic speeds, at which point the scramjet kicks in, and the turbojet is cocooned, and it is supposed to take a vehicle to around Mach 6.

Additionally, the X-51A scramjet test vehicle has been moved to the Boeing plant at Huntington Beach, CA for structural tests.

It's not as sophisticated as the FACET, it's a pure scramjet, and boosted to speed by a rocket booster after being dropped by a B-52, and it's rather crude, using existing equipment wherever possible, using a rocket booster from ATACMS, an existing fuel control system, and geriatric igniters from the TF-33 engine, along with using a rather heavy tungsten nose cone and ablative coatings elsewhere to deal with the heat.

Maneuverability is Irrelevant

That's the latest pitch for the F-35, as noted by Stephen Trimble.

They even have a video showing how their new whiz bank sensor fusion means that you can see everywhere all the time, so maneuverability does not matter, because they have the Electro-Optical Distributed Aperture System (EO-DAS).

You have to love this quote at around the 3½ minute mark, "maneuverability is irrelevant. Instead of mutual kills, the F-35 simply exits the fight, and lets its missiles do the turning."

Shades of the no gun versions of the F-4 Phantom II, and how well those worked.

Watch the video, and I'll note how this is disingenuous afterwords.


First, note that with distinctly limited space in the weapons bays, the F-35 is pretty much limited to the AIM-120 AMRAAM and the AIM-9Z, the latest Sidewinder, both of which are smaller, and so have inferior kinematics (range and end game maneuverability) to their Russian and Chinese counterparts, particularly when they start off with an 180° turn with an over the shoulder shot, so shooting the aircraft behind you is not all that likely, since by the time that they are in your missile envelope, they have already fired.

This is particularly true of the Sidewinder, which was never designed with thrust vectoring, and is smaller (5" diameter as vs 6" diameter), and is using an older motor not designed for thrust vectoring. The Over the shoulder AMRAAM actually has a new larger motor using the space available from a reduction in the size of its guidance electronics.

Of course, at the ranges where the AMRAAM outperforms the Sidewinder, you probably want to turn and put the nose on target to improve the envelope anyway.

Improved situational awareness is a good thing. Most pilots get shot down by a threat that they never see, but once the guy is in your 6 o'clock, you are hosed.

Death Star vs Enterprise

Of course, I know that the laws are completely different in the two universes.

Star Trek Review (NSFW)

Yeah, and there is a spoiler or two.

I haven't seen the movie, but this is funny.

Make Your Money Multiply

ND+SFW, at least not if you are into Origami.

This iPod Thing is Getting Out of Hand

OK, out of nose, but still.....

Ebay Discovered to Have Socially Redeeming Value

It turns out that stealing artifacts from archeological sites is expensive and time consuming, and eBay allows these folks, who already know a fair amount about the artifacts to to make their money more easily by peddling counterfeits:

A little over a decade ago, archaeologists experienced a collective nightmare--the emergence of eBay, the Internet auction site that, among other things, lets people sell looted artifacts. The black market for antiquities has existed for centuries, of course, with devastating consequences for the world's cultural heritage. But we could at least take some comfort that it was largely confined to either high-end dealers on one end of the economic spectrum or rural flea markets on the other. The sheer physical constraints of transporting and selling illegal artifacts kept the market relatively small. But the rise of online auction sites promised to drastically alter the landscape. And so it did, just not in the dire way we had anticipated.

Back in the pre-eBay days, the cost of acquiring and selling an antiquity was high. The actual looter was usually paid little, but various middlemen down the line added huge costs. During my 25 years of working in the Andes, I have often seen this dynamic at work. In years past, transporting an object was a big expense, even for portable artifacts, and the potential for arrest added to the total cost of doing business. In addition, the expense of authentication, conservation, and occasional restoration of the pieces, made buying and selling quality antiquities a wealthy person's vice.

Our greatest fear was that the Internet would democratize antiquities trafficking and lead to widespread looting. This seemed a logical outcome of a system in which anyone could open up an eBay site and sell artifacts dug up by locals anywhere in the world. We feared that an unorganized but massive looting campaign was about to begin, with everything from potsherds to pieces of the Great Wall on the auction block for a few dollars. But a very curious thing has happened. It appears that electronic buying and selling has actually hurt the antiquities trade.

How is it possible? The short answer is that many of the primary "producers" of the objects have shifted from looting sites to faking antiquities. I've been tracking eBay antiquities for years now, and from what I can tell, this shift began around 2000, about five years after eBay was established. It is true that fakes have been around for centuries. In 1886, the celebrated Smithsonian archaeologist W. H. Holmes described countless bogus antiquities in Mexico. A few decades later, Egyptologist T. G. Wakeling noted that many ancient Egyptian artifacts were, in fact, fakes. In the 19th century, American and European museums purchased large numbers of "Etruscan" ceramic vessels and sarcophagi that came straight from the kilns of rural Italian farmers. But these were usually the really good fakes, labor-intensive pieces that required lots of work and skill. Today, every grade and kind of antiquity is being mass-produced and sold in quantities too large to imagine.

...

The interaction between technology and society is indeed weird.

Lying Two Faced Rat Bastard!

I have a joke for you:
Q:What's the difference between Barack Obama and Dick Cheney?
A: I have no damn clue, because Barack Obama is restarting the military tribunals:

Military Tribunals Will Resume, Obama Says

By Peter Finn
Washington Post Staff Writer
Friday, May 15, 2009 1:55 PM

President Obama said today he will revive military commissions but with greater legal safeguards for defendants to try some terrorist suspects held at the military base in Cuba.

The decision, which follows an intense internal debate, represents something of a reversal by the president who said during the campaign that military courts martial or the federal courts offered a better route to successful prosecution because he said military commissions had been an "enormous failure."

In recent weeks, however, the administration appears to have bowed to fears articulated by the Pentagon that bringing some detainees before regular courts presented enormous legal hurdles and could risk acquittals.

Risk acquittals? You are doing this because of a Risk of Acquittals?

That's the F$#@ING POINT OF A F$#@ING TRIAL, YOU F$#@ING ILL CONCEIVED F$#@ING SON OF A F$#@ING WOMBAT!

If you don't have a "risk of acquittal", it's a F$#@ING show trial. So you are pre-announcing that the military commissions are a fraud, because, you don't want to "risk acquittals"

He's claiming that they will be fairer than the commissions that Bush came up with, because....Because, He's Barack Obama, and he's just so F$#@ING awesome.

Wrong! We are the United States of America, our whole system of government is about not relying on our leaders being, "so F$#@ING awesome," it's about the F$#@ING rule of F$#@ING law.

I don't care how F$#@ING awsome you F$#@ING think you are, that's not how Americans do things.

That weren't bad enough you also have this:

The administration is still grappling with how to handle the cases of detainees that are deemed too dangerous to release, but that some in the Pentagon fear cannot be prosecuted in any legal forum. That could lead to the creation of a system of indefinite detention without charge backed by some form of regular court review.

Well, there's another wonderful bit of accepting who we are as a nation: If there is anything that defines American jurisprudence, and the things that our founding fathers, commie pinkos like George Washington, Thomas Jefferson, and Ben Franklin, it was that they found the very idea that someone could use the state could detain someone forever without any recourse to legal process to be an anathema.

It's wrong, it's stupid, and it's un-American.

Glenn Greenwald, who is far kinder than I am, or perhaps more well spoken (better writer is a given), calls this "Obama's kinder, gentler military commissions." He quotes many people who are now serving in the Obama administration, as well as President Obama when he was candidate Obama, noting that the problem is not just that the processes were wrong, but that the entire idea of a special court with special procedures is wrong.

What is most pernicious, quoting a letter in response to Greenwald's article is this:

The other aspect of it, and you hinted at this the other day, is this: Under Bush, half the country was trained to recite all sorts of dangerous propositions about how important it is to vest The President with all sorts of powers to keep us safe, how vital it is that he keep things secret to protect us from the Terrorists, how we can trust in our leaders to exercise in ways we don't understand because we know he's good at heart.

And now, with Obama, a significant portion of the other half of the country is being trained to recite the same things.

Once again proving that almost any person on the Internet can write, and think, more clearly than I can.

And then there's what Digby said:

By the way, I have to wonder why it's taken centuries to come up with the civilian and military justice systems? Apparently, creating a new one is piece of cake. Why all the sturm and drang with appellate court challenges and legislation? Just put it in a presidential memo and carry on.

What has been announced today is disgraceful.

Why Obama Suppressed the Torture Photos

Economics Update

Grim news out of Europe, with Euro zone GDP collapsing by 2.5% in the first quarter...That's a quarterly decline, not a year over year decline, and largest decline for the Euro zone in at least 13 years. Before that there were no Euro zone statistics. (It should be noted that the YoY number is 4.6%, which is merely scary, as opposed to a terrifying double digit annual decline)

Not surprisingly, this pushed the dollar up relative to the Euro.

As bad as this was, it was even worse in Eastern Europe, because their recent growth was driven by exports and foreign investments looking for high returns, which are both gone.

Again using the quarterly numbers, Hungary -6.4%, Slovakia -5.4%, the Czech Republic -3.4, and Romania -6.4%.

A lot of this was driven by Germany's contraction, which was among the largest in Western Europe, because they have a Hooverite as Chancellor, which was -3.8%, the biggest decline in Germany since the end of WWII.

Seriously we are talking end of the world numbers, he said, citing experts:

Dr Ray Stantz: What he means is Old Testament, Mr. Mayor, real wrath of God type stuff.
Dr. Peter Venkman: Exactly.
Dr Ray Stantz: Fire and brimstone coming down from the skies! Rivers and seas boiling!
Dr. Egon Spengler: Forty years of darkness! Earthquakes, volcanoes...
Winston Zeddemore: The dead rising from the grave!
Dr. Peter Venkman: Human sacrifice, dogs and cats living together... mass hysteria!

Of course you have to go to Russia for a really scary number, -9.5% in the first quarter....Annualize that.

The news from the US was relatively mild, with the Empire State Manufacturing Survey showing only a modest decline. The index was up, but still below zero, so it still indicates contraction, and the Fed's report on capacity utilization showed a marked decline.

We are still seeing the largest year over year decline in consumer prices since June 1955, but month to month indicates that there was no change, which eases deflationary concerns...A bit.


In banking, we are seeing further signs of easing with both the LIBOR and TED spread falling.

The easing of credit may be why the FDIC is walking away from its plan to guarantee 10 year bank bonds, though there are also indications of push-back from Treasury.

Meanwhile, the horrible GDP numbers from Europe, and the stronger dollar drove oil down, though retail gasoline is moving in the opposite direction, up 12% over the past 17 days.

Am I The Only Person Left Not Applying for TARP Money?

Because it's beginning to feel like my geek days in high school^*, when I though that I was the only virgin among the 1200+ students at Woodrow Wilson High School, because we have yet more people scrambling for TARP money.

First, we have major insurance companies getting major commitments of money:

The Treasury yesterday granted preliminary approval for some of the nation's largest insurance companies to receive capital infusions under the government's Troubled Assets Relief Program, Treasury spokesman Andrew Williams said.

Recipients are Hartford, Prudential, Allstate, Ameriprise, Lincoln National and Principal Financial Group, he said. The insurers notified yesterday are among hundreds of financial institutions in the pipeline "that are being reviewed and funded as appropriate on a rolling basis," Williams said.

In addition we have YRC Worldwide, one of the largest trucking firms in the world, applying for bailout money to shore up its underfunded pension plan.

They are a big player, over 20%, in the "less-than-truckload" market, where loads amongst multiple customers are consolidated onto one truck.

How do I get my hands on some free money? I gotta start me a bank......I'll pay myself just $500,000 a year, along with a $½ million bonus.

^*I was more than just a geek. I wasn't just a wargamer who played Dungeons and Dragons, but I founded the wargaming club at the school. I was the king of the geeks.

Talk About the Odd Couple

By which I mean Representative Ron Paul, Libertarian icon, and Senator Bernie Sanders, socialist are have both submitted bills calling for a full audit of the books of the Federal Reserve System, both the board, and the 12 regional banks.

I think that their motivations are different, Paul has long opposed the Fed because it sees it as an unwarranted intrusion by the government into the market, and Sanders sees it as being a tool of the big banks, but knowing what the Fed is doing would be a good thing, for everyone but Federal Reserve members.

Note that there is a general bipartisan consensus towards opening up the fed, as evidenced by the Senate's passage of a bankruptcy reform bill with an amendment that expands oversight of the Federal Reserve.

I think that it's clear that the role of the Fed in the current crisis shows that its role should be significantly restricted. I understand why there needs to be an institution which is insulated from political winds to manages monetary policy, but in their roles of bank regulator and bank rescuer, this "insulation", is a level of opaqueness that does not serve society.

Pelosi Says that CIA Is Lying

I'm inclined to agree, since, as I have already noted, both Senators Rockefeller and Graham confirm her account of CIA briefings.

In any case, Nancy Pelosi has upped the ante now, and she has specifically called the CIA out as liars:

At a contentious news conference Thursday, Mrs. Pelosi said that during the 2002 briefing, "we were told that waterboarding was not being used." Mrs. Pelosi acknowledged that as the top Democrat on the House Intelligence Committee, she was briefed on Sept. 4, 2002, about waterboarding, a form of simulated drowning that critics, including President Barack Obama, call torture. But she said CIA officials told her and other lawmakers only that the Justice Department had concluded the procedure was legal.

This is interesting, because it may force Obama, whether he likes it or not, to put his support behind an investigation of the torture issue, as opposed to his desire to cover it up put it behind us.

It would be amusing if 'Phant attacks on Pelosi end up precipitating a full investigation of this matter.

BankUnited It Looks Like Bank Failure Friday on Thursday

BankUnited is in trouble. Regulators have called "critically undercapitalized", and so they are looking for a buyer.

Only one problem, it appears that the bidders are demanding that BankU be placed in receivership, i.e. taken over by the government and the common shareholders wiped out, before they buy into it.

This won't be pretty.

Hank Paulson and His Evil Minions&trade Strong Armed the Banks into Taking TARP

And, BTW, Paulson's Evil Minions^™ include the then president of the Federal Reserve Bank of New York, one Timothy "Eddie Haskell" Geithner.

Judicial watch is a bunch of nuts right-wing, or maybe they are a bunch right-wing of squirrels who collect nuts, but every now and then amongst their nuts (FOIA requests) they turn up a gem, and this time, it appears to be a doozy.

Basically, they have the memos about the initial TARP, and it is clear from them that Hank Paulson told the banks that they had no choice about letting the US government buy equity in them(See also here and here):

"We don't believe it is tenable to opt out because doing so would leave you vulnerable and exposed. If a capital infusion is not appealing, you should be aware your regulator will require it in any circumstance," the document said, citing Paulson talking points.

One of the things of interest here (see the Scribd Window) is that Hank Paulson's chief of staff did not know who the "big 9 banks" were....The Secretary of the Treasury's chief of staff did not know who the big 10 banks were?

Great googly moogly.


Treasury CEO Talking Points v1

Publish at Scribd or explore others:

Note that the Scribd link is from Market Ticker, who also notes that according to AIG President Edward Liddy, the Federal Reserve insisted that all Credit Default Swaps at 100¢ on the dollar (CSPAN video Link at about 2:25:00)

The Smoking Gun For Dick Cheney

And no, this is not from the Smoking Gun, it's from The Daily Beast, and it's a big one.

Specifically, Robert Windrem, formerly a senior investigative producer with NBC News, has uncovered information that the office of the Vice President specifically requested that the a senior Iraqi official be waterboarded so as to extract a statement that Saddam Hussein and Osama bin Laden were in league and cooperating on terrorism:

At the end of April 2003, not long after the fall of Baghdad, U.S. forces captured an Iraqi who Bush White House officials suspected might provide information of a relationship between al Qaeda and Saddam Hussein’s regime. Muhammed Khudayr al-Dulaymi was the head of the M-14 section of Mukhabarat, one of Saddam’s secret police organizations. His responsibilities included chemical weapons and contacts with terrorist groups.

...

In his new book, Hide and Seek: The Search for Truth in Iraq, and in an interview with The Daily Beast, Duelfer says he heard from “some in Washington at very senior levels (not in the CIA),” who thought Khudayr’s interrogation had been “too gentle” and suggested another route, one that they believed has proven effective elsewhere. “They asked if enhanced measures, such as waterboarding, should be used,” Duelfer writes. “The executive authorities addressing those measures made clear that such techniques could legally be applied only to terrorism cases, and our debriefings were not as yet terrorism-related. The debriefings were just debriefings, even for this creature.”

Duelfer will not disclose who in Washington had proposed the use of waterboarding, saying only: “The language I can use is what has been cleared.” In fact, two senior U.S. intelligence officials at the time tell The Daily Beast that the suggestion to waterboard came from the Office of Vice President Cheney. Cheney, of course, has vehemently defended waterboarding and other harsh techniques, insisting they elicited valuable intelligence and saved lives. He has also asked that several memoranda be declassified to prove his case. (The Daily Beast placed a call to Cheney’s office and will post a response if we get one.)

(emphasis mine)

This isn't about a ticking time bomb. This isn't about ongoing plans. This is a request to torture someone until they say something that benefits you politically.

Can we put him on trial now?

Yes, I know that OVP does not necessarily equal Dick Cheney, but we also know that his office would not make such a request without his tacit or explicit approval.

Great Google Moogly!

So, I go off to hear the Franklin High School strings festival, which includes stuff from Franklin Middle, where my daughter goes, and plays violin, in addition to Timber Grove and Chatsworth elementary schools, and when I get back, all hell has broken loose.

Looks like about ½ dozen things developed.

Go figures.

Schadenfreude: That is Not a Natural Skin Color Edition

It looks like former Countrywide Mortgage CEO Angelo Mozilo is going to be sued by the SEC for, "insider trading and failing to disclose to shareholders the risks the company was running".

At this point, it appears to just be a civil suit, but it appears to me that this is the first step toward a criminal prosecution.

Needless to say, this is a development that puts me in a Nelson Munz state of mind.

The SEC cannot put Mozilo in jail, but a separate federal criminal probe of Countrywide, begun last year, is continuing, one of the people familiar with the SEC case said.

.....

The agency's staff also is recommending fraud charges against other former Countrywide officials, according to one of the people familiar with the probe, who was not authorized to discuss it publicly and spoke on condition of anonymity.

In the old days, following the excesses of the 1920s, one of the big players did his jail time, and spent the rest of his life earning a modest living running a farm.

If that were to happen to people like Mozilo and Miliken, it would be a good thing, because it would deter those who would be like them.

Another Day, Another Obama Backdown on a Campaign Promise

So now Barack Obama is saying that they just don't have the votes to pass the Employee Free Choice Act (EFCA):

President Barack Obama said there aren’t enough votes in the Senate to pass “card-check” legislation sought by labor unions and only a revamped measure would have a chance getting through Congress.

“There may be areas of compromise to get this bill done,” Obama said today a town hall meeting in Rio Rancho, New Mexico, outside Albuquerque.

Suck it up man!

You are the President of the United States of America! Your job is to find the votes for this.

He thinks that by not pushing this, he'll get cooperation from the 'Phants healthcare or his other initiatives. He's wrong.

And, BTW, I am sick and tired of all these people claiming that he's playing some sort of ten dimensional chess, he's not.

He figures that labor has no where else to go, so he will not work for them.

US Looking at New Regulations on Finance Industry

I find this hard to believe, coming as it does from Timothy "Regulatory Capture" Geithner, but we now have reports that the Treasury is looking at new regulations on bank executive compensation, with the appropriate squeals of protest from the pigs who get the pay and bonuses.

There is also a proposal to regulate derivative trading by requiring that most of them be traded on open and transparent markets, as opposed to the "black pools" in the shadow banking system.

Additionally they are looking to implement a reporting system on these trades based on the "Trace" system on bond prices, which halved the spreads between buy and sell prices that banks charged to purchasers by about ½.

Now, if they could only remember the lessons the Marine Insurance Act of 1746, and require that people who buy insurance, including swaps, must have a material interest in the underlying asset.

Unfortunately, Geithner, Summers, and Their Evil Minions^™ still have their heart set on making the Federal Reserve the "systemic risk regulator, which is bad for a number of reasons:

• The Fed has been captured by Wall Street.
• There is no accountability at all, with its members appointed to very long terms by Congress, or by the banks themselves.
• The organization is opaque and secretive.

My guess is that these proposals are going to be half measures designed to forestall real change, but I'm a pessimist realist.

Normy's Going to Jail

It looks like the FBI probe of Norm Coleman's bribe taking is expanding.

He's dirty, and with a bit of luck, he's going to go to jail.

Things being what they are though, he might very well finish serving his sentence before the election is resolved.

Credit Card Reform May Relax Rules for Retailers

Specifically, the bill in the Senate is likely to contain regulations that would relax the regulations on retailers for charging to use credit and debit cards:

The law allows merchants to charge less for using cash, but card companies' contracts with retailers can make it difficult. Merchants say they're required to post two prices on every product if they want to charge more for credit card use, and that the credit card price be more prominent. Retailers can face penalties if they don't.

The legislation would allow discounts for debit cards and ban retaliation against retailers who charge less for transactions that don't involve credit cards. [merchants and credit-card costs]

"The extra charges the establishment has to pay for the use of a credit card are kind of hidden inflaters in the cost of the product," said Sen. Richard Durbin (D., Ill.), who is pushing the measure with Sen. Christopher Bond (R., Mo.).

Needless to say, the banks and other credit card issuers are aggressively lobbying against this.

Your Liberal Media

You may have heard a minor media sh%$storm about an OMB report that says that global warming is a farce, and that it will wreck the economy.

Only the report is not a report, it's just a collection of various opinions from other agencies that the OMB passes on without comment, and it's just one comment.

And the comment, it came from the Small Business Administration's Office of Advocacy, an office whose only job is to lobby for small businesses, and which has no professional staff, only political appointees.

In this case, the political appointee in question was Joseph Johnson, a former member of the Mercatus Center at George Mason University, which is another right wing funded front. See also here if you can stomach a Glen Beck video.

Needless to say, this did not prevent the New York Times from mindlessly echoing all the spin (also here), along with the rest of usual suspects.

Of course, it took a bunch of couple DFH^* bloggers at The Atlantic and Media Matters about a half day to get to the bottom of this, but our main stream media?

Not so much.

^*Dirty F%$#ing Hippy.

Financial Innovations Did Not Create Capital

I'm Not Seeing Capital Growth (Blue Line)

And look over here, all those derivatives? They are not hitting the real world, they are just trading amongst themselves, and generating commissions, but, "it is a revealing indicator that the non financial companies for whom these products were prescribed did not themselves use them." Imagine that.

One of the alibis presented by those who created the current crisis in the financial system is that this innovation made capital more available, and hence increased economic growth.

So Adam S. Posen and Marc Hinterschweiger take a look at this theory, and they discover that there are no facts to back up this hypothesis:

....

But not every innovative product is safe, let alone productive. Unlike pharmaceuticals, aerospace, and a host of other technical fields, financial innovations have been allowed to proliferate unscrutinized and untested for safety or effectiveness. Yet the negative spillovers on the public at large from faulty financial engineering and toxic products have now been clearly demonstrated to be enormous. In particular, there is some solid evidence that the most recent batch of financial innovations was used in manners inconsistent with their labeling, and not only had terrible side effects, but did not even yield the advertised benefits.

....

Between 2003 and 2008, US gross fixed capital increased by about 25 percent, a reasonable number during an economic expansion, but hardly a boom. During the same five-year period, the global amount of over-the-counter (OTC) derivatives increased by 300 percent, while derivatives held by the 25 largest US commercial banks rose by 170 percent.

The reality is that people were not aiding capital formation of the "real" economy, they were creating products that would best allow them to feather their own nests.

In other words, this world of innovation was actually an exercise in personal selfishness.

There is a word for this, capitalism, and the same capitalism that creates a hybrid car also gives us the crack dealer and the stock broker, and the crack dealer harms far fewer people.

Terrorist Training Camp Found in Imperial, California

It appears that the Explorer Scouts are training their members in weapons use and military tactics.

OK, they are not. It's training for law enforcement, and to my mind, probably very bad training for law enforcement, because, with its emphasis on military style assaults for for things like simulated bus hijackings, it contributes to an increasingly militarized mind set for what should be peace officers.

Additionally, if this were not run by the Explorer Scouts, a Co-Ed division of the Boy Scouts, but instead by the Islamic Community Center of Imperial California (Where the story is reported from), how long would before an ambitious prosecutor would charge them all with running a "terrorist training camp."

What's more, he would probably win the case.

Economics Update

So, initial jobless claims rose 32,000 637,000 (seasonally adjusted) worse than expected, the four-week moving average rose by 6,000 to 630,500, and continuing claims rose by 202,000 to a record 6.56 million.

Meanwhile producer prices rose unexpectedly by 0.3%, indicating that, perhaps, the inflation genie is not as firmly in the bottle as one would hope.

Meanwhile, in real estate, office rents in London have fallen to 1991 levels, as a combination of overbuilding and the implosion of "The City", the UK Wall Street have driven down rents.

We are seeing the same thing in retail space, with rents falling and concessions increasing, at such high profile locations as Rodeo Drive, 5th Avenue, Bond Street, and the Champs Elysees.

It's no wonder then, that commercial and multi-residential mortgage loan originations have fallen sharply. (top pic)

Also, the HousingWire has a good picture on the surge in foreclosures that I noted yesterday. (bottom pic)

Neanwhile, energy and the dollar seem to be at odds with each other, with oil up today, it appears on the belief of a recovery, and the dollar also up, on economic insecurity.

Go figure.

Not Enough Bullets: Chrysler/Fiat

It appears that Fiat may be the employer of record for senior management, and that they will then be "seconded" to Chrysler in order to skirt pay limitations at bailed out firms. (See also here)

In the long run, the real answer is confiscatory taxes at higher levels of remuneration.

Figure bumping the tax rate by 1% at $250K/year and at each $250K break point, with a limit of 85% at income in excess of $13¼ million a year, or 90% at 14½ million a year.

This crap needs to stop. These executives are overpaid by the standards of the world, they will be making more than the Chairman of Fiat, which is taking them over, and they do not deliver value.

The problem is not excessive salaries for senior executives at bailed out firms, it is excessive salaries, period, full stop.

It is theft from the shareholders and the less well remunerated employees, and it is corrosive to society.

Elections Have Consequences

Under Obama, the Justice Department is planning much more aggressive anti-trust enforcement (see also here and here)

About damn time.

Quote of the Day

Brad Delong came up with this bon mot:

Republicans Plan to Rename Selves

I hear that the Republican Party plans next week to rename the Democratic Party the "Democratic Socialists"...

... And to rename themselves the "National Socialists."

Now I gots to clean my screen,

Auto Update

First, let's be clear that the domestic auto makers problems are not just incompetent management. No one is making money selling cars right now, not even Toyota, which posted its first quarterly loss in 59 years, $7.74 billion in the quarter ending in March, and, as the picture shows, is looking at more losses in the future, while Nissan posted a $2.4 billion loss.

Of course, the sight of GM executives frantically selling stocks as a trading window opened to allow them to sell their stocks without insider trading concerns.

They are also sending terms of sale sheets to the dozen or so bidders for the Saturn brand brand. It's primarily the sale of a dealer network and brand, rather than a sale of designs or factories.

Meanwhile, across the pond, Fiat is still negotiating a deal to buy GM's Opel division, and most of this is about how much can be extracted from the German government.

At the nexus of the two failed auto makers, both GM and Chrysler will be cutting dealers, which makes sense, and it's the urban dealers that will see most of the cuts, which, surprise means that minority owned dealerships will see it landing them.

Same old, same old.

In any case, it now appears that the 2 month bankruptcy is a fiction, with media reports that the bankruptcy will take 2 years, though the sale of assets to the new operating company should be finished well before this.

Meanwhile, Ford, which saw the storm coming, and accumulated cash to weather it, is now looking to sell 300 million shares of common stock in order to fund the Voluntary Employee Beneficiary Association (VEBA) that it negotiated with the UAW.

Finally, we have Ferrari threatening to pull out of Formula One because they do not like the new rules, most particularly the £40 million budget cap, which is intended to make more teams competitive.

Idiocracy Was a Documentary

About iPhone users, or so it seems.

More Support for Pelosi's Version of the Non-Briefing

Both former Florida Senator Bob Graham, and current Senator Jay "Spine of Jello" Rockefeller have categorically stated that they were not briefed on waterboarding at the time that the CIA docs implied that they were brief on the procedure.

Graham is significant, because of his obsessive record keeping. This guy has been diarying his meals for something like 20 years, so he is not the sort to "forget" what happened at a specific date and time.

Pat Roberts' (R-KS) silence on this is deafening.

Impeach Timothy Geithner Today

When he was asked about AIG's bonus program when it became a scandal, Geithner simply lied about it:

As American International Group chief executive Edward M. Liddy returns to Washington to face Congress today, new details are emerging about how long federal officials were aware of the company's recent bonus payments to its executives and of how inflammatory the payments could be.

Documents show that senior officials at the Federal Reserve Bank of New York received details about the bonuses more than five months before the firestorm erupted and were deeply engaged with AIG as well as outside lawyers, auditors and public relations firms about the potential controversy. But the New York Fed did not raise the alarm with the Obama administration until the end of February.

(emphasis mine)

The post does note that, "his [Geithner's] name is not among those of senior New York Fed officials mentioned in the summaries of phone calls, correspondence and other documents obtained by The Washington Post," but this makes him either a liar, willfully blind, or unconscionably incompetent.

It is crap like this which has led Edolphus Towns (D-NY-10) to call for supervision of AIG to be removed from the New York Bank of the Federal Reserve and moved to a government agency.

Right now these trustees answer to the NY Fed.

It makes sense. The Federal Reserve in general, and the New York Fed in particular, are textbook cases of "regulatory capture", and what's more, they are secretive, and opaque.

It does not help that the New York Fed is owned by the banks it is charged to regulate too.

As to AIG CEO Liddy's testimony today that AIG would pay back the money in 5 years. That's just a bald faced lie.

Another Obama Campaign Promise Bites the Dust

He is now seeking to block the release of photos of abuse of prisoners in Iraq and Afghanistan.

It's the exact opposite of what he promised, and to do this he has to overrule the decision made last month by the Pentagon to turn over the photos to the ACLU.

It's only a promise, after all.

5 of Miami 7 Found Guilty

You know, these were the losers who were promised money by an FBI informant to blow up the Sears Tower in Chicago, and despite the fact that they did nothing but try to extract money from the informant, the Jury convicted 5 of the remaining 6 defendants, one had been acquitted in an earlier trial.

I took 3 tries to get a conviction, there were two hung juries, and I still think that this whole case stinks.

ACLU Challenges Gene Patent

The ACLU is arguing that Myriad Genetics' holding a patent on two genes associated with various forms of cancer, BRCA1 and BRCA2, is not a legal use of the patent process.

I got some training in engineering schools on patents, and it was always made clear to us, by our non-lawyer professors, that a patent was for an invention, not a discovery, and it seems to me that these genes are the latter, not the former, but I'm an engineer, not a lawyer, dammit!^*

Among other things, they are arguing not just that the patent should not have been granted, and I agree with that, because at its core IP is an infringement on every one's rights in order to, "To promote the Progress of Science and useful Arts," as it says int he constitution, and it is clear that by patenting a gene, they are not doing this.

Additionally, the ACLU is saying that the way that Myriad is violating the first amendment:

As the A.C.L.U. explored the restrictions on competition that companies like Myriad had put in place — blocking alternatives to the patented tests, and even the practice of interpreting or comparing gene sequences that involved those genes — the restrictions started to look like not just a question of patent law, Mr. Hansen said, but of the First Amendment’s guarantee of free speech as well.

I'm not sure if that would fly, since, after all, IP has at its core the restrictions of the rights of everyone for a perceived public benefit.

As to the reason as to why the patent examiners approved it?

The decision to allow gene patents was controversial from the start; patents are normally not granted for products of nature or laws of nature. The companies successfully argued that they had done something that made the genes more than nature’s work: they had isolated and purified the DNA, and thus had patented something they had created — even though it corresponded to the sequence of an actual gene.

This is bullsh%$. They are arguing that they can patent a discovery, because it's hard work.

Here's hoping that they win, because the current patent regime in the US is hamstringing economic development and innovation in our society, which is the exact opposite of its intended purpose.

^*I LOVE IT when I get to go all Doctor McCoy!!!

Economics Update

With all this talk of green shoots, its worth noting that the evidence in the underlying economy does not really indicate much in the way of a recovery, which is why the decline in retail sales in April should come as no surprise.

That's a big portion of the US economy right there, and what's not is real estate, which is showing little in the way or recovery either, with foreclosures at a new record in April, though actual repossession of property fell, because the banks are worried about the costs of actually having to take care of the property when they finally assume ownership, along with changes in laws that have drawn out the process in many of the hardest hit states.

The number of foreclosures were up 1% over an already record March, and up 32% year over year.

We also saw a drop in mortgage applications as refinancing slowed with the increase in interest rates.

There is not a whole bunch of economic recovery in the Euro zone either, with industrial output falling more than 20% year over year.

We are seeing some good news on the credit front again though, because LIBOR hit a 2 month low, though in the real world, where it's lending to real businesses, as opposed to banks, real interest rates, interest minus inflation, are at a 25 year high and it is curtailing all sorts of capital activity.

It also looks like BankUnited may be heading to a headline on Friday Night Bank failures, with a late filing with the SEC saying that they need to raise over $1 billion in capital, because, "the Board of Directors of the Bank entered into a Stipulation and Consent to Prompt Corrective Action Directive (the “PCA Agreements”) with the OTS." (Office of Thrift Supervision).

In any case, the bad consumer spending figures pushed oil down on demand concerns, and pushed the dollar up as investors fled to safety.

An Unlikely Voice of Reason

Jesse "The Body" Ventura, on Larry King, of all places.

VENTURA: No, I live in Mexico now, Larry. So I do a lot of reading. I don't watch much TV. This year's reading, I covered Bush's life. I covered Guantanamo and a few other subjects. And I'm very disturbed about it.

I'm bothered over Guantanamo because it seems we have created our own Hanoi Hilton. We can live with that? I have a problem. I will criticize President Obama on this level; it's a good thing I'm not president because I would prosecute every person that was involved in that torture. I would prosecute the people that did it. I would prosecute the people that ordered it. Because torture is against the law.

KING: You were a Navy SEAL.

VENTURA: That's right. I was water boarded, so I know -- at SERE School, Survival Escape Resistance Evasion. It was a required school you had to go to prior to going into the combat zone, which in my era was Vietnam. All of us had to go there. We were all, in essence -- every one of us was water boarded. It is torture.

KING: What was it like?

VENTURA: It's drowning. It gives you the complete sensation that you are drowning. It is no good, because you -- I'll put it to you this way, you give me a water board, Dick Cheney and one hour, and I'll have him confess to the Sharon Tate murders.

KING: Even though you know it's not going to happen -- even though before it, you know you're not going to drown.

VENTURA: You don't know it. If it's -- if it's done wrong, you certainly could drown. You could swallow your tongue. You could do a whole bunch of stuff. If it's it done wrong or -- it's torture, Larry. It's torture.

Sorry Jesse, but our nation has a big deficit.

When Cheney is up for waterboarding, we are taking bids, starting at $1 million.

Norm Coleman Looking to Use Campaign Funds on His Criminal Defense

Because, you know, he took bribes from Nasser Kazeminy, and he's raised a lot of money in his election contest.

He has applied to the FEC for permission to do this.

He'll likely get it too, based on my understanding of the case law.

I don't think that this will help, because he is as guilty as hell.

I am so (NOT) Shocked: Social Security and the Sky is Falling Edition

Reductions in employment have reduced receipts for Social Security, which has pushed up the theoretical insolvency date, to 2037, and of course, everyone is running like chickens with their heads cut off trying to figure out how to hand everything to the Wall Streeters who completely f$#@ed the nation as a result.

It is true that Medicare is in trouble, but Social security, not so much.

The Housing Market is Doomed

I know this as a certainty.

How do I know this?

Because Alan "Bubbles" Greenspan has declared that, "we are finally beginning to see the seeds of a bottoming" in the housing industry.

Since he is wrong on everything, I would suggest shorting home builders.

Friends Don't Let Friends Pledge to NPR

There is a documentary out called Outrage about closeted gay politicians, and NPR did a review, and upper management rewrote it to specifically exclude the names to two politicians, Florida Governor Charlie Crist and Senator Larry Craig, from the review, which so outraged the author that he removed his byline from it. (His story had been written with close consultation of his editor)

As Pam Spalding notes, "NPR has no business tossing out the "privacy" card when it couldn't resist deeming John Edwards's heterosexual tomcatting newsworthy, underscoring that there were legitimate political reasons for the reporting."

If I weren't not giving because of their vociferous opposition to low power local broadcasts, I would not give to them because they have been completely captured by the sensibilities of the "inside the Beltway" crowd.

The Election that Would Not Die

Well, Franken has putting a motion before the Minnesota Supreme Court to direct Governor Tim Pawlenty to certify the election.

This is to prevent him from sitting on the certification as Norm Coleman inevitably drags this through the federal courts, as he would be otherwise inclined to do, because it scores him brownie points for when he runs for President in 2012.

Suckers Rally

So, we have Nobel Prize winning economist Paul Krugman saying that a rapid recovery is highly unlikely, and we have Andy Kessler, in the (web) pages of the Wall Street Journal noting the obvious, that, "You can have a jobless recovery but you can't have a profitless one," and saying that this sounds like a suckers rally.

One more bit of confirming data to support this is the fact that the main stream media, in the personage of ABC is writing stories saying that, "There is a growing belief among financial experts that the recession is over."

It's not just that these "financial experts" were generally the ones who were wrong about deregulation of the markets and the housing bubble. It's that these "financial experts" are always wrong.

The cause of this recession is a rot at the core of our financial institutions, and I haven't seen anyone chopping down trees to prevent "Wall Street Elm Disease" from spreading yet.

I'm not looking for a real turnaround until we start seeing "no end in sight" stories from these "financial experts," so I call suckers rally.

Snake Oil?

So, Barack Obama has gotten the medical industry to promise $2 trillion in health care savings over the next 10 years, by limiting medical inflation to "only" 4.7% a year.

I think that it's clear that the medical industry is lying, but I have no clue as to what Obama is up to, except perhaps that this is a preemptive strike to prevent the public option from being discussed...I'm not smart enough to figure out another reason.

Me, I'd bank on the fact that almost everyone hates their insurance company, and wage Jihad against them, but that is just me.

Maybe there is some sort of Obam jujitsu going on here, and I just don't see it.

Charlie Crist to Run From Senate from Florida

This is not a surprise.

There are two questions here: Will the rabid right wingers shoot down his nomination, and will the whispers about his personal life get louder.

If he gets the nomination, he would be favored to win, though it's likely going to be an off year for Republicans.

On The White House Correspondents Dinner

Really, I got nothing here.

That being said, Jon Stewart, and his crew at The Daily Show do.

Watch:

Economics Update

The US trade deficit rose in March, to 27.6 billion, on falling exports and the recent increases in oil prices.

Imports fell by $1.6 billion, but exports fell by $3 billion.

We will not be, as the Japanese did, exporting our way out of this trade deficit.

This is one reason why the American Express/CFO Research Services survey has 59% of CFOs seeing more layoffs.

Of course, the fact that nationwide, US home prices fell the most on record, 14% year over year, and the only markets where home sales are rising are where vultures are sweeping in to buy cheap foreclosure properties.

On the bright side, the National Federation of Independent Business' monthly index of small business sentiment was up for the first time in 4 months.

It appears, however, that credit card company Advanta is not so optimistic. The company, which specializes in credit cards for small businesses, is shutting down its lending operations on June 10, after uncollectible debt exceeded 20%.

They are not shutting down, they are just shutting down all their credit lines, and just taking payments, which is awfully close to shutting down, so the credit cards just become so much plastic.

The deficit is not looking good either, with tax receipts so low that the federal government ran its first April deficit since 1983.

In energy, oil was up today, briefly breaking $60/bbl for the first time since November, before settling at $58.85/bbl.

This, along with banking changes and interest rate increases, is why the ruble is on a tear right now, and the US dollar fell to a 4 month low on comments by a number of experts that the recession is bottoming....Yeah....sure...

Economics Update

Tom Toles

It appears that the Fed's best efforts to revive the housing market through low interest rates may be reaching their limits as mortgage rates and long term bonds climb higher.

Additionally, it appears that the Obama administration is seriously looking at winding down and liquidating Fannie Mae and Freddie Mac in the long term, which would generally push up mortgages issued after that point.

In the long run, I see this as a good thing. Home ownership as a goal in and of itself has driven much of the ills in our society whether it is the housing bubble, or the suburbanization of our society and out energy consumption levels,

In energy, oil fell on inventory growth, but that has not lowered retail gasoline prices, which are up 9% over the past 2 weeks.

In the mean time, the dollar and the Yen both rose, as the stock market decline pushed investors into safe havens.

Commander in Afghanistan Fired

This is odd, but General David McKiernan has been fired as commander in charge of the Afghan theater, and replaced by General Stanley McChrystal.

The claim is that McChrystal, with a special ops background, is better suited to the conflict, but this has unfolded very quickly.

Note that McChrystal is hip deep in the Pat Tillman friendly fire coverup, as well as allegations of torture in Iraq.

No clue as to what is going on here.

Possible Compromise on the EFCA

It's not great, Feinstein and Specter are suggesting ballots mailed into the NLRB to replace card check, but it would move the bill along, and might get the bill into 60 vote territory.

There may also be some changes to the arbitration.

I think that Specter, facing a likely primary challenge from Sestak, and possibly others, is desperate to find a way to not have labor campaigning against him.

Yet Another Auto Industry Update

First and foremost, it looks like GM will be dropped from the Dow Jones Industrial average, no surprise with GM trading at around a buck and a half.

For the same reason, GM is looking at a 1-For-100 reverse stock split, which is no surprise, as the troubled automaker was trading at over $50 a share just 2 years ago.

Seeing as how GM bled $6 billion in the last quarter, the reverse stock split is prudent.

Meanwhile, the Chrysler bankruptcy is proceeding rather smoothly, see here, and here.

The judge has generally ruled against the sanctimony of the "non-TARP lenders," whose numbers has dwindled, and the fact that their names will be revealed has made think twice about being jerks.

Meanwhile Fiat has been busy after having taken a stake in Chrysler, and is now looking to purchase GM Europe, aka Opel, and spin off its own auto manufacture in Italy to incorporate in their new larger auto manufacturing concern. (See also here)