Breaking: Supreme Court Justice David Souter To Retire

This has been reported by NPR, and confirmed by NBC.

It should get interesting.

I would say that if there is a policy of Republicans to follow, it is to appoint younger justices.

If you look at recent appointments, the Republican appointments were in their early 50s (43 for Thomas), and the Dems (Bryer and Ginsberg) were 56 and 60 respectively.

This was a conscious decision, in order to maximize their tenure.

I would also add, wait for Franken to be seated, in order to forestall a filibuster.

The Best Argument of Draconian Immigration Restrictions

Alan Greenspan saying that illegal immigration aids the US economy, because he's wrong about everything:

Former Federal Reserve Chairman Alan Greenspan said that illegal immigration makes a “significant” contribution to U.S. economic growth by providing a flexible workforce.

Greenspan, appearing before a Senate subcommittee today, said illegal immigrants provide a “safety valve” as demand for workers rises and falls.

On a more serious note, look at what he is saying when you tease out the meaning, he is saying that illegal immigration is good because it drives down wages.....That's what "flexible workforce" and "safety valve," mean.

Alan Greenspan has always been a big fan of cheap labor.

There is no doubt that illegal immigration adds to GDP. The question is whether it contributes to per capita GDP, or the slightly more nebulous and hard to measure concept of the well being of our society.

½ of Europe's population died during the heyday of the Black Death, and it is indisputable that the GDP of Europe was lower in the years following the Bubonic Plague outbreak than before.

What is also indisputable is that the standard of living of those remaining rose at the time, as can be seen through records of increased wages, and the frantic passage of (largely ineffective) laws intended to reign in wages and reduce worker mobility.

The end question is not what our immigration policy should be, but rather what should our society look like, and how to we create an immigration policy most consistent with our professed values that creates this society.

To my mind, this is best addressed by extremely aggressive laws targeting employers who deliberately or negligently hire illegals, and not by harsh measures taken against desperate economic refugees.

The Big Banks Own the Senate

And they do their master's bidding and kill a cram down amendment, which would allowed bankruptcy judges to adjust mortgage principal for primary homes much in the same way they do for vacation homes and commercial property.

15 Democrats, including newly minted Dem Arlen Specter, voted for banks, and against American families.

The house passed a bill with cramdown, and Pelosi has been insistent that it be included, and conference reports, and this will now go to a conference committee as the bills are different, are not filabusterable.

Here's hoping that ordinary people win.

Auto Industry Update

Well Chrysler had gone Chapter 11, because of the unwillingness of a number of the smaller creditors to negotiate in good faith.

Those folks are actually better described as hedge funds, and knowing how hedgies work, they doubtless bought debt at a discount for the express purpose of holding it for ransom.

Here is hoping that the BK judge cleans them out.

Meanwhile, back in GM land, its bondholders have made a counter-offer, wanting a 58% stake in the firm, as opposed to the 10% stake offered, so there is a big gap to bridge there too.

Economics Update

To initial jobless claims fell to 631,000 this week, down 14,000 from the prior week, though continuing claims rose by 133,000 to 6.271 million, another new record.

More generally, both personal income and personal spending fell.

We also have the Institute for Supply Management's Chicago Purchasers’ Index for April rising to 40.1, though this still indicates contraction, just slower contraction, as 50 is the neutral point.

Additionally, mortgage rates are essentially unchanged over the past week. remaining near historic lows.

The markets seem to be anticipating an improvement in the economy, which has pushed oil up and the dollar down, which I think means nothing, but the folks who run those predictive markets rather like.

Mexican Swine View May Have Originated in Ohio

Tara Smith, over at the always excellent Aetiology has some very preliminary data that points toward this flue being the progeny of asmall outbreak outbreak at the Ohio state fair a few years back.

It is by no means definitive, but it is interesting.

If true, it pokes big holes in the denials by the Mexican government, and Smithfield, that this has nothing to do with their hogs.

Now Winston Churchill is a Commie and a DFH*

Because, as Obama noted in his presser, Churchill opposed torture

Obama responded by pointing to the example from the Blitz: 'I was struck by an article that I was reading the other day talking about the fact that the British, during world war two, when London was being bombed to smithereens, had 200 or so detainees. And Churchill said 'we don't torture', when all of the British people were being subjected to unimaginable risk and threat. And the reason was that Churchill understood you start taking shortcuts, and over time, that corrodes what's best in a people. It corrodes the character of a country.'

Hoocoodanode?

^*Dirty f%$#ing hippie.

Zimbabwe Update

Not a whole bunch of movement, just updates such as the fact that the Zimbabwe Central Bank (RBZ) took money from private bank accounts, and that Finance Minister Tendai ordered parliament members who received cars from the RBZ to return them immediately.

It's probably a prelude to the bank chief's firing.

There is some relatively bright economic news with gold mining companies restarting operations after the government said that they could sell gold directly on the world market, which cuts off an avenue for Mugabe to pay off his associates, and the UK has pledged $21 million in humanitarian aid, and its African neighbors have pledged $400 million in credit lines.

Bank of America CEO Ken Lewis No Longer Chairman of the Board

It was a close vote, but splitting the CEO and Chairman of the Board positions passed, 50.3%-49.7%, and the new Chairman is Walter Massey.

I do not think that this makes much of a difference in day to day operations, but the fact that shareholders went against Lewis and the board on this is significant.

It's also a big win for AFSME, who campaigned for this, because of Lewis' aggressive campaign against labor unions.

Auto Industry Update (Chrysler and Dealers)

Well, it looks like the Chrysler/Fiat thing is a done deal, though this would likely be post bankruptcy, because they cannot get the smaller creditors on to agree to concessions:

The Obama administration last night planned to send Chrysler into bankruptcy, replace chief executive Robert L. Nardelli^* and pump billions of dollars more into the effort, all in hopes the company can emerge from court proceedings as a reenergized competitor in the global economy.

Government officials clung to 11th-hour hopes last night that bankruptcy could be averted, but talks broke down with Chrysler's creditors. A bankruptcy filing could happen as soon as today.

The U.S. government's attempt to save the automaker amounts to another extraordinary intervention in the economy and a landmark event in the history of the American auto industry.

Under the administration's detailed court strategy, ownership of Chrysler would be dramatically reorganized, the leadership of Italian automaker Fiat would take over company management and the U.S. and Canadian governments would contribute more than $10 billion in additional funding.

I would note that Cerberus would be completely wiped out on this deal, and be left with nothing, but they are not complaining, since they bought Chrysler to flip it to GM, and then found themselves having to run it when GM had its own crisis, and the alternative, that various parties go after them is even less palatable.

In related news, the dealers for both Chrysler, with the aid of the NADA, are lawyering up to deal with the consequences of a bankruptcy, which would void their franchise agreements.

Cutting dealerships is necessary, as Chrysler has about 2¾ times as many dealers per car sale as Toyota, which adds costs and inefficiencies to the system.

^*Full disclosure, I worded at GE Transportation Systems (GETS) their locomotive manufacturing unit from 1994-1996, and for about half of my time there, the chief of the division was Bob Nardelli, who I have never met.

Swine Flu Hits Home

Someone on a BBS that I frequent, Short Skool Bus, just noted that they are under self-imposed quarantine until tests came back, because one of their mom's is an LPN who might have been exposed in her practice.

This is beginning to get freaky.

It Could Be Worse, I Could Live in Minnesota

And be represented by Michele Bachmann, though she is worth a spit take.

Latest case in point: Suggesting that the Swine Flu outbreak is some sort of Democratic Party plot:

'I find it interesting that it was back in the 1970s that the swine flu broke out then under another Democrat president Jimmy Carter. And I'm not blaming this on President Obama, I just think it's an interesting coincidence.'

Except, of course, it happened under Gerald Ford, and the media frenzy over the flu was electioneering largely driven by Ford's SecDef, Don Rumsfeld, like a bad apple, he keeps turning up.

The stupid, it burns, it burns.

Byron York Thinks that Black People Don't Count

Or maybe he thinks that they only count 3/5ths.

His claim is that Barak Obama's support is somehow not real, because he is polling much higher among black voters, which ignores the fact that Democratic Presidents always poll higher among black voters, because they know that the Republicans have become the party of bigotry and segregation.

Simply put, when you see one party as hating you and trying to do harm to you, any representative of an opposing party looks better.

But Byron York, in a perfect reflection of the Republican Party, wants to say that black Americans simply do not count, much like the Republican Party vote suppression apparatus says that black American votes simply should not be counted.

The First 100 Days

It's an artificial piece of media driven bullsh@#.

'Nuff said.

So Much for "I Did It for the Judicial Appointment"

Now Jay Bybee is actively defending the torture memos that he wrote, as opposed what was said by "friends" to the Washington Post, which is that he basically took the OLC job because he had to in order become a Federal Judge.

I think that the money quote is, "In that context, we gave our best, honest advice, based on our good-faith analysis of the law."

It's an attempt to say that it's reprehensible, but not criminal, and hence does not fall under the the bailiwick of, "treason, bribery, or other high crimes and misdemeanors," though that might be small comfort, since the first impeachment and conviction was really because the subject was probably clinically insane, the charges were "drunkenness and unlawful rulings," and the latter sounds a like Bybee.

When the Rude Pundit Isn't

He isn't rude, that is, at least after the first paragraph, where he compares Republicans to fattie amputee midget S&M fetishists who draw a line when someone sends them links to child porn:

Some conservatives have actually gotten queasy with the release of the torture memos and the Senate Armed Services Committee report on the same. Maggie Gallagher, who has lived for years now off the lucre she makes from her hatred of gay marriage, once praised the illegal data mining that Bush's NSA did: "When exposed to information about efforts like this by President Bush, I am not outraged. I'm deeply grateful. And worried now about who might die now that The New York Times has published this information." Now, in the National Review Online (motto: "Is anyone still reading this sh$# beyond bloggers who need something to argue with?"), Gallagher writes, "I personally believe torture is wrong. We shouldn't do it. Even if it means me, my husband, and my two sons get blown up. Seriously, if I had to choose I'd say: Death is common to us all; torture is a choice." It's as impassioned an anti-torture statement as anyone on the Left has made.

($#@ of swear words mine, as is the emphasis)

He's right. Maggie Gallagher gets it.

Go read the rest.

Spanish Judges Opens Torture Inquiry On Gitmo

So, it looks like the Spanish judges are ignoring the recommendation of the Spanish Attorney General, and proceeding with an investigation.

The best outcome of this investigation, IMNSHO, is that this forces the US government to pursue the perpetrators of these crimes, though the fact that this will tend to prevent Bush and His Evil Minions^&trade from traveling freely around the world because of concerns regarding torture is an added plus in any case.

Now For the Criminal Investigation

Neel "Cash and Carry" Kashkari is finally leaving as head of the TARP.

I have no knowledge of whether or not he actually broke any laws, though describing the management of the program as "criminal," is certainly appropriate, but I do think that the DoJ and SEC should investigate because it smells bad.

I do not think that it is at the level of a grand jury investigation....Yet....But you won't know what's under the rocks until you turn them over.

Certainly, the program was an example of corruption and regulatory capture though.

Economics Update

Banks' turnaround

Great Googly Moogly, the new GDP numbers are in for the first quarter, and they show that the economy contracted at a 6.1% annual rate, which follows a 6.3% rate for Q4 of 2008, the worst contraction for a 6 month period in 50 years.

There is a bright spot, however. As Calculated Risk notes, is that sectors that have been traditionally leading are doing better than those that typically lag a recession, which might point toward a bit of a moderation.

At least we are not Lithuania, whose economy contracted by 12% year over year.

It's news like this that makes the Federal Open Market Committee (FOMC) statement minor economic news.

Basically, they said, "We think that it's getting worse more slowly, and we can't cut rates any more, but we will keep shoveling money out the door, and we are watching inflation, really we are."

If that means anything, it's beyond me, but it appears that the
Fed's aggressive asset purchase program will not be further expanded, which implies that they think that we are at/near bottom.

In other banking news, remember yesterday's stress test update, which fingered BoA and Citi?

Well, there are now reports that at least 6 of the 19 banking giants are under capitalized, hoocoodanode?

Meanwhile, in real estate, we have mortgage applications falling by 18%, and it appears that there is a tidal wave of troubled commercial mortgages on the horizon, with, "volume of commercial mortgages at risk of default has quintupled since the beginning of 2008."

One of the interesting things here is that commercial real estate loans are generally short term, 5 years or so, so people who have to refinance into the teeth of the recession and credit crisis may be up a certain creek without a paddle, even though they would be otherwise solvent.

Meanwhile, oil rose on the slightly positive Fed statement and reports of a drop in gasoline inventories, while the dollar fell on on optimism about the world economy.

Just Say No

That's what should be done regarding Citi's request to Treasury to pay big bonuses to traders.

Seriously, just f&^% em.

Quote of the Day

Too funny!

What starts with "f," ends with "k," and means "screw your workers"? That's right—401(k).

James Ridgeway

Kathleen Sebelius, Approved by Senate as Head of HHS

Finally.

The idea that a cabinet position would not reflect a key position of a president in their portfolio, and thus must be filibustered was ludicrous.

9th Circuit Deals Blow to Obama Secrecy Stance

The 9th Circuit Court of Appeals has just told the Obama administration that its assertion of a state secret privilege is full of crap.

Binyam Mohamed, a British national who was rendered, and tortured by the CIA, is to be allowed to pursue his lawsuit against Jeppesen, a private transportation company that flew him to their secret gulags:

The court said the government could ask judges to conduct a case-by-case review of whether the disclosure of specific documents would jeopardize national security. But allowing the executive branch to shut down an entire lawsuit whenever an official says its subject is classified would be a “concentration of unchecked power” and lead to abuses, it said.

“According to the government’s theory, the judiciary should effectively cordon off all secret government actions from judicial scrutiny, immunizing the C.I.A. and its partners from the demands and limits of the law,” wrote Judge Michael Daly Hawkins.

I would also note (again) that as a matter of fact, though not of law, that the precedent here, US v. Reynolds, is in fact based on a lie. There were no state secrets involved, the B-29 which crashed was not, as was claimed, on a secret mission or testing secret equipment, as the government implied, but that the the aircraft was in poor condition because of inadequate maintenance.

This is a good decision, and I rather hope that it won't make it to the Supreme Court, because 4 of those justices will rubber stamp the Bush, and now Obama, policy.

Federal Reserve Determines Interest Rate Appropriate to Economic Situation

Using the "Taylor-rule approach", basically yet another one of those equations for the economy that the "quants" came up with, and they get a number: negative five percent.

This is why central bankers have no clue what to do.

Of course, if Greenspan had not created the bubble, both in real estate, and in other investments, by pushing interest rates so low and ignoring market abuses, there would still be some marging, but there is no margin, so we are screwed.

Auto Industry Update

Well, Honda automobile lost money, though the whole operation made a slight profit because of their motorcycle business.

Meanwhile, GM is having problems negotiating its bondholders, with the troubled automaker giving what says is a "final offer," and the bond holders are blowing a gasket over this:

Today’s posturing makes it clear that the company and the auto task force would rather discount the thousands of individual investors and retirees who own GM bonds than undergo earnest negotiations.

I think that the bond holders think that they can do with GM what was done with GMAC, throw a tantrum, and get what they want, but the market has already discounted these bonds by over 85%, and the offer is a better deal than that.

On Chrysler's side, things look better with both the UAW and the bondholders coming to agreements with the auto firm.

The UAW will a get 55% equity stake in Chrysler, in exchange for concessions, but I'm still a pessimist, and believe that they are getting 55% of what will turn out to be nothing.

I think that the bondholders for GM have unrealistic expectations of the carmaker's survival.

I would say that even if GM gets the bondholders to an agreement, they still have to figure out how to cut dealerships without declaring bankruptcy.

Getting out of those franchise agreements would be difficult otherwise, unless Congress gets into the act to streamline the process, which I do not expect, since car dealers are big political donors.

Workplace Funny

It's a breadboard in the lab for a robotic product in development.

Look at the last line:

Good Read on Swine Flu, By an Expert

John M. Barry, who literally wrote the book on the Spanish Influenza Pandemic, has an article on the Swine Flue outbreak that is a must read.

I also need to read his book.

I had not previously realized that the initial Spring outbreak was very mild, and it was the Autumn outbreak that had the virulence that we now remember the disease for.

Money quote is at the end:

In all four instances [Influenza Pandemics], the gap between the time the virus was first recognized and a second, more dangerous wave swelled was about six months. It will take a minimum of four months to produce vaccine in any volume, possibly longer, and much longer than that to produce enough vaccine to protect most Americans. The race has begun.

Go read.

Ross Douthat is a F$#@ing Moron

So, the latest New York Times OP/ED page conservative affirmative action case has his debut editorial for the paper, and what is his trenchant analysis?

It's that the Republicans should have nominated Richard Milhaus Cheney as their presidential nominee in 2008.

I guess that's because Cheney is such a photogenic and friendly dude, whether talking about his penis (top picture), or simply snarling at the American public (bottom).

Of course this is not really what the author believes. He wanted Cheney to run because he would have been beaten like a baby seal while showing how the right wing orthodoxy needs to be repackaged: It's simply link bait, as Froomkin notes.

He wants people to read him, so Douthat says something outrageous, and finishes with, "And when he went down to a landslide loss, the conservative movement might – might! – have been jolted into the kind of rethinking that’s necessary if it hopes to regain power."

No. Simply put, he is being a tool to get buzz, and it increasingly appears that the Republican Neocons are simply some sort of truly subversive performance art group.

I miss William Safire, who while right wing, had a brain, and could actually string together words in an attractive way.

Between Tierney, Kristol, and now Douthat, it appears that the sure sign that you are really, really, stupid is getting a regular Times OP/ED slot.

Yes, I know, I am really describing him being an asshole, not stupid, but his argument boils down to, "We should have nominated Dick Cheney, and we would have lost much better."

That's Doug "The Stupidest Motherf^%$er on the Planet" Feith stupid, and the New York Times already has a surfeit of stupid among their regular columnists, with Maureen Dowd, who covers politics like she is a junior high schooler dissing a classmates choice in shoes.

Still it appears that but it appears that Andrew Rosenthal, the Editorial Page Editor, feels that they need some more stupid.

Stress Test Update

We are already getting reports, and the latest is that preliminary results show that Bank of America and Citigroup are under capitalized.

The truth is that it is very likely that all 19 banking giants are under capitalized, and that Citi and BoA are insolvent, but the tests would be universally seen as a joke if they had cited these two banks as needing more capital.

One area of concern here is that there is a a tremendous opportunity for insider trading and abuse here, and no one knows who has the data, and who doesn't, so I would expect that some people are trading on this, or will be in the next few days.

F$#@ Kindle, This is Something that Will Revolutionize Publishing

It's called the Espresso Book Machine, and it prints books on demand.

It literally prints the book and binds it in about 5 minutes from an order.

If you were to integrate a scanner/shredder to do book "returns", you could eventually run a bookstore without any physical delivery, and only stock those books you sell, plus preprinting stock to put out on your shelves for the things that move faster.

Right now, it's primarily handling out of copyright works, but the manufacturer is looking to add in copyright works.

List for the machine is about $175,000.00, but that should pay for itself fairly quickly, if just by generating sales that take 5 minutes to deliver, as opposed to 2 weeks, so the customer goes elsewhere.

The big problem, of course, is that book publishers will insist that this new technology will require an even higher profit margin on their part, just like record distributors did with CDs when they came out, even though they were cheaper than vinyl.

Unlike Amazon's^® Kindle^®, they can't turn a book into a $359.00 doorstop because you have a billing or return dispute.

Of course, XKCD was all over this:

Or not, but it's funny.

Economics Update

Graph courtesy of Wikipedia

Well, we have some legitimately good news, that the Conference Board's Consumer Confidence Index rose to 39.2 in April, a 12.3 point gain from March, though with the rather neutral year of 1985 being indexed to 100, 39.2 still sucks, as is clear from the graph.

Additionally, while the home prices continued to fall, they are falling at a slightly slower rate, or as Atrios so amusingly notes, "Positive 2nd Derivative!!!"^*

House prices are still falling, and the rate of decline is the noisiest metric, unless you want to do the change in rate of decline (unless you want to go to something like the 3rd derivative, called "jerk" when dealing with motion).

I would wait and see for a few months before jumping back into the market.

Meanwhile, the flu concerns continue to push oil down, though the positive economic data above has driven the dollar down too, because there is less of a flight to safety.

^*If you don't get the joke because you are not a math geek, don't despair....At least you are not a math geek, which has to count for something.

Specter Switches Parties

This is obviously the big news of the day, which is that Arlen Specter is changing parties, and becoming a Democrat.

The immediate effect is that Coleman-Franken goes on for another year, because now when Franken gets seated,^* the Dems have the votes necessary for cloture.

If you read his official statement, he does not say that he is becoming a Democrat, just that he will be running in the Democratic primary, which is a less than sterling endorsement of the party, though his statement that, "The Republican Party has moved far to the right," is no endorsement of them either.

Personally, it's nice having a 60th vote for cloture, whenever the damn Minnesota recount is done,^* but fundamentally, I see this as being all about Arlen Specter.

He squeaked out a primary victory in 2004 against wingnut Pat Toomey, and realized that, with moderates increasingly changing party affiliations to independent or Democrat, he had no chance of winning.

As a final thought on him: Quoth the Atrios, who was quoting Harry Reid, "Arlen Specter's with us except when we need him."

He'll be a weasel, and will remain so.

I expect this to continue, particularly with regard to the Employee Free Choice Act (EFCA) labor legislation, which he says he will continue to oppose, despite sponsoring it a few years back.

^*Please, just make it stop.....This recount is going on forever!!^†
†Why yes, that little self-destructing man will continue to be a part of my Minnesota recount coverage.

U.S. Looks to Resettle Gitmo Uighurs in US

This is a good thing, though there are still a number of road blocks, most likely bureaucratic resistance, because it's a black eye for the military's determination to hold them in the first place, and 'Phant grandstanding.

They were held at Guantanamo Bay for years despite the fact that they were not terrorists, and they were tortured at the request of the Chinese government, and they have no where else to go.

Just in Case You Were Wondering How Tied Into Wall Street Geithner Is....

The New York Times has a rundown of his ties, and the behavior that this has engendered:

Timothy F. Geithner, who as president of the New York Federal Reserve Bank oversaw many of the nation’s most powerful financial institutions, stunned the group with the audacity of his answer. He proposed asking Congress to give the president broad power to guarantee all the debt in the banking system, according to two participants, including Michele Davis, then an assistant Treasury secretary.

The proposal quickly died amid protests that it was politically untenable because it could put taxpayers on the hook for trillions of dollars.

“People thought, ‘Wow, that’s kind of out there,’ ” said John C. Dugan, the comptroller of the currency, who heard about the idea afterward. Mr. Geithner says, “I don’t remember a serious discussion on that proposal then.”

But in the 10 months since then, the government has in many ways embraced his blue-sky prescription. Step by step, through an array of new programs, the Federal Reserve and Treasury have assumed an unprecedented role in the banking system, using unprecedented amounts of taxpayer money, to try to save the nation’s financiers from their own mistakes.

And more often than not, Mr. Geithner has been a leading architect of those bailouts, the activist at the head of the pack. He was the federal regulator most willing to “push the envelope,” said H. Rodgin Cohen, a prominent Wall Street lawyer who spoke frequently with Mr. Geithner.

There is no failure in Wall Street that Geithner does not think should be subsidized by the taxpayer, or as Yves Smith says, "Geithner is a creature of the financial establishment."

What is important here is that this was page 1 on the New York Times, which is a recognition by the main stream media that this is a problem, and they used his calendar while President of the New York Fed, showing private meetings and lunches with Wall Street executives, as a part of this.

The use of the calendar is very competent shoe leather journalism, and as Ms. Smith notes, it is exceedingly rare to see it used in a story.

If you scroll down toward the bottom of the story, you discover that the bill drafted to give the Treasury the authority to take over large institutions was drafted by Wall Street lobbyists, literally.

The draft bill sent to Congress sent contained metadata that showed it was from a law firm that represents lobbyists.

Seriously, if the problem is that the banking industry and its ethos are dysfunctional, and I believe this to be the case, you could not find a worse steward of this crisis.

And the MSM is beginning to notice,

Swine Flu Update

The caveat here is that the only country with enough cases for any real data is Mexico, and their public health system is awful, so the numbers are suspect, and there are a lot of untreated TB, asthma, and HIV, but it appears that most of the deaths so far have been young adults.

This may just be an artifact of the fact that Mexico is missing cases, etc., but it could point to an immune system response known as a Cytokine storm it was the reason that Spanish Influenza in 1918, and SARS more recently, disproportionately effected young adults.

Student Loan Reform to Use Reconciliation Too

Which means that it's likely to pass, because it requires only 51 votes in the Senate, not 60.

So the taxpayers will stop subsidizing private lenders to overcharge.

Woot!

Bybee Broke the Law Because He Wanted to be a Judge

Friends of one of the torture memo authors have been waging a campaign to rehabilitate him by explaining his motives, which is, unfortunately, at the end of the article:

"The whole idea that the Constitution is based on a kind of wariness of mankind's tendency to grab power, that is an idea I got from Jay," McAffee said. "So the whole idea of uninhibited executive power, from him, does seem passing strange."

Bybee's friends said he never sought the job at the Office of Legal Counsel. The reason he went back to Washington, Guynn said, was to interview with then-White House counsel Alberto R. Gonzales for a slot that would be opening on the 9th Circuit when a judge retired. The opening was not yet there, however, so Gonzales asked, "Would you be willing to take a position at the OLC first?" Guynn said.

Being unable to answer for what followed is "very frustrating," said Guynn, who spoke to Bybee before agreeing to be interviewed.

Gee, he was a movement conservative who thought he deserved a Federal judgeship, so he authorized torture, even though he knew that it was wrong.

That does not make his circumstances better, it makes them even more indefensible.

He did it because he was a career Apparatchik, not out of any conviction or perceived need.

Bonus video:

John Podesta calls for Bybee's impeachment.

Israel Has Sunk Multiple Iranian Ships

I missed the reports, but it appears that Israeli aircraft sank a ship carrying arms to Hamas in Gaza in late March, and that an Israeli missile boat sank another ship just a few days ago, both off the coast of Sudan.

Both of the above links are the Jerusalem Post, but we have confirmation from Haaretz, which means that it probably happened.

The Fix is In on the Stress Tests

It appears that the stress test results will say that only one bank will need additional capital.

This is bullsh@#. The result that only one bank has issues, and they are small was pre-ordained from the start.

Because they don't want to say that banks are insolvent, and if they said that no banks had issues, the fix would be obvious, so they went with only 1 bank.

It looks like the good doctor (Roubini) agrees. He is saying that the stress tests are not "serious".

Teck of a job, Timmy.

Russia Looking to Make Significant Nuclear Cuts in Talks

One hopes that this translates into significant reductions in nuclear stockpiles for both the US and Russia, though I have my doubts.

Economics Update

Here's a surprise, Bank of America buys Countrywide Financial, whose reckless mortgage policies destroyed their company and threw untold thousands out on the street, and now BoA is attempting to make the "Countrywide" brand vanish, because it is such a completely toxic entity.

Which means that they are writing off the so-called "good will", basically the value of the "Countrywide" brand name, accrued with the purchase.

Heck of a job, Kenny.

In related real estate news, home ownership percentages are back at the level they were in 2000.

More generally, we have the Dallas branch of the Federal Reserve releasing its numbers, and they are all very negative, though they are no longer the end of the world bad, which is an improvement.

In energy, retail gasoline has been flat for the past 2 weeks, and oil is down on the expectation that the flu outbreak is likely to further crimp energy demand.

The flu also drove the dollar up, as people looked for safe havens.

Washington's Various Serious People in Action

Here we see Republican Senator Susan Collins saying that we should cut the stimulus money for flu pandemic.

They cut the money, because they are "centrists", and unless they do something to throw their weight around, it means nothing, so Collins killed the money on pandemic preparedness, to show "fiscal responsibility", and we may be on the brink of a major flu outbreak.



Bobby Jindal lambasted volcano monitoring, and Mount Redoubt erupted.

Republican spending cuts are making me very nervous about the next shoe to drop.

My Take on Swine Flu

In no particular order:

• It is H1N1, a variant of the Spanish Influenza.
• We don't know the numbers from Mexico, only the numbers of those seriously ill, so we don't really have mortality and serious illness percentages from them.
• The US numbers appear to show that it's not so bad.
• It may become a pandemic, but if so, think Hong Kong Flu (Influenza A virus subtype H3N2) where the 1968-9 pandemic killed about 33,800 in the us, primarily among the old, very young, and immune compromised, not Spanish Influenza, where ½-¾ million died, and it hit the young and healthy hard through cytokine storms.

Summer flu is not unknown, so don't panic, but do wash your hands.

USAF’s 2018 Bomber Looks Dead

Or at least significantly delayed. (paid subscription required)

The concept out there was for a 20,000 lb payload stealthy bomber, which is really only suited to the nuclear strike, you probably want twice that to match the payloads of the B-52, B-1, and B-2, and it really does not have much of a mission beyond the nuclear strike role.

Additionally, the current arms control agreements are likely to be rather unfriendly to nuclear bombers, which are typically counted on maximum theoretical loadout, as opposed to actual weapons loads.

USAF Sees Writing on the Wall

The US Air Force Chief of staff, General Norton Schwartz, is now saying that maybe, just maybe, the service should look at procuring a "light strike" capability.

The current aircraft operate too far from the front, and do not have the endurance to stay on station a meaningful length of time.

He was talking about something like the an armed turboprop trainer, though the basic needs are very similar to the A-10, and there are a lot of those in the boneyard.

I would also argue that a turbofan based new airframe, designed to roughly the same specs as the A-10 would be superior, because you could incorporate narrow band stealth to address the issue of the radar guided AAA.

My guess is that a replacement for the A-10 would be, considering advances in armor, propulsion, and cannon, would be at less than ¾ of the weight.

The problem would be how to deal with mission/feature creep.


Video courtesy of the DEW Line.

Swiss Push Back Fighter Deal Competition

The official word is that they are looking for more industrial involvement by Swiss industry, but the effect is to push back the date of the decision.

The competitors still standing are the Dassault Rafale, Eurofighter Typhoon, and the SAAB Gripen

Of note is the fact that they are still evaluating noise data, which would tend to favor the smallest aircraft (Gripen), and it looks like they want the Swedes to purchase their Pilatus trainer should they win.

IAF Looking at Silent Eagle Purchase

They are looking at purchasing the upgraded F-15 because of concerns regarding cost and schedule for the F-35 JSF, though the inability of Israel to integrate their own systems into the JSF may be a factor too.

Earlier post on the F-15 SE here.

The Daily Show on the Horrors of Swedish Socialism

Funny.

Part 1

Part 2

More Google Ads Mishugas

So I come across this add when I bring up my blog, an add offering "Ann Coulter Free" (no link, I don't want to drive her traffic).

I do not involve myself in what Google^® Adsense^® serves, I just make fun of them when it they get it wrong, and this ad is very, very wrong.



Truth be told, I don't want Ann Coulter free, I want Ann Coulter in jail for vote fraud.

Expect the Stock Market Rally to End Soon

Because stock sales by executives and other insiders at firms has hit the highest level since 2007.

They know that the earnings for this quarter are not sustainable, and they are getting out of their own companies' stocks and into cash:

Executives and insiders at U.S. companies are taking advantage of the steepest stock market gains since 1938 to unload shares at the fastest pace since the start of the bear market.

What we have been seeing is a bear rally or dead cat bounce.

Credit Union Closing Shutdown, Friday Edition

I normally follow the FDIC, so I missed the closing of the Eastern Financial Florida Credit Union, which was actually a larger financial institution than any of the 4 banks closed yesterday.

Tedisco Officially Concedes

So Scott Murphy is the next Congressman from the NY-20 district, despite the fact that it's a heavily Republican district.

It was a nail biter, but it's a win for the good guys.

One hopes that Norm Coleman learns from this, but I doubt it.

Someone Else Recommends Disbanding the USAF

Only this time, as opposed to being a proposal in the milblogosphere, it's a retired Marine corps officer, Paul Kane on the OP/ED pages of the New York Times.

I agreed with it then, and I agree with it now.

He also suggests that the services abandon up or out, where officers are discharged if they get passed over for promotion twice, which is a good idea too.

Up or out tends to create sycophants, because having a poor review given out of enmity can destroy a career, and is one reason that our current military is so top heavy (1 officer per 5 enlisted men, as opposed to the 1:10 it had through most of its history).

US Navy Discovers the Zamboni

The difference is that a Zamboni is the only reason I want to watch hockey, but carrier takeoffs and landings are cool.

Lockheed Martin Rolls Over on F-22 Cancellation

This is an unexpected but welcome development:

A top Lockheed Martin executive says the company will not oppose the Department of Defense's proposal to halt F-22 production. The company stands to lose production lines for the F-22 and the VH-71 presidential helicopter under fiscal year 2010 budget proposals announced by Secretary of Defense Robert Gates on 6 April.

I can't imagine what gun that they are holding to LM's head to make them do this, but it needs to used across the entire Pentagon procurement process.

Russian Draws Back Veil from MiG-31BM

Russia has finally displayed the latest version of the MiG 31 interceptor along with its weapons loadout.

Of interest is that this is the first showing of the R-33S (bottom pic, right hand side), which differs from the basic R-33 by having some small destabilizing surfaces up front (the ones with the ray and white bodies).

It's about 40 kg (88 lb) heavier than the basic R-33, which would imply some increase in range, and the destabilizing surfaces implies an increase in maneuverability, though it is still clearly not intended for highly maneuverable targets.

You can click the pics for the full size photographs.

AIG Commercial

Friday Night FDIC Bank Seizures

First Bank of Idaho, Ketchum, ID
First Bank of Beverly Hills, Calabasas, CA
Heritage Bank, Farmington Hills, MI
American Southern Bank, Kennesaw, GA

29 so far this year.

Full list.

Amazingly Politically Incorrect Humor

So, I'm on the Stellar Parthenon BBS, and we are discussing the rapidly deteriorating state of governance in Pakistan, and I'm a part of the following exchange:

Me: (Furiously calling up Wiki) Pakistan has somewhere around 40 throughly weaponized and deliverable nuclear warheads....

CZ: That many? F@#$.

UM: Don't worry, they're all pointed at India.
I think they could probably wipe out about 5% of India's total population.

Me: As long as they are pointed at whoever does tech support for Dell.....

DC: Let me provide the coordinates.

CZ: Win!

Congress Threatens Subpoena Over BoA Threats

Now that Bank of America CEO Ken Lewis' testimony before NY State Attorney General Andrew Cuomo has been released, members of Congress want the documents to investigate, and are threatening a subpoena if they don't get them.

Representatives Rep. Edolphus Towns (D-N.Y.), chairman of the House Oversight and Government Reform Committee, and Dennis Kucinich (D-OH), who the Domestic Policy subpanel, are demanding that all relevant documents be turned over to them, and they are threatening a subpoena:

The implications of Mr. Lewis’ testimony, if accurate, are extremely serious. Under these circumstances failure to comply with the Subcommittee’s request raises the prospect that we will be forced to consider compulsory means to achieve compliance with our request. However, we would prefer your voluntary compliance.

(emphasis mine)

As I've said before, it sounds to me like Paulson and Bernanke broke the law, and a full investigation would be a very good idea.

Hell an indictment would be a very good idea.

Tedisco Likely to Concede Shortly

Word is that Jim Tedisco has run the numbers, and realizes that even with his attempts to selectively object to absentee ballots, he's going to lose, and unlike Norm Coleman, does not want to stretch it out, so he will concede to Democrat Scott Murphy in the next few days.

Your mouth to God's ear.

General Motors Update

The big news is that the Firebird is dead, as GM will eliminate Pontiac, though it is keeping GMC.

I wonder if they will look for a legislative fix to minimize the costs of winding it down, as GM had to pay billions to dealers when it wound down Oldsmobile a few years back.

Additionally, they gust got $2 billion more lent to them, which implies that the folks looking at this on the automotive task force think that they are getting their sh&% together.

Minnesota Elections: June 1 Oral Arguments

June first???

That's eight months after the elections that the Minnesota Supreme Court will begin to hear arguments. It will probably be at least 2 weeks before they issue an opinion.

Jeebus.

We Need to Be More European

Because the EU is proposing a cap on executive compensation:

Bankers’ bonuses and golden parachutes would be capped in all European Union countries under a draft policy circulating in Brussels that amounts to one of the broadest responses yet to concerns about executive pay.

No BS about, "If you participate in this program, you are limited," it applies to everyone.

They are saying, "Just so much and no more never more than a spot or something may happen, you never know what."

Even if the bankers were doing a good job, that level of remuneration is immoral, whether its a lawyer or a football player.

Elections Have Consequences, Part IV

Obama has stated his intention to shut down federal subsidies to private student loan lenders and go exclusively with direct federal loans.

It should save $5 billion a year for the taxpayers and lower interest rates for students, so everyone wins....Except, of course for the private lenders, who are basically parasites anyway, so it doesn't bother me.

I believe taht he can do most of this through executive order, which is a good thing.

Banks Might Need $1T More in Capital

So, Timothy Geithner will beginning to report the results of the stress test to the banks, and I do not know the results, but the estimate is scary:

“The headlines, not the details, seem to be driving the markets,” said Frederick Cannon, who is in charge of equity research at Keefe, Bruyette & Woods, a boutique investment bank.

Analysts are already betting that the stress tests will show that banks need to raise significant amounts of new capital, as profits made in the first three months of the year give way to more losses, tied to credit card, commercial real estate and corporate loans. An assessment by Mr. Cannon’s firm, which calculated its own stress test for the industry, concluded Thursday that United States banks might need as much as an additional $1 trillion in capital.

I don't know this guy from Adam, but $1T is a lot of money. US GDP is about $15T.

I would also note that the economy is already doing worse than the worst case in the stress test, so I would expect the final number is likely to be at least twice as much as this.

Democrats Agree to Put Health Care Reform in Budget Reconciliation

This report is preliminary, but it makes sense.

The 'Phants have everything to lose, and nothing to gain with a well done reform of the US healthcare system, and even if you play nice, they will offer no cooperation.

Economics Update

The Economist Nails It

The British economy just posted its largest quarterly loss since 1979, 1.9 % for the quarter, and 4.1% year over year.

We had Moody's downgrade American Express debt from A2 to A3, because of lower earnings from fewer purchases made with its cards, and more bad loans.

Unsurprisingly, the same thing is happening with the stress tested banks, where PNC Financial says that bad assets are expected to triple.

We do have some good news with Ford Motors beating expectations, though the numbers are still awful, and corporate borrowing costs falling below last October's numbers.

In currency, the dollar weakened again, and this had traders bidding up the price of oil.

Obama Now Comes Out Against Truth Commission

What the hell is wrong with everyone in Washington?

Meeting with the Democratic leadership on Wednesday night, Mr. Obama said a special inquiry would steal time and energy from his policy agenda, and could mushroom into a wider distraction looking back at the Bush years, people briefed on the discussion said. Mr. Obama, they said, repeated much the same message on Thursday at a bipartisan meeting with Congressional leaders.

The Senate majority leader, Harry Reid of Nevada, and other top Senate Democrats endorsed Mr. Obama’s view on Thursday, telling reporters at a news conference at the Capitol that they preferred to wait for the results of an investigation by the Senate Intelligence Committee expected late this year.

It should be noted that senior Senators on the Intel Committee have already been described as having signed off on torture, and as such Rockefeller, Feinstein^*, Roberts, etc. have a vested interest in burying this.

The fact is that the American public wants this, the Republicans are going to fight you every step of the way on your agenda anyway, but still, you are determined to kick the can down the road long enough that people will forget.

This is not partisan politics, it is, as Krugman says, a battle for America's soul, and it appears that the folks inside the Beltway just don't give a damn

And the only way we can regain our moral compass, not just for the sake of our position in the world, but for the sake of our own national conscience, is to investigate how that happened, and, if necessary, to prosecute those responsible.

What about the argument that investigating the Bush administration’s abuses will impede efforts to deal with the crises of today? Even if that were true — even if truth and justice came at a high price — that would arguably be a price we must pay: laws aren’t supposed to be enforced only when convenient. But is there any real reason to believe that the nation would pay a high price for accountability?

Tim Geithner, the Treasury secretary, wouldn’t be called away from his efforts to rescue the economy. Peter Orszag, the budget director, wouldn’t be called away from his efforts to reform health care. Steven Chu, the energy secretary, wouldn’t be called away from his efforts to limit climate change. Even the president needn’t, and indeed shouldn’t, be involved. All he would have to do is let the Justice Department do its job — which he’s supposed to do in any case — and not get in the way of any Congressional investigations.

Why this scramble not to investigate. It makes no sense.

^*Full disclosure, my great grandfather, Harry Goldman, and her grandfather, Sam Goldman were brothers, though we have never met, either in person or electronically.

Fun and Games With Bad Financial Reporting

I've included some graph pr0n to show just what the innumerate folks in the 4th estate have been doing.

We have a rather good article by Diana Olick, who explains that the bump in house prices reported yesterday were a mirage.

Basically, at different times of the years, different people look for different homes, and these different people buy different sorts of houses:

All that said, the Realtors, in a twist, decided to give the month-to-month home price changes today, because it offered, as chief economist Lawrence Yun suggested, hope of a possible “green chute.” Existing home prices rose 4 percent from February to March, according to the Realtors. Now, if you were listening before, you would say, ok, that’s because the families are getting into the spring game. But Mr. Yun points out that the usual bump up in spring prices is about 1 percent, so the 4 percent monthly bump up should be a good sign. I’m not going to argue with that, because it makes sense to me

But still, we get crap like, "New home sales down, but show sign of revival",and "Drop in new U.S. home inventories offers hope", which ignore basic facts.

New home inventories are down because developers cannot compete against foreclosures and short sales, which are nearly half the market, and the fact that the numbers dropping, but "exceeding" forecasts generally ignores the fact that the forecasters have gotten the entire housing market wrong.

As Barry Righoltz notes, the real number is that new home sales fell 41% YoY in February 2009, though the margin of error is ±7.9%, it's indisputably a drop.

The 4.7% month to month increase against an ±18.3% margin of error (!) means nothing. (link to the Census Bureau Data)

BTW, the top graph, the one that even the most mathematically inept person in journalism could use to figure this out, is in the Census Bureau report.

And then we have this report on durable goods orders, which again claims that, "Orders for U.S. Durable Goods Fall Less Than Forecast," using a different set of data from the Census Bureau, but using a similarly clueless group of economists to show that it "beat expectations"

http://img141.imageshack.us/img141/7573/headsmashkeyboard112129.gifOnly, as you can see from the graph, new orders are down 27% year over year, (graph courtesy of Bonddad) but we still have to see that, "Prosperity is just around the corner."

Gah!!!!!

Auto Industry Update

It now appears that the sale of GM's main European division is a done deal, and it also looks possible that they will essentially give the car company away, "According to a person familiar with GM’s thinking, an investor will be asked to pay at least €500m ($652m) in equity but the carmaker will realise no financial gain as the money will be injected directly into Opel."

I note without surprise that Cerberus, the private equity firm that owns Chrysler, is not interested in getting a piece of this deal.

When Cerberus bought Chrysler, they expected to hold onto it for perhaps 6 months, and then sell it to GM. Their model was flip and flee, not sensibly operate a company as a going concern.

Meanwhile, on the worker benefits front, it looks like GM Sand the UAW will be renegotiating their benefits deal, replacing much of the cash promised with an ownership stock in GM.

There is very little that I am sure of, but one is that when employees get an ownership stake in lieu of payment, they get the shaft.

In other GM News, it now appears that the normal 2 week end of year shutdown will be extended to 9 weeks, which makes sense when you look at how moribund car sales are, and they spooked the market by saying that was unlikely that they would be making a $1 billion debt payment in July, though they are saying that this is because they will have restructured the debt.

There is also a report that the US government will move to convert GM's debt to it into equity, which will likely make the taxpayer the largest shareholder of the automotive giant.

Meanwhile, the Treasury is directing Chrysler to prepare for a bankruptcy filing, and not because, as the chattering class is so fond of asserting, the union is being unreasonable, but because the banks and other debt holders are.

Chrysler lenders offer to cut debt, take stock - Apr. 21, 2009, see here,
here, here, and here.

Basically, the market value on their debt is about 15%, and they want something north of 85%.

Rachael Maddow Gives Us Context

She links torture to political needs, as opposed to security needs. (13:23)

This may explain why Karl Rove is flipping out on Fox News about a possible criminal investigation: If this was done for political reasons, then he had to be actively involved in pursuing the policy.

Politics and electioneering went through his office.

Gay Marriage Now Law in Connecticut

Governor Rell just signed the bill into law

Ken Lewis Says that Paulson and Bernanke Threatened Him to Keep Mum on Merrill Lynch IMploding

It looks like the former Treasure Secretary, and the current Chairman of the Federal Reserve pressured Lewis to ignore the normal disclosure requirements to the SEC and his shareholders:.

Bank of America Chief Executive Kenneth Lewis told the New York attorney general he believed former Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke wanted him to keep quiet about the worsening terms of the bank's acquisition of Merrill Lynch, according to testimony reviewed by The Wall Street Journal.

This is actually a big deal, and while I still think that Lewis is an idiot who should be fired for buying Countrywide Financial, it casts a far more sinister light of the involvement of the people who were then two most senior finance officials in the US.

I would note that Paulson has denied this, though the circumstances seem fairly clear:

The Journal said in Thursday's edition that Lewis doesn't say in the transcript that he was told specifically to remain silent about Merrill's burgeoning losses. But the paper quotes Lewis as testifying that disclosing that information "wasn't up to me," and that he was warned by Paulson and Bernanke that failing to complete Merrill's takeover would "impose a big risk to the financial system."

Citing a person familiar with the matter, the newspaper said Paulson told the NY AG's office last month that Lewis may have misread some remarks about Treasury's disclosure requirements as instead pertaining to his bank's obligations.

The "person familiar with the matter," is Hank Paulson or one of His Evil Minions^™, and, "he misheard me," is awfully week tea by way of a denial.

As the the Bloomberg article notes:

The allegations in Cuomo’s letter suggest Paulson and other policymakers may have resorted to breaking securities laws in order to protect a fragile financial system, according to Peter Sorrentino, a senior portfolio manager at Cincinnati-based Huntington Asset Advisors, which has about $13.3 billion under management and doesn’t own Bank of America Corp. stock.

It's actually more than that. Just by instructing Lewis to keep his mouth shut, Bernanke and Paulson engaged in a criminal conspiracy, and possibly, because of the power that they held in their positions, racketeering and abuse of power.

The Wall Street Journal has released selected transcripts, and if Lewis' allegations are true, we have a criminal Chairing the Fed:

Mr. Lewis: I remember, for some reason, we wanted to follow up and see if any progress -- as I recall, we actually, had not agreed to call a MAC after the conversation that we had, and so I tried to get in touch with Hank, and, as I recall, I got a number that was somebody at the Treasury kind of guard-like thing. He had a number for Hank, and Hank was out, I think, on his bike, and he -- this is vague; I won't get the words exactly right -- and he said, "I'm going to be very blunt, we're very supportive of Bank of America and we want to be of help, but" -- I recall him saying "the government," but that may or may not be the case -- "does not feel it's in your best interest for you to call a MAC, and that we feel strongly," -- I can't recall if he said "we would remove the board and management if you called it" or if he said "we would do it if you intended to." I don't remember which one it was, before or after, and I said, "Hank, let's deescalate this for a while. Let me talk to our board." And the board's reaction was one of "That threat, okay, do it. That would be systemic risk."

...

Q: Why do you say it wasn't up to you? Were you instructed not to tell your shareholders what the transaction was going to be?

Mr. Lewis: I was instructed that "We do not want a public disclosure."

Q: Who said that to you?

Mr. Lewis: Paulson.

Seriously, this sounds like gangsters making threats, and I would suggest that a criminal investigation is in order.

We Have Entered Bizarro World: Part II of Many

Seriously, Shepard Smith of Fox News pounding the table and saying, "We don't f&^$ing torture?"


Interestingly enough, the big issue here is not Shepard Smith showing common decency, but the fact that we are all using the word "torture".

It changes the dialogue to use that word, and makes it clear just how repulsive the whole concept is.

Harman Update: The CIA is Really the Gang That Cannot Shoot Straight

As I've said before, I'm glad that Harman is not House Intel Chairman, but tht latest from Jeff Stein, who broke the story, is a classic case of the CIA screwing itself up, and f%$#ing itself over:

Frustrated and angry at Gonzales for aborting the investigation, intelligence officials let Pelosi know about the wiretap and its contents, according to the three former national security officials.

'She knew. We made sure she knew,' said one of the former officials, chuckling.

The officials would discuss the matter only on terms of anonymity, because even the existence of the wiretap remains classified.

These guys want to be unshackled from the Frank Church era restrictions, and they pull crap like this.

You are going to have Congressional committees investigating you in a way that is far less pleasant than an unlubed proctology exam now, and you are to blame for this.

Morons....We should have outsourced you lot's job to the ex-KGB when the wall came down.

Economics Update

Well, we have the new jobless claims out, and again, they are grim, with initial claims raising from 613K to 640K, though the 4 week moving average, which is a better indicator, dropped to 646,750 from 651,000.

Continuing claims hit another record, up 93K to 6.137 million, worse than the forecast.

The fact that mass layoffs, more than 50 people, hit a record, with 2,933 in March, probably had something to do with this.

In world finance, we have Moody’s downgrading the debt of the Baltic Republics Lithuania and Latvia, indicating a bumpy way ahead.

In real estate March existing home sales fell, and with mortgage rates inching up, I would not expect a significant improvement in the situation.

Meanwhile, oil is up, and the dollar is down, for reasons not clear to me.

Pirate Bay Trial Judge Had Conflict of Interest

He belonged to 2 copyright advocacy organizations that one of the witness headed:

Norstrom is a member of The Swedish Association for Copyright, an organisation whose board includes Peter Danowsky, who represented the music and film industry in the trial, the group said on its website.

Norstrom said he did not believe his memberships had made him ineligible to preside over the trial.

Yeah, sure.....The head of the organization to which you belong is the lawyer litigating in front of you....

In any case, the defense is now asking for a new trial, and they are likely to get it.

Shoe's on the Other Food Now, Huh Steny?

House Majority Leader Steny Hoyer is expressing concern over the wiretapping of house members, of course it wasn't a problem when ordinary people were spied on, but not that it's you and yours, there must be an investigation:

House Majority Leader Steny Hoyer (D-Md.) said Tuesday he had “great concern” over news reports that Rep. Jane Harman (D-Calif.) was wiretapped during a federal probe into Israeli agents, and he vowed to personally look into whether there should be an investigation into wiretapping of Members of Congress.

“The stories that I’ve read give me great concern. I’m going to be in the process personally of finding out more about it and then, with the Speaker, determining what action, if any, needs to be taken,” Hoyer said Wednesday during a meeting with reporters.

Wanker.

Health-Care: Obama Looks Ready to Cave on Public Option

And his allies in creating universal health coverage are pissed off:

More than 70 House Democrats recently warned party leaders that they will not support a broad health reform bill that does not offer consumers a government-sponsored policy, and two unions withdrew from a high-profile health coalition because it would not endorse a public plan.

"It's way too early" to abandon what it considers a central plank in health reform, said Andy Stern, president of the Service Employees International Union. He said the organization pulled out of the bipartisan Health Reform Dialogue because it feared its friends in the coalition were sacrificing core principles too soon. "You don't make compromises with your allies."

So he's looking at compromising on what should be one of the goals of the program:

Many Republicans and industry executives say that any program modeled after Medicare -- with its power to set prices -- would have an unfair advantage over private-sector competitors and eventually force some companies out of business.

Destroying private health insurance companies in the US should be one of the goals.

They are in large part responsible for the problem, and taking them down has the overwhelming support of everyone who has had to deal with them.

If there is not a public insurance option, I will contact my Congressman and ask him to vote against it.

Enough Schadenfreude for the Whole Month

I'm shocked, shocked to find that gambling is going on here!

Two articles on how the rich investment bankers are so upset about people thinking that they are overpaid scumbags, The Wail of the 1%, about how they all feel unjustly vilified, after creating the financial crisis, and still demanding 7 figure bonuses and 7 figure life styles, and Confessions of a Bailout CEO Wife, whose content is pretty much obvious from the title.

It should be noted that the Gawker has an absolutely devastating summary of the latter article. The final lines of which are prize:

Sounds awful. If only there were some good news too. Oh, what, there is? "The good news is that Americans have short attention spans. Before long, some other group will come along to absorb all the frustration and anger."

Such as: Rich wives.

(emphasis mine)

I'm not an empathic guy, and I don't feel your pain, I just go Nelson Muntz.

With children going hungry, and ordinary folks who actually work for a living having lost their jobs and their medical coverage, the idea that you are wailing about not being as overpaid to mismanage people's money fills me with nothing but contempt.

How about you do some real work, physical labor, even if it's something as simple repaving a road, and then ask yourself: just how onerous is your work, and why do you need to be paid so much to do it?

Lessons Learned in Defense Budgeting

SecDef Gates says, and I agree, that the non-disclosure agreements that he required participants to sign made the process work better:

“[It] was critically important as we considered dramatic changes in the way we were going to procure things and programmatic changes to specific programs was that we be able to have those deliberations among the senior military and the senior civilians in the department without the newspapers printing, every single day, the results of our deliberations the preceding day,” Gates said last week, speaking at the Naval War College, Newport R.I.

Gates took the unusual step earlier this year of requiring everyone involved in the 2010 budget deliberations sign nondisclosure agreements. The 2010 defense budget had already become politically hot well before deliberations began in earnest when news got out that the Joint Chiefs of Staff had prepared a draft budget request of $584 billion (an 8 percent increase over 2009), putting the incoming Obama administration into the position of having to “cut” defense. The Obama administration’s 2010 defense budget request is $527 billion.

The military budget process has become so politicized and pork laden that it was the only way to get things done.

Financial Firms Lobby to Cut Cost of TARP Exit - WSJ.com

It looks like the Treasury will allow some of the TARP recipients to pay back their money early, though it is implied that the stress test has to be complete, and that their financial status has to be well capitalized, in order for them to do this.

In a related note, the banks are lobbying to reduce the costs of the loans that they took:

The banking industry is aggressively lobbying the Treasury Department to make it less costly for financial institutions to get out of the Troubled Asset Relief Program.

...


At issue are "warrants" the government received when it bought preferred stock in roughly 500 banks over the past six months as part of TARP. The warrants allow the government to buy common stock in the banks at a later date so taxpayers can receive more of a return on their investment when the banking industry recovers.

Many banks want to return their TARP money and, as part of that effort, want to expunge the warrants. To do that, banks must either buy them back from the government or allow the Treasury to sell them to private investors.

Today, most of the warrants are essentially worthless, because their exercise price is higher than where most banks' stocks are trading. But the government believes the warrants still have value, since they give the Treasury the right to buy common stock at a set price for 10 years.

Bankers say it is unfair to charge what amounts to a "prepayment penalty," which makes it additionally onerous to escape TARP. Bank representatives say the cost of buying back the warrants could be equivalent to paying 60% annual interest on short-term loans. That, they argue, would exacerbate banks' existing problems.

(emphasis mine)

Awww....the poor little babies, they have a "prepayment penalty", such a pity.

The irony is delicious.

Props to Senator Pat Leahy

He is saying that he will not allow bipartisanship to be used as an excuse to delay an investigation into torture:

Sen. Patrick Leahy pledged today that if he cannot get the votes to create a bipartisan commission to investigate U.S. torture policy under former President George W. Bush -- and regardless of calls by President Obama that any inquiry be bipartisan -- he'll conduct his own partisan inquiry in the Senate Judiciary Committee.

Leahy's comments after a press conference on Capitol Hill today exposed a growing rift between Democrats in Congress and the White House on how to seek accountability from Bush-era Justice officials for condoning torture in the aftermath of 9/11.

Leahy is right, and Obama is wrong, morally, legally, and politically.

When you do not prosecute, these people keep coming back, which is why you had so many Watergate and Iran-Contra alums in Bush's staff and cabinet.

Economic Scene - The Bottom for Housing Is Probably Not Near - NYTimes.com

Dave Leonhardt looks at various metrics for home prices and concludes that foreclosure auctions may be the pest metric, because many people are deferring putting their house on the market, hoping for prices to increase.

Auctions indicate that house prices still have a way to fall, as I agree, and Dean Baker has the graph shown to indicate that prices are still above historical norms.

I actually expect a measure of overshoot. so if you assume that prices will head down to about 80 before rebounding, and the the path is a straight line, you are looking at a real estate turn around somewhere in 2011-2012, based on my imprecise eye.

EU Finally Starts to Get it Right on Somolia

They hafve set up a commission to investigate European illegal fishing off Somalia, which is a good thing, since the pirates started out as fishemen who are being starved by the depletion of their waters by illegal fishing.

It should have happened 5 years ago.

Seriously, These People Should Be Thrown in a Hole So Deep That They Forget What the Sun Looks Like

Well, the Senate report on torture is out, and it appears that Rumsfeld and His Evil Minions^™ were authorizing torture before the infamous memos justifying such behavior had been drafted, despite the fact that numerous experts on interrogation said that it torture does not work.

Notably, it was based on the Survival, Evasion, Resistance and Escape (SERE) training which was used to allow captured Americans to resist torture designed to elicit false confessions.

Bush, Cheney, Rumsfeld, Rice et all did not care. They just wanted to torture out of a combination of sadism and machismo.

That being said, I do like the last line of the article, "If torture occurred before the memo was written, it's not worth the paper it's written on, and the writing of the memo is potentially criminal."

In a related note, we now know the answer to the question, "Why waterboard someone 183 times in one month?"

They did it for propaganda purposes, specifically, in order to extract false statements linking al Queida to Saddam Hussein"

The Bush administration applied relentless pressure on interrogators to use harsh methods on detainees in part to find evidence of cooperation between al Qaida and the late Iraqi dictator Saddam Hussein's regime, according to a former senior U.S. intelligence official and a former Army psychiatrist.

Seriously, these people need to spend the rest of their lives in a SUPERMAX facility.

Supreme Court Discovers the 4th Amendment

In Arizona v. Gant, by a 5/4 decision, the Supreme Court largely reversed New York v. Belton, which had said that a police officer could search a car when they arrested someone without probable cause.

It was an odd mix of judges too who voted in favor of the 4th amendment, Stevens, Souter,Ginsburg, Scalia(!) and Thomas (!!!).

Basically, the old rule was that if you arrested someone, you could search his car, and now the standard is, "police may search a vehicle without a warrant only when the suspect could reach for a weapon or try to destroy evidence, or when it is 'reasonable to believe' there is evidence in the car supporting the crime at hand."

The other 4, including the 2GW Bush appointees, think that it will be too confusing, but it's not: If you arrest someone for an expired license, or not seat belting their kids, and they are away from the car, you do not have authority to search it.

This ain't rocket science.<sup>*

*</sup>Full Disclosure, in 1999-2000 and 1996-1998, I worked as a mechanical engineer for what is now Lockheed Martin Missiles and Fire Control, and I have some claim to actually having been a rocket scientist.

Now We Know Part of Why Obama Backtracked Over Torture Prosecutions

It appears that Rahm Emanuel's and Robert Gibbs statements about not prosecuting people, incensed senior career lawyers at the Department of Justice, who saw this as political meddling in a law enforcement decision.

Interestingly enough, as Scott Horton notes, the net result of this fallout may be to force AG Holder to appoint a special prosecutor in order to defuse those charges, which to my mind is a good thing.

Senators John McCain, Lindsey Graham, and Joe Lieberman Walk Into a Bar.....

Sounds like a joke, but the punchline is that the Three Stooges of the Senate have penned a letter to President Obama asking for a get out of jail free card for the torture memo writers, because, of course, accountability is only for blow jobs in Washington, DC.

A Mindset that Bob Gates and His Successor Need to Break

SecDef Gates is looking to insource acquisition expertise into the Pentagon, hiring 4,100 people in this area by 2010, and 9,000 by 2015.

This is a good idea, but the mindset in this article shows why it will be hard, starting with the title, Top Talent Won’t Pick Pentagon for Pay.

The first assumption is that junior hires, "they won’t know enough to make much of a difference for at least six or seven years," is simply wrong.

A good person can be online and doing good work in under 6 months, one who is merely competent can do the same in 18.

What's more, with the expansion of internal positions at the Pentagon, the job prospects for outside consultants shrink accordingly, which will both bring new people in, and dissuade people who have done a few years in there from moving into outside positions.

It's not going to be easy, but it will be much better than what we have now.

D'oh! I Miss the Obvious!

And the Shrill One, Paul Krugman, catches it

So the market was greatly reassured when Tim Geithner declared that the “vast majority” of banks are well capitalized. Count me as baffled. .....

After all, there are a lot of banks in America. There are 1,722 institutions on the Fed’s list of “large commercial banks”. And I have no doubt that most of these banks — indeed, the vast majority — are in fine shape. That’s because they’re regional institutions that never got into the risky games played by the big guys.

But the big guys are where the money is. ....

The construction of the statement was odd, and I noticed it, but missed the connection, that about 20 banks control something in excess of ¾ of the assets out there. If 17 of those banks are insolvent, only 1% of the banks would be in trouble, but a majority of bank holdings would be wiped out.

I Want BlogAds

So, I'm reviewing my post on GGP going bankrupt, and my schadenfreude regarding NY Times columnist Thomas "The 'Stache of Banality" Friedman's wife's family's net worth has gone from $4 billion to $25 million, and I see this Google ad in the left column:

Umm....Once again, it looks like Google Ads has chosen to serve up ads that are selling something that I am lambasting.

Anyone know anyone at BlogAds?

Actually, I really don't generate much revenue, about enough to treat my wife to a dinner and babysitting about twice a year, which still makes me the most overpaid writer in the blogosphere, but I reserve the right to bite the hand that feeds me.

Another Banker Tops Himself

Freddie Mac actinf CFO David Kellermann was found dead of an apparent suicide in his Northern Virginia home.

My condolences to his family.

Generally, in such matters, it's the decent people who care about what they are doing and the people that work for and their customers who do this.

Economics Update

Well, the IMF has updated its recession forecast for 2009, and their estimate has become much more pessimistic, with their estimate for contraction at -1.3%, down from -0.5%, they are also anticipating credit losses on the order of $4.1 trillion, and that the financial system will not stabilize until sometime in 2010.

Honestly, I still think that the new estimate is overly optimistic, but I'm a born bear.

This is born out by the fact that official UK economic predictions are that the British Isles will experience their fastest contraction since the end of the WW II, and Japanese exports are down year over year by almost ½.

That being said, we have some good news in real estate, with the Architecture billings index rising last month, and home were up 0.7%month to month in February, though prices are still down 6.5% year over year, but it's the first two month price gain in about 2 years.

Additionally, mortgage applications are up, though this is largely refi activity, and the delay in foreclosures in California have returned with a vengeance, now that the little "holiday" created by the law changes that lengthened the time line from default to eviction has passed.

Banking still sucks though with Fannie and Freddie losses from defaults rising, Capital One's losses on credit card defaults were worse than expected, as were Morgan Stanley's losses (the cut dividends too), though Wells Fargo, who largely eschewed the high flying ways of the other large banks, had record profit and displaced Bank of America as the nation's top lender.

In energy, oil rose slightly, despite reports of a growing inventory, and in currency, the dollar fell on reduced investor worries.

Living in Bizarro* World

Because Dick Cheney is demanding that more torture memos be declassified, because his memos, or at least the ones that he wants released, show that torture worked, and got important information.

Not surprising, as Cheney is a master of bureaucratic infighting and the CYA memo

I agree with Dan Froomkin when he says, "Call Cheney's bluff," I also think that if he wants memos releases, they should be reports from the agents in place, and not self serving memos from the OVP.



^*If you do not know what Bizarro World is, go here, or better yet, read some classic Superman^® comic books....Bizarro, and Superman^® are a part of basic American cultural literacy.

Why We Should Look to Europe

Paul Krugman makes a very good case that the US explosion in productivity starting in the 1990s was a mirage, and was basically equal parts Walmart buying Chinese crap, and the finance industry lining their own pockets.

It was the tail, not the dog.

This Whole Rep. Harman Thing is Going Very Weird

First, we have a report that the "Israeli agent" that Jane Harman was having a phone conversation with was an Israeli-American named Haim Saban, if the name sounds familiar, it's because you watch the credits for Mighty Morphin' Power rangers.

He's a producer who made much of his fortune by importing and redubbing the children's show.

Then we have Ron Kampeas at the JTA noting that the phone call in question happened in the Summer of 2005, which is pre-Katrina, has her discussing becoming Intel committee chairman.

Katrina hit New Orleans on August 29, 2005. It was around a week before the scope of the incompetence hit, and began destroying whatever remained of Bush's post 911, so the possibility of a Democratically controlled house was remote. People were still talking about a permanent Republican majority.

In any case, Keampeas points us toward

Laura Rozen at Foreign Policy magazine, who appears to have a line on the personalities, and the machinations therein within the intelligence establishment that might figure in this:

• That Bush Era intel officials felt on the defensive about the recent torture and wiretap revelations, and might want to push back.
• Porter Goss authorized the wire tap, and Goss has always, "intensely disliked," each other. (It is claimed that FBI Chief Mueller was unavailable at the time the warrant was requested)
• According to an interview with Goss, Harman was the only member of Congress briefed on water boarding whose reaction wasnot , "encouragement," which included, "Reps Pelosi and Harman, and Sens Rockefeller and Sen. Pat Roberts."

On the other side, the statement from the Neww York Times editor that Harman did not attempt to influence the publication of the illegal wiretap article may not be true, as Bill Keller has clarified his statements, and it appears that she contacted Washington Bureau Chief Phil Taubman regarding the matter, at the request of Michael Hayden, who keeps showing up in every bit of evil in the intelligence establishment like a demented Amway salesman.

It also means that Harman was actively working against the election of John Kerry, because if the Times had published before the election, it would likely have swung the race.

Finally, we have Jane Harman asking for the transcripts of her phone calls to be declassified and released.

Here is my older post on this, and try to figure this out.

It's beginning to read like a John le Carré novel.

Why Israel Still Matters

Yemen's few remaining Jews are being targeted with violence and murder, and they have a place to go.

Before Israel, there was the case of the St. Louis as an illustrative point.

Elections Update

Tho the surprise of no one, and to the disappointment of almost everyone, Norm Coleman has appealed the decision of the election court to the Minnesota Supreme Court. His lawyers are claiming that it's the principal of the thing.

Meanwhile, in upstate New York, the NY-20 vote count continues apace, and it looks like Scott Murphy is picking up votes with each round.

What is interesting here is that it looks like Democratic campaigns are out-hustling Republicans on absentee ballots, which in years past, always seemed to trend Republican.

It's a very good development.

Faith and Pecora

Nancy Pelosi is now proposing a bipartisan commission to investigate the cases and abuses that have led to the current banking crisis.

It would be modeled after the Pecora Commission, which looked into the 1929 crash.

This ignores both recent, and less recent history, with the history of the Iran-Contra commission being that the Republicans would use it to obstruct any real investigation of Reagan's arms for hostages swap, and the Pecora Commission itself, which really did not do much until the Dems took control of Congress, and unleashed their cheif counsel, Ferdinand Pecora.

The Republicans are far more venal and partisan than they were in 1987, and infinitely more so than in 1932, and the idea that they can be trusted even as spectators is a pipe dream.

Tom Friedman, Suck on This: Part III

18 months ago, the Bucksbaum family, the owners of the General Growth Properties mall chain were worth about $4 billion dollars.

Following GGP's bankruptcy, it's $25 million, and Tom "Suck on This" Friedman is much more exposed to the downsides of that flat world that he espouses.

Connecticut Treasurer Calls for BofA CEO Lewis to Be Removed from Board

CT state treasurer Denise Nappier, who is responsible for managing the state pension funds, which hold a significant stake in Bank of America, is calling for the CEO Ken Lewis to be kicked off the board, along with, "lead director O. Temple Sloan and chairman of the governance committee Tom Ryan."

She is not calling for his removal, but rather separation of the rolls of chief executive and chairman of the board of directors, and other significant shareholders are in agreement.

There is a shareholder meeting in 8 days, so this should get interesting.

Pass the popcorn.

BTW, doesn't Mr. Lewis take an awful picture? He looks mean, spiteful, selfish, and egotistical all at once.

He seems to look that way in all of his pictures....Maybe that's the real him.

The New York Times Calls for Jay Bybee's Impeachment

Read the whole editorial, it's brutal, and calls for a thorough investigation of everyone who conspired on this, and the penultimate 'graph calls for the Congress to remove Jay Bybee as a federal court judge:

These memos make it clear that Mr. Bybee is unfit for a job that requires legal judgment and a respect for the Constitution. Congress should impeach him. And if the administration will not conduct a thorough investigation of these issues, then Congress has a constitutional duty to hold the executive branch accountable. If that means putting Donald Rumsfeld and Alberto Gonzales on the stand, even Dick Cheney, we are sure Americans can handle it.

(emphasis mine)

Somehow, I do not expect Mr. Bybee to go quietly though.

Hopefully, he'll rat on his fellow conspirators, but I would not expect that either.

Swedish Pirate Party Beats Greens in Polls After Pirate Bay Conviction

I would have expected a bounce in the numbers for this party following the trial; they were in the low single digits before hand, but they seem to be riding a rising wave right now, and might secure a seat in the European Parliament.

I'm not surprised.

Economics Update

Scare Pic of the Day, Courtesy of The Big Picture

So, Timothy "Eddie Haskell" Genthner spoke before Congress, and said that most banks are adequately capitalized.

I guess that all depends on the definition of "banks", "most", and "adequately capitalized."

At the same time, the inspector general charged with investigating the TARP says that there is a lack of transparency and safeguards in the program.

Once again, it looks like the only folks who are doing their job for the tax payers are the FDIC who are in discussions with Citi about firing CEO Vikram Pandit.

In energy, oil is up, but we are dealing with the switch over to June delivery contracts, and the dollar was mixed on unexpectedly high business sentiment in Germany.

On a note unrelated to economics, but related to the the article on Geithner, there was following picture, where you see the Code Pink protesters in the background.

These people piss me off. They seem to be dedicated to nothing more than mutual intellectual masturbation as guerrilla theater, and they do nothing but to convince decision makers that anyone who has less Wall Street friendly ideas is a DFH who does not deserve to be listened to.

These folks are playing to lose, but we all lose when they do so.

Miscellaneous Thoughts on Jane Harman

Let me start by saying that I've always thought that she was an anti-civil rights scumbag, so that colors my view of her, but this news is really big.

You can go to CQ politics for Jeff Klein's story, but the short version is that Jane Harman wanted to be the chairman of the House Intelligence Committee, and in the process of lobbying various folks to get that position, which ultimately went to Silvestre Reyes, she talked to some member of the Israel lobby who was under a court authorized wiretap because they were under suspicion of being an Israeli intelligence operative, and she said that she would "waddle into" the AIPAC prosecution, and that she wanted them to intercede with Nancy Pelosi on her behalf regarding the Intel committee post.

According to sources who saw the transcript, she finished the discussion with the phrase, "This conversation doesn't exist."

Certainly, the implication of "interceding with Pelosi," is that campaign donations were involved, though the article does not make a specific claim of campaign donations for Harman's action.

This gets more complex because Alberto Gonzalez quashed the investigation of Harman because he wanted her support of the Bush Administration's illegal wiretap program, she had always been supportive of the program, and the New York Times was finally getting ready to release the story, and they wanted a Vichy Dem to speak for them.

Let's be clear, there was no indication of a quid pro quo between Abu Gonzalez and Harman, but neither did there need to be one. She was always in the tank on this issue.

I would also note that while Klein suggests that Harman interceded to get the story spiked at the Times in 2004, the editors there have categorically denied this.

I'm not sure whether there was a crime or not. Law enforcement officials seem to think so, but law enforcement officials always think that, as the other Matt notes, "....how many politicians’ reputations could really stand up to serious surveillance? ..... we have a political system that’s substantially powered by a kind of systematic, quasi-legalized bribery."

He also has the bigger point, which is that politics is messy business, and if you were to wire tap any political figure, you would end up with stuff that is just plain sleazy, because that is how political "sausage" is made.

His best point, however is this:

Thinking about that further reinforces the point that selective, unaccountable surveillance is very dangerous. A president could do a great deal to gin up pretexts to wiretap members of congress and blackmail them even without the members doing anything unusually egregious.

Which really is the big point on why we should all object to the surveillance society.

Meanwhile a friend of John Aravosis thinks that this is all a tempest in a teapot, noting, accurately, that the AIPAC "spies" are not charged with espionage, i.e. acting as an agent for a foreign power, but rather acquiring sensitive government data under the (never used in this circumstance in the past 90 years) 1919 Espionage act:

The heart of the CQ story is incorrect...because Harman wasn't acting on behalf of Israel. Rosen and Weissman aren't being accused for spying on behalf of Israel. The CQ story is trying to depict Rosen and Weissman as convicted spy Jonathan Pollard. What Rosen and Weiss did is nothing like what Pollard was convicted of. Rosen and Weissman met with the State Department official on their behalf, not at the behest of Israel or AIPAC. To suggest so is wrong and that's what stinks about this story. The fact that Stein’s title of CQ’s “Spy Talk Columnist” shows the inherent bias of this story and shows that it is teetering on pure fantasy.

In any case, it's clear that if she had a normal security clearance, it would be yanked pending an investigation, and that she should never be chairman of the Intel committee, and it appears that Pelosi was aware of this episode, and it may have contributed to her passing over Harman for the position.

Treasury Formally Denies Right Wing Racist Nut Job Blog Post

White supremacist wing nut Hal Turner has posted on his blog (no link to him, ever) that he has an advance copy of the Treasury's bank stress tests, and that it shows that 16 out of the top 19 banks are already insolvent.

Were it from anyone else, I might be inclined to believe it, as it jibes with my sense of the state of the banking industry, but from him, I'd just as soon ignore it.

Only, I'm posting about it, which begs the question, "Why are you reading this?"

The answer is that I'm posting because a Treasury Department Spokesman formally denied Turner's claims:

A U.S. Treasury spokesman said there’s no basis to a blog posting that buffeted financial stocks by saying that most of the nation’s largest banks are insolvent.

Andrew Williams, a Treasury spokesman, dismissed the report from Hal Turner of North Bergen, New Jersey, “particularly given we don’t have stress test results yet.” Turner has advocated violence against blacks, Jews and immigrants on his Web site and Internet radio show, according to the Anti- Defamation League, created in 1913 to monitor anti-Semitism.

Why is the US Department of the Treasury responding to what amounts to semi-literate scrawls on the wall of a bathroom stall?

I see three possibilities, in no particular order:

• Turner has a friend in the Treasury, who thought that an official denial would get him some air play.
• He actually has preliminary stress test documents.
• The Treasury has come to the conclusion that its credibility, and that of the US banking industry is so pathetically low that they have no choice but to respond.

Honestly, none of these alternatives are particularly good ones, and if I had to place a bet, it would be on the last one, which would indicate that in less than 100 days, Mssrs. Geithner & Summers have completely pissed away their credibility, and they know it.

I Want What They Are Smoking

IHS Global Insight is saying that the nation’s housing market is undervalued:

A new report released today by IHS Global Insight and PNC Financial Services Group revealed that the nation’s housing market as a whole is “slightly undervalued,” but said there was no sign of a bottom.

The so-called “House Prices in America” fourth quarter update found that home prices had fallen a collective 9.9 percent from their 2007 peak, although much more in sand states like California and Florida.

About the only thing that I can figure is that they are thinking that the dollar figures are Zimbabwean dollars of something.

Housing is still well above historical trends in terms of absolute price, rent/own ratio, and relative to wages.

Park Dae-sun Acquitted

He is a prominent Korean economic blogger who was was brought up on charges for making dire predictions:

Mr. Park, an unemployed 31-year-old, gained an almost prophet-like status among many South Koreans after he correctly predicted the collapse of the U.S. investment bank Lehman Brothers, the crash of the South Korean currency — the won — and the effects on South Korea of the U.S. subprime mortgage crisis.

It appears that he also published some data in error, such as when he, "wrote that the government had banned financial firms and major companies from buying dollars in an effort to arrest the fall of the Korean won," and the government charged him with, "spreading false data in public with a harmful intent," and faced up to 5 years in prison. (!)

Considering my accuracy, I'd be facing life without parole.

Indian Air Force says Rafale Remains in MMRCA Competition

Remember when I said over the weekend that the Dassault Rafale had been dropped from the Indian MMRCA competition?

Well, it appears that the reports of the French Fighter's demise have been exaggerated.

The Indian Air Force has denied reports that the Dassault Rafale has been eliminated from the country’s medium multi-role combat aircraft competition.

“We have not ruled anyone out yet in the MMRCA competition,” says an IAF spokesman, who confirmed that the service is responsible for evaluating the contenders. “All of the tests have not been completed. The technical evaluations are only just over and we are scheduled to begin the flight tests next month. Everyone is still in the competition.”

Last week, several Indian newspapers reported that the Rafale was eliminated after failing the technical evaluation. .....

No clue as to what is going on here, or why.

Prosecution of Torture Architects Has Evolved in Just 2 Days

I started collecting links on Sunday, and it appears that the the news has developed in a rather interesting manner, with strong statements that there would be no prosecutions, followed by a retreat by the Obama administration following push back from multiple quarters.

On Sunday, we have appearances by administration officials saying that there will be no prosecutions of anyone involved in torture

I asked Emanuel: "The president has ruled out prosecution for CIA officials who believed they were following the law. Does he believe that the officials who devised the policies should be immune from prosecution?"

"He believes that, look, as you saw in that statement he wrote, let's just take a step back. He came up with this and worked on this for about four weeks. Wrote that statement Wednesday night after he had made his decision and dictated what he wanted to see. And Thursday morning I saw him in the office, he was still editing it. He believes that people in good faith were operating with the guidance they were provided," Emanuel said.

What about those who devised the policy, I asked?

"Yeah, but those who devised the policy, he believes that they were, should not be prosecuted either," Emanuel said.

"And it's not the place that we go, and as he said in that letter, and I would really recommend people look at the full statement, not the letter, the statement, and that second paragraph: "This is not a time for retribution. It's a time for reflection. It's not a time to use our energy and our time in looking back and in a sense of anger and retribution.' We have a lot to do to protect America. But what people need to know? This practice and technique, we don't use anymore. We banned it."

(emphasis mine)

Then the pressure mounted to not bury everything, and Obama is now saying that investigating the people who crafted the policy is up to the Department of Justice, and Michael Isikoff and Evan Thomas reporting that, "Attorney General Eric Holder Jr. has discussed naming a senior prosecutor or outside counsel to review whether CIA interrogators exceeded legal boundaries--and whether Bush administration officials broke the law by giving the CIA permission to torture in the first place.

Once again, showing that, when absolutely forced to by the weight of public opinion, the Obama administration can come around on this.

This is a good thing, because whoever was involved in waterboarding Khalid Sheikh Mohammed 183 times in one month, about 6 times a day, was not following even the Orwellian rules of Bush and His Evil Minions^™.

Economics Update

The Conference Board's Index of Leading Index of Leading Economic Indicators fell more than forecast, 0.3% as versus 0.2%.

The recessionary concerns from this drove oil below $46/bbl, and the dollar to a one month high.

Whiskey Tango Foxtrot??? They Wanted to Wiretap a Congressman Without a Warrant?

Well, we are seeing new revelations about the NSA warrantless spying program, and this one is a doozy:

While the N.S.A.’s operations in recent months have come under examination, new details are also emerging about earlier domestic-surveillance activities, including the agency’s attempt to wiretap a member of Congress, without court approval, on an overseas trip, current and former intelligence officials said.

(emphasis mine)

Great googly moogly!

This is why it needs to be pursued, and people need to be prosecuted, because this was not some sort of intelligence gathering operation, it was one of Dick Cheney's moles trying to wiretap someone for political advantage.

The people who did this need to be rooted out, and have their clearances stripped, and senior folks who authorized this need to go to jail.

Not Enough Bullets: AIG AND Goldman Sachs

Gee, it appears that the trustees that were appointed to keep the government from "interfering" in the affairs of AIG when they were taken over managed to select a man who owned over $3 million in stock in Goldman Sachs.

This might explain why AIG CEO Edward Liddy was so eager to pay back Goldman Sachs at 100¢ on those bogus AIG credit default swaps (CDS).

Seriously, just how much corruption and self dealing is Obama/Geithner/Summers going to tolerate before they start looking at criminality?

This is a lot worse than a, "$6000 gold-and-burgundy floral patterned shower curtain," and the idea that the taxpayer can't place conditions on aid, because the CEOs will choose their own pay over the well being of the taxpayer is the active and open looting of these companies by senior management.

It should be viewed as a criminal act.

I'm not saying that senior management cannot quit, but I am saying that if they are unwilling to act in the best interest of the shareholders, they should be fired.

Indian Drops Rafale from MMRCA Trials

Unofficial reports from a "senior Indian Defence Ministry" are that, "Dassault was unable to give full technical bid requirements, but this is obviously a rather vague and uninformative.

I find this very odd. Dassault and India have a long and established relationship, with India owning and operating Mirage 2000s, and at one point, offered to transfer the whole Mirage 2000 line to India.

The idea that they did not cross their "I"s and dot their "T"s, and thus was dropped from the Medium Multi Role Combat Aircraft (MMRCA) competition is curious.

In any case, it appears that the Official MMRCA trials in August, with the, Boeing F/A-18, Lockheed Martin F-16, Eurofighter Typhoon, RSK MiG-35 and Saab Gripen.

Elections Make a Difference

Case in point, the EPA has not declared greenhouse gasses a threat to public health, opening the door for regulation of these gasses.

What's more, it puts a pin in the Congress to put something in legislation, because the EPA can institute regulations that are far more expansive, without the opportunity for bribery campaign contributions.

While I am regularly (OK, constantly) criticizing the Obama administration for their mishandling of the banking crisis and the banking system and their avoidance of any real investigation of crimes against humanity and corruption by Bush and His Evil Minions^&trade, this is real change, and beneficial.

We will now be returning to the regularly scheduled broadcast.

Picking Industry Insiders for their "Experience" is Such a Good Idea

Because the corporate raider that Barack Obama has put in charge of the auto industry bailout has now been tied to a kickback scheme involving the New York state pension fund:

The man leading the Obama administration’s efforts to restructure the auto industry has been described in Securities and Exchange Commission documents as having arranged for his investment firm to pay more than $1 million to obtain New York State pension business.

Although he is not named in the documents, a person with knowledge of the inquiry said the investment executive is Steven Rattner, co-founder of the Quadrangle Group, the prominent private equity firm

Gee....Hoocoodanode that a man who is a corporate chop shop might be ethically challenged.

This is why expertise does not trump ethics and philosophy. Summers, Geithner, Rattner, etc. are all either wrong doers, or were until recently in the pay or wrong doers, and are largely responsible for the problem.

It's like making an arsonist for hire your fire department chief.

Pirate Bay Operators Sentenced to Jail

They have been sentenced to a year in jail along with extensive fines. for operating their Bit Torrent search engine.

I don't think that this is a good thing, because it's a symptom of an increasingly draconian IP regime worldwide, which is now serving to hinder, rather than promote, creative and inventive activities.

Another Geithner/Summers Epic Fail for Consumers in the Works

So, now that the economy has turned down, and there is a real possibility that legislation limiting abusive credit card practices might pass Congress, the White House economic team is finally meeting with credit card issuers in order to address the issue:

A Capital One spokeswoman confirmed the meeting.

"We have been invited to the White House and look forward to a constructive dialogue," she said.

On the eve of the White House meeting, the House Financial Services Committee is planning to consider credit card legislation aimed at reforming the industry, which is facing massive pressure to lessen debt burdens on cardholders, one source said.

Treasury Secretary Timothy Geithner, National Economic Council Director Lawrence Summers and other officials are planning to attend the meeting, but U.S. President Barack Obama is not, the sources said.

(emphasis mine)

Color me skeptical. Between Tim "Eddie Haskell" Geithner, who has been the big bank's bitch since birth, and Larry Summers, who has taken millions just last year from hedge funds, I can't see this as anything but an attempt to minimize reforms in the credit card industry.

Obama isn't there because he wants plausible deniability when they come out with an "agreement" that is far weaker than anything going around Congress.

If it were otherwise, then they would be talking with Congress, not the credit card industry.

Friday Bank Failures

Banks number 24 and 25 for the year, a pace of over 75 this year.

• Great Basin Bank of Nevada, Elko, NV
• American Sterling Bank, Sugar Creek, MO

Full list.

General Atomics Rolls Out Stealthy Predator C

David Fulghum and Bill Sweetman post their observations, most of which are obvious from the top picture, edge alignment, a serpentine inlet, a flattened exhaust nozzle, and a lack or right angles for stealth, along with a roughly 10 foot long weapons bay, more than enough for 500 lb JDAMS, or Hellfires, etc., and some wing to accommodate the higher speeds that the jet engine can generate.

There are some more pictures here, and you can also look through the Aviation Week gallery.

The aircraft has been designed with folding wings and a tail hook (bottom pic), which implies that it is intended to be operated from an aircraft carrier at some point, and this is clearly an early prototype, as the current air data probes, and the antenna/sensor on the bottom of the fuselage (also bottom pic) appear to be decidedly non stealthy.

Stephen Colbert Was Robbed!

The third node of the space station will be named, "Tranquility," not Colbert, as the public demanded.

By way of a sop, they will name a treadmill after America's most courageous journalist.

I profoundly am disappointed in NASA, though I really want the mission patch.

Where Olbermann Gets It Wrong

I watched Keith Olbermann's special comment from last night on Youtube, as I was too busy wrapping Passover to watch the show.

While I generally agree with him, I find him powerful even when I disagree with him, or find his conclusions lacking, as was the case last night, and I'm not referring to the Kaiser thing.^*

In this case, I believe that KO did not go far enough.

While he is correct that letting people off for "just following orders", as is implied by the statements that those , "carried out their duties relying in good faith upon legal advice from the Department of Justice," will not be subject to prosecution.

This is wrong, and there is a bigger point, made ably by Glenn Greenwald, that there is a real and legally binding obligation obligation under the Convention Against Torture, which was signed in 1988 and ratified in 1994, to actively pursue and prosecute torturers ( roll Article 7 para 7):

The State Party in territory under whose jurisdiction a person alleged to have committed any offence referred to in article 4 is found, shall in the cases contemplated in article 5, if it does not extradite him, submit the case to its competent authorities for the purpose of prosecution.

This is not to say that refraining from after the little fish to target the big fish is a violation of this.

That is a legitimate prosecution strategy.

However, it increasingly appears that President Obama and Attorney General Holder do not intend to go after anyone, and in so doing, they are, but not going after anyone, with the explanation that this is, "moving forward".

This is a obstruction of the prosecution of these acts is a war crime, and if this means no prosecution, it is an affirmative act to obstruct the course of justice.

Certainly, there are alternate venues, such as some sort of "Truth and Reconciliation Commission," but all indications are that the White House are fighting even this weak tea.

I believe that, in the absence for support for some sort of fact official fact finding process, it makes Eric Holder and Barack Obama accessories after the fact to a crime against humanity.

In the short form, people who actively work to subvert any process of judicial or semi-judicial fact finding inquiry, outside of the context of legitimate activities of defense counsel, are war criminals, including the current President and Attorney General of the United States of America if they choose to continue this course.

That being, said, I am an engineer, not a lawyer, dammit,^‡ and I would be interested in hearing opinions from people with a deeper knowledge of both US and international law.

^*The Kaiser committed no war crimes by the standards of the day, notwithstanding the accusations of amputation Belgian babies hands^† made in the early days of the war. The rules had not yet caught up with the technology of war, and if the Kaiser were guilty, than every participant in the war would have been guilty.
^†Ironically, the Belgians, during the genocide phase of their rule over what was then the Belgian Congo DID require their native levees to return a human hand for each bullet fired, in order to prevent them from "wasting" bullets hunting game for food, along with holding families hostage, etc.
^‡I LOVE IT when I get to go all Doctor McCoy!!!

Economics Update

Well, let's start with the good news, that the Conference Board's consumer confidence index has risen to a 7 month high, I think largely on Obama being president more than anything else, seeing as how the manufacturing reports from the
New York and Philadelphia Federal Reserve Banks, continue to show contraction, though the press is still crowing about how these reports show that the rate of contraction is easing, despite the fact that manufacturing fell in March by the largest amount since VE day, almost 64 years ago.

Taking the rate of change month to month is stupid, it's the noisiest way to measure things, but there is real pressure to report prosperity "just around the corner," because the alternative is to make real systemic changes that would have to be to the disadvantage of people like bank and brokerage presidents.

The fact that housing starts fell again, (top pic) and the weekly jobless numbers remained at very high levels, they dropped a bit, but continuing claims (bottom pic) remained at scary numbers. (click pics to be taken to the Calculated Risk posts in question)

CRE is suffering too, with office vacancies rising to a 3 year high.

Citi actually reported better quarterly numbers than expected, losing about 18¢ a share, less than the forecast 32¢.

Part of the problem is that we are still seeing distressed bonds selling for 3.5¢ on the dollar:

Credit-default swaps traders set a value of 3.25 cents on the dollar for bonds of an AbitibiBowater Inc. unit to settle derivatives linked to the newsprint maker that’s now in bankruptcy protection.

The price means sellers of credit swaps guaranteeing as much as $1.1 billion against a default by the Abitibi- Consolidated unit would pay 96.75 cents on the dollar to settle the contracts. Eleven dealers, including JPMorgan Chase & Co., Barclays Plc and Morgan Stanley, bid in the auction, which was administered by Markit Group Ltd. and broker Creditex Group Inc.

Oh.....My.....Ghod!

This might explain why BankUnited has been given 20 days by regulators to find a buyer, or they will be shut down.

Meanwhile, oil rose slightly on the consumer confidence numbers, as did the US dollar and Pound Sterling.

And a Small, Well Lubed, Dominican Boy*

^*Not my bon mot. That honor goes to Cthulhu at Short Skool Bus.

We Didn't Start the Flame War

A vid from Collge Humor dot com.

Let me just say completely NSFW....Very funny!

A Few Thousand Words on Teabagging

I really didn't cover it, because I don't do right wing agitprop, but these protest signs at the rallies are prize:

Evolution Disproved!

I just hurt myself laughing:

In a severe blow to the credibility of evolutionary science, biologist Richard Dawkins admitted today that Darwin’s theory of evolution could offer no rational explanation for the continued existence of creationists. The process of natural selection sees genes which provide an advantage in the battle for survival being preserved across generations, but scientists can find no useful purpose for the gene which leads people to believe that the earth was created in only six days about 10,000 years ago.

Solipsism as proof of Genesis.

The Easter Bunny Hates You!

No Easter Bunnius were harmed in the course of this production.

From the perspective of a Yid, I'm LMAO!

What is Wrong with the Village:

Dana Perino is joining Mark Penn's PR firm, Burson-Marsteller:

Mr. Penn, the firm's CEO, said Ms. Perino's experiences in Mr. Bush's second term make her a valuable addition to the team of battle-tested public-relations veterans he is assembling. Mr. Penn writes a "Microtrends" column for The Wall Street Journal Online.

Bull. She was clubbed daily like a baby seal.

This is all about the incestuous ways in Washington, DC, and I can think of no better illustration of why the town needs a good muck-raking prosecutor to clean it out.

Dutch Soft Pedal JSF Order

It turns out that the Dutch Government did not have the votes to buy two JSF test aircraft without a firm fixed price commitment (Yeah, what are they smoking?^*)

They managed a compromise, in which they order the test aircraft, but defer the production order from 2010 to 2011 or 2012, when the price should be firmer. (Yeah, what are they smoking?^*)

The problem is that the last sale was what was clearly a phony price (around $80m a pop), and the opposition expects massive cost and schedule problems....And they are probably right.


^*Well, it's Holland, so we have a pretty good idea.

Deep Thought

It is harder getting the tune of Weird Al's Virus Alert out of your head than it is to banish It's a Small World from your brain.

I'm ready for Vogon poetry for relief.

Light Posting for a 2 Days

Tonite starts days 7-8 of Pesach, so I will be largely off line until Thursday night.

NY Gov. Paterson Continues to Move Left to Shore Up Flagging Poll Numbers

Now he has announced that he will introduce a same-sex marriage bill to the New York legislature.

Much like the income tax hike on the wealthy, we now know that Paterson will do the right thing, if you are holding a political gun to his head, like being down by double digits in the primary and the general elections for New York governor in 2010.

Obama Plan to Nationalize Student Lending Meets Forces of Evil

Most notably Sallie Mae, which has a history of cheating students, bribing college financial aid officers, and contributing generously Congressional campaigns.

As Matthew Yglesias notes, the college lending giant's "compromise", would waste $17 billion a year as compared to direct loans.

Luckily, Obama can eliminate much of the fraud, waste, and abuse, by which I mean much of the private players in the student loan market, through executive orders, as well he should.

Another Chinese Move Away from the Dollar

China is moving away from settling debts internally in US dollars, as the cities of Hong Kong, Guangzhou, Shenzhen, Zhuhai and Dongguan will start settling trade in Yuan, as opposed to US dollars.

China is walking away from the dollar, and this implies downward pressure on the dollar in the longer term.

Prosecutors Seek Indictment Against Abu Gonzalez and 5 Others

Unfortunately, it's Spanish prosecutors seeking criminal charges.

We need a criminal investigation of these folks.

Do I Look Like a F&^%ing Idiot?

Goldman Sach's CFO, David Viniar, says that he is mystified at why people care about the dealings between AIG and Goldman, "They’re one of thousands and thousands and thousands of counterparties and the results of any trading with AIG are completely immaterial to what we do...I am mystified by this fascination with AIG."

People are interested because you bought phony insurance contracts (CDS's) from them, and when they imploded, you got the taxpayer to pay out at 100¢ on the dollar, creating yet another subsidy for you corrupt bastards.

Even people who don't understand the whole picture, they know that this is corrupt, and that they are being stuck with the check for this.

Your claim that profits on AIG deals, "rounded to zero", in 2008 is bullsh%$. In a fair system, your firm should have lost millions, if not billions, were it not for yet another subsidy of you corrupt losers.

Breaking News: Wall Street Salary Caps Drive Away Assholes!

From the ever reliable Andy Borowitz:

As the federal government moves to institute salary caps for Wall Street executives, an increasing number of assholes are seeking employment elsewhere, a study confirmed today.

According to the report commissioned by the University of Minnesota's School of Business, at a time when the economy needs experienced hands at the tiller, some of the financial world's best-trained dickwads are fleeing the ship.

....

I need a screen wipe.

Roubini: Stress Test Too Lienient

And 100% correct. The numbers now are already worse than the "worst case" scenario that the Treasury is using.

The Money quote is, "Conclusion: Actual macro data for 2009 are already worse than the more adverse scenario in the stress tests. These are not stress tests but rather fudge tests." (emphasis original)

I agree.

Celebrity Update

Phil Spector was found guilty of Lana Clarkson's death, and