Author: Matthew G. Saroff

Obama to California: Drop Dead*

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I can;t say that I blame Barack Obama on the decision not to provide aid to California.

Unlike the situation with some cities in the 1970s, where much of the problem came from the fact that they were taxed to create suburban and exurban sprawl, getting little in return, California has had a failed government for at least the past 30 years, and the people who committed this crime are not the politicians, though they have been willing accomplices, but rather the whole population of the state, who have, though overuse and abuse of the initiative process, created this situation.

It’s not just prop 13, which capped property taxes to the benefit of corporate land owners, it’s a whole series of policies that have created mandates on the budget without a way to generate revenue.

I would suggest, in a sort of “fighting fire with fire” way, that someone in California circulate a new petition for a law that would require that anything passed by the initiative process that still has the force of law be brought up for a new vote every 10 years, or more accurately, every general statewide election closest to 10 years, so as not to have to pay for special elections, just the cost of putting it on the ballot.

I think that there would be a lot of trash that would be discarded, but would not be by the cowards in California state politics.

*Here is the historical reference to New York’s budget crisis in the 1970s.

Calling Cheney’s Bluff

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There is a 2004 report by the CIA on torture, the so called “Holy Grail,” (also here) and, according to Congressional sources who have seen the classified document, it completely demolishes Dick Cheney’s arguments.

It shows what we already know: Torture does not work, and torture did not work.

This should be released, but Obama and His Clueless Minions™, will try everything possible to prevent it, because the more evidence that comes out, the greater the push for prosecutions, because it will show what was done, and that Bush and His Evil Minions™ were told that it did not work.

The Obama administration believes that he needs bipartisan support to implement his agenda, and that prosecutions and investigations of Cheney/Rumsfeld/etc. will prevent this.

The truth is that neither Social Security or Medicare/Medicaid passed with very few Republican votes(none in the case of Social Security), and the benefits of these programs are legion.

The other fact is that the big items on Obama’s agenda would require Republicans to cut their own throats to support him.

Republican support of new financial regulation and stimulus would require them declare that their guiding governmental philosophy since Reagan is a failure, and Republican support for a good public healthcare option would add at least 20 years to their time in the minority, because everyone in the United States would see the personal benefit to “big government”.

Simply put, it is not realistic to expect people to commit suicide for you, particularly when they are your opposition, but Obama continues to work for this, because, he believes that reasonable discourse and his eloquence will work.

This is a delusion. Not only do today’s Republicans not understand the concept of loyal opposition, it is not reasonable for them to support him, because the political fallout is all negative for them.

I’ve Need Help to Grok Twitter

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Because it appears to be a remarkable tool for heckling people.

I’m logged in, and I can search for stuff, but it appears that a lot of people who use it find a lot of utility that I simply miss.

Case in point: Pete Hoekstra (R-Clueless) got today’s talking point, which was that being a Republican in the current Congress was a lot like the Iranian protesters being beaten and shot:

Iranian twitter activity similar to what we did in House last year when Republicans were shut down in the House.

Great googly moogly, it’s stupid, and there are hundreds of parodies out there, including a blog which has LOLZed some of the tweets:

Economics Update

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So, we have the inflation numbers for May, and the CPI was up 0.1% over April, and down 1.3% year over year, the biggest price decline since April, 1950.

The deflation would have been worse, but for the ramp up in retail gasoline prices, which continues on its tear, with prices having risen for 50 straight days.

In the mean time, banking is getting interesting, with S&P cutting ratings on 18 major banks, including Wells Fargo, Capital One, BB&T.

Additionally, you have credit default swaps (CDS) have shown their largest 3 day in over 3 months, which indicates that there is a belief that the risks of default on corporate bonds is getting worse.

The fact that treasuries have staged a mini-rally, with prices up and yields down, is either a measure of concern about corporate bonds, or relief about the low inflation numbers, I’m not sure which.

Real estate is full of mixed signals. Mortgage applications fell to a 7 month low, largely on the relatively high interest rates, but mortgage bond yields have been falling for a week, which would point toward lower rates in the future.

The low inflation is perceived, to be a good marker for recovery, which pushed the dollar down, because of less demand for the $US safe haven.

Oil is getting just plain flaky. It finished the day up, to $71.03/bbl, though it dropped like a stone earlier in the day following news that gasoline stockpiles rose by 3.4 million bbl this week.

I’m not certain where oil is going, but the recent volatility seems to indicate that it is going somewhere in the near term, probably up.

Obama’s Weak Tea on Gay Rights

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So, Obama is extending ‘some’ federal benefits to gay partners, and as Pam Spaulding notes, it’s awfully meaningless and ill conceived.

First, as is noted in the New York Times, but buried in the last ‘graph, it’s not intended to be meaningful change:

But administration officials said the timing of the announcement was intended to help contain the growing furor among gay rights groups. Several gay donors withdrew their sponsorship of a Democratic National Committee fund-raising event next week, where Vice President Joseph R. Biden Jr. is scheduled to speak.

Further, it’s not even an executive order, but an administrative memorandum, so it expires when he leaves office.

It also does not cover health benefits, so what is left to cover? The only thing that comes to mind is relocation benefits.

And they are leaking the reasons to make clear that people don’t think that this is the start of a trend to support gay rights, it’s just a ploy to appease people before a fundraiser.

LBTG’s of America, welcome to under the bus, where supporters of government transparency, accountability for war crimes and torture for Bush and His Evil Minions™, and meaningful reform of the financial system were thrown months ago.

It’s not particularly comfortable here, and now it’s getting very crowded.

It’s Like Dick Cheney in Drag

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Yep, the Obama administration, and they are refusing to release visitor logs to the press:

The Obama administration is fighting to block access to names of visitors to the White House, taking up the Bush administration argument that a president doesn’t have to reveal who comes calling to influence policy decisions.

Despite President Barack Obama’s pledge to introduce a new era of transparency to Washington, and despite two rulings by a federal judge that the records are public, the Secret Service has denied msnbc.com’s request for the names of all White House visitors from Jan. 20 to the present. It also denied a narrower request by the nonpartisan watchdog group Citizens for Responsibility and Ethics in Washington, which sought logs of visits by executives of coal companies.

**sigh**

A Portrait of Regulatory Capture

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So the details of Obama’s regulatory plans for finance are leaking out, and the picture is not good.

The New York Times makes a big deal about how all the stake-holders were brought in and given a voice:

President Obama’s plan to reshape financial regulation, which he will unveil on Wednesday, is the product of weeks of meetings among government officials, financial experts, lawmakers, industry executives and lobbyists, many of whom were invited to help the White House draft the proposal.

…

In the last two weeks alone, the administration has heard from top executives from Goldman Sachs, MetLife, Allstate, JPMorgan Chase, Credit Suisse, Citigroup, Barclays, UBS, Deutsche Bank, Morgan Stanley, Travelers, Prudential and Wells Fargo, among others. Administration officials also discussed the president’s plan with the top lobbyists at major financial trade associations in Washington.

So we ave the wrong and incompetent (financial experts), and the criminal and corrupt (industry executives and lobbyists) brought into the big tent in order to make one big happy family on the legislation.

As a result, they get very little right, they just rearrange the deck chairs, giving the Federal Reserve, the least accountable and most culpable of the banking regulators an expanded role, and create a “council of regulators,” which will serve to do nothing. It will be where meaningful regulation goes to die.

We already have a model for regulation that works: Roosevelt’s regulatory regime set up during the Depression.

It worked until the mid-1970s when Jimmy Carter started, and Ronald Reagan pushed to excess regulation.

About the only rule you need to add to all that is the rule that any new financial instrument is illegal until approved by a regulatory agency.

People may complain that this curtails “innovation,” but “innovation” is what got us here.

Obama Getting Hammered on Selling Out Gays

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It’s got the Human Rights Campaign up in arms, finally.

They’ve been a captive of the Obama administration for some time, and it’s nice that they have found some guts.

What’s more it looks like people are bailing from the DNC’s very high profile $1000 a person gay fundraiser as a result.

Additionally, the New York Times blasted Obama on his call to defend the law, noting that Obama’s assertion that the DoJ was compelled to defend the statute is simply not true.

Economics Update

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It’s a day for mixed economic news, with credit card defaults rise hitting a record in May, which obviously bodes ill for consumer spending

On less personal metrics, Los Angeles and Long Beach port traffic was up over April, though it was still down year over year, and housing starts and housing permits jumped though much of this activity may simply be builders trying to beat the $8000 first time home buyer tax credit before it expires at the end of November.

Additionally, it looks like the financial markets are moving toward some instability, as the VIX, an index of market volatility, has moved above 30, which indicates a bumpy ride, and possibly a correction, in the markets.

Inflation is muted on both sides of the Atlantic, with last with wholesale prices inflation hitting only 0.2% in May, and inflation in the Euro Zone posting a 0% rate.

Meanwhile, continued comments by Russia about moving to an alternative reserve currency to the dollar pushed the dollar down, and that, along with the housing numbers, drove crude oil up for most of the day, though it settled down $0.15/bbl, basically treading water.

[late update]

US industrial output fell 1.1% in May, and the capacity utilization rate fell to 68.3%, the lowest number since records started being kept in 1967.

Swedes Don’t Understand the United States at All

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The Swedes have a society that I envy in a number of ways.

A social safety net, a policy of making contraception to teens 15 and above, and the latest case, the requirement that, “Sex education should form part of the curriculum for all adults attending Swedish for Immigrants (SFI) classes,” according to an official report given to the Minister for Health and Social Affairs.

This is a good policy. The idea of teaching people who may have come from very sexually repressive societies things like human sexuality, that clitoridectomy is wrong, and that homosexuality isn’t wrong, that women have the right to refuse sex to their husbands, contraception, etc.

Here is the part that had me spewing at my screen, though:

Milton said he thought it would be unnecessary for people from functioning democracies to sit through classes on sex education. He added however that finding a practical solution did not fall under his remit.

“Clearly people from the UK, US or Canada, for example, know these things already. But it can be sorted out on a case by case basis. It’s something that can be worked out locally,” he said.

While I cannot speak to the sexuality and sexual mores of either the Canadians or British, notwithstanding the, “no sex please, we’re British,” jokes, I find the idea that the United States, with the highest incidence of teen pregnancy, partner murder, etc. is somehow sexually enlightened as a society to be completely unsupported by reality.

Just ask Briston Palin.

Were US sexual mores more honest, and less punitive, we would be a far better place to live.

Now This is Good Policy

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The House Ways and Means Committee is considering generating additional $37 billion in additional revenue by removing the deductiblity of direct to consumer advertising for prescription drugs.

The Chairman, Charles Rengel is talking about it favorably, and I think it does good on a number of levels:

  • It generates more taxes.
  • It reduces the artificial demand for the new under patent prescription drugs that are frequently not much better than their predecessors.
  • It redirects sales efforts to the doctors, who are better equipped to weigh the merits.
  • It would likely make drug companies more amenable to moving their drugs to over-the-counter, where they could deduct the ads, saving everyone money.

New York State Senate Tied Again

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Senator Hiram Monserrate, he’s the one who slashed his girlfriend’s face, not the one who took thousands of dollars of illegal campaign contributions and laundered money
, has returned to caucusing with the Democrats, because the old Dem Senate leader has been replaced.

So, it’s a 31-31 tie, and there is no Lieutenant Governor to break the impasse, that was Paterson pre-Eliot Spitzer, and quorum is 32, and the Dems are refusing to enter the chamber.

This is also in court, and the judge is looking for a compromise here, and so is refusing to rule, but he’s being optimistic. He’s going to have to rule.

Economics Update

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Well, if you are looking for “green shoots”, the New York Fed Empire State Manufacturing Survey is not one of them, they got worse (see picture).

Additionally, the NAHB Builder Confidence fell a bit in June, from 16 to 15, with 50 being neutral, so that remains awful.

When one considers that delinquencies on commercial mortgage backed securities broke 2%, this is a state of mind that accurately reflects the reality out there.

Still, another measure of consumer confidence, this one from the University of Michigan, , which is marginally better, but still well below the 10 year average of 88.2.

We also have two relatively well known business have filed for bankruptcy reorganization, Six Flags amusement parks and the Extended Stay hotel chain.

Meanwhile, in Ireland, deflation has hit an annual rate of -4.7%, which is not surprising. There are a lot fewer dollars (Euros) chasing goods there, now that their bubble has popped.

Still, it appears that foreign investors are more confident about the future on a global level, as they have cut back on purchases of long term US securities, as the flight to safety slowed/reversed.

Meanwhile, we are starting to see some inflation from the recovery in oil prices, with import prices rising 1.3%, largely on oil, though they are down by 17.6% (!) year over year.

This has driven the price of retail gasoline up again, and are now up 63% for the year, though crude oil fell today.

The dollar was up, largely on statements by Russia that it should remain the world’s reserve currency.