Italy downgraded by S&P; repercussions expected across Europe, and possibly the US as well

This time S&P might actually have a point.

If things continue like this, then countries are going to start falling out of the Euro and pretty soon only Germany will be left.

"Coming at a time when the world's financial markets are on edge, warily watching for a default by Greece with knock-on unknown effects on the financial system, the optics of this downgrade stink," said Carl Weinberg of High Frequency Economics.

"Perceptions are more important than realities," he added.

"Investors will be shaken, as if they are not shaken enough already, by what appears to be decaying conditions for another sovereign issuer."

Black Wednesday, the day that the pound fell out of the ERM (that preceded the Euro) is starting to look like one of the luckiest escapes that Britain has had since Dunkirk. Read the rest of this post...

VIDEO: Remote control truck herds cows

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Texas has paid $294,000 for Perry security detail during travels

That's a lot of money considering the financial difficulties of the state. If the roads around Texas are anything as bad as they are in Houston (where I am at the moment) then there are a lot of better places for spending that hard earned taxpayer money. Houston Chronicle:

At a time when state budget reductions were used to help offset a multibillion-dollar revenue shortfall, taxpayers were billed in excess of $294,000 in security detail expenses for out-of-state trips by Gov. Rick Perry or his wife, according to records released by the Department of Public Safety.

Destinations included the Bahamas in January for a family vacation and trips to Amsterdam, Madrid and New York by Anita Perry alone – visits that Perry spokeswoman Allison Castle said were for economic development.

Perry traveled to locales including New York, Washington, California and Las Vegas for events such as promotion of his anti-Washington book, Fed Up!, speeches, duties related to his then-chairmanship of the Republican Governors Association and meetings with business leaders or potential supporters for his presidential bid.

Is he really promoting the state of Texas, or just Rick Perry's ego? Read the rest of this post...

Hey, Did Ryan just accept that the Bush tax cuts will expire?

In amongst the usual GOP blather about why the rich should not pay any taxes from Ryan, this nugget:

Ryan, while backing a payroll tax hike, nevertheless said that tax hikes cannot be part of the deficit-cutting proposal that the super committee comes up with. As part of his explanation, Ryan made it clear that he sees no difference between raising taxes proactively and allowing tax breaks to expire. "You already have a $1.5 trillion tax increase coming in 2013," he said, referring to the expiration of the Bush tax cuts that were extended by President Obama for two years. Ryan's reference to the expiration as an "increase" gives greater weight to his willingness to let tax cuts for the middle class expire.

Now Ryan has obviously not given up hope of avoiding letting the Bush tax cuts expire (except perhaps for the 'little people'). But doesn't merely admitting the possibility that the GOP might not get its way count as apostasy in GOP circles these days?

Has the GOP suddenly lost its game? Read the rest of this post...

Bachmann: Obama did not do enough to preserve dictatorships in the Middle East

Bachmann and her ilk are pretty disgusting people. But her latest argument is truly revolting. Bachmann thinks that Obama did too little to save the dictatorship of Mubarak. According to the National Review:

In a speech to about 400 Republicans gathered for the state party’s fall convention here, the three-term Minnesota congresswoman blamed President Obama for “the hostilities of the Arab spring” and expressed regret that “we saw (Egyptian) President (Hosni) Mubarak fall while President Obama sat on his hands.”

Just what is so special about Israel that the populations of Egypt, Tunisia and Libya, a total of over 100 million people should have to live under brutal dictatorships just in case democracy might be a threat? Margaret Thatcher believed the opposite, pointing out to Gorbachev that two democracies had never gone to war against each other.

The US has a long history of backing dictatorships in the region and the current government of Iran is a direct product of that policy. Back in 1953 Iran had a democratically elected government. That was too much of a threat as far as the Dulles brothers were concerned and so they arranged a coup to eliminate the democratic government and install the Shah as a dictator, the first CIA organized coup.

Propping up crumbling dictators like Bachmann urges is a fool's bet. Carter did not make a mistake in refusing to save the Shah, that was never an option. The mistake Carter and Ford made was not cutting their losses and openly abandoning the Shah when it became clear that he had lost popular support. Read the rest of this post...

Paul Ryan wants tax increases on middle class

Standing up once again for those least in need. Huffington Post:

Rep. Paul Ryan (R-Wis.) said on Sunday that House Republicans would oppose President Barack Obama's payroll tax cuts for both employers and employees, arguing that the policy had already failed to provide a sufficient boost to the economy. "It hasn't worked," Ryan said, suggesting the current temporary tax cut should be allowed to expire, which will amount to a 50 percent tax hike on workers making less than $106,000 per year.

He also said he opposes the president's proposal to require millionaires to pay the same tax rate as the middle class, known as the Buffett plan. "Class warfare might make for good politics, but it makes for rotten economics," Ryan said.

As chairman of the House Budget Committee and the author of a long-term plan that radically alters Medicare and slashes tax rates for the wealthy as well as social spending, Ryan serves as something of an economic spokesman for House Republicans.

Read the rest of this post...

Is the White House finally "manning up"?

Ezra Klein channels the White House's latest strategy on the deficit talks:

The president doesn’t think of himself as that kind of Democrat. He believes that there are sensible cuts that can be made to both Medicare and Social Security. He would like to win by governing effectively, by cutting deals with the other party, by making Washington work. He doesn’t want to run a generic Democratic campaign hammering Republicans for being willing to cut Medicare even as they cut taxes on the rich.

There are a few issues here.
1. Are the President's goals good, substantively? That's questionable re Medicare and SS.
2. Are they achievable? Depends how he goes about it.
3. What does he have to do to achieve them? It's not clear that "working with" the Republicans ever works, certainly not in today's climate, and especially a year before the presidential elections - it serves the Republicans to stop any progress from happening on anything between now and the elections. Though, there's a silver lining. The GOP controls the House. They need to show some progress, some reason that their continued leadership is justified.

The new theory goes something like this: The first-best outcome is still striking a grand bargain with the Republicans, and it’s more likely to happen if the Republicans worry that Democrats have found a clear, popular message that might win them the election. The better Obama looks in the polls, the more interested Republicans will become in a compromise that takes some of the Democrats’ most potent attacks off the table.

Maybe. Or maybe the better Obama looks in the polls the more the GOP will try to destroy him by any means necessary, including lots of lies that, up until now, Team Obama has not been very good at refuting.

But the second-best outcome isn’t necessarily looking like the most reasonable guy in the room. It’s looking like the strongest leader in the room. That’s why Obama, somewhat unusually for him, attached a veto threat to his deficit plan: If the supercommittee sends him a package that cuts benefits for Medicare beneficiaries but leaves the rich untouched, he says he’ll kick the plan back to Congress. Rather than emphasizing his willingness to meet Boehner’s bottom lines, which was the communications strategy during the debt ceiling showdown, he’s emphasizing his unwillingness to bend on his bottom lines.

That isn’t how the White House would prefer to govern. It’s not how they would prefer to campaign. It is, let’s admit it, politics-as-usual. It’s the triumph of the old way of doing things, an admission that Washington proved too hard to change. But it’s also the only option they have left.

I don't think it's politics as usual at all. It's POLITICS, period. There's this pollyanna view that some people have that politics should be all tea and crumpets, where we the civilized all sit down and exchange niceties while dividing up the world. In America, it doesn't work that way. It feels somewhat naive to think it could.

The White House has finally shown signs of "manning up," as they like to say.  Let's not neuter them so quickly. Read the rest of this post...

Obama's $3 Trillion plan: What will he veto?

I have been on the fence on Obama's performance for some time. Is his willingness to accommodate the GOP due to a lack of a spine or because he knows something we don't? Like maybe working with the GOP in Congress he might know that they are in fact genuinely totally fruit-bat insane and not just pretending to be crazy to strengthen their negotiating position.

So for me what is important about the proposed $3 Trillion deficit plan is not what is on the bargaining table but what Obama will veto and what is the default outcome should no compromise be reached.

As things stand the default outcome is that all the Bush tax cuts end and there are significant across the board cuts including for the military. There are cuts in Medicare payments, but those would fall on providers. All things considered the default outcome is already one of the least bad that progressives might realistically hope for.

It is not that I particularly like the default outcome, I just don't see that negotiating with the GOP is going to result in anything better.

Obama has already said that he will veto any cuts in Medicare without an increase in taxes on the wealthy. That is a good starting point, though John raises some legitimate concerns about what the President may not veto.

What I would like to see in addition is for Obama to state that he will veto any extension of the Bush tax cuts for his wealthiest friends even if that means vetoing an extension of the middle class tax cut as well. Read the rest of this post...

Appeals court overturns "shoe bomber wannabe" Padilla’s sentence, says it isn’t severe enough

I've never heard of appellate courts throwing out a sentence because it wasn't severe enough. I have little sympathy for Jose Padilla, but that's not the standard for fairness in this country, being a nice guy.  Then again, if a judge goes nuts and gives a rapist one day in jail shouldn't someone be able to overturn that?  The counter argument is that the judge is the one who heard the entire case, not the appeals court. Then again, our system permits appellate courts to overturn lower courts, even though they weren't there.  Lots to think about here.

From UPI:

The appeals court panel ruled 2-1 Monday, "The record shows that the government presented evidence that the defendants formed a support cell linked to radical Islamists worldwide and conspired to send money, recruits and equipment overseas to groups that the defendants knew used violence in their efforts to establish Islamic states," ruling against all three.

On the government's cross-appeal, the majority said the sentencing judge "attached little weight to Padilla's extensive criminal history, gave no weight to his future dangerousness, compared him to criminals who were not similarly situated and gave unreasonable weight to the conditions of his pre-trial confinement.

Read the rest of this post...

When is a veto threat not a veto threat?

Mother Jones:

Which brings me to the one sentence in the White House fact sheet that is in boldface: "The President will veto any bill that takes one dime from the Medicare benefits seniors rely on without asking the wealthiest Americans and biggest corporations to pay their fair share."

Before GOPers even saw the details of Obama's plan, they were blasting it (predictably) as class warfare. Is Obama ready to pound back?

This is known as a message. Obama is saying that he won't take anything away from Medicare beneficiaries—and he'll continue to point out that the Republicans are on record as supporting ending the Medicare guarantee for seniors. But there is, it seems, wiggle room here. If the GOPers relent on revenues and OK a tax hike on the wealthiest Americans and biggest corporations, might Obama consider trimming benefits for some seniors? With this statement, Obama looks as if he's both prepping to stand firm—while still being open to a grand bargain that includes more extensive entitlement cuts.

I thought the same thing the moment I saw the veto "threat." This goes back to the concern I've already noted a few times in the past several days. Yes, the President appears to be playing hard(er) ball with the GOP, and that's great. But is he capable of sustaining the effort? This veto threat was weasel-y. And it's the kind of pandering-to-both-sides kind of language that we'd expect from the old Obama, not the new and improved "fighting" Obama.  It also, justifiably, opens Democrats to attack from Republicans in the 2012 elections for being willing to cut Medicare benefits.  And when defending Medicare was one of the only things Democrats had going for them in next year's elections, that's just dumb. Read the rest of this post...

Austerity is hurting the future, not just the present

The usual argument for austerity in the U.S. (unlike the "morality argument" in Europe, which cites Greece as the classic Corrupt Undeserving) is that we need to take care of our economic future — future deficits, future total government debt, future hyper-inflation — by sacrificing the present (the economic health of our current fellow citizens).

It turns out that it's not a matter of the future or the present — it's the future and the present. What we do to one, we will do to both.

Shoring up the present — with, yes, more and larger stimulus, plus debt forgiveness and restructuring — is the one best way to guarantee a better future. The faster we clear the overhang of household debt and restore the buying capacity (wage growth) of us ordinary folk (us "littles"), the faster we get out of our own "Japan decade." (Did you realize that we're closing out year four of the Great Recession?)

And conversely (perversely), the best way to kill the future is by killing the present to protect it. Paul Krugman (my emphasis):

But, say apologists for the bad results so far, shouldn’t we be focused on the long run rather than short-run pain? Actually, no: the economy needs real help now, not hypothetical payoffs a decade from now. In any case, evidence is starting to emerge that the economy’s “short run” troubles — now in their fourth year, and being made worse by the focus on austerity — are taking a toll on its long-run prospects as well.

Consider, in particular, what is happening to America’s manufacturing base. In normal times manufacturing capacity rises 2 or 3 percent every year. But faced with a persistently weak economy, industry has been reducing, not increasing, its productive capacity. At this point, according to Federal Reserve estimates, manufacturing capacity is almost 5 percent lower than it was in December 2007.

What this means is that if and when a real recovery finally gets going, the economy will run into capacity constraints and production bottlenecks much sooner than it should. That is, the weak economy, which is partly the result of budget-cutting, is hurting the future as well as the present.

Furthermore, the decline in manufacturing capacity is probably only the beginning of the bad news....

It's becoming clearer and clearer that what we Littles need now is help, not just now, but to guarantee the future health of the U.S.

It's also clear that the Bigs won't give that to us. I wonder why? Are they protecting the banks (the rentier or creditor class) at all costs? Certainly that. But aren't they also afraid of hurting themselves, as a byproduct of hurting us? Maybe not.

Is it time to start to take, what they don't want to give us for free. (Your answer here.)

GP Read the rest of this post...

What if the cuts kick in and the economy isn’t back on its feet in 2013?

The White House is assuming, under its new deficit proposal, that the American economy will back back on its feet 16 months for now. According to a White House press releases, issued today, the proposed new cuts wouldn't kick in until 2013, when the economy will be growing stronger.

"[D]eficit reduction phases in starting in 2013, as the economy grows stronger."

But who thinks the economy will be growing stronger in 2013, which is only a little more than a year away? In fact, what Stiglitz and Krugman have both warned about is a malaise that continues for years and years to come.

If significant cuts kick in while the economy is still on life support, or at the very best, lame, this plan - any budget cutting plan - could do significant harm to the economy.

Why is that not being acknowledged in this plan?  The plan ought to have a safety valve that puts cuts (and possibly tax increases as well) on hold if the economy is not "growing stronger" by a set amount.  Meaning, cuts only kick in if GDP is growing at a rate of more than, say, 5% a year.

We're still playing the Republican game of telling the American people that near-immediate cuts are a-okay when they're not at all. Read the rest of this post...

Frank Rich on the new Suskind book about the Obama White House

Whatever you think of the book, I found (always find) Frank Rich's observation's worth a read. New York Magazine:

I have sympathy for [Obama], too, and I have heard him express that (charming and genuinely modest) amazement that he ended up sitting in the White House, the most unlikely president imaginable. His turning to Rubin during the transition — as he hired his economic team — may have been out of some understandable human insecurity. Or was it because he's too easily impressed by the type of elite he met at Harvard? Whatever. But beyond the bad hiring choices, it was also a bad meta-policy choice, period, to put jobs on the back burner for eighteen months while pushing health care.

Suskind also nails, I think, Obama's intellectual blind spot. Indeed, Obama himself nails it, telling Suskind that he was too inclined to search for "the perfect technical answer" to the myriad of complex issues coming at him. What he'd end up with instead is, as Suskind astutely summarizes it, "clever" answers that were "respectfully acknowledging opponents' positions, even those with thin evidence behind them, that then get stitched together into some pragmatic conclusion — but hollow." That said, could someone else have done better? Not the out-of-it McCain, not Hillary (an equivocator in her own right and one who would have embraced the same Clinton administration alumni and Wall Street crowd that Obama did). I still believe Obama was our best hope, and I still hope, however quixotically and self-deludedly, that he might learn from his mistakes.

Read the rest of this post...

Obama to ask for 50-50 tax increases, budget cuts totaling $3 trillion

The Wall Street Journal is reporting (behind a firewall) that the President's new deficit reduction plan that he'll be offering tomorrow will call for around $3 in savings, with half coming from tax increases and half coming from budget cuts. And reportedly, the President won't be talking about any changes to Social Security, and on Medicare will only focus on lowering payments to providers of medical services.

Interesting, but why "start" with a 50-50 offer on tax increases and spending cuts? That means the final deal will be worse, unless the President doesn't plan on caving, and rather, plans on letting the GOP hang itself by saying no, then he'll go the American people and show them how even with a 50-50 deal the GOP just had to say no.

Also, the White House had better make sure that this deal doesn't kick in until the economy is back on its feet. And no one thinks that's going to happen for a good many years (like 4 or more, from what I've heard). Starting these cuts, and even possibly the tax increases, too early will suck money from the economy and hurt GDP and employment. It's time for the President to start leveling with the American people about the basics of Economics 101. Read the rest of this post...

Reddish-brown seal shunned for being different

It's the middle of the night, you want more Obama?

Sad story.  The pictures are really sad too.  Though it has a happy ending.  Just go read it.  Then go back to bed.  Unless you're in Europe or Asia, then you should be working. Read the rest of this post...