Month: January 2008

Cuz Manny is probably sitting on the can or something.

Cuz BooMan is probably on the toilet or somethin  😀 looking up Super Bowl odds.

I think it’s a draw so far. Both candidates are shining.

Earlier today I talked about the “monoline nuke”, how like the focused detonation charge of a nuclear bomb, the subprime collapse was going to send the monoline insurers into critical mass.  Result:  a massive market meltdown.

At its heart, the stock market of 2008 is a confidence game.  It’s largely a sucker bet.  The collapse is coming, but nobody wants to admit it.

Here’s the truth of the last eight trading days in the US:  the rate cuts didn’t help at all.  In fact, they made things worse.  Short term interest rates went down, but long term interest rates actually went up.  Mortgages are long term investments.  Mortgage rates are actually going to rise because of those rate cuts due to the inflation these cuts are going to spark.  The price of long-term credit will rise even as the cost to banks to borrow short-term is lowered.  Why?

Banks need the money now.  It’s all about solvency.  And the hyper-leveraged derivatives market and the collapse of home prices and subprime defaults has sapped banks of the money they need to stay operational.  They cut it too close to the bone, made bad investments, and now they are going to pay.

Or should I say we are going to pay.  The banks want handouts.  They expect in an election year to get them.  The market is expecting bailouts, starting with the monolines.  The notion of a bailout of the monolines is the only thing keeping the market standing right now.

Major rating agencies are holding off downgrading bond insurers MBIA and Ambac Financial Group while they attempt to work out a bailout plan, bankers working on the bailout told CNBC.

As reported, the ratings agencies Moody’s and Standard & Poor’s are poised to downgrade the coveted Triple A rating of the bond insurers, whose main business is guaranteeing municipal bonds but which recently entered the risky subprime debt market and lost billions of dollars. Just today, MBIA, the world’s largest bond insurer, posted a quarterly loss after writing down $3.5 billion in risky debt.

Losing their Triple A rating could be devastating for the bond insurers because it could prevent them from drumming up new clients and possibly force them out of business.

States and cities that issue municipal bonds, meanwhile, could see their own bonds downgraded because of questions about the insurers’ ability to back up those bonds.

Banks could also be hit. According to Meredith Whitney, banking analyst at Oppenheimer, U.S. financial institutions could face fresh write-downs of as much as $70 billion if the bond insurers lose their top rating.

For that reason, the issue of downgrading bond insurers has become politically sensitive.

Now the game is different.  The article is basically saying here that the monolines fully expect to be bailed out and to keep their credit ratings.  Too many big players in Wall Street will tumble and fall if these companies lose their ratings and can no longer insure bonds…bonds that Wall Street knows full well aren’t going to be paid back.  The fat cats know the defaults are coming and they expect to get paid off when they do default, that’s why they bought the insurance.

It’s as close to a sure thing as it came on Wall Street.

Except a funny thing happened…everyone bought insurance for the market to fall apart.  So much so that if the market ever did fall apart, there’s no way they would ever be able to be paid back.  Everyone wanted in on the sure thing…and now everybody stands to lose.

“Politically sensitive” is Bushspeak for “We will not allow this to happen.”  The billionaires who put Bush in office and kept him there expect payback now that they are in trouble.  They expect the government to bail them out.

Only one problem.  The government is even more insolvent than the monolines.  A lot of state and municipal bonds are at stake here, and if those start to default, there will be a catastrophe.  Even worse, the biggest tax revenue for many state and municipal governments is…go on, guess…taxes!

Taxes Bush wants to cut.  Taxes that are going down as home prices (property tax) and business revenues (corporate tax) and consumer spending (sales tax) all continue to fall.

Fewer taxes mean less government revenue, which means more defaults, which means more monolines in trouble because they have to come up with the money to pay them back.  Devious.  The Devil himself couldn’t have designed a better trap.

And that trap has been sprung.

The bond insurers haven’t completely escaped downgrades. Late Thursday, S&P cut its “AAA” ratings on FGIC’s bond insurance arm, and placed its top ratings on the bond insurance arm of MBIA on review for downgrade. The rating agency also said it may cut the “AAA” rating of XL Capital Assurance, the bond insurance arm of Security Capital Assurance.

On Wednesday, Fitch Ratings downgraded FGIC after earlier downgrading Ambac.

Even the stock market has become worried about a potential meltdown among bond insurers. On Wednesday, a strong rally sparked by the Fed’s latest cut in interest rates quickly collapsed after CNBC reported that the bond insurers could be downgraded soon and that a prominent short-seller believed their losses were bigger than reported.

During a Thursday conference call, MBIA Chief Executive Gary Dunton said the troubled bond insurer has been the target of “fear mongering” by self-interested parties. He said the company will have real and significant losses, but nothing to justify the sharp decline in MBIA’s shares. He also said MBIA is in the best position to maintain Triple-A ratings among public bond insurers.

Despite the massive rate cuts, the monolines are still borderline comatose.  It’s like putting defibrillation voltage into a dead corpse.  After a while it just starts to smell like dead meat, and our gooses are cooked.

The rumors of the fate of MBIA’s credit rating is enough to cause a 400 point swing in the Dow.  How’s that for proof the game’s over?

New York state insurance regulators, meanwhile, are trying to work out a bailout plan for the bond insurers and have urged the rating agencies to hold off on any downgrades. Bankers who are working on a bailout plan have given themselves an unofficial timetable of about two weeks to work something out. But people involved in the discussions say progress is slow and it’s unclear if any bailout involving the banks will get done.

Late Wednesday evening, MBIA announced that private-equity firm Warburg Pincus completed a $500 million investment in the bond insurer, paying $31 a share for stock that has fallen to $13.96 a share since the deal was announced last month.

The company on Wednesday also said Warburg managing directors David Coulter and Kewsong Lee were named to the MBIA board. MBIA said a director Richard Walker, general counsel of Deutsche Bank, resigned to avoid any appearance of potential conflicts of interest in light of ongoing bail-out talks among bond insurers, investment banks and New York state’s insurance department.

One wrinkle in working out a bailout is that William Ackman, a hedge fund manager and short-seller of MBIA, has submitted data to the Securities and Exchange Commission and insurance regulators in New York State alleging that MBIA and Ambac are understating their losses.

In his report, Ackman, of Pershing Square Capital, contends that both bond insurers have said their mark-to-market losses are less than $1.5 billion, but according to his analysis, the losses for each firm will be around $12 billion.

If the the losses are as large as Ackman claims, Wall Street firms may be hesitant to help bail out the bond insurers.

CNBC has confirmed that Ackman has recently met with investor Wilbur Ross to discuss Ross’ examination of Ambac. Ross is interested in buying one of the troubled insurers rather than starting one of his own.

Sources say Ross may be hesitant to put more than $1 billion into Ambac, so if Ackman is right, it might end Ross’ interest in the bond insurer.

Wilbur Ross has declined to comment.

One possible scenario is that New York State commissioner Eric Dinallo could force a prepackaged bankruptcy of the bond insurers and split the municipal bond insurance from that of the risky subprime debt. The municipal bond insurance business could be sold off, while the risky debt insurance would likley be written off.

Both Moody’s and S&P declined comment.

Write it off!  Pretend it doesn’t matter!  A huge government bailout of the monolines is coming.  It has to come, or the markets will not see March in five figures.

Wall Street is waiting for the government to act.  But the thing is this, the government can’t afford to act.  It’s long past insolvent.  The only answer is going to be massive hyper-inflation to try to stop a massive market collapse.

And in the end it’ll only make things worse.  At this rate the bottom may fall out before the elections, while Bush is still President.

But then again, maybe that was the plan all along.  Maybe this is the event that Bush needs to take and hold power for a while.  The other mechanisms are in place.  He just needs a weapon of mass destruction to drive the public into panic so he can step in and use his powers.

That WMD may be the Monoline Nuke.  It’ll leave a pretty ugly crater in New York, that’s for sure.

Talk about “Disaster Capitalism”.

Boom.

At 8pm CNN will air the first one-on-one debate between Barack Obama and Hillary Clinton. Clinton will probably have to answer questions about the Kennedy endorsements, her time on the board of Wal*Mart, and her husbands involvement in a uranium mining deal in Kazakhstan. I wonder what the Big Dog thought of Borat: Cultural Learnings of America for Make Benefit Glorious Nation of Kazakhstan?

I’m not sure what they’ll hit Obama with. The Rezko thing is pretty dead now that the Chicago Tribune, which has led the way on that investigation, said the following while endorsing Barack:

Last week, Hillary Clinton attacked Obama for his association with alleged influence-peddler Tony Rezko. If Obama had dealt with the Rezko issue forthrightly long ago, it might rank in public memory with Clinton’s remarkable success in cattle futures.

Instead, as we’ve said, Obama has been too self-exculpatory. His assertion in network TV interviews last week that nobody had indications Rezko was engaging in wrongdoing strains credulity: Tribune stories linked Rezko to questionable fundraising for Gov. Rod Blagojevich in 2004 — more than a year before the adjacent home and property purchases by the Obamas and the Rezkos.

One more time, Senator:

You need to divulge all there is to know about that relationship. Until you do, the journalistic scrubbing and opposition research will intensify. You should have recognized Rezko as a political seducer of young talent. But given that you’ve not been accused of any crime or ethical breach, your Rezko history is not a deal-breaker.

Nor do we know of similar lapses during the 12 years we’ve been watching Obama.

To the contrary, the professional judgment and personal decency with which he has managed himself and his ambition distinguish Barack Obama. We endorse him convinced that he could lead America in directions that the other Democrats could not.

What do you expect to see?

This past weekend, I posted a diary talking about the progressive movement and how we needed to have more progressives in Congress in order for either Senator Clinton or Senator Obama pass anything progressive, as well as to fight for progressive causes, and against any agenda that a (gasp) President McCain or Romney would be pushing. In that diary, I said the following:

None of the three Democratic candidates can really accomplish much with a Congress that is as divided as this one. That may not be completely their fault, but it could also serve as a convenient excuse (as it has for both Reid and Pelosi). And without more progressives in Congress, our movement will not continue in any meaningful way.

—snip—

There is at least one, possibly two progressives running in my district on the Democratic side. Scott Garrett will never vote with Clinton, Obama or Edwards on anything that I want to see passed. But the Democratic candidates in my district will. As will many other progressive Democratic candidates – some of whom are members of the progressive blogosphere. From Charlie Brown to John Laesch to Darcy Burner to Barry Welsh to Ron Sheptson to Gilda Reed to Dennis Shulman in my district, and many others (I apologize if I forgot a few).

These are the people that we need – without them, NOTHING that Clinton or Obama or Edwards wants will happen. On the flip side, it is these people who can not only stop the agenda of McCain or Huckabee or Romney but can also plant the seeds for the progressive agenda – one that can last for a generation or even longer.

Now, as someone who has a baby on the way, I have limited funds to spread around, but being someone with a big mouth and a platform like BlogTalkRadio and its progressive website Heading Left, I do have the ability to at least give some of these candidates exposure and a voice that can be heard by many more people than just some in their own districts.

And with that, I am happy to announce that my partner in crime, er, co-host and good friend thereisnospoon and I are starting a series of interviews on our BlogTalkRadio show, ePluribus Radio (which can also be found at ePluribus Media) with progressive congressional candidates.

We will be posting some information on the various candidates as well as a link to their ActBlue page so you can listen in and if you are so inclined, contribute to their campaign.

The first interview will be with Gilda Reed, who is running in Louisiana’s 1st District. The interview will be this Saturday, February 2, at 1PM Eastern/10AM Pacific. The link to the show can be found here as well. Gilda’s ActBlue page is here as well.

Our next interview will be with John Laesch (IL-14), most likely on Monday February 4 in the mid afternoon Eastern (I will update the time when we finalize it). John has been on our show twice before, as has his brother (and also a Daily Kos community member Peter). John’s ActBlue page is here.

Other interviews that we have received commitments from and you can look forward to over the next few weeks are with Dennis Shulman (NJ-5) and my home district, Charlie Brown (CA-4), Ron Sheptson (CA-42) (also known as CanYouBeAngryAndStillDream), Jerry Northington (DE-AL) (also known as possum).

We will also be reaching out to others who work with campaigns and continue this series throughout the next few months. We also will be taking the various statements that we get from candidates on various issues and doing future shows that feature the progressive slate of candidates’ positions and statements on various issues.

Of course, if you know or work on a campaign (House or Senate) and would be interested in having your candidate doing an interview, please please please do not hesitate to let me know.

We have a lot of good Democrats and progressives running for Congress. Without them in Congress, the progressive movement will go nowhere. But with them in Congress, the progressive movement can, well, progress. These candidates don’t get as much press or exposure as they should. Hopefully, this can help get the word out a bit more as well as possibly get a few more much needed dollars for their campaigns as well.

That’s Bill Donahue, President of the ultraconservative Catholic League, who seems to be suffering from excessive testosterone in his old age. I say that because it seems Mr. Donahue is ready and willing to put a beat down on Bill Maher, comedian and host of the show Real Time on HBO, because Maher, a self admitted atheist, had the audacity to say he doesn’t believe that Jesus is the Christ, our Lord and Savior, the Son of God. In other words an atheist saying he doesn’t believe in Christianity constitutes fighting words (and therefore unprotected speech under the First amendment) in Bill Donahue’s universe. He even wants to hold the fight in Madison Square Garden! See for yourself (courtesy The Raw Story):

That Maher deigned to question the divinity of Jesus Christ — saying he was more skeptical of Christian mythology than that UFOs regularly visit earth — sent Donahue into an apoplectic rage. The 60-year-old Donahue challenged his longtime nemesis Maher to a fist-fight. Fox News host Megyn Kelly offered to televise the fight right there on Americas’ Newsroom.

“Bill Maher … constantly is going after not just religion in general, he really has it out against Christians,” Donahue charged. “I’m at the point right now where I’d love to challenge this guy in a ring … preferably Madison Square Garden. I’m a lot older than he is, but let me tell you something, I’d floor him.” […]

Donahue has made Maher one of his favorite targets for verbal vitriol, and Thursday’s challenge apparently marked his blood boiling over. Indeed, the Catholic League president alluded to his deep yearning to battle the HBO host just three weeks ago.

“Unlike most non-believers, who are generally content to respect the right of most Americans to believe in God, guys like Maher want a brawl,” Donahue said Jan. 7. “He should be careful what he wishes for because there are those who pine to deliver.”

Dear Mr. Donahue, it is with the sincerest concern that I ask you to have yourself (and your gonads) checked out by a competent urologist as soon as possible. Excessive testosterone can lead to a number of medical problems including loss of brain cells, acne, head aches, anxiety, irritability, rage (you may already know this, but that sounds a lot like what you’ve been experiencing for quite a while), an increased risk of violent behavior including suicide, as well as increasing the risk of of some forms of cancer.

Oh, and I’d recommend not watching Mr. Maher’s show in the future. Clearly he isn’t good for your health, spiritual, mental or physical.

.

"But I will not let myself be reduced to silence."

Weekly Voting Rights News Update

By Erin Ferns

Despite the intense media spotlight on the presidential primaries and Indiana’s voter ID case in the Supreme Court, the issues of voter participation and voting rights are still grossly underreported. This week, Project Vote cited Colorado for failure to follow the federal National Voter Registration Act – a 1993 law created to increase the number of eligible citizens registered to vote – in a report released on Monday.  Project Vote found the state was in poor compliance with a section of the law requiring voter registration applications to be offered at public assistance agencies – an effort to reduce disparities in voting population based on race and income.
NVRA’s well known “Motor Voter” feature, which instructs states to offer voter registration to citizens applying for or renewing driver’s licenses, has helped millions of Americans register or update their information every year. However, the same efforts have not been put forth to comply with Section 7 of the law in many states, which requires voter registration at agencies other than the DMV “to ensure that ‘the poor and persons with disabilities who do not have driver’s licenses [would]…not be excluded from those for whom registration will be convenient and readily available.'” Although mandated by federal law since 1995, negligence by large numbers of states has hampered the law’s intent to close the representational gap in the voting population.

“In 2006, human service agencies in some of the state’s largest counties, including El Paso, Arapahoe and Weld, did not register a single person to vote, according to the report by Project Vote, which works to increase civic engagement” wrote Myung Oak Kim in the Rocky Mountain News Tuesday.

Released Monday, the report by Jody Herman and Douglass Hess documents the state’s consistently low rates of registration in public assistance offices despite the state’s significant population of unregistered, low-income citizens. Of the 900,000 unregistered adult citizens in Colorado in 2006, 229,000 had household incomes below $25,000 and are likely to be in contact with public assistance offices, the report found. A Project Vote analysis of the 2006 electorate illustrates the drastic  disparities in the electorate: Low-income citizens comprise of 21% of the voting eligible population, but just 60% of them are registered to vote. In comparison, those earning $100,000 or more make up a smaller portion (19%) of the voting eligible population, but have the greatest voting power with 81% registered in that income bracket. Find more in this 2007 Project Vote report, “Representational Bias in the 2006 Electorate.”

“If [Colorado] had followed the requirements of the NVRA more diligently, the disparity in registration rates between rich and poor would likely be much less profound,” said Herman in the press release Monday.

The report, one in a series of reports on NVRA compliance in the states, examines the following “possible explanations” for lackluster voter registration performance, but ultimately concludes poor performance is a result of poor compliance with the NVRA.

1)There is a decline in participation in public assistance programs and many of those participating are non-citizens.
Although participation in public assistance programs declined in the 1990s, participation has actually increased in the last decade. Further, “only a small number of adults participating in public assistance programs are non-citizens.” For example, approximately 117,000 adults participated in the Food Stamp Program and only 7,000 were non-citizens.

2)The successful NVRA mandated registrations at the Department of Motor Vehicles “crowds out” the opportunity for public assistance agencies to register new voters.
While DMV registrations fluctuated over a decade, there are no visible trends to make the correlation between the DMV’s success in registering voters and public assistance agency performance. Given the 229,000 unregistered, low-income citizens, “there is a large untapped population of unregistered citizens that public assistance offices are not reaching with required voter registration services,” the report said.

3)Public assistance offices are registering voters, but are not reporting the numbers, skewing performance records.
While Herman and Hess acknowledge a “reporting problem in many jurisdictions, data collected by [community organization,] Colorado ACORN reveal that public assistance offices in Colorado are not in compliance with NVRA.” In November and December 2007, the group visited the offices of WIC, TANF and Food Stamp services in four counties. They found that more than half of the surveyed offices did not have voter registration forms available upon request, nor did they provide them in application materials.

The state is currently addressing  the issue. According to the Associated Press, “Hess said he met with representatives from the secretary of state’s office last month and said they are taking steps to put together training for county workers as well as a new system to monitor compliance with the law.” See the report for state recommendations on how to successfully comply with the law.

NVRA non-compliance is not exclusive to Colorado. On Tuesday, Project Vote and Demos notified Arizona and Florida Secretaries of State that the states failed to offer voter registration services to low income citizens, as required by NVRA.

“Other states that have recently made compliance with this requirement a priority have experienced significant gains in public agency registration rates. One in 5 Iowans, for example, who access public assistance register to vote since that state took steps to improve compliance,” Project Vote’s press release said. The potential to bring millions of new voters into the electoral process via aggressive implementation of Section 7 of the NVRA cannot be overstated. Thirteen years ago, 2.6 million registered to vote through agency registration, while only 527,752 did so in 2006. Voting rights activists and those who prize fair and representative elections should closely examine their own state’s efforts (or lack thereof) in implementing Section 7 and demand compliance with the law.

Quick Links

Contact

Contact the office of Colorado Secretary of State Mike Coffman here.

To find out the contact information for your own Secretary of state go here

Webpages

NVRA Implementation Project

Demos

Reports

“Investigating Voting Rights in Colorado: An Assessment of Compliance with the National Voter Registration Act in Public Assistance Agencies.” Project Vote. Jan. 28, 2008.

“Maximizing Voter Registration Opportunities at Public Assistance Agencies.” NVRA Implementation Project. November 2005.

“Ten Years Later: A Promise Unfulfilled. The National Voter Registration Act in Public Assistance Agencies, 1995-2005.” NVRA Implementation Project. July 2005.

Other Sources:

“Public Agency Registration Model Bill.” NVRA Implementation Project. July 2005.

“A Summary of the National Voter Registration Act.” Project Vote. March 2006.

In Other News:

“Secretary of State Delbert Hosemann says Mississippi shouldn’t wait for a court decision before enacting a voter identification law.” Read more of this Associated Press report here.

“Fewer than half of the ballots cast in November by voters who lacked photo identification were ultimately counted, according to data provided to The Associated Press by the Georgia Secretary of State.” Read more of this AP story here.

Erin Ferns is a Research and Policy Analyst with Project Vote’s Strategic Writing and Research Department (SWORD).

Is this for real?

Volcker Joins List of Obama Backers

Jackie Calmes reports on the presidential election.

Former Federal Reserve Chairman Paul Volcker, the latest big name to endorse Sen. Barack Obama, could give the Illinois Democrat a boost by lending his gravitas in the financial world to a presidential candidate whose biggest hurdle is to convince voters he is experienced enough.

“After 30 years in government, serving under five Presidents of both parties and chairing two non-partisan commissions on the Public Service, I have been reluctant to engage in political campaigns. The time has come to overcome that reluctance,” Volcker, a Democrat, said in a statement today. “However, it is not the current turmoil in markets or the economic uncertainties that have impelled my decision. Rather, it is the breadth and depth of challenges that face our nation at home and abroad. Those challenges demand a new leadership and a fresh approach.”

He concluded: “It is only Barack Obama, in his person, in his ideas, in his ability to understand and to articulate both our needs and our hopes that provide the potential for strong and fresh leadership. That leadership must begin here in America but it can also restore needed confidence in our vision, our strength, and our purposes right around the world.”

LINK

Does this suggest that Volker is displeased with the Fed at this stage? Is the Fed dropping its focus on inflation and going for Republican good times all over again, a la Greenspan?

Obama, not Hillary is the fiscally responsible Democrat! Given Hillary and Bill’s dedication to Corporatism, this endorsement is not surprising.