Saturday, May 30, 2009

Fund-Raising Still Has Its Perks in the Obama Era

By PETER BAKER - New York Times

WASHINGTON — A day after President Obama announced his choices for some of the most coveted ambassador posts in the world, his press secretary, Robert Gibbs, was asked about their credentials.

The new ambassador to France? What is his qualification? Does he speak French?

“He does,” Mr. Gibbs said.

And the new ambassador to Britain? What is his qualification? “He speaks English,” Mr. Gibbs said.

Mr. Gibbs was kidding, but mastery of English may be one of the most relevant items on the résumé of Louis B. Susman, the new ambassador to the Court of St. James’s. Mr. Susman, a retired investment banker, earned the London posting not through diplomatic service but by collecting big checks for Mr. Obama’s campaign. Charles H. Rivkin, an entertainment mogul who once headed the company that created the Muppets, is heading to Paris for the same reason.

The practice of sending top fund-raisers to prestigious embassies is nothing new for presidents of either party. But that is what makes Mr. Obama’s nominations so noteworthy. For a candidate who made grand promises to bring change to a capital where power and position are greased by money, the latest selections are a reminder that there are limits to just how much change the new president intends to bring.

For all his generalized message of change, Mr. Obama made clear when pressed even before becoming president that he would wall off the ambassadorial spoils system from his vows of reform. During a news conference 11 days before his inauguration, Mr. Obama said flatly that he would continue to tap political allies for at least some diplomatic posts.

“My general inclination is to have civil service wherever possible serve in these posts,” he said at the time. “Are there going to be political appointees to ambassadorships? There probably will be some.” He added that “it would be disingenuous for me to suggest that there are not going to be some.”
(To view remainder of article see Comments below:)

“Baucus’ Raucous Caucus”

Barack Obama appeared this week with health-industry bigwigs, proclaiming light at the end of the health-care tunnel. Among those gathered were executives from HMO giants Kaiser Foundation Health Plan and Health Net Inc., and the health-insurance lobbying group America’s Health Insurance Plans; from the American Hospital Association and the American Medical Association; from medical-device companies; and from the pharmaceutical industry, including the president and CEO of Merck and former Rep. Billy Tauzin, now president and CEO of PhRMA, the massive industry lobbying group. They have pledged to voluntarily shave some $2 trillion off of U.S. health-care costs over 10 years. But these groups, which are heavily invested in the U.S. health-care status quo, have little incentive to actually make good on their promises.

(To listen to this commentary from "Democracy Now" - go to: http://www.democracynow.org/blog/2009/5/14/amy_goodmans_new_column_baucus_raucous_caucus

Health Care Activists Lament Single-Payer Snub

by Victoria Colliver

Frustrated by the exclusion of government-financed medical care from the debate to revamp the nation's troubled health system, advocates of a "single-payer" plan are increasingly turning to demonstrations and civil disobedience as a way to get their message across.

During Senate Finance Committee hearings May 5 and 12 on health reform, 13 doctors, nurses, lawyers and activists stood up to complain that no single-payer proponent had been invited to take part and were arrested for disrupting the proceedings.

On Friday in San Francisco, about 200 single-payer proponents held a rally in front of the Federal Building and headed in small groups to Rep. Nancy Pelosi's office to urge the speaker of the House, who was in China, to back single-payer legislation and give its supporters a seat at the table of the health reform debate. The public appeals were part of a series of demonstrations being held in more than 50 U.S. cities over the next few days to encourage lawmakers to enact a single-payer plan.

Some advocates of a nationalized health plan are calling for activists to become even more militant.

"It's the only way - direct confrontation with the people who are blocking what the majority of the American people want," said Russell Mokhiber, the founder of the newly formed Single Payer Action.

(To view reminader of article - see Comments below:)

Everyone Should See "Torturing Democracy"

By Bill Moyers & Michael Winsap - Truthout Perspective

In all the recent debate over torture, many of our Beltway pundits and politicians have twisted themselves into verbal contortions to avoid using the word at all.

During his speech to the conservative American Enterprise Institute last week - immediately on the heels of President Obama's address at the National Archives - former Vice President Dick Cheney used the euphemism "enhanced interrogation" a full dozen times.

Smothering the reality of torture in euphemism, of course, has a political value, enabling its defenders to diminish the horror and possible illegality. It also gives partisans the opening they need to divert our attention by turning the future of the prison at Guantanamo Bay into a "wedge issue," as noted on the front page of Sunday's New York Times.

According to the Times, "Armed with polling data that show a narrow majority of support for keeping the prison open and deep fear about the detainees, Republicans in Congress started laying plans even before the inauguration to make the debate over Guantanamo Bay a question of local community safety instead of one about national character and principles."

(To view article and find a link to the film "Torturing Democracy - go to: http://www.truthout.org/053009Z

Yes He Can, But Will He? Obama Hesitates to Make the Tough Calls

By Robert Kuttner, Huffington Post

This week, we learned that President Obama really is capable of political courage and idealism, as well as calculation. The question is how he will apply these gifts to the financial crisis as well as to issues closer to both his heart and to the strengths of his intellect, such as defense of the Constitution.

Each of his major speeches of the past week was a tour de force. At Notre Dame he spoke candidly and movingly about reproductive rights and tolerance. His quest for common ground won repeated applause from this largely Catholic audience, some of whom evidently are less dogmatic than their church's leaders. Said Obama:

So let us work together to reduce the number of women seeking abortions, let's reduce unintended pregnancies. (Applause.) Let's make adoption more available. (Applause.) Let's provide care and support for women who do carry their children to term. (Applause.) Let's honor the conscience of those who disagree with abortion, and draft a sensible conscience clause, and make sure that all of our health care policies are grounded not only in sound science, but also in clear ethics, as well as respect for the equality of women." Those are things we can do. (Applause.)

At Annapolis, he sounded as resolutely committed to national defense as any chicken hawk, and rather more serious about what true national security entails -- and he got repeated ovations from the midshipmen, among them John McCain IV.

(To view the remainder of this article go to: http://www.alternet.org/politics/140231/yes_he_can%2C_but_will_he_obama_hesitates_to_make_the_tough_calls/

Wednesday, May 27, 2009

As If We Needed Another Reason Why Single-Payer Is The Only Workable Option

It now appears that the recent pledge by the health care mucky-mucks to President Obama that they would reduce costs in the future was so much hot air by people who should have known better. Every previous attempt to control costs by hospital consortiums or the AMA have been shot down by the Justice Department Anti-Trust Division as price fixing, even though they were trying to fix a maximum, not a minimum price for care. Details here:
http://www.nytimes.com/2009/05/27/health/policy/27health.html?ref=us
This problem is another that would disappear utterly if we were to adopt a single-payer health care system funded by the government, along with those other pesky little problems such as the uninsured, the underinsured, the people who go bankrupt due to medical bills, the burden on U.S. manufacturers and other employers, or the incalculable cost in human suffering of sick people skipping treatment because they'd rather eat and pay the rent.
http://www.cnn.com/2009/HEALTH/03/16/health.care.survey.deloitte/index.html?iref=newssearch
Under an monopsonistic system, the government would be setting the maximum prices, not the providers. The government can't very well prosecute itself for price fixing. The dirty little secret is that the savings can only come from the limits on providers' compensation as determined by the government. That might work to the disadvantage of some players in the health care market, particularly pharmaceutical companies, who would see the advantages of their patent-derived monopolies whittled away. They might be forced to accept the rates of return on investment that the rest of us enjoy rather than the immense profits they have been reaping thanks to the above-mentioned monopoly. It might also lead to the departure from the market of those providers who are only in medicine for the money. Somewhere a tiny violin is playing a very sad song.
What this reveals about the big players in health care is that their pledge to reduce costs was mere window dressing. The same players are funding the disingenous ad campaigns that demonize any public option for health insurance by lobbing the usual canards: long waits, government control of health decisions, no choice of doctor, death, warts, bad breath, etc. A reading of the proposals for single-payer health care, H.R. 676 or S. 703, quickly puts all those lies in their place. S. 703 is considerably more complex and less elegant than the House version, but is also more in line with the need to transition smoothly from our current fractured system. Both bills guarantee that doctors may act as private entities and patients may see the doctor of their choice. We need a sustained campaign to publicize the truth about a workable single-payer plan that will withstand the onslaught from those who profit from other people's ill health.

Monday, May 25, 2009

Job Losses Push Safer Mortgages to Foreclosure

May 25, 2009
The New York Times

As job losses rise, growing numbers of American homeowners with once solid credit are falling behind on their mortgages, amplifying a wave of foreclosures.

In the latest phase of the nation’s real estate disaster, the locus of trouble has shifted from subprime loans — those extended to home buyers with troubled credit — to the far more numerous prime loans issued to those with decent financial histories.

With many economists anticipating that the unemployment rate will rise into the double digits from its current 8.9 percent, foreclosures are expected to accelerate. That could exacerbate bank losses, adding pressure to the financial system and the broader economy.

“We’re about to have a big problem,” said Morris A. Davis, a real estate expert at the University of Wisconsin. “Foreclosures were bad last year? It’s going to get worse.”

Economists refer to the current surge of foreclosures as the third wave, distinct from the initial spike when speculators gave up property because of plunging real estate prices, and the secondary shock, when borrowers’ introductory interest rates expired and were reset higher.

“We’re right in the middle of this third wave, and it’s intensifying,” said Mark Zandi, chief economist at Moody’s Economy.com. “That loss of jobs and loss of overtime hours and being forced from a full-time to part-time job is resulting in defaults. They’re coast to coast.”

Those sliding into foreclosure today are more likely to be modest borrowers whose loans fit their income than the consumers of exotically lenient mortgages that formerly typified the crisis.

Economy.com expects that 60 percent of the mortgage defaults this year will be set off primarily by unemployment, up from 29 percent last year.

Robert and Kay Richards live in the center of this trend. In 2006, they took a 30-year, fixed-rate mortgage — a prime loan — borrowing $172,000 to buy a prefabricated house. They erected the building on land they owned in the northern Minnesota town of Babbitt, clearing the terrain of pine trees with their own hands.

Mr. Richards worked as a truck driver, hauling timber from a nearby mill. His wife oversaw the books. Together, they brought in about $70,000 a year — enough to make their monthly mortgage payments of $1,300 while raising their two boys, now 11 and 16.

But their truck driving business collapsed last year when the mill closed. Mr. Richards has since worked occasional stints for local trucking companies. His wife has failed to find clerical work.

“Every month that goes by, you get a little further behind,” Mr. Richards said.

Last June, they missed their first payment, and they have since slipped $10,000 into arrears. They are trying to persuade their bank to cut their payments ahead of a foreclosure sale.

From November to February, the number of prime mortgages that were delinquent at least 90 days, were in foreclosure or had deteriorated to the point that the lender took possession of the home increased more than 473,000, exceeding 1.5 million, according to a New York Times analysis of data provided by First American CoreLogic, a real estate research group. Those loans totaled more than $224 billion.

During the same period, subprime mortgages in those three categories increased by fewer than 14,000, reaching 1.65 million. The number of similarly troubled Alt-A loans — those given to people with slightly tainted credit — rose 159,000, to 836,000.

Over all, more than four million loans worth $717 billion were in the three distressed categories in February, a jump of more than 60 percent in dollar terms compared with a year earlier.

Under a program announced in February by the Obama administration, the government is to spend $75 billion on incentives for mortgage servicing companies that reduce payments for troubled homeowners. The Treasury Department says the program will spare as many as four million homeowners from foreclosure.

But three months after the program was announced, a Treasury spokeswoman, Jenni Engebretsen, estimated the number of loans that have been modified at “more than 10,000 but fewer than 55,000.”

In the first two months of the year alone, another 313,000 mortgages landed in foreclosure or became delinquent at least 90 days, according to First American CoreLogic.

“I don’t think there’s any chance of government measures making more than a small dent,” said Alan Ruskin, chief international strategist at RBS Greenwich Capital.

Last year, foreclosures expanded sharply as the economy shed an average of 256,000 jobs each month. Since then, the job market has deteriorated further, with an average of 665,000 jobs vanishing each month.

Each foreclosure costs lenders $50,000, according to data cited in a 2006 study by the Federal Reserve Bank of Chicago, so an additional two million foreclosures could mean $100 billion in lender losses.

The government’s recent stress tests of banks concluded that the nation’s 19 largest could be forced to write off as much as a fresh $600 billion by the end of 2010, bringing their total losses to $1 trillion. The Federal Reserve concluded that these banks needed to raise another $75 billion.

Many economists pronounce that assessment reasonable, while cautioning that it could become inadequate if foreclosures continue to accelerate.

“The margin for error is not that big,” said Brian Bethune, chief United States financial economist for HIS Global Insight. “It’s kind of like, ‘Let’s keep our fingers crossed that we’ve seen the worst.’ ”

Among prime borrowers, foreclosure rates have been growing fastest in states with particularly high unemployment. In California, for example, the unemployment rate rose to 11.2 percent from 6.4 percent for the year that ended in March, while the foreclosure rate for prime mortgages nearly tripled, reaching 1.81 percent.

Even states seemingly removed from the real estate bubble are seeing foreclosures accelerate as the recession grinds on.

In Minnesota, three of every five people seeking foreclosure counseling now have a prime loan, according to the nonprofit Minnesota Home Ownership Center.

In Woodbury, Minn., Rick and Christine Sellman are struggling to persuade their bank to reduce their $2,200 monthly mortgage on their five-bedroom home.

Mr. Sellman, a construction worker, found some work putting in asphalt driveways last summer, but he is now receiving unemployment. Ms. Sellman’s scrapbooking businesses shut down last summer. Since then, they have slipped $19,000 behind on their mortgage.

“We were always up on our house payments,” Ms. Sellman said. “You work so hard to keep what you have, and because of circumstances beyond our control now, there’s nothing we can do about it.”

Copyright 2009 The New York Times Company

La Cage aux Democrats

May 24, 2009

THE most potent word in our new president’s lexicon — change — has been heard much less since his inspiring campaign gave way to the hard realities of governing. But on Tuesday night, the irresistible Obama brand made an unexpected and pointed cameo appearance on America’s most popular television show, “American Idol.” In the talent competition’s climactic faceoff, the song picked for one of the two finalists, Adam Lambert, was Sam Cooke’s soul classic, “A Change Is Gonna Come.”

Cooke recorded it in January 1964. Some four months earlier he had been arrested when trying to check into a whites-only motel in Shreveport, La. “It’s been a long, long time coming,” goes the lyric. “But I know a change is gonna come, oh yes it will.” Cooke, who was killed later that same year in a shooting at another motel, in Los Angeles, didn’t live to see his song turn into a civil rights anthem. He could not have imagined how many changes were gonna come, including the election of an African-American president who ran on change some 44 years later.

Cooke might also have been baffled to see his song covered by Lambert, a 27-year-old white guy from San Diego, on Fox last week. But the producers of “American Idol” knew what they were doing. With his dyed black hair, eyeliner and black nail polish — and an Internet photographic trail of same-sex canoodling — Lambert was “widely assumed to be gay” (Entertainment Weekly), “seemingly gay” (The Times) and “flam-bam-boyantly queeny” (Rolling Stone). Another civil rights movement was in the house even if Lambert himself stopped just short of coming out (as of my deadline, anyway) in the ritualistic Ellen DeGeneres/Clay Aiken show-biz manner.

In the end, Lambert was runner-up to his friendly and blander opponent, Kris Allen, an evangelical Christian from Arkansas. That verdict, dominated by the votes of texting tween girls, was in all likelihood a referendum on musical and cultural habits, not red/blue politics or sexual orientation. As the pop critic Ann Powers wrote in The Los Angeles Times, the victorious Allen also has a gay fan base, much as Lambert has vocal Christian admirers.

This is increasingly the live-and-let-live society we inhabit — particularly younger America. In a Times/CBS News poll in April, 57 percent of those under 40 supported same-sex marriage. The approval figure for all ages (42 percent) has nearly doubled in just five years. On Tuesday the California Supreme Court will render its opinion on that state’s pox on gay marriage, Proposition 8. Since Prop 8 passed last fall, four states have legalized gay marriage and New Hampshire is about to. This rapid change has been greeted not by a backlash, but by a national shrug — just as a seemingly gay “American Idol” victory most likely would have been.

And yet the changes aren’t coming as fast as many gay Americans would like, and as our Bill of Rights would demand. Especially in Washington. Despite Barack Obama’s pledges as a candidate and president, there is no discernible movement on repealing the military’s “don’t ask, don’t tell” policy or the Defense of Marriage Act. Both seem more cruelly discriminatory by the day.

When yet another Arabic translator was thrown out of the Army this month for being gay, Jon Stewart nailed the self-destructive Catch-22 of “don’t ask”: We allow interrogators to waterboard detainees and then banish a soldier who can tell us what that detainee is saying. The equally egregious Defense of Marriage Act, a k a DOMA, punishes same-sex spouses by voiding their federal marital rights even in states that have legalized gay marriage. As The Wall Street Journal reported, the widower of America’s first openly gay congressman, Gerry Studds of Massachusetts, must mount a long-shot court battle to try to collect the survivor benefits from his federal pension and health insurance plans. (Studds died in 2006.) Nothing short of Congressional repeal of DOMA is likely to rectify that injustice.

The civil rights lawyer Evan Wolfson, who is executive director of the advocacy group Freedom to Marry, notes that the current stasis in Washington is a bit reminiscent of early 1963, when major triumphs in the black civil rights movement (Brown v. Board of Education, the Freedom Riders, the Montgomery bus boycott) had been followed by stalling, infighting and more violent setbacks. Victories were on their way but it took the march on Washington and Martin Luther King’s “I Have a Dream” speech to galvanize John Kennedy and ultimately Lyndon Johnson into action. Even after the Civil Rights Act of 1964, Johnson had to step up big time — and did — to prod Congressional passage of the Voting Rights Act of 1965 (now under imminent threat from the Roberts Supreme Court).

It would be easy to blame the Beltway logjam in gay civil rights progress on the cultural warriors of the religious right and its political host, the Republican Party. But it would be inaccurate. The right has lost much of its clout in the capital and, as President Obama’s thoughtful performance at Notre Dame dramatized last weekend, its shrill anti-abortion-rights extremism now plays badly even in supposedly friendly confines.

Anyone with half a brain in the incredibly shrinking G.O.P. knows that gay bashing will further dim the party’s already remote chance of recruiting young voters to replenish its aging ranks, much as the right’s immigrant bashing drove away Hispanics. This is why Republican politicians now say they oppose only gay marriage, not gay people, even when it’s blatant that they’re dissembling. Naked homophobia — those campy, fear-mongering National Organization for Marriage ads, for instance — is increasingly unwelcome in a party fighting for survival. The wingnuts don’t even have Dick Cheney on their side on this issue.

Most Congressional Republicans will still vote against gay civil rights. Some may take the politically risky path of demonizing same-sex marriage during the coming debate over the new Supreme Court nominee. Old prejudices and defense mechanisms die hard, after all: there are still many gay men in the party’s hierarchy hiding in fear from what remains of the old religious-right base. In “Outrage,” a new documentary addressing precisely this point, Kirk Fordham, who had been chief of staff to Mark Foley, the former Republican congressman, says, “If they tried to fire gay staff like they do booting people out of the military, the legislative process would screech to a halt.” A closet divided against itself cannot stand.

But when Congressional Republicans try to block gay civil rights — last week one cadre introduced a bill to void the recognition of same-sex marriage in the District of Columbia — they just don’t have the votes to get their way. The Democrats do have the votes to advance the gay civil rights legislation Obama has promised to sign. And they have a serious responsibility to do so. Let’s not forget that “don’t ask” and DOMA both happened on Bill Clinton’s watch and with his approval. Indeed, in the 2008 campaign, Obama’s promise to repeal DOMA outright was a position meant to outflank Hillary Clinton, who favored only a partial revision.

So what’s stopping the Democrats from rectifying that legacy now? As Wolfson said to me last week, they lack “a towering national figure to make the moral case” for full gay civil rights. There’s no one of that stature in Congress now that Ted Kennedy has been sidelined by illness, and the president shows no signs so far of following the example of L.B.J., who championed black civil rights even though he knew it would cost his own party the South. When Obama invoked same-sex marriage in an innocuous joke at the White House correspondents’ dinner two weeks ago — he and his political partner, David Axelrod, went to Iowa to “make it official” — it seemed all the odder that he hasn’t engaged the issue substantively.

“This is a civil rights moment,” Wolfson said, “and Obama has not yet risen to it.” Worse, Obama’s opposition to same-sex marriage is now giving cover to every hard-core opponent of gay rights, from the Miss USA contestant Carrie Prejean to the former Washington mayor Marion Barry, each of whom can claim with nominal justification to share the president’s views.

In reality, they don’t. Obama has long been, as he says, a fierce advocate for gay equality. The Windy City Times has reported that he initially endorsed legalizing same-sex marriage when running for the Illinois State Senate in 1996. The most common rationale for his current passivity is that his plate is too full. But the president has so far shown an impressive inclination both to multitask and to argue passionately for bedrock American principles when he wants to. Relegating fundamental constitutional rights to the bottom of the pile until some to-be-determined future seems like a shell game.

As Wolfson reminds us in his book “Why Marriage Matters,” Dr. King addressed such dawdling in 1963. “For years now I have heard the word ‘Wait,’ ” King wrote. “It rings in the ear of every Negro with piercing familiarity. This ‘Wait’ has almost always meant ‘Never.’ ”

The gay civil rights movement has fewer obstacles in its path than did Dr. King’s Herculean mission to overthrow the singular legacy of slavery. That makes it all the more shameful that it has fewer courageous allies in Washington than King did. If “American Idol” can sing out for change on Fox in prime time, it ill becomes Obama, of all presidents, to remain mute in the White House.

Copyright 2009 The New York Times

Krugman - State of Paralysis

May 25, 2009
The New York Times
Op-Ed Columnist

California, it has long been claimed, is where the future happens first. But is that still true? If it is, God help America.

The recession has hit the Golden State hard. The housing bubble was bigger there than almost anywhere else, and the bust has been bigger too. California’s unemployment rate, at 11 percent, is the fifth-highest in the nation. And the state’s revenues have suffered accordingly.

What’s really alarming about California, however, is the political system’s inability to rise to the occasion.

Despite the economic slump, despite irresponsible policies that have doubled the state’s debt burden since Arnold Schwarzenegger became governor, California has immense human and financial resources. It should not be in fiscal crisis; it should not be on the verge of cutting essential public services and denying health coverage to almost a million children. But it is — and you have to wonder if California’s political paralysis foreshadows the future of the nation as a whole.

The seeds of California’s current crisis were planted more than 30 years ago, when voters overwhelmingly passed Proposition 13, a ballot measure that placed the state’s budget in a straitjacket. Property tax rates were capped, and homeowners were shielded from increases in their tax assessments even as the value of their homes rose.

The result was a tax system that is both inequitable and unstable. It’s inequitable because older homeowners often pay far less property tax than their younger neighbors. It’s unstable because limits on property taxation have forced California to rely more heavily than other states on income taxes, which fall steeply during recessions.

Even more important, however, Proposition 13 made it extremely hard to raise taxes, even in emergencies: no state tax rate may be increased without a two-thirds majority in both houses of the State Legislature. And this provision has interacted disastrously with state political trends.

For California, where the Republicans began their transformation from the party of Eisenhower to the party of Reagan, is also the place where they began their next transformation, into the party of Rush Limbaugh. As the political tide has turned against California Republicans, the party’s remaining members have become ever more extreme, ever less interested in the actual business of governing.

And while the party’s growing extremism condemns it to seemingly permanent minority status — Mr. Schwarzenegger was and is sui generis — the Republican rump retains enough seats in the Legislature to block any responsible action in the face of the fiscal crisis.

Will the same thing happen to the nation as a whole?

Last week Bill Gross of Pimco, the giant bond fund, warned that the U.S. government may lose its AAA debt rating in a few years, thanks to the trillions it’s spending to rescue the economy and the banks. Is that a real possibility?

Well, in a rational world Mr. Gross’s warning would make no sense. America’s projected deficits may sound large, yet it would take only a modest tax increase to cover the expected rise in interest payments — and right now American taxes are well below those in most other wealthy countries. The fiscal consequences of the current crisis, in other words, should be manageable.

But that presumes that we’ll be able, as a political matter, to act responsibly. The example of California shows that this is by no means guaranteed. And the political problems that have plagued California for years are now increasingly apparent at a national level.

To be blunt: recent events suggest that the Republican Party has been driven mad by lack of power. The few remaining moderates have been defeated, have fled, or are being driven out. What’s left is a party whose national committee has just passed a resolution solemnly declaring that Democrats are “dedicated to restructuring American society along socialist ideals,” and released a video comparing Speaker of the House Nancy Pelosi to Pussy Galore.

And that party still has 40 senators.

So will America follow California into ungovernability? Well, California has some special weaknesses that aren’t shared by the federal government. In particular, tax increases at the federal level don’t require a two-thirds majority, and can in some cases bypass the filibuster. So acting responsibly should be easier in Washington than in Sacramento.

But the California precedent still has me rattled. Who would have thought that America’s largest state, a state whose economy is larger than that of all but a few nations, could so easily become a banana republic?

On the other hand, the problems that plague California politics apply at the national level too.

Copyright 2009 The New York Times Company

Saturday, May 23, 2009

Right-Wing Radio Host Gets Waterboarded, and Lasts Six Seconds Before Saying It's Torture

Host Erich Muller says "It was instantaneous...and I don't want to say this: absolutely torture."

Chicago radio host Erich "Mancow" Muller decided he'd get himself waterboarded to prove the technique wasn't torture.

It didn't turn out that way. "Mancow," in fact, lasted just six or seven seconds before crying foul. Apparently, the experience went pretty badly -- "Witnesses said Muller thrashed on the table, and even instantly threw the toy cow he was holding as his emergency tool to signify when he wanted the experiment to stop," according to NBC Chicago.

"The average person can take this for 14 seconds," Marine Sergeant Clay South told his audience before he was waterboarded on air. "He's going to wiggle, he's going to scream, he's going to wish he never did this."

Mancow was set on a 7-foot long table with his legs elevated and his feet tied.

(To view remainder of article - including You Tube of actual event see:
http://www.alternet.org/media/140205/right-wing_radio_host_gets_waterboarded%2C_and_lasts_six_seconds_before_saying_it%27s_torture/

U.S. Congress to finally stand up against torture?

Glenn Greenwald, Salon.com

Yesterday, President Obama approved a proposed civilian nuclear technology-sharing agreement between the U.S. and the United Arab Emirates and requested its execution, but CNN -- in one of the all-time most unintentionally hilarious articles ever written -- reports that its ratification is in doubt:

WASHINGTON (CNN) -- President Obama on Thursday sent a civil nuclear agreement with the United Arab Emirates to the Senate for ratification, but its passage remains uncertain, thanks to a recently disclosed video.

Senior U.S. officials said lawmakers critical of the deal could use the video, which shows a member of the UAE government's royal family torturing a man, to argue the United States should not have such nuclear cooperation with a country where the rule of law is not respected and human rights violations are tolerated.

How anyone could write or even read that last sentence without succumbing to painful, prolonged cackling is genuinely mystifying.

The videos in questions involve torture by a single individual citizen of the UAE, not an entire government. The individual torturer isn't even part of the UAE's government: he never worked in its Justice Department, doesn't currently sit as a judge on a high-level court, doesn't teach law in a prestigious university, doesn't have his torture-defending speeches broadcast on national television by UAE news networks, isn't constantly defended by admiring journalists any time he's criticized, and doesn't have hordes of TV pundits demanding that nothing be done to him. Also, the UAE legislature never passed any laws on a bipartisan basis retroactively immunizing him from the consequences of his torture.

(To see remainder of article see Comments below:)

Obama Says Supreme Court Choice Is Coming Soon

WASHINGTON — President Obama, who has often cited intellect and empathy as qualities he wants in a Supreme Court nominee, said in a television interview broadcast Saturday that he was also looking for “somebody who has common sense and somebody who has a sense of how American society works and how the American people live.”

In the interview, the president, who taught constitutional law at the University of Chicago before coming to Washington, suggested that he prized real-world experience and a common touch as much as scholarly thought in seeking a successor to Justice David H. Souter, who is retiring.

“What I want is not just ivory tower learning,” Mr. Obama told Steve Scully, the C-Span political editor, who conducted the interview on Friday in the White House library. “I want somebody who has the intellectual firepower but also a little bit of a common touch and has a practical sense of how the world works.”

The court now consists entirely of former federal appeals court judges; one question is whether Mr. Obama, in seeking a balance, would try to pick someone with political experience as well. Several governors, including Jennifer M. Granholm of Michigan, have been mentioned as possible candidates.

But Mr. Obama has kept a tight veil of secrecy around his selection process.

(For remainder of article see comments below:)

Friday, May 22, 2009

Blue Double Cross

May 22, 2009
The New York Times

That didn’t take long. Less than two weeks have passed since much of the medical-industrial complex made a big show of working with President Obama on health care reform — and the double-crossing is already well under way. Indeed, it’s now clear that even as they met with the president, pretending to be cooperative, insurers were gearing up to play the same destructive role they did the last time health reform was on the agenda.

So here’s the question: Will Mr. Obama gloss over the reality of what’s happening, and try to preserve the appearance of cooperation? Or will he honor his own pledge, made back during the campaign, to go on the offensive against special interests if they stand in the way of reform?

The story so far: on May 11 the White House called a news conference to announce that major players in health care, including the American Hospital Association and the lobbying group America’s Health Insurance Plans, had come together to support a national effort to control health care costs.

The fact sheet on the meeting, one has to say, was classic Obama in its message of post-partisanship and, um, hope. “For too long, politics and point-scoring have prevented our country from tackling this growing crisis,” it said, adding, “The American people are eager to put the old Washington ways behind them.”

But just three days later the hospital association insisted that it had not, in fact, promised what the president said it had promised — that it had made no commitment to the administration’s goal of reducing the rate at which health care costs are rising by 1.5 percentage points a year. And the head of the insurance lobby said that the idea was merely to “ramp up” savings, whatever that means.

Meanwhile, the insurance industry is busily lobbying Congress to block one crucial element of health care reform, the public option — that is, offering Americans the right to buy insurance directly from the government as well as from private insurance companies. And at least some insurers are gearing up for a major smear campaign.

On Monday, just a week after the White House photo-op, The Washington Post reported that Blue Cross Blue Shield of North Carolina was preparing to run a series of ads attacking the public option. The planning for this ad campaign must have begun quite some time ago.

The Post has the storyboards for the ads, and they read just like the infamous Harry and Louise ads that helped kill health care reform in 1993. Troubled Americans are shown being denied their choice of doctor, or forced to wait months for appointments, by faceless government bureaucrats. It’s a scary image that might make some sense if private health insurance — which these days comes primarily via HMOs — offered all of us free choice of doctors, with no wait for medical procedures. But my health plan isn’t like that. Is yours?

“We can do a lot better than a government-run health care system,” says a voice-over in one of the ads. To which the obvious response is, if that’s true, why don’t you? Why deny Americans the chance to reject government insurance if it’s really that bad?

For none of the reform proposals currently on the table would force people into a government-run insurance plan. At most they would offer Americans the choice of buying into such a plan.

And the goal of the insurers is to deny Americans that choice. They fear that many people would prefer a government plan to dealing with private insurance companies that, in the real world as opposed to the world of their ads, are more bureaucratic than any government agency, routinely deny clients their choice of doctor, and often refuse to pay for care.

Which brings us back to Mr. Obama.

Back during the Democratic primary campaign, Mr. Obama argued that the Clintons had failed in their 1993 attempt to reform health care because they had been insufficiently inclusive. He promised instead to gather all the stakeholders, including the insurance companies, around a “big table.” And that May 11 event was, of course, intended precisely to show this big-table strategy in action.

But what if interest groups showed up at the big table, then blocked reform? Back then, Mr. Obama assured voters that he would get tough: “If those insurance companies and drug companies start trying to run ads with Harry and Louise, I’ll run my own ads as president. I’ll get on television and say ‘Harry and Louise are lying.’ ”

The question now is whether he really meant it.

The medical-industrial complex has called the president’s bluff. It polished its image by showing up at the big table and promising cooperation, then promptly went back to doing all it can to block real change. The insurers and the drug companies are, in effect, betting that Mr. Obama will be afraid to call them out on their duplicity.

It’s up to Mr. Obama to prove them wrong.

Copyright 2009 The New York Times Company

Wednesday, May 20, 2009

Apparently, We Are a Nation of Weenies

This is a bit off-topic for this blog, but I couldn't help myself. It seems that too many Americans, after seeing films like "Con Air", "Faceoff" and the like are sure that if a villain is evil enough, that it somehow imbues him with superpowers and makes him able to outwit and overpower any police or army arrayed against him, as well as withstand treatment that would kill ten lesser men. The flap is over the disposition 240 detainees in Guantanamo, who are apparently SO EVIL that they are too dangerous to bring onto United States soil. Even most of the people of Montana are skeered of them, as both of that state's Democratic senators wet their pants over a town's offer to house the prisoners in its jail. Full story here:
http://www.nytimes.com/2009/05/20/us/politics/20detain.html?pagewanted=1&sq=guantanamo&st=cse&scp=2
Notwithstanding the fact that escapes from high security federal prisons are statistically insignificant, these prisoners have been broken by torture for the last seven years, and they haven't been convicted of anything, i.e. their dangerousness hasn't even been proven beyond a reasonable doubt. If they are going to provoke terrorist attacks on the prison towns, why haven't there been any on the town where Ramsay Youssef (the 1994 World Trade Center bomber) is housed?
This is another example of how Democrats can be Republicans' best friends and play right into their hands. Here was an opportunity to convince the people that we can be safe while we use due process to convict those who have committed crimes against us. It would bury once and for all the Bush doctrine of committing human rights violations with impunity in the name of security. Instead we get the Dems cowering behind Jack Nicholson ("You can't handle the truth!", "You need me on that wall!", blah, blah, blah) We have the most powerful military in the world, spending more in a year than the rest of the world combined. We can't guard 240 men adequately?
Here in Michigan, we have a few federal prisons, and a couple of closed Air Force bases, the closing of which devastated the local communities. Why not give Michigan the $80M to make a new "home" for these guys while they await trial. We could fly them up to Selfridge in a C-130 and get Ted Nugent and his friends to guard them around the clock. We need the money. Con Air indeed.

Monday, May 18, 2009

Frank Rich: Obama Can’t Turn the Page on Bush

May 17, 2009
Op-Ed Columnist

TO paraphrase Al Pacino in “Godfather III,” just when we thought we were out, the Bush mob keeps pulling us back in. And will keep doing so. No matter how hard President Obama tries to turn the page on the previous administration, he can’t. Until there is true transparency and true accountability, revelations of that unresolved eight-year nightmare will keep raining down drip by drip, disrupting the new administration’s high ambitions.

That’s why the president’s flip-flop on the release of detainee abuse photos — whatever his motivation — is a fool’s errand. The pictures will eventually emerge anyway, either because of leaks (if they haven’t started already) or because the federal appeals court decision upholding their release remains in force. And here’s a bet: These images will not prove the most shocking evidence of Bush administration sins still to come.

There are many dots yet to be connected, and not just on torture. This Sunday, GQ magazine is posting on its Web site an article adding new details to the ample dossier on how Donald Rumsfeld’s corrupt and incompetent Defense Department cost American lives and compromised national security. The piece is not the work of a partisan but the Texan journalist Robert Draper, author of “Dead Certain,” the 2007 Bush biography that had the blessing (and cooperation) of the former president and his top brass. It draws on interviews with more than a dozen high-level Bush loyalists.

Draper reports that Rumsfeld’s monomaniacal determination to protect his Pentagon turf led him to hobble and antagonize America’s most willing allies in Iraq, Britain and Australia, and even to undermine his own soldiers. But Draper’s biggest find is a collection of daily cover sheets that Rumsfeld approved for the Secretary of Defense Worldwide Intelligence Update, a highly classified digest prepared for a tiny audience, including the president, and often delivered by hand to the White House by the defense secretary himself. These cover sheets greeted Bush each day with triumphal color photos of the war headlined by biblical quotations. GQ is posting 11 of them, and they are seriously creepy.

Take the one dated April 3, 2003, two weeks into the invasion, just as Shock and Awe hit its first potholes. Two days earlier, on April 1, a panicky Pentagon had begun spreading its hyped, fictional account of the rescue of Pvt. Jessica Lynch to distract from troubling news of setbacks. On April 2, Gen. Joseph Hoar, the commander in chief of the United States Central Command from 1991-94, had declared on the Times Op-Ed page that Rumsfeld had sent too few troops to Iraq. And so the Worldwide Intelligence Update for April 3 bullied Bush with Joshua 1:9: “Have I not commanded you? Be strong and courageous. Do not be terrified; do not be discouraged, for the LORD your God will be with you wherever you go.” (Including, as it happened, into a quagmire.)

What’s up with that? As Draper writes, Rumsfeld is not known for ostentatious displays of piety. He was cynically playing the religious angle to seduce and manipulate a president who frequently quoted the Bible. But the secretary’s actions were not just oily; he was also taking a risk with national security. If these official daily collages of Crusade-like messaging and war imagery had been leaked, they would have reinforced the Muslim world’s apocalyptic fear that America was waging a religious war. As one alarmed Pentagon hand told Draper, the fallout “would be as bad as Abu Ghraib.”

The GQ article isn’t the only revelation of previously unknown Bush Defense Department misbehavior to emerge this month. Just two weeks ago, the Obama Pentagon revealed that a major cover-up of corruption had taken place at the Bush Pentagon on Jan. 14 of this year — just six days before Bush left office. This strange incident — reported in The Times but largely ignored by Washington correspondents preparing for their annual dinner — deserves far more attention and follow-up.

What happened on Jan. 14 was the release of a report from the Pentagon’s internal watchdog, the inspector general. It had been ordered up in response to a scandal uncovered last year by David Barstow, an investigative reporter for The Times. Barstow had found that the Bush Pentagon fielded a clandestine network of retired military officers and defense officials to spread administration talking points on television, radio and in print while posing as objective “military analysts.” Many of these propagandists worked for military contractors with billions of dollars of business at stake in Pentagon procurement. Many were recipients of junkets and high-level special briefings unavailable to the legitimate press. Yet the public was never told of these conflicts of interest when these “analysts” appeared on the evening news to provide rosy assessments of what they tended to call “the real situation on the ground in Iraq.”

When Barstow’s story broke, more than 45 members of Congress demanded an inquiry. The Pentagon’s inspector general went to work, and its Jan. 14 report was the result. It found no wrongdoing by the Pentagon. Indeed, when Barstow won the Pulitzer Prize last month, Rumsfeld’s current spokesman cited the inspector general’s “exoneration” to attack the Times articles as fiction.

But the Pentagon took another look at this exoneration, and announced on May 5 that the inspector general’s report, not The Times’s reporting, was fiction. The report, it turns out, was riddled with factual errors and included little actual investigation of Barstow’s charges. The inspector general’s office had barely glanced at the 8,000 pages of e-mail that Barstow had used as evidence, and interviewed only seven of the 70 disputed analysts. In other words, the report was a whitewash. The Obama Pentagon officially rescinded it — an almost unprecedented step — and even removed it from its Web site.

Network news operations ignored the unmasking of this last-minute Bush Pentagon cover-up, as they had the original Barstow articles — surely not because they had been patsies for the Bush P.R. machine. But the story is actually far larger than this one particular incident. If the Pentagon inspector general’s office could whitewash this scandal, what else did it whitewash?

In 2005, to take just one example, the same office released a report on how Boeing colluded with low-level Pentagon bad apples on an inflated (and ultimately canceled) $30 billion air-tanker deal. At the time, even John Warner, then the go-to Republican senator on military affairs, didn’t buy the heavily redacted report’s claim that Rumsfeld and his deputy, Paul Wolfowitz, were ignorant of what Warner called “the most significant defense procurement mismanagement in contemporary history.” The Pentagon inspector general who presided over that exoneration soon fled to become an executive at the parent company of another Pentagon contractor, Blackwater.

But the new administration doesn’t want to revisit this history any more than it wants to dwell on torture. Once the inspector general’s report on the military analysts was rescinded, the Obama Pentagon declared the matter closed. The White House seems to be taking its cues from the Reagan-Bush 41 speechwriter Peggy Noonan. “Sometimes I think just keep walking,” she said on ABC’s “This Week” as the torture memos surfaced. “Some of life has to be mysterious.” Imagine if she’d been at Nuremberg!

The administration can’t “just keep walking” because it is losing control of the story. The Beltway punditocracy keeps repeating the cliché that only the A.C.L.U. and the president’s “left-wing base” want accountability, but that’s not the case. Americans know that the Iraq war is not over. A key revelation in last month’s Senate Armed Services Committee report on detainees — that torture was used to try to coerce prisoners into “confirming” a bogus Al Qaeda-Saddam Hussein link to sell that war — is finally attracting attention. The more we learn piecemeal of this history, the more bipartisan and voluble the call for full transparency has become.

And I do mean bipartisan. Both Dick Cheney, hoping to prove that torture “worked,” and Nancy Pelosi, fending off accusations of hypocrisy on torture, have now asked for classified C.I.A. documents to be made public. When a duo this unlikely, however inadvertently, is on the same side of an issue, the wave is rising too fast for any White House to control. Court cases, including appeals by the “bad apples” made scapegoats for Abu Ghraib, will yank more secrets into the daylight and enlist more anxious past and present officials into the Cheney-Pelosi demands for disclosure.

It will soon be every man for himself. “Did President Bush know everything you knew?” Bob Schieffer asked Cheney on “Face the Nation” last Sunday. The former vice president’s uncharacteristically stumbling and qualified answer — “I certainly, yeah, have every reason to believe he knew...” — suggests that the Bush White House’s once-united front is starting to crack under pressure.

I’m not a fan of Washington’s blue-ribbon commissions, where political compromises can trump the truth. But the 9/11 investigation did illuminate how, a month after Bush received an intelligence brief titled “Bin Laden Determined to Strike in U.S.,” 3,000 Americans were slaughtered on his and Cheney’s watch. If the Obama administration really wants to move on from the dark Bush era, it will need a new commission, backed up by serious law enforcement, to shed light on where every body is buried.

Saturday, May 16, 2009

The NYT sums up Obama's civil liberties record in one paragraph

Among progressives, Democrats, liberals, Obama supporters and the like, there seems to be some debate about the extent to which Obama deserves criticisms for what he has done thus far in the realm of civil liberties, restoration of Constitutional principles, and reversing the severe imbalance between "security" and liberties -- major planks of his two-year-long campaign and among the most frequent weapons used to criticize the Bush presidency. On that topic, here is the first paragraph of this New York Times article this morning by David Sanger, summing everything up:

President Obama’s decisions this week to retain important elements of the Bush-era system for trying terrorism suspects and to block the release of pictures showing abuse of American-held prisoners abroad are the most graphic examples yet of how he has backtracked, in substantial if often nuanced ways, from the approach to national security that he preached as a candidate, and even from his first days in the Oval Office.

Here's how the NYT describes the article on its front page:

The opening paragraph of this Washington Post article today says much the same thing:

As a candidate for president, Barack Obama offered himself as a clear alternative to Bush-era anti-terrorism policies. Governing has proven muddier.

Both articles quote the hardest-core Bush supporters as heaping praise on Obama for what he has done in the area of "national security," terrorism and civil liberties ("Pete Wehner, a member of Karl Rove’s staff in the Bush White House [and a current National Review writer] applauded several of Mr. Obama’s decisions this week"). Indeed, all week long, and even before that, the greatest enthusiasm for Obama's decisions on so-called "terrorism policies" and civil liberties (with some important exceptions) has been found in the pages of The Weekly Standard and National Review.

Can anyone deny what the NYT and Post are pointing out today? This is what happened this week alone in the realm of Obama's approach to "national security" and civil liberties:

Monday - Obama administration's letter to Britian threatening to cut off intelligence-sharing if British courts reveal the details of how we tortured British resident Binyam Mohamed;

Tuesday - Promoted to military commander in Afghanistan Gen. Stanley McChyrstal, who was deeply involved in some of the worst abuses of the Bush era;

Wednesday - Announced he was reversing himself and would try to conceal photographic evidence showing widespread detainee abuse -- despite the rulings from two separate courts (four federal judges unanimously) that the law compels their disclosure;

Friday - Unveiled his plan to preserve a modified system of military commissions for trying Guantanamo detainees, rather than using our extant-judicial processes for doing so.

(To review remainder of article - see Comments below:)

Lobbyists Skirt Disclosures on Stimulus Lobbying

President Barack Obama's March 20 memo was quite clear on stimulus lobbying: every communication between a lobbyist and a government agency regarding the stimulus has to be documented, and those records have to be posted.

We know that, like any giant pot of government money, the American Recovery and Reinvestment Act attracted lobbyists' interest. Lobbyists have long been required to give Congress quarterly disclosure reports outlining their lobbying efforts. In the latest quarterly reports, no less than 871 lobbyists indicated lobbying on the stimulus.

But only 12 of those lobbyists appear in the filings that agencies are now required to post online almost immediately after they speak to a lobbyist. (See our full list of lobbyist communication disclosures.)

Given that lobbyists' job is to serve as go-betweens for their clients and government agents, what are the droves of stimulus lobbyists now doing?

There were only a few days of overlap between the start of the March 20 requirement for agencies to report conversations with lobbyists and the filing deadline for the first-quarter reports to Congress. So much of the lobbying shown in the congressional reports did not require agencies to post records.

Still, the first-quarter lobbying reports show that there were many stimulus lobbyists with many stimulus clients. The fact that so few of those lobbyists have made contact with agencies over the two months is striking.

Holland & Knight, a lobbying firm that boasted to the Washington Post in March about having 240 stimulus clients, hasn't filed a single one of the contact disclosures appearing on agency Web sites.

The same holds for Kinghorn, Hilbert & Associates, which indicated in its first-quarter filings that it lobbied federal agencies on behalf of clients seeking stimulus funds. In the firm's filing for Hardeesville, S.C., for example, it says the departments of Justice, Transportation and Agriculture were lobbied for "stimulus funding." (Neither firm has returned our requests for comment.)

(See comments below for remainder of article:)

Howard Zinn: Changing Obama's Military Mindset

Obama once said, 'It's not enough to get out of Iraq; we have to get out of the mindset that led us into Iraq.' What happened to that Obama?

We are citizens, and Obama is a politician. You might not like that word. But the fact is he’s a politician. He’s other things, too—he’s a very sensitive and intelligent and thoughtful and promising person. But he’s a politician.

If you’re a citizen, you have to know the difference between them and you—the difference between what they have to do and what you have to do. And there are things they don’t have to do, if you make it clear to them they don’t have to do it.

From the beginning, I liked Obama. But the first time it suddenly struck me that he was a politician was early on, when Joe Lieberman was running for the Democratic nomination for his Senate seat in 2006.

Lieberman—who, as you know, was and is a war lover—was running for the Democratic nomination, and his opponent was a man named Ned Lamont, who was the peace candidate. And Obama went to Connecticut to support Lieberman against Lamont.

It took me aback. I say that to indicate that, yes, Obama was and is a politician. So we must not be swept away into an unthinking and unquestioning acceptance of what Obama does.

Our job is not to give him a blank check or simply be cheerleaders. It was good that we were cheerleaders while he was running for office, but it’s not good to be cheerleaders now. Because we want the country to go beyond where it has been in the past. We want to make a clean break from what it has been in the past.

To view remainder of article - see http://www.alternet.org/democracy/140035/howard_zinn%3A_changing_obama%27s_military_mindset/

Thursday, May 14, 2009

CHENEY REDIVIVUS, OBAMA AND TIMIDITY, AND WHERE IS THE ECONOMY GOING?

Here is the news, at least some of it. What is missing is a more lively and focused discussion on health care reform in mainstream media. I start to feel that Obama is repeating the mistake the Clintons made, when? oh, long ago, but this time WE are shut out: WE who want at least the public plan option in the bill. Why don't we get invited to the White House to talk about it?

And where is the economy going? No one knows, but I am afraid that the Doomsayers may still have the final word: there are more foreclosures coming, and more problems with credit card debts and guess what? we are losing jobs!

At least there are some modest proposals to rein a bit in derivatives and things of such kind...

http://www.nytimes.com/2009/05/14/business/14regs.html?_r=1&ref=us

Didn't we win the elections? Why should we listen to Dick Cheney? But there is hope that his shamelessness will backfire.

http://www.washingtonpost.com/wp-dyn/content/article/2009/05/13/AR2009051303789.html?wpisrc=newsletter&wpisrc=newsletter&wpisrc=newsletter

Obama is taking his role as Protector in Chief way too seriously. Why shouldn't we see the photographs of people tortured by various American agencies? Is he serious about changing our relations with the Muslim world or not?

http://www.washingtonpost.com/wp-dyn/content/article/2009/05/13/AR2009051301751.html?wpisrc=newsletter&wpisrc=newsletter&wpisrc=newsletter

Has the economy bottomed out? No one knows.... As these two articles from the Financial Times show.

http://www.ft.com/cms/s/0/03d19fd6-3e2d-11de-9a6c-00144feabdc0.html?ftcamp=Late_headline1/NL/USMay2009/Cluster_1_shoots/0/

http://www.ft.com/cms/s/0/2df5eb62-3f1f-11de-ae4f-00144feabdc0.html

Home mortgage refinincing is definitely booming...

http://www.ft.com/cms/s/0/285792b6-3fea-11de-9ced-00144feabdc0,dwp_uuid=ffa475a0-f3ff-11dc-aaad-0000779fd2ac.html

And a very good summary of where we stand, economically, from Roubini's blog.

Greetings from RGE Monitor!

Many commentators are suggesting that the recent data from the manufacturing, housing market, labor markets suggest that the ‘green shoots’ of an economic recovery are blossoming. While there do seem to be some signs of improvement, ie that the pace of contraction has slowed, the most recent data may still suggest that the global economic contraction is still in full swing with a very severe, a deep and protracted U-shaped recession. Although the outlook for global manufacturing and service sectors is still consistent with a significant fall in global GDP, the pace of contraction began to slow towards the end of Q1, even in Europe and Japan which have lagged the U.S. and China. Globally, surveys suggest that the manufacturing outlook has improved from the freefall of the end of Q4 2008 and early 2009. Some emerging economies like China may now be experiencing expansion based on government investment, but those of most advanced economies remain well in contraction territory. In part, inventory adjustment following the sharp destocking could contribute to a revival in demand, but a real increase in end user demand needed for a sustainable fast-paced recovery could be far off. Another necessary condition for a global recovery is a bottoming in not only the U.S. but also global housing markets. So far in most markets, housing prices seem far from their bottom and the outstanding inventory continues to be very high. Moreover there is a risk that the increase in commodity prices might choke off a sustainable recovery if it weighs on industrial production and consumption. The recent increase in commodity prices, driven in part by an increase in Chinese demand for crude oil and other commodities, has contributed to an increase in the Baltic Dry shipping index. Yet, given the significant inventory in commodities like oil, prices might suffer renewed declines. Moreover although trade finance is no longer quite as impaired as at the turn of the year, global trade continues to be quite weak as evidenced from recent data from China, the U.S. and other countries. Accompanied by the rally in stocks starting in March, the wide variety of central banks’ liquidity facilities have finally started to show clear effects in the interbank lending and money markets. Stress indicators such as the 3 month LIBOR-OIS spreads have narrowed significantly as well as the TED spread. The stock market rally extended also to the bond market with spreads receding significantly and junk bonds outperforming all other asset classes in the month of April. Is the worst over or have markets overextended themselves? United States Some green shoots emerged in the U.S. starting January and February 2009 providing relief to rest of the world that the global engine of growth, the U.S. economy, might be on the path to recovery. Government transfer payments, public sector wages and holiday discounts boosted personal disposable income, consumer spending and retail sales in January/February. However, spending and retail sales are set to drop again in March. Optimism about recovery and tax cuts via fiscal stimulus have boosted consumer sentiment recently. But the rise in consumer spending witnessed in Q1 2009 might be unsustainable in the coming months amid hiring freezes (indicated by record high continued claims), slower compensation growth, stringent borrowing conditions, fading impact of lower energy prices and the need to increase savings to de-leverage and offset wealth erosion. Auto plant closures and removal of temporary workers hired for government census might cause another spike in jobless claims and job losses in spite of some optimism in the April data. The ISM manufacturing index, industrial production and imports are also contracting at a slower pace since January/February as firms have been aggressively slashing inventories and conditions for trade finance have improved. But if sales continue to plunge, the currently high inventory levels will have to continue to fall sharply in the coming months, which will be a negative for U.S. trade partners. Similarly, some stabilization in starts and rise in construction spending starting February/March signal that the supply side of the housing sector might be close to a bottom and will continue to move sideways for some time. The persistent high level of inventories though, implies that the adjustment in terms of home prices in the U.S. housing sector might continue until mid-2010, possibly at a somewhat slower pace. Canada With its fortunes tied to the U.S. which absorbs about 75% of its exports, Canada would seem a strange candidate for early green shoots, but there are some signs of improved sentiment. Canada actually added jobs in April 2009 – albeit all in self-employment – but a breather from the sharp declines experienced from November 2008 to March 2009. Moreover, the descent of the Canadian housing market also seems to have slowed, at least temporarily due to seasonal factors. Canada’s shift back from trade deficit to surplus in February and March though reflects a weak loonie’s dampening effect on imports rather than any revival of demand in Canada’s exports. The relative soundness of Canada’s banks, which are still extending credit to households and businesses, does protect Canada from some of the woes facing other G7 economies but a recovery could be far off. Europe Just as the European Commission, the IMF, and the OECD revised down their 2009 forecasts to at least -4% after a dismal Q1 performance, Eurozone economic indicators are starting to paint a brighter picture starting in April. In particular, German manufacturing orders rose again on a monthly basis thus corroborating the recovery signaled by business sentiment indicators. Similarly, both manufacturing and services PMI indicators recorded an increase although hovering firmly in contractionary territory. The most upbeat indicator so far has come from the OECD’s 6 month leading indicator signaling that both France and Italy might have reached a possible trough in Q1. Already commentators are speculating about the shape of the recovery but important structural headwinds remain. See Green Shoots In the Eurozone? OECD Leading Indicators Turn For France and Italy United Kingdom In the UK, more and more analysts have suggested that the housing sector is bottoming despite the mixed signs shown by different pricing and lending measures. April Nationwide data showed that prices registered a m/m decline of 0.4%, bringing the y/y rate to -15% even as Halifax house prices fell by a bigger than expected 1.7% in April, returning the average house price to 2004 levels. The fall in house prices was still the smallest monthly decline since December, though. On the economic activity side, April CIPS/Markit manufacturing PMI rose to a reading of 42.9, up from 39.5 in March. The index has now recovered substantially from the record weakness of November to February but remains firmly in contraction territory. Moreover, the services PMI for March, a survey of businesses ranging from banks to restaurants also increased. This increase, the fourth monthly rise again, continues to reflect contraction even if a less steep one. Even though the survey is bringing a slowing pace of decline in new business and business expectations, companies are still shedding staff at the fastest rate since records began in 1996. Retail sales for February were also on the downside while unemployment is at the highest rate since 1997. Russia Despite the recovery in commodity prices, there are few green shoots in Russia where the EBRD suggested that the economy might contract by -7% in 2009. Although Russia’s PMI has now risen to 43 in April, the contraction is already longer and more severe than during the 1998 financial crisis. Moreover, the unemployment rate neared 10% already in March, and wage arrears suggest further job losses are to come, despite government support. The increase in commodity prices may alleviate the worst of the revenue deterioration but even at an oil price of $50-55 a barrel, Russia would draw heavily on its past savings (as it has already been doing) and in any case hydrocarbon output is falling. Meanwhile despite some reductions in external debts in H2 2008, vulnerabilities in the financial sector will weigh on growth even once the recovery at last begins. MENA As for the Middle East and North Africa, a region relatively less hit by the global financial crisis but vulnerable to tighter global and regional liquidity conditions as well as lower demand for its exports, some nascent green shoots appeared in the real estate and property sector as early as Q1 2009. Continued price corrections in 2009 contributed to an increase in residential sales in Dubai as early as February 2009. Mortgage lending started to pick up slightly from a virtual standstill between September 2008 and March 2009. However overcapacities and a shrinking population suggest prices have further to fall. More generally, MENA bank recapitalizations and increased government expenditure – together with a return of global risk appetite – are improving the liquidity situation. The outlook for the MENA region in general and the GCC in particular, remains quite tied to oil prices, meaning that the recent correction in commodity prices have reduced the revenue and macroeconomic deterioration somewhat but economic output and credit growth will be much weaker in 2009. In Israel, inflation started to pick up, bringing forward the possibility that the Bank of Israel might even begin tightening before the end of 2009. Consumer confidence also increased in April 2009 which may imply an improved outlook fro the Israeli economy. It is important to note that despite a contraction in Israel, overall MENA growth will likely be positive- a rarity globally. Asia Exports plunged between 20% to 40% y/y in ASEAN and Asian Tigers in December 2008 and January 2009 due to large inventory buildup in Asia and G-3 and the crunch in trade finance. But exports are now contracting at a somewhat slower pace across most countries starting in February 2009. In fact on a monthly basis, Asian exports improved in February and March. Asian exports to China, a large share of which are re-exported to the G-3, are also recovering while Chinese fiscal stimulus might also be boosting domestic demand for Asian exports. This is clearly reflected in the industrial production data which has recovered in most of Asia starting February as their export destinations themselves had slower contraction in industrial production and goods orders. While exports and industrial output corrected again in a few countries in March, the trend going forward will be determined by the pace of inventory adjustment and demand stabilization in the G-3 and therefore in China. Also, as deleveraging by firms and consumers in the West continues and global recovery remains sluggish, Asian exports will continue to contract though most of 2009 and much more than during 2001 or 1997-98. Japan Has Spring sprung in Japan? Some are seeing signs of green shoots. Industrial production rose 1.6% month-over-month in March (the first gain in six months), while exports were up 2.2%. Japan’s Economy Watchers’ Survey has picked up from its record-low in December 2008. Meanwhile, the government’s roughly $150 billion fiscal stimulus package, announced in April, is expected to provide a big jolt to the economy. When you scratch the surface, however, these green shoots seem like nothing more than flights of fancy. Industrial production may have risen m/m in March, but production was still in freefall in y/y terms, dropping 35%. And while most analysts agree that the fiscal stimulus package will boost growth, most see this as only a short-term phenomenon. Exports, production and capital expenditure have collapsed and the seeds of recovery are not yet visible. Given Japan’s anemic domestic demand, most analysts agree that economic recovery depends upon the future course of Japan’s exports. That means a recovery will depend heavily on an upturn in overseas economies or a restructuring of Japan’s domestic economy. China So far, China may have some of the most persistent green shoots as the government’s investment program and massive credit extension are leading to a q/q acceleration of growth from the near stall of Q4 2008 and Q1 2009. The most recently released OECD composite leading indicators suggest Chinese output may have reached a trough in March, rising the most of any of the OECD and non-OECD economy the organization tracks. China's PMIs have risen above the 50 threshold indicating that the manufacturing sector may now be expanding, job losses seem to have slowed, and credit extension may be financing investment rather than merely plugging balance sheets. The residential property market is also finally showing signs of improvement at least in transactions volumes and the erosion of the large inventories and property investment rose slightly in April. Industrial production has improved from the negative growth in January, but could slow from the 8% level attained in March, especially since electricity demand continued to contract in April. Moreover, it remains uncertain whether China can stimulate sufficient domestic demand to shift away from exports and export-oriented investment particularly at a time of external weakness and still impaired credit conditions. If it does not, the increased production could further contribute to overcapacities and disinflationary pressures at home and abroad. Consumption began to slow towards the end of Q1- albeit only slightly - despite vouchers to boost spending. Absent increased government spending on health, pensions and other social spending, the structural incentives to save and not to consume will remain. See Has The Chinese Economy Bottomed Out? Korea Korean GDP growth barely missed a technical recession in Q1 2009 by inching up 0.051% q/q (but shedding 4.3% y/y) after plunging in 5.6% q/q in Q4 2008. The Q1 rebound was signaled by the electronics sector, which drove a revival in industrial production and exports. Private consumption rose 0.4% q/q and construction rose 6.1% q/q in Q1 2009 - both with the help of fiscal stimulus packages. Net exports were positive as imports dropped faster than exports. Korea's 'green shoots' may just be a technical recovery, with the pace of economic contraction slowing but economic activity stabilizing at low levels. Restructuring has further to go – Korea still needs to whittle down its excess inventory of houses and ships and clean up bank balance sheets. A true recovery in Korea would require domestic consumption to revive not only on pent-up demand but on a more secure income and employment outlook. Retail sales got a lift from tourists taking advantage of a weaker won earlier this year but the won's recent appreciation and a bear market rally in Korean equities has turned the tables in favor of domestic spenders. According to a Bank of Korea survey, consumer sentiment leaped in April along with asset price expectations. A key question going forward is whether Korea can sustain the domestic demand rebound when credit continues to contract. Bank loan growth slowed to 8.4% y/y in March 2009 as banks tightened lending standards in anticipation of asset quality deterioration and the looming suspension of FX derivative contracts, which may weigh on bank earnings. A domestic credit crunch remains a risk even though the Bank of Korea has lowered its Base Rate to a record low 2% because many banks fund themselves through bonds at higher rates and economic concerns have elevated the yield on corporate bonds. Latin America It is quite fair to say that so far in the Latin American region there is limited evidence of a sustained recovery and in some cases the reality is actually of a still deteriorating outlook either due to the strong inertia of the global economic crisis and the deleveraging process or due to specific events such as the swine flu in Mexico. In Brazil, the latest data on industrial production definitely showed improvements on the margin. March industrial production was up 0.7% m/m s.a., pushing the y/y rate up from -16.8% to -10%, mainly driven by a sharp increase in the production of automobiles. In fact, the tax cuts given by the government to boost auto sales have been quite successful. But the recovery is not widespread throughout the economy. Retail sales surprised on the upside in January but the downward trend resumed in February and more deterioration is expected in March as the labor market brings signs of continued deterioration. In Chile, the latest economic activity data showed a -0.7% reading in March, which was above estimates and surprising in light of the poor mining, industrial production and retail sales results. Copper prices, Chile’s main export is up now by more than 35% YTD, largely because of an increase in exports to China and could be a trigger to further improvements in activity. The central bank of Chile has been the most proactive within the region, slashing rates by 7 percentage points so far in 2009, with more cuts expected. Thus, both monetary and fiscal accommodation should certainly support a quicker and stronger recovery in Chile, despite the fact that so far those signs are still mixed. In Mexico, analysts recently revised their growth estimates once the own government’s estimates were sharply reduced (from -1.8% to -4.8% for 2009). Furthermore, economists are trying to calculate the impacts of the swine flu on the country’s economy which could subtract of -0.5 to -1.0 percentage points from GDP depending on how long the flu affects the tourism and entertainment sectors. The latest economic activity indicators have failed to bring any signs of recovery so far and the overall sentiment seems to be of a relatively far bottoming of the economy. The economic activity indicator from IGAE declined by 10.8% y/y in February, worse than expected as all components contracted but it did expand on a seasonally adjusted month-on-month basis.