George Bailey, Please Report to Citibank

Remember last night where we speculated that Citibank was probably in talks with the government to avoid some type of something or other: collapse maybe. Well here we are today reading of the "frantics" going on to save this massive institution from spilling its guts across the landscape.

More speculation over here at Dealbreaker.

We get an update from the Wall Street Journal which suggests that toxic assets may be lifted off the books of Citi in a reversal of a reversal of direction by Treasury Secretary Paulson. Such a crazy driver he is. They want the bad assets, they don't want the bad assets, and now, oh literal crap, they want the bad assets again.

The agreement, which was still under discussion and could fall apart, would
mark a new phase in government efforts to stabilize U.S. banks and securities
firms. After injecting nearly $300 billion of capital into financial
institutions, federal officials now appear to be willing to absorb bad assets,
on a targeted basis, from specific institutions.

The talks Sunday centered on the creation of what is sometimes called a "bad bank" -- an outside entity designed to hold some of a financial firm's worst assets. That structure would help Citigroup cleanse itself of billions of dollars in potentially toxic
assets, these people said.

(WSJ)

Of course what gives us the willies about the "un-done deal" nature of this, is the off balance sheet assets of Citi:

In addition to $2 trillion in assets it has on its balance sheet, it has another
$1.23 trillion in entities that aren't reflected there. Some of those assets are
tied to mortgages, and investors have worried they could cause heavy losses if
they are brought back on the company's books.

and this:

In Citigroup's case, the planned bad bank likely will be able to accommodate
only a sliver of the company's more than $3 trillion in assets, including its
holdings in off-balance-sheet entities. Jitters about such "hidden" assets
helped trigger the nose-dive in Citigroup's stock last week.

It would seem that the government should have been working on correct valuations and lifting out the bad assets from day one, and that's been an ongoing complaint here. The values are not entirely clear to the public, and no doubt shifting every day, and if the casual observer has no clue about the cancer the government is trying to scapel out, that same person will show their confidence in government action by yanking their funds out of the system.

Someone needs to sit down in front of the nation and explain in some level of detail exactly what is causing the losses, and the relationships between bad mortgages, credit default swaps, mortgage backed securities, large investors, banks, and the government. Not in enough clarity to spook, but explained in a manner that lets people know that the issue is a bit beyond mere greed, helping Wall Street, lax regulation, use of taxpayer funds, or shareholders losing money.

Someone really needs to have a George Bailey moment before everyone starts to cash out of the system not from great fear, but from a casual fear brought on by great ignorance.

Somali Pirates Face Looming Crisis: Wine, Women, Cars to be Lost

I am not going to bring you down with talk of Citibank, and how we can probably assume that someone, somewhere, in NYC or Washington, is having frantic and heated discussions right now. If we have learned anything this year, we have come to realize that every weekend brings a cluster of secret activity that will be sprung upon us Monday morning. Besides, it's the weekend. Gas prices are dropping, and next week brings us some delicious chow. Why focus on domestic financial crisis when we can look at the looming crisis about to fall upon the shores and waters of Somalia.

I am sitting here in the comfort of my home reading about pirates. Is this not so 17th century or what? This report is amusing, primarily because it includes the phrase "pirate lair":

Speaking to AFP from the pirate lair of Harardhere, a member of the group holding the Sirius Star said there was no plan to destroy the super-tanker or harm its crew but warned any military bid to free it would be "disastrous."

(AFP)

Are we in novel times or what? It almost seems like we are back in more adventurous days, where chaos is around every corner, and money can be had, and a young man can step out into the world and make his fortune, slave to the desk no more.

Thoughts of adventure aside, for the Somali pirates some introspection is probably in order.

I wonder if some smart pirate analyst is starting to ask his fellow pirates, "Are we overextending ourselves, much like western banks? How long do we really think we can continue in business when we start taking over tankers filled with millions of dollars of oil, or stuffed to the gills with Ukrainian tanks?"

Then again people, whether running Western financial institutions, or Somali financial schemes, rarely pause to reflect when caught up in the moment of accumulating money, and spending that money (and always on the usual stuff: wine, women, and big cars).  

They also seem to have missed the crucial inflection point in this ongoing endeavor, which came when the Indian Navy took it upon themselves to sink one of the mother ships used as a base.  When one of the less efficient Navies is starting to take shots at you directly, that should probably be a signal to change your business plan before the ten real navies from Europe and Russia start steaming in your direction.

SOMALI pirates who hijacked the Saudi oil supertanker Sirius Star are demanding $US25 million ($39 million) in ransom, while plans have emerged for additional warships from 10 European countries and Russia to converge on the region to tackle the pirate problem.


One of the pirates on the ship, Mohamed Said, told news agencies: "We do not want long-term discussions to resolve the matter. The Saudis have 10 days to comply, otherwise we will take action that could be disastrous."

(Sydney Morning Herald)

Clearly, the pirates are not looking at the long term. It goes something like this: all current hijacked ships get their ransoms paid as the developed nations get the decks cleared. Then, a flotilla of Western ships remain permanently in your waters sinking anything that moves. The money dries up. You lose your extra beautiful wives. You lose your fancy car. You lose your brick house. You lose the respect of the villagers who you have been tossing a few extra dollars to.

Daily Update: Ode to Norway (Bailing Out Iceland) Edition

Norway. It's one of those countries we have always wanted to visit, lacking both money, opportunity, and, again, money. At a time when everyone is scrambling for cash (Iceland that's you, and you Turkey, and you Pakistan, and you GM, and you GMAC, and you Joe homeowner), Norway seems to be all casual and willing to spread the wealth.

In unneighborly (to Sweden) fashion, Norway has opted to reject Sweden weaponry and purchase a new batch of military jet fighters from the United States.  The F-35 Joint Strike Fighter was determined to be the better plane, which should give us here in the States some comfort, since the overall contract represents about $21 billion over its life.

The F-35 - a single-seat, single-engine jet - is being developed by Bethesda, Maryland-based Lockheed Martin, with engines made United Technologies Corp.'s Pratt and Whitney unit and General Electric Co.
A news release said the total cost of the deal over the aircraft's' expected 30- year life span would be about 145 billion kroner ($20.7 billion) for the fighter, weapons, maintenance, infrastructure and operations.

*

News like the above makes you take a second look at Norway with a kind of "I never noticed you before" admiration. Obviously they are doing something right. (Russia, look at Norway, an oil state, and pay attention!), but how? One of the things they are doing now, unlike most everyone else, is buying stuff via their oil fund (aptly named "The Government Pension Fund Global). The fund's top manager Yngve Slyngstad had this to say:

"The market we are now in suits us very well. We are a large buyer in a market with a lot of sellers," he said.

According to U.S. News, they have $20 billion of the $286 billion fund set aside to begin buying real estate. Slyngstad also mentions that the fund is the largest equity investor in Europe, which just makes us respect Norway even more for brains rather than looks. Buying when others are panicking and selling is very novel, no? How this sensible ethic did not rub off on Iceland is anyone's guess, but we suspect that floating alone in the ocean, and being inches closer to the fun loving, carefree U.S.A. probably had a huge impact on their losing their sense of Nordic reserve.
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If Iceland did lose its better judgement, they have Norway, among other Scandinavian pals, to thank for bailing them out in their time of need:

Nordic countries followed up a $2.1 billion loan to Iceland by the International Monetary Fund with an additional $2.5 billion.
The finance ministers of Denmark, Finland, Norway and Sweden said in a joint statement that the money would help Iceland stabilize its economy and exchange rate, and reduce its public debt over the medium term.

(N.Y.Times)

Ah Norway. So quiet, so reserved, so serious. Oil and oil wealth like Russia, but not all in your face about it and wiser with the income from that oil.  Buying when others are selling, arming up and bailing out. Quiet, wise, sexy Norway.

*

It would be wrong of us to leave without more oil chat. The price has now fallen below $50 per barrel, which means that certain nations in certain parts of the world are going to come under increasing pressure.

Some analysts predict oil could fall to $30 to 40 a barrel as the world economy worsens.


The pillars that had pushed up the price of oil and other commodities seem to be crumbling all at once: the American consumer is in full retreat; the Chinese economy is sputtering; financial markets are collapsing; developing countries are trimming their energy subsidies; and the dollar is strengthening.

(N.Y.Times)

So this is a good moment for you if you have a car. Just as you are losing your home, you will be able to get a lot more mileage out of living in that car of yours. But this is really bad news for others, the Times tells us:

But for oil producers, the collapse is bad news. The downturn will probably herald a depressed cycle for the energy industry as markets shrink and prices drop. Dozens of large-scale projects have already been canceled, or delayed, because of the fall in prices and financing constraints, including refineries in Saudi Arabia, tar sands in Canada and offshore fields in Brazil.

What's interesting is how hysterical people were getting not too long ago about oil prices, and it seems almost ludicrous when we think back to the Republican convention and the chants of "Drill, Baby, Drill."  It's not that we don't need to work on energy efficiency, but rather, that we need to formulate long term policy that is not based upon current and fleeting perceptions of reality.

Daily Update: It's Wednesday, Let's Hijack a Football Sized Ship Edition

You know how we said (most recently yesterday) that we like to watch what smart (already wealthy) money is doing because it gives insight?  That knowing what a Bill Gates or Warren Buffett is buying tells you a lot about the world we live in?  Well, we don't grant such status to just any old wealthy or well connected chap that rolls across the border of our consciousness. Not every billionaire is leading you to wisdom. When we think of Mexican billionaire Ricardo Salinas Pliego, who holds a huge chunk of the now in bankruptcy retail chain Circuit City, we certainly have some doubts. CNN/Money tells us he built this stake before AND after the chain filed.

Says the billionaire:

"...Circuit City is a great brand and an important name in the U.S. retail industry."

Were kinda thinking that sentiment is so three years ago or more, and his purchases are not exactly the best buy available.

*

While the billionaire is feeling inappropriately optimistic, the homebuilders are feeling feelings quite reflective of reality:

The National Association of Home Builders/Wells Fargo housing market index, started in January 1985, tumbled five points to nine in November. The index stood at 14 in October after slipping three points from September.


Index readings higher than 50 indicate positive sentiment about the market. But the index has drifted below 50 since May 2006 and below 20 since April. 

And in one of those "duh" sentences, NAHB Chairman Sandy Dunn says, "Today's report shows that we are in a crisis situation." Yep, that report, and probably the near collapse of the world's economic order.

*

England deflated, just a little bit.  So good news on the cut interest rates front.

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I don't mean to judge the military skills of countries like the United States, Russia, China, France or England, or underestimate the really bigness of the bodies of water off the coast of East Africa.  But is there something odd about a bunch of Somali based pirates in speed boats being able to take over ships the size of supertankers; ships filled with tanks and oil and other costly stuff?  And what of these crews, unarmed and so willing to get jacked as part of some elebatorate ransom scheme.

The company did not say specifically that it had begun negotiations with the hijackers. The supertanker, about the same length as an American Nimitz class aircraft carrier, is the largest ship known to have been seized by pirates, and it was fully loaded with two million barrels of oil.

"Our first and foremost priority is ensuring the safety of the crew," Salah Ka'aki, the president and chief executive of Vela, said in the statement. The crew members are citizens of Britain, Poland, Croatia, the Philippines and Saudi Arabia.

(International Herald Tribune)

The fact that $25 to $30 million has been paid to the pirates is shocking, and obviously working as an incentive to continue the status quo.  Shouldn't there be an opportunity here for military and security contractors to play a role? Or maybe change maritime laws to fit with the times. Instead of crew safety as priority number one, perhaps kill pirates should move up the priority scale.

*

And finally, Chris Kelly at Huffington Post reminds us that Chrysler is owned by a hedge fund/private equity firm, and not millions of shareholders.  If they had the hubris to think they could run a car company that the quite capable Germans were unable to tame, shouldn't they have the stones to make it work on their own? Kelly suggests that they sell off a few other assets to cover for their failing adventure in mini-van land. Amen to that.

Daily Update: The "We Won't Mention Citi Laying Off 50K plus" Edition

If there was ever a moment to see that Obama is more than what his critics hoped to suggest, it was his reaching out to both Hillary Clinton and John McCain in recent days (meaning, yesterday).

In this process we are vastly rewarded by Obama's desire to harness the effort of people of differing views on behalf of improving the problems facing the country.

Sources on both sides said Obama did not offer McCain a cabinet job, but focused on how the senator for Arizona could help to guide through Congress legislation that they both strongly favour.

(Guardian-UK)

This is good, even if it turns out to be symbolic.

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Meanwhile over at The Economist were are told that the government's initial analysis and efforts in dealing with A.I.G. were flawed.

A bankruptcy was avoided only because of the size of the holding company’s book of toxic credit derivatives, which senior executives barely understood. These left AIG so intertwined with other financial firms that its failure was judged by the Federal Reserve and Treasury to endanger the financial system.

Whether that judgment was right remains unknowable. But it is now clear that the original plan was flawed. That may be understandable: panic was in the air, AIG faced crippling collateral calls and Lehman Brothers had just folded. And the authorities lacked the wide powers granted by the Troubled Asset Relief Programme (TARP) approved by Congress in October. Unorthodox options, such as splitting the systemically threatening credit derivatives from AIG, were not under discussion.

The article ends oddly:

"Plenty of time to reflect on how an offer of a temporary loan, to a company that barely made the list of systemically vital firms, spiralled into one of the biggest corporate bail-outs ever."

One would think that the company did in fact make the list of systemically vital firms by mere example of the actions of the government. One cannot be sitting on a stack of credit derivatives and not be considered vital. It was not so much a company moving from "non-vital" to vital, but merely the governments inability to deal with multiple moving parts (different companies, different products affecting the books, constantly changing valuations, etc).

And absent the alternative result (collapse), it is really too early to tell how bad a deal this will ultimately be for the taxpayers, regardless of the title of the piece. One imagines that most of the hand wringing is the type of analysis of the now that gets proved wrong with time and perspective.

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In our ongoing blathering, we have always recommended watching what the wise investor does and use that information to gain clues on where the world is headed. Thus we have hedge funder John Paulson beginning to buy some mortgage backed assets after making huge gains in 2007 betting the opposite way.
John Paulson, the hedge fund manager who was called before Congress last week to discuss the big profits he made by foreseeing the collapse of the subprime mortgage market, has started to buy securities backed by residential mortgages.

Mr Paulson’s move marks the latest example of a famously bearish investor shifting gears to profit from depressed prices in the global credit markets.
(FT-UK)

*

Hillary must be giving Bill the major frown right now, knowing that her future job as secretary of state is predicated on his purity.

Obama's advisers have begun looking into Bill Clinton's foundation, which distributes millions of dollars to Africa to help with development, to ensure that there is no conflict of interest. But Democrats do not believe that the vetting is likely to be a problem.

(Guardian-UK)

While we've always had a major dislike for Hillary, though never doubting her smarts or ambition, this seems like it might be a good move. Given the complexity of the chaos, having a strong person handling the "outside" issues will allow Obama freedom to focus on the economic internals. Unless Hillary wants to sabotage him from the inside. Hmmmm. (We actually think that would be ridiculous, and that most people are motivated by good, intially).

Slutty TARP Getting Hit On Right and Left

Isn't it about time the government made an effort to explain to the public the necessary $150 billion going into the firm A.I.G.?  Given the mal-explained situation at hand, the tendency is for the casual observer to assume that if American International Group--an evil insurance company--gets saved, surely the auto companies and other industries ought to be helped.

In terms of icons, it's easy to visualize the hard working midwesterner who is doing an honest day's work for a day's pay building your ram tough pickup; the man who is just trying to provide a pool for the kids and meatloaf on the table and a trip to Disneyland every fourth year. We like our cars, and we like the concept of "hardworking American," though it's not so elastic a concept as to extend to our local insurance guy. Too many people, most of the time, assume that the insurance industry in its various forms is profitable beyond reason, and secretly ripping everyone off. That would be wrong of course. But don't let the populararity of our former potential vice president (in Palin) lend any doubt to the desire for a huge mass of people to accept simplicity in place of complexity. So the reality of what AIG means to the financial system and America's health gets lost.

Thus, with the singular focus on "fairness," and not wanting to appear to help special interests, or explain tough concepts to the masses, the Feds are moving both toward helping out the auto industry (again) and redefining for the upteenth time a plan to assist the average homeowner. This new plan, announced yesterday, is designed to speed the process of helping Joe Homeowner (with all that implies).

Under the program, Fannie Mae, Freddie Mac and other companies would move to modify mortgages for borrowers who are more than 90 days late on paying their loans and fit within certain formulas. That contrasts with the current system, where modifications are addressed on a case-by-case basis.

The goal of the new program would be for borrowers' annual mortgage payment to equal 38 percent of annual income, the model used successfully by the government when it took over IndyMac in California. The companies would do that by extending the loan term, reducing the interest rate and, if necessary, delaying payment on a part of the principal of the loan. If a borrower is able to meet payments for three months, the change would become permanent.

(Washington Post)

We assume the government will put in place the type of safeguards to avoid abuse of the program, though Dealbreaker seems to think otherwise:

2. Putting the power for participants to qualify themselves for the program by merely ceasing to pay their mortgage payments for three months, making any due diligence on your part impossible by "fast tracking" decisions, especially where the program's benefits include:
A. Lengthening the loan term;
B. Reducing the interest rate, and;
C. Deferring payments until the loan is 38% or so of gross household income,

will expand the programs size to roughly every mortgage in the United States.

and

3. Any hope of securitizing mortgages cost-effectively after this program is doomed to failure.

These points are certainly a worry. If a certain percentage of homeowners were not essentially honest or financially astute the first time around, we hardly expect a violent shift in human nature now.  We also don't assume that the other legs of the problem (Congress, mortgage brokers, the Fannies, mortgage insurers) can be counted on to do what needs to be done to fully cherish and preserve taxpayer funds. The fundamental issue is that prices are not where they should be, and no amount of tinkering is going to restore that, though that seems to be a desired result of many. One hears the phrase, "stabilize prices" quite a bit, which is wishful thinking.

The Wall Street Journal also brings up the issue of moral hazard.

A bigger worry could be that these modification programs are too effective. In that case, "many current borrowers will wave the white flag of surrender and also try to get a modification," Rod Dubitsky, a senior strategist for asset-backed securities at Credit Suisse, wrote in a recent report.

The danger is that loan holders who otherwise could meet their payments would decide to fall behind to get their cut of the bailout. That could unleash a chain reaction that drives default rates even higher.

That means another dose of moral hazard. Federal officials stopped worrying months ago about that for companies, as they piled up bailout upon bailout to keep the financial system from collapsing. Now officials risk injecting warped incentives into the behavior of individuals.

And just how far will these T.A.R.P. (Trouble Asset Relief Program) funds go anyway?  It's about time someone started saying saying "no" with a little dignity and restraint.

Palin the Butt for McCain

The post-election reaction is going in different directions. While 52% of the voting public is marginally rejoicing, or watching the news with expectation, the Republican professionals (politicians, those in the media), are spending a lot of time pointing their fingers at each other. Reputations and future careers are in jeopardy as McCain and Palin seek to redefine their own failure, and as the wider Republican world seeks to determine on whom to pin its hopes for the future.  Those suggesting that Palin is anything close to being the future of the Republican party are completely out of their minds, but Palin seems to be her own number one fan (and assuming, as she says, that God gets on her side as well).  

Palin has been coming out to the media now, but still doing soft interviews on not very important topics, defending herself. The more we read, the more we see the disconnect between McCain and Palin, and the casual marriage of convenience between McCain's desperation and Palin's ambition.

ABC news reports that Palin did not think Obama and Biden would win by the margin they did, and she credits the money, among other things, for that win. Never does she reflect inward and question her own role and lack of preparation.

Palin told NBC she was disappointed that she was not allowed to speak on election night in Phoenix. She and a team of speechwriters had prepared remarks for her to deliver, but at the last minute McCain aides decided it would not be in keeping with tradition for the vice presidential candidate to speak before the candidate's concession speech.
"I thought even if it was unprecedented, so what. Geez, let's do something a bit out of the box there. But those were the type of shots that were called that I didn't have control over," Palin told Lauer.

One might think that the incredible amounts of money that Obama raised, combined with a popular vote win on par with Reagan's first win, should be a clear suggestion to Palin and others that the ideas behind the candidate are what attract support.
 
In Palin land, the assumption is that if more money was available, then they might have won. But the reality is that money could have been available, had they pushed ideas worth supporting. They never engaged a wide enough section of the voting populace with reality. We remember Ayers and Islam more than McCain's economic policy.  We see the shaky artiface of our current engagements in Afghanistan and Iraq more than McCain's ideas on moving those situations into a better light.
 
But she is home now in the comfort of Wassilla, and talking up a storm. She is preparing to address the Governor's Association, although one wonders what she would really have to offer of value.
 
Lacking wisdom and humility, onward she goes. That she could say what she said about Obama, and then, flip on a dime and move right on to making more moose stew without taking a vow of silence for a moment of reflection, speaks volumes about her and the people who support her.

Obama's Chief Mandate is for Substantive Change

It goes without saying that President-elect Barack Obama presents a welcome challenge to the status quo, and the mandate, if he has one, is to follow up with some change.  After soundly beating a GOP effort that can be best described as incompetent, he now has in place a Congress that can work with him to move legislation forward in a manner that begins to reverse existing trends little by little.  He should not assume his win is a mandate for radical social change, given the numbers of Republican, conservative, and independent voters who decided to support him out of the fear that doing nothing new would represent a continued fall in the American way of life.  Obama has to hang his effforts on a few clear and broadly popular themes, dividing his goals between satisfying the left, his own ambition, and the needs of the population at large.

The newspapers are already reporting his desire to examine some 200 Bush executive orders, and while this is always a good start for some quick and easy change, it is the type of change that can easily be reversed, or lead to partisan meandering.  Thus it is important for him to move immediately on major issues. We've always thought it best, both in terms of legacy and the good of the country, for a president to have as a goal reform of one of the big areas of government endeavor, whether healthcare reform, tax changes, or adjustments to social security and medicare. Should Obama manage to handle one of these areas, while also stabilizing the financial system, that in itself will be a worthy legacy.

When he looks in the mirror each day, he should be asking himself what he can do to improve the daily life of each American, beginning with those who did not support him. Such an approach will keep his effort broad enough to impact every corner of life without side ventures into the type of social policy and experimentation that will cause a reversal of support.

In many ways this election represented the triumph of sound judgement over ideology. The type of demagoguery employed by John McCain in this campaign, and the ability of conservative and often Christian voters to support him, created a level of cognitive disonnance that was astounding. One can hardly hold the Bible in one portion of the brain, with ideas like "not bearing false witness," while supporting the type of campaign that McCain chose to run. Fortunately just enough people, yet barely enough, could not live with the idea of holding reality at bay in order to accept the work of negative art that McCain was painting. And now the Republicans are scratching their heads, and rethinking their direction. The Miami Herald suggests that they are battling between returning to some sort of Reagan inspired ideal, or looking forward and trying to broaden their appeal. Whichever method is chosen, race baiting, negative appeals and subtle mind and image tricks should be kept to a minimum.

Hopefully they will come to the conclusion that you can win elections by presenting powerful ideas that address the issues at hand that affect people across lines of sex, race and color. Obama made that appeal this time around. While the United States and the world, from Iceland to Brazil to Germany to England were falling apart, Obama was focused on the issues of relevance, while McCain was focused on distorting the personal character of his opponent. While Obama was presenting ideas (however pie in the sky they might prove to be, given our economic condition), McCain was appealing to people's fears with falsities of elaborate construction. Further, and a slight majority of people realized this, McCain's chief assessment of the threats to the country centered on terrorism. This, while the enemy--economic retardation--was inside the house wreaking havoc.

Thus, we welcome the change that Obama represents. Aside from the actual issues of running the country, it also gives us a long overdue reinforcement of the idea that America is the land of opportunity for all, regardless of who you are, or how you got here.

Daily Update: Curb Euphoria Weekend Edition

The AP, via Miami Herald, reports that Republicans are stunned, just stunned, and seeking a way forward after the Democrats managed to gain more control of the government. These debates always come down to "more Reagan, less government, and taxes " versus  "bigger tent, less dogma"

Within hours of election returns that expanded Democratic congressional majorities and delivered a historic presidential victory to Barack Obama, Republicans began searching for a new way forward.

Just as quickly, a split emerged between Republican loyalists advocating a purer form of conservative ideology and those urging a less-dogmatic flexibility.

We are of the belief that a few new ideas (as in, less Reagan, and Reagan worship) might be nice, without abandoning the entire social platform.  How about expanding the morality based arguments to include helping the poor, or adjusting healthcare in a truly radical way, while pushing for tax reform and financial solvency? Yea, we should should probably keep dreaming. Assessments like this are not promising:

"In order for the social conservatives to succeed, they will need to have something to mobilise against. It could be an issue or the congressional leadership," said Michael Lindsay, a political sociologist at Rice University in Houston.

(Reuters)

A "Long Road Ahead" for social conservatives may indeed be accurate, if positive affirmation of new ideas that address broad issues are not part of any changes.

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Having already been approved for $25 billion in loans, the auto industry is pushing for more assistance, with the support of Congressional Democrats, led by House Speaker Nancy Pelosi and Senate majority leader Harry Reid. 

They are urging that a portion of the $700 billion approved for bailouts go to the struggling GM, Ford, and Chrysler companies, in a somewhat quixotic effort, it seems to us, to put the near terminal body with smushed head on life support in order to induce a miraculous recovery.  How is it that foreign (Japanese) automakers can best American producers in quality year after year, and maintain a level of profitability to boot? 

The only possible way this assistance will be worthwhile is if the car companies (and their unions) are forced to radically change how they do business from an accounting standpoint, in additon to changing the types of cars they produce. If you are serious about energy intiatives and global warming, why not now demand that the companies produce cars that don't get all their power from oil? What can the industry say? No? If so, pull the plug.

Wethinks the TARP (Troubled Asset Relief Program) should be used primarily to fix systemic damage in the financial sector and not to help private industry reverse years of faulty decision making.

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It seems we are kind of all over the place on how to allocate the TARP, but don't let that stop China in its efforts. China has moved forward with a dometically oriented bailout plan of $586 billion to help stimulate its still "more robust than everyone elses for now" economy.

The stimulus plan would be enormous for any country, let alone one whose gross domestic product is lower than most other major industrialized countries, estimated to be around $3.5 trillion this year. Earlier this year, the United States Congress passed a $700 billion bailout package in a country with an economy whose size is close to $14 trillion.

(N.Y.Times)

Beyond what this tells you, it should tell you even more. Perhaps something about the importance of the United States getting its financial house in order to remain competitive.

Wisdom of the Day:
Curb your euphoria and build your base.

Obama Slays Faulty Thinking, Frank Rich Points it Out

Having already spent considerable time debating with one of my friends that half the reasoning used by Hillary Clinton to argue her case against Obama was utter nonsense, the results of this election provided me with a moment of satisfaction.  After all, I was not even the Obama person. She was. I was happily hoping someone like Huckabee could peel away from the pack and assert himself with a combination of new face, conservative values, and distinct ideas. But no, it didn't work like that and McCain--the name best known--stumbled to the front of the pack.  I was inclined to get behind him under the assumption he would be his own man and put forward some ideas that differed enough from standard Republican group think.

Meanwhile Hillary and Obama battled on, with Hillary rotating through themes trying to maintain traction with voters. Apparently Hillary hit upon the right theme to attract women, and my friend, part of Hillary's target demographic, latched onto the idea that somehow Obama was not in fact deserving enough, female enough, experienced enough, or particularly white enough to reach necessary voters.  Counting Hillary's stints as wife to the former president Bill as experience in office, Obama faded in her eyes.  Or as she said once, "There is just something about him. He seems arrogant."  I took this as interesting, since, if anything, Obama's seeming arrogance can only be matched or surpassed by Hillary's demonstrated arrogance and supreme confidence.  Indeed it was her arrogance that led her to assume she had the primaries locked up back in December of 2007.  That arrogance forced her to constantly re-theme her efforts, rolling through issues of class and race before settling on sex as the primary tool to beat Obama over the head with.

Once Obama succeeded in his win (and leaving many pro-Hillary supporters carping from the sidelines), McCain latched onto Hillary's efforts with abandon. He decided to raise Hillary from the dead and resurrect her message in the form of Palin.  Of course Palin was no Hillary, so it was akin to substituting soy for chocolate in the cake mix. But still it was his attempt to reconstruct what he thought he was seeing. And what he saw was Hillary appealing to issues of race and gender to make an argument against the black, male candidate. McCain assumed that Palin could continue the task, while scooping up the women's vote in the process.

Frank Rich has a much needed piece in the N.Y. Times today pointing out the degree to which assumptions being made by those in power (politicians and the media) were quite simply wrong.  Some of us who knew this, and had to listen through friends saying, "Well I just can't put my finger on why I don't like him" when his positions were principled in the same direction as Hillary's, were quite vexed. Raised eyebrows and all.  If you can make an argument that not voting for a black person because he cannot win the white vote is not a racist argument (against the black candidate, against white voters), then one is doing miraculous cognitive things in the head with a level of unprecedented compartmentalization.

Rich lays it out:

For eight years, we’ve been told by those in power that we are small, bigoted and stupid — easily divided and easily frightened. This was the toxic catechism of Bush-Rove politics. It was the soiled banner picked up by the sad McCain campaign, and it was often abetted by an amen corner in the dominant news media. We heard this slander of America so often that we all started to believe it, liberals most certainly included. If I had a dollar for every Democrat who told me there was no way that Americans would ever turn against the war in Iraq or definitively reject Bush governance or elect a black man named Barack Hussein Obama president, I could almost start to recoup my 401(k). Few wanted to take yes for an answer.
So let’s be blunt. Almost every assumption about America that was taken as a given by our political culture on Tuesday morning was proved wrong by Tuesday night.

(N.Y.Times)

Now I actually think McCain took things in a more cynical direction than Bush ever did, and believe Bush thought he was acting on principle on most occassions. I do not extend such benevolence to McCain, who so clearly deviated from his previous self that it was a shock.  Nor is it wise to assume that every Republican, or every conservative is somehow acting out of cynicism or evil intent, and Rich seems to imply that as a trend.

If anything this election has lifted us out of the cookie cutter thought patterns that allowed us to assume that people could not put race behind them when it mattered most.