Wednesday’s Mini-Report

January 30, 2008

Today’s edition of quick hits.

* As a long-term economic policy, I’m not sure this is going to cut it: “The Federal Reserve cut a key interest rate by half a percentage point today, the second rate cut in nine days, in an aggressive move to try to prevent a recession. The central bank cut the federal funds rate, the rate at which banks lend to each other, to 3 percent. Combined with a surprise rate cut last week after a massive sell-off on world financial markets, the Fed has now cut the rate by 1.25 percentage points in January, the steepest rate cut in a single month in the nearly 20 years that the bank has been targeting the federal funds rate.”

* WaPo: “The House and Senate yesterday approved a 15-day extension of an expiring intelligence surveillance law and the White House backed off a threatened veto, allowing more time to resolve a dispute over the administration’s proposal to immunize telephone companies from lawsuits stemming from their cooperation with warrantless wiretaps. Both chambers passed by unanimous voice votes the temporary extension of the Protect America Act, and members then left town for a one-week break. The White House gave its blessing last night to the short-term measure rather than allowing the surveillance law to expire Friday.”

* NYT: “Four months after announcing troop reductions in Iraq, President Bush is now sending signals that the cuts may not continue past this summer, a development likely to infuriate Democrats and renew concerns among military planners about strains on the force. Mr. Bush has made no decisions on troop reductions to follow those he announced last September. But White House officials said Mr. Bush had been taking the opportunity, as he did in Monday’s State of the Union address, to prepare Americans for the possibility that, when he leaves office a year from now, the military presence in Iraq will be just as large as it was a year ago, or even slightly larger.”

* Maybe it’s just me, but I think a burst housing bubble, a credit crunch, slowing consumer demand, and rising inflation, all at the same time, isn’t encouraging.

* As speechwriting goes, John Edwards’ withdrawal speech was quite good.

* As speechwriting goes, Bush’s SOTU was quite awful, possibly “one of the worst ever written.”

* Attorney General Michael Mukasey’s Interesting Senate Judiciary Committee Hearing, Part I: the AG feels that if he were personally subjected to waterboarding, it would be torture. Due to “the office” he holds, though, Mukasey can’t concede that waterboarding is, in fact, torture.

* Mukasey’s Interesting Senate Judiciary Committee Hearing, Part II: “Does the attorney general really think that it depends on the circumstances when you can waterboard somebody?” Apparently, yes.

* Mukasey’s Interesting Senate Judiciary Committee Hearing, Part III: Chuck Schumer got Mukasey to concede that waterboarding is “repugnant.” So, following up, wouldn’t a ban on something that’s “repugnant” be a good thing? Mukasey said he’d have to mull it over.

* Mukasey’s Interesting Senate Judiciary Committee Hearing, Part IV (my personal favorite): Arlen Specter knows the president violated the Foreign Intelligence Surveillance Act. So, Specter wants to know if the AG also knows that the president violated the Foreign Intelligence Surveillance Act. Mukasey couldn’t quite come up with an answer to the question.

* Bush’s ambassador to the United Nations, Zalmay Khalilzad, is in the administration’s dog-house because he chatted briefly with two high-ranking Iranian officials during a chance encounter at Davos. It’s a reminder of just how unhealthy the Bush gang really is: “It’s dumb enough that we have a policy of refusing to speak to Iran in the first place, as if merely talking to them would give us geopolitical cooties. But to repeatedly get bent out of shape by the mere possibility of an American diplomat saying a few words to an Iranian even in an unofficial setting is stark raving mad. Tell me again how many days are left until next January 20th?”

* I hope congressional Dems are listening: “‘Who do you want to see take the lead role in setting policy for the country: George W. Bush or the Congress?’ asks NBC/WSJ. The answer is congress by a 62 to 21 margin.”

* From the brilliant mind of Lee Stranahan, meet “Pablito Ali.”

* Greg Sargent raises a good point about John and Elizabeth Edwards: “Thanks largely to the Edwards couple, aggressive push-back against right-wing (and even traditional) media figures went mainstream in Dem primary politics in a big way.”

* And finally, just a random thought to close the day: with John Edwards’ departure from the presidential race, the Democratic Party is going to either nominate an African-American or a woman this year, marking the first time in American history that a major political party has nominated someone other than a white Christian guy. This is going to happen, and putting aside who likes which candidate, I think that’s pretty exciting.

Anything to add? Consider this an end-of-the-day open thread.

The SOTU sounded like it was cribbed from previous talking points, like a Frankenstein’s monster of BS. Short speech too, no?

  • Bioretention said:

    The SOTU sounded like it was cribbed from previous talking points, like a Frankenstein’s monster of BS. Short speech too, no?

    I read somewhere that it was 4 minutes longer than last year. He should have gone with more yada yada yada.

  • Maybe it’s just me, but I think a burst housing bubble, a credit crunch, slowing consumer demand, and rising inflation, all at the same time, isn’t encouraging.

    No, it’s really not encouraging at all.

    The administration’s economic policy right now is aimed at keeping financial institutions afloat and capitulating to the craven bastards of Wall Street. It’s a cold calculation — the rest of us take it on the chin so the Investment Club can keep their heads above water.

  • I thought one of our problems as a nation is that we aren’t saving enough. Savings were supposed to help provide capital for loans. Since we aren’t saving, where are we getting more money? Besides China. With interest rates dropping to the point where keeping the money under the mattress is earning as much interest, why would anyone save? Sorry, I studied history and literature, not economics.

  • A “white Christian guy”? Both candidates are Christian, why not just write “white guy”? Alluding to Obama’s inherent “muslim”-ness?I expect a little more man, come on.

  • Correct me if I’m wrong, but don’t the Feds interest rate cuts also mean a lower return for people with savings accounts, CD’s and those whose investments didn’t tank?

  • Correct me if I’m wrong, but don’t the Feds interest rate cuts also mean a lower return for people with savings accounts, CD’s and those whose investments didn’t tank?

    No correction required. Even as we suffer from our low savings rate, we take steps to penalize saving. As Bush and Cheney said on behalf of their corporate masters after 9/11, if you don’t go shopping the terr’ists win.

  • At 6: With interest rates dropping to the point where keeping the money under the mattress is earning as much interest, why would anyone save?

    That’s an excellent question. One of the intended side effects of the rate cuts is to re-inject money into the markets — you’re right, why should anyone save when the rates become marginal? The answer is the Powers That Be don’t want you to. It’s a War On Savers.

    It’s not just the marginal interest rates. Increasing inflation and decreasing power vis a vis foreign currencies also impact our ability (or willingness) to save. The Fed and their cohorts want that capital percolating through the economy, propping up the ever-spinning cycle of credit and debt.

  • jen flowers,

    Since we aren’t saving, where are we getting more money? Besides China.

    Soverign Wealth Funds is one prime source. Especially related to the sub-prime meltdown. These funds are the quasi-governmental funds of nations that have huge amounts of money due to the sale of their natural resources or enormous trade imbalances: Saudi Arabia, Kuwait, UAE, China, Norway, etc.

    The other main source of money is believe it or not US citizens. The vast majority of our citenzry don’t have good savings habits, but the top 1% do and due to the fiscal policies of the last 7 years, they have lots of extra money and nothing really to spend it on (when you already have 5 yachts and 25 cars and 9 luxury homes, do you really need one more?).

  • Okie #4 and Jen #6: absolutely right. One point and a quarter drop in the prime rate in 9 days outside of the normal Fed board meetings when such things are usually considered is freaky. And I don’t get why the Fed thinks the answer to an economic crisis spurred by poorly considered and overzealous borrowing and lending practices is to hastily open the door for more borrowing.

    Taking measures to restore the faith in US lending practices would seem a better route, as would calling the heads of many of these lending and home purchasing institutions together and telling them to get their act together would at least send a message to world market that the US government is not asleep at the switch. But no, letting the markets fall into an unfettered collapse only to be spared the pain of their mistakes by some taxpayer-funded bailout seems to be the Republican solution to everything.

  • If I was a conspiracy theorist (And that’s easy enough to do these days) I’d also see dissuading people from saving as a wonderful way to make sure that they stay in shit jobs and take whatever the boss doles out.

  • We’re getting the money from Japan. Their interest rates have been at .25%-.5% for the last 15 years. At that rate, Japanese banks are glad to lap up US 10yr notes, even at 3%. That’s why the yield curve has been inverted for 2 years.

  • When Republicans say people should save, they do not mean in savings accounts. They mean in the stock market. Not saying that’s good. Just saying that’s what they want.

  • Yes, that is a historic first, whether Obama or Hillary is nominated. Let us hope it carries through the general election. Or we’re in deep trouble.

    If I were king-maker, I’d engineer a deal between Hillary and Obama. Hillary gets the nod for 2008, and Obama becomes the VP, with the proviso that Hillary runs for one term. By that time Obama should be seasoned enough to take the baton. And I think 24 years of Bush/Clinton will have been enough. But at this point, I have to admit I trust Hillary’s pragmatism over Obama’s idealism, and I’m also not convinced Obama is a liberal. He makes me nervous with all that unity talk. Nobody can unify right and left. We’re two different countries. We need to win for a change, not compromise even further to the right.

    And I’m concerned that global warming/energy is not getting the attention it needs. If the scientists are right, it’s the most critical issue for this century. Why are treating them as if they’re wrong? As if it’s only a minor problem that we can deal with as we see fit?

  • I think a burst housing bubble, a credit crunch, slowing consumer demand, and rising inflation, all at the same time, isn’t encouraging.

    George Soros had a good op-ed last week in the International Herald Tribune about this being the end of the 60-year postwar economy, which has seen repeated governmental intervention to increase credit and stabilize markets that are unable to supervise themselves, but that now the entire thing is at the point where there are no meaningful returns left from this kind of intervention, only serious restructuing of the markets will have any effect.

    The day China decides to stop losing money by investing in US Treasuries – which have lost 30% of their value adjusted for inflation and the fall of the dollar – is the day the American Empire becomes the former American Empire. You’ll see American tanks sitting in Baghdad with signs “Will retreat for gas”.

    The only bit of good news about this is it’s happening this year rather than next, so the blame can be properly placed on the shoulders of the Republican morons who have – as they have in every economic hiccup since 1866 – once again run the ship of state onto the rocks, this time with a bigger drunk at the wheel than the captain of the Exxon Valdez.

  • Just on the subject of money in general, and inspired by Jen’s trenchant question on why anyone would attempt to keep a savings account when interest is worth diidly : the Economics section of today’s Iran Daily reports via the U.S.-based E-Zine “Dinar Standard” that the National Iran Oil Company (NIOC) enjoyed revenues of $90.7 Billion this year, up 20% for 2007 and the second-largest for the Islamic countries – surpassed only by Saudi Arabia. Incidentally, the aforementioned Islamic countries posted combined revenues of $1.8 Trillion, “showing continued strengthening of Muslim world economies”.

    I’m sure I don’t need to tell you where a lot of that money came from. Somebody who can ill afford to spend it, evidently.

  • As MUKASEY said when asked by Senator Kennedy “…are there any interrogation techniques to be illegal..”
    ” There are statutes that describe specifically what we may not do. We may not maim, we may not rape. There is a whole list of specifically barred techniques.”

    Websters defines rape as “an outrageous violation” or ” despoiling or carrying away a person by force ” Wouldn’t that pretty much cover waterboarding and suspension of habeas corpus? Mukasey.What.A.Tool.

  • SOTU? Imagine a tepid bowl of hideously-overcooked ratatouille, made with under-ripe zucchini, over-ripe tomatoes, sun-scalded peppers, spoiled onion and really bland garlic—with not even a hint of eggplant to be found in the whole disgusting mess. But hey—that Strata character from the neocon cage zone loved it so much, we’ll name the foul dish after him:

    “Stratatouille.”

    Well, now—it looks like some Senators and Representatives just discovered that they can push back against the howler-monkey-in-chief. May it be the first of many, many such instances this year.

    Finally, on the Fed’s rate-cuts: The only value in this is to get the banks to start moving money around again. Everyone’s clammed up over the sub-prime mess, especially with the beatings they’re taking in European banks that invested heavily in leveraged debt that contained “repackaged” debt-loads that were already heading into default before the Euro-banks ever bought into the packages. It’s the only thing that kept the US banks afloat, and it may come back to haunt those US banks with a vengeance….

  • “the Democratic Party is going to either nominate an African-American or a woman this year”

    As I’ve been telling friends for about a year now, the one and only good thing GW has done for this country is to make enough people so thoroughly disgusted with politics as usual, that it is now possible for a woman or an African American to be elected president. Even as a kid, I thought that I could live long enough to see a female president. However, I always reasoned that she would have to be republican. I never imagined I would see a person of color being a serious contender for the job.

    Thanks Chimp

  • And I think 24 years of Bush/Clinton will have been enough.

    lol hark.
    Glad you have sense enough to draw the line somewhere.

  • “Both chambers passed by unanimous voice votes the temporary extension of the Protect America Act, and members then left town for a one-week break.”

    What the *hell* is going on with Congress and all those paid vacations? Every time you turn around, they’re taking another break. They just came back from the Christmas/New Years one, and that one was month–long. People complain that teachers have unusually long vacations but, really… Teachers don’t get paid $165K a year (at least, in the public school system, they don’t) plus a super-duper health plan (by itself worth at least 10K).

    And I wonder if Reid managed to remember to install hedges against recess nominations (poor Webb) again…

  • “What the *hell* is going on with Congress and all those paid vacations? ”

    They do have to check in once in a while with the districts they represent. Fundraisers, that sort of thing, you know.

  • Wonderful. More foolish monetary policy (great pun by the way). I’m still sad the demigod-like figure of Greenspan isn’t the chairman any more.

    Seriously, these moves by the Fed are only going to increase anxiety on Wall Street. Sure, they encourage people to lend and what not, but when investors see the Fed becoming anxious, they will freak out likewise. Once we get anxiety nice and high, capital flows (in loans, etc) will decline, and then we’ll have a REAL recession. The Fed really doesn’t seem to be in control of the markets any more. It’s quite a shame.

    While I’m at it, why is Congress preoccupied with a stimulus package that CREATES deficits? The stimulus package has no empirical value, but it will increase our governments massive, out of control debt. Just what we need going when baby-boomers start to retire onto Medicare Plan D (prescription drugs, the fiscally irresponsible extension Bush advocated). At that point, we become dependent on other countries to finance our debt, as #21 said above. They’ll get wise eventually, dump their (worthless) dollar assets, and we’ll see the Great Depression 2.0.

  • The stimulus package was created in accordance with what I call The LePetomaine Principle. To wit:
    “Gentlemen, we have to do something to protect our phony-baloney jobs!”

    No, it won’t cure what ails the economy. It won’t shore up the financial markets. It will buy some votes.

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