'Obama Announces Intiatives for Middle Class' -- Yay for Me...Oh, Fuck...Scratch That

I'd like to stop being the "other person" in the "spending other people's money" axiom.

AP:

WASHINGTON – President Barack Obama on Monday offered help for people struggling to pay bills and care for their families, appealing to a middle-class he says has been "under assault for a long time."

In a partial preview of a State of the Union address that aims to answer voter angst about the economy and reconnect with the public, Obama outlined the series of proposals from the White House.[...]

Among the initiatives: a doubling of the child care tax credit for families earning under $85,000; a $1.6 billion increase in federal funding for child care programs and a program to cap student loan payments at 10 percent of income above "a basic living allowance."

His initiatives also include expanding tax credits to match retirement savings and increasing aid for families taking care of elderly relatives. That program would also require many employers to provide the option of a workplace-based retirement savings plan.

I exist in some sort of childless, non-property owning, no college debt, earning little money, black-fuck-me-up-the-ass-hole of taxpayers. Doesn't anyone want to buy my vote??

I promise you; 20-somethings with substance abuse problems and a lack of life ambitions WILL be the swing vote in the upcoming mid-term elections. And we're cheap to buy off. I'd just take a bottle of something.

The Story That Makes You Want To Poop All Over America

I hate America. WSJ:

PALMDALE, Calif. -- Schoolteacher Shana Richey misses the playroom she decorated with Glamour Girl decals for her daughters. Fireman Jay Fernandez misses the custom putting green he installed in his backyard.

But ever since they quit paying their mortgages and walked away from their homes, they've discovered that giving up on the American dream has its benefits.

Both now live on the 3100 block of Club Rancho Drive in Palmdale, where a terrible housing market lets them rent luxurious homes -- one with a pool for the kids, the other with a golf-course view -- for a fraction of their former monthly payments.

I WANT YOU BOTH TO DIE.

Both these assholes also get free coffee once a month at Dunkin Donuts. When's free coffee day for Underpaid Non-Profit Workers?? Never, that's when. Fuck you Dunkin Donuts. I'll take Caribou's over-priced coffee any day of the week over your Indian inspired brown water.

Houses for free, coffee for free. Pensions that non public-sector employees could only dream of. I mean that. I dream of guaranteed pensions and retirement. Kitties too. [Speaking of cats....Have any of you seen this? The Furminator. Probably the most bad-ass invention ever. Review to follow after my old lady and I are rolling around in piles of fur on our bed, like mountains of $100 bills.] All these riches made possible by the ass-sweat of renters and taxpayers alike.

You can't even call them stupid for spending like a Caligula and buying (I'll use that term loosely in this case) homes they couldn't afford AND doubling up on the debt with improvements like putting greens and helicopter landing pads, or whatever it is that stupid white people put in their homes. No, people like me are the ones left looking like idiots in this equation. I rent an apartment that is roughly the size of my cube here at work. Roughly...The cube may be a little bit bigger. And has better heat.

These assholes not only walk away from hundreds of thousands of dollars in debt but also get to rent houses with pools and access to golf courses. FUCK YOU. These people should be thrown in jail. It's stealing, plain and simple. From the bank, and from the taxpayers who are subsidizing this madness. I don't care what their credit will look like, that's no punishment. I want to see them behind bars. If we live in a country that throws people in jail for smoking I think it's only fair that this type of behavior is punished just as harshly. It's hurting a lot more people than marijuana smoke could ever hope to.

If nothing else at least these people are cutting back once they have thrown the debt off their shoulders...Right?

Some are leaving behind their homes and mortgages right away, while others are simply halting payments until the bank kicks them out. That's freeing up cash to use in other ways.

Ms. Richey's family of five used some of the money to buy season tickets to Disneyland, and plans to take a Carnival cruise to Mexico in March. Mr. Fernandez takes his girlfriend out to dinner more frequently. "We're saving lots of money," Ms. Richey says.

*Sigh*...Motherfuckers.

Via City Paper where some good, and not-quite-as-angry comments are made.

Friday Links

*Unemployment hits 10.2%, but apparently the real unemployment number is over 17% when you factor in people who have taken part-time work in lieu of non-existent full-time jobs, and people who have stopped looking for jobs because...well...I have no fucking clue why you would stop looking for a job when you don't have one.

So I think this underemployed number that the media likes to trot out is stupid. It's stupid because you shouldn't count as unemployed if you are employed. Even part-time. You certainly shouldn't count as unemployed if you're too fucking lazy to look for a job. While I understand that the statistic is called "underemployed" for a reason, it's still too often used by the media as a better judge of the labor market. Personally, I think we should just go Bush-era Homeland Security style, and start using a color coded scale ranging from green (for a great labor market) to red (for a shitty labor market).

*China gets golf. Tiger was sidelined for the last HSBC Championship -- a golf tournament known as the "Asia Major" that takes place in Shanghai every fall -- his return has brought back rabid galleries that were missing last year. With those rabid galleries comes a gazillion little Chinese men that have no fucking clue about golf etiquette. True, this is coming from an American golf fan -- a species of golf fan responsible for the "GET IN THE HOLE!" yell that has now officially zoomed past the douche zone and follows every golf shot on the PGA Tour. Still, the Chinese seem to be a particularly annoying new golf fan base who -- if you can believe this -- won't put down their nosy electronics during golfers swings. As the reporter in the linked story above says:

Most fairways have the feel of the electronics department of the downtown Shanghai Best Buy.

*Lots of whores due to flock to Dallas for NBA All-Star game and the Super Bowl in 2011. Whatever. Same old story that gets rehashed every year. But this is newsworthy -- from the linked Dallas News story -- there's a National Prostitute Diversion Conference. Here's a thought: Do hookers flock every year to take care of the attendees of the National Prostitute Diversion Conference?

*Baltimore Sun engages in actual journalism. Snarky? Yes. Undeserved...probably not. But credit due where credit is earned. The Sun and the Independent are doing an exchange program with their crime reporters. By way of Britain's massive crush on all things The Wire related the Sun's Justin Fenton ad the Independent's Mark Hughes are switching countries for a short time and comparing crime trends. The two papers have set up blogs, updated daily, and the two reporters are filing regular stories for the print editions. It's good stuff. It's the type of interesting journalism that papers like the Sun should be doing more of.

The Belly Button Lint I Picked Out Last Night Saved Or Created 1,325 Jobs

But, not to be out done be my belly button lint the Obama Administration claims that the "Rape and Pillaging Act of '09" saved or created 650,000 jobs. In Maryland our cut of those 650,000 jobs works out to 4,460 jobs. 3,425 jobs were also saved or created on the moon, 4,745 somewhere around the core of the earth, and another 8,200 were saved or created in some distant land called "Wisconsin".

If Only Obama Would Listen To Himself

Washington is set to raise the debt ceiling, again, pushing this country even deeper into a sea of red ink. Was it only three years ago that Democrats were citing this as proof of George W. Bush's failure? Yes, it was:

“Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren,” Obama said in a 2006 floor speech that preceded a Senate vote to extend the debt limit. “America has a debt problem and a failure of leadership.”

Obama later joined his Democratic colleagues in voting en bloc against raising the debt increase.

Now Obama is asking Congress to raise the debt ceiling, something lawmakers are almost certain to do despite misgivings about the federal debt. The ceiling already has been hiked three times in the past two years, and the House took action earlier this year to raise the ceiling to $13 trillion.

Maybe it's just me but I don't think going even further into debt was the change people voted for in 2008.

Hopefully He's More Careful When It's Other People's Money

Meet Democratic Rep. Alan Grayson of Florida. He's a member of the House Financial Services Committee, which is busy rewriting all of the rules covering banking, investing and such. So he's on top of those issues right? Hmm, maybe not according to the Capitol Hill newspaper Roll Call:

Freshman Rep. Alan Grayson (D-Fla.) lost $3 million in a stock swindle between 2000 and 2005, a Florida television station reported this week.

According to Orlando’s Local 6, Grayson was an investor in a Ponzi scheme run by the company Derivium Capital. The scheme allowed Grayson and other investors to turn over stock to Derivium in exchange for cash loans and redeem the value later if the stock prices increased.

The station cited court filings indicating that Grayson transferred about $29 million in stock to the fund, taking out about $26 million in cash. A South Carolina court ruled earlier this year that Derivium shareholders were owed about $270 million in lost profits and that Grayson’s share of that would be about $34 million.

Read the rest of the story here.

Of course, when it comes to the federal government, only losing a few million is an accomplishment.

Blue Light Specials In Red Light District

The recession is hurting Amsterdam's prostitutes so bady that they have been forced to discount themselves like they were mini Wal-Marts:

Eva, a 25-year-old prostitute in Amsterdam's red-light district, gestures angrily in the direction of a rival who has slashed her rates as the economic crisis emboldens sex tourists to haggle.

"People like her make it very difficult for the rest of us," scowled the tall, blonde Estonian in skimpy black-and-white lingerie as she dragged on a cigarette while posing for men passing the window in which she offers herself.

"Some of the girls are now doing it for 30 euros (A$70). My price is still 50 euros, but the men are playing us off against each other. Some want to pay only 20 euros," she said.

Eva is not the only one complaining.

As the credit crunch keeps away sightseers and business travellers, owners of brothels, escort agencies and sex shops grumble that visitors who still do indulge in the pleasures of the flesh are increasingly tight-fisted.

They haven't been helped by the fact that Amsterdam has been busily trying to destroy its own tourism industry:

Last December, Amsterdam's city officials announced plans to halve the total 482 prostitutes' windows in the centre in a multi-million-euro revamp that would also involve shuttering many cannabis-vending coffee shops, another tourist drawcard.

Officials claim the two vices, in themselves not illegal, attract elements of organised crime. But observers have pointed to a growing Dutch conservatism.

Hey, Brother Can You Spare $7.1 Trillion?

Washington Post columnist Robert J. Samuelson is great at being really depressing:

Just how much government debt does a president have to endorse before he's labeled "irresponsible"? Well, apparently much more than the massive amounts envisioned by President Obama. The final version of his 2010 budget, released last week, is a case study in political expediency and economic gambling.

Let's see. From 2010 to 2019, Obama projects annual deficits totaling $7.1 trillion; that's atop the $1.8 trillion deficit for 2009. By 2019, the ratio of publicly held federal debt to gross domestic product (GDP, or the economy) would reach 70 percent, up from 41 percent in 2008. That would be the highest since 1950 (80 percent). The Congressional Budget Office, using less optimistic economic forecasts, raises these estimates. The 2010-19 deficits would total $9.3 trillion; the debt-to-GDP ratio in 2019 would be 82 percent.

There's more, but frankly that is enough. I'm posting the picture above to distract me from even thinking about this shit.

A Ponzi Scheme Worthy Of Bernie Madoff

It is otherwise known as "Social Security". The most recent reports on its health came out yesterday and -- shock! -- the already-unsustainable-in-the-long-run program is getting worse. Medicare ain't looking too healthy either:

Specifically, the trustees' report predicts that the trust fund from which Social Security payments are made will be unable to pay retirees full benefits by 2037, four years earlier than forecast a year ago. In particular, the trustees single out the financial weakness of the part of the program that subsidizes disabled Americans, saying that fund will run out of money in 2020.

Only three times in the past 15 years have the trustees predicted that Social Security would run out of money sooner than previously expected. Last year, they forecast no change from the 2007 prediction, and in 2007, they predicted that the fund would last a year longer than they had previously thought.

The year 2037 sounds kind of far off but the problem is that it is a bogus factoid. The trust fund doesn't really exist. It is a collection of government bonds that will have to be redeemed by ... the U.S. government. It will literally be taking from one pocket and putting it into another. The real number that matters is the date that Social Security starts paying out more to retirees than it gets in payroll taxes. That date is coming up much sooner:

Yesterday's report also said the Social Security trust fund will begin to spend more money than it takes in through tax revenue in 2016, one year sooner than predicted a year ago.

Administration officials said that if Congress were to act immediately, the impending gap could be filled three ways: by raising workers' Social Security payroll taxes by 2 percentage points, from 12.4 percent to 14.4 percent; by reducing benefits by 13 percent; or a combination of the two approaches. The officials briefed reporters on the condition of anonymity on the technical aspects of the trustees' findings.

Read the whole story here.

The Wall Street Journal reports that the administration has a spiffy way of addressing the cost problem with Medicare too:

The Obama administration has proposed several ways to control Medicare costs, including cutting payments to private insurers and allowing the government to negotiate drug prices with pharmaceutical companies.

The negotiation line is liberalspeak for "impose price controls on drug companies". I mean, do you really think the administration is going to have a polite back-and-forth with the drug makers? Or do you think it is going say, "Accept the price caps we want or we'll do to you what we're doing to Detroit"? I think the latter.

It's Not Quite Over

Down, down, down they go.

You know that thing that is the "biggest assets of most American consumers"? Yeah, home prices are still dropping at a double-digit pace:

Home prices fell nearly 10 percent in the Baltimore-Towson region in February, accelerating the downward spiral seen in the same period a year ago.

The drop is less dramatic than in some other cities — parts of California, Florida and Nevada are seeing drops of greater than 20 percent, according to new data from First American CoreLogic’s Home Price Index.


Nationally, housing prices fell 12.2 percent in February, when compared with February 2008. Home prices nationally and regionally have been on a steady decline over the past three months after leveling off in the fall, according to First American.

Sex: Not Recession-Proof After All?

Here's an interesting article by the Associated Press about how the various branches of the "adult entertainment industry" are weathering the recession. The bottomline? Better than the rest of us, but they are feeling the pinch too:

CHICAGO (AP) — As a bartender and trainer at a national restaurant chain, Rebecca Brown [pictured above] earned a couple thousand dollars in a really good week. Now, as a dancer at Chicago’s Pink Monkey gentleman’s club, she makes almost that much in one good night.

The tough job market is prompting a growing number of women across the country to dance in strip clubs, appear in adult movies or pose for magazines like Hustler.

Employers across the adult entertainment industry say they’re seeing an influx of applications from women who, like Brown, are attracted by the promise of flexible schedules and fast cash. Many have college degrees and held white-collar jobs until the economy soured.

“You’re seeing a lot more beautiful women who are eligible to do so many other things,” said Gus Poulos, general manager of New York City’s Sin City gentleman’s club. He said he got 85 responses in just one day to a recent job posting on Craigslist.

But the influx of people into the business is undercutting profits:

Still, analysts say, the industry isn’t immune to the economic recession. Business is down an estimated 30 percent across all segments, including adult films, gentleman’s clubs, magazines and novelty shops, said Paul Fishbein, president of AVN Media Network, an adult entertainment company that has a widely distributed trade publication and an award show.

“In the past, people have said this industry is recession-proof,” said Eric Wold, director of research for financial services firm Merriman Curhan Ford. “I definitely don’t see that; maybe recession-resistant.”

Strip club dancers and managers said they’re drawing in the same number of customers, but fewer high rollers.

“They’re not getting the big spenders,” said Angelina Spencer, executive director of the Association of Club Executives, a trade group for adult nightclubs. “They’re not getting the guys who come in and drop $3,000 to $4,000 a night anymore.”

Still, the clubs’ operating structure leaves them with low overhead and profit margins of up to 50 percent, Wold said.

The article closes with Brown explaining one of the other attractions of the business. There will always be an audience for naked women. Therefore, she says, "I have job security." Well, at least until gravity wins out.

Taibbi Calls "1) Bullshit; 2) bullshit; 3) bullshit, plus of course; 4) bullshit" And "5) Boo-Fucking-Hoo"

Matt Taibbi posts a thorough and highly entertaining flogging of former AIG exec Jake DeSantis and his resignation letter -slash- NY Times op-ed.

The whole thing is well worth reading, but these paragraphs are my favorites: responses to DeSantis's claim that he "was in no way involved in — or responsible for — the credit default swap transactions that have hamstrung A.I.G."

Are we supposed to believe that Jake DeSantis knew nothing about Joe Cassano's CDS deals? If your boss and the top guys in your firm were all making a killing selling anything at all -- whether it was rubber kayaks, generic Levitra or credit default swaps -- you really wouldn't bother to find out what that thing they were selling was? You'd really just mind your own business, sit at your cubicle and put your faith in the guys up top to fill you in if there was something you needed to know?

and

[...] Let's just say, Jake, that you're telling the truth, that you don't know anything about this toxic portfolio. If that's the case, then why the fuck does anyone need to retain you at an exorbitant salary to help unwind that very portfolio? If these transactions aren't and never were your expertise, then where the hell is your value here?

After reading the publicity stunt of a resignation letter, I never felt bad for DeSantis. But I also did not even realize that AIG-FP had only 377 employees.

I work for a large corporation, and I understand that such corporations have different branches that can operate like separate companies under the same name. It's hard to believe, however, that an executive VP of a 377-head branch "never received any pay resulting from the credit default swaps that are now losing so much money."

I am glad to see that, for whatever reason DeSantis is really returning his bonus, he is giving it directly to charity. At least the money will likely make it to some of those who actually need it. If he gave it back to the government, well, nobody really knows where the fuck the money would end up.

You Ain't Gettin It Back

At Samizdata, Brian Micklethwait kicks around the idea of telling the citizens of nations funding Western governments' debt that they're not going to get their money back:

It needs to be said that under certain circumstances easily now imaginable, many Western citizens would argue, strongly and vocally, that those idiot foreigners who are now lending money to Western governments should in due course be told: sorry sunshine, you ain't ever going to get it back. Our governments are bankrupt. Why the hell should we and our descendants in perpetuity be paying tribute to you? You knew that the money to pay you back would have to be stolen from us. You assumed we'd just cough up indefinitely. Well, we damn well won't. You are now a definite part of our problem, and telling you to take a hike is going to be part of our solution. Our thieving class is now "borrowing" money from your thieving class like there is no tomorrow, and we are not responsible for the actions of either gang. A plague on both your houses.

To avoid taking Micklethwait out of context, I should clarify that the topic of the post is that it may be healthy for some general ideas currently too politically incorrect to be discussed in mainstream politics to be discussed on the internet. And I think the lead-in example in the third paragraph of the post is counterproductive.

But he has a point in that it may be time to start seriously discussing the default option - if not as a mainstream political talk point, at least as a strategy to start some political push back in the lending nations to stop funding these trillions in Western government debt.

How To Make Money In A Recession: Boobies

Yeah, the recession is hurting everyone ... except apparently Hooters and its imitators:

They're called "breastaurants."

You've seen them or even eaten there, places like Hooters or Wing House. They are hot spots where wings, sports, beer and yes, beautiful women, all converge.

In an economy where businesses are losing money and closing, these breastaurants are raking in the cash.

Hooters, which originated in Clearwater, posted huge profits last year to the tune of one billion dollars.

"People get in a fun atmosphere around Hooters, and I think they feel that," Bob Passwaters tells us. He's been doing marketing for Hooters for nearly two decades. "Of course, you have the girls and the food, kind of a neighborhood escape."

An escape where the food is inexpensive, and entrees are under $10.

These breastaurants offer a carefree atmosphere where Passwaters says, people can forget about the bad economy and eat a good meal.

"They just love getting away from sitting at their computer seeing all the bad news in the markets going down and this is going down," Passwaters told us. "Heck, let's go to Hooters and have some chicken wings and relax a bit."

The above picture is from the Tilted Kilt Pub & Eatery, where I presume the girls will put a tilt in your kilt.

No Shit

So maybe Obama's budget assumptions of future economic growth are wildly optimistic and most likely unreachable. Color me shocked.

Washington » The White House's top budget official declared on Sunday that "fundamentally, the economy is weak" while saying the administration's own financial predictions could need a revision by midyear.[...]

Orszag said. "Let's see what happens, let it work. We'll have a mid-session review later in the year. We'll have an opportunity to revise the assumptions at that point."

That revision, though, seemed unavoidable.

Obama's budget assumes the economy will grow at about 3.2 percent. Given climbing unemployment, shrinking credit and a general frustration over a crumbling economy, that now seems unrealistic.

Full story here.

During a Reccession Twenty-Somethings Lose Their Jobs Too

It shouldn't come as a total shock to twenty-somethings with limited experience and fat paychecks that when cuts are made they might be the first to go. Especially if you are working on a one year contract paying you $65,000/year with an internet start-up company. Let me repeat -- AN INTERNET START-UP COMPANY. Baltimore Sun:

At 29, Cynthia Schatoff has been laid off twice. After three years as a graphic artist at a local firm, she was let go in April. It wasn't easy finding a job as the economy worsened, but she did. In September, she lost that job.

After six months at an Internet startup, Loretta Goodridge, 27, lost her $65,000-a-year contract in January as seed money dried up.

A few years ago, employers wooed young workers with bonuses, perks and trips to ski resorts. Now, more people in their 20s are losing jobs and getting by on unemployment benefits and help from family.

Whoa. Back the fuck up. What's this about "wooing young workers with bonuses, perks and trips to ski resorts"? Unless the author is talking about a $200 Christmas bonus and a ride inhaling noxious fumes on the Duck boat, I clearly missed out on this pre-recession fad. Thinking about it some...the only perk I've ever had -- in my more than few years as a twenty-something in work force -- is free coffee and water at my last job. Well, one time I got to go to Pittsburgh in November. It was a great time. And you'll notice I say "last job". I'd kill for a fucking water cooler at this place, let alone free coffee.

More:

"I got my MBA to have something permanent and stable," said Goodridge, who graduated in May from the University of Maryland's Robert H. Smith School of Business. "I've spent more time looking for a job than I've been in one."

You mean to tell me that the myth of needing to go to graduate school might turn out to be...a myth? Who would've guessed that loading yourself up with debt for an extra degree might not always be a guarantee for future professional success?

The article ends:

Goodridge, who did not quality for unemployment benefits, is cutting expenses, clipping coupons, tapping into her savings, using a no-interest credit card, got a six-month unemployment deferment on her student loan and is getting help from her mother. But "at 27, you don't want to rely on her," she said.

Meanwhile, Goodridge is keeping busy, attending networking events and trying to meet at least two to three new people a week.

"I thought with my education it would be easy to get a job and all the opportunities," she said. "That has been different than what I thought going into the whole thing.

Before I say anything else, let me add that despite my snarkiness I do feel compassion for anyone who loses their job for just about any reason; and that goes double for a time when it really is difficult for a young worker to find a replacement job. [And I'm not just saying this because Loretta Goodridge will google herself, find this blog post and then send me an angry email. Really. It happens all the time.] But I don't feel too bad for people, especially younger people with savings, who take risks in the labor market that don't pay off. It was a risk to pay for a MBA with debt. It was a risk to work for an internet start-up company. I feel the same way for young adults who made a shit load of money at investment banks and are now losing their jobs. With greater risk comes a bigger potential payoff, but also there has to be a downside.

My advice for twenty-somethings in today's labor market? Follow my lead and find a position that has the responsibility for multiple revenue streams within the organization. Then take the job for a few thousand LESS than anyone else in their right mind. That spells job security my friends. Or worse case scenario they lay you off and you start collecting unemployment; which in this case would actually be raise. Win-Win situation...

Full article here. Thanks to my roommate for the heads up on the article.

Fairy Dust A Key Ingredient Of Obama Economic Policy

Apparently that whole "audacity of hope" thing extends to the Obama administration budget policies too. From the Wall Street Journal:

WASHINGTON -- The White House is relying on a set of optimistic economic assumptions in its budget that allows the Obama administration to claim a steeper drop in the deficit in coming years than many mainstream forecasters expect.

The budget forecast assumes that U.S. gross domestic product -- the nation's total economic output -- will decline about 1.2% this year, while private forecasts -- measured by the Blue Chip survey -- show a 1.9% decline. Next year the Obama team forecasts 3.2% growth, while professional forecasters expect a 2.1% gain.

Economic assumptions are vital to the budget forecasts. Stronger growth translates into more profits for businesses and greater income for individuals. That means higher tax receipts, which can reduce the nation's annual deficit and total debt.

The Obama budget puts the deficit at less than $600 billion starting in 2012 from $1.75 trillion this year. Getting to that point requires GDP to rise more than 4% a year by then -- meaning the U.S. would quickly return to growth rates similar to the boom years of the 1990s -- after the worst financial shock since the Great Depression. Such growth is more than a full percentage point above private-sector growth estimates for 2011 and 2012.

Hey, That's 6 Billion Jobs Lost Every Year!

"Every month that we do not have an economic recovery package 500 million Americans lose their jobs. I don't think we can go fast enough to stop that."

-- House Speaker Nancy Pelosi. This has already been all over the web but it is still worth noting that one of our top political leaders has less than a grade school education in math.

Republicans Fearful Of Obama's Package

The folks over at Politico are having a little too much fun, but can you blame them?:

House Speaker Nancy Pelosi said the [stimulus] bill was on track for passage by February 16, while Republicans continued to voice their opposition.

“We expressed our concerns about some of the spending that’s being proposed in the House bill,” House Minority Leader John Boehner said after meeting with Obama.

“How can you spend hundreds of millions of dollars on contraceptives?” Boehner asked. “How does that stimulate the economy?”

Boehner said congressional Republicans are also concerned about the size of the package.

Pot: A Recession-Proof Industry?

Maybe so. It now accounts for two-thirds of the economy in Mendocino County, California:

[Ukiah Morrison, a Mendocino pot grower] walks a fine line. He grows as much marijuana as he can without triggering a legal crackdown. He can do that because authorities here are overwhelmed by the sheer number of growers. They’re also hampered by conflicting state, federal and county laws governing marijuana.

Marijuana is the major cash crop here. A county-commissioned study reports pot accounts for up to two-thirds of the local economy.

“I don’t think there’s anything more important in this economy. To take this out would be a major blow,” said Morrison.

Though reliable numbers are hard to come by, marijuana growers in Mendocino County generate an estimated $1 billion a year. That makes the area home to a sizable chunk of a national market for marijuana believed to be in the tens of billions of dollars.

Interesting Libertarian tidbit from the story: The market share for northern California product has grown since the state began cracking down on the U.S.-Mexico border. This had the effect of cutting off the supply of Mexican weed.

[Mendocino grower Eric Sligh, pictured above] “There’s a very developed system of brokering marijuana that exists all throughout California; it’s just like a commodities broker on Wall Street,” he said. “They’re getting it for the lowest price they can get it, and they’re bringing in the buyer and trying to get the buyer to pay the highest price they can. So, the margin in between is where they make their money.”

The economics of this drug are simple and attractive. It costs an estimated $400 to grow a pound of pot. One pound sells for $2,500 to a middle man. It then yields $6,000 on the street. With low start-up and overhead costs, marijuana is the most profitable drug of all, according to local law enforcement officials. With that kind of profit margin, marijuana is increasingly filling the gap left by other failing industries like lumber and fishing.

“If we didn’t have marijuana, what would this county be like?” said Sligh. “I think we’d all be selling Amway. I mean what else are we going to do?”

Prostitutes: Keep Our Profession Illegal!

The mayor of Las Vegas is pushing to legalize prostitution in the city by creating an official red light district. Why? Well, for the children of course. And by "for the children" he means "I want to tax the hookers":

[Mayor Oscar] Goodman said, “I’ve met with folks from that industry who make a very compelling argument that it could generate 200 million a year in tax dollars, and that would buy a lot of textbooks, pay for a lot of teachers.”

So what do the hookers think of paying more taxes and being forced to work in brothels instead of independently? Shockingly, they are not thrilled one told the L.A. Times:

"Since many customers are critically concerned with discretion and prostitutes prefer their 'freedom,' I believe the idea may appear much more appealing than the reality of the situation and what is necessary to make it happen."
***
In any other industry, the brothel system itself would seem obviously a bad deal for the workers. The brothels charge room and board to the workers for lodging as well as take up to half the money earned by them from customers, technically often including tips. So, you could in theory work a week and lose money after you pay your rent to the brothel. Women have no privacy rights even in their rented rooms which can be searched by the brothel owners for hidden cash or drugs at any time. The sacrifice of "freedom" is real.

Others strongly object to the money. One local high-end illegal escort I reached who opposes legal brothels in Vegas told me: "I would never give a brothel owner half of what I earn, that is a legal word for pimp."

Is This Not A Sign Of The Apocalypse And The Coming Of The Anti-Chrysler?

So, what happened to that $17 billion we gave the auto industry late year so they could survive? It's being used spent wisely, right? Well ...

DETROIT, Jan 20 (Reuters) - Just as Chrysler LLC announced a sequel to its ownership saga, the struggling automaker also unveiled plans to help underwrite the fourth installment of the "Terminator" movie series.

Chrysler, which has received $4 billion in emergency aid from the U.S. government, has a deal to place its vehicles in cameo roles in "Terminator Salvation," scheduled for release later this year and starring Christian Bale, executives said on Tuesday.

Financial terms of the sponsorship deal were not disclosed.

"This spring, Terminator 4 comes out and we will be one of the sponsors," Chrysler director of media Susan Thomson said in a presentation at the Automotive News World Congress. "We have a following with the Terminator movies and we are going to continue with that."

First released in 1984, "The Terminator" starred now-California Gov. Arnold Schwarzenegger as a cyborg sent from the future to kill a woman whose son would lead a resistance to a worldwide takeover by machines.

The film led to two sequels and a television series.

Under private ownership, Chrysler has cut 36 percent of its employees, taking its combined blue-collar and white-collar staffing to the lowest level since 1934.

Under the terms of its federal bailout, the automaker must submit a restructuring plan next month and demonstrate it can be made viable by the end of March. It has said it will seek another $3 billion in U.S.

On the other hand it kind of makes sense. What better way to sell your cars than to get consumers to identify them with a post-apocalyptic wasteland were the machines are out of control and threaten to destroy us all? It almost seems like a metaphor ...

The Man Who Sold The World?

Is an aging 70s glam rocker behind the world financial meltdown? The UK Daily Mail investigates:

He's always been a trendsetter. But could David Bowie have caused the latest fad sweeping the nation - the credit crunch?

It may sound like a ridiculous question, but it's not as mad as it seems. Even when it comes to finances Bowie leads the way - and back in 1997 he did something called 'securitisation'.

He thought: 'I have a lot of money coming in over the next ten years from my back catalogue, but I'd rather have the cash now and not have to wait.'

He produced some bits of paper - Bowie Bonds - and said: 'Whoever buys these gets my royalties.'

It meant he no longer had the money coming in but instead had a lot up front. His investors were guaranteed a decent income. It was a good deal all round.

And the banks were catching on to the idea. They thought: 'We have billions out there in mortgages which are going to pay us back very slowly. Why don't we sell those and get the money now?'

So the banks started doing what Bowie had done - in a big way.

It was a complete rebuilding of what a bank does. Normally, a bank borrows from people like you and I, then lends it out.

But now the bank was lending the money - and selling the loan on elsewhere.

Read the rest here.

And you mocked the people who said rock n' roll was the Devil's music? Well, who's laughing now?

Hold Off On that Bailout

Sex is still selling:

Point-and-shoot cameras, CDs and fancy woven handbags may languish on store shelves. But women like Ms. Weller, a nurse from Frederick, Md., are willing to splurge, spending as much as $100 or more for a pulsing rubber duckie or bath sponge, a vibrating bullet or lipstick tube. Their fascination with such battery-operated novelties is rendering luxury sex toys a thriving sector in an otherwise listless economy. [...]

Even in a lingering recession, “sex will always sell,” said Analena Graham, an owner of Dascha, where cone-shaped vibrators and jewel-tone fur ticklers are showcased alongside made-to-order corsets and aromatic oils. “You might tell yourself, ‘I can do without that $400 sweater,’ ” Ms. Graham went on, “ ‘but I would still like to have that rechargeable vibrator.’ ”

Also popular are pulsing cigars that turn into pendants, and pearl wrist restraints that double as necklaces. People are paying as much as $250 for similarly kinky designs, said Robyn Goodman, chief of American operations for Myla, a British-owned boutique chain and Web site. “They don’t feel like they’re getting a bit of smut,” Ms. Goodman said. “They feel like they acquiring a very boudoir-style, high-end luxury.”

Perhaps it is just me living in my frigid, conservative world; but I think that when you are spending $200-450 on vibrators you may not be feeling the Great Recession of '08-'09. in fact, you are probably a single women in your 30's with no dependents other than a few cats. Nothing wrong with that, I personally like desperate middle aged women, but none-the-less you probably aren't hit hard by a weakening economy.

Full story here.

The Economy Has Truly Gone Tits Up

The economy has gotten so bad that the breast implant business is, well, sagging. From the NY Daily News:

With the stock market in a tailspin and home values dropping, demand for breast implants is sagging too, city docs say.

"The number of the bigger surgeries has gone down for sure," said Dr. David Shafer, a Manhattan plastic surgeon. Breast enlargement surgery can cost anywhere from $4,000 to more than $10,000.

"People are definitely thinking twice right now," said Dr. Sydney Coleman, another Manhattan surgeon. He said his colleagues in the lucrative field are starting to feel the pinch. "They're complaining about it," he said, "and they don't usually complain."

When You WIsh Upon a Star.....You Can Get $17.4 Billion

I return from a mini-vacation happy to report that Disney World is still attracting guests during this the greatest economic collapse since the Great Depression. Good news. Unfortunately I return from one fantasy world right back into another one, where we as a nation can just "bail out" any industry we want to and any price they want. Free money, right? It's not like easy money got us into this mess....

This About Sums It Up

I mean really, screw the Democratic process and the free market. We have failing industries and union jobs to protect.

How Fannie n' Freddie Entertained Their Elected Overseers

The Associated Press put out a good, if infuriating, story explaining exactly how those entities managed to get the elected officials that were supposed to be overseeing them eating out of their hands instead:

WASHINGTON – From a hefty lobbying budget to the use of free baseball tickets, Freddie Mac fended off any meaningful regulation in the years before the housing mortgage giant crashed, records obtained by The Associated Press show.

When the Washington Nationals played their first-ever baseball game in the nation's capital in April 2005, two congressmen who oversaw Freddie Mac had choice seats — courtesy of the very company they were supposed to be keeping an eye on.

Efforts to tighten government regulation were gaining support on Capitol Hill, and Freddie Mac was fighting back.

According to internal Freddie Mac documents obtained by the AP, Reps. Bob Ney, R-Ohio, and Paul Kanjorski, D-Pa., spent the evening in hard-to-obtain seats near the Nationals dugout with Freddie Mac executive Hollis McLoughlin and four of Freddie Mac's in-house lobbyists. The two congressmen were both members of the House Financial Services Committee.

Okay, so the congressmen could be bought, but at least they weren't cheap. Oh, no, wait. They were:

The ticket to attend the opening game of the Washington Nationals was valued at less than $50, which was the congressional gift limit at that time, Kanjorski said in a statement Monday.

The Nationals tickets were bargains for Freddie Mac, part of a well-orchestrated, multimillion-dollar campaign to preserve its largely regulatory-free environment, with particular pressure exerted on Republicans who controlled Congress at the time.

At least this corrpution didn't hurt the rest of us. Oh, no, wait. It did:

The tactics worked — for a time. Freddie Mac was able to operate with a relatively free hand until the housing bubble ultimately burst in 2007.

Now Freddie Mac and its sister company, Fannie Mae, are in financial collapse and under government control. Congress is investigating how it all happened. Lawmakers have planned a hearing Tuesday.

Oh, and guess who is one of the leading whores:

Internal Freddie Mac budget records show $11.7 million was paid to 52 outside lobbyists and consultants in 2006. Power brokers such as former House Speaker Newt Gingrich were recruited with six-figure contracts.

Client #9 Is Back In The Game, Baby

Meet the media's latest financial columnist:

NEW YORK (Reuters) - Former New York Governor Eliot Spitzer, who resigned earlier this year over his involvement in a prostitution ring, will write a column for online magazine Slate.com about the economy and financial regulation.

The column, which will be called "The Best Policy," will appear every other week, Slate Group Editor Jacob Weisberg told Reuters in an interview.

Excuse me, but what does this guy know about finance? He's the only Jew ever to have paid above retail price for something, for crying out loud.

Oh well, at least this time he'll only be able to screw over his new employers at Slate.com.

So, will Spitzer write the only column by him that I am interested in reading? The answer is maybe:

David Plotz, who edits Slate.com, said Spitzer has not said whether he will write about the events leading to his resignation, but, "if he chooses to write about that in Slate, we'd be happy to publish it."

UPDATE: Here's his first column, and, no, it is not about hookers. It's about why the bailouts are a bad idea. Maybe there is hope for the guy yet.

Detroit, We Have A Problem

In the latest government bailout news, the United Auto Workers conceded today they'll have to make some concessions to help the Big Three automakers become economically competitive again. Or at least competitive after they've burned through the $34 billion in loans they are begging the government to give them. Wait, wasn't it $25 billion? Oh, wait that was last week.

Oh, and another thing: Why would the UAW's sacrifice be necessary? The Detroit News offers a clue :

The union has lost more than 119,000 auto workers since 2006 and now represents 139,000 active workers. It agreed last year to a contract that reduced total hourly pay and benefits for new hires to about $26 from about $78, and new hires also wouldn't be eligible for pensions. The contract also called for creating union-managed trusts that will take over retiree health-care obligations starting in 2010.

UAW Local 600 delegate Gary Walkowicz, who works at the massive Ford Rouge facility in Dearborn, said he was opposed to reopening the contract.

"We've already given enough," he said. But many other delegates said they understood Detroit automakers were facing collapse.

Whip out your calculator. The UAW had negotiated a deal that until last year got new hires over a $160 grand a year. That's salary and benefits, but still, holy fucking shit. I wonder what the 20-year vets are getting. With labor costs like that it's no fucking wonder the car makers cannot compete anymore.

And the unions are still hanging on to those absurd salaries even as their own industry faces bankruptcy. The last renegotiation had the UAW simply cut off the guys who haven't even been hired yet while preserving the salaries for the existing guys. Some sacrifice. The current deal is only slightly better, per the Times:

The U.A.W. president, Ron Gettelfinger, said the union would suspend its jobs bank, which requires carmakers to keep paying laid-off employees, and would consider changes to its labor contracts. The union has also agreed, Mr. Gettelfinger said, to delay the payments that the automakers must make to a new retiree health care fund called a Voluntary Employee Beneficiary Association, or VEBA.

Or to put it another way, they're giving up two of the scams they use to bilk the industry out of even more money. Wow, how selfless. Let's break out the Springsteen ballads, shall we?

Shikha Dalmia is right. Let the automakers go bankrupt. It is the only way to reform this mess.

Don't Count the American Consumer Out...Yet

For an economy teetering on the edge of collapse, some good news from this past holiday weekend. Holiday shopping up 7% from last year:

The National Retail Federation, adding up sales Thursday through Saturday and projected sales for Sunday, said that each shopper spent about 7 percent more this year than last year. Shoppers spent an average of $372.57 Friday though Sunday, according to the federation, a trade group.

“It seems that not only did retailers do a good job of attracting shoppers but it seems that shoppers were also excited again to take part in the tradition of Black Friday weekend,” said Kathy Grannis, a spokeswoman for the federation.

When I looked at the numbers coming out for this weekend's spending and what projections are for the holiday season in total, I was shocked at how the average dollar amount spent by shoppers for Christmas. It's a lot. Like in the $700 range. I had no idea people spend that much on Christmas. I usually just masturbate into a sock and give that out to friends, family, toys for tots, etc. It's always a winner. But a dollar amount of $700 reminds how far the American consumer could fall if that's what was in the cards for the next 5 years; but for now let's just enjoy the good news...

More good news, but not as widely talked about -- A good weekend at the box office:

Consumers opened their wallets this weekend not only for Black Friday retail sales but also for the movie industry, which recorded its second-highest Thanksgiving weekend box office ever.

Ticket sales for the five-day period totaled $236 million, spurred by the Warner Bros. movie "Four Christmases," according to box-office tracking firm Media by Numbers. The only Thanksgiving weekend with higher receipts came in 2000 when theaters rang up $244.4 million with such movies as "How the Grinch Stole Christmas" and "Unbreakable."

Great. Hey, so maybe this rally in the markets could keep the momentum going from last week with this positive news about the American consumer? No, fat chance....

This Week In Prostitution

Once again, we here at TtP are dedicated to bringing you the latest news in the vitally important economic sector. So here we go, sailor:

Ho's Down, Economic Indicators Up in Middle East -- Here's one of those stories that makes you wonder how exactly the reporter did his research. It's headlined Prostitutes in Syria raise prices, improve services.

Defying the worldwide economic downturn, prostitutes in Syria are experiencing boom times as more robust economic activity in Syria has created a booming market for their profession due to an inflow of investments in the private sector that have increased the disposable incomes that fund entertainment and indulgence.

Prostitutes in Syria hoping to cash into the economic boom are accordingly raising their prices and improving their highly sought services for better customer satisfaction as the demand for prostitution peaks.

"Prostitution is gradually becoming a legitimate profession, considered mainly as part of tourism."

From AlArabiya.net.

Ho's Down, Economic Indicators Down In Nevada -- Things are worse here in the states, where even in the popular places more and more people are getting laid off as opposed to getting laid:

The Mustang Ranch is a multimillion-dollar business and, despite the unique product, it's run with sophistication and a keen eye on the profit margin. Austin is a former prostitute and shrewd businesswoman who never goes anywhere without her German guard dog named Cita. These days, she is worried. Despite strong demand, the clients are spending less money.

"Well, recently, business has dropped off dramatically dollar-wise, a lot of men coming in, a lot of parties, but less money," she said. "They don't have as much to spend."

***

The irony for Austin is that while the money is drying up, more women are applying for jobs. "And the age group is going older," she said. "I had a 72-year-old apply for a job."

She says the poor economy has forced her to lay off 30 percent of her staff, unheard of in a business generally regarded as a printing press for making money.

Read the whole story here.

Child Prostitution Stings Nab Adult Prostitutes -- The FBI and the Justice Department operates a program called "Innocence Lost," which is intended to combat child prostitution. It has task forces set up in 23 cities around the country. So how are they doing? Well ABC News sent a news crew along to one of their stings. What they discovered is that the task force is a doing a bang up job with your tax dollars:

When the police had enough evidence, officers came in the hotel room to arrest the woman and bring her to another room for questioning. It turned out she was not in fact underage, but in her early 20s.

Soon after, a second woman arrived. She was 23.

They're not exactly being exploited either:

The second woman told Bob that she got involved with escort services after working at a strip club in Atlanta, where the VIP room strippers performed sexual services for men.

"I like sex, sex is my favorite thing," she said.

Get Up, Stand Up, Be Counted

Prostitutes, higglers and ganja farmers could soon find their output captured in local official data as part of efforts by the Statistical Institute of Jamaica (STATIN) to accurately measure the country's gross domestic product (GDP).

"We will try to capture underground production, legal and illegal," Anette McKenzie, deputy director general of STATIN, said yesterday, as the agency launched its Jamaican System of National Accounts.

According to McKenzie, prostitution is already captured in the data and efforts will be made to capture information on the under ground and informal economy.

It is a move that has been welcomed by Prime Minister Bruce Golding, who noted that the informal sector is estimated to be 40 per cent of the formal economy.

Not only is the "informal sector" an estimated 40% of the economy but it is growing faster than the rest of the economy, according to the Jamaica Gleaner. So, umm, yeah, I'd say adding those people could give a better sense of Jamaica's GDP. Read the whole story here.

Stockpile Gold, Canned Goods and Magazine Porn

A selection of some stocks from my portfolio and watch list after today's bloodbath.
I'm thinking tomorrow might be a good day to liquidate all my assets and buy as many drugs and hookers that I can. See how long I go until I drop dead in a warm crotch of a loving prostitute.
--
Name Price Change MktCap
CIT 4.59 -1.88 (-29.06%) 1.31B
NTAP 13.40 +0.15 (1.13%) 4.39B
MOO 26.00 -0.55 (-2.07%) 624.20M
SBUX 11.01 -0.52 (-4.51%) 8.04B
PXE 13.87 -1.68 (-10.80%) 80.45M
GS 101.35 -11.65 (-10.31%) 40.08B
AIG 2.39 -0.80 (-25.08%) 6.43B

Our Ever-Vigilant Congress

How did we get into the mortgage mess in the first place? This Youtube clip, while obviously put together by some partisan Republican, is pretty damning. As the soundbytes from 2004 show, a major problem was the Democrats' refusal to ever admit that there was a problem with the Fannie Mae and Freddie Mac. Congresswoman's Maxine Waters' comments are particularly stupid in retrospect:

"Through nearly a dozen hearings where we frankly were trying to fix something that wasn't broke. Mr. Chairman. We do not have a crisis at Freddie Mac, and in particular at Fannie Mae, under the outstanding leadership of Mr. Franklin Raines."

This would be the same Franklin Raines who was found to be cooking the books and helping to create the subprime crisis. Hmmm, I wonder how all of this slipped past Congress's notice?

It Was a Nice Afternoon of Golf, Away from the Office. Say, Did Anyone Hear Anything About the End of Our Financial System Today?

The markets tumble as the House defeats the financial Bailout/Rescue/$700 Billion whatever-the-fuck-you-want-to-call-it plan that, if you listen to just about every pundit everywhere, would have saved us from the financial apocalypse. They may be right. But they could also be wrong, and my uninformed opinion that I come to by watching lots of porn* and doing some serious economic thinking after, is that if we are on the brink of collapse of the magnitude they warn us of; then I doubt this action by the government would stop it. I doubt any government action would.

On the upside, this makes for some great CNBC viewing.

*Some links may go to pornography therefore may not be suitable for workplace viewing. If it is suitable for your workplace viewing , please contact me with your employer and any open positions there may be.

I, For One, Welcome Our New JP Morgan Chase Overlords

Another day, another collapse of a major financial institution. This time it was Washington Mutual, which was bought by JP Morgan Chase. The same company that bought Bear Stearns. Thus continues a period of consolidation in which a few companies have survived the mortgage meltdown and become bigger and stronger in the process. Oh, and with fewer rivals too. That's all good, right?:

The transaction gives JPMorgan roughly 5,400 branches, and fulfills JPMorgan Chief Executive Jamie Dimon's long-held goal of becoming a retail bank force in the western United States.

It comes four months after JPMorgan acquired the failing investment bank Bear Stearns Cos at a fire-sale price.

"Jamie Dimon is clearly feeling that he has an opportunity to grab market share, and get it at fire-sale prices," said Matt McCormick, a portfolio manager at Bahl & Gaynor Investment Counsel in Cincinnati. "He's becoming an acquisition machine."
***
Thursday's transaction makes JPMorgan close in size to Citigroup, now the largest U.S. bank by assets.

JPMorgan has surpassed Bank of America in size. That bank would become the largest U.S. bank once it completes its planned purchase of Merrill Lynch, expected in the first quarter of 2009.

Some Lawmakers Taking Financial Hits Too

Sept. 19 (Bloomberg) -- The market storm that brought down Lehman Brothers Holdings Inc., American International Group Inc. and other pillars of U.S. finance may have also blown holes in the portfolios of House Speaker Nancy Pelosi, Senator John Kerry and more than 50 other members of Congress.

Pelosi, in her most recent financial disclosure form, reported that her husband owned between $250,000 and $500,000 of stock in AIG, which ceded majority control to the U.S. government this week in exchange for $85 billion of loans.

Kerry, the 2004 Democratic presidential nominee, disclosed that his wife, Teresa Heinz Kerry, had more than $2 million of AIG stock at the end of 2007, when shares were worth $58.30. AIG has fallen 85 percent this week to close yesterday at $2.69. The lawmakers' aides didn't respond to calls seeking comment.

Altogether, 56 senators and representatives had stakes in AIG, Lehman, Fannie Mae, Freddie Mac, Bear Stearns Cos. or IndyMac Bancorp Inc. -- some of the biggest casualties of the market bloodbath -- according to the Center for Responsive Politics.

More here, via Bloomberg. Hat Tip: The Drudge Report.

Yeah, it's kind of amusing until you realize that these people are going to have a hand in crafting any legislative response to the meltdown. So we can be sure now that they'll be looking to extract their pound of flesh from whomever becomes a convenient scapegoat for the meltdown.

The Latest Wall Street Fashion: Brown Trousers

As our economy is engulfed by a disaster so bad that its shocks have actually forced the Russians to shutdown their stock market, you may find yourself wondering, "How the fuck did we get here?"

Well, what precipitated the current crisis was the collapse of the subprime mortgage market. And how did the that market get big enough to take down the rest of economy? Well, this eerily prophetic 2000 article from the Manhattan Institute's City Journal goes a long way towards explaining things:

The Clinton administration has turned the Community Reinvestment Act, a once-obscure and lightly enforced banking regulation law, into one of the most powerful mandates shaping American cities—and, as Senate Banking Committee chairman Phil Gramm memorably put it, a vast extortion scheme against the nation's banks. Under its provisions, U.S. banks have committed nearly $1 trillion for inner-city and low-income mortgages and real estate development projects ...

In other words banks were pushed into okaying these CRA-related loans in order to meet the political goal of expanding homeownership. It worked like this: If the banks did not make enough "community" loans for low-income people they were marked under CRA's rating system as racist redliners. The problem was a lot of the people who got these loans eventually had a hard time making the payments. A wave of potential defaults built up over the years:

Even without a no-down-payment policy, the pressure on banks to make CRA-related loans may be leading to foreclosures. Though bankers generally cheerlead for CRA out of fear of being branded racists if they do not, the CEO of one midsize bank grumbles that 20 percent of his institution's CRA-related mortgages, which required only $500 down payments, were delinquent in their very first year, and probably 7 percent will end in foreclosure. "The problem with CRA," says an executive with a major national financial-services firm, "is that banks will simply throw money at things because they want that CRA rating." From the banks' point of view, CRA lending is simply a price of doing business—even if some of the mortgages must be written off. The growth in very large banks—ones most likely to sign major CRA agreements—also means that those advancing the funds for CRA loans are less likely to have to worry about the effects of those loans going bad: such loans will be a small portion of their lending portfolios.

Looking into the future gives further cause for concern: "The bulk of these loans," notes a Federal Reserve economist, "have been made during a period in which we have not experienced an economic downturn." The Neighborhood Assistance Corporation of America's own success stories make you wonder how much CRA-related carnage will result when the economy cools. The group likes to promote, for instance, the story of Renea Swain-Price, grateful for NACA's negotiating on her behalf with Fleet Bank to prevent foreclosure when she fell behind on a $1,400 monthly mortgage payment on her three-family house in Dorchester. Yet NACA had no qualms about arranging the $137,500 mortgage in the first place, notwithstanding the fact that Swain-Price's husband was in prison, that she'd had previous credit problems, and that the monthly mortgage payment constituted more than half her monthly salary. The fact that NACA has arranged an agreement to forestall foreclosure does not inspire confidence that she will have the resources required to maintain her aging frame house: her new monthly payment, in recognition of previously missed payments, is $1,879.

That's not the end the only cause. The author goes to list a number of actions the Bush Administration could have pursued to prevent the current crisis, none of which were done to my knowledge. Meanwhile Fannie Mae and Freddie Mac grew out of control while their Congressional patrons, Democrats primarily, attacked anyone who dared to suggest the entities needed to be reformed. And the titans of Wall Street expressed no alarm over what was an obvious real estate bubble fatter than Chris Farley on the day after Thanksgiving. So we all got fucked.

It's Days Like this that Make One Happy to Be Working for a Non-Profit

Today there are some awful long faces in the building that we share with Constellation Energy. One of the two remaining Fortune 500 companies based in Baltimore is sold to an Iowa based energy company after Constellation had lost 60% of its share value and was in danger of having it's credit rating slashed by S&P.

DES MOINES, Iowa - Iowa-based MidAmerican Energy Holdings Company has reached a tentative agreement with Constellation Energy to purchase outstanding shares of Constellation for $4.7 billion, or $26.50 per share, Constellation announced today.

The two companies plan to sign a definitive merger agreement by the end of business Friday.

After the deal is signed, Constellation will issue $1 billion in preferred stock to MidAmerican, the companies said.

The deal was unanimously approved by both companies' boards, but still requires approval from shareholders and governmental officials and is expected to close within nine months.

Stocks Soar

It's amazing what nationalizing a couple of the biggest financial institutions in the world will do for the stock market...

How Fannie n' Freddie Got Fucked Up

The Washington Post has a good article in today's edition noting that for years people pointed out the warning signs regarding Freddie Mac and Fannie Mae. Thing was, too many people in Congress and the government had a piece of the action. So rather than pursue any kind of reform that would ensure the companies were solvent, they bullied and intimidated the people who dared raise any warnings:

From a Washington think tank to the halls of Congress, from the Treasury to the Federal Reserve, from the Clinton to the Bush administrations, critics of the government-sponsored mortgage giants have long argued that they were allowed to operate with financial cushions that were too thin to support their far-reaching financial risks.

The critics argued that regulators should be empowered to require deeper capital cushions at Fannie Mae and Freddie Mac, but their persistent efforts were thwarted in the face of the companies' formidable lobbying. Many members of Congress defended the companies, contending that efforts to rein them in were tantamount to an assault on housing.

They were quite brazen about it too:

The political battle lines were drawn by 2000, when a senior Clinton administration official called on Congress to take steps that might have diminished the companies' special status. Treasury Undersecretary Gary Gensler also urged that regulators be given more power to set capital requirements for Fannie Mae and Freddie Mac.

The companies fought back.

"We think that the statements evidence a contempt for the nation's housing and mortgage markets," Freddie Mac spokeswoman Sharon J. McHale said at the time.

Even after Freddie Mac was shown to have manipulated earnings, Congress remained deadlocked over legislation to create a stronger regulator. Opposing one such bill in 2004, Sen. Charles E. Schumer (D-N.Y.) argued that a hostile regulator could use the proposed powers to choke the companies.

When a federal regulator accused Fannie Mae of cooking its books to increase bonuses, lawmakers lined up to denounce the regulator. Rep. William L. Clay Jr. (D-Mo.) said a House panel had no business holding a hearing on the matter -- "unless this is truly a witch hunt." Fannie Mae was later found to have overstated profits by $6.3 billion.

Former representative Richard H. Baker (R-La.), who chaired a subcommittee that oversaw the companies, struggled for years to rein them in and tried to show they were being managed for the enrichment of their executives. When Baker obtained data on Fannie Mae pay, a lawyer for the company threatened him with personal liability if he made it public, Baker recounted last week.

Also worth checking out, Mickey Kaus' dismantling of Paul Krugman's recent column on the matter.

Truckers Now Spending Whore Money On Gas Instead

The economic downturn continues to impact honest, hard-working folks, according to this AP story:

RENO, Nevada (AP) -- Rising fuel prices are putting a pinch on the world's oldest profession.

Nevada brothels that cater to long-haul truckers are offering gas cards and other promotions after seeing business decline as much as 25 percent from a year ago, industry officials said.

Geoffrey Arnold, president of the Nevada Brothel Owners' Association, said truckers account for up to 75 percent of business at the state's rural brothels along Interstate 80 and U.S. Highway 95.

He said business is down about 19 percent at his two northern Nevada brothels along I-80: Donna's Ranch in Wells and Donna's Battle Mountain Ranch.

"We're being affected by the economy like everybody else," Arnold said. "Times are tougher ... and truckers have less money to spend. They're not high-rollers anymore."
***
Hardest hit are independent truckers, who must pay for their own fuel, said George Flint, a lobbyist for the brothel owners' association.

"So there goes your disposable income to have a little fun," Flint told the Reno Gazette-Journal.

Since January, the number of long-haul trucks based in Nevada has dropped by 4,100, or 12 percent, said Paul Eons of the Nevada Motor Transport Association.

So, there is a Nevada Brothel Owners' Association and it has a lobbyist? Wow, how does one get that job?

House Rent Boogie

An op-ed in today's Washington Post by Charles Steele Jr. argues that blacks and Latinos are taking the brunt of the mortgage meltdown:

The subprime mortgage fiasco is sending tremors through Wall Street and has brought the U.S. economy near (if not into) recession. For African Americans and Latinos -- the primary victims of the debacle -- the mortgage meltdown may widen the considerable gap in wealth that already exists between whites and people of color. Even worse, some proposals to fix the problem of limited access to credit may end up doing more harm than good.

"We estimate the total loss of wealth for people of color to be between $164 billion and $213 billion for subprime loans taken during the past eight years. We believe this represents the greatest loss of wealth for people of color in modern U.S. history," the Boston-based organization United for a Fair Economy noted in its report "Foreclosed: State of the Dream 2008."

A little later in the same article Steele notes this factoid:

As a result of laws enacted to address housing discrimination, the rate of African American homeownership rose from 42.3 percent in 1994 to 49.1 percent in 2004, the highest level in U.S. history. As great an achievement as that is, a 49.1 percent rate is about where white U.S. ownership stood in 1900.

Umm, Chuck, did it occur to you that there might be a connection between these two things? That adjusting the laws to put people whose finances may not be that great into homes may be one reason why we're having so many foreclosures? Just throwing it out there ...

Is that a Rebate Check in Your Pants, Or Are You Just Erect?

Brothels in Neveda getting hit hard by high fuel costs and a weakening economy are looking for creative ways to drum up business. Nothing beats the Bunny Ranch's special tax rebate promotion:

Media exposure certainly has its benefits. Featured in the ongoing HBO reality series, Cathouse, Hof's Bunny Ranch is going strong. While others brothels saw a slump in revenues, Hof experienced a 30 percent jump in May. But he's not resting on his laurels. Last week he began offering a recession special: The first 100 customers who show up with their tax rebate checks receive twice the "services" for the price of one. "We always give our customers the most bang for the buck," he says. "You bring your $600 check in, and we give you the $1,200 George Bush party--three girls and a bottle of champagne."

Full story here.

The Up Side of a Recession ...

... is that snooty yuppies have lately stopped bitching about urban sprawl. As the Washington Post reports:

Once the dominant topic in regional politics, taming residential development has largely been eclipsed by the fiscal woes created by the slowdown. Rising construction costs, plummeting property assessments, soaring foreclosures and high gas prices have local officials debating how to craft budgets with limited resources instead of arguing over new subdivisions.

It's a fiscal scenario affecting fast-growing areas across the country. In Collier County, Fla. (Naples), Sacramento County, Calif. (Sacramento), and Maricopa County, Ariz. (Phoenix), for example, strained income sources -- including impact fees for new construction and sales and property taxes -- means officials are debating a mix of deferring capital improvements, freezing hiring and scaling back services.

"Counties are getting hit right, left and sideways," said Jacqueline Byers, director of research for the National Association of Counties.

And of course this has sprawl fighters delighted:

Slow-growth advocates say the downturn will allow localities to "take a breather" and focus on improving existing communities rather than trying to keep up with the impact of booming growth.

It would have been nice if the Post writer had put two and two together and realized that this recession is what the anti-sprawl movement is basically about: ending economic growth because that's somehow better for us.

Whoa

Quote from Hillary Clinton right now on Jim Cramer about more market regulations, greater SEC and Fed powers: "..they just want the market to work its magic, you know, we haven't done that since the Great Depression"

Isn't it great when people get to make up history? Or as I like to say...Lie.

Related Hilliary-is-done-point, Obama gets an interview with Maria Bartiromo, Hillary gets Jim Cramer on MAD MONEY!!! Enough said.

Bonus pic of Maria added for no reason, other than I like to look at her.

Pre-Lunch Links

Zimbabwe update.

Who knew fax machines were such an important component of diplomatic relations on the Korean Peninsula?

Meanwhile, South Korea's Defense Ministry sent a fax message to the North Korean military asking it to stop trying to rile its neighbor. The North's moves came after the South's top military officer said last week the country could strike suspected North Korean nuclear targets if there were signs of an imminent atomic attack.

Meanwhile South Korea also complained that North Korea "never sends confirmation of receipt" of their faxes, and always "claims that the fax never went through, even when we (South Korea) have a confirmation on our end".

That's so 1995 Koreas. Word is, South Korea would have sent an email to North Korea's Hot Mail account, but their e-mails always get marked as spam so it is faxes or ICQ messages for the neighboring country.

Sen. Jim DeMint makes a lot of sense when he says the tax-code makes no sense:

[...]a change in the American tax code two years ago that has raised considerably the tax burden facing many American expatriates - and which, in turn, often makes it more expensive for U.S. companies operating abroad to keep Americans on their payrolls.

"It makes absolutely no sense," said Senator Jim DeMint, Republican of South Carolina, of a system that makes the United States the sole developed country to tax income earned by its citizens abroad.

He is sponsoring legislation to remove the limit - currently $82,400 - on the amount of foreign-earned income exempt from taxation.

I've come to like Jim DeMint much more than I thought I would when he was running for Fritz Hollings's open Senate seat in 2004. I happened to be living in South Carolina at that time and was forced to listen to him say relatively (for the state he was running in) crazy things during a tight race like, "gays and unmarried woman shouldn't be allowed to be school teachers". In fairness to him he said even crazier things like "I will work to get rid of the IRS". He hasn't accomplished that goal, but I'd give him 2 out of 5 stars for his efforts against excessive government spending and taxation. That's practically an A+ in the Senate.

Best Buy beats expectations in the 4th quarter, and helps to confirm what the mall parking lot has been telling me for some time.

April 2 (Bloomberg) -- Best Buy Co., the largest U.S. electronics retailer, said fourth-quarter profit fell less than analysts estimated as the company sold more higher-priced items including laptops and video-game consoles.

'Cause you know, X-boxes, VIAOS and Mac Books are important things to have during an economic depression.

What Do These Five "Recession-Proof" Industries Have In Common?

I found an article on CNN.com entitled "Is your job recession-proof?" that starts by reassuring that, despite the slowing economy and housing markets, employers are generally still hiring. At first, it seemed to be just another commentary on the economy.

However, something really caught my attention in the second half of the article, in which a consulting firm notes five industries "expected to offer the best opportunities for job seekers during the predicted slump." The five "recession-proof" industries listed in the article are education, energy, environmental sector, health care and security.

Why are these five industries doing so well these days, while "retail, manufacturing, finance and technology, are vulnerable during recessions?" What is it that these industries have in common? Well, their success is either directly or indirectly driven by government.

Education is almost completely a government monopoly. Government pays for about half of Americans' health care and heavily interferes with and regulates the entire system. Security, especially airport security, is booming due to the "War on Terror." Energy and environment go hand in hand to an extent, and government is either acting or about to act on both. Energy is largely controlled (see: public utilities) or subsidized (see: ethanol) by government.

The article does not explicitly note the involvement (intrusion) of government into the noted five industries. But a critical reader can read between the lines and catch the hints.

Hmm, do you think the extensive government involvement in these booming industries might play at least some role in the plight of the rest of the economy?

Leading Economic Indicators

How weak is the U.S. dollar? Well, a Chilean strip club has decided to accept dollars at 2004 exchange rates as a way to lure the gringos back, according to a story in Bloomberg News:

Bikini-clad pole dancers, mini- skirted hostesses and a deal on foreign exchange await customers at Passapoga, a Santiago nightclub, who pay with U.S. dollars.

At banks and foreign-exchange bureaus, $1 fetches less than 430 pesos. Passapoga pays 600 pesos.

``This campaign has had considerable success,'' said Jaime Retamal, 55, the club's manager. ``Customers come from all over, but a lot from the U.S.''

The dollar has lost a quarter of its value against the peso in the past three years, increasing U.S. travelers' expense for hotels, taxis and restaurants in Chile. Passapoga is discounting the exchange rate to discourage Americans from cutting back on nightclub visits.

***

Patricia Kart, a Passapoga hostess for 2 1/2 years, said workers agreed to the plan even though it reduces their commissions. The promotion is bringing in more customers, she said.

``We have to take what the house gives us, and our job is to do what it takes to make the clients happy,'' Kart, 28, said in a telephone interview from the club. ``They are very content.''

Montana's Booming Economy

While the rest the America's economy is floundering, Montana's keeps chugging along. It has been buoyed by high commodity prices from mining exports. Nice to see one state is taking advantage of a weak dollar. Story from The Economist.

Wine Store Recession Index

On New Year's eve I visited my wine store and the wine buyer was glum. Yes, people were buying bottles of wine and champagne but no one was buying cases anymore. The party era was over. He had called his peers throughout the District and they all reported a major slump, one that was the worst they could recall in their professional lives.

As a big wine purchaser (lush) the wine buyer used to walk me up the register and dictate major discounts for me. That is gone now too and I pay retail.

Wine stores are the canary in the coal mine about the economy, and the canary died.

Free Money!!!!*

Quickly, someone print the "I'm a Slave for the Government, and All I Got was $300" t-shirts:

The top business news from The Associated Press for the morning of Thursday, Jan. 24, 2008:

Deal for Economic Rescue Package Closer

WASHINGTON (AP) — House Democratic and Republican leaders are looking for imminent agreement with the White House on an emergency package to jolt the economy out of its slump after negotiators on all sides made significant concessions at a late-night bargaining session. House Speaker Nancy Pelosi agreed to drop increases in food stamp and unemployment benefits during the Wednesday meeting in exchange for gaining a rebates of at least $300 for each person earning a paycheck, including low-income earners who make too little to pay income taxes.

Are they even going to pretend to find the $250+ billion anywhere in the budget? Or is that money just being printed as we speak?

If the goal of this stimulus is to jolt the economy with increased consumer spending, why don't we give different amount of money to different types of spenders? People like me, who are prolific spenders should get like 5x the normal rebate. Please, $300 is child's play. It's not even warm-up spending money -- I'll spend $300 on English muffins and Bic lighters before noon. And you know that some people won't even spend the measly $300 that they do get. They'll pay off credit card debt or put it into savings, or something equally stupid -- like put it into their kid's college fund. Losers.

So I'm asking the Federal Government: Let me do my part to help this great country; give me the spending respect I deserve and I will single-handily keep this economy from falling of the cliff.

AP report on the compromise here.

*Post title reference explained here.

George Will on the Economy

In his latest Newsweek column, George Will has one of the best takes I've read to date on the economy and the inevitable stimulus package. I can't do the article justice by quoting a paragraph or two, so I recommend the whole thing.

From Will's article from the November 19th issue of Newsweek, the hard copy of which I just received last weekend due to the administrative cluster fuck involved in forwarding my mail to Japan, comes this great quote:

Everyone should remember the witticism that the stock market has predicted nine of the last three recessions.

Besides George Will and John Tierney, can anyone think of any other MSM columnists you'd recommend to a libertarian? I'm sure there are one or two more who I just can't think of right now or maybe have never even heard of.

Added: I later remembered PJ O'Rourke, who I guess can still be considered MSM.

Dear Bush, Bernanke and Congress,

I have heard the news that you plan to release an economic stimulus package that entails giving each American taxpayer a lump sum payment of, tentatively, $800 per person.

Therefore, I feel compelled to disclose that I plan to spend my "stimulus" payment primarily on marijuana, with the remainder going towards a beer chaser and cigarettes. Likely there are many Americans, young and old, who plan to spend their checks in a similar manner.

I hope you realize that your policies on drugs, alcohol and tobacco will mostly likely prevent such expenditures from stimulating the economy whatsoever. For instance, the marijuana I plan to buy is inflated in cost due to the risks involved in growing, transporting and selling it in the black market. So instead of my "rebate" being injected back into the economy, most of it will end up in the pockets of various levels of dealers who don't pay taxes on drug income, likely don't invest in the market, and will probably spend the money in a way of which you wouldn't approve.

The remainder, which I will spend on beer and cigarettes, will indeed go into the economy. But since these industries are taxed so heavily in the name of "public health," you'll probably be taking back a good chuck of this sum anyway. If the money is - at least in part - going right back into your hands regardless, then why bother with the lump sum payout to me in the first place?

I realize that my economic rationale in this letter may not be flawless. But I do sincerely believe that it's better than all of yours. I have been waiting, but so far left wanting, for an explanation of exactly how sending just a small part of the taxes we pay back to us is going to stimulate the economy at all. Please feel free to explain your rationale in the comments section of this post.

Sincerely,
Nate