Knocking on 10's Door

Unemployment is at 9.5%.

The American economy shed 467,000 jobs last month, and the unemployment rate rose to 9.5 percent from 9.4 percent, the Labor Department reported on Thursday. Job losses were widespread among the construction, manufacturing, and business and professional services sectors.

The losses were sharply higher than economists’ expectations of 365,000 lost jobs.

Economists said a decline of 322,000 jobs in May had raised expectations that the market was bottoming out as the economy struggled to right itself, but the numbers on Friday dashed some of those hopes.

Obama Wants to Bring Back Bank Regulation; GOP Cries Like Babies

The grownups are in charge, the babies go nuts.

President Obama says the Wall Street melt-down was caused by a dangerous combination: wild risk-taking by financial institutions and a lack of government oversight.

Tuesday he said he wants to make sure it never happens again, reports CBS News chief White House correspondent Chip Reid.

"We have to make sure that we've got an updated regulatory system that hasn't been significantly changed since the 1930s," Mr. Obama said.

The president will officially roll out his long-awaited plan Wednesday. One major component: he wants to create a brand new Consumer Financial Protection Agency with "broad authority" to crack down on banks and credit card companies that engage in "unfair and deceptive practices."

The plan would also strengthen government oversight of all large financial institutions, toughen regulation of derivatives and other complicated financial instruments at the heart of the Wall Street crisis, and allow the government to take control of massive companies like AIG if their failure threatens the entire economy. But many Republicans in Congress say the plan will lead to too much government intervention and continued reliance on bailouts.

When it comes to the criminals who have been running the banking business, there's no such thing as "too much" intervention. Sorry, babies. Step aside.

SOCIALISM RUNNING WILD

Yeah...Obama has really taken over American business.

Obama Breaks Bread with Krugman

At least he's listening.

To judge from "War of Necessity, War of Choice," Richard N. Haass's new book on presidential decision-making with regard to Iraq, George W. Bush lived in a bubble, partly of his own making, that walled off creative dissent or even, in some cases, common sense.

Mindful of his predecessor, Barack Obama seems to be trying harder to make sure he hears all sides. On the night of April 27, for instance, the president invited to the White House some of his administration's sharpest critics on the economy, including New York Times columnist Paul Krugman and Columbia University economist Joseph Stiglitz. Over a roast-beef dinner, Obama listened and questioned while Krugman and Stiglitz, both Nobel Prize winners, pushed for more aggressive government intervention in the banking system.

That sort of outreach is admirable—but it would be a mistake to make too much of it. A couple of hours of conversation is no substitute for methodical inquiry and debate. At present, Obama's economic advice is closely controlled by his chief economic adviser, Larry Summers, who acts as a kind of gatekeeper, determining what Obama sees and hears—and what he does not.

I doubt Obama's bubble - and his head - are anywhere as thick as Bush's was.

Offshore Business Addresses No Longer Tax Free

...at least if Obama gets his way. 'Bout time.

President Obama will present a set of proposals on Monday aimed at changing international tax policy, calling for the elimination of benefits for companies and wealthy individuals that harbor their cash in offshore accounts. The president and Treasury Secretary Timothy F. Geithner will announce their plans during a late-morning appearance at the White House. The proposed overhaul in the tax code, which will be fully unveiled in the administration’s budget later this week, could help raise $210 billion in revenues over the next 10 years.

Good Luck With That

The White House wants to talk some sense into the credit card companies.

Because of the recession, credit card companies have been clamping down on credit limits. They've also been jacking up interest rates. Sometimes without informing their customers. They argue it  protects them against defaults.

"Because the credit card companies have arbitrarily stepped in and cutting down on credit lines, it has impacted credit scores. It costs us as consumers," says MCC Professor Cheryl McKeiver.

But help is coming from Washington.  President Obama's economic team will meet with bank and credit card executives this week to prevent random changes. The house is also expected to vote on Wednesday on a bill requiring companies to give you 45 days notice before any interest rate or fee changes.

"If this is signed off, in 90 days, we could see it enacted," says McKeiver.

These changes cant some soon enough. Recently, chase added a $125 fee on some of its no fee cards. American Express raised its late fees on some cards, from $29 to $39. Bank of America and Chase have doubled interest rates on some customers, to up to 30 percent.

This is ringing true as we're preparing to leave town for a while in the wake of the AmEx debacle. I could pay down one of the cards which got the credit limit clipped to clear space for the trip, but what's to stop them from slamming the limit down again once I'm there?

The seeming randomness and contemptuous nature of it all makes it all one big stress-filled crapshoot just to go on a vacation. When our ability to spend is crippled this way, it hurts everyone.

What Jim Baker Told Me on CNN This Morning

On Farid Zakaria's show, Baker says the Obama administration needs to stop focusing on everything else, and make their top three priorities the economy, the economy and the economy.

Advice from the people who just a few short months ago used to think national security was far and away our number one priority and everything else be damned. Talk about unfocused.

Some Republicans Didn't Buy the GOP's Budget Pamphlet

The budget passed the house and senate, despite zero votes from obstructionist Republicans.

It must really suck to be wrong all the time, and to now actually be proven wrong in public.

About twice as many Republicans (38 or 20 percent of their conference) voted against the GOP alternative budget -- than Democrats (20 or 8 percent) who nixed their party's spending plan.

The trends were not surprising: Most of the Dem nays came from the South and southern midwest; Most of the GOP defectors were north of the Mason-Dixon line.

The exception: seven Florida Rs voted against the tax-cutting, lower-spending GOP alternative.

Ryan Says Boehner Got It Wrong

HA! Paul Ryan needed an entire week to explain what that "budget" was the GOP presented to the press last week. Despite Boehner flapping it in front of the cameras and saying, "HERE IT IS!" Ryan gives the quote of the month, highlighted below.

Can't blame this one on the media, asshat.

(BTW, thanks, reader Lynne. I didn't even catch The Hill's mislabeling of their party affiliations when I posted this before I had coffee. They have since fixed that, but I'll leave the original form here for laughs.)

Remember that Republican budget outline last week that was supposed to be the GOP's alternative to the president's? Remember how House Minority Leader John Boehner (D-Ohio) said: "Two nights ago, the president said we haven't seen a budget yet out of the Republicans…Well, it's not true, because here it is, Mr. President"?

Not so much, Rep. Paul Ryan (D-Wis.) said Wednesday morning. Appearing on MSNBC, Ryan said, "The thing you saw last week was not the alternative budget, this is our alternative budget," referring to the budget the GOP plans to introduce on Wednesday.

More, that budget last week, which was widely panned for lacking specifics, was a "marketing document," Ryan said.

'Somewhere along the line there was a misimpression given that that was our budget," he said.

Here's where that "misinterpretation" came from...and holy schnit! It's directly from Boehner's YouTube site! Thanks, John.

$50 Million in AIG Bonuses Will Be Returned

NOW can we move off this goofy distraction?

Whatever the Reason...

...my 401k is grateful today. Now to find a way to dump it all into my mattress.

Krugman's "Despair"

Everyone's pointing to Paul Krugman's blog today where he destroys the Geithner toxic loan plan which was released early this morning. What's more important to me is his explanation for his "despair" which is here.

It's easy to proclaim failure. At least Krugman took a breath and explained his initial reaction. We still are weighing whether or not this is a real cause for panic or his dismay that they didn't follow his own plan. We'll get back to you.

Meanwhile, he also destroys the reporting of the CBO's projection on Obama's budget.

Layers and layers of greatness and evil. It really takes a freaking genius to follow it all.

Olbermann Special Comment: "Enough"

No one walked away from this excellent rage against corporate America. Not even NBC. This is seven minutes of outstanding.

Is This Anything?

Sen. Ron Wyden (D-OR) tells HuffPo about a provision he co-sponsored with Sen. Olympia Snowe a month ago which limited bonuses at firms like AIG to $100,000. The provision somehow disappeared in the House after it sailed through the Seante, which prompted the HuffPo story. But there's one thing about the provision I find kinda weird.

Any amount paid above that would have been taxed at 35 percent.

So we would have gotten some of it back. But it still rewards the recipients with 65% of their undeserved bonuses anyway. Tax it at 65% and you have a story.

It's a shame it got stripped, but it's not enough to warrant a national-emergency headline on the homepage.

The Result of No Regulation

There's a time for free market and a time to step in and slap people.

In the AIG situation, lack of regulation allowed executives to write their golden tickets by crafting contracts that allowed them to receive crazy bonuses under any circumstance. That includes failure. That includes incompetence. And that includes getting those bonuses no matter what the money source is.

WITH regulation, bonuses would be prohibited if the funds came from taxpayer money.

WITHOUT regulation, we're fucked with iron-clad contracts.

And that, my friends, is the dark truth about "libertarians" (what many embarrassed Republicans like to call themselves).

Republicans and "libertarians" like the ol' hands-off approach. It'll fix itself.

Obama's pissed off enough about it to step in. That's what Democrats do.

Call it socialism. Call it government intervention. Call it Penelope for all I care. It has to be done. Why?

The government's #1 job is to protect us. Just as much as that means military protection from enemies and law enforcement protection from terrorists, it also means economic protection from corporate thieves and corporate terrorists. That's what we're dealing with here.

Questions?

FIre Department / House on Fire Analogy of the Day

Thomas Friedman, a little late to the metaphor party, but he made it.

Yet I read that we’re actually holding up dozens of key appointments at the Treasury Department because we are worried whether someone paid Social Security taxes on a nanny hired 20 years ago at $5 an hour. That’s insane. It’s as if our financial house is burning down but we won’t let the Fire Department open the hydrant until it assures us that there isn’t too much chlorine in the water. Hello?

Stewart Takes CNBC Down ANOTHER Six Feet

And he used Jim Cramer as the drill bit. Catch the replays - it tops the show, and it was even more devastating than last week's CNBC "tribute." We'll put up the video as soon as it's available from Comedy Central. (Hey, that's what they insist, so we'll abide.)

UPDATE: Here's Cramer's sphincter enhancement procedure. He truly is the Limbaugh of financial media - loud, attention-getting and generally full of shit.

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Don't Screw with Jon Stewart, Folks

We're extremely pleased that The Daily Show's flame piece on CNBC after Rick Santelli bagged on them is catching fire. Frank Rich:

Last week Jon Stewart whipped up a well-earned frenzy with an eight-minute “Daily Show” takedown of the stars of CNBC, the business network that venerated our financial gods, plugged their stocks and hyped the bubble’s reckless delusions. (Just as it had in the dot-com bubble.) Stewart’s horrifying clip reel featured Jim Cramer reassuring viewers that Bear Stearns was “not in trouble” just six days before its March 2008 collapse; Charlie Gasparino lip-syncing A.I.G.’s claim that its subprime losses were “very manageable” in December 2007; and Larry Kudlow declaring last April that “the worst of this subprime business is over.” The coup de grâce was a CNBC interviewer fawning over the lordly Robert Allen Stanford. Stewart spoke for many when he concluded, “Between the two of them I can’t decide which one of those guys I’d rather see in jail.”

Led by Cramer and Kudlow, the CNBC carnival barkers are now, without any irony whatsoever, assailing the president as a radical saboteur of capitalism. It’s particularly rich to hear Cramer tar Obama (or anyone else) for “wealth destruction” when he followed up his bum steer to viewers on Bear Stearns with oleaginous on-camera salesmanship for Wachovia and its brilliant chief executive, a Cramer friend and former boss, just two weeks before it, too, collapsed. What should really terrify the White House is that Cramer last month gave a big thumbs-up to Timothy Geithner’s bank-rescue plan.

In one way, though, the remaining vestiges of the past decade’s excesses, whether they live on in the shouted sophistry of CNBC or in the ashes of Stanford’s castle, are useful. Seen in the cold light of our long hangover, they remind us that it was the America of the bubble that was aberrant and perverse, creating a new normal that wasn’t normal at all.

Country On Fire; Republicans Have a Hangnail

Bob Herbert has a simple message to the GOP obstructionists: Try sweating the big stuff, jackasses.

Earmarks.

More than 4.4 million jobs have been lost since this monster recession officially got under way in December 2007, and we’ve got people wigging out over earmarks. Folks, get a grip. Some earmarks are good, some are not, but collectively they account for a tiny, tiny portion of the national budget — less than 1 percent.

Freaking out over earmarks is like watching a neighborhood that is being consumed by flames and complaining that there is crabgrass on some of the lawns.

In the midst of the craziness, conservatives are busy trying to blame this epic economic catastrophe — a conflagration of their own making — on the new president. Forget Ronald Reagan and George Herbert Walker Bush and George Herbert Hoover Bush and the Heritage Foundation and the Club for Growth and Phil Gramm and Newt Gingrich and all the rest. The right-wingers would have you believe this is Obama’s downturn.

The bear market would no doubt have magically turned around by now, and those failing geniuses at the helm of our flat-lined megacorporations would no doubt be busy manufacturing new profits and putting people back to work — if only Mr. Obama had solved the banking crisis, had lowered taxes on the rich, had refused to consider running up those giant deficits (a difficult thing to do at the same time that you are saving banks and lowering taxes), and had abandoned any inclination that he might have had to reform health care and make it a little easier for ordinary American kids to get a better education.
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Maybe the markets are down because demand has dried up, because many of the nation’s biggest firms have imploded and because Americans are losing their jobs and their homes by the millions. Maybe a dose of reality is in order, as opposed to the childish desire for yet another stock market bubble.

Maybe the nuns in grammar school were right when they counseled that patience is a virtue. The man has been president for six weeks.

Obstructionist GOP Bars Two Economic Advisers

That's not coming from another blog, folks. This is from BLOOMBERG. We're in the midst of a full-blown crisis, but the GOP obstructionists are blocking the confirmation (and as a result, blocking the advise) of two brilliant economists - for revenge. Holy. Shit.

We need help and the GOP is having a crybabyfest.

President Barack Obama’s economic advisers are increasingly concerned about the U.S. Senate’s delay in confirming the nominations of Austan Goolsbee and Cecilia Rouse to the White House Council of Economic Advisers.

Without Senate confirmation, the two economists are barred from advising the president as the administration tackles the worst financial crisis in 70 years and tries to advance the spending plan Obama submitted to Congress last week.

“It’s frustrating,” said Christina Romer, who heads the three-member CEA. “These are hard economic times and we desperately want to get them through the Senate and definitely on the job.”

“They are both superb economists,” she said. “I can’t imagine what the holdup is.”

Goolsbee and Rouse appeared before the Senate Banking Committee on Jan. 15 and were slated for a full Senate confirmation on Inauguration Day, Jan. 20, according to a senior administration official. Instead, they were approved by the panel Feb. 10.

They weren’t placed on the confirmation slate for the full chamber, leading some administration officials to conclude that Senate Republicans were retaliating against the Democrats because President George W. Bush’s nominations for the same slots languished in the Senate for months at the end of his second term.

NBC's Wingnut Arm Gets Busted Up in Ten Places by TDS

Don't diss the Jon. The Daily Show destroys CNBC's financial expertise. You really have to set aside almost nine well-spent minutes for this one.

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48% to 20%

NBC/WSJ Poll: Over twice as many Americans trust the Democratic party to pull us out of the recession than the Republicans.

Hey, obstructionists. No one's buying your act.

The rest of the poll comes out at 6:30pm ET.

Show Your Pride of Ownership

You now own 40% of it. Get the shirt to show how you feel about them and their banking buddies - before they yank the design. Click shirt, wear it.

The Grown-Up Budget

It looks enormous because EVERYTHING is in it. Yes, including war spending - something Bush chose not to include in his budgets for the past eight years.

And as we've always said since this blog's been going, the Dow's reaction to anything is how corporate America feels - it's never a true reflection of the real mood of the American public. That's why I tend to take the "WATCHING THE DOW" graphic in the corner of the cable news screens with only a fear for my 401k - not a fear for what Americans want and need. Corporate America has had its party. It's now our turn.

Today's New York Times has two pieces which essentially say that President Obama's budget is for grown-ups, not for those who need a daddy (y'know - Republicans). The editorial:

The collapse of the Bush-era economy is ample and awful evidence of the folly of unconstrained debt-fueled growth. The Obama administration has acknowledged the need for deficit spending to stimulate the economy but has vowed that unpaid-for government will not become the norm. Judging from the blueprint, Mr. Obama is not just talking the talk...

No one who really believes in fiscal responsibility could object to the proposed tax increases. And yet, each one presages a political fight. At issue is not only the tax burden on the wealthiest Americans or election-year debates, but the real-life difficulty of weaning people hooked on unsustainable debt — whether it is unpaid-for tax breaks or over-leveraged buyouts or junk mortgages. It’s a challenge avoided for too long.

And Nobel prize winning economist Paul Krugman offers rare enthusiastic praise for a federal budget, celebrating this overdue welcome change from the quickly diminishing Reagan era:

President Obama’s new budget represents a huge break, not just with the policies of the past eight years, but with policy trends over the past 30 years. If he can get anything like the plan he announced on Thursday through Congress, he will set America on a fundamentally new course...

Many will ask whether Mr. Obama can actually pull off the deficit reduction he promises. Can he actually reduce the red ink from $1.75 trillion this year to less than a third as much in 2013? Yes, he can.

Right now the deficit is huge thanks to temporary factors (at least we hope they’re temporary): a severe economic slump is depressing revenues and large sums have to be allocated both to fiscal stimulus and to financial rescues.

But if and when the crisis passes, the budget picture should improve dramatically. Bear in mind that from 2005 to 2007, that is, in the three years before the crisis, the federal deficit averaged only $243 billion a year. Now, during those years, revenues were inflated, to some degree, by the housing bubble. But it’s also true that we were spending more than $100 billion a year in Iraq.

So if Mr. Obama gets us out of Iraq (without bogging us down in an equally expensive Afghan quagmire) and manages to engineer a solid economic recovery — two big ifs, to be sure — getting the deficit down to around $500 billion by 2013 shouldn’t be at all difficult...

...I don’t blame Mr. Obama for leaving some big questions unanswered in this budget. There’s only so much long-run thinking the political system can handle in the midst of a severe crisis; he has probably taken on all he can, for now. And this budget looks very, very good.

For Krugman, that's a standing ovation.

TMZ Becomes Useful: Bailed Out Bank Goes Nuts

They truly are crackheads in the banking industry. Chicago-based Northern Trust fired 450 people, accepted $1.6 billion in bailout money, then turned around and partied their asses off. Way to embarrass yourselves and the country, jackasses.

- Wednesday, Northern Trust hosted a fancy dinner at the Ritz followed by a performance by the group Chicago.

- Thursday, Northern Trust rented a private hangar at the Santa Monica Airport for dinner, followed by a performance by Earth, Wind & Fire.

- Saturday, Northern Trust had the entire House of Blues in West Hollywood shut down for its private party. We got the menu -- guests dined on seared salmon and petite Angus filet. Dinner was followed by a performance by none other than Sheryl Crow.

There was also a fabulous cocktail party at the Loews. And how's this for a nice touch: Female guests at the Chicago concert all got trinkets from ... TIFFANY AND CO.

Northern Trust gave us a statement yesterday before going total radio silence. A rep for the bank acknowledges they paid for the events, but that the bailout money did not pay for the events. He claims it was paid out of the bank's operating expenses