Bloodbath

Scott Black, president and portfolio manager at Delphi Management, says the state of the stock market is a "bloodbath."

USA TODAY reports:

Wealth is being destroyed on Wall Street at a rate not seen since the 1930s. The gains from the 2002-07 bull market are gone. A big chunk of the huge profits from the 1990s dot-com stock boom have been wiped out. In all, after Monday's 300-point drop to 6763, more than 7,400 Dow points, or 52.3%, have disappeared since the October 2007 peak, the biggest-ever point drop. Of all the bear markets in Dow's long history, only the 89.2% drop during the Great Depression was worse.

The Chicago Tribune, if less baneful, agrees, saying:

No question, another spate of bad numbers could be coming. This week's key economic indicators include car sales on Tuesday, retail-chain sales Thursday and what's widely expected to be another disastrous employment report Friday. Analysts believe the economy lost as many as 800,000 jobs last month, which could raise the U.S. unemployment rate to more than 8 percent.

No matter how you cut it, it is bad news, and cause for alarm. Consistent throughout the media coverage is a sense that the lack of confidence is a weak show of support for Obama. USA Today calls it a "vote of no confidence." The president's approval ratings have dropped 8 points over the week, although he is still enjoying high approval overall at 57%, according to Cook political polling, and still averaging a +35% positive approval rating. Those are great numbers, but they won't last if the market doesn't bounce back. Obama is in jeopardy of being, as I would call it, "Carterized." Jimmy Carter was a good president. But he was blamed for failure to adequately address the economic troubles of his time. And this is a lot worse. The faithful have confidence and patience, but if public opinion turns against the stimulus bill and the government, it's trouble.

I have no opinion on how the President should address this, but I do know it was recently leaked that when the reality of just how bad the economy was, and how much worse it was going to get really hit home, then-Senator Obama was heard to joke, "It's not too late to tank this one." (Meaning, lose the election on purpose.) Hopefully the multiple government bailouts that are being conducted will get credit where credit is due, excuse the pun. And, the president will be able to muster more praise. People are tired of spin, so some meat with the bread would be good, too. This sweeping government intervention in the form of the stimulus bill was the event horizon for Obama's win in November, and the speed with which it was created and signed into law was a hallmark moment for the new administration; unfortunately, they will not be able to distance themselves from it if it goes bad, and will have to work to claim credit if it goes well.

Obama Gets $787 Billion Dollar Valentine's Day Card

Congratulations, President Obama. Here's you're Valentine's Day breakfast, with a big side of pork bacon. Mm-mm.

Nancy Pelosi gets to write her biggest check yet, which she was bubbling over about: "I never thought I'd see the day when we had an opportunity to do so much... so great... for the American people..." Pelosi also claims this bill has "unprecedented transparency," which is one of the bigger lies I've heard told about it. The entire way this bill was crafted was the absolute antithesis of Obama's ethics regulations, which along with new lobbyist rules, are starting to look like they apply to.... um, no one. I suppose the chances of this bill getting 5 days "sunlight before signing" are equally slim.

Roll Call: 61-36, Stimulus Passes the Senate

Susan Collins. Olympia Snowe. Arlen Specter. Being the three Senate GOP members who will not be eviscerated by the Democratic party over the stimulus.

'Yes We Can' Redux

Well, Obama's back on the campaign trail. I wasn't expecting to have to write that for at least another two years. But it's true. The president is headed to Indiana today and Florida Tuesday to pitch his economic stimulus. Over the weekend Obama's "grassroots' network was reactivated, calling for "stimulus parties" on his website BarackObama.com One supporter in San Jose, Madalyn Perrine, is so excited she is calling for the Obama campaign offices in California to be reopened, "...so we can call the voters, the Obama supporters to tell them to make these calls." And apparently 800 people are waiting in line right now at the Harborside Events Center in Fort Myers for tickets to Obama's townhall Tuesday. The Chicago Sun Times has a fairly good breakdown of the whole mini-campaign operation. The Washington Post, in their article today titled Echoes From The Campaign Trail, they describe Obama as being in full tilt campaign mode:

In a fiery speech before a gathering of House Democrats in Williamsburg on Thursday night that took place even as he was searching out GOP support for his stimulus package, Obama blasted Republican policies that "for the last eight years doubled the national debt and threw our economy into a tailspin." He then led Democratic members of Congress in a familiar chant: "Fired up!" he declared. "Ready to go!" they returned -- a call and response that became a trademark of his campaign.[SOURCE]

I say this is both a genius PR campaign and a somewhat sad escapist adventure. The president is tapping the excitement and energy of his presidential campaign, and staging the first real test of his supposed "grassroots network." But, it runs the risk of looking desperate, too. And using the townhall style (a Clinton and McCain trademark event), something he was generally against on the campaign trail, is a sneaky move. Sure, maybe the townhall will be used to answer questions and push his agenda, but they are more a chance to attract media attention than anything else, and to get pictures of fired up supporters on the news in embattled districts.

You'd think his presidency was riding on this or something...

Senate Tells Pelosi To Suck It Up

Power brokers of the stimulus deal that has been reached in the Senate are sending a clear message to House Speaker Nancy Pelosi: don't screw it up, or it's on your head. I would say, that isn't even too much spin. If the compromise bill gets worked over in conference sessions between the House and Senate, and fails to pass again, it will be Nancy Pelosi's fault.

If I didn't think getting this bill passed was so critical, I'd almost welcome a bungle on that scale by Pelosi. She needs to be put in check before she embarrasses the president and her whole party. People think I just love to hate Nancy Pelosi and that's the source of all my complaining. It's not. She is gloating over the Democratic wash in November, intentionally goading her enemies and her allies alike, and asserting a kind of power with the Speaker's gavel that is counterproductive.

Still My Way Or The Highway For Pelosi

Did I say something nice about Nancy Pelosi yesterday? Allow me to take it back. Yes, I said she was "mending fences" and "taking a placating tone."

Not so much. Pretty much the moment word came out of the Senate that a deal on the stimulus had been reached, and enough GOP Senators swayed to the side of passage, she's at it again. Note that I believe the dial was turned way up on the rancor over this bill by her refusal to allow regular House rules to come to order, and for this bill to receive the daylight and due process a trillion dollar appropriations bill should get.

So, Pelosi says, "I'll restore regular rules once this stimulus bill is passed." This should be read: once I get my way, I'll throw you a bone. So, the bill passes the House. No regular rules. The Senate indicates they have reach a passable agreement, and Pelosi is already threatening to ruin it by reinserting everything the opponents of the bill hate. President Obama has called for this legislation to be on his desk by Friday the 13th. I don't see regular order in the House any time soon. And Pelosi has already let her favorite attack dog, David Obey off the chain.

I honestly don't know what kind of game Pelosi thinks she is playing. She's not doing herself any favors with anyone at this point, except her personal amen chorus of Appropriations Committee Chairman David Obey and House Majority Leader Steny Hoyer. Note that when Hoyer tried to advocate on behalf of Democratic House members asking for normal rules to be resumed, Pelosi quickly brought him to toe. The party line in the House is not the party line any more, it's the Pelosi line. Now that it appears the stimulus bill will be bounced back to the House for a joint conference session, the President has to protect his hard-fought-for bill from the meddling of his own party. All of this could have been avoided if Pelosi had allowed regular rules to resume in the House at the onset of the 111th Congress, which she gave a clear sign she had no intention of doing with her first edict. Pelosi and Obama have both jibed the GOP with comments about how "we won," and it looks more every day like rubbing salt in the wound is more important than actually getting anything done. Of course, the GOP isn't acting much better or more mature, but would you? If someone was constantly scoffing at your failures, telling you what a wreck you made of things and systematically destroying your ability to get anything done, and shutting you out of a process you have legal right and imperative to participate in? News flash, Nancy: we are still a two-party government. The GOP didn't get fired in November, and if you're not careful, you'll be lucky to be House Minority Leader by 2010.

Olympia to Obama: Let's Get This Thing Hashed Out

RINO! (Republican In Name only) Turncoat! Closet Liberal! Oh..... and one of the few moderate voices in Congress that the President trusts.

Yesterday, President Obama had a one-on-one sit down with Sen. Olympia Snowe (R-ME), followed shortly by Sen. Susan Collins (R-ME) and Sen. Ben Nelson (D-NE) to discuss compromises that could keep the stimulus bill alive. Snowe is spearheading efforts in the Senate to "scrub" the stimulus bill of unnecessary spending, and has indicated a spirit of cooperation, not opposition. Ironically, liberal media groups are targeting Snowe and Collins in campaign ads as opponents of the bill, when in fact they may be the search & rescue team that drags it out of sea.

Snowe followed up with a speech on the Senate floor, including:

"Indisputably, the grave nature of the current economic landscape dictates the urgency of passing a substantial and comprehensive recovery plan. But I cannot support just any stimulus package. This amendment process is fundamental to achieve an improved package that will jump start the economy by creating jobs, assisting people in need, and charting the course for long-term growth... We must not confuse stimulus with omnibus. We have a responsibility -- an obligation -- to apply a rigorous standard to determine whether this approach will help extricate our nation from this crisis. There are no do-overs." [SOURCE]

A well-substantiated rumor says that Obama may have approached Snowe with an offer for Secretary of Commerce before offering it to Judd Gregg. Snowe is said to have declined, citing her desire to remain in the Senate. Snowe would have been an excellent pick (in fact, I name her as an excellent pick for Labor in my My Cabinet.) Snowe was a key GOP voice on the Senate Finance Committee that pushed the confirmation of Treasury Secretary Tim Geithner through, after meeting with him privately and then endorsing him to her colleagues. Snowe was also a key Republican in passing the SCHIP bill that Obama just signed into law. And, just two weeks ago, Sen. Snowe and Sen. John Kerry published a fairly explosive report exposing wide-spread corruption in the National Veterans Business Development Corporation, along with a list of recommendations for fixing the problem, and redirecting Veteran monies where they belong: in the hands of veterans. If there is any single person in the GOP who has a) the ear of the President, b) the respect of her colleagues regardless of party, and c) the political clout to get things done, it's Olympia Snowe. Maybe, just maybe, if the GOP can get over their feeling that Snowe is a secret liberal and listen to her, the stimulus bill can make it through Congress and please enoughpeople.

Economy in the ER

It seems to me there are as many opinions as there are opinion-makers on the economic stimulus bill that passed the House yesterday and is now en route to the Senate for another round of markups and a likely yes vote. Even proponents of the bill are cautious in their praise, except for President Obama and Speaker Pelosi who are in full cheerleader mode. I have an opinion, too:

If you go to the emergency room because you are having a heart attack, they don't give you cholesterol pills and send you home. The economic stimulus bill passing through Congress as we speak is the equivalent of hearing a doctor shout, Clear! As long as we hear a heartbeat afterwards, we can move on to the pills and the diet and exercise and the follow-ups and the lifestyle changes. For now, the American economy (maybe the world economy) is in the ER, not the walk-in clinic.

Has the economy really bottomed out? Probably not, but do we need that to happen before we do something about it? To take the medical analogy further, you don't wait until you're dead to call the ambulance. One thing all sides can agree on is that America and Americans are in financial trouble -- big trouble -- it's just what to do about it that we don't see eye to eye on. I would say, however, nothing is not it. More on the medical analogy: when someone saves your life, and another person works out a long term health strategy for you, who are you most grateful to? I'd bet it's the person who saved your life.

Democrats are banking on that gratitude, and need it even more than ever now that the GOP has fully retracted themselves from the stimulus bill. Not one Republican congressman voted for the bill, and a few Democrats came along for the opposition ride, too. I have no inside information, but I would also guess that, even though Democrats didn't need Republicans to pass this legislation, an en masse boycott of the bill in the House may allow for more Republican input in the Senate, may require it. One way or another, according to the Congressional Budget Office, we are going to pump somewhere around $1.1 Trillion dollars into US infrastructure, education, health care, social programs, mass transit, green conversions and tax benefits. The main debate seems to be over three prongs: 1) effectiveness, 2) oversight, and 3) long term results.

One resounding sentiment seems to be that the poorest people in America are going to get money, fast, and are expected to spend it fast. Again with the medical analogy: it's financial triage, and it makes sense. Under this legislation, states are being granted large discretionary funds (in the multi-billions) and are receiving a wash of additional cash to flush out existing programs, which means larger groups of individuals, businesses and institutions that have capital but have been holding it, will be able to petition the state directly for money, while we give a hand up to the poorest and most needy among us. Opponents of this strategy are comparing it to the Tax Stimulus checks we all got last year that did... um, nothing for "the economy". I'll tell you what it did: it paid down debt, put food on the table, and staved off homelessness and hunger for at least a few weeks for a lot of people. A few weeks is nothing to the government and to the millionaire lawmakers who think they understand poverty. Even a few days, and as little as a few dollars, could be the difference between life and death for a lot of Americans. And it's been that way for a long time, not just since the government noticed that Americans are struggling. President Obama is making good on a promise here -- too all Americans, particularly the ones who actually need something, rather than believe they deserve it.

Back in December I asked, Can We Just Save The Workers? This is a major step in that direction. I agree with a good deal of the legislation's opposition, but I also agree with the Democratic majority that believes this is an emergency and needs broad, confident, major and swift action to deal with it. We can deal with the nuts and bolts as we go -- and I would also bet Senate GOP heavyweights are going to get their way with oversight before it's all said and done. But, as I have already said, we're treating the economy for a heart attack right now, not a hangnail.

Rather than litter this article with hyperlinks, I am providing a list of articles about the stimulus package here:

House Vote on H.R.1: Making supplemental appropriations for fiscal year ending 2009
An $800 Billion Mistake
Stimulus Plan Brings Real Relief
Economic Stimulus or Opportunism?
The Stimulus Advances
A Stimulus With Merit, and Misses Too
RESEARCH: Stimulus Bill Full of Pork and Payoffs
Highlights of economic stimulus plan
The Rundown

Real Economic Stimulus

With the American economy in the dumps, and the Bush administration pushing through a half-hearted spending measure designed to stimulate the economy, I would like to take this opportunity to share my thoughts on what we really need to do to get back on track.

My Economic Stimulus Plan:

• Immediate Relief
  • Tax rebate of $500 minimum to every tax payer
  • $500 pay-out to all SSI recipients immediately
  • 30% increase to Social Security benefits effective immediately
  • 12 month extension of Unemployment Benefits nationwide
  • 20% immediate increase of Food Stamps nationwide, retroactive for 3 months, paid in lump sum
  • Federal Reserve rate break on mortgages of at least 1%


• Long Run Goals
  • Tax breaks for employers who show staff increases of 10% or more over each fiscal year
  • Tax credits to individuals who purchase hybrid vehichles
  • Increase Federal Minimum Wage to $8/hr by 2010
  • Offer a tax break to employers who give all employees a salary increase equivalent to each minimum wage increase
  • Authorize $100 Billion fund to create a government sponsored rent-to-own and low-income credit programs for first time buyers and credit challenged buyers
  • Enact legislation excluding medical debt, federal student loan debt, and delinquent energy and heating bills from credit reporting bureaus
  • Enact legislation requiring all employers grossing $1MIL or more annually to offer health insurance to all employees, with a tax credit for all employers who offer these benefits free
  • Create a $50 billion dollar fund to subsidize tax rebates for home owners who convert to at least 50% renewable power
  • Require employers to pay equivalent federal payroll taxes on all non-American employees. The fund created by this will be channeled into the Social Security Administration.
  • Hire independent financial consultants to evaluate government administrative spending, and decrease spending by 30% over 5 years
  • Create a $100 Billion dollar fund to sponsor college scholarships for Americans living below the poverty line
  • Offer a tax credit to employers who offer tuition reimbursement to employees
  • Enact legislation prohibiting insurance companies from denying benefits based on pre-existing conditions
  • Offer tax breaks to employers who provide housing subsidies to their employees
  • Authorize price controls on residential rentals based on cost of living with tax incentives to landlords who offer below-market rental rates to individuals or families living below the poverty line
  • Enact legislation requiring employers to offer credit rehabilitation programs to employees, by pre-tax payroll deduction


• Contingency Plans
  • If the real estate market is unable to recover within 2 years, authorize government mandated mortgage deferrals or reductions of up to 12 months, based on income and cost of living evaluations
  • If crude oil prices do not fall below $50 a barrel within 2 years, authorize 100 million barrels of oil from the Strategic Petroleum Reserve to be sold on the open market. The funds raised would be placed into a discretionary fund earmarked in the Senate for economic relief

Of course, this is why I'm not president.