Looks like Paulson agrees with Greenspan: Markets can’t be trusted to do anything useful. He tells the Financial Times

… in the years leading up to the crisis, savings from nations such as China and oil exporters -- at a time of low inflation and booming trade and capital flows -- exerted downward pressure on yields everywhere.

This pushed down interest rates and drove investors to riskier assets, sowing the seeds of a global credit bubble that extended beyond the US subprime or high-risk home loan market and eventually burst.

This statement of the obvious cost us a couple of trillion dollars. Can you remember Economics 101? Increased supply without a change in demand results in lower prices. I passed this class 40 years ago and I still remember. It isn’t the kind of insight that would get the guy a job in the mailroom at Goldman Sachs, but it’s enough to get him a job as George Bush’s Secretary of the Treasury.

Paulson and Greenspan, following Milton Friedman and Ayn Rand, persuaded too many people that the market was great at risk evaluation, especially the credit default swap market. The whole point of the CDS market, it’s sole social justification, is that it is so fantastic at pricing risk. Now they tell us it didn’t work? Really?

Not only are markets truly supreme at risk evaluation, even more emphatically, markets are just fabulous at capital allocation. Paulson, Greenspan and their true believing repub buddies insisted that the market was the be-all and end-all when it came to capital allocation, the process of providing money to start new businesses, bringing out new technologies, and creating a better future. Government, they screamed, had no right to interfere with the free flow of capital, mediated by the sacred market.

Wrong again. In the rabid search for more income, whipped on by the Financial Elites, the "market" moved money into building houses, and selling related debt instruments to greater fools. Now Paulson and Greenspan tell us maybe that wasn’t the best use of trillions of dollars.

Paulson and Greenspan agree the markets they worship failed, and failed spectacularly. The difference is where they put the blame. Greenspan points at the Financial Elites:

The evidence strongly suggests that without the excess demand from securitizers, subprime mortgage originations (undeniably the original source of crisis) would have been far smaller and defaults accordingly far fewer.

The industry created excess demand for securitized instruments. This was coupled with a misapprehension of the degree of risk inherent in these instruments, leading investors to buy in increasing amounts.

Greenspan doesn’t say who caused the “misapprehension of risk”, or how it was done (credit default swaps, ineffective hedging, outright lying about safety) but a fair reading of his statement is that the industry is responsible.

Paulson puts the blame solely and squarely on investors:

"Excesses ... built up for a long time, (with) investors looking for yield, mis-pricing risk," Paulson told the FT.

In the securities business, investors who "... consider only yield in examining investments and ignore other issues such as safety, liquidity, and tax implications"* are called Yield Hogs. Paulson puts all of the blame on yield hog investors, people who just couldn’t live with the reasonable returns available when the supply of capital was historically high; people whose greed was so intense they believed they were entitled to more than the blessed markets could honestly deliver; people who “mis-priced risk” by ignoring it completely.

Paulson doesn’t mention the possibility that Financial Elites, like the ex-CEO of Goldman Sachs, could have any responsibility for the disaster. He cannot conceive of the possibility that someone from Goldman Sachs might have told an investor that the risk was insignificant, or that it was completely hedged, or that this time everything was different.

These are the most naïve people we have ever had in government. From the President on down, not a one of them was able to think outside their ideology, until reality smacked the credit markets silly.

At least Greenspan is honest enough to point to the real culprits. It wasn’t the poor people of developing nations trying to save for the future. It wasn’t the suckers who listened to their stockbrokers. It was the leaders of the securities industry who did it. They lied, cheated and stole. They unraveled the regulatory system so they could get away with it. They did it on purpose, solely for the money.

Too bad there isn’t anyone to hold them accountable.
______________
*Bonds, The Unbeaten Path to Secure Investment Growth, by Hildy Richelson and Stan Richelson, (Bloomberg Press, 2007).

I'm still trying to sort through the conflicting stories on contacts Rahm Emanuel had with Rod Blagojevich and his crowd. One of two things is going on:

1. Rahm has been less than forthcoming in describing his contacts with Blagojevich and his minions.

AND/OR

2. There has been a sustained effort to misrepresent Rahm's contacts with the governor.

Note the AND/OR there: I believe both are true, to a point. Which is why I'm still trying to wade through these details.

Did Rahm call Blago in December?

The most recent conflicting data point is this one, included in a Sun-Times story reporting on Reid's contact with Blago:

Before [Reid's and Menendez's conversations with Blago on December 3], Obama's chief of staff Rahm Emanuel called Blagojevich to tell him to expect to hear from Senate leadership because they were pushing against Jackson and others, according to statements the governor made to others.

This would seem to conflict with Rahm's representation to Obama's team, which asserted that he had only spoken directly to Blago one or two times--both in early November.

Mr. Emanuel had one or two telephone calls with Governor Blagojevich. Those conversations occurred between November 6 and November 8, 2008.

There are a couple of ways to resolve this contradiction, neither one of them very satisfying. First, it is possible (though highly improbable) that Rahm told Blago on November 8 that Senate leadership would call him (though note that--at that point--Schumer had not yet announced his resignation as DSCC Chair), and they simply didn't get around to calling him until December. This is unlikely for two reasons: Obama's team hadn't even given Blago their "list" yet, so it seems unlikely that Reid and Menendez or Schumer were already lobbying heavily. And then there's the unrealistic delay of almost a month, during a period when it was never clear whether Blago was about to appoint someone in the near future or not.

The other way to resolve the contradiction is via the dodge I pointed out earlier. The Obama report does not claim to be a comprehensive on all contacts between Obama's team and Blago's team; it is limited to conversations relating to Obama's successor.

On December 11, 2008, the President-Elect asked the White House Counsel-designate to determine whether there had been any staff contacts or communications – and the nature of any such contacts of communications – between the transition and Governor Blagojevich and his office relating to the selection of the President-Elect’s successor in the United States Senate.

The fact that Rahm did not know whether he had one or two conversations with Blago directly about the Senate seat suggests there were other conversations on different subjects. After all, presumbaly Rahm could check his cell phone records to find out the total number of calls with Blago, so his uncertainty on number suggests an uncertainty about the content of the calls, not an uncertainty about the number of calls.

Thus, given the way this report is scoped narrowly to cover only contacts about the Senate seat, it's possible that as Rahm was discussing other issues with Blago--such as the special election to replace him--Rahm mentioned that Harry Reid would call, without much else. How a smart guy like Rahm could imagine that that didn't pertain to Obama's seat and therefore rationalize leaving it off the report on contacts, since Reid wouldn't much care about Rahm's seat, I don't know.

Also, add in the possibility that the Sun-Times reference to Rahm calling Blago was the same metonymy that Axelrod got in trouble for earlier: representing a contact with a Blago representative as a contact with Blago. Given the possibility that John Wyma was preparing to speak to Rahm after November 13, as suggested by the complaint, this opens up other ways for a Rahm contact with Blago's team--but not Blago--sometime closer to the Reid and Menendez phone calls on December 3.

Did Blago make up a December Rahm call, either in December or more recently?

But there is another possibility: that Rahm never actually called. To understand why, consider the structure of this statement:

Before their contacts, Obama's chief of staff Rahm Emanuel called Blagojevich to tell him to expect to hear from Senate leadership because they were pushing against Jackson and others, according to statements the governor made to others.

This claim is based not on Blago's assertion to the reporters who wrote this story, but on assertions Blago "made to others," with no qualification as to when Blago made the statements or what his potential motivations might have been. Which, as I suggested yesterday, could mean one of several things.

• Blago was taped around about December 3 saying, factually, "Rahm called me and said Reid is going to call" and somehow those tape contents found their way to the Sun-Times.
• Blago told people around about December 3 that "Rahm called me and said Reid is going to call" and those people are now sharing that information with the Sun-Times (note, these people could just as easily be JJJ associates as Blago associates).
• Blago told people, after he was arrested but before Obama released his report, that "Back in December Rahm called me and said Reid is going to call" and those people are now sharing it with the Sun-Times (these people would be more likely to be Blago associates, but could still be JJJ associates).
• Blago has directed people to tell the Sun-Times in the last week or so that "back in December, Rahm called me and said Reid is going to call" and those people are now doing Blago's bidding.

Given that Blago now knows tapes exist but did not before December 3 and given that Blago saw Rahm's version of affairs on December 23 with the rest of us, some of these are more likely than others (that is, it would be stupid for him to claim, now, that Rahm called on December 3 if he did not call at all, since that would be easily disproven). And, depending on the timing, Blago's motivation for doing this would be different; inventing a Rahm call in December might have served to heighten the urgency of donations for JJJ's associations, whereas doing so in the last week would fit Blago's race-baiting strategy to get Burris appointed. And anything Blago has said in the last month may be intended for potential jurors, as LabDancer reminded me yesterday.

Again, I don't know which of these many scenarios is true. But there are at least two other major discrepancies between Rahm's claims about his contacts and what has been reported about his contacts. There's the question of whether or not Rahm included JJJ and Cheryle Jackson on the list of candidates Obama found acceptable for the seat, as I laid out yesterday. And there are the reports that Rahm had 21 contacts with Blago's team (which might easily be explained by the Obama report dodge if there were 15 contacts with Blago's team on subjects unrelated to the Senate seat).

Which is why I come back to that AND/OR distinction. There appears to be some contest over what Rahm said when, with multiple players playing to get their side out. I find that curious.

For a long time progressive and conservatives alike have been reading the tea leaves trying to figure out what Obama's priorities are.  Is he a hidden progressive or is he a conservative in sheep's clothing, or does he mean what he says about being a post-partisan figure?

Chalk another one up for "believing people when they tell you who they are". Politico:

Obama strategists say he wants to get 80 or more votes in the 100-member Senate, and the emphasis on tax cuts is a way to defuse conservative criticism and enlist Republican support.

In order to get those 80 votes, Obama has pre-compromised his stimulus bill, which will define the first year of his administration more than anything else, loading it up with 310 billion of tax cuts, making up 40% of the total.  (I will also note that he and his team seem to have flunked negotiation 101, because you don't pre-compromise if you know how to negotiate, you come out with the most liberal bill possible, even if that's not what you want, so you can bargain towards the bill you want.  This bill will be watered down even further from it's already pre-compromised state).

Of course Obama doesn't need 80 votes.  He probably doesn't even need 60, as a stimulus bill is a spending bill it could be done under reconciliation, in which case you could get it through with 51 votes.  But even at 60, that would mean Obama would need to get all of 2 Republicans to vote with him, not 22.  He's sitting at over 70% approval ratings, with as much political capital as he'll probably ever have during his presidency and he's compromising already?

What that should tell you is that what matters to Barack Obama most is not effective policy, it is not ends, it is consensus.  Obama wants everyone to play nice together and wants everyone onside, and if that means he has to give away the farm, he will do so, because to him putting through an effective stimulus bill is less important than keeping Republicans happy and being able to say that his bill had "broad bipartisan support".

None of that will matter when the stimulus bill doesn't actually work well enough to kick the US out of its economic doldrums, mind you.  That's what Obama is forgetting, it's not whether you pass policies in a bipartisan fashion that matters, it's whether those policies work.  The key Bush initiaties had plenty of bipartisan support, the Republicans got their butts kicked anyway because Bush's policies didn't work.

Obama told everyone this is who he was, that he agreed with Reagan's critique of liberalism, and that the most important thing to him was making sure everyone worked together nicely in Washington.  He meant it.  Guess primary voters should have listened to what he said, not how well he said it.

Note: I'll be on MSNBC at 6:50 ET with David Shuster talking about Roland Burris tonight -- jh

When we started to hear all those rumors about the "inevitability" of Caroline Kennedy as David Paterson's choice for the Senate, it sure sounded like the last-ditch attempt of a desperate spinmeister to stop the bleeding. You had to wonder what they knew that we didn't.

Now we know:

Cuomo now leads Kennedy 58%-27% as the one that voters would like to see Gov. David Paterson appoint to the Senate, with a 54%-34% spread among Democrats only. In last month's poll, which tested Democrats only, Kennedy had a 44%-23% lead. So a 21-point Caroline lead among Democrats has turned into a 20-point Cuomo advantage.

People have certainly overcome huge obstacles on their path to office before (though this one looks pretty ugly). If Kennedy has the kind of moxie it takes to be a good Senator for the state of New York, let's see her fight her way back and convince people she'd be a good choice.

If it turns out she just doesn't have the taste for public life and isn't willing to do that, it's good to find out now. These kind of numbers certainly give Paterson every excuse he needs to Just Say No.

Sounds like the Kennedy/Lieberman handler, Josh Isay, is a bit distracted though. Doesn't seem like he's quite on his game. Probably has his hands full with other clients like Michael Bloomberg and Bibi Netanyahu at the moment.

Dianne Feinstein, the California Democrat who's about to take the reins as chairwoman of the Senate Select Committee on Intelligence, doesn't appear to be too happy with Leon Panetta's prospective appointment to the CIA. Here's what her office just sent me:

“I was not informed about the selection of Leon Panetta to be the CIA Director. I know nothing about this, other than what I’ve read," said Senator Feinstein, who will chair the Senate Select Committee on Intelligence in the 111th Congress.

"My position has consistently been that I believe the Agency is best-served by having an intelligence professional in charge at this time."

Not an auspicious sign for Panetta's confirmation hearings.

Crossposted to The Streak.

Partners in Crime, and in the Times
(by twolf1)

John Yoo and John Bolton, two recently coverted and now stalwart defenders of the Constitutional principle of separation of powers, kidnap and torture the New York Times op-ed page to urge the Obama Administration to restore that principle with respect to treaty ratification after its long abuse by. . . Bill Clinton. Why would they do this?

Well, it seems both are worried that Obama's penchant for negotiations might actually result in an agreement with other nations to control global climate change or perhaps some agreement to, God forbid, limit nuclear proliferation.

Even worse, according to these scholars, would be for the US to sanction an international judicial system that would hold nations and/or their officials publically accountable for committing war crimes.

Now why would a man who sanctioned aggressive war against a country that did not attack or threaten us, and who helped misrepresent the case for war, and a man who sanctioned the use of torture and found it to be consistent with US law, be concerned about international justice?

After all, these scholars are Very Serious People, and attention must be paid (or op-ed pages made available). John Yoo was a lackey in the Addington cabal of Bush/Cheney attorneys who believed their job was to sanction whatever an unbridled executive asked for, the law, hundreds of years of democratic tradition and just ordinary human decency notwithstanding.

It's touching, therefore, that these defilers of the Constitution would now be so solicitous of Congressional prerogatives, having sprung from that group of legal thugs who, when opining on the limits of Presidential power in the face of statutory limits, couldn't seem to find Youngstown in their oh-so-selective search of applicable law.

In tomorrow's fair and balanced NYT op-ed page: A confessed mass murderer argues for leniency on the grounds that fewer people means more food for the rest of us.

God Bless America, but god [help] the op-editors of the New York Times. Amen.

President Elect Barack Obama has tapped Leon Panetta as his choice for Director of Central Intelligence. Panetta, the former eight term California Representative and former President Bill Clinton Chief of Staff, has no specific intelligence experience, but did serve as a member of the Iraq Study Group.

Some coverage cites the difficulty in finding a DCI that wasn’t tarred by the Bush Administration’s proclivity to use torture, rendition, and illegal domestic surveillance as part of their intel efforts:

Aides have said Mr. Obama had originally hoped to select a C.I.A. head with extensive field experience, especially in combating terrorist networks. But his first choice for the job, John O. Brennan, had to withdraw his name amidst criticism over his role in the formation of the C.I.A’s detention and interrogation program after the Sept. 11 attacks.

Members of Mr. Obama’s transition also raised concerns about other candidates, even some Democratic lawmakers with intelligence experience. Representative Jane Harman of California, formerly the senior Democrat on the House Intelligence Committee, had hoped to get the job, but she was ruled out as a candidate in part because of her early support for some Bush administration programs like the domestic eavesdropping program.

The advantage that Panetta might have, says Lee Hamilton, a partner of Panetta’s on the ISG, is his close relationship to PEBO, and that he could supplement his lack of direct experience by placing more seasoned intel hands in top posts. “You have to look at the team. You clearly will want intelligence professionals at the highest levels of the C.I.A.,” he said.

Update: I received a note offline that clued me to the fact that Panetta did have some related intel experience; according to his wiki page, Panetta served as chief of operations and planning of the intelligence section while in the Army, stationed at Fort Ord. 

Liberals and Jewish liberals cheer on Hamas in Gaza.

In a post where he lays out all the reasons Hamas is like, way, way worse than the Nazis, Ron Rosenbaum notes:

Liberals and liberal Jews (I’m one myself) used to think of theselves as anti-fascists and internationalists. They would be horrifed [sic] by the idea of supporting the goals of a Nazi-like party such as Hamas. Liberals and liberal Jews almost without exception supported the use of force to cause the unconditional surrender of Hitler and the Nazis. Some – not all – contemporary American liberals and some liberal Jews support the maintenance of the Nazi-like theological fascists of Hamas, who support the beheading of women and the stoning of gays, in power, rather than use force to oust them. They pat themselves on the back for being brave dissenters in their defense of the plight of a fascist genocidal party.

Presumably then these “liberals” would have been out in the streets in the ’30s demonstrating in support of Hitler’s demands for the Sudeten Deutsch against the Czechs despite the fact that the irredentists among the Sudeten Deutsch were mainly Nazis.

Since there are obviously no liberals or Jewish liberals who support Hamas -- Rosenbaum tellingly doesn't name any -- you'll note his carefully worded phrase, "support the maintenance of." That can be translated from the original neocon as "questions the effectiveness and appropriateness of an all-out Israeli invasion/bombing of Gaza and laments innocent Palestianian civilian casualties as a result of such action."

So, to review, not clapping loudly enough for Israeli's offensive in Gaza makes you objectively pro-Hamas, and by historical extension, a Nazi.

Glad we cleared that up.

Per Ed Morrissey, I see the Wall Street Journal is indulging its fantasies about Employee Free Choice once again:

The Senate Goes Wobbly on Card Check

It's hard to defend taking away the secret ballot.

[]

Arkansas Democrat Blanche Lincoln voted for cloture in 2007 but is now messaging Mr. Reid that she's not eager for a repeat. She recently said she doesn't think "there is a need for this legislation right now," that the country has bigger problems. What she didn't mention is that she is also up for re-election next year, and that one potential GOP challenger, Tim Griffin, is already vowing to make card check an issue. South Dakota's Tim Johnson, Nebraska's Ben Nelson and others face similar pressure.

I've said before I think too much has been read into Blanche Lincoln's comments, and frankly I'm just not that worried about Ol' Ben:

“Sometimes you see something so dumb you know the creators thought they had a brainstorm. But it really was just a drizzle. That’s how I reacted when I saw sleazy and intentionally confusing advertisements running in Nebraska media outlets that mention me.

“The ads, paid for by a Washington special interest group that hides its donors, are an insult to Nebraskans who are interested in a proposed bill, the “Employee Free Choice Act,” and have shared their thoughts with me. While I have expressed concerns about the legislation and continue to weigh it, these ads are unfair to those who deserve an honest, fact-based debate if it is considered next year by Congress.

“The good news is I know Nebraskans are smarter than this special interest group thinks they are. We Nebraskans certainly know a snow job from a snow storm.

“The ads apparently address a provision that would eliminate the rights of employees to cast secret ballots on union organizing petitions. There are clear views for and against this idea. But the ads cook up a stew of innuendo linking Illinois’ embattled governor to political campaign contributions, to unpopular “bailouts” for the banking and auto industries, and to the bill somehow being a bailout. This has nothing to do with the “Employee Free Choice Act.”

“If Americans for Job Security, which paid for the ads, is convinced that the legislation has enough support to pass, I can’t imagine how this demeaning and misleading media campaign would persuade any member of Congress to vote no. I can take debate and criticism on the merits of issues before Congress, and believe that Nebraskans deserve to know where I stand when I cast my vote.

“But smear tactics that insult me and my fellow Nebraskans?

“These folks shot themselves in the foot. While aiming.”

Ed concludes that "the prevailing winds at the moment run against the unions." He must not have caught Steny Hoyer on Fox yesterday, saying that Employee Free Choice will pass in the spring.

Moveover, its opponents now know that there is a good chance it will pass -- which is why we're seeing all these measures in states like Missouri to "Save Our Secret Ballot" (never mind that Employee Free Choice doesn't take away secret ballot, it just gives workers a choice). The best chance they have now is to try and water down Employee Free Choice with amendments, such as one which guarantees a state's right to legislate on the matter themselves.

As I wrote yesterday, the Dems are pissed about the stuff that Rick Berman, the Chamber of Commerce and NAM have done to them on this front. They seem to be of a mind to just pass it and get it over with, rather than letting things drag on.

Nice try, though.

Politico:

Obama strategists say he wants to get 80 or more votes in the 100-member Senate, and the emphasis on tax cuts is a way to defuse conservative criticism and enlist Republican support.

Krugman:

Look, Republicans are not going to come on board. Make 40% of the package tax cuts, they’ll demand 100%. Then they’ll start the thing about how you can’t cut taxes on people who don’t pay taxes (with only income taxes counting, of course) and demand that the plan focus on the affluent. Then they’ll demand cuts in corporate taxes. And Mitch McConnell is already saying that state and local governments should get loans, not aid — which would undermine that part of the plan, too.

Sirota:

For 30+ years, the conservative movement has insisted that tax cuts are always better economic policy than public spending. And despite the fact that such rigid ideology has proven bankrupt over and over and over again, it still confines American politics, as evidenced by a new Democratic president already appearing to embrace the right's basic tax fallacies.

Sirota provides a chart by Economy.com's Mark Zandi, a Republican. As Krugman has noted, the fastest way to get stimulus funds spent is to put them into unemployment insurance and food stamps. And those features may well be revealed as future parts of a stimulus plan, but it is sad that the first move here is to appease Republicans whose supply side crackpottery should by now be thoroughly discredited.

Katrina VandenHeuvel writes at The Nation about the Congressional Progressive Caucus's proposed recovery plan:

It was just three months ago, after all, that Republicans successfully filibustered a stimulus that targeted unemployment insurance, food stamps and "shovel-ready" infrastructure projects--and that was only $56 billion.

The number of people living in extreme poverty increased 26% under Bush as of 2007. Making a commitment to help them is the right thing to do, and it's long overdue -- the Democrats abandoned them the last time around. Appeasing Republicans to the tune of hundreds of millions of dollars in exchange for 80 votes just doesn't seem quite as imperative.

On CNN yesterday, Olmert informed us that:

Israel would not "allow a humanitarian crisis to be created in the Gaza Strip."

"We will help supply food and medicines like any enlightened and moral country must do," he said.

Yet this morning, we read in the Independent about another loss caused by the actions of the “enlightened and moral country” - the death of the father of the paper's Gaza correspondent Fares Akram:

The phone call came at around 4.20pm on Saturday. A bomb had been dropped on the house at our small farm in northern Gaza. My father was walking from the gate to the farmhouse at the time. It was our beloved place, that farm and its two-storey white house with a red roof. Nestled in a flat fertile agricultural plain north-west of Beit Lahiya, it had lemon groves, orange and apricot trees and we had recently acquired 60 dairy cows.

It was the closest farm to the northern border with Israel. Ironically, we always thought the biggest danger there was not from Israeli troops, who usually went straight past if they were mounting an incursion, but from stray Hamas rockets aimed at the Israeli towns north of us.

But shortly before sunset on Saturday, as Israeli ground troops and tanks invaded Gaza in the name of shutting down Hamas rocket sites, the peace of that place was shattered and my father's life extinguished at the age of 48. Warplanes and helicopters had swept in, bombing and firing to open up the space for the tanks and ground forces that would follow in the darkness. It was one of those F16 airstrikes that killed my father.

The house was reduced to little more than powder, and of Dad there was nothing much left either. "Just a pile of flesh," my uncle, who found him in the rubble, said later with brutal honesty…

Another story – this one from Oxfam:

A paramedic working for an Oxfam funded organisation was killed when an Israeli shell struck a civilian ambulance in Gaza today according to international agency Oxfam. The tragedy illustrates the deadly dangers faced by Palestinian civilians and aid worker said the agency.

Another paramedic lost his foot and a driver was injured in the same incident, which occurred when an ambulance belonging to Oxfam's partner organisation, Union of Health Work Committees, was hit while trying to evacuate an injured person in the Beit Lahiya area.

The ICRC reports this morning that:

The situation in Gaza since the Israel Defense Forces launched their ground offensive on Saturday night has become both chaotic and extremely dangerous. It is difficult for the ICRC to move around and assess the urgent humanitarian needs created by the continued shelling and bombing, and by fighting on the ground. The ground attack has forced a number of people in the north of the Gaza Strip to flee their homes.

The fighting is causing damage to hospitals, water supply systems, government buildings and mosques. A number of water supply lines have been severed during bombardments, making it very difficult for families in certain areas of the Gaza Strip to get hold of safe drinking water.

And the United Nations Office for the Coordination of Humanitarian Affairs (OCHA) reports:

According to the Coastal Municipalities Water Utilities (CMWU), about 70% of the Gaza Strip population has no access to water…

Gaza City and northern Gaza are particularly affected due to electricity cuts and a lack of fuel for back-up generators….

The Palestinian Red Crescent Society estimates that thousands of homes have been damaged since the beginning of military operations, exposing their residents to cold weather…

There is an almost total blackout in the governorates of Gaza, North Gaza, Middle Area, and Khan Yunis. Most of the telephone network (both land lines and cell phones) is also not functioning, since it now depends on back-up generators with dwindling fuel stocks.

In today’s Ha’aretz, Amira Haas quotes a Palestinian friend, after recounting more stories from the Gaza Olmert does not want us to see:

It's cold and the windows are open; there's fire and smoke in open areas; at home there's no water, no electricity, no heating gas. And you [the Israelis] say there's no humanitarian crisis in Gaza. Tell me, are you normal?"

One's a bloviating echo chamber. Two's company:

O'REILLY: All right, so you are agreeing with me then that there is a conscious effort on the part of The New York Times and other liberal media to basically paint as drastic a picture as possible, so that when Barack Obama takes office that anything is better than what we have now? 

ROVE: Yes.

But three? Three's a wurlitzer. And a big, fat tell on wheels:

Republican Senate leader Mitch McConnell...is drawing a clear line in the sand....But the GOP has got to do more. It must start talking about tax cuts to grow the economy. And it must get back to the supply-side by talking about lower marginal tax rates on individuals, businesses, and investors....

Social historian and early supply-side activist Irving Kristol taught us three decades ago that the top earners are the economic activists. They're the ones with the highest propensity to consume and invest. They're the ones who buy the yachts, which are built by blue-collar workers. And they're the ones who run the small businesses and provide the capital for the new entrepreneurial start-ups that are the lifeblood of the economy. It is they who energize free-market capitalism.

If we had an economy without rich people we wouldn't have much of an economy. That's why lower tax rates to reward the economic activists — the most prominent capitalists — are so essential.

Um...yeah...roger that, Larry.  "Economic activists?"  With a heavy coat of Lunztian whitewash.  Because, obviously, supply side economics has worked out swimmingly for the rest of us. The demand side is missing entirely...literally.

Nothing says fabu strategery like pimping greed and misinformation to the masses in the midst of a craptastic recession caused by the very policies being cheerleaded. 

Brace yourselves, kids. We're headed into misdirection season at the Yacht Club Corral.  Good faith, bi-partisan negotiations, my ass.

(YouTube -- Super secret Limbaugh, Rove, O'Reilly and Kudlow's GOP Miss Direction Phil "Mental Recession" Gramm Memorial Cheerleader competition video.  And a word of wisdom:  don't pay the mutually reinforcing ass-slappery any mind -- keep your eye on the ball.)

So, the Wall Street Journal is reporting that part of the Obama "stimulus" plan is $310 billion in tax cuts for businesses and individuals. If this is the plan, I'm going to predict right now that the stimulus won't be sufficient.

Some of the proposed tax cuts are relatively efficient and progressive, such as an increase to earned income credit. Others, like retroactive tax cuts to businesses, and tax cuts for businesses that "create" jobs, aren't. I say this because a lot of that job creation will be fictional. Take some temporary or contract workers or outsourced jobs, and roll them back in—that's what most of the jobs created will be, not real new jobs. Not to mention the fact that the tax code is so full of holes right now that money rebated by the government will simply be siphoned off by corporations to dividends, off shore havens or executive compensation.

You don't pour money into a bucket with a hole in its bottom, and you don't punch more holes the bottom either.

I've long observed that the only economic policy that Obama really really believes in is tax cuts. During the election, even when no one really cared, he would keep repeating, over and over and over again, that he was going to cut taxes.

The problem is that giving money to people without pricing power (most middle and working class people) is pointless. People with pricing power, like health care providers, credit card companies (who can and will raise rates) and employers (who will take into account that their workers are now taking home more money and thus don't need as much from them) will simply take the money away. And at this time workers and ordinary consumers just don't have pricing power.

Likewise corporations are not going to create real new jobs if there's no demand. Who wants to invest into this economy? This isn't an economy where you hire new people, it's an economy where you take any money you've got and you use it to buy up distressed competitors and properties at generational lows. Then you rationalize your new acquisition with your own company by laying people off. We've just spent the past few months watching this play out in the banking industry, heavily subsidized by the government, now we're going to have to watch the government subsidize buyouts of non-financial companies. If at first giving money to corporations (banks) doesn't work, why not try it with even more companies?

Stimulus at this time should not be tax cuts, it should be spending. Rewire the country's energy infrastructure, make every building energy efficient, rebuild roads, build high speed train corridors on the west and east costs, then connect them to each other. Give cities money to build the trams or subways they've been wanting to build. Push high speed internet out to everyone, and at the same time increase its speed to international standards (i.e. 10x as fast as the crappy "high" speed internet North Americans get). Move to single-payer healthcare and buyout the health insurance companies. Extend UI to 12 months, and create a bunch of programs that folks can work in as was done in the Great Depression.

Spend money and that money will create demand—for all the products needed for all those projects, for the workers to build all the trains, rail lines, roads, power lines, high speed internet, and so on. And you won't just be giving money away to be spent in all the same ways that got us where we are, you'll be refitting the economy. The key thing that hasn't got through the thick skulls of the elites is that the old economy didn't work for the majority of people. It was broken. Even the "prosperity" which the elites had (and they did, they are richer than they have been in a century) was fake—it was based on profits that didn't exist. Wall Street's losses weren't losses, they were the revelation that every profit they made for the last 10 years was fake and based on fraud.

The economy needs to be restructured, and that means spending on restructuring, not giving money to people to spend in the same patterns as they did before. That doesn't mean no money shouldn't be given out, it should. Relief for those who need help should be generous, but the majority of money shouldn't go to handouts, it should go to creating a new America and creating jobs that Americans can work in to help create that new America.

The past 30 years have been tax cut after tax cut. And they have led us here. The solution is not more tax cuts, no matter who they're meant for. It's to stop thinking that tax cuts are the solution, or that "high" tax rates are the problem. They aren't, low tax rates are the problem. The US has cut its tax rates into the verge of a depression. And the solution the geniuses, like Larry Summers, who brought us this disaster, are proposing is more tax cuts? More of the same?

I said the other day that predicting what would happen economically this year would be harder than predicting economic matters in the Bush era, because presumably the Obama administration wouldn't be so ideologically blind and stupid as the Bush administration.

I hope I wasn't wrong, but after reading this, I'm beginning to think I may have been. As I've said for a long time, personnel matters, and Summers and most of the key economic advisers simply are not liberals and do not understand liberalism any more than Obama does. Even when they try and do something liberal, like a large stimulus, they wind up acting like half-baked Chicago school acolytes.

• The war to destroy Hamas defeat terror accomplish...something update.
• Israel making hay while the Chimp shines.
• Michael Lerner, Jew hater.
• Michael Goldfarb, terrorist.
• Team Obama makes an oopsie.
• Please tell me this is some kind of joke.
• Reid to Coleman: it's over. 
• Meet the new DNC chair.
• On "Face the Nation," Dick lauds awesomeness of Iraq.

Is that after years of unmitigated failure, pushing the same policies are still lucrative -- and completely without risk -- to Bill Kristol:

An Israeli success in Gaza would be a victory in the war on terror — and in the broader struggle for the future of the Middle East. Hamas is only one manifestation of the rise, over the past few decades, of a terror-friendly and almost death-cult-like form of Islamic extremism. The combination of such terror movements with a terror-sponsoring and nuclear-weapons-seeking Iranian state (aided by its sidekick Syria) has produced a new kind of threat to Israel.

But not just to Israel. To everyone in the Middle East — very much including Muslims — who aren’t interested in living under the sway of extremist regimes. And to any nation, like the United States, that is a target of Islamic terror. So there are sound reasons why the United States — whether led by George W. Bush or Barack Obama — will stand with Israel as it fights.

Once again the calculus is this:

-- Random indiscriminate car bomb or ill-aimed mortar -- the most awful tragedy ever (from Gaza, rocket attacks killed 15 people over 8 years).

-- Carpet bombing killing hundreds -- AWESOME!

There's never a question of proportionality as long as a Muslim is on the receiving end of Bill Kristol's notion of justice.

Robben Ford - Worried Life Blues.

What's on your mind tonight?

Photo by HiCe

I'm gonna go with... "always."

Ann Coulter in her new book Guilty: Liberal "Victims" and Their Assault on America (courtesy of Media Matters):

The most amazing thing liberals have done is create the myth of a compliant right-wing media with Republicans badgering baffled reporters into attacking Democrats. It's so mad, it's brilliant. It's one kind of a lie to say the Holocaust was when the Swedes killed the Jews. But it's another kind of lie entirely to say the Holocaust was when the Jews killed the Nazis. Liberals have actually neutralized the incredible press orchestration of left-wing propaganda by acting as if they are the victims of the all-powerful Republican National Committee. [Page 110]

Ann Coulter on The Sean Hannity Show, 7/26/05 (original audio file is gone, additional verbiage from DU):

It's a better Senate than it was then and we have the media now.

If pressed, I suppose Coulter could claim that the media went from totally right-wing propaganda to totally left-wing propaganda in a mere three years.  Or that she said "we have the media now" on Hannity's show simply to trick us gullible liberals, but that's kind of a tough sell considering the context (she was arguing that Dubya should nominate a hard-right judge for the Supreme Court).

You screwed up, Ann.  You can't gloat about how your team controls the media, and then rant and rave about how conservative media bias is all a liberal hoax.

Back when it looked like the counting of the fifth-pile ballots would likely only provide 30-odd additional ballots for Al Franken, and thus keep his margin of victory to around 80 votes, the Coleman camp, and especially Fritz Knaak, were all belligerence and vinegar.  But when Al Franken picked up 176 votes and wound up with a 225-vote margin, suddenly Knaak has gone relatively quiet:

Soon after, when asked about a legal contest beyond the count, Knaak seemed to back off from his pretty strong fightin' words Friday about a legal contest.

At that time, he had said, "An election challenge is inevitable. There's no doubt in my mind, that's the case."

Barely 24 hours later, he said, "If necessary ... we are prepared to go forward to take whatever legal action necessary to remedy this artificial lead ..."

Was he suggesting the end-game litigation by Coleman won't happen?

"You always give yourself a little wiggle room," Knaak said, still adding that, really, yes, they were going to take this to court.

Still, he added even more, "You always allow yourself a chance to reflect."

There's not much time for that -- the Franken win is set to be certified tomorrow, and even though the Minnesota Supreme Court has yet to rule on Coleman's most recent legal motion, an effort to add into the count about 400 rejected ballots from heavily-Republican areas of Hennepin County, Coleman's past track record with the Supremes has been pretty poor. 

So why hasn't Knaak filed yet another motion?  I thought for sure that he'd have done so by now.  

My guess is that it is one thing to challenge an 49-vote or an 80-vote margin, but quite another to challenge a 225-vote margin.   Furthermore, in such a challenge, the loser pays all court costs.  Granted, the Republican National Committee very much wants to keep Norm's seat in Republican hands, but Norm might not have the cash for yet another losing legal motion.

Stay tuned, folks:  The next twenty-four hours will be interesting.

Yesterday, a video started circulating with claims that it showed the immediate aftermath of the bombing of a market in Gaza. Many of you by now may have seen it – it is horrifying. Even though I’ve seen an awful lot of rough video from Iraq and Afghanistan and now Gaza, this one … this one was like a punch to the gut … this one made me cry.

This afternoon, markfromireland, who, as many of you know, is a very experienced bomb disposal officer, and I watched it again and again – and did more digging. Several things have led us to think this is not a video from yesterday. It may be from a horrific explosion a few years ago – markfromireland discovered that both Liveleaks and Toxicjunction (warning:video starts automatically) have the same video, the first posted on January 1 of this year making a very dubious claim to show events from September 2005, the latter uploaded in March 2008.

markfromireland had a feeling that something was just not right and other things seen in the video raised our suspicions: there is a focus on a truck at the end yet no truck mentioned in the Times article on yesterday’s market strike, there are men in uniforms seen, yet we doubt Hamas or other Gazan fighters are circulating in public in uniform at the moment, and the number of dead and wounded seems greater than the casualties of yesterday’s market strike.

Since we do our best to check our sources and both the Guides team and I believe in tracking down dodginess when we can -- and revealing it even if it weakens the case we might be making, we wanted to be very clear about our agreement that this video is not a legitimate report of events yesterday in Gaza.

What is being done in Gaza is horrific enough, the truth disturbing enough without embellishment. There is confirmation now of the use of clusterbombs, and evidence of the use of white phosphorous.

And there was a market in Gaza hit yesterday by the Israelis. The Times of London reports – and it is no less horrific for not being the subject of this video:

Nobody even knows what kind of shell it was that hit Gaza City’s main vegetable market this morning – the explosives are falling so thick and fast it could have come from an Israeli naval vessel, an F-16 fighter-bomber, an Apache helicopter gunship, an unmanned drone, an artillery cannon or a tank.

But the results were unmistakable. With Gaza’s ambulance service stretched far beyond its normal capacity, the first mangled bodies arrived in private cars as locals scrambled to save the lives of the shoppers.

The first to be carried in was a boy, his face masked in blood from a head wound as medics whisked him into the overcrowded emergency rooms. The next car disgorged a girl, perhaps 12 or 13 years old, her entrails blown out through a hole in her back by shrapnel.

Medics said five people were killed in the market bombing, and 40 wounded. Israel said it had no knowledge of a market being hit.

Let’s leave aside the authenticity of the video as a genuine report on what happened in Gaza yesterday. I still think it is important.

This video is very disturbing and folks should know that before viewing. It is very graphic and should not be viewed by children.

I thought a lot last night about the video – and why it hit harder than all those others that have become almost commonplace on youtube, all that footage that is shown on the news, less here than in other countries, but more often now shown with the usual warnings about “may find disturbing” and such.

Here’s what makes this, at least to my mind, so different.

When we see the pictures, the blood and body parts, the children broken and crying, the medics rushing the wounded to an overflowing, understaffed, undersupplied hospital, we see one moment of the actual, real cost of our wars.

But what we never see, what we never hear – are the moments before the medics arrive, before the aid team gets there, before the reporters and cameras arrive. The moments when people, regular everyday people like you and I, like our parents and our children, are thrown into the chaos and frenzy and horror of having their homes, their neighborhood, their everyday lives blown into bloody bits.

So much of what we’ve talked about here these past few years has been about bombings, US air strikes on Iraq, on Afghanistan and now the US bought and sold Iraeli air strikes and shelling of Gaza.

And what we see in this video is the moment, the moment when the world explodes for people just like us.

Almost two years ago, Mohammed Ibn Laith wrote about that moment which he has lived so many times in What Shall We Talk About Today You and I? I went back this morning to read it once again, I hope you will too.

Everywhere inside there are pieces of flesh and blood and rubble. Pulling the living flesh from the rubble. Separating the living from the dead. Climbing over rubble to reach bloodied living flesh. She is so small she cannot be older than 5. The cars and the trucks and the vans begin to arrive. A man takes my bloodied burden from me and others run in to help. I run to the next shop.

Where is my brother?

There is nothing to be done here. Where is my brother?

The others of my team are here. Doing as our trainers have shown us. Doing the things that must be done in the first few minutes. All 5 of us are here now. We do as our trainers have shown us. Doing the things that must be done in the first few minutes.

Where is my brother?

What will we talk about today you and I? I do not want to talk about last Saturday. Shall we talk about peace? I would like to talk about peace. I love the word. No, perhaps we are not ready to talk of peace yet you and I, we are not at peace, we are not even at truce.

Moving round the market with my team. Taking wounded people to the waiting cars. Where are the ambulances? Where are the police? Will the Americans stop the cars and buses and vans carrying the wounded and the dieing to the hospitals as they have done so often before?

…

Showing the helpers how to pick up the pieces of human flesh. Put your hand inside one plastic bag pick it up. Drop it into the plastic sack. Move on to the next piece. One of them has not done this before his hand is shaking so much that he drops a piece of dead human flesh to the ground. But before I can get to him another whose face I recognise from before moves to him and shows him how to do it properly. They stay together the experienced helping the new. The first time is hardest. The new one’s shoulders are moving up and done as he works. He stands up and runs to a stall his helper running after him. He stands his shoulders moving up and down. His helper’s hand upon his shoulder. My brother calls out:

O God! Pardon our living and our dead, the present and the absent, the young and the old, the males and the females.

They go back to work.

O God! Pardon our living and our dead, the present and the absent, the young and the old, the males and the females.

Lips moving with each piece that they pick up and put into their plastic sacks.

O God! Pardon our living and our dead, the present and the absent, the young and the old, the males and the females.

What will we talk about today you and I? I do not want to talk about last Saturday. Shall we talk about peace? I would like to talk about peace. I love the word. No, perhaps we are not ready to talk of peace yet you and I, we are not at peace, we are not even at truce.

Today, in this video, no matter when it was shot or the bombing it records, we see that moment, we hear that moment and perhaps we begin to understand a bit more.

Each day, as we hear the news of another bomb in Iraq, another destroyed wedding party in Afghanistan, another day of the Israeli war on Gaza, each day, let us remember that this is what it looks like, this is what it sounds like and it is our weapons, our funding, our government’s support which so often makes this possible.

Thank you to markfromireland for his help in analysing this video and for his understanding, to Mohammed Ibn Laith for his words. Special thanks as well to Michael Braymen for his map which reminds us how very small Gaza is, how very small the area where 1.5 million Gazans are living under a rain of bombs.