Senator McCain opposes Obama's stimulus plan

This doesn't surprise me. From The Politico.com:

Sen. John McCain took his most direct shot at President Barack Obama since the presidential campaign on Friday morning, using a Senate floor speech to criticize the president for mocking the Republican concerns over the massive economic stimulus package.

In a fiery speech Thursday night before House Democrats, Obama rejected the GOP’s characterization that the stimulus package was merely another spending bill.

“What do you think a stimulus is? That’s the whole point. No, seriously, that’s the point,” Obama said at the retreat in Williamsburg, Va.

On Friday morning, McCain fought back.

“The whole point, Mr. President, is to enact tax cuts and spending measures that truly stimulate the economy,” McCain said. “There are billions and tens of billions of dollars in this bill which will have no effect within three, four, five or more years, or ever. Or ever.”

The back and forth is more reminiscent of the sharp attacks the two men exchanged on the campaign trail rather than Obama’s hope of moving past partisanship in Washington. And it comes as McCain has positioned himself to becoming a leading opponent of the Senate Democratic plan, which may cost more than $920 billion if major cuts are not made.

Why am I not surprised that John McCain has decided to reject any sense of bipartisanship--reject working with President Obama in order to solve the serious economic problems this country is facing? Then again, why should John McCain care--he still can't count how many houses his wife owns.

Or maybe John McCain still believes that the problems Americans are facing are still "psychological."

Obama goes on offensive, slams Senate Republicans for obstructing economic stimulus bill

It appears that President Barack Obama has finally gone on the offensive against the Republican congressional obstructionism against his economic stimulus bill. Speaking before House Democrats at a conference in Williamsburg, Virginia, President Obama urged the congressional lawmakers to put aside their differences and pass his economic stimulus package. President Obama also took some potshots against Senate Republicans for their obstructionism against his stimulus plan. According to the New York Times:

WILLIAMSBURG, Va. — President Obama urged House Democrats tonight to set aside their differences with the Senate and Republicans in order to push forward quickly with the stimulus package. At times, he sounded irritated with critics who contended the bill was too big or its purpose wrong-headed.

And while he was indeed before a friendly audience, or, as the House majority leader, Steny Hoyer, phrased it, “among family,” Mr. Obama sought to chide his former congressional colleagues just a little bit:

“These aren’t just statistics. This is not a game, this is not a contest for who’s in power, who’s up and who’s down. These are your constituents. These are families you know and you care about. I believe it is important for us to set aside some of the gamesmanship in this town and get something done.”

You can view President Obama's speech here via YouTube:

Part one of President Obama's economic speech;



Part two of President Obama's economic speech;



A couple of points here to note on President Obama's economic speech. The first is President Obama's exasperated frustration at the GOP obstructionism taking place on this stimulus debate. President Obama came into the Oval Office with the intention of bringing a level of bipartisanship back into government, after eight years of the Bush administration's partisan politics. He went to Capitol Hill to visit with congressional Republicans on his stimulus bill. He offered to compromise on the bill. And yet, the House Republicans completely snubbed Obama with every single House Republican voting no on the stimulus package. And now the Senate Republicans have been threatening to filibuster the Obama stimulus package. So while President Obama has been making an effort to provide a bipartisan government, the congressional Republicans have been slapping Obama down like insolent children intent on playing partisan politics.

This may have been President Obama's intent all along. I found an incredible comment by Zmulls in this Washington Monthly post on the Obama speech. It is a fascinating political analysis of just how the Obama administration will allow the opposition to shoot first, before deconstructing and destroying their political opponent's arguments. From Zmulls' comment in the Washington Monthly:

I've said this elsewhere and I think it's worth saying again. After watching Obama, and seeing him handle this first GOP onslaught, I'm coming to the conclusion that this coming-late-to-the-game is a feature, not a bug. I think this is the way he rolls. And it's frustrating to watch but might be crazy like a fox.

Remember the Wright week? It looked like he was sunk. But he waited (it seemed too long?) and when he did the speech in Philadelphia, it not only neutralized the Wright story, it killed it dead, and turned it into a positive. It was an amazing piece of ju-jitsu and may have won him the election.

Obama lets the other side shoot first. Give it their best shot. Makes them show their game. Cause after a couple of days, he knows their game and how to beat it. He doesn't come out swinging, he formulates a plan, the best plan, the right plan. A few days into the GOP game, they've laid down all their best cards, they're out of ammunition and here comes Obama with an answer to everything they've said, and they have nothing to come back with. And because he gave them the hand of friendship at first, they're in a worse position.

It's high-risk, high-stakes. I really think it's his thing to hold back and force the other guy to play first. I don't have the stomach or the cojones to play the game that way. I'm starting to think Obama does, and that's why he wins.

Zmulls comment nails it! The Obama campaign never shot from the hip in responding to political attacks from their opponents. They always seemed to respond to an attack a day after with a calculated argument that really destroyed the opponent's attack. The Reverend Wright controversy was a perfect example of this. There were the campaign smears that Obama had to deal with on refusing to wear an American flag pin, or dressing up in African clothes. There were the consistent attacks by then Republican presidential candidate John McCain against Obama on economics, the U.S. war in Iraq, terrorism, the Bill Ayers controversy, or just plain, old character assassinations. The Obama campaign was able to deflect these attacks and character assassinations. In the case of the 2008 election, the Obama campaign was probably successful due to the combination of the campaign's ability to deconstruct the GOP arguments against Obama, the self-destruction and consistent rebooting of the McCain campaign, and the American voters wish for change after eight years of the Bush administration. When Barack Obama stepped into the Oval Office, he may have had a two-fold plan in offering real bipartisanship to the Republican congressmen first, but then going into campaign attack mode if the GOP decided to reject Obama's outstretched bipartisan hand. The Republicans have decided to reject bipartisanship with President Obama. Now President Obama may just be coming after the Republicans with a very big stick.

Unemployment rises to 7.6 percent in worst monthly job loss since 1974

Graph showing worst monthly job loss since 1974. From MSNBC News.

There is not much to say about this MSNBC story that I haven't really said on unemployment. From MSNBC News:

Recession-battered employers eliminated 598,000 jobs in January, the most since the end of 1974, and catapulted the unemployment rate to 7.6 percent.

The grim figures were further proof that the nation's job climate is deteriorating at an alarming clip with no end in sight.

The Labor Department's report, released Friday, showed the terrible toll the drawn-out recession is having on workers and companies. It also puts even more pressure on President Barack Obama to revive the economy.

"These numbers, and the very real suffering of American workers they represent, reinforce the need for bold fiscal action," said Christina Romer, chief of the White House's Council of Economic Advisers. "If we fail to act, we are likely to lose millions more jobs and the unemployment rate could reach double digits."

The latest net total of job losses was far worse than the 524,000 that economists expected. Job reductions in November and December also were deeper than previously reported.

With cost-cutting employers in no mood to hire, the unemployment rate bolted to 7.6 percent in January, the highest since September 1992. The increase in the jobless rate from 7.2 percent in December also was worse than the 7.5 percent rate economists expected.

All told, the economy has lost a staggering 3.6 million jobs since the start of the recession in December 2007. About one-half of this decline occurred in the past three months.

"Companies are in survival mode and are really cutting to the bone," said economist Ken Mayland, president of ClearView Economics. "They are cutting and cutting hard now out of fear of an uncertain future."

In one sense, it is probably good that the timing of this terrible job loss report came just as the Senate is taking a second day to debate the Obama administration's economic stimulus plan. The Republicans have been opposed to the Obama stimulus plan--my guess is that the Republicans are playing election politics, by opposing the stimulus plan, so that President Obama would fail, and the GOP can win congressional seats in the 2010 midterm elections. This jobs report should provide some pressure to at least the moderate Republicans in putting aside their ideological differences and do what is right for the country--the right wing wackos are a lost hope. This may not be the best economic stimulus bill, but at least it is something to attempt to stop the economic slide of this country.

Olbermann Special Comment--Dick Cheney's lies

I saw this story three days ago, but I didn't take the time to make a comment on it. Former Vice President Dick Cheney gave an interview with the Politico, where he warned that terrorists will engage in another attack on the U.S., and that the Obama administration will allow the terrorists to succeed in their attack. From the Politico.com:

Former Vice President Dick Cheney warned that there is a “high probability” that terrorists will attempt a catastrophic nuclear or biological attack in coming years, and said he fears the Obama administration’s policies will make it more likely the attempt will succeed.

In an interview Tuesday with Politico, Cheney unyieldingly defended the Bush administration’s support for the Guantanamo Bay prison and coercive interrogation of terrorism suspects.

And he asserted that President Obama will either backtrack on his stated intentions to end those policies or put the country at risk in ways more severe than most Americans — and, he charged, many members of Obama’s own team — understand.

“When we get people who are more concerned about reading the rights to an Al Qaeda terrorist than they are with protecting the United States against people who are absolutely committed to do anything they can to kill Americans, then I worry,” Cheney said.

Protecting the country’s security is “a tough, mean, dirty, nasty business,” he said. “These are evil people. And we’re not going to win this fight by turning the other cheek.”

Citing intelligence reports, Cheney said at least 61 of the inmates who were released from Guantanamo during the Bush administration — “that’s about 11 or 12 percent” — have “gone back into the business of being terrorists.”

The 200 or so inmates still there, he claimed, are “the hard core” whose “recidivism rate would be much higher.” (Lawyers for Guantanamo detainees have strongly disputed the recidivism figures, asserting that the Pentagon data have inconsistencies and omissions.) Cheney called Guantanamo a “first-class program,” and “a necessary facility” that is operated legally and with better food and treatment than the jails in inmates' native countries.

But he said he worried that “instead of sitting down and carefully evaluating the policies,” Obama officials are unwisely following “campaign rhetoric” and preparing to release terrorism suspects or afford them legal protections granted to more conventional defendants in crime cases.

The choice, he alleged, reflects a naive mindset among the new team in Washington: “The United States needs to be not so much loved as it needs to be respected. Sometimes, that requires us to take actions that generate controversy. I’m not at all sure that that’s what the Obama administration believes.”

Now I do not take credibility in whatever Dick Cheney says--he is like the crotchety old asshole that yells at the kids to get off his lawn [My apologies for the coarse language]. I seriously wonder whether Dick Cheney is evil, misguided, or just an angry man that has plunged into the depths of senility. Regardless of the speculation, Dick Cheney is pissed that the American voters have decided to elect a terrorist-loving Barack Obama into the White House, and he had to deliver a final, insulting, angry shot at both the Obama administration, and the American people. It was more fear-mongering coming from a man who now fears America, and its laws and freedoms. To be honest, I think the best way to respond to Cheney's rantings is simply to ignore him.

But the story came up on Countdown with Keith Olbermann. The original news story came up on Tuesday, where MSNBC's David Shuster questioned how unhinged Cheney has become after leaving office. Here is the original Countdown story:

Visit msnbc.com for Breaking News, World News, and News about the Economy

And last night, Keith Olbermann couldn't resist delivering his own special comment on Dick Cheney's rantings. Here is Olbermann's Special Comment:

Visit msnbc.com for Breaking News, World News, and News about the Economy

You can read the transcript here.

I will not go through the entire transcript of Olbermann's comment, aside from saying that Olbermann destroys much of Cheney's arguments and lies from the Politico interview. But what is really important in Olbermann's comment is that Cheney doesn't even realize that the Obama administration, and hopefully the American people, are moving away from the lies and fear-mongering that was prevalent in the Bush/Cheney administration, towards a government that has returned to ruling by laws and rational thought. From Olbermann:

"The United States needs to be not so much loved as it needs to be respected. Sometimes, that requires us to take actions that generate controversy. I'm not at all sure that that's what the Obama administration believes."

The first glimmer, in years, of sanity in any your remarks, Sir. That's not at all what the Obama administration appears to believe. It seems to be ready to use all avenues and all emotions, seeking love, respect, fear, diplomacy, shared experience, education, principle, and, yes, even rational thought. This President, unlike yours, seems intent on living in the real world rather than trying to re-shape an imaginary one, by force.

[....]

Of course, none of that mattered to Mr. Cheney, just as none of this matters to Mr. Cheney. Because, at heart, Mr. Cheney is not interested foremost in protecting this country. He is interested foremost in protecting Mr. Cheney. And the business of being Dick Cheney, of rationalizing one's own existence after one of the most reprehensible, myopic, unprincipled, and even un-American careers in the history of our government, depends on continuing to convince the gullible of us to live in abject fear and not with vigilance and common sense and principles.

We, sir, will most completely assure our security not by maintaining the endless, demoralizing, draining, life-denying blind fear and blind hatred which you so thoroughly embody. We will most easily purchase our safety by repudiating the "Bush System." We will reserve the violence for which you are so eager, Sir, for any battlefield to which we truly must take, and not for unconscionable wars which people like you goad and scare and lie us into.

You, Mr. Cheney, you terrified more Americans than did any terrorist in the last seven years, and now it is time for you to desist, or to be made to desist. With damnable words like these, Sir, you help no American, you protect no American, you serve no American — you only aid and abet those who would destroy this nation from within or without. More than 400 years ago, when a British Parliament attempted to govern after its term had expired, it was dispersed by the actions, and words, of Oliver Cromwell.

"You have sat too long for any good you have been doing lately," he told them — exactly as, Mr. Cheney, exactly as a nation now tells you: "Depart, I say, and let us have done with you.
"In the name of God… go!"

Let us hope that this is the last we will ever hear from Dick Cheney.

Some Daily Political Headliners

There are some crazy stuff happening this week in the world of politics, with much of this having to do with the "bipartisanship" between the congressional Republicans and the Obama administration. So let us get into the fun of today's Daily Political Headliners:

GOP Rep. calls for Taliban-like insurgency; I am not making this up. From The Huffington Post;

In an interview with National Journal's Hotline, Republican Rep. Pete Sessions of Texas suggested his party could follow the model of the Taliban in its legislative battles.

"Insurgency, we understand perhaps a little bit more because of the Taliban," Sessions said. "And that is that they went about systematically understanding how to disrupt and change a person's entire processes. And these Taliban -- I'm not trying to say the Republican Party is the Taliban. No, that's not what we're saying. I'm saying an example of how you go about [sic] is to change a person from their messaging to their operations to their frontline message. And we need to understand that insurgency may be required when the other side, the House leadership, does not follow the same commands, which we entered the game with."

Sessions said the "Taliban" approach was a reaction to a lack of bipartisan outreach from House Democrats.

So does this mean that Representative Pete Sessions is now against America if he is calling for the Taliban should be taking over the House leadership? Or maybe the Republican Party should embrace terrorism--car bombs and IEDs' set to blow up Democratic congressmen? Assassinate cabinet officials? Or how about sending a couple commercial airlines into the White House? Is this what the Republicans want? Because this is what the face of terrorism is right now.

Then again, this isn't the most idiotic and stupid statement that Pete Sessions has made. According to this February 2, 2009 Politico story, Sessions started this insurgency craze by telling Republicans, at their party retreat in Hot Springs, Virginia, that the GOP needed "to get over the idea that they’re participating in legislation and ought to start thinking of themselves as 'an insurgency' instead." According to two people who attended Sessions' briefing, Kentucky Rep. Hal Rogers said that Sessions' insurgency remark "was the most offensive-minded proposal he’s seen during his 28 years in the House."

Of course, the stupidity comments on insurgencies doesn't even stop with Pete Sessions. According to this January 21, 2009 Wall Street Journal story [Hat tip Washington Monthly], Republican Senator Jim DeMint of South Carolina liked GOP opposition to President Obama's stimulus package as "freedom fighters. From the WSJ:

"We have to have a remnant of the Republican Party who are recognizable as freedom fighters," Mr. DeMint said. "What I'm looking to do as a conservative leader in the Senate is to identify those Republicans, and even some Democrats, and put together a consensus of people who can help stop this slide toward socialism."

So now we've got one GOP House representative claiming the party should be operating a Taliban-like insurgency, and one GOP senator claiming that same party should be operating as freedom fighters. I'm sorry, but these guys are stark, raving, lunatics!

GOP's fight against "honeybee insurance:" I found this Los Angeles Times' columnist Michael Hiltzik story, also through The Washington Monthly, where it appears that Senate Minority Leader Mitch McConnell is attempting to kill the economic stimulus package by zeroing in on a small provision that the GOP is calling "honeybee insurance." According to LA Times columnist Michael Hiltzik;

That brings us to McConnell and his problem with "honeybee insurance." It turns out that the Senate minority leader took his cue from Neil Cavuto of Fox News, who has been carrying on about the topic for more than a week. Their campaign was joined Tuesday by Sen. David Vitter (R-La.), who stood on the floor of the chamber challenging "any member to come and explain what that provision was."

I'm no senator, but I'm pleased to inform Vitter that it is, in fact, a disaster insurance program for all livestock producers. Beekeepers obviously would be minor beneficiaries next to, say, cattle ranchers, so it's a tad bit dishonest to label the whole program "honeybee insurance."

The provision simply continues a program enacted by Congress last year, overriding a veto by President Bush. In other words, the Senate voted on it twice in 2008 -- once to enact and once to override. Connoisseurs of political comedy will see the punch line coming: McConnell and Vitter voted yea both times.

So it turns out that McConnell isn't really against honeybees. He's only using them to pretend that he's got a principled objection to a stimulus plan aimed at pulling the country out of the most severe recession in decades.

The honeybees, and the rest of us, are merely collateral damage.

This is just amazing! McConnell and the Republicans are so opposed to this stimulus plan that they are pulling stories from Neil Cavuto of Fox News to present their own misguided arguments in order to kill the stimulus plan. And they still get it completely wrong where the program is not about honeybee insurance, but rather "a disaster insurance program for all livestock producers." It may be a pork program, but the Republicans have decided to cherry-pick the smallest details of this stimulus plan and over-hype those details, concluding that the stimulus plan is a bad bill. And the GOP are getting these cherry-picked stories from Fox News? I thought it was the other way around, where Fox News was the mouthpiece for the Republican Party.

Republicans oppose Obama stimulus plan for more tax cuts: This Talking Points Memo story is really no big surprise for what the Republican Party stands for;

President Obama talks about seeking bipartisan accord ... and he reaches out to GOP senators ... but how many Republicans are even open to the need for fixing the economy through government spending?

As The Washington Independent's Dave Weigel points out, that question seems to have been answered in a Senate vote last night. When Sen. Jim DeMint (R-SC) offered an alternative stimulus plan that would replace all government spending in the stimulus with a series of tax cuts, 36 Republican senators voted for it.

To emphasize the point, that means all but four GOPers were perfectly happy with scrapping the core assumption of the president's plan. Here, then, are the four Republican senators whom Obama has the best shot at working with: Susan Collins (ME), George Voinovich (OH), Arlen Specter (PA), and Olympia Snowe (ME).

So the Republicans in the Senate have decided that tax cuts are a better economic stimulus plan than the current stimulus plan that President Obama has submitted to Congress. Excuse me, but didn't we already have a huge tax cut plan, proposed by President George W. Bush about eight years ago? And how those tax cuts, along with the U.S. wars in Iraq and Afghanistan, have driven this country into over $10 trillion into debt?

As for the four senators who voted against scraping the Obama stimulus plan for a tax cut plan, all four senators are centrist senators residing in blue, Democratic states. If may be possible to swing their votes in favor of the economic stimulus package, if enough of their Democratic constituents demand that they vote in favor of the stimulus package. As for the rest of the Senate Republicans, they are probably sitting in strong red states, so they are going to vote as right-wing crazy as they want to be.

Joe the Plumber becomes Joe the Political Analyst; I haven't really said much about Joe the Plumber on my blog here. Joe the Plumber is really Samuel Joseph Wurzelbacher, who was videotaped questioning Democratic presidential candidate Barack Obama's tax policies on his plumbing business. During the third presidential debate, Republican presidential candidate John McCain made repeated references to Wurzelbacher as "Joe the Plumber." The name stuck. Since then, Joe the Plumber has made numerous media appearances and has campaigned for John McCain. Wurzelbacher then decided to ditch his plumbing business to become a war correspondent for Pajama's Media TV. Reporting from the war front, where Israel invaded the Gaza strip in an attempt to stop Hamas rocket attacks, Joe the War Correspondent said that journalists should not be allowed anywhere near a war zone.

Well, now it appears that Wurzelbacher has taken off his war correspondent's jacket and is becoming a political analyst. From the February 2, 2009 Politico.com story:

Fresh off his stint as a war correspondent in Gaza, Joe the Plumber is now doing political strategy with Republicans.

When GOP congressional aides gather Tuesday morning for a meeting of the Conservative Working Group, Samuel Joseph Wurzelbacher – more commonly known as Joe the Plumber — will be their featured guest. This group is an organization of conservative Capitol Hill staffers who meet regularly to chart GOP strategy for the week.

Wurzelbacher, who became a household name during the presidential election, will be focusing his talk on the proposed stimulus package. He's apparently not a fan of the economic rescue package, according to members of the group.

If nothing else, GOP aides are using the appearance to get staffers to attend the 9 a.m meeting.

“In case you weren’t planning to attend CWG tomorrow morning, you might want to reconsider because Joe the Plumber will be joining us!” Kimberly Wallner, an aide to South Carolina Sen. Jim DeMint, wrote in a message to her e-mail list this afternoon.

So it is now Joe the Political Analyst?

I'm not sure I understand the Republican Party's love for this guy. Does the GOP really believe that Wurzelbacher is the epitome of what an average American should be? I'll admit that this guy's claim to fame was that he questioned Obama's tax policies during a rally. But then the Republican spin-miesters decided to use Wurzelbacher as their mascot for attacking Obama's economic policies--and they still failed to get Republican John McCain elected into the White House in spite of using Joe the Plumber. In the end, Wurzelbacher decided to use the Republican Party for his own fifteen minutes of fame--first by campaigning for John McCain, and then by taking his fame to playing war correspondent for a conservative media site. And now the GOP is so obsessed with Joe the Plumber that they've brought him to Washington DC to become their political analyst? What kind of political advise and analysis can this "plumber" give to these GOP idiots?

The craziness continues.

New jobless claims surge to a 26-year high

Graph showing increase of jobless claims soaring to 626,000 in January. From MSNBC News.

More bad economic news showing that nation's unemployment picture is still deteriorating. From MSNBC News:

New jobless claims soared to a more than 26-year high in the latest week and a record number of Americans are receiving jobless benefits, according to government data released Thursday. Meanwhile, productivity soared at the end of last year as companies cut the number of hours worked faster than output declined, a reflection of the massive number of layoffs.

And factory orders dropped for a fifth straight month in December, closing out the weakest year since 2002.

The only bright spot was that with all the job cuts, labor costs have slowed, removing one threat of inflation.

The Labor Department reported Thursday that the number of laid-off workers seeking jobless benefits rose last week to a seasonally adjusted 626,000, from the previous week's upwardly revised figure of 591,000. The latest total is far more than analysts' expectations of 583,000.

That's also the highest since October 1982, when the economy was in a steep recession, though the work force has grown by about half since then.

The number of people that remained on the unemployment compensation rolls increased slightly to nearly 4.8 million, the most since records began in 1967.

As a proportion of the work force, the number of people receiving unemployment benefits is at the highest level since August 1982. But that doesn't include an additional 1.7 million people receiving unemployment insurance through an extension of benefits Congress approved last year, which brings the total to about 6.5 million.

Tomorrow's unemployment report for January is expecting to show U.S. employers slashing 525,000 jobs, in addition to cutting another 524,000 jobs in December. In other words, we are still not out of the woods yet.

Democrats / Republicans claim bipartisanship isn't working

We're getting into the fun part of the congressional blame game here. From The Politico.com:

Frustrated Senate Democratic leaders dispensed with calls for bipartisanship on the stimulus package Thursday, with Senate Majority Leader Harry Reid saying that he won't let anyone "hold the president of the United States hostage."

President Barack Obama had once hoped to have the package pass with substantial Republican support. But Sen. Chuck Schumer (D-N.Y.) said that's now a “distant memory."

"So far," he said, bipartisanship "isn't working. . . . It takes two to tango, but the Republicans aren’t dancing.”

But in an interview with Politico, Sen. Lindsey Graham (R-S.C.) said that it’s the Democrats – and not the Republicans – who have made a mockery of bipartisanship.

“Senators are in a panic – this bill is stinking up the place,” Graham said – then accused Obama of being “AWOL” in the stimulus discussions.

Sens. Ben Nelson (D-Neb.), Susan Collins (R-Maine) and other moderate senators are trying to negotiate a compromise that could kill tens of billions from the bill. Reid said the leadership would consider that proposal, "but the question is whether [the plan] would strengthen the bill."

Reid said Obama “instructed” him to work with the bipartisan group of senators, but he rejected calls from some senators to overhaul the bill. “If they think they’re going to rewrite the bill, Barack Obama is going to walk away,” he said.

Reid said he hoped the Senate would approve the bill as soon as Thursday night and send the measure to a House-Senate conference committee that would iron out the final package.

Despite concerns from some centrist Democrats, Reid said his 58-person caucus would be unified in support - and that he could pick up two Republican votes to get to the 60 he'll need.

The Democratic Senate leaders seemed to be taking their lead from Obama, who's been courting Republicans but also taking veiled shots at their party.

Sometimes politics is fun to watch with some buttered popcorn. Harry Reid is blaming the Republicans for holding President Barack Obama hostage, while Senate Republicans are blaming the Democrats for allowing the stimulus bill to stink Capitol Hill up. What you are hearing is the obligatory insults of each party blaming the other for not engaging in a "bipartisan" manner. Of course, if both sides are that pissed off over "bipartisanship," then maybe the compromise and bipartisanship for passing this economic stimulus bill is actually working? Perhaps it may end up passing.

Reid claims Democrats have enough votes to overcome GOP filibuster on stimulus bill

This is from The Hill.com:

Senate Majority Leader Harry Reid (D-Nev.) told reporters Thursday that he has enough votes to pass a more than $900 billion stimulus bill out of the Senate.

Reid said he believes at least two Republicans of "good will" would support the Democratic-crafted package.

"Do we have the votes? We believe we do," said Reid, who expects a final vote on the package will be held on Thursday.

It appears the stimulus would attract only a few GOP votes, however, and Senate Democratic leaders distanced themselves from earlier hopes that the economic recovery could draw more Republican support.

Sen. Charles Schumer (D-N.Y.), vice chairman of the Democratic Conference, said the notion of attracting 80 votes for the package in the Senate is a "distant memory."

"We'd rather pass a good bill with 65 votes," said Schumer.

Democratic leaders also cast doubt on an effort negotiated by centrists such as Sen. Susan Collins (R-Maine) and Sen. Ben Nelson (D-Neb.) to strip as much as $200 billion from the bill.

Schumer said a price tag of $650 billion, which Collins supports for the package, is inadequate.

"If they think they're going to rewrite this bill, President Obama is going to walk away," said Reid, when asked about efforts by about 20 centrists to lop off $100 billion to $200 billion from the cost of the package.

Senate Democratic Whip Dick Durbin (Ill.) said such a large cut in the bill’s size would cost Americans hundreds of thousands of jobs.

We will see if Harry Reid is correct very soon. The Senate should be voting on this bill either tonight, or tomorrow.

President Obama pens op-ed on the economic stimulus plan

Well, this is rather interesting. President Barack Obama has written an opinion piece in today's Washington Post, arguing for the passage of his economic stimulus plan:

By now, it's clear to everyone that we have inherited an economic crisis as deep and dire as any since the days of the Great Depression. Millions of jobs that Americans relied on just a year ago are gone; millions more of the nest eggs families worked so hard to build have vanished. People everywhere are worried about what tomorrow will bring.

What Americans expect from Washington is action that matches the urgency they feel in their daily lives -- action that's swift, bold and wise enough for us to climb out of this crisis.

Because each day we wait to begin the work of turning our economy around, more people lose their jobs, their savings and their homes. And if nothing is done, this recession might linger for years. Our economy will lose 5 million more jobs. Unemployment will approach double digits. Our nation will sink deeper into a crisis that, at some point, we may not be able to reverse.

That's why I feel such a sense of urgency about the recovery plan before Congress. With it, we will create or save more than 3 million jobs over the next two years, provide immediate tax relief to 95 percent of American workers, ignite spending by businesses and consumers alike, and take steps to strengthen our country for years to come.

This plan is more than a prescription for short-term spending -- it's a strategy for America's long-term growth and opportunity in areas such as renewable energy, health care and education. And it's a strategy that will be implemented with unprecedented transparency and accountability, so Americans know where their tax dollars are going and how they are being spent.

In recent days, there have been misguided criticisms of this plan that echo the failed theories that helped lead us into this crisis -- the notion that tax cuts alone will solve all our problems; that we can meet our enormous tests with half-steps and piecemeal measures; that we can ignore fundamental challenges such as energy independence and the high cost of health care and still expect our economy and our country to thrive.

I reject these theories, and so did the American people when they went to the polls in November and voted resoundingly for change. They know that we have tried it those ways for too long. And because we have, our health-care costs still rise faster than inflation. Our dependence on foreign oil still threatens our economy and our security. Our children still study in schools that put them at a disadvantage. We've seen the tragic consequences when our bridges crumble and our levees fail.

Every day, our economy gets sicker -- and the time for a remedy that puts Americans back to work, jump-starts our economy and invests in lasting growth is now.

Now is the time to protect health insurance for the more than 8 million Americans at risk of losing their coverage and to computerize the health-care records of every American within five years, saving billions of dollars and countless lives in the process.

Now is the time to save billions by making 2 million homes and 75 percent of federal buildings more energy-efficient, and to double our capacity to generate alternative sources of energy within three years.

Now is the time to give our children every advantage they need to compete by upgrading 10,000 schools with state-of-the-art classrooms, libraries and labs; by training our teachers in math and science; and by bringing the dream of a college education within reach for millions of Americans.

And now is the time to create the jobs that remake America for the 21st century by rebuilding aging roads, bridges and levees; designing a smart electrical grid; and connecting every corner of the country to the information superhighway.

These are the actions Americans expect us to take without delay. They're patient enough to know that our economic recovery will be measured in years, not months. But they have no patience for the same old partisan gridlock that stands in the way of action while our economy continues to slide.

So we have a choice to make. We can once again let Washington's bad habits stand in the way of progress. Or we can pull together and say that in America, our destiny isn't written for us but by us. We can place good ideas ahead of old ideological battles, and a sense of purpose above the same narrow partisanship. We can act boldly to turn crisis into opportunity and, together, write the next great chapter in our history and meet the test of our time.

The writer is president of the United States.

A couple of comments on the fight taking place over the Obama stimulus bill in the Senate. First, the Republicans are playing hardball politics here. Over the past couple of weeks, they have been able to shif the debate from why we need this economic stimulus plan to stop the economic free fall taking place in the U.S., towards complaining that this Obama stimulus plan is nothing more than a huge pork package of government spending. And at the same time, the Republicans offer their own economic stimulus plan consisting mainly of--you guessed it--tax cuts. At the same time, the Obama administration has been putting out brush fires regarding former Senate Majority Leader Tom Daschle's withdrawal from nomination as HHS secretary and Nancy Killefer to withdrawal her nomination for chief performance officer--with both nominees citing tax issues as the reason for their withdrawals. So the Republicans have been able to hijack the debate over the economic stimulus plan.

Another problem for President Obama has been the compromise issue with the Republicans. I know that President Obama campaigned with the promise of restoring bipartisanship in government--something that was never given with the previous Bush administration, which made Congress a castrated rubber-stamp to their hard-lined, conservative policies. And bipartisanship is important, at least up to a point. But with President Obama visiting House Republicans, and offering compromises--but no compromise to tax cuts--to his stimulus bill, only to have the entire House GOP snub Obama by voting against the stimulus bill. What is more, House Minority Leader John Boehner told his GOP colleagues not to vote for the stimulus package, even before President Obama visited Capitol Hill. The Republicans are playing hardball politics here simply for political gain. They want President Barack Obama to fail in passing this stimulus bill, possibly hoping that if the U.S. economy gets even worst, then the American people will blame Obama for the economic mess and vote more Republicans into office during the next election. The Republicans do not care about the country, or even helping the American people--they just care about the accumulation of political power.

Which brings us back to the issue of compromise. For the Republicans, compromise means we shove our political and ideological agenda down your throat--whether you like it or not. Republicans will refuse to compromise on any of their issues or legislative agenda, while demanding that the Democrats compromise on all of their issues and legislative agenda. This makes the GOP a very good opposition party, able to employ every dirty trick and filibuster to kill legislation, or block any appointment, that they oppose. So it is no surprise that Senate Republicans are gearing up towards filibustering the Obama stimulus package. President Obama needs to take the debate on the stimulus bill back to the point where the bill will halt the sliding U.S. economy, and slowly begin the recovery with Americans getting more jobs, and money to consume in the economy. That is what this opinion-ed was written for. It is also an argument, by the president to the American people, to show who is to blame for the failure of this stimulus bill to be passed by the Senate--Republican obstructionism. So the Obama administration is starting to play their own version of hardball politics against the congressional Republicans--be open to bipartisanship and compromise, but carry a big stick against obstructionism. This economic stimulus package is going to be the opening salvo in revealing whether President Obama can succeed, or fail, in his term of office.

Wells Fargo may have to pay cancellation fees for Vegas trip

Wells Fargo is having all sorts of problems with their Vegas party fiasco. From MSNBC News:

WASHINGTON - Wells Fargo & Co. is likely on the hook for hefty cancellation fees after abruptly scrapping its upcoming retreats to Las Vegas casinos.

The company, which received $25 billion in taxpayer bailout money and recently announced a $2.3 billion loss for the last quarter of 2008, had booked 12 nights at two of the most expensive hotels in Las Vegas for events that included a luxurious four-day employee sales conference.

But after lawmakers and investigators admonished the company, Wells Fargo scrapped the trip Tuesday night.

“Typically there would be some sort of cancellation clause in the contract,” said Jeremy Handel, a spokesman for the Las Vegas Convention and Visitors Authority.

That often means losing a big deposit or paying a cancellation penalty, he said.

Wells Fargo suggested that canceling the event would cost about as much as holding it.

“Late last year, we canceled recognition events for 2009 except those where the financial commitment was so great that no meaningful savings would occur by canceling these events,” the company said in a statement.

A spokeswoman for Wynn Las Vegas, which along with its sister hotel, Encore Las Vegas, was scheduled to host the retreat, would not comment on the arrangement it had with Wells Fargo.

It appears that the cancellation fees may be the same cost as holding the trip. Of course, no one at Wells Fargo or Wynn Hotel is commenting on the arrangement Wells Fargo made for this trip, nor how much Wells Fargo paid for this trip.

Obama calls for $500,000 executive pay cap on bailout banks

This is from The New York Times:

WASHINGTON — The Obama administration is expected to impose a cap of $500,000 for top executives at companies that receive large amounts of bailout money, according to people familiar with the plan.

Executives would also be prohibited from receiving any bonuses above their base pay, except for normal stock dividends.

President Obama and Treasury Secretary Timothy F. Geithner plan to announce the executive compensation plan on Wednesday morning at the White House.

The new rules would be far tougher than any restrictions imposed during the Bush administration, and they could force executives to accept deep reductions in their current pay. They come amid rising public fury about huge pay packages for executives at financial companies being propped up by federal tax dollars.

Executives at companies that have already received money from the Treasury Department would not have to make any changes. But analysts and administration officials are bracing for a huge wave of new losses, largely because of the deepening recession, and many companies that have already received federal money may well be coming back.

That is not a bad idea. We've seen enough of Wall Street excesses, as corporate executives accept the government's bailout money, and then purchase corporate jets, redecorate corner offices, or hand out $18 billion bonuses to themselves. The latest corporate excess was Wells Fargo's upcoming party in Las Vegas for their mortgage officials, of which they then canceled due to negative criticism. I do not care if a public company wants to pay their CEOs, and other top officials, hundreds of millions of dollars in compensation--although I do believe that CEOs get paid way too much for their performance, or for their incompetence and failure to perform in their jobs. And I certainly know that there is a racket taking place between the CEOs, and the compensation boards of their companies, where the board members scratches each others' backs to make even more money for their own compensation packages in their own companies--regardless of performance. Companies have every right to pay their CEOs whatever compensation that the market is accepting, without any government interference or limits on such compensation. These companies will either succeed, or fail, due to the CEO's knowledge and experience within the company. I will accept that as the nature of the market.

However, when you have Wall Street CEOs coming to the government and asking for a bailout, due to their own incompetence or excessive gambling in the subprime mortgage market, they have lost their right to their own excessive compensation. If they are asking for money from the government to cover their company's losses, then they are going to have to accept a cap on their salaries, because now the American taxpayer is footing the risk of their company's future. These executives had screwed up their companies--they do not deserve their golden parachutes due to their own incompetence. You ask for a government loan, then you accept the strings attached to it. If you do not like it, then do not take the government bailout money at all, or quickly pay back the government bailout money. Then you can offer whatever compensation package you want for the company CEOs. Just do not expect a blank check coming from the government for Wall Street to do whatever the heck they want with their money. The NY Times lists some of the top CEO compensation packages from firms that are in serious trouble, and have taken the government bailout money:

Under the Treasury’s $700 billion rescue program, most companies that have received money so far have been considered “healthy” rather than on the brink of collapse.

But five of the biggest companies to get help — Citigroup, Bank of America and the American International Group, General Motors and Chrysler — were all facing acute problems. And top executives at those companies made far more than $500,000 in recent years.

Kenneth D. Lewis, the chief executive of Bank of America, took home more than $20 million in 2007. Of that, $5.75 million was in salary and bonuses.

Vikram Pandit, who became chief executive of Citigroup in December of 2007 and previously held other senior positions at the bank, made $3.1 million.

Richard Wagoner, the chief executive of General Motors, made $14.4 million, much of it in stock, options and other non-cash benefits. He earned a $1.6 million salary.

And how is Wall Street reacting to this cap on executive pay? According to the NY Times:

“That is pretty draconian — $500,000 is not a lot of money, particularly if there is no bonus,” said James F. Reda, founder and managing director of James F. Reda & Associates, a compensation consulting firm. “And you know these companies that are in trouble are not going to pay much of an annual dividend.”

Mr. Reda said only a handful of big companies pay chief executives and other senior executives $500,000 or less in total compensation. He said such limits will make it hard for the companies to recruit and keep executives, most of whom could earn more money at other firms.

“It would be really tough to get people to staff” companies that are forced to impose these limits, he said. “I don’t think this will work.”

Then fine--don't take the bailout money! If these Wall Street executives have run their companies into the ground, they shouldn't even get the $500,000 pay cap--they really should be fired from their companies without any golden parachutes! They screwed up, and they should pay for the consequences of their own actions.

Wells Fargo cancels Vegas party

Looks like some harsh criticism has forced Wells Fargo to cancel next month's Vegas party. From MSNBC News:

WASHINGTON - Wells Fargo & Co. abruptly canceled Tuesday a pricey Las Vegas casino junket for employees after a torrent of criticism that it was misusing $25 billion in taxpayer bailout money.

The company initially defended the trip after The Associated Press reported it had booked 12 nights beginning Friday at the Wynn Las Vegas and the Encore Las Vegas. But within hours, investigators and lawmakers on Capitol Hill had scorned the bank, and the company canceled.

The conference is a Wells Fargo tradition. Previous all-expense-paid trips have included helicopter rides, wine tasting, horseback riding in Puerto Rico and a private Jimmy Buffett concert in the Bahamas for more than 1,000 of the company's top employees and guests.

"In light of the current environment, we have now decided to cancel this event as well," the company said Tuesday night in a news release that also said the it had never planned to use taxpayer bailout money for the trip.

Of course, it gets even better. Wells Fargo spokesman Kevin Waetke said that the Las Vegas trip provided a "unique opportunity" for employees from both Wells Fargo and Wachovia Corp. "to focus on continuing to do all we can for U.S. homeowners."

Naturally, Congress had to get into the criticism:

"Let's get this straight: These guys are going to Vegas to roll the dice on the taxpayer dime?" said Rep. Shelley Moore Capito, a West Virginia Republican who sits on the House Financial Services Committee. "They're tone deaf. It's outrageous."

The trip was to come on the heels of this week's announcement that Wells Fargo lost more than $2.3 billion in the last three months of 2008.

"Now, they're sending employees on junkets to Las Vegas. You do the math," said New York Attorney General Andrew Cuomo, who recently sought information about Wells Fargo's bonuses as part of his investigation into the banking industry.

Pass the popcorn.

Motorola posts $3.6 billion loss, revealing deeper problems with cell phone industry

I found two stories here, that I think show a serious problem taking place within the cell phone industry. The first story is from Bloomberg, reporting on Motorola's $3.6 billion fourth quarter loss:

Feb. 3 (Bloomberg) -- Motorola Inc., the second-biggest U.S. seller of mobile phones, forecast a wider-than-estimated first-quarter loss and suspended its dividend for the first time in more than 60 years, hurt by a lack of new products.

The stock fell 11 percent after the company said today that this quarter’s loss will be at least 10 cents a share, excluding some costs. That trailed the 4-cent average of estimates compiled by Bloomberg.

Motorola reported a $3.6 billion fourth-quarter loss, with phone shipments dropping by half. New products such as the touch-screen Krave have failed to generate the same demand as its Razr, once the top seller in the U.S. The company, which is slashing jobs to cope with the recession, said today it doesn’t expect to restore profitability this year.

Now I have not talked much about Motorola, except for this comment on my post regarding Nortel's bankruptcy. I noticed that Motorola couldn't compete against the smart phones like the Apple iPhone, or the Blackberry, when they were selling traditional cell phones. And that may be a serious factor, considering Motorola's $3.6 billion fourth-quarter loss.

I found some very interesting details in this New York Times story regarding the cell phone industries' potential growth problem:

Analysts and investors are beginning to ask whether the [cell phone] industry can continue growing. The challenge is both simple and daunting: how to expand when four billion of the six billion people on the planet already have phones. And even in developing countries where there are underserved markets, subscribers spend less on phones and services.

Craig Moffett, an industry analyst at Sanford C. Bernstein & Company, is one of the skeptics. “I don’t think anyone would argue that the salad days of the wireless industry are over,” he said. He added that in terms of subscriber growth in North America, “we’re awfully close to saturation.”

That is a huge problem for the industry--everyone in the developing countries who wanted, or needed, a cell phone, already has a cell phone. The U.S. market is saturated with cell phones, and even older cell phones that consumers replaced with newer cell phones. My first cell phone provider was Nextel, around five years ago, when I purchased an i60 from my brother, who was working for the company. I then received an i90 hand-me-down from my brother, after he upgraded to the i95c color phone. I left Nextel for Verizon, purchasing my first Verizon phone--the LG VX3200. I used this phone for about three years, until the little pin inside the power socket broke, around eight months ago. Then I could not use the car charger for the LG phone. I enjoyed the LG phone. It did everything I needed for a basic cell phone. I didn't need a camera, or cell phone games, or Java apps. But when I couldn't charge the LG phone by my car, I had to purchase a new phone. In this case, I purchased a a Samsung SCH-U410 phone. While I will admit that the Samsung is a nice phone, it has features I have barely used, or will not use. I probably will never use the Bluetooth capability, and have used the camera phone only two times. I only use a cell phone to make calls when I have too.

This brings us to the first big problem with the cell phone industry. It is how they sell their phones. The industry practically gives their phones away to consumers to entice them into the two-year phone contracts. I've checked the Verizon site, and there are plenty of free cell phones that you can get with a two-year contract. With the basic Verizon cell phone plan starting at $39.99 a month, you are paying 959.76 for a two year contract. And let us not forget that Verizon charges a $175 early termination fee for all of their cell phone plans. In other words, you are paying for the phone through the calling plan. Now, if you wanted to purchase a cell phone without the plan, the cell phone company would charge you the full retail price of that phone. For a Samsung SCH-U430 from Verizon, the successor of my SCH-U410, the retail price is $219.99. A Verizon Blackberry 8130 smartphone costs around $400 retail, but you can get it free with a two-year contract, and a $119 online discount.

So what is the point here? The cell phone industry wants you to upgrade your phone every two years--or earlier. They make it simple for you to upgrade your cell phone at a ridiculously low price while forcing you to continue your contract with them. If you are off the contract, and are paying month-to-month, it is easier for you to go from one cell phone plan to another, without having to pay any penalty fees. In other words, the industry is selling you disposable phones. And in order to keep you buying these disposable phones, the cell phone makers have to cram even more electronics, more gizmos, and more features into their phones to keep you purchasing them. Hence, the new phones not only have cameras, or Bluetooth capabilities, but they can play MP3 music, or have text messaging, or even have email and internet web surfing capabilities. And with more features, the wireless cell phone companies can charge even higher fees to their customers for these services. The Verizon Nationwide Blackberry email and messaging plan starts at $99.99 for 450 minutes. This has been the business model for the cell phone providers to get American consumers into purchasing cell phones, and the cell phone plans.

The problem for the industry has been the saturation of cell phones in the market. Everyone who wants, or needs, a cell phone, already has a cell phone. The only way for the industry to continue their growth is to offer more services from these phones at higher monthly service charges. But how many Americans are willing to spend $80-$90 a month for voice and email plans? In this recessionary economy? The industry believes that can grow with the introduction of data services in both their phones, and their plans. Continuing with the New York Times story:

Sanjay Jha, Motorola’s co-chief executive, said the industry would grow after the recession, but how much and how quickly is the interesting question. “While it may not be possible to return to explosive growth we’ve seen in wireless, there will be good, sustainable growth as data applications become essential,” Mr. Jha said.

He said he believes that data — Internet and text messages — can assume the mantle of growth from voice communications. “Data can be similarly influential in changing people’s lives.”

To be sure, nobody is looking at the cellphone industry and making comparisons with Detroit. There is little doubt that there are tens of billions of dollars to be made selling phones and providing services, particularly those involving data.

The industry is pinning high hopes on a new generation of more powerful (and expensive) smartphones. AT&T activated 1.9 million iPhones in the fourth quarter, while Verizon added more than a million BlackBerry Storms.

Over all, these devices make up about 10 percent of the domestic cellphone market and are considered likely to grow in popularity, driving people to upgrade and pay for more data to do things like download songs and send text messages. In the fourth quarter, for example, AT&T’s data revenue for each subscriber rose 27 percent, to $16.30, from about $12 a year earlier.

The cell phone industry may be pinning high hopes on wireless data transfers, but I'm not sure how bright a future that will be for the industry. Yes, AT&T saw a surge in their data revenue, but I'm guessing that is because the new service is attracting the tech junkies. And the tech junkies are going to be purchasing the latest and greatest tech stuff--regardless of cost. But when your are charging almost $100 a month for both cell and data use for your phone, or Blackberry, you are not going to get the average Americans to buy into this stuff. Again, how many Americans are willing to spend $100 for data services on their phones during an economic downturn? For the cell phone industry to grow, they are going to have to incorporate the data services within the regular cell phone package of around $40 a month. However, the industry will not give up what they believe is a huge revenue stream for them at $80-$90 a month for data services.

Naturally, the wireless industry disputes this notion. Continuing with the NY Times article:

Over the long term, the industry vigorously disputes the notion that it is anywhere near slowing down. “If there’s anything I can be extremely confident about, it’s that our customer base wants new phones,” said Denny Strigl, president and chief operating officer of Verizon, which owns 55 percent of Verizon Wireless (the Vodafone Group owns 45 percent).

Verizon and its chief rival, AT&T, each reported financial returns last week that hinted at challenges to sustained high levels of growth. Verizon Wireless gained 1.4 million subscribers, but that is down from 2 million a year earlier. AT&T gained 2 million subscribers, compared with 2.7 million in the fourth quarter of 2007.

SprintNextel recently announced plans to eliminate 8,000 jobs.

Some industry analysts say they believe the lure of data and the fancier phones that support it will not stop growth rates from falling over time.

Over all in the wireless industry, “there’s ton of money being made, but it’s not going to grow as fast as people have experienced or as quickly as they’re relying on it to in the future,” said Ed Snyder, an analyst with Charter Equity Research. “All this talk about data and other services bringing a renaissance of growth is wrong.”

It is interesting that Verizon's president Denny Strigl believes that the cell phone industry has such a bright future because people want to purchase newer phones. But yet at the same time, Verizon Wireless has seen a drop in subscribers--down from 2 million subscribers a year ago to around 1.4 million subscribers. It is like the industry is trying to hold onto this older business model in a market that has been saturated with cell phones, rather than attempting to provide better services to customers at a lower price. The cell phone industry has matured. The days of explosive growth rates, of penetrating new markets, are over. Already the number of smartphone handsets have been falling:

Smartphones notwithstanding, the number of handsets sold around the world has been falling in important regions — even before the recession. In Western Europe, around 191 million mobile phones were sold in 2007, a figure that fell to 171 million in 2008 and is projected at 165 million in 2009, according to Carolina Milanesi, an analyst with the research firm Gartner.

In the United States, people bought 176 million handsets in 2007, and 184 million in 2008. That number will probably remain flat this year, the Gartner analyst said. She said that Europe might provide some indication of where the United States was headed because, as highly populated as it is with phones, it is still slightly behind Europe.

The toll seemed to blindside handset makers in the last quarter. Motorola said last month that it sold half as many phones in the fourth quarter than it had the year earlier, and announced 3,000 job cuts at its cellphone unit.

It is not more and more phones that the industry needs to be selling, along with even more expensive cell phone and data plans. The industry needs to be providing better services at a lower price. They need to bring the data and email services down to a $40, or even a $50 a month plan. They need to provide the incremental changes of improving their services at the same, or lower, price that they charge for their customers. The cell phone companies should probably drop their termination fee, allowing the freedom of moving between the wireless cell phone companies--but they are never going to do that. The next couple of years are going to be very interesting for this cell phone market, and how they are going to react to the economic slowdown, and possibly to the slowdown in the cell phone market--even as the industry touts whatever bright future they believe they have.

Wells Fargo planning a Vegas "junket" for its corporate officials

Oh my--this doesn't look too good. From MSNBC News:

WASHINGTON - Wells Fargo & Co., which received $25 billion in taxpayer bailout money, is planning a series of corporate junkets to Las Vegas casinos this month.

Wells Fargo, once among the nation’s top writers of subprime mortgages, has booked 12 nights at the Wynn Las Vegas and its sister hotel, the Encore Las Vegas beginning Friday, said Wynn spokeswoman Michelle Loosbrock. The hotels will host the annual conference for company’s top mortgage officers.

The conference is a Wells Fargo tradition. Previous years have included all-expense-paid helicopter rides, wine tasting, horseback riding in Puerto Rico and a private Jimmy Buffett concert in the Bahamas for more than 1,000 employees and guests.

“I was amazed with just how lavish it was,” said Debra Rickard, a former Wells Fargo mortgage employee from Colorado who attended the events regularly until she left the company in 2004. “We stayed in top hotels, the entertainment was just unbelievable, and there were awards — you got plaques or trophies.”

While the nation’s recession has led other banks, such as Bank of America, to cancel employee recognition outings, Wells Fargo has not.

“Recognition events are still part of our culture,” spokeswoman Melissa Murray said. “It’s really important that our team members are still valued and recognized.”

Now I can understand the need for companies to provide such parties as a means of rewarding top employees for the work they have done for Wells Fargo, but the company timing of this lavish party is a complete disaster. First, Wells Fargo received $25 billion in taxpayer bailout money--and now Wells Fargo wants to put on a Vegas party for its employees. I'm not sure if American taxpayers are going to be thrilled to hear that Wells Fargo is putting on this huge party with what could be some of this bailout money--your taxpayer money is at work with Wells Fargo! Second, not only do we have a deepening recession taking place in this country, but more huge layoffs are still taking place. Macy's is cutting 7,000 jobs. Almost 524,000 jobs were lost last December, with the unemployment rate rising from 6.8 percent to 7.2 percent. And Wells Fargo wants to have a Vegas party? Want to guess how lavish this party will be? Continuing further in the MSNBC story:

Beginning Feb. 25, Wells Fargo’s insurance division is hosting a 40-person team meeting at the Mandalay Bay Hotel in Las Vegas, according to the Las Vegas Convention and Visitors Authority.

Murray did not immediately have details about the size or cost of the events or what was planned.

In previous years, top loan officers were treated to performances by Cher, Jay Leno and Huey Lewis. One year, the company provided fortune tellers and offered camel rides, Rickard said. Every night when employees returned to their rooms, there was a new gift on their pillows, she said.

Wells Fargo Chairman Richard Kovacevich has traditionally greeted every employee personally when they arrived.

Rooms at the Wynn and the Encore are consistently among the most expensive in Las Vegas. The $2.3 billion Encore opened in December as sister hotel to the Wynn. Its decor includes a 27-foot Asian dragon made from 90,000 Swarovski crystals and artwork by Colombian artist Fernando Botero. One of the restaurants features Frank Sinatra’s 1953 Oscar.

It may be important to recognize your employees by providing such perks, but the timing of this lavish party stinks--especially with more Americans feeling the pressures of job losses, losing their homes, increasing prices on gas and energy, and the corporate excesses of purchasing $50 million corporate jets, $18 billion Wall Street bonuses, and a multi-million office redecoration. What is worst, Wells Fargo is giving this party in recognition to their top mortgage underwriters--probably the same people who underwrote the billions of subprime mortgages that have gotten this country into the current economic and housing mess in the first place. How hypocritical can Wells Fargo become? This party is going to draw some serious critical attention to Wells Fargo--even if the company claims it is giving this party as recognition for its employees.

Some Tuesday economic headlines

How about some economic headlines to start today:

Macy's to cut 7,000 jobs; I saw this headline yesterday, but was a little busy to be posting. This MSNBC News story reports that Macy's will be eliminating 7,000 jobs, or around 4 percent of its workforce, as the company attempts to consolidate itself into a single unit during this economic downturn. According to the MSNBC News story;

Macy’s announced last month — on the heels of the worst holiday shopping season in decades — that it would close 11 stores, affecting 960 employees. The company expects the additional actions announced Monday to lower its annual selling, general and administrative expenses about $400 million per year starting in 2010.

The company also slashed its quarterly dividend to 5 cents from 13.25 cents. The dividend will be paid on April 1 to shareholders of record March 13.

[....]

The news from Macy’s came as the government released yet another batch of bad news on consumers’ financial health: Consumer spending fell for a record sixth straight month in December as financially strapped households, worried about rising layoffs, increased their savings rates to the highest level since May, federal officials said Monday.

Department stores have been especially hard-hit by the poor economy as shoppers cut spending and turn to discount stores.

Nobody has any money to buy things. So Americans are cutting spending, and they are avoiding the high-end department stores (Can you say Macy's?), while going to the lower-end discount stores to fulfill their shopping needs. It is no wonder that Macy's is in trouble here. The MSNBC story also reports troubles with two other high-end department stores. Gottschalks has filed for Chapter 11 bankruptcy and has placed itself up for sale, while Nieman Marcus Group said that they are cutting around 375 jobs, or around 3 percent of its workforce.

Americans are spending less and saving more; According to this MSNBC News story, consumer spending plunged for the sixth straight month in December, as the Commerce Department reported that personal consumption spending dropped by 1 percent for that month. This was worst than the 0.9 percent decline that economists were forecasting. With Americans worried about the increasing possibility of job layoffs, they boosted their savings rate to 3.6 percent of their after-tax incomes in December, the highest level since last May, when tax rebate checks sent the rate up to 4.8 percent. Americans are worried about the job layoffs, so they are increasing their savings rate as a "rainy day fund" in case they end up getting laid off. Of course, this isn't good news for the retailers, who are seeing Americans cutting back on their spending, and such cutbacks are seriously hitting the retailers' bottom line--especially with the awful holiday season that the retailers suffered through. I wonder if this savings boost by American consumers is a short-term boost, or a part of a longer-term trend, considering the problems Americans are facing with the housing bust, the serious drop in housing values, and the increased foreclosures due to higher interest payments on subprime and ARM loans.

More Big Three auto woes; This MSNBC News story reports that General Motors U.S. vehicle sales plunged 49 percent in January, while Ford's sales dropped 40 percent. Chrysler is predicting that their U.S. auto sales could drop around 35 percent in January. On the import side, Toyota sales dropped 32 percent for the month, while Honda's sales dropped 28 percent. All of the automakers are facing some serious sales declines in this U.S. recession, with the Detroit Big Three in worst shape than the Japanese rivals. The problem for the auto industry is not just the serious U.S. recession, or even the fact that Americans do not have any money to spend on cars, but also the tightening credit market. Cars are usually purchased through auto loans from banks. However, with the banks suffering from their own losses due to the speculation on subprime loans during the housing bubble, they have frozen out the loaning of money to anyone wanting to purchase a house, invest in a business, or purchase a car. So the credit market needs to be thawed out, allowing American consumers to purchase new cars via auto loans. Of course, this is overly simplified, but I guess it shows another problem this U.S. economy is facing.

BP reports first quarterly loss in 7 years; I'm trying to figure this one out--especially when Exxon reported a huge $45.2 billion profit for 2008. This is from The New York Times:

LONDON — The British energy giant BP became the latest oil company to report a fourth-quarter loss and warned on Tuesday that demand would probably continue to drop as the global recession deepened.

BP, Europe’s second-biggest oil company behind Royal Dutch Shell, had a loss of $3.3 billion, or 18 cents a share — its first quarterly deficit in seven years. BP had a profit of $4.4 billion, or 23 cents a share, in the period a year earlier. The chief executive, Anthony B. Hayward, warned that “the next year or two will be challenging” and that record earnings might not return for some time.

Oil giants like Shell, ConocoPhillips and Total reported declining revenue or losses in the fourth quarter as the price of oil dropped to the lowest level in four years. BP said an oil price of about $60 a barrel was “appropriate” because it would allow the company to invest in projects to guarantee supplies once demand recovers. Oil was trading Tuesday in the $40-a-barrel range.

As oil prices are falling, the revenues for these oil companies are also falling--especially if the costs for refining and processing the oil remains the same. I am also thinking that as the world economy slows down, then demand for oil is also slowing. That is what may be causing the quarterly losses for BP, Shell, and other oil companies. As for Exxon, they had so much cash to diversify into other investments, besides oil, that they could probably afford to suffer a decline in oil production and still profit from it.

Pending home sales rise 6.3 percent in December; Here is some good economic news from The New York Times;

The National Association of Realtors said that pending home sales rose 6.3 percent in December from a month earlier, with strong gains in the South and Midwest. The number of pending home sales — those in which a buyer has signed a contract but not closed — were up 2.1 percent from December 2007.

“We’ve got some up-turns that are encouraging to us,” said Jed Smith, director for quantitative research of the Realtors’ group. “It’s the direction we like to see.”

But economists cautioned that December could prove to be nothing more than a bump in real-estate’s long slide.

“They rebounded from an all-time low, so the level is still low,” said Patrick Newport, United States economist at IHS Global Insight. “Sales are going to continue sliding because the recession is intensifying. Banks have tightened credit since last year, and they’re not easing up.”

The number of pending sales for 2008 was down 9.5 percent from 2007 — a sign of the toll that the tight credit markets had inflicted on the flagging housing market. The Commerce Department reported that new-home sales in December fell to an annual rate of 331,000, their lowest point on record.

Those Americans, who have the money to buy homes, are finding some incredible deals as home values have dropped. This isn't to say that the housing crisis is still over. Home foreclosures are still going to continue as we shake off the excesses of the subprime mortgage crap. According to this January 23, 2009 AOL News story;

The National Association of Realtors calculates official housing inventory statistics using data from the multiple listing services. By that measure, there were 4.2 million existing homes for sale in November, an 11.2-month supply at the current sales pace, up from a 10.3 month supply in October.

But now it seems quite possible that these figures, which are already at record highs, are underestimating the situation. And if that's the case, it could take much longer for the housing market recover than analysts currently expect.

The chief problem is probably system overload: Lenders are just not prepared to handle the sheer numbers of foreclosures that they have on their books. Banks took back about 860,000 in 2008 - more than twice the number in 2007 - according to RealtyTrac. Before the housing crisis hit, it took only about a month to get a bank-owned foreclosure on the market.

There is almost a year's supply of housing on the market, with the banks bringing in even more foreclosures, as Americans are facing even higher housing payments due to subprime and ARM interest rate increases. Banks either do not want, or cannot due to the sheer volume, to renegotiate the subprime mortgages of American homeowners facing such trouble. Part of the reason may be that banks want the higher interest payments to cover their own losses due to the gambling during the subprime mortgage bubble. Or maybe the banks are paralyzed after facing this deluge of American homeowners losing their homes. Either way, the banks are sitting on a huge supply of homes that are over-priced, that the banks may not be able to sell to cover their loan losses, and that the supply may continue to increase as more Americans lose their homes. So the home values continue to drop. Going back to the NY Times story;

Home values dropped throughout 2008 as foreclosures soared, buyers fled the market and banks tightened their lending standards. In November, the Standard & Poor’s Case-Shiller 20-city price index, a closely watched barometer of the market, fell at its fastest rate on record. The index of home values in 20 metropolitan areas receded to its lowest point since early 2004.

The median home price in December was $175,400, down more than 15 percent from $207,000 in December 2007 and at its lowest point since May of 2003, the National Association of Realtors reported. The lower prices contributed to a 6.5 percent increase in existing-home sales in December.

I do not believe that we are near the bottom of this housing market.

Banks are continuing to tighten access to credit; This is a not-surprising story from The New York Times;

WASHINGTON — Many banks have made it harder for borrowers to obtain loans in the last three months despite a $700 billion federal bailout program and a flurry of other bold moves to stem the worst financial crisis to hit the country since the 1930s.

The Federal Reserve, in its quarterly survey of bank lending practices released Monday, found large numbers of banks reporting tighter credit standards across a broad range of loan products.

Nearly 60 percent of banks responding to the survey said they had tightened lending standards on credit card and other consumer loans, about the same share as in the previous survey released in early November. And about 80 percent of domestic banks said they tightened lending standards on commercial real estate loans, slightly less than the roughly 85 percent that reported doing so in the previous survey.

All told, though, the proportion of banks that “reported having tightened their lending policies on all major loan categories over the previous three months stayed very elevated,” the Fed concluded.

The survey was based on the responses of 51 domestic banks and 23 American offices of foreign banks.

This returns full circle to the auto industry woes, as January sales declined among the car makers by between 30-50 percent. The banks have frozen the credit markets, avoiding lending money to anyone for anything--be it car loans, business loans, credit card loans, and even home loans. It is just one factor in this deteriorating U.S. economy. The banks are facing losses due to foreclosed homes and the speculation of subprime mortgage investments. They are tightening their credit standards, and are using the $700 billion bailout money for everything else but providing loans to American homeowners. American homeowners were foolish enough to jump onto the subprime mortgage bandwagon and purchase over-valued homes, that the banks were happy to lend money to, that these Americans could not afford. And the government regulators, under the Bush administration, were in a coma as the inflated housing bubble exploded into this economic wreckage. It really comes down to a problem of how do we fix the housing crisis, to keep those American consumers who are facing underwater mortgages, to continue paying their mortgages and avoid their homes from being foreclosed. By finding a way to keep Americans paying their mortgages to the banks, the banks will have more money coming in, rather than having more foreclosed homes on their books. Then the banks can hopefully ease up on their credit standards, and hopefully lend out more money in order to stimulate the economy. Again, this is very simplified, but it shows just how much of a problem this economy is facing.