Part of the big Citibank bailout (by the way, did you notice the White House said it "didn't know anything about weekend rescue talks? Entirely believable, unfortunately) calls for the government to buy "toxic mortgages." So, now we -- the taxpayer -- are back to buying bad mortgage instruments? Let's recap. The initial big bailout bill was to be used mostly for buying up "toxic mortgages." But when the Treasury Department experts got a look at things, they realized that was an unworkable solution, so they started buying stakes in banks instead. That led to uncertainty (a nice way of saying "calamity" in stock market-speak) in the market because the feds were sending the signal that they really didn't know what they were doing. The Citibank bailout -- a partial return to Plan A -- has cheered the market, which is up 300 points at midmorning.
And we haven't even figured out yet whether the taxpayers are now on the hook for the $400 million Citi is paying the New York Mets.
Bailouts and the economy defy explanation by mere mortals.
Which is why my colleague, Preston Wright, has formulated his own economic plan. I'll let him tell it:
Yes, this is a real solution. It's kind of like daylight savings.
Extend the number of days in a month to 42.
That way, everyone paid every two weeks would suddenly get an extra paycheck per month to pay off debt and mortgages.
Financial institutions would take the brunt of it because it would be like refinancing all loans, yet people would suddenly have extra cash to spend, save and pay back debt.
The economy would be jump-started because everyone would feel like they had gotten a 50% raise.
If I follow this correctly -- a dubious assumption at best -- we'd still have 12 months in the year, thus adding 84 to our year. Under this plan, the first day of summer could also be New Year's Day at least once.
President-elect Obama reportedly is going to keep the tax cuts on the wealthy around until they're scheduled to expire in 2011 (We'll find out more at 11 when he holds a news conference on the economy, which I'll live blog here). But a Minnesota budget expert sees a tax increase on wealthy Minnesotans as a solution to an estimated $4 billion state budget deficit.
"The deficit we're hearing about would be about 11 percent of the general fund," says Nan Madden, director of the Minnesota Budget Project. That's slightly less than the size of the deficit that greeted Gov. Tim Pawlenty when he took office in 2003. (Listen)
Madden says lawmakers need to understand "that programs that help people get and keep jobs, and make ends meet, those things should not be cut. We shouldn't pile on folks who are already suffering from the economic downturn. Second thing to understand is cutting state spending is a drag on the state's economy. State spending largely goes to people's salaries, to buying goods and services in Minnesota. So when we cut spending, that's actually taking dollars out of the state economy."
Madden says a targeted tax increase to people with high incomes won't have a detrimental effect on the economy because "that's money that people would save rather than money that would be spent on consumption."
Are there enough wealthy people left in Minnesota? "The size of this problem means you can't take anything completely off the table but we would argue we need a balanced approach. We can't take revenue increases off the table. And when you have a budget deficit that's 11% of the general fund, you can't close it only through spending cuts."
Madden expects some delays in payments to Minnesota school districts "and some things that are on the gimmicky side." She says she hopes lawmakers take a long-term view of the state budget, using spending cuts and delayed payments as "a short term bridge."
We're waiting for the start of the president-elect's news conference, and silently praying that nobody will ask questions about puppies. NPR is stressing Obama's insistence that "there's only one president." That president this morning said more Citi-type bailouts are possible.
11:07 a.m. - We're underway. In his opening statement Obama says "we're facing an economic crisis of historic proportions." He announces the nomination of four individuals, including : Tim Geithner as secretary of treasury; Larry Summers as head of the economic council; Melanie Barnes as head of the domestic policy council.
11:12 a.m. - Dow up 305.13 as Obama begins.
11:13 a.m. - Obama says one of his nominees -- Melody Barnes -- is "an expert at determining whether a recession has started." He needs someone to tell him that? On the other hand, he didn't mention that she was name done of the "best dressed women in Washington." Matthew Yglesias takes a more intellectual approach.
11:17 a.m. - It doesn't sound like we're going to hear many specifics today on Obama's solutions. The Dow is dropping slightly from its high.
11:18 a.m. -- How bad is the economy and, in particular, the auto industry. While Obama was talking, GM announced its ending its endorsement deal with Tiger Woods.
Q: What about the stimulus package?
A: Obama says he doesn't want to get into numbers right now. "We have a consensus, which is pretty rare, between conservative economists and liberal economists, that we need a big stimulus package that will jolt the economy back into shape." Dow gains continue to evaporate. Now up 250.
Q:Will you let Bush tax cuts expire?
A: Says the tax cuts were disproportionately targeted to the wealthiest. "It is important if we're going to help pay for some of these expenditures to get our economy back on track, then it's important for those who can pay more do so." He then avoided answering the question about whether those tax cuts would be repealed immediately or allowed to expire.
Q: Can you give us a range of the size of stimulus package you're considering?
11:24 a.m. - The Dow has shed 100 points since the president-elect started talking.
Q: Can you describe how your team's approach might differ from the approach we've had in the last year?
A: "I don't want to look backwards. I'm sure there are some things that Secretary Paulson has done that he wish he'd done differently." He then punts the question and lapses into the stump speech about a strong Main Street is as important as a strong Wall Street.
Q: Do you think the automakers made a convincing case for a bailout?
A: "We can't allow the auto industry simply to vanish. We've got to make sure it is there and that the workers and suppliers ... stay in business. I've also said we can't just write a blank check to the auto industry."
So is that a "yes" or a "no"?
"I was surprised they didn't have a better thought-out proposal."
So, that's a "no," I guess.
Q: How and when should the second half of the rescue money be spent?
A: Obama said he spoke with President Bush and Fed Chair Bernanke today. I will make further assessments about whether it's necessary to draw down additional (bailout) money as the administration and treasury secretary provide me with more real-time information. We are united in making sure the financial system operates the way it was mean to.
11:33 a.m. We get the trademark, "thank you, guys."
Another very short Obama news conference with very little insight.
The Dow is up
205 183 at the end of the news conference. It bent but did not break.
The Minnesota Twins today announced plans for celebrating their final season in the Metrodome. Each game will feature at least one of 100 "Metrodome memories," throwback uniforms, and the naming of an all-time Metrodome team.
Let's hit the Wayback Machine:
There's a romance to baseball if it's played on grass on a sunny day or a nice evening. And you can't experience that in a football stadium, particularly not in a domed football stadium.
That was Jerry Bell, the chief Twins lobbyist for a new stadium in 1999.
Part of the reason for a new baseball stadium -- thank you, Hennepin County taxpayers -- was that the Metrodome, well, stinks for baseball. It was, conventional wisdom said, a sterile football stadium that had absolutely no charm.
Are we supposed to get misty eyed about it now?(8 Comments)
Americans are still putting money into their 401Ks, despite the dwindling returns, a survey by Hewitt Associates released today shows.
An analysis of 2.7 million U.S. employees found the average 401(K) has dropped 14 percent so far this year, down to $68,000 from $79,000 at the start of the year.
"Some have lost more than 30 percent," the report said. Gosh, it's almost like they were talking directly to me on that one.
Only about half of the 401(K)s are invested in the stock market, according to the survey, and more than 6 percent of those surveyed cashed out, a move that runs contrary to most financial advice these days.(3 Comments)
MPR News revealed today that the Lizard People advocate is Lucas Davenport of Bemidji.
"A friend of mine, we didn't like the candidates, so we were at first going to write in revolution, because we thought that was good and to the point. And then, we thought the Lizard People would be even funnier, and there was kind of a running inside gag between some friends and I."
Still unanswered is who Lucas' friend end up voting for as there was only one Lizard People ballot.
But back to our story. How did MPR find Lucas? We didn't. He found us. He sent us an e-mail on Saturday evening.
My name is Lucas Davenport and I live in Bemidji, Minnesota. My ballot, the infamous "Lizard People" ballot is mine. If you'd like my story about why I voted "lizard people" and what my real intentions were, seeing as how it's already been thrown out, please contact me at xxxxxx or 218-xxx-xxxx. You may not believe me, but I could prove that it's my ballot, assuming that it hasn't been destroyed.
I wish it could be a more compelling story of intrigue behind the unmasking of Mr. Davenport.(6 Comments)
What's the future of the "don't ask, don't tell" policy in the U.S. military?
National Public Radio's Talk of the Nation tackled the subject today.
"I don't see why we're cutting off people at a time when we need them in the military," Alex of Mankato said when he called the program. He's in the Minnesota National Guard and has recently returned from Kosovo. "Whether or not they're officially outed, you will know within the unit who is gay and who is not."
The policy, which turned 15 this year, ended the military's practice of asking recruits whether they are gay, but dismisses those who acknowledge that they are. A bill to repeal the policy has 149 co-sponsors, including Reps. Oberstar, McCollum and Ellison in Minnesota, but not Rep. Tim Walz nor Rep. John Kline, two recent veterans of military service.
A poll from the Washington Post last summer found 75 percent of those surveyed favored allowing homosexuals to serve in the military.
The Atlantic's Marc Ambinder writes today that President-elect Barack Obama has little choice but to punt on the issue:
For one, the LGBT community is at a period of weakness, coming off losses in California and Florida on propositions to outlaw gay marriage. By focusing initially on an issue prominent in the LGBT community, Obama would be essentially ignoring the message he received from two states that helped get him elected, which supported a Democratic candidate but did not back steps forward in gay rights. A repeal now would be perceived as an appeal to a liberal base at a time when he should be reaching out to moderates, including religious moderates for whom gay issues remain a touchy subject.
A headline on WCCO.com caught my attention this afternoon.
Roundabout Causes Cattle Truck Tip-Over
The accompanying story was about a driver whose truck, with 32 cows, flipped over because he was unaware of the roundabout, the hottest new thing in Minnesota traffic control.
Of course, this would be like running a stop sign and then headlining the story "stop sign causes cattle truck tip-over," which is better, I suppose, than "cattle truck driver, driving too fast and not paying attention causes cattle truck trip-over."
Last summer, I put a short slideshow together explaining the science of the roundabout:
Woodbury's roundabout experiment has been so successful -- if one ignores the woman who almost t-boned me a few weeks ago when she went careening through without stopping, apparently believing the old Minnesota adage, "if I'm talking on my cellphone, you're not really there" -- they're building another one.
They're supposed to be -- and usually are -- a fairly simple process. But don't tell that to Wisconsin, which has put together an online video that takes 11 minutes to tell you how to drive through one.(7 Comments)
Three tales from the music biz.
It's been a strange week for old fogeys who used to go to the record store to get their music.
And today, Bruce Springsteen is providing free downloads of the title track from his upcoming album, Working on a Dream (today only). The first step toward making a pile of money with an album, now appears to be giving away a piece of it for free.
Music marketing clearly has come a long way from the days when a record company would just pay a disc jockey to play its junk.(2 Comments)
MPR's Steve Mullis has put this graphic together showing Web pages status updates of the U.S. Senate recount in Minnesota on the MPR, Star Tribune, and Pioneer Press Web sites.
MPR's numbers are based on the Secretary of State's recount site, which treats the results the same way they're treated on election night.
The Star Tribune and Pioneer Press are focusing on the gap between Coleman and Franken on election night, and then subtracting or adding to that as differences in each precinct are reported from election night to the recount.
Clear as mud?(6 Comments)
Downstream, some commenters have asked questions of Lucas Davenport, identified today as the person who wrote in Lizard People on his U.S. Senate ballot.
Q: In the Pres race, he selected the write-in candidate Lizard People (with the filled in oval). But he selected a real candidate in the Senate race while still writing in Lizard People. Was he trying to vote in the Senate race, or was the whole thing part of his 'joke'?
I had first written in lizard people on all of the write ins. I then went through and X'ed all the ovals for which I intended my vote, and then blackened them all in. So, yes, I intended to vote for Franken. I had no idea that a write in was an automatic vote. I assumed you still had to fill in the oval for the scanning machine to read the vote. I left "Lizard People" blank intentionally.
Q: You mentioned you discussed this with your friend. Did you friend vote Lizard People too?
As for my friend, yes, in the Presidential election he also voted Lizard People.