The Senate has fallen

The Senate overwhelmingly passed Chief Executive Mr. Bush's version of the FISA/PAA bill today. It includes every horror I've talked about, as Democratic Majority Leader Reid intended - retroactive immunity for separate and specific lawbreaking by the telecom companies that cooperated; retroactive legality of the massive warrantless domestic spying programme; forward legality for this spying programme without accountability or enforceability - it eviscerates the already-toothless FISA court. And, most of all as far as Chief Executive Mr. Bush is concerned, it ends the only functional path of investigation into his many crimes.

This is a disgrace. It is far more than the usual well-crafted lies; it's a case of badly-crafted lies, the kind of lie you can vomit out when you know you won't get called on it, or if you are, you don't have to care. Note how after he has done everything in his power - which is quite a lot, as documented here and elsewhere - to ensure this bill's passage and the defeat of any mitigating amendments, Senate Majority Leader Reid's brutally cynical condemnation of the bill runs unquestioned in the Reuters article out this afternoon. He can lie like this because he knows he won't get called on it. He is the architect of this bill's success; he set the voting requirements; he chose the worse of the two bills that came out of committee; he stifled every attempt to filibuster or amend; and, once everything was done but the final vote, voted a token "no" against the final bill he meticulously shepherded through the Senate, so that he could claim to have been against it from the start.

What contemptible filth.

This derogate bill, and the degenerate sophistry about it, is formed from the purest mockery of the very ideas of law, constitution, and the public good. This is the Church Commission finding the details of Watergate - and signing off on them. This is the vindication of J. Edgar Hoover and his many blacklists. This is Senator La Follette coming back to his office and, finding it ransacked, deciding to retroactively affirm that whole Teapot Dome thing in Federal law. This is taking another look at the Sedition Act and saying, "y'know - that wasn't so bad."

What putrescence must emanate from the very footprints of these vile men. What nauseous gasses must corrode their environs. What wretched half-formed monsters must crawl inside their bodies, straining at their bloated skins. With such glee they must celebrate their faithlessness.

There will be a last stand. It will be made in the House, which passed a bad, but less bad, FISA/PAA bill that did not include retroactive immunity, and did include at least some oversight. You can and should sign the petition demanding they hold their ground here:

Petition against warrantless spying on Americans and retroactive immunity

More actions will be coming, if there's time - but there's precious little left of that.

Gleen Greenwald called today Amnesty Day for Mr. Bush and the telecommunications industry. This paragraph is particularly relevant:

...the Washington Post's Dan Froomkin cites the primary justification for telecom amnesty -- that these companies were just doing what they were told by the Government -- and then asks rhetorically: "isn't that the very definition of a police state: that companies should do whatever the government asks, even if they know it's illegal?" I used to think that amnesty supporters held their position because they didn't understand this extremely simple point, but now I think that most of them have their position precisely because they do understand it. A lawless "police state" -- and that's the only term that can be used to describe what this bill creates -- is exactly what our political establishment desires.

I could not agree more. This happened because they wanted it to happen, worked for it to happen, insured it would happen, and then did it. Nothing less; nothing more.

On a final note: Senator McCain, the GOP leadership's chosen candidate, came by to vote the wrong way on cloture and the bill as a whole; these crimes have his wholehearted endorsement, along with that of the Republican party entire. Senator Obama found the time to stop by and vote against cloture - but couldn't be bothered to do anything more, like stick around and vote "no" on the final bill. Senator Clinton did not even manage that much, no doubt too busy trying to figure out how she could declare that the Virginia primary loss didn't count, either.

I would like to believe that Senator Obama actually cares about this issue - but I can't. A press release - no matter how strongly worded - and a token vote do not amount to caring. After all - Democratic Senate Majority Leader Reid himself condemned the bill! And voted against final passage! He can't be for it - and yet, then, there is reality. And I have no problem whatsoever assuming that Senator Clinton is as happy with the outcome as Senator McCain, and Chief Executive Mr. Bush; I imagine she just didn't want her fingerprints on the corpse, since she, like Senator Reid, condemned this bill that Democratic Majority Leader Reid worked so hard to pass.

I should have more, but I don't. There is no law; we do not have a President; there is no Constitution; and none of us - none of us - are citizens. The courts won't help; they're too busy off in fantasyland, pretending torturing suspects is fine - it's only convincted criminals who are protected against it. All that's left is the scrabbling. So go sign the House petition, and contact your so-called Representative. I've always said it's important to keep fighting all the way down, and there's not much left more now to do - the bottom of this pit is coming up at us, fast. Your signature and calls probably won't change the outcome - I do believe we have lost this war - but, if you care, at least you'll have kept your self-respect, and later, at least you will know: you were there, and you fought 'till the end.

Go, and do. It's what's left.

And on the other side of the world...

Heads up: Venezuela Halts Oil Sales to Exxon Mobil. Yes, crude is fungible. However, there aren't as many refineries that can Venezuelan oil (it's heavy, and sour), and, more importantly, they're five days away by tanker, and replacement supplies are 30 days away. I don't know how many BPD we're talking about here; the markets reacted calmly. I have a small question in the back of my head as to whether this might help Chile with its severe upcoming energy crisis, but the answer is not really - they're more dealing with infrastructure failure than anything else. The market play here would probably be on copper futures, by the way. Not that this is financial advice, because it's not, and it's a risky play. But that would be it.

Today's bigger news items were the "Project Lifeline" mortgage aid plan, and the Warren Buffet offer to buy municipal obligations from the monoline insurers. These sent the Dow and S&P 500 up sharply, while doing somewhat less for the NASDAQ. Let's look at both of these for a minute.

"Project Lifeline" is basically a 30-day foreclosure-forbearance plan; if you're 90+ days late on your mortgage (if you're in default), it puts a 30-day hold on foreclosure so you can try to work something out. Bluntly, there's so much FAIL here I don't know where to start, but I'll keep it short and limit it to two elements. First, banks are already months behind on foreclosures, and, as previously detailed here, a lot of CDO-based foreclosures could be dragged on for months if not years due to crap record-keeping and the inability of mortgage owners even to prove ownership. 30 days is nothing in that environment.

But just as much, this isn't going to make that much difference even for those cases where loan ownership is clear. My first reaction when I heard this - on my own, I promise - was the same as Minyanville's Mike Shedlock, which is that this is just a month's free rent for people walking away. His column on "walking away" from mortgages buyers can't afford on properties not worth the loan cost, previously posted, is a bit of a shorter form of a blog post he wrote a week before on his own blog, but both boil down to the same thing: if it makes business sense to walk, walk. It's what they'd do to you; why should you owe them anything?

Warren Buffet's bid, on the other hand, has some real meaning. Again, my first reaction was that he was cherry-picking the salvageable assets from the monoline insurers, which is good in that it would restart the municipal bond market, and then the monolines could go down in flames, by which I mean Hindenberg-style. Mr. Shedlock and I apparently think alike, as he described the offer as Buffet's Kiss of Death.

The key takeaway is that this is not a monoline insurer bailout; they're dead in the water. I think we're better off burying them now and letting the chips fall, because all that's happening right now is more auction failures, this time in municipal bonds, which is just crazy. I mean, seriously:

Rates on $100 million of bonds sold by the Port Authority of New York and New Jersey with yields determined through periodic auctions soared to 20 percent today from 4.3 percent a week ago, after the debt failed to attract enough bidders, according to data compiled by Bloomberg. Presbyterian Healthcare in Albuquerque, operator of seven hospitals throughout New Mexico, had rates on $38.7 million of debt reset at 12 percent.

12% on hospitals?! 20% on ports?! I pay much less than that on my credit card! The good part is that New York is not willing to deal with this kind of crap for very long - their state regulators are forcing the issue, which is absolutely the right thing to do. Particularly when stories like this just keep coming.

On an earlier topic - bank reserves - Mike Shedlock also has his take on nonborrowed reserves going negative, which is to say bank reserves failure. He quotes an article that was going around pooh-poohing the whole thing as no big deal; the article in question asserted that despite this not happening before ever, everything is actually Just Fine. Mr. Shedlock, by contrast, considers this extremely serious. He notes that the banks can only borrow to maintain reserves on valid collateral. No collateral, no loans; no loans, no reserves. And the collateral has been, in large part, commercial real estate loans, since all their CDOs and SIVs and such are in the tank. He then quotes John Dugan, the Comptroller of the Currency, as saying:

Over a third of the nation’s community banks have commercial real estate concentrations exceeding 300 percent of their capital, and almost 30 percent have construction and development loans exceeding 100 percent of capital.

There will be more criticized assets; increases to loan loss reserves; and more problem banks. And yes, there will be an increase in bank failures.

I add that you need to remember those CMBX spreads I point to occasionally; what those are saying is that commercial real estate lending is auguring in, severely; the reason "up" is "bad" in those charts is that they're measurements of perceived risk. Up is bad. That much up is very bad. He tells his readers to keep reading all that until it sinks in. I repeat that recommendation.

Because the credit situation has deteriourated so badly that London's admittedly-bearish Banque AIG is making a massive US government buyout of assets to avoid a Great Depression their base scenario. Not their worst-case scenario. Their base scenario. It's not just for crazies anymore; it's for investment banks. Let that sink in, won't you?