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Tuesday, August 30, 2011

Beshear outright slaughtering Williams at this point, up 27 points

PPP just released a new poll, and boy oh boy, well just look:

Well, having worked in politics I'd hate to nail the coffin shut so soon but it appears Williams doesn't have a chance at this point. Polls traditionally should be way tighter by August, but the fact that Williams has right around $100,000 on hand, no campaign manager, a split Republican base, high negatives and is facing a popular incumbent governor tells you unless Beshear is caught eating children at this point he has smooth sailing into November.

Sigh, what a boring year.  Here are the highlights:

"It doesn't look like there's going to be much to see in the Kentucky Governor's race this year. Incumbent Steve Beshear leads by 27 points right now with 55% to 28% for Republican David Williams and 10% Gatewood Galbraith. 

More than anything else this is because Williams is one of the worst candidates a party's put forth in a plausibly competitive Gubernatorial race in recent memory. Only 21% of voters have a favorable opinion of him to 54% who view him negatively. Even with Republicans he's barely seen positively by a 41/29 margin and with Democrats (9/70) and independents (16/55) there are virtually no voters with a favorable view.

Even if the GOP had a really strong candidate this might be an uphill battle though. Beshear has a 57% approval rating, with only 30% of voters giving him bad marks. Out of 42 sitting Governors PPP's polled on those numbers put Beshear in a tie for the 4th most popular with Tennessee's Bill Haslam, behind only Dave Heineman of Nebraska, Mike Beebe of Arkansas, and John Hickenlooper of Colorado. Combine one of the most popular Governors in the country with one of the worst challengers imaginable and you get this blow out race.

Beshear is winning 78% of the Democratic vote. At the same time Williams gets only 59% of Republicans, with Beshear taking 19% of those votes. And Beshear is also up big with independents, getting 51% to 25% for Williams and 14% for Galbraith."

Joe presents a pretty good analysis over at Leo about the prospects of the other candidates.  More or less it's looking to be a pretty blue Bluegrass in 2011.

Monday, August 29, 2011

The newest Obama conspiracy,

I'm trying to keep these straight at this point, Kenyan, Muslim, Communist, Socialist, sleeper cell terrorist, and tack on CIA operative to the list:

Wednesday, August 24, 2011

Steve Chabot loves to go all East Germany on his constituents

Yeah, this is America. I thought even basic constitutional protections would be upheld by this jackass.

Friday, August 19, 2011

Bernie Sanders strikes again: U.S. oil speculative data released by Senator, sparking ire


U.S. oil speculative data released by Senator, sparking ire

(Reuters) - Oil trading data that exposed the extensive positions speculators held in the run-up to record high prices in 2008 were intentionally leaked by a U.S. senator, sparking broader concern about industry confidentiality as Congress moves on Wall Street reform.
Senator Bernie Sanders, a staunch critic of oil speculators, leaked the information to a major newspaper in a move that has unsettled both regulators and Wall Street alike.
In a June 16 e-mail reviewed by Reuters, a senior policy adviser to Sanders discusses how his office received private data with the names and positions of traders and forwarded it exclusively to a Wall Street Journal reporter.
The e-mail, which also attaches two files with the data, was sent to Public Citizen's Tyson Slocum asking him to review it and speak with the newspaper about his observations.
In a statement from Sanders provided to Reuters, Sanders said he felt the data needed to be publicly aired.
"The CFTC has kept this information hidden from the American public for nearly three years," he said. "This is an outrage. The American people have a right to know exactly who caused gas prices to skyrocket in 2008 and who is causing them to spike today."
The leaked information has sparked concern at the Commodity Futures Trading Commission, which is legally prohibited from releasing confidential information that identifies trader positions and identities.
The leak also raises broader questions as U.S. regulators gear up to collect massive new amounts of private data from market players on everything from swaps and hedge funds to blueprints for how large financial firms can be liquidated. The breach of data could make Wall Street less reluctant to hand over sensitive information if they fear it is not appropriately safeguarded.
"This type of incident will have a chilling effect on derivatives trading in the U.S. because market participants will be reluctant to take the risk that their positions will be exposed to the public-and their competitors," John Damgard, president of the Futures Industry Association, said in a statement sent to Reuters.
Republicans have already raised concerns in recent hearings about the Treasury's new Office of Financial Research created by Dodd-Frank, and whether its collection of data from hedge funds and banks may constitute a regulatory overreach.
Although the CFTC is barred from releasing confidential data, the law does require the CFTC to hand over such information if a Congressional committee acting within its proper authority requests it. Once it is in the hands of Congress, there is nothing to prevent lawmakers from releasing it publicly.
The leaked data contains long and short positions held by oil traders in 2008, the same year that oil prices spiked to $147 a barrel. Critics at the time accused oil speculators of driving up prices, leading lawmakers to later insert a provision into the Dodd-Frank Wall Street overhaul law compelling the CFTC to place stricter limits on how many commodity contracts any one trader can control.
Among the kinds of traders accused of excessive speculation included passive long investors such as pension funds, which often seek exposure to commodities markets indirectly by going through an intermediary swap dealer such as such as Goldman Sachs and Morgan Stanley.
The data that was leaked to the Wall Street Journal was compiled by the CFTC in 2008 during a "special call" in which the agency sought crude oil position data from swap dealers so they could piece together market activity occurring both on and off the exchange, people familiar with the matter said.
The CFTC first became aware of the breach of the data after a staffer from Sanders' office sent the agency an e-mail with the information and asked the CFTC's chief economist to discuss it more.
The agency began exploring internally whether or not any staffers were responsible for the leak, and concluded that no CFTC employees were involved, according to people familiar with the matter.
It is unclear exactly how Sanders acquired the private information, and a spokesman declined to say.
But people familiar with the matter say the data later obtained by Sanders was first formally requested by the U.S. House Energy Committee. From there it somehow migrated over to the U.S. Senate.
(Reporting by Sarah N. Lynch; Editing by Russell Blinch and Alden Bentley)

Taibbi: Is the SEC Covering Up Wall Street Crimes?

Rolling Stone:

A whistle-blower claims that over the past two decades, the agency has destroyed records of thousands of investigations, whitewashing the files of some of the nation's worst financial criminals.

Imagine a world in which a man who is repeatedly investigated for a string of serious crimes, but never prosecuted, has his slate wiped clean every time the cops fail to make a case. No more Lifetime channel specials where the murderer is unveiled after police stumble upon past intrigues in some old file – "Hey, chief, didja know this guy had two wives die falling down the stairs?" No more burglary sprees cracked when some sharp cop sees the same name pop up in one too many witness statements. This is a different world, one far friendlier to lawbreakers, where even the suspicion of wrongdoing gets wiped from the record.

That, it now appears, is exactly how the Securities and Exchange Commission has been treating the Wall Street criminals who cratered the global economy a few years back. For the past two decades, according to a whistle-blower at the SEC who recently came forward to Congress, the agency has been systematically destroying records of its preliminary investigations once they are closed. By whitewashing the files of some of the nation's worst financial criminals, the SEC has kept an entire generation of federal investigators in the dark about past inquiries into insider trading, fraud and market manipulation against companies like Goldman Sachs, Deutsche Bank and AIG. With a few strokes of the keyboard, the evidence gathered during thousands of investigations – "18,000 ... including Madoff," as one high-ranking SEC official put it during a panicked meeting about the destruction – has apparently disappeared forever into the wormhole of history.

Under a deal the SEC worked out with the National Archives and Records Administration, all of the agency's records – "including case files relating to preliminary investigations" – are supposed to be maintained for at least 25 years. But the SEC, using history-altering practices that for once actually deserve the overused and usually hysterical term "Orwellian," devised an elaborate and possibly illegal system under which staffers were directed to dispose of the documents from any preliminary inquiry that did not receive approval from senior staff to become a full-blown, formal investigation. Amazingly, the wholesale destruction of the cases – known as MUIs, or "Matters Under Inquiry" – was not something done on the sly, in secret. The enforcement division of the SEC even spelled out the procedure in writing, on the commission's internal website. "After you have closed a MUI that has not become an investigation," the site advised staffers, "you should dispose of any documents obtained in connection with the MUI."

Many of the destroyed files involved companies and individuals who would later play prominent roles in the economic meltdown of 2008. Two MUIs involving con artist Bernie Madoff vanished. So did a 2002 inquiry into financial fraud at Lehman Brothers, as well as a 2005 case of insider trading at the same soon-to-be-bankrupt bank. A 2009 preliminary investigation of insider trading by Goldman Sachs was deleted, along with records for at least three cases involving the infamous hedge fund SAC Capital.

The widespread destruction of records was brought to the attention of Congress in July, when an SEC attorney named Darcy Flynn decided to blow the whistle. According to Flynn, who was responsible for helping to manage the commission's records, the SEC has been destroying records of preliminary investigations since at least 1993. After he alerted NARA to the problem, Flynn reports, senior staff at the SEC scrambled to hide the commission's improprieties.

As a federally protected whistle-blower, Flynn is not permitted to speak to the press. But in evidence he presented to the SEC's inspector general and three congressional committees earlier this summer, the 13-year veteran of the agency paints a startling picture of a federal police force that has effectively been conquered by the financial criminals it is charged with investigating. In at least one case, according to Flynn, investigators at the SEC found their desire to bring a case against an influential bank thwarted by senior officials in the enforcement division – whose director turned around and accepted a lucrative job from the very same bank they had been prevented from investigating. In another case, the agency farmed out its inquiry to a private law firm – one hired by the company under investigation. The outside firm, unsurprisingly, concluded that no further investigation of its client was necessary. To complete the bureaucratic laundering process, Flynn says, the SEC dropped the case and destroyed the files.

Much has been made in recent months of the government's glaring failure to police Wall Street; to date, federal and state prosecutors have yet to put a single senior Wall Street executive behind bars for any of the many well-documented crimes related to the financial crisis. Indeed, Flynn's accusations dovetail with a recent series of damaging critiques of the SEC made by reporters, watchdog groups and members of Congress, all of which seem to indicate that top federal regulators spend more time lunching, schmoozing and job-interviewing with Wall Street crooks than they do catching them. As one former SEC staffer describes it, the agency is now filled with so many Wall Street hotshots from oft-investigated banks that it has been "infected with the Goldman mindset from within."

The destruction of records by the SEC, as outlined by Flynn, is something far more than an administrative accident or bureaucratic fuck-up. It's a symptom of the agency's terminal brain damage. Somewhere along the line, those at the SEC responsible for policing America's banks fell and hit their head on a big pile of Wall Street's money – a blow from which the agency has never recovered. "From what I've seen, it looks as if the SEC might have sanctioned some level of case-related document destruction," says Sen. Chuck Grassley, the ranking Republican on the Senate Judiciary Committee, whose staff has interviewed Flynn. "It doesn't make sense that an agency responsible for investigations would want to get rid of potential evidence. If these charges are true, the agency needs to explain why it destroyed documents, how many documents it destroyed over what time frame and to what extent its actions were consistent with the law."

Chamber of Commerce sets out to hack Progressive Organizations

Anonymous strikes again:

via Leo via Think Progress:

Earlier this year, ThinkProgress obtained 75,000 private emails from the defense contractor HBGary Federal via the hacktivist group called Anonymous. The emails led to two shocking revelations. First, that an assortment of private military firms collectively called “Team Themis” had been tapped by Bank of America to conduct a cyber war against reporters sympathetically covering the Wikileaks revelations. And second, that late in 2010, the same set of firms began work separately for the U.S. Chamber of Commerce, a Republican-aligned corporate lobbying group, to develop a similar campaign of sabotage against progressive organizations, including the SEIU and ThinkProgress.
In presentations obtained by ThinkProgress from the e-mail dump detailing the tactics potentially used against progressives, HBGary Federal floated the idea of using “fake insider personas” to infiltrate left-leaning groups critical of the U.S. Chamber of Commerce’s policies. As HBGary Federal executive Aaron Barr described in several emails, his firm could work with partner companies Palantir and Berico Technologies to manipulate fakeonline identities, using networks like Facebook, to gain access to private information from his targets. Other presentations are more specific and describe efforts to use social media to hackcomputers and find vulnerabilities among even the families of people who work at organizations critical of the Chamber.
In one email from the dump, Barr discusses a fake persona he created called “Holly Weber.” She would be born in Portland in 1984, attend Reynolds High School, and work for Lockheed Martin after a stint in the Air Force. Earlier this week, Twitter users actually identified the phony account. Before it was taken down, ThinkProgress snagged screen shots of the fake persona’s Facebook and LinkedIn accounts. (Barr also described his strategy for pretending to be teenagers online). View a screenshot of the fake account below:

Fox News says: "The poor are okay because they have refrigerators"

Despite massive amounts of inequity and poverty: Not Trickling Down: The Percentage Of Americans In Poverty Now Equals China



Thursday, August 18, 2011

Another military birther to go to jail


Adam Weinstein flags the case of the latest member of the military, Staff Sgt. Daryn J. Moran, who has apparently gone AWOL over his belief that Barack Obama was not born in the United States and is therefore not legitimate commander-in-chief.
Moran stopped reporting for work at Ramstein Air Force base in Germany last week because of his belief that Obama is "an enemy and a liar." His recent background in the military includes protesting the repeal of "Don't Ask, Don't Tell" and getting in trouble for assailing Islam in a way that made coworkers uncomfortable.
"I feel like I'm supporting the flag of whatever those Islamic countries are and the rainbow flag, and not the red, white, and blue, you know?" he said on a Birther radio show over the weekend. He also expressed his belief that Obama's long-form birth certificate, released in April, is fake.
The episode points to the remarkable resiliency of Birtherism. And the fact that Moran's case has quickly become a cause celebre online shows that anti-Obama conspiracy theories continue to have a broad appeal.
In a letter explaining his actions, Moran, who says he believes he will be arrested, cites as a role model a former Army doctor who pulled a similar stunt last year.
Regular readers will remember the tragic case of Terry Lakin, who served six months in prison for his Birther-inspired refusal to follow orders. Lakin accomplished nothing beyond losing his job and causing financial ruin for his family.
In Moran's case, the Omaha World-Herald found that the airman is getting support from his like-minded father:
"I think he thinks he's right, and so I'm behind him," Howard Moran said. "I am concerned they are going to put him in jail, though."
Finally, here is Moran explaining his stance on a Birther radio show:

Krugman says fake alien invasion would fix economy

A joke of course, but it would knock all the silly debating off.


Please, keep running to the right R's

Please Rick Perry, keep saying that Ben Bernanke is treasonous, also keep reminding us how you're flirted with the idea of having Texas secede (again).

The next 2 years are going to be a laugh riot of politics. And it's only going to get crazier...

Monday, August 15, 2011

Yeah Lexingtonians! Let's show everyone how much we hate poor people!


As Urban County Council members consider expanding a nuisance ordinance that might threaten the Catholic Action Center's existence, the center is trying to address neighbors' complaints about loitering homeless people.

The center at 400 East Fifth Street provides food, shelter, restrooms and showers for the homeless.

But neighbors complain about drunks, fighting, raucous behavior and crowds of people congregating on the sidewalk outside the center, frightening children who pass by on their way to William Wells Brown Elementary School a few blocks away.

These are not new issues, Councilman Steve Kay said.
But the center has not addressed such complaints, he said. Kay, who lives in the neighborhood, said he was aware of problems even before he took office in January.

Resident Stuart Green said he has seen many of these problems for years, "but they were not as bad as they are now."

Four council members met recently with Bishop Ronald Gainer of the Roman Catholic Diocese of Lexington to express their concerns and show him the lengthy list of 911 calls to police regarding the Catholic Action Center.

"We asked the bishop to take a look at the crime statistics and take some action to increase safety there," Vice Mayor Linda Gorton said.

Police received 779 calls about the Catholic Action Center from June 2, 2006, to June 2, 2011.
That compares to 38 calls to police from Lighthouse Ministry, 1,708 from the Hope Center and 762 from the Salvation Army, all of which also house homeless people.

More calls came from the Hope Center because it is a larger facility, with about 300 people staying there each night, Kay said. About 40 people stay at the Catholic Action Center each night.

At other facilities serving the homeless, most police calls came from the facility itself because staffers were having trouble with someone who was drunk, on drugs or being disruptive, Kay said.

"At the Catholic Action Center, it is mostly the neighbors who call. The center doesn't seem willing to police its own activities and the people it services," Kay said.

The city also has received 21 complaints about trash and loitering outside the Community Inn nighttime homeless shelter, which opened this spring at 824 Winchester Road. The inn is a joint venture of the Catholic Action Center and Emmanuel Apostolic Church of Zion. An average of 65 men and women sleep there every night.

One way to deal with the disturbances, Kay said, is to expand the city's nuisance ordinance so it applies to commercial property, not just residential property. "The current ordinance says if you have more than two police citations in a certain period of time, the building can be closed for one year," Kay said.

Ginny Ramsey, co-director of the center, said her staff met with neighbors two weeks ago to hear their concerns, and another meeting is scheduled Monday. She also wants to meet with council members.

She said the center has taken steps to respond to concerns. A security guard was hired to patrol in front of the center from 7 to 8:15 a.m. and 2:15 to 4 p.m., times when children are going to and coming from school. The guard started working Thursday, the first day Fayette County Public Schools were back in session.

Security cameras have been installed at the Fifth Street center and the Community Inn so staff inside can see activity outside.

Also, center volunteers have started picking up trash in front of the center and about a block in each direction on Chestnut Street.

Ramsey said she and her staff are taking the complaints seriously.
She said people at the center have been told they no longer may smoke outside the center. "They can come inside for services. But if they want to smoke, they have to walk," she said.

Read more:

Sunday, August 14, 2011

Where is the bottom? You tell me.


The End Of Europe

Britain is burning. Strange that it should be so. After all, the catastrophic economic news of recent days, including the highly controversial downgrading of U.S. debt by Standard & Poor's, the burgeoning euro crisis in continental Europe and the market turmoil that followed both, has been made in New York City, Brussels and Berlin, not in the streets of North London. But if you look closer, it all makes sense. Britain, like the U.S., has been a center of both great wealth creation and a widening wealth divide over the past 20 years, thanks to the rise and, more recently, fall...

Monday, August 8, 2011

Fancy Farm 2011

Pretty boring, from this we know they all love American service members, Rand Paul rants about how his vision of capitalism is what makes America so great, Gatewood goes after Beshear about not visiting the Navy Seals in Fort Campbell after they got Bin Laden.

Jim did manage to burn one of P'Pool's actors, follow the links to see:

Hillbilly and CJ's wrap up of Fancy Farm 2011. If you're looking for barn-burning speeches you're going to be disappointed this year.

Wait, what? Adam Smith said workers, not owners make capitalism work?

Go figure, who knew half the population was being hoodwinked into an economic theory that has proven to be a false correlation, tax cuts on the wealthiest don't create jobs, and the wealthiest aren't the job creators!


What Republicans get wrong about capitalism

Conservative hero Adam Smith thought workers -- not Rick Perry's "job creators" -- were the engine for growth

To hear the Republicans tell it, even more than paying down the national debt, the key to solving our current economic woes is to make way for the "job creators," a motley crew of Americans who appear to share no more in common than their membership in the top tax bracket.
The reasoning is relatively straightforward and was summed up recentlyby Texas Governor Rick Perry: "America is not going to move forward until we remove restrictions of over-taxation, over-regulation and over-litigation on the job creators and free them so the jobs can be created." This is a familiar refrain, one that makes progressives shake their heads at a seeming indifference to hard choices and economic history. Still, by now it should be clear that the refrain is far more than convenient rhetoric. It is founded on a bedrock belief about the free market, one that answers What makes capitalism work? by addressing a different question: Who? For that is what is at stake in the term "job creators," a vision of capitalism's essential players, one very different from the original account provided by Adam Smith. His account of who makes capitalism work is at odds with the one we are used to. The essential players are found at the base, not the apex, of the economic pyramid.
Near the beginning of "The Wealth of Nations", Smith calls our attention to what, for him, is one of the fundamental qualities of human experience: helplessness. "[M]an has almost constant need for the help of his brethren," he says, for unlike animals, we cannot tend to even our most basic needs on our own. How exactly do we gain the help of others? The answer, says Smith, lies somewhere between the fawning cocker spaniel and the commands of an all-powerful king.
Let's hold the king aside for a moment. When a cocker spaniel wants to be fed, Smith says, "it has no other means of persuasion but to gain the favor of those whose service it requires." It wags its tails, licks its master's hand, and appeals to him with puppy dog eyes. The cocker spaniel will occasionally succeed, and so too will the fawning beggar, but such an approach is obviously not an optimal way to get what you want. Indeed, most times people will simply pass by you, leaving you hat in hand.
Thankfully, says Smith, human beings have a natural propensity to negotiate or, as he describes it, to truck, barter, and exchange. "Give me that which I want, and you shall have this which you want" is not only the manner in which we acquire most things in this world, but it is the building block for an economically advanced society. Thus, Smith declares in his most famous passage:
It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.
People who read this passage and nothing else of Smith tend to regard it as an affirmation of the virtue and efficacy of selfishness over and against the relative impotence of altruism. But that isn't its significance for Smith. Yes, our personal interests act as a sharper spur to action than the interests of others, but the same may be said for the cocker spaniel. The difference is not that we have selfish interests, but that only by understanding the interests of others are we able to fulfill our own.
Indeed, the passage attests to the human capacity for empathy, the focus of Smith's other great work, "The Theory of Moral Sentiments". It is because of our natural tendency to stand in the shoes of others and see the world through their eyes that we can appeal to their interests. The commercial effect of this practice is that we individually learn how to make the kinds of exchanges that, in the aggregate, lead to the wealth of a nation.
This brings us back to the all-powerful king. Fundamentally, he is no different from the rest of us. Regardless of the scepter and pomp, set him down on a deserted island and he would be just as helpless. Still, when he is seated on the throne he can remedy his helplessness by ordering others to attend to his needs. He can also force them to attend to the needs of one another. In this respect, he provides an alternative way of thinking about how we might distribute the resources of society apart from relying on the dull instinct of altruism or the even the organizational force of self-interest guided by empathy.
And yet, says Smith, if we consider those cases where, because of assumed wisdom and/or threatened force, a single person directs considerable resources, we will soon see that this third way fails to match the decentralized power of truck, barter, and exchange. Reflecting on the creature comforts that even the meanest person enjoys in a developed society, Smith says, if we
consider what a variety of labour is employed about each of them, we shall be sensible that without the assistance and co-operation of many thousands, the very meanest person in a civilized country could not be provided, even according to, what we very falsely imagine, the easy and simple manner in which he is commonly accommodated. Compared, indeed, with the more extravagant luxury of the great, his accommodation must no doubt appear extremely simple and easy; and yet it may be true, perhaps, that the accommodation of an European prince does not always so much exceed that of an industrious and frugal peasant, as the accommodation of the latter exceeds that of many an African king, the absolute master of the lives and liberties of ten thousand naked savages.
If the contrast Smith makes is not necessarily marked by cultural sensitivity, it underscores his broader point about who makes capitalism work. Not the all-powerful king, however wise and mighty, but "the assistance and co-operation of many thousands." The butcher, the baker, and the brewer, the countless men and women who support and extend the division the labor -- these are the people who ensure the increasing efficiency, growing complexity, and continued development of society. They are the base of the economic pyramid, and their actions ensure the bounty of the Invisible Hand.

Friday, August 5, 2011

A silver lining after Thursday, oil dropped 25%


Gasoline prices are likely to plunge. The same economic concerns that have prompted a massive sell-off in equities have also driven down the price of crude. It has retreated to $83 from over $110 in late April — a drop of 25%. Gasoline prices usually follow oil down although not in lockstep. Refinery costs often interfere with the differences in the rate of ascent or descent.
If the 2008/2009 recession is any indication, crude could move toward $60. The drop helped push gasoline prices down to $1.62 per gallon for regular in early 2009.
There has been concern that as gasoline approached $4 a gallon in the spring it could cripple the U.S. economic recovery. American families, it was theorized, would cease whatever consumer spending they had begun when the recession ended. Families with two working adults who commuted to jobs would have to pay hundreds of dollars more a month to operate their cars. The price of gas still averages $3.70 nationwide for a gallon of regular. That is up from $2.75 a year ago, so the price would need to collapse to ever return to mid-2010 levels.
A new recession has almost certainly begun. Damaged consumer activity and PMI figures have shown that. A relief in gasoline prices could keep a new dip from being a brutal one. Consumer costs would fall with gas prices. And the undermining of margins at companies that rely on gas to fuel vehicles, such as FedEx (NYSE: FDX) and Southwest Air (NYSE: LUV), and those that rely on shipments by truck or airplane, such as McDonald’s (NYSE: MCD) and Wal-Mart (NYSE: WMT), would end.
A drop in gas prices will not keep a recession from happening. It would, however, soften the blow.

NPR explains how we ain't out of the woods yet...

We really haven't even hit bottom...  Hold on to your asses, this is probably going to get uglier before it gets better:


The nations belonging to the euro currency zone have been struggling with a debt crisis for more than a year. The wealthier nations — notably, Germany — have helped bail out the troubled nations, including Greece, Ireland and Portugal.
Yet these smaller countries have not solved their financial problems, and there is now a growing fear that the debt problems are spreading to the much larger economies of Spain and Italy.
Wealthy European nations and the International Monetary Fund will have to come up with a bailout package that would dwarf the amount they've contributed already — and quickly. So argues Desmond Lachman, a former deputy director for policy of the IMF.
With world markets in turmoil, NPR spoke with Lachman, who is currently a fellow at the American Enterprise Institute, a conservative think tank, and has been a managing director at Salomon Smith Barney.
How did this crisis come about?
Lachman: The short version is that these countries just didn't play by the rules. The eurozone had strict rules about the size of public deficit and debt levels.
Deficits aren't supposed to rise above 3 percent of GDP, and debt should be no more than 60 percent. When you got to 2009, a country like Greece had a deficit of 15 percent of GDP, Ireland 14 percent and Portugal 12 percent.
Wages and prices also fell out of line within the eurozone. They lost huge amounts of international competitiveness relative to Germany, meaning that they opened up huge unemployment rates.
And, since they're stuck in the euro, they can't readily address those problems. A normal country in these circumstances would do the fiscal tightening, but also devalue their currency, which would lead to an export boom. But since they're stuck in the euro, they can't do that.
Why has this spread to Spain and Italy?
They're different cases. Spain's fundamentals are on the shaky side. Not so much in the public sector, but in the private sector that borrowed too much to finance a housing bubble that was worse than in the United States. The banks abroad are now reluctant to roll over those loans.
Italy suffers from two problems. Its economy doesn't grow at all. In the past decade, it's been growing by less than 1 percent a year. And they've got very shaky politics. [Italian Prime Minister Silvio] Berlusconi blames not Italy but speculators abroad. He's not responding in ways that the markets want.
Once the markets begin turning against a country, it becomes self-fulfilling. Once markets stop lending, they get themselves into a vicious cycle.
The markets have turned on Italy. Right now, you've just got a huge run on the Spanish and the Italian banks by foreigners.
What are the rich nations going to have to do at this point?
What's important about this crisis from a global point of view — it's not so much a crisis about these peripheral countries as it is about the banking system in France and Germany. The political elite realize that if they cut these countries loose, they've got a huge banking crisis in their own backyard.
They try to prop the periphery up through a massive amount of lending. It's not easy. Where we are right now is, in order for them to be able to save the euro, they're going to have to be able to come up with 1 or 1.5 trillion euros to calm the markets down.
That's what we're going to see in the next few days, whether they've got the resolve to do that. But they are getting considerable pushback from the electorate. The German voters are furious enough about having to bail out Greece. How are they going to feel about a country like Italy or Spain that's going to cost a lot more? And not just for 2012 but 2013 and 2014?
What happens if they don't come up with an addition trillion, or more?
Then I think it's game over for the euro. We'll have these countries defaulting. If they don't have that kind of backstop, they can't get access to public financing. We've just seen that with Greece.
Italy has a huge amount of debt falling due over the next six months, like 100 million euro. If the markets seize up on Italy and the European Union and the IMF don't present financing, Italy will have to default on some of its obligations. That would be really bad news.
My expectation would be, it might be torturous and they might balk, but in the end they'll come up with the money. Because the real story is the European banking system. You're talking about a banking crisis in an area that accounts for a third of the world's output. It would spread in the same way that the Lehman banking crisis spread.
That led to the global recession in 2008. So this would have obvious implications for the U.S. economy.
The U.S. would get hit pretty hard. The implications would be severe. Money market funds have $1.2 trillion invested in European banks. That alone is a huge linkage.
There's no doubt that the U.S. economy is slowing abruptly. The last thing that the U.S. economy needs right now is a shock coming from Europe.
How do you see this playing out over the longer term?
The countries at the periphery are going to have to adjust. They can't expect politically for Germany to keep writing blank checks. But the recipe that the IMF and EU prescribes — just keep tightening your belt, which is telling them to live with a deeper and deeper recession — that's not a sustainable view, either.
My view is that the euro is going to break, it's just a question of when. You've had reckless policies for 10 years and the system now is broken. I've never seen anything quite so serious.
There's a crisis playing out in a part of the world that's hugely important for the global economy.
What makes it difficult to be optimistic is the crisis is playing out in five or six countries simultaneously. We're just lurching from one crisis to the next. I don't see any reason for that to stop.
We're going to need more bailouts and more austerity and at some point this thing breaks.

Krugman weighs in

Rates of Wrath:

Not good news in stock markets — but you really have to look at the bond markets to get the full awfulness of the situation.
The US 10-year bond rate is now down to 2.5%. So much for those bond vigilantes. What this rate is saying is that markets are pricing in terrible economic performance, quite possibly a double dip. And it also says that Washington’s deficit obsession has been utterly, totally wrong-headed.
Meanwhile, Italy’s spread against German bonds is soaring even further. What are markets pricing in here? Default as a real possibility; maybe even euro breakup. The latter certainly sounds a lot more plausible now than it did a few months ago.
Oh, by the way, how do I know that falling rates in America and rising rates in Italy are both bad news? Part of the answer is that you have to look at the context. My old teacher Charles Kindleberger used to say about balance of payments analysis that everyone wanted a single number that told you whether things were good or bad, but what you really needed, always, was a story.
But if that doesn’t satisfy you, you can always make sure to look at more than one market. Italian stocks are plunging, which tells you that the rate rise isn’t about economic optimism; so are US stocks, which tells you that our rate fall isn’t about optimism regarding US solvency.

So things are falling apart all over. Maybe someone should do something?