For those not interested in Lieberman, right wing judicial activism and tasteless humor, here is an Open Thread.

This is an Open Thread.

I know very little about health care delivery. But one thing I do know -- health care delivery is not a normal market and applying the standard free market platitudes to it is just plain silly. Greg Mankiw does that today and Paul Krugman has the appropriate response:

[E]conomists have known for 45 years — ever since Kenneth Arrow’s seminal paper — that the standard competitive market model just doesn’t work for health care: adverse selection and moral hazard are so central to the enterprise that nobody, nobody expects free-market principles to be enough. To act all wide-eyed and innocent about these problems at this late date is either remarkably ignorant or simply disingenuous.

I say disingenuous.

Speaking for me only

Lots of headlines today about Treasury's decision to allow banks to repay billions in TARP funds.

A more significant story is getting lost in the shuffle, however: Elizabeth Warren says that more stress tests are needed because unemployment could well exceed the worst case scenario used in the recent stress tests.

"We have not actually broken through the worst-case scenario, but let's face it, the numbers are bad and they're heading in the wrong direction," Warren says.

[More...]

AP:

Three Indiana state pension and construction funds want the Supreme Court to block Chrysler's sale to Fiat so they can pursue an appeal in hopes of getting a better deal. The funds filed emergency papers at the high court early Sunday.

. . . U.S. Judge Arthur Gonzalez, the bankruptcy judge overseeing Chrysler's case, approved the sale last Sunday, finding that the deal with Fiat was Chrysler's only alternative to liquidation. . . . [Second Circuit] Chief Judge Dennis Jacobs . . . asked Thomas Lauria, the lawyer representing the Indiana funds, why he believed his clients would be better off if the deal with Fiat went away and Chrysler was forced to liquidate. "You can't wait for a better deal to come in from Studebaker," Jacobs said. Lauria responded that the sale could be restructured to provide a better return for the secured debtholders.

My own view is that these Chrysler bondholders have no case under the Bankruptcy Code. But heck, the Roberts Court could rewrite it. After all, they seem poised to rewrite Title VII of the Civil Rights Act. Worth a shot with the judicially activist Roberts Court.

Speaking for me only

Surreal news coverage:

The United States economy lost 345,000 jobs in May, the government reported on Friday, a sharp slowing in the pace of job losses that fueled hopes that the economy was on its way toward a recovery. The recession continued to take a toll as the unemployment rate climbed to 9.4 percent, its highest point in a quarter-century. In normal times, the loss of so many jobs in a single month would have been interpreted as a calamity. But 18 months into the longest recession since the 1930s, economists said the milder pace of job losses indicated that the economy was gradually leveling off . . . “Things are still getting worse, but the pace of decline has slowed down,” said David Wyss, chief economist at Standard & Poor’s. “Over all, it’s not quite as dire as it looked in the first quarter.”

(Emphasis supplied.) Happy days are here again! Sheesh.

Speaking for me only

Via Kevin Drum, ding dong the Geithner Plan is dead:

The Federal Deposit Insurance Corporation indefinitely postponed a central element of the Obama administration’s bank rescue plan on Wednesday, acknowledging that it could not persuade enough banks to sell off their bad assets. . . . Many banks have refused to sell their loans, in part because doing so would force them to mark down the value of those loans and book big losses.

The entire plan was ridiculous. Now the question is what does it mean and do we need to do something different? More . . .

General Motors is expected to file for bankruptcy protection tomorrow morning.

Under the restructuring, U.S. taxpayers will own 70% of the new company.

GM is racing to meet the government's Monday deadline to qualify for more aid. It already has received about $20 billion in government loans and could get $30 billion more to make it through what is expected to be a 60- to 90-day reorganization in bankruptcy court.

How it is expected to work: [More...]

Mortgage rates were way, way up last week and because of the rise in rates for 30 year loans the appetite for ARM loans is apparently back, big time.

Borrowers who can't afford the new, higher rates for traditional mortgages are looking at ARMs again and banks are happily handing them out, according to the Field Check Group: [More...]

In the wake of the housing collapse there's naturally been a lot of debate about the role of homeowners who took on risky mortgages (or houses they simply couldn't afford) in inflating the bubble.

But this is a distraction from the real causes of the credit and housing bubbles which as Calculated Risk recently pointed out were driven by: [More...]

Ian Welsh writes:

The refusal to make [banks] take their losses; the refusal to wind up any of the big banks; the refusal to recognize that what is important isn’t the banking system but what the banking system does, and thus the unwillingness to cut past the big banks and lend directly means that those trillions of dollars of losses are going to have to be paid back by consumers and taxpayers. You will pay. You will pay not just in high interest rates, but in lower wages, and for many of you, a lack of jobs. The economy will not, before the next recession after this downturn, return to the same level of employment the US had before this crisis. All of this because neither party, and neither President, had what it took to stand up to the banks.

(Emphasis supplied.) This very well could end up being President Obama's lasting legacy - his horrendous policy regarding the financial crisis.

Speaking for me only

Give your car dealer a hug today. This can't be good news for Jeep owners, of whom Colorado has more than its fair share, including me. As part of its bankruptcy plan, Chrysler notified 789 dealers across the country today it is terminating their relationship.

I'm really glad my dealer isn't on this list (pdf). But more closures could be coming. [More...]

Adam Davidson, one of the hosts of NPR's "Planet Money" just conducted a bullying, appallingly stupid interview with Elizabeth Warren that's worth hearing just for a glimpse into just how glib and superficial journalists can be.

Davidson accuses Warren of stepping beyond her bailout watchdog role to advocate for her "pet issues" (Davidson isn't specific about what Warren's "pet issues" are but presumably he is referring to Warren's advocacy for consumers in a number of areas from credit cards to mortgages).

When Warren points out that the financial crisis will "not be over until the American family begins to recover" and that the financial crisis does not "exist independently" from problems experienced by American families (skyrocketing foreclosure rates, high debt levels on credit cards), Davidson sarcastically interjects "that's your crisis." [More...]