It's all about the revisions

First quarter GDP was revised down:

The economy grew at a 0.6% annualized pace in the quarter, revised down from the initial estimate of 1.3%, the government said in its second estimate of quarterly gross domestic product. It was the slowest growth since late 2002.

This is due primarily to a rundown in corporate inventories and a large uptick in consumer spending. Since we know that consumer spending is going to go into the tank, I think we will have a rough time of it as business work to restock inventories that consumers don't buy, putting downward pressure on both top line revenue growth and quarterly profits. But MasterCard is at $150. today, so what the hell do I know.

Housing now on the front pages

Two articles, one in the Washington Post the other in the Wall Street Journal, tell two sides of the same dismal story. WSJ first:

Her neighbors are losing interest in their lawns because they're losing their homes -- a result of the recent boom in "subprime" mortgage lending. Over the past several years, seven of the 26 households on the 5100 block have taken out subprime loans, typically aimed at folks with poor or patchy credit.

[...]

If events unfold as some predict, subprime lending could end up eliminating more homeowners than it created. One study by the Center for Responsible Lending, a nonprofit that focuses on abusive lending practices, forecasts that the subprime boom will result in a total of 2.4 million foreclosures nationwide, most of them on homes people owned before taking out the loans. That outweighs even the most optimistic estimates of the number of homeowners created, which don't exceed two million. (Emphasis mine)

Here is the first key quote:

"Individuals will resist reductions in their standard of living with everything in their power, including mortgaging their futures."

and how it manifests itself:

April Williams was feeling the pain of the downturn back in 2002, when she saw an ad from subprime lender World Wide Financial Services Inc. offering cash to solve her financial problems. At the time, production slowdowns at Ford Motor Co. were squeezing her husband's income from an assembly-line job, and they'd heard rumors that more cutbacks were coming. Still, after a loan officer from World Wide paid a visit, they became convinced they could afford stainless-steel appliances, custom tile, a new bay window, and central air-conditioning -- and a $195,500 loan to retire their old mortgage and pay for the improvements. The loan carried an interest rate of 9.75% for the first two years, then a "margin" of 9.125 percentage points over the benchmark short-term rate at which banks lend money to each other -- known as the London interbank offered rate, or Libor. The average subprime loan charges a margin of about 6.5% over six-month Libor, which as of Tuesday stood at 5.38%.

And the second key quote:

"You have two options -- to sell it or to refinance it," she says. "But if you can't do either, what can you do?"

Now the WaPo:

For a long time, Paul and Amy Woodhull's house on Capitol Hill was a honey pot. Through multiple refinancings over nearly a decade, they pulled out money to fix it up, buy a car, pay down credit cards, buy three other properties and improve them, too. Now the pot is dry. The Woodhulls are feeling squeezed by bills, but with interest rates up and home prices down, they're reluctant to touch their home equity again. They called their six children into a family meeting recently, and Amy laid down new rules: No more impulse purchases or frivolous shopping trips. "We're going to have to save our pennies," she declared.

The subprime market is where the most severe pain is going to be felt, but I don't for a second believe that problems will be exclusively (or mainly for that matter) in subprime. Alt-A and prime mortage borrowers will be put under pressure as well. Why? Because:

About a third of the free cash gained during this period was used to buy other homes, they calculated. About 29 percent was used to acquire stocks and other assets. About 12 percent went to home improvements. And nearly a fourth, 23 percent, went to consumer spending, including paying credit card bills and reducing other non-mortgage debts. The amount of free cash extracted has fallen sharply since the peak in 2005, to $217 billion in the last three months of 2006, down by almost half from a peak of nearly $400 billion in the third quarter of 2005. Analysts disagree about whether these changes will affect consumer spending. (Emphasis mine)

Analysts disagree? Sorry, but I don't see how this can't impact consumer spending. A major part of the nation's income - gains on home sales - that was used to fuel high-interest credit card spending is drying up. From where is this income going to be replaced?

How do the Woodhulls feel about this?

"Jeez, we've got all these payments every month," said Amy, 48, a radio network executive. "Now, when I look at sending my son to college in a year, I can't refinance again. Rates aren't falling. . . . I'm kind of stuck. What are my options? Sell a property into a down market? I'm really feeling quite caught -- like panicked caught."

But it's ok:

How consumers cope with these pressures will determine whether the economy stays on keel this year. In the case of the Woodhulls, they know they could sell their home if they really needed cash. For now, though, they're planning to hunker down until the housing market picks up.

So they could sell their home if they really become cash-strapped. But remember, if you can't sell it, and you can't refinance it, what are you going to do?

If you are the US economy, you are going to crash into a recession - hard.

Riis...

Admitted to doping when he won the TdF in 1996:

1996 Tour de France winner Bjarne Riis, who is now the owner and manager of Team CSC, admitted doping in a Friday press conference at CSC headquarters in Lyngby, just outside Copenhagen. The Dane, who was then riding for Team Telekom, said he took EPO in 1996, the year that he ended Miguel Indurain's five-year Tour de France winning streak.

Riis had be called "Mr. 60%", a derisive nickname referring to his heavy EPO use (which boosted his hemocit to 60%). It'll be interesting to see what happens at CSC now (where, by the way, Basso was riding when he got wrapped up in the Fuentes/Puerto affair).

How are we different from those we fight?

Who said this:

As Army officers on duty in the war on terror, you will now face enemies who oppose and despise everything you know to be right, every notion of upright conduct and character, and every belief you consider worth fighting for and living for. Capture one of these killers, and he'll be quick to demand the protections of the Geneva Convention and the Constitution of the United States. Yet when they wage attacks or take captives, their delicate sensibilities seem to fall away. These are men who glorify murder and suicide. Their cruelty is not rebuked by human suffering, only fed by it. They have given themselves to an ideology that rejects tolerance, denies freedom of conscience, and demands that women be pushed to the margins of society. The terrorists are defined entirely by their hatreds, and they hate nothing more than the country you have volunteered to defend.

Your vice-president.

Yes, so for those of you who are going to go out and fight, do not be concerned with giving our enemies the comforts of the Geneva Convention or the rights under our Constitution if they apply. No, treat these savages savagely, for it is by acting like our enemy that we distinguish ourselves from our enemy.

Or something like that.

Housing

Sales of new houses up huge in April (I'd be willing to bet big that the number will be revised down in future months) while the sale of existing homes continues to deteriorate and the median price fell again. The supply of existing homes on the market is now over 8 months. That's a really long time to have your house on the market.

More thoughts on funding

Realized I gave the whole funding thing short-shrift last night in my effort to catch up. The way I see it is that the Dems didn't have the votes to overturn a Presidential veto and the meta-message these days is that not funding a continued presence in Iraq is not supporting the troops. It's as if people think that by not funding the troops, they'd be over there with nothing but rocks to throw and dirt to eat (as an aside, with this administration, they just might). So a showdown here would be all about who "supports" the troops. And on this, the Dems lose. The narrative is too ingrained at this point, and people are still too willing to make the easy (irrelevant and/or wrong) arguments rather than look at the facts and the implications of each side's actions. So in the end, I think the Dems had to avoid an ultimate showdown.

What truly sucks is that (1) the administration talking points write themselves, "Democrats had an opportunity to de-fund the war, they chose not to do so. In fact, they passed an incremental that is precisely what President Bush was asking for, after all, the President has been emphatic in his desire to see benchmarks for the Iraqis. As a result, it is hypocritical of them to now criticize the President's plan since they have, in fact, endorsed it. Blah, blah, blah."

(2) the left is REALLY pissed off about this. And the anger is understandable. They were electing people to go and make changes, principally to take Bush on over the war. Dems caved. Listen, if you think that the war is unwinnable, then you have to want it to end. I want it to end. But at the same time, I realize that with the egomaniac we currently have in the White House, it is not going to end. And as long as the narrative continues to run as it is currently, the Dems are in a box.

Confessions, confessions

The T-Mobile team was implicated in systematic doping in the 90's (when they were Telekom). A number of riders have come forward and confessed. There are some surprises:

A tearful Erik Zabel appeared at the T-Mobile press conference Thursday along with former teammate Rolf Aldag to confess to EPO usage while riding for the Team Telekom in the 1990s. Current T-Mobile Team Manager Bob Stapleton praised the two for coming forward, saying that Aldag would continue to work for the team, and promised "further significant changes in our program this year and next year."

Zabel! Udo Bolts has also confessed. So most of the team supporting Jan Ullrich has now confessed to doping in the 90's. Um, Jan? It's time.

Catch up

Been focused on cycling stuff lately. Politics has slipped from the front of mind for a while, suffering from burnout a bit on that. Don't really know what to make of the supplemental - I was pretty disappointed in the dropping of the timetable, but at the same time I do think that the Dems would have been beaten over the head had the situation reached a critical impasse. I think Bush might have let the troops twist in the wind to score points so I guess I'm ok with it.

I didn't think that Goodling would say much and it doesn't sound like she did. I'm amazed that the Comey stuff hasn't been 24/7/365... I guess if he was a blonde and had gone missing in Jamaica it would be different.

Like I said, I'm a tad burnt on politics.

Equity extraction is down. Of course it's down. Read an interesting article somewhere that said that part of the problem is that mortgages are no longer long-term loans, if you are in a 5-year exploding ARM, the loan is 5 not 30 years regardless of the stated term. Thought that was interesting. The comptroller of the currency said, in a speech today, that lenders probably want to verify a borrower's income. Um, well, yeah.

Got the new Wilco album/CD/MP3, whatever. I'm disappointed. It seems much more straightforward and not particularly interesting. What I liked about Wilco is that listening to their last 4 or so releases, you got to hear the disintegration of a band and a man. This one sounds like he came through the other side and he's... boring.

Still waiting on the coolest bike in the world. The good news is that the 42X16 is feeling smaller and smaller each day.

All caught up now. Peace out.

It's worse

I found out yesterday that Floyd Landis was IN THE ROOM when Geoghan was making the call to Lemond. Landis claims that he didn't hear/understand what Geoghan said to Lemond. Besides being an unbelievably lame excuse, don't you think that they would think it an exceedingly bad idea to call Lemond the night before he is scheduled to testify (you think) against you? What jackasses. And then Landis didn't report the contact to his attorneys until the next day. When Lemond started to testify. Geoghan wasn't fired until Lemond spilled the beans from the stand.

Of course

Did anyone not see this coming?

The ongoing saga of Floyd Landis's business manager Will Geoghegan took another twist Monday when it was announced he was entering rehab.

[...]

"I am sure that you are aware of last week's events and may be concerned about Will's well being," Kay wrote. "He is distraught by his actions and is entering a rehabilitation program [Monday] in an effort to address his problems. The past few months have been remarkably stressful for Will and his decompensation resulted in the unfortunate and embarrassing incident last Wednesday. While Floyd and the entire team find Will's actions regrettable and abhorrent, he is still a friend and we wish him the best in his recovery."

Late edition of McSweeney's Friday

But worth the wait.

A NOTE PLACED INTHE PAY ENVELOPE OF BILLY "THE PIANO MAN" JOEL.

The Landis Case gets Really Weird

OK, after Landis came up positive in the TdF, he called Greg Lemond. That's not weird, although Lemond has been pretty outspoken about doping in cycling (particularly concerning Armstrong). During that conversation, Lemond tells Landis that he (Lemond) was sexually abused by an uncle as a child. OK, that's kind of weird, but not all that weird. This is all weird:

As he was returning to his hotel with his wife he said he received a phone call from a man claiming to be his uncle. Mr. LeMond said the caller said many things including, "I am your uncle and if you want me to finish this... We can talk about how we used to hide your weenie."

Now that's pretty weird. But this is REALLY weird:

LeMond said that he called the local police last night and filed a police report. When he called the number back the voice mail referred to the name, "Will." LeMond believed that it was possibly Will Geoghegan, a close friend of Mr. Landis that is always at his side during official events.

Upon investigation by the police, the number that was used to call Mr. LeMond was identified as that of Mr. Geoghegan, and he was asked to stand and identify himself in the hearing room. Mr. Geoghegan stood from his chair behind Landis.

So, what you have is a close friend of Landis calling Lemond on the day before Lemond was scheduled to testify, pretending to be the uncle who abused Lemond as a child? WTF? And who the hell calls from their own phone? Do I now think he did it? Yeah, pretty much I do.

Comey and the rule of law

Amazing stuff.

Here is a good link to some background and some very good points:

And yet not only would Ashcroft, et al., not budge -- they were prepared to resign their offices if the President allowed this program of vital importance to go forward in the teeth of their legal objections.In light of all these considerations, just try to imagine how legally dubious the Yoo justification must have been that John Ashcroft was so profoundly committed to its repudiation. It's staggering, really -- almost unimaginable that anything such as this could have happened, especially where the stakes were so high. And recall this, as well: These are hardly officials who were unwilling to push the legal envelope, or who were disdainful of the objectives or need for the NSA rogram. Two or three weeks later, OLC did develop an alternative legal theory that permitted a narrower version of the surveillance program to go forward. By all accounts, that legal theory is some version of the argument that the 2001 Authorization for the Use of Military Force against Al Qaeda authorized this form of electronic surveillance, notwithstanding FISA. That is a theory that I and many others have harshly criticized... It is, to say the least, an extremely creative reading of the relevant statutes -- a reading that not a single member of Congress who voted for the AUMF could possibly have imagined, and one that (to my knowledge) not a single member of Congress has approved once reading of it in DOJ's "White Paper." These DOJ officials were willing to sign off on that very tenuous legal theory. What does that tell us about the OLC theory that they inisted upon repudiating?

and this:

This is the real heart of the Comey story -- What happened between September 2001 and October 2003, before Comey and Goldmsith came aboard? Just how radical were the Administration's legal judgments? How extreme were the programs they implemented? How egregious was the lawbreaking?It is imperative now that the Senate do all it can to obtain and investigate the entire paper trail that led up to the events described yesterday. There is no longer any excuse for the legislature to be denied the OLC opinions, at least pre-Goldsmith, that were the basis for the Executive branch's regime of extra-legal conduct. Not only the OLC Opinions and the Executive orders on the NSA program, but also the all-important Yoo Opinion signed on March 14, 2003, the day after Jay Bybee left OLC, which was the genesis for the terrible abuse that occurred in the Department of Defense during the remainder of 2003.

This appears to be the smoking gun to criminal behavior in the White House.

Hey kids, always wear your helmets

I knew that helmet design has really improved lately, but I didn't know it had improved this much:

Lipscomb, a graduate student in medical physics at the University of Wisconsin-Madison, was riding down a bike path in Madison on Friday afternoon. As he approached an intersection, he said, he noticed the oncoming delivery truck preparing to make a right turn in front of him. The truck wasn't going to stop, Lipscomb said, so he slammed on his brakes, flipping his bike and landing in the street.

A moment later the truck rolled over his head.

"I didn't see it coming, but I sure felt it roll over my head," he told The Capital Times newspaper. "It feels really strange to have a truck run over your head." His black helmet was flattened, tread marks visible on the cracked frame.

Wow.

More Landis

Landis is in the middle of his arbitration hearing. It could last up to 10 days. If he loses, he loses his TdF championship and is suspended for 2 years.

Joementum

Lieberman is an asshole, part XLI:

Not only has Lieberman endorsed Sen. Susan Collins (R-Maine.) -- one of Democrats' biggest targets in the 2008 cycle -- but he's planning to co-host a fundraiser for her on June 21 in Washington, D.C.

This is another example of elections having consequences. I hope that this can be remedied in 2008.

More Landis

Not sure what to make of this:

Floyd Landis has said that the United States Anti-Doping Agency (USADA) offered him a deal to reduce his potential suspension on drug charges if he would provide incriminating evidence against Lance Armstrong "or anyone more important than me," according to ESPN.com.

I've said a few times that Landis appears to be using the spaghetti defence - throw everything against the wall and see what sticks. His latest doesn't ring true to me for 2 reasons: (1) Armstrong's been out of the sport for 2 years now, I can't imagine the USADA (USADA, not the French, not the Italians) would still be focused on bringing him down. I'm not sure how focused they were on it while he was riding. (2) Landis had just won the TdF. In the cycling world, there is nobody "more important" than him at the time. They had bagged the biggest fish possible - the comeback winner of the largest, best known bicycle race in the world.

I didn't post on it, but recently all of Landis' "B" samples from the TdF were re-tested and they all came up positive for exogenous testosterone. They weren't tested for it during the original tests and Landis actually fought to prevent these tests from happening. Since they all came up dirty, some additional weight can be given to the "they f'ed up the masking on the day he tested positive in the Tour" theory. It also points to a much bigger problem since he was obviously able to consistently beat the tests. He is claiming that the lab did a big frame-up job on him, that the French are out to get him, etc. etc.

I'm becoming more and more convinced that he's guilty.

Maybe he doesn't want to run

In his heart of hearts, maybe Rudy doesn't want to really run for president. I understand that he really doesn't have a choice in announcing that he's pro-choice since he is and his record states that fairly convincingly. But still, to say it openly and honestly to the Republican base? Again, kudos for his honesty, too bad about his candidacy.

In local news...

Tom Allen is going to run against Susan Collins for the Senate. He seems pretty popular (in Portland at least) and well funded. She seems vulnerable on the war. But I have no idea how everyone else in Maine feels about them. Should be fun to watch though.

More Basso

My thoughts on his "I was just planning to dope" bullshit from yesterday:

He won the Giro by 9 minutes. His competitors were awed by his performance (Gilberto Simoni called him "inhuman"). I've become very skeptical of dominating performances at that level - with current training techniques, current coaching and the ability to communicate with riders from the cars - the natural differences between top riders is minimal and mistakes are very rare. That leaves unnatural differences (doping) and the occasional mistake (like the guy in the TdF every year who misses a key early break and loses 4 minutes).

I'd be willing to bet he was doping during the Giro.

That could be interesting

In the wake of the Devil's bid for the WSJ, another potential suitor has emerged: Yahoo! I like Yahoo!'s finance portal, it's one of the things I think that Yahoo! does much better than Google. The WSJ is one of the few news sites that actually charges for online subscriptions (I have one) and gets people to sign up for it. And the site itself is great.

It could be a very interesting partnership.

They'd probably have a better chance of people believing they are innocent

If they weren't always guilty:

According to the Gazzetta dello Sport's Valerio Piccioni, Ivan Basso has confessed his involvement in Operación Puerto to the antidoping prosecutor Ettore Torri of the Italian Olympic Committee (CONI). Today in Rome, CONI issued communiqué saying "Ivan Basso has largely admitted his responsibility relative to Operación Puerto and has provided the maximum collaboration to clarify the facts relative to his involvement."

Basso, as you'll remember, is the rider who had to sit out last year's TdF as a result of the original Puerto files and was signed to ride for Discovery this year. Last week he resigned from Discovery once new allegations surfaced. I didn't like the Basso signing to begin with, and I'll be interested to see what, if any, fallout results from this latest news.

There is a ton of background on this, but essentially a Spanish paper unearthed a doping ring centered around a doctor in Spain (Fuentes) who had many riders as clients. Authorities have seized Fuentes' logbooks (with coded entries) and a number of blood bags. They are in the process of tying the coded names back to real riders. This is the same scandal that enmeshed Jan Ullrich last year.

Interestingly, new allegations surfaced last week with more riders implicated. One implicated rider of note is Tyler Hamilton who is currently riding for Tinker in Europe. I wonder what his defence for this one will be.

Since the Spanish police have the blood bags in their possession, I imagine it would be fairly easy for a wrongly accused rider to clear his name by allowing the suspected bag to be matched to his own DNA. I assume that riders won't want to do that because (1) the precedent they'd be setting (2) the fact that they're guilty. We'll see how many come out and demand to be tested once accused.

UPDATE:

Basso today unveiled his "I didn't inhale" explanation:

"It was only attempted doping," said 29 year-old Ivan Basso to a conference room full of journalists and photographers in Milan's Hotel Michelangelo. The 2006 Giro d'Italia winner called the press conference following his admission of involvement in the Operación Puerto blood doping scandal...

"In my career I have never used doping products or resorted to blood transfusions," Basso claimed, according to La Gazzetta dello Sport.

Republican Debate

Imagine if you will, the stories that would be written today if at last week's Democratic debate all the candidates said all freakin' night was, "We've got to go back and re-implement the Clinton way." There would be howls about how the Democrats have no new ideas, how they don't understand that the world has changed, etc. etc. etc. Of course when it's Republicans and it's Reagan, well, that's different.

Didn't watch continuously, had to take it in small doses. Was horrified that 30% of the candidates stated that they don't believe in evolution yet are somehow still viable candidates today. Was horrified at Chris Matthews. He really bugs me. The Clinton question? WTF?

Cycling

Things are getting mighty nice here in Southern Maine. I went out for my first recreational bike ride of the year yesterday, a little jaunt around the Back Cove here in Portland. Rode a fixed wheel bike (42x16 for you nerds out there, and man did that feel big) and had a great time.