The economic downturn continues.

Spain's finance minister Pedro Solbes has stunned the markets with an admission that his country faces the worst economic crisis in its history as the full effects of the property crash spread through the economy.

http://www.telegraph.co.uk/...

More below:

On the front page of CNN.com, I read two headlines this afternoon, in this order: "Paulson braces public for months of tough times" and "Batman dethrones Spidey as superhero king." Without having seen "The Dark Knight" but being reasonably familiar with the characters involved, I believe the two stories are related.

   I called the death of Indymac Bancorp on Monday, July 7th. The Federal Deposit Insurance Corporation seized Indymac on Friday, July 11th.

  I called the implosion of the two Government Sponsored Entities in the mortgage business, Fannie Mae and Freddie Mac on Wednesday, July 9th. Sunday, July 13th the White House announced a bailout for them.

  Want to know what happens next? It’s ape ass ugly and it’s going to happen to you, so don’t say I didn’t warn you.

I'll just say I work in financial management in a substantial government subdivision in a Northwest state.  We've been working on our budget for 2008-2009 since January and its just about ready.  I make a presentation to our governing board next Monday, and I've been asked to make a presentation on what I see happening in the near future that could affect our financial position.  I did some research today.  I'm trying to be positive, because we employ over 300 people in our small town and pump around 26% of the payroll in to this part of the county.  We are the largest professional employer here and pay double the median salary here.  If we get a cold the community gets the flue.

More below....

Well, this definitely won't go down in history as My Favourite Week. I lost my job, the dream job it felt like I'd spent the last thirty years trying to land. I was underpaid and it was sometimes tough to make ends meet but at least I had a regular paycheck to live from one to the next. But I wasn't living the hell of freelancing anymore, and I was doing work I loved, I was learning new things every day and I was working with great, talented, dedicated people who worked as a team to do the best job possible on limited resources. Although my title was associate editor, I did the jobs of a staff writer, a calendar events editor, a photographer and a proofreader and occasional copy editor. I was the fact-checker, the institutional memory who knew this town's music, arts and political scenes. I was the one who corrected all the misspelled names of artists and photographers in our art critic's copy -- a brilliant man who knows his paint and writes poetically about it but doesn't know how to spell "Salvador Dali."

Why are McCain and Bush always saying the same things?
They're both convinced, or want to convince us, that our current economic problems are "psychological."  There's something psycho about it, true, but it's not all in our heads . . .

According to the New York Times, Peter G. Peterson plans to spend $1 billion to alert the American people to the debt crisis this country is facing:

Unfortunately, since Mr. Peterson has endorsed John McCain, there can be little doubt that his solution is the wrong solution.

Progressives pay a lot of attention to right and wrong, to the downtrodden, to the Constitution, but, to figure out what is happening, they need to pay more attention to following the money.

The American Dream is belief in the freedom that allows all citizens and residents of the United States to achieve their goals in life through hard work.  It was a phrase best coined by James Truslow Adams in his 1931 book The Epic of America.

But that dream has been laid off.

Amity Shlaes, writer for the Washington Post, fan of free markets, and critic of FDR, thinks Phil Gramm was right on the money when he said in his comments to an interviewer with the Washington Times:

"You've heard of mental depression; this is a mental recession," he said, noting that growth has held up at about 1 percent despite all the publicity over losing jobs to India, China, illegal immigration, housing and credit problems and record oil prices. "We may have a recession; we haven't had one yet. We have sort of become a nation of whiners," he said. "You just hear this constant whining, complaining about a loss of competitiveness, America in decline" despite a major export boom that is the primary reason that growth continues in the economy, he said.

Last November I wrote a diary called The Panic of 2008? in which I predicted:

This is NOT the Great Depression II.  Nor is this the stagflationary 1970s.  It is going to unfold as some other Beast.  Only the broad outlines of this Beast appear discernable now:  it will likely feature (1) increasing import prices; (2) wage stagnation (that does not keep up with price inflation); (3) real asset deflation; and (4) possibly a Japan-style "liquidity trap."

 
    That prediction has been borne out so far.  In view of the events of this last week, particularly the run on Fannie and Freddie, and the failure of IndyMac, revisiting the Big economic Picture seems timely.  The Panic of 2008 is unfolding like a neutron bomb over the financial and construction sectors of the economy, leaving the infrastructure of the rest of the economy basically intact.  Asset prices - stocks and real estate - are declining, wages are stagnant, import inflation is setting records.  But The Panic of 2008 nevertheless signifies an important turning point.

(Updated)

The Feds seized the assets of mortgage lender IndyMac Bank.  IndyMac is the largest single bank to be bailed out by the FDIC since the failure of Continental Illinois National Bank and Trust Company whose assets totaled over $40 billion in 1984.  Continental Illinois Bank's remaining assets, 80% owned by the Fed, were eventually sold to BankAmerica in 1994.

As far as I can tell from the wires, former Senator and all-purpose douche bag Phil Gramm is hanging in there and refusing to repudiate his assertion that the U.S. economy is not in recession (and that the American people are a bunch of deranged whiners for even thinking such a thing.)

Now this is obviously not very smart politically -- but then, no one ever accused Phil Gramm of having the common touch. It may even get the husband of Enron's favorite regulator airdropped from the Straight Talk Express over downtown Minsk. But it did raise a question in my mind: Is Dr. Phil technically correct? Is the US economy not in a recession?  

Republican Presidential candidate John McCain today released details of his Economic Plan. Explained by senior advisor and former Texas senator Phil Gramm, the plan would involve the distribution of millions of "Recovery Textiles" to hardworking American families.

"You've heard of mental depression; this is a mental recession" said Gramm in remarks to the Washington Times. "The American people just need some soft, downy goodness to make them feel better, create jobs, lower the price of gas, and get my boss into the White House. Cotton blends and John McCain are something we can all agree upon."

Just two weeks after John McCain's latest declaration that the American economic slowdown is "psychological," his top adviser Phil Gramm also insisted the recession is all in our heads.  The American people are not merely experiencing a "mental recession," Gramm announced, but are "a nation of whiners" for complaining about it.

Some breaking quotes via TPM...McCain's chief economic adviser, Phil Gramm (also vice chairman of UBS and the guy most expect to be McCain's Sec. of Treasury) in an interview with the Washington Times, said the following:

"You've heard of mental depression; this is a mental recession," he said, noting that growth has held up at about 1 percent despite all the publicity over losing jobs to India, China, illegal immigration, housing and credit problems and record oil prices. "We may have a recession; we haven't had one yet."

That's right folks, this is all in the minds of the American people.  There's no real economic pain being felt.  But in case you're complaining about such pain, Gramm has more choice words for you:

Conservative apologists are perplexed.  They can't seem to understand why Americans are so worried about their economic struggles.  After all, unemployment is down from historical highs, we haven't had a quarter of negative economic growth yet, the Dow is still high relative to prior downturns, so what's the problem?

Maybe if they actually listened to just one average American instead of figuring out ways to place the numbers in the right combination to make all look well, they'd get their answer.  Hint: it has nothing to do with what they hear on the nightly news.

Ann Shea, 47, an attorney who lives in Butte, said the nation faces hardships that trump patriotism.

"The issue is, we're paying almost five bucks a gallon in gas, we're in a war we shouldn't be in, and the current administration, which is the one McCain will carry on, is just lying to the American people to get what they want," she said. "Obama's not about that."

ugh.

Well, count me as one of the people now unemployed in this non-recession recession.

My boss just came in with the HR person and gave me the news. They're taking the budget back to 2005 and well, that is before my job existed here, so I'm gone.

Decent severance 2 weeks pay, and full support for collecting unemployment.

To the jump.