Thoughts & links

ABC News reports that video of BP's hemoraging well was in the hands of the US Coast Guard very early on. The video clearly shows oil gushing at a much higher rate than BP was claiming. Yet at that same time, the Coast Guard and other Federal officials were telling people not to focus on the quantity of leaking oil. These revelations along with much of the visible behavior simply adds to the suspicion that the government is trying to protect BP as much as it's trying to protect the environment and the Gulf coast economy.

The Federal economic stimulus effort has turned out to be much like filling a leaking bucket. While Federal stimulus has been creating work projects around the country, state and local governments have been cutting back their budgets and payrolls. Now, just as the Federal stimulus is winding down, regional governments are pulling back even more, including with potentially hundreds of thousands of teacher layoffs.

Meanwhile, the proportion of unemployed who have been without work for more than a half-year is the highest it's been in over a half-century. This is a key difference between this and other recent recessions and raises the danger of creating a new permanently unemployed or underemployed population.

Finally, the Civic Opera Building of Chicago would like to thank the American taxpayer for coming to its rescue, along with a few other prime downtown Chicago addresses. Tishman Speyer Properties of NewYork is the owner of these properties, having acquired them from real estate tycoon Sam Zell when Sam decided to go into the newspaper business. Partial financing for the purchase came from Bear Stearns, whose collapse then passed the mortgage on to the Federal Reserve Bank of New York. This week the FRBNY agreed to restructure the loan, meaning take less money for it, meaning take a loss on it, meaning the Federal Treasury eats it, meaning Federal taxpayers will now subsidize Tishman Speyer's foolish overpayment to Sam Zell (who has since lost much of that money on his foolish overpayment for the Tribune Co.) And this is what the ongoing Federal bailout looks like behind closed doors. Why did this happen? Apparently because Tishman Speyer is--you guessed it--too big to fail, especially since it already lost a fortune when it defaulted on Stuyvesant Town, the largest single residential property in Manhattan. Oh, and one other factor: TS's CEO Jerry Speyer is a board member of--you guessed it again--the New York Federal Reserve Bank.