Dana Perino: Not a pirate, but sometimes wears eye patch to briefings.

It’s Day 3 of one man’s plea for the country that he loves to go out and fight pirates.  They’re out there just waiting to be run through or made to walk a plank and we sit idly by.

Yesterday the British announced they would be putting together a European armada - an armada for God’s sake - to defeat the pirates in the Gulf of Aden.  When was the last time you heard the word ‘armada’ used?  Reading some 18th or 19th century history?  Watching Master and Commander on DVD?  This is some cool stuff and we’re on the sidelines : (

Q:  Another issue. What is the U.S. going to do about the Somali pirates? And has the President been briefed about the situation? Is unilateral or a concerted effort planned?

MS. PERINO: The President has been briefed about it, and ensuring the safety and well being of the crew is of paramount importance in preventing or dealing with issues of piracy. We’re working with other members of the Security Council right now to see if there are actions that we can do to more effectively fight against piracy and prevent it.

It’s a very complicated issue. There’s a lot of international laws that factor into these efforts. One of the things that’s clear is that piracy is something that is affecting a lot more — many more waters than any of us would have known about. I mean, if you look at some of the charts that have come out, that piracy is not something that just happened back in the 1500s. This has been going on for a while. The problem is now that it’s much more dangerous and they have a lot more weapons that they’re using. And the goal would be to try to help get this ship to safety, secure the crew, and then work with our international partners to try to alleviate the piracy problem full stop.

“There’s a lot of international laws that factor into these efforts,” said Perino.  Are you crazy?  There’s one supreme law on the high seas: No Freaking Pirates!  Unbelieveable.

Example of Marine Before He Kills a Pirate

I saw a commercial for the U.S. Marine Corps the other day, and guess what?  They’ve got swords.  And, guess what a pirate’s weapon of choice is?  The sword.  Need I say more?  I’m calling on W to immediately gather as many leathernecks and swords as possible and ship them to the pirates’ lair.  One thing that would be extra cool and send a strong statement to the rest of the world - and potential would-be pirates - is if we actually parachuted them in.  It’s a known fact that most pirates prefer to enter battle by swinging from ropes from one ship to another.  Can you imagine if about 500 enraged, sword-wielding U.S. Marines started dropping from the sky - without ropes - onto one of the remaining pirate motherships?  I guarantee they would shit down their wooden legs.

Here’s what we know and what we think we know:

• White House CoS - Rahm Emanuel - Clinton Alumni
• Secretary of State - Hillary Clinton - Former First Lady
• Secretary of HHS - Tom Daschle - Former Senate Leader from Clinton Era
• Secretary of Homeland Security - Janet Napolitano - Actual Newcomer
• Secretary of the Treasury - Larry Summers - Clinton Alumni
• Attorney General - Eric Holder - Clinton Alumni

Now some are looking at this list and wondering where the change is coming for the top cabinet spots.  Here’s where the benefit of the doubt has to come in.

If you voted for Barack Obama and believe that he means what he says and that he’ll work toward a different Washington, one more responsive to the needs of regular folks and less so to the special interests - remember that he’s not even in office yet. 

When these prospective Cabinet members worked for or in the Clinton administration it was in the heady days when the Democratic Party first fell in love with Wall Street and its money.  They were smitten.  These smart people were tired of ceding the “business” argument to the Republican Party.  Except for perhaps Robert Reich and James Carville every Democrat in Washington during the nineties bent over backwards to deregulate and tear down firewalls because Goldman Sachs and their favorite Republican, Alan Greenspan, said it was good for business.

Here’s what’s different: Obama.  Despite all the crap that John McCain and the Republican Party threw at Barack Obama during the campaign, he stayed on message.  That’s integrity.  That’s steadiness and steel.  I believe the guy when he says things are going to change.

As for the retreads - other things have changed.  The Democratic Party is still heavily funded by the investment class and its economic brainpower is still a little too tied to Wall Street for my comfort, but these people aren’t stupid.  They got caught up in the same high flying economy so many did during the nineties.  The difference was they were in power and we can trace some of today’s financial crisis to the policies they pursued back then.  We can only hope they’ve learned their lesson and the great talent of people like Rahm Emanuel and Tom Daschle will be fully aligned with Barack Obama’s world view and public policy.

One thing I do wish they’d try again from the nineties.  Remember when they deregulated cable TV?  I’m still waiting for the “competition” to lower my cable bills.

At the time we had been through Fannie and Freddie, Lehman was failing, more banks were failing and the federal government and media began explaining things like credit default swaps to America.  Things looked bad, but some were still touting the “fundamentals” of the U.S. economy and the publicly traded companies on our major stock exchanges shouldn’t pay too high a price (with dropping share values) for the excesses of the financial services industry.  Also at that time, I was reading Kevin Phillps’ book, Bad Money.  If you want a better understanding than the average bear - or bull - of the current U.S. financial system Bad Money is a must read.  At any rate, under the influence of that book, it was just obvious that as stocks dropped sharply that day there were probably many more shoes to drop, hence the market wasn’t at the bottom yet.

Now I’ll revise my estimate.  On top of the crisis in the financial system and all that it entails, from failing banks to a still too tight credit market there are many more economic indicators pointing to the final quarter of 2008 just being the beginning of a difficult economic downturn.  Here are a few things that immediately come to mind:

1. Jobs - Job losses mount and job creation lags.  Citi Corp. announced the largest single cutback in people ever in the last week with plans to cut 52,000 employees.  Here in Ohio, 2008 has brought the double whammy of DHL and GM closures with job losses of around 12,000 combined.  Even the once vaunted ’service industry’ which was supposed to employ all of the Americans who used to work in manufacturing took a huge hit with the closure of 600 Starbucks - the same Starbucks which was one of the few service industry employers with even half a soul.
2. Deflation - Stocks fell today partly on news that the Consumer Price Index fell by 1% in October.  This was the largest drop in the history of this measure of what consumers pay for food, clothes, and other goods and services.  The spectre of deflation is upon us and it doesn’t just mean paying less for milk.  For some, it will mean more job losses as businesses make cuts to deal with less revenue.  When prices drop, already in-place salaries and wages don’t. 
3. Housing and Real Estate - Building things means jobs and there’s not a great deal being built relative to recent history.  We all know housing construction has been down.  Part of this is a glut of foreclosed homes in some markets.  What else is at work is tight credit markets.  A little anecdotal evidence: A friend of mine took a trip to Las Vegas two weeks ago.  He said he saw no fewer than four major construction projects on or near The Strip simply shut down midstream.  He asked a native what was up and the reply was “funding dried up.”
4. The Big Three - The major U.S. automakers - GM, Ford and Chrysler - have spent more time and energy recently begging for a taxpayer bailout than they have re-thinking their current strategic position in the world’s automobile market.  The statistic that 1 in 10 U.S. jobs is related to the auto industry has been thrown around quite a bit lately.  I have no idea if it’s true.  What does seem to be true is that between the largesse of the corporate car titans and the United Auto Workers, these venerable brands may be dying.  Great timing guys!  Today’s closing share prices: GM, $2.79; Ford, $1.26.  In another round of hearings on a proposed Big Three Bailout, all three CEOs of GM, Ford and Chrysler flew to Washington, D.C. in their private jets.  That’s three separate corporate jets to ask for our money.
5. Globalization - In the early days as the U.S. financial crisis began to take hold, our European friends smugly rolled their eyes and wagged their fingers.  Oh, the arrogant piggish Americans.  Within weeks they were in as much trouble as we were.  Everything is bought and sold everywhere these days.  That includes unregulated, speculative investment vehicles like credit default swaps(CDS).  It’s estimated that the size of the CDS turd in the world’s punchbowl is $50 trillion.  Looks like there are capitalist pigs everywhere.
6. Recession - Is it here or isn’t it?  Technically not yet but it seems like a foregone conclusion.  It has arrived in Europe.
7. Bank Failures - There’s been 19 this year. 
8. Layaway - It’s back.  You can go down to JC Penney or KMart and actually put something on layaway just like in the olden days before teeny boppers had their own credit cards.  I’m just old enough to remember an America that when you wanted something that wasn’t a car or a house you saved for it or you put it on layaway - paying for it over time and not getting it until it was paid for.  Layaway coming back may be the best sign of the times.

Back on October 6 when I was reading Bad Money, the financial crisis was taking off and the Dow was dropping, 8,000 points or thereabouts seemed a likely bottom - it just felt like there were more shoes to drop.  They have and it still feels like there’s a ways to go for the bottom.  I’m revising to 7,000.

INS Tavar of the Indian Navy seen rescuing a cargo ship from … Pirates!

Here’s a headline any red-blooded American (U.S.) shouldn’t want to see: India Leads Fight Against Somali Pirates.

As suggested yesterday in this space, pirates are bad and they’re back.  Ninety-one hijackings off the Somali coast in just this year.

If there were ever an opportunity for the U.S. of A. to regain its standing in the world - or for a courageous U.S. politician to go ninja and kick some pirate ass - it’s here brothers and sisters.  Opportunity is staring us right in the face - and we’re being outflanked by the Indian Navy?  Come on!

You know what headline Drudge is running this story under on his website which gets a jazillion looks a day?  How about this: Indian Navy sinks mothership …

There’s something wrong with a “mothership” being sunk that’s not being sunk by our own boys and girls of the U.S. Navy.  Our own U.S. Marine Corps Hymn draws its “to the shores of Tripoli …” from pirate butt-kicking in the early days of our republic.  Thomas Jefferson would be befuddled to learn that with all of our high technology and long-windedness about freedom and justice we are allowing pirates to sail the seven seas.

This is Day Two of my plea for the U.S. to defeat pirates.  For you presidents and presidents-elect out there; can you think of one cooler thing to have on your resume than pirate fighter?  President Bush, this one is being delivered slow and right over the plate.  Please tell America that any further motherships to be destroyed will be destroyed by our own American ordinance.  I’ll bet you it’s worth 20 points overnight in your favorable ratings.

Mr. Obama, is there any better way to establish your national security bona fides than to go out and defeat pirates?  If Shrub doesn’t sink every last mothership, you’d be crazy not to in your first 30 days in office. 

There be pirates about the seven seas and they are the real deal.

A couple of months ago I remember a story about pirates taking control of a Ukranian ship laden with arms.  It seemed silly that there are pirates capable of doing such things in the 21st century - and getting away with it - and I didn’t write about it. 

In the last two days however there have been more spectacular pirate attacks.  The Sirius Star, a 1000 foot-long oil supertanker carrying $100 million worth of Saudi crude oil lies at anchor off the Somali coast after being hijacked.  There are reports that the pirates are negotiating with U.K.-based lawyers on a ransom.  A Hong Kong-flagged cargo ship was seized by pirates off the coast of Yemen this morning.  It’s carrying thousands of tons of wheat to Iran.

Sirius Star - Big Ass Ship Controlled by ... Pirates!

The problem is Somalia.  The country has been without a legitimate government since 1991.  It’s essentially lawless.  A review of news reports shows most contemporary pirates are considered to be Somali.  The problem is also the governments and businesses who own the ships.  I was pretty surprised to find out that it is de rigeur to negotiate with pirates and essentially pay ransoms to secure the crews and cargoes taken. It pays to be a Somali pirate.

Political Opportunity?

If you think about it, it’s just ridiculous in 2008, with all of the resources, large navies and technology in the world that we have pirates.  Aaargh!

The opportunity for George W. Bush is apparent.  He is the black and white thinking president of modern times.  This pirate stuff is just that: good versus evil - black and white.  Bush is unpopular at home and abroad.  What a great way for him to go out than by declaring a war on pirates!  This one would actually be a winner.  We’re not pissing on anyone’s sovereignty, we’re going after those who are already doing that.  And, what could be a more true-blue American move than to rid the world of an evil menace.

I think if Bush captures or kills pirates on his way out, he moves the old legacy bar up a notch.  This shouldn’t be a hard sell for the president.  Pirates bad!

How about the Obama play?  If Bush demurs, there’s still a winner - the next president. 

Can you imagine the political and public relations capital Barack Obama will gain with the public and media if he goes after pirates?  Obama hasn’t taken his first steps as president and the media have already annointed him Franklin Delano Obama.  Can you imagine if this guy goes out and kicks some pirate ass?  The sky’s the limit for him then.

Somebody needs to do something about these pirates.  The whole notion of pirates who are so well resourced, trained, and lawyered up that they can ransom a supertanker is just incongruous with a civil world society.

Click this link for PDF of Sec. Paulson’s Testimony

Summary of Draft Auto Rescue Bill

Adds Title IV to the Emergency Economic Stability Act (EESA):

Emergency Direct Loan Program – Directs Treasury to make no greater than $25 billion total in loans to eligible automobile manufacturers no earlier than December 1, 2008. These funds will be drawn from the third tranche of the $700 billion provided under EESA without triggering the reporting and procedural requirements. Treasury will designate a portion of these funds as needed to meet applicants’ short-term liquidity requirements while they develop the long-term restructuring plan due on 3/31/09, and reserve the balance for long-term needs and implementation of restructuring plan.

Eligible Applicants

• Domestic automobile manufacturers producing in the U.S. continuously for 25 years or more.
• Treasury, in consultation with the Oversight Board described below, must make a determination that the failure of the applicant would have “systemic adverse effect on the overall United States economy.”
• Applicant must provide financial and other information as Treasury may require.
• Applicant must submit a short-term operating plan that describes planned use of the loan proceeds, including commitment of resources to develop long-term restructuring plan and reasonable prospects for repayment.•

Long-Term Restructuring Plan – Not later than 3/31/09, loan recipients must submit to Treasury acceptable restructuring plan for long-term viability and international competitiveness, including fuel efficiency standards and advanced technology vehicle manufacturing, rationalization of costs, and proposals for restructuring existing debt.

Oversight Board

• The Financial Stability Oversight Board (Oversight Board) established under EESA will provide oversight of the loan program, and will have four additional members for purposes of the loan program (Secretaries of Energy, Labor and Transportation and the EPA Administrator) in addition to the five existing members (Fed Chairman, Treasury Secretary, FHFA Director, SEC Chairman, and HUD Secretary).

Oversight of the Loan Program – Existing oversight provisions of EESA apply to the loan program, including GAO, Special IG, and Congressional Oversight Panel.

Allocation of Funds – Treasury, in consultation with the Oversight Board, will prioritize applications based on the magnitude of the impact of the applicant’s U.S. manufacturing operations on the overall U.S. economy.

Terms of Loans

• Term: 7 years (or longer as may be determined by the Oversight Board), subject to immediate acceleration if the recipient fails to submit an acceptable long-term restructuring plan.
• Interest Rate: 5% for first 5 years and 9% thereafter.
• Super Seniority: All other obligations and liabilities of a recipient will be subordinate to the loan.
• No prepayment penalty.

Warrants – Treasury must obtain warrants from each loan recipient (or economic equivalent in the case of a privately held firm) equal to 20% of the loan or such greater percentage as may be determined by Treasury in consultation with the Oversight Board.

Executive Compensation and Corporate Governance – All executive compensation restrictions from EESA apply to loan recipients for the duration of the loan plus the following additional restrictions:

• No bonuses to employees making more than $200,000 (which Treasury will adjust for inflation).
• No golden parachutes under any circumstances.
• No compensation plan that could encourage manipulation of reported earnings to enhance compensation.

Ability to Prohibit Transactions, Oversight of Financial Condition – For duration of the loan, Treasury in consultation with the Oversight Board will have the authority to review and prohibit any asset sale, investment, contract, or commitment proposed to be entered into by the recipient valued in excess of $25 million.•

Dividends – Recipients may not pay any dividends for duration of the loan.•

Full Information Access – Recipients are required to provide Treasury and Oversight Board access to all information that may be relevant to the loan to monitor the interests of the government under this title.

Acceleration of Repayment for Failure to Comply – Treasury may require, in consultation with the Oversight Board, accelerated repayment if loan recipient fails to submit an acceptable long-term restructuring plan or fails comply with any other applicable condition or requirement of the loan program or CAFE

• Automakers beg for aid as their bailout bill stalls - Associated Press
• Big Three try to jumpstart U.S. bailout - Agence France Presse
• GM’s Wagoner: Bailout needed to save U.S. economy from ‘catastrophic collapse’ - Reuters
• Support unravels for Detroit’s share of $700 BN - Detroit Free Press
• Mulally defends Ford’s decisions - Detroit Free Press
• Automakers ask for federal help - Washington Post
• Automakers make their case to Congress - New York Times