December 12th Edition

Good Morning All,

The presumptive failure of the Senate's ability to pass auto bailout legislation led U.S. markets lower yesterday and last night's resolution of the fact has negatively impacted world markets during our overnight trading hours. This failure, or victory for those who opposed the funding, has also diminished the U.S. dollar and had a lowering effect on oil prices despite the OPEC production cuts and the technicals that were leading that commodity trade higher.

Whether you are for or against the auto bailout it is interesting to place the dollar amount in perspective and link it to the short and long term job risks. The alternative bankruptcy option appears to be the popular solution for many business and economic observers, none of whom are auto suppliers who would be left holding the debt. Okay so let's see; the U.S. government has been spending between 10 and 15 billion per month on the inane war efforts in Iraq and Afghanistan while AIG and CitiGroup have already been in receipt of amounts 10 times as large as the initial 14 billion at stake here and they are still paying bonuses to senior management. The list of banks and bankers goes on and on and on.

So who is to blame here? Well the most popular whipping boy among opponents appears to be, surprise, the workers themselves and the UAW leadership. And of course they share the blame, along with the American auto and other executives who are (unlike their Japanese counterparts) paid in excess of 10 times the average labourer's wage. So the difference as best I can figure is about 14$ per hour based on salary and benefits. It does not of course take into account the tax and other concessions given to foreign car makers by Tennessee or Alabama or wherever. It should also be noted that the UAW has not said no to negotiating downward, it has simply refused to sign a blank cheque.

The ball is now in George Bush's court as the Whitehouse can, if it wishes, order the money up from the TARP which is still sitting on the much of its unspent treasury funds. The Republicans have now essentially conceded the rust belt states for the foreseeable future but the mostly abandoned outgoing President still has his legacy to worry about. Just think how far a little love will go for this guy no matter what the source. Detroit can count on these funds, maybe before you read this.

Further to Wall Street's problems has been the disclosure of former NASDAQ Chairman and Advisory Broker owner Bernard Madoff's 50 billion dollar Ponzi scheme wherein he appears to have blown a lot of very rich people's money.As has been said about a lot of this year's goings on "You couldn't make this stuff up".

Look for a market recovery later if Bush comes through.

Obama Worked to Distance Self From Blagojevich Early On


By Eli SaslowWashington Post Staff WriterFriday, December 12, 2008; A01

Like every other politician in Illinois, Gov. Rod Blagojevich waited for Barack Obama's call this summer. He told colleagues that he expected a speaking role at the 2008 Democratic National Convention, a nice bit of payback for being the first governor to endorse the senator from Illinois in his campaign for president. By showing off a connection to Obama in Denver, Blagojevich hoped to repair his own diminished reputation.


Obama's campaign made speaking offers to the Illinois treasurer, the comptroller, the attorney general and a Chicago city clerk. Sen. Richard J. Durbin (Ill.) was asked to introduce Obama on the convention's final night; Rep. Jesse L. Jackson Jr. (Ill.) was told he would speak on television during prime time. Finally, fed up and embarrassed that he still had heard nothing, Blagojevich joked to a crowd at the Illinois State Fair that, yes, he also had been asked to speak -- at 4 a.m., in a Denver area men's bathroom.


Long before federal prosecutors charged Blagojevich with bribery this week, Obama had worked to distance himself from his home-state governor. The two men have not talked for more than a year, colleagues said, save for a requisite handshake at a funeral or public event. Blagojevich rarely campaigned for Obama and never stumped with him. The governor arrived late at the Democratic convention and skipped Obama's victory-night celebration at Chicago's Grant Park.
Even though they often occupied the same political space -- two young lawyers in Chicago, two power brokers in Springfield, two ambitious men who coveted the presidency -- Obama and Blagojevich never warmed to each other, Illinois politicians said. They sometimes used each other to propel their own careers but privately acted like rivals. Blagojevich considered Obama naive and pretentious and dismissed his success as "good luck." Obama disparaged Blagojevich for what he viewed as his combativeness, his disorganization and his habit of arriving at official events half an hour late.

Under different circumstances, friends said, Obama might have derived some satisfaction from seeing Blagojevich handcuffed for allegedly trying to sell off Obama's vacated Senate seat to the highest bidder. But, only six weeks after Obama won the presidency by casting himself as a reformer, the Blagojevich scandal is a jarring reminder that Obama's political origins are in a city and state long tainted by corruption.

Blagojevich was elected in 2002 as a reform governor, but he has faced a series of investigations and charges of ethical irregularities ever since.

"Obama saw this coming, and he was very cautious about not having dealings with the governor for quite some time," said Abner Mikva, a former congressman and appeals court judge who was Obama's political mentor in Chicago. "The governor was perhaps the only American public officeholder who didn't speak at the convention, and that wasn't by accident. He's politically poisonous. You don't get through Chicago like Barack Obama did unless you know how to avoid people like that."

But Obama and Blagojevich shared pieces of the Chicago political network, which is why this has been an uncomfortable week for Obama's presidential transition team. Senior adviser David Axelrod once advised Blagojevich. Antoin "Tony" Rezko, a developer who was convicted in June of fraud and money laundering, raised money for both men. Robert Blackwell Jr., a longtime Obama friend, served on Blagojevich's gubernatorial transition team. Blagojevich appointed one of Obama's closest confidants, Eric Whitaker, as director of the Illinois Department of Public Health.

The president-elect's connection to Blagojevich is emblematic of his political rise in Chicago. Obama had contact with corruption, but rarely firsthand. He relied on the establishment when he needed it, but he maintained enough distance to cast himself as an outsider.

"Few people I've ever known have as good a sense about who might end up getting you in trouble," said Denny Jacobs, a retired Illinois politician from East Moline who befriended Obama when they both served in the state Senate. "It's like a sixth sense. Chicago's a mess, and he was surrounded by it. But he knew the people that could drag you down and tarnish your image."
Even though they both began their careers in Chicago, Blagojevich and Obama operated on distinct tracks. Blagojevich, the son of a steelworker who was born in Serbia, grew up on the city's predominantly white North Side and rode a pair of buses with his mother to his first Chicago Cubs game. He married the daughter of a gritty, deal-making alderman and entered politics as an unapologetic product -- and representative -- of the Chicago Democratic machine. He drew support from the city's white middle class and was elected to the state legislature in 1992.

Obama, a transplant from Hawaii and New York City, moved into the progressive, integrated Hyde Park neighborhood and attended White Sox games on the South Side. In his campaign for state Senate, he cast himself as the righteous alternative to what he called "old-school politics" and pitched his case to a coalition of African Americans and Hyde Park's liberal upper class.
Obama and Blagojevich rarely interacted until Blagojevich ran for governor. Obama told his friends in Springfield that he was unimpressed by Blagojevich's résumé, and he tried to lobby his friend Durbin to enter the race before deciding to support Roland Burris in the Democratic primary.

"When Blagojevich beat me, I told Barack to get on board with him," Burris said. "It was kind of like swallowing his pride a little bit, because he didn't really see that they had anything in common."

About all Blagojevich and Obama shared was searing ambition, which is what occasionally brought them together. Obama recognized that a Democratic governor could help him pass legislation and build his résumé in anticipation of a U.S. Senate run, so he helped Blagojevich's campaign as an informal adviser. Once Blagojevich was elected, he and Obama formed an awkward, arranged marriage: Obama passed a steady succession of legislation and built his reputation as a power player in Springfield; Blagojevich signed the bills and took the center seat at celebratory news conferences.

It worked just fine, Springfield politicians said, until Obama started to eclipse Blagojevich as the rising star in Illinois politics. Blagojevich never endorsed Obama in his U.S. Senate bid in 2004, and he expressed a preference for two other Democratic candidates. On the campaign trail, Obama sometimes made a point to highlight his distance from Blagojevich and the rest of the administration. "Nobody sent me," he often told his crowds.

"The governor didn't offer his support, and to be honest, we didn't really ask for it," said Jim Cauley, a Kentucky native whom Obama hired to run his U.S. Senate campaign. "We weren't going to the old hall or chasing the county chairs. We wanted to show we weren't a part of that world."

While Obama prepared to deliver the keynote address at the 2004 Democratic National Convention, a speech that would launch him to stardom, Blagojevich was back in Springfield watching his own reputation dissolve. After a poor first term, he fought over the state budget with Democratic leaders before flying to Boston and arriving an hour late at a party held in his honor. The event was sparsely attended. Obama made only a brief appearance.
"We have one salvation, and that is Barack," Jacobs, the state senator, said at the time. "It probably knocks Blagojevich down a peg from the leadership chart."

Not long thereafter, Obama started cultivating Illinois leadership of his own. He mentored a basketball buddy, Alexi Giannoulias, and supported his run for state treasurer. He befriended Attorney General Lisa Madigan and Comptroller Daniel W. Hynes. On one night in August, Obama boosted the gubernatorial hopes of all three by inviting each to speak during the opening night of the Democratic convention. Blagojevich watched from his seat.

As Obama went on to win the presidency and his rift with the Illinois governor crystallized, Blagojevich grew increasingly desperate. In phone calls reported in the criminal complaint, he pined for a spot in the Obama administration. Maybe, the governor reasoned, he could let Obama pick his own Senate successor in exchange for a job as an ambassador or as secretary of health and human services. Or maybe Obama could set up Blagojevich's wife, Patricia, with a cushy, high-paid position on a corporate board.

But Blagojevich's solicitations went nowhere, and it became clear that Obama had abandoned him for good.
"They're not willing to give me anything but appreciation," the governor told his chief of staff, John Harris. "[Expletive] them."

Staff writer Peter Slevin in Chicago contributed to this report.