Some good news for a change (along with some bad)
Meanwhile, probably everyone already knows the good news - a) the House let the FISA bill lapse, and b) the House voted contempt citations for Bolton and Miers. Bush claims outrage about both and also claims that the US is about to be destroyed because the Democrats are letting it go undefended. Of course, Bush has never hesitated to break a law he didn't want to obey before, so we can be sure that notwithstanding the fact that the old FISA law is now back in place, he will violate it just as he did before. Furthermore, we all know that those violations have nothing to do with national security. They have to do with political espionage. I'm sure Bush has a tape recording of every call Hillary and Barack have made, just ready to pull them out and play them on the air at the appropriate moment in the upcoming campaign.
Now, for the bad news. Paul Krugman explains in some detain the meltdown of the auction-rate securities market. It turns out that it isn't just ignorant homeowners that succored into borrowing at teaser rates only to get stuck in over their heads when the rates reset. Even the Port Authority of New York borrowed in this auction-rate market -- long-term at a supposedly fixed rate of 4.3%. Only problem, there was supposed to be a weekly auction in these securities so investors would have some liquidity if they wanted to unload them. However, under the terms of the bonds, if the weekly auctions ever failed (something that was never supposed to happen) the interest rate would reset to 20%. Last week the auction failed, as have many others in this market. So, the Port Authority is now stuck with a long-term bond on which it has to pay 20% interest. I kind of wish I owned some of those bonds. The Port Authority has pretty good credit. Of course, if it keeps on having to pay 20% interest on all its debt, that good credit might disappear pretty quickly.
As bad as all this is in many respects (among other things this market has provided funds for student loans, which are now drying up), there's some grim justice in the fact that even the big boys who laughed at the small ignorant homeowners who got stuck with rate resets now got stuck with a rate reset of their own. Schadenfreude.