Morning reading: collapsing walls Edition!

via Daily Kos -Ronald Brownstein:

When Sen. Arlen Specter of Pennsylvania switched to the Democratic Party this week, the response from Republican leaders was unequivocal: Don't let the door hit you on your way out.

Of course, they said that while standing, metaphorically speaking, in a building with no roof, broken windows, and collapsing walls.

dday: But Remember, Greed Is Good

Over the last 30 days, Chrysler secured deals with their union. They got the bondholders to take 28 cents on the dollar. They made a deal with Fiat. They lined up pretty much every stakeholder and got them all to share in the pain. And then the hedge funds said no and forced them into bankruptcy.

Chrysler LLC is going to file for bankruptcy, an administration official confirmed to CNN Thursday.

The filing comes after some of the company's smaller lenders refused a Treasury Department demand to reduce the amount of money the troubled automaker owed them.

Chrysler officials had no comment on the bankruptcy report. The company faces a Thursday deadline from the Treasury Department to reach deals with creditors who had loaned the company about $7 billion.

But the filing will not mean the halt of operations or liquidation for the troubled 85-year old automaker. Instead, the administration expects to use the bankruptcy process to join Chrysler with Italian automaker Fiat.

In addition, the United Auto Workers union announced late Wednesday night that its membership at Chrysler had overwhelmingly ratified a concession contract reached between the company and union leadership on Sunday night.

This will be a quick bankruptcy, since most of the deals are in place. But in this case, the hedge funds (they are the "smaller lenders" referenced in the article) are more likely to get a better deal from a bankruptcy judge. And we're certainly going to see if anyone trusts buying a car from a company in bankruptcy. So Chrysler comes out of this, but diminished, because the hedge funds demanded payment.

Now can we tax their income as income instead of capital gains?

...Obama on the hedge funds, just now:

While many stakeholders made sacrifices and worked constructively, I have to tell you, some did not. In particular, a group of investment firms and hedge funds decided to hold out for the prospect of an unjustified taxpayer-funded bailout. They were hoping that everybody else would make sacrifices, and they would have to make none. Some demanded twice the return that other lenders were getting. I don't stand with them. I stand with Chrysler's employees, its families and communities. I stand with Chrysler's management, its dealers and suppliers. I stand with the millions of Americans who own and want to buy Chrysler cars. I don't stand with those who held out when everybody else is making sacrifices.

Obama had an interesting bit last night where he talked about the enormous scope of the political landscape, and how "I can't get the banks to do what I want them to." It was a telling example.

• Chris in Paris: Obama rips hedge funds over Chrysler bankruptcy

  This is encouraging news and suggests the Obama administration has had enough of the Wall Street extremists who are only too happy to sponge from taxpayers. They all thought they were going to get a better deal and Obama told them to drop dead. Hell yeah and good for him.

  "For too long," Obama said at the White House, "Chrysler moved too slowly to adapt to the future, designing and building cars that were less popular, less reliable and less fuel efficient than foreign competitors."
  
  The Obama administration had long hoped to stave off bankruptcy for Chrysler LLC, but it became clear that a holdout group of creditors wouldn't budge on proposals to reduce Chrysler's $6.9 billion in secured debt. Obama praised all the constituencies that have offered sacrifices and blasted those that did not.
  
  He said a group of investment firms and hedge funds were holding out for the prospect of an unjustified taxpayer bailout.
  
  "I don't stand with them," Obama said at the White House event.

  I'm with Obama on this one. It's not perfect and maybe the White House should have taken a harder line but it's a change in the right direction. Better late than never.

Think Progress: Banking lobby successfully defeats mortgage cram-down provision.

Today, a proposal to change bankruptcy law and allow bankruptcy judges to cram-down mortgage payments for troubled homeowners failed in the Senate by a vote of 45-51. The provision, which was introduced as an amendment by Sen. Dick Durbin (D-IL), required 60 votes to pass. In recent weeks, support for the measure evaporated in the face of furious lobbying by the banking and mortgage industries. Prior to the vote, Durbin -- who this week said that bankers "are still the most powerful lobby on Capitol Hill" -- took to the floor to decry the banking industry's influence in the cram-down debate:

At some point the senators in this chamber will decide the bankers shouldn't write the agenda for the United States Senate. At some point the people in this chamber will decide the people we represent are not the folks working in the big banks, but the folks struggling to make a living and struggling to keep a decent home.

Watch it:

The American News Project noted that the Mortgage Bankers Association was "in a celebratory mood" at its annual meeting this week because "a massive lobbying campaign" against cram-down appeared to be working.

Sully: Jesus Wept

Some terribly depressing news. Here's the poll result:

More than half of people who attend services at least once a week -- 54 percent -- said the use of torture against suspected terrorists is "often" or "sometimes" justified. Only 42 percent of people who "seldom or never" go to services agreed, according the analysis released Wednesday by the Pew Forum on Religion & Public Life.

So Christian devotion correlates with approval for absolute evil in America. And people wonder why atheism is gaining in this country. Notice the poll does not even use a euphemism like "coercive interrogation" - forcing Allahpundit to substitute it. (Even HotAir, it seems, finds it difficult to write the sentence: "Evangelicals are more likely to be conservative and conservatives are more likely to support torture.") But it remains a fact that white evangelicals are the most pro-torture of any grouping. Mainline Protestant groups were the most opposed. A mere 20 percent of non-Hispanic Catholics believe that torture is never justified.

In a similar poll last September, Southern evangelicals got suddenly secular on this question:

The new poll found that 44 percent of white Southern evangelicals rely on life experiences and common sense to determine their views about torture. A lower percentage, 28 percent, said they relied on Christian teachings or beliefs.

One wonders how many times evangelical preachers have inveighed against the evil of someone like me getting a civil marriage license compared with acts of cruelty inflicted on defenseless human beings in American custody. But one also sees the impact of a Catholic hierarchy more exercized on these social issues than on a categorical evil defended proudly by a former vice-president.

hilzoy: Paul Krugman Asks An Excellent Question

Paul Krugman's column today is on the costs of cap and trade:

"If emission permits were auctioned off -- as they should be -- the revenue thus raised could be used to give consumers rebates or reduce other taxes, partially offsetting the higher prices. But the offset wouldn't be complete. Consumers would end up poorer than they would have been without a climate-change policy.

But how much poorer? Not much, say careful researchers, like those at the Environmental Protection Agency or the Emissions Prediction and Policy Analysis Group at the Massachusetts Institute of Technology. Even with stringent limits, says the M.I.T. group, Americans would consume only 2 percent less in 2050 than they would have in the absence of emission limits. That would still leave room for a large rise in the standard of living, shaving only one-twentieth of a percentage point off the average annual growth rate.

To be sure, there are many who insist that the costs would be much higher. Strange to say, however, such assertions nearly always come from people who claim to believe that free-market economies are wonderfully flexible and innovative, that they can easily transcend any constraints imposed by the world's limited resources of crude oil, arable land or fresh water.

So why don't they think the economy can cope with limits on greenhouse gas emissions? Under cap-and-trade, emission rights would just be another scarce resource, no different in economic terms from the supply of arable land."

Krugman is right. One of the main points of markets is to provide incentives to people to use their ingenuity to solve problems in the most efficient way. Cap and trade is a straightforward market solution to a straightforward market failure. There's no earthly reason why anyone who believes in the marvelous benefits of markets to decide that when it comes to reducing carbon emissions, those benefits will magically cease to exist.