By a 5-4 decision, the conservative judicial activists on the Supreme Court violated in the Ricci decision any reasonable notion of state sovereignty by second-guessing use of public money by a local government, imposing by fiat the elitist views of those judges on how to judge potential qualifications for a local firefighters job.

It is a remarkable thing that conservatives that supposedly object to (a) inflexible federal rules on civil rights; (b) telling states how to spend their own money, and (c) second-guessing elected officials with judicial opinion would violate all three principles in the Ricci firefighter case. But then, conservatives have never really objected to judicial activism or federal imposition on local governments, just to most situations where such federal activism benefits poor people or non-white folks.

Somehow don't expect to hear Sotomayor praised for judicial restraint and deference to states rights in her 2nd Circuit ruling in the Ricci decision.

Update Below the Fold

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OK, so Bernie Madoff will spend the rest of his life in jail. But the question of what happened to the money still remains.

The central problem being played out among Madoff victims is that only a small fraction of the nearly $65 billion that disappeared has been recovered.

So he didn't earn 10% a year on the invested money with some fantastic stock picking skill. Even if he had left it in a money market account earning 2%, it wouldn't explain how most of the $65 billion has disappeared, unless as I speculated in January it was just a money laundering operation for some very bad people who made sure they got whole.

General Electric's CEO Jeff Immelt gave a speech in Detroit on Friday announcing a new manufacturing plant. What he said went beyond the usual corporate-speak into the realm of essential truth.

Many bought into the idea that America could go from a technology-based, export-oriented powerhouse to a services-led, consumption-based economy - and somehow still expect to prosper. That idea was flat wrong. And what did we get in the bargain? We've seen a great vanishing of wealth. Our competitive edge has slipped away, and this has hit the middle class hard.

As a nation, we've been consuming more than we earn, saved too little and taken on far too much debt. Growth in research and development has slowed. Our country has made too little progress on some of the defining challenges of our time - like clean energy and affordable health care. Our budget and trade deficits have reached levels that are clearly not sustainable...

Recently my colleague Peter Loescher, the CEO of Siemens, extolled the importance of Germany as an exporting country. In my career, I have never heard an American CEO say that the United States should be leading in exports. Well, I am saying it today: This country ought to be, and we can be, not just the world's leading market but a leading exporter as well.

As I have been saying, the consumer economy will not rescue us from this crisis. We have to become an export power again. And this transition has to come soon. Bob Herbert pointed this morning to a shocking study on labor underutilization (unemployed+part time employed+given up looking for a job).

"By May 2009," according to the Center for Labor Market Studies at Northeastern University in Boston, "the total number of underutilized workers had increased dramatically from 15.63 million to 29.37 million -- a rise of 13.7 million, or 88 percent. Nearly 30 million working-age individuals were underutilized in May 2009, the largest number in our nation's history. The overall labor underutilization rate in May 2009 had risen to 18.2 percent, its highest value in 26 years."

If a year from now we still have 30 million underutilized workers the civil unrest could be exploited by demagogues of the right and the left. Take your pick. It could get ugly.

I'm blown away by the fact that scores of people took the time to comment on the "silliness of Amitai Etzioni" here. In Iran they are shooting protestors; in Iraq people are killing each other because they hold different interpretations of Islam; in many countries millions of people are thrown out of their jobs and homes--and you want to waste your key strokes on me? I mean not my ideas, they may deserve to be taken apart, but on my persona? How trivial can you get?

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In the year I spent in the White House, I kept being surprised by government agencies that simply ignored the president's instructions and directives. In some cases, the political heads of the agencies were more liberal than the president and had their own political agendas; in others, the civil servants just refused to play ball. (Dealing with high levels of inflation I suggested that the government issue some gold-based bonds, which I hoped would demand a much lower interest rate and hence reduce the costs to the public. The president sent me across the street to the Treasury to discuss the matter with the civil servant in charge of the issuance of bonds. The guy in charge said that he did not consider this a sound idea. When pushed, he responded: "you and your president will soon be out of here. I have seen four come and go. And--I will still be here." My little idea was never tested.)

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Here is a scary chart. A second wave of foreclosures in California seems to be growing monthly. More disturbing is that twice the number of homes sold each month are coming back on the market through foreclosure. With this kind of supply- demand imbalance anyone who thinks that prices will stabilize soon is smoking something from Humboldt County.

And as for the inflation hawks on Wall Street, what are they snorting?

South Carolina guv Mark Sanford has resurfaced. Getting off a plane in Atlanta on his way back from Bueno Aires this morning he declared that he went because he "wanted to do something exotic."

No one here at TPM has ever been to Argentina, so maybe you can help us out. Any guesses as to Sanford's exotic exploits? Searching for Obama's birth certificate? Hunting Nazi war criminals? I'll leave it to you.

My wife and I went out for a Sunday stroll today in Santa Monica. On Montana Avenue, the chic shopping street, every third store is empty with a for lease sign in the window. A year ago our U.S. personal savings rate was almost zero and by next month it will be over 6%. Besides saving more we are beginning to pay down our credit cards. Earlier this year household debt as a percentage of disposable income was 134% up from 68% in the early 1980's. My Princeton classmate Vince Farrell notes that this is a huge difference.

Disposable personal income is close enough to $11 trillion that we can use that as a number. If household debt were to retreat to, say, 100% of income, it would be a retrenchment of a good bit over $3 trillion. That would be one big bite out of consumer expenditures. I have no idea where this debt to income will or should go. Things tend to revert to the norm over time, and if we were in the 70% range in the 1980's, I don't think returning to 100% is a crazy view. If the savings rate were to return to its 70-year average of 9%, that would chip in almost $1 trillion a year.

Vince is saying that the consumer's reversion to a cosmology of thrift will take $4 trillion out of annual consumption which represent 72% of our GDP.

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The management of the WP, in its collective unwisdom, has decided to terminate Dan Froomkin's fine "White House Watch" online column effective early next month. The official statement:

Editors and our research teams are constantly reviewing our online content to ensure we bring readers the most value when they are on our Web site while balancing the need to make the most of our resources. Regrettably, this means that sometimes features must be eliminated, and this time it was the blog that Dan Froomkin freelanced" to The Post's Web site.

Everyone knows the dimensions of the newspaper crisis. Last month, the WP company overall reported "a net loss of $19.5 million...for its first quarter ended March 29, 2009, compared to net income of $39.3 million in the first quarter of last year." Income plunged in all the company's divisions--broadcast, cable, even the Kaplan cram course cash cow that's been carrying the company in recent years.

Here's a business plan: Your company's tanking. You've been buying out your most knowledgeable, most experienced hands. You've been shuttering foreign bureaus, even removed the globe that for years pinpointed their sites from your the newsroom--in embarrassment, presumably. Your paper's lost respect. Its editorial section has gone neocon. What to do?

Let's see: Guess you'd better can the liberal online column there. John Podhoretz is probably available for a substitute, maybe cheaper.

As many commentators have pointed out, this is not the first time the Iranian students have protested the repressive regime.

The Iranian government tolerated student-led uprisings in 1999 and 2003 for only a few days before unleashing fearsome crackdowns, sending Basij vigilantes onto campuses, where they flung a few students from the windows; bloodied as many heads as they could with bricks, chains or truncheons; and jailed scores.

Three things seem different this time.

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The American media, that herd of independent minds, give Netanyahu the headlines he wanted: "For the first time, Netanyahu accepts limited Palestinian state" (LAT); "Netanyahu Backs Unarmed Palestinian State" (WSJ); "Israeli Prime Minister Backs Palestinian State" (WP); "Israel PM calls for demilitarized Palestinian state" (CNN); and better, "Israeli Premier Backs State for Palestinians, With Caveats" (NYT).

Further down, you may read about his no to a settlement freeze, no to twin-capital Jerusalem, and the other bricks in the wall he put up.

But the metaphor of the day comes from PA negotiator Saeb Erekat:

Saeb Erekat, the Palestinians' senior negotiator, called on Obama to intervene to force Israel to abide by previous interim agreements that include freezing settlement activity in the West Bank.

"The peace process has been moving at the speed of a tortoise. Tonight, Netanyahu has flipped it over on its back," he said.

What a dreadful weekend! For all the thrill of Obama in Cairo, Ahmadinejad and Netanyahu are not so impressed.

P. S. Some European headlines are graver and less gullible. The Times of London: "Netanyahu defies Obama with hardline speech"; Le Monde: "Netanyahu poses his conditions for the existence of a Palestinian state"; but the Telegraph lines up with American coverage: "Netanyahu backs creation of Palestinian 'state.'"

P. P. S. Martin Fletcher on NBC last night did this right: "It was billed as a major policy speech, Israel's answer to President Obama's demand for progress towards peace. And tonight Israel's prime minister, Benjamin Netanyahu, finally did say yes to a Palestinian state, but with conditions. No military. It must recognize Israel as a Jewish state. Jerusalem will remain the undivided capital of Israel. For many in his own government, Netanyahu went too far. For Palestinians, he didn't go far enough. But tonight, Netanyahu just repeated his traditional line, no new settlements but natural growth must be permitted." He interviewed both Erekat and a Palestinian farmer. Imagine! [H/t: Herbert Gans]

In a brief and shallow policy address at one of the most right-wing Israeli universities, Israeli Prime Minister Benjamin Netanyahu was visibly nervous and edgy as he reverted to sloganeering instead of accepting Israel's historic responsibility toward regional peace. Clearly aiming to appease President Obama's new thrust to end the Israeli-Palestinian conflict, Netanyahu uttered some of the words that all were seeking--like peace and statehood--but stripped them of substance.

Netanyahu and his coalition still refuse to acknowledge that Israel is an occupying power responsible for daily war crimes and the bearer of a sophisticated ethnic cleansing campaign against Palestinians. The speech clearly slapped President Obama and the international community in the face and should motivate the US to finally act to bring Israel in line with international law; otherwise, the future will offer only more of the past.

Mike Murphy, the Republican campaign strategist delivers the bad news to the GOP.

Despairing Republican friends have been asking me what I think we should do to rebuild the GOP and begin our certain and inevitable comeback. My answer disappoints them: "Build an ark."I say this because I've made a career out of counting votes, and the numbers tell a clear story; the demographics of America are changing in a way that is deadly for the Republican Party as it exists today. A GOP ice age is on the way.

I make it a habit when I'm driving in the morning to tune into Rush Limbaugh for a few minutes. He is getting increasingly spleenful, as if he just woke up to realize he is in a permanent minority and it bugs the hell out of him.

How are we here after two landslide elections of Ronald Reagan? How are we here after the Republican takeover of the House in 1994? "How in the world," we ask ourselves, "can the voters forget?" And the answer is, our side stopped teaching. Our side got wobbly. Our side wanted to make nice with the other guys. Our side thinks that the future is getting the gay marriage vote and the Hispanic vote.

Well actually Rush, what Mike Murphy is saying is that you are totally wrong. Demography is destiny.

The U.N. Security Council passed a resolution today which calls for U.N. member states to inspect all ships entering or leaving North Korea if there is a reasonable suspicion that the cargo contains banned nuclear or missile technology. Now, this mission will fall on a little know body, the PSI (Proliferation Security Initiative). The PSI, an activity launched in 2003, meets all the criteria progressive people have been promoting for a new international approach to the exercise of power--yet they are curiously mum about the merits of putting the PSI to work.

The PSI works mainly by sharing intelligence among the participating states, who patrol the seas and interdict ships that are suspected of carrying WMD, their delivery systems, and related materials

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Moderate Democrats, perhaps cowed by Limbaugh's "socialized medicine" trope seem to be backing away from the public plan option. Their substitute is a non profit insurance cooperative.

"I am inclined, and I think the committee is inclined, toward a co-op," Mr. Baucus said. "It's not going to be public, we won't call it public, but it will be tough enough to keep insurance companies' feet to the fire."

This is a really dumb idea. You are going to start from scratch a whole new bureaucracy to handle potentially millions of customers, instead of letting the government which already has the systems in place (thanks to Medicare) service these customers? A start up coop is doomed to fail, which is probably the point.

John Kelly of Columbia, Harvard, and Morningside Analytics has been mapping the Farsi-speaking blogosphere, and if you check out his diagram of technicolor results--visually the gaudiest in cyberspace, but that's another story--you'll see his findings are auspicious on the brink of the election. Turns out that Iranian blogs that link to Ahmadinejad (emtedadmehr.com) are concentrated in a cluster that's normally devoted to Conservative Politics, while the blogs that link to Moussavi (mirhussein.com) "come from all over the map, not just the reformist politics group." In other words, Ahmadinejad's support in the cybersphere is self-limiting.

It must immediately be added that, of course, you would expect proportionately fewer of Ahmadinejad's rural poor to be online than Moussavi's urbanites. Still, if you don't mind having your expectations raised today, this is nice news.

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Senator Mitch McConnell on why Democrats should delay the Sotomayor confirmation hearings.

"There is no point in this," Mr. McConnell said. "It serves no purpose other than to run the risk of destroying the kind of comity and cooperation that we expect of each other here in the Senate."

Who said that irony was dead?

Everytime I hear the comment that we went into Iraq to introduce democracy to the Arab World or that Israel is the only democracy in the Mid East, I think of Lebanon. By Saturday I'm probably going to think about adding Iran to the list.

"Lebanon is a telling case," said Osama Safa, director of the Lebanese Center for Policy Studies here. "It is no longer relevant for the extremists to use the anti-American card. It does look like the U.S. is moving on to something new."

In fact, some analysts said that it was possible that Lebanon's election could be a harbinger of Friday's presidential race in Iran, where a hard-line anti-American president,Mahmoud Ahmadinejad, may be losing ground to his main moderate challenger, Mir Hussein Moussavi.

While President Ahmadinejad has grown unpopular for many reasons, including his troubled stewardship of the economy, political analysts said that President Obama had blunted the appeal of Mr. Ahmadinejad's confrontation with the West.

We all know the Ayatollahs still have the last say in Iran, but if Ahmadinejad loses on Friday in the Iranian Election, it will be 2 for 2 in Obama's Post Cairo speech election victories. That would be a very powerful message for both democracy and reform that even the Ayatollahs could not ignore.

This is the objection the health insurance industry is putting forward in opposition to Obama's plan to include a public plan option in the health care reform bill.

But critics argue that with low administrative costs and no need to produce profits, a public plan will start with an unfair pricing advantage. They say that if a public plan is allowed to pay doctors and hospitals at levels comparable to Medicare's, which are substantially below commercial insurance rates, it could set premiums so low it would quickly consume the market.

So let me get this straight. It's not fair to have a public option because they don't have to make obscene profits for their shareholders and they can use the leverage of the combined group of medicare and public option customers to negotiate better fees with doctors, hospitals and drug companies.

Isn't that the point?

I don't think I could improve upon M.J. Rosenberg's summary of what the meaning of the Obama speech would be to the Mid East. Clearly it was directed at that audience and its reception (except perhaps in the Likud and other expansionist parties in Israel) was very good. What struck me was how a similar speech might be addressed to an American audience, perhaps at one of the Think Tanks that is at the heart of the American Military Industrial Complex. This is a speech that Americans may not be ready for, but some time in the next three years, Obama should make it.

Obama seeks a new beginning with the Arab World. Part of that is the acknowledgement of what can only be described as the Imperial history of American intervention in the Arab world. There are hints in the Cairo speech that he understands this legacy.

The relationship between Islam and the West includes centuries of co-existence and cooperation, but also conflict and religious wars. More recently, tension has been fed by colonialism that denied rights and opportunities to many Muslims, and a Cold War in which Muslim-majority countries were too often treated as proxies without regard to their own aspirations...

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"To those who cling to power through corruption and deceit and the silencing of dissent, know that you are on the wrong side of history; but that we will extend a hand if you are willing to unclench your fist." President Obama could hardly improve on this line, from his inaugural address, during his forthcoming much-heralded major speech to the Muslim world on June 4th. Better yet, he has already further reinforced this position when he announced--after an extensive strategic review--that the United States' goal in Afghanistan was "to disrupt, dismantle and defeat al Qaeda," full stop. To further this message, we have outlined here points we hope the President will include in his scheduled speech.

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"Court Choice Pushes Issue of 'Identity' Back to Forefront," went yesterday's NYT headline on a Peter Baker story. "Identity politics is back with a vengeance," Baker wrote. "The capital once again has polarized along familiar lines."

Note the sources Baker quoted. On Sotomayor's side: Obama himself, David Axelrod and Rep. Nydia Velazquez. Declaring that Sotomayor is a poster child for identity politics: neocon ideologue Abigail Thernstrom (Sotomayor is "a quintessential spokesman for racial spoils"), William Burck, a deputy White House counsel under President George W. Bush, and those discerning analysts, Rush Limbaugh and Newt Gingrich. As if the debate that matters is the one between the administration and the wingnut right. The fact that Republicans themselves are divided on whether to demonize Sotomayor, as reported by TPM's Eric Kleefeld on Friday, evidently doesn't count.

That creaking sound you hear is the NYT bending over backwards to prove it's fair-and-balanced by sanctifying the viewpoint of the far right--perhaps that it even has "empathy" for them.

P. S. In the Monday paper, John Harwood deftly punctures Peter Baker's balloon with a single sentence: "Notwithstanding fierce criticism from the likes of Rush Limbaugh and Newt Gingrich, there is scant evidence of solid opposition from Republican senators."

The central thesis of my Interregnum meme is "the old is dying, but the new cannot be born". This is because the revanchist forces still fight from their bunkers. Case in point, the Big Banks are fighting Obama on derivative reform.

For credit-default swaps, information about intraday trades and prices has long been controlled by a handful of large banks that handle most trades and earn bigger profits from every transaction they facilitate if prices aren't easily accessible.

For example, credit-default swaps tied to bonds of companies such as General Electric Capital and Goldman Sachs typically have a pricing gap of 0.1 percentage point between the bid and offer price. That translates into a $40,000 margin for every $10 million in debt insured for five years. Greater price transparency could narrow that gap, lowering costs for buyers and sellers but reducing fees for banks.

Goldman Sachs and the other big trading banks have never liked transparency, because their trading and arbitrage profits have always been based on an information imbalance.

Why would they want to change this?