Morning Must Reads

As writer Laura Meckler points out, though, the smiles of a summit may not turn into real policy shifts. As Obama learned in Europe, a warm reception doesn’t translate into action.

“Saturday, Mr. Chávez gave Mr. Obama a book that chronicles what it considers U.S. and European economic and political interference in the region. That photo opportunity came after the pair grasped hands Friday night before photographers, when a smiling Mr. Chávez said, ‘I want to be your friend.’

For the U.S., a better relationship with Mr. Chávez could help in the drug war. Mr. Chávez has hampered the Drug Enforcement Administration’s antinarcotics efforts in Venezuela, and he has close ties to Colombia’s drug-funded communist guerrillas, who operate with impunity in Venezuela.

The U.S. disapproves of Mr. Chávez’s treatment of political opponents and is concerned over his country’s growing ties with Iran. Mr. Chávez has supported Tehran’s bid to obtain nuclear energy in defiance of United Nations sanctions.”
 
New York Times — U.S. May Convert Banks’ Bailouts to Equity Share
 
Banks have been trying to jump out of the federal bailout program as quickly as they can, the Obama administration may not let them go.
Depending on what the stress test results show in the next week or so, loans to banks that Treasury worries might fail in the next crisis could be rapidly converted to ownership shares.

Plus, it would allow the administration to expand the scope of the banking bailout (already at $565 billion) without asking congress for more money.

Writer Edmund Andrews explains that when Obama did so with Citigroup, it was explained as a one-time thing. But now it could be a broad approach to the banking industry.

“After the conversion, the Treasury would end up with about 36 percent of Citigroup’s common shares, which come with full voting rights. That would make the government Citigroup’s biggest shareholder, effectively nudging the government one step closer to nationalizing a major bank.

Nationalization, or even just the hint of nationalization, is a politically explosive step that White House and Treasury officials have fought hard to avoid.

Administration officials acknowledged that they might still have to ask Congress for extra money. Beyond the 19 big banks, which are defined as those with more than $100 billion in assets, the Treasury has also injected capital into hundreds of regional and community banks and may need to provide more money before the financial crisis is over.”
 
New York Times — Obama’s Revenue Plans Hit Resistance in Congress
 
Writer Carl Hulse explains that with Congress balking at the president’s plans to reduce the tax deductions allowed for charitable giving and sell the rights to emit greenhouse gases, there is a $918 billion hole in the White House budget. The money was supposed to be a down payment on a new national health care system, among other things.

While the administration promises the money will still be found and hints at major changes to the tax code next year to pay for the plans, in the short term, Democrats may just fake it.

“Given the difficulties in finding a way to pay for health care, and given the extended time that Democrats have allowed themselves before money to pay for it must catch up with the spending, Senator Judd Gregg of New Hampshire predicts that Democrats will not pay for it at all or will use gimmicks to mask the costs. ‘They are going to play games,’ said Mr. Gregg, the senior Republican on the Budget Committee, ‘and ultimately they are going to add it to the deficit.’”
 
 
Washington Post — Extremist Tide Rises in Pakistan
 
It turns out that giving in to the Taliban doesn’t appease them. Pakistan’s kleptocratic government gave in to Talibani demands to run the Swat Valley in the country’s northwest under hash Islamic law and a considerable degree of local autonomy.  But rather than being appeased, the Islamists are now making more demands and visiting more violence on the capital, less than 100 miles away from their new haven. Writer Pamela Constable explains how things are going in Pakistan.

“‘The government made a big mistake to give these guys legal cover for their agenda. Now they are going to be battle-ready to struggle for the soul of Pakistan,’ said Rifaat Hussain, a professor of security studies at Quaid-i-Azam university here. He predicted a further surge in the suicide bombings that have recently become an almost daily occurrence across the country. Two recent bombings at security checkpoints in the northwest killed more than 40 people.”
 
USA Today — Concerns raised on pace of stimulus

Writer Brad Heath gives a handy guide (with graphic) to how fast and where the Obama stimulus money is going.

Much of the money that’s been spent has gone to close state and local budget gaps, but the bricks and mortar projects that were supposed to put people to work, etc. have been slower to materialize. Who knew that spending an extra $ 1 billion a day since February would be criticized as inadequate?

“The U.S. government has spent about $13 billion of the $60 billion it promised for specific projects, nearly all to help states pay for health care for elderly and low-income Americans. The reports do not say how many jobs have been created.

A handful of agencies — including the U.S. Department of the Interior and the U.S. Department of Veterans Affairs — still have not promised money for any stimulus projects, the reports show.”