Terrorists Win! Modern Warfare 2 Kills Records and Civilians.

For once, marketers have told the truth: Modern Warfare 2 really was the entertainment industry's biggest launch ever.

First-day sales: 4.7 million copies, $310 million in North America and the U.K. Hollywood's biggest movie launch was The Dark Knight, which pulled in $158.3 million (and took three days to do it).

It wasn't an idle boast this past June by marketers that MW2 would blitz the world. Videogames are the future, movies are the past, at least in money terms.

Whatever happened to 9/11 and Bush's War on Terror? In MW2 you can even play a terrorist and shoot civilians at an airport massacre! And see Washington, D.C., go up in flames! Life's good.

Of course, there is the debate (see here and here) over whether such games contribute to real-life violence. Ho-fucking-hum. We're already an extremely violent society.

Memo to Obama: Bring Plenty of Dollars With You to China

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No matter what Republicans say about the health-care overhaul, the scariest bill is the U.S. dollar. If you think Barack Obama's sparring with Congress over health care is difficult, just wait till he starts talking about the dollar with China.

The Chinese did just send out friendly signals about the dollar and the yuan. Cam Hui talks about that this morning on Seeking Alpha.

Wall Street generally likes the weakening dollar, because it makes U.S. exports more valuable. On the other hand, inflation lurks around the corner if the dollar collapses or slides too fast. (Don't worry: It wouldn't be like Zimbabwe's staggering currency collapse and inflation.) Not to mention that China and Japan would see their trillions of dollars in U.S. debt lose even more value.

The WSJ's Mark Gongloff mildly rebukes Wall Streeters this morning by saying that "the case for a weak dollar isn't strong."

For background, see the Financial Times's "Dollar Under Pressure" cluster of stories.

Other bad news this morning: The Fed is likely to raise interest rates around next September, right before the midterm elections, according to the WSJ's latest survey of economists. Ouch.

But good economic news for New York City: Reporters from around the world and from what's left of the U.S. press will flock here for the just-announced trial in federal court of Khalid Sheikh Mohammed and other Gitmo detainees. Spend your money on our hotels and restaurants, please.

Chris Dodd's Big, Bad Cyclopean Regulator Likely to Be a Wimp

Connecticut Senator Chris Dodd, desperate to repair his reputation after his AIG bonus embarrassment and other missteps, now wants one big regulator, eh? The blogger Washington weighs in with a thoughtful piece, arguing that Dodd's bill is likely to contain too many loopholes and "really just maintains the status quo."

Community bankers (i.e., most of America's little banks) think of such a superregulator as a "big, hairy, cyclopean beast," as my colleague James Lieber pointed out in "No Justice." True, but ultimately such a regulator will be wimpy. And why strip any authority at all from the FDIC, where Sheila Bair has shown that banks can at least occasionally be brought back into line?

I'm partial to Washington's arguments because he thinks Glass-Steagall should be reinstated, "that banks should choose either to act as traditional, safe depository institutions or as speculative funds, but not both."

Washington points to a piece that cuts through all the bullshit (including Dodd's) by investment-banking type Marshall Auerback called "Attention Lloyd Blankfein: The Public Purpose of Banking." Wherein Auerback concludes by saying that "what Senator Dodd and Congressman [Barney] Frank are arguing about is akin to how to rearrange the deck chairs on the Titanic."

Gamble on the Supreme Court -- At Your Peril

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Markets are popping up everywhere. There's always InTrade, for those too scared of Wall Street to stand in the direct line of fire. Now there's fantasySCOTUS.net, a fantasy league for U.S. Supreme Court cases. Here's the deal: "Cert is granted. You listen to the arguments. You read the briefs. You predict the outcome. Compete for the win!"

The league went live yesterday, and founder Josh Blackman, a freshly minted George Mason law school grad, says 700 fellow law wonks have already signed up. More from the WSJ's Ashby Jones.

NY State Has a Plan to Avoid Budget Disaster. Wanna Bet? There's Now a Market for It.

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Governor David Paterson says state lawmakers have agreed on most of a plan to narrow a $10 billion budget deficit. All that remains to be settled to patch up the ship of state while it floats in a sea of red ink are $800 million in cuts in education and health care — the two biggest parts of the budget.

Not encouraged by the hapless governor's pronouncement? Bet against New York State's financial survival. InTrade, the Ireland-based trading market on all sorts of issues, opened bets yesterday on whether — and when — the state government will go into default.

The cuts are already bad enough. Leaving aside the poor, hungry, and homeless, now it's students who are being hammered, and not by alcohol. New York City itself is suffering from budget problems, despite the fact that Wall Street appears to be pretty healthy. For the first time ever, New York City's community colleges are being forced to abandon their "all-are welcome admissions policies."

Toward a Perfect Vagina: Cutting-Edge Operations Another Boost to Burgeoning Cosmetic-Surgery Industry

The quest for the "perfect vagina" — the growing trend of labial surgery — is fraught with peril, according to a new report in a British medical journal.

But the increasingly popular surgery (the 2008 video above has been viewed 3 million times), which clips flesh for a neater (and critics say "more pubescent") look down there, is yet another boon to the $30 billion cosmetic-surgery industry.

Poor Baby! Strollers' 'Edward Scissorhands' Danger Known to Maker for Five Years, Court Papers Indicate.

The recent "voluntary recall" by Maclaren of a million strollers whose scissoring hinges could chop off kids' fingers is just another example of poor regulation of industry, if court papers cited by the NY Post this morning are true.

The Post dug up a suit showing that the British company knew five years ago that the strollers posed a possible threat. The Consumer Products Safety Commission says companies are required to report "immediately" when they learn of even a "potential hazard."

The Post story, however, puts all the blame on the company and none on the federal government's CPSC.

If there was a 2004 lawsuit in Connecticut accusing the company of a serious defect in the China-made strollers, why couldn't the CPSC have been proactive enough to find out about it and force a recall back then? There was a Web back then. That kind of thing is easy to keep track of, especially if you're a federal agency. And especially if the company is one of the U.K.'s biggest exporters to the U.S. of a product used by millions of Americans.

Depending on companies to report their own misdeeds is the kind of volunteerism that's not going to happen. So-called "voluntary regulation" doesn't work, as the Wall Street meltdown showed. Just one example: The Street's "self-regulatory" Securities Industry Association (actually a lobby) featured Bernie Madoff on its board of directors.

China Syndrome: Market's 13-Month High Just More Proof U.S. Fortunes Increasingly Tethered to China

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Behind today's happy, happy news for investors that the S&P 500 hit a 13-month high is that, among other reasons, China's industrial production soared.

More on China in a moment, but meanwhile, no one believes Treasury Secretary Tim Geithner, currently on a world tour and, as the WSJ says, "sticking to his mantra on foreign-exchange policy as the U.S. currency continues its broad downtrend." The dollar is dolor (despite a small uptick today), but there's probably a method to his madness:

Lack of major changes in his tone indicates that, while he doesn't want any dollar freefall to shake the recovery in the U.S. economy, he may find it comfortable as long as the currency declines at a manageable pace. A weaker dollar could boost U.S. exports by making them less expensive abroad, lifting the nation's growth and cutting its trade deficit.

Back to China: Check out Der Spiegel's excellent backgrounder, "Reluctant Partners: Global Crisis Makes US More Dependent on China than Ever."

Are the U.S. and China joined at the hip? Yeah, our two economies are making the springs squeak. And the two countries' inevitable spats will take on more and more importance. A divorce is highly unlikely, but everything just short of domestic violence between the two is, especially when it comes to trade issues.

New Report: California May Be Going For Broke, But Other States Are Following Right Along

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From the Pew report "Beyond California: States in Peril."

Getting ink this afternoon is the red ink flooding not only California but your state, too. "Beyond California: States in Peril," a new report from the sharp Pew Center steams through the dire straits in much more dramatic fashion than a similar report of states' last rites from the Center for Budget and Policy Priorities (see "Recession's Over? States in Deep Trouble; Even More Jobs Will Be Lost").

The Pew report lists the top 10 troubled states: California, Arizona, Rhode Island, Michigan, Oregon, Nevada, Florida, New Jersey, Illinois, and Wisconsin. New York is close behind. Stories on this from CNN, Daily Finance, and the Detroit Free Press.

Capitol Hill and the White House have passed the "stimulus" torch to the states. Too bad for the states that the torch isn't lit.

Recession's Over? States in Deep Trouble; Even More Jobs Will Be Lost

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Celebrate the recession's end, if you like, but it's not over. Barack Obama's Recovery Act is softening the blow to state budgets, but that's only temporary. The shit continues to roll downhill from Wall Street to Main Street, as the Center for Budget and Policy Priorities points out (though not in those words) in "Additional Federal Fiscal Relief Needed to Help States Address Recession's Impact":

State and local spending plays an important role in the economy. The state and local sector is responsible for about one-eighth of GDP, so when states cut expenditures and raise taxes in an economic downturn, the overall economy feels the effect.

The revenue decline in this recession is unprecedented; it is the largest on record in the post-World War II period. State tax revenues have been declining since the fourth quarter of 2008. In the critical April-June quarter, when a major portion of state tax revenues are collected, revenues dropped 16.6 percent in 2009 compared to the previous year. The income tax was down 27.5 percent, and the sales tax was down 9.5 percent.

We're talking about nearly a million jobs still to be lost, on top of the current 10 percent jobless rate, which some think is on its way up to 12 or 13 percent.