Weekend Economists Easter Weekend April 2-4, 2010

Well, it's that time of year, again. The rabbits are out laying colored eggs...and the March hare gives way to the Easter bunny. Pagan that I am, despite years of indoctrination, I thought it might be helpful to remember where Easter comes from:

Origins of the name "Easter":

The name "Easter" originated with the names of an ancient Goddess and God. The Venerable Bede, (672-735 CE.) a Christian scholar, first asserted in his book De Ratione Temporum that Easter was named after Eostre (a.k.a. Eastre). She was the Great Mother Goddess of the Saxon people in Northern Europe. Similarly, the "Teutonic dawn goddess of fertility was known variously as Ostare, Ostara, Ostern, Eostra, Eostre, Eostur, Eastra, Eastur, Austron and Ausos." Her name was derived from the ancient word for spring: "eastre." Similar Goddesses were known by other names in ancient cultures around the Mediterranean, and were celebrated in the springtime. Some were:

Aphrodite from ancient Cyprus
Ashtoreth from ancient Israel
Astarte from ancient Greece
Demeter from Mycenae
Hathor from ancient Egypt
Ishtar from Assyria
Kali, from India
Ostara a Norse Goddess of fertility.

An alternative explanation has been suggested. The name given by the Frankish church to Jesus' resurrection festival included the Latin word "alba" which means "white." (This was a reference to the white robes that were worn during the festival.) "Alba" also has a second meaning: "sunrise." When the name of the festival was translated into German, the "sunrise" meaning was selected in error. This became "ostern" in German. Ostern has been proposed as the origin of the word "Easter". 2
There are two popular beliefs about the origin of the English word "Sunday."
bullet It is derived from the name of the Scandinavian sun Goddess Sunna (a.k.a. Sunne, Frau Sonne). 5,6
bullet It is derived from "Sol," the Roman God of the Sun." Their phrase "Dies Solis" means "day of the Sun." The Christian saint Jerome (d. 420) commented "If it is called the day of the sun by the pagans, we willingly accept this name, for on this day the Light of the world arose, on this day the Sun of Justice shone forth.

http://www.religioustolerance.org/easter1.htm

(Don't tell the Catholics--or the Baptists, or the....)

Whereas Easter celebrates a resurrection of one form or another, our totally dysfunctional political system is hell-bent on celebrating a phony resurrection of our economy this weekend. It's worse than too many jelly beans before breakfast. (Is there such a thing as too many jelly beans?)

So gird up your loins and let's dig for the truth.

By the way, the forsythia bloomed today, and several crocus and daffodils. And it Hit 80F. It is very odd to wear shorts when there isn't a leaf on a tree.

http://www.theonion.com/articles/rich-guy-feeling-left-out-of-recession,17181/

Michael Chandler looks out the windows of his sun room, past the swimming pool and guest cottage, to the wide backyard where his two children are playing with their pet dalmatian, Scotty. At a time when Americans everywhere are sharing the struggle of a once-in-a-generation recession, Chandler can't help but wonder how he and his family fell through the cracks.

"It's just not fair," said the 49-year-old real estate developer and grandson of oil baron Duncan Chandler. "Everyone is worrying about an uncertain future and coming together to express their outrage, and I don't get to be a part of it."

Staring out at the ornate garden where workers were installing a large marble fountain, Chandler sighed and added, "It's like I don't even exist."

According to the multimillionaire, the past 18 months have been incredibly difficult to endure, as he is often left feeling excluded from an American populace that includes millions who struggle every day to make ends meet. Chandler, who watched helplessly as his enormous fortune easily withstood the market freefall, has been "completely left out" of one of this nation's most significant cultural moments.

"Everybody's suffering," Chandler said. "And here I am, not scrimping and saving at all, with no demoralizing periods of financial hardship, or frantic weeks living paycheck to paycheck. What about me, you know? Where's my struggle?"

"Everyone's supposed to get a fair shake at this misery," Chandler added. "Even incredibly wealthy people of privilege like me."

Throughout the economic downturn, Chandler has tried to tap into the recession and experience some of the sorrow and widespread desperation he has so cruelly been denied. Sadly, all of his attempts have been thwarted by his seemingly insurmountable stack of riches.

According to longtime financial adviser Ben Schultz, Chandler "constantly" inquires as to whether any of his diversely invested mutual funds are losing money, but is always let down.

"Michael's portfolio is better than ever, to be honest," Schultz told reporters. "In fact, his only real connection to the recession is that he helped to cause it by artificially inflating home prices and making millions off unstable derivatives trading."

Chandler has been so devastated by his inability to feel the same anguish and hopelessness the rest of the country is enduring that he took the extraordinary step last week of speaking openly with a chauffeur about how hard the recession has been on everyone. He even went so far as to tip the driver 50 percent less than usual in an attempt to show the man that he, too, was hurting financially.

"I kept waiting for him to say, 'Well, times are tough on all of us,' or 'Who isn't feeling the pinch these days, eh?'" Chandler said. "But he just seemed really angry."

Despite his best efforts, Chandler told reporters he knows that someday the crisis uniting so many of his fellow Americans will pass, and that the far-reaching anger will give way to the worship of money that preceded it.

But until then, he admitted, it will hurt to be excluded.

"Every month they announce tens of thousands of layoffs," Chandler said, "and every time, I'm not one of them. No matter what I say or do, it'll never be me. My only memory of this historic point in time will be the prosperity I have always known."

Added Chandler, "Dear God, when's this recession going to end?"


IT IS THE ONION--AND AN APRIL FOOL-- A BIT LATE.

and comparing the public outrage over the Church's handling of this chronic abuse to "anti-semitism". Somebody get His Holiness a clue, please?

and the stock market was also closed, giving our President an excellent opportunity to proclaim the recession is over without fear of immediate contradiction from Wall Street.

Watch for it on Monday, though.

The Tea Party Of The Future.

I think Cato's Gene Healy is misjudging how integration works here while imagining the future of small government conservatism:

Yet, here's an interesting fact: Recent Census Bureau figures predict that the working-age population will be 55 percent minority by midcentury. It may be hard to imagine the Tea Party movement becoming a Rainbow Coalition. But it's even harder to believe that minority voters will enjoy paying for the (mostly white) baby boomers' retirement and health care while they're working to support their own families.

The looming entitlement crisis may scramble existing political coalitions, with traditional GOP constituencies becoming even more resistant to cuts, while Democratic ones begin to resist paying the freight.

Healy's problem is he's looking into the future with a mind-set that the eroding tribal rivalries of the present will resemble today. We won't be in a post-racial utopia by 2050 either, but think about the leaps made toward a more racially integrated and equitable society from 1960 to 2010, or for that matter from 1910 to 1960.

Social scientist Richard Alba predicted in his book, Blurring the Color Line, that the influx of nonwhites into the work force heralds the kind of dramatic cultural shift in integration that we saw happen with white ethnics in the aftermath of World War II. Because this diversifying of the work force will be a natural consequence of a diversifying society, the fading racial rivalries that are fading even now will be even more diminished by 2050, because nonwhites won't be "taking" jobs from whites -- they'll be filling available spaces.

We won't be colorblind, but our understanding of who represents a racial "other" will be very different, and I think it's likely that it will be more tied to class than ever before. As a result, I don't think a browner America will have a problem with "paying for the mostly white baby boomers' retirement and health care" because there won't be as many cultural barriers to identifying with those retiring baby boomers as Healy seems to think there are today.

At the same time, it is also possible that "traditional Democratic constituencies" may be more friendly to small-government ideas than they are now, but that won't be because of racial rivalry -- it will be because that rivalry has diminished.


http://www.prospect.org/csnc/blogs/tapped_archive?month=04&year=2010&base_name=the_tea_party_of_the_future

IN OTHER WORDS, NOT EVERYBODY IS AS BIG A RACIST AS THE TEABAGGERS...HARDLY ANYBODY, FRANKLY.

http://www.prospect.org/csnc/blogs/tapped_archive?month=03&year=2010&base_name=hopeychangey_at_the_department

During the Bush administration, when I encountered those who wondered whether a particular Democrat (say, John Kerry) was progressive enough, I would often make the point that at that moment, there were literally thousands of people in positions of power in the federal government who went to work every day attempting to undermine everything those progressives believed in. As we've gotten so focused on big legislative issues like health-care reform, we shouldn't forget that there is a lot of activity going on in federal agencies that normally escapes notice. And progressives ought to be pretty pleased about it.

Over at The Nation, Esther Kaplan profiles Secretary of Labor Hilda Solis and finds that she has done a pretty remarkable job returning the Labor Department to -- get this -- advancing the interests of working people. It's in large part a product of personnel. For instance, the Mine Safety and Health Administration (MSHA) is now not headed by a former mining-company executive whose goal is to free mining companies from safety regulations, as is usually the case during Republican administrations. Solis has put in place a cadre of tough, experienced advocates for worker safety, fair pay practices, and real enforcement of labor laws. But it's also a matter of how aggressive you're willing to be. And it seems that Solis is working overtime (!) to undo what George W. Bush's administration wrought:

Facing badly depleted enforcement ranks, Solis hired 710 additional enforcement staff, including 130 at OSHA and 250 for the crucial wage-and-hour division, upping inspectors by more than a third. Another hundred will come on next year to staff a crackdown on the misclassification of millions of employees as "independent contractors" -- a dodge to avoid paying taxes and benefits -- a move that has set off enormous buzz on business blogs. Her team took a plunger to the stagnant regulatory pipeline, moving forward new rules on coal mine dust, silica, and cranes and derricks. She restored prevailing wages for agricultural guest workers and is poised to restore reporting rules on ergonomic injuries. She revoked Bush Labor Secretary Elaine Chao's union reporting requirements and countered with a proposed rule that employers who hire union avoidance firms must publicly report it, the sort of sunshine that could easily act as a deterrent. This latter measure hints at the sort of creative tactics being explored at the DoL, even as pro-union legislation is stymied in Congress.

This is what happens when the labor secretary is actually committed to supporting labor. The approach in Republican administrations -- where the department is staffed by people with backgrounds in union-busting and corporate avoidance of labor laws -- is akin to appointing the entire membership of Code Pink to influential positions in the Defense Department.

The work done in the various agencies of the federal government doesn't get the attention of something like health-care reform, but it will be a huge part of the legacy of the Obama administration. Sarah Palin is encouraging her supporters to accost anyone they see with an Obama bumper sticker and demand, "How's that hopey changey thing workin' out for ya?" Just something else to think about when you're considering your answer.

TOO BAD IT'S ONLY ONE DEPARTMENT THAT'S MAKING ANY ATTEMPT AT CLEANING OUT THE SCALAWAGS.

So Why Isn’t the DoJ After JP Morgan and Goldman for Anti-Competitive Behavior? (Jefferson County Edition)


http://www.nakedcapitalism.com/2010/04/so-why-isnt-the-doj-after-jp-morgan-and-goldman-for-anti-competitive-behavior-jefferson-county-edition.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29


Even though I have read a number of accounts of the horrorshow of Jefferson County’s sewer financing fiasco, every time I go through a new one that it reasonably detailed, it still instills the same sense of rage. Rage not simply at the pervasive corruption – that’s bad enough – but that this predatory style of doing business is becoming increasingly acceptable (as witness the comments here that often defend it).

Municipal finance has long been a cesspool, but blatantly corrupt behavior was, not that long ago, for the most part limited to backwaters and bucket-shop operators. Now, it isn’t just Jefferson County, but pretty much every big-name financial firm is involved in multiple cases of stuffing local governments and their pensions funds, with derivatives that had all sorts of tricks and traps or toxic CDOs, sometimes with the liberal applications of bribes, sometimes merely with fast talk and omission of key details. Often, these government entities hired “experts” who simply sold them out for fat fees.

Matt Taibbi has a typical take-no-prisoners account of the fiasco, and one bit jumped out:

Given the shitload of money to be made on the refinancing deals, JP Morgan was prepared to pay whatever it took to buy off officials in Jefferson County. In 2002, during a conversation recorded in Nixonian fashion by JP Morgan itself, LeCroy bragged that he had agreed to funnel payoff money to a pair of local companies to secure the votes of two county commissioners. “Look,” the commissioners told him, “if we support the synthetic refunding, you guys have to take care of our two firms.” LeCroy didn’t blink. “Whatever you want,” he told them. “If that’s what you need, that’s what you get. Just tell us how much.”

Just tell us how much. That sums up the approach that JP Morgan took a few months later, when Langford announced that his good buddy Bill Blount would henceforth be involved with every financing transaction for Jefferson County. From JP Morgan’s point of view, the decision to pay off Blount was a no-brainer. But the bank had one small problem: Goldman Sachs had already crawled up Blount’s trouser leg, and the broker was advising Langford to pick them as Jefferson County’s investment bank.

The solution they came up with was an extraordinary one: JP Morgan cut a separate deal with Goldman, paying the bank $3 million to fuck off, with Blount taking a $300,000 cut of the side deal. Suddenly Goldman was out and JP Morgan was sitting in Langford’s lap. In another conversation caught on tape, LeCroy joked that the deal was his “philanthropic work,” since the payoff amounted to a “charitable donation to Goldman Sachs” in return for “taking no risk.”

That such a blatant violation of anti-trust laws took place and neither JP Morgan nor Goldman have been prosecuted for it is yet another mystery of the current financial crisis. “This is an open-and-shut case of anti-competitive behavior,” says Taylor, the former regulator.

Yves here. Now tell me, how come the other cops on the beat have swung into action but not the Department of Justice? Langford was found guilty on 60 counts and has been sentenced to 15 years in jail (despite being mayor of Birmingham at the time of his trial). Oh, and Langford is the fourth Jefferson County commissioner convicted on sewer-related charges. Blount was sentenced to 52 months (he testified against Langford). Jefferson County is suing JP Morgan, and the SEC has fined it $75 million and made it disgorge over $647 million of termination charges.

So where is the Department of Justice on the little bribe JP Morgan paid to Goldman to get lost? Or does the DoJ inaction have more than a little bit to do with the fact that Obama raised more money from the financial services industry than any previous presidential candidate?

http://www.prospect.org/csnc/blogs/beat_the_press

...Serious people would point out that the projected interest burden (DUE TO NATIONAL DEBT) is a bit more than 4.0 percent of GDP, about the same as it was in the early 90s.

More importantly, there are not many people who have advocated spending 25 percent of GDP. They have expressed support for specific programs, like Social Security and Medicare. The latter costs way more in the United States than in any other country, not because we get better care, but because our health care system is hugely corrupt and inefficient. If we paid the same amount per person for health care as people in any other country then the deficits would quickly vanish.

Furthermore, even if fixing our health care system is hard to do politically because the system is so corrupt, we could achieve enormous savings by just allowing for freer trade in health care....

http://www.usatoday.com/money/economy/employment/2010-04-02-financejobs02_ST_N.htm

Wall Street is bullish again. On hiring.

The financial services industry, among the hardest hit in the recession, has been adding jobs at a brisker pace recently, according to companies and executive search and training firms.

The Labor Department reported Friday that the economy created 162,000 jobs in March but the unemployment rate stayed at 9.7%.

"I think there's been a general positive trend in hiring," says Mike Franzino, global market managing director for Korn/Ferry International, the top executive search firm. He said his firm's financial service placements are up "significantly" this year.

It could take several months for the new hires to more than offset continued layoffs at some firms and bump up employment figures. By summer, large investment banks are expected to increase hiring of entry-level workers 20% to 50% over last year, says Scott Rostan, principal of Training the Street, which trains such employees for the slots.

A Wall Street rebound is good news for the economy. It signifies U.S. corporations are again raising cash by issuing stock and bonds as their prospects improve, with financial firms underwriting the deals. Beefed-up staffs have a ripple effect on restaurants, printers and car services in financial centers, Rostan says. The surge is touching investment and retail banking, wealth and asset management, and stock and bond trading. And it's boosting finance centers from New York to San Francisco.

Finance and insurance lost 400,000 jobs since the slump began, the Labor Department says. Many, such as those involving mortgage-backed securities — a market that imploded with the real estate crash — likely won't return, says professor Peter Cappelli of the Wharton School of business.

But businesses such as the sale and trading of bonds and commodities are booming.

The stock market rally has let companies use their more-valuable shares to buy others, Franzino says. Wall Street firms advise on the deals. The value of U.S. mergers rose 27% in the first quarter over a year ago, Thomson Reuters says. Who's hiring:

• JPMorgan Chase says it's adding 1,000 bankers across the USA, many in California and Florida, a sharp rise over last year. They include executives for personal banking and small-business lending.

• Bank of America has more than doubled its intern and graduate hiring this year. It currently has 3,600 job openings across all its units.

• Edward Jones plans to add more than 1,000 financial advisers in the U.S., up from 800 last year.

• UBS and Deutsche Bank say they're hiring robustly in areas such as wealth management and bond sales. "Hiring is up substantially" over the 200 bankers and traders Deutsche Bank added each of the past two years, spokesman Ted Meyer says.

NOT THE ONION, UNFORTUNATELY

http://news.yahoo.com/s/ap/20100402/ap_on_bi_ge/us_refinery_safety

U.S. oil refineries have an ongoing problem with accidents that turn deadly, losing four times as much money from such incidents than refineries in the rest of the world, according to an insurance company report obtained Friday by The Associated Press.

The problem is highlighted by a deadly string of explosions, including one that killed four people Friday at a Tesoro Corp. refinery in Washington state, federal officials said.

The federal Occupational Safety and Health Administration got so worried that in 2007 it started a major push for safety inspection in refineries and found more than 1,000 workplace violations in the industry.

"If the aviation industry were having the same number of significant serious accidents as the refinery industry was having you probably wouldn't see people flying too much," Chemical Safety and Hazard Investigation Board chairman John Bresland told The Associated Press Friday.

The internal insurance report, given to federal safety regulators two years ago but never publicized, was all too familiar to Bresland's agency, which said Friday's deadly explosion revives concerns there's something terribly wrong with the industry.

The board, which makes nonbinding recommendations, oversees investigations on accidents in 150 refineries in the United States and tens of thousands of chemical plants. But about half of the outstanding investigations are of accidents at refineries, officials said.

The cause of Friday's blast at the Tesoro refinery in Anacortes, about 70 miles north of Seattle on Puget Sound, was under investigation. The blaze started during maintenance work on a unit that processes highly flammable liquid derived during the refining process, the company said.

Six investigators with the chemical safety board were dispatched to the scene. Tesoro, based in San Antonio, was fined $85,700 last April for 17 serious safety and health violations at the plant.

In November, the state reached a settlement with Tesoro, requiring in part that the company correct the hazards and hire a third-party consultant to do a safety audit. The settlement reduced the total penalty to $12,250 and lowered the number of violations to three.

Jeff Haffner, associate general counsel for Tesoro, said the company is investigating the blast and has been working to correct the problems found.

It was the largest fatal refinery accident since a 2005 explosion at a BP American refinery in Texas killed 15 people and injured another 170.

Officials at the National Petrochemical & Refiners Association said their industry is not only safe, it has a better safety record than the U.S. manufacturing sector as a whole.

The industry is "one of the leaders" in safety, said Charlie Drevna, the association's president and actually has a lower rate of injuries per workers than the manufacturing industry as a whole.

Officials from the chemical safety board and OSHA said that comparison missed the point because it is based on routine slips and falls and not the big accidents from poor safety processes that lead to deaths.

That Texas refinery had a low injury rate, but people were killed "because they didn't properly maintain their equipment," said David Michaels, OSHA chief and deputy assistant secretary of labor.

"We think this continues to be a very serious concern, a very serious issue in the petroleum industry," Michaels said late Friday in a telephone conference. "We're trying to prevent more tragedies."

Last month, an explosion at a New Mexico refinery killed two people, putting the refinery death toll since January 2008 at least 10. Refinery accidents have killed four people in Texas since January 2008.

Insurance giant Swiss Re gave the chemical safety board the report warning of problems two years ago. It looked at the losses per refinery and per amount of oil refined and found that those in America were "significantly higher" than the rest of the world.

"We believe the difference is due to the operational hazard," the Swiss Re report said, saying U.S. plants are "pushing the operating envelope."

http://www.prospect.org/csnc/blogs/beat_the_press_archive?month=03&year=2010&base_name=did_the_federal_government_mak

The Washington Post is anxious to tell its readers that the government made a profit on its bailout of Citigroup. This claim gives a whole new meaning to the notion of "profit." The government gave enormous amounts of money to Citigroup through various direct and indirect channels. It is only getting a portion of this money back in its "profits," the rest is going to Citigroup's shareholders (e.g. Robert Rubin) and its millionaire executives who are highly skilled at getting the government to hand them money.

First, it is worth noting how the government got the shares of common stock which it is now selling for a profit. On November 23, 2008, the government bought $20 billion in preferred shares in Citigroup. It also received another $7 billion in preferred shares in exchange for guarantees on $300 billion in bad assets. At the time, the combined value of the investment in preferred shares and the guarantee on bad assets exceeded the full market value of Citigroup stock on November 21st, the last trading day prior to the deal. In other words, for the same financial commitment that the government made on that day, it could have owned Citigroup outright.

The government subsequently held onto to its preferred shares until Citigroup's stock had nearly tripled in value. In September of last year it traded its preferred shares for common shares that were priced at a level that only give the government a 27 percent stake in Citigroup. These shares have have now risen enough to give the government an $8 billion profit on its investment. While the Post tells readers that:

"The windfall expected from the stock sale would amount to a validation of the rescue plan adopted by government officials during the height of the financial panic, when the banking system neared the brink of collapse. A year ago, Citigroup's stock hovered around a dollar a share, and the bank's future seemed in doubt. On Friday, the stock closed at $4.31."

The logic of the Post's assertion that the profit on Citigroup stock validated the bailout is not clear. By making capital available to Citigroup at below market rates, the government effectively subsidized the income of Citigroup's shareholders. It also allowed its top executives to make millions of dollars because they were smart enough to be able to get taxpayers to subsidize the bank. The current market value of Citigroup is $123 billion, with only $33 billion belonging to the government. This means that the government has effectively given $90 billion (@ 25 million kid-years of health care provided through the State Children's Health Insurance Program or SCHIP) to Citigroup's shareholders and billions more to its executives by not demanding a market price for its support.

It is also worth noting that the government has supported Citigroup through other mechanisms. The Fed created various special lending facilities that allowed Citigroup to borrow money from the government at extremely low interest rates. Since one of the main uses of this money was buying government bonds, Citigroup was essentially getting free money from the government. If it borrowed $200 billion at near zero interest and lent it back to the government by buying 10-year Treasury bonds at 3.7 percent interest, then the government was effectively handing Citigroup $7.4 billion a year for nothing. This money is not deducted from the Post's estimate of the government's "profit" on its dealings with Citigroup. (The Fed refuses to tell the public how much money it lent to Citigroup and other banks at below market rates.)

It is possible that the losses at Fannie Mae and Freddie Mac, as well as the Federal Housing Authority (FHA), may also have helped to subsidize Citigroup's profits. Fannie and Freddie lose money when they pay too much to banks to buy mortgages. It is likely that Citigroup was one of the banks that Fannie and Freddie overpaid for mortgages. Similarly, the FHA loses money when it guarantees mortgages without charging a high enough insurance fee. It is likely that many of the mortgages that the FHA guaranteed, which went bad, were issued by Citigroup.

It is also worth noting that government policy has helped to boost Citigroup's profitability in other ways. Citigroup is at the top of the list of "too big to fail" institutions. This has allowed it to continue to borrow money from the private investors at interest rates that are far below the rates it would have to pay if it did not rely on a guarantee of support from the nanny state.

Also, the government's efforts to support the economy more generally have proven a boon to Citigroup. Specifically, by pushing down interest rates it has enormously raised the value of the loans on Citigroup's books. The value of long-term loans rises substantially when interest rates fall. If the Fed's program of buying mortgage-backed securities lowered the interest rate on 30-year mortgages from 5.5 percent to 5.0 percent, then this would raise the value of Citigroup's outstanding 30-year mortgages by more than 7 percent. If Citi had $500 billion invested in mortgages or related assets, then the action by the Fed would have effectively given Citi $35 billion.

If the Fed subsequently resells the $1.25 trillion in mortgage-backed securities it purchased in order to push down mortgage interest rates in an environment in which interest rates have risen, then it will lose money on these purchases. If it sells the mortgage-backed securities when interest rates are 6 percent, then it will lose close to 15 percent, or more than $180 billion on its purchases of these mortgages.

In telling readers that the profit on Citi stock "would amount to a validation of the rescue plan adopted by government officials during the height of the financial panic" the Post is ignoring all the other costs born by the government in allowing Citigroup to be restored to viability. It is also ignoring the enormous handout of taxpayer dollars to some of the richest people in the country. This is not good reporting.

the rabbit is freakin' me out. :)

I'm feeling rather freaked out, myself, anyway.

The Kid is still in her Birthday Frenzy segue to Easter frenzy--and I am regretting weaning her off the medication. She is driving me nuts. I don't know if it's the weather, the holiday, her digestive system, or the annual Spring madness when she tries to convince me that she's totally independent. But after 27 years of this, I've had enough. I could become an alcoholic--if I had the time, the money, and a liking for hard liquor...

They've got hard liquor down to a science. And here, you won't go broke doing it.

(Despite what some people might be thinking - this was for a school newspaper fund raiser.)

That image brings back haunting memories that I thought had long since been buried. Disturbed parents watched while their freaked-out toddlers sat in my lap, squirming madly to avoid being photographed with the dingy Easter Bunny. Had I been old enough - I would have attempted to exorcise the experience with hard liquor.

Nonetheless, I recommended this thread.

I thought only young children were traumatized by the Easer Bunny Live experience...

My moorings in the local religion had already come loose. That experience was probably the tsunami that swept everything left away. Forced jollity in the midst of being personally involved in so much holiday terror rendered that net sum effect.

Shei-shei!

http://www.nakedcapitalism.com/2010/04/more-evidence-of-lack-of-competitiveness-of-many-chinese-exporters.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29


One argument we have made, which some readers find difficult to accept, is that China’s keeping its currency, the renminbi, at artificially cheap levels is tantamount to an across-the-board export subsidy (the proof that the RMB is artificially cheap comes via the fact that China has had to engage in massive dollar purchases to keep the RMB pegged at its target level. It’s hard to track Chinese purchase directly from monthly Treasury International Capital reports, since the Chinese execute many of their dollar purchases through London. And I would take the latest Goldman assertion on the value of the RMB with a fistful of salt. Goldman was also calling the euro a buy at 1.50).

Now one of the reason that export subsidies and tariffs are considered to be a Bad Thing among Respectable Economists is that they lead to inefficient producers, ones that are dependent on government protection and cannot compete without official support.

That appears to be the case with a fair number of Chinese exporters, per the report of a state news agency. I only have a short Bloomberg report on the release, which came out on Xinhua; I was unable to find it on the English version of the paper.

From Bloomberg (hat tip reader Michael):

The profits of China’s makers of household appliances, automobiles and cell phones may plunge by between 30 percent and 50 percent if the Chinese currency were to strengthen by 3 percent, according to a state media report.

Small and medium-size exporters with low price-negotiating powers will face losses and may even go out of business, according to the Xinhua News Agency’s Economic Information Daily newspaper, citing the results of a “stress test.”

“The ultimate result of a currency that strengthens too quickly and by too much may be the irreversible damage to our economic structure, rather than improving our economic structure,” the report said.

Yves here. A 30% to 50% fall in profits on a mere 3% rise in the RMB (already an admission that they compete only on price), says their margins are unhealthy even with the benefit of a cheap RMB. Margins that thin will not support needed reinvestment in the business (nominal depreciation is often too low to cover needed reinvestment) nor allow the business to have much in the way of buffers for any kind of shocks.

http://www.ft.com/cms/s/0/0f973936-3beb-11df-9412-00144feabdc0.html

The head of the International Energy Agency, the developed world’s energy watchdog, has called for China to join the agency and warned that the institution risked losing relevance as energy demand shifted eastward away from its current members.

Nobuo Tanaka, executive director of the IEA, told the Financial Times: “Our relevance is under question because half of the energy consumption already is in non-Organisation of Economic Cooperation and Development countries. And for oil it is soon coming that the majority of consumption is happening in non-OECD countries.”

He added: “In many ways they are already working closely with us. But eventually we wish they would join us.”

Beijing has been wary of joining multilateral organisations it sees as being controlled by rich developed countries, particularly the US. On the international stage, its leaders prefer to portray China as the champion and chief advocate for poorer countries and point out it is itself a developing country and not yet a global superpower, in spite of its rapidly growing wealth and influence.

Mr Tanaka was speaking at the International Energy Forum in Cancun, Mexico, where ministers of the world’s largest energy producing and consuming countries have gathered to discuss enhancing energy security.

The IEA counts as its members 28 countries of the OECD and for much of the group’s near 40-year existence these countries were also the world’s largest oil consumers.

But that is changing. OECD demand for oil is shrinking as environmental policies and economic malaise reduce its demand for petroleum products, such as petrol and diesel, China and the rest of Asia’s consumption is growing.

Last month, China’s oil demand grew at 28 per cent, a level the IEA described as “astonishing.” For the first time, Saudi Arabia, the world’s largest oil exporter, now sends more oil to China than to the US.

Diplomats of the IEA’s member countries have been courting Chinese officials and are considering rewriting the organisation’s constitution if necessary. So far China has not applied for membership to the OECD.

However, as its energy imports continue to surge, China may find it useful to join the organisation, if only to secure a new platform to advance its agenda.

After a number of high-profile frustrations in their attempts to expand abroad, China’s state-owned energy giants are increasingly teaming up with western energy companies to strike deals in regions and sectors where a Chinese-only bid could be politically sensitive.

The IEA was initially created in 1974 as a counterweight to the Opec oil cartel, which had just shocked the world with its oil embargo.

It coordinates the storage and release of emergency supplies of oil, which each of its member countries must keep stashed away in case of sudden supply interruptions caused by political conflict, such as the 1991 war in Iraq, or natural disasters, such as hurricane Katrina, which ripped through the US Gulf of Mexico in 2005.

It also plays an important role during calmer times by monitoring the market and influencing current and future oil prices with its analysis of inventory data and its forecasts of demand and supply.

But that task had become far more difficult since so much of the world’s demand and its stored oil now resided in countries outside the IEA’s domain, particularly in China, Mr Tanaka admitted.

“For the sake of transparency, we need their help,” Mr Tanaka said, referring to the Chinese government. He noted the IEA’s storage level reports – a key indicator of whether the market is over- or under-supplied – were losing their significance because they failed to include some of the world’s biggest hoards of oil.

China has been relatively slow to give out critical oil market data, but it is beginning to work more closely with the IEA and the IEF, which collects data from both producers and consumers.

Mid-ranking Chinese officials have been allowed to attend IEA committee meetings on issues such as the energy security dialogue and energy technologies. They had also attended meetings on more sensitive subjects, such as emergency response and long-term policy planning, IEA officials said.

Meanwhile, China’s ministry of science and technology is translating much of the IEA’s work into Chinese and the IEA itself has a Chinese version of its website.

IEA officials do not expect Chinese membership overnight, but do believe it could be possible within the next five years.

http://www.ft.com/cms/s/2/d611862c-3c25-11df-b40c-00144feabdc0.html

Chinese internet users suffered more serious problems with Google searches on Wednesday amid confusion over who was to blame for a series of disruptions that have occured since the company last week moved its search engine to Hong Kong.

The problems – where searches in Chinese for words as harmless as “dog” or “home” produce browser error messages – re-emerged just hours after users reported that major disruptions that continued from Tuesday evening appeared to have disappeared.

Google on Tuesday evening took responsibility for the problems. The company said the blockages occured when it inserted new computer code into its system. It suggested that the change – which included the letters “rfa” – caused Chinese filters to confuse its search pages with Radio Free Asia, a site which is blocked by China.

However, the company created confusion just hours later when it reversed the previous announcement, saying China was to blame for the disruptions. Google said that since it had introduced the new code much earlier, the blockages must have been the result of China’s so-called “Great Firewall” becoming more restrictive.

The disruption on Tuesday evening was the first time many Chinese internet users found themselves unable to use Google’s services since the company last week moved its search engine to Hong Kong to avoid having to comply with censorship restrictions on the mainland.

Google and many observers have feared a backlash from Beijing over the move. While internet users in China have experienced similar problems several times over the past before Tuesday, the previous blockages lasted less than an hour.

“This gives me whiplash,” said an executive at an agency that sells advertising on both Google and Baidu, the Chinese online search market leader.

Search engine experts said frequent disruptions could cause Google to lose most of its advertising business in China, the market with the world’s largest internet population.

One employee at Google China described the situation as “death by a thousand cuts”. The person said that was what the Chinese censors had done to Google.com before the company launched its Google.cn search engine on the mainland.

People in mainland China can circumvent the “Great Firewall of China” by using proxy servers or virtual private networks. But Google could quickly lose most of its advertising customers in the country if the outages continue.

“If that happens a few more times, advertisers will lose trust completely and switch,” said an agent for Google in China.

Analysts estimate that about one-third of Google’s advertising from Chinese customers is aimed at foreign markets and runs on Google sites outside the country.

“This portion would obviously not be affected,” said Edward Yu, chief executive of Analysys, the internet research firm.

Google intends to decide whether to keep its more than 300 sales staff in China depending on mainland users’ access to the Hong Kong site.

http://www.ft.com/cms/s/0/4a9ae9ae-3d19-11df-b81b-00144feabdc0.html

China uses a large array of dubious measures to prevent foreign companies competing fairly in its market, a US government report said on Wednesday.

The annual report on trade barriers to American exports, produced by the US trade representative’s office, acknowledged that Beijing had reduced official trade tariffs and quotas. But the Chinese authorities still used domestic tools such as restricting trading rights, skewing government procurement towards Chinese companies and hoarding raw materials for internal use.

“Eight years after China’s WTO accession, many US industries complain that they face significant non-tariff barriers to trade”, the report said. “These barriers include, for example, regulations that set high thresholds for entry into service sectors such as banking, insurance and telecommunications . . . and the use of questionable sanitary and phytosanitary measures to control import volumes.”

China’s agricultural inspection and quarantine regime, for example, gave too much discretion to officials, who often slowed down shipments without warning, it said.

American officials partly blame Chinese protectionism for the bilateral trade deficit with China, along with the politically explosive question of the renminbi’s peg to the dollar. On Wednesday Tim Geithner, US Treasury secretary, said he expected China to move towards currency flexibility, though he did not give a date. After touring a steel plant in Pennsylvania, he told reporters: “I am very confident that they are going to decide it is in their interest to move on currency reforms.”

The US has resorted to litigation against several trading partners, including China, to force them to drop regulations they consider biased against foreign companies. In December it won a final victory in a case at the World Trade Organisation which argued that China’s licensing system for DVDs, books, music and newspapers discriminated against imports. But Walter Spak, head of the international trade practice at law firm White & Case, said litigating the way to free trade would be a long slog for the administration. “The listing of trade barriers to US exports is only an initial step related to enforcement of trade rights,” he said. “Trying to eliminate such practices is the difficult part. Even if this can be done, it will take time.”

The US has become increasingly concerned about the extent to which international commerce is blocked by technical barriers to trade, and sanitary and phytosanitary standards on agricultural produce. Such rules frequently play a more important role than tariffs in blocking imports.

The US spent several years making poultry trade the centrepiece of its “transatlantic economic dialogue” with the European Union. Brussels maintains a ban on chicken meat sterilised with chlorinated water in the European market. China, along with other trading partners, continues to ban imports of poultry from several US states because of the threat of avian influenza. Washington says this flies in the the face of scientific opinion that American chicken is safe. On Wednesday the USTR released separate annual reports into technical and sanitary barriers to trade for the first time, underlining the importance of the issues.


WHINE, WHINE, WHINE. WHERE DOES A 1.3 BILLION POUND GORILLA SIT? ANYWHERE IT WANTS TO!

http://www.kake.com/politics/headlines/89507107.html

President Barack Obama has told China's new ambassador to the U.S. that the two countries must work together, especially on nuclear nonproliferation.

The White House meeting came as Secretary of State Hillary Rodham Clinton said formulating sanctions against Iran over its nuclear ambitions means a role for China.

Clinton says though Beijing remains generally opposed to international sanctions, China agrees Iran must not become a nuclear weapons power. Clinton was in the Canadian capital, Ottawa, for a meeting of top diplomats from the Group of Eight leading industrialized democracies.

China has been holding up consideration of new sanctions, saying diplomacy must be given time. But last week it appeared to soften its position.

Spokesman Robert Gibbs says President Obama's meeting with China's ambassador also emphasized the need for cooperation on "pursuing sustained and balanced global growth."

http://news.yahoo.com/s/ap/20100404/ap_on_bi_ge/us_china_currency

The Obama administration is delaying a report to Congress on currency policies amid calls from some lawmakers that it should cite China as a currency manipulator harmful to the U.S. economy.

Treasury Secretary Timothy Geithner said Saturday that he will delay publication of the report, due April 15, because several high-level international meetings in the coming months will be a better way to advance the United States' position.

Still, Geithner said in a statement that China should adopt "a more market-oriented exchange rate" to balance the U.S. trade deficit with China, which totaled $226.8 billion last year — the largest imbalance with any country. U.S. manufacturers say China's yuan is undervalued by as much as 40 percent and is a big reason for the massive trade deficit.

A stronger yuan versus the dollar would make U.S. products less expensive in China, while making Chinese goods more expensive for American consumers.

Geithner's announcement came a day after the White House signaled an improvement in relations between the two countries amid news that Chinese President Hu Jintao will attend a summit on nuclear security later this month in Washington. President Barack Obama told the Chinese leader during an hourlong phone call that he welcomed the decision.

The delay of the Treasury report could be designed to avoid embarrassing the Chinese at a time the administration is enlisting their aid on sensitive issues of nuclear security and Iran's nuclear program. Hu is scheduled to attend the summit the same week that the report normally is due.

The administration is hoping that China will again allow its currency to rise in value against the dollar as a way of narrowing the trade gap — as it did until mid-2008 when the global recession began to cut sharply into China's exports abroad.

In his statement, Geithner said "there are a series of very important high-level meetings over the next three months that will be critical to bringing about policies that will help create a stronger, more sustainable, and more balanced global economy." They include a meeting of the Group of 20 rich and developing nations in Washington this month, and a strategic and economic meeting with China in May.

"I believe these meetings are the best avenue for advancing U.S. interests at this time," Geithner said.

Two weeks ago, a group of 130 House members sent a letter to the administration urging a citation of China as a currency manipulator. The lawmakers also called on the Commerce Department to impose trade sanctions on China on the basis that its currency system is an unfair trade practice.

In addition, 14 senators unveiled legislation calling for stiff trade sanctions against China if it doesn't let the yuan rise in value against the dollar.

China rejected the pressure from U.S. lawmakers and accused Washington of trade protectionism that Beijing said could hurt the global economic recovery. China insists it is not intentionally pursuing a trade surplus.

Geithner said then that the Treasury Department had not yet decided whether to cite China as a currency manipulator in the twice-annual report to Congress on the trade and currency policies of the United States' major trading partners.

Such a finding against China would trigger talks between the two nations — with a threat of trade sanctions if the negotiations failed to resolve the issue. The Obama White House, following the lead of the Bush administration, has so far refused to formally peg China as a manipulator, believing that the more productive course would be to convince the Chinese that it is in their own interests to allow their currency to rise in value.

In separate statements, the head of the Senate Finance Committee and its senior Republican both criticized the decision to delay the currency report. The panel's chairman, Sen. Max Baucus, D-Mont., said that for years, the Treasury Department "has given China's currency practices a free pass, but it's time to reevaluate."

"For too long, the United States has pursued diplomacy at the expense of American jobs and exports," he said. "Further delay is not the answer."

Sen. Charles Grassley, R-Iowa, called on the administration to prepare an unfair trade case against China before the World Trade Organization. "Everyone knows China is manipulating the value of its currency to gain an unfair advantage in international trade," he said. "If we want the Chinese to take us seriously, we need to be willing to say so in public."

But Rep. Sander Levin, D-Mich., who is chairman of the House Ways and Means Committee, which oversees trade policies, said delaying the report has "a defined purpose."

"It is to see if, in the next few months, the international community will address the causes of major global imbalances, including China's substantial undervaluing of its currency, which hurts American jobs and businesses," Levin said. "If the multilateral effort does not result in China's making significant changes, the administration and Congress will have no choice but to take appropriate action."

Alan Tonelson, research fellow at the U.S. Business and Industry Council, which represents 1,900 mainly family-owned U.S. manufacturing companies, said Geithner's decision "guarantees that at least through June, more U.S. factories are going to be closing down, more U.S. workers will lose their jobs."

The international meetings that Geithner cited will run through June.

http://seekingalpha.com/article/196779-gaming-uncle-sams-mortgage-modification-program?source=feed

A new release by the SIGTARP (Office of the Special Inspector General for the Troubled Asset Relief Program) is exceptionally enlightening in detailing how a likely significant percentage of those homeowners who entered the trial mortgage modification process gamed the system.

Once again, major high five to our friends at 12th Street Capital for sharing this report and providing insightful commentary. As 12th Street pointed out:

With all of the hoopla surrounding the government and Bank of America announcements to push principal forgiveness to the top of the waterfall for mortgage modification triage, it would have been easy to miss the latest report from the SIGTARP (Special Inspector General of TARP). I have attached the report here and would encourage you to print it out and read it.

In spite of the best efforts of the government and mortgage servicer community, I believe some of the challenges that have resulted in lower than expected modification volume could continue (or even get worse) when it comes to gaining critical mass regardless of the type of modification utilized. It would be easy to get bogged down in the report where it disparages the metrics upon which the government measures volume of modifications and success rate versus initial projections, but I would say flip to page 12 of the report and take a look at the stagnating number of trial mods and then on page 13 it talks about conversion to permanent mods, which I believe will become even more challenging.

Verbal financial information was acceptable to start a trial modification, however that meant there was more work to do down the road (sound familiar?) to confirm eligibility for permanent modifications. That additional work has slowed down the process and added work for the servicers. The ability to qualify via ’stated doc.’ will end on April 15th, which I have to assume means there will be far less trial modifications occurring:

The second issue affecting conversion relates to when payments are due during the trial period. On or prior to April 15, 2010, after the borrower makes the first trial modification payment during the initial month in which the trial modification becomes effective, he or she has the full length of the trial period to satisfy further trial payment requirements. As such, a borrower’s likelihood for default is concealed during the trial period and borrowers may have an incentive to delay entering into permanent modifications. Several of the servicers interviewed reported concerns about homeowners trying to game the system in this fashion. Treasury changed these payment requirements so that after April 15, 2010 a borrower must make monthly payments to be considered current.

I never knew about the payment schedule. I know there are a lot of people who think the principal reduction is a game changer, however I would temper the enthusiasm given the ongoing implementation problems of the government programs and the tightening of guidelines and processes that go into effect on the not so ironic date of April 15th.

For those who may not have fully appreciated the words of wisdom provided by 12th Street, I will reduce it to layman’s terms: under Uncle Sam’s mortgage modification plan, homeowners were not required to provide written documentation of verified income in order to qualify. Additionally, the homeowners were not required to continue making monthly mortgage payments. What happened as a result? Just as night follows day, lots of people clearly misrepresented income levels and did not maintain their monthly payments. They beat Uncle Sam and the taxpayers supporting this program like a drum. The report highlights this reality and other issues with the program starting on the bottom of page 24. The report reads:

All five of the servicers interviewed in connection with this audit have identified problems of one sort or another that they have experienced due to repeated changes in program guidelines. One servicer in particular noted that it changed from offering only fully documented trial modifications to verbal modifications after Treasury threatened to make examples of servicers with low trial modification numbers (note 22 see below). Servicers have reported among other things that:

>>repeated changes to program guidelines have made it difficult for servicers’ operators to keep up with program rules.

>>verbal modifications have allowed borrowers to obtain trial modifications due to misrepresentations, and identifying borrowers who have misrepresented their eligibility is difficult and resource intensive.

>>borrowers might be gaming the system by withholding required documents (and thereby avoiding to have to make payments until the end of the trial period and still avoid foreclosure), and that some borrowers might be withholding documents to avoid disclosing misrepresentations on their original loan applications.

Note 22: Other servicers have noted issues relating to Treasury’s drive in July 2009 to increase the rate of trial modifications. One servicer found the meeting on July 28, 2009 as not helpful and just a forum for Treasury to tout publicly its goal of 500,000 modifications. Another complained that several servicers were made examples of for the sake of providing a certain public perspective about Treasury’s oversight of the program.

Do you get the sense that Treasury was trying to game the system itself in order to present it as a success? I do.

What does this all mean for the future of the principal reduction program? Just as 12th Street highlights, look for a likely decline in the numbers even applying for the program. I would add, however, that we should expect an increase in those who will change behaviors (that is, an increase in mortgage delinquencies) in the hope of becoming eligible for this program. That development would be exceptionally unhealthy for housing and our economy.

In my opinion along with many others, the mortgage modification program has been an abysmal failure in terms of development, management, execution, and results. I would hope I am wrong but I expect no better with the principal reduction program. I see it as merely another wealth redistribution program promoted by the Obama administration.

One last comment. This $75 billion undertaking is not insignificant from a dollars standpoint, but relative to healthcare reform it is a drop in the bucket. You tell me how Uncle Sam is going to manage that.

http://www.senseoncents.com/wp-content/uploads/2010/03/Factors-Affecting-Implementation.pdf

http://www.ft.com/cms/s/0/e8d44f9a-3ccc-11df-89ca-00144feabdc0.html

European steel and auto industries on Wednesday accused mining companies of unfair pricing practices following the introduction of a new system for valuing iron ore that will see the cost of the resource nearly double.

Eurofer, which represents European steelmakers, has complained to the European Commission about possible pricing abuses, saying there were “strong indications of illicit coordination of price increases and pricing models and pressure on individual steel producers to accept these changes”.

The appeal to Brussels comes at a sensitive time, since competition officials at both the European Commission and the Bundeskartellamt, Germany’s antitrust regulator, are already scrutinising a proposal by Rio Tinto and BHP Billiton to combine their rich iron ore fields in western Australia.

The complaints followed warnings steel prices would have to rise by up to a third after miners and steelmakers in Japan and China agreed to a change in pricing iron ore. The higher steel costs will flow onto increased prices for cars, construction girders and white goods, steelmakers said.

Brazil’s Vale and Anglo-Australian BHP Billiton have led the push to scrap a 40-year-old benchmark system of annual contract negotiations in favour of quarterly contracts linked to the global spot price for ore.

With old benchmark levels lagging spot prices by as much as 100 per cent in a tight market for the resource, iron ore costs will double in the short term.

“A 100 per cent increase in iron ore is an insult,” said Gordon Moffat, director general of Eurofer.

Acea, which represents car and truckmakers in Europe, claimed the three biggest producers, Vale, Rio and BHP-Billiton, had “the pricing power of an oligopoly”.

Rio and BHP have said the JV will be “production-only”, combining infrastructure and budgets but not pricing power.

Building companies said construction work would become expensive, and commercial construction would be hit hard.

“If contractors have to pass this cost on to the customers, it could stifle the current recovery we are seeing in the building industry,” said Noble Francis, economics director at the UK-based Construction Products Association.

Brussels said on Wednesday that it would “make use of all relevant information in its possession” to examine potential competition issues in the sector.

Unlike in Europe, Chinese and Japanese steelmakers are selling into a booming market and are confident about the long-term benefits of a more flexible pricing system.

Geithner is getting his own dressing room this weekend. He's gonna need it. Too many skeletons for a communal closet...

Geithner Says Pickpocketing Trillions from the People to Give to the Oligarchy Was “Deeply Unfair”, But We … Um … Had To

http://www.nakedcapitalism.com/2010/04/guest-post-geithner-says-pickpocketing-trillions-from-the-people-to-give-to-the-oligarchy-was-deeply-unfair-but-we-um-had-to.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

→ Washington’s Blog

Tim Geithner told the Today Show that:

It’s “deeply unfair” that some financial institutions that got taxpayer-paid bailouts are emerging in better shape from the recession than millions of ordinary Americans.

Geithner also argued that President Barack Obama had no choice when confronted with a financial crisis.

“As the president has said, we had to do some very unpopular things,” Geithner said. “People looked at what had happened.”"It’s not fair. It’s deeply unfair,” he said. “He (Obama) had to decide whether he was going to act to fix it or stand back … and that would have been calamitous for the American economy.”

There are only a couple of minor inaccuracies in Geithner’s statements:

* The government hasn’t done anything to fix the economy

* Geithner’s entire approach is wrong, because the economy can’t recover until many of the “financial institutions that got taxpayer-paid bailouts are emerging in better shape” are broken up

* The government has been anemic in addressing unemployment

Moreover, it is not like their approach fell on them and they couldn’t do anything about it. Geithner, Summers, Bernanke and the boys made a conscious decision to side with the oligarchy at the expense of the people.

As Simon Johnson and James Kwak write:

point at which the government had to decide if it would defend the financial oligarchy from populist outrage, or whether it would reform the financial system that brought us the financial crisis and severe recession. We do not think it was an easy choice. But ultimately Obama and his advisers chose to bet on the bankers they knew. The result has been even larger banks and an even more concentrated financial sector.

Geithner also told the Today Show that he hopes skeptical voters will note legislation moving through Congress to bring reforms to the financial system.

He’s banking, of course, on the fact that many voters won’t realize that the legislation is a placebo containing no real medicine.

Geithner ended the interview with this pearl of wisdom:

“What happened in our country should never happen again,” he said. “People were paid for taking enormous risks. It was a crazy way to run a financial system.” Geithner said, “It’s the government’s job … to do a better job of restraining that kind of risk-taking.”

Indeed … too bad that Geithner and the boys are still encouraging that kind of risk-taking.

Geithner was, of course, largely responsible for much of the failure of the government to restrain risk-taking in the first place.

As William Black points out:

Mr. Geithner, as President of the Federal Reserve Bank of New York since October 2003, was one of those senior regulators who failed to take any effective regulatory action to prevent the crisis, but instead covered up its depth.

Geithner was also complicit in Lehman’s accounting fraud .

And pushed to pay AIG’s CDS counterparties at full value, and then to keep the deal secret.

And as Robert Reich notes today, Geithner was “very much in the center of the action” regarding the secret bail out of Bear Stearns without Congressional approval.

Indeed, the list of Geithner’s hinky actions grows longer by the day as new facts emerge.

The Fed has finally came clean. It now admits it bailed out Bear Stearns – taking on tens of billions of dollars of the bank's bad loans – in order to smooth Bear Stearns' takeover by JPMorgan Chase. The secret Fed bailout came months before Congress authorized the government to spend up to $700 billion of taxpayer dollars bailing out the banks, even months before Lehman Brothers collapsed. The Fed also took on billions of dollars worth of AIG securities, also before the official government-sanctioned bailout.

The losses from those deals still total tens of billions, and taxpayers are ultimately on the hook. But the public never knew. There was no congressional oversight. It was all done behind closed doors. And the New York Fed – then run by Tim Geithner – was very much in the center of the action.

This raises three issues.

First, only Congress is supposed to risk taxpayer dollars. The Fed is not part of the legislative branch. Its secret deals, announced almost two years after they were done, violate the democratic process, if not the Constitution itself. Thomas Jefferson put a stop to Alexander Hamilton's idea of a powerful central bank out of fear it would be unaccountable to the public. The Fed has just proven Jefferson's point.

Second, if the Fed can secretly bail out big banks, the problem of "moral hazard" – bankers taking irresponsible risks because they know they'll be rescued – is far greater than anyone assumed after Congress and the Bush and Obama administrations bailed out the banks. Big banks will always be too big to fail because they know the Fed will secretly back them up if they get into trouble, even if Congress won't do it openly.

Third, the announcement throws a monkey wrench into the financial reform bill now on Capitol Hill, which gives the Fed additional authority by, for example, creating a consumer protection bureau inside it. Only yesterday, Sen. Jim DeMint (R-S.C.) blasted the Dodd bill for expanding the Fed's authority "even as it remains shrouded in secrecy."

The Fed has a big problem. It acts in secret. That makes it an odd duck in a democracy. As long as it's merely setting interest rates, its secrecy and political independence can be justified. But once it departs from that role and begins putting billions of dollars of taxpayer money at risk — choosing winners and losers in the capitalist system — its legitimacy is questionable.

That it chose to reveal the truth about its activities during a week when Congress is out of town, when much of official Washington and the Washington media have gone on vacation, and only after several federal courts have held that the Fed must release documents related to its bailout of Bear Stearns, suggests it would rather remain secret than become transparent.

Much of what Ben Bernanke and Tim Geithner did (when Geithner was at the New York Fed) in 2008 was presumably necessary. But the public has no way of knowing. The public doesn't even know who else the Fed has bailed out, or what entities it will bail out in the future. All we know is the Fed secretly bailed out Bear Stearns and AIG and thereby subjected taxpayers to risks that remain even today, without informing the public. That's not a record on which to build public trust.

All republished content that appears on Truthout has been obtained by permission or license.

THIS week? THAT has me so down I doubt I'll have the will to post anything else this weekend. Besides, big Derby preps today - I am retreating into the run for the roses in self-defense - I just can't take it these days - age, weakness, half my friends convincing themselves that the Insurance Profits Protection Act is a good start....

Oh, and btw, though Hilda is doing many good things over there in Labor, this past week, in response to a question about off-shoring, she said something to the effect of "I can't comment on the actions of private sector employers" (HUH?)

I'll try to find the link later - have to take g'dtr to a Fertility Rite of Spring Egg Hunt.

http://www.informationclearinghouse.info/article25125.htm

Whew. That was fast. It didn't take long for Wall Street to figure out how to game Obama's new mortgage modification program, did it? The plan was hyped as help for "struggling homeowners", but it turns out, it's just another stealth bailout for pudgy bank-execs. It's funny, the program hasn't even kicked in yet and, already, bigtime speculators are riffling through their filing cabinets looking any garbage paper they can find to dump on Uncle Sam. Take a look at this on today's Bloomberg report:

"Subprime-mortgage securities are rising at an accelerating pace as the U.S. begins to encourage reductions to homeowners’ balances, which may lead to fewer foreclosures and a quicker end to the housing slump....Senior-ranked bonds tied to borrowers with poor credit will mostly benefit after the Treasury Department said for the first time it would seek to cut the size of mortgages, reducing the likelihood that loan modifications will fail, according to JPMorgan Chase & Co., Morgan Stanley and Barclays Plc. (Bloomberg)

What does it mean? It means that Obama's mortgage modification extravaganza has touched-off a gold rush in toxic paper. Subprime securitizations, which had been worth next to nothing, are now the hottest trade on Wall Street. It's a subprime bonanza! The investment sharpies are scarfing up all the crummy MBS they can get their hands on, because they know they can trade it in for Triple A FHA-backed loans when the program gets going. It's another swindle cooked up by Treasury Secretary Timothy Geithner to keep the brokerage clan in the clover. Here's how a Wall Street veteran explained it to me:

"It looks like the investors in securitizations will be swapping underwater real estate for govt-insured paper... I think the scam here is just to provide some cover so the hedge funds and other high net worth individuals can trade their low grade paper for Triple AAA mortgages insured by the FHA at the taxpayer expense."

That's it, in a nutshell. The faux-foreclosure prevention program has nothing to do with helping homeowners. That's just diversionary gibberish to confuse the public. The real objective is to create a government landfill (aka--FHA) where the banks and other financial institutions can dump their toxic MBS-sludge and walk away with gov-backed loans. Get a load of this:

(Bloomberg) -- The Federal Reserve’s completion this week of its program to buy $1.25 trillion in mortgage bonds probably won’t mean significantly higher U.S. home loan rates as investors return to the market, replacing the Fed...

What we are seeing is an effective handoff occurring between the Fed and industry buyers such as banks and pension funds,” said Christopher Sebald, chief investment officer for Advantus Capital Management in St. Paul, Minnesota...

Advantus is purchasing mortgage bonds after the Fed’s program drained supply in the $5.4 trillion market." (Bloomberg)

Of course, they're "purchasing mortgage bonds", because the government is going to insure them. It's a "no brainer". And don't you love that expression, "a handoff", because that's exactly what it is. The government hasn't stopped pumping liquidity into the system; they've just found another entry-point where they can push it in. Here's how it works: The new program offers incentives to banks and other deep-pocketed investors (in mortgage-backed securities) to slash the principal on underwater mortgages which keeps people from strategic default or foreclosure. Sounds good, right? But here's the catch: When the mortgage is refinanced, it's converted into a FHA-backed loan which provides an explicit gov-guarantee. So, for a slight loss on the face-value of the MBS, the investors (ie--investment banks, hedgies, etc) are able to resuscitate their moribund securitizations (MBS) and reap hefty gains. It's like taking Fido's steaming pile on the front lawn and turning it into the Hope Diamond. Abracadabra!

Geithner has figured out how to put together a bailout that will cost taxpayers hundreds of billions of dollars without any money actually exchanging hands. The value of the putrid mortgage-paper will soar because of the gov-underwriting, and the ginormous losses won't be realized until the mortgages start blowing up sometime in the future. That's when FHA will be put-to-pasture along with fellow-homicide victims, Fannie and Freddie. Pretty clever, eh?

So, the cutthroat speculators and bunko artists who fleeced us all with their dogshit subprimes, have returned for another dip at the public trough. That means taxpayers will get scalped on the same investments a second time. Hey, it's a double-whammy!

This really takes the cake. You gotta hand it to that sniveling scamster Geithner. He had his back to the wall and, presto, he extracts another rabbit from his hat. What a guy. He knew he couldn't go begging to congress for more money, or they'd kick him to the curb. So he worked out a scam that picks up where the Fed's $1.25 trillion quantitative easing bailout leaves off. It's a seamless transition from one massive corporate giveaway to the next. Now the Fed has nearly $2 trillion worth of structured garbage on its balance sheet, (which it will undoubtedly dump on Fannie or Freddie) the banks are loaded with fresh reserves, and another trillion or so is earmarked for the shadow bankers who provide funding to the regulated banking system. AND IT'S ALL 100% FREE. Such a deal.

This bank/credit cabal is robbing us blind in broad daylight and no one seems to give a hoot. Maybe Barack Obama will save us from all ruin?

Fat chance!

http://www.alternet.org/news/146228


AMY GOODMAN: The Obama administration has announced changes to its signature foreclosure prevention program, Making Home Affordable. The initial foreclosure relief program unveiled a year ago was supposed to help up to four million struggling homeowners. So far fewer than 200,000 borrowers have been granted permanent loan modifications. Meanwhile, a record 2.8 million properties with mortgages received foreclosure notices last year, this according to RealtyTrac.

The steps announced Friday would broaden the program to include people who’ve lost jobs, encourage lenders to reduce the principal balances on problem mortgages, and help refinance borrowers who are “underwater,” or owe more than their homes are worth. But will these changes help stem the tide of foreclosures?

In a statement this weekend, economist Dean Baker said the plan was well-intentioned, but the winners are likely once again to be the banks. Baker is the co-director of the Center for Economic and Policy Research and the author of a number of books, his latest called False Profits: Recovering from the Bubble Economy.

He joins us now from Washington, DC, and then we’ll go to Tavis Smiley in Burbank, California, to talk about President Obama’s trip to Afghanistan.

But Dean Baker, one in five American homeowners are now underwater? What does that mean? And talk about what the Obama administration plans to do about it.

DEAN BAKER: Well, the basic story is, we had a housing bubble, prices have fallen, they’re continuing to fall, and we had a situation where people were borrowing very heavily both to buy their homes and also, in many cases, they were taking equity out of their homes. That was a reasonable thing to do if the bubble was real, in other words, if prices were going to continue to rise, as people like Alan Greenspan and Ben Bernanke were telling them. So now that prices have reversed, we have this situation where all these people owe more than the value of their house.

And the important thing, and this is just amazing to me, that no one seems to want to talk about the bubble, even after it’s wrecked the economy, put us in this situation. And they design a housing plan that acts as though there was no bubble, there is no bubble, there’s no problem with house prices falling. Now, house prices are virtually certain to continue to fall, not everywhere, but in very many of these markets. So, if we have a homeowner who’s underwater, their house price is going to fall further, we get the federal government to give some money to the banks to allow them to stay in their home another year or two years. Well, odds are that we aren’t really helping that person. They’re paying more on their mortgage than they would to rent the same house. And on top of that, at the end of the day, they’re going to end up with no equity in their home anyhow. So I don’t quite understand what’s wrong with people in this town, that you had an $8 trillion bubble, it wrecked the economy, the worst downturn since the Great Depression, and people still can’t talk about the bubble. It’s bizarre.

AMY GOODMAN: So talk about exactly what the plan is, who it will help and who it won’t help.

DEAN BAKER: Well, it’s a—first off, I mean, the important thing to understand is everything here is voluntary on the part of lenders, so it sets up a formula where, if lenders reduce principal, in some cases, that the government will issue a new mortgage, or I should say guarantee a new mortgage, at a lower principal. So say someone currently owes $300,000 on a home that we’ll say is worth $250,000. If the bank is willing to issue a new mortgage at, let’s say, $250,000—it’d be a little less, say $240,000—then the Federal Housing Authority will guarantee that new mortgage. So that would mean the person will be paying less than their mortgage each month. In principle, they could come out ahead. But again, in many of these markets, prices are still falling. So let’s say the home’s worth $250,000 today. A year from now it might be worth $225,000. And at that point, the person is again underwater, and the taxpayers are on the hook for the difference. Haven’t helped the person, you’ve helped the bank.

http://www.telegraph.co.uk/finance/economics/7533014/Sell-off-in-US-Treasuries-raises-sovereign-debt-fears.html

The yield on 10-year Treasuries – the benchmark price of global capital – surged 30 basis points in just two days last week to over 3.9pc, the highest level since the Lehman crisis. Alan Greenspan, ex-head of the US Federal Reserve, said the abrupt move may be "the canary in the coal mine", a warning to Washington that it can no longer borrow with impunity. He said there is a "huge overhang of federal debt, which we have never seen before".

David Rosenberg at Gluskin Sheff said Treasury yields have ratcheted up 90 basis points since December in a "destabilising fashion", for the wrong reasons. Growth has not been strong enough to revive fears of inflation. Commodity prices peaked in January and US home sales have fallen for the last three months, pointing to a double-dip in the housing market.

Mr Rosenberg said the yield spike recalls the move in the spring of 2007 just as the credit system started to unravel. "The question is how the equity market is going to handle this back-up in rates," he said.

The trigger for last week's sell-off was poor demand at Treasury auctions, linked to the passage of the Obama health care reform. Critics say it will add $1 trillion (£670bn) to America's debt over the next decade, a claim disputed fiercely by Democrats.

It is unclear whether China is selling US Treasuries after cutting its holdings for three months in a row, or what its motive may be. There are concerns that Beijing may be sending a coded message before the US Treasury rules next month on whether China is a "currency manipulator", though experts say China is clearly still buying dollar assets because it is holding down the yuan against the greenback. Some investors may be selling Treasuries as a precaution against a trade spat.

Looming over everything is the worry that markets will not be able to absorb the glut of US debt as the Fed winds down its policy of bond purchases, starting with an exit from mortgage-backed securities. It currently holds a quarter of the $5 trillion of the MBS market.

The rise in US bond yields has set off mayhem in the 10-year US swaps markets. Spreads turned negative last week, touching the lowest level in 20 years. The effect was to drive credit costs for high-grade companies such as Berkshire Hathaway below that of the US government. This may have been a technical aberration.

TIMMY'S IN A SINKHOLE, NOT A WELL. A SINKHOLE THAT GOES ALL THE WAY TO CHINA!

While they re-peat what I have read otherwise about the NAME EASTER (its Germanic Pagan roots) there make mistakes as to Easter itself (Bede, who was a Christian Monk, who reports this face as part of English Church history, saw the name for Easter as being unimportant compared to what it was celebrating).

First, while death and resurrection were told of other gods in various legends (and this the story of Christ and his Crucifixion and death do match those stories) the death and resurrection is told in to much details in the Four Gospels (With enough variation of the story to be a retelling of the same event from at least two if not four first hand reports) to be something stolen from one of these pagan stories. The early church probably saw the similarities and used them to convert but that as far as it went.

This report brings up HOW the name of the week came about, but just mentioned Sunday and then apparently gets that wrong. Rome did NOT have a week, it did have a mid month mark (around the 15th of each month, thus the 15th of March is the "Ides of March") and the end of the month mark but that is all. When Constantine adopted Christianity (During the Council of Nicea) he had to adopt the seven day Jewish week, for that is what the Christian church used. Constantine face a problem, worship of the Sun had become quite popular in the 200s and was still popular during Constantine's rule. The Sun worshipers worshiped the sun every 14 days on what we now call Sunday. The Christian Bishops, during the Council of Nicea, decided that since Scripture said that we must keep one out of every Seven days "Holy" it did NOT matter if that "Sabbath" was on Saturday, it could be on another day PROVIDED IT WAS UNIFORMLY APPLIED, i.e to Christian and non-Christians. This Compromise sounded good to Constantine and thus Sunday become our Sabbath.

Now with the adoption of the Week, it was imposed on the Roman Calendar that had been in use since the days of Julius Caesar. The Sun worshipers could still have they every other Sunday to do as they wanted, and the Christian had every Sunday for the same function. This is how Sunday became Sunday.

Now the rest of the week were adopted AFTER the Roman Empire fell in the West. The Germans used a five day week, Monday, for the Moon, Tuesday for Try, the god of the law, Wednesday for Woden or Oden, the German main god of 0-700 AD, Thursday for Thor, the German god of War and the Chief German God after about 600 AD (Thus in English we have Wednesday, but in German it is called, Translated from the German, to "Midweek" for by the time the Germans in what is now Germany adopted Christianity Oden seemed to have disappear from their Mythology). Friday was named for the Goddess Fry, the goddess of grain. With Sunday that made it Six days, then Saturday, after the Roman God Saturn was given the Saturday more to just give it a name then anything else.

For more on Sunday
http://en.wikipedia.org/wiki/Sunday

For more on Monday
http://en.wikipedia.org/wiki/Monday

For more on Tuesday
http://en.wikipedia.org/wiki/Tuesday

For more on Wednesday
http://en.wikipedia.org/wiki/Wednesday

For more on Thursday
http://en.wikipedia.org/wiki/Thursday

For More on Friday
http://en.wikipedia.org/wiki/Friday

For more on Saturday and the only name of the week in English Speaking Country NOT of Germanic origin:
http://en.wikipedia.org/wiki/Saturday

More on names of the Day of the Week (Including the difference between countries):
http://en.wikipedia.org/wiki/Week-day_names

Just pointing out the problems with this site, I do NOT believe it is intentional, just NOT as accurate as it could be.

One last comment, Easter moves around for it is based on the concept of the "Golden Number", of which you can read more here:
http://en.wikipedia.org/wiki/Computus

http://www.creditwritedowns.com/2010/03/three-potential-explanations-for-the-continued-fall-in-us-savings-rate.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+creditwritedowns+%28Credit+Writedowns%29

A thorough exploration of the entire savings process and the state of our economy and what may come next....

A graphic and thoughtful analysis to keep you focused during tax season, with the inevitable conclusion: we could get a lot more for the money if it weren't so mis-allocated.

http://econompicdata.blogspot.com/2010/03/does-us-pay-too-little-in-taxes.html

http://www.econbrowser.com/archives/2010/03/deutsche_bank_o.html

MASSIVE AND MASTERFUL

http://www.bloomberg.com/apps/news?pid=20601087&sid=aD.UFT8xnGhw&pos=7

April 1 (Bloomberg) -- Laurence Fink, chief executive officer of BlackRock Inc., stands alone among the biggest U.S. money-market fund providers in publicly opposing a proposed safety net for the industry that manages $3 trillion for investors.

Fink, who has said companies should set aside their own capital cushions, won’t back an industry plan to spread risk among money-market mutual fund firms in its current form, according to Brian Beades, a spokesman for BlackRock, the world’s biggest asset manager. JPMorgan Chase & Co., Federated Investors Inc., Vanguard Group Inc., Goldman Sachs Group Inc. and four other firms have backed the plan, which was proposed by the industry’s trade group last month.

“Larry Fink has invested a lot of time and energy on an alternative idea, talking about capital reserves,” Peter Crane, president of research firm Crane Data LLC in Westborough, Massachusetts, said in a telephone interview.

BlackRock’s dissent may make it harder for money funds to head off regulatory changes that could include an end to the stable $1 net asset value that made the funds a popular alternative to bank accounts. Regulators and firms are seeking ways to prevent a repeat of the run on money funds that followed the 2008 collapse of the Reserve Primary Fund.

Emergency Facility

The industry has planned since last year for an emergency- liquidity facility that would protect money-market mutual funds that invest in corporate debt, stepping in to buy securities at face value in the event of a financial crisis. Funds that can purchase corporate debt, known as prime funds, held $1.67 trillion as of March 30.

Paul Schott Stevens, president of the Investment Company Institute, outlined the Washington-based trade group’s plan in a March 15 speech, two months after Fink voiced qualms about the concept of an industry fund in a conference call with analysts.

Fink, in the Jan. 27 conference call, said companies should establish their own reserves. He said BlackRock was open to an industry liquidity bank in “some form,” as long as credit risk falls to individual fund managers.

“The last thing we are looking for is an industry fund,” he said, according to a transcript of the call. “The last thing we need to do is socialize money-market risk.”

‘Socialized’ Risk

The New York-based company, which managed $202.6 billion in money-fund assets as of Feb. 28, is the fifth-largest U.S. provider, according to Crane Data.

“We favor those solutions that allow fund managers access to incremental liquidity but that do not have the effect of spreading risk among industry participants,” Beades said. He declined to comment on what changes might make the ICI’s plan acceptable to BlackRock.

Under the ICI plan, fees collected from money-market funds would be used to capitalize a state-chartered bank or trust. The facility would purchase holdings at face value from funds during a crisis. That could prevent a fund fielding heavy redemption requests from taking losses because it is forced to sell healthy holdings at a discount.

As a bank, it would also have access to the U.S. Federal Reserve’s discount lending window, according to the ICI, making taxpayers the ultimate backer of money-market funds’ liquidity.

“We absolutely support this,” Christopher Donahue, chief executive officer of Pittsburgh-based Federated, said in a telephone interview. “We’ve spent a lot of work and time on coming up with this position and the industry would be well served by having everyone in it.”

JPMorgan, Goldman

Donahue said he endorses making participation in the plan mandatory for all money-market mutual funds eligible to purchase corporate debt. Federated is the third-largest provider, with a total of $247.8 billion in money funds, Crane data show.

“We are strong supporters,” Kristen Chambers, a JPMorgan spokeswoman, said in an e-mail. JPMorgan in New York manages $313.6 billion, behind only Boston-based Fidelity Investment’s $496.7 billion.

Spokesmen for Bank of New York Mellon Corp.’s Dreyfus unit, the fourth-biggest provider; Vanguard in Valley Forge, Pennsylvania; New York’s Goldman Sachs; Baltimore-based Legg Mason Inc.; and Charles Schwab Corp. and Wells Fargo & Co. in San Francisco said their companies supported the basic proposal as outlined by Stevens.

David D. Sylvester, head of money-market funds at Wells Fargo, said the company would want to see more details before deciding whether it would participate in the plan.

Geithner’s Review

Vincent Loporchio, a spokesman for Fidelity, declined to comment.

Money-market funds have come under scrutiny since the September 2008 failure of the $62.5 billion Reserve Primary Fund, when its value fell below the standard $1 a share. The mass investor redemptions that ensued helped freeze global credit markets by shutting down the biggest collective buyer of short-term corporate debt.

The U.S. Securities and Exchange Commission in January imposed liquidity restrictions on money funds, tightened maturity limits, raised credit standards and gave fund boards more flexibility in dealing with depositor runs.

Treasury Secretary Timothy Geithner, as head of the President’s Working Group on Financial Markets, a government advisory group, is considering more significant changes opposed by the funds industry and business groups, including the U.S. Chamber of Commerce. The advisory panel is preparing a report that examines, among other proposals, requiring funds to abandon the $1 share price for a floating value.

‘Good Stuff’

The proposed money fund safety net, which aims to fend off such a change, wouldn’t offer insurance against losses on securities that default, like the bonds issued by Lehman Brothers Holdings Inc. when the bank went bankrupt, causing Reserve Primary to collapse.

Donahue said the bank could minimize its credit risk by carefully limiting what it would purchase from funds in an emergency.

“I want to stress this is a liquidity facility and not a credit facility,” Donahue said. The bank should “only take the good stuff.”

The bank would still take on credit risk whenever it bought holdings out of a fund, he said. Any default after such a sale could cause losses for the bank.

Donahue compared the idea to the government’s Commercial Paper Funding Facility, started in 2008 to buy short-term unsecured and asset-backed bonds during the credit crisis.

How much the liquidity facility would charge participants, how it would select assets eligible for purchase and other details haven’t been determined, according to several of the companies contacted. The plan, once completed, would need approval from banking regulators including the U.S. Federal Reserve.

Wall Street and the City of London can relax and learn to love financial-regulatory “reform.” Sure, Western governments vow to rein in bankers and speculators. But the politicians also offer a way for Wall Street to evade new rules that would restrict their profits. As long as financiers employ their creativity to help governments conceal and expand public-sector obligations, rather than use that creativity to expose those obligations as untenable, they’ll be OK.

The blueprint is in Sen. Chris Dodd’s reg-reform bill. The bill promises to “restore America’s financial stability.” A new Financial Stability Oversight Council (FSOC) would scan transactions and accounts for potential threats.

Yet the bill signals the FSOC: don’t look for risk in government securities markets. Consider the section that governs banks’ trading. It directs regulators to prohibit banks and their holding companies from proprietary trading and equity-fund sponsorship. But there’s an exception. Banks could trade in “obligations of the United States” and GNMA and Fannie Mae securities, as well as in state, city, and local public-authority debt.

The bill gives other financial firms a pass on government debt, too. Dodd wants regulators to set debt limits on systemically risky companies that aren’t banks. But, the bill says, “the rules … shall not apply” for proprietary trades in federal, mortgage-agency, or state and local government debt.

The same principle holds for securitization. The bill would require underwriters to retain risk in the debt-backed securities they sell. But it offers “a total or partial exemption of any securitization, as may be appropriate in the public interest” (hint: mortgages).

The pols want “financial stability,” then, but only if it doesn’t affect the capacity of government -- and favored constituencies like homeowners -- to borrow profligately and cheaply. To ensure institutional demand for its debt and for the debt of cash-strapped cities, states, and homeowners, Washington would disproportionately encourage banks and other institutions to use such debt as trading-profit fodder.

MORE

http://www.businessinsider.com/wall-streets-big-growth-sector-is-helping-the-government-hurt-taxpayers-2010-3#ixzz0jz6fqwrz

But hey, you suspected this all along, didn't you?

This is the April update despite the typo on the video

http://jessescrossroadscafe.blogspot.com/2010/04/april-2-update-from-steve-meyers.html

previous Steve Meyers videos
http://www.youtube.com/results?search_query=firstbaptistmarco&aq=f

http://www.nakedcapitalism.com/2010/03/fbi-warns-of-mortgage-fraud-%E2%80%98epidemic%E2%80%99-seeks-to-head-off-%E2%80%98next-sl-crisis%E2%80%99.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

Rampant fraud in the mortgage industry has increased so sharply that the FBI warned Friday of an "epidemic" of financial crimes which, if not curtailed, could become "the next S&L crisis."

Assistant FBI Director Chris Swecker said the booming mortgage market, fueled by low interest rates and soaring home values, has attracted unscrupulous professionals and criminal groups whose fraudulent activities could cause multibillion-dollar losses to financial institutions.

"It has the potential to be an epidemic," said Swecker, who heads the Criminal Division at FBI headquarters in Washington. "We think we can prevent a problem that could have as much impact as the S&L crisis," he said.

In the 1980s, many Savings and Loans failed because of poor management, risky loans and investments, and in some cases, fraud. Taxpayers were left with a $132 billion tab to cover federal guarantees to S&L customers.

This is the headline and first four paragraphs of a CNN article from 17 September 2004.

Where are the investigations, perp walks, convictions? So what happened to all that fraud?

It’s still ongoing.

* Short sale fraud
* Mortgage fraud indictments result from media investigation

Here’s the only investigation of a leading insider that I know about:

* SEC Press Release on Mozilo’s fraud and insider trading

But, that was June of 2009. Have you heard anything about this? I haven’t.

See Bill Black’s take on the fraud and the systemic response to it. You should note that, while the FBI was concentrated on criminal gangs outside of financial institutions, Black believes the problem is the collusion of the financial institutions themselves in the frauds. Obviously, in an environment that relies largely on self-reporting by regulated institutions, there is no incentive to report, if much of the criminal activity is within those institutions.

http://www.youtube.com/watch?v=sA_MkJB84VA&feature=player_embedded

http://www.ft.com/cms/s/0/cef26d7c-3c41-11df-b316-00144feabdc0.html

Citigroup will close a chapter in its troubled history on Wednesday with the spin-off of Primerica, its door-to-door insurance unit, in a move that will raise about $250m and should enable the US bank to move more than $2bn in assets off its balance sheet.

The listing of Primerica – one of the building blocks of the company that later became Citigroup – is part of the US financial company’s plans to sell some $900bn in unwanted business and assets after suffering huge losses during the crisis.

People close to the situation said Citi’s investment banking unit, which is arranging the initial public offering, was expected to price the 18 million shares, or about 24 per cent of the company, it is selling in Primerica after US markets close on Wednesday.

Citi can also sell a further 2.7 million shares if there is strong investor demand.

In a recent regulatory filing, Primerica, one of the first businesses acquired by Sandy Weill as he was building a financial services conglomerate in the late 1980s – said the shares would be priced between $12 and $14 each.

At the top end of the range, Citi would raise $252m, valuing the whole of Primerica, which has an army of 100,000 self-employed insurance agents, at more than $1bn.

Primerica had revenues of $2.2bn and net income of $495m last year.

Citi also stands to reap a further gain of up to $330m by selling an additional stake to Warburg Pincus, the private equity group, as well as receiving a $454m dividend to be paid by Primerica to compensate Citi for keeping most of its old policies.

The gains are expected to be partly offset by a one-off loss stemming from the fact that Citi is selling shares in Primerica below its book value.

Citi executives hope that the combination of the public sale and the deal with Warburg Pincus will allow them to treat Primerica as a separate business for accounting purposes. Such treatment is crucial to Citi’s goal of reducing its balance sheet and meeting demands from regulators and investors for speedy divestments of the $540bn-plus in non-core assets that the company still holds.

People familiar with the matter say that if Citi sells more than 50 per cent in Primerica, it will be able to move more than $2bn in assets off its balance sheet.

The Primerica spin-off comes a day after the US Treasury said it would sell its 27 per cent stake in Citi before the end of the year...SEE ARTICLE POSTED ABOVE

http://www.ft.com/cms/s/0/b61b7c62-3cfa-11df-bbcf-00144feabdc0.html

The top 400 executives of Credit Suisse will share a jackpot of more than SFr3bn when a special bonus scheme that reached maturity on Wednesday pays out next month.

The end of the bank’s five-year performance incentive plan (PIP) means that Brady Dougan, chief executive and the biggest beneficiary, will receive 1.3m shares. Based on Wednesday’s closing share price of SFr54.35, he stands to make SFr70m (€49m) – on top of the SFr19.3m compensation he received for 2009.

Paul Calello, head of investment banking and the second biggest beneficiary, is set to receive SFr37m, while Walter Berchtold, head of private banking, should make SFr34m.

The exact amounts will depend on the bank’s share price on April 23, the first day the scheme’s shares can be sold and a day after the group’s first-quarter results. Credit Suisse stressed the proceeds would be subject to tax, depending on the recipients’ jurisdictions. About SFr1bn of the total is being withheld for tax purposes.

The disclosure of a fresh bonanza for senior bankers will stoke criticism of excessive pay in financial services. News of the awards comes just days after the group’s 2009 annual report revealed that Mr Dougan was Europe’s best-paid bank chief executive and one of the highest paid in the world.

In Credit Suisse’s normal annual compensation scheme, bonuses are largely deferred, paid in stock as well as cash and subject to clawbacks. In 2004, the bank required eligible executives to take part of their variable compensation as PIP units in a move designed to boost incentives and ensure retention.

Launched by Oswald Grübel, then the bank’s head and now chief executive of UBS, shortly after John Mack was ousted as co-head of investment banking and Mr Dougan’s promotion to lead that unit, the scheme is likely to cause embarrassment in today’s climate, in spite of elaborate provisions to ensure fairness.

Top executives in the PIP were awarded a given number of units, convertible into shares. The conversion factor, or “multiplier” – was based on profitability and, crucially, returns to shareholders, compared with eight peers, including JPMorgan Chase, UBS and Deutsche Bank. While the share price movement has not been outstanding, the size of the multiplier – at 4.8 times – reflects the fact that Credit Suisse had the second highest returns to shareholders in its peer group, behind JPMorgan. The other banks all had negative returns.

http://www.ft.com/cms/s/0/734fc852-3b83-11df-a4c0-00144feabdc0.html

US regulators on Monday asked more than 20 financial groups whether they engaged in transactions along the lines of “Repo 105” – an accounting device that helped Lehman Brothers conceal its high leverage ratio during the financial crisis.

The corporate finance division of the Securities and Exchange Commission wrote to chief financial officers of “close to two dozen” large foreign and domestic banks and insurers, demanding details of repurchase agreement deals.

The SEC probe includes whether companies booked repos as asset sales for accounting purposes over the past three years, and whether these deals were concentrated with certain counterparties or certain countries. Regulators also asked companies to quantify the amount of repos that were disclosed as asset sales and to explain the “business reasons” for use of these structures.

The heightened scrutiny of repos is the result of a report by a court-appointed examiner this month which found that Lehman used the Repo 105 technique to book temporary repurchase agreements as permanent asset sales in 2008. This helped Lehman conceal about $50bn from its balance sheet, thus reducing its leverage ratio and appearing healthier to the eyes of investors and analysts.

“We are looking at the Lehman activity very, very carefully and all the issues surrounding Repo 105,” Mary Schapiro, SEC chairman, told CNBC on Monday.

The report on Lehman caused a flurry of activity in Washington. Chris Dodd, chairman of the Senate banking committee, called on the justice department to investigate alleged accounting wrongdoing at Lehman and prosecute any employees at the bank – or “other companies” – who might have broken the law.

The Repo 105 furore highlights how fallout from the crisis continues to generate debate among policymakers, regulators and Wall Street executives even now the banking system has returned to profitability.

http://www.ft.com/cms/s/0/d49cfdec-3c2c-11df-b40c-00144feabdc0.html

Many people believe there was a housing bubble in the UK, that the bubble burst and the consequences took down British banks. Almost none of this is true. There was not a bubble in the British housing market, there has been no house price collapse and the problems of British banks have little to do with losses on residential mortgages in the UK.

Between 1989 and 1995 house prices in Britain fell by about one-third in real terms. In 1997, they began to rise rapidly and the pace accelerated. The first predictions of an impending crash appeared around 2001 and were repeated more and more frequently thereafter. But prices continued to rise until the credit crunch hit in mid-2007. There was a gentle fall and then prices stabilised so that the gains made in 2006-07 have been lost. The level of prices today is broadly that reached at the beginning of 2006.

John Kay, columist


But that represents a very big rise. The average increase in UK house prices from 1997 to the present is about 7½ per cent per annum, compared with an annual rise in the retail price index of 2½ per cent. The ratio of average house prices to earnings today is at a level only briefly seen in 1989 and at the height of the boom in 2006-07. Given the current shortage of mortgage finance and the rise in bank lending margins – rates on new mortgages have barely fallen despite swingeing cuts in official interest rates – it is surprising that house prices have remained so robust.

There are two ways of interpreting this data, and there may well be some truth in both of them. One is that UK house prices still have some way to fall. The other is that the rise after 1997 was justified by a shortage of desirable housing and falling interest rates. The increase in house prices was greatest in areas such as Greater London, the south-east and south-west, where land shortages are marked and good-quality property is scarce. Average mortgage repayments as a percentage of income are not historically high and never have been recently. A fall in real interest rates from about 4 per cent in 1998 to 1 per cent now roughly doubles the value of a long-dated indexed bond in real terms – and houses are, in financial terms, more similar to indexed bonds than to any other asset.

If there has been no UK housing market crash, why were large mortgage lenders – Northern Rock, Bradford & Bingley and HBOS – prominent among the British victims of the credit crunch? The answer is that losses on UK residential mortgage lending were not even a significant contributory cause of the failure of these businesses. Northern Rock expanded too rapidly – partly by making poor loans, to be sure. But the reason the company failed was not the rate of defaults on these poor loans. It failed because its excessive growth required constant refinancing and the company ran out of cash when wholesale credit markets dried up. Bradford & Bingley also had funding problems; but its need for major refinancing related not to its own bad mortgages but to the bad mortgages it had foolishly contracted to buy. And HBOS, for a long time the UK’s leading lender for house purchases, had a good-quality mortgage book. The bank ran into trouble because its traders and corporate bankers failed to display the same prudence.

Housing market bubbles contributed to Britain’s financial crisis, but the bubbles were in the US, not the UK. There was froth in sectors of the buy-to-let market, but throughout the boom most British buyers bought houses they planned to live in with mortgages they could afford to repay. Repossessions of residential properties are barely half the level of the early 1990s, when a perfect storm of falling prices, high interest rates, inflation and recession hit UK housing. Major mortgage lenders then sailed through these menacing seas with little impact on profits and cash flow, improving balance sheets and capital ratios. The novelty is not the scale of the crisis but the fragility of institutions. It was not British housebuyers who took on debts they could not repay in the recent boom: it was British banks.

Happy spring to all of you who have survived the rough weather in northern climes.

We're getting an unusually cool prelude to summer here in the central Arizona desert. Spent most of yesterday afternoon weeding and should have good weather for it through the week.

And Little League starts this week, too!



Tansy Gold, where hope springs eternal. . . . .

Financial Times headline.

I'm going to be an optimist and take this as a sign that Larry the Cable Guy is going to reach "escape velocity" in the near future--may he take Geithner and Bernanke with him!

It looks like FT has finally gotten the bugs out of its software limiting access to free articles. I may have to subscribe ($4 a week)! I'll have to inquire what the paper copy, which is delivered to your home in Ann Arbor, costs....$99/year, it looks like, via amazon.

http://www.kndo.com/Global/story.asp?S=12223028

Do you qualify for help under President Obama's latest foreclosure prevention effort, announced Friday?

Here's a quick take on who may be eligible under the new home-loan programs, which include aid to borrowers who become unemployed and incentives for lenders to reduce loan balances for underwater borrowers. The information comes from Obama administration statements and a Friday analysis of those plans by economists at Goldman Sachs in New York.

Three months of mortgage relief for the unemployed

For three months, jobless mortgage holders get temporary forbearance on their mortgage loan. They'll still have to pay 31 percent of their monthly income, but not the full amount they usually have to pay each month on the loan. Loan servicers participating in the Making Home Affordable Program -- which includes many big lenders -- are required to offer assistance to all jobless borrowers who meet eligibility criteria.

To be eligible, you must show that you are drawing unemployment insurance benefits, that you live in the home, and that the loan was originated before Jan. 1, 2009. The loan balance must be below $729,750. You can't be more than 90 days delinquent in your payments.

FHA refinance loan

Participation in this Federal Housing Administration program is voluntary, with the government providing incentives to encourage lenders to offer principal (loan balance) relief to borrowers at high risk of foreclosure. The target group is borrowers deeply "underwater," with loan balances far above the current value of their home. The idea is to get a win-win outcome, where borrowers stay in their homes and lenders don't lose as much as they otherwise might by foreclosing.

Lenders must agree to reduce the principal balance by at least 10 percent on a first-lien mortgage. After refinancing, the first mortgage can't be larger than 97.75 of the home's value (the current FHA limit) but the total loan-to-value ratio (with a second lien) may be as high as 115 percent. In many cases, this will mean substantial write-downs (losses) for both first- and second-lien lenders.

To qualify, borrowers must be current on their existing mortgage payment, occupying their home, and qualify under standard FHA underwriting guidelines – including a FICO credit score of at least 500. The new loans can't result in a monthly payment higher than 31 percent of borrower income. Many borrowers won't qualify, but many also will.

Other mortgage relief

When evaluating what to do about at-risk loans, mortgage servicers in the Home Affordable Modification Program (HAMP) will be "required to consider" principal writedowns if the loan-to-value (LTV) ratio is greater than 115 percent. They will compare whether this would result in a higher "net present value" of the loan (to the bank or investors who own it) than other loan-modification options under the HAMP program.

So if your loan is being reviewed under the HAMP program, you'll be considered. This program will allow some homeowners with negative equity to reap a reduction in the principal balance in steps over three years, if they remain current on payments.

To encourage lenders to opt for loan-balance reductions, the government will offer lenders 10 cents per dollar of principal written down above 140 percent LTV, 15 cents between that level and 115 percent LTV, and 21 cents for LTV reductions below that. Second liens that are more than six months delinquent will get a standard 6 percent incentive payment, according to the Goldman Sachs report.

When will all this start? Soon, the administration says, but there's no set date. Some parts will be operational within the next few weeks, and all the elements (not all of which are discussed here) should be in place by this fall, the Obama administration says.

For updates and more information you can check the White House's "home affordable" website. The site also has interactive steps to help you determine whether you're eligible for government-backed programs.

http://www.informationclearinghouse.info/article25104.htm



"The people who own the country ought to govern it." - John Jay, first Chief Justice of the Supreme Court, 1789-1795

"We have to tolerate the inequality as a way to achieve a greater prosperity and opportunity for all." - Lord Brian Griffiths, Goldman Sachs international advisor, 2009

"The modern conservative is engaged in one of man's oldest exercises in moral philosophy; that is, the search for a superior moral justification for selfishness." - John Kenneth Galbraith

March 30, 2010 "Global Research" -- In an interview with Detroit Free Press and USA Today just before his "jobs summit" in December, President Obama said "It's just not going to be possible for us to have a huge second stimulus, because frankly, we just don't have the money." And "I want to be clear: while I believe the government has a critical role in creating the conditions for economic growth, ultimately true economic recovery is only going to come from the private sector." This was just two days after he announced a $30 billion per year escalation of the war in Afghanistan. (emphasis added)

The president opened the summit itself by saying that we had to face the fact that our resources are too limited to finance job creation. But he failed to mention that the $1.4 trillion deficit tripled last year's deficit due, in large part, to the bank bailout, which "according to the Inspector General of TARP, was allocated up to $23.7 trillion (of the people's money) in cash handouts, loans, debt guarantees and other subsidies" to the financial sector. (1) That's in addition to the loss of $1.3 trillion in revenue due to the Bush tax cuts that went overwhelmingly to the already superfluously wealthy. (2) (italics added)

The president asked the multimillionaire corporate CEOs assembled for the summit what he could do to get them to hire new workers. They demanded corporate tax cuts. The president told them "that he would propose tax incentives for hiring new employees, the dismantling of business regulations, and other measures that will do next to nothing to put jobless people back to work," but will, however, boost corporate profits. (3)

The $100 billion the administration claims will go toward "job creation" is primarily credits to businesses that hire workers or raise wages, extended unemployment benefits, and aid to state and local governments. But even if the $100 billion did create jobs, it would be two million jobs paying $50,000 (or four million jobs paying $25,000) for a projected 20 million unemployed or underemployed... (4)

SEE LINK FOR THE REST OF THIS SCHOLARLY AND COMPREHENSIVE SUMMARY

Vi Ransel is a retired writer of eEementary Educational Materials and Corporate Communications, who never thought she'd be returning to the Gilded Age - and beyond, when America was ruled by a Unitary Executive (King George III) and the largest transnational corporation in the world (the British East India Company). She can be reached at rosiesretrocycle@yahoo.com.

THE ONLY REASON I WOULD EVER LIVE IN CALIFORNIA AGAIN IS IF I WERE REDUCED TO A TENT....YET WE HAVE A TENT CITY HERE IN ANN ARBOR

http://www.informationclearinghouse.info/article25111.htm

Concentrations of homeless people are nothing new in America, but recent BBC and Los Angeles Times reports depict a rising trend of shanty slums, such as a "city" of newly homeless people living in tents near the Ontario airport in Los Angeles.

If you recall your Steinbeck, the residents of the 20c Hoovervilles were largely tenant farmers thrown off their farms by the owners, who in turn tried mechanized farming to bring down costs and break even. These displaced farmers migrated West where they became agricultural day laborers and settled into shanty camps.

The California tent slum depicted in the BBC report is quite different, because they are not migrant workers, so much as locals who have lost their homes. It is hard to tell if the newly dispossessed are all the victims of the subprime market. More likely, the tent slum population is a mix of new and old homelessness -- perhaps with a few migrant workers in the mix.

http://www.youtube.com/watch?v=CnnOOo6tRs8&feature=player_embedded

I do not know if there is a technical point at which a tent city becomes a slum -- a boundary of some sort that gets crossed in terms of population density or length of time in existence or total acreage. But the Los Angeles Times reports that the police are handing out wrist bands to make sure that only locals take up residence in the tent camp by the airport. Non locals have to get out. Passing out armbands to make sure only locals get into the camp has to be crossing a boundary of some kind. And it is not a good one to cross.

Whatever the actual demographics, the images and the stories are heartbreaking. If ever there was a reason to let go of market orthodoxy, and to re-embrace the American spirit of making things better by the most pragmatic means possible -- this is it. Make it work better, period. No ideology; no grand theories about freedom from government; just come together to help people before we lose a generation to this mounting economic tragedy.

http://www.informationclearinghouse.info/article25109.htm

How cold and callous can we become? When, as a society and as a nation, we can undergo a massive earthquake under our very feet and before our very eyes, how can we just ignore its victims?

RealtyTrac, the California-based authority on property trends and valuations, projects 4.5 million home foreclosures before the end of this year. That’s 4.5 million homes, and with four people to a household that is eighteen million people. Eighteen million men, women and children put out into the road, people who must scramble to find shelter and scramble to find new schools for their children.

Last year it was 2.8 million homes or 11.2 million Americans put out into the road. In two years that is 29.2 million people just put out into the road.

“I gotta see them folks that’s gone out on the road. I got a feelin' I got to see them. They gonna need help no preachin' can give 'em. Hope of heaven when their lives ain’t lived? Holy Sperit when their own sperit is downcast an’ sad?” Preacher Casey--The Grapes of Wrath

Twenty-nine million is more people than the population of forty-nine states in the union. Eighteen million is a larger population than all of the states except New York, Texas and California. Yet the problem is glossed over; the solution is discussed casually and the victims are ignored. I am but one of the citizens of this invisible empire. As I approach my one year anniversary of living in a garage and washing in a bucket let me tell you what I’ve found.

Number one, I am one of the lucky ones. I’ve lost my wealth, my wife and my home. But I still have a place to sleep and a bathroom to use. Over the year I’ve met people who are sleeping in tents and everyone I talk to tells me their own version of the same story entitled, “My Downward Spiral.”

I’ve got it made when I think about the women out there with small children. What must that hell on Earth be like? The other day I saw middle-aged man pushing an elderly man down the shoulder of a four-lane highway in a wheelchair. Could that have been for fun? To get out and see the sights or for a breath of fresh air? They were about three blocks away from Burger King, a used car lot, a Holiday Inn and a hospital. Where do you suppose they were going?

I would scream if I thought it would help. I could set myself alight on the steps of the Capitol if I thought it would do any good. I too-well understand that in America, the live, twenty four-hour sitcom, the actions of the invisible mean nothing. So instead I write and I write and I write. I write for me and I write for you, but I won’t write for anyone who tells me what to write.

I’ve had very kind people tell me that they like what I write and I truly appreciate that. I applied to a want ad for a political writer. The ad was non-specific; they wanted a conservative political writer. The editor, who bragged on himself as a regular Fox News contributor, sent me back a nice note explaining their conservative point of view and added that if I could write on the same caliber from a conservative perspective he would consider hiring me. “Sorry, No!”

Not a day goes by that I don’t become depressed by reading the want ads. Scams, come-ons, frauds and peasant pay. Writing jobs to sell cosmetics, I-pods or ear wax remover for less than minimum wage. You know what? I got better things to do with my time! I do have a job; it just doesn’t pay anything. I write the things the folks with money don’t want said.

“This is the thing to bomb. This is the beginning—from 'I' to 'we'. If you who own the things people must have could understand this, you might preserve yourself. If you could separate causes from results, if you could know that Paine, Marx, Jefferson, Lenin were results, not causes, you might survive. But that you cannot know. For the quality of owning freezes you forever into 'I', and cuts you off forever from the 'we'.” The Grapes of Wrath

We have a problem in this country and our government refuses to deal with it. It wants to pretend that all we need is an aspirin when our society needs chemotherapy. Our cities are falling into ruin; our public schools are warehouses where the children are caged like chickens until they’re old enough to be made into soup. A college education has become a high-risk crapshoot with tuitions rising and employment falling.

I want a bed to sleep in and I want a shower to wash in and sometimes I wonder if I’ll ever have those things again. I am a left wing FDR liberal with socialist leanings, but underneath that veneer I am a nationalist. I want my nation to do well. I want we the people to work for good wages. I want our kids to go to good schools and live in nice neighborhoods, and sadly I don’t see where that is ever going to happen with the people who are in power. I don’t see where that is going to happen with the media in power. I don’t see where that is going to happen until we are in power.

“Every one a drum major leading a parade of hurts, marching with our bitterness. And some day—the armies of bitterness will all be going the same way. And they'll all walk together, and there'll be a dead terror from it.” The Grapes of Wrath

The current administration's solution to the mortgage crisis has been the same as his Republican predecessor. Leave it in the hands of the big banks which caused the problem in the first place. Leave Jesse James in charge of bank security and Tony Soprano in charge of financial ethics. The current administration's solution has had the same results as its predecessor, one percent of applicants rescued.

Fifty percent of applicants were disqualified from the start, so the administration is tweaking the program to pay the banks more money for each mortgage rescued. Meanwhile Wall Street warns that 50 percent of rescued mortgages will default again. We need jobs, we need help and we are asking nicely this time.

“Okie (Homeless) use'ta mean you was from Oklahoma (didn’t have a home). Now it means you're a dirty son-of-a-bitch. Okie (Homeless) means you're scum. Don't mean nothing itself, it's the way they say it.” The Grapes of Wrath

“And the great owners, who must lose their land in an upheaval, the great owners with access to history, with eyes to read history and to know the great fact: when property accumulates in too few hands it is taken away. And that companion fact: when a majority of the people are hungry and cold they will take by force what they need. And the little screaming fact that sounds through all history: repression works only to strengthen and knit the repressed. The great owners ignored the three cries of history. The land fell into fewer hands, the number of dispossessed increased, and every effort of the great owners was directed at repression.” The Grapes of Wrath

"I know this … a man got to do what he got to do." The Grapes of Wrath

I’ll continue to write what I write and I’ll continue to be turned down by so-called liberal websites, but that don’t make no never mind to me. I write for me and for you, for the eighteen million this year and the eleven million last year and the ten million the year before that. To tell the truth as I see it, 'cause when you ain’t got nothing you ain’t got nothing to lose.

"It don’t take no nerve to do somepin when there ain’t nothin’ else you can do." Tom Joad--The Grapes of Wrath

The Easter message for those who will not heed it anyway. And in their baskets, bright shiny FRSP.

http://www.informationclearinghouse.info/article25108.htm

...

So we got health care reform last week -- but it's a far cry from reformation. You can't blame President Obama for celebrating what he did get -- he and the Democrats needed some political points on the scoreboard. And imagine the mood in the White House if the vote had gone the other way; they would have been cutting wrists instead of cake.

Give the victors their due: the bill Obama signed expands coverage to many more people, stops some very ugly and immoral practices by the health insurance industry that should have been stopped long ago, and offers a framework for more change down the road, if there's any heart or will left to fight for it.

But reformation? Hardly. For all their screaming and gnashing of teeth, the insurance companies still make out like bandits. Millions of new customers, under penalty of law, will be required to buy the companies' policies, feeding the insatiable greed of their CEOs and filling the campaign coffers of the politicians they wine and dine. Profits are secure; they don't have to worry about competition from a public alternative to their cartel, and they can continue to scam us without fear of antitrust action.

The big drug companies bought their protection before the fight even began, when the White House agreed that if they supported Obama's brand of health care reform -- not reformation -- they could hold onto their monopoly. No imports of cheaper drugs from abroad, no prescriptions filled at a lower price by our friendly Canadian neighbors to the north.

And let's not forget another, gigantic health care winner: a new report from the nonpartisan Center for Public Integrity says the battle for reform has been "a bonanza" for the lobbying industry. According to the Center's analysis, "About 1,750 businesses and organizations hired about 4,525 lobbyists, total -- eight for each member of Congress -- and spent at least $1.2 billion to influence health care bills and other issues."

But while we're at it, a cheer for the federal student loan overhaul -- Democrats managed to pass that reform with an end run around powerful lobbyists, cleverly nestling it in the health care reconciliation package.

Nonetheless, under pressure from the lending industry, it, too, was watered down from its original intent. The three Democratic senators who voted against -- Ben Nelson, Blanche Lincoln and Mark Pryor -- have all received campaign contributions from Nelnet, the student loan company based in Nelson's home state of Nebraska, or its lobbyists.

(And would you be amazed to learn that one of the student loan industry's lobbyists used to be Blanche Lincoln's chief of staff? The Capitol Hill newspaper Roll Call described Kelly Bingel as Lincoln's "alter ego," and cited a former colleague saying Bingel was "first on the list of the Senator's callbacks," words that would sound like heaven to any Washington lobbyist's ears.)

Another case of reform gone off track: this week, a year and a half after Wall Street brought us so close to fiscal hell we could smell the brimstone, a crippled little financial regulation bill seems to be hobbling out of the wreckage, but still faces an array of well-armed forces gunning for it.

No wonder. In the 2008 and 2010 election cycles, members of the Senate Banking Committee -- which sent the bill to Congress this week -- received more than $39 million from Wall Street and the banks; members of the House Financial Services Committee raked in more than $21 million -- so far. Just how serious do you think they're going to be about true reform?

Senate Banking Committee Chairman Chris Dodd of Connecticut has sounded like a champion of reform ever since he announced he will not run for reelection. It's about time. Since 2005, his top ten campaign contributors have included Citigroup, AIG, Merrill Lynch and the now deceased Bear Stearns, all front-line players in bringing on the financial calamity....

http://www.washingtonpost.com/wp-dyn/content/article/2010/03/29/AR2010032903824_pf.html

The expensive "sheep's milk" cheese in a Manhattan market was really made from cow's milk. And a jar of "Sturgeon caviar" was, in fact, Mississippi paddlefish.

Some honey makers dilute their honey with sugar beets or corn syrup, their competitors say, but still market it as 100 percent pure at a premium price.

And last year, a Fairfax man was convicted of selling 10 million pounds of cheap, frozen catfish fillets from Vietnam as much more expensive grouper, red snapper and flounder. The fish was bought by national chain retailers, wholesalers and food service companies, and ended up on dinner plates across the country.

"Food fraud" has been documented in fruit juice, olive oil, spices, vinegar, wine, spirits and maple syrup, and appears to pose a significant problem in the seafood industry. Victims range from the shopper at the local supermarket to multimillion companies, including E&J Gallo and Heinz USA.

Such deception has been happening since Roman times, but it is getting new attention as more products are imported and a tight economy heightens competition. And the U.S. food industry says federal regulators are not doing enough to combat it....MORE AT LINK

http://thehill.com/homenews/senate/90449-more-than-200000-to-lose-jobless-benefits-monday

Starting Monday, more than 200,000 unemployed Americans won't see jobless benefits they're expecting because Congress failed to act.

The interruption in benefits will last two weeks at a minimum, according to Judy Conti of the National Employment Law Project (NELP), since lawmakers return from spring break on April 12.

As the two-week recess began, Congress was at an impasse over how to extend the emergency unemployment insurance program and other expiring provisions, including increased COBRA health insurance subsidies for the unemployed, the Medicare doctor payment rate and federal flood insurance.

Senate Republicans said the $9.3 billion, 30-day extension preferred by Democrats should be paid for, while Democrats said the bill's cost didn't need to be offset because the program was "emergency spending."

Under the jobless benefits program that ends Monday, Americans out of work are eligible for up to 99 weeks of unemployment benefits. The program, aimed at helping jobless Americans stay afloat when new jobs aren't readily available, gives an unemployed worker more than the 26 weeks of unemployment insurance normally available. But with the program ending, those out of work for as few as six months will see an interruption in their benefit checks....

http://www.istockanalyst.com/article/viewarticle/articleid/3999525

....
Nevertheless, behind the rosy headlines, data from the Bureau of Labor Statistics also give a grim side of the employment picture.

The number of long-term unemployed (more than 27 weeks) in March rose to more than 6.5 million. The percentage of people unemployed for 27 weeks or more also rose to a record 44.1% of all jobless.

The Labor Dept. figures also showed average earnings per hour dropped last month and the number of people working part-time because they couldn't find full-time work increased.

A Rise in The Underemployed
The underemployment rate -- which includes the part-timers and people who want work but have given up looking - - increased to 16.9% from 16.8%, based on government data, seasonally adjusted.

However, the latest Gallup Daily tracking finds that 20.3% of the U.S. workforce was underemployed in March-- a slight uptick from the relatively flat January and February numbers. Gallup employment data are not seasonally adjusted. (See chart)




Gallop concludes its findings as follows:

As unemployed Americans find part-time, temporary, and seasonal work, the official unemployment rate could decline. However, this does not necessarily mean more Americans are working at their desired capacity. It will continue to be important to track underemployment -- to shed light on the true state of the U.S. workforce." ....

http://www.huffingtonpost.com/2010/04/02/number-of-long-term-unemp_n_523321.html

...As of last month, more than 6.5 million Americans have been without a job for at least six months, an all-time high, according to Labor Department data. That's more than double the amount this time last year.

Of the more than 15 million unemployed Americans, nearly 44 percent have been without a job for at least six months -- another all-time high....

Robert Reich, an economist at the University of California at Berkeley and former Labor Secretary under President Bill Clinton, was much more pessimistic.

Reich wrote on his blog:

"Since the Great Recession began, the economy has lost 8.4 million jobs and failed to create another 2.7 million needed just to keep up with population growth. That means we're more than 11 million in the hole right now. And that hole keeps deepening every month we fail to add at least 150,000 new jobs, again reflecting population growth."



MORE AT LINK

http://news.newamericamedia.org/news/view_article.html?article_id=900ae42969a5c742b0ba2b260fb06b16

....On the whole, the economic news was mixed, but for African Americans, it was particularly troubling. The unemployment rate for whites held steady at 8.8 percent compared to February and went down for Asians from 8.4 percent to 7.5 percent. But it rose to 16.5 percent for blacks from 15.8 percent. Hispanics showed a slight increase as well from 12.4 percent to 12.6 percent....

http://www.presstv.ir/detail.aspx?id=122277§ionid=351020603

Workers at a factory facing closure in France have threatened to blow up the plant unless they are given better layoff compensation.

About 50 workers at Sodimatex, which makes car rugs, have been occupying the site in Crepy-en-Valois since Thursday. They are pressuring the company for better compensation.

The employees have placed petrol bombs near a large gas tank and are threatening to set them ablaze.

The French industry minister has condemned the move and urged the workers to settle the row through talks. France is suffering a 10 percent unemployment rate — highest in a decade.

The car industry is among the hardest-hit by the economic slowdown.

Plant closings have led French workers to increasingly militant behavior, with numerous cases of boss-napping over the past year and one other case of a threat to blow up a factory.

Although I don't, really, advocate threatening to blow things up, it's hard not to give a cheer for the direct French route. And for the French gov't's seemingly mild response - "now, now, let's all sit down and talk this out."

Here, we'd be calling them terrorists.

http://www.informationclearinghouse.info/article25134.htm

The Civil War ranks as the most costly of US wars, with 625,000 deaths and a comparable number of injuries. Now the Republican Party is stoking the fires of insurrection and for thousands of right-wing zealots a new civil war seems a political necessity. As increasing numbers of Democratic politicians are threatened, how long will it be before domestic terrorists use their weapons?

The first Civil War was precipitated by a dispute regarding slavery and states' rights. It was inflamed by volatile rhetoric and widespread use of guns.

The looming civil war reincarnates the debate about states' rights. Immediately after President Obama signed health care reform into law, several state Attorney Generals filed lawsuits arguing the Federal government violated the Constitution.

Rather than slavery, the new civil war is being waged over the necessity to guarantee human rights for all Americans -- whether or not every citizen deserves health care. Many Republicans feel this is not a legitimate use of government power, that it infringes on the sacred "free market."

In the run up to the first Civil War, passions were inflamed by fiery rhetoric from secessionist politicians such as Jefferson Davis. The impending civil war is being fed by mass-media personalities, such as Rush Limbaugh and Glenn Beck, who routinely feed their listeners blatant falsehoods. The success of these demagogues was revealed in a March 23rd Louis Harris poll of Republicans: 67 percent "believe that Obama is a socialist." 57 percent "believe that Obama is a Muslim." 45 percent believe that Obama "was not born in the United States and so is not eligible to be president." 38 percent of Republicans say the President is "doing many of the things that Hitler did." And, 24 percent believe Obama "may be the Antichrist."

Coupled with these skewed beliefs is increasingly strident rhetoric from Republican leaders. House minority leader John Boehner compared health care reform to "Armageddon" and declared the GOP to the Party of "Hell no." This refrain was picked up by Senator John McCain and former Governor Sarah Palin, who added, "Freedom is a god-given right worth fighting for."

There's little doubt that the use of inflammatory language has increased the ratings of the Fox News Channel, which is now the highest rated cable channel, and "the highest rated basic channel in primetime." Fox commentators such as Glenn Beck and Bill O'Reilly regularly contend the US "is headed into socialism" and compare President Obama to Hitler. On March 23rd, prominent conservative David Frum, a former George W. Bush speechwriter, appearing on ABC Nightline observed, "Republicans originally thought that Fox worked for us and now we're discovering we work for Fox."

Beck and his new Fox News associate, Sarah Palin, have appropriated the rhetoric used by the militia movement, language that suggests violence may be required to "save" America. Since Barack Obama became President there has been an unprecedented run on guns fomented by a right-wing rumor that Obama was going to restrict gun ownership. As documented in the Spring Report of the Southern Poverty Law Center, there has also been an explosive growth of hate and militia groups. "An astonishing 363 new Patriot groups appeared in 2009 -- a 244% jump." (On March 29th, nine members of one of these groups, the Hutaree, were charged with conspiring to kill police officers.)

The Republican Party's embrace of militant extremism follows a grim logic. The GOP is losing members; a recent Washington Post/ABC News poll found that only 24 percent of respondents self-identified as Republicans -- versus 34 percent for Democrats and 38 percent for Independents. Grasping for support, the GOP has abandoned traditional conservative ideology and allowed its message to be highjacked.

Unfortunately, the Republican Party lacks a leader with the gravitas to speak out against the escalating violence of its supporters. Elected Republicans such as Boehner, McCain, McConnell, and Steele are much less influential than are conservative media figures such as Beck, Limbaugh, O'Reilly, and Palin. As a result, as Fox News becomes even more outrageous, and violence against Democrats escalates, GOP leaders either claim to be powerless to stop it or argue the mainstream media has exaggerated the problem.

Meanwhile, a second civil war is brewing. Considering the volatile mixture of inflammatory rhetoric, weapons usage, and growth of militia groups, it appears likely there will be a tragic event: an assault on a Democratic politician, the burning of a congressional office, or another bombing of a Federal office building.

In 1860, the onset of the Civil War could have been averted. Dispassionate observers saw that the Confederacy did not have the resources required to defeat the Union. In 2010, the impending Civil War should be averted. Right-wing zealots are a minority and do not have the resources to commandeer America. Nonetheless, they can cause needless bloodshed.

What will it take for voices of reason to rise up within the Republican Party? How long will it be before a major Republican leader speaks out against domestic terrorism and urges the GOP to return to reason and reconciliation?

Bob Burnett, Berkeley writer, retired Silicon Valley executive.

"The goal of a good society is to structure social relations and
institutions so that cooperative and generous impulses are rewarded, while
antisocial ones are discouraged. The problem with capitalism is that it best
rewards the worst part of us: ruthless, competitive, conniving,
opportunistic, acquisitive drives, giving little reward and often much
punishment -- or at least much handicap -- to honesty, compassion, fair
play, many forms of hard work, love of justice, and a concern for those in
need." -- Michael Parenti

http://www.informationclearinghouse.info/article25124.htm

April 01, 2010 "International Forecaster" -- Bubbles have a hard time coming to an end, especially in residential real estate. Underlying forces such as government intervention to prolong the agony and the abject stupidity of builders extends the bubbles.

We are in a vast home inventory expansion and builders are going to build 535,000 new homes. The projected foreclosure rate could give us as much as a 3-year home inventory, up from present levels of about a year, if one includes the lenders shadow inventory. This past week the home building index rose 7.1% and it is up 25.1% year-to-date. The retail index rose 17% y-t-d, yet unemployment stubbornly clings to 22-1/8%. In fact, the retail index is up 87.4% y-o-y. We would say that index is grossly overpriced. As you can see bubbles have a way of not wanting to die quickly. This is caused by man’s disparately wanting to cling to the past attempting to take the easy way out rather than adapting to change. Government tries to keep sections of the economy alive rather than letting the cleansing process take its course.

The subsidization of the housing market is doomed to failure, because there simply isn’t enough money and credit available to keep it going indefinitely. All government is doing is re-flating a dying bubble. These Socialistic/Marxist policies just won’t work. Whether government likes it or not interest rates are headed higher, probably by 1% or more by the end of the year as government in its quest for more money to cover its debts crowds most others out of the market. This can be accommodated by the Fed, but not without higher inflation or perhaps hyperinflation, which in turn will drive interest rates even higher. We are seeing the reigniting of speculative mania in other markets as well – in the stock market and particularly in the low quality sector of the bond market worldwide. The mis-pricing of investments and finance is resulting in terrible distortions, mostly the result of Fed and government policy.

This mania has been aided and abetted by US dollar strength, especially over the past two months. We saw JPMorgan Chase, Goldman Sachs and Citigroup and others loading up on the long side of the dollar starting last October between USDX 74 and 78. They obviously knew the Greece episode was on the way. Irrespective, and in spite of no positive fundamentals, dollar strength was used to draw funds into dollar denominated assets. Supposedly the dollar has some sort of competitive advantage, which it doesn’t, and that a strong dollar will be re-flationary, which it has been. Gold and silver should have been flying to the upside, but our government detests free markets and it again temporarily suppressed prices. This is the result of the machinations of Larry Summers and Tim Geither. Dollar strength has the perceived benefit of the Fed’s ability to endlessly create money and credit.

It is this perception added to Greece, European and euro problems that have fueled speculation in world markets. Perceptions are one thing, and fundamentals are another more powerful force, which in time will reassert themselves. Problems will first be evident in the bond markets, which have already begun. As soon as the 10-year T-note solidly crosses 4% the market, the dollar and bonds will falter. The current strength is perceived to be the weakness of other currencies and their economies, prospective re-flationary policies and the concept of too big to fail. This is why there is the concept that the current “recovery” will persist. They also recognize that individual euro zone countries cannot inflate their way out of problems. One currency prohibits that from happening. This means Greece and others cannot monetize their debt and that means any kind of recovery is years away. All 19 near bankrupt countries are in the same boat except the US. Markets believe in the Bernanke put or backstop. They also believe the Fed will reinflate again. They would rather have inflation or hyperinflation, which they can in part control, rather than deflation, which once it begins cannot be contained.

Then enters the question will the Fed deliberately choose deflation in a year or two to bring about world government? Is this what Greece was all about? We do not know for sure. All we can do is guess. Do not forget Europe’s problems are not as bad as those of the US even though they are led to believe they are.

The 10-year Treasury note may well be telling us something and that is that higher rates are on the way. It certainly doesn’t auger well for any recovery. If credit spreads widen watch out. Such a development would mean the dollar would begin to retrace its recent gains. Dollar gains are over at 82 on the USDX. We await its correction.

We have spent more than 70 years as Americans and we gasp at the criminal enterprise that America has become. Lawbreaking has become as casual as running a business, whether it is on Wall Street or within the beltway in Washington. Worse yet, almost all malefactors never see the inside of a jail, they just have their corporations pay fines and go back to doing what they were doing, which was breaking the law.

One of the ultimate insults comes from the FDIC requesting donations. 200 to 500 banks will fail this year because of incompetence and terrible investments. We believe, as the year progresses, bank failures will explode. One of the factors leading us to this conclusion is that more than 1,000 banks have professionals overseeing bank operations from the Comptroller of the Currency’s Office. Worse yet, we are seeing many banks and credit unions telling depositors they may have to wait seven days or more for their money. Can bank holidays be far behind? We believe it will happen over the next couple of years.

As we go forward we continue to see massive Treasury purchases by the Fed. The monetization is spellbinding at somewhere between 50 and 80 percent. The more we look at this cartoon the more we know quantitative easing cannot stop. If it does the system will collapse. The Fed and the FDIC even want pension funds to buy their toxic garbage, as does Fannie Mae and Freddie Mac. What a sordid turn of events, but not unexpected considering what we are dealing with.

Unemployment sticks at 22-1/8% as tax revenues continue to plunge as the budget deficit heads toward Mars. The next administration push will be to legalize illegal aliens. You ask where will this all end? Can you believe builders have been buying CDOs? Lennar has plunged in and Orleans fell into insolvency with 20% of their assets in toxic garbage.

There is no question zero interest rates, unbridled government deficits, stimulus plans and the Fed’s quantitative easing have been a failure. The result normally would be to pump more aggregates into the system. We will have to see what the Fed, Congress and the administration do, especially between now and the election. Is it any wonder we have called for a two-third’s official dollar devaluation and a debt default. Be patient we should see them happen within two years. Maybe we will get lucky and get tariffs on goods and services. That way we can bring most of our jobs back and get a healthy economy back with 5% unemployment. Many credit derivatives will be banned as well. We have been involved in markets for 50 years and we know sooner or later those who are leveraged – or on margin – lose sooner or later. As a broker we never had margin accounts. The halt in the downward fall of economics, finance and stock market prices are but an interlude. There are still no solutions, so the downside will begin anew. One thing that has come out of the foregoing and the recent troubles in Greece and with the euro is that gold has been recognized as money, as a currency. That view is going to grow as gold trades higher and higher. As an example, just look at the value of gold in euros and all other currencies. Gold has consolidated time after time at $1,050 to $1,100 no matter what the US government threw at the gold market. There have been a few exceptions to gold’s strength, but over time all currencies will fall against the only real money. On the short-term do not forget the government is very short gold and silver on the Comex, probably the LBMA and most certainly in the producer shares. This week’s numbers will give us an indication whether they have begun to cover. We are going to also see a resumption of inflation officially in the next CPI figures. Real inflation is again approaching 8% and this inflation will be reflected in gold and silver prices. Not all professionals are dumb enough to believe official figures. On the downside we do not believe $1,050 to $1,100 will ever be broken again. Your gains when they come will be quick and large.

Now that most of the evidence is in, it is apparent that Lehman Brothers management created a colossal fraud even bigger than that of Enron with its Repo 105 maneuvers and was assisted by its accounting firm of Ernst & Young, and by the NY fed under the direction of our current Treasury Secretary Timothy Geithner. Geithner and all the top management and directors of Lehman should be charged criminally, but all being Illuminati members no one has been charged. Do not expect much from the Department of Justice. Eric Holder was the official who wrote the pardon letter for March Rich, tax cheat and Mossad operative for the State of Israel. As you can see Holder is where he is today because of his enablement of criminal activity. It shows you again that Wall Street, banking and Washington are nothing more than a criminal cartel. The question now is who else on Wall Street is doing the same thing? We already know they keep two sets of books, which is sanctioned by the BIS, the FASB and your government. What is really going on at these Illuminist firms, besides that they tell us they are doing God’s work.

As this criminal activity unfolds the Chairman of the Federal Reserve Ben Bernanke wants more regulatory authority for the Fed so the Fed can better cover up criminal activities. He says the Fed is unequally suited to supervise large, complex financial organizations and to address both safety and soundness risks and risks in the stability of the financial system as a whole. This is the ringleader talking. This is the nexus, the core, the leader of criminal activity in America grasping for even more power. This is the same group under Greenspan and then Bernanke that created the stock market bubble of the late 1990s, the housing, mortgage, commercial real estate bubble, the bubble that took the Dow to 14,100 and then from 6,500 to 10,900, the toxic garbage bubble and the bubble on Wall Street and in banking.

These are the people who lost Americans trillions of dollars so they could implement world government. All this just didn’t happen; it was planned that way. Yes, they are unequally suited to the creation and transmission of criminal activity. This is the same Fed that spent two years in Lehman’s offices and found nothing, because they aided and abetted their criminal activity. They knew everything that was going on. They were trying to bail Lehman out and it did not work. The SEC was there with them, shoulder to shoulder, covering up the crime scene. They are all liars and thieves, not incompetents. We then wonder how deep and serious the fraud is at other firms. From what we have seen so far we haven’t even scratched the surface. We want to see all these facilitators in jail. We do not want to see the Fed with more power. We want to see the Fed out of business as well as the end of the SEC and CFTC. As you can see our government and Wall Street are totally corrupt and unless we do something about it they will destroy our country.

http://www.businessweek.com/news/2010-04-01/california-hotel-foreclosures-climb-as-unemployment-cuts-travel.html

Hotel foreclosures in California climbed 27 percent in the first quarter from a year earlier as unemployment cut business travel.

Foreclosures, including the 469-room Los Angeles Marriott Downtown, rose to 79 properties from 62 in the first three months of 2009. Defaults increased 6.5 percent to 327, Irvine, California-based Atlas Hospitality Group said in a statement. The company specializes in selling hotels.

The U.S. lodging business is struggling with declining room rates and falling occupancy in the wake of the deepest recession since the 1930s. In California, 12.5 percent unemployment reduced business travel budgets and cash flow to hoteliers.

“If we look throughout the U.S., states like Florida, Nevada, Arizona and California were tied very closely to the housing boom and that was a big driver of the economy there,” Atlas President Alan Reay said in a telephone interview. “Hotels that are suffering the most are in areas with high unemployment.”

Riverside, California, outside of Los Angeles, had nine hotels in foreclosure in the first quarter. San Bernardino was home to eight and Los Angeles had seven, Atlas said. An additional 38 Los Angeles hotels were in default, according to Atlas.

Revenue per available room, or revpar, at California hotels dropped an average of 3.5 percent during the first two months of this year compared with the same period in 2009, Reay said. Some markets in the northern part of the state reported increases, while central California continued to decline and properties along the coast and in Los Angeles were little changed, he said.

Debt Burden

“Most hotels that have been in trouble will still struggle through 2010 because of the amount of debt they have,” said Reay. “Even with increased revenue, they can’t cover their debt service.”

He estimates more than 1,000 hotels in the state are operating under forbearance agreements, where lenders have modified the loans that are starting to come due.

“One bright spot in California is that there is a tremendous amount of interest from overseas buyers, particularly from Asia and China,” he said. “They are seeing this as a great bright buying opportunity.”

well well well... tacit admission, to my mind, that you may as well throw away your money on the track as on the market.

http://www.bloodhorse.com/horse-racing/articles/56230/cnbc-cdi-offer-derby-trip-100000-wager



Note that this is a "win" wager - meaning the horse you pick has to win - place or show doesn't count. And consider that last year the 50 - 1 shot Mine That Bird not only won but won by 6 3/4 lengths. http://www.nytimes.com/2009/05/03/sports/othersports/03derby.html

And consider that when the ill-fated Barbaro won the Derby by 6 1/2 lengths he was hailed as the probable next Triple Crown winner. Which tells you something about how unlikely it is that a 50/1 shot would win the Derby by nearly 7 lengths.

So good luck to anyone here who wants to enter - while I'd love a trip to the Derby (at least, if one gets to sit in one of the boxes and actually see the race), my working class roots wouldn't allow me to bet even free $$ in such a sum without angst that would spoil the fun - but I post it for any "go-for-it" bold souls here...and for what I see as an amusing unintended irony.

To watch Mine That Birds utterly improbable win and hear the hilarious call by a totally befuddled professional go here:

http://www.youtube.com/results?search_query=kentucky+derby+mine+that+bird&aq=0m

History
http://en.wikipedia.org/wiki/Mine_That_Bird


Even though I have lived in 'Derby' country, I've never been, opting for the Indy 500 racing instead.

I usually do really well picking the ponies. But I don't bet any money, I just watch on TV and hope no one breaks a leg. I have a couple of horses of my own and I just pick the horse that looks like he wants to win the most as they are led out to the gates.

http://finance.yahoo.com/taxes/article/109244/what-the-top-us-companies-pay-in-taxes

As you work on your taxes this month, here's something to raise your hackles: Some of the world's biggest, most profitable corporations enjoy a far lower tax rate than you do -- that is, if they pay taxes at all.

More from Forbes.com:

• In Pictures: What the 25 Top U.S. Companies Pay in Taxes

• Apple America's Highest Sales Taxes

• 12 Dodgy Tax Preparers

The most egregious example is General Electric (NYSE: GE - News). Last year the conglomerate generated $10.3 billion in pretax income, but ended up owing nothing to Uncle Sam. In fact, it recorded a tax benefit of $1.1 billion.

Avoiding taxes is nothing new for General Electric. In 2008 its effective tax rate was 5.3%; in 2007 it was 15%. The marginal U.S. corporate rate is 35%.

How did this happen? It's complicated. GE's tax return is the largest the IRS deals with each year -- some 24,000 pages if printed out. Its annual report filed with the Securities and Exchange Commission weighs in at more than 700 pages.

Inside you'll find that GE in effect consists of two divisions: General Electric Capital and everything else. The everything else -- maker of engines, power plants, TV shows and the like -- would have paid a 22% tax rate if it was a standalone company.

More from Yahoo! Finance:

• Serious Debt Requires Serious Fix

• Why Washington Is Failing

• Medicare Tax Hikes: What the Rich Will Pay
Visit the Taxes Center

It's GE Capital that keeps the overall tax bill so low. Over the last two years, GE Capital has displayed an uncanny ability to lose lots of money in the U.S. (posting a $6.5 billion loss in 2009), and make lots of money overseas (a $4.3 billion gain). Not only do the U.S. losses balance out the overseas gains, but GE can defer taxes on that overseas income indefinitely. The timing of big deductions for depreciation in GE Capital's equipment leasing business also provides a tax benefit, as will loan losses left over from the credit crunch.

But it's the tax benefit of overseas operations that is the biggest reason why multinationals end up with lower tax rates than the rest of us. It only makes sense that multinationals "put costs in high-tax countries and profits in low-tax countries," says Scott Hodge, president of the Tax Foundation. Those low-tax countries are almost anywhere but the U.S. "When you add in state taxes, the U.S. has the highest tax burden among industrialized countries," says Hodge. In contrast, China's rate is just 25%; Ireland's is 12.5%.

Corporations are getting smarter, not just about doing more business in low-tax countries, but in moving their more valuable assets there as well. That means setting up overseas subsidiaries, then transferring to them ownership of long-lived, often intangible but highly profitable assets, like patents and software.

As a result, figures tax economist Martin Sullivan, companies are keeping some $28 billion a year out of the clutches of the U.S. Treasury by engaging in so-called transfer pricing arrangements, where, say, Microsoft's (NYSE: MSFT - News) overseas subsidiaries license software to its U.S. parent company in return for handsome royalties (that get taxed at those lower overseas rates).

"Corporations are paying lower amounts of their profits in taxes now than in the past," says Douglas Schackelford, who teaches tax law at the University of North Carolina at Chapel Hill. "Other countries have been lowering their rates, but not the U.S."

Mind you, not all global megacorps enjoy such low tax rates. Try to muster some pity for Big Oil. ExxonMobil (NYSE: XOM - News) paid more income taxes than any other U.S. company last year, some $15 billion, or 47% of pretax earnings. Exxon's peers Chevron (NYSE: CVX - News) and ConocoPhillips (NYSE: COP - News) likewise paid out more than half their earnings in income taxes. The oil companies are oddities among the multinationals because many of the oil-rich countries where they do business levy even higher taxes than the U.S.

Exxon tries to limit the tax pain with the help of 20 wholly owned subsidiaries domiciled in the Bahamas, Bermuda and the Cayman Islands that (legally) shelter the cash flow from operations in the likes of Angola, Azerbaijan and Abu Dhabi. No wonder that of $15 billion in income taxes last year, Exxon paid none of it to Uncle Sam, and has tens of billions in earnings permanently reinvested overseas.

Likewise, GE has $84 billion in overseas income parked indefinitely outside the U.S.

Naturally the Obama administration wants to put an end to this. It has proposed doing away with tax deferrals on overseas income. If the plan passes, a U.S. company that pays a 25% tax on profits in China would have to pay an additional 10% income tax to Uncle Sam to bring it up to the 35% corporate rate. "Eliminating deferrals would put U.S. companies on an unlevel playing field," says the Tax Foundation's Hodge, "especially if competing with the likes of Germany, which only taxes companies on domestic operations."

Hewlett-Packard (NYSE: HPQ - News) and others among the top 25 state in their annual reports that if Obama's tax measures pass it would mean a certain tax hike, probably amounting to billions of dollars.

Would no more tax holiday for GE really end up helping Mr. and Mrs. Taxpayer? Doubtful. "The average Joe should be in favor of lower corporate taxes," says Hodge, "because ultimately they are paying the corporate income tax. Either as workers, getting lower wages and fewer jobs, or as consumers, paying higher prices, or as retirees, getting lower dividends and earnings on their investments."

In the same vein, JPMorgan Chase (NYSE: JPM - News) Chief Executive Jamie Dimon has spoken out against an Obama proposal to levy a special tax on banks to recoup bailout costs. "Using tax policy to punish people is a bad idea," said Dimon. "All businesses tend to pass costs on to customers."

No. 1: Wal-Mart Stores

Wal-Mart.jpg
Robyn Beck/AFP/Getty Images

Sales: $401 billion
Pretax income: $20.9 billion
Income taxes: $7.1 billion
Tax rate: 34.2%

$1.2 billion of Wal-Mart Stores' taxes are international.





No. 2: ExxonMobil

XOM.jpg
Eric Thayer/Getty Images

Sales: $311 billion
Pretax income: $35 billion
Income taxes: $15 billion
Tax rate: 47%

None of ExxonMobil's income taxes were paid in the U.S. In 2008 the company's income tax bill was $36 billion.




No. 3: Chevron

Chevron.jpg
David McNew/Getty Images

Sales: $172 billion
Pretax income: $18.5 billion
Income taxes: $8 billion
Tax rate: 43%

Chevron paid $19 billion income tax in 2008. Of this year's taxes, just $200 million were paid in the U.S.




No. 4: General Electric

GE.jpg
AP Photo/Paul Sakuma

Sales: $157 billion
Pretax income: $10.3 billion
Income taxes: (-$1.1 billion)
Tax rate: N/A

How Can It Be That You Pay More to the IRS Than General Electric?

GE's financial services unit, GE Capital, keeps the overall tax bill so low. Over the last two years, GE Capital has displayed an uncanny ability to lose lots of money in the U.S. and make lots of money overseas, where tax rates are lower.



No. 5: ConocoPhillips

Conoco.jpg
AP Photo/David Zalubowski

Sales: $152 billion
Pretax income: $10 billion
Income taxes: $5 billion
Tax rate: 51%

ConocoPhillips paid $13 billion in taxes in 2008.





No. 6: AT&T

ATT.jpg
Justin Sullivan/Getty Images

Sales: $123 billion
Pretax income: $19 billion
Income taxes: $6.2 billion
Tax rate: 32.4%

AT&T's executive officers are eligible to bill the company $14,000 a year for their own income tax preparations.




No. 7: Bank of America

BofA.jpg
David McNew/Getty Images

Sales: $120 billion
Pretax income: $4.4 billion
Income taxes: (-$1.9 billion)
Tax rate: N/A

How did Bank of America not pay any taxes on $4.4 billion in income? Because of deductions like $860 million in tax-exempt income, $670 million in low-income housing credits and a $600 million loss on shares of foreign subsidiaries. With a provision for credit losses of $49 billion, Bank of America probably won't be paying taxes for a long time.



No. 8: Ford Motor

Ford.jpg
Scott Olson/Getty Images

Sales: $118 billion
Pretax income: $3 billion
Income taxes: $69 million
Tax rate: 2.3%

Ford's tax rate is so low because of past years' losses from U.S. operations.




No. 9: Hewlett-Packard

HPQ.jpg
Justin Sullivan/Getty Images

Sales: $115 billion
Pretax income: $9.4 billion
Income taxes: $1.75 billion
Tax rate: 18.6%

HP's low tax rate is due to lower tax rates in foreign countries. The company says in its annual report that President Obama's proposals to end tax deferrals on international operations would mean a big tax hike.



No. 10: Berkshire Hathaway

Berkshire.jpg
Justin Sullivan/Getty Images

Sales: $112 billion
Pretax income: $11.5 billion
Income taxes: $3.5 billion
Tax rate: 30%

I'll try to spread out the rest of the bad news over the week.