The Weekend Economists "Cash not Trash" Compendium February 26-28, 2010

[Demeter]

Well I got home from work, and shoveled out the driveway, walked the grandpuppy, and here we are again!

Our theme, if I can dignify it with such an organizing thought, is to combine a celebration of the works of Johnny Cash, AND a salute to AnneD's topic: the field of human waste disposal.

I do not want anyone to think that Johnny Cash was in any way to be considered human waste--he is the artist in residence for this weekend, since it is his birthday.

And as for the toilet humor, well, as AnneD says, everything's in the crapper anyway, so be creative and go with the flow. (I'm cringing already; be gentle!)

---------------------------------------

Johnny Cash (February 26, 1932 – September 12, 2003), born J. R. Cash, was an American singer-songwriter, actor,<2> author,<2> and Biblical scholar,<3><2><4> who was one of the most influential musicians of the 20th century.<5> Although he is primarily remembered as a country music artist, his songs and sound spanned many other genres, including rockabilly and rock and roll—especially early in his career—as well as blues, folk, and gospel. Late in his career, Cash covered songs by several rock artists, among them the industrial rock band Nine Inch Nails.<6>

Cash was known for his deep, distinctive bass-baritone voice; for the "boom-chicka-boom" freight train sound of his Tennessee Three backing band; for his demeanor; and for his dark clothing, which earned him the nickname, "The Man in Black". He traditionally started his concerts by saying, "Hello, I'm Johnny Cash."

Much of Cash's music, especially that of his later career, echoed themes of sorrow, moral tribulation and redemption. His signature songs include "I Walk the Line", "Folsom Prison Blues", "Ring of Fire", "Get Rhythm" and "Man in Black". He also recorded humorous numbers, such as "One Piece at a Time" and "A Boy Named Sue", a duet with future wife June Carter called "Jackson", as well as railroad songs including "Hey Porter" and "Rock Island Line".

Cash, a devout but troubled Christian,<7> has been characterized "as a lens through which to view American contradictions and challenges."<8><9> A Biblical scholar,<3><2><4> he penned a Christian novel entitled Man In White,<10><11> and he recited the entire New King James Version of the New Testament<12><13> on a spoken word recording.

http://en.wikipedia.org/wiki/Johnny_Cash

http://www.youtube.com/watch?v=ZCqpPj87ekE

[Demeter]

1. In Spite of My Tardiness, there are no bank failures yet

Can't think of a holiday to shut down the FDIC. Is it snowing in DC?

[AnneD]

19. As a 'John'ny Cash fan.....

I give it 2 :thumbsup: I guess combining it with Elvis might have lead to tasteless toilet jokes-but hey, it's just been that kind of week for me. I have my Uncle John bathroom readers so I'll post some facts here and there.

Out of curiosity...how many of you have experience with outhouses? They were always 100 yards to far away in the winter and 100 yards to close in the summer

In Australia it's a dunny in New Zealand a long drop, it can be a humble one hole or a prosperous 2 story device. This most device represents man's answer to his first ecological problem.

http://en.wikipedia.org/wiki/Outhouse

answers to your most common outhouse questions......
www.jldr.com/faqs.html

[Demeter]

23. My Grandfather's Mother Lived on a Farm North of Detroit Somewhere

It had an outhouse. We only visited in summer. And a hand pump for water to wash with.

The main house was built on a hill, so you could go out a door on the second floor, run down the hill, and come into the first floor. It felt rather like a Mobius strip--changing floors without a staircase....

[Mojorabbit]

72. My grandmother

had one. I remember using a chamber pot at night when we visited. I loved staying with her.

[Dr.Phool]

20. We have a bank...Carson River Community Bank, Reno, Nevada.

Press Releases
Heritage Bank of Nevada, Reno, Nevada, Assumes All of the Deposits of Carson River Community Bank, Carson City, Nevada

FOR IMMEDIATE RELEASE
February 26, 2010
Media Contact:
LaJuan Williams-Young
Phone: [phone]
Email: [e-mail]

Carson River Community Bank, Carson City, Nevada, was closed today by the Nevada Department of Business and Industry, Financial Institutions Division, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Heritage Bank of Nevada, Reno, Nevada, to assume all of the deposits of Carson River Community Bank.

The sole branch of Carson River Community Bank will reopen on Monday as a branch of Heritage Bank of Nevada. Depositors of Carson River Community Bank will automatically become depositors of Heritage Bank of Nevada. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage. Customers should continue to use their former Carson River Community Bank branch until they receive notice from Heritage Bank of Nevada that it has completed systems changes to allow other Heritage Bank of Nevada branches to process their accounts as well.

This evening and over the weekend, depositors of Carson River Community Bank can access their money by writing checks or using ATM or debit cards. Checks drawn on the bank will continue to be processed. Loan customers should continue to make their payments as usual.

As of December 31, 2009, Carson River Community Bank had approximately $51.1 million in total assets and $50.0 million in total deposits. Heritage Bank of Nevada did not pay the FDIC a premium to assume all of the deposits of Carson River Community Bank. In addition to assuming all of the deposits, Heritage Bank of Nevada agreed to purchase approximately $38.0 million of the failed bank's assets. The FDIC will retain the remaining assets for later disposition.

The FDIC and Heritage Bank of Nevada entered into a loss-share transaction on $28.5 million of Carson River Community Bank's assets. Heritage Bank of Nevada will share in the losses on the asset pools covered under the loss-share agreement. The loss-share transaction is projected to maximize returns on the assets covered by keeping them in the private sector. The transaction also is expected to minimize disruptions for loan customers. For more information on loss share, please visit: http://www.fdic.gov/bank/individual/failed/lossshare/index.html.

Customers who have questions about today's transaction can call the FDIC toll-free at 1-800-894-6802. The phone number will be operational this evening until 9:00 p.m., Pacific Standard Time (PST); on Saturday from 9:00 a.m. to 6:00 p.m., PST; on Sunday from noon to 6:00 p.m., PST; and thereafter from 8:00 a.m. to 8:00 p.m., PST. Interested parties also can visit the FDIC's Web site at http://www.fdic.gov/bank/individual/failed/carsonriver.html.

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $7.9 million. Heritage Bank of Nevada's acquisition of all the deposits was the "least costly" resolution for the FDIC's DIF compared to all alternatives. Carson River Community Bank is the 21st FDIC-insured institution to fail in the nation this year, and the first in Nevada. The last FDIC-insured institution closed in the state was Community Bank of Nevada, August 14, 2009.

[Demeter]

24. And a Second Bank Fails (Thanks Doc!)

Rainier Pacific Bank, Tacoma, Washington, was closed today by the Washington Department of Financial Institutions, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Umpqua Bank, Roseburg, Oregon, to assume all of the deposits of Rainier Pacific Bank.

The 14 branches of Rainier Pacific Bank will reopen during normal business hours as branches of Umpqua Bank...As of December 31, 2009, Rainier Pacific Bank had approximately $717.8 million in total assets and $446.2 million in total deposits. Umpqua Bank will pay the FDIC a premium of 1.04 percent to assume all of the deposits of Rainier Pacific Bank. In addition to assuming all of the deposits, Umpqua Bank agreed to purchase approximately $670.1 million of the failed bank's assets. The FDIC will retain the remaining assets for later disposition.

The FDIC and Umpqua Bank entered into a loss-share transaction on $578.1 million of Rainier Pacific Bank's assets. Umpqua Bank will share in the losses on the asset pools covered under the loss-share agreement...
The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $95.2 million. Umpqua Bank's acquisition of all the deposits was the "least costly" resolution for the FDIC's DIF compared to all alternatives. Rainier Pacific Bank is the 22nd FDIC-insured institution to fail in the nation this year, and the fourth in Washington. The last FDIC-insured institution closed in the state was American Marine Bank, January 29, 2010.

[ozymandius]

27. "Two Banks Fell Into Burnin' Ring of Fire"

...went down,down,down
and the flames went higher.
And it burns,burns,burns
the ring of fire
the ring of fire.

[Demeter]

30. hey Ozy! You Made It!

http://www.youtube.com/watch?v=gRlj5vjp3Ko

[ozymandius]

33. Just got home.

Family is in town until tomorrow. I've been busy to say the least. Anyway - here's the 1969 version.

http://www.dailymotion.com/video/x1oipi_johnny-cash-ring-of-fire-1969_music

[Robbien]

48. A brand new vulture group setting up a fund to buy FDIC failed banks

And this one seems pretty sinister due to the people running it. Well, maybe not sinister but when the old FDIC and OTS and GSE guys get together to buy banks from the FDIC something is seriously wrong here.


http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aip0Cix5ABew

Feb. 26 (Bloomberg) -- William Isaac, former chairman of the Federal Deposit Insurance Corp., is leading a group of ex- regulators and bankers raising $1 billion to buy failed lenders in the southeast U.S., according to people briefed on the plan.

The investment group, called BSE Management LLC, will be chaired by Isaac, according to the people, who asked not to be identified because the fundraising is private. David Moffett, who stepped down as chief executive officer of Freddie Mac last year, and former Office of Thrift Supervision regional director John Ryan will help run BSE, the people said.

Isaac joins investors hoping to pounce as banks close at the fastest pace since 1992. Regulators have seized at least 160 lenders since Jan. 1, 2009, and the FDIC’s confidential list of “problem” banks stands at 702 with $402.8 billion in assets, according to a Feb. 23 report.

“The organizers behind BSE are a ‘Who’s Who’ of the banking system,” said Chip MacDonald, a partner with Jones Day in Atlanta who specializes in deals among banks. “They know the regulators well and are experienced with lenders in the southeast. This is a very capable group.”

BSE’s plan calls for raising $500 million in the initial stage, said one of the people. Michael Freitag, an outside spokesman for BSE, said the firm doesn’t comment on potential fundraising. Isaac didn’t respond to requests for comment.

The group includes Ray Christman, former CEO of the Federal Home Loan Bank of Atlanta and chairman of the Federal Home Loan Bank of Pittsburgh, and Brendan MacMillan, previously a partner at investment firm Oceanwood Capital Management, according to offering documents dated last May.

Soothing Concerns

BSE members’ experience as bankers and regulators puts the firm “in a good position to win the most desirable bank auctions and recapitalizations,” according to the documents.

Regulators have been debating how much leeway to give private buyers of failed banks because of concern that they may take too much risk with federally insured deposits. Some investment groups have recruited former bankers as officers to reassure regulators.

In May, WL Ross & Co., Blackstone Group LP and Carlyle Group bought BankUnited Financial Corp., agreed to inject $900 million and named John Kanas, former head of North Fork Bancorp, to run the Florida lender after it collapsed.

Stephen Ross

Billionaire investor Stephen Ross and his partners in real estate firm Related Cos., Jeff Blau and Bruce Beal Jr., this month raised about $1.1 billion from investors including David Einhorn’s Greenlight Capital Inc. to help their SJB National Bank acquire a seized U.S. lender, according to a person with knowledge of the matter. Former Bank of America Corp. investment bank head Gene Taylor is leading North American Financial Holdings, which wants to buy Florida banking assets.

BSE seeks an internal rate of return of at least 25 percent “by building a clean regional bank through a small number of acquisitions and then selling the rebranded deposit franchise in five to seven years,” according to the offering. The fund is focusing on the U.S. southeast, “which represents the area of greatest dislocation for banks and real estate while possessing the most favorable demographics to support a strong economic recovery and a higher exit multiple.”

Isaac was FDIC chairman from 1981 to 1985. He’s now chairman of LECG Global Financial Services. Moffett was a senior adviser for the Carlyle Group in Washington before leaving in 2008 to head McLean, Virginia-based Freddie Mac. He also was chief financial officer at Minneapolis-based U.S. Bancorp, now ranked sixth by deposits.

“There’s a capital vacuum and there’s a lot of money that wants to fill it,” said Walter Moeling, a banking lawyer at Bryan Cave LLP in Atlanta. “The biggest problem remains that the FDIC has an inherent bias against new money from private equity coming in. But these are bona fide bankers with deep roots.”

[Hugin]

57. Eventually, I figured TPTB would find a way to game the FDIC.

"... rate of return of at least 25 percent"
"Carlyle Group"
"Freddie Mac"
"U.S. Bancorp"

A formula for destruction.

[Demeter]

2. Max Keiser in a Calm and Collected Interview (for him)

http://www.youtube.com/watch?v=Sq5j0ba034M

It's quite long, but well worth the time.

[Demeter]

3. The Last Temptation of Risk by Barry Eichengreen

FROM LAST APRIL, BUT MAYBE EVEN MORE USEFUL NOW FOR PERSPECTIVE

A MEA CULPA FROM THE ECONOMICS PROFESSOR AT BUSINESS SCHOOL

http://www.nationalinterest.org/PrinterFriendly.aspx?id=21274

EXCERPT:

THE GREAT Credit Crisis has cast into doubt much of what we thought we knew about economics. We thought that monetary policy had tamed the business cycle. We thought that because changes in central-bank policies had delivered low and stable inflation, the volatility of the pre-1985 years had been consigned to the dustbin of history; they had given way to the quaintly dubbed “Great Moderation.” We thought that financial institutions and markets had come to be self-regulating—that investors could be left largely if not wholly to their own devices. Above all we thought that we had learned how to prevent the kind of financial calamity that struck the world in 1929.

We now know that much of what we thought was true was not. The Great Moderation was an illusion. Monetary policies focusing on low inflation to the exclusion of other considerations (not least excesses in financial markets) can allow dangerous vulnerabilities to build up. Relying on institutional investors to self-regulate is the economic equivalent of letting children decide their own diets. As a result we are now in for an economic and financial downturn that will rival the Great Depression before it is over.

The question is how we could have been so misguided. One interpretation, understandably popular given our current plight, is that the basic economic theory informing the actions of central bankers and regulators was fatally flawed. The only course left is to throw it out and start over. But another view, considerably closer to the truth, is that the problem lay not so much with the poverty of the underlying theory as with selective reading of it—a selective reading shaped by the social milieu. That social milieu encouraged financial decision makers to cherry-pick the theories that supported excessive risk taking. It discouraged whistle-blowing, not just by risk-management officers in large financial institutions, but also by the economists whose scholarship provided intellectual justification for the financial institutions’ decisions. The consequence was that scholarship that warned of potential disaster was ignored. And the result was global economic calamity on a scale not seen for four generations....

[Demeter]

4. THEY WALK THE LINE

http://www.youtube.com/watch?v=k7K4jH7NqUw

[Demeter]

5. Matt Taibbi Comments on His Own Article: "Wall Street's Bailout Hustle"

http://trueslant.com/matttaibbi/2010/02/19/on-the-bailout-hustle/

...Thus though the piece appears to focus exclusively on the banks and how they skimmed their own bailout — which is totally true — there is actually a more subtle story out there about the mutual dependency of our increasingly broke-ass, politically desperate government in Washington and their virtually insolvent partner-banks on Wall Street. I would like to get into that more in the future.

Already I’m getting some criticism in the mail. As I’m still pretty sick right now I can’t really respond to it at length. But one theme that comes back over and over again from some writers is this idea that I ignored what would have happened if the banks had not been bailed out. That would have been an even worse disaster, the theory goes, ergo all this whining about the banks robbing the bailout money is off base.

My feeling on that is similar to what Barry Ritholtz (check out his site if you haven’t), the author of Bailout Nation and one of the guys I spoke with at length for this story, proposed. He said that “we should have gone Swedish on their asses.” The Swedes after a similar bubble burst in 1992 temporarily seized control of insolvent institutions, forced banks to write down losses before they got aid, and gave taxpayers a huge share in the upside of recovery. It was a tough-love approach that really worked and forcefully addressed the moral hazard issue in a way we never touched.

That’s one way we could have proceeded. But whatever we didn’t do, we can be sure that what we did do was exactly wrong. Barry pointed out the classic pronunciation of Victorian economist/journalist Walter Bagehot, who said that in a crisis, a Central Bank should lend freely to solvent institutions against good collateral, at penalty rates. We did exactly the opposite: we lent to insolvent institutions, against shit collateral, at zero percent interest. We told these guys to drink themselves sober. Total crap thinking and totally typical.

Anyway, I’ll get into this more after I return to the living; right now I’m going to go hang a plasma bag from my bedroom lamp and eat the contents of the first prescription bottle I can find in my bathroom.

Thanks to those who sent get well wishes.

[Demeter]

6. The Article In Question: And the Con Games They Pulled in Detailed Study

http://www.rollingstone.com/politics/story/32255149/wall_streets_bailout_hustle/

[Demeter]

7. Only Music from "the Sting" Could Go Here:

http://www.youtube.com/watch?v=_xWS3h-apmk

[Demeter]

8. COMMENTARY: The U.S. opts for the bailout hustle over the Swedish banking crisis response

http://www.nakedcapitalism.com/2010/02/the-u-s-opts-for-the-bailout-hustle-over-the-swedish-banking-crisis-response.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

I referenced Matt Taibbi’s latest work at Rolling Stone “Wall Street’s Bailout Hustle” recently when talking about a movie on Ponzi schemes and fraud that aired on 60 Minutes. I liked the piece and recommend you read it – fully aware of the awaiting hyperbole Taibbi uses to hype his case.

The interesting bit is Taibbi followed up his article with a blog entry “On the Bailout Hustle” in which he contrasts the American bailout hustle with the more effective but less banker-friendly approach used in Sweden after their own housing bubble and financial crisis in the early 1990s.

My feeling on that is similar to what Barry Ritholtz (check out his site if you haven’t), the author of Bailout Nation and one of the guys I spoke with at length for this story, proposed. He said that “we should have gone Swedish on their asses.” The Swedes after a similar bubble burst in 1992 temporarily seized control of insolvent institutions, forced banks to write down losses before they got aid, and gave taxpayers a huge share in the upside of recovery. It was a tough-love approach that really worked and forcefully addressed the moral hazard issue in a way we never touched.

Of course, it was Barry who pointed this passage on Sweden out. He would, do that, wouldn’t he?

I definitely agree with Barry. In fact, I am probably the first major blogger to broach the subject. See my post: The Swedish banking crisis response – a model for the future? from August 2008 which describes a piece by former Riksbanks head Urban Bäckström from way back in 1997! This is the number one entry on the Internet when you search for ‘Swedish banking crisis.’

Now, this was before the Lehman debacle. And I anticipated massive credit writedowns for the global financial system which would precipitate a major financial crisis. Of course, this is what happened. But, pre-Lehman, I was looking for a banking crisis response model which would prove effective. I looked at the Japanese model and found it wanting. The Nordic model is more promising.

Here’s what I said in August 2008:

Yesterday I pointed out that today’s global banking crisis has some historical precedents worthy of comparison. In particular, I looked at the Japanese bailout schemes from their housing bubble to see if there was anything there to learn. Unfortunately, the Japanese experience leaves doubts as to whether government intervention is helpful or harmful.

There are other examples, however. The Nordic model is a particularly useful one to look at as we move forward. Sweden’s Central Bank Chairman Bäckström shared some of his insights from that experience some eleven years ago in a speech to a Federal Reserve symposium that is available on the Swedish Riksbank website. This is a brilliant piece of work.

I use the term ‘Nordic’ because Finland and Norway also had deep, deep contractions due to a banking crisis at the same time (see Marshall Auerback’s piece on Finland here).

Now, the information about these financial crisis strategies was readily available in the public domain for years. I mean, my blog post was based on a 1997 article for goodness sake. Clearly, the Obama people didn’t want this solution because they are captured by the financial services industry. That’s why the U.S. is going the Japanese route of bailouts and accounting dodges.

The Swedes of the mid-1990s did drag their feet too; they didn’t implement a draconian solution until it was obvious the system was insolvent. And I would add that the technology bubble bailed the Finns and the Swedes out. (Oil helped the Norwegians). So, without the boon for the likes of Nokia or Ericsson, where would those economies have been? Nevertheless, this is not the course the U.S. is on. The closest we have seen to this is Ireland – but even there I have had my doubts.

The key difference is the Swedes recognized:

Their entire banking system was effectively insolvent. Yet, they were able to fashion a workout scheme that had bi-partisan political support, did not unfairly reward shareholders, dealt with moral hazard, separated regulatory and workout roles so as to reduce conflicts of interest, and that quickly wrote down valuations and liquidated the bad debts as opposed to dragging the process out.

Fifteen years later, even the Swedes are not using the ‘Swedish model’ despite their massive loan exposure in the Baltics, which are now in Depression. Clearly denial as to the severity of the banking problem is not just an American phenomenon, it is also a European thing too.

But you can only hide your head in the sand for so long. Reality has a way of making itself felt.

———

Update: You’ll probably have noticed that I never used the words ‘nationalisation’ in this piece – and for good reason; The nationalisation talk is just a red herring. The crux of the article is not about nationalisation – or even FDIC-style asset seizure at all. What this article is really about is what I highlighted and said it was about: The Swedes “quickly wrote down valuations and liquidated the bad debts as opposed to dragging the process out.” Put simply: we are looking at a choice between the Japanese approach and the Swedish approach.

Now, when it comes to seizure, we are really mainly discussing Citi. JPMorgan was never in doubt. Wells Fargo probably could have made it through with TARP funds alone. After the Merrill deal, Bank of America was the only other too-big-to-fail company that probably would have been seized. (Some super-regionals may have been a question as well). But, in the main, what we’re discussing here is whether Citi would have been taken into majority government ownership the way that AIG was.

As for writedowns, this could have been done using an RTC-type vehicle as we saw after the S&L crisis or using a bad bank as the Swedes did during their crisis. The key is writing down the assets quickly rather than keeping the deadweight on the balance sheet as was done in Japan.

So the article is a reminder that the bailouts were done because they were the preferred option, not because other choices didn’t exist. And this is important yet again because we are about to see this year that having avoided asset writedown and used asset appreciation to bail out the banks is going to have a very negative impact on credit – and the economy.

Above I did point out that the Swedish dilemma was tackled in a bipartisan way, so talk of ‘nationalisation’ is germane because this fictitious argument would probably have been used by Republicans purely for political purposes rather than ideological ones. After all AIG was nationalised and Citi and BofA were effectively nationalised, albeit without the requisite strings attached. The point would be to block Obama’s agenda in order to weaken him. But this is just politics.

One last point, the Swedes are playing the same game this time too! That’s because it’s politically easier to try to let banks recapitalize themselves via high margin spreads (borrowing short and lending long in a steep yield-curve environment).

The problem for banks is always that they lend long – and that means you can never know the true extent of future losses. That gives an accountant a lot of room for playing with the numbers. Writedowns are just an estimate of loan impairment of unrecoverable asset value. So all a bank has to do is pretend that assets are only temporarily impaired.

You’ve heard the term ‘extend and pretend.’ That’s what it’s all about – extending the term of the loan so that even if the asset is eventually written down, the profits earned in the interim will restore the bank’s lost capital.

The key is asset prices and accounting standards. If asset prices fail to rise, writedowns are going to come sooner than later – and that means insolvency for some banks.

If regulators change accounting standards and allow banks to pretend their assets don’t need to be written down as they did in the early 1980s, the problem could be much larger down the line, as it indeed was when the S&L crisis finally blew up – especially if asset prices (the loan collateral) don’t rise. This is indeed what has happened in the U.S. yet again.

Update II: a lot of people have bought the ‘nationalisation’ propaganda. It is Fannie/Freddie-style ‘nationalisation’ that is criminal. These companies should be wound down and eliminated. Instead, they are being used as a slush fund for bailing out the mortgage market.

Which is more free-market – a bailout and mega bonuses all around or asset seizure and recapitalization?

There is a price for bank failure in a capitalist society, you know. It’s called bankruptcy and seizure. The FDIC seizes and resells bank assets every week. That’s the right approach. But apparently, Lehman’s demise and the inadequate preparation for it scared everyone into bailouts – and that’s how it’s going to stay it seems.

[BR_Parkway]

42. Interesting how everyone wants to go back and look at how Japan

solved their crisis, how Sweden handled theirs, Norway, Finland - on and on

How come no one looks to see how the crisis can be averted in the first place? They all want to focus on the barn door, not the horse.

[Demeter]

43. These Are The People Who Care

They aren't in a position to make policy.

The people who are in policy-making position, on the other hand, simply don't care. They aren't looking at anything, and they are led by misguided fools like Bernanke and Geithner.

And Obama is clueless, and it appears likely to remain so.

[BR_Parkway]

58. Sorry, wasn't trying to point out anything wrong with these people

What I so was trying to say was that it's obvious that these systems fail on a regular basis - instead of just reacting to the next crisis - perhaps it's time to figure out more sustainable systems

[Demeter]

60. I Know. I'm Just Trying to Point Out

That's there's something VERY wrong with the people in charge...

[BR_Parkway]

63. Depends - if they benefit from it, maybe they think there's something

very right about it.

I think a big part of the problem is that too many have no connection to the working class any longer. It's like the whole jobs bill discussion. I'm a small business owner. I don't need a loan so I can buy more inventory, I need customers with money in hand to buy what I already have. I don't need a 6% tax cut if I hire an employee - there aren't enough customers coming in to pay for an employee. And I've got enough tax loss from the economy already that giving me an additional 6% off of zero isn't going to do a thing. Toss that on top of a 28% increase in health insurance and it's getting close to the point of just shutting down.

[KoKo]

9. Ahh...the Great Johnny Cash....this is Spectacular!

:kick: Demeter...you are an ANGEL ...even if you are tearing out your hair...Demeter...

[Demeter]

13. What Hair?

[AnneD]

37. This will make you feel better.....

Home of the Blues-with a twist

www.youtube.com/watch?v=7ufjeTqOhuM&feature=related

Because of her heritage, the fact that she went to my alma mater, and she sings so damn good, she is one of my favs-Hubby scratches his head and thinks she should be playing India Classical-but I tell him a good wine takes elements from the surrounding area and makes it into something new. She has the gift of music and she was planted in this soil and will be as famous as her dad and her half sister.

[bread_and_roses]

10. graphic of the state of affairs out here in the real world

I consider this fits the theme because Johnny Cash knew about hard times and because the friend who sent me the link of the animated map of unemployment by County from 2007 - present said it looked like a case of galloping gangrene.


It's called: "The Decline: The Geography of a Recession" but you tell me if THAT looks like "recession" after you watch it.

There's no way to really describe it - you have to watch - takes less than a minute

http://www.youtube.com/watch?v=J28tLOpzfpA

[AnneD]

38. The perfect Johnny Cash tune....

Busted...

www.youtube.com/watch?v=B8kRsoAZjpM&feature=related

[Demeter]

11. True Fiscal Insanity: Creating Money to Buy Government Debt By The Mogambo Guru

http://dailyreckoning.com/true-fiscal-insanity-creating-money-to-buy-government-debt/


...The family had cleared out because my Mogambo Machine To Measure Magical Money (MMTMMM) was going nuts, banging and beeping, and clanging and cleeping, which is not even a real word, which only shows you how freaked out I still am when I instantly saw why: Federal Reserve Credit (the magical “money out of thin air” of story and song, which the gold standard would prevent), jumped a massive $31 billion last week – $31 billion in One Freaking Week (OFW)! – taking the total to a record $2.264 trillion.

The banks, for their part, can take this new credit that has appeared, as if by magic, on their books, and loan out Huge Freaking Multiples (HFM) of this $31 billion, according to the Fed’s preposterously-low required fractional-reserve ratio which is (and has been for almost two full decades) almost a zillion-to-one, which (multiplying a zillion times $31 billion) is slightly more than, as I understand it, a freaking gazillion.

Well, apparently, none of this reached the banks, as the Fed bought up, for itself in a disgusting orgy of monetization of government debt, in One Freaking Week (OFW), a massive $53.6 billion of “Securities bought outright”! The Fed created the money to buy government debt! Gaaaaagakkk!

That last word, properly pronounced with a guttural ending, was to indicate another in a series of Timeless Mogambo Truths (TMT), which, in this case, is don’t eat a burrito while you are reading Bad, Bad News (BBN) because you will gag and choke, mostly because it makes a big mess all over everything and the guy in the next cubicle starts whining, “Hey! Stop spitting on me!”, but also because transcripts of the people bugging your office will read it as “unintelligible, followed by gagging and choking”, which proves my point about eating burritos while reading BBN, although I am not sure if it works with, for example, tacos, so they are still OK as far as I am concerned.

In case you were wondering how much credit the Federal Reserve has made, so that it can use up some of it to buy, for itself in a loathsome fraud known as “monetizing the debt”, government debt, that particular horrific total comes to a record of $1.967 trillion, which is an astonishing $1.397 trillion higher than this time last year!!

As you would expect, the money supply is still rising, and the monetary base rose a whopping $56 billion in the last week, which is more than $560 for everybody in the Whole Freaking Country (WFC) that has a non-government job! In One Freaking Week (OFW)!

As Junior Mogambo Rangers (JMRs) know, perhaps intuitively or perhaps because I (as a proxy for the Austrian school of economics but who, if you call them up and ask them, say, “We never heard of this Mogambo person you speak of! Goodbye!”, but you can tell by their suspicious change of mood that they have) never seem to shut up about inflation being properly defined as an increase in the money supply and that inflation in consumer prices is a result of that, and here it is!

This increase in the money supply usually, firstly, has a stimulating effect or, in our case, prevention of the Big Freaking Bust (BFB) and economic devastation that we so richly deserve for a ridiculous, laughable half century of experimental socialist governmental deficit-spending and “putting every leveraged dollar to work!”, and the abysmal, total failure of the loathsome Federal Reserve to control the money supply so that the damned government couldn’t do crap like that without entering the money marketplace and bidding for the funds, like any other borrower, thus driving up interest rates, which made the economy slow down, which infuriated worker/voters, and the government would stop doing that fiscal incompetence immediately, or as soon as the next election rolled around, ignoring the possibly of a recall election in the interim, or even a general insurrection and revolution, perhaps ending with the people carrying me on their shoulders, a hero to rule the country as Emperor Mogambo (EM) who immediately installs a gold standard to protect the people’s money from inflation (which keeps from making the poor poorer because of the inevitable higher prices that the additional money causes), and, also as a treat for all my adult loyal subjects, dovetailing the arrival of 3-D TV with hearty encouragement to develop, at great speed, a brave, new world of 3-D pornography, leading America to a new golden age in many, many, many ways! I can hardly wait!

In the meantime, however, accumulate gold, silver and oil, especially using some kind of Dollar-Cost Averaging scheme, which has not been improved upon, either in its simplicity (you spend the same number of dollars per month, month after month) or its efficacy; it kicks butt over a long trend, as you are always buying more when they are cheap, and you buy less when they are more expensive.

Or, if you are like most people, you are an impatient, greedy little bastard who wants to make the biggest, most maximum profit possible, as soon as possible, by taking maximum risk that gold, silver and oil will never be cheaper than they are now, then you should rush out and buy as much gold, silver and oil as possible Right Freaking Now (RFN), exhausting every source of credit you can get your clutching, grasping little hands on, and then selling the kid’s stuff and buying more gold, silver and oil with that money, too!

Somewhere in between these extremes you will find yourself, my budding Junior Mogambo Ranger (JMR)! The effects of massive increases in the money supply (horrifying inflation) will lead you to True Mogambo Enlightenment (TME) about how economics really, really works, and in a blazing moment of incandescent, transcendent clarity, you will suddenly realize you have to buy gold, silver and oil, right away, because, “Whee! This investing stuff is easy!”

The Mogambo Guru
for The Daily Reckoning

[Demeter]

12. It Couldn't Be Anything Else

http://www.youtube.com/watch?v=M89c3hWx3RQ

[Demeter]

54. Bernanke Delivers Blunt Warning on U.S. Debt

http://www.informationclearinghouse.info/article24879.htm

With uncharacteristic bluntness, Federal Reserve Chairman Ben S. Bernanke warned Congress on Wednesday that the United States could soon face a debt crisis like the one in Greece, and declared that the central bank will not help legislators by printing money to pay for the ballooning federal debt.

TELL THAT TO THE MUGAMBO GURU. IF YOU DARE.



Recent events in Europe, where Greece and other nations with large, unsustainable deficits like the United States are having increasing trouble selling their debt to investors, show that the U.S. is vulnerable to a sudden reversal of fortunes that would force taxpayers to pay higher interest rates on the debt, Mr. Bernanke said.

"It's not something that is 10 years away. It affects the markets currently," he told the House Financial Services Committee. "It is possible that bond markets will become worried about the sustainability , and we may find ourselves facing higher interest rates even today."

It was some of the toughest rhetoric to date about the nation's fiscal and budgetary woes from the Fed chief, who faces a second round of questioning Thursday before a Senate panel.

RELATED STORY: Fed to look at high-risk contracts on Greek debt

Mr. Bernanke for the first time addressed concerns that the impasse in Congress over tough spending cuts and tax increases needed to bring down deficits will eventually force the Fed to accommodate deficits by printing money and buying Treasury bonds — effectively financing the deficit on behalf of Congress and spurring inflation in the process.

Some economists at the International Monetary Fund and elsewhere have advocated this approach, suggesting running moderate inflation rates of 4 percent to 6 percent as a partial solution to the U.S. debt problem. But the move runs the risk of damaging the dollar's reputation and spawning much higher inflation that would be debilitating to the U.S. economy and living standards.

Rep. Brad Sherman, California Democrat, asked Mr. Bernanke directly whether the Fed would consider such a strategy, especially since IMF officials endorsed it.

"We're not going to monetize the debt," Mr. Bernanke declared flatly, stressing that Congress needs to start making plans to bring down the deficit to avoid such a dangerous dilemma for the Fed.

I THOUGHT LYING TO CONGRESS WAS A FELONY



"It is very, very important for Congress and administration to come to some kind of program, some kind of plan that will credibly show how the United States government is going to bring itself back to a sustainable position."

Separately, Mr. Bernanke's predecessor, Alan Greenspan, told Bloomberg News that "fiscal affairs are threatening the outlook" for recovery from recession as Congress and the White House have been unable for years to make tough decisions to raise taxes or cut spending.

He said he is so concerned about a sudden sharp increase in interest rates that every day he checks the interest rate on 10-year Treasury notes and 30-year Treasury bonds, calling them the "critical Achilles' heel" of the economy.

Despite his gloomy testimony, Mr. Bernanke dismissed concerns that the United States will lose its gold-plated AAA credit rating any time soon. Moody's Investors Service recently said that the U.S. rating would come "under pressure" at some point if Congress does not rein in the budget deficit.

The Fed chairman said repeatedly that he understands how difficult it will be for Congress to tame deficits by curbing spending in popular programs like Social Security, Medicare and defense, while also considering tax hikes. But he said there would be an immediate payoff: lower interest rates.

"It would be very helpful, even to the current recovery, to markets' confidence, if there were a sustainable, credible plan for a fiscal exit," he said.

A plan that eases market worries by laying out how Congress will address the long-term insolvency of Social Security, Medicare and other entitlement programs also would give Congress more room to take the actions needed today to address the jobs crisis, Mr. Bernanke added.

"There could be a bonus there," he said. "To the extent that we can achieve credible plans to reduce medium- to long-term deficits, we'll actually have more flexibility in the short term if we want to take other kinds of actions."

Separately, the debate continued over whether Fannie Mae and Freddie Mac, the two mortgage financing giants, should be included in the federal budget books now that the Obama administration has taken the limits off aid the Treasury Department is prepared to give the companies to keep them solvent.

Republicans, including Rep. Spencer Bachus of Alabama, the top Republican on the banking committee, have argued that the government is now effectively guaranteeing Fannie and Freddie's nearly $5 trillion of mortgage-backed securities and other debt, so their revenues and liabilities should be included in the federal budget as obligations of the government. Taking this step would greatly bloat the federal balance sheet.

Mr. Bachus said he worries that keeping Fannie and Freddie's status off the federal books is "the same sort of financial shell game that has brought governments like Greece to a crisis point."

But Treasury Secretary Timothy F. Geithner, who also testified on Capitol Hill on Wednesday, said the administration opposes including the quasi-government entities in the budget, although it lifted the limits on aid to Fannie and Freddie with the intent of assuring financial markets that the U.S. government stands behind their obligations.

"We do not think it is necessary to consolidate the full obligations of Fannie and Freddie onto the nation's budget. But we do think it's very important … that we make it clear to investors around the world that we will make sure that we will take the actions necessary" to keep the two entities stable, he told the House Budget Committee.

[Demeter]

55. NASTY BEN

http://www.youtube.com/watch?v=H75eQX006jA&feature=channel

[Demeter]

14. How to Enjoy an Economic Depression By Bill Bonner

http://dailyreckoning.com/how-to-enjoy-an-economic-depression/

The depression is alive and well!

Unemployment claims just came in higher than expected.

And new house sales in January were at their lowest ever. Pundits were quick to blame the snow. But sales were off even in areas that had better-than-usual weather.

Household income has gone nowhere in 10 years. Stocks have suffered a lost decade too. And now Ben Bernanke says we’d better be careful…because the recovery ain’t no sure thing.

The Fed chief has no idea. But average people know what’s going on. They know how hard it is to find a job. If you’re in the building trades…or you have only a year or two of college…you’re pretty much out of luck. You may have to retire before you ever start work again.

That’s why there was such a big drop in consumer confidence.

But look on the bright side. Building more houses for people who couldn’t afford to live in them was not exactly the greatest business strategy. And all those people who were appraising, mortgaging and selling houses can now find more useful work. Real jobs. Doing something more useful. What are those real jobs going to be? We don’t know yet. But it could take a long time to find out. And in the meantime, we have a depression on our hands…

So, let’s enjoy it…

How do you enjoy a depression? Well, the first thing is to make sure you’re not in its way…



When you’re investing real money, you need some discipline…and some rules. At the Family Office, we’ve developed a methodical approach that let’s us choose investment themes very carefully – after much thought, consultation and deliberation. And then it prevents us from making any changes…again, except with much reflection and discussion. We also have our own timing index, which would practically take an act of congress to override. If the timing index says to get out…we get out.

Why are we telling you this? Because you need to follow some rules too – or you’re going to suffer in this depression along with everyone else.

What’s the number one rule in a depression? Conserve cash. In a depression, cash goes up. Everything else goes down.

Almost everyone loses in a depression. All assets go down. Against what? Against money…cash. So, the thing to do is obvious. Get rid of your investments. Cut your expenses. Sit tight. Do nothing. When you’re given an investment opportunity, just say no. Wait until the depression has run its course.

If Japan is any indication, this could go on for another 10 to 20 years – with generally sinking prices for just about everything, but particularly for stocks and real estate.

It’s going to be hard to sit out a downturn that long. You’re going to be tempted to speculate…to get back in… You’re not going to want to be left behind.

And yet, in a real depression, getting left behind is the best you can hope for…

A year or two ago, we would have thought that you couldn’t increase the monetary base so dramatically without grave inflationary consequences. Inflation – with a lag of about 18 months – was a dead certainty. Now that we’re closer to the situation, we see that inflation may be hard to avoid…but it’s hard to summon up too. Japan couldn’t do it. And now the Bernanke Fed can’t seem to do it either.

Central bankers are talking about increasing their inflation targets from 2% to 4% in order to give themselves more flexibility to deal with situations such as the crisis of the last 2 years. But they are dreaming. They can’t really control inflation that perfectly. Maybe they can’t really control it at all, except in the grossest, clumsiest way. They have tripled the world’s monetary reserves in the last 7 years. Prices for gold and oil have responded more or less in line with the monetary base. But most consumer prices are heavily dependent on capital investment in China…housing prices in the US…and a million other things that the economists at the Fed can’t begin to control.

Of course, in extremis, as Ben Bernanke once told the world, a central bank can always create un-controlled inflation. They “have a technology known as the printing press,” he said. Crank up the presses…and let people know that you are cranking up the presses…and you’ll have price inflation lickety split.

But the financial and economic costs of cranking up the presses are so great that very rarely is any central bank…and certainly not any major central bank of a civilized nation…reckless or bold enough to do it. It’s the nuclear option of the monetary world. You have to be very desperate to take the nuclear option. We don’t think Bernanke and crew will get there…not for a long time.

That said, there are also conventional weapons…such as those being used now. One in particular…quantitative easing…packs a lot of firepower. It’s not nuclear. But it can still make one helluva mess. Stay tuned.

Regards,

Bill Bonner
for The Daily Reckoning

[Demeter]

15. Another Snippet from Bill

“There is some analogy to the Great Depression in the present situation. Between 1918 and 1939, American agriculture was in permanent decline, because the end of the First World War reduced demand for American exports, and because the substitution of the tractor for draught animals freed up an enormous amount of land set aside for animal feed. There was nothing to be done but to get the farmers off the land into other occupations, and that was not accomplished until the Second World War.”

The farmers found work in wartime factories…and in military service. After the war, they took up new jobs, in a new economy with new factories and new professions.

What work will today’s laid-off construction workers find? Darned if we know.

http://dailyreckoning.com/depression-causes-a-shift-in-economic-models/

MY BET? TRUCK FARMING IN RECLAIMED URBAN AND SUBURBAN DEVELOPMENTS...

[Demeter]

16. A NEW ENDEAVOR: GUERRILLA ECONOMICS

I, Demeter, will be pursuing a new train of thought: Guerrilla Economics, or alternatively, Economics as if People Mattered.

What we have had too much of in this species is maintaining, polishing, and serving Institutions. We treat Institutions like Gods. In fact, most institutions have Godhead in their foundation: either elevating and immortalizing a mere human for some better than average talent or accomplishment, or creating a fictional equivalent and embellishing it over time. Think of Lloyd Blankfein, "Doing God's Work" over at Golden Sacks...

Well, name me an Institution that really gives a damn about an average real person. I can't think of one, either. Not even such institutions as the Family or the Marriage. Although an actual family or marriage may care about some actual people, it's a hit-or-miss arrangement, and only good for specific individuals, and usually only over certain spans of time, as membership turns over and fortunes wax or wane.

Some religions may claim to care about Everyone in the Abstract, but I'm not talking abstraction here. I'm talking about food, clothing, shelter, medicine, education and quality of life for the 6 billion plus that cover the earth, and then throw in as many other species as possible and the earth itself. (I do not require anyone to give a fig for the tse-tse fly or other plagues).

So, Economics As If People Mattered.

The first thing would be Universal Single Payer. And a steeply progressive tax on all income and wealth to pay for it. And go from there. Direct elections; completely transparent, with no machines or other hurdles to channel, discriminate, or otherwise meddle with direct expression of the voters' will, and no influence peddling.

The articles under this thread build upon this idea. Feel free to add your own finds or thoughts.

[Demeter]

17. FICO is Shocked by Default Data By Addison Wiggin

http://dailyreckoning.com/fico-is-shocked-by-default-data/

FICO, the outfit that computes your vaunted “credit score,” has just noticed that consumers with high scores are more likely to default on their mortgages than their credit cards.

Last year, the firm says, folks with FICO scores of 760 or higher defaulted on real estate loans at three times the pace they defaulted on plastic.

This shouldn’t be any surprise to FICO. We noticed a few days ago that the number of consumers current on their cards but delinquent on their mortgages exploded by 50% in the year after Lehman went belly up. FICO has access to this data in real time.

But it appears flabbergasted by this development, marveling in the first paragraph of a press release that “most credit cards are unsecured credit and mortgages are secured by real estate.”

Earth to FICO: If you’re in an underwater home, why wouldn’t you commit strategic default and use the difference between a mortgage payment and rent on a similar home to pay down those cards? You might not even have to move if your mortgage lender doesn’t want to follow through on foreclosure and book the loss!

Still, FICO’s CEO told Bloomberg TV he’s stunned the phenomenon isn’t limited to subprime: “Now we’re starting to see at the high end of the marketplace people with good FICO scores having serious delinquency problems.”

There’s a hint of panic in the man’s words, as if he senses his entire business model is going down the toilet. Good riddance. Millions of mortgages were issued in the last decade on the basis of nothing more than the “score” issued by this company, which reveals exactly nothing about a borrower’s income, or how his debt load compares to his income. FICO wasn’t the cause of the housing bubble, just a trifling enabler.

[Demeter]

18. A graphic representation

http://imgsrv.gocomics.com/dim/?fh=f9913dcb7915912b1a169fd0a869ba4b&w=750.0

[AnneD]

21. This might be better.....

www.jldr.com/realaudio/odetoshack.mp3

And you didn't think I could find music to go with this.

[Demeter]

22. Science briefing: Biofuel breakthrough

http://www.ft.com/cms/s/2/2721293a-2247-11df-9a72-00144feab49a.html?ftcamp=rss

Biofuels made from wood, grass and agricultural wastes such as corn stalks are environmentally attractive because, unlike crops such as maize and sugar grown primarily to produce fuels, they do not take over good farmland. The trouble is that, until now, these “cellulosic biofuels” have been hard to convert into useful liquid fuels.

Researchers at the University of Wisconsin report a breakthrough on Friday in the journal Science. Their two-step chemical conversion turns waste biomass efficiently into liquid hydrocarbons that could fuel vehicle or jet engines.

The process turns biomass first into a chemical called gamma-valerolactone or GVL, which in turn is converted into jet fuel hydrocarbons. This preserves 95 per cent of the energy from the original biomass, while the waste carbon dioxide can be captured under high pressure for storage or burial underground.

“The hydrocarbons produced from GVL in this new process are chemically equivalent to those used in the present infrastructure,” said David Martin Alonso, a member of the Wisconsin research team. “The product we make is ready for the jet fuel application and can be added to existing hydrocarbon blends, as needed.”

[Demeter]

35. Fighting the Subversion of Our People's Sovereignty By Jim Hightower

http://www.informationclearinghouse.info/article24858.htm

As you've probably heard, corporations are now "people" — humanoids that are equivalent to you and me. This miraculous metamorphosis happened on Jan. 21. Accompanied by a blinding bolt of lightning, and a terrifying jolt of thunder, five Dr. Frankensteins on the Supreme Court threw a judicial switch that endowed these pulseless paper entities with the human right to speak politically.

Never mind that inanimate corporate constructs have no tongue, brain, heart or soul — the five judicial fabricators breathed unprecedented legal life into corporations, decreeing that the vast wealth held in their corporate treasuries is their voice. With a cry of "Shazam!" the court ruled that, henceforth, every corporation — from Wal-Mart to Wall Street — is entitled to "speak" by spending unlimited sums from their treasuries to elect or defeat candidates for any and all public offices in our land, from city council to the presidency.

By a bare five-to-four majority, the justices created an artificial, uber-wealthy, political monster that will overpower everyone else's voices. For example, just the 100 largest corporations have assets totaling more than $13 trillion. No combination of human people's political organizations can amass even a tiny fraction of that spending power.

With their ruling, five unelected guys in black robes have subverted our people's sovereignty with a semantical perversion that twists special-interest things into "people" and money into "speech." In so doing, the Supreme Five have substituted their personal political views for the clearly-expressed wisdom of America's founders, every Congress since Teddy Roosevelt's time, 22 states, dozens of cities, the court's own precedents and the People themselves.

Bizarrely, the five court corporatists seemed to think that their sneak attack on America's democratic ideals was so cleverly done that it would be meekly accepted by the public and even widely applauded. Hardly. The ink of their signatures on this absurd opinion wasn't dry before the justices were pelted with ridicule.

"Hey," demanded one blogger, "it's time to reinstitute the draft." Others raised an intriguing constitutional conundrum that the Court obviously failed to contemplate. Since the 13th Amendment bans slavery, which is the ownership of a person, the newly born corporate "persons" cannot legally be bought and sold. Thus Wall Street — now a slave market — must be shut down! Let us all join hands and march for this new civil rights cause, chanting, "Free the Corporate Slaves!"

Meanwhile, Americans of all political stripes have risen in overwhelming opposition to the court's contortion of both the Constitution and common sense. In a Washington Post-ABC poll published last week, 85 percent of Democrats, 81 percent of independents and — get this — 76 percent of Republicans reject this act of gross judicial overreach.

So, with eight of 10 Americans decrying the decree and nearly as many demanding that it be reversed, we can expect swift and decisive action from Congress. Right?

Uh ... no. First, Republican leaders (who've consistently proven to be tail-wagging kowtowers to corporate power) flatly say they will oppose any legislation to restrict the ruling. Second, Democrats have designated Sen. Schumer to lead their effort to undo the decision. Schumer is a notorious CEO-hugging Democrat who serves as the party's chief shaker of the corporate money tree, so sending him into this battle is like going lion hunting with a flyswatter.

Sure enough, Schumer has started by declaring that he wants a reform that can get "bipartisan support" in the Senate, and he is not even considering anything as bold or effective as a constitutional amendment to force these corporate behemoths out of our elections. Instead, he's lamely offering a patchwork of regulatory fixes designed to cover up this theft of political power from actual people — fixes that corporate lawyers and lobbyists will riddle with loopholes.

To get remedies that work, We the People will have to take direct grassroots action. Already, three major national coalitions have formed to retrieve our democratic authority from the court and its corporate clients: MoveToAmend.org, FreeSpeechForPeople.org and FixCongressFirst.org. Let's get connected and get moving.

© 2010 Creators.com

[burf]

59. Speaking of Blankfein

From the first time I heard his ridiculous claim, I was reminded of a scene in the movie The Blues Brothers. I tried to find the clip but its not out there. It is where Jake and Elwood go into a diner to get Matt "Guitar" Murphy and Blue Lou to rejoin the band. Elwood tells Matt's wife (Aretha Franklin) "We're on a mission from God". She goes berserk and tells them "Don't you blaspheme". Every time I see Lloyd's quote, the scene pops into my head. I wish some news organization would play clips of the two quotes, back to back. Maybe something to get the peoples attention to what these financial terrorist are doing to this country.

So much for my morning coffee sermon, now back to your regularly scheduled programing.

Good day to all!

Thanks again Demeter for all you do here and at SMW.

[DemReadingDU]

25. Johnny Cash Song Download Wins Apple Contest

2/26/10 Louis Sulcer, 71, of Woodstock, Georgia, won a $10,000 iTunes gift card. The song he bought, Johnny Cash's "Guess Things Happen That Way" was the 10 billionth song downloaded on iTunes. The grandfather of nine says he was putting together a mix of Johnny Cash songs for his son. Sulcer started downloading music three years ago.

click to hear the audio and read transcript
http://www.npr.org/templates/story/story.php?storyId=124105191


Johnny Cash - I Guess Things Happen That Way
Town Hall Party, Los Angeles, California
August 8, 1959
http://www.youtube.com/watch?v=u1O5hxhrI6Y

[Demeter]

31. The Man In Black's History

Cash was of Scottish royal descent but he learned this only upon researching his ancestry.<14> After a chance meeting with former Falkland laird, Major Michael Crichton-Stuart, he traced the Cash family tree to 11th century Fife, Scotland.<15><16><17> Scotland's Cash Loch bears the name of his family.<15>

He had believed in his younger days that he was mainly Irish and partially Native American. Even after learning he was not Native American, Cash's empathy and compassion for Native Americans was unabated. These feelings were expressed in several of his songs, including "Apache Tears" and "The Ballad of Ira Hayes", and on his album, Bitter Tears.

Early life

Johnny Cash was born J. R. Cash in Kingsland, Arkansas, to Ray (1897–1985) and Carrie (née Rivers) Cash (1904–1991), and raised in Dyess, Arkansas.

Cash was given the name "J.R." because his parents could not agree on a name, only on initials.<18> When he enlisted in the United States Air Force, the military would not accept initials as his name, so he adopted John R. Cash as his legal name. In 1955, when signing with Sun Records, he took Johnny Cash as his stage name. His friends and in-laws generally called him John, while his blood relatives usually continued to call him J.R.

Cash was one of seven children: Jack, Joanne Cash Yates, Louise Garrett, Reba Hancock, Roy, and Tommy.<19><20> His younger brother, Tommy Cash, also became a successful country artist.

By the age of five, J.R. was working in the cotton fields, singing along with his family as they worked. The family farm was flooded on at least one occasion, which later inspired him to write the song "Five Feet High and Rising".<21> His family's economic and personal struggles during the Depression inspired many of his songs, especially those about other people facing similar difficulties.

Cash was very close to his older brother, Jack, who in 1944 was pulled into a whirling table saw in the mill where he worked, and cut almost in two. He suffered for over a week before he died.<21> Cash often spoke of the horrible guilt he felt over this incident. According to Cash: The Autobiography, his father was away that morning, but he and his mother, and Jack himself, all had premonitions or a sense of foreboding about that day, causing his mother to urge Jack to skip work and go fishing with his brother. Jack insisted on working, as the family needed the money. On his deathbed, Jack said he had visions of heaven and angels. Decades later, Cash spoke of looking forward to meeting his brother in heaven. He wrote that he had seen his brother many times in his dreams, and that Jack always looked two years older than whatever age Cash himself was at that moment.

Cash's early memories were dominated by gospel music and radio. Taught by his mother and a childhood friend, Cash began playing guitar and writing songs as a young boy. In high school he sang on a local radio station; decades later he released an album of traditional gospel songs, called My Mother's Hymn Book. He was also significantly influenced by traditional Irish music that he heard performed weekly by Dennis Day on the Jack Benny radio program.<22>

Cash enlisted in the United States Air Force. After basic training at Lackland Air Force Base and technical training at Brooks Air Force Base, both in San Antonio, Texas, Cash was assigned to a U.S. Air Force Security Service unit, assigned as a code intercept operator for Soviet Army transmissions, at Landsberg, Germany. On July 3, 1954, he was honorably discharged as a sergeant. Then, he returned to Texas.<23>

[AnneD]

40. And the circle is now complete....

www.youtube.com/watch?v=m9S9M_c8034&feature=related

but I can't resist to throw in Pentangle's version
www.youtube.com/watch?v=tFGRnUzfOEI&feature=fvw

[Demeter]

26. Lehman agrees JPMorgan settlement

http://www.ft.com/cms/s/0/9591bf24-224c-11df-9a72-00144feab49a.html

Lehman Brothers Holdings has agreed to pay JPMorgan Chase $557m in cash and let it keep $7.1bn in collateral to settle claims related to Lehman’s 2008 bankruptcy filing, according to court documents.

As part of the settlement, JPMorgan Chase will also transfer back to Lehman illiquid securities with a “face value in the billions of dollars”.

JPMorgan served as the primary clearing bank for Lehman’s brokerage division. In the weeks leading up to Lehman’s September 15, 2008, bankruptcy filing, JPMorgan required Lehman Brothers to pledge billions of dollars in collateral to guarantee its borrowings, court papers show.

Calls for collateral came on August 26, when Lehman posted billions of dollars in hard-to-value illiquid securities, and again between September 9 and September 12, when Lehman pledged an additional $8.57bn in cash and money market funds.

When Lehman failed – in the biggest bankruptcy to date in US history – JPMorgan filed claims against the bank that exceeded $29bn. JPMorgan reduced that amount over time by drawing down on the collateral that Lehman had pledged.

The agreement reached yesterday will settle the remaining balance.

Both sides have reserved their rights to dispute future claims. The settlement requires court approval. A JPMorgan spokesman declined to comment. A Lehman spokeswoman referred reporters to the documents filed with the US Bankruptcy Court for the Southern District of New York.

The terms of the agreement call for JPMorgan to keep $7.1bn in collateral and Lehman to pay an additional $557m in cash. JPMorgan will then return to Lehman the remainder of the collateral, which is in the form of illiquid securities that are hard to value. Lehman said in the court papers that these securities “could be worth billions of dollars”.

Once the fourth-largest US investment bank, Lehman Brothers failed amid the financial market turbulence of 2008. Last-ditch attempts to save the investment bank by selling it to bigger competitors such as Barclays of the UK or Bank of America failed, forcing the company into Chapter 11 bankruptcy proceedings.

Before filing, Lehman Brothers, which employed about 25,000 people, listed assets of $639bn and debts of $613bn.

[Demeter]

28. Financial crisis panel to recall bank chiefs

http://www.ft.com/cms/s/0/cc66ba98-2253-11df-9a72-00144feab49a.html

The commission set up by the US Congress to probe the causes of the 2008 financial market meltdown will interview foreign regulators and put bank executives back on the witness stand.

Phil Angelides, chairman of the Financial Crisis Inquiry Commission, a latter-day version of the Pecora commission that examined the Great Depression, said he planned to question overseas regulators to understand similarities and differences with US oversight in the run-up to the crisis.

In an interview before the second public hearing of the FCIC that begins on Friday, Mr Angelides, a former California state treasurer, said he was most struck so far in his inquiry by the way in which Goldman Sachs had been “creating and selling securities and then fully betting against them”.

In a reference to the Greek crisis and the alleged role of securities sold by the bank, Mr Angelides said: “It appears that this action was not confined to creating and selling mortgage securities. It also extended to the creation and selling of foreign debt instruments. I find the practice troubling and it raises questions about fair dealing and trust and transparency in the marketplace.”

Bill Thomas, vice-chairman of the FCIC and the former Republican chairman of the House ways and means committee, said the hearing last month that questioned Lloyd Blankfein of Goldman, John Mack of Morgan Stanley, Jamie Dimon of JPMorgan Chase and Brian Moynihan of Bank of America was not the end of the process for the bankers and “doesn’t mean we won’t get to them again”.

In the dramatic hearing, the four men were sworn in under oath and questioned about their behaviour before the crisis. Mr Blankfein was forced to field more than his share of the questions, with Mr Angelides accusing him of a conflict of interest in creating mortgage-backed securities at the same time as taking a trading position against them.

Mr Blankfein noted that Goldman traded with informed institutional investors in securitised assets who were responsible for their own action but he appears not to have convinced his inquisitor.

Mr Angelides said that the FCIC wielded subpoena power and could demand witnesses and documents from banks and regulators. “Remember this: we do have the ability to get information that other folks do not,” he said.

“So far, knock on fake wood,” said Mr Angelides, drumming the table, “people are in compliance.”

Mr Thomas said: “The corporate world has been pretty co-operative.”

Asked whether his inquiry could extend to issues such as the Greek debt crisis, Mr Angelides, himself of Greek heritage, said: “Our view generally is that the crisis is not a past-tense phenomenon.”

However, he noted that the FCIC had a hard deadline in December to deliver a report to Congress and that would govern the way the commission went about its business. “That’s what’s driving us crazy: the time we have to get a report,” said Mr Thomas.

The report is not supposed to be the “definitive word”, said Mr Angelides. He said it “behooves the country” to pay attention to the product but that “does not mean that the president and the Congress should hold up” on regulatory reform.

“I will say that for the long term, a better common understanding of this calamity is important.” He added that a lot of people had told him the regulatory reform – now bogged down in the Senate – would be completed before his work started. “As it turns out, that didn’t happen,” he noted wryly.

The FCIC session at the American University in Washington, which continues on Saturday, will hear from academics including Randall Kroszner of the University of Chicago and Markus Brunnermeier of Yale University.

[Demeter]

29. Freddie Mac likely to need more cash support

http://www.ft.com/cms/s/0/32f13b76-217d-11df-830e-00144feab49a.html

Freddie Mac said on Wednesday it would probably have to take more taxpayer cash this year to offset continued losses in a fragile housing market.

The warning by the government-run mortgage financier came as it revealed it lost $7.8bn in the last three months of 2009, compared with a loss of $23.9bn a year earlier. The deficit in the fourth quarter of last year was inflated by a $1.3bn dividend payment to the US Treasury but is still up on the loss of $5.4bn in the previous quarter.

Tim Geithner, Treasury secretary, on Wednesday put off until next year a final resolution of Freddie Mac and Fannie Mae, the other main mortgage financier, which back most US home loans and are in a suspended state between full nationalisation or privatisation.

Amid Republican criticism, Mr Geithner told a congressional hearing that it was only an “abundance of caution” that led the Treasury to remove in December a $400bn cap on its assistance to the so-called government-sponsored enterprises. At a separate hearing, Ben Bernanke, Federal Reserve chairman, agreed with Republican suggestions that a blueprint for the GSEs should be outlined in the next few months.

A rebound in the price of mortgage-backed securities in the second half of last year meant Freddie Mac did not have to tap the Treasury for more money in the fourth quarter, the third consecutive three-month period in which it avoided taxpayer financing.

But that streak is expected to be broken in the first quarter of 2010, when Freddie takes an $11.7bn charge related to an accounting change that requires companies to record securitised assets on their balance sheets.

Charles Haldeman, Freddie Mac chief executive, said that in spite of some signs of stabilisation “the housing recovery remains fragile, with significant downside risk posed by high unemployment and a potential large wave of foreclosures”.

Freddie Mac’s fourth quarter loss included $7.1bn in credit-related expenses and a $3.4bn write-down on a low-income tax credit. Provisions for loan losses fell to $7.1bn from $8bn the previous quarter. Full-year provisions nearly doubled to $29.5bn.

Delinquency rates on single family homes rose quarter-on-quarter to 3.87 per cent at the end of December, compared with 3.33 per cent the previous quarter. At the end of 2008, the rate was 1.72 per cent.

In another sign the housing market remains weak, new home sales fell 11.2 per cent in January from the month earlier to a seasonally adjusted annual rate of 309,000, a record low, the Commerce Department said on Wednesday.

[Po_d Mainiac]

71. The commission set up by the US Congress to probe the causes of the 2008 financial market meltdown"

Onyun Style

Will again call the heads of the TBTF institutions, along with the current and former Sec's. of Treasury and Fed Chair Bumhankie to the Hill. This time, the probes are to be sharp edged and much girthier than those used in earlier committee hearings. The "KY" amendment, that is currently tied up in the Unemployment Extension Bill, will not be available for skid greasing.

Misuse of TARP funds ($ intended to give the economy a shart in the butt) and Wall St involvement in the errant bookeeping for the PIIGS are expected to weight heavily while the committee investigates God's Work.

:hide:

[DemReadingDU]

32. Rosanne Cash Sails The 'Sea Of Heartbreak'

October 8, 2009 - Morning Edition Music Interview

Rosanne Cash has a new album on which she sings one of the most famous lines in country music: "The lights in the harbor don't shine for me." That's from the Hal David and Paul Hampton classic, "Sea of Heartbreak." Many artists have recorded the song in the past half-century, and Cash recently sat down with NPR's Steve Inskeep to discuss its history and significance.

Cash's new album is titled The List — a reference to a list of timeless songs made for her decades ago by her father, Johnny Cash.

"I was out on the road with him, he mentioned a song while we were riding on the tour bus, and I said, 'I don't know that one,' " Cash says. "And he mentioned another, and I said, 'I don't know that one either, Dad,' and he got very alarmed. I was so steeped in The Beatles and Buffalo Springfield, and he thought I was missing something essential about my own musical genealogy. So he spent the rest of the day making this list."

"Sea of Heartbreak" is on that list. The song's first recording, by the country star Don Gibson, came in 1961.

"I think he was a bit tortured," Cash says. "And he had somewhat of a difficult life, and all of his experience, and his longing and his own heartbreak is really apparent in his vocals."

The song is a rare successful example of a tricky songwriting device: the extended metaphor.

"It uses a metaphor, and it keeps that metaphor all the way through, and many songs that try to do that kind of, you know, fall over into kitsch," Cash says. "This song starts with that metaphor, of sailing on the Sea of Heartbreak, and it uses it to absolute perfect effect — you know, 'The lights in the harbor don't shine for me.' Oh! It just breaks your heart."

Johnny Cash himself interpreted the song, in a notably up-tempo version.

"I always thought his version was a little aggressive," Rosanne Cash says. "You know, he was recording with Tom Petty and the Heartbreakers, and I think maybe he was a bit too energized by them."

On The List, Cash performs the track as a duet with Bruce Springsteen.

"I couldn't find anyone good, so I got Bruce," Cash jokes. "You know, I wanted to do the song as a duet. I thought maybe there is a 50-50 chance that Bruce will do it, but he doesn't do that many duets. But he said yes right away, and of course he knew the song; he's very steeped in country and roots music. Bruce — who knew he was such a good country crooner? We made this song, I think, even more introspective than the Don Gibson version."

What does Cash think her father might have thought of her rendition?

"I think my dad would have been so proud," she says. "You know, I spent my life as a songwriter, sometimes pushing away this music. And I wish he could see me embrace it so fully."


click to hear the audio interview and some music snippets
http://www.npr.org/templates/story/story.php?storyId=113580537

[DemReadingDU]

34. Rosanne Cash Runs Down Her Father's 'List'

October 5, 2009 - NPR Fresh Air Interview with Rosanne Cash

When Rosanne Cash was 18, her father (you may have heard of him; some call him the Man in Black) presented her with a gift: a list of 100 essential country songs, chosen to help the budding singer-songwriter connect with and better understand the music that came before her.

She was more focused on writing her own songs than on interpreting the songs of others, and she succeeded in becoming known as a songwriter. Rosanne Cash recorded several No. 1 country hits, then left Nashville and established herself as a singer-songwriter in the indie-rock world.

After holding onto that list for the past few decades, Cash decided to turn her father's gift into a singularly personal new album — titled, not surprisingly, The List.

The 12-track disc, the younger Cash's first recording made up entirely of other writers' songs, collects her interpretations of titles from her father's list. Among the artists who've joined her for featured tracks are Bruce Springsteen, Elvis Costello and Rufus Wainwright.

The List

So how did her father come to prepare a list for her?

"When I was 18 years old, I went on the road with my dad after I graduated from high school. And we were riding on the tour bus one day, kind of rolling through the South, and he mentioned a song," Cash says. "We started talking about songs, and he mentioned one, and I said I don't know that one. And he mentioned another. I said, 'I don't know that one either, Dad,' and he became very alarmed that I didn't know what he considered my own musical genealogy. So he spent the rest of the afternoon making a list for me, and at the end of the day, he said, 'This is your education.' And across the top of the page, he wrote '100 Essential Country Songs.'"

Despite his own label, Johnny Cash didn't limit his choices with a strict definition of "country" music.

"The list might have been better titled '100 Essential American Songs,' because it was very comprehensive. He covered every critical point in Southern and American music: early folk songs, protest songs, Delta blues, Southern gospel, early country music, Appalachian. Everything that fed into modern country music was on that list."

Cash is primarily known as a singer-songwriter; she performs her own songs, and not typically covers. How did she feel about recording an album of other people's songs?

"It was a little scary at first, because I didn't ever want to put my voice front and center. You know, I was a songwriter; that was the torch I carried. This is an honorable profession. This is what I do. I'm a songwriter," she says. "My voice just serves what I'm writing about. So to let all that go, I mean, bring the sensibilities of it actually to the song choices, but to just be the interpreter was incredibly liberating, really fun."

Preserving A Legacy

Cash says there is a legacy to preserve — and it isn't just her father's.

"You know, people who weren't around to hear Patsy Cline's version of 'She's Got You,' or a song like 'Take These Chains,' or never heard Ray Charles' Modern Sounds in Country and Western Music or Hank Snow or any of these people. So, I always felt like, you can't imagine the Scots or the Irish without Celtic music," she says. "You can't imagine us, the Americans, without these songs. They are so important to us. You know, it would be a tragedy if they were just, you know, you had to — if they were just in a museum, or if they were just archived somewhere; if they weren't still being performed."

Listen to the rest of Terry Gross' interview with Rosanne Cash here.

click to hear the audio interview and some music snippets
http://www.npr.org/templates/story/story.php?storyId=113496614&ps=rs

[AnneD]

41. Thanks......

I had heard about the list-and he was so right.

[Demeter]

36. The War on Toyota: It's All Politics By Mike Whitney

http://www.informationclearinghouse.info/article24852.htm

Does anyone really believe that Toyota is being pilloried in the media for a few highway fatalities?

Nonsense. If Congress is so worried about innocent people getting killed, then why haven't they indicted US commander Stanley McChrystal for blowing up another 27 Afghan civilians on Sunday?

But this isn't about bloodshed and it's certainly not "safety regulations". It's about politics--bare-knuckle Machiavellian politics. An attack on Toyota is an attack on Japan's leading export. It is an act of war. Here's a excerpt from the New York Times which explains what is really going on:

"The Japanese economy has emerged from its worst recession since World War II, but is still reeling. Japan must do more to lift its economy out of deflation and boost long-term growth, S.&P. said.

“The outlook change reflects our view that the Japanese government’s diminishing economic policy flexibility may lead to a downgrade unless measures can be taken to stem fiscal and deflationary pressures,” S.&P. said. “The policies of the new Democratic Party of Japan government point to a slower pace of fiscal consolidation than we had previously expected.”

President Barack Obama is expected to address similar worries in the Untied States on Wednesday, with a call for a freeze in spending on many domestic programs, a move he hopes will quell perceptions that government spending is out of control. Fiscal problems in Greece and Ireland have also helped put the spotlight on the issue of national debt." ("Japan’s High Debt Prompts Credit Rating Warning", HIROKO TABUCHI AND BETTINA WASSENER, NY Times)

Japan's new liberal government is fighting deflation using the traditional methodology, by lowering interest rates and increasing fiscal stimulus. But that's not what Washington wants. Neoliberal policymakers and their buddies in the right-wing think tanks want "fiscal consolidation" which means harsh austerity measures that will deepen the recession, increase unemployment, and trigger a wave of defaults and bankruptcies. This is how western corporatists and bank tycoons keep their thumb on the developing world and thrust their economies into perennial crisis. It's the "shock doctrine" and it's been the IMF's modus operandi for over 20 years. Japan is being stuffed into a fiscal straight-jacket by supporters of the Washington consensus whose goal is to weaken government and accelerate the privatization of public assets and services.

The ratings agencies are being used in the same way as the media; to wage an economic/guerrilla war on Japan and force the administration to rethink their economic policies. (Note: There is no chance that Japan will default on its debt because it pays its debts in its own currency and has large foreign exchange reserves of over $1 trillion) The attacks on Toyota are a way of showing Tokyo what happens to countries that fail to obey Washington's orders.

Here's a clip from the New York Times which sums up the problem in a nutshell:

The government of Prime Minister Yukio Hatoyama has "bolstered spending on social programs aimed at helping households......The powerful lower house of parliament approved a supplementary budget for the fiscal year that ends in March worth ¥7.2 trillion, or $80.3 billion, to help shore up the economy...And next year, government spending will grow further with a record trillion-dollar budget including ambitious welfare outlays. (New York Times)

Western elites will not tolerate economic policies which raise the standard of living for the average working slob. "Social programs" or "welfare outlays" are anathema to their trickle down, Voodoo capitalist orthodoxy. What they want is upward redistribution and class warfare. Regrettably, Prime Minister Yukio Hatoyama has put himself at odds with US powerbrokers and is feeling the full measure of their wrath. His public approval ratings have plummeted to 37 percent and are headed downward still. The message is simple: Cross Washington and you're a goner.

[bread_and_roses]

39. All makes sense

and when (if? I want to write "if" - do I really have that much "hope" left in me?) Obama calls for a spending freeze on social programs, we'll know he's gone totally to the dark side. It's heartbreaking. Apt, I guess, for a weekend of Cash.

[AnneD]

85. WHY I DRESS IN BLACK...

www.youtube.com/watch?v=Nhrm0Xe2VOk

[Demeter]

51. How Prime Minister Hotoyama Can Stop The "Japan Bashing" By Mike Whitney

http://www.informationclearinghouse.info/article24865.htm

Japan should not allow itself to be publicly humiliated by the world's biggest human rights abuser. It has many tools at its disposal which can be used to persuade sanctimonious senators and flannel-mouth congressmen that they need to stop their belligerent grandstanding for the cameras. The new Japanese government--particularly Prime Minister Yukio Hatoyama--should be proactive in defending the reputation of its premier car manufacturer and national icon, Toyota. This is more than just a matter of saving face. It's way to change the fundamental relationship between the United States and Japan by demanding that each partner be treated with respect and dignity. To achieve this goal, the prime minister should convene an emergency meeting of his administration and top members of the business community. They should outline the steps that will be taken if there is not a manifest improvement in the rhetoric and an end to the Japan bashing.

The Japanese central bank (BOJ) presently holds more than $1 trillion US Treasurys and dollar-backed assets. PM Hatoyama should announce that USTs will be liquidated incrementally at 5 percent per week until the balance is zero.

The government should warn that it will temporarily close Toyota plants now operating in the United States at a pace of one per month.

There should be a thorough review of import tariff policy, with the prospect of raising tariffs on US imports by 30 to 50 percent.

US nationals working in Japan should be required to update their Visas on a monthly basis pending resolution of the Toyota controversy.

New regulations and taxes should be targeted at US industries and financial institutions operating in Japan.

Hatoyama should appoint a blue ribbon commission to determine whether US military bases in Japan should be terminated or mothballed.

Toyota should make every effort to repair its vehicles and make sure that the people who were injured or killed are fairly compensated. That said, it's mistake for the government to sit back and allow Toyota (and Japan) to be dragged through the mud in front of the entire world. The assault on Toyota has far exceeded any response by congress to the many US corporations who pollute the air, poison the water, or destroy the environment with impunity.

The US congress--which supported a war that killed over one million Iraqis--is in no position to pass judgment on others. It is a thoroughly corrupt institution.

Japan needs to defend its national honor. It's up to Prime Minister Hatoyama, to let Washington know--in no uncertain terms-- that the attacks on Toyota will stop immediately or there will be a heavy price to pay.

[Demeter]

44. U.S. economy is a shambles, with no improvement in sight

http://www.vancouversun.com/sports/economy+shambles+with+improvement+sight/2601195/story.html

President Obama's claim that a second depression isn't possible doesn't square with the relevant numbers

It has been one year since U.S. President Barack Obama signed the $787-billion stimulus bill, the Recovery Act, to lift the U.S. out of recession, and threw an additional $50-billion lifeline to American homeowners facing foreclosure. The package was subsequently enriched and is now estimated at $862 billion, while the pledge to stem foreclosures has risen to $275 billion.

"One year later, thanks to the Recovery Act, we can stand here again and say that a second depression is no longer a possibility," Obama said in marking the anniversary last week.

Oh no? Take another look at the numbers.

After all that spending -- actual and committed (Congress passed an additional $155 billion in aid in December) -- claims of job creation and economic growth remain highly suspect. The U.S. economy has shed more than eight million jobs since the recession began, and losses continue with 20,000 fewer jobs in January alone. A White House advisory council forecast that the economy will create 95,000 jobs per month this year. For forecasters, the year is not off to a good start. Unless the job generator shifts into a higher gear, one analysis concluded, it will take more than seven years to replace the jobs lost since 2007.

The U.S. Labor Department recorded 473,000 new jobless claims last week, up from 442,000 a week earlier, while the number of people on extended benefits (those who have exhausted the regular 26 weeks of benefits) rose by 274,000 to six million. The official unemployment rate eased to 9.7 per cent in January from 10.1 per cent in October, but few believe the Obama administration's boast that the stimulus has generated nearly two million jobs. According to a recent CBS News/ New York Times poll, only six per cent of Americans think the stimulus has created any jobs at all, and public support for the plan has dropped from 55 per cent in June to 38 per cent.

If the stimulus package has created jobs, they are in the public sector, displacing jobs that could have been created more efficiently in the private sector, costing taxpayers far more for each job than the sum of salary and benefits. That's what happens when capital is diverted from productive endeavours that create wealth to government spending programs that dissipate it.

Beyond the jobs front, things are even worse. Loans in foreclosure now represent 4.6 per cent of all mortgages, and the number of mortgages more than 90 days overdue has climbed to 5.1 per cent.

A Congressional panel reported earlier this month that half of approximately $1.4 trillion in commercial loans coming due over the next four years are under water, and hundreds of small-and mid-sized banks face insolvency. It warned of an impending commercial real estate crisis with property values down 40 per cent since 2007 and 18 per cent of office space sitting vacant.

The move last week by the Federal Reserve to raise its emergency loan rate looked more like public relations than economic policy, an attempt to signal that GDP growth -- seen at three per cent this year and four per cent in 2011 -- is real and that inflation remains a threat. But strip out energy prices and consumer prices fell 0.1 per cent in January, the first month of deflation since 1982.

Underlying the economic gloom is a national debt of $12.4 trillion. Obama, apparently unfazed, signed a law this month that raised the limit on public debt to $14.3 trillion. Government debt now amounts to more than $40,000 for each American, $113,000 for each taxpayer. Given its ballooning budget deficit, which is seen at $1.6 trillion this year, or 10.6 per cent of GDP -- a post-Second World War record -- it's difficult to see how the administration can put its fiscal house in order without massive spending cuts. But with soaring health care costs, an aging population, the environmental agenda, military commitments and more Obama-inspired social initiatives, spending cuts are unlikely.

China has indicated its lack of confidence in the crumbling U.S. economy by unloading $34.2 billion in U.S. bonds in December, relinquishing its status as the largest holder of U.S. foreign debt to Japan. As U.S. debt grows, so too does pressure on the interest rate on bills and bonds used to finance it. Rising debt service costs, perhaps accompanied by a downgrade from global ratings agencies, would help expose the phantom recovery for the charade it is.

A second depression impossible? Don't bet on it.

[Demeter]

45. Underwater Mortgages Hit 11.3 Million

http://247wallst.com/2010/02/23/underwater-mortgages-hit-11-3-million/

There is a reason that 702 American banks, nearly one in ten, were on the FDIC “problem list” as of the end of 2009. A large number of small and mid-sized banks are burdened with home and commercial mortgages that are in default and may even go into foreclosure.

New data from First American CoreLogic shows why the solution to the problem banks face is so difficult to find. Eleven million, three hundreds thousand homes had underwater mortgages as of the fourth quarter of last year. That number represent 24% of all residential homes loans in America.The mortgage numbers are much worse when homes with equity of less than 5% are included. First American reports that ”an additional 2.3 million mortgages were approaching negative equity at the end of last year, meaning they had less than five percent equity.” That means that three out of ten homes have virtually no financial value to their owners.

The pressure that the home value trouble puts on banks is clear. The aggregate dollar value of negative equity was $801 billion at the end of last year, up $55 billion from $746 billion in Q3 2009. People who believe there is no hope of their homes ever having any economic value are more likely to default on mortgages, especially in an environment where unemployed and under-employed people make up 17% of the total available workforce nationwide. Many homeowners are as concerned about their employment future as they are about the value of their houses.

Problem home loans are concentrated in the regions where real estate values have fallen the most–Arizona, Florida, Nevada, Michigan, and California. First American says that “among the top five states, the average negative equity share was 42 percent, compared to 15 percent for the remaining 45 states.” In other words, the odds are relatively high that some of the home owners in those states will never sell their houses for more than the amount of their mortgages. That creates a vicious cycle in which high numbers of people with underwater loans default in the states where real estate values have dropped the most. There is no easy way to create a foundation under home prices.

The FDIC has closed 20 banks this year, Five of those were in the five states where mortgage equity problems are at their worst. The agency closed 15 banks in December. Of those, five were in Arizona, Florida, Nevada, Michigan, or California. The bank failure and mortgage failure problems area inextricably linked.

The First American numbers do not leave much hope for a home price rebound this year. It is too hard to sell a house with an underwater mortgage because the bank has to be paid the balance of the loan in cash at closing. Many people do not even try make home payments or cannot afford to under those circumstances. The Mortgage Bankers Association reported that a record 15% of American mortgage holders are either in foreclosure or at least one payment behind.

The difficulties that face small and mid-sized banks, which ultimately are a problem for the FDIC, are to a large extent still a fallout of the deteriorating real estate sector. The underwater mortgage problem is still growing and that almost certainly means bank closings will be high again this year as well.

[Demeter]

46. Blue-collar workers hanging on by thread

http://www.detnews.com/article/20100225/METRO08/2250419/LeDuff--Blue-collar-workers-hanging-on-by-thread

Garden City -- They arrive at work at 7:25 a.m. and many of their cars are rusting buckets of crud. Except for the boss's. He drives a Volvo.

Walk in the door at Schaefer Screw Products and there is the enemy -- the clock. The oil vapors and solvents are overwhelming. The yellow light is dispiriting. The workers don't want to be here. The liquor bottles in the weedy lot out back tell part of the story. The graffiti in the bathroom -- profanely denouncing "hard workers" -- tells the rest.

The workers punch the clock at precisely 7:30 a.m., not a minute later since they would be docked 14 minutes and nobody in America works 14 minutes for free. A quiet resignation settles over them as the roar of the screw grinding machines rev up. Want it or not, they need to be here. After this place, there is no place. Not in today's America.

This machine shop may be the next wobbling domino in the collapse of the American manufacturing sector and the struggles of its blue-collar workers. There are at least seven shops nearby that are available for lease.

Schaefer Screw is in an industrial section of Garden City north of Ford Road, about two miles west of Detroit.

My brother Bill Parker and his wife Kim work there. Bill, 35, made $70,000 shuffling subprime mortgages for Rock Financial in 2006. He used to wear suits and now he wears oily jeans making $8.50 an hour counting and cleaning screws. For Christmas, he got a $43.80 bonus and evicted from the house he wrote the mortgage on.

"Dude, I was making more than that in high school," he said. Then he recited the new battle cry of a generation: "I'm just glad to be working."

Schaefer Screw is a three-generation mom-and-pop shop dating back to 1946. By all rights it should have a "For Sale sign" in the window. Its jobs should be overseas in places like Guangzhou and Juarez and Bangalore, where the labor is cheap.

Free trade is friend and foe

The ironic bit is this: Schaefer Screw would not be here at all had it not been for the cheap Chinese labor that supplies the plant with screws and bolts and fittings and nipples. Inside its 20,000-square-foot frame sits a snapshot of American lives of desperation: falling wages, fewer hours, homes nearing default, a business nearing failure, worker/ management friction.

"I got a call from New York in 2001," recalled the owner Mike Szalay, 45, who along with his brother Mark took the place over from his father Sanford, who took it from his father Mike. The caller was a competitor, but also a friend. "He warned me that my prices were too high. He said guys in China are coming in and they're going to kill you. Get with it. NAFTA is here. So I kicked a few pieces over there I wasn't making money on, standard plumbing fittings. I thought I'd give it a try. They came back. The quality was good; the price was right."

NAFTA, the North American Free Trade Agreement, created a free trade block beginning in 1994. But that is only part of the story. The World Trade Organization (WTO) began quietly in 1995, encouraging a sort of worldwide NAFTA that all but eliminated international trade barriers. China was admitted in November 2001 and since then Michigan has lost nearly 400,000 manufacturing jobs or nearly 50 percent of its industrial work force.

"It's got its roots in the Big Three," Szalay said of the job losses. "The big boys made so much money, they gave the unions whatever they wanted, no matter what productivity was. They gave a guy $28 an hour to lean on a broom. So it trickled down and my guy wanted $20 to lean on a broom. It got so bad they figured out a way not to pay the guy with the broom. They moved whole factories, whole industries overseas.

"But now it's swung too far. We've got nothing left here. I'm employing people in menial jobs just to keep them going. And I'm scared to death that this place is going to die. How are we going to pay this national debt back? The stimulus? What sort of jobs are we going to tax? Where's the value in the money?"

Schaefer employs 20 people, down from 40 when the WTO began. It is considered a manufacturer, but only about 25 percent of the product is made on site. What choice did he have?

"I'm a distributor technically," said Szalay.

Except for the few machinists filling spot orders, the menial jobs consist basically of removing screws from a box that says Made in China, counting the bits, cleaning them and putting them into new boxes that do not say Made in China.

There are machines that can count and clean screws more quickly and efficiently than a human being, Szalay said, but the machines cost $50,000 plus maintenance and software. In today's America, a human being is cheaper than a machine in the short run.

At the same time, Szalay had to ask his workers for concessions: a 5 percent reduction in pay and a 20 percent cutback in hours. This is not unusual. The average hourly earnings for the American worker fell last year by nearly 2 percent when adjusted for inflation, according to the Bureau of Labor Statistics. Of the more than 8 million jobs lost in the past two years -- 2 million were the good-paying jobs in the manufacturing sector.

The workers were not pleased. When Szalay went back into his office, a machinist said this of the boss: "I'm sicka hearing about the economy. What's he gonna do? Trade in his Hummer for a Porsche?"

He traded it for the Volvo.

Struggling to get by

For workers here, Szalay is the closest they will come to THE MAN. And by THE MAN they mean the bozos in Washington, D.C., who voted for the trade agreements and the bank deregulations that let the jobs slip away and money disappear into thin air.

When they say THE MAN, they mean the wolves on Wall Street who amplified the housing bubble and nearly took the world economy down. Instead of paying the price and going out of business and collecting their own unemployment checks, the Wall Street wizards got a multibillion-dollar bailout paid for in part by that $43.80 screw factory bonus. Now those wizards are making beaucoup bonuses again while some see darker clouds on the horizon.

Goldman Sachs, which was a heartbeat away from failure in 2008 and received $40 billion in federal aid, paid out $16 billion in bonuses and compensation in 2009 -- an average of nearly $500,000 per employee. The bank paid just $14 million in taxes. At the same time, Deutsche Bank forecasts that a quarter of homeowners are underwater and RealtyTrac.com reported 315,000 foreclosures in January, the most for that month on record. Many economists are predicting a bleak year in the housing market if wages and unemployment don't improve.

"You feel the whole thing's a swindle," says Cindi Borbi, the 59-year-old account manager behind a desk behind a cloud of cigarette smoke. Her husband took his life last year after being let go from his auto supply firm. He left his wife a broken heart, a mound of debt and a house she can't pay for. "I'm looking for a basement if you've got one."

Amanda Wollschlager, 26, is giving up her home. Her husband was laid off a year ago from a white-collar job at an auto supplier. His unemployment benefits will run out in March. They are packing up the baby and heading to Arizona. "We heard there's jobs out there, hopefully," she said.

Mike Straw, 42, must be the most honest man in America. Straw, a 12th-grade dropout, earns $8 an hour but takes home about $75 a week. Up to his neck in house payments on a house that is no longer worth what he owes, Straw has decided to pay instead of walk away.

Why?, he was asked. A lot of people are walking out on debts.

"A lot of people do, but I don't," he said. "If everybody walked away on what they owe, where would we be?"

And with that, the lunch bell rang. Everybody was huddled around the time clock like it was the only thing giving off heat.

From The Detroit News: http://www.detnews.com/article/20100225/METRO08/2250419/LeDuff--Blue-collar-workers-hanging-on-by-thread#ixzz0gjWev2QI

[burf]

65. One of the starting points for

the loss of US manufacturing jobs was Jack Abramoff and his lobbying for the Tan family in the Northern Mariannas Islands (CNMI). The deplorable conditions and treatment of the garment workers there was reported in Ms magazine in 2006 in an article titled "Paradise Lost".

Link: http://www.msmagazine.com/spring2006/paradise_full.asp

The conditions in the CNMI were touted by former House Majority Whip Tom Delay as "the petri dish of capitalism" during a visit there arranged by Abramoff. Those conditions are very possibly coming to a country near you in the very near future.

[Demeter]

49. Fannie Mae seeks $15.3B in gov't aid after 4Q loss

http://news.yahoo.com/s/ap/20100226/ap_on_bi_ge/us_earns_fannie_mae

Fannie Mae needs another $15 billion in federal assistance, bringing its total to more than $75 billion. And worse, the mortgage finance company warned its losses will continue this year.

The rescue of Fannie Mae and sister company Freddie Mac is turning out to be one of the most expensive aftereffects of the financial meltdown. The new request means the total bill for the duo will top $126 billion.

And the pain isn't over. Fannie warned Friday that it will need even more money from the Treasury, as unemployment remains high and millions of Americans lose their homes through foreclosure.

Fannie Mae reported Friday that it lost $74.4 billion, or $13.11 a share, last year, including $2.5 billion in dividends paid to the government. That compares with a loss of $59.8 billion, or $24 a share, a year earlier.

Fannie Mae, which was seized by federal regulators in September 2008, has racked up losses totaling $136.8 billion over the past three year.

Late last year, the Obama administration pledged to cover unlimited losses through 2012 for Freddie and Fannie, lifting an earlier cap of $400 billion.

Earlier in the week, Freddie reported a loss of almost $26 billion for last year. The company didn't request any more money, but expect to do so later this year.

Fannie and Freddie play a vital role in the mortgage market by purchasing mortgages from lenders and selling them to investors. Together the pair own or guarantee almost 31 million home loans worth about $5.5 trillion. That's about half of all mortgages.

"Through this prolonged stress in the housing market, we are helping homeowners across the country, supporting affordable housing, and providing financing to keep the residential markets functioning," the company's chief executive, Mike Williams, said in a statement.

The two companies, however, loosened their lending standards for borrowers during the real estate boom and are reeling from the consequences. At the end of last year, nearly 5.4 percent of Fannie Mae's borrowers had missed at least one payment — dramatically higher than historic levels.

During the most recent quarter, Washington-based Fannie suffered $11.9 billion in credit losses and a $5 billion write-down for low income tax credit investments.

That led to a fourth-quarter loss of $16.3 billion, or $2.87 a share, including $1.2 billion in dividends paid to the Treasury Department. It compares with a loss of $25.2 billion, or $4.47 a share, in the year-ago period.

[Demeter]

47. We don't need US, says Latin America

http://www.brisbanetimes.com.au/world/we-dont-need-us-says-latin-america-20100224-p16g.html

Latin American and Caribbean nations have agreed to create a new regional alliance, without the United States and Canada, Mexican President Felipe Calderon said at a summit here on Tuesday.

The bloc "must as a priority push for regional integration ... and promote the regional agenda in global meetings," Calderon told participants from 32 nations, including 24 leaders, at the beach resort of Cancun.

The new grouping was expected to serve as an alternative to the Organisation of American States (OAS), which includes the North American neighbours and has been the main forum for regional affairs in the past half-century.

It was a move away from the traditional influence of the United States in the region, and was promoted by regional heavyweights Brazil and Mexico.

Cuban President Raul Castro was one of the first to laud the announcement during a final summit session broadcast live on television as a historic move toward "the constitution of a purely Latin American and Caribbean regional organisation."

US Assistant Secretary of State for Western Hemisphere Affairs Arturo Valenzuela said on Monday in Washington that the United States did not see the new grouping as a problem.

"Replacing the OAS? I don't think most of the countries are on that at all," Valenzuela told journalists at an event in Washington.

"This should not be an effort that would replace the OAS," he added.

[Demeter]

50. Officials puzzle over millions of dollars leaving Afghanistan by plane for Dubai

http://www.washingtonpost.com/wp-dyn/content/article/2010/02/24/AR2010022404914.html#

A blizzard of bank notes is flying out of Afghanistan -- often in full view of customs officers at the Kabul airport -- as part of a cash exodus that is confounding U.S. officials and raising concerns about the money's origin.

The cash, estimated to total well over $1 billion a year, flows mostly to the Persian Gulf emirate of Dubai, where many wealthy Afghans now park their families and funds, according to U.S. and Afghan officials. So long as departing cash is declared at the airport here, its transfer is legal.

But at a time when the United States and its allies are spending billions of dollars to prop up the fragile government of President Hamid Karzai, the volume of the outflow has stirred concerns that funds have been diverted from aid. The U.S. Drug Enforcement Administration, for its part, is trying to figure out whether some of the money comes from Afghanistan's thriving opium trade. And officials in neighboring Pakistan think that at least some of the cash leaving Kabul has been smuggled overland from Pakistan.

"All this money magically appears from nowhere," said a U.S. official who monitors Afghanistan's growing role as a hub for cash transfers to Dubai, which has six flights a day to and from Kabul.

Meanwhile, the United States is stepping up efforts to stop money flow in the other direction -- into Afghanistan and Pakistan in support of al-Qaeda and the Taliban. Senior Treasury Department officials visited Kabul this month to discuss the cash flows and other issues relating to this country's infant, often chaotic financial sector.

Tracking Afghan exchanges has long been made difficult by the widespread use of traditional money-moving outfits, known as "hawalas," which keep few records. The Afghan central bank, supported by U.S. Treasury advisers, is trying to get a grip on them by licensing their operations.

In the meantime, the money continues to flow. Cash declaration forms filed at Kabul International Airport and reviewed by The Washington Post show that Afghan passengers took more than $180 million to Dubai during a two-month period starting in July. If that rate held for the entire year, the amount of cash that left Afghanistan in 2009 would have far exceeded the country's annual tax and other domestic revenue of about $875 million.

The declaration forms highlight the prominent and often opaque role played by hawalas. Asked to identify the "source of funds" in forms issued by the Afghan central bank, cash couriers frequently put down the name of the same Kabul hawala, an outfit called New Ansari Exchange.

Early last month, Afghan police and intelligence officers raided New Ansari's office in Kabul's bazaar district, carting away documents and computers, said Afghan bankers familiar with the operation. U.S. officials declined to comment on what prompted the raid. New Ansari Exchange, which is affiliated with a licensed Afghan bank, closed for a day or so but was soon up and running again.

The total volume of departing cash is almost certainly much higher than the declared amount. A Chinese man, for instance, was arrested recently at the Kabul airport carrying 800,000 undeclared euros (about $1.1 million).

Cash also can be moved easily through a VIP section at the airport, from which Afghan officials generally leave without being searched. American officials said that they have repeatedly raised the issue of special treatment for VIPs at the Kabul airport with the Afghan government but that they have made no headway.

One U.S. official said he had been told by a senior Dubai police officer that an Afghan diplomat flew into the emirate's airport last year with more than $2 million worth of euros in undeclared cash. The Afghan consul general in Dubai, Haji Rashoudin Mohammadi, said in a telephone interview that he was not aware of any such incident.

The high volume of cash passing through Kabul's airport first came to light last summer when British company Global Strategies Group, which has an airport security contract, started filing reports on the money transfers at the request of Afghanistan's National Directorate of Security, the domestic intelligence agency. The country's notoriously corrupt police force, however, complained about this arrangement, and Global stopped its reporting in September, according to someone familiar with the matter.

Afghan bankers interviewed in Kabul said that much of the money that does get declared belongs to traders who want to buy goods in Dubai but want to avoid the fees, delays and paperwork that result from conventional wire transfers.

The cash flown out of Kabul includes a wide range of foreign currencies. Most is in U.S. dollars, euros and -- to the bafflement of officials -- Saudi Arabian riyals, a currency not widely used in Afghanistan.

Last month, a well-dressed Afghan man en route to Dubai was found carrying three briefcases stuffed with $3 million in U.S. currency and $2 million in Saudi currency, according to an American official who was present when the notes were counted. A few days later, the same man was back at the Kabul airport, en route to Dubai again, with about $5 million in U.S. and Saudi bank notes.

One theory is that some of the Arab nation's cash might come from Saudi donations that were supposed to go to mosques and other projects in Afghanistan and Pakistan. But, the American official said, "we don't really know what is going on."

Efforts to figure out just how much money is leaving Afghanistan and why have been hampered by a lack of cooperation from Dubai, complained Afghan and U.S. officials, who spoke on the condition of anonymity. Dubai's financial problems, said a U.S. official, had left the emirate eager for foreign cash, and "they don't seem to care where it comes from." Dubai authorities declined to comment.

[Demeter]

52. Drowning in "Cash"

http://www.youtube.com/watch?v=5M2v-pkSIQY&feature=fvw

[Demeter]

53. The Man in Black Had Two Wives

Vivian Liberto

On July 18, 1951, while in Air Force training, Cash met 17 year-old Vivian Liberto (April 23, 1934, San Antonio, Texas—May 24, 2005, Ventura, California) at a roller skating rink in her native San Antonio. They dated for three weeks, until Cash was deployed to Germany for a three year tour. During that time, the couple exchanged hundreds of pages of love letters.<24>

On August 7, 1954, one month after his discharge, they were married at St. Anne's Catholic church in San Antonio. The ceremony was performed by her uncle, Father Vincent Liberto. They had four daughters: Rosanne (born May 24, 1955), Kathy (born April 16, 1956), Cindy (born July 29, 1958) and Tara (born August 24, 1961). Cash's drug and alcohol abuse, constant touring, and affairs with other women (including future wife June Carter) led Liberto to file for divorce in 1966.<25>
June Carter

In 1968, 12 years after they first met backstage at the Grand Ole Opry, Cash proposed to June Carter, an established country singer, during a live performance in London, Ontario,<26> marrying on March 1, 1968 in Franklin, Kentucky. He had proposed numerous times, but she had always refused. They had one child together, John Carter Cash (born March 3, 1970).

They continued to work together and tour for 35 years, until June Carter died in 2003. Cash died just four months later. Carter co-wrote one of his biggest hits, "Ring of Fire," and they won two Grammy awards for their duets.

Vivian Liberto claims a different version of the origins of "Ring of Fire" in I Walked the Line: My Life with Johnny, stating that Cash gave Carter the credit for monetary reasons.<27>

[Demeter]

56. Happy Saturday, Everyone!

I have to do some useful work today, so I'm leaving you all to work on this Weekend issue. I hope to return this evening.

It's a winter wonderland out there. The icicles are enormous. And here we thought we had fixed that problem...it was merely a lack of snow that kept the gutters clear until now.

3 weeks till the Equinox. And many more until the recovery. Fasten your seatbelts, it's gonna be a bumpy ride.

[AnneD]

61. So many criminals.....

so little time

Sooner or later God will cut you down....from your mouth to God's ear Johnny.

www.youtube.com/watch?v=wxh-FfElY0M&NR=1&feature=fvwp

[DemReadingDU]

62. Harry Markopolos: "No One Would Listen" about Bernie Madoff

Interesting book to be released on 3/2/10

No One Would Listen: A True Financial Thriller by Harry Markopolos, David Einhorn (Foreword by)

Synopsis
Harry Markopolos and his team of financial sleuths discuss first-hand how they cracked the Madoff Ponzi scheme
No One Would Listen is the exclusive story of the Harry Markopolos-lead investigation into Bernie Madoff and his $65 billion Ponzi scheme. While a lot has been written about Madoff's scam, few actually know how Markopolos and his team-affectionately called "The Fox Hounds" by Markopolos himself, uncovered what Madoff was doing years before this financial disaster reached its pinnacle. Unfortunately, no one listened, until the damage of the world's largest financial fraud ever was irreversible.

Click to read rest of the synopsis...
http://search.barnesandnoble.com/No-One-Would-Listen/Harry-Markopolos/e/9780470553732/


2/25/10 Madoff Whistleblower Book: Claims He Uncovered State Street Fraud, Thought About Killing Madoff

In an explosive new book, Bernie Madoff whistleblower Harry Markopolos tells the inside story of how he uncovered the $65 billion fraud, claims that he exposed State Street's alleged fraud of pension funds and admits that he considered the idea of killing Madoff if he was ever threatened by the Ponzi schemer.

Click to read rest of article...
http://www.huffingtonpost.com/2010/02/25/madoff-whistleblower-book_n_476820.html


I feel like Markopolos...no one in my family listens to me either.

[AnneD]

64. When Cassandra speaks

Meredith Whitney calls them as she sees them-something other Wall Street analysts still don't dare to do

Bears experienced a golden moment in the fall of 2008, when the financial system teetered like a dreidel off its axis. Analysts who'd been dismissed as worrywarts or cranks a year earlier for warning that markets were dangerously overheated became financial-media superstars, while their perennially bullish counterparts at Wall Street's mainstream investment banks ran for cover. Academics such as Nouriel Roubini and Nassim Taleb (nicknamed Dr. Doom and the Black Swan) became television celebrities and were summoned to Switzerland to explain the meltdown to world leaders. But the forecaster who attracted the most attention and applause was a blonde-a very sharp and outspoken one: Meredith Whitney (a.k.a. Wall Street's Cassandra).

Whitney had earned it. In October, 2007, when she was a bank analyst for CIBC World Markets, she sent Citigroup's share price into a tailspin by issuing a research report that said the shaky financial services giant would have to raise $30 billion (all currency in U.S. dollars) to survive, most likely by cutting its dividend or selling assets. True, this was after the subprime mortgage market in the U.S. had started to crack, but it was almost a year before Lehman Brothers collapsed and triggered a global market meltdown.

Now, just over two years later, the market's fortunes have reversed. The MSCI World stock index climbed more than 70% by January from its low point last March, Wall Street is wallowing in bonuses and the bullish analysts are back. But, after softening her stance somewhat last year, Whitney has become increasingly negative. If we've learned anything after going through the wringer and surviving, it's that you can't ignore this messenger or her message.

Yes, part of the reason is that Whitney is just so much more entertaining than the typical Wall Street number cruncher. She's married to retired WWE pro wrestler John Layfield, and clearly revels in high fashion and trips to Bikini Boot Camp in Mexico. She also peppers her interviews with references to Barbie. Whitney doesn't have stodgy superiors to answer to any more, either. In February, 2009, she founded an independent research firm, Meredith Whitney Advisory Group LLC.

more.....

www.theglobeandmail.com/report-on-business/rob-magazine/when-cassandra-speaks/article1482143/

[Demeter]

66. The Sovereign Debt Disaster By Egon von Greyerz

http://dailyreckoning.com/the-sovereign-debt-disaster/


...It took almost 200 years for US Federal debt to reach $1 trillion, which it did in 1981. In 2009 the debt increased by $1.9 trillion in just that year to $12.4 trillion. In the next ten years the US debt is forecast to reach $25 trillion. And this doubling of the debt does not include any funds to continue propping up a bankrupt financial system. The forecast also assumes optimistic growth in GDP, which is extremely unlikely. Currently, US Federal debt is six times what it collects in tax revenue every year. With debt exploding and tax revenues collapsing, there is no chance that the debt can ever be repaid with normal money. Also, with debt out of control, interest rates will rise substantially to 10-20% per annum. Applying a 15% interest rate to a $25 trillion debt would give an annual interest bill of $3.75 trillion, which is the same size as this year’s ENTIRE budget.

The chart below shows the US Federal Debt per person. In the last ten years it has gone from $ 20,000 to $ 40,000. If we were to also include the present value of the government’s future unfunded liabilities like Social Security and Medicare, the debt per person would soar to more than $250,000.


US Debt Per Person

Therefore, the indebted governments of the world have two choices: continue to borrow and print money or reduce government spending. This is a lose-lose situation. Countries within the EU like Greece or Spain are introducing austerity programs that forecast their deficits to come down to 3% of GDP, which is the EU maximum deficit limit. These are totally unrealistic targets that are mainly based on an improvement in the economy. Ironically, not one single country within the EU is below the 3% limit, not even Germany. Furthermore, the austerity programs would lead to such a major contraction of the economies that tax revenues would collapse, further exacerbating the plight of these countries.

The alternative is to print or borrow more money. Printing is not a luxury that individual EU members have. And borrowing is becoming increasingly expensive…or impossible. But the European Central Bank can print money and this is likely to be the path they will initially choose to save Greece and possibly Spain. Countries like the US and the UK can still borrow and print money. And this is what they will continue to do. With rising deficits, rising unemployment and the problems in the financial system re-emerging they have no choice. We will see trillions of pounds and dollars printed in the next few years.

We will also see trillions of pounds and dollars worth of new government securities. But the buyers of these government securities might start to become scarce. The rest of the world may dump their holdings of US and UK debt, which would result in both the dollar and the pound dropping precipitously and interest rates rising substantially. The effect of a collapsing currency will be a hyperinflationary depression. This is the inevitable outcome for the UK and US.

All the countries of the major trading currencies – the dollar, euro, pound and yen – have major economic problems that can only be resolved by massive money printing. This is why it is a futile game to try to predict which currency will be the weakest out of the above four. They will all weaken substantially but not at the same time. Therefore, we will have incredible volatility in currency markets in the next few years whilst speculators lose their shirts jumping from one currency to the next. There will be very few winners in that game....

...Therefore, as many paper currencies become virtually worthless in the next few years, gold will continue to do what it has done for 6,000 years. It will maintain its purchasing power and therefore appreciate substantially against all paper currencies. The recent correction in gold is the weak hands getting out of speculative positions in the paper gold market. There has been virtually no selling in the physical market. So far gold has gone up more than four times in the last ten years in a stealth bull market that very few investors have participated in. There is no other asset during this period that has given such an excellent return whilst at the same time providing the highest form of wealth protection (provided it is physical gold).

The chart shows gold in 2009 dollars adjusted for inflation, as calculated by Shadowstats.com. (Shadowstats.com is a superb service that analyzes government statistics on a true basis, taking out all adjustments, revisions and other manipulations). Applying the true inflation rate on the gold price shows that the gold high in 1980 of $850 in today’s terms is $6,400.


Inflation Adjusted Gold Price

Governments have suppressed the gold price in the last 30 years by both overt operations (official gold sales) and covert operations (manipulations in the paper gold market and unofficial sales). Central banks have now stopped official sales and China, India, Russia and many other countries are major buyers. Production is falling steadily and investment demand is soaring. With the fundamentals so much in gold’s favor, it should have no problem to reach the 1980 inflation-adjusted high of $6,400. With inflation or hyperinflation, gold will go a lot higher than that.

During the next phase up in gold, which we expect to start within the next few weeks, mainstream investors will discover what only a few investors have understood in the last ten years, namely that physical gold is one of the very few ways to protect their assets and preserve capital.

[Demeter]

67. The Trust Fund Con By David Walker

http://dailyreckoning.com/the-trust-fund-con/


02/22/10 New York, New York – Social Security is in trouble. According to the Social Security Trustees Report, the Social Security program was in a $7.7 trillion hole as of January 1, 2009. That means Washington would have needed $7.7 trillion on that date, invested at prevailing rates, to deliver for the next seventy-five-years on the promises that the federal government has made. But we actually need much more than that to keep Social Security healthy, because it will experience larger and larger deficits both in the near future and beyond the seventy-five-year accounting horizon. As of January 1, 2009, that number – the amount we would need to invest to ensure the sustainability of the program for seventy-five years and beyond – was $15.1 trillion. How much of this huge sum do we have invested in real liquid and transferable assets today – that is, how much in actual money? Zero, zip, cero, nada, nothing!

The truth is that the government’s Social Security guarantee is one huge unfunded promise. How can this be? I have mentioned the Social Security “trust funds,” where our payroll taxes go. All this money is transmitted to the federal government and credited to the Social Security trust funds. You would logically assume that these funds would have hard assets that have been saved and invested to cover the program’s future costs. However, rather than saving the money and investing it in a diversified pool of real and readily marketable assets, the government spends it and provides “special-issue” government securities in return.

Just consider what actually goes into those funds. First there are the numbers reported in government financial statements. According to those numbers, Washington had issued approximately $2.4 trillion in special-issue US government securities that had been credited to the Social Security trust fund as of January 1, 2009. The computer records documenting these securities are held in a locked file cabinet in West Virginia. But there is a reason they are called special-issue securities, and it’s not good. Unlike regular government bonds, which people like us and the Chinese government can buy, these special-issue bonds cannot be sold; in other words, they are government IOUs that the government has issued to itself, to be paid back later – with interest. Imagine if you or I could sit around writing IOUs to ourselves that were worth something. Great way to make a living.

Washington says that we can count on these bonds because they are backed by the full faith and credit of the United States government, which guarantees both principal and interest. But – believe it or not – under current federal accounting principles, the government does not consider these bonds to be liabilities – which is another way of saying the government doesn’t really think that it’s our money.

Think about that for a minute. If you or I lend the government money by buying a bond, the government has to pay us back with interest. In other words, that bond is a government liability. But when it comes to the Social Security trust funds, the government is saying the special-issue securities it deposits are not a liability – in other words, they’re basically worth nothing at all. Now get this: The trust funds report these securities as assets on the annual reports that they provide to the public. Does that sound like wanting to have your cake and eat it too? Con artists of the world, I hope you’re taking notes.

In my view, these bonds should be treated as liabilities, and their value should be counted as part of our debt-to-GDP ratio. After all, they are backed by the full faith and credit of the federal government, and I do not believe the federal government will default on them.

Under the current scheme, the Social Security program has been running large surpluses since the reforms of 1983. But in actuality, Washington has spent those surpluses every year on other government activities. That is one way the government can reduce its public borrowing and keep interest rates down.

To say the least, the federal government’s accounting for these funds understates both its total liabilities and its annual operating deficits. That brings us to another clever bit of Washington wordsmithing: the “unified deficit.” In public reporting, the government takes the real operating deficit, $638 billion in fiscal 2008, and subtracts the nonexistent amount credited to the Social Security trust funds, $183 billion in fiscal 2008. This “unified” figure – $455 billion – makes the federal budget deficit seem smaller than it actually is. And they have been doing this for many years.

These accounting tricks would never be allowed in the real world, where trust funds are subject to stringent accounting rules and fiduciary standards. In essence, Washington is playing a massive con game – collecting your Social Security taxes, spending that money for its own purposes, and accounting for it in trust funds that are largely a fiction. A more proper description would be “trust-the-government funds.” Or as my boss, Pete Peterson, would say, “You can’t trust them, and they aren’t funded.” Just another example of how words used in Washington don’t have the same meaning they have in Webster’s dictionary.

Don’t worry, the reforms of the 1980s are still keeping the system above water. Monthly benefits should be paid in full for at least another three decades. However, the Social Security program will begin to pay out more than it takes in much sooner than that. The retirement and survivors income program expects its payments to exceed its revenues in 2010 and 2011. That will happen because revenue has declined during the recession –while at the same time, more people are retiring. When the federal government has to start cashing in the special-issue securities in the trust funds in order to pay benefits, it will have to raise taxes, cut benefits, and/or sell real bonds to the public in order to raise real money for retirees receiving benefits. If the government issues more public debt – in part to attract more foreign investors – that will likely increase our foreign dependency.

[Demeter]

68. Want to Fix Housing? Listen to the Gipper By Mike Whitney

http://www.informationclearinghouse.info/article24871.htm



February 26, 2010 "Information Clearing House" -- There is a remedy for the housing crisis. And it doesn't involve an agonizing decade of uncertainty while supply adjusts to demand. All Obama needs to do is to stop artificially propping up the market and let the chips fall where they may. That means the Fed should stop buying mortgage-backed securities to keep long-term interest rates low. That means the congress should not renew the $8,000 first-time homebuyers subsidy. That means the FHA should modify its lending standards so that mortgage applicants have to meet normal criteria for securing a mortgage.

When government stops meddling in the market, housing prices will return to long-term trend and sales will resume.

But doesn't that mean that millions of people will face foreclosure when the current price of their homes dips below the value of their mortgages?

Yes, it does. But there is a flip side to that (awful) prospect, which is this: the areas of the country with the most foreclosures, are also the markets where where sales have picked up the most. That's because--contrary to belief--people are not fools and they know that prices have to come down. When prices fall, buyers appear. The Fed knows this, the Treasury knows this, realtors know this, and Obama knows this.

So, why does the administration continue to meddle?

It's because a surge of foreclosures will put more red ink on banks balance sheets. None of the extraordinary measures the government has taken so far--HAMP, mortgage modifications, loan abatements, subsidies etc--have been designed to help the victims of fraudulent loans and bubblenomics. It's all been for the banks. That should be obvious by now. It's a simple equation: The banks get everything and the people get bupkis.

Consider this: On Tuesday the Census Bureau announced that new home sales in January fell to a "record low" of 309 thousand. This is a sharp decrease from the revised rate of 348 thousand in December. In other words, the nearly $2 trillion the Fed has pumped into housing---via quantitative easing (QE), first-time homebuyer subsidies, $300 billion in Treasury purchases, and $175 billion in Fannie and Freddie debt--has not reversed the downward direction of the market. Prices are still falling, foreclosures are still rising, and supply still far exceeds demand. It's time for the government to back-off and let the market clear.

There are ways to soften the blow for the people who will suffer from foreclosure or the loss of equity. Dean Baker, who was the first economist in the country to spot the bubble in 2002, suggests that foreclosures be mitigated by judges so that people are allowed to stay in their homes as renters at a reduced rate if they agree to do the maintenance. That does not make up for the fact that they were ripped off in a fraudulent mortgage swindle, but there are no pain-free solutions. Propping up the market just extends the misery over a longer period of time. It does not fix the problem.

So, why is it important that the government withdraw its support for the housing market now?

Perhaps, this article which appeared on Bloomberg News on Thursday will explain:
Bloomberg News: "The Obama administration may expand efforts to ease the housing crisis by banning all foreclosures on home loans unless they have been screened and rejected by the government’s Home Affordable Modification Program.

The proposal, reviewed by lenders last week on a White House conference call, “prohibits referral to foreclosure until borrower is evaluated and found ineligible for HAMP or reasonable contact efforts have failed,” according to a Treasury Department document outlining the plan." (Bloomberg)

Obama "prohibits foreclosures"?

What's next? Will the president stand at the water's edge and try to stop the tide from coming in?

Our befuddled leaders have gone from one extreme to the other; from believing wholeheartedly in the wondrous beauty of the self-regulating market to presidential edicts which ban the business cycle. This is lunacy.


Obama should take a moment and reflect on the words of his hero Ronald Reagan who famously quipped at the 1976 Republican Convention:

"The nine most terrifying words in the English language are, 'I'm from the government and I'm here to help."

For once, the waxy-hair Gipper was right. Obama needs to "stop helping" and let the market correct.

[Demeter]

69. This Is One of the Biggest Wall Street Frauds Ever... By Porter Stansberry:

http://www.thedailycrux.com/content/4177/Porter_Stansberry

One of the best lessons I've learned over my career as an investment analyst is the myth of excellent management or "great execution" is really just that – a myth.

When I see companies in troubled industries reporting quarter after quarter of great results, while all of their peers are getting killed, I know a fraud is going on. I remember in the early 2000s, WorldCom kept reporting profits when all of the other long-distance carriers were getting killed. I knew it couldn't last. And it didn't. WorldCom's accounting was revealed to be a fraud – the company was counting its network access costs as capital expenses. Once the real numbers came out, the company collapsed in what was the largest bankruptcy in American history at that point.

About three years ago, I saw Goldman Sachs reporting quarter after quarter of unbelievable results when all of the other investment banks were hurting. I spent a lot of time looking at its numbers – which didn't make any sense. It reminded me of Enron. It kept reporting bigger and bigger profits, but lost more money every year in cash. And its debt balances kept growing.

I wrote a lot about this in The Digest, but I never officially recommended shorting Goldman in my newsletter because I literally couldn't figure out how Goldman Sachs was doing it. I couldn't find the smoking gun... but I knew a giant fraud would be discovered there, eventually.

In October 2008, I figured out part of the big secret: Goldman had insured all of its subprime exposure via AIG. This allowed it to book huge profits on its subprime investments long before they were actually paid off because the bonds were insured. Of course, it was all a sham – AIG didn't have nearly enough money to pay off any of the insurance. (See the October issue of PSIA for more details.) A source close to the company even told me how big the exposure to AIG really was – $20 billion. That's roughly 100% of the profit Goldman claimed in 2006 and 2007, at the height of the credit bubble. Goldman completely denied my report and claimed it had zero exposure to AIG.

As was subsequently revealed in the spring of 2009, my report was right on the money. Goldman had roughly $20 billion in exposure to AIG and received roughly $14 billion of money the federal government used to bail out AIG.

But I completely missed one big part of the story... And once this fact becomes common knowledge, it will probably mean jail time for several leading Goldman executives and the end of the firm. What did I miss? The entire Goldman-AIG relationship was a complete sham. Let me explain...

Goldman eventually admitted it had insured roughly $20 billion worth of subprime CDOs with AIG and had major exposure to the firm. But the New York Federal Reserve and Goldman Sachs never revealed this critical fact: Goldman didn't merely buy insurance on a bunch of random subprime CDOs. It actually bought insurance on special CDOs it had put together and sold to its own clients. In other words, Goldman knew more about these CDOs than anyone else. Goldman bought insurance on these CDOs because it knew they'd collapse.

This is tantamount to building a house, planting a bomb in it, selling it to an unsuspecting buyer, and buying $20 billion worth of life insurance on the homeowner – who you know is going to die!

These facts all came to light because of research done by the office of Darrell Issa, the ranking Republican on the House Committee on Oversight and Government Reform. These new documents will certainly lead to a full investigation of the Goldman-AIG dealings and the subsequent $180 billion bailout led by the New York Federal Reserve. My bet? Heads will roll. If you own Goldman Sachs, you'd better sell.

INCLUDING TIMMY, I DO HOPE!

[Demeter]

70. Cash Can Keep Goldman Warm

http://www.youtube.com/watch?v=N5Ts4M3irWM

[Demeter]

73. Happy End of February, Everyone

PIRATE KING:
For some ridiculous reason, to which, however, I've no desire to be disloyal,

Some person in authority, I don't know who, very likely the Astronomer Royal,

Has decided that, although for such a beastly month as February, twenty-eight days as a rule are plenty,

One year in every four his days shall be reckoned as nine and twenty.

Through some singular coincidence, I shouldn't be surprised if it were owing to the agency of an ill-natured fairy,

You are the victim of this clumsy arrangement, having been born in leap-year, on the twenty-ninth of February;

And so, by a simple arithmetical process, you'll easily discover,

That though you've lived twenty-one years, yet, if we go by birthdays, you're only five and a little bit over!

NEXT WEEK PROMISES TO BE MORE SEASONAL--SUNNY AND ABOVE FREEZING. AS MY YOUNGER KID REMARKED THIS MORNING @ 4 AM AS WE BAGGED PAPERS, IT WAS ALMOST PLEASANT OUT THERE....

[Demeter]

74. CASH'S CAREER

In 1954, Cash and Vivian moved to Memphis, Tennessee, where he sold appliances while studying to be a radio announcer. At night he played with guitarist Luther Perkins and bassist Marshall Grant. Perkins and Grant were known as the Tennessee Two. Cash worked up the courage to visit the Sun Records studio, hoping to get a recording contract. After auditioning for Sam Phillips, singing mostly gospel songs, Phillips told him that gospel was unmarketable. It was once rumored that Phillips told Cash to "go home and sin, then come back with a song I can sell," though Cash refuted that Phillips made any such comment in a 2002 interview.<28> Cash eventually won over the producer with new songs delivered in his early frenetic style. His first recordings at Sun, "Hey Porter" and "Cry Cry Cry", were released in 1955 and met with reasonable success on the country hit parade.

Cash's next record, "Folsom Prison Blues", made the country Top 5, and "I Walk the Line" became No. 1 on the country charts and entered the pop charts Top 20. Following "I Walk the Line" was "Home of the Blues", recorded in July 1957. That same year Cash became the first Sun artist to release a long-playing album. Although he was Sun's most consistently best-selling and prolific artist at that time, Cash felt constrained by his contract with the small label. Elvis Presley had already left Sun, and Phillips was focusing most of his attention and promotion on Jerry Lee Lewis. The following year Cash left the label to sign a lucrative offer with Columbia Records, where his single "Don't Take Your Guns to Town" became one of his biggest hits.

In the early 1960s, Cash toured with the Carter Family, which by this time regularly included Mother Maybelle's daughters, Anita, June and Helen. June, whom Cash would eventually marry, later recalled admiring him from afar during these tours.

He also acted in a 1961 film entitled Five Minutes to Live, later re-released as Door-to-door Maniac. He also wrote and sang the opening theme.

Outlaw image

As his career was taking off in the early 1960s, Cash started drinking heavily and became addicted to amphetamines and barbiturates. For a brief time, he shared an apartment in Nashville with Waylon Jennings, who was heavily addicted to amphetamines. Cash used the uppers to stay awake during tours. Friends joked about his "nervousness" and erratic behavior, many ignoring the warning signs of his worsening drug addiction. In a behind-the-scenes look at The Johnny Cash Show, Cash claims to have "tried every drug there was to try."

Although in many ways spiraling out of control, Cash's frenetic creativity was still delivering hits. His rendition of "Ring of Fire" was a crossover hit, reaching No. 1 on the country charts and entering the Top 20 on the pop charts. The song was written by June Carter and Merle Kilgore. The song was originally performed by Carter's sister, but the signature mariachi-style horn arrangement was provided by Cash, who said that it had come to him in a dream.

In June 1965, his truck caught fire due to an overheated wheel bearing, triggering a forest fire that burned several hundred acres in Los Padres National Forest in California.<29><30> When the judge asked Cash why he did it, Cash said, "I didn't do it, my truck did, and it's dead, so you can't question it."<21> The fire destroyed 508 acres (2.06 km2), burning the foliage off three mountains and killing 49 of the refuge's 53 endangered condors. Cash was unrepentant: "I don't care about your damn yellow buzzards." The federal government sued him and was awarded $125,172 ($845,341 in current dollar terms). Cash eventually settled the case and paid $82,001.<31> He said he was the only person ever sued by the government for starting a forest fire.<21>

Although Cash carefully cultivated a romantic outlaw image, he never served a prison sentence. Despite landing in jail seven times for misdemeanors, each stay lasted only a single night. His most infamous run-in with the law occurred while on tour in 1965, when he was arrested by a narcotics squad in El Paso, Texas. The officers suspected that he was smuggling heroin from Mexico, but it was prescription narcotics and amphetamines that the singer had hidden inside his guitar case. Because they were prescription drugs rather than illegal narcotics, he received a suspended sentence.

Johnny Cash and his second wife, June Carter

Cash was also arrested on May 11, 1965, in Starkville, Mississippi, for trespassing late at night onto private property to pick flowers. (This incident gave the spark for the song "Starkville City Jail", which he spoke about on his live At San Quentin prison album.)

In the mid 1960s, Cash released a number of concept albums, including Ballads Of the True West (1965), an experimental double record mixing authentic frontier songs with Cash's spoken narration, and Bitter Tears (1964), with songs highlighting the plight of the Native Americans. His drug addiction was at its worst at this point, and his destructive behavior led to a divorce from his first wife and canceled performances.

In 1967, Cash's duet with Carter, "Jackson", won a Grammy Award.

Cash quit using drugs in 1968, after a spiritual epiphany in the Nickajack Cave, when he attempted to commit suicide while under the heavy influence of drugs. He descended deeper into the cave, trying to lose himself and "just die", when he passed out on the floor. He reported to be exhausted and feeling at the end of his rope when he felt God's presence in his heart and managed to struggle out of the cave (despite the exhaustion) by following a faint light and slight breeze. To him, it was his own rebirth. June, Maybelle, and Ezra Carter moved into Cash's mansion for a month to help him conquer his addiction. Cash proposed onstage to June at a concert at the London Gardens in London, Ontario, Canada on February 22, 1968; the couple married a week later (on March 1) in Franklin, Kentucky. June had agreed to marry Cash after he had 'cleaned up'.<32> Rediscovering his Christian faith, taking an "altar call" in Evangel Temple, a small church in the Nashville area, pastored by Rev. Jimmy Rodgers Snow, son of country music legend Hank Snow. Cash chose this church over many larger celebrity churches in the Nashville area because he said that there he was treated like just another parishioner and not a celebrity.

[Demeter]

75. Apache Tears, and more

http://www.youtube.com/watch?v=MCAf_Ajh_KQ

http://www.youtube.com/watch?v=vmNKspKUaTQ&NR=1

http://www.youtube.com/watch?v=ni_EdsL-avU&feature=related

http://www.youtube.com/watch?v=h9U0tF0Vuew&feature=related

http://www.youtube.com/watch?v=jPHGZTmVKKE&feature=related

http://www.youtube.com/watch?v=YOBNYmtFHGo&feature=related

http://www.youtube.com/watch?v=mBx4l8OVUOQ&feature=related

[Demeter]

76. US Banks Reject Effort by UK Bank Execs to Rein in Pay

http://www.nakedcapitalism.com/2010/02/us-banks-reject-effort-by-uk-bank-execs-to-rein-in-pay.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

From the Independent:

http://www.independent.co.uk/news/business/news/us-banks-veto-socialist-pay-in-secret-talks-1912827.html

Chief executives from the world’s banks discussed the plans at a secret dinner held at Claridge’s, the London hotel, last October, at which several leading British bankers are said to have suggested that the sector should take greater responsibility for its part in the crash, and do more to reduce the vast bonuses paid to staff.

But the recommendations were met by stiff opposition from the US banks JP Morgan, Morgan Stanley and Goldman Sachs, according to one source. “Some of the US bankers were furious about attempts to reduce pay throughout the industry, arguing that any such move smacked of socialism and would be fiercely resisted,” the source said on Friday. “It’s not the way the Americans like to go about their business.”

Yves here. The evidence that US capital markets firms are firmly in the hands of hopeless sociopaths continues to mount.

The fact set is undeniable: the big firms in the industry engaged in a massive campaign of looting, of running enterprises in which the employees were consistently overpaid relative to the risks and true profits of the firms. The result was that they were overleveraged. The only reason the industry survived was due to massive public subsidies, from equity injections to special lending programs to super low rates to regulatory forebearance. By any right, the firms should have failed, and the bankruptcy course should have gone full bore after the pay earned in the bubble years as fraudulent conveyance.

The British bankers seem to understand:

1. The industry is responsible for the financial crisis and the toll it has inflicted on innocent bystanders

2. The industry should be very grateful indeed for all the emergency rescue, particularly since virtually nothing has been done to prevent the industry from resuming the same sort of profitable-looking reckless behavior that nearly drove the world economy off the cliff

3. Banks’ current profits are also due in significant measure to all that lovely cheap funding on offer from central banks, in effect an unexpected reward for having caused the crisis. Reader NYT pointed out:

GS gone from a privately funded balance sheet to a government funded balance sheet since the October meltdown. They paid only $6.5B interest on only $500B of debt in 2009. That’s about 1.3%. Given that some of their debt is long term debt (e.g Buffet’s 10% loan etc) issued prior to 2009, they must have replaced almost all of the $500B in debt with loans from the Fed.

Looks like the financial crisis worked out very well for GS. They are paying $25B a year less in interest than they paid in 2008 and it looks like no one is even talking about why GS should not be given this huge and ongoing government subsidy.

4. The wisest course of action is to try to resume as much of status quo ante as possible while keeping a low profile so that the public and officialdom will not decide to interfere in this juicy little racket. That means avoiding in engaging in the most press and public annoying behavior, namely, paying lavish bonuses, is not a very good idea right now

5. But the US banks are convinced of their divine right to feed at the trough

The astonishing bit is that the US banking execs have the temerity to self-restraint on pay “socialism”. They are benefiting from what most would call socialism for the rich, but is more accurately termed Mussolini-style corpocracy or good old fashioned pilfering from the public purse.

A successful investor would often say, “Little pigs get fed. Big pigs get slaughtered.” A lot of people are waiting for these big pigs to get their just deserts.

[Demeter]

77. Cyber-whistleblower stuns Latvia with tax heist

http://news.yahoo.com/s/ap/20100224/ap_on_hi_te/eu_latvia_hackers

Latvian officials struggled Wednesday to come to grips with an enigmatic group that stole millions of classified tax documents from government computers in a purported effort to expose waste and graft in Europe's weakest economy.

The massive data theft from the tax authority's computer system has raised concerns about cybersecurity in the Baltic country.

It has also embarrassed politicians and other public officials whose income and wealth — often many times the national average — are being exposed to the public at a time when Latvia is undergoing painful budget cutbacks to rebound from a severe recession.

News of the electronic security breach surfaced last week, when an organization calling itself the People's Army of the Fourth Awakening told Latvian TV it had downloaded millions of classified documents over several months from the revenue service's Web site.

One of the group's members, who uses the name "Neo" — apparently in reference to the hero of the popular "Matrix" films — has been making some of the documents available on the Internet.

On Wednesday "Neo" published salaries of members of Latvia's police force and, in comments on a Twitter account, said "I call on the police union to analyze the data and determine whether the salary reform is fair and to continue the fight against crime."

Earlier this week "Neo" released data showing that the CEO of Riga's heating company, Aris Zigurs, paid himself a 16,000 lat ($32,000) bonus last year — a hefty sum for a city-owned utility, especially at a time when many municipal workers have had their salaries slashed. Zigurs confirmed to Latvian media the data was accurate.

It is unclear where "Neo" and the other organization members — if they exist — are located, though "Neo" has indicated that he or she is currently abroad. Even "Neo's" gender remains a mystery, though local media believe it is a man.

"Who is Neo?" asked a Twitter entry on Wednesday. "Behind Neo's mask is something more than flesh, behind this mask is an idea that hopefully no one in power can stop."

While some government officials have questioned "Neo's" motives, many Latvians are supportive.

"There is very little trust in Latvia's institutions right now, so anyone who can expose the system is going to be a hero," said Juris Kaza, a political commentator and blogger.

Latvia's economy is the weakest in the European Union, with unemployment reaching 23 percent. It is currently carrying out painful social reforms, and many public employees have had their salaries slashed up to 50 percent.

Top government officials earn approximately 2,000 lats ($4,000) a month and in some cases more, while teachers have seen their monthly salaries slashed by approximately one-third over the past year to some 300 lats ($600).

Discontent has soared, making it possible for cyber-activists such as "Neo" to win people's admiration.

"Judging by the overall reaction, it seems that Latvians are getting some new heroes — a sort of Robin Hood," Maris Kucinskis, the head of parliament's national security council, told Latvian Radio on Tuesday.

The nation's security council discussed the breach and expressed concern that only 50 percent of the country's 175 state-run data systems have security oversight. President Valdis Zatlers called for immediate action to install proper security on all systems.

Computer experts concluded that the breach did not constitute a cyber-attack and was the result of poorly developed software and systems management.

Police, meanwhile, are searching for "Neo" and other suspects behind the data theft. Police chief Valdis Voins said Latvia has turned to other countries for assistance in the investigation.

"One thing is clear now — we're only at the beginning of a long investigation," police spokeswoman Ieva Reksna said.

[Demeter]

78. Elizabeth Warren on the Coming Commercial Real Estate Crisis; 3000 Community Banks at Risk

http://globaleconomicanalysis.blogspot.com/2010/02/elizabeth-warren-on-coming-commercial.html


Here are a couple of stories similar to thousands playing out across the country, and tens of thousands more to come. The second article gets to the heart of the upcoming commercial real estate bust.

The Minneapolis Star Tribune is reporting Brookdale Mall sold at auction for big markdown.

A sheriff's foreclosure auction produced just one bid -- from the mall's mortgage-holders, who bid $12.5 million.

Brookdale Center went on the auction block at a sheriff's foreclosure sale Friday, netting just one bid of $12.5 million from the shopping mall's lenders.

The bid from Brookdale Mall HH LLC was well below the $51.8 million owed on a $54.2 million mortgage by the property's owners, Brooks Mall Properties of Coral Gables, Fla.

Sears is its sole remaining anchor. In the last couple of years Macy's, Barnes & Noble and Mervyn's have all closed their stores. The mall also has lost other key tenants, such as Steve & Barry's. Almost 60 percent of its space is vacant, according to recent figures from NorthMarq.

Commercial Real Estate Crisis Coming

The following story headline masquerades as a local (D.C.) problem but the real story buried in the article is a few select quotes from Elizabeth Warren.

Please consider In D.C., more evidence that commercial real estate headed for foreclosure crisis.

A mortgage crisis like the one that has devastated homeowners is enveloping the nation's office and retail buildings, and few places are likely to be hit as hard as Washington.

The foreclosure wave is likely to swamp many smaller community banks across the country, and many well-known properties, including Washington's Mayflower Hotel and the Boulevard at the Capital Centre in Largo, are at risk, industry analysts say.

"There's been an enormous bubble in commercial real estate, and it has to come down," said Elizabeth Warren, chairman of the Congressional Oversight Panel, the watchdog created by Congress to monitor the financial bailout. "There will be significant bankruptcies among developers and significant failures among community banks."

Nearly 3,000 community banks -- 40 percent of the banking system -- have a high proportion of commercial real estate loans relative to their capital, said Warren, whose committee issued a report on commercial real estate last week. "Every dollar they lose in commercial real estate is a dollar they can't use for small businesses," she said. Individuals -- who saw their home values drop in the residential mortgage crisis -- would not feel that kind of loss, but, Warren said, a large-scale failure would "throw sand into the gears of economic recovery."

In Washington, the office vacancy rate stopped ballooning in the fourth quarter of last year for the first time since the first quarter of 2006, according to CoStar, although largely for an unfortunate reason: The space was being filled mainly by office workers hired to handle the plethora of bankruptcy filings and "workouts" of borrowers who need to renegotiate bad debt.

Do the math'

Nationwide, at least $1.4 trillion in commercial real estate debt is expected to roll over during the next three years. Warren said that half of commercial real estate mortgages will be underwater by the beginning of 2011. A fifth of residential mortgages are underwater now, she said.

Unlike residential mortgages, which often can be paid over 30 years, commercial real estate mortgages typically must be paid off or refinanced within five years. Commercial properties mortgaged in 2005, 2006 and 2007, at the height of the boom, are reaching their maturity date. "Do the math on this," Warren said. "This is a significant problem."

Do The Math Indeed

There is a strong potential to see a thousand commercial real estate bank failures in the next couple of years unless Congress acts to bail them out. Bernanke is unlikely to lift a finger as his concern is for the big boys, who he will support at any and all costs.

Of course no banks should be bailed out, and two wrongs do not make a right. Thus, the correct decision is to let failed banks fail. The last thing we need is further bank zombification.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

[DemReadingDU]

80. Thanks for Elizabeth Warren's honesty!

And thanks to Demeter who has keeps finding more and more articles alerting us to the impending crisis (s).


My circle of family and friends still don't have any clue, and it's staring them in the face, all those empty storefronts.

[Demeter]

79. AIG mulls sale of Asia arm to Pru

http://www.ft.com/cms/s/0/bcf45824-23cd-11df-8b20-00144feab49a.html

The board of American International Group is locked in talks this weekend to decide whether to sell its huge Asian business to Prudential of the UK for more than $30bn, or proceed with a planned listing of the unit.

People close to the situation on Saturday said the stricken insurance group had called a board meeting after Prudential stepped up the pressure to acquire AIA, one of the jewels in AIG’s crown.

Buying AIA would represent a stunning coup by Prudential and enable the UK group – which already books a third of its global sales in Asia – to become an insurance powerhouse in the region. However, it could also stretch its finances and face opposition from shareholders.

AIG’s board does not have to decide AIA’s fate this weekend but is expected to take a view on the competing merits of a sale and the estimated $20bn Hong Kong listing.

However, people familiar with the matter on Saturday said that there was a strong chance that a sale announcement could be made before Monday’s opening of the London market, where Prudential is listed.

“There are still a few issues to iron out which could scupper a deal but this could be announced soon,” said one person familiar with the matter.

The US Treasury and the New York Federal Reserve, which have an 80 per cent stake in AIG following repeated bail-outs of the insurer, were also being consulted, AIG insiders said.

Prudential declined to comment.

The US authorities will receive the bulk of the proceeds of any sale or initial public offering as part payment for the $80bn-plus that AIG owes them.

An outright sale of AIA to Prudential could enable AIG to raise more funds than by listing a stake in the unit on the Hong Kong stock exchange.

People close to the situation said that AIG was asking for more than $30bn for AIA although no decision on the final price had been taken.

However, some in the AIG camp are worried about Prudential’s ability to fund such a large deal and argue a listing would be a safer option for both the company and the US government.

Tidjane Thiam, Prudential’s chief executive, was in New York last week in an effort to persuade AIG’s management that his company had both the desire and the financial firepower to buy AIA.

If the sale goes ahead, the UK group will have to raise at least part of the funds through a large equity issue that would dilute existing shareholders. It could also sell some or all of its historic UK life business, which is growing relatively slowly, to help fund a deal.

Its UK unit business is coveted by Clive Cowdery’s Resolution acquisition vehicle, which bought Friends Provident last November and could combine the two.

However, the UK assets still provide a huge source of capital and cash flow to Prudential. The company’s ability to operate without its UK base would depend to a large degree on how any deal for AIA is funded and on the outlook for the underlying businesses.

People familiar with the matter said that Prudential had lined up financing options with JPMorgan, HSBC and Credit Suisse, among others.

For AIG, an outright divestment of AIA could mean a quicker repayment of the billions it owes US taxpayers. AIG is already in advanced talks with its US rival MetLife over the $15bn-$20bn sale of Alico, its international insurance arm.

AIA is the leading pan-Asian foreign insurer, followed by Prudential.

A cornerstone of AIG’s business for a century, it boasts 20m policyholders across 13 countries, employs 250,000 tied agents and makes aggregate operating profits of about $2bn a year.

Foreign insurers are flocking to strike deals in Asia given the high industry growth rates, fuelled by rising household incomes which are leading to a rapid take up of insurance products.

[Demeter]

81. Auerback: Bernanke Fesses Up: America Has No ‘Insolvency’ Issue

http://www.nakedcapitalism.com/2010/02/auerback-bernanke-fesses-up-america-has-no-%E2%80%98insolvency%E2%80%99-issue.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

By Marshall Auerback, a fund manager and investment strategist who writes for New Deal 2.0.

Usually, we dread the regular Congressional testimonies of the Fed Chairman. They generally constitute a mix of obfuscation on the part of Mr. Bernanke mixed with political grandstanding on the part of Congress. But occasionally, a glimmer of truth comes through, as occurred today in this exchange between the chairman of the Federal Reserve and Congressman Barney Frank:

Frank: Do you think there is any realistic prospect of America’s defaulting on its debt in the near future?

Bernanke: Not unless Congress decides not to pay….

So there you have it. If Congress doesn’t pass the debt ceiling, the Treasury can default. But this constraint is not operationally inherent in the monetary system. It is put there by the same Congress that could (and should) revoke the unnecessary constraints, much as the European Union could (if it chose to do so) eliminate its arbitrary rules limiting government expenditure. This is a problem of “willingness to pay” and not “ability to pay”, as the government is at all times in control of its spending process. In short, here we have the Chairman of the Federal Reserve openly acknowledging that, short of voluntary political constraints, there are no financial constraints on the ability of a sovereign nation to deficit spend.

To anticipate the usual objections that we usually encounter whenever we point this out, please note that this doesn’t mean that there are no real resource constraints on government spending; this should be the real concern, not financial constraints. Government spending should be analyzed in regard to its effects on the real economy, which means that it should, like Goldilocks, be neither “too hot” (or else inflation will result), or “too cold” (as is the case today, where we have an economy characterized by high unemployment and significant resource underutilization). Debating whether the social losses due to operating below full employment are higher than economic losses due to inflation or currency depreciation, are germane discussions to POLITICAL debate, but totally separate from the issue of national solvency.

So what’s with the Fed Chairman’s obsession with fiscal sustainability, when Bernanke knows that there is no insolvency issue?

There’s obviously a degree of self-interest here. As head of the nation’s central bank, Mr. Bernanke (like any other central banker) is keen to assert the primacy of monetary policy over fiscal policy, despite the fact that the former’s impact on real economic activity is far more ambiguous. The manipulation of interest rates may be used to control inflation and that inflation expectations may have an influence on the spreads at the longer end of the yield curve. But the way in which interest rate manipulation (that is, monetary policy) impacts on inflation is unclear: rising interest rates certainly increase costs for borrowers and may choke off aggregate demand but equally they increase incomes for those with interest-rate sensitive portfolios which may add to aggregate demand. Fiscal policy, by contrast is far more targeted in terms of the impact it seeks to achieve.

There is also a political dimension: the financial class (whose views still reflect the predominant economic thinking at the Fed and on Wall Street), benefits from the deflationary bias imparted as a consequence of these artificial financing rules, which are remnants of the gold standard era. But in reality this is a denial of the essence of the fiat monetary system that we now live in and there is thus no economic basis for these constraints. Keeping unemployment high provides a strong means of disciplining wage demands and enhancing profits.

A stable ratio of federal debt to GDP may or may not be the right policy objective. But it is neither more nor less “sustainable,” under different economic conditions, than a rising or a falling ratio and Mr. Bernanke implicitly recognized that in his testimony today. We wish he had gone further. It is not, as Professor James Galbraith has argued, “a hidden evil. It is not a secret shame, or even an embarrassment. It does not need to be reversed in the near or even the medium term. If and as the private economy recovers, the ratio will begin again to drift down. And if the private economy does not recover, we will have much bigger problems to worry about, than the debt-to-GDP ratio”.

The public is told that government spending causes inflation and is warned that if we do not control the budget deficits that a Weimar Germany fate awaits us. Conveniently forgotten is that German production capacity was either significantly damaged by WWI, or redirected toward output required by the military. Additionally, Weimar Germany faced large foreign claims from war reparations, as well as exploding budget deficits. By 1919, it is reported the German budget deficit was equal to half of GDP, and by 1921, war reparation payments represented one third of government spending (the so-called London ultimatum required annual installment payments of $2b in gold or foreign currency, in addition to a claim on just over a quarter of the value of German exports).

Neither of these conditions remotely pertains to the US today. In the highly unlikely event that inflation started to accelerate in the US, a highly non-unionized workforce has neither the bargaining power nor the access to credit to keep up with rising prices. Household claims on real resources would wither under inflation as real wages would simply fall behind.

The reality is that all questions of “national insolvency” or fiscal sustainability go by the wayside whenever Wall Street or some other major corporate interest demands a hand-out from the government.

And if they don’t get satisfaction from one party, they’ll shift their support to the other, as Wall Street is doing today According to new data compiled for The Washington Post by the Center for Responsive Politics, the securities and investment industry went from giving 2 to 1 to Democrats at the start of 2009 to providing almost half of its donations to Republicans by the end of the year. Similarly, commercial banks and their employees also returned to their traditional tilt in favor of the GOP after a brief dalliance with Democrats, giving nearly twice as much to Republicans during the last three months of 2009.

The naked self-interest of the financial sector trumps all. All this talk about “free markets” and the virtues of “private market disciplines” go out the window should the actual discipline of markets impose losses on these institutions. Virtually the moment the handouts are made, in comes the discussion of national insolvency and the public mobilization against further government spending. Never do we step back and ask the question – what is the public purpose being served by net government spending? Perhaps this is the line of enquiry that should be directed at Ben Bernanke the next time he appears before Congress and lectures us on fiscal and monetary policy.

[Demeter]

82. WSL RECOMMENDS THE FOLLOWING BLOGS: Ozy Please Note

http://www.ritholtz.com/blog/

http://www.businessinsider.com/clusterstock

http://www.calculatedriskblog.com/2010/02/unofficial-problem-bank-list-increases_20.html

features list of troubled banks

http://dealbreaker.com/

http://epicureandealmaker.blogspot.com/2010/02/mouth-of-sauron.html

http://www.goldmansachs666.com/

http://macro-man.blogspot.com/

http://www.nakedcapitalism.com/

http://stocktwits.net/thereformedbroker/

http://www.zerohedge.com/

Oddly enough, they don't list our endeavors....but we aggregate instead of originate...

[DemReadingDU]

83. Who/what is WSL?

[Demeter]

89. Typo--WSJ

[DemReadingDU]

91. lol!

How silly of me not to figure that out!

:rofl:

[Robbien]

86. Hard to believe anyone at the WSJ reads financial blogs

Even harder to believe that they can recognize good financial writing when they see it. Since Murdoch took over the WSJ really sucks.

But they didn't do too bad with the list. IMO six out of the ten they listed are pretty good blogs which I also follow.

The other four, golmansachs666, macroman, stocktwits and epicurean are eh.

[AnneD]

84. Sunday Morning Coming Down.....

I cannot let the day pass with out mentioning one of my favourite Cash song. If you haven't seen Walk the Line, I encourage you to. It really is a story of the redemptive healing power of love. It is about a sensitive young soul scared by poverty and abuse and racked with survivors guilt. He tries to cope with religion and drugs but in the end it was the power of love that made him whole and gave him back his life.

Although Kris Kristoffersen wrote it, Johnny recorded it (bringing Kris into Nashville prominence as a gifted songwriter). I like this song because it captures the despair and loneliness but also the desire we all feel to belong.

www.youtube.com/watch?v=HBWFJ85n_w0&feature=related


a bonus

Johnny Cash and Joni Mitchell in a duet

www.youtube.com/watch?v=aql_T-1W3NU&feature=related

Johnny had Joni on his show many times. This is Joni at her best capture on Johnny's show of course.

http://www.youtube.com/watch?v=yMc_Q0bBRjg&feature=related

Johnny had an ear for rising talent.

[Dr.Phool]

87. What's a good natural disaster without Pat Robertson?

FEBRUARY 27, 2010 12:41PM
Robertson: “God Even Angrier with Chile than Haiti"




Citing what he described as the “the persecution of a great hero who rid their land of Godless communists” as a possible cause, prominent TV evangelist and amateur seismologist Pat Robertson today argued that the 8.8 magnitude of the earthquake that struck Chile early this morning should serve as a warning to the population that “God is even angrier with them than he is with the people of Haiti.”

“If I had to guess, I’d say it must have to do with Chile’s persecution and attempted prosecution of their great former leader, and a personal hero of mine, Augusto Pinochet – who, it should be noted, had never been convicted of a crime when the Lord called him home three years ago.” The popular host of ‘The 700 Club’ and longtime bingo circuit icon also added, “General Pinochet not only assisted the CIA in the overthrow of Chile’s Marxist government, but is widely credited with personally arranging the meetings of hundreds, perhaps thousands, of his countrymen with Jesus.”

General Pinochet, who spent the last eight years of his life fighting prosecution on human rights and other charges before succumbing to congestive heart failure in December 2006, could not be reached for comment, even by Robertson. The General–turned-Dictator has long been considered a transformative figure in the field of Crimes Against Humanity as a result of his landmark policy of ‘Forced Disappearance’, and was even honored in 1998 with the first-ever arrest warrant for a former head of state under the principle of ‘universal jurisdiction’ by Spanish Judge Baltasar Garzon, who is currently investigating former Bush Administration officials for War Crimes and Crimes Against Humanity.

For his part, Robertson, who reportedly lobbied then-President George W. Bush on behalf of former Liberian Dictator and accused Human Rights criminal Charles Taylor in exchange for lucrative gold mining contracts, says that he is “praying that the people of Chile will heed this warning, and never again blaspheme against God and international free-market commerce by nationalizing their most precious natural resources.”
http://open.salon.com/blog/the_desperate_blogger/2010/02/27/robertson_god_even_angrier_with_chile_than_haiti

[bread_and_roses]

88. Please tell me this is from the Onion?

“praying that the people of Chile will heed this warning, and never again blaspheme against God and international free-market commerce by nationalizing their most precious natural resources.” - so "free market commerce" is right up there with God? Even this atheist is shocked. I mean, we've ACTED like it is lo these thirty + years or so, but to say it aloud? I imagine there are a lot of good catholics in Chile who'd be shocked to their very imaginary souls at such a comparison.

[Demeter]

90. He'll Get a Seat By the Fire, in Hell

the Devil takes care of his own