Our (US) Heart Belongs to Daddy (Warbucks) Weekend Economists Salute the Old Man June 18-20, 2010

[Demeter]

The word came to me from the Onion, of all places. Little Orphan Annie will cease publication this weekend, after 85 years of blind faith in America's corporate class.



A brief history from Toonopedia:

http://www.toonopedia.com/annie.htm

LITTLE ORPHAN ANNIE
Medium: Newspaper comics
Distributed by: Chicago Tribune Syndicate
First Appeared: 1925
Creator: Harold Gray

The strip debuted on August 5, 1925...the idea of a self-reliant kid, alone against the world...

"Gray's art style was stiff and primitive, and his characterizations unsubtle in the extreme. He has been accused, by almost everyone commenting on his work, of injecting a great deal of his very conservative political point of view into the strip. About the only thing he had going for him was an amazing ability to grab the reader's interest, drag him into the story, and make him come back the next day for another installment. But that's all a master storyteller — and Gray was a master — needs.

The story formula was simple — rags to riches and back again, with a healthy dollop of homespun philosophy made up of grit, cheer, self-reliance, and good ol' pluck. The strip opened in an orphanage right out of Dickens, but within two months, Annie met Oliver "Daddy" Warbucks, the self-made millionaire who introduced her to a life of ease and comfort. She and Daddy were soon separated, and Annie had to make her own way in the world, her only companion a large, nondescript dog named Sandy. Daddy came back into her life, but was soon gone again, in a cycle that Gray repeated over and over until his death in 1968. Whatever her station, Annie's spirit was unquenchable as she buckled down and did whatever it was that needed to be done, foiling any number of thugs, politicians, and other crooks along the way...

Annie became a radio star in 1930, and remained on the air for 13 years. In 1932, she was the subject of her first movie, from RKO; and the second, from Paramount Pictures, followed six years later. Along with Dick Tracy, Terry & the Pirates and other Tribune Syndicate stars, she appeared in Dell's Super Comics from 1938-49; and scattered issues of her own Dell comic appeared from 1937-48. She was honored by appearing on a U.S. postage stamp in 1995, as were Blondie, Bringing Up Father, Rube Goldberg's inventions, and several other "Comic Strip Classics" .

In 1977, she became the subject of a Broadway musical, titled Annie, which ran over 2,000 performances before it closed in 1983. In '82, that stage production formed the basis of her third movie. The play is still revived from time to time, most recently in a 1999 episode of the Walt Disney TV show. It even had a sequel, Annie 2: Miss Hannigan's Revenge, which opened on Broadway in 1990.

After Gray's death, several cartoonists tried to fill his shoes, but only he was capable of dishing up that peculiar mix of schmaltz and simple pragmatism without lapsing into self-parody. In 1974, the syndicate gave up, and simply started re-running old strips by Gray. Following her success on Broadway, however, the strip was revived, retooled and retitled. Under the name Annie, it was for two decades written and drawn by Leonard Starr, whose earlier strip, Mary Perkins On Stage, folded in 1979, just before he began his long run as Gray's successor. Starr drew an older Annie than Gray had (Gray's was perpetually 11 years old); and while making an attempt to capture something of Gray's style, did not do the strip as a slavish imitator of its creator. Starr retired in February, 2000. In June of that year, the new writer/artist team, Jay Maeder and Andrew Pepoy, gave Annie a complete makeover, maing her look almost like a denizen of the modern world."

But WEE is more interested in Annie's Sugar Daddy, Oliver Warbucks, the obscenely wealthy, FDR-hating industrialist, and we shall pursue his ilk below.

http://www.youtube.com/watch?v=w0La15_Ziwo

[Tansy_Gold]

1. first rec!

Now I guess I'll do some LOA research so I don't come across tooooo ignorant this week-end.


TG

[Demeter]

3. LOLOLOL!

How's that software update coming, TG?


Would you believe some troll has already un-recced?

[Tansy_Gold]

37. I think the trolls pounce on EVERYTHING just because they can

My work is done and I have a nice extra-long week-end off, a kind of mini-vacation during which I am going to give MY projects top priority for a change.


The conversion problems are from implementation, not the software itself. The company has no one posing the "What do we do if. . . . " questions, so when the ifs arise, they're all stumped. And they arise ALL THE TIME.

But I scheduled Friday, Monday, and Tuesday off, and I'm not even going to think about that shit.

Why should I, when there's so much more important shit to think about?




Tansy Gold, who has already crossed two items off her "to do" list!

[emilyg]

51. We got some sick people here. K/R

[Demeter]

2. No Banks Down Yet

But the night is young.

I will have to step out for a 7:30 emergency co-op meeting, so feel free to post if you see one (or more) go blooey.

In fact, feel free to post anything (within reason) on economics, politics, our theme the weather, etc....Just try not to get us locked out, again. i feel a bit like the cat on the stove...once burned, twice shy.

[Demeter]

52. ONE BANK DOWN AT 9:45 PM

Nevada Security Bank, Reno, Nevada, was closed today by the Nevada 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 Umpqua Bank, Roseburg, Oregon, to assume all of the deposits of Nevada Security Bank.

The five branches of Nevada Security Bank will reopen on Monday as branches of Umpqua Bank...As of March 31, 2010, Nevada Security Bank had approximately $480.3 million in total assets and $479.8 million in total deposits. Umpqua Bank did not pay the FDIC a premium for the deposits of Nevada Security Bank. In addition to assuming all of the deposits of the failed bank, Umpqua Bank agreed to purchase essentially all of the assets.

The FDIC and Umpqua Bank entered into a loss-share transaction on $368.2 million of Nevada Security 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 $80.9 million. Compared to other alternatives, Umpqua Bank's acquisition was the "least costly" resolution for the FDIC's DIF. Nevada Security Bank is the 83rd FDIC-insured institution to fail in the nation this year, and the third in Nevada. The last FDIC-insured institution closed in the state was Sun West Bank, Las Vegas, on May 28, 2010.

[DemReadingDU]

53. delete

Demeter was quicker!

[Demeter]

4. When We Last Left Our Heroine...

http://www.newser.com/story/92356/little-orphan-annie-bows-out-mysteriously.html

Little Orphan Annie Bows Out, Mysteriously
Comic strips ends 85-year run 'for now'

After 85 years of adventures, Little Orphan Annie made her final appearance in the funny papers today, and she left behind a cliffhanger. The last panel of the strip consists of a yellow background with black lettering reading "And this is where we leave our Annie. For now—" She won't be forgotten, and in fact, she won't even really be gone, writes comics expert Michael Cavna of the Washington Post.

Annie was living on borrowed time even before she became a casualty of the crisis in the newspaper business; toward the end, she wasn't even in 20 outlets. But musical theater guarantees she'll live on, says a rep for syndicator Tribune Media Service. "The musical refashioned the property and gave us another 30 years of original Annie in print," he explains.

http://www.nytimes.com/2010/06/15/books/15arts-LITTLEORPHAN_BRF.html

Little Orphan Annie Says Goodbye For Now

The lizards have ceased leaping. On Sunday, after an 86-year run as the pluckiest pupil-free young adventurer in the funny pages, Little Orphan Annie (above with her dog, Sandy) appeared in her last newspaper comic strip. In May, Tribune Media Services announced that it was ending the syndication of “Annie,” the comic strip chronicling that red-headed ragamuffin created by the cartoonist Harold Gray in 1924. But fans hoping for some narrative closure may have had better luck with the “Lost” finale. The last “Annie” comic concluded with its title character missing in Guatemala, and, according to a caption, Daddy Warbucks “resigning himself to Miss Annie’s being lost forever.” A final panel bore the legend, “And this is where we leave our Annie. For now — ” But Steve Tippie, vice president of marketing and licensing at Tribune Media Services, said, “Annie is not dying, she’s moving into new channels,” according to an interview with BBC News (which also looks at one of Annie’s earliest comic adventures). He said the character would continue to appear in graphic novels, games and in online and mobile projects.

http://www.thesundaily.com/article.cfm?id=48140

No more tomorrows for Orphan Annie strip

....Gray had two rules for his character: Annie could never reach a “happy ending” and she could never grow up. The Annie franchise later grew to include a 1930s syndicated radio show, a 1977 Broadway musical, a 1982 movie, and a 1995 commemorative stamp.

At the height of its popularity, the strip was carried by hundreds of newspapers, but a mere 20 papers carried the cliffhanger finale in which Annie tangled with the Butcher from the Balkans in the last panel.

The strip’s shrinking distribution is a result of the ongoing shake-up in the newspaper industry: declining circulation, a preference for comics that are jokey or humorous rather than adventure-driven, and the defection of younger readers to the Web

“Newspaper comic strips are going the way of the radio drama and the soap opera, long gone art forms,” said Heidi MacDonald, editor of The Beat, The Blog of Comics Culture on the industry Website comicsbeat.com.

Steve Tippie, vice-president for TMS Licensing and New Market Development, said: “Over the years, Annie has generated an enormous amount of international awareness and affection through three generations – and now it’s time to go where this new base of Annie fans finds their entertainment.”

TMS plans to modernise and repackage the franchise for film, television, and digital media in the hopes of reaching a larger, more global, cross-over audience of children and adults in the style of the Harry Potter franchise.

AIN'T GONNA HAPPEN, TMS. HARD TO BE A KID'S CARTOON IN A PAPERLESS AGE...

[Tansy_Gold]

39. I dunno about that. Kids are going paperless very quickly

and at younger and younger ages.

Just think of all the trees they're saving!

[Demeter]

43. The Funnies Were the Kid's Section

they encouraged reading, parent-child interaction, etc.

It's just not the same on line. Especially for the littlest.

[snot]

89. My niece is addicted to video games AND to MANGA.

[Demeter]

5. BRIC-BATS (Brazil, Russia, India, China--the Developing Nations)

Brazil to suspend action in US cotton dispute

Brazil said that it would suspend sanctions on US imports in retaliation for illegal American cotton subsidies, temporarily defusing one of the most contentious disputes in international trade
Read more >>
http://link.ft.com/r/LVA6WW/PRBC5G/LSLXF/BMSZ0F/YHO5QO/ZH/t

[Demeter]

19. China attempts to soothe worker unrest

Wen: ‘We must care for, love and respect migrant workers, especially the new generation of young migrant workers’
Read more >>
http://link.ft.com/r/EB8122/YHAA25/1O51V/72IG8C/WL8V2P/PJ/t

[Demeter]

20. Beijing pledges more investment in Greece

A senior Beijing official visiting Athens has pledged to promote further investment in Greece by Chinese companies in spite of the country’s sovereign downgrade to junk status
Read more >>
http://link.ft.com/r/EB8122/YHAA25/1O51V/72IG8C/WL8V23/PJ/t

[Demeter]

27. Investor optimism way down on China and energy

http://www.asianinvestor.net/News/215673,investor-optimism-way-down-on-china-and-energy.aspx

Investors' growth expectations look to be 'double-dipping', with optimism on the Chinese economy at its lowest since January 2009 and expectations on global growth and corporate profits at their lowest since March 2009, according to Bank of America Merrill Lynch's fund manager survey for June.

[Demeter]

30. Record number of Chinese says prices too high: central bank

http://news.xinhuanet.com/english2010/business/2010-06/17/c_13355747.htm

A record number of Chinese said current prices were "too high to be acceptable", according to survey results released on Thursday by the People's Bank of China (PBOC), the central bank.

The survey, published on the PBOC's website, indicated that 58.9 percent of the respondents, a record high in the past decade, said current prices were too high, while satisfaction with consumer prices fell to 21.7 percent in the second quarter, 4.2 percentage points lower than in the first quarter.

China's consumer price index (CPI), a main gauge of inflation, hit a 19-month high with a 3.1 percent year-on-year rise in May, surpassing the target of 3 percent annual inflation set by the government in March.

During the first five months of 2010 China's CPI rose 2.5 percent year on year. On June 12, the National Development and Reform Commission projected a 2.6 percent growth in CPI for the first half of this year.

The survey also said 72.5 percent of the respondents held that current home prices were "too high to be acceptable". The percentage figure began to climb during the second quarter of last year and hit a record high in the second quarter of this year.

Consumers' expectations for further increases in home prices has weakened, with 29.3 percent of the respondents expecting gains in property prices, down 10 percentage points from the first quarter.

Also, the percentage of participants who were prepared to buy homes in the next three months dropped to 15.5 percent, the second consecutive quarterly decline, according to the survey.

The survey came after home prices in the country's 70 large and medium-sized cities rose 12.4 percent year on year in May after an increase of 12.8 percent in April, a record high not seen since July 2005.

[Demeter]

31. China may adjust stake in Fannie

http://www.chinadaily.com.cn/bizchina/2010-06/18/content_9988291.htm

Analyst: Steps needed to ensure security of nation's dollar assets

BEIJING - The delisting of Fannie Mae and Freddie Mac, the largest US home funding companies, on US securities exchanges may force China, the largest holder of their mortgage bonds, to adjust its holdings, but large-scale selling is unlikely, said analysts.

And China should demand more active measures from the US side to ensure the security of its dollar assets, said Lei Yanhua, a researcher with the Chinese Academy of International Trade and Economic Cooperation affiliated to the Ministry of Commerce.

The Federal Housing Finance Agency (FHFA) on Wednesday ordered Fannie Mae and Freddie Mac, taken under government control in September 2008 during the financial crisis, to delist their common and preferred stock from the New York Stock Exchange (NYSE) and any other national securities exchange.

The decision does not reflect on either enterprises' current performance or future direction, nor other findings or on FHFA's role as a regulator, said Edward J. DeMarco, FHFA acting director.

But it could be damaging to Chinese institutions holding mortgage bonds of the two companies.

China was the largest foreign creditor of Fannie Mae and Freddie Mac, holding mortgage bonds worth between $300 billion to $400 billion even after the financial crisis erupted and worsened in 2008, less than 20 percent of China's official foreign exchange reserves, according to various unofficial estimates.

"Delisting would make the bonds less attractive to investors and affect their liquidity," said Dong Xian'an, chief macroeconomic analyst with Industrial Securities.

The toughest time has passed for the two companies and they are "too big to fail", said Lei Yanhua. But after the delisting, their new financing would lead to a decline in the prices of bonds held by China, he said.

Ding Zhijie, head of School of Banking and Finance at the University of International Business and Economics, also said bond value held by China is quite worrisome as market confidence may slide after the delisting and put downward pressure on the bond prices after the order was issued.

There are no indications that there will be any negative impact on the payment of interest due, given the huge quantity of such bonds China holds, but the nation would probably resort to short-term market transactions based on its judgment of the market situation, Dong said.

It is unlikely, however, that China will dump the bonds because it is still possible their prices will rise, said Huang Yiping, an economist with the China Center for Economic Research at Peking University.

"The US government would not give up on these two institutions whose housing mortgage loans account for about half of the nation's total," he said. "It would be inadvisable to sell the bonds on a large scale when the prices already hit the trough," he said.

[amandabeech]

55. Of course, it may be that China's wages and salaries are too low.

Either prices come down or compensation goes up to keep the Chinese masses from becoming restive.

No wonder China is totally intransigent on the yuan.

[Demeter]

73. Strikes in China signal end to era of low-cost labour and cheap exports

http://www.guardian.co.uk/world/2010/jun/17/china-strikes-economy

The Chinese Communist party called on employers to raise salaries and improve training for workers today, as Toyota became the latest foreign firm to be hit by a wave of high-profile strikes.

The People's Daily, the mouthpiece of the ruling party, warned that the country's manufacturing model faced a turning point as demographic and social changes slowed the influx of low-cost labour from the countryside.

Coming a day after the premier, Wen Jiabao, made similar comments, the editorial suggests the authorities may be encouraging businesses to restructure the economy by putting less emphasis on cheap exports and more on higher-value goods and domestic consumption.

For most of the past 30 years, China's economic growth has been fuelled by low-cost migrant labour. This has helped raise national competitiveness, attract foreign investors and keep consumer prices lower across the world. But members of a new generation of migrants are less willing to endure hardship and many have successfully gone on strike to demand better conditions.

Without mentioning strikes, the People's Daily said China should adjust to a tighter labour market by improving skills, creating more service-sector jobs and giving workers more cash to spend. This echoed a speech a day earlier by Wen, who said a new generation of migrant workers should be given improved conditions .

"Your work is glorious and should be respected by society at large. Migrant workers should be cared for, protected and respected," he told workers at the construction site for the No 6 subway in the capital. "The government and the public should be treating young migrant workers like their own children."

According to labour activists, there have been numerous strikes in recent years, though few get reported in the media. Chang Kai, professor of labour relations and law at Renmin University, said the number had increased by 30% per year.

Their impact has grown as the "one-child" family planning policy starts to thin the bulge in the working-age population. This demographic change in the balance of labour supply and demand has added to improved worker organisation and greater activism at high-profile foreign firms.

Japanese firms have disproportionately been the focus of the reported strikes. The Toyoda Gosei car parts plant, in Tianjin, was shut down by a strike this week until the management promised to negotiate higher wages.

Three Honda plants in Guangdong have been affected, along with a Hyundai factory in Beijing and a Taiwanese rubber products manufacturer in Shanghai. According to Xinhua news agency, the fast food franchise KFC has conceded to a union demand for minimum monthly pay of 900 yuan (£90), up by 200 yuan.

In most cases, however, workers have organised outside the unions, which are seen as close to management and the party. This has sparked commentaries in local media urging unions to mediate more effectively between workers and employers.

Having seen how the Solidarity movement in Poland helped to overthrow a communist government that stopped representing its interests, China's leaders do not want to alienate the labour force. So far, there is no sign of any mass, nationwide protests. This week's statements of support for workers' rights suggest the politburo wants to keep on the right side of the activists.

[amandabeech]

138. I've seen similar articles in the past couple of weeks,

but this is the best one.

This is exactly what I was trying to say.

Interesting that the Japanese are being hit hardest.

Old, nasty wounds not cauterized tend to fester.

[Demeter]

65. China and other countries buy US Treasury debt

http://www.latimes.com/business/la-fi-0616-foreign-capital-20100616,0,5560197.story

China boosted its holdings of U.S. Treasury debt in April for the second straight month as total foreign holdings of U.S. government debt increased.

China's holdings of U.S. Treasury securities rose by $5 billion to $900.2 billion in April, the Treasury Department said Tuesday. Total foreign holdings rose by $72.8 billion to $3.96 trillion.

The sizable gains are being driven by fears that Greece and other European governments could default on their debt. Worries over possible defaults have sparked a flight to safety and that has benefited U.S. Treasury securities. Treasurys are considered the world's safest investment — the U.S. government has never defaulted on its debt.

The April increases eased concerns that lagging foreign demand will force the U.S. government to pay higher interest rates to finance its debt with private economists forecasting strong gains in May as well because of the debt crisis.

"We will state the obvious that flight to safety will most likely continue to favor the United States in the second quarter," said Win Thin, senior currency strategist at Brown Brothers Harriman & Co. in New York. "Given that the European crisis intensified in May, we would expert further large-scale inflows."

Gregory Daco, U.S. economist at IHS Global Insight, said that demand for U.S. debt was also being helped by the fact that the profit outlook for many U.S. companies is bright and the U.S. economy is forecast to grow at a stronger pace this year than Europe.

China is the largest foreign holder of Treasury securities. The monthly gains in March and April came after six consecutive months when China was either reducing its U.S. holdings or keeping them constant. The stretch raised concerns that China might shift money away from Treasury securities.

The 1.9% rise in total holdings of U.S. debt in April followed an even bigger 3.5% increase in March.

The Treasury reported that net purchases of long-term securities, covering U.S. government debt and the debt of U.S. companies, increased by $83 billion in April. That follows a record monthly gain of $140.5 billion in March.

The higher interest in U.S. bonds has helped push interest rates lower. It's a welcome development for the government, which faces the task of financing record federal budget deficits. The federal deficit hit an all-time high of $1.4 trillion last year. It is expected to remain above $1 trillion this year and in 2011 as well.

Japan, the No. 2 foreign holder of Treasury securities, also increased its holdings in April. It boosted them by $10.6 billion to $795.5 billion.

Other countries registering gains in their holdings in April were the United Kingdom and various oil exporting nations.

[Demeter]

66. More bad loan woes on way

http://www.chinadaily.com.cn/business/2010-06/16/content_9979531.htm

China's top banking regulator on Tuesday said the country would face more bad loan pressure this year and warned against growing risks embedded in lending to the property sector and local government units.

As the country's economic restructuring intensifies, the possibility of some credit assets evolving into "substantive risks and losses" has increased in 2010, China Banking Regulatory Commission (CBRC), the nation's top banking watchdog, said in its annual report.

After a record 9.6 trillion yuan loans flooded the market last year to shore up flagging economic growth, the regulator has repeatedly urged Chinese banks to control the pace of lending this year and is giving special attention to lending risks in the property sector.

"With increasing uncertainty in the property sector, imprudent behavior in personal housing loans is likely to rise and a chain effect may reappear in lending to real estate developers," the CBRC said in the report.

With the total outstanding loans for property sector standing at 7.33 trillion yuan as of the end of 2009, the regulator is asking commercial lenders to conduct quarterly stress tests of property loans in case of massive loan defaults following the government clampdown on the property sector.

The government has unveiled a barrage of measures to cool the country's red-hot property market since April, widely seen as a necessary move to head off asset bubbles, but these steps have caused concerns that the clampdown might add more volatility to the property sector.

China's property prices have so far shown little sign of easing, rising 12.4 year-on-year in May, down from the record expansion of 12.8 percent in April.

In the 128-page annual report for 2009, the fourth of its kind since 2006, the banking regulator also expressed concerns over "quite large latent risks" in lending to local investment vehicles, the entities set up by local governments to help finance public works projects....

MORE AT LINK

[Demeter]

111. China vows increased currency flexibility

China on Saturday said it would increase the flexibility of its exchange rate regime, in an apparent concession to US pressure for Beijing to let the renminbi rise.

The issue was threatening to overshadow next weekend’s meeting of the G20 heads of government in Toronto, with President Barack Obama calling on Friday for currency flexibility as an essential part of the global economic recovery.

The statement, by the People’s Bank of China, said that there was no basis for a large-scale appreciation of the currency. But it appeared to suggest that the renminbi would be allowed to resume appreciating slowly within a narrow but movable band.
Read more >>
http://link.ft.com/r/BLH300/NSTVRU/HI3M9/QFOF9R/XT647R/MQ/t

[amandabeech]

139. Probably everyone who reads this will think, "I'll believe it when I see it." n/t

[Demeter]

6. DUBAI-DUBAI-DOO

Blow for Dubai World asset sale

Dubai’s sale of Inchcape Shipping Services, a flagship corporate asset, has been dealt a blow after prospective bidders learnt of an investigation they believe the US Department of Justice is conducting into the business
Read more >>
http://link.ft.com/r/R5WAEE/HDNT1R/06MUC/FXN4VE/8A49NP/CM/t

[Demeter]

7. HOME ON THE RANGE

US companies tap cash piles for share buy-backs

US companies are signalling a desire to buy back their own shares at the highest rate in months as record levels of cash pile up on balance sheets
Read more >>
http://link.ft.com/r/R5WAEE/HDNT1R/06MUC/FXN4VE/6VMER3/CM/t

[Demeter]

9. MetLife chief slams US financial reforms

The head of MetLife, the largest life assurer in the US, has criticised the financial reforms being finalised by Congress, saying some measures betray a ‘total misunderstanding’ of the insurance industry and could hit the sector hard
Read more >>
http://link.ft.com/r/R5WAEE/HDNT1R/06MUC/FXN4VE/RNLC7Y/CM/t

[Demeter]

10. US states query Google’s Street View data

Google is likely to face a co-ordinated inquiry from multiple US states into its collection of data from unsecured wireless networks
Read more >>
http://link.ft.com/r/R5WAEE/HDNT1R/06MUC/FXN4VE/QF10ZY/CM/t

THE SPOOKS ARE JUST JEALOUS

[Demeter]

14. 'Circuit breakers' tripped for the first time

The S&P 500 circuit breakers, which began operating this week, were triggered for the first time when shares in the Washington Post Company doubled in price inside the space of one second
Read more >>
http://link.ft.com/r/P75VYY/40WDNQ/3CWTA/XTZPKL/M9NH65/RF/t

[Po_d Mainiac]

50. WaPo was not alone

snip
Kaufman pointed to a one-minute plunge in Diebold's share price that saw the stock go from $28 per share at 12:22 p.m. EDT to $18, a 35% drop that occurred three minutes before news outlets began reporting the settlement had been finalized.

By 12:40 p.m. EDT, he said, Diebold's stock had returned to $28 per share.

http://online.wsj.com/article/BT-CO-20100616-710635.html?mod=WSJ_latestheadlines

80% of all transactions are now generated via HFT servers....The markets aren't broken...They are totally F**KED

[Demeter]

83. Just for Po--From Annie

Daddy Warbucks: I never thought I'd get used to a girl.
Annie: Girls are easier to get used to than boys. Look how used to Miss Farrell you are. She does all the work around here, and you don't even know her first name.
Daddy Warbucks: I do, it's Grace.
Annie: She thinks you're the greatest thing since sliced bread.
Daddy Warbucks: I beg your pardon?
Annie: I know it's none of my business, but you never notice anything!

[Po_d Mainiac]

106. :smile:

It might have taken half a century, but I now walk without getting my knuckles muddy.

The bride has an old dishwasher.........me

[Demeter]

33. Most GM plants to stay open all summer

http://www.freep.com/article/20100618/BUSINESS01/6180416/1320/Most-GM-plants-to-stay-open-all-summer

[amandabeech]

57. Hope that helps the local scene out there, Demeter. n/t

[Demeter]

62. It isn't any more jobs, just not fewer.

We really need more.

[amandabeech]

105. Yes, you do. The whole state and practically the whole country do, too.

Last night I saw a bit of the "Ed" show on TV.

Ed has been touring the country talking about jobs or something. His last stop was the Denver area, and one of the folks in his crowd had started a business making garden implements and other products that last more than two seasons.

Ed held up a nice-looking brass garden hose nozzle--you know the kind that makes a spray or a hard stream as you like. It was made in the Denver area and looked like you wouldn't have a buy a new one from Wally World any time soon. If I had a house, I'd buy one. Unfortunately, Ed didn't say where you could buy one or where you could call to order one.

Personally, I'd like to know where I could buy a decent toaster oven. I read an article recently about folks wanting better power tools, but not needing true professional grade.

I'm just a dumb lawyer, and I don't know a thing about engineering or manufacturing or marketing, but I wonder what it would take to find some abandoned rust belt factory, some 50-ish people who still know how to do manufacturing, make a few quality things, and sell them to upscale places. Of course, it would probably be useful to put "Made in Germany" on them so the new owners would buy them, but hey--it'd probably worth settling a few lawsuits quietly to do so.

Well, I guess that I can dream, can't I?

Well, someone should dream, because it doesn't look like the White House is doing it.

[Tansy_Gold]

107. Quality goods do not produce a steady cash flow

for the non-working "investor" class.

Quality goods are produced by people who care to produce quality goods, and not generally by wage slaves forced to turn out more and more and more cheap crap. When the vicious cycle becomes produce more to buy more to produce more to buy more, we're trapped.

The difficulty is finding the balance between production for its own sake and production for comfort. But it's truly amazing how comfortably one can live on a smaller income if one simply learns to get off the consumption merry-go-round.


A couple of weeks ago an acquaintance announced that she was going to be downsizing her living arrangements following the recent death of her husband. She asked if anyone was interested in her antique sleigh bed which had been in her family since it was made in about 1870. She said she will not give it to any of her children or grandchildren because they will just trash it, as that is the only way they know how to treat things because that is how they justify buying new all the time. Another acquaintance spoke up in defence of "buying new all the time." "Why would you want to keep the same old stuff? I mean, I get bored looking at the same furniture all the time, so I just buy the cheap stuff and then I don't feel so bad when it falls apart in a year or so and then I get to buy new again!"


A friend who was laid off about six months or so ago put the experience to good work. Discovering that she and her husband spent approximately $300 a month taking their two teen-agers out for a movie and pizza about every other week, they scaled back their lifestyle to live within her husband's modest income. They found out they wasted way too much money on crap, and now have less junk and more time to actually do things.


I'd like one or two of those nice brass nozzles. I currently have eight garden hoses hooked up around my property and NOT ONE OF THEM HAS A DECENT NOZZLE. When I broke down and washed my car a few days ago, I gave up on the nozzles and resorted to using my thumb. It doesn't get much cheaper than that, but it makes a mess, too.



TG

[Demeter]

112. $300/MONTH FOR PIZZA AND MOVIE?

Well teenage boys do eat a lot. They should learn how to make pizza.

I am appalled.

[Tansy_Gold]

115. She was appalled, too

Pizza for 4, inc. 1 pitcher beer = $60
Four adult movie tickets @ $10 = $40
Popcorn, drinks, etc. = $30
Gas; ice cream on the way home (opt.) = $20


And they usually did this twice a month or so as a family evening out and had been doing it ever since their kids were very young. Fortunately, it established a good relationship with their kids and it wasn't a difficult transition to say to them hey, look, the money isn't there any more and this just isn't in the budget. They now do movie nights at home with DVDs often picked up for pennies at yard sales, and the kids are bringing home friends to watch classics like "Casablanca," "The Great Escape," and "The Big Country."

[Tansy_Gold]

144. Another friend appalled

He took his nieces, aged 13 (adult ticket) and 9 (child's ticket), to see the new Toy Story movie yesterday. Pizza without beer, tickets, popcorn and soft drinks (no candy) totalled just shy of $100.


TG

[DemReadingDU]

149. Which reminds me...Probably about 25 years ago

It was winter in Ohio, so our family was dressed in big coats and hats. Spouse is real tall, but at that time, I was same size as the 2 kids (who have both grown much taller than me). But then, at a quick glance, it appeared that a dad was taking 3 kids to the movies. So that's what we did...bought 1 adult ticket and 3 children tickets. LOL. I can't even remember the prices, but not near as expensive nowadays.

[amandabeech]

140. You are so right about the investor class and the junk stuff.

I've heard about people who are completely infatuated with new, new, new.

At what point will people get exhausted from so much consuming?

Maybe it's my age, but I'm not nearly as enthusiastic about consuming as I was when I was in my '20s, but even then, I didn't buy stuff all the time just to have some stimulation in my life.

Stimulation by reading, doing hobbies, and, most importantly, socializing (in person is best, but the net ain't too bad here and on SMW) is just so much better.

Maybe the Ed Show would give you the name of the nozzle company. You might and others might be the impetus for them to hook up with some mail order business.

[Demeter]

34. Consumer price index 'inflation report' shows deflation. No Fed rate hike until 2012?

http://www.csmonitor.com/Money/2010/0617/Consumer-price-index-inflation-report-shows-deflation.-No-Fed-rate-hike-until-2012

The overall level of US consumer prices fell in May for the second month in a row, a sign that the economic recovery remains weak.

Normally people call this monthly bulletin the "inflation report." Now the consumer price index (CPI) shows deflation at least since January...

[Demeter]

40. WTO against US poultry ban

http://english.people.com.cn/90001/90778/90861/7027837.html


The majority of the WTO panel of experts handling the dispute ruled in favor of China, according to a report by the China News Service.

The US can appeal against the decision, according to WTO rules, but the report will be considered the panel's final verdict if the US loses the appeal.

In April 2009, China filed an appeal with the WTO to protest a key clause in a US law, which prohibits Chinese exports of poultry.

China argued that section 727 of the Omnibus Appropriations Act of 2009, which was signed into US law in March 2009, violates the rules of the world trade body.

According to the US law, no government funds should be made available for establishment or implementation of a rule allowing imports of poultry products from China - deemed a de facto ban on Chinese poultry products.

The US government has revised the law annually for several years, said Zhang.

"Actually, the 2009 law we complained about has already ceased to be in effect, and it's not clear if the ruling will have a binding effect on its successor, section 743 in Act 2010," Zhang said.

The latest WTO report will force the US to comply with free trade rules and restrict its discriminatory actions against China, which is highly significant given the growing number of trade disputes between the world's two major traders, she said.

"It's good news for China anyway; it will bolster our confidence in the multilateral trading system," said Cheng, the ministry official.Source:Xinhua

[Po_d Mainiac]

118. Send us your weak

and toxin filled poultry......Take your lead and shove it :grr:

[Demeter]

41. Housing Market Slows as Buyers Get Picky

http://www.nytimes.com/2010/06/17/business/economy/17slump.html?pagewanted=1&hp



Before the recession, people simply looked for a house to buy. Later they got squeamish just thinking about buying. Now they are on a quest for perfection at the perfect price.

Exacting buyers are upending the battered real estate market, agents and other experts say, leading to last-minute demands for multiple concessions, bruised feelings on all sides and many more collapsed deals than usual.

It is a reversal of roles from the boom, when competing buyers were sometimes reduced to writing heartfelt letters saying how much they loved the house and how they promised to eternally worship the memory of the previous owners. These days, it is the buyers who are coldly seeking the absolute best deal while the sellers are left in emotional turmoil.

“We see buyers who must have learned their moves from the World Wrestling Federation,” said Glenn Kelman, chief executive of the online broker Redfin. “They think the final smack-down occurs at the inspection, where the seller will be reluctant to refuse any demand because the alternative is putting the house back on the market as damaged goods.”

Everyone expected the housing market to suffer at least a temporary hangover after the government’s $8,000 tax credit expired, but not necessarily this much. Preliminary data from around the country indicates that the housing market began swooning last month immediately after the credit was no longer available. In some places, sales dropped more than 20 percent from May 2009, when the worst of the financial crisis had subsided.

Builders have been affected too. Construction of new homes in May dropped 17.2 percent from April, the Commerce Department said Wednesday, significantly lower than forecast. Permits for future construction dropped 10 percent, suggesting a cruel summer.

Even the lowest home mortgage rates in decades are not doing much to invite deals. The Mortgage Bankers Association said Wednesday that applications for loans to buy houses were down by a third compared with last year. Applications are back to the level of the mid-1990s, when the country’s housing market was smaller.

Against such a backdrop of misery, buyers are empowered — and are taking full advantage. MORE AT LINK

[amandabeech]

56. What a productive use of the cash!

It amazes me when so much cash is sitting around with nowhere to go. Well, really, it doesn't.

So much value has gone to so few people over the past 35 years, it is amazing that so many people are still buying stuff.

That's what happens when so many people around the world cannot afford to buy what consumer goods they are making.

[Demeter]

70. In jail for being in debt

http://www.startribune.com/investigators/95692619.html

You committed no crime, but an officer is knocking on your door. More Minnesotans are surprised to find themselves being locked up over debts.

As a sheriff's deputy dumped the contents of Joy Uhlmeyer's purse into a sealed bag, she begged to know why she had just been arrested while driving home to Richfield after an Easter visit with her elderly mother.

No one had an answer. Uhlmeyer spent a sleepless night in a frigid Anoka County holding cell, her hands tucked under her armpits for warmth. Then, handcuffed in a squad car, she was taken to downtown Minneapolis for booking. Finally, after 16 hours in limbo, jail officials fingerprinted Uhlmeyer and explained her offense -- missing a court hearing over an unpaid debt. "They have no right to do this to me," said the 57-year-old patient care advocate, her voice as soft as a whisper. "Not for a stupid credit card."

It's not a crime to owe money, and debtors' prisons were abolished in the United States in the 19th century. But people are routinely being thrown in jail for failing to pay debts. In Minnesota, which has some of the most creditor-friendly laws in the country, the use of arrest warrants against debtors has jumped 60 percent over the past four years, with 845 cases in 2009, a Star Tribune analysis of state court data has found.

Not every warrant results in an arrest, but in Minnesota many debtors spend up to 48 hours in cells with criminals. Consumer attorneys say such arrests are increasing in many states, including Arkansas, Arizona and Washington, driven by a bad economy, high consumer debt and a growing industry that buys bad debts and employs every means available to collect.

Whether a debtor is locked up depends largely on where the person lives, because enforcement is inconsistent from state to state, and even county to county.

In Illinois and southwest Indiana, some judges jail debtors for missing court-ordered debt payments. In extreme cases, people stay in jail until they raise a minimum payment. In January, a judge sentenced a Kenney, Ill., man "to indefinite incarceration" until he came up with $300 toward a lumber yard debt... MORE AT LINK

THIS IS A CLEVERLY CRAFTED LIE--THE CRIME IS NOT DEBT, BUT FAILURE TO RESPOND TO THE COURT.

[Demeter]

71. Nevada’s unemployment rate reaches No. 1 in U.S.

http://www.mynews4.com/story.php?id=20417&n=122


Unemployment Up
Unemployment Up
Nevada now has the highest unemployment rate in the nation.

The rate hit a record 14 percent statewide in May, pushing the Silver State ahead of
Michigan to lead the nation in joblessness.

The state Department of Employment, Training and Rehabilitation reported Friday that the jump from 13.7 percent in April set a new record for Nevada.

The report says the jobless rate eased a bit in Las Vegas, dropping from 14.2 percent in April to 14.1 percent in May.

The only bright spot is the Elko area, where mining is strong and the May jobless rate was 8.3 percent.

The report says Nevada's economy has dropped dramatically since December 2007, with the state unemployment rate increasing 8.8 percentage points.

The figures put Nevada 4.3 percent above the national unemployment rate of 9.7 percent.

The numbers reflect the continued collapse of construction employment, and continued layoffs by government, small businesses and resorts.

"Our economy is very heavily dependent upon tourism," said UNLV Department of Economics' Stephen Miller. "And the current recession, the drivers for the recession, were leisure and hospitality, finance and insurance and real estate, and construction. And we know we're big players in at least two of those markets. That's why the recession has been so severe, unlike previous recessions in Nevada."

In April, more than 195,000 Washoe County residents were out of work, and the jobless rate hit 13.5 percent; up from 13.3 percent in March.

UNTIL THE CENSUS IS OVER, AT LEAST...

[Demeter]

94. Home builders won’t lift the economy this time

http://www.msnbc.msn.com/id/37725749/ns/business-real_estate/

YOU DON'T SAY!

[4dsc]

136. When did housing become the leading economic indicator

over manufacturing?? When did this transition occur?

[amandabeech]

141. When manufacturing went into the toilet. n/t

[monmouth]

8. "It's A Hard Knock Life"...Loved that show...n/t

[Demeter]

11. Here Ya Go!

http://www.youtube.com/watch?v=LR80EEsWauU

[monmouth]

23. Thanks for the memory. We took our daughter on her 9th birthday

in '78 and after the show we were outside with programs still in hand and the girls came out of the theater for their dinner break. They were thrilled we had seen it and wanted to know how we liked the show. When we told them it was daughter's birthday they sang happy birthday to her. I still get chills when I think about it. Thank you again.

[DemReadingDU]

58. Every year I would take my daughter to some event

A play, or ballet, a musical, an ice show. It was fun, and something special for mother-daughter.

Then there was the Annie year. A local theater of actors did Annie, and a regional group also came to town. My daughter always loved the dog!

[Demeter]

12. OILCAN!

Svanberg admits deal will annoy BP investors

BP does at least have a deal with the administration that means it avoids the worst possible outcomes that had been alarming financial markets
Read more >>
http://link.ft.com/r/P75VYY/40WDNQ/3CWTA/XTZPKL/5C7DQN/RF/t

[Demeter]

48. BP Rebounds on Agreement to Phase Oil Spill Payments

http://www.bloomberg.com/apps/news?pid=20601087&sid=av._syjMIAHA&pos=2

BP Plc rebounded in London trading and the cost of insuring the company against default tumbled after an agreement to phase in payments to a $20 billion fund to compensate victims of the worst oil spill in U.S. history.

BP scrapped dividends and pledged asset sales yesterday to meet President Barack Obama’s demand to set up the fund in response to the Gulf of Mexico oil spill. Its shares have slumped 45 percent since the Deepwater Horizon rig exploded on April 20, wiping about 55 billion pounds ($81 billion) off the London-based company’s value.

“It brings some clarity, but obviously we still don’t know whether $20 billion will be enough or whether the company will need more,” said Colin Morton, who helps manage about $1.7 billion at Rensburg Fund Management in Leeds, England. “If this is the final cost, it’s more than adequately reflected in the price.” ...MORE AT LINK

[Demeter]

91. Make BP pay? May be out of Obama's control

http://www.msnbc.msn.com/id/37720386/ns/disaster_in_the_gulf/

In assuring Americans on Tuesday that BP won't control the compensation fund for Gulf oil spill recovery, President Barack Obama failed to mention that the government won't control it, either.

That means it's anyone's guess whether the government can, in fact, make BP pay all costs related to the spill.

Obama aimed high in his prime-time Oval Office address — perhaps higher than the facts support and history teaches — as he vowed to restore livelihoods and nature from the still-unfolding calamity in the Gulf of Mexico.

A look at some of his statements and how they compare with those facts:

OBAMA: "We will make BP pay for the damage their company has caused and we will do whatever's necessary to help the Gulf Coast and its people recover from this tragedy. ... Tomorrow, I will meet with the chairman of BP and inform him that he is to set aside whatever resources are required to compensate the workers and business owners who have been harmed as a result of his company's recklessness. And this fund will not be controlled by BP. In order to ensure that all legitimate claims are paid out in a fair and timely manner, the account must and will be administered by an independent, third party."

THE FACTS: An independent arbiter is no more bound to the government's wishes than an oil company's. In that sense, there is no certainty BP will be forced to make the Gulf economy whole again or that taxpayers are completely off the hook for any of the myriad costs associated with the spill or cleanup. The government can certainly press for that, using legislative and legal tools. But there are no guarantees.

It took 20 years to sort through liability after the Exxon Valdez oil spill in Alaska, and in the end, punitive damages were slashed by the courts to about $500 million from $2.5 billion. Many people who had lost their livelihoods in the spill died without seeing a check.

OBAMA: "Already, I have issued a six-month moratorium on deepwater drilling. I know this creates difficulty for the people who work on these rigs, but for the sake of their safety and for the sake of the entire region, we need to know the facts before we allow deepwater drilling to continue."

THE FACTS: Obama issued a six-month moratorium on new permits for deepwater drilling but production continues from existing deepwater wells...

[Demeter]

92. BP not yet decided on assets to sell -Russian head

http://uk.reuters.com/article/idUKLDE65G1PM20100617?rpc=401&feedType=RSS&feedName=governmentFilingsNews

BP (BP.L) has not decided what assets to sell to meet U.S. oil spill costs, the head of its Russian operations said, following rumours its stake in Rosneft (ROSN.MM), Russia's top oil producer, was for sale.

BP has said it would suspend dividends to shareholders, reduce its investment programme and sell $10 billion of assets after agreeing with the U.S. government to set aside $20 billion to pay for the spill.

"$10 billion of assets -- nothing specific has been identified yet. (It is) too early," David Peattie said on Thursday on the sidelines of the St Petersburg Economic Forum.

Shares in state-run Rosneft, which produces over a fifth of Russia's oil, tumbled over 6 percent earlier in the day and closed down 5.5 percent on speculation BP might sell its stake of around 1.3 percent.

Russian Energy Minister Sergei Shmatko said he had not heard of any plans by BP to sell Russian assets.

Rosneft President Sergei Bogdanchikov said there would be no economic damage for Rosneft, in which the state holds 75 percent.

In Russia, BP's assets include TNK-BP (TNBPI.RTS), a 50-50 joint venture with Russia-based partners, where there were no plans to change the dividend policy, Peattie said.

"The future is very good, very bright," he said, when asked about the Russian assets.

"We have a successful business here for BP, investing $4 billion a year through our joint venture TNK-BP. We have a very successful investment in Rosneft," he said. (Reporting by Vladimir Soldatkin, Denis Pinchuk and Gleb Bryanski; Writing by Toni Vorobyova, editing by Will Waterman)

[Tansy_Gold]

61. Update on my LBN post: BP Deploys Costner's oil machines. . . .

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x4433298

http://thestar.com.my/news/story.asp?file=/2010/6/19/worldupdates/2010-06-19T080738Z_01_NOOTR_RTRMDNC_0_-494475-1&sec=Worldupdates

(Source is Reuters)

Saturday June 19, 2010
BP deploys Costner's oil machine in Gulf cleanup
By Jeffrey Jones

PORT FOURCHON, La. (Reuters) - Hollywood star Kevin Costner joined BP’s efforts to clean up the oil-fouled Gulf of Mexico on Friday as the British company began deploying his "dream" machine to separate oil from water.


Kevin Costner, founding partner, Ocean Therapy Solutions Inc. along with John Houghtaling II, Chief Executive Officer, and Patrick Smith, Chief Operating Officer of Ocean Therapy Solutions Inc. answer questions from the media in Port Fourchon, Louisiana June 18, 2010. (REUTERS/Sean Gardner)

BP acquired 32 of the centrifuges to help remove some of the oil that has been gushing into the Gulf from its blown-out well in the worst oil spill in U.S. history.

The units are being deployed after BP tested them to see if they could handle the crude leaking from an undersea well for two months at an estimated rate of up to 60,000 barrels a day (2.5 million gallons/9.5 million liters).

"At its core, my dream, this machine, was designed ... to give us a fighting chance to fight back the oil that's got us by the throat," Costner told reporters.

"When you are in a fight, anybody knows you go to confront it right where it is. You don't wait for it to come to your door," the actor said at this oil industry supply port in southern Louisiana.

Moored behind him was a barge with his machines mounted on the deck that had returned to port to be fitted with a global positioning system to allow it to detect concentrations of oil.

Costner's company, Ocean Therapy Solutions, signed a contract with BP to provide 32 of the units that are expected to be working in the next 60 days, BP Chief Operating Officer Doug Suttles said. Financial details were not disclosed.

Each machine, called a V20, can separate 210,000 gallons of oily water a day.

Costner, best-known for such films as "Dances with Wolves" and "Waterworld," stressed he was no overnight oil spill sensation. He has been trying to employ the technology designed by his company for the past 17 years, and has invested more than $20 million of his own money in its development.

Costner testified in the U.S. Congress last week about the need for a 21st century solution to the risks of drilling in waters as deep as one mile (1.6 km).

His proposals had been ignored and bureaucratic red tape hindered the introduction of new technology, he said. (Reporting by Jeff Jones; Editing by Anthony Boadle)

Copyright © 2010 Reuters

[DemReadingDU]

63. The video was yesterday, 6/18/10

If you look at the shirt Costner is taken in the picture in this WEE link, he is wearing the same shirt as in the video at the link in LBN.
Great find, thanks!

[Demeter]

68. Chevron CEO distances his firm from BP

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2010/06/16/BUBA1DVDIJ.DTL

San Ramon's Chevron Corp. is the largest leaseholder in the Gulf of Mexico. Of its 669 leases, 423 are located in deepwater, i.e., depths greater than 1,000 feet. Its total daily energy production in the gulf and from onshore fields in the region averages 243,000 barrels per day.

If, as congressional inquisitors suggested at Tuesday's hearings in Washington, Chevron is just another "bad apple" in the rotten oil company barrel alongside BP - and its "cookie-cutter" oil-spill-response plan is as "worthless" as BP's - then we've got even more to worry about.

It was Chevron CEO John Watson's job to put those ideas to rest, primarily by distancing Chevron from BP.

The spill was "preventable," Watson said in prepared testimony, echoing what he and other Chevron executives have previously said. "The expectation we share with the American people (that) the energy that we need will be produced safely and reliably ... did not happen here."

By way of contrast, he said, Chevron's own internal review, conducted in the aftermath of the spill, "confirmed what our regular audits have told us. Chevron's drilling and control practices for deepwater wells are safe and environmentally sound."

Digging the knife deeper, Watson said Chevron immediately "reinforced our own safety practices, which include what we call 'stop work' authority - the responsibility of any employee or contractor to stop work immediately if they see anything unsafe. All our people clearly understand they have that authority." As opposed to BP, which ignored employee warnings that some things didn't look right.

Yes, keep drilling: As for lawmakers' disbelief that his company has a better handle on such matters, Watson pointed out that "Chevron has successfully drilled 375 deepwater wells around the world." Whether Chevron, which claims to have a "robust" containment plan could handle a spill of BP proportions any better is an open question.

Still, Chevron, like other energy companies and various interests in the gulf, wants the six-month moratorium, imposed by the Obama administration last month on all drilling below 500 feet, lifted ASAP. Watson's reasoning: "For the last two years - and for the first time since 1970 - U.S. crude output has increased for one reason: deepwater development in the Gulf of Mexico."

The gulf, he said, also accounts for 15 percent of the nation's natural gas, and 27 percent of its domestic oil supply, he noted. In addition to the loss of production, and concomitant royalties and taxes, tens of thousands of jobs in the gulf region are at stake.

"Any extension of the moratorium will only exacerbate the economic consequences," Watson said. Whatever its merits, the argument is gaining force and a shortening of the moratorium would not be surprising.

It's not just about oil: "We need ... a sharpened focus on alternatives and renewables, even as we continue to develop our domestic oil and gas resources." Especially natural gas, said Watson. Plus, "a 20 percent improvement in U.S. energy efficiency could result in saving the equivalent of 10 million barrels of oil and reducing 1.5 billion metric tons of CO{-2} emissions per year." Chevron has reduced its own energy use by 30 percent since 1992, Watson said.

Whether, as congressional critics said, oil company CEOs like Watson are chiefly engaged in PR, Chevron's chief executive set a high bar by which he and his company are to be judged. (Full text of the testimony at links.sfgate.com/ZJVT)

"We all know," he concluded, "that actions speak louder than words. Chevron's top priority over the coming days, weeks and months will be to demonstrate to you, your colleagues and the American public that we understand that we operate by public permission."

Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2010/06/16/BUBA1DVDIJ.DTL#ixzz0rITlUjCb

[Demeter]

69. Lawmakers attack plans oil companies had in place to deal with a spill

http://www.washingtonpost.com/wp-dyn/content/article/2010/06/15/AR2010061501700.html?hpid=topnews

Five oil giants. Five plans for coping with an oil spill, all written by the same tiny Texas subcontractor.

The government-mandated plans all came under attack at a congressional hearing Tuesday: Three of them listed the phone number for the same University of Miami marine science expert, Peter Lutz, who died in 2005. Four talked about the need to protect walruses, which, as Rep. Edward J. Markey (D-Mass.) dryly noted, "have not called the Gulf of Mexico home for 3 million years." The plans also mentioned protecting sea lions and seals, which aren't found in the gulf, either.

The five oil companies submitted these plans -- each more than 500 pages long and each relying on the same reassuring language -- as part of their applications for permits to drill deepwater wells in the gulf. The firms assured the government that they could handle oil spills much larger than the one now threatening the region's environment and economy. And each time, the Minerals Management Service approved the plan and gave the go-ahead for drilling.

Yet House Energy and Commerce Chairman Henry A. Waxman (D-Calif.) said that the "cookie-cutter" plans show that "none of the five oil companies has an adequate response plan" for a spill like the one that began April 20 with a blowout on a BP well.

"It could be said that BP is the one bad apple in the bunch," Rep. Bart Stupak (D-Mich.) said at a hearing of the House Energy and Environment subcommittee. "But unfortunately they appear to have plenty of company. Exxon and the other oil companies are just as unprepared to respond to a major oil spill in the gulf as BP." (STUPID HAS EARNED HIS NICKNAME HONESTLY--MORE AT LINK)

[Demeter]

74. Tomgram: Nick Turse, BP and the Pentagon's Dirty Little Secret

http://www.tomdispatch.com/archive/175262/

It couldn’t be worse, could it? In the Gulf, BP now claims to be retrieving 15,000 barrels of oil a day from the busted pipe 5,000 feet down. That’s three times the total amount of oil it claimed, bare weeks ago, was coming out of that pipe. A government panel of experts now suggests that the real figure could be up to 60,000 barrels or 2.5 million gallons a day, the equivalent of an Exxon Valdez spill every four days -- and some independent experts think the figure could actually be closer to 100,000 barrels a day.

In the meantime, we just learned from the Los Angeles Times that -- go figure -- the “primary responsibility for safety and other inspections” on the oil rig that blew in the Gulf “rested not with the U.S. government but with the Republic of the Marshall Islands,” and that those impoverished islands had outsourced their responsibilities to private companies. Go BP! We also learned that the relief wells sure to staunch the flow of oil by “early August” could take far longer, fail, or even make matters significantly worse; that BP cut every corner in the book to save money when drilling its well; and, oh, that evidently even the heavens are angry at the oil giant, since on Tuesday a lightning strike put its sole drill/retrieval ship in the Gulf out of action for hours, leaving all that oil pouring into the water unimpeded. However bad the bad news is, each new dawn it only seems to get worse, as does the “collateral damage,” whether to pelicans or the Gulf's beaches and wetlands.

Meanwhile, in Afghanistan, that war equivalent of BP’s Gulf disaster, things are similarly trending downward at a startling pace as the news from there grows ever grimmer. The model American offensive in the southern town of Marja, declared a "success" in early May, has faltered badly and has been labeled by Afghan war commander General Stanley McChrystal a “bleeding ulcer”; the “government in a box” that he claimed the U.S. would merrily roll out after U.S. and Afghan troops decisively shoved the Taliban aside, is still in absentia, and the Taliban remain all too present; Afghan President Hamid Karzai now openly indicates that he thinks the Americans can’t win in his country and he’s planning accordingly; the much ballyhooed American “offensive” in Afghanistan’s second largest city, Kandahar, has once again been delayed; corruption increases; American and NATO death tolls grow worse by the month as support for the war in the U.S. sinks; the “collateral damage” only increases; and this week, in a piece in the New York Times, we were told things are so bad that a serious drawdown of forces in 2011 is considered unlikely. Go figure (again)!

And oh, the heavens are evidently not so happy with our Afghan operations either, since Centcom commander General David Petraeus fainted while under what one commentator called “withering” questioning about drawdown schedules for U.S. troops in a Senate hearing room Tuesday.

To make matters more complicated, as Nick Turse, TomDispatch regular and author of The Complex: How the Military Invades Our Everyday Lives, points out, America’s two distant disasters are not only out of control and seemingly unstaunchable, but more intimately connected than we might imagine. The American disaster in Afghanistan runs, in significant part, on BP-produced fuel, and government payments for that fuel are bolstering BP while it lives through its purgatory in the Gulf. MORE AT LINK

[Demeter]

75. Embattled BP asks 7 banks for $1 billion each

http://uk.news.yahoo.com/22/20100618/tot-uk-oil-spill-bp-loan-4b7b872.html

BP Plc , battling to plug a gushing oil well under the Gulf of Mexico, is seeking loans of $1 billion (676 million pounds) from each of seven banks to raise up to $7 billion, banking sources told Thomson Reuters LPC on Friday.

BP is raising capital for a $20 billion clean-up fund, said a different senior banker in the United States, referring to the escrow account that U.S. President Barack Obama demanded the company set up to handle damage claims.

BP has asked its main lenders to put a series of coordinated 1-year standby bilateral loans in place, one source said. This type of loan is made by individual banks to a company and are not syndicated.

Banks including Barclays, HSBC and Royal Bank of Scotland are working on loans of $1 billion each for BP, several banking sources said.

"BP is quietly approaching banks for the facility and it's a club deal," a second banker said. A third banker said that no U.S. banks were providing loans.

Such a loan by BP move would echo a similar move by Exxon Corp in 1996. Following the Exxon Valdez oil spill in Alaska in 1989, Exxon put $6.75 billion of 1-year standby loans in place to guarantee payment of a $5 billion fine against the company.

An official for BP declined to comment on any plans for loans.

"We do not comment on rumour and speculation," a BP spokesperson said.

BP's five-year CDS hit a record wide of 610 basis points (bps) on Wednesday after a six-notch downgrade to BBB on Tuesday by Fitch, bankers said.

The private loans would bypass the wide spreads that would be demanded by the corporate bond market, which would price off the CDS and current inflated bond spreads.

BP's five-year CDS recovered to 465 bps on Friday. Its illiquid one-year CDS is priced at around 620 bps, but traded as wide as 1000 bps earlier this month, according to Markit.

Bilateral loans would be priced far lower than BP's CDS rates on the expectation that banks will earn hefty fees from BP at a later date, the senior banker said.

"All of the scenarios for BP would net huge fees. Even if the company is broken up, it has enormous assets that would result in huge sellside M&A fees," he added.

Large U.S. bond managers said that they had not been approached or declined to comment.

BP said in an investor call on June 4 that it had $5 billion of cash in addition to $5.25 billion of undrawn committed bank lines, and $5.25 billion of committed stand-by bank lines.

The group's free cash flow before dividends for 2010 is $6 billion, according to Fitch, which does not include the potential to monetise existing assets.

[Demeter]

85. What Does The BP "Escrow" Deal Really Mean? By Seize BP

http://www.informationclearinghouse.info/article25751.htm

People all around the country have put so much pressure on the Obama administration that it had to “do something” to look like it was standing up to BP. The announcement today of a so-called $20 billion escrow fund from BP would never have happened without mass pressure. But does this fund truly respond to the needs of the people in the Gulf Coast states?

Too much is at stake for people to let down their guard and accept the “feel good” sound-bite version of what took place today in the meeting between President Obama and BP’s executives.

The White House and BP are creating a mythology, or "spin," on what the tentative agreement signifies.

It is noteworthy that BP's executives are very happy with the new agreement. Their necessary goal as a corporation is to maximize profits, and not to pay damages to all of those who have been harmed. As the Washington Post reported after the meetings, "Behind the scenes, the company had signaled what it expected from Wednesday's meeting—and the company appears to have gotten exactly what it wanted."

It is quite clear to us, even though much more will be revealed in the coming days and weeks, that we have to accelerate the movement for justice. This agreement is not only inadequate but attempts to shield BP from paying all the damages and compensation for lost work, ruined small businesses, and a devastated ecosystem.

At first glance, one would believe, based on the headlines that the Obama Administration compelled BP to set aside $20 billion dollars in an escrow account to meet the needs of people and communities harmed by BP's criminal negligence.

But this is actually a great deal for BP.

The facts on the "escrow" account

The "escrow account" in 2010 is not $20 billion dollars. BP will put in $3 billion dollars in the third quarter of 2010 (ending September 30) and another $2 billion in the fourth quarter (ending December 31). Thereafter, it will have to make installments of $1.25 billion each quarter for the next three years.

This means that the necessary money will not be available to pay the tens of billions in losses that are real and immediate. It also means that people and businesses will have to get in line.

The real number for the escrow account in 2010 is $5 billion—six months from now at the earliest. To put this in perspective, BP has been bringing in between $26 billion and $36 billion annually in profits on revenue of $250 billion, and pays out more than $10 billion in dividends yearly.

According to a report in Forbes, BP could absorb $35 billion in spill costs before it would have a "material impact" on its operations. But instead, it will be allowed a paltry $5 billion a year, in an installment plan over four years.

Another measure of perspective can be had by comparison of this $5 billion per year voluntary set-aside to the accumulated potential fines and penalties under the Clean Water Act. BP can be fined $4,300 per barrel of oil spilled as a consequence of gross negligence. With the recent acknowledgment that the spill volume is 60,000 barrels per day, that is a potential penalty of over $250 million per day. Put another way, every 60 days accumulates a potential $15 billion fine under the Act. The voluntary arrangement to set aside $5 billion per year is meager in comparison.

This, of course, reflects Obama’s unwillingness to exercise legal authority against BP. Department of Justice lawyers could be initiating prosecutions for the accumulated fines, but aside from the announcement of potential investigations, this has not occurred.

Obama denies that his deal with BP will function as a cap on its liability, but this remains to be determined. The deal appears to functionally provide a shield for BP. As one investment advisor told the Wall Street Journal, the agreement puts "an end to the financial bleeding," and allows investors to assess what BP's total liabilities might be. So while President Obama stresses that the plan is not a cap on liability, it certainly appears as one. The installment terms of the payments themselves limit the amounts that will be made available while people are seeking claims.

Mr. Feinberg to the rescue—again

President Obama announced that the fund will be administered by Kenneth Feinberg, a Washington lawyer who made $5.7 million in his law practice in 2008. Mr. Feinberg has played a particular role in Washington at the time of virtual uprising against the banks and bankers' bonuses. He was appointed to be the “pay czar” by Obama reviewing and approving many of the obscene bonuses doled out to AIG and other executives after they were bailed out with hundreds of billions of dollars of taxpayers’ money. As Reuters wrote today, "He has been hailed for soothing the egos of Wall Street executives clutching on to big paychecks, while still looking tough to a general public shocked by massive payouts to firms on a government lifeline."

There is very little other information about how claims will be processed. There will have to be determinations made as to what, in the parlance of both BP and President Obama, is a "legitimate" claim. While Obama stated that anyone can file a claim, that doesn’t mean that the claim will be accepted or paid. Nor does it appear that the decision-making process will include any of the affected Gulf coast residents or their representatives from the fishers, shrimpers, crabbers, unions, small business people and workers in the tourism and recreation industry, local elected officials, clergy, and independent scientists and environmentalists.

Details must be forthcoming about claims payments and standards. Can we expect tens of thousands of people to receive checks by the end of the month? One thing is clear: The limited level of the fund necessarily means that claims cannot be paid equivalent to the damages incurred right now.

The creation of the so-called escrow fund was the result of a nationwide mass movement. Now is the time to step up our organizing to make sure that we have the kind of escrow fund that can really meet the needs of the people and repair the vast environmental damage caused by BP.

[Demeter]

86. Is the BP Gusher Unstoppable? By Julia Whitty

http://motherjones.com/blue-marble/2010/06/worst-already-true-BP-well-now-unstoppable?utm_source=twitterfeed&utm_medium=twitter&utm_campaign=Feed%3A+motherjones%2FTheBlueMarble+%28Mother+Jones+|+The+B

Sharon Astyk at ScienceBlogs points the way to a seriously scary comment thread at The Oil Drum, a sounding board for, among others, many petroleum geologists and oil professionals. The comment in question is from a seemingly very knowledgable "dougr." Some of it follows verbatim below. I've highlighted the parts that frightened me the most and left me wondering: Is this why Obama's praying?

You can read the comment in its entirety here, complete with useful links, as well as all the comments (some of which dissent from dougr's claims) made in response. Sharon notes, to the inevitable question of why pass along an anonymous comment: "This one passes my smell test, which is usually pretty good - that doesn't mean I claim commenter Doug R is right - it means I think his information is interesting enough to be worth exposing to a wider audience for clarification or correction." As the Oil Drum staff explains to it's own readers regarding this post: "Were the US government and BP more forthcoming with information and details, the situation would not be giving rise to so much speculation about what is actually going on in the Gulf. This should be run more like Mission Control at NASA than an exclusive country club function--it is a public matter--transparency, now!" Amen. Meanwhile, judge for yourself:

"All the actions and few tid bits of information all lead to one inescapable conclusion. The well pipes below the sea floor are broken and leaking. Now you have some real data of how BP's actions are evidence of that, as well as some murky statement from "BP officials" confirming the same.

"To those of us outside the real inside loop, yet still fairly knowledgeable, was a major confirmation of what many feared. That the system below the sea floor has serious failures of varying magnitude in the complicated chain, and it is breaking down and it will continue to.

"What does this mean?

"It means they will never cap the gusher after the wellhead. They cannot...the more they try and restrict the oil gushing out the bop?...the more it will transfer to the leaks below. Just like a leaky garden hose with a nozzle on it. When you open up the nozzle?...it doesn't leak so bad, you close the nozzle?...it leaks real bad, same dynamics. It is why they sawed the riser off...or tried to anyway...but they clipped it off, to relieve pressure on the leaks "down hole". I'm sure there was a bit of panic time after they crimp/pinched off the large riser pipe and the Diamond wire saw got stuck and failed...because that crimp diverted pressure and flow to the rupture down below.

"Contrary to what most of us would think as logical to stop the oil mess, actually opening up the gushing well and making it gush more became direction BP took after confirming that there was a leak. In fact if you note their actions, that should become clear. They have shifted from stopping or restricting the gusher to opening it up and catching it. This only makes sense if they want to relieve pressure at the leak hidden down below the seabed.....and that sort of leak is one of the most dangerous and potentially damaging kind of leak there could be. It is also inaccessible which compounds our problems. There is no way to stop that leak from above, all they can do is relieve the pressure on it and the only way to do that right now is to open up the nozzle above and gush more oil into the gulf and hopefully catch it, which they have done, they just neglected to tell us why, gee thanks.

"A down hole leak is dangerous and damaging for several reasons. There will be erosion throughout the entire beat up, beat on and beat down remainder of the "system" including that inaccessible leak. The same erosion I spoke about in the first post is still present and has never stopped, cannot be stopped, is impossible to stop and will always be present in and acting on anything that is left which has crude oil "Product" rushing through it. There are abrasives still present, swirling flow will create hot spots of wear and this erosion is relentless and will always be present until eventually it wears away enough material to break it's way out. It will slowly eat the bop away especially at the now pinched off riser head and it will flow more and more. Perhaps BP can outrun or keep up with that out flow with various suckage methods for a period of time, but eventually the well will win that race, just how long that race will be?...no one really knows....However now?...there are other problems that a down hole leak will and must produce that will compound this already bad situation.

"This down hole leak will undermine the foundation of the seabed in and around the well area. It also weakens the only thing holding up the massive Blow Out Preventer's immense bulk of 450 tons. In fact?...we are beginning to the results of the well's total integrity beginning to fail due to the undermining being caused by the leaking well bore.

"The first layer of the sea floor in the gulf is mostly lose material of sand and silt. It doesn't hold up anything and isn't meant to, what holds the entire subsea system of the Bop in place is the well itself... The well's piping in comparison is actually very much smaller than the Blow Out Preventer and strong as it may be, it relies on some support from the seabed to function and not literally fall over...and it is now showing signs of doing just that....falling over...

"What is likely to happen now?

"Well...none of what is likely to happen is good, in fact...it's about as bad as it gets. I am convinced the erosion and compromising of the entire system is accelerating and attacking more key structural areas of the well, the blow out preventer and surrounding strata holding it all up and together. This is evidenced by the tilt of the blow out preventer and the erosion which has exposed the well head connection. What eventually will happen is that the blow out preventer will literally tip over if they do not run supports to it as the currents push on it. I suspect they will run those supports as cables tied to anchors very soon, if they don't, they are inviting disaster that much sooner.

"Eventually even that will be futile as the well casings cannot support the weight of the massive system above with out the cement bond to the earth and that bond is being eroded away. When enough is eroded away the casings will buckle and the BOP will collapse the well. If and when you begin to see oil and gas coming up around the well area from under the BOP? or the area around the well head connection and casing sinking more and more rapidly? ...it won't be too long after that the entire system fails. BP must be aware of this, they are mapping the sea floor sonically and that is not a mere exercise. Our Gov't must be well aware too, they just are not telling us.

"All of these things lead to only one place, a fully wide open well bore directly to the oil deposit...after that, it goes into the realm of "the worst things you can think of" The well may come completely apart as the inner liners fail. There is still a very long drill string in the well, that could literally come flying out...as I said...all the worst things you can think of are a possibility, but the very least damaging outcome as bad as it is, is that we are stuck with a wide open gusher blowing out 150,000 barrels a day of raw oil or more. There isn't any "cap dome" or any other suck fixer device on earth that exists or could be built that will stop it from gushing out and doing more and more damage to the gulf. While at the same time also doing more damage to the well, making the chance of halting it with a kill from the bottom up less and less likely to work, which as it stands now?....is the only real chance we have left to stop it all.

"It's a race now...a race to drill the relief wells and take our last chance at killing this monster before the whole weakened, wore out, blown out, leaking and failing system gives up it's last gasp in a horrific crescendo...

MUCH MORE AT LINK

[Hugin]

88. "When you have eliminated the impossible, whatever remains, however improbable, must be the truth."

-- Sherlock Holmes via Sir Arthur Conan Doyle.

[Demeter]

13. RUE BRITTANIA!

UK tax to cost US banks $2bn

US banks will foot a total bill of about $2bn in their second-quarter results to pay for the UK tax on bankers’ bonuses, with Goldman Sachs alone in line for a $600m-plus charge
Read more >>
http://link.ft.com/r/P75VYY/40WDNQ/3CWTA/XTZPKL/ZB0MXY/RF/t

[Demeter]

29. UK may try to stop Iceland joining EU over bank collapse refund

http://www.guardian.co.uk/business/2010/jun/17/uk-threat-block-iceland-eu

Iceland put on fast-track to join the EU but acrimony lingers over £2.3bn owed from Icesave collapse



Iceland was put on a fast track to join the European Union today, but the Cameron government served notice that it could block the country's membership unless it settled the £2.3bn Britain says it is owed as a result of the country's financial collapse two years ago.

European government chiefs at a Brussels summit decided that "accession negotiations should be opened" with Iceland. At British and Dutch insistence, however, the summit said that Iceland would have to address "existing obligations such as those identified by the European free trade area surveillance authority", a reference to the fallout from the collapse of Icesave in 2008 that left 400,000 depositors in Britain and the Netherlands fearing for their savings.

The Icesave dispute generated acrimonious negotiations, with the terms for reimbursing the British and Dutch rejected first by Iceland's president and then by the Icelandic public in a referendum.

Earlier this week, William Hague, the foreign secretary, made it plain that Britain could veto membership unless the dispute was settled. "Iceland will have to recognise its obligations," he said. "We won't block , but we will want it clear at the start that Iceland meets its financial and legal obligations."...

[Demeter]

77. Deficit Terrorists Strike In The UK - USA Next? By Ellen Brown

http://www.informationclearinghouse.info/article25766.htm



Last week, England’s new government said it would abandon the previous government’s stimulus program and introduce the austerity measures required to pay down its estimated $1 trillion in debts. That means cutting public spending, laying off workers, reducing consumption, and increasing unemployment and bankruptcies. It also means shrinking the money supply, since virtually all “money” today originates as loans or debt. Reducing the outstanding debt will reduce the amount of money available to pay workers and buy goods, precipitating depression and further economic pain.

July 18, 2010 "Information Clearing House" -- The financial sector has sometimes been accused of shrinking the money supply intentionally, in order to increase the demand for its own products. Bankers are in the debt business, and if governments are allowed to create enough money to keep themselves and their constituents out of debt, lenders will be out of business. The central banks charged with maintaining the banking business therefore insist on a “stable currency” at all costs, even if it means slashing services, laying off workers, and soaring debt and interest burdens. For the financial business to continue to boom, governments must not be allowed to create money themselves, either by printing it outright or by borrowing it into existence from their own government-owned banks.

Today this financial goal has largely been achieved. In most countries, 95% or more of the money supply is created by banks as loans (or “credit”). The small portion issued by the government is usually created just to replace lost or worn out bills or coins, not to fund new government programs. Early in the twentieth century, about 30% of the British currency was issued by the government as pounds sterling or coins, versus only about 3% today. In the U.S., only coins are now issued by the government. Dollar bills (Federal Reserve Notes) are issued by the Federal Reserve, which is privately owned by a consortium of banks.

Banks advance the principal but not the interest necessary to pay off their loans; and since bank loans are now virtually the only source of new money in the economy, the interest can only come from additional debt. For the banks, that means business continues to boom; while for the rest of the economy, it means cutbacks, belt-tightening and austerity. Since more must always be paid back than was advanced as credit, however, the system is inherently unstable. When the debt bubble becomes too large to be sustained, a recession or depression is precipitated, wiping out a major portion of the debt and allowing the whole process to begin again. This is called the “business cycle,” and it causes markets to vacillate wildly, allowing the monied interests that triggered the cycle to pick up real estate and other assets very cheaply on the down-swing.

The financial sector, which controls the money supply and can easily capture the media, cajoles the populace into compliance by selling its agenda as a “balanced budget,” “fiscal responsibility,” and saving future generations from a massive debt burden by suffering austerity measures now. Bill Mitchell, Professor of Economics at the University of New Castle in Australia, calls this “deficit terrorism.” Bank-created debt becomes more important than schools, medical care or infrastructure. Rather than “providing for the general welfare,” the purpose of government becomes to maintain the value of the investments of the government’s creditors.
England Dons the Hair Shirt

England’s new coalition government has just bought into this agenda, imposing on itself the sort of fiscal austerity that the International Monetary Fund (IMF) has long imposed on Third World countries, and has more recently imposed on European countries, including Latvia, Iceland, Ireland and Greece. Where those countries were forced into compliance by their creditors, however, England has tightened the screws voluntarily, having succumbed to the argument that it must pay down its debts to maintain the market for its bonds.

Deficit hawks point ominously to Greece, which has been virtually squeezed out of the private bond market because nobody wants its bonds. Greece has been forced to borrow from the IMF and the European Monetary Union (EMU), which have imposed draconian austerity measures as conditions for the loans. Like a Third World country owing money in a foreign currency, Greece cannot print Euros or borrow them from its own central bank, since those alternatives are forbidden under EMU rules. In a desperate attempt to save the Euro, the European Central Bank recently bent the rules by buying Greek bonds on the secondary market rather than lending to the Greek government directly, but the ECB has said it would “sterilize” these purchases by withdrawing an equivalent amount of liquidity from the market, making the deal a wash. (More on that below.)

Greece is stuck in the debt trap, but the UK is not a member of the EMU. Although it belongs to the European Union, it still trades in its own national currency, which it has the power to issue directly or to borrow from its own central bank. Like all central banks, the Bank of England is a “lender of last resort,” which means it can create money on its books without borrowing first. The government owns the Bank of England, so loans from the bank to the government would effectively be interest-free; and as long as the Bank of England is available to buy the bonds that don’t get sold on the private market, there need be no fear of a collapse of the value of the UK’s bonds.

The “deficit terrorists,” however, will have none of this obvious solution, ostensibly because of the fear of “hyperinflation.” A June 9 guest post by “Cameroni” on Rick Ackerman’s financial website takes this position. Titled “Britain Becomes the First to Choose Deflation,” it begins:

“David Cameron’s new Government in England announced Tuesday that it will introduce austerity measures to begin paying down the estimated one trillion (U.S. value) in debts held by the British Government. . . . That being said, we have just received the signal to an end to global stimulus measures -- one that puts a nail in the coffin of the debate on whether or not Britain would ‘print’ her way out of the debt crisis. . . . This is actually a celebratory moment although it will not feel like it for most. . . . Debts will have to be paid. . . . Standards of living will decline . . . but it is a better future than what a hyperinflation would bring us all.” MORE AT LINK

[Demeter]

15. PIIGS IN BLANKETS

Spain to reveal bank ‘stress tests’ results

The country’s central bank plans to publish the outcome of checks showing estimated loan losses, capital requirements and the contribution of promised balance sheet reinforcements
Read more >>
http://link.ft.com/r/8P1R88/NSTGRP/7ZY85/M9HY04/RNLO0D/ZH/t

[Demeter]

42. EU, IMF, U.S. Deny Report on Credit Line for Spain

http://www.businessweek.com/news/2010-06-16/eu-imf-u-s-deny-report-on-credit-line-for-spain-update2-.html

The European Union, the International Monetary Fund and the U.S. Treasury denied a report that they are putting together a credit line of as much as 250 billion euros ($307 billion) for the Spanish government.

“That story is rubbish,” European Commission spokesman Amadeu Altafaj told reporters in Brussels today. There is “no truth” to speculation on an emergency credit line for Spain, IMF spokeswoman Simonetta Nardin said in an e-mailed statement. The U.S. Treasury denied that it would participate in a credit line for Spain, a spokeswoman said.

Prime Minister Jose Luis Rodriguez Zapatero is trying to convince investors he can trim the euro region’s third-largest deficit, shore up the country’s banks and lift the economy out of a two-year slump. The country faces 16.2 billion euros of bond maturities next month and the decline in its debt in secondary markets means it will have to offer higher returns to attract investors.

Finance Minister Elena Salgado told reporters at the Spanish parliament in Madrid that the report in El Economista “has been denied by the Spanish government, by the European Commission and by the IMF.”

The extra yield investors demand to hold Spanish debt rather than German equivalents rose 13 basis points to 218.4, the highest since before the start of the euro in 1999, fueled by the speculation Spain may follow Greece in needing a bailout. The yield on the country’s benchmark 10-year bond rose 9 basis points today to 4.823 percent, the highest in almost two years.

MORE AT LINK

[Demeter]

44. Spain may use 30 billion euros for bank restructuring

http://www.reuters.com/article/idUSTRE65G11A20100617

Spain may use as much as 30 billion euros of its Fund for Orderly Bank Restructuring (FROB) to cover the financing needs of its banks, the Economy Minister Elena Salgado said on Thursday. The FROB, created to help the banking sector, can issue up to 99 billion euros to aid credit institutions.

"(The fund) will be more than sufficient for all of banks' needs," Salgado said during a television interview.

"It's going to be much less than (90 billion euros). These figures have to come from the Bank of Spain, but I would estimate, with total certainty, that it will be less than one third."

[Demeter]

16. VIVE LA FRANCE!

France unveils reforms to tackle debt

The French will have to work two years longer before retiring and the rich will pay higher taxes in an effort to drag the country’s pensions budget out of the red
Read more >>
http://link.ft.com/r/8P1R88/NSTGRP/7ZY85/M9HY04/RNLO0Y/ZH/t

[Demeter]

17. BANKSTERS

Subprime consumers hit at Goldman

Goldman Sachs is facing a wave of complaints from consumers over the business practices of its mortgage servicing unit, a subsidiary that collects payments on hundreds of thousands of loans worth tens of billions of dollars.
Read more >>
http://link.ft.com/r/FG6LAA/S3688T/VTVRG/ZBM3L5/3OA459/D5/t

[Demeter]

18. Walmart extends its banking interests

Walmart has taken an equity stake in a rapidly expanding US financial company, in a move that may also give the largest US retailer an indirect link to a small commercial bank
Read more >>
http://link.ft.com/r/FG6LAA/S3688T/VTVRG/ZBM3L5/GKQFRG/D5/t

[Demeter]

21. US could scrap NY Fed appointment plan

The US Congress could drop a plan to let the White House and Senate decide the next president of the New York Federal Reserve, which central bank officials have warned amounts to ‘politicisation’
Read more >>
http://link.ft.com/r/EB8122/YHAA25/1O51V/72IG8C/26254T/PJ/t

[Demeter]

38. U.S. government accuses former mortgage executive of multibillion-dollar scam

http://www.washingtonpost.com/wp-dyn/content/article/2010/06/16/AR2010061603438.html

The U.S. government accused the former chairman of one of the nation's largest mortgage firms of a multibillion-dollar scam Wednesday, unveiling what is to date the biggest criminal case related to the crisis that nearly brought down the financial system.

The Justice Department accused Lee Bentley Farkas of Taylor, Bean & Whitaker of committing a $1.9 billion fraud against investors and the federal government that led to the demise of his firm and one of the nation's largest regional banks, Colonial Bank in Alabama.

But beyond the indictment, federal officials described an even wider scheme, and they said the collateral damage to federal agencies has only begun to be tallied.

Taylor Bean allegedly hid how sick it had become, enabling the firm to fraudulently meet government conditions and become one of the largest business partners of the Federal Housing Administration and Ginnie Mae, federal agencies that cover losses suffered by mortgage lenders and their financiers. Federal officials said the scheme caused the two agencies' largest losses ever, totaling at least $3 billion. The officials warned that the final figure could be higher.
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Taylor Bean's activities could also prove costly to Freddie Mac, which helps finance mortgage lending. Freddie Mac officials have said they could face losses on more than $1 billion in assets that are at risk because of the Taylor Bean and Colonial failures, but they have yet to clarify the ultimate cost. Meanwhile, the Federal Deposit Insurance Corp. paid out $4 billion from its insurance fund to cover the collapse of Colonial.

"The fraud alleged here is truly stunning in its scale and in its complexity,'' Assistant Attorney General Lanny A. Breuer said at a news conference. He said Farkas's arrest "sends a strong message to corporations and corporate executives alike that financial fraud will be found and it will be prosecuted."

Under pressure to bring more criminal cases related to the financial meltdown, the Justice Department has made such fraud a top priority.

Farkas was arrested in his car Tuesday night after working out at a gym he owns in Ocala, Fla. He was indicted by a federal grand jury in Alexandria on bank, wire and securities fraud and other charges.

An attorney for Farkas, Anthony Cochran, said his client will plead not guilty and will "vigorously defend against the charges. He looks forward to having his day in court to clear his name."

The court documents, in part, accuse Farkas of trying to destroy evidence to cover up the scheme and say he used about $20 million in Taylor Bean funds for personal expenses such as payments on a private jet and three Florida properties.

He is also charged with trying to defraud the Treasury Department of $553 million in a scheme that he and other conspirators dubbed "Project Squirrel," officials said. As Taylor Bean's losses mounted, he allegedly covered them with money from Colonial Bank and then tried to help Colonial by tapping into the emergency bailout program for the banking system, falsifying documents and shuffling hundreds of millions of dollars among firms in a bid to make the bank look healthier than it was. The scam was detected by a special inspector general at Treasury before the government paid out any money, officials said.

Taylor Bean primarily acted as a middleman between lenders and investors who provide financing by buying big bundles of home loans. Half its business was with the FHA. Last summer, the FHA and Ginnie Mae ended the relationship with Taylor Bean. Ginnie Mae took over $26.8 billion worth of the loans that Taylor Bean was servicing. The move forced Taylor Bean, once one of the nation's largest privately held mortgage companies, to file for bankruptcy protection.

MORE AT LINK

[Demeter]

45. Fed probing big bank interconnectedness, Bernanke says

http://www.marketwatch.com/story/fed-probing-bank-ties-to-each-other-bernanke-says-2010-06-16

The Federal Reserve has started a program to measure the ties among the largest U.S. banks "to better identify potential channels of financial contagion," Federal Reserve Board Chairman Ben Bernanke said Wednesday.

" supervisors are working to improve their understanding of banks' largest exposures to other banks, nonbank financial institutions, and corporate borrowers," Bernanke said in a speech in New York at a conference releasing recommendations of the Squam Lake Group, 15 leading academics who have banded together to discuss ways to fix the financial system and avoid another crisis.

One of the recommendations of the academics was the creation of a single bank regulatory agency in the United States.

Bernanke pushed back on this idea, saying it might create "regulatory blind spots."

In general, Bernanke agreed with much of the report.

He described it as a "valuable contribution" to the understanding of the crisis.

Bernanke said the Fed "strongly agrees" with two core principles of the Squam Lake report.

The first is that financial regulators can not focus narrowly on the health of one institution. Instead, policy makers must consider other factors, including the stability of the financial system as a whole and the firm's interaction with the market.

The second principle is that the concept of "too big to fail" must be ended. Bernanke said the financial-reform legislation making its way through Congress contains the necessary resolution regime to end too big to fail.

In both the House and Senate versions of the legislation, the Federal Deposit Insurance Corp. would be given the authority to manage the resolution of banks and nonbanks.

A key challenge will be to get other countries to agree on cross-border aspects of such a resolution regime, Bernanke said.

House and Senate negotiators are meeting to smooth out differences between the two versions of the financial-reform legislation. The Obama administration is pushing for completion of the conference before the G20 leaders meet in Toronto at the end of next week.

Greg Robb is a senior reporter for MarketWatch in Washington.

[Demeter]

67. Fed Sells $1.15 Billion of Term Deposits in Auction

http://www.bloomberg.com/apps/news?pid=20601103&sid=ayd_jQTrVITA

The Federal Reserve said it sold $1.15 billion in deposits in the first test of a credit- tightening tool it may use to drain a near-record amount of cash from the banking system.

The Fed offered $1 billion for 14 days through its Term Deposit Facility and received bids worth $6.14 billion, the central bank said in a statement today. The successful banks will deposit money with the Fed from June 17, 2010, to July 1, and receive interest of 0.27 percent. Banks currently receive 0.25 percent in interest on their excess reserves.

Fed Chairman Ben S. Bernanke is planning to use the program, which he says is analogous to a bank certificate of deposit, to eventually help policy makers raise interest rates. With $1.05 trillion in excess reserves in the banking system, central bank officials are looking for new ways to help achieve their target rate for overnight lending among banks.

The auction “certainly drew enough interest from bidders,” said Thomas Simons, a money-market economist at Jefferies & Co. in New York, one of the 18 primary dealers that deal directly with the Fed. “I don’t see anything that indicates that there were any problems.”

The central bank aims to prevent excess reserves from stoking inflation. Fed officials pumped the cash into the banking system while expanding the central bank balance sheet to end the financial crisis.

‘Prudent Planning’

The tests “are a matter of prudent planning and have no implications for the near-term conduct of monetary policy,” the Fed said last month when it announced the schedule for the auctions.

The Fed also plans to use reverse repurchase agreements to reduce excess liquidity. In a reverse repo, the Fed lends securities for a set period, draining cash from the banking system. At maturity, the securities are returned to the Fed, and the cash to the primary dealers.

“The use of reverse repos and the deposit facility would together allow the Federal Reserve to drain hundreds of billions of dollars of reserves from the banking system quite quickly, should it choose to do so,” Bernanke told Congress in March.

The small size of the test makes it difficult to evaluate how auctions for a hundredfold more in deposits would work, Simons said. “I don’t know if an auction this small can give you a great handle on how things will go when the real pace of operations gets going.”

Tying up funds in the program should be attractive to banks that have been leaving their excess reserves idle, Simons said.

“I don’t really think that they’re concerned about not having the money available to make loans -- they’re not making too many loans right now,” he said.

Unprecedented Policy

At the April 27-28 meeting of the Federal Open Market Committee, the central bank signaled it’s not ready to begin its exit from its unprecedented expansionary policy. The Fed pledged to keep rates low for an “extended period.” The FOMC is next scheduled to meet in Washington June 22-23.

The Fed may conduct four additional tests of the program. An auction for 28-day deposits will be held June 28, and a sale of 84-day deposits will be held July 12. Two further tests may be scheduled later in the summer, the central bank said last month.

[Demeter]

81. Global War Between Financial Theocracy and Democracy? Les Leopold Author, "The Looting of America"

http://www.informationclearinghouse.info/article25752.htm

Senate and House conferees are about to reconcile a financial reform bill that is virtually designed to institutionalize "too big to fail." And when they do we'll lose another battle in the ongoing war between global financial markets and democratic nation-states.

This war has been going on for decades -- but democracy hasn't always been in full retreat.

The New Deal Conquest: During the Great Depression democratic forces gained the upper hand in the war. We realized that financial markets, which are driven by the largest banks and financiers, had to be tightly controlled. We knew that global speculation on currencies only deepened the Depression and had to be strictly limited. We knew that an iron curtain was needed between commercial and investment banking to protect Main Street depositors from market madness (that was the Glass-Steagall Act). And most importantly we knew that the key to preventing economic upheaval was to limit the wealth of the super-rich and to increase the wealth of working people through progressive taxes, Social Security, wage and hour laws, and the promotion of unionization. The Bretton Woods agreements forged by the Allies during WWII set up strict rules for global finance, rules that kept financiers in check for more than a quarter century.

And it worked pretty damn well. As economist Joseph Stiglitz points out, this era saw only one financial crisis (Brazil, 1964), and working people in western democracies made huge gains. Since the era of deregulation took hold in the late 1970s, the world has suffered over a hundred financial crises and middle-class incomes have stagnated.

The Deregulatory Counter-Offensive: By the late 1970s, bankers regained the advantage through the spread of a new faith in self-regulated markets. The economic apostles of unfettered markets lobbied against progressive taxes, unions, and social welfare programs. The new orthodoxy was: Let the elites collect the money--they'll invest wisely (instead of consuming), and all boats will rise. This near-religious revolution rapidly spread through the economic and policy establishment. Regulations were dismantled right and left, and the revolving door between government and Wall Street started spinning. The American financial catechism ruled the world. And on Wall Street, the money tap was open. It did not trickle down.

Then, suddenly, in 2008, the market gods destroyed themselves as the unregulated financial casinos crashed and burned, just like they did in 1929. For a few months, it seemed like the deregulatory theology become a global heresy. It was obvious that Wall Street's reckless speculation and its bold new wave of financial engineering had caused the Great Recession. (See The Looting of America for an accessible account.). It was also clear that if government didn't come to the rescue, Wall Street would lay in ruins, along with the rest of the economy. This was the perfect moment for democracy reassert democratic control on financial markets, just as we did during the New Deal. We blew it.

The Victory at Too Big to Fail: At the moment when Wall Street was on its knees, we decided to bypass serious reform. Instead, we rebuilt Wall Street, using taxpayer money and guarantees - more than $10 trillion worth. We let bankers use our bailout money to pay themselves $150 billion in bonuses -- at a moment when over 29 million Americans were jobless or forced into part-time jobs. We allowed the top hedge fund managers to walk off with over $900,000 an hour (not a typo) in 2009. Windfall profits taxes? No. In fact we let hedge fund honchos pay an extra-low tax rate by calling their income "capital gains." We didn't restore Glass-Steagall, we didn't break up "too big to fail" financial institutions. In fact the biggest banks became even bigger, courtesy of the U.S. government.

The Invasion against Democracy: The war is escalating. Right now, financial elites aren't just fighting a defensive battle against new regulations. They're playing offense: They're whipping up deficit hysteria around the globe and calling for drastic cuts in middle class programs. Why? They want to ensure that their loans to governments aren't threatened by rising public debt. Ironically, the public debt they're so worried about was created in large part by them -- the result of huge bailouts and other expenses stemming from the crash they caused. Although the bankers want us to dismantle what remains of our worker-oriented policies, welfare for the financial elites is still fine and dandy.

This is the most dangerous counter attack in the history of finance. We had better know a great deal more about the attackers. Who makes up this shadowy force called "global markets"? Who fights their battles? Do they have a high command?

Not really. There is no executive committee of financial elites. There's no international conspiracy, no Elders of Zion. Instead these markets are pulled and pushed by about 50 very large banks and financial institutions. This is where much of the nation's $2 trillion in hedge fund money roams. This is where the top six US banks frolic. They don't have to sit around a table strategizing. They instantly sense threats to their power. They instantly smell profitable openings and they're poised to grab what they can, whenever they can. They thrive on turmoil, which gives them new "proprietary" trading opportunities to exploit. Volatility means big bucks, especially now that the largest players know that the government will back up even their wildest gambles. History has just proven that they are way too big to fail.

Of course they still have to lobby government officials--many of whom either were bankers, or will be once they leave office. But their most powerful lever on government is through the market itself: Here, by moving vast quantities of money around, they can instantly veto policies they don't like. If the EU talks seriously about financial transaction taxes, the markets go down the Euro grows weaker, and interest rates rise--making it more expensive for governments to borrow the money they need to operate. Politicians have learned to "listen" to the markets and are conditioned to placate them.

Should a nation state get out of line (Greece, Italy, Spain, Portugal, etc), the markets slap them silly. Politicians rush to the scene and start slicing social spending. If instead they demand new taxes on financial elites to reduce public debt, the markets respond with even more fury. Money flees.

All the external machinery of democracy still clanks along. We still pull the levers in the voting booth. But the decisions that affect us the most are made in a profoundly undemocratic way. Faceless financial markets exercise far more control over politicians than the voters who elected them.

So the problem isn't just the corporate campaign contributions, or corporate media control or the academic consensus supporting our financial theocracy. It's the raw power of the markets. They've been roaming free and virtually unregulated for more than a generation, and now their power is unparalleled. Just months after they brought our economy crashing down, they're right back to their old tricks, setting the stage for the next crash and the next bailout while getting filthy rich along the way.

Bill Clinton nailed it on the head when he reportedly said:

"You mean to tell me that the success of the economic program and my reelection hinges on the Federal Reserve and a bunch of fxxxing bond traders?" (See Agenda by Bob Woodward)

No Retreat, No Surrender? There's no room for pacifists in this war. Clearly, Wall Street and its global minions are not seeking a truce. Instead, they're coming after our Social Security, Medicare and Medicaid programs. They want us to work longer before we retire and get less when we do. They want us to pay more for health care and get less of it. They want less public money to go to schools, teachers and public infrastructures. And they want us to get used to a jobless recovery with double digit unemployment rates. (And when millions and millions of people are unemployed, we can't maintain high labor standards, and our wages and benefits erode.) In short, they want to undermine all the policies and programs that have built and sustained middle class life.

Already government officials in the UK, Germany and here are telling us we must endure austerity for "decades to come." As Fed Chair Ben Bernanke candidly put it:

"We can see what problems can arise in a country if investors lose confidence in the fiscal position of that country, so it is very important that we address this problem."

Of course, he's not going to point out that this austerity is only for the masses, definitely not for the financial elites. Or that the underlying cause of the debt investors are so worried about is the giant economic crater caused by the very same financial elites who now might "lose confidence" in financing a middle class society.

We shouldn't kid ourselves about the pitched battles ahead. Fighting back won't be easy, and winning will be even harder. People in country after country will have to mobilize themselves in defense of real democracy, in defense of each nation's right to provide its people with a decent quality of life. In my opinion, that includes sustainable jobs with decent benefits and a solid public infrastructure that promotes equity, protects the vulnerable and enriches the environment.

Unfortunately, no one can guarantee that democracy will prevail in the war against financial theocracy -- just recall the totalitarian chaos in Europe during the Great Depression. But don't count it out, either. It's true that many of us regular folks have been diverted by the media, distracted by the Internet or lulled into a stupor by pharmaceuticals. But when we realize that we've been shoved into a corner with no way out, we'll act. A popular struggle will begin. And when it does, we'll at least have a fighting chance to recapture our democratic souls.

Les Leopold is the author of The Looting of America: How Wall Street's Game of Fantasy Finance destroyed our Jobs, Pensions and Prosperity, and What We Can Do About It Chelsea Green Publishing, June 2009.

[Demeter]

90. The Hidden Wealth of the Catholic Church

http://www.spiegel.de/international/germany/0,1518,700513,00.html

The Catholic Church in Germany, already struggling to cope with the sex abuse scandal, has been hit by revelations of theft, opaque accounting and extravagance. While the grassroots faithful are being forced to make cutbacks, some bishops enjoy the trappings of the church's considerable hidden wealth.

Shortly before Pentecost, Pastor S. received an unexpected early morning visit, not from the Holy Ghost, but from the police.

For the authorities, the words of the Gospel of Luke came true on that morning: He who seeks finds. More than €131,000 ($158,000) were hidden in various places in the rooms of the Catholic priest, tucked in between his laundry or attached to the bottom of drawers. The reverend was arrested on the spot. After several weeks in custody, Hans S., 76, is now back at the monastery, waiting for his trial.

And lo and behold, the proliferation of cash may have been even more miraculous than initially assumed. The public prosecutor's office in the southern city of Würzburg now estimates that S. may have embezzled up to €1.5 million from collections and other church funds. The members of his flock in a wine-growing village in the northern Bavarian region of Franconia are stunned. They had blindly trusted their shepherd, who always seemed so humble and modest.

The Catholic Church is currently being shaken by a number of financial scandals, not only in Franconia but also in Augsburg, another Bavarian city, where Bishop Walter Mixa's dip into funds from a foundation that runs children's homes recently made headlines.

More than €40 million have gone missing in the Diocese of Magdeburg in eastern Germany, €5 million have disappeared in Limburg near Frankfurt, and it was recently discovered that a senior priest in the Diocese of Münster had 30 secret bank accounts. And while parishes throughout Germany are cutting jobs and funds for community work, many bishops are still living on the high horse. A brand-new residence? An ostentatious home for their retirement? Restoration of a Marian column to the tune of €120,000? None of these expenditures presents a problem to high-ranking church officials from Trier in the west to Passau in the southeastern corner of Bavaria, whose coffers are brimming with cash.

In many places, this blatant disparity, along with reports of mismanagement, misappropriation and pomposity have prompted the faithful to challenge church officials. They are accusing many bishops of just covering up the problem, as they did in the sex abuse scandal. They are determined not to allow anyone to see behind the curtain into their parallel world of bulging bank accounts and hidden assets, which, in some cases, have buttressed their power for centuries. The only aspect of church finances that is public is the diocesan budget, which derives its funding from the church tax -- but the church's true assets remain in the shadows...

MUCH MUCH MORE AT LINK

[Tansy_Gold]

145. I generally stay out of discussions about churches and religion because

I know it's gonna end up a flamefest. And I have a number of friends who are devout, unquestioning catholics. They don't even want to hear about the scandals, la la la la la I'm not listening kind of don't want to hear. They were raised catholic, many went to catholic schools, they take it all at face value. And I know they would be emotionally devastated if forced to confront the obscene horror (imho) the church has become.

But that obscene horror becomes more obscene and more horrific with each revelation. At what point am *I* complicit because I don't confront my friends? "Your church is a corrupt organization, it's a racket, it's a crime syndicate, and it needs to be destroyed. It adds no value to the economy, it does not promote the general welfare. It preaches -- and practices -- hate and war much more than it does love and peace. it should be abolished, its wealth distributed to all nations and all peoples. It is evil and does not deserve to live."

Again, this is my personal opinion, and it is directed at The Church, the Vatican, the pope, the cardinals and archbishops and bishops and priests who support and maintain and benefit from their membership in this corrupt corporation. My disgust is not directed at individual catholics who innocently and genuinely believe in their faith. (I may and do think they are misguided, but what the hell.)

But the church itself is too old and too powerful and too wealthy and too evil ever to change. Like Sauron, it must be destroyed. It cannot be redeemed.


Tansy Gold

[Demeter]

93. More Than 90 Banks Miss TARP Payments

http://www.cnbc.com/id/37732312

More than 90 U.S. banks and thrifts missed making a May 17 payment to the U.S. government under its main bank bailout program, signaling a rising number of lenders are struggling to meet their obligations.

The SNL Financial statistics show 91 banks missed their dividend payment under the Troubled Asset Relief Program. The statistics, compiled by SNL Financial from U.S. Treasury data, showed 91 banks and thrifts skipped the May dividend payment under the Troubled Asset Relief Program, or TARP. It was the first missed payment for 23 of the banks; for the others, it was at least their second miss.

The number of banks missing their TARP payments rose for the third straight quarter. In February, 74 banks deferred their payments; 55 deferred last November.

SNL Financial's analysis found 20 banks have missed four or more payments since the program began in 2008, while eight banks have missed five payments.

Under the TARP program, the U.S. Treasury invested in preferred shares issued banks looking for funds. The banks were to make regular dividend payments to the Treasury, and have the right to repurchase the shares at some point in the future.

While many of the largest U.S. banks easily repaid billions in TARP aid, more than 600 smaller banks still hold $130 billion from the program, created at the height of the financial crisis.

In some cases, small banks are renegotiating the repayment terms. Midwest Banc Holdings, for example, agreed to swap $84.8 million in preferred shares issued under the TARP program in 2008 for $15.5 million in common shares. That would have meant an 80 percent loss for the government—and the U.S. taxpayer—on the initial investment. But the swap was contingent on the bank raising more private capital, which it failed to do. Regulators seized the bank in May.

The next quarterly TARP payments to the U.S. Treasury are due by August 16.

[Demeter]

102. Fannie, Freddie Delisting and the Fix Could Cost $1 Trillion By Rocky Vega

http://dailyreckoning.com/fannie-freddie-delisting-and-the-fix-could-cost-1-trillion/

Things aren’t going well for Fannie Mae and Freddie Mac. First, the Federal Housing Finance Agency told them to delist from NYSE, and now, the real price tag of fixing the agencies is coming to light.

In an interview below, Anthony Sanders, a professor of real estate finance at George Mason University, who was called to testify before the House Financial Services Committee, says we should be “very concerned” about Fannie and Freddie, which have become a “huge problem” for a nation with ballooning debt.

How big? Fannie and Freddie guarantee almost $6 trillion in mortgages, and the potential cost of fixing them will be the largest US bailout ever, potentially up to $1 trillion.

Of course, back in March Tim Geithner essentially said he was “on it,” but, according to this interview, nothing’s been done.

The interview came to our attention via The Daily Bail, and here’s a link to the Bloomberg video.:

http://preview.bloomberg.com/video/60799688/

[Demeter]

120. Cost of Seizing Fannie and Freddie Surges for Taxpayers

http://www.nytimes.com/2010/06/20/business/20foreclose.html?partner=rss&emc=rss



CASA GRANDE, Ariz. — Fannie Mae and Freddie Mac took over a foreclosed home roughly every 90 seconds during the first three months of the year. They owned 163,828 houses at the end of March, a virtual city with more houses than Seattle. The mortgage finance companies, created by Congress to help Americans buy homes, have become two of the nation’s largest landlords.

Bill Bridwell, a real estate agent in the desert south of Phoenix, is among the thousands of agents hired nationwide by the companies to sell those foreclosures, recouping some of the money that borrowers failed to repay. In a good week, he sells 20 homes and Fannie sends another 20 listings his way.

“We’re all working for the government now,” said Mr. Bridwell on a recent sun-baked morning, steering a Hummer through subdivisions laid out like circuit boards on the desert floor.

For all the focus on the historic federal rescue of the banking industry, it is the government’s decision to seize Fannie Mae and Freddie Mac in September 2008 that is likely to cost taxpayers the most money. So far the tab stands at $145.9 billion, and it grows with every foreclosure of a three-bedroom home with a two-car garage one hour from Phoenix. The Congressional Budget Office predicts that the final bill could reach $389 billion.

Fannie and Freddie increased American home ownership over the last half-century by persuading investors to provide money for mortgage loans. The sales pitch amounted to a money-back guarantee: If borrowers defaulted, the companies promised to repay the investors.

Rather than actually making loans, the two companies — Fannie older and larger, Freddie created to provide competition — bought loans from banks and other originators, providing money for more lending and helping to hold down interest rates.

“Our business is the American dream of home ownership,” Fannie Mae declared in its mission statement, and in 2001 the company set a target of helping to create six million new homeowners by 2014. Here in Arizona, during a housing boom fueled by cheap land, cheap money and population growth, Fannie Mae executives trumpeted that the company would invest $15 billion to help families buy homes.

As it turns out, Fannie and Freddie increasingly were channeling money into loans that borrowers could not afford. As defaults mounted, the companies quickly ran low on money to honor their guarantees. The federal government, fearing that investors would stop providing money for new loans, placed the companies in conservatorship and took a 79.9 percent ownership stake, adding its own guarantee that investors would be repaid.

The huge and continually rising cost of that decision has spurred national debate about federal subsidies for mortgage lending. Republicans want to sever ties with Fannie and Freddie once the crisis abates. The Obama administration and Congressional Democrats have insisted on postponing the argument until after the midterm elections.

In the meantime, Fannie and Freddie are, at public expense, removing owners who cannot afford their homes, reselling the houses at much lower prices and financing mortgage loans for the new owners.

The two companies together accounted for 17 percent of real estate sales in Arizona during the first four months of the year, almost three times their share of the market during the same period last year, according to an analysis by MDA DataQuick.

Valarie Ross, who lives in the Phoenix suburb of Avondale, has watched six of the nine homes visible from her lawn chair emptied by moving trucks during the last year. Four have been resold by the government. “One by one,” she said. “Just amazing.”

The population of Pinal County, where Mr. Bridwell lives and works, roughly doubled to 340,000 over the last decade. Developers built an entirely new city called Maricopa on land assembled from farmers. Buyers camped outside new developments, waiting to purchase homes. One builder laid out a 300-lot subdivision at the end of a three-mile dirt road and still managed to sell 30 of the homes.

Mr. Bridwell sold plenty of those houses during the boom, then cut workers as prices crashed. Now his firm, Golden Touch Realty, again employs as many people as at the height of the boom, all working exclusively for Fannie Mae. The payroll now includes a locksmith to secure foreclosed homes and two clerks devoted to federal paperwork.

Golden Touch gets more listings from Fannie Mae than any other firm in Pinal County. Mr. Bridwell said he was ready to jump because he remembered the last time the government ended up owning thousands of Arizona houses, after the late-1980s collapse of the savings and loan industry.

“The way I see it,” said Mr. Bridwell, whose glass-top desk displays membership cards from the Republican National Committee, “is that we’re getting these homes back into private hands.”

Selling a house generally costs the government about $10,000. The outsides are weeded and the insides are scrubbed. Stolen appliances are replaced, brackish pools are refilled. And until the properties are sold, they must be maintained. Fannie asks contractors to mow lawns twice a month during the summer, and pays them $80 each time. That’s a monthly grass bill of more than $10 million.

All told, the companies spent more than $1 billion on upkeep last year.

“We may be behind many loans on the same street, so we believe that it’s in everyone’s best interest to aggressively do property maintenance,” said Chris Bowden, the Freddie Mac executive in charge of foreclosure sales.

Prices have plunged. So by the time a home is resold, Fannie and Freddie on average recoup less than 60 percent of the money the borrower failed to repay, according to the companies’ financial filings. In Phoenix and other areas where prices have fallen sharply, the losses often are larger.

Foreclosures punch holes in neighborhoods, so residents, community groups and public officials are eager to see properties reoccupied. But there also is concern that investors are buying many foreclosures as rental properties, making it harder for neighborhoods to recover.

Real estate agents tend to favor investors because the sales close surely and quickly and there is the prospect of repeat business. But community advocates say that Fannie and Freddie have an obligation to sell houses to homeowners.

David Adame worked for Fannie Mae’s local office during the boom, on programs to make ownership more affordable. Now with prices down sharply, Mr. Adame sees a second chance to put people into homes they can afford.

“Yes, move inventory,” said Mr. Adame, now an executive focused on housing issues at Chicanos por la Causa, a Phoenix nonprofit group, “but if we just move inventory to investors, then what are we doing?”

Executives at both Fannie and Freddie say they have an overriding obligation to limit losses, but that they are taking steps to sell more homes to families.

Fannie Mae last summer announced that it would give people seeking homes a “first look” by not accepting offers from investors in the first 15 days that a property is on the market. It also offers to help buyers with closing costs, and prohibits buyers from reselling properties at a profit for 90 days, to discourage speculation. Fannie Mae said that 68.4 percent of buyers this year had certified that they would use the house as a primary residence.

Freddie Mac has adopted fewer programs, but it said it had sold about the same share of foreclosures to owner-occupants.

The companies also have agreed to sell foreclosed homes to nonprofits using grants from the federal Neighborhood Stabilization Program. Chicanos por la Causa, which won $137 million under the program in partnership with nonprofits in eight other states, plans to buy more than 200 homes in Phoenix in the next two years. It plans to renovate them to sell to local families.

The scale of such efforts is small. The home ownership rate in Phoenix continues to fall as foreclosures pile up and renters replace owners.

But John R. Smith, chief of Housing Our Communities, another Phoenix-area group using federal money to buy foreclosures, says he tries to focus on salvaging one property at a time.

“I tell them, ‘O.K., you want to unload 10 houses to that guy, fine,’ ” he said. “ ‘Now give me this one. And this one. And one over here.’ ”

[Demeter]

121. END RESULT: THE ENTIRE HOUSING BUSINESS IS UPENDED

By using Fannie and Freddie and probably Ginnie as "bad banks", the Feds have helped out the commercial banks and trashed the Roosevelt innovations simultaneously.

Fannie and Freddie are unlikely to ever return to their primary function: securitizing mortgages for institutional investors; as a sole focus. Yet even now Fannie and Freddie are the only market for mortgages--who are they selling them to? Not China--China got out of GSE bonds two years ago. The Fed Reserve? They are full up, I think.

So the US Govt. is laundering all the houses gone poof, recycling them to "investors" so that we return to a nation of landlords and tenants.

Thing is, without jobs, this will further divide the nation into Haves and Have Nots. Watch for federally-subsidized rent vouchers next, when nobody can afford to even rent the damn housing stock.

[Po_d Mainiac]

124. Call it what it is...Fraud

snip

Recent filings by two Federal Home Loan Banks — in San Francisco and Seattle — offer an intriguing way to clear this high hurdle. Lawyers representing the banks, which bought mortgage securities, combed through the loan pools looking for discrepancies between actual loan characteristics and how they were pitched to investors.

You may not be shocked to learn that the analysis found significant differences between what the Home Loan Banks were told about these securities and what they were sold.

snip

Among the 10 defendants in the cases are Deutsche Bank, Credit Suisse, Merrill Lynch, Countrywide and UBS. None of these banks would comment. :popcorn:

http://www.nytimes.com/2010/06/20/business/20gret.html?ref=gretchen_morgenson

[Demeter]

132. Congress Defends the Big Guys

http://www.nytimes.com/2010/06/20/opinion/20sun1.html?hpw



In the first week of talks over a financial regulatory reform bill, Democratic lawmakers — in some cases with apparent White House backing — have been defeating or delaying reforms to protect individual investors. Instead, they are catering to corporate interests that prefer the status quo — and write big campaign checks.

At its most basic, this bill is supposed to restore stability and fairness to the markets and give Americans some confidence that their efforts to save and invest will not be undone — over and over again — by the destructive excesses of banks and corporations.

Those goals are being undermined by cynical maneuvers. Here is the damage assessment:

COOKING THE BOOKS. A majority of Senate negotiators, including two Democrats, approved a bad provision from the House version of the bill to exempt most publicly traded companies (those worth less than $75 million) from an antifraud auditing requirement in the Sarbanes-Oxley law, passed in 2002 after the Enron debacle. The argument is that the audits are too burdensome, but research shows that they reduce errors and fraud, and that refinements to the law from 2007 have made them less onerous. The upshot is that a bill that is supposed to be about strengthening regulation would instead end a safeguard against financial fraud.

KEEPING CORPORATE BOARDS SAFE FOR CRONIES. Both versions of the reform bill clarified the authority of the Securities and Exchange Commission to make it easier for shareholders to nominate corporate directors. The clarification is useful, because the S.E.C. has been threatened with lawsuits from industry-supported groups if it writes new nomination rules. The reform would give shareholders a chance to shake up boards that have become rubber stamps for management decisions.

Then, last week, Senator Christopher Dodd gutted the Senate version, with the reported encouragement of the White House. He proposed that shareholders must hold an ownership stake of at least 5 percent to nominate a director, a level that would be exceedingly difficult to reach. As such, his proposal would effectively kill shareholders’ ability to more efficiently influence boards.

House and Senate negotiators have not yet reached a decision. The correct approach is to allow the S.E.C. to write and enforce the rules as it sees fit.

SHORTCHANGING THE S.E.C. The Senate’s version of reform would allow the S.E.C. to finance itself through fees it already imposes on securities transactions and corporate filings, rather than having Congress decide its budget each year. The House was on board with the idea. Self funding would help ensure adequate resources.

But lawmakers who stand to lose control of the S.E.C. budget have objected, leading some of them to seek a deal that would somehow retain the power of Congressional appropriators. In the best interests of the S.E.C. and investors, supporters of self funding, including Senator Charles Schumer of New York, need to hang tough.

Among the other unresolved issues is a long overdue reform to require brokers who give investment advice to act in their clients’ best interest. The House version is in favor of imposing a fiduciary duty; the Senate version lamely calls for a study and other delays.

If lawmakers are unwilling to enact fundamental investor protections, there is little hope that they will act boldly on far-reaching structural reforms, like curbing banks’ risky involvement in derivatives dealmaking and establishing a strong new regulator for consumer financial protection.

[Demeter]

133. The New York Times' Timely Whitewash of Goldman Sachs

http://www.huffingtonpost.com/raymond-j-learsy/the-new-york-times-timely_b_616953.html

At this critical moment, while the House and Senate are merging the final measure of the most significant changes to financial regulation since the Great Depression, Goldman Sachs is fighting tooth and nail to water down Congress' Financial Regulatory Reform Bill before it comes to a vote in the next days. It is a moment for the 'old boy' network to go into high gear.

Goldman's objective is to protect its massive proprietary trading desks, the source of much of its profits and the focus of the new bill. The bill reportedly incorporates a tough 'Volcker Rule' prohibiting banks engaged in commercial lending -- and thereby having access to federally insured deposits, access to myriad federal programs and bountiful Federal Reserve funds at the Fed window -- to engage in naked trading (placing bets on commodities and financial instruments in which they or their clients have no business interest, i.e. taking out fire insurance on someone else's house, as a grim hypothetical).

It is what Goldman, once having been a classic investment bank helping to finance businesses and grow the economy, now does most profitably. In other realms it's known as playing casino with the house's money, and the Volcker Rule would bring it to a stop. It would cause them to move their 'proprietary' trading activities to other entities where they no longer have preferred access to the banking system and implied federal guarantees, thereby placing the entire system at risk, as was the case with much of Wall Street during the recent meltdown.

So just this week, along comes a great whitewash orchestrated by the New York Times and their star financial reporter, Andrew Ross Sorkin, author of the best seller Too Big to Fail: The Inside Story of How Wall Street and Washington Fought to Save the Financial System -- and Themselves.

In a column published earlier this week in the New York Times, Mr. Sorkin begins "Despite all the bad headlines-..." and then goes on to regale us with all the big names singing hosannas to Goldman. "We trust them" rings forth from Jeffrey Immelt, the CEO of General Electric. "Goldman has been politicized, and its important to look beyond the demagogy..." Sorkin quotes the chief financial officer of Aetna, Joseph M. Zubretsky. Not left out is Warren Buffett "who has invested billions" in Goldman and has come to the defense of Goldman's actions in a curious application of 'caveat emptor,' as in the now infamous 'Abacus' deal. Here Buffet instructs us, in effect, that if Goldman was selling you a used car with faulty brakes under the banner of a 'Moody's Triple A' rating and the imprimatur of what once was one of the most hallowed names on Wall Street, it is the buyers fault if he/she didn't check out the brakes by examining the underside of the car before the smash up. Sadly, that is what much of Wall Street has come to.

And then Mr. Sorkin, treating us as though we were all sitting in the corner with a dunce cap on, tries to smooth over "accusations that Goldman sometimes wore multiple, seemingly conflicting hats." He cites Hyatt Hotels and its chairman Mr. Thomas J. Pritzker. It seems that when Goldman was advising Hyatt Hotels about selling a stake in its hotel chain and an investor dropped out, "Goldman's own private equity arm swooped in. Did Goldman profit? Probably. But Mr Prizker was just glad the deal got done." Sorkin thereby leaves us with the impression that Goldman's multi-tasking is just fine. This leaves the reader confused between Goldman's function as an investment banker and its proprietary trading, thereby bringing succor to those who would do away with the Volcker rule in the new financial reform legislation.

Oh yes, and by the way, Goldman Sachs advises the New York Times Company.

[Demeter]

22. HAIL TO THE CHIEF

Obama urges G20 to boost demand

President Barack Obama on Friday urged other G20 countries to boost domestic demand and increase exchange rate flexibility to encourage global growth and rebalance the world economy.

In what appeared to be a warning aimed at China ahead of next weekend’s meeting of G20 heads of government in Toronto, the White House released a presidential letter saying: “I also want to underscore that market-determined exchange rates are essential to global economic vitality.”

Read more >>
http://link.ft.com/r/KC2844/18MI7C/52KB7/6VICNR/6VM97D/SN/t


I THOUGHT OF WRITING HELL TO THE CHIEF...BUT I REFRAINED.

[Demeter]

32. Jobs bill blocked in Senate

http://www.washingtonpost.com/wp-dyn/content/article/2010/06/17/AR2010061705548.html?hpid=moreheadlines

The Senate effectively rejected a slimmed-down package of jobless benefits and state aid late Thursday, rebuffing President Obama's call for urgent action to bolster the economic recovery.

Sens. Ben Nelson (D-Neb.) and Joseph I. Lieberman (I-Conn.) voted with a united Republican caucus to block the approximately $120 billion package. The measure needed 60 votes to advance, but garnered only 56.

Democratic leaders, who had predicted victory less than 24 hours earlier, vowed not to give up on the measure, but acknowledged that they have no clear path to securing the one or two Republican votes needed to push it to final passage. Though the sprawling package contains a number of must-pass provisions, Republicans have been steadfast in their opposition, insisting that the full cost of the measure be covered by cutting existing government programs...

[amandabeech]

59. There's a great line in the story about how fighting the recession

has hugely enlarged the deficit.

When do war stories mention the impact on the deficit of seven years of two wars, one of them absolutely worthless right from the get-go?

[bread_and_roses]

78. every time I read of Holy Joe blocking some Dem Bill...

...all I can think is Karma...How do you like him now? You all backed him, over the will of the Primary voters in your own Party, one of the many long nails driven into the coffin of the so-beloved notion around other fora here that we on the ground should only challenge our Dem candidates in primaries but must rally round once "the people" have spoken - no matter how loathsome the D on the ballot. (I should clarify that the "you" I refer to is the Dem establishment.)

And then I think...wait...what do you want to bet that the other Ds, when bargaining with their Corporate Masters in back rooms, say, "listen, I have to back this (whatever Bill has some shred of sanity) 'cause the "unwashed" back home will expect it, but don't worry...we always have Holy Joe to throw the wrench in the works...we have you covered, so just keep those $$ rolling my way."

It's all a sham. Just like Obama, miserably failing at looking leader-like because he won't do the obvious and put the US gov't in charge of the clean-up, freezing all BP's assets (or whatever the right word is for giving US first draw on every cent they have) while making BP pay every cent it costs - including the fuel oil for all those Coast Guard ships and every hour of their pay, maintenance, etc. - and putting their engineers, scientists, everyone else under OUR supervision, tries to cover his own subservient status by fake "kick ass" comments and empty promises.

None of it any more real than a performance of "Annie" on stage, but lacking the charm and fun of the production.

However, no matter how our Corporate Stooges in DC try to play it out, this time Daddy Warbucks (AKA BP) may be truely down for the count - he's already stollen every cent in Annie's little piggy bank, and no end in sight.

[bread_and_roses]

79. I realize I digressed into the Gulf and Obama....

...it's cause I can't think of anything else.

I wanted to post exerpts from this week's "Regressive Antidote" (available on commondreams.org) but in deference to our not getting locked down again I refrained.

[Demeter]

80. PLEASE DO!

We have to use our forum, or we lose it.

[Demeter]

36. On eve of G-20 economic summit in Toronto, Obama seeks cooperation

http://www.washingtonpost.com/wp-dyn/content/article/2010/06/18/AR2010061800002.html

President Obama warned world economic leaders in a letter this week that the global recovery could founder on growing divisions over issues they pledged a year ago to resolve cooperatively...

[Demeter]

46. Obama renews debate on energy bill

http://www.latimes.com/news/nationworld/nation/la-na-energy-congress-20100617,0,3898972.story


The wheels are turning on an issue that was all but dead before the gulf oil spill. Now the president is to meet with senators for broad, bipartisan talks about the legislative path forward.

President Obama may not yet have persuaded Congress to approve a sweeping new energy bill, but as Senate Democrats meet behind closed doors Thursday to hammer out a list of proposals, he has clearly rekindled the debate.

In a sign of the president's engagement on a goal that was all but given up for dead before oil started gushing in the gulf, Obama has summoned eight senators to the White House next week for broad, bipartisan talks about the legislative path forward.

Obama, after his morning meeting with BP executives at the White House, also sat down Wednesday with Sen. Scott Brown (R-Mass.), who has been a swing vote on several issues this year...

[amandabeech]

60. A comprehensive clean energy bill doesn't have that much to do with

reducing our dependence on oil for transportation.

It seems that few people understand that oil is only used to generate electricity when demand is at its absolute peak on a 105 degree summer day and the utilities fire up the diesel generators.

If Obama wants to talk about CAFE standards, electric cars and public transit, fine.

However, if he wants to talk about anything that makes electricity more expensive, when our competitors like China, Mexico and India do nothing, he will send industries that use electricity off shore even faster than they are going now.

And the electricity will be generated by less efficient coal fired generators than we have here.

The end result will do nothing to lower carbon emissions on the planet, but will surely leave more unemployed here in the U.S.

Look where the "green energy" solar power arrays are made. Not here. In China.

Less carbon and green jobs my foot.

[Demeter]

64. Climate-energy bill cost for consumers: up to $146 a year

http://www.csmonitor.com/USA/Politics/2010/0616/Climate-energy-bill-cost-for-consumers-up-to-146-a-year

A stalled climate-energy bill in the Senate got a boost Tuesday from federal regulators who reported it would not be too costly, then from President Obama...

NOT TOO COSTLY? WHAT ABOUT THE PEOPLE WITHOUT JOBS AND INCOME? HOW WAS THEIR SHARE HANDLED?

[amandabeech]

104. Congress exists in a world in which everyone over the age of 30 makes $100,000 a year

and has no student loans. Congress recently acknowledged that few of their staff members make that much and opened a student loan forgiveness fund for them. Of course, if any of them will bring themselves to hire an older person, that person won't get any benefit from a young person's benefit. I wonder if they have a pool to pay for parent's nursing home bills?

Everyone has a job in Congressworld, and no one is afraid that it will go overseas or be taken by someone from overseas explicitly imported to do that job for considerably less than $100,000.

In Congressworld, everyone has the ability to go to a top 25 college and everyone WANTS to go to college, too.

In other words, Congresspersons think that everyone is like them and their friends, and legislate accordingly.

How else could they have spent a year mouldering around with the health care bill and bailing out banksters when MANY PLACES HAD 20% UNEMPLOYMENT?

Each of them should be dropped in metro Detroit or Flint with a hundred bucks in cash and told to fend for themselves for three months.

[Demeter]

113. TRUER WORDS WERE NEVER SAID

The DC Bubble afflicts us all.

[amandabeech]

142. Thanks, Demeter.

It's much better not to vent alone.

[Tansy_Gold]

146. I'm with you, too, on this

They haven't a fucking clue.

[amandabeech]

147. Thanks, Tansy!

Glad to have you on board, too!

[Tansy_Gold]

148. How much would it cost SRP and APS. . . . .

To put photovoltaic systems on, say, half the rooftops in central and southern Arizona?

SRP (Salt River Project) and APS (Arizona Public Service) are two of the largest power companies in Arizona. Much of the electricity here is generated by traditional coal-fired and natural gas plants as well as nuclear and hydro.

What would it cost if SRP and APS footed the bill for, round numbers, 250,000 rooftop generating stations? Building owners would get to use what their generators put out, with the rest going back to the power companies. If the building consumes more than it generates, it pays the difference, but it does NOT get paid for the excess it generates. That's the price the property owner "pays" for getting free power. The equipment remains the property of the power company; they have to maintain it.

Start with low-income homeowners, public buildings, and commercial real estate first. Why not? Wouldn't require any invasion of the wilderness, no large and potentially dangerous windfarms. Who would even notice a modest PV array on the top of a mall or a school or a police station or a public library?



WHY THE HELL NOT?



Tansy Gold, thinking like RFK????

[DemReadingDU]

150. Somebody wouldn't get their usual greedy profits

12/17/09
Back in Ohio,

Construction on what will be the largest solar power array in Southwest Ohio has begun in Washington Twp., the Dayton Power & Light Co. said Wednesday Dec. 16.
The 1.1 megawatt array on seven acres near the utility’s Yankee substation will be on line in March 2010. The facility will have 9,000 solar panels and will generate enough electricity to power nearly 150 homes.
The project is expected to cost approximately $5 million, the utility said. Although the test project is relatively small compared to other such facilities nationwide, it could be the first of many here.
http://www.daytondailynews.com/news/dayton-news/dpl-to-build-7dpl-to-build-7-acre-solar-power-array-in-washington-twp-451498.html

$5 million project for only 150 homes!
Somebody is getting boatloads of profits.

[Demeter]

47. Barack Obama's pound of flesh: $20bn compensation and no BP dividends

http://www.guardian.co.uk/environment/2010/jun/16/barack-obama-bp-dividends-compensation

MORE AT LINK INCLUDING VIDEO

[Demeter]

87. Call the Politburo, We’re in Trouble Entering the Soviet Era in America By Tom Engelhardt

http://www.informationclearinghouse.info/article25746.htm

Mark it on your calendar. It seems we’ve finally entered the Soviet era in America.

You remember the Soviet Union, now almost 20 years in its grave. But who gives it a second thought today? Even in its glory years that “evil empire” was sometimes referred to as “the second superpower.” In 1991, after seven decades, it suddenly disintegrated and disappeared, leaving the United States -- the “sole superpower,” even the “hyperpower,” on planet Earth -- surprised but triumphant.

The USSR had been heading for the exits for quite a while, not that official Washington had a clue. At the moment it happened, Soviet “experts” like Secretary of Defense Robert Gates (then director of the CIA) still expected the Cold War to go on and on. In Washington, eyes were trained on the might of the Soviet military, which the Soviet leadership had never stopped feeding, even as its sclerotic bureaucracy was rotting, its economy (which had ceased to grow in the late 1970s) was tanking, budget deficits were soaring, indebtedness to other countries was growing, and social welfare payments were eating into what funds remained. Not even a vigorous, reformist leader like Mikhail Gorbachev could staunch the rot, especially when, in the late 1980s, the price of Russian oil fell drastically.

Looking back, the most distinctive feature of the last years of the Soviet Union may have been the way it continued to pour money into its military -- and its military adventure in Afghanistan -- when it was already going bankrupt and the society it had built was beginning to collapse around it. In the end, its aging leaders made a devastating miscalculation. They mistook military power for power on this planet. Armed to the teeth and possessing a nuclear force capable of destroying the Earth many times over, the Soviets nonetheless remained the vastly poorer, weaker, and (except when it came to the arms race) far less technologically innovative of the two superpowers.

In December 1979, perhaps taking the bait of the Carter administration whose national security advisor was eager to see the Soviets bloodied by a “Vietnam” of their own, the Red Army invaded Afghanistan to support a weak communist government in Kabul. When resistance in the countryside, led by Islamic fundamentalist guerrillas and backed by the other superpower, only grew, the Soviets sent in more troops, launched major offensives, called in air power, and fought on brutally and futilely for a decade until, in 1989, long after they had been whipped, they withdrew in defeat.

Gorbachev had dubbed Afghanistan “the bleeding wound,” and when the wounded Red Army finally limped home, it was to a country that would soon cease to exist. For the Soviet Union, Afghanistan had literally proven “the graveyard of empires.” If, at the end, its military remained standing, the empire didn’t. (And if you don’t already find this description just a tad eerie, given the present moment in the U.S., you should.)

In Washington, the Bush administration -- G.H.W.’s, not G.W.’s -- declared victory and then left the much ballyhooed “peace dividend” in the nearest ditch. Caught off guard by the collapse of the Soviet Union, Washington’s consensus policymakers drew no meaningful lessons from it (just as they had drawn few that mattered from their Vietnam defeat 16 years earlier).

Quite the opposite, successive American administrations would blindly head down the very path that had led the Soviets to ruin. They would serially agree that, in a world without significant enemies, the key to U.S. global power still was the care and feeding of the American military and the military-industrial complex that went with it. As the years passed, that military would be sent ever more regularly into the far reaches of the planet to fight frontier wars, establish military bases, and finally impose a global Pax Americana on the planet.

This urge, delusional in retrospect, seemed to reach its ultimate expression in the second Bush administration, whose infamous “unilateralism” rested on a belief that no country or even bloc of countries should ever again be allowed to come close to matching U.S. military power. (As its National Security Strategy of 2002 put the matter -- and it couldn’t have been blunter on the subject -- the U.S. was to “build and maintain” its military power “beyond challenge.”) Bush’s military fundamentalists firmly believed that, in the face of the most technologically advanced, bulked-up, destructive force around, hostile states would be “shocked and awed” by a simple demonstration of its power and friendly ones would have little choice but to come to heel as well. After all, as the president said in front of a Veterans of Foreign Wars convention in 2007, the U.S. military was “the greatest force for human liberation the world has ever known.”

In this way, far more than the Soviets, the top officials of the Bush administration mistook military power for power, a gargantuan misreading of the U.S. economic position in the world and of their moment.

IT'S LONG BUT WORTH THE READ--CONTINUES AT LINK

[Demeter]

95. WARBUCKS ON WELFARE

FDR: I want to feed them and house them and pay them. Not much, but enough to send home to their parents. So they can hold their heads up again and be proud to be Americans.

Annie: That's a swell idea.

Daddy Warbucks: It isn't a swell idea Annie. It's mistaken foolishness.

[Demeter]

24. Oliver "Daddy" Warbucks

"Lieutenant General Oliver "Daddy" Warbucks is a fictional character from the comic strip Little Orphan Annie. He first appeared in the Annie strip on September 27, 1924. His age in the series is around 52.

He was born about 1894, near the small town of Supine. His father, a section boss on the railroad, was killed when he was a month old. His mother was left with only "gumption" and a house in which she was able to keep boarders. His early youth in Supine involved cornering all the marbles in town at age nine, serving as a messenger for the telegraph company, having a girlfriend named Millie, fishing, swimming and raiding melon patches with Spike Spangle and beating up the son of the banker who planned to foreclose on his mother's house. Then on June 7, 1905 when he was only 11, his mother died at age 30, of typhoid. On the night of the funeral he was put on the outbound Limited. Presumably he later spent some time in the city for he and Paddy Cairns were companions together in the old 8th Ward. Though mentioned rarely in the series, Warbucks was also involved in the Freemasons even serving as Worshipful Master.

Work

For a few semesters he attended college studying engineering but found no time for football or girls because he had to work seven nights a week and Sundays in the local steel mill to pay off a debt. His family background and lack of prep school education kept him from entering a fraternity. He eventually became foreman in the rolling mill, married Mrs. Warbucks, worked and planned for a family, kids, and house of their own. When "Daddy" began to make big money during World War I, the marital happiness was lost but he retained his identity with the common people.

WWI

After the war, Warbucks continued as an industrialist, but became a philanthropist as well—his fortune had built to "ten zillion dollars." His wife instigated the taking in (no adoption ever took place) of Annie while Warbucks was away on a business trip. On his return, he was smitten with Annie and, as her father-figure, offered the girl support as needed. He often intervened in Annie's life during crisis, always returning in time to save the day.

World War II

During World War II, Warbucks, along with his bodyguards Punjab and Asp, joined Allied forces. Warbucks became a three-star general.

Post WWII

Despite his immense wealth, Warbucks is, now and then, reduced to such poverty as to be forced to raid Annie's piggy bank. He always leaves an I.O.U., and is always restored to his wealth and repays Annie.

He was knighted by the Queen later in life.

Views

Warbucks was often a platform for cartoonist Harold Gray's political views, which were free market-based. He sometimes expounded on the need for wealthy men to work hard—lest the masses have no employment. At the same time, capitalists who underpaid or mistreated their workers were portrayed in a negative light, with corrupt businessmen often being shown as villains. While, in the strip, Warbucks would interact with the rich and powerful, the close relationship in the play and movie between Warbucks and Franklin Delano Roosevelt (FDR) would likely have been anathema to Gray, who opposed the New Deal policies of FDR and the Democrats. In fact, in 1944, Gray briefly killed off Warbucks on the grounds that it was widely thought that capitalists were obsolete. Warbucks was resurrected, however, after FDR's death. Nonetheless, severed from Gray's control, the fictional Warbucks took on a life of his own, his versatility and craftiness seeming as credible as FDR's hobnobbing on stage with Republicans in the atmosphere of a musical."--WIKIPEDIA



Grace: Miss Hannigan. I am the private secretary to Oliver Warbucks.

Miss Hannigan: The Oliver Warbucks? Oliver Warbucks, the millionaire?

Grace: Oh no. Oliver Warbucks, the billionaire.

Miss Hannigan: Mary, mother of God.

fROM THE 1982 MOVIE

[Demeter]

25. What purpose does the character Oliver Warbucks serve in the musical Annie?

http://wiki.answers.com/Q/What_purpose_do_the_characters_Oliver_Warbucks._and_Rooster_and_Lilly_serve_in_the_musical_Annie

"It may be argued the character Oliver Warbucks(usually styled daddy) is a sort of updated and reformed Scrooge, in his case a Defense contractor haunted by possible misuse of his products-hence guilt. The notion that charity is sprung from guilt-which sort of reduces (Love your neighbor) to the level of parking laws(!) is not too far removed. Oliver Warbucks-War Bucks, hence defense contractor, is in a loose sense a modernized and reformed Scrooge type..."

[Demeter]

26. I Don't Need Anything But You

http://www.youtube.com/watch?v=ncBns8bWgns&feature=related

[Demeter]

84. Annie: Who would want to kill Mr. Warbucks?

Grace: The Bolsheviks, dear. He's living proof that the American system really works and the Bolsheviks don't want anyone to know about that.
Annie: The Bolsheviks? Leapin' lizards!

WARBUCKS IS DESIGNED TO MAKE SOCIALISTS LOOK BAD--SEE HUDSON'S INTERVIEW!

[Demeter]

96. WHAT A SOFTIE HE IS!

Daddy Warbucks: Absolutely not! I'm a businessman. I love money, I love power, I love capitalism. I do not now and never will love children.

[Demeter]

28. GREENSPAM

U.S. Debt and the Greece Analogy By ALAN GREENSPAN

http://online.wsj.com/article/SB10001424052748704198004575310962247772540.html?KEYWORDS=greenspan+

An urgency to rein in budget deficits seems to be gaining some traction among American lawmakers. If so, it is none too soon. Perceptions of a large U.S. borrowing capacity are misleading.

Despite the surge in federal debt to the public during the past 18 months—to $8.6 trillion from $5.5 trillion—inflation and long-term interest rates, the typical symptoms of fiscal excess, have remained remarkably subdued. This is regrettable, because it is fostering a sense of complacency that can have dire consequences.

The roots of the apparent debt market calm are clear enough. The financial crisis, triggered by the unexpected default of Lehman Brothers in September 2008, created a collapse in global demand that engendered a high degree of deflationary slack in our economy. The very large contraction of private financing demand freed private saving to finance the explosion of federal debt. Although our financial institutions have recovered perceptibly and returned to a degree of solvency, banks, pending a significant increase in capital, remain reluctant to lend.

Beneath the calm, there are market signals that do not bode well for the future. For generations there had been a large buffer between the borrowing capacity of the U.S. government and the level of its debt to the public. But in the aftermath of the Lehman Brothers collapse, that gap began to narrow rapidly. Federal debt to the public rose to 59% of GDP by mid-June 2010 from 38% in September 2008. How much borrowing leeway at current interest rates remains for U.S. Treasury financing is highly uncertain.

The U.S. government can create dollars at will to meet any obligation, and it will doubtless continue to do so. U.S. Treasurys are thus free of credit risk. But they are not free of interest rate risk. If Treasury net debt issuance were to double overnight, for example, newly issued Treasury securities would continue free of credit risk, but the Treasury would have to pay much higher interest rates to market its newly issued securities.

In the wake of recent massive budget deficits, the difference between the 10-year swap rate and 10-year Treasury note yield (the swap spread) declined to an unprecedented negative 13 basis points this March from a positive 77 basis points in September 2008. This indicated that investors were requiring the U.S. Treasury to pay an interest rate higher than rates that prevailed on comparable maturity private swaps.

(A private swap rate is the fixed interest rate required of a private bank or corporation to be exchanged for a series of cash flow payments, based on floating interest rates, for a particular length of time. A dollar swap spread is the swap rate less the interest rate on U.S. Treasury debt of the same maturity.)

At the height of budget surplus euphoria in 2000, the Office of Management and Budget, the Congressional Budget Office and the Federal Reserve foresaw an elimination of marketable federal debt securities outstanding. The 10-year swap spread in August 2000 reached a record 130 basis points. As the projected surplus disappeared and deficits mounted, the 10-year swap spread progressively declined, turning negative this March, and continued to deteriorate until the unexpected euro-zone crisis granted a reprieve to the U.S.

The 10-year swap spread quickly regained positive territory and by June 14 stood at a plus 12 basis points. The sharp decline in the euro-dollar exchange rate since March reflects a large, but temporary, swing in the intermediate demand for U.S. Treasury securities at the expense of euro issues.

The 10-year swap spread understandably has emerged as a sensitive proxy of Treasury borrowing capacity: a so-called canary in the coal mine.

I grant that low long-term interest rates could continue for months, or even well into next year. But just as easily, long-term rate increases can emerge with unexpected suddenness. Between early October 1979 and late February 1980, for example, the yield on the 10-year note rose almost four percentage points.

In the 1950s, as I remember them, U.S. federal budget deficits were no more politically acceptable than households spending beyond their means. Regrettably, that now quaint notion gave way over the decades, such that today it is the rare politician who doesn't run on seemingly costless spending increases or tax cuts with borrowed money. A low tax burden is essential to maintain America's global competitiveness. But tax cuts need to be funded by permanent outlay reductions.

The current federal debt explosion is being driven by an inability to stem new spending initiatives. Having appropriated hundreds of billions of dollars on new programs in the last year and a half, it is very difficult for Congress to deny an additional one or two billion dollars for programs that significant constituencies perceive as urgent. The federal government is currently saddled with commitments for the next three decades that it will be unable to meet in real terms. This is not new. For at least a quarter century analysts have been aware of the pending surge in baby boomer retirees.

We cannot grow out of these fiscal pressures. The modest-sized post-baby-boom labor force, if history is any guide, will not be able to consistently increase output per hour by more than 3% annually. The product of a slowly growing labor force and limited productivity growth will not provide the real resources necessary to meet existing commitments. (We must avoid persistent borrowing from abroad. We cannot count on foreigners to finance our current account deficit indefinitely.)

Only politically toxic cuts or rationing of medical care, a marked rise in the eligible age for health and retirement benefits, or significant inflation, can close the deficit. I rule out large tax increases that would sap economic growth (and the tax base) and accordingly achieve little added revenues.

With huge deficits currently having no evident effect on either inflation or long-term interest rates, the budget constraints of the past are missing. It is little comfort that the dollar is still the least worst of the major fiat currencies. But the inexorable rise in the price of gold indicates a large number of investors are seeking a safe haven beyond fiat currencies.

The United States, and most of the rest of the developed world, is in need of a tectonic shift in fiscal policy. Incremental change will not be adequate. In the past decade the U.S. has been unable to cut any federal spending programs of significance.

I believe the fears of budget contraction inducing a renewed decline of economic activity are misplaced. The current spending momentum is so pressing that it is highly unlikely that any politically feasible fiscal constraint will unleash new deflationary forces. I do not believe that our lawmakers or others are aware of the degree of impairment of our fiscal brakes. If we contained the amount of issuance of Treasury securities, pressures on private capital markets would be eased.

Fortunately, the very severity of the pending crisis and growing analogies to Greece set the stage for a serious response. That response needs to recognize that the range of error of long-term U.S. budget forecasts (especially of Medicare) is, in historic perspective, exceptionally wide. Our economy cannot afford a major mistake in underestimating the corrosive momentum of this fiscal crisis. Our policy focus must therefore err significantly on the side of restraint.

Mr. Greenspan, former chairman of the Federal Reserve, is president of Greenspan Associates LLC and author of "The Age of Turbulence: Adventures in a New World" (Penguin, 2007).

[ozymandius]

123. Greenspan Says “Deficit Reduction A Priority” — Hence, You Know its Not

Former Fed Chair Alan Greenspan discussed the Federal deficit in a WSJ OpEd yesterday. In it, he argued that the budding “urgency to rein in budget deficits” is occurring “none too soon.”

Like most of the former Fed Chair’s analyses, forecasts, and economic beliefs, this one is pure, unmitigated nonsense. A brief look at the Greenspan legacy, along with his track record of forecasts, leads to the obvious conclusion: Greenspan is an economist to blithely ignore, as his commentary contains almost nothing of value other than its status as a contrary indicator.

Before we get into the details of his deficit commentary, I must highlight this sentence: “The financial crisis, triggered by the unexpected default of Lehman Brothers in September 2008, created a collapse in global demand that engendered a high degree of deflationary slack in our economy.”

No, Alan, the financial crisis was not triggered by Lehman’s collapse. You are getting the causation exactly backwards: The crisis is what triggered LEH’s collapse. Further, the fall of Lehman was hardly “unexpected.” Whether you want to look at stock price before the collapse, spreads on its debt, David Einhorn’s forensic accounting (he was short LEH) or our own quantitative analysis (we were short LEH), there were plenty of warnings about Lehman’s collapse. It was only unexpected by those whose ideological beliefs blinded them to reality. (Remind you of anyone?)

This is classic Greenspan, demonstrating a lack of knowledge, inconsistency, and disconnected belief system:

1) To say that “remarkably subdued” inflation and long-term interest rates is regrettable reflects 1) a lack of understanding of the current deflationary environment;

2) If inflation and higher interest rates are the “typical symptoms of fiscal excess,” then perhaps the message of the markets is that deficits during the immediate aftermath of a huge recession are not a problem? For a guy who supposedly placed incredible trust in the markets, he sure does cherry pick what he wants, and disregards the rest.

3) The surge was caused by the enormous shortfall in tax revenue due to the recession, and the massive costs of bailing out the banking sector. Treating these costs as if they are ordinary budget items is ridiculous.

http://www.ritholtz.com/blog/2010/06/greenspan-deficit-reduction/

---

This is some righteous smackdown.

[Demeter]

129. Well-Deserved and Horribly Overdue

Greenspan was protected by Reagan's Teflon and GOP enabling. He should have been slapped down 30 years ago.

[Demeter]

35. EUROZONE AND COMMON MARKET

EU to Push Levies on Banks, Financial-Transaction Tax at G-20

http://www.bloomberg.com/apps/news?pid=20601208&sid=aNweOx.o6zPk

European Union leaders vowed to push for global taxes on banks and financial transactions, setting the stage for a conflict over worldwide regulation at next week’s Group of 20 meeting.

With Germany, Britain and France pledging to impose levies on their own banks and to clamp down on financial speculation, the EU called for global taxes that have run into opposition from G-20 powers such as China.

“We want a system of levies and taxes for financial institutions to ensure fair burden-sharing and rein in systemic risks,” German Chancellor Angela Merkel told reporters after an EU summit in Brussels yesterday. “We also want a global system.”

Europe said it will put up a united front at the G-20, which has refused to endorse a bank tax under pressure from Canada, China and Brazil, three countries with banks that suffered less during the 2008 financial crisis.

Proposals for taxes on securities transactions weren’t spelled out in detail, with a statement by the bloc’s 27 leaders saying only that they should be “explored and developed” in concert with the world’s leading economies...

[Demeter]

72. Euro 'will be dead in five years'

http://www.telegraph.co.uk/finance/economics/7806064/Euro-will-be-dead-in-five-years.html

The euro will have broken up before the end of this Parliamentary term, according to the bulk of economists taking part in a wide-ranging economic survey for The Sunday Telegraph.

The single currency is in its death throes and may not survive in its current membership for a week, let alone the next five years, according to a selection of responses to the survey – the first major wide-ranging litmus test of economic opinion in the City since the election. The findings underline suspicions that the new Chancellor, George Osborne, will have to firefight a full-blown crisis in Britain's biggest trading partner in his first years in office.

Of the 25 leading City economists who took part in the Telegraph survey, 12 predicted that the euro would not survive in its current form this Parliamentary term, compared with eight who suspected it would. Five declared themselves undecided. The finding is only one of a number of remarkable conclusions, including that:

• The economy will grow by well over a percentage point less next year than the Budget predicted in March.

• The Government will borrow almost £10bn less next year than the Treasury previously forecast, despite this weaker growth.

• Just as many economists think the Bank of England will not raise rates until 2012 or later as think it will lift borrowing costs this year.

But the conclusion on the euro is perhaps the most remarkable finding. A year ago or less, few within the City would have confidently predicted the currency's demise. But the travails of Greece, Spain and Portugal in recent weeks, plus German Chancellor Angela Merkel's acknowledgement that the currency is facing an "existential crisis", have radically shifted opinion.

Two of the eight experts who predicted that the currency would survive said it would do so only at the cost of seeing at least one of its members default on its sovereign debt. Andrew Lilico, chief economist at think tank Policy Exchange, said there was "nearly zero chance" of the euro surviving with its current membership, adding: "Greece will certainly default on its debts, and it is an open question whether Greece will experience some form of revolution or coup – I'd put the likelihood of that over the next five years as around one in four."

MUCH MORE WAILING AND GNASHING OF TEETH AT LINK

[Demeter]

76. "Europe's Financial Class War Against Labor, Industry and Government" Dr. Michael Hudson.

http://www.informationclearinghouse.info/article25765.htm

GUNS AND BUTTER INTERVIEW AT LINK

[ozymandius]

49. Good evening, all.

Exhausting day. Looking forward for some rest.

What a wonderfully nice theme you have picked for this WEE thread!

[Demeter]

54. Why thank you, Ozy!

I learned from the best.

The special board meeting went well, and then I grabbed 30 minutes in the pool, and then while making ravioli, the storm finally landed like a ton of bricks.

I'm rushing to finish so that if we lose power, nothing else goes wrong.

[Demeter]

82. Together At Last May 9, 2009

http://www.youtube.com/watch?v=d6Zb-1yKgAo&feature=related

[Demeter]

97. WOULD YOU BELIEVE I HAVE A THESIS?

There's been a movement centered in Chicago since at least the 1920's to undo everything progressive in the US, especially the economic arena.

This movement included election fraud (Kennedy, etc), political quid pro quo (like what Blagojevich tried), and propaganda through the comics and the opinion pages and the slant on news in general. It is the ugly underside of the GOP, which is now flowering out in public for all to see, with Sarah Palin as the leading rosebud.

It was supported by the banksters, of course, and the Chicago Boys in economics. It is the Iowa folks from "Music Man", hidebound, suspicious of foreigners, and always ready to be flattered and conned by whichever Reaganesque dude just sauntered into town.

Remember Robert Preston's famous line? He's playing poker with other travelling salesmen on the train. When asked where he was going, he replied: "Wherever the people are as green as the money" and he scoops up the pot.

It is the ignorant, prideful, bigoted Ugly American who is his own worst enemy. And there's always a grifter to take him to the poor house. Like Harold Gray and his sock pupppet, Little Orphan Annie.

[Demeter]

98. Hmmmm....Who Do We Know Just Arrived on the National Scene from Chicago?

It is a rhetorical question.

[Demeter]

99. But It Was a Helluva Movie!

http://www.youtube.com/watch?v=j2SmaBv8aL4&feature=related

http://www.youtube.com/watch?v=yma-p1imse4&feature=related

[Demeter]

100. Daddy Warbucks: They say it can land on a dime... whatever that may be.

Another gem:


Miss Hannigan: Why any kid would want to be an orphan is beyond me.

[Demeter]

101. And....HERE'S ANNIE!

http://www.youtube.com/watch?v=5TK5lZr60HI&feature=related

12 MORE SEGMENTS

[Dr.Phool]

109. I heard there's some college professor from there.

He's gonna straighten everything out, real quick.

[ozymandius]

143. That is one hell of a thesis.

One that is worthy of a great deal of research. This, by the way, is very similar to my own thesis which is a history of economic progress - or lack thereof. It really is a wonder that we have as much popularly representative government as we do now, given the history of the United States. My father, a local politician of my hometown, educated me about political accidents. I suppose it is through some "political accidents" that we merely have what Tocqueville described as 'benign despotism' - though the benevolence has been precipitously degraded during the last regime. After all the corruption that has been embedded in the original system - it often amazes me that we are not totally a government run by Politburo in which people like Bernie Sanders would be in exile at Guantanamo.

[Demeter]

103. NOSTALGIA FOR ROLAND: It’s June in Florida By Bill Bonner

http://dailyreckoning.com/its-june-in-florida/

“You can get wood. You can get brick. You can get stucco. Boy, can you get stucco.” – Groucho Marx

In the Florida land boom of the ’20s, promoter Carl G. Fisher hired a huge, lighted billboard in Times Square in New York. It advertised that “It’s June in Miami,” a claim that was fraudulent 11/12ths of the year. In June, it was just too bad.

South Florida is entering its fourth year of a property slump. Places sell for about half of what they brought three years ago. The retail building across the street is half empty. Signs are everywhere: “Office for rent.” “Ocean front lot for sale.” “Commercial space available.” Here in Delray Beach, the sun is shining. The grass is growing. Waves caress the shore. But our hotel is nearly empty. Many restaurants on Atlantic Avenue are closed. The streets are so quiet the city seems like a ghost town. Then again, it’s so hot and sweaty, even the ghosts wilt.

But the ghosts talk:

“There was nothing languorous about the atmosphere of tropical Miami during that memorable summer and autumn of 1925,” wrote Frederick Lewis Allen in 1931. “ The whole city had become one frenzied real-estate exchange. There were said to be 2,000 real-estate offices and 25,000 agents marketing house-lots or acreage…the city fathers had been forced to pass an ordinance forbidding the sale of property in the street, or even the showing of a map, to prevent inordinate traffic congestion.”

The boom of the 1920s came to an end in 1926. Henry S. Villard, reported what he saw two years later:

Dead subdivisions line the highway, their pompous names half-obliterated on crumbling stucco gates. Lonely white-way lights stand guard over miles of cement side-walks, where grass and palmetto take the place of homes that were to be… Whole sections of outlying subdivisions are composed of unoccupied houses, past which one speeds on broad thoroughfares as if traversing a city in the grip of death.

For three years, Florida’s property market died, even as the rest of the nation danced the charleston. It did not recover until after WWII – 20 years later. And now, it is out of season once more in Florida. The subject of today’s note is why it may never be high season again.

There are no houses for sale here. A house is a tangible thing. Its paint peels. Its roof leaks. Its a/c needs to be replaced. But a home is an agreeable abstraction. So great is the local realtor’s distaste for tangibility, that houses have all been replaced by mansions, estates, compounds, retreats, and most importantly, by ‘homes.’ We find, for example, a “spectacular Palm Beach Estate Home,” with a separate 2-bedroom oxymoron – a “guest home.” It must be a house for guests who refuse to go home. Or perhaps a home for people who refuse to be guests. And if we looked for a home in the country, we would probably find one with a dog home in the back yard.

“This palatial home features over 20,000 square feet of living area,” says a current listing. “Built with entertaining in mind, this home features 9 bars, 2 walk-in wine coolers, 3 outside grilling areas, a 75’ pool surrounded by a 400’ marble dock and patio…summer kitchen with complete with outdoor fireplace…no detail has been overlooked.”

Well, maybe one detail. Who would want to pay $11.5 million for a jumped-up mock-Tuscan relic from the bubble era? Even in the best of circumstances, a major property bust can take decades to fix. In Japan, property collapsed after the stock market bubble popped in ’89. All around it, the world economy kept bubbling away. But Japanese property sank to the bottom anyway. Twenty years later, prices are still down as much as 80%.

The Hoover administration helpfully turned its back, neither causing the bubble of the ’20s nor attempting to repair it. This week, Sheila Blair, chairwoman of the Federal Deposit Insurance Corporation, admitted that the feds now are more involved. Too bad, again. Like Florida in June, government support is not always what it pretends to be. The New York Times:

“For 25 years federal policy has been primarily focused on promoting homeownership and promoting the availability of credit to home buyers,” Ms. Bair said. She mentioned some of the many subsidies home buyers get, including the home mortgage interest deduction and the ability to deduct property taxes.

She mentioned Fannie Mae and Freddie Mac too. Along with the other federal subsidies, the two agencies largely financed America’s real estate bubble. Now, with their help it could be a long time before the market recovers. Maybe forever. Fannie and Freddie stand behind $5.5 trillion worth of mortgages. More than $1 trillion of them were written during the height of the ’05 –’06 bubble. Those houses, many of them in Florida, are probably underwater now – worth less than the value of their mortgages. Most will go into default…leaving Fannie and Freddie, and indirectly the taxpayers, on the hook. The foreclosed properties will cause properties to sink deeper. And by the time the inventory is finally worked off, circumstances may have changed. Buyers may look to Cuba, Nicaragua or the moon for their retirement havens…leaving Florida to the ghosts forever.

[Dr.Phool]

108. Commercial and residential are pretty much screwed around here.

About 5 miles down the road, in Palm Harbor on US 19, a extremely crowded and traveled road, the finished an nice, upscale, contemporary strip mall about 2 years ago. They have leased exactly zero units in two years.

A little closer, again, off US 19 in Tarpon Springs, next to a sold out sub-division, sits some acreage that's been divided up into approx. 100 home sites. All of the improvements are in. Utilities, cable, water, sewers and roads.They've been ready to build for about 2 years. Now the whole shebang is up for sale. I guess the developer pulled out without building a single house.

On my street, about 10 houses down, across the street sits a nice house on the Anclote River. I looked at it 8 years ago before it went on the market. A very desirable place, with a dock, gulf access, pool and a quiet street. At the right time of year, you can see dolphins and manatees from your deck. We almost bought it, but it needed a few major repairs to the sea wall. It sold as soon as it hit the market. The people who bought it put in some major improvements, and it looks better than it did back then. It's been on the market for over a year for almost the same price the people bought it for 8 years ago.

Another friend of mine has a place across the street from the Gulf in Palm Harbor. He's about 2 blocks from Innisbrook Resort and Country Club, where they hold a few PGA events each year. He's been trying to sell it "by owner", for the last year. He was getting 4-5 inquiries each week. Since the spill, he hasn't gotten a single call.

Yeah, I'd say real estate is pretty much dead on this coast.

[Demeter]

110. Yankees Seek Tax Refuge in the Deep South By Bill Bonner

http://dailyreckoning.com/yankees-seek-tax-refuge-in-the-deep-south/

Florida seems to have been invaded by zombies.

“Injured in a workplace accident? Treated unfairly? Call 1-800-A-LAWYER.” The signs are along the highway…on the radio…and in magazines. Chasing ambulances must be good business in Florida. The advertising must pay.

We got back from Florida on Wednesday and immediately got stuck in a traffic jam. The Washington, DC beltway must be one of the worst traffic areas in the US.

Later, we went to dinner in Bethesda. The downtown area has been spiffed up – like a mall. Restaurants have been replaced with noisy, crowded eateries where you stand in line to get a table…and then wait to get an entree scarcely more refined than a McDonald’s Happy Meal.

Meanwhile, Forbes Magazine tells us that people with money are on the move – from the North to the South. Why? Taxes. Cost of living. Lifestyle.

Judging from what we’ve seen in the Maryland suburbs, it’s not surprising that people are moving out. It’s surprising that anyone is left:

Where America’s Money Is Moving

Topping the list: Collier County, Fla., which includes the city of Naples. Tax returns accounting for 15,150 people showed moves to Collier County from other parts of the country in 2008, the latest year for which IRS data is available. Their average reported income: $76,161 per person – equivalent to $304,644 for a family of four. Although slightly more taxpayers moved out of Collier County than into it, the departing residents’ average income came out to just $26,128 per person.

Households that moved to Collier County principally came from other parts of Florida, with Lee, Miami Dade, Broward, Palm Beach and Orange counties leading the list. Big northern cities also sent lots of migrants: Cook County, Ill. (home to Chicago); Oakland County, Mich. (near Detroit); and Suffolk County, N.Y. (on Long Island) each sent more than 100 people to Collier County during 2008.

In second place is Greene County, Ga., with a population of just 15,743 at the Census Bureau’s last estimate. The IRS data show that in 2008, 788 people moved to the county, about 75 miles east of Atlanta.

Rounding out the top five: Nassau County, Fla., near Jacksonville; Llano County, Texas, 70 miles northwest of Austin; and Walton County, Fla., 80 miles east of Pensacola.

The dominance of the list by Florida and Texas – the former has eight of the top 20 counties, the latter four – makes sense to Robert Shrum, manager of state affairs at the Tax Foundation in Washington, D.C., since neither state has an income tax. “If you’re a high-income earner, then that, from a tax perspective, is going to be a driving decider if you’re going to move to one of those two states,” Shrum says.

After accounting for property taxes, Shrum’s analysis shows that Texas has the fourth-lowest personal tax burden in the country, and Florida has the eighth lowest. Shrum also points to eight states that have targeted wealthy households with extra-high tax brackets: California, New Jersey, New York, Maryland, Hawaii, Oregon, Connecticut and Wisconsin. Six of the top 10 counties the rich are fleeing are located in those states.

[Demeter]

114. I'm Going Swimming

It's too hot, my hip hurts (I had to take the Saturn, as the gas can leaked in Mobius) and the pool is renovated to a fare-thee-well.

See you later, alligator.

[Dr.Phool]

116. Just when you thought Florida had overdosed on stoopid.

They find another 8-ball to start smoking. And Sink and McCollum are running for Governor?


Florida rolls the dice with chunk of pension funds

Kris Hundley, Times staff writer


In Print: Sunday, June 20, 2010

http://www.tampabay.com/news/business/florida-rolls-the-dice-with-chunk-of-pension-funds/1103657


Chasing bigger investment returns, the agency that manages Florida's $113.8 billion public pension fund wants to make far riskier investment bets.

The state wants to reduce the pension fund's holdings in publicly traded stocks and bonds and triple its allocation to hedge funds and other private investments that are less liquid and harder to value.

Earlier this month, the head of the State Board of Administration told his bosses that rearranging the state's portfolio would benefit the nearly 1 million public employees and retirees who depend on the fund, as well as the taxpayers who underwrite the system.

"We will probably have a slightly higher level of return, with a slightly lower level of risk," SBA executive director and chief investment officer Ash Williams told Gov. Charlie Crist, Chief Financial Officer Alex Sink and Attorney General Bill McCollum.

All three voted to approve Williams' plan after a few questions from McCollum and Sink and no comment from Crist. The Legislature still must approve the expansion of the alternative asset class.

Several financial experts said that expecting higher returns with lower risk is as realistic as promising weight loss on an all-you-can eat diet.

"It's basic Finance 101: There's no such thing as reducing risk and increasing return," said Lawrence Weinman, a financial adviser in Los Angeles who teaches endowment investing.

Edward Siedle, an attorney formerly with the Securities and Exchange Commission, said Williams' assertion that he can make the SBA's pot of money grow bigger, faster, with less risk is "the perfect political response. But it's an absurd investment scenario."

Andrew Biggs, former principal deputy commissioner of the Social Security Administration and resident scholar at the American Enterprise Institute, said it may be possible to produce higher returns in the short term. But in the long term, the risks catch up with you.

"There are lots of studies of what percent of active managers beat the market and the answer is, in any given year, it's very low. Over the long term, it's even lower," he said. "People who are doing it may just be lucky. It's like a monkey with a dartboard."

Biggs believes Florida's pension fund, which needs to earn 7.75 percent a year to meet its pension commitments, already has taken on too much risk.

(snip) more at link

[AnneD]

119. The politicians are too cheap.....

to fund it properly.

My only question is....Will the pensioners be getting a buzz cut or a brazilian?

[AnneD]

117. My Mom once told me a poignant story involving Orphan Annie.....

She was born at the tail end of the depression. In a totally rare occurrence at the time-her parents divorced and he got custody of the children (and contact with the mom was severed). He worked as an engineer and brought them home to his parents to take care of him when he was on projects. When Pearl Harbor was bombed-he signed up and because of his engineering skills and because he was the sole support of his elderly parents and 3 young children-he was assigned state side non combat.

He came home on Christmas leave and he and Uncle Earnest (his lifelong friend) went out for a drink. Earnest had too much and was picked up for drunk and disorderly by the local police. Now this was a small town police department with a bad reputation. Although he wasn't under arrest, Grandpa stayed with Earnest for his protection. From there the story gets murkier. According to the police Grandpa left Uncle Earnest at the jail and walked to the farm to get assistance.

The next thing you know, the sheriff comes to the door to tell great grandmother and great grandfather that their son (Mom's dad) had been killed by a hit and run driver. There were many questions that were never answered. Why was his body found past the exit road. Why did onion seeds from fall out of his jacket when the sheriff opened the jacket for them to identify ( and the onion farm was miles from the family farm) . But the most disturbing question happened when the undertaker-a family friend called great grandpa out and showed him the bullet holes in grandfather's body he discovered as he prepared the body. The FBI 'investigated' and at the inquest stated that they found no wrong doing by the police and Grandpa was killed by a hit and run driver. They took normally quiet, reserved Papa (great grand father) out of the hearing as he was shouting about a lie and cover up. Mom and her 2 brothers stayed with their elderly grandparents to be raised.

When Mom told me the story, she said that she woke up when the Sheriff came to the door. She hide behind the curtain and when she saw the seeds fall out of her dad's coat-knew he was dead. The first thing she thought of was all the Sunday mornings she and her dad would read the Sunday funnies. She loved Little Orphan Annie. She had the decoder ring and everything. She told me that at that moment she knew she was an orphan, just like Annie. Despite her Grandparents reassurances, she knew she was an orphan. " I'll never read Little Orphan Annie ever again" And she didn't.

I never think about Father's Day that I don't remember that story. Mom only told me this story once. Uncle Earnest told me the same story years later and only once when Mom wasn't around. He always said he felt guilty and responsible for his best friend and my grandfather's death. He told me he and Papa lost all trust in the government after that and for me to never forget.

Happy Father's Day to the father in our family that stepped up to the plate despite his advanced years and refused to split up siblings, to the father whose time was too short, and the other men in the family that always stepped in and manned up.

And Happy Father's Day to all Dads on the thread. You have a great generational influence.

[Demeter]

122. AnneD, Thank You For Sharing

Our nation's history is made up of little tragedies like this--and if these stories are forgotten, the nation is adrift.

The entire premise of Little Orphan Annie--that a young girl can survive on her own with the help of a dog--is absurd on the face of it. Annie would have been enslaved,raped, tortured or dead within months, maybe all four, if she was especially unlucky. The country hasn't improved since 1924, not in a dependable fashion, except to become more violent, detached from reality, and uncaring.

Little Orphan Annie was the Sarah Palin of her day. Daddy Warbucks was the model for Ronald Reagan.

[AnneD]

125. Mom is a gifted story teller.....

yet when she told me that one....it was one of the most powerful ones she ever told me. She was a Daddy's girl and he was taken from her in a most cruel way. They found a locket deep in his coat pocket that he had bought for her as a Christmas present. It was his last gift.

There was a family meeting after the funeral when they thought all the kids were asleep. Mom was awake and listened to the family debate. Pappa and Grandma were well up into years. It was after the Depression, there was no Social Security survivor benefits, and all of the kids were grown and had families of their own to feed. The children could take one each but not all three. Several recommended an orphanage. At that suggestion, Pappa used his god given authority (his words) as head of the family and stated that no Randal child would ever be raised by strangers. Children came first in his book. He had always provided for all his family and would continue no matter how old he was.

So that is how Mom and my Uncles ended up with their grand parents. He came to Arizona in a covered wagon and settled it when it was a territory. He dealt with local Indians and Spanish and learned their languages. He was know as an honest and fair man. As Uncle Earnest once said....he was the most saintly and generous men outside of Christ you would ever meet. All his family lived long lives and most were blessed with long and happy marriages. I think the modern world has not improved. People have forgotten what is important and what has lasting value. They don't think for themselves anymore-they just react. And when you do that-it makes you no more than an animal.

I can forgive Little Orphan Annie because she was a child-Sarah Palin has no excuse. Daddy Warbucks did not fool anyone-Ronald Reagan fooled most of the nation.

[DemReadingDU]

131. That's a great story, Thanks for sharing!

[DemReadingDU]

126. Why deflation will win: An interview with Robert Prechter

6/6/10 Why deflation will win: An interview with Robert Prechter

Can you give us a brief, easy-to-understand explanation of how deflation could happen in a paper-money, reserve currency system like ours, and why you think it's likely?

Prechter: Sure... in the simplest terms, creditors will stop lending, which will keep the credit supply from inflating. And debtors will default, causing the supply of outstanding debt to deflate. This will overwhelm government and central-bank efforts to inflate, and will result in deflation. These trends have already begun.

Believe me, I understand people's resistance to this scenario. The case for runaway inflation seems so logical.

Over the past eight years, the Fed's lending rates have twice fallen to zero, meaning that credit is free. The Fed has created $1.5 trillion of new money. Central banks around the world have offered unlimited, cost-free credit. The government is spending money like mad. And the Fed and the Treasury have bailed out or guaranteed another trillion or two of bad debt and promise to do even more. Oh, and the Chairman of the Fed swore eight years ago that he would drop money from helicopters.

There is only one problem with the logic involved: It does not lead us to present conditions.

In the great inflations of history – such as what occurred in Germany in the 1920s and Zimbabwe in the 2000s – several things happened. The money supply zoomed. Interest rates soared to double and triple digits. Commodity and stock prices went up. Consumer prices rose relentlessly. And people raced to get rid of money as fast as they got hold of it.

Today, not one of these events is happening. In fact, the opposite is happening.
.
.
I'll mention four key points.

First of all, the banks are ruined. They lent out every penny of deposits, and their loans are increasingly non-performing. They can't borrow any new money, because they're already underwater. And consumers are also broke, so they can't borrow more, either. Unlimited Fed credit is irrelevant. No one can afford to pay banks interest anymore.

Second, the only active creditors left are sovereign governments. And as Greece proved, governments have limits. They can't print their way out, because creditors will abandon them if they do. They need their creditors too much to choose printing.

Greece agreed to austerity. Britain is talking about austerity. The Tea Partiers are demanding austerity. At some point, members of Congress will have to stop borrowing and spending, because voters will oust them if they don't.

Third, the idea that the Fed can inflate "at will" is going to be challenged.

Is the Fed going to monetize – what's often referred to as "money-printing" – another $57 trillion worth of dollar debt, shore up trillions more of foreign debt and guarantee $600 trillion worth of derivative promises? Not likely.

Can the Fed's $2.3 trillion balance sheet – already over-inflated – keep a quadrillion dollars worth of worldwide IOUs from imploding? Not a chance.

Its own governors are already fighting about the monetization it orchestrated in 2008-2009. The Fed has been historically accommodating so far, but cracks are appearing in its resolve. Some of its own governors disagree on Bernanke's extreme policies, and that's after monetizing only 1/7 of 1% of the world's outstanding IOUs.

Fourth is the crucial importance of social psychology. Voters are getting angry about the bailouts. Congress is talking about auditing the Fed for the first time since it was created in 1913. Suddenly, Ron Paul is popular, and he wants to abolish the Fed.

These changes are not random. They come about because of the trend away from a positive social mood and toward a negative social mood.
.
.
Prechter: I realize my forecast for deflation differs from most bears' views, and calling for a depression really differs from the bulls' views, but I'm convinced that deflation and depression are already underway and about to get much, much worse.

much more...
http://beforeitsnews.com/story/73/584/Why_deflation_will_win:_An_interview_with_Robert_Prechter.html

[DemReadingDU]

127. Listen to Robert Prechter on the Financial Sense Newshour

6/19/10 Bob Prechter on Financial Sense
Conversations with Bob Prechter on the End Game

http://www.financialsensenewshour.com/broadcast/fsn2010-0619-2.mp3 appx 1 hour

[Demeter]

130. Makes a Lot of Sense

I do believe commodity inflation--the price of real goods--will still tend to increase.

I wonder what he thinks about shrinking the money supply by repudiating the old currency and issuing new...I fully expect that to happen, once someone with an ounce of economic imagination and expertise gets near the seat of power. Also expect the imposition of trade barriers. Globalism is a failed coup.

The US has several things collapsing simultaneously, but the two worst are the internal economy and the external economy. We might survive restructuring one or the other, but both at the same time? With nobody with a clue in charge?

And then add in the collapse of democracy--the corruption in the leadership process at every level--and we've got the triple whammy.

[DemReadingDU]

134. Prices also increase/decrease with supply & demand

I would expect prices of real goods to increase when supplies get scarce due to the decline in global trade. And once the economy implodes, people are not going to have the cash to buy necessities which would make anything seem expensive if there is no money nor credit.

We are heading back to a 1930's lifestyle. I wish I could get my circle of family and friends to understand what is happening, but they are too busy living the 'good life', buying stuff and going further into debt. They consider me obsessed. Oh well, thanks to people here, and other forums, I am getting prepared for the transition.

[DemReadingDU]

128. The Stoneleigh Effect

6/17/10 The Stoneleigh Effect by Charlotte Du Cann

Nicole Foss writes under the name Stoneleigh on the influential blog, The Automatic Earth. Unlike most disciplines which only look at their subject on its own terms, Stoneleigh looks at the Big Picture, and the the Big Picture in 2010 from the financial and resource perspective is looking none too good. In fact it became obvious through this intense one and a half hour lecture that we are facing a meltdown, within which the financial collapse (already set in motion in 2008) is the defining event. This is because finanical markets move far more quickly than resource markets. They change in the speed of an email or a phone call. Fear spreads like contagion and positive feedback is the rule.

The graphs came and went. The patterns of deflation were spelled out. Bubbles burst through the centuries, pyramids collapsed. With fossil fuels the bubble has expanded like never before in history. 1600 trillion dollars of virtual money in 30 years. For every slice of financial cake that exists there are now one hundred claims. Because these expansions are built, as Stoneleigh pointed out, not on the reality of wealth, but on a perception of money. At some point the spell breaks. We are running off a cliff and our legs are still working, but very soon we’re going to look down and realise there is nothing to hold us up. We fall bigtime.

We looked at the screen: credit disppearing, affordability descreasing, house prices going down, prices for essentials going up. People hoarding and the lack of lubricant money halting the interactive flow of goods and services. What do we need to do now? Stoneleigh advises us: look at your structural dependency, deal with debt, and make relationships you can trust. In effect, be part of Transition.

more...
http://transitionnorwich.blogspot.com/2010/06/stoneleigh-effect.html


Yes, Stoneleigh has a real name! She currently is in Europe giving talks about the Financial Crisis. For anyone in Europe, check out her schedule located in the right portion of the blog
http://theautomaticearth.blogspot.com/

[Demeter]

135. I think this thread has gone well

There's stuff I'm still reading. Although the inbox is fuller than ever, and there's probably at least one other crisis I haven't hit, I'm going to go off and do something in real time now. We are having an ice cream social--and I had better get some ice cream before it starts.

How do you like the organization? I figure corralling problems helps to integrate all the details and aids retention.

I want to especially thank DRDU for the Transition post--I am researching the movement and adding it to my Must Read. Transition is exactly what I and my fellow board members are doing with the co-op turned condo--I see us going so green as to become self-sufficient in basic energy needs, with truck farming, maybe fish farming, solar and biomass for cash crops once our internal needs are met. A united community will survive and hold onto a much higher level of technology than individualistic Survivalists. It will be a true test of Capitalist vs Socialist.

I'm hoping that the stuff in the inbox is expiring a natural death and timing out--but it seems that we are still dealing, or not dealing, with the same set of problems as last year, and the year before....

[DemReadingDU]

137. Transition

Stoneleigh was speaking at a Transition group in England, but the U.S. has an organization too.

You can find most states at this link, and can also search by most active, most members, etc. Actually, I need to look more at this site myself, maybe I will find others in my locality.

http://transitionus.ning.com/groups/group/listByLocation?location=USStates