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Workers of the World, Untie! Weekend Economists Labor Day Exravaganza Sept 4-7, 2009

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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Sep-04-09 06:34 PM
Original message
Workers of the World, Untie! Weekend Economists Labor Day Exravaganza Sept 4-7, 2009
Edited on Fri Sep-04-09 06:35 PM by Demeter
Well, I got off my sickbed, where I've been sulking since lunch, when I realized what time (and day) it was...

This is the Labor Day Weekend, when we get to celebrate the strong hands, the sturdy back, the tree-like legs that bring us all the good things in life--

The phonetic phrase is "shay-shay!" (Thank you, in Mandarin). Thank you, China!

But before China took over all the manufacturing in the world, the US was premier in everything with the exception of watches, chocolates, BMWs and other luxury goods....Hershey's notwithstanding.

And even in less exalted places, economy was a local event and people provided for themselves and their neighbors. We should be back to that within a generation (20 years) if not sooner, by my calculations. But in the meanwhile, let us celebrate the Working Man and Woman.

Working was never more elevated in this country than during the Great Depression, when Diego Rivera did his famous murals (see the Detroit Institute of Art), Isadora Duncan did her interpretive dance, and songs were gathered and written for generations to come.

Here is my favorite, incorporating the Women's Movement as well as the Labor Movement, sung by Judy Collins:

http://www.rhapsody.com/judy-collins/bread-and-roses--2...

The slogan "Bread and Roses" originated in a poem of that name by James Oppenheim, published in The American Magazine in December 1911, which attributed it to "the women in the West." It is commonly associated with a textile strike in Lawrence, Massachusetts during January-March 1912, now often known as the "Bread and Roses strike".

The slogan appeals for both fair wages and dignified conditions.

History

The Lawrence strike, which united dozens of immigrant communities under the leadership of the Industrial Workers of the World, was led to a large extent by women. Many claim that during the strike some of the women carried a sign that said, "We want bread, but we want roses, too!" No reliable evidence has yet been found to verify this, and the claim has been rejected by some veterans of the Lawrence strike.

A 1916 labor anthology, The Cry for Justice: An Anthology of the Literature of Social Protest by Upton Sinclair, is the first known source to attribute the phrase to the Lawrence strikers. A republication of Oppenheim's poem in 1912, following the strike, attributed it to "Chicago Women Trade Unionists".

The strike was settled on March 14, 1912, on terms generally favorable to the workers. The workers won pay increases, time-and-a-quarter pay for overtime, and a promise of no discrimination against strikers. The strikers are credited with inventing the moving picket line (so that they would not be arrested for loitering).

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

As we go marching, marching, in the beauty of the day,
A million darkened kitchens, a thousand mill lofts gray,
Are touched with all the radiance that a sudden sun discloses,
For the people hear us singing: Bread and Roses! Bread and Roses!

As we go marching, marching, we battle too for men,
For they are women's children, and we mother them again.
Our lives shall not be sweated from birth until life closes;
Hearts starve as well as bodies; give us bread, but give us roses.

As we go marching, marching, unnumbered women dead
Go crying through our singing their ancient call for bread.
Small art and love and beauty their drudging spirits knew.
Yes, it is bread we fight for, but we fight for roses too.

As we go marching, marching, we bring the greater days,
The rising of the women means the rising of the race.
No more the drudge and idler, ten that toil where one reposes,
But a sharing of life's glories: Bread and roses, bread and roses.
Our lives shall not be sweated from birth until life closes;
Hearts starve as well as bodies; bread and roses, bread and roses.


It was the great fear of working women and men, organizing, striking, and winning, that brought us permanent class warfare, the Federal Reserve, FDR and civil rights, and most of the events following the Civil War. And the workers united, because the corporations took over during the Civil War, as Lincoln so rightly feared even in 1860.
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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Sep-04-09 06:39 PM
Response to Original message
1. And at 6:30, we have (wonder of wonders) a Bank Failure
THIS IS JUST A LITTLE ONE--AN HORS' D'OEUVRE, PERHAPS?

First Bank of Kansas City, Kansas City, Missouri, was closed today by the Missouri Division of Finance, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Great American Bank, De Soto, Kansas, to assume all of the deposits of First Bank of Kansas City.

As of June 30, 2009, First Bank of Kansas City had total assets of $16 million and total deposits of approximately $15 million. In addition to assuming all of the deposits of the failed bank, Great American Bank agreed to purchase all of the assets...

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $6 million. Great American Bank's acquisition of all the deposits was the "least costly" resolution for the FDIC's DIF compared to alternatives. First Bank of Kansas City is the 85th FDIC-insured institution to fail in the nation this year, and the second in Missouri. The last FDIC-insured institution closed in the state was American Sterling Bank, Sugar Creek, on April 17, 2009.
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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Sep-04-09 07:57 PM
Response to Reply #1
24. At 8 PM, We Have 2 More Banks Down

InBank, Oak Forest, Illinois, was closed today by the Illinois Department of Financial and Professional Regulation, Division of Banking, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with MB Financial Bank, National Association, Chicago, Illinois, to assume all of the deposits of InBank, except certain brokered deposits...

As of August 3, 2009, InBank had total assets of $212 million and total deposits of approximately $199 million. In addition to assuming the deposits of the failed bank, MB Financial Bank, N.A., agreed to purchase essentially all of the assets.

MB Financial Bank, N.A., will purchase all of Inbank's deposits, except those from certain deposit brokers. The FDIC will pay these brokers directly for the amount of their funds. Customers who placed money with brokers should contact them directly for more information about the status of their deposits...

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $66 million. MB Financial Bank, N.A.'s acquisition of all the deposits was the "least costly" resolution for the FDIC's DIF compared to alternatives. InBank is the 86th FDIC-insured institution to fail in the nation this year, and the 14th in Illinois. The last FDIC-insured institution closed in the state was Mutual Bank, Harvey, on July 31, 2009.


Vantus Bank, Sioux City, Iowa, was closed today by the Office of Thrift Supervision, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Great Southern Bank, Springfield, Missouri, to assume all of the deposits of Vantus Bank...

As of August 28, 2009, Vantus Bank had total assets of $458 million and total deposits of approximately $368 million. In addition to assuming all of the deposits of the failed bank, Great Southern Bank agreed to purchase approximately $387 million of the assets. The FDIC will retain the remaining assets for later disposition.

The FDIC and Great Southern Bank entered into a loss-share transaction on approximately $338 million of Vantus Bank's assets. Great Southern Bank will share in the losses on the asset pools covered under the loss-share agreement. The loss-share arrangement is projected to maximize returns on the assets covered by keeping them in the private sector. The agreement also is expected to minimize disruptions for loan customers...

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $168 million. Great Southern Bank's acquisition of all the deposits was the "least costly" resolution for the FDIC's DIF compared to alternatives. Vantus Bank is the 87th FDIC-insured institution to fail in the nation this year, and the first in Iowa. The last FDIC-insured institution closed in the state was Hartford-Carlisle Savings Bank, Carlisle, on January 14, 2000.
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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Sep-04-09 08:30 PM
Response to Reply #24
33. A Hard Day's Night
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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Sep-04-09 09:38 PM
Response to Reply #24
42. 9:40, and Two MORE Banks Bite the Dust--Soup to Nuts!
First State Bank, Flagstaff, Arizona, was closed today by the Arizona Department of Financial Institutions, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Sunwest Bank, Tustin, California, to assume all of the deposits of First State Bank...

As of July 24, 2009, First State Bank had total assets of $105 million and total deposits of approximately $95 million. In addition to assuming all of the deposits of the failed bank, Sunwest Bank agreed to purchase essentially all of the assets...

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $47 million. Sunwest Bank's acquisition of all the deposits was the "least costly" resolution for the FDIC's DIF compared to alternatives. First State Bank is the 89th FDIC-insured institution to fail in the nation this year, and the third in Arizona. The last FDIC-insured institution closed in the state was Union Bank, National Association, Gilbert, on August 14, 2009.


The Federal Deposit Insurance Corporation (FDIC) approved the payout of the insured deposits of Platinum Community Bank, Rolling Meadows, Illinois. The bank was closed today by the Office of Thrift Supervision, which appointed the FDIC as receiver.

The FDIC will mail customers checks for their insured funds on Tuesday, September 8. Platinum Community Bank, as of August 29, 2009, had total assets of $345.6 million and total deposits of $305.0 million.

The FDIC entered into an agreement with MB Financial Bank, National Association, to accept the failed bank's direct deposits from the federal government, such as Social Security and Veterans' payments. Customers must use MB Financial's branch located at 2251 Plum Grove, Palatine, Illinois, to access their federal government direct deposits...

Beginning Tuesday, depositors of Platinum Community Bank with more than $250,000 at the bank may visit the FDIC's Web page "Is My Account Fully Insured?" at http://www2.fdic.gov/dip/Index.asp to determine their insurance coverage.

Platinum Community Bank is the 88th FDIC-insured institution to fail this year and the 15th in Illinois. The last bank to be closed in the state was Inbank, Oak Forest, earlier today. The FDIC estimates the cost of the failure to its Deposit Insurance Fund to be approximately $114.3 million.

It's so bad NOBODY wants it!

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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Sep-04-09 09:41 PM
Response to Reply #42
43. Total Bailout: $403.3 Million Tonight
Since it's a 3 day weekend, could there be more? Check here for updates, or go to:

http://www.fdic.gov/bank/individual/failed/banklist.htm...
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FSogol Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Sep-04-09 06:44 PM
Response to Original message
2. Untie? Untie what? n/t
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virgogal Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Sep-04-09 06:48 PM
Response to Reply #2
3. You beat me to it!
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Chef Eric Donating Member (576 posts) Send PM | Profile | Ignore Fri Sep-04-09 06:48 PM
Response to Reply #2
4. Your neckties? Your shoelaces?
:shrug:
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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Sep-04-09 06:55 PM
Response to Reply #2
6. Somebody Noticed!
Edited on Fri Sep-04-09 07:02 PM by Demeter
I'm playing with words, here: untie your mental and spiritual bonds--fear, loneliness, despair, and unite to help your fellow worker as well as yourself!

But then, only the smartest people read this thread. I should have known it would be noticed!
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Ghost Dog Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Sep-05-09 04:45 AM
Response to Reply #6
50. Untie the knot that binds you
to your corrupt masters.
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AnneD Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Sep-05-09 08:04 PM
Response to Reply #6
84. And I have a quote from 9-5 for you Demeter.....
He's out of the chute ladies and gentlemen, he's out of the chute, How long will it take her to rope and tie this sexist, egotistical, lying, hypocritical bigot.
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AnneD Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Sep-05-09 09:45 PM
Response to Reply #6
92. Loosen your chains????
Edited on Sat Sep-05-09 09:53 PM by AnneD
I have to insert this tasty nugget. I saw it years ago (and I might have it in my DVD collection) and this version still haunts me.

www.youtube.com/watch?v=u0CRAavN4EI&feature=related


now for vocal virtuosity

http://www.youtube.com/watch?v=pg-9oyk-Hww&feature=rela...
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snot Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Sep-07-09 09:44 AM
Response to Reply #6
107. Untie the blindfold.
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Dr.Phool Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Sep-04-09 07:17 PM
Response to Reply #2
14. I had a dyslexic cook in my restaurant.
I wanted to tie him up.
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kestrel91316 Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Sep-04-09 06:54 PM
Response to Original message
5. We have had several clients call this week who were just amazed that we were
(GASP!) going to be closed on Labor Day.

We have always closed on the 6 biggest holidays for 18 years. And yes, Labor Day is one of the most important to me, though I am the boss.
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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Sep-04-09 06:58 PM
Response to Reply #5
7. Well, My Bank is So Desperate, It's Open Monday Until 3pm
The times, they are a changing--and nothing is sacred anymore.

http://www.youtube.com/watch?v=lZ_XwLSN45I

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sabbat hunter Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Sep-04-09 07:14 PM
Response to Reply #7
13. commerce bank
now known as TD Bank, is open. I think they are open 365 days a year
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kestrel91316 Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Sep-05-09 11:18 AM
Response to Reply #7
71. The day I am expected to work on New Year's Day, Memorial Day,
July 4, Labor Day, Thanksgiving Day, and Christmas Day is the day I quit. I have been working 6 days a week for 18 years, with little vacation time. I will continue to take my major holidays even if every bank in the country stays open for them, lol.
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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Sep-04-09 07:00 PM
Response to Original message
8. All government cost studies: sheltering the homeless is most cost-effective
http://www.examiner.com/x-18425-LA-County-Nonpartisan-E...



The US Interagency Council on Homelessness has found that all cost-benefit analyses show that paying for the homeless to have minimal housing, food, health care, and job counseling costs less than public costs of their street life. The greatest savings come from decreased emergency room visits, police calls, and court time. What isn't counted, and significant, is the increase of business in areas where the homeless are vagrants. In addition, these studies show most of these participants find jobs and leave these programs.

As always, please share this with all who say they want to be responsible citizens.

Philip Mangano, former Director of the US Interagency Council on Homelessness, provides an overview of the US and local government's experience of the costs and benefits:

http://www.youtube.com/watch?v=UfHd6rk_TX0&feature=play...
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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Sep-04-09 07:04 PM
Response to Reply #8
9. Encore Performance
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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Sep-04-09 07:07 PM
Response to Original message
10. The Impact of Inequality: How to Make Sick Societies Healthier
http://blog.buzzflash.com/hartmann/036

If the number of dog-eared pages thickening the upper corner of a book on my bookshelves is any indication of how important that book was to me (and it is), then "The Impact of Inequality" is one of the top ten books in my library (and it is).

Wilkinson has, quite simply, identified the One Single Issue That Drives Everything Else.

Obesity, cancer, infant mortality, homicide, gun violence, imprisonment ratios, depression, drug abuse, teenage pregnancies, venereal disease rates, use of prescription antidepressants, workplace satisfaction, trust of one's neighbors pick from the menu. ALL of them are driven by a single variable.

And that variable isn't wealth. While America is the richest nation in the world with a median income of around $44,000/year, we're way in the back of the pack in all the indices mentioned above. So is the second richest nation, Great Britain.

And it wasn't that way in the period from 1940 to 1980.

The reason it is now, it turns out, is pretty straightforward. While most European and developed nations have a ratio of about 3:1 to 5:1 between the wealth of the poorest 20% of the populace and the richest 20%, the UK and US are running in the neighborhood of 8:1.

The more unequal a society is, the more problems it has. Regardless of how rich it is.

Conversely, the more equal a society is the better it does. Regardless of how poor it is (so long as they're above a baseline survival threshold, which appears to run around $5000/year). Costa Rica, at around $7,000 a year, does better than the US or UK on all of the items on the list above and more.

And it's not just differences in these indices between nations: they also occur between states or provinces in nations. Wilkinson documents in his book how the most equal of the states of the US and provinces of Canada have the best outcomes in all the cases listed above, and the most unequal of the states have the worst outcomes. The relationship is absolutely definable, linear, and predictable.

Richard Wilkinson builds a powerful and irrefutable case in this book for a radical re-think of the role of wealth and government and taxes in society. Without this incredible piece of the puzzle, no other discussion of tax policy, industrial policy, educational policy, or rules of business can make serious sense.

"The Impact of Inequality" is one of the most important books you will ever read. And as a bonus, it's also one of the most readable. I started it on a Friday afternoon, and was so stuck to it that I was finished by Sunday afternoon, complete with having made pages of notes and folded over and marked up at least sixty or seventy pages. Buy two or three copies, because this is a book you'll want to share with everybody you know.

(Note: Wilkinson has published a sequel to "Impact" in the UK, titled "The Spirit Level," which will become available in the US this winter. Its website is here. I ordered it via a British bookseller and read it cover-to-cover, but found it to be mostly a rehash and update of the contents/statistics/arguments of "Impact." While "Spirit Level" will definitely be worth buying when it comes out, I recommend you not wait but get "Impact" now and familiarize yourself with what I predict will become the hottest topic of discussion in economic and political circles over the next few years.)

m Hartmann is a New York Times bestselling Project Censored Award winning author and host of a nationally syndicated progressive radio talk show. You can learn more about Thom Hartmann at his website and find out what stations broadcast his program. You can also listen to Thom over the Internet.

THOM HARTMANN'S INDEPENDENT THINKER REVIEW OF THE MONTH
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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Sep-04-09 07:09 PM
Response to Reply #10
11. By Special Request: 9 to 5
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bread_and_roses Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Sep-05-09 09:26 AM
Response to Reply #10
65. writing it down now
I hadn't heard of it - ty. For years I have found and then lost and then found and then lost a site focused on global inequality - read there about something called the "gini(?)index?. And Kevin Phillips addresses it in US recent history - but this sounds like a more historic approach? Anyway, thanks.
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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Sep-04-09 07:13 PM
Response to Original message
12. Nancy Pelosi: Public Option Best Way to Control Costs, Promote Competition
http://blog.buzzflash.com/node/9348

Washington, D.C. Speaker Nancy Pelosi released the following statement on health insurance reform legislation pending before Congress:

Any real change requires the inclusion of a strong public option to promote competition and bring down costs. If a vigorous public option is not included, it would be a major victory for the health insurance industry.

President Obama has said that a public option will keep the insurance companies honest. If someone has a better idea for promoting competition and reducing health care costs, they should put it on the table. But for the past month, opponents of health insurance reform have demonstrated that they are afraid of the facts. They have only offered distortions, distractions and misrepresentations to try to kill this historic legislation.

A bill without a strong public option will not pass the House. Eliminating the public option would be a major victory for the insurance companies who have rationed care, increased premiums and denied coverage.
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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Sep-04-09 07:20 PM
Response to Original message
15. U.S. consumer bankruptcies up 24 percent in August
http://www.reuters.com/article/email/idUSTRE5815X020090...

NEW YORK (Reuters) - Bankruptcy filings by U.S. consumers rose 24 percent in August compared with a year earlier and could reach 1.4 million this year, according to an American Bankruptcy Institute and National Bankruptcy Research Center report released on Wednesday.

Despite the spike, consumer bankruptcy filings last month were down 5 percent from July.

The August bankruptcies brought the 2009 number to 922,000.

In 2008, a total of 1.1 million consumers filed for bankruptcy, according to ABI.

---THIS IN SPITE OF ALL THE HARSH PENALTIES INSTITUTED AT THE REQUEST OF THE CREDIT CARD COMPANIES IN 2005---
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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Sep-04-09 08:37 PM
Response to Reply #15
35. Oney: Johnny Cash
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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Sep-04-09 07:23 PM
Response to Original message
16.  Even higher taxes coming for Californians
http://www.latimes.com/news/local/la-me-taxes27-2009aug...

Lower brackets and reduced deductions mean yet higher payments to Sacramento for 2009.

By Shane Goldmacher

August 27, 2009

While Californians are still feeling the sting of income and sales tax hikes signed into law earlier this year, now comes news that state tax authorities plan to take a little more from their pockets.

For only the second time in 30 years, the tax board is lowering the point where each tax bracket begins, bumping many people into a higher category. At the same time, officials are cutting back some deductions. Everyone will pay more, even people whose bracket or income doesn't change.

The extra sums will total as much as $140 per family, on top of the increases previously enacted.

Officials said the latest adjustments have been triggered by inflation, or rather the lack of it. This year, the state's inflation index was a negative number for the first time since 1983. When the economy takes a deep plunge, so do tax brackets.

The new changes apply to the 2009 tax year. Residents are already paying hundreds -- even thousands -- of additional income tax dollars under the quarter-point rate increase and other tax hikes approved in February as part of a budget deal.

"Everything is going up, up, up," said Othman Rabie, owner of a sandwich shop in downtown Sacramento. "And business is going down."

Back in February, state lawmakers and Gov. Arnold Schwarzenegger approved a slate of temporary tax increases in an effort to balance California's perennially out-of-whack books.

In addition to the income tax rate rising 0.25%, the dependent credit was slashed by more than two-thirds. The vehicle license fee nearly doubled to 1.15% of a car's value. The state sales tax climbed 1%.

This summer, lawmakers and Schwarzenegger decided to withhold 10% more from workers' paychecks starting Nov. 1 -- an accounting scheme to collect taxes faster. Under another bookkeeping maneuver, individuals and businesses that make estimated tax payments will pony up more of that money sooner starting in the first half of next year.

And some local taxes are on the way up. In Los Angeles County, a half-cent-higher sales tax approved by voters took effect in July to fund transportation projects.

Under the latest changes, for a married couple filing jointly, the top tax rate of 9.55% now begins at $92,698, down from $94,110. Combined with the earlier increases, such a couple with two children, earning $100,000, will see their California income tax bill rise by 22.3%, or $716, according to the state Franchise Tax Board. Their tax would go from $3,208 to $3,924, factoring in a $110 drop in the standard deduction for joint returns.

For singles, the top tax threshold has dropped from $47,055 to $46,349. This year, a single filer without children who earned $30,000 in 2008 and 2009 would pay 13.8% more: $617 instead of $542. The standard deduction for sole filers will fall by $55.

The state automatically adjusts its tax brackets. They have moved in taxpayers' favor for the last 25 years, with the amount of earnings required to kick people up a notch continually increasing. But that doesn't salve the pain of the latest changes, said Assemblyman Chuck DeVore, the Republican vice chairman of the Assembly Revenue and Taxation Committee.

"It takes more money out of the taxpaying productive sectors and scoops it into the government coffers at a time when taxpayers are already reeling," DeVore said.

It is unclear how much additional revenue the new brackets will yield for beleaguered state coffers; the state has not computed that yet, said Denise Azimi, spokeswoman for the tax board.

Meanwhile, experts such as Ted Gibson, who was chief state economist under both a Republican and a Democratic governor, remind policymakers even modest tax increases affect the state's financial health because they prompt people to further pinch pennies...
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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Sep-04-09 07:24 PM
Response to Reply #16
17. The Taxman Cometh!
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CatholicEdHead Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Sep-04-09 07:35 PM
Response to Original message
18. Who would want to unrecommend WEE?
It was at -1 when I found this week's thread.
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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Sep-04-09 07:43 PM
Response to Reply #18
21. I Don't Know, and Don't Care
Let the children come to scoff, at least they will know where to look when they are ready to learn.
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bread_and_roses Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Sep-05-09 08:57 AM
Response to Reply #18
60. I am curious - how do you see "unrecs?"
Does one have to have a star? (I do not donate to DU for several reasons, but chief among them is the prohibition on supporting non-D candidates - it offends my free-speech absolutist principles. Yes, the owners have the right to run the site any way they choose - and I have the right not to support those rules with my paltry $$.)

Anyway, I see the little "+" sign, but not how many?
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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Sep-05-09 09:04 AM
Response to Reply #60
62. Welcome! Hope You Like the Opening Song!
It shows up on the Forum page, when there's a net negative. Otherwise, it's a running total, and the positives win.
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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Sep-04-09 07:36 PM
Response to Original message
19. FSAs Lord Turner Tells Banks to Get a Death Wish
http://www.nakedcapitalism.com/2009/09/fsas-lord-turner...

Wish

Lord Turner, the head of the UKs Financial Services Authority, is my new hero. He is willing to tell banks to do things that are in the publics best interest but are singularly unpleasant and costly to the financiers. The fact that what is good for the banksters is increasingly at odds with what is desirable for the rest of us simply highlights how predatory the industry has become, and how the incumbents are pathologically unable to see that (I may be being charitable in taking their wounded-sounding protests at face value)

Last week, he stirred up a hornets nest by suggesting the unthinkable, namely, that the financial services industry needs to shrink. In reality, quite a few people have made that observation, but anyone in authority who dares say such a thing out loud must be beaten back.

Lord Turner is not deterred. Today he pressed forward by again provoking the industry with another sound idea that they are certain to fight tooth and nail, namely, to restructure themselves and develop plans in the event they fail. This move is a necessary step in implementing a bankruptcy regime for financial services firm, which of course is something the firms do not want. The No More Lehmans doctrine has put banks in the catbird seat, deemed to important to be allowed to fail, yet managing to evade the sort of controls that would be appropriate given their utility status.

The reason for the howls of protest, however, is more immediate: financial firms often have complex structures either to minimize taxes or circumvent regulations. So they would not only face the cost of restructuring, but higher ongoing expenses. How horrid. Those banks have an absolute right to their profits, or at least thats what they expect us to believe.

Even if Turner is catching a lot of flack, he is at least willing to stare down the industry. The financial services sector is even more important to England than to the US, but they also have been longer at the empire and banking game than we have, and as a result, at least some recognize the importance of having sound institutional structures. We have completely lost the plot in the US. While Timothy Geithner is giving lip service to having banks draw up resolution plans, every measure the Treasury has proposed had either been bank-friendly from the get-go, mere posturing, or half hearted and easily beaten back. The Turner discussion of the need to simplify legal structures reveals what a serious version of wind-down plan would need to include, and it is a virtual certainty nothing of the sort will be required in the US....
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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Sep-04-09 07:40 PM
Response to Reply #19
20. US debt markets show signs of better health
http://www.ft.com/cms/s/0/70d1a1d6-97eb-11de-8d3d-00144...

The revival of markets for bonds backed by auto and credit card debts is expected to be underscored on Thursday when the US Federal Reserve reveals details of its latest loans to investors in asset-backed securities.

The Fed offers cheap funding every month to investors in such bonds under its term asset-backed securities loan facility (Talf), an emergency measure meant to support the markets through which hundreds of billions of dollars in consumer loans are financed.

This month, Fed funding will be available for investors considering buying $12bn in eligible asset-backed securities sold by the likes of American Express, Bank of America, General Electric, Nissan and Ford.

Investors and bankers expected the percentage of asset-backed deals to be financed with Fed loans would be lower than in previous months, reflecting the growing appetite for such securities among investors.

For credit card and auto loan deals, we expect 50 per cent could be bought directly by investors, without resorting to Fed loans, said Don Ross, global strategist at Boyd Watterson Asset Management, which buys securities with Fed funds. In some ways that means the Fed can declare victory ... those parts of the markets are now working without their help.

According to Deutsche Bank, the Fed financed 82 per cent of Talf-eligible securities in August, which included deals financing inventory for car dealers. The full breakdown of this months buyers will be revealed after the markets close on Thursday.

The Talfs lifespan was recently extended to March 2010 for some loans and to June 2010 for others, such as those backed by commercial mortgages. Dealers said that until many deals are fully financed without Fed backing, government support provides an important prop for the asset-backed sector.

The Fed introduced the $1,000bn Talf this year after it became almost impossible to finance many consumer loans with the sale of asset-backed bonds. Such securities promise investors the cash from pools of consumer loans.

Securities backed by auto loans, credit cards and equipment leases are now in better shape, with funding costs down sharply. But problems remain with other asset-backed securities, such as those backed by commercial mortgages. Fed support is expected to focus on these more troubled parts of the asset-backed market...

ANYBODY KNOW IF THIS HAPPENED, OR GOT ANY PRESS?
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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Sep-04-09 07:45 PM
Response to Original message
22. Morgan Stanley, Moody's, S&P must defend fraud claims
http://www.reuters.com/article/ousiv/idUSTRE5817EK20090...

NEW YORK (Reuters) - A U.S. federal judge ruled that Morgan Stanley (MS.N) and two credit rating agencies must defend fraud charges in a class-action lawsuit accusing them of masking the risks of an investment linked to subprime mortgages, and which eventually collapsed.

U.S. District Judge Shira Scheindlin on Wednesday rejected efforts by Morgan Stanley, Moody's Corp's (MCO.N) Moody's Investors Service and McGraw-Hill Cos' (MHP.N) Standard & Poor's to dismiss fraud claims brought by the plaintiffs, Abu Dhabi Commercial Bank and King County in Washington state.

She dismissed the plaintiffs' remaining claims, and all claims against a fourth defendant, Bank of New York Mellon Corp (BK.N), while granting permission for the plaintiffs to amend their complaint.

Scheindlin's ruling could affect other lawsuits brought by pension funds and other investors, seeking to hold banks and credit raters responsible for hyping the value of complex debt to win fees and causing investor losses as the debt collapsed.

The case concerned the Cheyne Structured Investment Vehicle (SIV), which went bankrupt in August 2007 after the quality of its assets plummeted. Many investors in Cheyne-related notes lost much or all of their investments.

SIVs are complex packages of loans and debt, including collateralized debt obligations, that once held some $350 billion of assets before falling out of favor.

The California Public Employees' Retirement System, the nation's largest public pension fund, in July sued Moody's, S&P and Fitch Ratings over losses on Cheyne and other SIVs.

In the New York case, the plaintiffs alleged that Morgan Stanley wrongly marketed Cheyne as a high-quality investment, and that the rating agencies assigned improperly high ratings.

The complaint also accused Bank of New York Mellon, acting as a depositary and processing agent, of improperly valuing Cheyne's assets and delivering reports to the rating agencies.

In a 68-page ruling, Scheindlin said the plaintiffs pleaded enough facts to let the fraud claims case go forward.

"Where both the rating agencies and Morgan Stanley knew that the ratings process was flawed, knew that the portfolio was not a safe, stable investment, and knew that the rating agencies could not issue an objective rating because of the effect it would have on their compensation, it may be plausibly inferred that Morgan Stanley and the rating agencies knew they were disseminating false and misleading ratings," she wrote.

Scheindlin set an October 1 status conference in the case.

McGraw-Hill spokesman Frank Briamonte said the company was pleased that Scheindlin dismissed all but one of 11 claims it faced, and said it was "confident" it would prevail on the remaining claim.

Bank of New York Mellon spokesman Kevin Heine had no immediate comment. The rest of the parties did not immediately return calls or e-mails seeking comment.

The case is Abu Dhabi Commercial Bank v. Morgan Stanley, U.S. District Court, Southern District of New York (Manhattan), No. 08-7508.
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AnneD Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Sep-05-09 08:18 PM
Response to Reply #22
85. From Office Space
Dedicated to all those whose don't take shit from these WS thugs.....

ttp://www.youtube.com/watch?v=eniw_S8JaJM


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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Sep-04-09 07:53 PM
Response to Original message
23. Calculating the Clunkers Real Cost to Taxpayers
http://www.cjr.org/the_audit/calculating_the_clunkers_r...

Calculated Risk has a smart bit of economic analysis on the real cost to taxpayers of the Cash for Clunkers and housing-credit subsidiescalculations I havent seen anywhere else.

CR notes that the real economic benefits of the subsidies come only from the sales they spur over and above what would have occurred without them. Some lucky folks who were going to buy anyway will happily snap up the cash but theyre a wash. Its impossible to determine these number for sure, but you can get a pretty good estimate by looking at previous months data.

For August, CR estimates Cash for Clunkers prodded an additional 320,000 car sales and calculates that the cost to taxpayers per additional car sold at $7,200. That looks a lot worse than the $4,170 per car number put out by the government.

Home sales are far worse:

With 1.9 million first-time buyers, the total cost of the tax credit will be $15.2 billion. Divide $15.2 billion by 350 thousand (CJR: the number of additional buyers), and the program cost $43.4 thousand per additional buyer.

Excellent work.

The press ought to learn from CR here and include this kind of analysis in its stories on these credits.

I wont hold my breath.

-----------------------------------------------------------------
http://www.calculatedriskblog.com/2009/09/houses-and-au...

Houses and Autos: The Cost of a Tax Credit per Additional Units Sold

by CalculatedRisk on 9/01/2009 01:14:00 PM

To calculate the cost of a tax credit per additional unit sold, we need to sum up the total cost of the credit - as an example $2.877 billion for Cash-for-Clunkers according to the Dept. of Transportation - and then divide by the estimated increase in sales because of the credit.

Remember some cars or houses would have been sold anyway (even though they still receive the tax credit), but it is the additional sales that matter. That was the purpose of the tax credit! (update: Shnaps notes that the auto credit had an additional benefit of better mileage)

We have two examples today.

First, for autos, if sales in August had been about the same as June (pre-tax credit), there would have been 850 thousand light vehicles sold (NSA). This is about a 9.7 million SAAR.

Next we add in the tax credit: Although the DOT reported close to 700 thousand car sales associated with the Cash-for-Clunkers program, probably about 550 thousand were in August. If these were all additional sales, then the total sales (NSA) for August would be about 1.4 million, or almost 16 million SAAR.

If Edmonds.com is correct, and total sales were 1.17 million (NSA) in August, then the tax credit only generated about 320 thousand extra sales. Of course some regular car buyers might have put off a purchase to avoid the rush in August, so this isn't perfect, but instead of costing taxpayers $4,170 per car (as announced by DOT), the cost to taxpayers per additional car sold was close to $7,200.

The numbers are much worse for the first-time home buyer tax credit. The NAR reported this morning:

NAR estimates that about 1.8 to 2.0 million first-time buyers will take advantage of the $8,000 tax credit this year, with approximately 350,000 additional sales that would not have taken place without the credit.

I believe the NAR underestimates first-time home buyers, especially considering the definition for the tax credit is anyone who hasn't owned a home in three years - not really a "first-time" buyer. I also think the NAR is overestimating the number of additional buyers.

But using their numbers ...

With 1.9 million first-time buyers, the total cost of the tax credit will be $15.2 billion. Divide $15.2 billion by 350 thousand, and the program cost $43.4 thousand per additional buyer. The actual number could be much higher if there were fewer additional first-time buyers than the NAR's estimate - or if the overall cost is higher (more buyers claiming tax credit).

This is the actual cost per additional home sold. And since buyer interest will fade (like with the Clunkers program), the cost per additional house will increase sharply if the program is extended.

--------------------------------------------------------------------------
A FOLLOWUP COLUMN:

http://www.cjr.org/the_audit/calculating_the_benefits_o...

Yesterday I tipped The Audits cap to a nifty bit of analysis from Calculated Risk pointing out that the real cost of the Cash for Clunkers and first-time-homebuyers subsidy programs were far higher than whats been reported.

But Michael S. Cullen in comments and reader Doug Smith in an email both point out that CRs analysis is only of the cost side not the benefit side, which is true, though it in no way takes away from CR, who explicitly said he was only tallying costs, not doing a cost-benefit analysis.

So what about that upside?

Daniel Gross at Slate took a stab at that last week:

If we use Taylors estimate, about 250,000 extra cars were purchased (40 percent of 625,000). And if each cost $29,000, those sales generated about $7.3 billion in revenue in the space of a few weeks. Thats a pretty good return on $2.6 billion in government spending. Lets be more conservative. Say only 20 percent of the clunker traders were extra demand, and the cars they bought cost $25,000 each. Thats still an extra $3.125 billion in sales for dealers. Whats more, the sales represent only a portion of the economic impact. Ford, for example, announced that it is increasing production of some models.

But CR estimates 320,000 additional sales in August alone so lets do our own math with those numbers.

If the average sales price for those cars was $26,300 (thats what Comerica Bank said the average sales price for a new car was in the second quarter), that gives you $8.42 billion in additional sales in August alone. Thats almost triple the $2.88 billion the government spent on the whole program.

But as Smith points out, theres a multiplier effect on economic activity. Those sales filter through the economy in the form of increased bonuses for salesmen, saved jobs at auto plants, more hauls by truckers, etc. When they spend money, it in turn saves jobs in other industries, who in turn spend money and save jobs in other industries, and so on. Ive got no idea what a multiplier effect might be for this (have at it in comments), but manufacturing jobs have the highest multiplier of any industry.

Thats not to mention the boost in taxes to state and local coffers, who will take anything they can get these days.

The true extent of the economic benefits of Cash for Clunkers wont be known until sales numbers come in for September and October. Theres no doubt that many of the sales were just pulled forward a couple or three months by the subsidy, the question is how many. And to prove there are always unintended consequences with anything, the program seems likely to make it more expensive for poor folks to buy cars. Also, theres the opportunity cost: What else would have or could have been done with that $2.9 billion? And some of the manufacturing benefits went overseas. Its unclear how much since many foreign cars are now made in the U.S.

But the calculation also doesnt account for the non-economic benefits of the program, as Justin Hyde of The Detroit Free Press pointed out to me on Twitter.

The new cars bought with the subsidies get 9.2 mpg morea 58 percent jumpthan the cars traded in. Those drivers will not only be spending less on gas (perhaps $600 a year), theyll be polluting less, though that benefit is pretty microscopic.

The benefits of less pollution arent anywhere near enough in and of themselves to justify the spendingthe dollar-to-carbon-saved ratio is high.

Consider them an added bonus. Oh, and getting those heavy cars off the roads makes them safer for the rest of us.
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DemReadingDU Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Sep-07-09 06:10 PM
Response to Reply #23
109. Evicted from Your Brand New Clunker

9/7/09 Evicted from Your Brand New Clunker
By The Mogambo Guru

Roger Wiegand of Trader Tracks Newsletter finally says what I always figured: Cash for Clunkers was a real clunker. One out of four auto buyers using this program is having buyers remorse as they just signed-up for so many new payments they cannot afford.

Thanks, Roger! I always had a hard time believing in the unbelievable Cash for Clunkers program, where the government astonishingly gives up to $4,500 to people who buy a new car!

This is a subject which is very interesting to me because I happen to be a guy who owned a whole series of clunker cars and trucks over the years because I couldnt justify the expense of a new vehicle/a good vehicle/a better vehicle/a vehicle that wasnt rusted/a vehicle where parts and pieces didnt fall off/a vehicle that usually started because they were completely paid for, thus costing me exactly nothing per month in principal and interest payments, and which needed only the legally-required minimum of liability insurance.

In short, the cost of driving those old cars and trucks was almost zilch, which fitted my budget perfectly, as I thought I would need the extra money for dating, but which turned out not to be the case. In fact, I found that women usually disdained both me and my cars, and they would say hurtful things like, Hey! It stinks in here! Or is that you? and, At least clean out the old, moldy pizza boxes and chicken bones so I wont be more disgusted than I am just sitting next to you! and yammer yammer yammer.

That is, however, when I learned one of the Immortal Lessons Of The Mogambo (ILOTM), which is that as long as you had a good set of brakes on your ratty old car, a case of cheap oil in the trunk, a long siphon hose and a girlfriend who had a nice car in which to ride around, you could get along pretty good!

Not getting along as good as the federal government, however, which can (and did) just decide on a plan to sell a couple of trillions of dollars in new debt, whereupon the Federal Reserve will create the money, like when the Fed bought $30 billion of US government securities, directly increasing the money supply by the amount of the new debt! Now THATS what I call getting along pretty good! Hahaha!

Now, suddenly, sad sack people like me, whose incomes are so low that we have to drive rusted-out, beat-up old clunkers that cost almost nothing to own or operate, that nobody would steal, which were completely paid for, for which you only needed the minimum of liability insurance, would suddenly decide to buy a very expensive, shiny new car and begin paying upwards of $400-$500 a month for the new car and the big new premiums for the required higher insurance coverage? Hmmmm!

Perhaps this is why Bloomberg reports that Consumer spending in the US rose in July as Americans jammed auto showrooms to take advantage of the cash for clunkers program while avoiding other purchases! Yikes! Avoiding other purchases! This is NOT the kind of thing from which economic recoveries are made!

And to suddenly start paying all of that money, every month for the next seven years or so, is not to even mention the effort of always having to wash and wax the new car, which is hard, disagreeable work that you dont get paid for, which is like being punished for having a new car!

So, the only explanation that makes sense is that since people can stop paying on their house but still live in it because the bank doesnt want to evict them, people will start living in their cars and stop paying on them, too! What are the car companies going to do? Evict a family onto the street by repossessing the snazzy new car in which they are living? Hahahaha!

a bit more...
http://dailyreckoning.com/evicted-from-your-brand-new-c... /

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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Sep-04-09 07:59 PM
Response to Original message
25. Prices Rise 7% Nationwide, Says Clear Capital
http://www.housingwire.com/2009/09/02/prices-rise-7-nat... /

National home prices increased 7.3% and the saturation of real estate owned (REO) properties also declined three percentage points to 30.1% over the past four months compared to the previous three.

The so-called rolling quarter is the backbone of the Clear Capital Home Data Index Market Report. Clear Capital said its method eliminates the lag time between the end of a reporting period and the compilation of data.

The price changes in this months highest and lowest performing markets lists speak to the extremely positive summer home buying seasonmore than what can be attributed to seasonality, Clear Capital president Kevin Marshall said in a statement.

All four regions in Clear Capitals report experienced gains, led by a 16.4% increase in prices in the Midwest, a 5.7% increase in the South, 5.4% in the Northeast and 3% in the West.

Marshall said he anticipates more REO properties to hit the market later in the year, the momentum built during the summer could carry over into the winter months.

Buyers are getting nervous that they are missing the bottom of the market, so theyre choosing to get in the market now. These factors greatly increase the chances of a springtime recovery next year, he said.
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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Sep-04-09 08:02 PM
Response to Reply #25
26. It's only a paper moon
http://www.youtube.com/watch?v=AXf753ONVaY&feature=play...

I never feel a thing is real
When I'm away from you
Out of your embrace
The world's a temporary parking place

A bubble for a minute
Mmm, mm, mm, mm
You smile, the bubble has a rainbow in it

Say, its only a paper moon
Sailing over a cardboard sea
But it wouldn't be make-believe
If you believed in me

Yes, it's only a canvas sky
Hanging over a muslin tree
But it wouldn't be make-believe
If you believed in me

Without your love
It's a honky-tonk parade
Without your love
It's a melody played in a penny arcade

It's a Barnum and Bailey world
Just as phony as it can be
But it wouldn't be make-believe
If you believed in me
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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Sep-04-09 08:13 PM
Response to Original message
27. Frustrated Judges Engage in Ineffectual Harassment of Mortgage Servicers
http://www.nakedcapitalism.com/2009/09/frustrated-judge...


The New York Times has a story tonight, Judges Frustration Grows With Mortgage Servicers, which narrowly speaking, is not bad, but illustrates a frustrating propensity of the budget and time constrained MSM to fail to dig into the meaty issues behind its articles.

The piece is yet another sighting in the Servicers Behaving Badly saga. Earlier installments included Servicers Show Up in Court With No Proof That They Really Own the Mortgage, Services Go Missing in Action When Customers Try to Straighten Out Errors, and Mods? You Must Be Joking.

Today we learn Judges Try to Shame Services:

Bobbi Giguere had no luck in securing a loan modification from her mortgage servicer, Wells Fargo. For months, she had sent the bank the financial documents it requested to process her modification. But each time she called to check on the request, she was told to send her paperwork again.

Judge Randolph J. Haines of the United States Bankruptcy Court to summon a senior executive from Wells Fargo to appear in Mrs. Gigueres bankruptcy case.

Mr. Ohayon stated that Mrs. Giguere had repeatedly failed to provide a financial worksheet, a critical document in processing a loan modification.

Under cross-examination by Mrs. Giguere (who had a little assistance from Judge Haines), the banks defense withered. From her files, Mrs. Giguere produced a letter from Wells Fargo describing the paperwork that she needed to file for a loan modification. In the witness chair, Mr. Ohayon read the letter.

Mrs. Giguere is right, Mr. Ohayon concluded. The letter did not ask for a financial worksheet.


While this little tale makes for nice theater, the judges action was completely ineffective, and the Times does not score the point strongly enough. Servicers have proven impervious to bad PR and pressure from the Obama administration. A judge making an executive spend a few hours on a court visit hed need some prep from his general counsel) is not going to make a jot of interest.

It would be much more helpful if the Times shed some light on why mods are not being made. The MSM, including the Times, has occasionally dug into this topic, but the findings of those articles tend not to be integrated into future storied.

Cynics like yours truly think the culprit is the bad incentives, that servicers make money on foreclosures, which the Team Obama payments for mods are grossly inadequate to change behavior. The servicers also appear to be hiding behind incompetence, as in We cant find your paperwork. This is a very easy way to brush off customer and official requests, but begs the question of whether the servicers have serious shortcomings in their record keeping. That isnt a defense, but would suggest that some of their sins are venal rather than mortal. And if the servicers are not as incompetent as they pretend to be, that suggests a creative lawyer might find a way to have a go at them, for instance, asserting violations of fundamental assumptions in contractual relations, like good faith and fair dealing.

Id like to see the servicers leashed and collared, but range wars by judges will not have much impact.
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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Sep-04-09 09:07 PM
Response to Reply #27
40. Johnny Cash: 16 Tons
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Tansy_Gold Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Sep-05-09 11:01 PM
Response to Reply #40
99. Tennesse Ernie Ford. . . .
And Dinah "See the USA in your Chevrolet" Shore


http://www.youtube.com/watch?v=Joo90ZWrUkU


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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Sep-04-09 08:16 PM
Response to Original message
28. Stiglitz Doubts Recovery Can Be Sustained
http://www.nakedcapitalism.com/2009/09/stiglitz-doubts-...



Joseph Stiglitz takes issue with the view of economists (well, economists surveyed by Bloomberg and the Wall Street Journal, which not surprisingly have a Pollyannish optimistic streak) that the economy is in or on the verge of a recovery.

The real issue is the ongoing con job. Team Obama has made it clear that it sees restoring confidence as paramount, when anyone with consumer marketing experience will tell you that advertising campaigns that make exaggerated claims about the product often dont simply fail (as in customers see through the hype) but often backfire (buyers discount future ad messages about the product). The press has had a manipulated feel, with readers on sending news stories that have misleadingly positive stories with Panglossian headlines and upbeat initial paragraphs that are often undercut by other material in the same article.

So in our new branding, the economy is no longer in a freefall has become recovery. The self-congratulatory tone among US financial regulators (who should instead be engaging in serious self-recrimination for failing to foresee and prevent this crisis) is premature. The financial system has been patched up and put back together with considerable continued official support, and more important, policies in place that allow banks to go back to the craps table with the taxpayer sopping up any mess. This is not a sound foundation for growth...
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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Sep-04-09 08:38 PM
Response to Reply #28
36. ZZ Top: Just Got Paid
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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Sep-04-09 08:20 PM
Response to Original message
29. Elizabeth Warren: Real Change: Turning up the heat on non-bank lenders
THIS IS A REALLY NEAT BLOG: new deal 2.0, A PROJECT OF THE FRANKLIN AND ELEANOR ROOSEVELT INSTITUTE!

http://www.newdeal20.org/?p=4454

We know that big banks need reigning in, but Elizabeth Warren argues that it is time for serious oversight of non-bank lenders like mortgage brokers or payday loan outfits as well. A strong, well-funded CFPA would not only protect consumers from the abusive practices of these largely unregulated businesses, but it would also benefit the small banks that are hurting from the current system....

The big banks are storming Washington, determined to kill the Consumer Financial Protection Agency (CFPA). They understand that a regulator who actually cares about consumers would cause a seismic change in their business model: No more burying the terms of the agreement in the fine print, no more tricks and traps. If the big banks lose the protection of their friendly regulators, the business model that produces hundreds of billions of dollars in revenue and monopoly-size profits that exist only in non-competitive markets will be at risk. Thats a big change.

But there is an even bigger change in the wind: regulating the non-banks. Democrats and Republicans alike agree that the proliferation of unregulated, non-bank lenders contributed significantly to the financial crisis by feeding millions of dangerous financial products into the economic system. Non-bank institutions were active participants in the race to the bottom among lenders. From subprime mortgage loans to small dollar loans, they showed how to wring high fees and staggering interest rates out of consumer lending. Their fine-print contracts, and new tricks and traps, transformed the market.

Despite widespread agreement about the problem, the U.S. has never made a sustained, systemic effort to regulate non-bank lenders. As lending abuses became more obvious, there was no effort to close regulatory gaps and loopholes or to devote federal resources toward the oversight of non-bank institutions. The reasons are many, but one of the most benign explanations is that policymakers for too long assumed that states could deal with the non-banks because the non-bank lenders are often small and often operate locally (although Countrywide showed that state-based organizations can metastasize rapidly). As it turns out, the states actually faced several limitations in reining in these lenders.

States, just like the federal government, were subject to intense lobbying by creditors. In short order, many states changed their rules to undercut basic protections. For example, the consumer finance industry succeeded in rewriting state interest rate regulation to allow for massive increases in allowable effective rates even when the advertised rate looks far lower and obscures the true cost of credit. In many states, making an end run around local usury laws is now as easy as running around a single fencepost. At the same time, state legislatures face the perpetual lag-behind problem. They are unable to adjust to a rapidly changing financial services market, too slow to identify problems and not capable of changing the laws quickly enough to head off serious problems.

Moreover, resources are always constrained at the state level, and the enforcement of consumer credit laws competes with a wide variety of other state obligations. When consumer credit laws were violated, states often lacked the capacity to undertake serious investigations or to prosecute offenders. Some states made heroic efforts, but others left consumer financial issues far down their priority list.

The problem of enforcement has been exacerbated by a serious structural problem. When an abuse surfaced-for example, a local paper ran a news story about an unfair practice or a consumer group assembled evidence of sharp practices-local officials often responded by jumping on small banks. The non-banks were often scattered and difficult to find, while the biggest financial institutions were typically protected from local prosecution through pre-emption. That left the small banks holding the bag. These small banks, often those with state charters, were the easiest institutions to locate and the cheapest to prosecute even if they were only tangentially involved in deceptive practices. The result was that the worst offenders slipped away. Non-banks could shut down for a while, and then reappear when the heat was off. In effect, the state enforcement structure benefitted the big banks and the non-banks.

The CFPA presents the first real opportunity to change that harmful structure.

First, the CFPA will regulate consumer financial products across the board-using the same rules for all mortgages or for all small dollar loans, regardless of whether the mortgage or the loan is issued by a national bank, a state bank or a non-bank. The old practice of different sets of rules and different regulatory structures for the same products would disappear. Instead, the CFPA would create a coordinated set of baseline rules applicable across the board.

Consolidated rule-making will also stop the practice of lenders shopping around for the regulator with the weakest rules. Bank holding companies have enjoyed an enormous advantage by having the freedom to structure their many business divisions to exploit regulatory weakness. They can operate a federally chartered bank when preemption is valuable to them. At the same time, they can purchase the products of non-banks in bulk, creating informal partnerships that exploit gaps in the state regulatory system. In fact, the Center for Public Integrity found that 21 of the 25 largest subprime issuers leading up to the crisis were financed by large banks. (Remember this the next time you hear a lobbyist blaming the crisis on non-banks and denying the role of the bank holding companies.) With consistent rules across the board, the CFPA would put an end to these practices.

Consistent rules are important, but, as we now know, it isnt enough to have good rules on the books. There must also be a serious effort to enforce those rules. With the right sources of funding and some smart strategic thinking about how to force non-banks to follow the same rules as other lenders, the entire landscape of consumer lending would change.

From history, we have learned that an agencys source of funding is critical to its success. By allowing the Agency to tax lenders directly perhaps a dime for every open credit card account, a quarter for every open mortgage, etc. Congress can make sure that the CFPA stays well-funded in the years ahead. The right funding structure will allow the Agency to develop the capacity to go after the non-banks and the dangerous products they originate, and it will insulate the Agency from political efforts to starve-the-regulators into inaction. Moreover, as we now know, the cost of even a well-funded agency is dwarfed by the cost to the government and the economy as a whole of bank failures. The cost of the failure of just one thrift IndyMac was almost ten times the annual budget of the Securities and Exchange Commission.

New forms of strategic thinking will also be needed. By creating a system for mandatory lender registration, for example, CFPA will be able to keep track of the consumer lenders out there something that no current regulators have the tools to do. To encourage compliance, the CFPA can work with other federal agencies like the Treasury Department or the Internal Revenue Service to identify unregistered lenders. In states that already register certain non-bank lenders, the CFPA can work off those registrations and collaborate with state officials. This is tough work, but a consumer agency with expertise and resources will rise to the challenge.

The CFPA can also get smarter with enforcement by exploiting concentration points, places where small players are effectively grouped together. In the case of mortgage brokers, for example, without the large bank holding companies and their subsidiaries as customers for the loans they place, many would be out of business. Focusing regulatory attention on the buyers would create substantial leverage over the brokers as well. If the sponsors and funding mechanisms for the worst practices go away, so will the worst practices.

There is more that we can do to deal with non-bank lenders, but only if Congress creates a strong CFPA. If we stick with the status quo which treats loans differently depending on who issues them and places consumer protection in agencies that consider it an afterthought - we know what will happen because we have seen it happen before. Lenders will continue their tricks and traps business model, the mega-banks will exploit regulatory loopholes, and the non-banks will continue to sell deceptive products. In that world, small banks will need to choose between lowering standards or losing market share, and they will still get too much attention from regulators while the non-banks and big banks get too little. Dangerous loans will destabilize both families and the economy, and well all remain at risk for the next trillion-dollar bailout.

Regulating the non-banks hasnt been tried in any serious way. The CFPA offers a real chance to level the playing field, to add balance to the system, and to change the consumer lending landscape forever.

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

Harvard Law School Professor Elizabeth Warren is currently chair of the Congressional Oversight Panel created to oversee the banking bailouts and first proposed a new federal agency for consumer financial products in 2007.
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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Sep-04-09 08:35 PM
Response to Reply #29
34. Takin' Care of Business
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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Sep-04-09 08:22 PM
Response to Original message
30. Inquiry Stokes Unease Over Trading Firms That Shape Markets
http://www.nytimes.com/2009/09/04/business/global/04opt...


OH, THERE'S ABSOLUTELY NO MANIPULATION IN THE OIL MARKETS, NOSIREE! NONE WHATSOEVR!
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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Sep-04-09 08:40 PM
Response to Reply #30
37. Wichita Lineman
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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Sep-04-09 08:26 PM
Response to Original message
31. Lehman downfall triggered by mix-up between London and Washington
http://www.guardian.co.uk/business/2009/sep/03/lehman-c...

...The downfall of Lehman, which triggered the biggest banking crisis since the Great Depression, came after a rescue bid by the high street bank Barclays failed to materialise.

In London, the Treasury, the Bank of England and the Financial Services Authority all believed that the US government would step in with a financial guarantee for the troubled Wall Street bank. The tripartite authorities insist that they always made it clear to the Americans that a possible bid from Barclays could go ahead only if sweetened by US money.

But in Washington, the former Treasury secretary Hank Paulson has blamed Lehman's demise on Alistair Darling's failure to let Washington know of his misgivings until it was too late. Paulson has told journalists that during a transatlantic phone call the chancellor said he was not prepared to import the American "cancer" into Britain something Darling strongly denies.

With finance ministers and central bank governors from the G20 countries meeting in London on Saturday, the first-hand accounts of those handling last year's events underline a rift between London and Washington over who was to blame for the demise of Lehman, which triggered a month of mayhem on the financial markets.

Lehman's demise sent shock waves around an already fragile financial system and raised fears that any bank, anywhere in the world was vulnerable to collapse. Within three days, HBOS had been rescued by Lloyds TSB. A month later RBS, HBOS and Lloyds were propped up with an unprecedented 37bn of taxpayer funds.

Hector Sants, the chief executive of the Financial Services Authority, said: "I have sympathy for the US authorities given the complexity of the problems they faced that weekend but I do believe it was a mistake to let Lehman's fail." As well trying to find a solution for Lehman, the US authorities were also aware that Merrill Lynch was on the brink and that weekend it was taken over by Bank of America.

While admitting the UK authorities had botched Northern Rock a year earlier, Sants said the collapse of Lehman had more dire consequences. "Without the future market shock created by Lehman Brothers' collapse, RBS may not have failed," said Sants.

"Was Lehman the cause or was it the manifestation? It was our view that if Lehman had been supported you would not have seen such a dramatic reduction in liquidity."

Sir John Gieve, deputy governor of the Bank of England last September, said: "It was a catastrophic error. It caused a loss of confidence in the authorities' ability to handle the financial crisis which really did change things and proved hugely costly."

The UK tripartite authorities the FSA, the Bank of England and the Treasury had expected the US government to stand behind Lehman in the way that it had backed two crucial mortgage lenders the previous week and helped to orchestrate the bailout for Bear Stearns in March.

No explanation has ever been given for the lack of government funds offered in the final weeks of the Bush administration, which had to step in to prop up the insurance company AIG days after Lehman's demise.

The UK tripartite authorities were concerned about the financial system in the spring of 2007 and asked their American counterparts to participate in a "war game" to prepare for the collapse of a major US bank and develop a response to a financial crisis. However, the war game, which was to have included the UK, Switzerland, the Netherlands and the US, never took place because of a lack of willingness to participate by the US regulatory bodies.

SHOW OF HANDS, NOW. HOW MANY BELIEVE THAT BUSH/PAULSON ACCIDENTALLY DROPPED THE SPINNING PLATE? NOW, HOW MANY THINK IT WAS AN INTENTIONAL ACTION TO SCREW OVER SOMEONE BOY GEORGE AND/OR HIS STAFF WAS PISSED AT?
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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Sep-04-09 08:29 PM
Response to Reply #31
32. Work Songs in a Texas Prison
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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Sep-05-09 04:36 AM
Response to Reply #31
46. Another Lehmans Post Mortem: Rogoff: The Fault Lies Not in Lehman, But in Ourselves
http://www.nakedcapitalism.com/2009/08/rogoff-problem-w...

Well, Ken Rogoff does not do a Shakespearean turn, but he makes a badly needed observation in his latest piece at Project Syndicate, namely, that pinning a lot of blame for the crisis on the Lehman collapse is a faulty analysis. And he picks up a pet theme of ours, that patching up the system is not a viable long-term solution.

From Project Syndicate (hat tip Mark Thoma):

The overwhelming consensus in the policy community is that if only the government had bailed out Lehman, the whole thing would have been a hiccup and not a heart attack..

Yves here. If that is what the policy crowd that Rogoff hangs with really believes, the are even more deluded than I realized. Back to his article:

Unfortunately, the conventional post-mortem on Lehman is wishful thinking. It basically says that no matter how huge the housing bubble, how deep a credit hole the United States (and many other countries) had dug, and how convoluted the global financial system, we could have just grown our way out of trouble.

It was not just Lehman Brothers. The entire financial system was totally unprepared to deal with the inevitable collapse of the housing and credit bubbles. The system had reached a point where it had to be bailed out and restructured. And there is no realistic political or legal scenario where such a bailout could have been executed without some blood on the streets. Hence, the fall of a large bank or investment bank was inevitable as a catalyst to action.

The problem with letting Lehman go under was not the concept but the execution. The government should have moved in aggressively to cushion the workout of Lehmans complex derivative book, even if this meant creative legal interpretations or pushing through new laws governing the financial system. Admittedly, it is hard to do these things overnight, but there was plenty of warning. The six months prior to Lehman saw a slow freezing up of global credit and incipient recessions in the US and Europe. Yet little was done to prepare.

So what is the game plan now? There is talk of regulating the financial sector, but governments are afraid to shake confidence. There is recognition that the housing bubble collapse has to be absorbed, but no stomach for acknowledging the years of slow growth in consumption that this will imply.

There is acknowledgement that the US China trade relationship needs to be rebalanced, but little imagination on how to proceed. Deep down, our leaders and policymakers have convinced themselves that for all its flaws, the old system was better than anything we are going to think of, and that simply restoring confidence will fix everything, at least for as long as they remain in office.

The right lesson from Lehman should be that the global financial system needs major changes in regulation and governance. The current safety net approach may work in the short term but will ultimately lead to ballooning and unsustainable government debts, particularly in the US and Europe.

Asia may be willing to sponsor the west for now, but not in perpetuity. Eventually Asia will find alternatives in part by deepening its own debt markets. Within a few years, western governments will have to sharply raise taxes, inflate, partially default, or some combination of all three. As painful as it may seem, it would be far better to start bringing fundamentals in line now. Restoring confidence has been helpful and important. But ultimately we need a system of global financial regulation and governance that merits our faith.
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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Sep-04-09 08:50 PM
Response to Original message
38. The Capitalists Have No Capital by Bill Bonner

The US system of capitalism has become a system where the capitalists have no capital. The big banks have too little in savings...not enough 'buffers' to protect them from unexpected crises. They made a fortune during the boom years - loading consumers up with debt. But instead of holding onto the money to protect themselves against emergencies, they paid it out in bonuses and salaries. Then, when the crisis came - one they caused - they were without sufficient funds.

What do you do when you're a major bank and you are insolvent? Hey, you already know the answer. You turn to the government!


...This is the problem economists call "moral hazard." If you protect people from their own excesses they will become even more excessive. On the other hand, if they have to pay for their errors, they'll be quicker to correct them.

Okay...well...maybe the banks still wouldn't save enough. But that would take care of itself. If the feds didn't intervene, the insolvent banks would go under; those left would - by definition or accident - be better run.


DailyReckoning.com
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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Sep-04-09 08:53 PM
Response to Reply #38
39. The September Syndrome by Bill Jenkins
http://dailyreckoning.com/archives /


As just about everyone knows, the stock market crashed in a big way in 1929. Analyst Nick Guarino reminds me that it rallied 15 times before it hit bottom fours years later, having lost 90% of its value.

And the truth is, when adjusted for inflation, the market didn't break even again until 1960. (If you're a "buy-and-hold" investor, you MUST account for inflation. It is the single biggest "invisible" tax in our wonderful Fed managed economy.)

But before people could get too happy with making money again, along came President Johnson and the "Great Society." I don't know who it was so great for - the market began crashing again in '66. Once again, adjusted for inflation, it didn't get back to breakeven for another 30 years.

So, 30 years from the Great Depression to the Great Society. Then 30 years from the Great Society to the Great Depression II. Each of the peaks resulted in 10-15 years of declines. Of course, they didn't fall straight down. That's the "trick" of the whole deal.
"We are now in just the second year of this disaster. We are witnessing an almost perfect copy of the first Great Depression. And there are more nasty little secrets in the economy, waiting like ticking time bombs to explode."

Each rally draws in a few more people, a little more money, until there are no suckers left. Then when the bottom hits, it has takes 15-20 years to "recover."

It will take a very long time to recover from what we've been hit with: Exxon/Mobil lost two-thirds of its profits... that's 66%! The "World's Company," GE, saw a 47% collapse in profits. Toyota, the recession- impervious carmaker, posted its largest yearly loss EVER and is looking at losses this year, too. Insurers have been hit. Computer giants have taken a whacking. Even Disney is down over 25% in the third quarter.

These are not "bumps in the road." They are "driving off a cliff." By some estimates, inflation-adjusted earnings are down 90% in the last 20 months.

We are now in just the second year of this disaster. We are witnessing an almost perfect copy of the first Great Depression. And there are more nasty little secrets in the economy, waiting like ticking time bombs to explode. We will see more businesses in trouble, more banks failing, more foreclosures and more commercial real estate losses.

At the end of June alone, there were over 5,300 commercial properties in the United States in default. That's more than double the number from the end of 2008 - and there are still six months to count. Still think American companies are recovering? What will a 300% rise in commercial defaults do for jobs? Profits? Banks?

So don't let the recovery pundits fool you, even though they're out in force.

No doubt you've heard the optimists: "The Recession is over." "The Recovery has begun." "Better get in on the ground floor now if you hope to recover all that retirement money you lost last year."

Just look at the evidence, they say:

# Markets up 50%. In the greatest bull run since the Great Depression, stock indices are forging higher. The numbers are swelling. Ride the wave!


# Housing numbers are turning north - Over the past six months, there have been some the fall in some housing numbers are slowing, and some have turned up. Building permits. Existing home sales. New home sales. New housing starts. Pending home sales. Hmmm... nice!


# Manufacturing looks like it's exploding. Earlier this week, the Institute for Supply Management manufacturing index posted a stronger- than-expected rise at 52.9. Well above expectations, and well into the 50+ territory that signals expansion. Looking better and stronger than it has in 2 years. It would be a mistake to bet against it!

But you probably know what I'm going to say right now: Don't believe a word of it!

No market goes up forever. Isn't that one of the first lessons we learn when chasing a bull market?

This one is no different. Could it go higher? Sure. But just how far can you stretch a rubber band? Eventually, it is going to snap back.

And, as it happens, we're heading right into "snapback" season.

Historically, the month of September is the worst month for stocks. Hands down. Indices fall more in this month on average than in any other month of the year.

In fact, the S&P has declined in 11 of the past 20 Septembers. You may be inclined to say, "That's not so impressive." But an average decline of 10 points is something worth noting. Additionally, 40% of those falls consisted of declines that were 75-125 points. That's huge. No other month has such an anomaly. And it seems to me that this September may be ripe for the picking.

In fact, the first day of September was a real whopper. And Monday (although technically an August day) was not so august for US equities. Thus, as the calendar turns over, we have two days in the down column.

But as bad as September is, October has the reputation for being a real bloodbath. It certainly possesses a number of the largest down and crash days. But in order for a crash of monumental proportions to take place, there has to be some lofty level from which to fall.

I get physically sick when people tell me how they are moving (what's left of their money) back into equities. I try to reason with them; I try to warn them. It breaks my heart to see pensioners barely getting by. You remember all the drama from recent years, how we were told that the elderly were forced to choose between food and medicine? Do you remember the seniors who were reportedly sharing their cat's food so they could buy their prescriptions?

And that was during the go-go boom years. I cringe when I think of what lies ahead for them.

Will it start this fall? Has the band stretched far enough? Has Wall Street suckered in all the money that will venture out into the street? That's all they're after. Draw everyone out of the woods. Get all those who believe that it's time to buy and hold into the game again. A 50% rally? Child's play! This time the Dow is headed for 18,000!

Better tread carefully. This is without question the area of thinnest ice. One misstep by the government, a foolish line slip or a negative surprise, and the entire "recovery" falls like a house of cards.

Keep your money, and your exits, close... and don't be afraid to take profit.
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Tansy_Gold Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Sep-05-09 09:52 PM
Response to Reply #39
95. Long term investments?
Help me out here.

If it took The Market 30 years from the 29-30 crash to recoup only to crash again in '66; and then it took another 30 years to recover again, but then also crashed again, would it be safe to say that today's DJIA is essentially the same as 1929 adjusted for inflation? Or was 1929 a bubble value, so the 1932 value is the accurate one?

I mean, it seems to me -- as it has seemed from the time I started hangin' out wi' you guys -- that there is virtually no such thing as "long term investing" in the sense that you put your money in at Year One and at Year Thirty or Forty you take out something more than you would've had if you'd left it all in your sock under the bed, or at least in a minimum-interest-paying savings account. And if that's true, then The Market is ONLY profitable when it's used for speculating, not investing.

Correct? or not???



Tansy Gold, still wondering. . . .
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DemReadingDU Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Sep-05-09 10:27 PM
Response to Reply #95
96. Speculating vs Investing

I believe you're right. And it's been going on for so long, that most people today, think The Market is for investing. And they are about to get a rude awakening, when the speculators get out with the gains, and the investors are left holding empty bags.





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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Sep-06-09 07:49 AM
Response to Reply #95
102. Sounds About Right
With the exception that companies (the Eternal Personhood notwithstanding) do come and go, so that today's market is not identical to any other year's market, especially after a decade or two.
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Tansy_Gold Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Sep-06-09 10:37 AM
Response to Reply #102
103. Very true, and I think that's actually an element of it
There is no guarantee. If you "invest" in IBM or GM or 3M, you know that there's a tiny remote possibility that they'll go broke, but that expectation is so far-fetched that you don't think about it. Hello? GM? They're not gonna go away any time soon! Which of course we learned was :sarcasm: of the cruelest kind.

But I was taught and I think many people around me for years and years believed that one invested in the stock market, either directly or through a mutual fund or your job's 401K, as a hedge against inflation and to make some money via dividends. You owned part of a company and it would give you a reasonable return on that investment over the long term. As the company grew, and as inflation affected the entire economy, the value of that stock went up. And you hoped it went up enough that when you sold it, to fund your retirement or whatever, you came out with something more than the compounded interest you'd have got at the local S&L.

But it hasn't worked that way. None of it has. It's all been turned into lies.

Once a company you've invested in goes bust, you don't get that money back to invest in something else. You're just SOL. Sure, sure, sure. That stock you bought at $5 went up to $150, but you're in it for the long haul so you didn't cash it out. Then when it fell to 50 cents in two days, you're SOL but the speculators made out like bandits. It's not designed any more for long term safe investing; it's ONLY for the speculators. The rules have all changed. The GS computerized trading -- trading, not investing -- has no function in a market of investors; it's ONLY function is to make money off the speculators who trade frequently, hoping to make money off the trade, not off the investment.

And we can go right back to the changes in the tax laws, easing of capital gains taxes, to see where this got its big boost. More ways to benefit the investor class and more ways to screw the working class.


Tansy Gold, making sure she sticks with the theme. . . . .
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snot Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Sep-07-09 10:22 AM
Response to Reply #102
108. Wish I cd invest in shares of CEO compensation.
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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Sep-04-09 09:09 PM
Response to Original message
41. I'm Putting My Cold to Bed--See Y'all in the Morning!
Post 'em if you got them--news or entertainment! Don't be shy, now!
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DemReadingDU Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Sep-04-09 10:00 PM
Response to Reply #41
44. Thanks for the weekend thread

Demeter, Hope you feel better in the morning.


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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Sep-05-09 04:34 AM
Response to Original message
45. Incoming AIG CEO Started Tenure With Two Week Vacation
http://www.nakedcapitalism.com/2009/08/incoming-aig-ceo...

I am cynical enough to believe that this signal, of having a CEO start his new job by going on holiday, is quite deliberate. We the great unwashed public are being given the message that we should not run Goldman operatives fine upstanding men like Edward Liddy out, because look what sort of commitment to the job we get now.

Having said that, Dubrovnik, where the new CEO Robert Benmosche, has a villa, is very nice. I recommend it highly, villa or not.

From Bloomberg (hat tip reader DoctoRx):

Robert Benmosche, the chief executive officer of American International Group Inc., plans to spend part of his first month leading the insurer in Croatia on vacation, according to two people familiar with the situation.

Benmosche, 65, who started yesterday as CEO and president of the bailed-out company, will leave for about two weeks, according to one of the people, who declined to be identified because the plans were private

Its probably not a propitious time for an incoming CEO to begin with a vacation, said Steven Seiden, president of New York-based executive recruitment firm Seiden Krieger Associates. Seiden said that while the absence wont hurt the companys financial position, from a public relations standpoint its probably not the wisest thing to do.
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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Sep-05-09 08:28 AM
Response to Reply #45
55. Nice Work If You Can Get It
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AnneD Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Sep-05-09 08:35 PM
Response to Reply #45
86. Meanwhile....back in the pits....
www.youtube.com/watch?v=025QQwTwzdU&feature=PlayList&p=...

use to have an elderly neighbor that was a gandy dancer and could entertain me for hours with those gandy songs. Wish more were recorded...Similar to marching jodi calls.
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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Sep-05-09 09:40 PM
Response to Reply #86
90. We have a fancy restaurant in the old train station, named Gandy Dancer
Excellent addition to the theme, thanks!
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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Sep-05-09 04:39 AM
Response to Original message
47. Economists Call for Bernanke to Stay, Say Recession Is Over
http://online.wsj.com/article/SB124993702311020493.html

Economists are nearly unanimous that Ben Bernanke should be reappointed to another term as Federal Reserve chairman, and they said there is a 71% chance that President Barack Obama will ask him to stay on, according to a survey.

WSJ's Phil Izzo and Kelly Evans discuss results of the latest survey of economists, which indicates many think the recession may be ending. Plus, will Bernanke be seen as the hero of this recession after all?

Meanwhile, the majority of the economists The Wall Street Journal surveyed during the past few days said the recession that began in December 2007 is now over. Battling the downturn defined most of Mr. Bernanke's term, which began in early 2006 and expires in January, and economists say his handling of the crisis has earned him four more years as Fed chief.

"He deserves a lot of credit for stabilizing the financial markets," said Joseph Carson of AllianceBernstein. "Confidence in recovery would be damaged if he was not reappointed."

The Journal surveyed 52 economists; 47 responded.

Well, if the Wall Street Journal's stable of economists says so, it must be true! :sarcasm:
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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Sep-05-09 08:39 AM
Response to Reply #47
57. Which Side Are You On?
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bread_and_roses Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Sep-05-09 09:47 AM
Response to Reply #57
66. never fails to make me weep - never
my for-fathers/mothers came out of those mines not all that long ago as history goes - hoping here that Trumpka can bring some fire back to the labor movement - but it's like with Obama - one is afraid to hope, then can't help hoping because of who this man is, and where he comes from, then the inevitable crash when even thet small flicker so sternly moderated by experience and awareness - even that little flicker one allowed oneself is stomped on. So I guess I'll just go off and bawl some more now.
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KoKo Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Sep-05-09 05:11 PM
Response to Reply #66
82. I know what you say...
:-(
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Tansy_Gold Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Sep-05-09 10:54 PM
Response to Reply #66
98. Ain't it the freakin' truth.
And yet, without hope, even so much as a tiny wee flicker, we have nothing.

It's as if Obama was such a good campaigner that he just keeps doin' what he's good at, what's easy, and don't wanta do the hard stuff, the stuff he ain't never done before: leadin'. Takin' charge o' the situation and playin' all Lee Iacocca with it.

"It's time to get out there, man. Quit kissin' up to the bosses, quit tryin' to make 'em like you. They ain't never goin' to. Never. Not in a fuckin' brazillion years. And, man, if you don't get this shit taken care of now, you ain't gonna get another chance. No second term for failures, dude, least not for Dem failures. You got one chance to prove you can do the job, not just get it."



Tansy Gold, who don't mind talkin' to him like he was right here on WEE
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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Sep-05-09 04:42 AM
Response to Original message
48. Australia central bank a model for popping bubbles?
http://www.reuters.com/article/ousiv/idUSTRE57B0SV20090...

By Koh Gui Qing - Analysis

SYDNEY (Reuters) - Policy makers daunted by the idea of puncturing asset bubbles in coming years can learn from Australia's central bank, one of the very few to have deflated a housing boom without turning it into a crash.

As the world cleans up after the U.S. housing debacle, central bankers are already fretting over how to tackle the next bubble, which may not be too far off as super-easy monetary policies worldwide leave financial markets flush with cash.

Up until a year ago, many central bankers such as Federal Reserve Chairman Ben Bernanke and his predecessor Alan Greenspan, believed bubbles can't be spotted or tempered.

But the Reserve Bank of Australia (RBA) challenged that view when it leaned against Australia's housing boom in 2002 by refusing to cut interest rates despite a world economic slowdown, opting instead to talk down the property market.

"Other countries are looking at the Australian example as a very positive one, and there are some lesson to be learnt from that episode," said Brian Redican, an economist at Macquarie.

The bursting of the U.S. housing bubble in 2007 after its unfettered rise brought the world economy and financial markets to their knees. In contrast Australia's housing market has been remarkably resilient, supporting consumer confidence and helping Australia become one of a rare breed of developed nations to dodge a recession.

"Up until the crisis, it was received wisdom that central banks should probably target mostly inflation. That is now beginning to change very quickly," said Frederic Neumann, a regional economist at HSBC in Hong Kong.

The European Central Bank, for one, is coming round to the idea that it may need to respond to asset bubbles.

For now, China, Hong Kong and South Korea are seen most vulnerable to forming new bubbles in property and stock markets. The RBA also warned last week record low local interest rates could inflate a housing bubble.

WATCHING PROPERTY MORE CLOSELY

At the heart of a long-standing debate about monetary policy is whether central banks should target asset prices alongside inflation. Conventional wisdom says central banks should care about asset prices only to the extent that they affect inflation.

This is because bubbles are hard to spot, and economists can't agree on what counts as a bubble.

Bubbles are usually defined as prices that have risen so far they deviate from economic fundamentals for an extended period. Yet, not all price rallies are unjustified. "It's extremely difficult in reality to pin-point," said HSBC's Neumann. "By the time you realize 'Oh we have a bubble in our hands', it runs so quickly it's almost too late to stop."

The RBA deftly avoided the problem by talking around it instead, highlighting the economic risks of the housing boom.

"We should not get too hung up about trying to decide what is a 'bubble'," Glenn Stevens, current RBA Governor and then deputy governor wrote in a conference paper in 2003. "It tends to promote the idea that if we can define something as not being a bubble, then we can forget about it."

To build its case that property prices were getting out of hand, and unhappy that government data was not timely enough, the RBA took the unusual step of commissioning coverage on the housing market from private-sector firms.

It focused on ratios such as the ratio of income to home prices to gauge the amount of debt buyers took on, and the number of home loans taken out for investment housing.

Falling bank lending standards, rising innovation and competition among mortgage lenders also flagged market frenzy.

Lenders invented deposit bonds where they paid the first deposit for home buyers for a fee, and people competed in television shows to renovate and sell flats at a top price.

RBA officials attended property seminars to observe over-zealous salesmen, dubbed locally as "property spruikers," who encouraged buyers to think home prices will never fall.

All that led the RBA to refrain from joining other central banks in cutting rates in 2002-03 when economies faltered after the September 11 attacks, the SARS outbreak and the Iraq war.

Then RBA governor Ian Macfarlane went out of his way to talk would-be property buyers out of their investments. "I'm using a certain amount of moral suasion to try and get...to investors, to make them sit back and think again," he said in 2002.

The RBA was so forceful in talking down the housing market many suspected property prices dictated its monetary policy, which the RBA denied. It declined to respond to this article.

"IT'S THE LEVERAGE, STUPID"

The RBA's efforts worked, with annual growth in house prices halving to about 9 percent in June 2004, from over 19 percent six months earlier. By March 2005, they were up just 0.1 percent.

That experience contrasted starkly with the United Sates and UK where prices were allowed to fly with scant restraint.

Home prices in 20 U.S. metropolitan areas in May were down nearly a third from their record high hit in July 2006, according to the Standard & Poor's/Case Shiller home price index.

In Australia, average prices in the second quarter were just 2.2 percent off a record hit in March 2008, official data show.

The RBA thought its aggressive response necessary because housing bubbles are driven by debt and more damaging to the economy, than say a stock market bubble.

"To coin a phrase, 'It's the leverage, stupid,'" Stevens wrote in 2003.

To be fair, the RBA owes some of its success to good fortune.

Australia's housing market is sensitive to changes in the RBA's policy rate as 80 percent of mortgages are variable-rate loans. In comparison, about the same percentage of U.S. mortgages are fixed-rate and tied to long-term bond yields.

The commodity price rally from 2004 also saved the resource-rich country from slowing economic growth brought about by rate hikes from 2001-07.

One of the main arguments against central banks targeting asset prices is that rate hikes are too blunt a tool for popping bubbles since they can drag the whole economy into recession.

The fact that Australian property prices continued to rise after 2004, making homes among the least affordable in the world, meant the RBA was not entirely successful, some economists say.

But most still agree Australia's economy fared better after the RBA's actions, and that in itself is laudable.

"At least they tried," said HSBC's Neumann. "The RBA should be commended for having done so."

(Editing by Kim Coghill)
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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Sep-05-09 09:10 AM
Response to Reply #48
64. Did you Know, Pete Seeger Turned 90 This May?
Edited on Sat Sep-05-09 09:12 AM by Demeter

http://www.youtube.com/watch?v=X5JLCAIJLJ8


GUANTANAMERA
Original music by Jose Fernandez Diaz
Music adaptation by Pete Seeger & Julian Orbon
Lyric adaptation by Julian Orbon, based on a poem by Jose Marti

Yo soy un hombre sincero
De donde crecen las palmas
Yo soy un hombre sincero
De donde crecen las palmas
Y antes de morirme quiero
Echar mis versos del alma

Chorus:
Guantanamera
Guajira Guantanamera
Guantanamera
Guajira Guantanamera

Mi verso es de un verde claro
Y de un carmin encendido
Mi verso es de un verde claro
Y de un carmin encendido
Mi verso es un ciervo herido
Que busca en el monte amparo

Chorus

I am a truthful man from this land of palm trees
Before dying I want to share these poems of my soul
My verses are light green
But they are also flaming red

(the next verse says,)
I cultivate a rose in June and in January
For the sincere friend who gives me his hand
And for the cruel one who would tear out this
heart with which I live
I do not cultivate thistles nor nettles
I cultivate a white rose

Cultivo la rosa blanca
En junio como en enero
Qultivo la rosa blanca
En junio como en enero
Para el amigo sincero
Que me da su mano franca

Chorus

Y para el cruel que me arranca
El corazon con que vivo
Y para el cruel que me arranca
El corazon con que vivo
Cardo ni ortiga cultivo
Cultivo la rosa blanca

Chorus

Con los pobres de la tierra
Quiero yo mi suerte echar
Con los pobres de la tierra
Quiero yo mi suerte echar
El arroyo de la sierra
Me complace mas que el mar
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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Sep-05-09 04:44 AM
Response to Original message
49. Japan still a major factor in US Treasury market
Edited on Sat Sep-05-09 04:44 AM by Demeter
Click on link for graph

http://wasatchecon.files.wordpress.com/2009/08/top_ten_...

as reported in the US Treasury's TIC report. It's interesting that China did not surpass Japan until September of 2008; and that those two countries dwarf all the other holders. How long can Japan avoid having to redeem some of these assets to fund domestic social programs?
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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Sep-05-09 04:46 AM
Response to Original message
51. Cheesy Collateral Keeps Italian Credit Flowing Amid Recession
http://www.bloomberg.com/apps/news?pid=20601109&sid=aT_...


The vaults of Credito Emiliano SpA hold the pungent gold prized by gourmands around the world -- 17,000 tons of parmesan cheese.

The regional bank accepts parmesan as collateral for loans, helping it to keep financing cheesemakers in northern Italy amid the worst recession since World War II. Emilia Romagna-based Credito Emilianos two climate-controlled warehouses hold about 440,000 wheels worth 132 million euros ($187 million).

This mechanism is our life blood, said Giuseppe Montanari, 65, a cheese producer and dealer who uses the loans to buy milk. Its a great way to finance our expenses at convenient rates, and the bank doesnt risk much because they can always sell the cheese.

So precious is the cheese that each 80-pound wheel, worth about 300 euros, is branded with a serial number so it can be traced if it is stolen. Thieves tunneled into one warehouse in February and made off with 570 pieces before they were apprehended by police.

Thank heavens we caught the robbers before they grated it, said William Bizzarri, 58, who manages the cheese vaults.


Nestled in the valleys of Italys Emilia Romagna region, southeast of Milan, Credito Emiliano has been using parmesan as collateral since 1953, entrusting management of the cheese to a unit called Magazzini Generali delle Tagliate.

The bank offers loans for as long as 24 months, equal to the time it takes the parmesan to age, at the euro interbank offered rate, plus 0.75 percent to 2 percent, Bizzarri said. The bank gives producers as much as 80 percent of the value of the product, based on current market prices.

550 Liters of Milk

Parmesan cheese has been used for financial operations since the Middle Ages, said Leo Bertozzi, head of Italys Parmigiano-Reggiano Producers Association. This is both due to its value, since each compact wheel holds the equivalent of 550 liters of milk, and the fact that aging takes years, making financing necessary until the product can be sold.

The bank considered taking prosciutto ham, another of the regions specialties, and olive oil as collateral but such products are harder to store and brand, Bizzarri said.

Its easier to steal or replace them, he said.

Emilia Romagna is the only area in the world legally allowed to use the parmigiano-reggiano name for the hard, dry skim milk cheese that was first made in the region around 1200. Sales of parmesan equaled 1.54 billion euros in 2008, 25 percent from exports, according to the producers association.

Once the bank accepts cheese as collateral it oversees the aging process, which includes turning the wheels several times a week and checking periodically for cheeses that have gone soft. As a master tester taps each cheese with a small metal hammer, Bizzarri listens for hollow sounds that would indicate the wheel is a dud and result in its disposal.

Like a Check

Most wheels pass the test, said Bizzarri, who sold financial products and managed bank branches before taking over the cheese unit. After a year they are branded with the parmigiano-reggiano logo and serial numbers and tags.

Its just like a bank check, Bizzarri explained. If we catch any thieves in time we can easily trace the cheese.

When loans arent repaid, Credito Emiliano sells the cheese collateral to recover its investment, returning any difference to the producer. This makes the operation low risk for the bank, Bizzarri said, adding that very few producers default.

Producer prices for parmesan averaged 7.27 euros a kilogram in July, down from 7.49 euros in January, according to data from the Parmesan Producers Association in Reggio Emilia. Prices peaked at 9.36 euros a kilo in January 2004.

Fortunately, prices have now stabilized and while the global economic crisis remains a concern, consumption, including sales abroad, is holding up, Bertozzi said.

Economic Boost

Credito Emiliano has almost 6,000 employees and 590 branches, mostly in central and northern Italy. First-quarter net income fell 75 percent to 11.8 million euros on lower commissions and trading losses of 33 million euros.

While cheese accounts for less than 1 percent of the banks revenue, the unit is important because it helps keep parmesan makers in business, bolstering the local economy, Bizzarri said.

Italy is facing its fourth recession in seven years, with the economy likely to shrink 5.3 percent this year, the worst contraction on record, according to research institute Isae.

The government has been asking banks to help the economy and keep lending, but credit quality is a problem these days, said Edoardo Liuni, an analyst at IlNuovoMercato.it in Rome. With this system, defaults are less likely.

While other local banks have at times had similar programs, and larger institutions sometimes accept high-value goods such as art as collateral, Credito Emiliano is the main bank offering loans to Italys 429 parmesan producers, Bizzarri said.

Its not our main source of funds, but it helps producers and shows there are more ways than one to keep doing business, he said. Lets say its a way to put our heritage to good use.
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AnneD Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Sep-05-09 08:40 PM
Response to Reply #51
87. I can't resist......
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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Sep-05-09 09:35 PM
Response to Reply #87
88. I Couldn't Think of Anything--That's Brilliant!
I guess you CAN find anything on the Internets!
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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Sep-05-09 08:09 AM
Response to Original message
52. Obama's No Socialist. I Should Know By Billy Wharton, editor of the Socialist magazine
http://www.washingtonpost.com/wp-dyn/content/article/20...


...
The first clear indication that Obama is not, in fact, a socialist, is the way his administration is avoiding structural changes to the financial system. Nationalization is simply not in the playbook of Treasury Secretary Timothy Geithner and his team. They favor costly, temporary measures that can easily be dismantled should the economy stabilize. Socialists support nationalization and see it as a means of creating a banking system that acts like a highly regulated public utility. The banks would then cease to be sinkholes for public funds or financial versions of casinos and would become essential to reenergizing productive sectors of the economy.

The same holds true for health care. A national health insurance system as embodied in the single-payer health plan reintroduced in legislation this year by Rep. John Conyers Jr. (D-Mich.), makes perfect sense to us. That bill would provide comprehensive coverage, offer a full range of choice of doctors and services and eliminate the primary cause of personal bankruptcy -- health-care bills. Obama's plan would do the opposite. By mandating that every person be insured, ObamaCare would give private health insurance companies license to systematically underinsure policyholders while cashing in on the moral currency of universal coverage. If Obama is a socialist, then on health care, he's doing a fairly good job of concealing it.

Issues of war and peace further weaken the commander in chief's socialist credentials. Obama announced that all U.S. combat brigades will be removed from Iraq by August 2010, but he still intends to leave as many as 50,000 troops in Iraq and wishes to expand the war in Afghanistan and Pakistan. A socialist foreign policy would call for the immediate removal of all troops. It would seek to follow the proposal made recently by an Afghan parliamentarian, which called for the United States to send 30,000 scholars or engineers instead of more fighting forces.

Yet the president remains "the world's best salesman of socialism," according to Republican Sen. Jim DeMint of South Carolina. DeMint encouraged supporters "to take to the streets to stop America's slide into socialism." Despite the fact that billions of dollars of public wealth are being transferred to private corporations, Huckabee still felt confident in proposing that "Lenin and Stalin would love" Obama's bank bailout plan.

Huckabee is clearly no socialist scholar, and I doubt that any of Obama's policies will someday appear in the annals of socialist history. The president has, however, been assigned the unenviable task of salvaging a capitalist system intent on devouring itself. The question is whether he can do so without addressing the deep inequalities that have become fundamental features of American society. So, President Obama, what I want to know is this: Can you lend legitimacy to a society in which 5 percent of the population controls 85 percent of the wealth? Can you sell a health-care reform package that will only end up enriching a private health insurance industry? Will you continue to favor military spending over infrastructure development and social services?

My guess is that the president will avoid these questions, further confirming that he is not a socialist except, perhaps, in the imaginations of an odd assortment of conservatives. Yet as the unemployment lines grow longer, the food pantries emptier and health care scarcer, socialism may be poised for a comeback in America. The doors of our "socialist cubby-hole" are open to anyone, including Obama. I encourage him to stop by for one of our monthly membership meetings. Be sure to arrive early to get a seat -- we're more popular than ever lately.
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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Sep-05-09 08:19 AM
Response to Reply #52
53. Seven Avoidance Indicators By Ralph Nader
http://www.informationclearinghouse.info/article22213.h...

http://www.commondreams.org/view/2009/03/14


...Here are seven avoidance indicators which outline what Washington is not doing to prevent another round of greed and misdeeds by the Wall Street few against the innocent many throughout the country.

1. Where are the resources for comprehensive law enforcement against the Wall Street crooks, swindlers and purveyors of costly deceptive practices? Isn't there a need to add two to three hundred million dollars for more FBI agents, prosecutors and corporate crime attorneys under the Justice Department to obtain the fines and disgorgements which will far exceed in dollars what is spent by the forces of law and order?

Americans want justice. They want jailtime not bailtime for these crooks. Look how many of the swindled just turned out in a New York City winter to let Bernard Madoff have a piece of their mind as he entered the courtroom and immediate imprisonment.

There has been very little movement so far in Congress or the White House toward this necessary action.

2. Where are the anti-trusters to revive the moribund divisions in the Justice Department and Federal Trade Commision? Failed banks, brokerage firms, and now insurance companies are being taken over by shaky acquirers, often with the encouragement of the federal government. Other industries are experiencing similar mergers and acquisitions in an already over-concentrated economy.

Our government needs to be on top of this accelerating creation of more companies deemed to be "too big to fail." A variety of antitrust policies are needed to prevent, restructure or, at least, require spinoffs to minimize the anti-competitive effects of the "urge to merge."

3. What about Congress and Obama shifting some power to the investors and shareholders who are paying for all these losses? The corporate bosses have made sure for many years that shareholders, who own their companies, have little or no right to control them. Had there been less of a gap between ownership and control, the bosses could never have engaged in such reckless speculation, looting and draining of the trillions of dollars with which they were entrusted. These include mutual funds, pension funds and various trusts. Power to the owners seems to be off the table.

4. The federal officials are talking up stronger regulation and re-regulation proposals but we have not yet been informed of their specific plans. There is not much talk of regulatory prohibition. That is, flat-out prohibition of banks, insurance companies, and other fiduciary institutions from speculating in derivatives or, to be more specific, bets on debts and the even more hyped creations of bets on bets on debts on debts.

5. By now, Washington should be devising ways to pay for these gigantic deficits and bailouts. A fraction of one percent sales tax on the hundreds of trillions of dollars in derivative transactions annually would produce hundreds of billions of dollars in revenue and tamp down some of this Wall Street gambling with other peoples' money.

Such a tax on speculative trades in these abstract instruments can make the Wall Streeters pay for their own bailouts and reduce some of the taxes on human labor.

6. Our government doesn't highlight not-for-profit institutions like the 8000 credit unions that are increasing their loans and continue to serve over 80 million Americans without a single insolvency. One would think that with the financial goliaths in a free fall, despite ever-larger bailouts from the federal government, that the cooperative model of credit unions would become a useful teaching instrument.

In his new paperback book, Agenda for a New Economy, David Korten makes an important distinction between the "phantom wealth" of Wall Street and the "real wealth" of Main Street.

His twelve-point agenda raises the fundamental question of why Wall Street is needed and how the functions of a just and progressive economy can be fulfilled with a sensible transition to a "real wealth" economy engaged by and accountable to real people striving for the necessities and wants of life through environmentally friendly, more efficient institutions.

Lest any remaining doubters out there are thinking about our country returning to business as usual Wall Street style, please read the confidential powerpoint presentation "AIG: Is the Risk Systemic?" by the AIG financial giant grasping $180 billion, so far, in federal aid and guarantees

In 21 pages of very large type, you will see why the AIG bosses believe that failure of their gigantic corporation would only "trigger a cascading set of further failures which cannot be stopped except by extraordinary means." In other words, AIG says to Uncle Sam and you the taxpayer save it or be prepared for a global collapse through a dominoes effect of unknown catastrophic sequences. For the full astonishing AIG text, see: http://www.aig.com/Related-Resources_385_136430.html . Right from the horse's mouth!

Ralph Nader is a consumer advocate, lawyer, and author. His most recent book is The Seventeen Traditions.

BY MY COUNT IT'S ONLY 6 AVOIDANCE INDICATORS, AND THERE WERE SEVERAL INSOLVENT CREDIT UNIONS WHICH GOT INVOLVED IN SUBPRIME LENDING AND WERE SHUT DOWN, BUT IT'S A FAIR SUMMARY OF WHAT NEEDS TO BE DONE TO FIX THIS ECONOMY FOR REAL.
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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Sep-05-09 08:25 AM
Response to Reply #53
54. A Different Kind of Revolution: (ENDING) Obedience to Authority in America By Mike Whitney
http://www.informationclearinghouse.info/article22221.h...


My e mail exchange with Dr. Bede Vincent Curley

Mike Whitney: I have been beating the same dead horse for three or four years now and many people are getting tired of the endless iterations of collapsing markets, rising unemployment and growing pessimism. What's needed is a vision of the future and a concrete plan of action, but I don't have one. So, tell me, what is to be done?

Bede Vincent Curley: I do not know what is to be done in the US.... Thinking people can see that most Americans veer between manic-depression and paranoid-schizophrenia. While they know they are getting kicked around by the rich, there's such a strong tradition of obedience to authority in America that most people just take it in stride and just get on with their lives. This is a population with an severe "abuse" problem. I compare it to the compulsive behavior among women and children who've lived in abusive relationships. The sickness passes from one generation to the next without interruption. It is a condition that has to be treated, which means creating a process where the person can see that the violence being done to them is violence and not love. America is a nation badly in need of therapy.

The US is full of such abusive notions as "tough love" which only reinforces dependence on the violent parent or partner. There is absolutely no way to confront the situation constructively except by raising awareness to what is happening and pointing out as clearly as possible that this crisis was created by the rich and imposed on the rest of us. And, as soon as you say that, you risk being marginalized-- especially among the I-Generation.

There's almost no discussion about class in the US, even among the Left, and yet, the chasm between rich and poor has grown wider in America than anyplace in the industrial world. The rich get richer and the poor own nothing. The middle class--the class of illusion--is committed to defending the so called American dream and believing whatever the rich tell them in order to sustain their own very tenuous existence. Remember, George Carlin said that "They call it the American dream, because you have to be asleep to believe it." Just try to convince someone in the middle class, some working man or woman, that the US kills and exploits the rest of the planet to serve the narrow interests of 10% of the population, they just point to their college educations, their cars, and other trinkets and shrug it off as unimportant or plug their heads back into the sand. What do they care? They have their Starbucks and their I-Pods and their flat-screens.

That's the bad news. The good news is that the US is a very big country. If reactionaries (militias?) can seize territory (as they routinely do in the South and parts of the West) why not revolutionaries?

Americans should take the constant erosion of civil and economic liberties in their country over the past 30 years seriously. They need to ask themselves who has benefited from the enormous investment in more police, prisons and military, than in schools and hospitals or affordable housing? These developments were not inevitable or automatic. That means that other choices were and still are possible but they must be made consciously and they require action to implement them.

The banks aren't going to feed and house people or provide them with anything except shinier chains. The poor and black will get rusty chains, tent prisons, and brutality, like they always do (especially given the host of government incentives for the private prison-industrial complex). The next time someone brings up our "post racial" society, just remind them of Katrina and the thousands of poor black people who were herded into the Superdome at gunpoint. The evacuation and "reconstruction" of New Orleans bear an uncanny resemblance to forced removals imposed by apartheid South Africa under the infamous Group Areas Act. Apartheid's founders drew explicitly on US segregation practice. Don't think it can't happen here again.

What is needed is a different kind of civil disobedience aimed at regaining local control of ECONOMIC resources...a whole new model of social and human responsibility focused on localism and community.

The way the financial crisis is unfolding, we'll all have to focus on saving our own environment "close to home" without help from the government. We should remember what Malcolm X and others who were murdered in the struggle for justice in the US had to say about human dignity and self reliance; we'll need it.

People should organize to solve real material problems. Forget about overthrowing "the government". That's nonsense. They should focus on defending their homes, strengthening their role in the community, and staying alive. By any means necessary. There will be plenty to do just assuring that basic needs are met. For example, a person facing eviction has no chance to resist by himself, but if the community comes to his defense, then the sheriff's department will have to back off. This rule can be applied elsewhere, too. Small victories can inspire tenacity, too. The "strike" was never a privilege granted by Congress. It is a weapon of self-defense against abuse that involved the whole working community and not just union members. A factory closing is an opening for resistance. Crowds prepared to storm a WalMart for Christmas shopping sales should be able to storm the doors and occupy the buildings to protect jobs like they did in Chicago earlier this year. The same thing happened in Argentina after their meltdown.

Financial crisis is an opportunity for political mobilization, but people have to pull together and work for a common goal. If a supermarket chain threatens to shut down or lay off workers; it should be boycotted. At the same time however, local farmers should be organized to set up community-supported alternative stores to provide affordable food. These are all politically charged actions that have been tried in the past with some degree of success. Not everything will succeed, but what other choice is there? People are losing their homes and livelihoods. The system is breaking down. It's time for community politics to take precedence over "identity politics". As Benjamin Franklin was reputed to have said, "We must all hang together, or surely we will all hang separately".


You can't educate sedated and misinformed Americans overnight. But resistance is a process, and it's a process that improves one's chance for survival. Look at what happened in Gaza. The main cities were bombed mercilessly by the Israelis but they managed to keep the hospital open. If the Palestinians can accomplish that, then it ought to be possible to take over a local clinic and keep it running even if supplies are cut off.

Of course, this will require an alternative media to succeed. People will need to be updated regularly by reliable independent sources. There could be corporate and government manipulation and attacks on citizen access to the Internet and other alternative media to disrupt activism. In fact, the Pentagon already has plans for nearly every imaginable scenario. And, of course, the MSM will try to discredit the so-called "troublemakers". The government will do everything in its power to crush grassroots resistance, but history tells us, that when a system breaks down, the central authority gets weaker and weaker while local groups step in to fill the power vacuum.

The country is simply too big for a domestic force of a couple hundred thousand soldiers to manage. Just look at Iraq; there were only 25 million Iraqis and it still turned into chaos. There are over 300 million people living in America; it cannot be done. Besides, on the odd chance that rioting breaks out, there may be reluctance among some in the elite to deploy soldiers visibly to major cities, for fear that foreign capital will flee and further aggravate the capital markets. Still, groups should establish redundancies to stay connected and better endure disruptions.

I'll stop here, since there's enough to think about in this rather long and sermonizing message. I am an optimist though, because it isn't over until we die. As long as people have a will to live there is a reason to resist. There are things that can be done that don't require blind hope. People need to see that their communities are under attack and that their future is no longer certain. The economic problems of feeding the top 10% are not going away, in fact, they're getting worse.

The only standard by which an economy ought to be measured is whether all the people who live in it are fed, housed, clothed, educated, and receive care and rest-- if that cannot be done then the economy has failed and has to be rebuilt to meet that standard. We're at war, and the enemy is not the government per se, but the super-rich corporatists that run the government and who prevent the economy from serving human needs.

(These comments were edited for grammar and readability. Dr. Curley is the nom de plume of a friend who wishes to remain anonymous)
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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Sep-05-09 08:32 AM
Response to Reply #54
56. Solidarity Forever
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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Sep-05-09 08:40 AM
Response to Original message
58. Keeping Up Appearances: London Turns Eye to Empty Mansions
Edited on Sat Sep-05-09 08:52 AM by Demeter
http://online.wsj.com/article/SB124752462689735243.html

LONDON -- At an abandoned home with yellowing newspapers on its front stoop, Paul Palmer peeks through a mail slot to find letters and leaves carpeting the entryway. The house next door has a dead plant chained to its porch, which is covered in faded utility bills.

Mr. Palmer investigates abandoned homes for a living. But his turf isn't a poverty-stricken corner of this financial capital. It's the Mayfair district, home to wealthy financiers, celebrities, the U.S. Embassy -- and a few squatters.

In the city of Westminster, where Mayfair is located, homes can cost up to 50 million ($81 million). Yet Westminster is fifth among London's 33 boroughs in the number of unoccupied properties. In 2008, 1,737 homes had been vacant six months or more, the third highest number among all London boroughs, according to the Empty Homes Agency, a nonprofit group that seeks to put empty homes back into use.

Unlike people facing foreclosures in other neighborhoods around the world, Mayfair's homeowners aren't down on their luck. Rather, the properties serve as investments for owners who pay the bills to keep them empty -- something the neighbors and city object to when the homes fall into disrepair. Many owners decline to rent the homes due to local council tax rules, which tax properties at a lower rate if they are empty and unfurnished. That loophole frustrates Mr. Palmer. "We shouldn't be rewarding these people," he says.

As the Westminster City Council's empty-property officer, Mr. Palmer strolls the area's streets six hours each day to identify vacant homes and track down their owners. Under British law, local authorities have the power to seek an order to claim ownership of the ghost properties and put them up for sale.

On a recent mission in Mayfair, Mr. Palmer -- an impeccably dressed man with a jovial demeanor -- walked barely half a mile to canvass 22 empty homes. Many have been collecting dust and cobwebs for six years or more. Mr. Palmer tries to determine whether a house is inhabited by glimpsing through the mail slot.

"Ah! Smell that wood! It's lovely, isn't it?" he said after getting a whiff of a house with mahogany-lined walls.

The high concentration of rundown, empty homes is striking for a posh neighborhood like Mayfair, with its ornately gated manses. The hub of aristocratic society before World War II, Mayfair's modern-day image is demonstrated by its prominent place on the British Monopoly board.

In real life, the empty-home phenomenon touches some of the U.K.'s more famous residents. A few years ago, Mr. Palmer met comedian Tracey Ullman and her husband, Allan McKeown. They wanted to know why the house next door to theirs was derelict, recalls Mr. McKeown.

To Mr. Palmer's delight, refurbishment began on the home in question after he spent years wrestling with the owners.

On a recent visit, Mr. Palmer phoned a colleague to share the sweet sound of renovation: "Do you hear that noise? They're on site, which is fantastic!"

Former Prime Minister Tony Blair's home is adjacent to a crumbling property that's been vacant for more than a decade. The owner keeps up on its payments, according to Mr. Palmer. But one look inside indicates they likely haven't visited in years.

Ron Mowlam, who lives across the street, pines to buy the home and refurbish it, but he can't locate the owners. So far, they've evaded Mr. Palmer as well. "It's just sitting there rotting, which is bizarre," says Mr. Mowlam.

Once he identifies a vacant house, Mr. Palmer consults property records. After that, he often finds himself sending letters to the British Virgin Islands, a known tax haven for foreign companies, and a place where many of the property owners in question have mailing addresses. He says he rarely receives a response back. Except, that is, when a court action is about to begin.

If a property is still empty after six months, with no effort on the owner's part to occupy, rent or renovate it, Mr. Palmer begins a "compulsory purchase" -- a process that forces an owner to relinquish possession. After assessing the value of the property, officials typically sell the house. If the original owner hasn't come forward, funds are paid to a local court where they remain for up to seven years. Most owners eventually turn up to claim the cash.

The compulsory purchase, says Mr. Palmer, is a "tool we use as a last resort to take empty property away from owners who refuse to do anything to it."
Jennifer M. Martinez/The Wall Street Journal

Squatters have inhabited some homes, like the ones above.

The problems surrounding the abandonment of high-end real estate were exposed last winter when a group of young squatters occupied two 20 million homes on Park Lane overlooking Hyde Park. Before the squatters settled in, the homes had been empty for seven years. During that time, Mr. Palmer had tried three times to contact their British Virgin Islands-based property owners: Red Line Ltd. and Perfectil Ltd.

Following two years of silence, the property owners surfaced once multiple British newspaper accounts outed the squatters. "We're the REAL Slumdog Millionaires," read a headline in the Sun.

Red Line and Perfectil couldn't be reached for comment. The houses remain empty. Mr. Palmer says he intends to seek a compulsory purchase order.

Mr. Palmer often takes a more sympathetic view to squatters than he does toward the owners of an abandoned property. After finding out about another group of squatters in Mayfair, he stopped by to introduce himself.

"I sat on the floor and had tea with them," he says. "It enabled me to get into properties I've been chasing for a long, long time." He has saved their mobile phone numbers. "At the end of the day, they have a similar goal of putting empty properties back into use," he says. "We just go about it in two very different ways."
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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Sep-05-09 08:55 AM
Response to Reply #58
59. Little Boxes
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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Sep-05-09 09:03 AM
Response to Original message
61. Putting the Cart Before the Horse: Obama expands workers' retirement savings options
http://news.yahoo.com/s/ap/20090905/ap_on_go_pr_wh/us_o...

WASHINGTON The government is trying to make it easier for Americans to save for retirement, President Barack Obama said Saturday, as he noted the toll the recession has taken on extra income and savings accounts.

One initiative will allow people to have their federal tax refunds sent as savings bonds. Others are meant to require workers to take action to stay out of an employer-run savings program rather than having to take action to join it.

"We know that automatic enrollment has made a big difference in participation rates by making it simpler for workers to save," Obama said in his weekly radio and Internet address. "That's why we're going to expand it to more people."

The new federal steps, which do not require congressional action, include:

Making it easier for small companies to set up 401(k) retirement savings plans in which all workers are automatically enrolled unless they ask to be omitted. Employers can set default amounts of each worker's pay perhaps 3 percent to automatically be deposited into the accounts without being taxed. Workers can raise or lower the contribution levels, and they choose how to invest the money. They will pay taxes on the money only when they withdraw it as retirees, when their tax rates are likely to be lower than when they are working full-time. A similar process would apply to savings plans called SIMPLE-IRAs.

Allowing such plans to automatically increase the amount that workers save over time unless the workers object.

Allowing people to check a box on their federal tax returns asking that any refund be sent as a savings bond. More than 100 million U.S. households receive refund checks each year, and many are promptly cashed and spent.

Allowing workers, when leaving a job, to direct unused vacation pay to a retirement savings account rather than taking it in cash.

The administration earlier asked Congress to make it easier to set up retirement accounts for people whose workplaces do not offer them. No legislation has moved thus far.

"Tens of millions of families have been, for a variety of reasons, unable to put away enough money for a secure retirement," Obama said. "Half of America's work force doesn't have access to a retirement plan at work. And fewer than 10 percent of those without workplace retirement plans have one of their own."

While saving for retirement is universally seen as a good idea, any increase in savings rates could somewhat slow the nation's rebound from the economic recession.

MR. PRESIDENT? MR.PRESIDENT? IN ORDER TO SAVE FOR RETIREMENT, DON'T YOU FIRST NEED A JOB, SO YOU CAN EARN MONEY TO SAVE? and have something to retire from?
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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Sep-05-09 09:06 AM
Response to Reply #61
63. Rainbow Quest
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KoKo Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Sep-05-09 05:03 PM
Response to Reply #61
80. Billions for Wall St.....and let's let the last ones employed give their sick pay and vacation pay
to the same folks who brought us this disaster.

Why is it that this proposal seems kind of hollow? Doesn't anyone want to talk about folks who had 401-K's in what they were told the safest of investments who are still looking at a big hole even though the "Markets" are supposedly up and the green shoots are turning into "young saplings" according to one of those yapping CNBC mouths?
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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Sep-05-09 10:15 AM
Response to Original message
67. What to do with the Fed by Willem Buiter
http://blogs.ft.com/maverecon/2009/07/what-to-do-with-t... /

The Fed is in trouble. Obama administration proposals for enhancing the Feds supervisory and regulatory role and for assigning it new macro-prudential responsibilities and powers - effectively turning it into the nations systemic risk regulator - are meeting with strong and vocal opposition...

...The desire for stronger Congressional oversight of the Fed is no longer confined to a few libertarian fruitcakes, conspiracy theorists and old lefties. It is a mainstream view that the Fed has failed to foresee and prevent the crisis, that it has managed it ineffectively since it started, and that it has allowed itself to be used as a quasi-fiscal instrument of the US Treasury, by-passing Congressional control....
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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Sep-05-09 10:18 AM
Response to Reply #67
68. A Panel Is Named to Examine Causes of the Economic Crisis
http://www.nytimes.com/2009/07/16/business/16inquiry.ht...

Congressional Democrats announced on Wednesday that Phil Angelides, a former California treasurer, would lead a commission to examine the causes of the financial crisis.

The vice chairman of the panel, which has 10 members, will be Bill Thomas, the former Republican representative from California who led the Ways and Means Committee, who was selected by Republican leaders.

Other Democratic-appointed members of the committee include Brooksley Born, the chairwoman of the Commodity Futures Trading Commission under President Bill Clinton; Bob Graham, a former Democratic senator from Florida; Heather Murren, a retired managing director at Merrill Lynch; Byron Georgiou, a Las Vegas businessman; and John W. Thompson, chairman of Symantec.

The other members of the committee appointed by Republicans are Keith Hennessey, a former economic adviser to President George W. Bush; Peter J. Wallison, a fellow at the American Enterprise Institute; and Douglas J. Holtz-Eakin, a former top adviser to the presidential campaign of Senator John McCain.

The commission was created by Congress to investigate the roots of the crisis. Lawmakers gave the commission a broad mandate, as well as subpoena power, to look at issues like the role of exotic financial instruments and credit rating agencies, compensation, and the failure of regulators to manage risky lending at banks....

The commission is supposed to issue a final report at the end of next year.
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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Sep-05-09 10:20 AM
Response to Reply #68
69. Anticipating Financial Instability - High Time for a Coherent Macroeconomics
http://www.nakedcapitalism.com/2009/07/guest-post-antic...

Rob Parenteau, CFA, is sole proprietor of MacroStrategy Edge, editor of the Richebacher Letter, and a research associate with the Levy Economics Institute.

At a Brookings Institution session last March, while Bear Stearns was flaming out, Robert Rubin asserted few, if any people anticipated the sort of meltdown that we are seeing in credit markets at present. Der Spiegel recently carried an insightful piece on one of the few, former central banker William White (http://www.spiegel.de/international/business/0,1518,635... ). White and his protgs at the BIS the central bank for central banks like Claudio Borio repeatedly stuck their necks out to warn of the financial imbalances building in the global economic system. In contrast, most of their colleagues in central banks, backed by the prevailing mainstream macroeconomics, mistakenly asserted that inflation stability would insure both stability in economic growth and financial stability. Indeed, this was part of the narrative that central bankers like Chairman Bernanke took up with their Great Moderation story.

Similarly, Nassim Taleb has gained notoriety for his view that the recent episode of financial instability is an example of a Black Swan event a type of tail event that will randomly disrupt human affairs because we tend to systematically clip off the extremes of the possible when examining the range of likely outcomes. Yet a recent paper by Dirk Bezemer at Groningen University, No One Saw This Coming, however, documents that dissenting voices were there to be heard, if one was only willing to listen (http://mpra.ub.uni-muenchen.de/15892/1/MPRA_paper_15892... ).

This in itself is not entirely surprising after all, financial markets require bulls and bear if any trading is to actually occur, and there is always a contingent of knee jerk contrarians, misanthropes, and malcontents known as permabears willing to spin the doom and gloom narrative. However, what Bezemer uncovered is that an identifiable common thread ran across the dissenting views.

The dissenters, Bezemer found, shared an emphasis on a stock/flow coherent macroeconomics. That is, starting from what should be an uncontroversial, accounting based view that at the level of the economy as a whole, total income must equal total expenditures, and total assets must equal total liabilities, those who saw this coming were able to identify unsustainable sectoral cash flow and balance sheet developments. In advance, a stock/flow coherent macroeconomics revealed the reasons why the Great Moderation was bound, by construction, to eventually give way to the Great Disruption.

As Bezemer put it,

Surveying these assessments and forecasts, there appears to be a set of interrelated elements central and common to the contrarians thinking. This comprises a concern with financial assets as distinct from real sector assets, with the credit flows that finance both forms of wealth, with the debt growth accompanying growth in financial wealth, and with the accounting relation between the financial and real economy.

Having performed one such analysis for the Levy Economics Institute in 2006 (http://www.levy.org/vdoc.aspx?docid=866 ) and studied financial instability reports issued by the Levy Institute, the BIS, the IMF, and others prior to the recent financial crisis, we believe Bezemer has it largely correct. If policy makers are indeed serious about the never again pledge regarding a financial crises the size of the recent one, they will need to set aside the prevailing macroeconomic paradigm one which has largely made itself irrelevant by approaching macro as little more than aggregated microeconomics. Instead, they will need to become familiar with a stock/flow coherent macroeconomics that highlights the way financial conditions can shape economic outcomes. This is an economics examined and utilized by J.M. Keynes, Irving Fisher, Hy Minsky, Wynne Godley, Kurt Richebacher, and others it is an economics especially relevant to the world we actually inhabit.

When a plane crashes, investigators swarm over the site and retrieve the black box in order to determine the cause of the crash, with the aim of reducing the odds of future crashes. In that fashion, knowledge it built over time about what works and what does not work, and appropriate adjustment in technology or best practices can be made along the way.

Little in the way of such procedures appears to be set in motion following a financial crash. Given the ability of financial crises to disrupt the lives of more people than can fit on a plane, this should strike most people as somewhat cavalier, if not absurd.

Some, like Bill Black, have suggested nothing less than a modern version of the Pecora Commission should be launched (http://neweconomicperspectives.blogspot.com/2009/07/som... ). We are no fans of witch hunts, but we do believe ignoring useful frameworks for understanding financial instability, and leaving applied analysis based on these frameworks essentially ignored or marginalized, is unlikely to benefit anyone except those who gain the most from manufacturing and milking serial asset bubbles. Any attempt at an autopsy of the Great Disruption must go beyond cataloguing the inherent fragilities of the financial instruments and specific market structures themselves, as well as the flawed incentive structures and ample room for fraudulent practices, to a serious examination of the unsustainable macrofinancial dynamics that were either ignored or simply explained away.

If macroprudential supervision or any such related effort at reducing the odds of systemic economic crises unfolding from financial instability is to be successful, the core analytics will need to be built around a stock/flow coherent approach macroeconomics. The ground work in this area has been already been done by the likes of Claudio Borio, Wynne Godley, Levy Institute research associates, and others working in financial stability projects within various national and international institutions. Without paying attention to unsustainable sectoral cash flows and the resulting balance sheet leverage building up over time, financial vulnerabilities that can trip up the entire economy indeed, as we have seen, the entire global economy - will remain largely invisible to investors, entrepreneurs, and policy makers. Perhaps that serves the interests of asset bubble perpetrators, but after recent events, it is high time to question whether those interests should remain paramount.

Bob Rubin is right a few people did see an episode of financial instability brewing. Dirk Bezemer is also correct these people tended to share a common approach to viewing economic and financial dynamics. That this framework is not being used to explicitly inform solutions to the current crisis is dumbfounding. That attempts to reduce the odds of future episodes of financial instability may not incorporate this framework, which after all is grounded in relatively straight forward and uncontroversial accounting, is senseless.
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MattSh Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Sep-05-09 10:45 AM
Response to Original message
70. A view from Kiev.
Earlier this year, I wrote a couple of these "views from Kiev," thinking that there was going to be a lot going down this year. And then...nothing. But it looks like things are beginning to heat up again. So just what is happening now in the Black Hole that was supposed to swallow Europe?

The Unwinding Begins Again.

I remember August 2008 well. For the first time since I've been in Kiev, that month the local currency had a big gain against the dollar. For the longest time, it hovered around 5:1. The little minor currency that no one outside this country cares about gained 10% against the dollar, to 4.5:1. And most of my money was still in dollars in the US, since most banks in most countries will refuse to open an account for an American. And we needed to pay for our September vacation, so it cost us 10% more. And immediately after we paid for said vacation, the exchange rate went the other way. Bummer.

Within a couple of months, the rate reached a high of 9.3:1, meaning now I could get twice as much local currency for my dollar compared to a few months earlier. At least for awhile, I could get twice as much money when we exchanged currency. This also means that inflation would catch up to this devaluation in a few months, being a lagging indicator. Slowly, the exchange rate started to drift the other way, settling around 8.25:1 for awhile. Then within a period of about 10 days this spring, the rate sank to 7.5:1. This was very good for the locals, who found their money suddenly bought them a bit more every month, but not so good for those who held mostly dollars, like myself. For about four months it stayed near this rate, until about three weeks ago, when it began moving the other way again. Now it's again around 8.75:1

Last year, there seemed to be some talk that an exchange of 10:1 would be the breaking point. That would be the point where general social unrest would set in, that is, in a bigger way then we had seen so far this year. Will we hit that 10:1 rate this time? Is it still the breaking point? Was it ever the breaking point to begin with? Or have people already adjusted to this new reality? Only time will tell.

Bet Your Politicians Don't Do This...

Back in April, utility rates were revised upwards, effective June. At that time, various portions of our combined utility bill would go up from 48% to 102%. This especially hit utilities dependent on oil, namely heat and hot water. And it's very much related to the exchange rate issue above.

A couple of years ago, the local authorities attempted to raise utility rates. Rates went up, and people didn't pay. And politicians encouraged people not to pay, stating that the rate increases would not stand. They did not. Within two months, all increases were reversed. Those who had paid their bills during that time paid the new rates. People who did not pay only had to pay the old rate for the months they missed. So those who paid their bills on time were penalized. Those who did not pay were rewarded.

So, what happens again this year? The rates go up, and people again refuse to pay. From what I've heard, only 55% of bills were paid this summer. Even the prime minister is encouraging this action. Last month, one of the plants that generate hot water was shut down because they could not pay for fuel to make hot water. Not only residences were without hot water, factories, hospitals, and schools were too. As of September 2, all hot water seems to be on in the city again, coinciding with the opening of schools.

A new presidential election in January does not help matters. Politicians are likely to continue to keep the issue alive, hoping for votes, but yet setting up conditions for blackouts of heat, hot water, electric, or other utilities. And it doesn't help matters that ending subsidies (yes, a good portion of my utilities are subsidized) is a priority of the IMF.

But politicians here apparently know that they can get away with thumbing their noses at the IMF. Ukraine is not Argentina. The powers that be understand that if they push too hard, it could swing Ukraine back toward Russian influence and the so-called bad old days. Which to many here were not really all that bad, and might be a welcome change from the current president, Mr 4% approval. In fact, the current government here has the lowest approval rating ever, or at least since pollsters began as poll about these sort of things.

Well hopefully, I don't have to write these things too often, because if I do, it means things are falling apart.
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Ghost Dog Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Sep-05-09 11:24 AM
Response to Reply #70
72. Very interesting. Thanks, MattSh. A couple of questions and an observation:
Edited on Sat Sep-05-09 11:28 AM by Ghost Dog
1). How many plants provide the city of Kiev with heating, hot water, electric power (these are what are known as (Soviet-era) combined heat&power systems, right?) - in other words, how much diversity and therefore resilience is there in the system?

2). You comment: "Most banks in most countries will refuse to open an account for an American." (We saw a reference to this the other day in the SMW). Why do you think that is? Would any other US ex-pats like to chip in with their experiences here?

3). Currency fluctuations affecting local prices. The (recently) strong Euro has been helping to keep (especially oil-dependent) prices down in the eurozone (I'm in Spain). (Keeping this issue separate from the depression-related deflationary processes also in play). I reckon that, but for oil/gas/uranium and some other crucial raw materials, Europe could be much more self-sufficient in most other things, especially food. I'd guess the Ukraine is not very different in that respect.

Your observations are welcome, at least to me. Are you aware of this site where perhaps you could also usefully post on occasion?

:hi:
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MattSh Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Sep-05-09 01:03 PM
Response to Reply #72
74. Answers, where I can...
1). How many plants provide the city of Kiev with heating, hot water, electric power (these are what are known as (Soviet-era) combined heat&power systems, right?) - in other words, how much diversity and therefore resilience is there in the system?

Diversity in the system? For heat and hot water, I couldn't tell you. Nor my wife too. Generally during Soviet times, the hot water was turned off for two weeks in the fall and two weeks in the spring for maintenance. Now it's just two weeks during the summer. Heat maintenance is done during the six months when heat is not supplied. I'm sure there's some back ups built into the system, but can't tell you what. Electric here, like elsewhere is on a grid. One part of the grid goes down, different parts of the grid will fill in.

An article about Soviet era subsides here. A lot of this still sounds familiar in Kiev, 12 years later.

http://www.nytimes.com/1997/07/13/world/yeltsin-attacks...

2). You comment: "Most banks in most countries will refuse to open an account for an American." (We saw a reference to this the other day in the SMW). Why do you think that is? Would any other US ex-pats like to chip in with their experiences here?

The simple answer, which most people will give you, is three letters. IRS. You see the trouble that UBS recently ran into with the IRS. And UBS likely required a minimum opening balance of a million, or at least a half. People with that kind of money makes it worth their time and the headaches. But I believe there's much more to it than that. The IRS is used to run interference for American financial institutions. Bank of America, Citibank, Merrill, etc, don't like foreign competition. My credit union in the states will pay 2% on a savings account, but accounts here will pay 12% or more for a dollar account or up to 25% for an account in local currency. While I can't begin to fathom how the local banks do that, it makes me wonder if it's just another way for the American "consumer" to get screwed. I've also read that in any average year, 8 of the top 10 yielding mutual funds are not available to Americans to invest in. The hoops the SEC puts in place makes it not worth their time to make their products USA legal.

3). Currency fluctuations affecting local prices. The (recently) strong Euro has been helping to keep (especially oil-dependent) prices down in the eurozone (I'm in Spain). (Keeping this issue separate from the depression-related deflationary processes also in play). I reckon that, but for oil/gas/uranium and some other crucial raw materials, Europe could be much more self-sufficient in most other things, especially food. I'd guess the Ukraine is not very different in that respect.

Currency fluctuations definitely impact prices here, especially for those who's finances are handled in local currency only. The local currency here is weak, so anything oil related is up. But not being a EU member, Ukraine has a weird mix of free market and socialist policies. Energy conservation is next to non-existant here. Ukraine still does not allow foreigners to own farmland, and in the last year has restricted exports of a number of food items at certain times. Ukraine has decent sufficiency in food, but lacks sufficiency in so many other areas.

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Ghost Dog Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Sep-05-09 01:40 PM
Response to Reply #74
77. Ok thanks. "The IRS is used to run interference for American financial institutions."
Gotcha. Understood.

I'd be very very wary of a dollar savings a/c offering anything like 12% or more: sounds potentially Ponzi.

Stay safe.
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MattSh Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Sep-06-09 02:27 AM
Response to Reply #77
100. Ever have a do'h moment?
Like when you walk by something every day, for a year or two, wondering how do they do that?

Then you type something up here, click "Post Message", then an hour or two later that which eluded you for months or years suddenly becomes clear? Or at least a part of it?

The 25% interest rate for local currency makes sense. At a minimum, inflation here last year was somewhere in the mid-30's, or above. In order to entice people to entrust their money to them, a bank needs to hold out the promise that even if they can't increase your buying power that you will at least not lose too much. Even in the states, during the late 70's early 80's, I seem to remember interest rates in the double digits, because if inflation is 20% and a bank pays 5% interest, you're better off buying now, before you money loses too much value.



Of course, a bank needs to lend money out to be profitable. And to be profitable you need to lend at a higher rate than you pay on deposits. Charging greater than 25% interest on a loan usually will get you nowhere. So that part still has some 'splaining to do. A few hours after I click "Post Message", maybe that too will make sense.
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Ghost Dog Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Sep-06-09 03:55 AM
Response to Reply #100
101. Many banks appear to be lending much less,
and playing the financial 'bubble-markets' even more than before...?
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DemReadingDU Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Sep-05-09 04:49 PM
Response to Reply #74
79. Thanks for sharing

Always appreciate postings to read what is going on in other countries.

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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Sep-05-09 01:14 PM
Response to Reply #70
75. Sounds Like Ukraine Is Caught Between 2 Paradigms
Edited on Sat Sep-05-09 01:17 PM by Demeter
the old planned economy/socialism and the wild west/capitalism. And doesn't know which way to jump.

At least they are open to alternatives....the US has yet to get to that point, except there seems to be a strong current for single payer healthcare, which the "elites" are fighting tooth and nail with the propaganda blaring 24/7.

No, TPTB don't want universal health care---where's the profit in that? Where are the bribes, legal and illegal? Where are the bonuses?

That's exactly our point, say the People.

We are always glad to hear from you. Stop in any time!
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KoKo Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Sep-05-09 05:09 PM
Response to Reply #70
81. Thanks for this post. It's good to get the "on the ground" view
from a fellow DU'er what's going on in your area. Wish we had more of this. We used to in the early days of DU...it helps us understand.
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RedCloud Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Sep-05-09 12:11 PM
Response to Original message
73. isn't it "woikers" for some regions?
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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Sep-05-09 01:18 PM
Response to Reply #73
76. If you're from Joisy, Sure
Edited on Sat Sep-05-09 01:20 PM by Demeter
But in the Midwest, it's "Hollywood standard" English.

Thanks for stopping in! Come on back, you hear?
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Po_d Mainiac Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Sep-05-09 07:38 PM
Response to Reply #76
83. Up heeyah, it used to be werkah
now it's just unemployahd.

Great post Lady! Ayuh
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OxQQme Donating Member (694 posts) Send PM | Profile | Ignore Sat Sep-05-09 02:32 PM
Response to Original message
78. Kris
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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Sep-05-09 09:44 PM
Response to Reply #78
91. Thank You!
I always learn so much from everybody!
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AnneD Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Sep-05-09 09:39 PM
Response to Original message
89. US Airways pilots union sues pension agency


WASHINGTON The pilots union for US Airways filed suit Wednesday against the federal government's pension agency, claiming it is not doing enough to investigate charges that the airline's pension plan was mismanaged.
The U.S. Airline Pilots Association wants the Pension Benefit Guaranty Corp. removed as trustee for the plan and replaced with someone who will actively pursue charges of misconduct.
A complaint filed in U.S. District Court says the pension plan was almost fully funded in 2000. But the plan lost about $2.1 billion over the next two years and the airline sought bankruptcy protection.
A bankruptcy court later terminated the plan.
Union officials say the massive losses were unusually high and claim they have uncovered "questionable circumstances" showing the assets may have been improperly invested.
"Our request to the PBGC for a thorough investigation has fallen on deaf ears," said union president Mike Cleary.
The PBGC, which insures the retirement benefits of 44 million Americans, took over control what was left of the pilots' pension plan in 2003. Retiring pilots now stand to get only a tiny fraction of the benefits they were expecting.
A PBGC spokesman had no immediate comment.
Earlier this year, the US Airways pilot celebrated for making a successful emergency landing on the Hudson River in New York testified in Congress about the financial plight of his company's pilots.
"My pay has been cut 40 percent," Chesley "Sully" Sullenberger III told lawmakers. "My pension, like most airline pensions, has been terminated and replaced by a PBGC guarantee worth only pennies on the dollar."



/www.google.com/hostednews/ap/article/ALeqM5gfYFPWqmKL-S...

Pilots have mandated early retirement and thus a short time to make their money. These guys were royally screwed and deserve justice. I can only imagine getting 40% of what I was counting on to live the rest of my life on. No way to plan around that
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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Sep-05-09 09:45 PM
Response to Reply #89
93. I Wish them Luck
the only way we win is deflation--getting more bang for whatever bucks we can hold onto....
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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Sep-05-09 09:47 PM
Response to Original message
94. If You've Worked Your Way This Far Down the Thread, Remember!
Edited on Sat Sep-05-09 10:06 PM by Demeter
We still have two days to go, Sunday and Monday.

I will start a Part 2 thread tonight, so as to keep it from getting too awfully long.

Thread continues at this link:


http://www.democraticunderground.com/discuss/duboard.ph...
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AnneD Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Sep-05-09 10:33 PM
Response to Reply #94
97. I have not yet begun to post!!!!!
Solidarity forever.
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DemReadingDU Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Sep-07-09 07:23 AM
Response to Original message
104. HBO Documentary: GM Last Truck

9/7/09 Last Truck film about GM Moraine airs on HBO tonight

DAYTON The Last Truck, the new documentary by Yellow Springs filmmakers Steven Bognar and Julia Reichert, will have its broadcast premiere today, Sept. 7, on HBO.

Home Box Office, which produced it, will air the 40-minute film about the December 2008 closing of the General Motors plant in Moraine several times over the next three weeks. The schedule is as follows.

HBO: 9 p.m. today; 9:30 a.m. Thursday, Sept. 10; 12:45 p.m. Sunday, Sept. 13; 12:30 p.m. Sept. 16; 1:30 p.m. Sept. 19; 5 p.m. and 11 p.m. Sept. 21.

HBO2: 8 p.m. Wednesday, Sept. 9; 5:10 a.m. Saturday, Sept. 12, and 2:15 p.m. Sept. 30.

HBO Signature: 3:50 a.m. Sept. 24 and 8 a.m. Sept. 25.

DVDs of the film will be available for purchase beginning Nov. 17 at HBO.com or Amazon.com.

In addition, an interview by National Public Radio reporter Renee Montagne with Bognar and former Moraine worker Katie Geiger will be aired after 8 a.m. today during the second hour of Morning Edition aired locally on WYSO, 91.3 FM. It will be streamed on the NPR site after 9 a.m.
http://www.daytondailynews.com/news/dayton-news/last-tr...


Here is the NPR segment:
9/7/09 What Happens When GM Closes A Plant

"The Last Truck", a new documentary about the closing of a General Motors plant in Moraine Ohio will air tonight on HBO. Renee Montagne talks with filmmaker Steve Bognar and former auto worker Kate Geiger about the film.
http://www.npr.org/templates/story/story.php?storyId=11...


We don't get HBO, so if anyone watches this documentary, let us know the details.

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DemReadingDU Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Sep-07-09 07:27 AM
Response to Original message
105. NPR Planet Money Looks At The Financial Crisis One Year Later

9/7/09 Planet Money Looks At The Financial Crisis One Year Later

Panic and dread spread around the globe exactly one year ago today as what seemed like a pretty isolated American problem the subprime mortgage meltdown morphed into a full-fledged global crisis. It was the day that the government took over mortgage giants Fannie Mae and Freddie Mac. And by a quirk of fate, it was the day that Planet Money produced its first podcast. Audio for this story from Morning Edition will be available at approx. 9:00 a.m. ET

http://www.npr.org/templates/story/story.php?storyId=11...


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DemReadingDU Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Sep-07-09 08:47 AM
Response to Original message
106. How China Cooks Its Books

9/3/09 How China Cooks Its Books

It's an open secret that China has doctored its economic and financial statistics since the time of Mao. But could it all go south now?

In February, local Chinese Labor Ministry officials came to "help" with massive layoffs at an electronics factory in Guangdong province, China. The owner of the factory felt nervous having government officials there, but kept his mouth shut. Who was he to complain that the officials were breaking the law by interfering with the firings, he added. They were the law! And they ordered him to offer his workers what seemed like a pretty good deal: Accept the layoff and receive the legal severance package, or "resign" and get an even larger upfront payment.

"I would estimate around 70 percent of workers took the resignation deal. This is happening all over Guangdong," the factory owner said. "I help the Department of Labor, and they'll help me later on down the line."

Such open-secret programs, writ large, help China manipulate its unemployment rate, because workers who "resign" don't count toward that number. The government estimates that roughly 20 million migrant factory workers have lost their jobs since the downturn started. But, with "resignations" included, the number is likely closer to 40 million or 50 million, according to estimates made by Yiping Huang, chief Asia economist for Citigroup. That is the same size as Germany's entire work force. China similarly distorts everything from its GDP to retail sales figures to production activity. This sort of number-padding isn't just unethical, it's also dangerous: The push to develop rosy economic data could actually lead China's economy over the cliff.

Western media outlets often portray Chinese book-cooking as part and parcel of a monolithic central government and omnipotent Beijing bureaucrats. But the problem is manifold, a product of centralized government as well as decentralized officials.

Pressure to distort or fudge statistics likely comes from up high -- and it's intense. "China announces its annual objective of GDP growth rate each year. In Chinese culture, the government has to reach the objective; otherwise, they will 'lose face,'" said Gary Liu, deputy director of the China Europe International Business School's Lujiazui International Financial Research Center. "For instance, the government announced that it wanted to ensure a GDP growth rate of 8 percent in 2009, and it has become the priority for government officials to meet that objective."

more...
http://www.foreignpolicy.com/articles/2009/09/03/how_ch...


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