Weekend Economists' "Try to Remember" Weekend, September 11-13, 2009

[Demeter]

Testing, testing...is this thing on?

Well, here we are, Friday again. I spent the week not sleeping, getting up at midnight to throw the NYTimes for friends with sob stories....and I still have another week to go. Soft headed, or soft-hearted...you decide!

And America spent the week anticipating the President's Health Care Reform speech...then like distracted children, chased the ephemeral GOP idiot of the moment for his bad form and worse intellect instead of landing on the inane mandatory insurance proposal with a ton of bricks and ending its foul, evil existence.

The one good thing about this is the media was almost completely prevented from wallowing in 9/11, to the exclusion of anything happening in Real Time.

Should we wish to wallow in past tragedies, there is plenty of pathos in economic events, enough to drown a whole nation, not just New Orleans. And that's what we are going to do 24/7.

This is your economy on drugs: read them and weep. Post what you have to amaze or amuse your friends.

We will intersperse the news with anything pertaining to September: starting with a classic tune from "The Fantasticks".

Music by Harvey Schmidt
Book and Lyrics by Tom Jones
Based on: Les Romanesques by Edmond Rostand

The Fantasticks tells the story of a young boy and girl who fall madly in love at the hands of their meddling fathers, but soon grow restless and stray from one another. Will their separation provide a deeper appreciation for the love they once shared—or create a permanent gulf between them? The Fantasticks is a quintessential celebration of love in all its gorgeous simplicity and heartbreaking complexities.

http://www.allmusicals.com/f/fantasticksthe.htm

Sounds like our daily lives, doesn't it?

This tune is of course entitled: "Try to Remember"


Try to remember the kind of September
When life was slow and oh, so mellow.
Try to remember the kind of September
When grass was green and grain was yellow.
Try to remember the kind of September
When you were a tender and callow fellow.
Try to remember, and if you remember,
Then follow.

Follow, follow, follow, follow, follow,
Follow, follow, follow, follow.

Try to remember when life was so tender
That no one wept except the willow.
Try to remember when life was so tender
That dreams were kept beside your pillow.
Try to remember when life was so tender
That love was an ember about to billow.
Try to remember, and if you remember,
Then follow.

Follow, follow, follow, follow, follow,
Follow, follow, follow, follow.

Follow, follow, follow, follow, follow,
Follow, follow, follow, follow.

Follow, follow, follow, follow, follow,
Follow, follow, follow, follow.

Deep in December, it's nice to remember,
Although you know the snow will follow.
Deep in December, it's nice to remember,
Without a hurt the heart is hollow.
Deep in December, it's nice to remember,
The fire of September that made us mellow.
Deep in December, our hearts should remember
And follow.

http://www.youtube.com/watch?v=8crw7baUGAk

I picked this of many versions because I think the singer is fabulous!

[Demeter]

1. It's too Early for Bank Failures But check back in this location later

[Demeter]

15. 7 PM and Still No Failures!

Did the FDIC take the weekend off, or did they finally run out of the ready?

[Demeter]

27. 7:30 and the FDIC is On! 2 New bank Failures! And It's a Big One!

Corus Bank, recently in the rumor mill, has just hit the fan...it's a big one, folks!


Corus Bank, National Association, Chicago, Illinois, was closed today by the Office of the Comptroller of the Currency, 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 Corus Bank, N.A...

As of June 30, 2009, Corus Bank had total assets of $7 billion and total deposits of approximately $7 billion. MB Financial Bank will pay the FDIC a premium of 0.2 percent to assume all of the deposits of Corus Bank. In addition to assuming all of the deposits of the failed bank, MB Financial Bank agreed to purchase approximately $3 billion of the assets, comprised mainly of cash and marketable securities. The FDIC will retain the remaining assets for later disposition. The FDIC plans to sell substantially all of the remaining assets of Corus Bank in the next 30 days in a private placement transaction...

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $1.7 billion. MB Financial Bank's acquisition of all the deposits was the "least costly" resolution for the FDIC's DIF compared to alternatives. Corus Bank is the 90th FDIC-insured institution to fail in the nation this year, and the sixteenth in Illinois. The last FDIC-insured institution closed in the state was Platinum Community Bank, Rolling Meadows, on September 4, 2009.


Brickwell Community Bank, Woodbury, Minnesota, was closed today by the Minnesota Department of Commerce, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with CorTrust Bank, N.A., Mitchell, South Dakota, to assume all of the deposits of Brickwell Community Bank...

As of July, 24, 2009, Brickwell Community Bank had total assets of $72 million and total deposits of approximately $63 million. CorTrust Bank will pay the FDIC a premium of 0.10 percent to assume all of the deposits of Brickwell Community Bank. In addition to assuming all of the deposits of the failed bank, CorTrust Bank agreed to purchase essentially all of the assets.

The FDIC and CorTrust Bank entered into a loss-share transaction on approximately $65 million of Brickwell Community Bank's assets. CorTrust Bank will share in the losses on the asset pools covered under the loss-share agreement. The loss-sharing 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 $22 million. CorTrust Bank's acquisition of all the deposits was the "least costly" resolution for the FDIC's DIF compared to alternatives. Brickwell Community Bank is the 91st FDIC-insured institution to fail in the nation this year, and the third in Minnesota. The last FDIC-insured institution closed in the state was Mainstreet Bank, Forest Lake, on August 28, 2009.

[Demeter]

28. See You In September?

That classic from the Association comes to mind, originally from The Tempos-original song-1959:

I'll be alone each and every night
While you're away, don't forget to write
Bye-bye, so long, farewell
Bye-bye, so long

See you in September
See you when the summer's through
Here we are (bye, baby, goodbye)
Saying goodbye at the station (bye, baby, goodbye)
Summer vacation (bye, baby bye, baby)
Is taking you away (bye, baby, goodbye)

Have a good time but remember
There is danger in the summer moon above
Will I see you in September
Or lose you to a summer love
(counting the days 'til I'll be with you)
(counting the hours and the minutes, too)

Bye, baby, goodbye
Bye, baby, goodbye
Bye, baby, goodbye (bye-bye, so long, farewell)
Bye, baby, goodbye (bye-bye, so long)

Have a good time but remember
There is danger in the summer moon above
Will I see you in September
Or lose you to a summer love

(I'll be alone each and every night)
(While you're away, don't forget to write)
See you (bye-bye, so long, farewell)
In September (bye-bye, so long, farewell)
I'm hopin' I'll
See you (bye-bye, so long, farewell)
In September (bye-bye, so long, farewell)
Well, maybe I'll
See you (bye-bye, so long, farewell)
In September (bye-bye, so long, farewell)

http://www.youtube.com/watch?v=QRGLjzFHa40

Another interesting interpretation:

http://www.youtube.com/watch?v=CRjBWt70QNs&feature=related

[DemReadingDU]

50. I remember the version by The Happenings

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

Good Morning!


edit, and the 2005 version by The Happenings
http://www.youtube.com/watch?v=OlUigSXxgG8


As a side note, they came to my college and performed in 1968, or maybe it was 1969. Fun time.

[ozymandius]

38. We were expecting Corus to bite the big one.

There has been a death watch for this clunker for nearly two weeks.

Greetings Demeter and everyone! :yourock: Nothing like starting the weekend thread with a flash and a bang.

:hi:

[Demeter]

43. U.S. regulators close Corus Bank, to sell assets later

http://news.yahoo.com/s/nm/20090912/bs_nm/us_corus_failure_1

WASHINGTON/NEW YORK (Reuters) – U.S. regulators seized Corus Bank on Friday in the fourth-largest bank failure this year and sold its deposits to MB Financial Bank (MBFI.O).

Long controlled by the Glickman family, Chicago-based Corus Bank crumbled under the pressure of bad loans on commercial real estate and condominium developments in Arizona, southern California, southern Florida and Nevada. The seizure of Corus and the failure of two smaller banks announced on Friday brought to 92 the number of shuttered banks in 2009.

Left behind in the wake of Corus Bank were 11 retail branches in the Chicago area, which are expected to reopen on their next business day as branches of MB Financial bank. Depositors of Corus Bank will automatically become depositors of MB Financial.

The Federal Deposit Insurance Corp said MB will assume all of the deposits of Corus Bank and about $3 billion of its assets, leaving about $4 billion in other assets that the agency hopes to later sell in a private placement.

Corus, the depository bank unit of Corus Bankshares Inc (CORS.O), had $7 billion in assets and about $7 billion in deposits as of June 30, the FDIC said.

The agency had spent weeks running separate sales of the deposits and other assets of Corus Bank, a lender specializing in condominium, office, hotel and apartment projects.

Sources familiar with the matter said on Friday that the FDIC has extended the bid deadline for the assets by a couple of weeks to September 22.

The FDIC said in its statement that it plans to complete the sale in the next 30 days.

Real estate developer Stephen Ross has received preliminary approval to start a bank, while his firm, Related Companies, is separately eyeing the assets of Corus Bank, the sources said.

Related has teamed with several partners including real estate investment firm Lubert-Adler Partners to bid on Corus Bank's assets, while private equity firm Lone Star Funds and real estate investment firm Colony Capital LLC are also considering bids, the sources said.

Barry Sternlicht's Starwood Capital Group is also considering a bid for the assets, the Wall Street Journal reported.

The FDIC, Related, Colony, Starwood and Lone Star declined to comment on the auction for the assets. The sources asked not to be named because the talks are private.

With only 11 branches, Corus's depository bank unit was considered to have little franchise value.

The FDIC said the closing of Corus will cost its insurance fund about $1.7 billion.

As Corus spiraled downward, in April, Chief Executive and President Robert Glickman resigned along with Joseph Glickman, the bank's chairman. The Glickmans in August were continuing to sell off their stakes in the bank, according to regulatory filings.

[Demeter]

44. 3rd Bank Succumbs

Venture Bank, Lacey, Wash., which as of July 28 had total assets of $970 million and total deposits of $903 million according to the FDIC. The FDIC said First-Citizens Bank & Trust Co., Raleigh, N.C., will assume all of the deposits of Venture Bank; will buy $874 million of the assets and entered into a share-loss transaction for $715 million of the assets. The FDIC said it will retain the remaining assets for later disposition. It estimated the cost to the deposit insurance fund at $298 million. Venture Bank, based in an Olympia suburb, is the third in Washington to fail this year and the first since Westsound Bank in Bremerton on May 8.

http://www.marketwatch.com/story/corus-minn-busts-bring-09-bank-failures-to-91-2009-09-11?siteid=yahoomy

[Robbien]

48. FDIC audit: Regulators too slow

(No sh*t Sherlock)

http://www.ajc.com/business/fdic-audit-135891.html

Signs that FirstBank Financial Services was headed for trouble appeared long before the small McDonough bank failed last February.

Regulatory examinations that took place almost every year since the bank opened its doors in 2002 found that it had grown too fast and took on too much risk related to the booming housing market.

But federal regulators took no action to force the bank to change its ways until October 2008, when the bank was already in free fall.

What took so long?

According to a federal audit released Thursday that explored regulators’ role in FirstBank’s failure, regulators were slow because the bank’s risky behavior had yet to show up on the balance sheet. Borrowers were paying on time, profits were rolling in.

The report said the Atlanta office of the Federal Deposit Insurance Corp. relies on “moral suasion” rather than formal actions to prod changes at banks that have problems but are doing well financially.


. . .

The inspector general also released an audit late last month on the failure of MagnetBank, a Utah-based bank founded by Atlanta investors with a sizable chunk of its operations based in Atlanta.

The blistering report said the bank engaged in a host of questionable lending practices before failing in spectacular fashion last January, just 40 months after opening its doors.

The audit catalogued examples of “inappropriate” actions by MagnetBank’s loan officers, including misrepresentation of facts, falsifying inspections on real estate collateral, and a lease transaction for an individual with a prior conviction for fraudulent leases.The audit also said loan officers were hired based on their ability to bring in business rather than sound credit judgment.


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


moral suasion: the act of persuading by appealing to one's sense of morality

Banksters open a bank with the obvious intent of defrauding the public for personal gain and the regulators believed moral suasion was going to get them to stop?

[Demeter]

53. Good Catch! That Was the Boy Wonder's Watch and His Policy

Georgie never saw a criminal he didn't indulge. 8 years without any meaningful government--we may never recover from it.

[Demeter]

2. Campaign finance hearing may have ramifications for corporate personhood

http://www.scholarsandrogues.com/2009/09/10/campaign-finance-personhood/

According to Fortune Magazine, the largest American company in 2009 was Exxon Mobil Its total revenues were $442.85 billion. Second was Wal-Mart, with total revenues of $405.61 billion. Rounding out the top 10 were Chevron ($263.16 billion), ConocoPhillips ($230.76 billion), General Electric ($183.21 billion), General Motors ($148.98 billion), Ford Motor ($146.28 billion), AT&T ($124.03 billion), Hewlett-Packard ($118.36 billion), and Valero Energy ($118.30 billion).

According to the International Monetary Fund (IMF), the 182 nations of the world had a combined GDP of nearly $60.9 trillion (or $60,900 billion) in 2008. But comparing the GDP data to the Fortune 500 data produces the table



(Go to the link and click for the top 182 nations and corporations each, in order).

If Exxon Mobil were a country, it would rank 25th in the world, right between Norway and Austria. Wal-Mart would rank 27th, sandwiched between Austria and Taiwan. Chevron would rank 28th, ConocoPhillips 42nd, GE 49th, GM 59th, Ford 60th, and AT&T, H-P, and Valero would be ranked 64-66 respectively.

In fact, all of the Fortune 500 would rank above the 40 smallest national economies in the world. And the smallest company on Fortune’s list of the 1000 largest U.S. companies would be larger than the national economies of 28 entire countries. Exxon Mobil’s revenue is greater than the combined GDP of the 78 smallest countries (out of a total of 182) in the world.

And yet the Supreme Court took the unusual step of ordering a hearing during the court’s recess in order to hear legal arguments over whether corporate money could be spent to influence elections and whether the current bans on most such money in politics were constitutional. And indications are that the conservative majority will likely rule to overturn nearly 20 years of precedent and rule that it is constitutional for corporate money to be spent directly to influence local, state, and federal elections.

According to the Constitutional Accountability Center, the four liberal justices were the ones quoting from the U.S. Constitution to support their questions and arguments:

Justice Ginsburg reminded Olson that it is living persons, not corporations, who are “endowed by Creator with unalienable rights.” Justice Sotomayor, too, picked up on this theme, emphasizing how the Supreme Court had rewritten the Constitution to create the fiction that corporations are persons entitled to the same basic rights as human beings. If we are looking to constitutional first principles to topple precedents, she asked, why shouldn’t we also look at the cases that invented corporate constitutional personhood and “imbued a creature of State law with human characteristics”?

Several of the court’s conservatives are supposed to be Originalists, judges who believe that the meaning of the Constitution was fixed at it’s writing (except for amendments, of course) and has not changed since then. Granting state creations the rights guaranteed to flesh and blood people when the Constitution doesn’t mention state creations is hypocrisy of the first order. It’s also an example of the very judicial activism than the Senate Republicans who voted against confirming Justice Sotomayor feared she would bring to the court. Perhaps the most activist judge on the Supreme Court today, defined by being the most willing to overrule Congress, is Antonin Scalia.

At present, corporate profits may not be spent to directly influence elections. This has historically been the case because corporations can live effectively forever and amass financial resources that no individual person could equal, and because legislators and courts have been concerned about corporate influence corrupting the political process. In essence, these are many of the same arguments that federal law uses to ban foreign nationals and governments from donating money to political campaigns. And yet, to the best of my knowledge, there are no foreign governments suing for free speech rights to influence elections.

The problem twofold – corporations are presently considered people, and money is considered speech. Corporations were defined legally as people for the purposes of limiting personal liability in the event of a business failure. But one of the results is that corporations have claimed the rights guaranteed to real people in the Bill of Rights, specifically the First Amendment right to free speech. And because the Supreme Court declared, in Buckley v. Valeo, that spending money equals exercising the right to free speech, corporations are now claiming that their money should be given identical rights to the money of individual citizens.

There are at least two direct solutions to this problem. The first would be to overturn Buckley v. Valeo. This would make money no longer equal to speech and could be an even more significant change in legal precedent than overturning 100 years of campaign limits on corporate donations to candidates. It would also require the conservatives on the court to go against their known personal ideologies.

The second is to redefine corporations so that they are not considered individual people for all situations. This would certainly require federal legislation and would probably require state legislation as well. It would also require that the economic and political powers at the state and federal levels voluntarily relinquish the power that corporate money (via PACs today, possibly via direct contributions in a few months) brings them.

Neither is particularly likely given the composition of the Supreme Court and the major influence of money in politics today.

Eventually, though, if the laws are overturned, enough companies will corrupt enough politicians with direct donations that they’ll overreach, and the public reaction will be swift and unstoppable. And when that happens, Exxon Mobil’s money and Wal-Mart’s money and Chevron’s money will be as untouchable as money from Hugo Chavez of Venezuela or Mahmoud Ahmadinejad of Iran.

Both of which have smaller economies than either Exxon Mobil or Wal-Mart.

[Demeter]

3. Yes, Even John Adams, One of Our Founding Fathers, Would Be Appalled

The revolution was in part a revolt against that great-granddaddy of corporations: the East India company, which looked upon the colonists as a captive market.


Adams:
I do believe you've laid a curse on North America
A curse that we now here rehearse in Philadelphia
A second flood, a simple famine
Plagues of locusts everywhere
Or a cataclysmic earthquake
I'd accept with some despair
But, no, you sent us Congress.
Good God, sir, was that fair?

I say it with humility in Philadelphia
We're your responsibility in Philadephia
If you don't want to see us hanging
From some far-off British hill
If you don't want the voice of independency
Forever still
Then God, sir, get thee to it
For Congress never will

You see, we piddle, twiddle, and resolve
Not one damn thing do we solve
Piddle, twiddle, and resolve
Nothing's ever solved in
Foul, fetid, fuming, foggy, filthy
Philadephia!

They may sit here for years and years in Philadelphia.
These indecisive grenadiers of Philadelphia.
They can't agree on what is right and wrong
Or what is good or bad; I'm convinced
The only purpose this Congress ever had
Was to gather here specifically
To drive John Adams mad!

You see, we piddle, twiddle, and resolve
Not one damn thing do we solve
Piddle, twiddle, and resolve
Nothing's ever solved in
Foul, fetid, fuming, foggy, filthy
Philadephia!

Congress:
Someone oughta open up a window!

Adams:
Oh good God!

http://www.youtube.com/watch?v=sM9KcAS5_K4&feature=related

[hay rick]

42. Vicious circle.

The rich support candidates of both parties in "wealth primaries." The politicians that emerge from these contests predictably favor reduced capital gains taxes, lower top marginal income tax rates, reduced barriers to trade, lax antitrust enforcement, deregulation of financial markets, the appointment of "conservative" justices, etc. The implementation of these policies increases the wealth and income of the very rich and enables them, operating through corporate proxies, to gain control of the media and frame the issues of further political debate to their liking...

Watching the public non-debate on health care, it is difficult to believe we have not already passed some obscene tipping point. Government FOR the people appears to be a rotting corpse by the side of the road we are traveling...

[Demeter]

54. Well, there's another circle that's coming around

and it's been 235 years in the making...

[Demeter]

4. Funny Numbers, Withering Green Shoots All Over the World

http://www.ft.com/cms/s/0/3b5c159c-9e79-11de-b0aa-00144feabdc0.html

"Fast-falling corporate inventories meant Japanese gross domestic product grew more slowly in the second quarter of this year than was first thought, government data showed on Friday, but analysts said the nascent recovery in the world’s second largest economy remained on track..."

http://www.ft.com/cms/s/0/4dd467e2-9dde-11de-8de8-00144feabdc0.html

"Fall in oil demand expected to slow

Global oil consumption will contract less than previously feared this year and grow strongly in 2010, the developed countries’ energy watchdog said on Thursday, in the latest sign of surging economic optimism.

The International Energy Agency said it detected “growing evidence that the global economy may be finally stabilising”. But it added: “The spectre of a double-dip, W-shaped recession . . . cannot be entirely discounted.”

The organisation said it now expected global oil demand to drop 1.9m barrels a day this year, less than the 2.3m b/d it had forecast last month. It is the third revision since May, when it forecast a contraction of 2.6m b/d. The upward revision of 700,000 b/d over the past four months equals Qatar’s oil output....

Goldman Sachs, Wall Street’s biggest commodities dealer, said this week that oil prices could hit $85 a barrel by the end of the year on stronger economic growth. (They never stop trying to scare it up, do they?)

“While oil markets were supported by the surprisingly robust Chinese economy earlier this year, economic indicators in the US and Europe have started to pick up as well,” said Jeffrey Currie, Goldman’s head of commodities research.

Barclays Capital, the third-largest bank in commodities, is also bullish, but most physical oil traders remain cautious .

The IEA gave warning that in spite of signs of stronger oil consumption, it was too early to declare that the impact of the economic crisis in energy consumption was over. It noted that diesel demand, closely related to industrial activity, remained low.

“The recent economic rebound has been essentially due to the completion of the massive inventory adjustment triggered by last year’s financial panic on the one hand, and to substantial government intervention on the other, more than to the revival of sustained private demand, which remains feeble.” "

[Demeter]

5. Big Changes Hit Morgan Stanley

http://www.ft.com/cms/s/0/07a74bca-9e49-11de-b0aa-00144feabdc0.html

"John Mack is to step down as chief executive of Morgan Stanley, putting an end to a four-year tenure marked by controversy over his strategic decisions and a near-death experience last year as the financial crisis began..."

Did he jump, or was he pushed by Bernanke, Geithner et al?

http://www.ft.com/cms/s/0/8450dbbc-9d8d-11de-9f4a-00144feabdc0.html

"Morgan Stanley’s Mideast president to resign

....One senior Morgan Stanley executive summed up the situation on Wednesday by saying: “You have to be in Dubai, even though the place has imploded and the mega transactions aren’t overwhelming. The fees aren’t there.”

Mr Makhoul did not respond to an email seeking his comment.

Another senior executive of Morgan Stanley said Mr Makhoul decided that he “isn’t suited to the industry”.

This executive said he thought Mr Makhoul would likely join local boards and might return to consulting.

There is also speculation that Mr Makhoul may work closely with some of the wealthy families of the region.

Mr Makhoul, who is originally from Lebanon, is expected to remain in Dubai..."



LOOKS LIKE A WHOLE LOT OF DECK CHAIR REARRANGING AT MORGAN STANLEY--CHECK FOR ICEBERGS!

[Demeter]

64. IS THIS WHY? Morgan Stanley sets aside 72% of revenue to pay bonuses

http://www.guardian.co.uk/business/2009/jul/22/morgan-stanley-to-pay-big-bonuses

Morgan Stanley is setting aside a huge sum to pay out bonuses despite posting its third consecutive quarterly loss and admitting it is disappointed with key departments.

The US bank's latest results show it is allocating $3.9bn (£2.36bn) for paying out to staff, 72% of its net revenues. That dwarfs the percentage of revenue set aside by arch rival Goldman Sachs, where workers are on track for large bonuses after record results last week.

Morgan Stanley extinguished the tentative flames of optimism among US banks today when it posted a loss of $159m for April to June and said it was not satisfied with its performance in fixed income trading and in asset management.

News of the bank's loss unsettled traders on Wall Street, whose view of the banking sector's prospects was brightened last week by Goldman's surge in profits and further upbeat news from JP Morgan, Citigroup and Bank of America.

Goldman said last week that it was dedicating 49% of its revenue to paying its staff, amounting to a compensation fund of $6.65bn.

Further reading of Morgan Stanley's results showed its compensation pot was not only much bigger as a percentage of net revenues of $5.4bn, but that it had jumped 26% from $3.1bn a year ago.

"It was a very good quarter to be a Morgan Stanley employee," said analyst Brad Hintz at Sanford C Bernstein & Co. "I'm not so sure it was so good to be a Morgan Stanley shareholder."

Although big bonuses to bankers are arousing controversy in the wake of the credit crunch, bumper payouts seem here to stay as firms continue to battle to attract the most talented staff.

The hefty bonus pot at Morgan Stanley echoes its comments that it needs to woo more top performers to its trading floors.

John Mack, chairman and chief executive, said that it was one way the loss-making bank was "taking steps to deliver better results" in its underperforming departments.

"These initiatives include hiring to add key trading and investment management talent," he said.

The bank was hit in the latest quarter by a charge related to repaying government loans known as Tarp. The disappointing performance from Morgan Stanley was accompanied by downbeat news from San Francisco-based Wells Fargo and tempered optimism about a recovery in the financial sector.

[Demeter]

6. Golden couple refuse to shoulder blame

http://www.ft.com/cms/s/0/f1c0992a-9d61-11de-9f4a-00144feabdc0.html

"When Herb and Marion Sandler, the founders and co-chief executives of Golden West Financial, sold their 43-year old California mortgage lender to Wachovia in May 2006, investors were so sceptical of the deal they wiped $1bn off Wachovia’s market capitalisation in a day..."

[Demeter]

7. Goldman chief admits banks lost control

http://www.ft.com/cms/s/0/ffb670be-9d33-11de-9f4a-00144feabdc0.html

Lost their minds, and their ethics, and their respect, and the industry...but thank God they still have their jobs, golden parachutes, bonuses and stock options!

"Lloyd Blankfein, chief executive of Goldman Sachs, on Wednesday admitted that banks lost control of the exotic products they sold in the run-up to the financial crisis, and said that some of the instruments lacked social or economic value.

In a speech to the Handelsblatt banking conference in Frankfurt, he also repeated an attack, first made in the spring, on Wall Street compensation practices, calling the furore over bankers’ pay “understandable and appropriate”..."

So, what's with all this ass-kissing, Blankenfein? Is GS starting to see an iceberg in its future, too?

[Demeter]

8. Pret­-A­-Voter targets fraud

http://www.ft.com/cms/s/0/3b991ff2-9e31-11de-b0aa-00144feabdc0.html?ftcamp=rss

Scientists in Britain and Luxembourg are developing an electronic voting system that could plug security loopholes and curb the potential for electoral fraud.

The encrypted Pret-A-Voter (PaV) prototype will be easy to use, cheap to run and “more secure than anything available at the moment”, said James Heather of the University of Surrey, one of the specialists working on the project.

Mr Heather said it could be implemented anywhere in the world. “If recent elections in Afghanistan, Zimbabwe, Russia and Iran had used our system, there would have been no potential for fraud,” he told an audience at the British Science Festival in Guildford on Thursday.

Under PaV, a vote is cast on an encrypted sheet of paper in a polling station. After voters tick off their preferences they divide the perforated voting sheet in half.

The left hand strip, which lists the candidates’ names in random order – which differs on each ballot – is discarded.

The right hand strip, which contains the voting marks, is read electronically and the votes registered on computer. The paper is also used as a receipt, so that voters can track their ballot online. Since the voting information is encrypted, it can only be interpreted by specialist electoral staff.

The software-independent technology guarantees the accuracy of the count and helps to remove bias that can occur under coercion.

“Voting over the internet can never be properly secure: how do you avoid the possibility of someone standing behind you with a gun? When we talk about ‘electronic voting’ we are talking primarily about voting using electronic means in a polling station,” Dr Heather explained.

The prototype, developed by scientists from the universities of Birmingham, Surrey and Luxembourg, recently secured £1.5m funds from the Engineering and Physical Sciences Research Council and will be ready for full production by 2015.

IF I WERE THE BETTING TYPE, I'D TRY TO GET STOCK IN ANY COMPANY SELLING THIS SYSTEM! THAT'S IF IT EVER GETS TO THE COMERCIAL MARKET....

[Joe Chi Minh]

98. "and “more secure than anything available at the moment”, I can't believe

anyone could be so foolish as to put it past American, wingnut hackers to get into any computer system. Certainly, the last thing they would want is a secure system. Also, big money to be made and kickbacks to be taken by those bent American voting-machine manufacturers. I expect in most of Europe they would be safe to use.

[Demeter]

99. A Real Right Winger Couldn't Hack Out of a Paper Bag

Not only reality challenged, also science/technology challenged. They would have to buy the talent, which means blackmail/whistle-blowing opportunities.

[Joe Chi Minh]

103. Well, if those tea-bagger are any guide, I'm sure you're right, but I can't forget

the damage they've done in those two previous presidential elections.

[Demeter]

9. Van der Moolen files for bankruptcy

http://www.ft.com/cms/s/0/c944619c-9d8f-11de-9f4a-00144feabdc0.html

Van der Moolen, once one of the biggest market makers on the New York Stock Exchange, has filed for bankruptcy in Amsterdam after administrators at the Dutch brokerage failed to find a buyer or construct a business plan as a smaller company.

The 117-year-old company filed for bankruptcy late on Wednesday, saying it could no longer pay salaries or ongoing expenses in September. It had already sought creditor protection a month ago and will now be liquidated...

Van der Moolen made a first half loss of €8.7m, compared to a profit of €14.5m a year earlier, but that figure did not include asset impairments. The company attributed its downfall to large losses in the US, failed business initiatives, falling revenues due to the financial crisis and high structural costs.

The group’s chief executive, Richard Den Drijver, resigned in mid-July, and nearly two dozen traders left its London and Amsterdam operations, prompting analysts to express concern. Last week, the Dutch financial services authority, the AFM, announced it had begun an investigation into Van der Moolen, but declined to give any details.

[Demeter]

10. Gold breaches $1,000 an ounce

http://www.ft.com/cms/s/0/8d2055d6-9c45-11de-ab58-00144feabdc0.html

"Gold prices hit a year high above $1,000 a troy ounce on Tuesday, as renewed dollar weakness attracted more investors to the safety of bullion..."


THIS IS DOWNPLAYED BY THOSE WHO SAY GOLD ALWAYS RISES IN THE FALL....

[Demeter]

11. Crackdown threat to bank profits

http://www.ft.com/cms/s/0/90ec20d4-9ca7-11de-ab58-00144feabdc0.html

The global regulatory crackdown in the wake of the financial crisis is likely to cut long-term profitability at US and European investment banks by nearly a third, forcing them to cut bonuses and shed staff, says a study by JPMorgan.

The report, a copy of which has been seen by the FT, takes a deeply pessimistic view of the impact of regulatory changes that include tougher capital rules for trading and a push to trade derivatives on exchanges.

It calculates that investment banks’ return on equity will fall from 15 per cent to just under 11 per cent in 2011.

JPMorgan says the drop in profitability is likely to lead to lower pay and bonuses at the investment banks.

Its report forecasts that banks will be unwilling to operate at reduced profitability levels and will respond with massive restructuring, including further headcount reductions in some areas and swingeing cuts in compensation across the board.

By contrast, banks that focus on traditional lending are likely to be less affected by much of the regulatory clampdown, the report says.

Kian Abouhossein, JPMorgan banking analyst, says: “Traditional credit will be a better place to be than investment banking”.

Other industry analysts and regulators have also forecast that higher capital requirements for higher-risk activities will lead to lower profits and smaller bonuses.

The report’s findings are likely to be well received by politicians and regulators around the world who have been fighting hard for policy changes to rein in investment banks and to encourage ordinary lending.

“The abatement of financial tensions has led some financial institutions to imagine they can return to the same modes of action prevalent before the crisis. This is not an option,” the leaders of the UK, France and Germany wrote last week in a letter outlining their goals for the G20 summit of world leaders in Pittsburgh later this month.

The report focuses mainly on proposals that have strong support in the US and does not include the higher overall capital requirements that were discussed by G20 finance ministers at the weekend.

The investment banking divisions of Deutsche Bank and French banks Société Générale and BNP Paribas will be hit hardest by the changes, the report says, but Morgan Stanley and Goldman Sachs will feel the most impact.

NOTE: I WAS CONFUSED, BUT FOUND OUT THAT JP MORGAN CHASE IS THE BANK, MORGAN STANLEY CHASE SMITH IS A BROKERAGE SET UP BY CITIGROUP...

[Demeter]

12. US university dividend ‘highest in world’

http://www.ft.com/cms/s/0/2b4bb848-9bd5-11de-b214-00144feabdc0.html

The value of a university education for male students in the US in terms of future earning power is double the rich country average, research by the Organisation for Economic Co-operation and Development suggests.

A male graduate in the US can expect to earn $367,000 extra over his lifetime compared with someone who has merely completed high school.

The income boost for men is higher than for any other country in the world and double the rich-country average of $186,000, suggesting that in the US going to college is particularly key to high earnings.

The especially strong reward for being a graduate in the US may reflect the relatively low number of workplaces where pay rates are set through collective bargaining, compared with many other rich countries. Collective bargaining tends to make earnings in the same company more equal.

The OECD said that across all countries, “going to university pays dividends in later life through higher salaries, better health and less vulnerability to unemployment”.

The earnings boost for a female graduate in the US is lower, at $229,000, but still much higher than the rich-country average of $134,000. These lower figures reflect the fact that women earn less in general than men – so the gulf between a high-earning woman and low-earning woman will be lower.

The figures were in the OECD’s annual Education at a Glance report, published on Tuesday.

I HAVE TO WONDER IF THEY FIGURED IN THE FACT THAT AFTER 40 MOST PEOPLE ARE LAID OFF, BECAUSE OF THEIR POTENTIAL FOR HIGH MEDICAL COSTS...

[Demeter]

71. The Real Unemployment Rate Hits a 68-Year High

http://www.dollarsandsense.org/archives/2009/0709miller.html



Words and more at link

[Demeter]

13. ‘Lebanese Madoff’ mystery stuns investors

http://www.ft.com/cms/s/0/43e7f584-9ca6-11de-ab58-00144feabdc0.html

"...a prominent businessman from the area, who is close to Hizbollah, the powerful Shia militant movement,Salah Ezzedine,... has been dubbed “the Lebanese Madoff” by the country’s media... may have lost hundreds of millions of dollars of his investors’ money...

The Shia community, poor and long ignored by the Lebanese government, has been stunned by the news. The financial scandal also threatens to embarrass Hizbollah, which is hailed by much of the Arab world as a resistance movement against Israel and prides itself on its austere religious image, but which is seen by Washington as a terrorist group...

investors say they were lured by the promise of improbably high returns. They mention 20, 30 and even 60 per cent annual profits that Mr Ezzedine’s middlemen said were “guaranteed”. In order to conform to Islamic law, such proceeds were described as profits from projects rather than interest.

Half of the missing capital is from investors in the Gulf and the other half from Lebanon, according to the central bank official. In the Gulf, it seems that Qatar and its small Shia community have been particularly hard hit. Qatari banking insiders say the loss amounts to $180m, although it is not clear yet whether that includes anticipated profits..."

[Demeter]

14. US citizens in rush for offshore tax advice

http://www.ft.com/cms/s/0/09800986-9ca1-11de-ab58-00144feabdc0.html

"Concerns have been fuelled by the Swiss government’s decision to reveal the names of 4,450 wealthy Americans who hold offshore accounts at UBS, the country’s biggest bank.

The US Internal Revenue Service said that the deal underscored the US government’s determination to clamp down on tax evasion.

A Senate committee has estimated that the parking of assets offshore costs the US $100bn in lost taxes each year.

New IRS guidelines for individuals with untaxed offshore assets were announced on March 23.

By coming forward voluntarily, many taxpayers who are not already being investigated by the IRS can cap their liability at six years of back taxes, interest and penalties – and avoid possible criminal prosecution.

Suzanne Reisman, a London-based US private client lawyer, said the IRS deadline was particularly relevant for Americans living in low-tax jurisdictions - such as Singapore and Hong Kong - in Asia.

Americans living in Britain and other relatively high-tax countries were less likely to owe the IRS money, although those who had neglected to file returns were urged to get their affairs in order.She estimated “tens of thousands” of Americans living abroad had inadvertently fallen foul of the rules..."

THIS IS MORE THAN JUST BLACK ACCOUNTS IN SWITZERLAND...MUST BE PART OF THE ANTI-IMMIGRANT GOP AGENDA...GOING AFTER THE CHILD SENDING MONEY HOME TO PARENTS...

[Demeter]

24. More US wealthy opt to surrender their citizenship

http://www.wealth-bulletin.com/rich-life/rich-monitor/content/1054959505/

As offshore havens comply with transparency demands, a growing number of ultra-wealthy Americans are handing back their passports

Private client lawyers and relocation specialists are reporting a surge in wealthy Americans living abroad who are prepared to give up their citizenship to avoid the scrutiny of US tax authorities.

Although such a move means they have to pay an exit tax, lawyers say this is a price people have become more willing to pay this year, now the fall in asset values has reduced the size of the imposition.

Jay Krause, a partner at private-client specialist law firm Withers, said: “The number of inquiries from US citizens wanting to expatriate from their citizenship has increased rapidly in the last year.”

The level of interest is set to increase following the tax disclosure deal between the US Government and UBS of Switzerland, involving the names of 5,000 alleged US tax evaders being handed over to the authorities. The UK concluded a tax deal with Liechtenstein last week.

Because of this, many ultra-wealthy individuals who have chosen to become stateless now cruise outside coastal waters in their mega-yachts in the belief that if they stay on the move, tax authorities will not be able to catch up with them. One analyst who did not want to be named, has estimated the number of stateless tax evaders amounted to a few thousand.

This implies the quantity of money outside the grasp of global tax authorities could be trillions of dollars.

Under US tax laws, the worldwide income of any US citizen or resident is subject to tax. The US is the only country in the world that requires its citizens to stump up, no matter where they live.

Krause said current economic conditions are making it more conducive for Americans to contemplate paying exit tax demands from the US Internal Revenue Service. “The mark-to-market provision in the Exit Tax from the IRS is a big incentive,” he said.

In the final months of the Bush administration, the US Government introduced a package of tax reforms that included an amendment to the exit tax on US citizens and long-term green card holders who expatriate the US.

The tax allows US citizens and permanent residents wanting to renounce citizenship or permanent residency to pay a one-off income tax on gains over $600,000 (€420,000). All assets beyond this amount are valued at mark-to-market.

The exit tax allows a clean break from the US tax system from the date of expatriation without imposing the previous 10-year period after expatriation where tax rules used to apply – another big incentive, say lawyers.

One of the other benefits of the amended exit tax is that a former US citizen who has expatriated will be able to travel to the US without his income becoming taxable. Under the previous exit tax this was not possible.

Krause said many people looking to give up US citizenship are accidental Americans. These are either those born in America when their non-citizen parents might have been living there for a short period, or the offspring of an American parent living abroad. Both categories qualify automatically for US citizenship.They may not take up a US passport, but they will still be subject to US taxes unless they expatriate. “More and more accidental Americans are looking at the fall in asset prices in the last year and taking up the option to expatriate,” said Krause.

Official figures on US expatriate cases reported by the IRS every quarter show about 90 people giving up their citizenship in the first half of 2009.

But one prominent lawyer, who did not want to be named, said: “There has been for some time a view that the IRS has been under-reporting these numbers.”

The IRS denies this. Some argue the figures are more or less meaningless. John Gaver, who edits right-leaning website Action America, said in an article published on the site: “What these lists fail to show is the vast and increasing numbers of wealthy US citizens who are just ‘dropping out’ – taking all of their wealth and leaving the US without renouncing. They just disappear off the US tax rolls and appear on some other country’s tax rolls.”

Anecdotal evidence also suggests there has been a surge of inquires from Americans looking at taking up citizenship of another country.

Christian Kälin, a partner at residence and citizenship planning consultancy Henley Partners, said his firm has had a big rise in such inquiries.

He said: “Tax reasons might be the biggest reason why US citizens will want to drop their passports, but security issues will also influence their decisions.

“For example, we saw a huge surge in inquires from US citizens contemplating acquiring an alternative passport after the Mumbai killings.”

The terrorist attacks in Mumbai last November targeted Americans among other foreigners.

Kälin said citizenships of the Caribbean Islands and western European countries prove to be the most popular for ex-American passport holders.

He said: “St Kitts and Nevis is the favourite alternative citizenship option for US citizens. Many will also be looking at Austrian citizenship, but it costs the most.”

St Kitts and Nevis is favoured for its perceived security, while Austria is one of the few European countries where it is possible to purchase citizenship.

Typically, it will cost $400,000 to secure a St Kitts and Nevis passport, whereas Austrian citizenship might run into several million euros.

[Ghost Dog]

47. How very ... extortionate. n/t

[Demeter]

55. At least after they are not citizens, they can't legally contribute to election campaigns

Not that that will stop the determined...

[CatholicEdHead]

57. Maybe not directly but they can find ways to do it indirectly

the hope is to turn the political tide in the US, change the laws and they can land their yachts without worry.

[CatholicEdHead]

16. Wake Me Up When September Ends

http://www.youtube.com/watch?v=5G0Sq3lwtTs

[CatholicEdHead]

36. Ooops

Ignore the first link

http://www.youtube.com/watch?v=JHa16644e-k&feature=related

[Demeter]

17. Job openings down 50% from the peak in 2007; 6 People for Every Job

http://www.marketwatch.com/story/job-openings-down-50-from-the-peak-in-2007-2009-09-09

[Demeter]

18. Top 1 Percent of Americans Reaped Two-Thirds of Income Gains in Last Economic Expansion

http://www.cbpp.org/cms/index.cfm?fa=view&id=2908

SEE PREVIOUS POST

[Demeter]

19. Senate must raise debt ceiling above $12T

http://thehill.com/homenews/senate/57493-senate-must-raise-debt-ceiling-above-12t

"...The ceiling already has been hiked three times in the past two years, and the House took action earlier this year to raise the ceiling to $13 trillion..."

[Demeter]

29. September by Earth, Wind and Fire (respite)

http://www.youtube.com/watch?v=nfLEc09tTjI&feature=related

Maurice white, charles stepney & verdine white

Do you remember the 21st night of september?
Love was changing the minds of pretenders
While chasing the clouds away

Our hearts were ringing
In the key that our souls were singing.
As we danced in the night,
Remember how the stars stole the night away

Ba de ya - say do you remember
Ba de ya - dancing in september
Ba de ya - never was a cloudy day

My thoughts are with you
Holding hands with your heart to see you
Only blue talk and love,
Remember how we knew love was here to stay

Now december found the love that we shared in september.
Only blue talk and love,
Remember the true love we share today

Ba de ya - say do you remember
Ba de ya - dancing in september
Ba de ya - never was a cloudy day

Ba de ya - say do you remember
Ba de ya - dancing in september
Ba de ya - golden dreams were shiny days

[Demeter]

20. Whose Economic Recovery? By Danny Schechter

http://www.informationclearinghouse.info/article23462.htm

President Obama's highly anticipated health care speech started on a totally different subject: The economy.

"When I spoke here last winter, this nation was facing the worst economic crisis since the Great Depression," he told Congress and the people at home. "We were losing an average of 700,000 jobs per month. Credit was frozen. And our financial system was on the verge of collapse."

"But," he went on, "thanks to the bold and decisive action we have taken since January, I can stand here with confidence and say that we have pulled this economy back from the brink."

Applause. Applause. Applause.

Are we back from the brink? And what brink is that? On Labor Day, HBO featured a powerful documentary about a GM Plant in Ohio that was shutting down. It showed the workers, teary eyed and forlorn, making the last truck on "their" assembly line. Their faces told the rest of the story as they asked themselves and each other, "What do I do now? What happens to my family and my life?"

They had no answers, and neither, alas, does Barack Obama.

A "jobless recovery" will not give these workers the money to buy into even the cheapest health care coverage, public option or not.

Look around Mr. Obama: the unemployment rate in real terms is over 16%. The consumer economy is shattered. The commercial real estate market is imploding, and, yes, more foreclosures are on the way according to the Washington Post:

A new report foresees another wave of foreclosures, as option adjustable-rate mortgages -- an entire class of specialized home loans -- will soon reset to higher payments. Estimated to jump by 63 percent on average, the higher rates will likely push many of the already-strained loan recipients over the brink. The loans, also called pick-a-pay loans, are a prime example of the risky lending techniques that created the housing crisis: Borrowers were allowed to pay back the loan with as little as they wanted each month, though that meant many paid less than the interest due...the report says the fallout from the loans could be felt for years, especially in states already hit hard by foreclosures.

Just who is back from the brink?

If you listen to the Fed, the glass is more than half full. If you listen to economists like Simon Johnson, it's way more than half empty, as he wrote on Baseline Scenario:

In the absence of effective financial regulation - i.e., both during the 1920s and again since 1990 - the Fed has operated in a manner that encourages the formation of sequential bubbles. This destabilization of our financial system is not a minor matter; the damage caused - human, financial, social - is already enormous.

And we are very far from being done.

Don't take my word for it. Lou Jiwei, the chairman of China's sovereign wealth fund said recently, "It will not be too bad this year. Both China and America are addressing bubbles by creating more bubbles and we're just taking advantage of that. So we can't lose."

Yes, We Can... Lose, that is, Mr. Lou. And Yes We Are, Mr. Obama. The problem is that we are still in some Bernanke fantasyland, thinking that if we keep saying everything is ok, it will be.

Here's Washington's blog on real unemployment as opposed to what the Bureau of Labor Statistics is saying:

... Paul Craig Roberts - former Assistant Secretary of the Treasury and former editor of the Wall Street Journal - and economist John Williams both said in December 2008 that - if the unemployment rate was calculated as it was during the Great Depression - the December 2008 unemployment figure would actually have been 17.5%.

Williams says that unemployment figures for July 2009 rose to 20.6% According to an article summarizing the projections of former International Monetary Fund Chief Economist and Harvard University Economics Professor Kenneth Rogoff and University of Maryland Economics Professor Carmen Reinhart,... unemployment could rise to 22% within the next 4 years or so.

Hello, Mr. President? Why can't you bring to the discussion of the economy the same passion and fact-based arguments that you brought to the health care debate?

Why can't you propose serious reforms on the financial sector? Why can't we jail the financial criminals?

The answer seems to be that Wall Street will be a far more tenacious and resourceful enemy than the health care industry perhaps because they already own much of the Congress.

Remember Senator Dick Durbin's comment, ‘the bankers run the place."

Alan Blinder a former vice-chairman of the Fed fears that pressure for financial reform is losing steam in part because of the power of what he calls "The Mother Of All Lobbies." He writes, "in the case of financial reform, the money at stake is mind-boggling and one financial industry after another will go to the mat to fight any provision that might hurt it."

Obama acknowledged we are not out of the woods yet. (What woods?) But what are the likely consequences? How long can people live without anything coming in? How long can we live on upbeat projections?

"There is no doubt class antagonism is stewing," says the editor of the blog Naked Captalism. (S)He expressed a fear of a reaction that will go way beyond flag-waving tea parties:

... I am concerned this behavior is setting the stage for another sort of extra-legal measure: violence. I have been amazed at the vitriol directed at the banking classes. Suggestions for punishment have included the guillotine (frequent), hanging, pitchforks, even burning at the stake. Tar and feathering appears inadequate, and stoning hasn't yet surfaced as an idea. And mind you, my readership is educated, older, typically well-off (even if less so than three years ago). The fuse has to be shorter where the suffering is more acute.

One is reminded of the title of that movie, There Will Be Blood. Rather than show contrition or compassion for its own victims, Wall Street is hoping to jack up its salaries and bonuses to pre-2007 levels. The men at the top are oblivious to the pain they helped cause. They are getting away with the crime of our time.

And the people - The People - who potentially can challenge all this by action on the ground are being mesmerized by the false hope that recovery is here or right around the corner. How long before they realize you can't eat optimistic speeches?

Mediachannel’s News Dissector Danny Schechter investigates the origins of the economic crisis in his new book Plunder: Investigating Our Economic Calamity and the Subprime Scandal (Cosimo Books via Amazon). [email protected]

[Demeter]

21. Reviewing President Rahm Emanuel's Health Care Speech By David Sirota

http://www.informationclearinghouse.info/article23461.htm

Not to be too much of a downer, but I found Obama's speech (to be) a big O-bummer. Really, other than his very important reminder that "we're all in this together," it was disappointing (although that's probably not the right word, because it implies I expected something more). And remember, while I have at times been critical of Obama, I've been very supportive of him on health care...up until tonight. Here's a list of my basic problems.
- Why do Republican presidents and politicians never bash "The Right," but President Obama uses a joint session speech to bash/call out "The Left?"

- Obama felt the need to tell the country that he's devoted to making sure the wildly unpopular private insurance industry at the heart of the health care meltdown remains profitable. He also made sure to forget that Americans love Medicare and hate private insurance when he went out of his way to reiterate his support for "market" economics (shocker - this was the line both parties stood up and gave a thundering round of applause). Awesome.

- Completely unclear why Obama promised to "call out lies," and then proceeded to embrace the Right's most dishonest narrative about tort reform being a major vehicle to fix health care (not surprisingly, the "don't negotiate with legislative terrorists" lesson was reinforced when the GOP response called Obama's bluff and pushed to work with him on tort reform).

- The wavering on the public option would be hilarious if it wasn't so serious. Really - his insistence that he supports it but might also support removing it reminded me of a Saturday Night Live skit parodying wavering and waffling Democrats. Obviously he just had to listen to pundits insisting he must abandon the public option, when a huge majority of Americans continue to support it, and he has a huge legislative majority in Congress. He obviously just HAS to compromise on it because...well...just because - and he certainly can't use reconciliation like President Bush did because...well, again, just because. And, of course, those of us who don't expect him to compromise away an already compromised yet still wildly popular public option are obviously on the radical fringe regardless of polling data. Obviously!

- Though he didn't draw a direct equivalence, he implied there was one between the progressive push for single payer and the ultra-conservative push to destroy the entire health care system. Sick.

In sum, when you couple this with the speech's fawning praise for lunatics like John McCain and Chuck Grassley and add to it the news that the White House is holding closed-door compromise meetings with corporate Democrats tomorrow, I felt like I was listening to a parsed screed by President Rahm Emanuel, not a call to arms from the Barack Obama who actually ran for president. There was lots of passionate talk about the problem, and little courage to demand a serious solution.

I mean, I seem to remember an election just a few months ago that resulted in a Democratic president, and huge Democratic majorities in Congress - and I seem to remember there was a Barack Obama who only a short while ago said getting those electoral results was the only obstacle to a full-on single payer health care system, much less a weakened public option. But again, I guess it's just too bad that after that election, President Emanuel now rules America.

[Demeter]

23. Baucus Plan Allows for Fines Up to $3,800 for Failing to Get Health Insurance

http://www.foxnews.com/politics/2009/09/08/baucus-plan-allows-fines-failing-health-insurance/

Is this a sick country, or what?

[Demeter]

26. The Speech the President Should Have Given to Congress, September 9, 2009 By Ray McGovern

http://www.informationclearinghouse.info/article23449.htm



"...I plan to talk first about health care reform. Then I will make some fresh proposals regarding how to pay for it, since this is a legitimate concern.

A new strategy will kill two birds with one stone. That strategy finds the money for health care reform by curbing wasteful, self-defeating spending on the military — spending that is making us less, not more, safe. Stay tuned.

First, health care:

Last year I promised to do all I could to ensure that all of you — that is, every single American — would be able to get affordable health care. I said elect me President and then hold me accountable.

You did your part. This evening I will give you a preliminary accounting.

But, first a question. How many of you members of Congress do not have affordable health care?

I’m serious. And the nation is curious.

Okay, let’s do it this way. Any Senator or Representative who does not have affordable health care, please rise.

No one is standing up.

Now a more important question: How many of you Senators and Representatives will stand up for legislation that will give ALL Americans essentially the same access to health care that you enjoy?

I’m dead serious. You and I and the families of members of Congress can get all the health care we need, while millions of Americans cannot.

Again, please rise if you want everyone to have equal access to quality medical care. Rise if you believe it is wrong to consider some Americans, like us, more equal than others.

Thank you. I invite those of you standing to sit down.

That showing is reassuring — that is, if it is authentic and not just for the TV cameras.

Health care coverage is basically a moral question, isn’t it?

It has something to do with being “your brother’s keeper” (or your sister’s). That expression is from the Bible. So is the parable of the Good Samaritan. The story is about health care and being a good neighbor, isn’t it? Let’s see how it may relate to our situation today....

For now, let me speak to those of you who stood just now to show that you wish to stand up for ALL Americans. I would like to assume that ALL those who got up from their seats rose out of conviction, and not just because we are on TV.

I wish I could assume that, but I cannot...."

LENGTHY AND COMPREHENSIVE..UNLIKE ANY OF THE PROPOSALS, WHICH ARE MERELY LENGTHY.

[Demeter]

33. How Washington is screwing up health care reform & why it may take a revolt to fix it MATT TAIBBI

http://www.rollingstone.com/politics/story/29988909/sick_and_wrong

[Demeter]

22. Is It 1984 Yet?

"The essence of oligarchical rule is not father-to-son inheritance, but the persistence of a certain world-view and a certain way of life ... A ruling group is a ruling group so long as it can nominate its successors... Who wields power is not important, provided that the hierarchical structure remains always the same."

--George Orwell, 1984


For some people, it always was 1984...

"Where justice is denied, where poverty is enforced, where ignorance prevails, and where any one class is made to feel that society is an organized conspiracy to oppress, rob and degrade them, neither persons nor property will be safe.

---Frederick Douglass

[Demeter]

25. 4 Signs that China is Moving Out of the Dollar

http://www.washingtonsblog.com/2009/09/3-signs-that-china-is-moving-out-of.html


There are 3 recent signs that China is moving out of the dollar.

First, in June, China was a net seller of U.S. Treasury bonds (and shorter term notes) for the first time ever. As Mike Larson writes:

A few days ago, the U.S. Treasury Department revealed that China actually REDUCED its note and bond holdings by $25 billion in June. Although China did NOT sell shorter-term Treasury bills — and isn’t expected to — it’s still the largest amount of Treasuries China has ever sold in a single month.

Second, China will issue a non-Dollar denominated Renminbi bond sale on September 28th (6 Billion Renminbi worth).

Third, China has agreed to purchase $5o billion dollars worth of IMF bonds (denominated in the IMF Special Drawing Rights currency).

And fourth, the former vice-chairman of China's Politburo Standing Committee (the highest and most powerful decision-making body in China) - Cheng Siwei - recently said:

We will diversify incremental reserves into euros, yen, and other currencies. Gold is definitely an alternative, but when we buy, the price goes up. We have to do it carefully so as not to stimulate the markets.

[Demeter]

30. Industrial Capacity Use Hits Record Low

http://www.joc.com/node/411908


Falling production idles nearly a third of nation’s factories, mines, utilities

Use of industrial capacity fell to its lowest point ever in May as output of factories, mines and utilities slipped another 1.1 percent from April and fell 13.4 percent below last May’s level.

The nation’s industries used only 68.3 percent of available capacity, according to a monthly report from the Federal Reserve. Prior to the current recession, the lowest rate since the Fed started this series of records in 1967 was 70.9 percent in December 1982. Since February this year, the rate of capacity utilization has been below that mark.

Industrial production decreased 1.1 percent in May after having fallen a downward-revised 0.7 percent in April. The average decrease in industrial production during the first three months of the year was 1.6 percent, said the Fed.

Manufacturing output moved down 1 percent in May with broad-based declines across industries. Factory production was more than 15 percent below its year-earlier level. The factory operating rate decreased 0.6 percentage point to a historical low of 65 percent in May; prior to this recession, the low for this series, which begins in 1948, was 68.6 percent in December 1982. The production of durable goods fell 1.8 percent with declines in most categories. The largest decreases were in motor vehicles and parts and in machinery.

The output of mines dropped 2.1 percent, and the output of utilities fell 1.4 percent. At 95.8 percent of its 2002 average, overall industrial output in May was 13.4 percent below its year-earlier level.

[Demeter]

31. U.S. Recession Worst Since Great Depression, Revised Data Show

http://www.bloomberg.com/apps/news?pid=20601087&sid=aNivTjr852TI

Aug. 1 (Bloomberg) -- The first 12 months of the U.S. recession saw the economy shrink more than twice as much as previously estimated, reflecting even bigger declines in consumer spending and housing, revised figures showed.

The world’s largest economy contracted 1.9 percent from the fourth quarter of 2007 to the last three months of 2008, compared with the 0.8 percent drop previously on the books, the Commerce Department said yesterday in Washington. Gross domestic product has shrunk 3.9 percent in the past year, the report said, indicating the worst slump since the Great Depression.

Updated statistics also showed that Americans earned more over the last 10 years and socked away a larger share of that cash in savings. The report signals the process of repairing tattered balance sheets following the biggest drop in household wealth on record may be further along than anticipated.

“The current downturn beginning in 2008 is more pronounced,” Steven Landefeld, director of the Commerce Department’s Bureau of Economic Analysis, said in a press briefing this week. The revisions were in line with past experience in which initial figures tended to underestimate the severity of contractions during their early stages, he said.

Consumer spending, which accounts for 70 percent of the economy, decreased 1.8 percent in last year’s fourth quarter from the same period in 2007, exceeding the prior estimate of a 1.5 percent drop. Purchases also began sinking sooner than previously projected, registering their first decline at the start of 2008 rather than in the second half....

MORE BAD NEWS AT LINK

[Demeter]

32. Credit Rating Agencies Took "Bribes" for Higher Ratings

http://www.washingtonsblog.com/2009/09/credit-rating-agencies-took-bribes-for.html


You may have heard how the big ratings agencies - Moody's, S&P and Fitch - "sold their soul" by rating toxic assets and mismanaged companies much more highly than they should have been rated.

But as the following discussion shows, the ratings agencies effectively took bribes for higher ratings, just like people who knowingly authenticate forged art so that they will earn a higher fee:

Kane: One has to remember that these are profit-making institutions. Issuers will would pay more money for a good rating than a bad one, and issuers are very clear what kind of ratings they want. This is a straight-forward way to pay bribes without ever violating the law, it appears, and the credit rating organizations do not take formal responsibility for their incompetence or negligence.

Mayer: One of the untold scandals of this country is that our museums are stuffed with fake old masters because the people who authenticated paintings for the Mellons and Morgans of this world were paid a percentage of the price for the authentication. If they said it was no good, they got a few hundred bucks. If they said it was great, they got $100,000. Same story in the credit-rating organizations.

Todd: Right. They also drop the ball. I've been around failing banks and financial crises since 1974, and the rating agencies have dropped the ball almost every time. They were always at best late to the party.

Mayer: John Heimann used to say that the function of the ratings agency is to go on the battlefield after the battle is over and shoot the wounded.

[Demeter]

34. Your Turn, People

I have to get some rest--even though I spent the entire day sleeping off this week's folly...

[AnneD]

39. Since my birthday is in September....

I have always looked for a song that fit the mood and time, I tend to like Autumn in New York.

www.youtube.com/watch?v=yYGTXRTpbR8 Da Chairman of the Bored

www.youtube.com/watch?v=fqPNHGkQl5M&feature=fvw Ella and Louie

www.youtube.com/watch?v=WpL8bQDY_eE&feature=related Jo Stafford excellent

www.youtube.com/watch?v=gFlQmB04xRU&feature=related Aubra Graves alto sax-makes me want to have a cup of black coffee and smoke a cigarette- and I don't like either

And this is similar to the version that I first heard when I went to see a concert that the Air Force Band of the Southwest was preforming in Las Cruces. It was shortly after 9/11 and they played an arrangement that did not have so much flourish, and a tad more somber, but it was just right as a tribute. It has been a fav song every since.

www.youtube.com/watch?v=gFlQmB04xRU&feature=related

[Demeter]

45. Happy Birthday, AnneD!

and a great year to come.

[AnneD]

49. Thanks Demeter.....

fellow lover of all things classic. Better luck this year to you and health to your daughter.

[Demeter]

35. Exposed: The Carlyle Group

http://www.informationclearinghouse.info/article3995.htm

It's long, but informative

[Demeter]

37. Study: 2 out of 5 working-age Californians jobless

http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2009/09/06/state/n000211D96.DTL#ixzz0QOTlkz7S

Let's see, 2/5 is 40%...

[burf]

40. I didn't see this

one posted so here goes. From Seeking Alpha via The Automatic Earth.

The Coming Consequences of Banking Fraud

The Double Dip Recession, or the “W” shaped recovery that a minority of economists, such as Joseph Stiglitz, is now stating as a strong possible outcome of this current rally, should not be discussed in the realm of economics but rather in the more apropos realm of financial fraud.

http://seekingalpha.com/article/160619-the-coming-consequences-of-banking-fraud?source=article_sb_popular

[Ghost Dog]

46. Yes, I also recommend this. Here's a little more:

... The fact that the upleg of the “W” shaped recovery that is occurring now will inevitably crumble in spectacular fashion will not be a result of any free market principle, but rather the direct consequence of a fraudulent scheme executed by an elite global financial oligarchy, otherwise known as Central Banks. If the mission of this current manufactured leg-up in Western stock markets was to fool the world into believing that global economies are recovering, then clearly, up until this point, the mission has been a resounding success. For those unfamiliar with the term “blowback”, it's a CIA term that was first used in March 1954 to describe the unintended consequences of US government international activities kept secret from the American people.

Though this term has primarily been used to describe the consequences of covert military operations, “blowback” is an appropriate term to use to describe the coming consequences of banking fraud because the US government, US Federal Reserve, Wall Street, the US Treasury, and the Exchange Stabilization Fund have all engaged in domestic and international financial and monetary transactions that have been kept secret from the world, and that will have severe and negative consequences in the not so distant future. In fact, I predict that the blowback of these activities will not only exceed, but far exceed, the fallout the world experienced in 2008 at the prior apex of this current crisis. Most people today can not even fathom how bad the situation will become primarily because of all the secrecy that the banksters have engaged in – in US Treasury markets, the gold markets, the US dollar markets, agriculture commodities, stock markets, and financial markets – in hiding reality from the people.

/continues... http://seekingalpha.com/article/160619-the-coming-consequences-of-banking-fraud?source=hp_mostpopular

[DemReadingDU]

52. That part is scary

:scared:


Yet, most people still don't have a clue. Well, people around me, family and friends. I don't even talk much about it anymore, they look at me with glazed eyes. They say I talk like a meteor is going to hit, and that is never going to happen. So I quietly go about stockpiling some extra canned food and nuts, water, vitamins and aspirin, some extra cash, a bicycle. Spouse is funny, he thinks we have the best grocery store around.

[Joe Chi Minh]

77. Fascinating analysis of the current "caper". Beats Rififi, hands down.

[AnneD]

41. Another September Song

I learned it when I was 12. It is from Knickerbocker Holiday. No wonder I have a warped perspective.

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

www.youtube.com/watch?v=rdc4oBnu_fw&feature=fvw

www.youtube.com/watch?v=a-ldVj34Sfo&feature=related

www.youtube.com/watch?v=r5CoAIAfK50&feature=related


My daughter once said nailing down my music tastes is like nailing jello to the wall and says I am responsible for her career choice.

[Tansy_Gold]

51. "Calhoun Conservatism"

http://www.huffingtonpost.com/mike-lux/calhoun-conservatism-rais_b_283480.html#comments

http://www.msnbc.msn.com/id/26315908/vp/32806961#32806961 (Mike Lux interview starts at about 7:00 of this 13:00 segment)

I'm not sure these have anything whatsoever to do with the economy, but they sure do have to do with politics. And because so much of what Obama appears to be doing vis a vis the economy -- bailouts, health care, stimulus, etc. -- gives some of us the impression that he is catering more to the right than to his own base on the left, maybe we do need to look at the larger picture of how core ideologies affect political action.

From Lux's HuffPost 9/11/09 (I fixed what I think were a couple of typos):

Although discussions about the relative power of the states and the federal government had been around since the days of the Articles of Confederation in the 1780s, Calhoun was the South Carolina politician who fused a particularly extreme view of states' rights with a patriarchal and violent conservatism. Calhoun argued that states could come and go into and out of the Union, whenever they wanted to; that they could secede from the Union at any time and for any reason; and that even if they stayed in the Union they could nullify any law they wanted, again at any time and for any reason.

He was also violently opposed to the idea of democracy itself, say that the growing population of the North had no power whatsoever over slavery or any other thing the southern states chose to do, and in fact believed that the Bill of Rights only applied to what the federal government couldn't do--that the states were free to eliminate freedom of speech and religion and other civil liberties. (In fact, most southern states had done exactly that by the time of the Civil War.)

Calhoun was ready to start a Civil War in 1832, when he and Andrew Jackson disagreed over a policy that would hurt Calhoun's beloved plantation economy. He resigned as Jackson's vice president, and encouraged the state to secede and raise an army right then and there. It was a protégé of Calhoun who beat abolitionist Charles Sumner almost to death with a cane on the floor of the Senate in 1856, and protégés of Calhoun who led South Carolina to be the first state to secede from the Union in 1861 after Lincoln's election, and be the first state to fire on Union soldiers at Ft. Sumter.

Calhoun's states' rights theories were used to justify Jim Crow in the South and oppose integration after the Civil War all the way into the 1960s. Today, we are seeing Calhoun Conservatism spreading throughout the Republican party and the right wing movement. Joe Wilson's thuggishness on Wednesday night and the conservative movement's embrace of his action yesterday are just the latest examples. Some highlights from the last year:

• John McCain picks a vice presidential candidate whose husband was a seven-year member of a far right secessionist party with ties to the racist, neo-confederacy movement. Palin had gone to at least one of the party's conventions herself, and had done a warm welcoming video for their most recent convention, telling them she shared their values.

• Texas Governor Rick Perry suggested that Texas might have to consider seceding from the United States.

• One of the congressional sponsors of a right wing rally on the Capitol steps, the "9/12 movement," which will be attended by Wilson and several other Republican members of Congress, is an organization advocating secession and the violent overthrow the United States.

More at link, and more on his HuffPost blog, where some of the comments seem to indicate the Civil War/War Between the States/War of Northern Aggression/Recent Unpleasantness isn't over. . . . yet.



Tansy Gold

[Demeter]

56. They Sure Didn't Talk About THAT in High School History Books!

Even so, I got the vague general impression that Calhoun was NOT one of our best citizens...of course, since then the history books have probably been rendered totally content free....

[Tansy_Gold]

78. History lessons

I started this rant before I had to go out for a while, but I saved it and thought about it some more and decided maybe I needed to go ahead and post it after all.

The funny thing about Calhoun is this --

I distinctly remember my junior year in high school -- 1964-65 -- and particularly my American history class with Miss Doris L. Black, long gone to her reward. That is to say, I remember the class, but not a great deal of what was taught in it. However, I do remember that Calhoun was not treated kindly in our text book; I came away with the impression (an impression only, because I did not absorb any real facts) that Calhoun represented the very worst of everything horrible "The South" stood for, from slavery to secession.

So when I heard Mike Lux on Maddow last night say "Calhoun Conservatism," I knew exactly what he was talking about, and I've read nothing substantive about Calhoun since that junior year in high school. And it seems now, today, in my never ever humble opinion, that the great failure of the Civil War, of Reconstruction, of reunification, even of the Civil Rights Movement (caps intended) 100 years later was that the Calhounian attitudes of The South were never expunged. Racism, especially after King's murder, was a small elephant in someone else's living room. It was a Southern thing, and the Northerners who had saved the Union didn't need to deal with it.

But the elephant's mess never got cleaned up, and the elephant grew. The ones who DID live in that living room started shoveling the elephant shit quietly into their neighbors' back yards, so to speak. A little here, a little there, and NO ONE NOTICED. Or if they did, they didn't care. The smell wasn't all that bad, and the flowers grew nicely.

The BF and I got into it last night when he started in on health care as a form of welfare -- never mind that he's recently 65 and is on Medicare himself, after utilizing VA off and on for years -- and I told him he had just indicated how thoroughly he had fallen 30 years ago for Reagan's bullshit. Blaming welfare for stripping minorities of "self-esteem" -- one of Bf's favorites -- and suggesting that at least slavery gave blacks jobs and self-respect. I'm not kidding you, folks; this is a man who brags about his liberalism because he lived in SF for 35 years, and yet he still believes this shit.

Well, maybe not so much after last night. I gave him a 90-second lesson in social history and institutionalized racism, and then asked him if he really thought taking people off welfare would improve their "self-esteem." He shut up.

But the point is, I wonder how many others who claim to be "liberals" or at least "Democrats," have internalized so much of the elephant-shit that came out of the sneaked piles of it that came out of the "Southern strategy" that we have essentially the country we might have had if The South had won??? Or at least are we on a path to becoming that? Remember that one of the reasons The North/The Union prevailed was its industrial base, fueled by low-wage and often immigrant workers. Our economy is returning, in many ways, to a plantation-like economy.

What we lack, I fear, is the resolve of The North. We have failed to rally our troops with the facts, and allowed the liars to rule the day.

One of the most powerful pieces of "propaganda" to come out of the abolition movement was Harriet Beecher Stowe's "Uncle Tom's Cabin." The original character "Uncle Tom" was presented as a Christian martyr (the christian aspect was important at the time because much of the abolitionist movement was sponsored by the radical/liberal protestant churches) who died rather than betray fellow slaves who were escaping. But when I read the book, in about 2000, and with a lifetime of considering the term "Uncle Tom" in its later pejorative sense, I was more struck with Tom's passivity, his acceptance of his lot and his refusal to challenge it except in the most tangential way (helping others to escape, but not altering the system). I saw in Stowe's work a paternalism: the liberation of the slaves could not be self-won; it had to be a gift from the more powerful in a way that maintained their power. Moved forward a century, to the beginning of the civil rights movement, that became an attitude that blacks could be free, but they could not be equals, certainly not equals in power, and never in political power.

At about the same time I read Stowe, I was reading Taylor Branch's biography of Martin Luther King, Jr., or at least the first volume "Parting the Waters," which dealt with the early part of the civil rights movement. Something that Branch wrote -- and I just don't have the time to go through the BF's copy to find the quote -- that disturbed me was that (in his opinion at least) the movement, carried on mainly in the deep South, didn't attract the kind of national attention it needed to succeed until white college students from the North began to participate. And so I began to think again, was it more of that paternalism, and in a way that perpetuated a Stovian attitude of white superiority, if not exactly a Calhounian white supremacy?

I don't think there's any question that these attitudes have been perpetuated to one extent or another. But I don't think they've entered the political discourse sufficiently to be analyzed regarding their effect on our economy, our economic and social institutions, our international relations. Race and the socio-historical legacy of racism in this country are taboo discussion subjects, other than in the academic setting of a "Race, Class, and Gender" course that's usually taught to non-majors who are just trying to get their "diversity" credit and move on to something else.

So we get to this point, where the economy is in the shitter, health care is a privilege of the wealthy few while health insurance becomes little more than a vehicle to funnel cash to the wealthy, the wingnuts are out in force and virtually unchallenged wherever they go, and no one seems to have any answers, at least no one outside us wise few on SMW and WEE.

A good number of years ago I was happily self-employed in an industry where the producers of the product were treated like virtual slaves. We were paid a pittance and told over and over and over by those who paid it that we ought to be glad to get anything. Our own "professional" organization (we couldn't have a real "union") repeatedly told us to shut up, sit down, and be happy even while we were cheated over and over by those who made big buck off our labor. Finally, given a platform, I spoke out in writing about the abuse. I named names, I published numbers. I was, of course, excoriated by my own (this being in the days when message boards were in their infancy and the phrase "flame war" not yet in common usage). But months later, I discovered that my essay had been quoted in a book that examined a particular company in that industry -- and pointed out that this particular company was one of the most abusive, exactly as I had said.

So here we are, the week-end after Labor Day, the beginning of September and the beginning of another school year, when kids have been encouraged to stay in school and wash their hands, when the insurance companies are happily watching their stock prices rise and their prospects for increased profits rise as well, when the blatant racism of a Southern congressman is shrugged off by the man who should know better, when the line drawn in the sand is merrily scuffed out by a fistful of dollars by the lobbyists.

Our America isn't the only country that has to deal with racism, and we may not even be the worst. We seem to have gotten over most of our institutionalized religious bias, at least to the extent that Catholics and Jews aren't automatically barred from certain colleges or professions; and we've conquered a good bit of our gender bias. But even though we are able to turn George Allen's "macaca" moment into a political victory, we don't seem to be able to do the same when the racism is covert. Had Congressman Wilson added the unspoken "n" word to his accusation, he'd have been gone. We can deal with overt racism, as we did with Trent Lott and the aforementioned Allen. But the covert racism inherent in Wilson's outburst is untouchable, because we've never examined the long long history behind it.

Until we do, until he and his kind are carefully UNtaught, we're going to continue to be at their mercy.

And they don't have any.


My apologies for this ramble. I don't even know if it makes any sense. I just think we're missing a major part of the problem.


Tansy Gold

[Demeter]

80. I Think You've Hit Gold There, Tansy

I was thinking earlier today that the biggest problem in this country is that we've become a nation of crooks instead of a nation of laws. If you aren't a crook, you are going under. If you aren't a very good crook, or a very well-connected crook, you are getting punished. Otherwise, you are rich and powerful.

I asked in General Discussion, what was the point of the 9/11 attack. And then, I found the Carlyle video I posted here.

I've concluded that 9/11 was an attack on the Kingdom of Saud and the BFEE because Osama wanted the US troops out of Meccaland, and I'm wondering if he wasn't a bit jealous of howthe Bush family came before him and got more attention and respect in the eyes of the Saudi princes and the old king.

I think the Boy Wonder sat stunned in the classroom because he got the message loud and clear: "You may be President, asshole, but 19 nobodies can screw you over." Hence the crusade, and the lashing out at any nation that somehow offended BFEE. Poopy and Boy George realized that there are weapons that they cannot be defended against, situations that cannot be controlled, people who cannot be bought off or assassinated.

So when the elephants dance, the mice had better get far away.

[Tansy_Gold]

81. Interesting

I wish I knew more about "The Great Game" played by the various powers in the 18th and 18th and early 20th centuries over the general "middle east" area, because I suspect there are many lessons to be learned.

To throw my own conspiracy theory out there -- and I was saying as early as the afternoon of 9/11/01 that it had been done by a very very small group of people, not the huge operation as Kissinger was insisting -- I've thought quite often that Bin Laden was astonished at his success and had no way to follow up on it. Maybe they thought one or two of the planes might hit their target, and maybe if one hit one of the towers it would cause enough damage to shut the building down or something. But I don't think the Qaeda leadership (if there ever was such a thing) ever expected that they'd get away with all four planes and that the two WTC targets would be completely destroyed.

Of course the obvious motive is Bin Laden's fundamentalist religio-politics, which gets all wrapped up with the houses of Bush and Saud. The house of Saud has been corrupt from the beginning, which is probably why they were installed.

Did the little prince have an idea what was going on? I don't know. I do think that he was completely out of his element, and I'm damn sure rat-fucker cheeeney was the real head of the government. But I also believe that ultimately they were all so stupid that they both over- and under-estimated each other -- and themselves. The rest of the world got caught in the resulting stalemate.

Most of the booosh/cheeeeeney/blair/carlyle/kbr/blackwater/etc axis of evil operates on a power/wealth engine; the house of Saud is religion and wealth, and Bin Laden is religion. Because all three of them are operating on different motivations, they can't think in the others' mindsets sufficiently to effect a victory.

Along comes Obama with his wonderful speeches and his audacious hope, and we looked to him to break that three-way stalemate: end the war(s), fix the economy, keep us safe. But because he does not seem able to stand up to the various powers that be and instead tries to appease -- yes APPEASE -- all of them, not a fucking thing is getting done.

We still have 130,000 troops or so in Iraq, plus goddess knows how many "contractors." Whatever the horrendous cost of that ongoing quagmire is, it is higher because of the privatization of military functions. If an army corporal can be a cook for $2000 a month plus room and board (or whatever it is corporals make these days), how can anyone say that KBR is "saving" the government money by paying a contractor "cook" $10,000 a month plus billing the taxpayers an extra $3,000 for KBR's profit? Obviously, these are hypothetical numbers, but we all know those contractors for non-combat operations are making more than their military equivalents. We know that. And now Afghanistan is ramping up, with the corresponding ramp up in contractor expenses, so Obama hasn't changed a single thing. Nothing. And the hit on the economy -- and on the taxpayers -- just goes on and on and on.

I know I haven't participated much lately in WEE and SMW, but it's not been for lack of material to input. I've read so much and I have only limited amounts of time. Even this week-end, there are a ton of things the real world is screaming at me to do. But this whole theatre of the absurd with Obama and this Wilson jerk and the media circus it's turned into, and the utter and transparent stupidity of the Obama health care "plan" -- has anyone anywhere addressed what happens to Medicaid in all this? -- and I've just set aside some really important chores because I have to get some of these thoughts out of my brain and make room for others!

Back during the campaign, maybe even during the primaries, I posted something to the effect that maybe the whole thing was really all about race after all. And I wrote it as a white woman who grew up in a pretty lily white Chicago suburb and admitted I couldn't speak from very much experience. But I felt, instinctively, that something was missing from the larger political debate, the one we should have been having as a nation. We never had it.

I think we were afraid to ask some of the hard questions. I think we're still afraid to. And I think that until we face that fear, we aren't going to get the answers we need to survive as a nation.



Tansy Gold

[Demeter]

58. Obama: I've every reason to get health care right

http://news.yahoo.com/s/ap/20090912/ap_on_go_pr_wh/us_obama_health_care_12

President Barack Obama says he'll be held responsible for any problems once a health care overhaul becomes law, so he has every reason to get it right.

"I have no interest in having a bill get passed that fails. That doesn't work," he told CBS' "60 Minutes" in an interview to air Sunday night.

Heading to a rally Saturday in Minneapolis, the president used his weekly radio and Internet address to focus on government figures showing that nearly half of all Americans live without health insurance in a 10-year period. He said the situation will worsen without the changes he wants and that losing coverage can happen to anyone.

"I intend to be president for a while and once this bill passes, I own it. And if people look and say, You know what? This hasn't reduced my costs. My premiums are still going up 25 percent, insurance companies are still jerking me around. I'm the one who's going to be held responsible. So I have every incentive to get this right," he said in an excerpt of the CBS interview released Saturday. "I refuse to allow that future to happen," Obama said in his weekend message. "In the United States of America, no one should have to worry that they'll go without health insurance — not for one year, not for one month, not for one day. And once I sign my health reform plan into law, they won't," he added...

In his televised speech to the nation, Obama spelled out what he'd like to see in the health overhaul bill he wants: coverage expanded to most of the nearly 50 million uninsured, new requirements for people to get insurance, new prohibitions against insurance company practices like denying coverage because of a pre-existing condition and creation of a new marketplace, or exchange, where consumers could shop for coverage.

OKAY--EITHER HE'S UNDER THE MOST INTENSIVE FORM OF BRAINWASHING IMAGINABLE, OR HE'S THE MOST NAIVE PERSON EVER ELETED TO OFFICE. IT'S A SETUP, AND THE RESULTS AREN'T GOING TO BE PRETTY.

[Tansy_Gold]

68. I really wanna believe he's not that stoopid, but. . . . .

he's just not getting very good grades on his tests.

(That's my contribution to a back-to-school "September" theme. . . . . .)


Tansy Gold, who always loved school

[Demeter]

69. Morning, Tansy!

Thanks for stopping in. We've got the good weather back. 70's and dry and sunny.

The Kid is still sick, and I am sick of her being sick.

[Demeter]

59. How You Finance Goldman Sachs’ Profits By Nomi Prins

http://www.motherjones.com/politics/2009/07/how-you-finance-goldman-sachs%E2%80%99-profits

This is perhaps the most important thing I learned over my years working on Wall Street, including as a managing director at Goldman Sachs: Numbers lie. In a normal time, the fact that the numbers generated by the nation's biggest banks can't be trusted might not matter very much to the rest of us. But since the record bank profits we're now hearing about are essentially created by massive federal funding, perhaps it behooves us to dig beneath their data. On July 27, 10 congressmen, led by Rep. Alan Grayson (D-Fla.), did just that, writing a letter to Federal Reserve Chairman Ben Bernanke questioning the Fed's role in Goldman's rapid return to the top of Wall Street.

To understand this particular giveaway, look back to September 21, 2008. It was a frenzied night for Goldman Sachs and the only other remaining major investment bank, Morgan Stanley. Their three main competitors were gone. Bear Stearns had been taken over by JPMorgan Chase in March, 2008, Lehman Brothers had just declared bankruptcy due to lack of capital, and Bank of America had been pushed to acquire Merrill Lynch because the firm didn't have enough cash to survive on its own. Anxious to avoid a similar fate, hat in hand, they came to the Fed for access to desperately needed capital. All they had to do was become bank holding companies to get it. So, without so much as clearing the standard five-day antitrust waiting period for such a change, the Fed granted their wish.

Bank holding companies (which all the biggest financial firms now are) come under the regulatory purview of the Fed, the Office of the Comptroller of the Currency, and the FDIC. The capital they keep in reserve in case of emergency (like, say, toxic assets hemorrhaging on their books, or credit derivatives trades not being paid) is supposed to be greater than investment banks'. That's the trade-off. You get access to federal assistance, you pony up more capital, and you take less risk.

Goldman didn't like the last part. It makes most of its money speculating, or trading. So it asked the Fed to be exempt from what's called the Market Risk Rules that bank holding companies adhere to when computing their risk.

Keep in mind that by virtue of becoming a bank holding company, Goldman received a total of $63.6 billion in federal subsidies (that we know about—probably more if the Fed were ever forced to disclose its $7.6 trillion of borrower details). There was the $10 billion it got from TARP (which it repaid), the $12.9 billion it grabbed from AIG's spoils—even though Goldman had stated beforehand that it was protected from losses incurred by AIG's free fall, and if that were the case, would not have needed that money, let alone deserved it. Then, there's the $29.7 billion it's used so far out of the $35 billion it has available, backed by the FDIC's Temporary Liquidity Guarantee Program, and finally, there's the $11 billion available under the Fed's Commercial Paper Funding Facility.

Tactically, after bagging this bounty, Goldman asked the Fed, its new regulator, if it could use its old risk model to determine capital reserves. It wanted to use the model that its old investment bank regulator, the SEC, was fine with, called VaR, or value at risk. VaR pretty much allows banks to plug in their own parameters, and based on these, calculate how much risk they have, and thus how much capital they need to hold against it. VaR was the same lax SEC-approved risk model that investment banks such as Bear Stearns and Lehman Brothers used, with the aforementioned results.

On February 5, 2009, the Fed granted Goldman's request. This meant that not only was Goldman getting big federal subsidies, but also that it could keep betting big without saving aside as much capital as the other banks. Using VaR gave Goldman more leeway to, well, accentuate the positive. Yes, Goldman is a more risk-prone firm now than it was BEFORE it got to play with our money.

Which brings us back to these recent quarterly earnings. Goldman posted record profits of $3.4 billion on revenues of $13.76 billion. More than 78 precent of those revenues came from its most risky division, the one that requires the most capital to operate, Trading and Principal Investments. Of those, the Fixed Income, Currency and Commodities (FICC) area within that division brought in a record $6.8 billion in revenues. That's the division, by the way, that I worked in and that Lloyd Blankfein managed on his way up the Goldman totem pole. (It's also the division that would stand to gain the most if Waxman's cap-and-trade bill passes.)

Since Goldman is trading big with our money, why not also use it to pay big bonuses? It's not like there are any strings attached. For the first half of 2009, Goldman set aside $11.4 billion for compensation—34 percent more than for the first half of 2008, keeping them on target for a record bonus year—even though they still owe the federal government $53.6 billion, a sum more than four times that bonus amount.

But capital is still key. Capital is the lifeblood that pumps through a financial organization. You can't trade without it. As of June 26, 2009, Goldman's total capital was $254 billion, but that included $191 billion in unsecured long-term borrowing (meaning money it had borrowed without putting up any collateral for it). On November 28, 2008 (4Q 2008), it had only $168 billion in unsecured long-term borrowing. Thus, its long-term unsecured debt jumped 14 percent. Though Goldman doesn't disclose exactly where all this debt comes from, given the $23 billion jump, we can only wonder whether some of it has come from government subsidies or the Fed's secret facilities.

Not only that, by virtue of how it's set up, most of Goldman's unsecured funding comes in through its parent company, Group Inc. (Think the top point of an umbrella with each spoke being a subsidiary.) This parent parcels that money out to Goldman's subsidiaries, some of which are regulated, some of which aren't. This means that even though Goldman is supposed to be regulated by the Fed and other agencies, it has unregulated elements receiving unsecured funding—just like before the crisis, but with more of our money involved.

As for JPMorgan Chase, its profit of $2.7 billion was up 36 percent for the second quarter of 2009 vs. the same quarter last year, but a lot of that also came from trading revenues, meaning its speculative endeavors are driving its profits. Over on the consumer side, the firm had to set aside nearly $30 billion in reserve for credit-related losses. Riding on its trading laurels, when its consumer business is still in deterioration mode, is not a recipe for stability, no matter how much cheering JPMorgan Chase's results got from Wall Street. Betting is betting.

Let's pause for some reflection: The bank "stars" made most of their money on speculation, got nearly $124 billion in government guarantees and subsidies between them over the past year and a half, yet saw continued losses in the credit products most affected by consumer credit problems. Both are setting aside top-dollar bonuses. JPMorgan Chase CEO Jamie Dimon mentioned that he's concerned about attracting talent, a translation for wanting to pay investment bankers big bucks—because, after all, they suffered so terribly last year, and he needs to stay competitive with his friends at Goldman. This doesn't add up to a really healthy scenario. It's more like bad déjà vu.

As a recent New York Times article (and many other publications in different words) said, "For the most part, the worst of the financial crisis seems to be over." Sure, the crisis may appear to be over because the major banks of Wall Street are speculating well with government subsidies. But that's a dangerous conclusion. It doesn't mean that finance firms could thrive without the artificial, public-funded assistance. And it certainly doesn't mean that consumers are any better off than they were before the crisis emerged. It's just that they didn't get the same generous subsidies.

[Demeter]

70. A $100 million bonus--Citigroup

http://blogs.moneycentral.msn.com/topstocks/archive/2009/07/27/a-100-million-bonus.aspx

Citigroup (C) is considering paying a $100 million bonus -- to one guy.

This is the same Citigroup that received $45 billion in bailout money. The same Citigroup that will soon be 34% owned by the U.S. government. The same Citigroup that has lost 95% of its share value since 2007.

Citigroup is in no position to be awarding bonuses of $10 million -- let alone adding another zero to that amount. So why is it mulling such a colossally dumb move? Because the guy demanding it is probably the bank's most valuable employee.

Enter Andrew Hall. He's a rock star, a legend among banking circles. He makes a boatload of money for Citigroup as head of Phibro, the bank's energy-trading unit. The Wall Street Journal calls Phibro a secretive operation, housed in a former Connecticut dairy farm, that "occasionally accounts for a disproportionate chunk of Citigroup income."

Phibro made so much money for Citigroup last year that Hall got a $100 million bonus (His bonus is based on Phibro's profits). Phibro was the main source of the $667 million in pretax revenue Citigroup received in commodities trading, the Journal reported. And the unit is doing so well this year that Hall may be in line for a similar amount.

Even though it's only July, it sounds like Hall is pressing Citigroup for confirmation of the bonus. He's threatening to leave the company, reports say.

So here's Citigroup's dilemma: Keeping Hall would likely help the company climb out of the hole it's in. But can it afford to spend $100 million?

And will the U.S. government allow it? That will depend largely on the opinion of Kenneth Feinberg, the new pay czar appointed to oversee compensation at the bailed-out banks.

Hall already has so much money that he owns a castle in Germany called Schloss Derneburg (pictured here). He's a huge art collector, and caused a bit of a ruckus in Southport, Conn., by commissioning a six-ton, 80-foot-long sculpture of concrete and steel on his front lawn. That doesn't play well with Southporters.

And how will a $100 million bonus play with taxpayers? We'll see.

[Demeter]

60. 3 Good Reasons To Liquidate Our Empire & 10 Steps to Take to Do So By Chalmers Johnson

http://www.tomdispatch.com/post/175101/chalmers_johnson_dismantling_the_empire

However ambitious President Barack Obama's domestic plans, one unacknowledged issue has the potential to destroy any reform efforts he might launch. Think of it as the 800-pound gorilla in the American living room: our longstanding reliance on imperialism and militarism in our relations with other countries and the vast, potentially ruinous global empire of bases that goes with it. The failure to begin to deal with our bloated military establishment and the profligate use of it in missions for which it is hopelessly inappropriate will, sooner rather than later, condemn the United States to a devastating trio of consequences: imperial overstretch, perpetual war, and insolvency, leading to a likely collapse similar to that of the former Soviet Union.

According to the 2008 official Pentagon inventory of our military bases around the world, our empire consists of 865 facilities in more than 40 countries and overseas U.S. territories. We deploy over 190,000 troops in 46 countries and territories. In just one such country, Japan, at the end of March 2008, we still had 99,295 people connected to U.S. military forces living and working there -- 49,364 members of our armed services, 45,753 dependent family members, and 4,178 civilian employees. Some 13,975 of these were crowded into the small island of Okinawa, the largest concentration of foreign troops anywhere in Japan.

These massive concentrations of American military power outside the United States are not needed for our defense. They are, if anything, a prime contributor to our numerous conflicts with other countries. They are also unimaginably expensive. According to Anita Dancs, an analyst for the website Foreign Policy in Focus, the United States spends approximately $250 billion each year maintaining its global military presence. The sole purpose of this is to give us hegemony -- that is, control or dominance -- over as many nations on the planet as possible.

We are like the British at the end of World War II: desperately trying to shore up an empire that we never needed and can no longer afford, using methods that often resemble those of failed empires of the past -- including the Axis powers of World War II and the former Soviet Union. There is an important lesson for us in the British decision, starting in 1945, to liquidate their empire relatively voluntarily, rather than being forced to do so by defeat in war, as were Japan and Germany, or by debilitating colonial conflicts, as were the French and Dutch. We should follow the British example. (Alas, they are currently backsliding and following our example by assisting us in the war in Afghanistan.)

Here are three basic reasons why we must liquidate our empire or else watch it liquidate us.

1. We Can No Longer Afford Our Postwar Expansionism

(details at length at link)

2. We Are Going to Lose the War in Afghanistan and It Will Help Bankrupt Us

(ditto)

3. We Need to End the Secret Shame of Our Empire of Bases

(ditto, ditto)

10 Steps Toward Liquidating the Empire

Dismantling the American empire would, of course, involve many steps. Here are ten key places to begin:

1. We need to put a halt to the serious environmental damage done by our bases planet-wide. We also need to stop writing SOFAs that exempt us from any responsibility for cleaning up after ourselves.

2. Liquidating the empire will end the burden of carrying our empire of bases and so of the "opportunity costs" that go with them -- the things we might otherwise do with our talents and resources but can't or won't.

3. As we already know (but often forget), imperialism breeds the use of torture. In the 1960s and 1970s we helped overthrow the elected governments in Brazil and Chile and underwrote regimes of torture that prefigured our own treatment of prisoners in Iraq and Afghanistan. (See, for instance, A.J. Langguth, Hidden Terrors , on how the U.S. spread torture methods to Brazil and Uruguay.) Dismantling the empire would potentially mean a real end to the modern American record of using torture abroad.

4. We need to cut the ever-lengthening train of camp followers, dependents, civilian employees of the Department of Defense, and hucksters -- along with their expensive medical facilities, housing requirements, swimming pools, clubs, golf courses, and so forth -- that follow our military enclaves around the world.

5. We need to discredit the myth promoted by the military-industrial complex that our military establishment is valuable to us in terms of jobs, scientific research, and defense. These alleged advantages have long been discredited by serious economic research. Ending empire would make this happen.

6. As a self-respecting democratic nation, we need to stop being the world's largest exporter of arms and munitions and quit educating Third World militaries in the techniques of torture, military coups, and service as proxies for our imperialism. A prime candidate for immediate closure is the so-called School of the Americas, the U.S. Army's infamous military academy at Fort Benning, Georgia, for Latin American military officers. (See Chalmers Johnson, The Sorrows of Empire , pp. 136-40.)

7. Given the growing constraints on the federal budget, we should abolish the Reserve Officers' Training Corps and other long-standing programs that promote militarism in our schools.

8. We need to restore discipline and accountability in our armed forces by radically scaling back our reliance on civilian contractors, private military companies, and agents working for the military outside the chain of command and the Uniform Code of Military Justice. (See Jeremy Scahill, Blackwater:The Rise of the World's Most Powerful Mercenary Army ). Ending empire would make this possible.

9. We need to reduce, not increase, the size of our standing army and deal much more effectively with the wounds our soldiers receive and combat stress they undergo.

10. To repeat the main message of this essay, we must give up our inappropriate reliance on military force as the chief means of attempting to achieve foreign policy objectives.

Unfortunately, few empires of the past voluntarily gave up their dominions in order to remain independent, self-governing polities. The two most important recent examples are the British and Soviet empires. If we do not learn from their examples, our decline and fall is foreordained.

Chalmers Johnson is the author of Blowback (2000), The Sorrows of Empire (2004), and Nemesis: The Last Days of the American Republic (2006), and editor of Okinawa: Cold War Island (1999).

SUPPORTING SOURCES AT LINK

[Demeter]

61. Want to Fight Deflation? Give a Worker a Raise By Mike Whitney

http://www.informationclearinghouse.info/article23470.htm

September 11, 2009 "Information Clearing House" -- The slight rebound in housing looks a lot different when one considers how much the Fed is meddling in the market. Fed chair Ben Bernanke has purchased $240 billion in US Treasuries to keep long-term interest rates artificially low while--at the same time--buying $740 billion in Fannie Mae and Freddie Mac mortgage-backed securities (MBS) to provide the financing for new home buyers. It's the double-whammy; and that's not all. Bernanke plans to continue buying agency MBS (monetization) until he reaches $1.45 trillion, which will make Uncle Sam the biggest player in the housing market by far. How's that for central planning?

Ironically, the funds for Bernanke's housing market rescue plan were never approved by Congress, which means that the Fed committed nearly-$2 trillion with "no down" payment. That makes the Fed's Treasury buyback program the biggest subprime loan of all time.

The fact is, all the recent gains in home sales are all the result of direct government intervention. If interest rates were allowed to rise (as the would naturally) or if Congress withdrew its $8,000 first-time home-buyer subsidy, or if FHA tightened its loosey-goosey financing (which requires just 3.5% down payment and low FICO scores, the same as subprime!) home prices and sales would continue to drop at a 10 to 15 percent year-over-year rate. Housing has stopped plummeting for one reason alone; the Fed bought the market.

The same rule applies to the stock market, where the Fed's quantitative easing (QE) and liquidity injections have sparked a 6-month bear market rally sending equities to the moon. It's all Fed intervention. A recent report by Egan-Jones Ratings And Analytics traces the Fed's lavish liquidity handouts pointing out the precise sectors of the market that have been most effected:

"Massive monetary stimulus is good for asset prices (stocks, bonds, houses, commodities) in a weak pricing environment and soft economy. The Federal Reserve has doubled its balance sheet from $1 Trillion to $2 Trillion effectively adding $1 Trillion to our economy. In addition, the Fed has through an alphabet soup of facilities i.e. Term Auction credit, Asset Backed Commercial Paper Money Market Mutual Fund Liquidity Facility, Term Asset Backed Securities Loan Facility, Primary Dealer and other Broker Dealer Credit, Other Credit Extensions, Term Facility, Maiden Lane LLC one, two and three, Money Market Investor Facility, added approximately $3 Trillion in loans and over $5.5 Trillion in guarantees of private investments. While these latter funds are technically loans, they get renewed regularly.

So where has all the money gone? The chart below shows the rise in the stock market causing the valuation to be somewhat extended in our view - some liquidity found a home here. Large rises in just the last month in small cap stocks, plus 17%; most shorted stocks, plus 17%; stocks with the lowest analyst rating out performing those with the highest rating by 380 basis points, all suggest some speculation......
Commodities have had a nice rebound from their lows with copper hitting new highs. High yield bonds have out performed investment rated bonds as investors are willing to bet on a faster recovery and start to reach for yield.
These are indications of excess liquidity finding outlets." ( "Fundamentally...Disconnected" Egan-Jones Ratings And Analytics, hat tip zero hedge.com)

Let's summarize: The Fed is goosing the stock market and subsidizing the housing market. Bernanke has slashed interest rates to zero percent, underwritten the entire financial system with $12.8 trillion in loans and guarantees, and flooded the financial system with liquidity. The Fed has also doubled its balance sheet to $2.08 trillion which is the equivalent of dropping the Fed Funds rate to -1 percent. As Mark Gongloff of the Wall Street Journal opines, "The Fed is essentially paying people to borrow money."

Indeed, the Fed has done its level-best to keep the market from correcting, but isn't it a bit of a stretch to call it a "recovery"?

In truth, Bernanke is in a pitch-battle with deflation and the outcome is still uncertain. Deflation has spread to every sector of the economy; retail, travel, luxury items, autos, building supplies, home furnishings, electronics. No business has been spared. The C.P.I. inflation-gauge has slipped into negative territory and is now at -2.1 percent. Prices are headed down and spending is falling fast. Unemployment is soaring, wages are dropping, and the average work-week has been sliced to just 33 hrs. And, as we noted, housing prices have flattened out, but only because of unprecedented government intervention into the market. Otherwise, real estate would still be stretched out on a marble slab.

Most people think it should be easy to beat deflation. They think all the Fed has to do is flip a switch and print more money. But there's more to it than that, especially when trillions of dollars in credit suddenly vanishes in a poof of smoke. That's what happened last September when Lehman Bros imploded and reduced the financial system to rubble. Global stock markets crashed, interbank lending collapsed, capital flows stopped, and payrolls and inventories were slashed. The gigantic credit-purge thrust the economy into deflation, a condition which persists to this day.

Economist Irving Fisher tackled the problem of deflation 76 years ago in his masterpiece "Debt-Deflation Theory of the Great Depression". Fisher showed how over-indebtedness eventually triggers a chain of events beginning with debt liquidation and ending in distress selling, huge capital losses, and violent economic contraction; the same challenge that Bernanke faces today.

Irving Fisher:

"Unless some counteracting cause comes along to prevent the fall in the price level, such a depression as that of 1929-33 tends to continue, going deeper, in a vicious spiral, for many years. There is then no tendency of the boat to stop tipping until it has capsized....

On the other hand, it is always economically possible to stop or prevent such a depression simply by reflating the price level up to the average level at which outstanding debts were contracted by existing debtors and assumed by existing creditors, and then maintaining that level unchanged." (Irving Fisher)

Clearly, Bernanke is following Fisher's advice and doing everything in his power to reflate asset prices and avoid a bigger crash. But it's still too soon to tell whether his strategy will work. We're still in the early innings of a humongous system wide credit-implosion event.

The term "deflation" relates to a drop in the general price level, something not seen in the United States since the Great Depression. As economist John Bellamy Foster points out, deflation squeezes corporate profits even if costs and productivity remain the same. When profits fall, heavy layoffs and wage reductions ensue.

John Bellamy Foster: "But the real fear of deflation has to do with the enormously bloated financial structure and the huge debt load of the economy... In a deflationary economy, debt has to be paid back with bigger dollars (worth more over time). This then creates a debt-deflation spiral, enormously accelerating financial meltdown. As Fisher put it, "deflation caused by the debt reacts on the debt. Each dollar of debt still unpaid becomes a bigger dollar, and if the over-indebtedness with which we started was great enough, the liquidation of debt cannot keep up with the fall of prices which it causes." Stated differently, quoting from The Great Financial Crisis (p. 116), "prices fall as debtors sell assets to pay their debts, and as prices fall the remaining debts must be repaid in dollars more valuable than the ones borrowed, causing more defaults, leading to yet lower prices, and thus a deflationary spiral." (Interview of John Bellamy Foster on the Great Financial Crisis, Monthly Review) http://www.monthlyreview.org/mrzine/foster270209.html

It is this "deflationary spiral" that Bernanke is trying to avoid at all cost, even if he destroys the currency in the process. (Which he appears to be doing) Despite the Fed chairman's steely resolve, the economy has continued its historic nosedive. Consumer spending is falling and households are limiting themselves to the bare essentials. (US households lost $14 trillion in wealth in the last year alone.) Families everywhere are paring back their credit, paying down their debts and rebuilding their nest eggs with what's left from their skimpy paychecks. Unfortunately, what's good for the family balance sheet is poison for the economy.

From Bloomberg News: "U.S. consumer credit plunged more than five times as much as forecast in July as banks maintained more restrictive lending terms and job losses made households reluctant to borrow.

Consumer credit fell by a record $21.6 billion, or 10 percent at an annual rate, to $2.5 trillion, according to a Federal Reserve report released today in Washington. Credit dropped by $15.5 billion in June, more than previously estimated. Credit fell for a sixth month, the longest series of declines since 1991. (Bloomberg)

US households and consumers have never been as strapped as they are today. They're dealing with recession the only way they can, by pulling back and hunkering down. That will make it even harder for Bernanke to resuscitate the economy. There's simply no way to force people to borrow when they're not interested.

Bernanke's deflation-fighting strategy needs to be revamped. The country doesn't need another credit bubble. The surge in delinquencies, defaults and personal bankruptcies all suggest that the era of easy money and lax lending standards is over. Why not "hang it up" for good. The Fed should be focused on rebuilding the economy from the ground up, paying particular attention to aggregate demand. Demand is what keeps the mighty GDP-flywheel in motion. Wall Street likes to stimulate demand through credit expansion and bubblenomics so they can skim fat bonuses on the front end and then bail out before stocks crash. But this perennial "boom and bust" cycle get's old for ordinary working people, who just want a little stability and a paycheck that keeps pace with inflation. The best way to avoid "demand shock"--which is at the heart of every recession--is through wage growth and full employment. It's that simple. When workers get better pay, they buy more more stuff and the economy thrives. Everybody wins!

[Ghost Dog]

62. Haven’t We Been to this Show Before? (c. 1930 "Hope Rally")

(Note: Past Results are No Guide to Future Performance)
Daniel Alpert | Sep 9, 2009

“There were fairly distinct indications, in last week’s stock market, that even professional Wall Street is getting back to a mood in which it will look at things as they are, and not necessarily as they would like them to be. Not much more than a month ago it was in that frame of mind; examining with great care actual returns of production, trade and employment and trying to discover, from these tangible facts, when the real turn for the better was likely to come. But the restless “professional” wearied of that. He may have seriously thought that cheap money in Wall Street would at once and automatically revive a business boom, irrespective of all other influences. He may actually have believed the stock market to be an independent industry not concerned with trade vicissitudes. Possibly, although not in himself the least deluded on either supposition, he may have imagined that the outside public would not have sense enough to see the fallacy. At any rate, a bold pretense was put up of retuning to speculation.”

-- The New York Times – Opening paragraph of Financial Markets: A Changing Mood In Wall Street – Stocks and the Problems of Trade, April 21, 1930, four days after the DJIA hit the peak of the recovery rally about six months after the great crash of 1929…a level it was not to see again for nearly a quarter century (full article appended to this report).

Overview

About six months following the nadir of the Dow Jones Industrial Average’s roughly 50% decline from its bubble-era highs, it rose to 48% off its lows. Speculation that another bull market was in the offing, brought anxious capital back in from previously frightened traders. Unemployment threatened to define the economic picture in a way that hadn't been seen in decades. The Federal Reserve and banks were lowering the cost of money to borrowers still able to borrow. Brokerage firms were re-hiring workers that had been let go in mass layoffs. Investment trust pools were all the rage – investing in assets at supposedly depressed prices. Favored stocks were being bid up, while talk abounded of ample cash on the sidelines. Corporate earnings were down, but the Street was pouring over any sign of the slight industrial improvement that had prevailed in the prior quarter, and ignoring any discouraging news.

You may have guessed that, by our use of the past tense, the foregoing refers to the “hope” rally of 1930.To say it is eerily on par with a description of the condition of today’s market (up until this week) is an understatement. Accordingly, instead of joining in the coming flood of one year anniversary pieces on 2008’s “Autumn of Anxiety,” we offer this 80th anniversary reflection on the events of 1929–1930. Not a Santayana-esque tome about being condemned to repeat a past we have forgotten, but some very interesting history it certainly can’t hurt market participants and policy makers to remember.

/... This introduction continues at Roubinii's site: http://www.rgemonitor.com/financemarkets-monitor/257661/havent_we_been_to_this_show_before_note_past_results_are_no_guide_to_future_performance
/... And refers to Alpert's Westwood Capital Research Report (.pdf) here: http://www.westwoodcapital.com/opinion/images/stories/research/research-opinion/havent_we_been_to_this_show_before-alpert-090209.pdf which includes some fascinating quotes from 1930's media cheerleaders and, eg. this chart:

[Demeter]

63. How California Could Turn Its IOUs into Dollars

I WONDER IF THIS WAS THE SHOT ACROSS THE BOW THAT BROUGHT CALIFORNIA OUT OF CRISIS (FOR THE MOMENT)

http://www.huffingtonpost.com/ellen-brown/how-california-could-turn_b_242901.html

California has over $17 billion on deposit in banks that have refused to honor its IOUs, forcing legislators to accept crippling budget cuts. These austerity measures are unnecessary. If the state were to deposit its money in its own state-owned bank, it could have enough credit to solve its budget crisis with funds to spare.

"We make money the old-fashioned way," said Art Rolnick, chief economist of the Minneapolis Federal Reserve. "We print it." That works for the federal government's central bank, but states are forbidden by the Constitution to issue "bills of credit," a term that has been interpreted to mean the state's own paper money. "Sacramento is not Washington," said California Governor Arnold Schwarzenegger in May. "We cannot print our own money." When legislators could not agree on how to solve the state's $26.3 billion budget deficit, the Governor therefore did the next best thing: he began paying the bills with IOUs ("I Owe You's," or promises to pay bearing interest).

The problem was that most banks declined to honor the IOUs, at least after July 24. "They said something about not wanting to enable the dysfunctional state legislature," observed a San Diego Union-Tribune staff writer, "which is kind of funny as the federal government has been enabling the dysfunctional financial sector for almost a year."

On July 21, California legislators were strong-armed into a tentative agreement on budget cuts, a forced move that was called "painful" by the Speaker of the Assembly and "devastating" by the executive director of the California State Association of Counties. The cuts involve more job losses, more bleeding of school funds, more closing of facilities. Worse, they will not solve the budget crisis long-term. The state's economy is expected to continue to deteriorate along with its revenues. But without banks to honor the state's IOUs, California has no time to negotiate or explore alternatives. There is no "quick fix," says UCLA Professor Daniel Mitchell.

Or is there?

More Than One Way to Solve a Budget Crisis

Among the banks rejecting California's IOUs are six of particular interest: Citibank, Union Bank, Bank of America, Wells Fargo, U.S. Bank, and Westamerica Bank. These banks are interesting because they are six of the seven depository banks in which the state of California currently deposits its money. (The seventh is Bank of the West, which loyally said it would accept the IOUs indefinitely.)

Banks operate under federal or state charters that grant them special rights and privileges. Chartered banks are endowed with a gift that keeps on giving: they can "leverage" the value of their deposits into anywhere from ten to thirty times that sum in interest-bearing loans. This "multiplier effect" is attested to by many authorities, including President Obama himself. He said in a speech at Georgetown University on April 14:

lthough there are a lot of Americans who understandably think that government money would be better spent going directly to families and businesses instead of banks -- "where's our bailout?," they ask -- the truth is that a dollar of capital in a bank can actually result in eight or ten dollars of loans to families and businesses, a multiplier effect that can ultimately lead to a faster pace of economic growth.

The website of the Federal Reserve Bank of Dallas explains:

Banks actually create money when they lend it. Here's how it works: Most of a bank's loans are made to its own customers and are deposited in their checking accounts. Because the loan becomes a new deposit, just like a paycheck does, the bank . . . holds a small percentage of that new amount in reserve and again lends the remainder to someone else, repeating the money-creation process many times.

Combine this with another interesting fact: according to the California Treasurer's report, as of May 2009 the state had aggregate deposits and investments exceeding $55 billion. Of this sum, $1.1 billion was held in demand deposit accounts (non-interest-bearing accounts allowing unlimited deposits and withdrawals) and $16.5 billion was in NOW accounts (interest-bearing accounts allowing unlimited deposits and withdrawals). According to the Treasurer's office, the non-interest-bearing demand deposits are held at the seven depository banks named earlier, while the NOW accounts are held at Citibank and Union Bank. Applying a "multiplier effect" of ten to the total sum on deposit at these seven banks ($17.6 billion), the banks collectively have the ability to make $176 billion in loans. At 5%, $176 billion can generate $8.8 billion in interest for the banks.

Rather than showing their gratitude by reciprocating, however, six of the seven depository banks have refused to honor California's IOUs. Worse, three of these six actually received federal bailout money from the taxpayers, something that was supposedly done to keep credit flowing to the states and their citizens. Citibank got $45 billion in bailout money, Wells Fargo got $25 billion, and Bank of America got $45 billion, not to mention guarantees of $300 billion for Citibank and $118 billion for Bank of America. When Governor Schwarzenegger asked for a loan guarantee for a mere $6 billion to bolster California's credit rating, on the other hand, he was turned down. Californians compose one-eighth of the nation's population.

When the state's appeal for aid was rejected by the banks, California State Treasurer Bill Lockyer said he was "disappointed." He and other state leaders should show their disappointment with their feet. California could pull its deposits out of those depository banks refusing its IOUs and put them instead in its own state-owned bank, following the lead of North Dakota, which now has the only state-owned bank in the country. Set up in 1919 to escape Wall Street predators, the Bank of North Dakota has been generating low-interest credit for the state and its residents for nearly a century. North Dakota is one of only two states (along with Montana) currently able to meet their budgets.

A state-owned bank could be fast-tracked into operation in a matter of weeks. With over $17 billion available to deposit in its own bank, California could create $170 billion or more in credit -- enough not only to meet its budget shortfall but to fund many other much-needed projects; and rather than feeding an ungrateful Wall Street, the bank's profits would return to the state and its people.

[Demeter]

65. Once More for Emphasis: New Rule Not Everything in America Has to Make a Profit By Bill Maher

http://www.huffingtonpost.com/bill-maher/new-rule-not-everything-i_b_244050.html

How about this for a New Rule: Not everything in America has to make a profit. It used to be that there were some services and institutions so vital to our nation that they were exempt from market pressures. Some things we just didn't do for money. The United States always defined capitalism, but it didn't used to define us. But now it's becoming all that we are.

Did you know, for example, that there was a time when being called a "war profiteer" was a bad thing? But now our war zones are dominated by private contractors and mercenaries who work for corporations. There are more private contractors in Iraq than American troops, and we pay them generous salaries to do jobs the troops used to do for themselves ­-- like laundry. War is not supposed to turn a profit, but our wars have become boondoggles for weapons manufacturers and connected civilian contractors.

Prisons used to be a non-profit business, too. And for good reason --­ who the hell wants to own a prison? By definition you're going to have trouble with the tenants. But now prisons are big business. A company called the Corrections Corporation of America is on the New York Stock Exchange, which is convenient since that's where all the real crime is happening anyway. The CCA and similar corporations actually lobby Congress for stiffer sentencing laws so they can lock more people up and make more money. That's why America has the world;s largest prison population ­-- because actually rehabilitating people would have a negative impact on the bottom line.

Television news is another area that used to be roped off from the profit motive. When Walter Cronkite died last week, it was odd to see news anchor after news anchor talking about how much better the news coverage was back in Cronkite's day. I thought, "Gee, if only you were in a position to do something about it."

But maybe they aren't. Because unlike in Cronkite's day, today's news has to make a profit like all the other divisions in a media conglomerate. That's why it wasn't surprising to see the CBS Evening News broadcast live from the Staples Center for two nights this month, just in case Michael Jackson came back to life and sold Iran nuclear weapons. In Uncle Walter's time, the news division was a loss leader. Making money was the job of The Beverly Hillbillies. And now that we have reporters moving to Alaska to hang out with the Palin family, the news is The Beverly Hillbillies.

And finally, there's health care. It wasn't that long ago that when a kid broke his leg playing stickball, his parents took him to the local Catholic hospital, the nun put a thermometer in his mouth, the doctor slapped some plaster on his ankle and you were done. The bill was $1.50, plus you got to keep the thermometer.

But like everything else that's good and noble in life, some Wall Street wizard decided that hospitals could be big business, so now they're run by some bean counters in a corporate plaza in Charlotte. In the U.S. today, three giant for-profit conglomerates own close to 600 hospitals and other health care facilities. They're not hospitals anymore; they're Jiffy Lubes with bedpans. America's largest hospital chain, HCA, was founded by the family of Bill Frist, who perfectly represents the Republican attitude toward health care: it's not a right, it's a racket. The more people who get sick and need medicine, the higher their profit margins. Which is why they're always pushing the Jell-O.

Because medicine is now for-profit we have things like "recision," where insurance companies hire people to figure out ways to deny you coverage when you get sick, even though you've been paying into your plan for years.

When did the profit motive become the only reason to do anything? When did that become the new patriotism? Ask not what you could do for your country, ask what's in it for Blue Cross/Blue Shield.

If conservatives get to call universal health care "socialized medicine," I get to call private health care "soulless vampires making money off human pain." The problem with President Obama's health care plan isn't socialism, it's capitalism.

And if medicine is for profit, and war, and the news, and the penal system, my question is: what's wrong with firemen? Why don't they charge? They must be commies. Oh my God! That explains the red trucks!

Bill Maher, host of HBO's Real Time with Bill Maher

[Demeter]

66. The Story of A Place Called Mouseland

http://www.youtube.com/watch?v=gqpFm7zAK90&feature=player_embedded

[AnneD]

79. Thanks Demeter.....

for introducing me to a truly wonderful person. No wonder you don't hear much about him down here. Tommy is a dangerous little mouse with a radical idea. I will be reading up on this man and spreading his tale of mouse land. Such a scary idea (to some) disguised as a fairy tale-a true inspiration. It was his parables that made Christ so dangerous. To explain a complex idea in such simple terms is always a threat.

[Ghost Dog]

83. But the mice simply have no idea how to run a cat-sized economy,

they will say. Even though it's the mice who do all the work for so little pay.

[Demeter]

86. Mice Have Lots of Information on How NOT to Run an Economy

Pretty much do the opposite, and it will come out good.

[Ghost Dog]

87. Yes. It will come out good.

I think plenty of people mice are quite well-prepared,

by now. Once and for all.

But (as always) I may be wrong in practice but certainly not morally.

:hi: (international solidarity).

:cry:

(Edit: having spent halfalifetime learning all there is to know about cats, fat cats, myveryself, that is).

:( :thumbsdown:

[Demeter]

67. Spitzer: Federal Reserve is ‘a Ponzi Scheme, an Inside Job’ By Daniel Tencer

http://rawstory.com/08/news/2009/07/25/spitzer-federal-reserve-is-a-ponzi-scheme-an-inside-job/

The Federal Reserve — the quasi-autonomous body that controls the US’s money supply — is a “Ponzi scheme” that created “bubble after bubble” in the US economy and needs to be held accountable for its actions, says Eliot Spitzer, the former governor and attorney-general of New York.

In a wide-ranging discussion of the bank bailouts on MSNBC’s Morning Meeting, host Dylan Ratigan described the process by which the Federal Reserve exchanged $13.9 trillion of bad bank debt for cash that it gave to the struggling banks.

Spitzer — who built a reputation as “the Sheriff of Wall Street” for his zealous prosecutions of corporate crime as New York’s attorney-general and then resigned as the state’s governor over revelations he had paid for prostitutes — seemed to agree with Ratigan that the bank bailout amounts to “America’s greatest theft and cover-up ever.”

Advocating in favor of a House bill to audit the Federal Reserve, Spitzer said: “The Federal Reserve has benefited for decades from the notion that it is quasi-autonomous, it’s supposed to be independent. Let me tell you a dirty secret: The Fed has done an absolutely disastrous job since Paul Volcker left.

“The reality is the Fed has blown it. Time and time again, they blew it. Bubble after bubble, they failed to understand what they were doing to the economy.

“The most poignant example for me is the AIG bailout, where they gave tens of billions of dollars that went right through — conduit payments — to the investment banks that are now solvent. We didn’t get stock in those banks, they didn’t ask what was going on — this begs and cries out for hard, tough examination.

“You look at the governing structure of the New York , it was run by the very banks that got the money. This is a Ponzi scheme, an inside job. It is outrageous, it is time for Congress to say enough of this. And to give them more power now is crazy.

“The Fed needs to be examined carefully.”

Spitzer resigned as governor of New York in March, 2008, after news reports stated he had paid for a $1,000-an-hour New York City call girl.

At the time, Spitzer had been raising the alarm about sub-prime mortgages. In the wake of the economic meltdown triggered last fall by sub-prime loans, some observers have suggested that Spitzer may have been targeted by law enforcement because of his high-profile opposition to Wall Street financial policies.

Investigative reporter Greg Palast wrote that federal agents’ revealing of Spitzer’s identity as a call-girl customer was no coincidence.

Palast wrote that the principle of “prosecutorial discretion” is often used to keep the names of high-profile persons out of the media when they are tangentially linked to a criminal investigation. In the case of Spitzer, the Justice Department chose not to invoke prosecutorial discretion.

Funny thing, this ‘discretion.’ For example, Senator David Vitter, Republican of Louisiana, paid Washington DC prostitutes to put him in diapers (ewww!), yet the Senator was not exposed by the US prosecutors busting the pimp-ring that pampered him.

Naming and shaming and ruining Spitzer – rarely done in these cases - was made at the ‘discretion’ of Bush’s Justice Department.

Spitzer recently told Bloomberg News that President Obama’s regulatory reforms of the financial sector are “irrelevant” because regulatory agencies have not been enforcing corporate laws to begin with.

“Regulatory agencies already had the power to do everything they needed to do,” he said. “They just affirmatively chose not to do it.”

– Daniel Tencer

http://www.youtube.com/watch?v=gAtSmR7Z-Kg&feature=player_embedded

[Demeter]

72. Statistical Deceptions By Paul Craig Roberts

http://www.informationclearinghouse.info/article23143.htm

July 29, 2009 "ICH' -- Last week on NPR a professor in the Sloan School of Management at MIT explained that what is really at stake in the health care bill is the US government’s ability to borrow. In other words, the bill is about cutting health care costs, not about providing hard-pressed Americans with health care.

The professor said that if we didn’t get health care costs under control, in 30 years the US government would not be able to sell Treasury bonds.

It is not at all clear that the Treasury will be able to sell its debt instruments in 30 months, and it has nothing to do with health care costs. The Treasury debt marketing problem has to do with two back-to- back US fiscal year budgets, each with a $2 trillion deficit. The size of the US deficit exceeds in these troubled times the supply of world savings available to fund the US government’s wars, bailouts and stimulus plans. If the Federal Reserve has to monetize the Treasury’s new borrowings by creating demand deposits for the Treasury (printing money), America’s foreign creditors might flee the dollar.

The professor didn’t seem to know anything about this and gave Washington 30 more years before the proverbial hits the fan.

One looks in vain to the US financial media for accurate economic information. Currently, Wall Street, the White House, and the media are hyping a new sign of economic recovery--”surging” June home sales. John Williams at shadowstats.com predicted this latest reporting deception.

Here is the way Williams explains how statistics can produce false signs of recovery. The economy has been contracting for so long that a plateauing of the falloff in home sales compared to the previous time period’s more rapid contraction can appear like a gain.

The Census Bureau itself notes that the reported 11% increase in June home sales might be illusory. The reporting agency says that the gain is not statistically meaningful at a 90% confidence interval and that “the Census Bureau does not have sufficient statistical evidence to conclude that the actual change is different from zero.”

Williams explains other data distortions likely to create false hopes and lead to investment losses. Financial stresses from the current state of the economy have changed behavior. This means that normal seasonal adjustments to statistical data can result in misleading information.

For example, the recent decline that was reported in seasonally- adjusted new unemployment claims was a result of the normal adjustments for the retooling of auto lines that did not, in fact, take place to the normal extent due to the bankruptcies and uncertainties. Adding in seasonal adjustments that did not in fact take place artificially reduced the unemployment claims.

Williams warns that after a period of contraction, new monthly or quarterly figures are being compared to prior periods of collapsing activity. “Improvements” are thus artifacts of the prior collapse and not signs of economic rebound.

The “Birth-Death Model” is used by the Bureau of Labor Statistics to estimate the net of the non-reported jobs lost by failed businesses
(deaths) and new jobs created by start-up companies (births). Williams explains why the model understates job loss during periods of contraction. The modeling on which the birth-death adjustment is based consists primarily of periods of economic growth when there are more non-reported start-up jobs than non-reported job losses from business failures. The BLS model came up with a monthly adjustment of
75,000 new jobs added to the reported number. That means an adjustment factor of 900,000 new jobs added to the reported payroll jobs number each year.

However, during economic contraction, such as the current one, it is wrong to assume that new start-ups are creating 75,000 jobs each month more than are being lost to business failures. Thus the job losses are understated by the 900,000 upside birth-death adjustment and by the absence of a downside adjustment to estimate the jobs lost as a result of failed companies that cease to report.

The reported unemployment rate is itself deceptive as it no longer includes discouraged workers who have been unemployed for more than a year. These long-term discouraged workers are simply erased from the rolls of the unemployed.

The Consumer Price Index no longer measures a constant standard of living and is not comparable to pre-Clinton periods. During the
1990s, the CPI ceased to be based on a weighted fixed assortment. The principle of substitution was introduced. For example, under the old measure, if the price of steak rose, the CPI rose. Under the new measure, if the price of steak rises, the index switches to hamburger on the assumption that consumers substitute hamburger for steak.

Consumer confidence typically is swayed by “good news” hype. The drops in the Conference Board’s and the University of Michigan’s measures of consumer confidence in July suggest that Americans are becoming inured to recovery hype and are realizing that the government and the media lie about the economy just as they lie about everything else.

[Demeter]

73. Report: FDIC Bailout Will Save Banks $24 Billion

http://www.propublica.org/ion/bailout/item/report-fdic-bailout-saved-banks-24-billion#11711

We keep you up to date on how many taxpayer billions <1> have gone out to the nation’s banks (and insurance, credit card and auto companies) via the $700 billion TARP <2>. But the Wall Street Journal ran the numbers <3> on a separate federal bailout program, this one run by the FDIC, and found it will save eight big U.S. banks “about $24 billion in borrowing costs during the next three years.”

Of course, the program was launched to save banks billions—or put another way, it was designed to make their debt affordable. Banks under the program (called the Temporary Liquidity Guarantee Program) issue debt guaranteed by the FDIC. Since the debt has government backing, the interest rate is lower than the market rate. And at the height of the financial crisis late last year, market rates were remarkably high. The Journal‘s analysis focused on the eight biggest participants in the program and is based on the difference between the FDIC-backed rate and the going market rate at the time the banks issued debt under the program.

As we reported last month, one company that has benefited from this program is General Electric <4>. The Journal calculates that its savings “likely will reach $3.3 billion,” a total GE disputed. (A spokeswoman said it was “something much less,” but evidently didn’t provide an estimate.)

[Demeter]

74. Sticker Shock: $23.7 Trillion Bailout?

http://abcnews.go.com/Business/Politics/story?id=8140184

"The total potential federal government support could reach up to $23.7 trillion," says Neil Barofsky, the special inspector general for the Troubled Asset Relief Program, in a report released today on the government's efforts to fix the financial system.

Yes, $23.7 trillion.

"The potential financial commitment the American taxpayers could be responsible for is of a size and scope that isn't even imaginable," said Rep. Darrell Issa, R-Calif., ranking member on the House Oversight and Government Reform Committee.

"If you spent a million dollars a day going back to the birth of Christ, that wouldn't even come close to just $1 trillion -- $23.7 trillion is a staggering figure."

To be sure, we aren't there yet.

The government has about 50 different programs to fight the current recession, including programs to bail out ailing banks and automakers, boost lending and beat back the housing crisis. So far they've cost taxpayers around $4 trillion.

But Barofsky says if each federal agency spent the maximum potential amount involved in these initiatives, taxpayers could be on the hook for trillions more.

The staggering $23.7 trillion estimate elicited concern from members of Congress and a sharp rebuke from the Treasury Department after the report was leaked late Monday.

Treasury spokesman Andrew Williams called the estimate "inflated," saying it "does not provide a useful framework for evaluating the potential cost of these programs."

He said utilization of the department's financial rescue programs has begun to decline, and some banks have already repaid $70 billion in TARP funds.

Other financial experts also questioned the significance of Barofsky's potential TARP price tag.

"I'm not sure how you could come up with a number like <$23.7 trillion> without lots of assumptions involved," said Kevin Petrasic, a private financial services lawyer with broad government experience.

"Throwing out a number you can't provide a tremendous amount of insight about: what's in that? You just get a headline. Why do we even need to know that this number, in a worst case scenario, is the number? What is gained from that?"

In his appearance before the House Oversight and Government Reform Committee today, Barofsky insisted his report provides a valuable accounting of taxpayer dollars.

"We take offense to comments," he said. "These numbers are from the government."

He said the $23.7 trillion figure in his quarterly report was derived from publicly available data on allocations to the government's various bailout programs.

"We've explained the number does include some programs that have terminated… and it isn't that the taxpayer is on the hook for $23.7 trillion – we don't say it, we don't suggest it," Barofsky said. "The actual potential for losses," he says, "is likely to be lower."

MUCH MORE AT LINK, IF YOU CAN STAND THE STICKER SHOCK...

[Demeter]

75. When Debtors Decide to Default By DAVID STREITFELD

http://www.nytimes.com/2009/07/26/weekinreview/26streitfeld.html?_r=1&ref=business



Melissa Birks is being stalked. Her cellphone keeps ringing, always from a caller marked “unknown.” She says she knows it is her credit card company wondering why she stopped making payments. Ms. Birks, who owes $28,830, has nothing to say.

Those on the front lines of the debt industry say there is a small but increasingly noticeable group of strapped consumers who, like Ms. Birks, are deciding they will simply stop paying. After loading up on debt eagerly provided by the card companies during the boom times, these people now find themselves trapped in an endless cycle where they are charged interest on interest and fees upon fees while the lenders get government bailouts.

They are upset — at the unyielding banks and often at their free-spending selves — and are pre-emptively defaulting. They could continue to pay for a while longer but instead are walking away. “You reach a point where you embrace the darkness of default,” said Adam Levin, chairman of the financial products Web site Credit.com.

The lending industry term for these people is “ruthless defaulters.” In a miserable economy where paychecks, savings and expectations are all diminished, their numbers will surely grow.

“They’ve done the math on their account and they’re very angry,” said Corey Calabrese, a Fordham Law student who is an administrator of the school’s walk-in clinic for debtors at Manhattan Civil Court. Public sentiment is on their side, she added: “For the first time, Americans are no longer blaming the borrower but are looking at the credit card companies.”

(That’s certainly true in the mortgage crisis. According to a Quinnipiac University poll in February, 62 percent of those polled blamed lenders “who loaned the money to people who may not be able to pay it back.” Only a quarter blamed homeowners.)

The deteriorating relationship between Americans and their creditors has not yet reached the level of Shays’ Rebellion, the 1786 uprising by poor farmers in western Massachusetts during a recession. But the basic issues are strikingly similar, suggesting an eternal tension between creditor and consumer.

Boston merchants, who were suffering themselves, aggressively sought payment from their customers. When the folks could not pay, which was often, they were jailed. The incensed farmers sought “reforms that would permit repayment on less destructive terms,” writes Bruce H. Mann in “Republic of Debtors,” a history of bankruptcy in early America. “Creditors replied with lectures on frugality, luxury, virtue and the sanctity of obligations.”

Shays’ Rebellion provoked mixed reactions, then and now. Were the rebels trying to remedy grievous wrongs in the spirit of the Revolutionary War, or were they threatening public order and the fledgling state — acting as terrorists, in the modern parlance? Shays’ followers were quickly arrested and quickly pardoned, although two were hanged.

Ruthless defaulters today face different perils. Delinquency destroys credit scores, can prompt a lawsuit and guarantees a very large number of hostile calls from collection agencies.

Still, all that can seem the better alternative. Like many who default, Ms. Birks first asked her credit card company to lower her 19 percent interest rate. No dice, Bank of America responded. After she tried to get the bank’s attention by skipping a payment, it immediately raised her rate to 25 percent. As Ms. Birks’ debt swelled, so did a sense of injustice mingled with helplessness.

Bank of America has its hands full, with a June default rate of 13.8 percent, up from 12.5 percent in May. The other major credit card companies are in a similar fix. Estimates of the total industry losses are over $100 billion for the current recession.

Collectors are noticing a shift not only in ability but in willingness to pay. “With all the bailouts the government is giving everyone, no one has any personal accountability about their own debts,” said Roger Knauf, who runs a trade group of debt-buying firms.

Many of today’s debtors were maxed out long before the recession. Much of this debt was of course in the form of junky mortgages on wildly overpriced houses, and it was here that people first began to rebel.

Countrywide Financial, the country’s biggest and most aggressive lender, surveyed its customers about why they were defaulting in the summer of 2007. One of the leading reasons was “low regard for property ownership.” In other words, people concluded that owning these houses was a bad deal.

That people would intentionally default on loans they never should have gotten in the first place took lenders by surprise. “I’m astonished that people would walk away from their homes,” Bank of America chief executive Kenneth Lewis said in late 2007.

Nineteen months later, walking away from mortgages is widespread if impossible to quantify, and no cause for embarrassment. Rather the opposite: it shows savviness. “I’ll walk away before I take a loss,” a Dallas financier recently boasted to Barron’s magazine about his efforts to sell his $6 million vacation estate.

With credit cards, this type of chest-pounding seems less evident, at least so far. Ms. Birks, 43, readily admits that no one forced her to use her cards. “Some people are good with money,” she said. “I was stupid.”

Still, just about everyone made mistakes during the boom — regulators, Congress, Wall Street. If Bank of America got a bailout for making bad loans, Ms. Birks figured, she deserved a bailout for accepting them.

“You have to start looking at the future,” says Ms. Birks, who has been a writer and editor for various publications. “I already feel horrible because I can’t find a good job.” She earns $15 an hour as a copy editor for a magazine and does other part-time work.

In previous downturns, Ms. Birks’ only recourse would have been a debt management plan, where she would restructure her payments with the help of a counselor, or bankruptcy. Now there is a third option: debt settlement. This means going on strike until the lender accepts a partial payment.

Ms. Birks asked Bank of America about a settlement this spring. Since her account was up to date, she was told she didn’t qualify. She stopped paying, the bank started calling.

When Bank of America finally got her on the phone, it agreed for the first time to drastically reduce her interest rate. She did not take the deal, but considered it progress.

WAIT TILL WE ALL GET TO BECOME RUTHLESS VOTERS...IN 14 MONTHS.

[TankLV]

82. I have two friends that did and are doing just that.

One died a year ago - she had a couple heart attacks, and her "insurance" co-pay amounted to almost a hundred thousand.

She offered to pay literally a couple bucks a month - she was out of work - and had no income.

When she died - they discovered she had over thirty thousand in savings - all went to her nephew before anything could be done.

The bill collectors hounded the friend she lived with - and tried to get him to give his name so they could attack HIM - he rightly refused. The bill collectors had to eat it!

Now that friend is upside down in his mortgage, and plans to default. He already had about forty thousand in credit card debt - being self employed - so he promptly ran up to the limit on all his cards - and he is promptly stopping making any payments!
Now those credit companies have to "eat it" too!

I STRONGLY support both their actions!

I, on the other hand, got out of the market and sold my other condo just before the bubble burst - and used the funds to pay off everything except the mortgage on my home - now I am in a decent situation to help my friends as they one by one lose their jobs.
So far - my job is OK - but that could also change - who knows.,.

[Tansy_Gold]

84. I have mixed feelings, but. . . . .

I have no real criticism either.

I suspect that in many cases, people have already repaid the original debt and with reasonable interest. But because the interest is calculated every month and it's an outrageous rate, and the penalties for late payment are even more outrageous and then interest is calculated on that, the banks and other lenders make most of their money off those. And consider too that part of the cost of using a credit card is charged automatically to the vendor, the bank is making more money.

And while the people who intentionally default on their credit cards will for the most part get to keep whatever goods they've purchased with them, those who walk out on underwater mortgages will not get to keep the houses on the same terms.

And many of us who have paid those outrageous fees and interest rates -- often on balances that were initially acquired at much lower rates -- know that we're paying to cover for the defaulters. The banks "gambled" on lending to less-qualified borrowers and built their profit into the rates charged to those who could be counted on to pay. So there's a rationale at work that says hey, I paid what I owe and I paid to cover the schuck you should never have lent to in the first place, so now I'm done. Scrape up your money from some other poor schlub and leave me the hell alone.



Tansy Gold

[Demeter]

76. AND NOW A WORD FROM OUR SPONSOR--REALLIFE

Time for me to deal with it. Carry on, Marketeers!

With all this bad news, we could use some humor or music or anything!

[Karenina]

88. Early Autumn... Johnny Mathis

http://www.youtube.com/watch?v=UA1JG40zkWA

[AnneD]

92. Hello Karenina......

How are you, how are things in Germany?

Haven't seen you for while. Missed you.

[Hugin]

91. Sorry I haven't posted much lately...

But, I seem to have hit a patch where I don't have much to say.

The only amusement I can think of currently is watching the stupid "You have a Windows virus" pop-ups yelling at me from my Ubuntu Linux Firefox browser.

Yeah, I dumped Fedora 11 a couple of days ago and picked up Ubuntu 9.04 (Jaunty Jackalope) on my ancient laptop. I have to admit the performance is, if not faster, at least more robust and reliable. Fedora 11 was good, but, it was a little more of a hobby horse OS than I wanted to deal with on a laptop I use often.

Only problem I've found with Ubuntu so far... It and Java don't seem to get along very well. In particular, the key bindings are somehow different and my pre-compiled Java Applets won't load into Firefox. Well, it something to work on.

Oh, and as usual... Video playback is very poor. I think, it's some setting in Firefox v 3.0 distributed with Ubuntu.
When I download a video onto the HDD and play it back from there... It's good. :shrug:

[Ghost Dog]

95. Latest is Firefox 3.5.3 here under windoze...

(Automatically out of control, but since we're no subversive...)

[DemReadingDU]

100. oh,oh,oh. I got something weird too. Personal AntiVirus scan

I was searching in Google (I think I was using IE, but maybe Firefox) for a Kristof article, and it found the link in New York Times. I clicked on the link, and this Personal AntiVirus thingy started up, supposedly looking for stuff on my computer. Really bizarre. I closed it, then researched my computer, rerunning scans. Nothing showed up. Totally freaked me out. Think I will head over to the computer forum.

[Hugin]

102. Now that you mention it...

It was a Personal AntiVirus pop-up when I opened the Frank Rich article over at the NYT.

Looks like the NYT has been p0wned!

[Demeter]

85. I Almost Forgot the Cartoon!

[Ghost Dog]

89. Best thing about September? It comes right before October

(always my favorite month -- seems, when I was conceived (in i953)).

http://www.youtube.com/watch?v=zCnJdQ9izto

And also here: http://www.youtube.com/watch?v=kjnC-vTDvMI

[Demeter]

94. Nice!

[Tansy_Gold]

90. Ehrenreich & Muhammad: The Recession's Racial Divide

http://www.nytimes.com/2009/09/13/opinion/13ehrenreich.html

(It's in three segments)


WHAT do you get when you combine the worst economic downturn since the Depression with the first black president? A surge of white racial resentment, loosely disguised as a populist revolt. An article on the Fox News Web site has put forth the theory that health reform is a stealth version of reparations for slavery: whites will foot the bill and, by some undisclosed mechanism, blacks will get all the care. President Obama, in such fantasies, is a dictator and, in one image circulated among the anti-tax, anti-health reform “tea parties,” he is depicted as a befeathered African witch doctor with little tusks coming out of his nostrils. When you’re going down, as the white middle class has been doing for several years now, it’s all too easy to imagine that it’s because someone else is climbing up over your back.

Despite the sense of white grievance, though, blacks are the ones who are taking the brunt of the recession, with disproportionately high levels of foreclosures and unemployment. And they weren’t doing so well to begin with. At the start of the recession, 33 percent of the black middle class was already in danger of falling to a lower economic level, according to a study by the Institute on Assets and Social Policy at Brandeis University and Demos, a nonpartisan public policy research organization.

In fact, you could say that for African-Americans the recession is over. It occurred from 2000 to 2007, as black employment decreased by 2.4 percent and incomes declined by 2.9 percent. During those seven years, one-third of black children lived in poverty, and black unemployment — even among college graduates — consistently ran at about twice the level of white unemployment.

That was the black recession. What’s happening now is more like a depression. Nauvata and James, a middle-aged African American couple living in Prince Georges County, Md., who asked that their last name not be published, had never recovered from the first recession of the ’00s when the second one came along. In 2003 Nauvata was laid off from a $25-an-hour administrative job at Aetna, and in 2007 she wound up in $10.50-an-hour job at a car rental company. James has had a steady union job as a building equipment operator, but the two couldn’t earn enough to save themselves from predatory lending schemes.

They were paying off a $524 dining set bought on credit from the furniture store Levitz when it went out of business, and their debt swelled inexplicably as it was sold from one creditor to another. The couple ultimately spent a total of $3,800 to both pay it off and hire a lawyer to clear their credit rating. But to do this they had to refinance their home — not once, but with a series of mortgage lenders. Now they face foreclosure.

Nauvata, who is 47, has since seen her blood pressure soar, and James, 56, has developed heart palpitations. “There is no middle class anymore,” he told us, “just a top and a bottom.”

Plenty of formerly middle- or working-class whites have followed similar paths to ruin: the layoff or reduced hours, the credit traps and ever-rising debts, the lost home. But one thing distinguishes hard-pressed African-Americans as a group: Thanks to a legacy of a discrimination in both hiring and lending, they’re less likely than whites to be cushioned against the blows by wealthy relatives or well-stocked savings accounts. In 2008, on the cusp of the recession, the typical African-American family had only a dime for every dollar of wealth possessed by the typical white family. Only 18 percent of blacks and Latinos had retirement accounts, compared with 43.4 percent of whites.

Racial asymmetry was stamped on this recession from the beginning. Wall Street’s reckless infatuation with subprime mortgages led to the global financial crash of 2007, which depleted home values and 401(k)’s across the racial spectrum. People of all races got sucked into subprime and adjustable-rate mortgages, but even high-income blacks were almost twice as likely to end up with subprime home-purchase loans as low-income whites — even when they qualified for prime mortgages, even when they offered down payments.

According to a 2008 report by United for a Fair Economy, a research and advocacy group, from 1998 to 2006 (before the subprime crisis), blacks lost $71 billion to $93 billion in home-value wealth from subprime loans. The researchers called this family net-worth catastrophe the “greatest loss of wealth in recent history for people of color.” And the worst was yet to come.

In a new documentary film about the subprime crisis, “American Casino,” solid black citizens — a high school social studies teacher, a psychotherapist, a minister — relate how they lost their homes when their monthly mortgage payments exploded. Watching the parts of the film set in Baltimore is a little like watching the TV series “The Wire,” except that the bad guys don’t live in the projects; they hover over computer screens on Wall Street.

It’s not easy to get people to talk about their subprime experiences. There’s the humiliation of having been “played” by distant, mysterious forces. “I don’t feel very good about myself,” says the teacher in “American Casino.” “I kind of feel like a failure.”

Even people who know better tend to blame themselves — like Melonie Griffith, a 40-year-old African-American who works with the Boston group City Life/La Vida Urbana helping other people avoid foreclosure and eviction. She criticizes herself for having been “naïve” enough to trust the mortgage lender who, in 2004, told her not to worry about the high monthly payments she was signing on for because the mortgage would be refinanced in “a couple of months.” The lender then disappeared, leaving Ms. Griffith in foreclosure, with “nowhere for my kids and me to go.” Only when she went public with her story did she find that she wasn’t the only one. “There is a consistent pattern here,” she told us.

Mortgage lenders like Countrywide and Wells Fargo sought out minority homebuyers for the heartbreakingly simple reason that, for decades, blacks had been denied mortgages on racial grounds, and were thus a ready-made market for the gonzo mortgage products of the mid-’00s. Banks replaced the old racist practice of redlining with “reverse redlining” — intensive marketing aimed at black neighborhoods in the name of extending home ownership to the historically excluded. Countrywide, which prided itself on being a dream factory for previously disadvantaged homebuyers, rolled out commercials showing canny black women talking their husbands into signing mortgages.

At Wells Fargo, Elizabeth Jacobson, a former loan officer at the company, recently revealed — in an affidavit in a lawsuit by the City of Baltimore — that salesmen were encouraged to try to persuade black preachers to hold “wealth-building seminars” in their churches. For every loan that resulted from these seminars, whether to buy a new home or refinance one, Wells Fargo promised to donate $350 to the customer’s favorite charity, usually the church. (Wells Fargo denied any effort to market subprime loans specifically to blacks.) Another former loan officer, Tony Paschal, reported that at the same time cynicism was rampant within Wells Fargo, with some employees referring to subprimes as “ghetto loans” and to minority customers as “mud people.”

If any cultural factor predisposed blacks to fall for risky loans, it was one widely shared with whites — a penchant for “positive thinking” and unwarranted optimism, which takes the theological form of the “prosperity gospel.” Since “God wants to prosper you,” all you have to do to get something is “name it and claim it.” A 2000 DVD from the black evangelist Creflo Dollar featured African-American parishioners shouting, “I want my stuff — right now!”

Joel Osteen, the white megachurch pastor who draws 40,000 worshippers each Sunday, about two-thirds of them black and Latino, likes to relate how he himself succumbed to God’s urgings — conveyed by his wife — to upgrade to a larger house. According to Jonathan Walton, a religion professor at the University of California at Riverside, pastors like Mr. Osteen reassured people about subprime mortgages by getting them to believe that “God caused the bank to ignore my credit score and bless me with my first house.” If African-Americans made any collective mistake in the mid-’00s, it was to embrace white culture too enthusiastically, and substitute the individual wish-fulfillment promoted by Norman Vincent Peale for the collective-action message of Martin Luther King.

But you didn’t need a dodgy mortgage to be wiped out by the subprime crisis and ensuing recession. Black unemployment is now at 15.1 percent, compared with 8.9 percent for whites. In New York City, black unemployment has been rising four times as fast as that of whites. By 2010, according to Lawrence Mishel of the Economic Policy Institute, 40 percent of African-Americans nationwide will have endured patches of unemployment or underemployment.

One result is that blacks are being hit by a second wave of foreclosures caused by unemployment. Willett Thomas, a neat, wiry 47-year-old in Washington who describes herself as a “fiscal conservative,” told us that until a year ago she thought she’d “figured out a way to live my dream.” Not only did she have a job and a house, but she had a rental property in Gainesville, Fla., leaving her with the flexibility to pursue a part-time writing career.

Then she became ill, lost her job and fell behind on the fixed-rate mortgage on her home. The tenants in Florida had financial problems of their own and stopped paying rent. Now, although she manages to have an interview a week and regularly upgrades her résumé, Ms. Thomas cannot find a new job. The house she lives in is in foreclosure.

Mulugeta Yimer of Alexandria, Va., still has his taxi-driving job, but it no longer pays enough to live on. A thin, tall man with worry written all over his face, Mr. Yimer came to this country in 1981 as a refugee from Ethiopia, firmly believing in the American dream. In 2003, when Wells Fargo offered him an adjustable-rate mortgage, he calculated that he’d be able to deal with the higher interest rate when it kicked in. But the recession delivered a near-mortal blow to the taxi industry, even in the still relatively affluent Washington suburbs. He’s now putting in 19-hour days, with occasional naps in his taxi, while his wife works 32 hours a week at a convenience store, but they still don’t earn enough to cover expenses: $400 a month for health insurance, $800 for child care and $1,700 for the mortgage. What will Mr. Yimer do if he ends up losing his house? “We’ll go to a shelter, I guess,” he said, throwing open his hands, “if we can find one.”

So despite the right-wing perception of black power grabs, this recession is on track to leave blacks even more economically disadvantaged than they were. Does a black president who is inclined toward bipartisanship dare address this destruction of the black middle class? Probably not. But if Americans of all races don’t get some economic relief soon, the pain will only increase and with it, perversely, the unfounded sense of white racial grievance.


Barbara Ehrenreich is the author of the forthcoming “Bright-Sided: How the Relentless Promotion of Positive Thinking Has Undermined America.” Dedrick Muhammad is a senior organizer and research associate at the Institute for Policy Studies.

[Demeter]

93. Well, It's Time to Wrap It Up

Sorry---I came home at 8 am and slept till 4:30 pm...didn't get as much posted as I hoped. Well, there's always SMW and next weekend...this kind of stuff keeps, unfortunately, because WASHINGTON is doing NOTHING about the problems, except letting the problems get bigger and worse....

If there was a procrastination award, Obama would get it, hands down. I used to think Bush was waiting for the Apocalypse because then his problems would be all over, and he could be as self-indulgent as he wanted...what's Obama's game? He isn't going to have a second term, the way he's screwing up the first one, and we aren't like Bushbots, willing to vote for him again just for the hell of it! We don't reward incompetence, and it's not like bipartisanship will get him re-elected!.

[Ghost Dog]

96. Well, there was this:

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x4056248

... http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=103x480354

[DemReadingDU]

97. Stiglitz Says Banking Problems Are Now Bigger Than Pre-Lehman

9/14/09 Stiglitz Says Banking Problems Are Now Bigger Than Pre-Lehman

Joseph Stiglitz, the Nobel Prize- winning economist, said the U.S. has failed to fix the underlying problems of its banking system after the credit crunch and the collapse of Lehman Brothers Holdings Inc.

“In the U.S. and many other countries, the too-big-to-fail banks have become even bigger,” Stiglitz said in an interview yesterday in Paris. “The problems are worse than they were in 2007 before the crisis.”

Stiglitz’s views echo those of former Federal Reserve Chairman Paul Volcker, who has advised President Barack Obama’s administration to curtail the size of banks, and Bank of Israel Governor Stanley Fischer, who suggested last month that governments may want to discourage financial institutions from growing “excessively.”

A year after the demise of Lehman forced the Treasury Department to spend billions to shore up the financial system, Bank of America Corp.’s assets have grown and Citigroup Inc. remains intact. In the U.K., Lloyds Banking Group Plc, 43 percent owned by the government, has taken over the activities of HBOS Plc, and in France BNP Paribas SA now owns the Belgian and Luxembourg banking assets of insurer Fortis.

While Obama wants to name some banks as “systemically important” and subject them to stricter oversight, his plan wouldn’t force them to shrink or simplify their structure.

Stiglitz said the U.S. government is wary of challenging the financial industry because it is politically difficult, and that he hopes the Group of 20 leaders will cajole the U.S. into tougher action.

G-20 Steps

“We aren’t doing anything significant so far, and the banks are pushing back,” said Stiglitz, a Columbia University professor. “The leaders of the G-20 will make some small steps forward, given the power of the banks” and “any step forward is a move in the right direction.”

G-20 leaders gather Sept. 24-25 in Pittsburgh and will consider ways of improving regulation of financial markets and in particular how to set tighter limits on remuneration for market operators. Under pressure from France and Germany, G-20 finance ministers earlier this month reached a preliminary accord that included proposals to reduce bonuses and linking compensation more closely to long-term performance.

“It’s an outrage,” especially “in the U.S. where we poured so much money into the banks,” Stiglitz said. “The administration seems very reluctant to do what is necessary. Yes they’ll do something, the question is: Will they do as much as required?”

more...
http://www.bloomberg.com/apps/news?pid=20601087&sid=a7UTn7JFw1qk

[Ghost Dog]

101. Some (more) people are going to get suicided

before this gets straightened out...