STOCK MARKET WATCH -- Thursday, 29 March 2012

[Tansy_Gold]

[font size=3]STOCK MARKET WATCH, Thursday, 29 March 2012[font color=black][/font]

SMW for 28 March 2012

AT THE CLOSING BELL ON 28 March 2012
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Dow Jones 13,126.21 -71.52 (-0.54%)
S&P 500 1,405.54 -6.98 (-0.49%)
Nasdaq 3,104.96 -15.39 (-0.49%)


[font color=red]10 Year 2.20% +0.01 (0.46%)
[font color=black]30 Year 3.31% 0.00 (0.00%) [font color=black]


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[font size=2]Market Conditions During Trading Hours[/font]
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[font size=2]Euro, Yen, Loonie, Silver and Gold[center]

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[font color=black][font size=2]Handy Links - Market Data and News:[/font][/font]
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Economic Calendar
Marketwatch Data
Bloomberg Economic News
Yahoo Finance
Google Finance
Bank Tracker
Credit Union Tracker
Daily Job Cuts
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[font color=black][font size=2]Handy Links - Economic Blogs:[/font][/font]
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The Big Picture
Financial Sense
Calculated Risk
Naked Capitalism
Credit Writedowns
Brad DeLong
Bonddad
Atrios
goldmansachs666
The Stand-Up Economist
The Automatic Earth
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[font color=black][font size=2]Handy Links - Government Issues:[/font][/font]
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LegitGov
Open Government
Earmark Database
USA spending.gov
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[font color=black][font size=2]Handy Links - Videos:[/font][/font]
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Charlie Rose talks with Roubini
Charlie Rose talks with Krugman
William Black: This Economic Disaster
Bill Moyers with Kevin Drum and David Corn
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Financial Sector Officials Convicted since 1/20/09 = [/font][font color=red]12[/font]
2/2/12 David Higgs and Salmaan Siddiqui, Credit Suisse, plead guilty to conspiracy involving valuation of MBS
3/6/12 Allen Stanford, former Caribbean billionaire and general schmuck, convicted on 13 of 14 counts in $2.2B Ponzi scheme, faces 20+ years in prison



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[font size=3][font color=red]This thread contains opinions and observations. Individuals may post their experiences, inferences and opinions on this thread. However, it should not be construed as advice. It is unethical (and probably illegal) for financial recommendations to be given here.[/font][/font][/font color=red][font color=black]

[Tansy_Gold]

1. See, I have a sense of humor after all.

It's just. . . . . warped.

[Demeter]

2. It's not warped!

Warped is something else entirely. You are just a little bit evil....but in a good way.

[Warpy]

7. HEY!!

That hurt!

[Tansy_Gold]

8. Being warped is a good thing

It means you're ready to be woofed, right?

[Demeter]

23. Sorry!

(I'm not sure what I am apologizing for, so take it as a general purpose apology, suitable for any occasion).

You know, you CAN be Warped, and Evil, too. If that makes you feel better...

[tclambert]

11. Do you even HAVE mosquitoes in Arizona?

I live in Michigan, less than a block from an actual swamp. Now you've got me worried what summer nights will be like. It's not that the mosquitoes will grow huge. It's that they will come in swarms. Good year for West Nile Virus. Is there any way to invest in virus futures?

[Fuddnik]

15. I've never been bitten by a mosquito in Florida.

The guy who lives next to us, drives the Mosquito Control truck. And whenever it's our neighborhoods time for spraying, he circles the block about 6 times, instead of once.

Unfortunately, it doesn't kill no-seeums. And, they'll eat you alive.

[Tansy_Gold]

42. We do occasionally have mosquitoes

They breed in standing water, so if someone in the neighborhood leaves an old tire out or whatever, we'll get a few. And the guy two doors down has a veritable junk yard, so I've see lots more mosquitoes here than I ever did where I used to live.

And because of so many people bringing their dogs from other areas where canine heartworm is transmitted by mosquitoes, we now have that to worry about here, too.

But it's not like back in Indiana where we were surrounded by lakes and had a small swamp just on the other side of the hill our house was built in. There, the skeeters would carry you off.


Yesteday we had a dove fly into the house. The BF was all panicky about it, but I calmly got the yellow fuzzy thing for dusting off the ceiling fans and she hopped right onto it and let me carry her to the door. Afterward, he actually said, "Wow. I'm impressed. That actually looked easy." Duh!

[Demeter]

3. Nine Strategies to End Corporate Rule

http://truth-out.org/index.php?option=com_k2&view=item&id=7999:nine-strategies-to-end-corporate-rule

...(RECENT) history notwithstanding, We the People, and our government representatives, do have the power to hold companies accountable for the wrongs they commit. The challenge is to mobilize sufficient political pressure to demand that available tools be used and new mechanisms of accountability be created.

One powerful way to hold companies accountable is through debarment—denying corporate wrongdoers the right to obtain government contracts. Almost every major company does significant business with the government, so debarment is a penalty with teeth. Similarly, federal, state, and local governments should deny other government benefits to corporate criminals and wrongdoers. Denying BP the right to drill in the Gulf is a penalty that would sting. Drug companies that can’t sell to Medicare, Medicaid, and the Department of Veterans Affairs are deprived of more than a third of their market. The Federal Communications Commission has the authority to deny broadcast licenses to media corporations that do not exhibit “good character.” Federal and state governments do frequently debar companies, but typically only smaller firms that engage in massive fraud or operate as criminal enterprises.

A second tool to discipline corporate wrongdoers is charter revocation. Establishing a new corporation requires that a state government grant a charter to operate. (This is typically a perfunctory requirement, as evidenced by the state of Virginia’s grant of a charter to Licensed to Kill, Inc., a company whose articles of incorporation state that it will engage in “manufacturing and marketing of tobacco products in a way that each year kills over 400,000 Americans and 4.5 million other persons worldwide.”) State governments have the right to revoke charters from companies that do not serve the public interest. Free Speech for People has petitioned Delaware to revoke the charter of Massey Energy. Charter revocation effectively constitutes the death penalty for a corporation. Even occasional use against large corporations would be a major deterrent to corporate wrongdoing.

A third form of control on corporate wrongdoing is civil litigation. Lawsuits against corporate wrongdoers not only afford victims an opportunity to receive some compensation for the harms they have suffered, they work to strip corporations of ill-gotten gains. The civil justice system is a vital deterrent to corporate misconduct, because it means corporations will at least sometimes be forced to pay for the harms they cause. And lawsuits provide direct justice to victims of corporate wrongdoing, without the need to persuade government officials to act. In many ways, the U.S. civil justice system is the most important form of corporate accountability we have.

It’s for exactly these reasons that corporations have worked for decades to undermine the functioning of the civil justice system, making it harder to file cases, interfering with the ability of victims to join together in class actions, making it harder for victims to obtain evidence, capping the damages that victims may recover, limiting punitive damages, and forcing victims out of the civil justice system (real courts) and into arbitration tribunals biased to favor giant corporations....

[snot]

65. None of the remedies quoted get to the root of the problem,

'cuz they do little or nothing to the PEOPLE who caused the corp. to misbehave. The people, the senior execs., just take their golden parachutes and move on to the next looting opportunity.

[Demeter]

69. Some Jail Time Would Be Included, One Would Hope

And maybe banning from the chosen line of fraud.

What? It COULD happen!

[Demeter]

4. Loan Forgiveness Good for the Economy, and Maybe Fannie and Freddie Mac Too

http://truth-out.org/news/item/8085-loan-forgiveness-good-for-the-economy-and-maybe-for-fannie-and-freddie-mac-too

New analyses by mortgage giants Freddie Mac and Fannie Mae have added an explosive new dimension to one of the most politically charged debates about the housing crisis: Whether to reduce the amount of money beleaguered homeowners owe on their mortgages.

Their conclusion: Such loan forgiveness wouldn't just help keep hundreds of thousands of families in their homes, it would also save Freddie and Fannie money. That, in turn, would help taxpayers, who bailed out the companies at a cost of more than $150 billion and are still on the hook for future losses.

The analyses, which have not been made public, were recently presented to the agency that controls the companies, the Federal Housing Finance Agency, according to two people familiar with the matter. Freddie Mac's meeting with the FHFA took place last week.

The decision of whether to allow such reductions rests with Edward DeMarco, the acting director of the FHFA, who has steadfastly opposed so-called principal reductions on the grounds that it's a bad business decision for the companies and would cost taxpayers money...

MUST READ

[Demeter]

5. NIKKEI Isn't Happy, Again

Ain't nobody happy. Including me. We can all be miserable together.

Thursday morning I am making milk-free, non-chocolate birthday cake for the Kid, whose birthday is Saturday. She'll be having a party with her friends on Friday. And a family party at a later date yet to be determined, and a third when my voice teacher, her husband, the Kid and I have a group party, since our birthdays fall within 9 days of each other.

And in honor of the festivities, I am going to IGNORE the board. Stupidity is its own reward.

[girl gone mad]

9. General strike in Spain today.

29M – Strike in Spain, why?
http://carabanchel.tomalosbarrios.net/2012/03/21/29m-strike-in-spain-why

The new Government has begun with several changes in the Labor Law because it wasn´t enough for the markets, newspapers said, but who are the markets? IMF and Chicago boys around the world, of course. With the excuse of a crisis, the new and conservative Government of Mariano Rajoy has changed again the Labor Law getting off all the rights of working people: freedom to hire and fire for free which, we believe, is not good for workers in a country without any social resources, unlike the rest of Europe, and with one the lowest wages in Europe (in Spain the legal minimum for a 40 h/week job is 645 €/month, in Luxemburg is 1700 €).

At the same time 48 State companies have been closed, being one of them the State Company of Rent (the organism that let access to a flat to the people with low wages– absolutely necessary in this moment–), and, at the same time, giving millions of Euros to the banks for it’s own business, Government is getting this money from working taxes. So ironic, so indignant! At Spain we have around forty evictions per day, so we can see so clear the ideological position of the Government that is not making any law to protect the families but giving money to the banks for clearing their debt. It´s not a crisis, It´s a trick.

But it´s not only about rights and banks. Also they are applying all the corrupt manners that the capitalism let them to improve themselves: with many of the State companies becoming private, we can read on the newspapers how the politicians give a very good positions to trust people, relatives included. The regional Gobernment of the Region of Madrid has fired 3.500 people from public Primary and High schools and at the same time they promote the orthodox catholic to better positions in the private educational system, and even they support BBVA bank to create a foundation to teach in the State system about capitalism manners. In the Public Health System we are expecting 4.500 fires at the end of the month, and at the same time one of the most famous businessman that owns one of the biggest building company, ACS, get from the same President the possibility to manage public hospitals. Mrs. President next step will be to give to the New Yok Univerity a Palace, which property is from the citizens in Carabanchel (neighborhood in Madrid), for free, and the questions that we make to ourselves now are what will the President Aguirre get in return for that? Is our Regional President making this present only for political reasons?

We have a lot of reasons for a national strike and also for an international action for a global attack. We are the 99%.

Mmmmm.... cake!

[Demeter]

31. Wall Street Is VERY Unhappy

Well, good for them. I mean it. It's good for them.

Are they unhappy that Obamacare is going down in flames? Or that Corzine didn't off his assistant treasurer before she could testify?

Or is the trading on as yet unrevealed, insider information?

[CatholicEdHead]

6. Only if it is warm and wet

If we get a dry and warm summer not many mosquitoes. A warm and wet summer means a open blood bank.

[Po_d Mainiac]

14. The death of BATS exchange ain't the only threat

Since March 2008, biologists estimate that over a million bats have died from this disease, many of which have been little brown bats (Myotis lucifugus). White-nose syndrome mortality has been documented in 13 states in the Northeast, Mid-Atlantic, and Midwest, and in 2 Canadian provinces (Ontario and Quebec).

http://www.nwhc.usgs.gov/disease_information/white-nose_syndrome/

Bats are bug (esp mosquito) eating machines. This is a major 'NOT GOOD!'

[DemReadingDU]

10. An interview with Michael Hudson about the Federal Reserve System

3/29/12 2 Michael Hudson on the Federal Reserve System

By Michael Hudson, a research professor of Economics at University of Missouri, Kansas City and a research associate at the Levy Economics Institute of Bard College

An interview with Michael Hudson published on the Russian website Terra America (TA).

What is the place of the Federal Reserve System in the American financial and economic structure?

Prior to the Federal Reserve’s founding in 1913, U.S. monetary policy was conducted by the Treasury. Like the Fed, it had district sub-treasuries that performed nearly all the financial functions that the Fed later took over: providing credit to move the crops in autumn, managing government debt, and so forth.

But after the severe 1907 financial crisis, a National Monetary Commission was reformed. Under the then-Republican administration, it recognized a need for more active government intervention to prevent future financial crises. It also recognized the desirability of moving away from the Anglo-Dutch-American system of “merchant banking” based on short-term lending against collateral in place, or for shipping of goods already produced. The National Monetary Commission’s longest volumes were on the great German industrial banks, and Republican policy aimed at bringing banking into the industrial era, to provide long-term funding after the model of German and other Central European banks.

However, the leading bankers sought to use the crisis as an opportunity to grab power for Wall Street, away from the Treasury. In this sense, the Fed was founded in large part to take monetary control away from Washington’s elected officials and appointees, and privatize the supply of money and credit.

So its place in the U.S. financial and economic structure is to allocate credit, primarily to serve Wall Street financial interests. That explains the insistence on the financial class here and abroad in insisting on an “independent” central bank. It means that instead of serving the public interest, it serves the interests of the banking class. The hoped-for transformation of commercial banking into long-term industrial banking was not achieved.

much more...
http://www.nakedcapitalism.com/2012/03/michael-hudson-on-the-federal-reserve-system.html

[xchrom]

12. morning -- i like the idea -- but i don't like how the characters turned out...

[Demeter]

25. Well, It will be shown for free in the next weekend after this

and I suppose I will take the Kid...if I don't sleep through it, I'll let you know.

[xchrom]

28. Oh cool. Please do.

I'm kinda old fashioned in my tastes for animation - so it would be nice to know what you think.

[Po_d Mainiac]

13. 4 inches of spring

Accumulated during the overnight

[Demeter]

26. Nature's fertilizer, just turn it under

We haven't had a flake (other than the hail during the tornado) since March 9.

[Po_d Mainiac]

33. AKA "Poor man's fertilizer"

Turn it under? RIIIGGHT...The frost ain't outa the ground yet

[Demeter]

39. Compost over it?

Throw on a little fresh topsoil?

I don't think the ground ever really froze in Ann Arbor, this winter. It was always raining and swampy. They say we got 3 ft of snow this winter, but it would melt within hours of falling.

[tclambert]

49. The lakes around me never did freeze all the way across.

Most winters you can snowmobile across Walled Lake (app. 1 mile across) until early March. Last year one of the ice fishermen drove his pickup truck out on the lake about the second week of March. This year a few ice fishermen set up tents on the ice shelf in one bay of the lake with a stretch of open water just a few hundred yards away . . . in February.

I heard there were 1300 new high temperature records set in northern and eastern states this year.

[Demeter]

53. Slight chance of snow for Michigan Friday Morning

But more likely, rain in the afternoon.

[Po_d Mainiac]

58. Fresh topsoil?

If it ain't frozen, it's mud....

[westerebus]

16. That's a fair sized mosquitoe by Jersey standards.

Which is why we all drive like crazy people, Jersey mosquitoes have a hard time hitting a moving target.

[AnneD]

29. I've been to Jersey....

live in Houston. It is worse in Houston.

Houston, where you can have 100% humidity but no rain. Houston, where you have no change of season because you are subtropical. Houston, where the city zoo grows their owe bananas.

Drained swamps and bayous are the foundation of the city. It isn't the city lights that obscure the night time sky but blue glow of the numerous 500,000 kilowatt bug zappers in the local lawns.

The bright spot in last years drought was that the mosquito population diminished. But the fleas and ticks made up for it. We like to think these natural obstacles keep the pesky tourists from settling here. We try to redirect those weather weenies to Dallas.

[westerebus]

71. Never been to Texas.

It's on the bucket list. I want to spend some time in Austin, so should I cross Houston and Dallas off the list?

[AnneD]

72. They question is???????

Why do you want to come to Texas and what do you want to see. Ask me anything-I'm a friendly native. PM me if you wish. I have a gift for planning.

[xchrom]

17. Global Takeovers Drop in Quarter as Bankers See Revival

http://www.bloomberg.com/news/2012-03-29/global-takeovers-drop-in-quarter-as-bankers-see-reversal.html


An aerial view shows the Super Pit and mining operations at Xstrata's Mt. Isa mine. Glencore's $45 billion deal for Xstrata was the only announced purchase in the quarter that topped $8 billion.

Global dealmaking slumped for a third straight quarter as chief executive officers funneled cash into share buybacks and new products, a trend that may reverse in the coming months as the economic recovery gains momentum.

Mergers and acquisitions so far this quarter fell 14 percent from the fourth quarter to $418 billion, making it the slowest three-month period in 2 1/2 years, according to data compiled by Bloomberg. Glencore International Plc’s (GLEN) $45 billion deal for Xstrata Plc (XTA) was the only announced purchase in the quarter that topped $8 billion.

Most CEOs are only now beginning to consider deals, said investment bankers at Goldman Sachs Group Inc. (GS) and Citigroup Inc. (C), predicting renewed confidence in the U.S. and Europe will spur a pickup. Since deal negotiations often take three months or more, the first quarter is mainly a reflection of a temporary slowdown that began last year as global stock markets hit a one- year low, bankers said.

“I still think big cash surpluses will lead to more M&A because companies fundamentally want to grow,” said Peter Tague, who started as co-head of global M&A at Citigroup in New York in this month. “If we find ourselves in June having these same low activity levels, I’d be really surprised.”

[xchrom]

18. German Jobless Fell in March as Economy Showed Resilience

http://www.bloomberg.com/news/2012-03-29/german-jobless-fell-in-march-as-economy-showed-resilience.html

German unemployment fell more than forecast in March, adding to evidence that growth in Europe’s biggest economy is gaining traction as the debt crisis recedes.

The number of people out of work fell a seasonally adjusted 18,000 to 2.84 million, the Nuremberg-based Federal Labor Agency said today. Economists forecast a decline of 10,000, the median of 36 estimates in a Bloomberg News survey showed. The adjusted jobless rate slipped to 6.7 percent, a two-decade low.

“Hiring hasn’t halted this quarter after the fourth- quarter contraction,” said Thomas Costerg, an economist at Standard Chartered Bank in London. It “says a lot about the underlying strength of the German economy.” Unemployment will continue to decline in coming months as the pace of economic growth accelerates, he said.

Falling joblessness underscores Germany’s resilience in the face of the debt crisis that Chancellor Angela Merkel says may have peaked. While the 17-member euro-region economy will shrink 0.3 percent in 2012, Germany’s economy will grow 0.6 percent, the European Commission forecast. Investor confidence is at its highest in 21 months and business confidence at an 8-month high.

[xchrom]

19. Economy in U.S. Expanded at 3% Annual Rate in Fourth Quarter

http://www.bloomberg.com/news/2012-03-29/economy-in-u-s-expanded-at-3-annual-rate-in-fourth-quarter.html

The economy in the U.S. grew at a 3 percent annual rate in the last three months of 2011, the same as previously estimated, while corporate profits climbed at the slowest pace in three years, raising the risk that business investment and hiring will cool.

The increase in gross domestic product was the biggest in more than a year and followed a 1.8 percent gain in the prior period, revised figures from the Commerce Department showed today in Washington. Company earnings were up 0.9 percent from the third quarter, the smallest advance since the last three months of 2008.

While the report showed business spending on new equipment and software climbed more the previously estimated, figures this month indicate outlays are slowing following the expiration of a government tax credit. Consumers may be poised to take a leading role in the expansion as the biggest increase in employment since 2006 gives households the confidence and means to spend.

“We’ve got more momentum in consumer spending than on the business side,” Brian Jones, a senior U.S. economist at Societe Generale in New York, said before the report.

[Demeter]

27. Suure It Did

That's why the retailers are crying in their beer...if they can afford beer.

[xchrom]

30. I always love the revised data news. Nt

[xchrom]

20. Bank of Portugal Sees Deeper Economic Contraction in 2012

http://www.bloomberg.com/news/2012-03-29/bank-of-portugal-sees-deeper-economic-contraction-in-2012.html

Portugal's central bank said the economy will contract more than previously forecast in 2012 and won’t grow next year as consumer spending drops and export growth eases.

Gross domestic product will fall 3.4 percent this year after declining 1.6 percent in 2011, the Bank of Portugal said today in its spring economic bulletin. In January, the bank forecast GDP would decrease 3.1 percent in 2012, also a bigger drop than previously estimated, and predicted that the economy would expand 0.3 percent in 2013.

“The risks surrounding the current projection point to more unfavorable economic-activity developments,” the Lisbon- based central bank said in a statement. “These risks stem to a large extent from external-driven factors, in particular related to the sovereign-debt crisis in the euro area, which may constrain external-demand developments.”

Prime Minister Pedro Passos Coelho is cutting spending and raising taxes to meet the terms of a 78 billion-euro ($104 billion) aid plan from the European Union and the International Monetary Fund. As the country’s borrowing costs surged, Portugal followed Greece and Ireland last April in seeking a bailout and now plans to return to bond markets in 2013.

[DemReadingDU]

21. FORA.tv: Blueprint for Accountability

3/28/12 Blueprint For Accountability: The Wall Street - Washington Connection

A panel at Georgetown University, called "Blueprint for Accountability," is a wide-ranging discussion about Wall Street that includes Eliot Spitzer, Ron Suskind, OWS activist Jesse LaGreca, Matt Taibbi and is moderated by Dylan Ratigan.

appx 2 hr 8 min

http://jessescrossroadscafe.blogspot.com/2012/03/foratv-blueprint-for-accountability.html


or direct link
http://fora.tv/2012/03/27/Culture_Project_Blueprint_for_Accountability

[DemReadingDU]

22. Bloomberg video: MF Not Positive Picture for Corzine, Barofksy Says

3/29/12 MF Not Positive Picture for Corzine, Barofksy Says

Neil Barofsky, former special inspector for the U.S. Treasury's Troubled Asset Relief Program and a Bloomberg Television contributing editor, talks about MF Global Holdings Ltd. Assistant Treasurer Edith O’Brien's testimony yesterday during a hearing on the New York firm’s Oct. 31 bankruptcy. O’Brien, who has become a key figure in tracing $1.6 billion in missing customer funds, declined to answer questions from House lawmakers. Barofsky speaks with Erik Schatzker, Stephanie Ruhle, Scarlet Fu and Sara Eisen on Bloomberg Television's "InsideTrack."
appx 6 minutes

http://www.bloomberg.com/video/89203807/

[Demeter]

36. MF Global exec tied to money transfers clams up

http://news.yahoo.com/jpmorgan-corzine-assured-mf-global-transfers-155520324.html

An MF Global executive, who has emerged as a central figure in the desperate shifting of funds before the brokerage's collapse, refused to answer questions on Wednesday, frustrating lawmakers probing why more than $1 billion in customer money is missing... Assistant Treasurer Edith O'Brien and other mid-level MF Global executives, people who had operational control over money transfers at the brokerage, were called to testify before the investigations panel of the House Financial Services Committee. O'Brien, a demure-appearing brunette dressed in a somber black dress suit, was excused after refusing to answer questions...O'Brien was the star witness, especially after the congressional panel released last week details of an email from O'Brien that said a $175 million transfer, that may have included customer funds, was "Per JC's direct instructions."...O'Brien refused to elaborate to lawmakers. "On advice of counsel I respectfully decline to answer based on my constitutional right," she told subcommittee chairman Randy Neugebauer when asked whether she gave Corzine assurances that the fund transfer was proper...

"Everyone seems to continually point in Edith's direction, and for her not to provide any information or insight she has, it's really disappointing," said Angela Wisdom, vice president of Wisdom Financial Inc, a California firm that is still short about $20 million it held at MF Global. "Every person they bring into these hearings, they can't answer these questions."

The others remained to take scathing questions from the lawmakers who likened the missing customer funds to a grand heist. The executives were unable to say why the money is missing, and who was responsible for it, keeping open the mystery nearly five months after MF Global filed for bankruptcy and former Chief Executive Jon Corzine resigned from the firm....The three MF Global executives who stayed to answer questions - Ferber, Chief Financial Officer Henri Steenkamp, and Christine Serwinski, former chief financial officer of the company's brokerage unit - revealed that they have been talking to the Justice Department. Steenkamp said his lawyers provided a proffer, or an informal document that describes information he would be able to provide in exchange for immunity, to "all of the regulatory agencies and investigative offices." Serwinski said she talked to investigators twice, and Ferber said she is cooperating with the Justice Department and is scheduled to meet with them on April 6. All three indicated no when asked if they had been offered immunity by the Justice Department...Ferber said she resisted providing broad written assurance to JPMorgan that MF Global was complying with rules to segregate customer funds. She said a letter suggesting narrower language was drafted, but not signed. Serwinski said in her written testimony that by October 27 she was "not comfortable" with putting customer funds at risk even overnight, after having learned there had been a "substantial deficit" in one metric on the company's books the day before. Under questioning, she told lawmakers she would not have approved the $175 million transfer had she known then what she knows now.

"Obviously there was a terrible failure here of some kind, but what it was, I don't know," said MF Global General Counsel Laurie Ferber.

Lawmakers were angered by such non-committal answers. "Bonnie and Clyde, they were chumps," said Republican Representative Steve Pearce, referring to bank-robbing duo from the 1930s. "You guys have people send things electronically...and nobody's responsible, and you can't even declare that it was robbed or stolen." Corzine, a former U.S. senator and a governor of New Jersey, has maintained that he "never intended" to break any rules and did not give instructions to misuse customer funds...There has so far been no smoking gun to suggest criminal intent, although federal investigators have been looking at whether any criminal wrongdoing might have taken place.

I HAVE MOVED RELEVANT FACTS TOGETHER AND EDITED OUT STUFF WE ALREADY KNOW...SEE LINK FOR ORIGINAL REPORT

[Demeter]

37. Warning Flags Were Raised in MF Global Transfers

http://dealbook.nytimes.com/2012/03/27/mf-globals-shortfall-no-surprise-some-say/?ref=business

Some MF Global employees were aware of a shortfall in the firm’s customer accounts days before filing for bankruptcy on Oct. 31, according to people involved in the case, a revelation that raises questions about why the firm failed to safeguard client money and whether it withheld information from authorities.

One such indication came from an internal document suggesting that the firm was putting customer funds at risk on Oct. 27, an MF Global executive, Christine Serwinski, is expected to tell a Congressional panel on Wednesday. Specifically, the firm had burned through a buffer of its own money and was using the cash of customers who were trading overseas, according to one of the people involved in the case....While using customer funds was a serious red flag at MF Global, it was not necessarily illegal.

...Other employees in the firm’s back office have also told lawyers that they knew of a potential deficit in customer accounts on Oct. 27, according to the people involved in the case. One employee on Oct. 30 told an outside firm that was reviewing MF Global’s books that the brokerage firm was worried about a shortfall earlier in the week, according to one of the people involved in the conversation. Federal authorities are also investigating whether MF Global was improperly using customer money as early as August, one of the people involved in the case said.

It is unclear whether the firm’s top executives were aware of a potential shortfall.

The details are the first significant indications that MF Global received early warning signs that customer money was in jeopardy at the commodities brokerage firm. MF Global officials have maintained they did not know the shortfall was real until hours before the firm filed for bankruptcy, arguing in part that earlier indications were attributed to accounting errors....Despite the internal alarms, MF Global employees continued to transfer customer money out of the firm. By Monday, Oct. 31, the shortfall ballooned to more than $1 billion. Little has changed since.


MORE DELICIOUS DETAILS AT LINK

[Demeter]

70. MF Global’s Counsel Resisted Giving Assurances on Transfers

http://www.bloomberg.com/news/2012-03-26/mf-global-s-ferber-says-jpmorgan-sought-assurance-on-transfers.html

General Counsel Laurie Ferber twice resisted providing assurances to JPMorgan Chase & Co. (JPM) that the broker was complying with rules to segregate customers’ collateral, saying language in a draft provided by the bank was too broad.

Ferber said JPMorgan was “specifically interested in two transfers” that occurred the morning of Oct. 28. The first was a $200 million transfer from a segregated customer funds account at MF Global Inc., the firm’s brokerage, to a “house” account, followed by a second transfer of $175 million from the house account to a London subsidiary’s account at JPMorgan.

“Although I had no reason to believe that any non- compliant transfers from segregated accounts had occurred or would occur, I did not think that any individual officer or employee should be asked to issue such a broad certificate,” Ferber said in testimony prepared for a March 28 House Financial Services subcommittee hearing. Any employee making such an assurance, she said, would have had to personally handle all the transfers or been able to review all the transactions within the available timeframe.

[xchrom]

24. Arrests, injuries reported as Spanish workers strike

http://edition.cnn.com/2012/03/29/world/europe/spain-strike/index.html?hpt=wo_c2

Madrid (CNN) -- Huge traffic jams snarled central Madrid Thursday, as Spain's first general strike in more than a year kicked off with nine people slightly injured in demonstrations, including police officers, the Interior Ministry said.

Interior Ministry official Cristina Diaz said 58 people had been detained. The cause was not immediately clear.

Dozens of union members picketed outside the Agriculture Ministry before dawn, with dozens of riot police on hand. Picketers heckled and momentarily blocked a car trying to get into the ministry.

Spanish unions are protesting the new conservative government's labor reforms and austerity cuts.

[Demeter]

32. You Have to See this one!

http://cdn.svcs.c2.uclick.com/c2/accfbe805b72012f2fd700163e41dd5b

[Demeter]

34. And HEEEERRREE'S DILBERT!

[Fuddnik]

35. When the going gets crazy, the crazy get going.

crazy: :



Just sayin'.......

It's turning into one of those weeks.

[Demeter]

38. I'm Game. WHERE Are We Going?

[Tansy_Gold]

43. You can come to my house and help me polish rocks. n/t

[Demeter]

44. I'd love to

I could bring my tumbler...haven't used it in 15 years...if it isn't rusted to pieces.

Sigh. It's a nice dream.

[Demeter]

40. World Bank selection a ‘hypocrisy test’

The World Bank presidency has always been in Washington’s gift but the emerging world is pushing for an open contest to choose a successor to Robert Zoellick

Read more >>
http://link.ft.com/r/R5WAEE/PFZH5A/06MUC/JEUGJS/ORAXOZ/GX/t?a1=2012&a2=3&a3=29

WELL, I THINK I CAN SAY WITHOUT FEAR OF CONTRADICTION....EVERYBODY PASSED!

(AND I THINK THEY MEANT TO WRITE "GRIP" NOT "GIFT&quot

[Demeter]

41. BofA chief’s pay jumps to $8.1m

Brian Moynihan’s overall package of $8.1m, up from $1.9m in 2010, was boosted by $6.1m in performance-related stock

Read more >>
http://link.ft.com/r/VKY5JJ/WTK0ON/FDFZE/KQ189T/DWT0J8/1G/t?a1=2012&a2=3&a3=29

ISN'T BOA OWNED BY THE US PEOPLE?

[Demeter]

45. Goldman Ex-Prop Traders Flopping on Their Own

http://www.nakedcapitalism.com/2012/03/goldman-ex-prop-traders-flopping-on-their-own.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

John Whitehead is being proven right. The former Goldman co-chairman took the unheard of step of excoriating Lloyd Blankfein for Goldman’s “shocking” pay levels of 2006. As anyone who has been following Wall Street knows, compensation levels were even higher in 2007, 2009, 2010 and last year. Per an interview with Bloomberg:

“I’m appalled at the salaries,” the retired co-chairman of the securities industry’s most profitable firm said in an interview this week. At Goldman, which paid Chairman and Chief Executive Officer Lloyd Blankfein $54 million last year, compensation levels are “shocking,” Whitehead said. “They’re the leaders in this outrageous increase.”

Whitehead went even further, recommending the unthinkable, that Goldman cut pay:

Whitehead, who left the firm in 1984 and now chairs its charitable foundation, said Goldman should be courageous enough to curb bonuses, even if the effort to return a sense of restraint to Wall Street costs it some valued employees. No securities firm can match the pay available in a good year at the top hedge funds.

“I would take the chance of losing a lot of them and let them see what happens when the hedge fund bubble, as I see it, ends,” Whitehead, 85, said….

The Galtian traders who carry on as if they are solely responsible for their profits are being shown to be more dependent on the franchise, in particular, the concentrated information flows from dealing with lots of customers and counterparties, than they had persuaded themselves and management. Bloomberg today tells us that the prop traders who have decamped from Goldman, convinced that they’d be able to rack up stellar returns, are floundering. It isn’t just that they aren’t racking up huge wins; they are losing money and falling short of hitting the average for their trading strategy. As the report notes:

Ex-Goldman Sachs (GS) Group Inc. traders led by Pierre-Henri Flamand and Morgan Sze raised more than $4.5 billion for their own hedge funds..

So far, none of them has made money for clients.

The two are among at least six traders who have left Goldman Sachs’s biggest proprietary-trading group in the past two years, which the New York-based bank shuttered in response to new U.S. regulations. All, including Daniele Benatoff and Ariel Roskis, trailed this year’s stock market rally after losing money in 2011, investors said…

Flamand, 41, who was the global chief of Goldman Sachs’s principal strategies group before he quit two years ago to start Edoma Capital Partners LLP in London, has lost about 2.4 percent through February since his $1.8 billion hedge fund started in November 2010, according to investors.

Edoma is an event-driven fund, which invests in companies undergoing events such as mergers, spinoffs and bankruptcies. Such funds returned an average 3.9 percent in the same 16-month period…

Sze, 46, who ran Goldman Sachs’s principal strategies team in Asia before briefly replacing Flamand as global head, left the bank in 2010 to start Azentus Capital Management Ltd. in Hong Kong, hiring 13 former Goldman Sachs traders. His event- driven fund lost about 4.8 percent through February since its April 2011 inception, said a person with knowledge of its returns.

Event-driven funds declined 2.4 percent in the same period…

We’ve long been skeptical of the idea that big firm traders are worth their outsized pay packages. Of course, it nevertheless make sense for management to play along, since higher pay levels for traders justify robust pay for everyone senior to them in the hierarchy (yes, a top trader will often be paid more than the top brass, but it’s an anchoring issue. And pay in banks at the senior levels has become more hierarchical than it was in the 1980s and 1990s).

MORE HISTORICAL DETAIL AT LINK

[Demeter]

46. And then there's Corzine, Rubin, and all the other Alumni

They will have to hold reunions in Sing-Sing, if there's any justice in the world.

[InkAddict]

52. OK - sing-sing

[Demeter]

56. i raise: "SING, SING, SING"

[hamerfan]

66. Call: "Cry, Cry, Cry"

[Demeter]

47. Sheila Bair Told Administration Its Housing Programs Would Bomb, Was Rebuffed on Better Solutions

http://www.nakedcapitalism.com/2012/03/sheila-bair-told-administration-its-housing-programs-would-bomb-was-rebuffed-on-better-solutions.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

No wonder Geithner and the other financial regulators complained about Sheila Bair not being a team player. If you want to do what is expedient and you are confronted with someone who cares about fixing the problem, then yes, they aren’t on your side. And bully for them. (OH, IT WAS MORE THAN EXPEDIENCY...IT WAS FRAUD AND COVERUP OF FRAUD AND CONSPIRACY AND BRIBES AND...DEMETER)

Bair, in an interview in the National Journal (hat tip Amanda F), describes how it was clear even before it was launched that the embarrassingly bad HAMP program wouldn’t work (HAMP not only fell well short of its goals but was a cesspool of consumer abuses, with many participants losing their homes after being incorrectly told they had to be delinquent to be considered and to ignore the notices they received as their foreclosures moved ahead). This is a big deal. It’s one thing for outsiders to have said the incentives for servicers were too small to get them to play ball; quite another for a senior banking regulator with experience on that beat to see that as a big problem in advance. From the interview:

NJ: You have been critical of the administration’s efforts to address the housing crisis. What’s wrong with its approach?

Bair: They had academics and theoretical economists designing it who may have been well-intentioned, but didn’t have any practical understanding of the market or servicers or operationally what would make sense. Everything the administration has done has only helped at the margin. The timidity and incrementalism have been real problems. They just don’t want to spend money on it. They are conflicted.

NJ: You warned against the incentives for industry that the administration created around the Home Affordable Modification Program, which provides payments to lenders and investors over time for successfully modified loans. Why?

Bair: You get what you pay for. Trying to do this on the cheap just didn’t work and the complexity of the program, if anything just compounded the problem. The bottom line is the financial incentives were not enough. The program was too complicated and the sense of urgency we saw, and I think that frankly the president saw, I don’t think translated into a program that could be operationalized. They were relying on a voluntary program with weak economic incentives and the big servicers were not putting the resources that were needed into these big servicing operations…

It was just frustrating to us because the FDIC had all these people from the savings and loan [crisis] days. We had a lot of people who understand securitization. We had a lot of people who understand loan restructuring. We deal with troubled assets day in and day out. What we saw from IndyMac mainly really gave us the frontline view. We knew the problems with these servicers and what they were capable of and what they weren’t capable of. We talked to our economists and we had a good analysis and I think we had a program that promised to work. We could never get our hands on it and it was very frustrating to me. We were one voice of many and frequently not the voice they listened to.

The Administration refused to consider bolder ideas because they believed you couldn’t design mods that would get low redefault rates (this after Wilbur Ross was getting good results on a pretty drecky portfolio he bought, and Judge Annette Rizzo in Philadelphia has redefault rates of only 15% after 18 months for borrowers in the program she runs in her courtroom, which is in a lower income area). But the Administration is apparently so convinced that borrowers are deadbeats that it refused to believe that a mortgage mod program could be designed so as to be pretty effective. Again from the interview:

NJ: Tell us about the insurance-redefault subsidy proposal that the FDIC developed which you suggested to Obama’s advisers in late 2008 and early 2009. You said the idea was to encourage servicers to modify delinquent loans by providing insurance against some of the losses if the mortgage later went into foreclosure. Why this approach?

Bair: Economic incentives were skewed because of securitization. The incentives worked in favor of foreclosures, even when loan mods would have preserved greater economic value. Normal market incentives were not working to mitigate losses because those servicing the loans did not own the loans and the investors themselves were conflicted. The rush to foreclosure, which we saw in 2008 and on, was against the public interest — that is what we were trying to fix with our insurance-redefault program. We were trying to counter that by putting some real money on the table.

NJ: You said the FDIC predicted from the beginning of 2009 through mid-2010 that 3.2 million borrowers would qualify for modifications and about one-third would redefault, leaving about 2.1 million permanent modifications over that time period at a cost of about $38 billion. What was the administration’s reaction?

Bair: It was going to cost real money to counter these incentives and they just didn’t want to spend it. At the end of the day that is what the problem has been and to a large extent what the problem still is. They thought it was too expensive. They said we were paying for failure instead of paying for success. They insisted that the redefault rates were going to be high, even though we had data showing them that redefault rates were going to be about a third.

This is the Obama approach to middle class interests in a nutshell. Opt for initiatives that are clearly going to fail over ones that have good odds of success but cost real money. Obama seems to be getting his wish of being a transformative president. Everything he touches turns to dross.

YOU SAID IT, YVES! GO, SISTER!

[Demeter]

48. Foreclosure Fraud 101: A Step-By-Step Look at One of the Most Common Fixes for Securitization Fail

http://www.nakedcapitalism.com/2012/03/foreclosure-fraud-101-a-step-by-step-look-at-one-of-the-most-common-fixes-for-securitization-fail.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

We’ve written from time to time that the train wreck in foreclosure-related procedures is the direct result of widespread, possibly pervasive failure to convey borrower IOUs (notes) to securitization trusts as stipulated in the governing documents (the pooling & servicing agreement). Because key actions had to be taken by dates long past, and the contracts that governed these deals are rigid, there isn’t a permissible way to get notes that weren’t conveyed properly to trusts on time there now. So the fix has been document fabrication and forgeries. We thought we’d provide a specific example for reader edification...One thing that foreclosure defense attorneys have seen as a huge red flag of servicer chicanery is the use of allonges. An allonge is a separate piece of paper used for endorsements that is required by the Uniform Commercial Code to be “affixed” to the note and used for endorsements when there is no more space left on the note for signatures. Allonges were pretty much never seen until the robosigning scandal, since all the space on a note (meaning the back and the margins) can be used for endorsements. But they have a funny way of showing up out of nowhere and solving all the problems with a particular foreclosure. Of course, if an allonge really was “affixed,” it shouldn’t be possible for it to materialize out of nowhere.

So readers can see how this looks up close, I’m attaching this pleading from Lynn Szymoniak (the foreclosure fraud investigator who appeared on 60 Minutes and later received $18 million in settling a qui tam case as part of the national foreclosure settlement). Lynn in still embroiled in an an ongoing foreclosure fight and a major bone of contention is whether the party trying to foreclose has standing.

SEE LINK AT ORIGINAL POST

I suggest you read this filing in full; it’s pretty comprehensible on its own. For newbies to this sort of thing, one thing that is it important to understand is that all the documents pertaining to a specific mortgage (the note, the mortgage, which is the lien on the property, title insurance, etc) go in a single file called a collateral file. It is supposed to be with the trustee or a custodian hired by the trustee, unless it has been sent out for a specific purpose. The documents in a collateral file are put in in a particular order (generally chronological) and are supposed to remain in that order.

Notice also that Szymoniak’s argument about mishandling or worse of her files rests on extensive photographic evidence. Borrowers fighting banks take note.

Szymoniak Objection to Continued Use of Original Clerk Documents 3.27.12

The efforts to tidy up the files are so amateurish that it seems clear that the law firm never expected to be challenged. Crudely renumbering pages? New holes appearing in the magically appearing allonge (after the note miraculously ceased being lost and materialized) when it was in the custody of the law firm to make it look as if it had been stapled to the note. And Lynn adds this by e-mail:

It is even worse in my case because the allonge served on me in December 2009 is different from the allonge in the court file.

The Allonge served in Dec. 2009 had a book and page number as if it had been filed in the county records – but it turned out that had been cut from the top of my mortgage and pasted on the allonge.

That occurred when the first firm – Marshall Watson – was representing Deutsche Bank.

I think this document altering is much more frequent that homeowners and their lawyers realize.

This is the sort of thing the mortgage settlement is trying to cover up. But nothing in the settlement addressed the underlying failure to convey the notes properly to securitization trusts (and a special servicer last week told me she sees serious title problems in whole loans too). So the servicers are guaranteed to continue to engage in fraud in order to foreclose. There assumption now seems to be that with the authorities having cast their lots with the banks, no one will call these abuses out.

[Demeter]

50. Facebook plans May IPO and halts private trading of its shares

Facebook instructed exchanges to stop trading its privately held shares as it prepares for an initial public offering in May. The sale is expected to be the biggest Internet IPO in history. The company is in its pre-IPO "quiet period."

http://www.latimes.com/business/la-fi-facebook-ipo-20120329,0,6601807.story

[Demeter]

51. BRICS to eye joint bank, stock exchange tie-up at summit

http://www.reuters.com/article/2012/03/28/india-brics-idUSL3E8ES5Z020120328



...BRICS leaders held their first summit in 2009 and have sought to increase their global influence to reflect their growing economic clout. But with radically different economies and systems of government, and competing priorities, the countries from four different continents have often struggled to find common cause.

A significant announcement at this week's meeting is likely to be the plan for a joint development bank in the mould of the World Bank. Such an initiative would allow the countries to pool resources for infrastructure improvements and could eventually serve as a vehicle for lending during global financial crises such as the one in Europe, officials say. Brazilian Trade Minister Fernando Pimentel told reporters in Brasilia last week that the countries would sign a deal at the summit to study the creation of the bank. Sudhir Vyas, a senior Indian foreign ministry official, told reporters on Monday that the BRICS would have to determine how the bank would be structured and capitalised. Such an ambitious project would take time, he said.

"We don't set up a bank every ordinary day," he said. THANK GODDESS FOR THAT!

The leaders are also expected to sign agreements allowing their individual development banks to extend credit to other members in their local currencies, a step towards replacing the dollar as the main unit of trade between them.

FIVE NATION STOCK INDEX

Benchmark equity index derivatives allowing investors in one BRICS country to bet on the performance of stock markets in the other four members without currency risk will be cross-listed on their stock exchanges from Friday, the exchanges said earlier this month...


...The exchange rate of China's currency has sparked protests, including from Brazilian manufacturers, for being undervalued. Most member countries also face a slowdown in their economies....

[AnneD]

54. Jusy got a note from Roland

they toured the Catacombs of Paris yesterday. Not more than that, but I am sure they are having a wonderful time. It is night time there so I don't expect more.

[Demeter]

55. JOBS Act benefits financial criminals: Congress declares open season on small investors

http://www.marketwatch.com/story/jobs-act-benefits-financial-criminals-2012-03-29?siteid=rss&rss=1

If, as expected, the Jumpstart Our Business Startups (JOBS) Act that passed through Congress last week becomes law, the big increase in employment most likely will come in the investment scam business. Criminal minds must be working overtime now, because the new legislation — which seemingly every investor- and consumer-protection group has railed against — effectively makes it open season on small investors.

The legislation effectively allows a burgeoning phenomenon known as “crowd funding” to proceed virtually unfettered, with the idea that it will help new and small businesses raise capital effectively at a time when the financial-services industry has been tight about making loans and institutional investors have been rushing for safety.

Crowd funding — sometimes called “crowd financing” — is used to describe a group of people who network and pool money and resources together to support an effort. It really started with charitable causes, disaster relief and political campaigns, then it spread to the arts community (where the idea was to finance, say, a movie or Broadway show), and ultimately to supplying capital for small businesses and start-up companies.

It’s a particularly appealing idea in this day and age of social media, where a cool concept can spread like wildfire and generate immediate excitement...

[Demeter]

57. Chairman Ben S. Bernanke Speaks (March 26)

http://www.federalreserve.gov/newsevents/speech/bernanke20120326a.htm

Who would believe the Fed Reserve had a website?

[Demeter]

59. Republicans are causing a moral crisis in America Katrina vanden Heuvel

http://www.washingtonpost.com/opinions/republicans-are-causing-a-moral-crisis-in-america/2012/03/26/gIQACSM2dS_story.html?tid=pm_opinions_pop

RIGHTEOUS SCREED!

[Demeter]

60. Red States See Massive Public Sector Job Losses

http://www.thenation.com/article/167050/red-states-see-massive-public-sector-job-losses?rel=emailNation

THE FACTS BEHIND THE SCREED

[Demeter]

61. THE CHERRY ON TOP: Bain Gave Staff Way to Swell IRAs by Investing in Deals

http://online.wsj.com/article/SB10001424052970204062704577223682180407266.html?mod=djemalertNEWS

Just after Philippe Wells took a job in 1998 at Bain Capital, then run by Mitt Romney, he recalls hearing an unusual boast from a partner. The man's individual retirement account had jumped tenfold in five years.

Mr. Wells soon learned how this was possible. Bain, like many other private-equity firms, allowed employees to co-invest in its takeover deals. This posed a risk they could lose their whole investment, as they sometimes did. But because of the firm's success during the Romney era, employees ended up able to share in returns for Bain investors that averaged 50% to 80% annually.

Bain added a couple of unusual twists that made co-investing even more rewarding. It allowed employees to co-invest via tax-deferred retirement accounts, and to do so by buying a special share class that cost little but yielded much larger gains than other shares when deals proved successful, according to former employees and internal Bain documents analyzed by The Wall Street Journal.

In one particularly successful deal, Bain increased the equity value of a company it had acquired by 36-fold in 20 months. But some Bain employees saw a 583-fold increase over the same period on IRA money they invested in the special share class of that company. Being in an IRA, the gain could then be rolled over, without initially subtracting taxes, into fresh Bain deals, for years of compounding...

THE REVERSE ROBIN HOOD

[Demeter]

62. I'M SURE IT IS ALL LEGAL...

...Bain's co-investment arrangements, not previously reported in detail, offer a possible explanation of the large size of Mr. Romney's IRA: between $20.7 million and $101.6 million, according to his finance disclosures. It is unusual for such an account, a vehicle devised to help workers save for retirement and one to which contributions are limited, to grow so large....

[Demeter]

63. I'M GONNA HAVE TO SKIP LUNCH

I'm not feeling so well, all of a sudden.

[Fuddnik]

67. Oh shit.

I was down with bronchitis all of last week. Now the wife has that, and something worse. At least she seems worse than I did. She's pretty much done nothing but sleep since she got home from work on Monday. Probably have to take her back to the doctor again tomorrow.

[Demeter]

68. Sorry to hear your wife is ailing. Turn on the Florida Sunshine (liquid, too)

I meant the Romney IRA scam was making me sick..

Here is a man with more money than his entire family, including the cousins 3 times removed, could spend, scamming the tax system with his cozy little IRA deal.

[Demeter]

64. 'Pink Slime' Defense Rises: Ag. Secretary, Farm-State Governors Want Supermarkets to Use Filler

http://online.wsj.com/article/SB10001424052702304177104577310073554930742.html?mod=WSJ_hp_LEFTWhatsNewsCollection

It turns out not everyone hates pink slime.

After being pummeled in the media for weeks, the beef additive made from leftover trimmings is getting support from the U.S. Department of Agriculture and the governors of five states, who argue it has been unfairly labeled and is actually a safe, low-cost way to make ground beef leaner.

"This is an unwarranted, unmerited food scare," said Iowa Gov. Terry Branstad, who, along with Texas Gov. Rick Perry and representatives of several other states, has vowed to consume the product themselves after touring a plant where it is made on Thursday. "If there was some basis in fact to this, other than somebody's clever naming of it, then you'd say 'no you shouldn't stick your neck out on it.'"

The additive, which has long been used as a cheap filler in hamburger meat without anyone knowing or caring, has become the latest example of a product to fall prey to a social-media feeding frenzy after celebrity chef Jamie Oliver detailed how it is made in a TV special. Facebook, Twitter and other social media sites took it from there. Supermarkets and school districts across the country have been shunning it after mounting public pressure. Supporters say taking the product out of the U.S. food chain will lead to higher beef prices and fattier hamburger, since it is very low in fat.

"You effectively need to kill 1.5 million more head of cattle in a year to replace the meat that would go off the market from this unwarranted, unmerited food scare," Gov. Branstad said. "That's why we're pushing back on it."

"We have said all along, and have been saying for weeks, this product is safe," USDA chief Tom Vilsack said in a news conference Wednesday.

The USDA chief is dispatching a top federal food safety official, Under Secretary Elisabeth Hagen, Thursday to a facility that produces the additive in South Sioux City, Neb. Several governors also will attend the event as they pressure supermarkets to return ground beef with the filler to refrigerator cases.

"We're going to consume it," Gov. Branstad said. "We'll do everything we can to set the record straight."

Known in the industry as lean finely textured beef, the additive is made from scraps remaining after cattle are butchered into cuts such as steaks and roasts. Processors remove the fat from trimmings, and in some cases treat the meat for bacteria with ammonium hydroxide. The product is then mixed with ground beef, often making it leaner, according to Beef Products Inc., a major producer. The filler has been used for nearly two decades and the U.S. Department of Agriculture says it is safe. Still, that hasn't kept supermarket chains such as Kroger Co., Safeway Inc. and Supervalu Inc. from phasing out the additive. The decision caught state and federal officials off guard and led Beef Products to suspend production at plants in Amarillo, Texas; Garden City, Kan.; and Waterloo, Iowa. Support for the product, particularly in states where the beef filler is produced, helped persuade Midwest supermarket chain Hy-Vee Inc. to back off its original plan to completely phase it out. The chain will now offer ground beef with and without the filler. The decision came after Hy-Vee, which has 235 retail stores, received hundreds of calls both for and against the filler, said Ruth Comer, a spokeswoman for the supermarket chain.

Those who have oppose the additive say consumers have already decided on the product.

"This is so clearly a movement that's been driven by consumers," said Willy Ritch, a spokesman for U.S. Rep. Chellie Pingree (D., Maine), who is pushing for a ban of the filler in school lunches.

...