Weekend Economists in "the Happiest Place on Earth", October 23-25, 2009

[Demeter]

Yep. It's Friday, and we are going to DisneyLand AND DisneyWorld!

How lucky can Market Watchers get?

For purposes of not straining the brain and my rusty technological abilities, please just assume that all those registered trademarks and copyrights are in their appropriate positions...

Well, it's been a wild week here in Econoland. A lot of dirty laundry has been hung out to dry, but no dirty crooks, yet. The PPT was called back Thursday to pump it up so Friday's dump wouldn't be too catastrophic. Somebody must have some options to unload this month, that's the only reason for the latest bubbling action that makes any sense.

So, what do we know about Disneyland, besides it being the Happiest Place on Earth? (I do take issue with that designation, I have to think GS or maybe Rahm Emmanuel's office are more worthy of the designation, but I'm a cynic, dyed in the wool.)

DisneyLand and its younger sibling, DisneyWorld, were the brainchildren of one Walter Elias Disney.

"Walter Elias "Walt" Disney (December 5, 1901 � December 15, 1966) was an American film producer, director, screenwriter, voice actor, animator, entrepreneur, entertainer, international icon and philanthropist. Disney is famous for his influence in the field of entertainment during the twentieth century. As the co-founder (with his brother Roy O. Disney) of Walt Disney Productions, Disney became one of the best-known motion picture producers in the world. The corporation he co-founded, now known as The Walt Disney Company, today has annual revenues of approximately U.S. $35 billion.

Disney is particularly noted for being a film producer and a popular showman, as well as an innovator in animation and theme park design. He and his staff created a number of the world's most famous fictional characters including Mickey Mouse. He received fifty-nine Academy Award nominations and won twenty-six Oscars, including a record four in one year,<2> giving him more awards and nominations than any other individual. He also won seven Emmy Awards. He is the namesake for Disneyland and Walt Disney World Resort theme parks in the United States, Japan, France, and China.

Disney died of lung cancer on December 15, 1966, a few years prior to the opening of his Walt Disney World Resort dream project in Florida."

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

And even though tourist business in general may be in decline, I don't worry about the Disney corporation. Long after the United States is a legend or a myth, DisneyLand and DisneyWorld will still be there, entertaining corporate clones from all over the world.

[Demeter]

1. And in Honor of Ole Walt, We Have 3 Bank Failures in Florida Alone, Plus More!

Flagship National Bank, Bradenton, Florida, 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 First Federal Bank of Florida, Lake City, Florida, to assume all of the deposits of Flagship National Bank...

As of August 31, 2009, Flagship National Bank had total assets of $190 million and total deposits of approximately $175 million. First Federal Bank of Florida did not pay the FDIC a premium for the deposits of Flagship National Bank. In addition to assuming all of the deposits of the failed bank, First Federal Bank of Florida agreed to purchase essentially all of the assets.

The FDIC and First Federal Bank of Florida entered into a loss-share transaction on approximately $130 million of Flagship National Bank's assets. First Federal Bank of Florida will share in the losses on the asset pools covered under the loss-share agreement...The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $59 million. First Federal Bank of Florida's acquisition of all the deposits was the "least costly" resolution for the FDIC's DIF compared to alternatives. Flagship National Bank is the 103rd FDIC-insured institution to fail in the Nation this year, and the ninth in Florida...

Hillcrest Bank Florida, Naples, Florida, was closed today by the Florida Office of Financial Regulation, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Stonegate Bank, Fort Lauderdale, Florida, to assume all of the deposits of Hillcrest Bank Florida...

As of October 1, 2009 , Hillcrest Bank Florida had total assets of $83 million and total deposits of approximately $84 million. Stonegate Bank will pay the FDIC a premium of 0.50 percent to assume all of the deposits of Hillcrest Bank Florida. In addition to assuming all of the deposits of the failed bank, Stonegate Bank agreed to purchase $28 million of the failed bank's assets. The FDIC will retain the remaining assets for later disposition...The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $45 million. Stonegate Bank's acquisition of all the deposits was the "least costly" resolution for the FDIC's DIF compared to alternatives. Hillcrest Bank Florida is the 102nd FDIC-insured institution to fail in the Nation this year, and the eighth in Florida...

Partners Bank, Naples, Florida, was closed today by the Office of Thrift Supervision, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Stonegate Bank, Fort Lauderdale, Florida, to assume all of the deposits of PartnersBank...

As of September 30, 2009, Partners Bank had total assets of $65.5 million and total deposits of approximately $64.9 million. Stonegate Bank did not pay the FDIC a premium for the deposits of Partners Bank. In addition to assuming all of the deposits of the failed bank, Stonegate Bank agreed to purchase essentially all of the assets...The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $28.6 million. Stonegate Bank's acquisition of all the deposits was the "least costly" resolution for the FDIC's DIF compared to alternatives. Partners Bank is the 100th FDIC-insured institution to fail in the Nation this year, and the seventh in Florida. The last FDIC-insured institution closed in the state was Community National Bank of Sarasota County, Venice, on August 7, 2009.

So Naples, Florida, has lost 2 banks, and Stonegate Bank has gained a strong foothold in Naples....to round out the first batch, a Georgia bank, because it just doesn't feel like Friday without a Georgia bank failure...


American United Bank, Lawrenceville, Georgia, was closed today by the Georgia Department of Banking & Finance, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Ameris Bank, Moultrie, Georgia, to assume all of the deposits of American United Bank...

As of August 11, 2009, American United Bank had total assets of $111 million and total deposits of approximately $101 million. Ameris Bank will pay the FDIC a premium of 1.02 percent to assume all of the deposits of American United Bank. In addition to assuming all of the deposits of the failed bank, Ameris Bank agreed to purchase essentially all of the assets...The FDIC and Ameris Bank entered into a loss-share transaction on approximately $92 million of American United Bank's assets. Ameris Bank will share in the losses on the asset pools covered under the loss-share agreement...The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $44 million. Ameris Bank's acquisition of all the deposits was the "least costly" resolution for the FDIC's DIF compared to alternatives. American United Bank is the 101st FDIC-insured institution to fail in the Nation this year, and the twentieth in Georgia. The last FDIC-insured institution closed in the state was Georgian Bank, Atlanta, on September 25, 2009.

So, that's $176.6M almost, practically peanuts! The night is still young, so check back in this location for more banker's follies to come!

[Demeter]

12. Two More Banks in Central Time Zone--Thanks Burf!

Riverview Community Bank, Otsego, 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 Central Bank, Stillwater, Minnesota, to assume all of the deposits of Riverview Community Bank...

As of August 31, 2009, Riverview Community Bank had total assets of $108 million and total deposits of approximately $80 million. Central Bank did not pay the FDIC a premium to assume all of the deposits of Riverview Community Bank. In addition to assuming all of the deposits of the failed bank, Central Bank agreed to purchase essentially all of the assets.

The FDIC and Central Bank entered into a loss-share transaction on approximately $75 million of Riverview Community Bank's assets. Central Bank will share in the losses on the assets covered under the loss-share agreement...The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $20 million. Central Bank's acquisition of all the deposits was the "least costly" resolution for the FDIC's DIF compared to alternatives. Riverview Community Bank is the 105th FDIC-insured institution to fail in the Nation this year, and the fifth in Minnesota. The last FDIC-insured institution closed in the state was Jennings State Bank, Spring Grove, on October 2, 2009.


Bank of Elmwood, Racine, Wisconsin, was closed today by the Wisconsin Department of Financial Institutions, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Tri City National Bank, Oak Creek, Wisconsin, to assume all of the deposits of Bank of Elmwood...

As of September 30, 2009, Bank of Elmwood had total assets of $327.4 million and total deposits of approximately $273.2 million. Tri City National Bank did not pay the FDIC a premium for the deposits of Bank of Elmwood. In addition to assuming all of the deposits of the failed bank, Tri City National Bank agreed to purchase essentially all of the assets...The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $101.1 million. Tri City National Bank's acquisition of all the deposits was the "least costly" resolution for the FDIC's DIF compared to alternatives. Bank of Elmwood is the 104th FDIC-insured institution to fail in the Nation this year, and the first in Wisconsin. The last FDIC-insured institution closed in the state was The First National Bank of Blanchardville, Blanchardville, on May 9, 2003.

That brings our running total to .... $297.7M and we have quite a few timezones left to go!

[Demeter]

35. Illinois Bank Brings Us Failure Number Seven

First Dupage Bank, Westmont, Illinois, was closed today by the Illinois Department of Financial & Professional Regulation � Division of Banking, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with First Midwest Bank, Itasca, Illinois, to assume all of the deposits of First Dupage Bank...

As of July 31, 2009, First Dupage Bank had total assets of $279 million and total deposits of approximately $254 million. First Midwest Bank will pay the FDIC a premium of 0.75 percent to assume all of the deposits of First Dupage Bank. In addition to assuming all of the deposits of the failed bank, First Midwest Bank agreed to purchase essentially all of the assets.

The FDIC and First Midwest Bank entered into a loss-share transaction on approximately $247 million of First Dupage Bank's assets. First Midwest Bank will share in the losses on the asset pools covered under the loss-share agreement...The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $59 million. First Midwest Bank's acquisition of all the deposits was the "least costly" resolution for the FDIC's DIF compared to alternatives. First Dupage Bank is the 106th FDIC-insured institution to fail in the Nation this year, and the seventeenth in Illinois. The last FDIC-insured institution closed in the state was Corus Bank, Chicago, on September 11, 2009.

That brings us to $356.7M at 9 PM EDT.

[AnneD]

64. We have a winner in the FDIC FLAME OUT CONTEST.....

NC4BO accurately predicted this weekend as the date that the number of failed banks would top 100. So it is the hobo special pizza. Beans and rice and some sliced tube steak (and a touch of cheese to bind it to the crust) for everyone).

Now for a little dinner music to go with it.......


http://www.youtube.com/watch?v=2CW0hGhINjc&feature=related

[Demeter]

66. Congrats to NC4BO and Thank You AnneD!

Eat it in good health!

[Zenlitened]

2. Electrolux Closing 2 Iowa Plants, 850 Jobs Lost

By THE ASSOCIATED PRESS
Published: October 23, 2009

Filed at 6:01 p.m. ET

DES MOINES, Iowa (AP) -- Appliance maker Electrolux announced Friday that it would close two Iowa plants by spring 2011, putting 850 people out of work as operations are moved to Mexico.

Electrolux Major Appliances North America said it would close the Webster City plant by early 2011 and a smaller facility in Jefferson by late 2010.

The Webster City plant employs about 880 people and produces top-loading washing machines. About 50 people work in Jefferson, a plant about 50 miles southwest from Webster City that builds components for the washing machines.

The company says about 75 jobs will remain at a technology center in Iowa.

More:
http://www.nytimes.com/aponline/2009/10/23/business/AP-IA-Iowa-Plant-Closings-Electrolux.html

[Demeter]

6. That Giant Sucking Sound

[Zenlitened]

10. No, no, no... you don't understand...

...
The company says about 75 jobs will remain at a technology center in Iowa.

See, those are The Knowledge Workers in our shiny, new Knowledge Economy.

I'm sure the folks who used to bolt, rivet and weld things together are all re-training as software and systems engineers even as we speak.

Simple as that!










Here it is --> :sarcasm:

(We need a sarcasm-tinged-with-sadness smiley.) :( :( :(

[Dr.Phool]

18. How many of those 75 will be H1-b visas?

[DemReadingDU]

3. First rec!

:woohoo:

I'll be back!

Edit: went back to check, but two weeks in a row
:)

[burf]

7. Second!

Six banks down in the early rounds of FDIC Friday!

On Friday, October 23, 2009, Riverview Community Bank, Otsego, MN was closed by the Minnesota Department of Commerce, and the Federal Deposit Insurance Corporation (FDIC) was named Receiver. No advance notice is given to the public when a financial institution is closed

On Friday, October 23, 2009, Bank of Elmwood, Racine, WI was closed by the State of Wisconsin Department of Financial Institutions, and the Federal Deposit Insurance Corporation (FDIC) was named Receiver. No advance notice is given to the public when a financial institution is closed.

On Friday, October 23, 2009, Flagship National Bank, Bradenton, FL was closed by the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation (FDIC) was named Receiver. No advance notice is given to the public when a financial institution is closed.

On Friday, October 23, 2009, Hillcrest Bank Florida, Naples, FL was closed by the Florida Office of Financial Regulation, and the Federal Deposit Insurance Corporation (FDIC) was named Receiver. No advance notice is given to the public when a financial institution is closed.

On Friday, October 23, 2009, American United Bank, Lawrenceville, GA, was closed by the Georgia Department of Banking and Finance, and the Federal Deposit Insurance Corporation (FDIC) was named Receiver. No advance notice is given to the public when a financial institution is closed.

On Friday, October 23, 2009, Partners Bank, Naples, FL was closed by the Office of Thrift Supervision, and the Federal Deposit Insurance Corporation (FDIC) was named Receiver. No advance notice is given to the public when a financial institution is closed.

http://www.fdic.gov/

Sheila must have gotten an increase in her allowance!

Good evening, Demeter! Thanks for the WEE.

[Demeter]

9. Top of the Evening To You!

Things are going too fast tonight! Of course, if I weren't typing in the dark...It's because I hate modern lighting...

[DemReadingDU]

11. A Message from FDIC Chairman Sheila C. Bair

FDIC Chairman Sheila C. Bair talks to consumers about deposit insurance and the state of the FDIC.
http://www.youtube.com/watch?v=7BxiEJcOoo0


Shelia says your money is safe!

[Zenlitened]

13. Safe as houses, eh?

:yoiks:

[Demeter]

15. We Need to Send Zenlitened a First Class Ticket to Disneyworld, STAT!

Or I will start sobbing again, and it's too soon since the last episode.

[Zenlitened]

17. No way! Walt was a Socialist Commie Nazi er somethin'

...Walt felt that EPCOT should be grounded in a concern "with the public need." To serve this need EPCOT would be "an experimental city that would incorporate the best ideas of industry, government, and academia worldwide, a city that caters to the people as a service function. It will be a planned, controlled community, a showcase for American industry and research, schools, cultural and educational opportunities. In EPCOT there will be no slum areas because we won't let them develop. There will be no landowners and therefore no voting control. People will rent houses instead of buying them, and at modest rentals. There will be no retirees; everyone must be employed." He concluded that "people still want to live like human beings."

http://xroads.virginia.edu/~MA98/hogan/celebration/epcot.htm

People living like human beings? Pffft. Are there no tent cities? Are there no cardboard camps under highway overpasses?

Oh, wait. There are. And more of them every day.

[Demeter]

23. Walt Was Your Basic Fascist Corporatist

ask anybody working at the Happiest Place on Earth today--makes the Puritans look like hedonists.

[truedelphi]

81. Walking past a bank in Marin County over the weekend -

Sign on window stated "We have doubled the amount of FDIC insurance on your accounts!"

So it is all okay, everyone. Relax. Buy a Mickey Mouse watch or two and a couple of tickets for some great rides.

Life has never been better in Fantasy Land!

[Demeter]

4. And Next, the Funnies Section

in which we endeavor to find something to laugh about:

Dogbert Does Charity

http://dilbert.com/dyn_file/str_strip/71291/gif/strip.print/

http://dilbert.com/dyn_file/str_strip/71292/gif/strip.print/


The Usual Herd of Oliphants:

http://imgsrv.gocomics.com/dim/?fh=f8d0663a15568d860f7c679bcb43b64e


http://imgsrv.gocomics.com/dim/?fh=015675045857585e30bfe5a88ad1556b&w=750.0

[Demeter]

16. Mark Fiore Tackles Goldman Sachs

http://www.markfiore.com/political/balloon-bank

[Demeter]

36. Shamelessly Stolen

[Demeter]

70. You Have To See Saturday's Doonesbury!

http://ic1.apps.yahooapis.com/v1/cache/public/M0qGDEGyoa7ZN2kk6.GMwgJfpRxuA5RnClRfg_74gfIHNwkWwVVB0uq0i7ZJs1IyKTo8vBfMNdIIhRVmSSqkOilKp4C1Bzdp

[Zenlitened]

5. The Number of Job Hunters 65 or Older Skyrockets

By STEVEN GREENHOUSE, New York Times
Published: October 23, 2009

It is well known that during the nation�s gale-force recession, many older Americans who dreamed of retirement continued to work, often because their 401(k)�s had plunged in value.

In fact, there are more Americans 65 and older in the job market today than at any time in history, 6.6 million, compared with 4.1 million in 2001.

Less well known, though, is that nearly half a million workers 65 and older want to work but cannot find a job � more than five times the level early this decade and this group�s highest unemployment level since the Great Depression.

The situation is made more dire because of numerous recent trends: many people over 65 have lost their jobs as seniority protections have weakened, and like most other Americans, a higher percentage of them took on debt than in previous generations.

The expectation once was to pay off your 30-year mortgage before you retired, or come close. Instead, the level of indebtedness among older Americans has risen faster than in any other age group, partly because so many obtained second mortgages to take money out of their homes.

More:
http://www.nytimes.com/2009/10/24/business/economy/24older.html?ref=business

[Demeter]

8. Ancestral Origins and The Childhood Years

Walter Elias Disney was born to Elias Disney, an Irish-Canadian, and Flora Call Disney, of German-American descent, in Chicago's Hermosa community area at 2156 N. Tripp Ave.<3><4> Walt Disney's ancestors had emigrated from Gowran, County Kilkenny in Ireland. Arundel Elias Disney, great-grandfather of Walt Disney, was born in Kilkenny, Ireland in 1801 and was a descendant of Hughes and his son Robert d'Isigny, originally of France but who travelled to England with William the Conqueror in 1066.<5>. The d'Isigny name became Anglicised as Disney and the family settled in the village now known as Norton Disney, south of the city of Lincoln, in the county of Lincolnshire.

His father Elias Disney moved from Huron County, Ontario to the United States in 1878, seeking first for gold in California but finally farming with his parents near Ellis, Kansas until 1884. He worked for Union Pacific Railroad and married Flora Call on January 1, 1888 in Acron, Florida. The family moved to Chicago, Illinois in 1890,<6> where his brother Robert lived.<6> For most of his early life, Robert helped Elias financially.<6> In 1906, when Walt was four, Elias and his family moved to a farm in Marceline, Missouri,<7> where his brother Roy had recently purchased farmland.<7> While in Marceline, Disney developed his love for drawing.<8> One of their neighbors, a retired doctor named "Doc" Sherwood, paid him to draw pictures of Sherwood's horse, Rupert.<8> He also developed his love for trains in Marceline, which owed its existence to the Atchison, Topeka and Santa Fe Railway which ran through town. Walt would put his ear to the tracks in anticipation of the coming train.<4> Then he would look for his uncle, engineer Michael Martin, running the train.

The Disneys remained in Marceline for four years,<9> before moving to Kansas City in 1911.<10> There, Walt and his sister Ruth attended the Benton Grammar School where he met Walter Pfeiffer. The Pfeiffers were theatre aficionados, and introduced Walt to the world of vaudeville and motion pictures. Soon, Walt was spending more time at the Pfeiffers' than at home.<11> During this time he attended Saturday courses as a child at the Kansas City Art Institute <12>

[Hugin]

14. Well, it looks like they didn't want to hold stock over the weekend...

Dipped below 10,000.

:/



(I only said this to bug UIA! :) )

[Demeter]

19. US jobless claims climb more than projected

http://www.ft.com/cms/s/0/1af4f488-bf0b-11de-8034-00144feab49a.html

The number of US workers claiming jobless benefits for the first time climbed last week, as the labour market continues to signal that its recovery lags the overall economy.

New jobless claims rose by 11,000 to 531,000, the labour department said on Thursday. The figures were worse than economists anticipated, although the less volatile four-week average showed that new claims have been waning in the last month.

Continuing unemployment claims declined by 98,000 to 5.92m in the week ending October 2. Many Americans have seen their jobless benefits expire and are waiting for government legislation that could extend payments.

�As such the job rot looks to be continuing at a disconcertingly strong pace for the early stages of recovery,� said Alan Ruskin, a strategist at RBS Greenwich Capital.

According to Mr Ruskin, new jobless claims will need to fall to a weekly rate of 450,000 before the US economy begins to create jobs. Last month the unemployment rate reached 9.8 per cent.

Only California saw a big drop-off in new claims, while Florida, New York, Wisconsin and Indiana reported more job cuts in industries such as construction, manufacturing and the car sector. On Tuesday, Sun Microsystems announced that it would slash 3,000 jobs during the next year, as customers have delayed purchases of new equipment.

Oregon, Nevada and Pennsylvania have the highest insured unemployment rates and many states have already moved to extend benefits. The labour department said earlier this week that unemployment rates rose in 23 US states last month.

�Looking ahead, the pace of declines in claims and the message this sends regarding payroll employment will be critical,� said Joshua Shapiro, chief US economist at MFR. �We expect the improvement to remain a very slow one, and therefore for the household sector to be contending with a weak labour market for quite some time.�

[Demeter]

20. the Banking SubThread--If It Ka-Chings, It Goes Here

Investment banking boosts Credit Suisse

http://www.ft.com/cms/s/0/c3ac6270-bed2-11de-8034-00144feab49a.html

Credit Suisse reported bumper third-quarter earnings on Thursday, providing evidence of the sharp recovery in profitability for those banks least hurt by the credit crisis.

The group�s earnings followed strong third-quarter results from Goldman Sachs , JPMorgan Chase and Deutsche Bank that were boosted by reduced competition and buoyant conditions in financial markets.

�There�s no question market conditions in the third quarter were pretty good,� Brady Dougan, chief executive, said. �We benefited from having a more stable environment. But our hope is that this is fairly durable.�


Russia drops $22.5bn BoNY Mellon lawsuit

http://www.ft.com/cms/s/0/b3a56732-beeb-11de-8034-00144feab49a.html

ussia dropped a $22.5bn lawsuit against the Bank of New York Mellon on Thursday after agreeing an out-of-court settlement with the company in a case related to a decade-old money laundering scandal.

A judge in Moscow�s arbitration court said Russia�s federal customs service, the plaintiff, had ordered the case to be closed, Interfax reported.

The case stems from a scandal 10 years ago when two Russian �migr�s, one a vice-president of the Bank of New York, admitted helping to wire $7bn out of Russia illegally through accounts at the bank. The bank was never charged with wrongdoing.

Russia�s customs service resurrected the case in 2008 invoking Rico, a US anti-racketeering law, in Moscow�s arbitration court to claim billions of dollars of damages for unpaid taxes on the money.

The case, seen as a test of whether Rico laws are applicable outside the US, has thrown a spotlight on Russian president Dmitry Medvedev�s pledge to eliminate what he calls �legal nihilism� in Russia.

BNY Mellon has agreed without admission of liability to pay $14m to cover the trial costs � the same amount paid by the bank to the US in 2005 under a non-prosecution case related to the money laundering scandal. It has also agreed to open a trade finance line with Russian banks renew-able every 180 days for an aggregate amount of $4bn over five years.

Matthew Biben, executive vice-president and deputy general counsel of BNY Mellon, said, �Now the impediment of the case is behind us we look forward to expanding relations with our existing customers.�

Throughout its passage through the courts, the lawsuit has been repeatedly adjourned raising concern among investors about the rule of law in Russia.

Signs that the dispute was drawing to a close came last month when Alexei Kudrin, the Russian finance minister, told parliament the customs service had been unable to gather sufficient evidence to support its case.

Russia�s customs service and BNY Mellon issued a joint statement on Thursday saying they were pleased the dispute was resolved.

Andrey Belyaninov, the head of the Russian customs service, said the case was �an example of the increased vigilance of the Russian Federation in international financial markets�.

Mr Biben said the settlement was �a commonsense resolution that benefits our company, our employees, shareholders and customers.�

[Demeter]

27. The two-stage de-risking of banks By Mohamed El-Erian

The first stage of de-risking of the banking sector was led by the markets. Fueled by massive concern about the banks� lax risk management practices and related over-exposure to toxic assets, the process was vicious and indiscriminate. With the market-induced contraction of the banking sector over-shooting, the highly disruptive implications for employment and economic activity forced policymakers into a �WIT� mindset � doing �whatever it takes� to stabilise the sector.

The massive policy reaction succeeded in stabilising the banking system. And while the banks are still not lending in any meaningful manner to the real economy � an issue that will become politically even more problematic as unemployment continues to rise in the industrial countries (particularly, in the US and UK) � most have used the extraordinary policy support to strengthen their balance sheets and, also, take on risk.

The question is whether this is the end of the story. It is not.

There is another stage of de-risking in banks� future. This second stage will be driven by the regulatory authorities, rather than the markets. Ironically, the success of some banks in restoring huge profitability will make this phase come earlier and be more consequential for banks.

What will this de-risking look like? Widespread consensus is forming around five issues.

First, banks must be subject to higher capital requirements, with capital being defined more robustly.

Second, they should be induced to think of capital counter-cyclically, increasing it in good times so that they have a meaningful cushion for the bad times.

Third, the prudential regulation of banks should be supplemented by better consumer protection.

Fourth, �large� institutions should be subject to an additional layer of prudential regulations given their potential to contaminate the economy as a whole.

Fifth, better resolution mechanisms are needed for those firms that stumble badly.

There is a sixth issue, which is much more controversial. Should regulatory authorities reverse the multi-year trend towards combining commercial and investment banking activities in single institutions? At the heart of this issue is whether to restrict the ability of banks to use government-guaranteed deposits to fund investment banking activities.

Mervyn King, the governor of the Bank of England, is pushing for such a reversal. In doing so, he is reacting to the view that, to use his colourful language adapted from Churchill, �Never in the field of financial endeavour has so much money been owed by so few to so many. And, one might add, so far with little real reform.�

Mr King�s calls will face resistance. Most European countries will be reluctant to abandon the universal banking model, arguing that the crisis was primarily an Anglo-Saxon creation. The most consequential battlefield will be in the US, where the opposing camps are already digging their heels.

Regardless of what happens on this sixth issue, it is clear that the banking system will soon be taking an important step towards the �utility� end of the institutional spectrum � a likelihood that is yet to be internalised, both in market valuations and in consensus expectations regarding the medium-term prospectus for growth in the US and UK, in particular.

Buoyed by the recovery in banking sector profitability, markets are pricing a return to the previous paradigm for the banking system � call it the �old normal�. Yet the likelihood is for a �new normal� in which more dominant utility-like functions translate into an average return on equity (ROE) in the low teens, as opposed to the 20s.

Similarly, consensus growth projections for the US, which have been heading steadily towards 4 per cent for 2010, underestimate the extent to which the economy�s credit factories are undergoing a long-lasting contraction.

Banks are in no position to assume the critical hand-off from government stimulus in order to maintain in 2010 the rates of growth that are materialising in the second half of 2009. With credit availability lacking, consumers will be hard pressed to sustain high spending in the face of rising unemployment and weakened retirement nest eggs.

All this speaks to a critical issue that should remain front and centre on the radar screens of both policymakers and markets. The panic engendered by the crisis may be behind us, but its longer-term consequences are yet to play out fully. These � be they economic, political or institutional � will become apparent in the period ahead.

Any attempt to dismiss this process as a �flesh wound� ignores the fact that, unlike anything the world has experienced in the post-war period, the 2008 crisis struck at the core of the global system and not at the periphery.

The writer is chief executive and co-chief investment officer of Pimco. His book �When Markets Collide� won the FT/Goldman Sachs award for Business Book of the Year in 2008.

http://www.ft.com/cms/s/0/74eb1a16-bf02-11de-8034-00144feab49a.html

[Demeter]

43. Bernanke Urges Overhaul of Bank Regulatory System

http://www.nytimes.com/2009/10/24/business/economy/24fed.html?_r=2&hpw

The Federal Reserve chairman, Ben S. Bernanke, prodded Congress on Friday to enact legislation overhauling the nation�s financial regulatory system to prevent a repeat of the banking and credit debacles that thrust the country into crisis.

�With the financial turmoil abating, now is the time for policy makers to take action to reduce the probability and severity of any future crises,� Mr. Bernanke said in remarks to a Fed conference in Chatham, Mass.

For its part, the Fed has been taking steps to strengthen oversight of banks and sharpen consumer protections. On Thursday it announced a sweeping proposal to police the pay policies of banks to make sure they did not encourage top executives and other employees to take reckless gambles.

But Congress needs to step in, close regulatory gaps and make other changes that only lawmakers have the power to enact, Mr. Bernanke said.

At the top of Mr. Bernanke�s list is a mechanism � along the lines of what the Federal Deposit Insurance Corporation does with troubled banks � to safely wind down big financial firms whose failure could endanger the entire financial system.

The costs for such a mechanism should be paid for through an assessment on the financial industry, not by taxpayers, he said.

Moreover, Congress needs to set up better systems for regulators to monitor risks lurking in the financial system, he said.

The Obama administration has proposed such action as part of its revamp of financial rules. Its plan would expand the Fed�s powers over big financial institutions but reduce it over consumers. Congress, however, is leery of expanding the Fed�s reach because it and other regulators failed to crack down on problems that led to the crisis.

A House panel on Thursday approved a piece of the Obama plan, the creation of a federal agency devoted to protecting consumers from predatory lending, abusive overdraft fees and unfair rate increases.

Mr. Bernanke also said the Fed was working on rules governing overdraft protection, reverse mortgages and gift cards.

[Demeter]

29. Brussels set to pass Northern Rock plan

http://www.ft.com/cms/s/0/7a16e9d2-bf4f-11de-a696-00144feab49a.html

The European Commission is next week expected to approve a radical restructuring of Northern Rock, paving the way for the break-up and sale of the nationalised bank.

Northern Rock�s proposal to split itself into two � in effect creating a �good� and a �bad� bank � was submitted to Brussels for state aid approval this year.

The Commission is expected to authorise the plan next Wednesday when it holds its final formal session before its five-year term expires at the end of the month.

The restructuring of Northern Rock will ultimately lead to the bulk of its retail deposits and low-risk mortgage loans being separated into a good bank and sold off. Its other mortgage assets, including those held in its Granite securitisation programme, will be placed into a separate asset company that will remain under government control.

Alistair Darling, chancellor, hopes to separate Northern Rock towards the end of the year as a prelude to a sale of the good part of the bank in 2010...

[Demeter]

30. Goldman Sachs�s Griffiths Says Inequality Helps All

http://www.bloomberg.com/apps/news?pid=20601087&sid=a8upOpH5Q3Tw

A Goldman Sachs International adviser defended compensation in the finance industry as his company plans a near-record year for pay, saying the spending will help boost the economy.

�We have to tolerate the inequality as a way to achieve greater prosperity and opportunity for all,� Brian Griffiths, who was a special adviser to former British Prime Minister Margaret Thatcher, said yesterday at a panel discussion at St. Paul�s Cathedral in London. The panel�s discussion topic was, �What is the place of morality in the marketplace?�

Goldman Sachs Group Inc., based in New York, set aside $16.7 billion for compensation and benefits in the first nine months of 2009, up 46 percent from a year earlier and enough to pay each worker $527,192 for the period. The amount set aside this year is just shy of the all-time high $16.9 billion allocated in the first three quarters of 2007. Goldman Sachs spokesman Michael DuVally in New York declined to comment.

Banks in the U.K. and U.S. have been pressured by lawmakers to contain compensation after bailouts of financial firms by national governments. Goldman Sachs repaid $10 billion plus dividends to the U.S. government this year, and resumed allocating billions of dollars for year-end bonuses after slashing compensation last year when the firm reported its first quarterly loss.

Griffiths, 67, called on bankers to boost their charitable giving to help improve the financial industry�s reputation following a worldwide crisis.

�Much Is Expected�

�To whom much is given much is expected,� he said. �There is a sense that if you make money you are expected to give.�

Griffiths said that banks should hire and promote people based on criteria beyond how much money they could or did make.

�It was the failed moral compass of bankers which was primarily responsible for why we had this crisis,� he said. �The question is: what can we do in the culture of institutions to make them behave in a more socially responsible way?�

Financial Services Authority Chairman Adair Turner, speaking at the same event, repeated his call for a global tax on financial transactions, a so-called Tobin Tax. He said in August a tax could redistribute bank profits to the world�s poor and to causes like fighting climate change.

�The role of regulation is to bring a concordance between private actions and beneficial results,� Turner, 54, said yesterday. Central bankers, lawmakers and regulators bear the greatest blame for the seeds of the financial crisis, not traders or their senior executives, he said.

Tobin Tax

James Tobin proposed a tax in 1971 on currency trading to deter speculation in the wake of the collapse of the Bretton Woods system of pegging currencies. Tobin, who died in 2002, won the 1981 Nobel Prize for his work on financial markets.

Turner told U.K. banks last month that they should place �social usefulness� above profit. Prime Minister Gordon Brown and the leader of the Anglican Church, Archbishop of Canterbury Rowan Williams, have previously warned against banks returning to �business as usual� amid concerns that momentum for policy changes in the wake of the financial crisis will subside.

Turner and Griffiths spoke at London�s 300-year-old landmark church where Winston Churchill�s funeral was held. The event was organized by the St Paul�s Institute, a group that �seeks to recapture the cathedral�s ancient role as a center of education or public debate.�

[Demeter]

31. State Street Sued: Jerry Brown, California AG, Sues Bank For "Unconscionable Fraud"

http://www.huffingtonpost.com/2009/10/20/post_268_n_327261.html

Citing "unconscionable fraud," California Attorney General Jerry Brown announced a major lawsuit today against State Street Bank and Trust. Brown seeks to recover more than $200 million from the Boston-based bank.

According to the complaint, State Street overcharged California's largest pension funds, CalPERS and CalSTRS, for the execution of foreign currency trades. From the press release:

"Over a period of eight years, State Street bankers committed unconscionable fraud by misappropriating millions of dollars that rightfully belonged to California's public pension funds," Brown said. "This is just the latest example of how clever financial traders violate laws and rip off the public trust."

The charges appear to involve alleged shenanigans with the time-stamping of foreign currency trades.

Read more in the press release:

SACRAMENTO - Seeking to recover more than $200 million in illegal overcharges and penalties, Attorney General Edmund G. Brown Jr. today announced that he has filed suit against State Street Bank and Trust -- one of the world's leading providers of financial services to institutional investors -- for committing "unconscionable fraud" against California's two largest pension funds -- CalPERS and CalSTRS.

The suit, which was unsealed today by a Sacramento Superior Court judge, contends that Boston-based State Street illegally overcharged CalPERS and CalSTRS for the costs of executing foreign currency trades since 2001.

"Over a period of eight years, State Street bankers committed unconscionable fraud by misappropriating millions of dollars that rightfully belonged to California's public pension funds," Brown said. "This is just the latest example of how clever financial traders violate laws and rip off the public trust."

The case was originally filed under seal by whistleblowers - "Associates Against FX Insider Trading," who alleged that State Street added a secret and substantial mark-up to the price of interbank foreign currency trades. The interbank rate is the price at which major banks buy and sell foreign currency.

Subsequently, Brown launched an independent investigation into the allegations.

Brown's investigation revealed that State Street was indeed overcharging the two funds. Despite being contractually obligated to charge the interbank rate at the precise time of the trade, State Street consistently charged at or near the highest rate of the day, even if the interbank rate was lower at the time of trade.

Additionally, State Street concealed the fraud by deliberately failing to include time stamp data in its reports, so that the pension funds could not determine the true execution costs by verifying when State Street actually executed the trades. Commenting on this deception, one State Street senior vice president said to another executive that "...if providing execution costs will give any insight into how much we make off of FX transactions, I will be shocked if or anyone would agree to reveal the information."

Brown's office estimates that the pension funds were overcharged by more than $56.6 million over eight years. The lawsuit asks for relief in the amount of triple California's damages, civil penalties of $10,000 for each false claim; and recovery of costs, attorneys' fees and expenses. It is estimated that damages and penalties could exceed more than $200 million.

Under California's False Claims Act, anyone who has previously undisclosed information about a fraud, overcharge, or other false claim against the state, can file a sealed lawsuit on behalf of California to recover the losses. They must notify the Attorney General as well.

Such a case is called a "qui tam" case. If there is a monetary recovery, the law provides that the whistleblower "qui tam plaintiff" receives a share of the amount recovered if the requirements of the statute are met.



Read more at: http://www.huffingtonpost.com/2009/10/20/post_268_n_327261.html?view=print

[Name removed]

127. Deleted message

Message removed by moderator. Click here to review the message board rules.

[Demeter]

46. The Movement Against the Banks By Ruth Conniff

http://www.progressive.org/rc102109.html

October 22, 2009 "The Progressive" -- A massive rally in Chicago next week aims to express public displeasure with the massive bank bailout outside the American Bank Association annual meeting. Protesters will converge at 11:30 on Monday, October 26, at 301 North Water Street, where the meeting is taking place.

"The same financial institutions that caused the economic crisis and took billions in taxpayer bailouts are back to earning incredible profits," rally organizers�including Public Citizen, the AFL-CIO, and Change to Win�declare. "Meanwhile, Americans face shrinking pensions, rising foreclosures and unemployment, state budget cuts, predatory lending, outrageous overdraft fees, and sky-high credit card interest rates."

Protesters will demand oversight and accountability and reforms that would rein in the banks. It is an important moment, since Congress takes up regulatory legislation, including the idea of a Consumer Financial Protection Agency, this month.

The Obama Administration is backing the idea of a consumer protection agency, but shying away from other reforms, including breaking up the "too-big-to-fail" banks and separating commercial banking activities from the investment activities that led to the current financial crisis. Today's New York Times includes a profile of Paul Volcker, the Federal Reserve chairman from 1979 to 1987, describing how he has been marginalized by Obama's pro-Wall Street economic advisors for suggesting a return to the 1933 Glass-Steagall Act, which, before deregulation, mandated that commercial banking and investment activities be separate.

"His disagreement with the Obama people on whether to restore some version of Glass-Steagall appears to have contributed to published reports that his influence in the administration is fading and that he is rarely if ever in the small Washington office assigned to him," the Times reports.

Meanwhile, Bankster, "your go-to site for updates on the financial services re-regulation fight in Congress and for progressive net-roots campaigning against the big boys on Wall Street"�is up and running.

The site, a project of the Center for Media and Democracy, aims to be the most comprehensive resource on the web for lay people who want to understand the battle for control over the financial services industry.

The site calls for criminal penalties for the bankers: "On the one-year anniversary of the Banksters blowing a hole in the global economy, no employee of a major American bank or financial institution is behind bars," Bankster points out. "Compare this to what happened after the Savings and Loan heist almost 20 years ago. No less than 1,852 S&L officials were prosecuted and 1,072 were jailed. Over 500 CEOs and top officers were indicted. What is going on here? Don't we believe in holding people accountable anymore? Tell the U.S. Department of Justice and the FBI to get cracking!"

Among the other citizens' groups featured on the site are the "10 percent is enough" campaign that brings together leaders from all the major world religions to oppose usurious interest rates on moral grounds.

And just in time for Halloween, the anti-death-bonds campaign focuses on an issue Michael Moore brought to light in his new movie, "Capitalism: A Love Story": employers and investment firms such as Goldman Sachs taking out life insurance policies on working people and naming themselves the beneficiaries, so they can benefit from your death.

All of these issues should galvanize public opposition to the banks' control of their own regulators in Washington. As Bankster puts it, "If you want to rein in the Banksters and if you think America deserves better than a �boom and bail� economy, you need to muscle up and weigh in." Only engaged citizens can stop the banks.

[Demeter]

77. Falling Down the Wells By Eric Fry

http://dailyreckoning.com/falling-down-the-wells/

Whoops!�What�s this?�Bad news is bad news after all?

Tuesday morning, Wells Fargo posted a cosmetically pleasing profit of $3.2 billion, or double the tally from the same quarter last year. So when the opening bell sounded, exuberant investors rushed into the market and bid up the shares of WFC.

But then a very strange thing happened; the buying frenzy dissipated into a selling panic, as a variety of analysts started poking holes in Wells Fargo�s �strong� report. In particular, analyst Dick Bove of Rochdale Securities, complained that the bank�s entire profit for the quarter came from a $3.6 billion profit on a hedging transaction. The bank�s operations, meanwhile, produced results that ranged from mediocre to poor.

Bove slapped a �sell� recommendation on the stock, and more than one investor seemed to heed the advice. The stock slumped 7% from its high print of the day to its closing price of $28.90.

Technically oriented traders couldn�t care less about WFC�s income statement mumbo jumbo�but they would probably care a great deal about the textbook �outside day reversal� pattern that WFC etched onto trading screens yesterday.

Outside-Day Reversal

This ominous pattern features a share price that exceeds both the prior day�s high and the prior day�s low � i.e., �outside� � and then ends the trading session on or very near the day�s lows. A �textbook� reversal pattern should also feature a big surge in volume.




In other words, WFC�s reversal pattern has it all! � higher high, lower low and a huge spike in volume. Yesterday�s trading volume of 113 million shares doubled the average daily volume of the last four months! So if you added up all the component to yesterday�s reversal patter, you would probably begin to deduce that a new bearish trend will unfold over the coming days. Incidentally, the KBW Bank Index (BKX) of 24 financial stocks also produced an outside day reversal yesterday.

This technical formation does not guarantee a selloff, of course, but it does suggest that WFC might stop going up�at least for a while. This pattern also suggests that bad news is actually bad news�which would be REALLY bad news for a stock market that relies more on hope than substance.

[Demeter]

78. Countrywide faces House probe of VIP loan plan

http://www.marketwatch.com/story/countrywide-faces-house-probe-of-vip-loan-plan-2009-10-24?siteid=yahoomy

By Jessica Holzer

WASHINGTON (MarketWatch) -- The chairman of a U.S. House panel said he would issue a subpoena Friday for records on subprime lender Countrywide Financial Corp.'s VIP loan program, dropping his resistance to Republican calls for a probe.

Rep. Edolphus Towns, D-N.Y., who heads the House Committee on Oversight and Government Reform, also announced an investigation into predatory practices by the mortgage industry.

In a statement, Towns said he is issuing the subpoena "to gather information about how the program worked and whether it provided special benefits to government officials."

Towns' shift comes after two panel Democrats, Reps. Paul Hodes of New Hampshire and Mike Quigley of Illinois, joined Republicans to push for the probe.

"The American people deserve to know the truth about these lending practices," the Democratic lawmakers wrote in a letter to Towns and Rep. Darrell Issa of California, the panel's top Republican, on Thursday.

The loan program, known as "Friends of Angelo" - a reference to former Countrywide Chief Executive Angelo Mozilo - provided loans to public figures and other favored persons at rates and terms more favorable than what Countrywide offered to the general public. The committee will subpoena Bank of America /quotes/comstock/13*!bac (BAC 16.22, -0.30, -1.82%) , which now owns Countrywide.

Towns received two mortgage loans under the program, The Wall Street Journal reported in August. He contends that he had no knowledge that he was in the program and didn't receive any special treatment. For months, he has refused calls from Issa and other panel Republicans to subpoena records from the program.

The committee's Republican spokesman Frederick Hill issued a statement saying no subpoena has been issued yet to Bank of America and no agreement has been reached between Republicans and Democrats on the wording.

"Majority and minority staff members continue to discuss a draft subpoena put forth by the majority," Hill said.

The mortgage industry investigation will target the largest U.S. mortgage lenders, including Wells Fargo /quotes/comstock/13*!wfc (WFC 29.32, -0.85, -2.82%) , JPMorgan Chase /quotes/comstock/13*!jpm (JPM 45.23, -0.48, -1.05%) and Bank of America

[Demeter]

21. The Oil Patch--Anything Energetic Goes Here

KNOC agrees C$4.1bn deal for Harvest

http://www.ft.com/cms/s/0/0ca69164-beb8-11de-b4ab-00144feab49a.html

State-run Korea National Oil Corp has agreed to buy Canada�s Harvest Energy Trust for C$4.1bn (US$3.9bn), the latest move by South Korea to compete with other resource-hungry Asian economies for overseas assets.

The deal would be the second-largest overseas acquisition by a Korean group, behind Doosan Infracore�s $4.9bn purchase of Bobcat�s assets in 2007, and South Korea�s biggest overseas oil and gas deal to date, according to Dealogic.

The South Korean group said it would pay C$1.8bn in cash for shares in Harvest � an oil and gas producer and refiner in western Canada that produces 53,400 barrels of oil and gas a day � at C$10 each. That represents a 37 per cent premium over Wednesday�s closing price of C$7.30.

Knoc would also assume C$2.3bn of debt.

South Korea, the fifth-largest oil importer, has stepped up its search for overseas energy acquisitions amid increasing concerns over the stability of its supplies. Like Japan, it imports nearly all of its energy needs.

China, which is snapping up resources, is 70 per cent self-sufficient in energy because of its coal deposits.

Knoc said this year it was looking at five to 10 oil companies overseas, each producing 50,000-100,000 barrels per day.

It said it wanted to take advantage of cheaper energy asset prices after the global economic crisis and the won�s appreciation against the dollar.

[Demeter]

32. Pickens says U.S. firms 'entitled' to Iraqi oil

http://in.reuters.com/article/oilRpt/idINN2149238420091021?sp=true

Oil tycoon T. Boone Pickens told Congress on Wednesday that U.S. energy companies are "entitled" to some of Iraq's crude because of the large number of American troops that lost their lives fighting in the country and the U.S. taxpayer money spent in Iraq...

The Existentialist Cowboy's Take on This:

Texas Oil Man: US Should Plunder Iraqi Oil by Len Hart, The Existentialist Cowboy

Texas oil man T. Boone Pickets typifies what is dead wrong about America and what passes for 'foreign policy'. Pickens claims the US is 'entitled' to Iraqi oil. How convenient for the oil barons who conspired with Dick Cheney to carve up the oil fields of Iraq before 911 would give Bush the pretext he would need to attack and invade Iraq, a nation that had nothing whatsoever to do with 911.

Nevertheless, it would be claimed that Iraq was --somehow --a part of the 'war on terror'. Is there no end to the lies? ...Every cover, every rationalization, every pretext for war was a treasonous lie from traitors who betrayed the people of the US, the Constitution, and specific US Codes that make any death resulting from such a war a crime punishable by death. If you are reading this, George W. Bush, you are not out of the woods.

Now for the idiot du jour:

Oil tycoon T. Boone Pickens told Congress on Wednesday that U.S. energy companies are "entitled" to some of Iraq's crude because of the large number of American troops that lost their lives fighting in the country and the U.S. taxpayer money spent in Iraq.

Boone, speaking to the newly formed Congressional Natural Gas Caucus, complained that the Iraqi government has awarded contracts to foreign companies, particularly Chinese firms, to develop Iraq's vast reserves while American companies have mostly been shut out.

"They're opening them (oil fields) up to other companies all over the world ... We're entitled to it," Pickens said of Iraq's oil. "Heck, we even lost 5,000 of our people, 65,000 injured and a trillion, five hundred billion dollars."

--Reuters, Pickens says U.S. firms 'entitled' to Iraqi oil

T. Boone Pickens is either stupid, ignorant or just doesn't care! I am referring to various kinds of law, specifically English Common Law upon which most US laws and Constitution are based and, secondly, US Codes, Title 18, Section 2441 which makes what the US did in and to Iraq and to the people of Iraq a war crime punishable by death.

That applies, of course, to Bush who ordered the attack and invasion as well as his close associates who conspired with him knowing that Iraq had no WMD. It applies as well to the Army brass in an all volunteer army. They must take responsibility for having willingly participated in the commission of war crimes for which the penalty is death as prescribed by US law.

Now --are we to believe that US laws are no longer valid? Certainly --there must be a reason the Bush crime family is never brought to justice! There must be a reason that a certain 'class' in America is --in fact --above the law! Perhaps the law has become quaint replaced by a sophisticated but unjust two-tiered affair in which the criminal justice system enforces laws on behalf of an elite 'ruling class' which is itself placed above the rule of law to which everyone is expected to pay obeisance and tribute! This elite ruling class of just one percent of the total US population own more than about 95 percent of the rest of us combined and is, in fact, the only beneficiary of US wars of aggression and oil theft in Iraq and elsewhere. Big Brother has arrived!

FACT TIME: there is only ONE justification for war under International Law and that is ''imminent threat'. Iraq POSED no such threat to the US or its interests. That's why Bush tried to claim that Iraq was a part of the so-called 'war on terrorism'' though there is absolutely NO EVIDENCE that Iraq had anything at all to do with 911.

I say revolution now! I say bring down this elite! I say arrest the war criminals who continue to rape the sovereign nation of Iraq! I say file capital charges against George W. Bush, his guilty staff and the Pentagon brass who knowingly and willing planned the entire heist on behalf of big oil!

I say charge every member of the Dick Cheney 'Energy Task Force' for planning it all, literally carving up the oil fields of Iraq before the all-too-convenient Riechstag Fire called 911 gave them the broad and wide ranging pretext to begin a perpetual war in which the US would plunder the Middle East.

Secondly, the US has an all volunteer army. Should that army commit war crimes, are not the willing participants of those crime subject to prosecution? By law, yes!

Is the legacy of the GOP/Reagan/Bush era the abolition of the rule of law? Clearly --unless things change, unless Bush and a gang of war criminals in the Pentagon are brought to justice, the very concept of the 'rule of law' will have become a macabre and ludicrous joke.

Goodbye America, you sold your soul to the likes of T. Boone Pickens!

[Tansy_Gold]

39. That logic (?) is so close to the punk who murders his parents

and then asks the court for mercy because he's an orphan that it's scary.

Once again, life imitates irony.



TG

[Dr.Phool]

65. Pickens is, and always has been a prick.

He's not the folksy, populist, friend of the environment he tries to portray himself as in his TV ads.

Anybody who's followed the news for the last 30 years or so, knows he's a greedy, ruthless corporate raider, who leaves lives and whole communities devastated in his wake. He's a parasite.

He's one of the bastards who started us down the slope, to where we are now.

[AnneD]

92. I survived Pickens' destruction of Gulf Oil.....

His take over attempts was liken to a bugler going to a banker asking for a loan to buy burglary tools. As collateral, the thief offers the contents of the house that he will steal and sell. So the bank gives him the money to buy the tools to rob the house. WS cheered Pickens on as he proceeded to try to rob Gulf Oil.

Not that Pickens gives a shit, but a lot of people were hurt by this and such takeovers did not benefit the oil industry or the companies. It just raided company wealth and encouraged companies to take on debt. I went through almost ten years of personal hell because of this-the only good thing -I was more prepared for this economic disaster today because what I went through in the years following 1984.

Bastard is the nicest thing we call him in the oil patch.

[Demeter]

22. the Teenage Years

In 1917, Elias acquired shares in the O-Zell jelly factory in Chicago and moved his family back there.<13> In the fall, Disney began his freshman year at McKinley High School and began taking night courses at the Chicago Art Institute.<14> Disney became the cartoonist for the school newspaper. His cartoons were very patriotic, focusing on World War I. Disney dropped out of high school at the age of sixteen to join the Army, but the army rejected him because he was underage.<15>

After his rejection from the army, Walt and one of his friends decided to join the Red Cross.<16> Soon after he joined The Red Cross, Walt was sent to France for a year, where he drove an ambulance.<17>

In 1919, Walt, hoping to find work outside the Chicago Ozell factory,<18> left home and moved back to Kansas City to begin his artistic career.<19> After considering becoming an actor or a newspaper artist, he decided he wanted to create a career in the newspaper, drawing political caricatures or comic strips. But when nobody wanted to hire him as either an artist or even as an ambulance driver, his brother Roy, who worked at a bank in the area, got a temporary job for him at the Pesmen-Rubin Art Studio through a bank colleague .<19> At Pesmen-Rubin, Disney created ads for newspapers, magazines, and movie theaters.<20> It was here that he met a cartoonist named Ubbe Iwerks.<21> When their time at the Pesmen-Rubin Art Studio expired, they were both without a job, and they decided to start their own commercial company.<22>

In January 1920, Disney and Iwerks formed a short-lived company called, "Iwerks-Disney Commercial Artists". However, following a rough start, Disney left temporarily to earn money at Kansas City Film Ad Company, and was soon joined by Iwerks who was not able to run the business alone.<23> While working for the Kansas City Film Ad Company, where he made commercials based on cutout animation, Disney took up an interest in the field of animation, and decided to become an animator.<24> He was allowed by the owner of the Ad Company, A.V. Cauger, to borrow a camera from work, which he could use to experiment with at home. After reading a book by Edwin G. Lutz, called Animated Cartoons: How They Are Made, Their Origin and Development, he found cel animation to be much more promising than the cutout animation he was doing for Cauger. Walt eventually decided to open his own animation business,<25> and recruited a fellow co-worker at the Kansas City Film Ad Company, Fred Harman, as his first employee.<25> Walt and Harman then secured a deal with local theater owner Frank L. Newman-arguably the most popular "showman" in the Kansas City area at the time-<26> to air their cartoons � which they titled "Laugh-O-Grams" � at his local theater.<26>


Disney as an ambulance driver during World War I.

[Demeter]

24. Chinese writers seek redress on Google e-books

http://www.ft.com/cms/s/0/9f9e0462-bf4d-11de-a696-00144feab49a.html

A Chinese copyright group is demanding talks with Google over compensation for Chinese authors who have had their books scanned into the US company�s electronic library.

The move is a further challenge to a US agreement designed to offer a framework for the emerging electronic book business.

The agreement has already upset writers and publishers in Europe, prompting Google to only scan books that have been published for more than than 150 years in that region.

�Some take the view that under US law, Google�s proposed settlement will also be valid for works by Chinese authors. We reject that view,� Zhang Hongbo, deputy head of the China Written Works Copyright Society, told the Financial Times.

Mr Zhang added that the government-backed body would send a letter to Google China, perhaps as early as today demanding negotiations on the issue.

Google has scanned more than 10m books from US libraries since 2004 and plans to offer them to online users.

Following years of legal action and negotiations, the company and US writers reached an agreement and it is expected this will be finalised at a court hearing on November 9.

Under the proposed settlement, Google would make one-off payments to writers whose books it scanned without prior approval, and pay them 63 per cent of revenues from future electronic book sales. The spat in China could spell fresh trouble for Google in a market that has the world�s largest internet population, but where the US company remains a distant second to Baidu, the local internet search favourite.

The Chinese books scanned by Google include recent works, according to rights holders.

The Chinese copyright group said it had found more than 17,000 works, by 570 Chinese authors in Google�s electronic library.

The society appealed to members last month to check whether their works had been scanned.

Mr Zhang said that about 100 authors had contacted the organisation, including novelists Zhang Jie and Xu Kun.

The copyright group also said it had received an e-mail from Google China�s legal counsel on Tuesday proposing a video conference on the issue with company representatives.

Apart from the discussions about how compensation could be set, the Chinese side is also demanding an apology from Google for allegedly scanning the books without prior approval from their authors or publishers.

�We also hope that the Chinese government can give the US government an official message expressing our belief that Google has infringed copyrights here,� Mr Zhang said.

�If a Chinese website had done this to American rights holders, you can imagine what the US government would have said.�

Google said the US settlement �is limited to the US and comes under US law and only US readers will benefit.

�Of course, we listen carefully to all concerns and will work hard to address them.�

THE CLASH OF INFORMATION TECHNOLOGY AND INTELLECTUAL PROPERTY--BROUGHT BY THE PEOPLE OF A NATION THAT RECOGNIZES NEITHER INTELLECTUAL PROPERTY NOR FREEDOM OF KNOWLEDGE...

[Demeter]

25. Criminal Courts and Civil Courts--All Rise!

Former Vivendi executives face trial

Jean-Marie Messier and Edgar Bronfman Jr, former executives at Vivendi, the French media group, have been ordered to stand trial by a Paris judge over allegations that include share price manipulation dating back eight years.

The decision by Jean-Marie d�Huy, the investigating judge, overrules an earlier finding by the Paris prosecutor that there was no case to answer.

The investigation centres on allegations of market manipulation, distributing false information, and misuse of corporate funds during a period of daring acquisitions masterminded by Mr Messier, then chief executive, to turn Vivendi into a global media giant.

The $100bn of acquisitions pushed it close to bankruptcy and Mr Messier, who now heads Messier and Partners, a mergers advisory firm based in New York, left the company in 2002.

Vivendi bought Seagram, the drinks and media group, in 2000 in a deal that made the Bronfman family the French company�s largest shareholder. Mr Bronfman, now head of Warner Music, was vice-chairman of Vivendi until his resignation in 2003.

In total, seven former Vivendi executives people have been ordered to stand trial, including Guillaume Hannezo, former chief financial officer. The most serious charges could lead to five years� imprisonment and hefty fines. The trial would be held next year at the earliest.

Olivier Metzner, Mr Messier�s lawyer, said on Thursday that the public prosecutor: �recognises that Jean-Marie Messier never committed an offence�.

Thierry Marembert, a lawyer for Mr Bronfman, said his client was innocent. �The case against Mr Bronfman is very weak,� he was quoted telling newswires.

Vivendi said it was co-operating with the French investigation. �Vivendi joined in these proceedings as a civil plaintiff on October 2002 and has fully co-operated with the judicial authorities since the beginning,� it said in a statement.

Vivendi is currently the target of a contested class action lawsuit in New York, with investors alleging they were given misleading financial information by the French entertainment group about its liquidity position and overall performance between 2000 and 2002.

In 2003, Vivendi reached a settlement with the US Securities and Exchange Commission in which the company paid $50m to 12,000 investors. Vivendi settled without any admission of guilt.

The AMF, the French stock market regulator, recently upheld a verdict against Vivendi for breaches of rules on financial communication from 2000-02 but halved its fine on the company to �500,000.

[Demeter]

93. Bernard Madoff enjoys eating pizza with the Mafia in prison

http://www.telegraph.co.uk/finance/financetopics/bernard-madoff/6400760/Bernard-Madoff-enjoys-eating-pizza-with-the-Mafia-in-prison.html

Where once he used to enjoy feasting on Neopolitan pizza at the Mezzaluna trattoria on New York's Upper East Side, convicted fraudster Bernard Madoff now has to resort to sharing a "slice" with mafia mobsters.

And rather than spending his days sailing on his yacht Bull, or relaxing at one of his three holiday homes, his favoured pastime these days is wandering around the prison yard.

The life of Madoff � serving a 150-year sentence at Butner prison, North Carolina, after pleading guilty to running a $65bn (�40bn) "Ponzi" scheme in March � has changed remarkably since going inside.

Publicly-available court filings, stemming from a class-action lawsuit, allege that in prison Madoff is friendly with Carmine "The Snake" Persico, the head of the Colombo crime family, and Jonathan Pollard, who was imprisoned in 1987 for trading military secrets to Israel.

The former multi-millionaire shares a cell with a 21-year-old drug dealer. How well he and Madoff get on is unknown, although the court filings also allege that from 1975-2003 the financier employed a member of staff to buy cocaine, with workers nicknaming his offices "the North Pole" because of the drug's prevalence.

For food, pizza is a popular dish, which is cooked by a fellow inmate who is serving time on child molestation charges.

The picture of Madoff's life in prison came to light in a 272-page legal complaint filed by lawyer Joe Cotchett, who visited Madoff at Butner in July.

In the complaint, Mr Cotchett claims the details on Madoff's life in prison were obtained from that interview, describing also how the former money manager's only recreation is "walking around the prison track at night".

The speculative legal action, brought on behalf of dozens of Madoff investors by Mr Cotchett, accuses KPMG, JP Morgan Chase and Bank of New York Mellon of assisting Madoff in carrying out the $65bn fraud.

KPMG was the auditor of his London business, which prosecutors claimed in court was used for laundering the family's money. JP Morgan was the custodian of his business accounts, while BoNY Mellon administered some of the funds that funnelled money to Madoff. All three institutions have consistently denied any wrongdoing with regards to their relationship with Madoff.

Madoff's lawyer, Ira Sorkin, declined to comment on Mr Cotchett's allegations over his client's past and present lifestyle.

[Demeter]

26. Technology Beat

http://www.ft.com/cms/s/0/7c0751fe-bf7d-11de-a696-00144feab49a.html

Hynix Semiconductor, the world�s second-largest memory chipmaker, returned to net profit in the third quarter after two years of losses as industry-wide production cuts boosted chip prices.

The South Korean company made a net profit of Won245.4bn ($207m) compared with a Won1,650bn net loss a year ago. Sales increased 10 per cent to Won2,050bn.

Shares in Hynix have almost tripled since January on expectations of an earnings recovery as chip prices rose more than three times so far this year.

Hynix shares were 0.52 per cent lower at Won18,700 on Friday.

Analysts forecast that higher chip prices would help Hynix post its largest profits in three years in the fourth quarter.

Intel, the world�s biggest chipmaker, last week announced third-quarter results that exceeded estimates and Paul Otellini, its chief executive, predicted growth in global personal computer demand this year.

Earlier this month, Samsung Electronics gave strong earnings guidance for the third quarter, estimating operating profit at between Won3,900bn and Won4,300bn. Samsung is set to unveil results at the end of this month. Earlier this month, Japan�s Elpida Memory also reported its first quarterly operating profit for two years.

Hynix said prices for D-Ram memory, its main products, surged 26 per cent in the July-September period after a 20 per cent rise in the previous quarter. Nand flash memory chip prices rose 4 per cent in the same period.

The company�s turnround comes as creditors holding 28 per cent of Hynix, worth about $2.6bn, are trying to sell their controlling stake to South Korea�s Hyosung Group, the only company to have submitted a bid.

Separately, Chartered Semiconductor Manufacturing, Singapore�s contract chipmaker, said third-quarter net loss narrowed from $24.4m a year earlier to $4.7m. However, sales fell 10 per cent to $415.2m.

[Demeter]

28. The Roulette Table--Hedge Funds, Gamblers, Etc

Meriwether setting up new hedge fund

http://www.ft.com/cms/s/0/331bae80-be93-11de-b4ab-00144feab49a.html

John Meriwether, the hedge fund manager and arbitrageur behind Long-Term Capital Management, is in the process of setting up a new hedge fund � his third.

The move comes barely three months after Mr Meriwether decided to close his second fund manager, JWM Partners, which was wound down after clients saw the value of their investments fall by more than 44 per cent over the course of the financial crisis.

JWM Partners was set up soon after the collapse in 1998 of Mr Meriwether�s first � and most infamous � fund, LTCM, which triggered a wave of panic across the world�s markets and prompted the US Federal Reserve to take the then-unprecedented step of orchestrating a multi-billion dollar bail-out.

Mr Meriwether�s new venture, named JM Advisors Management, will, like both of his previous hedge fund management companies, be based in Greenwich, Connecticut.

People with knowledge of the situation say the fund has not yet started accepting outside investments, however. According to HFMWeek, an industry publication, the fund will open to investors in 2010.

The fund is expected use the same strategy as both LTCM and JWM to make money: so-called relative value arbitrage, a quantitative investment strategy Mr Meriwether pioneered when he led the hugely successful bond arbitrage group at Salomon Brothers in the 1980s.

The strategy, described by the Nobel Prize-winning economist Myron Scholes as being akin to a giant vacuum cleaner �sucking up nickels from all over the world�, can be highly successful in periods following market dislocations.

Relative value trades profit by betting on unusual pricing relationships between securities, anticipating a return to an historically modelled �normal� state between them.

Traders say the strategy has the potential to deliver huge returns in the current market, with many banks� proprietary trading desks having scaled back their operations and far fewer hedge funds in existence.

Their absence is leading to �inefficiencies� according to many market participants.

The swap spread on 30-year Treasury bonds � the difference between the cost of a 30-year bond and the cost of an interest-rate hedge against it � is still negative.

However, as Mr Meriwether�s experience shows, relative value strategies are not without their pitfalls.

The strategy typically has a high �blow-up� risk because of the large amounts of leverage it uses to profit from often tiny pricing anomalies.

At its peak, LTCM borrowed 25 times more than it had in investor�s capital in order to ratchet-up its returns.

JWM boasted a more conservative 10 times leverage ratio.

The hedge fund industry average is estimated at between two and three times.

Galleon to liquidate after insider deal charges

http://www.ft.com/cms/s/0/c2a6ca66-be44-11de-9195-00144feab49a.html

Galleon Group is winding down all its hedge funds just days after insider trading allegations against billionaire Raj Rajaratnam, its founder and president, sparked a wave of investor withdrawals.

Mr Rajaratnam told clients in a letter on Wednesday that it was in their �best interest� to conduct an �orderly wind down� of Galleon�s funds while exploring �various alternatives� for the business. Potential buyers have approached the group, according to a source familiar with the situation.

Mr Rajaratnam�s letter did not detail when Galleon�s liquidation would conclude, but the hedge fund is expected to follow its standard redemption policy as long as there is no intervention by the government, according to people close to the process. That means investors will not get money back until January 1, 2010. Galleon had about $3.7bn of assets under management as of Friday, but had about $7bn at its peak.

The hedge fund manager is among six people, including former Bear Stearns executives and an executive at IBM, who were charged on Friday in an alleged insider trading scheme from at least 2006 which prosecutors claim reaped more than $20m in profits.

The fallout was also felt in Europe as Union Bancaire Priv�e, the Swiss bank, said it was liquidating a fund it set up three months ago with New Castle Partners - the former Bear Stearns hedge fund that is also implicated in the insider trading case. That fund has about $50m in assets, according to people close to the situation. UBP�s move marks another setback for the bank which has sought to restore investor confidence after revealing about $700m of losses linked to the Bernard Madoff �Ponzi� scheme last year.

Investors started to put in requests for redemptions from Galleon�s funds soon after the charges were announced and large investors in Galleon say the fund has already liquidated the bulk of its positions. �They started on Friday when the market wasn�t so bad and now we understand they�ve already exited the vast majority of their positions,� said one.

The bulk of Galleon�s positions are in liquid, rising equity markets. This means the unwinding has been orderly and brokers say the process has been efficient. There are only a few illiquid positions that may be difficult to sell quickly, according to people close to the situation.

In Wednesday�s letter, Mr Rajaratnam told investors that Galleon�s funds were liquid and assured employees � about 130 people including 35 specialist analysts � that the group was �seeking the best way to keep together what I believe is the best long/short equity team in the business.�

�I want to reiterate that I am innocent of all charges and will defend myself against these accusations with the same intensity and focus I have brought to managing our investors� capital,� he added. New Castle, which faces civil charges by the Securities and Exchange Commission and is estimated to have about $926m of assets, has said that it is �fully committed� to serving clients� best interest and will co-operate with authorities.

[Demeter]

69. John Meriwether is back, risk must be too by Edward Harrison

http://www.nakedcapitalism.com/2009/10/john-meriwether-is-back-risk-must-be-too.html

John Meriwether, the 62-year old former Salomon bond trader and LTCM wizard is back for, what is this, his fourth go round.

For those of you who don�t remember the 1980s, John Meriwether was the biggest of the �big swinging dicks� on Wall Street, leading Salomon Brothers to huge profits in its fixed income division. Lionized in the eponymous book �Liar�s Poker� and inspiration for Bonfire of the vanities, Meriwether and Salomon�s rise marked the change from a bulge bracket culture dominated by deal makers and IBD (Investment banking Division) white shoe bankers to one dominated by the foul-mouthed traders and math geek quants of fixed income. The change at Goldman Sachs from a firm dominated by IBD to one dominated by trading is testament to this. Unfortunately for Meriwether, his career path since reaching the top has been rather rocky.

First there was the enormous Treasury bond scandal, in which Meriwether subordinate Paul Mozer put in fake Treasury bids on behalf of clients in an attempt to corner the market for on-the-run securities. Lax oversight got Meriwether a $50,000 fine and Salomon a $290 million fine, the largest ever to that date. Salomon head John Gutfreund resigned and Warren Buffett came in to serve as Chairman (Phibro which was recently offloaded to Occidental Petroleum by Citigroup is a Salomon Brothers company, by the way). Meriwether left.

Soon, Meriwether was back at it at Long-Term Capital Management, the Greenwich-based hedge fund he founded in 1993 and which was famously leveraged 100 to 1, not including derivatives exposure of $1 trillion on a capital base of $5 billion. This company produced spectacular 40+% profits year after year before going spectacularly bust in 1998 after Russia devalued its currency and defaulted on its debt (see Frontline�s recent video which has a part on LTCM).

Meriwether miraculously was able to start again, literally the next year, helped by a bubble in shares which increased appetite for risk. He started JWM Partners in 1999. After years of gains, this fund too produced staggering losses (44% last year) and was liquidated.

Now that shares are up some 60% in US markets, guess what, John W. Meriwether is back� and he�s taking investors. This one is called JM Advisors Management, also based in Greenwich.

The fund is expected use the same strategy as both LTCM and JWM to make money: so-called relative value arbitrage, a quantitative investment strategy Mr Meriwether pioneered when he led the hugely successful bond arbitrage group at Salomon Brothers in the 1980s.

The strategy, described by the Nobel Prize-winning economist Myron Scholes as being akin to a giant vacuum cleaner �sucking up nickels from all over the world�, can be highly successful in periods following market dislocations.

Relative value trades profit by betting on unusual pricing relationships between securities, anticipating a return to an historically modelled �normal� state between them.

Traders say the strategy has the potential to deliver huge returns in the current market, with many banks� proprietary trading desks having scaled back their operations and far fewer hedge funds in existence.

I bet the money is pouring in.

The timing here is interesting given what is happening in mortgages and banking. Meriwether was at the center of the creation of the mortgage-backed securities market with his colleague Lewis Ranieri. Franklin Bank Corp., a bank run by Ranieri was recently seized by the FDIC as it ran into difficulties in the financial crisis due to poor lending. The seizure cost taxpayers $1.6 billion.

However, the much more important tidbit on the mortgages front comes in terms of foreclosure activity. Because of an August ruling by the Kansas Supreme Court (Yves linked out to a story on this today), we could be seeing some major changes in the way foreclosures happen. A post at Credit Writedowns, �Why mortgages aren�t modified and what a ruling stopping foreclosures means� chronicles the case in greater detail.

[Demeter]

33. Walt Starting Out

Laugh O'Gram Studio

Presented as "Newman Laugh-O Grams,"<26> Disney's cartoons became widely popular in the Kansas City area.<27> Through the success of Laugh-O Grams, Disney was able to acquire his own studio<28> and hire a vast number of additional animators, including Fred Harman's brother Hugh Harman, Rudolf Ising, and his close friend Ubbe Iwerks.<29> Unfortunately, with all his high employee salaries unable to make up for studio profits, Walt was unable to successfully manage money.<30> As a result, the studio became loaded with debt<30> and wound up bankrupt.<31> Disney then set his sights on establishing a studio in the movie industry's capital city, Hollywood, California.<32>

Hollywood

Disney and his brother pooled their money to set up a cartoon studio in Hollywood.<33> Needing to find a distributor for his new Alice Comedies-which he started making while in Kansas City,<31> but never got to distribute- Disney sent an unfinished print to New York distributor Margaret Winkler, who promptly wrote back to him. She was keen on a distribution deal with Disney for more live-action/animated shorts based upon Alice's Wonderland.<34>

Alice Comedies

Virginia Davis (the live-action star of Alice�s Wonderland) and her family were relocated at Disney's request from Kansas City to Hollywood, as were Iwerks and his family. This was the beginning of the Disney Brothers' Studio. It was located on Hyperion Avenue in the Silver Lake district, where the studio remained until 1939. In 1925, Disney hired a young woman named Lillian Bounds to ink and paint celluloid. After a brief period of dating her, the two got married the same year.

The new series, Alice Comedies, was reasonably successful, and featured both Dawn O'Day and Margie Gay as Alice. Lois Hardwick also briefly assumed the role of Alice. By the time the series ended in 1927, the focus was more on the animated characters, in particular a cat named Julius who resembled Felix the Cat, rather than the live-action Alice.

Oswald the Lucky Rabbit

By 1927, Charles B. Mintz had married Margaret Winkler and assumed control of her business, and ordered a new all-animated series to be put into production for distribution through Universal Pictures. The new series, Oswald the Lucky Rabbit, was an almost instant success, and the character, Oswald�drawn and created by Iwerks�became a popular figure. The Disney studio expanded, and Walt hired back Harman, Rudolph Ising, Carman Maxwell, and Friz Freleng from Kansas City.

In February 1928, Disney went to New York to negotiate a higher fee per short from Mintz. Disney was shocked when Mintz announced that not only he wanted to reduce the fee he paid Disney per short but also that he had most of his main animators, including Harman, Ising, Maxwell, and Freleng (notably, except Iwerks, who refused to leave Disney) under contract and would start his own studio if Disney did not accept the reduced production budgets. Universal, not Disney, owned the Oswald trademark, and could make the films without Disney. Disney declined Mintz's offer and lost most of his animation staff.

With most of his staff gone Disney now found himself on his own again.<35> It took Disney's company 78 years to get back the rights to the Oswald character. The Walt Disney Company reacquired the rights to Oswald the Lucky Rabbit from NBC Universal in 2006, through a trade for longtime ABC sports commentator Al Michaels.

[Demeter]

34. We Pause Now For Station Identification

Hope that the distractions of Walt Disney's hands-on education in American business (probably what soured him for life) are keeping your urge to scream and foam at the mouth below that of the infamous Mogambo Guru, who may be making an appearance tomorrow...

I do not know why, whether it was family chauvinism or confusion between Disney and Lawrence Welk, but I grew up under the impression that Walt was Polish.

I had an Uncle Walter, and there was Walter Poole conducting the Detroit Symphony, so maybe I was just confusing all the Walters....

Anyway--I decided that Thursday was not a good day to die. Before I could work up enough enthusiasm for the task of trying to put the rosebushes to bed for the winter, the temperature dropped and an icy cold but not freezing drizzle started falling--so today, while the heavens opened up in the wettest non-hurricane I've ever seen, I did laundry and seasonal wardrobe adjustments.

It turns out I have 3X as many winter garments as summer. I hope that's enough.

Stay warm and dry, wherever you may be. Get some sleep and we'll meet back here in the morning!

http://www.youtube.com/watch?v=qyXnv3-7qSs

[DemReadingDU]

37. Original Mickey Mouse Club Intro with Commercial!

Funny commercial at the end

http://www.dailymotion.com/video/x3o38q_original-mickey-mouse-club-intro-wi


Does anyone still wax floors?

[DemReadingDU]

38. The Original Mickey Mouse Club Show

This site is dedicated to the original Mickey Mouse Club Show of the 1950's, the first television show for, by, and about kids.

http://www.originalmmc.com/

[Demeter]

41. Only Under Duress

[Demeter]

42. that's Like Visiting a Foreign Land

I can remember life like that, but my kids would have no referents.

What has happened to the country in the last 50 odd years?

[bread_and_roses]

40. "Somebody must have some options to unload this month"

I thought they were just having a game of see-saw with 10,000 as a rough fulcrum...
See-Saw Hee-Haw
I'll make mine today
You make yours tomorraw

[Demeter]

44. Whither The Dollar, and Why or Why Not?

The Dollar: Dive or survive

http://www.youtube.com/watch?v=xzosN3HHQBI&feature=player_embedded
http://www.youtube.com/watch?v=xzosN3HHQBI&feature=related

http://www.youtube.com/watch?v=CJxmiSMD-Oc&feature=player_embedded#

[Demeter]

45. French official says U.S. trying to inflate away debt

http://www.forbes.com/feeds/afx/2009/10/20/afx7018936.html

[Demeter]

47. The Warning: Frontline PBS Broadcast October 21, 2009--MUST SEE!!

VIDEO AT LINK

http://www.informationclearinghouse.info/article23787.htm


In The Warning, veteran FRONTLINE producer Michael Kirk unearths the hidden history of the nation's worst financial crisis since the Great Depression. At the center of it all he finds Brooksley Born, who speaks for the first time on television about her failed campaign to regulate the secretive, multitrillion-dollar derivatives market whose crash helped trigger the financial collapse in the fall of 2008.

"I didn't know Brooksley Born," says former SEC Chairman Arthur Levitt, a member of President Clinton's powerful Working Group on Financial Markets. "I was told that she was irascible, difficult, stubborn, unreasonable." Levitt explains how the other principals of the Working Group -- former Fed Chairman Alan Greenspan and former Treasury Secretary Robert Rubin -- convinced him that Born's attempt to regulate the risky derivatives market could lead to financial turmoil, a conclusion he now believes was "clearly a mistake."



Born's battle behind closed doors was epic, Kirk finds. The members of the President's Working Group vehemently opposed regulation -- especially when proposed by a Washington outsider like Born.

"I walk into Brooksley's office one day; the blood has drained from her face," says Michael Greenberger, a former top official at the CFTC who worked closely with Born. "She's hanging up the telephone; she says to me: 'That was Larry Summers. He says, "You're going to cause the worst financial crisis since the end of World War II."... 13 bankers in his office who informed him of this. Stop, right away. No more.'"

Greenspan, Rubin and Summers ultimately prevailed on Congress to stop Born and limit future regulation of derivatives. "Born faced a formidable struggle pushing for regulation at a time when the stock market was booming," Kirk says. "Alan Greenspan was the maestro, and both parties in Washington were united in a belief that the markets would take care of themselves."

Now, with many of the same men who shut down Born in key positions in the Obama administration, The Warning reveals the complicated politics that led to this crisis and what it may say about current attempts to prevent the next one.

"It'll happen again if we don't take the appropriate steps," Born warns. "There will be significant financial downturns and disasters attributed to this regulatory gap over and over until we learn from experience."

[Demeter]

54. THAT DOES IT! I'M BUYING A PITCHFORK AND A TORCH

[DemReadingDU]

67. That was good, saw it on TV Tuesday evening

[Demeter]

48. How Did America Fall So Fast? By Washington Blog

http://www.washingtonsblog.com/2009/10/how-did-america-fall-so-fast.html

October 21, 2009 "Washington Blog" -- In 2000, America was described as the sole remaining superpower - or even the world's "hyperpower". Now we're in real trouble (at the very least, you have to admit that we're losing power and wealth in comparison with China).

How did it happen so fast?

As everyone knows, the war in Iraq - which will end up costing $3-5 trillion dollars - was launched based upon false justifications. Indeed, the government apparently planned both the Afghanistan war (see this and this) and the Iraq war before 9/11.

And the financial system collapsed last year due to looting and fraud.

How Empires Fall

But Paul Farrel provides a bigger-picture analysis, quoting Jared Diamond and Marc Faber.

Diamond's book 's, Collapse: How Societies Choose to Fail or Succeed, studies the collapse of civilizations throughout history, and finds:

Civilizations share a sharp curve of decline. Indeed, a society's demise may begin only a decade or two after it reaches its peak population, wealth and power...

One of the choices has depended on the courage to practice long-term thinking, and to make bold, courageous, anticipatory decisions at a time when problems have become perceptible but before they reach crisis proportions

And PhD economist Faber states:

How so sure about this final collapse?

Of all the questions I have about the future, this is the easiest one to answer. Once a society becomes successful it becomes arrogant, righteous, overconfident, corrupt, and decadent ... overspends ... costly wars ... wealth inequity and social tensions increase; and society enters a secular decline.

The average life span of the world's greatest civilizations has been 200 years progressing from "bondage to spiritual faith ... to great courage ... to liberty ... to abundance ... to selfishness ... to complacency ... to apathy ... to dependence and ... back into bondage"

It is most unlikely that Western societies, and especially the U.S., will be an exception to this typical "society cycle." ... The U.S. is somewhere between the phase where it moves "from complacency to apathy" and "from apathy to dependence."

In other words, America's rapid fall is not really that novel after all.

How Consumers, Politicians and Wall Street All Contributed to the Fall

On the individual level, people became "fat and happy", the abundance led to selfishness ("greed is good"), and then complacency, and then apathy.

Indeed, if you think back about tv and radio ads over the last couple of decades, you can trace the tone of voice of the characters from Gordon Gecko-like, to complacent, to apathetic and know-nothing.

On the political level, there was no courage in the White House or Congress "to practice long-term thinking, and to make bold, courageous, anticipatory decisions". Of course, the bucket loads of donations from Wall Street didn't hurt, but there was also a religion of deregulation promoted by Greenspan, Rubin, Gensler and others which preached that the economy was self-stabilizing and self-sustaining. This type of false ideology only can spread during times of abundance and complacency, when an empire is at its peak and people can fool themselves into thinking "the empire has always been prosperous, we've solved all of the problems, and we will always prosper" (incidentally, this type of false thinking was also common in the 1920's, when government and financial leaders said that the "modern banking system" - overseen by the Federal Reserve - had destroyed instability once and for all).

And as for Wall Street, the best possible time to pillage is when your victim is at the peak of wealth. With America in a huge bubble phase of wealth and power, the Wall Street looters sucked out vast sums through fraudulent subprime loans, derivatives and securitization schemes, Ponzi schemes and high frequency trading and dark pools and all of the rest.

Like the mugger who waits until his victim has made a withdrawal from the ATM, the white collar criminals pounced when America's economy was booming (at least on paper).

Given that the people were in a contented stupor of consumption, and the politicians were flush with cash and feel-good platitudes, the job of the criminals became easier.

A study of the crash of the Roman - or almost any other - empire would show something very similar.

[Demeter]

50. Herding the Sheep By Washington's Blog

http://www.washingtonsblog.com/2009/10/herding-sheep.html

October 23, 2009 "WB" -- Financial insider and commentator Yves Smith wrote an essay last week entitled "MSM Reporting as Propaganda" arguing that the government has been using propaganda to make people think that things are getting better, no one is angry, and - therefore - no one should get upset:

The message, quite overtly, is: if you are pissed, you are in a minority. The country has moved on. Things are getting better, get with the program...

Per the social psychology research, this �you are in a minority, you are wrong� message DOES dissuade a lot of people. It is remarkably poisonous. And it discourages people from taking concrete action.

Is Smith right? And even if she is, isn't "propaganda" too strong a word?

Think Positive


Sure, William K. Black - professor of economics and law, and the senior regulator during the S & L crisis - says that that the government's entire strategy now - as during the S&L crisis - is to cover up how bad things are ("the entire strategy is to keep people from getting the facts").
Admittedly, 7 out of the 8 giant, money center banks went bankrupt in the 1980's during the "Latin American Crisis", and the government's response was to cover up their insolvency.

It's true that Business Week wrote on May 23, 2006:

President George W. Bush has bestowed on his intelligence czar, John Negroponte, broad authority, in the name of national security, to excuse publicly traded companies from their usual accounting and securities-disclosure obligations.

I can't deny that the Tarp Inspector General said that Paulson and Bernanke falsely stated that the big banks receiving Tarp money were healthy, when they were not.

Okay, the government and Wall Street have traditionally tried to dispense happy talk when there is an economic crash, and Arianna Huffington recently pointed out:

There is something in the current DC/NY culture that equates a lack of unthinking boosterism with a lack of patriotism. As if not being drunk on the latest Dow gains is somehow un-American.


And I'll give you that a recent Pew Research Center study on the coverage of the crisis found that the media has largely parroted what the White House and Wall Street were saying.


Read more at: http://www.huffingtonpost.com/robert-reich/why-wall-street-reform-is_b_330105.html
But that's not propaganda . . . its just positive thinking, right?

The Other Guy


And the whole word propaganda is a Nazi, communist kind of thing which has no place in the same sentence as America. Right?

Granted, famed Watergate reporter Carl Bernstein says the CIA has already bought and paid for many successful journalists.

And sure, the New York Times discusses in a matter-of-fact way the use of mainstream writers by the CIA to spread messages.

True, a 4-part BBC documentary called the "Century of the Self" shows that an American - Freud's nephew, Edward Bernays - created the modern field of manipulation of public perceptions, and the U.S. government has extensively used his techniques (but the BBC isn't American, so it doesn't count).

I won't deny that the Independent discusses allegations of American propaganda (but that's a British paper, doesn't count).

And (ho hum) one of the premier writers on journalism says the U.S. has used widespread propaganda.

And (are we still talking about this?) an expert on propaganda testified under oath during trial that the CIA employs THOUSANDS of reporters and OWNS its own media organizations (the expert has an impressive background).

And (I can't believe we're still talking about this) while the U.S. government has repeatedly claimed that it was launching propaganda programs solely at foreign enemies, it has actually used them against American citizens. For example:

* In 2002, the Pentagon announced that it was considering spreading false propaganda in the foreign press. However, the military has spread propaganda within the U.S. in an operation so aggressive that one participant, a military analyst, called it "psyops on steroids"

* Raw Story confirmed yesterday the use of propaganda on Americans

* The U.S. government long ago announced its intention to "fight the net".

* As revealed by an official Pentagon report signed by Rumsfeld called "Information Operations Roadmap":

The roadmap acknowledgement that information put out as part of the military's psychological operations, or Psyops, is finding its way onto the computer and television screens of ordinary Americans.

"Information intended for foreign audiences, including public diplomacy and Psyops, is increasingly consumed by our domestic audience," it reads.

"Psyops messages will often be replayed by the news media for much larger audiences, including the American public," it goes on.***
"Strategy should be based on the premise that the Department will 'fight the net' as it would an enemy weapons system".

And (when's the next episode of American Idol on?) CENTCOM announced in 2008 that a team of employees would be " bloggers who are posting inaccurate or untrue information, as well as bloggers who are posting incomplete information."

And (who do you think will win the playoffs?) the Air Force is also engaging bloggers. Indeed, an Air Force spokesman said:

"We obviously have many more concerns regarding cyberspace than a typical Social Media user," Capt. Faggard says. "I am concerned with how insurgents or potential enemies can use Social Media to their advantage. It's our role to provide a clear and accurate, completely truthful and transparent picture for any audience."

And (did you see that crazy photo?) it is well known that certain governments use software to automatically vote stories questioning their interests down and to send letters favorable to their view to politicians and media (see - as just one example - this, this, this, this and this). The U.S. government is very large and well-funded, and could substantially influence voting on social news sites with very little effort, if it wished.

The Bottom Line

Yeah yeah, people say this or that, whatever, I'm too busy to think about it.

Even if true, propaganda is too strong a word for attempts to convince people that important issues are boring, that no one else is angry about them, and that everything is normal.

Perhaps "herding the wayward sheep" would be better . . .

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51. Why Wall Street Reform is Stuck in Reverse posted by Robert Reich

http://robertreich.blogspot.com/

At a conference in London, a Goldman Sachs international adviser, Brian Griffiths, praised inequality. As his company was putting aside $16.7 billion for compensation and benefits in the first nine months of 2009, up 46 percent from a year earlier, Griffiths told us not to worry. �We have to tolerate the inequality as a way to achieve greater prosperity and opportunity for all,� he said.

Eight months ago it looked as if Wall Street was in store for strong financial regulation -- oversight of derivative trading, pay linked to long-term performance, much higher capital requirements, an end to conflicts of interest (i.e. credit rating agencies being paid by the very companies whose securities they're rating), and even resurrection of the Glass-Steagall Act separating commercial from investment banking.

Today, Congress is struggling to produce the tiniest shards of regulation that would at least give the appearance of doing something to rein in the Street.

What happened in the intervening months? Two things. First, America's attention wandered. We're now focusing on health care, Letterman's frolics, and little boys who hide in attics rather than balloons. And, hey, the Dow is up again. The politicians who put off Wall Street regulation for ten months knew that the public would probably lose interest by now.

Second, the banks keep paying off Congress. The big guns on Wall Street increased their political donations last month after increasing their lobbying muscle. Morgan Stanley's Political Action Committee donated $110,000 in September, for example, of which Democrats got $43,000.

Official Wall Street PAC donations are piddling compared to the tens of millions of dollars that Wall Street executives dole out to candidates on their own (or with a gentle nudge from their firms). Remember -- the Street is where the money is. Executives and traders on the Street have become the single biggest sources of money for Democrats as well as Republicans. And with mid-term elections looming next year, you can bet every member of Congress has a glint in his or her eye directed at the Street.

That's why the President went to Wall Street to raise money Tuesday night, gleaning about $2 million for the effort. He politely asked the crowd to cooperate with reform -- �If there are members of the financial industry in the audience today, I would ask that you join us in passing necessary reforms" -- but those were hardly fighting words. It's hard to fight people you're trying to squeeze money out of.

Which is the essential problem.

Ken Feinberg, the President's "pay czar" came down hard on executive pay yesterday, for those banks still collecting money under TARP, as well he should. But Feinberg isn't trying to pass new financial reform legislation, and TARP no longer covers several of the biggest banks with the highest pay and bonuses -- although they're still getting subsidized by the government with low-interest loans.

Wall Street and the Treasury want us to believe that the TARP money will be repaid to taxpayers, but Neil Barofsky, the special inspector general keeping watch over TARP, said yesterday that just 17 percent of the TARP money has been repaid, and �t�s extremely unlikely that taxpayers will see a full return on their investment." Later he told a reporter that it's unlikely "we'll get a lot of our money back at all."

Brian Griffiths, the Goldman international adviser who told us inequality is good for us, doesn't know what he's talking about. America is lurching toward inequality once again, led by the financial industry. The Street is back to where it was in 2007, but most of the rest of us are poorer than we were then -- largely due to the meltdown that occurred because Wall Street overreached. The oddity is that we bailed out the Street, including Griffiths and his colleagues, but apparently won't even be repaid.
And now that Griffiths et al knows his firm and the other big ones on the Street are too big to fail, he and his colleagues will make even bigger gambles in the future with our money.

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52. Dollar Collapse Update: "Obama Demands Pay in Euros!" By Mike Whitney

http://www.informationclearinghouse.info/article23801.htm

October 23, 2009 "Information Clearing House" -- The "dollar debate" on the Internet has been ferocious and emotionally-charged, but sadly lacking in logic. To oppose the "dollar will crash" theorists is like arguing a woman's right to choose with the fist-waving throng assembled outside an abortion clinic. The results are equally disappointing. To say that "minds are already made up and the issue is settled", is an understatement. For many, the dollar's transition from the world's reserve currency to a Wiemar era Deutschemark is not a question "if" but only of "when". One reader summed up the distrust that's felt for anyone who dares to challenge the prevailing dogma like this:

"Mike.....Your article on October 19th 2009 titled �The Dollar will NOT crash,� made all of us in this part of the world who respected your views and opinions feel disturbed and appalled....Then my friend explicated and reminded me, �From the time of Chaim Weizmann�s solicitous and guile behavior towards the politicians, the media and the newspersons, the powerful Zionists lobby had perfected the art of falsity and misrepresentation."

Uh, okay. So, now opposing the dominant theory not only proves that one is a fool, but also a tool of the "Zionist lobby"?

This is why struggling writers always keep the refrigerator stocked with a hearty malt.

No one can deny that the dollar COULD crash or that it faces stiff headwinds in the years ahead as the fiscal deficits continue to pile up. But let's not overreact. Japan's deficits are twice the size of GDP and bond yields are still hovering below 2 percent. In other words, the Japanese are fighting deflation, so no one is particularly worried about inflation. That's as it should be. In the US, deficits are a paltry 12 percent of GDP, and already people have their knickers-in-a-twist. Even deficits soar above 100 percent ($14 trillion) it's unlikely that they'll crush the dollar. But--on the other hand-- if the government suddenly stops spending money and running huge deficits; unemployment will skyrocket, banks and businesses will default, foreclosures will rise, and the economy will slip back into a very severe recession. The myth that "You can't solve a debt problem by creating more debt" is pure bunkum. That's for people who want to balance the budget at all costs, regardless of its effect on working people. The goal should be to get the economy back on its feet and worry about the red ink later.

Here's Paul Krugman explaining why the Fed is engineering a weaker dollar:

"Although there has been a lot of doomsaying about the falling dollar, that decline is actually both natural and desirable. America needs a weaker dollar to help reduce its trade deficit, and it�s getting that weaker dollar as nervous investors, who flocked into the presumed safety of U.S. debt at the peak of the crisis, have started putting their money to work elsewhere.

But China has been keeping its currency pegged to the dollar � which means that a country with a huge trade surplus and a rapidly recovering economy, a country whose currency should be rising in value, is in effect engineering a large devaluation instead.

And that�s a particularly bad thing to do at a time when the world economy remains deeply depressed due to inadequate overall demand." (Paul Krugman, "The Chinese Disconnect" New York Times)

So, if China is so worried about their massive investment in dollars, (as everyone seems to think) then why aren't they letting their currency rise so the dollar can weaken? It's because they are more concerned about sustaining demand then problems with the greenback. They're showing they have more confidence in the dollar than most Americans.

It is true that the dollar has dipped 15 percent since summer, but so what? That just means that people are less scared now then they were after Lehman Bros. collapsed. Here's a clip from the Economist explaining it all:

"The simplest explanation for the currency�s decline is based on risk aversion. On the days when risky assets fall, the dollar tends to go up. When risky assets rise, the dollar falls. The dollar has fallen fairly steadily since March, a period which has seen stockmarkets enjoy a phenomenal rally. Domestic American investors may be driving the relationship, repatriating funds in 2008 when they were nervous about the state of financial markets and sending the money abroad again this summer because of a perception that the global economy is reviving." ("Down with the Dollar" The economist, Oct, 2009)

As time goes by, the relationship between stocks and the dollar will change, but for now, the rule is still holds.

So why is this debate about the dollar so important?

Because the majority of people believe that the real problem is the deficits, and not the economy. That's just flat wrong, and it creates political opposition to more stimulus, which we need. Blame it on the media for convincing people that we are in a recovery and that "green shoots" are sprouting up everywhere. It's pure fiction. The country could still wind up in a Depression when the stimulus wears off. And it's wearing off very quickly. (The effects of the stimulus will peak in the Third Quarter)

Consumer credit is contracting at a year-over-year rate of 5 percent. Household balance sheets are in tatters, savings are up, spending is down, and unemployment is headed for 10 percent. Record foreclosures, delinquencies, bankruptcies, and defaults are sucking credit from the system making it harder for the Fed to keep the economy sputtering along. If the Fed cuts off the bloodflow of monetary stimulus, the patient will slip into a deep coma.

Here's a likely scenario of what could take place in the next few months:

Even though the signs of severe deflation are visible everywhere, investors short the greenback and the dollar plunges to $1.60 per euro. That increases public angst which sets off a firestorm on Capital Hill. The Congress forces the Fed to stop its quantitative easing (QE) program (which has already pumped over $1 trillion into US Treasuries and mortgage-backed securities) and long-term interest rates spike overnight. This puts downward pressure on the housing market and the slump deepens. More jobs are lost, more banks and financial institutions default, perfectly good businesses cannot role over their debt and call it quits, prices fall across the board, the stock market retraces its March lows, and the economy ends up in the ditch.

Think it can't happen?

Bernanke's problem, is that all the tools at his disposal are blunt instruments. It's like performing kidney surgery with a meat cleaver. Dropping interest rates and printing money can stave off deflation, but it also pushes stocks higher than anyone really wants. That leaves traders on the sidelines waiting for a market correction before they jump back in. The same is true of the dollar. Sure, Bernanke wants a cheap greenback to spark exports and reduce household debt, but when the dollar plunges to $1.60 per euro, then the sh** hits the fan and the public outcry forces him to change directions. If the dollar falls any further, the Fed will have to shut down the printing presses altogether and watch while the boat capsizes. The problem is more political than economic.

US policymakers should drop this nonsense about the dollar and deal with the underlying problem itself; lack of demand. That means the focus should be on wage growth and full employment. If that means printing up a couple more trillion; then get to it! Getting people back to work and paying them decently should be job one.

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53. The Death-Defying Dollar By Barry Eichengreen

http://www.gulf-times.com/site/topics/article.asp?cu_no=2&item_no=321781&version=1&template_id=46&parent_id=26

The blogosphere is abuzz with reports of the dollar�s looming demise. The greenback has fallen against the euro by nearly 15% since the beginning of the summer. Central banks have reportedly slowed their accumulation of dollars in favour of other currencies.

Economists have no trouble explaining the dollar�s weakness after the fact. With American households saving more in order to rebuild their retirement accounts, the country has to export more. A weaker dollar is needed to make American goods more attractive to foreign consumers.

Moreover, disenchantment with the sophisticated instruments that American financial institutions specialise in originating and distributing means more limited foreign capital flows into the United States. Fewer foreign purchases of US assets again imply a weaker dollar. Extrapolating the past into the future, forecasters predict that the dollar will decline further.

The first thing to say about this is that one should be sceptical about economists� predictions, especially those concerning the near term. Our models are, to put it bluntly, useless for predicting currency movements over a few weeks or months.

I should know. When the sub-prime crisis erupted in early September 2007, I published an article entitled �Why Now is a Good Time to Sell the Dollar� in a prominent financial publication. What happened next, of course, was that the dollar strengthened sharply, as investors, desperate for liquidity, fled into US Treasury securities. Subsequently the dollar did decline. But then it shot up again following the failure of Bear Stearns and the problems with AIG.

Over periods of several years, our models do better. Over those time horizons, the emphasis on the need for the US to export more and on the greater difficulty the economy will have in attracting foreign capital are on the mark. These factors give good grounds for expecting further dollar weakness.

The question is, Weakness against what? Not against the euro, which is already expensive and is the currency of an economy with banking and structural problems that are even more serious than those of the US. Not against the yen, which is the currency of an economy that refuses to grow.

Thus, for the dollar to depreciate further, it will have to depreciate against the currencies of China and other emerging markets. Their intervention in recent weeks shows a reluctance to let this happen. But their choice boils down to buying US dollars or buying US goods. The first option is a losing proposition.

In the longer run, Opec will shift to pricing petroleum in a basket of currencies. It sells its oil to the US, Europe, Japan, and emerging markets alike. It hardly makes sense for it to denominate oil prices in the currency of only one of its customers. And central banks, when deciding what to hold as reserves, will surely put somewhat fewer of their eggs in the dollar basket.

Beyond this, the dollar isn�t going anywhere. It is not about to be replaced by the euro or the yen, given that both Europe and Japan have serious economic problems of their own. The renminbi is coming, but not before 2020, by which time Shanghai will have become a first-class international financial centre. And, even then, the renminbi will presumably share the international stage with the dollar, not replace it.

The one thing that could precipitate the demise of the dollar would be reckless economic mismanagement in the US. One popular scenario is chronic inflation. But this is implausible. Once the episode of zero interest rates ends, the US Federal Reserve will be anxious to reassert its commitment to price stability. There may be a temptation to inflate away debt held by foreigners, but the fact is that the majority of US debt is held by Americans, who would constitute a strong constituency opposing the policy.

The other scenario is that US budget deficits continue to run out of control. Predictions of outright default are far-fetched. But high debts will mean high taxes. The combination of loose fiscal policy and tight monetary policy will mean high interest rates, sluggish investment, and slow growth. Foreigners � and residents � might well grow disenchanted with the currency of an economy with these characteristics.

Mark Twain, the 19th-century American author and humorist, once responded to accounts of his ill health by writing that �reports of my death are greatly exaggerated.� He might have been speaking about the dollar. For the moment, the patient is stable, external symptoms notwithstanding. But there will be grounds for worry if he doesn�t commit to a healthier lifestyle. - Project Syndicate

Barry Eichengreen is Professor of Economics and Political Science at the University of California, Berkeley.

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55. 3 signs of the next real estate collapse By Katie Benner

http://money.cnn.com/2009/10/21/real_estate/commercial_real_estate_bubble.fortune/index.htm?postversion=2009102210

The latest bubble is about to burst, but this time it's in the commercial market. Here's how to see it coming.


NEW YORK (Fortune) -- When the FDIC closed Chicago's Corus Bank last month, it may have signaled the beginning of the next shock to the banking system: commercial real estate defaults.

Corus, whose balance sheet was larded with bad construction loans, is just one of many banks that have a slew of this debt on their books. Refinancing the $2 trillion in commercial mortgages will be tough, as property values decline. And in this new age of cautious lending, few banks are willing to refinance loans.

"There is a lack of new debt," says Michael Haas, a real estate attorney at Jones Day. "There is a hesitancy to extend credit when there is a real possibility that the real estate may be worth less than it was a few years ago."

Now, in a situation eerily similar to the subprime crisis, the result is likely to be a wave of foreclosures and loan defaults that could, in turn, trigger a collapse in the market of the structured bonds backed by commercial real estate and construction debt. But when, and how bad will it be? Here are three indicators to watch.


1. Special Servicers

Firms such as LNR Property, CW Capital, and Centerline are tasked with unraveling the most troubled loans in a last ditch attempt to keep them from default. An uptick in business at these companies means more borrowers under duress.

Between April and August of this year, the value of commercial loans in special servicing doubled to about $50 billion, according to Trepp, a firm that tracks the commercial real estate market.

2. Big Projects

When rents and property values fall, apartment complexes, malls, hotels, and major projects financed during the bubble become more likely to default on their debt.

Fitch Ratings has identified several stressed loans that have been sliced and diced into billions of dollars in commercial mortgage-backed securities, including Tishman Speyer's $3 billion loan for its Stuyvesant Town-Peter Cooper apartment complex in Manhattan and a $4.1 billion loan secured by Extended Stay's hotels.

3. Regional Banks

Watch to see how banks such as Fidelity Southern and United Community Banks -- identified in a SunTrust Robinson Humphrey report as having a high proportion of noncurrent construction loans -- hold up over the next few months. Community banks were especially aggressive in originating commercial real estate loans, but they could still manage to avoid big problems.

"Medium and small banks have a lot of exposure to local building projects," says Chris Whalen, a bank analyst and co-founder of Institutional Risk Analytics. "They're forbearing or getting involved in their customers' business rather than taking losses. They're hoping they can hold out until values come back."

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49. Losing their lifeline - 7,000 a day

http://money.cnn.com/2009/10/22/news/economy/unemployment_benefits_extension/index.htm

As the Senate debates whether to extend unemployment benefits, more than 200,000 jobless Americans are set to see their checks stop in October.


NEW YORK (CNNMoney.com) -- Another day, another 7,000 people run out of unemployment benefits.

One month after the House passed a bill extending unemployment benefits, the issue is still being debated in the Senate.

Democratic leaders in the Senate introduced a bill two weeks ago to lengthen benefits in all states by 14 weeks. Those that live in states with unemployment greater than 8.5% would receive an additional six weeks.

Senate Republicans want to add several amendments, including one that would pay for the extra benefits with stimulus funds rather than by extending a federal unemployment tax.

While leaders in both parties are trying to negotiate a compromise, Senate Democrats Wednesday took a step to bring the bill to the floor as early as the end of next week. If it passes, the Senate legislation must then be reconciled with the House version, which extends benefits by 13 weeks in high-unemployment states.

Meanwhile, the bickering has cost people like Crystal Jordan of Dolton, Ill., their benefits. The single mother of three ran out in late September.

She is one of the 1.3 million people set to lose their benefits before year's end if Congress doesn't act, according to the National Employment Law Project, an advocacy group. In October alone, more than 200,000 people will fall off the rolls.

Lawmakers twice lengthened the time people can receive checks to as much as 79 weeks, depending on the state.

Jordan lost her administrative support job in the spring of 2008. She had never been unemployed before and hasn't been able to find work since, despite sending out 10 resumes a day.

Jordan is also finishing her bachelor's degree in business management. She hopes that will give her the edge she needs to find a job in 2010.

The $1,000 check she received every two weeks allowed her to pay the rent and feed her family. Now, she doesn't know how she'll cover next month's bills.

"I am fearful we will all end up on the street because I can't find a job and have no income," Jordan said. "Everyone's household is extremely tight at the moment so I cannot lean on friends or family for any support."

More Americans than ever before are in Jordan's situation. More than one in three people who are unemployed have been out of work for at least six months, according to the law project. The unemployment rate hit a 26-year high of 9.8% in September.

"We're talking about people who've been unemployed for well over a year," said Judy Conti, federal advocacy coordinator at the law project. "If they had savings, it's gone. This is their last lifeline."

Gregg Rock, a business strategy consultant, drained his savings after joining the ranks of the unemployed in summer 2008. He was forced to move back to his mother's home in Huntington, N.Y., for the first time in more than 20 years.

With so many people looking for work, Rock feels his best chance is land a new job is through networking. But it costs him $18 just to trek into Manhattan, not to mention $4 for a cup of coffee at Starbucks, where he often meets people who he hopes will lead him to a job.

Rock's benefits ran out last week. Now, he says, he'll be forced to drive a cab at night or take a bartending job just to earn enough to keep job hunting.

"Unemployment is what allows you to afford to be out there networking," Rock said. To top of page

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56. Mickey Mouse

After losing the rights to Oswald, Disney felt the need to develop a new character to replace him. He based the character on a mouse he had adopted as a pet while working in a Kansas City studio.<36> Ub Iwerks reworked on the sketches made by Disney so that it was easier to animate it. However, Mickey's voice and personality was provided by Disney. In the words of a Disney employee, "Ub designed Mickey's physical appearance, but Walt gave him his soul."<36> Besides Oswald and Mickey, a similar mouse-character is seen in Alice Comedies which featured a mouse named Ike the Mouse, and the first Flip the Frog cartoon called Fiddlesticks, which showed a Mickey Mouse look-alike playing fiddle. The initial films were animated by Iwerks, his name was prominently featured on the title cards. The mouse was originally named "Mortimer", but later christened "Mickey Mouse" by Lillian Disney who thought that the name Mortimer did not fit. Mortimer later became the name of Mickey's rival for Minnie, who was taller than his renowned adversary and had a Brooklyn accent.

The first animated short with Mickey in it was titled, Plane Crazy, which was, like all of Disney's previous works, a silent film. After failing to find a distributor for Plane Crazy or its follow-up, The Gallopin' Gaucho, Disney created a Mickey cartoon with sound called Steamboat Willie. A businessman named Pat Powers provided Disney with both distribution and Cinephone, a sound-synchronization process. Steamboat Willie became an instant success,<37> and Plane Crazy, The Galloping Gaucho, and all future Mickey cartoons were released with soundtracks. Disney himself provided the vocal effects for the earliest cartoons and performed as the voice of Mickey Mouse until 1946. After the release of Steamboat Willie, Walt Disney would continue to successfully use sound in all of his future cartoons, and Cinephone became the new distributor for Disney's early sound cartoons as well.<38> Mickey soon eclipsed Felix the Cat as the world's most popular cartoon character.<36> By 1930, Felix, now in sound, had faded from the screen, as his sound cartoons failed to gain attention.<39> Mickey's popularity would now skyrocket in the early 1930s.<36>

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57. Mickey Mouse Piano Solo - The Opry House (1929)

http://www.youtube.com/watch?v=o5zdHAspBAQ

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58. Mickey Mouse Cartoon � Wild Waves (August 15, 1929)

http://www.youtube.com/watch?v=Pcz8YM8sAu0&NR=1

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59. Mickey Cartoons � Building a Building (Jan. 7, 1933)

http://www.youtube.com/watch?v=P1TLtLE43nE&feature=related

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60. Mickey Mouse - The Gallopin' Gaucho (1928)

http://www.youtube.com/watch?v=dUgoYfl5h94&feature=related

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61. Mickey Mouse Cartoon - The Moving Day (1936) (Co-starring Donald and Goofy)

http://www.youtube.com/watch?v=R8FzGOOQNDY&feature=related

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62. Mickey Mouse - The Picnic (1930)

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

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63. Mickey Cartoons � The Beach Party (Nov. 5, 1931)

http://www.youtube.com/watch?v=MgK4g5XDfCE&feature=related

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68. Gillian Tett: �Was October 2008 just a dress rehearsal?�

http://www.nakedcapitalism.com/2009/10/gillian-tett-was-october-2008-just-a-dress-rehearsal.html


A lot of investors I know lamented the loss of Gillian Tett. As the Financial Times� capital markets editor in the runup to the crisis, she had provided insight into some of the more arcane goings-on in the financial markets. I�ve had reason to look at her older commentary (circa 2004-2005) and some of it is freakishily prescient. But then she got promoted, she went to work on her book, and her writings were less frequent and just not as crisp.

Well, we may be getting the old Miss Tett back, and we all should be careful what we wished for. This article is very much like some pieces she wrote in January 2007�..and she says we�ll know better if the �reflate the economy by creating an asset bubble� strategy will work in 6 months.

Um, first we have the ugly 6 month parallel. The real break in the credit markets started in July 2007�.6 months out from her January 2007 pieces.

Second, she indicates that most observers recognize the rally is not the result of fundamentals (duh!) but the result of excessive liquidity chasing assets. She adds this:

Now, some western policymakers like to argue � or hope � that this striking rally could be beneficial, in a way, even if it is not initially based on fundamentals. After all, the argument goes, if markets rebound sharply, that should boost animal spirits in a way that could eventually seep through to the �real� economy�.

Yet, what worries me is that it is still very unclear that that pile of damp wood � aka the real economy � truly will catch fire, in a sustainable way.

Tett is being way too cautious. Someone tried this very experiment once and it was a complete disaster.

In 1985, the US bilateral trade deficit with Japan had gotten so bad that even the �free markets� oriented Reagan administration felt it had to do something about it. The result was the Plaza accord, a coordinated currency intervention to push down the greenback.

It was narrowly too successful and broadly a failure. The dollar fell further than anyone wanted it to, over 50% versus the yen. In fact, two years later, another coordinated intervention, the Louvre accord, was implemented to drive the dollar back up.

Even though US imports from Japan fell, US exports to Japan barely budged. The trade barriers were structural. But the Japanese now had a very pricey currency, and their exports to other countries fell also.

So the authorities figured they�d try to stimulate consumer spending via asset appreciation. Notice how Japan�s problem then is analogous to China�s now: an economy that depends on exports with insufficient consumer spending (of course, one problem in Japan that everyone seems to forget is the small size of their homes. How can you consume a lot if you have restricted living and storage space?). The idea was that the wealth effect would lead people to spend more and raise the level of domestic growth, offsetting the fall in exports.

We know how that movie ended.

Asset bubbles beget more bubbles unless the authorities shrink the financial sector. Tett�s colleague Wolfgang Munchau wrote earlier in the week:

This is exactly what the economist Hyman Minsky predicted in his financial instability hypothesis.** He postulated that a world with a large financial sector and an excessive emphasis on the production of investment goods creates instability both in terms of output and prices.

While, according to Minsky, these are the deep causes of instability, the mechanism through which instability comes about is the way governments and central banks respond to crises. The state has potent means to end a recession, but the policies it uses give rise to the next phase of instabiliy�.The world has witnessed a proliferation of financial bubbles and extreme economic instability that cannot be explained by any of the established macroeconomic models. Minsky is about all we have.

His policy conclusions are disturbing, especially if contrasted with what is actually happening. In their crisis response, world leaders have focused on bonuses and other irrelevant side-issues. But they have failed to address the financial sector�s overall size. So if Minsky is right, instability should continue and get worse.

From Tett:

Earlier this month, I received a sobering e-mail from a senior, recently-retired banker. This particular man, a veteran of the credit world, had just chatted with ex-colleagues who are still in the markets � and was feeling deeply shocked.

�Forget about the events of the past 12 months � the punters are back punting as aggressively as ever,� he wrote. �Highly leveraged short-term trades are back in vogue as players � jostle to load up on everything from Reits and commercial property, commodities, emerging markets and regular stocks and bonds.

�Oh, I am sure the banks� public relations people will talk about the subdued atmosphere in banking, but don�t you believe it,� he continued bitterly, noting that when money is virtually free � or, at least, at 0.5 per cent � traders feel stupid if they don�t leverage up.

�Any sense of control is being chucked out of the window. After the dotcom boom and bust it took a good few years for the market to get its collective mojo back this time it has taken just a few months,� he added. He finished with a despairing question: �Was October 2008 just a dress rehearsal for the crash when this latest bubble bursts?�

I daresay this missive reflects some element of hyperbole. But I have quoted it at length because the question is becoming more critical. Six months ago, the financial system was in deep distress, reeling from a meltdown. Now despair and panic have been replaced not simply by relief � but, in some quarters, euphoria. Never mind the high-profile rally that has occurred in the equity markets; what is perhaps most stunning is the less visible rebound in debt and derivatives markets, as risk assets have displayed what Barclays describes as a �stellar performance�.

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71. The Onion Does Disney World

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72. A LIKELY EXCUSE! Wall St falls on weak industrials; transports drag

http://news.yahoo.com/s/nm/20091023/bs_nm/us_markets_stocks_79

U.S. stocks fell on Friday, with the major indexes slipping for the first week in three, as industrial companies' weak results overshadowed robust earnings from tech and retail heavy-weights.

The blue-chip Dow average finished below 10,000 for the second time this week.

A stronger U.S. dollar hit commodity prices, hurting the energy and materials sectors, while an analyst's comments on a major railroad's stock hit the transports sector.

Shares of Burlington Northern Santa Fe Corp (BNI.N), the second-biggest U.S. railroad, slid over 6 percent after an RBC Capital analyst cut his price target on the stock and helped drive the Dow Jones Transportation Average (.DJT) down 3.5 percent. An index of S&P industrial companies (.GSPI) lost 1.7 percent.

The U.S. dollar rose against the pound after data showed the UK posted its sixth straight quarter of contraction in gross domestic product, the longest stretch on record, and better-than-expected U.S. housing data gave the greenback an extra boost.

The dollar's strength helped push oil and commodity prices lower, sending shares of companies in the energy and materials sectors down. The S&P materials sector (.GSPM) fell 2.1 percent.

But shares of technology bellwether Microsoft Corp (MSFT.O) jumped 5.4 percent to $28.02 and online retailer Amazon.com Inc (AMZN.O) soared a whopping 26.8 percent to $118.49 after earlier climbing to a lifetime high of $119.65.

"In the face of a market moving down, Microsoft and Amazon are up strong. Today it is not a stock market, but a market of stocks. If companies come out with good reports, they are being rewarded," said Robert Auer, senior portfolio manager at SBAuer Funds in Indianapolis.

"For the rest of the market, it is a normal day. We're up more than 50 percent on the S&P from the March lows, and the market just has to go down sometimes."

The Dow Jones industrial average (.DJI) dropped 109.13 points, or 1.08 percent, to 9,972.18, marking its second finish this week below the 10,000 mark. The Standard & Poor's 500 Index (.SPX) dropped 13.31 points, or 1.22 percent, to 1,079.60. The Nasdaq Composite Index (.IXIC) dropped 10.82 points, or 0.50 percent, to 2,154.47.

On Wednesday, the Dow industrials also finished slightly below the 10,000 mark following a late sell-off led by financial stocks.

For the week, the Dow slipped 0.2 percent and the S&P 500 declined 0.7 percent, while the Nasdaq dipped 0.1 percent.

RAILROADS' ROUGH DAY

In Friday's session, Burlington Northern's shares fell 6.5 percent, or $5.50, to $79.12 a day after the company reported a 30 percent drop in quarterly profit. The company hauls a variety of commodities such as coal, grain, lumber, construction materials, automobiles and consumer goods.

An RBC Capital analyst cut his price target on Burlington Northern's stock to $87 from $91, while keeping his "underperform" rating.

Shares of Union Pacific Corp (UNP.N), the largest U.S. railroad, tumbled 5.6 percent, or $3.39, to $57.73.

Oilfield services company Schlumberger Ltd (SLB.N) dropped 5 percent to $65.20 after it warned natural gas drilling activity would remain weak until late 2010. This year, natural gas prices globally have been too low to justify much drilling of new wells, Schlumberger said.

U.S. crude oil futures fell 69 cents, or 0.9 percent, to settle at $80.50 a barrel. The S&P energy sector index (.GSPE) slid 2 percent.

Top decliners in the tech sector included Broadcom Corp (BRCM.O) and MEMC Electronic Materials Inc (WFR.N) following disappointing quarterly results.

Shares of Broadcom, which makes chips for everything from cellphones to TV set-top boxes, slid 7.3 percent to $28.50 on Nasdaq. The stock of MEMC Electronic Materials, which makes silicon, the major raw material for the solar and semiconductor industries, dropped 10.1 percent to $13.87 on the New York Stock Exchange.

The semiconductor index (.SOXX) lost 3.2 percent.

Earlier in the day, September data showed sales of previously owned U.S. homes surged to their highest level since July 2007.

Volume was moderate on the New York Stock Exchange, with 1.28 billion shares changing hands, below last year's estimated daily average of 1.49 billion. On the Nasdaq, about 2.48 billion shares traded, above last year's daily average of 2.28 billion.

Declining stocks outnumbered advancing ones on the NYSE by a ratio of about 3 to 1, while on the Nasdaq, nearly 10 stocks fell for every three that rose.

[Demeter]

73. 4 Part Max Keiser: Bomb Goldman, Not Iran! (He includes maps)

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=385x393488

[Karenina]

111. I so love Max!!!

:rofl:

[Demeter]

74. After the Billionaires Plundered Alabama Town, Troops Were Called in ... Illegally

http://www.alternet.org/workplace/143485/after_the_billionaires_plundered_alabama_town%2C_troops_were_called_in_..._illegally

Editor's Note: The shocking transfer of public wealth to Wall Street's pockets is illustrated vividly in Mark Ames' article below, which covers some very disturbing recent events in Alabama, where billionaires and banks are squeezing the locals so hard that they're literally going bankrupt just for flushing their toilets, where violence and the threat of violence are reaching a boiling point and where even the Posse Comitatus Act is under threat.

Earlier this week, a Goldman Sachs adviser made the mistake of publicly confirming what most of us already assumed: They believe that the shocking gap between their obscene wealth and the rest of America's declining incomes is actually a good thing.

Even though the facts prove the opposite. Average American incomes are lower today than in 1998 and have largely stagnated since 1979, while the top 1 percent saw its wealth soar to such bizarre heights that today, just the Walton family alone is worth more than the bottom 100 million Americans, and income inequality hasn't been this bad since 1928 -- the year before the last economic crash.

Our problem, according to the Goldman adviser, Brian Griffiths, is that we commoners just don't understand a good thing when we see it: "We have to tolerate the inequality as a way to achieve greater prosperity and opportunity for all."

What's really stunning is that Griffiths made that statement in St. Paul's Cathedral in New York. That's how arrogant our billionaire masters have become, now that they've gotten away with looting trillions from America -- they're equating their corruption and plunder with God's will. And I think they mean it, too. (God, on the other hand, could go a long way toward proving Griffiths wrong by, say, planting a few tumor cells in his pancreas. Just sayin'.)

Griffiths is wrong, of course; but he's right in the sense that America has been on a relentless path toward widening the gap between rich and the rest ever since the Reagan Revolution. And it's worked: The Organization for Economic Cooperation and Development issued a report last year showing that America now has the third-worst level of income inequality and poverty among the OECD's 30 countries. Only Turkey and Mexico were worse off.

That's right, America is now in a class with corrupt Third World basket-case nations, or what are euphemistically called "developing nations." And that's exactly what the billionaires' goal has been, whether you want to believe it or not: to turn America into Mexico or Turkey.

Because Mexico and Turkey are the kinds of places where billionaires can plunder wealth and control the government without fear of too much resistance from an uppity middle class, disruptive unions and all those demands for "rights" that every other First World country's citizens besides America's (and Mexico's and Turkey's) expect -- like the right to universal health care, paid vacations, guaranteed pensions, fair business rules �

What our billionaire class wants is a broken Third World system it can manipulate and profit from, superimposed on a wealthy First World nation offering bottomless riches. So it has superimposed a corrupt Mexico structure on top of America and proceeded to suck it dry like King Leopold II in the Congo.

But of course, the two come into conflict: First World America and the expectations of its citizens, and Third World inequality.

We're at the point now where the zero-sum struggle between the billionaires and the rest of us is being decided, and so far, we -- the bottom 95 percent -- are getting our sorry asses kicked.

To show you what I mean, and how far we've gone toward becoming another Mexico, look at what's happening in Alabama, where billionaires and banks are squeezing the locals so hard that they're literally going bankrupt just for flushing their toilets, where violence and the threat of violence are reaching a boiling point and where even the Posse Comitatus Act is under threat.
* * *

One of this year's more disturbing stories that were ignored was the illegal Army occupation of Samson, Alab., in March following a shooting spree that raged across two towns by a disgruntled worker, leaving 11 people dead.

As I wrote at the time, Michael McLendon, 27, went on a killing rampage following years of relentless corporate exploitation and harassment against him, his mother (whom he mercy-killed), and the entire rural Alabama region, which suffered like so many parts of rural America at the hands of billionaire goons like chicken oligarch Bo Pilgrim of Pilgrim's Pride notoriety.

One of the creepiest details to emerge in the shooting rampage were reports that troops from nearby Fort Rucker were brought into Samson and other surrounding areas to patrol the streets. This is a clear violation of the Posse Comitatus Act, every freedom-loving American's worst nightmare.

And now, finally, the Army officially agrees that its occupation of the Alabama streets was illegal, according to an internal report the Associated Press got a hold of, following a Freedom of Information Act filing:

An Army investigation found that soldiers should not have been sent to man traffic stops in a small Alabama town after 11 people were killed in March during a shooting spree.

An Army report released to the Associated Press on Monday in response to a Freedom of Information Act request said the decision to dispatch military police to Samson from nearby Fort Rucker broke the law. But an Army spokesman said no charges have been filed following the Aug. 10 report.

The report from the Department of Army Inspector General found the use of military personnel in Samson violated the Posse Comitatus Act, which prohibits federal troops from performing law-enforcement actions. The names of those involved were redacted from the report.

According to the report, the officer's "intent was to be a good Army neighbor and help local civilian authorities facing a difficult, unique tragedy affecting the local community. There were no apparent adverse collateral effects to the support provided."

Indeed. For a lot of Americans, the sight of troops occupying their towns is their worst nightmare come true -- part of the reason that America came into existence was to create a country where this sort of thing would never happen, even if the Army's sole intent was to be a good neighbor and help old ladies cross the streets.

Strangely enough, there was almost no media coverage of the occupation -- you had to rely on various right-wing outlets like CNSNews.com, whose article I blogged at the time, or the left-wing Democratic Underground.

But what even the right-wing anti-government people won't report is the true reason why the Army was called out in the first place, something that goes right back to the cause of the shooting rampage: billionaire exploitation of the local Alabamans, not just by the chicken oligarch, but from higher up the predator food chain -- Wall Street banking behemoth JP Morgan Chase.

You see, thanks to a combination of corporate-tax holidays (which reduce local revenues), billionaire greed like the sort that bankrupted Pilgrim's Pride, and Wall Street investment-banking scams on places like Alabama that result in corrupted local officials and bankrupted municipalities, counties and states -- now, there's no money left to fund local police forces, as the U.S. Army report reveals:

The soldiers arrived in the hours after the shootings, which stretched the town's tiny police force and county officers to the limit with several different crime scenes. The report said troops were dispatched after the Geneva County Sheriff's Office and Samson Police requested assistance from Fort Rucker to relieve law enforcement at traffic checkpoints around the crime-scene area.

As I wrote earlier this year, Pilgrim's Pride hooked up with Wall Street to leverage itself into bankruptcy while enriching the executives' family and a handful of insiders at the expense of tens of thousands of Americans workers:

In 2006, Pilgrim's Pride, then the second-largest chicken processor in the world, made a huge gamble that will seem familiar to anyone who's been following the financial crash: the company borrowed hundreds of millions of dollars, leveraging itself well beyond its means, in order to acquire a rival company and become the nation's No. 1 chicken processor, slaughtering 45 million chickens per week.

That might have given the executives a nice, big hard-on, but it also meant they would have to come up with more money to pay for all that debt. So the company did do what every post-Reagan company has done and gotten away with: it made the workforce pay for the executives' bonuses.

That meant squeezing lower-middle-class workers for more work for less pay, or in Pilgrim's case, more work for no pay: In August 2007, the U.S. Department of Labor filed a lawsuit against Pilgrim's Pride accusing it of grossly undercompensating its employees. That same year, 10,000 Pilgrim's Pride employees launched a class-action lawsuit demanding compensation for their work.

The damage extended well beyond Pilgrim's Pride's plants. With bankruptcy came huge unpaid local tax bills, leading to further layoffs and reduced services for the already-beleaguered locals:

Suwannee County could be out about $2 million if Pilgrim's Pride doesn't pay its property-tax bill, according to property appraiser Lamar Jenkins.

The biggest taxpayer in the county filed for bankruptcy protection Dec. 1. Now it's not clear when -- or if -- the bill will be paid.

"It's certainly going to put a hurt on the budget of the county," Jenkins told the Democrat by phone Thursday. Jenkins said the unpaid bill represents 7.4 percent of the money local schools get from property taxes; 5.3 percent of county funds from that source; and 8 percent of the money the Suwannee River Water Management District receives from local property-tax revenues.

A spokesman for Pilgrim's did not respond to a request for comment.

Bo Pilgrim, the head of Pilgrim's Pride, once told his Texas church that he was worth over $1 billion before the market crash, and he's still worth hundreds of millions. His rapacity was boundless, and in the end it was the undoing of Pilgrim's Pride -- not the Pilgrim family, mind you, which is still filthy disgusting rich, but the company is through.

Last month, 64 percent of Pilgrim's Pride was sold to JBS, a Brazilian beef giant, making it the largest meat company in the world, topping America's Tyson. The American cattle industry tried to block the deal, which it says could result in the destruction of the American beef industry, but the Justice Department already approved JBS' takeover.

In the billionaires' Third World model for America, it makes awful sense that a Brazilian meat company would take control of a bankrupt, corrupt American chicken company. For Wall Street and the billionaires, the more they destroy in America, the richer they get, consequences be damned. And anyway, it's not like Pilgrim's Pride was a model of corporate responsibility while under American ownership; just read some of the comments on this recent Reuters article:

Gilmer, Texas, Sep. 8, 2009 -- working as a supervisor in mt pleasant plant use to be injoyable, but lately they expect you to work 50/70 hours for no extra pay. pilgrims pride does not care about family life just their money. Everyone is afraid to say anything, because upper management may let you go with no warnning because you voiced your oppion

robert, Carrollton, Ga. -- i work carrollton,ga former goldkist plant we were goldkist 1 plant now we fill like we in pure hell working for pilgrim pride these people want you to kiss there ass and work three times hard for same money no rasied in two years old chicken farmer

Doddridge, Ark. -- While I was raising chickens for Pilgrim's Pride, I became friends with many lower management employees of the company. The manner in which they were terminated was just simply unmerciful. While the growers had the brunt of the financial devastion, many that were nearing retirement were left with no prospects of employment in the near future. I know some that have had to uproot their families and settle for a considerable more modest lifestyle with their retirement benefits in doubt after a number of years of employment. It is just a shame that Bo Pilgrim has pocketed the money of many hard working people. I still believe Bo needs to be in the jail cell next to Bernie Madoff.

The comments section is where you'll find the real, unvarnished, ungrammatical rage among America's cheated majority, because for the most part, people are too desperate and afraid to complain in public.

But here's the rub: Selling Pilgrim's Pride to a Brazilian meat monopoly doesn't mean things will get better for Alabamans. Just weeks after the buyout was announced, Pilgrim's Pride closed another plant, this one in northern Alabama. According to the AP:

A chicken-processing plant owned by Pilgrim's Pride Corp. is shutting down this week after almost six decades, putting more than 600 people out of work and creating ripples that will be felt all over town.

The city of almost 20,000 is preparing for the end of a relationship that began in 1952 when James Beasley founded Sweet Sue Poultry, which originally ran the plant. Owners included Beatrice Foods and ConAgra before Pilgrim's Pride purchased the business in 2003.

Which looks a lot like an even more depressing Pilgrim's Pride story from a few months earlier, this from rural Arkansas. The town of Clinton filed a lawsuit in June against Pilgrim's Pride, accusing it of turning the town into a "ghost town":

"With its largest and sole remaining employer, Pilgrim's, now evacuated, the city faces a crisis of revenue, bond payments and economic devastation, and as a result of the Pilgrim's evacuation is threatened with becoming a modern-day ghost town," the lawsuit filed by the city said. "This serious economic situation is, however, a direct consequence of Pilgrim's illegal purpose in shuttering the Clinton plant and operations."

This story is repeated all over the rural South. So guess who put together the deal that bankrupted Pilgrim's Pride? Lehman Bros., the king of bankruptcy.

On the other side of the deal, serving Gold Kist, was Merrill Lynch, which also collapsed last year. But Merrill's banker in the Pilgrim's Pride acquisition is still doing well, thank you very much. In fact, he was recently hired by JPMorgan Chase as vice chairman of mergers and acquisitions.

Which makes perfect sense, because JPMorgan Chase has been laying waste to Alabama on a level that makes Pilgrim's Pride's destruction look downright humanitarian. JP Morgan Chase has plundered so much wealth from one county in Alabama, using a complex derivatives scheme and old-fashioned bribery, that some locals are calling it "Armageddon." According to Bloomberg:

In its 190-year history, Jefferson County, Ala., has endured a cholera epidemic, a pounding in the Civil War, gunslingers, labor riots and terrorism by the Ku Klux Klan. Now this namesake of Thomas Jefferson, anchored by Birmingham, is staring at what one local politician calls financial "Armageddon."

The spectacle -- a tax struck down, about 1,000 county employees furloughed, a politician indicted over $3 billion in sewer debt that may lead to the largest municipal bankruptcy in history -- has elbowed its way up the ladder of county lore.

"People want to kill somebody, but they don't know who to shoot at," says Russell Cunningham, past president of the Birmingham Regional Chamber of Commerce.

Jefferson County's debacle is a parable for billions of dollars lost by state and local governments from Florida to California in transactions done behind closed doors. Selling debt without requiring competition made public officials vulnerable to bankers' sales pitches, leaving taxpayers to foot the bill for borrowing gone awry.

he county bet on interest-rate swaps, agreements that a representative of New York-based JPMorgan Chase & Co. told commissioners could reduce their interest costs. Instead, the swaps -- covering more than $5 billion in all -- blew up during the credit crisis after ratings for the county's bond insurers fell.

JPMorgan, through spokeswoman Christine Holevas, declined to comment for this story.

Yeah, why bother commenting to the public when you own the bastards? JPMorgan, which took $25 billion in direct bailout money and tens of billions more in backdoor subsidies and handouts, just posted a massive $3.6 billion quarterly profit, and has set aside at least $11.1 billion for management bonuses. Meanwhile, Alabamans can't afford to flush their toilets.

This is what inequality looks like. From Wall Street, it must look extremely appealing; for the rest of America, it's a nightmare that's only getting worse.

So far, it's clear that Birmingham and the entire Jefferson County are following the wretched script of a typical Third World scenario, where the Wall Street bankers corrupt the politicians and eventually bankrupt the place and then, while the corpse is still warm and the bankruptcy deals are cut, Wall Street makes sure it's first in line to profit off the chaos it created, while its corrupt local shill (in this case Birmingham's mayor) takes the fall for the crime of accepting the JP Morgan bribes � and the locals get screwed worst of all, paying off the bill for years or decades.

Just this week, it emerged that Goldman Sachs, employer of Brian "Inequality Is Good" Griffiths, bilked the state of New Jersey using a similar scheme involving interest-rate swaps on bonds that don't even exist. According to Bloomberg, New Jersey is considering raising its gasoline tax to pay the $1 million a month they have to pay out to Goldman for the scam -- a regressive tax that once again takes from the struggling middle class and poor, and puts in thepockets of the billionaires.

Meanwhile, over in Jefferson County, Ala., there's so little left to steal from the impoverished locals that Wall Street has been forced to come up with a new, grotesquely evil plan to line their pockets: taxing the local residents for taking a shit:

In August, Bank of New York Mellon Corp., as trustee for owners of about $3 billion in sewer warrants, filed suit in Jefferson County Circuit Court seeking an appointed receiver for the sewer system. The receiver should have authority to raise rates enough to meet the debt service, the bank said in the complaint, which is pending. The sewer system is already charging customers about 300 percent more to drain bathtubs or flush toilets than a dozen years ago.

By one county estimate, average annual bills are now about $750, compared with the national average of $331, according to a 2007 survey by the Washington, D.C.-based National Association of Clean Water Agencies, a coalition of utilities.

It's impossible to boost them enough without putting them beyond the means of many residents, County CommissionerJim Carns says. "We're like a guy making $50,000 a year with a $1 million mortgage."

In Wall Street's eyes, Alabamans really do shit gold.

The thing now will be to convince the locals to use their toilets rather than, say, gas to heat their homes.

As I wrote a few months ago, Jefferson County residents have become so desperate that they're being forced to choose between water and heating, as this article shows:

As nighttime temperatures plunged in Birmingham, Ala., last October, Dora Bonner had a choice: either pay the gas bill so she could heat the home she shares with four grandchildren, or send the Birmingham Water Works a $250 check for her water and sewer bill.

Bonner, who is 73 and lives on Social Security, decided to keep the house from freezing.

"I couldn't afford the water, so they shut it off," she says.

Bonner's sewer bills have risen more than fourfold in the past decade. So have those of others in Jefferson County, which has 659,000 residents and includes Birmingham, the state's largest city.

The logical outcome of the billionaires' plundering of Alabama is the same thing that happens all over the Third World: violence, fear and calling in the troops, the only way to secure the billionaires' dirty profits:

In August and September � Jefferson County residents got a taste of what bankruptcy might look like. As the county began putting about 1,000 workers on leave without pay, one disgruntled employee allegedly e-mailed bomb threats to officials and was promptly arrested, according to the Jefferson County Sheriff's Office.

Lines soon formed outside the courthouse as such tasks as renewing driver's licenses slowed.

A kind of legal civil war broke out when three county agencies -- the sheriff's department, an indigent-care hospital and the tax-assessor's office -- sued the county commission to stop the budget cuts on the grounds that they posed a danger to public safety.

Bettye Fine Collins, the commission president, declared the situation, "our Armageddon."

The state's response is right out of the Central America banana republic playbook: When there's no money left for the people, send in the troops.

The cuts in the sheriff's department budget were so severe that he was planning to call in the National Guard to keep order:

The sheriff in Alabama's most populous county may call for the National Guard to help maintain order, a spokesman said Tuesday, as a judge cleared the way for cuts in the sheriff's budget, and lawmakers reached a compromise they hope will end the budget crisis.

In light of all of this, the Army's brief, illegal occupation of a string of towns in Alabama this past spring no longer looks like a freak one-off, but rather a logical progression in the ongoing billionaire plunder of America.

It gives new meaning to what MSNBC host Dylan Ratigan is calling "corporate communism." Not only are banking billionaires on permanent state wealthfare, but even worse, as the wealth available becomes increasingly scarce and there isn't enough left to satisfy the billionaires' grotesque appetites and regular citizens' needs to flush their toilets or heat their homes, we're heading to the point that all Third World countries come to -- calling out the troops to ensure that the peasants pay their tithes to their absentee masters in New York and Connecticut and don't get all uppity like those Europeans.

Now you can see why Alabamans are loading up on so many weapons. That makes sense. Now they need to understand who the real enemy is. Not the make-believe liberal bogeymen of their nightmares. Rather, Alabamans should focus their anger on the real-world billionaires who are making this country a living hell.

[Demeter]

75. Public option likely to be managed by private insurance company

http://rawstory.com/2009/10/public-option-managed-private-insurance-company/

...Saturday's Washington Post is sure to raise eyebrows among liberal supporters of a gorvernment-run healthcare plan: the plan is likely to be administered by a private insurance company, the very companies that progressive activists are trying to unseat.

The public-option debate is frustrating some Democrats, who have come to believe that a government-run plan is neither as radical as its conservative critics have portrayed, nor as important as its liberal supporters contend. Any public plan is likely to have a relatively narrow scope, as it would be offered only to people who don't have access to coverage through an employer.

The public option would effectively be just another insurance plan offered on the open market. It would likely be administered by a private insurance provider, charging premiums and copayments like any other policy. In an early estimate of the House bill, the Congressional Budget Office forecast that fewer than 12 million people would buy insurance through the government plan.

Supporters of the public plan contend that it will help to trim healthcare costs, as a public insurer wouldn't need to generate profits. Health insurance companies typically earn profits of around two to four percent, which amounts to billions of dollars for some firms.

A physicians' group notes that the bills authorize the government to contract with "corporations" that will create a "public option."
Story continues below...

"Both bills authorize the Secretary to contract with corporations to conduct unspecified activities that will somehow lead to the creation of an �€œoption�€� program throughout the country," Kip Sullivan at Physicians for a National Health Program writes.

He continues:

Advocates of a �€œpublic option�€� claim that the �€œoption�€� will look like Medicare. They say this about the �€œoption�€� in both bills that have been introduced to date �€“ the House �€œreform�€� bill, HR 3200, and the bill written by the Senate Health, Education, Labor and Pensions (HELP) committee. But this statement is not true.

Medicare is larger than any private insurance company; the �€œoption�€� in both bills will be small. The traditional Medicare program is a single program with uniform benefits; the �€œoption�€� in both bills will be a balkanized program that may not be available in all parts of the country. Medicare is administered by public employees; the �€œoptions�€� in both bills will be administered by private-sector corporations, some or all of which will be insurance companies. The �€œoption�€� in neither bill resembles Medicare....

As the preceding rather convoluted description of MACs and contracting administrators suggests, neither the HELP bill nor HR 3200 makes it easy for readers to grasp that corporations, not public employees, will create, and probably run, the �€œoption�€� program. Neither bill comes right out and says, �€œThe Secretary shall hire private-sector corporations to create and run as many health insurance companies as is necessary to make health insurance available for sale to the non-elderly in each health insurance market in America.�€� Nor is that fact being ballyhooed by the bills�€™ authors and proponents. But it�€™s an important feature for �€œoption�€� supporters to understand because it undermines the claim �€œoption�€� advocates make over and over that the �€œoption�€� will look like Medicare.

The Senate Health Committee bill includes a public option; the Senate Finance Committee bill does not. Senate Democrats are pushing to include an "opt-out" or "trigger" public health option in their final bill, which would unsettle some Democratic moderates but not to the point where they'd join a Republican filibuster.

In the House, Speaker Nancy Pelosi (D-CA) is whipping votes for a "robust" public option, to give negotiators between the two chambers leverage in order to have some form of the public option be included in a final bill.

[Demeter]

76. Who cares if Wall Street 'talent' leaves?

http://money.cnn.com/2009/10/23/news/newsmakers/fed.feinberg.fortune/index.htm?cnn=yes

If lower pay lures some of Wall Street's finest away, so be it. It's not as if the best and brightest were doing a good job to begin with.


NEW YORK (Fortune) -- There's no need to fear a Wall Street brain drain -- despite the crackdown on pay by Washington.

On Thursday, White House pay czar Kenneth Feinberg outlined compensation restrictions at seven firms that got special bailouts, and the Federal Reserve proposed to review pay practices at 28 unnamed giant banks.

Critics warn that reining in pay makes it hard to keep talented employees. Hemmed in, institutions like AIG (AIG, Fortune 500),Bank of America (BAC, Fortune 500) and Citigroup (C, Fortune 500) could lose their best people.

These firms would then perform even more abysmally, if that's possible, leaving them hard pressed to repay tens of billions of dollars of taxpayer-backed loans.

Still, we say Godspeed to this "talent." After all, the traders and suits in the corner offices don't exactly have an unblemished track record. In 2008, Citigroup, BofA and Merrill Lynch (since acquired by BofA) posted a grand total of $51 billion in losses.

Yet even as they were running themselves into the ground, the firms managed to pay out more than $12 billion in bonuses -- including 1,606 million-dollar-plus bonuses, according to a report from the New York attorney general's office.

"Even a cursory examination of the data suggests that in these challenging economic times, compensation for bank employees has become unmoored from the banks' financial performance," the report said.

Meanwhile, it's hard to imagine that defection-hit firms would have a lot of trouble finding qualified replacements in the current job market.

Unemployment has doubled nationally since December 2007, when the recession started. Securities industry employment has fallen 10% nationwide and 14% in New York from a mid-2008 peak, according to Bureau of Labor Statistics data, costing some 90,000 jobs in the U.S.

And Goldman Sachs' (GS, Fortune 500) charm offensive notwithstanding, it looks like the official response to runaway pay is just starting.

The Fed's plan to weigh big banks' compensation plans against their potential for undermining the economy could eventually put pressure on pay at all the big banks.

"This could be a game changer," said Simon Johnson, an economist at MIT. "There will be a lot of pressure on them in Congress to stick it to the big firms."

But maybe the best reason not to fret about talent flight is one familiar to cubicle dwellers everywhere: just because someone has a big, high-paying job doesn't mean they're good at it.

Take Bank of America, for instance. The bank's longtime CEO, Ken Lewis, unexpectedly announced his retirement this month, while agreeing to give back his 2009 salary.

Lewis didn't say why he was leaving, but it seems that criticism over his empire building, mishandling of the Merrill acquisition and outsize pay got to him. The Charlotte Observer reported he had grown tired of the "mud being thrown on him day by day."

Another helping or two of that mud could be just what Wall Street needs.

[Demeter]

79. AIG says it has made $12.1 million in bonus payments

http://www.marketwatch.com/story/aig-says-it-has-made-121-million-in-bonus-payments-2009-10-24?siteid=yahoomy

The day after U.S. pay czar Kenneth R. Feinberg finalized his review of American International Group Inc.'s compensation plans, the insurer paid out retention bonuses and a retirement benefit that had been held up by the by review.

On Friday, AIG paid $4 million to a total of four executives, three of whom AIG named. That included $1 million paid to David Herzog, its chief financial officer; $1.6 million to Kristian P. Moor, president and chief executive officer of Chartis, AIG's property/casualty insurance business; and unspecified amounts to two other executives, one of which is Jay S. Wintrob, an executive vice president.

Another $8.1 million was paid to a number of other employees. All were retention payments that were due to be paid beginning earlier in 2009 but delayed due to AIG's status as one of the seven companies that received large amounts of money from the Troubled Asset Relief Program, or TARP, and was subject to an examination of its compensation standards.

The awards were originally 60% payable in December 2008 and 40% payable in December 2009, but the payment dates were voluntarily delayed pending the examination, AIG said in a Securities and Exchange Commission filing Friday. AIG had made the payments of these retention awards contingent upon "meeting performance goals related to AIG's restructuring," the filing said.

Treasury's pay czar Feinberg concluded in a determination released Thursday that further "restructuring of these retention contracts would not be consistent with the Public Interest Standard," with respect to three of the covered employees, AIG said in its filing.

In addition to the retention payments, AIG paid $14.4 million to the retirement account of Edmund S. W. Tse, the former senior vice chairman of life insurance who retired at AIG's 2009 annual meeting.

[Demeter]

80. The Sun Came Out!

It's cold as deepest November Out there, but I'm going to chance it. Hold the fort for me!

[DemReadingDU]

82. Capmark Said Ready to File for Bankruptcy

10/24/09 Capmark Said Ready to File for Bankruptcy

Capmark Financial Group Inc., one of the nation's largest commercial-real-estate lenders, plans to file for bankruptcy as soon as this weekend, a person familiar with the situation said.

The much-expected move underscores the deep problems in the business-property market. After suffering from the collapse in residential mortgages, U.S. banks face steep losses from commercial real-estate loans. Capmark has originated more than $10 billion in commercial real-estate loans, according to Moody's Investors Service.

It also represents a blow to the company's private-equity owners. In 2006, a group led by KKR & Co., Goldman Sachs Capital Partners and Five Mile Capital Partners acquired the lender GMAC LLC's commercial-real estate business and renamed it Capmark. As of March 31, the investor group owned about 75% of the company, with GMAC and its employees owning the balance.

The Horsham, Pa., company recently reported a $1.6 billion second-quarter loss and warned it might be forced to seek Chapter 11 bankruptcy protection. KKR has already written down its investment in Capmark to zero.

Capmark recently entered an agreement to sell its North American servicing and mortgage-banking operations to a new company owned by Warren Buffet's Berkshire Hathaway and Leucadia National Corp. for as much as $490 million. Under the deal's terms, the sale could occur while Capmark is in bankruptcy, but would require a bigger cash payment.

Adding to Capmark's pressures, the Federal Deposit Insurance Corp. had notified the company that it must raise capital and boost liquidity at its Utah bank, which has roughly $10 billion in assets.

The bank would not be part of Capmark's bankruptcy filing, a person familiar with the situation said.

KKR declined to comment. Capmark didn't respond to a request for comment.

http://online.wsj.com/article/SB125640081248705947.html?mod=rss_Today%27s_Most_Popular

[Demeter]

85. It Was Only a Matter of Time

Will Goldman take a haircut?

[DemReadingDU]

83. PBS: The Crash of 1929

The Crash of 1929 chronicles a fateful year through the words and experiences of the descendants of these titans of finance.
read more Intro...
http://www.pbs.org/wgbh/americanexperience/crash/introduction

Watch here
http://www.pbs.org/wgbh/americanexperience/crash/

or watch Monday evening 10/26/09. Check your PBS local listing for time



"History doesn't repeat itself, but it does rhyme." Mark Twain

[Demeter]

84. Obama declares swine flu a national emergency

http://news.yahoo.com/s/nm/20091024/ts_nm/us_flu_usa_obama_6

President Barack Obama has declared 2009 H1N1 swine flu a national emergency, the White House said on Saturday.

The declaration will make it easier for U.S. medical facilities to handle a surge in flu patients by allowing the waiver of some requirements of Medicare, Medicaid and other federal health insurance programs as needed, the White House said in a statement.

The U.S. Centers for Disease Control and Prevention said on Friday that swine flu has become widespread in 46 of the 50 U.S. states, a level comparable to the peak of ordinary flu seasons but far earlier and with more waves of infection expected.

Obama signed the statement on Friday night.

The White House statement said the declaration was intended to prepare the country in case of "a rapid increase in illness that may overburden health care resources." It was similar to disaster declarations issued before hurricanes hit coastal areas.

"It's important to note that this is a proactive measure -- not a response to a new development," an administration official said.

"H1N1 is moving rapidly, as expected. By the time regions or healthcare systems recognize they are becoming overburdened, they need to implement disaster plans quickly," he said.

Seasonal flu normally peaks sometime between late November and early March and kills about 36,000 Americans in an average year.

Swine flu has hit young adults and children the hardest, while seasonal flu normally is more dangerous for people over age 65.

H1N1, declared a public health emergency earlier in the year, has killed more than 1,000 people in the United States and put more than 20,000 in the hospital since it emerged earlier this year, the CDC said. But health officials are quick to note that the actual number of cases cannot be measured.

The new declaration clears the way for waivers of federal requirements that, for example, could prevent hospitals from establishing off-site, alternate care facilities that could help them deal with emergency department demands, the White House said.

The Health and Human Services Department is trying to deliver vaccines against H1N1 but says production is falling short of projections because companies are having trouble making them.

HHS has also moved to make available stockpiles of antiviral drugs oseltamivir, made by Roche AG under the brand name Tamiflu, and zanamivir, an inhaled drug made by GlaxoSmithKline under the brand name Relenza.

On Friday the U.S. Food and Drug Administration issued an emergency use authorization for an experimental new drug called peramivir, made by Biocryst Pharmaceuticals Inc and licensed to Shionogi & Co Ltd.

The authorization allows the intravenous drug to be used in hospitalized patients who cannot take pills or inhale Relenza or when Tamiflu or Relenza do not seem to be helping.

[Demeter]

86. Congressmen Grayson, Clay and Miller Introduce CFPA Amendment to Help Reduce Looting By George Washi

http://www.nakedcapitalism.com/2009/10/guest-post-congressmen-grayson-clay-and-miller-introduce-cfpa-amendment-to-help-reduce-looting.html

Congressmen Grayson, Clay and Miller are introducing an amendment to the Consumer Financial Protection Agency bill:

Today we will offer the �Financial Autopsy� amendment. The Grayson/Clay/Miller amendment is essential to attacking the root problem of consumer bankruptcy and foreclosure because it requires the CFPA to do a financial audit of products that have caused the highest rates of bankruptcy and foreclosure annually. Not later than March 31st of each calendar year, the CFPA will list these anti-consumer products, submit their conclusions on why these products �fail� consumers, the companies and employees that underwrote these products, and authorizes the CFPA to take action to restrict these products.

Financial Autopsy Amendment:

- Requires the CFPA conduct a �Financial Autopsy� of each state�s bankruptcies and foreclosures (a scientific sampling), and identify financial products that systematically led to a large number of bankruptcies and foreclosures.

- Requires the CFPA report to Congress annually on the top financial products (the companies and individuals that originated the products) that caused consumer bankruptcies and foreclosures.

- Requires the CFPA take corrective action to eliminate or restrict those deceptive products to prevent future bankruptcies and corrections

- The bottom line is to highlight destructive products based on if they are making people �broke�. Thank you for your consideration, we hope you will join us in supporting this amendment.

Sincerely,
Alan Grayson Wm. Lacy Clay Brad Miller

Is this a good amendment or a bad amendment?

It is a great amendment.

Why?

Instead of trying to pass a one-size-fits-all bill prohibiting certain specified conduct, it will force an annual analysis of what financial products are sticking it to the consumer.

Remember, credit default swaps didn�t bring down the economy because they are toxic while all other financial vehicles are pure as the driven snow. CDS brought down the economy because they were the choice du jour of the looters.

If we outlaw CDS (which I have argued for in the past), then the looters would create some other instrument for looting.

The Grayson/Clay/Miller amendment would help to force an annual review of the tool-of-trade of the rip-off artists.

Note: Given the huge incentives for financial �innovation�, the armies of lawyers, mathematicians and other footsoldiers employed by the financial giants, the pressure that the �too big to fails� to earn their way out of the hole, and the rapidity with which imbalances in the modern financial system can build up when alot of people are making the same kind of trade, an annual review is probably not enough.

So my only suggestion for Congressmen Grayson, Clay and Miller is that the amendment require:

(1) Annual reviews generating formal written reports

Plus �

(2) Monthly informal reviews. If a review reveals a large number of bankruptcies or foreclosures caused by a specific type of financial product, this would trigger a formal report

Trust me . . . the boys can still cause the economy to thoroughly crash if their actions are not examined for a year at a time.

Call your congressional representatives and demand that they support the Grayson/Clay/ Miller amendment.

[Demeter]

87. Denninger Adds:

http://market-ticker.denninger.net/archives/1527-Financial-Autopsy-Amendment-CFPA.html

This sounds good, especially at first blush, and is certainly a move in the right direction. But......

1.
There is nothing preventing financial institutions from "tweaking" a product that causes trouble and reintroducing it. The general problem here is the same as what we've seen before with so-called regulation - the lack of an "or else.

2.
There appears to be no financial sanction or clawback to compensate those who are harmed by these products.

I generally like the premise, but I don't like the lack of hard accountability. "Stop beating your wife" sounds good, but who pays for her medical treatment? More importantly, if you beat your wife with a baseball bat, simply removing the bat is insufficient so long as there is a kitchen full of knives and chairs available to you when she returns home!

This sort of "feel good" legislative amendment will of course be resisted, but it simply isn't enough. The basic principle of equity (better said as "fairness under the law") puts forward the premise that one cannot cheat and be allowed to keep the fruits of one's outrageous behavior.

So while I like the direction of this amendment, I would put forward the premise that the entirety of the gains "earned" from such toxic products, when found, are clawed back and distributed to the consumers so harmed, and that to the extent this does not fully compensate for that harm such a finding should give rise to a private, civil cause of action for the consumers who are bankrupted or foreclosed.

The key here is that in order for that cause of action to exist a finding must be made that systematically cause a large number of foreclosures and bankruptcies.

We do not simply bar people from creating toxic "foods" and "drugs", we expose them to legal liability if and when they do.

Pure logic dictates that screwing someone, no matter how you do it, should lead to legal sanction and exposure for your outrageous conduct. How we have managed to get to a place in this country where that is not the immediate and indisputable response to such ridiculously egregious conduct is something we must address - and resolve.

[Demeter]

88. Banks Must Protect Consumers to Protect Themselves

http://www.nakedcapitalism.com/2009/10/guest-post-banks-must-protect-consumers-to-protect-themselves.html

By Jonathan Mintz, the Commissioner of the New York City Department of Consumer Affairs, and Richard H. Neiman, the Superintendent of Banks for the State of New York:

For over a year, most of us have agreed that reform of our financial regulatory system is essential to our future financial stability and economic growth. Yet further consensus has been difficult to achieve.

With House committee debate and markup of Congress�s reform bills underway we, a bank regulator and a consumer protection official write to unify two perspectives that have created more conflict than necessary in this debate. We reject the myth, as many have unfortunately framed it, that consumer protection and prudent bank regulation are in conflict. Risky or deceptive financial products hurt the economy as a whole as much as they hurt the consumer. The public deserves � and our economy requires � that we concentrate on a strengthened system of financial oversight that demands clear, fair, and prudent banking and lending products and practices.

More important than the discourse over whether it would be better to combine or separate bank regulatory and consumer protection agencies is the idea that we first collectively agree that the solution must leverage and strengthen the resources of both disciplines. The New York State Banking Department (NYSBD) is the oldest bank regulatory agency in the nation, regulating state-licensed and state-chartered financial entities. New York City�s Department of Consumer Affairs (DCA) is the first municipal consumer protection agency in the nation, enforcing a fair and vibrant consumer marketplace. Through our cooperation in developing consumer products and financial education programs, we have experienced firsthand the benefits of combining our perspectives and offer three observations based on that experience.

First, smart consumer protections enhance choice and encourage a more competitive and more stable marketplace. Consumer protection at its core is about a clear offer that can be meaningfully accepted; it is a red herring to suggest that consumer protection leads to limitations on consumer choice. Excessive latitude toward overly complex, aggressive and deceptive marketing created a robust but short-term recipe for profit, but sacrificed sustained profitability, a stable customer base and ultimately the entire economy. And it decimated millions of individual families� financial stability, primarily those least able to afford having their modest resources plundered.

Second, while expanding financial literacy is critical, it is insufficient alone to protect consumers. Deceptive practices must be banned and truly effective disclosures for complex products must be required. The vast bulk of consumers who avoid mainstream banking do so because of well-founded fears of unexpected and destabilizing fees and hidden product features, not a lack of education. Overdraft protection plan fees are the prime example. The Federal Deposit Insurance Corporation reports that overdraft fees on debit transactions-which average $27 on overdrafts averaging just $20-represents a staggering annual percentage rate of 3,540 percent. According to a recent Moebs Study, bank revenues from these fees may total $38.5 billion this year alone. Credit products offer more of the same: hidden disclosures, costly fees and imposed surprises. In addition to prohibiting unacceptably unsafe financial products and services, we need to empower consumers to distinguish between safe and potentially dangerous products, for their benefit and the stability of our economic system.

Third, we therefore propose the development of a nationally recognized rating system that would clearly communicate product safety and complexity. With advice from diverse stakeholders, this rating function would be enforced across the spectrum of banking regulators. These product ratings would aid consumers in selecting suitable products, and would provide a useful tool for evaluating Community Reinvestment Act (CRA) compliance in a qualitative way, reforming the program�s stifling �check-the-box� mentality which fails to bring meaningful banking services to many communities.

For example, simple and transparent products would be appropriate for many consumers and could receive green light safety ratings. Product features that add complexity or riskiness for those with lower incomes could be given a yellow light designation. And products with features that are inherently dangerous or expensive to the majority of such consumers could be labeled with a red warning, alerting consumers to high risk. Think of skiing. Who would ever venture down a mountain without first knowing if the trail was rated for beginners or was a double black diamond, for experts only?

Approaches such as this ratings system wouldn�t constrain financial institutions to anything other than free market competition, while at the same time empowering consumers to choose the most appropriate financial products and services for their individual needs. If this idea can unite these two regulators, perhaps it can unite the two sides of the debate as well.

[Demeter]

89. PwC: Sour Economy Sparks Divestitures

http://www.cfo.com/article.cfm/14448440/?f=rsspage

Each of the Big Four accounting firms has scrutinized the corporate divestiture market over the past three quarters and has come up with largely the same conclusions. The divestiture market, they say, is outpacing the mergers and acquisitions market in general. More distressed businesses are on the block. Deals are more complex, and therefore take longer to complete. And the woefully stagnant global economy has created a corporate buyer's market, at least for now.

[Demeter]

90. The FHA failed a recent audit

http://bubblemeter.blogspot.com/2009/10/fha-failed-recent-audit.html

Reckless lending practices are part of what got us into the current financial crisis, and the government's response has been...

The Federal Housing Administration may be under-equipped to manage its exploding market share, according to an internal audit released last week. The report gave the FHA poor marks for its steps to screen lenders that are allowed to sell loans backed by the federal agency.

The FHA�s market share has grown sharply as the private mortgage market collapsed over the past two years, and the FHA now insures around one-quarter of all U.S. mortgages, up from around 2% in 2006. ...

The audit, by the inspector general for the Department of Housing and Urban Development, found that the agency was under-equipped to manage a big inflow in applications by lenders to make FHA-backed loans. ...

The agency�s management of its affiliated lenders remains a top concern because the FHA�s financial reserves have dropped below mandatory levels for the first time in its 75-year history. Critics warn that rising defaults on FHA-backed loans could require a taxpayer bailout, but agency officials insist taxpayer money won�t be needed. Fraud remains a top concern as defaults rise on loans backed by the agency. ...

Some in Congress want the agency to do more by increasing minimum down payments to 5%, up from the current 3.5%. The agency says that such a move would kill any nascent housing recovery.

Things are really messed up when 5% down payments would "kill any nascent housing recovery." 20% down payments used to be the norm. Is America really that addicted to debt?

[Demeter]

91. Emergency! Everybody to Get From Street! Emergency!

Points to anyone who identifies that quote (clue: it has NOTHING to do with Disney).

Peter Schiff has a panic attack on camera--Justified, or not?

http://www.youtube.com/watch?v=8qGt4yeb6Wk

Peter Schiff: Death Of The Dollar, Hyperinflation

[DemReadingDU]

94. Ok, I don't doubt the dollar will collapse, just not yet

IMO, When the markets decline, and most likely sooner than later, dollar will increase. Besides, for now, it's the world's reserve currency. People all over the world happily spend dollars. Can you imagine the angry people if they couldn't spend their dollars? I really think government will save the dollar, for now. Most likely in a few years, the government won't have any choice and the dollar wouldn't have value. But it should be fine, for awhile.

[Demeter]

95. The Problem is Not TBTF, but TDTR

http://www.nakedcapitalism.com/2009/10/the-problem-is-not-tbtf-but-tdtr.html


Robert Johnson, former chief economist to the Senate Banking Committee, submitted testimony to a House Financial Services Committee hearing on OTC derivatives. His written testimony is to be posted today.

While his remarks are worth reading in their entirety, one bit that caught my attention was his discussion of TDTR, or �Too Difficult to Resolve.� Many readers and economists such as Willem Buiter have argued, forcefully, that it is essential to develop what Buiter calls a �special resolution regime,� which is a fancy way of saying a specific set of rules and practices for putting big financial players into bankruptcy.

I expressed concerns about dealing with the difficulties of Too Big Too Fail institutions yesterday, saying (in effect) that many of the appealing-sounding ideas (including some I had favored, like putting credit default swaps on an exchange) were not workable or would not solve the problem (for instance, as Satyajit Das explained at some length, the amount of initial margin it would take to deal with �jump to default� risk would make credit default swaps uneconomic. No one is willing to kill CDS, which would be the effect of such measures. An undercapitalized exchange creates a concentrated point of failure, an AIG waiting to happen. And even though we would love to shut that casino down overnight, having looked into it is some depth, the cure would probably be at least as bad, if not worse than the disease. The best of the bad choices on offer is to regulate them like insurance, ideally more intrusively, and take affirmative measures to contain the market, particularly restricting the writing of �naked� short exposures).

Many readers were unhappy, but shooting the messenger does not change the fact that this is an even bigger problem to tackle than most realize.

From Johnson (note the link is not live yet, for some reason; Johnson was updating his testimony):

It would not be too strong to say that the architecture of derivatives regulation and market structure is the heart of Too Big to Fail policy.

Absent a drastic simplification of derivative exposures and a transparent and comprehensive improvement in the monitoring of those positions when imbedded in large firms, complex derivatives render these behemoth institutions Too Difficult to Resolve (TDTR). I say that because, the policies of resolving troubled financial institutions, so- called enhanced resolution powers, cannot be invoked unless government authorities have the capacity to assess and understand the entanglements of derivatives exposures throughout the financial sector and the economy at large. Resolution powers themselves can be quite useful and should be passed into law as a part of the financial reform you are considering. The ability to undertake �prompt corrective action� vis a vis bank holding companies and financial services holding companies, as the FDIC can now do vis a vis failing banks, would diminish the probabilities of a cascading bankruptcy or other disruptive panic.

Yet opaque, complex entangled derivatives exposures would serve to deter the authorities from invoking those powers and taking over a failing institution for fear of setting off a system wide calamity of magnitudes that policy officials can dread but not understand or estimate. Complex entanglements through derivatives exposures discourage government officials who are the risk managers on behalf of the citizens of our nation from invoking and using those powers. The spider web of complex opaque derivatives renders enhanced resolution powers impotent.

It is in this respect that complex and opaque derivatives exposures at large financial institutions contributed mightily to a policy of induced forbearance, as we witnessed in the first quarter of 2009. That experience, as we have seen, was very demoralizing to our citizens who have put their faith in philosophies that emphasize the use of markets as a mechanism for achieving social goals. The inhibitions that authorities experience in applying market discipline to large financial institutions and their managements tend to undermine belief in the use of markets.

What makes induced forbearance of TDTR institutions even more troubling is that their potential creditors would understand that they will not have their debts restructured when government officials are deterred by complex derivative exposures from taking a TDTR institution into receivership and restructuring the entity. This would create the perverse impact of reducing the risk premium on the unsecured debt of these institutions, lowering their funding costs, and giving them incentive to take more risk. It would also create a competitive advantage for TDTR firms that encourages an increase in their market share relative to those firms who had to pay more for funding because their creditors would fear that their bonds could be restructured in the event of solvency problems. TDTR financial institutions are enabled to get larger and larger by wrapping themselves in a spider web of complex derivatives and thereby inducing authorities to make ever-larger scale gambles on forbearance. Forbearance is a two-sided coin. Firms can continue to lose money rather than return to health. This is not a tolerable state of affairs for taxpayers who are held hostage by the fear of resolving complex intertwined institutions.

[Demeter]

96. The Next Financial Crisis Hits Wall Street, as Judges Start Nixing Foreclosures By PAM MARTENS

http://www.counterpunch.org/martens10212009.html

The financial tsunami unleashed by Wall Street�s esurient alchemy of spinning toxic home mortgages into triple-A bonds, a process known as securitization, has set off its second round of financial tremors.

After leaving mortgage investors, bank shareholders, and pension fiduciaries awash in losses and a large chunk of Wall Street feeding at the public trough, the full threat of this vast securitization machine and its unseen masters who push the levers behind a tightly drawn curtain is playing out in courtrooms across America.

Three plain talking judges, in state courts in Massachusetts and Kansas, and a Federal Court in Ohio, have drilled down to the �straw man� aspect of securitization. The judges� decisions have raised serious questions as to the legality of hundreds of thousands of foreclosures that have transpired as well as the legal standing of the subsequent purchasers of those homes, who are more and more frequently the Wall Street banks themselves.

Adding to the chaos, the Financial Accounting Standards Board (FASB) has made rule changes that will force hundreds of billions of dollars of these securitizations back onto the Wall Street banks balance sheets, necessitating the need to raise capital just as the unseemly courtroom dramas are playing out.

The problems grew out of the steps required to structure a mortgage securitization. In order to meet the test of an arm�s length transaction, pass muster with regulators, conform to accounting rules and to qualify as an actual sale of the securities in order to be removed from the bank�s balance sheet, the mortgages get transferred a number of times before being sold to investors. Typically, the original lender (or a sponsor who has purchased the mortgages in the secondary market) will transfer the mortgages to a limited purpose entity called a depositor. The depositor will then transfer the mortgages to a trust which sells certificates to investors based on the various risk-rated tranches of the mortgage pool. (Theoretically, the lower rated tranches were to absorb the losses of defaults first with the top triple-A tiers being safe. In reality, many of the triple-A tiers have received ratings downgrades along with all the other tranches.)

Because of the expense, time and paperwork it would take to record each of the assignments of the thousands of mortgages in each securitization, Wall Street firms decided to just issue blank mortgage assignments all along the channel of transfers, skipping the actual physical recording of the mortgage at the county registry of deeds.

Astonishingly, representatives for the trusts have been foreclosing on homes across the country, evicting the families, then auctioning the homes, without a proper paper trail on the mortgage assignments or proof that they had legal standing. In some cases, the courts have allowed the representatives to foreclose and evict despite their admission that the original mortgage note is lost. (This raises the question as to whether these mortgage notes are really lost or might have been fraudulently used in multiple securitizations, a concern raised by some Wall Street veterans.)

But, at last, some astute judges have done more than take a cursory look and render a shrug. In a decision handed down on October 14, 2009, Judge Keith Long of the Massachusetts Land Court wrote:

�The blank mortgage assignments they possessed transferred nothing...in Massachusetts, a mortgage is a conveyance of land. Nothing is conveyed unless and until it is validly conveyed. The various agreements between the securitization entities stating that each had a right to an assignment of the mortgage are not themselves an assignment and they are certainly not in recordable form...The issues in this case are not merely problems with paperwork or a matter of dotting i�s and crossing t�s. Instead, they lie at the heart of the protections given to homeowners and borrowers by the Massachusetts legislature. To accept the plaintiffs� arguments is to allow them to take someone�s home without any demonstrable right to do so, based upon the assumption that they ultimately will be able to show that they have that right and the further assumption that potential bidders will be undeterred by the lack of a demonstrable legal foundation for the sale and will nonetheless bid full value in the expectation that that foundation will ultimately be produced, even if it takes a year or more. The law recognizes the troubling nature of these assumptions, the harm caused if those assumptions prove erroneous, and commands otherwise.� (U.S. Bank National Association v. Ibanez/Wells Fargo v. Larace)

A month and a half before, on August 28, 2009, Judge Eric S. Rosen of the Kansas Supreme Court took an intensive look at a �straw man� some Wall Street firms had set up to handle the dirty work of foreclosure and serve as the �nominee� as the mortgages flipped between the various entities. Called MERS (Mortgage Electronic Registration Systems, Inc.) it�s a bankruptcy-remote subsidiary of MERSCORP, which in turn is owned by units of Citigroup, JPMorgan Chase, Bank of America, the Mortgage Bankers Association and assorted mortgage and title companies. According to the MERSCORP web site, these �shareholders played a critical role in the development of MERS. Through their capital support, MERS was able to fund expenses related to development and initial start-up.�

In recent years, MERS has become less of an electronic registration system and more of a serial defendant in courts across the land. In a May 2009 document titled �The Building Blocks of MERS,� the company concedes that �Recently there has been a wave of lawsuits filed by homeowners facing foreclosure which challenge MERS standing�� and then proceeds over the next 30 pages to describe the lawsuits state by state, putting a decidedly optimistic spin on the situation.

MERS doesn�t have a big roster of employees or lawyers running around the country foreclosing and defending itself in lawsuits. It simply deputizes employees of the banks and mortgage companies that use it as a nominee. It calls these deputies a �certifying officer.� Here�s how they explain this on their web site: �A certifying officer is an officer of the Member who is appointed a MERS officer by the Corporate Secretary of MERS by the issuance of a MERS Corporate Resolution. The Resolution authorizes the certifying officer to execute documents as a MERS officer.�

Kansas Supreme Court Judge Rosen wasn�t buying MERS� story. In fact, Wall Street was probably not too happy to land before Judge Rosen. In January 2002, Judge Rosen had received the Martin Luther King �Living the Dream� Humanitarian Award; he previously served as Associate General Counsel for the Kansas Securities Commissioner, and as Assistant District Attorney in Shawnee County, Kansas. Judge Rosen wrote:

�The relationship that MERS has to Sovereign is more akin to that of a straw man than to a party possessing all the rights given a buyer� What meaning is this court to attach to MERS's designation as nominee for Millennia ? The parties appear to have defined the word in much the same way that the blind men of Indian legend described an elephant -- their description depended on which part they were touching at any given time. Counsel for Sovereign stated to the trial court that MERS holds the mortgage �in street name, if you will, and our client the bank and other banks transfer these mortgages and rely on MERS to provide them with notice of foreclosures and what not.� � (Landmark National Bank v. Boyd A. Kesler)

Lawyers for homeowners see a darker agenda to MERS. Timothy McCandless, a California lawyer, wrote on his blog as follows:

��all across the country, MERS now brings foreclosure proceedings in its own name -- even though it is not the financial party in interest. This is problematic because MERS is not prepared for or equipped to provide responses to consumers� discovery requests with respect to predatory lending claims and defenses. In effect, the securitization conduit attempts to use a faceless and seemingly innocent proxy with no knowledge of predatory origination or servicing behavior to do the dirty work of seizing the consumer�s home. While up against the wall of foreclosure, consumers that try to assert predatory lending defenses are often forced to join the party -- usually an investment trust -- that actually will benefit from the foreclosure. As a simple matter of logistics this can be difficult, since the investment trust is even more faceless and seemingly innocent than MERS itself. The investment trust has no customer service personnel and has probably not even retained counsel. Inquiries to the trustee -- if it can be identified -- are typically referred to the servicer, who will then direct counsel back to MERS. This pattern of non-response gives the securitization conduit significant leverage in forcing consumers out of their homes. The prospect of waging a protracted discovery battle with all of these well funded parties in hopes of uncovering evidence of predatory lending can be too daunting even for those victims who know such evidence exists. So imposing is this opaque corporate wall, that in a �vast� number of foreclosures, MERS actually succeeds in foreclosing without producing the original note -- the legal sine qua non of foreclosure -- much less documentation that could support predatory lending defenses.�

One of the first judges to hand Wall Street a serious slap down was Christopher A. Boyko of U.S. District Court in the Northern District of Ohio. In an opinion dated October 31, 2007, Judge Boyko dismissed 14 foreclosures that had been brought on behalf of investors in securitizations. Judge Boyko delivered the following harsh rebuke in a footnote:

�Plaintiff�s �Judge, you just don�t understand how things work,� argument reveals a condescending mindset and quasi-monopolistic system where financial institutions have traditionally controlled, and still control, the foreclosure process�There is no doubt every decision made by a financial institution in the foreclosure is driven by money. And the legal work which flows from winning the financial institution�s favor is highly lucrative. There is nothing improper or wrong with financial institutions or law firms making a profit � to the contrary, they should be rewarded for sound business and legal practices. However, unchallenged by underfinanced opponents, the institutions worry less about jurisdictional requirements and more about maximizing returns. Unlike the focus of financial institutions, the federal courts must act as gatekeepers�� (In Re Foreclosure Cases)

While the illegal foreclosure filings, investor lawsuits over securitization improprieties, and predatory lending challenges play out in courts across the country, a few sentences buried deep in Citigroup�s 10Q filing for the quarter ended June 30, 2009 signals that we�ve seen merely a few warts on the head of the securitization monster thus far and the massive torso remains well hidden in murky water.

Citigroup tells us that the Financial Accounting Standards Board (FASB) has issued a new rule, SFAS No. 166, and this is going to have a significant impact on Citigroup�s Consolidated Financial Statements �as the Company will lose sales treatment for certain assets previously sold to QSPEs , as well as for certain future sales, and for certain transfers of portions of assets that do not meet the definition of participating interests. Just when might we expect this new land mine to go off? �SFAS 166 is effective for fiscal years that begin after November 15, 2009.� There�s more bad news. The FASB has also issued SFAS 167 and, long story short, more of those off balance sheet assets are going to move back onto Citi�s books.

Bottom line says Citi:

�� the cumulative effect of adopting these new accounting standards as of January 1, 2010, based on financial information as of June 30, 2009, would result in an estimated aggregate after-tax charge to Retained earnings of approximately $8.3 billion, reflecting the net effect of an overall pretax charge to Retained earnings (primarily relating to the establishment of loan loss reserves and the reversal of residual interests held) of approximately $13.3 billion and the recognition of related deferred tax assets amounting to approximately $5.0 billion�.�

I�m trying to imagine how the American taxpayer is going to be asked to put more money into Citigroup as it continues to bleed into infinity.

Citigroup is far from alone in financial hits that will be coming from the Qualifying Special Purpose Entities. Regulators are receiving letters from Citigroup and other Wall Street firms pressing hard to rethink when this change will take effect.

Putting aside for the moment the massive predatory lending frauds bundled into mortgage securitizations, inadequate debate has occurred on whether securitization of home mortgages (other than those of government sponsored enterprises) should be resuscitated or allowed to die a welcome death. If we understand the true function of Wall Street, to efficiently allocate capital, the answer must be a resounding no to this racket.

Trillions of dollars of bundled home mortgage loans and derivative side bets tied to those loans were being manufactured by Wall Street without any one asking the basic question: why is all this capital being invested in a dormant structure? Houses don�t think and innovate. Houses don�t spawn new technologies, patents, new industries. Houses don�t create the jobs of tomorrow.

Also, by acting as wholesale lenders to the unscrupulous mortgage firms (some in house at Wall Street firms), Wall Street was not responding to legitimate consumer demand, it was creating an artificial demand simply to create mortgage product to feed its securitization machine and generate big fees for itself. Now we see the aftermath of that inefficient allocation of capital: a massive glut of condos and homes pulling down asset prices in neighborhoods as well as in those ill-conceived securitizations whose triple-A ratings have been downgraded to junk.

There�s no doubt that one of the contributing factors to the depression of the 30s and the intractable unemployment today stem from a massive misallocation of capital to both bad ideas and fraud. Today�s Wall Street, it turns out, is just another straw man for a rigged wealth transfer system.

Pam Martens worked on Wall Street for 21 years; she has no security position, long or short, in any company mentioned in this article other than that which the U.S. Treasury has thrust upon her and fellow Americans involuntarily through TARP. She writes on public interest issues from New Hampshire. She can be reached at [email protected]

[Hugin]

97. Here's what I'm curious about WRT Foreclosures and Bankruptcy...

My meager knowledge of these legal matters has me understanding that...

If say, Entity A forecloses on a property, then Entity A can't be in line to receive any of the proceeds of a subsequent or simultaneous Bankruptcy.

Now, I know many people carry credit cards or other lines of credit and/or unsecured credit with the same Entity as nominally holds their mortgage... This is especially true due to the fact so many Mortgage Sausages were made (and continue to be made) in this securitization fever.

The Law of Large Numbers tells us this has happened, and probably happened many times, due to the large number of foreclosures and relatively small number of financial institutions involved.

It sure seems that (along with getting big slices of the bailout TARP, also paid for by people who are potentially foreclosed on) the Financial Institutions are claiming to be owed money they really shouldn't be getting... Legally, anyway.

Am I seeing this correctly... Any other opinions?

[Hugin]

99. Here's some Constitutional background to my thinkage.

Surprisingly, from the 5th Amendment...

Specifically, The Double Jepardy Clause.

"No person shall be held to answer for a capital, or otherwise infamous crime, unless on presentment or indictment of a Grand Jury, except in cases arising in the land or naval forces, or in the Militia, when in actual service in time of War or public danger; nor shall any person be subject for the same offense to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.<1>"

But, since the Bush Mal-administration (and a little prior to that with the "Contract on America")... TPTB have had little use for those pesky old world traditions like the Magna Carta and Common Law. (or for the U.S. Constitution)

[bread_and_roses]

98. that is absolutly fascinating

- not that I fully understand all the terms and details, but then, I don't have to. The outlines are perfectly clear. And isn't it interesting that in ANY transaction with any large institution the "consumer" or "client" or supplicant of any sort must always always always "cross every T and dot every i" or pay the penalty, whatever it may be, these institutions (and some judges along the way) figured they could just ignore them? And ignore the law right along with the "details?"

"a rigged wealth transfer system" really does say it all.

[Demeter]

100. CHART OF THE DAY: Google Searchers Are Obsessed With The Dollar Collapse

http://www.businessinsider.com/chart-of-the-day-gold-and-dollar-collapse-2009-10?utm_source=Triggermail&utm_medium=email&utm_campaign=Clusterstock%20Chart%20of%20the%20Day,%20Wednesday,%2010/21/09

If you believe in the wisdom of crowds, then rising google searches for 'dollar collapse' are a bad sign.

While Google data is choppy, search queries have basically doubled since the start of 2008.

'Buy gold' searches have also doubled since the start of 2008. Searches for this have tracked those for 'dollar collapse' relatively well as shown by the two shared spikes in 2008, plus the shared bottom in 2009.

If fears over a dollar collapse ebb, it is clear which way the 'buy gold' trend will go.

http://static.businessinsider.com/~~/f?id=4adf71df0000000000a3c593

[Demeter]

101. Wall Street Steps Up Political Donations, Lobbying

http://online.wsj.com/article/SB125616828727300265.html?mod=WSJ_hps_LEFTWhatsNews

Some of the biggest Wall Street firms are back in the political-spending game after hunkering down while they were getting government bailout funds.

Goldman Sachs Group Inc., Bank of America Corp., Morgan Stanley and other large financial-services firms stepped up their political donations in September to members of Congress, for many the first time this year they have joined the fray.

Most Wall Street firms stopped making donations to lawmakers when they were receiving government funds, and many lawmakers stopped accepting them. But now that the companies have begun returning the bailout funds, they are making campaign donations again. At the same time, they are increasing their spending on lobbying after a yearlong slump.

To be sure, the donations from Wall Street are far below levels of the comparable period four years ago -- the first year of President George W. Bush's second term -- when companies' finances and the overall economy were much healthier.

The renewed assault on Washington comes as the Capitol Hill debate begins on a broad overhaul of financial-services regulations that is strongly backed by President Barack Obama and opposed by large swaths of the finance industry. The spending could also heighten tensions with Mr. Obama, who as recently as Tuesday called on Wall Street to stop lobbying against the proposed regulations.

Wall Street and the Obama administration are at loggerheads over a number of issues, including compensation. The Treasury's pay czar, Kenneth Feinberg, is expected in coming days to slash pay at firms receiving substantial government assistance, including Citigroup Inc. and Bank of America.

New fund-raising data show that Morgan Stanley's political action committee made a total of $110,000 in political contributions in September. The only other month this year the company made donations was July, when it gave $43,000. About 60% of the September donations went to Republicans, who generally support Wall Street's efforts to block the regulations proposed by Mr. Obama and congressional Democrats, a shift to the minority party from July.

Morgan Stanley's fund-raising arm in September donated $2,500 to Alabama's Rep. Spencer Bachus, the top Republican on the House Financial Services Committee, and $5,000 to House Minority Leader John Boehner of Ohio. Half of Morgan Stanley's donations in September went to members of the House panel, which is crafting the financial-services overhaul.

Mr. Bachus couldn't be reached. Mr. Boehner and Morgan Stanley declined to comment.

Democrats received $43,000 from the company. Democratic Rep. Melissa Bean of Illinois received $5,000. Ms. Bean is considered a key swing vote on the financial-services panel and backs an effort to prevent state regulators from approving tougher consumer-protection rules than the federal legislation. Through a spokesman, Ms. Bean declined to comment.

Morgan Stanley also donated $5,000 to Majority Leader Steny Hoyer (D., Md.). Katie Grant, a spokeswoman for Mr. Hoyer, said it is his "policy to accept legal contributions and to pursue the policies he believes are in the best interests of our country irrespective of such contributions."

The fund-raising arm of Bank of America donated $30,500 to Republicans in September and $13,500 to Democrats. The company gave a large amount in February, but otherwise has been quiet this year. Goldman Sachs made $37,500 in donations through its PACs in September, after donating $23,000 up until that month.

Records shows Goldman's PAC donated $22,500 to Democrats and $15,000 to Republicans in September. The company contributed $15,000 each to the Democratic and Republican parties, as well as $5,000 to Mr. Hoyer, the Democratic leader. A spokeswoman for Goldman Sachs declined to comment on the donations.

J.P. Morgan Chase & Co. made nearly $50,000 in political donations through its PAC in September. The company's PAC made no donations from February through May, and only a small number of donations in June, July and August. Records show that the company's donations were split between Democrats and Republicans.

The company donated $2,000 to Alabama Sen. Richard Shelby, the senior Republican on the Senate Banking Committee. The company also donated $1,000 to Pennsylvania Rep. Paul Kanjorski, the No. 2 Democrat on the House financial-services panel.

The lawmakers declined to comment. A J.P. Morgan spokeswoman declined to comment.

The increase in spending by the big Wall Street firms comes amid an aggressive push by financial-services lobbyists on Capitol Hill to stop Mr. Obama's regulatory legislation as it winds its way through Congress.

The House Financial Services panel approved the first elements of the legislation this week and is expected to move to other parts next week. Mr. Obama has repeatedly called on Wall Street to support his overhaul plan, and he has complained about the industry's efforts to defeat the plan so soon after accepting government bailout funds.

Separate lobbying records made public Wednesday show that several of the largest Wall Street firms have ramped up their lobbying efforts recently as Democrats advance their financial-services overhaul plan.

Bank of America and Goldman Sachs each reported spending more on lobbyists in the three-month period ended Sept. 30 than in the previous quarter. Overall, most financial-services firms reported a decline in spending on lobbying, according to a Wall Street Journal analysis of the lobbying-disclosure forms.

[Demeter]

102. Compromise Bill Could Block States on Bank Rules

http://www.nytimes.com/2009/10/22/business/22comptroller.html?_r=1&ref=business

Reaching a compromise on an issue that threatened to derail financial regulatory legislation, the House Financial Services Committee voted on Wednesday to give the federal government the power to block the states from regulating large national banks in some circumstances.

The Obama administration had opposed any efforts by the federal government to pre-empt state officials from imposing more rigorous banking standards. A group of Democrats with close ties to the banking industry had sought a complete federal pre-emption, which would have the effect of sharply limiting any state regulation of banks.

Under the compromise offered by two Democrats, Representative Melvin Watt of North Carolina and Dennis Moore of Kansas, and approved by voice vote, the Office of the Comptroller of the Currency, which regulates national banks, would be able to override the states, but only if it found that the state law �significantly� interfered with federal regulatory policies.

The compromise cleared the way for the House Financial Services Committee to move ahead with plans to approve the creation of a new federal agency to protect consumers from abusive or deceptive credit cards, mortgages and other loans. That vote was expected to take place on Thursday.

On another issue that has been hotly debated for months, the House Agriculture Committee on Wednesday approved a measure to regulate derivatives, the arcane financial instruments that have been linked to the current financial crisis. The Financial Services Committee approved a similar measure last week. (The agriculture panel has jurisdiction because many derivatives involve trading in farm commodities.)

It will be weeks before both houses of Congress act on a final bill to regulate the financial services industry, said Representative Barney Frank, the Massachusetts Democrat who heads the Financial Services Committee.

Adoption of the compromise proposal on bank regulation was a partial setback for the banking industry, which would like to avoid having to comply with state laws that are sometimes stricter than federal rules.

Still, President Obama and Mr. Frank would have gone further and subjected banks to state laws with no chance for appeal.

While its authors said they were reasonably happy with their compromise, some Democrats on the committee have their doubts. Representative Melissa Bean, an Illinois Democrat, issued a statement saying she would have pushed for even greater federal authority in rule-making, but that flu in her family prevented her from attending Wednesday�s session.

�Rolling back this 140-year-old precedent of federal rules to a system of 50 different state regimes increases costs for training and compliance, which gets passed to consumers, as in the insurance industry, where such costs are estimated at $13 billion annually,� she said.

Ms. Bean, described by the Almanac of American Politics as a �centrist,� issued a statement declaring her support for the creation of a strong consumer financial protection agency that would �put cops on the beat where enforcement has lacked in the past.�

Representative Collin Peterson, the Minnesota Democrat who heads the agriculture panel, said derivative regulation was a big step toward passage of broader financial regulation.

[Demeter]

103. Paulson revealed policy at Goldman Sachs meeting, book alleges

http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article6884920.ece



Henry Paulson, the former US Treasury Secretary, held a meeting in Moscow with Goldman Sachs�s board in which he spilt sensitive details of forthcoming government policy, a new book has alleged.

The meeting, which is certain to raise further questions about Mr Paulson�s close relations with Goldman Sachs, is described in Too Big To Fail, a heavily anticipated rundown of the months leading up to Lehman Brothers� collapse, written by Andrew Ross Sorkin, the New York Times columnist.

Mr Paulson is said to have met with the Goldman Sachs board even though he signed an ethics agreement when appointed Treasury Secretary in 2006, under which he promised not to contact Goldman Sachs, the bank for which he worked for 32 years and which he ran for seven years.

In June 2008, Mr Paulson went to Moscow to encourage Russian investment in the collapsing US economy. Goldman Sachs�s board was also in Moscow, to attend a dinner with Mikhail Gorbachev.

Mr Sorkin describes how Mr Paulson asked Jim Wilkinson, his chief of staff, to organise a social get-together for him with the board. Nervous that news of the meeting would leak, fanning the flames of conspiracy theories about Goldman Sachs�s undue influence on the Treasury, Mr Wilkinson sought permission from Bob Hoyt, the Treasury�s general counsel.

According to Mr Sorkin�s book, Mr Hoyt said that the meeting would not contravene ethics guidelines as long as it remained a �social event�.

But Mr Sorkin writes of the meeting: �Paulson regaled his old friends with stories about his time in Treasury and his prognostications about the economy. They questioned him about the possibility of another bank blowing up, like Lehman, and he talked about the need for the Government to have the power to wind down troubled firms, offering a preview of his upcoming speech.�

Ethics experts yesterday called on Congress to investigate Mr Paulson�s actions.

Melanie Sloan, executive director for Citizens for Responsibility and Ethics in Washington, a non-profit body, said: �It�s hard to imagine why thought such a meeting would be OK. It wasn�t purely social � purely social is when you don�t discuss business. That�s basically inside information that the Goldman board received�.

A spokeswoman for Mr Paulson did not immediately respond to a request for comment.

In August, Timothy Geithner, the Treasury Secretary, denied that Mr Paulson gave special treatment to his former employer.

�We have been forced to do just extraordinary things and, frankly, offensive things to help save the economy,� he said. �I am completely confident that none of those decisions ... had anything to do with the specific interest of any individual firm, much less Goldman Sachs.�

Banking sources said that Mr Paulson has spoken several times following the March 2008 collapse of Bear Stearns, about his desire for more power to deal with failing companies.

Goldman Sachs received $10 billion during the $700 billion bailout of the biggest US banks last year, which it has since repaid.

[Demeter]

104. Claims of Financial Reform Victory? You Can't Reform Vampires and Zombies

http://www.huffingtonpost.com/marshall-auerback/claims-of-financial-refor_b_323902.html

If nothing else, the Obama Administration has learned the virtues of Clintonian spin. The so-called "financial reform victory" claimed Friday over approved new rules for over-the-counter derivatives is, in reality, akin to using a band-aid to treat gangrene.

Any kind of bill which (in the words of the Reuters report), "strives to balance a desire to curb speculative market excess with preserving the market's useful role in helping corporations hedge against operational risks" ignores the fact that it is not the market playing a "useful role in helping corporations hedge against operational risks," but the product of a big financial subsidy to Wall Street. Lack of transparency is a hallmark of these instruments and this gives huge pricing power to the banks. More importantly, it makes them tougher to regulate. There is no public, continuous record of Credit Default Swap trades that is comparable to the data available to investors and regulators from the major cash and derivatives exchanges, and the "reforms" introduced by the House of Representatives Financial Services Committee do nothing to address this reality for Credit Default Swaps.

This is in sharp contrast to the available pricing for other OTC derivatives, which is generally good and tracks the highly visible cash basis that underlie many other derivatives markets, OTC and exchange-based. Whether you are talking about currency swaps or a commodities related product, the world of OTC derivatives excluding CDSs is largely standardized in line with the exchange-traded products. Hence, they do not generate the same volumes of profits for Wall Street, which explains why the latter have fought to retain the status quo in spite of almost blowing up the entire financial system last year.

Obama clearly believes the BS fed to him by Jamie Dimon. I guess we should not be surprised; the President taught at the University of Chicago, after all, and clearly seems to have imbibed some of the Chicago School's free market ideology, and the unspoken assumption that free, unfettered markets are the optimal state. Anything else is a distortion or a rigidity. That of course fails to address the problem of fraud, which my colleague, Bill Black, has tirelessly sought to highlight.

Dealing with fraud is not only an important moral issue, but also crucial on basic economic grounds.

If we don't know what's really going on, we can't gauge whether the government's economic policies are working or not. The advantages of living in a society governed by the rule of law require both the right laws that, with common agreement, public purpose, as well as enforcement sufficient to deter non-compliance in the first place. Laws that most agree are okay to break, and a lack of enforcement, break down the core morality of the system, and result in a dangerous degeneration into lawlessness.

Leaving aside political agendas, the truest test of any reform is: will it have any kind of positive effect? As far as the current financial regulatory reforms go, the answer is probably yes in a very limited fashion, but that is more a function of the impairment of the capital markets themselves, which is precluding additional proliferation of these horrible Frankenstein financial products. If you don't deal with a cancer fully, it comes back and spreads, even if you conduct surgery to remove some of the tumor the first time around. And, as any oncologist can tell you, it's the secondary recurrence that usually kills.

Reform of the current US financial sector is neither possible nor would it ever be sufficient. It's a bit like saying, "Well, this slavery thing has a few problems, but we can 'reform' it and make it better." As any student of horror films knows, you cannot reform vampires or zombies. They must be killed (stakes through the hearts of Wall Street's vampires, bullets to the heads of zombie banks). In other words, the financial system must be downsized.

Downsizing can begin with the following set of actions:

a) All bank assets and liabilities must be brought onto balance sheets, and made subject to reserve and capital requirements and, more importantly, to normal oversight by appropriate regulatory agencies. Any assets and liabilities that are left off balance sheet will be declared null and void, unenforceable by US courts.

b) All CDSs must be bought and sold on regulated exchanges; otherwise they will be declared unenforceable by US courts.

c) Unless specifically approved by Congress, securitization of financial products such as life insurance policies will be prohibited and thus unenforceable by US courts.

d) The FDIC will be directed to examine the books of the largest 25 insured banks to uncover all CDS contracts held. These will then be netted among these 25 banks, canceling CDS contracts held on one another. CDS contracts with foreign banks will be unwound. The FDIC will also examine derivative positions with a view to determine whether unwinding these would be in the public interest.

e) In its examination, the FDIC will determine which of these banks is insolvent based on current market values-after netting positions. Those that are insolvent will be resolved. Resolution will be accomplished with a goal of i) minimizing cost to FDIC and ii) minimizing impacts on the rest of the banking system. It will be necessary to cover some uninsured losses to other financial institutions as well as to equity holders (such as pension funds) arising due to the resolution.

These actions should substantially reduce the size of the financial sector, and would eliminate some of the riskiest assets, including assets that serve no useful public purpose. The financial system would emerge with healthier institutions and with much less market concentration.

Failing that, we should at least have the government get into the insurance business as credit insurer of last resort. Private firms can't do it, as they do not have the financial resources to meet the potential claims (see AIG). And private firms have a tendency to mis-price credit risk (again, see AIG), which creates further incentives to bad behavior. As "Credit Insurer of Last Resort" (Professor Perry Mehrling's term, not mine), the government can charge proper premiums for it, which will have the additional impact of mitigating the worst behavior of Wall Street. The government can put a floor on the value of the best collateral in the system. As Mehrling says (in a variation of the Bagehot rule - i.e. "lend freely but at a high rate during a crisis"): Insure freely but at a high premium.

We can spend more time blogging about these issues, but now is the time to do something about it. As my friend Dean Baker has already noted, those disgusted by the rapacious and highly destructive behavior of our bankers can go to Chicago on the dates of Oct. 25-27th when the American Bankers Association is having their annual meeting and make yourselves heard. If we stay quiescent, we'll get the kinds of "reforms" we deserve. To paraphrase Rahm Emanuel, it's time to ensure that this crisis does not go to waste.

Roosevelt Institute Braintruster Marshall Auerback is a market analyst and commentator.


Read more at: http://www.huffingtonpost.com/marshall-auerback/claims-of-financial-refor_b_323902.html

[Demeter]

105. State Revenue Falls Most Since 1963 on Incomes, Sales

http://www.bloomberg.com/apps/news?pid=20601015&sid=aFbiGWsXmkyU

By Jerry Hart and William Selway

Oct. 15 (Bloomberg) -- U.S. state tax collections tumbled the most in almost half a century in the second quarter as the economic recession curbed levies on incomes and sales.

The 16.6 percent plunge was the biggest since at least 1963, the Nelson A. Rockefeller Institute of Government said today. For the 12 months to June 30, the fiscal year for most states, revenue declined 8.2 percent, or $63 billion, about twice what states got from the $787 billion U.S. economic stimulus package, the institute said.

State revenue has dwindled for two straight quarters and continued to decline in July and August, the Albany-based research organization said. Budgets for the year that began July 1 already face $26 billion of deficits, the Washington, D.C.- based Center on Budget and Policy Priorities said Aug. 12, forcing state lawmakers to confront additional spending cuts.

�We�re looking at a multiyear problem hitting essentially every state,� Robert Ward, the institute�s deputy director, told reporters. �It has happened during recessions before, but the depth of this decline is unprecedented in modern times.�

Collections dropped in 49 states in the second quarter as sales and personal-income taxes slid for the third consecutive period, the institute said. Income tax was down 27.5 percent and sales tax fell down 9.5 percent, its study said. Both categories fell by the most in 45 years.

�Many economists believe that the national recession has ended and that a tepid recovery is now underway,� Rockefeller analysts Lucy Dadayan and Donald J. Boyd wrote. �Unfortunately for states, an emerging economic recovery does not spell instant budget relief.�

�Considerably More�

Figures for July and August for 36 early-reporting states showed tax collections down 8 percent, the Rockefeller Institute said. At least 17 states have announced budget shortfalls since July, with �considerably more� expected, Boyd said.

New York�s tax revenue from April 1 to Sept. 15 was $634.5 million below projections and $3.6 billion less than a year ago, Comptroller Thomas DiNapoli said yesterday. California reported last week that revenue trailed a forecast made less than three months earlier by $1.1 billion, or 5.3 percent.

States are anticipating more cuts to current-year budgets, already pared once to bring them into balance. Mississippi Governor Haley Barbour told managers on Oct. 13 to cut spending 5 percent because tax collections in the first three months of fiscal 2010 were 7.7 percent below estimates. Florida Governor Charlie Crist told department heads on Oct. 12 not to request more money for next year, when the state faces a $2.6 billion deficit.

�It�s clear that when governors propose their budgets in January, the vast preponderance will be looking for more spending cuts and tax increases,� Boyd said.

Housing Market

The main driver for the second-quarter decline was lower income-tax collections, Boyd said on a conference call, �most likely due to lower capital gains from market declines in 2008 and the bursting real estate bubble.�

Payroll-tax withholding fell 4 percent from a year earlier and estimated-tax payments made in the quarter fell 32 percent in the median state, he said.

�Real wages take 13 to 17 quarters to recover from the end of a recession,� he said. �It will take several years for states to bring spending into line with incomes.�

The study�s retail-sales index showed an 11 percent decline since the start of the recession in December 2007, he said. The second quarter�s 9.5 percent decline in sales taxes followed an 8.3 percent decline in the first quarter, he said.

Alaska�s tax income declined the most of any state, the study said, with an 86.5 percent drop because of lower oil prices. Vermont fared the best, with a 2.2 percent gain because of a one-time estate-tax settlement.

Local tax collections declined by 2.8 percent in the second quarter, the Rockefeller study said. That�s less severe than the state slowdown because municipalities rely more on property taxes, which rose �a surprising� 3.1 percent in the quarter, the report said.

Still, 88 percent of local finance officers said in a September poll by the National League of Cities that they�re less able to cover expenses than in the year before.

[Demeter]

106. Derivatives Markets Rebound As Reform Recedes

http://www.researchrecap.com/index.php/2009/10/16/derivatives-markets-rebound-as-reform-recedes/

Over-the-counter (OTC) derivatives, particularly credit default swaps (CDSs), were faulted as a cause of the credit crunch, most prominently in a June 17 speech by US President Barack Obama announcing his administration�s plan for financial reform. This led to calls in the United States and elsewhere to regulate the CDS market.

Regulatory outlook. Some of this pressure has been addressed indirectly by proposals such as the G20�s commitment to require all standardised OTC derivative contracts to be traded on exchanges or electronic trading platforms, where appropriate, at the latest by the end of 2012 � non-centrally cleared contracts would be subject to higher capital requirements.

The Obama administration has made a strong case for pushing to move �standardised� OTC derivatives transactions to organised exchanges, so as to benefit both from standardisation (and the expected price decreases that will follow), and centralised clearing mechanisms (which would replace the exchange as the nominal counterparty to the transaction, thus eliminating the lion�s share of counterparty risk). Unsurprisingly, the exchanges themselves support such moves and have positioned themselves to offer a broader product mix, and cross-border services

Yet different sources of opposition have arisen, even to such modest proposals. It remains uncertain whether the 2012 G20 deadline will be achieved, despite calls from such prominent officials as EU Internal Market Commissioner Charlie McCreevy for more rapid and meaningful standardisation of such markets.

Industrial companies. Within the EU, large industrial companies have emerged as an unanticipated source of opposition. The consequence of mooted changes would be to increase their costs, as they would be required to post margin to make such trades, which is currently not necessary:

* Ironically, proposals are designed to reduce the systemic risk posed by financial institutions engaging in such trading (especially given its concentration in a handful of firms), but would have a strong cost impact on the industrial firms who use OTC derivatives for valid non-speculative hedging purposes.

* Some industrial players have called for exempting industrial firms from margining and clearing requirements, but such a suggestion is impractical, if not conceptually impossible.

* Yet if reforms proceed, industrial firms may attempt to move their trading offshore to reduce such costs, and away from stringent regulation, thus reducing another major motivation for reforms.

Financial institutions. While some firms, such as JP Morgan Chase, have opposed changes upfront and outright, more serious debate will centre on what constitutes a �standardised� contract, with the industry pushing for narrow interpretations so as to continue to gain high spread from structuring and offering bespoke products; and under what conditions and to what extent higher disclosure standards must be met.

Exchange default risk? Some regulators have echoed parallel concerns, for example that expanding the definition of �standardised� transactions would put exchanges in the position of clearing illiquid products; and unexpected future systemic shocks might reveal unexpected consequences of such a policy:

* Centralised clearing is held to reduce counterparty risk, because the exchange is a counterparty to each trade.

* However, it does not eliminate such risk, because the exchange itself could default on commitments.

This seems unlikely given past history of exchange performance, but is not impossible. Some have suggested that exchanges thus far largely have not defaulted on their commitments because they have limited themselves generally to clearing liquid products.

Congressional priorities The United States has taken the lead in pushing for exchange trading of OTC products, and the US Treasury Department has produced draft legislation. Timely US implementation of meaningful legislation could advance this issue significantly, but any such action is unlikely this year, in part because Congress first will focus on proposals to create a Consumer Financial Protection Agency, and improve regulation of credit ratings agencies.

Outlook. Robust trading activity in OTC derivatives products, including credit derivatives, is likely to continue, and signifies the broader return to �normal� trading conditions. Yet despite the G20 commitment to move more such trading onto organised exchanges, the lack of a strong US lead to move forward quickly to this goal means major changes are unlikely before 2010 � afterward further momentum may dissipate.

[CatholicEdHead]

121. Of course, we are in "recovery" so these are not needed anymore

Bonuses are back up to where they were before, so things are turning around and everything will be just fine. We all need to get our second yacht for the holidays. :sarcasm:

[Demeter]

107. Silly Symphonies

Following the footsteps of Mickey Mouse series, a series of musical shorts, titled "Silly Symphonies," was released in 1929. The first of these was titled The Skeleton Dance and was entirely drawn and animated by Iwerks, who was also responsible for drawing the majority of cartoons released by Disney in 1928 and 1929. Although both series were successful, the Disney studio was not seeing its rightful share of profits from Pat Powers,<40> and in 1930, Disney signed a new distribution deal with Columbia Pictures. The original basis of the cartoons were musical novelty, and Carl Stalling wrote the score for the first Silly Symphony cartoons as well.<41>

Iwerks was soon lured by Powers into opening his own studio with an exclusive contract. Later, Carl Stalling would also leave Disney to join Iwerks' new studio.<42> Iwerks launched his Flip the Frog series with first voice cartoon in color, "Fiddlesticks," filmed in two-strip Technicolor. Iwerks also created two other series of cartoons, the Willie Whopper and the Comicolor. In 1936, Iwerks shut his studio to work on various projects dealing with animation technology. He would return to Disney in 1940 and, would go on to pioneer a number of film processes and specialized animation technologies in the studio's research and development department.

By 1932, Mickey Mouse had become quite a popular cinema character, but Silly Symphonies was not as successful. The same year also saw competition for Disney grow worse as Max Fleischer's flapper cartoon character, Betty Boop, would gain more popularity among theater audiences.<43> Fleischer was considered to be Disney's main rival in the 1930s,<44> and was also the father of Richard Fleischer, whom Disney would later hire to direct his 1954 film 20,000 Leagues Under the Sea. Meanwhile, Columbia Pictures dropped the distribution of Disney cartoons and was replaced by United Artists.<45> In late 1932, Herbert Kalmus, who had just completed work on the first three-strip technicolor camera,<46> approached Walt and convinced him to redo Flowers and Trees, which was originally done in black and white, with three-strip Technicolor.<47> Flowers and Trees would go on to be a phenomenal success and would also win the first Academy Award for Best Short Subject: Cartoons for 1932. After Flowers and Trees was released, all future Silly Symphony cartoons were done in color as well. Disney was also able to negotiate a two-year deal with Technicolor, giving him the sole right to use three-strip Technicolor,<48><49> which would also eventually be extended to five years as well.<41> Through Silly Symphonies, Disney would also create his most successful cartoon short of all time, The Three Little Pigs, in 1933.<50> The cartoon ran in theaters for many months, and also featured the hit song that became the anthem of the Great Depression, "Who's Afraid of the Big Bad Wolf".<51>

http://www.youtube.com/watch?v=Olo923T2HQ4

[Demeter]

108. The Country Cousin (City Mouse, Country Mouse)

http://www.totlol.com/watch/3U7adg_yPLM/Disney-%2736---Silly-Symphony---The-Country-Cousin/0/

Many other Silly Symphonies at this link. Enjoy!

[Demeter]

116. Ferdinand the Bull

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

[Demeter]

109. $13 an Hour? 500 Sign Up, 1 Wins a Job

http://www.nytimes.com/2009/10/22/us/22hire.html?ref=business

I do not like the light, carefree tone of this article, but it does cover the situation in gruesome detail.

[Demeter]

110. Imagine If September Hadn't Seen The Homebuyer Tax Credit by Joe Weisenthal

http://www.businessinsider.com/imagine-if-september-hadnt-seen-the-homebuyer-tax-credit-2009-10

For some added color on this morning's existing home sales number, our friend and analyst Mark Hanson passes along this chart, which nicely demonstrates the seasonality of the housing market. As you can see, in most years, September drops big against, as families stop moving once the school year starts. This year though: it was only a modest sequential decline -- that's all thanks to first-time homebuyers rushing in to buy. When that ends... can you say clunk?

http://static.businessinsider.com/~~/f?id=4ae1eb6c00000000001dd0cd&maxX=573&maxY=316

[Demeter]

112. Citigroup's "Hail Mary Pass": How To Know Citigroup Is In Serious Trouble

http://globaleconomicanalysis.blogspot.com/2009/10/citigroups-hail-mary-pass-how-to-know.html

Citigroup is in serious trouble. It's easy to tell by what they are doing.

Inquiring minds note that Citi Abruptly Shutting Down Gas-Linked Credit Cards.

Citi (C) is abruptly shutting down credit cards linked to gas station partners.

The bank is offering few details:

The bank said in a statement it "decided to close a limited number of oil partner co-branded MasterCard accounts." That includes not only Shell, but Citgo, ExxonMobil and Phillips 66-Conoco cards.

The close date was Wednesday, and letters were sent out Monday to customers informing them of the change, a Citi spokesman said. The bank would not say how many cards were shut down or how much available credit they represented.

In a followup article the Business Insider notes ....

Citi Jacks Credit Card Rates To 29.99% On Unsuspecting Customers.

Yesterday, we reported on how scores of people across the country had found their gas station-linked credit cards from Citibank had been canceled.

One reader, Rachel, emailed us and explained her frustration.

I received two letters by mail from Citibank yesterday. One said that because I always paid my account on time and that I was such a great customer they were increasing my credit limit. The next letter I opened stated that Citibank was raising my interest rate from the current 18.99% to 29.99%.

My husband and I have good credit and are making a genuine effort to get out of debt by purchasing next to nothing on credit.

While I am ashamed to admit this to you we owe $25,000 to Citibank, our choices at this time are very limited. I have made some calculations and in order to pay the balance before they forcibly close my account, my husband and I must make payments of $1400 per month, this is a substantial increase from the minimum balances they require of $665 per month. I have not opted to pay Citibank the 29.99% interest. ...

Now admittedly having a $25,000 balance is a sign of a problem. On the other hand, the account seems to be in good standing, so let's dig further.

Citigroup Pressure Builds

Karl Denninger gets straight to the heart of the matter in Hisssss (Citibank Overpressure Warning?)

Citibank's average yield year-to-date (consumer and plastic) was about 12%. But they're suffering 10% defaults, making their true margin about 2%. That's still a positive number.... if it's accurate.

This spread, of course, has a lot to do with previously-issued fixed-rate 12.99% cards (they and everyone else had a lot) that were handed out like candy to everyone and their brother, frequently with $10,000, $20,000 or even $50,000 credit lines.

Huge numbers of small business owners - especially sole proprietors - use these cards as a means of financing operations. They relied on that 10 or 12% interest rate, and most of them have huge balances outstanding.

I have since confirmed that this letter is not just going to people who have had credit "challenges". Indeed, this appears to be a blanket change on the part of Citibank. I now have multiple copies from people who assert that they have 750+ FICOs and have never missed a payment on this or any other obligation - the "paragon" of so-called "responsible" credit use. All of the letters are identical.

The problem should be obvious - for someone with one of the 12.99% cards that is now 30%, this is a radical change that more than doubles monthly interest expense. Of those who have sent me copies of this letter and disclosed their previous rate, none were over 20%, meaning that these changes represent 50% or greater interest rate increases. If you're anywhere near the edge of being unable to pay, this will shove you off the bridge and into the deep, shark-infested water of bankruptcy.

Perhaps what we're really seeing is a business reacting to hidden deterioration of asset bases that are not known by investors and the public due to the legitimation of bogus accounting that happened this last March, but which is known by company executives!

This sort of "terms change", which is an effective declaration of default even against those who haven't defaulted (see above; the same 30% rate is being applied to defaulted and non-defaulted accounts!), will drive two consumer behaviors that could ultimately destroy Citibank's credit card business and perhaps the bank as a whole:

1. Those who can transfer balances out somewhere else and/or pay them off will immediately do so. Nobody is going to pay a 30% interest rate and an imposition of default rates on non-defaulted balances willingly and on purpose unless they have no other choice.

2. A significant number of people, on receipt of this notice and understanding what it means (a declaration that non-defaulted accounts are being charged the same penalty rate as a defaulted account!) will immediately go out and charge up the entire unused balance on their card and then intentionally default.

In short, this looks to me like a "Hail Mary" pass. So long as this remains a Citibank-only story my interpretation is that Citibank is in a lot worse financial shape than is being let on - perhaps poor enough that they're at risk of imploding anyway, "too big to fail" or not.

In case you missed it, please take a look at Karl's post from yesterday Recovery? How, Given THIS? where he showed some nice Citigroup statistics and an actual "jack letter" from Citigroup to its customers.

Here is the key paragraph in all of these articles.

Perhaps what we're really seeing is a business reacting to hidden deterioration of asset bases that are not known by investors and the public due to the legitimation of bogus accounting that happened this last March, but which is known by company executives!

Ding! Ding! Ding!

We have a winner. Citigroup needs money, and needs money badly. Moreover, there is no reason to believe this is all credit card related. In fact, there is every reason to believe Citigroup (and other banks) are in trouble on multiple fronts.

Citigroup's Shadow Assets

Citigroup is still stuck in $800 billion in off-balance-sheet SIVs of highly questionable value. That's exactly why it's Not Practical To Tell The Truth.

The Financial Accounting Standards Board postponed a measure, opposed by Citigroup Inc. and the securities industry, forcing banks to bring off-balance-sheet assets such as mortgages and credit-card receivables back onto their books.

FASB, the Norwalk, Connecticut-based panel that sets U.S. accounting standards, voted 5-0 today to delay the rule change until fiscal years starting after Nov. 15, 2009. The board needs to give financial institutions more time to prepare for the switch, FASB member Thomas Linsmeier said at a board meeting.

"We need to get a new standard into effect," Linsmeier said, though "it's not practical" to begin requiring companies to put assets underlying securitizations onto their books this year.

Enquiring minds may wish to consider Citigroup's $1.1 Trillion in Mysterious Shadow Assets.

If Citigroup is looking for an award, it can take the blue ribbon for greed, arrogance, and stupidity in the off balance sheet category. There are plenty of other categories and more blue ribbons will be awarded. Nominations are being taken now.

At the time I penned that, Citigroup's shadow assets were $1.1 trillion. They are now down to a mere $800 billion or so.

Note that the FASB voted to postpone mark-to-market until Nov. 15, 2009. That time is approaching, but have no fear. The FASB has postponed mark-to-market rules once again.

The reason is obvious: It's Still Not Practical To Tell The Truth.

Mike "Mish" Shedlock

[Hugin]

113. This is not limited to Citibank. I can think (without any effort) of two other TBTF Banks which...

are doing exactly the same thing. Pushing THEIR default off onto Clients who have been faithfully following the terms of their CC agreements.

The fact that this is such a 'lock-step' reaction by TBTFs indicates (to me, anyway) that they've been given the 'Green Light' to follow this course by some Regulatory Group... Hmmm... Now, who could that be? :eyes:

[snot]

114. Anyone here recall a story about people who'd had $$ in a bank that had

been sold or got taken over by the FDIC or something, and the bank had no record of the depositors' deposit, and was denying liability, so that the people couldn't get their money out?

A link or key word would be appreciated -- thanks!

[Demeter]

115. Interest on loans rankles college grads

http://www.chicagotribune.com/business/yourmoney/chi-tc-biz-ym-college-1018oct18,0,5582294.story

Like many recent college grads, Steven Lee finds himself unemployed in one of the roughest job markets in decades and saddled with a big pile of debt. He owes about $84,000 in student loans for undergrad and grad-school costs.

But what Lee's angry about isn't the slings and arrows of an outrageous economy, and it isn't the idea that he owes a ton of money for all the learning he's received. It's the interest rates on his government-backed student loans, which range from 6.8 percent to 8.5 percent.

"The rate for a 30-year mortgage is around 5 percent," Lee said. "Why should anyone have to pay 8.5 percent?"

Well, because a deal's a deal, and that's the rate Lee accepted when he received his loan.

"I disagree," he replied. "The government has bailed out homeowners. It's bailed out big businesses. Why can't it also help students?"

Good question.

"If I was a student, I'd be outraged, too," said Tony Hollin, CEO of Edamerica, the seventh-largest provider of student loans nationwide.

Edamerica lent $30,000 to Lee so he could earn a master's degree in clinical psychology.

Hollin said he would love to charge market rates for student loans. Problem is, all of Edamerica's loans, and most of those provided by other lenders, fall under the Department of Education's Federal Family Education Loan Program.

"I wish we could help students," Hollin said. "But the rates we charge are mandated by the federal government."

Uncle Sam's influence over student loans could become even greater if Congress passes legislation that essentially would drive private lenders out of the market. The Student Aid and Fiscal Responsibility Act passed the House last month pretty much along party lines. It's now working its way through the Senate.

The bill would eliminate the Federal Family Education Loan Program, thus making student loans much riskier (and hence unattractive) for banks. The Department of Education would continue offering direct loans and presumably would dominate the market.

Democrats say the legislation would free more funds for Pell Grants and other financial aid. Republicans say the federal government would be playing too large a role in higher education.

Jane Glickman, a spokeswoman for the Department of Education, said rates under the Federal Family Education Loan Program are set by Congress.

"It may seem high today," she said, "but remember it is a fixed rate. The comparable loan would be a fixed-rate unsecured loan or a private student loan. Even with excellent credit, you can't get one of those below 12 percent fixed, and the majority of students have no credit at all."

That's true. But then, the idea of a government-subsidized loan is to help fund the sky-high education costs of people who have nowhere else to turn.

Glickman said people such as Lee do have options. They can apply for help under a program that pegs monthly loan payments to income levels. Or they can postpone payments for a set period, although they still will be responsible for repaying the entire loan, and the interest will continue to accumulate.

[Demeter]

117. Glass Steagall on steroids now by Diane Francis

http://network.nationalpost.com/np/blogs/francis/archive/2009/10/23/glass-steagall-on-steroids-now.aspx

SOS

The world desperately needs Glass Steagall on Steroids.

Banking must be atomized � a la America�s 1933 legislation called Glass Steagall � in order to separate high-risk investment banking from taxpayer-insured deposits. Canada does a reasonably good job of sequestering these businesses, but the facts are that excessively big banks like ours contributed mightily to the current global catastrophe.

Concentration of power's damage

Busting up the banking trusts is essential for the following reasons:
-- It eliminates the too-big-to-fail issue which puts entire economies at risk.
-- Excessively large banks destroy democracies, like the United States, through inordinate influence on policy, politicians and regulators.

-- Oligopolies and monopolies are economically inefficient and charge excessive fees, earn excessive profits and pay excessive salaries and bonuses.

-- Oligopolies and monopolies don�t innovate because they don�t have to.

-- Oligopolies and monopolies are risky because they indulge in group-think mistakes that are too large for economies and the business community to bear.

-- Oligopolies and monopolies fossilize markets by dealing with big entities, cronies, politically-connected clients and nepotism.

-- Oligopolies and monopolies hurt economies because of overcharging and gouging.

Banks overpowering the world

The world�s concentrated financial sector has been grabbing more than its fair share of wealth because it has been able to and this must stop.
Between 1989 and 1999, financial fees increased ten-fold. Since the 1960s, the financial sector in the U.S. more than doubled in size from 3% of GDP to 7.5% currently.

�This is like looting,� said outspoken Boston money manager Jeremy Grantham whose firm invests US$89 billion in funds. �That 7.5%, that goes to financial fees, is on its way to 10%. This industry can grow to gobble up all the benefits of the real economy if allowed to. It is trying to grab our cash. It�s obscene.�

Banks too darn big

Despite the obvious benefits of busting up the bank trusts, the U.S. and other governments resist a Glass Steagall restructuring.

Washington�s intransigence flies in the face of the anti-trust tradition in the United States. Americans invented a strong economy by keeping banks smaller and competitive, by blowing up Rockefeller�s abusive Standard Oil of New Jersey into pieces to prevent it from owning the world and by curbing other Robber Barons through laws.

More recently, AT&T�s break-up created innovation and competition, as did the prolonged (even if unsuccessful) attempt to break up software bully Microsoft. Even though the bust-up didn�t happen, the firm was cosseted and the possible stultification of the high tech world was prevented.

Glass Steagall is the only reform that will work which is why Bank of England Governor Mervyn King and former Federal Reserve chairman Paul Volcker came out last week in support of a global Glass Steagall.

But Washington, London, Ottawa and others are counting on regulation instead even though that didn�t work.

Their position is even less justifiable given the fact that the meltdown has increased concentration of banking power with even more accompanying problems. For instance, monopoly profits are why months after Goldman Sachs was given US$10 billion taxpayer bailout funds it has amassed US$23 billion for bonuses this year � an amount equivalent in size to the economies of Trinidad and Tobago, Estonia, Lebanon or Congo and Mongolia combined.

First let's kill off Wall Street bad boy

Goldman Sachs should be the first to be broken up. The firm would have disappeared without its US$10-billion bailout (which it paid back) and is still at the taxpayer trough, thanks to its conversion of part of its business into a deposit-taking institution to get US$26 billion taxpayer deposit insurance.

Likewise, oligopoly profits are why a handful of America�s other rescued banks also planned on handing out obscene salaries, forcing Washington this week to chop some salaries by 90% to appease an outraged public.
But slashing salaries is a one-time event that won�t work as bankers learn how to get around such salary restrictions by paying themselves through consulting contracts, by outsourcing to partners or by simply fooling regulators or co-opting politicians like they have done for years.
Governments must bust up the banking giants or risk ruination again.

Read more: http://network.nationalpost.com/np/blogs/francis/archive/2009/10/23/glass-steagall-on-steroids-now.aspx#ixzz0UyqPoqUv

[Demeter]

118. How I Became a Keynesian: Second Thoughts in the Middle of a Crisis Richard Posner

http://www.tnr.com/article/how-i-became-keynesian?page=0,2

Keynes's analysis provides an explanation--though there is debate among economists whether it is the correct one--for England's persistent high unemployment in the interwar period, or more precisely for the component that represented involuntary unemployment, the plight of unemployed workers who would have preferred to work at a wage below the prevailing rate than to be on the dole. One might think that wages would have fallen to a level at which anyone who wanted a job could have found one. But Keynes pointed out that since workers are a high proportion of all consumers, a fall in the wage level will reduce incomes, and therefore reduce consumption and investment, unless prices fall proportionately. They would be likely to fall somewhat, because producers' labor costs will be lower.

But a general fall in the price level--deflation--imperils economic stability, and actually cutting workers' wages to make room for the unemployed is a surefire formula for industrial strife.

And workers are not fungible. A factory that employs 100 highly skilled workers may have a lower average cost of production than one that employs 120 less-skilled workers at a lower wage. Only if demand for goods is high may the market have room for a firm that, because it employs those less skilled workers, has higher costs of production than the existing firm.

Thus a high level of involuntary unemployment could be, as Keynes showed, an equilibrium, rather than a temporary result of the business cycle. His analysis casts a particularly bright light on the cyclical downturns that we call recessions, or in extreme cases depressions. For when the demand for goods and services falls, as in the present downturn, the economic environment becomes unsettled and even the near future becomes unpredictable. This dampens businessmen's animal spirits and causes consumers to hoard--and businessmen as well. For when the urge to action deserts them, they build up their cash balances, in lieu of active investment, in order to hedge against uncertainty. Owing to uncertainty, businessmen even in the best of times lack "strong roots of conviction" in their estimate of what the future holds, and so a sudden change in economic conditions can paralyze them. If so, a downward spiral will develop, as falling demand and falling investment reinforce each other, causing layoffs that reduce incomes and therefore consumption and production, and so induce more layoffs.

But the government may be able to arrest the decline--another of Keynes's central ideas, and one strongly resisted by the conservative economists of his time, as of today. It can reduce interest rates (by buying government bonds or other debt for cash, which increases the amount of money that banks are permitted to lend) in an effort to reduce the costs of active investment and thus encourage employment. Keynes urged this approach. But he also pointed out that it might not work well--as we have learned in the current downturn. The banks may lack confidence in "those who seek to borrow from them," so that "while the weakening of credit is sufficient to bring about a collapse, its strengthening, though a necessary condition of recovery, is not a sufficient condition." In fact, banks in America today are hoarding, rather than lending, most of the cash that they have received from the government's bailouts. The hoard may make the banks a little freer with lending, but the effect on economic activity, at least in the short run, may be tepid.

Fortunately, there is more that government can do to arrest a downward economic spiral besides pushing down interest rates. It can offset the decline in private consumption and investment in a recession or a depression by increasing public investment. When we say that the government builds highways, we mean it buys highways from private contractors. And the more it buys, the more that investment--and because of the multiplier effect, the more that income, output, and employment--are stimulated. And because private decisions to invest and to consume are influenced by confidence in the future, or the lack thereof, the government must do everything it can to convince businessmen and consumers that it is resolute and competent in working for economic recovery. An ambitious public-works program can be a confidence builder. It shows that government means (to help) business. "The return of confidence," Keynes explains, "is the aspect of the slump which bankers and businessmen have been right in emphasizing, and which the economists who have put their faith in a �purely monetary' remedy have underestimated." In a possible gesture toward Roosevelt's first inaugural ("we have nothing to fear but fear itself"), Keynes remarks upon "the uncontrollable and disobedient psychology of the business world."

But for a confidence-building public-works program to be effective in arresting an economic collapse, the government must be able to finance its increased spending by means that do not reduce private spending commensurately. If it finances the program by taxation, it will be draining cash from the economy at the same time that it is injecting cash into it. But if it borrows to finance the program (deficit spending), or finances it with new money created by the Federal Reserve, the costs may be deferred until the economy is well on the way to recovery and can afford to pay them without endangering economic stability. When investors passively save rather than actively invest, government can borrow their savings (as by selling them government bonds) and use the money for active investment. That is the essential Keynesian prescription for fighting depressions.

Keynes's emphasis on consumption as the driver of active investment and hence of economic growth may seem to give his theory a hedonistic flavor. He was indeed hostile to thrift, which is another name for hoarding. We have seen the damaging effects of thrift in the current downturn, in which rich people's forswearing luxury purchases in the name of thrift has reduced employment in the retail sector, thus deepening the downturn. This is an example of the "paradox of thrift." "Prodigality is a vice that is prejudicial to the Man, but not to trade," in the words of the seventeenth-century economist Nicholas Barbon, quoted by Keynes. (The full paradox of thrift is that, if incomes fall far enough because people are saving rather than consuming, savings will actually decline.)

Keynes commends FDR for having destroyed agricultural stocks during the Great Depression, since sales from existing inventories do not stimulate active investment, but are actually a form of disinvestment. He even discusses sympathetically, though ultimately he rejects, the curious proposal of "stamped money," whereby people would be required to have their currency stamped periodically at a government office in order to remain legal tender, because the bother of having to get one's money stamped would have the effect of a tax on hoarding.

All this may seem like an incitement to profligacy, consistent with Keynes's rather bohemian private life as a charter member of the Cambridge Apostles and the Bloomsbury group. But nothing in his theory limits consumption to the purchase of frivolous private goods, or indeed to private goods of any kind. I gave the example of a public highway; other examples are the purchase of military equipment for national defense and the public subvention of education and art. And while he famously (or notoriously) argued the value of unproductive projects--or so they would seem to us--such as the building of the Egyptian pyramids, on the ground that they provided employment, which increased consumption (the workers, even if they were slaves, had to be fed and clothed and housed), he preferred that governments undertake productive projects.

Correctly anticipating the rapid growth of living standards, moreover, Keynes predicted that within a century people's material wants would be satiated, and so per capita consumption would stop growing. People would work less, but only because their need for income, and more important their desire for it, was less. And then the challenge to society would be the management of unprecedented voluntary leisure. This was a popular 1930s theme--think of Huxley's Brave New World--but it underestimated the ability of business to create new wants, and new goods and services to fulfill them.

That was merely a mistake, an oddity in Keynes's belief in the possibility of perpetual boom. He has wise words, which Alan Greenspan and Ben Bernanke could with profit have heeded earlier in this decade, about the need to raise interest rates to prick an asset-price bubble before it gets too large. Yet just a few pages earlier he remarked that "the remedy for a boom is not a higher rate of interest but a lower rate of interest! For that may enable the so-called boom to last." (That may have been what Greenspan thought!) The statements can be reconciled by observing that as long as there is involuntary unemployment, low interest rates, by stimulating active investment and therefore production without raising labor costs, should not produce inflation. But we have just seen, in the United States of the 2000s, how even if labor costs are steady, low interest rates can produce an asset-price inflation (the housing and credit bubbles) that can precipitate an economic collapse. Keynes had earlier in his career written prophetically about the potentially disastrous effects of inflation. There is almost no mention of inflation in The General Theory, but he does say what many of his successors forgot--that when an economy no longer has any involuntary unemployment, further efforts to stimulate demand will merely cause inflation.

Perpetual-boom thinking illustrates the left-leaning utopian strain in The General Theory. This was what made Keynes a b�te noire for conservatives, but it charms Skidelsky, who devotes the last chapters of his book to celebrating Keynes as a "green," a philosopher of limits to growth, of "the good life" lived simply, even of the end of economics. Recall Keynes's erroneous prediction that within a century people's material wants would be satiated. When that happened, the demand for capital (to finance consumption) would plummet and rentiers (people who live on income from passive investments, such as stocks or bonds, and thus are hoarders) would be wiped out--a prospect that delighted Keynes, who looked forward to "the euthanasia of the rentier," though fortunately he did not mean this literally. He questioned free trade--that holy of holies of conventional economists--by pointing out that a country whose people had a low propensity to consume could stimulate investment by depreciating its currency so that its exports were attractive, because that would encourage its industries to invest in producing for foreign consumption and therefore to employ more workers. The country would accumulate foreign currency that it could use to invest abroad--the policy that China has been following lately, with pretty good results. He even had kind words for usury laws, arguing that they had reduced interest rates and thus discouraged hoarding. He favored a heavy estate tax, reasoning that it would increase consumption by reducing accumulation for bequests. (The standard economic argument against the estate tax is identical--it encourages "wasteful" consumption!)

Although there are other heresies in The General Theory, along with puzzles, opacities, loose ends, confusions, errors, exaggerations, and anachronisms galore, they do not detract from the book's relevance to our present troubles. Economists may have forgotten The General Theory and moved on, but economics has not outgrown it, or the informal mode of argument that it exemplifies, which can illuminate nooks and crannies that are closed to mathematics. Keynes's masterpiece is many things, but "outdated" it is not. So I will let a contrite Gregory Mankiw, writing in November 2008 in The New York Times, amid a collapsing economy, have the last word: "If you were going to turn to only one economist to understand the problems facing the economy, there is little doubt that the economist would be John Maynard Keynes. Although Keynes died more than a half-century ago, his diagnosis of recessions and depressions remains the foundation of modern macroeconomics. His insights go a long way toward explaining the challenges we now confront. . . . Keynes wrote, �Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slave of some defunct economist.' In 2008, no defunct economist is more prominent than Keynes himself."



Richard A. Posner is a judge on the U.S. Court of Appeals for the Seventh Circuit and a senior lecturer at the University of Chicago Law School.

[Demeter]

119. Well, that Was Fun!

Not the economic stuff, but reliving my childhood, and my parents', and partly, my grandparents', thanks to good old Walt. It's amazing how much stuff is on Youtube!

I liked it when Walt went from the basic sight gag cartoons to those with story lines. Next time we visit the Magic Kingdom, we will get to the full-length features, which was considered quite daring in those days.

Walt Disney was a man who accomplished much in his lifetime--reviewing his oeuvre will easily take another 2 or three weekends. It may be that wishing upon a star will be the only way we get through this storm.

Have a good week, everybody. Stay sane, stay healthy, and "Noli nothi permittere te terere" which is the most grammatically correct form of the more familiar

"Illegitimi non carborundum"--http://en.wikipedia.org/wiki/Illegitimi_non_carborundum

[Demeter]

120. News Flash! Palm Beach police: Jeffry Picower has died

http://news.yahoo.com/s/ap/20091025/ap_on_bi_ge/us_madoff_associate_death

PALM BEACH, Fla. � Authorities say Jeffry Picower, a Florida philanthropist and a friend of Bernard Madoff for decades, has died. He was 67.

Picower was the former New York lawyer and accountant alleged to have extracted billions of dollars from the Bernard Madoff investment scheme.

Authorities say he was found at the bottom of his Palm Beach home's pool Sunday afternoon by his wife and could not be revived by Palm Beach fire rescue workers. Picower was transported to Good Samaritan Hospital where he was pronounced dead at about 1:30 p.m.


HOW CONVENIENT! YOU KNEW SOMETHING LIKE THIS WAS IN THE CARDS. WAS HE PUSHED, OR DID HE SUICIDE?

HE WAS YOUNG ENOUGH AND PROBABLY HEALTHY ENOUGH FOR JAIL TO BE A CREDIBLE THREAT. OF COURSE, THE POOR WIFE WILL BE LEFT TO CLEAN UP AND LIVE DOWN HIS CRIMES...

[Zenlitened]

122. Capmark Financial Files for Bankruptcy Protection

By THE ASSOCIATED PRESS
Published: October 25, 2009

Filed at 5:51 p.m. ET

CHICAGO (AP) -- Capmark Financial Group, one of the nation's largest commercial real estate lenders, has filed for bankruptcy protection amid mounting bad debt.

Capmark has been hurt by rising losses on mortgage loans. In its filing Sunday in Delaware bankruptcy court, the company listed total debt of $21 billion and assets of $20.1 billion.

Last month, the Horsham, Pa.-based company posted a $1.6 billion quarterly loss, as it set aside $345.8 million to cover loan losses during the quarter ended June 30. The company had been in talks with lenders and bondholders to restructure its debt so that it could stay in business.

Link:
http://www.nytimes.com/aponline/2009/10/25/business/AP-US-Capmark-Financial-Bankruptcy.html?_r=1

[DemReadingDU]

123. not good for an economic recovery, n/t

[Demeter]

124. There Is NO Recovery, As We Very Well Know

And the effort to happytalk and paper over the disaster must be exhausting. Poor Ben, Larry, and Tiny Tim. God bless us every one.

[DemReadingDU]

125. We don't manufacture the things people will need

like clothes, shoes, appliances, tools, sheets, towels. I have doubts that any of these jobs will be brought back. If people can learn skills, like fixing things, gardening, cooking, sewing, we can make-do and survive. That's about it.

[DemReadingDU]

126. How Wall Street Will Kill the Recovery

posted by Nikki Stone1 in GD
http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x6849969

and people are actually civil in that thread