Weekend Economists' Hair-Raising Adventures August 20-22, 2010

[Demeter]

Well, I had yet another meeting tonight, so this is coming in rather later than I'd like, but better late than never....

It's been the kind of week that makes your hair stand on end: the markets gyrating ever lower, the racial bigotry ever higher, the upcoming elections ever wilder, and there's no signs that the madness will subside any time in the near future.

Before you grab something guaranteed to put hair on your chest, help us make sense of it all. Post what you have, what you think, whatever is on your mind.

Afterthought:


When do you think it will dawn on the President that he's been sold a load of goods by Messers Geithner, Summers and Bernanke? I offer that as a pool question, so jump right in with a date and a reason.



http://www.youtube.com/watch?v=f0phX56DGaI

[jotsy]

1. First rec?

Will check back in. For now all I know is about the FDIC bank closure list. 4 in California, 2 in Florida, one in Virginia and one in Illinois for a total of eight.

[Demeter]

3. CONGRATULATIONS!

Yes, you are the first to check in...and you've got the numbers right. Details follow...

[Demeter]

2. WE HIT THE JACKPOT--8 BANKS WENT DOWN TONIGHT

Community National Bank At Bartow, Bartow, Florida, and Independent National Bank, Ocala, Florida, were closed today by the Office of the Comptroller of the Currency, which then appointed the Federal Deposit Insurance Corporation (FDIC) as receiver for the two banks. To protect depositors, the FDIC entered into purchase and assumption agreements with CenterState Bank of Florida, National Association, Winter Haven, Florida, to assume all the deposits and essentially all the assets of the two failed banks, which were not affiliated with one another.

Collectively, the failed banks operated five branches, which will reopen as branches of CenterState Bank of Florida, N.A. under their normal business hours, including those offices with Saturday hours. Community National Bank At Bartow has one branch, and Independent National Bank has four branches...
As of June 30, 2010, Community National Bank At Bartow had total assets of $67.9 million and total deposits of $63.7 million; and Independent National Bank had total assets of $156.2 million and total deposits of $141.9 million. CenterState Bank of Florida, N.A. did not pay the FDIC a premium for the deposits of the two failed banks.

The FDIC and CenterState Bank of Florida, N.A. entered into loss-share transactions on $51.9 million of Community National Bank At Bartow's assets; and $119.7 million of Independent National Bank's assets. CenterState Bank of Florida, N.A. 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) for Community National Bank At Bartow will be $10.3 million; and for Independent National Bank, $23.2 million. Compared to other alternatives, CenterState Bank of Florida, N.A.'s acquisition was the least costly resolution for the FDIC's DIF.

These closings bring the total for the year to 112 banks in the nation, and the twenty-first and twenty-second in Florida. Prior to these failures, the last FDIC-insured institution closed in the state was Bayside Savings Bank, Port Saint Joe, on July 30, 2010.

Imperial Savings and Loan Association, Martinsville, Virginia, 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 River Community Bank, National Association, Martinsville, Virginia, to assume all of the deposits of Imperial Savings and Loan Association.

The sole branch of Imperial Savings and Loan Association will reopen on Monday as a branch of River Community Bank, N.A...As of June 30, 2010, Imperial Savings and Loan Association had approximately $9.4 million in total assets and $10.1 million in total deposits. River Community Bank, N.A. did not pay the FDIC a premium for the deposits of Imperial Savings and Loan Association. In addition to assuming all of the deposits of the failed bank, River Community Bank, N.A. agreed to purchase essentially all of the assets...

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $3.5 million. Compared to other alternatives, River Community Bank, N.A.'s acquisition was the least costly resolution for the FDIC's DIF. Imperial Savings and Loan Association is the 113th FDIC-insured institution to fail in the nation this year, and the first in Virginia. The last FDIC-insured institution closed in the state was Greater Atlantic Bank, Reston, on December 4, 2009.

ShoreBank, Chicago, Illinois, was closed today by the Illinois Department of Financial and Professional 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 Urban Partnership Bank, Chicago, Illinois, a newly-chartered institution, to assume all of the deposits of ShoreBank.

The 15 branches of ShoreBank will reopen as branches of Urban Partnership Bank, including those in Detroit, Michigan, and Cleveland, Ohio, under their normal business hours, including those offices with Saturday hours....
As of June 30, 2010, ShoreBank had approximately $2.16 billion in total assets and $1.54 billion in total deposits. Urban Partnership Bank will pay the FDIC a premium of 0.50 percent to assume all of the deposits of ShoreBank. In addition to assuming all of the deposits of the failed bank, Urban Partnership Bank agreed to purchase essentially all of the assets except for the marketable securities and fixed assets.

The FDIC and Urban Partnership Bank entered into a loss-share transaction on $1.41 billion of ShoreBank's assets. Urban Partnership 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 $367.7 million. Compared to other alternatives, Urban Partnership Bank's acquisition was the least costly resolution for the FDIC's DIF. ShoreBank is the 114th FDIC-insured institution to fail in the nation this year, and the fifteenth in Illinois. The last FDIC-insured institution closed in the state was Palos Bank and Trust Company, Palos Heights, on August 13, 2010.

Supplemental Fact Sheet Reason for Failure

• ShoreBank experienced asset quality problems, which were centered in residential rehabilitation loans, both multi-family and single family, and condominium conversion loans. Loan and operational losses depleted earnings and eroded capital to the point where the bank was no longer viable without recapitalization and the Illinois Department of Financial and Professional
Regulation closed the Bank.

Losses to Investors

• ShoreBank was 100 percent owned by ShoreBank Corporation, a two bank holding company. Although ShoreBank, Chicago represented a significant portion of the company’s asset base, the holding company continues to operate. The holding company’s investment in ShoreBank is now worthless.

Marketing Process and Bidding

• The Division of Resolutions and Receiverships followed its normal protocols for a competitive marketing of the bank and for soliciting interest.

• ShoreBank is a unique kind of institution - one that is mission-driven and focused on a doublebottom line. Community Development Financial Institutions (CDFIs) in this credit environment are particularly focused on the needs of the residents in their community and rely on their philanthropic partners to enhance their ability to serve their community. ShoreBank was the largest CDFI in the country and as such, presented unique marketing challenges.

• FDIC received only one bid, which included an asset discount of $146 million and a 0.5 percent deposit premium. This saved the FDIC’s insurance fund $250 million to $334 million over liquidation.

Loss to the Deposit Insurance Fund

• The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $367.7 million. If the FDIC is unable to find a buyer, in most cases it is forced to liquidate the institution. The purchase and assumption transaction saved the FDIC’s insurance fund between $250 million to $334 million over liquidation of the institution.

• The FDIC’s Deposit Insurance Fund is capitalized through assessments on the banking industry. The FDIC is statutorily mandated to pursue the least cost strategy of resolving failed institutions. As part of this transaction, the FDIC also considered the needs of the community as required by applicable law. Minimizing resolution costs inures to the benefit of all insured banks which fund the FDIC through lower premiums for deposit insurance and ultimately to the US Government which ultimately stands behind the FDIC's guarantee.

Acquirers

• The significant investors in Urban Partnership Bank are American Express Company, Bank of America, Citigroup, Ford Foundation, GE Capital Equity Investments, Inc., Harris Bank, the John D. and Catherine T. MacArthur Foundation, JPMorgan Chase & Co., Key Community Development Corp., Morgan Stanley, Northern Trust Corporation, PNC Investment Corp., State Farm Mutual Automobile, The Goldman Sachs Group, Inc., and Wells Fargo & Company.

Management

• ShoreBank will have an entirely new board of directors. The ShoreBank board of directors and executives who presided during the deterioration of the condition of the institution will not be retained. New management leading the efforts to save the institution and that did not contribute to the bank’s problems will be retained. The investors selected the new management with
regulatory approval.

Acquisition

• In 2010 the FDIC has resolved more than 85 percent of failed banks through the same type of transaction used to resolve ShoreBank: an all deposit whole bank purchase and assumption transaction with loss share. In the ShoreBank transaction, all the deposits and virtually all of the assets except for the marketable securities and fixed assets are being acquired. Loans will be subject to an 80/20 loss share agreement.

Impact on Community

• Urban Partnership Bank has indicated that they will maintain ShoreBank’s focus of providing loan and deposit products and services to individuals and small-to mid-sized business, with special emphasis on the underserved LMI areas of Chicago, Detroit, and Cleveland. The Bank, after it opens for business, plans to apply to become a certified CDFI.

Supervisory History

• ShoreBank was initially notified that it was critically undercapitalized on February 23, 2010. Due to a private capital raise of more than $146 million on May 18th, the PCA period was extended by 90 days from May 24th until August 22nd.

• The bank has been subject to an Order to Cease and Desist since July 14, 2009, requiring a number of corrective measures. The Order was amended on March 22, 2010, to require the bank to achieve higher levels of capital.

Recapitalization Efforts

• It is always in the interest of the FDIC to achieve a privately funded recapitalization or acquisition over a failed bank resolution. A bank that does not fail by definition does not cost the industry funded Deposit Insurance Fund any money. Through the supervisory process, the FDI will work with problem institutions to produce a viable recapitalization plan or assist in a sale.

• In the case of ShoreBank, as long as recapitalization remained a viable possibility, it is the normal course to pursue this in order to avoid failure. As is often the case, a viable recapitalization plan did not emerge within the required PCA timeframe which resulted in the need to resolve the institution.

Butte Community Bank, Chico, California, and Pacific State Bank, Stockton, California, were closed today by the California Department of Financial Institutions, which then appointed the Federal Deposit Insurance Corporation (FDIC) as receiver for the two banks. To protect depositors, the FDIC entered into purchase and assumption agreements with Rabobank, National Association, El Centro, California, to assume all the deposits and essentially all the assets of the two failed banks, which were not affiliated with one another.

Collectively, the failed banks operated 23 branches, which will reopen as branches of Rabobank, National Association under their normal business hours, including those offices with Saturday hours. Butte Community Bank has 14 branches, and Pacific State Bank has nine branches...

As of June 30, 2010, Butte Community Bank had total assets of $498.8 million and total deposits of $471.3 million; and Pacific State Bank had total assets of $312.1 million and total deposits of $278.8 million. Rabobank, National Association will pay the FDIC a premium of 4.05 percent to assume all of the deposits of Butte Community Bank, but it did not pay the FDIC a premium for the deposits of Pacific State Bank.

The FDIC and Rabobank, National Association entered into loss-share transactions on $425.4 million of Butte Community Bank's assets; and $249.7 million of Pacific State Bank's assets. Rabobank, National Association will share in the losses on the asset pools covered under the loss-share agreement. The loss-share transaction is projected to maximize returns on the assets covered by keeping them in the private sector...The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) for Butte Community Bank will be $17.4 million; and for Pacific State Bank, $32.6 million. Compared to other alternatives, Rabobank, National Association's acquisition was the least costly resolution for the FDIC's DIF.

These closings bring the total for the year to 116 banks in the nation, and the seventh and eighth in California. Prior to these failures, the last FDIC-insured bank closed in the state was Granite Community Bank, National Association, Granite Bay, on May 28, 2010.

Los Padres Bank, Solvang, California, 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 Pacific Western Bank, San Diego, California, to assume all of the deposits of Los Padres Bank.

The 14 branches of Los Padres Bank will reopen on Monday as branches of Pacific Western Bank...As of June 30, 2010, Los Padres Bank had approximately $870.4 million in total assets and $770.7 million in total deposits. Pacific Western Bank will pay the FDIC a premium of 0.45 percent to assume all of the deposits of Los Padres Bank. In addition to assuming all of the deposits of the failed bank, Pacific Western Bank agreed to purchase essentially all of the assets.

The FDIC and Pacific Western Bank entered into a loss-share transaction on $579.8 million of Los Padres Bank's assets. Pacific Western 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 $8.7 million. Compared to other alternatives, Pacific Western Bank's acquisition was the least costly resolution for the FDIC's DIF. Los Padres Bank is the 117th FDIC-insured institution to fail in the nation this year, and the eighth in California. The last FDIC-insured institution closed in the state was Butte Community Bank, Chico, earlier today.

Sonoma Valley Bank, Sonoma, California, was closed today by the California 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 Westamerica Bank, San Rafael, California, to assume all of the deposits of Sonoma Valley Bank.

The three branches of Sonoma Valley Bank will reopen on Saturday as branches of Westamerica Bank...As of June 30, 2010, Sonoma Valley Bank had approximately $337.1 million in total assets and $255.5 million in total deposits. Westamerica Bank will pay the FDIC a premium of 2.0 percent to assume all of the deposits of Sonoma Valley Bank. In addition to assuming all of the deposits of the failed bank, Westamerica Bank agreed to purchase essentially all of the assets...

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $10.1 million. Compared to other alternatives, Westamerica Bank's acquisition was the least costly resolution for the FDIC's DIF. Sonoma Valley Bank is the 118th FDIC-insured institution to fail in the nation this year, and the ninth in California. The last FDIC-insured institution closed in the state was Los Padres Bank, Solvang, earlier today.

[Demeter]

8. Four banks face big losses on repurchases-Fitch

http://www.reuters.com/article/idUSN1821994820100818

The four largest U.S. banks could face as much as $42 billion in losses as they repurchase faulty mortgages from housing finance giants Fannie Mae and Freddie Mac, Fitch Ratings said on Wednesday...Under an "extremely adverse scenario," the pool of "at risk" loans for JPMorgan Chase & Co (JPM.N), Citigroup Inc (C.N), Bank of America Corp (BAC.N) and Wells Fargo & Co (WFC.N) could total $175 billion to $180 billion, Fitch said...

Fannie Mae and Freddie Mac are pushing to recover losses on loans that failed to meet "representations and warranties," which state that loans sold into mortgage bond programs fit strict underwriting requirements. As the government-sponsored enterprises (GSEs) are life support from the U.S., repurchases would help offset the tens of billions of dollars being laid out by taxpayers.

Banks have responded by increasing reserves for repurchases, but are also challenging the claims.

Under an "adverse but less likely" scenario where Fannie Mae and Freddie Mac successfully put back 50 percent of bad loans and the banks can still recover 50 percent of the assets' value, the institutions could lose $42 billion, Fitch said. If the GSEs put back 25 percent of the loans, the expected loss could be $17 billion, it said.

Fitch said a more moderate case is the most likely outcome. Losses for banks if the GSEs put back 35 percent of loans would be about $27 billion, it said.

[Demeter]

28. US banks receive Basel III boost

Big US banks should be able to meet tighter global capital requirements without having to raise substantial amounts of new equity, according to calculations by Barclays Capital.
The analysis by BarCap’s debt capital markets group estimates that the 35 largest US banks will have to come up with half as much new capital as had been expected following last month’s rewrite of proposed requirements by the Basel Committee on Banking Supervision.
Read more >>
http://link.ft.com/r/UXDMSS/OJ67YI/NRHD3/A7FIP4/M9UN9L/T3/t

[Demeter]

45. SEC spins judge's words in defending Citigroup settlement

http://voices.washingtonpost.com/market-cop/2010/08/sec_spins_judges_words_in_defe.html

....In the end, perhaps the SEC would like (JUDGE) Huvelle to channel Rakoff (DECISION) all the way, ultimately approving the Citi settlement -- but not before requiring of the agency months of pleading, new charges, additional fines and sanctions, and a much more thorough discussion of the investigative record.

[Demeter]

56. Another Warning Shot for Bond Investors By Ian Mathias

The United States experienced another interesting first on Wednesday. For the first time in the history of our union, the Securities and Exchange Commission brought charges against a State. The powers that be in New Jersey had been deceiving and misleading investors in regards to the fiscal well-being of the Garden State, and the SEC busted 'em. Bravo.

That's where the good news ends.

But first, the Cliff's Notes to this mess, according to the SEC's allegations:

In 2001, New Jersey increased pension benefits for state employees without having the funds to cover new benefit expenses. For the next six years, at least, the state continued to underfund the pension system - but hid that information from municipal bond investors. On 79 separate occasions the state sold a total of $26 billion in bonds while "withholding and misrepresenting pertinent information about its financial situation," said SEC director of enforcement Robert Khuzami.

In other words, they lied so that the bonds they were selling would appear more attractive. It's classic balance sheet fraud, committed by senior state officials working for both democrat and republican governors. And the state's bond underwriters - JP Morgan, Citi, Morgan Stanley, Bank of America, Barclays, Merrill and (of course) Goldman Sachs - all probably lied too. At the very least, they all failed to conduct due diligence before vouching for the quality of the state bonds.

What's the penalty for this outright fraud? Nothing.

The State of New Jersey will pay the SEC precisely zero dollars. Not one state employee will pay a fine either, or go to jail...not even lose his job. In fact, the State didn't even have to admit wrongdoing. "New Jersey agreed to settle the case without admitting or denying the SEC's findings," calmly explains the SEC press release. Come again? Essentially, the only provision of the settlement is Jersey's promise that it won't do this in the future. That's it.

And Goldman Sachs, JP Morgan and all those other mega-banks? C'mon... They weren't even mentioned in the SEC's statement.

It's worth repeating: We're talking $26 billion in bonds sold under purposely false pretenses. This isn't some small-time phony IPO. Pretend a company like McDonald's, which has a market cap of roughly $77 billion (that's about the same value of New Jersey's pension fund system) sold $26 billion in bonds under similar guise. Heads would freaking roll. They'd be lucky to not go bankrupt.

Yet, here we are. New Jersey officials were so unfazed by the SEC settlement - the status quo was so unchanged - that they proceeded with a $2.2 billion bond sale on August 19, 2010. That's less than 24 hours after the SEC announced the results of their investigation. SEC investigators did a fine job forging into uncharted territory and exposing State fraud, but they offered literally the most toothless settlement possible.

That's not to say no lessons have been learned. The smart investor should already be leery of municipal bonds, with so many states struggling to close budget gaps while honoring swollen pension agreements. Now you have all but absolute proof that State administrators are not only unable to balance their books, but they're willing to cook 'em too. Plus, there is really no incentive for States to change their ways, aside from a gentle tap on the wrist from the SEC.

And this whole mess ought to (though it likely won't) highlight fundamental unfairness in the way we regulate the $3 trillion municipal bond market. Having the SEC patrol state funds is a hot mess of conflict of interest and political gamesmanship. At the end of the day, this is government policing government...an operation likely to be as inefficient as it is ineffective.

Of course municipalities need a regulator, as they have proven unable to regulate themselves. But once the SEC discovers such a fraud, why not - at the least - order the state to hire a team of private sector auditors that will report their findings to the government every year for the next five...or as long as it takes for the State to get its act together.

How's that for a stimulus plan? Auditing state pension programs would employ thousands of accountants for years. And those are real jobs, with a real purpose... Bean-counters could get back to work and bureaucrats would have to be just as responsible and forthright as the rest of us. While they're at it, those auditors can figure out exactly how long those struggling pension funds will last before running out of money. Wouldn't that be nice to know?

We'll be on the lookout for an e-mail from Mr. Obama, asking for more details on our stimulus plan. In the meantime, know what you're getting into when you buy muni-bonds. Only one state has ever defaulted on its bonds - Arkansas back in 1934. So the odds are still in your favor. But reason is not. Now ethics aren't, either.


FROM DAILYRECKONING.COM NEWSLETTER

[Demeter]

100. LINK

http://dailyreckoning.com/another-warning-shot-for-bond-investors/

[DemReadingDU]

32. Appears the FDIC is quite busy this weekend!

Good Evening Demeter, and everyone!

[girl gone mad]

34. $367.7 million????

...pretty soon we're talking real money.

[Demeter]

37. GRAND TOTAL FOR THE NIGHT: $473.5 MILLION MINIMUM

Kinda makes up for the last two weeks. Looks like they had to do some fancy paper-shuffling in Chicago...

[burf]

76. I dunno if this has already been addressed

as I don't get out much lately.

From Bloomberg via Daily Job Cuts:

Midwest Banc Holdings Inc., whose Midwest Bank and Trust was closed in May by Illinois regulators, filed for Chapter 11 bankruptcy protection.

Midwest listed $9.7 million in assets and $144.7 million in debt in a filing today in U.S. Bankruptcy Court in Chicago.

The bank had received $84.8 million in U.S. bailout funds from the Troubled Asset Relief Program. Its lender, Midwest Bank and Trust, with $3.17 billion in assets and 23 retail branches at the time, was shut May 14 with Firstmerit Bank of Akron, Ohio, assuming all the $2.42 billion in deposits.

I remember when Midwest closed and I guess this is the final step in the corporation.

I do wonder though just how much of the 84.4 million in TARP money wound up in the hands of bonus recipients.

Good weekend to all.

[Demeter]

78. No, I Hadn't Seen That

can you post a link?

[burf]

81. Sure, sorry I forgot!

http://www.bloomberg.com/news/2010-08-21/midwest-banc-holdings-files-for-bankruptcy-following-regulator-s-shutdown.html

It can also be accessed thru the daily job cuts site. It is posted today under the bankruptcy category.

Again, a fine weekend to all. It is hotter than it out to be here and supposed to be worse tomorrow. Just trying to keep the critters cool.

[Demeter]

4. Sheila must be pulling her hair out

http://www.youtube.com/watch?v=7dyl0j3WU6Y&feature=related

[Demeter]

5. At Treasury, Geithner Struggles to Escape a Past He Never Had

http://www.nytimes.com/2010/08/20/business/20tax.html?_r=2&ref=business

Timothy F. Geithner has been misidentified as a former Wall Street insider from Goldman Sachs so many times since he became the Treasury secretary that he and his advisers had taken to joking about it. Then the joke backfired.

Earlier this month, Mr. Geithner had breakfast in Manhattan with Mayor Michael R. Bloomberg and Robert Steel, a deputy mayor and former Treasury official in the Bush administration who had previously worked at Goldman. Facetiously, a Geithner aide said Mr. Steel and Mr. Geithner knew each other from the investment bank.

Later that day at a public event, the mayor in all seriousness referred to Mr. Steel and Mr. Geithner, and added, “They both worked at Goldman.”

Oops....

Except for his first three years out of graduate school, when Mr. Geithner was a researcher for the global consulting firm founded by Henry A. Kissinger, the former secretary of state, he has worked at governmental agencies and mostly at Treasury.

Mr. Geithner, who turned 49 on Wednesday, began as a lower-level civil servant late in the Reagan administration and left 12 years later as under secretary for international finance at the end of the Clinton administration.

He went to the International Monetary Fund for two years. In late 2003, he became president of the Federal Reserve Bank of New York, part of the Federal Reserve System — picked by a board that includes the heads of some of the big banks that the New York Fed regulates.

Administration officials and others close to Mr. Geithner say it most likely was the Fed job that gave rise to the sense that he hails from Wall Street, along with the fact that his mentor at the Clinton Treasury, former Secretary Robert E. Rubin, previously headed Goldman Sachs.

As the New York Fed president, Mr. Geithner in 2008 became prominent as part of the triumvirate with the Federal Reserve chairman, Ben S. Bernanke, and Treasury Secretary Henry M. Paulson Jr. — a former chief executive of Goldman Sachs — that engineered the government’s bailout of the financial system.

.........................

The confusion grew so widespread that Mr. Geithner himself has privately told others of a dinner where the wife of the White House chief of staff, Rahm Emanuel, remarked that Mr. Geithner must look forward to returning to Goldman.

POOR TIMMY! SEE, THE ODDS ARE THAT HE'LL BE GOING TO GOLDMAN FOR HIS NEXT JOB!

[Demeter]

23. Geithner calls for housing finance reform

Tim Geithner, US Treasury secretary, has called for a ‘careful’ wind-down of the portfolios of Fannie Mae and Freddie Mac in order to keep mortgage rates low in a tough housing market
Read more >>
http://link.ft.com/r/S4XZQQ/YH5YWC/IEP5S/M96UTF/QFHP7Y/28/t

[Demeter]

6. How Close Is America’s Demise? By Paul Craig Roberts

http://www.informationclearinghouse.info/article26166.htm

ANALYSIS, PROGNOSIS AND PRESCRIPTION FOR US.

[Demeter]

18. Washington to enforce health reform

The federal government will step in to ensure that the Obama administration’s healthcare reforms are implemented in every state, Kathleen Sebelius, the health secretary, said
Read more >>
http://link.ft.com/r/YIQXNN/LQBZEF/PNGIU/8AJDO0/A7YXJD/7V/t

[pscot]

96. Our demise may be at hand

but Roberts is still a moron.

[Demeter]

7. US Unemployment: Don't Let the Elite Pass the Buck By Paul Krugman

http://www.guardian.co.uk/business/2010/aug/15/us-unemployment-congress-paul-krugman

Growth is slowing and the odds are that unemployment will rise, not fall, in the months ahead. That's bad. But what's worse is the growing evidence that our governing elite just doesn't care – that a once-unthinkable level of economic distress is becoming the norm. And I worry that those in power, rather than taking responsibility for job creation, will soon declare that high unemployment is "structural", a permanent part of the economic landscape – and that by condemning large numbers of Americans to long-term joblessness, they'll turn that excuse into dismal reality.

Not long ago, anyone predicting that one in six American workers would soon be unemployed or underemployed, and that the average unemployed worker would have been jobless for 35 weeks, would have been dismissed as outlandishly pessimistic – in part because if anything like that happened, policy makers would surely be pulling out all the stops on behalf of job creation.

But now it has happened and what do we see?

First, we see Congress sitting on its hands, with Republicans and conservative Democrats refusing to spend anything to create jobs, and unwilling even to mitigate the suffering of the jobless.

We're told that we can't afford to help the unemployed – that we must get budget deficits down immediately or the "bond vigilantes" will send US borrowing costs sky-high. Some of us have tried to point out that those bond vigilantes are, as far as anyone can tell, figments of the deficit hawks' imagination – far from fleeing US debt, investors have been buying it eagerly, driving interest rates to historic lows. But the fear-mongers are unmoved: fighting deficits, they insist, must take priority over everything – everything, that is, except tax cuts for the rich, which must be extended, no matter how much red ink they create.

The point is that a large part of Congress, large enough to block any action on jobs, cares a lot about taxes on the richest 1% of the population, but very little about the plight of Americans who can't find work.

http://t1.gstatic.com/images?q=tbn:5FGNHeNGK1WgXM:http://bp0.blogger.com/_Skoh-lE8sO0/SJXrKcP4oKI/AAAAAAAAJXA/sSpmqn3Nqos/s400/Hair+Tommar+Wilson+Will+Swenson+Bryce+Ryness.jpg&t=1

[Demeter]

9. Intel to purchase McAfee for $7.7bn

Intel, the US chipmaker, said that it would acquire McAfee, the antivirus software company, in a $7.68bn deal that will enhance its ability to combat cyber threats as it pushes deeper into mobile computing
Read more >>
http://link.ft.com/r/19JYUU/KEH729/PNGIU/GKLNCP/WL0OLD/SN/t

[Demeter]

10. Pakistan seeks $10bn loan restructure

Pakistan is to ask the International Monetary Fund to ease restrictions on a $10bn loan it received in 2008 after concluding that the recent devastating floods had made the conditions attached to the lending programme impossible to meet
Read more >>
http://link.ft.com/r/NA70KK/72QTLS/7ZY85/EWUR8K/C5EIW7/HK/t

[Demeter]

11. German economic growth set to hit 3%

Germany’s economy will grow by 3% this year, the Bundesbank said in a revised forecast issued as investors pushed the cost of borrowing by the government towards fresh record lows
Read more >>
http://link.ft.com/r/NA70KK/72QTLS/7ZY85/EWUR8K/8AKX70/HK/t

[Demeter]

12. Obama accused of muting Bhopal

Critics say Washington is putting pressure on India to bury the highly emotive 1984 industrial accident only weeks before the US president is due to visit New Delhi
Read more >>
http://link.ft.com/r/NA70KK/72QTLS/7ZY85/EWUR8K/YHVCGY/HK/t

[Demeter]

16. Blackstone to invest $4bn in India

The deal shows how US private equity companies are ramping up their interest in the country, with rival Kohlberg Kravis Roberts also announcing two big deals this year
Read more >>
http://link.ft.com/r/EB8122/V1ZI11/NRHD3/6V9XBB/JINJLC/E4/t

[Demeter]

21. US matches Indian call centre costs

Call centre workers are becoming as cheap to hire in the US as they are in India, says the head of the country’s largest business process outsourcing company
Read more >>
http://link.ft.com/r/H60H77/WL7DHI/9MEOW/XT4C6L/40529K/LE/t

[Demeter]

24. India’s lawmakers plan to triple their pay

India’s parliament is poised to more than triple lawmakers’ pay at a time when the government is desperately trying to keep a lid on wage expectations in its battle with high inflation
Read more >>
http://link.ft.com/r/S4XZQQ/YH5YWC/IEP5S/M96UTF/LQPJC7/28/t

[Demeter]

30. Hair - Hare Krishna

http://www.youtube.com/watch?v=l3Ww3Im_KsU&feature=related

[Demeter]

44. So Much for Workers in India Being Cheaper

http://www.nakedcapitalism.com/2010/08/so-much-for-workers-in-india-being-cheaper.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

...In general, simple labor cost comparisons are vastly overrated in manufacturing. Factory labor is only 10% of the product cost of most manufactured goods, so the savings of having the work done in China is not all that large, and is often offset by other factors (shipping and inventory funding costs, greater management costs due to more coordination, plus greater risk, since longer lead times reduce responsiveness and produce greater risk of taking losses due to inability to cancel orders if customer demand falls)...



...wages in India’s outsourcing sector have risen by 10 per cent this year and senior outsourcing managers based in the country command salaries above global averages...

[bread_and_roses]

52. I think it's more about union-busting. Public workers next on the chopping block

We might not yet be able to outsource our teachers, or all our DMV clerks, Public Assistance workers, etc., (though we're trying - I think a while back some state outsourced their Food Stamp work) and never our Firefighters, but we can whip up public rage against the last bastion of middle-class wages until the voters/taxpayers support State efforts to destroy those unions in a false "fiscal discipline mode... a la NY, where by the way the two largest public unions find they cannot support the DEMOCRATIC candidate for Governor.

I am starting to think that maybe after the that last refuge of decent wages and retirement is destroyed that we might reach the "tipping point" - I mean, who's left to blame then? Our Oligarch Masters have been wondrously successful at setting the working class at each others' throats, but who's left after the teachers, etc., are working for Wal-Mart wages?

[Demeter]

57. I Think I Am Finally Old Enough to Understand "Hair"

I was merely a child in the 60's.

I understood the horror of the draft, taking kids too young to die, to inexperienced to survive a war, and shipping them out to an unimaginably foreign land, without their parents' consent, leaving behind their futures, so many never returning, or returning so damaged as to have no future. You don't have to be terribly old to understand death, abuse of power, and the like. You just have to be poor enough to have few options to avoid these.

What I didn't understand, perhaps, is that the draft victims understood all too well they were trapped or in danger of entrapment. Those, who could formulate a plan, did, with the help of families, friends, church, whatever.
My brother-in-law, 10 years older than I, ate himself into 4F, and is suffering the consequences to his health, at age 65. Dick Cheney got 4 deferments, although his abuse of his body was much more severe, and he still hasn't died for his sins. Some fled to Canada or Europe, and thus found the Promised Land, anywhere but here.

But other draft-eligibles were conflicted--dazzled by the propaganda, bullied by their local social milieu, or just not quick enough to figure out the score. Too many were getting drunk, or screwed, or drugged up and losing contact with reality just when Reality was far to dangerous to ignore.

Our family never got that far. The draft ended the year before my brother turned eligible. I do not know what my parents thought, or planned, or dreamed or had nightmares about. I do not know if they ever even thought about it, although I would think they did. They were good parents. They certainly didn't discuss their fears around us children.

I would not ask my father now. He is terrified enough by his infirmities. He need not be burdened with fears that didn't come to pass.

But I now understand what Hair is about. Like rats in a cage, seeking whatever comfort they could, the hippies sought to alter their grim reality in any way they could, for as long as possible, in the hopes that the Man would pass over them as 4F or otherwise unusable. (I'm embarrassed it took me this long to figure it out. Passivity, avoidance, escapism isn't my style. I'm much more direct and confrontational. I would have been off to Canada if I had to swim Lake Superior. Or taken up arms, and by opposing, end them.)

And is that not the American way, still?

Do not too many Workers seek any relief, no matter how temporary and self-destructive?

Do not families try their best to live a "normal" life, in the midst of a nation coming apart at the seams? Some of them will. It's a big continent, and there are places remote enough that some will escape Big Brother, either in His Corporate drag or Military gear. As the banner said after Kent State: They Cannot Shoot Us All.

The Peace Movement was huge, ponderous and relentless. We need something of that nature again, to take back the government from the GOVERNMENT and the CORPORATIONS and the THINK TANKS and the Self-Styled ELITES.

It took the largest generation in history to make the change. Now it will take all generations, working together.

[Demeter]

25. Merkel to stick with cuts despite growth

The German chancellor is sticking with plans to cut public spending and hold off tax cuts even amid evidence the economy this year could expand at twice the rate last forecast
Read more >>
http://link.ft.com/r/CTBPCC/OJ6C5D/LSLXF/S3AHUB/TP8UWQ/T3/t

[Demeter]

26. DONNA

http://www.youtube.com/watch?v=LEm2EUKMKVY&feature=related

[Demeter]

13. Sharp upturn in use of shipping containers

The upturn in the trade, boosted by traffic of goods to and from emerging economies, has been so strong that analysts say that it has caught many by surprise
Read more >>
http://link.ft.com/r/EB8122/V1ZI11/NRHD3/6V9XBB/8AK4QB/E4/t

CHRISTMAS IS COMING, THE GOOSE IS GETTING FAT
PLEASE PUT A PENNY IN THE OLD MAN'S HAT

[Po_d Mainiac]

88. Housing units..........link below

http://www.youtube.com/watch?v=65C9OLvmjpI&feature=player_embedded#!

[Demeter]

14. The genuine nobility of manufacturing Luke Johnson

http://www.ft.com/cms/s/0/e76c1c3e-ad28-11de-9caf-00144feabdc0.html

Something has been troubling me for a long, long time. I have a certain regret about the industries to which I have devoted my attention. I love fields like hospitality and the media, where I have spent much of my career. I understand how the economics work: restaurants and broadcasting can offer high margins and excellent cash flow, and providing diners and viewers with pleasure is hard to beat.

But a part of me would have loved to have been a genuine manufacturer. There is something authentic, something noble about making physical objects. It appears to me the essence of capitalism. Service and support sectors are all very well, but their output feels so much less tangible than a production business. Moreover, economies need balance: that way they are better equipped to ride out downturns.

Success in manufacturing needs at least four ingredients that are in short supply in countries like Britain. First, it needs patient capital – returns are rarely quick or indeed easy in many manufacturing spheres such as automotives, machinery or electronics. Second, it needs steady capital expenditure – unlike activities such as media, for example, which demands little. Third, it needs an army of sub-contractors and suppliers supporting the core fabrication. And finally, it needs engineering and technical skills in the workforce.

In truth, I have found service industries an easier and more certain path to profit than manufacturing. I served as a director and part-owner of a producer of large print presses, but the wild fluctuations in orders and work-in-progress were scary, and the quality of the global competitors was intimidating. Endless research and development expenses absorbed heavy amounts of cash flow. Low-cost foreign rivals can always undercut you. Meanwhile, regulation and taxation place an ever-greater burden on any factory owner. In this safety-first age, it often feels as if we have become almost too squeamish to cope with the grit and noise of manufacture...

In almost any country, dealing in property, shares or companies will likely lead to riches far faster than running factories to produce the goods we all need. I would love an economist to explain to me the flaw in our system that leads to this far from ideal outcome...



The writer Luke Johnson is chairman of Channel 4 and runs Risk Capital Partners, a private equity firm

[Demeter]

15. I got life

http://www.youtube.com/watch?v=8pa1QvSD440&feature=related

[Demeter]

17. S Korean treasuries sought by China

China more than doubled its direct holdings of South Korean treasury bonds in recent months as it turned to regional markets to diversify some of its $2,450bn in forex reserves away from the dollar and the euro
Read more >>
http://link.ft.com/r/YIQXNN/LQBZEF/PNGIU/8AJDO0/V1OGZT/7V/t

[Demeter]

43. Killer Trade Deficits (CHINA) Paul Krugman

http://krugman.blogs.nytimes.com/2010/08/16/killer-trade-deficits/

I agree with everything this NYT editorial has to say about the economics of widening international imbalances. Where I disagree is on the issue of negotiating strategy. My colleagues believe that we should lecture the Chinese on what a bad thing they’re doing, but not actually threaten sanctions, lest we start a trade war. My belief is that this gets us nowhere.

Right now, China is following a policy that is, in effect, one of imposing high tariffs and providing large export subsidies — because that’s what an undervalued currency does. That should be a violation of trade rules; it might in fact be a violation, but the language of the law is vague on the subject. But leave aside the fine print of the law for a moment: what China is doing amounts to a seriously predatory trade policy, the kind of thing that is supposed to be prevented by the threat of sanctions.

Yet the Chinese have taken our measure, and decided that we won’t act. Until or unless that changes, we’re just whistling in the wind.

I say confront the issue head on — and if it leads to trade conflict, bear in mind that in a depressed world economy, surplus countries have a lot to lose from such a conflict, while deficit countries may well end up gaining. Or to put it differently, right now we’re in a world in which mercantilism works. In the long run we’ll emerge from this kind of world; but in the long run …

[Demeter]

19. Price rises drive rising tide of Asian labour militancy

Bangladeshi garment workers, who make clothes for western brands such as Gap and Marks & Spencer, greeted a recent 80 per cent pay rise by rampaging through the capital Dhaka burning cars and looting shops
Read more >>
http://link.ft.com/r/YIQXNN/LQBZEF/PNGIU/8AJDO0/5C47I4/7V/t

[Demeter]

20. Vietnam devaluation fails to stem dong’s fall

Vietnam’s decision to devalue its currency, as part of efforts to control a ballooning trade deficit, did little to ease pressure on the dong raising the possibility of further devaluations
Read more >>
http://link.ft.com/r/YIQXNN/LQBZEF/PNGIU/8AJDO0/GKJQUI/7V/t


HAVING FAILED TO PICK OFF THE EURO, SPECULATORS HAVE TURNED TO THE 98 LB WEAKLING OF ASIA..

[Demeter]

22. Funding cuts decimate horse race meetings

Horseracing is suffering from a sharp fall in the annual horseracing betting levy, which provides prize money and is crucial to the livelihoods of trainers, jockeys and stable staff
Read more >>
http://link.ft.com/r/H60H77/WL7DHI/9MEOW/XT4C6L/6VWZJK/LE/t

[Demeter]

27. BP raises $5bn in loans from oil revenue

BP has raised $5bn in new loans by pledging revenues from oil sales for the first time in a bid to bolster its liquidity following the Gulf of Mexico spill
Read more >>
http://link.ft.com/r/LVA6WW/C5FPOT/B49CK/A7FK5K/QFHNW4/50/t

[Demeter]

29. Criminal gangs get involved in insider dealing

Organised criminals in the UK are becoming increasingly involved in financial frauds including insider share dealing that they see as lucrative and low risk, investigators have warned.
Read more >>
http://link.ft.com/r/OZMCDD/6VER1P/OFBYP/PRCLXL/4052VA/XL/t

HOW QUAINT THAT THE K STILL MAKES SUCH SLIGHT SOCIAL DISTINCTIONS BETWEEN CROOKS AND BANKSTERS....

[Demeter]

31. I APOLOGISE FOR THE LACK OF ORDER THIS EVENING

I wanted to get some stuff up before my eyes close down...

[Dr.Phool]

35. You will be flogged in the morning!

:hi:

[Demeter]

36. I'm Flogged Every Morning

And worse on Sundays.

[bread_and_roses]

33. another R here

but way too tired to even think...just cruised through the thread titles so I'd have some idea what to look at first tomorrow...I think maybe the Paul C. Roberts...

...was in the car a lot the past week and "the news" has me reeling even more than usual...maybe I'll manage better tomorrow.

Love the "Hair" poster

"...a home for the fleas...a hive for the buzzin' bees..."

later, and thanks for getting the thread up.

[jotsy]

38. Kickin' it.

just cuz.

[jtuck004]

39. I am quite certain that Obama's, and by extension

the nation's, inability to move ahead stems from the counsel of these three musketeers, advice that would curl your hair.

Is the whiskered republican, Bernanke, trying to pull the wool over our eyes? In his 2007 speech to the Federal Reserve Bank of Chicago he pelted the listeners with points such as how improvements have "reduced the costs for lenders" yet "subprime borrowers face higher costs of borrowing than prime borrowers do". He speaks in the same speech about the sharp rise in delinquencies, talks about potential responses by the Fed, but at the same time states that "we do not want to curtail responsible subprime lending". How much responsible lending was going on while millions of homeowners were obviously in trouble? Is it possible that their inablity to pay the loans might be due in part to the the homeowner not being allowed to share in these lower costs? Could this be considered a fleecing?

In June of 2010 he told the Congress that "The economy . . . appears to be on track to continue to expand through this year and next". In the same month President Obama appeared on stage with the bearded Bernanke and talked about how the economy is strengthening, job growth and consumer confidence increasing. (I watched this in a screen on CNBC while the market and consumer confidence numbers were dropping, and I remember thinking it would have been a fine time for an aide to yell "fire" and get him off stage. Sigh). I don't think Bernanke has the keys to the locks on the economy. Maybe Obama needs a new mane man at the Fed?

Is the former republican, now independant, Timothy Geithner any better? No, he hasn't worked on Wall Street, but his mop of "unusually close relationships with executives of Wall Street’s giant financial institutions", also detailed http://www.nytimes.com/2009/04/27/business/27geithner.html">here..., while engineering "overly generous" bailouts seem to have been great for the banks. Not so fur the American people. His reticence to push for a plan to increase demand in the economy, instead allowing the consumer to languish while they lose their public schools and jobs, public and private, would make for a fine chapter detailing these shocks in a book by Naomi Klein.

But far and away the worst of these might be Larry Summers. During the California energy crisis of 2000, then-Treasury Secretary Summers teamed with Alan Greenspan and Enron executive Kenneth Lay to lecture California Governor Gray Davis on the causes of the crisis, explaining that the problem was excessive government regulation, which, in retrospect, was the only thing that might have saved millions of people from the haircut they took in energy prices. Yet Summers hailed the Gramm-Leach-Bliley Act in 1999, which, by repealing key provisions of the Glass-Steagall Act lifted more than six decades of restrictions against banks offering commercial banking. Many critics including, oddly, President Obama, have suggested the 2007 subprime mortgage financial crisis was caused by the partial repeal of the 1933 Glass-Steagall Act". Enron taught us that the villian doesn't always have to have a mustache, when we pulled back the thatch from the the true accounting for their money. According to Mark Ames, in addition to being one of the "key villains fighting to suppress the regulatory efforts of a top official, Brooksley Born, who was trying to call attention to the dangers of the unregulated derivatives", Summers was one of the "key architects of our financial crisis".

Obama has accomplishments that he can be proud of. But just like a painter must choose the appropriate palette to make the best picture, or the runway presentation of a style can be made or broken by the accent of the coiffure, perhaps President Obama needs to test the fiber of a new group of advisors, advisors who will take the side of the American people against the wealthy in the financial sector.

(Wow. That's a lot of torture for innocent synonyms. I apologize for making you comb through this).

We have 15 million good people unemployed, and at least another 15 million under-employed, many in jobs that pay 1/2 what they used to make. The CBO just came out with a forecast that is deluded at the very least, trying to get us to believe that unemployment will be back to 5% in 2014. Perhaps they think the entire country woke up today and lost our collective ability to do junior high math? Can they not see the great likelihood of an increase in unemployment over the next 12 months, (only buffered by the hundreds of thousands too discouraged to look for work to be counted in the monthly survey)?

But that aside, if we started today to employ the unemployed, those who despair of looking, and those who are working but can no longer pay their bills, a conservative 20 million new jobs would take a job growth of 417,000 per month OVER AND ABOVE the 125,000 that just keeps us even. 536,000 net new jobs a month for the next 48 months starting this month? Even during the Clinton administration, where we saw, arguably, the greatest job growth of a modern presidency, his best average year was 321,000 per month, and that was with the growth of the Internet and the ramp up to the year 2000. And will those jobs pay the dollars to sustain the retirements, pensions, public and private jobs and lives we have these things built around? Very likely, no.

Job growth is all tangled up, I'm afraid, and maybe only a hair's-breadth from disaster. We need a new set of advisors.

[Demeter]

41. DID YOU WRITE THIS? IT'S PERFECT!

I had a wonderful time reading it and all the HAIRY details....

[jtuck004]

48. Yea. I put links to the good stuff everyone else wrote, but

I have to confess to the strain I put on the synonyms. Thank you for the hair theme.

I just hope nobody wigs out ;)

[Hawkowl]

69. Awesome post

And on topic(within theme?)! Well done!

[ozymandius]

84. This is fantastic.

Pun-ditry may be in your calling. This is truly an inspired piece. Bravo!

[jtuck004]

85. There was one truly disturbing statement that stood out.

"Mr. Geithner told The Times that his actions in the bailout were motivated solely by a desire to help businesses and consumers. But in a financial crisis, he added, “the government has to take risk, and we are going to be doing things which ultimately — in order to get the credit flowing again — are going to benefit the institutions that are at the core of the problem.”

Good thing he isn't a policeman - he would be proffering a new supply of victims to the rapist or murderer as his prescription for justice.

___

I hope now that we are moving out of the "Summer of Recovery" we are not just moving into "Fall Over".

'Cause 30 million Americans (or more) is a terrible thing to waste.

[Demeter]

87. Everything Timmy says is disturbing

If he told me I was on fire, I'd ask for a second opinion...

[Demeter]

40. TAKE THAT, MR. BLANKFEIN!

"Power always thinks it has a great soul and vast views beyond the comprehension
of the weak; and that it is doing God's service when it is violating all his
laws." -John Adams

http://www.youtube.com/watch?v=JshdUZ5KRpo&feature=related

[Joe Chi Minh]

83. Fascinating quote, Demeter. A lot of your Presidents seem to have coined

some real pearls of wisdom.

[Demeter]

89. It's Only Hit or Miss

We have had very educated and effective presidents, just not consistently.

[Joe Chi Minh]

95. That makes sense. I expect it's the same with our premiers in the UK.

[Demeter]

42. In Lehman’s Demise, an Elusive Search for Culprits

http://dealbook.blogs.nytimes.com/2010/08/16/in-lehmans-demise-an-elusive-search-for-culprits/?ref=business

DID LOOSE LIPS SINK LEHMAN'S SHIP? TOO COMPLICATED TO SUMMARIZE, BUT VERY INTERESTING.

[Po_d Mainiac]

97. Utterances from below the mustache may have shaved a few days from the life

But the bank's pate was already shy of any discernible follicles. Harebrained schemes such as repos prior to end of quarter reporting, are not needed when the balance sheet is solid.

Short sellers caught Lehman with a hairball wrapped around their tonsils. One that couldn't be coughed free. Fuld may have tried to blame the haircut on the squeeze put on the bank's short and curly's, but in actuality the fault lay in trying to shave losses with book cooking, instead of honest accounting. Lehman could have shed its ties to Countrywide, and the other predatory lenders, long before the feathers started to fly.

Investors should have bristled when false quarterlies went out. They didn't even bother to bat an eyelash. The could have forced the BOD's to scalp the executive bonuses instead of getting their dander up after the fact.

Och-Ziff will most likely walk away with their pelts intact, as the investors legal staff fleece them from one last shearing.
YMMV

[Demeter]

46. Stop the Catfood Commission

PETITION SPONSORED BY ALAN GRAYSON--SIGN IT TODAY!

http://salsa.mydccc.org/o/30019/p/dia/action/public/?action_KEY=51

[Demeter]

49. Critics’ Misleading Attack on “Misleading” Medicare Report

http://www.offthechartsblog.org/critics%E2%80%99-misleading-attack-on-%E2%80%9Cmisleading%E2%80%9D-medicare-report/

Sunday’s New York Times op-ed by Stanford Ross and David Walker (“Misled on Medicare”) charges that the latest Medicare trustees’ report on the program’s finances is misleading. In fact, it’s Messrs. Ross and Walker who are telling only part of the story.

They allege that the trustees report is “based on unreasonable assumptions that produced unrealistic and misleading results.” But those assumptions are simply that the new health reform law — which strengthens Medicare’s short- and long-term finances — will take effect as enacted.

Trustees’ reports have always assumed that the laws of the land will be implemented, rather than hazard guesses about how future Congresses might change those laws. Gail Wilensky, who administered Medicare under President George H.W. Bush, said just that at an American Enterprise Institute forum on August 6:

“The convention is that we use current law. That makes sense as long as people understand that’s what the convention is. It would be very hard to know what you would use if you didn’t use current law — whose view of the future we would use.”

Messrs. Ross and Walker ask that the trustees’ report also include “a more realistic” estimate that assumes only some of health reform’s Medicare savings will materialize. But that’s exactly what the trustees did. As they write on page 3, “Where possible, we illustrate the potential understatement of Medicare costs and projection results by reference to an alternative projection.” In fact, Ross and Walker’s column cites figures from that projection.....

MORE AT LINK

[ozymandius]

53. signed and potential enlistees to the cause contacted

We need more and better Democrats - just like Alan Grayson.

[Demeter]

47. HAIR--THE MUSICAL

Hair: The American Tribal Love-Rock Musical is a rock musical with a book and lyrics by James Rado and Gerome Ragni and music by Galt MacDermot. A product of the hippie counter-culture and sexual revolution of the 1960s, several of its songs became anthems of the anti-Vietnam War peace movement. The musical's profanity, its depiction of the use of illegal drugs, its treatment of sexuality, its irreverence for the American flag, and its nude scene caused much comment and controversy. The musical broke new ground in musical theatre by defining the genre of "rock musical", using a racially integrated cast, and inviting the audience onstage for a "Be-In" finale.

Hair tells the story of the "tribe", a group of politically active, long-haired hippies of the "Age of Aquarius" living a bohemian life in New York City and fighting against conscription into the Vietnam War. Claude, his good friend Berger, their roommate Sheila and their friends struggle to balance their young lives, loves and the sexual revolution with their rebellion against the war and their conservative parents and society. Ultimately, Claude must decide whether to resist the draft as his friends have done, or to compromise his pacifistic principles and risk his life by serving in Vietnam.

After an off-Broadway debut in October 1967 at Joseph Papp's Public Theater and a subsequent run in a midtown discothèque space, the show opened on Broadway in April 1968 and ran for 1,750 performances. Simultaneous productions in cities across the United States and Europe followed shortly thereafter, including a successful London production, which ran for 1,997 performances. Since then, numerous productions have been staged around the world, spawning dozens of recordings of the musical. Some of the songs from its score became Top 10 hits, and a feature film adaptation was released in 1979. A Broadway revival opened on March 31, 2009, earning strong reviews and winning the Tony Award and Drama Desk Award for best revival of a musical. In 2008, Time magazine wrote, "Today Hair seems, if anything, more daring than ever."

History

Hair was conceived by actors James Rado and Gerome Ragni. The two met in 1964 when they performed together in the off-Broadway flop "Hang Down Your Head and Die", and they began writing Hair together in late 1964. The main characters were autobiographical, with Rado's Claude being a pensive romantic and Ragni's Berger an extrovert. Their close relationship, including its volatility, was reflected in the musical. Rado explained, "We were great friends. It was a passionate kind of relationship that we directed into creativity, into writing, into creating this piece. We put the drama between us on stage."

Rado described the inspiration for Hair as "a combination of some characters we met in the streets, people we knew and our own imaginations. We knew this group of kids in the East Village who were dropping out and dodging the draft, and there were also lots of articles in the press about how kids were being kicked out of school for growing their hair long". He recalled, "There was so much excitement in the streets and the parks and the hippie areas, and we thought if we could transmit this excitement to the stage it would be wonderful.... We hung out with them and went to their Be-Ins and let our hair grow." Many cast members (Shelley Plimpton in particular) were recruited right off the street. Rado said, "It was very important historically, and if we hadn't written it, there'd not be any examples. You could read about it and see film clips, but you'd never experience it. We thought, 'This is happening in the streets,' and we wanted to bring it to the stage."

Rado and Ragni came from different artistic backgrounds. In college, Rado wrote musical revues and aspired to be a Broadway composer in the Rodgers and Hammerstein tradition. He went on to study acting with Lee Strasberg. Ragni, on the other hand, was an active member of The Open Theater, one of several groups, mostly Off-off Broadway, that were developing experimental theatre techniques. He introduced Rado to the modern theatre styles and methods being developed at The Open Theater. In 1966, while the two were developing Hair, Ragni performed in The Open Theater's production of Megan Terry's play, Viet Rock, a story about young men being deployed to the Vietnam War. In addition to the war theme, Viet Rock employed the improvisational exercises being used in the experimental theatre scene and later used in the development of Hair.

Rado and Ragni brought their drafts of the show to producer Eric Blau who, through common friend Nat Shapiro, connected the two with Canadian composer Galt MacDermot. MacDermot had won a Grammy Award in 1961 for his composition "African Waltz" (recorded by Cannonball Adderley). The composer's lifestyle was in marked contrast to his co-creators: "I had short hair, a wife, and, at that point, four children, and I lived on Staten Island." "I never even heard of a hippie when I met Rado and Ragni." But he shared their enthusiasm to do a rock and roll show. "We work independently," explained MacDermot in May 1968. "I prefer it that way. They hand me the material. I set it to music." MacDermot wrote the first score in three weeks, starting with the songs "I Got Life", "Ain't Got No", "Where Do I Go" and the title song. He first wrote "Aquarius" as an unconventional art piece, but later rewrote it into an uplifting anthem.

[Tansy_Gold]

55. hair -- and why i had a delightful chuckle at the WEE topic

I get teased quite a bit about my hair, specifically because it's not considered "age appropriate," shall we say. Ask me if I give a shit. :evilgrin:










Yours truly, 1981 --

[Demeter]

58. You Are Talking to a Woman Who Just Cut Off 6 Inches for the Swimming Season

and because it was giving me a headache.

But it's great insulation in the winter. Like a blanket.

[DemReadingDU]

71. Amazing

I always wanted long beautiful hair, but mine is so thin and fine. Every year, it keeps getting shorter and shorter. Wash-n-wear, and it's ready to go in a minute.


no wine for me
:evilgrin:

[Demeter]

50. BREAKFAST BREAK--TALK AMONGST YOURSELVES

I get so hungry between the blogging and the meeting--it's all that indignation, I expect.

[ozymandius]

51. I've just posted a Social Security piece in Editorials.

Here it is. Feel free to comment.

[Demeter]

60. Gave it the 5th

I read that earlier today. I think the DC bubble is hallucinogenic.

[Po_d Mainiac]

80. Just looking for a few good customers

snip
But Illinois Tool Works in Glenview shows why more government action might offer limited help.
snip
"I could borrow $2 billion tomorrow for 3 1/2 percent," said Speer. "But what am I going to do with it?"
snip
More fiscal stimulus "might help make things a little better for a couple of quarters, but I'm not sure it would get at the underlying economic issue," Speer said. "The core question is: How do you get consumers back on their feet. We need growth in a sustainable way, not another Band-Aid."
snip
"It took us a decade to get in the ditch we are in," Speer said. "There isn't going to be instant gratification to get us out of it. We're going to have to get used to a lower growth economy, and that is going to be a big adjustment for all of us."

http://www.washingtonpost.com/wp-dyn/content/article/2010/08/20/AR2010082005165_3.html

[ozymandius]

54. "If this is 'the Recovery,' god forbid if we ever officially enter into a double-dip."

From diarist Bob Swern at DailyKos.

Three posts from Calculated Risk from Thursday, August 19th (alone, just one day of god-awful economic story after story that screams to me: "If this is 'the Recovery,' god forbid if we ever officially enter into a double-dip."):

Commercial Real Estate: Moody's: Commercial Real Estate Price Index declines 4% in June.

Ongoing Economic Contraction: Philly Fed Index shows contraction in August, first time since July 2009.

Unemployment: Weekly initial unemployment claims at 500,000, highest since November 2009.

All in one day's news cycle!

[bread_and_roses]

59. "Economic forecaster: ‘Greatest Depression’ coming"

I have no idea if this guy is any good or not - figure you guys will know so I'll post it for what it's worth:

http://rawstory.com/rs/2010/0820/economic-forecaster-greatest-depression-coming

Collapse of middle class means there's no fuel for recovery, Gerald Celente argues

The US economic recovery in recent quarters is little more than a "cover-up" and the world is headed for a "Greatest Depression," complete with social unrest and class warfare, says a renowned economic forecaster.

Gerald Celente, head of the Trends Research Institute, told Yahoo!News' Tech Ticker that there's no risk of a "double-dip recession" because the first "dip" never ended.

... "One of the good businesses to get in to may be guillotines," Celente quipped. "Because there's a real off-with-their-heads fever going on. People are really fed up."

... "We went from a country that used to be merchants, craftspeople, manufacturers, to clerks and cashiers," Celente said. "We have to bring manufacturing back to America."

[Demeter]

61. Hair - Let the Sunshine In

http://www.youtube.com/watch?v=fhNrqc6yvTU&feature=related

[Po_d Mainiac]

82. Let's just call it the "recoveryless recovery" n/t

[Demeter]

62. I May Never Leave This Thread Again!

DU has been taken over by zombies.

[snot]

63. I'm always disappointed when it trails away each day . . .

But it's the quality, not the quantity, that keeps me comin' back.

[Demeter]

64. Thanks, I Think

[Po_d Mainiac]

65. Best to stay North of South America.......n/t

[Demeter]

70. I Don't Know, Po

The way things are progressing, South America may pick up the torch that North America dropped.

Of course, I need a place with reasonable humidity levels...

[Po_d Mainiac]

74. It was a play on the Oz man's Jonestown remark...n/t

[Demeter]

66. Chase Bank and Obama's "Make Home Affordable" Scam By Ted Rall

http://www.informationclearinghouse.info/article26208.htm

SOMEWHERE IN AFGHANISTAN--It isn't surprising, what with the world falling apart and all, that the world scarcely noticed that I lost my job as an editor in April 2009. Why should it? I was one of millions of Americans who lost their job that month.

But it mattered to me.

It wasn't all bad. No more early morning commutes. And no more Lisa. Lisa was my boss. My mean boss. My mean and crazy boss. In the long run, I stand to save thousands of dollars on therapy.

In the meantime, however, one visit with HR cost more than half my annual income. (My ex-employer, the Scripps media conglomerate, offered just four weeks severance pay--if I agreed not to work as a journalist for the rest of my life. Needless to say, I refused.) Just like that, I was broke.

The bills, of course, kept coming. Including my home mortgage. Unlike many people, I was conservative. When I bought, in 2004, I put down more than 50 percent of the purchase price. Refusing an adjustable-rate mortgage, I took out a vanilla 30-year fixed-rate mortgage from Chase Home Finance LLC.

My monthly nut, a combined payment of $2200 for the loan plus local property tax, didn't seem so bad in '04. But property taxes went up. Now I'm shelling out over $2700--on half the income. I'm still making my payments on time, but only by borrowing from a home equity line of credit.

I'm not in foreclosure. But it's easy to see how, if this keeps up, I will be. The credit line isn't limitless. The more I borrow, the higher my payments on that. My cash flow is a disaster.

So I asked Chase for help.

Responding to political pressure to cut distressed homeowners a break, the big banks who destroyed global capitalism in 2008--including Chase--agreed to the Obama Administration's request to create a program to assist distressed homeowners. The result was "Make Home Affordable." (Nice name.)

From Chase's website: "No matter what your individual situation is, you may have options. Whether your want to stay in your home or sell it, we may be able to help."

Key word: "May." Translation: "May" = "Won't."

As I can now attest from personal experience, "Make Home Affordable" is a scam. MHA is cited by bank ads as evidence that they get it, that their "greed is good" days are over, that we don't need to nationalize the sons of bitches and ship them off to reeducation labor camps.

In reality, it exists solely to give banks like Chase political cover. They deliberately give homeowners the runaround, dragging out the process so they can foreclose. As of the end of 2009, only four percent of applicants received any help. By June 2010 the vast majority of that "lucky" four percent had lost their homes anyway--because the amount of relief they got was too small.

I was a banker in the '80s. I often travel to the former USSR, where sloppy paperwork gives the police the right to rob you blind. So I know how to navigate bureaucracy. I'm careful. Thorough. When, among other things--many, many other things--Chase asked me for copies of my bank statements, I knew to send the blank pages too.

I explained my situation to an officer at my local Chase branch. "As someone who recently lost a job and thus a substantial portion of your income," she said, "you clearly qualify for Make Home Affordable. But you have to keep making your payments on time. Don't fall behind or you'll be disqualified."

Chase Home Finance's lists qualifications for MHA; I easily fulfilled them. I was excited. To make sure I didn't become the ten millionth American to lose his house since 2008, Chase would work to reduce my monthly payment. First, they would lengthen the repayment period. If that wasn't enough help, they'd cut my interest rate. They might even reduce the principal.

I carefully filled out the forms. I copied all the financial records they demanded. I mailed them off to a brand-new loan center in Colorado that, Chase promised, had been set up to expedite the processing of HFA applications. The package was more than 100 pages thick.

That was in January.

About a month later, Chase sent me a letter asking for the same exact documents I had already sent them. I was perplexed. The application was in the same package as the supporting papers. How could they know I wanted to apply for HFA, yet not have that stuff? They also asked for another bank statement--for the month that had passed between their receipt of my application and the date of their letter.

They did it over and over. They'd confirm receipt of an item, then demand it again. They asked for one particular month's bank record three times--after telling me that they'd gotten it twice.

Want a good laugh? Try navigating Chase's phone tree. It's at [phone].

I called in March. Happy day! After submitting 318 pages of records, most of them redundant, my application was finally complete. An Actual Living Human would be in touch shortly to tell me whether I'd been approved and, if so, how much of a break I'd get. I also got a letter. Application complete! Application complete! What were all those pissed-off Chase Home Finance customers on the Internet whining about? All you had to do was be thorough. And persistent.

Alas, April brought more melancholia. Another letter: my application still wasn't complete again. Why hadn't I sent in the same documents I'd already sent in four times and had confirmed three times? And what about the bank statement that arrived between March and April?

I sent in the stuff along with a pissy cover note threatening to contact my Congressman if they didn't shape up.

So what happened? Democracy works! One week later, on May 18th, I received a rejection letter. The Reason: I had not suffered any loss of income.

"If it is determined that you are not eligible for a Home Affordable Modification," their website assures, "we'll evaluate you for other workout options to keep you in your home or advise you of other foreclosure alternatives." Never heard from them.

As a former banker, I wondered: How could they say that I hadn't taken a hit? Then it came to me. Chase only asks for records that show income: W-2s, pay stubs, income statements, bank statements. They don't look at your debt: credit cards, home equity lines of credit, other mortgages. Like most people whose income drops, my debts went up as I struggled to pay my bills. Indeed, I offered to send that stuff. They refused it!

At this time I would like to express my unvarnished admiration for the ruthless cynicism that led the executives at Chase Home Finance to conceive of a fake lending branch entirely dedicated to increasing foreclosures, improving their public image, and driving distressed homeowners crazy.

"The foreclosure-prevention program has had minimal impact," says John Taylor, chief executive of the National Community Reinvestment Coalition. "It's sad that they didn't put the same amount of resources into helping families avoid foreclosure as they did helping banks."

I would also like to volunteer for the firing squad if and when these scumbags get what they deserve.

[Demeter]

67. Questioning the “The Authorities Did a Great Job in the Crisis” Meme

http://www.nakedcapitalism.com/2010/08/questioning-the-the-authorities-did-a-great-job-in-the-crisis-meme.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

What is disconcerting is how this view has now become conventional wisdom, despite the panicked Fed reaction (being way behind the curve, then overreacting and making 75 basis point cuts the new normal, with the result that short rates are now so low that the Fed is boxed in), denial and failure to investigate the seriousness of looming problems (for instance, Bear’s implosion should have led to a full bore investigation of the credit default swaps market, which would have led straight to AIG); the inconsistent bailout processes; the heinous language and process of the passage of porked-up TARP.

And now we have the aggressive selling of “how well it all worked.” For starters, consider the misleading “banks have paid back the TARP meme.” Yes, thanks to other back door, less visible bailouts, super cheap interest rates, regulatory forbearance (aka, extend and pretend, starting with bank second mortgages and HELOCs). This is simply a shell game, with the banks eager to pay back the TARP for the worse possible reason, so the top brass could escape restrictions on compensation.

An interesting proof of the success of the power-that-be’s PR campaign is the blogosphere silence on a Barry Ritholtz post of Monday, “2008 Bailout Counter-Factual.” I’m what would normally be late to it, but I can’t find another blog in my RSS reader having commented on it.Barry makes an aggressive case, that none of the bailouts were necessary:

http://www.ritholtz.com/blog/2010/08/bailout-counter-factual/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+TheBigPicture+%28The+Big+Picture%29

[bread_and_roses]

90. I thought the Ritholtz article was quite good

short, concise, comprehensible. It's not that easy to make such complex matters relatively plain - especially to droppers-in like myself, who are impatient with details.

It's interesting to me, though, that there were plenty of us - both knowledgable and, like me, not so, who said at the time "let them go down."

[Demeter]

68. The Economy is in Big Trouble By Mike Whitney

http://www.informationclearinghouse.info/article26206.htm

HOW BIG IS IT? CLICK, READ AND WEEP--IT'S TOO BIG TO POST!

[DemReadingDU]

72. The politicians are just starting to catch on (from the article)

Duh, they should have talked to the SMW posters several years ago, we would have straightened them out!

[DemReadingDU]

73. Paul Craig Roberts: Deceptive Economic Statistics

8/18/10 Deceptive Economic Statistics by Paul Craig Roberts
While Economists Lied, the Economy Died
.
.
Wherever one looks--food stamps, home foreclosures, bankrupted states, mounting joblessness, the message to long-suffering Americans from “their government” is the same: go eat cake, while we fight wars for ...... that enrich the military/security complex and while we bail out banksters whose annual incomes are in the tens of millions of dollars and up.

It is impossible to get any truth out of the US government about anything. If private companies used US government accounting, the executives would be prosecuted, convicted, and incarcerated.

edit: removed a line

All most members of Congress, especially Republicans, want to do is to pay for the pointless wars by cutting Social Security and Medicare.

When they worry about the deficit, it is usually Social Security and Medicare--so-called “entitlements” that are in the crosshairs.

You don’t have to be smart to see that Wall Street’s and the government’s response to the amazing US budget deficit is not to stop the senseless wars and bailouts of mega-millionaires, but to cut “entitlements.”

I will end this column on unemployment. “Our government” tells us that the unemployment rate is just under 10 percent, a figure that would have wrecked any post-Great Depression administration. But, again, “our government” is lying.

Compare this fact with the number you read from the financial press. Right now, if measured according to the methodology of 1980, the US unemployment rate is about 22%. Thus, the reported rate of unemployment hides more than half of the unemployed.

And Secretary Treasury Tim Geithner welcomed us in the August 2 NewYork Times to “the recovery.”

Utterly amazing.
http://www.counterpunch.org/roberts08182010.html

[Po_d Mainiac]

75. How to save SS from privatization

The only possible hope is that financial markets completely collapse in the next three to four months. That would discredit Pete Peterson and the wingnuts at his think tanks. It would make it possible to stop the right wing stampede and the collective amnesia about the last three years—that is, about the global financial crisis caused by free market wingnuts. Resumption of the crisis could discredit the crazy troglodyte thinking promoted at Chicago and Washington think tanks.

http://neweconomicperspectives.blogspot.com/2010/08/wingnuts-go-after-fannie-and-freddi.html

the above paragraph is about halfway down the page, followed by these one-liner gems

What is the free market path to homeownership? A subprime crisis.

What is the free market path to private pensions? Across the board collapse of commodities, real estate, and equities markets.

What is the free market alternative to Social Security? An impoverished elderly population.

What is the free market alternative to Medicare? High priced health insurance that most elderly people cannot afford.

Edited to add: Can you drown someone in a think tank?

[Demeter]

77. I Don't Know About That Last

but I'd sure like to try.

Maybe mandate that they all have to be in NOLA?

[Demeter]

79. Corporate Rotten Eggs by Robert Reich

http://robertreich.org/post/985703357/corporate-rotten-eggs

There are rotten apples in every industry. Or perhaps I should say rotten eggs.

One especially rotten egg is Jack DeCoster, whose commercial egg agribusiness, which goes under the homey title “Wright County Egg,” headquartered in Galt, Iowa, sends eggs all over the country under many different brands. Those eggs have now laid low thousands of Americans with salmonella poisoning, and may well infect thousands more....


...Thirteen years ago when I was Secretary of Labor, DeCoster agreed to pay a $2 million penalty (the most we could throw at him) for some of the most heinous workplace violations I’d seen. His workers had been forced to live in trailers infested with rats and handle manure and dead chickens with their bare hands. It was an agricultural sweatshop.

Several people in Maine told me the fine wouldn’t stop DeCoster. He’d just consider it a cost of doing business. Evidently they were right. DeCoster’s commercial egg business has a record that would make a repeat offender blush.

In 2003, DeCoster pleaded guilty to knowingly hiring undocumented immigrants (who don’t complain about unsafe working conditions, below-minimum-wage pay, and unsanitary facilities). DeCoster paid a record $2.1 million penalty for that one.

In the 1990s he was charged by Iowa authorities for violating state environmental laws governing the runoff of manure into rivers. He continued to violate environmental laws so often that the Iowa Supreme Court approved an order barring him from building more hog structures.

In 2002 the U.S. Equal Employment Opportunity Commission fined DeCoster’s operation $1.5 million for mistreating female workers. The charges included rape, sexual harassment, and other abuses.

Earlier this year, DeCoster paid another fine to settle state animal cruelty charges against his egg operations in Maine.

In other words, the current national salmonella outbreak is just the latest in a long series of DeCoster corporate crimes. He’s fostered a culture that disregards any law standing in the way of profits. Along the way, DeCoster has abused the environment, animals, his employees, and his customers....


MORE HISTORY - READ IT AND WEEP

[fasttense]

93. His explanation of criminal behavior on the part of corporations makes common sense.

Corporations are like any other criminals. If they can get away with breaking one law, they are likely to break a lot of other laws too. You would be amazed at how often thieves get caught because they run red lights and break other minor traffic laws. That's why police run license plate checks on most minor traffic violations. A criminal doesn't break just one law.

I like his solution. It's a kin to creating a data base for criminals that other police departments can access.

"Corporations that play fast and loose with one set of laws are likely to cut corners on others. Look at Massey Energy Company, which owned the mine where 27 miners were killed several months ago. Massey also had a long record of law breaking, and had racked up an even longer list of alleged violations and settlements. Or consider BP, whose malfeasance even before the Gulf spill, included workplace safety violations, deaths, and other environmental disasters."

"Too often, though, one level or agency of government doesn't know about corporate malfeasance turned up by another level or agency of government. This is especially true when violations are settled out of court, as is now common. Government doesn't’t have nearly enough inspectors or lawyers to bring every rotten egg to trial.

A national database of corporate crimes and settlements would tip off federal, state, and local inspectors to rotten eggs like Jack DeCoster’s agribusiness, Massey Energy, BP, Bridgestone Firestone, and other serial corporate offenders. Scarce inspection resources could be targeted at them rather than at the good eggs. Consumers could benefit as well."

[Demeter]

94. We Should Live That Long

I confess to losing hope.

[Demeter]

86. Wow! 29 Recs!

Gonna do a Sally Field...

http://www.youtube.com/watch?v=XCtrVdcXr04

http://www.youtube.com/watch?v=nmZqb2VVc48&feature=related

[bread_and_roses]

91. "Too bad we no longer have a real Party of Jobs to support. "

Somewhere this weekend - may have been in a link from here - I read an "unofficial" figure of something like 22% on unemployment. This article calls it a still unimaginable 16.5%.

http://www.commondreams.org/view/2010/08/19-3

Five Washington Excuses for Ignoring the Jobs Crisis

by Les Leopold

... the Administration should be very worried about the more than 29 million Americans who have lost their jobs or are forced into part-time work.

... Since the 1930s struggling workers like these have flocked to the Democratic Party, which they viewed as the party of jobs. Now they're not so sure, and the party risks losing its mass base

Our current unemployment trough, by far the longest and deepest since 1937, directly violates the social compact that glues together modern industrial societies -- the tacit commitment that business and government will produce a full-employment economy. When that promise goes unmet for long periods, chaos ensues. It is not an accident that the rise of fascism in Europe during the 1930s corresponded with a prolonged period of high unemployment. Unfortunately, rearmament and war also are tools to put people back to work. Our political and business leaders are playing with fire by failing to seriously address the jobs crisis.

... Unless the Obama Administration finally organizes a major assault on the jobs crisis, there will be no relief for Mr. Gibbs or his boss. Many angry Americans -- liberals and conservatives -- will turn against the party in power.

Too bad we no longer have a real Party of Jobs to support.

[Dr.Phool]

92. How true.

People tend to not quietly let themselves and their families starve to death.

The corruption inside the DC bubble is beyond repair. By either party. I don't think this whole thing is going to end nicely. I've lived, and worked (and been laid off) through every recession since 1971. There was always hope, and a knowledge that things were going to get better. Not any more.

[Demeter]

98. Or of the People

I'm not sure how they expect to attract voters--by IQ, or lack thereof?

Of course, with modern voting methods--which look a lot tike the bad old voting methods--who needs voters?

[Demeter]

99. Bankruptcy and the Crisis: Why so Few?

http://www.creditslips.org/creditslips/2010/08/bankruptcy-and-the-crisis-why-so-few.html

Those who follow Bob's postings on bankruptcy filing numbers will have seen that U.S. consumer bankruptcy filings have been plodding upwards steadily, but only to roughly where they were before the BAPCPA bubble back in 2005. One of the inscrutable mysteries of the financial crisis of 2007-??, which is after all a housing and consumer debt crisis, has been how few bankruptcies have been filed. Somehow, historically unprecedented levels of consumer debt and loan defaults have not produced the surge in bankruptcy filings one would expect.

American households tripled their mortgage debt from $3.5 trillion at the end of 1996 to $10.5 trillion at the end of 2007. Median income, meanwhile, rose by about 40%. While credit card and other unsecured debt grew less dramatically, that is only because homeowners used mortgage refinancing to soak up quite a bit of credit card debt. All this debt growth came to a screeching halt in early 2008, after subprime mortgage lenders were wiped out by early payment defaults, and the bond market, spooked by losses at Bear Sterns and elsewhere, suddenly lost its appetite for mortgage-backed securities.

Unable to recycle their loans any longer, homeowners and consumers defaulted. Debt defaults for consumers and homeowners are now running at two to five times their pre-crisis levels. Each quarter for the past two years, the Mortgage Bankers Association has announced new all-time highs for mortgage default or foreclosure rates. Through previous business cycles the combined rate of foreclosures and 90-day delinquencies has rarely exceeded 2% of all mortgages; it now stands at 9.7%, and will probably exceed 10% in the second quarter numbers due out this week. Credit card charge-off rates for banks have been hovering around 10%, compared to their usual 3% to 5% range in the recent past. So debt, and debt defaults, are much, much higher than they have been at any time since the 1978 Bankruptcy Code. But filings are not.

The Treasury Department estimates that there are 1.6 million homeowners nationwide who are 60 days delinquent, and are otherwise candidates for workouts through the Administration’s HAMP program. Chapter 13 filings, the logical choice for homeowners trying to work out mortgage debt, are running at 25% of filings,so we can expect perhaps 400,000 Chapter 13s for calendar 2010.

The gap between Chapter 13 filings and distressed mortgage borrowers looks even greater when you consider that not all Chapter 13s are filed to deal with foreclosures; some Chapter 13 debtors are not even homeowners. Perhaps Chapter 7s are being filed by distressed mortgage debtors to help with a graceful exit, but bankruptcy is clearly not playing a central part in deleveraging the American homeowner.

While there may be good reasons for this disconnect between bankruptcy filings and the debt crisis, including the presence of a shadow consumer bankruptcy system (about which more later) this does raise the old question, “if bankruptcy is the solution, what is the problem?” Or, “if not now, when?”

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

COMMENT:

Chapter 13 is a joke. Thanks to our for hire representatives. The average chapter 13 costs $2500 - it's easier to turn the ringer off. People are fatigued and the confidence in this current financial system is cracking....

[Demeter]

101. Traffic Jam on the Superhighway By Frank Holmes

There’s growing congestion on one of America’s highways and reports say the problem will only get worse. In just the past few years, America’s technological network—our information superhighway—has gone from hare to tortoise. Dropped calls, Internet outages and surfing at a snail’s pace now seem to be commonplace.

One of the main causes of the congestion is the exponential growth of smartphones. Did you know that the new 4G iPhone uses the equivalent network capacity of 200 older generation cell phones?

Earlier this year when Apple sold 1.7 million of them in just three days, it was the data equivalent of dumping 340 million new cell phones into the system at once—no wonder there were problems. It isn’t Apple’s (or AT&T’s) fault so many people wanted their product, but it does highlight the investment opportunity.

According to tech research firm PacificCrest, the global technology buildout is a $200+ billion opportunity over the next five years. The infrastructure needs include $100 billion to relieve congestion and $50 billion for boosting networks by upgrading Internet protocols. PacificCrest also estimates $54 billion is needed for new routing systems to improve data flow.

Read more: Traffic Jam on the Superhighway http://dailyreckoning.com/traffic-jam-on-the-superhighway/#ixzz0xNfU0VNE

[Demeter]

102. The American Retirement Crisis By Dave Gonigam

Just when it looked as if the baby boomer retirement picture couldn’t get any worse, it did. The number of workers making “hardship withdrawals” from their 401(k) plans hit a record during the second quarter, according to Fidelity.

A hardship withdrawal is something you take when you’re still working and still on the company plan… provided you can prove to the IRS you’re having a genuine “hardship.” 62,000 Fidelity 401(k) account holders took that step during Q2…compared to 45,000 in the same period a year ago. Ouch.

Granted, the IRS has a pretty loose definition of “hardship,” judging by this part of the press release accompanying Fidelity’s report: “Plan sponsors report that the top reasons why participants are taking hardship withdrawals are to prevent foreclosure or eviction, pay for college and the purchase of a primary residence.”

OK, foreclosure would be a genuine hardship. (Never mind that 401(k)s are usually untouchable in bankruptcy, so it makes next to no sense to tap into those funds to keep your home…but we digress.)

But a home purchase or college tuition? Let’s get this straight: These people are tapping into their retirement nest egg…paying income tax on it…plus the 10% early withdrawal penalty if they’re younger than 59½…to make their measly 3.5% FHA down payment? Or the kid’s tuition for next semester? The mind reels.


Read more: The American Retirement Crisis http://dailyreckoning.com/the-american-retirement-crisis/#ixzz0xNhImEia

[Demeter]

103. I Don't Know About That Last

I am more and more certain that getting out of paper assets and putting it into something that DOESN'T evaporate, whether real estate or education, is the only sensible thing to do these days.

Of course there are better and worse ways to do it...

[Demeter]

104. That's a wrap

So much to ponder, so little weekend, too much humidity, and no will to live.

Which will break first, the horrible summer or the impossible markets?

See you all next week.