Weekday NEWS to Comfort the Disturbed and Disturb the Comfortable.
Thurs 04.29.2010
Why Should You Be Freaked Out About Greece? by Megan McArdle - BusinessInsider.com Remember, The Great Depression Had Two Parts The most terrifying words I've seen written so far about the growing crisis in Greece were penned by Yves Smith yesterday: "So the whole idea that the financial crisis was over is being called into doubt. Recall that the Great Depression nadir was the sovereign debt default phase. And the EU's erratic responses (obvious hesitancy followed by finesses rather than decisive responses) is going to prove even more detrimental as the Club Med crisis grinds on." The Great Depression was composed of two separate panics. As you can see from contemporary accounts--and I highly recommend that anyone who is interested in the Great Depression read the archives of that blog along with Benjamin Roth's diary of the Great Depression--in 1930 people thought they'd seen the worst of things.
Roubini: "In A Few Days Time, Joe Weisenthal - BusinessInsider.com There Might Not Be A Eurozone For Us To Discuss" When it comes to the PIIGS, Dr. Doom is in full-on doom mode. Felix Salmon has some good notes on a PIIGS panel from the Milken Global Conference, which included Nouriel Roubini, who is in his wheelhouse when talking about sovereign debt crises. Nouriel, of course, takes that kind of thinking to its logical conclusion, and kicked off the panel by announcing that it was just in time: “in a few days,” he said, “there might not be a eurozone for us to discuss.” There's no way that Greece can implement the 10% spending cut it needs to do in order to stop its debt spiralling out of control at current interest rates — and even if it did, the economic effects would be disastrous.
Nouriel Roubini Discusses U.S., Government Deficit
Already Holding Junk, Germany Hesitates By JACK EWING - NYTimes.com FRANKFURT — Add this to the list of reasons German taxpayers are unhappy about having to lend Greece money to ease its debt crisis: In effect, they already have. Germany’s financial institutions hold some 28 billion euros, or $37 billion, in Greek bonds, according to estimates by Barclays Capital, extrapolating from International Monetary Fund data. Germany’s regulators and many of its banks do not disclose precise figures, but an informal survey on Wednesday of the largest banks indicates that about half of that debt — rated as junk by Standard & Poor’s since Tuesday — appears on the balance sheets of institutions that are owned or controlled by the German government.
The Cost of Insuring the Financial Industry By Bill Bonner - DailyReckoning.com “Ask me how insurance works.” “All right, how does insurance work?” “Well, okay, you give me your money…” “Is that all there is to it?” “Yes.” “Is that a joke?” “Not exactly…” Fire insurance works by sharing out the risk of a fire among hundreds of homeowners. In effect, if one house burns down, the others have already put aside enough money to rebuild it. It’s a kind of voluntary socialism…freely collectivizing the risk of a house fire. But just because you have fire insurance doesn’t mean you will leave a can of gasoline on the kitchen stove. You know it would be a big pain to replace the house and its contents – even if you were made whole financially. That’s why it works, because it doesn’t change human behavior. So, actuaries can calculate the odds of a fire fairly accurately.
Gold Potential to Hit $2,000 to $3,000 Within 2 Years By: Aden Forecast - MarketOracle.co.uk This month’s jump up in precious metals, resources and oil reinforces that the lows in February were likely the lows for the downward correction. For now, the second quarter is off to a good start. The fact that gold’s decline was mild (down 13?%) is saying that the underlying bull market is strong and solid. You should now have your positions bought and in place, waiting for the bull market to further unfold. Platinum and palladium have been strong, reaching new highs and they seem to be leading gold, silver and the metals shares in another leg up in the bull market. In fact, the new highs in many commodities reinforces this.
If gold goes to $5000, where will commodities head By Stewart Thomson - CommodityOnline.com The Bugs Bunny Show continues to take comedy to new levels, surpassed only by the Angela “Euro to Zero” Merkel show. How she manages to keep a straight face while mauling the currency of her citizens, while they give her a standing ovation, is beyond my understanding. If I was in her place, I’d be on the floor screeching with laughter at the stupidity of my citizens while I ruined their currency, if I had her character. After handing the commercial banksters a $500 billion blank check after 8 hours of supposed “deliberation”, she has engaged in endless weeks of rants about why the Greek govt can’t get 1/100th of that amt, unless they agree to an equally endless list of supposed demands to ensure austerity.
Gold climbs as eurozone debt crisis intensifies People's Daily Online - Xinhua Gold futures on the COMEX Division of the New York Mercantile Exchange extended gains on Wednesday, as euro sank to one-year lows against U.S. dollar amid intensified sovereignty debt crisis in Europe. Silver and platinum both dropped. The most active gold contract for June delivery rose 9.60 U.S. dollars, or 0.8 percent, to finish at 1,171.80 dollars. Rating agency Standard & Poor's announced on Wednesday to downgrade the debt rating of Spain by one notch to AA, indicating a negative outlook and possible further downgrade.
All Aboard the Gold Train as Recognition Move Approaches By: Jordan Roy Byrne - MarketOracle.co.uk Since early 2009 we’ve written about the super-bullish long-term cup and handle pattern in Gold. It dates back to 1980 and has a logarithmic target of about $2,100. We noted that previous cup and handle patterns in Gold all reached their logarithmic target1. We expect that this move to $2,100 will be the recognition move that awakens the masses to the Gold bull market and the reality of severe inflation in the near future. Speaking of the near future, the relative strength of Gold in the face of a strong US dollar (or weak Euro) is one big hint that this recognition move is around the corner. We’ve noted this before and it is important to explain to new readers. Gold priced in foreign currencies has been leading Gold in US$ terms. It is true for the entire bull market and is quite evident in just the past few years.
Five Questions About Gold The IMF Refuses To Answer Vince Veneziani - BusinessInsider.com You'll recall that a few weeks ago, we interviewed the IMF on why it had blocked investor Eric Sprott's attempt to buy gold from the fund. We then spoke with Eric Sprott and the Gold Anti-Trust Action Committee, better known as GATA for their take on the matter. Along the way, both GATA and Sprott suggested we ask the IMF some questions that the fund has avoided answering in the past. So we did. They were:
What are the incentives for the IMF not to sell gold on the open market or to investors, be it institutional or retail?
What are the designated depositories for gold?
Did gold physically change hands with the banks you have sold to so far or was the transaction basically bookkeeping stuff (the IMF still holds the physical gold in this case)?
Are there available records on the actual serial numbers of bullion? How is the gold at the IMF tracked and accounted for?
When the IMF says it will "phase out" the sal of available gold, could you be more specific? What amount of gold in regard to what amount of time.
Does IMF support a need for total transparency in the sale of gold despite the effects it could have on various markets?
U.S. Households Lost $100,000 From Crisis By Rebecca Christie April 28 (Bloomberg) -- The financial crisis and recession cost U.S. households an average of about $100,000 in lost wealth and income, according to a study by former Treasury Department economist Phillip Swagel. From June 2008 through March 2009, households’ stock holdings fell $66,000 and real estate dropped $30,000, according to the study released today by the Pew Economic Policy Group. Each household also lost an average $5,800 from unemployment and lower earnings from September 2008 through December 2009, the study said.
Junking Greece May Be Beginning of End for Euro Commentary by Mark Gilbert April 29 (Bloomberg) -- Greece cheated its way into the single-currency club, lied about its deficit for years, and now brings the shame of becoming the first junk-rated member after losing investment-grade status at Standard & Poor’s this week. Greece’s punishment? A 30 billion-euro ($40 billion) handout from its neighbors, with Germany on the hook for almost 8.4 billion euros, followed by France for 6.3 billion euros and 5.5 billion euros from Italy. The rest of the gang members are expected to contribute pro rata, based on their capital subscriptions to the European Central Bank.
Yuan’s Gain Against Euro May Delay China Ending Peg By Bob Chen and Shamim Adam April 28 (Bloomberg) -- The yuan’s climb to a one-year high against the euro will erode China’s competitiveness in its largest export market and delay an end to its currency’s peg against the dollar, said UniCredit SpA and Societe Generale SA. Forward contracts on the currency fell after debt-rating downgrades of Greece and Portugal yesterday deepened concern that a sovereign-credit crisis will hamper a global economic recovery. The European turmoil may buttress Premier Wen Jiabao’s reticence to abandon the yuan’s peg to the dollar, adopted in July 2008 to shield exporters from the world recession.
Jim Rogers on Get out of The Dollars!
Greece's Bill Is Now Due - And Others Will Be Next, Debt Denial and the Five Stages of Greece By: Justice Litle - MarketOracle.co.uk The phenomenon of "debt denial" has gripped not only Greece and the eurozone, but the entire roster of rich Western nations. When the smoke finally clears, you'll want to own gold coins... The eurozone is slowly but surely imploding under an unsustainable debt load. Greece is still center stage, but the woes will soon spread. Ultimately, Greece is the first domino in a long chain of looming debt defaults... and at the end of that chain lies the United States. You'll want to be paid up on "printing press insurance" before the final domino falls - and gold coins might fit the bill nicely in that regard. More on that at the end of today's piece...
Selling Greece to Disney Solves Europe’s Woes Commentary by Alice Schroeder (it's a spoof! . . . . but plausible) April 28 (Bloomberg) -- The following is this columnist’s look into the future of Europe’s debt crisis. A news story on Jan. 5, 2011, may look something like this: . . . . Disney’s decision to buy Greece has been credited to Steve Jobs, CEO of Apple Inc. and Disney’s largest shareholder. In 2009, Jobs told Disney to “dream bigger,” setting into motion a deal that is generating a new series of Disney hit movies and product spin-offs, and transforming the theme-park industry. Theme Parks Already under construction are Space Mountain Olympus, the Pirates of the Aegean water theme park covering hundreds of nautical miles, the Little Mermaid Harpoon thrill ride, and “Trojan,” a multimedia adventure that the company reassured shareholders yesterday will not be adult-themed.
Goldman And The PIIGS Keep Stock Market Jittery By: PaddyPowerTrader - MarketOracle.co.uk The price action and news headlines Tuesday were dominated by US rating agency Standard and Poor’s decision to downgrade the sovereign ratings of Greece and Portugal to BB+ (by a savage and unprecedented three notches) and A- (down two notches) respectively. This saw a dramatic further significant ballooning in bond spreads and CDS to fresh highs whilst the domestic equity markets were down 6% and 5% respectively. With the downgrade of Greek sovereign ratings, the fate of Greek depends on ratings action by the other two major rating agencies Moody’s and Fitch.
Mohammad El-Erian And Paul Krugman by Joe Weisenthal - BusinessInsider.com Both Wildly Gloomy About Spiraling Crisis In Greece The market has been in full-on panic about Greece for awhile now -- hence the parabolic spike in short-term rates -- and now it seems the wise men of the market are fully on board. Felix Salmon points to new pieces from both Mohammad El-Erian and Paul Krugman, both of whom see nothing but bad news right now. El-Erian, in so many words, says Greece will default. Krugman is talking about the real possibility of unwinding the euro and ends his piece with: "I think I’ll go hide under the table now."
Massive Inflation is Coming - Jim Rogers!
Goldman Death Fight May Explain Lloyd’s Words Commentary by Jonathan Weil April 29 (Bloomberg) -- If we are to take Lloyd Blankfein’s word for it, and that’s always a big if, then there must be a lot worse behavior by Goldman Sachs that has yet to be discovered, beyond what was publicly unearthed at this week’s Senate hearing. Here’s what Goldman’s chief executive officer told Tom Coburn of Oklahoma, the ranking Republican on the Senate Permanent Subcommittee on Investigations, when asked if he had any “legal, ethical or reputational” concerns about any of the activities undertaken by Goldman employees that were described during the daylong hearing. “I heard nothing today that makes me think anything went wrong,” Blankfein said.
Barofsky Says Criminal Charges Possible in Alleged AIG Coverup By Richard Teitelbaum April 28 (Bloomberg) -- Neil Barofsky was unpacking boxes in December 2008 when the stench of sewage wafted through the hallways at the 168-year-old Main Treasury Building. The space assigned to him as head of the Office of the Special Inspector General for the Troubled Asset Relief Program, or SIGTARP, was shoehorned into the basement, three floors below U.S. Treasury Secretary Henry Paulson’s offices. “They eventually discovered a broken sewer main beneath the floor,” says Barofsky, 40, adding that he doesn’t think any slight was intended by relegating him to the malodorous quarters. Still, he says with a smile, “I wasn’t given the prime real estate in Treasury.”
Roubini Says Rising Debt Leads to Inflation, Defaults By Vivien Lou Chen and Gabrielle Coppola April 28 (Bloomberg) -- Nouriel Roubini, the New York University professor who predicted the U.S. recession more than a year before its start in December 2007, said rising sovereign debt from the U.S. to Japan and Greece will ultimately lead to higher inflation or government defaults. “While today markets are worried about Greece, Greece is just the tip of the iceberg, or the canary in the coal mine for a much broader range of fiscal problems,” Roubini, 52, said today during a discussion on financial markets at the Milken Institute Global Conference in Beverly Hills, California. Increasing tax revenue won’t be enough “to save the day.”
America’s Second Great Depression (Part 1) By: Mike Stathis - MarketOracle.co.uk Overview - Washington, Wall Street and their partners in crime, the media, have continued to spread the myths of an economic recovery since late summer 2009. In response to the propaganda, the stock market has continued to rally. But most individual investors have been left out of this tremendous rally. . . . With the national debt approaching $13 trillion, no real improvements to the worst and longest recession since the Great Depression, blue chips slashing dividends for the first time in history (eg. DOW), century-old financial institutions now in bankruptcy (Lehman Brothers, Bear Stearns, Washington Mutual), trillions of dollars in bailouts, the largest year-over-year decline in GDP, state tax revenues and housing starts since the Great Depression, over 7 million foreclosures, an additional 7 million more foreclosures over the next 2 to 4 years, more than 8 million lost jobs with about 32 million Americans out of work, more than 40 million Americans on food stamps, a healthcare crisis that has not been addressed, a continuing trend of excessive inflation for food, energy and healthcare, and consumer spending coming to a halt…you can be assured of many things over the next several years:
Several more stimulus packages (which won’t offer any permanent assistance)
Soaring consumer loan defaults
Soaring commercial real estate defaults
Several million additional foreclosures
Rapidly rising and high interest rates
Muted real wage growth
Declining job quality
Lingering high unemployment for several years
Significant downside in the U.S. stock market
Continuation of employee benefit cuts
Continuation of healthcare inflation with millions more medical bankruptcies
A deepening of the entitlement crisis
Excessive inflation over an extended period OR massive inflation that will be countered by double-digit interest rates
A long period of muted consumer spending
Much higher taxes (not just income, but all taxes)
A worsening of America’s Second Great Depression, with up to two lost decades.
World War III
Western Civilization is Doomed By: John Kozy - MarketOracle.co.uk Peace cannot be achieved through violence, it can only be attained through understanding." Ralph Waldo Emerson When I was a boy, I knew a man who repaired clocks and watches as a hobby. (Quartz watches had not yet been invented.) I often sat for hours in utter fascination watching him work. Then one day, I asked, "Frank, how do you know how to do that?" He answered, "Johnny, what man has done, man can do." Therein lies the fallacy of the Nuclear Nonproliferation Treaty. Science and technology is a Pandora's Box. Once opened by one man, company, or country, what is emitted soon becomes everyone's.
Gold vulnerable to Greek debt crisis: by Jeff Nichols NEW YORK (Commodity Online) Last week, the sovereign debt crisis caused daily swings in gold prices and it remains vulnerable to more bad news for Greece or signs that one or another European Union member is following Greece down the road to insolvency, according to Jeffrey Nichols, Senior Economic Advisor to Rosland Capital and senior precious metals economist. Jeff Nichols said that gold should benefit from euro problems and its continuing loss of status as a dollar alternative. In fact, with Europe facing a chronic sovereign debt problem, the euro is itself a shrinking yardstick, hardly a stable unit of value against which to measure the dollar.
EMU domino fears as Spain downgraded, Germany drags feet on rescue By Ambrose Evans-Pritchard - Telegraph.co.uk German leaders have agreed in principle to a rescue package of up to €135bn for Greece in emergency talks with EU and IMF officials, but failed to offer any clarity on the conditions for such aid. Hopes for a respite for Southern Europe's battered bond markets were quickly dashed as Standard & Poor’s downgraded Spain. Rainer Brüderle, Germany’s economy minister, said the Greek bail-out would be much larger than first thought, acknowledging that Greece cannot hope to tap the private debt markets for three years. The heads of the European Central Bank and the International Monetary Fund made a joint pilgrimage to Berlin, pleading with lawmakers in the Bundestag to throw their full weight behind rescue efforts before the chain-reaction spreads to Portugal and the rest of the EMU periphery. Their presence as supplicants in Berlin marks the symbolic moment when Germany appears the undisputed master of Europe.
ECB warns on sovereign debt crisis By Ralph Atkins in Frankfurt - FT.com A top European Central Bank policymaker has intensified warnings of a “full-blown sovereign debt crisis” unless governments take ambitious steps to bring public finances under control, saying the UK, US and Japan faced an even greater challenge than the eurozone. The comments by Jürgen Stark, ECB executive board member – which echoed similar warnings by the International Monetary Fund – highlighted the spreading concerns sparked by the escalating crisis over Greece’s public debt. However, he played down the idea of the ECB offering Greece a lifeline in an extreme scenario by buying its government bonds.
Currency Wars: Markets Shudder on Downgrade of Spain There was unusually heavy put buying yesterday in NY markets on the Spanish stock index ETF. Last month a group of US hedge funds were investigated for collusion in planning short selling assaults on the euro. Having exhausted the developing world, which has largely tossed them out, have the economic hitmen finally turned on the developing world as we forecast in 2005 that they would? This is not to say that Greece, Portugal, or Spain are without problems or fault. There is a general crisis in many of the developed country fiat currencies, including the United States. The rising price of gold and silver, despite the heavy handed manipulation by a few of the banking centers, is a sure sign of a flight from paper controlled by central banks.
Spain hit as Greek 'illness' spreads over Europe Carl Mortished - The TimesOnline.co.uk The crisis affecting the eurozone worsened yesterday when Spain’s credit rating was downgraded less than 24 hours after Greece was sent into financial meltdown. Fear of contagion gripped Europe’s financial markets when the debt rating agency Standard & Poor’s cut the rating on Spain’s sovereign bonds. The decision — coming after the agency downgraded Portugal’s rating and cast Greek bonds into the scrapyard, designating them junk — sent the euro plunging against the dollar.
I.M.F. Promises More Aid for Greece as European Crisis Grows By LANDON THOMAS Jr., NICHOLAS KULISH - NYTimes.com Hoping to quell its biggest crisis since the Asian woes of 1997, the International Monetary Fund promised on Wednesday to increase the 45 billion-euro aid package for Greece to as much as 120 billion euros over three years. The fund is racing to conclude an agreement for more painful austerity measures from Greece by Monday, clearing the way for the government to receive funding and reassuring investors worldwide that European debt is safe. On Wednesday, Dominique Strauss-Kahn, the I.M.F.’s forceful managing director, made the higher aid pledge in a private meeting with German legislators. The package would be the equivalent of up to $160 billion and would come from both the I.M.F. and from other countries using the euro.
Dangers loom beyond the eurozone By Chris Giles in London - FT.com The crisis in Greece serves as a warning to other countries not to lose control of their fiscal positions and the confidence of markets. But advanced countries have now stretched their public budgets so far that investors, economists and international organisations are getting worried. Returning to form, the International Monetary Fund warned this month that reducing budget deficits, “should precede the normalisation of monetary policy” in many economies and that they “need to make more progress in developing and communicating credible medium term fiscal adjustment strategies”.
NYU's Roubini Says Greece Wasn't Ready to Join EU
My big fat Greek market bloodbath By Colin Barr - CNNMoney.com (Fortune) -- Europe is finally cobbling together a credible Greek bailout. But even a big wad of cash may not be enough to prevent another round of market mayhem. Officials from the European Union and the International Monetary Fund said Wednesday they hope to agree this weekend with the Greek government on the terms of a bailout package. The IMF said the package could cost as much as $160 billion over three years -- well above the sums previously discussed. European officials have been "dragging their feet" on Greece for months, said Mitchell Orenstein, a European studies professor at Johns Hopkins University in Baltimore.
Ireland suffers fallout from Greek crisis By John Murray Brown - FT.com Ireland was hit by the fallout from the Greek crisis on Wednesday as its bond spreads widened, in spite of bold steps to contain its budget deficit and stabilise its banking sector. Irish government bonds were trading 35 basis points wider at 255bp above German bonds, the largest spread since July last year. Alan McQuaid, chief bond analyst with Bloxham stockbrokers, said: “As much as the Irish economic stabilisation and the progress in recapitalisation of the banking sector are welcome, Ireland remains vulnerable to the external stresses in the financial markets.”
Irish Official Calls Markets 'Irrational' By DAVID JOLLY - NYTimes.com PARIS — A top Irish finance official said Wednesday that the soaring borrowing costs many European governments were facing showed that markets had become “irrational,” and he played down any comparison of Ireland’s financial situation to that of Greece. “The blowout that has occurred across the markets indicates I think that we’ve reached an irrational phase in the pricing of bonds generally,” John C. Corrigan, chief executive of the National Treasury Management Agency, said during an interview. “And the situation with Irish bonds” — the yields of which have soared this week as Greece has melted down — “is on the back of a general blowout.”
Portugal to rush through austerity measures By Peter Wise in Lisbon - FT.com The Portuguese government said on Wednesday it would immediately implement austerity measures initially planned for 2011 in an effort to regain the confidence of international financial markets after a downgrade of its sovereign debt hit borrowing costs and share prices. José Sócrates, Portugal’s Socialist prime minister, said the government would accelerate plans to increase capital gains tax, introduce new road tolls and reduce spending on unemployment and other welfare payments. High earners would also pay more income tax.
Keiser Report with very special Hollywood guest
Goldman on Senate hot seat for reform By Patrice Hill - WashingtonTimes.com Executives explain e-mails, risky deal Goldman Sachs executives on Tuesday strongly resisted attempts by a Senate investigative subcommittee to use the storied Wall Street firm as "Exhibit A" in the Democrats' drive to enact a sweeping reform of Wall Street practices. Members of the Senate Homeland Security and Governmental Affairs permanent subcommittee on investigations repeatedly accused the firm of working against its own clients as well as creating the housing and credit disaster that brought down the global economy in the fall of 2008.
Goldman Sachs adds to its ranks of lobbyists By Tomoeh Murakami Tse - Washington Post Until a few years ago, Goldman Sachs operated a sleepy lobby shop in the nation's capital. But now, faced with fraud charges, investigations, a firestorm of criticism and a regulatory overhaul bill that could seriously damage its profitability, the venerable Wall Street firm is assembling a team of veteran lobbyists, well-connected former Hill staffers and top public relations strategists to confront what is arguably the most traumatic moment in its 140-year history.
Goldman Sachs Bribed Senate To Pass Bailout Bill
Obama Said to Announce Fed Board Nominees Tomorrow By Hans Nichols and Scott Lanman April 28 (Bloomberg) -- President Barack Obama plans to announce his choice of Federal Reserve Bank of San Francisco President Janet Yellen tomorrow as vice chairman of the Fed Board of Governors, according to two people familiar with the decision. The president will also name Sarah Bloom Raskin, Maryland’s commissioner of financial regulation, and Peter Diamond, an economics professor at the Massachusetts Institute of Technology, for the two remaining open seats on the central bank’s seven-person board, according to the people, who spoke on condition of anonymity before the announcement.
Obama Sends in the Clowns By J. Matt Barber - CapitolHillCoffeeHouse.com With a potential political bloodbath looming in November, liberals are understandably desperate. They see it all slipping away and it shows. The grassroots groundswell of opposition to Obama’s neo-Marxist, secular-humanist agenda intensifies daily despite the left’s best efforts to silence dissent. Commensurate with plummeting poll numbers and evaporating public trust, Democrats, media elites and the usual gaggle of left-wing pressure groups have ramped-up the unhinged “right-wing-extremist” twaddle to historically hysterical levels. For those who delight in watching the self-styled “progressive” movement implode, it’s priceless.
Wall Street Begins Taking Bets on Jumbo-Mortgage Debt By Jody Shenn April 28 (Bloomberg) -- Wall Street banks began taking bets on pools of jumbo-mortgage bonds as trading started today on four new credit-default-swap indexes. The PrimeX indexes, administered by London-based Markit Group Ltd., are similar to the ABX indexes tied to subprime debt that began in early 2006, allowing easier wagers on the subsequent record defaults among homeowners with bad credit. When a plan to create the indexes linked to older prime loans larger than the limits for government-supported Fannie Mae and Freddie Mac was announced in December, Wells Fargo & Co. analyst Glenn Schultz suggested investors consider selling jumbo-mortgage securities because PrimeX trading could drive down their prices, as happened with subprime bonds and the ABX indexes he had called “Frankenstein’s monster.”
California Declares War on State Bond Short-Sellers Commentary by Joe Mysak April 28 (Bloomberg) -- California wants to know why underwriters take its money to sell the state’s bonds, and then talk trash behind its back. That’s what California Treasurer Bill Lockyer asked in March of six banks that have made $215 million from selling the state’s general obligation bonds since 2007. “We have information that indicates your firm, which sells California GO bonds, may participate in the municipal credit default swaps market,” the letter said. Lockyer wanted to know why, and to what extent. The treasurer posted the banks’ responses on his Web site last week.
Foreclosure more likely if you’re bad at simple math There’s a better chance you’ll experience foreclosure if your math isn’t up to snuff, according to a new research paper from the Atlanta Fed. Three researchers studied the effect of borrower’s financial literacy and cognitive ability to see what type of role, if any, they played in the mortgage crisis. They surveyed subprime borrowers who took out mortgages between 2006 and 2007, and found foreclosure starts were approximately two-thirds lower in the group with the highest measured level of numerical ability compared with the group with the lowest measured ability.
Homeownership Rates: That Was Then, This Is Now Every now and then it's good to take a stroll down memory lane. Today we have politicians, the media and many borrowers incensed about banks with lending standards that are too loose and complaining about how so many people were enticed to buy homes that they couldn't afford. Doomers might detect a slightly different tone in this excerpt from a 1999 Los Angeles Times article on booming homeownership rates among minorities.
Purchases up as homebuyer tax credit set to expire Mortgage demand decreased 2.9 percent during the week ending April 23 compared with one week earlier, the Mortgage Bankers Association said today. The weekly decline was led by an 8.8 percent drop in refinance applications, while purchase applications picked up the slack with a 7.4 percent week-to-week gain, thanks in part to the expiration of the homebuyer tax credit on April 30. “Purchase activity continues to increase as we approach the end of the homebuyer tax credit program,” said Michael Fratantoni, MBA’s Vice President of Research and Economics, in a release.
Housing Shows Recovery Signs After Prices Fell to 2003 Levels By Kathleen M. Howley April 28 (Bloomberg) -- U.S. housing prices are showing signs of recovery after a slide that sent values to levels last seen in 2003 and left almost a quarter of homeowners with properties worth less than their mortgages. The S&P/Case-Shiller index of home prices in 20 cities rose 0.6 percent in February from a year earlier, the first annual gain since December 2006, the group said yesterday. The National Association of Realtors reported last week that existing-home prices advanced 0.4 percent in March as sales climbed for the first time in four months.
Housing Rebound at Least 3 Years Away By Dan Levy and Daniel Taub April 28 (Bloomberg) -- The U.S. housing market won’t recover for three to five years as mounting foreclosures hold down prices, according to mortgage-bond pioneer Lewis Ranieri. “There’s another big leg down and the question is how long does it stay,” Ranieri, chairman of Ranieri Partners LLC, said during a panel discussion today at the Milken Institute Global Conference in Beverly Hills, California. “You can’t have much of a rally when you’ve got this big overhang.”
One Down, Three to Go By Armand C. Hale - CapitolHillCoffeeHouse.com The passage and signing of SB1070, Arizona immigration enforcement law is a prime example what Joe and Jane Citizen can do. Fed up Arizonans banded together and legally took matters in their own hands. This was to the shock of the east coast D.C. establishment. The border state citizens of Texas, New Mexico, and California must demand their states follow Arizona’s lead or suffer the economic, social and criminal consequences. Attention boarder states. Here is how you can make your state house listen. It is up to you:
Justice Department considers suing Arizona to block immigration law By Jerry Markon and Anne E. Kornblut - Washington Post -- Officials in the Obama administration are urging the extraordinary step of suing Arizona over its new immigration law, and the Justice Department is considering such an action to block the legislation from taking effect, government officials said Wednesday. The Arizona law criminalizes illegal immigration by defining it as trespassing and empowers police to question anyone they have a "reasonable suspicion" is an illegal immigrant. President Obama and Attorney General Eric H. Holder Jr. have blasted the legislation, with Obama saying that it "threatened to undermine basic notions of fairness."
Arizona immigrant law energizes Hispanics, Democrats by Tim Gaynor - Reuters.com (Reuters) - U.S. Hispanics and Democratic lawmakers furious over Arizona's harsh crackdown on illegal immigrants expect huge weekend rallies across the United States, piling pressure on President Barack Obama to overhaul immigration laws in this election year. Protest organizers said on Wednesday outrage over the Arizona law -- which seeks to drive illegal immigrants out of the state bordering Mexico -- has galvanized Latinos and would translate into a higher turnout for May Day rallies in more than 70 U.S. cities. "The marches and demonstrations are going to be far more massive than they otherwise would have been," said Juan Jose Gutierrez, a Los Angeles rally organizer who runs an immigration assistance company.
In 2014, IRS will become health insurance enforcer By Sandra Block, USA TODAY The IRS processed more than 230 million tax returns last year, paid 127 million refunds and received about 68 million phone calls. The agency is responsible for enforcing a tax code that, at 71,000 pages, makes Anna Karenina look like a comic book. Starting in 2014, the agency will have another task: making sure all Americans have health insurance. Under the law, Americans who can afford health insurance but refuse to buy it will face a fine of up to $695 or 2.5% of their income, whichever is higher. More than 4 million Americans could be subject to penalties of up to $1,000 by 2016 if they fail to obtain health insurance, the Congressional Budget Office said last week. The IRS will be the enforcer — sort of.
Wal-Mart $40 Million Pay Suit Accord Wins Approval By Janelle Lawrence April 28 (Bloomberg) -- Wal-Mart Stores’ $40 million settlement of a lawsuit over employee pay in Massachusetts was approved by a judge. “I have approved this settlement,” Superior Court Judge Thomas R. Murtagh in Woburn, Massachusetts, said today. “I believe it is fair and adequate and free of collusion.” Hourly workers claimed in the class-action suit that the world’s biggest retailer made them work “off the clock” and denied or cut short their breaks. The settlement was first announced in December. Each of about 87,000 employees at Wal-Mart and Sam’s Club stores covered by the accord will be paid from $400 to $2,500 depending on their years of work, according to the settlement agreement.
The Real Story of the Oklahoma City Bombing By Roger Aronoff - CapitolHillCoffeeHouse.com While liberal news outlets such as MSNBC were cynically exploiting the April 19 anniversary of the 1995 Oklahoma City bombing by attempting to tie the terrorist attack to the anti-government sentiments of the modern-day Tea Party movement, investigative reporter Jayna Davis was setting the record straight in an exclusive interview on the AIM radio show, Take AIM. The Oklahoma City bombing was an Arab/Muslim terrorist attack on the United States, she says. Davis, author of a blockbuster book on the attack, The Third Terrorist, has examined and presented the evidence showing that Oklahoma City bomber Timothy McVeigh was in fact a front man for Middle Eastern terrorists. The third terrorist, in addition to the two, McVeigh and Terry Nichols, who were convicted, was an Arab. This was the mysterious “John Doe” who was never found. But other members of an Arab terrorist network were involved, she says.
Nation's 1st offshore wind farm, off Mass., gets U.S. go-ahead BOSTON (AP) — The Obama administration has approved what would be the nation's first offshore wind farm, off Cape Cod, inching the U.S. closer to harvesting an untapped domestic energy source — the steady breezes blowing along its vast coasts. U.S. Interior Secretary Ken Salazar announced the decision Wednesday in Boston, clearing the way for a 130-turbine wind farm in Nantucket Sound. Cape Wind was in its ninth year of federal review, and Salazar stepped in early this year to bring what he called much-needed resolution to the bitterly contested proposal.
White House seeks to soften Iran sanctions By Eli Lake - WashingtonTimes.com Wants exemption for firms based in China and Russia The Obama administration is pressing Congress to provide an exemption from Iran sanctions to companies based in "cooperating countries," a move that likely would exempt Chinese and Russian concerns from penalties meant to discourage investment in Iran. The Comprehensive Iran Sanctions, Accountability, and Divestment Act is in a House-Senate conference committee and is expected to reach President Obama's desk by Memorial Day.
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