Wednesday, June 17, 2009

Housing is bad enough, but wait — it'll get worse

WASHINGTON — If you think the housing slump can't get much worse, Martin Feldstein thinks that both home prices and the broader economy can — and very likely will — get a whole lot worse.

The Harvard University professor and former chief economic adviser to Ronald Reagan isn't part of the crowd that continually forecasts doom. For two decades, he's headed the National Bureau of Economic Research, which officially determines when U.S. recessions begin and end.

So when he spoke on Monday night at the annual dinner of the National Economists Club, a gathering of like-minded wonks, Feldstein's grim calculations were noteworthy.

"There are now 12 million homes in the United States with a loan-to-value ratio greater than 100 percent. That's one mortgage in four. The aggregate amount of that is some $2 trillion," said Feldstein. "If you look at the median (midpoint) loan-to-value ratio in that 12 million group of underwater mortgages — mortgages with negative equity — the median loan-to-value ratio is 120 percent."

That means about 25 percent of all U.S. mortgages are exceed the value of the homes the mortgages are financing. In the case of half the homes that are underwater, homeowners are paying a mortgage that's now 20 percent higher than the value of the home.

That's bad — but it's likely to get worse.

A recent report by First American Core Logic, a real-estate data firm in Santa Ana, Calif., estimated that as of Sept. 30, 7.5 million mortgages, or 18 percent of all properties with a mortgage, had negative equity. The group thinks there are another 2.1 million mortgages that are within 5 percent of going underwater.

Together, these two categories account for 23 percent of all properties with a mortgage. Nevada led all states with 48 percent of homes with negative equity. Florida and Arizona each had 29 percent of homes with underwater mortgages, while 27 percent of mortgages in California were upside-down, the group said.

If home prices fall another 10 to 15 percent, as measured by the Case/Shiller Home Price Index, then four out of every 10 mortgages in the U.S. could be underwater, Feldstein said.

"At those levels, it's hard to see how many people are going to be willing to keep up with their mortgages," Feldstein said.

The implications for many homeowners are staggering. Before the recent housing boom of 2000 to 2006, homes increased in value at a historical annual rate of about 2.3 percent when adjusted for inflation.

That means that for homeowners who owe 35 percent more than their homes' value, it would take, at historical averages, about 15 years just to break even on their home investment. They won't build equity. It would be a huge incentive for millions to hand the keys back to the lender and seek cheaper housing.

Not all real estate experts buy Feldstein's stark numbers.

"That's the highest percentage I've heard from anybody, by quite a bit," said Rick Sharga, senior vice president for Realtytrac, an Irvine, Calif., company that publishes foreclosure data.

More conservative forecasts, though still dismal, point to a smaller drop in home prices of 5 percent to 7 percent, he said.

Added Jay Brinkmann, chief economist for the Mortgage Bankers Association in the nation's capital, "If you generalize the numbers too far, I think it leads to some incorrect conclusions."

The Case/Shiller Index is driven by home sales that have taken place. It doesn't reflect the stability in older, established neighborhoods, Brinkmann said. The vacant and for-sale rates nationwide for homes built before 2000 — that is, pre-boom — is just 2 percent. The delinquency and foreclosure problems are concentrated mostly in a handful of states, such as California, Florida, Arizona and Nevada, which had overbuilding and weak lending standards.

"Those states have about 25 percent of the mortgages and 50 percent of the foreclosure starts" in the latest association survey, Brinkmann said. Nationwide, 6.4 percent of all mortgages were delinquent through June, but the number of delinquencies and foreclosure starts are breaking records every quarter, the most recent MBA survey said.

Brinkmann's own rough guess is that somewhere between 6 million and 8 million mortgages are underwater, still a very high number. He doesn't see the national outlook getting better any time soon, framing his estimate of when that happens in the form of a question: "When does the influence of these massive declines in California and Florida go away?"

Realtytrac's forecast isn't any brighter.

"The best-case scenario in terms of the real estate market is we probably bottom out between mid-year and the end of 2009. And that's the best case from where we're sitting," Sharga said. "The only reason it could happen that soon is because of how rapidly and how severe the downturn has been in the housing market."

A lot would have to go right to reach that best-case scenario. Government and industry efforts would have to step up efforts to forgive or make up the difference between the value of the mortgage and the value of the home.

The final batch of subprime mortgages scheduled to reset to a higher interest rate will have done so by the end of the first quarter of 2009.

In a rare bit of relief for one segment of the housing market, the interest rates that determine the monthly payments for some adjustable-rate mortgages are falling.

Sharga said, however, that the next problem is the $60 billion of adjustable-rate Alt-A mortgages, which fall between subprime and prime loans. Millions of these loans are scheduled to reset next year to higher interest rates. That could bring monthly mortgage payment increases of $1,000 or more if the loans aren't modified or refinanced.

All this is happening amid what now clearly is a deepening recession, with the highest job losses and deepest drops in consumer spending in decades. The Labor Department reported on Thursday that weekly jobless claims jumped to 542,000, a 16-year high, last week. That suggests a fast-deepening recession.

The White House Thursday acknowledged for the first time that it now supports efforts in Congress to extend unemployment benefits for longer periods to the millions of Americans who can't find work in the downturn.

Consumer spending drives about two-thirds of U.S. economic activity, and as unemployment mounts and consumers retrench, that leads to even more unemployment, mortgage delinquencies and foreclosures.

"The problem now is what will be happening with jobs," Brinkmann said.

US Stocks Narrowly Mixed After Gloomy FedEx Outlook

U.S. stocks were narrowly mixed after a gloomy outlook from FedEx and data showing the biggest annual drop in consumer prices in nearly 60 years.

Shortly after the opening bell, the Dow Jones Industrial Average was little-changed, moving between small gains and losses. The Dow has fallen 3% since creeping into positive territory for the year last week. The S&P 500 and the Nasdaq Composite Index were also flat.

FedEx sank 1.4% after its fiscal fourth-quarter loss widened and the package-delivery giant projected earnings for the current quarter well below Wall Street forecasts. Results for FedEx and other shippers are often seen as an important gauge of overall economic activity. Rival UPS was marginally lower.

The consumer-price index rose 0.1% in May from April but fell 1.3% from a year ago, the largest 12-month decline since April 1950. The core CPI, which excludes food and energy prices, climbed 0.1% month over month. The data support the growing sentiment at the Federal Reserve that deflation risks have waned. But there's little evidence inflation is taking hold, a concern that has crept into bond markets in recent weeks.

Treasury prices rose after the report. The two-year note was up 1/32 to yield 1.17%, while the benchmark 10-year note rose 3/32 to yield 3.64%.

Crude-oil futures sank below $70 a barrel ahead of the release of weekly data on U.S. fuel inventories.

Asian markets finished mostly lower, but the Nikkei 225 rose 0.9% in Tokyo. Stocks in Europe were weaker for the fourth session in a row. The FTSE 100 slid 1%.

Chinese president makes proposal for tackling global financial crisis at BRIC summit

YEKATERINBURG, Russia, June 16 (Xinhua) -- Chinese President Hu Jintao Tuesday presented a four-point proposal for dealing with the ongoing global financial crisis at the first summit meeting of BRIC countries which groups Brazil, Russia, India and China.

First, BRIC countries should commit themselves to bringing about an early recovery of the world economy, Hu said.

"We should work hard to overcome the difficulties and try to take the lead in recovering from the global financial crisis," he said, adding "This is not only for our own need, but also contributes to world economic recovery."

BRIC countries should solve the long-existing structural problems in their economic development and change their development pattern in an effort to improve the quality and level of their economic development , while striving to resume world economic growth.

He also urged BRIC countries to continue to open their markets, make use of their mutually complementary strength and expand economic and trade cooperation.

"We should also firmly oppose protectionism, jointly safeguard the normal and orderly flow of commodities, services and personnel worldwide, and help ensure that the Doha round of global trade talks would achieve a comprehensive and balanced outcome as soon as possible," he added.

Second, BRIC countries should commit themselves to pushing forward the reform of international financial system, Hu said.

To establish a new international financial order that is fair, equitable, inclusive and well-managed, and provide guarantee for the sustainable development of the global economy in terms of system and mechanism conforms with the trend of the historical development and is in the fundamental interest of all parties, he said.

BRIC countries should improve the international financial supervision mechanism and ensure the effective participation of the developing countries in world financial supervision organizations such as the Financial Stability Board, Hu said.

Third, BRIC countries should commit themselves to implementing the UN Millennium Development Goals (MDGs), the president said.

The international community should not overlook development issues and cut the input for development while dealing with global financial crisis, he said.

Instead, it should pay close attention to the impact that the crisis has left on developing countries, especially the least developed ones, he added.

The BRIC countries should call on all parties to continue to implement the MDGs and urge the developed economies to fulfil their commitment to assistance, he added.

Fourth, BRIC countries should commit themselves to ensuring the security of food, energy resource, and public health, he added.

He said while tackling the ongoing global financial crisis, efforts should be made to properly handle some outstanding problems that hinder development, such as climate change, food, energy, resource and public health security. A long-term approach and overall plan should be adopted to take all factors into consideration as these issues bear on the wellbeing of all peoples in the world and their overall interests, he added.

He also urged BRIC countries to increase investment in agriculture, develop advanced agricultural technique and curb market speculation. He also called for greater food assistance and closer agricultural and food cooperation.

"We should also accelerate our efforts in developing clean and renewable energy, and establish advanced research and promotion systems in a bid to diversity our energy supply," Hu said.

He urged the four countries to strengthen information exchanges and communication, share the experience on epidemics preventions and control, and work together to develop and share vaccines, and cooperate in pandemic control and prevention.

Obama Blocks Visitor List Access, Echoing Bush

The Obama administration has denied requests from both reporters and government watchdogs to reveal the names of White House guests, echoing Bush administration policy. reports that their attempt to get visitor logs was denied:

The Obama administration is arguing that the White House visitor logs are presidential records -- not Secret Service agency records, which would be subject to the Freedom of Information Act. The administration ought to be able to hold secret meetings in the White House, "such as an elected official interviewing for an administration position or an ambassador coming for a discussion on issues that would affect international negotiations," said Obama spokesman Ben LaBolt.

These same arguments, made by the Bush administration, were rejected twice by a federal judge. The visitor logs are created by the Secret Service and maintained by the Secret Service, U.S. District Judge Royce Lamberth ruled in 2007 and again this January. CREW had requested records of visits to the Bush White House, as well as the residence of Vice President Dick Cheney, by leaders of Religious Right organizations.

Citizens for Responsibility and Ethics in Washington, a nonpartisan watchdog focused on special interests, was also rebuffed.

CREW sought records of visits by top coal executives in an effort to learn the extent to which these individuals may have influenced the administration's energy policy. Taking the exact same position as the Bush administration, the Obama administration claimed the records are presidential, not agency records, and otherwise exempt in their entirety because of the possibility in some instances they could reveal information protected by the presidential communications privilege. In prior litigation U.S. District Court Judge Royce Lamberth agreed with CREW that the records are agency records that must be disclosed under the FOIA.

The group is filing a complaint against the Department of Homeland Security.

We are deeply disappointed," CREW attorney Anne L. Weismann told MSNBC, "that the Obama administration is following the same anti-transparency policy as the Bush administration when it comes to White House visitor records. Refusing to let the public know who visits the White House is not the action of a pro-transparency, pro-accountability administration."

President Bush fought for years to keep White House visitor logs private, arguing that they should fall under the presidential communications privilege. In January of this year a judge rejected that argument.








































他同意這項計劃於2007年國陣政府執政時期被提出,同時由Sino Land有限公司提呈給國陣政府。不過,在這項計劃於去年7月29日提呈上中霹靂縣議會常月會議時,州政府是民聯政府。

他表示,他知道縣議會於2007年針對這項90英畝土地發展計劃發出幾封信件給數家公司,包括Sino Land有限公司。





































Singapore exports drop again

SINGAPORE: Singapore's non-oil exports fell in May from a year earlier but rose from the previous month, suggesting the city-state's most important economic sector may be stabilizing.

Exports fell 12 percent in May from the same month in 2008 to 10.9 billion Singapore dollars ($7.5 billion) following a 19 percent drop in April, according to Trade and Industry Ministry figures released Wednesday.

But compared to April, exports rose a seasonally adjusted 5.6 percent.

Singapore's economy has contracted each of the last four quarters compared with the preceding quarter, including an annualized, seasonally adjusted 14.6 percent in the January-March period.

The government expects the economy to shrink as much as 9 percent this year.

Non-oil exports, which have fallen 13 straight months, were equal to about 60 percent of gross domestic product last year.

Electronic products - which account for 36 percent of non-oil exports - fell 21 percent, petrochemicals dropped 37 percent while pharmaceuticals jumped 40 percent, the ministry said.

Non-oil imports fell 20 percent in May from the same month a year earlier after dropping 27 percent in April, the ministry said.

Beijing flames protectionism with 'Buy China' project edict

HONG KONG (MarketWatch) -- China has introduced a requirement that its stimulus projects embrace a "Buy Chinese" policy, a requirement likely to raise the ire of the country's major trading partners amid mutual recriminations of protectionist trade policies.

Buyers supplying government projects can source foreign-produced supplies only if no domestic equivalents are available or if the pricing for the goods is unrealistic, according to an order issued jointly by nine government departments.

Analysts said the edict sent the wrong message for a Chinese economy that depends heavily on international trade. It also appears contradictory after Beijing protested a "Buy American" requirement that was included in Washington's rescue programs unveiled earlier this year.

"Government investment projects should buy domestically made products unless products or services cannot be obtained in reasonable commercial conditions in China," according to an Associated Press report Wednesday citing the government order.

"Projects that really need to buy imports should be approved by the relevant government departments before purchasing activity starts."

The government order was approved June 1 and reported this week by state media.

Asia shares weaken; alternative energy leads Tokyo higher

TOKYO (MarketWatch) -- Asian share markets finished mostly lower Wednesday as investors remained wary of the size of recent stock market gains, but trading ended higher in Tokyo as fresh talk about an improving economy helped rescue the market from a third day of losses.

Australia's S&P/ASX 200 closed 1.5% lower and South Korea's Kospi Composite slipped 0.6%. Hong Kong's Hang Seng Index ended 0.5% lower, Taiwan shares shed 0.4% and New Zealand's NZX-50 fell 0.3%. But China's Shanghai Composite added 1.2% led by gains in industrial stocks and Japan's Nikkei finished up 0.9%, showing some resilience after Tuesday's 2.9% tumble, which was its biggest one-day loss since March 30.

"Overall, most markets are lower and gains in Japanese ... stocks appear more related to country-specific factors," said Mitul Kotecha, head of global FX Research at Calyon.

"Japanese markets have been helped by the news that Fitch Ratings Ltd. will maintain the country's sovereign ratings at AA- despite the government dropping its goal of balancing the budget by 2011," he said.

Strength in Tokyo-traded shares also came a day after the Bank of Japan said the nation's economic conditions have "begun to stop worsening." In a monthly report issued Wednesday, the central bank said that in the coming months, the economy is "likely to show clearer evidence of leveling out over time."

"There was relentless buying last week because of all the economic signals and the new buzz word was 'green shoots,'" said RBS director David Iron in Sydney. But "people are now being a little bit more risk averse, plus you're seeing a renewed wave of capital raisings."

ABN Amro broker James Porteous in New Zealand said that "in the last two or three weeks people have been getting a bit more nervous, they are standing back again. People just don't seem to think things are that cheap."

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Indonesia's corruption court in fight for existence

AKARTA, June 17, 2009 (Reuters) — It has put central bankers and government officials behind bars and is easily Indonesia's most feared judicial body. But the corruption court, an important weapon in the fight against graft, is now under threat itself.

Politicians, some of whom have much to fear from the court, are meddling with the panel of judges and even trying to close it down completely.

That could threaten one of the more successful anti-graft campaigns in a Southeast Asian nation that year after year ranks among the world's most corrupt.

Widespread graft deters investors who otherwise might pour billions of dollars into developing Indonesia's abundant oil, gas, and mineral deposits or improving its shoddy infrastructure. That is one reason Indonesian economic growth tends to languish behind economic behemoths like China and India.

"The battle against corruption is still a long way from over, but at least the public can see it has gone in the right direction," said Emerson Yuntho of Indonesia Corruption Watch.

Set up in 2004, the court -- housed in a shabby building in central Jakarta with broken glass windows and damp, smelly courtrooms -- has a number of features that have made it far more effective in punishing the corrupt than Indonesia's regular court system has been.

One is its system of appointing three ad hoc, or outside, judges out of a total of five on the panel. These ad hoc judges are picked from outside the court system and include academics and other professionals.

In a country where the judiciary itself is rated among the most corrupt institutions, these outsiders are considered more independent.

Armed with dossiers of evidence from the Corruption Eradication Commission, or KPK, the corruption court has had a 100 percent conviction rate. The average sentence, for the 90 or so defendants who have been tried. is about four years, according to Indonesia Corruption Watch (ICW).

"We need the (corruption) court, because the public court is ineffective," said Budi Effendi, an unemployed man in Jakarta.

"But maybe we should follow China's example, recover the stolen money and sentence the corrupt to death to serve as a deterrent."


Scores of senior officials, who under previous governments would have been considered virtually untouchable, have been sentenced by the corruption court including a former governor of Aceh province, Abdullah Puteh, and a leading prosecutor, Urip Tri Gunawan, who took bribes to drop a graft case involving a tycoon.

Several senior central bankers including a former governor, Burhanuddin Abdullah, were found guilty of making illegal payments from a foundation to several members of parliament in order to influence amendments to legislation.

And on Wednesday, the corruption court sentenced one of President Susilo Bambang Yudhoyono's in-laws, former central bank official Aulia Pohan, to four-and-a-half years in prison for his role in approving illegal payments to members of parliament.

Eight members of parliament have been sentenced by the corruption court, and others still await verdicts. That, many suspect, is why parliament has delayed passing the key legislation required to ensure the court continues to exist.

However, a member of parliament in charge of discussing the bill denied any deliberate move to thwart the court.

"There is absolutely no attempt from the parliament to slow down or to intentionally not finish (the legislation)," Dewi Asmara, the head of a special committee discussing the bill, told Reuters.

She said issues holding up the bill include whether to keep the current ratio of three ad hoc judges to two career judges, or whether to reverse the numbers which, many believe, would make the panel less independent.

President Yudhoyono, often known by his initials SBY, was elected in 2004 on promises to fight graft and is seeking re-election on July 8 in a campaign where his track record in tackling corruption is under scrutiny.

The Wednesday decision against his in-law could help Yudhoyono's campaign by showing a commitment to fight such crimes regardless of who is involved.

"Of course Aulia Pohan's detention, followed by a charge and a sentence, will increase SBY's reputation in fighting graft and law enforcement," said Arbi Sanit, an academic at the University of Indonesia.

Yudhoyono has said he would issue a presidential decree to ensure the court's continued existence if parliament fails to pass the legislation before October.

Without that, the prime anti-corruption agency, or KPK, would be powerless when it comes to prosecuting suspects, and the public courts would once again take over such cases.

"I suspect, like others, that this bill will not be approved by its deadline of December 19. Why? Because how could parliament do that? It's like digging their own grave," said Teguh Hariyanto, a judge at the corruption court.

"If SBY whose selling point is corruption eradication got elected again, he should at least have the guts to do something if this corruption court law is not approved," he added.

China's Hu meets Putin in Moscow

NOVO-OGARYOVO, Russia, June 17, 2009 (Reuters) — Chinese President Hu Jintao met Russian Prime Minister Vladimir Putin in Moscow on Wednesday amid a push by the two countries to increase their influence around the world.

Russian Prime Minister Vladimir Putin (R) and Chinese President Hu Jintao (2nd L) meet in the presidential residence Novo-Ogaryovo outside Moscow, June 17, 2009. REUTERS/RIA Novosti/Alexei Druzhinin/Pool

Hu came to Russia for a state visit which also included two summits of developing world countries covering global trade, security and greater representation for emerging market powers on the world stage.

Russia's Economic Development Ministry released figures showing that in the first quarter of 2009, China had become Russia's biggest trading partner, overtaking Germany and the Netherlands, Interfax reported.

At talks in Putin's residence on the outskirts of Moscow, Hu said: "We have enacted effective strategic cooperation, which allows us ... to assert our joint forces and provide the necessary contribution to achieving peace and stability in the world," according to a Russian translation of his comments.

He invited Putin to visit Beijing in October. The two leaders know each other well, having met several times when Putin was president of Russia from 2000-2008.

Hu also laid a wreath at the tomb of Russia's unknown soldier at the foot of the Kremlin walls. Hu was due to meet Russian President Dmitry Medvedev later. (Reporting by Denis Dyomkin;

( Writing by Conor Humphries; Editing by Janet Lawrence)

No new clues on causes of Air France crash

PARIS, June 17, 2009 (Reuters) — French investigators have no further clues on what caused the crash of an Air France jetliner in the Atlantic two weeks ago, the head of France's investigation agency said on Wednesday.

Debris of the missing Air France flight 447, recovered from the Atlantic Ocean, arrives at Recife's port June 14, 2009. An Air France Airbus 330 crashed into the sea on June 1 en route from Brazil to Paris, killing all 228 aboard. REUTERS/JC Imagem/Alexandre Severo

More information might be available in the coming days, Paul-Louis Arslanian told reporters, urging the public to show "a lot of patience" while the search for wreckage and bodies continued in the Atlantic Ocean.

He was speaking at a news conference on the search efforts and what investigators called "unfavorable conditions" in the remote area of ocean where the Airbus A330 crashed en route from Brazil to Paris on June 1.

The investigation agency has so far said data transmitted from the plane before it crashed indicated unreliable speed readings from the aircraft's sensors, but that it was too early to say whether this contributed to the accident.

All 228 people on board the plane died in the crash, making it the worst disaster in the history of Air France.

(Reporting by Tim Hepher; editing by Crispian Balmer)

Thousands of Mousavi supporters head for TV building

TEHRAN, June 16, 2009 (Reuters) — Thousands of supporters of Iran's defeated presidential candidate Mirhossein Mousavi marched on Tuesday toward the state television building, despite his call for them to call off a planned rally.

(Editors' note: Reuters coverage is now subject to an Iranian ban on foreign media leaving the office to report, film or take pictures in Tehran.)

Mousavi has disputed official results of Iran's election, which showed a landslide win for hardline incumbent Mahmoud Ahmadinejad, and many tens of thousands of people marched in his support on Monday.

But he urged them to call off a second rally on Tuesday after pro-Ahmadinejad supporters announced a rival demonstration.

Mousavi supporters marching on Tuesday said they planned to assemble in front of the state television IRIB building in northern Tehran. Witnesses said some supporters had already gathered close to the building, which was ringed by riot police.

Wearing wristbands and ribbons in his green campaign colors, the Mousavi supporters carried his picture and made victory signs. Unlike Monday's demonstration where marchers chanted anti-Ahmadinejad slogans, they walked largely in silence.

Some were passing on messages to others to meet again on Wednesday for a rally at Tehran's central Haft-e Tir Square.

Dozens of riot police, flanked by Basij militia forces, watched them as they passed through one major square. Near the marchers a riot police motorbike lay on the road in flames, but the demonstration appeared to be peaceful.

Earlier on Tuesday, tens of thousands of Ahmadinejad supporters gathered at the site where Mousavi supporters had planned to assemble.

(Editing by Charles Dick)





















Palestine: What it's all about (Never Before Campaign)

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How the Wall Street bankers bought Congress

YOU WOULD think that causing the worst financial crisis since the Great Depression might have repercussions. You would think being a major factor in the destruction of around 40 percent of the world's wealth might get you in trouble. You would think being the cause of the worst housing crisis in history--with millions of people losing their homes because of you--might force a restructuring of how Wall Street does things.

You would think that. But you'd be wrong.

For Wall Street's lobbyists in Washington, it's business as usual. Since Barack Obama took office, the bankers have succeeded in pushing through bogus "stress tests" of financial institutions' solvency, escaping tougher government oversight, and steamrolling attempts to give home-owner borrowers a break.

Even the much-hyped limits on CEO pay are being rolled back. In mid-June, Barack Obama lifted a five-month-old limit on executive compensation at financial firms that took federal bailout money. Apparently, only $500,000 a year in salaries and other perks was just too much of a sacrifice for the financial system to bear. Instead, Obama has established a "special master of compensation," who will decide on pay to top executives at banks still reliant on government money.

While having a "special master" oversee pay might sound like a big deal, the banks aren't sweating it. "Our people kind of thought it was a non-event," one unnamed executive of a large bank told the Washington Post. "I don't think there are worries about it on Wall Street." And, the executive added, "It's not like the horrible and unethical action from Congress, where they were putting artificial caps on pay or trying to steal back bonuses."

The sense of entitlement on display in comments like these is staggering--as if the "wizards" of Wall Street deserve the billions in compensation showered upon them in the past decade for producing what has proved to be fictitious wealth, while destabilizing the economy and destroying the lives of people across the U.S.

As for legislation aimed at stemming the kinds of predatory lending practices that helped exacerbate the housing bubble and ultimately triggered the financial crisis, Senate Banking Committee Chair Christopher Dodd recently said, "We've got a lot on our plate. We've got other things to do."

Apparently, however, one of those "other things to do" was not passing "cramdown" legislation--a measure that would have enabled bankruptcy court judges to lower the principal on existing mortgages for homeowners facing foreclosure, thereby helping people to keep their homes. In that bill, defeated in early May, the Senate sided with banks over homeowners by a 51-45 margin.

Housing rights activists estimate the legislation could have staved off 1.7 million foreclosures and preserved $300 billion in home equity. Nevertheless, a dozen Democrats in Senate voted against it.

"Instead of defending ordinary Americans, the majority of the senators went with the banks," said the Center for Responsible Lending in a statement. "Yes, the same banks who have benefited so richly in the [$700 billion Troubled Asset Relief Program, or TARP] bailout."

Meanwhile, the Treasury Department was celebrating the fact that 10 banks would be paying back TARP funds--insinuating that the financial system is on stable enough ground that the government could begin backing off.

But the same day that Treasury Secretary Tim Geithner talked up the TARP repayments, TARP Oversight Panel Chair Elizabeth Warren said the so-called stress tests, conducted to determine whether the big banks were on safe financial footing, should be redone.

"The employment numbers for 2009 have already exceeded the harshest scenario considered so far, suggesting that the stress tests should be repeated," Warren's report stated.

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THERE WAS just one piece of legislation that didn't go entirely the banks' way--a bill, signed into law by Obama in May, that put some restraints on the out-of-control credit card industry,

The new law bans increases in annual percentage rate interest charges during the first 12 months after opening up an account. Consumers must get 45 days' notice of changes in rates or contracts, and 30 days' notice for account closures. The law also eliminates the notorious practice of "double billing," in which credit card issuers impose finance charges based on balances already paid.

Yet even here, industry lobbyists were able to block changes sought by industry critics. Crucially, there's still no cap on the interest rates that credit card companies can charge.

That's why John Taylor, chief executive of the National Community Reinvestment Coalition, said in a recent interview: "It's the bottom of the ninth, and it's bankers 10, consumers zero. It's like being in a street fight, and you and a few friends just went up against 100 other people, and you're just picking yourself up off the ground. And you're just bloodied."

One reason bank lobbyists have been so successful is that they have convinced Congress to take on financial issues piecemeal, rather than in a single piece of legislation. That way, the lobbyists could focus on one battle at a time.

And on each bill, they made the case that new rules would restrict credit and jack up interest rates, thereby hurting consumers. Overall, the financial industry spent $42 million in lobbying efforts in the first quarter of 2009--even as many banks were still being bailed out with taxpayer money.

By and large, this tactic has been successful. Scott Talbott, a lobbyist at the Financial Services Roundtable, admitted, "We knew we were going to be up against it. Yeah, we knew it was going to be a tough year. And so far, it has not been a tough as expected."

So despite Wall Street's greatest crisis since the 1930s, the banking system is still calling the shots in Washington. Indeed, in a rare moment of candor, Sen. Dick Durbin (D-Ill.) said: "And the banks--hard to believe in a time when we're facing a banking crisis that many of the banks created--are still the most powerful lobby on Capitol Hill. And they frankly own the place."

What's more, the same people move seamlessly back and forth between the corridors of power in finance and politics. Consider the case of Michael Paese, an ex-JP Morgan employee who became the top staffer to Rep. Barney Frank, chair of the House Financial Services Committee--which oversees Wall Street. Last September, Paese bolted to become Goldman Sachs' top lobbyist. There he replaced Mark Patterson, who, in turn, left Goldman Sachs to become chief of staff at the Treasury Department.

Goldman Sachs, remember, is the firm that was run by former Treasury Secretary Henry Paulson before he went to Washington to work in the Bush administration. And don't forget that Treasury Secretary Timothy Geithner himself is a disciple of Robert Rubin, another former Goldman Sachs executive turned treasury secretary during the Clinton administration.

Given this Wall Street-Washington circuit, it's little surprise that Barney Frank has written a piece of legislation on lending "reform" that seems tailored to Wall Street.

His proposed measure has nine consumer, housing and civil rights groups up in arms. The National Consumer Law Center, for example, says the proposed legislation would "do more harm than good"--and added in a statement, "The bill is complex, convoluted and simply will not accomplish its main goal--to fundamentally change the way mortgages are made in this country."

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JUST IN case the Wall Street/Washington revolving door isn't sufficient to get their way, the finance capitalists spread enormous amounts of money around Congress.

In the 2008 election cycle, securities and investment firms donated a whopping $154.9 million to political campaigns--$57 million more than the 2004 elections, according to Of that, 57 percent went to Democrats and 43 percent to Republicans. Real estate, which became deeply enmeshed with Wall Street during the housing bubble, donated another $136.7 million. The split was 49 percent Democrats and 51 percent Republicans.

Commercial banks, meanwhile, contributed $37.1 million to politicians--the most ever from that sector--with 48 percent going to Democrats and 52 percent to Republicans. Lastly, hedge funds tossed in another $16.7 million--four times as much as the sector had donated in any other election cycle. Hedge funds favored Democrats by a 65-35 percent margin. Altogether, that comes to $345.4 million.

While the numbers may have been larger than ever, Wall Street has long bought members of Congress in both parties to advance its legislative agenda. And it was a Democrat--President Bill Clinton--who signed into law two key pieces of legislation that set the stage for the current financial crisis.

The Gramm-Leach-Bliley Act, passed by a Republican Congress in 1999, repealed the Depression-era Glass-Steagall laws, which had separated risky investment banking from traditional, deposit-taking commercial banks. A year later, Congress passed the Commodity Futures Modernization Act, which kept large parts of commodities trading beyond the reach of regulators--including complex financial instruments that triggered the financial meltdown.

Today, Democrats have total control of the legislative process. But Wall Street is still getting its way, despite the bankers' shattered credibility for their role in crashing the economy. Real financial reform that provides relief to working people will come only when social movements can put enough pressure on politicians to force them act.

By Petrino DiLeo


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Medvedev calls for new reserve currencies

YEKATERINBURG, Russia – Russian President Dmitry Medvedev says the world needs new reserve currencies.

Medvedev told a regional summit Tuesday that the creation of new reserve currencies in addition to the dollar is needed to stabilize global finances.

Medvedev has made the proposal before. It reflects both the Kremlin's push for greater international clout and a concern shared by other countries that soaring U.S. budget deficits could spur inflation and weaken the dollar.

Airing it at a summit meeting underlined the challenge to U.S. clout.

Medvedev spoke at a summit of the Shanghai Cooperation Organization, which includes China and four Central Asian nations.

Later Tuesday he hosts a summit of the BRIC group of leading emerging economies — Brazil, Russia, India and China.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.

YEKATERINBURG, Russia (AP) — Russia played regional power broker Monday, hosting China and Central Asian nations for a summit that highlights the Kremlin's efforts to maintain clout in former Soviet territory and raise its profile in Afghanistan.

Moscow is expected to use the meeting of leaders from the Shanghai Cooperation Organization to try to cement the six-nation group as a counterbalance to the U.S. presence in strategic Central Asia.

Russian President Dmitry Medvedev opened the two-day meeting by saying the group would discuss the global financial crisis as well as the key issue the organization was created to address: regional security.

"Our organization has been created quite recently, but it has scored quite serious progress," he said.

Late Monday, Medvedev had what he called a "most productive and useful" meeting with Afghan President Hamid Karzai and he promised that Russia will help Afghanistan create "an efficient political system."

"We are very thankful for the assistance that Russia has given Afghanistan," Karzai responded, "particularly over the last seven years, during this difficult period of history when we have been fighting terrorism."

At a meeting later with Pakistani President Asif Ali Zardari, Medvedev said all nations needed to work together to fight terrorism — a call he repeated after he, Zardari and Karzai held a final meeting together.

"Many issues including the most difficult challenges our nations are facing today, such as terrorism and crime, can only be fought with collective efforts," Medvedev said. "If we can create efficient workable trilateral mechanism, that will benefit our nations."

The 8-year-old Shanghai Cooperation Organization is dominated by Russia and China and includes Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan, with countries such as India, Iran and Pakistan holding observer status.

Medvedev also was expected to meet with Iranian President Mahmoud Ahmadinejad. The Iranian leader postponed his arrival in this Ural Mountains city until Tuesday, according to the Iranian Embassy in Moscow, during protests in Iran over his bitterly disputed re-election.

Amid efforts by Washington and Moscow to improve strained ties, the summit will be watched for signs of stronger support from Russia and its neighbors for American-led operations in Afghanistan. That will be a signal of the depth of Russia's determination to mend fences with the United States at a time of warming relations between the two countries.

While Moscow and its neighbors have stressed solidarity with the West on the need for stability in Afghanistan, Kremlin critics say they have used their combined clout in the past to confound U.S. efforts.

In 2005, the Shanghai Cooperation Organization supported Uzbekistan's eviction of U.S. forces from a base supporting operations in Afghanistan. In February, Kyrgyzstan announced it would evict U.S. forces from their only other Central Asian base — a decision widely seen as influenced by Russia. U.S. officials have said there is still hope for a deal to keep use of the Manas base.

Karzai has appealed to Kyrgyzstan to let coalition forces continue using Manas, and the Afghan leader could meet his Kyrgyz counterpart for talks during the summit.

Kremlin foreign affairs adviser Sergei Prikhodko said Sunday that the Shanghai Cooperation Organization has seen "more transparency" from the administration of President Barack Obama on U.S. policy toward Afghanistan and Pakistan. "The niches of interaction with Western countries, including the U.S., may be widened," he said.

Russia and the Central Asian countries already have allowed the transport of non-lethal military supplies across their territory.

Prikhodko did not say what the nations might do to increase cooperation, but made it clear they want a greater say in resolving the situation in Afghanistan.

Prikhodko also said the leaders will discuss broader security issues and the global financial crisis, as well as the situation on the Korean peninsula, but that no major statement on North Korea's nuclear activity was expected.

The summit will be followed late Tuesday by the first full-fledged summit of BRIC, a group linking the emerging economies Brazil, Russia, India and China.

Medvedev may repeat Russia's call for a new global reserve currency to augment the dollar, but Russia's finance minister over the weekend suggested that the dollar would remain the currency of choice for years to come.