Saturday, February 27, 2010

Man who broke the Bank of England, George Soros, 'at centre of hedge funds plot to cash in on fall of the euro'

A secretive group of Wall Street hedge fund bosses are said to be behind a plot to cash in on the decline of the euro.

Representatives of George Soros's investment business were among an all-star line up of Wall Street investors at an 'ideas dinner' at a private townhouse in Manhattan, according to reports.

A spokesman for Soros Fund Management said the legendary investor did not attend the dinner on February 8, but did not deny that his firm was represented.

At the dinner, the speculators are said to have argued that the euro is likely to plunge in value to parity with the dollar.

The single currency has been under enormous pressure because of Greece's debt crisis, plus financial worries in Portugal, Italy, Spain and Ireland.

But, it has also struggled because hedge funds have been placing huge bets on the currency's decline, which could make the speculators hundreds of millions of pounds.

The euro traded at $1.51 in December, but has since fallen to $1.34. Details of the secretive dinner emerged days after Mr Soros, chairman of Soros

Fund Management, warned in a newspaper article that the euro could 'fall apart' even if the European Union can agree a deal to shore up support for stricken Greece.

Mr Soros, who made more than $1billion by currency speculation when the pound was ejected from the Exchange Rate Mechanism on Black Wednesday in 1992, believes the structure of the euro is 'patently flawed'.


Hitting back: Greek PM George Papandreou blames 'speculators' for preying on the country's troubles

He said: 'Makeshift assistance should be enough for Greece, but that leaves Spain, Italy, Portugal and Ireland.

'Together they constitute too large a portion of euroland to be helped in this way.'

He believes that unless the European Commission is given sweeping powers over taxation and spending, the single currency will always be vulnerable to financial turbulence in individual states.

'If member countries cannot take the next steps forward, the euro may fall apart,' he added.

Last night, Greek prime minister George Papandreou hit back at the 'speculators' who he blames for preying on the country's troubles.

Following a visit by EU economic inspectors and experts from the International Monetary Fund, he told the country's parliament that the worst fears about Greece's economy had been confirmed.

Greece is desperate to restore the confidence of investors in its debt after revealing that the previous government understated its budget deficit by half.

Outlining the precarious nature of Greece's finances, Mr Papandreou said: 'There is only one dilemma: Will we let the country go bankrupt or will we react?

'Will we let the speculators strangle us, or will we take our fate in our own hands?'

The Greek leader also called for more help from the EU with its debt crisis. Until now, the EU has offered political support but no bailout.


With friends like this: The cover of the German magazine 'Focus' this week, which shows the Venus de Milo giving the finger by a headline accusing Greece of swindling its way into the euro


Row: Greek daily Eleftheros Typos ran this depiction of the statue of the goddess Victoria, atop the Siegessaeule in Berlin, holding a swastika earlier this week in reaction to the Focus cover

But a row is still festering between Berlin and Athens over the crisis.

cabinet chancellery

Tight spot: German Chancellor Angela Merkel said the situation was 'difficult'

A Greek consumer group called for a boycott of German goods today after a German magazine blasted the country as 'cheats.

The new trade war came as Angela Merkel admitted the euro is in 'a difficult situation' for the first time.

She spoke as German magazine Focus ran a cover image of the armless Venus de Milo somehow raising her middle finger under the headline 'Cheats in the euro family' to suggest that Greece deliberately misled EU peers to swindle its way into the euro.

The cover sparked outrage in Greece, prompting the demands for a boycott. A Greek newspaper has also hit back, running an image showing the statue of the goddess Victoria atop the Siegessaeule in Berlin holding a swastika.

'The falsification of a statue of Greek history, beauty and civilisation, from a time when there (in Germany) they were eating bananas on trees is impermissible and unforgivable,' a statement from the Consumer Institute (INKA) said.

'Greeks are no crooks, we want the German government to condemn this most improper publication,' said INKA president George Lakouritis.

'If you have such friends, what do you need enemies for?'

INKA distributed leaflets in central Athens and in front of German-owned consumer electronics store Media Markt, urging Greeks to heed the boycott.

Merkel's government has so far deflected appeals to promise aid to heavily indebted Greece. Opinion polls show that a majority of Germans oppose a bailout.

Germany's ambassador to Greece, Wolfgang Schultheiss, said yesterday he regretted that German press reports caused offence. 'Germany is firmly on Greece's side,' Schultheiss said after being summoned by Greece's parliament speaker Filippos Petsalnikos.

But it wasn't enough for Mr Lakouritis. 'The ambassador's statements were not satisfactory,' he said.

Yesterday Mrs Merkel admitted that Greece's debt crisis has plunged the euro into a ‘difficult situation'.

The admission from the leader of Europe's biggest economy prompted fresh fears about the collapse of the single currency.

In the gravest sign yet of the international threat posed by Greece’s crippling debt crisis, Mrs Merkel warned for the first time that the eurozone faces a ‘ dangerous’ period.

Documents Reveal Anthem Blue Cross Manipulated Data to Justify Massive Rate Hike

Internal documents show one of the country's largest for-profit health insurers, in an effort to maintain profits, manipulated data to justify a rate increase on individual premiums in California this year by as much as 39 percent.

At a closely watched Congressional hearing Wednesday, Rep. Henry Waxman, the Democratic chairman of the House Energy and Commerce Committee, blasted WellPoint Inc. executives for publicly stating that the country's economic turmoil and rising health care costs was the reason its Anthem Blue Cross subsidiary intended to move forward with a massive rate increase in California when the company's own documents say otherwise.

Waxman said the company "may have manipulated its actuarial assumptions to keep its medical loss ratio (MLR), a key measure reviewed by California regulators, 'flat.'"

"WellPoint says the rate increases are a result of medical inflation and healthier policyholders dropping coverage," Waxman (D-California) said. "But the thousands of pages of WellPoint documents we have reviewed tell another story ... WellPoint says that its rate increases have nothing to do with increasing company profits. But an internal company e-mail says that its rate increase would 'return CA to target profit of 7 percent.'"

The email Waxman referred to was sent October 7, 2009, by WellPoint executive Barry Shane to Cynthia Miller, the company's executive vice president, chief actuary and integration management officer. It says:

Re CA rate filing ... I will try to keep you better informed re: key increases. Average increase is 23 percent and is intended to return CA to target profit of 7 percent (vs 5 percent this year). Still have another 1-2 weeks of discussion before we get finalized. Also, this has been a collaborative rate development process [with another executive] and his team fully engaged and encouraging a higher rate increase (while being aware of the risk associated).


Last month, it was revealed that Anthem Blue Cross notified thousands of its 800,000 customers in California who hold individual plans that they would be affected by a rate hike as of March 1. The increase has been delayed by two months pending an independent review launched two weeks ago at the behest of California Insurance Commissioner Steve Poizner.

Poizner, a GOP gubernatorial candidate, said he "instructed" an outside actuary "to review the rates with a fine-tooth comb" to determine if the rate hikes are excessive and ensure that Anthem Blue Cross is spending 70 cents of every dollar on premium medical care as required by state law.

If the actuary finds "that these rate increases were unwarranted, I will immediately take action to get Anthem Blue Cross to follow the law and lower their rates," he said.

When news of the rate hike broke, it resulted in a major backlash against the health insurer and underscored the urgency of passing legislation to reform the industry.

Wednesday's hearing was chaired by Rep. Bart Stupak (D-Michigan) and comes a day before Republican and Democratic leaders gather at the White House for a hotly-anticipated bipartisan health care summit that will be broadcast live on C-Span.

The meeting will be led by President Barack Obama and is intended to get both parties to agree on provisions to be included in a health care bill, the cornerstone of Obama's domestic agenda. Obama has cited the Anthem Blue Cross rate hike several times in recent weeks in an effort to rally lawmakers behind his health care proposal.

Last week, the Department of Health and Human Services released a report, Insurance Companies Prosper, Families Suffer: Our Broken Health Insurance System, that identified how other for-profit health insurance companies were planning massive rate increases in Connecticut, Maine, Michigan, Oregon, Rhode Island, and Washington.

The timing of Wednesday's hearing was not lost on some Republican lawmakers, such as Congressman Michael Burgess (R-Texas), who said it was a political ploy scheduled to promote Obama's "six-hour photo op."

Burgess, a doctor, defended WellPoint's rate hike, stating it could be due to a variety of factors, and "any number, no matter how big, may be acceptable."

But Stupak said the committee's probe "discovered internal documents that suggest a closer relationship between the proposed premium increases and WellPoint profits."

"The documents reveal that WellPoint sought inflated premium increases as a negotiating tool with the California Department of Insurance," Stupak said.

One such document released by the committee last week called into question recent claims by WellPoint to justify Anthem Blue Cross's rate increase in California. The company pointed out that healthy individuals had decided to drop their coverage. But according to data the company submitted to the National Association of Insurance Commissioners, in 2009 enrollment actually rose by more than 7 percent, from 583,967 individual policyholders at the end of 2008 to 627,082 individual policyholders at the end of the third quarter of 2009.

Cooking the Books?

California law requires WellPoint, as well as other health insurers, to spend 70 percent of its premium costs on medical care.

According to the committee's investigation, "to meet this requirement, WellPoint reported to the California Department of Insurance that its anticipated medical loss ratios for each plan as of March 2010 ranged from 72.0% to 78.9%, with one outlier of 144.8%."

"One factor that can have a great impact on medical spending is the number of healthy people, who are relatively inexpensive to insure and chose to leave a particular plan. This is known as 'adverse selection,'" according to the committee's analysis of internal WellPoint documents.

"If a company projects that a large number of healthy people will exit a plan, the estimated spending on medical care for the remaining sicker population is expected to rise and result in a higher medical loss ratio," the committee's analysis concluded. "Even if premium increases generate more revenue for a particular plan, if the pool of policyholders for that plan becomes more expensive to insure, the medical loss ratio will appear higher."

WellPoint uses the concept of "adverse selection" to justify its premium increases, according to the documents. During discussions WellPoint executives had with Energy Committee staff last year, the company disclosed that as much as seven percentage points of the average 25 percent increase in premiums is due to "adverse selection."

According to internal e-mails obtained by the Energy Committee WellPoint "may have manipulated its adverse selection projections to achieve a desired medical loss ratio."

In a September 3, 2009 email, David Shea, WellPoint's vice president for individual pricing, proposed for health plans regulated by the California Department of Insurance to “add 1.0% to margin for adverse selection to ultimately keep MLR flat.”

In the same e-mail, he also proposed for health plans regulated by the California Department of Managed Care to “[a]dd 2.0% to projected claims for adverse selection to lower the margin to flat.”

The medical loss ratio is the proportion of premium revenues that a health insurance plan uses to pay down medical claims. The rest of the money is booked as profit and also used for other expenses, such as marketing and administrative costs and executive compensation.

According to documents obtained by the committee, WellPoint put together a 12-point plan to reduce its medical loss ratio.

In a document titled "WellPoint Individual Business 2010 Plan 1st Pass," the company identified "[o]pportunities (not reflected in forecast/Plan). Under the "Risk Management" heading, the plan indicates that WellPoint's medical loss ration "should improve as we eliminate subsidies and other Risk Management Initiatives.”

That was followed by 12 risk initiatives followed, which included:

  • “Application for those with prior coverage will be dated no earlier than the day after receipt.”
  • “Pre-existing waiting periods have been adjusted to be the either 12 months or the legal maximum if less.”
  • “Reinstatements will only be allowed for a period of 60 days post termination and will require underwriting and payment of back premiums.”

WellPoint executives also identified key issues confronting the individual market in California that helps to better explain why it was targeted with a double-digit rate increase.

"Lack of attention to risk management, decreased ability to use pre-existing claim denials and rescind policies, and maternity policies have led to first year loss ratios climbing from less than 50% five years ago to over 65% today," the company's 12-point plan document says.


WellPoint Chief Executive Angela Braly testified Wednesday that the rate increase in California, filed last November, was reviewed by an "independent actuarial firm" that concluded the company's "methodology was reasonable.

"Raising our premiums was not something we wanted to do--but we believe this was the most prudent choice given the rising cost of care and the problems caused by many younger and healthier policyholders dropping or reducing their coverage during tough economic times," Braly said, adding that the company "clearly" understands "that rate increases create a challenge for many of our members."

"However, it is important to know that many of our members often have a choice of coverage," she said. Still, WellPoint "determined that a rate increase averaging approximately 25 percent (excluding aging) was necessary."

Braly said she "was very disappointed to see the health reform debate change . . . to an attack on the health insurance industry, specifically pointing to our profits and citing this as the primary reason for premium increases, which is very misleading."

But Waxman wasn't buying any of it and he again pointed to the company's own internal documents, which he says show the health insurer's reasons for hiking rates are purely profit-driven.

In a November 2, 2009, email, Bryan Curley, WellPoint's regional vice president and actuary, wrote: "Note: we are asking for premiums that would put us $40 [million] favorable. Just a week earlier, Curley told Brian Sassi, president and chief executive of WellPoint's consumer business, that "[i]f we get the increases on time, we will see an op gain upside of $30 [million] after downgrades and rate caps."

The committee also took issue with Braly's statement that "raising our premiums was not something we wanted to do" noting that other documents "suggest that WellPoint padded its rate increase by five percentage points to counteract anticipated concessions to [California] state regulators concerning the size of its premium increases."

In an internal email dated October 24, 2009, Shane, WellPoint's vice president of consumer actuary, told Sassi, that WellPoint executives needed to "reach agreement on a filing strategy quickly - specifically in the area of do we file with a cushion allowed for negotiations/margin expansion, or do we file at a lower level that maintains margin, but does not allow for negotiation."

"It appears that WellPoint elected to file with 'a cushion,'" according to the Energy Committee's review of WellPoint's internal documents. "In an October 21, 2009, presentation to the WellPoint Board of Directors, Mr. Sassi identified the 'Key Assumptions' in pricing for the individual market in 2010. This slide differentiated the '2010 Rate Ask' from the '2010 Plan Rate Increase.' According to the slide, WellPoint's 'Rate Ask' would be 25 percent to 26 percent, while the 'Rate Increase' the company assumed in its '2010 Plan' was just 20.4 percent."

Watered Down Coverage

Other documents showed that WellPoint sought to reduce benefits coverage and place some of its California customers affected by the rate increase into less than generous plans.

WellPoint's strategy for shifting consumers into reduced benefit plans has three parts.

First, according to the committee's review of documents, WellPoint’s highest rate increases "seem to apply to their most comprehensive insurance plans."

For example:

Maternity care is a marker for a more comprehensive package of benefits. A chart of proposed rates shows that WellPoint’s highest rate increases apply to the only two product families regulated by the Department of Insurance with maternity coverage. The chart also shows that for the most part, WellPoint proposed lower increases within specific product lines for the versions with higher deductibles than for the versions with lower deductibles.

Second, WellPoint is developing new products, called “downgrade options,” to promote to consumers facing the high rate increases. In one e-mail, David Shea, the Vice President for Individual Pricing, states: “Jim has asked Bryan to price 5-6 downgrade options to be made available in conjunction with the upcoming rate action.” In another internal e-mail, Mr. Curley, the Regional Vice President and Actuary, proposed that WellPoint “create 5-6 CA look-alike plans for CA with a benefit or two removed to create a downgrade option upon renewal.”

WellPoint also introduced a completely new product line called CoreGuard, advertised to have “some of our lowest monthly rates” and a “higher percentage of member cost-sharing in exchange for lower premiums.” One of the CoreGuard plans has a $20,000 deductible for a family for in-network services and a separate $20,000 deductible for non-network services. On top of that, a family can spend an additional $15,000 for co-payments for non-network services. Enrollees can be liable for another $4,500 in prescription drug costs. This adds up to a potential $59,500 out-of-pocket maximum for a family, who are still liable for the cost of drugs not on the formulary and maternity services.

Third, company officials discussed scaling back benefits for existing plans. Indeed, in an October 2, 2009, email Shea sent to Curley and James Oatman, another executive, Shea wrote: "During our Plan review this morning Brian was mentioning that, in CA in the past, we mitigated rate increases by introducing product changes for existing members. We brought up the introduction of new products but he wanted to pursue existing product changes."

In another e-mail, Curley described different scenarios that would result in 6 to 10 percent reductions in benefits for four plans, such as raising deductibles in three of the four plans and adding 25 percent coinsurance payments.

Waxman said "actively developing...'downgrade options,' effectively reduces benefits for its policyholders."

"This 'purging' process cuts coverage for WellPoint policyholders when they need it most: when they get sick," he added.

The committee also heard testimony from three of Anthem Blue Cross's individual policy holders. Lauren Meister testified that she was notified that WellPoint will increase her rates by 38.6 percent this year. She said that WellPoint offered her an alternative plan that does not cover the brand name medication she needs to treat a chronic condition. Meister said WellPoint told her that the alternative plan would require her to pay $5,000 out of pocket before the insurance kicks in.

And Jeremy Arnold testified that he has experienced rate increases on his WellPoint policy totaling 74 percent between 2009 and 2010. Anthem has proposed to raise his rates by 38 percent this year.

Corporate Getaways

Waxman and other Democratic lawmakers on the Energy Committee criticized WellPoint for spending tens of millions of dollars on retreats for top executives and doling seven-figure salaries.

"One question we asked is where does all of this money go?" Waxman asked in his opening statement. "We have learned that in 2008, WellPoint paid 39 senior executives over $1 million each. And the company spent tens of millions of dollars more on expensive corporate retreats. During 2007 and 2008, WellPoint spent $27 million on 103 executive retreats. One retreat in Scottsdale, Arizona, cost over $3 million."

"Corporate executives at WellPoint are thriving, but its policyholders are paying the price," Waxman said. "WellPoint executives may get richer, but our nation's health is suffering."

The committee included photographs of the luxurious five-star hotels, such as the Four Seasons in San Diego and Hawaii, that corporate executives stayed at during their getaways.

WellPoint generated $4.75 billion in earnings last year and its profit margin soared to 7.8 percent, compared with 4.1 percent in 2008. Over the past 12 months, the company's share price increased by 50 percent. According to BusinessWeek, WellPoint shares rose 90 cents, or 1.5 percent, to $59.91 Wednesday in New York Stock Exchange composite trading.

Spectre of double-dip recession looms over UK

Investor Jim Rogers

Financier Jim Rogers, who has denied warning that the pound could become a 'basket case'. Photograph: Martin Argles

This note has been added on 26 February 2010: Jim Rogers has contacted the Guardian and other publications to say that he did not make the remarks attributed to him (below). They appeared in press release that has since been withdrawn. A published correction will also appear in the Guardian newspaper.

Fears of a double-dip recession and a sterling crisis in the run-up to the election were raised last night amid news of collapsing investment in British industry and a warning from one of the world's leading financiers that the pound could plummet within weeks.

The pound fell sharply on the foreign exchange markets after a day of grim economic news which saw an admission from RBS that it had missed government targets for business lending, a downgrading of the UK growth prospects by the European commission and a warning from the CBI that consumer spending was likely to remain weak ahead of polling day.

Sterling, already down by a cent against the dollar following the release of official figures showing capital expenditure plunging by almost a quarter between late 2008 and late 2009, saw its losses doubled after Jim Rogers, the former business partner of speculator George Soros, said sterling was a potential "basket case".

"Other currencies aren't strong and the euro has real problems, with cracks much wider than Greece beginning to show," Rogers said, "but it's the pound that's most vulnerable. In real terms, it's already devalued against virtually every currency barring the Zimbabwean dollar and it's especially exposed over the weeks running up to the UK election. In a basket of currencies, the pound is potentially a basket case. That will put Britain in an extremely bad position."

Ahead of eagerly awaited official growth figures this morning, loss-making RBS said weak demand for finance from companies left it well short of the targets set by Alistair Darling, the chancellor, when he allowed the bank to park troubled assets with the government. Data from the Office for National Statistics showed that investment was 24% lower in the final quarter of 2009 than a year earlier. Hopes that businesses would start to invest again late last year were dashed by a 5.8% drop in capital expenditure during the quarter.

City analysts said it was "touch and go" whether today's revision to gross domestic product data for the final three months of 2009 would show that growth was stronger than the 0.1% estimated last month. Colin Ellis, European economist at Daiwa Securities, said the investment figures were "consistent with no upward revision to headline GDP growth – although we would not rule out the possibility of changes in either direction."

Meanwhile, the European commission singled out Britain as one of the few European Union countries where growth prospects had weakened since the autumn. Brussels expects Britain to grow by 0.6% this year, compared with a previous forecast of 0.9%.

Concerns about the durability of the pick-up in activity were not confined to the UK. Shares on Wall Street fell sharply after the weekly jobless figures rose from 474,000 to 496,000. Although some analysts blamed temporary lay-offs caused by the bad weather, the persistence of high unemployment was enough to shave more than 150 points off the Dow Jones industrial average in early trading.

The CBI, despite reporting a bounce-back in high-street spending in the first half of this month, warned that the outlook for consumer spending before the expected May election was unpromising.

Andy Clarke, chairman of the CBI's distributive trades panel and the chief operating officer at Asda, said: "The next four months are going to be pretty tough. Last year was a challenge. This year will be equally challenging."

In its quarterly snapshot of spending, the CBI said supermarkets, clothing outlets and stores selling household goods had all enjoyed better trading conditions following the prolonged cold snap in January. But Clarke said rising fuel prices, pay freezes and consumer jitters over the possibility of a post-election rise in VAT meant times were tough for ordinary families.

Further evidence of the fragile state of the economy was displayed when RBS admitted more of its customers had repaid loans than were granted them in 2009. The bank was set targets by Alistair Darling to lend an additional £9bn to the mortgage market and an extra £16bn to creditworthy businesses, in return for being allowed to insure £282bn of troublesome loans in the government's asset protection scheme.

RBS lent £11.8bn to those seeking home loans, but business lending fell by £12.2bn, as customers raced to repay their debts. Overall, the bank lent £80bn in 2009 but saw £80.4bn repaid.

The data from RBS supported statistics released by the Bank of England last week which showed that lending to companies fell last year for the first time since records began. Chris Sullivan, head of RBS's corporate banking business, insisted the bank was doing everything it could to lend. "It's not about the cost of loans, it's about the confidence of the market," said Sullivan.

Recent Stats Indicate U.S. Economic Recovery Was an Illusion

A number of economic reports in the last few days indicate that the U.S. economy has not only not failed to recover from the recession, but continues to fall deeper into a hole. Banking, consumer confidence, employment numbers, durable goods and the housing industry - each representing a different aspect of the economy - are all sending out troubling signs. Despite the onslaught of negative data, mainstream economists continue to echo the official U.S. government view that "the recovery is still on track."

Updated statistics from the FDIC indicate that there were 702 banks on the troubled list at the end of 2009. This is an increase of 27% from the third quarter. FDIC numbers also show that U.S. banks cut lending by 7.5% in the fourth quarter of last year. Since lending is the lifeblood of the economy this doesn't bode well for the future. The FDIC also had to put aside an additional $17.8 billion for future bank failures. Its deposit insurance fund is now at a negative $20.9 billion. Despite statements that it has enough cash to keep operating (Bear Stearns and Lehman Brothers made similar claims), it is only a matter of time before the FDIC is bailed out. This will take place before the end of the year and will be done by tapping a line of credit from the Treasury department. Expect this event to be downplayed by mainstream media reports with claims that it is not really a bailout.

While the U.S. banking system continues to dissolve, consumers are losing confidence in the economy. The Conference Board numbers for February fell a whopping 10.5 points to 46 (around 100 is a good number). The present situation subindex fell to 19.4, the lowest level since February 1983 when the U.S. was trying to recover from a severe double dip recession. Before the Credit Crisis, consumer spending represented 72% of the U.S. economy. Without their participation, a sustainable recovery is not possible. Other reports indicate there is no way in the near future that consumers can resume their vital economic role. Consumers not only don't have credit - credit card debt was dropping at close to a 20% annual rate at the end of last year - but they are worried about the job market as well.

The weekly jobless claims indicate why the job picture is still troubling. Initial claims were up 22,000 last week to 496,000 (a number around 400,000 indicates recession and 300,000 indicates a healthy economy). These numbers are highly volatile because they come from state unemployment offices that are notorious for backlogs in processing claims. This problem occurred during the holiday season and the claim numbers were consequently lower. The mainstream media then fell all over itself to report the tremendous improvement in the employment picture, instead of the real story of bureaucratic incompetence that was preventing accurate numbers from being produced. Market watchers usually only pay attention to the four-week moving average to get around this problem. This number has risen by 30,000 to 473,750 in the last four-weeks.

The just released Durable Goods report got major headlines about how bullish the number was. This is only the case as long as you don't look at the details of the report. Responsible for the good headline number was a 126% increase in civilian aircraft orders (these orders can be cancelled, by the way). Outside of transportation, orders fell 0.6%. Core capital equipment and machinery orders dropped 2.9% and 9.7%, respectively. These two numbers are the important ones that determine the direction of the economy. For all of 2009, durable goods fell a record 20%.

Finally, housing doesn't look like it is in recovery mode either. Housing was the epicenter of the Credit Crisis and it will be years before all the damage wrought by the bubble is worked out. According to the Mortgage Bankers Association, mortgage applications for home purchases have just fallen to a 13-year low. New home sales in the U.S. fell to the lowest level on record in January (records go back almost 50 years). Government nationalized Freddie Mac (FRE) reported it lost another $7.8 billion in the fourth quarter. That brings its total loss to $25.7 billion for all of 2009. Freddie Mac purchased or guaranteed one in four U.S. home loans in 2009. The Obama administration has promised a blank check to Freddie along with its companion housing entity Fannie Mae (FNM), also nationalized and bleeding money, to cover losses up until 2012.

There is little evidence that the U.S. economy has recovered from the recession or is going to recover from the recession anytime soon. The support for the recovery viewpoint comes from government statistics that have been highly manipulated. All governments, of course, want to present a rosy picture of their handling of the economy for political reasons and it is much easier to make the numbers better than it is to actually make the economy better. Eventually the public catches on to this game, however. The recent consumer confidence numbers indicate that the American public is no longer buying the public relations story, but is starting to pay more attention to the realities they have to face on a day to day basis.

High court to define reach of gun-control laws

WASHINGTON — In 2008, when national gun rights advocates were looking for residents to challenge Chicago's ban on handguns, Otis McDonald was in effect looking for them. McDonald, 76, says he had seen his neighborhood on the far South Side of Chicago turn from bad to worse over the years with "gangbangers and drug dealers."

"My wife and I are here alone all the time now," says McDonald, a retired maintenance engineer, who with his wife, Laura, reared three children. "I've got burglar alarms hooked into the police department. I have a shotgun, but a handgun (would be) more handy for me to handle."

McDonald had driven down to Springfield, Ill., a few years earlier for an Illinois State Rifle Association rally, to support the push for looser gun laws in Chicago. It was the beginning of a bond with gun rights activists that led to McDonald v. City of Chicago, a dispute that will be argued before the Supreme Court on Tuesday and could reshape firearms regulations nationwide.

The case marks the second round of high-stakes litigation over the breadth of the Second Amendment — and will likely have wider impact nationwide than the first. In June 2008, the justices struck down a Washington, D.C., handgun ban and declared for the first time that the Second Amendment covers an individual right to keep and bear arms.

The new question is whether the 2008 decision also applies to cities and states, or only to laws in the federal government and its enclaves, such as Washington. It sets up another major constitutional question with ramifications for scores of mostly urban gun regulations.

Chicago defends the 1982 law that stops McDonald and other residents from keeping handguns in their homes, arguing that firearms violence is so serious that the court should not extend the 2008 landmark ruling to states.

Benna Ruth Solomon, the city attorney taking the lead on the new case, says in her brief that states and cities should be able to decide for their own jurisdictions how to reduce crime and also prevent accidental injuries caused by firearms.

The Brady Center to Prevent Gun Violence, the International Association of Chiefs of Police and two other police groups have joined in a "friend of the court" brief cautioning the justices about how their decision could affect gun regulations nationwide.

"Courts already have been grappling with over 190 Second Amendment challenges brought against firearms laws and prosecutions in the year and a half since" the justices' ruling in District of Columbia v. Heller, the groups say in their brief.

They say lawsuits have targeted, among other regulations, those barring loaded guns on public streets and the possession of guns on government property.

The court said the Second Amendment protects an individual's right to keep guns in the home for self-defense but did not preclude other long-standing laws, such as those that ban felons from having firearms.

The overriding question in the Chicago case: Does the Second Amendment grant a fundamental right comparable to, say, the First Amendment's guarantee of free speech and the Fourth Amendment's shield against unreasonable searches and seizures? Or, is the Second Amendment in a class of its own because it involves a right to possess a weapon designed to kill or cause injury?

McDonald's lawyers, backed by 38 states, argue the Second Amendment should protect people against city and state regulation because the right to bear arms is "fundamental to the American scheme of justice."

The Chicago School Board, backing the city, counters: "We tolerate few restrictions on the right to free speech because of its salutary effects, and because 'sticks and stones may break my bones but words can never hurt me,' as the children's rhyme goes. Guns, on the other hand, will kill you."

'I am doing this for me'

The case against Chicago's handgun law began while the groundbreaking District of Columbia v. Heller was in the works. Virginia lawyer Alan Gura, who took the lead on the 2008 case, was looking for residents to challenge the Chicago law and offer a broader test of the Second Amendment.

"I said the Lord is hearing my prayer," recalls McDonald of meeting Gura and other gun rights lawyers in early 2008. "They never pressed me. I'm not doing this for them. I am doing this for me."

McDonald had been trying for years to protect himself and other seniors in the deteriorating neighborhood.

Crime in McDonald's area has been steadily rising, although it is mainly property crime rather than violent assaults, according to Chicago police district statistics. Burglaries and thefts are the most common types of crimes in the district. There were 881 burglaries reported in 2006, 1,109 in 2007 and 1,215 in 2008, the most recent annual report available. There were 17 murders in 2008, a number that has held steady since 2006.

McDonald says he often challenged young drug dealers as they hung around idling cars and warned that he would alert the police: "They'd just call me, 'You old gray-headed so-and-so' and say they'd get me."

McDonald took the threats seriously.

When he first got involved with the Illinois State Rifle Association, he was a rare voice from his South Side neighborhood.

"I was probably the only black at that first meeting" in Springfield, McDonald says. "I met a lot of people. Everybody was friendly." The Army veteran adds that "it was like a bunch of old GIs getting together. ... I liked their message."

The other three Chicagoans in the lawsuit are Adam Orlov and Colleen and David Lawson. The Second Amendment Foundation and Illinois State Rifle Association are also challengers to the Chicago law. (A separate challenge to a handgun ban in the Village of Oak Park, a Chicago suburb, is also part of the Supreme Court case.)

Colleen Lawson, 51, says that when she was young, before the city passed the 1982 ban, many people kept handguns in the home to protect themselves.

"My grandmother carried a handgun in her apron pocket when I was growing up," she says.

After an attempted burglary in 2006 at the home she and her husband, David, own on the city's North Side, Lawson says she wanted to keep a handgun in the house. She says that would be easier to handle and give her more confidence than an "unwieldy" shotgun, which is legal in Chicago if properly registered.

On June 26, 2008, the day the Supreme Court invalidated the Washington ban, McDonald, the Lawsons and Orlov were poised to file their lawsuit against Chicago.

They claimed the new ruling on the Second Amendment meant they should be able to register handguns in the city.

Lower U.S. courts rejected the challenge and sided with Chicago.

The U.S. Court of Appeals for the 7th Circuit, which covers Illinois, Indiana and Wisconsin, stressed that the Supreme Court held more than a century ago that the Second Amendment applies only to the federal government. The appeals court said the 2008 Supreme Court ruling did not change that.

Among the groups backing McDonald and the other residents is the NRA, which won time to argue separately before the justices on the gun rights side.

"The case comes down to whether people in cities like Chicago are going to have the same rights as people in Washington, D.C.," says Paul Clement, a former U.S. solicitor general under President George W. Bush who will represent the NRA during arguments.

"It would be an odd constitutional situation if only people in enclaves like Washington had these rights. If the NRA side of this case doesn't prevail in this case, then Heller wasn't that big of a deal — and people thought Heller was a big deal."

Chicago city lawyers say states and cities should be able to work out their own solutions to gun crime. Solomon highlights the city's problem in her brief: "Handguns were used in 402 of 412 firearm homicides in Chicago in 2008. Handguns are used to kill in the United States more than all other weapons — firearms and otherwise — combined."

In 2008, the city reported 510 murders, up from 445 in 2007.

Siding with Chicago are three states with populous urban centers: Illinois, Maryland and New Jersey.

They contend that if McDonald wins, "nearly every firearms law will become the subject of a constitutional challenge, and even in cases where the law ultimately survives, its defense will be costly and time-consuming."

On the other side, Texas leads 38 states in saying the Second Amendment should apply beyond Washington. They note that 44 state constitutions include a right to keep and bear arms.

A test for Sotomayor

McDonald v. City of Chicago is shaping up to be one of the most consequential cases of the term.

Fifty-one "friend of court" briefs have been filed by groups on both sides of the case. (In 2008, when the justices directly confronted the Second Amendment for the first time, 67 such briefs were filed.)

The court's decision in Heller, which reinforced the popular notion in American culture of an individual right to bear arms, was decided on an ideologically split vote that has become a defining feature of the current bench under Chief Justice John Roberts.

About the time that case was argued, a USA TODAY/Gallup Poll showed that nearly three out of four Americans believed the Second Amendment covered an individual right to own a firearm.

Justice Antonin Scalia wrote for the majority and was joined by fellow conservatives Roberts, Anthony Kennedy, Clarence Thomas and Samuel Alito. Liberals John Paul Stevens, David Souter, Ruth Bader Ginsburg and Stephen Breyer dissented.

Justice Sonia Sotomayor succeeded Souter in 2009. Earlier that year, Sotomayor, a judge on the New York-based U.S. appeals court, had been part of a three-judge panel that found the Second Amendment did not apply to the states.

That decision, which rejected a challenge to a New York ban on certain weapons used in martial arts, provoked some gun groups, including the NRA, to protest her high-court nomination.

When she testified before the Senate Judiciary Committee last July, Sotomayor observed that the Supreme Court had left open in Heller the question of whether the Second Amendment covers the states and said that issue needed to be resolved before appeals courts weighed in.

She said her panel decided the martial-arts case on the basis of established high-court precedent and that she had a "completely open mind" on whether the Supreme Court should extend the Second Amendment to the states.

On Chicago's dicey far South Side, McDonald contends people in cities beyond Washington should have the same Second Amendment protections as people in the nation's capital.

"Why should we have to suffer with all the laws passed down by the states and the cities," he says, "while the people who are doing all this (violence) are getting guns and the police can't stop them?"

City of Angels on brink of abyss

Los Angeles, the second-largest US city, is facing a crisis of funding not seen since the darkest days of the Great Depression

Two and a half years after the official start of the worst economic downturn and fiscal crisis in nearly 80 years, America's economy is supposedly growing again, the stock market is halfway recovered from the lows of 2008 and early 2009, and the unemployment plunge seems to have been halted.

Yet, built-in time lags in how revenues are raised and budgets calculated mean that many states and cities around the country are only now starting to feel the worst of the pain. This year has been, quite simply, abysmal for local and state governments, and next year promises to be even worse. With easy cuts long-ago made, these days basic services are increasingly seen as luxuries, and public sector employees are increasingly vulnerable to wage cuts, benefits rollbacks, and unemployment.

While the federal government has considerable wiggle room to borrow or simply increase the supply of money to help fight its way out of financial collapse, smaller government units in America don't have those options; increasingly cities, counties and states are facing the sorts of austerity measures we've come to associate with third world countries in crisis, or, in recent years, with vulnerable European nations such as Greece or Latvia.

In Arizona, a cash-pinched legislature put the Capitol building up for sale, proposing to lease it back for state use. In the small Colorado town of Colorado Springs, officials shut off half the street lamps and one-third of the traffic lights, told residents who wanted short grass in public parks to bring their own lawnmowers, and auctioned off a police helicopter on eBay. Around the country, libraries have been shuttered, after-school programmes have been curtailed, mental health services have been decimated.

In Los Angeles, the nation's second largest metropolis, the Democratic mayor, Antonio Villaraigosa, addressed a full session of the city council on 9 February to detail just how grim the city's finances had become. Miguel Santana, the city administrative officer (the CAO is the mayor and council's chief financial adviser) had recently informed the mayor's office that LA was facing a $200m shortfall through the end of this financial year and another half billion dollar-plus shortfall in the years to come if it didn't radically, and rapidly, restructure its budget. Santana didn't mince words. His nearly 300-page report (pdf) opened with this stark warning:

"The city is facing a budget crisis unlike any it has ever experienced … The enormity of our current fiscal crisis forces the City to take swift action now and lay out a financial plan for the future."

Wall Street was growing increasingly worried by the city's financial fragility, and the city's ability to raise revenues through bond sales was at risk.

Why the crunch? According to city council president Eric Garcetti's office, for the past four quarters, the city has seen double-digit revenue declines, a scenario not experienced since the darkest days of the Great Depression. Quite simply, the downturn was so steep it had made government-as-normal impossible to maintain in the City of Angels. As a result, says Garcetti, the city will face a crisis of funding for the next several years as well as an increasingly bitter battle of ideas as to the role of government in modern-day America; for conservatives, he warns it will likely be seen as an opportunity to starve the public sector, to "downsize government so much it can never come back."

Los Angeles' budget, currently around $7bn per year, will, all parties agree, shrink for years to come. And, since much of that $7bn is committed to untouchable items – making sure pensions are paid, keeping the LAPD afloat – the hundreds of millions of dollars in cuts will fall overwhelmingly on employees and on discretionary services. And these are services that disproportionately are used by lower income residents – the very people who have already been hit the hardest by the broader economic meltdown.

The city has already negotiated with public sector unions to ease 2,400 employees (out of a city workforce of about 40,000) into early retirement, is working to immediately reduce the city's payrolls by another one thousand, and is exploring how to make more cuts down the road that could lead to a couple of thousand additional job losses – or, if the mayor and Garcetti's vision of "shared sacrifice" is implemented, to fewer job cuts but across-the-board pay reductions instead. "For me, government matters," says Garcetti. "Workers matter. Services matter." Inevitably, however, the crisis will in some ways shrink the role of city government.

At the same time as the city is negotiating concessions from unions, it is also exploring "private-public partnerships" that would hand the city's zoo, convention centre, parking garages and even parking meters to private operators. And it has already eliminated two city departments – environmental affairs and human services – with more likely to follow, hoping to seamlessly amalgamate their functions into other departments.

Yet in reality, there is very little that is seamless about these budget readjustments. The job losses are adding to LA's already great economic pain – the city has a more than 11% unemployment rate; even with progressives occupying key positions in the city's political leadership, the evisceration of core public services will, over the years to come, impact the quality of life of most Angelenos; and the privatisation of venues such as the zoo and the convention centre will harm the city's long-term ability to raise sufficient revenue to meet its growing needs.

The broader economy may be starting to show some signs of healing, but for those at the bottom of the economy, for those most reliant on government services in Los Angeles and the countless other cities teetering over financial abysses, 2010 looks more like a bona fide Depression year than one made beautiful by the myriad green shoots of recovery.

Bernanke delivers blunt warning on U.S. debt

With uncharacteristic bluntness, Federal Reserve Chairman Ben S. Bernanke warned Congress on Wednesday that the United States could soon face a debt crisis like the one in Greece, and declared that the central bank will not help legislators by printing money to pay for the ballooning federal debt.

Recent events in Europe, where Greece and other nations with large, unsustainable deficits like the United States are having increasing trouble selling their debt to investors, show that the U.S. is vulnerable to a sudden reversal of fortunes that would force taxpayers to pay higher interest rates on the debt, Mr. Bernanke said.

"It's not something that is 10 years away. It affects the markets currently," he told the House Financial Services Committee. "It is possible that bond markets will become worried about the sustainability [of yearly deficits over $1 trillion], and we may find ourselves facing higher interest rates even today."

It was some of the toughest rhetoric to date about the nation's fiscal and budgetary woes from the Fed chief, who faces a second round of questioning Thursday before a Senate panel.

RELATED STORY: Fed to look at high-risk contracts on Greek debt

Mr. Bernanke for the first time addressed concerns that the impasse in Congress over tough spending cuts and tax increases needed to bring down deficits will eventually force the Fed to accommodate deficits by printing money and buying Treasury bonds — effectively financing the deficit on behalf of Congress and spurring inflation in the process.

Some economists at the International Monetary Fund and elsewhere have advocated this approach, suggesting running moderate inflation rates of 4 percent to 6 percent as a partial solution to the U.S. debt problem. But the move runs the risk of damaging the dollar's reputation and spawning much higher inflation that would be debilitating to the U.S. economy and living standards.

Rep. Brad Sherman, California Democrat, asked Mr. Bernanke directly whether the Fed would consider such a strategy, especially since IMF officials endorsed it.

"We're not going to monetize the debt," Mr. Bernanke declared flatly, stressing that Congress needs to start making plans to bring down the deficit to avoid such a dangerous dilemma for the Fed.

"It is very, very important for Congress and administration to come to some kind of program, some kind of plan that will credibly show how the United States government is going to bring itself back to a sustainable position."

23,000 now expected to lose jobs after shuttle retirement

VIERA — The local economic forecast tied to President Barack Obama's proposed NASA budget keeps growing bleaker.

Revised projections now show that about 23,000 workers at and around Kennedy Space Center will lose their jobs because of the shuttles' retirement and the new proposal to cancel the development of new rockets and spacecraft.


That sum includes 9,000 "direct" space jobs and -- conservatively speaking -- 14,000 "indirect" jobs at hotels, restaurants, retail stores and others that depend on activity at the space center, said Lisa Rice, Brevard Workforce president.

The organization's earlier estimate of 7,000 direct jobs reflected just the retirement of the shuttle program. The updated numbers also include the cancellation of Project Constellation and other initiatives as outlined in the president's 2011 budget, Rice said.

"Our unemployment rate is going to skyrocket," she warned Thursday during a five-hour Brevard County Commission space workshop. Much conversation centered on the future of human space launches from KSC, and attendees heaped criticism on Obama's strategy.

Mark Nappi is vice president of launch and recovery systems for United Space Alliance, NASA's prime contractor for shuttle operations. As things stand today, he predicted that more than 4,500 of the company's 5,500 Florida workers will lose their jobs. Geographically speaking, Nappi said 4,850 USA workers live in Brevard, including 3,250 in the northern half of the county.

Commissioners asked what the county can do to recruit commercial launch companies from California, Virginia, Texas and elsewhere.

"The market will drive where space vehicles are launched from," Nappi said. "And if we believe in Florida that we have the birthright to spaceflight operations, we're going to be the Pittsburgh of the steel industry and the Detroit of the car industry."

State Rep. Ritch Workman, founder of the Florida Space Caucus, denounced "this horrible president's budget."

Workman said that even if KSC somehow lures five leading commercial crew transport companies -- SpaceX, Orbital Sciences Corp., The Boeing Co., Lockheed Martin and Sierra Nevada Corp. -- from other states, that would account for only about 2,400 jobs.

"And we're talking about putting humans on private spacecraft. That is not going to happen for a decade," the Melbourne Republican said.

Gov. Charlie Crist's proposed budget includes $8.7 million for the development of the years-delayed Exploration Park, a proposed research complex that may someday employ 1,750 people, said Leigh Holt, county government relations manager. Crist's budget also earmarks $3.9 million to refurbish Launch Complex 46, Holt said.

On Thursday, the county was scheduled to roll out an updated version of, a Web site that touts a pro-NASA letter-writing campaign. The site has picked up more than 11,100 fans on Facebook and nearly 200 followers on Twitter, county spokeswoman Kimberly Prosser said.

By a 4-0 vote, commissioners also decided to offer Pauley Management Inc. a new federal lobbying contract for space, transportation and other matters.

Blockbuster Collapses: Shutting Down 500 Stores In Desperate Bid To Save $200 Million

Blockbuster is losing big when it comes to at-home videos, so they are cutting back on expenses and on advertising in the U.S. to make up for it.

US same-store sales fell 15.9% in the 4Q and revenue dipped 18% to $1.08 billion compared to last year.

By closing its 500 weakest stores, the video-rental company hopes to reduce expenses by $200 million, the Financial Times reports.

Jim Keyes, chief executive officer, said the company was working with Rothschild, its financial advisors, on ways to increase its liquidity, including a possible recapitalisation.

Under Mr Keyes, Blockbuster is seeking to establish its brand in rapidly emerging new channels such as digital downloads and vending kiosks.

But they’ve already been beat to the punch. Netflix and Redbox dominate market share when it comes to digital downloads and vending kiosks, and Blockbuster will have a difficult time growing in those segments.

The company ended last year with $963 million of debt. Can they make it through 2010?

Meaning of MERS

The Voice of the White House

Washington, D.C., February 24, 2010: Although only bankers are aware of it, there is a second wave of economic disaster starting to build up that will make the earlier one pale into insignificance. Let us start out with MERS, shall we?

MERS = Mortgage Electronic Registration Inc.holds approximately 60 million American mortgages and is a Delaware corporation whose sole shareholder is Mers Corp. MersCorp and its specified members have agreed to include the MERS corporate name on any mortgage that was executed in conjunction with any mortgage loan made by any member of MersCorp. Thus in place of the original lender being named as the mortgagee on the mortgage that is supposed to secure their loan, MERS is named as the “nominee” for the lender who actually loaned the money to the borrower. In other words MERS is really nothing more than a name that is used on the mortgage instrument in place of the actual lender. MERS’ primary function, therefore, is to act as a document custodian. MERS was created solely to simplify the process of transferring mortgages by avoiding the need to re-record liens – and pay county recorder filing fees – each time a loan is assigned. Instead, servicers record loans only once and MERS’ electronic system monitors transfers and facilitates the trading of notes. It has very conservatively estimated that as of February, 2010, over half of all new residential mortgage loans in the United States are registered with MERS and recorded in county recording offices in MERS’ name

MersCorp was created in the early 1990’s by the former C.E.O.’s of Fannie Mae, Freddie Mac, Indy Mac, Countrywide, Stewart Title Insurance and the American Land Title Association. The executives of these companies lined their pockets with billions of dollars of unearned bonuses and free stock by creating so-called mortgage backed securities using bogus mortgage loans to unqualified borrowers thereby creating a huge false demand for residential homes and thereby falsely inflating the value of those homes. MERS marketing claims that its “paperless systems fit within the legal framework of the laws of all fifty states” are now being vetted by courts and legal commentators throughout the country.

The MERS paperless system is the type of crooked rip-off scheme that is has been seen for generations past in the crooked financial world. In this present case, MERS was created in the boardrooms of the most powerful and controlling members of the American financial institutions. This gigantic scheme completely ignored long standing law of commerce relating to mortgage lending and did so for its own personal gain. That the inevitable collapse of the crooked mortgage swindles would lead to terrible national repercussions was a matter of little or no interest to the upper levels of America’s banking and financial world because the only interest of these entities was to grab the money of suckers, keep it in the form of ficticious bonuses, real estate and very large accounts in foreign banks. The effect of this system has led to catastrophic meltdown on both the American and global economy.

MERS, as has clearly been proven in many civil cases, does not hold any promissory notes of any kind. A party must have possession of a promissory note in order to have standing to enforce and/or otherwise collect a debt that is owed to another party. Given this clear-cut legal definition, MERS does not have legal standing to enforce or collect on the over 60 million mortgages it controls and no member of MERS has any standing in an American civil court.

MERS has been taken to civil courts across the country and charged with a lack of standing in reposession issues. When the mortgage debacle initially, and inevitably, began, MERS always routinely brought actions against defaulting mortgage holders purporting to represent the owners of the defaulted mortgages but once the courts discovered that MERS was only a front organization that did not hold any deed nor was aware of who or what agencies might hold a deed, they have routinely been denied in their attempts to force foreclosure. In the past, persons alleging they were officials of MERS in foreclosure motions, purported to be the holders of the mortgage, when, in fact, they not only were not the holder of the mortgage but, under a court order, could not produce the identity of the actual holder. These so-called MERS officers have usually been just employees of entities who are servicing the loan for the actual lender. MERS, it is now widely acknowledged by the courts, has no legal right to foreclose or otherwise collect debt which are evidenced by promissory notes held by someone else.

The American media routinely identifies MERS as a mortgage lender, creditor, and mortgage company, when in point of fact MERS has never loaned so much as a dollar to anyone, is not a creditor and is not a mortgage company. MERS is merely a name that is printed on mortgages, purporting to give MERS some sort of legal status, in the matter of a loan made by a completely different and almost always,a totally unknown entity.

The infamous collapse of the American housing bubble originated, in the main, with one Angelo Mozilo, CEO of the later failed Countrywide Mortgage.

Mozilo started working in his father’s butcher shop, in the Bronx, when he was ten years old. He graduated from Fordham in 1960, and that year he met David Loeb. In 1968, Mozilo and Loeb created a new mortgage company, Countrywide, together. Mozilo believed the company should make special efforts to lower the barrier for minorities and others who had been excluded from homeownership. Loeb died in 2003

In 1996, Countrywide created a new subsidiary for subprime loans.

  • Countrywide Financial’s former management
  • Angelo R. Mozilo, cofounder, chairman of the board, chief executive officer
  • David S. Loeb, cofounder, President and Chairman from 1969 to 2000
  • David Sambol, president, chief operating officer, director
  • Eric P. Sieracki, chief financial officer, executive managing director
  • Jack Schakett, executive managing director, chief operating officer
  • Kevin Bartlett, executive managing director, chief investment officer
  • Andrew Gissinger, executive managing director, chief production officer, Countrywide Home Loans[14]
  • Sandor E. Samuels, executive managing director, chief legal officer and assistant secretary
  • Ranjit Kripalani, executive managing director and president, Capital Markets
  • Laura K. Milleman, senior managing director, chief accounting officer
  • Marshall Gates, senior managing director, chief administrative officer
  • Timothy H. Wennes, senior managing director, president and chief operating officer, Countrywide Bank FSB
  • Anne D. McCallion, senior managing director, chief of financial operations and planning
  • Steve Bailey, senior managing director of loan administration, Countrywide Home Loans

The standard Countrywide procedure was to openly solicit persons who either had no credit or could not obtain it, and, by the use of false credit reports drawn up in their offices, arrange mortgages. The new home owners were barely able to meet the minimum interest only payments and when, as always happens, the mortgage payments are increased to far, far more than could be paid, defaults and repossessions were inevitable. Countrywide sold these mortgages to lower-tier banks which in turn, put them together in packages and sold them to the large American banks. These so-called “bundled mortgages” were quickly sold these major banking houses to many foreign investors with the comments that when the payments increased, so also would the income from the original mortgage. In 1996, Countrywide created a new subsidiary for subprime loans.

At one point in time, Countrywide Financial Corporation was regarded with awe in the business world. In 2003, Fortune observed that Countrywide was expected to write $400 billion in home loans and earn $1.9 billion. Countrywide’s chairman and C.E.O., Angelo Mozilo, did rather well himself. In 2003, he received nearly $33 million in compensation. By that same year, Wall Street had become addicted to home loans, which bankers used to create immensely lucrative mortgage-backed securities and, later, collateralized debt obligations, or C.D.O.s—and Countrywide was their biggest supplier. Under Mozilo’s leadership, Countrywide’s growth had been astonishing.

He was aiming to achieve a market share—thirty to forty per cent—that was far greater than anyone in the financial-services industry had ever attained. For several years, Countrywide continued to thrive. Then, inevitably, in 2007, subprime defaults began to rocket upwards , forcing the top American bankers to abandoned the mortgage-backed securities they had previously prized. It was obvious to them that the fraudulent mortgages engendered by Countrywide had been highly suceessful as a marketing program but it was obvious to eveyone concerned, at all levels, that the mortgages based entirely on false and misleading credit information were bound to eventually default. In August of 2007, the top American bankers cut off. Countrywide’s short-term funding, which seriously hindered its ability to operate, and in just a few months following this abandonment, Mozilo was forced to choose between bankruptcy or selling out to the best bidder.

In January, 2008, Bank of America announced that it would buy the company for a fraction of what Countrywide was worth at its peak. Mozilo was subsequently named a defendant in more than a hundred civil lawsuits and a target of a criminal investigation. On June 4th, 2007 the S.E.C., in a civil suit, charged Mozilo, David Sambol, and Eric Sieracki with securities fraud; Mozilo was also charged with insider trading. The complaint formalized a public indictment of Mozilo as an icon of corporate malfeasance and greed.

In essence, not only bad credit risks were used to create and sell mortgages on American homes that were essentially worthless. By grouping all of these together and selling them abroad, the banks all made huge profits. When the kissing had to stop, there were two major groups holding the financial bag. The first were the investors and the second were, not those with weak credit, but those who had excellent credit and who were able, and willing to pay off their mortgages.

Unfortunately, just as no one knows who owns the title to any home in order to foreclose, when the legitimate mortgage holder finally pays off his mortgage, or tries to sell his house, a clear title to said house or property cannot ever be found so, in essence, the innocent mortgage payer can never own or sell his house. This is a terrible economic time bomb quietly ticking away under the feet of the Bank of America and if, and when, it explodes, another bank is but a fond memory.

Readers wishing to find out if their title is secure should write to, leave a comment on any article and ask for contact information for legal advice.

The Brits Want Us in Another War

After all, Blair joined Bush in the Iraq charade (Blair insisted that “history would vindicate” them, but history isn’t smiling.) So now a British “expert” demands that Obama bail out the Brits again and live up to the requirements of a mysterious “special relationship” that has never been put into treaty form, publicly debated, and given the advice and consent of the Senate as required by the Constitution. “The core of the problem is a simple inability to recognize and support our friends over adversaries,” pouts the Brit, who wants the US to blow a hole in its hull so we can follow England’s sinking ship.

In 1981, Ronald Reagan had widespread support across Latin America. England was sinking even then, and had given up most of its colonies, including Hong Kong to the Communist Chinese and Zimbabwe to the communist Mugabe. But Maggie Thatcher couldn’t stomach giving back the colonies England had stolen from Catholic countries. So today, England’s last three colonies are in Catholic countries — Northern Ireland (Ireland), Gibraltar (Spain), and the Argentine Malvinas, the name all Latin Americans give the islands that colonial occupier England calls the Falklands.

When Reagan backed Thatcher in 1982, he alienated Latin America so profoundly that I predicted it would take a generation to recover the goodwill that he lost. Alas, a generation has gone by, and just look south of the border. How much love of the United States do we find there today? We certainly can’t call it friendship. Alas, a generation was not enough.

Shortly after the war between Britain and Argentina, Cap Weinberger, Reagan’s Defense Secretary, told me — unclassified, at a party — that the United States had actually been ready to go to war with Argentina, if English forces had not prevailed on their own. And they almost didn’t. If those Exocets had gone off and sunk those British ships (here’s why they didn’t), the United States would have been at war with a Latin American country on behalf of a European colonial power.

Like America’s security and defense industry and major financial interests, the Brits prosper from wars and the rumors of wars. Meanwhile, Prime Minister Gordon Brown wants to be king of the third world (with our money, of course), and join the hordes who prosper on ending poverty (with our money, of course). The United States has too many secret “special relationships” with too many countries: the UK, Israel, Iraq, Mexico, to name a few — and now, for all we know, with the corrupt regime in Kabul. It’s time to end them and return to a constitutional foreign policy.

Glenn Beck Wants to kill you!

Damn ten minute limit,I could have used just one extra minute,ahhhhhh! Anyway enjoy it flaws and all.


History of the Federal Reserve (Money Masters) - 3:36:06

Full video 42 min

G. Edward Griffin on the Federal Reserve System

More info Click here .....

City removes trash cans, streetlights to save cash

City workers remove trash bins in one of Colorado Springs' parks, an effort to close a nearly $30 million budget gap.

Colorado Springs, Colorado (CNN) -- If you come to a neighborhood park in Colorado Springs, plan on bringing your own trash bags.

To save money, the city has removed the trash cans.

Need to catch a bus? Don't try on evenings or weekends. The city has cut that service, too.

And when the sun goes down, Colorado Springs is going to look a little bit dimmer. Crews are removing a third of the city's streetlight to save money on electricity and light bulbs.

Watch city's PSA on streetlight deactivation

It's this conservative city's way of closing a $28.5 million budget gap.

"You can cry about the fiscal situation ... or you can take it as an opportunity to change, reinvent yourself and innovate and that's what were going to do in Colorado Springs," City Councilman Sean Paige said.

Other governments are considering higher taxes to avoid such cutbacks, but in the state of Colorado, there is a taxpayers' bill of rights. It prevents state and city governments from raising taxes unless such a measure is approved by the voters.

"We put it on the ballot last fall, and they said 'no,' " said Paige, a Republican. "They declined to write the city a blank check, and they said, 'City, tighten your belts. We're tightening ours. You need to do the same.'

"We're going to respect that," he added. "I'm not going to cry about that."

It's not a new concept in Colorado Springs, touted on some Web sites as a "libertarian paradise." The city's garbage collection, zoo and philharmonic are all privately funded.

The city is even auctioning off its police helicopters on the Internet.

Want to place a bid?

The latest budget cuts could be felt at community centers like Meadows Park, which is bustling with after-school programs for kids, as well as exercise classes and hot meals for seniors.

Unless the center can find private funding, Colorado Springs is slated to shut it down at the end of March.

"I'm hoping that some sort of a miracle will happen so we can keep the centers open," said Sheryle Nix, 56.

Every day, Nix eats a $2 lunch at the center because she can't afford to eat in a restaurant and has trouble preparing her own food.

"I have a traumatic brain injury, so this really helps keep me on schedule to eat lunch," she explained.

Jeanie Schweitzer, 55, returned to Colorado Springs to take care of her grandmother Elsie, who suffered a stroke. She brings Elsie to the center to get her out of the house.

"I don't think they should be shutting it down. There should be enough money," Schweizer said. "It's not that much in the big picture to keep it open."

The center is a lifeline for parents who work and cannot pick their kids up after school ends in the afternoon.

Lindon Jackson, who is 13, has been coming to the Meadows Park after-school program since she was 3. When asked what she'll do if the center shuts down, she said, "Nothing."

"I'd just be home doing nothing."

Whether the government should continue funding Meadows Park and other community centers like it strikes at the heart of the political argument over the role of government, particularly during an economic downturn.

"The model of governments, from the federal government down to municipal governments, don't work anymore," according to Chuck Fowler, chairman of City Committee, an alliance of local businesspeople set up by Paige.

"They don't take in as much money. They can't possibly provide the same amount of services, pay their employees, pay their pensions. Something's got to give."

Fowler believes that the solution may be in weaning people off of government services.

"The larger the government is, the more conditioning with certain people that they don't need to take personal responsibility of their life," he said.

The budget cuts, according to Fowler, "could really recondition people's ideas about what government should be doing."

"Should it be doing all of these things, or should it really be focused on the vital things that clearly have a public interest?"

But Brian Kates, who runs Meadows Park Community Center, says the people affected by the government cutbacks "are pawns in the game."

"These aren't people trying to be lazy and live off the system," Kates said. "These are hard-working, intelligent and bright [people], and they're not asking for much. We're giving them just the very basics."

Is Glenn Beck warning us that General Wesley Clark is a Whacko?

Please go to Patriots Question 911 Truth where you will find, among many, many credible 911 Truth advocates, the following:

"General Wesley Clark, U.S. Army (ret) – Former Commanding General of U.S. European Command, which included all American military activities in the 89 countries and territories of Europe, Africa, and the Middle East. Additionally, Supreme Allied Commander Europe (SACEUR), which granted him overall command of NATO military forces in Europe 1997 - 2001. Awarded Bronze Star, Silver Star, and Purple Heart for his service in Viet Nam and numerous subsequent medals and citations. Graduated valedictorian of his class at West Point.
Video interview ABC's This Week with George Stephanopoulos 3/5/06: "I think when you look at this country, right now, we need a 2-party system that works. We need Congress to do its job. We need real investigation of some of the abuses of authority that are apparently going on at the Executive branch. ... We've never finished the investigation of 9/11 and whether the administration actually misused the intelligence information it had. The evidence seems pretty clear to me. I've seen that for a long time.""

The Patriots Question 911 Truth site has this quote:

"In the long history of the world, only a few generations have been granted the role of
defending freedom in its hour of maximum danger. I do not shrink from this responsibility. I welcome it.
— John F. Kennedy, Inaugural Address Jan. 20, 1961"

Check out the links on the left side of this blog for Firefighters for 911 Truth, Architects and Engineers for 911 Truth, Lawyers for 911 Truth and many others.

Now please watch the following video clip where Glenn Beck associates 911 Truthers with the Holocaust shooter. I didn't hear him make any exceptions, so I must conclude he means General Wesley Clark too.

Now from AE911Truth:

Now Glenn Beck again:

How does this fearmonger make such gratuitous assertions on national television? He brings up "Don't blame the messenger" while he commits the same crime by blaming the messengers bringing the truth about 911.
UPDATE June 21, 2009 911Truther to sue Glenn Beck/Fox
UPDATE JUNE 21, 2009 Jack Blood to Glenn Beck
UPDATE JUNE 22, 2009 Audio interview Dr. Griffin -includes this topic
UPDATE JUNE 26, 2009 Court upholds ban on words with NAZI link
UPDATE JULY 28, 2009 Silly Chris Matthews jumps on the "they're crazy" bandwagon -