Friday, February 25, 2011

Visual Atlas Of Distressed Oil Production

As recent developments out of Libya have demonstrated, when geopolitics and oil production mix, the resultant product is quite explosive. And as more protests are sure to spread to other countries in the region (with Saudi of course being the key domino whose potential fall would send crude well over $200), below we present a summary atlas of the key production capacities in both crude and gas, as well as proven reserves of all the countries in the MENA region. At this point, with Libya largely priced in, all attention should once again shift to developments in Bahrain, which contrary to the media black out, have not been put under control even remotely. The rumored fact that Al Jazeera may have allegedly received a "request" from Saudi Arabia to not cover recent events is a different story altogether.

Workers Revolution -- it's personal

Study says US wasted billions in Iraq, Afghanistan

© AFP Shah Marai

WASHINGTON (AFP) - Corruption and waste has cost the US government billions of reconstruction dollars in Iraq and Afghanistan, according to an official study on wartime contracting released on Thursday.

The report found that "criminal behavior and blatant corruption" were responsible for much of the waste related to the nearly $200 billion spent since 2002 on US reconstruction and other projects in the two countries.

It did not give exact figures, but cited the Inspector General for Afghanistan Reconstruction report to Congress in January that found efforts were at clear risk because of poor planning and insufficient oversight.

Another estimate in the "Commission on Wartime Contracting" report found that losses to fraud alone in both war zones could be as high as $12 billion.

"When it comes to oversight of contingency contracting, we've been driving beyond the reach of our headlights. Reforms are badly needed," said the report.

"For many years, the government has abdicated its contracting responsibilities -- too often using contractors as the default mechanism -- without consideration for the resources needed to manage them."

The commission offers 32 recommendations to improve the situation in both Iraq and Afghanistan, where some 200,000 people are employed by subcontractors, including a decrease in dependence on private security and an increase in competition between subcontractors to lower prices.

It also called for a separate agency to oversee the different contractors currently overseen by the State Department, Pentagon and the US Agency for International Development (USAID).

The commission was established by Congress in 2008 under the model of the Truman Commission during World War II, which investigated US government spending during the conflict.

© AFP -- Published at Activist Post with license

Banks Just Too Big To Fail? Iceland Proves Otherwise; After Punishing Creditors, Economy Returns To Strong Growth

Source - New Zealand Herald

Banks just too big to fail? Iceland shows otherwise

Decision to let banks go under looks smarter by the day, in contrast to Ireland's costly bailout.

On his second day as head of Iceland's third-largest bank, Arni Tomasson faced a crisis: the firm that regulators had asked him to run was out of cash.

It was October 8, 2008, at the height of the global financial meltdown and Iceland's bank assets in Britain had been frozen. Customers flocked to branches of Tomasson's Glitnir Banki to withdraw money, even though the Government had guaranteed their deposits. By the end of the day, the vaults were empty, says Tomasson, recalling the drama.

The only way Glitnir and other lenders could avoid a panic the next morning was to get more cash, which they were having trouble doing. A container of crisp kronur sat on the tarmac at Reykjavik's airport awaiting payment.

The British company that printed the bills, De La Rue, was demanding sterling, and the central bank couldn't access its British account.

"Everybody was panicked - depositors, creditors, banks around the world," Tomasson says.

But Tomasson got the cash he needed that night after the central bank managed to open an emergency line of credit with a European lender. Now he's sitting in an office in Reykjavik, handling about US$24 billion ($32 billion) of claims by creditors as life in Iceland's capital returns to normal.

Unlike other nations, including the US and Ireland, which injected billions of dollars of capital into their financial institutions to keep them afloat, Iceland placed its biggest lenders in receivership. It chose not to protect creditors of the country's banks, whose assets had ballooned to US$209 billion, 11 times gross domestic product.

The crisis almost sank the country. The krona lost 58 per cent of its value by the end of November 2008, inflation reached 19 per cent in January 2009, GDP fell 7 per cent that year and the Prime Minister resigned after nationwide protests.

But with the economy projected to grow 3 per cent this year, Iceland's decision to let the banks fail is looking smart.

  • "Iceland did the right thing by making sure its payment systems continued to function while creditors, not the taxpayers, shouldered the losses of banks," says Nobel laureate Joseph Stiglitz, an economics professor at Columbia University in New York. "Ireland's done all the wrong things, on the other hand. That's probably the worst model."

Ireland guaranteed all the liabilities of its banks when they ran into trouble and has been injecting capital - €46 billion so far - to prop them up. That brought the country to the brink of ruin, forcing it to accept a rescue package from the European Union in December.

Continue reading...


Icesave protest - Oct. 4, 2010


America's revolution grows, but where is Obama?

2007: Barack Obama promised to "walk on that picket line" if workers are...

Foreclosures make up 26% of home sales

Of all home sold in the U.S. last year, 26 percent were foreclosures and short sales, according to a RealtyTrac report released on Thursday. That’s down slightly from 2009, but a jump compared to 2008.

In Illinois, RealtyTrac said 29,194 distressed properties were sold, accounting for 26 percent of all sales last year.

“It’s like the post-holiday sales at Macy’s where they’re trying to clear out unwanted inventory,“ said Anthony Sanders, a real estate professor at George Mason University.

Homes already foreclosed on and repossessed by banks, called REOs (real estate owned), sold for an average of 36 percent less than normal sales, RealtyTrac reported. Meanwhile, the discount for homes sold while they were still in the foreclosure process (short sales) was 15 percent.

Nevada had the highest percentage of distressed sales of any state at 57 percent. That was, however, less than 2009, when 67 percent of sales there were foreclosures. In Arizona, 49 percent of sales were distressed properties; in California, 44 percent; and in Florida, 36 percent.

Foreclosed properties sold for the biggest discount — 50 percent off — in New Jersey.

These homes have attracted bargain hunters, including individuals or groups looking to buy and hold properties, according to Hoffman. They hope to buy at such a good price that they can rent out the properties and make a profit.

“These folks are cash investors who are going in and offering very low bids,“ he said.

NAR reported that all-cash sales went up to 32 percent of the total, up from 26 percent a year earlier. It estimated the percentage of investor purchases hit 23 percent up from 17 percent a year ago.

“Unprecedented levels of all-cash purchases — primarily of distressed homes sold at deep discounts — undoubtedly pulls the median price downward,“ said NAR president, Ron Phipps.

These investment opportunities are not going away. Nearly 30 percent of mortgage borrowers are underwater on their loans, owing more than their homes are worth, according to Stan Humphries, chief economist for Zillow, the real estate web site.

These owners are very vulnerable to foreclosure so the number of distressed properties that will go on sale only the next year or two will probably remained high.

Geithner's Crimes Through AIG - Will The Truth Come Out

Bloomberg's Jonathan Weil: Citi's Vikram Pandit May Have Violated Federal Securities Law

Jonathan Weil delivers bombshell evidence this morning that Citi CEO Vikram Pandit violated Sarbanes-Oxley and other securities regulations in early 2008. Here's the gist of the case. The OCC warned Pandit on Feb. 14, 2008 that Citi's valuation models for the mortgage-backed securities it owned were severely flawed. Just over a week later, Pandit signed off on Citi's annual report, which stated that everything regarding valuation of its assets, including its mortgage-backed securities, was in proper order.

This is yet one more instance in which a few intrepid reporters and bloggers have more on the ball than the SEC, FINRA, and the Department of Justice combined.

Weil's article is posted below.


Source - Jonathan Weil (Bloomberg)

What Vikram Pandit Knew, and When He Knew It

On Feb. 14, 2008, the Office of the Comptroller of the Currency sent a seven-page letter to Citigroup Inc.’s chief executive, Vikram Pandit, summarizing the results of a special supervisory review its bank examiners had recently concluded.

The gist of the regulator’s findings: Citigroup’s internal controls were a mess. So were its valuation methods for subprime mortgage bonds, which had spawned record losses at the bank. Among other things, “weaknesses were noted with model documentation, validation and control group oversight,” the letter said. The main valuation model Citigroup was using “is not in a controlled environment.” In other words, the model wasn’t reliable.

Here’s where the timeline gets curious. Eight days later, on Feb. 22, Citigroup filed its annual report to shareholders, in which it said “management believes that, as of Dec. 31, 2007, the company’s internal control over financial reporting is effective.” Pandit certified the report personally, including the part about Citigroup’s internal controls. So did Citigroup’s chief financial officer at the time, Gary Crittenden.

The annual report also included a Feb. 22 letter from KPMG LLP, Citigroup’s outside auditor, vouching for the effectiveness of the company’s financial-reporting controls. Nowhere did Citigroup or KPMG mention any of the problems cited by the OCC. KPMG, which earned $88.1 million in fees from Citigroup for 2007, should have been aware of them, too. The lead partner on KPMG’s Citigroup audit, William O’Mara, was listed on the “cc” line of the OCC’s Feb. 14 letter.
Unanswered Questions

So, what did Citigroup and KPMG know, and when did they know it? Those are questions the Financial Crisis Inquiry Commission should have answered, but didn’t.

The OCC’s letter to Pandit was one of hundreds of newly released documents the FCIC posted to its website before it closed shop this month. As far as I can tell, there’s no indication the commission asked anyone at Citigroup or KPMG to explain how they justified their assurances about Citigroup’s internal controls in the face of the OCC’s criticisms. KPMG’s name doesn’t even appear anywhere in the FCIC’s 545-page report.

The key players aren’t talking now, either. Pandit, Crittenden and O’Mara didn’t return phone calls. A KPMG spokesman, George Ledwith, declined to comment, as did an OCC spokesman, Kevin Mukri. A Citigroup spokeswoman, Shannon Bell, declined to discuss the OCC’s findings, though in an e-mail she said the certifications by Pandit and Crittenden were “entirely appropriate.”

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Why It Is Here And Why It Is Going To Be Very Painful

Are you ready for an economy that has high inflation and high unemployment at the same time? Well, welcome to "Stagflation 2011". Stagflation exists when inflation and unemployment are both at high levels at the same time. Of course we all know about the high unemployment situation already. Gallup's daily tracking poll says that the U.S. unemployment rate has been hovering around 10 percent all year so far. But now thanks to rapidly rising food prices and the exploding price of oil, rampant inflation is being added to the equation. Normally inflation is a sign of increased economic activity, but when the basic commodities that we depend on to run our economy (such as oil) go up in price it actually causes a slowdown in economy activity. When the price of oil goes up high enough, it fundamentally changes the behavior of individuals and businesses. Suddenly certain types of economic activities that were feasible when oil was very cheap are not profitable any longer. When the price of oil rises to a new level and it stays there, essentially what is happening is that more "blood" is being drained out of our economy. Our economy will continue to function when there are higher oil prices, it will just be a lot more sluggish.

In some way, shape or form the price of oil factors into the production of most of our goods and services and it also factors into the transportation of most of our goods and services. A significant rise in the price of oil changes the economic equation for almost every business in the United States.

Today, the price of WTI crude soared past 100 dollars a barrel before closing at $98.10. The price of Brent crude increased 5.3 percent to $111.25. The protests in Libya are certainly causing a lot of the price activity that we have seen over the past few days, but the truth is that oil has been going up for a number of months. Right now we are only seeing an acceleration of the long-term trend.

Things are likely to get far worse if the "day of rage" planned for Saudi Arabia next month turns into a full-blown revolution. Up to this point, the revolutions that have been sweeping the Middle East have been organized largely on Facebook, and now there are calls all over Facebook for the "Saudi revolution" to start on March 20th.

That date is less than 4 weeks away. If Saudi Arabia plunges into chaos, the price of oil is going to go through the roof.

A rapidly rising price for oil is really bad news for the U.S. economy, because it is going to mean lots of inflation. Unfortunately, this also comes at a time when the economy is also feeling the inflationary effects of more quantitative easing by the Federal Reserve.

So if rising oil prices are going to cause more inflation and if rising oil prices are also going to cause our economy to become even more sluggish, what does all of that add up to?

It adds up to stagflation.

Wikipedia defines stagflation in the following manner....

In economics, stagflation is the situation when both the inflation rate and the unemployment rate are persistently high.

This is going to rapidly become the "new normal" for America. High oil prices are going to cause the cost of just about everything to go up, and high oil prices are also going to cause the economy to slow down thus making the unemployment numbers even worse.

It is going to be just like the 1970s all over again.

Only worse.

Economists differ as to how much rising oil prices affect U.S. GDP, but almost all of them agree that rising oil prices do cause a decline in U.S. GDP at least to some extent.

If American families have to spend $10 or $20 more each time they visit a gas station, that means that they are going to have less discretionary income. They won't be able to spend as much at the stores.

Not only that, but since the price of oil affects the price of almost everything else, Americans will find that their dollars have reduced purchasing power.

An oil crisis would force American families to stretch their already overburdened budgets even farther.

So where is the price of gasoline going from here? Well, the average price of gasoline in the United States is rapidly sneaking up on the $3.20 a gallon mark. Almost everyone believes that it is going to be going significantly higher.

Tom Kloza, the chief analyst for the Oil Price Information Service, was recently quoted in USA Today as saying that he believes that the average price for gasoline in the United States will reach somewhere between $3.50 and $3.75 a gallon by April.

As I wrote about yesterday, there are other analysts that believe that we are going to see $4.00 gasoline in the United States by the end of the year, and there are some that believe that we could see $5.00 gasoline if revolution sweeps Saudi Arabia.

If gasoline becomes that expensive and it stays there for a while, it is going to seriously start affecting the behavior of American businesses and American consumers.

Just remember what happened back in 2008. Andrew Busch of BMO Capital Markets recently told CNBC the following....

"Remember when oil was last at $140 (a barrel), Americans reacted and cut the amount of miles they drove."

Can you imagine what it would do to the economy if millions of Americans start sitting in their homes instead of doing their normal amounts of driving and flying?

In addition, one of the biggest problems with a higher price for oil is that it would cause our trade deficit to explode. According to the U.S. government, more than half of the oil that we use is imported. So every month we send the rest of the world billions and billions of our dollars and they send us massive amounts of oil. We rapidly consume all of the oil they send us and we continually need more. So we keep sending larger and larger amounts of money overseas and they keep sending us larger amounts of oil. In the process, our national wealth is being drained at an astounding rate. It is one of the greatest transfers of wealth the world has ever seen.

When the price of oil rises substantially, the transfer of wealth accelerates. This is a very bad thing for the U.S. economy. For example, when oil prices were above $100 a barrel back in 2008 our trade deficit for the year was almost 700 billion dollars.

It would be great if the Middle East would settle down and oil prices would start declining because that would really help out the U.S. economy. Unfortunately, it does not look like that is going to happen. Instead, it appears that we are steamrolling directly towards stagflation. Anyone that lived through the stagflation of the 1970s knows that it is not a lot of fun.

The cold, hard reality of the matter is that without cheap oil our lifestyles are going to change. Our economy was not set up to run on expensive oil. If oil moves well above $100 a barrel and it stays there it is going to bring about significant societal changes.

For the rest of 2011, the price of oil will be the number one economic indicator to watch. If it gets too high it is going to be an absolute disaster for the U.S. economy.

Florida Sen. Rubio warns of U.S. debt 'death spiral'

Florida’s biggest Republican star, U.S. Sen. Marco Rubio, returned to the state Capitol Wednesday to give a pep talk to the House Republican caucus and warn that the American dream is in danger of drowning in debt.

“The math is straightforward. The federal government this year, in order to operate, will have to borrow one-and-a-half trillion dollars. – trillion dollars,” Rubio said.

“Medicare and Social Security as they currently are structured, is unsustainable,” he said to applause. “They will bankrupt themselves and ultimately bankrupt our country.”

But despite his calls for bipartisan solutions, Rubio gave no specifics and offered standard party-line fare to reduce spending and not raise taxes.

“Apart from all the ideological rhetoric,” he said, “an increase in taxes will destroy the ability of our economy to grow, which will mean less revenue to government. It’s a vicious cycle. They’re starting to doubt about our ability to pay our debt back.”

Speaking fluidly without notes, Rubio gave his address from the well of the Florida House, which he led as speaker in 2007 and ‘08. During his 18-minute speech Rubio compared the challenge of the nation’s debt to slavery and the two world wars. But he wasn’t all doom-and-gloom. The son of Cuban exiles paid homage to America, “the single greatest society in all of human history,” and wove in Reaganesque touches about the struggles and greatness of the common man.

Rubio’s friend and current state House Republican leader, Miami Rep. Carlos Lopez-Cantera, summed up the performance simply: “That’s why he’s a United States senator.”

And it’s also part of the reason why Rubio creamed Gov. Charlie Crist in the race for U.S. Senate, a campaign that propelled Rubio into national political stardom. But rather than seek the spotlight, Rubio has declined high-profile speaking engagements out of state in his first two months in office.

Prior to his speech, Rubio met privately with Gov. Rick Scott, Attorney General Pam Bondi and state Chief Financial Officer Jeff Atwater, all Republicans. Rubio said he discussed Panamanian and Colombian free-trade issues with Scott and discussed Bondi’s efforts to fight so-called “fake cocaine” sold under the guise as bath salts.

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Says administration has to make MERS legal. READ what else he implies "Banks Will Walk away from loans of those who Stand Up and Sue"

The legal counsel for MERS called Daniel Pennell of Naked Capitalism yesterday. What Richard Anderson of MERS told him, is so typical of the big banks and what they believe will or will not happen! It shows they believe they are ABOVE the law and the White House will twist the laws to make MERS foreclosure FRAUD legal!

What is also very interesting is him saying "That they would rather walk away from loans right now of those WHO FIGHT foreclosures than to have MORE judges RULE AGAINST THEM!

Did you get that? In other words - STAND UP RIGHT NOW AGAINST A FORECLOSURE! MERS banks would rather WALK AWAY than go to court to have more RULINGS AGAINST THEM! This is very important to understand right now! I believe there is a window of time, where the banks are running scared! Most Judges around the country are ruling by the law, there are some who still will not. But those cases can be appealed to a higher court which rules by the law. That has been happening around the country also!

Richard Anderson displays such cockiness as to say - MERS banks will do as they want and that Judges should not rule against them, due to the amount of mortgages they have in the U.S. (60% of mortgages are MERS).

Portions of article:

Mr. Anderson was in fact calling in response to an email I had sent to MERS last week (see below) asking how MERS intended to manage its response to the Agard case in N.Y. where judge Grossman clearly said (or in Mr. Anderson’s words “opined from the bench”) that MERS did not have the legal standing to assign mortgages.

As regards the Agard case in N.Y, Mr. Anderson first pointed out that MERS has 300 plus cases that support its legal position. He then went on to tell me that Judge Grossman did not understand or chose to ignore the laws of N.Y. and that his comments regarding MERS were nothing more than his “opining from the bench” and therefore had no legal relevance and because it was nothing more than an “opining” that there was nothing for MERS to appeal.

When I pointed out that the MERS announced changes to its membership agreements that followed so quickly on the heels of the Agard decision seemed to align almost exactly with the comments made by Judge Grossman, Mr. Anderson said that it was just a “coincidence of timing” and that the changes were just intended to avoid any potential legal issues and to improve and secure the MERS business process. It’s interesting in light of Mr. Anderson’s remarks that a Naked Capitalism reader reported yesterday that banks have been settling cases where MERS is at risk of getting an unfavorable judgment. As he wrote:
That’s not unexpected behavior–better to cave with small dollars than to lose plus have adverse law become embedded in the case law for an entire federal district. That makes it appear to non-specialists that the jurisprudence in favor of lenders/MERS is static.

I want to make sure everyone UNDERSTANDS the SIGNIFICANCE of the above Statement!!!!!!!

He is basically saying - They will WALK AWAY from people WHO SUE the banks, right to foreclosure! That is how I read it! Also, with out saying too much about my own case, I have been having the feeling MERS may decide to walk away from my case - without it going to court. I don't believe they will want a new state (Tn.) ruling against them, of which there has not been one before. This is why I say STAND UP NOW!

Here is another portion - of SUCH ARROGANCE on the part of the MERS lawyer

Mr. Anderson said that he could not comment on the OCC investigation or actions but then went on to say that no administration would allow, nor would it allow a judge’s ruling, to threaten the legal standing of a MERS member to take a home. He pointed out that MERS has some relationship with 60% of the mortgages in the country worth in the trillions of dollars. In other words, in his opinion, regardless of the law or the findings of the OCC, MERS is too important because of the dollars associated with its operation to be allowed to be found to be acting illegally.

"Off with their heads 2.0" - Gerald Celente with Sterling Faux on This Week In Money Feb 18th 2011

Providence plans to pink slip all teachers

Linda Borg
Providence Journal

PROVIDENCE — The school district plans to send out dismissal notices to every one of its 1,926 teachers, an unprecedented move that has union leaders up in arms.

In a letter sent to all teachers Tuesday, Supt. Tom Brady wrote that the Providence School Board on Thursday will vote on a resolution to dismiss every teacher, effective the last day of school.

In an e-mail sent to all teachers and School Department staff, Brady said, “We are forced to take this precautionary action by the March 1 deadline given the dire budget outline for the 2011-2012 school year in which we are projecting a near $40 million deficit for the district,” Brady wrote. “Since the full extent of the potential cuts to the school budget have yet to be determined, issuing a dismissal letter to all teachers was necessary to give the mayor, the School Board and the district maximum flexibility to consider every cost savings option, including reductions in staff.” State law requires that teachers be notified about potential changes to their employment status by March 1.

Read Full Article

SunTrust Chief Executive Wells's Pay Rises 34% as Pension Valuation Climbs

SunTrust Banks Inc., the Georgia lender that has yet to repay $4.85 billion in taxpayer bailout funds, reported a 34 percent increase in Chief Executive Officer James Wells’s 2010 compensation.

Wells’s total $10.3 million included $4.5 million in pay to be collected later, primarily boosted by the changing value of his pension benefits, the bank said today in a regulatory filing. He received $4.6 million in stock, more than three times as much as the previous year, it said. His salary was unchanged at $1.1 million, and he didn’t get a cash bonus or stock options. The bank reported a $3.3 million option award for 2009.

SunTrust, led by Wells since January of 2007, returned to quarterly profits last year for the first time since 2008 as it set aside less money to cover bad loans. The company may sell stock to repay funds received under the $700 billion Troubled Asset Relief Program, Wells, 64, told analysts last month.

He declined more than 552,900 stock options that were awarded for 2009, according to the filing. Had he accepted the grant, his total compensation for 2010 would have fallen 37 percent from the year earlier, the Atlanta-based company said.

SunTrust climbed 0.2 percent to $30.62 at 4:15 p.m. in New York Stock Exchange Trading today. The shares have advanced 35 percent in the past 12 months.

Using the Bank - a 1947 Public Domain Film

Troubled banks rise to highest level in 18 years

WASHINGTON -- The number of banks at risk of failing made up nearly 12 percent of all federally insured banks in the final three months of 2010, the highest level in 18 years.

The Federal Deposit Insurance Corp. said Wednesday that the number of banks on its confidential "problem" list rose to 884 in the October-December quarter, up from 860 in the previous quarter. Those are banks rated by examiners as having very low capital cushions against risk.

Twenty-two banks have failed so far this year. And more banks are at risk, even as the FDIC reported the industry's highest earnings as a group since the financial crisis hit three years ago.

Only a small fraction of the 7,657 federally insured banks -- about 1.4 percent with assets of more than $10 billion -- are driving the bulk of the earnings growth. They are the largest banks, including Bank of America, Citigroup, JPMorgan Chase and Wells Fargo.

The big banks accounted for about $20.6 billion of the industry earnings of $21.7 billion in the fourth quarter. The total earnings compared with a net loss of $1.8 billion in the same quarter of 2009. The agency said bank earnings were buoyed in the latest quarter by reduced charges for soured loans.

Most of the big banks have recovered with help from federal bailout money and record-low borrowing rates. On the other side, many smaller banks are struggling.

Last year, 157 U.S. banks were brought down by the soured economy

and mounting loan defaults. That was the most in one year since 1992, the height of the savings and loan crisis. They were mostly smaller or regional banks. The failures compare with 25 in 2008 and three in 2007. They cost the federal deposit insurance fund an estimated $21 billion in 2010.

Smaller and regional banks depend heavily on making loans for commercial property and development -- sectors that have suffered huge losses. Companies shut down in the recession, vacating shopping malls and office buildings financed by the loans.

Overall, banks' net income reached a three-year high of $87.5 billion in 2010. That contrasted with a loss of $10.6 billion in 2009.

Loan balances declined at a majority of U.S. banks in the October-December quarter, falling by $51.8 billion, or 0.4 percent, from the July-September quarter.

Bernie Sanders On What Banking Should Be: "It's Clear Bernanke's Magic Money Printing Is Working, It's Just Unclear For Whom"

Video - Sanders with Ratigan - Feb. 9, 2011

Excellent discussion. It's been a while since we've heard from the Vermont Senator, as he offers his views on Bernanke, inflation, the economy and jobs.

Below is an editorial penned by Sanders in December of 2010.


A Real Jaw Dropper at the Federal Reserve

By Senator Bernie Sanders

At a Senate Budget Committee hearing in 2009, I asked Fed Chairman Ben Bernanke to tell the American people the names of the financial institutions that received an unprecedented backdoor bailout from the Federal Reserve, how much they received, and the exact terms of this assistance. He refused. A year and a half later, as a result of an amendment that I was able to include in the Wall Street reform bill, we have begun to lift the veil of secrecy at the Fed, and the American people now have this information.

It is unfortunate that it took this long, and it is a shame that the biggest banks in America and Mr. Bernanke fought to keep this secret from the American public every step of the way. But, the details on this bailout are now on the Federal Reserve's website, and this is a major victory for the American taxpayer and for transparency in government.

Importantly, my amendment also required the Government Accountability Office to conduct a top-to-bottom audit of all of the emergency lending the Fed provided during the financial crisis to be completed on July 21, 2011, which will take a hard look at all of the potential conflicts of interest that took place with respect to this bailout. So, in many respects, details that the Fed was forced to divulge on Wednesday about the $3.3 trillion in emergency loans that until now were totally kept from public scrutiny, marked the beginning, not the end, of lifting the veil of secrecy at the Fed.

After years of stonewalling by the Fed, the American people are finally learning the incredible and jaw-dropping details of the Fed's multi-trillion-dollar bailout of Wall Street and corporate America. As a result of this disclosure, other members of Congress and I will be taking a very extensive look at all aspects of how the Federal Reserve functions and how we can make our financial institutions more responsive to the needs of ordinary Americans and small businesses.

What have we learned so far from the disclosure of more than 21,000 transactions? We have learned that the $700 billion Wall Street bailout signed into law by President George W. Bush turned out to be pocket change compared to the trillions and trillions of dollars in near-zero interest loans and other financial arrangements the Federal Reserve doled out to every major financial institution in this country. Among those are Goldman Sachs, which received nearly $600 billion; Morgan Stanley, which received nearly $2 trillion; Citigroup, which received $1.8 trillion; Bear Stearns, which received nearly $1 trillion, and Merrill Lynch, which received some $1.5 trillion in short term loans from the Fed.

We also learned that the Fed's multi-trillion bailout was not limited to Wall Street and big banks, but that some of the largest corporations in this country also received a very substantial bailout. Among those are General Electric, McDonald's, Caterpillar, Harley Davidson, Toyota and Verizon.

Perhaps most surprising is the huge sum that went to bail out foreign private banks and corporations including two European megabanks -- Deutsche Bank and Credit Suisse -- which were the largest beneficiaries of the Fed's purchase of mortgage-backed securities.

Deutsche Bank, a German lender, sold the Fed more than $290 billion worth of mortgage securities. Credit Suisse, a Swiss bank, sold the Fed more than $287 billion in mortgage bonds.

Has the Federal Reserve of the United States become the central bank of the world?

The Fed said that this bailout was necessary to prevent the world economy from going over a cliff. But three years after the start of the recession, millions of Americans remain unemployed and have lost their homes, life savings and ability to send their kids to college. Meanwhile, big banks and corporations have returned to making huge profits and paying their executives record-breaking compensation packages as if the financial crisis they started never happened.

What this disclosure tells us, among many other things, is that despite this huge taxpayer bailout, the Fed did not make the appropriate demands on these institutions necessary to rebuild our economy and protect the needs of ordinary Americans.

For example, at a time when big banks have nearly a trillion dollars in excess reserves parked at the Fed, the Fed did not require these institutions to increase lending to small- and medium-sized businesses as a condition of the bailout.

At a time when large corporations are more profitable than ever, the Fed did not demand that corporations that received this backdoor bailout create jobs and expand the economy once they returned to profitability.

I intend to investigate whether these secret Fed loans, in some cases, turned out to be direct corporate welfare to big banks that used these loans not to reinvest in the economy but rather to lend back to the federal government at a higher rate of interest by purchasing Treasury Securities. Instead of using this money to reinvest in the productive economy, I suspect a large portion of these near-zero interest loans were used to buy Treasury Securities at a higher interest rate providing free money to some of the largest financial institutions in this country. That is something that we have got to closely examine.

At a time when Wall Street executives are now making more money than before the financial crisis, how many big banks that paid back TARP funds in 2009 to avoid limits on executive compensation received no-strings-attached loans from the Federal Reserve?

At a time when millions of Americans are paying outrageously high credit card interest rates, why didn't the Fed require credit card issuers to lower interest rates as a condition of the bailout?

The four largest banks in this country (Bank of America, JP Morgan Chase, Wells Fargo, and Citigroup) issue half of all mortgages in this country. We now know that these banks received hundreds of billions from the Fed. How many Americans could have remained in their homes, if the Fed required these bailed-out banks to reduce mortgage payments as a condition of receiving these secret loans?

We have begun to lift the veil of secrecy at one of most important agencies in our government. What we are seeing is the incredible power of a small number of people who have incredible conflicts of interest getting incredible help from the taxpayers of this country while ignoring the needs of the people.


EX-CIA Analyst Beaten, Arrested for Turning His Back on Hillary Clinton.

Hundreds of repossessed homes and idle cranes go for auction in Ireland

Apartments that until a few years ago sold for $205,000 in the Celtic Tiger economy are now on the market at discounts as low as $34,167 during Ireland's first ever mass auction of repossessed homes.

As though to underline the scale of the nations fall from its financial boom times, fifteen cranes including two that were dedicated to the building of Anglo Irish Bank's half-completed headquarters in the city, are on on the block.

"Tower cranes were among the most sought-after heavy plant and machinery 10 years ago," Ricky Wilson of Wilsons Auctions told the press. "You couldn't buy them quick enough. Now they are left idle for two or three years on sites."

For those with the cash, property bargains abound. Even the upscale Dublin 4 district is offering apartments formerly on sale for $1,230,030 for a previously unheard of reserve price closer to $300,674.

The mass property auction will be held on 15 April in the upscale Shelbourne Hotel, one of Dublin's premiere venues.

Most of the lots for auction were previously owned by Irish property investors who have either gone into receivership or simply handed over the keys to the banks.

Thousands protest against high food prices in Delhi

Thousands of people have gathered in the Indian capital, Delhi, to take part in a rally to protest against rising food prices and unemployment.

A steady stream of protesters, carrying red flags, has been marching through the streets of central Delhi since early morning.

The rally has led to massive traffic jams in the city.

Trade unions who have called the rally say nearly 40,000 people will attend a meeting at the Ramlila grounds.

Thousands will then march to parliament, they say.

Security is tight across the city with thousands of policemen deployed at the rally ground and along the route of the march.

The protest has been organised by major trade unions, including the All India Trade Union Congress (AITUC) and the Centre for Industrial Trade Union (CITU).

The Indian National Trade Union Congress (INTUC) - which is backed by the governing Congress party - is also supporting the strike saying it wants to remind the government about its commitments to the poor.

A CITU statement said workers from 19 states, thousands of women among them, were participating in the march.

Food inflation has been consistently rising in India, pushing up household budgets.

The cost of pulses, milk, wheat, rice and vegetables has gone up sharply. Finance Minister Pranab Mukherjee has said food prices are an "area of concern".

Obama's Top Economist Discloses Why The Administration Refused To Support U.S. Manufacturing

For the past two years, executives of domestic manufacturing companies -- along with their workers -- were in a daze, wondering why the Obama administration pushed no policies to counter the hemorrhage and the continued offshoring of American production.

Now it is clear.

Obama's outgoing chief economist Lawrence Summers does not think it necessary for the United States to mass-produce products that would be consumed by hundreds of millions of Americans. Summers justifies this position by stating that even the number of manufacturing jobs in China is declining, when in fact, they are not.


The Obama administration's top economic policy maker's argument is not correct, however. The latest data available from the Department of Labor's International Labor Comparisons Program found that China's manufacturing employment is not in decline but instead rose by an astounding 11 million workers between 2002 and 2006, to 112 million. In four years, China added as many manufacturing jobs as exist in the United States.

Homeless man jailed for a week for begging in Belfast

A homeless man who admitted begging in Belfast has been jailed for a week after being unable to pay a fine.

Piotr Dabrowski, 58, could not pay the £80 imposed for the offence when he appeared at the city's Magistrates Court.

The district judge refused to give him a conditional discharge saying he had two other begging convictions and that it was clear they had not deterred him.

Offshoring American Jobs: An Ongoing Economic Catastrophe

The real war underway right now isn't being fought with terrorists. It's being waged by the wealthy on the middle class and poor.

PL Editorial

There's a tremendous, and rapidly growing, gap in the distribution of wealth in American society. While there will always be some gap in any meritocratic society, most of the current yawning chasm isn't due to differences in merit between the ultrawealthy and the middle class and poor. Rather, it's due to an ever-increasing imbalance of political and economic power, which has dramatically shifted since the mid-70s to favor the wealthy. Secondarily, it's due to the capture of almost the entirety of the mass media by the ultrawealthy, and its transformation in their hands into an incredibly effective instrument of propaganda on their own behalf.

PL Editorial

What's Wrong With This Idea?: "We'll Create Good American Jobs by Offshoring Them All "

This is what Americans were told some time ago when good manufacturing jobs were offshored (largely courtesy of the National Association of Manufacturers).

We were told that we were entering a new economy that had nothing to do with manufacturing. The offshoring was part of the "maturation of our economy." And so we were handed a promissory note that read as follows:

"Dear American: We don't like unions or high-paying union jobs, so we're sending manufacturing jobs offshore. We're not going to support the communities that this will disastrously impact when all those jobs are lost. We're going to do little or nothing to retrain the individuals who have lost those jobs due to offshoring. But don't worry. The stock market will do better, and trickle-down theory tells us that someday, somehow, good jobs, different jobs, will come back to America.

Mr. Nobody"

What happened? Well, those jobs didn't come back, and they weren't replaced with anything. Of course, the stock market hasn't been exactly booming, either, and job losses continue apace despite the "stimulus" package. The result: Mr. Nobody has gotten off scott free for the economic carnage that he wrought. Of course, that was predictable. No one is offshoring jobs to the United States, and "Mr. Nobody" runs the government, even under Obama (largely due to the fact that the worst American politicans weren't voted out in the 2008 election cycle). To this day, many of those areas of America that were involved in manufacturing remain blighted (Detroit has become a virtual ghost town). And if that doesn't make you mad, it should. No matter what you do for a living, chances are you'd be earning more now if it hadn't happened. We'll explain that point more fully in a moment.

For the millions of unemployed or underemployed, and for the many millions more who are fearful for their jobs, improvements in the performance of the stock market mean nothing at all, unless that improvement also entails an increase in jobs and job security. And stock market profitability can't be sustained without consumer demand. ("Consumer" currently meaning, in large part, "an individual who is unemployed, underemployed, or fearful of losing his or her job".) Job creation in the service sector of the economy, which was much trumpeted by the Bush administration, was no solution either. In fact, those jobs were a problem: they paid badly, and offered little in the way of benefits. In short, they amounted to a way of creating greater numbers of underemployed. Even those lousy jobs didn't exactly pour in. For example, in July, 2005, 207,000 jobs were created, virtually all of them in the service sector. The better part of them were in sales. (Ever done commission sales? Sometimes you have a paycheck. Sometimes you don't.) But 150,000 new jobs are needed each month just to keep pace with the increased needs resulting from immigration and new workers entering the workforce. And not only was this hyper-modest level of growth not sustained, we instead plummeted into massive job losses. (You can keep up with the latest developments at this url: .) Now, of course, existing jobs continue to leave the economy at about the same rate that new ones are needed.

Bush Economic Policies Were Directly Responsible

Of course, it's not much of a secret that the American economy was a catastrophe for the entire course of the Bush administration. What does seem to be something of an open secret is the fact that economic policies embraced by Bush, and not coincidentally endorsed by transnational corporations (= Wall Street) and the financial sector, exacerbated that poor performance, and, as we predicted some years back (in 2005), helped transform it into an economic meltdown. (The sub-prime mortgage fiasco was only the tip of the iceberg, and wouldn't have been nearly as virulent as it has been if Americans had had better jobs.).

As we just noted, the economy has nowhere to go when consumers have no money to spend. Consumers have no money to spend when they're unemployed, and are much less likely to spend when they're underemployed or fear for their jobs. This kind of scenario sets the stage for a deflationary economy, in which consumers with less to spend reduce demand, which reduces prices, which reduces profit margins, which results in layoffs, which results in even greater fears of job loss. A stimulus package can't reverse this dynamic indefinitely. Only robust job creation can do that.

Bad? You bet. But the Worst may be Yet to Come.

The year and a half prior to 9/11 saw the loss of 1.6 million American jobs. The six months following 9/11 saw the loss of an additional 2.5 million American jobs. Obviously, Americans are right in believing they have a lot to fear; but the truth is that they have far more to fear than they have yet realized. That's because, if offshoring isn't reversed, millions and millions and millions more American jobs are going to be lost in the decade ahead, particularly better-paying jobs. How many more millions? A good question. Incredibly, the government still isn't even keeping track of the jobs already being lost to offshoring, nor is the media doing much of anything to report that rate (a state of affairs that must be intentional). But one estimate is that one-third of all US jobs are offshorable, and many of these are the kind of jobs that underpin the American middle-class, upon which the entire economy depends. This would, of course, mean that there would never be a true recovery from the meltdown of 2008.

How Did We Get Here?

Certainly not by accident. Most of this job loss is due to the process euphemistically known as "globalization", and globalization is no blind force of history or economics. You've heard of NAFTA and the WTO? They're part of the globalization framework. And the FTAA Bush so strongly endorsed was more of the same — but much worse.

Globalization has deep historical roots. The process has been aggressively fostered by the wealthy for years through the corporate corruption of governments all over the world, including that of the US, and through the corruption of international institutions like the World Bank and the IMF which, in effect, utilize a vicious version of economic blackmail on behalf of large corporations with no loyalty to any nation. While globalization is a complex phenomenon with many aspects, one of the simplest to understand is this: when American-based companies are subsidized for shipping American jobs overseas, they will. (Despite Obama rhetoric, nothing has yet been done about this.) Indeed, the only jobs that aren't likely to be so exported are those tied directly to local economies — mostly the badly paying service jobs we mentioned earlier. This situation is wonderful, certainly, for those already wealthy (since the mid-70s the only real winners in the globalizing economy), but the process of job exporting can only crush the middle class, because there will always be immense pools of cheap labor overseas.

The Fantasies of Wall Street

Absurdly, Americans have been urged to "retrain" or acquire "additional skills" in the face of the trend to send jobs offshore — as if the vast majority of jobs they might retrain for couldn't just as easily be sent offshore, too, no matter what "additional skills" they might acquire. Too, the exporting of any job from any sector increases pressure on all the remaining sectors, because it increases the labor supply and drives down wages for everybody. Worst of all, the offshoring trend, though slowed for the moment in the face of public outrage, may well begin accelerating again, possibly even faster; and if this occurs it will continue to make for tremendous economic turbulence, which will make it difficult to even guess what to retrain for. No, what Wall Street has really meant all along is this: "Americans should retrain themselves, at their own expense, of course, for less skilled jobs for lower pay and fewer benefits."

As we noted above, some have claimed that the savings corporations realize by offshoring jobs are ultimately returned to investors and are thereby eventually pumped back into the economy. This argument no longer has a leg to stand on. If it had been true, the events of 2008 would have been far less dire, which makes it clear that the argument was simply another version of long discredited trickle-down economics. How much in the way of goods can, say, a Bill Gates possibly buy? We've already seen in the clearest possible terms that that the process doesn't automatically entail domestic job creation, and globalization weakens labor unions, by far the most effective force (indeed, very nearly the only one) for promoting wage increases. Since jobs that are offshored are gone for good, the very likely fate of a person who has lost a manufacturing job is to eventually get a lower-paid job after a long period of unemployment — and that represents a permanent or semi-permanent loss of income. And other troubling questions remain: whose economy, and which investors profit? When the products that are purchased are increasingly overseas imports, who ends up with most of the that profit? Today, incredibly, the US has piled up more debt with China than any other country in the world. Moreover, even today, most US stock is held by those already wealthy. The truth is that of the total gain in marketable wealth from 1983 to 1998, more than half went to the richest 1 percent, and they don't buy much in the way of goods (rather, they tend to place that money in the stock market, thereby creating economic bubbles of the kind we saw in 2001). Of course, even if it were true, trickle-down theory doesn't address the massive problems of environmental degradation, the loss of national sovereignty, and the assaults on democracy also engendered by globalization.

The Reality on Main Street

The upshot of all of this is that you can run, but you can't hide.

The corporate cure for accelerating unemployment due to globalization and offshoring is so much snake oil, and was never more than a very deliberate effort to obscure the deadly seriousness of the problem. Neither retraining nor re-education are, or even conceivably could be, the answer for most Americans; and trade imbalances and job loss and career destabilization and environmental and community destruction vitiate whatever little benefit might be derived from globalization for working Americans. The "wall" that most politicians are telling us we can't build around the American employment market is the dike that must be built if we are to retain quality jobs. Or, to change metaphors, it's the compression bandage that should have been applied years ago when we began hemorrhaging manufacturing jobs.

What Can Be Done?

For better or for worse, this is one issue that, in the short term, can only be addressed by political action and/or massively increased unionization.

The transnationals, who have been anticipating this response for some time, continue to scream (as they always scream) that regulation and unionization aren't the answer (again, they suggest retraining). But aside from economic logic, history also makes it clear that these are the only possible answers.

Why Does Wall Street Hate Americans?

For half of the existence of America, slavery, the ownership of another human being for purposes of economic exploitation, was legal. Why? Because the slaveowners were addicted to cheap labor. Even child labor was legal in the United States until the agitation of Progressives (especially that of Mother Jones) finally forced businessmen to eliminate the practice in 1938. How could an institution as pernicious as child labor have remained legal for so long? Because businessmen were addicted to cheap labor. And all of this is to say nothing of the horrific conditions of employment that Upton Sinclair wrote of, or the incredibly long working weeks and low wages that were endemic until Americans organized, unionized, and legislative reforms were passed over the vociferous objections and treacherous backroom maneuvering of businessmen. Indeed, it was in large part unionization and regulatory legislative reform, and emphatically not trickle-down, that set the stage for a prosperous post World War II middle class.

Now, we have globalization and the offshoring of jobs. The addiction is no less gripping, and is vastly more far-reaching; and this is why the need for reform legislation hasn't been so urgent since the 1930s. The sooner we curtail this latest addiction, the better the chances of effective control.

The alternative, continued offshoring, the impact of which has already contributed immensely to something close to the outright destruction of the American middle class, would have truly catastrophic consequences for the American economy; and since the US economy is the workhorse of the international economy, the consequences would unquestionably be global, affecting virtually all of humanity. Some have said there's no going "back". The truth, however, is the world can't go "forward" with policies desired almost exclusively by the CEOs of self-interested transnational corporations. If there is to be globalization at all, it must look radically different from anything currently on the table, and it must proceed at a far slower pace.

What steps, then, to take?

  • First, we suggest that you further educate yourself regarding the nature of globalization. The most indispensable reading here is David Korten's When Corporations Rule the World. You might also consider subscribing to the Nader-founded Multinational Monitor, which will keep you abreast of more current developments. So will Public Citizen's Global Trade Watch. A book that focuses a little more narrowly on jobs and on how offshoring came about is America: What Went Wrong? by Donald Barlett and James Steele. Conservatives take note (and everyone else, too): Chapter 11 of NAFTA is an end-run around the US constitution. So is Chapter 10 of CAFTA. Get the details.
  • The US should return to steeply progressive income taxes. When the ultrawealthy have nothing to gain from the process of globalization, the process will soon slow. This would also set the stage for desperately needed, and effective, trickle-up economics. When you put more money in the hands of working Americans, that money finds its way into the economy quickly.
  • American voters should be very, very wary of voting Republican. While the Democratic track record on globalization is poor, it is nevertheless enormously better than the dismal record of the Republicans. (Most continue to aggressively promote globalization.) No matter how the economy performs under Obama, it has nowhere at all to go except collapse under Republican leadership.
  • Work to oppose Republican trade policies. There was never a president more pro-globalization and pro-offshoring than George Bush. Even with Republican majorities in the House and Senate, CAFTA was very nearly defeated because of pressure from American voters. For all of his patriotic posturing, Bush was the most virulently anti-American president in US history, if by "America" we mean working Americans.
  • H-1B and L1 visa programs were responsible for the loss of more than a million American jobs to overseas workers, even as American IT workers searched for work. It's time to eliminate provisions for job shortages that don't exist (and never did). Keep a close eye on immigration plans, which can, in effect, be job giveaway programs.
  • Incredibly, even in late 2009, US taxpayers are still funding numerous Federal programs that provide incentives for US corporations to relocate their jobs offshore by way of providing loans, subsidies, credits, or loan guarantees. All such funding and all such incentives must cease immediately. (Again, Obama has promised action that hasn't materialized.) Funding and incentives to keep jobs in the US should take their place. Penalties for offshoring should receive study. Fines or taxes levied on job-exporting corporations could be devoted to extending unemployment compensation benefits, funding for small business creation by the unemployed, and so forth.
  • US funding of the World Bank (which brokers many deals that result in job exporting) and the IMF should be tapered off and eventually eliminated. Both institutions should be scrapped and alternative institutions created from scratch.
  • The FTAA, CAFTA, and other globalization-promoting accords must be scuttled. Organizations promoting globalization, such as the National Association of Manufacturers, should receive greater media scrutiny, and their position, and its dismal implications for US employment, should be exposed.
  • Corporations exporting the largest number of jobs should be identified and boycotted.
  • Americans must cure themselves of their addiction to television and newspaper news. Very nearly all of the mass media are very much in favor of globalization, and, although they're careful to hide it well, are rabidly opposed to unionization. Instead, we suggest that you consider subscribing to one of the news sources mentioned in our political field guide or our guide to legitimate, democratic media.
  • Oppose further media consolidation. The implications of globalization aren't being adequately reported. Support media diversification (PBS and NPR are doing by far the best job among the mass media, but are still under-reporting most globalization-related issues). The Media Access Project is doing good work in the area of diversification.
  • Since the corporate media are flatly opposed to the interests of ordinary Americans on this issue, it's up to working people to get the word out. Share this editorial with your friends and family.
  • If your workplace is unionized, consider joining. If it's not unionized, consider organizing one. Work to remove all barriers to union organizing.
  • Write the media and write your representatives regarding your concerns about globalization and offshoring. Here are the basic tools:
    Write your congressperson here:
    Write your senator here:
    Determine who's telling your representatives to vote against working Americans here: . Don't spend your money with those companies.
  • Support organizations working to get corporate money out of government. The standard bearer for years has been Common Cause: Organizations working for publicly funded elections also merit your support.
  • Corporate capitalism is in urgent need of fundamental reforms. The point is made devastatingly in Marjorie Kelly's critique "The Divine Right of Capital." The biggest, best-kept political and economic secret today is the fact that other forms of capitalism are possible, have been immensely successful, and some give working people a much fairer shake. See our section on economics for details of Mondragon capitalism. There's a link below. You can also read our essay "Capitalism, Socialism, and Communism: What They Are, Why They Don't Work, What Works Better".
  • Some web links dealing with the offshoring of jobs are as follows: (high tech jobs are being particularly hard hit by offshoring practices - and that affects everyone, no matter what they do for a living)
  • Local economic self-sufficiency should be maximized instead of global economic dependency. Numerous practices for greening the global economy can be found in our economics field guide.
  • Tips for who to vote against can be found in our Field Guide to American Politicians.

If working Americans don't take immediate steps to stop globalization, who will? And if globalization isn't stopped, the consequences will be dire indeed.

The Editors
Progressive Living

Obama Administration Pushing For A Global, $20 Billion Settlement To End Foreclosuregate

The Obama administration wants to push through a massive settlement over mortgage-servicing breakdowns that could force the nation's biggest lenders to shell out more than $20 billion in fines, or to at least fund the same amount in loan modifications for troubled borrowers, the WSJ reports.

According to Reuters, the terms of the proposal, which would obviously require a commitment from the mortgage servicers themselves, have not yet been presented to the banks.

The White House hopes such a deal would allow the foreclosure process to start ramping up again.

To get a far-reaching settlement, the White House needs to get the approval of federal regulators, state attorneys general, and of course, the lenders themselves.

14 firms including Bank of America, Wells Fargo and JP Morgan, would be involved, according to the WSJ.

"Nothing has been finalized among the states, and it's our understanding that the federal agencies we are in discussions with have not finalized their positions," a spokesman for Iowa's Attorney General Tom Miller, who is leading a country-wide investigation of mortgage-servicing practices, told the paper.

Under the settlement:

  • Banks, not investors, would bear the cost of all writedowns
  • There would be no new government programs developed to reduce principal. Rather, the lenders will devise their own modifications or use existing government programs.
  • Banks will have to reduce second-lien mortgages when first mortgages are modified.

Issues with any settlement include the fact that principal reductions may result in other problems; there's questions over determining who gets approved for reductions and who misses out; even if the $20 billion figure is given the go-ahead by servicers, that figure would barely touch the sides of the mortgage mess -- "the number of mortgages that can be cured with that number is limited."

From the WSJ ,

If a single settlement can't be reached, different federal agencies could seek smaller penalties through regular enforcement channels, and banks could face the prospect of separate civil actions from state attorneys general.

How Walker's Wisconsin Plan Allows For the Selling of Energy Assets With No Bids.

Have you heard about 16.896?

The fight in Wisconsin is over Governor Walker's 144-page Budget Repair Bill. The parts everyone is focusing on have to do with the right to collectively bargain being stripped from public sector unions (except for the unions that supported Walker running for Governor). Focusing on this misses a large part of what the bill would do. Check out this language, from the same bill (my bold):

16.896 Sale or contractual operation of state−owned heating, cooling, and power plants. (1) Notwithstanding ss. 13.48 (14) (am) and 16.705 (1), the department may sell any state−owned heating, cooling, and power plant or may contract with a private entity for the operation of any such plant, with or without solicitation of bids, for any amount that the department determines to be in the best interest of the state. Notwithstanding ss. 196.49 and 196.80, no approval or certification of the public service commission is necessary for a public utility to purchase, or contract for the operation of, such a plant, and any such purchase is considered to be in the public interest and to comply with the criteria for certification of a project under s. 196.49 (3) (b). (Emphasis mine – Ilene)

The bill would allow for the selling of state-owned heating/cooling/power plants without bids and without concern for the legally-defined public interest. This excellent catch is from Ed at (who, speaking of Madison, took me to the Essen Haus on my 21st birthday, where the night began to go sideways). Ed correctly notes:

If this isn't the best summary of the goals of modern conservatism, I don't know what is. It's like a highlight reel of all of the tomahawk dunks of neo-Gilded Age corporatism: privatization, no-bid contracts, deregulation, and naked cronyism. Extra bonus points for the explicit effort to legally redefine the term “public interest” as “whatever the energy industry lobbyists we appoint to these unelected bureaucratic positions say it is.”

In case it isn't clear where the naked cronyism comes in, remember which large, politically active private interest loves buying up power plants and already has considerable interests in Wisconsin. Then consider their demonstrated eagerness to help Mr. Walker get elected and bus in carpetbaggers to have a sad little pro-Mubarak style “rally” in his honor. There are dots to be connected here, but doing so might not

KOCH PRANK CALL: Listen To Wisconsin Gov. Scott Walker As He Thinks He's Talking To Billionaire David Koch

This is part 1; scroll down for audio part 2.

Below is a complete transcript of the Buffalo Beast prank conversation with Gov. Scott Walker Tuesday. Ian Murphy of the Beast poses on the call as David Koch, a billionaire contributor to Walker's 2010 campaign.



Walker: Hi; this is Scott Walker.

Murphy: Scott! David Koch. How are you?

Walker: Hey, David! I’m good. And yourself?

Murphy: I’m very well. I’m a little disheartened by the situation there, but, uh, what’s the latest?

Walker: Well, we’re actually hanging pretty tough. I mean, you know, amazingly there’s a much smaller group of protesters almost all of whom are in from other states today. The State Assembly is taking the bill up, getting it all the way to the last point it can be at where it’s unamendable. But they’re waiting to pass it until the Senate’s — the Senate Democrats, excuse me, the assembly Democrats have about a hundred amendments they’re going through. The state Senate still has the 14 members missing but what they’re doing today is bringing up all sorts of other nonfiscal items, many of which are things members in the Democratic side care about. And each day we’re going to ratchet it up a little bit. The Senate majority leader had a great plan he told about this morning — he told the Senate Democrats about and he’s going to announce it later today — and that is: The Senate organization committee is going to meet and pass a rule that says if you don’t show up for two consecutive days on a session day in the state Senate, the Senate chief clerk — it’s a little procedural thing here, but — can actually have your payroll stopped from being automatically deducted —

Murphy: Beautiful.

Walker: — into your checking account and instead, you still get a check, but the check has to be personally picked up and he’s instructing them — which we just loved — to lock them in their desk on the floor of the state Senate.

Murphy: Now you’re not talking to any of these Democrat bastards, are you?

Walker: Ah, I, there’s one guy that’s actually voted with me on a bunch of things I called on Saturday for about 45 minutes, mainly to tell him that while I appreciate his friendship and he’s worked with us on other things, to tell him I wasn’t going to budge.

Murphy: [Expletive] right!

Walker: Mainly because I thought he’s about the only reasonable one over there, I figured if I talked to him, he’d go back to the rest of the gang and say you know, I know Walker and he’s not budging.

Murphy: Now what’s his name again?

Walker: Uh, his name is Tim Cullen —

Murphy: All right, I’ll have to give that man a call.

Walker: Well, actually, in his case I wouldn’t call him and I’ll tell you why: He’s pretty reasonable but he’s not one of us. So I would let him be. I think he is in a position where he can maybe motivate that caucus. But he’s not an ally, he’s just a guy. He was in the Senate years ago, he was actually the Senate Democratic leader back in the ’80s and (former Gov.) Tommy Thompson hired him to be the head of Health and Human Services. He went into the private sector, made real money and became a little more open-minded, and last fall he got elected to the Senate seat he was in 25 years ago. And he’s kind of one of these guys who he really doesn’t care, he’s not there for political reasons, he’s just trying to get something done. So he’s good to reach out to for me, but he’s not a conservative, he’s just a pragmatist.

Murphy: Now who can we get to budge on this collective bargaining?

Walker: Well, I think in the end, a couple of things. One, if the, I think the paycheck will have an impact. Secondly, one of the things we’re looking at next, we’ll probably announce in the next day or two — we’ve been working with our Republican leaders in the Legislature — we’re still waiting on an opinion to see if the unions have been paying to put these guys up out of state. We think there’s at a minimum an ethics violation if not an outright felony.

Murphy: Well, they’re probably putting hobos in suits.

Walker: Yeah.

Murphy: That’s what we do. Sometimes.

Walker: I mean paying for the senators to be put up. I know they’re paying for these guys to be here — I mean, people can pay for protesters to come in and that’s not an ethics code, but, I mean, literally if the unions are paying the 14 senators, if they’re paying for their food, their lodging, anything like that, we believe at a minimum it’s an ethics code violation and it may very well be a felony, misconduct in office. Because see technically, it’s not just a political contribution, it is, if they’re being paid to keep them from doing their job, we think that there’s legally an obstruction of justice, but an obstruction of their ability to do their job, and we still got, the attorney general’s office is looking into it for us. So we’re trying about four or five different angles. Each day we crank up a little bit more pressure. The other thing is I’ve got layoff notices ready, we put out the at-risk notices, we’ll announce Thursday, they’ll go out early next week and we’ll probably get five to six thousand state workers will get at-risk notices for layoffs. We might ratchet that up a little bit too.

Murphy: Beautiful; beautiful. Gotta crush that union.

Walker: Well it’s one of those where in the end, and I’ve had not only Cullen — I’ve talked to him myself — I had three or four of my other business leader friends who know him over the years and just kind of pass the message on to these guys, if they think I’m caving, they’ve been asleep for the last eight years because I’ve taken on every major battle in Milwaukee County and won even in the county where I’m overwhelmingly overpowered politically and it’s because we don’t budge.

Murphy: [Expletive] right.

Walker: If you’re doing the right thing, you stay firm. And in this case, we say we’ll wait it out. If they want to start sacrificing thousands of public workers to be laid off, sooner or later there’s going to be pressure on these senators to come back.

Murphy: Beautiful.

Walker: We’re not compromising. The other thing we may do, ‘cause the senator I mentioned thinks that these guys, you’ve got a few of the radical ones who unfortunately one of them is the minority leader, but most the rest of them are just looking for a way to get out of this. And they’re scared out of their mind, they don’t know what it means. There’s a bunch of recalls up against them. They’d really like to just get up back here and get it over with. So the paycheck thing, some of the other things threatened them. I think collectively there’s enough going on and as long as they don’t think I’m going to cave, which again we have no interest in. An interesting idea that was brought up to me this morning by my chief of staff, we won’t do it until tomorrow is putting out an appeal to the Democrat leader that I would be willing to sit down and talk to him, the Assembly Democrat leader, plus the other two Republican leaders — talk, not negotiate and listen to what they have to say if they will in turn — but I’ll only do it if all 14 of them will come back and sit down in the state assembly. They can recess it to come back in the room to talk to me, but they all have to go back there. The reason is — we’re verifying it this afternoon — but legally, we believe, once they’ve gone into session, they don’t physically have to be there. If they’re actually in session for that day, and they take a recess, the 19 Senate Republicans could then go into action and they’d have a quorum because they started out that way. So we’re double checking that. If you heard that I was going to talk to them, that would be the only reason why. We would only do it if they came back to the Capitol with all 14 of them. My sense is hell, I’ll talk to them, if they want to yell at me for an hour, you know I’m used to that, I can deal with that, but I’m not negotiating.

Murphy: Bring a baseball bat. That’s what I’d do.

Walker: [Laughs] I have one in my office; you’d be happy with that. [Laughs] I have a Slugger with my name on it.

Murphy: Beautiful.

Walker: But in the end, this is, and I even pointed it out last night ‘cause I’m trying to keep out as many of the private unions as possible. I said, this is about the budget. This is about public sector unions. Hell, even FDR got is. There’s no place for the kind of, I mean, essentially you’re having taxpayers’ money being used to pay to lobby for spending more of taxpayers’ money. It’s absolutely ridiculous.

Murphy: Beautiful.

Walker: So this is ground zero, there’s no doubt about it. But I think for us, I just keep telling my, I call any, I tell the speaker, the Senate majority leader every night: Give me a list of people I need to call at home, shore ‘em up. The New York Times of all things, I don’t normally tell people to read The New York Times, but the front page of The New York Times has got a great story, one of these unbelievable moments of true journalism, what it’s supposed to be objective journalism. They got out of the Capitol and went down, one county south from the Capitol to Janesville, to Rock County, that’s where the General Motors plant once was. They moved out two years ago. The lead on this story is about a guy who was laid off two years ago, he’d been laid off twice by GM, who points out that everybody else in his town has had to sacrifice except for all these public employees, and it’s about damn time that they do and he supports me. And they had a bartender, and they had every stereotypical blue collar worker type they interviewed, and the only ones that weren’t with us were people who were either a public employee or married to a public employee. It’s an unbelievable story. So I went through and called a handful, a dozen or so lawmakers I worry about each day and said, “Every one of you should get that story printed out and send it to anyone giving you grief.”

Murphy: [Expletive] right! We, uh, we sent, uh, Andrew Breitbart down there.

Walker: Yeah.

Murphy: Yeah.

Walker: Good stuff.

Murphy: Yeah. He’s our man, you know.

Walker: Well it has been amazing to me, the massive amount of attention. I want to stay ahead, so every day I do a five o’clock press conference, tonight I’m actually doing a fireside chat, the state TV stations are picking up and I guess a bunch of the national ones too. And in the last couple of days when I do the TV shows, I’ve been going after Obama because he’s stuck his — although he’s backed off now — but he’s stuck his nose in here. And I said, they asked me what I thought about it, and I said the last time I checked, this guy’s got a much bigger budget deficit than we do, maybe he should worry about that and not stick his nose in Wisconsin’s business. We’ve had all the national shows, we were on Hannity (“The Sean Hannity Show”) last night, I did “Good Morning America” and “The Today Show” and all that sort of stuff, was on “Good Morning Joe” this morning. We’ve done Greta (“On The Record with Greta Van Susteren”). We’re going to keep getting our message out; Mark Levin (“The Mark Levin Show”) last night. And I gotta tell you, the response around the country has been phenomenal. I had Brian (Sadoval), the new Governor of Nevada, called me the last night he said — he was out in the Lincoln Day Circuit in the last two weekends — and he was kidding me, he’s new as well as me, he said, “Scott, don’t come to Nevada because I’d be afraid you beat me running for governor.” That’s all they want to talk about is what are you doing to help the governor of Wisconsin. I talk to Kasich every day, John’s gotta stand firm in Ohio. I think we could do the same thing with Vic Scott in Florida. I think, uh, (Rick) Snyder, if he got a little more support, probably could do that in Michigan. You start going down the list there’s a lot of us new governors that got elected to do something big.

Murphy: You’re the first domino.

Walker: Yep. This is our moment.

Murphy: Now what else could we do for you down there?

Walker: Well the biggest thing would be — and your guy on the ground (Americans For Prosperity President Tim Phillips) is probably seeing this, it would be well, two things. One, our members, originally the guy that got freaked out about all the bodies here — although I told him an interesting story, I was first elected county executive in Milwaukee of all places. First budget I put through was pretty bold, aggressive and the union went nuts on me and got all sorts of grief. But a couple of weeks later I’m at a Veterans Day parade and I’m going down the line and usually unless you’re a veteran or marching with a veterans’ group, politicians will get polite applause but nobody gets up. I come down the line, 40, 50 people in a row, hands up, thumbs up, you know cheering, screaming, yelling, “Way to go, hang in there, Walker.” And then after about 40, 50 people like that, there’s a guy flipping me off. This goes on 40, 50 [break in recording] … right thing, the people who know it’s right will cheer you, they’ll applaud you, they’ll run through a wall for you. And the people who don’t like you, they’re going to flip you off. But stop worrying about them because the other day there were 70,000 — probably two-thirds were against the bill, one-third were for — 70,000 people at the Capitol. All week there’s been fifteen to thirty thousand a day. But I remind all our lawmakers that there’s five and a half million people in this state. And just because a bunch of guys who can jump off of work because of their union work rules doesn’t mean the rest of the people in your district are with them. So the one thing in your question, the more groups that are encouraging people not just to show up but to call lawmakers and tell them to hang firm with the governor, the better. Because the more they get that assurance, the easier it is for them to vote yes. The other thing is more long term, and that is after this, you know the coming days and weeks and months ahead, particularly in some of these more swing areas, a lot of these guys are gonna need, they don’t actually need ads for them but they’re going to need a message put out reinforcing why this was a good thing to do for the economy and a good thing to do for the state. So the extent that that message is out over and over again is obviously a good thing.

Murphy: Right, right. We’ll back you any way we can. But what we were thinking about the crowd was, uh, was planting some troublemakers.

Walker: You know, well, the only problem with that — because we thought about that. The problem with — my only gut reaction to that would be, right now the lawmakers I’ve talked to have just completely had it with them. The public is not really fond of this. The teacher’s union did some polling and focus groups I think and found out that the public turned on them the minute they closed school down on them for a couple of days. The guys we’ve got left are largely from out of state and I keep dismissing it in all my press comments, saying ehh, they’re mostly from out of state. My only fear would be if there’s a ruckus caused is that would scare the public into thinking maybe the governor has to settle to avoid all these problems. You know, whereas I’ve said, hey, we can handle this, people can protest, this is Madison, you know, full of the ’60s liberals. Let ’em protest. It’s not going to affect us. And as long as we go back to our homes and the majority of people are telling us we’re doing the right thing, let ’em protest all they want. So that’s my gut reaction. I think it’s actually good if they’re constant, they’re noisy, but they’re quiet, nothing happens. Sooner or later the media stops finding them interesting.

Murphy: Well, not the liberal bastards on MSNBC.

Walker: Oh yeah, but who watches that? I mean I went on “Morning Joe” this morning. I like it because I just like being combative with those guys, but, uh. You know they’re off the deep end.

Murphy: Joe (Scarborough) — Joe’s a good guy. He’s one of us.

Walker: Yeah, he’s all right. He was fair to me. I mean, the rest of them were out there. Although I had fun, they had (New York Sen. Chuck) Schumer over from New York on ripping me, and then they had a little clip of a state senator hiding out ripping me, and it was almost too easy. I walked in, Joe asked me a question and I said, well, before I answer that, let me just point out the amazing irony of the fact that you’ve got a United States senator from New York, a senator who by the way is part of a team that can’t seem to balance the federal budget talking about my budget. At least he’s coming into work to talk about something, although it’s mine. And you’ve got one of these 14 state Senate Democrats who can’t even bother to show up and deal with the budget he’s elected to do something about. And uh, so that kind of tells you the whole story right there.

Murphy: Beautiful; beautiful. You gotta love that Mika Brzezinski (co-host of “Morning Joe”); she’s a real piece of [expletive].

Walker: Oh yeah. A couple weeks ago, I’d known Joe before, but I was having dinner with Jim Sensenbrenner when I came into D.C. for a day to do an event and we’d gone over to do the “The Greta Show” and had dinner with Congressman Sensenbrenner and right next to us was the two of them and their guest was [Obama’s Senior Adviser David] Axelrod. I came over, I introduced myself.

Murphy: That son of a [expletive]!

Walker: Yeah no kidding huh? Introduced myself and said I figured you probably knew who I was since your boss was campaigning against me but it’s always good to let them know you know what’s going on.

Murphy: Well, good; good. It’s good catching up with ya’.

Walker: Yeah, well thanks. This is an exciting time. This is, I told my cabinet, I had a dinner the Sunday uh, excuse me, Monday right after the sixth. Came home from the Super Bowl where the Packers won, that Monday night I had all my cabinet over to the residence for dinner, talked about what we were going to do, how we were going to do it, we’d already kind of built plans up but it was kind of the last hurrah before we dropped the bomb. And I stood up and I pulled out a picture of Ronald Reagan, and I said, you know, this may seem a little melodramatic, but 30 years ago Ronald Reagan, whose 100th birthday we just celebrated the day before, had one of the most defining moments of his political career, not just his presidency, when he fired the air traffic controllers. And I said, to me that moment was more important than just for labor relations or even the federal budget. That was the first crack in the Berlin Wall in the fall of Communism because from that point forward the Soviets and the Communists knew that Ronald Reagan wasn’t a pushover. And I said, this may not have as broad of world applications, but in Wisconsin’s history — little did I know how big it would be nationally — Wisconsin’s history, I said, this is our moment. This is our time to change the course of history, and this is why it’s so important that they were all there. I had a cabinet meeting this morning, I reminded them of that. I said, for those who thought I was being melodramatic, you now know it was purely putting it in the right context.

Murphy: [Laughs] Well, I tell you what, Scott: Once you crush these bastards I’ll fly you out to Cali (California) and really show you a good time.

Walker: All right, that would be outstanding. Thanks for all the support in helping us move the cause forward, and we appreciate it, and we’re doing it the just and right thing for the right reasons and it’s all about getting our freedoms back.

Murphy: Absolutely. And, you know, we have a little bit of a vested interest as well. [Laughs]

Walker: Well that’s just it, the bottom line is we’re gonna get the world moving here ’cause it’s the right thing to do.

Murphy: Alright then.

Walker: Thanks a million!

Murphy: Bye-bye!

Walker: Bye.


Video - Part 2