Saturday, May 7, 2011

Governor signs tough foreclosure bill

HONOLULU (HawaiiNewsNow) - During a ceremony in his office Thursday, Gov. Neil Abercrombie signed the strictest mortgage foreclosure law in the nation.

Read the entire bill here.

Goldman Sachs faces contentious AGM

Goldman Sachs boss Lloyd Blankfein
Goldman Sachs chairman and chief executive Lloyd Blankfein faces shareholders amid speculation he is planning to step down. Photograph: Ramin Talaie/EPA

Goldman Sachs is bracing itself for what may be the most contentious annual meeting in the embattled investment bank's 142-year history.

On Friday, angry shareholders, including a coalition of religious groups, are planning to call on Goldman's executives to justify the combined $69.6m (£42.4m) payday its top five executives received in 2010 and to answer questions about allegations that the bank misled clients and lied to Congress.

Goldman's most recent financial results comfortably beat expectations and its shares have rallied spectacularly since the lows of the credit crunch. But the bank has continued to be mired in controversy. Chairman and chief executive Lloyd Blankfein faces shareholders amid speculation that he may be planning to step down. The bank has denied any such move.

The meeting comes amid mounting pressure on the bank. Earlier this week Eric Holder, the US attorney-general, confirmed that the justice department was investigating Goldman's role in the financial crisis following a withering report on the bank's role led by senators Carl Levin and Tom Coburn. The 650-page report "Wall Street and the Financial Crisis: Anatomy of a Financial Collapse," gave Goldman its own section titled "Failing to Manage Conflicts of Interest: A Case Study of Goldman Sachs."

In July the bank paid $500m to settle charges brought by financial regulator the Securities and Exchange Commission (SEC) that it misled customers over complex sub-prime mortgage products it sold in 2007.

While Goldman is unlikely to lose any shareholder vote, the spotlight on executive pay could not come at a more sensitive moment for the bank. Among those protesting Goldman's payouts are the Nathan Cummings Foundation, a Jewish charity, and the Interfaith Centre on Corporate Responsibility (ICCR).

Among the proposals being put forward by shareholders is one calling for a formal annual review of Goldman's pay deals every year that would compare the wages of top earners with those at the bottom of the Goldman pay scale.

In an interview with the Guardian last month Sister Nora Nash, a member of the ICCR, said St Francis, founding saint of her order, would be "spinning in his grave" if he knew how much the Goldman elite were paying themselves.

The bank's top five executives received cash and stock last year that was 13 times greater than the year before. Goldman's 2010 net revenues fell 13% and profits fell 37%. Goldman paid Blankfein close to $19m in compensation for 2010, almost double his award for the previous year. The bank increased Blankfein's 2011 annual pay by $2m.

Goldman has dismissed the shareholder's actions as "a distraction" that "would entail an unjustified cost to our firm and would not provide shareholders with any meaningful information," since it says shareholders can already get this information in its filings.

William Cohan, author of Money and Power: How Goldman Sachs Came to Rule The World, said AGMs tended to be "more about theatre than substance". But he added: "I think the impact of the negative publicity on the top executives of the firm has been considerable. They don't like it, don't think it is fair and feel it is unwarranted. No surprise there. But there is not much they can do. They are the firm that came out of the crisis in the best shape financially, along with JP Morgan, so they are a natural target of legitimate public anger and frustration."

The Kabbalah Centre in Los Angeles is the focus of an IRS investigation into tax evasion

Two charities linked to Madonna are also being scrutinized. The center has attracted A-list celebrities such as Ashton Kutcher and Gwyneth Paltrow.


Madonna with her adopted daughter, Mercy James, during a brick-laying ceremony in 2010 for Raising Malawi Girls Academy. (Mike Hutchings, Reuters / May 6, 2011)

The Kabbalah Centre, the Los Angeles-based spiritual organization that mingles ancient Jewish mysticism with the glamour of its celebrity devotees, is the focus of a federal tax evasion investigation probing, among other things, the finances of two charities connected to Madonna, the center's most famous adherent.

Sources familiar with the investigation said the criminal division of the IRS is looking into whether nonprofit funds were used for the personal enrichment of the Berg family, which has controlled the Kabbalah Centre for more than four decades, a period in which it expanded from one school of a little-known strain of Judaism to a global brand with A-list followers like Ashton Kutcher and Gwyneth Paltrow and assets that may top $260 million.

Those cooperating with the IRS include representatives of one of Madonna's charities, Raising Malawi. The nonprofit is named in subpoenas as a subject of the grand jury probe alongside the Bergs and Kabbalah Centre organizations despite having cut its ties with the center this spring.

"We have tried to provide as much information as we can as quickly as possible to the people who are investigating and are very actively cooperating in every way we can," said Trevor Neilson of Global Philanthropy Group, a consulting firm now managing Raising Malawi.

In a statement in response to questions about the probe, the Kabbalah Centre acknowledged that it and one of its charities, Spirituality for Kids, "have received subpoenas from the government concerning tax-related issues."

"The Centre and SFK intend to work closely with the IRS and the government, and are in the process of providing responsive information to the subpoenas," according to the statement.

The IRS and the U.S. Attorney's office in New York declined to comment. People with knowledge of the investigation said it began last year and is playing out on two coasts. A federal grand jury in Manhattan, where the Kabbalah Centre has a large branch and real estate holdings, is gathering evidence there, according to the subpoenas. Meanwhile, in Los Angeles, where the center is headquartered on Robertson Boulevard, a team of IRS agents dispatched from the agency's New York criminal division is interviewing people connected to the organization, said individuals familiar with the agents' activities.

Among the items that investigators have reviewed, according to one source, is an August 2010 email in which a former chief financial officer of the center complained that he had been fired for pointing out financial improprieties and warned that the center was in danger of "committing suicide."

"I recently uncovered instances of income tax fraud at the Kabbalah Centre — instances which could bankrupt several of the directors involved … this is very serious business," the former CFO, Nicholas Vakkur, wrote in an email that circulated among high-level officials at the center. "I have little choice but to cooperate with the IRS and bring down the entire Kabbalah Centre," Vakkur wrote, adding a plea that "someone in authority" try to "reason" with center Chief Executive Karen Berg.

Berg's husband, Philip, 81, was appointed the head rabbi or rav in 1969, but since he suffered a debilitating stroke in 2004, his wife, 68, has run the Kabbalah Centre with the help of the couple's two sons, Michael, 37, and Yehuda, 38. The family has close ties with Madonna, whose decision to study at the center in 1996 put kabbalah and its distinctive red-string bracelets on the pop culture map and led to a period of enormous growth. In addition to individual members of the Berg family, subpoenas reviewed by The Times list various charities and for-profit businesses overseen by them as subjects of the investigation. The subpoenas do not indicate that Madonna personally is being investigated but do name two nonprofits she has championed: Spirituality for Kids and Raising Malawi.

The singer served as chairwoman of the board for Spirituality for Kids, an educational program founded by Karen Berg, and donated more than $600,000 to the cause, according to tax filings. Raising Malawi was an outgrowth of Spirituality for Kids that the singer cofounded with Michael Berg. The charity announced this spring that it was scrapping its plan to build a girls' school in Malawi, a venture in which it had already invested $3.8 million, according to Neilson. The decision received wide media coverage and criticism in Malawi. Madonna, who Global Philanthropy Group said put about $11 million of her own money into the charity, replaced Michael Berg as CEO and moved Raising Malawi's offices out of the Kabbalah Centre in March.

Madonna's publicist did not return messages seeking comment. Neilson said Raising Malawi had retained legal counsel separate from the Kabbalah Centre to represent the organization in the IRS investigation.

The Kabbalah Centre is far and away the most well-known proponent of kabbalah, an esoteric Jewish movement that traces its roots to the Zohar, a holy book followers believe was written by a rabbi 2,000 years ago to explain the mysteries of the universe. The center, according to its literature, began in Jerusalem in 1922 and now has outlets in 31 countries and claims 4,000 regular participants in its services and programs globally. Mainstream Jewish leaders have criticized the center on a number of fronts, including its de-emphasis of the religion in courting new members, an approach the center touts in its literature: "One of the nice things about studying Kabbalah is that it doesn't require you to leave your current faith or religious path."

Investigators looking into the center's finances face a complex organizational structure involving more than a dozen separate nonprofits and business entities with connections to the Bergs, according to public business records and sources familiar with the workings of Kabbalah. The total assets of the center are unclear because the parent organization, Kabbalah Centre International, has tax-exempt status as a church and is not required to make public its tax filings. A former CFO, Nicholas Boord Jr., who left the center in 2009, wrote in a resume posted online that the center had annual revenue of $60 million and assets that included a $200-million real estate portfolio and a $60-million investment fund.

According to a 1993 filing seeking tax-exempt status for the center, neither Karen nor Philip Berg receive salaries for their leadership roles. In those documents, signed by Karen Berg, the center said that she and her husband as well as other clerical staff "derive their subsistence from the meals and lodging and care provided to them by the organization's facilities." The Bergs live in Beverly Hills, in homes a few blocks from the headquarters that were purchased for them and owned by the Kabbalah Centre, according to property records and court documents.

The investigation comes as a handful of lawsuits are raising other questions about the Kabbalah Centre's financial dealings. In a New York bankruptcy court, a trustee sorting out a $68-million Ponzi scheme has alleged that the center, an investor, was paid $2.9 million in "fictitious profits" and demanded the money be returned. Settlement talks in that case are ongoing, according to court filings.

In two other suits filed earlier this year, an heiress accused the Bergs and others connected to the Kabbalah Centre of defrauding her of about $1.3 million. Courtenay Geddes, a former member of the center, alleged that staff members pushed her to invest with an official at the Orange County branch who absconded with more than $800,000 and was later revealed to be a convicted felon. In a second suit, she claimed that a homeschooling program she funded with a half-million-dollar donation never came to fruition despite assurances from Yehuda Berg and others that it was under development.

In a stinging February filing that referred to the Bergs as "charlatans," her attorney, Alain Bonavida, wrote that the center and its related organizations "exist primarily to enrich" the Bergs and their associates and predicted that any IRS review "will result in a revocation of said nonprofit status as well as various penalties, fines and likely criminal prosecution" of the family.

In a statement, the Kabbalah Centre called the allegations in the suit "meritless" and said it "intends to defend the case vigorously."

Peer-to-peer currency takes banks out of the picture


A few months ago we looked at Irish CurrencyFair, a peer-to-peer site that effectively removes banks and other middlemen from currency exchange. Pushing the peer-to-peer concept even further into the world of finance, Bitcoin is a collectively managed and open-source digital currency that's completely independent of any central authority.

Now in beta, Bitcoin bills itself as “the first digital currency that is completely distributed.” In essence, that means that it's managed collectively by a global network of users, so no bank or payment processor is required between buyers and sellers in any transaction. Users begin with Bitcoin by downloading its client program for Linux, Mac or Windows, thereby creating a digital wallet and associated Bitcoin address for themselves. Next, very small quantities of Bitcoins are available for free from the Bitcoin faucet, but to get larger ones, users can visit various currency exchanges and sites. They can also accept Bitcoins as payments for goods and services. Either way, once they have Bitcoins — abbreviated “BTC” — users can spend them at various participating online merchants for a wide variety of goods and services. It's free for merchants to accept Bitcoins, and there are no chargebacks or fees. Currently, there is no charge for processing Bitcoin transactions, but eventually a small fee of about one bitcent will be charged every transaction to one of many competing Bitcoin “miners,” who create Bitcoins in a controlled way by running a dedicated program. A video on YouTube explains the Bitcoin concept.
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How Goldman Sachs Created the Food Crisis

Don't blame American appetites, rising oil prices, or genetically modified crops for rising food prices. Wall Street and The Fed are at fault for the spiraling cost of food.

Frederick Kaufman
Foreign Policy

Bankers recognized a good system when they saw it, and dozens of speculative non-physical hedgers followed Goldman's lead and joined the commodities index game, including Barclays, Deutsche Bank, Pimco, JP Morgan Chase, AIG, Bear Stearns, and Lehman Brothers, to name but a few purveyors of commodity index funds. The scene had been set for food inflation that would eventually catch unawares some of the largest milling, processing, and retailing corporations in the United States, and send shockwaves throughout the world.

The money tells the story. Since the bursting of the tech bubble in 2000, there has been a 50-fold increase in dollars invested in commodity index funds. To put the phenomenon in real terms: In 2003, the commodities futures market still totaled a sleepy $13 billion. But when the global financial crisis sent investors running scared in early 2008, and as dollars, pounds, and euros evaded investor confidence, commodities -- including food -- seemed like the last, best place for hedge, pension, and sovereign wealth funds to park their cash. "You had people who had no clue what commodities were all about suddenly buying commodities," an analyst from the United States Department of Agriculture told me. In the first 55 days of 2008, speculators poured $55 billion into commodity markets, and by July, $318 billion was roiling the markets. Food inflation has remained steady since.

The money flowed, and the bankers were ready with a sparkling new casino of food derivatives. Spearheaded by oil and gas prices (the dominant commodities of the index funds) the new investment products ignited the markets of all the other indexed commodities, which led to a problem familiar to those versed in the history of tulips, dot-coms, and cheap real estate: a food bubble. Hard red spring wheat, which usually trades in the $4 to $6 dollar range per 60-pound bushel, broke all previous records as the futures contract climbed into the teens and kept on going until it topped $25. And so, from 2005 to 2008, the worldwide price of food rose 80 percent -- and has kept rising. "It's unprecedented how much investment capital we've seen in commodity markets," Kendell Keith, president of the National Grain and Feed Association, told me. "There's no question there's been speculation." In a recently published briefing note, Olivier De Schutter, the U.N. Special Rapporteur on the Right to Food, concluded that in 2008 "a significant portion of the price spike was due to the emergence of a speculative bubble."

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Economy adds 244,000 jobs, but US jobless rate rises

Companies created 268,000 jobs in April, the most since February 2006.

The gains were widespread. Retailers, factories, financial companies, education and health care and even construction companies all added jobs.

After subtracting cuts by federal, state and local governments, the economy added 244,000 net jobs last month, the Labor Department said Friday. That marked the third straight month in which more than 200,000 jobs were created, the best three-month hiring spree in five years. Job gains in March and February were even stronger than previously reported.

The unemployment rate ticked up to 9 percent from 8.8 percent in March, the first increase since November. The government uses a separate survey to calculate the unemployment rate. The survey sometimes diverges from a separate survey used to number of jobs employers added.

The latest employment figures suggest businesses are confident in the economy despite weak growth earlier this year and soaring gas prices. Stocks rose after the employment report was released. The Dow Jones industrial average gained more than 168 points in morning trading.

Companies are finally starting to spend the nearly $2 trillion in cash that they stockpiled after the recession ended in June 2009, economists say. Businesses are gaining confidence in their sales and the economy's ability to grow, despite some obstacles.

"It is a sign of relief. Economic momentum has not been lost," said Sung won Sohn, economist at California State University. "Surprisingly, the rising energy prices have not made a significant dent in businesses' willingness to hire, indicating that their optimism on the economy has not faded."

The positive jobs report completes a strong week for President Barack Obama, who announced earlier that a team of Navy SEALs killed Osama bin Laden, the mastermind behind the Sept. 11, 2001 terrorist attacks.

Workers' paychecks edged up in April. Average hourly earnings rose to $22.95, up from $22.93 in March.

All told there were 13.7 million people unemployed in April, still almost double since before the recession began in December 2007.

Including part-time workers who would rather be working full time, plus people who have given up looking altogether, the percentage of "underemployed" people rose to 15.9 percent in April.

To calculate the unemployment rate, the government calls 60,000 households and asks people if they're working or looking for a job. This survey includes the self-employed, farm workers and domestic help — people not counted in the payroll survey.

For the payroll survey, the government seeks input from about 140,000 businesses and government agencies to determine the number of jobs added.

Most analysts agree the economy has strengthened enough to keep growing this year. And many say the factors that held back growth at the start of the year were most likely temporary. They predict growth will pick up over the rest of the year.

There have been some positive signs. Retailers reported strong April sales, helped by a late Easter. Auto companies reported brisk sales. And factories have expanded production this year at the fastest pace in a quarter-century.

Economists' prediction for a pickup in overall growth is based, however, on gasoline prices stabilizing in the months ahead and then dropping to around $3.50 a gallon or lower near the end of the year.

Gas prices had risen for 44 straight days before holding steady Friday at a national average of roughly $3.99 a gallon.

"The U.S. labor market strengthened in April, damping concerns that rising energy costs are staunching the recovery, said Sal Guatieri, an economist at BMO Capital Markets Economics.

Lost But Not Found: $2.3 Trillion Still Missing At Pentagon

Exxon Makes $30.5 Billion, So GOP Votes Unanimously To Give Them Tax Breaks

Exxon Mobil is by far the most profitable company in the new Fortune 500 list, riding “high oil prices to a staggering $30 billion in income” in 2010. Exxon made over $10 billion more than fellow oil giant Chevron, the third most profitable company (AT&T edged out Chevron for the number two spot). ConocoPhillips’ $11.4 billion in profits put it in the 16th spot, giving the three oil giants a combined $60.9 billion in profits in 2010.

Today, the Republicans in the House of Representatives celebrated this massive redistribution of wealth from American families to oil executives. With the support of 7 oil-patch Democrats, 234 Republicans voted to block a bill to eliminate a $1.8 billion annual subsidy that treats oil drilling as “domestic manufacturing”:

House Republicans rejected an effort by Democrats Thursday to use a procedural maneuver to force a vote on a bill to repeal a key oil industry tax break.

As they did in March, House Republicans voted unanimously to defend these wasteful, unaffordable and unfair oil subsidies, even though several members told their constituents they want to end them.

Global markets bounce on surprise rise in US jobs

More Americans were hired last month than at any time since 2006, evidence that economic growth could pick up momentum later this year.

Private employers created 268,000 jobs in April.

Private employers created 268,000 jobs in April, a report from the Labor Department showed on Friday, overshadowing the 24,000 jobs that were cut by the public sector in the same month.

It wasn't enough, though, to prevent the unemployment rate rising to 9pc from 8.8pc as more of the country's unemployed joined the hunt for work.

The anemic pace of job creation has been the Achilles heel of America's recovery from its worst recession since World War II.

The world's biggest economy has only replaced about 1.5 of the 8.5m jobs that went during the recession, with industries like construction unlikely to create new employment soon.

The report provides some evidence that companies' confidence to hire has withstood the marked slowing in gross domestic product in the first quarter of the year.

Stock markets rallied after the figures were published with the Dow Jones, FTSE 100, DAX and CAC rising between 0.4pc and 1.2pc. Equities have fallen this weak after earlier economic data raise doubts about the global economy.

Oil prices, which have fallen heavily this week on fears of falling demand and were trading as low as $105.15 earlier in the day, rose $2.88 to $113,69 as the dollar strengthened a basket of major currencies.

The rising dollar led to a fall in gold and a rise in hard-hit silver prices. Base metals also turned positive after the jobs data.

Barclays Capital said the metals sell-off had been overdone, and opened a buying opportunity. "Those who do not choose to take advantage of this window are likely to be disappointed later," it said in a note.

Estimates for the number of jobs created in February and March were revised higher to 235,000 and 216,000 respectively.

The Federal Reserve and President Barack Obama's administration have controversially continued to pursue monetary and fiscal stimulus in an effort to ensure the recovery is self-sustaining.

"Job creation is good. We're getting close to the point where we are seeing sustainable job growth," said Gary Thayer, a strategist at Wells Fargo Advisors. "We're getting close to the point where we're seeing sustainable job growth."

However, the report again underlined that the recovery in the jobs market is leaving many Americans behind. Almost six million people, or just under 44pc of the total without work, have been without a job for more than six months.

Poll - When Was Osama Bin Laden Killed?

Poll - When Was Osama Killed?



$2 Trillion Mile Marker on Road to Perdition

Greg Hunter
USA Watchdog

This week, Treasury Secretary Tim Geithner proposed raising the debt ceiling by $2 trillion. I thought, this should be big news! After all, a trillion is a thousand billion. This adds up to 2 thousand billion over the next 2 years!! The mainstream media greeted this story with a great big yawn. I do not get that because the Republicans and Democrats fought for weeks to only cut the budget a measly $38 billion. The press was non-stop, and Congress was only an hour away from shutting down the government. Even the $38 billion cut was a big fat lie according to CBS News. The story said in mid-April, “Well, thanks to the Congressional Budget Office and some great reporting by the Washington Post, it turns out the government won’t be cutting $38 billion in one year after all. No, the real cuts will be more like $352 million! You heard me right, $352 million, NOT $38 billion. The rest? Mostly smoke, mirrors and accounting gimmicks.” (Click here for the entire CBS News story.)

Both parties want to cut roughly $4 trillion out of the budget over the next 10 to 12 years. Can someone please explain how that is accomplished by tacking on another $2 trillion to the national tab? I do not get the math and neither does Bill Gross, the head of the biggest bond fund in the world. He said in early January, “We have a deficit in the $1 trillion plus arena, which means we must borrow at least a trillion dollars additional a year in order to fund the deficit. And, so, the debt ceiling currently at $14.3 trillion, which is 95% of GDP, has to go up by another trillion or so every 12 months.” (Click here to read my original post on the debt ceiling.) Not long after Gross made this statement, he sold most, if not all, of his U.S Treasuries. What do you know? He was right on the money. The proposal from the Treasury is a $2 trillion increase in the debt ceiling to cover the next 2 years.

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Senator Klobuchar Remembers Four Dollar A Gallon Gas Under George W Bush