Tuesday, August 6, 2013

Banks Threaten to Punish Cities that Use Eminent Domain to Help Underwater Homeowners

Roughly half the homeowners in the Bay Area city of Richmond are underwater on their mortgages, but city officials have come up with a plan to float them to safety, much to the consternation of banks and other moneyed interests.

The city is strongly considering using the power of eminent domain to seize the homes, which are worth less than the amount owed on the mortgage, and sell them back to the owners at fair market prices. Richmond, a poor city by most measurements, has not benefited much by the recent surge in housing prices and many of the homeowners owe three or four times as much as the home is worth, according to The New York Times.

It would be the first city in the nation to use eminent domain in this fashion. But they certainly aren’t the only city that would benefit immensely from the strategy. A lot of cities with low-income minority populations were sold a ton of predatory loans that shouldn’t have been offered, and the Times says at least two dozen are actively considering the move.

Banks—which make money by selling the homes to lenders in the secondary market, who then make money by foreclosing on the homes and reselling them—have promised to block the city with lawsuits. They promise an end to lending in the city if it persists in its plan.

On July 29, the city, according to Carolyn Said of the San Francisco Chronicle, “sent letters to 32 banks and other mortgage holders offering to buy 624 underwater mortgages at discounts to the homes’ current value. If the offers are spurned, the letter said Richmond may use the power of eminent domain to condemn the mortgages and seize them, paying court-determined fair market value.”

The current market value of the 624 homes is about $177 million, but the face value of their mortgages is $242 million. Richmond has given the loan holders until August 14 to sell the homes.

As explained by Shaila Dewan of The New York Times:   

“In a hypothetical example, a home mortgaged for $400,000 is now worth $200,000. The city plans to buy the loan for $160,000, or about 80 percent of the value of the home, a discount that factors in the risk of default. Then, the city would write down the debt to $190,000 and allow the homeowner to refinance at the new amount, probably through a government program.”

The city and investors would take $30,000 and use it to for expenses and a small profit, while the homeowner ends up with $10,000 in equity.

The banks and secondary lenders would lose a cash cow that relies on the suffering of homeowners. At stake are more than just the primary mortgages. There are $450 billion in second liens and equity loans on bank books that could be affected. The lenders have called the eminent domain tactic illegal and unconstitutional, and an array of heavy hitters, including the Securities Industry and Financial Markets Association, the American Bankers Association and the National Association of Realtors, have lined up in opposition.

Besides threatening court action, they are seeking legislation at the state and federal level to snuff out the nascent movement, and revving up advertising campaigns to argue their case.

However, as David Brodwin of U.S. News and World Report put it, “it's hard to see why bailing out homeowners with a program of this sort is any less an affront to the principles of capitalism than bailing out banks that made bad investments in mortgage backed derivatives.”
-Ken Broder

The Truth About The Employment Crisis

Do you actually believe that the employment numbers are getting better?  Do you actually believe that there is a bright future ahead for American workers?  If so, then you really need to read this article.  The truth is that we are in the midst of the worst employment crisis since the Great Depression, and there has been absolutely no employment recovery.  In fact, the percentage of working age Americans that are employed is just about exactly where it was during the darkest days of the last recession.  But the mainstream media is not telling you this.  The mainstream media is instead focusing on the fact that the official “unemployment rate” declined from 7.6% in June to 7.4% in July.  That sounds like great news, but when you take a deeper look at the employment numbers some very disturbing trends emerge.
Over the past several years, almost the entire decline in the unemployment rate can be accounted for by people “leaving the workforce”.  The “unemployment rate” has not been going down because people are actually getting jobs.  Rather, the “unemployment rate” has been going down because the government has been pretending that millions upon millions of American workers simply do not want jobs anymore.  This is extremely misleading.
We are being told that 162,000 jobs were created in July.  Okay, so that is just barely enough to keep up with population growth, and most of the jobs that were created last month were part-time jobs.

Meanwhile, the jobs numbers for the two previous months were both revised down
The change in total nonfarm payroll employment for May was revised from +195,000 to +176,000, and the change for June was revised from +195,000 to +188,000. With these revisions, employment gains in May and June combined were 26,000 less than previously reported.
Will this month eventually be revised down too?
When it comes to measuring employment in the United States, I believe that a much more accurate measurement than the highly manipulated “unemployment rate” is the civilian employment-population ratio.  This ratio tells us what percentage of working age Americans actually have a job.
Just prior to the last recession, about 63 percent of all working age Americans had a job.  During the recession, that number plunged dramatically and ultimately fell below 59 percent, and it has stayed below 59 percent for 47 months in a row
Employment-Population Ratio 2013
This is the first time in the post-World War II era that the employment-population ratio has not bounced back after a recession.
So there has not been an employment recovery.  Anyone that tells you that there has been an employment recovery is lying to you.
Since the end of 2009, we have been treading water at best.  But during that time, another disturbing trend has emerged.  Good paying full-time jobs are rapidly being replaced by low paying part-time jobs.
And this trend has definitely accelerated this year.  If you can believe it, an astounding 76.7 percent of the jobs that have been “created” in 2013 have been part-time jobs.

Pages: Next

Jolie film decides against Hawaii base, likely moving to Australia

Hawaii News Now - KGMB and KHNL
HONOLULU (HawaiiNewsNow) - The feature film "Unbroken," which opened a small production office in Waikiki a few weeks ago, has decided against shooting the movie in Hawaii, and most likely will move its production base to Australia, sources told Hawaii News Now Friday.
World-famous actress Angelina Jolie will direct the film, based on the true story of Louis Zamperini, a U.S. Olympic distance runner and a bombardier flying out of Hawaii during World War II.  He was shot down in the Pacific, survived on a raft for a month and a half before being taken prisoner and tortured by the Japanese for more than two years. Zamperini later became a motivational speaker and at age 96, still lives in California.
Jolie visited Hawaii last month to scout locations for the movie – visiting public parks and military installations. The film opened a small production office at the Waikiki Marriott Resort and Spa three weeks ago, sources said.
But sources said that office closed Friday afternoon, and most of the movie will now be shot in Australia, instead of Hawaii.  It is not clear why the film won't be based in the islands.
"It is disappointing that a film of that credibility and that magnitude is at least drawing back from its full involvement with Hawaii. But we'll hope that they still will be able to salvage some work for our people," David Farmer, the incoming local president of the Screen Actors Guild, which represents more than 900 unionized actors in Hawaii.
Farmer and other movie industry insiders are still hoping Jolie decides to use Hawaii to film so-called "second unit" work -- secondary scenes like wide or scenic shots without the principal actors.
But there are other major movie and TV projects in the islands, such as  Hawaii Five-O, which just began shooting its fourth season.
"Just hearing things like that coming to Hawaii, I guess with the new tax break, or things like that are really going to benefit a lot of filmmakers and, well, hopefully give us a lot more work," said Leon Sheen, a UH Manoa senior majoring in travel industry management and minoring in theater.
He was one of hundreds of extras who ran down Lewers Street on film when the movie Godzilla filmed in Waikiki last month.
On July 1, Hawaii's tax credit for large TV and movie projects increased by five percent. The state will now reimburse producers 20 percent of their costs on Oahu and 25 percent on neighbor islands.  
"We have a thriving film industry here. It's not Hollywood, but we're doing pretty well for a regional office and a regional industry," Farmer said.    
This fall, a romantic comedy feature film starring Bradley Cooper and Emma Stone called "Deep Tiki" is set to film in Hawaii for up to four months, from September to December, sources said. Directed and written by Cameron Crowe, the film tells the story of a military contractor on top-secret military mission in Hawaii who teams up with an Air Force pilot to sabotage the project.
Another major feature film called "Big Eyes," directed by Tim Burton will film in Hawaii for about a week in September.  A source said that film is expected to hire local actors as extras and in larger speaking roles.  Hawaii will play a prominent role in the story, a source said.

Copyright 2013 Hawaii News Now. All rights reserved.

The Detroit Bail-In Template: Fleecing Pensioners to Save the Banks

The Detroit bankruptcy is looking suspiciously like the bail-in template originated by the G20’s Financial Stability Board in 2011, which exploded on the scene in Cyprus in 2013 and is now becoming the model globally. In Cyprus, the depositors were “bailed in” (stripped of a major portion of their deposits) to re-capitalize the banks. In Detroit, it is the municipal workers who are being bailed in, stripped of a major portion of their pensions to save the banks.
Bank of America Corp. and UBS AG have been given priority over other bankruptcy claimants, meaning chiefly the pensioners, for payments due on interest rate swaps they entered into with the city. Interest rate swaps – the exchange of interest rate payments between counterparties – are sold by Wall Street banks as a form of insurance, something municipal governments “should” do to protect their loans from an unanticipated increase in rates. Unlike ordinary insurance, however, swaps are actually just bets; and if the municipality loses the bet, it can owe the house, and owe big. The swap casino is almost entirely unregulated, and it is a rigged game that the house virtually always wins. Interest rate swaps are based on the LIBOR rate, which has now been proven to be manipulated by the rate-setting banks; and they were a major contributor to Detroit’s bankruptcy.
Derivative claims are considered “secured” because the players must post collateral to play. They get not just priority but “super-priority” in bankruptcy, meaning they go first before all others, a deal pushed through by Wall Street in the Bankruptcy Reform Act of 2005. Meanwhile, the municipal workers, whose pensions are theoretically protected under the Michigan Constitution, are classified as “unsecured” claimants who will get the scraps after the secured creditors put in their claims. The banking casino, it seems, trumps even the state constitution. The banks win and the workers lose once again.
Systemically Dangerous Institutions Are Moved to the Head of the Line

The argument for the super-priority of derivative claims is that nonpayment on these bets represents a “systemic risk” to the financial scheme. Derivative bets are cross-collateralized and are so inextricably entwined in a $600-plus trillion house of cards that the whole financial scheme could go down if the betting scheme were to collapse. Instead of banning or regulating this very risky casino, Congress has been persuaded by the masterminds of Wall Street that it needs to be preserved at all costs.
The same tortured logic has been used to justify the fact that the federal government deigned to bail out Wall Street but not Detroit. Supposedly, the mega-banks pose a systemic risk and Detroit doesn’t. On July 29th, former Obama administration economist Jared Bernstein pursued this line of reasoning on his blog, writing:
[T]he correct motivation for federal bailouts — meaning some combination of managing a bankruptcy, paying off creditors (though often with a haircut), or providing liquidity in cases where that’s the issue as opposed to insolvency – is systemic risk. The failure of large, major banks, two out of the big three auto companies, the secondary market for housing – all of these pose unacceptably large risks to global financial markets, and thus the global economy, to a major industry, including its upstream and downstream suppliers, and to the national housing sector.
Because a) there’s not much of a case that Detroit is systemically connected in those ways, and b) Chapter 9 of the bankruptcy code appears to provide an adequate way for it to deal with its insolvency, I don’t think anything like a large scale bailout is forthcoming.
Holding Main Street Hostage
Detroit’s bankruptcy poses no systemic risk to Wall Street and global financial markets. Fine. But it does pose a systemic risk to Main Street, local governments, and the contractual rights of pensioners. Credit rating agency Moody’s stated in a recent report that if Detroit manages to cut its pension obligations, other struggling cities could follow suit. The Detroit bankruptcy is establishing a template for wiping out government pensions everywhere. Chicago or New York could be next.
There is also the systemic risk posed to the municipal bond system. Bryce Hoffman, writing in The Detroit News on July 30th, warned:
Detroit’s bankruptcy threatens to change the rules of the municipal bond game and already is making it more expensive for the state’s other struggling towns and school districts to borrow money and fund big infrastructure projects.
In fact, one bond analyst told The Detroit News that he has spoken to major institutional investors who have already decided to stop, for now, buying any Michigan bonds.
The real concern of bond investors, says Hoffman, is not the default of Detroit but the precedent the city is setting. General obligation municipal bonds have always been viewed as a virtually risk-free investment. They are unsecured, but bondholders have considered themselves protected because the bonds are backed by the “unlimited taxing authority” of the government that issued them. Detroit, however, has shown that the city’s taxing authority is far from unlimited.  It already has the highest property taxes of any major city in the country, and it is bumping up against a ceiling imposed by the state constitution. If Detroit is able to cut its bond debt in half or more by defaulting, other distressed cities are liable to look very closely at following suit. Hoffman writes:
The bond market is warning that this will make Michigan a pariah state and raise borrowing costs — not just for Detroit and other troubled municipalities, but also for paragons of fiscal virtue such as Oakland and Livingston counties.
However, writes Hoffman:
Gov. Rick Snyder dismisses that threat and says the bond market is just trying to turn Detroit away from a radical solution that could become a model for other struggling cities across America.
A Safer, Saner, More Equitable Model
Interestingly, Lansing Mayor Virg Bernero, Snyder’s Democratic opponent in the last gubernatorial race, proposed a solution that could have avoided either robbing the pensioners or scaring off the bondholders: a state-owned bank. If the state or the city had its own bank, it would not need to borrow from Wall Street, worry about interest rate swaps, or be beholden to the bond vigilantes. It could borrow from its own bank, which would leverage the local government’s capital into credit, back that credit with the deposits created by the government’s own revenues, and return the interest to the government as a dividend, following the ground-breaking model of the state-owned Bank of North Dakota.
There are other steps that need to be taken, and soon, to prevent a cascade of municipal bankruptcies.  The super-priority of derivatives in bankruptcy needs to be repealed, and the protections of Glass Steagall need to be restored. While we are waiting on a very dilatory Congress, however, state and local governments might consider protecting themselves and their revenues by setting up their own banks.
Ellen Brown is an attorney, president of the Public Banking Institute, and author of twelve books, including the best-selling Web of Debt and its 2013 sequel, The Public Bank Solution. Her websites are http://WebofDebt.comhttp://PublicBankSolution.com, and http://PublicBankingInstitute.org.

Pandemic of pension woes is plaguing the nation

CNBC News – by John W. Schoen
Detroit, you’re not alone.
Across the nation, cities and states are watching Detroit’s largest-ever municipal bankruptcy filing with great trepidation. Years of underfunded retirement promises to public sector workers, which helped lay Detroit low, could plunge them into a similar and terrifying financial hole.
A CNBC.com analysis of more than 120 of the nation’s largest state and local pension plans finds they face a wide range of burdens as their aging workforces near retirement.  
Thanks to a patchwork of accounting practices and rosy investment assumptions, it’s not even clear just how big a financial hole many states and cities have dug for themselves. That may soon change, thanks to a new set of government accounting standards that could serve as a nasty wake-up call to states and cities relying on rosy scenarios and head-in-the-sand accounting.
“Sadly, [Detroit] is not the only municipality in trouble,” Glenn Hubbard, economist, Columbia University Graduate School of Business dean and Mitt Romney campaign adviser, told CNBC’s “Squawk Box” on Monday. “A lot of state and local governments have too much debt, too generous public pensions. We need a national conversation on how to fix this.”
One of the thorniest questions that conversation will need to address: who will pay to clean up these financial messes? Will it be the millions of retirees owed trillions of dollars in benefits, the bondholders who lent states and cities trillions more, or local taxpayers who may have to pay more to cover the shortfalls or see deeper cuts in public services?
Regardless, the painful process will likely play out for years.
“Moving pension plans is like steering a blimp: You turn the wheel and you go 6 miles before it starts to turn,” said John Tuohy, Arlington County, Va., deputy treasurer, who chairs the pension committee of the Government Finance Officers Association. “In the political process, that kind of patience is very difficult.”
Many state and local governments have set aside enough money to comfortably make good on promised retirement benefits. Seventeen states have funded more than 80 percent of their projected pension liability, a level that’s generally seen as financially sound. Most of the rest have been scrambling to make up investment losses inflicted by the 2008 market collapse and the shortfalls in sales, property and incomes taxes produced by the Great Recession.
But even as the economy and housing markets have recovered, most states are still falling behind in closing their pension funding gaps. In the last year, 34 states have seen their pension funds stretched further as they’ve failed to make the full contributions needed to meet the projected cost of retirement promises.
Much like a family that fails to save regularly to build a retirement nest egg, shortchanging those contributions increases the risk that the fund eventually will go broke.
Nine states—Hawaii, Alaska, Kansas, Rhode Island, New Hampshire, Louisiana, Connecticut, Kentucky and Illinois—have now set aside less than 60 percent of what they need. Illinois has saved just 43 cents to cover every dollar of what it needs to pay 350,000 retirees and 500,000 current plan participants who are counting on a pension check.
In Detroit, city officials argue that pension payments to retirees simply have to be cut because the money just isn’t there to pay them. But union officials there and in other cash-strapped cities say that’s the city’s problem.
“Our members were promised certain things,” said Tom Ryan, president of the firefighters’ union in Chicago, where years of underfunding have prompted proposals to cut workers’ retirement benefits. “They enter dangerous situations every day, and the only thing they want to look forward to when they can no longer perform their duties is to be able to retire with some sort of security. People expect us to be there, and we are always there. We expect that the city holds up their end of the bargain when we signed on to be firefighters and paramedics for the city of Chicago.”
Without a pension check, public sector workers face a bleak retirement. Many are ineligible for Social Security.
“If we were talking about doing this to people with Social Security there would be rioting in the street,” said Ryan. “But because it’s public servants on pensions it seems to be OK to do this.”
Most cities and states with funding gaps still have time to fix the problem. Of the roughly 20,000 municipalities in the country, only a handful have completely run out of cash and been forced to seek shelter in bankruptcy court.
What’s less clear is whether those states and cities have the political will to make the necessary, unpopular decisions, according to Jean-Pierre Aubry, assistant director of state and local research at the Center for Retirement Research at Boston College.
“Even the ones that are really up against it have somewhere around 10 to 15 years of a window to turn things around,” he said. “That’s not a whole lot of time. And it’s not clear if these governments that couldn’t make contributions when times were good and the economy was better will be able to make them now or going forward.”
That political challenge is playing out in Illinois, where a $95 billion pension fund gap has deadlocked the state legislature over reform proposals for two years. In March, the nation’s fifth most populous state settled with the Securities and Exchange Commission after the agency charged Illinois with fraud for misleading bond investors about its pension funding problems between 2005 and 2009.
After lawmakers adjourned in May without fixing the problem, the state’s credit rating was slashed, raising future borrowing costs. Earlier this summer, Gov. Pat Quinn used a budget line-item veto to freeze lawmakers’ salaries effective August. Last week, the Illinois House speaker and Senate president hauled Quinn into court to get their pay restored.
Such gridlock only increases the cost of fixing the problem. As pension payments consume a greater share of tax dollar—for example, Illinois’ badly underfunded pensions now consume a fifth of the state’s revenues—other services are starved of funds.
“This is happening in too many cities and towns across America, where social services, because they can be cut, are cut, financial analyst Meredith Whitney, CEO and founder of Meredith Whitney Advisory Group, told CNBC: “(But) because pensions and bonds constitutionally cannot be cut, they’re the protected class. I think you’re going to see a real issue of neighbor against neighbor on these very issues.”
But as Detroit has demonstrated, budget-balancing service cuts only lower the quality of life in a community, chasing residents away and further eroding the tax base. Raising taxes, on the other hand discourages new business expansion, further reducing revenues. For cities and states that have failed to fund their pension promises, it’s a vicious cycle.
To be sure, many jurisdictions have avoided falling into that the trap by keeping up with their pension promises.
Even after sustaining heavy losses in the 2008 stock market crash, seven states—Wisconsin, South Dakota, North Carolina, Washington, New York, Tennessee and Delaware—have set aside more than 90 percent of their estimated future pension payments.
“There are great stories about the cities and towns that are doing well that are investing in key things and being mindful of their fiscal discipline,” said Whitney.
Fuzzy math
Assessing the financial health of a jurisdiction is compounded by the fuzzy math used to calculate just how much a state or city needs to set aside to meet its pension promises.
Even in the best of times, pension accounting is fertile ground for voodoo economics and political expediency because those projections are based on a series of all but unknowable assumptions. It’s hard to predict with precision, for example, just how many years of service a current employee will accumulate or how many checks they’ll collect in their lifetime.
Future pension cost estimates have been made more problematic by a common practice known as “spiking”—in which retirement-ready workers rack up hours of overtime and apply unused vacation to swell their last paychecks to lock in a higher monthly pension payment.
Managers of many underfunded plans have come up with a neat trick to make the problem seem to disappear. By simply assuming a higher investment return in the future, they can lowball the reported amount needed to meet future payments.
Even as low interest rates have badly depressed investment performance, many fund managers continue to project returns of 8 percent or higher.
In 2011, the latest data available, the 100 largest public pension funds projected an average return of 7.84 percent. But their actual return over the prior 10 years was just 5.6 percent a year, according to a survey by Pensions and Investments, a trade publication.
Eventually, those assumptions come home to roost, according to Rhode Island state Treasurer Gina Raimondo, who helped shepherd an overhaul of the state’s ailing pension system in 2011.
“Real people get hurt when politicians aren’t honest and realistic about the magnitude of these issues,” she said. “If you use a set of assumptions that makes the problem look smaller on paper today, that’s irrelevant 10 years from now when the cash runs out and someone needs a pension check.”
Many fund managers also use a technique called “smoothing”—which allows them to book investment gains and losses slowly for as long as five years. In good times, the scheme lets state and city officials ride a bull market years after it’s over, underfunding pensions to pay other government expenses, cut taxes or increase pension benefits without paying for the added longer-term cost.
“The boom of the ’90s was probably the worst thing that happened because (states and cities) ended up with a number of overfunded plans,” said Arlington County’s Tuohy. “And promises were made based on those overfunded plans.”
But smoothing also prolongs the pain of a severe market downturn, including heavy losses like those sustained in the 2008 market collapse. Thanks to smoothing, the burden of those investment losses continues to weigh on pension funds even as the stock market has recovered in the past year.
That’s one reason the Government Accounting Standards Board, which sets the bookkeeping rules for pension plan managers, has banned smoothing and requires underfunded plans to put away their rose-colored glasses when estimating future investment returns.
When implemented next year, the new rules will paint a bleaker funding picture, cutting the average funding ratio of assets to liability, which stood at 75 percent in 2011, to 57 percent, according to a study by the Center for Retirement Research.
Bond rating agency Moody’s recently issued its own state-by-state reality check, based on its estimates of “adjusted” pension fund shortfalls that better reflect the new accounting realities.
Moody’s figures that 15 states are in better shape than the current reporting rules would indicate. The rest have bigger liabilities (some much bigger) than found in their current financial statements. Based on the adjusted funding gaps, nine states—Massachusetts, Pennsylvania, Colorado, Louisiana, Hawaii, New Jersey, Kentucky and Connecticut—would see their funding liabilities exceed an entire year’s worth of state revenues. In Illinois, the adjusted funding gap amounts to 241 percent of state revenues.
Since the Great Recession officially lifted in 2009, all 50 states have undertaken ever-more intense reforms as the pension funding problem deepened. This year alone, more than 1,200 bills have been introduced covering a range of fixes.
The list includes suspending cost of living increases for retirees and shifting some of the investment risk on future retirees with the addition of a defined contribution plan similar to a 401(k). Some states have gone further by raising employee contributions or shifting the entire burden onto new workers with defined contribution plans.
“That deals with the next generation,” said Verne Sedlacek, president of Commonfund. “But we’ve got this whole group of people who worked for city and state governments for decades who had an expectation of payment. And they can’t be paid.”
The most drastic reforms also leave jurisdictions at a marked disadvantage when they go to recruit the next generation of police, firefighters and teachers. Because cuts to public pension plans haven’t been offset with wage increases, they leave public workers making about 20 percent less than their counterparts in the private sector, according to a Center for Retirement Research study.
“So you now have two people with the same human capital—and the one in the private sector makes 20 percent more than the one in the public sector,” said Boston College’s Aubry. “The question is how are you going to attract and retain quality public sector employees with that disparity?”
—By CNBC’s John W. Schoen. Follow him on Twitter

Rahm’s Chicago: $1 Billion Financial Shortfall Forecast by 2015

Breitbart – by REBEL PUNDIT
Chicago Mayor Rahm Emanuel released the city’s second Annual Financial Forecast on Wednesday. Not only does the report predict a $369 million financial shortfall for the city’s operating “budget” in 2014, but it also predicts a shortfall of more than $1 billion by the year 2015.
In his press release regarding the city’s financial woes, Emanuel bragged, “By making the tough but necessary choices in 2012, we were able to cut our budget gap in half in one year without using one-time fixes… But this will not be done in one year and while a $369 million budget shortfall is a substantial gap, we are continuing to make the difficult but necessary choices as we right the city’s financial ship and stabilize its fiscal future.”   
But, is the city really making the “difficult choices,” as Emanuel claims?
On Thursday, Breitbart News reported the city’s payroll is more than $2.4 billion, with over 2400 city employees (not including school employees) making over $100,000 a year. The payroll is by far the highest expense for the city, yet in the Financial Forecast report, it is expected to increase by $100 million in 2014. No one from city hall is talking about making any cuts to employees’ salaries. A 10 percent across the board cut would cover most of the city’s shortfall for 2014, at least.
It seems, however, little can or will be done to deal in earnest with the greatest problem facing the city’s poorly managed budget—the unfunded pension liability for city retirees.
While Emanuel predicts revenue increases of $466 million and $580 million in 2014 and 2015 respectively, he fails to make any mention of the massive expenditures coming the city’s way in 2015 and 2016.
The city’s forecast report spells out that even the most positive outlook is beyond bleak, and the rosiest possible outcome painted in the report shows a $917.8 million shortfall by 2016.

The pension problem does not lie squarely on Chicago’s shoulders, as stated in the report: “the City’s pension funds are governed by state law.” The state legislature has yet to act, despite a veto-proof Democrat majority as well as a Democrat Governor in Pat Quinn.
From the report:
Even under optimistic projections, the City will continue to experience a sizable annual operating budget shortfall for several years. This is in part a product of the City’s longstanding structural deficit and makes evident the need to continue the difficult process of reforming government to bring operating costs in line with revenues in 2014 and beyond. However, the legacy cost of pension obligations more than doubles the size of the City’s projected gap in 2015 and 2016. Substantive pension reform could significantly reduce the impact of these costs on the City’s budget over the coming years; however, such action must occur at the State level, as the City’s pension funds are governed by state law.

Poor Economy = Low Gold Price?

Casey Research

Despite some positive data, the global economy is showing signs of slowing, a remarkable development in itself when you consider all the money printing and deficit spending that's transpired over the past few years. According to the IMF's overview, global growth was less than expected in the first quarter of 2013, at just over 3%, which is roughly the same as 2012. The lower-than-expected figures were driven by significantly weaker domestic demand and slower growth in emerging-market economies, a deeper recession in the euro area, and a slower US expansion than anticipated. The report concludes that the prospects for the world economy remain subdued.

Many investors consider a weak economy to be a bearish environment for commodities, including gold. Doug Casey says we have entered into what will become known as the Greater Depression. That's as bearish as it gets, so should we expect gold to decline if the bears are right?

One of the most rocky economic periods in modern times was the late 1970s. For those who don't remember, the period was characterized by:

  • Unexpected jumps in oil prices, leading to soaring gasoline prices and rationing
  • A falling dollar
  • High and accelerating inflation
  • Record interest rates
  • Bank failures
  • Wars, including the Iranian Revolution (1978), the Iran-Iraq war (1979), the Russian invasion of Afghanistan (1979), and the Iranian hostage crisis (November 4, 1979 to January 20, 1981).
Outside of the Great Depression, it's hard to identify more trying economic circumstances.

Here's a closer look at the three-year period from 1977 through 1979. In the following chart, we looked at the economic indicators that affected citizens and investors the most, showing which were getting better and which, worse. These factors would all have affected market sentiment and the appetite to invest in gold at the time...

You can see that by the time 1979 hit, inflation was rising, gas prices were soaring, incomes were dropping, and mortgage rates were climbing. The S&P was rising, but not so much in real terms. GDP growth was high, but it was clearly not a rosy time for consumers or workers. Key points:
  • Nominal GDP in 1979 increased 10% year over year, but it was 4.5 percentage points less than in 1978, when the economy expanded a whopping 14.5%. Real GDP changes didn't reach those highs but kept to the trend: in 1978 the growth was 5.6%, while during 1979 the economy expanded only 3.1%, notably slowing down.
  • Inflation was dramatically accelerating. The '70s was a hard time for the dollar, much of it connected to the energy crisis. Annual inflation grew from 5.7% in 1976 to 7.6% in 1978, and accelerated to 11.2% in 1979. Prices were up significantly, especially those that had energy costs associated with them, squeezing the average American budget tighter and tighter.
  • Gasoline prices rose almost 37% in 1979. This obviously impacted spendable income. It would be the equivalent of national gasoline prices hitting $4.54/gallon by December after starting the year at $3.32.
  • Real disposable personal income slowed in 1979, growing only 1.2%, compared to a 3.5% growth rate just a year earlier.
  • Mortgage rates were already high—and then shot higher. The interest rate to mortgage a home went from 8.8% in 1978 to 11.2% in 1979. Home values were rising dramatically due to inflation, though rate increases cooled the pace, as values slowed to a 14.7% rate in 1979 vs. 15.3% in 1978.
  • Real manufacturing and trade sales (listed as Real Trade Sales in the chart) weakened from 7% in 1977 to 2.4% in 1979. This is a broad indicator that includes manufacturing, merchant wholesalers, and retail sales. The likely culprit for the drop was falling personal incomes as prices were rising.
  • The S&P 500 went from negative territory in 1977 to logging a 12.3% gain in 1979. As inflation rose, so did nominal stock prices, but the real gain was a mere 1.1%.
  • Unemployment was decreasing during this period, from 7.1% in 1977 to 5.8% in 1979. This may seem at odds with a slowing economy, but labor looked cheap since prices were growing faster than wages. Also, unemployment is a lagging indicator—and it sharply worsened later, when another recession hit in 1980.
So how did gold perform during this challenging economic environment?

The gold price rose 23% in 1977 and 37% in 1978, both of which are considered economic expansion years. But as things worsened in 1979, the price accelerated and went into a mania, ending the year with an incredible 127% return.

While there are many variables at play and no two economic time periods will be the same, this history lesson signals that a sluggish economy is not necessarily an obstacle for gold doing well. Indeed, some of these factors directly contributed to the rush to gold, which is not just a commodity, but the single best tool for storing and transferring wealth (money) ever devised.

In short, there is no contradiction between Doug Casey's gloomy global economic outlook and his bullishness on gold. In our view, the former is the reason for the latter, and a very good reason to buy. If the history of the current bull cycle for precious metals even slightly rhymes with what happened in the 1970s, the market mania that lies ahead should bring us the biggest and fastest gains on our investments to date.

Tomorrow's BIG GOLD outlines why we think buying this month will reward investors not just in the long-term but quite possibly in the short-term as well. The bullion discounts we offered last month have been extended for 30 days solely for BIG GOLD readers—this is the time to pounce, so take advantage of weak prices while they're still available.

[Thanks to research assistant Alena Mikhan for her contributions to this report.]

Time to Take Note of USA Firsts

Anthony Freda Art
Catherine J. Frompovich
Activist Post

Everyone always is impressed when someone accomplishes that coveted award or title of Number One—Numero Uno, which defines the epitome of accomplishment. For many years the USA stood proud at the Olympics, taking home more gold medals than any country. The USA many times has had the honor of being number one in many more categories. However, in recent years, Old Glory may be somewhat embarrassed by many of the Number One spots USA statistics has had her flying in. Let’s take a closer look to see where we shine as Number One.

First and foremost, it seems that the USA quickly is becoming a police-controlled population or state. That dubious recognition is attained from incarceration statistics, which certainly are not enviable. Back in October of 2012, Salon featured the article “US has more prisoners, prisons than any other country.” [1] According to the International Centre for Prison Studies, the USA had 730 incarcerated persons for every 100,000 in population. We ‘towered’ over the second-best rival, the Czech Republic, which had slightly over 200 incarcerations per 100,000 population. The USA outshined Mexico for Numero Uno; Mexico’s rate was 200 per 100,000.

According to the Federation of American Scientists, [2, 3] the USA was Number One in arms deliveries to the world by supplier for the years 1999 through 2006 inclusive. Taxpayers forked over a grand sum totaling $107,672 Millions of constant 2006 U.S. dollars. The USA outshined and outspent its nearest contender, Russia, several times over, since Russia ponied up a measly $38,754 Millions of constant 2006 U.S. dollars. Was that money well spent? Who knows, since it represents what many consider the Republican “Bush-2” war horse machine that got us into inextricable military action. But, it did get us to be Numero Uno!

Probably where the USA ‘shines’ the brightest as Number One is in healthcare statistics. No one beats us in many of the various aspects of those statistics. Let’s see how well we do there.

Regarding percentage of Gross Domestic Production (GDP) spent on healthcare, the USA outranks every country as of 2007 data from the Organization for Economic Co-operation and Development (OECD) with a whopping 15.3%. Next is Switzerland with 11.6%; then Germany at 10.7%; the United Kingdom at 8.3%; and Japan at 8% -- almost half the U.S. GDP. [4] Notation ought to be made that the U.S. Congressional Budget Office projects that total U.S. healthcare spending will reach 31% of GDP by 2035. [5]

Now, let’s compare what we are getting for our GDP outlay as a return on longevity or life expectancy at birth and compared with:
  • Japan  82.1 years
  • Switzerland  81.3 years
  • United Kingdom  79 years
  • Germany  79 years
  • The USA slips to  77 years 
So, it looks like Japan’s 8% GDP in 2007, which was almost half the USA, secured for the Japanese a life expectancy of 5.1 years more than the USA, who spent 15.3% GDP. [6]

According to OECD statistics for 2007, infant mortality rates place the USA into a position it should not be in, i.e., considering all the money spent, our advanced medical technology, and vaccines, which are touted to prevent childhood and other diseases.

In the category Infant Mortality (Deaths per 1000 Live Births): [7]
  • United States  6.8
  • United Kingdom  5.1
  • Switzerland  4.2
  • Germany  3.9
  • Japan  2.8
In trying to weigh the benefits of healthcare parameters that affect overall health outcomes, we need to consider the role that vaccines play in health. Let’s check out this chart for starters.


Although the base year in the above chart is 2009, not 2007 used in prior statistics, it graphically illustrates something we need to consider seriously: The country of Japan has one of the lowest number of vaccinations given to children before 5 years of age, i.e., 11 vaccinations. Whereas, the United States mandated children before 5 years of age in 2009 receive 36 vaccinations, more than three times the vaccines given to children in Japan in 2009. And yet, we don’t hear of outbreaks or pandemics of contagious infectious childhood diseases in Japan, which the U.S. media would be only too obliging to report. Isn’t that rather remarkable?

Now, for sake of argument, consider the Lifespan Rankings in 2009. Japan was Number 4; the USA was Number 34! Moreover, did you notice that the 2011 statistic for USA’s Life Ranking slipped to 39?

Here is something else to ponder. Let’s examine another chart to see some extremely interesting data. The Mortality Increase Trendline climbs from a low end of mandated vaccines of 11 to the high end of mandated vaccines: 36 in the United States in 2009. How does that vaccine mandate affect healthcare costs from several perspectives, i.e., costs of vaccines and their administration, including costs of healthcare services and vaccine failures for premature birth, sick, and dying children, who may be impacted by the very vaccines they receive, since the graph below seems to associate mortality and number of vaccines given? Questions should be airborne in science and the U.S. court system about the possible role of vaccines in Sudden Infant Death Syndrome (SIDS) and Shaken Baby Syndrome (SBS


Another journalist, Cynthia A. Janak, published information from the U.S. Census Bureau that is no longer available on Census Bureau servers. Question: Why? Janak points out the apparent ‘hidden’ costs vaccines will saddle healthcare with for numerous countries, including the USA, in the coming years. Janak addresses two vaccines in particular: Cervarix® and Gardasil®.

The United States spends two-and-a-half times more than the OECD average health expenditure per person (Chart 1). It even spends twice as much as France, for example, a country which is generally accepted as having very good health services. At 17.4% of GDP in 2009, US health spending is half as much again as any other country, and nearly twice the average. [10]
If we examine the chart at http://www.oecd.org/unitedstates/49084355.pdf , we see how the USA is Number One in health expenditures per capita, but apparently: (a) not very healthy; (b) not getting our money’s worth; and (c) in need of a complete overhaul for better quality of care, something that the Patient Protection and Affordable Care Act (Obamacare) may not provide but, in actuality, will result in an escalation of health insurance costs enforced by the IRS.

According to About.com,
The Obamacare ruling allows the IRS to tax you 1% of adjusted gross income (above the taxable minimum income), but no less than $95 per adult/$47.50 per child in 2013. 
These taxes rise in 2015 and 2016. For more, see Obamacare Taxes. [11]
Before we leave the vaccine component in this article, here’s a chart that needs to be studied since it implicates the role of chemicals in disease, and seemingly with polio. Please study this chart.

click to enlarge [12]
We note that there is no indication of paralytic polio epidemic(s) worldwide prior to the 1886 epidemic in Sweden. Polio starts to escalate during the World War I years when mustard gas and phosgene [13] were used in combat. Then polio intensifies into pandemic proportions with the introduction of many DDT-like chemicals. Note that “DDT was discovered to cause nerve damage, paralysis and death by respiratory failure in calves, via milk. 1953, confirmed by Swiss.” So, let’s see where the USA stands on the production of chemicals.

Again, the USA is Numero Uno in chemical shipments per Wikipedia’s “Chemical Industry.” [14]

What impact do all those chemicals have on our health, the quality and safety of the air we breathe, and the food and water we take into our bodies? What percentage of those shipments pertains to glyphosate and other chemicals used in GMO agriculture? This writer discusses chemical issues in her book, Our Chemical Lives And The Hijacking Of Our DNA, A Probe Into What’s Probably Making Us Sick.

According to the United Nations Survey Report [15], the United States is Number One in total number of crimes! Numero Uno, again, according to the map showing the top ten countries with the highest reported crime rates.

The Washington Post in June of 2005 reported, Study: U.S. Leads in Mental Illness, Lags in Treatment.” [16] "We lead the world in a lot of good things, but we're also leaders in this one particular domain that we'd rather not be,” according to Ronald Kessler, the Harvard professor of health care policy who led the study.

What about pharmaceutical drugs? How does the USA stack up with them? Well, according to bls.gov,
Total value of U.S. consumption of pharmaceutical drugs in 2009 was $300 billion, or about 40 percent of the worldwide market share, and reflected a 37-percent increase since 2003. [17]
With close to 306 million people in the USA in January of 2009 and an estimated 6 billion 8 hundred thousand plus people world-wide in March of 2009, we realize just how disproportionate a use—40% of the worldwide pharmaceutical drug market share—there is in the USA. Why? Are pharmaceuticals over-prescribed in the U.S., or are we just sicker than the rest of the world? With that amount of pharmaceutical consumption, we undoubtedly have to be Number One.

After reviewing these statistics, U.S. healthcare consumers, taxpayers, voters, and those who regulate and govern in the United States need to take a long, hard, conscientious look at how the U.S. excels where it should not. Everyone ought to realize that being Number One in so many areas where we would rather not be—and should not be considering capital outlay in healthcare, especially—is cause for major concern, plus definite confirmation of the desperate need for fundamental reform and the change we were promised, not the same old lip service with higher taxes, especially those coming in the name of healthcare insurance.


[1] http://www.salon.com/2012/10/15/us_has_more_prisoners_prisons_than_any_other_country/

[2] http://www.photius.com/rankings/arms_sales_major_suppliers_1999_2006.html

[3] http://www.fas.org/asmp/campaigns/smallarms/Statefactsheet29jun06.htm

[4] http://www.pbs.org/wgbh/pages/frontline/sickaroundtheworld/etc/graphs.html

[5] http://www.cnbc.com/id/44180042

[6] http://www.pbs.org/wgbh/pages/frontline/sickaroundtheworld/etc/graphs.html

[7] Ibid.

[8] http://www.google.com/search?q=charts+of+vaccines+in+usa+and+other+countries&tbm=isch&tbo=u&source=univ&sa=X&ei=yh33UfvoDMz_4AOYl4DYCA&ved=0CFgQsAQ&biw=1012&bih=650#facrc=_&imgdii=_&imgrc=a_dXjwustv2AKM%3A%3BglZ8zmU_fVjn_M%3Bhttp%253A%252F%252Fwww.newautism.com%252Fwp-content%252Fuploads%252F2011%252F12%252FVaccinesChart.png%3Bhttp%253A%252F%252Fwww.newautism.com%252Fcuba-vaccines-and-autism-vs-usa%252F1555%252F%3B713%3B294

[9] Ibid.

[10] http://www.oecd.org/unitedstates/49084355.pdf

[11] http://useconomy.about.com/od/healthcarereform/f/What-Is-Obama-Care.htm

[12]] http://www.wellwithin1.com/pol_all.htm

[13] http://www.historylearningsite.co.uk/poison_gas_and_world_war_one.htm

[14] http://en.wikipedia.org/wiki/Chemical_industry

[15] http://www.mapsofworld.com/world-top-ten/countries-with-highest-reported-crime-rates.html

[16] http://www.washingtonpost.com/wp-dyn/content/article/2005/06/06/AR2005060601651.html

[17] http://www.bls.gov/ppi/pharmpricescomparison.pdf

Catherine J Frompovich (website) is a retired natural nutritionist who earned advanced degrees in Nutrition and Holistic Health Sciences, Certification in Orthomolecular Theory and Practice plus Paralegal Studies.

Her work has been published in national and airline magazines since the early 1980s. Catherine authored numerous books on health issues along with co-authoring papers and monographs with physicians, nurses, and holistic healthcare professionals. She has been a consumer healthcare researcher 35 years and counting.

Catherine’s latest book, A Cancer Answer, Holistic BREAST Cancer Management, A Guide to Effective & Non-Toxic Treatments, is available on Amazon.com and as a Kindle eBook.

Two of Catherine’s more recent books on Amazon.com are Our Chemical Lives And The Hijacking Of Our DNA, A Probe Into What’s Probably Making Us Sick (2009) and Lord, How Can I Make It Through Grieving My Loss, An Inspirational Guide Through the Grieving Process (2008).

Update on Public Banking in Pennsylvania and Philadelphia

Public Banking things are happening in Pennsylvania, the home of Public banking during revolutionary times. 

From http://commons.wikimedia.org/wiki/File:Benjamin_Franklin.jpg

The REAL Reason for the Revolutionary War-- Bringing It Back Now

The real reason for the revolutionary war was the British, when Ben Franklin told them how well the colonies were thriving because they were issuing their own currency, shut down the public banks. The King ordered the colonists to only use British currency. 

This podcast is an in depth discussion on the history of public banking and an exciting up-date on efforts to bring public banking to two Pennsylvania cities- Reading and Philadelphia.  The details, the experience, the strategy and planning-- they're exciting and valuable. 

My Guests:
Mike Krauss, founding director of the Public Banking institute and founder and chair of the Pennsylvania Project inc. before that had a career in county and state government and international commerce
Walt McRee senior advisor to the public banking institute, and one of the directors of the PA project.  background as media executive, work primarily in moving policy issues into the media conversation.  
Interview notes-- mostly my questions. 
Tell me a story. 
Tell me a about the revolutionary war-- how it was not a tax on tea that led to the war, and about the tie between public banking and the revolutionary war, Ben Franklin and the times. 
You've said that the new public bank idea is a second revolution. What do you mean by that?
Where did the Rothschilds fit into the Revolutionary war. 
Can you talk about Philadelphia's own public bank. Can you talk about that?
How do Republicans feel about Public Banking?
Doesn't the government own the bank?
You're differentiating schools and roads and police from government?
Let's start with Detroit and why that applies to Reading and Philadelphia. 
Why is it too late for Detroit and Harrisburg-- in terms of public banking?
Tell me about what's happening in Reading and Philadelphia?
You're talking about a lot of money invested by the city of Phila.
What's exciting to me is that you don't need congress to make this happen. You don't need to get a state legislature to approve this. In many cases a handful of people can make this happen. 
Why are you doing this Mike?
      "I'm a believing Christian."
Have you spoken to people of faith about public banking?
How would you frame public banking and its connection to the Christian faith?
What's the status of public banking efforts outside of Pennsylvania?
How will public banking help progressives who are fighting corporatism and the corporate state?
What have your learned to increase the likelihood of your success at making public banking happen?
Public banking roadmap;My  publicbanking.org site. 

Size: 30,361,680 -- 1 hrs, 3 min, 15 sec
listen on iTunes
You will need the Flash plug-in to use the Listen button.

Rob Kall is executive editor, publisher and website architect of OpEdNews.com, Host of the Rob Kall Bottom Up Radio Show (WNJC 1360 AM), and publisher of more...)
  The views expressed in this article are the sole responsibility of the author and do not necessarily reflect those of this website or its editors.

Gerald Celente: Detroit From Motown To No-Town

Mortgage Fraud: Former Bear Stearns Mortgage Executives Have Plum Jobs on Wall Street

The four “deny that the offering documents referenced contained material misstatements of fact or omissions of material facts,” according to the answer jointly filed by the Bear Stearns companies and the individual defendants from Bear.
Two other mortgage division leaders, Mary Haggerty and Baron Silverstein, were not named defendants in the lawsuit.
AMBAC Assurance Corp., a company that guaranteed some of Bear’s mortgage bonds and went bankrupt in 2010, accused Bear of fraud in a separate lawsuit that described actions by the six mortgage division leaders. AMBAC emerged from bankruptcy in May.
Yet all six continue to work at the top levels of their field, earning salaries and bonuses that have allowed them to live in luxury while the mortgages that made up the bonds they sold have defaulted at alarming rates.
“How is it that we could say that we learned something from the last crisis when we still have the same people running our companies for the future?” asked Jordan Thomas, a former attorney for the Securities and Exchange Commission who now runs the whistleblower practice at Labaton Sucharow in New York.
Four years, $29 million
Thomas Marano, who led Bear’s mortgage finance division, is perhaps the most telling example.
In the past four years he earned more than $29 million as head of Residential Capital, LLC,  the mortgage subsidiary of the former General Motors Acceptance Corp. (GMAC), which was bailed out by the government during the financial crisis. ResCap filed for bankruptcy last year.
As global head of mortgages, asset-backed securities and commercial mortgage-backed securities at Bear Stearns, he oversaw the underwriting and securitization of subprime loans from Bear’s mortgage subsidiary EMC Mortgage Corp.
His division oversaw the mortgage operation from start to finish. EMC would make or purchase mortgage loans, then pool thousands of them into mortgage backed securities, register them with the SEC and then sell them to investors.
The FHFA, along with the State of New York, mortgage insurers, and other federal agencies and investors, said in lawsuits that Bear falsely assured investors and insurers in customer disclosures and SEC filings that the loans were subjected to rigorous underwriting standards.
The lawsuits said Marano’s unit was so hungry for new loans to securitize that they let the standards slide and knowingly included bad loans in mortgage pools.
Marano personally signed the SEC filings on at least $8.7 billion worth of residential mortgage-backed securities sold to Fannie Mae and Freddie Mac, according to documents included in the FHFA lawsuit.
“Defendants falsely represented that the underlying mortgage loans complied with certain underwriting guidelines and standards, including representations that significantly overstated the ability of the borrowers to repay their mortgage loans,” the lawsuit states.
Marano, the company and all the other defendants “deny there was an abandonment of reasonable due diligence procedures,” according to court documents.
“Individual defendants deny that the securitizations … contained material misstatements of fact or omissions of fact,” the defendants’ response to the FHFA complaint filed in court reads.
Marano also directed executives to withhold “every fee” from credit rating agencies that had lowered the ratings on the firm’s mortgages bonds, according to the AMBAC complaint.
In the majority of the securities signed by Marano, more than half the loans were delinquent, in default or foreclosed by July 2011, according to figures the FHFA included in its lawsuit.
Marano, who has a 4,700-square-foot home in New Jersey and a vacation home in Park City, Utah, declined to comment for this story. He sold the New Jersey house to Old Pike Associates LLC, a limited liability corporation, for $99 in 2002 and the LLC also owns the Utah house. Old Pike’s address is Marano’s home address and the company lists Marano as CEO.
Marano is managing member of another LLC, Old Pike Associates II, LLC, which was formed in March 2012. The company bought a $4.2 million dollar home in Tenafly, N.J., in December 2012, according to public records.
When Bear went under, “everybody and their brother descended on the place,” looking to hire the best talent, said Chad Dean, managing partner of Integrated Management Resources and a banking recruiter for 11 years.
“Nobody should be surprised that Bear Stearns people are still all over the Street in high-level positions at other firms,” Dean said. “It’s very competitive. There’s resumés flying all over the place.”
Sen. Carl Levin, D-Mich., who as chairman of the Permanent Subcommittee on Investigations led some of the most thorough inquiries into the causes of the financial crisis, echoed that.
“Just because Bear Stearns went out of business doesn’t mean everybody who worked for Bear Stearns was incompetent,” he said. He declined to discuss Marano and his colleagues specifically.
Warren Spector, who was co-president of Bear Stearns until he was fired in August 2007, said Marano was seen in the industry as a “rock star.”
“He knew the business inside and out, and he could do every job, up and down the line,” Spector said. “He was one of the best managers Bear Stearns ever had.” Spector said he has no knowledge of the specific accusations against Marano in any lawsuits.
Republished from: Global Research

Obama, the economy and the movement

The latest figures on the economy make it all too clear that we are stuck in a feeble recovery that could go on for several years to come. Growth was only 1.4 percent in the first half of 2013, and the economy is still creating too few jobs to increase worker earnings, which actually declined in July.
So what’s the cure, and what might be done, given Republican obstructionism?
Start with interest rates. They need to stay very low. It’s clear that the Federal Reserve jumped the gun, with Chairman Bernanke saying in June that our central bank might reduce bond purchases soon — and then having to walk it back.
The economy is still far too weak to tolerate higher interest rates. The Fed needs to keep the monetary spigots wide open for the foreseeable future.
It’s also clear that the Sequester is fiscal madness. The Congressional Budget Office last year warned that the increase in payroll taxes coupled with the $85 billion Sequester would cut the growth rate for 2013 in half. That’s happening. Instead of furloughing public employees, the government should be adding new public jobs.
Obama’s tour to promote a recovery from the “middle out” is a good start, but there is nothing in his agenda that would fundamentally change the pitifully slow recovery. His proposed grand bargain on taxes would cut the corporate tax rate in exchange for closing loopholes, yielding net new revenues in the short run but no new revenue over time.
Instead, we need corporations to start paying their fair share. The claim that corporate America is over-taxed is nonsense. For Obama to embrace this idea plays once again to right-wing ideology.
So, what to do to end the blockage? There are some things that Obama could do, and other things that we need to do.
The Republicans will obstruct any legislative initiative to restore an economy of broad prosperity. So it’s necessary both to make their obstructionism bad politics and to use the power of the presidency until the legislative equation changes.
For starters, the president has a great deal of executive power that he hasn’t used. One example is the power to set the terms of government contracts.
During World War II, President Roosevelt denied war production contracts to any employer who tried to bust unions. In the 1960s, before there were the votes to pass civil rights legislation, Presidents Kennedy and Johnson issued executive orders requiring government contractors to end racial discrimination in hiring and promotion.
President Obama could issue orders requiring government contractors to pay decent wages and not to interfere with workers’ legal right to unionize. And now that the Senate has finally confirmed his appointees to the National Labor Relations Board, the NLRB could take a much tougher stance against illegal union busting.
The president could stop proposing trade deals that make it easier for industry to outsource and to evade labor and environmental regulations by moving offshore. Social standards should be part of all trade deals.
Obama, who tends to dislike partisanship, needs to become a better partisan in order to be a more effective president. He should make it even clearer what stands between us and a strong recovery — Republican obstruction on the budget. He should send up legislation for much more substantial public investment, and then lead the attack on the obstructionist Republican House, Harry Truman style.
Obama famously declared in his 2004 keynote address to the Democratic National Convention that there is no red state America, or blue state America, but only the United States of America. He should admit that he was wrong. Thanks to gerrymandering and the fact that Republicans have at least 190 safe House seats, nothing that Obama can say or do will move those Republicans members of Congress to stop obstructing the recovery. But even so, that leaves 245 other House seats. And there are enough swing seats currently held by Republicans that a compelling stance by the president could split the right and take back the House for the Democrats.
And if we are to reclaim a politics of broad prosperity, what we do on the ground is at least as important as what the president does. In that respect, the most hopeful development in years is the spate of one-day strikes by minimum-wage fast food workers demanding a living wage.
This movement is spreading. It’s telling that corporate America doesn’t have the nerve to fire these workers.
There are now tens of millions of Americans earning too little to live in minimal decency. The society, on average, is richer than ever, but too much of the national wealth and income is going to the top.
Obama said as much in his July 24 address at Knox College.
What’s needed is not just presidential rhetoric but a mass social movement to press for decent wages. The Occupy movement was a start, but it was a protest without a program. The movement for a $15 minimum wage is a protest connected to a politics. As it grows, this movement can create a tailwind for presidential leadership and isolate the Republicans as the party of privilege.
For three decades, this society has been dividing into haves and have-nots. Yet the struggles of ordinary people have been weirdly disconnected from our politics. Democrats express an economic populism when their backs are to the wall, but our Democratic presidents tend to get captured by economic elites.
Rebuilding the economy from the middle out is a start. Even better would be rebuilding it from the bottom up.
Republished from: Press TV

March Against the Banksters July 6th in South Africa

Wow! The UBUNTU Party’s got it goin’ on!
Press Release: March Against the Banksters 6 July 2013 – Sandton
Saturday 6 July 2013 – Sandton, South Africa.
I am pleased to announce that on the 1st of July 2013, the UBUNTU Party was issued with a permit for the Public Gathering and “March against the BANKSTERS” by the Johannesburg Metropolitan Police Department, under section 205 of 1993. The permit number is 0232/06/2013.
Everyone is invited to join in the march – because everyone is severely affected by the criminal activity of the banksters. This is not about politics or personal agendas – it is about our human rights and liberties that will bring about our freedom from financial slavery.
Join the event HERE: https://www.facebook.com/events/136840266518030/
The march will start at 11 am on Saturday, 6th July – on the corner of Rivonia Rd & Grayston Dr, Sandton in front of INVESTEC Bank. We will deliver memorandums to INVESTEC, NEDBANK, FNB, STD BANK, ABSA and also NORTON ROSE, one of the key law firms that continues to defend and represent the banksters, being fully aware of their unlawful activity. The memorandum will be distributed to the media – and contains simple questions that the bankers and their many law firms have refused to answer after repeated requests by thousands of people.
We will also deliver a memorandum to the 3 major media companies: PRIMEDIA, e-TV and SABC, urging them to stand with the people, and to perform their task as investigative journalist responsibly and report truthfully on their findings. We call on the editors and the journalists to become human beings first – and then play their role as journalists to bring justice into an unjust system filled with lies and deceptions often perpetuated by reckless and ignorant reporting.
We will also deliver memorandum to the OMBUDSMAN FOR BANKING SERVICES and most importantly to the RESERVE BANK OF SOUTH AFRICA in Pretoria – a private corporation that has been allowed to take control of our economic policy, by issuing privately printed money, in the form of a “FIAT” currency without any value whatsoever, by which they enslave all the people of South Africa. Our objective is to follow in the footsteps of brave leaders of the past, like JFK, and to return the right to print money, to the people, where it belongs. We propose the implementation of a PEOPLE’S BANK owned by the people, that pints money for the people by the people – interest free.
Our objectives are:
1) To mobilise those who have been enlightened regarding the gross unlawful conduct and criminal activity of the banks in South Africa – including the RESERVE BANK.
2) To bring this to the attention of the greater public and the media who are still in the dark regarding such activity of the banksters.
3) To highlight the method by which the gross fraud and criminal activity is conducted by the banksters.
4) To ensure that everyone understands their malicious intent and fraud committed through a process called SECURITISATION, by which our signatures, promissory notes and contracts of loans are sold to third party companies and traded on international stock markets for unimaginable profits, while repossessing people’s properties unlawfully, without the right to do so, destroying millions of lives in the process.
5) To expose the seemingly infinite influence and control over the Judiciary by the banks and their corrupt lawyers to the point where they influence certain Judges and the circumstances surrounding judgements against ordinary people who stand their ground.
6) To expose the corrupt lawyers and advocates who are complicit in this criminal activity by defending the criminal actions of the banks while being fully aware of the banks’ actions.
7) To urge the media to inform themselves and to report responsibly on the criminal activities of the banks that affect every human being alive, in the interest of justice for the people.
8) To make the banksters aware that the people will not stop until their criminal actions have been fully exposed.
9) To launch criminal charges against the CEOs, CFOs and DIRECTORS of the relevant banks, together with their lawyers and advocates that have relentlessly defended them while lying under oath, making them complicit in the fraud.
10) Ensure the swift prosecution and incarceration of the senior bank management, their directors, and their lawyers for their inhumane actions and crimes against the people of South Africa.
11) To facilitate the closure of the privately owned RESERVE BANK OF SOUTH AFRICA and replacing it with a PEOPLE’S BANK, that issues interest-free money BY THE PEOPLE, FOR THE PEOPLE.
12) To allow this interest-free money to bring freedom from financial slavery and prosperity to all. THE PEOPLE SHALL GOVERN – NOT PRIVATE BANKING CORPORATIONS
“Justice is indivisible. Injustice anywhere is a threat to justice everywhere.” Martin Luther King.
In pure truth
Michael of the family Tellinger
Founder of the UBUNTU PARTY
For information email: contact@ubuntuparty.org.za join the UBUNTU movement at www.ubuntuparty.org.za

Income Inequality: Measuring Us Against the World

Click to enlarge
Source: NYT

They Will Bring The Dollar Down! And The US Economy!

Bernanke Wants 2% Inflation in a Deflationary World; Who Pays the Price?

PEW Social Trends research shows a Record 21.6 Million Young Adults Live in Their Parents’ Home
Here are some clips from the fascinating PEW study.

In 2012, 36% of the nation’s young adults ages 18 to 31 the so-called Millennial generation—were living in their parents’ home, according to a new Pew Research Center analysis of U.S. Census Bureau data. This is the highest share in at least four decades and represents a slow but steady increase over the 32% of their same-aged counterparts who were living at home prior to the Great Recession in 2007 and the 34% doing so when it officially ended in 2009.

A record total of 21.6 million Millennials lived in their parents’ home in 2012, up from 18.5 million of their same aged counterparts in 2007. Of these, at least a third and perhaps as many as half are college students.
The steady rise in the share of young adults who live in their parents’ home appears to be driven by a combination of economic, educational and cultural factors. Among them:
  • Declining employment: In 2012, 63% of 18- to 31-year-olds had jobs, down from the 70% of their same-aged counterparts who had jobs in 2007. In 2012, unemployed Millennials were much more likely than employed Millennials to be living with their parents (45% versus 29%).
  • Rising college enrollment: In March 2012, 39% of 18- to 24-year-olds were enrolled in college, up from 35% in March 2007. Among 18 to 24 year olds, those enrolled in college were much more likely than those not in college to be living at home – 66% versus 50%.
  • Declining marriage: In 2012 just 25% of Millennials were married, down from the 30% of 18- to 31-year-olds who were married in 2007.

How Citi is hedging against the foreclosure settlements

Are you missing a $125,000 check?
Four hundred thousand checks mailed out as part of the government's foreclosure settlement with 13 banks have been returned to Rust Consulting, the firm that mailed them. Bryan Hubbard, an OCC spokesperson, says efforts are underway to track down better addresses for the recipients of these checks, some of which are worth up to $125,000.
Who's paying Rust to do this work? The 13 banks that agreed to the government settlement pay Rust, Hubbard told me. These banks include Bank of America (BAC), Citigroup (C), J.P. Morgan (JPM), Goldman Sachs (GS), Morgan Stanley (MS), and Wells Fargo (WFC), among others. Rust would not provide information for this article on how the contracts with the banks were negotiated or information on the terms of those contracts.
Rust's parent company is SourceHOV. Up until March, Apollo Global Management owned SourceHOV. Now, Citigroup, one of the 13 banks involved in the settlement, has that privilege. Citi Venture Capital International Private Equity (CVCI) "has an established track record of successful investments in the business services/outsourcing space; Source HOV fit nicely into our parameters," Citi spokesperson Danielle Romero-Apsilos wrote me in an email.
For Citigroup, the stake in SourceHOV is a hedge of sorts, though perhaps an unintentional one. When Rust gets bank settlement business, including settlements like the one involving Citi, it generates revenues for SourceHOV, the company Citigroup owns.