Thursday, February 27, 2014

NGO dedahkan Taib Mahmud, anak terlibat perjanjian perniagaan RM6.6 juta

Dua pertubuhan bukan kerajaan (NGO) hari ini mendedahkan penglibatan Ketua Menteri Sarawak Tan Sri Abdul Taib Mahmud bersama anaknya, Datuk Seri Mahmud Abu Bekir Taib, dalam satu perjanjian perniagaan bernilai RM6.6 juta (AS$2 juta) dengan sebuah syarikat berpengkalan di Jerman.
Pembongkaran perjanjian tersebut didedahkan hari ini oleh dua NGO, Global Witness dan Centre to Combat Corruption and Cronyism (C4)  dua hari sebelum Taib dijangka mengambil alih jawatan Yang di-Pertua Negeri (TYT) Sarawak daripada Tun Abang Muhammad Salahuddin Abang Barieng yang akan bersara 28 Februari ini.
Taib dan anaknya, Abu Bekir, terlibat dalam perjanjian lumayan dengan syarikat pengurusan sisa Trienekens dengan kerajaan Sarawak pada 1998. Syarikat berpengkalan di Jerman itu juga sebelum ini pernah terlibat dalam kes rasuah pada 1999.
"Trienekens menjalankan kerjasama dengan syarikat tempatan, Sarawak Capital, yang dimiliki anak Taib Mahmud untuk memberikan 'khidmat nasihat' bernilai RM6.6 juta sebagai sebahagian daripada perjanjian," kata NGO tersebut dalam satu kenyataan hari ini.
Menurut Global Witness, penglibatan anak Taib tersebut mempunyai konflik kepentingan.
"Secara faktanya, nilai besar yang dibayar kepada syarikat anak Taib sebagai sebahagian daripada perjanjian kelihatan mempunyai konflik berkepentingan," kata Cynthia Gabriel pada sidang media petang ini.
 Cynthia Gabriel dari NGO Global Witness dan Centre to Combat Corruption and Cronyism (C4) ketika sidang media di Kuala Lumpur hari ini. – Gambar The Malaysian Insider oleh Najjua Zulkefli, 27 Februari, 2014. NGO tersebut mendakwa anak Taib juga turut bersama menandatangani perjanjian persefahaman yang dimerterai antara Sarawak Wastes Management Sdn Bhd sebagai wakil kerajaan Sarawak dengan syarikat Jerman tersebut.
"Ia masih tidak jelas mengapa anak Ketua Menteri Sarawak perlu menjadi saksi dalam perjanjian bernilai besar tersebut antara kerajaan negeri dan firma antarabangsa," katanya lagi.
Global Witness mendakwa pakar perundangannya mendapati perjanjian dengan syarikat milik anak Taib, Sarawak Capital, hanyalah sebuah "perjanjian".
Syarikat milik anak Taib tersebut didakwa tidak terikat dalam kewajipan kontrak dalam "skop kerjanya".
"Pada pandangan kami, perjanjian ini menunjukkan wujudnya sogokan tersembunyi; tidak kelihatan Sarawak Capital membuat sesuatu ke atas wang mereka peroleh dan tidak munasabah mempunyai nilai komersil," kata Gabriel.
Trienekens dan Sarawak Capital bagaimanapun masih belum memberi jawapan kepada Global Witness walaupun sudah dihubungi NGO tersebut.
Namun, firma guaman di London, Mishcon de Reya yang mewakili Taib menafikan anak guamnya terlibat dalam "perjanjian palsu" selepas maklum balas dihantar oleh Global Witness.
"Perjanjian yang anda rujuk bukan 'perjanjian', juga bukan sogokan sama ada tersembunyi atau sebaliknya," kata firma guaman tersebut.
Bagaimanapun, Global Witness melahirkan kesangsian ke atas perjanjian tersebut memandangkan CEO Trienekens Hellmut Trienekens pernah didapati bersalah terlibat dalam rasuah bernilai jutaan euro kepada pegawai tempatan menerusi Switzerland untuk membina sebuah insinerator sisa di Cologne, Jerman.
Susulan perkembangan terbaru di mana Taib kemungkinan dilantik sebagai TYT Sarawak, Gabriel yang merupakan pengerusi C4, mendesak Putrajaya menyiasat pendedahan terbaru ini.
"Kes ini melibatkan kepentingan awam yang perlu disiasat oleh Suruhanjaya Pencegahan Rasuah Malaysia (SPRM)," kata Gabriel yang mendesak SPRM supaya campur tangan dan menyiasat Taib.
"Kami desak pentadbiran Najib menangguhkan pelantikan Taib Mahmud sebagai TYT sehingga perkara ini selesai diteliti."
Tekanan kepada Taib supaya tidak dilantik sebagai TYT semakin ketara, minggu lalu sekumpulan 50 NGO melancarkan petisyen dalam usaha menghalang pelantikan ketua menteri Sarawak yang didakwa mereka seorang perasuah dan menyalahgunakan kuasa sepanjang 33 tahun pemerintahannya.
Satu kajian oleh Bruno Manser Fund (BMF) mendedahkan harta Taib mencecah AS$15 bilion (RM46 billion) dan 20 ahli keluarganya mengumpul harta hampir AS$21 bilion (RM64 bilion).
Pada 16 Februari lalu, BMF yang berpengkalan di Switzerland juga membuat laporan polis ke atas keluarga Taib atas dakwaan penyeludupan balak haram di Kanada, malah PAS juga menggesa SPRM membuka kertas siasatan ke atas ketua menteri tersebut.
BMF berkata, satu laporan polis dibuat kepada Royal Canadian Mounted Police, berdasarkan "bukti baru" yang mendapati wujud kaitan kewangan antara Richfold Investments di Hong Kong dengan Sakto Development Corporation di Ottawa, Kanada.
Sakto Development Corporation adalah sebuah syarikat pemaju jutaan ringgit yang dimiliki oleh anak perempuan Taib, Jamilah Taib Murray. – 27 Februari, 2014.

31 Percent Of All Food In America Is Wasted – And Why That Is About To End

By Michael Snyder
Burger And Fries - Photo by Ewan Munro
According to a stunning new report from the U.S. Department of Agriculture, nearly a third of all food produced in the United States gets wasted.  We are probably the most wasteful society in the history of the planet, and we are also one of the most gluttonous.  More than 35 percent of all Americans are considered to be officially “obese” by the Centers for Disease Control and Prevention.  Unfortunately, this era of gluttony and taking food for granted will soon be coming to an end.  Thanks to crippling drought in key growing areas and other extremely bizarre weather patterns, a massive food crisis is beginning to emerge all over the planet.  If you don’t think that this is going to affect you, then you simply are not paying attention.  Approximately half of all produce grown in the United States comes from the state of California, and right now California is suffering through the worst stretch of drought on record.  Food prices are going to start soaring, and that is going to affect the household budget of every family in America.
Needless to say, a time is coming when Americans will not waste food so recklessly.  But for the moment, we still have a tremendous amount of disrespect for the value of food.  According to the U.S. Department of Agriculture, we waste a staggering 133 billion pounds of food each year
Nearly a third of the 430 billion pounds of food produced for Americans to eat is wasted, a potential catastrophe for landfills and a wake-up call to officials scrambling to feed the hungry, according to a stunning new report from the Department of Agriculture.
The just-issued report revealed that in 2010, 31 percent, or 133 billion pounds, of food produced for Americans to eat was wasted, either molded or improperly cooked, suffered “natural shrinkage” due to moisture loss, or because people became disinterested in what they purchased.
Not that we need to stuff any more food into our mouths.  As I mentioned above, we have an epidemic of obesity in this nation.  In fact, the CDC says that 35 percent of the entire population is “obese”…
Meanwhile, according to the Centers for Disease Control and Prevention, more than one-third of US adults (35.7 percent) are obese, which is perhaps the best argument that Americans can offset a large part of the food waste problem by simply eating less. The estimated annual medical cost of obesity in the US was $147 billion in 2008; the costs of providing medical assistance for individuals who are obese were $1,429 higher than those of normal weight, thereby placing an enormous strain on healthcare costs.
Since we are such gluttons and we are so incredibly wasteful, we should have plenty of food to share with those in need, right?
Unfortunately, we are also extremely greedy and greatly lacking in compassion.
As I have written about previously, feeding the homeless has been banned in cities all over the nation, and other cities have passed regulations that greatly discourage the feeding of the homeless
Feeding the homeless is about to get harder as a new policy is set to begin this Saturday, Feb. 15, in Columbia, SC. Charities and non-profits will be requiredto pay a fee and obtain a permit 15 days in advance in order to feed the homeless in parks.
One impacted charity that was interviewed by the Free Times, Food Not Bombs, has been serving food to the homeless in Finlay Park every Sunday for 12 years. The group’s organizer, Judith Turnipseed, noted that the group has an impeccable track record and always tidies up after the meal. But with the new crackdown, Food Not Bombs will have to pay at least $120 per week for the right to feed the homeless.
Since the Columbia City Council approved its exile plan in August, the city has been trying to herd its homeless people to a shelter on the outskirts of town and keep them away from downtown. If charities continue to provide food in downtown parks, the thinking goes, it will allow homeless people to continue to live downtown, rather than being forced to leave.
What is wrong with us?
While we stuff our faces with more french fries and chicken wings, we have an appalling lack of compassion for those that are not able to take care of themselves.
Perhaps we deserve what is coming.
The horrible drought that never seems to end is rapidly turning much of the western half of the country into a barren wasteland.
You can see some incredible before and after photos of the drought in California right here.
The water level in Folsom Lake has dropped 80 percent in just two years.  In 2011, the lake was at 97 percent of capacity.  Now it is just at 17 percent of capacity and it is still dropping.
If a miracle does not happen, the upcoming growing season is going to be absolutely disastrous.  As I have written about previously, California farmers have already decided to allow half a million acres of farmland to sit idle this year because of the extremely dry conditions.
And it certainly does not help that the government has decided to cut off water supplies to many of the farmers.  The following is an excerpt from a recent article by Holly Deyo
Government has lost its mind. It is no more evident than their decision last week to cut off water to America’s food basket. Squeezed by the worst-ever drought in the state’s history, California is dying of thirst. Crushing news was delivered to farmer’s that no water would be coming from the Federal government. This dreaded decision was compounded by the Sierra Mountains getting just 25% of normal snowpack. There is no water to replenish already dangerously low reservoirs, so no water for farmers.
Needless to say, there are a lot of farmers that are going to be absolutely crippled by this.  The following is from Fox News
A federal agency’s recent announcement that the California’s Central Valley will get zero percent water allocation this year was devastating for farmers already dealing with the worst drought seen in decades.
One of the world’s most productive agricultural regions, the enormous valley is reeling after the driest year in more than a century. But last week, the Department of Interior’s Bureau of Reclamation, which supplies water to a third of the irrigated farmland in California through a 500-mile network of canals and tunnel, said it won’t be able to deliver any of the water sought by farmers.
“It goes beyond devastation, you’re going to see farms that have been in business 30 and 40 years, they do not have any water, they are out of business,” said Dennis Falaschi, general manager of the Panoche Water District.
If California produces much less food than it normally does, that means that food prices are going to start skyrocketing.  Here is more from Holly Deyo
As one Millennium-Ark reader pointed out in an email last week, after the jump in beef prices, people will look to chicken, pork, fish and turkey. Chicken is already up though not as much as beef.  This will, in turn, drive up their costs and affect availability of these other meats. Keep in mind that California also produces all of these proteins plus lamb. Then consider this: Ag Specialists Warn of Higher Wheat Prices Due to Drought. It’s not just beef, weather is clobbering food from all angles.
And please keep in mind that the total size of the U.S. cattle herd has already been shrinking for seven years in a row, and that it is now the smallest that it has been since 1951.
But back in 1951, the size of the U.S. population was less than half of what it is today.
For much more on the emerging food crisis, please see this video.
Let us certainly hope and pray that the drought in California ends soon and that things get back to normal.
But I wouldn’t count on that.
According to National Geographic, the scientific experts that have studied these things tell us that it has been quite common throughout history for that region of North America to suffer through extended droughts that last for a decade or more.
One drought even lasted for about 200 years.
So the current drought in California might end next year.
Or it might last for the rest of our lifetimes.
We simply do not know.
But what does seem clear is that the days of taking our food for granted will soon be coming to an end.
In-N-Out_triple_cheeseburger_fries -  Photo by Christian Razukas

Doug Casey: Central Banks Will Lead To Greater Higher Inflation And Economic Volatility In The Near Future

Published on Feb 24, 2014 
Our lead story: Erin looks at a landmark deal between Comcast and Netflix this past weekend that gives Netflix direct access to Comcast’s broadband network. This agreement removes Internet middlemen like Cogent Communications and Level 3, which Netflix previously used to send its content to broadband providers. Now Netflix has cut out these middle players so that it has a direct pipeline to Comcast. So instead of public pipes for the Internet at large, Netflix got its own pipe, and set a terrible precedent.Doug Casey calls in from Punta del Este, Uruguay to give us his assessment of China and why he thinks that 21st Century is a Chinese century. In this segment, he explains why he thinks central banks will lead to greater higher inflation and economic volatility in the near future; extols gold and explains why you should buy it; and warns why economic nationalism by governments could threaten economies throughout the world. After the break, Casey talks about water scarcity, the rising price of oil extraction, and how financialization and militarization hurt the US economy.In today’s Big Deal, Erin welcomes Ed Harrison back to talk about Abenomics and what it is trying to do to overcome Japan’s economic problems. Harrison expects Abenomics to eventually fail since wages remain stagnant despite the recent inflation numbers. He also explains why he thinks that the United States could become the next Japan.
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Another “Successful Banker” Found Dead

Image: James Stuart
The dismal trail of dead bankers continues. As The Journal Star reports, a successful Lincoln businessman and member of a prominent local family died last week. Former National Bank of Commerce CEO James Stuart Jr. was found dead in Scottsdale, Ariz., the morning of Feb. 19. A family spokesman did not say what caused the death. This brings the total of banker deaths in recent weeks to 9 as Stuart is sadly survived by three sons and four daughters.
Mr Stuart’s background (via The Journal Star):
Stuart was a native of Lincoln and graduated from the University of Nebraska-Lincoln with a degree in Business Administration.
In 1969, Stuart joined Citibank in New York City and served as a loan officer until 1973, when he joined First Commerce Bancshares (then NBC Co.) as executive vice president. He was named president in 1976, chairman and CEO in 1978, and also became chairman and CEO of National Bank of Commerce in 1985. Stuart spent his life building the organization into an important business voice in Lincoln, friend and colleague Brad Korell said.
He was a very successful banker,” said Korell, who worked with Stuart for more than 30 years. “I always felt that he was a visionary. He really did build one of the most successful and admired banking organizations in the Midwest.”
Stuart spent much of his career with First Commerce Bancshares, a $3 billion multi-bank holding company headquartered in Lincoln. First Commerce was sold to Wells Fargo in 2000.
He is a former member of the Nebraska Game and Parks Commission and was appointed by Gov. Dave Heineman to the board of the Nebraska Environmental Trust in 2008. Stuart was also involved with natural resources-related groups such as Nature Conservancy, Ducks Unlimited and U.S. National Forest Foundation.
He served on the international board of the Juvenile Diabetes Foundation and the boards of the University of Nebraska Foundation and Nebraska Wesleyan University.
According to Korell, Stuart was living in Scottsdale, overlooking his family’s financial investments, as well as golfing and fishing.
Which brings the total number of recent banker deaths to 9 (via Intellihub):
1 – William Broeksmit, 58-year-old former senior executive at Deutsche Bank AG, was found dead in his home after an apparent suicide in South Kensington in central London, on January 26th.
2- Karl Slym, 51 year old Tata Motors managing director Karl Slym, was found dead on the fourth floor of the Shangri-La hotel in Bangkok on January 27th.
3 – Gabriel Magee, a 39-year-old JP Morgan employee, died after falling from the roof of the JP Morgan European headquarters in London on January 27th.
4 – Mike Dueker, 50-year-old chief economist of a US investment bank was found dead close to the Tacoma Narrows Bridge in Washington State.
5 – Richard Talley, the 57 year old founder of American Title Services in Centennial, Colorado, was found dead earlier this month after apparently shooting himself with a nail gun.
6 -Tim Dickenson, a U.K.-based communications director at Swiss Re AG, also died last month, however the circumstances surrounding his death are still unknown.
7 – Ryan Henry Crane, a 37 year old executive at JP Morgan died in an alleged suicide just a few weeks ago.  No details have been released about his death aside from this small obituary announcement at the Stamford Daily Voice.
8 – Li Junjie, 33-year-old banker in Hong Kong jumped from the JP Morgan HQ in Hong Kong this week.
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Marc Faber – Gold Market Has Bottomed and He has Increased His purchases of Gold and Foresees Flight Out Of U.S. Equities

24/02/2014 – Marc Faber, author of ‘The Gloom, Boom & Doom Report’, foresees investors will fly out of US equities in 2014 and shares where he is putting his money.

10 Signs That Reveal Mounting Panic In The Banking System

by Gold Silver Worlds
Dear Depositor:
We don’t want to cause you unnecessary stress or worry, but it might be prudent to pay attention to a series of unusual news reports recently emanating from the banking world.  Viewed independently, each event might be rather insignificant.
However, when examined collectively, these events paint a very dire warning for the safety of bank deposits everywhere.  Naturally, most all of these have received little to no coverage by the mainstream media.  That is to be expected.
The mainstream media’s job one is to always obfuscate any potentially dangerous news that has a chance of frightening investors or depositors.  After all, the goal of the world banking cartel/equities Ponzi scheme is to keep depositors and investors relaxed and passive in their comfort zones until the complete collapse of their positions is unavoidable.
Here is a timeline of these very disturbing banking events that have occurred since last fall:
1 – October 3, 2013:  US banks fearing default stock up on cash.  The Financial Times reported today that two of the country’s biggest banks are putting into place a “play book” as preparation for a possible banking panic.  A senior banking executive reported that his bank has delivered 20 – 30% more cash than usual in cash panicked customers try to withdraw cash in mass.
2 – October 12, 2013:  Food stamp card malfunction causes riots at Walmart stores in Louisiana.  The technical problem that eliminated spending limits on food stamp debit cards sets off a bizarre shopping frenzy at Walmart stores in Louisiana.
3 – November 2 – 8, 2013:  A reputed computer glitch wipes out ATMs and online banking on a massive scale.  Major shutdowns of online banking occurred in Alabama, Arizona, and California and affected such banks as Wells Fargo, Chase, Bank of America, Compass, Chase Fairwinds Credit Union, American Express, and others.  Tellers reportedly had a hard time with even simple transactions such as check cashing and checking balances.  Rumors circulated on the internet that the banks are using this temporary shutdown as a beta test for a future full bank “holiday” closure.
4 – November 17, 2013:  JP Morgan Chase halts international wire transfers from the US for many small businesses.  Also, Chase alerted it small business customers that the total cash activity (the combined total of cash deposits and withdrawals made at Chase branches and ATMs, including money orders and cashier’s checks) is hereby limited to a total of $50,000 per business customer per billing cycle.
5 – January 16, 2014:  Reports from Hong Kong indicate another HSBC scandal:  an $80B capitalization shortfall.  Forensic Asia, a Hong Kong based research firm, issued a “sell recommendation” on HSBC because of “questionable assets” on its balance sheet.  The London Telegraph reported Forensic Asia’s warning that HSBC “had between $63.6B and $92.3B of ‘questionable assets’ on its balance sheet, ranging from loan loss reserves and accrued interest to deferred taxes.”
6 – January 24, 2014:  HSBC imposes restrictions on cash withdrawals in Britain.  Reports circulated that British HSBC customers have been suddenly refused cash withdrawals as low as 3,000 pounds.  HSBC admitted that it did not inform its customers of the abrupt policy change.  HSBC officers putatively suggested that it is “only for the protection of its customers.”
7  China’s Banking Problems are Escalating Fast.  Beijing based ICBC, the world’s largest bank by assets, announced it will not take full responsibility for a trust investment equivalent to US $500 million that may go bust.  ICBC, one of China’s “Big Four” banks, may be linked to a loan default very similar to the type that precipitated the Lehman Brothers crisis in 2007.
In fact, this may be only the tip of the iceberg that has an outside chance of bringing down the entire Chinese banking world.  This ICBC “trust investment” is actually one of a vast array of loans that comprises China’s secret shadow banking system.  It is estimated that China’s total shadow banking debt is now in excess of $4.7 trillion – a staggering figure for any market, let alone an unregulated one.  It is believed that much of this secret lending system is fraught with high interest, high risk loans that contain a strong possibility of default.  Any major failure in this market can only have catastrophic outcomes, for not only markets in China, but for all types of markets worldwide.
8 – January 28, 2014:  One of Russia’s top two hundred lenders, “My Bank,” introduces a one week complete ban on cash withdrawals.  The reputed reason is customer wishing to exit the declining ruble in exchange for other currencies.
9 – February 17, 2014:  Chase imposes imposes new capital controls on cash deposits.  Chase alerted customers that they must now present a valid ID when making any cash deposit and that the bank will now only accept cash deposits in the customer’s own account.  As of February 1, 2014, Chase customers are asked for ID for cash deposits for their account while cash deposits for another customer’s account will be completely banned after March 3, 2014.
Some analysts speculated that such measures are a sign that banks are getting ready for economic turmoil and possible bank runs.
10 – February 20, 2014:  Royal Bank of Scotland group announces lay-offs of 30,000 employees in coming months.  The Financial Times reported that Britain’s largest state owned lender will shrink its work force by 30,000 and also pull out of “dozens of the 38 countries” in which it does business.  As initially reported in Bloomberg (but later revised for online posting), this dramatic pull-back by RBS (which is 80% government owned), was strongly encouraged by British Prime Minister David Cameron, who undoubtedly has become concerned by the bank’s overextension in non-British markets.  (A special thanks to David Lenihan of Wavesync Research LLC, for the tip on this story)
Our question, dear reader, is why any sane person would wish to risk their hard earned money in any of today’s banking institutions, especially when they are paying ridiculously low returns substantially below the real rate of inflation.  From our perspective, another Lehman Brothers, Iceland banking collapse, or Cyprus depositor bail-in confiscation is in the making.  Do you really want to entrust your hard earned savings to these completely irresponsible institutions?  If you don’t, please consider precious metals investment as an excellent alternative.
To learn more about the rewards of precious metals investing, including how to fund your existing IRA with gold or silver, call Liberty Gold and Silver seven days a week at 888.751.3330. To learn about the most generous referral program in the precious metals industry, please visit the Liberty Gold and Silver Referral Program. We’re happy to spend as much time as you need to discuss the details with you.

EU makes budget plea to Italy's 'Super Mario'

Former (unelected*) Italian prime minister Mario Monti has been handed the thorny task of finding new sources of funding for the EU budget, European authorities announced on Tuesday.
Europe's leaders are hoping Monti's pedigree will help in formulating new funding ideas to avoid the deadlock that occurs every seven years when the 28-member bloc debates its common budget.
Aware of the uphill challenge he faces in leading a working group on the subject, Monti joked that one of the reasons he took the job was "a great curiosity about a subject that is practically impossible to resolve."
Source and full story: The Local (Italy), 26 February 2014
* added by Tom, not in the original

BofA under probe over U.S. housing program, forex

(Reuters) - Bank of America Corp may have a new mortgage problem on its plate, saying on Tuesday that federal investigators are looking into whether the bank violated requirements of a U.S. government housing program.

The second-largest U.S. bank said the civil division of the U.S. Attorney's Office for the Eastern District of New York in Brooklyn is investigating Bank of America's compliance with the rules of the Federal Housing Administration's Direct Endorsement Program. Bank of America made the disclosure in its annual report filed on Tuesday with the U.S. Securities and Exchange Commission.

Spokesmen for Bank of America and U.S. Attorney Loretta Lynch declined to provide additional details on the probe.

The Charlotte, North Carolina-based bank also said in the filing that government authorities in North America, Europe and Asia are investigating the bank's conduct and practices in foreign-exchange markets as part of a broader industry inquiry.

The FHA program has been at the center of cases brought by U.S. Attorney Preet Bharara, who is Lynch's counterpart in Manhattan. In 2012, Citigroup Inc agreed to pay $158.3 million and Deutsche Bank AG agreed to pay $202.3 million to settle cases, while a third case is pending against Wells Fargo & Co.

Under the program, mortgage lenders such as Bank of America are given the authority to approve home loans that the federal government then insures without further review. If the mortgage defaults and it is later determined that the lender did not follow FHA underwriting standards, the FHA can demand to be reimbursed for any losses.

JPMorgan Chase & Co agreed in early February to pay $614 million to settle claims that it defrauded the FHA and the Department of Veterans Affairs by making sub-standard mortgage loans.

In February 2012, Bank of America agreed to $1 billion in payments to the federal government to settle separate claims that its Countrywide home loan subsidiary made FHA-insured mortgages to unqualified borrowers. That settlement covered loans made before April 30, 2009.

Bank of America raised its estimate of overall litigation costs to as much as $6.1 billion above what it has already set aside, up from an estimate of $5.1 billion at the end of the third quarter, according to its SEC filing.


The bank also disclosed in the filing an agreement with Warren Buffett's Berkshire Hathaway Inc that could give it an additional $2.9 billion in capital.

Berkshire acquired a special class of preferred stock in Bank of America in 2011 as part of a larger $5 billion investment. Under international regulatory capital rules that U.S. regulators finalized in 2013, that preferred stock would not have counted toward the bank's capital ratios.

But in exchange for agreeing not to redeem the preferred stock for five years, Berkshire agreed to change the terms of the investment so that it counts for Tier 1 capital purposes. The new terms include a fixed annual dividend of 6 percent and the removal of a provision that would have let Berkshire receive additional payments if the bank missed a dividend.

The deal is subject to shareholder approval. An amendment will be put to a vote at the bank's annual meeting in May.

(Reporting by Peter Rudegeair in New York; Additional reporting by Nate Raymond, Jonathan Stempel and Karen Freifeld in New York; Editing by Andrew Hay, Lisa Shumaker and Jan Paschal)

Gold Eyes 4th Week Of Gains On Possible Contagion Risk To European Markets Exposed To Ukraine

Gold may post its fourth week of gains as concern of prolonged political unrest in Ukraine raises fears of a sovereign default, fueling demand for safe-haven assets including bullion.

REALIST NEWS – MT Gox Appears To Be Closing For Good – 750k bitcoins GONE

HOUSING BUBBLE: Mortgage Applications at Lowest Level in Two Decades

WOW China let the U.S. have it at the G20 meeting that just ended!

Wow!  China really let the U.S. have it at the G20 meeting that just ended!  The U.S. was complaining and accusing China of all sorts of financial mis-doings.
Well China gave it right back to the U.S. right where it Hurts! 
The U.S. of course accuses China of having financial problems and putting the 'Global Economy' at risk.
China stood up to the U.S. bullying and told the truth about the U.S. economy and the printing press of the Federal Reserve.  They said the U.S. was living off printed money and the U.S. economy was fake and there was nothing really backing the 'prosperity' of the U.S. 
China obviously knows the U.S. is running on fumes and was not going to stand for the U.S. trying to bully them.  The U.S. is going down in stature in every respect.  
Portion From article:
At the meeting of G20 Finance Ministers and Central Bank Governors which concluded on February 23, China and the US engaged in a vigorous debate on China's economic reforms.Before the meetingAmerican Treasury Secretary Jacob Lew had criticized China for its failure to show any signs of accelerating economic reform in line with U.S. expectations, and called for China to speed up reforms though facing the risk of social and political turmoil.Chinese Finance Minister Lou Jiwei responded in kind by pointing out that the US had not engaged in any structural reform eitherbut had revitalized its economy by printing money.

Lew wrote to G20 members voicing his concerns about bad debt in the Chinese financial system, which may threaten the global economyLou Jiwei responded that China's shadow banking problem was less serious than western economiessince China's shadow banking was still connected with the real economy; while the shadow banking products of western economies, such as CDS (credit default swap), have nothing to do with real economic activity.

Foreclosures Surging in New York-New Jersey Market

The epicenter of the U.S. foreclosure crisis is shifting to New Jersey and New York, threatening a housing rebound in one of the country’s most densely populated areas.
New Jersey has surpassed Florida in having the highest share of residential mortgages that are seriously delinquent or in foreclosure, with New York third, a Mortgage Bankers Association report showed last week. By contrast, hard-hit areas such as Arizona and California have some of the lowest levels of soured loans after allowing banks to quickly foreclose after the 2007 property crash.
The number of New York and New Jersey homeowners losing their houses reached a three-year high in 2013. Banks in these states have been slowly working through a backlog of delinquent loans that enabled borrowers to skip mortgage payments for years. Now these properties are poised to empty onto a market where affluent Manhattan suburbs neighbor blighted towns that are struggling most with surging defaults.

“It is really a delayed reaction in New Jersey and New York,” said Michael Fratantoni, chief economist for the Mortgage Bankers Association in Washington. “Loans that were made pre-crisis have been in this state of suspended animation for a number of years. And now, we are beginning to see the pace of resolution pick up.”
Photographer: Spencer Platt/Getty Images
A resident stands outside of his home as community activists and members of the Occupy... Read More

Filings Plunge

In January, the number of New York foreclosure auctions reached 527, the highest monthly level since October 2010, according to data firm RealtyTrac. Foreclosure filings in New York City increased 30 percent to 15,993 in 2013, a three-year high, according to RealtyTrac.
Almost 10,000 cases in New Jersey headed to a sheriff sale in 2013, 47 percent more than the year before and the highest level since 2009, according to the New Jersey Administrative Office of the courts. Across the country, repossessions fell 31 percent in 2013 to the lowest since 2007, according to RealtyTrac.
The difference in New York and New Jersey stems partly from a foreclosure process that requires court approval before lenders can seize homes. It takes 1,029 days on average to foreclose in New York, the longest timeline in the U.S., followed by New Jersey at 999 days and Florida, at 944 days, RealtyTrac data show.
Delays were worsened by negotiations between top banks and state attorneys general over alleged foreclosure abuses that ended with a $25 billion settlement in 2012. Superstorm Sandy, which damaged homes and businesses in coastal northeast communities in 2012, also slowed the process.

New York Trailing

The real estate markets in New York and New Jersey are trailing the rest of the country as a result. Prices in New Jersey, the most densely populated state, climbed 2.9 percent in the fourth quarter from a year earlier, compared with a 7.7 percent jump for the U.S, the Federal Housing Finance Agency said yesterday. New York values rose 3.7 percent.
California prices surged 19.5 percent and Arizona’s gained 15.2 percent. These states do not have a judicial foreclosure process.
“Price increases that are occurring in the rest of the country are not likely to happen in the New York-New Jersey area, with the potential inventory that can come at any time,” said Lawrence Yun, chief economist of the National Association of Realtors.
“When one sees a price increase in Phoenix or many other parts of the country, one can assume it’s a genuine increase from falling inventory,” he said. “If it happens in Edison, New Jersey, or Long Island, New York, one has to ask, ’Is this for real or just temporary?”

Commission Income

Jon Pardi, a 62-year-old resident of Edison, is among those facing eviction after he stopped making house payments in mid-2012. Last month, a judge gave Pardi six months to generate enough income so that he could work out a modified payment arrangement with his loan servicer, Ocwen Financial Corp. (OCN), or lose his home to foreclosure, he said.
Pardi said he could no longer pay his loan because his commission-based income as a mortgage broker dropped to $20,000 a year from a peak of more than $100,000. Having little confidence in New Jersey’s housing market rebounding, and the career prospects for loan officers, Pardi is training to become a holistic nutritionist.
“My odds are down but the chances of saving my home aren’t zero,” Pardi said. “If I start making money again, everything changes. But if jobs don’t come back for me, and for my country, then it’s going to keep moving in a down direction.”
Ocwen, which declined to comment on specifics of the case, citing privacy considerations, said it hasn’t made a decision and hasn’t received the necessary documentation from the borrower.

Ocwen Response

“Ocwen has been working hard to provide a modification or other resolution for this borrower,” since the servicing of the loan was transferred late last year from the prior servicer, the company said in an e-mailed statement.
Phyllis Salowe-Kaye, executive director of New Jersey Citizen Action, said many borrowers who aren’t paying their mortgages don’t put that money aside.
“Some people put money away, but most people are not paying for their house because they don’t have it,” Kaye said. “Why they don’t have it is often due to lack of employment or underemployment.”

Moving Quicker

Lenders in New Jersey are pushing cases through more quickly and it now takes about two months to process final judgments against delinquent homeowners, compared with a backup of nine months a few years ago, said Kevin Wolfe, assistant director of the Civil Practice Division in the Administrative Office of the Courts.
The Office of Foreclosure, which reviews case files before they can move to the final step of sheriff sale, has added four permanent staff members, six law clerks and 10 case analysts since 2012. It previously had seven employees.
“We are staffed up to move these cases faster,” Wolfe said. “But the other reason cases are moving more quickly is that lenders have improved their foreclosure practices and worked out logistics with their law firms and, as a result, they’re geared up to handle foreclosures more efficiently.”
Private-equity firms such as Blackstone Group LP (BX) -- which helped drive up prices by buying thousands of single-family homes to rent in Arizona, Nevada, California and Florida -- have steered clear of the Northeast. Large investors favor markets with newer construction and demographic growth rather than the Northeast’s aging homes and higher property taxes, said Sam Khater, senior economist for CoreLogic.

Hedge Funds

Some hedge-fund investors are instead purchasing delinquent mortgages in the New York and New Jersey area. They are discounted because of the legal delays, said Jeff Taylor, managing partner at Digital Risk, a mortgage-risk analytics firm.
The investor strategy is to avoid court delays by modifying loans, and if that’s not feasible, to pay homeowners to handover keys or sell for less than what’s owed, Taylor said. That may help flush out the pipeline of delinquencies.
“The sooner that this inventory that has been pent up gets to the market place the quicker you’re going to see more home price appreciation,” Taylor said. “It gets the overall real estate market healthier quicker.”
Housing inventory remains tight in the U.S., with a 4.6 month supply in December, according to the National Association of Realtors. New Jersey had a 6.6 month supply, the New Jersey Association of Realtors data show. A six-month inventory is considered equilibrium between buyers and sellers.

Urban Areas

While investors may help the market, they are generally avoiding hard-hit neighborhoods in cities such as New Jersey’s Newark, Irvington, Elizabeth, Trenton and Camden, according to Jeffrey G. Otteau, president of Otteau Valuation Inc. in East Brunswick. About 21 percent of New Jersey foreclosures are in urban areas and another 18 percent are in towns hit by Sandy. Only 4 percent are in the southern suburbs and 2.5 percent in the northern ones, Otteau said.
“There is a crisis, and where that crisis will play out is in inner, urban neighborhoods where unemployment is highest, credit scores are lowest and investor appetite is non-existent,” Otteau said.

Eminent Domain

Newark, the state’s most populous city, and nearby Irvington are considering plans to use government power to seize underwater mortgages to help homeowners reduce debt and avoid foreclosure. The cities are researching a program that would offer fair-market value for the loans and reissue them to homeowners who can afford to keep making payments at the lowered amount.
Many largely black and Hispanic communities in New Jersey and elsewhere were targeted for predatory loans during the boom, said Linda E. Fisher, law professor at Seton Hall University, who is helping the cities research the eminent domain proposal.
Fisher is also campaigning with residents on her block in the town of Montclair to encourage the bank, which owns a vacant property two doors down from her, to clean it up and resell it. The house, which has been empty for three years, was stripped of pipes. It attracted squatters who moved in a stove and a flat screen television, she said.
Montclair, home of comedian Stephen Colbert, is a leafy commuter town with hundreds of shops and restaurants accessible by foot.
“Here we are in our middle- and upper-middle-class community and we’re seeing the same problem of poor maintenance by servicers,” Fisher said. “The foreclosure crisis has had ripple effects and it is not limited to poor communities of color where it’s concentrated.”

Forced Move

About a 15-minute drive south of Fisher, a court officer knocked on the door of the two-story home on Newark’s west side that Janet Hopes-Edrington shares with her elderly parents. The officer served her with foreclosure papers. Hopes-Edrington, 50, said she had filed the necessary paperwork to modify the terms of payments with her lender in December and was surprised to learn it was pursuing a foreclosure. Now, she’s contemplating having to move along with her infirm parents.
Hopes-Edrington, who lives on Social Security disability benefits, fell behind on her mortgage after losing her job at the Internal Revenue Service and hasn’t made a mortgage payment since July 2012.
“That’s the thing that’s getting me, I can’t easily relocate,” she said. “I have no idea what I’m going to do.”

RBS to reignite bankers' pay row with bonus pot of £550m set to be revealed amid £8bn annual loss

Taxpayer owned Royal Bank of Scotland is set to reignite the row over pay tomorrow when it will reportedly reveal a £550million staff bonus pot despite slumping into the red with an expected £8billion annual loss.
The lender has agreed the bonus windfall with UK Financial Investments, the body charged with managing government stakes in banks, according to Sky News.
This would be a drop on the £607million haul for 2012, although this is partly expected given the significant headcount reduction in its investment banking team.
Big loss: RBS, which is just over 80 per cent owned by the taxpayer, is thought to be heading for an annual loss of close to £8billion for 2013
Big loss: RBS, which is just over 80 per cent owned by the taxpayer, is thought to be heading for an annual loss of close to £8billion for 2013

The bonus haul will be controversial given the losses expected at RBS and as a strategy review by chief executive Ross McEwan is likely to reveal a major downsizing as the bank refocuses on retail customers, small businesses and larger corporates.
There are fears over large scale job losses as reports suggest its 120,000 strong workforce could be reduced by around a quarter, although much of this is thought likely to come from plans to sell off businesses and exit from many of its riskier investment bank activities, as well as much of its overseas operation.

Mr McEwan will also give his verdict on the group's troubled Ulster Bank subsidiary, which has been put under the microscope as part of the group-wide review.
RBS is expected to make heavy cuts to the 11,000 jobs in its investment bank, including a retreat from its US and Asian markets businesses.
The planned sale of its US retail bank Citizens will remove 18,500 jobs, while further reductions will come from its float of Williams & Glyn's, which employs about 4,500 staff.
The bank's full-year results will lay bare the scale of the turnaround job that lies ahead and will come in stark contrast to the fortunes of fellow bailed out player Lloyds Banking Group, which returned to bottom line profit for the first time in three years in 2013.
RBS boss: New chief executive Ross McEwan has already said he would not take a bonus for 2013 or 2014
RBS boss: New chief executive Ross McEwan has already said he would not take a bonus for 2013 or 2014

RBS, which is just over 80 per cent owned by the Government, is thought to be heading for an annual loss of close to £8billion for 2013 after it stunned the City last month by revealing a string of scandal-related financial charges worth more than £3billion.
Its latest round of provisions include £1.9billion to cover mainly US action over mortgage-backed financial products, an extra £465million to payment protection insurance (PPI) compensation and another £500million for mis-selling of interest rate swaps to small businesses.
The bank was already facing bad debt write downs of up to £4.5billion in the creation of an internal 'bad bank' to wind down toxic loans.
The losses also come after a calamitous year for IT glitches at RBS, prompting Mr McEwan to admit it had failed to invest properly in systems for decades and pledge hundreds of millions of pounds in new investment.
RBS has sought to deflect flak over bonuses by scrapping 2013 payouts for its eight-strong executive committee in the wake of its recent shock provisions update, while Mr McEwan has already said he would not take a bonus for 2013 or 2014.
But any banker windfalls will court controversy given that it is still heavily loss-making and under investigation over allegations of unscrupulous treatment of small firms.
The group is facing a series of investigations after a shocking report from government adviser Lawrence Tomlinson accused RBS of driving firms to collapse in order to profit from their property assets/

The bank has fuelled anger further over bonuses by recently confirming it was considering plans to request shareholder permission to pay bonuses of up to double an employee's salary for 2014 onwards - the maximum allowed under new EU rules to cap payouts.
It will no doubt also be pressed on whether it plans to follow the lead of rivals such as Barclays and HSBC by introducing monthly allowance payments to sidestep the rules further and boost potential bonuses.
On Monday, HSBC confirmed plans for its boss Stuart Gulliver to swerve the EU bonus cap as his pay package soared to £8million - making him Britain's best paid banker.
The UK-based global banking giant said Mr Gulliver's base salary will remain at £1.25million for this year but that he will receive a fixed pay allowance of £1.7million, to be awarded in shares on a quarterly basis.
The news came as HSBC today announced profits up 9 per cent to £13.6billion in 2013.
Last week, Lloyds Banking Group came under fire for handing its chief executive Antonio Horta-Osorio a £1.7million shares bonus, albeit one which he will not be able to collect until 2019.
Lloyds also confirmed it had hiked its bonus pool by 8 per cent to £395million, which Horta-Osorio described as a ‘small increase’ given the improvement.
And the increase in bonuses at Lloyds came just days after Barclays hiked its bonus pool by 10 per cent to £2.38billion.
Barclays chief executive Antony Jenkins, who had already waved his bonus of up to £2.75million, said paying for talented staff was in the ‘best interests’ of shareholders.

Using the crisis to build a United States of Europe - Nigel Farage


Obama’s CFPB Sure Is Secretive
The Consumer Financial Protection Board, which was created by the Dodd-Frank financial regulation bill President Obama signed into law, is operating in almost complete secrecy. The public isn’t allowed in on its meetings and the minutes of those meetings are not available for scrutiny. Why are they being so secretive? Could it be all of the radicals advising them? They’re meeting again today and tomorrow, but we have no way of knowing what they’re up to.
According to an agenda from CFPB’s Consumer Advisory Board, the closed-door talks include issues regarding mortgage “rulemaking” and something called “Approach to Regulation.” The secret talks will take place, ironically, at the Constitution Center in Washington.
It’s critical the financial community and the public know that these powerful officials are scheming with their taxpayer-paid advisers. CFPB has the power to control virtually every financial transaction in the U.S. And it’s doing so with the help of radical advisers.
The 25-member Consumer Advisory Board includes trial lawyers who make a living suing banks, former ACORN activists, and even a member of the Democratic National Committee. Some have taken hundreds of thousands of dollars in federal grant money to gin up housing and lending discrimination complaints. Yet their activities are subject to virtually zero scrutiny.
CFPB not only is paying these community organizer zealots, but is contracting with them to help investigate lenders. One CFBP adviser getting hundreds of thousands of dollars in federal grants is Maeve Brown, a lawyer who runs Oakland, Calif.-based Housing and Economic Rights Advocates, a far-left shakedown group.
Read the whole thing. The Competitive Enterprise Institute is suing the CFPB for what it’s worth, but by the time that law suit is settled who knows how much damage they can do.

Martenson: Years of money pumping will end in equity rout

Homeless population in US capital up 135 percent from last year

The number of homeless families seeking shelter in the Washington, DC has risen by 135 percent from the same time last year, surging past earlier official expectations of a 10 percent increase, according to various news sources. The growing rate of homeless families seeking shelter is almost unprecedented, bringing the entire family shelter system to maximum capacity by late January.
Nearly 300 individuals fill DC General, a former hospital-turned-family shelter, with another 125 families filling up the District’s only other family shelter. In fact, the city has had to put an additional 436 families with a combined 849 children in motels in the District and in the neighboring Maryland suburbs. The epidemic has been termed “a crisis” by the District’s director of the Department of Human Services (DHS), David Berns.
At a February 3 public hearing at the former hospital, shelter residents blasted the city government for the abysmal conditions in which they were living. The hearing was attended by Council member Jim Graham, who chairs the Committee on Human Services. One complaint was raised in regard to a pile of dirty diapers that had been allowed to accumulate next to the cafeteria, where residents took their meals.
Washington, DC is one of the few cities in the US with a “right to shelter” law that goes into effect every winter when the temperatures reach dangerously cold levels. With the recent cold snap in January, homeless families from the District have come to rely on the law to protect them from the threat of deadly hypothermia.
Democratic Mayor Vincent Gray has attributed the rise in homelessness to non-residents flocking to the District with intent to “take advantage” of the law. This is an attempt to deflect attention away from the city’s miserly allocation of resources for dealing with the victims of the social catastrophe wrought by gentrification, budget cuts, and a general decline in the living standards of the city population.
The current crisis fully exposes the social reality of the Washington Metropolitan region, often cited by pundits and politicians as having a “recession-proof” economy. According to the DC Fiscal Policy Institute (DCFPI), the District has shed over 50 percent of its low-cost rental units and 72 percent of its low-value homes. In addition to that, 40 percent of DC households have not seen their incomes increase since 2000.
As in many other cities throughout the US, official responses to the decline in living standards have been limited to populist calls to raise the minimum wage. In the case of DC, last December saw the DC Council vote unanimously to raise the minimum wage from $8.25 an hour to $11.50 over the next three years. This was after an earlier attempt to raise the minimum wage to $12.50 was vetoed by Gray last summer.
At $11.50 an hour, a full-time worker would see a yearly income of $22,080 before taxes. A report put out by the Economic Policy Institute (EPI) found that a family of four would need a combined income of $88,000 yearly to live decently in the District of Columbia.
For the top layers of DC, business has been brisk. According to a report by the Wall Street Journal, government spending on local contractors went from $29.3 billion a year in 2000 to $83.5 billion a year in 2010. In 2013 the sale of million-dollar homes went up by 32 percent over 2012. In 2013, Market Watch rated the Washington-Arlington-Alexandria area the second richest region in the US, with a median household income of $88,223. The District has a city budget surplus of $1.75 billion.
Gray, who is running for re-election as mayor, first won office in 2010 by making appeals to the city’s homeless advocates with pledges of support, but it was not long after winning office that he began to hatch proposals to defund essential social services, which he contemptuously refers to as the District’s “handout” culture.
During his tenure, Gray and the DC Council have cut $20 million from a trust fund for affordable housing units and imposed stricter measures on the Temporary Assistance for Needy Families (TANF) Act in the name of fiscal responsibility. Last year, on the local level, nonprofits saw their funding for homeless prevention and family counseling cut by as much as 18 percent, in addition to the loss of federal homeless prevention grants as a result of the sequester.
DHS Director David Berns has stated that without additional funding, he may need to close shelters for homeless singles in order to shift resources to caring for families.
City officials have offered up the “Rapid Rehousing” program as a solution to the crisis. Under Rapid Rehousing, sheltered families agree to sign an apartment lease for which the city government will pay the first four months of rent, with an additional two years of possible extensions. The program is being presented as a means of clearing families out of overflowing shelters in order to make space for others in need.
Yet, according to the Washington Post, the absence of affordable housing is bottlenecking Rapid Rehousing. Whereas official predictions put the monthly number of families relocated with the program at 60, the actual numbers are 27 to 35. This is because many sheltered families are resisting the city’s efforts to put them into the program. According to one sheltered resident interviewed by the Post, Cartrice Haynesworth, “A lot of families that tried Rapid Rehousing are back at DC General, so families are afraid to try it.” Another resident who testified at the February 3 hearing called it “a revolving door of homelessness.”
In pushing for Rapid Rehousing, DC officials seek to claw back even more savings by eliminating more costly programs like permanent subsidy vouchers or rent-controlled public housing units. To highlight this, Gray recently amended a law that would allow officials to kick out sheltered families who have refused at least two Rapid Rehousing offers.
Adam Soroka is a writer for WSWS.

How Govt. Hides the Poor: Formula for Measuring Poverty Dates to When a Loaf of Bread Cost 22 Cents

Why is Congress still measuring poverty based on a 1963 trip to the grocery store?
To determine who is officially poor in America, the federal government compares a family’s annual cash income to a figure produced by an arcane formula that’s based on the price of food in 1963, when a loaf of bread was 22 cents and a burger less than a quarter. Starting under President Lyndon Johnson, the government’s official way of defining who is poor comes from calculating a minimum food budget for a family of four, tripling that figure to cover other living costs, and then indexing it annually for inflation.
The result is the federal poverty level. For 2014, that threshold was $23,850 for a family of four. Smaller families can subtract $4,060 per person. Individuals making $11,670 or less in 2014 were officially poor. Many government programs, from School Lunch to the Earned Income Tax Credit to Obamacare’s subsidies, decide eligibility by comparing one’s annual cash income to the official poverty level—or to a multiple of it, say 150 percent.
Cities, states, advocates and academics have known for years that this measure of who is poor undercounts millions of Americans. They know that the 1960s-based formula ignores modern living costs, such as today’s cheaper food but higher housing and other expenses. And they have developed alternative ways to track living costs that confirm poverty and economic insecurity of households just above the poverty line is far more widespread than Congress wants to admit.
But the 1960s poverty formula persists, and not without other pernicious effects. This heads-in-the-sand approach works against Congress spending more on current programs because lawmakers aren’t using numbers that honestly depict the extent of economic insecurities. And an outdated methodology pre-empts a contemporary discussion of what a basic, dignified living standard costs, based on variables such as family size, one’s age and stage in life, and location.
“In the 1960s, the poverty measure was a focal point for the nation’s growing concern about poverty,” an April 2013 report by New York City’s Center for Economic Opportunity said, recounting this history and shortcomings. “Over the decades, society evolved and policies have shifted, but the official poverty measure remains frozen in time. As a result it has lost its credibility and usefulness.”
“In 2011, our poverty line for the two-adult, two-child family comes to $30,945,” the NYC agencysaid, after using a more sophisticated modern formula. “The 2011 official [federal] poverty threshold for the corresponding family was $22,811.”
Looking back to 2005, New York City found that its poverty rate consistently was 2 percent higher than the official federal rate. The federal formula did not just ignore changes in real life expenses, but also decades of government programs that didn’t pay out cash but kept more money in poorer people’s pockets.
“In recent years an increasing share of what government programs do to support low-income families takes the form of tax credits and in-kind benefits,” the Center for Economic Opportunity said. “If policymakers or the public want to know how these programs affect poverty, the official measure cannot provide an answer.”
There have been notable efforts in recent decades by government institutions, including Congress, to update, expand and replace the 1963 formula. But those efforts, while drawing a more realistic picture of who is poor in America, still aren’t framing federal policy. That’s because when it comes to Congress, better metrics aren’t used to create policy and law. One result is that anti-poverty advocates continually urge Congress to look at real living costs, and use more up-to-date numbers.
“Policymakers considering changes to social insurance programs such as Social Security and Medicare must consider the economic realities confronting older Americans,” a 2013 report by the Economic Policy Institute said, in one such example. EPI based its analysis on a more comprehensive but unofficial measure used by the Census Bureau—the same one used by New York City. Not surprisingly, EPI found that poverty and near-poverty were more widespread among the elderly than the government admitted.
“Many of America’s 41 million seniors are just one bad economic shock away from significant material hardship,” it reported. “Most seniors live on modest retirement incomes, which are often barely adequate—and sometimes inadequate—to cover the costs of basic necessities and support a simple, yet dignified, quality of life.”
But official Washington holds firm, using its arcane 1960s formula instead of adopting a more honest measure of tracking poverty and economically insecure Americans.
A Better Baseline
Social scientists have known for decades that the 1963-based poverty line didn’t include necessities such as shelter, utilities, healthcare, childcare, clothes, commuting and other out-of-pocket costs. In 1995, Congress asked the National Academy of Sciences (NAS) to create a formula including those factors. It did, but for years that sat on the shelf. It was used for academic research but not to recalibrate government policy and actions.
However, a decade after it was created, the NAS formula was adopted by several cities and states. Starting in 2005, New York, Philadelphia, Connecticut, Georgia, Illinois, Masachusetts, Minnesota and Wisconsin used the NAS formula and soon found out there were many more households living just above and below the poverty line.
Starting in March 2010, the Census Bureau started applying the 1995 formula, which it called the Supplemental Poverty Measure (SPM), and started issuing reports comparing the official and unofficial measures. For 2012, the “official measure” of poverty level income for “two-adult, two-child” households was $23,283, while the SPM was $31,060. For seniors, the Census Bureausaid, “Note that poverty rates for those 65 years of age and over were higher under the SPM measure compared with the official measure.”
This Obama administration initiative, which was not embraced by the Congress, was noticed and praised by New York City Mayor Michael Bloomberg, who encouraged his city’s Center for Economic Opportunity to do a better job measuring poverty even if it meant acknowledging that New York had more poor people than previously thought.
“If we are going to successfully fight poverty, we need data that captures the challenges that poor households face as well as the benefits conveyed by our most significant government supports,” he said in 2011, when the Census released its first report using the NAS formula. “The decision to adopt this measure is not one that was made lightly; we know that a greater proportion of the American people are poor under this Supplemental Measure, and this is, if course an attention-grabbing finding. But it is important to have a measure that can accurately tell us what is going on.”
What’s going on, as Bloomberg puts it, is that Congress is in the dark about the extent of economic insecurity and the role of government programs to offset it. Perhaps the best example is Social Security, which is not just an anti-poverty program paying the elderly a monthly benefit, but also helps millions of people with disabilities as well as children in families who lose a parent.
A recent Boston College study found that the country’s latest generation of retirees lack $6.6 trillion to maintain current lifestyles as they age, underscoring just how important Social Security will be for their quality of life. For millions of baby boomers, especially people of color and women, it will make up 90 percent or more of retirement income, according to experts like the non-partisan National Academy of Social Insurance.
In June 2013, the Social Security Administration said that there were 37 million retirees receiving benefits. Of those recipients, 23 percent of married couples and 46 percent of unmarried individuals relied on Social Security for 90 percent or more of their income. Those percentages are expected to grow in coming years, advocates say.
Washington’s current budget debate highlights this omission. President Obama is pushing to raise the minimum wage to $10.10 a hour, or $21,000 a year—saying that’s a living wage. But absent from public debate is what it costs to keep vulnerable Americans, young and old, from falling into poverty or hovering above it by paying for household necessities.
How Much Is Needed?
When EPI experts Elise Gould and David Cooper looked at replacing the official poverty line with the more modern Supplemental Poverty Measure, they found that seniors with a household income (via any mix of social insurance benefits or savings) that was less than double the SPM could be thrown into poverty by a “single economic shock.”
“There is a large share of elderly Americans who are economicaly vulnerable; a single shock could push them precariously close to or into outright material deprivation,” they wrote. “With nearly half of all seniors in the United States falling below the threshold of economic vulnerability, policymakers must be especially careful when considering changes to social insurance programs—predominantly Social Security and Medicare—that protect this group.”
EPI’s conclusion that elderly Americans needed a monthly income twice that of the SPM is backed up ny an even more detailed poverty-line tool developed by the Washington-based advocacy group, Wider Opportunities for Women. It has an online index where anyone, from families with children to seniors, can plug in information on family type, income, location, savings and other expenses to calculate basic living costs below which one becomes impoverished—not being able to pay for necessities.
All of these tools and indices—the Supplemental Poverty Measure, EPI’s finding that elderly Americans need to earn double the SPM to weather inevitable crises, WOW’s economic security index—are a far cry from the official federal poverty threshold. They suggest that Congress and the White House should be looking at a different big picture: what it costs to live today and how far social insurance programs fall short of that line.
There’s no need to measure poverty and economic insecurity by indexing family food budgets based on large eggs costing 45 cents a dozen and macaroni-and-cheese dinners 39 cents, as they did in Wisconsin in 1963.
Steven Rosenfeld covers democracy issues for AlterNet.