The Housing Bubble

I searched the 3 people in this article and none of them are or ever have been homeowners in Palm Beach County with the ability to pick up an extra $150k from a cash out refi or take 2-3 years off from making a rent payment. I searched 3 people in last weeks Black Friday article and 1 of the 3 had done exactly that. How the banks and the govt. can allow people like 60 minutes Robo queen Lynn to not only keep her $500k cash out refi but continue to live rent free in a really nice house and community along with the millions of other “victims” who do the same or worse collect rent on houses and condos they don`t pay for while they are crying foul is way beyond me.

Not only do these people in the Stalled salaries article struggle as many of us do but they also have to deal with artificially high rent prices to go along with $7 peanutbutter and high gas and utility prices. I think these people rioting around the world might be on the right track. But I also think OWS needs to throw people like 60 minutes Robo queen Lynn and LLs that collect rent w/o paying the mortgage in with the 1% for good measure.

Stalled salaries: Wage-drops to be felt for decades

By Emily Roach Palm Beach Post Staff Writer
Posted: 9:44 p.m. Saturday, Dec. 3, 2011

Layoffs, furloughs and frozen wages lingering from the Great Recession have cost families thousands of dollars in income and will keep denting earning power for decades.

In Palm Beach County, it has drained more than 60,000 workers from the ranks of the employed, stalling wages and retirement payments.

The national unemployment rate for November, released Friday, showed a drop from 9 percent to 8.6 percent, but much of that was driven by people leaving the labor force.

John Friar of Palm Beach Gardens was laid off just before the recession from the metal company where he had worked almost 11 years. Since then, his odd jobs have paid far less than his previous $47,000 salary - $10 an hour as a landscaper, maybe $75 a night bar-backing. He tried driving a truck, but he and his wife have had on-and-off work for nearly five years. “We were struggling with just about everything: keeping the lights on, getting the car paid for, food,” said Friar, who has children ages 5 and 8. “It gives you a real heads-up on what’s important.”

Although Friar is back working in his field at an industrial equipment maintenance company, he’s making $10,000 less than before. Friar figures it will take a couple of years to regain his salary, but economists say it could be decades.

Former construction supervisors working at Publix and recent college graduates juggling part-time jobs will find themselves in the same place: handicapped by their current salary when they try to negotiate pay and benefits in a new job.

Jessie Tirsch of West Palm Beach had a full-time job in 2007 as a Lord & Taylor counter manager. She moved to a better-paying, part-time job at Bloomingdale’s for $17 an hour plus commissions, but she was laid off three months later. Now she’s getting $7.31 an hour in a grant-funded state position and doing freelance writing.

“I’ve had to get help from my children because it’s been a really horrible three years,” she said.

About 66,000 fewer people were working in Palm Beach County in spring 2010 than the spring before the recession hit.

In past major recessions, laid-off workers found their earnings reduced 30 percent in the first year, and even 15 or 20 years later those same workers faced 20 percent less pay, Till von Wachter, an economics professor at Columbia University, testified last year before a joint committee of Congress.

More than a third of all families have been affected directly by wage, benefit or work-hour reductions, the Economic Policy Institute reported.

Yanet Alvarez pays her family’s bills with her Publix salary after her husband lost his job as an air-conditioner mechanic. And she’s done it after having her workweek cut as well. It means the family income was sliced by more than half.

“We pay bills and then there’s nothing left,” Alvarez said.

http://www.palmbeachpost.com/money/stalled-salaries-wage-drops-to-be-felt-for-2010875.html

Bank of America extends its $20,000 short sale incentive in Florida

By Kimberly Miller Palm Beach Post Staff Writer
Posted: 4:38 p.m. Friday, Dec. 2, 2011

Bank of America has extended a Florida-only incentive program that offers homeowners up to $20,000 to short sell their homes rather than going through a lengthy foreclosure.

The program was initially scheduled to end Nov. 30, but has been extended through Dec. 12. To qualify, homes must have no offers on them and the closing must occur before Aug. 31.

Jumana Bauwens, a spokeswoman with the Charlotte, N.C.-based bank, said about 20,000 Floridians were contacted as possible candidates for the “test-and-learn” program.

Of those contacted, about 15 percent – 3,000 – said they want to participate. Homeowners not contacted can call (877) 459-2852 for more information.

“As this is a pilot program, it remains to be seen what the pull-through success rate and test-and-learn outcome will be,” Bauwens said Friday.

Bank of America’s plan, quietly unveiled in early October with e-mails to select Realtors, has a minimum payout amount of $5,000,

Similar to the federal Home Affordable Foreclosure Alternatives program, which offers $3,000 in relocation assistance, the Bank of America program also may waive a homeowner’s deficiency judgment at closing.

Florida is a testing ground for Bank of America’s program because of the state’s high foreclosure rates. In October, Florida ranked fourth in the nation for foreclosure activity with one in every 268 homes receiving a foreclosure filing, which includes an initial notice, notice of sale, or bank repossession.

If successful in Florida, the Bank of America program could be made available to homeowners in other states.

“While it is too early to make an assessment of the program and its possible introduction to other states, we are encouraged by the initial interest that Florida homeowners and real estate agents have shown,” Bauwens said.

11 COMMENTS

Before we quit paying, our mortgage was $2421 per month. Basically, if we live here another 8 months, that alone would cover what this bank is proposing to give us to walk away. No chance. We’re on 17 months without a mortgage payment and they can’t get their act together enough to find proper docs to foreclose on us in all that time, what would suddenly make them find it. I suspect we are here to stay. Don’t fall for yet another Bank of America scam on the hard working people of America.

Wellington homeowner
5:30 PM, 12/2/2011

Hey Wellington, get ready. They are coming, as soon as they read your blog, the name calling will begin……..The hostility will start…. The holier than thou’s will put their 2 cents in to what they think of you…………

diver4llife
7:01 PM, 12/2/2011

http://www.palmbeachpost.com/money/real-estate/bank-of-america-extends-its-20-000-short-2008952.html - 84k

http://www.usatoday.com/news/nation/story/2011-12-01/gun-sales-up-black-friday/51554972/1

Guns were Black Friday bestsellers. Sign of the times.

http://www.guardian.co.uk/travel/2011/dec/04/america-horror-theatre

America’s descent into depravity on display.

Pay someone $60 for the pleasure of getting yourself waterboarded?

What a great gift idea for Christmas.

Priced out forever:

http://www.orlandosentinel.com/business/os-bimini-bay-resort-20111203,0,6580096.story

Realtors Are Liars®

China is a poster child for the Austrian school of economics’ theory of the business cycle. After undertaking the biggest stimulus program the world has ever seen in response to the global financial crisis, the country is drowning in unproductive investments financed with credit.

The government spent 15% of GDP largely on public works projects in inland regions, financed with loans from the state-owned banks. Investment as a share of GDP soared to 48.5% in 2010, and the M2 measure of money supply ballooned to 140% that of the U.S.

Now comes the hangover. The public works projects are winding down, unleashing a wave of unemployment and an uptick in social unrest. The banks’ nonperforming loans are rising, and local governments are insolvent. The country is littered with luxurious county government offices, ghost cities of empty apartment blocks, unsafe high-speed rail lines and crumbling highways to nowhere.

I’m pretty sure that unsafe rail lines has nothing to do with economic theory and everything to do with regulation same with crumbling highways. They also ignore the massive drop in revenue due to the economic collapse in the US and Europe, or that I believe they and GS were at the front of calling for a decoupling of China from the US. The excess real estate is predominantly a problem with monetarists flooding the country with cheep cash likely without requiring a large enough down payment same as the US.

“Millions of luxury apartments are vacant, even as there is a shortage of affordable housing for the poor.”

My guess is that this problem will eventually be addressed by collapsing real estate prices.

“Earlier this year banking regulators conducted stress tests that supposedly showed the financial system can withstand a 40% fall in property prices. ” Sounds like they are planning on a big fall. I wonder if this # holds up in the face of collapsing exports to the US and Europe.

“There is no easy way to avoid the bust that is coming. The silver lining is that China’s increasingly state-led growth model will be discredited”

As opposed to our free market crony capitalism model??

online.wsj.com/article/SB10001424052970203833104577071901186892744.html

Standard & Poor’s cuts ratings on many top banks worldwide, including largest in US
By Associated Press, Published: November 29

NEW YORK — Standard & Poor’s Ratings Services has lowered its credit ratings for many of the world’s largest financial institutions, including the biggest banks in the U.S.

Bank of America Corp. and its main subsidiaries are among the institutions whose ratings fell at least one notch Tuesday, along with Citigroup Inc., Goldman Sachs Group Inc., JPMorgan Chase & Co., Morgan Stanley and Wells Fargo & Co.

S&P said the changes in 37 financial companies’ ratings reflect the firm’s new criteria for banks, and they incorporate shifts in the industry and the role of governments and central banks worldwide. The agency did not release its evaluation of each company but said it plans to discuss the changes during a conference call early Wednesday.

Bank of America’s issuer credit rating was cut to “A-” from “A,” as were its Countrywide Financial Corp. and Merrill Lynch & Co. Inc. units, along with a series of related subsidiaries

Ratings downgrades are never seen as positive, but this round may be particularly damaging for Bank of America.

Concern already was growing Tuesday about whether B of A has enough capital to withstand another downturn in the U.S. economy or further trouble in Europe, and the bank’s stock fell to a two-year low before the ratings announcement.

The Charlotte, N.C.-based bank said in a recent regulatory filing that downgrades from S&P or Fitch Ratings, which also is reevaluating its ratings, “could likely have a material adverse effect on our liquidity” and cut off its access to credit markets.
…

Notice how the author of this screed conveniently neglects to mention that the drastic decline in U.S. credit scores is a direct consequence of the insanely loose credit standards of just a few years back.

Lower credit scores slow housing recovery by thwarting sales

Many Americans’ credit scores have fallen because of economic distress in the last few years. It’s probably affecting their ability to get a new mortgage or buy a house.

By Kenneth R. Harney
December 4, 2011
Reporting from Washington—

How big a whack did your credit scores take during the grim years of economic distress after the housing bust? Was it 20 points, 50 points, 100 points — or maybe no drop at all?

These are key questions for millions of potential home buyers who hope to qualify for mortgages and current owners looking to refinance. New research from a major credit-risk evaluation company suggests that the drop in huge numbers of Americans’ scores was dramatic.

FICO (formerly known as Fair Isaac Corp.), which developed and markets the eponymous score that dominates the home mortgage field, found that in 2008-09, about 50 million consumers in this country saw their FICO scores plunge more than 20 points. Nearly 21 million of these lost more than 50 points. Many lost 100 points or more because of severe delinquencies.

During the same period, lenders and investors began ratcheting up their standards for acceptable scores and to extend special preferences in fees and interest rates to loan applicants who rank among the highest scorers. Among these developments:

•Loans originated for purchase or guarantee by the two dominant home loan investors — government-run Fannie Mae and Freddie Mac — now carry average FICO credit scores in the 760 range and above, record highs for both companies. That’s good for them, but not necessarily for you if you need a loan. (FICO scores range from 300 to 850; higher scores indicate lower risk of default.)

•Even new mortgages being insured by the Federal Housing Administration — traditionally the fail-safe financing refuge for first-time buyers with modest incomes and less-than-perfect credit histories — now have average credit scores slightly above 700.

•During the housing boom years of 2004-06, by contrast, a score of 620-640 was adequate to earn you a good mortgage rate and terms at Fannie Mae and Freddie Mac. The FHA often approved loans in which the FICO scores were in the mid-500s.

Earlier FICO studies found that the deepest score declines — creating the toughest challenges for obtaining new credit on affordable terms — have been among borrowers who ranked among the credit elite. Homeowners with scores in the high 700s may have lost as much as 130 points when they fell three months behind or more on loan payments. They might have lost as much as 160 points when they negotiated a short sale with their bank and as a result had unpaid deficiency balances left over.
…

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/8933460/Bank-of-England-in-crackdown-on-bankers-bonuses.html

Bank of England trying to force lenders to scale back the obscene compensation paid to bankers. It’s about time.

Downside to the “stealth recovery”: It makes it harder for the Fed to politically justify further quantitative easing. This could put a dent into U.S. stock prices, if Wall Street expectations for further Fed-funded stimulus go unfulfilled.

Are we in the midst of a stealth recovery?
Hiring numbers and Dow are up and malls are crowded, but crisis in eurozone may wreck rebound
Written by Dean Calbreath
10:47 p.m., Dec. 3, 2011

Within the past two weeks, shoppers stampeded shopping malls to snap up billions of dollars worth of marked-down goods. Wall Street investors pushed the Dow Jones back above 12,000. San Diego employers were said to be hiring at their fastest pace in years.

So where did all the recessionary gloom go? Have we forgotten that 14 million people are looking for jobs? Are we in some kind of a stealth recovery — an upswing that is flying so low it hasn’t yet been picked up by radar?

Or are these signs of growth much more nuanced than they seem: hints of euphoria weighed down by fears of an uncertain future?

The good news is that after a dismal summer, things are actually improving.

Last month, the U.S. added 120,000 jobs, pushing the jobless rate to 8.6 percent, the lowest point since March 2009.

In San Diego County, the jobless rate has fallen, too. Companies are hiring more workers. Retail sales are rising. Incomes are improving. Fewer homes are being seized by banks. Borrowers are shrinking their debts.

There are still massive problems, of course.

At last count, 10 states still have double-digit jobless rates, led by California at 11.7 percent. State and local governments have axed nearly half a million jobs over the past year and are still cutting. And the problems of the eurozone are poised like a torpedo threatening to sink our nascent comeback.

And yet, there it is again. The word comeback. The hint that things might be getting better.

Judging by the job market, San Diego County has been recovering for nearly two years. Despite a rough patch this summer, the county added 22,500 jobs from October 2010 to October 2011, shaving the jobless rate from 10.4 percent to 9.7 percent, according to state employment data. That’s the biggest year-to-year job growth since early 2005, at the crest of the housing boom, and the biggest percentage growth since 2003.

In fact, the numbers are so good that some economists doubt they’re true.

“We probably are on a slow trajectory up, but I don’t think it’s as strong as those numbers show,” said Marney Cox, economist at the San Diego Association of Governments. “The numbers say we’re doing better than the nation as a whole, and I don’t think that’s true. We’ve been trailing the nation through most of recession.”
…

Late response to a post from yesterday:

Comment by Bill in Phoenix and Tampa

What does “bulletproof” even look like, Bill?

Considering that the two different scenarios calls or radically-different structuring of your portfolio, what could possibly be a good structure for both?

Since I can’t think even picture what that would look like, I can’t quite buy that I could prepare to be so.

http://www.debka.com/article/21541/

Iran is threatening to take oil to $250 a barrel. The Fed, Treasury, and Republicrats can keep Wall Street’s Ponzi going for awhile longer by papering over the banksters’ bad bets with trillions of created-out-of-thin-air Bernanke Bucks and transfering liabilities from the bankster accounts to the taxpaying public. However, in the REAL economy - as opposed to the house-of-cards speculative swindle perpetrated by the above - $250 a barrel oil would cause a total systemic lock-up. Which might have the beneficial effect of de-zombifying the US electorate, but at a terrible cost to us as a nation.

Ben Bernanke can print greenbacks, but he can’t print oil. Prepare accordingly.

This has nothing to do with the bubble, but it’s amazing:

http://www.youtube.com/watch?v=TWfph3iNC-k

Actually, there’s plummeting and balloons…

Just like Bogie and Bacall?

Knife goes through man’s foot during domestic brawl

By Mike Clary, Sun Sentinel
8:58 a.m. EST, December 4, 2011

Key Largo—

A man involved in a bloody brawl with his girlfriend was jailed on a domestic battery charge early Sunday but only after emergency room doctors removed a steak knife driven all the way through his foot.

Jesus Galindo, 31, was stabbed during a 2 a.m. melee that spilled out into the street, according to Monroe County Sheriff’s deputies.

The woman, who was not identified, told deputies that she and Galindo went outside to settle their differences because she did not want to fight in front of her three young children.

Video: Mom turns in foul-mouthed son in Santa hat to police (graphic warning)

She said at one point she was able to run back into the house and grab a steak knife that she used to defend herself. She said she tried to call for help twice, but Galindo smashed the first phone and removed the battery from the second phone, telling her she could not call anyone for help, deputies reported.

Galindo was “stomping” her, she said, and when he tried to kick the knife out of her hand it penetrated his foot.

Galindo was found in a residence at 27 Avenue A with the knife blade still sticking through his right foot. He was taken to the hospital for treatment of his injury, then was booked into jail for domestic battery and two counts of depriving the victim of the ability to call 911.

http://www.sun-sentinel.com/news/local/breakingnews/fl-knife-in-foot-20111204,0,3066491.story -

I’m so confused about this “Free Market” and “Supply and Demand” thing…..

In the past two weeks, I’ve been approached by:

-A local operator with two aircraft, who “wants someone working on their airplanes who is trained, and knows what they are doing”, that wants to contract with me to maintain their aircraft.

Seems they have reached the “last straw” stage with their shop, who has recently released their aircraft:
-with under inflated tires, and
-No hydraulic fluid in the hydraulic reservoir. (This is only a problem if you plan on retracting/extending the landing gear, or using the thrust reversers).

Strangely enough, I’ve been approached by this shop, about taking the manager’s job there.

You would think I’d be in the catbird seat, since getting “someone who knows what they are doing” from out of town costs $100-120/hour, plus overtime, plus travel expenses. You would think, but you would be wrong.

Seems that nobody thinks a mechanic, experienced or not, is “worth” $100K. Or worth more than whatever they are paying their pilots. Never mind the fact that contract pilots are a dime a dozen. Never mind that the nearest factory trained/certified tech is 200 miles away.
Never mind that nobody from a major metro is going to relocate to BFE and take a 20% pay cut in the process.

You see this attitude all over the place. Nobody is “worth” what they are getting paid. Employers say the have “jobs they can’t fill” when they really mean to say “jobs they can’t fill at the price we are willing to pay”. They could fill these jobs and train their own employees, but nobody wants to pay for training either.

So, how does one price his time in an environment like this? I’m just a simple caveman, and I find all of this very confusing…….

“So, how does one price his time in an environment like this?”

It aint easy. Over the last couple of years I have bid jobs on a regular basis against people who price them at less than my cost. All but one of them I have turned down. The one I took was big and kept my guys working at a time that it ended up costing me less than paying them to do nothing. The others I thanked them for the oppurtunity for a shot at the job and said give me a call on the next one. A few of those jobs we ended up finishing when the low man ran out of money, got thrown off the job or split.

I do always try to remember a crew I worked on in the early eighties when the lead man turned down a job because it didn`t pay enough. At the end of that week I learned that I would have rather worked and earned less than not worked and earned nothing.

Take it or leave it I am a caveman too.

http://market-ticker.org/akcs-www?post=198550

Prosecution long overdue for mortgage swindlers - but don’t hold your breath.

Tonight’s 60 Minutes: “Prosecuting Wall Street”

http://www.cbsnews.com/sections/60minutes/main3415.shtml

EUROPE NEWS
DECEMBER 5, 2011

Mortgage Burden Looms Over Dutch
By MATTHEW DALTON
Associated Press

Households in the Netherlands carry heavy mortgage debt, which some economists see as a risk. Above, houses in Amsterdam, the capital.

ALMERE, The Netherlands—The most debt-burdened households in the euro zone aren’t in Portugal, Ireland or Greece. Spanish households—which borrowed heavily in the boom years to build and buy houses—aren’t even close to the top.

The title of most indebted goes to households in the Netherlands, and the main reason is the enormous mortgages that the Dutch—though frugal by reputation—take out.

While the Dutch government has been an enforcer of fiscal orthodoxy throughout the European debt crisis, seeking budget cuts from governments across the euro zone, household debt is a persistent worry for Dutch regulators, who see it as a major risk for the economy.

In the boom years, Dutch banks routinely wrote mortgages that exceeded 125% of the value of a home—covering closing costs, taxes, renovations and even new-car purchases on the side. Though low unemployment means most Dutch are still able to pay their mortgages, a significant drop in house prices, a rise in interest rates or an increase in unemployment would leave more people unable to pay their debts, with effects that could ripple through the financial system and the broader euro-zone economy.

“This debt makes the economy much more vulnerable to shocks in the housing market, interest rates and employment,” says Gerbert Hebbink, senior economist at the Dutch National Bank. “From a financial stability perspective, we think the mortgage loan-to-value ratios are too high.”
…

Given how deeply underwater the U.S. balance sheet is, how is it we can afford to loan money to the eurozone through the I.M.F.?

And I have probably asked this question at least once before, but is there any independence at this juncture in history between the Fed and the Treasury? It is sure hard to discern, when an article discussing Fed plans casually mentions the Treasury Secretary as though he is a Fed spokesman.

Fed may give loans to IMF to help euro zone: paper
BERLIN | Sun Dec 4, 2011 5:29pm EST

(Reuters) - The Federal Reserve, along with the 17 euro zone national central banks, may help provide the International Monetary Fund with funds that could be used to aid debt-ridden states, a German newspaper said.

Die Welt cited sources close to the negotiations as saying the euro zone central banks could pay at least 100 billion euros ($134.2 billion) into a special fund that could be used for programs for nations struggling to control their debts.

“Also other central banks, for example the U.S. Federal Reserve, are apparently prepared to finance a part of the costs,” the paper said in an advance copy of an article to appear on Monday.

Treasury Secretary Timothy Geithner may discuss the idea in the coming weeks when he visits Europe, the paper said.
…

Dudley Should Resign as New York Fed President: Simon Johnson
December 04, 2011, 7:36 PM EST
…
The legitimacy of top financial officials has increasingly come into question over the last three years. A recent article in Bloomberg Markets magazine quotes an unnamed fund manager alleging that Treasury Secretary Henry Paulson provided hedge funds with material, nonpublic information in July 2008, by describing in a private meeting how the U.S. could put Fannie Mae and Freddie Mac into conservatorship, which it did seven weeks later.

Bagehot’s “Lombard Street” was published in Britain in 1873, when the electoral franchise was still quite limited. Legitimacy of the lender-of-last-resort concept was not a major issue for him. But there is something inherently undemocratic about deciding behind closed doors who gets a generous bailout - - and who doesn’t.

This is why central banking is controversial in the U.S., and has been since the early 19th century. Presidents Thomas Jefferson and Andrew Jackson objected to the earliest form of central banking, which consisted of a powerful private bank with central-bank-type features.

The New York Fed has long had three kinds of directors: Class A represent banks that belong to the Federal Reserve system (and typically will be chief executive officers of such institutions); Classes B and C are supposed to be people who do not work at banks overseen by the Fed and represent agriculture, commerce, industry, services, labor and consumers. All three classes of directors once chose the New York Fed president, giving some the perception that the bank CEOs had too much say in the selection process.

The Dodd-Frank reform legislation recognized the sensitivity of this perceived conflict and mandated that only Class B and C directors could participate in choosing the regional Fed presidents.

This governance change was meant to strengthen the legitimacy of the New York Fed president. But Dudley, a former Goldman Sachs chief U.S. economist, was appointed by the board of the New York Fed under the rules in existence in January 2009, so the Class A directors presumably were very much involved.

The Fed should attempt to address its perceived legitimacy problems, ahead of the impending crisis. Dudley should resign and make way for someone appointed under the new rules.

(Simon Johnson, who served as chief economist at the International Monetary Fund in 2007 and 2008, and is now a professor at the MIT Sloan School of Management and a senior fellow at the Peterson Institute for International Economics, is a Bloomberg View columnist. The opinions expressed are his own.)

HEARD ON THE STREET
DECEMBER 2, 2011

So Who Is Too Big to Fail Now?
By DAVID REILLY

Here’s an irony Morgan Stanley CEO James Gorman can probably live without.

In early October, Morgan came under extreme pressure, largely due to questions about the firm’s exposure to French banks. Although that has since eased, especially in the wake of Wednesday’s central-bank-induced markets rally, the cost of insuring against default by Morgan is still elevated—and remains higher than the cost of protection on big French banks themselves.

It cost about $446,000 Thursday to insure $10 million of Morgan debt, according to Markit. This compared with $335,000 for Société Générale. On average, Morgan’s CDS cost is about $154,000 higher than that of the big three French banks—BNP Paribas, Crédit Agricole and SocGen—more than three times the average premium in 2011.

In this, Morgan isn’t alone. The cost of insuring against default at Goldman Sachs is also higher than that of the French banks. That in part may reflect that the two U.S. firms are brokers, rather than more diversified commercial banks. But credit-default swaps for Bank of America are also more expensive, while the cost of protection for Citigroup is almost equal to that of BNP.

That is somewhat curious given French banks have more exposure to France and troubled euro-zone countries. The most likely reason: the issue of who really is too big to fail.

Many investors believe there is little chance the French government would let its biggest banks fall. That view was reinforced by recent support for Franco-Belgian lender Dexia. “Even if the French banks have significant amounts of exposure to sovereign debt, particularly of Greece, there is a political culture of state intervention there,” says Otis Casey, a director of credit research at Markit.

In contrast, the higher cost of CDS for the U.S. brokers hints that markets may no longer think they are firmly in the too-big-to-fail club. Although they were essentially bailed out in 2008, both firms today face a far different, and more hostile, political climate, stoked by both the Tea Party and Occupy Wall Street.
…

Britain and the EU
British Eurosceptics demand the right to prescribe euthanasia for the euro zone
Dec 4th 2011, 21:53 by Bagehot

THE weekend papers are full of angry quotes from British Conservatives, appalled by the idea that British voters might be denied a referendum on a new European Union treaty that imposes sweeping new restrictions on the taxation, spending and borrowing of the 17 countries that use the single currency.

Conservative MPs and activists correctly sense that the Conservative-Liberal Democrat coalition does not want a referendum on the new EU treaty which is being actively sought by Germany, and grudgingly endorsed by France (now that it is clear that the price for German aquiescence to some form of debt mutualisation or massive intervention by the European Central Bank is a binding agreement on automatic sanctions designed to stop euro-zone members from ever again running up unsustainable debts).

Under the terms of the European Union Act 2011, Britain must hold a referendum on new EU treaties which see powers passed from Westminster to Brussels. But as Nick Clegg, the Liberal Democrat deputy prime minister pointed out on the BBC this morning, that does not mean that a referendum would be triggered by shifts of sovereignty involving only the 17 euro zone members. As Mr Clegg told Andrew Marr of the BBC:

Let me be very clear. The test, which we’ve legislated on, is if we, the United Kingdom, give up more sovereignty in a big way to the European Union

That bit about “in a big way” raises alarm bells among British Eurosceptics, who think the EU Act falls way short of a “referendum lock”. Actually, the EU Act is a pretty tightly-worded referendum lock, as I have written before.

But the point of dispute here is actually a different one. The contention of Eurosceptics is that such a leap towards fiscal union inside the euro zone would marginalise countries such as Britain which were not involved. As it happens, I think that is right.
…

Don’t look now, but Communism is rebounding in Russia, not to be confused with Corporate Capitalistic Communism, of course.

Voters punish Putin as Russia’s communists make comeback
Alexey Nikolsky / EPA

The United Russia party of President Dmitry Medvedev, left, and Prime Minister Vladimir Putin suffered a setback in Sunday’s election.
By Msnbc.com staff and wire services

Updated at 5:40 a.m. ET: European monitors said that Russia’s parliamentary election has been tilted in favor of the ruling party and marred by violations, The Associated Press reports.

The monitors from the Organization for Security and Cooperation in Europe and other European institutions highlighted issues including limited political competition and a lack of fairness.

Prime Minister Vladimir Putin’s United Russia party saw its parliament majority weaken sharply in Sunday’s vote despite allegations of widespread violations.

The European observers said the vote was tainted by frequent procedural violations and instances of apparent manipulations, including serious indications of ballot box stuffing.

Earlier, Communist Party leader Gennady Zyuganov dismissed the official results as “theft on an especially grand scale.” His party made big gains in Sunday’s election.

However, Zyuganov told Reuters that police had barred Communist monitors from several polling stations and “some ended up in hospital with broken bones”.
…

Bloomberg
Italian Bonds Surge on Monti Austerity Plan; German Bunds Drop
December 05, 2011, 5:56 AM EST
By Paul Dobson and Emma Charlton

Dec. 5 (Bloomberg) — Italian bonds rose, pushing the 10- year yield down by the most in almost four months, after Prime Minister Mario Monti announced 30 billion euros ($40 billion) of austerity and growth measures to lower the nation’s debt load.

Spanish 10-year bonds climbed for a sixth day before German Chancellor Angela Merkel and French President Nicolas Sarkozy meet to discuss the region’s deficit rules ahead of a Dec. 9 European leaders’ summit. German yields rose for the first time in four days as European stocks advanced, sapping demand for the nation’s bonds. Germany sold 2.675 billion euros of six-month bills to yield 0.0005 percent today, while France and the Netherlands will also auction short-maturity debt.

“The market is betting a lot on a positive outcome at the end of the week after the leaders’ summit and that’s supporting peripheral bonds,” said Gianluca Ziglio, a London-based interest-rate strategist at UBS AG. “The Italian budget measures seem to go in the right direction, especially in terms of the size.”

The yield on 10-year Italian bonds fell 50 basis points, or 0.50 percentage point, to 6.18 percent at 10:28 a.m. London time. That’s the biggest drop since Aug. 8. The 4.75 percent securities maturing in September 2021 rose 3.225, or 32.25 euros per 1,000-euro face amount, to 90.25. The rate on Italy’s two- year notes fell 93 basis points to 5.64 percent.

Italian 10-year rates dropped 58 basis points last week, the first weekly decline since the five days ending Oct. 7, as optimism that France and Germany are aligned on measures to stem the euro-area debt crisis boosted demand for higher-yielding assets.

Draghi Signal

European Central Bank President Mario Draghi signaled on Dec. 1 the central bank may do more to fight the crisis as long as governments push the euro area toward a fiscal union.

Italy’s cabinet approved Monti’s austerity package yesterday, and the Prime Minister is due to present the plan to the legislature today, while parliament may vote on it by Christmas. The premier is seeking to cut the euro area’s second- biggest debt load and regain investor confidence after Italian borrowing costs exceeded the 7 percent threshold that led Greece, Ireland and Portugal to seek aid.

Ten-year Spanish bond yields fell 33 basis points to 5.35 percent, and Belgian rates fell 15 basis points to 4.50 percent. The yield on German securities of similar maturity increased six basis points to 2.19 percent.

The euro climbed 0.5 percent to $1.3456. The Stoxx Europe 600 Index of European equities advanced 0.8 percent.

Merkel, Sarkozy Plan

Merkel and Sarkozy will discuss a plan for stricter enforcement of the region’s deficit rules in Paris today that will be presented to the European Leaders summit. U.S. Treasury Secretary Timothy F. Geithner arrives in Frankfurt tomorrow and the ECB holds a policy meeting Dec. 8.

The ECB will lower interest rates by a quarter-point to 1 percent, according to 52 of 57 economists in a Bloomberg News survey. Two said the central bank will cut rates to 0.75 percent, and three estimate it will keep borrowing costs at 1.25 percent. It currently offers unlimited funding to euro-area banks against eligible collateral.

“I expect the ECB to cut by 25 basis points and possibly add further liquidity supporting measures,” said Niels From, chief analyst at Nordea Bank AB in Copenhagen. “The extra liquidity measures would support risky assets and cause sovereign-credit spreads to tighten.” The measures would support “the shorter end of the sovereign-credit curves, from Italy and Spain to Belgium and France,” he said.
…

I spent a good part of yesterday afternoon with friends, a European couple. I asked at one point in the conversation what they thought about the prospects of a euro collapse, and they dismissed it as a U.S. MSM fabrication, to make the U.S. financial situation seem less dire by comparison.

Fiddling as the euro burns
It is, said the foreign minister whose country holds the EU presidency, “the edge of a precipice the scariest moment of my ministerial life.”
By Andrew Gilligan
9:00PM GMT 03 Dec 2011

The chief executives of Shell, Unilever and Phillips called it “one minute to midnight.” Even the EU’s own financial affairs commissioner, Olli Rehn, says Europe only has ten days to stop the euro falling apart.

By this coming Friday, the ninth of those ten days, the continent’s leaders are supposed to have agreed a plan that satisfies the markets and gives their tottering currency a future. They have tried, and failed, three times this year already. A fourth failure would probably be the end. But in the Brussels corridors, with the sands fast running out, you really wouldn’t know that these are perhaps the most dangerous times in Europe since the Second World War.

At the Berlaymont, the Commission HQ, on Thursday, they were proudly launching their “better airports package.” “There is no Commission proposal for the auctioning of new airport capacity,” explained an official. “The decision was to go ahead with liberalising the secondary trading of existing slots.” Across the road the European Council, the ministerial decision making body, was busy on a resolution deciding that member states must “combat negative stereotypes regarding older persons” and demanding that “optimism has to prevail in the EU.” The week before, the Commission announced a new drive to “protect our sharks,” proclaiming it a “very good day, not just for European sharks, but for sharks worldwide.” The sharks in question were the finned, not the financial, variety.

The European Parliament was doing a little better. Mario Draghi, the new head of the European Central Bank, addressed MEPs on ways out of the crisis. His speech was easily the most important thing said in this particular building for years. Amazingly, however, he made it to an almost empty chamber. Of the 736 MEPs, about 700 – or 95 per cent – were elsewhere. Still, never mind. They had a key meeting later on the subject of “online gambling at a policy crossroads: towards an EU regulatory approach or increased member states’ co-operation?”
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Gingrich cheated on wife during Clinton impeachment

Former U.S. House speaker Newt Gingrich Friday told a Christian radio program he was cheating on his second wife at the same time as he was fighting for the impeachment of former president Bill Clinton over the Monica Lewinsky affair.

March 9, 2007
…

12.02.11

Debt Slavery – Why It Destroyed Rome, Why It Will Destroy Us Unless It’s StoppedPosted in General at 12:22 pm by nemo

Hammurabi Knew Better

http://www.counterpunch.org/2011/12/02/debt-slavery-%e2%80%93-why-it-destroyed-rome-why-it-will-destroy-us-unless-it%e2%80%99s-stopped/

Debt Slavery – Why It Destroyed Rome, Why It Will Destroy Us Unless It’s Stopped
by MICHAEL HUDSON
Book V of Aristotle’s Politics describes the eternal transition of oligarchies making themselves into hereditary aristocracies – which end up being overthrown by tyrants or develop internal rivalries as some families decide to “take the multitude into their camp” and usher in democracy, within which an oligarchy emerges once again, followed by aristocracy, democracy, and so on throughout history.

Debt has been the main dynamic driving these shifts – always with new twists and turns. It polarizes wealth to create a creditor class, whose oligarchic rule is ended as new leaders (“tyrants” to Aristotle) win popular support by cancelling the debts and redistributing property or taking its usufruct for the state.

Since the Renaissance, however, bankers have shifted their political support to democracies. This did not reflect egalitarian or liberal political convictions as such, but rather a desire for better security for their loans. As James Steuart explained in 1767, royal borrowings remained private affairs rather than truly public debts. For a sovereign’s debts to become binding upon the entire nation, elected representatives had to enact the taxes to pay their interest charges.

By giving taxpayers this voice in government, the Dutch and British democracies provided creditors with much safer claims for payment than did kings and princes whose debts died with them. But the recent debt protests from Iceland to Greece and Spain suggest that creditors are shifting their support away from democracies. They are demanding fiscal austerity and even privatization sell-offs.

This is turning international finance into a new mode of warfare. Its objective is the same as military conquest in times past: to appropriate land and mineral resources, also communal infrastructure and extract tribute. In response, democracies are demanding referendums over whether to pay creditors by selling off the public domain and raising taxes to impose unemployment, falling wages and economic depression. The alternative is to write down debts or even annul them, and to re-assert regulatory control over the financial sector.