May 2011 archive

Just few laws and proposals that really are so incredibly bad that they deserve to be buried at sea with concrete boots, except, we’d be polluting the ocean.

• TN Bill Calls Two Or More Observant Muslims A ‘Sharia Organization’

  

  After initial objections, lawmakers in Tennessee are moving a new version (pdf) of the most expansive anti-Sharia bill yet. The legislation has already been passed by committees in each chamber. The bill’s house sponsor has even cited defense against possible retaliation terror attacks for Osama bin Laden’s death to justify its breadth.

  Tennessee is one of more than fifteen states trying to push laws banning Sharia – referring to the legal code of Islam. The bill says Sharia is “inextricably linked” to its “war doctrine known as jihad.”

• Florida Bill Will Come ‘Between Doctors And Patients’ By Prohibiting Pediatricians From Asking About Guns

  Governor Rick Scott (R-FL) has been one of the country’s fiercest critics of health care reform, frequently deriding the Affordable Care Act for supposedly coming “between doctors and patients.”

  But now Scott is expected to soon sign a first-of-its-kind bill that does just that by forbidding doctors from asking their patients if they own guns. To prevent accidental injuries, pediatricians routinely ask new parents if they have guns at home and if they are stored safely. But the NRA and its allies in the Florida legislature see something more sinister at work – a radical agenda to curb the rights of gun owners.

• Florida City Paying $2,500 A Day To Radical Union-Busting Firm To Stop Workers From Organizing
  

  All over the country, right-wing lawmakers are waging a war on Main Street America’s labor rights, purporting to do so out of a desire for fiscal restraint (while also backing budget-busting tax breaks for the wealthiest among us).

  Now, the city of Winter Park, Florida, is going to new lengths to stop nearly 150 city workers from joining a union. Apparently more concerned with stopping the union than saving money, Winter Park hired consultants at Kulture LLC, “a firm specializing in labor relations” at the rate of $2,500 a day to persuade workers to vote against organizing this summer. . .

• FSU Accepts Funds From Charles Koch In Return For Control Over Its Academic Freedom
  

  Charles Koch, the billionaire libertarian who has funded front-groups and lobbying efforts to expand his anti-tax, anti-regulatory agenda under the guise of “free enterprise,” has now widened his reach into another key public policy area: academics. The Charles G. Koch Charitable Foundation entered into an agreement with Florida State University in 2008 in which the foundation would provide millions of dollars in funds for the school’s economics department.

• And two quickies:
  

  Florida Gov. Rick Scott (R) will soon sign a bill to cut unemployment benefits to a maximum of 23 weeks. The bill is the first in the nation to tie number of weeks to the state’s unemployment rate, a move Florida lawmakers are making to “blunt the massive increase in unemployment taxes that’s looming for businesses.”

  State legislators in Maine spent more time debating whoopie pies than health reform this year. A GOP plan to overhaul the state’s health system went from public hearing to first vote in just eight days. It took 51 days for a bill to make the whoopie pie the official state treat. Alas, Gov. Paul LePage (R) never signed the whoopie pie bill.

Blessing on the writers at Think Progress for reading through this idiocy and keeping us up to speed on the stupid.

As read by Keith.

Evening Edition is an Open Thread

Now with 45 Top Stories.

1 NATO bombs rock Tripoli, Libya rebels hail advance

by W.G. Dunlop, AFP

37 mins ago

The fact of the matter is that most, if not all, of the mega-banks are insolvent.  The paper they base their balance sheets on is suitible mostly for lining litter boxes and wrapping fish and ultimately, when the write downs come, they’re going to shoulder the brunt of it because now that they own over 50% of all assets there’s simply no place else they can steal from.

Yesterday I mentioned the continuing decline in real estate, more from the Wall Street Journal today-

Home values fell 3% in the first quarter and 1.1% in March, according to Zillow, which says prices have fallen 57 consecutive months. CoreLogic (CLGX) this week reported that home prices have fallen for eight months in a row.

The Realtors’ trade group, which measures resales using median prices where half sell for more and half sell for less, says existing-home prices rose in 34 out of 153 metropolitan statistical areas in the first quarter compared to a year ago. The data also shows four double-digit increases – including Buffalo, N.Y., and Burlington, Vt. – and 118 price declines.

…

NAR also makes it clear that distressed-home sales, which typically command a discount around 20%, continue weighing on prices. In the first quarter, the median existing home price came in at $158,700 nationwide, down 4.6% from a year earlier. Distressed sales made up 39% of the first-quarter’s sales, up from 36% a year ago.

…

This has some economists pushing back their estimates of when the battered market will see prices strike the long-awaited bottom and begin recovery.

Stan Humphries, Zillow’s chief economist, now believes prices won’t hit bottom before next year and expects they will fall by another 7% to 9%.

Paul Dales, a senior U.S. economist with Capital Economics, said prices could fall by as much as 10%, down from his previous forecasts of around 5%.

Others are even more pessimistic. “The real-estate market is dead money until at least 2014,” says Michael Pento, a senior economist with Euro Pacific Capital. “There is just too much supply.”

Banks lied about the value of these mortgages in the prospectuses for the securities they re-sold to investors, exposing them to Trillions of Dollars of Civil Liability and Criminal Fraud charges.

Deutsche Bank Accused Of Massive Mortgage Fraud, Sued for $1 Billion By U.S. Government

Shahien Nasiripour, The Huffington Post

05/ 3/11 04:42 PM ET

The Justice Department is seeking damages three times the amount HUD has already shelled out for defaulted mortgages with allegedly fraudulently-obtained government insurance, plus additional penalties for each mortgage that broke federal rules.

While private investors have thus far faced a long, slow war battling lenders and connected Wall Street firms to buy back toxic mortgages investors claim were sold to them fraudulently, the government’s suit is fairly straightforward. As part of the FHA program MortgageIT participated in, lenders are required to annually certify that they check basic records like borrowers’ incomes, credit history and employment record. The lenders also are required to review loans that quickly default to guard against sloppy lending practices, and act in the government’s best interests because taxpayers are bearing the risks for potentially poor loans.

…

“These companies repeatedly and brazenly breached the public trust,” said Preet Bharara, the U.S. Attorney in Manhattan. “This lawsuit sends them — and other lenders — the message that they cannot get away with lies and recklessness. They cannot casually assign the prospect of being caught to the cost of doing business.”

Claiming Fraud in A.I.G. Bailout, Whistle-Blower Lawsuit Names 3 Companies

By MARY WILLIAMS WALSH, The New York Times

Published: May 4, 2011

The lawsuit, filed by a pair of veteran political activists from the La Jolla area of San Diego, asserts that A.I.G. and two large banks engaged in a variety of fraudulent and speculative transactions, running up losses well into the billions of dollars. Then the three institutions persuaded the Federal Reserve Bank of New York to bail them out by giving A.I.G. two rescue loans, which were used to unwind hundreds of failed trades.

…

“To cover losses of those engaged in fraudulent financial transactions is an authority not yet given to the Fed board,” said the plaintiffs, Derek and Nancy Casady, in their complaint, filed in Federal District Court for the Southern District of California.

The lawsuit names A.I.G., Goldman Sachs and Deutsche Bank as defendants, but not the Fed.

Will "False Claims" Lawsuit Against AIG, Goldman, Deutsche, BofA, SocGen on Fed Funding Lead to New Round of Embarrassing Revelations?

Yves Smith, Naked Capitalism

Thursday, May 5, 2011

The case focuses on allegedly fraudulent representations made by AIG and the various major dealers in the course of obtaining the financing. But the part I find interesting is the Fed’s evident non-compliance with the requirements of this section, particularly the fact that the central bank lent 100% against the face value of the AIG CDOs, between taking out the CDS and then lending the bailout vehicle Maiden Lane III the funds to buy the CDOs. Interestingly, the SIGTARP investigation missed this issue. If this was at all considered, the argument may have been that the AIG equity in MLIII was tantamount to a discount, but the lawsuit argues that notion is bogus. Since AIG was broke, any money for the AIG equity came from the outside (in fairness, it’s a bit more complex, thanks to reserves set aside over the collateral dispute).

The suit argues that the initial loan was made under false premises, since the loan was secured by all assets of AIG, when the assets were already pledged (all the regulated subs have prior claims on them, both to creditors and policy-holders). The understanding, as depicted in various less-than-official accounts, like the Andrew Ross Sorkin Too Big Too Fail, is that the loans were secured by the equity of the subs. Fine in theory, but in practice, that isn’t what the loan document says, and as important (although not argued in the case) is the amount of the loan was based on what AIG needed to stay afloat, not on any effort to find a market value of the assets pledged and discount that.

In addition, the notion that it was acceptable to lend against stock appears to be based on the discount schedule that the Fed posts and revises from time to time as to the types of collateral that are accepted for lending and the various discount rates established for them. But note that schedule is for depositary institutions. The Fed acted as if it could simply lend against the same assets held by non-depositaries, but the language of the germane section does not appear to support that idea.

And then there are Portugal, Ireland, Italy, Greece, and Spain.

Investors count cost to banks of Greek default

By Tracy Alloway, Megan Murphy and David Oakley, Financial Times

Published: May 10 2011 19:17

Financial markets are pricing in the once unthinkable. Worried by the possibility that Greece could restructure its debt, investors are gauging the likely impact on European banks that hold its bonds. Some, it has emerged, could be exposed to billions of euros in losses

The question of who would suffer in the event of a writedown being imposed on Greek bondholders has acquired extra urgency as analysts digest different scenarios should Greece be unable to return to the bond markets next year.

…

A 50 per cent writedown, or haircut, on the value of Greek bonds, which some commentators believe is a possibility, would cost BNP €1.7bn.

At Dexia, the Franco-Belgian bank, its €3.5bn banking exposure represents a sizeable 39 per cent of the bank’s tangible net asset value, Morgan Stanley estimates. A 50 per cent haircut would lead to the group taking a €1.3bn hit.

Commerzbank of Germany and Société Générale in France are also exposed, both holding about €2bn-€3bn of Greek sovereign debt. In total, non-Greek banks hold 11 per cent of outstanding Greek debt, UBS says, the International Monetary Fund and European nations that took part in last year’s Greek bail-out having similar exposure.

…

The European Central Bank is estimated to hold 20 per cent through direct purchases of Greek bonds, making it Greece’s second-biggest investor. Widening the central bank’s exposure to take account of its financial liquidity operations paints a starker picture.

JPMorgan analysts estimate that including lending by the ECB to Greek banks raises its notional exposure to nearly €200bn. Using that figure, they calculate the ECB can withstand a haircut of up to 30 per cent before taking losses. “A hypothetical Greek debt restructuring exceeding that haircut would be damaging especially if Ireland followed suit,” JPMorgan says.

…

For Greek banks, a 50 per cent haircut in a hard restructuring would lead to about €25bn in losses, JPMorgan says, leaving only €4bn of equity to cushion the Hellenic banking system.

It is only a question of when, and not if, there will be another global financial crisis and another leg down in the Greatest Depression.  My bet is that it will come just in time to completely doom Obama’s re-election prospects.

For which he has no one to blame but himself.

“Punting the Pundits” is an Open Thread. It is a selection of editorials and opinions from around the news medium and the internet blogs. The intent is to provide a forum for your reactions and opinions, not just to the opinions presented, but to what ever you find important.

Thanks to ek hornbeck, click on the link and you can access all the past “Punting the Pundits”.

Eugene Robinson: Now casting: A few good GOP candidates

With the nation transfixed by the daring raid that killed Osama bin Laden, the first GOP presidential debate transpired last week with relatively little notice. For Republicans, that’s the good news.

The bad news is that for those who did pay attention, the debate brought to mind – and I’m just trying to be honest here, folks – the famous bar scene from “Star Wars.” At times the dialogue sounded like a faltering attempt at interplanetary communication. Can anyone seriously imagine Rick Santorum, Herman Cain, Ron Paul or Gary Johnson as president? Will anyone forgive Tim Pawlenty for joining such a motley crew?

Back on Earth, it’s hard to escape the conclusion that the elimination of bin Laden was good not only for national security, the interest of justice and the public mood, but for President Obama’s political prospects as well. He’s not unbeatable in 2012, but at the moment you’ve got to like his chances.

Dana Milbank: Muskets in hand, tea party blasts House Republicans

Poor Paul Ryan and John Boehner.

Ryan, chairman of the House budget committee, proposed budget cuts so severe his plan has been described as a suicide note. Boehner, the House speaker, rushed the budget to passage before Republicans grasped the potential fallout from their vote to replace Medicare.

Yet even this was not enough for the tea party.

On Monday morning, tea party leaders from around the country gathered at the National Press Club for a news conference denouncing Boehner and Ryan in terms normally reserved for that most loathsome of creatures, the Democrat.

“Instead of a fighter for U.S. taxpayers, Mr. Boehner has been a surrenderist, if that’s a word,” proclaimed William Temple, chairman of the Tea Party Founding Fathers. “It seems House Speaker John Maynard Boehner and his fellow RINOs – Republicans In Name Only – like to spend other peoples’ money just as much as the Democrats.”

Some of the Democrats in Congress are more the enemy of the people than the Republicans. Case in point, Sen. Claire McCaskill (D-MO) and her unholy alliance with Sen. Bob Corker (R-TN) on a proposed budget bill that would completely destroy Medicare and Medicaid. The bill would cut $7.6 trillion over 10 years by capping federal spending at 20.6 percent of gross domestic product within a decade, down from 24.3 percent now. Achieving that goal would necessitate massive cuts to Medicare, Social Security and Medicaid.

Under the McCaskill-Corker plan, if Congress fails to keep spending under the annual cap, the Office of Management and Budget would make evenly distributed cuts throughout the budget.

If the automatic cuts took place, they would total about $1.3 trillion in Social Security, $856 billion in Medicare and $547 billion in Medicaid reductions over the first nine years, according to the Center on Budget and Policy Priorities report.

To avoid the automatic across-the-board cuts, lawmakers would probably have to enact policies for Medicare and Medicaid along the lines of what Ryan has outlined, the report said.

snip

Federal spending is projected to grow rapidly in coming years as the Baby Boom generation reaches retirement age, which means the McCaskill-Corker proposal would require dramatic cuts. The reductions would total more than $800 billion in 2022 alone, which would be the equivalent of eliminating the entire Medicare program or the Defense Department.

Spending Caps: Putting Lipstick On A Pig

Hi, I’m Robert Reich. Republicans figure that if they can’t sell the pig they’ll just put lipstick on it and find some suckers who will think it’s something else. That’s the proposal emerging in the Senate from Republican Bob Corker of Tennessee and also Democrat Claire McCaskill of Missouri. It would get the deficit down, not by raising taxes on the rich, but by capping federal spending. That cap would steadily drop over time as it squeezed spending more and more.And if Congress failed to stay under the cap the budget would be automatically cut.

According to an analysis by the Center on Budget and Policy Priorities the McCaskill/Corker plan would require eight hundred billion dollars of cuts in twenty-twenty-two alone. That’s the equivalent of eliminating Medicare entirely, or the entire Department of Defense. Now, obviously, the Defense Department wouldn’t disappear, so what would go?

We’d have to have giant cuts in Medicare, Medicaid, education, and much of everything else American’s depend on.

It’s the republican plan with lipstick. It would have exactly the same result as the current Republican plan. But, by disguising it with caps and procedures Republicans can avoid saying what they’re intending to do, destroy Medicare and Medicaid, slash programs for poor and moderate income Americans, and not demand a penny from wealthy Americans.

The McCaskill/Corker spending cap would also make it impossible for government to boost the economy in recessions, which would lead to even higher unemployment, lasting longer.

Other Senate Democrats are showing interest in this lipsticked pig, including West Virginia’s Joe Machin. And not surprisingly, Joe Lieberman is on board.

But don’t be fooled and don’t let anyone else be. McCaskill/Corker is the same republican pig.

[Tell Congress: No Spending Caps That Slash Medicare]

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This is your morning Open Thread. Pour your favorite beverage and review the past and comment on the future.

Find the past “On This Day in History” here.

Click on images to enlarge

May 10 is the 130th day of the year (131st in leap years) in the Gregorian calendar. There are 235 days remaining until the end of the year.

On this day in 1869, the presidents of the Union Pacific and Central Pacific railroads meet in Promontory, Utah, and drive a ceremonial last spike into a rail line that connects their railroads. This made transcontinental railroad travel possible for the first time in U.S. history. No longer would western-bound travelers need to take the long and dangerous journey by wagon train, and the West would surely lose some of its wild charm with the new connection to the civilized East.

Since at least 1832, both Eastern and frontier statesmen realized a need to connect the two coasts. It was not until 1853, though, that Congress appropriated funds to survey several routes for the transcontinental railroad. The actual building of the railroad would have to wait even longer, as North-South tensions prevented Congress from reaching an agreement on where the line would begin.

Route

The Union Pacific laid 1,087 miles (1,749 km) of track, starting in Council Bluffs, and continuing across the Missouri River and through Nebraska (Elkhorn, now Omaha, Grand Island, North Platte, Ogallala, Sidney, Nebraska), the Colorado Territory (Julesburg), the Wyoming Territory (Cheyenne, Laramie, Green River, Evanston), the Utah Territory (Ogden, Brigham City, Corinne), and connecting with the Central Pacific at Promontory Summit. The route did not pass through the two biggest cities in the Great American Desert — Denver, Colorado and Salt Lake City, Utah. Feeder lines were built to service the two cities.

The Central Pacific laid 690 miles (1,100 km) of track, starting in Sacramento, California, and continuing over the Sierra Nevada mountains into Nevada. It passed through Newcastle, California and Truckee, California, Reno, Nevada, Wadsworth, Winnemucca, Battle Mountain, Elko, and Wells, Nevada, before connecting with the Union Pacific line at Promontory Summit in the Utah Territory. Later, the western part of the route was extended to the Alameda Terminal in Alameda, California, and shortly thereafter, to the Oakland Long Wharf at Oakland Point in Oakland, California. When the eastern end of the CPRR was extended to Ogden, it ended the short period of a boom town for Promontory. Before the CPRR was completed, developers were building other railroads in Nevada and California to connect to it.

At first, the Union Pacific was not directly connected to the Eastern U.S. rail network. Instead, trains had to be ferried across the Missouri River. In 1873, the Union Pacific Missouri River Bridge opened and directly connected the East and West.

Modern-day Interstate 80 closely follows the path of the railroad, with one exception. Between Echo, Utah and Wells, Nevada, Interstate 80 passes through the larger Salt Lake City and passes along the south shore of the Great Salt Lake. The Railroad had blasted and tunneled its way down the Weber River canyon to Ogden and around the north shore of the Great Salt Lake (roughly paralleling modern Interstate 84 and State Route 30). While routing the railroad along the Weber River, Mormon workers signed the Thousand Mile Tree, to commemorate the milestone. A historic marker has been placed there. The portion of the railroad around the north shore of the lake is no longer intact. In 1904, the Lucin Cutoff, a causeway across the center of the Great Salt Lake, shortened the route by approximately 43 miles (69 km), traversing Promontory Point instead of Promontory Summit.

Pakistanis disclose name of CIA operative



By Karin Brulliard and Greg Miller, Tuesday, May 10

ISLAMABAD, Pakistan – The public outing of the CIA station chief here threatened on Monday to deepen the rift between the United States and Pakistan, with U.S. officials saying they believed the disclosure had been made deliberately by Pakistan’s main spy agency.

If true, the leak would be a sign that Pakistan’s powerful security establishment, far from feeling chastened by the killing of terrorist leader Osama bin Laden in a Pakistani garrison city last week, is seeking to demonstrate its leverage over Washington and retaliate for the unilateral U.S. operation.

Less than six months ago, the identity of the previous CIA station chief in Islamabad was also disclosed in an act that U.S. officials blamed on their counterparts in Pakistan’s Inter-Services Intelligence agency, or ISI.

As read by Keith