February 2012 archive

6 pm tomorrow.

Oh, so not the haircut you thought I was talking about.

How about this-

Banks Paying Homeowners to Avoid Foreclosures

By Prashant Gopal, Bloomberg News

Feb 7, 2012 12:00 AM ET

As lenders shift their focus to sales, they are finding that some borrowers would rather risk repossession while they wait for a loan modification, according to Guy Cecala, publisher of Inside Mortgage Finance, a trade journal. In a loan modification, the monthly payment, and sometimes principal, is reduced to help prevent seizure. Homeowners facing foreclosure may live rent-free for years before they are forced out.

“That’s why the banks have got to pay the big bucks,” Cecala said. “The real question is why is the bribe so big? Is that what it takes to get somebody out of their home?”

…

Cecala of Inside Mortgage Finance said he wonders whether lenders are making big payments on properties with underlying title problems. Evan Berlin, managing partner of Berlin Patten, a real estate law firm in Sarasota, Florida, said representatives of a large bank told him the incentives are primarily given to borrowers when it doesn’t have the proper paperwork needed to win its foreclosure case.

Because that’s where the money is-

Greece, Troika Work on Final Rescue Draft

By Marcus Bensasson, Maria Petrakis and Natalie Weeks, Bloomberg News

Feb 7, 2012 9:45 AM ET

Adding to pressure on Papademos and political leaders jostling ahead of the elections, the biggest public-sector and private-sector union groups, ADEDY and GSEE, held a 24-hour general strike today, shutting down government services, courts, schools and ferry services. Dockworkers and bank employees also walked off the job while a walkout by culture ministry workers forced the closure of museums and other tourist attractions.

“What is taking place isn’t a negotiation,” GSEE president Yannis Panagopoulos said in an e-mailed statement. “It’s raw, cynical blackmail against a whole people.”

…

The troika argues that lower wage costs is among reforms necessary to boost competitiveness in the country. Those opposed say the cuts would deepen the country’s recession, now in its fifth year.

Antonis Samaras, the head of the second-biggest party, New Democracy, has indicated he will oppose measures that will deepen the country’s downturn.

Guarantees from Greek political leaders such as Samaras, who leads in opinion polls, are key to securing the funds from the EU and IMF. International lenders want assurances that whoever wins the next election will stick to pledges made now to receive financing.

The rescue blueprint includes a loss of more than 70 percent for bondholders in a voluntary debt exchange that will slice 100 billion euros off 200 billion euros of privately-held Greek debt and loans that will probably exceed the 130 billion euros now on the table. A formal offer for the debt swap must be made by Feb. 13 to allow all procedures to be completed before the March 20 bond comes due.

Creditors are prepared to accept an average coupon of as low as 3.6 percent on new 30-year bonds in the exchange, said a person familiar with the talks, who declined to be identified because a final deal hasn’t been struck yet.

The End of Wall Street As They Knew It

By Gabriel Sherman, New York Magazine

Published Feb 5, 2012

To understand how radically Wall Street is changing, you have to first understand how modern Wall Street made its money. In the quaint old days, Wall Street tended to earn its profits rather boringly by loaning money, advising mergers, and supervising bond issues and IPOs. The leveraging of the American economy-and the supercharging of the financial industry-began in earnest in the early eighties. And banks have profited from a successive series of financial bubbles, each bigger and more violent than the one preceding it. “Wall Street did a really good job convincing people it was really complicated and they were the only ones who could do it and it justified paying them millions of dollars,” a former Lehman trader explained. Credit was the engine that powered the explosion in bank profits. From junk bonds in the eighties to the emerging-markets crisis in the nineties to the subprime mania of the aughts, Wall Street developed new ways to produce, package, and sell debt to willing investors. The alphabet soup of complex vehicles that defined the 2008 crash-CLO, CDO, CDS-had all been developed to sell more credit. “If you look at the past 25 years, the world economy was going through a process of leveraging,” a senior Citigroup executive said. “Debt has grown faster than economic growth. The banking industry was at the epicenter of facilitating the growth of credit creation. It drove every business.”

…

After the big investment banks went public, the sense of restraint that sometimes could hold back private partnerships from taking on too much risk-it was their own money-was removed. Bank earnings and ever-rising asset values allowed them to borrow ever-larger amounts of money, which in turn juiced ever-greater profits. Banks, which had previously made their money advising corporations and underwriting securities, essentially became giant hedge funds (in 2007, Morgan Stanley held $1.05 trillion in assets supported by just $30 billion in equity). The triumph of the Wall Street system was the exploitation of the real-estate boom: Real estate enabled the biggest credit bubble ever conceived-and a bust of similar magnitude, which some shrewd traders also took advantage of. “The mortgage mess is the biggest financial mess we’ll see in our lifetime,” Jamie Dimon told me.

And without real estate to fuel growth, many on Wall Street know it’ll be a long time before there is ever a profit center like it again. “The number of houses being sold is 25 percent of what it was,” a former Lehman trader says. “You don’t have the mortgages behind it. Essentially the pump has stopped working. All the IPOs, the mergers-everything is slowing down. And the number of new homes will never jump back to what it was. If you look at history, the past 50 years have been incredible. Never has there been a period of time of so little disease and so few wars and such growth of such absurd wealth.”

…

(R)ecently, hedge funds have fared just as poorly as the banks. The bad economy plays a role in this, of course. But just as important is the fact the hedge-fund industry is almost as overbuilt as the housing and credit markets that drove its profits. In 1990, there were 610 hedge funds in the world. In 2000, there were 3,873; in 2011, there were 9,553, according to a report by Hedge Fund Research. All these funds are chasing fewer surefire trades. “When markets are panicked and there’s global risk fear, the markets move in the same direction,” one analyst at a Manhattan hedge fund says. “It’s just a lot harder to make money.” The easy, obvious plays are oversubscribed, which shrinks margins.

…

“We used to rely on the public making dumb investing decisions,” one well-known Manhattan hedge-fund manager told me. “but with the advent of the public leaving the market, it’s just hedge funds trading against hedge funds. At the end of the day, it’s a zero-sum game.” Based on these numbers-too many funds with fewer dollars chasing too few trades-many have predicted a hedge-fund shakeout, and it seems to have started. Over 1,000 funds have closed in the past year and a half.

…

On Wall Street, the misery index is as high as it’s been since brokers were on window ledges back in 1929. But sentiments like that, accompanied by a full orchestra of the world’s tiniest violins, are only part of the conversation in Wall Street offices and trading desks. Along with the complaint is something that might be called soul-searching-which is, in itself, a surprising development. Since the crash, and especially since the occupation of Zuccotti Park last September (which does appear to have rattled a lot of nerves), there has been a growing recognition on Wall Street that the system that had provided those million-dollar bonuses was built on a highly unstable foundation. Disagreeable as it may be, goes this thinking, bankers have to go back to first principles, assess their value in the economy, and take their part in its rebuilding. No one on Wall Street liked to be scapegoated either by the Obama administration or by the Occupiers. But many acknowledge that the bubble­-bust-bubble seesaw of the past decades isn’t the natural order of capitalism-and that the compensation arrangements just may have been a bit out of whack. “There’s no other industry where you could get paid so much for doing so little,” a former Lehman trader said. Paul Volcker, whose eponymous rule is at the core of the changes, echoes an idea that more bankers than you’d think would agree with. “Finance became a self-justification,” he told me recently. “They made a lot of money trading with each other with doubtful public benefit.”

Pobrecitos.  Que lastima.

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.

February 8 is the 39th day of the year in the Gregorian calendar. There are 326 days remaining until the end of the year (327 in leap years).

On this day in 1828, Jules Gabriel Verne is born in Nantes, Brittany in France. He was a French author who pioneered the science-fiction genre. He is best known for novels such as Twenty Thousand Leagues Under the Sea (1870), A Journey to the Center of the Earth (1864), and Around the World in Eighty Days (1873). Verne wrote about space, air, and underwater travel before air travel and practical submarines were invented, and before practical means of space travel had been devised. He is the third most translated individual author in the world, according to Index Translationum. Some of his books have been made into films. Verne, along with Hugo Gernsback and H. G. Wells, is often popularly referred to as the “Father of Science Fiction”.

Literary debut

After completing his studies at the lycée, Verne went to Paris to study for the bar. About 1848, in conjunction with Michel Carré, he began writing libretti for operettas. For some years his attentions were divided between the theatre and work, but some travellers’ stories which he wrote for the Musée des Familles revealed to him his true talent: the telling of delightfully extravagant voyages and adventures to which cleverly prepared scientific and geographical details lent an air of verisimilitude.

When Verne’s father discovered that his son was writing rather than studying law, he promptly withdrew his financial support. Verne was forced to support himself as a stockbroker, which he hated despite being somewhat successful at it. During this period, he met Victor Hugo and Alexandre Dumas, pére, who offered him writing advice.

Verne also met Honorine de Viane Morel, a widow with two daughters. They were married on January 10 1857. With her encouragement, he continued to write and actively looked for a publisher.

Verne’s situation improved when he met Pierre-Jules Hetzel, one of the most important French publishers of the 19th century, who also published Victor Hugo, Georges Sand, and Erckmann-Chatrian, among others. They formed an excellent writer-publisher team until Hetzel’s death. Hetzel helped improve Verne’s writings, which until then had been repeatedly rejected by other publishers. Hetzel read a draft of Verne’s story about the balloon exploration of Africa, which had been rejected by other publishers for being “too scientific”. With Hetzel’s help, Verne rewrote the story, which was published in 1863 in book form as Cinq semaines en balloon (Five_Weeks_in_a_Balloon Five Weeks in a Baloon). Acting on Hetzel’s advice, Verne added comical accents to his novels, changed sad endings into happy ones, and toned down various political messages.

From that point, Hetzel published two or more volumes a year. The most successful of these include: Voyage au centre de la terre (Journey to the Center of the Earth, 1864); De la terre à la lune (From the Earth to the Moon, 1865); Vingt mille lieues sous les mers (Twenty Thousand Leagues Under the Sea, 1869); and Le tour du monde en quatre-vingts jours (Around the World in Eighty Days), which first appeared in Le Temps in 1872. The series is collectively known as “Voyages Extraordinaires” (“extraordinary voyages”). Verne could now live on his writings. But most of his wealth came from the stage adaptations of Le tour du monde en quatre-vingts jours (1874) and Michel Strogoff (1876), which he wrote with Adolphe d’Ennery. In 1867 Verne bought a small ship, the Saint-Michel, which he successively replaced with the Saint-Michel II and the Saint-Michel III as his financial situation improved. On board the Saint-Michel III, he sailed around Europe. In 1870, he was appointed as “Chevalier” (Knight) of the Légion d’honneur. After his first novel, most of his stories were first serialised in the Magazine d’Éducation et de Récréation, a Hetzel biweekly publication, before being published in the form of books.

In his last years, Jules Verne wrote a novel called Paris in the 20th Century about a young man who lives in a world of glass skyscrapers, high-speed trains, gas-powered automobiles, calculators, and a worldwide communications network, yet cannot find happiness and comes to a tragic end. Hetzel thought the novel’s pessimism would damage Verne’s then booming career, and suggested he wait 20 years to publish it. Verne put the manuscript in a safe, where it was discovered by his great-grandson in 1989. It was published in 1994.

In 1905, while ill with diabetes, Verne died at his home, 44 Boulevard Longueville (now Boulevard Jules-Verne).

Waiting for slaughter.

Today I’m going to pick on the National Council for La Raza which you may remember fondly as a Hispanic empowerment group on the forefront of Immigration Reform.

Having completely and totally failed at changing the Obama Administration’s worse than George W. Bush deportation policy (MSNBC, not exactly a hotbed of rumor and innuendo), La Raza has now attempted to gather the shreds of credibility that remain to sell out once again in defense of the Obama Bankster Bailout: Robo Signing Edition.

This did not escape my notice over at The Great Orange Satan-

Attorneys General: It’s Time to Close the Deal

by NCLR

Mon Jan 30, 2012 at 11:58 AM PST

Details of a $25 billion robosigning settlement have begun to emerge and if the reported details are accurate, there is much to celebrate.

…

Clearly, $25 billion is not enough to repair all of the damage done to our homes and the economy, but that is why the robosigning settlement is only part of the solution. One of the most important deals struck in the negotiation is on the releasing of future legal claims. This means that the AGs and the Department of Justice can continue to pursue civil rights, origination, and securitization claims. In fact, the financial crimes task force, investigations underway by AGs in California, Nevada, and Massachusetts, and the Department of Justice’s landmark settlement with Countrywide give us every reason to believe that the march toward accountability is off to a good start. The robosigning settlement should be the next step. It is time to deliver the first installment of relief for homeowners that have not a moment to lose.

Is this the policy of La Raza?

If so it’s remarkably short sighted nor does it seem to match the policy goals of your organization.

This is a ridiculously small amount of money to cover over $700 Billion in lost value and most of it comes not from banks, but from the same taxpayers that bailed them out.

This is a horrible settlement on every level.  Supporters should be ashamed.

by ek hornbeck on Mon Jan 30, 2012 at 01:50:53 PM PST

NCLR Policy on AG Settlement

NCLR’s policy goal is to maximize relief for families in the timeliest fashion possible.  As we noted in the blog post, we agree that $25 billion is will not meet demand or atone for all the harms caused by the financial crisis. However, it is an important first step at a time when we really need momentum. The deals preserves the ability of the Department of Justice and the state Attorneys General to continue pursuing financial criminals and holding them accountable.  It would be short-sighted, and quite frankly irresponsible, to walk away from $25 billion and drag out negotiations for another six months or a year, while millions of families continue to slip toward foreclosure.  The settlement is not perfect and advocates will have to remain vigilant.  NCLR will continue our drumbeat for justice and meaningful relief for the millions of Americans who have been victimized by improper lending practices.

by NCLR on Tue Jan 31, 2012 at 07:50:06 AM PST

Oddly enough it’s the very same Janis Bowdler that Yves Smith cites today-

(S)ome core constituencies aren’t buying what the Administration is selling:

Aides to President Barack Obama have in recent weeks courted civil rights groups and borrower advocacy organisations, scheduling meetings and calls in an attempt to gain support for the expected settlement and muffle criticism from key political allies… The meetings have occasionally served as a “gripe session”, as one participant called them, because many of Mr Obama’s most ardent supporters have criticised the pending deal’s terms for the degree of relief provided and the extent of the release from legal claims it provides for banks desperate to minimise mortgage-related liability… Janis Bowdler, a housing expert at the National Council of La Raza, the largest US Hispanic civil rights group, said the settlement would be a good start for the White House as it seeks to prove it is doing all it can for homeowners. “Wrapping up the settlement now is the right thing to do, but it’s only going to be a win for them politically if they follow up with the financial crimes task force,” Ms Bowdler said…”Otherwise, if this is it, and they’re satisfied with just $25bn, I don’t think that will be enough to convince voters that they were doing all they could to fix the housing market.”

Oh, they plan to do more: put some small and maybe even mid sized players in stocks in the town square, the closer to the elections, the better. As we know all too well, the Administration only wants to appease voters, not fix the problem. What it seems to fail to recognize is the the housing market is in such distress that token measures and gimmickry are unlikely to do the trick.

La Raza.  A sold out failure on every level.  Exactly as influential as Planned Parenthood.

DHinMI called me dangerous and edgy.  Well, I am.

Norton Anti-Virus is itself a virus that makes it impossible to maintain your computer without paying a yearly rent to Symantec and has only middling effectiveness at its purported purpose.

Don’t pay?  Your computer crashes and you have to wipe it and re-install the operating system.

pcAnywhere is malware that allows remote users to hijack your machine.

It was Symantec and their police handlers who introduced money into the equation.

I encourage you to download a torrent today and leave it to seed.  Free Download Manager is not only free, but superior.  It also offers a BitTorrent client that you can selectively turn off and on and resumable downloads and error correction.

Anonymous: Symantec Offered $50K for Stolen Code, Plus a Lie

By Mark Hachman, PC World

February 6, 2012 08:36pm EST

Members of the Anonymous network released an email thread on Monday that claims that Symantec offered $50,000 in return for the guaranteed destruction of code tied to its pcAnywhere and Norton Antivirus tools.

…

The group said later that the code would be released. Separately, Anonymous released emails from the legal team who represented Frank Wuterich, the staff sergeant who led an assault on the Iraqi city of Haditha that left 24 unarmed civilians dead.

According to the email chain, Sam Thomas, an employee of Symantec, began negotiations with “Yamatough,” a member of the Lords of Dharmaraja group using a Venezuelan email address, on or about Jan. 18. According to the emails, Symantec asked Yamatough and the group to lie about having accomplished an earlier 2006 hack, which obtained the code.

Hackers sought $50,000 from Symantec for anti-virus blueprint

By Frank Jack Daniel, Reuters

Tue Feb 7, 2012 3:46am EST

An email exchange released by the hacker, who is known as YamaTough and claims to be based in Mumbai, India, shows drawn-out negotiations with a purported Symantec employee starting on January 18.

…

“In exchange, you will make a public statement on behalf of your group that you lied about the hack.”

The hacker said he never intended to take the money and warned he would soon release the blueprints for Symantec’s pcAnywhere and Norton antivirus products.

“We tricked them into offering us a bribe so we could humiliate them,” YamaTough told Reuters.

This morning the US 9th Circuit Court of Appeals has ruled that California’s Prop 8 is unconstitutional striking down the ban on gay marriage under both the Due Process and Equal Protection clauses of the U.S. Constitution’s 14th Amendment. The ruling is limited and specific to California only.

“Proposition 8 served no purpose, and had no effect, other than to lessen the status and human dignity of gays and lesbians in California,” the court said.

The ruling upheld a decision by retired Chief U.S. District Judge Vaughn R. Walker, who struck down the ballot measure in 2010 after holding an unprecedented trial on the nature of sexual orientation and the history of marriage.

The ruling makes same sex marriage legal again in California but it is expected that the court will not permit marriages to take place while the appeals are in progress. The backers of Prop 8 have stated that they will appeal this ruling but have not said if they would request a the full 9th Court to hear the appeal or take it directly to the US Supreme Court.

Ninth Circuit Prop. 8 decision

Well, I think you deserve some explanation and it’s also instructive.

Not that I’m complaining because many people have much worse problems.  After Sunday’s Superbowl live blog I noticed some changes in the performance of my computer.  The significant indicators were that all the websites I visited had invalid security certificates (even yahoo mail) and no Java enabled features would work.

So I spent a whole day (because that’s how long it takes) running virus scans (caught a few) and uninstalling and re-installing browsers and Java.

Since re-installing your prime OS is a pain in the ass, even if you have a backup, and can take even longer.

Monday night I spent a lot of time preparing for a format when I should have been sleeping, backing up all those piddly things like bookmarks and wallpaper and your last 2 weeks of writing that you ought but never get around to and then I dug out my amber preserved base and took a nap because it’s best to start these things fresh.

When I approached my machine I noticed the date was out of wack.  That’s odd said I.  So I changed it.

Problem solved (apparently).

It’s times like these I think myself a poor technician and blogger.  Thank goodness I have TheMomCat who is always supportive even when I am stupid and lazy.

I apologize to my readers also.  You put up with a lot of abuse and hardly ever call me on it.

“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”.

Joe Nocera; Poisoned Politics of Keystone XL

On Monday, Stephen Harper, the prime minister of Canada, traveled to China for a week of high-level meetings.  He brought with him a handful of his cabinet ministers, including Joe Oliver, his tough-talking minister of natural resources who, until recently, had been withering in his scorn for the opponents of the Keystone XL oil pipeline, which President Obama rejected a few weeks ago.  The pipeline, of course, was intended to transport vast oil reserves in Alberta to the American refineries on the Gulf of Mexico.

Oliver no longer talks so freely about the environmental critics of the Keystone pipeline; all of Harper’s ministers have been instructed to stop making comments that might be construed as interfering in the American presidential election.  But there are other, more diplomatic, ways to send messages.  Like going to China with your cabinet members and cutting energy deals with a country that has, as The Globe and Mail in Toronto put it recently, a “thirst for Canadian oil.”  Oil, I might add, that may be a little dirtier than the crude that pours forth from the Saudi Arabian desert – that is one of the main reasons environmentalists say they oppose Keystone – but is hardly the environmental disaster many suppose.

New York Times Editorial: The Payroll Tax Fight

Republicans in Congress seem to have forgotten the embarrassment they suffered late last year for trying to block a payroll tax cut for millions of wage-earners. The two-month extension they reluctantly approved will run out in three weeks, yet, again, they are stalling a full-year’s tax cut with extraneous issues and political ploys. [..]

Republicans, on the other hand, are only interested in extending the tax benefits for working Americans if they can punish other groups. They want to extend the freeze on wages for federal workers to a third consecutive year, and appeal to their base by barring the use of welfare debit cards at casinos and strip clubs. This is hardly a national problem; a few states have allowed that, but most have cracked down on it.

Republicans seem no more serious about cutting the tax and stimulating the economy than they were in December. They may be furious that President Obama is campaigning against a do-nothing Congress, but they don’t seem as if they’re planning to actually do something.

As the the multistate foreclosure settlement inches to some conclusion, the Big Banks have dropped the other shoe. They won’t sign on to the agreement unless Schneiderman drops his law suit against them and MERS. The proposed settlement would also require the attorneys general from Nevada, Massachusetts and Arizona to drop their litigation should they decide to sign onto the agreement:

Bank of America Corp., JPMorgan Chase & Co. and Wells Fargo & Co. made a last-minute demand that New York drop claims filed against them Feb. 3 as a condition of the settlement, a person familiar with the matter said. [..]

New York sued Bank of America, JPMorgan and Wells Fargo in state court in Brooklyn, saying their use of a mortgage database known as MERS led to improper foreclosures. Schneiderman said the banks’ use of the Mortgage Electronic Registration Systems database misled homeowners, undermined foreclosure proceedings and created uncertainty about ownership interests in properties.

The banks have asked that many of the claims in the complaint be thrown out, said the person. The other two banks involved in the nationwide settlement proposal, Ally Financial Inc. and Citigroup Inc., weren’t named in the complaint. [..]

The proposed settlement already requires Massachusetts, Nevada and Arizona, which have sued banks involved in the talks, to settle their claims, a person familiar with them said.

Nevada and Arizona each sued Bank of America over mortgage- servicing practices, accusing it of misleading consumers, while Massachusetts sued all five banks.

It appears that the agreement would give the banks immunity from prosecution and civil suits from mortgage origination fraud. The settlement does not prevent an investigation into mortgage securitization (secondary mortgage fraud), it would give the banks a free pass on all the fraudulent foreclosures and mortgages that are the primary cause of the housing market crash.

So where does this leave the new unit the President Obama created to investigate mortgage fraud? Professor of law and economics at the University of Missouri-Kansas City, Bill Black, spoke with Theresa Riley on Bill Moyers & Compnany:

The special new unit is a charade. There will be no prosecutions of any elite criminals. Obama has made sure of that.

Meanwhile the agreement is inching towards a conclusion with Iowa Attorney General announcing that 40 states have agreed to sign:

“The sign-on deadline for the proposed joint state-federal mortgage servicing settlement passed Monday with more than 40 states signing on,” Miller said “This enables us to move forward into the very final stages of remaining work.Federal and state officials, as well as representatives from the banks, continue to address matters that they must complete before finalizing any settlement.”

Delaware Attorney General Beau Biden, who spoke with MSNBC’s Dylan Ratigan, indicated he will sign on only if he can continue to pursue MERS and not be precluded from adding the banks from the suit.

Apparently Missouri’s Attorney General didn’t get the word about not filing suits. He not only filed a criminal lawsuit against DocX, one of the largest companies that provided home foreclosure services to lenders across the nation, for forgery in the preparation of documents used to evict financially strained borrowers from their homes but arrested Lorraine O. Brown, the company’s founder and former president.

Chris Koster, the Missouri attorney general, will prosecute the case. “The grand jury indictment alleges that mass-produced fraudulent signatures on notarized real estate documents constitutes forgery,” Mr. Koster said in a statement. “Today’s indictment reflects our firm conviction that when you sign your name to a legal document, it matters.”

Mr. Koster said his office’s investigation was continuing. This suggests he may hope to persuade Ms. Brown to cooperate in his investigation of the parent company. If convicted, Ms. Brown could face up to seven years in prison for each forgery count. DocX could be fined up to $10,000 for each forgery conviction.

Hey, Mr. President, this is what needs to be done on a federal level.

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.

February 7 is the 38th day of the year in the Gregorian calendar. There are 327 days remaining until the end of the year (328 in leap years).

On this day in 1795, The 11th Amendment to the United States Constitution is ratified. It dealt with each state’s sovereign immunity from being sued in federal court by someone of another state or country.

The Eleventh Amendment (Amendment XI) to the United States Constitution, which was passed by the Congress on March 4, 1794 and was ratified on February 7, 1795, deals with each state’s sovereign immunity from being sued in federal court by someone of another state or country. This amendment was adopted in order to overrule the U.S. Supreme Court‘s decision in Chisholm v. Georgia, 2 U.S. 419 (1793).]

Amendment Eleven:

   The Judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State.

By itself this Amendment is a little impenetrable. It was passed as a clarification of Article 3, Section 2 of the Constitution, specifically Clause One which reads:

Clause 1:

   The judicial Power shall extend to all Cases, in Law and Equity, arising under this Constitution, the Laws of the United States, and Treaties made, or which shall be made, under their Authority;–to all Cases affecting Ambassadors, other public Ministers and Consuls;–to all Cases of admiralty and maritime Jurisdiction;–to Controversies to which the United States shall be a Party;–to Controversies between two or more States;–between a State and Citizens of another State; between Citizens of different States,–between Citizens of the same State claiming Lands under Grants of different States, and between a State, or the Citizens thereof, and foreign States, Citizens or Subjects

Basically what this boils down to is the concept of Sovereign Immunity. Basically you can not use the Federal Government unless it agrees to let the case be heard. Yes, you read that right. The Government reserves the right to prevent you from suing it, as a citizen, except under very specific circumstances. The exceptions are detailed in the Federal Tort Claims Act and the Tucker Act. These acts allow a citizen to sue the Government if there is a claim resulting from either the actions of a federal employee or if there is a case involving contracts with the Federal Government.

Now, Amendment 11 extends this same sovereign immunity to the States in terms of the Federal Courts. What that means is that you as a citizen can not use the Federal Courts to sue your State Government, without the consent of the State. The Dog believes the reason for this is to prevent citizens from tying up their government with suits that arise from the normal operation of the government. As a practical matter it forces citizens that don’t like the way things are being run to replace their government officials instead of just suing the government.

Now, this does not apply to crimes committed by members of the government or the government itself. There is what is called a Stripping Doctrine that says when a government employee or official commits a crime, they have lost their immunity. So, in the case of torture or War Crimes there can be no reasonable sovereign immunity defense.

h/t Something the Dog Said

There is still no agreement on bailing out Greece as Greek Premier Lucas Papademos failed to get his government’s coalition parties to agree to the severe austerity terms set out by the European Commission, European Central Bank and International Monetary Fund:

After five hours of discussions, the three leaders of Greece’s national unity government had not accepted demands by international lenders for immediate deep spending cuts and labour market reforms as part of a new medium-term package.

Mr Papademos said the political leaders had agreed on some “basic issues”, including making spending cuts this year of 1.5 percentage points of gross domestic product, or about €3bn, according to a statement from his office. [..]

The talks with the three leaders of a national unity government came after the government failed to persuade the so-called “troika”- representatives of the European Commission, European Central Bank and International Monetary Fund – to ease conditions for the rescue deal.

Patience with Greek politicians has evaporated among its creditors. During a conference call on Saturday, eurozone finance ministers bluntly told Athens to deliver on its promises and agree to reforms or face default next month.

David Dayen at FDL News Desk points out that the Greeks are being asked to destroy themselves for a bailout and calls the terms “insane”:

The deal calls for Greece to run a primary budget surplus (not counting interest payments on debt) in 2013 of over 2% of GDP, rising to over 4% by 2014. That implies massive cuts to public spending in the middle of a 5-year recession, if not a depression. As Antonis Samaras, leader of the New Democracy Party, told the Financial Times, “They’re asking for more recession than the country can take.” Samaras also has highlighted that the troika seeks cuts in private sector wages as part of the deal, of up to 25%. There would also be a 35% cut in supplementary pensions.

Trying to pressure for a settlement that many Greek leaders feel would damage the Greek economy and prolong the five year Greek recession, French President Nicholas Sarkozy and German Chancellor Andrea Merkel issued statements and made a proposal that would reassure creditors:

Nicolas Sarkozy, French president, and Angela Merkel, German chancellor, also proposed that a special closed account be created for the interest due on Greek debt to reassure creditors that they would be paid.

“The situation of Greece has to be fixed once and for all,” Mr Sarkozy said after the two leaders met in Paris. He said the terms of a bail-out deal were “on the table” and called on all the main political leaders urgently to back them, adding “time is running out”.

“Our Greek friends must take responsibility and vote for the reforms to which they are committed. This concerns everybody – the prime minister, the leader of the socialist party and the leader of the [centre-right] New Democracy party.”

Ms Merkel added: “We want Greece to stay in the euro … but I also say there can be no new Greek programme if agreement is not reached with the troika [European Commission, European Central Bank and International Monetary Fund]. All those who bear responsibility in Greece must know we will not deviate from this position.”

She added: “Time is running short. A lot is at stake for the entire eurozone.”

The stalemate had its effect on stock markets today with US stocks taking a dip

The three major U.S. stock market indices retreated slightly on Monday as investors continued to await the outcome of a potential Greek sovereign debt deal with private creditors. At 2:30pm Eastern Time, the Dow Jones Industrial Average (DJIA) had lost 40 points, or 0.3 percent, to 12,822 while the NASDAQ Composite had backed down 0.2 percent to 2,899. Meanwhile, the S&P 500 was down 0.2% to 1,342 points.

The austerity measures have already caused a 6% drop in the GDP which increases the debt to GDP ratio. the last thing Greece needs, or for that matter Europe,is more austerity.