Daily Archive: 06/27/2012

Jun 27 2012

Punting the Pundits

“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”.

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Kristina vanden Heuvel: The Robin Hood Tax: A Powerful Antidote to Austerity

Last week, nurses rallied, bank staff marched, conservatives coalesced and finance professionals petitioned-all in support of a global tax on Wall Street speculation. You wouldn’t know it from the headlines (Financial Times: “Push for EU-wide ‘Robin Hood Tax’ ends”), but by week’s end, that elusive goal was closer than ever.

“We don’t just advocate for people when they’re ill, and we don’t just advocate for them when they’re in the hospital,” says Jean Ross, a registered nurse and co-president of National Nurses United, the country’s largest nursing union. “We have to have a society where they can get well and stay well.”

As I’ve written before, the financial transaction tax (FTT) is a good idea whose time has come. By assessing a modest fee on transactions, we can raise revenue from those who can afford it while discouraging the unproductive speculation that puts our economy at risk. And frankly, Wall Street owes us. The tax offers an antidote to austerity and a rallying cry that hard-core occupiers, Democratic senators, and reality-based conservatives can all get behind.

Wenonah Hauter: Secrecy + Haste = Farm Bill Status Quo

Late last week, the Senate passed its version of the Farm Bill – the sprawling legislation that dictates what and how we eat. From the perspective of consumer protection and leveling the playing field for small and midsized family farmers, the Senate bill does little to address the problems of consolidation and anti-competitive business practices that plague our food system.

Although the Senate bill made changes to commodity policy that will be touted as reform, the bill reinforced prior farm policies that favor large industrial-scale agriculture and overproduction of commodity crops like corn and soybeans. Only a few companies sell what farmers need (like seeds, fertilizer and tractors) and only a few firms buy what farmers raise, which means they pay more for supplies and get less for their crops and livestock. The four largest companies in each industry slaughter nearly all the beef, process two-thirds of the pork, sell half the groceries and process about half the milk in the United States.

Michelle Chen: Migration as Ecology: How Culture Evolves

The immigration debate in the United States often centers narrowly around people who cross a border, and their social impacts on the “destination” country. But what if we viewed migration as a social phenomenon, or as a natural process? An ecological viewpoint can open a new frame for exploring the immigrant experience as a continual cultural and demographic transformation. This month, advocates at the Rio +20 earth summit took up the issue of migration as a form of ecology.

The environmental lens moves the immigration debate beyond the concept of rich countries “receiving” outsiders, or poor countries “sending” workers across borders. Seeing immigration as a zero-sum game ignores the humanity of the people who are driving, and are driven by, constant movement and resettlement. For the U.S. in particular, the focus on border enforcement-sanctifying artificial boundaries as a delimiter of citizenship-ignores the idea that migration is both an inevitable social process, and intimately connected with all other forms of social change, be they political movements, poverty, war, or, perhaps more acutely, environmental disaster.

Caroline Arnold: Who Will Write the Scripts for Our Future?

A few weeks before the U.S. invaded Iraq, the late Edward Said wrote:

Millions of people will be affected, [by a war with Iraq] yet America contemptuously plans for their future without consulting them. … Will no one come out into the light of day to express a vision for our future that isn’t based on a script written by Donald Rumsfeld and Paul Wolfowitz?

-Guardian/UK, January 25, 2003

Nine years later – with President Obama collaborating with Israel on cyberwarfare against Iran, and protecting his Presidential “kill list” from public scrutiny while asserting that anyone who gets in the way of our drones must deserve to die – we should be asking a similar question: Will no one come into the light of public politics with a vision for our future not based on scripts written for political or economic power?

Or, to put it another way: Is there any way for “We-the-People” to free ourselves from these scripts and take control of our own government?

Allison Kilkenny: The Resistance Continues as Citizens Fight Budget Cuts

Much has been written about the future of Occupy: the movement is dead, it is not dead, it evolved into something else, it will experience a resurgence in the fall, etc. But what has received less air time are all the ways in which citizens, be they part of Occupy or not, continue to battle budget cuts in their own communities and across the country.

The blasé reception of this ongoing resistance might be explained, in part, by the decline of Occupy’s occupations. Revolution is sexy, but the quiet resistance of low-key direct action lacks Liberty Park’s flash.

Yet the resistance continues, in ways large and small.

Marta Sánchez: Losing Strength? An Alternative Vision of Spain’s Indignados Movement

A silent revolution emerges from the underground. Far from losing strength, decentralization has allowed 15-M to become ever more dynamic

Is the 15-M movement going invisible? Or is it rather gaining strength in the ‘underground’? The mainstream media keep claiming that the indignados have lost support since last year, that its only success is its ability to bring people together on special dates. Spanish newspaper El País concluded in May 2012 that, one year after the birth of the movement, popular support and sympathy for the indignados had decreased around 13% among the Spanish population, despite the massive mobilizations that took place from the 12th until the 15th of May, commemorating the anniversary of the movement. ABC opened its edition of May 15 stating that “the indignados movement shows less strength on their anniversary.” But the media misses the point. In reality, rather than losing strength, the movement has become stronger, more organized, better coordinated, and supported by the commitment of hundreds of people.

The decentralization of the movement

When May 2011 came to an end, the recently born 15-M movement had to find out how to survive beyond the camp at Puerta del Sol (acampadasol). Thus arose the idea of decentralizing the movement towards the neighborhoods: the ‘toma los barrios‘, or take the neighborhoods, initiative supported and encouraged the creation of assemblies in every neighborhood of Madrid. In this way, the movement went local: since the creation of the neighborhood assemblies on May 28, 2011, around 120 assemblies have been set up, and they coordinate through the Asamblea Popular de Madrid, the popular assembly of Madrid, also known as Asamblea Interbarrios (the inter-neighborhood assembly). As there were many thematic working groups in the original Sol camp, working groups with similar interests were created in most of the neighborhood assemblies, which since then collaborate and coordinate with the general groups from acampadasol.

Jun 27 2012

On This Day In History June 27

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.

June 27 is the 178th day of the year (179th in leap years) in the Gregorian calendar. There are 187 days remaining until the end of the year.

On this day in 1950, Truman orders U.S. forces to Korea.

On June 27, 1950, President Harry S. Truman announces that he is ordering U.S. air and naval forces to South Korea to aid the democratic nation in repulsing an invasion by communist North Korea. The United States was undertaking the major military operation, he explained, to enforce a United Nations resolution calling for an end to hostilities, and to stem the spread of communism in Asia. In addition to ordering U.S. forces to Korea, Truman also deployed the U.S. 7th Fleet to Formosa (Taiwan) to guard against invasion by communist China and ordered an acceleration of military aid to French forces fighting communist guerrillas in Vietnam.

Factors in US intervention

The Truman Administration was caught at a crossroads. Before the invasion, Korea was not included in the strategic Asian Defense Perimeter outlined by Secretary of State Acheson. Military strategists were more concerned with the security of Europe against the Soviet Union than East Asia. At the same time, the Administration was worried that a war in Korea could quickly widen into another world war should the Chinese or Soviets decide to get involved as well.

One facet of the changing attitude toward Korea and whether to get involved was Japan. Especially after the fall of China to the Communists, “…Japan itself increasingly appeared as the major East Asian prize to be protected”. US East Asian experts saw Japan as the critical counterweight to the Soviet Union and China in the region. While there was no United States policy that dealt with South Korea directly as a national interest, its proximity to Japan pushed South Korea to the fore. “The recognition that the security of Japan required a non-hostile Korea led directly to President Truman’s decision to intervene… The essential point… is that the American response to the North Korean attack stemmed from considerations of US policy toward Japan.” The United States wanted to shore up Japan to make it a viable counterweight against the Soviet Union and China, and Korea was seen as integral to that end.

The other important part of committing to intervention lay in speculation about Soviet action in the event that the United States intervene. The Truman administration was fretful that a war in Korea was a diversionary assault that would escalate to a general war in Europe once the US committed in Korea. At the same time, “[t]here was no suggestion from anyone that the United Nations or the United States could back away from (the conflict)”. In Truman’s mind, this aggression, if left unchecked, would start a chain reaction that would destroy the United Nations and give the go ahead to further Communist aggression elsewhere. Korea was where a stand had to be made, the difficult part was how. The UN Security council approved the use of force to help the South Koreans and the US immediately began using air and naval forces in the area to that end. The Administration still refrained from committing on the ground because some advisors believed the North Koreans could be stopped by air and naval power alone. Also, it was still uncertain if this was a clever ploy by the Soviet Union to catch the US unawares or just a test of US resolve. The decision to commit ground troops and to intervene eventually became viable when a communiqué was received on June 27 from the Soviet Union that alluded it would not move against US forces in Korea. “This opened the way for the sending of American ground forces, for it now seemed less likely that a general war-with Korea as a preliminary diversion-was imminent”. With the Soviet Union’s tacit agreement that this would not cause an escalation, the United States now could intervene with confidence that other commitments would not be jeopardized.

Jun 27 2012

Housing Market’s Irrational Exuberance

… how do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions…

– Alan Greenspan, Dec. 5, 1996

“Irrational exuberance”, “unrealistic expectations” accurately describe some of the reports about the alleged rebound in the housing market, such as this report on the increase in housing prices:

Home prices rose in nearly all major U.S. cities in April from March, further evidence that the housing market is slowly improving even while the job market slumps.

The Standard & Poor’s/Case-Shiller home price index shows increases in 19 of the 20 cities tracked. That’s the second straight month that prices have risen in a majority of U.S. cities.

And a measure of national prices rose 1.3 per cent in April from March, the first increase in seven months.

San Francisco, Washington and Phoenix posted the biggest increases. Prices fell 3.6 per cent in Detroit, the only city to record a drop.

The month-to-month prices aren’t adjusted for seasonal factors. Still, prices in half of the cities are up over the past 12 months.

Then there was this news in Bloomberg about the increase in demand for new homes:

Demand for new U.S. homes rose more than forecast in May as mortgage rates dropped, bolstering the residential real-estate market while other parts of the world’s largest economy cool.

Purchases climbed to a 369,000 annual rate, the most since April 2010 and up 7.6 percent from the prior month, the Commerce Department reported today in Washington. The median estimate in a Bloomberg News survey of 67 economists was 347,000. The number of houses on the market held near a record low.

The problem with this rise in housing prices and an increase in new home sales is that its a poor indicator of the real “health” of the housing market. Even Yale Prof. Robert Shiller, co-creator of the quoted Case-Shiller house price index, takes a cautious view of these optimistic predictions of a housing recovery:

MUCH hope has been pinned on the recovery in home prices that began about a year ago. A long-lasting housing recovery might provide a balm to households, mortgage lenders and the entire United States economy. But will the recovery be sustained? [..]

The most obvious reason for hope is that, unlike stock prices, home prices tend to show a great deal of momentum. Correcting for seasonal effects, home prices as measured by the S.&P./Case-Shiller 10-City Home Price Index increased each month from June 1995 to April 2006, then decreased almost every month to May 2009. Since then, they have risen through January, the latest month for which data is available.

So, because home prices have been climbing of late, isn’t it plausible that they’ll keep doing so?

If only it were that simple.

Home price booms and busts do end, sometimes quite suddenly, as was the case for the boom of 1995 to 2006 and the bust of 2006 to 2009. Today, we need to worry about strong headwinds, as the government begins to withdraw its support of a still-troubled lending industry and as foreclosures are dumping millions of homes onto the market.

Michael Olenick explains at naked capitalism:

Yale Prof. Robert Shiller, co-creator of the well-known Case-Shiller house price index, takes a more sober approach. Shiller argues in the New York Times until meaningful principal reductions are put in place that house prices are hosed. Pricing may bump up on artificial scarcity caused by the relatively low number of foreclosures after the robo-signing scandal, but in the long run underwater borrowers are likely to drown. Further, because of sky-high loss severities in foreclosures – my own data shows it is not at all uncommon for investors to lose the entire face value of a mortgage in a foreclosure – principal reductions make good business sense.

Shiller embraces an idea being floated about lately; having municipalities use eminent domain to “take” mortgages at fair market value. Databases like the one I’ve been compiling clearly show the loss severity of similar mortgages in similar ZIP codes, allowing municipalities to ascertain fair market value of the mortgages, as opposed to the houses. In bubble-states, where negative equity issues are most pronounced, fair market value of most mortgage would be no more than 20-percent of the face value of the first mortgages – and oftentimes far less; no more than a few cents on the dollar – while second liens would be worthless.

Assuming this approach is only used with the consent of the homeowner, I’d suspect that one last call the servicer before implementation would magically result in an almost immediate modification: no lost paperwork, no transfers to the offshore call center, no capitalized interest.

That’s too rational for anyone to heed.

Jun 27 2012

The American Family Association is Scared of Facebook 20120626

The AFA just gets more and more afraid to allow commentators to say her or his piece.

The started out allowing anyone to post a comment, but the comments got too intense for them, and likely too litigious for them, so they stopped allowing folks to post directly.