Evening Edition is an Open Thread

1 China may legalise secret detentions

By Allison Jackson, AFP

10 hrs ago

Well, during the break nothing much happens by mutual agreement and I found the practice session to be inconclusive since most of it was held in the rain and the last 20 minutes everyone sat in the garage, so I was poking around in Google when I came across the Gribkowsky Affair.

Who is Gerhard Gribkowsky you say?  He’s a German banker who’s been charged recently with corruption, tax evasion, and breach of trust (you’ll be pleased to know he’s actually in custody).  While this is only part of the case against him, in 2005 he helped organize the $1.7 Billion sale of the 100 year Formula One lease to the current holders CVC (headed by Bernie Ecclestone) and accepted $44 Million in payments from Bernie.

One of the former minority shareholders was a media group named Kirsh which put it’s shares up as collateral for a loan with the agreement that they would participate in the profits from any sale.  Constantine Medien, part of the Kirsh group, filed suit last month against Ecclestone, his lawyers, his family trust, and Gribkowsky contending that the $44 Million payment was in fact a bribe to reduce the price of the sale ensuring there were no profits to be shared.

It’s kind of like forcing a foreclosure instead of a principal reduction or a short sale.

German prosecutors are now investigating the deal and there’s definitely a very slim possibility Bernie might go to jail and it couldn’t happen to a nicer guy.

In other suits Nick Heidfeld, the points leader of the Renault team, has been unceremoniously dumped in favor of Bruno Senna, nephew of Ayrton.  Heidfeld contends this was partly to grab the $3 Million bribe sponsorship Bruno brings.  Renault denies this of course and in turn accuses Heidfeld of being slow (did I mention he was points leader of the team?) and lacking leadership.

Last night’s Evening Edition noted this dispute in stories 10, 11, and 33 (other Formula One news in stories 9, 32, and 43).  It’s doubly difficult for Heidfeld because Renault is one of the few teams debuting substantial changes to it’s cars AND missing the race mathematically eliminates him from the Driver’s Championship (not that he had much chance anyway).

Mark Webber had a birthday and got a 1 year extension on his Red Bull contract.  Michael Schumacher is celebrating his 20th anniversary in Formula One.  Red Bull was quickest in the second practice session.  Teams are not allowed to use Down Force Reduction in Eau Rouge because of safety concerns.

The two teams claiming the Lotus name appear to be approaching a settlement of that dispute.  Robert Kubica who was badly injured racing Rally Cars has one more reconstructive surgery to go and is expected back in a simulator before the end of the season.  Heidfeld was Kubica’s replacement after the accident.

Circuit de Spa-Francorchamps is one of the longest (4.4 miles) and fastest.  In dry weather it’s said that you can drive 85% of it flat out.  Of course it’s also one of those tracks where you will get tired of hearing it’s always raining or threatening to rain.

Speed coverage begins at 8 am.  Surprising developments below.

Our Regular Features-

• Late Night Karaoke by: mishima
• Muse in the Morning by: Robyn
• Cartnoon by: ek hornbeck

Featured Essays-

• On This Day In History August 26 by: TheMomCat
• Libya: Not Quite Mission Accomplished Or Legal by: TheMomCat
• Democratic Bloodbath by: ek hornbeck
• Sick of being right by: ek hornbeck
• True Colors Residence for LGBT youth to open in NYC by: Robyn
• Popular Culture (TeeVee) 20110826: Freaks and Geeks by: Translator

DocuDharma

Evening Edition is an Open Thread

1 Beleaguered Japan PM announces resignation

By David Watkins, AFP

21 hrs ago

Yup, this is the Bloomberg piece everyone is talking about.

Wall Street Aristocracy Got $1.2 Trillion in Fed’s Secret Loans

By Bradley Keoun and Phil Kuntz, Bloomberg News

Aug 22, 2011 8:19 AM ET

Fed Chairman Ben S. Bernanke’s unprecedented effort to keep the economy from plunging into depression included lending banks and other companies as much as $1.2 trillion of public money, about the same amount U.S. homeowners currently owe on 6.5 million delinquent and foreclosed mortgages. The largest borrower, Morgan Stanley (MS), got as much as $107.3 billion, while Citigroup took $99.5 billion and Bank of America $91.4 billion, according to a Bloomberg News compilation of data obtained through Freedom of Information Act requests, months of litigation and an act of Congress.

“These are all whopping numbers,” said Robert Litan, a former Justice Department official who in the 1990s served on a commission probing the causes of the savings and loan crisis. “You’re talking about the aristocracy of American finance going down the tubes without the federal money.”

…

The $1.2 trillion peak on Dec. 5, 2008 — the combined outstanding balance under the seven programs tallied by Bloomberg — was almost three times the size of the U.S. federal budget deficit that year and more than the total earnings of all federally insured banks in the U.S. for the decade through 2010, according to data compiled by Bloomberg.

The balance was more than 25 times the Fed’s pre-crisis lending peak of $46 billion on Sept. 12, 2001, the day after terrorists attacked the World Trade Center in New York and the Pentagon. Denominated in $1 bills, the $1.2 trillion would fill 539 Olympic-size swimming pools.

…

Two weeks after Lehman’s bankruptcy in September 2008, Morgan Stanley countered concerns that it might be next to go by announcing it had “strong capital and liquidity positions.” The statement, in a Sept. 29, 2008, press release about a $9 billion investment from Tokyo-based Mitsubishi UFJ Financial Group Inc., said nothing about Morgan Stanley’s Fed loans.

That was the same day as the firm’s $107.3 billion peak in borrowing from the central bank, which was the source of almost all of Morgan Stanley’s available cash, according to the lending data and documents released more than two years later by the Financial Crisis Inquiry Commission. The amount was almost three times the company’s total profits over the past decade, data compiled by Bloomberg show.

…

JPMorgan Chase & Co. (JPM), the New York-based lender that touted its “fortress balance sheet” at least 16 times in press releases and conference calls from October 2007 through February 2010, took as much as $48 billion in February 2009 from TAF. The facility, set up in December 2007, was a temporary alternative to the discount window, the central bank’s 97-year-old primary lending program to help banks in a cash squeeze.

Goldman Sachs Group Inc. (GS), which in 2007 was the most profitable securities firm in Wall Street history, borrowed $69 billion from the Fed on Dec. 31, 2008. Among the programs New York-based Goldman Sachs tapped after the Lehman bankruptcy was the Primary Dealer Credit Facility, or PDCF, designed to lend money to brokerage firms ineligible for the Fed’s bank-lending programs.

…

The size of bank borrowings “certainly shows the Fed bailout was in many ways much larger than TARP,” Rogoff said.

TARP is the Treasury Department’s Troubled Asset Relief Program, a $700 billion bank-bailout fund that provided capital injections of $45 billion each to Citigroup and Bank of America, and $10 billion to Morgan Stanley.

(h/t John Aravosis @ Americablog)

Stop Coddling the Super-Rich

By WARREN E. BUFFETT, The New York Times

Published: August 14, 201

Since 1992, the I.R.S. has compiled data from the returns of the 400 Americans reporting the largest income. In 1992, the top 400 had aggregate taxable income of $16.9 billion and paid federal taxes of 29.2 percent on that sum. In 2008, the aggregate income of the highest 400 had soared to $90.9 billion – a staggering $227.4 million on average – but the rate paid had fallen to 21.5 percent.

…

(F)or those making more than $1 million – there were 236,883 such households in 2009 – I would raise rates immediately on taxable income in excess of $1 million, including, of course, dividends and capital gains. And for those who make $10 million or more – there were 8,274 in 2009 – I would suggest an additional increase in rate.

My friends and I have been coddled long enough by a billionaire-friendly Congress. It’s time for our government to get serious about shared sacrifice.

The Poor’s Free Ride Is Over

They can spare it.  After all they control 2.5% of our nation’s wealth.

…

Actually this is a pretty easy calculation.  We can do this.  The bottom 50% it’s just simple math.  In dollar figures the bottom 50% of this country have $1.45 Trillion in everything they own on this earth.  So let’s see, they have $1.45 Trillion, so what do you say we take, I don’t know, half of that.  That’d be, oh look at this- $700 Billion.  Why does that figure sound so familiar?

You can’t wipe your ass with an iPad.

If you pay attention to economics it’s hard not to predict a Democratic defeat in 2012 of epic proportions starting at the top with Barack Obama.

Fact:  The US economy has just entered or is about to enter the second leg of at least a Double Dip Recession.

Second-quarter growth cut on inventories, trade

By Lucia Mutikani, Reuters

WASHINGTON | Fri Aug 26, 2011 12:43pm EDT

(Reuters) – U.S. economic growth in the second quarter was slower than previously thought and consumer confidence sank in August, further reducing prospects of a strong pick-up in output in the second half of the year.

Gross domestic product expanded at an annual rate of 1 percent, the Commerce Department said on Friday, as business inventories and exports were less robust. That was a downward revision of the government’s prior 1.3 percent growth estimate.

Separately, the Thomson Reuters/University of Michigan consumer sentiment index fell to 55.7 this month from 63.7 in July.

…

The economy advanced just 0.4 percent in the first quarter. Economists had expected second-quarter GDP to be marked down to a 1.0 percent rate.

The second GDP estimate for the quarter confirmed growth almost stalled in the first six months of this year.

Chance of Recession Is as High as 80%: Study

By: John Melloy, Executive Producer, Fast Money & Strategy Session, CNBC

Published: Thursday, 25 Aug 2011 | 6:55 PM ET

The Philly Fed puts a recession probability at 85.7 percent, while the consumer survey puts contraction chances at 80 percent, according to Bank of America’s probability model, which uses a so-called Bayesian technique that “tests if the economy is in a recession based on the interaction of variables that are associated with turns in the business cycle.”

…

According to their data, the Philly Fed has accurately forecast four of the last seven recessions. The older Michigan survey has accurately signaled three of the last eight recessions.

“It’s a 100 percent chance,” said Peter Schiff, CEO & Chief Global Strategist of Euro Pacific Capital. “In fact the recession might have already started.”

World Facing 50% Danger of Another Recession, Nobel Laureate Spence Says

By Robyn Meredith, Bloomberg News

Aug 25, 2011 7:00 PM ET

“I’m quite worried,” Spence said in a Bloomberg Television interview in Hong Kong yesterday. “A combined downward dip in Europe and America, which is a good chunk of the industrialized economies, I’m quite sure will take down growth in China particularly, and that will then immediately spread to the rest of the emerging economies.” He put the likelihood of such a scenario “at about 50 percent.”

…

China “cannot make up for the kind of loss of demand that would go with a downturn in the advanced economies,” Spence said. Because Chinese inflation is running at an official rate of 6.5 percent, a figure many economists say is understated, Beijing would be “pretty close to nuts” to fuel further credit growth, he said.

QE3 Is Coming by Year End: Roubini

By: Margo D. Beller, CNBC

Published: Thursday, 25 Aug 2011 | 5:49 PM ET

Roubini, also known as “Dr. Doom,” puts the chance of a double-dip recession at 50 percent.

…

While bad economic data on housing, jobs and home sales suggests a double-dip in the U.S., Ireland, Portugal, Italy and Spain “are already back in recession or never got out of the first one.” Data also suggest France and Germany are in “borderline contraction” while the U.K. “has not had any economic growth for three quarters.”

With Economic Pessimism Rising, Americans Move Towards Keynesianism

By: Jon Walker, Firedog Lake

Friday August 26, 2011 9:30 am

(T)here is now a slim plurality of the country ready to embrace real spending on jobs programs. A five point increase over two months is a rather impressive amount of movement on what could be considered a fairly fundamental question of government ideology.

More government spending to create jobs is exactly what Keynesian economics prescribes. The fact that, without realizing it, more Americans are open to the idea of Keynesian spending to help the economy is remarkable given how the top leadership in both political parties have trumpeted the importance of deficit reduction over all else for so long. And Republicans have been openly disparaging Keynes, just as they did in the Great Depression.

This change in attitudes is a reflection of just how seriously worried regular people are right now about what they perceive as the worsening state of the economy. Since the last time Pew asked this (my link- ek) question the number of people who think the economy is getting worse has increase by over 10 points according to Gallup’s tracking poll.

AP-GfK poll: Views on economy, Obama role sour

By TOM RAUM, Associated Press

22 hrs ago

The survey found that 86 percent of adults see the economy as “poor,” up from 80 percent in June. About half – 49 percent – said it worsened just in the past month. Only 27 percent responded that way in the June survey.

…

As the public’s outlook on the economy dips, so has approval for the president’s economic stewardship.

More than 6 in 10 – 63 percent – disapprove of Obama’s handling of the economy. Nearly half, or 48 percent, “strongly” disapproved. Approval of his economic performance now stands at just 36 percent, his worst approval rating on the issue in AP-GfK polling.

Among Democrats, 58 percent approve of the president’s handling of the economy, down from 65 percent in June. Among Republicans, approval dipped to 9 percent from 15 percent.

Just 51 percent consider Obama a strong leader, down from 60 percent in June and 65 percent following the capture and death of Osama bin Laden in May. In June, 85 percent of Democrats in the poll called him a strong leader. Now, the number is down to 76 percent.

…

Some 75 percent in the poll said the country is heading in the wrong direction, up from 63 percent in June. Among Democrats, 61 percent chose “wrong direction” – up from 46 percent in June.

In a new high, 52 percent of all adults said they disapprove of his overall performance – 52 percent, up from 47 percent in June. Among Democrats, approval fell 8 points, to 74 percent from 82 percent in June. Among Republicans, it fell to 11 percent from 22 percent.

…

Unemployment increased to 9.2 percent in July, up from 9.1 percent in June. And most economists don’t expect it to decline much below 8.5 percent by the November 2012 presidential election. No president has won re-election with a jobless rate that high since Franklin D. Roosevelt in 1936.

Stock Tip: Be Worried. Workers are Consumers.

Robert Reich

Friday, August 19, 2011

We’re slouching toward a double dip, and the stock market is imploding, because consumers – whose spending is 70 percent of the economy – have reached their limit.

It’s not just the jobless who can’t spend. It’s mainly people with jobs. Median wages continue to fall. Weekly wages in July for Americans with jobs were 1.3 percent lower than eight months before.

…

Many on Wall Street are scratching their heads, trying to understand why the stock market is plummeting. After all, they tell themselves, corporate earnings are still near record highs.

But it’s becoming clear those earnings can’t be sustained. Corporate earnings are the highest they’ve been relative to worker wages and benefits since just before the Great Depression. And the richest 1 percent of Americans are getting a higher percent of total income since just before the Great Depression.

Get it? It was only a matter of time before the boom on Wall Street turned into a bust. Economic booms cannot continue without American workers participating in them.

…

What will happen to the Dow Jones Industrial Average when corporate earnings revert to their historic average relative to American wages? I’ve seen various estimates. They’re not pretty.

Bernanke “optimistic.” Philly Fed says another recession 85% sure; Roubini says it’s coming

by John Aravosis, Americablog

on 8/26/2011 10:40:00 AM

Anyone who votes to cut any spending this year or next, or signs such legislation, shouldn’t be re-elected.  Period.  This is criminal that Congress and the President just cut spending, and now plan on doing it again in the super committee.  It’s equally criminal that the President refused to adequately defend the stimulus (and refused to push for a big enough stimulus the first time), then embraced deficit reduction over a year ago, when the economy was still teetering on the brink.

Every single one of them, the Democrats in Congress, the Republicans in Congress, and the President own this double dip recession if it comes, as they do the already crappy economy we have.  And I don’t know how you vote for anyone who is supporting legislation that will literally depress the economy further.

…

We need another massive stimulus now. Or a lot of people are going to lose their jobs and their homes, and it will be the fault of every single politician in Washington, from the White House to the Congress.  The President’s constant pandering to conservative Dems and Republicans is no longer academic.  It’s  having real world consequences.

A lot of Politicians are going to lose their jobs too, including Barack Obama.

Electoral victory my ass.