STOCK MARKET WATCH -- Friday, 7 December 2012

[Tansy_Gold]

[font size=3]STOCK MARKET WATCH, Friday, 7 December 2012[font color=black][/font]

SMW for 6 December 2012

AT THE CLOSING BELL ON 6 December 2012
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Dow Jones 13,074.04 +39.55 (0.30%)
S&P 500 1,413.94 +4.66 (0.33%)
Nasdaq 2,989.27 +15.57 (0.52%)


[font color=red]10 Year 1.58% +0.02 (1.28%)
30 Year 2.76% +0.02 (0.73%) [font color=black]


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[font size=2]Market Conditions During Trading Hours[/font]
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[font size=2]Euro, Yen, Loonie, Silver and Gold[center]

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[font color=black][font size=2]Handy Links - Market Data and News:[/font][/font]
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Economic Calendar
Marketwatch Data
Bloomberg Economic News
Yahoo Finance
Google Finance
Bank Tracker
Credit Union Tracker
Daily Job Cuts
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[font color=black][font size=2]Handy Links - Economic Blogs:[/font][/font]
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The Big Picture
Financial Sense
Calculated Risk
Naked Capitalism
Credit Writedowns
Brad DeLong
Bonddad
Atrios
goldmansachs666
The Stand-Up Economist
The Automatic Earth
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[font color=black][font size=2]Handy Links - Government Issues:[/font][/font]
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LegitGov
Open Government
Earmark Database
USA spending.gov
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[font color=black][font size=2]Handy Links - Videos:[/font][/font]
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Charlie Rose talks with Roubini
Charlie Rose talks with Krugman
William Black: This Economic Disaster
Bill Moyers with Kevin Drum and David Corn
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[font color=red]Partial List of Financial Sector Officials Convicted since 1/20/09 [/font][font color=red]
2/2/12 David Higgs and Salmaan Siddiqui, Credit Suisse, plead guilty to conspiracy involving valuation of MBS
3/6/12 Allen Stanford, former Caribbean billionaire and general schmuck, convicted on 13 of 14 counts in $2.2B Ponzi scheme, faces 20+ years in prison
6/4/12 Matthew Kluger, lawyer, sentenced to 12 years in prison, along with co-conspirator stock trader Garrett Bauer (9 years) and co-conspirator Kenneth Robinson (not yet sentenced) for 17 year insider trading scheme.
6/14/12 Allen Stanford sentenced to 110 years without parole.
6/15/12 Rajat Gupta, former Goldman Sachs director, found guilty of insider trading. Could face a decade in prison when sentenced later this year.
6/22/12 Timothy S. Durham, 49, former CEO of Fair Financial Company, convicted of one count conspiracy to commit wire and securities fraud, 10 counts of wire fraud, and one count of securities fraud.
6/22/12 James F. Cochran, 56, former chairman of the board of Fair, convicted of one count of conspiracy to commit wire and securities fraud, one count of securities fraud, and six counts of wire fraud.
6/22/12 Rick D. Snow, 48, former CFO of Fair, convicted of one count of conspiracy to commit wire and securities fraud, one count of securities fraud, and three counts of wire fraud.
7/13/12 Russell Wassendorf Sr., CEO of collapsed brokerage firm Peregrine Financial Group Inc. arrested and charged with lying to regulators after admitting to authorities he embezzled "millions of dollars" and forged bank statements for "nearly twenty years."
8/22/12 Doug Whitman, Whitman Capital LLC hedge fund founder, convicted of insider trading following a trial in which he spent more than two days on the stand telling jurors he was innocent
10/26/12 UPDATE: Former Goldman Sachs director Rajat Gupta sentenced to two years in federal prison. He will, of course, appeal. . .
11/20/12 Hedge fund manager Matthew Martoma charged with insider trading at SAC Capital Advisors, and prosecutors are looking at Martoma's boss, Steven Cohen, for possible involvement.



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[font size=3][font color=red]This thread contains opinions and observations. Individuals may post their experiences, inferences and opinions on this thread. However, it should not be construed as advice. It is unethical (and probably illegal) for financial recommendations to be given here.[/font][/font][/font color=red][font color=black]

[Tansy_Gold]

1. We need to stop

calling them "entitlements."

Social Security and Medicare are "prepaid benefits."

[Demeter]

2. Amen, Sister

Only the truly "entitled" would think these scraps were "bonuses", to be reduced in times of "less profit".

The economic morons that run our economy should be removed from all positions of responsibility and decision-making. And I don't even want a pony to go with that.

[Demeter]

3. 10 who led us to the fiscal cliff

With our political leaders locked in a fiscal struggle that threatens to throw the economy off a so-called cliff and into recession, you might be wondering how we got to this place. Remember that this supposed fiscal cliff is the direct result of two contradictory impulses in American life: greed and guilt. Greed for low taxes, a strong military, a strong safety net and lots of government spending for everyone. And guilt that we weren't paying our way. All of us (or almost all) had a role in this melodrama, benefiting either from the spending or the lower tax rates -- or both. Despite our culpability, it took strong national leaders to foster the heady mix of greed and guilt that brought us to this spot.

Click through this slide show, published Dec. 5, to see the 10 people most responsible for bringing us to the edge of the fiscal cliff...

http://money.msn.com/investing/10-who-led-us-to-the-fiscal-cliff

1. Arthur Laffer

2. Pete Peterson

3. Bill Clinton

4. Alan Greenspan

5. George W. Bush

6. Dick Cheney

7. David Lereah

David Lereah was the chief economist for the National Association of Realtors and was perhaps the most enthusiastic and public cheerleader for the housing bubble. Even after the bubble began to deflate, Lereah insisted that real-estate investments would never lose money.

Of course, Lereah didn't cause the bubble by himself, but he does embody the greed that engulfed the real-estate industry, the Wall Street banks that profited from it, and the homeowners who took on more debt than they could ever hope to repay.

The housing and credit bubble led to the collapse of the financial system in 2008 and was the direct cause of the Great Recession and the ensuing $1 trillion-a-year deficits.

8. Grover Norquist

As the head of the powerful lobbying and campaign-finance organization Americans for Tax Reform, Grover Norquist has forced almost every Republican officeholder to sign a pledge never to raise taxes under any circumstance. If anyone declined to sign or dared to violate the pledge, Norquist would back a primary challenger. The threat worked.

The Norquist pledge blocked any possibility of a budget deal between Democrats and Republicans over the past two years. Democrats insisted that any plan to balance the budget must include more revenue as well as spending cuts, but Republicans held solid against any tax increase.

There are signs that Norquist could be losing his hold on the GOP, though. Several Republicans won elections this year without signing his pledge, and several incumbents have said they no longer feel bound by the pledge.

10. Barack Obama

President Barack Obama may be the perfect representative of our age, because he encapsulates our national schizophrenia over the budget. He honors both the greed and the guilt. He presided over the largest deficits in history, including a large fiscal stimulus, bailouts of the auto industry and an expansion of the safety net.

But Obama also lectures us about the need for the government to tighten its belt, even during a recession. He wants to raise taxes, if only on a few, and he's expressed a willingness to cut into the great middle-class entitlements. It was Obama's administration that first suggested the bargain in 2011 that created the fiscal cliff.

[Demeter]

4. Short Sales of Homes Surge as Tax Break to Expire: Mortgages

http://www.bloomberg.com/news/2012-12-06/short-sales-of-homes-surge-as-tax-break-to-expire-mortgages.html

Homeowners and banks are accelerating sales of properties for less than the amount owed as a U.S. law that gives them a tax break expires at the end of the year.

The transactions, known as short sales, increased by 35 percent in the third quarter from a year earlier, while sales of bank-owned homes dropped 20 percent, according to a report today by mortgage data seller Renwood RealtyTrac LLC. Together, they accounted for 41.5 percent of home purchases in the quarter.

Short sales have accounted for as many as 1.1 million transactions since 2009, helping to reduce the inventory of homes owned by banks that can blight neighborhoods and flood the market. Barring a last-minute extension of the 2007 Mortgage Forgiveness Debt Relief Act, homeowners will be taxed on the forgiven principal. With Congress focused on the so-called fiscal cliff, federal spending cuts and tax-rate hikes set to kick in on Jan. 1, the law may not be extended, leading to a drop in short sales and a rise in foreclosures.

“If you’re struggling to pay your mortgage, it’s not likely you can afford an extra $25,000 or $35,000 tax bill to avoid foreclosure,” said Edward Mills, a financial policy analyst at FBR Capital Markets in Arlington, Virginia. “Mortgage forgiveness has become part of fiscal cliff politics.”

The Internal Revenue Service typically taxes forgiven debt as income to the debtor. For short sales, the average price tag was $94,896 below the mortgage on the property, according to the RealtyTrac report. Tacking that onto borrowers’ income would not only raise the amount of taxes due -- it could push them into a more expensive tax bracket. Short sales are better for the real estate market than sales of bank-owned properties, said Daren Blomquist, vice president at RealtyTrac. The average price for a short sale was $186,000 in the third quarter, compared with an average bank- sale price of $161,954, which was down 7 percent from the second quarter as empty homes lost value, Blomquist said. Bank-owned properties often are unoccupied for six months or more, while short sales result in new owners moving in directly after the purchase, he said.

“The tax break going away could really stifle the upward trend in short sales we’ve seen this year, and by extension some of the rebound we’ve seen in the housing market,” Blomquist said. “People will shy away from agreeing to a principal reduction because they won’t be able to come up with additional funds to pay a new bill.

MORE

[Demeter]

5. Chris Hedges: Katrina, All Over Again

http://truth-out.org/news/item/13141-chris-hedges-katrina-all-over-again

...Hurricane Sandy, if you are poor, is the Katrina of the North. It has exposed the nation’s fragile, dilapidated and shoddy infrastructure, one that crumbles under minimal stress. It has highlighted the inability of utility companies, as well as state and federal agencies, to cope with the looming environmental disasters that because of the climate crisis will soon come in wave after wave. But, most important, it illustrates the depraved mentality of an oligarchic and corporate elite that, as conditions worsen, retreats into self-contained gated communities, guts basic services and abandons the wider population.

Sheepshead Bay, along with Coney Island, the Rockaways, parts of Staten Island and long stretches of the New Jersey coast, is obliterated. Stores, their merchandise destroyed by the water, are boarded up and closed. Rows of derelict cars, with the tires and license plates removed and the windows smashed, line the streets. Food distribution centers, most of them set up by volunteers from Occupy Sandy Recovery, hastily close before dark every day because of the danger of looting and robbery. And storm victims who remain in their damaged homes, often without heat, electricity or running water, clutch knives against the threat of gangs that prowl at night through the wreckage.

This storm—amid freakish weather patterns such storms will become routine—resulted in at least $71.3 billion in property damage in New York and New Jersey. Many of the 305,000 houses in New York destroyed by Sandy will never be rebuilt. New York City says it will have to spend $800 million just to repair its roads. And that is only the start. The next hurricane season will most likely descend on the Eastern Seaboard with even greater destructive fury. A couple of more hurricanes like this one and whole sections of the coast will become uninhabitable.

This is the new America. It is an America where economic and environmental catastrophes converge to trigger systems breakdown and collapse. It is an America divided between corporate predators and their prey. It is an America that, as things unravel, increasingly sacrifices its own....

[Demeter]

10. U.S. auto sales zoom in the wake of Superstorm Sandy THAT'S ALL RIGHT, THEN

http://www.latimes.com/business/la-fi-autos-auto-sales-20121204,0,2696209.story

Americans buy more than 1.1 million vehicles in November, up 15% from a year earlier and the highest pace since January 2008. Honda, Nissan, Hyundai and BMW have their best Novembers ever.

CLIMATE CHANGE---THE SOURCE OF PROFITS UNIMAGINABLE

With the presidential election and Superstorm Sandy behind them, car shoppers headed for dealer lots last month in the biggest numbers since early 2008... The import nameplates generally reported stronger gains than the domestic brands, helped by new products such as the new-generation Honda Accord and a new Nissan Pathfinder sport utility vehicle...Bolstered by shoppers replacing some of the 250,000 vehicles estimated to have been destroyed by Sandy, that translated into a seasonally adjusted annual rate of about 15.5 million, the highest since January 2008, according to industry research firm Autodata Corp.

Consumers leaned toward fuel-efficient cars and small SUVs. With gas prices around $3.50 a gallon in much of the nation, and even higher in car-crazy California, sales of hybrid vehicles also appear to be taking off. Led by its hot-selling Prius line of hybrids, Toyota Motor Corp. posted November hybrid vehicle sales of 24,682 in the U.S., a 29% increase over the same month last year. But for the first time since it started selling hybrids in the U.S. in 2000, Toyota has serious competition in the hybrid market.

Ford Motor Co. said it sold nearly 5,000 of its new C-Max hybrid in November, up about 50% from the car's first full month of sales in October. Combined with its other offerings, the automaker sold about 6,500 hybrids in November, its best month ever for those vehicles, which use both gas and electric motors to increase fuel efficiency. Ford has sold 9,000 of the C-Max models since they first went on sale a little more than two months ago. That amounts to about a quarter of the hybrid volume the automaker sold in all of 2011 and underscores how important the vehicle is to Ford's hybrid strategy. If C-Max sales keep on pace, the automaker will easily double its hybrid sales in the current model year.

Certainly hybrids are starting to catch on with consumers. Sales of hybrids by Toyota and Ford and General Motors Co.'s Chevrolet Volt — technically a plug-in hybrid that runs on gasoline once its electric battery charge runs out — were nearly 35,000 last month, up about 40% from November 2011. Sales of hybrids and plug-in electric cars are expected to top 500,000 in the U.S. for the first time both in this calendar year and in the 2013 model year, said Alan Baum of the Baum & Associates research firm. That would be about 3.5% of the U.S. auto market....About a quarter of Ford's C-Max sales are in California, a market dominated by Toyota, especially in the hybrid market...

[Demeter]

6. EU Moves Ahead With Transaction Tax in Rejecting U.K. Changes

http://www.bloomberg.com/news/2012-12-03/eu-moves-ahead-with-transaction-tax-in-rejecting-u-k-changes.html

The European Union has moved ahead with a plan to design a financial-transaction tax for participating nations, rejecting the U.K.’s requested changes to the proposal, an EU official said.

The U.K. had sought a series of wording changes to the European Commission’s proposal, according to documents obtained by Bloomberg News. National ambassadors to the EU on Nov. 30 rejected those changes and opted to seek European Parliament approval with the commission’s existing language, the official said on condition of anonymity because the deliberations are private.

All 27 nations and the EU parliament must agree for the Brussels-based commission to design a tax for 11 willing nations under so-called “enhanced cooperation” procedures. Skeptical nations that won’t take part, such as the U.K. and Poland, have said they won’t allow the smaller group of countries to proceed unless they know what to expect.

Accepting the U.K.’s wording request would have been an unjustified step backwards on the proposal, a European Commission official said...

[Demeter]

7. US oil production hits 15-year high

http://thehill.com/blogs/e2-wire/e2-wire/270837-eia-us-oil-production-hits-15-year-high

Domestic crude oil production in September hit the highest monthly output since 1998, according to the U.S. Energy Information Administration (EIA).

Oil production yielded 6.5 million barrels per day in September, EIA said. Daily production increased by 900,000 barrels daily compared with last September.

EIA credited horizontal drilling combined with hydraulic fracturing, popularly known as "fracking," for driving the production growth.

Lawmakers have lauded fracking for ushering in an era of greater energy self-sufficiency. The method helped turn the U.S. into a net oil exporter in 2011 for the first time since 1949...

[Demeter]

58. US Energy Independence: Let's not get too Carried Away

http://oilprice.com/Energy/Energy-General/US-Energy-Independence-Lets-not-get-too-Carried-Away.html

HOW AN OILMAN THINKS

[Demeter]

8. The Biggest Bank Bailouts in History (#2 Is Happening Right Now)

Did you hear that? No? Well, it's not exactly the other shoe dropping, but the Cyprus bank bailout is still quite a milestone. It's the second-costliest, in terms of GDP, on record. At $10 billion in a $18 billion economy, bailing out its banks will cost Cyprus a stunning 56 percent of GDP -- trailing only Indonesia in 1997, as the chart below from the International Monetary Fund (IMF) shows. It turns out Greek bonds weren't such a good investment.



There are three big waves of banking crises here: Latin America in the 1980s, the East Asian financial crisis in 1997, and the global financial crisis in 2008 -- together with a few other conflagrations in the 1990s.

The countries changed, but the story stayed the same. Money flowed into an it-economy and that pushed asset prices up. But then the animal spirits went into hibernation. Investors worried that the boom had gone too far, and race to pull out their money -- and paper profits -- before everyone else could. In other words, a bank run on the country. The economy, and asset prices, collapsed, the latter leaving banks underwater. International lenders like the IMF in the 1990s and the EU more recently have bailed out the banks to prevent further financial carnage, but they have done so at significant cost for the countries involved. The chart below looks at how each of the above countries fared three years after their bailout, with GDP indexed to 100 in the year their banks went bust. (Note: Data on GDP is courtesy of the IMF).



It's not a perfect relationship, but, in general, the bigger the bailout, the bigger the bust. This is shouldn't surprise us. It's not that bailouts kneecap growth -- just ask economists if they think TARP did -- but rather that a bigger shock requires a bigger bailout, and bigger shocks mean bigger hits to GDP. Of course, it doesn't help when lenders insist on tight money and tight budgets as the conditions for a bailout, as the IMF did in the 1990s and the EU has today.

Globalization has made a brave new world, at least since 1914, where money moves across borders in search of the best return, but this hasn't given countries the best return. There hasn't been much to insulate them from the booms and busts of hot money inflows and outflows. It's been bad enough that even the IMF, which made "neoliberal" a curse word in the 1990s, admits that temporary capital controls might be necessary sometimes. And that's an even braver, newer world, where experience is trumping ideology.

Maybe that's the real other shoe.

http://www.theatlantic.com/business/archive/2012/12/the-biggest-bank-bailouts-in-history-2-is-happening-right-now/265853/

[Demeter]

11. IMF Officially Endorses Capital Controls in Reversal

http://www.bloomberg.com/news/2012-12-03/imf-officially-endorses-capital-controls-in-reversal.html

The International Monetary Fund endorsed nations’ use of capital controls in certain circumstances, making official a shift, which has been in the works for three years, that will guide the fund’s advice.

In a reversal of its historic support for unrestricted flows of money across borders, the Washington-based IMF said controls can be useful when countries have little room for economic policies such as lowering interest rates or when surging capital inflows threaten financial stability. Still, it said the measures should be targeted, temporary and not discriminate between residents and non-residents.

S.O.B.'S OF THE WORLD, I HOPE YOU GET EVERYTHING THAT'S COMING TO YOU...

“Capital flows can have important benefits for individual countries across the fund membership and the global economy,” IMF staff wrote in a report discussed by the board on Nov. 16 and published today. They “also carry risks, however, as they can be volatile and large relative to the size of domestic markets.”

Countries from Brazil to the Philippines have sought in recent years to manage inflows of capital that put upward pressure on their currencies and threatened to create asset bubbles. The new guidelines will enable the fund to provide consistent advice, though rules prevent it from imposing views about managing capital flows on its 188 member nations.

IMF Managing Director Christine Lagarde has cited the shift on capital controls as an illustration of the fund’s attempts to modernize...MODERNIZE, OR FACE REALITY, INCLUDING THE TUMBRILS?

MORE

[Demeter]

9. Top U.S. Firms Are Cash-Rich Abroad, Cash-Poor at Home

http://online.wsj.com/article/SB10001424127887323717004578157331091972730.html?mod=dist_smartbrief



Emerson Electric Co. EMR +0.30% has $2 billion of cash in the bank. But this year it had to borrow money in the U.S. to help buy back shares, distribute dividends and even pay its taxes. That's because "substantially all" of Emerson's cash is in Europe and Asia, according to the company's filings with securities regulators. The maker of power-plant and data-center equipment could always bring that cash back home, but it would be taxed at the 35% rate on corporate profits minus whatever tax it has already paid overseas. As a result, Emerson says, it brings its foreign cash holdings back to the U.S. only if that can be "accomplished tax efficiently." In its most recent fiscal year, that meant bringing back just $500 million, then using debt to cover other obligations.



At a time when American companies hold near record amounts of cash, many are surprisingly cash-poor at home. That doesn't mean they could suddenly run out of money to pay their bills. But it does mean there could be unseen limits on their ability to pay dividends and buy back shares.

With billions of dollars overseas that may never come back, the Securities and Exchange Commission is concerned that companies haven't been presenting investors with an honest appraisal of their liquidity. As a result, regulators are pressing companies to more clearly lay out how much of their cash is in the U.S. and how much is overseas and potentially encumbered by U.S. taxes...

THEN THROW THE CEOS IN JAIL FOR TAX EVASION. NO PITY, NO MERCY.

[Demeter]

12. In Trouble and Paying Out CALL IT LOOTING, WSJ, BECAUSE THAT'S WHAT IT IS

http://online.wsj.com/article/SB10001424127887323830404578145182000348430.html?mod=dist_smartbrief

Financially Sick Firms Often Grant Bonuses in Months Before Bankruptcy Filing...Hostess Brands Inc. is closing after a recent standoff with its striking bakers union. But relations between the Twinkie maker and workers were poisoned months ago amid disclosures that Hostess executives received pay raises not long before seeking bankruptcy protection.

Financially ailing companies such as Hostess Brands often pay bonuses and other compensation to executives and private-equity owners before filing for bankruptcy protection...Hostess's bankruptcy judge said during a hearing Thursday that the payments "will definitely be looked at" as he approved the company's request to start liquidating and lay off more than 18,000 employees.

Hostess was exploring a potential bankruptcy filing in July 2011 when its board voted to boost the salary of its chief executive and others, according to creditors. Five months later, it filed for Chapter 11, its second bankruptcy filing in a decade. In April, creditors, including union representatives, cried foul: They alleged that Hostess made an end run around a federal law that restricts paying bonuses in bankruptcy cases before a judge could scrutinize them. Hostess later rolled back the salaries amid employee protests. Hostess's board approved the raises "long before" deciding on bankruptcy, rewarding executives for extra work, the company said. Financially ailing companies often pay bonuses and other compensation to executives, directors and private-equity owners in the months before filing for bankruptcy protection. Federal law restricts "retention" bonuses paid to such "insiders" after a bankruptcy case is filed but not before.
Bonuses paid in and around bankruptcy often draw fire from creditors and employees angered by executives getting extra compensation while cutting jobs and benefits, and leaving investors with losses.

To avoid running afoul of limits on bonuses that reward executives for sticking around during bankruptcy, companies craft incentive plans that compensate managers for meeting certain performance targets. But another way they can steer clear of the law's restrictions is by paying bonuses before filing for Chapter 11. There are ways for creditors to fight payments made before a bankruptcy case is filed, but legal hurdles, expense and time often discourage such litigation to claw them back...Companies often say they are using their best business judgment when paying bonuses to executives who are working overtime to keep operations afloat. A firm's fate often isn't known when bonuses are paid, and companies argue they must motivate some executives to stay lest they suffer exoduses that further destabilize troubled situations. "There are good people in troubled situations who are clearly going to be more recruitable than others," said Peter Crist, chairman of executive-search firm Crist|Kolder Associates, but "if you give yourself a bonus and the outcome two weeks later was bankruptcy, that's not good."

More than 1,600 insiders—executives and others controlling a company—received bonuses, salaries, fees and other compensation totaling more than $1.3 billion in the months before their companies filed for Chapter 11, according to a Wall Street Journal analysis of more than 80 bankruptcy cases over the past five years.

MORE, IF YOU CAN STOMACH IT...

[Demeter]

13. "Tis the season"

[Demeter]

14. Why Occupy Wall Street’s Rolling Jubilee Puts Borrowers at Risk YVES SMITH

Last month, I criticized the well meaning but naive strategy of the Occupy Wall Street group Strike Debt for dealing with consumer debt, which is to buy severely discounted debt from debt collectors and forgive it. My main complaint was that there were more productive approaches, such as wider publicity and distribution of the Debt Resistors’ Operations Manual, providing more counseling and legal support to borrowers, and using debt purchases to develop cases against the debt sellers. By contrast, the Rolling Jubilee increases the profitability of bad system by providing more revenues to the incumbents, while the debt purchases are unlikely to do more than help a few random people. It might make for feel-good PR, but it won’t make a dent in the problem.

Perversely the post got pushback on the last (and by implication, the least important) issue raised, namely, that of possible tax problems with the scheme. I wanted to revisit this issue and demonstrate why the responses of allies and members of Strike Debt have failed to put the issue to rest, and more important, why this matters.

The short version is that Strike Debt maintains that there is no risk here, when as we will demonstrate, the outcome is not knowable at this juncture (yes, that is unsatisfying, but welcome to the world of tax). It’s possible that things will work out just fine for the Rolling Jubilee. But if not, the ramifications to Strike Debt and the borrowers whose debt was cancelled would be significant. Thus, to dismiss this very real possibility is irresponsible.

Tax issues are nerdy. You need to be prepared to read this entire post, carefully. Go get some coffee or a cola. I’m planning to box readers about the ears if they raise issues that were addressed in the post...


SO, READ ON

http://www.alternet.org/economy/why-occupy-wall-streets-rolling-jubilee-puts-borrowers-risk?akid=9762.227380.riyBoM&rd=1&src=newsletter755977&t=11&paging=off

[Demeter]

15. Sounds like Congress Should Make a Hard, Fast Rule

Last edited Fri Dec 7, 2012, 11:27 AM - Edit history (1)

and tell the IRS where its authority ends.

[Demeter]

51. MORE DETAIL: Rolling Jubilee and the Pesky Tax Problem

http://my.firedoglake.com/masaccio/2012/12/05/rolling-jubilee-and-the-pesky-tax-problem/

...Yves Smith gives a detailed description of the problems, and urges Rolling Jubilee to spend the money it takes to hire a serious tax lawyer. I agree with her that the FAQ on the site isn’t satisfactory, and I hope the organizers will deal with the problem. Even if they don’t, many of the beneficiaries will be OK. You only get the income problem to the extent that forgiveness of debt restores you to solvency. The IRS uses a complex rule about solvency which you can find here. Generally, the test is whether your liabilities exceed your assets. Your assets include all of your retirement accounts, even though they can’t be reached by creditors, and any equity you might have in property that is collateral for a debt. Then, you have income to the extent that after the debt forgiveness, you are made solvent.

For example, suppose you have a debt of 50K and total assets of 30K. If a creditor forgives 10K of debt, you are still insolvent, so no income. If the creditor forgives 20K, you are still not solvent, and again, no income. If the creditor forgives 25K, you have income of $5K. Obviously that isn’t a good thing.

Rolling Jubilee will not file the form the lender is supposed to file when it forgives debt. They may not be able to contact the debtor to say that they have forgiven the debt. In that case, the debtor might have income but not know it, and neither would the IRS. That defeats the point of forgiveness of debt, because the debtor is still worried about the debt. Still, it might solve the income problem unless the IRS forces Rolling Jubilee to file the forms. That is a major point raised by Yves Smith. If Rolling Jubilee can find the debtor, there is another alternative. Suppose the debt is a deficiency balance from a bad mortgage loan. Forgiveness could easily be big enough to restore the debtor to solvency. The best solution in this case is for Rolling Jubilee to reach out to the debtor to find out how the mortgage came into existence, how the debtor was treated during while the mortgage was in default, and how the foreclosure was handled. It is highly likely that the debtor has valid defenses to the debt. It may have been a fraud from the outset, the debtor might have been abused by the servicer in the foreclosure process, and the foreclosure itself may have had serious defects. It is highly likely that the debtor has several potential defenses to the debt.

In this case, Rolling Jubilee and the debtor can enter into a settlement agreement in which both sides release each other from all claims. In that situation, there is no debt forgiveness. Instead, each side gives consideration to the other to avoid litigation and serious loss. The situation can be improved if the debtor provides a statement of assets and liabilities and a budget showing that collection of the amount owed is highly unlikely. It is further improved if the debtor pays something towards the debt. That money can be used by Rolling Jubilee to offset the expenses of reaching out and settling, or even to buy more debt...

MORE

[Demeter]

20. Wall Street Journal More Interested in Caviar and Foie Gras Than Employee-owned Firms

http://www.alternet.org/economy/revealed-wall-street-journal-more-interested-caviar-and-foie-gras-employee-owned-firms?akid=9767.227380.rnrSIh&rd=1&src=newsletter756803&t=12&paging=off

Social pain, anger at ecological degradation and the inability of traditional politics to address deep economic failings has fueled an extraordinary amount of practical on-the-ground institutional experimentation and innovation by activists, economists and socially minded business leaders in communities around the country.

A vast democratized "new economy" is slowly emerging throughout the United States. The general public, however, knows almost nothing about it because the American press simply does not cover the developing institutions and strategies...Not surprisingly, the growing “new economy movement” championing democratization of the economy has itself received even less coverage, despite growing citizen involvement on many levels. Over the past year, major national, state and other conferences focusing on worker-owned companies, cooperatives, public banking, nonprofit and public land trusts, and neighborhood corporations were oversubscribed, reflecting the growing interest in these forms. The Journal, however, gave scant coverage to the movement...

More than 120 million Americans are members of co-operatives and cooperative credit unions, 30 million more people than are owners of mutual funds. The Journal, however, devoted some 700 articles to mutual funds between January and October and only 183 to cooperatives. Of these the majority were concerned with high-end New York real estate, with headlines like “Pricey Co-ops Find Buyers”...The vast number of cooperative businesses on Main Streets across the country were discussed in just 70 articles and a mere 14 gave co-op businesses more than passing mention. Together, the articles only narrowly outnumbered the 13 Journal pieces that mentioned the Dom Perignon brand of champagne over the same time frame, and were eclipsed by the 40 Journal entries that refer to the French delicacy foie gras...

Since 2010 legislation to set up public banks along the lines of the long-established Bank of North Dakota has been proposed in twenty states. Several cities—including Los Angeles and Kansas City—have passed “responsible banking” ordinances that require banks to reveal their impact on the community and/or require city officials to do business only with banks that are responsive to community needs. But municipally led responsible banking initiatives appear to have received no attention in the Journal, whereas the newspaper published seven articles this year discussing President Obama’s birth certificate...

[Demeter]

16. For Greece, Oligarchs Are Obstacle to Recovery NOT THE ONLY PLACE!

http://www.nytimes.com/2012/12/06/world/europe/oligarchs-play-a-role-in-greeces-economic-troubles.html?_r=0

A dynamic entrepreneur, Lavrentis Lavrentiadis seemed to represent a promising new era for Greece. He dazzled the country’s traditionally insular business world by spinning together a multibillion-dollar empire just a few years after inheriting a small family firm at 18. Seeking acceptance in elite circles, he gave lavishly to charities and cultivated ties to the leading political parties. But as Greece’s economy soured in recent years, his fortunes sagged and he began embezzling money from a bank he controlled, prosecutors say. With charges looming, it looked as if his rapid rise would be followed by an equally precipitous fall. Thanks to a law passed quietly by the Greek Parliament, however, he avoided prosecution, at least for a time, simply by paying the money back.

Now 40, Mr. Lavrentiadis is back in the spotlight as one of the names on the so-called Lagarde list of more than 2,000 Greeks said to have accounts in a Geneva branch of the bank HSBC and who are suspected of tax evasion. Given to Greek officials two years ago by Christine Lagarde, then the French finance minister and now head of the International Monetary Fund, the list was expected to cast a damning light on the shady practices of the rich. Instead, it was swept under the rug, and now two former finance ministers and Greece’s top tax officials are under investigation for having failed to act.

Greece’s economic troubles are often attributed to a public sector packed full of redundant workers, a lavish pension system and uncompetitive industries hampered by overpaid workers with lifetime employment guarantees. Often overlooked, however, is the role played by a handful of wealthy families, politicians and the news media — often owned by the magnates — that make up the Greek power structure. In a country crushed by years of austerity and 25 percent unemployment, average Greeks are growing increasingly resentful of an oligarchy that, critics say, presides over an opaque, closed economy that is at the root of many of the country’s problems and operates with virtual impunity. Several dozen powerful families control critical sectors, including banking, shipping and construction, and can usually count on the political class to look out for their interests, sometimes by passing legislation tailored to their specific needs. The result, analysts say, is a lack of competition that undermines the economy by allowing the magnates to run cartels and enrich themselves through crony capitalism. “That makes it rational for them to form a close, incestuous relationship with politicians and the media, which is then highly vulnerable to corruption,” said Kevin Featherstone, a professor of European Politics at the London School of Economics.

This week the anticorruption watchdog Transparency International ranked Greece as the most corrupt nation in Europe, behind former Eastern Bloc states like Bulgaria, Romania and Slovakia. Under the pressure of the financial crisis, Greece is being pressed by Germany and its international lenders to make fundamental changes to its economic system in exchange for the money it needs to avoid bankruptcy. But it remains an open question whether Greece’s leaders will be able to engineer such a transformation. In the past year, despite numerous promises to increase transparency, the country actually dropped 14 places from the previous corruption survey...

[Demeter]

17. Terms of Greek Bond Buyback Top Expectations

http://www.nytimes.com/2012/12/04/business/global/greece-announces-terms-of-13-billion-bond-buyback-to-slash-debt.html?_r=0

In a bold bid to reduce its debt burden, Greece offered on Monday to spend as much as 10 billion euros to buy back 30 billion euros of its bonds from investors and banks. While the buyback had been expected, the prices offered by the government were above what the market had forecast, with a minimum price of 30 euro cents and a maximum of 40 cents, for a discount of 60 percent to 70 percent. Analysts said they expected that the average price would ultimately be 32 to 34 euro cents, a premium of about 4 cents above where the bonds traded at the end of last week.

Pierre Moscovici, the French finance minister, played down concerns that the Greek debt buyback might not go as planned.

“I have no particular anxiety about this,” Mr. Moscovici said Monday at the European Parliament ahead of the meeting in Brussels of euro zone finance ministers to discuss Greece. “It just has to be very quick.”

A successful buyback is critical for Greece. The International Monetary Fund has said that it will lend more money to Greece only if it is reasonably able to show that it is on target to achieve a ratio of debt to annual gross domestic product of less than 110 percent by 2022. Greece will have at its disposal 10 billion euros, or $13 billion, in borrowed money from Europe. Investors who agree to trade in their Greek bonds will receive six-month treasury bills issued by Europe’s rescue vehicle, the European Financial Stability Facility. The offer will close Friday. If successful, the exchange will retire about half of Greece’s 62 billion euros in debt owed to the private sector. The country still owes about 200 billion euros to European governments and the I.M.F. ...

[Demeter]

53. Depression Deepens Greek Middle Class Despair With Crime

http://www.bloomberg.com/news/2012-12-06/depression-deepens-greek-middle-class-despair-with-crime-rising.html

Anastasia Karagaitanaki, 57, is a former model and cafe owner in Thessaloniki, Greece. After losing her business to the financial crisis, she now sleeps on a daybed next to the refrigerator in her mother’s kitchen and depends on charity for food and insulin for her diabetes....For thousands of Greeks like Karagaitanaki, the fabric of middle-class life is unraveling. Teachers, salaries slashed by a third, are stealing electricity. Families in once-stable neighborhoods are afraid to leave their homes because of rising street crime.

Karagaitanaki’s family can’t afford gas to heat their home this winter and will rely on electric blankets in the chilly northern Greek city. They live on the 785 euros ($1,027) a month their mother collects monthly from their late father’s pension. Two years ago, Karagaitanaki sold her jewelry for 3,000 euros, which she gave to her two sons. Her blood sugar is rising because she can’t afford the meat and vegetables her doctor recommends and instead eats rice and beans she gets from the Greek Orthodox Church.

“We are waiting every month for my mother’s pension,” Karagaitanaki said. “If my mother dies, what can I do? Everyone here is dependent on their parents' pensions.”

SAYS George Tzogopoulos, a research fellow at the Hellenic Foundation for European & Foreign Policy in Athens:

“I don’t think there is a single Greek citizen who believes that things will be better. There is no money for people to spend.”

Greece’s effective poverty rate has risen to 36 percent from about 20 percent in 2009, Matsaganis said. About 8.5 percent of Greeks now live in extreme poverty and can’t afford a basic basket of goods and services, he said.

The crisis is shredding the middle class, which is feeling the brunt of public-sector salary reductions and private job losses while paying higher taxes, said Elias Papaioannou, an associate professor of economics at London Business School.

“People are suffering massively. To me, it’s the collapse of the state.”

“We’re at war,” Giannakis said. “The state is against us and we’re trying to protect ourselves and our rights, as much as we can. Things are becoming ferocious.”

[Demeter]

56. Greek banks seek buyback approval as deadline nears

http://news.yahoo.com/greece-shield-banks-buyback-lawsuits-finance-ministry-source-082443362--finance.html

Greece's biggest banks asked their boards to approve selling back as much as their entire holdings of national debt, banking sources said on Friday, putting Athens on track to meet a target set by its international lenders. The buyback scheme, in which investors must declare their interest by Friday, is central to efforts by Greece's euro zone and International Monetary Fund lenders to cut its debt to manageable levels by 2020.

Athens has pressured its banks, which hold an estimated 17 billion euros ($22 billion) of bonds out of the 63 billion eligible for the buyback, to sell and promised to shield them from any lawsuits by shareholders over losses from the scheme...The country's four biggest banks have each asked their boards to approve up to 100 percent participation in the deal ahead of the 1700 GMT deadline, two banking sources said.

"The proposals by banks to their boards were positive on the buyback offer, asking for approval to participate by up to 100 percent," said one banker, who declined to be named.

Board approval does not necessarily mean the banks will offer all of the Greek bonds they hold.... Under the scheme, Athens aims to spend 10 billion euros of borrowed money to buy back bonds far below their nominal value, in a bid to cut debt by a net 20 billion euros. Athens made the offer on Monday on more attractive terms than expected for investors, boosting expectations that enough bondholders will take part to ensure the deal is a success...

IF IT LOOKS LIKE A BAILOUT, AND SOUNDS LIKE A BAILOUT, AND A BANK IS INVOLVED...

[Demeter]

18. SEC study: 2010 money-fund rules not enough

http://articles.marketwatch.com/2012-12-05/economy/35614282_1_trillion-money-market-fund-industry-money-market-funds-money-market-funds

A Securities and Exchange Commission study released late Wednesday said that reforms implemented in 2010 for the $2.7 trillion money-market fund industry may not have been sufficient to prevent losses at a major firm during the peak of the financial crisis of 2008.

“The findings indicate that funds are more resilient now to both portfolio losses and investor redemptions than they were in 2008,” the study said.

“That being said, no fund would have been able to withstand the losses that the Reserve Primary Fund incurred in 2008 without breaking the buck, and nothing in the 2010 reforms would have prevented the Reserve Primary Fund’s holding of Lehman Brothers debt,” it said.

”Breaking the buck” refers to financially strapped funds being forced to devalue their share price below the customary $1. The comment in the report may provide ammunition to outgoing SEC Chairman Mary Schapiro and her efforts to introduce new costly reforms for the $2.7 trillion money-market fund industry.

In the wake of the 2008 financial crisis, the Treasury created a taxpayer-backed guarantee program after a major fund, the Reserve Primary Fund, broke the buck and suffered a run on assets due to losses connected with Lehman Brothers’ failure in September 2008. The agency in 2010 required that money-market funds be required to hold at least 10% of their securities in investments in liquid securities that could be sold for cash within a day, and with at least 30% of their assets to be convertible into cash within a week The study noted that if money market funds had maintained high levels of weekly liquid assets at the start of the 2008 financial crisis, further losses might have been reduced. But it added that “the original loss due to Lehman Brothers’ bankruptcy would have remained and still would have been concentrated by redemptions.”

However, the study also said that before one can use the results to make inferences about the ad­equacy of the 2010 rules, “it is important to understand that this analysis has two important caveats — it does not consider redemp­tion risk, and credit risk is based on average rather than security-specific credit risk.”

MORE HAND-WRINGING AT LINK

[Demeter]

19. The 10 biggest U.S. corporate layoffs of 2012

http://www.marketwatch.com/story/the-10-biggest-us-corporate-layoffs-of-2012-2012-12-05?siteid=YAHOOB


1. Hewlett-Packard Co. 27,000 jobs

2. Hostess Brands 18,500 jobs

3. AMR Corp. (AMERICAN AIRLINES) 11,000 jobs

4. Citigroup Inc. 11,000 jobs

5. PepsiCo Inc. 8,700 jobs (GLOBAL)

6. J.C. Penney Co. 4,700 jobs

7. MetLife Inc. 4,300 jobs

8. Procter & Gamble Co. 4,100 jobs ( While not among the top 10, competitor Colgate-Palmolive Co. recently said it would slash 2,300 jobs. )

9. Google Inc. 4,000 jobs (2/3 OUTSIDE US)

10. Morgan Stanley 3,200 jobs.

DETAILS AT LINK

[Demeter]

48. Citi Cuts 11,000 Jobs Rather Than Lower Pay, Illustrating Rentier Capitalism in Operation

http://www.nakedcapitalism.com/2012/12/citi-cuts-11000-jobs-illustrating-rentier-capitalism-in-operation.html

Citi is a particularly blatant example of a way of operating that has become endemic in American business: when things get tough, throw as many employees as possible under the bus, and use that to maintain or even increase the pay of the top echelon. In investment banking, the number of folks who are spared from corporate austerity is larger than in other businesses, since those businesses have more profit centers (a single trader can have his own P&L) but the same general principle applies.

This is the reverse of how business used to operate. When I was a kid on Wall Street, the line at Goldman was that partners lived poor and died rich. Even though everyone’s pay would suffer if the firm had a bad year (that was the poing of bonuses, you knew your pay depended on firm performance), the partners took more of the variability in pay themselves and did everything necessary to preserve employment levels. The first time Goldman had actual layoffs, as in fired people because the firm was having a bad year (as opposed to for individual performance reasons) was in the early 1990s, and it was highly traumatic. And this attitude was not unusual in Corporate America. A CEO would reduce his pay if his firm was suffering; broad headcount cuts were seen as a sign that a business was in very serious trouble, and the market often did not react well to them.

Now Citi may have some fat in selected areas, and it is a famously badly run firm. But given how aggressive banks have been in wringing efficiencies out of their operations, and how much pressure Citi has been under to rationalize its businesses, these cuts look to be reactive, to reassure the Investor Gods that Action is Being Taken.

On a broader basis, Henry Blodget wrote today how destructive the “cream for the top, crumbs for everyone else” business attitude is:

The first chart shows that big American companies now have the highest profit margins in history.

The second chart shows that the companies are now paying the lowest wages in history as a percent of the economy.

If you happen to be an owner of a big American corporation, these charts could be construed as good news: You’re coining it!

If you happen to be a rank-and-file employee, however–or someone hoping to be such an employee–this is bad news: You’re sharing less than ever before in the success of American industry.

This situation, by the way, is only temporarily good news for the company owners. Because, by pumping so little back into the economy in the form of employee wages (and capital investments–the other area where companies are scrimping), our companies are constraining the growth of the economy.

Why?

Because the rank-and-file employees of America’s corporations are also mainstream American consumers–the folks who account for ~70% of the spending in the economy.

Almost every dollar these folks earn in salaries gets spent–on food, clothing, houses, education, entertainment, cars, and other goods and services that big American companies produce.

So, if, instead of hoarding their wealth by hiking their profit margins ever higher, companies invested more in employees and equipment, they would help the whole economy.

And the companies would also, of course, help their employees–the people who are dedicating their lives to helping the companies earn such vast profits…

The business-ethos pendulum in this country has now swung so far toward “profit maximization” that most American companies would never dream of voluntarily sharing more wealth with their employees.

These employees, after all, are not viewed as people. They’re viewed as “costs”–cash outflows that just drain financial value away from owners…

Think about that for a minute.

Some of the richest, most revered companies in this country–companies that are currently generating record-high profits–pay their full-time employees so little that they’re poor.

Even more depressing is the fact that concepts like “fairness” and “sharing” are now seen as evidence of bleeding-heart socialism–as though the only way to be a bona fide capitalist is to treat your employees like costs and pay them as little as possible.

But Citi and its ilk are perpetuating this race to the bottom. We’ve had a radical shift in business and cultural values in a mere 30 years. Neofeudalism seems to serve the elites just fine, and many of those who are not on at top of the food chain seem reluctant to believe that the system has been restructured to exploit them.

[Demeter]

21. America Faces Three Serious "Cliffs," None of Them Fiscal By Robert Reich

http://www.alternet.org/economy/america-faces-three-serious-cliffs-none-them-fiscal?akid=9767.227380.rnrSIh&rd=1&src=newsletter756803&t=10


The “fiscal cliff” is a a metaphor for a government that no longer responds to the biggest challenges we face because it’s paralyzed by intransigent Republicans, obsessed by the federal budget deficit, and overwhelmed by big money from corporations, Wall Street, and billionaires. If we had a functional government America would address three “cliffs” posing far larger dangers to us than the fiscal one:

The child poverty cliff. Between 2007 and 2011, the percentage of American school-age children living in poor households grew from 17 to 21%. Last year, according to the Agriculture Department , nearly 1 in 4 young children lived in a family that had difficulty affording sufficient food at some point in the year. Yet federal programs to help children and lower-income families – food stamps, aid for poor school districts, Pell grants, child health care, child nutrition, pre- and post-natal care, and Medicaid – are being targeted by the Republican right. Over 60 percent of the cuts in the GOP’s most recent budget came out of these programs. Even if these programs are preserved, they don’t go nearly far enough. But the Obama Administration doesn’t talk about reducing poverty in America. It talks only about preserving the middle class. Yet unless we focus on better schools, better health, and improved conditions for these poor kids and their families, in a few years America will have a significant population of under-educated and desperate adults.

The baby-boomer healthcare cliff.

Healthcare costs are already 18% of GDP. Between now and 2030, when 76 million boomers join the ranks of the elderly, those costs will soar . This is the principal reason why the federal budget deficit is projected to grow. The Affordable Care Act offers a start but it isn’t nearly adequate to limit these rising costs. The President and the Democrats have to lead the way in using Medicare and Medicaid’s bargaining power over providers to get lower costs and to move from a fee-for-service system to a fee-for-healthy outcomes system of healthcare. But we can’t avoid the fact we have the most expensive and least effective system of health care in the world that’s spending 30 percent more on paperwork and administration than on keeping people healthy. The real healthcare cliff can only be avoided if we adopt a single-payer healthcare system.

The environmental cliff.

Global emissions of carbon dioxide jumped 3 percent in 2011 and are expected to jump another 2.6 percent this year according to scientists, putting the human race perilously close to the tipping point when ice caps irretrievably melt, sea-levels rise, and amount of available cropland in the world becomes dangerously small. Yet Republicans (and their patrons, such as Charles and David Koch) continue to deny climate change. And the Administration is no longer pushing for a cap-and-trade system or a carbon tax. Yet unless we act to reduce carbon emissions, other major emitters won’t do so. The only binding pact so far is the Kyoto Protocol, which the U.S. never joined. And we’re taking no leadership at the international climate talks now taking place in Qatar.

Yes, America does face a cliff — not a fiscal cliff but a set of precipices we’ll tumble over because the GOP’s obsession over government’s size and spending has obscured them. And Democrats so far haven’t been able or willing to sound the real alarms.

***********************************************************
Robert B. Reich has served in three national administrations, most recently as secretary of labor under President Bill Clinton. He also served on President Obama's transition advisory board. His latest book is Aftershock: The Next Economy and America's Future. His homepage is www.robertreich.org.

[Demeter]

22. ONE MORE: The Forgotten Millions By PAUL KRUGMAN

http://www.nytimes.com/2012/12/07/opinion/krugman-the-forgotten-millions.html

Let’s get one thing straight: America is not facing a fiscal crisis. It is, however, still very much experiencing a job crisis....Yet there is a whole industry built around the promotion of deficit panic. Lavishly funded corporate groups keep hyping the danger of government debt and the urgency of deficit reduction now now now — except that these same groups are suddenly warning against too much deficit reduction. No wonder the public is confused.

Meanwhile, there is almost no organized pressure to deal with the terrible thing that is actually happening right now — namely, mass unemployment. Yes, we’ve made progress over the past year. But long-term unemployment remains at levels not seen since the Great Depression: as of October, 4.9 million Americans had been unemployed for more than six months, and 3.6 million had been out of work for more than a year. When you see numbers like those, bear in mind that we’re looking at millions of human tragedies: at individuals and families whose lives are falling apart because they can’t find work, at savings consumed, homes lost and dreams destroyed. And the longer this goes on, the bigger the tragedy. There are also huge dollars-and-cents costs to our unmet jobs crisis. When willing workers endure forced idleness society as a whole suffers from the waste of their efforts and talents. The Congressional Budget Office estimates that what we are actually producing falls short of what we could and should be producing by around 6 percent of G.D.P., or $900 billion a year. Worse yet, there are good reasons to believe that high unemployment is undermining our future growth as well, as the long-term unemployed come to be considered unemployable, as investment falters in the face of inadequate sales.

So what can be done? The panic over the fiscal cliff has been revelatory. It shows that even the deficit scolds are closet Keynesians. That is, they believe that right now spending cuts and tax hikes would destroy jobs; it’s impossible to make that claim while denying that temporary spending increases and tax cuts would create jobs. Yes, our still-depressed economy needs more fiscal stimulus. And, to his credit, President Obama did include a modest amount of stimulus in his initial budget offer; the White House, at least, hasn’t completely forgotten about the unemployed. Unfortunately, almost nobody expects those stimulus plans to be included in whatever deal is eventually reached.

So why aren’t we helping the unemployed? It’s not because we can’t afford it. Given those ultralow borrowing costs, plus the damage unemployment is doing to our economy and hence to the tax base, you can make a pretty good case that spending more to create jobs now would actually improve our long-run fiscal position. Nor, I think, is it really ideology. Even Republicans, when opposing cuts in defense spending, immediately start talking about how such cuts would destroy jobs — and I’m sorry, but weaponized Keynesianism, the assertion that government spending creates jobs, but only if it goes to the military, doesn’t make sense.

No, in the end it’s hard to avoid concluding that it’s about class. Influential people in Washington aren’t worried about losing their jobs; by and large they don’t even know anyone who’s unemployed. The plight of the unemployed simply doesn’t loom large in their minds — and, of course, the unemployed don’t hire lobbyists or make big campaign contributions. So the unemployment crisis goes on and on, even though we have both the knowledge and the means to solve it. It’s a vast tragedy — and it’s also an outrage.

[DemReadingDU]

23. White House Christmas Card

I got one!
Anybody know the criteria for receiving this card? I did not send any donations.


Meet Iowa Artist Behind White House's Holiday Card
http://www.aol.com/video/meet-iowa-artist-behind-white-houses-holiday-card/517574887/?icid=maing-grid10%7Chtmlws-main-bb%7Cdl26%7Csec1_lnk2%26pLid%3D242002

[Demeter]

31. No idea

Are you a registered Democrat?

[DemReadingDU]

44. Yes, all my life. But this is my first WH Christmas Card

I didn't send any donations to Obama's re-election campaign. And truthfully, spouse is the believer in Obama. I can't figure out why I got the card, addressed to me. Not Mr. and Mrs.

[Ghost Dog]

61. Obama’s social media machine...

An Internet marketing system named Narwhal, used by President Barack Obama to help gain re-election, may be turned loose to help shape the public debate...

... The super-smart database system is credited with helping change the math of how modern elections are run, by greatly aiding the Democrats’ get-out-the-vote effort.

And it looks like Narwhal hasn’t sailed into the sunset just yet...

/... http://blog.constitutioncenter.org/2012/11/obama%E2%80%99s-social-media-machine-focsed-on-fiscal-cliff/

(Slate, Feb. 15, 2012)... (A)s part of a project code-named Narwhal, Obama’s team is working to link once completely separate repositories of information so that every fact gathered about a voter is available to every arm of the campaign...

... This year’s looming innovations in campaign mechanics will be imperceptible to the electorate, and the engineers at Obama’s Chicago headquarters racing to complete Narwhal in time for the fall election season may be at work at one of the most important. If successful, Narwhal would fuse the multiple identities of the engaged citizen—the online activist, the offline voter, the donor, the volunteer—into a single, unified political profile.

Traditionally, even the campaigns most intent on gathering varied types of data have had little strategy for getting all the information to work together... By the time campaign officials realized that they were agglomerating unprecedented volumes of political information—and that it would all become more valuable as it was allowed to mingle across categories—it was too late to rebuild their systems to make that sort of data-sharing easy. Even as the outside world marveled at their technical prowess, Obama campaign staffers were exasperated at what seemed like a basic system failure: They had records on 170 million potential voters, 13 million online supporters, 3 million campaign donors and at least as many volunteers—but no way of knowing who among them were the same people...

In a campaign that has grown obsessed with code-naming its initiatives, the integration project is known as Narwhal, after the tusked Arctic whale whose image (via a decal) adorns a wall adjacent to the campaign’s engineering department, as first reported by Newsweek. Narwhal remains a work-in-progress... Like much of what changes politics this year, Narwhal will remain below the surface, invisible to the outside world.

/... http://www.slate.com/articles/news_and_politics/victory_lab/2012/02/project_narwhal_how_a_top_secret_obama_campaign_program_could_change_the_2012_race_.single.html

[DemReadingDU]

66. Narwhal, top secret project

Hm, very interesting. I suppose I could have been input into this top-secret project Narwhal. But why? And what else have they got on me, and what do they want from me in the future?

[siligut]

64. They sent me a postcard pre-election.

Maybe I will get a xmas card? I will anxiously await the mail, I very much like the painting Michelle chose.

[Demeter]

24. Has gold lost its Midas touch for good?

http://www.marketwatch.com/story/has-gold-lost-its-midas-touch-for-good-2012-12-07?siteid=YAHOOB

Gold was a quiet winner before its big sell-off this week.

The yellow metal had worked its way up from around $1,560 an ounce back in July to almost $1,800 in October. Just last week it changed hands at $1,750. But then came waves of selling, which drove the price below $1,690 by Thursday morning, still slightly above support levels. But gold has gone nowhere in more than a year. It peaked near $1,900 in September 2011 and hasn’t come within $100 of that since. It fell as low as $1,540 in May. Though it’s still up around 8% in 2012, this year’s rally is looking pretty shaky.

And U.S. stocks, which so many investors still hate, have wiped the floor with gold. Since Sept. 22, 2011, when stocks and gold began to decouple, the Standard & Poor’s 500 index has risen 25% while SPDR Gold Shares has lost 3%...MORE

IT'S (UNINTENTIONALLY?) FUNNY

[Demeter]

25. Light Seen at End of Euro-Crisis Tunnel (MORE HUMOR, UNINTENTIONAL)

PROOF THAT DELUSION IS ALIVE AND WELL IN DEUTSCHLAND

http://www.spiegel.de/international/europe/euro-crisis-is-past-its-peak-eu-commissioner-says-a-871330.html

The worst of the euro crisis has passed, says European Commissioner Olli Rehn, who points to the common currency area's falling budget deficits in an interview on Thursday. Greek Prime Minister Samaras is also optimistic, saying that his country is now on the right track...Have we seen the worst of the euro crisis? According to European Commissioner Olli Rehn, we have. He said on Thursday that the debt and financial crisis afflicting Europe's common currency zone has surpassed its apex.

Rehn, commissioner for economic and monetary affairs, told the Financial Times Deutschland on Thursday: "The last high point of the crisis was in June, around the time of the Greek elections. Now we have a reverse trend."

Rehn defended the strict austerity measures applied in countries like Greece, Portugal and Spain, and credited such policies with successfully reducing the combined budget deficit in the euro zone from 6.2 percent of the currency area's gross domestic product in 2010 to 3 percent this year and a projected 2.5 percent in 2013.

In the interview, Rehn said a change in policy is underway, from one of purely crisis management, to a focus more on structural issues and the competitiveness of all euro zone and European Union member states...

CUE THE PITCHFORKS AND TORCHES IN 5...4...3...2...

[Demeter]

26. Greek jobless rate up to record 26 percent

http://www.usnews.com/news/business/articles/2012/12/06/greece-jobless-rate-up-to-26-percent

Greece's unemployment rate rose to a new record of 26 percent in September, underscoring the economic plight in the country as it heads toward a sixth year of recession.

The Greek Statistical Authority said Thursday that 1.295 million people — more than one-fourth of the workforce in this nation of 10 million — were recorded as unemployed in September. Unemployment rose from 25.3 percent the previous month and 18.9 percent a year earlier.

Greek unemployment has surged to the highest since the 1960s as a result of harsh austerity measures imposed in return for vital international rescue loans.

The conservative-led coalition government is finalizing a major tax reform bill, demanded by international rescue creditors as one of several conditions for continued payments. It has promised to try to stem the country's recession, despite being forced last month to introduce another round of deeply unpopular austerity measures that are part of Greece's bailout commitments.

These measures include raising €3 billion ($3.9 billion) in extra tax revenue....

[Demeter]

27. AND THAT'S NOT ALL: The REAL Unemployment Rate Is 22% US-SHADOWSTATS

http://dailybail.com/home/chart-shock-the-real-unemployment-rate-is-22.html



The seasonally-adjusted SGS Alternate Unemployment Rate reflects current unemployment reporting methodology adjusted for SGS-estimated long-term discouraged workers, who were defined out of official existence in 1994. That estimate is added to the BLS estimate of U-6 unemployment, which includes short-term discouraged workers.

The U-3 unemployment rate is the monthly headline number. The U-6 unemployment rate is the Bureau of Labor Statistics’ (BLS) broadest unemployment measure, including short-term discouraged and other marginally-attached workers as well as those forced to work part-time because they cannot find full-time employment.

---

[Demeter]

59. Satyajit Das: L’Age d’Or, Part 1 – “A Barbarous Relic”

http://www.nakedcapitalism.com/2012/12/satyajit-das-lage-dor-part-1-a-barbarous-relic.html#RSfOOhDqmlm3CJ4z.99

A COMPREHENSIVE AND EXHAUSTIVE HISTORY OF GOLD AS MONEY

[xchrom]

28. FRIDAY PARTY AT FUDDNIK'S

[Demeter]

36. Be there or be square!

I hear that there's going to be a Dave Brubeck retrospective...

[xchrom]

37. Dave Brubeck and Dim Sum

liberally splattered with rum

[xchrom]

29. $700K OF GOLD DUST MISSING FROM PFIZER LAB IN MO.

http://hosted.ap.org/dynamic/stories/U/US_MISSING_GOLD_DUST?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2012-12-07-08-59-24

CHESTERFIELD, Mo. (AP) -- Pfizer Inc.'s medical research lab in St. Louis County is missing $700,000 worth of gold dust, and police are trying to determine if it was lost or stolen.

The St. Louis Post-Dispatch ( HTTP://BIT.LY/UIPAYR ) reports that Chesterfield police began an investigation this week after a Pfizer employee conducting inventory couldn't find the gold dust purchased last year for use in research.

Police Capt. Steven Lewis says no one is "sure if they just didn't account for it and it was used naturally, or if it was stolen or misplaced."

Pfizer said in a statement it is working with law enforcement and takes the matter seriously.

[AnneD]

65. Maybe it is...

Gone with the Wind...

[xchrom]

30. US ECONOMY ADDS 146K JOBS, RATE FALLS TO 7.7 PCT.

http://hosted.ap.org/dynamic/stories/U/US_ECONOMY?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2012-12-07-09-25-10

WASHINGTON (AP) -- The U.S. economy added 146,000 jobs in November and the unemployment rate fell to 7.7 percent, the lowest since December 2008. The government said Superstorm Sandy had only a minimal effect on the figures.

The Labor Department's report Friday offered a mixed picture of the economy.

Hiring remained steady during the storm and in the face of looming tax increases. But the government said employers added 49,000 fewer jobs in October and September than it initially estimated.

And the unemployment rate fell to a four-year low in November from 7.9 percent in October mostly because more people stopped looking for work and weren't counted as unemployed.

[Roland99]

34. Treasuries taking a big hit, Markets up nominally.

[xchrom]

32. GERMAN CENTRAL BANK CUTS 2013 GROWTH FORECAST

http://hosted.ap.org/dynamic/stories/E/EU_GERMANY_ECONOMY?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2012-12-07-07-41-34

BERLIN (AP) -- Germany's central bank sharply cut its 2013 economic growth forecast to 0.4 percent on Friday, while poor industrial production figures underlined expectations of a weak winter for Europe's biggest economy.

The Bundesbank cut its outlook for gross domestic product growth next year from the 1.6 percent it predicted in June. It also lowered its forecast for 2012 to 0.7 percent from 1 percent.

That put the central bank's outlook well below the government's prediction of 0.8 percent growth this year and 1 percent growth in 2013.

However, the Bundesbank forecast a rebound to 1.9 percent growth in 2014 if the debt crisis in the 17-country eurozone doesn't escalate further and uncertainty among investors and consumers eases.

[xchrom]

33. RI COURT TO HEAR ARGUMENTS IN PENSION CASE

http://hosted.ap.org/dynamic/stories/U/US_PENSION_LAWSUIT?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2012-12-07-03-00-29

PROVIDENCE, R.I. (AP) -- Attorneys for the state of Rhode Island will ask a judge to dismiss a legal challenge to the state's landmark pension overhaul filed by public-sector unions.

The hearing in Judge Sarah Taft-Carter's Providence courtroom on Friday is the highest profile one yet in the legal dispute over the year-old pension law. Unions argue the changes to state retirement benefits are unconstitutional and unfair.

State leaders insist that without the changes, ever-escalating pension costs would swamp state finances. They say the pension law - which passed overwhelmingly in 2011 - was carefully crafted to withstand legal scrutiny.

The litigation could have far-reaching implications as states around the country seek to rein in pension costs. Collectively, states face a $1.4 trillion gap between what they've promised workers and what they've set aside to pay for those benefits.

[xchrom]

35. Lone German Keynesian Advocates Pooling Euro Debt

http://www.bloomberg.com/news/2012-12-06/lone-german-keynesian-advocates-pooling-euro-debt.html


As the sovereign-debt crisis batters southern Europe, the pro-stimulus economist Peter Bofinger is taking on Angela Merkel's -- and Germany's -- quasi-religious belief in austerity. Photographed in Germany, November 2012. Photograph: Stefan Heinrichs/Bloomberg Markets via Bloomberg.

n his office at the six-century-old University of Wuerzburg, Peter Bofinger contemplates the fate of his country under the weight of the European sovereign-debt crisis.

“Germany would be the biggest loser in a euro breakup,” he says. With his right hand, he does an emphatic knife chop onto a small round table. “Somehow, we need to save this thing.”
For the past year, as Chancellor Angela Merkel struggled to forge a euro-crisis solution that will pass muster with German voters, Bofinger, a 58-year-old economics professor, has been a leading voice among her economic opposition, Bloomberg Markets reports in its January issue.

Where Merkel has preached austerity, Bofinger has called for stimulus; where she has demanded fiscal responsibility from debtor nations, he has pleaded for collective liability among all members of the single European currency.

[Ghost Dog]

62. Redemption Plan

... Why, she is likely to be asked on the stump, did your government reject the so-called redemption pact, the debt- sharing proposal that Bofinger helped to author and that influential figures such as European Commission President Jose Manuel Barroso and billionaire investor George Soros say could save the euro?...

... As one of five economists on the German Council of Economic Experts, he is one of the wise men, as they are known, who first proposed the redemption pact in 2011 and then expanded upon it in July 2012. The idea is to allow countries in the single- currency zone to trade their old debts for new loans backed jointly by all euro members...

... Merkel has dismissed the plan.

She has supported a series of European Union and International Monetary Fund bailouts for Greece, Portugal and Ireland; accepted a 100 billion euro ($131 billion) EU loan to troubled Spanish banks; pledged 190 billion euros to the new bailout fund, the European Stability Mechanism, designed to stave off future crises; and, over objections from the German Bundesbank, acquiesced to the European Central Bank’s commitment to unlimited purchases of euro-zone sovereign debt...

(op. cit.)

[Demeter]

38. Newly Released Drone Records Reveal Extensive Military Flights in US

IN CASE YOU HAD ANY DOUBT OF YOUR ROLE IN THE NEW WORLD ORDER...YOU ARE TARGET PRACTICE.

https://www.eff.org/deeplinks/2012/12/newly-released-drone-records-reveal-extensive-military-flights-us



https://www.google.com/fusiontables/embedviz?viz=MAP&q=select+col2+from+1WuTyH62PmUF97oxo6IreT1BL_aw9HJN5pocwmwg&h=false&lat=44.08758502824518&lng=-85.5615234375&z=4&t=1&l=col2&y=1&tmplt=2

Today EFF posted several thousand pages of new drone license records and a new map that tracks the location of drone flights across the United States.

These records, received as a result of EFF’s Freedom of Information Act (FOIA) lawsuit against the Federal Aviation Administration (FAA), come from state and local law enforcement agencies, universities and—for the first time—three branches of the U.S. military: the Air Force, Marine Corps, and DARPA (Defense Advanced Research Projects Agency).

Military Drone Flights in the United States

A160 Hummingbird DroneWhile the U.S. military doesn’t need an FAA license to fly drones over its own military bases (these are considered “restricted airspace”), it does need a license to fly in the national airspace (which is almost everywhere else in the US). And, as we’ve learned from these records, the Air Force and Marine Corps regularly fly both large and small drones in the national airspace all around the country. This is problematic, given a recent New York Times report that the Air Force’s drone operators sometimes practice surveillance missions by tracking civilian cars along the highway adjacent to the base...

LOTS OF GEEKY DETAIL AT LINK

[xchrom]

39. Canada Nov. Employment Rises More-Than-Expected 59,300

http://www.bloomberg.com/news/2012-12-07/canada-employment-rises-more-than-expected-59-300-in-november.html

Canadian employment rose almost six times faster than economists forecast in November with most of the increase coming from full-time and private-sector work.

The increase of 59,300 lowered the unemployment rate to 7.2 percent from 7.4 percent, the first decline in five months, Statistics Canada said today in Ottawa. Economists surveyed by Bloomberg News projected a 10,000 gain in jobs and 7.4 percent unemployment, according to median forecasts.

The Canadian dollar rose to a one-month high after the report, which came three days after Bank of Canada Governor Mark Carney kept in place the Group of Seven’s only bias to raise interest rates, citing an economy approaching full output.

“With the decline in the unemployment rate it was unequivocally a good report,” said Mark Chandler, head of fixed-income strategy at Royal Bank of Canada’s Capital Markets unit in Toronto. “It’s going to be hard to keep up the same job machine” in coming months, he said.

[Demeter]

40. In Talks on a Budget Deal, Boehner and Obama Stand Alone

http://www.nytimes.com/2012/12/07/us/politics/at-boehners-request-he-and-obama-negotiate-alone.html

At House Speaker John A. Boehner’s request, Senate leaders and Representative Nancy Pelosi have been excluded from talks to avert a fiscal crisis, leaving it to Mr. Boehner and President Obama alone to find a deal, Congressional aides say....


I'VE GOT A BAD FEELING ABOUT THIS...NOT THAT MY OPINION OF PELOSI IS SO HIGH, BUT TWO HALFWITS TOGETHER MIGHT OUTWEIGH THE QUARTER-WIT OF BOEHNER....

BASICALLY, IF BOEHNER AND THE GOP THINK IT IS A GOOD IDEA...IT ISN'T.

AND I DON'T WANT ANY CLOSED-DOOR DEALS, MYSELF.

[Demeter]

45. Fiscal cliff: hopes rise for deal as Jim DeMint quits Senate

http://www.guardian.co.uk/world/fiscal-cliff-blog/2012/dec/06/fiscal-cliff-obama-polls-live



President Obama takes to the road again today to sell his plans to avert the so-called fiscal cliff, making an appearance with a family in northern Virginia who would be affected by the expiration of the Bush era tax cuts at the end of this year.

The House of Representatives, meanwhile, is gone off on a break, although Speaker John Boehner has vowed to stay in Washington in case a deal breaks out. Last night President Obama called Boehner to discuss negotiations on the fiscal cliff although few details have been released about the content of their discussion.

But new polling shows strong support for the White House and Democratic party stances on raising taxes on the most wealthy while extending tax cuts for the middle class – and show little support for any attempts to cut federal social services such as Medicare. Some 66% of those polled by Quinnipiac believe the best way to reduce the deficit is a combination of tax increases and spending cuts, which is the package being advocated by Democrats.

.........................

Senator Jim DeMint, South Carolina's rock-ribbed conservative and hero to the Tea Party movement, has announced that he is resigning from Congress, setting off a political explosion in Washington that will be felt in the fiscal cliff negotiations and throughout the Republican party. The decision to step down from the Senate next month to become head of the right-wing think tank the Heritage Foundation shocked Washington's commentators – and makes clear that the era of Tea Party influence over the GOP has waned. DeMint made a name for himself as an unyielding voice in opposition to taxes and spending within the Republican party, regularly excoriating his own side for any signs of compromise. Just this week he made a savage attack on the Republican House offer to avert the fiscal cliff. In recent years DeMint has become a kingmaker within Republican conservative circles. But his decision to leave Congress is a further sign that the extreme conservative wing of the Republican party is weakened in the wake of the 2012 elections...

THE AVERAGE IQ IN THE SENATE PROBABLY JUST DOUBLED....

[Demeter]

54. Fiscal Cliff Propaganda Watch: Business Owner Says the Fiscal Cliff Made Him Fire His Son

PRETTY AMAZING, CONSIDERING THE CLIFF HASN'T HAPPENED YET...WHAT A FATHER! NEEDS AN AWARD....

http://www.nakedcapitalism.com/2012/12/fiscal-cliff-propaganda-watch-business-owner-says-the-fiscal-cliff-made-him-fire-his-son.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

The lies told to sell the chump public on the necessity of enduring cuts to the social safety net are already at a breathtaking level. Where would you like to begin? The idea that big reductions in spending (going over the edge of the world off the fiscal cliff would be horrific, while only somewhat big cuts would be salutary? That Social Security “reforms” are necessary to fix the budget? Even former budget chief Peter Orszag ‘fessed up that one was not true. Or the favorite refuge of the Republicans, that raising taxes on the wealthy will hurt job creation. Ahem, we’ve pushed the low taxes model further than any other advanced economy, and the result is crumbling infrastructure, an overpriced and mediocre health care system, and record corporate profits combined with extreme measures to pay more to workers and a lack of new investment (the corporate sector has been a net saver since the early 2000s).

The propagandizing nevertheless has gotten so shameless it appeared to be time to point out particularly egregious examples. I thought it would be good to establish what the benchmark is and encourage NC readers to identify similarly outlandish examples (you can e-mail me with sightings at yves_at_nakedcapitlism.com, with “Fiscal Cliff Propaganda Watch” in the headline).

This illustration comes from Bloomberg and the headline, “I Laid Off My Own Son”: A Real Fiscal Cliff Story” is a howler. The fiscal cliff hasn’t even happened; the idea that businesses are engaging in extreme measures in anticipation of it strains credulity. And we’ll see, just as banks like blaming their current underwhelming profits on big bad government action, when blowing up their customers is the proximate cause, so too is this a case of long-standing business problems being repackaged to serve a favored political message....

[xchrom]

41. UK manufacturing output sees sharp fall

http://www.bbc.co.uk/news/business-20638091

UK manufacturing output registered a surprisingly sharp fall in October, resurrecting fears of recession.

Output fell by 1.3% from September, the Office for National Statistics said, with food and drink output, notably beer, down following the Olympics.

It was the worst fall since June, when activity was depressed by extra public holidays for the Diamond Jubilee.

It also adds to evidence that the UK economy may be relapsing into recession after a short rebound over the summer.

[xchrom]

42. Germany's growth forecast cut by Bundesbank

http://www.bbc.co.uk/news/business-20638041

Germany's central bank, the Bundesbank, has cut its growth forecast for next year, saying the country's economy might be entering a recession.

Growth in 2013 is now expected to be just 0.4%, compared with a forecast in June of 1.6%, but is expected to bounce back to 1.9% in 2014.

Meanwhile, industrial output fell a steeper-than-expected 2.6% in October.

It comes one day after European Central Bank president Mario Draghi cut his forecast for eurozone growth.

[Demeter]

43. A dream SEC chief By Matt Stoller

http://www.salon.com/2012/12/06/a_dream_sec_chief/

With a record of challenging Wall Street, Neil Barofsky says he'd take it "in a heartbeat." Here's what he'd do....The stakes are high. In the 1930s, the SEC cleaned up a stock market that had gone out of control, rigged by insiders and ultimately wrecking the economy. During this most recent financial crisis, the SEC operated as Barofsky put it, as a “backwater.” SEC Chairman Chris Cox was known as a passive regulator who did not understand the markets. Whistle-blower Harry Markopoulos later embarrassed the SEC by revealing he had tried to tell them about Bernie Madoff’s $20 billion-plus fraud for eight years, to no avail. Obama appointee Mary Schapiro has done marginally better, but the SEC has still been battered in the courts and in Congress. And Schapiro recently lost a high-profile fight to regulate money market funds, which were a key part of the highly vulnerable shadow banking system.

Most significantly, the SEC has no high-profile court wins against key players in the financial crisis. The SEC charged Goldman Sachs in 2010 with defrauding its customers in the mortgage-backed securities market, the centerpiece of the crisis. But it later settled with the company, not forcing Goldman to admit or deny wrongdoing. In fact, settling with corporations without forcing them to admit wrongdoing is policy at the SEC, under former Deutsche Bank executive turned SEC Chief of Enforcement Robert Khuzami. This policy is so ingrained that when Judge Jed Rakoff invalidated a settlement between the SEC and Citigroup on selling toxic mortgage bonds and ordered a trial, Khuzami fought bitterly to have the judge overruled. Fortunately, this is something Barack Obama can fix in his second term. The banking system is now stable enough to withstand legal challenges, and there’s a clear opening to change directions at the SEC. But what does the next SEC chair need to do to restore credibility to the agency?

Barofsky is uniquely positioned to comment on this, as a Democrat in public office who became one of the Treasury’s most high-profile critics, who received significant support from Democratic and Republican critics of the bailouts. He was a staunch ally of Elizabeth Warren, but conservative bank analyst Chris Whalen also says Barofsky would be “an excellent choice” for SEC chair, and says he was one of the “few advocates for the public” during the bailouts. Liberal economist Jane D’Arista calls him “the obvious first pick” for the job. Barofsky has a background in prosecuting complex financial frauds, having done so as an assistant U.S. attorney in the Southern District of New York. He also has a clear policy profile as a foil for Tim Geithner during the bailouts, when he ran the Special Inspector General Office for the Troubled Asset Relief Program (or SIGTARP).

A big change he’d make is in the enforcement area. He says it’s time to reexamine the policy of settling with corporations without forcing them to admit wrongdoing. He’d fight hard for more transparency within large financial institutions, and for reform of the money markets. Barofsky also believes that the next SEC chairman could make the Financial Stability Oversight Council, a council of regulators established by Dodd-Frank with the power to break up the banks, a real forum for action....

INTERVIEW AT LINK

[Demeter]

49. Khuzami Deathwatch: SEC Ignores Tips About $12 Billion of Hidden Losses at Deutsche Bank

http://www.nakedcapitalism.com/2012/12/khuzami-deathwatch-sec-ignores-tips-about-12-billion-of-hidden-losses-at-deutsche-bank.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

Two days ago, we said it was time to fire the SEC’s chief of enforcement Robert Khuzami, who has not provided the tough policing warranted by the biggest financial crisis in the agency’s history. Our call was based on compelling evidence of failure. Specifically, a year and a half after Dodd Frank created a $450 million whistleblower fund, which Khuzami confirmed had produced hundreds of high quality leads, the agency had taken only one referral far enough to merit a payout, that of a measley $50,000. We stressed that this was an astonishing lapse:

… whistleblowers are insiders and therefore should in many cases have access to the sort of internal documents that would serve to substantiate conduct and save the SEC a ton of time. In other words, this should be a prime, potentially its best, source of leads, since the SEC would be further along in case development if any of these tips had meat (ie, both damning info and on target with a clear violation).

We didn’t anticipate that the story of Khuzami’s negligence would blow so big so quickly. Today, the Financial Times reported that three separate whistleblowers charged that Deutsche Bank had mismarked up to $12 billion in exposures to make it look healthier in 2008 and 2009 than it was, yet the agency had not acted on these allegations. And this level of window dressing most assuredly would make a difference. From the Financial Times article that discusses the charges in detail:

When Deutsche reported earnings at the start of 2009, its tier one capital ratio – the gauge of banks’ ability to absorb losses – was about 10 per cent, with €32.3bn of tier one capital against €316bn of risk-weighted assets. If the tier one capital had fallen by €8bn, below the upper end of the former employees’ estimates, its ratio would have fallen below the 8 per cent that German regulators were demanding at the time.

It is important to recognize that even now, Deutsche is thinly capitalized. Bank analyst Chris Whalen wrote in 2011:

Even Deutsche Bank, arguably the most important bank in Western Europe, has just €50 billion in capital supporting €1.7 trillion in total assets. Only by ignoring the sovereign and off-balance sheet footings of Deutsche and other major EU banks can anyone even for a moment pretend that these banks are solvent.

The bank’s year end 2011 balance sheet shows even higher leverage: equity of €55 billion versus €2.2 trillion in assets.

Although 2009 appears to be when the mismarking reached its peak, there was evidence of monkey business before that. The FT’s Lex column points out that the German bank miraculously managed to report profits in the third quarter of 2008, which closed right after the Lehman/AIG implosions. That miracle was achieved by reclassifying €25bn of trading assets, which skeptical investors were told was permissible thanks to changes in accounting rules.

The line taken to minimize the significance of these charges is the trades were eventually unwound without impairing the bank. Yes, in no small measure because the financial system is still on life support, with central banks engaging in ZIRP to goose asset prices and flatter bank balance sheets (and that’s before we get to the ongoing high wire act in Europe to contend with French and German bank exposure to periphery country debt). So the idea that this all worked out well is a convenient fiction. It all worked out well for bankers, at considerable cost to ordinary citizens in their economies. If Deutsche had gotten a formal bailout, the odds are decent that changes in management and operations would have been forced on the bank (remember, Germany is more oriented towards industrial capital than financial capital, so the odds of a big bank welfare queen getting to carry on as before are less likely than the example of Citigroup would suggest). Again from the FT:

“If Lehman Brothers didn’t have to mark its books for six months it might still be in business,” says one of the men. “And if Deutsche had marked its books it might have been in the same position as Lehman.”

DETAILED ALLEGATIONS AT LINK

[Demeter]

46. Student-Loan Collections Could Be Subject to Drastic Overhaul by Nathalie Martin

http://www.creditslips.org/creditslips/2012/12/student-loan-collections-could-be-subject-to-drastic-overhaul.html



Bloomberg reports that Congress will consider overhauling debt collection in the $100 billion-a-year U.S. student loan program, replacing it with automatic withdrawals from borrowers’ paychecks tied to their income -- a system similar to those sued in the U.K., New Zealand and Australia. The bill, proposed by Wisconsin Republican Representative Tom Petri, would require employers to withhold payments from wages in the same way they do taxes, capping payments at 15 percent of borrowers’ income after basic living expenses. The bill follows growing concern about the burden of $1 trillion in outstanding student loans, which now exceed credit- card debt. Under the new system, the government would no longer need to hire thugs to collect, and I personally have found these student loan debt collectors to be quite formidable indeed. Never mind that the debt collectors fees can add up to 25 percent to borrowers’ loan balances, leaving defaulted former students even deeper in the hole. This new process would streamline the confusing process of getting on a reduced payment plan if a borrower is un or under-employed, but would still provide for repayment of the student debt.
According to Bloomberg, last year alone, 5 million borrowers were in default -- generally meaning they had failed to make payments for at least 270 days -- on $67 billion in loans, more than twice the amount in 2003. Through the new system, based on experience in the U.K., 98 percent of borrowers could meet their loan payments through automatic payroll withholding, according to Petri’s office. Last year alone, debt-collection companies -- working directly for the Education Department or for state agencies -- received about $1 billion in commissions, Bloomberg News reported.

This new law would also cap interest owed at 50 percent of a loan’s face value at the time of graduation, giving a break to lower-income borrowers who take longer than the standard 10 years to repay loans. For a student who took out $27,000 in loans, about the national average for a graduate of a four-year program who borrowed, the interest couldn’t exceed $13,500. But here’s the rub. To offset the cost of capping interest, the bill would eliminate some student-loan subsidies that help low-income families and borrowers. Actually, some of those subsidies are being eliminated no matter what, a topic I blogged about last year.

SEE ALSO COMMENTARY AT LINK

ORIGINAL BLOOMBERG ARTICLE:

http://www.bloomberg.com/news/2012-12-04/student-loan-collection-targeted-for-overhaul-in-congress.html

AS FAR AS I CAN TELL, IT STILL STINKS

[xchrom]

47. CONSUMER CONFIDENCE PLUNGES TO 74.5

http://www.businessinsider.com/consumer-confidence-december-preliminary-2012-12

UPDATE: The latest consumer confidence figure from the University of Michigan Survey is out.

The index fell to 74.5 from last month's reading of 82.7.
The number came in well below expectations of an 82.0 print.


Read more: http://www.businessinsider.com/consumer-confidence-december-preliminary-2012-12#ixzz2ENY4wjGj

[Demeter]

50. Volunteer Program Coordinator "Maine Attorneys Saving Homes" Purpose Prize Winner 2012

The timing couldn’t have been better when Thomas Cox walked into the offices of Pine Tree Legal Assistance, a Maine nonprofit where he had periodically volunteered during his long career as a private practice lawyer for banks that specialized in debt collection and foreclosures.

Pine Tree was just about to launch a new organization called Maine Attorneys Saving Homes, to provide legal assistance for low-income homeowners facing foreclosure in the state. And Cox couldn’t have been a better fit. He had literally written the book on the subject.

“The guy who wrote the manual on foreclosures walks into this place on the day they’re looking to set up a program,” he says with a laugh about that day in April 2008. “They said, ‘Would you like to help us get this going?’ and I said, ‘Yeah, that sounds like fun.’”

Maine Attorneys Saving Homes would soon have an impact far beyond Maine. When Cox delved into foreclosure affidavits (sworn statements), he detected blatantly fraudulent practices by banks. He discovered that their affidavits were signed by witnesses who knew nothing about the documents' contents, and that many of the affidavits were filled with false statements. “I was seeing it case after case,” Cox recalls.

http://www.encore.org/thomas-cox-0

[Demeter]

52. German man locked up over HVB bank allegations may have been telling truth

http://www.guardian.co.uk/world/2012/nov/28/gustl-mollath-hsv-claims-fraud

Gustl Mollath was put in a psychiatric unit for claiming his wife was involved in money-laundering at the Bavarian bank. But seven years on evidence has emerged that could set him free...A German man committed to a high-security psychiatric hospital after being accused of fabricating a story of money-laundering activities at a major bank is to have his case reviewed after evidence has emerged proving the validity of his claims.

In a plot worthy of a crime blockbuster, Gustl Mollath, 56, was submitted to the secure unit of a psychiatric hospital seven years ago after court experts diagnosed him with paranoid personality disorder following his claims that staff at the Hypo Vereinsbank (HVB) – including his wife, then an assets consultant at HVB – had been illegally smuggling large sums of money into Switzerland.

Mollath was tried in 2006 after his ex-wife accused him of causing her physical harm. He denied the charges, claiming she was trying to sully his name in the light of the evidence he allegedly had against her. He was admitted to the clinic, where he has remained against his will ever since.

But recent evidence brought to the attention of state prosecutors shows that money-laundering activities were indeed practiced over several years by members of staff at the Munich-based bank, the sixth-largest private financial institute in Germany, as detailed in an internal audit report carried out by the bank in 2003. The report, which has now been posted online, detailed illegal activities including money-laundering and aiding tax evasion. A number of employees, including Mollath's wife, were subsequently sacked following the bank's investigation. The "Mollath affair", as it has been dubbed by the German media, has taken on such political dimensions that it now threatens to bring down the government of Bavaria. Under the weight of public and political pressure Horst Seehofer, the prime minister of the rich southern state and a member of the Christian Social Union (CSU) – the sister party to Angela Merkel's Christian Democrats – has now called for the case to be reopened, amid charges that Mollath was possibly the victim of a gross miscarriage of justice...

I HOPE HE SUES THEIR PANTS OFF

[Demeter]

55. Eliminating holiday shoppers’ remorse: How bargain hunters can get better price even after purchase

http://www.marketwatch.com/story/eliminating-holiday-shoppers-remorse-2012-12-07?siteid=YAHOOB

Holiday shopping shouldn’t end at the checkout counter this year.

So called price-adjustment policies — which offer a refund for the difference to customers who spot a better price at the retailer or a competitor after buying – have gotten a little more generous. Best Buy and Target both expanded their policies to include online competitors this holiday season, pledging to match prices from sites including Amazon.com, Walmart.com, and each other’s websites. (Normally, the two match store prices only.) Best Buy will match prices through the typical 30-day return period for purchases, while Target will do so through Dec. 24 for items bought by Dec. 16. In November, Citibank also expanded its year round Price Rewind feature to encompass all its credit cards, letting cardholders register select purchases made on their card for price tracking over the next 30 days. If the bank spots a price that’s at least $25 lower during that period, the cardholder will get a credit for the difference.

The shift in policies is potentially valuable as the holiday sales fly fast and furious. “That first discount shoppers see is not always the end-all be-all,” says Erica Bell, co-founder of price-tracking site Hukkster. It’s common for site users to see multiple price drops over a product’s shelf time, she says. Missing out adds up: In 2010, the average household lost $177 in forgone price adjustments, according to Pricetector.com.

In almost all cases, it’s on the shopper to spot any new sales and request a credit for the difference, says Edgar Dworsky, founder of ConsumerWorld.org, an advocacy site. But that’s not hard. Look up items you bought on a site that tracks prices — like Hukkster, PriceSpider.com or any of the numerous other options — and then opt in to get alerts if the price changes. Most importantly, hang on to your receipt. You’ll need it to claim the adjustment, along with proof of the new, lower price. Some policies specifically require a dated ad or a printout of a webpage, says Anisha Sekar, a vice president at comparison site NerdWallet. Read 5 Top Price-Compare Apps

Don’t wait too long to claim the better price, experts advise. Retailer policies usually expire 14 days after purchase, although a few — including those of Lowe’s and Best Buy — stretch as long as 30 days. Adjustment deadlines for Web orders are similarly short, although retailers start the countdown at various points in the purchase process. Tory Burch, for example, offers an adjustment within 10 days of the shipment date, while Nordstrom counts down 14 days from the order date. Credit card policies have more generous timelines. Citibank tracks 30 days from purchase; MasterCard, 60 days, and Discover, 90 days, Sekar says. It’s also worth assessing the policy limits. Not every purchase or new sale qualifies. “The holes this year are really extraordinary in that they tend to exclude the best sales,” Dworsky says. Sears, for example, won’t adjust prices for competitors’ doorbusters or sales that are available for less than six hours, he says. Toys “R” Us and Walmart won’t if the new sale is a percentage-off deal, while J.Crew only offers adjustments if the item was originally purchased at full price. Auction sites and warehouse clubs are common exclusions. Many retailers won’t even match price drops on their own website if you made the original purchase in store. And often, corporate policies dictate that adjustments are made at the local store manager’s discretion. Dworsky recommends printing out a copy of the retailer’s policy to have on hand. “Expect a fight,” he says. ‘You’ll need to know the policy backwards and forwards.”

[Demeter]

57. Congress Arrested On Manslaughter Charges (YES, IT'S THE ONION--OR PROPHECY!)

http://www.theonion.com/articles/congress-arrested-on-manslaughter-charges%2c30588/

In a stunning development that has left every federal institution reeling, the U.S. government’s legislative branch was arrested this afternoon on 23.3 million separate charges of manslaughter, sources confirmed. Citing numerous lethal actions over nearly two and a half centuries—including negligent health care policies, failure to fund reconstruction on dangerously dilapidated roads and bridges, and repeatedly putting American soldiers in harm’s way in every armed conflict dating back to the War of 1812—authorities handcuffed all 535 members of Congress today and escorted them from the Capitol building amidst a throng of onlookers.

If convicted, prosecutors said, Congress would be officially deemed the most prolific killers in the nation’s history.

“Following a prolonged investigation, we have strong reason to believe the United States Congress is responsible for the deaths of millions of Americans at various times and in various locations since the late 18th century,” Washington, D.C. police lieutenant Art Thompson said at an ad-hoc press conference on the Capitol steps. “While we do not believe these deaths were caused voluntarily by the nation’s legislative branch, we nevertheless intend to prosecute them to the furthest extent of the law.”

“We have set a bail of $2 trillion,” Thompson added.

According to sources, SWAT teams broke down the Capitol building doors at precisely 10:12 this morning after law enforcement agents received a warrant implicating the Congress in multiple American deaths, including those of Maria Davidson of Forth Worth, TX, who died in 1981 from complications during pregnancy after Congress failed to provide birth control under Medicaid; Jeff Wnuk of Salem, OR, who died in 1968 following injuries sustained during the congressionally authorized war in Vietnam; and millions of others. Officers said the nation’s 100 senators and 435 representatives were cooperative but had publicly denied the charges.

“I would like to speak for my fellow lawmakers in saying that these charges are unfounded,” House Speaker John Boehner (R-OH) told reporters as officers led him to an awaiting police cruiser. “Beyond that, on advice of its attorney, Congress has no further comment at this time."

Despite the protestations of both Congress and its legal defense team, prosecutors said the manslaughter case against the legislative body is strong, and may result in significant jail time and fines should the bicameral institution be found guilty.

“From providing substandard health care to American citizens; to poor regulation of potentially lethal products such as cigarettes, assault weapons, and various pharmaceuticals; to embroiling the nation in numerous foreign wars, the case against Congress is really about as airtight as it gets,” prosecutor Derrick Allman explained while presenting a phone-book-sized warrant. “While Congress may be fairly well-connected, I’d say it would take a miracle for a jury of the legislative branch’s peers not to find them guilty as charged."

Local police authorities have been closely monitoring the lawmaking institution’s activities for decades, a source close to the investigation revealed. Officers were first tipped off by the Senate’s failure to pass a law restricting lead paint prior to 1971, a criminal act of negligence that led to untold deaths.

“Once we began pulling the string, we saw that Congress had been wreaking havoc on the American people for centuries,” Lt. Thompson told reporters. “The sheer number of elderly patients who were denied cutting-edge cancer treatment and died as a result was enormous. Add to that recent immigrants who lack any sort of comprehensive health coverage, people who fall between the cracks of the current system, and those who depend on emergency rooms for their primary care, and the number of deaths caused by Congress through the nation’s health care system alone is truly staggering.”

Legal experts said the trial could last for months, as each piece of evidence is presented one by one, from the bill authorizing the Iraq War in 2003 to the medical reports of children exposed to heavy metals at contaminated Superfund sites. However, while Congress collectively faces more than 800 million years in federal prison, the group’s legal team stressed that it plans to contest most, if not all, of the charges.

“Congress is a pillar of our national community and should not be held ultimately responsible for these deaths,” defense attorney Karen Krevat told reporters. “It is our intent to show that Congress acted prudently and in good conscience, and that these deaths were purely accidental."

“Mark my words, Congress will have justice,” Krevat added.

[Demeter]

60. NOT THE ONION: The Recession's Toll: How Middle Class Wealth Collapsed to a 40-Year Low

http://www.theatlantic.com/business/archive/2012/12/the-recessions-toll-how-middle-class-wealth-collapsed-to-a-40-year-low/265743/

I'm about to share a statistic that you should remember every time you think about the Great Recession, and why the recovery has been so painstaking. It's going to illustrate precisely how devastating the downturn was for your typical American family, and the size of the hole we've been trying to dig ourselves out of.

Ready? Here goes: Between 2007 and 2010, the median net worth of U.S. households fell by 47 percent, reaching its lowest level in more than forty years, adjusted for inflation. In other words, middle class wealth virtually evaporated in this country. A good chunk of the population got sucked through a financial wormhole back to the sixties.

Such are the findings of Edward Wolff, an economist at New York University who has produced a paper documenting the Chernobyl-like meltdown of asset values during the recession, and its impact on wealth inequality. To some degree, his work confirms what we've already more or less known; home prices, 401Ks, and the like were demolished during in the recession, and we've been reckoning with the consequences since. In June, the Federal Reserve released its own analysis of household finances, which found that median net worth (which just means a family's assets minus its debts) fell closer to 39 percent from 2007 to 2010. Wolff also uses Federal Reserve data, and approaches the net worth calculation in a slightly different way. But his study is valuable in that it gives us a clear sense of which families were set back, and how far.

In the United States, wealth (again, what people own, minus their debts) tends to be much, much more concentrated than income (what people make). That's not particularly surprising, since the rich have extra cash to stow away in bonds, stocks, and other investments, while the rest of us spend much of our money fulfilling basic needs such as housing and transportation. The rich are frequently well off to start with because they also own pieces their own businesses, which adds to their net worth tally....But Wolff found that during the recession, wealth inequality increased, even as incomes evened out a bit. Why? Because while middle class families saw the value of their possessions collapse dramatically, the wealthy came out comparatively unscathed. You can see that in the graph below via the difference between median (dark blue) and mean (light blue) net worth -- the former declined about half and the latter by around 18 percent.The mean (or average) gets boosted by all those rich households.



AND THE BEAT AND THE BEATINGS GO ON....HAS MORALE IMPROVED YET?
FOR THE 1%, IT CERTAINLY HAS! AFTER ALL, THEY GOT BAILED OUT, REPEATEDLY. AND THEIR COMPETITION HAS BEEN GUTTED...NO UPSTARTS NEED APPLY.

[mahatmakanejeeves]

63. ETA News Release: Unemployment Insurance Weekly Claims Report (12/06/2012)

I was off yesterday, so I didn't post this then.
-- -- -- --

Source: Department of Labor, Employment and Training Administration

Read more: http://www.dol.gov/opa/media/press/eta/ui/eta20122367.htm

UNEMPLOYMENT INSURANCE WEEKLY CLAIMS REPORT

SEASONALLY ADJUSTED DATA

In the week ending December 1, the advance figure for seasonally adjusted initial claims was 370,000, a decrease of 25,000 from the previous week's revised figure of 395,000. The 4-week moving average was 408,000, an increase of 2,250 from the previous week's revised average of 405,750.

The advance seasonally adjusted insured unemployment rate was 2.5 percent for the week ending November 24, a decrease of 0.1 percentage point from the prior week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending November 24 was 3,205,000, a decrease of 100,000 from the preceding week's revised level of 3,305,000. The 4-week moving average was 3,309,000, an increase of 7,750 from the preceding week's revised average of 3,301,250.

UNADJUSTED DATA

The advance number of actual initial claims under state programs, unadjusted, totaled 498,619 in the week ending December 1, an increase of 139,678 from the previous week. There were 528,793 initial claims in the comparable week in 2011.
....

The largest increases in initial claims for the week ending November 24 were in Wisconsin (+5,876), Oregon (+2,328), Ohio (+2,252), Washington (+2,107), and Iowa (+1,262), while the largest decreases were in New Jersey (-23,966), California (-7,053), New York (-6,682), Texas (-6,425) and North Carolina (-2,609).