Weekend Economists and the Lazy, Hazy, Crazy Days June 22-24, 2012

[Demeter]

HAPPY SOLSTICE EVERYBODY! Summer is here. Ignore all those 80+F days of March, the 90+ days of May and early June. It's now official, as of SUMMER SOLSTICE, June 20, 7:09 P.M. EDT.

Of course, because the earth wobbles so much, the "longest day" is more like several days, almost a week. And then we start the inexorable path to darkness and cold and...


But where was I? Oh yes, summer.

Kick back, pour yourself a cool one, and lets eviscerate the fools, knaves and scoundrels.

MAKE HAY (HEY!) WHILE THE SUN SHINES!

[Demeter]

1. NO BANKS DOWN YET--6:50 PM EDT CHECK BACK LATER

I doubt that they would be going for 3 weeks in a row, myself, but you never know....

[Demeter]

2. Germany rubs salt in Greek wounds with soccer defeat

http://news.yahoo.com/germany-rubs-salt-greek-wounds-soccer-defeat-222732512--sow.html

Germany humiliated Greece in the Euro 2012 soccer tournament on Friday, rubbing salt in the wounds of a nation reeling from a dire economic crisis which many blame on Berlin. Greeks were aching for at least a measure of revenge against their euro zone tormentor in the needle match of the tournament's quarter-finals, but it ended as yet another dashed dream with Germany rolling over their underdog rivals 4-2.

The euro zone paymaster gave what many Germans see as a profligate and lazy state yet another lesson, this time on the pitch - perhaps revenge for political headache after headache in a regional debt crisis unleashed by Athens in 2009 that now threatens the survival of the entire common European currency.

In restaurants and bars in Athens, a brief moment of hope when their team equalized with a stunning breakaway goal early in the second half caused ecstatic celebrations and the shouting of insults against Germany, which is widely blamed for the painful conditions of an international bailout.

"That's how they screw you, those who owe you ... shove your loan," the fans chanted.

But they were soon stunned into silence as Germany ran riot with three more goals to establish total domination despite a successful late Greek penalty at the match in the Polish coastal city of Gdansk...Christos Zois, spokesman for the anti-German Independent Greeks party, said on Twitter: "For a few minutes, we dreamed we could renegotiate the bailout. But then we got it rammed down our throat."

[Demeter]

11. Is Europe trying to kick Greece out? by Ezra Klein

http://www.washingtonpost.com/blogs/ezra-klein/wp/2012/06/22/is-europe-trying-to-kick-greece-out-wonkbook/

We last checked in on Greece in the direct aftermath of the country’s election, where New Democracy, the pro-bailout party eked out a slim win. Since then, ND has managed to overcome the first potential hurdle, forming what looks to be a stable government. For now.

Which means it’s time to move onto the next set of negotiations that could destroy the euro zone and plunge the world into a miserable recession: the renegotiation of the Greek bailout. The expectation was that if the Greeks voted the “right” way — that is to say, voted for New Democracy, which wanted to largely abide by the bailout, rather than for Syriza, which wanted to kick Germany in the shins and walk away — the Powers That Be in the euro zone would reward the Greeks by loosening the terms of the agreement.

Outside of Hellenic Stock Exchange

The renegotiated terms could include more time for Greece to hit its deficit targets, lower interest rates on their loans, more money to bolster their budget, or even some kind of external stimulus. France is open to any or all of those. Germany, the Netherlands, and some of the other Northern European nations say they are not.

If the Northern Europeans prevail, the odds that Greece will manage to keep to its timetable are low, and the odds that New Democracy and its coalition will survive are infinitesimal. Voters do not tend to like parties that aren’t able to deliver anything more than a ringing endorsement of crushing poverty at the hands of more powerful countries. The Northern Europeans know that, of course. So you might ask why they seem so intent on cracking Greece in half. One plausible story I’ve begun to hear is that an increasing number in the euro zone actually want to drive Greece out. The idea, basically, is that Greece is such an unsalvageable basket case, and its economy is so much weaker than anyone else’s, and its governments have been so much more dishonest and difficult to deal with, that solving Greece’s problems would mean rewarding irresponsibility while not solving them would mean an endless cycle of crisis. At some point, it’s better just to cut them off and cauterize the wound...

[Demeter]

13. Maestro, if you please!

[Demeter]

20. “The Eurozone’s Strategy is a Disaster”

http://www.nakedcapitalism.com/2012/06/the-eurozones-strategy-is-a-disaster.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

YVES...we’ve had disappointing reports out of China, a bad Philly Fed manufacturing report, a less than stellar initial jobless claims report, and not so hot housing data this AM, and more and more signs of inability to bail out the sinking Titanic of the Eurozone (a meaningless announcement compounded by continued focus on ongoing German court challenges to more aggressive support of rescues. Even if these cases lose, any uncertainty and delay has the potential to accelerate the ongoing bank run out of periphery countries).

This post from VoxEU is a good short form summary of how the Eurozone got into this fix. Its last para takes an unduly scolding tone that may turn off some readers, and does not reiterate the point made at the top, which is that the ECB needs to step up in a serious way to stem the crisis. Other remedies will take too long to implement and thus cannot change the trajectory under way....

*******************************************************************************

By Charles Wyplosz, Professor of International Economics at the Graduate Institute, Geneva; Director of the International Centre for Money and Banking Studies. Cross posted from VoxEU

************************************************************************************

The EZ rescue strategy adopted in May 2010 failed to restore debt sustainability, avoid contagion, or reduce moral hazard. This column argues that a volte face is needed. The debt of Greece, Portugal and Italy – and perhaps Ireland, Spain and France as well – must be restructured to restore growth and end the crisis. All EZ nations should pay since their leaders’ decision to violate the Maastricht Treaty’s no-bail out clause is what brought us here.

Chancellor Angela Merkel has sent word that Germany cannot save the euro. She is right.

From the very start of the Eurozone crisis, it was clear that a domino game was under way and that a highly indebted German government should not be seen as the residual saviour. But keeping the euro will be costly and Germany will have to share the burden.

The solution will have to combine debt structuring and ECB lending in last resort to banks and governments. Angela Merkel needs now to lift the German veto....MORE

[Demeter]

3. Market Overview

The stock market ended the week 0.6% below where it began. That is really the result of a dramatic one-day drop, though.

Broad market trade began the week in a relatively choppy, lackluster manner. Participants generally shrugged off news that early election polls in Greece pointed to a preference for the country's pro-austerity party. The apparent indifference came as precarious conditions in Spain took the yield on the country’s 10-year Note back above 7%.

Stocks advanced 1% on Tuesday for their strongest performance of the week as market participants prepared for announcements from the Fed scheduled for the following day. The effort gave the stock market its first finish above its 50-day moving average in more than a month...

http://finance.yahoo.com/marketupdate/overview

[Demeter]

4. Prisons, Privatization, Patronage By PAUL KRUGMAN

http://www.nytimes.com/2012/06/22/opinion/krugman-prisons-privatization-patronage.html



Over the past few days, The New York Times has published several terrifying reports about New Jersey’s system of halfway houses — privately run adjuncts to the regular system of prisons. The series is a model of investigative reporting, which everyone should read. But it should also be seen in context. The horrors described are part of a broader pattern in which essential functions of government are being both privatized and degraded.....You might be tempted to say that it reflects conservative belief in the magic of the marketplace, in the superiority of free-market competition over government planning. And that’s certainly the way right-wing politicians like to frame the issue. But if you think about it even for a minute, you realize that the one thing the companies that make up the prison-industrial complex — companies like Community Education or the private-prison giant Corrections Corporation of America — are definitely not doing is competing in a free market. They are, instead, living off government contracts. There isn’t any market here, and there is, therefore, no reason to expect any magical gains in efficiency.

And, sure enough, despite many promises that prison privatization will lead to big cost savings, such savings — as a comprehensive study by the Bureau of Justice Assistance, part of the U.S. Department of Justice, concluded — “have simply not materialized.” To the extent that private prison operators do manage to save money, they do so through “reductions in staffing patterns, fringe benefits, and other labor-related costs.” So let’s see: Privatized prisons save money by employing fewer guards and other workers, and by paying them badly. And then we get horror stories about how these prisons are run. What a surprise!

So what’s really behind the drive to privatize prisons, and just about everything else?

One answer is that privatization can serve as a stealth form of government borrowing, in which governments avoid recording upfront expenses (or even raise money by selling existing facilities) while raising their long-run costs in ways taxpayers can’t see. We hear a lot about the hidden debts that states have incurred in the form of pension liabilities; we don’t hear much about the hidden debts now being accumulated in the form of long-term contracts with private companies hired to operate prisons, schools and more. Another answer is that privatization is a way of getting rid of public employees, who do have a habit of unionizing and tend to lean Democratic in any case.

But the main answer, surely, is to follow the money. Never mind what privatization does or doesn’t do to state budgets; think instead of what it does for both the campaign coffers and the personal finances of politicians and their friends. As more and more government functions get privatized, states become pay-to-play paradises, in which both political contributions and contracts for friends and relatives become a quid pro quo for getting government business. Are the corporations capturing the politicians, or the politicians capturing the corporations? Does it matter? Now, someone will surely point out that nonprivatized government has its own problems of undue influence, that prison guards and teachers’ unions also have political clout, and this clout sometimes distorts public policy. Fair enough. But such influence tends to be relatively transparent. Everyone knows about those arguably excessive public pensions; it took an investigation by The Times over several months to bring the account of New Jersey’s halfway-house-hell to light.

MORE DETAIL AT LINK

[Demeter]

5. Is Grover Norquist’s Steel Grip On The GOP Finally Slipping?

http://tpmdc.talkingpointsmemo.com/2012/06/panic-time-grovers-trips-to-capitol-hill-raise-questions-about-his-influence.php?ref=fpa

Grover Norquist is the most tenacious anti-tax warrior in the conservative movement. No lobbyist whips Republican elected officials into line as effectively. Privately, both Republicans and Democrats admit that his Taxpayer Protection Pledge is the single biggest obstacle to effective governing in Washington.

But as frustration over congressional gridlock gives way to panic over fiscal armageddon in January, more and more Republicans are publicly breaking ranks with the anti-tax movement and publicly disavowing their pledge never to raise a cent of new revenue. At the same time, Norquist can boast accurately that despite deadly politics, and dangerous legislative brinksmanship, Republicans haven’t yielded — and thus 2011 passed with zero dollars in new tax revenue paired with trillions of dollars of cuts to federal programs.

Which raises a natural question: Is Republican commitment to Grover’s cause so deep that they’d rather plummet the country to the bottom of the fiscal cliff than allow taxes to rise, or will they hit the brakes and throw Grover over the edge instead?

Several days ago, multiple Democratic sources alerted me and other reporters to an event House Republicans — conservatives and tax bill writers — had planned for Thursday in the Longworth House Office Building with the man himself. He was invited to answer questions about the pledge nearly every member of the conference had signed. If the pledge is as straightforward as Grover insists, his visit suggests some Republicans are seeking flexibility ahead of the rough fight awaiting them at the end of the year.

“I understand that Mr. Norquist is going to come up here and he’ll have a conversation about [the pledge],” admitted House Speaker John Boehner. “I’ve been around the political process for a long time. I’ve never voted to raise taxes. But we’ve got a big job to do. I’m not interested in raising taxes. But they can discuss whether loophole closings are tax increases — I hope they resolve it all actually.”

DOES THE GOP NOT BELIEVE IN FREE WILL, THEN? OR ARE THEY ALL ANDROIDS?

[Demeter]

7. Romney’s Bain Capital invested in companies that moved jobs overseas

http://www.washingtonpost.com/business/economy/romneys-bain-capital-invested-in-companies-that-moved-jobs-overseas/2012/06/21/gJQAsD9ptV_story.html?hpid=z1

Mitt Romney’s financial company, Bain Capital, invested in a series of firms that specialized in relocating jobs done by American workers to new facilities in low-wage countries like China and India.

During the nearly 15 years that Romney was actively involved in running Bain, a private equity firm that he founded, it owned companies that were pioneers in the practice of shipping work from the United States to overseas call centers and factories making computer components, according to filings with the Securities and Exchange Commission.

While economists debate whether the massive outsourcing of American jobs over the last generation was inevitable, Romney in recent months has lamented the toll it’s taken on the U.S. economy. He has repeatedly pledged he would protect American employment by getting tough on China.

“They’ve been able to put American businesses out of business and kill American jobs,” he told workers at a Toledo fence factory in February. “If I’m president of the United States, that’s going to end.”

[Demeter]

8. Ladies and Gentlemen, as Promised, the Beach Boys! YAY!

[Demeter]

6. Drone industry becomes a booming business

http://rt.com/usa/news/drone-business-defense-million-422/

EMPHASIS ON THE "BOOM", NO DOUBT

Drones are set to take over US skies soon, and there is growing concern the public will lose their privacy to these spy planes.

The winners are the drone makers, and much of the reason for that is the aggressive and powerful lobbying by the defense and aerospace industry. The drones of today have revolutionized modern warfare and are known for their seek and destroy missions over Afghanistan and Pakistan. The drones of tomorrow, however, will be humming over American homes.

“There may be up to 30,000 drones flying in US skies by 2020, which is a huge number. Basically, one in every town,” said Trevor Timm from the Electronic Frontier Foundation.

Now that Congress and the president have cleared the way for spy planes to fly in US skies, defense and aerospace firms are pushing their weight in D.C. in hopes of cashing in on the expected drone business boon.

“Right now the global market is worth $6 billion but it’s supposed to double to over $11 billion within the next decade,” said a Andrea Stone, reporter with the Huffington Post.

In 2001, the Defense Department had 90 drones. Just eleven years later, though, and it has an arsenal of more than 9,500 remotely piloted aircraft. With wars winding down overseas, most of those unmanned aircraft will be used domestically for surveillance and disaster assistance, raising safety and privacy concerns.

“Why do you need drones against your citizens? That’s military weaponry? You’re police is not your military and we’ve lost that distinction,” said peace activist Maureen Cruise. “They’re the weapons manufacturers and they know we need war in order to be profitable so they buy Congress,” said Cruise as she demonstrated outside of defense contractor Raytheon.

[Demeter]

16. Drone strikes threaten 50 years of international law, says UN rapporteur

http://www.guardian.co.uk/world/2012/jun/21/drone-strikes-international-law-un

US policy of using drone strikes to carry out targeted killings 'may encourage other states to flout international law'

The US policy of using aerial drones to carry out targeted killings presents a major challenge to the system of international law that has endured since the second world war, a United Nations investigator has said.

Christof Heyns, the UN special rapporteur on extrajudicial killings, summary or arbitrary executions, told a conference in Geneva that President Obama's attacks in Pakistan, Yemen and elsewhere, carried out by the CIA, would encourage other states to flout long-established human rights standards.

In his strongest critique so far of drone strikes, Heyns suggested some may even constitute "war crimes". His comments come amid rising international unease over the surge in killings by remotely piloted unmanned aerial vehicles (UAVs).

Addressing the conference, which was organised by the American Civil Liberties Union (ACLU), a second UN rapporteur, Ben Emmerson QC, who monitors counter-terrorism, announced he would be prioritising inquiries into drone strikes...

MUCH MORE...TOOK THEM LONG ENOUGH

ANOTHER SIGN THAT WE WON'T HAVE OBAMA TO KICK AROUND MUCH LONGER--HE'S LOST THE CHARM

[Demeter]

17. WAKE THE WORLD

[Po_d Mainiac]

22. Gonna have anudder term for the things

Skeet!

[westerebus]

45. Goose guns gonna be mighty popular.

Hell on the shoulder though.

Now I'm thinking weather balloons and nylon fish nets.

Just needs a little duck tape so I can stick on some bike reflectors and a few mirrors and may be ... ah, never mind..

[Demeter]

46. We have to think about stuff like that to be safe in our own back yards

Disgusting.

I think the Iranians used computer hacking to bring down their prize. The GPS datastream....shouldn't be too hard. If the Military/Industrial complex is as it was, should take at least a decade to fix that little problem.

[westerebus]

68. Shhhhh. Don't tell anybody but..,

How did they got that Flame virus into the man in tan's computers?

think popular brand of condoms...

[Po_d Mainiac]

58. Agreed. 10ga 3.5in mags are kinda hard to warm up to

even with the pussy cushion on the stock.

Perhaps a mini RC Hindenberg stuffed with Mg chaffe and inflated with C2-H2

Standard 1034 12v bulb (globe removed) to provide the initial excitement
.....

More fun than feeding alka-seltzer to dump ducks.

[westerebus]

67. I like the way you think.

Battery operated bug zappers? What will they think of next?

[Demeter]

9. More Student Debt, Please: Why College Students Don't Borrow Enough HE'S SERIOUS (GET THE NET)

http://www.theatlantic.com/business/archive/2012/06/more-student-debt-please-why-college-students-dont-borrow-enough/258205/

If more students took out loans, they might be more likely to stay in school...AND IF MY GRANDMOTHER HAD WHEELS, SHE'D BE A WAGON.

U.S. undergraduates aren't deep enough in debt. They should take out more loans.

It sounds inconceivable. Outstanding student loans have shot up to around $1 trillion, a roughly four-fold increase since 2003. Thirty-eight percent of undergraduates now borrow for school, and more than half of full-time students do so, according to the most recent Department of Education statistics. The default rate, meanwhile, is increasing.

Yet, for all the real concerns we should have about the weight college debt places on young people, it's also possible that encouraging more students to borrow would help solve one of the most vexing problems in American higher education: Our terrible graduation rates.

The sad fact is that less than half of all Americans who start college ever finish, which leaves the United States dead last among the industrialized countries tracked for the Organization for Economic Cooperation and Development. Our dropout rates are worst at community colleges and other two-year schools, but only about 56 percent of students seeking a bachelor's degree make it to commencement within six years.

For the country that invented modern higher education, that's a pretty embarrassing record.

OF COURSE, THE FACT THAT OTHER NATIONS PAY THEIR KIDS TO GO TO SCHOOL HAS NOTHING TO DO WITH IT...

[Demeter]

10. Have we a tune for that?

&feature=related

[Demeter]

12. Encore!

[Demeter]

14. The Long, Hot Summer of Work By Froma Harrop

Since 1973, worker productivity has risen 80 percent, while median hourly compensation (wages and benefits, adjusted for inflation) has gone up less than 11 percent. That means most workers these days are producing more in the same time, but without appropriate rewards either in money or shortened hours. Senior executives and Wall Street grabbed most of the return from higher productivity.


http://www.nationofchange.org/long-hot-summer-work-1340374317

...Problem is, few of us worker bees will be packing a steamer trunk of volumes to while away the lazy afternoons. Average working Joes now put in a month more of labor a year than they did 25 years earlier, and much of that time comes out of summer vacation's hide. Of course, police, waiters and carousel operators have always been on call in the summer. But nowadays, office drones find themselves spending August at the same desk they spent January. Even those with decent vacation time may fear taking it, lest they miss an opportunity to make their case in a midsummer downsizing.

How did we get here? Benjamin Kline Hunnicutt, professor of leisure studies at the University of Iowa (yes, there is such a thing), explains.

The early part of the 20th century saw huge leaps in productivity, whereby workers could churn out the same amount of goods and services in less time. Utopian big thinkers predicted a four-hour workday in the not-distant future. More modestly, organized labor began agitating for a 40-hour week. Industrialists at the time said: "Hey wait a minute. We're shoving truckloads of new products out the factory door. Toasters, refrigerators, automobiles. Who is going to buy our stuff if the workers — rather than putting in the hours to make more money — go fishing, instead?" Some accused unions of trying to limit production.

Thus was born the "New Economic Gospel of Consumption." Advertising fueled the demand.

An example of a modern practitioner would be the neighbor working two jobs to pay off credit cards and an extravagant mortgage. Note that the conveyor belt of new consumer products has not slowed. Many are relatively recent inventions that we can't even see — data plans for iPads and cellphones, cellphone service or the Cadillac package of digital cable channels.

All-work, all-the-time was not a cemented virtue in our early culture, according to Hunnicutt. Moral authorities before the 1920s believed that a reduction in labor would lead to "human betterment." There would be more time for family, community service and spiritual growth. As a further blessing, workers could use the freed hours to engage in the craftsmanship that the machine age took away....

[Demeter]

15. Get away from it all

[Demeter]

18. Next time you fly, wear your 4th amendment T-Shirt!

http://cargocollective.com/4thamendment/Metallic-Ink-Printed-T-Shirt

[Demeter]

19. Gas prices could hit $2.50 a gallon by November, analyst predicts

AND DEMOCRATS WOULD STILL LOSE IN AN AVALANCHE

http://www.bizjournals.com/southflorida/blog/morning-edition/2012/06/gas-prices-could-hit-250-a-gallon-by.html?ana=twt

Gas prices have been dropping steadily in Florida since April, and according to at least one analyst, that may just be the tip of the iceberg.

Energy analyst Philip Verleger told Bloomberg TV that U.S. drivers could see $2.50-a-gallon gas prices by November, the Boston Business Journal reports.

The cause is two-fold, he said: The price of oil has fallen sharply recently due to overproduction in Saudi Arabia, and falling demand due to Europe’s economic slowdown is also a factor.

The average gas price in Fort Lauderdale dropped to $3.41 last week, the lowest in the tri-county area, according to the AAA Fuel Gauge Report. Miami's average fuel price fell to $3.43 and the average gas price in the West Palm Beach area dropped to $3.44.

[Demeter]

21. SWEET DREAMS, ALL

I'm trying to get back on some kind of schedule...see you in the morning!

[Demeter]

23. Bank of America Settlement on Customer Overbilling Proves Bank Crime Pays

http://www.nakedcapitalism.com/2012/06/bank-of-america-settlement-on-customer-overbilling-proves-bank-crime-pays.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29



Here’s the Bloomberg story on one of today’s regulatory theater announcements:

Bank of America Corp.’s Merrill Lynch wealth-management unit was fined $2.8 million by the Financial Industry Regulatory Authority for overbilling customers by $32.2 million over an eight-year period.

Merrill Lynch charged the fees to about 95,000 accounts between April 2003 and December 2011, FINRA said in a statement today. New York-based Merrill Lynch, which was acquired by Bank of America in 2009, lacked an adequate supervisory system to ensure that customers were billed in accordance with their contracts and disclosure documents, the regulator said.

Now of course, the bank says this was all a mistake, but it’s pretty certain the way Finra found about about it was via customer complaints, since the average amount pilfered per customer was under $400. This means that even if it was an initially error, Merrill and later BofA refused to correct it when alerted (customers who noticed would presumably try to get the charge reversed, and only then try other routes).

One also assumes the money was disgorged.

But let’s make some simple assumptions. Since this took place over eight years, let’s assume the average amount outstanding of money the bank had that it wasn’t entitled to was half that, or $16 million. This was free money, absolutely no cost of funds. If you assume even a low rate of return, roughly 2% or higher, and factor in that the fine was paid in arrears, and a full year after the practice stopped, the fine wasn’t even a punishment. It’s almost certain to be less than the money Merrill/BofA made from this abuse (alternatively, you could use cost of funds, which has plunged in the wake of the crisis, but was a meaningful positive number prior to when the Fed started implementing ZIRP).

So much for regulatory competence.

[Demeter]

24. We've been down this path many times before

“When a government is dependent upon bankers for money they, and not the leaders of the government, control the situation, since the hand that gives is superior to the hand that takes."

Napoleon Bonaparte

[Demeter]

25. Michael Hudson/Jeffrey Sommers: Latvia is No Model for Austerity

http://www.nakedcapitalism.com/2012/06/michael-hudsonjeffrey-sommers-latvia-is-no-model-for-austerity.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

Michael Hudson and Jeffery Sommers, a distinguished professor at the University of Missouri-Kansas City and associate professor at the University of Wisconsin-Milwaukee respectively, who have both advised members of Latvia’s government on alternatives to austerity. They are also contributors to the forthcoming book by Routledge Press: The Contradictions of Austerity: The Socio-Economic Costs of the Neoliberal Baltic Model. Cross posted from the Financial Times by permission of the authors

***********************************************************************************

Austerity’s advocates depict Latvia as a plucky country that can show Europe the way out of its financial dilemma – by “internal devaluation”, or slashing wages. Yet few of the enthusiastic commentators have spent enough time in the country to understand what happened. Its government has chosen austerity, its people have not. Finding no acceptable alternative, much of the labour force has elected to emigrate. This is a major factor holding down its unemployment rate to “just” 15 per cent today. Latvia is not a model for austerity in Greece or anywhere else. Both the impression that neoliberal policy has been a success and the claim that Latvians have voted to support this failed model are incorrect. Latvia’s one year of solid economic growth since its economy plunged by 25 per cent in 2008-10 is billed as a success. Then, unemployment soared above 20 per cent as the shutdown of foreign capital inflows (mainly Swedish mortgage loans to inflate its real estate bubble) left Latvia with a deep current-account deficit. It had to choose between devaluation or maintaining the euro peg.

It chose the latter in order to proceed towards euro accession. To meet the eurozone criteria it cut public sector wages by 30 per cent, driving down overall wage levels and consumption to match its low labour productivity. The doctrine was that this shock therapy and poverty would soon restore prosperity. What enabled Latvia to survive the crisis were EU and IMF bailouts – whose repayments will soon fall due. Relatively low public sector debt (9 per cent of gross domestic product at the start of the crisis) also provided some protection from bond traders. Latvia’s problem was mostly private sector debt, especially mortgage debt, which is secured not only by property but by the personal liability of entire families of joint signatories. The bank insurance agency insisted on this measure as it saw unaffordable housing prices being inflated by reckless bank lending. (Its job was to protect the banks, not the economy.)

The resulting austerity programme is anything but popular. Latvia’s parliament often polls approval ratings in the single-digits. Yet the government has survived two elections. How is one to read this? Chiefly by ethnic politics. The biggest party opposing the austerity programme (Harmony Centre) largely represents ethnic Russians and had no chance of winning given its focus on rights for Russian speakers. The smaller parties run by post-Soviet oligarchs also are seen as being in league with Russia and are widely resented for fiscal imprudence during the boom years, when oligarch-controlled parties were part of the governing coalition. So the only political force left is the “austerians”. While most voters dislike their economic policy, a majority are convinced that they are best able to resist Russia’s embrace. All other issues come a distant second for Latvian voters. That said, Latvians have protested against austerity. In January 2009, in the dead of winter, 10,000 protested in Riga. Teachers, nurses and farmers held demonstrations of their own. The police were called to suppress protests over the closure of a hospital. After these protests subsided, Latvians resigned themselves and began to emigrate. Demographers estimate that 200,000 have left in the past decade – nearly 10 per cent of the population – at an accelerating rate that reflects the austerity being inflicted.

MORE GLOOM

[Demeter]

26. Russia has no interest in success of Iran nuclear talks

http://soberlook.com/2012/06/russia-is-not-interested-in-iran.html

When it comes to the ongoing (and so far fairly ineffective) Iran nuclear talks, it is likely that the Russians simply do not want to see a resolution at this stage. The Russians have successfully inserted themselves in the middle of these talks and will probably do whatever they can to stall them. Why? The chart below gives us the answer. It is the breakeven oil price for various exporters - the all-in cost to deliver a barrel of oil to the market. And at current Brent prices Russia's oil industry is losing money.



Source: DB

Euronews: - The slump is bad news for energy-reliant Russia, with Brent the reference for its oil prices. This remains the case despite Putin’s expressed desire to cut the country’s dependence on energy exports :

http://www.euronews.com/2012/06/22/oil-price-slump-hits-energy-reliant-russia/

The last thing the Russians need is for the Iran sanctions to be lifted any time soon. In fact they could probably benefit from some escalation of tensions. Russia obviously walks a fine line between wanting higher energy prices, but not so high that it will choke global growth, which is already extremely fragile. But they absolutely can not afford to have oil prices drop much further.

[xchrom]

27. a Most Happy Saturday to all!

[DemReadingDU]

29. I was just reading somewhere, we should all party like hedonists

and why not, we all die anyway. Live it up, have a great day!

[Demeter]

33. We need some music for that picture

[xchrom]

34. sigh...

[Tansy_Gold]

59. Or. .. .

&feature=related

[Demeter]

35. I spent the morning working like a dog

I transplanted two large bushes (which I thought was only one--surprise!) into hard clay, weeded a bit, pruned, and hauled home most of the paper I'll be delivering tonight. It's 9 am and I have had enough exercise for the day.

[DemReadingDU]

38. That sounds more like a whole day of work!

Can't say I've done anything strenuous.
Well, I did take my 2 dogs for an early morning walk.
So lovely this morning!

[Demeter]

40. Well, since I'm in no shape to do anything more, I guess it was

Maybe food, swimming, a nap, and aspirin and alcohol, and I can live another day....

[Fuddnik]

44. I've already sprained my brain this morning.

Re-wiring a home theater system. Trying to remember where all these connections go, and wires up the wazoo. And the worst part is I'm going to take it back apart next week again when we get a new receiver, and do it all over again. I just did it now, so that I could test a pair of speakers that we're going to put outside on the lanai. The current receiver doesn't have a "speaker A, speaker B" switch, so you can switch between inside and outside.

For now, I'm going to spend some quality time with my favorite barmaid, and come home and do some electrical work. That should be safe!

[Fuddnik]

42. You mean we don't?

[DemReadingDU]

43. LOL!

[DemReadingDU]

28. Indiana Tim Durham found guilty of 12 counts, including wire and securities fraud

6/20/12 Tim Durham found guilty of 12 counts, including wire and securities fraud

The men that ran Fair Finance — Tim Durham, James F. Cochran and Rick Snow — were convicted in federal court of conning him and 5,000 other investors out of $200.million. They could spend the rest of their lives in prison and pay $250,000 in fines.

The jury in U.S. District Court in Indianapolis deliberated for about eight hours Wednesday before convicting Durham, 49, of all counts the three men faced: 10 counts of wire fraud, one count of securities fraud and one count of conspiracy to commit wire and securities fraud, all felonies.

Cochran, 56, and Snow, 48, were found guilty of the conspiracy and securities fraud counts, as well as some of the wire fraud counts.

The conspiracy count carries a sentence of up to five years in prison, and all of the other counts carry sentences of up to 20 years in prison.

Durham and Cochran were accused of using investors’ money to make loans to themselves, their other companies, and their families y and friends. Snow was accused of helping them hide the bad loans in financial documents.

Durham, who grew up in the small town of Seymour...

more...
http://www.indystar.com/article/20120620/NEWS/120620058/Tim-Durham-found-guilty-12-counts-including-wire-securities-fraud



One of my brothers was in the same class growing up as Durham. I never knew him, much younger than me.

Seymour also famous for John Mellencamp, another classmate of another sibling.


Small world.

[Demeter]

36. Tansy! Another for the wall of shame!

[Tansy_Gold]

60. Woo Hoo!

I used to know some people from Seymour, too!

[xchrom]

30. CHINA EXPERT: China's Situation Is Like The End Of The USSR, And No One Wants To Be Gorbachev

http://www.businessinsider.com/china-expert-no-one-wants-to-be-the-gorbachev-of-china-2012-6


From L to R: Roderick MacFarquhar, Ian Johnson, Orville Schell.

Last night the Asia Society, in conjunction with the New York Review of Books, hosted a speaker series with guest speakers Ian Johnson – Beijing-based writer and foreign correspondent for the Wall Street Journal – and Roderick MacFarquhar, a Professor of History and former Director of the John King Fairbank Center for East Asian Research at Harvard University. The session was moderated by the Director of the Center on U.S.-China Relations at the Asia Society in New York, Orville Schell.

The panel topic was, "How Stable is China: Can Its Economic Miracle Continue Under Its Current Political System?"
In the process of answering that question, three things were made very clear: no one is quite sure what China means anymore, no one is quite sure how much China is making progress, and no one is quite sure where China's power lies.

Johnson started by explaining that, "during the leadership of Deng Xiaoping, China meant wealth and prosperity. With the opening up of the world, and especially through his mandated special economic zones (SEZ's), people were able to get rich extremely quick."


Read more: http://www.businessinsider.com/china-expert-no-one-wants-to-be-the-gorbachev-of-china-2012-6#ixzz1ycQoc7px

[Demeter]

32. CHINA would quote a famous Vulcan: "I've been dead before."

You can't make a billion plus people disappear like that.

[xchrom]

31. Noonan rules out tax on financial transactions {ireland}

http://www.irishtimes.com/newspaper/finance/2012/0623/1224318510607.html

MINISTER FOR Finance Michael Noonan said Ireland will not adopt a new European tax on financial transactions. Under Denmark’s presidency of the EU, talks were set in train to introduce such a tax in a limited number of countries.

Although the Minister left the door open to participate in a slimmed-down tax scheme, he made it clear to his EU counterparts that Ireland would not adopt a full-blown transaction tax along the lines proposed by the European Commission.

“The proposals being made are not acceptable to us, in particular if they are applied to fewer than 27 [/[member states],” Mr Noonan said in a public debate with other ministers in Luxembourg. “We would look in detail at any proposals that are developed but at the moment we wouldn’t participate.”

He noted Ireland already imposes stamp duty on share transactions and said the Government was not convinced of the case to go beyond that point. The commission’s proposal would impose a tax on a much wider variety of transactions, including trades in financial derivatives.

[Demeter]

37. It's the American Way!

[Demeter]

39. Japan playing with fire - unsustainable debt burden FROM NOVEMBER

http://soberlook.com/2011/11/japan-playing-with-fire.html

Back in 2009 we discussed the rising leverage of Japan's public sector that seemed unsustainable. Today we find the situation of Japan's debt continuing to deteriorate in the face of increasing concerns about sovereign debt globally. It is a sharp lesson for the US as the dynamics of the two nations' paths are not significantly different.

The gross debt to GDP ratio has risen to 220% in 2010 (IMF), compared to say Italy at 119% in 2010. The argument one hears is that Japan is "different". It supposedly has high savings rate and JGBs are mostly held internally. But that assumption is about to be challenged.

First of all the high savings rate in Japan is a myth. Even though the overall private savings rate is high, the bulk of that comes from the corporate sector instead of households. As corporations de-lever, they are building cash reserves, but households are actually struggling.

http://2.bp.blogspot.com/-GhS4teGk_HM/TtEwl-93glI/AAAAAAAABq8/Y7LDTRAjIE4/s320/Japan+Household+vs+Corporate+Savings.png


From the G20 report:

Stagnating household disposable income has been accompanied by a rising consumption share of disposable income and declining saving among younger households, which has reinforced dissaving done by elderly households.

Japan's extremely restrictive immigration policy has sharply impacted the nation's demographics, accelerating the aging of the population. That's another lesson for the US - restricting immigration with an aging baby boomer population is a recipe for disaster. The chart below shows projected numbers of the elderly as percentage of the overall population (source: the IMF G20 Report - below).



MUCH MORE GRAPHIC PORN AT LINK

[Demeter]

41. Star Guide

As if there weren't enough signs of a historical shift in our world already -- bank failures, Occupy movements, environmental threats and economic uncertainty -- today's astrological news is the biggest sign of them all. Tomorrow, Uranus is square Pluto! And by "big" I mean, this is just the beginning of a whole new age!

This transformative planetary square-off is just the first of seven encounters between now and 2015. The last time this happened was between 1932 and 1934. The world faced redefining wars, economic depression and invention of the atomic bomb. Needless to say, we survived, thrived, and came out stronger; as we will again, but not without a little reflection and intention.

Oh Joy, my day is complete for the next 3 years....

[Demeter]

47. US HOUSING MARKET ROUNDUP

Five reasons 2012 will be the start of US housing recovery JANUARY

http://soberlook.com/2012/01/five-reasons-2012-will-be-start-of-us.html

1. Housing inventory levels have tightened considerably:

A. Existing homes for sale number is near the long-term average after the revision.

http://1.bp.blogspot.com/-0hGu6-LlNzY/TxBgFXnT4sI/AAAAAAAACoQ/LfKvrEMsQO4/s1600/Existing+homes+for+sale.png

Single Family home sales (millions, annualized, source: Capital Economics)

B. The number of unsold homes (new and existing) as a fraction of the population in the US is at a 7-year low. As household formation picks up, so will the demand for homes.



Total number of unsold homes as % of population (Bloomberg)

C. Housing starts continue to stay subdued with only limited inventory added.



Single family housing starts (Bloomberg)

2. Home sales are stabilizing in spite of QE2 ending last summer.


http://2.bp.blogspot.com/-pLTHvhKZy5Y/TxBeR0NahAI/AAAAAAAACoA/T36QvzMyK38/s1600/US+existing+home+sales.png

Existing home sales (Bloomberg)
3. Downpayment required on new mortgages is back down to 20% versus around 25% in 2010.
Loan-to-value on new mortgages (Capital Economics)

http://3.bp.blogspot.com/-6so6kgFyIIs/TxBYNJeuf3I/AAAAAAAACnw/tBmIGdMUGZA/s1600/Downpayment+on+home+purchases+-+loan+to+value.png

4. New mortgage payment affordability is now at best levels in recent history.

http://4.bp.blogspot.com/-sVOHkfuJ6Jc/TxBezxaaTHI/AAAAAAAACoI/7d1L2-K1ZpY/s1600/Monthly+mortgage+payments+as+percent+of+median+income.png

New mortgage monthly payment as % of median income (Capital Economics)
5. The market is telling us recovery may already be under way. The chart below shows the share price history of Hovnanian Enterprises, a company that builds single-family homes. The market is anticipating improved demand for homes.



HOV share price vs SP500

[Demeter]

48. US housing: shadow supply meets shadow demand

http://soberlook.com/2012/06/us-housing-shadow-supply-meets-shadow.html

One of the negative economic surprises this morning was the existing home sales number which dropped 1.5% in May. Not a real surprise, right? Slowing economy is resulting is slower sales. But it turns out there is something else afoot here. According to NAR, sales have slowed because of housing supply shortages.

NAR: - Limited supplies of housing inventory held back existing-home sales in May, but sales maintained a strong lead over year-ago levels and home prices are on a sustained uptrend in all regions, according to the National Association of Realtors.

Total existing-home sales1, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, declined 1.5 percent to a seasonally adjusted annual rate of 4.55 million in May from 4.62 million in April, but are 9.6 percent above the 4.15 million-unit pace in May 2011.

Lawrence Yun, NAR chief economist, said inventory shortages in certain areas have been building all year. "The slight pullback in monthly home sales is more likely due to supply constraints rather than softening demand. The normal seasonal upturn in inventory did not occur this spring," he said. "Even with the monthly decline, home sales have moved markedly higher with 11 consecutive months of gains over the same month a year earlier."

There are broad-based shortages of inventory in the lower price ranges in much of the country except the Northeast, and in the West supply is extremely tight in all price ranges except for the upper end.

Is that possible? What happened to the "shadow" housing inventory ("millions" of homes)?

NAR: - "Realtors in Western states have been calling for an expedited process to get additional foreclosed properties onto the market because they have more buyers than available property," Yun added. Widespread inventory shortages also are found in much of Florida.

Is the shadow demand finally catching up with the supply? House prices for actual transactions are indeed showing signs of improvement. FHFA House Price Index was up again, an increase of 0.8% for May.

Source: JPMorgan

JPMorgan: - The FHFA house price index rose 0.8% samr in April and is up a cumulative 3.1% over the past six months. The more widely followed Case-Shiller house price index is out next Tuesday. House prices are firming after an extended post-homebuyer tax credit downleg.

We are still getting hate mail for this post on US housing from the beginning of the year. But the data above is becoming more difficult to argue with.

[Demeter]

49. Low Rate of Household Formation Hurting Housing Market

http://news.firedoglake.com/2012/06/21/low-rate-of-household-formation-hurting-housing-market/



A new report by the US Census shows why it’s going to be so difficult to get a housing recovery going. We already have seen that the 9 million families locked out of the market by virtue of a recent delinquency or foreclosure dampens supply. The up to 16 million families who are underwater have almost no chance at being “step-up” buyers, purchasing a bigger home or a home closer to a new job. The only way to generate demand, then, would be to have a run of first-time homebuyers with good credit, typically young people just getting into the housing market. But the Census report shows that household formation just isn’t happening these days:

This research defines a shared household as a household with at least one resident adult who is not enrolled in school and who is neither the householder, nor the spouse or cohabiting partner of the householder. In spring 2007, there were 19.7 million shared households. By spring 2010, the number of shared households had increased by 11.4 percent, while all households increased by only 1.3 percent (Table 1). In 2010, shared households accounted for 18.7 percent of all households, up from 17.0 percent in 2007.

This is not about the marriage rate rising, it’s about multi-family shared homes, roommates, etc. So the rate of shared households, defined thusly, is going up. And considering the stagnating wages, high unemployment, and lack of purchasing power in the broad middle, this stands to reason. And it will continue to be a problem, even if the banks keep enough homes off the market to constrain industry and lower months-of-supply.

The big stat here is that additional adults living with a relative rose from 2007 to 2010 by 2.4 million, accounting for 68% of the increase in this metric of shared households. That just goes right to affordability. People cannot afford to live on their own, so they move back in with their parents or another relative. Household formation remains low as a result.

I keep hearing that this will break, like a fever, and people will move out of their parents’ homes, perhaps get married and start families, and return to the housing market. But they have to have a job to do that. They have to be unburdened by student debt. What I see is that these millions just add on to the 9 million foreclosed and the 16 million underwater as those locked out of the housing market. That number is starting to look daunting. And without those purchases, and with the threat of more foreclosures in certain regions (like Colorado), it’s hard to predict prices bottoming out.

[westerebus]

69. NAR might want to look at Zillo.

The short sale market is growing. Just sayin'

[Demeter]

65. Still Depressed, After All These Years

http://www.nytimes.com/2012/06/24/opinion/sunday/housing-still-depressed-after-all-these-years.html


...it is easy to forget that the housing bust has been the biggest drag on the economy over the past five years. Even with recent housing market improvements, sales and construction are still at very low levels, while prices are still falling in most areas. Worse, those signs of improvement may not be sustainable. One reason is that millions of foreclosures were delayed from late 2010 until this year, as banks wrangled — and eventually settled — with government officials over foreclosure abuses. With the legal issues now out of the way, foreclosures have resumed, with another five million expected between now and 2015, in addition to more than five million homes already lost, according to Moody’s Analytics.

If the economy were strengthening, the price declines from more foreclosures could be limited by an influx of first-time buyers and real-estate investors. But with the economy slowing again, housing could also relapse, with falling prices provoking more defaults, foreclosures and distress sales, and ever-lower prices. That dark scenario was a factor last week when the Federal Reserve downgraded its economic outlook, citing a housing market that “remains depressed.”

Policy makers need to take steps now to prevent a renewed housing downturn, along these lines:

REFINANCINGS Millions of homeowners have been unable to refinance their high-rate mortgages despite constructive moves by the Obama administration to relax the rules on refinancings in its mortgage-relief programs. Part of the problem appears to be foot-dragging by banks that want to keep borrowers paying at a higher rate. A bill by Senator Robert Menendez, Democrat of New Jersey, would help break the logjam, in part, by ensuring increased competition among lenders. The challenge, as always, is how to pass needed measures in a hyperpartisan Congress. President Obama should be making it clear to voters that efforts to impede refinancing condemn homeowners to paying above-market mortgage rates.

LOAN MODIFICATIONS Under the recent foreclosure settlement, big banks are supposed to provide some $10 billion worth of principal reduction to some of the millions of borrowers who owe more on their mortgages than their homes are worth. One concern is that banks will tailor the relief in ways that help them clean up their balance sheets, while leaving many homeowners deeply underwater. Obama administration officials must be unflinching in their assessments of banks’ performance and ensure that noncompliant banks are punished.

LAW ENFORCEMENT The foreclosure settlement allows for further investigation into banks’ mortgage abuses. In January, Mr. Obama vowed to begin an expanded inquiry, but there are scant signs of progress. The Justice Department has confirmed that 100 lawyers and staff members from various state and federal agencies are working on the investigation, a skeleton crew compared with the banks’ armies of lawyers. Only recently did the department convene a two-day meeting for lawyers, regulators and other experts involved in the inquiry to discuss cases, legal theories and strategies. Coordination is important, but it seems a far cry from a hard-charging prosecution, especially as potential violations draw closer to expiration under statutes of limitation for financial crimes.

Mr. Obama has promised an investigation with real accountability. There is still time, but he has not yet delivered. Meanwhile, with the possible exception of a euro zone meltdown, the housing market remains the largest threat to economic recovery.

[Demeter]

50. YVES SMITH AND MATT TAIBBI ON JAMIE DIMON VIDEO!

[Demeter]

51. How a Book Burning Party Saved the Library Frederick Clarkson

http://www.talk2action.org/story/2012/6/17/19716/8987/Front_Page/How_a_Book_Burning_Party_Saved_the_Library

What good is knowledge, if no one has access to it? That was the underlying question in Troy, Michigan where Tea Party activists sought to thwart a small tax increase to keep the award winning library open. This was the third effort, and the anti-tax crowd was well organized. But the people who wanted to save the library had an idea.

Chris Meadows at Teleread, writes:

So the library approached ad agency Leo Burnett/Arc Worldwide Detroit and asked what they could do with a $3,500 budget. The company produced a guerilla and social marketing campaign (PDF) in which they pretended to be a clandestine group urging people to vote to close the library so they could hold a book-burning party afterward.

They put up yard signs all over town, placed a classified ad asking for clowns and caterers for the party, and posted a Facebook page for their campaign where they made cute little inflammatory announcements like "Our agenda's pretty simple. We want the library to close so we can have a book burning party. What's not to get?" This had the effect of focusing the public's attention away from the question of a tax increase and onto the question of losing a library's worth of books. (They did reveal it was a hoax before the actual election.)

The campaign apparently worked; voter turnout in the election was 38%, double the anticipated 19%, and the vote won by a significant margin. And the campaign ended up winning an Effie Award, the marketing industry's equivalent of an Oscar or Grammy.

The campaign ultimately revealed that the book burning party campaign was a hoax and that their intention was to send a message: "A vote against the library, is like a vote to burn books."

There is much to learn from this amusing and heartening victory. And there are certainly implications for other issues, and perhaps even for broad agendas. But one comes immediately to mind for me. For many years the principal strategy of the antiabortion movement in all of its factions -- including the Religious Right -- has been to find ways to reduce the number of abortions performed by restricting access. This has been the unambiguous intention in the Obama era as well. The extraordinary escalation of the number of abortion restricting bills introduced in state legislatures is a logical outcome. It is completely consistent with movement thinking for a generation, and since they have the power to act in many legislatures thanks in part to gains in 2010, they are acting on their beliefs.

"We have opportunities before us which if properly exploited," declared militant strategist Mark Crutcher, of Life Dynamics in 1992, "could result in an America where abortion may be perfectly legal, but no one can get one."

The right to abortion, like any other right also means having access to that right. You may have the right to read, but not have access to books if there are no libraries. You may have the right to vote, but may not be able to do so if you are a victim of what we euphemistically call voter suppression tactics. The takeaway lesson for me is that we need to do better, much better, at building a culture of democracy, that includes not taking vital institutions like public education and libraries, or basic civil and human rights for granted. The library issue in Troy, MI should have been a no brainer -- that it wasn't, and voter turn-out was expected to be only 19%, underscores how chronic, long term lack of participation in the basics of democracy are threatening vital institutions and basic human rights. That an imaginative and provocative guerrilla campaign intervention saved the library is a heartening tale. But that the situation required one is sobering.

[Demeter]

52. Save the Troy Library "Adventures In Reverse Psychology" VIDEO

&feature=player_embedded

[DemReadingDU]

56. Now that's a clever campaign!

[Demeter]

53. Obama Trade Deal Worse Than NAFTA--- PETITION

http://act.rootsaction.org/p/dia/action/public/?action_KEY=6218&Email=[e-mail]

As a candidate, Obama promised to renegotiate NAFTA, the trade deal that has undermined workers and the environment. Now leaks of negotiations with eight Pacific countries reveal Obama's intention to out-NAFTA NAFTA.

The Trans-Pacific Partnership (TPP) deal has been negotiated in secret (except for 600 corporate advisors). The TPP would:

--reward outsourcing of jobs to lower-wage countries;
--give foreign corporations immunity from U.S. laws;
--allow foreign corporations to challenge U.S. laws in foreign (secret) tribunals; and
--wipe out national protections for workers or the environment.

Take a minute to tell President Obama (and Congress) that we won't stand for it. CLICK ON LINK

[Fuddnik]

55. I'd like to tell him a lot more than that.

[Po_d Mainiac]

57. Done.....

But, since there are ladies that follow this thread, I ain't gonna post the script.

It was more toxic than me fluids. And right now my blood will either kill a skeeter or mute it into a blood sucking bug that will cause the vampires to stand in line at the next job fair

[Hotler]

71. Remind me again why I should vote for that man again????

Nothing is going to change in this country until more people feel the pain that a lot of us here are feeling. A part of me says let the repugs have this election and let the pain come. Before a boil or cyst can open up and drain the infection and nastiness and begin healing, it becomes sore and painful. But we may not need to wait till the november elctions after reading the LEAP report that Ghostdog posted down thread. Seems like the shit is going to hit the fan in Sept-Oct.

[Demeter]

72. The 1% Can Stay Insane A Lot Longer than the 99%

But it costs them in the end...they can afford it, while they keep screwing the rest of us...the only way to stop it is to refuse to behave as if we went along with their schemes.

[Fuddnik]

54. What do you cook for your "waiting for the tropical storm" party?

What kind of wine do you serve with a python?


Python cook-off in Miami for title of "Best Invasivore Chef"



The Associated Press

Published: June 23, 2012

Updated: 02:02 pm

MIAMI - Python, wild boar and lion fish will be on the menu this weekend in Miami.

Three local chefs will participate Saturday night in a cook-off competition using the invasive species as key ingredients. The goal is to raise awareness about how the animals impact South Florida's ecology — and perhaps even generate an appetite for them.

Haven Gastro-Lounge executive chef Todd Erickson will be cooking braised python. He told the Miami Herald the event will show how these animals can be a "viable food source."

The other chefs cooking to be named the "Best Invasivore Chef" are: Bradley Herron of Michael's Genuine Food & Drink and Timon Balloo of Sugarcane Raw Bar Grill.

Funds will also be raised for Fertile Earth Foundation, a non-profit dedicated to promoting environmental awareness.

http://duke1.tbo.com/content/2012/jun/23/231402/python-cook-off-in-miami-for-title-of-quotbest-inv/news-breaking/

[Ghost Dog]

61. US Pensions screwed as train chugs on toward the debt cliff (Mauldin)

... If bonds are only yielding 4%, then to get an 8% return in a 60-40 portfolio requires that stocks rise over 10% a year, compounded. Not going to happen for a few years, until we see the end of the secular bear market (these last on average about 17 years), by which time pension funds will be even more massively underfunded and baby boomers will be wanting to retire. Look back to 2000. What has the total stock market return been?

... How badly have investors been hit? The chart below tells a very sad tale. Interest income has been almost cut in half over the last few years of the Fed targeting interest rates.



Part of the reason the Fed cut rates was to stimulate the economy. Lower rates mean lower mortgages and credit-card and car payments. They give businesses access to cheaper capital and hopefully spurs profits and thus hiring. This puts more money into the hands of consumers. As an example, US 30-year mortgage rates recently hit a record low of 3.66%, down from 4.5% the same time last year. A number of mortgage holders will refinance, given the much lower rates, increasing disposable income. That almost makes me want to buy a house or two.

Part of the mantra of Keynesian economics is that it is imperative to stimulate final consumer demand in times of recession or slow growth. That rationale is why the "stimulus" package of a few years ago included so many government transfer payments and tax cuts, coupled with much larger deficit spending.

But low rates punish savers and leave them with less money, so that hurts retirees' final consumer demand – or that is the view from the cheap seats where I sit. And retiree income and spending is a growing portion of the economy. Hurt that, and it's a sector big enough to have consequences. I know that economists can argue that the trade-off is positive, but it seems to me we are defrauding a generation or two of hard-working savers. You did what you were supposed to do, and your reward is a ten-year bond at 1.5%. Since you paid off your mortgage a long time ago, the lower rates don't help you either! So you either cut back or move out the risk curve. While better yields can be had with some serious research and homework, it is not easy.

The Fed is not going to change its policy to help retirees and pension funds, so you are left to fend for yourselves. Sadly, the recent vote by the citizens of San Jose to dramatically cut their fire and police pension benefits, which they felt was necessary because their city council had for years promised more than the tax base could afford, is going to become normal over the next few years.

Part of the problem is simply promising too much in the way of benefits, but an equally big part is pension-fund consultants making assumptions based on the bull market of the '80s and '90s. And now, low interest rates make those assumptions look even worse. To the point where local and state governments cannot afford what was contractually promised.

I should note that the vote in heavily Democratic San Jose, California was 2-1 in favor of those pension cuts. Not just a slim majority, and certainly unusual for a municipal election. Something similar happened in San Diego. It was not just in Wisconsin that voters said Tuesday a week ago that deficits matter. I think those municipal votes are highly indicative of a tectonic change, as voters look to the future of government deficits and start to say "Enough! Stop!" It can't happen too soon, as our train chugs on toward the debt cliff...

/..Read more: http://www.businessinsider.com/mauldin-the-fed-is-destroying-retirees-and-pension-funds-2012-6#ixzz1yhe7iCV3

[Demeter]

62. “The Euro Is Like a Knife in the Hands of a Child”

http://www.testosteronepit.com/home/2012/6/10/the-euro-is-like-a-knife-in-the-hands-of-a-child.html

...Germany and Austria plunge into intense public soul searching about the euro, its meaning, its relevancy, the sheer and endlessly growing expense of maintaining it....And yet, the German-language media scream about the expense of abandoning the euro. They call it the crazy option of returning to the D-Mark and warn of gigantic losses. But the very fact these discussions appear on the front pages of established newspapers moves the option a step closer to reality. Because, once the debate is opened up—and it’s a big can crammed with ugly worms—it’ll be difficult for governments to sweep all these worms under the rug and to revert to the con-game.

“As it’s going at the moment, the monetary union cannot function long term,” affirmed German Bundesbank President Jens Weidmann on Sunday. To avoid the worst turbulence, he called for clarity: either establish a fiscal union with transfer of sovereignty to a central authority, or continue with autonomous national budget policies, in which case, “common liability must be limited.” He warned of the consequences of the break-up of the Eurozone, which would produce unpredictable and huge costs and risks. In the same breath, he cautioned that the threat of these costs and risks must not make Germany vulnerable to extortion.

Germans are worried. According the ARD-Welt poll published last week, 55% believe that it would have been better to keep the D-Mark, up 9 points from November, 56% fear for their savings, 78% believe that the worst of the euro crisis is still ahead, and 83% want Greece to leave the Eurozone if it doesn’t stick to the austerity and reform measures it had agreed to.

“The euro is like a knife in the hands of a child,” said Thilo Sarrazin, former member of the Executive Board of the Bundesbank and politician in the opposition SPD. As so often, “something that appears useful and sensible becomes dangerous,” he said. The advantages of the euro, including low interest rates, have led almost all participating countries astray, he said. “Now you see the consequences.”

“The problem isn’t just the construction of the euro, but the bailout funds,” said Sahra Wagenknecht, deputy chairperson of the Left Party, Germany fourth largest party with 12% of the vote in 2009. “They’re not saving the euro but the financial sector! Banks, insurance companies, hedge funds, and speculators are being ransomed. Neither in Greece nor elsewhere do the people benefit.”

“It was certainly a mistake to bring the euro to life without the necessary instruments to control it and secure it,” Austrian Chancellor Werner Faymann chimed in...

While that type of pungent debate is missing in France, one French voice came through, in Austria: Marine Le Pen, President of the right-wing National Front and third in the French presidential election with 18% of the vote, said in an interview with the Austrian paper Kurier that she wanted to end not only the Eurozone, one of her campaign promises, but also the 27-member EU—in whose parliament she is a representative, ironically.

“I want the collapse of the European Union, to make room for a Europe of Nations,” she said. Cooperating independent nations would be the principle. She cited Airbus and Ariane. A Europe “that the people agree to freely and democratically, which isn’t the case currently.” Ultimately, she said, “you have to ask the question if the system is reformable. Can you convert a Europe that is becoming a federal state into a Europe of Nations? I don’t think so. The Soviet Union wasn’t reformable either.”

[Ghost Dog]

63. Taxmageddon Coming. (Shedlock)

http://globaleconomicanalysis.blogspot.com/2012/06/12-reasons-us-recession-has-arrived-or.html#ixzz1yi9UX3jb

When the NBER, the official arbiter of recessions finally backdates the recession, May or June of 2012 appear to be likely months.

... see link ... lists, with charts, reasons: Manufacturing, Philly Fed Survey, Misguided Optimism, Taxmageddon ...

Taxmageddon

Please consider Taxmageddon

The Tax Foundation reports that because of higher federal income and corporate tax collections, Tax Freedom Day came four days later this year than last. And the bad news is that unless Washington takes action, it will take working Americans 11 more days to meet next year’s tax burden.

That’s all due to Taxmageddon — a slew of expiring tax cuts and new tax increases that will hit Americans on January 1, 2013, amounting to a $494 billion tax hike. Heritage’s Curtis Dubay reports that American households can expect to face an average tax increase of $3,800 and that 70 percent of Taxmageddon’s impact will fall directly on low-income and middle-income families, leaving them with $346 billion less to spend.

... Without significant tax code changes, in 2013, America is scheduled to get hit with what would be the largest tax increase in our history.

Not only will the $1,000 per year tax holiday for a $50,000 income household disappear, come 2013 all Americans will see the tax on their first $8,700 of income jump from a 10% rate to 15% rate.

That hike will cost the majority of filers an additional $435.

For those eligible for child care tax credits that deduction will drop from $1,000 to $500. The marriage penalty will roar back into effect. The AMT, alternative minimum tax, will finally kick in.

Roll those changes up and a family filing as married with two children making $50,000, will see their taxes increase by basically $2,700.

Regardless of whether or not you feel taxes need to be raised, a big set of tax hikes is scheduled to happen.

To be sure, some of those hikes will be undone in compromises, but many if not most will sneak through...

/.. Read more: http://globaleconomicanalysis.blogspot.com/2012/06/12-reasons-us-recession-has-arrived-or.html#ixzz1yi9UX3jb

[Demeter]

66. Which is worse: To read and post depressing stuff, or to go and do depressing chores?

This is my dilemma today. Well, the chores are going to get some attention first, folks.

If there's anything left of me, I'll be back with some more bad news and worse ideas from the greater world of fools. If not, see you Monday!

[Fuddnik]

70. At least you have a choice.

It's been raining off and on for the last two days. Heavy rain and wind moved in at about 1:00am. Forecast calls for heavy rain and heavy thunderstorms over the next 2-3 days,as Debby sits there and intensifies.

The pool is ready to overflow. And it sounds like we're surrounded by thousands of frogs.

Maybe I'll take a ride over to the beachand see what the surf looks like. Or, I could just watch it on the Weather Channel.

[Demeter]

73. Send that water up here--Please!

[Fuddnik]

75. Gladly. I guess we're out of the drought now. Pool within an inch of overflowing.

I laid down for another hour or so. Much heavier wind and rain now. Flood warning for the river across the street. Maybe I shoulda bought that kayak.

[Demeter]

64. Obama wants deals on student loans, transportation

MORE SIGNS THAT THE RE-ELECTION ISN'T GOING WELL....OBAMA ACTUALLY DOING SOMETHING (FOR PEOPLE), OR AT LEAST, JAWING ABOUT IT!

http://news.yahoo.com/obama-wants-deals-student-loans-transportation-100219748.html

President Barack Obama is pressing Congress to reach agreement on a transportation bill and a plan to prevent students from having their loan rates double.

Obama says in his weekly radio and Internet address that Congress should do everything it can to help students attain higher education and repair the nation's crumbling roads and bridges.

Congressional negotiators are working on a deal to avert a July 1 doubling of interest rates on federal loans to 7.4 million college students and a separate plan to overhaul federal transportation programs.

In the Republican address, Louisiana Rep. Bill Cassidy says if the Supreme Court doesn't repeal the entire health care law, Congress should repeal what is left and implement common-sense reforms that protect access to health care and lower costs.

[Demeter]

74. Muslim Brotherhood candidate wins Egyptian presidency THE ARMY BLINKED! (OR OBAMA BRIBED THEM)

An Islamist leader from the long-suppressed Muslim Brotherhood group has been declared winner of Egypt’s first-ever free presidential election, held almost a year and a half after a popular uprising unseated Hosni Mubarak, the former dictator.

Mohamed Morsi, 62, a US-trained engineer, has been declared president by the powerful electoral commission, a week after polls closed in a tightly-fought election which pitted him against Ahmed Shafiq, a military man. Mr Shafiq, a former regime insider, was seen as embodying the army-led establishment which had been in power since 1952.

Mr Morsi’s victory marks a dramatic turning point for the Arab world’s most populous nation, which is now to be headed by an Islamist. It is also a turning point for a region clamouring for an end to rule by entrenched elites where Islamist oppositions are the best-organised groups poised to take advantage of democratic openings.

Read more >>
http://link.ft.com/r/H60H77/5V1SSE/YGZ3O/AMFZPP/QNYO9T/B7/t?a1=2012&a2=6&a3=24

[Demeter]

76. Stick a fork in me, I'm done

I'm calling it quits on this thread. See you on Monday's SMW!