Archive for February, 2009

A Must Read from Jim Kunstler

February 25, 2009

http://jameshowardkunstler.typepad.com/

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George Soros — not from the NY Times

February 21, 2009

NEW YORK (Reuters) – Renowned investor George Soros said on Friday the world financial system has effectively disintegrated, adding that there is yet no prospect of a near-term resolution to the crisis.

Soros said the turbulence is actually more severe than during the Great Depression, comparing the current situation to the demise of the Soviet Union.

He said the bankruptcy of Lehman Brothers in September marked a turning point in the functioning of the market system.

“We witnessed the collapse of the financial system,” Soros said at a Columbia University dinner. “It was placed on life support, and it’s still on life support. There’s no sign that we are anywhere near a bottom.”

Homeowners’ rallying cry: Produce the note

February 18, 2009

ZEPHYRHILLS, Fla. (AP) — Kathy Lovelace lost her job and was about to lose her house, too. But then she made a seemingly simple request of the bank: Show me the original mortgage paperwork.

And just like that, the foreclosure proceedings came to a standstill.

Lovelace and other homeowners around the country are managing to stave off foreclosure by employing a strategy that goes to the heart of the whole nationwide mess.

During the real estate frenzy of the past decade, mortgages were sold and resold, bundled into securities and peddled to investors. In many cases, the original note signed by the homeowner was lost, stored away in a distant warehouse or destroyed.

Persuading a judge to compel production of hard-to-find or nonexistent documents can, at the very least, delay foreclosure, buying the homeowner some time and turning up the pressure on the lender to renegotiate the mortgage.

“I’m going to hang on for dear life until they can prove to me it belongs to them,” said Lovelace, a 50-year-old divorced mother who owns a $200,000 home in Zephyrhills, near Tampa. “I’ll try everything I can because it’s all I have left.”

In interviews with The Associated Press, lawyers, homeowners and advocates outlined the produce-the-note strategy. Exactly how many homeowners have employed it is unknown. Nor is it clear how successful it has been; some judges are more sympathetic than others.

More than 2.3 million homeowners faced foreclosure proceedings last year and millions more are in danger of losing their homes. On Wednesday, President Obama will unveil a plan to spend at least $50 billion to help homeowners fend off foreclosure.

Chris Hoyer, a Tampa lawyer whose Consumer Warning Network Web site offers the free court documents Lovelace used to file her request, has played a major role in promoting the produce-the-note strategy.

“We knew early on that the only relief that would ever come to people would be to the people who were in their houses,” Hoyer said. “Nobody was going to fashion any relief for people who have already lost their houses. So your only hope was to hang on any way you could.”

Tom Deutsch, deputy executive director of the American Securitization Forum, a group that represents banks, law firms and investors, dismissed the strategy as merely a stalling tactic, saying homeowners are “making lawyers jump through procedural hoops to delay what’s likely to be inevitable.”

Deutsch said the original note is almost always electronically retained and can eventually be found.

Judges are often willing to accept electronic documentation. And lenders are sometimes allowed to produce other paperwork to establish they are the holder of a loan. Still, assembling such documents to a judge’s satisfaction takes time, which to homeowners is the point.

Lovelace filed her produce-the-note demand last fall after the bank acknowledged that her original mortgage document had been lost or destroyed. Since then, there has been no activity on the foreclosure — no letters from the lender, no court filings.

The law firm handling the foreclosure for the lender refused to comment.

A University of Iowa study last year suggested that companies servicing mortgages are often negligent when it comes to producing the documentation to support foreclosure. In the study of more than 1,700 bankruptcy cases stemming from home foreclosures, the original note was missing more than 40 percent of the time, and other pieces of required documentation also were routinely left out.

The first big success of the produce-the-note movement came in 2007 when a federal judge in Cleveland threw out 14 foreclosures by Deutsche Bank National Trust Co. because the bank failed to produce the original notes.

Michael Silver, a lawyer for two of the families in that case, said at least one eventually lost their home. Still, he considers that a success.

“From the perspective of the person who’s in the home, you may have kept them in the house another 10 or 12 months,” he said. “If I can get a result with economic benefits to a client, then I think I won.”

Democratic Rep. Marcy Kaptur of Ohio endorsed the strategy in a fiery speech on the House floor during debate on the federal bank bailout last month.

“Don’t leave your home,” she said. “Because you know what? When those companies say they have your mortgage, unless you have a lawyer that can put his or her finger on that mortgage, you don’t have that mortgage, and you are going to find they can’t find the paper up there on Wall Street.”

April Charney, head of foreclosure defense for Jacksonville Area Legal Aid in Florida, said the strategy has been so successful for her that she now travels around the country to train other lawyers in how to use it. She said she has gotten cases delayed for years by demanding that lenders produce paperwork they cannot find.

“This is an army of lawyers getting out there to stop foreclosures so we can get to the serious business of creating solutions,” Charney said. “Nothing good is going to happen as long as we continue to bleed homeowners.”

MITCH STACY

Obama Strikes Again

February 10, 2009

Yesterday, ACLU lawyers encountered a recurring — and troubling — obstacle in our lawsuit seeking justice for torture victims caught up in the CIA’s extraordinary rendition program. But this time, the objections were not coming from the Bush administration.

To our surprise and disappointment, the new Justice Department urged a federal appeals court to dismiss our lawsuit charging a Boeing subsidiary with providing critical support for the CIA’s rendition program based on the same “state secrets” claim that the Bush administration had repeatedly invoked to avoid any judicial scrutiny of its actions. During the course of the argument, one judge asked twice if the change in administration had any bearing on the Justice Department’s position. The attorney for the government said that its position remained the same.

The Destructive Center By PAUL KRUGMAN, or Obama Really Screwed Up

February 9, 2009

What do you call someone who eliminates hundreds of thousands of American jobs, deprives millions of adequate health care and nutrition, undermines schools, but offers a $15,000 bonus to affluent people who flip their houses?

A proud centrist. For that is what the senators who ended up calling the tune on the stimulus bill just accomplished.

Even if the original Obama plan — around $800 billion in stimulus, with a substantial fraction of that total given over to ineffective tax cuts — had been enacted, it wouldn’t have been enough to fill the looming hole in the U.S. economy, which the Congressional Budget Office estimates will amount to $2.9 trillion over the next three years.

Yet the centrists did their best to make the plan weaker and worse.

One of the best features of the original plan was aid to cash-strapped state governments, which would have provided a quick boost to the economy while preserving essential services. But the centrists insisted on a $40 billion cut in that spending.

The original plan also included badly needed spending on school construction; $16 billion of that spending was cut. It included aid to the unemployed, especially help in maintaining health care — cut. Food stamps — cut. All in all, more than $80 billion was cut from the plan, with the great bulk of those cuts falling on precisely the measures that would do the most to reduce the depth and pain of this slump.

On the other hand, the centrists were apparently just fine with one of the worst provisions in the Senate bill, a tax credit for home buyers. Dean Baker of the Center for Economic Policy Research calls this the “flip your house to your brother” provision: it will cost a lot of money while doing nothing to help the economy.

All in all, the centrists’ insistence on comforting the comfortable while afflicting the afflicted will, if reflected in the final bill, lead to substantially lower employment and substantially more suffering.

But how did this happen? I blame President Obama’s belief that he can transcend the partisan divide — a belief that warped his economic strategy.

After all, many people expected Mr. Obama to come out with a really strong stimulus plan, reflecting both the economy’s dire straits and his own electoral mandate.

Instead, however, he offered a plan that was clearly both too small and too heavily reliant on tax cuts. Why? Because he wanted the plan to have broad bipartisan support, and believed that it would. Not long ago administration strategists were talking about getting 80 or more votes in the Senate.

Mr. Obama’s postpartisan yearnings may also explain why he didn’t do something crucially important: speak forcefully about how government spending can help support the economy. Instead, he let conservatives define the debate, waiting until late last week before finally saying what needed to be said — that increasing spending is the whole point of the plan.

And Mr. Obama got nothing in return for his bipartisan outreach. Not one Republican voted for the House version of the stimulus plan, which was, by the way, better focused than the original administration proposal.

In the Senate, Republicans inveighed against “pork” — although the wasteful spending they claimed to have identified (much of it was fully justified) was a trivial share of the bill’s total. And they decried the bill’s cost — even as 36 out of 41 Republican senators voted to replace the Obama plan with $3 trillion, that’s right, $3 trillion in tax cuts over 10 years.

So Mr. Obama was reduced to bargaining for the votes of those centrists. And the centrists, predictably, extracted a pound of flesh — not, as far as anyone can tell, based on any coherent economic argument, but simply to demonstrate their centrist mojo. They probably would have demanded that $100 billion or so be cut from anything Mr. Obama proposed; by coming in with such a low initial bid, the president guaranteed that the final deal would be much too small.

Such are the perils of negotiating with yourself.

Now, House and Senate negotiators have to reconcile their versions of the stimulus, and it’s possible that the final bill will undo the centrists’ worst. And Mr. Obama may be able to come back for a second round. But this was his best chance to get decisive action, and it fell short.

So has Mr. Obama learned from this experience? Early indications aren’t good.

For rather than acknowledge the failure of his political strategy and the damage to his economic strategy, the president tried to put a postpartisan happy face on the whole thing. “Democrats and Republicans came together in the Senate and responded appropriately to the urgency this moment demands,” he declared on Saturday, and “the scale and scope of this plan is right.”

No, they didn’t, and no, it isn’t.

Obama’s Betrayal

February 5, 2009

Just two weeks after his historic inauguration ceremony, Obama’s presidency is lurching towards failure, and not because three of his administration picks have been found to be tax cheats, but because nearly all of his administration picks are corporate whores and shills.
http://www.counterpunch.com/lindorff02052009.html

David Lindorff

Obama’s Lincoln Thing

February 4, 2009

Let’s just hold it a bit on this Lincoln thing. If Barack Obama wants to lead the nation as Lincoln did, we’re in for a lot of trouble.

The man whose Bible he took the oath on, whose memory he regularly invokes, presided over the creation of what can only be called a nascent fascist government led by a party of industrial capitalism that ran roughshod over constitution and custom, encouraged a form of bloody warfare that defied all civilized practice to date, and was the cause of untold misery, violence, and destruction for the next half-century or more. He was the ultimate creator of an empire that, thanks to military might in service to corporate interests, spread across the American continent, not just north to south but eventually coast to coast, and would ultimately go on to impose itself worldwide.

We have now come to the culmination of that empire, whether they know it or not, and the meltdown of the global economy is only the first signal of its collapse. Peak oil, extreme climate, unwinnable wars, social unrest, environmental decay, and the multiple whiplashes of a failed capitalistsystem will hasten its demise.

We’ve got two choices. One is the Lincolnesque way that Obama seems to promise: government subsidies for the larger corporations and banks (as Lincoln pushed in his day, especially for the railroads), refurbishing of the infrastructure (ditto), nationalization of the financial system and reckless printing of currency, increased centralization of the government and its hold on the economy, continuation and expansion of warfare and the war machine (all ditto). That is a continuation of the past, and it is amazing that the nation largely does not recognize it as a recipe for continued collapse. It is in fact not sustainable, nor is the environment in which it is floundering.

The other way is to rejigger, to dismantle, the entire system. Abandon the empire (which we can no longer afford anyway, of course) and the war system that was begun in 1861 and has been in effective power since 1941 (of which Eisenhower famously warned us).

Dismantle the government-sponsored and –coddled corporate system of large-scale capitalism (agribusiness, Big Oil, Big Pharm, Big Chem, Big Silicone, the lot), overprotected (to keep the lobbyists in business and overregulated (ditto the bureaucrats), and return to a modern variety of an early 19th-century economy, which means small holders, family farmers, local businesses, individual enterprise, neighborhood artisans, community-supported agriculture and power generation, low taxes, and local empowerment.

Dismember the bloated Washington system as we know it (keep it around perhaps for automated record-keeping, but not defense or diplomacy), discard Congress entirely, and return effective power to the states (or better, in time, to bioregions), keep government machinery small even at that level and amenable to true democracy, and, this time around, create prohibitions against a takeover of electoral and legislative machinery by aristocratic interests and corporate cartelizers.

In other words, let’s try it all over again, having learned the lessons from a disastrous experiment in Romanesque empire that we might have learned long ago, had we any sense of history. No point in trying to put bailout and stimulus fingers in these broken dikes, no point in trying to hold on to and restore an economy built on nothing but growth and consumption, and the concomitant exhaustion of resources, befouling of environments, amassment of wastes, and emiseration of masses.

Let’s try something new. In fact, we have to.

Kirkpatrick Sale

the son of a bitch in the white house authorizes bombing of Pakistani civilians

February 3, 2009

This is what the “change” Obama promised turns out to be – instead of a Republican murderer in the White House, we now have a Democratic murderer in the White House. Could we contact them, the innocents dead because of Obama’s authorization of Predator bombings in Pakistan would most likely not express much concern over which side of our ruling political party ordered their deaths. From the Washington Post: “Officials described Obama’s overall approach to what the administration calls ‘Af-Pak’ [Afghanistan-Pakistan] as a refusal to be rushed, using words such as ‘rigor’ and ‘restraint.’ ‘We know we’re going to get [criticism] for taking our time,’ said a senior official. . . .” The dead won’t criticize, and why “rush”? After all, it’s only Pakistani who are being killed. But if one really needs time to formulate plans for an increased war in Af-Pak, is it not possible to stop bombing civilians while those plans are being formulated? Oops, sorry, I forgot they’re only Pakistani.

What will it take to drive Americans into the streets to shut down this grotesque monstrosity of a government?

jack

The Death of American Leadership

February 2, 2009

Paul Roberts

http://www.counterpunch.com/roberts02022009.html

More of the same: Bailouts For Bunglers

February 2, 2009

by Paul Krugman
Question: what happens if you lose vast amounts of other people’s money? Answer: you get a big gift from the federal government — but the president says some very harsh things about you before forking over the cash.

Am I being unfair? I hope so. But right now that’s what seems to be happening.

Just to be clear, I’m not talking about the Obama administration’s plan to support jobs and output with a large, temporary rise in federal spending, which is very much the right thing to do. I’m talking, instead, about the administration’s plans for a banking system rescue — plans that are shaping up as a classic exercise in “lemon socialism”: taxpayers bear the cost if things go wrong, but stockholders and executives get the benefits if things go right.

When I read recent remarks on financial policy by top Obama administration officials, I feel as if I’ve entered a time warp — as if it’s still 2005, Alan Greenspan is still the Maestro, and bankers are still heroes of capitalism.

“We have a financial system that is run by private shareholders, managed by private institutions, and we’d like to do our best to preserve that system,” says Timothy Geithner, the Treasury secretary — as he prepares to put taxpayers on the hook for that system’s immense losses.

Meanwhile, a Washington Post report based on administration sources says that Mr. Geithner and Lawrence Summers, President Obama’s top economic adviser, “think governments make poor bank managers” — as opposed, presumably, to the private-sector geniuses who managed to lose more than a trillion dollars in the space of a few years.

And this prejudice in favor of private control, even when the government is putting up all the money, seems to be warping the administration’s response to the financial crisis.

Now, something must be done to shore up the financial system. The chaos after Lehman Brothers failed showed that letting major financial institutions collapse can be very bad for the economy’s health. And a number of major institutions are dangerously close to the edge.

So banks need more capital. In normal times, banks raise capital by selling stock to private investors, who receive a share in the bank’s ownership in return. You might think, then, that if banks currently can’t or won’t raise enough capital from private investors, the government should do what a private investor would: provide capital in return for partial ownership.

But bank stocks are worth so little these days — Citigroup and Bank of America have a combined market value of only $52 billion — that the ownership wouldn’t be partial: pumping in enough taxpayer money to make the banks sound would, in effect, turn them into publicly owned enterprises.

My response to this prospect is: so? If taxpayers are footing the bill for rescuing the banks, why shouldn’t they get ownership, at least until private buyers can be found? But the Obama administration appears to be tying itself in knots to avoid this outcome.

If news reports are right, the bank rescue plan will contain two main elements: government purchases of some troubled bank assets and guarantees against losses on other assets. The guarantees would represent a big gift to bank stockholders; the purchases might not, if the price was fair — but prices would, The Financial Times reports, probably be based on “valuation models” rather than market prices, suggesting that the government would be making a big gift here, too.

And in return for what is likely to be a huge subsidy to stockholders, taxpayers will get, well, nothing.

Will there at least be limits on executive compensation, to prevent more of the rip-offs that have enraged the public? President Obama denounced Wall Street bonuses in his latest weekly address — but according to The Washington Post, “the administration is likely to refrain from imposing tougher restrictions on executive compensation at most firms receiving government aid” because “harsh limits could discourage some firms from asking for aid.” This suggests that Mr. Obama’s tough talk is just for show.

Meanwhile, Wall Street’s culture of excess seems to have been barely dented by the crisis. “Say I’m a banker and I created $30 million. I should get a part of that,” one banker told The New York Times. And if you’re a banker and you destroyed $30 billion? Uncle Sam to the rescue!

There’s more at stake here than fairness, although that matters too. Saving the economy is going to be very expensive: that $800 billion stimulus plan is probably just a down payment, and rescuing the financial system, even if it’s done right, is going to cost hundreds of billions more. We can’t afford to squander money giving huge windfalls to banks and their executives, merely to preserve the illusion of private ownership.