Friday, October 8, 2010

Today's Best Reads

1--Trichet Opposes `Disorderly' Currency Moves as Euro Climbs, Bloomberg

Excerpt: European Central Bank President Jean- Claude Trichet said he opposes “disorderly” currency moves even as his reluctance to consider easier monetary policy helped push the euro to a nine-month high against the dollar.

“More than ever, exchange rates should reflect economic fundamentals,” Trichet told reporters in Frankfurt today after the ECB today left its benchmark interest rate at a record low of 1 percent. “Excess volatility and disorderly moves have adverse implications for economic and financial stability.” ...

Trichet is trying to shore up Europe’s economic recovery and help banks hurt by this year’s debt crisis without making financial institutions dependant on cheap ECB cash. While the ECB has phased out its 12- and 6-month loans, it still lends unlimited amounts in its weekly, monthly and three-month tenders, and has pledged to keep doing so into early 2011. (Trichet scolds the Fed and the BOJ while providing "unlimited" funds to underwater EU banks. Go figure)

2--Bullard Sees No `Obvious' Case for More Stimulus as Risks Ease, Bloomberg

Excerpt: The chance of a U.S. double dip has receded and there may not be a strong enough case for additional stimulus, Federal Reserve Bank of St. Louis President James Bullard said....Bullard said today in an interview with CNBC. “The economy has slowed, but it hasn’t slowed so much that it’s an obvious case to do something. A very reasonable decision would be to say, ‘maybe we should push it off a meeting or two and see how the data comes in.’”

The Federal Reserve is considering whether to add to its purchases of Treasury bonds to stimulate the economy with unemployment near 10 percent. (Fed is still having trouble interpreting the data)

3--Ohio AG Sues GMAC Mortgage Over So-Called Robo-Signings, WCPN News, NPR

Just about two weeks ago, the country’s fourth largest lender, GMAC announced it was suspending foreclosure and eviction actions in 23 states, including Ohio. The reason? A document processor for the company admitted he had approved 10,000 foreclosure documents a month without even reading them. In the days that followed, Bank of America and JP Morgan Chase also halted foreclosures in states that require judicial approval. They, too, were concerned about the integrity of their foreclosure actions.

We are talking about lenders and servicers treating foreclosure not as a legal proceeding that deserves the careful attention of the property owner, the servicer of the mortgage and the courts, but rather as a production line - making widgets - that accords foreclosures little deliberate accuracy that the law, or for that matter, basic courtesy and common sense mandates be given to such serious matters.

4--The 22nd weekly outflow from domestic mutual funds, zero hedge

Excerpt: It is not at all surprising that ICI's latest weekly flow report confirms what everyone with half a brain has known for a long time: the 22nd weekly outflow from domestic mutual funds is now in the history books. One more month, and we will have had an unprecedented 6 months of consecutive outflows, even as the market continues to levitate ever more incredulously on nothing but Fed POMO action (and Brian Sack's much more stealthy "collaboration" with Citadel), vacuum tube upward feedback-loop momentum on no volume, and the custodian banks' terrorist forced buy-in action in ETFs like SPY and IWM. Absent these three factors stocks would have been around 50% lower. (Retail investors still leaving market in droves. Confidence in Wall Street continues to ebb)

5--Obama administration blocked scientists estimates of BP spill, naked capitalism

Excerpt: The Obama administration blocked efforts by government scientists to tell the public just how bad the Gulf oil spill could become and committed other missteps that raised questions about its competence and candor during the crisis, according to a commission appointed by the president to investigate the disaster….

Among other things, the report says, the administration made erroneous early estimates of the spill’s size, and President Barack Obama’s senior energy adviser went on national TV and mischaracterized a government analysis by saying it showed most of the oil was “gone.” The analysis actually said it could still be there…

“By initially underestimating the amount of oil flow and then, at the end of the summer, appearing to underestimate the amount of oil remaining in the Gulf, the federal government created the impression that it was either not fully competent to handle the spill or not fully candid with the American people about the scope of the problem,” the report said. (Gov assists in cover up)

6--The End of the Tunnel, Paul Krugman, New York Times

Excerpt: When people ask why the Obama stimulus didn’t accomplish more, one good response is to ask, what stimulus? Leaving aside the cost of financial rescues and safety-net programs like unemployment insurance, federal spending has risen only modestly — and this rise has been largely offset by cutbacks at the state and local level. Many of these cuts were forced by Congress, which has refused to approve adequate aid to the states. But as Mr. Christie is demonstrating, local politicians are also doing their part.

And the ideology that has led Mr. Christie to undermine his state’s future is, of course, the same ideology that has led almost all Republicans and some Democrats to stand in the way of any meaningful action to revive the nation’s economy. Worse yet, next month’s election seems likely to reward Republicans for their obstructionism.

So here’s how you should think about the decision to kill the tunnel: It’s a terrible thing in itself, but, beyond that, it’s a perfect symbol of how America has lost its way. By refusing to pay for essential investment, politicians are both perpetuating unemployment and sacrificing long-run growth. And why not? After all, this seems to be a winning electoral strategy.

7--America's fiscal choices, CBPP

Excerpt: (Krugman) So there is -- I agree with Jan that there's -- there are two main scenarios, one of which is pretty bad and one of which is very bad. But there's probably a third one, which is absolutely catastrophic, and that's not negligible now.

8--Standing Up to the I.M.F., Mark Weisbrot, New York Times

Excerpt: This has been the problem for at least 40 years: I.M.F. loans have carried conditions that too often inflicted unnecessary pain on borrowing countries. This includes not only the inappropriate, pro-cyclical macro-economic policies currently being implemented in Europe and in many other developing countries, but also I.M.F. conditions that have made it difficult or impossible for developing countries to pursue the strategies that made rich countries rich....

If a sizeable group of the world’s low- and middle-income countries got together and acted as a bloc within the I.M.F., they could make a difference, just as they did within the W.T.O. Although many middle-income countries — in Asia and Latin America as well as Russia — said goodbye to the I.M.F. after its dramatic policy errors of the late 1990s — they all, including even China, have a collective interest in fixing fund policy. It’s true that the W.T.O. formally operates by consensus, but in reality no one country blocks consensus. Similarly, the rich countries in the I.M.F. could not simply outvote the majority of the world if that majority were willing to put up a real fight. The fund’s legitimacy depends on the acquiescence of the majority within its membership. It is long past due for the excluded countries to either hang together at the I.M.F. — or to continue to hang separately.

9--War on Terror logic, Glenn Greenwald, Salon

Excerpt: The U.S. war in (against) Pakistan continues to escalate, as Pakistanis attacked NATO tankers carrying fuel through their country to soldiers in Afghanistan last night, killing three people, an attack that was in retaliation for vastly increased U.S. drone strikes in Pakistan this month, which were ordered in alleged response to reports of increased Terrorist threats aimed at Europe, which, in turn, were in retaliation for the escalating wars in Afghanistan and Pakistan (as evidenced by the large numbers of individuals of Afghan descent involved in these plots).....

a 2004 Task Force convened by Donald Rumsfeld said about the actual causes of Terrorism and, specifically, the effects on Terrorism from our wars in Afghanistan and Iraq. The whole Report is worth reviewing, but among the highlights: (a) the "underlying sources of threats to America's national security" are grounded in "negative attitudes" towards the U.S. in the Muslim world and "the conditions that create them"; (b) what most exacerbates anti-American sentiment, and therefore the threat of Terrorism, is "American direct intervention in the Muslim world" -- through our "one sided support in favor of Israel"; support for Islamic tyrannies in places like Egypt and Saudi Arabia; and, most of all, "the American occupation of Iraq and Afghanistan"; and (c) "Muslims do not 'hate our freedom,' but rather, they hate our policies."

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