Thursday, March 15, 2012

Today's links

1--Treasurys plunge as traders, Fed bet on economic strength; mortgage rates may creep up, Wa Post

Excerpt: The bond market is betting on a stronger economy.

Prices for U.S. Treasury debt plunged for the fifth straight trading session Wednesday, and the yield on the benchmark 10-year note spiked to its highest level since October.

Money poured out of bonds and into stocks after rosy words on Tuesday from the Federal Reserve gave traders confidence that the economic recovery is strengthening. Major stock market averages are at or near four-year highs.

Treasury yields — and interest rates that take their cues from Treasury yields, including mortgage rates — remain near all-time lows. So while mortgage rates may creep up, they should remain historically low....

With the spring home-buying season about to start, the average interest rate on the most popular mortgage loan, the 30-year fixed, fell last week to 3.88 percent, a hair above the 3.87 percent it hit three weeks ago. That was the lowest since long-term mortgages were popularized in the 1950s. A year ago, the average was 4.88 percent.

If mortgage rates rise from the all-time lows where they have coasted for months, fewer people will try to refinance their loans, said Greg McBride, senior analyst with Bankrate.com.

“It does have an impact on refinancing traffic, which is far more sensitive to every fluctuation in rates,” he said. But McBride said rates are still “super-low,” and homebuyers are unlikely to make decisions based on a move of a few hundredths of a percentage point.

2--What's wrong with the eurozone, macronomics

Excerpt: Most interesting points made by Amundi Asset Management in their recent report in relation to our European Flutter's "issues list" are as follows:

"It is very interesting to see that a good number of sensitive issues from the 1990s have resurfaced over the past three years – more specifically:

• The lack of budget and tax harmonisation, which made the European Monetary Zone an incomplete monetary union;

• The lack of a federal budget, which prevented automatic transfers from growth areas that were in good financial health to disadvantaged areas;

• Unwillingness to build true federalism, because of the desire to conserve a measure of autonomy and sovereignty, an indispensable element in the absence of a central government;

• The ECB's inflexibility, and specifically the unified target and mission (the currency's internal value, i.e. inflation);

• Convergence criteria based essentially on public finance criteria (public deficit and debt). Making this a virtually exclusive factor in the health of an economy relegated essential criteria such as the job market, competitiveness, and account balances to the background.

• The logic of the Stability Pact appeared inappropriate. More than that, it enshrined budgetary rigour as the only means of correction and promoted pro-cyclicality for certain economic policy instruments whose effectiveness, indeed, lies in their anticyclical nature."

3--My Take On Newly Filed AG Foreclosure Settlement: As Bad As We Thought It Was, subprime shakeout

Excerpt: The nation’s largest banks get off with a relatively small penalty (much of it paid by investors or in “credits” for things the banks should already be doing) in return for releases across a broad spectrum of misconduct that pervades just about every dark corner of mortgage servicing. The categories of servicer misconduct are laid out in detail in the complaint filed today in D.C. Federal Court, and include the following:

Providing false or misleading information to borrowers,

Overcharging borrowers and investors for services of dubious value,

Denying relief to eligible borrowers,

Foreclosing on borrowers who were pursuing loan mods in good faith,

Submitting forged or fraudulent documents and making false statements in foreclosure and bankruptcy proceedings

--Losing or destroying promissory notes and deeds of trust,

--Lying to borrowers about the reasons for denying their loan mods,

--Signing affidavits without personal knowledge and under false identities,

--Improperly charging excessive fees related to foreclosures,

--Foreclosing on servicemembers on active duty,

--Making false claims to the government for insurance coverage, and

--Being unorganized, understaffed, and generally slower than molasses to respond to borrowers desperately in need of relief, while servicing fees continue to accrue.

...But what’s the result when lying, cheating and stealing is perpetuated on the largest scale imaginable, by five of the largest banks in the country, thereby exacerbating the worst financial crisis since the Great Depression? A broad release of liability, no admission of guilt, and a monetary settlement that pales in comparison to the size of the problem, even if it were paid in full by the banks themselves...

...the release does not appear to encompass the vast majority of claims based on the origination, purchase, securitization, transfer or sale to investors of mortgage loans, nor does it release the actions of securitization trustees. The state releases very clearly spell out that they will not apply to origination or securitization activity, while the federal releases state that they’ll apply to all origination or securitization activity except for certain exemptions (which include most of the origination or securitization issues that may engender liability for the banks). Either way, regulators appear to have done a good job of only releasing activity covered by their allegations and investigations (what little there were), and nothing more.

But here’s the rub. In the face of the litany of charges brought against them, the banks are not forced to admit to any wrongdoing. The language in the Federal Release (p. 231 – Chase Consent Judgment) makes this explicit:

This Release is neither an admission of liability of the allegations of the Complaint or in cases settled pursuant to this Consent Judgment, nor a concession by the United States that its claims are not well-founded.

The state release is not so explicit, but conspicuously absent is any language by the bank admitting to fault, mistake or wrongdoing.

4--Robosigning Still Going on at Wells Fargo, Reports HUD Inspector General, naked capitalism

Excerpt: I’ve been going over the mortgage settlement documents over the past few days...I think the most interesting parts of the document release were the HUD Inspector General reports on the five banks and the DOJ complaint. What these prove is what we’ve always known – the law enforcement community knew exactly what these banks were doing. DOJ simply chose not to prosecute. There was intent to defraud, fraud, and frankly, according to HUD.

In fact, it’s not clear that the past tense is the correct tense to use. The Wells Fargo report is particularly interesting on that last point. Take it away, HUD OIG (italics are mine).

At the time of our review, affidavits continued to be processed by these same signers, who may not have been qualified, and these signers may not have adequately verified certain figures because they accessed a computer screen of data showing a compilation of figures instead of verifying the data against the information through review of the books and records kept in the regular course of business by the institution.

I’m sorry, but WHAT THE $&*@!?!? I’m so glad Eric Holder has cut a deal with Al Capone while Capone is still on a shooting spree. And note, this isn’t just robosigning, this is potentially overcharging homeowners with junk fees and just generally not verifying accurate data on who owes what to whom. There really is no lesson here except “crime pays”.

...Fields points out that the standards basically set caps for the number of illegal fees and illegal foreclosures banks can engage in before getting into trouble. Banks are actually allowed, in the standards in this settlement, to foreclose on people who are current on their mortgage. Let me repeat that – according to Fields, banks are actually allowed, in this settlement, to foreclose on people who are current on their mortgage. ...

banks will now get credit for houses they were going to bulldoze anyway, essentially being allowed to unload low-value properties with clouded title on a dollar-for-dollar basis, which are actually worth pennies on the dollar (or perhaps value negative in areas where there are fines for not keeping up properties). Banks will also get credit for not going after deficiency judgments, which means they get credit when they choose not to sue foreclosed families who have no money. They aren’t suing for deficiency judgments anyway, by and large, because suing people who have nothing is, surprise, not profitable! But they’ll get billions in credit for this regardless....

a new legal system is being designed wherein property rights are increasingly based solely on political connections.

5--Draghi on competitiveness, ECB

Excerpt: External performance in terms of the current account shows that the euro area as a whole has performed well, and that external imbalances have been kept in check. The euro area’s current account has traditionally been close to balance, compared with sustained deficits in the US and sustained surpluses in Japan.

Of course, remaining competitive is a continuous challenge. Over the past two decades, as low-cost competitors have emerged elsewhere in the world, the euro area – like other advanced economies – has recorded some decline in export market shares. These losses partly reflect the mechanical effect of the new entrants. Nevertheless, the euro area does need to adjust the range of goods, services, sectors and industries in which it specialises.

Euro area countries have changed their specialisation over the last two decades, but not all did so to the same extent. As a consequence, the specialisation of the euro area as a whole has not changed much. We could have expected that the euro area would have shifted more towards higher quality products and products that are more skill-intensive and capital-intensive.

The fact that there has not been more progress overall might reflect structural rigidities that constrain firms’ ability to adjust rapidly and to make substantial changes in their specialisation – particularly towards high-technology products.

In particular, rigidities in the product and labour markets make it difficult for firms to adjust costs and prices to changing conditions. The ability of countries to adopt the appropriate specialisation may also be limited by structural issues related to the quality of education and the incentives for innovation.

Internal competitiveness

The general picture for the external competitiveness of the euro area is positive.

But this general picture does not necessarily hold for each member of the euro area.

Overall, looking at competitiveness within the euro area, there have been substantial differences across countries.

Indeed, the strains in some sovereign debt markets have been compounded by the severe competitiveness differentials that have emerged within the euro area.

A convenient way to identify competitiveness differentials is simply to look at the current account balances of each country.

Current account imbalances could be justified for any country, including those participating in a monetary union, and they do not necessarily reflect a loss of competitiveness. But increasingly, larger current account deficits have resulted from significant losses of national competitiveness, signalling domestic macroeconomic imbalances and deeper structural problems. These losses of competitiveness limit the country’s growth potential and hinder its participation in the global trade integration.

Against this background, rather than financing productive investment in the tradable sector and fostering export performance, capital inflows in some countries with excessive current account deficits have fuelled asset price rises and private indebtedness. Hence, current account imbalances within the euro area should be a source of concern for policy-makers when they relate to losses of competitiveness.

A useful way to measure excessive imbalances is to look at unit labour costs, as these reflect developments in both productivity and labour costs. If we compare countries with an external surplus and countries with an external deficit, we see that, since the introduction of the euro, unit labour costs have increased by 28% in deficit countries, 2.5 times as much as in surplus countries.

For sure, some of this differential might reflect sustainable increases in income per capita or other “catch-up” effects. But to a much larger extent, this differential relates to structural problems and reflects growing misalignments between developments in wages and productivity.

These misalignments have also become visible in terms of deviations from price stability. Indeed, we can observe that most countries with strong current account deficits prior to the crisis had also experienced substantial increases in prices.

Ensuring price stability is key for competitiveness.

It provides the nominal anchor for future price developments. It is key for the euro area as a whole as much as it is key for all countries.

Significant and persistent deviations from price stability translate into losses of competitiveness and should be corrected.

Restoring competitiveness is vital for a number of countries within the euro area. Policies to ensure sufficient responsiveness in wages and prices, as well as to boost productivity, are crucial ingredients in the rebalancing.

6--CIA concerned about possible trial of Iraq's Vice President al-Hashemi, Press TV

Excerpt: The director of the US Central Intelligence Agency (CIA), David Petraeus, has expressed concerns about the possible trial of Iraqi Vice President Tareq al-Hashemi on charges of involvement in terrorist activities.

Hashemi is accused of ordering attacks and deadly bombings against innocent Iraqi civilians as well as government and security officials over the past years, including a November 2011 car bombing in the capital Baghdad that apparently targeted Prime Minister Nouri al-Maliki.

On December 19, 2011, an investigative committee within the Iraqi Interior Ministry issued an arrest warrant for Hashemi after three of his bodyguards made confessions of taking orders from him to carry out the terrorist attacks. Hashemi later fled to the Kurdistan region. Kurdistan Region President Massoud Barzani has illegally provided refuge for Hashemi and refused to hand him over to the Iraqi government.

Reports say Petraeus is worried that in case Barzani hands over Hashemi to the authorities in Baghdad, the behind-the-scene facts about the bombings and terrorist attacks in Iraq will be laid bare.

7--Al Jazeera director general linked to CIA, RT

Excerpt: Al Jazeera's director general has resigned due to rumors he is linked to the CIA. Critics say that would explain the switching US attitude towards the Qatar-based news network.

Not all that long ago, the Al Jazeera news network was considered “evil” by Washington. However the White House has certainly changed its tune, recently praising the channel’s ground-breaking coverage.

That is little surprise, say critics, after WikiLeaks revelations exposed Wadah Khanfar, its director general, as having links to the CIA, prompting him to hurriedly quit. Stepping into the vacant chair is Sheikh Ahmed bin Jassim Al Thani, an executive at Qatargas and a member of the country's ruling dynasty. This has fueled fears that Doha’s voice will get louder.

Al Jazeera, or “The Island”, is not in isolation anymore. Right now Al Jazeera English is seen in 2 million American households.

The channel’s in-your-face coverage of the violent turmoil in the Middle East and Libya, has grabbed it a cozy place alongside other local news sources in the US. The recent WikiLeaks claim about Al Jazeera’s now-resigned director general, though, indicate a longer-term interest in the channel among certain sections of America.

Qatar these days is interested in maintaining good relations with the US, media analyst Phil Rees told RT.

“Of course many of us know that Al Jazeera and the Qatari government have for some years worked quite closely with the United States government.

Remember that Qatar depends [on] its security from the United States. It has anti-missile systems based there, it has a large US military base,” he said. “Certainly for about five or six years there have been contacts between the US government and Al Jazeera, but it suited Qatar and it suited Al Jazeera. [Channel’s] anti-America stance was known about on the Arab street because that gave Qatar and Al Jazeera itself a great deal of popularity. Unfortunately these cables revealed the reality that there have been some back-room negotiations.”

Following his resignation from the station, Wadah Khanfar issued a statement saying that: “the target that was set up from the beginning was to transcend Al Jazeera into an international news network,” and that they did.

Years ago the channel used to send messages from Osama to Obama and was dubbed “Al-Qaeda TV”, but in 2004 Al Jazeera started getting live shout-outs on local US networks.

”This is a situation where media has become a war zone in itself and who controls the media?” Danny Schechter, a blogger and media critic, told RT. “We see this with Fox news, we see this with other channels around the world – now we are seeing it with Al Jazeera. I think the US will try to pressure Al Jazeera even more.”

8--No independent journalism anymore’says ex-Al Jazeera reporter, RT

Excerpt: Television channels have turned into political parties, pushing the agenda for some outside forces, former Al Jazeera correspondent in Beirut, Ali Hashem, told RT. Hashem has come in spotlight after resigning from the television citing its bias.

In emails leaked by Syrian hackers, Ali Hashem vented his anger over Al Jazeera's one-sided coverage of Syria and its refusal to cover the events in Bahrain. In an exclusive interview with RT, the former Beirut correspondent Hashem refrained from discussing his resignation, but stressed that these days, independent media is a myth.

“There is no independent media anymore. It is whose agenda is paying the money for the media outlet,” he said. “Politicization of media means that media outlets are today like political parties. Everyone is adopting a point of view, fight for it and bring all the tools and all the means they have in order to make it reach the biggest amount of viewers.”

9--Liberation NATO-style, daily mail

Excerpt: Libya blown to smithereens

10--Little US Popular Support for Israeli Attack on Iran, antiwar.com

Excerpt: According to the survey by the University of Maryland’s Program on International Policy Attitudes (PIPA), only one in four U.S. respondents favors an Israeli strike, while nearly seven in 10 (69%), including a strong majority of Republicans (59%), said they prefer continuing negotiations with Tehran.

Only one in seven (14%) of the survey’s 727 respondents said they thought Washington should encourage an Israeli attack, while 80% said the U.S. should either discourage Israel from taking such a step (34%) or maintain a neutral position (46%).

And, consistent with their preference for diplomacy over military action, nearly three out of four respondents, including 69% of Republicans, said the U.S. should act primarily through the U.N. Security Council, rather than unilaterally, in dealing with Iran’s nuclear program.

11--The collapse of American democracy, WSWS

Excerpt: One week ago, US Attorney General Eric Holder delivered a speech asserting the right of the president to secretly order the assassination of American citizens. Citing the so-called “war on terror,” he claimed that this never-before-asserted authority was lawful under the president’s war-making powers and was not subject to judicial review.

Holder stressed that the president’s power to order extra-judicial killings was part of a range of powers including the abduction of suspected terrorists and their indefinite internment, without trial, either in civilian or military prisons. Having noted that terrorists “reside within our own borders,” he insisted that the government’s authority to use lethal force was “not limited to the battlefields of Afghanistan.”

12--Hunger and homelessness on the rise in Greece, WSWS

Excerpt: The social devastation of Greece over the past three years has led to a drastic increase in homelessness and hunger.

It is officially estimated that a third of Greeks now live below the poverty line, but things are much worse in reality. According to the national statistics bureau ELSTAT, more than 3 million (27.7 percent) of Greece’s 11 million people were already on the edge of poverty or social exclusion in 2010, at the start of the crisis. Since then, the conditions of life for millions have worsened immeasurably....

The Financial Times commented this month: “As Greece’s crisis deepens, the social fabric is showing signs of unravelling, raising questions about how much more austerity the country can take. Job losses, along with pension cuts, have created a new class of urban poor.”..

“People come here with a lot of problems. A lot of them are homeless. Most of them have health problems. We send them to other help organizations. A lot of people have lost their jobs and can’t afford food any longer. They can’t find work, get no financial support and can’t get the finance to feed their families.”

Exarchou was a young girl when the fascist military regime took power in Greece in 1967. “If it goes on like this, it is going again in the direction of a junta,” she warned.

13--The student debt explosion, WSWS

Excerpt: A report on student debt published March 5 by the Federal Reserve Bank of New York highlights the social disaster confronting young people in the United States.

Amid mass unemployment, falling wages and rising tuition, more and more college graduates are unable to keep up with student loan payments. The report found that over one quarter of student loan borrowers are late on their payments, far higher than the 15 percent reported in earlier surveys.

The total amount of student loan debt in the United States has mushroomed to $870 billion, surpassing the total level of debt on auto loans ($730 billion) and credit cards ($693 billion). Compared to other types of loans, moreover, student loan debt is concentrated in a smaller segment of the population. While 80 percent of the US population has credit card debt, only 15 percent has outstanding student loans. The burden on individuals is enormous, with the average student borrower owing $23,300.

As tuitions have increased, so have the debt burdens taken on by students. The class of 2010 graduated with an average student loan debt of $25,250, up 29 percent from $19,646 for the class of 2006, according to the Project on Student Debt. Meanwhile, wages for college graduates have fallen. The hourly income for male college graduates age 23 to 29 fell by 11 percent in the last ten years, according to a report published last week by the Economic Policy Institute.

14--The Kandahar massacre and fight against war, WSWS

Excerpt: The past 10 years have seen the perpetration of one atrocity after the next—Guantanamo Bay, Abu Ghraib, the destruction of Fallujah, Iraq in 2004, the Haditha massacre of 24 Iraqi civilians in 2005, the countless drone strikes and nighttime raids in Afghanistan and Pakistan that routinely massacre dozens of people.

These daily acts of barbarism are swept under the rug by the US media, sanitized as attacks on “terrorists” or, when civilian deaths cannot be denied or ignored, rationalized as “collateral damage.” In a clear demonstration of the attitude of the Obama administration, Bradley Manning, who allegedly sought to expose these crimes by releasing documents to WikiLeaks, now faces a court martial, life in prison, or even the death penalty.

Atrocities like this accompany every war of colonial aggression. There are many parallels between Sunday’s incident and the My Lai massacre of up to 500 unarmed civilians by US soldiers in Vietnam in 1968, 44 years ago this Friday. Asked about the earlier event on Monday, Obama insisted that the bloodbath in Kandahar was different: “It's not comparable. It appeared you had a lone gunman who acted on his own. In no way is this representative of the enormous sacrifices that our men and women have made in Afghanistan.”

The attempt to present the Kandahar massacre as the act of madness perpetrated by a “lone gunman” explains nothing. First of all, the circumstances of Sunday’s killing are by no means clear, and there are reports that several soldiers may have been involved.

Moreover, the occupation by its very nature produces such atrocities. American soldiers are taught to treat the entire population as the enemy, which has an element of truth given the mass opposition. The soldiers are themselves treated with contempt by the military brass and the American government, sent in tour after tour, worn down mentally and physically to the point of breakdown.

15--The US elections and the jobs crisis, WSWS

Excerpt: The lack of any meaningful proposal by either major US political party to address mass unemployment in the 2012 election underscores the fact that the two big business parties have nothing to offer the unemployed and are indifferent to their plight.

Whenever politicians from either party speak of plans to “create jobs,” they mean only further deregulation, tax cuts, or outright cash handouts to corporations....

The way to solve the unemployment crisis is through a massive public works program, on the scale of the actual social needs, i.e., trillions of dollars, to rebuild the crumbling US infrastructure and secure the right of everyone to the necessities of social life. To this end, the major corporations, which today dominate society like a malignant cancer, must be placed under public ownership and the democratic control of working people.

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