Friday, January 11, 2013

Today's links

1---Gitmo-go-round: No solution in sight on 11th Guantanamo anniversary, RT

"The United States has an operation that can only be described as a medieval torture chamber. It’s in violation of Geneva Convention, and in violation of the US constitution. It violates legal principles such as trial by jury that goes back thousands of years," anthropologist Dr. Mark Mason said to RT.

2---Syria: A jihadi paradise, asia times

3---Hagel Nomination: --The Revenge of the Realists, antiwar

The Hagel appointment is one indication of this new direction in our foreign policy. Hagel’s position as one of the leading Republican "realists" is well-known. He is a part of the same group which was briefly known as the Committee for the Republic – Brent Scowcroft, Richard Armitage, C. Boyden Gray, and, and other old foreign policy hands from the days of Bush Senior – which is in loose alliance with Democratic foreign policy honchos like Zbigniew Brzezinski and Lee Hamilton. They aren’t anti-interventionists, but rather cautious internationalists, as John Judis explains here: they are, however, our invaluable allies in the present context. What they seek, after the madness of the Bush Doctrine, is to impose some sense of limits on a dangerously over-extended empire, in order to redirect our resources to the project of "nation-building" at home, rather than in the wilds of Central Asia.

They are, in short, tired of the neocons and their continued dominance in determining the foreign policy consensus in Washington, and they have mounted – in league with the President – an ambitious campaign to get rid of them once and for all. Hagel is their man, and his views – a reluctance to engage in military action, a willingness to engage our traditional enemies, and a desire to draw the thorn from the festering wound of the Middle East and finally settle the Palestinian question – reflect the emerging policy consensus, the “new normal” of what Brezinski calls the “post-imperial” era....

The Hagel nomination is a direct challenge to several foreign policy orthodoxies: 1) That Iran, which supposedly represents a dire and imminent military threat, cannot be dealt with diplomatically, and a military solution is our chief option, 2) That Israel must be supported unconditionally, and always, no matter how many of their neighbors they invade or dispossess, and 3) That our bloated-beyond-belief military budget cannot be cut without endangering our national security interests.

4--Program Cuts Far Outweigh Tax Increases in Deficit Reduction to Date, off the charts

5---Japan Approves $116 Billion for Urgent Economic Stimulus, NYT


6--More on the "qualified mortgage", Bloomberg

The groups split on the merits of the ability-to-repay rule. The Center for Responsible Lending, a Durham, North Carolina-based advocacy group, applauded the measure, while Alys Cohen, a staff attorney with the National Consumer Law Center, said that the bureau’s new requirement “invites abusive lending” and undermines goals of the Dodd-Frank law.

“The safe harbor the bureau has afforded for prime loans provides absolute shelter to lenders who knowingly make unaffordable loans, in direct violation of congressional intent,” Cohen said in an e-mailed statement.

7---Betrayed by Basel, NYT

8---Why the Unemployment Rate Is So High, NYT

The economic evidence is compelling. The high unemployment rate is the result of weak demand, not structural mismatches. And the longer workers are unemployed, the more their skills, contacts and links to the labor market atrophy, the less likely they are to find a job and the more likely they are to drop out of the labor force.

As a result, what is currently a temporary long-term unemployment problem runs the risk of morphing into a permanent and costly increase in the unemployment rate and a permanent and costly decline in the economy’s potential output. That’s what the Federal Reserve is worried about. It’s too bad that more members of Congress don’t share this concern.

9---Job Openings and Hiring Have Not Improved Since Early 2012--Still Not Enough Jobs to Go Around (CPI) counterpunch

10---Billionaires gain as living standards fall, WSWS

Nowhere is the contrast starker than in Spain, where Senor Ortega, the founder of Inditex and its 1,600 Zara stores, increased his fortune by $22.2 billion in the course of 2012.

The capitalist crisis has brought disaster for Spanish working people. Household wealth has fallen by 8 percent on average, second only to depression-ravaged Greece among European countries, while both overall unemployment and youth unemployment set records at 26.6 percent and 56.5 percent, respectively. The right-wing government headed by Prime Minister Mariano Rajoy has announced a series of massive cuts in public spending, devastating public education and other essential services.
But while the Spanish working class suffers through the worst economic conditions since the Great Depression, one Spanish billionaire possesses a personal fortune greater than the total amount of the cuts announced by the Rajoy government. At $57.5 billion, Ortega’s wealth would have allowed him to carry out last month’s $52 billion bailout of the Spanish banking system, which effectively wrecked Spain’s national budget, and have billions left over.

In recent months, Spain has been the scene of social tragedies unheard of since the depths of Franco fascism, including suicides by victims of foreclosure, and unemployed workers and the elderly picking through garbage dumps for food.

When in the human body a small group of cells begins to multiply and grow without limit, at the expense of other cells and the organism as a whole, medical science has a specific term for the phenomenon: it is called a cancer. In the social organism of 21st century capitalism, the super-rich play that fundamentally pernicious and destructive role

11---US life expectancy lowest among industrialized countries, WSWS

12---Will housing prices keep going up? Dr Housing Bubble

Back in the early 1990s the 30 year fixed rate mortgage hovered close to 9 percent. At that level, a buyer with an average income was able to afford closer to $110,000 to $120,000 in a mortgage. Today, we are inching closer to $228,000 with rates in the low 3 percent range. We discussed this in a previous post showing that Japan in spite of low rates has seen zero real growth in real estate values for nearly 30 years.
What is interesting about the chart above is what happens in a few years. You see what happens once rates begin to move up in 2015 as many are predicting. At this point, even a slight movement up will disrupt the market (i.e., if rates go from 3 to 6 percent). The amount people can take on decreases with the proportionate rise of interest rates. So right now, even more modest predictions do not see rates dipping much further from here and subsequently, in a couple of years, rates are very likely to go up...

Are we on a sustainable path in terms of seeing prices increase? Hard to say. We probably have a bit more gas in the low interest rate gas tank and with low inventory on the market, those that want to buy have to compete with hedge funds, flippers, FHA insured loan buyers, and your regular family trying to buy. The interesting thing is that psychology is very much in mania mode. Like in the 2000s, a good number of people knew we were in a bubble but after seeing the gains in the market, many decided they were going to jump contrary to understanding the numbers. Today, many understand that low rates are artificial, incomes are not going up, and a big part of the low inventory is based on how the banks are processing and leaking out distressed properties. Understanding and action are always two different things however. We don’t need to dig into the archives of housing history to understand that.

13---Great Canadian real estate crash of 2013, Macleans
The housing bubble has burst, and few will emerge unscathed

housing correction—or, possibly, a crash—is no longer coming. It’s here. And you don’t have to own a tiny $500,000 condo in downtown Toronto or a $1.3-million bungalow in Vancouver to get hurt. With few exceptions, the impact will be indiscriminate as the euphoria of rising house prices is replaced by fear. The only question now is how bad things will get. If the decline picks up speed, as many believe it will, there could be a nasty snowball effect. Construction jobs will be lost.

Homeowners will end up underwater. Consumers may stop spending. “I’m getting very nervous,” says David Madani, an economist at Capital Economics, who has been predicting a drop in housing prices of up to 25 per cent in Canada. “I know I’m a bear, but the housing market itself has the potential to put us in a recession, let alone what’s happening in Europe and the U.S.”

Canada could be setting itself up for a devastating one-two punch: a painful domestic housing slump just as Canada’s export and resource-driven economy is hit with falling global demand. The most acute threat is the U.S. debt crisis, which, if handled poorly, could tip the world’s largest economy back into recession, taking Canada along with it. Meanwhile, Europe remains mired in a recession and concerns about China’s growth persist. “I feel like Canada is in the path of a perfect storm here,” Madani says. Other than housing, “the key pillar of strength is our booming resource sector,” says Madani. “If you take that away, it’s just going to knock the lights out.”

The sudden cooling in Canada’s housing sector seemingly struck without warning. As recently as last spring, bidding wars were common in many Canadian cities as were the “over asking!” stickers agents slapped on “for sale” signs. The peak may have been reached in March when one Toronto bungalow made headlines after selling for $1.1 million, more than $420,000 above the list price.

14---Ready? Greater Fool

how about property values? If rates rise even a half point, with affordability already at the breaking point in most cities, won’t prices have to drop? Of course they will. And this is exactly where we’re headed. In other words, all those delusionals who have flooded this site for the past few years saying Canada is the new Japan, that the cost of money could never rise again and interest rates would actually be dropping, will simply have to change their Depends. There was never any doubt rates had but one direction in which to travel.

But don’t take this from me, just because I’m always right and have six-pack abs. I mean, here’s the biggest bank repeating my words. This week RBC (where mortgages come from) also stepped up to the plate and said the Bank of Canada will, in fact, insert the carrot.

“The Bank of Canada should be the only major central bank to actually make the move to tighten this year,” head fixed income and currency strategy dude told analysts. “We’re looking for 50 basis points in aggregate tightening skewed toward late this year.” Joining the Royal, by the way, are economists at TD Bank. And the GreaterFool Economics Department (pictured above). After all, it’s so obvious where we’re headed.

The US economy is in the middle of an awakening which every month is adding jobs, more real estate sales and consumer confidence. The re-elected president just won the fiscal cliff fight against a bunch of Republicans still wondering where their manhood went. The S&P 500 has re-established a five-year high after climbing 13% in 2012. US corporate profitability is at near-record levels and grew 12% in the last quarter. Even in little Canada we saw about 40,000 jobs created last month, where an American renaissance has an immediate impact.

Given the renewal of growth, there’s no way central banks will keep throwing gas on the economy in the form of stimulus spending and, especially, rock-bottom cheapo money. To do so would court inflation, bring damaging wage-price escalation and lessen hard-won productivity. Nope. Ain’t gonna happen.

15--The Political Economy of Climate Change---Why the free market won't save us, Robert Urie, counterpunch

Capitalist imperialism is destroying the planet, largely for beings that see little benefit (and often great harm) from the system. The only way this won’t constitute mass murder on a scale never before imagined in human history is if global warming isn’t really a threat; capitalist production isn’t behind it, or some combination of the two. Capitalist apparatchiks are pursuing two tracks in response—to replace social discourse around the issue with a commercial response—one that uses all means available to persuade people the problem isn’t real and / or the people responsible for it are not the people responsible for it. The second track is to propose solutions that (1) don’t call into question the nature of the problem—the political economy of capitalism is responsible for global warming and (2), provide the appearance of action toward a solution without effective action taking place.

Those looking to Western governments for an effective response face two challenges. In the first, in the face of global warming, the premise of capitalism, that individuals acting in their individual interests produce good collective outcomes, is demonstrably false. This system has apparently produced the worst of all possible outcomes—catastrophic environmental failure that threatens most life on the planet. If the theory of individual interests accumulating to collective good is false, so is the classical liberal conception of the state. If the state’s role, as imagined in capitalist theory, is the protection of ‘private’ interests and private interests are driving the world toward collective suicide (or rather capitalist homicide), the state must be recovered to serve collective interests. As the private interests currently in control of the state are tightening their grip on power through the build out of the corporate police state, I leave it to readers to propose non-confrontational counter-measures likely to be effective. Otherwise, global warming is the confrontation forced upon us.

Finally—Thomas Malthus was proved a captive of his ideology with his prediction of entropy, mass starvation as a growing population faced a static food supply. Mr. Malthus was writing in the early stages of global capitalism’s expanding reach. The agricultural technologies tied to capitalist production expanded the food supply to feed the growing population. In fact, capitalism re-engineered ‘the world’ to be dependent on capitalist production. Technological solutions to global warming will no doubt be put forward and tried. But technology is inexorably tied to the logic of capitalist production as capitalism is emerging as ‘the problem.’ Only a fundamental shift away from the premises of capitalism will provide workable solutions. And global warming is a gradual problem in a political system that responds to crisis. A politics of crisis around global warming must arise for effective political action to coalesce.

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