1---"Model development zones,"---Rise of the corporate state, Guardian
Honduras is set to host one of the world's most radical neo-liberal economic experiments under a plan to build from scratch the rules, roads and rafters of a "charter city" for foreign investors.
The Central American nation hopes the plan for model development zones, which will have their own laws, tax system, judiciary and police, will emulate the economic success of city states such as Singapore and Hong Kong.
2--Bernanke Defends Asset Buying as Benefits Outweigh Risks, Bloomberg
We do not see the potential costs of the increased risk- taking in some financial markets as outweighing the benefits of promoting a stronger economic recovery,” Bernanke said today in testimony to the Senate Banking Committee in Washington. “Inflation is currently subdued, and inflation expectations appear well anchored.” ...
Bernanke said that a “potential cost” of Fed policies that central bankers take “very seriously” is the “possibility that very low interest rates, if maintained for a considerable time, could impair financial stability.”
Policy makers have publicly debated the risk of financial instability, with Fed Governor Jeremy Stein saying earlier this month that some credit markets, including leveraged loans and junk bonds, show signs of potentially excessive risk-taking. Kansas City Fed President Esther George has warned of risks from farm land prices at “historically high levels.”
“All that said, given the fundamental factors in place that should support the demand for housing, we believe the effect of the troubles in the subprime sector on the broader housing market will likely be limited, and we do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system. The vast majority of mortgages, including even subprime mortgages, continue to perform well. Past gains in house prices have left most homeowners with significant amounts of home equity, and growth in jobs and incomes should help keep the financial obligations of most households manageable.” – Ben Bernanke – May 17, 2007
3---Where O Where Did My Two Trillion Go?, dshort
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4---Transcript of "Lost Decades: The Making of America's Debt Crisis and the Long Recovery", IMF
5---Home Prices Soar on Short Supply, Investor Demand, Realty check
Yes, home prices are on the rise for non-distressed properties, which accounted for 65.0 percent of total home purchase transactions tracked by HousingPulse in January," according to the survey. "But no, home prices for REO [Real Estate Owned—or bank owned] properties in need of repair—the type banks look to unload after a foreclosure—have not been rising along with prices for non-distressed properties. They have been moving in the opposite direction."
Prices for damaged foreclosures are at their lowest level in over four years, due to reduced demand by current and first-time home buyers. Investors have increased their purchase share of these properties, accounting for 65.4 percent of sales, up from 58 percent a year ago, according to the survey. Since investors largely buy in bulk, they get bigger discounts.
While home prices continue to surge, they are still 29 percent below their peak in 2006.
With the all-important spring season knocking on housing's door, price gains will depend on how many more homes are listed for sale. Demand is already waiting.
6---Stalemate: Italy votes against austerity. Grillo storms to victory, naked capitallism
German economy minister Philipp Rösler was putting a brace face on events, saying that he could imagine a better result for the pro-reform parties.Ah, but there are alternatives! As Ambrose-Pritchard noted, Italy could depart the eurozone, and my German-reading colleagues say that there was also discussion of Germany leaving the Eurozone. The German concern is that they are facing open ended rescues of those profligate Latins (which are in reality rescues of those profligate French and German bankers, somehow that part is never included in the equation). But the rescues were destined to continue until Germany addressed its chronic trade surpluses. Trade surpluses entail financing your trade partners. The alternative proposed by economists like Yanis Varoufakis is for Germany to invest heavily in the periphery countries, to increase the wealth of their population and enable them to make products that Germans would buy. It appears the German plan (if there was a plan, I think the Germans have been driven by their desire to avoid embarrassing questions about banks and their emotional attachment to manufacturing dominance and the virtues of saving) was to impose a German diktat on the periphery, which would make their governing apparatus irrelevant (that is pretty much the state of play in Greece) and enable them to acquire assets on the cheap. The problem is, if Greece is the model, is that you destroy so much of the economy that there is not much left worth salvaging. You not only destroy your cheap takeover opportunity, you also destroy your trade partner. Whoops!
But in a statement, Rösler insisted there was no other way:
There is no alternative to the structural reforms that are already underway and which include consolidating the budget and boosting competitiveness.
The German foreign minister also banged the same empty drum. Again, from the Guardian:
Germany’s foreign minister, Guido Westerwelle, has now weighed in, becoming the third German politician to argue that Italy must stick with Monti’s reform plan.7--Missile defense is a threat to Russian national security, RT-
Speaking in Berlin, Westerwelle said it was important that a stable Italian government is formed quickly – one that is committed to Monti’s policies
Methodical attempts are made to rock the strategic balance in one way or another. The US has practically started the second stage of its plan to set up a global missile defense system and there are probes into the possibility of NATO’s further eastward expansion. The danger of militarization of the Arctic exists,”the Russian President said at the Wednesday session with the Defense Ministry’s collegium – the panel of top military officials and commanders chaired by the recently appointed Defense Minister Sergey Shoigu.
8--- If you thought the European crisis was over... it’s probably only just beginning, zero hedge
European Banks remain Rotten to the Core: If austerity has failed economies, it’s singularly failed to address the banking crisis. The US has spent the last 5-years deleveraging and recapitalising its banking system, and that is now paying off with growth in personal and commercial lending, restoring housing markets and seeding growth.
What did Europe do? Debated banker salary caps and the self-immolation of the financial system through a transactions tax! The Elites singularly failed to address bank’s previous fatboy lending practices – they remain essentially over-levered, over-regulated and dangerously exposed to European risk. Every policy response, like long term LTROs or even OMT, was a hasty panicked infusion of liquidity to keep the banks in pretend and extend mode. Draghi did a superb job keeping the illusion going.
But aside from that, all Europe has done to address the banking crisis at its core is make a series of promises about “save the Euro at all costs”. Talk is cheap. And has done nothing to make Europe’s bad banks safer. Instead, they became even more bloated and exposed to Euro risk!
Sovereigns remain in Crisis: The poor South is caught with the wrong currency – uncompetitive, unproductive and unable to deflate to compete. Even Ireland’s status as the poster boy of austerity is bogus – economic growth is largely on the balance sheet of tax sheltering multinationals.
The results of austerity are all too obvious – rising unemployment, social tensions, and electoral dismissal. Although some of the crisis economies have done much to try to restructure and redirect their economies, in the teeth of the Austerity gale it’s proved pretty much impossible. It takes years for economies to become as lethargic as the south has become, and it can’t be turned around overnight.
Renewed Fears for the Euro: The core tenant of belief of the Euro – austerity is failing. There is no easy way to redirect the institutions of the Euro to create growth. The bloated Brussels bureaucracy would be a highly imperfect tool to sponsor European growth – although I am sure they will tell us otherwise.
The ECB’s reluctant acceptance of its de-facto role of lender of last resort is heavily qualified by the need for countries to sign up to austerity prior to ECB OMT support – that is increasingly politically unacceptable in the wake of the Italy election. A new easier OMT will be required with all the national votes and treaty changes that will require.
If you thought the European crisis was over... it’s probably only just beginning
9---The end of the Third Republic, Beppe Grillo blog
10---Everybody Listen Up! The Deficit Is Actually Shrinking, Despite Beltway Propaganda, alternet