Saturday, June 1, 2013

Today's links

1---Monsanto loses in Europe, naked capitalism

Monsanto’s previous flagship products included the once harmless DDT, now banned worldwide; a family of industrial chemicals called PCBs that are now considered highly toxic; Agent Orange, the defoliant liberally used during the Vietnam War and promoted as harmless to people, with grave results for the Vietnamese and US soldiers who came in contact with it. And there was saccharine, the sweetener that ended up being a carcinogen. More recently, Monsanto reinvented itself and decided to save mankind not with a DDT successor, but with genetically modified seeds, whether people wanted them or not....

Triumphs against multinational lobbying giants are rare. So, even mini triumphs count. And Monsanto’s admission that it would quit trying to force GMO crops down people’s throats in Europe, limited as this admission may be, is now celebrated as one of them.
2--President Obama uses a sledgehammer against dissent, Guardian

From Jeremy Hammond to Bradley Manning and the AP, Obama's 'assault on journalism' is a threat to our democracy

President Barack Obama and Attorney General Eric Holder have used the Espionage Act six times to prosecute whistle-blowers – more than all previous presidents combined. Obama's assault on journalism and his relentless war on whistle-blowers are serious threats to fundamental democratic principles on which this nation was founded.

The job of journalists is to hold those in power accountable. Our job is to be the fourth estate, not "for the state." Let us be.

3---The Israeli-Jihadist Alliance, Justin Raimondo, antiwar

Why would the Israelis aid a “rebel” army made up almost exclusively of hardened jihadists who supposedly hate Israel and want to see its non-Arab inhabitants driven into the sea? For the same reason they initially nurtured Hamas – because they believe it serves their long range purposes. The reason the Israelis granted official legal status to the group that eventually morphed into one of the Jewish state’s most implacable enemies was simple: to divide the Palestinian resistance, and therefore weaken it. At the time, Fatah, the largest component of the secular Palestinian Liberation Organization, was the most effective opposition to the Israeli occupation. The Israelis thought aiding an Islamist competitor would achieve certain desired ends: the decline of the PLO’s influence, the alienation of Arab governments from the Palestinian cause, and the marginalization of that cause in Western eyes. All three goals have since been achieved.

The Israelis are assisting the Syrian jihadists for similar reasons: because it fits in rather neatly with their long-range goals. For a look at those goals, all you have to do is peruse a 1996 document prepared for Prime Minister Benjamin Netanyahu by leading neoconservatives, proposing a radical new Israeli “defense” strategy. Reading “A Clean Break: A New Strategy for Securing the Realm” is like reading a timeline of events in the Middle East for the past ten years. As I wrote in October of 2003, on the occasion of the thirtieth anniversary of the Yom Kippur War – a day when Israel bombed alleged “terrorist camps” in Syria:

“The paper, co-authored by Richard Perle, James Colbert, Charles Fairbanks, Jr., Douglas Feith, Robert Loewenberg, David Wurmser, and Meyrav Wurmser, portrayed Syria as the main enemy of Israel, but maintained the road to Damascus had to first pass through Baghdad:

“‘Israel can shape its strategic environment, in cooperation with Turkey and Jordan, by weakening, containing, and even rolling back Syria. This effort can focus on removing Saddam Hussein from power in Iraq – an important Israeli strategic objective in its own right – as a means of foiling Syria’s regional ambitions. Jordan has challenged Syria’s regional ambitions recently by suggesting the restoration of the Hashemites in Iraq.’”

Well, we didn’t get the Hashemites – but Maliki will do. Or, rather, near complete chaos will suffice, as the religious civil war wracking the Muslim world takes another potential enemy out of contention. Now that Iraq lies bleeding by the wayside, King Bibi is speeding down that “Clean Break” highway, eager to turn two more regional rivals into roadkill. ....

Bin Laden’s legions fought in the Kosovo war on the side of their Kosovar Muslim brothers and NATO: many present day jihadists are veterans of that conflict, just as they are veterans of Afghanistan, Libya, and Chechnya – all regions where the jihadists and the Americans are de facto allies. In the Balkans, we used them to block Russian influence in Europe: in Syria, we are using them to run interference with the Iranians. In resisting – at least publicly – the call to intervene more visibly, this President is contravening the trajectory of American policy in the region – and the US ship of state, an enormous and therefore unwieldy vessel, is not so easily turned around. It has a momentum all its own.

4---Assad talks, Russia walks, Pepe Escobar, asia times

Syria is now Militia Hell; much like Iraq in the mid-2000s, much like the Western-imposed, "liberated" Libyan failed state. This Afghanization/Somalization is a direct consequence of NATO-GCC-Israel axis interference. [2] So Assad is also right when he says the West is adding fuel to the fire, and is only interested in regime change, whatever the cost.....

And don't forget Pipelineistan Assad could also have talked about - what else - Pipelineistan. It would have taken him two minutes to explain the meaning of the agreement for the US$10 billion Iran-Iraq-Syria gas pipeline that was signed in July 2012. This crucial Pipelineistan node will export gas from the South Pars field in Iran (the largest in the world, shared with Qatar), through Iraq, towards Syria, with a possible extension to Lebanon, with certified customers in Western Europe. It's what the Chinese call a "win-win" situation.

But not for - guess who? - Qatar and Turkey. Qatar dreams of a rival pipeline from its North field (contiguous with Iran's South Pars field), through Saudi Arabia, Jordan, Syria and finally Turkey (which bills itself as the privileged energy transit hub between East and West). Final destination: once again, Western Europe.

As in all Pipelineistan matters, the crux of the game is bypassing both Iran and Russia. That's what happens with the Qatari pipeline - frantically US-supported. But with the Iran-Iraq-Syria pipeline, the export route may originate nowhere else than in Tartus, the Syrian port in the Eastern Mediterranean that hosts the Russian navy. Gazprom would obviously be part of the whole picture, from investment to distribution.

Make no mistake; Pipelineistan - once again tied up with bypassing both Russia and Iran - explains a great deal about why Syria is being destroyed. 

5---How Obama and Al-Qaeda Became Syrian Bedfellows, Shamus Cooke, counterpunch

The New York Times also confirmed the complete dominance of extremists on the rebel side:
“Nowhere in rebel-controlled Syria is there a secular fighting force to speak of.”
Thus, the minority of secular rebel fighters are not leading the civil war and will not be in power if Assad falls. Instead, honest Syrian revolutionaries will instantly fall victim to the extremists, who will immediately proceed to a mopping-up mission of their former allies.

It’s now clear that Obama’s foreign policy in Syria is actively encouraging terrorism. Many rebel-controlled areas in Syria are now new safe havens for terrorists, and there have been hundreds of terrorist bombing attacks against the Syrian government, many of which have targeted civilian areas.
While the U.S. is pouring arms into the jihadist-controlled areas, they have also downplayed the atrocities committed by these rebels, which are well documented on Youtube and include a multitude of war crimes that include beheadings, group execution of prisoners, ethnic cleansing, and the recent episode where a famous rebel commander was videotaped mutilating a dead Syrian solider and eating his heart.

By minimizing this barbarism the Obama administration ensures that it will continue, since the extremists are empowered by U.S. support and are shielded in the U.S. media and protected from international political pressures....

Now the debate among U.S.-NATO countries is whether to give more sophisticated weaponry to the extremist-dominated rebels in Syria. The Obama Administration is pressuring the European Union to drop its arms embargo on Syria so that a new torrent of weapons can flood the country (apparently the CIA operations haven’t yet completely drenched Syria with guns).

6---How Syria Became a More Dangerous Quagmire Than Iraq, Patrick Cockburn, counterpunch.

The feeling that the future of whole states is in doubt is growing across the Middle East – for the first time since Britain and France carved up the remains of the Ottoman Empire after the First World War. ‘It is the end of Sykes-Picot,’ I was told repeatedly in Iraq; the reference was to the agreement of 1916 which divided up the spoils between Britain and France and was the basis for later treaties. Some are jubilant at the collapse of the old order, notably the thirty million Kurds who were left without a state of their own after the Ottoman collapse and are now spread across Iraq, Turkey, Iran and Syria

When the US invaded Iraq in 2003, it changed the overall balance of power and destabilised every country in the region. The same thing is happening again, except that the impact of the Syrian war is likely to be less easily contained. ...

Five distinct conflicts have become tangled together in Syria: a popular uprising against a dictatorship which is also a sectarian battle between Sunnis and the Alawite sect; a regional struggle between Shia and Sunni which is also a decades-old conflict between an Iranian-led grouping and Iran’s traditional enemies, notably the US and Saudi Arabia. Finally, at another level, there is a reborn Cold War confrontation: Russia and China v. the West. The conflict is full of unexpected and absurd contradictions, such as a purportedly democratic and secular Syrian opposition being funded by the absolute monarchies of the Gulf who are also fundamentalist Sunnis.
By savagely repressing demonstrations two years ago Bashar al-Assad helped turn mass protests into an insurrection which has torn Syria apart..

That Assad’s government is on its last legs has always been something of a myth..

From an early stage in the Syrian uprising the US, Nato, Israel and the Sunni Arab states openly exulted at the blow that would soon be dealt to Iran and to Hezbollah in Lebanon: Assad’s imminent fall would deprive them of their most important ally in the Arab world. Sunni leaders saw the uprising not as a triumph of democracy but as the beginning of a campaign directed at Shia or Shia-dominated states. As with Iraq in 2003, Hezbollah and Iran believe they have no alternative but to fight and that it’s better to get on with it while they still have friends in power in Damascus. ‘If the enemy attacks us,’ Hossein Taeb, a high-ranking intelligence officer in the Iranian Revolutionary Guard, recently said, ‘and seeks to take over Syria or Khuzestan’ – an Iranian province – ‘the priority is to maintain Syria, because if we maintain Syria we can take back Khuzestan. But if we lose Syria we won’t be able to hold Tehran.’ Hassan Nasrallah, the leader of Hezbollah, made it very clear in a speech on 30 April that the Lebanese Shia also see Syria as a battleground where they can’t afford a defeat. ‘Syria,’ he said, ‘has real friends in the region and the world who will not let Syria fall into the hands of America, Israel or takfiri groups.’ He believes the very survival of the Shia is at stake. For many in the Middle East this sounded like a declaration of war: a significant one, given Hezbollah’s experience in fighting a guerrilla war against the Israelis in Lebanon. The impact of its skill in irregular warfare has already been witnessed in the fighting at Qusayr and Homs, just beyond Lebanon’s northern border. ‘It probably is unrealistic to expect Lebanese actors to take a step back,’ a study by the International Crisis Group concludes. ‘Syria’s fate, they feel, is their own, and the stakes are too high for them to keep to the sideline.’
The Syrian civil war is spreading

7---Carrington Stops Buying U.S. Rentals as Blackstone Adding, Bloomberg

Hedge fund manager Bruce Rose was among the first investors to coax institutional money into the mom and pop business of single-family home rentals, raising $450 million last year from Oaktree Capital Group LLC. (OAK)
Now, with house prices climbing at the fastest pace in seven years and investors swamping the rental market, Rose says it no longer makes sense to be a buyer. ...

We just don’t see the returns there that are adequate to incentivize us to continue to invest,” Rose, 55, chief executive officer of Carrington Holding Co. LLC, said in an interview at his Aliso Viejo, California office. “There’s a lot of -- bluntly -- stupid money that jumped into the trade without any infrastructure, without any real capabilities and a kind of build-it-as-you-go mentality that we think is somewhat irresponsible.”

Carrington, which started in 2003 as a mortgage investment fund and has managed almost 25,000 rental homes for itself and others, has been joined by hundreds of institutional and international investors buying single-family homes after prices plunged following the housing crash. The firms are building a new institutional real estate asset class from the 14 million leased single-family residences that are worth an estimated $2.8 trillion, according to Goldman Sachs Group Inc.
Even as demand for rentals rises amid a falling homeownership rate, yields are declining and companies formed to buy the homes that have gone public haven’t yet been profitable.

Rising Prices

It’s also getting harder to buy properties cheaply, with purchase prices rising 11 percent in April from a year earlier to a median $192,800, according to the National Association of Realtors. Asking prices for rents rose just 2.4 percent in the 12-month period, according to Trulia Inc. (TRLA)

8---Treasuries Loss Is Biggest in 3 Years as Fed Considers Tapering, Bloomberg

Treasuries recorded the steepest monthly loss since 2009 amid speculation the Federal Reserve could curtail its unprecedented monetary stimulus program if recent improvement in domestic economic data is sustainable.
U.S. government debt tumbled 1.8 percent in the month through May 30, the most since December 2009, according to Bank of America Merrill Lynch index data. Yields extended gains yesterday after a report showed consumer confidence rose in May to the highest level since 2007. A government report on June 7 is forecast to show the U.S. added 165,000 jobs in May and the unemployment rate remained at a four-year low of 7.5 percent.

This is where the battle is going on now -- it’s all about what the Fed is going to do,” said Larry Milstein, managing director in New York of government-debt trading at R.W. Pressprich & Co. “The market’s going to overreact to the economic data that we get over the next couple of months because of that. The Fed is on hold right now and will look at economic data over the summer to decide whether or when to taper.”

9---Imperialism, Syria, and the threat of world war, wsws

As terror bombings and fighting between US-backed Sunni forces and Iranian-backed Shia forces spread from Syria to Lebanon and Iraq, the Syrian war is emerging as the center of a broad sectarian war. The Obama administration and its allies are using the most reactionary forces to restructure the entire Middle East. The resulting conflict is becoming ever more bloody and dangerous, as the imperialist powers move to shore up the faltering position of the opposition by escalating their own intervention.
In a New York Times comment, “In Syria, Go Big or Stay Home,” Ray Takeyh of the US Council on Foreign Relations expressed the thinking of significant sections of the American ruling class: “The sort of intervention needed to bring about a decisive rebel victory would require more than no-fly zones and arms. It would mean disabling Mr. Assad’s air power and putting boots on the ground … Moreover, rather than intimidating Iran, a less-than-decisive American intervention would do the opposite: convince Iran’s leaders that America doesn’t have an appetite for fighting a major war in the region.”
Takeyh’s comment spells out the implications of the policy—shared by Washington and its major European allies—of constantly threatening Iran, Syria, and other Middle Eastern regimes that every option, including war, is “on the table.” Desperate to control an oil-rich, geo-strategically critical region torn by decades of US wars and interventions, the imperialist powers are driven to ever more reckless threats and wars

10--Freddie Mac: Fixed Rates Soar to Highest Level in a Year , dsnews

11---Existing home sales drop in march, dsnews

Last week in a parallel report, the Census Bureau and HUD reported contracts for the sale of new homes increased 2.3 percent to 454,000 in April....

In March, existing-home sales dropped to 4.94 million from 4.95 million in February even though the PHSI rose in January. Closed transactions rose in both January and February although the pending sales index dropped in November and December.
NAR Chief Economist Lawrence Yun continued to blame tight inventories for the slow moving sales pace.
“The housing market continues to squeak out gains from already very positive conditions,” Yun said. “Pending contracts so far this year easily correspond to higher closed home sales in 2013,” he said. “Total existing-home sales are expected to rise just over 7 percent to about 5 million this year. Because of inventory shortages, higher home sales will push up home values to the highest level in five years.”

12---The whispers about private equity exiting the rental market are now out in the open. , Dr Housing Bubble

Wall Street and private equity money has no interest in staying in a business where cap rates are being compressed and rental prices are showing signs of weakness especially when the stock market is on a rocket ship up.  Since the hot money has been in the market for a few years now, there is probably good data on overall rents, vacancy rates, and expenses for prospective investors to make a solid decision to buy a giant block of properties.  The stock market is incredibly hot so there is probably no better time than now to unload into this momentum especially if the plan is to exit via an IPO.  While mom and pop investors are entering the game late, the top in the rental business may be in for big money in certain markets.

13---Rising rates wreak havoc, CNBC

Still, rising rates could not come at a worse time for the housing recovery. Home prices rose over ten percent in March, according to the latest surveys from S&P/Case-Shiller. Every one percentage point rise in mortgage rates reduces the average home buyer's maximum purchase price by 11 percent, figures Green

14--Qualified mortgage:  The amendments are, on balance, favorable to creditors, mortgage brokers, and loan originators. The amendments will take effect with the ability-to-repay rule on January 10, 2014., Law review

15--Loan officers commend CFPB lender compensation ruling, housingwire

The Consumer Financial Protection Bureau decided not to count compensation a lender pays its loan officer employees toward the 3% points and fees cap in the Qualified Mortgage rule, National Mortgage News reports.
"The fact that they are not including compensation paid to a loan officer is huge," said Larry Platt, a partner at K&L Gates. "I think they listened to the industry," he said, and realized that adding LO compensation to the points and fees would have an adverse impact on the availability of credit.

16--Revolving Door: Former CFPB Deputy Benjamin Olson Joins BuckleySandler, mortgage professional

BuckleySandler LLP has announced that Benjamin K. Olson, former Deputy Assistant Director for the Office of Regulations at the Consumer Financial Protection Bureau (CFPB), has joined the firm as Counsel in its Washington, D.C. office.  A recognized expert in the field of consumer financial protection regulation, Olson will bring valuable insights and broad experience on regulatory matters based on his experience at the CFPB, the Board of Governors of the Federal Reserve System (FRB), and the Federal Trade Commission (FTC). Most recently, he supervised the CFPB’s mortgage and credit card rulemakings, including those implementing provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act). Olson will play an integral role in the firm’s Government Enforcement/CFPB practice, handling financial services matters at the intersection of consumer protection and government regulation to provide advice and guidance to clients on government investigations and enforcement actions.

17---Final Mortgage Rules Balance Consumers, Lenders Interests, real estate rama

The final rules issued today by the Consumer Financial Protection Bureau strike the right balance: they safeguard consumers from abusive practices while helping lenders comply with new mortgage lending standards. The rules address two key issues related to the Dodd-Frank Act’s mandate that lenders assess a borrower’s ability to repay, particularly the standards a loan must meet to qualify as a “Qualified Mortgage.”  First, they properly prohibit mortgages with higher fees from gaining Qualified Mortgage (QM) status.  Second, they tailor the QM standards for small lenders who hold mortgages in portfolio and for other community-based lenders.

Importantly, the rules implement the Dodd-Frank Act requirement that payments from lenders to brokers –so-called “yield spread premiums”—be included when calculating whether a mortgage falls above or below the points-and-fees limit that defines a Qualified Mortgage.  Including yield-spread premiums will help prevent a lending abuse that fueled the financial crisis, when brokers were paid big fees to steer borrowers into loans with higher interest rates than what borrowers qualified for. The rules also help lenders by exempting from the Qualified Mortgage calculation the commissions paid by mortgage brokerages to individual brokers and by lenders  to individual loan officers.

The rules announced today continue CFPB’s approach of expanding access to credit while ensuring that loans are sustainable for the borrower and the overall economy.

18---House Rejects CFPB Testimony on Qualified Mortgage Rule, mortgage news daily

While the final rule describes certain minimum requirements for creditors making good faith determinations of consumers' ability to repay their mortgages, it does not dictate that they follow particular underwriting models.  "The Bureau believes that-subject to certain floors created by the Act-it is entirely appropriate for creditors to employ a variety of standards to evaluate their customers' repayment ability."

At a minimum, the rule requires creditors to assess the borrower's income, savings, other assets, and debts using reasonably reliable third-party records for verification.  It provides that monthly payments must generally be calculated by assuming substantially equal payments over the loan's life and that the higher of the fully indexed rate or an introductory rate be used to calculate adjustable rate mortgage payments. 

"By rooting out reckless and unsustainable lending without dictating specific underwriting models, we believe the rule protects consumers and strengthens the housing market while preserving flexibility for creditors," Cochran and Carroll said.

The final rule also implements provisions creating so-called "qualified mortgages." These mortgages are entitled to a presumption that the lender satisfied the ability-to-repay requirements because of additional safeguards such as prohibiting loans with negative amortization, interest-only payments, balloon payments, "no doc" loans or terms exceeding 30 years and sets levels for upfront costs in points and fees. The rule also establishes general underwriting criteria for qualified mortgages, requiring use of the highest monthly payment that will apply in the first five years of the loan and provides that the debt-to-income (DTI) ratio cannot exceed 43 percent.  The rule also creates a safe harbor for lenders when loans meet the definition of qualified mortgage and are not "higher priced."  "The line the Bureau is drawing is one that has long been recognized as a rule of thumb to separate prime loans from subprime loans," they said.

In defining qualified mortgages, the Bureau did not intend to stigmatize loans that fall outside those boundaries or to signal that responsible lending can only take place within the qualified mortgage space.  To the contrary, it expects to see markets develop for non-qualified mortgages and the final rule provides for a second, temporary category of qualified mortgages that have more flexible underwriting requirements so long as they satisfy the general requirements for a qualified mortgage and also are eligible for sale to the GSEs or certain federal agencies.  This temporary provision will phase out over time and the Bureau will continue to observe the health of the mortgage market going forward to ensure the availability of responsible credit outside the qualified mortgage space.

19---Little Cause for Inflation Worries,  Catherine Rampell, NYT

 Periodically I am asked whether we should worry about inflation, given how much money the Federal Reserve has pumped into the economy. Based on the Bureau of Economic Analysis data released Friday morning, this answer is still emphatically no.
The personal consumption expenditures, or P.C.E., price index, which the Fed has said it prefers to other measures of inflation, fell from March to April by 0.25 percent. On a year-over-year basis, it was up by just 0.74 percent. Those figures are quite low by historical standards...
When looking at price changes, a lot of economists like to strip out food and energy, since costs in those spending categories can be volatile. Instead they focus on so-called “core inflation.” On a monthly basis, core inflation was flat. But year over year, this core index grew just 1.05 percent, which is the lowest pace since the government started keeping track more than five decades ago. ...

20--How Does Income Growth Compare to Other Recoveries?, WSJ

Consumer surveys out this week show shoppers are feeling much happier about the economy. But that optimism may not translate into spending. While the spirit is willing, the wallet is weak.
Steve Blitz, chief economist at ITG Investment Research, points out how miserably real disposable income is growing in this recovery. In fact, the increase since the end of the last recession is the worst for the 7 most recent recoveries that have lasted this long. That lagging trend was the case even before this year’s tax hikes.

21--Dow Moves Up Despite Bad Week in JapanMI-BW273_PANMAR_G_20130530182705-1
Source: WSJ

22---The crazy growth of student loans, zero hedge


If you understand the student loan system is predatory, parasitic and exploitive, you have reached first base of a meaningful political awareness. If you understand the central state (Federal government) funds and enforces this system, you've reached second base. If you understand the vast majority of college degrees do little to prepare you to be productively employed in the real economy, you have reached third base.

If you understand the Status Quo is unsustainable and does not operate according the the fantasy model you've been told, congratulations, you're close to home base.

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