Archive for April, 2010
Dan Froomkin Dan Froomkin – Wed Apr 28, 2:26 pm ET
Former President Bill Clinton enthusiastically weighed into the blistering national debate on immigration today with a resounding assertion that America needs more immigrants — not fewer — to ensure its long-term fiscal future.
At a symposium on deficit reduction today (see my earlier story), Clinton said that one key to avoiding massive debt is to maintain a good ratio between people paying into the system, and those receiving payouts (through such programs as Social Security.)
That means more jobs and more people working, he said. “Which to me means more immigrants.”
Clinton said he supports immigration reform as proposed by President Obama or as supported by Sen. John McCain before he changed his mind.
Clinton spoke glowingly of the immigrant experience in the United States. “We’ve got somebody from everywhere here, and they do well,” he said.
And looking at the overall budget numbers, comparing money in to money out, “I don’t think there’s any alternative for us but increasing immigration,” he said. “I just don’t see any palatable way out of this unless that’s part of the strategy.”
Read the entire article HERE.
• Shortfall could reach 10m barrels a day, report says
• Cost of crude oil is predicted to top $100 a barrel
Sunday 11 April 2010 18.47 BST
The US military has warned that surplus oil production capacity could disappear within two years and there could be serious shortages by 2015 with a significant economic and political impact.
The energy crisis outlined in a Joint Operating Environment report from the US Joint Forces Command, comes as the price of petrol in Britain reaches record levels and the cost of crude is predicted to soon top $100 a barrel.
“By 2012, surplus oil production capacity could entirely disappear, and as early as 2015, the shortfall in output could reach nearly 10 million barrels per day,” says the report, which has a foreword by a senior commander, General James N Mattis.
It adds: “While it is difficult to predict precisely what economic, political, and strategic effects such a shortfall might produce, it surely would reduce the prospects for growth in both the developing and developed worlds. Such an economic slowdown would exacerbate other unresolved tensions, push fragile and failing states further down the path toward collapse, and perhaps have serious economic impact on both China and India.”
The US military says its views cannot be taken as US government policy but admits they are meant to provide the Joint Forces with “an intellectual foundation upon which we will construct the concept to guide out future force developments.”
The warning is the latest in a series from around the world that has turned peak oil – the moment when demand exceeds supply – from a distant threat to a more immediate risk.
The Wicks Review on UK energy policy published last summer effectively dismissed fears but Lord Hunt, the British energy minister, met concerned industrialists two weeks ago in a sign that it is rapidly changing its mind on the seriousness of the issue.
The Paris-based International Energy Agency remains confident that there is no short-term risk of oil shortages but privately some senior officials have admitted there is considerable disagreement internally about this upbeat stance.
Future fuel supplies are of acute importance to the US army because it is believed to be the biggest single user of petrol in the world. BP chief executive, Tony Hayward, said recently that there was little chance of crude from the carbon-heavy Canadian tar sands being banned in America because the US military like to have local supplies rather than rely on the politically unstable Middle East.
But there are signs that the US Department of Energy might also be changing its stance on peak oil. In a recent interview with French newspaper, Le Monde, Glen Sweetnam, main oil adviser to the Obama administration, admitted that “a chance exists that we may experience a decline” of world liquid fuels production between 2011 and 2015 if the investment was not forthcoming.
Lionel Badal, a post-graduate student at Kings College, London, who has been researching peak oil theories, said the review by the American military moves the debate on.
“It’s surprising to see that the US Army, unlike the US Department of Energy, publicly warns of major oil shortages in the near-term. Now it could be interesting to know on which study the information is based on,” he said.
“The Energy Information Administration (of the department of energy) has been saying for years that Peak Oil was “decades away”. In light of the report from the US Joint Forces Command, is the EIA still confident of its previous highly optimistic conclusions?”
Read the entire article HERE.
I don’t know why i’m even advertising for Apple. I’m not even getting paid. I guess that’s the power of a kick ass product.
By Justice Litle on April 20, 2010
The economic “recovery” we are now witnessing is based on theft, greed and deceit. It’s a giant rip-off, a rotten sham. In this sleazy imitation of a free market economy, liars, cheats and deadbeats are the ones getting rewarded.
And as for the savers, the hard workers, the ones who chose to honor their debts and live within their means? Nothing but a bunch of suckers. (They’re the ones paying for it all.)
If you’re one of those “suckers,” at least you’ve got company. I’m a sucker too.
All this time, I thought working hard for my money and staying debt free was wise. I thought sticking with one credit card – paying down the balance every month, no exceptions – was prudent. I thought driving a five-year-old car – fully paid off, nothing flashy – was a sensible thing to do.
Nope. Turns out those were sucker moves. What I should have done, to be in synch with this economy, was to have bought a 3,000-square-foot McMansion at the peak of the bubble… pulled out a cool hundred thousand in home equity loans… and then defaulted on the place.
That way I could have had the cash for a jet ski and a new convertible and a Hawaiian vacation – you know, the means of living in style – without having to worry about a thing.
No Morals Is the New Normal
Apologies for my cranky tone today. I hope I’m not messing up your Monday. It’s just that, heading into the weekend, I read something that absolutely made me sick. More on that in a moment…
Two weeks ago your humble editor asked, “Did the Housing Bust Fuel the Consumer Spending Binge?” In that piece, it was explained step by step how the phenomenon of “strategic defaults,” i.e. homeowners walking away from their mortgages, may have fueled a surge in retail spending by way of freeing up cash.
As it turns out, it looks like the strategic default thesis was correct. And this helps show why those who were expecting a “new normal” got it wrong.
See, guys like Mohamed El-Erian at Pimco (and yours truly) at first thought the “new normal” meant consumers tightening up and living within their means. What we failed to realize is that “new normal” actually translated to “NO MORALS,” as in “deadbeats ripping off the banks with abandon” (while the banks in turn screw the taxpayers).
In the piece two weeks ago, I hat-tipped a blog called Credit Writedowns for helping me solve the strategic default puzzle. The main blogger there, Edward Harrison, continues to do solid investigative work. Below are some of the anecdotes he recently reported (underscore emphasis mine). After reading them, I think you’ll understand my mood:
My 25 year old niece had $10,000 of outstanding credit card debt. Recently, she told the bank she couldn’t pay. She is not unemployed so the ‘hardship’ is all relative. Nevertheless, the bank offered her a concession which she refused. They offered another concession, she refused again. Finally, they told her if she paid $150/month for 2 years (total of only $3600 with no interest), they would call it paid in full! She accepted in a heartbeat. It is less than a month later, and she celebrated her good fortune by going on a cruise to Hawaii.
A friend owns a small manufacturing co. He tells me of one of his female employees who was saddled with a $450,000 home she purchased almost five years ago with no down pmt. One year after her purchase she pulled $75,000 home equity and purchased ‘fun stuff’ including a boat. She recently walked away from the house (now saddled with $525K mortgage), purchased a new house for $200,000 (in her sister’s name) and kept all the goodies purchased from the home equity withdrawal. With the much lower mortgage payment she just bought a new car.
Almost everyone in my “survey” is aware of, or knows someone living rent free in their home for an extended period of time, having stopped paying their mortgage. Many of these free boarders are spending lavishly on non-essentials. My hard-working part-time assistant knows two different 35+ yr olds who have enjoyed over 9 months (one is up to month eleven) of rent-free living in very nice homes they purchased in 2004/2005! Both are employed and both enjoy a non-frugal lifestyle. My assistant wonders if he should do the same or have me pay him more so that he too can enjoy the ‘good life’.
My sister is a nurse with 25+ years on the job. She told me of a young couple that she is good friends with that both work at her hospital making a decent joint income. They didn’t like the fact that they grossly overpaid for their 3000 sq ft home in 2006. They stopped making hefty monthly payments six months ago and haven’t yet been contacted by the bank. They have decided to wait until contacted and then walk away. In the meantime, they just returned from NYC from a week vacation in the Big Apple.
My brother-in-law wanted to know if he should stop making payments on everything. He lives in Virginia and his carpentry skills are not as marketable as they were in the height of the boom. He and his wife’s best friend have lived close-by for many years. For the past 13 months since they strategically decided to stop paying their mortgage, they had yet to be contacted by their bank. Not even one letter! My brother-in-law doesn’t understand how they get to pocket the mortgage and spend carefree, including a 10-day Caribbean vacation.
Apparently there are lots more anecdotes of this type – potentially “millions of similar stories across the country.”
I thought I was about as cynical as I could get. I thought that, after the initial outrage of the bailouts, my anger was all but spent. But this makes me feel righteously ticked off all over again.
The Revolutionary Rip-Off Machine
Why be furious? A few reasons.
Read the entire article HERE.
I’ve been following Peter Schiff now for over 5 years and I can attest to his projections on the economy. We need more people like him in our government. Our current government is like a child wanting an xbox even though his parents can’t afford it, but cries and cries until he gets his way. The American Taxpayer is the parent who must put that Trillion Dollar Xbox on their credit card just to make the child happy. If we continue to let the child cry and we continue to over extend our credit, our income will be to little to pay off the credit card. We are at a crossroads in our country. When it is time to vote into power the leaders of our country I hope you will look long and hard at people who believe in fiscal responsibility and truly giving back to the American people.
I’m willing to bet that this will get forced through whether it is wanted by the American people or not, much like the health care bill.
By Caren Bohan and Kevin Drawbaugh
updated 12:25 p.m. PT, Wed., April 14, 2010
WASHINGTON – President Barack Obama and top Republicans faced off Wednesday over a planned Democratic bill in the Senate to crack down on Wall Street excesses.
The Democrats want to tighten oversight of derivatives markets and protect consumers from abusive mortgages among other restraints, but need the support of Republican lawmakers.
“If there is one lesson that we’ve learned it’s that an unfettered market where people are taking huge risks and expecting taxpayers to bail out when things go sour is simply not acceptable,” Obama said.
Both sides said they believed a bipartisan package could be reached but there was little sign either gave ground on the financial reform plan at talks on Wednesday.
Republican congressional leaders said the bill would protect big banks, harm small banks and guarantee “endless taxpayer bailouts of Wall Street.”
After a major victory on healthcare reform in March, the president is shifting to financial reform as his top legislative priority. The issue is shaping up as a battleground for the November congressional elections, when the Democrats hope to tap into widespread popular anger at Wall Street.
A vote on financial regulation is expected in the Senate soon. Senate Republican leader Mitch McConnell slammed the bill.
“It will lead to endless taxpayer bailouts of Wall Street,” he said after talks with Obama, House Republican leader John Boehner, Senate Democratic Leader Harry Reid, House of Representatives Speaker Nancy Pelosi and House Democratic leader Steny Hoyer.
Boehner told reporters: “My concern is that it protects the biggest banks in America and harms the smallest banks.”
Obama administration officials have argued that passing a reform bill is crucial to preventing a repeat of the 2008-2009 financial crisis that tipped the U.S. economy into its worst recession in decades and unleased a global push for reforms.
‘Punitive bank tax’
Policymakers around the world are revising financial regulations affecting banks, insurers, hedge funds, exchanges, derivatives markets and asset management companies. Much of the international focus is on imposing a new tax on banks.
The International Monetary Fund is expected to make recommendations to G20 finance ministers in 10 days on forcing banks to contribute toward future bailouts. Obama has already proposed a bank levy, as have Britain, France and Germany.
JPMorgan CEO Jamie Dimon on Wednesday hit back at Washington as his firm reported quarterly earnings that beat forecasts, underscoring a Wall Street comeback.
Dimon groused about an Obama proposal to recoup taxpayer bailout costs through a $90 billion “financial crisis responsibility fee.”
“Let’s all not call it a bank fee, and call it what it is, which is a punitive bank tax,” Dimon told a conference call.
Read the entire article HERE.
“This reform bill authorizes Federal Reserve banks to provide as much as $4 trillion in emergency funding the next time Wall Street crashes. So much for “no-more-bailouts” talk. That is more than twice what the Fed pumped into markets this time around. The size of the fund makes the bribes in the Senate’s health-care bill look minuscule.
The bill also allows the government, in a crisis, to back financial firms’ debts. Bondholders can sleep easy — there are more bailouts to come.
The legislation does create a council of regulators to spot risks to the financial system and big financial firms. Unfortunately this group is made up of folks who missed the problems that led to the current crisis.
The bill calls for more than a dozen agencies to create a position called “Director of Minority and Women Inclusion.” People in these new posts will be presidential appointees. I thought too-big-to-fail banks were the pressing issue. Turns out it’s diversity, and patronage.
Best of all, the bill contains a provision that, in the event of another government request for emergency aid to prop up the financial system, debate in Congress be limited to just 10 hours. Anything that can get Congress to shut up can’t be all bad.
Link to H.R. 4173 Financial Reform Bill HERE.