August 17, 2012

Treasury reform to entrench Fannie, Freddie MUST READ

http://www.marketwatch.com/story/treasury-move-to-entrench-fannie-freddie-2012-08-17?siteid=YAHOOB

I DON'T THINK ANYONE WILL WEEP WHEN ED DEMARCO TAKES A POWDER...

The Treasury Department’s announcement that it is changing the terms of its four-year-old financial backing for Fannie Mae and Freddie Mac is a boon for mortgage originators, homebuilders and Treasury bonds as it delays reform of the two giant government-seized firms, experts said Friday. The Treasury Department on Friday announced a set of steps to change its financial backing of Fannie FNMA and Freddie FMCC. The agency set up a new arrangement where all profits from the firms make will be provided to the Treasury. The move decimated their shares on the over-the-counter market, with both penny stocks diving by double-digit percentages. This replaces the current system, where Fannie and Freddie pay 10% quarterly dividend payments to Treasury and must borrow from the government every time they don’t have a large profitable quarter. Read more about changes: http://www.marketwatch.com/story/us-treasury-revamps-fannie-freddie-support-deal-2012-08-17

The Treasury also said their massive mortgage portfolios be wound down at an annual rate of 15%, a policy that would have them reduced to $250 billion in assets each by 2018, four years earlier than previously expected. The move comes as many housing indicators are now showing signs of stability and growth, after a housing-bubble burst that left both prices and purchases roughly a third below peak levels. For instance, building permits in July reached their highest level since 2008.

“We see this as positive for housing as it ensures that Fannie and Freddie will remain in business,” said Jaret Seiberg, analyst at Guggenheim Securities in Washington. “Absent Fannie and Freddie, we believe housing finance will become more expensive and less available. That is why this is good news for mortgage originators and homebuilders.”

Mark A. Calabria, director of financial regulation studies at the Cato Institute in Washington, said the new structure makes it harder for a future administrator to place the two mortgage giants into receivership, which would force debt holders such as mortgage-backed securities holders and other investors to take losses...Fannie and Freddie were placed into government conservatorship in September 2008 at the height of the financial crisis. He added that this change in support is part of a broader effort by Treasury Secretary Timothy Geithner to ensure that China continues to buy both U.S. mortgage-backed securities and U.S. Treasury bonds.

“To the Treasury Department, this isn’t just about Fannie and Freddie,” he said. “Losses imposed on MBS debt holders would raise concerns by the Chinese and they would have to be compensated more to buy Treasury bonds.”

“There is a perception that if Fannie and Freddie went into receivership then the credibility of the U.S. government as a whole would be brought into question,” he added.

Seiberg noted that the government’s unlimited support for Fannie and Freddie expires after Dec. 31, 2012.

“The market’s worry is that Fannie and Freddie will exhaust this Treasury capital and default on bond payments,” he said. “Just the fear of this could drive up their borrowing costs, which would require them to seek government capital more quickly. This creates a vicious cycle that Treasury wanted to keep from starting.”

Ed DeMarco, the acting chief of the Federal Housing Finance Agency, backed the revamped Treasury support program. He said the new approach will “help to ensure stability, fully capture financial benefits for taxpayers, and eliminate the need for Fannie Mae and Freddie Mac to continue to borrow from the Treasury Department to pay dividends.” He added that as Fannie and Freddie shrink, the continued payments of a fixed dividend could have “called into question the continued adequacy of the financial commitment” in the previous support structure. DeMarco also backed the faster reductions in the mortgage portfolio.

“The faster reduction in the retained mortgage portfolio will further reduce risk exposure and simplify the operations of Fannie Mae and Freddie Mac,” he said in a statement. Previously, DeMarco raised concerns about reducing the portfolio too fast, saying that a “significantly faster” reduction based on a “congressional mandate” could cost taxpayers unnecessarily.

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Calabria added that the new rules will reduce the impetus for Congress to reform Fannie and Freddie. DeMarco said last month that Fannie and Freddie have already cost taxpayers $188 billion. In the second quarter, both Fannie and Freddie were profitable, with Fannie Mae earning $5.1 billion and Freddie Mac earning $3 billion.

August 17, 2012

Weekend Economists "Hello, I Must Be Going!" August 17-19, 2012

Because nobody had a theme, I'll muse free-form on things that have hung around too long already, that we would be glad to see the backside of. Today's header comes from an old Groucho tune I vaguely remember hearing:

Hello I Must Be Going ---lyrics

Groucho:
Hello, I must be going.
I cannot stay,
I came to say
I must be going.
I'm glad I came
but just the same
I must be going.

Margaret Dumont:
For my sake you must stay,
for if you go away,
you'll spoil this party
I am throwing.

Groucho:
I'll stay a week or two,
I'll stay the summer through,
but I am telling you,
I must be going.


And because there is so much of it, I'll be breaking up the monotony with more clips from Animal Crackers, that Marx brothers romp. Please help me out here, as I still have no working speakers (life has been frustrating).

Many others have riffed upon this 1930 tune. There's a new movie this year with that title: Circumstances force a young divorcée to move back in with her parents...



It's an Indy "adult comedy", coming out generally (limited) Sept 7th...
Only a 50 on Rotten Tomatoes--It musta really stunk, even for a chick flick.
The critics seem to think the only reason to see it is the naked swimming...

And Phil Collins used this phrase as the title of an album...



I'll see if any of his stuff is on youtube.

And then, there's the economic news that we'd like to see going away: the euro, the Bernank, the Timmeh, the banksters, the AG, and so forth...

Join us in a Farewell to Summer, Farewell to Arms, Fare thee well, my fairy fay!

Yeah, I'll be glad when we've seen the last of those HFT fairies, too.

August 14, 2012

The Top Ten Differences Between White and Non-White Terrorists by Juan Cole

http://www.alternet.org/media/top-ten-differences-between-white-and-non-white-terrorists?akid=9203.227380.LVtRnB&rd=1&src=newsletter691462&t=4

Not all terrorism is created equal.

1. White terrorists are called “gunmen.” What does that even mean? A person with a gun? Wouldn’t that be, like, everyone in the US? Other terrorists are called, like, “terrorists.”

2. White terrorists are “troubled loners.” Other terrorists are always suspected of being part of a global plot, even when they are obviously troubled loners.

3. Doing a study on the danger of white terrorists at the Department of Homeland Security will get you sidelined by angry white Congressmen. Doing studies on other kinds of terrorists is a guaranteed promotion.

4. The family of a white terrorist is interviewed, weeping as they wonder where he went wrong. The families of other terrorists are almost never interviewed.

5. White terrorists are part of a “fringe.” Other terrorists are apparently mainstream.

6. White terrorists are random events, like tornadoes. Other terrorists are long-running conspiracies.

7. White terrorists are never called “white.” But other terrorists are given ethnic affiliations.

8. Nobody thinks white terrorists are typical of white people. But other terrorists are considered paragons of their societies.

9. White terrorists are alcoholics, addicts or mentally ill. Other terrorists are apparently clean-living and perfectly sane.

10. There is nothing you can do about white terrorists. Gun control won’t stop them. No policy you could make, no government program, could possibly have an impact on them. But hundreds of billions of dollars must be spent on police and on the Department of Defense, and on TSA, which must virtually strip search 60 million people a year, to deal with other terrorists.

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Juan Cole is a professor of history at the University of Michigan and maintains the blog Informed Comment.

August 12, 2012

If There's a Theme in This Weekend's News

It's the abuse and misapplication of technology for Corporate gain. It's not even that a person will benefit from the pillaging of all that exists.

It's faceless, soulless Corporations, another misapplication of technology, in this case, financial technology, and legal technology, that is destroying the earth and the people on it, so that the Corporations can get bigger and more powerful. To what purpose? To destroy everything?

The non-profits may sit there and try to shame us individuals, guilt us, in the belief that we will change our individual choices, and everything will go right.

But it's the STRUCTURES: Government, Business and yes, Religion, that have turned rogue and destructive.

We the People must take down these rogue institutions, return our would-be Masters back into the Public Servants they are supposed to be. And we must either convert or incarcerate their human components, so that the People can thrive again.


Technology is what was supposed to give us the world of Star Trek. Do those quants and those geneticists at Monsanto know how they have betrayed the Present and the Future? Do those venal, grasping CongressCritters know how they have betrayed 300 years of patriots?

August 10, 2012

Weekend Economists Rise Again August 10-12, 2012

Yes, well, it's feeling really strange to be doing this, after an entire week stuck in my local Reality. It's like losing one's mind, when one loses one's computer. So if I fumble, just point me in the right direction....

I'm not the Resurrection NOR the Light, and I won't play one on the tubes, either, but let's see who started the whole idea and where it's taken the human race...


So, it's an idea that's been around for a long time....

Let's see if we can spot signs of Resurrection in this moribund economy....

August 10, 2012

America's Descent Into Darkness: Slouching Towards Nuremberg? by MORRIS BERMAN

http://www.counterpunch.org/2012/07/25/slouching-towards-nuremberg/

...the signs of a gradual slide towards Nuremberg, and concomitant citizen apathy, are very much present in the current political milieu. Let’s have a look at what has been going on in the decade since 9/11. I’m going to discuss the following topics:

I. The creation of a political climate in which the police are out of control, arbitrarily free to intimidate anyone for virtually anything

II. The persecution of whistleblowers, protesters, and dissenters

III. The dramatic expansion of the surveillance of American citizens on the part of the National Security Agency (NSA)

IV. The corruption of the judicial system by means of show trials of Muslim activists

V. The construction of political detention centers, also known as Communication Management Units (CMU’s)

VI. The shredding of the Bill of Rights by means of the National Defense Authorization Act

VII. Future scenarios: The “disappearing” of intellectual critics of the U.S. government?

DETAILS AT LINK

August 3, 2012

Beyond Throwaway Cities: How To Build An Export-Proof Local Economy MUST READ

http://www.alternet.org/beyond-throwaway-cities-how-build-export-proof-local-economy?akid=9142.227380.1tjlNZ&rd=1&src=newsletter682969&t=16&paging=off

We invest billions to create a functioning city. How do we create local businesses that won't be tempted to pack up our jobs and leave town? Americans face a unique challenge in solving the climate crisis. Unlike other Western countries and Japan, where population is projected to be relatively constant, the U.S. population is set to grow by at least 100 million—and likely 150 million—people by 2050. Where and under what conditions these people live present serious challenges to sustainability planning. American cities today are so spatially and economically unstable that anything beyond superficial sustainability planning is impossible.

Alternatively, we can radically change existing community and regional planning strategies to more sustainably house and serve the growing population. Fortunately, emerging approaches are capable of helping with this shift. One involves building local economies that anchor capital in place through community, worker, or public forms of ownership—so-called green community wealth strategies. By linking such stabilizing forms of economic organization to democratic forms of local, regional, and national planning, cities can regain the capacity to target jobs and investment to specific locations.

A good starting point is a clear understanding of America’s “throwaway city” habit. Simply put, as jobs move in and out of cities in uncontrolled ways we literally throw away housing, roads, schools, hospitals, and public facilities—only to have to build the same facilities elsewhere at great financial, energy, and carbon costs. All the while, the instability makes it impossible to carry out coherent transportation and high-density housing planning.

The most dramatic examples are places like Detroit and Cleveland, where the devastated landscape in many areas looks like bombed-out World War II cities. But these cases are not exceptional. Of the 112 largest U.S. cities in 1950 with populations over 100,000, 56—fully half of them—had experienced population decline by 2008. The people moved elsewhere, where all the usual facilities had to be built anew to serve them—and, built under conditions that were inherently likely to be subject to future instability and disruption...

August 2, 2012

VERY IMPORTANT MUST-READ: Romney Hasn’t Done His Homework By JARED DIAMOND

http://www.nytimes.com/2012/08/02/opinion/mitt-romneys-search-for-simple-answers.html

MITT ROMNEY’S latest controversial remark, about the role of culture in explaining why some countries are rich and powerful while others are poor and weak, has attracted much comment. I was especially interested in his remark because he misrepresented my views and, in contrasting them with another scholar’s arguments, oversimplified the issue.

It is not true that my book “Guns, Germs and Steel,” as Mr. Romney described it in a speech in Jerusalem, “basically says the physical characteristics of the land account for the differences in the success of the people that live there. There is iron ore on the land and so forth.”

That is so different from what my book actually says that I have to doubt whether Mr. Romney read it. My focus was mostly on biological features, like plant and animal species, and among physical characteristics, the ones I mentioned were continents’ sizes and shapes and relative isolation. I said nothing about iron ore, which is so widespread that its distribution has had little effect on the different successes of different peoples. (As I learned this week, Mr. Romney also mischaracterized my book in his memoir, “No Apology: Believe in America.”)

That’s not the worst part. Even scholars who emphasize social rather than geographic explanations — like the Harvard economist David S. Landes, whose book “The Wealth and Poverty of Nations” was mentioned favorably by Mr. Romney — would find Mr. Romney’s statement that “culture makes all the difference” dangerously out of date. In fact, Mr. Landes analyzed multiple factors (including climate) in explaining why the industrial revolution first occurred in Europe and not elsewhere...

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Jared Diamond, a professor of geography at the University of California, Los Angeles, is the author of the forthcoming book “The World Until Yesterday: What Can We Learn From Traditional Societies?”