Category: economy

Should we be calm, learn a few more details… or melt down tankers of tar and pluck tons of feathers? Oh y’just gotta know this tidbit. At least read the apex of sloppy in the last paragraph.

Mortgage Electronic Registration System

As a practical matter, the incoherence of MERS’ legal position is exacerbated by a corporate structure that is so unorthodox as to arguably be considered fraudulent.

Because MERSCORP is a company of relatively modest size, it does not have the personnel to deal with legal problems created by its purported ownership of millions of home mortgages.

To accommodate the massive amount of paperwork and litigation involved with its business model, MERSCORP simply farms out the MERS, Inc. identity to employees of mortgage servicers, originators, debt collectors, and foreclosure law firms. MERS invites financial companies to enter names of their own employees into a MERS webpage which then automatically regurgitates boilerplate “corporate resolutions” that purport to name the employees of other companies as “certifying officers” of MERS.

These certifying officers also take job titles from MERS stylizing themselves as either assistant secretaries or vice presidents of MERS, rather than the company that actually employs them.

These employees of the servicers, debt collectors, and law firms sign documents pretending to be vice presidents or assistant secretaries of MERS, Inc. even though neither MERSCORP, Inc. nor MERS, Inc. pays any compensation or provides benefits to them. Astonishingly, MERS “vice presidents” are simply paralegals, customer service representatives, and foreclosure attorneys employed by other companies.

MERS even sells its corporate seal to non-employees on its internet web page for $25.00 each. Ironically, MERS, Inc.—a company that holds 60% of the nation’s residential mortgages—does not have any of its own employees but still purports to have ‘thousands’ of assistant secretaries and vice presidents.

And read John Mauldin’s Debacle: Act 2.
Sloppy Sloppy Sloppy isn’t over ’til it’s over.

Read this too. It’s mature. It’s about where modern individualism and the essential institutions of modern life meet. J. M. Bernstein on roulette with the future of the nation:

Clearly, political deal-making and the influence of Wall Street over our politicians is part of the explanation for this failure; but the failure also expressed continuing disagreement about the nature of the free market.

…the banker believes that only raw self-interest, the profit motive, ever leads to successful actions. [But finally], it is not motives but actions that matter, and how those actions hang together to make a practical world.

We didn’t get into this mess by doing things right. We were listening to and influenced by, among others, financial policy experts.

But up to seventy percent of the policy setting experts in economics, often in the media and always at the meetings, advised, owned significant stock in or were on the board of private financial institutions and did not say so. They generally appeared as reputed analysts or studious academics offering objective data and highly evaluated recommendations, seldom identifying their fruitful ties to Wall Street.   Nuts.

Universities have codes of conduct, but these discourage conflicts of interest that harm the University, not the general public.

There is no Economist’s Oath… We easily are fed Grade A spin.

Economists enjoy enormous influence over the life chances of the world’s inhabitants, yet do not receive, at any point in their training, any exposure to the professional ethical challenges that their work entails.

This lack of attention to professional ethics means that even well-meaning economists will take actions that can cross ethical lines, to the detriment of those whom they seek to serve.

Modern finance spilled relentless justification for their actions, hoisting an untested ‘scientific foundation’ that they could carry a risk-free portfolio, sufficiently safe for private Social Security packaging as well,  if we if would only, if we would simply provide an unrestrained free market.

And Wall Street funded thousands of their executive minions too. In fact, what “modern finance developed and taught in the finance and economic departments, particularly of business schools, has been central for creating the conditions for the current crisis“:

Those views have been institutionalized by the astonishing growth of MBA programs. In the mid-1950’s, the annual output of US business masters was a little over 3,000. Close to three decades later, in 1981, the number of business master’s degrees reached 55,000. By 1997-1998, the number had expanded to reach over 100,000. In comparative terms to other professions, the number of MBA degrees surpassed the combined output of Lawyers and Medical Doctors in 1980, and in 2000 doubled the BAs awarded in engineering.

The solution to the current crisis would involve not only significant reform of financial institutions and practices, and more stringent regulations, but also a rethinking of the theories taught by finance departments.

If that does not happen, in the future Universities will have to apologize for their Finance departments, as much as the Catholic Church apologized for the Holy Inquisition.

When it comes to how wealth is distributed in America, we probably hold radically different views depending on our political affiliation, age, income, and gender, right? …

Wrong.

So what about the bottom 120 million of us?

When both right and left Americans were surveyed, they said that ideally the bottom 40 percent oughta woulda coulda shoulda own about 20 to 25 percent of USA share of wealth. When asked to estimate the share of wealth actually owned, the collective guesses were between 8 and 10 percent. Reality: 0.3 percent. … We are United In Our Delusions.

Billionaires prodding tea parties to pimp for a birth certificate is the silliest electioneering of all time. Well? It’s not facts that matter. The right invents any ‘fact’ it chooses to bully voters away from reality.

Simon Johnson:

The United States stands out as quite different.  No one is yet seriously proposing to address our underlying budget issues.

There Are No Fiscal Conservatives In The United States

There are certainly people who claim to be “fiscal conservatives” – some of the right and some on the left – but none can yet be taken seriously.  The implications are very bad for our fiscal future.

The background, of course, is that the US budget was in relatively good shape at the end of the Clinton years (culminating in a 2.5% of GDP surplus in 2000) – but turned sharply into deficit during the George W. Bush era.  The headline 2% deficit in 2006, for example, perhaps did not look too bad – but it was remarkably poor performance given how well the economy was doing.

The notion that tax cuts would lead to productivity increases, thus boosting growth and in turn fixing the budget, turned out to be completely illusory.

In fact, the tax cuts encouraged consumption, leading to overspending at the national level (and reflected in a current account deficit that reached 6% of GDP – this represents a big increase borrowing from foreigners by both the private sector and the government.)

But what really bust the US budget and pushed up our debt-to-GDP ratio was the way the financial system amplified the housing-based boom and bust through 2008; there were some “feel good” effects through the end of 2007, but then we faced the worst recession since World War II.  Net government debt held by the private sector will increase from about 42 percent of GDP to around 80 percent as a direct result of the economic crisis – and the measures taken to prevent it from turning into another Great Depression.

Comment snippets:

• So we find ourselves in a position where the public at large believes ‘facts’ that are pure fiction in reality. In such a case, matters will get worse before they can improve.

• People will surrender their jobs, surrender their food, surrender their families, surrender their lives, before they surrender their prevailing belief system.

• We went from basic military spending of $371.0 in 2000 to $737.3 billion in 2008, to basic military spending that is running at $813.0 billion yearly as of April through June 2010. The increase in military spending along with the continual Bush tax cuts will produce a structural deficit even with a return to significant economic growth.

• Where we should have created 16.44 million jobs these last 117 months simply to keep up with population growth, we lost 2.28 million jobs. This leaves us short an astonishing 18.72 million jobs, and the coming revision will make the figure 19.08 million.

What’s the story?

To be fair, spending on safety-net programs, mainly unemployment insurance and Medicaid, has risen — because, in case you haven’t noticed, there has been a surge in the number of Americans without jobs and badly in need of help.

And there were also substantial outlays to rescue troubled financial institutions, although it appears that the government will get most of its money back. But when people denounce big government, they usually have in mind the creation of big bureaucracies and major new programs. And that just hasn’t taken place. …

This fact, however, raises two questions. First, we know that Congress enacted a stimulus bill in early 2009; why didn’t that translate into a big rise in government spending? Second, if the expansion never happened, why does everyone think it did?

Part of the answer to the first question is that the stimulus wasn’t actually all that big compared with the size of the economy.

Furthermore, it wasn’t mainly focused on increasing government spending. Of the roughly $600 billion cost of the Recovery Act in 2009 and 2010, more than 40 percent came from tax cuts, while another large chunk consisted of aid to state and local governments. Only the remainder involved direct federal spending.

And federal aid to state and local governments wasn’t enough to make up for plunging tax receipts in the face of the economic slump. So states and cities, which can’t run large deficits, were forced into drastic spending cuts, more than offsetting the modest increase at the federal level.

The answer to the second question — why there’s a widespread perception that government spending has surged, when it hasn’t — is that there has been a disinformation campaign from the right, based on the usual combination of fact-free assertions and cooked numbers.

What happens living without a bank?

The nickel-and-diming never stopped.

The fees were constant: $28 to cash a paycheck. $1.50 for a money order. A dollar or more every time I swiped the prepaid cash card I bought at the drug store.

In all, I racked up $93 in fees in a monthlong experiment of living without a bank and making a go of it on the economic fringe. That works out to $1,100 a year just to spend my own money.

We’ve heard wingnuts blame the government for making money easy and that a tiny sliver of wobbly borrowers crashed the world economy. Geesh.

Sure, we’ve all heard the arguments that the Community Reinvestment Act went a long way toward causing the meltdown, but there are three problems with that.

• The first is that even if the CRA bore some responsibility, it was passed in 1977 – CRA or no CRA, there were years of tax cuts, cheap money coupled with low inflation, reduced regulation and a couple of semi-privatized wars. If the CRA was the problem and not lack of oversight, presumably the Great Recession would have happened during an administration that, say, did a less thorough job of deregulating and tax cutting.

• A second problem with blaming the CRA is that the economic mess is due to banks loaning money to people who shouldn’t have borrowed or been allowed to borrow, and there was no policy or law that forced a single organization to make loans it shouldn’t have or any entity to borrow money it shouldn’t have.

• A third problem is that the Great Recession struck many other countries as hard or harder than the US. One thing that was common about many of the worst hit countries is that they were high on the list of recent (say, in the past ten years or so) success stories as told by the same folks who like to blame the CRA for the mess.

All of which brings me back to where I started. The policies advocated by libertarians and economic conservatives not only tend to be accompanied by slower growth in general, but also tend to precede economic meltdowns.

Please let’s not forget “that although the deepest recession since the second world war has been blamed on the housing bubble and the financial problems of the American banking system, the problem was really global in nature, and it is not difficult to show the correlation with energy prices.”

You see, energy is an undertow. Speculative finance merely induces debt, selling money while extracting transaction margins, and that’s blood money any way you look at it.  If there’s a tax ahead, tax that.

And don’t worry about instability or threats of slow down or starved incentives. Brigands and pirates can easily bear the consequences of true growth and fairness.

Quit bias and belief for a moment. Try. Let this investigation assist.

Let’s say it’s within your powers to redistribute wealth in any way you choose.

Dan Ariely and Mike Norton asked Americans to guess at the distribution of wealth in the United States and then what they think would be the ideal distribution of wealth.

Americans rather badly estimate wealth disparity!

But whether left or right, they all offered an ideal wealth distribution that was more equal than the current state of affairs.

Beneath politics, Americans know justice and know what they want.

What does it mean that we’re not so different?

ASPO-USA. Association for the Study of Peak Oil and Gas. The world’s leading experts. The future of oil, energy and the economy. When these folks meet to worry about peak oil, what are they saying?

“The Earth is not a factory.”

There is no business as usual.

October 7 – The ASPO Conference – afternoon | ASPO Conference – evening

October 8 – ASPO Conference – second day before lunch

The neo-classical economists and those who advocated different political theories had found it easier to justify their claims in an environment where oil became increasingly available to support GDP growth.

However we are now entering a period of oil supply decline, when perhaps the “biophysical economics” theories will gain more credence.

October 13 – ASPO Conference- last day.

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Planners discuss how to create a stronger entrepreneurial community in their city so that it could be “more like Silicon Valley.”

It takes at least a half dozen people committed to provide leadership over 20 years.

Easy enough. Why not now?

Sloppy is just another extortion.

“It was shocking to see the U.S. falling behind other countries even as costs soared.”

“But what really surprised us was that all of the usual suspects—smoking, obesity, traffic accidents, and homicides—are not the culprits.

The U.S. doesn’t stand out as doing any worse in these areas than any of the other countries we studied, leading us to believe that failings in the U.S. health care system … are likely playing a large role in this relatively poor performance in life expectancy.”

Scientific American:

Why Broadband Service in the U.S. Is So Awful

The average U.S. household has to pay an exorbitant amount of money for an Internet connection that the rest of the industrial world would find mediocre.

Broadband in the U.S. is not just slower and more expensive than it is in tech-savvy nations such as South Korea and Japan, the U.S. has fallen behind infrastructure-challenged countries such as Portugal and Italy.

The consequences are far worse than having to wait a few extra seconds for a movie to load.

Our creaky Internet makes it harder for U.S. entrepreneurs to compete in global markets.

Broadband connections are the railroads of the 21st century, the  infrastructure to transmit information/products from seller to buyer.

As evidence, consider that the U.S. came in dead last in another recent study that compared how quickly 40 countries and regions have been progressing toward a knowledge-based economy over the past 10 years.

keywords: findings, Scientific American, exorbitant

Charles Hugh Smith and his Recipe for Collapse.

The ingredients for mixing up a batch of economic collapse are all present in both China and the U.S. If we wanted to increase the odds of financial/economic collapse to 95%, we would need to assemble the following ingredients:

1. Concentrate central-planning power in non-transparent State and quasi-State agencies. Placing the levers of central planning in a few hands who are unbound by pubic scrutiny greatly increases the odds of catastrophic policy mistakes being made, and guarantees that those policy mistakes will be pursued with bull-headed determination until collapse occurs.

Agencies that come to mind: The Federal Reserve, U.S. Treasury, National Security Agency, Central Intelligence Agency, Bank of China, China’s Politburo and organs of Central Planning.

2. Encourage speculation by reducing the safe return on capital (interest paid) to less than inflation/zero. To mix up a really good collapse, we need rampant speculation which bubbles up to mania levels.

Excellent examples: Japan’s zero-interest rate policy (ZIRP), the Fed’s ZIRP, China’s interest rates being lower than its rate of inflation.

3. Increase the share of financial and real estate speculation so that the inevitable collapse in speculative real estate, stock, bonds and commodities bubbles will crush the entire economy.

Excellent examples: 65 million vacant speculative condos in China and 19 million vacant dwellings in the U.S.

4. Increase the dependency of the Power Elites on financial profits. As finance profits come to dominate total corporate profits, the economy and stock market becomes dependent on a continued expansion of what are in essence profits skimmed from churning.

The Power Elites will also become dependent on these profits, as they fund the Elites’ share of the swag/maintenance of power.

Excellent examples: Japan’s two decades of financial stagnation, China’s local Power Elites’ dependence on real estate development, the way banks watered down Congressional “financial reform” in the U.S.

5. Concentrate wealth and power in an opaque Elite. That way, the interests of the Power Elites will diverge sharply from the bottom 95% of the society assuring Elites will act to protect their interests at the expense of the nation/populace.

Excellent examples: extreme concentration of wealth and power in the U.S. and China.

6. Increase debt and leverage to the point that the economy cannot function without ever-rising levels debt and leverage.

7. Impoverish the Status Quo of any ideas outside the same stale ones which have guided the buildup to inevitable collapse. More stimulus, more stimulus, brawk!

8. Make corruption, embezzlement, crony capitalism, insider trading and fraud systemic. The labels “communist” and “capitalist” are meaningless screens for the same Power Elites-based system of skimming and masking the skim.

9. Concentrate the mainstream media in a few hands beholden to the Central State and its crony-capitalist partners. Six corporations control most of the “free enterprise” media. In a pinch, have the State own and operate the media directly.

10. Devote an increasing share of the national wealth to the National Security State (internal control) and global Empire/military. This diversion of wealth into unproductive “assets” increases the top-heavy size of the Central State, thereby increasing the odds of systemic collapse and/or catastrophic wars.

11. Make ever-greater numbers of laws and regulations so the entire productive class is either criminalized or forced into complicity with a rapacious Status Quo. I address this in Survival+, along with all the other points raised here.

12. Raise the expectations of the populace to absurdly unrealistic heights so their disappointment and anger will be equally boundless when the status quo implodes. Owning property will make you rich, you won’t even have to work! The “dirty work” will be performed by marginalized immigrants from the poverty-stricken West (China) or the poverty-stricken south (U.S.).

Perhaps the most remarkable aspect of this list is how it describes both the U.S. and China so accurately. Scrape away the misleading labels and obfuscating spin, and both nations possess equally vulnerable, intellectually sclerotic concentrations of wealth and power ever more dependent on debt, speculation and financialization for their own wealth and power.

From the Volatility rant of the day:

The Rule of Rackets is that no one competes or otherwise acts as a textbook capitalist for one day longer than he has to.

As soon as possible and as much as possible, he leverages his market power and wealth into a monopoly position which he then aggressively exploits as a rent-seeking parasite.

This monopoly-creep is hard-wired into capitalism. He prefers slave labor, total socialization of costs and risks, and 100% extraction. That’s the logic in its entirety.

After all, as the apologists for the system never tire of reminding us, “the shareholders” would never settle for less, and they have a “right” to it, doggone it.

I know. Folks with ‘can do’ governed by extraction greed do not see the danger of what we’ve done or see the massive damage. It’s a stunning era.

There’s little good news on the science front and that’s an unstoppable osmosis into our heads and hearts. We’ll look back to see this era as history with a wollop. It’s a terriffic puzzle ahead. Sloppy is over.

Firing up Americans to argue the shape and rules of markets merely to capture a seat in office is embarrassing opportunism.

Theory is broad brush and opinion more vague than that. The squawk about supply-side free markets versus oversight and restraint stretches our best experts and will never be repaired by balloteers with slogans.

Anatole Kalestky:

Instead of obsessing over China’s currency manipulation as if it were a unique exception in a world of untrammeled market forces, the United States must adapt to an environment where exchange rates and trade imbalances are managed consciously and have become a legitimate subject for debate in international forums like the Group of 20.

Market fundamentalists who feel that government interference with free markets is anathema should be reminded that, by today’s dogmatic standards, Ronald Reagan is one of the great manipulators of all time.

He presided over two of the biggest currency interventions in history: the Plaza agreement, which devalued the dollar in 1985, and the Louvre accord of 1987, which brought this devaluation to an end.

The fact is that the rules of global capitalism have changed irrevocably since Lehman Brothers collapsed two years ago — and if the United States refuses to accept this, it will find its global leadership slipping away. The near collapse of the financial system was an “Emperor’s New Clothes” moment of revelation.

In this climate, the market fundamentalism now represented by the Tea Party, based on instinctive aversion to government and a faith that “the market is always right,” is a global laughingstock.

There’s a terrible challenge not about to be fixed by angry stories and myth.

In my view, a wise issue with far greater impact is determining how to dilute and prevent leaders for sale. After all, it’s a ‘representative democracy’ and why don’t we have it?

Evaluating honor is better than choosing sides.

What are the largest criminal fines ever imposed on corporations?

“For decades, antipsychotic drugs were a niche product. Today, they’re the top-selling class of pharmaceuticals in America, generating annual revenue of about $14.6 billion and surpassing sales of even blockbusters like heart-protective statins.

While the effectiveness of antipsychotic drugs in some patients remains a matter of great debate, how these drugs became so ubiquitous and profitable is not. Big Pharma got behind them in the 1990s, when they were still seen as treatments for the most serious mental illnesses, like hallucinatory schizophrenia, and recast them for much broader uses, according to previously confidential industry documents that have been produced in a variety of court cases.

Today, more than a half-million youths take antipsychotic drugs, and fully one-quarter of nursing-home residents have used them. Yet recent government warnings say the drugs may be fatal to some older patients and have unknown effects on children.

The new generation of antipsychotics has also become the single biggest target of the False Claims Act. Every major company selling the drugs — Bristol-Myers Squibb, Eli Lilly, Pfizer, AstraZeneca and Johnson & Johnson — has either settled recent government cases for hundreds of millions of dollars or is currently under investigation…

Two of the settlements, involving charges of illegal marketing, set records last year for the largest criminal fines ever imposed on corporations….”  (NYTimes.com).

“Notice that when it comes to overall growth during an economic expansion, cutting spending produced worse outcomes than small increases in government spending, and large increases in government spending produced better results still. That fits very well with Keynesian theory of all stripes. On the other hand, it doesn’t fit with libertarian, Austrian, or conservative economic theory.”

Dozens of new cities are required !

Why would we fail to build them well? Perhaps these days good technology will bring good living?

So many projects. It sometimes seems there’s more $$$ behind big than there is behind new.

After all, exponential horror is not a secret.

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The worried cow would have lived till now
If she had saved her breath;
But she found her hay wouldn’t last all day,
And she mooed herself to death.
Bishop Taylor Smith [link]

Did I mention expensive?

“The direct cost of this imprisonment boom, in dollars, has been staggering: state correctional costs quadrupled over the past two decades and now top $50 billion a year, consuming 1 in every 15 general fund dollars.”

Why Tax The Rich?

Why $250k?  That number didn’t come from the Bible, it is the income level that accounts for about 50% of the income tax revenue.

Fortunately, it is also only about 2% of the population, so you only have to piss off 750,000 people.  That’s democracy.  Eat it.

So Socialism Is The Answer?

To what? You don’t even know what the question is.

“Your BA is not a ticket to a job. Your loan is an anchor not a sail.” —Robert Paterson

Here’s the impassioned conclusion to his post:

How far does this have to go ladies and gentlemen, before you’ve had enough? Before you simply refuse to submit?  How much of your money – both present and future earnings – has to be stolen before you will rise and say “no more”?

How much?

Do you need to be reduced to living under a freeway overpass?  Eating scraps from a garbage bin?  Is not having your retirement and income security destroyed not once, but twice in ten years enough for you to demand that this crap stop, and for you to refuse to labor and thus create more wealth that these crooks can steal until you obtain effective redress and the people responsible are held to account?

These events were not accidents folks.

They were premeditated and intentional, undertaken with the full knowledge of what would – and did – happen.

The truth has been covered up, whitewashed and papered over by both major political parties, neither of which is willing to stand and demand that all of these void agreements be rescinded, that the funds stolen be returned and that everyone involved in this tawdry mess go straight to prison.

No, instead all you’ve heard is “irrational exuberance”.

There was nothing irrational about it folks.

It was intentional, mendacious theft !

via Tao Jonesing

Two years have passed since the financial crises erupted and we have only started to realize how costly it is likely to be.

The Bank of England estimates losses in future output could reach 100% of world GDP.

!

The mall.
They’re like little colonies of corpocracy beamed down from the capitalist mothership.

Let’s face it. Malls are soul-deadening, community-crushing, job-vaporizing, passion-flattening, purpose-destroying, innovation-sucking, future-munching vectors of the lethal disease known as consumer capitalism that’s eating America from the inside out.

Er, Walmart is a little different in China. [16 pics]

The bank. The reason banks blew up is that they aren’t really banks.

They are giant leveraged structured hedge funds where your deposits are casino chips in the hands of Gamblers Anonymous. So for Pete’s sake, will someone create a bank for the rest of us already?

The stock market. Gambling with our hard-earned cash sounds about as smart as eating a pound of plutonium.

It’s about time someone invented a stock market for actual investment; real, committed, long-haul, patient capital, not just myopic, narrow, by-the-nanosecond, rumor-mill driven speculation.

Get the idea?

If we could reimagine a better capitalism, what would we want — and where would we begin?

Because whether we like it or not, a Great Stagnation is choking us in the belching, noxious fumes of an industrial age, and it won’t go away just because we want it to. But it will when we cause it to.

David Degraw:

News reports are out saying that in 2009 the poverty rate “skyrocketed” to 43.6 million – up from 39.8 million in 2008, which is the largest year-to-year increase, and the highest number since statistics have been recorded – putting the poverty rate for 2009 at 14.3 percent.

This is obviously a tragedy and horrific news. However, this is blatant propaganda.

The Census Bureau uses a long outdated method to calculate the poverty rate. The Census is measuring poverty based on costs of living metrics established back in 1955 – 55 years ago!

These numbers are based on: $22,050 for a family of four. Let me repeat that: $22,050 for a family of four. That breaks down to $5513 per person, per year. I don’t know about you, but I can’t imagine living in the United States on $459 per month.

If you increase that measure by just a small increment, to $25,000 for a family of four, you are now looking at nearly 100 million Americans in poverty.

Let’s get real. Someday. Please.

While the economic top half of one percent now fears a ‘double-dip’, the overwhelming majority of Americans are in the same downward spiral they’ve been on since Reagan.

A recent study done by Capgemini and Merrill Lynch Wealth Management found that a mere one percent of Americans are hoarding $13 TRILLION in ‘investible wealth’.

Yep, one percent of Americans are hoarding $13 TRILLION in ‘investible wealth’ and that doesn’t even factor in all the money they have hidden in offshore accounts.