"The action I am taking is no more than a radical measure to hasten the explosion of truth and justice. I have but one passion: to enlighten those who have been kept in the dark, in the name of humanity which has suffered so much and is entitled to happiness. My fiery protest is simply the cry of my very soul. Let them dare, then, to bring me before a court of law and let the enquiry take place in broad daylight!" - Emile Zola, J'accuse! (1898) -

Saturday, September 20, 2008

A Few Financial thoughts: As Usual The “Mainstream Media” Has Seen Fit To Ignore The Development Of Tent Cities Growing On A Daily Basis While Fixated On The Technical Miracle The Congress Is Expected To Perform.

Deregulation Is Dead!

While It Is True That A Rooseveltian Heroic effort is called for to deal with the disaster of deregulation and Corporate Greed; the first offering from the administration leaking out contains the same old: “We’ll solve it by assuming more power” approach, setting up a real battle for Chris Dodd to manage; it is time to stop this shit and deal with reality and a genuine fix.

I am not enamored of some of the consequences of the necessary steps that must be taken, such as: the massive vacuum cleaner sucks up of indebtedness that encumbers the future, endangering any lower to middle class tax relief, universal health insurance, etc., but the financial peril of the table must be dealt with now. Many who have criminal level blame to bear are going to escape, and you and I know it.

The task of serious regulation of the financial mechanisms of this society is imperative. The total package of reform will have to be drastic.

Selling short in the market should be put on a six month moratorium, at least. Whatever new agency of supervise is created must have powerful over site jurisdiction and right of enforcement and tools of legal accountability.

Home mortgages probably should uniformly be put on a thirty year fixed rate basis to rid the market of “new products” and the casino-like atmosphere.

Credit Card companies need to be immediately barred from picking up bad debt products so that they can worm their way into government bailout/subsidy monies, because that facet of expectation is wide open. Stop the gamesmanship now.

Banks are going to have to forced to maintain liquidity in the market place, and at the moment they are heading south on that matter.

Frozen liquidity drove the last great depression and it cannot be allowed to happen again.

Roosevelt moved the economy in part with “make works” projects, and I am not faulting that approach as a component to restarting this economy.

If I had my choice the priority would be the research and development on a non hybrid, non-plug in electric engine to drive the world.

It would generate jobs, stimulate all kinds of R&D, solve in a large part (70%) of the environmental/energy oil consumption driven problems including blood for oil spills know as god forsaken fucking wars!

And whatever debt assets are eaten or nationalized by our government, whenever they come back into play in the market place, should provide federal debt pay down revenue and not another round of privatized pillage!

We have much to think about and much to do and partisanship has no place in this matter. Wherever it shows, whomever the Congressperson might be; they should be booted for office!

RENO, Nev. - A few tents cropped up hard by the railroad tracks, pitched by men left with nowhere to go once the emergency winter shelter closed for the summer.

Then others appeared — people who had lost their jobs to the ailing economy, or newcomers who had moved to Reno for work and discovered no one was hiring.

Within weeks, more than 150 people were living in tents big and small, barely a foot apart in a patch of dirt slated to be a parking lot for a campus of shelters Reno is building for its homeless population. Like many other cities, Reno has found itself with a "tent city" — an encampment of people who had nowhere else to go.

From Seattle to Athens, Ga., homeless advocacy groups and city agencies are reporting the most visible rise in homeless encampments in a generation.

Nearly 61 percent of local and state homeless coalitions say they've experienced a rise in homelessness since the foreclosure crisis began in 2007, according to a report by the National Coalition for the Homeless. The group says the problem has worsened since the report's release in April, with foreclosures mounting, gas and food prices rising and the job market tightening.

"It's clear that poverty and homelessness have increased," said Michael Stoops, acting executive director of the coalition. "The economy is in chaos, we're in an unofficial recession and Americans are worried, from the homeless to the middle class, about their future."

Caught by surprise

The phenomenon of encampments has caught advocacy groups somewhat by surprise, largely because of how quickly they have sprung up.

"What you're seeing is encampments that I haven't seen since the 80s," said Paul Boden, executive director of the Western Regional Advocacy Project, an umbrella group for homeless advocacy organizations in Los Angeles, San Francisco, Oakland, Calif., Portland, Ore. and Seattle.

The relatively tony city of Santa Barbara has given over a parking lot to people who sleep in cars and vans.

The city of Fresno, Calif., is trying to manage several proliferating tent cities, including an encampment where people have made shelters out of scrap wood.

In Portland, Ore., and Seattle, homeless advocacy groups have paired with nonprofits or faith-based groups to manage tent cities as outdoor shelters.

Other cities where tent cities have either appeared or expanded include include Chattanooga, Tenn., San Diego, and Columbus, Ohio.

The Department of Housing and Urban Development recently reported a 12 percent drop in homelessness nationally in two years, from about 754,000 in January 2005 to 666,000 in January 2007. But the 2007 numbers omitted people who previously had been considered homeless — such as those staying with relatives or friends or living in campgrounds or motel rooms for more than a week.

In addition, the housing and economic crisis began soon after HUD's most recent data was compiled.

"The data predates the housing crisis," said Brian Sullivan, a spokesman for HUD. "From the headlines, it might appear that the report is about yesterday. How is the housing situation affecting homelessness? That's a great question. We're still trying to get to that."

In Seattle, which is experiencing a building boom and an influx of affluent professionals in neighborhoods the working class once owned, homeless encampments have been springing up — in remote places to avoid police sweeps.

"What's happening in Seattle is what's happening everywhere else — on steroids," said Tim Harris, executive director of Real Change, an advocacy organization that publishes a weekly newspaper sold by homeless people.

Homeless people and their advocates have organized three tent cities at City Hall in recent months to call attention to the homeless and protest the sweeps — acts of militancy, said Harris, "that we really haven't seen around homeless activism since the early '90s."

In Reno, officials decided to let the tent city be because shelters were already filled.

Officials don't know how many homeless people are in Reno. "But we do know that the soup kitchens are serving hundreds more meals a day and that we have more people who are homeless than we can remember," said Jodi Royal-Goodwin, the city's redevelopment agency director.

Those in the tents have to register and are monitored weekly to see what progress they are making in finding jobs or real housing. They are provided times to take showers in the shelter, and told where to go for food and meals.

Hopes for casino jobs dashed

Sylvia Flynn, 51, came from northern California but lost a job almost immediately and then her apartment.

Since the cheapest motels here charge upward of $200 a week, Flynn ended up at the Reno women's shelter, which has only 20 beds and a two-week limit on stays.

Out of a dozen people interviewed in the tent city, six had come to Reno from California or elsewhere over the last year, hoping for casino jobs.

"I figured this would be a great place for a job," said Max Perez, a 19-year-old from Iowa. He couldn't find one and ended up taking showers at the men's shelter and sleeping in a pup tent barely big enough to cover his body.

The casinos are actually starting to lay off employees.

"Sometimes I think we need to put out an ad: 'No, we don't have any more jobs than you do,'" Royal-Goodwin said.

The city will shut down the tent city as soon as early October because the tents sit on what will be a parking lot for a complex of shelters and services for homeless people. The complex will include a men's shelter, a women's shelter, a family shelter and a resource center.

Reno officials aren't sure whether the construction will eliminate the need for the tent city. The demand, they say, keeps growing.

"They only hit tent city when they really bottom out." ... The pattern is cropping up in communities across the country, like Cleveland, Ohio, ...journals.aol.com/foxxgiavani/shaken-but-not-stirred/entries/2007/12/23/tent-city-in-the-suburbs-of.../1589 - 62k

BBC NEWS Americas Tent city highlights US homes crisis
Mar 14, 2008 ... The population of Tent City has grown rapidly in less than a year ... has cost them their homes; many thousands more across the US. ...news.bbc.co.uk/2/hi/americas/7297093.stm - 54k -

CNN-'Tent cities' of homeless on the rise across the USTelegraph.co.uk, United Kingdom - Sep 19, 2008Homeless encampments dubbed "tent cities" are springing up across the US, partly in response to soaring numbers of home repossessions, the credit crunch and ...Foreclosures Increasing Numbers Of Homeless Leading To More Tent ... AHN‘Tent cities’ housing homeless increasing in the US Fresh Newsall 25 news articles »

In hard times, tent cities rise across the countryThe Associated Press - Sep 18, 2008Other cities where tent cities have either appeared or expanded include include Chattanooga, Tenn., San Diego, and Columbus, Ohio. The Department of Housing ...

Protesters To Build "tent City" Outside McCain CondoCBS News, NY - Sep 15, 2008The protest will culminate with the construction of a tent city across the street from McCain’s condo. Workers from Ohio, Michigan, and Virginia will be on ...

NPR's Adam Davidson points out in his new Planet Money Blog, this bill also appears to constitute the greatest transfer of political power from the Congressional to the Executives Branches ... Possibly ever.

The creation of an RTC style bail out of Wall Street. From Business Week:

From the bill itself:

(a) Authority to Purchase.--The Secretary is authorized to purchase, and to make and fund commitments to purchase, on such terms and conditions as determined by the Secretary, mortgage-related assets from any financial institution having its headquarters in the United States.

(b) Necessary Actions.--The Secretary is authorized to take such actions as the Secretary deems necessary to carry out the authorities in this Act, including, without limitation:

(1) appointing such employees as may be required to carry out the authorities in this Act and defining their duties;

(2) entering into contracts, including contracts for services authorized by section 3109 of title 5, United States Code, without regard to any other provision of law regarding public contracts;

(3) designating financial institutions as financial agents of the Government, and they shall perform all such reasonable duties related to this Act as financial agents of the Government as may be required of them;

(4) establishing vehicles that are authorized, subject to supervision by the Secretary, to purchase mortgage-related assets and issue obligations; and

(5) issuing such regulations and other guidance as may be necessary or appropriate to define terms or carry out the authorities of this Act.

So essentially the Treasury Secretary can buy any assets he wants on any terms he likes, he can hire anyone he wants to do it, and he can write any kind of regulation he wants. The Treasury Secretary is now essentially in charge of oversight of the Treasury Secretary, and Congress is abdicating once again its own oversight powers, only getting a report from the Treasury Secretary twice a year.

Again, from the language of the Bill:

Within three months of the first exercise of the authority granted in section 2(a), and semiannually thereafter, the Secretary shall report to the Committees on the Budget, Financial Services, and Ways and Means of the House of Representatives and the Committees on the Budget, Finance, and Banking, Housing, and Urban Affairs of the Senate with respect to the authorities exercised under this Act and the considerations required by section 3.

Then comes the excessively scary paragraph:

Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.

As Adam Davidson says:


So, for the next three months, and then an additional six months after that, the Treasury Secretary can do anything he deems appropriate without anybody anywhere looking it over.

That seems like an awful lot of absolute power.

To which I add, No Shit. While a bailout is needed of the financial sector this bill seems to also constitute a massive and dangerous power grab by the Executive Branch of this country. Particularly since the Congress seems to be abdicating its own oversight duties and precluding the Court System from being able to intervene as well.

Okay, and I say this as someone who realizes some kind of bail out is necessary, WHOA! Time to slow it down Democratic Congress. Think before passing this legislation. No one in a government should be allowed this much power with this little oversight.


UPDATE (2): Phone Numbers:

Senator Charlies Schumer (202) 224-6542, Email Submission Page Senator Chris Dodd (202) 224-2823, Email Submission Page Switchboard Number for the House of Representatives: 202-225-3121 Switchboard Number for the U.S. Senate: 202-224-3121

Paul Krugman says No Deal. Writing in part about this bail out:

I hate to say this, but looking at the plan as leaked, I have to say no deal. Not unless Treasury explains, very clearly, why this is supposed to work, other than through having taxpayers pay premium prices for lousy assets.

As I posted earlier today, it seems all too likely that a “fair price” for mortgage-related assets will still leave much of the financial sector in trouble. And there’s nothing at all in the draft that says what happens next; although I do notice that there’s nothing in the plan requiring Treasury to pay a fair market price. So is the plan to pay premium prices to the most troubled institutions? Or is the hope that restoring liquidity will magically make the problem goes away?

It's been a quick slide from economic superpower to economic basket case.

Rosa Brooks September 18, 2008

Dear United States, Welcome to the Third World! It's not every day that a superpower makes a bid to transform itself into a Third World nation, and we here at the World Bank and the International Monetary Fund want to be among the first to welcome you to the community of states in desperate need of international economic assistance.

As you spiral into a catastrophic financial meltdown, we are delighted to respond to your Treasury Department's request that we undertake a joint stability assessment of your financial sector.

In these turbulent times, we can provide services ranging from subsidized loans to expert advisors willing to perform an emergency overhaul of your entire government.

As you know, some outside intervention in your economy is overdue. Last week -- even before Wall Street's latest collapse -- 13 former finance ministers convened at the University of Virginia and agreed that you must fix your "broken financial system."

Australia's Peter Costello noted that lately you've been "exporting instability" in world markets, and Yashwant Sinha, former finance minister of India, concluded, "The time has come.

The U.S. should accept some monitoring by the IMF."

We hope you won't feel embarrassed as we assess the stability of your economy and suggest needed changes.

Remember, many other countries have been in your shoes. We've bailed out the economies of Argentina, Brazil, Indonesia and South Korea. But whether our work is in Sudan, Bangladesh or now the United States, our experts are committed to intervening in national economies with care and sensitivity.

We thus want to acknowledge the progress you have made in your evolution from economic superpower to economic basket case.

Normally, such a process might take 100 years or more.

With your oscillation between free-market extremism and nationalization of private companies, however, you have successfully achieved, in a few short years, many of the key hallmarks of Third World economies.

Your policies of irresponsible government deregulation in critical sectors allowed you to rapidly develop an energy crisis, a housing crisis, a credit crisis and a financial market crisis, all at once, and accompanied (and partly caused) by impressive levels of corruption and speculation.

Meanwhile, those of your political leaders charged with oversight were either napping or in bed with corporate lobbyists.

Take John McCain, your Republican presidential nominee, whose senior staff includes half a dozen prominent former lobbyists. As he recently put it, "I was chairman of the [Senate] Commerce Committee that oversights every part of the economy." No question about it: Your leaders' failure to notice the damage done by irresponsible deregulation was indeed an oversight of epic proportions.

Now you are facing the consequences. Income inequality has increased, as the rich have gotten windfalls while the middle class has seen incomes stagnate.

Fewer and fewer of your citizens have access to affordable housing, healthcare or security in retirement.

Even life expectancy has dropped.

And when your economic woes went from chronic to acute, you responded -- like so many Third World states have -- with an extensive program of nationalizing private companies and assets.

Your mortgage giants Fannie Mae and Freddie Mac are now state owned and controlled, and this week your reinsurance giant AIG was effectively nationalized, with the Federal Reserve Board seizing an 80% equity stake in the flailing company.

Some might deride this as socialism. But desperate times call for desperate measures.

Admittedly, your transition to Third World status is far from over, and it won't be painless.

At first, for instance, you may find it hard to get used to the shantytowns that will replace the exurban sprawl of McMansions that helped fuel the real estate speculation bubble.

But in time, such shantytowns will simply become part of the landscape.

Similarly, as unemployment rates continue to rise, you will initially struggle to find a use for the expanding pool of angry, jobless young men. But you will gradually realize that you can recruit them to fight in a ceaseless round of armed conflicts, a solution that has been utilized by many other Third World states before you.

Indeed, with your wars in Iraq and Afghanistan, you are off to an excellent start.

Perhaps this letter comes as a surprise to you, and you feel you're not fully ready to join the Third World. Don't let this feeling concern you.

Though you may never have realized it, you've been preparing for this moment for years.