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FOCUS: Another Hidden Bailout Print
Tuesday, 20 March 2012 11:26

Intro: "Here's yet another form of hidden bailout the federal government doles out to our big banks, without the public having much of a clue. This is from the WSJ this morning: Some of the biggest names on Wall Street are lining up to become landlords to cash-strapped Americans by bidding on pools of foreclosed properties being sold by Fannie Mae..."

Matt Taibbi at Skylight Studio in New York, 10/27/10. (photo: Neilson Barnard/Getty Images)
Matt Taibbi at Skylight Studio in New York, 10/27/10. (photo: Neilson Barnard/Getty Images)



Another Hidden Bailout

By Matt Taibbi, Rolling Stone

20 March 12

 

ere's yet another form of hidden bailout the federal government doles out to our big banks, without the public having much of a clue.

This is from the WSJ this morning:

Some of the biggest names on Wall Street are lining up to become landlords to cash-strapped Americans by bidding on pools of foreclosed properties being sold by Fannie Mae...

While the current approach of selling homes one-by-one has its own high costs and is sometimes inefficient, selling properties in bulk to large investors could require Fannie Mae to sell at a big discount, leading to larger initial costs.

In con artistry parlance, they call this the "reload." That's when you hit the same mark twice – typically with a second scam designed to "fix" the damage caused by the first scam. Someone robs your house, then comes by the next day and sells you a fancy alarm system, that's the reload.

In this case, banks pumped up the real estate market by creating huge volumes of subprime loans, then dumped a lot of them on, among others, Fannie and Freddie, the ever-ready enthusiastic state customer. Now the loans have crashed in value, yet the GSEs (Government Sponsored Enterprises) are still out there feeding the banks money through two continuous bailouts.

One, they continue to buy mortgages from the big banks (until recently, even from Bank of America, whom the GSEs were already suing for sales of toxic MBS), giving the banks a permanent market for home loans.

And secondly, they conduct these quiet bulk sales of mortgages, in which huge packets of home loans are sold to banks at a "big discount."

By now we've come full circle. Banks create the loans, make money selling them off on the market at high prices, then come back and buy them again when they're low. When the GSEs are in the middle of this transaction, it makes mortgage lending a basically risk-free proposition: Banks get paid for creating home loans and they end up owning valuable property on the cheap, but in between, they offshore the market risk to a government entity and/or to the idiot individual who bought the home mortgage in the first place.

Even better, many of the banks/investors who buy these home loans back from Fannie/Freddie will rent out their properties instead of reselling them, which can vastly increase their revenue streams. From the WSJ:

Economists at Goldman Sachs estimate the annual yield on an investment on rental property nationwide averages about 6.3%, but can exceed 8% in cities that were hit hard during the housing bust, including Las Vegas, Detroit and Tampa. By contrast, mortgage bonds have average yields of just over 3%, and investment-grade corporate bonds are yielding about 3.5%, according the Barclays Capital U.S. Investment-Grade Index.

It gets better:

Warren Buffett, considered a sage investor and chief executive of Berkshire Hathaway Inc., said in an interview with CNBC-TV last month that he would buy up "a couple hundred thousand" single-family homes if he could do so easily, given the high yields on rental investments.

Another potential buyer, according to the article, is John Paulson, the pillaging hedge-fund billionaire who was behind Goldman's notorious "Abacus" deal (in which Goldman allowed Paulson to pack a portfolio full of loser mortgages he was shorting before those same mortgages were dumped on a pair of Euro banks).

So congratulations, America, your quasi-governmental housing entity is about to subcontract out mass-landlording/slumlording jobs to the likes of John Paulson and Warren Buffett, so that they can add to their bottom lines collecting rent payments in the middle of a nationwide housing slump.

As one hedge fund analyst put it to me this morning: "Help inflate the bubble, create a foreclosure crisis, buy homes in bulk, and rent them out to the same average homeowner."

Is this what we had in mind when we created the "ownership society" – helping billionaires collect your rent?

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FOCUS | We're All Muppets Here Print
Written by <a href="index.php?option=com_comprofiler&task=userProfile&user=9146"><span class="small">Will Durst, San Francisco Chronicle</span></a>   
Monday, 19 March 2012 14:34

Excerpt: "According to Smith, associates are encouraged to pursue profit above all else, and that includes ripping out the eyeballs of their own billion-dollar clients at the same time they mockingly scorn them as Muppets."

Political satirist Will Durst. (photo: WillDurst.com)
Political satirist Will Durst. (photo: WillDurst.com)



We're All Muppets Here

By Will Durst, San Francisco Chronicle

19 March 12

 

ot easy being a Muppet. Referring to Greg Smith, formerly of Goldman Sachs, who wrote an op-ed in the New York Times about getting the hell out of Dodge, due to his company's relentlessly spiraling moral depravity. According to Smith, associates are encouraged to pursue profit above all else, and that includes ripping out the eyeballs of their own billion-dollar clients at the same time they mockingly scorn them as Muppets.

Yeah. Yeah. Yeah. A complete shocker - big time brokerage firm with little or no conscience. My God. What next? High school prom parties where beer is served? Charley Sheen coming to, on the floor of a Vegas hotel after noon? Drive-through food that tastes like hot damp glued-together bar coasters? Mitt Romney making his own Robo-Calls?

Romney loves to hype his history as a private equity investment banker, so it's not difficult to imagine him as another of the sucking pods on a waving tentacle of the vampire squid. Wrapped so tightly in the "Me First," and "Success at any Cost" culture that he squeaks money when he moves. A sound that surely acts as a predatory mating call.

We're all Muppets to him. On a daily basis Mr. Bain Capital will say or do whatever he thinks might possibly help on the campaign trail. "Pro-choice, I got your pro-choice. Oh wait, not pro-choice, well, then neither am I." "What happens in the sanctity of one's own bedroom is nobody's business. Oh, Yes It Is!" Surprised every time he's not photographed wearing one of those whiplash neck braces from the twisting and turning necessary to cover his wide panoply of paradoxical convictions.

Recently, this shape shifter comically sucked up to the South pretending to like cheesy grits. Mitt, nothing personal, but if ever there were a non-cheesy grits eating kind of a dude, it's you. Even while referring to your NASCAR and NFL owner buddies, you still don't have a song in your heart. Probably consider them nothing more than slightly better constructed sock puppets. More realistic button eyes.

That's it, isn't it? We're all annoying obstacles to be overcome in order to better provide for your family. Who would be well advised not to get too comfortable, if there is anything to be learned from the fate of your valiant Irish Setter, Seamus. Is that going to be your solution to everything: hose us down?

The Politicrats even have a name for our particular kind of Muppetism, They call us Low Information Voters. People not paying too close attention. The ones that pretty much believe every ounce of slop our leaders shovel at us while greedy fingers fiddle at our orbital sockets.

Consider the 50% of Republicans in Mississippi and 45% in Alabama who still believe President Obama is a Muslim. While the hard of hearing think he's muslin, a loosely woven cotton fabric.

Maybe that's the ultimate goal of Republican Kingmakers like the Koch Brothers. Get rid of the messy unpredictable human element and create their own Muppet mouthpiece. Fold a spool of muslin into a head shaped ball, stick a hand up it and have it say exactly what they think we Low Information Voters, LIVers, want to hear. Or did they already do that and call it… Rush Limbaugh.

The New York Times says Emmy-nominated comedian and writer Will Durst "is quite possibly the best political satirist working in the country today." Check out the website: Redroom.com to buy his book or find out more about upcoming stand-up performances. Or willdurst.com.

Don't forget "Elect to Laugh!f at the Marsh. Every Tuesday. 415.826.5750 themarsh.org. Special $10 tickets. Use code "vote."

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Obama Sets Gas Prices? Just Another GOP Myth Print
Sunday, 18 March 2012 16:58

Semple writes: "If only the president had the power to give us $2.50-a-gallon gasoline, as Newt Gingrich promised to do if he got to the White House. It is ridiculous to think that a president can."

President Barack Obama delivers remarks on energy policy during a rally in Largo, Maryland, 03/15/12. (photo: Chip Somodevilla/Getty Images)
President Barack Obama delivers remarks on energy policy during a rally in Largo, Maryland, 03/15/12. (photo: Chip Somodevilla/Getty Images)



Obama Sets Gas Prices? Just Another GOP Myth

By Robert B. Semple Jr., The New York Times

18 March 12

 

eff Bingaman, chairman of the Senate energy committee, complained the other day of "widespread misunderstanding" about rising oil prices. He was being senatorially polite.

The issue of gas prices has not only been misunderstood but thoroughly distorted by relentless ideological spin from industry and its political allies, mainly Republican. Hardly a day goes by that some industry cheerleader somewhere - be it Gov. Bobby Jindal of Louisiana or Senator James Inhofe of Oklahoma - does not flay President Obama for driving up oil prices by denying the industry access to oil and gas deposits and imposing ruinous environmental rules. Senator John Barrasso, a Wyoming Republican, said last week that Mr. Obama should be held "fully responsible for what the American public is paying for gasoline."

If only the president had the power to give us $2.50-a-gallon gasoline, as Newt Gingrich promised to do if he got to the White House. It is ridiculous to think that a president can.

One can sympathize with consumers feeling the pain of higher gas prices. But the fundamental truth is that those prices are tied to the price of oil, set by world markets. There are peaks and valleys, but their causes - a worldwide recession, an embargo or conflict in the Middle East - are beyond the control of any one country. As the chart below shows, gasoline prices rise and fall in the same pattern throughout the world. Americans historically pay much less at the pump because they pay lower taxes; when the price of a gallon spikes at $3.70 in the United States, it is closer to $8 in, say, Germany.

Because oil is a global commodity, increasing domestic production will do very little to bring down retail prices, although it does help narrow the trade deficit as America spends less on imports. On this score, America is doing much better than the Republicans will admit. In 2005, oil imports accounted for nearly 60 percent of America's daily consumption. In 2010, for the first time in recent memory, imports were less than half of consumption, and last year, imports were only 45 percent - 8.6 million barrels a day of the 19 million consumed. There are two reasons for this welcome shift: production is up and oil consumption is down. Production of crude oil and other liquid fuels, onshore and offshore, reached about 10.3 million barrels daily in 2011, its highest level since the late 1980s.

Some of the biggest discoveries have occurred on private land in deep shale formations in Texas and North Dakota, and production on federal land is beginning to boom, too. The real issue, which industry's allies never mention, is whether the oil companies are fully exploiting the federal resources they already control. Mr. Bingaman notes that 7,000 approved onshore drilling permits have been sitting unused by the companies that own them, and that millions of acres under lease in the gulf remain unexplored.

The most encouraging news is on the consumption side. Americans are getting more miles to the gallon, which means there's that much less carbon dioxide going into the atmosphere. We used 20.8 million barrels a day in 2005, the highest level in history. That dropped to just under 19 million barrels last year, and, according to the federal Energy Information Administration, is likely to stay there awhile. The recession has had a lot to do with the decline, but so has fuel efficiency. Ten years ago, cars and light trucks (including S.U.V.'s) averaged 24.7 miles a gallon. In 2011, the figure rose to 29.6 miles a gallon as consumers chose more efficient cars. Two landmark agreements between the administration and the automakers - aimed at improving efficiency and reducing greenhouse gases - could raise it to 55 miles per gallon by 2025.

Despite this progress, ending dependence on foreign oil seems as remote as when President Richard Nixon proposed it. With developing countries like China and India demanding more petroleum, prices are likely to stay high. That's reality - no matter what the Republican spinners say. Only a rounded policy mix of greater fuel efficiency, steady production and the aggressive development of alternative fuels can protect American consumers against what could be even greater price shocks in the years ahead.

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FOCUS | Top Ten Catholic Teachings Santorum Ignores Print
Sunday, 18 March 2012 15:11

Cole writes: "Rick Santorum and Newt Gingrich are both Catholics, and wear their faith on their sleeves, but they are hypocritical in picking and choosing when they wish to listen to the bishops."

Republican presidential candidate and former Pennsylvania senator, Rick Santorum, speaks in Arlington Heights, Illinois, 03/16/12. (photo: Seth Perlman/AP)
Republican presidential candidate and former Pennsylvania senator, Rick Santorum, speaks in Arlington Heights, Illinois, 03/16/12. (photo: Seth Perlman/AP)



Top Ten Catholic Teachings Santorum Ignores

Juan Cole, Reader Supported News

18 March 12

 

Rick Santorum is claiming that if he wins the Illinois primary, he has virtually won the Republican nomination. It seems an appropriate time for this golden oldie:

he right wing Republican politicians who have been denouncing the requirement that female employees have access to birth control as part of their health benefits as an attack on religious freedom completely ignore the church teachings they don't agree with. Rick Santorum and Newt Gingrich are both Catholics, and wear their faith on their sleeves, but they are hypocritical in picking and choosing when they wish to listen to the bishops.

  1. So for instance, Pope John Paul II was against anyone going to war against Iraq I think you'll find that Rick Santorum managed to ignore that Catholic teaching.

  2. The Conference of Catholic Bishops requires that health care be provided to all Americans. I.e., Rick Santorum's opposition to universal health care is a betrayal of the Catholic faith he is always trumpeting.

  3. The Catholic Church opposes the death penalty for criminals in almost all situations. (Santorum largely supports executions.)

  4. The US Conference of Bishops has urged that the federal minimum wage be increased, for the working poor. Santorum in the Senate repeatedly voted against the minimum wage.

  5. The bishops want welfare for all needy families, saying "We reiterate our call for a minimum national welfare benefit that will permit children and their parents to live in dignity. A decent society will not balance its budget on the backs of poor children." Santorum is a critic of welfare.

  6. The US bishops say that "the basic rights of workers must be respected - the right to productive work, to decent and fair wages, to the organization and joining of unions…". Santorum, who used to be supportive of unions in the 1990s, has now, predictably, turned against them.

  7. Catholic bishops demand the withdrawal of Israel from Palestinian territories occupied in 1967. Rick Santorum denies that there are any Palestinians, so I guess he doesn't agree with the bishops on that one.

  8. The US Conference of Catholic Bishops ripped into Arizona's law on treatment of immigrants, Cardinal Roger Mahony characterized Arizona's S.B. 1070 as "the country's most retrogressive, mean-spirited, and useless anti-immigrant law," saying it is based on "totally flawed reasoning: that immigrants come to our country to rob, plunder, and consume public resources." He even suggested that the law is a harbinger of an American Nazism! Santorum attacks 'anchor babies' or the provision of any services to children of illegal immigrants born and brought up in the US.

  9. The Bishops have urged that illegal immigrants not be treated as criminals and that their contribution to this country be recognized.

  10. The US Conference of Bishops has denounced, as has the Pope, the Bush idea of ‘preventive war', and has come out against an attack on Iran in the absence of a real and present threat of an Iranian assault on the US. In contrast, Santorum wants to play Slim Pickens in Dr. Strangelove and ride the rocket down on Isfahan himself.

The conflict is between Federal authorities and the US Catholic bishops over rules requiring employees of Catholic institutions such as universities and hospitals to have birth control pills supplied to them as part of their health insurance. Because of Pope Paul VI's 1968 encyclical, Humanae Vitae, the contemporary Roman Catholic church has taken the stand that artificial birth control is immoral. The bishops therefore object to having the church be forced to supply it as part of their employees' health care packages.

The problem is that birth control is legal in the United States, and birth control pills are used for other purposes than contraception (in fact, contraception may not even be the purpose of the majority of prescriptions). Contrary to what Santorum alleges, the prescriptions are relatively expensive for poor and working class families.

Religious practices in the United States are trumped by secular law all the time when there is a conflict. Thus, Native Americans who believe in using peyote as part of their religious rituals were fired from their government jobs for doing so, and the US Supreme Court upheld it in 1990.

Likewise, traditionalist members of the Sikh religion believe that a man should avoid cutting his hair, and should bind it up in a turban. So what if an orthodox Sikh gets a job as a construction worker? He can't get a hard hat on over the turban. Does he have the right to forgo the hard hat on the construction site, so as to retain his turban? The question went to the US courts, and they said Sikhs have to wear hard hats. If a brick fell on the turban and killed the Sikh worker, his family could after all sue the construction company for negligence since it did not require him to wear a hard hat.

Or there are many instances in which Muslim religious laws and practices have been over-ruled in the United States by the courts. American law forbids Muslim-American men to take a second wife, something legal to them in many of their home countries. State law tends to award community property in cases of divorce instead of the much smaller payments men can make to divorced women in Islamic law, even if the couple have specified in their marriage contract that Muslim law (sharia) will govern these issues.

I don't think there is any question that Federal law, and state law, can trump Roman Catholic religious sentiments, just as they trump the religious sentiments and practices of other religious communities where issues of secular justice and equity are at stake.

The tradition of American progressive thought is tolerant of religion even while usually not being religious itself. In my view this attitude of tolerance is rooted in James Madison's theory of democracy, which is that it is best preserved by lively arguments among groups in the body politic that disagree with one another. Thus, while the Roman Catholic church authorities adopted a negative stance toward modernity, cultural pluralism, and democracy in the nineteenth century, the Catholic community in the United States nevertheless contributed in important ways to modernity, cultural pluralism and democracy. Arguably, had the US been entirely Protestant, its law and practice would have evolved in a less pluralistic and tolerant direction.

A flourishing Catholic community contributed to social debates and so improved American democracy - witness Dorothy Day and the Catholic Worker movement. And, the reformist theologians of the twentieth century, most of them European or Latin American, cultivated by American Catholics, made important contributions to our understanding - Karl Rahner, Edward Schillebeeckx, Pierre Teilhard de Chardin, Hans Kueng, Paulo Freire, and Gustavo Gutierrez. I would argue that Vatican II was an important event in American religious life across the board, not just for American Catholics. It is lack of appreciation of Madisonian conceptions of democracy of pluralism and checks and balances that led the late Christopher Hitchens to disregard altogether the enormous positive contribution of the Church, whether to the education of the poor and working classes or to teaching social justice. (By the way, the argument for democracy depending on diverse voices and vigorous debate is also an argument for the benefits for the US of the advent of Islam in American public life).

So, the arguments the bishops are making about the balance between conscience and the obligations of civil law should be welcomed by all Americans as part of our national dialectic.

President Obama is to be applauded for at least trying to find a compromise that doesn't dragoon Catholic institutions into betraying that conscience. In the end, of course, civil law must uphold equitable treatment of all women, and a satisfactory compromise may not be possible. We will be the better for having the debate, and attempting to find a modus vivendi.

What isn't helpful is to have loud-mouthed hypocrites who reject all the humane principles for which the Catholic Church stands getting on a high horse about a third-order teaching such as artificial birth control (on which the position of the church has changed over time, and may change again).


Reader Supported News is the Publication of Origin for this work. Permission to republish is freely granted with credit and a link back to Reader Supported News.

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Why Ron Paul May Cut a Deal With Mitt Romney Print
Thursday, 15 March 2012 15:38

Excerpt: "Even after his southern losses, only Romney has a real shot at amassing the 1,144 delegates required to wrap up the nomination, and he would then face the task of unifying the GOP's warring factions. Which is why Paul's campaign has sent discreet signals to Camp Romney that the keys to Paul's shop can be had for the right price."

Republican presidential candidates Mitt Romney and Ron Paul shake hands before the start of the first 2012 Republican presidential debate in Manchester, New Hampshire, June 13, 2011. (photo: Getty Images)
Republican presidential candidates Mitt Romney and Ron Paul shake hands before the start of the first 2012 Republican presidential debate in Manchester, New Hampshire, June 13, 2011. (photo: Getty Images)



Why Ron Paul May Cut a Deal With Mitt Romney

By Alex Altman, Time Magazine

15 March 12

 

or Ron Paul, victory is finally in sight. No, not a swearing-in ceremony next January 20, or even a single statewide win. Halfway through the primary season, Paul has won only a preference poll in the U.S. Virgin Islands, and he is running dead last in delegates among the four GOP candidates for President. He has spent a lot, if not always wisely: the $31.55 he has dropped per vote (more than even Mitt Romney) is a sum that might shock even a Democrat.

But winning the presidency was never Paul's foremost goal, and as he nears the end of his last presidential crusade, he has one more chance to promote his ideas. The Republican race is a muddled mess. Even after his southern losses, only Romney has a real shot at amassing the 1,144 delegates required to wrap up the nomination, and he would then face the task of unifying the GOP's warring factions. Which is why Paul's campaign has sent discreet signals to Camp Romney that the keys to Paul's shop can be had for the right price.

History suggests the two men are already in cahoots. Throughout the primary, Paul has been Romney's secret weapon. During the 20 GOP debates, Paul attacked Romney's rivals a total of 39 times while sparing Romney entirely, according to an analysis by the liberal group ThinkProgress. Paul leapt to Romney's defense when his tenure at Bain Capital and his taste for firing insurance companies came under attack, and skewered a series of Romney antagonists in TV ads. "He is our deputy campaign manager," jokes one Romney ally.

Paul's advisers bristle at suggestions that the libertarian icon is in league the GOP frontrunner. They say Paul still has a shot at the nomination if he can hold Romney beneath the delegate threshold until Tampa and then force a floor fight that sends delegates fleeing to Paul on a secondary ballot. This may be the company line, but the scenario is improbable enough that even Paul has conceded his "chances are slim."

Even as they tamp down rumors of a pact, Paul's advisers concede that the friendship between Paul and Romney is the initial step toward a deal. And behind the scenes, discussions between the two campaigns - as well as initial discussions with the Santorum and Gingrich camps, according to one Paul adviser - are slowly taking shape.

An alliance could benefit both camps. Paul's support would go a long way toward helping Romney with a bloc of young Republicans who have been turning out in huge numbers for Paul and who otherwise might stay home in November. It might also help Romney grab all of Paul's delegates. Such an arrangement would help Paul get what a Romney ally called "an important speaking role at the convention."

Paul's camp contends he will exceed the 270 delegates Romney garnered in 2008, which earned him an undercard slot on the penultimate evening in St. Paul. Josh Putnam, a political scientist at Davidson College who studies delegate allocation, notes that Paul's campaign hasn't furnished evidence to back up those claims. But he says there is a chance Paul could "completely exploit the system and take delegates from caucus states where there's no written rule to how delegates are allocated." Paul's aides say they expect to win a plurality of delegates in a batch of blue-to-purple caucus states where it failed to win the popular vote, including Iowa, Minnesota, Maine, Nevada and Washington.

Paul's acolytes insist their man cannot be bought. "Romney wants the ring of power. He wants it so bad," says Doug Wead, a Paul senior adviser. "Negotiating with Ron Paul is very difficult because he doesn't want anything. If he got the ring, he would throw it into Mount Doom."

Maybe so, but at 76, Paul is understandably concerned about the future of his movement. Aides say if Paul can't win the nomination, four legislative priorities would top the Texas Representative's wish list: deep spending cuts that lead to a balanced budget; the restoration of civil liberties; a commitment to reclaim the legislative branch's right to declare war, which it abdicated to the executive branch in recent decades; and reforms that shore up the U.S. monetary system, such an audit of the Federal Reserve or competing-currency legislation. The Texas Representative might also be enticed, says campaign chairman Jesse Benton, by the prospect of serving as a presidential adviser, a Cabinet position for someone in his orbit or "perhaps a vice presidency."

Not for himself, but rather his son. Rand Paul, the junior senator from Kentucky and a Tea Party icon, is expected to launch his own White House bid in 2016. Being on the ticket now – or even being mentioned for it – would be a helpful step. Says one Paul adviser: "If you're talking about putting Rand on the ticket, of course that would be worth delivering our people to Romney."

Romney is unlikely to go for that. At the same time, Paul's backers recognize that selling supporters on an alliance with Romney carries special risks, since Paul's bond with his backers is predicted on his record of principled stands. A pact would have to be done "very cautiously," says Benton. "We wouldn't ask our people to do that if we worried they were just being coopted or that we were in some way selling out."

But it may soon be time for Paul's army to decide if it wants to win or lose in the fall. "There's clearly something going on between the two of them, and that's a very good thing," says David Adams, a Kentucky Tea Party strategist who helmed Rand Paul's Senate primary campaign. "The main goal is stopping this lurch to the left. Mitt Romney and Ron Paul can go a long way toward healing what ails our nation."

With reporting by Katy Steinmetz

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