Economic Stories of Relevance in Today's World -- May 15, 2011

4closurefraud Website - A website dedicated to the fraudclosure MERS issue


FDIC’s Bair: Millions of Foreclosures Could Be ‘Infected’ - Wall Street Journal - Alan Zibel - May 12, 2011 - The head of the Federal Deposit Insurance Corp. is warning that flaws may have “infected millions of foreclosures” and questioned whether other regulators’ inquiries into problems at the nation’s mortgage-servicing companies have been thorough enough... “We do not yet really know the full extent of the problem,” FDIC Chairman Sheila Bair said Thursday in written remarks submitted to a hearing of the Senate Banking Committee. “Flawed mortgage-banking processes have potentially infected millions of foreclosures, and the damages to be assessed against these operations could be significant and take years to materialize.”


U.S. ‘Underwater’ Homeowners Increase to 28 Percent - Bloomberg - John Gittelsohn - May 10, 2011 - More than 28 percent of U.S. homeowners with mortgages owed more than their properties were worth in the first quarter as values fell the most since 2008, Zillow Inc. said today... Homeowners with negative equity increased from 22 percent a year earlier as home prices slumped 8.2 percent over the past 12 months, the Seattle-based company said. About 27 percent of homes with mortgages were “underwater” in the fourth quarter, according to Zillow, which runs a website with property-value estimates and real-estate listings...Home prices fell 3 percent in the first quarter and will drop as much as 9 percent this year as foreclosures spread and unemployment remains high, Zillow Chief Economist Stan Humphries said. Prices won’t find a floor until 2012, he said...“We get tired of telling such a grim story, but unfortunately this is the story that needs to be told,” Humphries said in a telephone interview. “Demand is still quite anemic due to unemployment and the fact that home values are still falling. And that tends to make people more cautious about buying.”


Foreclosure Filings Fall 34% as Banks Struggle With ‘Saturation’ - Bloomberg - Dan Levy - May 11, 2011 - Foreclosure filings in the U.S. fell 34 percent last month from a year earlier as lenders already swamped with seized homes delayed action on thousands of additional delinquent mortgages, RealtyTrac Inc. said... A total of 219,258 properties received default, auction or repossession notices in April, the fewest in 40 months, the Irvine, California-based data seller said today in a statement. It was the seventh straight month that filings dropped from a year earlier. They were down 9 percent from March. One in 593 U.S. households got a notice.


The covert bailing out of the commercial real estate industry by the Federal Reserve. How the Fed bails out ritzy hotels and empty shopping malls on the back of taxpayer dollars.- MyBudget360.com -  Part of the success that the Federal Reserve has achieved with boosting up large banks stems from its secretive ability to forge shadow bailouts of residential and commercial real estate loans.  The more secretive of the previous two comes from the commercial real estate (CRE) industry.  During the height of the housing mania in the United States CRE values were estimated to be worth $6.5 trillion.  A hefty sum no doubt and with $3.5 trillion in loans securing these properties, a significant cushion of equity was in place.  Yet with the crash in all real estate values, banks were left holding a smoldering portfolio of empty shopping malls, luxury hotels, and in some cases fast food outlets.  Today CRE values are estimated to be at $3 to $3.5 trillion putting many loans in a negative equity position reminiscent of many individual homeowners.  This issue of bailing out CRE was never discussed openly with the American people because it would have never carried any political muster.  So what the Federal Reserve accomplished was to create a system where banks were able to exchange toxic loans in place of U.S. Treasuries without taking up an open dialogue with the public.  In other words a clandestine bailout.



The People vs. Goldman Sachs - By Matt Taibbi - Rolling Stone Magazine - May 11, 2011 - A Senate committee has laid out the evidence. Now the Justice Department should bring criminal charges - They weren't murderers or anything; they had merely stolen more money than most people can rationally conceive of, from their own customers, in a few blinks of an eye. But then they went one step further. They came to Washington, took an oath before Congress, and lied about it... Thanks to an extraordinary investigative effort by a Senate subcommittee that unilaterally decided to take up the burden the criminal justice system has repeatedly refused to shoulder, we now know exactly what Goldman Sachs executives like Lloyd Blankfein and Daniel Sparks lied about. We know exactly how they and other top Goldman executives, including David Viniar and Thomas Montag, defrauded their clients. America has been waiting for a case to bring against Wall Street. Here it is, and the evidence has been gift-wrapped and left at the doorstep of federal prosecutors, evidence that doesn't leave much doubt: Goldman Sachs should stand trial. Video - Is Goldman Sachs above the law? - from Elliott Spitzer's TV Program - May 11, 2011


Countdown to Default - Is This the End of the Road? - Before It Was News - By Mike Whitney ~ Counterpunch.com - May 10, 2011 - Sometime in mid-May, the United States will hit the debt ceiling ($14.3 trillion) which is the legal limit that the country can borrow without congressional approval. If the ceiling isn't raised, the US will default on its debt and the government will begin to shut down. But that appears to be less likely now than it was a week ago because Treasury Secretary Timothy Geithner has implemented a plan that will pay off bondholders and keep the government operating until early August. Geithner's accounting maneuvers are designed to give the Obama administration and congress a little more time to hammer out the details on a final budget deal. But that's not going to be easy, because Democrats and Republicans are still far apart on the issue of spending cuts, and neither party is willing to give ground. And that's why Wall Street is so worried, because if a settlement isn't reached soon, the uncertainty is liable to roil markets and send stocks plunging.


Dollar in graver danger than the Euro- Axel Merk - The Financial Times - May 11, 2011 - In the US, the day investors come to accept the reality that inflation, rather than fiscal discipline, is the path of least political resistance may be the day the bond market won’t be as forgiving. Unlike the eurozone, where consumers stopped spending and started saving a decade ago, the highly indebted US consumer may not be able to stomach higher interest rates. The large US current account deficit also makes the dollar more vulnerable to a misbehaving bond market than the eurozone.


AMERICA IS BROKE AND BORROWING LIKE CRAZY - Frosty Wooldridge - NewsWithViews.com - May 5, 2011 - Back in 1965, the United States of America enjoyed the status of being the largest lender nation in the world. Today, America suffers the enigma of being the largest debtor nation on the planet... The U.S. government borrows in excess of $2 billion a day to float its false economy where manufacturing has been shipped off to China and every other country in the world...  Today, our $800 billion a year military budget wastes untold amounts of money that does nothing to keep Americans safe or secure.



Medicare, Social Security Funds Expiring Sooner, U.S. Says - National Journal - By Tim Fernholz - May 13, 2011 - The trust funds of Treasury bonds that provide back-stop funding for the programs will be exhausted sooner than anticipated: the Medicare hospital insurance fund will exhaust in 2024, five years sooner than expected, and the Social Security trust fund will expire in 2036, a year earlier than last projected. Social Security expenditures exceeded its tax receipts for the first time in nearly three decades last year with a deficit of $49 billion. The trustees project a similar deficit of $46 billion in 2011, largely the consequence of a weaker economy...    Economic conditions drove an even deeper near-term deterioration in the fiscal condition of Medicare's Hospital Insurance Trust Fund, which is now facing insolvency five years earlier than expected due to lower inflation-adjusted Medicare receipts as a consequence of sluggish economic growth.


The Fed and the Debt By Ron Paul - Lew Rockwell.com - May 12, 2011 -  I believe Congress should refuse to raise the debt ceiling. It would be one of the best things that could happen to this country. Congress finally would be forced to address the spending issue once and for all. Outlays would have to be covered by receipts, and Congress would have to get serious about eliminating unconstitutional government departments and programs. It is my hope that this hearing will help to examine the symbiotic relationship between the Federal Reserve's monetary policy and the Treasury's debt issuance, and I look forward to the testimony of our witnesses.


Treasury Auctions To Take US Over Debt Ceiling On Monday - Dow Jones Newswire - By Jeffrey Sparshott and Jeff Bater - May 13, 2011 - The Obama administration has asked Congress to raise the limit, warning that failure to act could lead the government to default by Aug. 2 and could spook investors even before then...  House Speaker John Boehner (R., Ohio) said Monday that any increase in the government's debt limit should be accompanied by trillions of dollars in spending cuts.


America Is Rapidly Bleeding Wealth And Jobs: 28 Statistics About The Gutting Of The U.S. Economy That Will Blow Your Mind  - endoftheamericandream.com - Red alert! Over 40 billion dollars of America's national wealth is being shipped out of the country every single month.  Our economy is being gutted and we are bleeding wealth and we are bleeding jobs.  This is a distress call.  Is anyone listening?  Thousands of our factories and millions of our jobs are being shipped overseas.  Over the past decade over 6 trillion dollars have been transferred into the hands of foreigners.  Our national government is so broke that they constantly have to go and beg those foreigners to lend us back some of that money in order to finance our exploding debt. The number of good jobs continues to decline and there are millions upon millions of my countrymen that are unemployed.  Can anybody help us? Mayday! Mayday! Mayday!


Barack Obama Is Wrong: 18 Facts Which Prove That Illegal Immigration Is An Absolute Nightmare For The U.S. Economy  - The Economic Collapse.Com - Barack Obama has declared that "immigration reform is an economic imperative", and is promising to do his best to get an immigration bill pushed through Congress this year.  But will "legalizing" all of the illegal immigration that has taken place over the last several decades improve the struggling U.S. economy or will it actually make our economic problems worse?  One of the favorite tricks of top politicians is to promise that the economy is going to improve if we just support what it is that they are currently pushing.  Hopefully the Americans people will not buy the nonsense that Obama is spewing.  The truth is that Barack Obama is wrong about the economic impact of illegal immigration.  Illegal immigrants don't do jobs that Americans "don't want" to do.  A million Americans recently showed up to apply for a job at McDonald's.  That is how desperate Americans are for work these days.  Please don't try to tell me that there aren't millions of Americans out there that would not pick fruit for minimum wage.  The millions upon millions of illegal immigrants in this country are stealing jobs, they are depressing wages in a whole host of industries and they are a huge factor in the erosion of the middle class.  Millions of middle class American families can't afford to provide for their families anymore and are losing their homes, drowning in debt or going bankrupt.  Rather than what Barack Obama is proposing (which is to essentially "legalize" illegal immigration), we need an immigration policy that makes sense and that protects American jobs.


SEC staff’s ‘revolving door’ prompts concerns about agency’s independence -  Washington Post - David S. Hilzenrath - May 13, 2011 - Until two weeks ago, Kayla Gillan was deputy chief of staff at the Securities and Exchange Commission, an agency whose duties include policing and regulating the accounting firms that audit public companies. Last week, PricewaterhouseCoopers announced that Gillan was taking a leadership role at the big accounting firm to work on regulatory issues... From Capitol Hill to academia and the SEC inspector general’s office, observers of the agency have voiced concern that the revolving door can make the SEC a more docile protector of the public interest.


Fraudonomics, What Will They Do To Defend It? - VisionVictory