November 2011 archive

Crossposted from The Stars Hollow Gazette

What you have to remember about them is that they’re not very good and they’re not very smart but they do have an overweening arrogance and sense of entitlement that makes them think that they’re better than you.

And they’re very, very afraid that some day some one will point out how stupid and wrong they are which is why they hate democracy so much.

Revenge of the Sovereign Nation

By Ambrose Evans-Pritchard, The Telegraph

November 1st, 2011

The Greek referendum – if it is not overtaken by a collapse of the government first – has left officials in Paris, Berlin, and Brussels speechless with rage. The ingratitude of them.

…

Every major claim by the inspectors at the outset of the Memorandum has turned out to be untrue. The facts are so far from the truth that it is hard to believe they ever thought it could work. The Greeks were made to suffer IMF austerity without the usual IMF cure. This was done for one purpose only, to buy time for banks and other Club Med states to beef up their defences.

It was not an unreasonable strategy (though a BIG LIE), and might not have failed entirely if the global economy recovered briskly this year and if the ECB had behaved with an ounce of common sense. Instead the ECB choose to tighten.

When the history books are written, I think scholarship will be very harsh on the handful of men running EMU monetary policy over the last three to four years. They are not as bad as the Chicago Fed of 1930 to 1932, but not much better.

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Certain architects of EMU calculated that the single currency would itself become the catalyst for a quantum leap in integration that could not be achieved otherwise.

They were warned by the European Commission’s own economists and by the Bundesbank that the undertaking was unworkable without fiscal union, and probably catastrophic if extended to Southern Europe. Yet the ideological view was that any trauma would be a “beneficial crisis”, to be exploited to advance the Project.

This was the Monnet Method of fait accompli and facts on the ground. These great manipulators of Europe’s destiny may yet succeed, but so far the crisis is not been remotely beneficial.

…

And as my old friend Gideon Rachman at the FT writes this morning: the Greek vote is “a hammer blow aimed at the most sensitive spot of the whole European construction – its lacks of popular support and legitimacy.”

Austerity Faces Test as Greeks Question Their Ties to Euro

By STEVEN ERLANGER, The New York Times

Published: November 1, 2011

“This is clearly the return of politics,” said Jean Pisani-Ferry, director of Bruegel, an economic research institution in Brussels. “The management of all this by the Europeans has been fairly technocratic. But now we see the gamble of a politician, which creates uncertainty again, but in a different form. But it was bound to come at some point.”

Mr. Papandreou’s decision to press for a popular referendum on the bailout was the inevitable result of Greece’s loss of sovereignty to Brussels and the International Monetary Fund, said Jean-Paul Fitoussi, professor of economics at the Institute of Political Studies in Paris. Chancellor Angela Merkel of Germany and President Nicolas Sarkozy of France were acting as if they were the real government of Greece, he said.

“It’s as if the Europeans – or Merkel and Sarkozy alone – believed that they were in control of the people of Greece,” Mr. Fitoussi said. “But this is a democracy. In Greece, and even in Italy, you cannot expect to rule without the support and consent of the people. And you can’t impose an austerity program for a decade on a country, and even choose for them the austerity measures that country must implement.”

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Mrs. Merkel and Mr. Sarkozy are clearly irritated with Greece, but so far they insist that the restructuring deal agreed upon Thursday in Brussels remains, as Mr. Sarkozy said Tuesday, “the only possible path to resolve the Greek debt problem.”

But Greece’s turmoil has the makings of a turning point. Greek elections during a deep economic slump would be likely to usher in a government that would, at a minimum, to try to renegotiate the bailout deal with European and foreign lenders, a messy process that would force Germany and other European lenders to decide how strictly to stick to their austerity formula. The uncertainty would undermine confidence in other indebted countries like Italy at a time they can ill afford it.

There is also the possibility that an election or a popular referendum would pose the question more bluntly, with Greeks essentially deciding whether they want to stick with the euro or not – if they want to put sovereignty over their own affairs ahead of membership in the common currency. That could mean the fraying, or at least the shrinking, of the euro zone.

Mr. Fitoussi believes that Greeks had no choice but to ask themselves that question. “There are only two possibilities in a democracy: the government has to resign or consult the people,” he said. “Of course, I don’t know which is the worst for Europe.”

Crats, Maybe, But Not Much Techno

Paul Krugman, The New York Times

November 2, 2011, 11:15 am

Atrios complains, rightly, about the description of the policies being followed in Europe as technocratic. His point is that

we’ve conjured up images of very sensible highly educated wonky people doing the right thing, even as they destroy the world.

But it’s more than that: these alleged technocrats have in fact systematically ignored both textbook macroeconomics and the lessons of history in favor of fantasies. The European Central Bank has placed its faith in the confidence fairy, while imagining that it can run policy in a way that has never worked in several centuries of central bank experience. Meanwhile, the European policy elite has simply wished away the clear evidence that the euro zone needs to make an adjustment that is virtually impossible unless inflation targets are raised.

The point is that I know technocrats, and these people aren’t – they’re faith healers who are making stuff up to suit their prejudices.

You can say something similar, although a bit less pointed, about the Obama administration. The line from people there, including the president, has been that it was too technocratic. But the real technocrats – people like Christy Romer and, well, me – were saying right from the beginning that the stimulus was too small, etc.; people like Geithner who opposed stronger action were basing their position on gut feelings about confidence, not number-crunching.

See also Progressive Realists.

Cross Posted from The Stars Hollow Gazette

The Obama administration is about to screw Main St. one more time by letting the banks get away with mortgage and foreclosure fraud with a pittance of a fine and indemnifying the banks from state-level prosecution for a series of crimes at practically all stages of the mortgage process. It has been pointed out that by not enforcing the law, which includes investigating and prosecuting fraud, Barack Obama is in violation of his oath of office. Remember? The one he took on front of a rapt nation on the steps of the Capitol where he swore to up hold the Constitution and Law. I don’t recall any part of that oath including letting the banks get away with bringing the US economy to its knees through fraudulent practices.

Cutting to the chase: if you thought this was the deal that would hold banks accountable for filing phony documents in courts, foreclosing without showing they had the legal right to do so and generally running roughshod over anyone who opposed them, you are likely to be disappointed.

This may not qualify as a shock. Accountability has been mostly A.W.O.L. in the aftermath of the 2008 financial crisis. A handful of state attorneys general became so troubled by the direction this deal was taking that they dropped out of the talks. Officials from Delaware, New York, Massachusetts and Nevada feared that the settlement would preclude further investigations, and would wind up being a gift to the banks.

It looks as if they were right to worry. As things stand, the settlement, said to total about $25 billion, would cost banks very little in actual cash – $3.5 billion to $5 billion. A dozen or so financial companies would contribute that money.

The rest – an estimated $20 billion – would consist of credits to banks that agree to reduce a predetermined dollar amount of principal owed on mortgages that they own or service for private investors. How many credits would accrue to a bank is unclear, but the amount would be based on a formula agreed to by the negotiators. A bank that writes down a second lien, for example, would receive a different amount from one that writes down a first lien.

Sure, $5 billion in cash isn’t nada. But government officials have held out this deal as the penalty for years of what they saw as unlawful foreclosure practices. A few billion spread among a dozen or so institutions wouldn’t seem a heavy burden, especially when considering the harm that was done. {..}

The deal being discussed now may also release the big banks that are members of MERS, the electronic mortgage registry, from the threat of some future legal liability for actions involving that organization. MERS, which wreaked havoc with land records across the country, was sued last week by Beau Biden, Delaware’s attorney general, on accusations of deceptive trade practices.

The MERS registry was also subpoenaed last week by Eric Schneiderman, the attorney general of New York, as part of his investigation into the fun-while-it-lasted mortgage securitization fest. If he were to sign on to the settlement, his investigation into MERS could not move forward.

Angry yet?

Morgenson highlights another feature of the plan:

   One of the oddest terms is that the banks would give $1,500 to any borrower who lost his or her home to foreclosure since September 2008. For people whose foreclosures were done properly, this would be a windfall. For those wrongfully evicted, it would be pathetic. Roughly $1.5 billion in cash is expected to go into this pot.

“Pathetic” isn’t strong enough. Let’s look at the damages sought by Nevada attorney general Catherine Masto in her second amended complaint against Bank of America: civil penalties of $5000 per violation, or $12,000 for elderly or disabled borrowers. An individual loan can, and likely does, have multiple violations. The suit also seeks restitution, costs for wrongful foreclosures, plus the cost of damage to municipalities and homeowners from unnecessary vacancies. Note that an AG victory on the issue of wrongful foreclosure would pave the way for private lawsuits, and here the damages would be massive, particularly if state law or precedent allows for penalties (as we’ve noted, Alabama has statutory tripe damages for wrongful foreclosure, and recent rulings have had applied penalties in excess of nine times).

And what did Masto get from a different servicer, Morgan Stanley’s Saxon? The settlement is estimated to average somewhere between $30,000 and $57,000 per borrower. And the basis of action wasn’t erroneous or fraudulent foreclosures, but deceptive practices in mortgage lending and securitization.



Look at the MERS compplaint filed by Delaware AG Beau Biden. He’s suing MERS over deceptive practices, at $10,000 per violation. It’s quite possible that he may find more than one violation per mortgage. And I would imagine that success against MERS would pave the way for actions against servicers who relied on MERS in the face of knowledge of its deficiencies.

In other words, the suits filed by two AGs alone make a mockery of these negotiations.

So, how much are the banks contributing to the president and the attorney generals who are going to try to let them off the hook?  

Our regular featured content-

• On This Day In History November 2 by TheMomCat
• Punting the Pundits by TheMomCat

These featured articles-

• The Best and the Brightest by ek hornbeck
• #CWS: Co-optupy Wall Street by ek hornbeck

And these special features-

• Occupy Wall St. Livestream: Day 47 by TheMomCat

The Stars Hollow Gazette

Crossposted from The Stars Hollow Gazette

Haupt v. United States, 330 U.S. 631-

(A)lthough the overt acts relied upon to support the charge of treason-defendant’s harboring and sheltering in his home his son who was an enemy spy and saboteur, assisting him in purchasing an automobile, and in obtaining employment in a defense plant-were all acts which a father would naturally perform for a son, this fact did not necessarily relieve them of the treasonable purpose of giving aid and comfort to the enemy. Speaking for the Court, Justice Jackson said: “No matter whether young Haupt’s mission was benign or traitorous, known or unknown to the defendant, these acts were aid and comfort to him. In the light of this mission and his instructions, they were more than casually useful; they were aids in steps essential to his design for treason. If proof be added that the defendant knew of his son’s instruction, preparation and plans, the purpose to aid and comfort the enemy becomes clear.”

Tar sands pipeline will comfort our enemies

By Steven M. Anderson, The Hill

10/25/11 11:21 AM ET

The Keystone XL pipeline doesn’t help.  This pipeline would move dirty oil from Canada to refineries in Texas and would set back our renewable energy efforts for at least two decades, much to our enemies’ delight.  It would ensure we maintain our oil addiction and delay making the tough decisions regarding energy production, management and conservation that we need to start making today.

Transcanada, the company that would own the pipeline, makes various claims about the pipeline’s supposed security benefits.   It claims the pipeline will reduce dependence on Mideast oil, that tar sands will feed a growing US demand, and that it will provide a supply cushion in times of natural or man-made disasters. None of these claims holds up. Transcanada says the project will supply roughly half of the amount of oil the US imports from the Middle East and Venezuela – but conveniently leaves out a crucial detail:  This tar sands oil will not reduce imports from those nations.

The Keystone XL is an export pipeline. Valero Energy Corporation, the pipeline’s largest customer, has explicitly told investors that it plans to focus its Port Arthur refinery on exports.  Canadian oil won’t replace imports from hostile countries because Texas refiners are serving global demand rather than domestic need.

Steven M. Anderson is a retired Army brigadier general, and senior mentor with the Army’s Battle Command Training Program.

Former Keystone pipeline lobbyist hired by Obama campaign

The L.A. Times

October 24, 2011, 5:13 pm

President Obama’s reelection campaign has hired a former lobbyist for the controversial Keystone XL oil pipeline as a top adviser.

The campaign said that Broderick Johnson, founder and former principal of the communications firm the Collins Johnson Group, would serve as a senior adviser for the campaign. Before founding the firm this spring, he worked for the powerhouse lobbying firm, Bryan Cave LLP, where his clients included Microsoft, Comcast and TransCanada, the company planning to build the $7-billion pipeline to carry crude from Alberta’s oil sands to the Texas Gulf Coast.

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An Obama campaign official said that in his new role Johnson would “serve as a national surrogate for the campaign and our representative in meetings with key leaders, communities and organizations.  Broderick will be an ear to the ground for the campaign’s political and constituency operations, helping to ensure that there is constant, open communication between the campaign and our supporters around the country.”

Given his ties to Keystone XL, Johnson is bound to get an earful when meeting with some in Obama’s constituency.

The pipeline needs a permit from the State Department because it would cross a federal border. For more than a year, Keystone XL has been mired in controversy. TransCanada, the oil industry and several labor unions have said the project would create thousands of jobs in the United States and reduce the country’s dependence on oil from hostile or unstable countries. Environmentalists, including many Obama supporters, have argued that the extraction of the crude in Alberta lays waste to the land and increases greenhouse gas emissions. They caution that the proposed route would take the pipeline over the Ogallala Aquifer in Nebraska, the main source of drinking and irrigation water in the High Plains states, and they argue that the number of jobs created would be far fewer than claimed by the project’s backers.

Moreover, in the last several months, emails and other documents have raised questions about the State Department’s impartiality as it weighs Keystone’s permit application. Secretary of State Hillary Rodham Clinton said late last year that her agency was “inclined” to grant the permit, although environmental reviews had not yet been completed.

TransCanada has hired a phalanx of former Democratic operatives since 2009 to lobby for Keystone XL, including Paul Elliott, the former deputy chairman for Clinton’s failed presidential campaign. Recently released emails show that the diplomat working on energy issues at the U.S. Embassy in Ottawa had an unusually warm and collaborative relationship with Elliott. Another top State Department official worked with the Canadians to hone their message about the environmental impacts of developing oil sands. The outside contractor for the State Department’s environmental impact statement also counted TransCanada among its clients. The document was harshly criticized by the U.S. Environmental Protection Agency.

Nebraska Legislature plans special session on Keystone XL project

The L.A.Times

October 24, 2011, 6:10 pm

The action throws a potentially significant new stumbling block into a Canadian company’s hope of winning approval before the end of the year for the 1,700-mile pipeline, which would move diluted bitumen — often heavy in sulfur, nickel and lead — from Alberta to the Texas coast.

“The key decision for current pipeline discussions is the permitting decision that will be made by the Obama administration, which is why I have urged President Obama and Secretary of State [Hilary] Clinton to deny the permit,” the governor, a Republican, said in a statement Monday.

“However, I believe Nebraskans are expecting our best efforts to determine if alternatives exist. Therefore, I will be calling a special session of the Nebraska Legislature to have a thoughtful and thorough public discussion about alternative solutions that could impact the route of the pipeline in a legal and constitutional manner.”