December 2011 archive

The Carry Trade

Crossposted from The Stars Hollow Gazette

Have I mentioned yet that banksters are stupider than you and I?

About the only way they can find to make money is to borrow it from Central Banks at low or non-existent rates of interest and lend it back to governments at significantly higher rates.

This is why Modern Monetary Theory is so appealing.  Why not just cut out the bloodsucking middlemen?

Oh, in theory they lend that money to producers of goods and services.  In fact, not so much.  Take for instance the European Central Bank’s outstandingly “successful” auction.

Where will the ECB’s billions go?

Felix Salmon, Reuters

Dec 22, 2011 09:50 EST

Norris’s bullishness is based on what you might call the Sarkozy trade – the idea that a huge amount of the ECB’s new lending will end up being invested in Eurozone government debt. He calls it “an obvious, virtually risk-free, option” for the banks who borrowed ECB funds.



(T)he prudent course of action, for Europe’s banks, is to use this ECB money to pay down their own debts. Doing so would address a big funding risk, and would also help derisk their balance sheets in the eyes of the world and of Basel.

The big question, then, is how long the ECB is going to be doing this kind of thing. If this operation is a signal to the market that the ECB will be the lender of last resort to European banks for at least the next couple of years, then the banks don’t need to worry so much about their own financing needs and can lock up the funds in two- or three-year government bonds as Norris and Sarkozy anticipate.



If I were running a European bank, I’d fill up on ECB lending now, when it’s plentiful, because you never know for sure when that limit might be reached. That’s what happened yesterday. But I’d definitely think twice before turning around and lending it all back out again to Italy or Spain. Yes, that trade is a profitable one. But the one thing that European banks need more than anything else right now is liquidity. Profits come second.

So the 2 choices on the table right now are stealing money using the ‘Carry Trade’ to extort it from governments and calling that ‘profit’ OR simply using it to write off the Trillions of crap they already have on their bloated, insolvent books.

Late Night Karaoke

Random Japan

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MONEY MONEY MONEY

The environment ministry says that ¥11.5 billion worth of “eco points” from the government’s recent energy-saving promotion are set to expire next March without being redeemed.

Authorities are investigating the president of a used-car company over suspicions that he bilked 2,500 investors out of ¥1.3 billion “on the pretext of helping victims of the Great East Japan Earthquake and poverty-stricken African people.”

Police in Okayama and Yokohama busted three Chinese man and one woman for smuggling 3kg of stimulants into Japan aboard a cargo ship last month. The drugs have a street value of ¥230 million.

It was announced that Japan will provide $2.9 million of additional funding to support the UN-backed trial of former Khmer Rouge leaders in Cambodia. By the end of the year, the tribunal will have spent nearly $150 million.

Sentence of the Week: “A ‘veteran’ pickpocket has told police he’s lost his touch and he’s going straight after he was caught lifting a person’s wallet on a bus [in Fukuoka] by another passenger.” (via The Mainichi Daily News)

Investigating Fannie & Freddie But Not The Banks

Cross posted from The Stars Hollow Gazette

Another slap on the wrist by the government for the banks that caused the housing bubble and the crash that sank the economy world wide with unregulated derivatives and credit default swaps:

DoJ Settles – Again – With Countrywide on Fair Lending Claim

by David Dayen

The Department of Justice has announced a $335 million settlement with Countrywide, the former subprime mortgage giant now subsumed into Bank of America, on claims of housing discrimination.

   The Justice Department on Wednesday announced the largest residential fair-lending settlement in history, saying that Bank of America had agreed to pay $335 million to settle allegations that its Countrywide Financial unit discriminated against black and Hispanic borrowers during the housing boom.

   A department investigation concluded that Countrywide had charged higher fees and rates to more than 200,000 minority borrowers across the country than to white borrowers who posed the same credit risk. It also steered more than 10,000 minority borrowers into costly subprime mortgages when white borrowers with similar credit profiles received prime loans, the department said.

   The pattern and practice covered the years 2004 to 2008, before Countrywide was acquired by Bank of America.

   “The department’s actions against Countrywide makes clear that we will not hesitate to hold financial institutions accountable, including one of the nation’s largest, for discrimination,” Attorney General Eric H. Holder Jr. said. “These institutions should make judgments based on applicants’ creditworthiness, not on the color of their skin.”

I’m waiting for someone to hold financial institutions accountable for discrimination against every one of its customers, by defrauding them and destroying the residential home mortgage market. That’s obviously not going to happen here.[..]

Here’s the settlement agreement, and once again you see that Countrywide doesn’t have to admit wrongdoing for their crimes.

But the Department of Justice and the Securities and Exchange Commission will enthusiastically pursue the one agency that didn’t cause the crash but just inherited it, at tax payers expense:

FBI Now Investigating Fannie Mae and Freddie Mac

by David Dayen

The walls have closed in over the past couple weeks on mortgage giants Fannie Mae and Freddie Mac. The SEC charged former CEOs and executives at the companies with fraud. California Attorney General Kamala Harris sued them for imformation (sic)in a wide-ranging fraud investigation. And now we learn that the FBI is investigating them[..]

If Fannie and Freddie are guilty of misleading investors, they deserve to pay the penalty. And yet, I do sense more enthusiasm to go after these government sponsored enterprises than to go after the private banking firms which were far more responsible for subprime. This feeds a false narrative that government somehow caused the financial crisis by forcing lending to poor people. Fannie and Freddie followed the market in subprime and did not originate it.

Popular Culture (Music) 20111223: A Brief History of The Who

The year 1970 was a roller coaster for The Who.  The success of Tommy, both in record sales and in touring revenue, were making them rich.  Not just doing OK, but rich.  However, the year started with a real tragedy, and probably marked the beginning of the end of the band, but no one knew it at the time.

Actually, there were two events that presaged the decline, but the one on 19700104 was the actual tragedy.  What I find interesting is that this event, which really happened, is not nearly as well know as the one about Moon driving the car into the swimming pool at the Holiday Inn the previous year, which as we discussed last week, never happened.

Foie gras

The world bank force-feeds money

into “bankable projects” until their livers

croak, but we refuse to force-feed Muslims

on Ramadan?  The oil-besotted world

has no poor to think of; it IS Heaven!  

Albeit CO2 heavy.  The indignant,

high-profile rich cry like milk-choked whelps

sent to lobby the Pentagon of class warfare;

Cuz we punk-ass kids didn’t buy

their flexible flyers PS3 drones;

War-horny men whose missiles creamed

the launch pad: Gullet the blue pills!

Gum the suicidal works!  Whoops.  

Nausea, dizziness, exploding shits, etc.  

Teach the Children…and the Adults

England Justice secretary Kenneth Clarke recently announced that “the starting point” for sentencing by judges in the murder of people with disabilities and transpeople would be doubled from 15 to 30 years.

That’s the same starting point for sentences for murders in which race, religion or sexual orientation is an aggravating factor.

The proposal is part of the government’s first strategy to tackle transgender prejudice in England and Wales. The equalities minister, Lynne Featherstone, said the strategy included support for transgender pupils in schools, measures to tackle discrimination in accessing public services and greater steps to protect transgender people’s privacy, including not having their transgender identity revealed at work without their consent.

Featherstone said the first transgender equality plan was needed because statistics showed that 70% of children who were uncertain about their gender were subject to bullying. The official figures also show that 88% of transgender employees experienced discrimination or harassment at work, and that hate crime against transgender people had recently risen by 14% to 357 incidents last year.

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Get Out Of Jail Free

Crossposted from The Stars Hollow Gazette

(h/t Calculated Risk)

Details of Mortgage Servicing Settlement Between Banks and AGs Begin to Emerge

By Massimo Calabresi, Time Magazine

December 23, 2011

In return for the $5 billion in cash and the $20 billion in credits, the banks would be released from claims against them for servicing and foreclosure abuses that might be brought against them by the states and the federal government. The states also release the banks from origination claims, that is, claims they might face for all the fraud and duplicity they engaged in when they made bad loans at the height of the housing craze. The banks do not get immunity or a release of for individual claims by homeowners-just a release from past practices State- and Federal-initiated claims. They also don’t get released for securitization abuses of the kind Citibank and Goldman Sachs have been investigated for.

The Iowa AG’s office, which led the negotiations, is bracing for criticism of the deal. The limited payments are likely to be criticized, as is the release for origination abuses. The state negotiators say all the originators are already out of business and that in most cases the claims would be too old to prosecute. Arguments over what the banks would and wouldn’t get off the hook for are what led several liberal State AGs to bolt from the deal. The $25 billion version of the price tag drops to $19 billion if California stays out of the deal, which looks likely. Other states that have dropped out have been in talks with Housing and Urban Development chief Shaun Donovan about coming back into the fold: in particular, Donovan has been in talks with New York State Attorney General Eric Schneiderman in recent weeks in the hope of getting him back into the deal, but that also seems unlikely.

Following yonder star

by Kathy Kelly

December 23, 2011

Beneath our flat, here in Kabul, wedding guests crowded into a restaurant and celebrated throughout the night. Guests sounded joyful and the music, mostly disco, thumped loudly. When the regular call to prayer sounded out at 5:20 a.m., the sounds seemed to collide in an odd cacophony, making all music indistinguishable. I smiled, remembering the prayer call’s durable exhortation to live in peace, heard worldwide for centuries, and went back to sleep.

Through most of my life, I’ve found it easy to resonate with the ringing and beautiful Christmas narrative found in the Gospel of Luke, but less so with that jangling discord with which westerners are so familiar-the annual collision between (on the one hand) the orgy of gift-purchasing and gift-consumption surrounding the holiday and the the sweeter, simpler proclamations of peace on earth heralded by the newborn’s arrival. I’ve found myself quite surprisingly happy to spend many Christmases either in U.S. jails or among Muslims living in places like Bosnia, Iraq, Jordan and now Afghanistan. My hosts and friends in these places have been people who are enduring wars or fleeing wars, including, as in the case of U.S. jails, a war against the poor in the United States.

The Christmas narrative that imagines living beings coming together across divides, the houseless family with no room at the inn, the shepherds and the foreign royals arriving, all awakening to unimagined possibilities of peace, comes alive quite beautifully in the community with which I’m graced to find myself here in Kabul.

Five of the Afghan Youth Peace Volunteers are spending winter months in the apartment here which accommodates their group as well as visiting guests such as our small Voices delegation. In recent months, the place has evolved into a resource center for learning languages and exchanging ideas about nonviolent movements for social change. I am filled with fond and deep admiration for these young people as I watch them studying each other’s languages and preparing their own delegation to visit other provinces of this land on the brink of civil war, meeting with other young people wherever they can.

I’ve often described Afghan Youth Peace Volunteers as having bridged considerable ethnic gaps in their steadfast aspiration to someday live without wars. It’s quite impressive, during this trip, to learn from them about how close several of them came to becoming armed fighters.

One young friend recalls having spent three weeks, at age 12, as part of a Taliban group. He had no choice but to go with the Taliban as a conscript. He was given a rifle, as well as adequate food, and assigned to be a sentry. “I loaded the weapon and I fired warning shots,” said our young friend, who is now 21 years of age, “but I didn’t feel good about it.” A village elder intervened, saying the new recruits were too young, and the Taliban released my friend and the other young teens.

We watched a film together in which another youngster, about seven years previously, had acted the role of the leader of a group of children imitating Talib fighters. Carrying sticks, the young actors had harassed a little girl over her determination that she would learn to read. Now we asked the young man, himself a Hazara, how he felt about playing a Taliban child. He acknowledged having grown up believing that anyone who was part of an ethnic group that had persecuted his people could never be trusted.

The father of another youngster had been killed by the Taliban. Still another describes how he watched in horror as Hazara fighters killed his brother.

Last week, the AYPVs welcomed a new friend who lives in a neighboring province and speaks a different language to join them and help them learn his language. Asked about NATO/ISAF night raids and other attacks that have occurred in his area, the new friend said that families who have suffered attacks feel intense anger, but even more so people say they want peace. “However, international forces have made people feel less secure,” he added. “It’s unfortunate that internationals hear stories about Afghans being wild people and think that more civilized outsiders are trying to build the country. People here are suffering because of destruction caused by outsiders.”

The air, the ground, the mountainsides, the water, and even the essential bonds of familial living have been ravaged by three decades of warfare here in Afghanistan. People living here have suffered the loss of an estimated two million people killed in the wars. 850 children die every day because of disease and hunger.

Amid excruciating sorrow and pain, it’s good to see people still find ways to gather for celebrations, even when the sounds seem curious and the dances seem, to some, forbiddingly exotic. Differences between insiders and outsiders become less relevant as people meet one another to celebrate.

Peace can surprise us when it comes, and that alone is abundantly sufficient cause for celebration in this season, wherever we are. Dr. King wrote that “the arc of history is long but it bends toward justice,” and we should not be surprised as new and growing movements around us reveal an unquenchable and ineradicable longing for simple justice. The killing fields that scar our earth and sear the memories of survivors beckon us to look and listen for new ways of living together. Massacres of innocents call to us to reject the easy and familiar and go home by an other way.

The desires to live more simply, to share resources more radically, and to prefer service to dominance are not unique to any place, season, or religion. Such desires may yet herald unions previously unimagined and a better world for every newborn, each one bringing an astonishing potential – as we do if we strive to fulfill it – for peace.

Kathy Kelly (kathyatvcnv [dot] org), twice nominated for the Nobel Peace Prize, co-coordinates Voices for Creative Nonviolence. She and two companions are part of a Voices delegation visiting the Afghan Youth Peace Volunteers in Kabul

Cartnoon

War and Pieces

Can you help her?

She was sitting on the street somewhere in Slatina, Romania. She was sitting in the rain and cold, with her feet cut away. And yet she lived, this sweet girl with a big desire to survive.

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She could use some more help. The wonderful Prietenii Nostri is a shelter and haven for some 400 to 500 dogs. This dog was lucky, as she was brought to Prietenii Nostri’s founder Gratiela Ristea, who does what she can to feed and house and provide medical care for these creatures, our fellow earthlings. I found my dog, Bobby, there almost two years and she is my sweet sweet girl.

Bobby had her tail cut off and her teeth kicked in. But this poor one, well… she’s had two surgeries already. And Gratiela says her spine is not broken, which is very good news.

Perhaps there are some of you who could make a donation to help cover her care … or even bigger: offer her a home… this would be wonderful.

cross posted at dKos

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