Merle Hazard is the one and only country-music singer writing songs about the Financial Crisis. He’s been on PBS NewsHour with Jim Lehrer; he’s been the subject of articles by The Economist, London’s Financial Times, The New York Times, and Der Spiegel. And by gum, the man can carry a tune! Here’s Merle Hazard performing “Double Dippin'”!
According to The New York Times today ––
On Dec. 10, one of the lawmakers under investigation, Representative Joseph Crowley, a New York Democrat who sits on the Ways and Means Committee, left the Capitol during the House debate to attend a fund-raising event for him hosted by a lobbyist at her nearby Capitol Hill town house that featured financial firms, along with other donors. After collecting thousands of dollars in checks, Mr. Crowley returned to the floor of the House just in time to vote against a series of amendments that would have imposed tougher restrictions on Wall Street.
He’s just one of our national legislators under investigation by Congress to determine exactly how money flows in Washington, and how it directly influences inhibits reform. Here’s another:
The right honorable Tom Price just happened to schedule a “Financial Services Luncheon” on December 10, the same day as Rep. Crowley’s fundraising event and the exact same day that the first full House vote on the financial reform bill was held. During a two-month period around the vote, he scored $23,000.
Now, old hands around D.C. like Tom DeLay might call this “business as usual in Washington.” Any sane person, however, would rather be inclined to call this bribery. No, I’m not suggesting that you members of the governmental elite will ever actually be convicted of such a crime. Just know that we know exactly what you’re doing, and how you’re doing it. You are colluding with business interests to keep yourselves employed, to the detriment of the future of the United States of America. You are the epitome of the fault Tocqueville foresaw in the American system –– to wit, that people would be more inclined to vote their immediate self-interest than have the education and wisdom to consider long-term ramifications. Crowley and Price, and all others –– we’ll be seeing you.
Read to your heart’s content at The New York Times.
Okay, it’s like this. The main reason we’re in a Great Recession is that, back in 1999, the U.S. government compromised itself to death. Bill Clinton wanted to increase lending to minorities. The Republican-controlled Congress (swept into office by Newt Gingrich’s “Contract with America”) said, “Only if you decrease regulation at the same time,” and so Phil Gramm (appointed senior economic adviser to McCain’s presidential campaign) drew up a bill that gutted Glass-Steagall, the 1933 act that prevented the Depression from happening again. President Clinton, weakened by the Monica Lewinsky scandal, didn’t have much wiggle-room in the Oval Office any more, and signed the legislation.
So, naturally, you get a huge housing boom totally based upon dodgy accounting and ludicrous credit standards which blows up in the world’s face.
You can’t make this stuff up, right?
Guess what. The BP oil spill is a result of exactly the same legislative deathmatch. The New York Times has a superb piece this morning by David S. Abraham declaring, this is a disaster that Congress voted for. In a highly balanced and nuanced argument, Abraham details how Congress really and truly has been addicted to providing the oil industry with economic incentives beyond all reason:
In a 1995 attempt to encourage more exploration, Congress agreed to reduce the cut of the proceeds the government could collect on oil and gas drilling in deep waters. Ten years later, despite higher oil prices and declarations from President George W. Bush that more incentives were not needed, a Republican-led Congress reduced royalties yet again.
It’s madness, of course – especially when
at the same time that Congress called for new drilling incentives, it also gutted oversight. From 2002 to 2008, legislators approved budgets reducing regulatory staffing levels by more than 15 percent… A 2004 Coast Guard study found that its “oil spill response personnel did not appear to have even a basic knowledge of the equipment required to support salvage or spill clean-up operations.”
When Bobby Jindal calls for more offshore drilling in order to help pay for coastal damage inflicted by offshore oil-and-gas operations (yeah, you read that right), then we have truly entered a land of the comedic insane, where the Mad Hatter starts writing Catch-22 contracts. The astounding thing is that, at base, it’s an exquisitely simple recipe for disaster: radically lower the barriers to enter the market, while radically de-regulating (by which we mean: knocking down the laws and rules that govern participation in this country’s economy) and what you get are toxic assets. That’s what we call a house, these days: a toxic asset, destroying the person who possesses it (for D&D fans, that’s kind of like a poisoned amulet, except with lots of bricks and mortar and wiring and plumbing).
But we should be calling the oil spill a toxic asset too. The definition’s more apt; no metaphors needed here. It’s a natural resource that’s killing our economy and destroying the ecosystems of our oceans. It’s a substance that, for decades now, has powered our economy; now it’s bringing the Gulf to a standstill. It’s the toxic asset, our home mortgage that’s underwater. The rich will probably walk away from it, their dirty souls skimming the tops of the oily waves in that Gulf between them and us.
David Harvey, Distinguished Professor at the City University of New York, gives the world’s most pithy and complete explanation of the cumulative financial crises over the last 80 years to show us what’s happened. It’s an 11-minute showstopper of a lecture, and it is the only coherent 360-degree view of the crisis I’ve ever seen. I can’t emphasize how brilliant this is. Harvey is having an open online course reading Book I of Marx’s Capital. Watch this, and it’ll all make sense. Plus, it’s cartoony!
With all this oil in the Gulf, all the terrifying pictures, footage, and reports its easy to forget the real victim here. That’s right, I’m talking about a sensitive affluent little business with a previously bright future, British Petr- I mean Beyond Petrolium. Once the most profitable company in the entire history of the world, BP now faces stock slides, falling credit and bond ratings, and a possible death by cannibalism.
The downturn began on Tuesday, after BP’s “top kill” plan failed to block a massive leak in the Gulf of Mexico by pumping mud into the well.
But BP’s bonds continued to fall even as its shares recovered on Wednesday.
Meanwhile, rating agency Fitch has cut the firm’s credit rating marginally, and threatens further downgrades if the cost of the oil leak rises further.
Fitch cut BP’s rating by one notch, from AA+ to AA, although this is still one of its highest investment grade credit ratings.
The other two main rating agencies – Moody’s and Standard & Poor’s – also still rate BP’s creditworthiness highly, at Aa1 and AA respectively.
Yet bond markets are now pricing BP’s debts at levels comparable with much riskier “junk” rated companies.
The oil company’s main five-year dollar bond was trading on Thursday at a yield of 5.5% – some 3.25% more expensive than the interest rate that the US government would have to borrow at.
Yet before the weekend, the same BP bond was trading at a yield of 3.5%, meaning its borrowing cost has jumped by 2% as a result of the failure to plug the oil leak.
One City analyst told the BBC that the bond markets’ fears made no sense, because BP has so little debt.
BP owes £14bn in total debts, whereas stock markets currently value the company at £84bn.
read more at the BBC
With a looming bills, suits, and fines to stack on the one billion dollars the company hs already spent on the disaster, and a 1-5 thousand dollar fine per barrel, one has to wonder how this company could fend off its competitors who would like nothing more to consume their business. Check out their new ad, and take a good look at it’s narratar, BP CEO Tony Hayward, because he might not be the face of the company for long.
We all know that big companies search for loopholes in the tax code, but sometimes you read a case that just questions the whole system. Apparently there is a new fun practice called Transfer Pricing in which with very flittle foreign investment, you can bounce your companies profits through other nations that have light taxes. It literally takes a financial transaction in America and transfers the profits to another country. It’s a miracle every hot dog stand in Battery Park hasnt figured a way to game this.
Off shore banks have now become metaphysical.
Jesse Drucker writes for Bloomberg News,
After an economic bailout in which the U.S. government lent, spent or guaranteed as much as $12.8 trillion, the Obama administration faces a projected budget deficit of $1.5 trillion this year. In February, the administration said it would target some of the techniques companies use to shift profits offshore — part of a package intended to raise $12 billion a year over the coming decade.
Losing $60 Billion
That’s only about a fifth of the $60 billion in annual U.S. tax revenue lost to thousands of companies’ income shifting, according to a study published in December in the National Tax Journal by Kimberly A. Clausing, an economics professor at Reed College in Portland, Oregon.
The lost revenue could pay the federal government’s share of health coverage for more than 10 million uninsured Americans, such as Hurst — more than a third of the people who will gain insurance under the health-care overhaul passed in March. The administration’s proposed tax on certain financial institutions would take almost seven years to generate $60 billion.
“Transfer pricing is the corporate equivalent of the secret offshore accounts of individual tax dodgers,” said Sen. Carl Levin, a Michigan Democrat and chairman of the Senate’s Permanent Subcommittee on Investigations, in a statement to Bloomberg News. Levin has overseen hearings on tax shelters including those sold to wealthy people by KPMG LLP. “Now that progress has been made in addressing offshore tax abuse by individuals, transfer pricing is an issue that deserves scrutiny.”
David Lightman and Kevin G. Hall write for McClatchy
WASHINGTON — The Senate took strong steps Thursday to fix a key cause of the recent financial crisis, approving measures to limit the ability of Wall Street firms to shop around for favorable ratings from now-discredited credit rating agencies.
Lawmakers approved two rating-agency amendments to a sweeping overhaul of financial regulation, despite objections from Senate Banking Committee Chairman Christopher Dodd, D-Conn.
Moody’s Investors Service, Standard & Poor’s and Fitch Ratings were all key players in the nation’s financial meltdown, giving blue-chip ratings to complex mortgage-backed bonds that turned out to be junk.
A McClatchy investigation last October revealed how Moody’s and its competitors sold out investors by trading their ratings for huge fees that came from rating complex deals.
Sen. Al Franken, D-Minn., offered an amendment aimed at putting an end to this Wall Street behavior that passed on a bipartisan 64-35 vote.
“They shop around for their ratings. They select those agencies that tend to offer them the best ratings, and threaten to stay away from rating agencies that are too tough on them,” Franken said.
Analysts are arguing today as to the cause of a major sell off in the stock market that took place yesterday May 6, 2010. Suggestions range from the Greek debt crisis all the way to a trader mistake who typed B for billion, when he meant to type M for million. At one point DOW had lost nearly 1000 points causing a rush of buyers to move in and snatch up the low prices. Whatever the cause yesterday, The massive movement reminded everyone that the Market is prepared to behave like a swarm of angry bees at the drop of a hat. Here’s some of the buzz from the trading floor.
We have known since the Enron in 2001 that this is a common scam, in which every major bank that was approached by Enron agreed to help them deceive creditors and investors by doing these kind of transactions.
And so what happened? There was a proposal in 2004 to stop it. And the regulatory heads — there was an interagency effort — killed it. They came out with something pathetic in 2006, and stalled its implication until 2007, but it ’s meaningless.
We have known for decades that these are frauds. We have known for a decade how to stop them.
That’s Bill Black, the former Litigation Director for the Federal Home Loan Bank Board, in testimony before Congress. This is the true story of the mortgage crisis, the financial crisis and the Great Recession, available on video on FireDogLake. You must watch it to believe it.
My name is Sam E. Antar. I am a convicted felon, former CPA, and former Chief Financial Officer of Crazy Eddie, Inc. During the 1980s, I helped mastermind with my cousin Eddie Antar and Uncle Sam M. Antar (co-founders of the company) one of the largest securities frauds of its time. Crazy Eddie Antar was coined by US Attorney Michael Chertoff as, “the Darth Vader of Capitalism.”
I believe that former criminals like me must do more than just express regret for our crimes and pay whatever punishment society imposes upon us. I believe that it is our obligation and responsibility to educate society, so that society can avoid future perils caused by new generations of criminals.
I teach law enforcement, government entities, businesses, professionals, and students about white collar crime and train them to catch corporate miscreants.
With that preamble, how can you not read his blog, especially this post about the SEC’s kick-ass tactics on Goldman Sachs? Antar writes, “When a company or individual receives a surprise subpoena on a Friday from the SEC, it is usually designed to ruin their weekend plans.” Antar also notes that the SEC’s chief counsel on this case is none other than Richard E. Simpson, who was the guy who put Sam and Crazy Eddie behind bars. After decades of SEC fecklessness (to put it charitably), finally they are swinging for the bleachers.
Hi guys. Whether or not you believe all this claptrap about global climate change, there’s a little fact we ought to bring to your attention: the Siberian permafrost is melting and woolly mammoth bones are surfacing – so many that Russian scientists are doing a splendid side trade in woolly mammoth tusks. In fact, they used to go for as much as $700 per kilogram; however these finds so endangered the market for African ivory that African ivory merchants made a huge sell-off of their wares to gut the woolly mammoth-tusk trade to about $220 a kilo.
The Los Angeles Times, which had its own news staff gutted by the financial crisis, has done a brilliant job at getting us this story. (We here at “WHEN HISTORY ATTACKS!” had almost written off the L.A. Times as a true functioning news organization.) And in this story, they’re telling us several things. First, the global financial meltdown has caused such frantic competition across the world, that a whole lot of people are forced into side trades (including Russian scientists and, by corollary, journalists). Second, these side jobs often have the negative effect of pressuring illegal economies – like the African ivory trade, which is banned worldwide with just a couple of exceptions. They will have to slaughter more elephants to make their living, and that means both legitimate, honest journalists and elephants are increasingly becoming very endangered species.
This is all embedded – but unstated – in the Los Angeles Times article, as well as the minor fact that the melting of the permafrost is an extremely bad thing. Trapped in the frozen ground is the world’s biggest reservoir of methane, which is a greenhouse gas. Its release virtually guarantees an acceleration in global climate change. So if you still have any doubts about global warming, come back to us in a couple of years and tell us “You were right.”
P.S. WOOLLY MAMMOTH tusk scavengers v.s. the African ivory trade is analogous to recycling vs. consumption of dwindling resources. The very issue of conservation itself is scalable from paleontology to global warming. Which is kind of a neat trick, if it weren’t all so deadly serious.
I was traveling via Los Angeles International Airport — LAX — last week. Walking through its faded, cramped domestic terminal, I got the feeling of a place that once thought of itself as modern but has had one too many face-lifts and simply can’t hide the wrinkles anymore. In some ways, LAX is us. We are the United States of Deferred Maintenance.
Why is Thomas Friedman absolutely, completely, the last person to understand anything?
Goldman Sachs has finally sussed out the fact that negative publicity is bad for business. Time to get your stuff in gear, Masters of the Universe. Hey, that’s all right: just throw a few billion into marketing and lobbying, like the entertainment and insurance industries have done, and you’re sorted.
“Goldman has become one giant pinata to whack,” said Charles M. Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware, adding that he couldn’t recall a previous instance where a company cited bad publicity as a risk to its business. “It’s reflective of the rather bizarre political climate in which we operate.”
Follow the story at the Wall Street Journal’s MarketWatch.
Read an excerpt from the book at Vanity Fair.
I have a couple friends who have the most exciting job imaginable in a field with a really boring reputation: they’re forensic accountants. They’re the folks who are called upon to tease out the fake numbers of financial fraudsters once an indictment’s come down. They helped put Bernie Madoff in jail, and a lot of other Wall Street hooligans too. How do I know? Because I asked ’em. I also asked ’em if they’d like a post at the National Security and Exchange Commission (SEC). One laughed. He said, “When they pay me as much as I’m making here!”
Now, these folks I know, they’re brilliant. And they’re right on. But they make their money after everyone else has lost theirs. That’s not right. And when I read something like this, I get really mad:
Why do you think the S.E.C. failed to wake up to Madoff’s $65 billion Ponzi scheme until he turned himself in?
They weren’t even asleep at the switch; they were comatose. They didn’t respond to heat and light, much less evidence of wrongdoing. They were not engaged in the fight.
That’s Harry Markopolos, who describes himself as “the SEC’s doormat for nine years,” who’s being profiled in The New York Times and has a new book out, No One Would Listen.
Simply put, we need to reform the compensation system for federal employees. People who work in finance are, naturally, motivated by money. People who are motivated by money and ethics and personal accountability and interesting problems go into fields like venture capitalism and forensic accounting. It makes no sense to hire SEC investigators and put them on a bureaucratically-contrived federal tier pay system tied to seniority. If, long ago, we had created enough incentives for my brilliant friends to work for the federal government and stop the Ponzi schemers and mortgage tranchers before the crap hit the fan, we could all have breathed a sigh of relief and continued to sip our martinis. As it stands, my friends the forensic accountants are skiing at Killington and sipping martinis while the rest of us are on the Mad Dog 20/20.
~ David Schneider
K.R. Sridhar is a NASA scientist who was working on a project to terraform Mars. He invented a machine that would produce oxygen in the Martian atmosphere and make the Red Planet habitable for humans.
But the budget got cut. The program got cancelled. So K.R. Sridhar took the invention and reversed it to suck in oxygen. He created an entirely new kind of fuel cell, which is far more compact and more efficient than anything now producing electricity. It is designed to replace the grid. And it’s coming.
DAVID BARBOZA writes for the New York Times,
SHANGHAI — China took a major step Friday toward making its capital market system more sophisticated and perhaps more stable as it agreed to give investors a new and powerful set of risk-management tools.
The government said it had approved, “in principle,” the creation of stock index futures, trading on margin and short selling, investment tools that are commonly used in New York, Chicago, London and many other financial markets, according to Xinhua, China’s state run news agency.
The announcement means that for the first time investors in China have more options than simply buying and selling their favorite stocks. They will soon be able to invest in a stock index (or set of stocks, collectively) and borrow money to trade stocks on margin.
Investors will also be able to make financial bets that stock prices will fall, a practice called short selling.
“This is a major step for China’s capital markets,” said Chang Chun, a professor of finance at the China Europe International Business School in Shanghai. “The government has been studying this for a long time.”
The China Securities Regulatory Commission said on its Web site Friday that it may take three months to complete preparations for the new investing tools to become available.
“This improves the stability and the healthy development of the capital markets,” the C.S.R.C. said in its statement.
By approving the new tools, the government hopes to accomplish several goals, including giving Shanghai more credibility as a financial capital and encouraging more ordinary Chinese to invest in equity markets. Many households still keep a large amount of their savings in low-interest accounts at state banks.
The announcement Friday did not come as a surprise to investors here.
Rumors that such an announcement was imminent have excited market players in recent days.
They drove up the share prices of Chinese brokerage houses, which expect to cash in on the new rules by making margin loans to investors and giving them additional options to hedge their risk.
THOMAS L. FRIEDMAN writes for the New York Times
As I listened to Denmark’s minister of economic and business affairs describe how her country used higher energy taxes to stimulate innovation in green power and then recycled the tax revenues back to Danish industry and consumers to make it easier for them to make and buy the new clean technologies, it all sounded so, well, intelligent. It sounded as if the Danes looked at themselves after the 1973 Arab oil embargo, found that they were totally dependent on Middle East oil and put in place a long-term strategy to make Denmark energy-secure and start a new industry at the same time.
The more I listened to the Danish minister, Lene Espersen, the more I thought of my own country, where I’ve been told time and again by U.S. politicians that proposing even a 10-cent-a-gallon increase in gasoline taxes to make America more energy independent and to stimulate fuel efficiency is “off the table,” an act of sure political suicide.
Not in Denmark. So I asked the Danish minister: “Tell me, what planet are you people from?”
Espersen laughed. But I didn’t. How long are we Americans going to go on thinking that we can thrive in the 21st century when doing the optimal things — whether for energy, health care, education or the deficit — are “off the table.” They’ve been banished by an ad hoc coalition of lobbyists loaded with money, loud-mouth talk-show hosts who will flame anyone who crosses them, political consultants who warn that asking Americans to do anything important but hard makes one unelectable and a citizenry that doesn’t even ask for optimal anymore because it believes that optimal is impossible.
Sorry, but there are no good ideas proven to work in other democratic/capitalist societies that we can afford to shove off our table — not when we need to build a knowledge economy with good jobs and everyone else is trying to do the same.
“Already the green taxes here are quite high,” said Espersen. “And even though we know this is not popular with business and industry, it has made all the difference for us. It forced our businesses to become more energy efficient and innovative, and this meant that, suddenly, we were inventing things nobody else was inventing because our businesses needed to be competitive.”
ELIOT SPITZER, FRANK PARTNOY and WILLIAM BLACK write for the NYT,
WE end this extraordinary financial year with news that the Treasury is in discussions with American International Group about selling the taxpayers’ 80 percent ownership stake in that company. The government recently permitted several banks to break free of its potential oversight by repaying loans made during the rescue. But with respect to A.I.G., the Treasury should not move so fast. There is one job left to do.
A.I.G. was at the center of the web of bad business judgments, opaque financial derivatives, failed economics and questionable political relationships that set off the economic cataclysm of the past two years. When A.I.G.’s financial products division collapsed — ultimately requiring a federal bailout of $180 billion — those who had been prospering from A.I.G.’s schemes scurried for taxpayer cover. Yet, more than a year after the rescue began, crucial questions remain unanswered. Who knew what, and when? Who benefited, and by exactly how much? Would A.I.G.’s counterparties have failed without taxpayer support?
The three of us, as experienced investigators and prosecutors of financial fraud, cannot answer these questions now. But we know where the answers are. They are in the trove of e-mail messages still backed up on A.I.G. servers, as well as in the key internal accounting documents and financial models generated by A.I.G. during the past decade. Before releasing its regulatory clutches, the government should insist that the company immediately make these materials public. By putting the evidence online, the government could establish a new form of “open source” investigation.
Once the documents are available for everyone to inspect, a thousand journalistic flowers can bloom, as reporters, victims and angry citizens have a chance to piece together the story. In past cases of financial fraud — from the complex swaps that Bankers Trust sold to Procter & Gamble in the early 1990s to the I.P.O. kickback schemes of the late 1990s to the fall of Enron — e-mail messages and internal documents became the central exhibits in our collective understanding of what happened, and why.
So far, prosecutors and regulators have been unable to build such evidence into anything resembling a persuasive case against any financial institution. Most recently, a jury acquitted Bear Stearns employees of fraud related to the collapse of the subprime mortgage market, in part because available e-mail messages suggested the employees had done nothing wrong.
Perhaps A.I.G.’s employees would also be judged not guilty. But we would like to see the record to find out. As fraud investigators, we would like to examine the trading patterns of A.I.G.’s financial products division, and its communications with Goldman Sachs and other bank counterparties who benefited from the bailout. We would like to understand whether the leaders of A.I.G. understood that they were approaching a financial Armageddon, and whether they alerted their counterparties, regulators and shareholders to the impending calamity.
We would like to see how A.I.G. was able to pay huge bonuses to its officers based on the short-term income they received from counterparties for selling guarantees that, lacking adequate loss reserves, the companies would never be able to honor. We would also like to know what regulators knew, and what they did with the information they had obtained.
Congress wants answers, too. This month, during hearings on Ben Bernanke’s nomination to a second term as chairman of the Federal Reserve, several senators fumed about being denied access to his A.I.G.-related documents.
No doubt, some of the e-mail messages contain privileged conversations among lawyers. Others probably include private information that is irrelevant to A.I.G.’s role in the crisis. But the vast majority of these documents could be made public without legal concern. So why haven’t the Treasury and the Federal Reserve already made sure the public could see this information? Do they want to protect A.I.G., or do they worry about shining too much sunlight on their own performance leading up to and during the crisis?
Suzanne Goldenberg writes for the Guardian,
Barack Obama is poised to arrive in Copenhagen tomorrow with additional pledges of cash for poor countries which will suffer the most from global warming, a day after America’s promise to support a $100bn a year climate fund.
Obama’s arrival has been the most anticipated event of the 10-day summit, which has lurched between optimism and rank despair. He will seek to make a decisive impact, building on the announcement today by Hillary Clinton, the secretary of state, who said for the first time that America would support a $100bn global climate change fund from 2020. But she will be a tough act to follow, as the statement was seen by delegates as a gamechanger.
Obama is expected to add an extra boost of momentum by beefing up America’s share in a $10bn a year fast-track aid package. That aims to cushion poor countries from the impact of climate change and promote rainforest preservation starting next year. He is also expected to outline little-known provisions in the climate bill passed by the House of Representatives that would direct some $4bn a year from the auction of emission allowances to a fund to help developing countries adapt to climate change and deploy clean technology.
He is also expected to call more forcefully on the Senate to pass climate change law, critical to the eventual success of Copenhagen. “I’ve got a sense that she set the table, and he is going to deliver the knock-out punch,” said Earl Blumenauer, part of the delegation of Democratic congressmen to the talks.
Clinton gave no specifics on how America would raise its share of the $100bn fund, and she made her offer contingent on overcoming an atmosphere of mistrust to reach a deal at Copenhagen. “It is no secret that we have lost precious time in these past days,” she said. “In the time we have left here, it can no longer be about us versus them — this group of nations pitted against that group. We all face the same challenge together.”
July 22 2008: T. Boone speaks at the hearing of the Senate Homeland Security & Govt. Reform committee.
Mike Wilkinson writes for the Detroit News,
Despite an official unemployment rate of 27 percent, the real jobs problem in Detroit may be affecting half of the working-age population, thousands of whom either can’t find a job or are working fewer hours than they want.
Using a broader definition of unemployment, as much as 45 percent of the labor force has been affected by the downturn.
And that doesn’t include those who gave up the job search more than a year ago, a number that could exceed 100,000 potential workers alone.
“It’s a big number, and we should be concerned about it whether it’s one in two or something less than that,” said George Fulton, a University of Michigan economist who helps craft economic forecasts for the state.
Mayor Dave Bing recently raised eyebrows when he said what many already suspected: that the city’s official unemployment rate was as believable as Santa Claus. In Washington for a jobs forum earlier this month, he estimated it was “closer to 50 percent.”
Although the government doesn’t produce an unemployment number that high, it’s not hard to get close.
Officially, the unemployment rate in Detroit was estimated at 27 percent in October. But that number does not include people working part-time who want full-time work, nor does it include “discouraged” workers, who have stopped looking for work. It also doesn’t include people who have gone back to school rather than search for a job.
‘Detroit’ by Gratuitous Art Films.
Riazat Butt writes for the Guardian,
People are so paralyzed by fear and selfishness they cannot save the planet, the archbishop of Canterbury said on Sunday during a church service in Copenhagen.
Rowan Williams was preaching in the Danish capital as crucial UN climate change talks entered their second and final week.
He said that fear paralyzed individuals, corporations and governments from making the choices needed to affect real and lasting change.
“We are afraid because we don’t know how we can survive without the comforts of our existing lifestyle. We are afraid that new policies will be unpopular with a national electorate. We are afraid that younger and more vigorous economies will take advantage of us – or we are afraid that older, historically dominant economies will use the excuse of ecological responsibility to deny us our proper and just development.”
Yesterday church bells in Denmark and other countries rang 350 times to represent the figure many scientists believe is a safe level of carbon dioxide in the air: 350 parts per million.
Joining Williams at Copenhagen’s Lutheran cathedral was Archbishop Desmond Tutu of South Africa and religious leaders from Tuvalu, Zambia, Mexico and Greenland. Williams, who led the ecumenical service, said a paralyzing sense of fear and selfishness would deny future generations a “stable, productive and balanced world to live in” and instead give them a world of “utterly chaotic and disruptive change, of devastation and desertification, of biological impoverishment and degradation.”
There was even a sense that people were not frightened enough by this apocalyptic vision and cautioned against this approach, saying it would “drive out one sickness with another.”
“It can make us feel that the problem is too great and we may as well pull up the bedclothes and wait for disaster. It can tempt us to blaming one another or waiting for someone else to make the first move,” he added.
But humans were not “doomed to carry on in a downward spiral of the greedy, addictive, loveless behavior” that had brought mankind to this crisis and he urged people to scrutinize their lifestyles and policies and how these demonstrated care for creation. He called on people to consider what a sustainable and healthy relationship with the world would look like
Could it be that the Cosa Nostra and Yakuza were more responsible with their money than banks? It makes sense they would never hike rates on delinquent bowers to the degree of banks, because they actually factored in collecting those debts. Banks just sold ballooned debts to other debtors, completely free from the fears of reality. What really confounds me is that organized crime and drug money actually confronted the drought of liquid credit that followed the global financial collapse. Apparently, if it wasn’t for a ‘reasonable’ black market, the world financial crisis could have turned out much worse.
Rajeev Syal writes for the Guardian,
Drugs money worth billions of dollars kept the financial system afloat at the height of the global crisis, the United Nations’ drugs and crime tsar has told the Observer.
Antonio Maria Costa, head of the UN Office on Drugs and Crime, said he has seen evidence that the proceeds of organised crime were “the only liquid investment capital” available to some banks on the brink of collapse last year. He said that a majority of the $352bn (£216bn) of drugs profits was absorbed into the economic system as a result.
This will raise questions about crime’s influence on the economic system at times of crisis. It will also prompt further examination of the banking sector as world leaders, including Barack Obama and Gordon Brown, call for new International Monetary Fund regulations. Speaking from his office in Vienna, Costa said evidence that illegal money was being absorbed into the financial system was first drawn to his attention by intelligence agencies and prosecutors around 18 months ago. “In many instances, the money from drugs was the only liquid investment capital. In the second half of 2008, liquidity was the banking system’s main problem and hence liquid capital became an important factor,” he said.
Some of the evidence put before his office indicated that gang money was used to save some banks from collapse when lending seized up, he said.
“Inter-bank loans were funded by money that originated from the drugs trade and other illegal activities… There were signs that some banks were rescued that way.” Costa declined to identify countries or banks that may have received any drugs money, saying that would be inappropriate because his office is supposed to address the problem, not apportion blame. But he said the money is now a part of the official system and had been effectively laundered.
“That was the moment [last year] when the system was basically paralysed because of the unwillingness of banks to lend money to one another. The progressive liquidisation to the system and the progressive improvement by some banks of their share values [has meant that] the problem [of illegal money] has become much less serious than it was,” he said.