Citizens of Greece Protesting Government

March 15, 2010

Mail Online

Street clashes broke out between rioting youths and police in central Athens today as tens of thousands demonstrated during a nationwide strike against the cash-strapped government.
Hundreds of masked and hooded youths punched and kicked motorcycle police, knocking several off their bikes, as police responded with volleys of tear gas and stun grenades.

The violence spread after the end of the march to a nearby square, where police faced off with stone-throwing anarchists and suffocating clouds of tear gas sent patrons scurrying from open-air cafes.
Police say 16 suspected rioters were detained and two officers were injured.

Rioters used sledge hammers to smash the glass fronts of more than a dozen shops, banks, jewelers and a cinema.

Youths also set fire to rubbish bins and a car, smashed bus stops, and chopped blocks off marble balustrades and building facades to use as projectiles.
Organisers said some 60,000 people took part in the protest. But an unofficial police estimate set the crowd at around 20,000 – including those that took part in a separate, peaceful march earlier Thursday. Police do not issue official crowd estimates for demonstrations.
Thursday’s strike – the second in a week – brought the country to a virtual standstill, grounding all flights and bringing public transport to a halt.

State hospitals were left with emergency staff only and all news broadcasts were suspended as workers walked off the job for 24 hours to protest spending cuts and tax hikes designed to tackle the country’s debt crisis.
Riot police made heavy use of tear gas during the start-and-stop clashes throughout the demonstration, including outside Parliament.

Strikers and protesters banged drums and chanted slogans such as ‘no sacrifice for plutocracy,’ and ‘real jobs, higher pay.’
People draped banners from apartment buildings reading: ‘No more sacrifices, war against war.
The demonstrators included hundreds of black-clad anarchists in crash helmets and ski masks, who repeatedly taunted and attacked riot police with stones and petrol bombs, at one point spraying officers with brown paint.

Shopkeepers along the demonstration route hastily rolled down their shutters, while a few blocks away, people sat at outdoor restaurants, nonchalantly continuing their meals.

Tear gas wafted through the city center’s streets, sending businessmen in suits scurrying for cover, their eyes streaming.
Minor clashes also broke out in the northern city of Thessaloniki, where about 14,000 people marched through the center.
Fears of a Greek default have undermined the euro for all 16 countries that share it, putting the Greek government under intense European Union pressure to quickly show fiscal improvement.

It has announced a raft of savings through public sector salary cuts, hiring and pension freezes and consumer tax hikes to deal with its ballooning deficit, but the measures have led to a new wave of labor discontent.
The cutbacks, added to a previous austerity plan, seek to reduce the country’s budget deficit from 12.7 percent of annual output to 8.7 percent this year. The long-term target is to bring overspending below the EU ceiling of 3 percent of GDP in 2012.
The new plan sparked a wave of strikes and protests from labour unions whose reaction to the initial austerity measures had been muted.

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IRS Visits Sacramento Carwash in Pursuit of 4 Cents!

March 15, 2010

The Sacramento Bee

By Bob Schallit

It was every businessperson’s nightmare.

Arriving at Harv’s Metro Car Wash in midtown Wednesday afternoon were two dark-suited IRS agents demanding payment of delinquent taxes. “They were deadly serious, very aggressive, very condescending,” says Harv’s owner, Aaron Zeff.

The really odd part of this: The letter that was hand-delivered to Zeff’s on-site manager showed the amount of money owed to the feds was … 4 cents.

Inexplicably, penalties and taxes accruing on the debt – stemming from the 2006 tax year – were listed as $202.31, leaving Harv’s with an obligation of $202.35.

Zeff, who also owns local parking lots and is the president of the Midtown Business Association, finds the situation a bit comical.

“It’s hilarious,” he says, “that two people hopped in a car and came down here for just 4 cents. I think (the IRS) may have a problem with priorities.”

Now he’s trying to figure out how penalties and interest could climb so high on such a small debt. He says he’s never been told he owes any taxes or that he’s ever incurred any late-payment penalties in the four years he’s owned Harv’s.

In fact, he provided us with an Oct. 22, 2009, letter from the IRS that states Harv’s “has filed all required returns and addressed any balances due.”

IRS spokesman Jesse Weller isn’t commenting “due to privacy and disclosure laws.”

Zeff says he’s as offended as much as anything else by what he considers rude behavior by the IRS guys. While at Harv’s, he sniffs, “they didn’t even get a car wash.”

Testing the market

One of the region’s best-regarded business sites could soon have a new owner.

Lowe Enterprises in February solicited bids for its five-building Prospect Green complex and the nearby stand-alone One Capital Center building in Rancho Cordova.

Asking price: About $75 million for the 640,000 square feet of space – a significant discount on the $103 million Los Angeles-based Lowe and its partner, JP Morgan, paid in 2005.

The bids were due Friday. We’ll hear shortly if any came close to what Lowe and its partner are seeking.

Why are they selling now in a depressed market?

Institutional money is redeploying assets to “first-tier markets,” like San Francisco and L.A, where price appreciation is likely to be swiftest when the market improves, says Nico Coulouras, Lowe’s head of NorCal operations.

Retail wrangler

Wanted: a “champion” for downtown retail development.

That’s the short job description for a retail recruiter now being sought by the Downtown Sacramento Partnership.

“We’ve talked retail recruitment for a long time,” says DSP exec Michael Ault. But now his group is putting some money behind the task by hiring an expert who can work full time with property owners, brokers and city economic development folks to lure trendy retailers to the 66-block downtown district.

Hiring such a person was one of the top recommendations of consulting firm Downtown Works, which last year helped develop a strategy to reinvigorate the downtown area.

Ault says the DSP hopes to have somebody onboard by the end of April.

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Cries for Wall Street Regulation

March 12, 2010

Reuters

By David Morgan

The findings suggest that 82 percent of Americans want the government to clamp down more strongly on Wall Street excesses, with a particular emphasis on bonus schemes that have rewarded employees at loss-making companies such as American International Group.

A Harris release on the February 16-21 telephone survey of 1,010 adults did not specify how financial regulation should be applied but said three-quarters of Americans believe Wall Street companies should pay bonuses only while in the black.

Harris said the U.S. public does see value in Wall Street itself: nearly 60 percent say the financial sector is an essential benefit to the United States.

But a slightly larger majority disagrees that what is good for Wall Street is good for the country, while about two-thirds harbor strong negative views about the people who work there.

By a margin of 66 percent to 29 percent, Americans agree that “most people on Wall Street would be willing to break the law if they believed they could make a lot of money and get away with it,” pollsters found.

Sixty-five percent say most successful people on Wall Street do not deserve the kind of money they make.

A similar majority said those in the financial sector are generally less honest and less moral than the general public.

“Those who manage large banks and other financial institutions can draw some comfort from the majorities who believe that Wall Street is essential and benefits the country, even if these numbers are much worse than they were before the 2008 crash,” Harris said in a statement.

“On the other hand, there is no evidence that the American people have begun to forgive the people in Wall Street or to forget the huge problems that they caused.”

Harris did not provide a margin of error for the poll.

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Government Workers Feel No Economic Pain

March 12, 2010

The Washington Times

By David M. Dickson

The recession and the ongoing jobless recovery devastated much of the private-sector work force last year, sending unemployment soaring, but government workers emerged essentially unscathed, according to data released Wednesday by the Labor Department.

Meanwhile, the compensation for state and local government employees continued to easily outdistance the wages and benefits for workers in private business, a separate Labor Department report showed.

Private-industry employers spent an average of $27.42 per hour worked for total employee compensation in December, while total compensation costs for state and local government workers averaged $39.60 per hour.

The average government wage and salary per hour of $26.11 was 35 percent higher than the average wage and salary of $19.41 per hour in the private sector. But the percentage difference in benefits was much higher. Benefits for state and local workers averaged $13.49 per hour, nearly 70 percent higher than the $8 per hour in benefits paid by private businesses.

Paul Booth, executive assistant to the president at the American Federation of State, County and Municipal Employees (AFSCME), attributed the pay difference to a changing government work force that has increased its proportion of higher-skilled workers during the past 15 to 20 years.

“In government payrolls, you no longer have low-wage occupations, such as janitors, whose jobs have been contracted out to the private sector,” he said. This trend has effectively increased the average wage of those higher-skilled workers who remain, said Mr. Booth, whose union represents 1.6 million workers.

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US Taxpayers on the Hook for Five Trillion in Bad Debt

March 11, 2010

Yahoo Finance

By Aaron Task

House Financial Services Chairman Barney Frank caused a bit of an uproar Friday when he suggested the U.S. government does not guarantee the debts of Fannie Mae and Freddie Mac.
Rep. Frank later recanted and backed a Treasury Department statement reassuring investors that, yes, Fannie and Freddie Mae debt is guaranteed by the U.S. government. “Going forward,” he said in a statement, we “will make sure that there are no implicit guarantees, hints, suggestions, or winks and nods…we will be explicit about what is and is not an obligation of the federal government.”

But after years of winks and nods, there’s no doubt that Fannie and Freddie now enjoy an explicit guarantee, according to most observers. The U.S. government placed Fannie Mae and Freddie Mac in conservatorship in September 2008: “This means that the U.S. Taxpayer now stands behind $5 trillion of GSE debt,” according to the Congressional Research Service.

The problem is that $5 trillion of so-called agency paper is not treated as if it is a debt of Uncle Sam for accounting purposes, says Richard Suttmeier, chief market strategist at Niagara International Capital and ValuEngine.com.

“Get it on the balance sheet – that’s where it belongs,” Suttmeier says. “Add it to the $14.2 trillion in [federal] debt and let’s move on.”

Another Time Bomb Ticking But $5 trillion is a lot of money – even by government standards — and moving on may be the problem because of ongoing problems in the housing market, Suttmeier says. “There’s a general concern on Main Street U.S.A. that ‘my neighbors are throwing in their keys, there’s more for sale signs in my community…do I want to buy a new home, risking there’s still downside risk to housing?’ ”

Noting the Case-Shiller 20-City Home Price Index is still 50% above 1999 levels and mortgage delinquencies are still rising despite the rebound in GDP, Suttmeier says “victory is nowhere in sight, particularly when the drain we’re going to see from Fannie and Freddie is unlimited losses between now and the end of 2012 — on top of the $400 billion that’s already been allocated.”

Coincidentally (or not), the FDIC is allowing U.S. banks until 2012 before forcing them to fully write-down bad or toxic loans, which is “another time bomb ticking,” Suttmeier says. “They’re hoping the public market comes back into the mortgage arena, which is going to be hard to do.”

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National ID Card Will Only Strengthen Big Brother

March 11, 2010

Fox News

By Alex Nowrasteh

The Senate is working toward a ghastly compromise on immigration reform that includes a biometric national identification card for all Americans. The stated purpose of this national ID, which an employee must present before getting a job, is to prevent undocumented workers from being employed. Back in December I warned that a national ID is the inevitable conclusion of the anti-immigration movement. The failure of E-Verify to catch 54% of undocumented workers is only accelerating the call for a national ID.

A national ID hurts American workers while pretending to help them.

First, every worker would have to ask permission from the federal government to get a job. American workers shouldn’t have to beg or plead to anybody to get permission to work. Being employed should be a private agreement between an employer and employee. Period. The government should get out of the way.

Second, carrying around government papers with biometric identification on it conjures up images of a more technologically savvy Oceania or East Germany. No thanks.

Third, the system will exclude millions of legal workers by accident and fail to catch the majority of undocumented immigrants. For instance, if E-Verify were instituted nation-wide 3.6 million Americans would be denied employment each year and have to visit the Social Security Administration to correct their records. The employer either fires them or delays training. Will a biometric ID card make this system better? How does that help American workers?

Fourth, it will cost businesses up to $800 to buy a scanner. Or as Senator Chuck Schumer says, employers can just go down to the DMV. Senator Schumer doesn’t know squat about running a business. The last thing an employer wants to do is spend time at the DMV when he could be spending it improving his business. And all this during an economic slump!

Fifth, it would treat every American like a criminal by requiring them to enter their most intimate and personal data into a government database. One of the benefits of not having committed any crimes is that my information is not in a government record office. I’d like to keep it that way.

Has the very notion of liberty been so diluted in this great nation that no-one is willing to decry this as the naked government power grab that it is? Must every American now ask government permission to get a job? Think what you will about undocumented immigration, is ending it so important that every single American must be entered into a massive government database and given an ID they must present when applying for a job?

It most emphatically is not.

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Canadian Dollar Likely to Trump US

March 11, 2010

Yahoo News

The Canadian dollar, or loonie as it is affectionately called here, is likely to soar above parity with the US greenback this year, experts at a Canadian bank said Wednesday.

Canadian Imperial Bank of Canada (CIBC) chief economist Avery Shenfeld said the Canadian dollar had already gained several cents in recent weeks as the market firms up expectations of an interest rate hike in July.

If as expected, the central bank “is out in front of the US Federal Reserve by a couple of quarters” in raising interest rates, the Canadian dollar could reach 1.02 dollars versus the US dollar by September, before dipping back to 0.97 dollars by year end,” Shenfeld said.

The Bank of Canada has maintained its key lending rate at a historic low of 0.25 percent since April 2009 to help bolster a fragile economic recovery, but is widely expected to review its position mid-year.

CIBC said other factors were also aligning to push up the value of Canada’s currency such as increased demand for oil, minerals and fertilizers; resurgent capital markets; and global debt fears.

“If the capital markets finally get an appetite for M&A (mergers and acquisitions) then Canada could be one of the first places to see the benefit of foreign inflows,” said CIBC analyst Zafar Bhatti.

Or “if the investing world starts looking for a place to park capital in the wake of deteriorating sovereign credits then Canada would look very attractive,” Bhatti said in a report.

Since the beginning of the year, the Canadian dollar has appreciated 2.5 percent against the US dollar and more than seven percent against the euro.

The loonie last achieved parity with the US greenback in 2008, and previously hit a record 1.10 dollars in 2007.

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Obama May Ban All Foreclosures Without HAMP Review

February 26, 2010

Bloomberg

By Dawn Kopecki

The Obama administration may expand efforts to ease the housing crisis by banning all foreclosures on home loans unless they have been screened and rejected by the government’s Home Affordable Modification Program.

The proposal, reviewed by lenders last week on a White House conference call, “prohibits referral to foreclosure until borrower is evaluated and found ineligible for HAMP or reasonable contact efforts have failed,” according to a Treasury Department document outlining the plan.

“It is one of the many ideas under consideration in the administration’s ongoing housing stabilization efforts,” Treasury spokeswoman Meg Reilly said in an e-mail. “This proposal has not been approved and there are no immediate planned announcements on the issue.”

She confirmed the authenticity of the document, which hasn’t been made public.

At present, lenders can initiate foreclosure proceedings on any loan that hasn’t been submitted for HAMP eligibility. Under current HAMP rules, foreclosure litigation can proceed while borrowers are under review for the program or even in a trial modification.

The proposed changes would prohibit lenders from initiating new foreclosure actions before loan screening by HAMP and would require lenders to halt existing proceedings for borrowers once they are in a trial repayment plan.

‘Improved Protections’

The Treasury Department will soon release guidance “which will include a set of improved protections for borrowers” in HAMP, Phyllis Caldwell, chief of Treasury’s Homeownership Preservation Office, said today in testimony prepared for a House Oversight and Government Reform subcommittee. She didn’t provide details.

The proposal goes further than rules adopted amid the crisis by federally controlled mortgage-finance companies Freddie Mac and Fannie Mae, which require lenders to review borrowers for a federal loan modification before a foreclosed property can be sold.

Foreclosure proceedings can still be initiated without a review, said Freddie Mac spokesman Doug Duvall. Fannie Mae spokeswoman Amy Bonitatibus said it adopted the same policy last March.

About 89 percent of outstanding residential mortgage loans are covered by the voluntary HAMP program.

About 2.82 million U.S. homeowners lost properties to foreclosure last year and 4.5 million filings are expected in 2010, RealtyTrac Inc., an Irvine, California data company, said last month.

Seven Million

Obama’s foreclosure prevention initiative, announced in February 2009 to help as many as 4 million Americans avert foreclosure, has modified 116,297 loans through steps such as lowering interest rates or lengthening repayment terms. More than 830,000 borrowers received trial repayment plans through January, according to Treasury data.

“Foreclosure processes differ among states, and the process is often confusing to homeowners already facing distress,” Caldwell said in her prepared testimony. “Treasury has been reviewing guidelines around outreach and the foreclosure process as part of its continual assessment of program effectiveness and transparency.”

Foreclosures may reach as many as 7 million mortgages, and an additional 5 million are at risk of default because borrowers owe more than the property is worth, Laurie Goodman, senior managing director at Amherst Securities Group LP in New York, said in a Feb. 17 interview.

Republican Criticism

“This is a problem of mammoth proportions,” Goodman said. “You can’t throw 12 million people out of their homes, so you need a successful modification program. My fear is that this isn’t it, but I’m highly confident that the administration will continue to iterate until they succeed.”

The Treasury proposal would require all borrowers who are 60 or more days delinquent on their mortgage to be sought out for participation in HAMP. Mortgage companies would need to try to contact the borrower at least four times by phone and twice by certified mail over 30 or more days before going to foreclosure.

Under current Treasury policy, foreclosure proceedings are only halted when a borrower receives a permanent modification plan.

House Republicans criticized HAMP as a failure today, saying in a report that it is prolonging the economic crisis and harming homeowners.

“By every empirical measure, HAMP has failed,” according to the 18-page report released by Republicans on the House Oversight and Government Reform Committee. “In its current form, HAMP both hurts homeowners who might otherwise spend their trial-period mortgage payments on rent and also distorts the housing market, delaying any recovery.”

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Greenspan: Worst Financial Crisis Ever, Including Great Depression

February 26, 2010

Washington’s Blog

Greenspan just said that the current credit crunch is “by far the greatest financial crisis, globally, ever” — including the 1930s Great Depression.

Bloomberg notes:

Greenspan said that while the economy was in worse shape in the Great Depression, the recent financial crisis was potentially more harmful than that in the 1930s because “never had short-term credit literally withdrawn.”
Greenspan also said “fiscal affairs are threatening this outlook” for recovery.

As I pointed out last May:

The following experts have said that the economic crisis could be worse than the Great Depression:

•Fed Chairman Ben Bernanke

•Economics professors Barry Eichengreen and and Kevin H. O’Rourke (updated here)

•Investment advisor, risk expert and “Black Swan” author Nassim Nicholas Taleb
•Former Fed Chairman Paul Volcker •Nobel prize winning economist Joseph Stiglitz
•Economics scholar and former Federal Reserve Governor Frederic Mishkin
•Well-known PhD economist Marc Faber
•Former Goldman Sachs chairman John Whitehead
•Morgan Stanley’s UK equity strategist Graham Secker •Former chief credit officer at Fannie Mae Edward J. Pinto
•Billionaire investor George Sorors
•Senior British minister Ed Balls
Unfortunately, virtually everything the American government has done since the crisis started has been counterproductive. See this, this, this, this, this, this, this, this, this, this and this.

The same is true of most other governments.

In the understatement of the day, Greenspan also called the recovery “extremely unbalanced,” driven largely by high earners benefiting from recovering stock markets and large corporations.

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Wall Street Bonuses and Unemployment Continue To Grow

February 26, 2010

The International Forecaster

People should not underestimate the rational of those in high places because their agenda may be totally different then what they say it is. That includes the predicament of Dubai and Greece and a host of other nations that include the US and UK. The credit crisis, borne of the subprime crisis just didn’t happen; it was planned that way. Are we supposed to believe that the Fed took interest rates close to zero and that they flooded the monetary system with money and credit, because they were incompetent or stupid, hardly? The Fed, banking and Wall Street knew subprime loans were not AAA, but triple BBB. They all knew the syndication of these bonds were a fraud, which they allowed and which kicked off the credit crisis. Again, all is not as it seems to be. Thus, those of you who believe it was greed and incompetence are wrong. Up until four years ago it was Sir Alan Greenspan who sold his soul out to the Illuminists, now it is Ben Bernanke.

The troubles that countries are having with sovereign debt are growing exponentially. First it was Dubai supposedly with $100 billion in debt problems, which in fact may be underwater three or four times that number. Then, of course, there are a host of others. In the case of Dubai, British banks are holding the bag and probably will go down in flames. Greece cannot find any support even from Goldman Sachs. The Germans don’t want to help even though they knew Greece never was qualified to be in the euro. Greece is in a state of denial; is demanding reparations from Germany, which in 1960 paid a substantial amount to Greece in compensation. Germans for some time have wanted to exit the euro and the eurozone, some 71%. They have been sick and tired of carrying most of the rest of the zone with their balance of payments surplus. Greece makes up about 2.4% of GDP of the zone hardly enough to be concerned about. Eurozone governments would be better off writing off Greek bonds than subsidizing the country. Any bailout would be short lived, because so many other nations are in serious trouble. Let’s face it the eurozone is really Germany, France and the Netherlands.

For the last two months the dollar with the help of insiders Goldman Sachs, JP Morgan Chase and Citigroup, who knew the Greek problem was on the way, has had an unusual rally that is about to end. They obviously knew the IMF would announce another gold sale and that the Fed would raise the discount rate. How could they not know with Goldman controlling the Treasury and Morgan the Fed? They also knew like any other observant economic professional that M3 was being reduced to almost no expansion as was happening simultaneously by the ECB and England, an event that would tend to strengthen the dollar. Doing this they all are playing a very dangerous game. If they lose control deflation will overwhelm inflation and a deflationary depression could begin. That will happen eventually, but the elitists would like it to happen on their timetable. The US has to find a way to end monetization and they have run out of options. The only possibility is for government to steal Americans’ retirement plans. The trouble is almost all sovereign debt cannot be avoided. Now the only question is when will the big conference begin to revalue, and devalue currencies, settle debt default and form a new international currency-trading unit in part backed by gold? All nations have been well aware for a long time that sovereign debt and some corporate and individual debt will never be repaid. That is why nations have reduced dollar holdings from 64.5% of foreign reserves to 61.4%. With the exception of four nations sovereign debt is not worth the paper it is written on. They are Switzerland, Canada, Australia and Norway.

The dollar rally will soon end and speculators should begin to take short positions. All the good news for the dollar is out. For the moment it is the best of a bad lot. Then only real money is gold and silver. In the future more and more people worldwide will realize that and eventually there will be a stampede into the two precious metals. America will produce a debt to GDP ratio or 95% to 100% this year.

A staggering blow to the Illuminists is the exposure of the criminal cartel known as Goldman Sachs in their testimony to Congress and now helping Italy and Greece illegally circumvent eurozone rules. This will push the public away from investment and toward the safety of gold and silver.

In an attempt to smother inflation and hyperinflation the US government may follow China’s lead and increase reserve requirements. That may reduce inflation, but it would also bring the US closer to deflationary depression. One false step and the game is over. That risk also includes the ECB and England. Funds already are not being lent out and such further constriction could be disastrous. Credit has already dropped by trillions of dollars as unemployment continues to grow. There is now no question that there will be no recovery. How can there be when there is little money and credit available to grease the skids of recovery. All we are seeing is a switch to stage 2 of inflation. The question is will central banks lose control, and it is obvious they are acting in concert, and fall victim to a deflationary depression.

Domestically real estate foreclosures, both residential and commercial, continue to climb. The government’s attempt to assist the residential market has been pathetic in a situation that is overwhelming. By next year, 50% of homeowners could be under water. Business can’t get the loans they need, so they cannot increase employment and the more workers fired the more who have lost their homes.

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