Ian Welsh writes on Naked Capitalism with 21 dismal and compelling "basics" about the economy and the so-called "recovery."
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7) Europe, ex. Germany, is in recession.
8 ) the developed world is in depression, it never left depression. During depressions there are recoveries (such as they are) and recessions, but the overall economy is in depression.
9) China’s economy is slowing down. Since China is the main engine of the world economy, followed by the US, this is really bad. If it goes into an actual recession, bend over and kiss your butt goodbye.
10) Austerity is a means by which the rich can buy up assets which are not normally on the market for cheap.
11) the wealth of the rich and major corporations has recovered and in many countries exceeded its prior highs. They are doing fine. Austerity is not hurting them. They control your politicians. The depression will not end until it is in their interest for it to do so, or their wealth and power is broken.
12) The US play is as follows: frack. Frack some more. Frack even more. They are trying the Reagan play, temporize while new supplies of hydrocarbons come on line. Their bet is that they’ll get another boom out of that. If they’re right, it’ll be a lousy boom. If they’re wrong (and the Saudis think they are, and the Saudis have been eating their lunch since 2001) then you won’t even get that. Either way, though, they’ll devastate the environment, by which I mean the water you drink and grow crops with.
The FDIC has issues a special alert warning that America's debt-haunted, cash-strapped banks are falling prey to conmen working the advance fee fraud, the same scam used in the familiar "Nigerian prince" or "419" scam. The banks fork over big bucks to supposed high-flying investors who are supposed to come through with large sums in return, but who vanish into the ether instead.
The FDIC has become aware of multiple instances in which individuals or purported investment advisors have approached financially weak institutions in apparent attempts to defraud the institutions by claiming to have access to funds for recapitalization. These parties also may claim that the investors, or individuals associated with the investors, include prominent public figures and that the investors have been approved by one or more of the federal banking agencies to invest substantial capital in the targeted institutions. Ultimately, these parties have required the targeted institutions to pay, in advance, retention and due diligence fees, as well as other costs. Once paid, the parties have failed to conduct substantive due diligence or to actively pursue the proposed investment.
Banks Desperate For Funds Victimized By Con Men
(via CSM) Read the rest
The LA Times's Diana Marcum tells the story of the bankruptcy of Stockton, California, a city of about 300,000 people, which has just filed for bankruptcy. The city -- and its developers -- borrowed heavily in the past decade to build a series of follies: a luxury hotel, a marina, a promenade, in a bid to lure people down from the Bay Area. Stockton is a boom-and-bust poster-child, and has just gone through the new AB 506 arbitration procedures set out for municipal defaults in California law, a drawn-out "death of a thousand meetings," and is still headed into bankruptcy.
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Although a city of almost 300,000, Stockton is a place where many families have known one another for generations. The most impassioned speakers argued on behalf of others, with the main rallying cry a plea to keep health insurance for retirees with illnesses. A high school student spoke of his aunt, a retired city worker with cancer, and a retired fire chief spoke of his former secretary who cares for her ill husband.
"People look at me and say, 'Well he can afford his own insurance,' and I can," said Gary Gillis, the retired chief. "But how about the ones who mowed the lawns, went in the sewers, typed my letters? We have to protect the most vulnerable among us."
Experts say there are no clear answers to what comes next for Stockton or how its fall will affect the rest of the state. Other cities hit hard by the housing bust and state budget crisis are negotiating with employee unions for concessions and are watching to see if municipal bankruptcy proves medicine or poison.
A group of Spanish activists organized under the #QuerellaPaRato ("Lawsuit for Rato") hashtag, have raised a large private fund to pay for a civil action against Rodrigo Rato, the disgraced former chairman of Bankia, one of the banks at the heart of the Spanish financial crisis. The activists also plan on paying private investigators to amass as dossier detailing Rato's wrongdoings in the hopes that Spain's prosecutors will bring criminal charges against the banker.
In the first 12 hours of the campaign, organisers reported that dozens of Bankia shareholders, as well as former employees, agreed to testify against Rato in a lawsuit. According to a survey by Spanish paper El País, 91% of respondents want an investigation of Rato's management of Bankia...
"Bankia did not last even two years; how is it that Rodrigo Rato leaves his position, hastily and receiving millions in compensations without anyone in an institution having asked nothing before, without anyone asking for an explanation, and nobody asking for an investigation? The Spanish political class is complicit in covering up anything that could have happened, and even more troubling, will continue to do so."
(via Techdirt) Read the rest
Share or Die is a new anthology from Shareable.net (whose mandate is to promote sharing in all its guises), written by 20-somethings struggling through austerity and econopocalypse, who find in sharing a solution to some of their problems. I was privileged to write the book's foreword, and I thoroughly enjoyed it. You can buy a copy or get a PDF for free -- all the book's publishers ask is that you tweet the fact that you've gotten a copy yourself. Here's a snip of my foreword:
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This was supposed to be the disconnected generation. Raised on video-games and networked communications, kept indoors by their parents' fear of predators and the erosion of public transit and public spaces, these were the kids who were supposed to be socially isolated, preferring the company of video-game sprites to their peers, preferring Facebook updates to real-life conversations.
The Internet's reputation for isolation is undeserved and one-dimensional. If the net makes it possible to choose to interact through an electronic remove from "the real world," it *also* affords the possibility of inhabiting the "real world" even when you've been shut away from it by your fearful parents or the tyranny of suburban geography.
Even as entertainment moguls were self-servingly declaring "content is king," they failed to notice that content without an audience was about as interesting as a tree that falls in the deserted woods. Conversation is king, not content. If we gather around forums to talk about TV shows or movies or games or bands, it's because we enjoy talking with each other, because "social" is the best content there is.
Andrew Leonard of Salon interviewed Charles Ferguson (director of Inside Job, the documentary about the unpunished criminals who caused the current financial collapse) about his new book, Predator Nation: Corporate Criminals, Political Corruption, and the Hijacking of America
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Ferguson: I recently was at a dinner in New York City and one of the people there was a very, very successful man who is on the borderline between venture capital and private equity. And this guy went into an extended rant about how he was at a disadvantage because he had to pay 15 percent capital gains taxes. When I was first dealing with venture capitalists in a significant way, the capital gains tax rate was 28 percent, and nobody was complaining. Then they got them reduced to 20 under Clinton, and then later 15 under Bush. Plus, they got a rollover provision so if they took the proceeds of a venture capital investment and rolled it over into a new venture capital investment it was tax-free. At that point, we’ve reached nirvana, what more could there be?
But now we’re in this environment where this guy was loudly and aggressively complaining that he has to pay 15 percent to the government. And if that’s where you’re at, then of course you are going to complain about Dodd-Frank. You are going to complain about everything. If you have already got 96 percent of what you want, why not take the remaining 4? That’s where the culture of American finance is right now, and I think it’s really dangerous for the country.
Laurence Lewis's Daily Kos editorial, "The cruel stupidity that is economic austerity," is a blazing indictment of austerity as a means of recovering from recession, and it cites experts and statistics showing that austerity programs (in Europe, particularly) are deepening the recession, destroying lives, and demolishing vital social institutions that are especially needed in economic downturns. Lewis's citations are not to the usual suspects in the fight against austerity, but rather to rock-ribbed conservatives and publications like The Economist, the chief economist of Standard Chartered, the IMF, the World Bank and the WTO. And there's Joseph Stiglitz, who compares austerity to medieval blood-letting: "when you took the blood out, the patient got sicker. The response then was more blood-letting until the patient very nearly died. What is happening in Europe is a mutual suicide pact."
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How bad is it?
* In Greece, we now have record unemployment, which includes the majority of young workers. Homelessness is up 20 percent, with soup kitchens in Athens reporting record demand, and the usually low suicide rate having doubled.
* Portugal has complied completely with the austerity demands it accepted for its bailout deal, but its debt is growing and its economy is shrinking, its unemployment rate continues to reach new heights, there is a crisis in medical care, and a 40 percent rise in emigration, with the Portuguese government acknowledging its own failure by actually encouraging its citizenry to leave.
* In Spain, austerity has resulted in falling industrial output and deepening debt, with record unemployment and a stunning rate of 50 percent youth unemployment.
A paper from the New England Complex Systems Institute claims that they have found evidence that traders executed a "bear raid" on Citigroup in 2007, precipitating the financial collapse. A "bear raid" is a market manipulation technique in which short sellers conspire to dump huge quantities of borrowed shares into the market all at once, driving the price down (short selling is a stock-trading technique in which shares are borrowed for sale; the short seller makes money when the value of the borrowed shares declines).
"Bear raids" have been considered a risk to markets since the Great Depression, and a financial regulation called the "uptick rule" was instituted in 1938 to prevent the tactic. The uptick rule was repealed in in July, 2007, and the alleged bear raid took place in November, 2007.
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On November 1, 2007, Citigroup experienced large spikes in short selling and trading
volume. The number of borrowed shares—short interest—increased by approximately 130
million shares to 3.8 times the 3-month moving average. The total trading volume jumped
from 73 million shares on the previous day to 171 million shares, 3.7 times the 3-month
moving average. The ratio of the increase in short positions to volume was 0.77. This is the
fraction of the total trading that day that may be attributed to short positions held until
market closing. The total value of shares borrowed on November 1 was approximately $6.07
billion. Adjusted for the dividend issued on November 1, 2007, Citigroup stock closed on
November 1 down $2.85 from the previous day, a drop of 6.9%.
Ottawa Citizen: "British embassies in the eurozone have been told to draw up plans to help British expatriates through the collapse of the single currency, amid renewed fears for Italy and Spain." Read the rest
I have no idea who shot these, or who is responsible. Update: here are some daytime shots, from the San Francisco Mission district.
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From a NYT opinion piece by Joe Nocera, "What the Costumes Reveal"—
On Friday, the law firm of Steven J. Baum threw a Halloween party. The firm, which is located near Buffalo, is what is commonly referred to as a “foreclosure mill” firm, meaning it represents banks and mortgage servicers as they attempt to foreclose on homeowners and evict them from their homes. Steven J. Baum is, in fact, the largest such firm in New York; it represents virtually all the giant mortgage lenders, including Citigroup, JPMorgan Chase, Bank of America and Wells Fargo.
The party is the firm’s big annual bash. Employees wear Halloween costumes to the office, where they party until around noon, and then return to work, still in costume. I can’t tell you how people dressed for this year’s party, but I can tell you about last year’s.
That’s because a former employee of Steven J. Baum recently sent me snapshots of last year’s party. In an e-mail, she said that she wanted me to see them because they showed an appalling lack of compassion toward the homeowners — invariably poor and down on their luck — that the Baum firm had brought foreclosure proceedings against.
I'm not one to incite illegal activity, but christ, guys: if there were ever a house that deserved T-P-ing on Halloween? This firm's headquarters is it. May not be justice, but it's a start.
Read the rest, and see all the photos, here. (via Chris Hayes) Read the rest
Richard sez, "For the discerning mad scientist: the list of items up for auction by the University of Delaware from a former Chrysler plant in Newark, Delaware. The university bought the plant after it closed, and apparently got the contents as well. The coolest items are probably the 6 axis robot arms, some still in line along assembly lines. There appears to be all kinds of milling equipment as well as other mysterious devices of unsure provenance. I am sure a machine expert would be able to make sense of all of it. The place is acres large (ed: literally -- 3 million sqft), so I bet there are plenty of robot arms to go around.
Oh to be an independently wealthy mad scientist with a large laboratory, perhaps under an extinct volcano, for this stuff. I suppose if there are any makers in the area they might want to check it out."
Former Assets of Chrysler / University of Delaware -
3 Million Sq. Ft. Automotive Fabrication, Assembly Plant & Distribution Center
Haunting photo-essay on rotting buildings in Detroit - Boing Boing
Real estate bubble bananas - Boing Boing
Hidden Econopocalypse Admonition in Chinatown Sign - Boing Boing
Artists buying cheap houses in Detroit - Boing Boing
Dinosaur auction - Boing Boing
Space history auction - Boing Boing Read the rest
"The Washington Post, in a significant retrenchment, is closing its remaining domestic bureaus around the country." The paper's six US news correspondents in New York, Los Angeles and Chicago will be offered reassignments in Washington. The Post's parent company lost $166.7 million in the first three quarters of 2009. Read the rest
"The very design of the federal assistance to A.I.G. was that tens of billions of dollars of government money was funneled inexorably and directly to A.I.G.'s counterparties." A necropsy of the AIG deal, in the NYT. Spoiler: we lose. (lifted from Mitch Kapor) Read the rest
America's official national unemployment rate is now 10.2%. But there are more sad numbers in the Bureau of Labor Statistics's October report, out today. Jobless rate in some states is higher. Michigan's the most grim: 15.1 percent. Nevada: 13.0, Rhode Island: 12.9, California: 12.5, South
Carolina: 12.1. Over the year, rates are up in all 50
states and in D.C. Among cities, Detroit's tops. 30%. The actual, practical toll of unemployment is worse when you count the underemployed and those on the streets and off the grid. Read the rest