Saturday, October 30, 2010
Next month, Citibank will begin testing a card that has two buttons and tiny lights that allow users to choose at the register whether they want to pay with rewards points or credit, at most any merchant they please.
Other card issuers are testing more newfangled cards, including some that can double as credit and debit cards, and cards with fraud protections baked right into the plastic. One, for instance, shows a portion of the account number only after the cardholder enters a PIN.
The microscopic engine powering the plastic will help breathe new life into a 1950s-era technology — the black magnetic stripe found on the back of the 1.8 billion credit and debit cards circulating in the United States. Much of the world has already moved to using more advanced cards, like the ones in Europe that require a PIN and use a chip instead of a magnetic strip.
Even with the innovations, no one knows how long plastic cards will reign. They may eventually be rendered obsolete by technologies that will transform consumers’ cellphones into virtual wallets, and a large number of companies, including Visa, MasterCard and Apple, are developing these. But several card analysts say it will probably take a while before any one technology standard becomes available across all phones and merchants.
In the meantime, banks are hedging their bets. Citi’s cards — known as 2G, for second generation — are no thicker and just as flexible as conventional plastic, but they contain a battery with a four-year life, an embedded chip and, of course, the buttons, which took nearly a year and hundreds of thousands of dollars to develop.
“It’s a big deal,” said Megan Bramlette, director of research for the Auriemma Consulting Group, a payments industry consultant in New York. “If once a month a consumer can fill up their gas tank for free, and they don’t have to do anything except push a button before they swipe their card, that’s cool. And that is something that I think will resonate with consumers.”
Dynamics, the company that developed the minicomputers-in-a-card, said that it had more cards in the works and that its bank partners would introduce its electronic cards on their own schedules.
Citi’s cards will be tested by a select group of cardholders beginning in November, though some Citi employees have been testing the cards since May. The pilot program will expand as Citi incorporates user feedback. The bank plans to make the cards available on a broader scale in mid to late 2011.
The 2G card will be offered on two of Citi’s existing rewards cards, including the Citi Dividend Platinum Select MasterCard, whose holders earn 1 percent cash back on all purchases and 2 percent on categories that change seasonally, as well as the Citi PremierPass Elite, whose holders generally earn one point for every dollar spent and mile flown.
To pay with points, users press the request-rewards button before swiping the card; the button marked regular credit allows a straight credit transaction.
Pressing the buttons changes the data imprinted on the magnetic stripe, so it still works like conventional plastic and can be swiped through existing card terminals nationwide. At least for now, cardholders need to know how many points they have, and if they don’t have enough, the transaction will be processed using credit.
“We’ve developed a proprietary technology that will allow Citi to do the conversion when the transaction comes through,” said Terry O’Neil, executive vice president of Citi Cards. “All they need to do is push that request-rewards button and we take care of everything else for them. They leave the store with the merchandise they selected.”
The cards are going to be most valuable to bigger spenders. The average cardholder spends about $6,300 a year, according to The Nilson Report, and, on a typical rewards card, users may earn one point for each dollar spent. At one penny a point, that translates into about $63 in annual rewards. Still, that is enough for a free cup or two of coffee each month.
Citi may yet change its rewards equation or decide that redeeming points at certain locations will yield better returns. “What we want is to get feedback directly from the customers, which will influence how we will roll the cards out,” Mr. O’Neil said. “We want to dig a little deeper on what the right redemption model is.”
American Express recently made its Membership Rewards points redeemable at Amazon.com, though they are not worth much: one point is equal to seven-tenths of penny that can be spent at the online retailer.
“Creating greater flexibility on how you redeem rewards points has been percolating in the industry for two or three years now,” said David Robertson, publisher of The Nilson Report, an industry newsletter. “The novelty of being first to market is a plus for Citi. But I anticipate that other issuers will have the technology as well.”
The technology that makes the new Citi card possible was created by Jeffrey D. Mullen, the 32-year-old chief executive of Dynamics, an electrical engineer and former patent lawyer who started the company in 2007 while he was working on his master’s degree in business at Carnegie Mellon. Months after he graduated, he secured $5.7 million in venture capital financing from Adams Capital Management. (Citi initially declined to issue him one of the electronic cards he had created, because he had used his entire credit line to start the company. He ultimately received one.)
“We are just scratching the surface with what these cards can do with these initial products,” said Mr. Mullen, whose innovation won business plan competitions, as well as $1 million in free advertising at a recent technology conference. “We are trying to be the innovation arm of an industry that has never had one. With this card, which is the baby-step card, you need to acclimate the consumer.”
Another Dynamics card would allow cardholders to have multiple accounts on one card, like a corporate and personal card. The company introduced another card this week, which he said would reduce fraud associated with “skimming,” when thieves steal your account number using a small scanner, but not your physical card.
All the cards, which are being produced by laptop and cellphone manufacturers, were tested by robots to make sure they would hold up for thousands of swipes. They can also withstand the washing machine. Clearly, they cost more to develop than conventional plastic; Mr. Mullen declined to provide specifics. Citi said it had not yet determined whether customers would be required to pay for the cards once officially introduced.
“The U.S. is the last bastion of the magnetic-stripe technology and shows no near-term desire to switch to chip technology,” said Mr. Robertson of The Nilson Report. “So what Dynamics is doing is extending the life of the mag stripe by adding a number of features that you find on chip cards.”
This story originally appeared in the The New York Times
Wednesday, October 27, 2010
Technion University researchers have come up with a new and simple blood test that may be able to detect cancer.
Professor Ari Admon, who led the research team, said its technique may “provide a large enough source of information to enable personalized treatment for the disease.” The researchers’ study was published this week in the Proceedings of the National Academy of Sciences.
Current blood tests for cancer detect where cancer cells are in the blood, but the technique developed by Prof. Admon’s team has come up with a test that can identify different types of cancers and other diseases.
The scientists’ report on a new source of blood-derived biomarkers may help doctors determine whether a recovering cancer patient has relapsed, and may someday aid in the early detection of a variety of cancers. The technique may also “provide a large enough source of information to enable personalized treatment for the disease,” Prof. Admon said.
The biomarkers consist of immune molecules called HLA and their cargo of peptides, which are degraded bits of protein that they haul to the surface of tumor cells. Since cancer cells release larger amounts of the HLA molecules, “we may be able to diagnose different disease, including cancer, by analyzing the repertoires of peptides carried by these soluble HLA,” he explained.
So far, the method has been tested in blood from patients with multiple myeloma and leukemia, as well as healthy people and cancer cells grown in the lab. If their process holds up under further intensive testing, the researchers say, it could form “a foundation for development of a simple and universal blood-based cancer diagnosis.”
Prof. Admon said, “We aim at early detection, leading to a better prognosis, relapse detection, and better information for personalized treatment. All of these are long term goals. We think that relapse detection may be the first achievable goal.”
Some researchers have suggested that the flood of HLA-peptide complexes released by tumor cells helps the cancer evade immune detection, by “blocking and confusing the anti-cancer T-cells,” Admon said.
There are only a handful of peptides known to be associated with particular types of cancer, so the new technique can not be used yet to determine whether a person has a certain type of cancer. However, researchers could study the soluble HLA-peptide repertoires to learn more about the proteins that each kind of tumor produces.
HLA come in a wide variety of their own, and differ between individuals. The different subtypes of HLA differ from each other in the repertoires of peptides they carry and present. By analyzing these differences in “many people of diverse ethnic origin,” the Technion professor said, “we will be able to come up with better diagnoses for larger parts of the human population.”
Someday, a person’s “healthy” HLA profile may join blood pressure and cholesterol readings as part of the person’s medical record, the researchers suggest in their PNAS report. Any changes in the HLA profile, they note, could be used for “detecting the telltale changes associated with the onset of diseases.”
Friday, October 22, 2010
Square, the venture from CEO Jack Dorsey, devised a tiny plug-in that turns digital devices into a credit card reader. Square opens its virtual doors for business Friday.
The Square, a free plastic device slightly smaller than a quarter, plugs into iPhones, iPads, iPod Touches and Androids. With a free downloaded application, it lets small businesses and consumers process credit card transactions. Merchants are charged 2.75% of the purchase price, plus 15 cents to swipe a credit card; no contract, set-up fee or monthly charge.
"In America, people do not leave their home without keys, their cellphone and their wallet, but they rarely carry cash. And debit cards can't be used everywhere," Dorsey says.
About 50,000 devices were shipped to small businesses and consumers nationwide — ranging from coffee shops and pizza deliverers to doctors and piano teachers — while the service was tested.
Dorsey, 33, who co-founded Square with Jim McKelvey, a local glass artist, expects his company to hit $1 billion in daily transactions by June 2011.
The year-old firm, whose motto is "zero to $60 in 10 seconds," gets its name from the expression "all squared" and is backed by venture-capital firm Khosla Ventures and angel investors.
Square's foray is a new wrinkle in an estimated $120 million mobile-payment market. Several tech companies are taking a mass-market approach to democratizing payments via smartphones — including PayPal and GoPayment, an application by software maker Intuit.
But there are plenty of opportunities for start-ups and established companies, analysts say. "The market is so nascent and fragmented, new technologies that pop up in it are expanding the reach of the market," says Morgan Stanley analyst Adam Frisch.
Doug Povich, co-owner of Red Hook Lobster Pound DC, a food truck in Washington, D.C., said a point-of-sales system would have cost him up to $10,000. Instead, he bought an iPad and loaded it with Square. "It's extremely simple to use."
Wednesday, October 20, 2010
China Plans to Withhold More of Rare Earth Elements: US In Deep Trouble Read more: China Plans to Withhold More of Rare Earth Elements: US In Deep Tr
Export levels in 2010 totaled about 30,300 tons, down 40% from 2009 exports. China reportedly exported all but about 8,000 tons in the first half of 2010.
The New York Times is reporting that China has stopped shipments of some REEs bound for the US and Europe. The halt to US and European shipments is presumably a Chinese reaction to a US announcement that it would investigate whether China was violating international trade rules in the way it supports its clean-tech industries.
China is expected to increase REE production to about 100,000 tons in 2011. A 30% cut in exports would reduce the amount of REEs available to the rest of the world to about 20,000 tons.
The only other countries currently producing REEs are India and South Africa, but a very small amount. Molycorp Inc. (NYSE:MCP) plans to re-open the Mountain Pass mine in California next year and plans production of 20,000 tons of REEs when the mine is fully operational in 2012. The mine was until the 1980s the world’s largest producer of REEs.
The 17 REEs, with names like yttrium, neodymium, ytterbium, and cerium, are used in a variety of high-tech products. Examples of products that use REEs include electric vehicles, compact fluorescent lighting, wind turbines, MP3 players, cell phones, disk drives, and a near endless list of national defense applications.
The Chinese government has said that it intends to retain the bulk of its REE production, and use the minerals to move up the value chain by manufacturing products using the REEs. One likely suspect is wind turbines, which use neodymium in the magnets of new direct-drive turbines.
Other REE mines could be opened or re-opened in Australia and Canada, but Molycorp’s mine is likely to be the first. There is even a potential mine site in Nebraska.
If China goes through with its plans to reduce exports of REEs even further, tensions between China and Japan and the US are sure to increase in inverse proportion.
Tuesday, October 19, 2010
"Part of the reason that our politics seems so tough right now," he recently told a group of Democratic donors in Massachusetts, "and facts and science and argument [do] not seem to be winning the day all the time is because we're hard-wired not to always think clearly when we're scared. And the country is scared."
Let's unpack these remarks.
Obama clearly believes that his brand of politics represents "facts and science and argument." His opponents, in disturbing contrast, are using the more fearful, primitive portion of their brains. Obama views himself as the neocortical leader -- the defender, not just of the stimulus package and health-care reform but also of cognitive reasoning. His critics rely on their lizard brains -- the location of reptilian ritual and aggression. Some, presumably Democrats, rise above their evolutionary hard-wiring in times of social stress; others, sadly, do not.
Though there is plenty of competition, these are some of the most arrogant words ever uttered by an American president.
The neocortical presidency destroys the possibility of political dialogue. What could Obama possibly learn from voters who are embittered, confused and dominated by subconscious evolutionary fears? They have nothing to teach, nothing to offer to the superior mind. Instead of engaging in debate, Obama resorts to reductionism, explaining his opponents away.
It is ironic that the great defender of "science" should be in the thrall of pseudoscience. Human beings under stress are not hard-wired for stupidity, which would be a distinct evolutionary disadvantage. The calculation of risk and a preference for proven practices are the conservative contributions to the survival of the species. Whatever neuroscience may explain about political behavior, it does not mean that the fears of massive debt and intrusive government are irrational.
There have been several recent attempts to explain Obama's worldview as the result of his post-colonial father or his early socialist mentors -- Gnostic attempts to produce the hidden key that unlocks the man. The reality is simpler. In April 2008, Obama described small-town voters to wealthy donors in San Francisco: "It's not surprising, then, they get bitter, they cling to guns or religion or antipathy to people who aren't like them." Now, to wealthy donors in Massachusetts, opponents are "hard-wired not to always think clearly." Interpreting Obama does not require psychoanalysis or the reading of mystic Chicago runes. He is an intellectual snob.
Not that there is anything wrong with this. Some of my best friends are intellectual snobs. But they don't make very good politicians. Somehow, an aristocrat such as Franklin Roosevelt was able to convince millions of average Americans that he was firmly on their side. But the old social aristocracy could have been taught a thing or two about snobbery by the intellectual upper class -- conditioned to believe their superiority is founded not on wealth or lineage but on "facts and science and argument."
What must Democrats trying to compete in Pennsylvania or Ohio think when they hear Obama make arguments such as these? Do they realize the tremendous mistake they have made, tying their political fortunes to a leader who makes Michael Dukakis, Al Gore and John Kerry look like prairie populists in comparison?
This is not just a political problem; it is a governing challenge. There is fear out there in America -- not because of the lizard brain but because of objective economic conditions. And a reactionary populism can be disturbing when it targets minorities, immigrants and intellectuals. But intellectual disdain among elites feeds this destructive populism rather than directing or defusing it. Obama is helping to cause what he criticizes.
It is among the nobler callings of a leader to understand public fears and then place them in the context of national commitments. Yes, the American dream is fragile, but it won't be recovered by abandoning American ideals. Yes, the borders must be controlled and terrorism is a mortal threat -- but we can't give in to stereotyping and hatred.
One response to social stress doesn't help at all: telling people their fears result from primitive irrationality. Obama may think that many of his fellow citizens can't reason. But they can still vote.
Friday, October 15, 2010
Russian-Venezuelan deal recoups $800 m lost on cancelled missile sale to Iran
Russia appears ready to sell Venezuela the same five advanced S-300PMU-1 air defense missile battalions it withheld from Iran because of international sanctions. debkafile's military sources report Venezuela's ruler Hugo Chavez, offered to buy them when he met Russian President Dmitry Medvedev in Moscow Thursday, Oct. 14. Israel immediately turned to Washington to try and block the transaction. Clearly, the highly-sophisticated interceptors are bound for their original client, Iran, through its good friend Chavez.
This time, the deal will be much harder to stop.
Our military sources stress that Iran needs the S-300 as the key to the effective defense of its nuclear and strategic sites against air or missile attack - even by cruise missiles - and to raising the risk to the assailants of heavy casualties. That said, the Israeli Air Force has spent the last two years training intensively in tactics for countering those very Russian interceptors. In September, Israel and Greece carried out joint practice strikes against the S-300 missiles Athens had purchased from Moscow.
Chavez began his Moscow visit by voicing interest in "buying different types of Russian-made air defense systems to create a multilayered air defense network."
The day after his offer, Russia cautiously tested the water in Washington to find how the Obama administration reacted to the prospect of ballistic missile interceptors being deployed not only in Iran but in the United States' Latin American backyard.
Igor Korotchenko, head of a Moscow think tank on the international arms trade, revealed: "Russia is looking for a buyer for five battalions of S-300PMU-1 defense systems ordered by Iran and Venezuela could become such a buyer."
He knew enough about the deal to disclose that Caracas was prepared to pay the asking price of $800 million in cash to expedite the deal although it asked Moscow for several loans to cover previous arms transactions, including the recent $2.2 billion purchase of 92 Russian T-72 tanks and the Smerch multiple launch rocket systems.
Our sources add Iran rather than Venezuela is in a hurry to get hold of the missiles and install them around its most vulnerable sites. There should be no delay once they reach Tehran because special units of the Iranian Revolutionary Guards had finished training on the weapon's operation in Russia.
debkafile's sources note that hardly a month has gone by since Sept. 22 when Medvedev publicly announced the S-300 missile system sale to Iran was cancelled - to wide acclaim from the US and Israeli media. Moscow lost no time in finding a neat stratagem for bypassing the UN sanctions barring arms sales to Iran with impunity. Even the Russian offer to return the $166.8 million Iran advanced for the deal can be covered by Caracas as intermediate customer.
A site (gone viral) that allows homeowners to request to find out who actually owns their mortgage note:
“When Wall Street banks securitized, packaged, sold, and resold mortgages, they created a system where it is often impossible to figure out who actually owns mortgage notes and therefore has the authority to foreclose on properties. But the big banks are getting tangled up in their own web. Recent events have exposed a handful of banks that are throwing families out of their homes even though they don’t have the mortgage note that proves they actually have a legal right to do so. There have been instances of two banks trying to foreclose on the same home, and in at least two cases, of a bank trying to foreclose on a house where the homeowner had never even taken out a mortgage with anyone in the first place.”
click for site
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Category: Credit, Legal, Real Estate.
For the most part, Groupon's deals feature small businesses, from restaurants and spas to specialty stores and dance schools. There's no question it's a hit with customers, who get to try out a product or service for half or more off the regular price. Because a deal can be activated only if a certain number of people sign up, shoppers are encouraged to forward the offer to friends and family -- increasing Groupon's reach.
Groupon definitely pays off for bargain hunters. But is it a good deal for businesses? In many cases, yes. Groupon says its own surveys show 95% of its business partners would sign up again. For new, not-yet-established businesses, it's an easy way to get exposure to a huge network of potential customers.
But a recent independent study found there are potential downsides as well. Utpal Dholakia, associate professor of marketing at Rice University's Jesse H. Jones Graduate School of Business, surveyed 150 businesses that had signed up with Groupon in 19 different cities. About 40% said they would not do it again.
"The businesses seemed to fall into two camps," he says. "Some were absolutely thrilled with the success of their promotion. Others had a terrible experience." Groupon promotions were profitable for about two-thirds of respondents -- one-third actually lost money on their deal.
So what makes for a successful social-promotion effort? "For the most part, it comes down to expectations and preparation," Dholakia says. Owners who lay the groundwork for a rush of customers do well, while those who don't prepare their employees adequately can face a backlash.
Dholakia decided to study the Groupon phenomenon after a disappointing experience with a restaurant he visited regularly in Houston. While getting a table there was usually no problem, he was surprised to find an hour wait one night; he soon learned the restaurant had been featured on Groupon, bringing in a flood of first-time diners.
"The service was terrible, the waitstaff looked unhappy and they were out of the specials," Dholakia says. The experience left him wondering how many other full-paying regulars were being turned off by the crowd of bargain-hunters.
Iranian military installation was struck by a triple blast Tues. Oct. 12 the day before Iranian president Mahmoud Ahmadinejad arrived in Lebanon. debkafile's military and intelligence sources report the site held most of the Shehab-3 medium-range missile launchers Iran had stocked for striking US forces in Iraq and Israel in the event of war - some set to deliver triple warheads (tri-conic nosecones).
The 18 soldiers officially reported killed in the blasts and 14 injured belonged to the Revolutionary Guards (IRGC) main missile arm, the Al-Hadid Brigades.
The Imam Ali Base where the explosion occurred is situated in lofty Zagros mountain country near the town of Khorramabad in the western Iranian province of Lorestan. This site was selected for an altitude which eases precise targeting and the difficulty of reaching it for air or ground attack. It lies 400 kilometers from Baghdad and primary American bases in central Iraq and 1,250 kilometers from Tel Aviv and central Israel. Both are well within the Shehab-3 missile's 1,800-2,500-kilometer operational range.
Our Iranian sources report that Tehran spent hundreds of millions to build one of the largest subterranean missile launching facilities of its kind in the Middle East or Europe. Burrowed under the Imam Ali Base is a whole network of wide tunnels deep underground. Somehow, a mysterious hand rigged three blasts in quick succession deep inside those tunnels, destroying a large number of launchers and causing enough damage to render the facility unfit for use.
In its official statement on the incident, Tehran denied it was the result of "a terrorist attack" and claimed the explosion "was caused by a nearby fire that spread to the munitions storage area of the base." In the same way, the regime went to great lengths to cover up the ravages wrought to their nuclear and military control systems by the Stuxnet virus - which is still at work.
In actual fact, debkafile's military sources report, Iran's missile arsenal and the Revolutionary Guards have also suffered a devastating blow. Worst of all, all their experts are a loss to account for the assailants' ability to penetrate one of Iran's most closely guarded bases and reach deep underground to blow up the missile launchers.
The number of casualties is believed to be greater than the figure given out by Tehran.
The soldiers' funerals took place Thursday, Oct. 14, as the same time as Ahmadinejad declared in South Lebanon that Israel was destined to "disappear." A few later, he ended his contentious two-day visit to Lebanon.
This week, Aviation Week discovered that the new intermediate-range BM-25 Musudan ballistic missile exhibited at the North Korean military parade Sunday Oct. 10 - at which Kim Jong-un also paraded his son and heir - bore a strong resemblance to the Iranian Shehab-3.
It is therefore possible that the explosions at the IRGC base in Lorestan Tuesday also sabotaged secret models of the Iran's latest road-mobile, liquid-fuel version of the Shehab-3 ballistic missile.
Tuesday, October 12, 2010
For the past couple of years, GM has insisted that the powertrain of its breakthrough car wasn't like a plug-in hybrid. The auxiliary gas engine in the car never directly drove the wheels, but only ran as needed to recharge the car's battery, which drives the wheels. That's why all, including Drive On, have called it an extended-range electric instead of a plug-in.
ALSO ON DRIVE ON: Test Drive's James R. Healey blows off the Volt tiff, but says the car is too pricey.
But with an embargo on driving impressions on the Volt having lifted, several say that the car's wheels are in effect -- if not directly-- driven by the engine when speeds exceed 70 miles per hour and the battery is depleted. Edmunds.com's Inside Line wrote a piece headlined "GM lied: Chevy Volt not a true EV." Popular Mechanics and Motor Trend both question GM's 230 mile-a-gallon claim, saying they received real-world mileage from the 20s to the 40s. Writes Ray Wert, editor-in-chief of Jalopnik.com:
It's enough for us to wonder why GM pushed the 230-mpg number in the first place and why they didn't just come clean on the powertrain this summer when asked a straightforward question.
As a result, GM has posted a full-throated defense on its media website. It says:
The engineering of the Voltec electric drive unit is very sophisticated. As part of the media launch, we're diving deeper into how the system works than we have in the past. We did not share all the details until now because the information was competitive and we awaited patent approvals. Following a small number of inaccurate media reports, we want to clarify a few points.
The Volt has an innovative electric drive system that can deliver power in both pure electric and extended range driving. The Voltec electric drive cannot operate without power from the electric motors. If the traction motor is disabled, the range-extending internal combustion engine cannot drive the vehicle by itself.
There is no direct mechanical connection (fixed gear ratio) between the Volt's extended-range 1.4L engine and the drive wheels. In extended-range driving, the engine generates power that is fed through the drive unit and is balanced by the generator and traction motor. The resulting power flow provides a 10 to 15 percent improvement in highway fuel economy.
Our overriding objective in developing the Voltec electric drive was to deliver the most efficient, yet fun-to-drive experience in both pure electric and extended-range driving. We think our unique technology lives up to its most important promise: delivering our customers with the only EV that can be their primary vehicle, with EV operation for normal daily driving, and extended range driving for weekends, holidays, and longer trips – all with no range anxiety.
A crucial (fourth) general strike is unfolding in France today against the pensions reform. I got many emails inquiring on how things looked like on the ground down here. In short:
1. Early to tell, but at this stage, mobilisation sounds quite significant (already 500 000 in the streets at mid-day). 3 million will be, once again, the magic number.
2. A key new dimension is the participation of high schools, which increases the risk of escalation. Transportation and refineries are also significantly hit.
3. Beyond the reform itself, discontent is mounting because the government is perceived to be "forcing" the reform through the Parliament (the debate was cut short at the Assembly, and the vote on key points re. retiring age. - on Monday - was accelerated at the Senate, where the debate is still expected to last until the week-end).
4. A few "grèves reconductibles" (renewed strikes) have already been announced.
5. The government already restated it wouldn't make any further concessions...
Elsewhere, the Telegraph just released the following update:
In the fourth such protest in a little over a month, unions estimated that 3.5 million people had taken to the streets against President Nicolas Sarkozy's pension bill – a 20 per cent rise from previous marches and what they called an "exceptional" figure.
Even the interior ministry conceded that turnout had reached a new high, although gave a more conservative figure of 1,230,000, compared to 997,000 on September 23.
In a symbolic act, the Eiffel Tower was closed due to striking staff. The landmark was last closed due to industrial action in April.
"Sarko, you're screwed, the young are on the streets," chanted students in the southwestern town of Toulouse, as they joined protests en masse for the first time. Secondary school pupils also took part with classes disrupted in around 400 schools.
French leaders have been notoriously wary of student protests ever since they sparked a two-week general strike in May 1968 that crippled the country and the government of President Charles de Gaulle.
In 2006, students managed to force the government to withdraw a plan to introduce more flexible short-term work contracts for the young, after paralysing the country.
Who could have possibly anticipated that removing trillions in credit money from the system, and the resulting austerity would have such a negative impact on the general feeling of (dis)content? Luckily, Europe is a fast becoming a great dress rehearsal for what will eventually happen in the soon-to-be-centrally-planned US, when the massively overdelayed domestic austerity episode is finally forced to come to the home of the not so brave and the land of the inkjets.
At this point I ask my friend: Is the robbery good or bad for you economically? “Bad,” they invariable answer, for “I now have less money for groceries.” Then I ask them: Is my robbing you good or bad for the grocer? “Bad,” they again answer, for “now he, too, has less money for his family.” Next question: Was it morally right or wrong for me to rob you? “Wrong, of course,” they answer, for “the money did not belong to you.”
Then, the coup de grace: What if I planned to give your money to someone else, I ask, someone whom I felt was more worthy or deserving of your money?
At this point, many liberals begin to suspect they have been led into a rhetorical cul de sac, and cognitive dissonance sets in as they realize that an honest answer necessitated by their answer to the previous questions will conflict with their stated political principles and past voting habits. Some will nevertheless admit, “Well, it isn’t really for you to decide who gets my money….”
An alternate hypothetical: Ask any liberal friend whether it would be morally sound or economically advantageous for an individual to rack up mountains of debt, until the gap between what is taken in and what goes out can never be rebalanced, with the fiscal burden passed onto their children and their children’s children, who likewise have little hope of living debt free.
An honest answer is that such behavior, like the hypothetical robbery, is both morally wrong and economically deleterious. Yet the same liberals who can see the fault in such behaviors for individuals support exactly those behaviors on the part of governments; confiscatory taxation and unsustainable deficits and debt are, after all, the inevitable consequences of liberal governance.
It is not hard to understand why. Liberals rarely see individuals except in the abstract aggregate, and so often fail to see the trees for the forest. Some are cognizant of this blind spot in their liberal world view: Margaret Carlson recently admitted, by way of explaining the president’s inability to connect with individual voters going through tough economic times:
It’s a long time now since Obama was a community organizer. Even then, he might have been more comfortable dealing with communities than with individuals. Democrats are best with groups. If I break down on the side of the road, I hope a Republican stops — he’ll fix my flat and offer me a drink. A Democrat will get busy forming a Committee to Protect Women Who Own Vulnerable Cars.
Quite. And it is precisely this feature of liberalism that has led to the economic and spiritual wasteland it leaves whenever and wherever it is put at the controls of government. For the truth is there are no such thing as “groups” — there are only individuals. To say, for example, that this or that policy is good for blacks, or for women, is to overlook the vast differences that exist between individuals — differences in needs, wants, ambitions, life-experiences, temperament, etc., even if they may share skin color or gender in common.
To smooth out such differences, which are in fact the manifestations of the uniqueness of each soul, is to suffer from a tragic myopia that can only lead to destruction — of rights, of property. After all, these are things that “individuals” possess. To see only groups is to necessarily dehumanize; to dehumanize in theory is to oppress in practice.
On a practical level, liberal policies don’t work — conservatives have long known and decried this. Take the infamous “War on Poverty,” instigated by that very liberal president, Lyndon Johnson, in his 1964 State of the Union address. In the name of waging his “moral equivalency of war,” Johnson ushered in a golden age of government social spending (read: confiscation and redistribution of wealth) of a size and scope unseen since the New Deal heyday. And many of the programs created under the War on Poverty umbrella are still with us today.
And where are we now, 46 years later? According to the U.S. Census Bureau, these days one in seven — or around 44 million — Americans live below the poverty line. As the Washington Post prosaically put it, “That is the largest number of people since the census began tracking poverty 51 years ago.” Twenty-five years ago, President Reagan liked to tweak his liberal critics by saying, “some years ago, the federal government declared war on poverty, and poverty won.” And yes, in 2010, it’s more true than ever: more people are poor today than before Johnson started his war.
The technical reason for the failure of Johnson’s War on Poverty, of course, pace Keynes, is that government spending — even if done with the best of intentions — stifles economic growth, which is the only thing that has ever lifted substantial numbers of people out of poverty. When Johnson robbed a taxpayer, who might have been on his way to buy groceries for his family, and gave that money to someone else, whatever temporary benefit was derived from those funds by the third party did not make up for the fact that both the taxpayer and the grocer were now poorer (the economic hardship has not vanished; it has just been “redistributed”). Nor does it disguise the fact that such robbery was — and is — ethically reprehensible.
And that is the rub: Liberal policies fail practically because they are morally defective — they discourage the recognition of individuals qua individuals, and therefore encourage the adoption of policies that hurt individuals. One might say in fact that it is the moral bankruptcy of liberal ideology that leads directly to the economic bankruptcy of states and nations that liberals govern.
Conservatives who relish pointing out the disastrous track record of liberal policies ought to take greater pains to point out the moral dimensions of the debate. It has long been widely observed that Americans are a practical people; less often noted however, save by some astute commentators like Tocqueville, is that Americans have also always been a deeply moral people, and have always welcomed discussions of ethics in public policy. Many Americans could, I think, be made to see the tremendous moral lapses that lay in the very foundations of liberal thought — if conservatives are wise and capable enough to press the case.
When you see a person, not as an individual, who might have worked for and earned whatever money they have, but as a mere cog in a group (“the rich” for example) then it is easy to say, as Obama did, “I do think at a certain point you’ve made enough money.” And if you see a person not as an individual who might have made some bad choices and is perfectly responsible for the consequences, but as a member of a group (the “disadvantaged” for example), then you have all the justification you need to rob from the one and give to the other, and you will have lost the capacity to see the injustice you have done to both, or care about the economic and social wreckage that follows.
Nearly half a century of the welfare state has made us poorer both individually and as a nation — our national debt now officially tops $13.4 trillion, or 92 percent of GDP, though the real number, according to some analysts who accuse the U.S. government of hiding how deep it’s really in the hole, could range as a high as $60-200 trillion. This despicable and debased condition is a direct result of the moral exhaustion of the modern liberal order, which treats humans as mere collections of similar skins and genitals — not as people.
Matt Patterson is senior editor at the Capital Research Center and contributor to Proud to be Right: Voices of the Next Conservative Generation. His email is firstname.lastname@example.org.
Monday, October 11, 2010
A review of insurance-claims data shows that so-called abandonment—when a patient refuses to purchase or pick up a prescription that was filled and packaged by a pharmacist—was up 55% in the second quarter of this year, compared with four years earlier.
The phenomenon coincides with rising co-payments for many drugs and increasing enrollment in high-deductible insurance plans that require patients to pay hundreds or thousands of dollars out of pocket before insurance kicks in.
Patients are deserting prescriptions for the most expensive drugs most often, according to the review by Wolters Kluwer Pharma Solutions, a health-care data company. For instance, nearly one in 10 new prescriptions for brand-name drugs were abandoned by people with commercial health plans in the quarter, up 88% from four years earlier, when the data were first tracked and before the recession began. Abandonment of generic drugs was higher, too, according to the data.
The trend is driven in part by higher out-of-pocket costs for covered medicines, pharmacists and Wolters Kluwer officials say. The average co-pays for brand-name drugs such as cholesterol fighter Lipitor rose to $28 a prescription this year, an 87% jump from 2000, according to the Kaiser Family Foundation. Some co-pays can be as high as $100.
"More and more people are questioning spending that much money and whether it's going to make a difference, and rationalizing it's OK" to forgo their prescriptions, said Anthony Coniglio of OPUS Pharma Consulting, who advises drug makers on helping patients to get and take their medicines. Doctors worry patients will suffer serious and costly consequences if they don't take medicines they need. Also, the failure to pick up prescriptions is likely to put somewhat of a dent in drug-company revenue.
The abandonment rates come from an analysis of 80 million claims that pharmacies make each month for payment, about 40% of the total market. Wolters Kluwer collects the data from more than 24,000 independent and chain pharmacies. Drug makers use abandonment statistics to assess the reasons for lost sales.
Prescription-drug use had long been considered immune from financial pressures, because people get sick regardless of the economy's ups and downs. But growing evidence aside from the abandonment data suggests price is increasingly a factor.
At City Drug Co. in Huntingdon, Tenn., shelves behind the counter are crowded with unclaimed prescriptions, said owner Tim Tucker. The pharmacy puts back more than 100 abandoned prescriptions each week, about a quarter of those its pharmacists fill, up from seven a week just a half-year ago, Mr. Tucker said.
Many are for drugs crucial to people's health, such as antibiotics like Levaquin, and Nexium for bleeding ulcers, but customers balk when told their share of the price, Mr. Tucker said.
"They just say, 'I can't afford it. I can't get it.' And they turn around and walk away," he said.
Mark Spiers, chief executive of Wolters Kluwer, points to efforts by employers and health plans to control fast-growing health-care spending by shifting more costs to consumers. The out-of-pocket costs, combined with people's sense they can't afford it, is causing some to make "real consumption choices about prescriptions versus other goods for their home," Mr. Spiers said.
High-deductible health plans, with their lower premiums, are another factor. Nearly three times as many people enrolled in such plans in 2010 compared with four years earlier, the Kaiser Family Foundation found.
Among them: Sharalee Brockway, a bank teller in Great Falls, Mont. After switching employers in April, Ms. Brockway said, she chose a high-deductible plan for herself and her 12-year-old son because it took less out of her paycheck. The next month, when she went to pick up asthma medicine for her son and an antidepressant for herself, the pharmacist told her it would cost more than $335.
"I said, 'I can't afford that,' " recalled Ms. Brockway, who left the prescriptions at the pharmacy. She returned later and bought a less-expensive prescription for her son. "I didn't want him to not have it, because [the asthma] affects him so much."
Since then, Ms. Brockway arranged to get help covering drug expenses through the HealthWell Foundation, which helps low-income patients with insurance.
The foundation, which receives funding from pharmaceutical companies, among other donors, received 55,135 applications from people seeking help with co-pays in the first six months of this year, up 23% from the same period last year, it said.
Volume is also increasing at drug makers' assistance programs. Companies that help patients with co-pays typically pay a quarter to half of the cost, said Mark Calabrese, who helps set up and run the programs. His firm, marketing consultant Cegedim Relationship Management, is processing more than 500,000 claims for discounts a month, up from 300,000 at the end of last year.
Drug makers declined to comment.
Anne Peters, director of the University of Southern California's Clinical Diabetes Program, is already seeing an impact in some patients. They lost control of their blood-sugar levels after either abandoning Lantus insulin prescriptions or spacing out its use because of the expense, she said.
In response, Dr. Peters is prescribing a less-expensive insulin sold at Wal-Mart Stores Inc. A 10ml vial of Lantus costs $111.88 on drugstore.com, while Wal-Mart charges $24.88 for the same size vial of Humulin ReliOn insulin.
"It's not necessarily the insulin I would have chosen for them—because it's not long-acting—but it's much less expensive," she said. If blood-sugar levels stay high too long, patients can experience serious and costly medical problems, such as kidney damage, loss of eyesight and slow-healing foot wounds that can require amputation.
The investigation of the 2005 assassination of former Lebanese prime minister Rafik Hariri, the father of the current premier, could turn out to be the spark that sets off the tinderbox. A Lebanon-based website has in recent days posted an interview with an arms dealer who lives in Beirut and reports that there has been a rise in the sale of light firearms. He says the sales have spiked as a result of a clash in a Beirut neighborhood, Burj Abu Haidar, between an extremist pro-Syria Sunni group and Hezbollah militants; four people were killed in the skirmish (one was a Hezbollah commander, who died at the start of the fighting ).
In the meantime, Iranian President Mahmoud Ahmadinejad's visit to Lebanon this week has opponents of Hezbollah worried. The visit, perceived as a blunt statement about Iran's influence over Lebanon, has stirred concerns over how incendiary Ahmadinejad might be when he visits the southern part of the country and tours sites near Israel's border.
According to Beirut residents, the Hariri assassination casts a long, ominous shadow over daily life in Lebanon's capital, and has come in recent weeks to dominate public discussions. The release of the next report on the Hariri assassination, prepared by a special international prosecutor, has been deferred, by probably another two months at least.
Lebanon is rife with speculation that the report will lead to indictments against several top Hezbollah figures; many believe that the prosecutor has postponed the document's release as a way of getting more time to build an irrefutable case against these figures. As tensions in the country rise, well-placed Lebanese sources describe the country's mood as "gloomy." Though its scope is difficult to determine, the sources point to a trend that the country has already seen in its war-torn past: Lebanese residents are reportedly leaving the country.
Should the international criminal tribunal hearing the Hariri case cite the names of those implicated in the assassination, it is doubtful that the Lebanese government will arrest them. However, under international law, the UN court is authorized to try defendants in absentia, and in that case, court proceedings against the accused would be broadcast daily on Lebanese television, at least those that aren't controlled by Syria or Hezbollah.
Such trials are likely to exert a tremendous influence over public opinion. Worried about the disclosure of its apparent involvement in the killing, Hezbollah will take steps to undermine any such trial process. At this stage, Hezbollah insists that the special prosecutor is relying on false testimony, and it is also trying to put an end to Lebanon's funding of the court investigation (it is underwriting 49 percent of the costs ). Ten government ministers back Hezbollah's efforts to cut off the money supply; all it needs to bring an end to the funding is the support of one more minister.
Presumably, the possibility of a widely covered prosecution of accused Hezbollah operatives has the organization's leader, Sheikh Hassan Nasrallah, nervous. This weekend Nasrallah presided over a ceremony marking the end of a project to plant 1 million trees across the country; Nasrallah's participation was seen as an effort to reinforce his credibility as a "Lebanese" patriot.
Since assuming control of Hezbollah in 1992, Nasrallah has pressured the organization to be less isolationist and more Lebanese. He realizes that if Hezbollah operatives are convicted for involvement in the Hariri killing, that would damage the efforts to brand Hezbollah as a patriotic Lebanese movement. Should the damage seem irreparable, Nasrallah's strategy of attaining power in the country by means of the ballot box would be rendered futile.
Syria has been working with Hezbollah to oppose the international investigation of the Hariri assassination. Last week, Syrian Foreign Minister Walid Moallem harshly denounced the special investigation, a position that generated tension when Mualem later met with UN Secretary-General Ban Ki-moon. Overall, it appears that Syria has increased its influence in Lebanon over the past six months; the Syrians have been filling in gaps that were left after they were forced to withdraw their troops from Lebanon five years ago, due to pressure that mounted after Hariri's death.
Given that backdrop, experts have been closely monitoring the relationship between Damascus and Tehran; the Syrians are clearly worried about an Iranian attempt to strengthen Tehran's grip over Lebanese affairs. The prime minister's office in Beirut is not the only place where Ahmadinejad's visit is generating tension. The Syrians will also be worriedly watching the Iranian leader's visit, knowing that their dreams of a Greater Syria could be slipping though their fingers once again, this time thanks to the Iranians.
Sunday, October 10, 2010
It also attests to the damaging effect the malworm has had on the program: the Bushehr reactor has faced one delay after another since it was inaugurated in August and other nuclear plants are functioning only partially since the virus first surfaced last July.
Salehi said the West had stepped up efforts "to establish contact with experts" at his agency and "lure them with promises of further study and better jobs abroad." Some nuclear personnel, he said, had access to information about Iran's plans for "foreign purchases and commercial affairs."
He thus accused Iranian personnel of making it possible for Western agencies to use items purchased overseas as Stuxnet carriers. But, the Iranian nuclear chief contended, Iran had countered their efforts and security had been stepped up so as to make it "almost impossible" for secrets to leak out. "The issue of spies existed in the past, but is diminishing day by day," he said
Salehi's words confirmed the forebodings of personnel at Iran's nuclear facilities. They had already suspected that a number of their colleagues taken away for questioning about the worm - and never since seen or heard of at work or at home - were no longer alive.
debkafile adds: The extreme security measures clamped down on the program's employees have further slowed its progress. Nuclear scientists, engineers and technicians are no longer allowed to communicate freely on their work and exchange information before obtaining clearance from intelligence officials.
The dark atmosphere pervading these workplaces has brought some of the nuclear facilities to a standstill.
The Atomic Energy Organization has published booklets which Salehi said will "alert personnel to Western techniques for luring them into espionage." They "spell out precautionary measures to protect information and the life of scientists," he said.
This phrase was taken by the personnel receiving the booklet as a death threat for any who defy its directives.
debkafile's sources find in Salehi's statement further evidence that Tehran is still fighting an uphill battle against the invasive worm and has not yet succeeded in bringing its nuclear facilities back to normal operation.
Saturday, October 9, 2010
The only problem is, they bought the house near the top of the market in 2005, and now find themselves underwater.
They’ve never missed a mortgage payment—Brian and Ilsa are the kind upright, not to say uptight 60-ish white semi-upper-middle-class couple who follow every rule, fill out every form, comply with every norm. In short, they are the backbone of America.
Even after the Global Financial Crisis had seriously hurt their retirement nest egg—and therefore their monthly income—and even fully aware that they would probably not live to see their house regain the value it has lost since they bought it, they kept up the mortgage payments. The idea of them strategically defaulting is as absurd as them sprouting wings.
When HAMP—the Home Affordable Modification Program—was unveiled, they applied, because they qualified: Every single one of the conditions applied to them, so there was no question that they would be approved—at least in theory.
Applying for HAMP was quite a struggle: Go here, go there, talk to this person, that person, et cetera, et cetera, et cetera. “It’s like they didn’t want us to qualify,” Ilsa told me, as she recounted their mind-numbing travails.
It was a months-long struggle—but finally, they were approved for HAMP: Their mortgage period was extended, and the interest rate was lowered. Even though their home was still underwater, and even though they still owed the same principal to their bank, Brian and Ilsa were very happy: Their mortgage payments had gone down by 40%. This was equivalent to about 15% of their retirement income. So of course they were happy.
However, three months later, out of the blue, they got a letter from their bank, Wells Fargo: It said that, after further review, Brian and Ilsa had in fact not qualified for HAMP. Therefore, their mortgage would go back to the old rate. Not only that, they now owed the difference for the three months when they had paid the lowered mortgage—and to add insult to injury, they were assessed a “penalty for non-payment”.
Brian and Ilsa were furious—a fury which soon turned to dour depression: They tried contacting Wells Fargo, to straighten this out. Of course, they were given the run-around once again.
They kept insisting that they qualified—they qualified! But of course, that didn’t help at all—like a football, they were punted around the inner working of the Mortgage Mess, with no answers and no accountability.
Finally, exhausted, Brian and Ilsa sat down, looked at the last letter—which had no signature, and no contact name or number—and wondered what to do.
On television, the news was talking about “robo-signatures” and “foreclosure mills”, and rank illegalities—illegalities which it seemed everyone was getting away with. To top it off, foreclosures have been suspended by the largest of the banks for 90 days—which to Brian and Ilsa meant that people who weren’t paying their mortgages got to live rent free for another quarter, while they were being squeezed out of a stimulus program that had been designed—tailor made—precisely for them.
Brian and Ilsa are salt-of-the-earth people: They put four kids through college, they always paid their taxes. The last time Brian broke the law was in 1998: An illegal U-turn on a suburban street.
“We’ve done everything right, we’ve always paid on time, and this program is supposed to help us,” said Brian. “We follow the rules—but people who bought homes they couldn’t afford get to squat in those McMansions rent free. It would have been smarter if we’d been crooks.”
Now, up to this point, this is just another sob story of the Mortgage Mess—and as sob stories go, up to this point, it’s no big deal.
But here’s where the story gets ominous—here’s where the Jaws soundtrack kicks in:
Brian and Ilsa—the nice upper-middle-class retired couple, who always follow the rules, and never ever break the law—who don’t even cheat on their golf scores—even when they’re playing alone (“Because if you cheat at golf, you’re only cheating yourself”)—have decided to give their bank the middle finger.
They have essentially said, Fuckit.
They haven’t defaulted—not yet. They’re paying the lower mortgage rate. That they’re making payments is because of Brian: He is insisting that they pay something—Ilsa is of the opinion that they should forget about paying the mortgage at all.
“We follow the rules, and look where that’s gotten us?” she says, furious and depressed. “Nowhere. They run us around, like lab rats in a cage. This HAMP business was supposed to help us. I bet the bank went along with the program for three months, so that they could tell the government that they had complied—and when the government got off their backs, they turned around and raised the mortgage back up again!”
“And charged us a penalty,” Brian chimes in. The non-payment penalty was only $84—but it might as well been $84 million, for all the outrage they feel. “A penalty for non-payment!”
Nevertheless, Brian is insisting that they continue paying the mortgage—albeit the lower monthly payment—because he’s still under the atavistic sway of his law-abiding-ness.
But Ilsa is quietly, constantly insisting that they stop paying the mortgage altogether: “Everybody else is doing it—so why shouldn’t we?”
A terrible sentence, when a law-abiding citizen speaks it: Everybody else is doing it—so why don’t we?
I’m like Wayne Gretsky: I don’t concern myself with where the puck has been—I look for where the puck is going to be.
Right now, people are having a little hissy-fit over the robo-signing scandal, and the double-booking scandal (where the same mortgage was signed over to two different bonds), and the little fights between junior tranches and senior tranches and the servicer, in the MBS mess.
But none of that shit is important.
What’s really important is Brian and Ilsa: What’s really important is that law-abiding middle-class citizens are deciding that playing by the rules is nothing but a sucker’s game.
Just like the poker player who’s been fleeced by all the other players, and gets one mean attitude once he finally wakes up to the con? I’m betting that more and more of the solid American middle-class will begin saying what Brian and Ilsa said: Fuckit.
Fuck the rules. Fuck playing the game the banksters want you to play. Fuck being the good citizen. Fuck filling out every form, fuck paying every tax. Fuck the government, fuck the banks who own them. Fuck the free-loaders, living rent-free while we pay. Fuck the legal process, a game which only works if you’ve got the money to pay for the parasite lawyers. Fuck being a chump. Fuck being a stooge. Fuck trying to do the right thing—what good does that get you? What good is coming your way?
When the backbone of a country starts thinking that laws and rules are not worth following, it’s just a hop, skip and a jump to anarchy.
TV has given us the illusion that anarchy is people rioting in the streets, smashing car windows and looting every store in sight. But there’s also the polite, quiet, far deadlier anarchy of the core citizenry—the upright citizenry—throwing in the towel and deciding it’s just not worth it anymore.
If a big enough proportion of the populace—not even a majority, just a largish chunk—decides that it’s just not worth following the rules anymore, then that society’s days are numbered: Not even a police-state with an armed Marine at every corner with Shoot-to-Kill orders can stop such middle-class anarchy.
Brian and Ilsa are such anarchists—grey-haired, well-dressed, golf-loving, well-to-do, exceedingly polite anarchists: But anarchists nevertheless. They are not important, or powerful, or influential: They are average—that’s why they’re so deadly: Their numbers are millions. And they are slowly, painfully coming to the conclusion that it’s just not worth it anymore.
Once enough of these J. Crew Anarchists decide they no longer give a fuck, it’s over for America—because they are America.
The Center for Public Integrity has a story, written by Michael Hudson this past August 6, that shines a light on the issue of perverse incentives of the HAMP program. These perverse incentives came to light because of a whistleblower, a former employee of Fannie Mae, filing a lawsuit. Fannie Mae was so keen on being perceived as a money-maker, after the Federal government bailout, that the aid programs passed by the Congress and signed by the President were turned into profit centers.
The former executive, Caroline Herron, recounts:
“It appeared that Fannie Mae officers were focused on maximizing incentive payments available to Fannie Mae under various federal programs – even if this meant wasting taxpayer money and delaying the implementation of high-priority Treasury programs,” she claims in the lawsuit.
Herron alleges that Fannie Mae officials terminated her $200-an-hour consulting work in January because she raised questions about how it was administering the federal government’s push to help homeowners avoid foreclosure, known as the Home Affordable Modification Program, or HAMP.
Herron further alleged that “trial mods” were implemented regardless of eligibility of applicants, so that Fannie Mae would be eligible for Federal government bonuses.
Ms. Herron’s testimony in fact proves Ilsa’s suspicion that there was a scam at bottom. As Mr. Hudson writes, “Herron charges that Fannie Mae continued in headlong pursuit of ‘trial mods’ even though it knew that many had little chance of becoming permanent. [. . .] Fannie preferred doing trials, Herron alleges, because it was eligible to receive incentive payments from the Treasury Department.”
So in the pursuit of these perverse incentives, people who did not qualify for HAMP were enrolled in the program. And when their “trial mods” were up after 90 days, they would be notified that they didn’t qualify—regardless of whether they in fact did qualify, as in the case of Brian and Ilsa.
All so as to be perceived as a profitable operation, worth having been bailed out. All so as to be perceived as “returning America’s money”.
As of February, 2010, of the over one million homeowners’ mortgages under HAMP auspices, 83% were “trial mods”. One would assume that those 850,000 homeowners would also be assessed an $84 penalty for non-payment.
$84 times over 850,000? You do the math.
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Ezra Klein: What’s happening here? Why are we suddenly faced with a crisis that wasn’t apparent two weeks ago?
Janet Tavakoli: This is the biggest fraud in the history of the capital markets. And it’s not something that happened last week. It happened when these loans were originated, in some cases years ago. Loans have representations and warranties that have to be met. In the past, you had a certain period of time, 60 to 90 days, where you sort through these loans and, if they’re bad, you kick them back. If the documentation wasn’t correct, you’d kick it back. If you found the incomes of the buyers had been overstated, or the houses had been appraised at twice their worth, you’d kick it back. But that didn’t happen here. And it turned out there were loan files that were missing required documentation. Part of putting the deal together is that the securitization professional, and in this case that’s banks like Goldman Sachs and JP Morgan, has to watch for this stuff. It’s called perfecting the security interest, and it’s not optional.
EK: And how much danger are the banks themselves in?
JT: When we had the financial crisis, the first thing the banks did was run to Congress and ask for accounting relief. They asked to be able to avoid pricing this stuff at the price where people would buy them. So no one can tell you the size of the hole in these balance sheets. We’ve thrown a lot of money at it. TARP was just the tip of the iceberg. We’ve given them guarantees on debts, low-cost funding from the Fed. But a lot of these mortgages just cannot be saved. Had we acknowledged this problem in 2005, we could’ve cleaned it up for a few hundred billion dollars. But we didn’t. Banks were lying and committing fraud, and our regulators were covering them and so a bad problem has become a hellacious one.
EK: My understanding is that this now pits the banks against the investors they sold these products too. The investors are going to court to argue that the products were flawed and the banks need to take them back.
JT: Many investors now are waking up to the fact that they were defrauded. Even sophisticated investors. If you did your due diligence but material information was withheld, you can recover. It’ll be a case-by-by-case basis.
EK: Given that our financial system is still fragile, isn’t that a disaster for the economy? Will credit freeze again?
JT: I disagree. In order to make the financial system healthy, we need to recognize the extent of our losses and begin facing the fraud. Then the market will be trustworthy again and people will start to participate.
EK: It sounds almost like you’re saying we still need to go through the end of our financial crisis.
JT: Yes, but I wouldn’t say crisis. This can be done with a resolution trust corporation, the way we cleaned up the S&Ls. The system got back on its feet faster because we grappled with the problems. The shareholders would be wiped out and the debt holders would have to take a discount on their debt and they’d get a debt-for-equity swap. Instead we poured TARP money into a pit and meanwhile the banks are paying huge bonuses to some people who should be made accountable for fraud. The financial crisis was a product of our irrational reaction, which protected crony capitalism rather than capitalism. In capitalism, the shareholders who took the risk would be wiped out and the debt holders would take a discount but banking would go on.
Friday, October 8, 2010
He said “small fiber” issues may be involved but that testing will provide a clearer understanding. “We don’t even know what all of the symptoms are at this point,” he disclosed.
Speaking slowly and carefully choosing his words, Beck went on to say somewhat cryptically that he believes “physical, mental, and spiritual are all tied. You can’t injure the soul of someone and not have physical wounds appear eventually.
“I would ask for your prayers,” not for healing but for “clarity, for a desire to continue to stand. I would just like to want to.
“Things are changing. And there is no bad news here because what I’m feeling in myself and what is happening to my physical body to some extent and what is happening to me mentally is not a depression, it is a transformation, it is atranscendence, it is a reaching out of the slime and pulling yourself out.”
Beck, who said he would be off Monday and Tuesday, told listeners it is important for him to share this with his audience “so that you will understand my mind-set.”
He also said listeners might have noticed a change in how he sounds on the radio because he’s been having difficulties with his vocal cords, and doctors will check out this problem.
The exchange, recorded by a voicemail, discussed Whitman cutting a deal to protect law enforcement pensions as the candidates competed for endorsements from police, the L.A. Times said.
In an audio recording available on the L.A. Times blog PolitiCal, Brown can be heard leaving a voice message for Scott Rate, a union official for the Los Angeles Police Protective League.
After asking Rate for the league’s endorsement, Brown says ‘thanks’ and hangs up the phone, but the call doesn’t end.
Instead, the message continues to record and Brown can be heard talking about the situation with his aides.
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After Brown discusses his frustration with Whitman potentially cutting a deal for several seconds, another voice appears to interject saying, “What about saying that she’s a whore?”
“Well I’m going to use that,” Brown replies. “It proves you’ve cut a secret deal to protect the pensions.”
The tape was released to the paper by the Los Angeles police union, the newspaper reported.
A Brown campaign spokesman confirmed the tape’s authenticity, but “said that Brown was responding to the notion of accusing Whitman of cutting a deal to gain endorsements, not to the use of the word ‘whore,’” the L.A. Times said.
Whitman campaign spokesman Sarah Pompei released a response to reports of the recording late Thursday.
"The use of the term 'whore' is an insult to both Meg Whitman and to the women of California. This is an appalling and unforgivable smear against Meg Whitman. At the very least Mr. Brown tacitly approved this despicable slur and he himself may have used the term at least once on this recording," Pompei said.
Richard Clark had a deal to buy this home in North Fort Myers, but it has been suspended.
Like many buyers across the country, Ms. Ducksworth was about to complete the purchase of a foreclosed house when it suddenly went off the market. Fannie Mae, the giant mortgage holding company that buys loans from commercial lenders, is pulling back sales of homes that might have been foreclosed in bad faith.
“I gave up my rental thinking I would have a house,” said Ms. Ducksworth, a 28-year-old catering assistant. “Now I’m sharing a room with my son. What the hell is up with that?”
With home sales this past summer at the lowest level in more than a decade, real estate is ill-prepared to suffer another blow. But as a scandal unfolds over mortgage lenders’ shoddy preparation of foreclosure documents, the fallout is beginning to hammer the housing market, especially in states like Florida where distressed properties are abundant.
“This crisis takes a situation that’s already bad and kind of cements it into place,” said Joshua Shapiro, chief United States economist for MFR Inc., an economic consulting firm.
Three major mortgage lenders — Bank of America, GMAC Mortgage and JPMorgan Chase — have said they are suspending foreclosures in the 23 states where they first need a judge’s approval. They are also waving off Fannie Mae from selling any of the foreclosed homes whose loans they sold to Fannie.
The companies say they are reviewing their operations after disclosures that employees signed documents without determining the accuracy of the material, as is required by law.
Those reviews are throwing into limbo hundreds of thousands of foreclosures and pending home sales, analysts estimate, though the lenders and Fannie Mae have been mostly silent about precise numbers and other specifics.
More broadly, the revelations about the sloppy paperwork are emboldening homeowners and law enforcement officials in many states to question whether lenders rightfully hold the notes underlying foreclosed properties — further chilling the housing market.
Distressed properties, many of which are in foreclosure, make up about a third of all home sales. “Foreclosures are going to slow to a crawl,” said Guy D. Cecala, publisher of the trade magazine Inside Mortgage Finance.
Of the 23 states where foreclosures need court approval, Florida has by far the most trouble — about a half-million cases clog its courts — and the moratoriums are having a noticeable effect.
Because most lenders sold their mortgages to Fannie Mae, it is largely that company that has been sending e-mails to real estate agents about putting off deals and removing houses from the market. In most cases, the agents are being told the freeze will last 30 to 90 days, but agents say there is no way to know for sure.
A snapshot of the problems can be seen at the real estate agency that sold Ms. Ducksworth her home, Marc Joseph Realty, based in Fort Myers.
The agency had 35 deals that were supposed to close this month. As of Thursday, Fannie had postponed 11 of them. Another handful of homes that did not have offers or were being prepared for market had also been withdrawn.
“If this wipes out half my inventory, that’s a scary thing,” said Bill Mitchell, the agency’s closing coordinator.
As he spoke, his computer pinged and another message from Fannie came through about withdrawing a house. It had the subject line, “Unable to Market Notice.”
Another client of the agency, Richard Clark, is caught in the foreclosure vise on both ends.
A delivery truck driver, Mr. Clark has gone through several rough years: his wife lost her banking job and they eventually separated; a vending business did not succeed; he fell behind on his home payments; and CitiMortgage rebuffed his efforts to restructure the mortgage.
With the prospect of being tossed out of his house in a foreclosure of his own, Mr. Clark, 62, cobbled together $58,000 — most of it from his parents — and successfully bid on a house in North Fort Myers that was in foreclosure. His offer on the house, with three bedrooms and two baths, a Jacuzzi tub in the master bedroom and a Key lime tree in the backyard, was finally approved on Oct. 1.
“It’s been a rocky two years,” Mr. Clark, a stocky man with a short pony tail, wire-rim glasses and a gold hoop earring, said while touring the rambling one-story home. “It’s a dream house for me.”
At least, it was. On Tuesday, Fannie suspended the deal. Mr. Clark said he did not know what to do. “I’m kind of hoping I have a place to live,” he said. “Now, who knows?”
It is possible the foreclosure on his current house in nearby Cape Coral — he has a court hearing on Dec. 7 — will also become caught up in the current problems, but Mr. Clark said he was not pleased by the prospect of staying there any longer.
“I’d rather just get on with it, get on with my life,” he said.
In the states far from Florida where foreclosures are an equally large problem but there is no judicial review — Nevada, Arizona and California — there were early signs this week that the document crisis was spreading. The only time a foreclosure in those states enters a courtroom is when the borrower sues the lender, something few of those in default have the money or the will to do.
In a telephone interview on Wednesday, Gary Kent, a foreclosure specialist in San Diego who has 80 listings, said he had not heard from Fannie or any lender about withdrawing a property. All his deals were on track, Mr. Kent said.
But a few hours later, Mr. Kent said he had received an e-mail about removing a home that was under contract.
The message was from his title insurer, who said that Pittsburgh-based PNC Bank was imposing a 30-day moratorium on all foreclosure sales. (PNC declined to comment to a reporter.)
Mr. Kent’s confidence was shaken. “My buyer’s upset, my agent’s upset and I’m a little nervous,” he said.
Several factors are likely to delay many more foreclosed houses from reaching the market and finding new owners.
Law enforcement officials in several states, including Texas, Maryland and Connecticut, are demanding a suspension of foreclosures until lenders can prove they are using legal methods.
It is unclear how many lenders will go along.
In a move that sets up a potential showdown in Texas, one major lender, CitiMortgage, is arguing that it is being considered guilty until proven innocent by the state attorney general.
“We have no reason to believe our employees are not following our process, and therefore have no reason to stop foreclosures,” a Citi spokesman said.
Another factor is the reaction of the title insurers, who defend homeowners in disputes over a home’s ownership. Lenders require title insurance before approving a mortgage.
The crisis took many title insurers by surprise, said Kurt Pfotenhauer, the chief executive of the industry’s trade group, the American Land Title Association.
One possibility the title insurers are discussing is obtaining warranties from lenders against errors in their foreclosures. Every title insurer, Mr. Pfotenhauer said, “understands there is a brand new risk that has to be evaluated. It’s not at all clear that courts across the country are going to be reversing their earlier decisions on foreclosures. But we don’t know.”
In the meantime, buyers like Ms. Ducksworth here in Ocala are at a loss for answers.
“She’s in a mess, actually,” said Jim Haston, Ms. Ducksworth’s agent.
“I really don’t know what to tell her,” he said.
Wednesday, October 6, 2010
New Yorkers' Income Falls for 1st Time in 70 Years The recession put a 3.1 percent dent in the personal incomes of New York state residents, who endur
Paychecks or net earnings tumbled 5.4 percent, while dividends, interest and rent slid 8.4 percent, to a grand total of nearly $908 billion, the state comptroller's report said.
Not only did New Yorkers' personal incomes fall "almost twice" as much as they did in the nation as a whole, but they have yet to recover to pre-recession levels, Comptroller Thomas DiNapoli said.
The drop occurred even though the job-destroying recession was milder in New York than in the rest of the country.
One reason for the hit to New Yorker's pocketbooks is Wall Street's dominance among the state's employers; pay and job security are often highly volatile in the securities industry.
After the securities industry lost a record $54 billion in the financial crisis of 2007 and 2008, federal bailouts and low interest rates helped it achieve record profits in 2009 of $61.4 billion, DiNapoli said.
This year, the companies' first-quarter profits of $10.1 billion were more than twice the $3.9 billion total in the second quarter - but the more recent earnings were "in line with historic levels," DiNapoli said.
Current DateTime: 03:12:48 06 Oct 2010
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* In New York, Cheap Eats Never Tasted Better
* Apartment Vacancy Rate Drops Sharply in Third Quarter
* Middle Class to Suffer Most From Bank Rules: Whitney
* Services Sector Grows More Than Expected, Hiring Rises
Though Wall Street went on a bit of a hiring spree in early 2010, these employers, whose earnings drive the city and state economies, have gone back to handing out pink slips, he said.
During the first eight months of this year, they sliced 4,200 positions, which means 31,300 securities industry jobs have been lost since January 2008, the report said.
Still, employment data for Wall Street can be difficult to fathom as workers often collect generous severance checks and thus do not show up in the state labor reports for many months.
The New York gubernatorial campaign, which pits Attorney General Andrew Cuomo, a Democrat, against Buffalo real estate developer and Republican candidate Carl Paladino, has accentuated the economic divide between the more prosperous downstate region and the hard-pressed upstate area.
"Job growth has been concentrated in New York City and its suburbs, which added a total of 90,000 jobs since December 2009," said DiNapoli, a Democrat who also stands for election in November.
The entire state, which has over 19 million people, lost 367,400 jobs from April 2008 to December 2009. During the recession, the state's unemployment rate hit a 17-year high of 8.9 percent.
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That is the message relayed by the October 1973 war papers released this week, which go beyond uncovering secret operational and intelligence decision-making and are unusually wide-ranging.
In the hours leading up to the fateful moment on Oct. 6 1973, when the combined forces of Egypt and Syria caught Israel napping by a joint offensive (designed by their Russian sponsor), Israel's chief of staff, the late Lt. Gen. David Elazar, said to Prime Minister Golda Meir: In operational terms, we can wipe out the entire Syrian air force by 12:00 noon today. We need another 30 hours to destroy its missiles. Then, if they go on the offensive at 5 pm., our air force will be free to strike the Syrian army. To me, this is operational option is attractive.
Three days later, on Oct. 9, catastrophe stared Israel in the face: The IDF was in a bad way and taking casualties in the realm of hundreds dead and thousands injured; their defense lines in Sinai and the Golan had fallen and there was nothing in the way of the Syrian army going all the way to the Sea of Galilee and Tiberias.
In a closed meeting with Golda Meir, the iconic defense minister Moshe Dayan asked for permission to bomb Damascus. "Inside the city?" she asked. "Inside the city and its environs," he replied. "We have to break the Syrians," Dayan explained that he proposed to strike the Syrian General Command and infrastructure in Damascus. "We've done enough going around the fields (a reference to targets outside the Syrian capital). There are no more key targets left. Damascus is the only one. We can't promise the population won't be hurt."
Golda's permission was withheld.
debkafile's sources report that the decision to release these documents and the section relating to Syria was taken in Jerusalem after the Obama administration failed to prevent the two-day state visit to Lebanon by Iranian President Mahmoud Ahmadinejad taking place on Oct. 13.
US Secretary of State Hillary Clinton may not have been tough enough on this issue when she met Syrian foreign minister Walid Muallem in New York Monday, Sept. 27. Damascus also inferred from the tenor of that converstion that Washington would not interfere with a Syrian-Iranian-backed Hizballah attack on Lebanon's centers of power.
The 1973 war papers released in Jerusalem, revealing that Israel then was just hours away from an air blitz against Damascus, was a message to Assad that Jerusalem was not aligned with the Americans in this.
The suspense ahead of the Ahmadinejad visit and its fallout continued to rise this week.
Tuesday, Oct. 5, U.S. sources told Kuwait's Al-Rai newspaper: There are international and Arab concerns over a potential assassination attempt against PM Saad Hariri.
That night, Damascus pressed ahead with its campaign to prepare Beirut for a Hizballah takeover by chipping away at Lebanese sovereignty and the authority of the Hariri government. Syria's chief military prosecutor issued summonses for four former Lebanese security officials to present themselves in Damascus and testify against three former officers, two Syrian and one Lebanese, who bore witness against Syria and Hizballah as complicit in the assassination of former Lebanese prime minister Rafiq Hariri in 2005.
This step followed the publication on Monday of a list of 33 Lebanese and international figures accused of conspiring in a plot to inculpate Syria for the murder.
Limbaugh responded: “Mr. Obama, our imam-child, they have already taken their trillion dollar ball home, and they’re sitting on it, you jackass." The talk how shost believes keeping the tax breaks for everyone, including the very wealthy (like Rush?) would "inspire confidence," notes ABC News. Did he think he was being a tad too harsh on the prez? Hardly. He insists he was "being charitable."
Tuesday, October 5, 2010
Fed, ECB Throwing World Into 'Chaos': Joseph StiglitzUltra-loose monetary policies by the U.S. Federal Reserve and the European Central Bank are throw
Franco Origlia | Getty Images
"We need fiscal stimulus," Nobel Prize-winning economist Joseph Stiglitz said Tuesday.
A "flood of liquidity" from the Fed and the ECB is bringing instability to foreign-exchange markets, forcing countries such as Japan and Brazil to defend its exporters, Stiglitz told reporters in a conference at Columbia University.
"The irony is that the Fed is creating all this liquidity with the hope that it will revive the American economy," Stiglitz said. "It's doing nothing for the American economy, but it's causing chaos over the rest of the world. It's a very strange policy that they are pursuing."
The U.S. dollar has weakened about 6.5 percent against a basket of major currencies [.DXY 77.75 --- UNCH (0) ] since the beginning of September as prospects for further monetary easing by the Fed have led investors to seek higher returns elsewhere.
That flow of dollars caused currencies to appreciate in many emerging market countries such as Brazil, which offers strong growth prospects. The Japanese yen [JPY=X 83.21 0.05 (+0.06%) ] has also hit record highs against the dollar on expectation of additional greenback weakness.
Recent actions by those countries to curb the strength of their currency were "necessary," Stiglitz added.
"It's natural in that context for them to say—we can't just let our exchange rates appreciate and destroy our exports," he said.
On Monday, Brazil doubled a tax on foreign investment into local government bonds, while Japan lowered the target for its benchmark interest rate to a range between zero and 0.1 percent.
The Bank of Japan also pledged to buy 5 trillion yen ($60 billion) worth of assets, in a strategy similar to the one adopted by the Fed to pump funds into the economy.
But additional monetary stimulus will "clearly" not solve the problems caused by lack of global aggregate demand, Stiglitz said.
"Lowering the interest rates may help a little bit, but that's much too weak to address the problems facing the United States and Europe," Stiglitz said. "We need fiscal stimulus."
Ultra-low interest rates in Europe and Japan and concerns that the U.S.
Federal Reserve is about to embark on another round of money printing that could weaken the dollar have pushed currencies to the top of the agenda for the gathering of finance chiefs from the Group of Seven rich nations Friday.
The International Monetary Fund, which holds its twice-yearly meeting this weekend, is also expected to discuss foreign exchange moves as part of its mission to get countries working together toward balanced global growth.
The IMF is responsible for vetting national policies to ensure they don't clash, and will present its findings to world leaders at upcoming summits in Seoul, South Korea.
"The conversations will begin this weekend but will no doubt continue until ministers and governors meet later in Seoul," said a senior U.S. Treasury officials who spoke to reporters on condition of anonymity.
Brazil, whose finance minister has warned of an international "currency war," on Monday doubled a tax on foreign investors buying local bonds to 4 percent to curb a strong real, boosted by high domestic interest rates and a commodity boom.
Slow economic growth and high unemployment in most rich countries leave them unusually reliant on exports, and weaker currencies can provide a trade advantage. Japan intervened to weaken the yen last month and a couple of emerging economies have followed.
But emerging economies including Brazil worry that low interest rates and weak currencies in the rich world will drive investors into faster-growing emerging markets, creating an unpredictable surge of hot money that can contribute to inflation and asset price bubbles.
For the G7 and IMF, the challenge now is to ensure countries don't go rogue, adopting policies that might help at home but hurt abroad.
Nobel-winning economist Joseph Stiglitz said the Federal Reserve's actions to spur growth were doing nothing for the U.S. economy while bringing chaos to the rest of the world.
Adding to the tension, policymakers from emerging Asian economies voiced growing concerns about the risk of a flood of hot money inflows.
South Korea warned investors it might impose further limits on forward trading and India and Thailand said they were looking at steps to control speculative surges.
"I don't foresee that we're moving into an era of global currency wars but there are clearly going to be tensions," World Bank President Robert Zoellick said on Monday, calling for action to ease the tension.
"Money is chasing yield. It can't find those yields in developed economies and this is not only pushing up currency values in developing countries... (but) also pushing up prices in assets with the risk of bubbles in property and some commodities," he added.
CONTINUED: Deeply rooted positions
Policymakers have been attacking the issue of global imbalances for years, with fundamental problems seen in the dollar's global dominance, China's under-valued yuan and Germany's lack of domestic consumption.
But entrenched positions and a scramble to lock in lower relative costs for exporters make it unlikely that officials sitting down to IMF and G7 meetings this weekend, and G20 meetings later this month, will resolve their differences.
"We are in a very extreme situation, everyone is about as far apart as they could possibly be,'' said Neil Mellor, currency strategist at Bank of New York Mellon.
"Everyone wants stability but everyone has the same objective — a weaker currency. They will make the right noises, but what can they possibly come up with?''
Despite attempts at coordination by G20 countries during the financial crisis, central banks have acted unilaterally.
U.S. Fed Chairman Ben Bernanke appeared to rubber-stamp a second round of quantitative easing on Monday, saying more asset buying could ease financial conditions further.
In a surprise move, Japan also pulled interest rates on the yen back to zero on Tuesday and pledged to pump more funds into an economy struggling to compete while the currency remains close to a 15-year high against the dollar.
Investors fleeing the dollar and yen have strengthened the euro, a bugbear for France in particular.
EU leaders on Tuesday echoed U.S. calls in urging China to allow an "orderly, significant and broad-based appreciation" of the yuan but they admitted that Chinese Prime Minister Wen Jiabao, in Brussels for a summit, did not agree.
Other G20 members have also been inching towards more action, with Turkey buying more foreign currencies and South African policymakers attempting to talk down the rand.
G7 finance ministers this week will discuss economic growth issues but they will also look at inflexible currencies, Canadian Finance Minister Jim Flaherty, chairing the gathering on Oct. 8 in Washington, has said.
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