The Internet is a large-scale version of the "Committees of Correspondence" that led to the first American Revolution — and with Washington's failings now so obvious and awful, it may lead to another.
People are asking, "Is the government doing us more harm than good? Should we change what it does and the way it does it?"
Pruning the power of government begins with the imperial presidency.
Too many overreaching laws give the president too much discretion to make too many open-ended rules controlling too many aspects of our lives. There's no end to the harm an out-of-control president can do.
Bill Clinton lowered the culture, moral tone and strength of the nation — and left America vulnerable to attack. When it came, George W. Bush stood up for America, albeit sometimes clumsily.
Barack Obama, however, has pulled off the ultimate switcheroo: He's diminishing America from within — so far, successfully.
He may soon bankrupt us and replace our big merit-based capitalist economy with a small government-directed one of his own design.
He is undermining our constitutional traditions: The rule of law and our Anglo-Saxon concepts of private property hang in the balance. Obama may be the most "consequential" president ever.
The Wall Street Journal's steadfast Dorothy Rabinowitz wrote that Barack Obama is "an alien in the White House."
His bullying and offenses against the economy and job creation are so outrageous that CEOs in the Business Roundtable finally mustered the courage to call him "anti-business." Veteran Democrat Sen. Max Baucus blurted out that Obama is engineering the biggest government-forced "redistribution of income" in history.
Fear and uncertainty stalk the land. Fed Chairman Ben Bernanke says America's financial future is "unusually uncertain."
A Wall Street "fear gauge" based on predicted market volatility is flashing long-term panic. New data on the federal budget confirm that record-setting deficits in the $1.4 trillion range are now endemic.
Obama is building an imperium of public debt and crushing taxes, contrary to George Washington's wise farewell admonition: "cherish public credit ... use it as sparingly as possible ... avoiding likewise the accumulation of debt ... bear in mind, that towards the payment of debts there must be Revenue, that to have Revenue there must be taxes; that no taxes can be devised, which are not ... inconvenient and unpleasant ... ."
Opinion polls suggest that in the November mid-term elections, voters will replace the present Democratic majority in Congress with opposition Republicans — but that will not necessarily stop Obama.
IBD Editorials
Saturday, July 31, 2010
Friday, July 30, 2010
GM's ELECTRIC LEMON
Times Topics: General Motors AutomobilesGENERAL MOTORS introduced America to the Chevrolet Volt at the 2007 Detroit Auto Show as a low-slung concept car that would someday be the future of motorized transportation. It would go 40 miles on battery power alone, promised G.M., after which it would create its own electricity with a gas engine. Three and a half years — and one government-assisted bankruptcy later — G.M. is bringing a Volt to market that makes good on those two promises. The problem is, well, everything else.
For starters, G.M.’s vision turned into a car that costs $41,000 before relevant tax breaks ... but after billions of dollars of government loans and grants for the Volt’s development and production. And instead of the sleek coupe of 2007, it looks suspiciously similar to a Toyota Prius. It also requires premium gasoline, seats only four people (the battery runs down the center of the car, preventing a rear bench) and has less head and leg room than the $17,000 Chevrolet Cruze, which is more or less the non-electric version of the Volt.
In short, the Volt appears to be exactly the kind of green-at-all-costs car that some opponents of the bailout feared the government might order G.M. to build. Unfortunately for this theory, G.M. was already committed to the Volt when it entered bankruptcy. And though President Obama’s task force reported in 2009 that the Volt “will likely be too expensive to be commercially successful in the short term,” it didn’t cancel the project.
Nor did the government or G.M. decide to sell the Volt at a loss, which, paradoxically, might have been the best hope for making it profitable. Consider the Prius. Back in 1997, Toyota began selling the high-tech, first-of-its-kind car in Japan for about $17,000, even though each model cost $32,000 to build.
By taking a loss on the first several years of Prius production, Toyota was able to hold its price steady, and then sell the gas-sippers in huge numbers when oil prices soared. Today a Prius costs roughly the same in inflation-adjusted dollars as those 1997 models did, and it has become the best-selling Toyota in the United States after the evergreen Camry and Corolla.
Instead of following Toyota’s model, G.M. decided to make the Volt more affordable by offering a $350-a-month lease over 36 months. But that offer allows only 12,000 miles per year, or about 33 miles per day. Assuming you charged your Volt every evening, giving you 40 miles of battery power, and wanted to keep below the mileage limit, you would rarely use its expensive range-extending gas engine. No wonder the Volt’s main competition, the Nissan Leaf, forgoes the additional combustion engine — and ends up costing $8,000 less as a result.
In the industry, some suspect that G.M. and the Obama administration decided against selling the Volt at a loss because they want the company to appear profitable before its long-awaited initial stock offering, which is likely to take place next month. For taxpayers, that approach might have made sense if the government planned on selling its entire 61 percent stake in G.M. But the administration has said it will sell only enough equity in the public offering to relinquish its controlling stake in G.M. Thus the government will remain exposed to the company’s (and the Volt’s) long-term fate.
So the future of General Motors (and the $50 billion taxpayer investment in it) now depends on a vehicle that costs $41,000 but offers the performance and interior space of a $15,000 economy car. The company is moving forward on a second generation of Volts aimed at eliminating the initial model’s considerable shortcomings. (In truth, the first-generation Volt was as good as written off inside G.M., which decided to cut its 2011 production volume to a mere 10,000 units rather than the initial plan for 60,000.) Yet G.M. seemingly has no plan for turning its low-volume “eco-flagship” into a mass-market icon like the Prius.
Quantifying just how much taxpayer money will have been wasted on the hastily developed Volt is no easy feat. Start with the $50 billion bailout (without which none of this would have been necessary), add $240 million in Energy Department grants doled out to G.M. last summer, $150 million in federal money to the Volt’s Korean battery supplier, up to $1.5 billion in tax breaks for purchasers and other consumer incentives, and some significant portion of the $14 billion loan G.M. got in 2008 for “retooling” its plants, and you’ve got some idea of how much taxpayer cash is built into every Volt.
In the end, making the bailout work — whatever the cost — is the only good reason for buying a Volt. The car is not just an environmental hair shirt (a charge leveled at the Prius early in its existence), it is an act of political self-denial as well.
If G.M. were honest, it would market the car as a personal donation for, and vote of confidence in, the auto bailout. Unfortunately, that’s not the kind of cross-branding that will make the Volt a runaway success.
Edward Niedermeyer is the editor of the Web site The Truth About Cars.
A version of this op-ed appeared in print on July 30, 2010, on page A23 of the New York edition..Recommend
For starters, G.M.’s vision turned into a car that costs $41,000 before relevant tax breaks ... but after billions of dollars of government loans and grants for the Volt’s development and production. And instead of the sleek coupe of 2007, it looks suspiciously similar to a Toyota Prius. It also requires premium gasoline, seats only four people (the battery runs down the center of the car, preventing a rear bench) and has less head and leg room than the $17,000 Chevrolet Cruze, which is more or less the non-electric version of the Volt.
In short, the Volt appears to be exactly the kind of green-at-all-costs car that some opponents of the bailout feared the government might order G.M. to build. Unfortunately for this theory, G.M. was already committed to the Volt when it entered bankruptcy. And though President Obama’s task force reported in 2009 that the Volt “will likely be too expensive to be commercially successful in the short term,” it didn’t cancel the project.
Nor did the government or G.M. decide to sell the Volt at a loss, which, paradoxically, might have been the best hope for making it profitable. Consider the Prius. Back in 1997, Toyota began selling the high-tech, first-of-its-kind car in Japan for about $17,000, even though each model cost $32,000 to build.
By taking a loss on the first several years of Prius production, Toyota was able to hold its price steady, and then sell the gas-sippers in huge numbers when oil prices soared. Today a Prius costs roughly the same in inflation-adjusted dollars as those 1997 models did, and it has become the best-selling Toyota in the United States after the evergreen Camry and Corolla.
Instead of following Toyota’s model, G.M. decided to make the Volt more affordable by offering a $350-a-month lease over 36 months. But that offer allows only 12,000 miles per year, or about 33 miles per day. Assuming you charged your Volt every evening, giving you 40 miles of battery power, and wanted to keep below the mileage limit, you would rarely use its expensive range-extending gas engine. No wonder the Volt’s main competition, the Nissan Leaf, forgoes the additional combustion engine — and ends up costing $8,000 less as a result.
In the industry, some suspect that G.M. and the Obama administration decided against selling the Volt at a loss because they want the company to appear profitable before its long-awaited initial stock offering, which is likely to take place next month. For taxpayers, that approach might have made sense if the government planned on selling its entire 61 percent stake in G.M. But the administration has said it will sell only enough equity in the public offering to relinquish its controlling stake in G.M. Thus the government will remain exposed to the company’s (and the Volt’s) long-term fate.
So the future of General Motors (and the $50 billion taxpayer investment in it) now depends on a vehicle that costs $41,000 but offers the performance and interior space of a $15,000 economy car. The company is moving forward on a second generation of Volts aimed at eliminating the initial model’s considerable shortcomings. (In truth, the first-generation Volt was as good as written off inside G.M., which decided to cut its 2011 production volume to a mere 10,000 units rather than the initial plan for 60,000.) Yet G.M. seemingly has no plan for turning its low-volume “eco-flagship” into a mass-market icon like the Prius.
Quantifying just how much taxpayer money will have been wasted on the hastily developed Volt is no easy feat. Start with the $50 billion bailout (without which none of this would have been necessary), add $240 million in Energy Department grants doled out to G.M. last summer, $150 million in federal money to the Volt’s Korean battery supplier, up to $1.5 billion in tax breaks for purchasers and other consumer incentives, and some significant portion of the $14 billion loan G.M. got in 2008 for “retooling” its plants, and you’ve got some idea of how much taxpayer cash is built into every Volt.
In the end, making the bailout work — whatever the cost — is the only good reason for buying a Volt. The car is not just an environmental hair shirt (a charge leveled at the Prius early in its existence), it is an act of political self-denial as well.
If G.M. were honest, it would market the car as a personal donation for, and vote of confidence in, the auto bailout. Unfortunately, that’s not the kind of cross-branding that will make the Volt a runaway success.
Edward Niedermeyer is the editor of the Web site The Truth About Cars.
A version of this op-ed appeared in print on July 30, 2010, on page A23 of the New York edition..Recommend
Wednesday, July 28, 2010
The Year America Dissolved
It was 2017. Clans were governing America.
Clans organized around families and individuals who possessed stocks of food, bullion, guns and ammunition. Photo: A scene from the 1997 film, The Postman.
The first clans organized around local police forces. The conservatives’ war on crime during the late 20th century and the Bush/Obama war on terror during the first decade of the 21st century had resulted in the police becoming militarized and unaccountable.
As society broke down, the police became warlords. The state police broke apart, and the officers were subsumed into the local forces of their communities. The newly formed tribes expanded to encompass the relatives and friends of the police.
The dollar had collapsed as world reserve currency in 2012 when the worsening economic depression made it clear to Washington’s creditors that the federal budget deficit was too large to be financed except by the printing of money.
With the dollar’s demise, import prices skyrocketed. As Americans were unable to afford foreign-made goods, the transnational corporations that were producing offshore for US markets were bankrupted, further eroding the government’s revenue base.
The government was forced to print money in order to pay its bills, causing domestic prices to rise rapidly. Faced with hyperinflation, Washington took recourse in terminating Social Security and Medicare and followed up by confiscating the remnants of private pensions. This provided a one-year respite, but with no more resources to confiscate, money creation and hyperinflation resumed.
Organized food deliveries broke down when the government fought hyperinflation with fixed prices and the mandate that all purchases and sales had to be in US paper currency. Unwilling to trade appreciating goods for depreciating paper, goods disappeared from stores.
Washington responded as Lenin had done during the “war communism” period of Soviet history. The government sent troops to confiscate goods for distribution in kind to the population. This was a temporary stop-gap until existing stocks were depleted, as future production was discouraged. Much of the confiscated stocks became the property of the troops who seized the goods.
Goods reappeared in markets under the protection of local warlords. Transactions were conducted in barter and in gold, silver, and copper coins.
Other clans organized around families and individuals who possessed stocks of food, bullion, guns and ammunition. Uneasy alliances formed to balance differences in clan strengths. Betrayals quickly made loyalty a necessary trait for survival.
Large scale food and other production broke down as local militias taxed distribution as goods moved across local territories. Washington seized domestic oil production and refineries, but much of the government’s gasoline was paid for safe passage across clan territories.
Most of the troops in Washington’s overseas bases were abandoned. As their resource stocks were drawn down, the abandoned soldiers were forced into alliances with those with whom they had been fighting.
Washington found it increasingly difficult to maintain itself. As it lost control over the country, Washington was less able to secure supplies from abroad as tribute from those Washington threatened with nuclear attack. Gradually other nuclear powers realized that the only target in America was Washington. The more astute saw the writing on the wall and slipped away from the former capital city.
When Rome began her empire, Rome’s currency consisted of gold and silver coinage. Rome was well organized with efficient institutions and the ability to supply troops in the field so that campaigns could continue indefinitely, a monopoly in the world of Rome’s time.
When hubris sent America in pursuit of overseas empire, the venture coincided with the offshoring of American manufacturing, industrial, and professional service jobs and the corresponding erosion of the government’s tax base, with the advent of massive budget and trade deficits, with the erosion of the fiat paper currency’s value, and with America’s dependence on foreign creditors and puppet rulers.
The Roman Empire lasted for centuries. The American one collapsed overnight.
Rome’s corruption became the strength of her enemies, and the Western Empire was overrun.
America’s collapse occurred when government ceased to represent the people and became the instrument of a private oligarchy. Decisions were made in behalf of short-term profits for the few at the expense of unmanageable liabilities for the many.
Overwhelmed by liabilities, the government collapsed.
Globalism had run its course. Life reformed on a local basis.
Clans organized around families and individuals who possessed stocks of food, bullion, guns and ammunition. Photo: A scene from the 1997 film, The Postman.
The first clans organized around local police forces. The conservatives’ war on crime during the late 20th century and the Bush/Obama war on terror during the first decade of the 21st century had resulted in the police becoming militarized and unaccountable.
As society broke down, the police became warlords. The state police broke apart, and the officers were subsumed into the local forces of their communities. The newly formed tribes expanded to encompass the relatives and friends of the police.
The dollar had collapsed as world reserve currency in 2012 when the worsening economic depression made it clear to Washington’s creditors that the federal budget deficit was too large to be financed except by the printing of money.
With the dollar’s demise, import prices skyrocketed. As Americans were unable to afford foreign-made goods, the transnational corporations that were producing offshore for US markets were bankrupted, further eroding the government’s revenue base.
The government was forced to print money in order to pay its bills, causing domestic prices to rise rapidly. Faced with hyperinflation, Washington took recourse in terminating Social Security and Medicare and followed up by confiscating the remnants of private pensions. This provided a one-year respite, but with no more resources to confiscate, money creation and hyperinflation resumed.
Organized food deliveries broke down when the government fought hyperinflation with fixed prices and the mandate that all purchases and sales had to be in US paper currency. Unwilling to trade appreciating goods for depreciating paper, goods disappeared from stores.
Washington responded as Lenin had done during the “war communism” period of Soviet history. The government sent troops to confiscate goods for distribution in kind to the population. This was a temporary stop-gap until existing stocks were depleted, as future production was discouraged. Much of the confiscated stocks became the property of the troops who seized the goods.
Goods reappeared in markets under the protection of local warlords. Transactions were conducted in barter and in gold, silver, and copper coins.
Other clans organized around families and individuals who possessed stocks of food, bullion, guns and ammunition. Uneasy alliances formed to balance differences in clan strengths. Betrayals quickly made loyalty a necessary trait for survival.
Large scale food and other production broke down as local militias taxed distribution as goods moved across local territories. Washington seized domestic oil production and refineries, but much of the government’s gasoline was paid for safe passage across clan territories.
Most of the troops in Washington’s overseas bases were abandoned. As their resource stocks were drawn down, the abandoned soldiers were forced into alliances with those with whom they had been fighting.
Washington found it increasingly difficult to maintain itself. As it lost control over the country, Washington was less able to secure supplies from abroad as tribute from those Washington threatened with nuclear attack. Gradually other nuclear powers realized that the only target in America was Washington. The more astute saw the writing on the wall and slipped away from the former capital city.
When Rome began her empire, Rome’s currency consisted of gold and silver coinage. Rome was well organized with efficient institutions and the ability to supply troops in the field so that campaigns could continue indefinitely, a monopoly in the world of Rome’s time.
When hubris sent America in pursuit of overseas empire, the venture coincided with the offshoring of American manufacturing, industrial, and professional service jobs and the corresponding erosion of the government’s tax base, with the advent of massive budget and trade deficits, with the erosion of the fiat paper currency’s value, and with America’s dependence on foreign creditors and puppet rulers.
The Roman Empire lasted for centuries. The American one collapsed overnight.
Rome’s corruption became the strength of her enemies, and the Western Empire was overrun.
America’s collapse occurred when government ceased to represent the people and became the instrument of a private oligarchy. Decisions were made in behalf of short-term profits for the few at the expense of unmanageable liabilities for the many.
Overwhelmed by liabilities, the government collapsed.
Globalism had run its course. Life reformed on a local basis.
Monday, July 26, 2010
Mortgage rates at record lows, but who can get them?
Mortgage interest rates dropped to record lows last week, hitting rates not seen since the 1970s. But brokers say few of the many South Florida homeowners rushing to take advantage and refinance their loans will be able to qualify.
The region's high levels of unemployment and depressed property values have made it tougher for many borrowers, and lenders are demanding better credit histories and proof of income before they'll refinance a loan. Only about half of those in the region seeking to refinance may actually qualify for a loan — far lower than before the housing market bust, South Florida mortgage brokers say.
Still, for many borrowers who don't face those problems, the rush to refinance is on.
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"There's been a lot of activity," said Claudine Claus, owner of Home Financing Center, which operates in Palm Beach, Broward and Miami-Dade Counties. She says the part of her business devoted to refinancing mortgages has quadrupled in the past 30 days, compared with the 30 days before that.
"Rates have dropped," she said. "A whole new group of people are interested in refinancing even though every loan can't be refinanced."
The people for whom refinancing makes the most sense are those who didn't get caught in the housing bubble and bust.
"There are a lot of people who purchased homes before [that cycle], who bought from 2002 to the 2005 peak in market," said Andre Brooks, who is in charge of the mortgage business in Florida for Wells Fargo Home Mortgage. "They have interest rates that are higher than the current market levels and they may not be experiencing negative equity." Negative equity is the term for owing more on a mortgage than a home is worth.
Applications for refinancing are up in Florida and nationwide, according to online lender Lending Tree.
Nationwide, four out of five conventional loan applications and more than half of Federal Housing Administration and Veterans Administration loan applications were for refinances in the last month, according to Freddie Mac Economist Frank Nothaft. The Mortgage Bankers Association says its weekly index of applications to refinance nationwide for the week ended July 16 was at the highest point since mid-May last year.
The rates are truly great. Thursday, the average rate on a 30-year, fixed-rate mortgage was a record-low 4.56 percent, down from 5.2 percent the year before, according to Freddie Mac, a federal government-backed mortgage provider. Previously, the all-time low was 4.57 percent. Freddie Mac has been releasing the weekly mortgage rates for 39 years.
According to Bankrate.com, the average mortgage interest rate at the end of 2008 was 6.33 percent. A borrower who had a $200,000 loan then could save $200 a month in payments if he or she refinanced today.
To see if refinancing makes sense, borrowers should divide the fees they pay to refinance their loans by the monthly amount that they'll save. That will tell them how many months they would have to live in the home to recoup the expense of refinancing.
Dan Longman, president of Priority Lending Corp. in Cooper City, said lenders want borrowers to have a 740 credit score or higher to qualify for the lowest-rate mortgages loans. Two years ago, he says a 680 score would suffice. Lenders also now require full documentation of a borrower's income, unlike during the housing boom when "no documentation" loans were often called "liar loans." And some are requiring borrowers to re-verify their income in the time between the application and final approval.
Indeed, anyone who is out of work will have a difficult time qualifying because they don't have sufficient income to make their loan payments. With unemployment ranging from 10.1 percent to 12.8 percent in Broward, Palm Beach, Miami-Dade and Orange Counties, that eliminates a huge swath of Floridians from the possibility of refinancing mortgages.
The other big obstacle is depressed home values. Because property values have fallen so far in the four-year downturn in the housing market, close to half of Fort Lauderdale's borrowers owe more on their homes than the property is now worth, according to CoreLogic, a real estate analytics firm. They probably won't qualify to refinance, either, because private lenders will not refinance a loan for more than the value of a home. The proportion of "underwater" loans are similar throughout South Florida.
There is one option for borrowers who are underwater to refinance. If the loan is owned by Fannie Mae, a government-sponsored mortgage funding corporation, it can be refinanced if the amount is 125 percent of the home's value. To find out if a loan is owned by Fannie Mae, use the "loan lookup" tool at www. Fanniemae.com.
Given the hurdles, "it's a real shame that all of these people can't take advantage of the rates," said Lane Barron, a senior mortgage consultant at Element Funding in Sunrise. His office this month has almost twice as many applications for new loans than in January, but none of them are for refinancings. Brokers say homeowners who know they are seriously underwater on their mortgages aren't even bothering to apply. But tougher standards are affecting even some folks with sterling credit seeking new mortgages. David Kosowski, of Miami, had an enviable credit score of more than 800 and a steady job. But he says he could not get a lender to give him a loan because part of his income depends upon the profits of his company. Profits had fallen during the recession. He instead paid cash to close on his home in June.
"Now I'm hoping to refinance," he said.
Time may be on his side. Concerns about the economy's recovery are the reason why rates have declined. Economists think they may stay there as the uncertainty continues.
"Mortgage rates are also expected to remain low heading into 2011," said Sam Khater, senior economist at CoreLogic, a real estate analytics firm. But he warned that the outlook could change if inflation, which is pretty much absent today, comes roaring back.
The region's high levels of unemployment and depressed property values have made it tougher for many borrowers, and lenders are demanding better credit histories and proof of income before they'll refinance a loan. Only about half of those in the region seeking to refinance may actually qualify for a loan — far lower than before the housing market bust, South Florida mortgage brokers say.
Still, for many borrowers who don't face those problems, the rush to refinance is on.
--------------------------------------------------------------------------------
Click to get the latest Business headlines sent to your phone
--------------------------------------------------------------------------------
"There's been a lot of activity," said Claudine Claus, owner of Home Financing Center, which operates in Palm Beach, Broward and Miami-Dade Counties. She says the part of her business devoted to refinancing mortgages has quadrupled in the past 30 days, compared with the 30 days before that.
"Rates have dropped," she said. "A whole new group of people are interested in refinancing even though every loan can't be refinanced."
The people for whom refinancing makes the most sense are those who didn't get caught in the housing bubble and bust.
"There are a lot of people who purchased homes before [that cycle], who bought from 2002 to the 2005 peak in market," said Andre Brooks, who is in charge of the mortgage business in Florida for Wells Fargo Home Mortgage. "They have interest rates that are higher than the current market levels and they may not be experiencing negative equity." Negative equity is the term for owing more on a mortgage than a home is worth.
Applications for refinancing are up in Florida and nationwide, according to online lender Lending Tree.
Nationwide, four out of five conventional loan applications and more than half of Federal Housing Administration and Veterans Administration loan applications were for refinances in the last month, according to Freddie Mac Economist Frank Nothaft. The Mortgage Bankers Association says its weekly index of applications to refinance nationwide for the week ended July 16 was at the highest point since mid-May last year.
The rates are truly great. Thursday, the average rate on a 30-year, fixed-rate mortgage was a record-low 4.56 percent, down from 5.2 percent the year before, according to Freddie Mac, a federal government-backed mortgage provider. Previously, the all-time low was 4.57 percent. Freddie Mac has been releasing the weekly mortgage rates for 39 years.
According to Bankrate.com, the average mortgage interest rate at the end of 2008 was 6.33 percent. A borrower who had a $200,000 loan then could save $200 a month in payments if he or she refinanced today.
To see if refinancing makes sense, borrowers should divide the fees they pay to refinance their loans by the monthly amount that they'll save. That will tell them how many months they would have to live in the home to recoup the expense of refinancing.
Dan Longman, president of Priority Lending Corp. in Cooper City, said lenders want borrowers to have a 740 credit score or higher to qualify for the lowest-rate mortgages loans. Two years ago, he says a 680 score would suffice. Lenders also now require full documentation of a borrower's income, unlike during the housing boom when "no documentation" loans were often called "liar loans." And some are requiring borrowers to re-verify their income in the time between the application and final approval.
Indeed, anyone who is out of work will have a difficult time qualifying because they don't have sufficient income to make their loan payments. With unemployment ranging from 10.1 percent to 12.8 percent in Broward, Palm Beach, Miami-Dade and Orange Counties, that eliminates a huge swath of Floridians from the possibility of refinancing mortgages.
The other big obstacle is depressed home values. Because property values have fallen so far in the four-year downturn in the housing market, close to half of Fort Lauderdale's borrowers owe more on their homes than the property is now worth, according to CoreLogic, a real estate analytics firm. They probably won't qualify to refinance, either, because private lenders will not refinance a loan for more than the value of a home. The proportion of "underwater" loans are similar throughout South Florida.
There is one option for borrowers who are underwater to refinance. If the loan is owned by Fannie Mae, a government-sponsored mortgage funding corporation, it can be refinanced if the amount is 125 percent of the home's value. To find out if a loan is owned by Fannie Mae, use the "loan lookup" tool at www. Fanniemae.com.
Given the hurdles, "it's a real shame that all of these people can't take advantage of the rates," said Lane Barron, a senior mortgage consultant at Element Funding in Sunrise. His office this month has almost twice as many applications for new loans than in January, but none of them are for refinancings. Brokers say homeowners who know they are seriously underwater on their mortgages aren't even bothering to apply. But tougher standards are affecting even some folks with sterling credit seeking new mortgages. David Kosowski, of Miami, had an enviable credit score of more than 800 and a steady job. But he says he could not get a lender to give him a loan because part of his income depends upon the profits of his company. Profits had fallen during the recession. He instead paid cash to close on his home in June.
"Now I'm hoping to refinance," he said.
Time may be on his side. Concerns about the economy's recovery are the reason why rates have declined. Economists think they may stay there as the uncertainty continues.
"Mortgage rates are also expected to remain low heading into 2011," said Sam Khater, senior economist at CoreLogic, a real estate analytics firm. But he warned that the outlook could change if inflation, which is pretty much absent today, comes roaring back.
Sunday, July 25, 2010
Obama's friend raising funds for new Gaza aid ship
WASHINGTON - A fundraising campaign is currently underway in the United States to finance the purchase of an American ship in an effort to break the Israeli naval blockade of the Gaza Strip in the early autumn. The ship is to be named after U.S. President Barack Obama's book "The Audacity of Hope."
If that isn't enough to stir the ghosts of the 2008 American presidential election, one of the prominent figures to support the initiative is Columbia University history professor Rashid Khalidi, a well-known critic of Israel whose friendship with the American president from their days together in Chicago engendered criticism of Obama.
An email being circulated by pro-Palestinian activists in the U.S. said the goal of the fundraising campaign is to raise at least $370,000 next month to obtain possession of a ship that could accommodate between 40 and 60 people and for operational expenses. The e-mail said the ship will join a flotilla of other vessels from Europe, Canada, India, South Africa and the Middle East in an additional attempt to break the Israeli naval blockade.
Right-wing Internet-based blog columnists immediately seized on the involvement of Khalidi, whom they portrayed as a friend of Obama who was supporting Hamas. Khalidi said he does not know what the ship will ultimately be named, but said the White House should not be embarrassed by the name "The Audacity of Hope" and should instead call for Israel's naval blockade of the Hamas-controlled territory to be lifted.
Khalidi, who was born in the U.S. and the son of a Palestinian refugee, told Haaretz that although he will participate in the fundraising event for the ship, he will not be sailing in it himself. In a reference to the Israel Defense Forces, he added: "Given the national-religious hierarchy which determines what the IDF can do to whom, the fact that the ship is American will make it harder to deal with it as the Mavi Marmara was dealt with."
The Mavi Marmara was boarded by the Israel Navy at the end of May while part of a flotilla attempting to run the blockade. Nine people on board the ship were killed in the confrontation with naval commandos.
Khalidi said he visited relatives in the Gaza Strip a number of years ago. He characterized the blockade as a measure "imposed on a population of 1. 5 million people who are effectively imprisoned, and most of whom are deprived of living a normal life."
When asked by Haaretz if he was aware of the proposed name of the ship and whether the choice of name was appropriate, Khalidi said: "I am not one of the organizers of this effort, and had no knowledge that this name had been chosen. If the name is a problem for the [Obama] administration, it can simply insist publicly that Israel lift the siege. That of course would require it to respond to the systematic mendacity of those in Congress and elsewhere who support the siege. It is shameful that the U.S. and Egyptian governments are complicit in this indefensible siege."
Khalidi said the fact that the ship is American would bring attention to the Gaza issue, which had begun to have an impact on American public opinion.
"This has not been the result of the ineffective efforts of the two feeble Palestinian 'authorities', nor has it mainly been the result of the work of activists, important though this has been," he said.
"It has primarily been a natural response to the actions of successive Israeli governments. These actions have appeared more and more unjustifiable to growing segments of US public opinion - the only place largely impervious to this change has been the US Congress. This is especially the case among younger people, who can detect the deception and chicanery which are an essential part of 'selling' such rotten goods as occupation, discrimination, and attacks on civilians. It is also visible in widening sectors of the American Jewish community."
Israel's blockade of Gaza was punishing civilians while having little effect on the Hamas administration, Khalidi said.
"The siege is not imposed on the Hamas government, or on a 'terrorist entity', as the Israeli government describes the entire Gaza Strip: it is imposed on a population of 1.5 million people, who are effectively imprisoned, and most of whom are deprived of living a normal life. Moreover, it hardly affects that government, as has been amply reported by Haaretz, the NY Times and other organs not known for their sympathy for Hamas."
This for of collective punishment could constitute a war crime, he said.
"This is collective punishment of a civilian population, pure and simple - as Dov Weisglass cynically said, the Gazans would be “put on a diet”. That is potentially a war crime. Most of Gaza’s population, being children, did not vote for Hamas or anyone else. Any human being of any political orientation should oppose this siege".
Nor does Khalidi have any faith in current peace talks between the Netanyahu administration and the Palestinians.
"Negotiations between the most extreme Israeli government in decades and a Palestinian authority operating without a national consensus are unlikely to resolve the outstanding issues," he said.
"Doing so would require accepting international law as the basis for a settlement, and abandoning the bankrupt “peace process” approach and the flagrant American bias in favor of Israel’s policies that have significantly worsened the situation over the past two decades. If the new flotilla helps to end the blockade of Gaza, and perhaps helps to bring the two Palestinian authorities to understand how much damage the continuation of the division between them, and between the West Bank and the Gaza Strip, is doing to the Palestinian cause, it will have been a good thing."
If that isn't enough to stir the ghosts of the 2008 American presidential election, one of the prominent figures to support the initiative is Columbia University history professor Rashid Khalidi, a well-known critic of Israel whose friendship with the American president from their days together in Chicago engendered criticism of Obama.
An email being circulated by pro-Palestinian activists in the U.S. said the goal of the fundraising campaign is to raise at least $370,000 next month to obtain possession of a ship that could accommodate between 40 and 60 people and for operational expenses. The e-mail said the ship will join a flotilla of other vessels from Europe, Canada, India, South Africa and the Middle East in an additional attempt to break the Israeli naval blockade.
Right-wing Internet-based blog columnists immediately seized on the involvement of Khalidi, whom they portrayed as a friend of Obama who was supporting Hamas. Khalidi said he does not know what the ship will ultimately be named, but said the White House should not be embarrassed by the name "The Audacity of Hope" and should instead call for Israel's naval blockade of the Hamas-controlled territory to be lifted.
Khalidi, who was born in the U.S. and the son of a Palestinian refugee, told Haaretz that although he will participate in the fundraising event for the ship, he will not be sailing in it himself. In a reference to the Israel Defense Forces, he added: "Given the national-religious hierarchy which determines what the IDF can do to whom, the fact that the ship is American will make it harder to deal with it as the Mavi Marmara was dealt with."
The Mavi Marmara was boarded by the Israel Navy at the end of May while part of a flotilla attempting to run the blockade. Nine people on board the ship were killed in the confrontation with naval commandos.
Khalidi said he visited relatives in the Gaza Strip a number of years ago. He characterized the blockade as a measure "imposed on a population of 1. 5 million people who are effectively imprisoned, and most of whom are deprived of living a normal life."
When asked by Haaretz if he was aware of the proposed name of the ship and whether the choice of name was appropriate, Khalidi said: "I am not one of the organizers of this effort, and had no knowledge that this name had been chosen. If the name is a problem for the [Obama] administration, it can simply insist publicly that Israel lift the siege. That of course would require it to respond to the systematic mendacity of those in Congress and elsewhere who support the siege. It is shameful that the U.S. and Egyptian governments are complicit in this indefensible siege."
Khalidi said the fact that the ship is American would bring attention to the Gaza issue, which had begun to have an impact on American public opinion.
"This has not been the result of the ineffective efforts of the two feeble Palestinian 'authorities', nor has it mainly been the result of the work of activists, important though this has been," he said.
"It has primarily been a natural response to the actions of successive Israeli governments. These actions have appeared more and more unjustifiable to growing segments of US public opinion - the only place largely impervious to this change has been the US Congress. This is especially the case among younger people, who can detect the deception and chicanery which are an essential part of 'selling' such rotten goods as occupation, discrimination, and attacks on civilians. It is also visible in widening sectors of the American Jewish community."
Israel's blockade of Gaza was punishing civilians while having little effect on the Hamas administration, Khalidi said.
"The siege is not imposed on the Hamas government, or on a 'terrorist entity', as the Israeli government describes the entire Gaza Strip: it is imposed on a population of 1.5 million people, who are effectively imprisoned, and most of whom are deprived of living a normal life. Moreover, it hardly affects that government, as has been amply reported by Haaretz, the NY Times and other organs not known for their sympathy for Hamas."
This for of collective punishment could constitute a war crime, he said.
"This is collective punishment of a civilian population, pure and simple - as Dov Weisglass cynically said, the Gazans would be “put on a diet”. That is potentially a war crime. Most of Gaza’s population, being children, did not vote for Hamas or anyone else. Any human being of any political orientation should oppose this siege".
Nor does Khalidi have any faith in current peace talks between the Netanyahu administration and the Palestinians.
"Negotiations between the most extreme Israeli government in decades and a Palestinian authority operating without a national consensus are unlikely to resolve the outstanding issues," he said.
"Doing so would require accepting international law as the basis for a settlement, and abandoning the bankrupt “peace process” approach and the flagrant American bias in favor of Israel’s policies that have significantly worsened the situation over the past two decades. If the new flotilla helps to end the blockade of Gaza, and perhaps helps to bring the two Palestinian authorities to understand how much damage the continuation of the division between them, and between the West Bank and the Gaza Strip, is doing to the Palestinian cause, it will have been a good thing."
Obama Names Medicaid Chief Who Backs Anti-Israel Doctors
Republicans, and some Democrats, are in an uproar over U.S. President Barack Obama’s naming a Medicare chief who backs socialized medicine—and an anti-Israel physicians’ group.
The appointment of Donald Berwick, who is heavily involved in the anti-Israel Physicians for Human Rights organization, was made without going through the usual process of securing confirmation by the Senate. Opposition to his appointment was strengthened after it was discovered that Dr. Berwick said in a speech two years ago that the British system of socialized medicine is superior to the American health system.
Republican senators accused President Obama of bypassing the Senate to hide Berwick’s views, but White House spokesman Robert Gibbs responded, "There are aspects of the health care law that have to be implemented on a timeline that I'm sure many who oppose Dr. Berwick for political reasons didn't want to see implemented.”
However, even some Democrats are against the appointment of Berwick as the administrator for Medicare, including Senate Finance Committee chairman Sen. Max Baucus of Montana. Senate confirmation "is an essential process prescribed by the Constitution that serves as a check on executive power and protects Montanans and all Americans by ensuring that crucial questions are asked of the nominee -- and answered," he said.
Berwick’s backing of the Physicians for Human Rights (PHR) group dates back to the year 2000, when he donated thousands of dollars to the organization after the outbreak of the Second Intifada, also known as the Oslo War.
Part of PHR’s mission was to conduct “a medical and forensic investigation in Israel, Gaza and the West Bank [Judea and Samaria] from October 20-27, 2000 to investigate allegations of excessive use of force, including the use of prohibited ammunition in the current conflict between Israeli forces and Palestinian demonstrators and authorities."
In its probe of the IDF’s counter terrorist operation in Jenin in 2002, the physicians’ group issued seven reports critical of Israel while totally ignoring human rights violations in Iran and Iraq. PHR also awarded a Gaza activist who later justified bombings of Israelis.
In 2008, Dr. Berwick joined the board of PHR, joining Richard Goldstone, who later authored the United Nations report accusing Israel of war crimes in the three-week Operation Cast Lead against the terrorist infrastructure in Gaza in the winter of 2008-2009, while barely mentioning the prior nine years of rocket attacks on Israeli civilians.
A statement by the PHR was part of the basis of the Goldstone Report. PHR director Frank Donaghue stated, "The parties to this horrific conflict are choking an entire population -- threatening access to food, shelter, medical care, and creating daily terror and insecurity. No military objectives can justify this."
(IsraelNationalNews.com)
http://www.israelnationalnews.com/News/News.aspx/138759
The appointment of Donald Berwick, who is heavily involved in the anti-Israel Physicians for Human Rights organization, was made without going through the usual process of securing confirmation by the Senate. Opposition to his appointment was strengthened after it was discovered that Dr. Berwick said in a speech two years ago that the British system of socialized medicine is superior to the American health system.
Republican senators accused President Obama of bypassing the Senate to hide Berwick’s views, but White House spokesman Robert Gibbs responded, "There are aspects of the health care law that have to be implemented on a timeline that I'm sure many who oppose Dr. Berwick for political reasons didn't want to see implemented.”
However, even some Democrats are against the appointment of Berwick as the administrator for Medicare, including Senate Finance Committee chairman Sen. Max Baucus of Montana. Senate confirmation "is an essential process prescribed by the Constitution that serves as a check on executive power and protects Montanans and all Americans by ensuring that crucial questions are asked of the nominee -- and answered," he said.
Berwick’s backing of the Physicians for Human Rights (PHR) group dates back to the year 2000, when he donated thousands of dollars to the organization after the outbreak of the Second Intifada, also known as the Oslo War.
Part of PHR’s mission was to conduct “a medical and forensic investigation in Israel, Gaza and the West Bank [Judea and Samaria] from October 20-27, 2000 to investigate allegations of excessive use of force, including the use of prohibited ammunition in the current conflict between Israeli forces and Palestinian demonstrators and authorities."
In its probe of the IDF’s counter terrorist operation in Jenin in 2002, the physicians’ group issued seven reports critical of Israel while totally ignoring human rights violations in Iran and Iraq. PHR also awarded a Gaza activist who later justified bombings of Israelis.
In 2008, Dr. Berwick joined the board of PHR, joining Richard Goldstone, who later authored the United Nations report accusing Israel of war crimes in the three-week Operation Cast Lead against the terrorist infrastructure in Gaza in the winter of 2008-2009, while barely mentioning the prior nine years of rocket attacks on Israeli civilians.
A statement by the PHR was part of the basis of the Goldstone Report. PHR director Frank Donaghue stated, "The parties to this horrific conflict are choking an entire population -- threatening access to food, shelter, medical care, and creating daily terror and insecurity. No military objectives can justify this."
(IsraelNationalNews.com)
http://www.israelnationalnews.com/News/News.aspx/138759
Friday, July 23, 2010
Sen. John Kerry skips town on sails tax
Sen. John Kerry, who has repeatedly voted to raise taxes while in Congress, dodged a whopping six-figure state tax bill on his new multimillion-dollar yacht by mooring her in Newport, R.I.
Isabel - Kerry’s luxe, 76-foot New Zealand-built Friendship sloop with an Edwardian-style, glossy varnished teak interior, two VIP main cabins and a pilothouse fitted with a wet bar and cold wine storage - was designed by Rhode Island boat designer Ted Fontaine.
But instead of berthing the vessel in Nantucket, where the senator summers with the missus, Teresa Heinz, Isabel’s hailing port is listed as “Newport” on her stern.
Could the reason be that the Ocean State repealed its Boat Sales and Use Tax back in 1993, making the tiny state to the south a haven - like the Cayman Islands, Bermuda and Nassau - for tax-skirting luxury yacht owners?
Cash-strapped Massachusetts still collects a 6.25 percent sales tax and an annual excise tax on yachts. Sources say Isabel sold for something in the neighborhood of $7 million, meaning Kerry saved approximately $437,500 in sales tax and an annual excise tax of about $70,000.
The senior senator’s chief of staff David Wade denied the old salt was berthing his boat out of state to avoid ponying up to the commonwealth.
“The boat was designed by and purchased from a company in Rhode Island, and it’s based in Newport at the Newport Shipyard for long-term maintenance, upkeep and charter purposes, not tax reasons,” Wade told the Track.
And state Department of Revenue spokesguy Bob Bliss confirmed the senator “is under no obligation to pay the commonwealth sales tax.”
But back in 2006, then-gubernatorial candidate Christy Mihos took some flack for avoiding some $23,000 in Bay State sales tax and $1,320 in local excise taxes by berthing his motor yacht in Rhode Island. But Mihos paid just $475,000 for his 36-foot vessel Ashley and readily admitted that he used the boat at his West Yarmouth summer home.
However, according to Bliss, if Kerry berths the Isabel in Massachusetts waters within six months of purchasing the boat, there’s a “presumption of use” and the Heinz-Kerrys would have to walk the plank and pony up to the Bay State. After six months, should the boat change its berth to, say, Nantucket, then it’s up to the state to go after them for the taxes, Bliss added.
Yesterday, the Isabel, which lists Great Point LLC of Pittsburgh, Penn., as its owner, was getting a spruce-up at the Hinckley shipyard in Portsmouth, R.I. Sources say the senior senator is demanding that some warranty work be done.
Fontaine, a protege of legendary sailboat designer Ted Hood, was tight-lipped about the owners of Isabel but he did confirm the boat was built in New Zealand. According to Internet reports, Kerry was seen in Whangarei last December inspecting his new high-seas plaything.
File Under: Shipping Up To Boston (Not
Isabel - Kerry’s luxe, 76-foot New Zealand-built Friendship sloop with an Edwardian-style, glossy varnished teak interior, two VIP main cabins and a pilothouse fitted with a wet bar and cold wine storage - was designed by Rhode Island boat designer Ted Fontaine.
But instead of berthing the vessel in Nantucket, where the senator summers with the missus, Teresa Heinz, Isabel’s hailing port is listed as “Newport” on her stern.
Could the reason be that the Ocean State repealed its Boat Sales and Use Tax back in 1993, making the tiny state to the south a haven - like the Cayman Islands, Bermuda and Nassau - for tax-skirting luxury yacht owners?
Cash-strapped Massachusetts still collects a 6.25 percent sales tax and an annual excise tax on yachts. Sources say Isabel sold for something in the neighborhood of $7 million, meaning Kerry saved approximately $437,500 in sales tax and an annual excise tax of about $70,000.
The senior senator’s chief of staff David Wade denied the old salt was berthing his boat out of state to avoid ponying up to the commonwealth.
“The boat was designed by and purchased from a company in Rhode Island, and it’s based in Newport at the Newport Shipyard for long-term maintenance, upkeep and charter purposes, not tax reasons,” Wade told the Track.
And state Department of Revenue spokesguy Bob Bliss confirmed the senator “is under no obligation to pay the commonwealth sales tax.”
But back in 2006, then-gubernatorial candidate Christy Mihos took some flack for avoiding some $23,000 in Bay State sales tax and $1,320 in local excise taxes by berthing his motor yacht in Rhode Island. But Mihos paid just $475,000 for his 36-foot vessel Ashley and readily admitted that he used the boat at his West Yarmouth summer home.
However, according to Bliss, if Kerry berths the Isabel in Massachusetts waters within six months of purchasing the boat, there’s a “presumption of use” and the Heinz-Kerrys would have to walk the plank and pony up to the Bay State. After six months, should the boat change its berth to, say, Nantucket, then it’s up to the state to go after them for the taxes, Bliss added.
Yesterday, the Isabel, which lists Great Point LLC of Pittsburgh, Penn., as its owner, was getting a spruce-up at the Hinckley shipyard in Portsmouth, R.I. Sources say the senior senator is demanding that some warranty work be done.
Fontaine, a protege of legendary sailboat designer Ted Hood, was tight-lipped about the owners of Isabel but he did confirm the boat was built in New Zealand. According to Internet reports, Kerry was seen in Whangarei last December inspecting his new high-seas plaything.
File Under: Shipping Up To Boston (Not
PLO Flag to Fly in Washington D.C.
The United States State Department has announced to the Palestinian Authority/Palestinian Liberation Organization Mission representative in the United States that its status will be upgraded from a 'bureau' to that of a "general delegation' and that this change will allow the office in which the representation is situated to fly the PLO, now also the Palestine Authority, flag at its entrance.
The upgrading, besides allowing the flag to be flown, also grants certan privileges to the delegation staff, such as diplomatic immunity, although it is not equal to embassy status.
The PLO's chief representative in the United States, Maen Areikat, said that this step makes the PLO's status in the United States equivalent to its status in Canada and many western European countries.
Israeli Radio reported that sources in Prime Minister Netanyahu's office said that the Prime Minister knew of the planned step and did not object to it. . Diplomatic sources in Jerusalem claimed that the step was taken to strengthen Abu Maazen and try to get him to agree to direct talks with Israel. However, they expressed dissapointment that the White House did not make ceasing the PA's anti Israel incitement a condition for the status upgrade.
The upgrading, besides allowing the flag to be flown, also grants certan privileges to the delegation staff, such as diplomatic immunity, although it is not equal to embassy status.
The PLO's chief representative in the United States, Maen Areikat, said that this step makes the PLO's status in the United States equivalent to its status in Canada and many western European countries.
Israeli Radio reported that sources in Prime Minister Netanyahu's office said that the Prime Minister knew of the planned step and did not object to it. . Diplomatic sources in Jerusalem claimed that the step was taken to strengthen Abu Maazen and try to get him to agree to direct talks with Israel. However, they expressed dissapointment that the White House did not make ceasing the PA's anti Israel incitement a condition for the status upgrade.
Tuesday, July 20, 2010
“Do you think Reverend Wright loves America as much as you do?”
It was the moment of greatest peril for then-Sen. Barack Obama’s political career. In the heat of the presidential campaign, videos surfaced of Obama’s pastor, the Rev. Jeremiah Wright, angrily denouncing whites, the U.S. government and America itself. Obama had once bragged of his closeness to Wright. Now the black nationalist preacher’s rhetoric was threatening to torpedo Obama’s campaign.
The crisis reached a howling pitch in mid-April, 2008, at an ABC News debate moderated by Charlie Gibson and George Stephanopoulos. Gibson asked Obama why it had taken him so long – nearly a year since Wright’s remarks became public – to dissociate himself from them. Stephanopoulos asked, “Do you think Reverend Wright loves America as much as you do?”
Watching this all at home were members of Journolist, a listserv comprised of several hundred liberal journalists, as well as like-minded professors and activists. The tough questioning from the ABC anchors left many of them outraged. “George [Stephanopoulos],” fumed Richard Kim of the Nation, is “being a disgusting little rat snake.”
Others went further. According to records obtained by The Daily Caller, at several points during the 2008 presidential campaign a group of liberal journalists took radical steps to protect their favored candidate. Employees of news organizations including Time, Politico, the Huffington Post, the Baltimore Sun, the Guardian, Salon and the New Republic participated in outpourings of anger over how Obama had been treated in the media, and in some cases plotted to fix the damage.
In one instance, Spencer Ackerman of the Washington Independent urged his colleagues to deflect attention from Obama’s relationship with Wright by changing the subject. Pick one of Obama’s conservative critics, Ackerman wrote, “Fred Barnes, Karl Rove, who cares — and call them racists.”
Michael Tomasky, a writer for the Guardian, also tried to rally his fellow members of Journolist: “Listen folks–in my opinion, we all have to do what we can to kill ABC and this idiocy in whatever venues we have. This isn’t about defending Obama. This is about how the [mainstream media] kills any chance of discourse that actually serves the people.”
“Richard Kim got this right above: ‘a horrible glimpse of general election press strategy.’ He’s dead on,” Tomasky continued. “We need to throw chairs now, try as hard as we can to get the call next time. Otherwise the questions in October will be exactly like this. This is just a disease.”
(In an interview Monday, Tomasky defended his position, calling the ABC debate an example of shoddy journalism.)
Thomas Schaller, a columnist for the Baltimore Sun as well as a political science professor, upped the ante from there. In a post with the subject header, “why don’t we use the power of this list to do something about the debate?” Schaller proposed coordinating a “smart statement expressing disgust” at the questions Gibson and Stephanopoulos had posed to Obama.
“It would create quite a stir, I bet, and be a warning against future behavior of the sort,” Schaller wrote.
Tomasky approved. “YES. A thousand times yes,” he exclaimed.
The members began collaborating on their open letter. Jonathan Stein of Mother Jones rejected an early draft, saying, “I’d say too short. In my opinion, it doesn’t go far enough in highlighting the inanity of some of [Gibson's] and [Stephanopoulos’s] questions. And it doesn’t point out their factual inaccuracies …Our friends at Media Matters probably have tons of experience with this sort of thing, if we want their input.”
Read more: http://dailycaller.com/2010/07/20/documents-show-media-plotting-to-kill-stories-about-rev-jeremiah-wright/#ixzz0uF3P9s9p
The crisis reached a howling pitch in mid-April, 2008, at an ABC News debate moderated by Charlie Gibson and George Stephanopoulos. Gibson asked Obama why it had taken him so long – nearly a year since Wright’s remarks became public – to dissociate himself from them. Stephanopoulos asked, “Do you think Reverend Wright loves America as much as you do?”
Watching this all at home were members of Journolist, a listserv comprised of several hundred liberal journalists, as well as like-minded professors and activists. The tough questioning from the ABC anchors left many of them outraged. “George [Stephanopoulos],” fumed Richard Kim of the Nation, is “being a disgusting little rat snake.”
Others went further. According to records obtained by The Daily Caller, at several points during the 2008 presidential campaign a group of liberal journalists took radical steps to protect their favored candidate. Employees of news organizations including Time, Politico, the Huffington Post, the Baltimore Sun, the Guardian, Salon and the New Republic participated in outpourings of anger over how Obama had been treated in the media, and in some cases plotted to fix the damage.
In one instance, Spencer Ackerman of the Washington Independent urged his colleagues to deflect attention from Obama’s relationship with Wright by changing the subject. Pick one of Obama’s conservative critics, Ackerman wrote, “Fred Barnes, Karl Rove, who cares — and call them racists.”
Michael Tomasky, a writer for the Guardian, also tried to rally his fellow members of Journolist: “Listen folks–in my opinion, we all have to do what we can to kill ABC and this idiocy in whatever venues we have. This isn’t about defending Obama. This is about how the [mainstream media] kills any chance of discourse that actually serves the people.”
“Richard Kim got this right above: ‘a horrible glimpse of general election press strategy.’ He’s dead on,” Tomasky continued. “We need to throw chairs now, try as hard as we can to get the call next time. Otherwise the questions in October will be exactly like this. This is just a disease.”
(In an interview Monday, Tomasky defended his position, calling the ABC debate an example of shoddy journalism.)
Thomas Schaller, a columnist for the Baltimore Sun as well as a political science professor, upped the ante from there. In a post with the subject header, “why don’t we use the power of this list to do something about the debate?” Schaller proposed coordinating a “smart statement expressing disgust” at the questions Gibson and Stephanopoulos had posed to Obama.
“It would create quite a stir, I bet, and be a warning against future behavior of the sort,” Schaller wrote.
Tomasky approved. “YES. A thousand times yes,” he exclaimed.
The members began collaborating on their open letter. Jonathan Stein of Mother Jones rejected an early draft, saying, “I’d say too short. In my opinion, it doesn’t go far enough in highlighting the inanity of some of [Gibson's] and [Stephanopoulos’s] questions. And it doesn’t point out their factual inaccuracies …Our friends at Media Matters probably have tons of experience with this sort of thing, if we want their input.”
Read more: http://dailycaller.com/2010/07/20/documents-show-media-plotting-to-kill-stories-about-rev-jeremiah-wright/#ixzz0uF3P9s9p
Tuesday, July 13, 2010
Fort Lauderdale's Riverfront now a ghost town
FORT LAUDERDALE — Dan Marino's — gone. Ugly Tuna Saloona — gone. Ditto for Max's Grille, Johnny Rockets, Argenti Designer Jewelers and Vogue Italia.
Planned 12 years ago as a major entertainment destination for tourists and locals, the Las Olas Riverfront complex sits today as a ghost town along the city's New River. The movie theater remains, but most retail stores have closed and the dining options have dwindled.
Riverfront's business directory lists it as less than half full. And while water still flows from its signature courtyard fountain, its escalators don't move and are blocked off.
--------------------------------------------------------------------------------
Have your say. Be sure to comment on this story below.
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Visitors pass shuttered store after shuttered store emblazoned with for-lease signs. The place picks up only late at night when its few nightclubs open.
Casey and Audrey Ahlbum, of Margate, were stunned last week when they came to Riverfront for the first time in a couple of years to take a sightseeing cruise. They hoped to shop and eat in the complex as they had done in the past.
"It's sad," Audrey Ahlbum said. "They should have left it as it was. It was such a great location and set-up, but now there's nothing."
Downtown leaders believe Riverfront will linger largely as it is today until the national economy recovers. Their hopes for a faster rebirth were dashed recently when a group of commercial real estate developers backed out of a deal to buy and restore the complex.
That was the latest setback for the beleaguered Riverfront.
Plans to tear it down and replace it with a hotel, high-rise condo tower and an office building fell through when the real estate market crashed. The complex was bought earlier this year at public auction by one of its lenders, an arm of Cerberus Capital Management in New York.
"Time will force a decision, but I don't know how much time that will be," said restaurateur Tim Petriello, a member of the Downtown Development Authority. "It's terrible because it is one of the nicest pieces of real estate in Fort Lauderdale and is so underutilized. Ultimately, I hope something happens sooner rather than later because what is happening right now does nothing for downtown."
The complex, located just off Las Olas Boulevard and Andrews Avenue, was heavily underwritten by tax money.
Taxpayers to both the Broward County School Board and the city of Fort Lauderdale lost more than $3 million in deals leading up to the 1998 development of Riverfront. Local government still has a stake in it because the site must remain a public entertainment zone until at least 2011 under the terms of the city's deal with the original developers.
The downfall of Riverfront has come despite the explosion of downtown residents as a result of the construction of thousands of nearby condos.
Downtown leaders believe the complex developed too young of a following as a result of its movie theater and bars and lost the higher-end customers that could sustain major restaurants and retail operations. They also contend the building was poorly designed for how downtown developed — largely blocking itself off as an island between the shops and restaurants along Las Olas and those in Himmarshee Village.
"It's kind of creepy," said Tracy Acton, of Fort Lauderdale, who took her two sons to see "Toy Story 3" at Riverfront last week. She said the original "bustling and wonderful" Riverfront was part of what attracted her family to Fort Lauderdale.
Merv Brody's Vogue Italia was one of Riverfront's original businesses, but he left 2 1/2 years ago.
"I didn't want to leave, but it just wasn't working," Brody said. "The location was right, but the caliber of people changed and the better places moved out."
Robbie Barnes, though, has faith that the complex will recover.
He recently moved his designer clothing store Street Couture from a warehouse studio in Deerfield Beach to Riverfront. He notes that he invested heavily in remodeling what once was a sandwich store and that a new restaurant and nightclub are soon to open.
Riverfront's continuing ill-health is drawing complaints from civic activists who argue the city must do something soon to rehabilitate a place that sits in the prime path along the river that runs from the Broward Center for the Performing Arts to Las Olas Boulevard.
"It's just critical that it be brought back because it is a pivotal piece of downtown," said former City Commissioner Tim Smith, who recently wrote about Riverfront's woes on his personal blog site. "The city needs to play hardball and force something to happen. It's the citizens' land, and someone needs to be a champion."
Mayor Jack Seiler agrees.
He would like the city to work with Riverfront's owners to bring about a redevelopment. He also wants more details on what happens legally next year when the entertainment zone requirement is set to end. He said Riverfront is a key part to building the walk along the New River into something more vibrant like that seen in San Antonio, Texas.
"The city started along the river and the river is our future," Seiler said. "You can't have such a large segment along the Riverwalk sitting vacant."
Planned 12 years ago as a major entertainment destination for tourists and locals, the Las Olas Riverfront complex sits today as a ghost town along the city's New River. The movie theater remains, but most retail stores have closed and the dining options have dwindled.
Riverfront's business directory lists it as less than half full. And while water still flows from its signature courtyard fountain, its escalators don't move and are blocked off.
--------------------------------------------------------------------------------
Have your say. Be sure to comment on this story below.
--------------------------------------------------------------------------------
Visitors pass shuttered store after shuttered store emblazoned with for-lease signs. The place picks up only late at night when its few nightclubs open.
Casey and Audrey Ahlbum, of Margate, were stunned last week when they came to Riverfront for the first time in a couple of years to take a sightseeing cruise. They hoped to shop and eat in the complex as they had done in the past.
"It's sad," Audrey Ahlbum said. "They should have left it as it was. It was such a great location and set-up, but now there's nothing."
Downtown leaders believe Riverfront will linger largely as it is today until the national economy recovers. Their hopes for a faster rebirth were dashed recently when a group of commercial real estate developers backed out of a deal to buy and restore the complex.
That was the latest setback for the beleaguered Riverfront.
Plans to tear it down and replace it with a hotel, high-rise condo tower and an office building fell through when the real estate market crashed. The complex was bought earlier this year at public auction by one of its lenders, an arm of Cerberus Capital Management in New York.
"Time will force a decision, but I don't know how much time that will be," said restaurateur Tim Petriello, a member of the Downtown Development Authority. "It's terrible because it is one of the nicest pieces of real estate in Fort Lauderdale and is so underutilized. Ultimately, I hope something happens sooner rather than later because what is happening right now does nothing for downtown."
The complex, located just off Las Olas Boulevard and Andrews Avenue, was heavily underwritten by tax money.
Taxpayers to both the Broward County School Board and the city of Fort Lauderdale lost more than $3 million in deals leading up to the 1998 development of Riverfront. Local government still has a stake in it because the site must remain a public entertainment zone until at least 2011 under the terms of the city's deal with the original developers.
The downfall of Riverfront has come despite the explosion of downtown residents as a result of the construction of thousands of nearby condos.
Downtown leaders believe the complex developed too young of a following as a result of its movie theater and bars and lost the higher-end customers that could sustain major restaurants and retail operations. They also contend the building was poorly designed for how downtown developed — largely blocking itself off as an island between the shops and restaurants along Las Olas and those in Himmarshee Village.
"It's kind of creepy," said Tracy Acton, of Fort Lauderdale, who took her two sons to see "Toy Story 3" at Riverfront last week. She said the original "bustling and wonderful" Riverfront was part of what attracted her family to Fort Lauderdale.
Merv Brody's Vogue Italia was one of Riverfront's original businesses, but he left 2 1/2 years ago.
"I didn't want to leave, but it just wasn't working," Brody said. "The location was right, but the caliber of people changed and the better places moved out."
Robbie Barnes, though, has faith that the complex will recover.
He recently moved his designer clothing store Street Couture from a warehouse studio in Deerfield Beach to Riverfront. He notes that he invested heavily in remodeling what once was a sandwich store and that a new restaurant and nightclub are soon to open.
Riverfront's continuing ill-health is drawing complaints from civic activists who argue the city must do something soon to rehabilitate a place that sits in the prime path along the river that runs from the Broward Center for the Performing Arts to Las Olas Boulevard.
"It's just critical that it be brought back because it is a pivotal piece of downtown," said former City Commissioner Tim Smith, who recently wrote about Riverfront's woes on his personal blog site. "The city needs to play hardball and force something to happen. It's the citizens' land, and someone needs to be a champion."
Mayor Jack Seiler agrees.
He would like the city to work with Riverfront's owners to bring about a redevelopment. He also wants more details on what happens legally next year when the entertainment zone requirement is set to end. He said Riverfront is a key part to building the walk along the New River into something more vibrant like that seen in San Antonio, Texas.
"The city started along the river and the river is our future," Seiler said. "You can't have such a large segment along the Riverwalk sitting vacant."
More than 1,000 exposed to dengue in Florida: CDC
(Reuters) - Five percent of the population of Key West, Florida -- more than 1,000 people -- have been infected at some point with the dengue virus, government researchers reported on Tuesday.
Most probably did not even know it, but the findings show the sometimes deadly infection is making its way north into the United States, the researchers said.
"We're concerned that if dengue gains a foothold in Key West, it will travel to other southern cities where the mosquito that transmits dengue is present, like Miami," said Harold Margolis, chief of the dengue branch at the U.S. Centers for Disease Control and Prevention.
"These cases represent the reemergence of dengue fever in Florida and elsewhere in the United States after 75 years," Margolis said in a statement.
"These people had not traveled outside of Florida, so we need to determine if these cases are an isolated occurrence or if dengue has once again become endemic in the continental United States."
Dengue is the most common virus transmitted by mosquitoes, infecting 50 million to 100 million people every year and killing 25,000 of them.
It can cause classic flu-like symptoms but can also take on a hemorrhagic form that causes internal and external bleeding and sudden death. Companies are working on a vaccine but there is not any effective drug to treat it.
Dengue was eradicated in the United States in the 1940s but a few locally acquired U.S. cases have been confirmed along the Texas-Mexico border since the 1980s. More cases have been reported recently in Mexico and the Caribbean.
After 27 cases of dengue were reported in Florida in 2009, scientists from the CDC and the Florida Department of Health took blood samples from 240 randomly chosen Key West residents.
Of these, 5 percent had active dengue infections or antibodies to the virus, showing they had been infected, the researchers told the International Conference on Emerging Infectious Diseases being held in Atlanta.
(
Most probably did not even know it, but the findings show the sometimes deadly infection is making its way north into the United States, the researchers said.
"We're concerned that if dengue gains a foothold in Key West, it will travel to other southern cities where the mosquito that transmits dengue is present, like Miami," said Harold Margolis, chief of the dengue branch at the U.S. Centers for Disease Control and Prevention.
"These cases represent the reemergence of dengue fever in Florida and elsewhere in the United States after 75 years," Margolis said in a statement.
"These people had not traveled outside of Florida, so we need to determine if these cases are an isolated occurrence or if dengue has once again become endemic in the continental United States."
Dengue is the most common virus transmitted by mosquitoes, infecting 50 million to 100 million people every year and killing 25,000 of them.
It can cause classic flu-like symptoms but can also take on a hemorrhagic form that causes internal and external bleeding and sudden death. Companies are working on a vaccine but there is not any effective drug to treat it.
Dengue was eradicated in the United States in the 1940s but a few locally acquired U.S. cases have been confirmed along the Texas-Mexico border since the 1980s. More cases have been reported recently in Mexico and the Caribbean.
After 27 cases of dengue were reported in Florida in 2009, scientists from the CDC and the Florida Department of Health took blood samples from 240 randomly chosen Key West residents.
Of these, 5 percent had active dengue infections or antibodies to the virus, showing they had been infected, the researchers told the International Conference on Emerging Infectious Diseases being held in Atlanta.
(
Monday, July 12, 2010
Doctors Threaten to Pull Out of Texas Medicaid
Cuts to the reimbursements given to doctors who treat patients covered by the state's low-income health care program are raising fears that already declining physician participation will fall even further, according to a published report.
The health care and insurance industries fear that a 1 percent cut in Medicaid fees scheduled to take effect Sept. 1 will be the first in a series of cuts as state agencies are asked to trim their two-year budgets by 10 percent to help cover an expected $18 billion revenue shortfall, The Dallas Morning News reported Sunday.
About 3.3 million poor and disabled Texans depend on Medicaid for health care, but less than a third of the state's 48,700 practicing doctors accept patients covered by the federal program, according to Texas Health and Human Services Commission. And some doctors who do participate in the program limit the number and kind of patients they accept.
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The commission, which administers the program in Texas, is among the state agencies that state leaders expect to cut spending. Thomas Suehs, the commission's top executive, said he realizes the bind that physicians find themselves in.
"No one ever wants to cut Medicaid," commission spokeswoman Stephanie Goodman said. But, she noted, "it's 75 percent of our budget. So when you start to identify places to reduce our budget, it gets very hard to skip Medicaid."
Dr. Lou Montanaro, a suburban Dallas obstetrician, said he wanted to stay in the Medicaid program, but low reimbursement levels have prompted him to restrict the Medicaid cases he takes. He accepts pregnant patients, but not women seeking gynecological care.
Montanaro believes that reimbursement levels will continue to decline, which will prompt more doctors to decide to restrict or stop taking Medicaid patients.
"They're going to try to expand the rolls of Medicaid ... and at the same time they want to reduce the reimbursement to doctors," he said. "With the (pay) trend going downwards, I don't see additional physicians signing up. It's just not going to happen."
A survey by the Texas Medical Association, the state's largest physicians interest group, showed that 45 percent of its members who responded said they would limit how many Medicaid patients they would treat if the Medicaid fees were cut by 1 or 2 percent, while another 24 percent said they would stop accepting any Medicaid patients.
The issue is one of financial survival, said Tom Banning, the association's lobbyist. He said Medicaid pays about 70 percent of what Medicare, a federal insurance program for people age 65 or older, pays for the same service. Commercial insurers are also lowering their rates, he said.
In planning their business survival strategies, doctors "have tended to look at what is the lowest-paying part of the market, which is Medicaid. It's not a hard economic decision," Banning said.
The health care and insurance industries fear that a 1 percent cut in Medicaid fees scheduled to take effect Sept. 1 will be the first in a series of cuts as state agencies are asked to trim their two-year budgets by 10 percent to help cover an expected $18 billion revenue shortfall, The Dallas Morning News reported Sunday.
About 3.3 million poor and disabled Texans depend on Medicaid for health care, but less than a third of the state's 48,700 practicing doctors accept patients covered by the federal program, according to Texas Health and Human Services Commission. And some doctors who do participate in the program limit the number and kind of patients they accept.
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The commission, which administers the program in Texas, is among the state agencies that state leaders expect to cut spending. Thomas Suehs, the commission's top executive, said he realizes the bind that physicians find themselves in.
"No one ever wants to cut Medicaid," commission spokeswoman Stephanie Goodman said. But, she noted, "it's 75 percent of our budget. So when you start to identify places to reduce our budget, it gets very hard to skip Medicaid."
Dr. Lou Montanaro, a suburban Dallas obstetrician, said he wanted to stay in the Medicaid program, but low reimbursement levels have prompted him to restrict the Medicaid cases he takes. He accepts pregnant patients, but not women seeking gynecological care.
Montanaro believes that reimbursement levels will continue to decline, which will prompt more doctors to decide to restrict or stop taking Medicaid patients.
"They're going to try to expand the rolls of Medicaid ... and at the same time they want to reduce the reimbursement to doctors," he said. "With the (pay) trend going downwards, I don't see additional physicians signing up. It's just not going to happen."
A survey by the Texas Medical Association, the state's largest physicians interest group, showed that 45 percent of its members who responded said they would limit how many Medicaid patients they would treat if the Medicaid fees were cut by 1 or 2 percent, while another 24 percent said they would stop accepting any Medicaid patients.
The issue is one of financial survival, said Tom Banning, the association's lobbyist. He said Medicaid pays about 70 percent of what Medicare, a federal insurance program for people age 65 or older, pays for the same service. Commercial insurers are also lowering their rates, he said.
In planning their business survival strategies, doctors "have tended to look at what is the lowest-paying part of the market, which is Medicaid. It's not a hard economic decision," Banning said.
Sunday, July 11, 2010
Deal said to be largest bulk purchase of condos in Lauderdale
Sixty-four units at Las Olas by the River were purchased earlier this month for $10.2 million, a deal said to be the largest bulk condo purchase in Fort Lauderdale.
Fernando Levy-Hara, a managing partner of The McKafka Group, said his firm completed the purchase on July 2 in a deal with Montecito Property Co., a California-based developer. The McKafka Group is a joint venture between European investors and Aventura-based G&D Developers.
Peter Zalewski, a principal with the Miami real estate consulting firm Condo Vultures, said the deal represents the biggest bulk condo purchase in Fort Lauderdale.
Of the 64 units, 62 are two- and three-bedroom units, Zalewski said. The remaining units are models for display, according to Levy-Hara.
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The total amount of salable space is 79,607 square feet, which breaks down to a short-sale price of $164,516 per unit — about $130 per square foot.
The building was in pre-foreclosure and a short sale of the properties was approved by the building's lender, Bank of America, according to Levy-Hara. The Montecito Property Co. declined to comment on the transaction.
The 240-unit Las Olas by the River was built in 2005 along the New River. It is within walking distance of the Riverwalk arts and entertainment district and parts of downtown Fort Lauderdale. The design is inspired by Mediterranean architecture, according to the building's website.
Levy-Hara said the units were appealing because of the building's location and age and because the developer-owned units are occupied by renters.
"The building is good, the location is good, and we know we can sell these [units]," Levy-Hara said.
He added that such condo surpluses are rare in Fort Lauderdale, compared to Miami. Zalewski said that of the 5,100 condo units in Fort Lauderdale, only 400 are unsold.
Levy-Hara said the group has sold 15 of the 64 units to investors from Europe and South America.
This purchase is part of a larger trend in South Florida, as other groups have negotiated bulk purchases of condos.
In June, Lionheart Capital purchased 146 units of the 2700 North Ocean Drive development on Singer Island for $120 million.
"[Foreign investors] are looking for a stable economy," Levy-Hara said. "Believe it or not, the US is stable compared to the rest of the world."
Fernando Levy-Hara, a managing partner of The McKafka Group, said his firm completed the purchase on July 2 in a deal with Montecito Property Co., a California-based developer. The McKafka Group is a joint venture between European investors and Aventura-based G&D Developers.
Peter Zalewski, a principal with the Miami real estate consulting firm Condo Vultures, said the deal represents the biggest bulk condo purchase in Fort Lauderdale.
Of the 64 units, 62 are two- and three-bedroom units, Zalewski said. The remaining units are models for display, according to Levy-Hara.
--------------------------------------------------------------------------------
Click to get the latest Business headlines sent to your phone
--------------------------------------------------------------------------------
The total amount of salable space is 79,607 square feet, which breaks down to a short-sale price of $164,516 per unit — about $130 per square foot.
The building was in pre-foreclosure and a short sale of the properties was approved by the building's lender, Bank of America, according to Levy-Hara. The Montecito Property Co. declined to comment on the transaction.
The 240-unit Las Olas by the River was built in 2005 along the New River. It is within walking distance of the Riverwalk arts and entertainment district and parts of downtown Fort Lauderdale. The design is inspired by Mediterranean architecture, according to the building's website.
Levy-Hara said the units were appealing because of the building's location and age and because the developer-owned units are occupied by renters.
"The building is good, the location is good, and we know we can sell these [units]," Levy-Hara said.
He added that such condo surpluses are rare in Fort Lauderdale, compared to Miami. Zalewski said that of the 5,100 condo units in Fort Lauderdale, only 400 are unsold.
Levy-Hara said the group has sold 15 of the 64 units to investors from Europe and South America.
This purchase is part of a larger trend in South Florida, as other groups have negotiated bulk purchases of condos.
In June, Lionheart Capital purchased 146 units of the 2700 North Ocean Drive development on Singer Island for $120 million.
"[Foreign investors] are looking for a stable economy," Levy-Hara said. "Believe it or not, the US is stable compared to the rest of the world."
Crisis Awaits World’s Banks as Trillions Come Due
FRANKFURT — The sovereign debt crisis would seem to create worry enough for European banks, but there is another gathering threat that has not garnered as much notice: the trillions of dollars in short-term borrowing that institutions around the world must repay or roll over in the next two years.
The European Central Bank, the Bank of England and the International Monetary Fund have all recently warned of a looming crunch, especially in Europe, where banks have enough trouble raising money as it is.
Their concern is that banks hungry for refinancing will compete with governments — which also must roll over huge sums — for the bond market’s favor. As a result, credit for business and consumers could become more costly and scarce, with unpleasant consequences for economic growth.
“There is a cliff we are racing toward — it’s huge,” said Richard Barwell, an economist at Royal Bank of Scotland and formerly a senior economist at the Bank of England, Britain’s central bank. “No one seems to be talking about it that much.” But, he added, “it’s of first-order importance for lending and output.”
Banks worldwide owe nearly $5 trillion to bondholders and other creditors that will come due through 2012, according to estimates by the Bank for International Settlements. About $2.6 trillion of the liabilities are in Europe.
U.S. banks must refinance about $1.3 trillion through 2012. While that sum is nothing to scoff at, analysts seem most concerned about Europe because the banking system there is already weighed down by the sovereign debt crisis.
How banks will come up with the money is an open question. With investors worried about government over-indebtedness in Greece, Spain, Ireland and other parts of Europe, many banks have been reluctant or unable to sell bonds, which they typically use to raise money that they lend on to businesses and households.
The financing crunch has its origins in a worldwide trend for banks to borrow money for shorter periods.
The practice of short-term borrowing and long-term lending contributed to the near-collapse of the world financial system in late 2008 when short-term financing dried up. Banks suddenly found themselves starved for cash, and some would have collapsed without central bank support.
Government bank guarantees extended in response to the crisis also inadvertently encouraged short-term lending. The guarantees were typically only for several years, and banks issued bonds to match.
Other banks took advantage of the gap between short-term and long-term rates, borrowing cheaply from money markets or central banks and lending to their customers at higher, long-term rates.
A study in November by Moody’s Investors Service found that new bond issues by banks during the past five years matured in an average of 4.7 years — the shortest average in 30 years.
Since then, worries about Greek and Spanish debt and whether Europe is headed for another recession have caused new problems. Investors are unsure which institutions are in good shape and which are sitting on piles of bad loans and potentially tainted government bonds.
Bond issuance by financial institutions in Europe plunged to $10.7 billion in May, compared with $106 billion in January and $95 billion in May 2009, according to Dealogic, a data provider. New issues have recovered somewhat since, to $42 billion in June and $19 billion so far in July.
Bank stress tests being conducted by European regulators could help if they succeed in convincing markets that most banks are healthy. Bank regulators plan to release results of the tests, covering 91 large banks, on July 23.
Sandeep Agarwal, head of financial institutions debt capital markets in Europe at Credit Suisse, predicted that the market could be separated into haves and have-nots, with the healthy banks raising money fairly easily but weaker banks required to pay a premium. “There is cash at the right price for many institutions, not all institutions,” Mr. Agarwal said.
That could add pressure on the weakest banks to merge, seek government help, or scale back their activities. Some might even fold. The Landesbanks in Germany, savings banks in Spain or other institutions that have struggled may be forced to confront difficult choices.
A shortage of bank finance also could create quandaries for the European Central Bank, which appears anxious to wean banks from the cheap cash that it began providing in the heat of the global financial crisis.
If institutions are unable to raise the money that they need on the open market, the European Central Bank would have to decide whether to continue to prop them up.
“Banks that have trouble tapping new funding sources will have to shrink,” the Bank for International Settlements said in its annual report in late June. The institution, based in Basel, Switzerland, brings together the world’s main central banks.
Stephen G. Cecchetti, head of the monetary and economic department at the institution, called the refinancing issue “a vulnerability and something to be watched.” But, he added, in a telephone interview, “I am confident that national authorities will take the necessary actions so that it isn’t a problem.”
Banks insist that they enjoy the trust of the markets and will be able to raise the cash they need.
“We’re in a comfortable position,” said Horst Bertram, head of investor relations at Bayerische Landesbank, Germany’s largest Landesbank, which is owned by the state of Bavaria and local savings banks. He said that as a result of government backing and a radical restructuring last year, the bank had ample cash and limited need for new financing.
Commerzbank, partly owned by the German government after a bailout, said its liquidity was well within regulatory limits. Commerzbank “can refinance at any time at market conditions,” the bank said.
Even if there is no market meltdown, banks still face a transition to a period of higher interest rates that will weigh on profits.
The cost of borrowing is likely to rise faster than banks can pass it on to customers, analysts say.
Jean-François Tremblay, a Moody’s vice president who has studied the refinancing issue, said that so far banks had managed to roll over debt better than expected. They have increased customer deposits, drawn on cash from central banks, or simply reduced their lending and their need for new financing — which is exactly what some economists feared.
The Bank of England estimates that British banks will need to issue £25 billion in bonds every month to meet their refinancing needs, which the central bank puts at £800 billion, or $1.2 trillion. That means banks will have to sell new bonds at double the rate they have been issuing so far this year.
“There is a risk that banks alleviate their own funding pressures by further constraining credit conditions for customers,” the Bank of England said last month in its Financial Stability Report. “That would dent economic recovery and so raise credit risk for all banks.”
The European Central Bank, the Bank of England and the International Monetary Fund have all recently warned of a looming crunch, especially in Europe, where banks have enough trouble raising money as it is.
Their concern is that banks hungry for refinancing will compete with governments — which also must roll over huge sums — for the bond market’s favor. As a result, credit for business and consumers could become more costly and scarce, with unpleasant consequences for economic growth.
“There is a cliff we are racing toward — it’s huge,” said Richard Barwell, an economist at Royal Bank of Scotland and formerly a senior economist at the Bank of England, Britain’s central bank. “No one seems to be talking about it that much.” But, he added, “it’s of first-order importance for lending and output.”
Banks worldwide owe nearly $5 trillion to bondholders and other creditors that will come due through 2012, according to estimates by the Bank for International Settlements. About $2.6 trillion of the liabilities are in Europe.
U.S. banks must refinance about $1.3 trillion through 2012. While that sum is nothing to scoff at, analysts seem most concerned about Europe because the banking system there is already weighed down by the sovereign debt crisis.
How banks will come up with the money is an open question. With investors worried about government over-indebtedness in Greece, Spain, Ireland and other parts of Europe, many banks have been reluctant or unable to sell bonds, which they typically use to raise money that they lend on to businesses and households.
The financing crunch has its origins in a worldwide trend for banks to borrow money for shorter periods.
The practice of short-term borrowing and long-term lending contributed to the near-collapse of the world financial system in late 2008 when short-term financing dried up. Banks suddenly found themselves starved for cash, and some would have collapsed without central bank support.
Government bank guarantees extended in response to the crisis also inadvertently encouraged short-term lending. The guarantees were typically only for several years, and banks issued bonds to match.
Other banks took advantage of the gap between short-term and long-term rates, borrowing cheaply from money markets or central banks and lending to their customers at higher, long-term rates.
A study in November by Moody’s Investors Service found that new bond issues by banks during the past five years matured in an average of 4.7 years — the shortest average in 30 years.
Since then, worries about Greek and Spanish debt and whether Europe is headed for another recession have caused new problems. Investors are unsure which institutions are in good shape and which are sitting on piles of bad loans and potentially tainted government bonds.
Bond issuance by financial institutions in Europe plunged to $10.7 billion in May, compared with $106 billion in January and $95 billion in May 2009, according to Dealogic, a data provider. New issues have recovered somewhat since, to $42 billion in June and $19 billion so far in July.
Bank stress tests being conducted by European regulators could help if they succeed in convincing markets that most banks are healthy. Bank regulators plan to release results of the tests, covering 91 large banks, on July 23.
Sandeep Agarwal, head of financial institutions debt capital markets in Europe at Credit Suisse, predicted that the market could be separated into haves and have-nots, with the healthy banks raising money fairly easily but weaker banks required to pay a premium. “There is cash at the right price for many institutions, not all institutions,” Mr. Agarwal said.
That could add pressure on the weakest banks to merge, seek government help, or scale back their activities. Some might even fold. The Landesbanks in Germany, savings banks in Spain or other institutions that have struggled may be forced to confront difficult choices.
A shortage of bank finance also could create quandaries for the European Central Bank, which appears anxious to wean banks from the cheap cash that it began providing in the heat of the global financial crisis.
If institutions are unable to raise the money that they need on the open market, the European Central Bank would have to decide whether to continue to prop them up.
“Banks that have trouble tapping new funding sources will have to shrink,” the Bank for International Settlements said in its annual report in late June. The institution, based in Basel, Switzerland, brings together the world’s main central banks.
Stephen G. Cecchetti, head of the monetary and economic department at the institution, called the refinancing issue “a vulnerability and something to be watched.” But, he added, in a telephone interview, “I am confident that national authorities will take the necessary actions so that it isn’t a problem.”
Banks insist that they enjoy the trust of the markets and will be able to raise the cash they need.
“We’re in a comfortable position,” said Horst Bertram, head of investor relations at Bayerische Landesbank, Germany’s largest Landesbank, which is owned by the state of Bavaria and local savings banks. He said that as a result of government backing and a radical restructuring last year, the bank had ample cash and limited need for new financing.
Commerzbank, partly owned by the German government after a bailout, said its liquidity was well within regulatory limits. Commerzbank “can refinance at any time at market conditions,” the bank said.
Even if there is no market meltdown, banks still face a transition to a period of higher interest rates that will weigh on profits.
The cost of borrowing is likely to rise faster than banks can pass it on to customers, analysts say.
Jean-François Tremblay, a Moody’s vice president who has studied the refinancing issue, said that so far banks had managed to roll over debt better than expected. They have increased customer deposits, drawn on cash from central banks, or simply reduced their lending and their need for new financing — which is exactly what some economists feared.
The Bank of England estimates that British banks will need to issue £25 billion in bonds every month to meet their refinancing needs, which the central bank puts at £800 billion, or $1.2 trillion. That means banks will have to sell new bonds at double the rate they have been issuing so far this year.
“There is a risk that banks alleviate their own funding pressures by further constraining credit conditions for customers,” the Bank of England said last month in its Financial Stability Report. “That would dent economic recovery and so raise credit risk for all banks.”
Hizballah advances 20,000 troops to Israeli border
Prime Minister Binyamin Netanyahu keeps on vowing that Iran will not be allowed to establish an outpost on Israel's borders, but he has not lifted a finger to stop this menace ensconcing itself in the north. He cannot realistically expect feeble UN reprimands and the puny French contingent of UNIFIL to blow away the 20,000 Hizballah troops dug in in 160 new positions in South Lebanon, backed by a vast rocket arsenal - even though this is a gross violation of UN Security Council resolution 1701.
Iran's proxy has therefore won the first round of its drive to recover the forward positions lost in the 2006 war and stands ready for the next. Israel has reinforced its border defenses against this massed Hizballah strength just a few hundreds meters away.
How could Jerusalem let this to happen?
The answer is by a misguided policy of misdirected reliance on international players and diplomacy, as though the military menace existed only in documentary form, instead of real armies led by single-minded terrorists with utter contempt for the rules of international diplomacy.
The guns Israel invoked for dealing with the Palestinian Hamas in Gaza - President Barack Obama and the European Union - were too big for their target and the Middle East Quartet's envoy former British premier Tony Blair had to be roped in. The guns Israel relied on to deal with Hizballah - the UN and France - are too small and ineffective for the job.
Following a French complaint, the UN Security Council convened Friday, July 9 and passed a resolution "strongly deploring the recent incidents involving UNIFIL peacekeepers which took place in southern Lebanon on June 29, July 3 and July 4." All parties in Lebanon were urged "to respect the safety of UNIFIL and United Nations personnel."
The UN was not even asked to address Hizballah's illegal redeployment in new positions in the South - only the harassment of peacekeepers - nor did it do so. In one instance last week, French troops on patrol were pulled out of their armed vehicles, their weapons snatched and they were beaten with sticks, rocks and eggs.
This was no spontaneous outburst. debkafile's military sources report that the "villagers" were instructed by Iran's new Iranian commander in Lebanon, Hossein Mahadavi, to hit on the French contingent to punish Paris for supporting the UN Security Council's expanded sanctions for its nuclear violations, while at the same time blocking the peacekeeper's access to the "closed areas" where the new Hizballah bases have been set up.
Tehran nominated a high-ranking officer to Lebanon - Mahadavi's former job was commander of Iran's Overseas Division - indicating the importance it attaches to this volatile borderland. Indeed, if Hizballah gets away with its new deployment in the South and is allowed to make it permanent, the UN force will have lost even this scrappy foothold and Hizballah will be free to carry on its preparations for war without the slightest hindrance.
So much for Netanyahu's pledge, reiterated during his talks and interviews in the United States last week, that in negotiations with Arabs, especially the Palestinians, Israel will never accept any accommodation that permits Iran to set up military and rocket bases on its borders.
The fact is that since he entered the prime minister's office, he and defense minister Ehud Barak have done nothing to hold back the stream of armed Hizballah militiamen flooding South Lebanon, although they are now actively endangering the one-and-a-half million Israelis living just across the border.
If they imagined that UN peacekeepers would suddenly stand up and start repelling this southward tide of men and war materiel, they need only to take note of the tepid UN reprimand last Friday to understand that the Elysee Palace had no intention of letting French troops pick up the Hizballah ball and chase the Shiite terrorists back to their former positions.
Tehran and Hizballah therefore felt they could safely issue a new spate of threats: Israelis traveling anywhere in the world faced kidnap or death in response to a series of hits attributed to their clandestine agencies, such as the assassination of a key Hizballah commander Imad Mughniyeh in Damascus in 2008, the deaths of the Iranian nuclear physicist Prof. Massoud Ali Mohammmadi in the middle of Tehran in January of this year, and the Hamas operative responsible for Iranian money transfers to the Gaza Strip Mohammed al-Mabhouh in Dubai nine days later.
Israel responded to the verbal escalation on July 7, by doing something it has never done before: Col. Ronen Marli, chief of the northern border's Western Brigade - the unit which will have to hold off the enemy in the early hours of attack from Lebanon - exhibited to the public aerial photos and intelligence maps recording the new spread of Hizballah forces: He reported 20,000 armed men scattered through 160 village and towns - only in the South, where its presence is prohibited by the UN-mediated ceasefire of 2006. The images did not include the substantial strength Hizballah maintains in central Lebanon and the Beqaa Valley to the east, or its estimated 40,000 rockets and missiles.
The Israeli colonel was of the opinion that an "event (a military attack or terrorist operation) could erupt today or in a year." He admitted it could be a surprise. Adding: "But we are working in different ways to thwart any event and if happens, we'll know how to handle it."
The IDF backed him up with an announcement that Israel is beefing up its strength along the Lebanese border and, the next day, July 8, the Jerusalem center for terrorist threats, published a warning to Israelis abroad, including the United States, to beware of abductions and murderous attacks.
Saturday, a Hizballah spokesman responded: "All three (UN, France, Israel) are preparing something, but we are ready," it said. "Our forces in the South are on the highest level of war preparedness."
The next conflagration may be just a single lighted match away. It could be ignited by some local incident, a terrorist event outside the Middle East or an order from Tehran.
Iran's proxy has therefore won the first round of its drive to recover the forward positions lost in the 2006 war and stands ready for the next. Israel has reinforced its border defenses against this massed Hizballah strength just a few hundreds meters away.
How could Jerusalem let this to happen?
The answer is by a misguided policy of misdirected reliance on international players and diplomacy, as though the military menace existed only in documentary form, instead of real armies led by single-minded terrorists with utter contempt for the rules of international diplomacy.
The guns Israel invoked for dealing with the Palestinian Hamas in Gaza - President Barack Obama and the European Union - were too big for their target and the Middle East Quartet's envoy former British premier Tony Blair had to be roped in. The guns Israel relied on to deal with Hizballah - the UN and France - are too small and ineffective for the job.
Following a French complaint, the UN Security Council convened Friday, July 9 and passed a resolution "strongly deploring the recent incidents involving UNIFIL peacekeepers which took place in southern Lebanon on June 29, July 3 and July 4." All parties in Lebanon were urged "to respect the safety of UNIFIL and United Nations personnel."
The UN was not even asked to address Hizballah's illegal redeployment in new positions in the South - only the harassment of peacekeepers - nor did it do so. In one instance last week, French troops on patrol were pulled out of their armed vehicles, their weapons snatched and they were beaten with sticks, rocks and eggs.
This was no spontaneous outburst. debkafile's military sources report that the "villagers" were instructed by Iran's new Iranian commander in Lebanon, Hossein Mahadavi, to hit on the French contingent to punish Paris for supporting the UN Security Council's expanded sanctions for its nuclear violations, while at the same time blocking the peacekeeper's access to the "closed areas" where the new Hizballah bases have been set up.
Tehran nominated a high-ranking officer to Lebanon - Mahadavi's former job was commander of Iran's Overseas Division - indicating the importance it attaches to this volatile borderland. Indeed, if Hizballah gets away with its new deployment in the South and is allowed to make it permanent, the UN force will have lost even this scrappy foothold and Hizballah will be free to carry on its preparations for war without the slightest hindrance.
So much for Netanyahu's pledge, reiterated during his talks and interviews in the United States last week, that in negotiations with Arabs, especially the Palestinians, Israel will never accept any accommodation that permits Iran to set up military and rocket bases on its borders.
The fact is that since he entered the prime minister's office, he and defense minister Ehud Barak have done nothing to hold back the stream of armed Hizballah militiamen flooding South Lebanon, although they are now actively endangering the one-and-a-half million Israelis living just across the border.
If they imagined that UN peacekeepers would suddenly stand up and start repelling this southward tide of men and war materiel, they need only to take note of the tepid UN reprimand last Friday to understand that the Elysee Palace had no intention of letting French troops pick up the Hizballah ball and chase the Shiite terrorists back to their former positions.
Tehran and Hizballah therefore felt they could safely issue a new spate of threats: Israelis traveling anywhere in the world faced kidnap or death in response to a series of hits attributed to their clandestine agencies, such as the assassination of a key Hizballah commander Imad Mughniyeh in Damascus in 2008, the deaths of the Iranian nuclear physicist Prof. Massoud Ali Mohammmadi in the middle of Tehran in January of this year, and the Hamas operative responsible for Iranian money transfers to the Gaza Strip Mohammed al-Mabhouh in Dubai nine days later.
Israel responded to the verbal escalation on July 7, by doing something it has never done before: Col. Ronen Marli, chief of the northern border's Western Brigade - the unit which will have to hold off the enemy in the early hours of attack from Lebanon - exhibited to the public aerial photos and intelligence maps recording the new spread of Hizballah forces: He reported 20,000 armed men scattered through 160 village and towns - only in the South, where its presence is prohibited by the UN-mediated ceasefire of 2006. The images did not include the substantial strength Hizballah maintains in central Lebanon and the Beqaa Valley to the east, or its estimated 40,000 rockets and missiles.
The Israeli colonel was of the opinion that an "event (a military attack or terrorist operation) could erupt today or in a year." He admitted it could be a surprise. Adding: "But we are working in different ways to thwart any event and if happens, we'll know how to handle it."
The IDF backed him up with an announcement that Israel is beefing up its strength along the Lebanese border and, the next day, July 8, the Jerusalem center for terrorist threats, published a warning to Israelis abroad, including the United States, to beware of abductions and murderous attacks.
Saturday, a Hizballah spokesman responded: "All three (UN, France, Israel) are preparing something, but we are ready," it said. "Our forces in the South are on the highest level of war preparedness."
The next conflagration may be just a single lighted match away. It could be ignited by some local incident, a terrorist event outside the Middle East or an order from Tehran.
Hizballah advances 20,000 troops to Israeli border
Prime Minister Binyamin Netanyahu keeps on vowing that Iran will not be allowed to establish an outpost on Israel's borders, but he has not lifted a finger to stop this menace ensconcing itself in the north. He cannot realistically expect feeble UN reprimands and the puny French contingent of UNIFIL to blow away the 20,000 Hizballah troops dug in in 160 new positions in South Lebanon, backed by a vast rocket arsenal - even though this is a gross violation of UN Security Council resolution 1701.
Iran's proxy has therefore won the first round of its drive to recover the forward positions lost in the 2006 war and stands ready for the next. Israel has reinforced its border defenses against this massed Hizballah strength just a few hundreds meters away.
How could Jerusalem let this to happen?
The answer is by a misguided policy of misdirected reliance on international players and diplomacy, as though the military menace existed only in documentary form, instead of real armies led by single-minded terrorists with utter contempt for the rules of international diplomacy.
The guns Israel invoked for dealing with the Palestinian Hamas in Gaza - President Barack Obama and the European Union - were too big for their target and the Middle East Quartet's envoy former British premier Tony Blair had to be roped in. The guns Israel relied on to deal with Hizballah - the UN and France - are too small and ineffective for the job.
Following a French complaint, the UN Security Council convened Friday, July 9 and passed a resolution "strongly deploring the recent incidents involving UNIFIL peacekeepers which took place in southern Lebanon on June 29, July 3 and July 4." All parties in Lebanon were urged "to respect the safety of UNIFIL and United Nations personnel."
The UN was not even asked to address Hizballah's illegal redeployment in new positions in the South - only the harassment of peacekeepers - nor did it do so. In one instance last week, French troops on patrol were pulled out of their armed vehicles, their weapons snatched and they were beaten with sticks, rocks and eggs.
This was no spontaneous outburst. debkafile's military sources report that the "villagers" were instructed by Iran's new Iranian commander in Lebanon, Hossein Mahadavi, to hit on the French contingent to punish Paris for supporting the UN Security Council's expanded sanctions for its nuclear violations, while at the same time blocking the peacekeeper's access to the "closed areas" where the new Hizballah bases have been set up.
Tehran nominated a high-ranking officer to Lebanon - Mahadavi's former job was commander of Iran's Overseas Division - indicating the importance it attaches to this volatile borderland. Indeed, if Hizballah gets away with its new deployment in the South and is allowed to make it permanent, the UN force will have lost even this scrappy foothold and Hizballah will be free to carry on its preparations for war without the slightest hindrance.
So much for Netanyahu's pledge, reiterated during his talks and interviews in the United States last week, that in negotiations with Arabs, especially the Palestinians, Israel will never accept any accommodation that permits Iran to set up military and rocket bases on its borders.
The fact is that since he entered the prime minister's office, he and defense minister Ehud Barak have done nothing to hold back the stream of armed Hizballah militiamen flooding South Lebanon, although they are now actively endangering the one-and-a-half million Israelis living just across the border.
If they imagined that UN peacekeepers would suddenly stand up and start repelling this southward tide of men and war materiel, they need only to take note of the tepid UN reprimand last Friday to understand that the Elysee Palace had no intention of letting French troops pick up the Hizballah ball and chase the Shiite terrorists back to their former positions.
Tehran and Hizballah therefore felt they could safely issue a new spate of threats: Israelis traveling anywhere in the world faced kidnap or death in response to a series of hits attributed to their clandestine agencies, such as the assassination of a key Hizballah commander Imad Mughniyeh in Damascus in 2008, the deaths of the Iranian nuclear physicist Prof. Massoud Ali Mohammmadi in the middle of Tehran in January of this year, and the Hamas operative responsible for Iranian money transfers to the Gaza Strip Mohammed al-Mabhouh in Dubai nine days later.
Israel responded to the verbal escalation on July 7, by doing something it has never done before: Col. Ronen Marli, chief of the northern border's Western Brigade - the unit which will have to hold off the enemy in the early hours of attack from Lebanon - exhibited to the public aerial photos and intelligence maps recording the new spread of Hizballah forces: He reported 20,000 armed men scattered through 160 village and towns - only in the South, where its presence is prohibited by the UN-mediated ceasefire of 2006. The images did not include the substantial strength Hizballah maintains in central Lebanon and the Beqaa Valley to the east, or its estimated 40,000 rockets and missiles.
The Israeli colonel was of the opinion that an "event (a military attack or terrorist operation) could erupt today or in a year." He admitted it could be a surprise. Adding: "But we are working in different ways to thwart any event and if happens, we'll know how to handle it."
The IDF backed him up with an announcement that Israel is beefing up its strength along the Lebanese border and, the next day, July 8, the Jerusalem center for terrorist threats, published a warning to Israelis abroad, including the United States, to beware of abductions and murderous attacks.
Saturday, a Hizballah spokesman responded: "All three (UN, France, Israel) are preparing something, but we are ready," it said. "Our forces in the South are on the highest level of war preparedness."
The next conflagration may be just a single lighted match away. It could be ignited by some local incident, a terrorist event outside the Middle East or an order from Tehran.
Iran's proxy has therefore won the first round of its drive to recover the forward positions lost in the 2006 war and stands ready for the next. Israel has reinforced its border defenses against this massed Hizballah strength just a few hundreds meters away.
How could Jerusalem let this to happen?
The answer is by a misguided policy of misdirected reliance on international players and diplomacy, as though the military menace existed only in documentary form, instead of real armies led by single-minded terrorists with utter contempt for the rules of international diplomacy.
The guns Israel invoked for dealing with the Palestinian Hamas in Gaza - President Barack Obama and the European Union - were too big for their target and the Middle East Quartet's envoy former British premier Tony Blair had to be roped in. The guns Israel relied on to deal with Hizballah - the UN and France - are too small and ineffective for the job.
Following a French complaint, the UN Security Council convened Friday, July 9 and passed a resolution "strongly deploring the recent incidents involving UNIFIL peacekeepers which took place in southern Lebanon on June 29, July 3 and July 4." All parties in Lebanon were urged "to respect the safety of UNIFIL and United Nations personnel."
The UN was not even asked to address Hizballah's illegal redeployment in new positions in the South - only the harassment of peacekeepers - nor did it do so. In one instance last week, French troops on patrol were pulled out of their armed vehicles, their weapons snatched and they were beaten with sticks, rocks and eggs.
This was no spontaneous outburst. debkafile's military sources report that the "villagers" were instructed by Iran's new Iranian commander in Lebanon, Hossein Mahadavi, to hit on the French contingent to punish Paris for supporting the UN Security Council's expanded sanctions for its nuclear violations, while at the same time blocking the peacekeeper's access to the "closed areas" where the new Hizballah bases have been set up.
Tehran nominated a high-ranking officer to Lebanon - Mahadavi's former job was commander of Iran's Overseas Division - indicating the importance it attaches to this volatile borderland. Indeed, if Hizballah gets away with its new deployment in the South and is allowed to make it permanent, the UN force will have lost even this scrappy foothold and Hizballah will be free to carry on its preparations for war without the slightest hindrance.
So much for Netanyahu's pledge, reiterated during his talks and interviews in the United States last week, that in negotiations with Arabs, especially the Palestinians, Israel will never accept any accommodation that permits Iran to set up military and rocket bases on its borders.
The fact is that since he entered the prime minister's office, he and defense minister Ehud Barak have done nothing to hold back the stream of armed Hizballah militiamen flooding South Lebanon, although they are now actively endangering the one-and-a-half million Israelis living just across the border.
If they imagined that UN peacekeepers would suddenly stand up and start repelling this southward tide of men and war materiel, they need only to take note of the tepid UN reprimand last Friday to understand that the Elysee Palace had no intention of letting French troops pick up the Hizballah ball and chase the Shiite terrorists back to their former positions.
Tehran and Hizballah therefore felt they could safely issue a new spate of threats: Israelis traveling anywhere in the world faced kidnap or death in response to a series of hits attributed to their clandestine agencies, such as the assassination of a key Hizballah commander Imad Mughniyeh in Damascus in 2008, the deaths of the Iranian nuclear physicist Prof. Massoud Ali Mohammmadi in the middle of Tehran in January of this year, and the Hamas operative responsible for Iranian money transfers to the Gaza Strip Mohammed al-Mabhouh in Dubai nine days later.
Israel responded to the verbal escalation on July 7, by doing something it has never done before: Col. Ronen Marli, chief of the northern border's Western Brigade - the unit which will have to hold off the enemy in the early hours of attack from Lebanon - exhibited to the public aerial photos and intelligence maps recording the new spread of Hizballah forces: He reported 20,000 armed men scattered through 160 village and towns - only in the South, where its presence is prohibited by the UN-mediated ceasefire of 2006. The images did not include the substantial strength Hizballah maintains in central Lebanon and the Beqaa Valley to the east, or its estimated 40,000 rockets and missiles.
The Israeli colonel was of the opinion that an "event (a military attack or terrorist operation) could erupt today or in a year." He admitted it could be a surprise. Adding: "But we are working in different ways to thwart any event and if happens, we'll know how to handle it."
The IDF backed him up with an announcement that Israel is beefing up its strength along the Lebanese border and, the next day, July 8, the Jerusalem center for terrorist threats, published a warning to Israelis abroad, including the United States, to beware of abductions and murderous attacks.
Saturday, a Hizballah spokesman responded: "All three (UN, France, Israel) are preparing something, but we are ready," it said. "Our forces in the South are on the highest level of war preparedness."
The next conflagration may be just a single lighted match away. It could be ignited by some local incident, a terrorist event outside the Middle East or an order from Tehran.
Hizballah advances 20,000 troops to Israeli border
Prime Minister Binyamin Netanyahu keeps on vowing that Iran will not be allowed to establish an outpost on Israel's borders, but he has not lifted a finger to stop this menace ensconcing itself in the north. He cannot realistically expect feeble UN reprimands and the puny French contingent of UNIFIL to blow away the 20,000 Hizballah troops dug in in 160 new positions in South Lebanon, backed by a vast rocket arsenal - even though this is a gross violation of UN Security Council resolution 1701.
Iran's proxy has therefore won the first round of its drive to recover the forward positions lost in the 2006 war and stands ready for the next. Israel has reinforced its border defenses against this massed Hizballah strength just a few hundreds meters away.
How could Jerusalem let this to happen?
The answer is by a misguided policy of misdirected reliance on international players and diplomacy, as though the military menace existed only in documentary form, instead of real armies led by single-minded terrorists with utter contempt for the rules of international diplomacy.
The guns Israel invoked for dealing with the Palestinian Hamas in Gaza - President Barack Obama and the European Union - were too big for their target and the Middle East Quartet's envoy former British premier Tony Blair had to be roped in. The guns Israel relied on to deal with Hizballah - the UN and France - are too small and ineffective for the job.
Following a French complaint, the UN Security Council convened Friday, July 9 and passed a resolution "strongly deploring the recent incidents involving UNIFIL peacekeepers which took place in southern Lebanon on June 29, July 3 and July 4." All parties in Lebanon were urged "to respect the safety of UNIFIL and United Nations personnel."
The UN was not even asked to address Hizballah's illegal redeployment in new positions in the South - only the harassment of peacekeepers - nor did it do so. In one instance last week, French troops on patrol were pulled out of their armed vehicles, their weapons snatched and they were beaten with sticks, rocks and eggs.
This was no spontaneous outburst. debkafile's military sources report that the "villagers" were instructed by Iran's new Iranian commander in Lebanon, Hossein Mahadavi, to hit on the French contingent to punish Paris for supporting the UN Security Council's expanded sanctions for its nuclear violations, while at the same time blocking the peacekeeper's access to the "closed areas" where the new Hizballah bases have been set up.
Tehran nominated a high-ranking officer to Lebanon - Mahadavi's former job was commander of Iran's Overseas Division - indicating the importance it attaches to this volatile borderland. Indeed, if Hizballah gets away with its new deployment in the South and is allowed to make it permanent, the UN force will have lost even this scrappy foothold and Hizballah will be free to carry on its preparations for war without the slightest hindrance.
So much for Netanyahu's pledge, reiterated during his talks and interviews in the United States last week, that in negotiations with Arabs, especially the Palestinians, Israel will never accept any accommodation that permits Iran to set up military and rocket bases on its borders.
The fact is that since he entered the prime minister's office, he and defense minister Ehud Barak have done nothing to hold back the stream of armed Hizballah militiamen flooding South Lebanon, although they are now actively endangering the one-and-a-half million Israelis living just across the border.
If they imagined that UN peacekeepers would suddenly stand up and start repelling this southward tide of men and war materiel, they need only to take note of the tepid UN reprimand last Friday to understand that the Elysee Palace had no intention of letting French troops pick up the Hizballah ball and chase the Shiite terrorists back to their former positions.
Tehran and Hizballah therefore felt they could safely issue a new spate of threats: Israelis traveling anywhere in the world faced kidnap or death in response to a series of hits attributed to their clandestine agencies, such as the assassination of a key Hizballah commander Imad Mughniyeh in Damascus in 2008, the deaths of the Iranian nuclear physicist Prof. Massoud Ali Mohammmadi in the middle of Tehran in January of this year, and the Hamas operative responsible for Iranian money transfers to the Gaza Strip Mohammed al-Mabhouh in Dubai nine days later.
Israel responded to the verbal escalation on July 7, by doing something it has never done before: Col. Ronen Marli, chief of the northern border's Western Brigade - the unit which will have to hold off the enemy in the early hours of attack from Lebanon - exhibited to the public aerial photos and intelligence maps recording the new spread of Hizballah forces: He reported 20,000 armed men scattered through 160 village and towns - only in the South, where its presence is prohibited by the UN-mediated ceasefire of 2006. The images did not include the substantial strength Hizballah maintains in central Lebanon and the Beqaa Valley to the east, or its estimated 40,000 rockets and missiles.
The Israeli colonel was of the opinion that an "event (a military attack or terrorist operation) could erupt today or in a year." He admitted it could be a surprise. Adding: "But we are working in different ways to thwart any event and if happens, we'll know how to handle it."
The IDF backed him up with an announcement that Israel is beefing up its strength along the Lebanese border and, the next day, July 8, the Jerusalem center for terrorist threats, published a warning to Israelis abroad, including the United States, to beware of abductions and murderous attacks.
Saturday, a Hizballah spokesman responded: "All three (UN, France, Israel) are preparing something, but we are ready," it said. "Our forces in the South are on the highest level of war preparedness."
The next conflagration may be just a single lighted match away. It could be ignited by some local incident, a terrorist event outside the Middle East or an order from Tehran.
Iran's proxy has therefore won the first round of its drive to recover the forward positions lost in the 2006 war and stands ready for the next. Israel has reinforced its border defenses against this massed Hizballah strength just a few hundreds meters away.
How could Jerusalem let this to happen?
The answer is by a misguided policy of misdirected reliance on international players and diplomacy, as though the military menace existed only in documentary form, instead of real armies led by single-minded terrorists with utter contempt for the rules of international diplomacy.
The guns Israel invoked for dealing with the Palestinian Hamas in Gaza - President Barack Obama and the European Union - were too big for their target and the Middle East Quartet's envoy former British premier Tony Blair had to be roped in. The guns Israel relied on to deal with Hizballah - the UN and France - are too small and ineffective for the job.
Following a French complaint, the UN Security Council convened Friday, July 9 and passed a resolution "strongly deploring the recent incidents involving UNIFIL peacekeepers which took place in southern Lebanon on June 29, July 3 and July 4." All parties in Lebanon were urged "to respect the safety of UNIFIL and United Nations personnel."
The UN was not even asked to address Hizballah's illegal redeployment in new positions in the South - only the harassment of peacekeepers - nor did it do so. In one instance last week, French troops on patrol were pulled out of their armed vehicles, their weapons snatched and they were beaten with sticks, rocks and eggs.
This was no spontaneous outburst. debkafile's military sources report that the "villagers" were instructed by Iran's new Iranian commander in Lebanon, Hossein Mahadavi, to hit on the French contingent to punish Paris for supporting the UN Security Council's expanded sanctions for its nuclear violations, while at the same time blocking the peacekeeper's access to the "closed areas" where the new Hizballah bases have been set up.
Tehran nominated a high-ranking officer to Lebanon - Mahadavi's former job was commander of Iran's Overseas Division - indicating the importance it attaches to this volatile borderland. Indeed, if Hizballah gets away with its new deployment in the South and is allowed to make it permanent, the UN force will have lost even this scrappy foothold and Hizballah will be free to carry on its preparations for war without the slightest hindrance.
So much for Netanyahu's pledge, reiterated during his talks and interviews in the United States last week, that in negotiations with Arabs, especially the Palestinians, Israel will never accept any accommodation that permits Iran to set up military and rocket bases on its borders.
The fact is that since he entered the prime minister's office, he and defense minister Ehud Barak have done nothing to hold back the stream of armed Hizballah militiamen flooding South Lebanon, although they are now actively endangering the one-and-a-half million Israelis living just across the border.
If they imagined that UN peacekeepers would suddenly stand up and start repelling this southward tide of men and war materiel, they need only to take note of the tepid UN reprimand last Friday to understand that the Elysee Palace had no intention of letting French troops pick up the Hizballah ball and chase the Shiite terrorists back to their former positions.
Tehran and Hizballah therefore felt they could safely issue a new spate of threats: Israelis traveling anywhere in the world faced kidnap or death in response to a series of hits attributed to their clandestine agencies, such as the assassination of a key Hizballah commander Imad Mughniyeh in Damascus in 2008, the deaths of the Iranian nuclear physicist Prof. Massoud Ali Mohammmadi in the middle of Tehran in January of this year, and the Hamas operative responsible for Iranian money transfers to the Gaza Strip Mohammed al-Mabhouh in Dubai nine days later.
Israel responded to the verbal escalation on July 7, by doing something it has never done before: Col. Ronen Marli, chief of the northern border's Western Brigade - the unit which will have to hold off the enemy in the early hours of attack from Lebanon - exhibited to the public aerial photos and intelligence maps recording the new spread of Hizballah forces: He reported 20,000 armed men scattered through 160 village and towns - only in the South, where its presence is prohibited by the UN-mediated ceasefire of 2006. The images did not include the substantial strength Hizballah maintains in central Lebanon and the Beqaa Valley to the east, or its estimated 40,000 rockets and missiles.
The Israeli colonel was of the opinion that an "event (a military attack or terrorist operation) could erupt today or in a year." He admitted it could be a surprise. Adding: "But we are working in different ways to thwart any event and if happens, we'll know how to handle it."
The IDF backed him up with an announcement that Israel is beefing up its strength along the Lebanese border and, the next day, July 8, the Jerusalem center for terrorist threats, published a warning to Israelis abroad, including the United States, to beware of abductions and murderous attacks.
Saturday, a Hizballah spokesman responded: "All three (UN, France, Israel) are preparing something, but we are ready," it said. "Our forces in the South are on the highest level of war preparedness."
The next conflagration may be just a single lighted match away. It could be ignited by some local incident, a terrorist event outside the Middle East or an order from Tehran.
Hectic preparations for historic Ahmadinejad visit to Beirut
Feverish preparations are afoot in Tehran for President Mahmoud Ahmadinejad's first visit to the Lebanese capital. Reporting this, debkafile's Iranian sources define the trip's purpose as a confrontational exercise to warn the US and Israel that full implementation of the tough new UN, US and European sanctions will provoke an Iranian war on Israel - waged from Lebanon.
Iran's rulers came up with this plan in their marathon consultations last week, prompted by the realization that the US embargo on gasoline and other refined oil products were for real. Combined with the Obama administration's partial success in closing the US banking system and markets to Iranian firms and the UAE's consent to close its ports to Iranian traffic, the new measures have the potential for throwing a large spanner into the Islamic Republic's normal economic activity.
The planning for Ahmadinejad's trip to Lebanon - probably towards the end of July or early August - went into high gear after Syrian president Bashar Assad and the Qatari ruler Shiekh Hamad Bin Khalif Al Thani (who engineered the power-sharing accord for setting up the Lebanese government coalition in 2009) reacted positively to the notion of the threesome landing in Beirut aboard the same plane or in convoy, at the invitation of Lebanese president Michel Suleiman.
This procedure was advised to insure the Iranian president against a possible Israel attempt on his life and also that of Hizballah leader Hassan Nasrallah, who would be on hand in the welcoming party headed by the Lebanese president.
Sunday, July 11, debkafile reported that Hizballah had massed 20,000 armed men along the border with Israel, while Israeli Defense Forces had ranged tank and armored divisions on the other side of the border.
The broad outline of the visit was laid down by Lebanese Shiite lawmaker Nabih Beri and Alaedin Boroujerdi, Chairman of the Majlis foreign affairs and security committee, who was in Beirut last week to attend the funeral of the Shiite cleric Ayatollah Hassan Fadlallah.
It was decided to use the occasion for the Iranian, Syrian, Qatari and Lebanese leaders to hold a war conference, essentially to plot moves for ramping up the Arab-Israeli conflict. They have already decided in principle to lay the groundwork for a high-tension crisis to erupt between Israel and Lebanon some time in September or October, by which time Tehran will be able to gauge in full how much the new sanctions are hurting Iran.
Iran's rulers came up with this plan in their marathon consultations last week, prompted by the realization that the US embargo on gasoline and other refined oil products were for real. Combined with the Obama administration's partial success in closing the US banking system and markets to Iranian firms and the UAE's consent to close its ports to Iranian traffic, the new measures have the potential for throwing a large spanner into the Islamic Republic's normal economic activity.
The planning for Ahmadinejad's trip to Lebanon - probably towards the end of July or early August - went into high gear after Syrian president Bashar Assad and the Qatari ruler Shiekh Hamad Bin Khalif Al Thani (who engineered the power-sharing accord for setting up the Lebanese government coalition in 2009) reacted positively to the notion of the threesome landing in Beirut aboard the same plane or in convoy, at the invitation of Lebanese president Michel Suleiman.
This procedure was advised to insure the Iranian president against a possible Israel attempt on his life and also that of Hizballah leader Hassan Nasrallah, who would be on hand in the welcoming party headed by the Lebanese president.
Sunday, July 11, debkafile reported that Hizballah had massed 20,000 armed men along the border with Israel, while Israeli Defense Forces had ranged tank and armored divisions on the other side of the border.
The broad outline of the visit was laid down by Lebanese Shiite lawmaker Nabih Beri and Alaedin Boroujerdi, Chairman of the Majlis foreign affairs and security committee, who was in Beirut last week to attend the funeral of the Shiite cleric Ayatollah Hassan Fadlallah.
It was decided to use the occasion for the Iranian, Syrian, Qatari and Lebanese leaders to hold a war conference, essentially to plot moves for ramping up the Arab-Israeli conflict. They have already decided in principle to lay the groundwork for a high-tension crisis to erupt between Israel and Lebanon some time in September or October, by which time Tehran will be able to gauge in full how much the new sanctions are hurting Iran.
Saturday, July 10, 2010
Black GOP candidate slams Obama for exploiting race
One of the GOP’s handful of black candidates for Congress condemned President Barack Obama for exploiting race for political gain.
Allen West, the Republican challenging Rep. Ron Klein (D) in Florida’s 22nd congressional district, sharply criticized the Obama administration for having declined prosecuting the New Black Panther Party on voter tampering charges allegedly for political reasons.
“For an Administration that promised a new era in race relations, Obama and the Democrats in Congress have demonstrated that race will continually be exploited for political gain,” West, who is one of two African-American Republicans running for Congress who survived their primaries, said in a statement.
West was picking up on a meme that’s made its way through conservative blogs in recent days, based on whistleblower claims made by a former Justice Department employee. Charges against the New Black Panthers for their actions on Election Day 2008 weren’t pursued because of racial politics, the employee charged. The Justice Department says charges were dropped due to lack of evidence.
West drew on his own history with race to condemn the New Black Panthers, as well as other black Democrats who he said had “remained silent” when he’d been called racially-tinged names during the course of his campaign.
“The die has been cast in this election cycle — Democrats and their liberal progressive socialist allies will continue to play the race card when it is politically expedient,” West said. “I demand an investigation of the New Black Panther Party and the placement of it, along with any extremist group, onto the Terrorist Watch List if warranted. If that it not done prior to my taking the oath of office as a United States Congressman, it will happen soon thereafter.”
The words have more weight coming from this candidate, who’s seen as one of two black Republican candidates who have a good shot at making their way to Washington next year.
West is seen as a top challenger to Klein after having come closer than expected to the incumbent Democrat in 2008. Republican Tim Scott is seen as likely to win his race in South Carolina’s first congressional district this fall, too. Either man, if elected, would be the first GOP African-American lawmaker in Congress since former Rep. J.C. Watts (R-Okla.), who retired in 2003.
Allen West, the Republican challenging Rep. Ron Klein (D) in Florida’s 22nd congressional district, sharply criticized the Obama administration for having declined prosecuting the New Black Panther Party on voter tampering charges allegedly for political reasons.
“For an Administration that promised a new era in race relations, Obama and the Democrats in Congress have demonstrated that race will continually be exploited for political gain,” West, who is one of two African-American Republicans running for Congress who survived their primaries, said in a statement.
West was picking up on a meme that’s made its way through conservative blogs in recent days, based on whistleblower claims made by a former Justice Department employee. Charges against the New Black Panthers for their actions on Election Day 2008 weren’t pursued because of racial politics, the employee charged. The Justice Department says charges were dropped due to lack of evidence.
West drew on his own history with race to condemn the New Black Panthers, as well as other black Democrats who he said had “remained silent” when he’d been called racially-tinged names during the course of his campaign.
“The die has been cast in this election cycle — Democrats and their liberal progressive socialist allies will continue to play the race card when it is politically expedient,” West said. “I demand an investigation of the New Black Panther Party and the placement of it, along with any extremist group, onto the Terrorist Watch List if warranted. If that it not done prior to my taking the oath of office as a United States Congressman, it will happen soon thereafter.”
The words have more weight coming from this candidate, who’s seen as one of two black Republican candidates who have a good shot at making their way to Washington next year.
West is seen as a top challenger to Klein after having come closer than expected to the incumbent Democrat in 2008. Republican Tim Scott is seen as likely to win his race in South Carolina’s first congressional district this fall, too. Either man, if elected, would be the first GOP African-American lawmaker in Congress since former Rep. J.C. Watts (R-Okla.), who retired in 2003.
IRS starts mopping up Congress's tax-reporting mess
NEW YORK (CNNMoney.com) -- With a new mandate looming that will require business owners to file millions more tax forms, the Internal Revenue Service has begun the daunting process of figuring out how to turn the law's sweeping demands into actual rules for taxpayers.
The new regulations, which kick in at the start of 2012, require any taxpayer with business income to issue 1099 forms to all vendors from whom they purchased more than $600 of goods and services that year. That promises to launch a fusillade of new paperwork: An estimated 40 million taxpayers will be subject to the requirement, including 26 million who run sole proprietorships, according to a report released this week by National Taxpayer Advocate Nina Olson.
diggEmail Print CommentOlson's office, which operates independently within the IRS, flagged the new reporting requirements as one of its priority issues for the next year. Like many who have delved into the details of the new rules, Olson is concerned about their far-reaching scope and potential unintended consequences.
"The new reporting burden, particularly as it falls on small businesses, may turn out to be disproportionate as compared with any resulting improvement in tax compliance," the Taxpayer Advocate Service wrote in a report released this week.
The new rules are aimed at reducing the "tax gap" between what individuals and businesses owe and what they actually pay. The federal government misses out on estimated $300 billion each year from tax underpayment. The expanded reporting requirements, which Congress slipped into the landmark health care reform bill passed in March, are an attempt to create a paper trail of 1099s exposing business-to-business payments that might otherwise stay off the radar.
But the cost of that paper trail could swamp the small companies, sole proprietors freelancers forced to generate it. Pennsylvania business networking organization SMC Business Councils surveyed its members and found that they currently average 10 filings a year of 1099 forms. The new rules would push that average to more than 200 filings per year for a typical small business, the industry group estimates.
The IRS will have broad leeway to interpret the rules -- and it's already showing signs that it will look for ways to staunch the paperwork flood.
In a late May speech before the two payroll industry trade group, IRS Commissioner Douglas Shulman announced a major exception to the new rules: The IRS plans to exempt transactions made through credit and debit cards. A separate reporting requirement kicks in next year that will cover card transactions and help the IRS spot unreported payments made through those channels, "so there is no need for businesses to report them as well," Shulman said. "Whenever a business uses a credit or debit card, there will be no new burden under the new law."
How much of a sigh of relief you should breathe depends on what kind of purchases your business makes. Some big-ticket consumer items that are typically paid by card -- airline tickets or hotel stays, for example -- will be 1099-free. But SMC Business Councils President Tom Henschke, a vocal critic of the new law, estimates that exempting credit-card transactions would affect less than 10% of his members' reporting requirements.
"Most of the small businesses out there that do small business [purchasing] don't do it by credit card," he said. "One of the reasons is the transaction cost is very high -- 2% to 3%."
Henschke thinks the main beneficiaries of the exemption are likely to be credit-card companies, which will gain an added hook to get small businesses to pay their fees. Nolan Newman, a Seattle CPA who specializes in small-business needs, says it's certainly possible that card usage will rise as a result: "If I'm a small business and I use my credit card moderately, would I try to increase my volume with which I pay vendors with it? Maybe."
Henschke foresees another unintended consequence of the new reporting provisions: that in order to cut down on tax forms to be filed, businesses will trim the number of vendors they do business with. "I've actually heard businesses talking about consolidating their purchases, going from 150, 200 vendors, down to less than 100," he said. "That will most certainly lead to some small businesses being swept under the door."
The taxpayer advocate's office shares that concern. "Many large vendors already have computer systems that can track purchases by customer. They are likely to advertise that they will track each customer's total purchases and send them a report at the end of the year that business customers can use to comply with the Form 1099 filing requirement," the office wrote in its report. "Small businesses that lack the capacity to track customer purchases may lose customers, leaving the economy with more large national vendors and less local competition."
That was just one of seven major pitfalls the Taxpayer Advocate Service foresees in the new rules. It also questions whether they will actually do much to close the tax gap. Because of product returns and other complications, the payments documented by the 1099 trail won't match up cleanly against the revenue businesses report. "The IRS will face challenges making productive use of this new volume of information reports," Olson's office concluded.
That could help explain one otherwise puzzling aspect of the new tax law, which is that despite the sweeping reporting requirements, the Joint Committee on Taxation -- a nonpartisan Congressional committee that analyzes pending tax legislation -- estimated that it would bring in only about $2 billion a year in new tax revenue. Committee staffers wouldn't comment on the record.
"Judging from the estimate that the committee has made, they didn't think it was that far-reaching," said Eric Toder of the Tax Policy Center, a nonpartisan think tank. "Does it close a lot of the tax gap? No."
The IRS did not return repeated calls and e-mails asking for clarification on its timeline for drafting the new regulations.
In his talk to accountants in May, Shulman put off questions about the expanded 1099 reporting, saying that even the idea of exempting credit-card transactions was just "an example of where we are headed, not as a complete implementation plan." The agency is currently seeking public comment on how it should implement the new rules.
The IRS has some leeway in implementing the new law -- but only some. "The regulations are supposed to implement the intent of Congress; they're not supposed to be independent policy-making," Toder said. "But obviously, there's some discretion there."
Shulman himself hinted that it may take new legislation -- not just IRS regs -- to fix what Congress has wrought. "We won't hesitate to consider alternate approaches," he said in his speech, "including working with Congress to address any potential implementation issues that may arise during this process."
The new regulations, which kick in at the start of 2012, require any taxpayer with business income to issue 1099 forms to all vendors from whom they purchased more than $600 of goods and services that year. That promises to launch a fusillade of new paperwork: An estimated 40 million taxpayers will be subject to the requirement, including 26 million who run sole proprietorships, according to a report released this week by National Taxpayer Advocate Nina Olson.
diggEmail Print CommentOlson's office, which operates independently within the IRS, flagged the new reporting requirements as one of its priority issues for the next year. Like many who have delved into the details of the new rules, Olson is concerned about their far-reaching scope and potential unintended consequences.
"The new reporting burden, particularly as it falls on small businesses, may turn out to be disproportionate as compared with any resulting improvement in tax compliance," the Taxpayer Advocate Service wrote in a report released this week.
The new rules are aimed at reducing the "tax gap" between what individuals and businesses owe and what they actually pay. The federal government misses out on estimated $300 billion each year from tax underpayment. The expanded reporting requirements, which Congress slipped into the landmark health care reform bill passed in March, are an attempt to create a paper trail of 1099s exposing business-to-business payments that might otherwise stay off the radar.
But the cost of that paper trail could swamp the small companies, sole proprietors freelancers forced to generate it. Pennsylvania business networking organization SMC Business Councils surveyed its members and found that they currently average 10 filings a year of 1099 forms. The new rules would push that average to more than 200 filings per year for a typical small business, the industry group estimates.
The IRS will have broad leeway to interpret the rules -- and it's already showing signs that it will look for ways to staunch the paperwork flood.
In a late May speech before the two payroll industry trade group, IRS Commissioner Douglas Shulman announced a major exception to the new rules: The IRS plans to exempt transactions made through credit and debit cards. A separate reporting requirement kicks in next year that will cover card transactions and help the IRS spot unreported payments made through those channels, "so there is no need for businesses to report them as well," Shulman said. "Whenever a business uses a credit or debit card, there will be no new burden under the new law."
How much of a sigh of relief you should breathe depends on what kind of purchases your business makes. Some big-ticket consumer items that are typically paid by card -- airline tickets or hotel stays, for example -- will be 1099-free. But SMC Business Councils President Tom Henschke, a vocal critic of the new law, estimates that exempting credit-card transactions would affect less than 10% of his members' reporting requirements.
"Most of the small businesses out there that do small business [purchasing] don't do it by credit card," he said. "One of the reasons is the transaction cost is very high -- 2% to 3%."
Henschke thinks the main beneficiaries of the exemption are likely to be credit-card companies, which will gain an added hook to get small businesses to pay their fees. Nolan Newman, a Seattle CPA who specializes in small-business needs, says it's certainly possible that card usage will rise as a result: "If I'm a small business and I use my credit card moderately, would I try to increase my volume with which I pay vendors with it? Maybe."
Henschke foresees another unintended consequence of the new reporting provisions: that in order to cut down on tax forms to be filed, businesses will trim the number of vendors they do business with. "I've actually heard businesses talking about consolidating their purchases, going from 150, 200 vendors, down to less than 100," he said. "That will most certainly lead to some small businesses being swept under the door."
The taxpayer advocate's office shares that concern. "Many large vendors already have computer systems that can track purchases by customer. They are likely to advertise that they will track each customer's total purchases and send them a report at the end of the year that business customers can use to comply with the Form 1099 filing requirement," the office wrote in its report. "Small businesses that lack the capacity to track customer purchases may lose customers, leaving the economy with more large national vendors and less local competition."
That was just one of seven major pitfalls the Taxpayer Advocate Service foresees in the new rules. It also questions whether they will actually do much to close the tax gap. Because of product returns and other complications, the payments documented by the 1099 trail won't match up cleanly against the revenue businesses report. "The IRS will face challenges making productive use of this new volume of information reports," Olson's office concluded.
That could help explain one otherwise puzzling aspect of the new tax law, which is that despite the sweeping reporting requirements, the Joint Committee on Taxation -- a nonpartisan Congressional committee that analyzes pending tax legislation -- estimated that it would bring in only about $2 billion a year in new tax revenue. Committee staffers wouldn't comment on the record.
"Judging from the estimate that the committee has made, they didn't think it was that far-reaching," said Eric Toder of the Tax Policy Center, a nonpartisan think tank. "Does it close a lot of the tax gap? No."
The IRS did not return repeated calls and e-mails asking for clarification on its timeline for drafting the new regulations.
In his talk to accountants in May, Shulman put off questions about the expanded 1099 reporting, saying that even the idea of exempting credit-card transactions was just "an example of where we are headed, not as a complete implementation plan." The agency is currently seeking public comment on how it should implement the new rules.
The IRS has some leeway in implementing the new law -- but only some. "The regulations are supposed to implement the intent of Congress; they're not supposed to be independent policy-making," Toder said. "But obviously, there's some discretion there."
Shulman himself hinted that it may take new legislation -- not just IRS regs -- to fix what Congress has wrought. "We won't hesitate to consider alternate approaches," he said in his speech, "including working with Congress to address any potential implementation issues that may arise during this process."
Friday, July 9, 2010
The Obama-Pelosi Lame Duck Strategy
IF YOU ARE NOT AFRAID OF DEMOCRATS YOU ARE A FOOL
Democratic House members are so worried about the fall elections they're leaving Washington on July 30, a full week earlier than normal—and they won't return until mid-September. Members gulped when National Journal's Charlie Cook, the Beltway's leading political handicapper, predicted last month "the House is gone," meaning a GOP takeover. He thinks Democrats will hold the Senate, but with a significantly reduced majority.
The rush to recess gives Democrats little time to pass any major laws. That's why there have been signs in recent weeks that party leaders are planning an ambitious, lame-duck session to muscle through bills in December they don't want to defend before November. Retiring or defeated members of Congress would then be able to vote for sweeping legislation without any fear of voter retaliation.
House Speaker Nancy Pelosi
."I've got lots of things I want to do" in a lame duck, Sen. Jay Rockefeller (D., W. Va.) told reporters in mid June. North Dakota's Kent Conrad, chairman of the Senate Budget Committee, wants a lame-duck session to act on the recommendations of President Obama's deficit commission, which is due to report on Dec. 1. "It could be a huge deal," he told Roll Call last month. "We could get the country on a sound long-term fiscal path." By which he undoubtedly means new taxes in exchange for extending some, but not all, of the Bush-era tax reductions that will expire at the end of the year.
In the House, Arizona Rep. Raul Grijalva, co-chairman of the Congressional Progressive Caucus, told reporters last month that for bills like "card check"—the measure to curb secret-ballot union elections—"the lame duck would be the last chance, quite honestly, for the foreseeable future."
Related Reading
Partisanship Pays Off in the Primaries
Obama: Full Campaign Mode
Obama Shifts to Export-Led Jobs Push
U.S. Challenges Immigration Law
Foes Face Uphill Battle to Oust Steele
Democrats' Peril GOP's Challenge
.Iowa Sen. Tom Harkin, chair of the Senate committee overseeing labor issues, told the Bill Press radio show in June that "to those who think [card check] is dead, I say think again." He told Mr. Press "we're still trying to maneuver" a way to pass some parts of the bill before the next Congress is sworn in.
Other lame-duck possibilities? Senate ratification of the New Start nuclear treaty, a federally mandated universal voter registration system to override state laws, and a budget resolution to lock in increased agency spending.
Then there is pork. A Senate aide told me that "some of the biggest porkers on both sides of the aisle are leaving office this year, and a lame-duck session would be their last hurrah for spending." Likely suspects include key members of the Senate Appropriations Committee, Congress's "favor factory," such as Pennsylvania Democrat Arlen Specter and Utah Republican Bob Bennett.
Conservative groups such as FreedomWorks are alarmed at the potential damage, and they are demanding that everyone in Congress pledge not to take up substantive legislation in a post-election session. "Members of Congress are supposed to represent their constituents, not override them like sore losers in a lame-duck session," Rep. Tom Price, head of the Republican Study Committee, told me.
It's been almost 30 years since anything remotely contentious was handled in a lame-duck session, but that doesn't faze Democrats who have jammed through ObamaCare and are determined to bring the financial system under greater federal control.
Mike Allen of Politico.com reports one reason President Obama failed to mention climate change legislation during his recent, Oval Office speech on the Gulf oil spill was that he wants to pass a modest energy bill this summer, then add carbon taxes or regulations in a conference committee with the House, most likely during a lame-duck session. The result would be a climate bill vastly more ambitious, and costly for American consumers and taxpayers, than moderate "Blue Dogs" in the House would support on the campaign trail. "We have a lot of wiggle room in conference," a House Democratic aide told the trade publication Environment & Energy Daily last month.
Many Democrats insist there will be no dramatic lame-duck agenda. But a few months ago they also insisted the extraordinary maneuvers used to pass health care wouldn't be used. Desperate times may be seen as calling for desperate measures, and this November the election results may well make Democrats desperate.
Mr. Fund is a columnist for WSJ.com.
Democratic House members are so worried about the fall elections they're leaving Washington on July 30, a full week earlier than normal—and they won't return until mid-September. Members gulped when National Journal's Charlie Cook, the Beltway's leading political handicapper, predicted last month "the House is gone," meaning a GOP takeover. He thinks Democrats will hold the Senate, but with a significantly reduced majority.
The rush to recess gives Democrats little time to pass any major laws. That's why there have been signs in recent weeks that party leaders are planning an ambitious, lame-duck session to muscle through bills in December they don't want to defend before November. Retiring or defeated members of Congress would then be able to vote for sweeping legislation without any fear of voter retaliation.
House Speaker Nancy Pelosi
."I've got lots of things I want to do" in a lame duck, Sen. Jay Rockefeller (D., W. Va.) told reporters in mid June. North Dakota's Kent Conrad, chairman of the Senate Budget Committee, wants a lame-duck session to act on the recommendations of President Obama's deficit commission, which is due to report on Dec. 1. "It could be a huge deal," he told Roll Call last month. "We could get the country on a sound long-term fiscal path." By which he undoubtedly means new taxes in exchange for extending some, but not all, of the Bush-era tax reductions that will expire at the end of the year.
In the House, Arizona Rep. Raul Grijalva, co-chairman of the Congressional Progressive Caucus, told reporters last month that for bills like "card check"—the measure to curb secret-ballot union elections—"the lame duck would be the last chance, quite honestly, for the foreseeable future."
Related Reading
Partisanship Pays Off in the Primaries
Obama: Full Campaign Mode
Obama Shifts to Export-Led Jobs Push
U.S. Challenges Immigration Law
Foes Face Uphill Battle to Oust Steele
Democrats' Peril GOP's Challenge
.Iowa Sen. Tom Harkin, chair of the Senate committee overseeing labor issues, told the Bill Press radio show in June that "to those who think [card check] is dead, I say think again." He told Mr. Press "we're still trying to maneuver" a way to pass some parts of the bill before the next Congress is sworn in.
Other lame-duck possibilities? Senate ratification of the New Start nuclear treaty, a federally mandated universal voter registration system to override state laws, and a budget resolution to lock in increased agency spending.
Then there is pork. A Senate aide told me that "some of the biggest porkers on both sides of the aisle are leaving office this year, and a lame-duck session would be their last hurrah for spending." Likely suspects include key members of the Senate Appropriations Committee, Congress's "favor factory," such as Pennsylvania Democrat Arlen Specter and Utah Republican Bob Bennett.
Conservative groups such as FreedomWorks are alarmed at the potential damage, and they are demanding that everyone in Congress pledge not to take up substantive legislation in a post-election session. "Members of Congress are supposed to represent their constituents, not override them like sore losers in a lame-duck session," Rep. Tom Price, head of the Republican Study Committee, told me.
It's been almost 30 years since anything remotely contentious was handled in a lame-duck session, but that doesn't faze Democrats who have jammed through ObamaCare and are determined to bring the financial system under greater federal control.
Mike Allen of Politico.com reports one reason President Obama failed to mention climate change legislation during his recent, Oval Office speech on the Gulf oil spill was that he wants to pass a modest energy bill this summer, then add carbon taxes or regulations in a conference committee with the House, most likely during a lame-duck session. The result would be a climate bill vastly more ambitious, and costly for American consumers and taxpayers, than moderate "Blue Dogs" in the House would support on the campaign trail. "We have a lot of wiggle room in conference," a House Democratic aide told the trade publication Environment & Energy Daily last month.
Many Democrats insist there will be no dramatic lame-duck agenda. But a few months ago they also insisted the extraordinary maneuvers used to pass health care wouldn't be used. Desperate times may be seen as calling for desperate measures, and this November the election results may well make Democrats desperate.
Mr. Fund is a columnist for WSJ.com.
Consumption Inflection Point - No One Wants Credit; Consumer Spending Plans Plunge
Consumer credit has fallen an unprecedented 7 consecutive quarters. Moreover, credit is poised to plunge further as consumer spending plans are falling through the floor.
Bloomberg reports Consumer Credit in U.S. Declined More Than Forecast.
Consumer borrowing in the U.S. dropped in May more than forecast, a sign Americans are less willing to take on debt without an improvement in the labor market.
The $9.1 billion decrease followed a revised $14.9 billion slump in April that was initially estimated as a $1 billion increase, the Federal Reserve reported today in Washington. Economists projected a $2.3 billion drop in the May measure of credit card debt and non-revolving loans, according to a Bloomberg News survey of 34 economists.
Borrowing that’s increased twice since the end of 2008 shows consumer spending, which accounts for about 70 percent of the economy, will be restrained as Americans pay down debt. Banks also continue to restrict lending following the collapse of the housing market, Fed officials said after their policy meeting last month.
Consumer Credit This Recession vs. Last
The above chart courtesy of Chris Puplava at Financial Sense.
Note the remarkable difference in consumer attitudes the latest recession vs. 2001. This drop is unprecedented, at least back to the great depression.
Massive Chargeoffs or Consumers Paying down Debt?
Inquiring minds are asking an important question: Is the drop in consumer credit related to chargeoffs or because consumers are wildly motivated to pay down debt?
For some clues, please consider Credit-card debt drops 10.5% in May
Paying down credit-card debt appears to be on the upswing.
Consumers cut their outstanding revolving debt -– overwhelmingly credit cards -– by an annualized, seasonally adjusted rate of 10.5 percent in May, the Federal Reserve reported Thursday. That’s on the heels of an 11.8 percent drop in April. Revolving credit is a line of credit allowing consumers to pay all or part of an outstanding balance, and, as the balance is paid, it becomes available to spend again as credit.
But it might be premature to say that consumers have been scared straight.
The monthly consumer credit numbers tell only part of the story because it’s not yet known how much debt banks or merchants will charge-off, or remove from their books because they’ve deemed it uncollectable. The Fed’s charge-off numbers are released quarterly, and the first quarter’s 10.1 percent rate tied for the highest since the beginning of 1985, the latest period for which figures are readily available.
“Unfortunately we won’t know until the charge-off data comes out for the second quarter whether the reduction was actually due to consumers paying down their debt or the banks writing bad debt off the books,” Odysseas Papadimitriou, a former Capital One executive who is now founder and chief executive of credit-card research Web site Cardhub.com, said.
In the first quarter, for example, about 40 percent of the decline in credit-card debt was due to charge-offs, Cardhub.com said.
I believe it is safe to say we are seeing both writedowns and chargeoffs. The latter will lead to declining financial earnings unless provisions for losses cover the writeoffs.
I highly doubt loan loss provisions are adequate.
Bloomberg reports Consumer Credit in U.S. Declined More Than Forecast.
Consumer borrowing in the U.S. dropped in May more than forecast, a sign Americans are less willing to take on debt without an improvement in the labor market.
The $9.1 billion decrease followed a revised $14.9 billion slump in April that was initially estimated as a $1 billion increase, the Federal Reserve reported today in Washington. Economists projected a $2.3 billion drop in the May measure of credit card debt and non-revolving loans, according to a Bloomberg News survey of 34 economists.
Borrowing that’s increased twice since the end of 2008 shows consumer spending, which accounts for about 70 percent of the economy, will be restrained as Americans pay down debt. Banks also continue to restrict lending following the collapse of the housing market, Fed officials said after their policy meeting last month.
Consumer Credit This Recession vs. Last
The above chart courtesy of Chris Puplava at Financial Sense.
Note the remarkable difference in consumer attitudes the latest recession vs. 2001. This drop is unprecedented, at least back to the great depression.
Massive Chargeoffs or Consumers Paying down Debt?
Inquiring minds are asking an important question: Is the drop in consumer credit related to chargeoffs or because consumers are wildly motivated to pay down debt?
For some clues, please consider Credit-card debt drops 10.5% in May
Paying down credit-card debt appears to be on the upswing.
Consumers cut their outstanding revolving debt -– overwhelmingly credit cards -– by an annualized, seasonally adjusted rate of 10.5 percent in May, the Federal Reserve reported Thursday. That’s on the heels of an 11.8 percent drop in April. Revolving credit is a line of credit allowing consumers to pay all or part of an outstanding balance, and, as the balance is paid, it becomes available to spend again as credit.
But it might be premature to say that consumers have been scared straight.
The monthly consumer credit numbers tell only part of the story because it’s not yet known how much debt banks or merchants will charge-off, or remove from their books because they’ve deemed it uncollectable. The Fed’s charge-off numbers are released quarterly, and the first quarter’s 10.1 percent rate tied for the highest since the beginning of 1985, the latest period for which figures are readily available.
“Unfortunately we won’t know until the charge-off data comes out for the second quarter whether the reduction was actually due to consumers paying down their debt or the banks writing bad debt off the books,” Odysseas Papadimitriou, a former Capital One executive who is now founder and chief executive of credit-card research Web site Cardhub.com, said.
In the first quarter, for example, about 40 percent of the decline in credit-card debt was due to charge-offs, Cardhub.com said.
I believe it is safe to say we are seeing both writedowns and chargeoffs. The latter will lead to declining financial earnings unless provisions for losses cover the writeoffs.
I highly doubt loan loss provisions are adequate.
Biggest Defaulters on Mortgages Are the Rich
LOS ALTOS, Calif. — No need for tears, but the well-off are losing their master suites and saying goodbye to their wine cellars.
The housing bust that began among the working class in remote subdivisions and quickly progressed to the suburban middle class is striking the upper class in privileged enclaves like this one in Silicon Valley.
Whether it is their residence, a second home or a house bought as an investment, the rich have stopped paying the mortgage at a rate that greatly exceeds the rest of the population.
More than one in seven homeowners with loans in excess of a million dollars are seriously delinquent, according to data compiled for The New York Times by the real estate analytics firm CoreLogic.
By contrast, homeowners with less lavish housing are much more likely to keep writing checks to their lender. About one in 12 mortgages below the million-dollar mark is delinquent.
Though it is hard to prove, the CoreLogic data suggest that many of the well-to-do are purposely dumping their financially draining properties, just as they would any sour investment.
“The rich are different: they are more ruthless,” said Sam Khater, CoreLogic’s senior economist.
Five properties here in Los Altos were scheduled for foreclosure auctions in a recent issue of The Los Altos Town Crier, the weekly newspaper where local legal notices are posted. Four have unpaid mortgage debt of more than $1 million, with the highest amount $2.8 million.
Not so long ago, said Chris Redden, the paper’s advertising services director, “it was a surprise if we had one foreclosure a month.”
The sheriff in Cook County, Ill., is increasingly in demand to evict foreclosed owners in the upscale suburbs to the north and west of Chicago — like Wilmette, La Grange and Glencoe. The occupants are always gone by the time a deputy gets there, a spokesman said, but just barely.
In Las Vegas, Ken Lowman, a longtime agent for luxury properties, said four of the 11 sales he brokered in June were distressed properties.
“I’ve never seen the wealthy hit like this before,” Mr. Lowman said. “They made their plans based on the best of all possible scenarios — that their incomes would continue to grow, that real estate would never drop. Not many had a plan B.”
The defaulting owners, he said, often remain as long as they can. “They’re in denial,” he said.
Here in Los Altos, where the median home price of $1.5 million makes it one of the most exclusive towns in the country, several houses scheduled for auction were still occupied this week. The people who answered the door were reluctant to explain their circumstances in any detail.
At one house, where the lender was owed $1.3 million, there was a couch out front wrapped in plastic. A woman said she and her husband had lost their jobs and were moving in with relatives. At another house, the family said they were renters. A third family, whose mortgage is $1.6 million, said they would be moving this weekend.
At a vacant house with a pool, where the lender was seeking $1.27 million, a raft and a water gun lay abandoned on the entryway floor.
Lenders are fearful that many of the 11 million or so homeowners who owe more than their house is worth will walk away from them, especially if the real estate market begins to weaken again. The so-called strategic defaults have become a matter of intense debate in recent months.
Fannie Mae and Freddie Mac, the two quasi-governmental mortgage finance companies that own most of the mortgages in America with a value of less than $500,000, are alternately pleading with distressed homeowners not to be bad citizens and brandishing a stick at them.
In a recent column on Freddie Mac’s Web site, the company’s executive vice president, Don Bisenius, acknowledged that walking away “might well be a good decision for certain borrowers” but argues that those who do it are trashing their communities.
The CoreLogic data suggest that the rich do not seem to have concerns about the civic good uppermost in their mind, especially when it comes to investment and second homes. Nor do they appear to be particularly worried about being sued by their lender or frozen out of future loans by Fannie Mae, possible consequences of default.
The delinquency rate on investment homes where the original mortgage was more than $1 million is now 23 percent. For cheaper investment homes, it is about 10 percent.
With second homes, the delinquency rate for both types of owners was rising in concert until the stock market crashed in September 2008. That sent the percentage of troubled million-dollar loans spiraling up much faster than the smaller loans.
“Those with high net worth have other resources to lean on if they get in trouble,” said Mr. Khater, the analyst. “If they’re going delinquent faster than anyone else, that tells me they are doing so willingly.”
Willingly, but not necessarily publicly. The rapper Chamillionaire is a plain-talking exception. He recently walked away from a $2 million house he bought in Houston in 2006.
“I just decided to let it go, give it back to the bank,” he told the celebrity gossip TV show “TMZ.” “I just didn’t feel like it was a good investment.”
The rich and successful often come naturally to this sort of attitude, said Brent T. White, a law professor at the University of Arizona who has studied strategic defaults.
“They may be less susceptible to the shame and fear-mongering used by the government and the mortgage banking industry to keep underwater homeowners from acting in their financial best interest,” Mr. White said.
The CoreLogic data measures serious delinquencies, which means the borrower has missed at least three payments in a row. At that point, lenders traditionally file a notice of default and the house enters the official foreclosure process.
In the current environment, however, notices of default are down for all types of loans as lenders work with owners in various modification programs. Even so, owners in some of the more expensive neighborhoods in and around San Francisco are beginning to head for the exit, according to data compiled by MDA DataQuick.
In Los Altos, Los Altos Hills and the most expensive neighborhood in adjoining Mountain View, defaults in the first five months of this year edged up to 16, from 15 in the same period in 2009 and four in 2008.
The East Bay suburb of Orinda had eight notices of default for million-dollar properties, up from five in the same period last year. On Nob Hill in San Francisco, there were four, up from one. The Marina neighborhood had four, up from two.
The vast majority of owners in these upscale communities are still paying the mortgage, of course. But they appear to be cutting back in other ways. The once-thriving Los Altos downtown is pocked with more than a dozen empty storefronts in a six-block stretch.
But this is still Silicon Valley, where failure can always be considered a prelude to success.
In the middle of a workday, one troubled homeowner here leaned over his laptop at the kitchen table, trying to maneuver his way out from under his debt and figure out the next big thing.
His five-bedroom house, drained of hundreds of thousands of dollars of equity over the last 13 years, is scheduled for auction July 20. Nine months ago, after his latest business (he has had several) failed in what he called “the global meltdown,” the man, a technology entrepreneur, said he quit making his $9,000 monthly payments.
“I’m going to be downsizing,” he said.
The man spoke on the condition of anonymity because, he said, he did not want his current problems to interfere with his coming reinvention. “I’m a businessman,” he explained. “I have to be upbeat.”
The housing bust that began among the working class in remote subdivisions and quickly progressed to the suburban middle class is striking the upper class in privileged enclaves like this one in Silicon Valley.
Whether it is their residence, a second home or a house bought as an investment, the rich have stopped paying the mortgage at a rate that greatly exceeds the rest of the population.
More than one in seven homeowners with loans in excess of a million dollars are seriously delinquent, according to data compiled for The New York Times by the real estate analytics firm CoreLogic.
By contrast, homeowners with less lavish housing are much more likely to keep writing checks to their lender. About one in 12 mortgages below the million-dollar mark is delinquent.
Though it is hard to prove, the CoreLogic data suggest that many of the well-to-do are purposely dumping their financially draining properties, just as they would any sour investment.
“The rich are different: they are more ruthless,” said Sam Khater, CoreLogic’s senior economist.
Five properties here in Los Altos were scheduled for foreclosure auctions in a recent issue of The Los Altos Town Crier, the weekly newspaper where local legal notices are posted. Four have unpaid mortgage debt of more than $1 million, with the highest amount $2.8 million.
Not so long ago, said Chris Redden, the paper’s advertising services director, “it was a surprise if we had one foreclosure a month.”
The sheriff in Cook County, Ill., is increasingly in demand to evict foreclosed owners in the upscale suburbs to the north and west of Chicago — like Wilmette, La Grange and Glencoe. The occupants are always gone by the time a deputy gets there, a spokesman said, but just barely.
In Las Vegas, Ken Lowman, a longtime agent for luxury properties, said four of the 11 sales he brokered in June were distressed properties.
“I’ve never seen the wealthy hit like this before,” Mr. Lowman said. “They made their plans based on the best of all possible scenarios — that their incomes would continue to grow, that real estate would never drop. Not many had a plan B.”
The defaulting owners, he said, often remain as long as they can. “They’re in denial,” he said.
Here in Los Altos, where the median home price of $1.5 million makes it one of the most exclusive towns in the country, several houses scheduled for auction were still occupied this week. The people who answered the door were reluctant to explain their circumstances in any detail.
At one house, where the lender was owed $1.3 million, there was a couch out front wrapped in plastic. A woman said she and her husband had lost their jobs and were moving in with relatives. At another house, the family said they were renters. A third family, whose mortgage is $1.6 million, said they would be moving this weekend.
At a vacant house with a pool, where the lender was seeking $1.27 million, a raft and a water gun lay abandoned on the entryway floor.
Lenders are fearful that many of the 11 million or so homeowners who owe more than their house is worth will walk away from them, especially if the real estate market begins to weaken again. The so-called strategic defaults have become a matter of intense debate in recent months.
Fannie Mae and Freddie Mac, the two quasi-governmental mortgage finance companies that own most of the mortgages in America with a value of less than $500,000, are alternately pleading with distressed homeowners not to be bad citizens and brandishing a stick at them.
In a recent column on Freddie Mac’s Web site, the company’s executive vice president, Don Bisenius, acknowledged that walking away “might well be a good decision for certain borrowers” but argues that those who do it are trashing their communities.
The CoreLogic data suggest that the rich do not seem to have concerns about the civic good uppermost in their mind, especially when it comes to investment and second homes. Nor do they appear to be particularly worried about being sued by their lender or frozen out of future loans by Fannie Mae, possible consequences of default.
The delinquency rate on investment homes where the original mortgage was more than $1 million is now 23 percent. For cheaper investment homes, it is about 10 percent.
With second homes, the delinquency rate for both types of owners was rising in concert until the stock market crashed in September 2008. That sent the percentage of troubled million-dollar loans spiraling up much faster than the smaller loans.
“Those with high net worth have other resources to lean on if they get in trouble,” said Mr. Khater, the analyst. “If they’re going delinquent faster than anyone else, that tells me they are doing so willingly.”
Willingly, but not necessarily publicly. The rapper Chamillionaire is a plain-talking exception. He recently walked away from a $2 million house he bought in Houston in 2006.
“I just decided to let it go, give it back to the bank,” he told the celebrity gossip TV show “TMZ.” “I just didn’t feel like it was a good investment.”
The rich and successful often come naturally to this sort of attitude, said Brent T. White, a law professor at the University of Arizona who has studied strategic defaults.
“They may be less susceptible to the shame and fear-mongering used by the government and the mortgage banking industry to keep underwater homeowners from acting in their financial best interest,” Mr. White said.
The CoreLogic data measures serious delinquencies, which means the borrower has missed at least three payments in a row. At that point, lenders traditionally file a notice of default and the house enters the official foreclosure process.
In the current environment, however, notices of default are down for all types of loans as lenders work with owners in various modification programs. Even so, owners in some of the more expensive neighborhoods in and around San Francisco are beginning to head for the exit, according to data compiled by MDA DataQuick.
In Los Altos, Los Altos Hills and the most expensive neighborhood in adjoining Mountain View, defaults in the first five months of this year edged up to 16, from 15 in the same period in 2009 and four in 2008.
The East Bay suburb of Orinda had eight notices of default for million-dollar properties, up from five in the same period last year. On Nob Hill in San Francisco, there were four, up from one. The Marina neighborhood had four, up from two.
The vast majority of owners in these upscale communities are still paying the mortgage, of course. But they appear to be cutting back in other ways. The once-thriving Los Altos downtown is pocked with more than a dozen empty storefronts in a six-block stretch.
But this is still Silicon Valley, where failure can always be considered a prelude to success.
In the middle of a workday, one troubled homeowner here leaned over his laptop at the kitchen table, trying to maneuver his way out from under his debt and figure out the next big thing.
His five-bedroom house, drained of hundreds of thousands of dollars of equity over the last 13 years, is scheduled for auction July 20. Nine months ago, after his latest business (he has had several) failed in what he called “the global meltdown,” the man, a technology entrepreneur, said he quit making his $9,000 monthly payments.
“I’m going to be downsizing,” he said.
The man spoke on the condition of anonymity because, he said, he did not want his current problems to interfere with his coming reinvention. “I’m a businessman,” he explained. “I have to be upbeat.”
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