Friday, May 09, 2014

20 million U.S. families could buy homes, but don’t - MarketWatch

20 million U.S. families could buy homes, but don’t - MarketWatch:

 "Only 13% view home ownership as their “ultimate financial goal”"

"Just 74.4 million American households — less than 65% of the country — owned the homes they lived in during the first quarter of this year, according to a U.S. Census Bureau report this week. That was the lowest level since 1995 and a big drop from 2006, when a peak of 76.5 million households, or 68.9%, were owner-occupied." 

"In fact, the National Endowment for Financial Education released a poll this week that showed only 13% of Americans considered home ownership as their “top long term financial goal,” down from 17% in 2011.
“The American dream has long been associated with the gratification and security of a comfortable home within the picturesque borders of a white-picket fence,” said Ted Beck, president and CEO of the NEFE, which is based in Denver. “However, today the perceived importance of home ownership appears to be waning.”
"Instead, according to the poll, a whopping 50% said that their sole long term financial goal was to save enough for retirement, up from 43% three years earlier, even though most financial planners say owning a home is the best way to build wealth that can be tapped once you retire."

Friday, March 28, 2014

Bank of America to Pay $6.3 Billion to Settle Mortgage Securities Suit

Bank of America to Pay $6.3 Billion to Settle Mortgage Securities Suit - NYTimes.com

"Bank of America is paying $6.3 billion to settle a lawsuit arising out of troubled mortgage-backed securities it cobbled together and sold to Fannie Mae and Freddie Mac in the run-up to the financial crisis.


The bank agreed on Wednesday to pay that sum
to settle a lawsuit filed on behalf of the two government-sponsored
mortgage finance firms by their regulator, the Federal Housing Finance
Agency. As part of the settlement, Bank of America will also repurchase
mortgage securities from Fannie and Freddie that are valued at about
$3.2 billion.
The agreement covers what are known as
private-label mortgage-backed securities sold by Bank of America and its
affiliated entities like Countrywide Financial and Merrill Lynch."

Tuesday, March 25, 2014

LIBOR: The World’s Most Dishonest Number

LIBOR: The World’s Most Dishonest Number | The Big Picture

"The FDIC has sued 16 of the largest banks in the world plus the
British Bankers Association (BBA) alleging that they engaged in fraud
and collusion to manipulate the London Inter-bank Offered Rate (LIBOR). 
BBA called LIBOR “The most important number in the world.”


LIBOR is actually many numbers that depend on the currency and term
(maturity) of the loan.  The collusion involved manipulating most of
these rates.  A vast number of loans and derivatives are priced off of
these “numbers.”  Estimates of the notional dollar amount of deals
affected by the collusion range from $300-550 trillion in deals
manipulated at any given time.  The LIBOR frauds began no later than
2005 and continued through 2011."

The fact that the FDIC “only” sued 16 of the largest banks in the
world does not indicate that the other elite banks were run honestly. 
The other elite banks were not part of the group that set LIBOR so they
could not join in the cartel.  The LIBOR conspiracy could only succeed
and persist if none of 16 elite banks was controlled by honest officers
and no regulator acted to end the collusion once they became aware of
the collusion (which happened no later than April 16, 2008).  We ran a
real world test of the ethics of the leaders of 16 of the world’s most
elite banks.  The scorecard according to the U.S. government agency that
investigated the matter (the FDIC) reports that each of the leaders
failed.  Our twin emergencies are financial and ethical.


According to the FDIC investigation, the three largest banks in
America (including the world’s two largest banks), the four largest
banks in the U.K, the largest bank in German, the largest bank in Japan
(plus one of the handful of surviving “main banks”), the third largest
bank in France, the two largest Swiss banks, the second largest bank in
Canada, and the second largest bank in the Netherlands conspired
together to manipulate LIBOR and not only lied about it but also covered
up the cartel and the fraud scheme it used.  The 15 surviving banks’
total assets were nearly twice as large as the U.S. GDP as of September
30, 2013."




Here are the data on the banks sued by the FDIC




Bank ($ billions, IFRS, as of 9/30/13)
Bank of America Corp 3063^
Barclays PLC 2275
Citigroup Inc 2693^
Credit Suisse Group AG 1643^
Deutsche Bank AG 2420
HSBC Holdings PLC 2723
JPMorgan Chase & Co 3678^
The Royal Bank of Scotland Group PLC 1829
UBS AG 1160
Rabobank 908
Lloyds Banking Group PLC 1409
Societe Generale 1698
Norinchukin Bank 846
Royal Bank of Canada 825
Bank of Tokyo-Mitsubishi UFJ 2469
Total: 29639
Source: SNL Financial








...



"Ethics


Consider the ethical and political implications of what the FDIC
investigation has confirmed.  The entire barrel of apples is rotten. 
Every CEO failed the ethical test, and the ethical bar that they failed
to surmount was set exceptionally low.  That can only happen when a
“Gresham’s” dynamic has been allowed to persist for years because of the
three “de’s” (deregulation, desupervision, and de facto decriminalization). 
Such a dynamic can cause “bad ethics to drive good ethics out of the
markets.”  No one should be able to view the facts the FDIC cites
without a sense of horror combined with an urgent commitment to
transform the industry that has done so much financial and ethical harm
to our nations.  "

..

"Crony Capitalism and Politics


There are two possibilities:  the Obama administration knew for six
years that the world’s largest banks were endemically led by frauds or
the administration learned of that fact recently when it learned of the
results of the FDIC investigation.  The LIBOR scandal became public
knowledge with the Wall Street Journal’s April 16, 2008 expose,
so the Bush administration also knew it was dealing with elite frauds. 
If the Obama administration has long known that fraud was endemic among
the leaders of the world’s largest banks, then its policies toward those
CEO and the banks they control have been reprehensible and harmful.


If the administration has just learned from the FDIC investigation
about the true nature of the CEOs that it has refused to hold
accountable and allowed to retain and even massively increase their
wealth through leading control frauds then we can doubtless expect a
series of emergency actions transforming the administration’s finance
industry policies.  The FDIC lawsuit provides a “natural experiment”
that allows us to test which of the possibilities was correct.


Let’s review the bidding.  The U.S. government, through the FDIC, has
found after a lengthy investigation that the leaders of 16 of the
world’s largest banks conspired together to form a cartel to manipulate
the LIBOR “numbers” and to defraud the public about the scam.  This
should have led the criminal justice authorities to prosecute large
numbers of senior officers of these banks – but none of them have been
prosecuted.  It obviously poses a grave threat to the “safety and
soundness” of the entire financial system.  The endemic frauds led by
elite CEOs demonstrate such a pervasive failure of integrity and ethics
by the leaders of the finance industry that there is a moral crisis of
tragic proportions. "






People Battle to Regain Online Privacy

People Battle to Regain Online Privacy - WSJ.com

"

More people are turning to a new wave of tools that let them cover their footsteps online or let them know who's watching them.
They're
downloading programs that allow them to see how their online activity
is being monitored or who can get access to their social-media
information. They're turning to browsers and search engines that don't
track their queries, and to services that encrypt their messages. Some
may soon opt for a new wave of phones that help hide their activity from
trackers.
The fears about privacy are
widespread. According to the Pew Research Center, half of Americans—up
from 33% in 2009—are concerned about the wealth of personal data on the
Internet.
But growing numbers of people
are also staging everyday rebellions against rampant data mining.
According to the same Pew survey, 86% have taken steps to mask their
digital footprints.










For instance, ad-blocking tools,
which keep ads off your screen and prevent the ad companies from getting
data about you, have become the most popular browser extension on the
Web: More than a quarter of Americans have downloaded them, according to




















Forrester Research Inc"



"DuckDuckGo and other Google alternatives
have seen traffic soar. Since its founding in 2011, for instance,
DuckDuckGo has risen to 4.5 million visits a day. Ixquick, another
anonymous search browser, had 2.5 million users a day in the spring of
2013, before the Snowden disclosures. Now it has five million a day.
Many
users are also looking to protect their email. Encrypted and so-called
ephemeral messaging—texts that disappear seconds after you send
them—have become explosively popular among teens, and have long been
used by security professionals.
But now
people who aren't worried about parents or hackers are seeing value in
these apps. WhisperSystems' free encrypted messaging service has had a
3,000% surge in installs since the Snowden revelations, the company
says."


Revealed: Apple and Google’s wage-fixing cartel involved dozens more companies, over one million employees

Revealed: Apple and Google’s wage-fixing cartel involved dozens more companies, over one million employees | PandoDaily

"Confidential internal Google and Apple memos, buried within piles of
court dockets and reviewed by PandoDaily, clearly show that what began
as a secret cartel agreement between Apple’s Steve Jobs and Google’s
Eric Schmidt to illegally fix the labor market for hi-tech workers,
expanded within a few years to include companies ranging from Dell, IBM,
eBay and Microsoft, to Comcast, Clear Channel, Dreamworks, and
London-based public relations behemoth WPP. All told, the combined
workforces of the companies involved totals well over a million
employees."

"Although the Department ultimately decided to focus its attention on
just Adobe, Apple, Google, Intel, Intuit, Lucasfilm and Pixar, the
emails and memos clearly name dozens more companies which, at least as
far as Google and Apple executives were concerned, formed part of their
wage-fixing cartel."

..

"The “effective date” of Google’s first wage-fixing agreements, early
March 2005, follows a few weeks after Steve Jobs threatened Google’s
Sergey Brin to stop all recruiting at Apple: “if you hire a single one
of these people,” Jobs emailed Brin, “that means war.”


Jobs threatened Brin and Google on February 17, 2005; nine days
later, Apple’s VP for Human Resources sent out an internal email to
Apple recruiting,


All,


Please add Google to your “hands-off” list. We recently agreed not to
recruit from one another so if you hear of any recruiting they are
doing against us, please be sure to let me know.


Please also be sure to honor our side of the deal."
"This is just a tiny sample of the “overwhelming” evidence used by
both the Justice Department’s antitrust division, and the District Court
judge in San Jose, to debunk the company executives’ claims that each
had coincidentally implemented identical non-solicitation policies at
the same time, with the same companies, without knowing what the other
side was doing.


From that point on, the secret cartel expanded. Later that year, in
September 2005, eBay CEO Meg Whitman called Schmidt complaining that
Google’s recruiters were hurting profits and business at eBay. Schmidt
emailed Google’s “Executive Management Committee”—the company’s top
executives— summarizing Whitman’s, and “the valley”’s view that
competing for workers by offering higher pay packages was “unfair”:

whitman

"Within weeks of Whitman’s call to Schmidt, eBay was placed on a Google
list of “Sensitive” companies, for whom Google placed fewer restrictions
on its recruiters except at the executive recruitment level. It was at
this time that Google began to internally formalize its illegal
wage-suppression pacts—and Schmidt was clearly worried about getting
caught."


"Schmidt was then asked if Google sales executive Omid Kordestani could share “with Ebay/PP the rules as they pertain to them?”


Schmidt responded:


“I would prefer that Omid do it verbally since I don’t
want to create a paper trail over which we can be sued later? Not sure
about this.. thanks Eric”
Google’s HR head at the time, Shona Brown, agreed with her boss, in lower-case ee cummings syntax:


“makes sense to do orally. i agree.”
A year later, by the end of 2006, Google upgraded eBay to its “Do Not
Cold Call” list, joining OpenTV, Nvidia Technologies, and Intuit along
with the original five companies."



...

"For now, it’s enough to try to absorb what all of these
cross-company, cross-industry secret labor-fixing agreements mean. Most
labor stories about wage theft and corporate abuse tend to focus on
low-wage earners and the most disadvantaged. Certainly it strains one’s
sensibilities to compare an exploited low-wage worker in the fast food
or retail industry to tech engineers and programmers, who are far better
compensated, live more comfortably, and rarely worry about putting food
in their children’s mouths.


In terms of pathos, there is no comparison; minimum wage earners are
struggling to survive, and nearly all of the well-educated,
privileged-born people in the media world agree that tech industry
workers are all a bunch of overpaid misogynist libertarian bros, a caricature
that makes it perfectly fine to hate the entire class, and impossible
to consider them as political comrades stuck in the same predicament as
the rest of the non-multimillionaires in this country.


What’s more important is the political predicament that low-paid fast
food workers share with well-paid hi-tech workers: the loss of power
over their lives and their futures to the growing mass of concentrated
power in Silicon Valley, whose tentacles are so strong now and so great,
that hundreds of thousands of workers around the globe—public relations
and cable company employees in the British Isles, programmers and tech
engineers in Russia and China (according to other documents which I’ll
write about soon)—have their lives controlled and their wages and
opportunities stolen from them without ever knowing about it, all the
while being bombarded with cultural cant about the wisdom of the free
market, about the efficiency of free knowledge, about the need to take
personal responsibility and to blame no one but yourself for everything
that happens in your life and your career."













U.S. banks enjoy "too-big-to-fail" advantage: Fed study

U.S. banks enjoy "too-big-to-fail" advantage: Fed study - Yahoo Finance

"A landmark study by Federal
Reserve economists found that large U.S. banks enjoy a "too-big-to-fail"
advantage in financial markets, confirming the suspicions of many Wall
Street critics more than five years after the financial crisis.

The
series of research papers, published on Tuesday by the U.S. central
bank's influential New York branch, suggests the biggest and most
complex banks benefited even after the financial crisis from lower
funding and operating costs compared to smaller firms. The researchers
used data through 2009.
The biggest banks also, Fed economists found, can take bigger risks than their smaller peers.
While
the study did not pinpoint the reason big banks borrow more cheaply,
Wall Street critics say it is because investors believe the U.S.
government would again rescue them in a panic, despite new rules adopted
in the wake of the 2007-2009 crisis and aimed at avoiding future
bailouts."

U.S. banks enjoy "too-big-to-fail" advantage: Fed study

U.S. banks enjoy "too-big-to-fail" advantage: Fed study - Yahoo Finance

"A landmark study by Federal
Reserve economists found that large U.S. banks enjoy a "too-big-to-fail"
advantage in financial markets, confirming the suspicions of many Wall
Street critics more than five years after the financial crisis.

The
series of research papers, published on Tuesday by the U.S. central
bank's influential New York branch, suggests the biggest and most
complex banks benefited even after the financial crisis from lower
funding and operating costs compared to smaller firms. The researchers
used data through 2009.
The biggest banks also, Fed economists found, can take bigger risks than their smaller peers.
While
the study did not pinpoint the reason big banks borrow more cheaply,
Wall Street critics say it is because investors believe the U.S.
government would again rescue them in a panic, despite new rules adopted
in the wake of the 2007-2009 crisis and aimed at avoiding future
bailouts."

Saturday, March 22, 2014

Credit Suisse to pay US$885m over bonds

Credit Suisse to pay US$885m over bonds - Taipei Times

"Swiss bank Credit Suisse agreed on Friday to pay US$885 million to settle US charges it sold shoddy mortgage bonds to Fannie Mae and Freddie Mac ahead of the financial crisis.

Credit Suisse will pay about US$651 million to Fannie and US$234 million to Freddie, said the US Federal Housing Finance Agency (FHFA), the conservator of the two companies rescued by government during the 2008 financial crisis.

The FHFA said the settlement resolves all of its claims in two lawsuits against Credit Suisse.

The claims alleged that Credit Suisse misrepresented the quality of billions of dollars of mortgage-backed securities it sold to Freddie and Fannie during 2005 to 2007."

Friday, March 21, 2014

U.S. schools plagued by inequality along racial lines, study finds

U.S. schools plagued by inequality along racial lines, study finds - latimes.com:

"Two-fifths of the nation's public school districts offer no preschool programs, and most of those that do offer only part-day programs. Black students account for less than a fifth of those in preschool across the nation but make up almost half of the students who are suspended from preschool multiple times.

Those results from the first comprehensive survey in nearly 15 years of civil rights data from the 97,000 U.S. public schools show they remain marked by inequities."

One in Four Mississippians' Struggled to Afford Food in 2013

One in Four Mississippians' Struggleed to Afford Food in 2013 _ Gallup:

"For the sixth consecutive year, Mississippians were the most likely in the U.S. to report struggling to afford food. In 2013, 25.1% report there was at least one time in the last 12 months when they did not have enough money to buy the food they or their families needed. Residents in West Virginia, Louisiana, and Alabama were also among the most likely to struggle to afford food. Residents of Alaska, New Hampshire, and Minnesota were among the least likely to have this problem."

"In 16 states, at least one in five residents said they struggled to afford the food that they or their families needed at least once in the past 12 months. In seven states, less than 15% of residents reported the same struggles in 2013."

Struggle Most to Afford Food Least Likely to Struggle to Afford Food



Two-thirds of those who live paycheck to paycheck aren't poor, study finds

Two-thirds of those who live paycheck to paycheck aren't poor, study finds - MarketWatch

"It’s not just the poor who live paycheck to paycheck.


A study from Greg Kaplan and Justin Weidner of Princeton University and Giovanni Violante of New York University
finds that two-thirds of the 38 million American households who consume
all their disposable income every pay period aren’t poor.


The study, released at a Brookings Institution event, found that
these so-called wealthy-hand-to-mouth are older than their poor
paycheck-to-paycheck counterparts, have higher incomes (about $50,000)
and hold substantial illiquid assets (also around $50,000 on average),
like real estate. The poor who live paycheck to paycheck have median
incomes around $20,000.


However, these people only tend to stay in this situation for about
2.5 years, unlike the poor who tend to stay for long periods of time.


It’s not just a U.S. phenomenon: Canada, Australia, the U.K.,
Germany, France, Italy and Spain also have more non-poor
paycheck-to-paycheck households than poor ones, though the percentage
varies across countries.


The authors say the findings are important for policymakers when they craft stimulus programs.


The other finding that may be startling is that a third of all households do live paycheck to paycheck."



Wednesday, March 19, 2014

Big banks finish paying $20 billion in mortgage settlement

Big banks finish paying $20 billion in mortgage settlement, report says - The Washington Post:

"The nation’s largest banks have met their obligations to provide relief to struggling homeowners under the $25 billion national mortgage settlement, the landmark agreement to clean up shoddy foreclosure prac­tices.

On Tuesday, the court-appointed monitor of the settlement said Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial had all completed their requirements to offer various types of aid to borrowers, including allowing them to refinance or lowering the balance of their loan.

The mortgage serv­icers had to provide $20 billion in relief to
borrowers with different types of aid assigned different credit toward
that figure. While they ponied up a total of $50 billion to assist more
than 600,000 families, only $20.7 billion of that money was counted
under the settlement. "

Sunday, March 16, 2014

What the collapse of the Ming Dynasty can tell us about American decline

What the collapse of the Ming Dynasty can tell us about American decline - The Week

"Why did the Ming allow itself to become isolationist, stagnant, and
backward-looking? Historians are divided, but the leading explanation is
what historian Ian Morris calls the "paradox of development," and Mark
Elvin calls the "high-level equilibrium trap." Simply put, when a
country thinks it's in a golden age, it stops focusing on progress.


America shows signs of falling into this trap. We tell ourselves
robotically that we have "the best health-care system in the world,"
when in fact it underperforms most other rich countries. We gape and
gawk when we first travel to Japan or Switzerland and find that all the
trains run perfectly on time — not to mention the fact that there are
trains in the first place. We ignore our sky-high infrastructure costs
and grumble about potholed roads, never pausing to wonder why West
Europe and East Asia don't have these problems. We tell ourselves that
we're the "land of the free," ignoring the fact that in Japan you can
drink a beer in the park without getting arrested. We say that anyone in
America can get rich, ignoring the fact that economic mobility is lower
here than in almost any other rich country."

Friday, March 14, 2014

Before Crisis, Ukrainians More Likely to See NATO as a Threat - Gallup poll

Before Crisis, Ukrainians More Likely to See NATO as a Threat:

Ukraine's staunchest support during its recent crisis has come from countries in NATO, which, paradoxically, Ukrainians as recently as last summer were still more likely to consider a threat (29%) to their country than as protection (17%). But Ukrainians were most likely to view it as neither (44%).

Ukrainians more likely to view NATO as a threat



Although Ukraine pursued NATO membership under pro-Western President Viktor Yuschenko, most Ukrainians never warmed to the idea. More Ukrainians saw NATO as a threat than as offering protection during the pursuit and have continued to feel this way even after the country ended its membership bid in 2010 under President Viktor Yanukovich. Dropping the bid may have neutralized the threat for many Ukrainians, with at least four in 10 or more likely to see NATO as neither protection nor a threat since that time.


U.S. Criticized for Lack of Action on Mortgage Fraud - NYTimes.com

U.S. Criticized for Lack of Action on Mortgage Fraud - NYTimes.com

"Four years after President Obama promised to
crack down on mortgage fraud, his administration has quietly made the
crime its lowest priority and has closed hundreds of cases after little
or no investigation, the Justice Department’s internal watchdog said on
Thursday.
The report by the department’s inspector general
undercuts the president’s contentions that the government is holding
people responsible for the collapse of the financial and housing
markets. The administration has been criticized, in particular, for not
pursuing large banks and their executives.
“In cities across the country, mortgage fraud crimes have reached crisis proportions,” Attorney General Eric H. Holder Jr. said at a mortgage fraud summit in Phoenix in 2010. “But we are fighting back.”
The inspector general’s report, however, shows that the F.B.I.
considered mortgage fraud to be its lowest-ranked national criminal
priority. In several large cities, including New York and Los Angeles,
F.B.I. agents either ranked mortgage fraud as a low priority or did not
rank it at all.
..."

Wednesday, March 12, 2014

Middle Class Protesting Venezuela Shortages Drive Poor to Maduro - Businessweek

Middle Class Protesting Venezuela Shortages Drive Poor to Maduro - Businessweek

"For bus driver Jorge Polo, the
protests in Venezuela’s capital city are an irritation, not an
attraction.


Every day, Polo has to navigate around the protesters’
makeshift barricades in the wealthy parts of Caracas. He is
never tempted to join them and blames hoarders -- and the
demonstrators themselves -- for the soaring cost of living and
mounting shortages.


“What’s going on down there in the valley is not our
fight,” Polo said, while drinking a beer in the slum of Petare
overlooking eastern Caracas. “It’s rich people trying to get
back lost economic perks. The slums won’t join them.”


After a month of protests, the demonstrations in Caracas
remain confined to wealthier areas with limited support from the
poor. Many residents of Petare say President Nicolas Maduro
should be given more time to turn around the economy after
taking over following the death of Hugo Chavez a year ago. For
now, the protesters are only making life harder, Polo says."

Life as a Retail Worker: Nasty, Brutish, and Poor

My Life as a Retail Worker: Nasty, Brutish, and Poor - Joseph Williams - The Atlantic

"After veteran reporter Joseph Williams lost his job, he found employment
in a sporting-goods store. In a personal essay, he recalls his
struggles with challenges millions of Americans return to day after day."

"Mop the floors in the bathroom, replace the toilet paper and scrub the
toilets if necessary. Vacuum. Empty the garbage. Wipe down the glass
front doors, every night, even if they don’t really need it. It was all
part of the job, done after your shift has ended but without overtime
pay.    "

"I imagine the unstated objective was to send another subtle message
about employee theft: Someone is always watching, even when you take out
the trash."

"Of course, I had no idea what a modern retail job demanded. I didn’t
realize the stamina that would be necessary, the extra, unpaid duties
that would be tacked on, or the required disregard for one’s own
self-esteem. "

Wealth Inequality and Stock Market Gains | House of Debt

Wealth Inequality and Stock Market Gains | House of Debt

"For the past couple of years, the quarterly release of the Federal
Reserve Flow of Funds data has been cheered because it has shown a sharp
rise in household wealth, particularly of financial assets. We agree
this is good news, but the aggregate headline numbers are incomplete."


"It is crucial to think carefully about the distribution of
these wealth gains."


"An indisputable fact is that the distribution of financial assets is
heavily skewed to the rich. In fact, the top 20% of the wealth
distribution owns over 80% of the financial assets in the economy! So
when the aggregate Flow of Funds data show a rise in financial asset
values, it is important to remember that the rise primarily benefits the
rich. Here is the fraction of total financial assets held by the top,
middle, and bottom quartile of the U.S. population in 2010."

"If stock market wealth is concentrated among the very rich, who are less
likely to spend out of an increase in wealth, rising stock market
wealth will have a  smaller impact on spending. Indeed, research suggests that the effect of increases in stock market wealth on spending are weak.

o while the aggregate headline number on household wealth is important,
we must remember who in the population is getting richer.  "



Robust bonuses: Big bucks back on Wall Street

Robust bonuses: Big bucks back on Wall Street

Wall Street bonuses hit their highest level since 2007.

"The average bonus paid to securities industry employees in New York
City in 2013 grew 15% to hit $164,530 in 2013, according to estimates
released Wednesday by New York State Comptroller Thomas P. DiNapoli.
That includes cash for the current year and compensation deferred from
prior years.

That is the third biggest bonus on record, says
DiNapoli. The other two stand-out years: 2006, when workers gleaned
$191,360 and 2007, when they gained $177,830."



Friday, March 07, 2014

Silicon Valley boom eludes many, drives income gap

Silicon Valley boom eludes many, drives income gap - Yahoo Finance:

"Silicon Valley is entering a fifth year of unfettered growth. The median household income is $90,000, according to the Census Bureau. The average single-family home sells for about $1 million. The airport is adding an $82 million private jet center.

But the river of money flowing through this 1,800-square-mile peninsula, stretching from south of San Francisco to San Jose, also has driven housing costs to double in the past five years while wages for low- and middle-skilled workers are stagnant. Nurses, preschool teachers, security guards and landscapers commute, sometimes for hours, from less-expensive inland suburbs.
Now the widening income gap between the wealthy and those left behind is sparking debate, anger and sporadic protests.
"F--- the 1%" and other rants were spray-painted last month on walls, garages and a car in the Silicon Valley town of Atherton, home to many top tech CEOs that Forbes magazine last year called the nation's most expensive community. In Cupertino, security guards rallied outside Apple's shareholder meeting on Feb. 28 demanding better wages. "What's the matter with Silicon Valley? Prosperity for some, poverty for many. That's what," read their banner."
"Buditom, also 44, said the reality of working for some of the nation's richest companies has sapped his belief in the American dream. For the past four years, he has been living in his sister's apartment, commuting an hour in stop-and-go traffic for a $13-an-hour security job.
"I'm so passed over by the American dream, I don't even want to dream it anymore," said Buditom, who emigrated from Indonesia 30 years ago. "It's impossible to get ahead. I'm just trying to survive.""
"From the White House to the Vatican to the world's business elite, the growing gap between the very wealthy and everyone else is seizing agendas. Three decades ago, Americans' income tended to grow at roughly similar rates, no matter how much they made. But since about 1980, income has grown most for the top earners. For the poorest 20 percent of families, it has dropped.
A study last month by the Brookings Institution found that among the nation's 50 largest cities, San Francisco experienced the largest increase in income inequality between 2007 and 2012. The richest 5 percent of households earned $28,000 more, while the poorest 20 percent of households saw income drop $4,000. To the south, Silicon Valley's success has made it a less hospitable place for many, said Russell Hancock, president of Joint Venture Silicon Valley, an organization focused on the local economy and quality of life."
"Once a peaceful paradise of apricot, peach and prune orchards, the region is among the most expensive places to live in the U.S. Those earning $50,000 a year in Dallas would need to make $77,000 a year in the Silicon Valley to maintain the same quality of life, according to the Council for Community and Economic Research; $63,000 if they moved from Chicago or Seattle.
Housing costs are largely to blame. An $800-a-month, two-bedroom apartment near AT&T's Dallas headquarters would cost about $1,700 near Google's Mountain View headquarters. Dental visits, hamburgers, washing machine repairs, movie tickets — all are above national averages.
Five years ago, Sacred Heart was providing food and clothing for about 35,000 people a year. This year it expects to serve more than twice that. On one brisk morning recently, families, working couples, disabled people and elderly lined up out the door for free bags of food, just miles from the bustling tech campuses."
"While some are struggling to survive, others are fighting back.
Twice in December and again in January, activists in San Francisco, where recent tax incentives have lured Twitter, Yelp, Spotify and other firms, swarmed privately run shuttle buses that ferry workers for Google, Facebook and other tech companies from the city to work. Tires were slashed, rocks hurled. Signs taped to the buses read: "Gentrification & Eviction Technologies: Integrated Displacement and Cultural Erasure" and "F--- Off Google."
Last month, as protesters beat drums outside, former Daily Show member and comedian John Oliver mocked the tech elite during an annual awards ceremony in San Francisco that honors startups and Internet innovations. "You are no longer the underdogs," he told the audience. "You're pissing off an entire city, not just with what you do at work, but how you get to work. It's not easy to do that."
The crowd roared with laughter, and he went on.
"I heard the latest design for your buses is to use tinted windows but reverse, with the tint on the inside, the reason being, 'Look, I don't mind if the peasants see me, but I would rather not see them, hmm?'"
Fewer laughs followed that one."
"Activist Sara Shortt of the Housing Rights Committee of San Francisco said the protests weren't intended to target the workers themselves.
"We're going after the bus as a symbol, a very palpable symbol, of the dramatically growing income divide in our city," she said. "Frankly those gleaming white buses with their tinted windows are a slap in the face to the rest of us who are waiting for the public bus or riding our bicycles down the bike lanes competing with these mammoth vehicles."
"A few prominent figures in the tech elite have fanned flames on the issue of income disparity. Greg Gropman, CEO of the tech startup AngelHack, ridiculed San Francisco in a now-deleted Facebook post in December: "Why the heart of our city has to be overrun by crazy, homeless, drug dealers, dropouts, and trash I have no clue."
A month later, in an open letter to The Wall Street Journal, venture capitalist Tom Perkins likened what he called "the war on the one percent, namely the 'rich'" with fascist Nazi Germany: "Kristallnacht was unthinkable in 1930; is its descendent 'progressive' radicalism unthinkable now?""


When Regulation Threatens, Bankers Predict Doom For Main Street - ProPublica

When Regulation Threatens, Bankers Predict Doom For Main Street - ProPublica

"Collateralized loan obligations, as the acronym is known, are bundles
of loans, usually made to junk-rated companies. They use the same
techniques as collateralized debt obligations, which were often made up
of subprime mortgage investments and were the rotten core of the
financial crisis. C.L.O.’s caused billions in losses for banks during
the market panic of 2008, but most recovered strongly and memories
faded. Junk-rated companies rallied, and C.L.O.’s roared back.


Under the Volcker Rule, which prevents banks from making speculative
investments or owning large pieces of hedge funds or private equity
firms, some C.L.O. holdings might be prohibited. Some C.L.O.’s own
securities or bonds, and those are considered more speculative. (In a
regulatory quirk, bonds and loans get different regulatory treatments.)
Some C.L.O.’s give certain investors the ability to remove the manager
that makes the C.L.O.’s investment decisions. That could be construed as
a form of ownership control, which would bar banks from participating
under a strict construction of the Volcker Rule.


The banking industry has been making loud noises about how the
uncertainty could have dire consequences. As with the TruPs ruckus, the
big banks have defended their interests in the name of smaller and more
sympathetic entities. According to the banking lobby and its friends in
Congress, any threat to the C.L.O. market is actually a dagger pointed
at midsize businesses, which will have trouble finding capital as a
result. In written testimony to the House subcommittee, a United States
Chamber of Commerce representative expressed “serious concerns that the
regulators had failed to take into account the impact of the Volcker
Rule upon the capital formation of Main Street businesses,” adding
ominously that “it may only be the first wave of capital formation
problems that may crop up as a result of the Volcker Rule.”


Like the TruPs fight, and countless other similar Washington
showdowns, this skirmish is largely about preserving a market for the
largest banks. Just three “too big to fail” banks — JPMorgan Chase,
Citigroup and Wells Fargo — account for 71 percent of bank C.L.O.
holdings, according to Better Markets, the banking reform group. And the
large banks get fees from creating the deals.


And so banking interests have massed their forces to preserve this
business. At the House subcommittee hearing last week, four industry
representatives counterbalanced a lone professor from Georgetown Law School, Adam J. Levitin, who was tasked with defending Dodd-Frank.


Professor Levitin’s testimony made clear what the central public concern is here: The C.L.O. market hides embedded systemic risk.
When banks sponsor C.L.O.’s by creating and marketing them, they imply
that they back them without actually doing so. Investors rely on this
implied guarantee because banks have bailed out comparable affiliated
entities in the past. Ultimately, Professor Levitin argued,
taxpayer-funded deposit insurance backstops the banks making these
potentially speculative investments — exactly the thing the Volcker Rule
is supposed to end."

Big Company CEOs Just Aren't Worth What We Pay Them - Forbes

Hmm.. this is from Forbes! A good piece...

Big Company CEOs Just Aren't Worth What We Pay Them - Forbes

"It isn’t every day that academic research comes along to tell you
something you really wanted to hear and that you suspected was the truth
all along? In this case it’s about the long running debate around top
executive pay.


A recent paper by J. Scott Armstrong of the Wharton School
and Philippe Jacquart of France’s EMLYON, seem to have finally
established that paying top dollar simply doesn’t get a better job done.
And, in fact, it might actually get a worse one done.


According to Armstrong and Jacquard, while there is plenty of
evidence that financial incentives can be effective in motivating people
to do mundane and boring tasks, individuals do the more interesting and
challenging stuff…well, because it’s interesting and challenging.


Perversely, they say, very large financial incentives may actually
hinder top performance. The paper argues there  is strong evidence that
individuals can become fixated on incentives and either become limited
in their thinking, unable to digest and adopt new ideas or alternately
become convinced that they will achieve the goal automatically so do not
need to try as hard as they might otherwise. Whatever the outcome,
every other stakeholder from the more modestly earning employee to the
corporate stockholder loses out.



And finally the research also suggests that we might not really be
getting the brightest and best talent at the top because the tools and
processes used to identify candidates are either limited or downright
faulty. There is simply too much emphasis on past performance, personal
recommendation, unstructured interviewing, an unwillingness to ask
really difficult and searching questions and that more dangerous
selection criterion of all – gut instinct. Worryingly, it seems that the
headhunters and in-house recruiters charged with hiring occupants of
the corner office may be relying too much on perception and too little
on good, hard facts. The paper points out that CEOs who win prestigious
industry awards constantly out-earn those that don’t. Yet the stocks of
the companies the award winners head up consistently underperform in
comparison to those of their less publicity hungry peers. Perhaps
because the latter spend their time running their businesses well
instead.


So far, so good. I’d never quite got the fact that a CEO might be
worth several hundred times the average person working for them (around
380 times, according to estimates from the AFL-CIO as recently as 2012.)
But what do we do about it?


Unlike many academics, who might shy away from coming up with a
solution, EM Lyon’s Jacquart is one willing to give the obvious if
uncomfortable answer – namely that current incentive models need to be
abandoned and overall executive pay should be reduced. And he’s also
ready with a counter to those who will doubtless argue that this will
make it impossible to recruit the right people and bring major banks and
corporations crashing to the ground. “Yes, of course this may make it
more difficult to recruit very senior individuals from outside an
organisation, at least in the short term. However it would force
businesses to focus more on the development of the talent it already
has, the talent that is more likely to be more loyal to and
understanding of its aims, goals and methodologies.”


As the old Bob Dylan lyric goes, “Don’t follow leaders.” And if
Messrs Armstrong and Jacquart are right, don’t pay them quite so much
either."

Friday, February 28, 2014

Musk, The Rent Seeker, Posing as Visionary - streetwiseprofessor.com

Musk, The Rent Seeker, Posing as Visionary - streetwiseprofessor.com

"It was about the fact that all of his companies were heavily dependent
on government subsidies and support.  This support socialized the
potential losses, and allowed Musk (and other major investors, notably
Goldman) to capture the upside.  My point was if his products and
business models were so great, he could succeed on his own, by
attracting private capital."

"...SpaceX, his  space launch venture.  Inevitably, this company is
dependent on government contracts, given that a very large fraction of
space launches carry government payloads.  This is something different
from Solar City and Tesla, where the government is providing subsidies
but not receiving any product or service in return.  But still, it means
that Musk depends crucially on cultivating government support.
 Government contracting-especially big ticket contracting-is hardly a
pristine activity.  A firm does not succeed or fail at it primarily on
the basis of the superiority of its product, but instead on the basis of
its ability to influence politicians and bureaucrats.  And a lack of
scruple is often a feature not a bug in that regard.
SpaceX
was  looking for a commercial launch site, and  seeking state subsidies
in order to build it.  The company has been playing states off against
one another, looking for tax benefits
."

"Cynically, Musk focused on one of the poorest parts of the
state-Brownsville-and dangled the prospect of a mere 600 jobs, in
exchange for  $20 million dollars or so in tax benefits.  Some of which
will come from the taxpayers of that very poor community.  And sadly,
the state legislature has succumbed."

"

The poorest people in Brownsville will not benefit the slightest from
the SpaceX venture.  But he and his lobbyist successfully importuned
the state and county to take taxpayer money and give it to SpaceX by
invoking their poverty.  It was utterly cynical for a billionaire to
extract tens of millions from Texas taxpayers in the name of the poor
Mexican Americans of Brownsville.


I know this is the way the game is played.  And that’s the problem:
the game is cynical and wrong.  It is mere rent seeking.  Musk is
particularly appalling because he is a rent seeker posing as a
technological visionary.  His businesses all depend on extracting rents
from the government, which he pockets.


But he has a cult of personality that portrays him as some towering visionary genius."





Saturday, February 22, 2014

Credit Suisse Admits Guilt in Settling With S.E.C. - NYTimes.com

Credit Suisse Admits Guilt in Settling With S.E.C. - NYTimes.com

"Credit Suisse on Friday became the latest big bank to admit wrongdoing to the Securities and Exchange Commission, striking a deal over its failure to comply with a cardinal rule of the financial industry.


The bank, based in Zurich, was accused of
advising clients in the United States without first registering at the
S.E.C. Credit Suisse paid $196 million to settle with the federal
agency, which requires banks and other firms that offer investment
advice to comply with basic registration rules.
“The broker-dealer and investment adviser
registration provisions are core protections for investors,” Andrew J.
Ceresney, director of the S.E.C.’s enforcement division, said in a
statement.
While the penalty is significant, the
admission of wrongdoing underscored the importance of the case. It is
the fifth such admission since the S.E.C. — in an important reversal —
modified its longstanding policy of letting defendants settle without
“admitting or denying” wrongdoing."

Fed knew about Libor rigging in 2008 - Telegraph

Fed knew about Libor rigging in 2008 - Telegraph

"

The US Federal Reserve knew about Libor rigging three years before the
financial scandal exploded but did not take any firm action, documents have
revealed.

According to newly published transcripts of the central bank’s meetings in the
run-up to and immediate aftermath of the collapse of Lehman Brothers, a
senior Fed official first flagged the issue at a policy meeting in April
2008.

William Dudley expressed fears that banks were being dishonest in the way they
were calculating the London interbank offered rate – a global benchmark
interest rate used as the basis for trillions of pounds of loans and
financial contracts.

“There is considerable evidence that the official Libor fixing understates the
rates paid by many banks for funding,” he said.

He added that a newspaper report, which lifted the lid on some degree of
manipulation, appeared to have triggered “an outbreak of veracity among at
least some” bankers, who started reporting accurately the interest rates
they offer each other, which are used to calculate Libor.


Three years after his remarks, it emerged that traders at more than a dozen
banks, including Lloyds, Royal Bank of Scotland and Barclays, had routinely
been trying to fix the official Libor rate in order to boost their own
bonuses and profits.




The scandal impacted the finances of tens of millions of ordinary households
and businesses, and dealt a devastating blow to the banking industry.
Financial institutions have paid more than $5bn (£3bn) in fines to settle
the matter with regulators in the US, UK and the European Union. A dozen
individuals have been criminally charged, and many others lost their jobs –
including Barclays’ chief executive Bob Diamond and chairman Marcus Agius,
who both resigned over the issue.




The transcript of the Fed’s April 2008 meeting raises questions about why the
central bank did not move to properly tackle the scandal. There was no
official regulator for Libor at the time, and officials at the US Federal
Reserve tried to blame British authorities for allowing the benchmark
interest rate to get out of control in the first place."





Get Off the (Google) Bus · LRB

A look at the Google bus blockade in SFO -

Get Off the Bus · LRB 20 February 2014 - Rebecca Solnit

"One of the curious things about the crisis in San Francisco –
precipitated by a huge influx of well-paid tech workers driving up
housing costs and causing evictions, gentrification and cultural change –
is that they seem unable to understand why many locals don’t love them.
They’re convinced that they are members of the tribe. Their confusion
may issue from Silicon Valley’s own favourite stories about itself.
These days in TED talks and tech-world conversation, commerce is
described as art and as revolution and huge corporations are portrayed
as agents of the counterculture.

That may actually have been the
case, briefly, in the popular tech Genesis story according to which
Apple emerged from a garage somewhere at the south end of the San
Francisco Peninsula, not yet known as Silicon Valley. But Google set
itself up with the help of a $4.5 million dollar government subsidy, and
Apple became a giant corporation that begat multimillion-dollar
advertising campaigns and overseas sweatshops and the rest that you
already know. Facebook, Google, eBay and Yahoo (though not Apple) belong
to the conservative anti-environmental political action committee Alec
(the American Legislative Exchange Council).

The story Silicon
Valley less often tells about itself has to do with dollar signs and
weapons systems. The industry came out of military contracting, and its
alliance with the Pentagon has never ended. The valley’s first major
firm, Hewlett-Packard, was a military contractor. One of its
co-founders, David Packard, was an undersecretary of defence in the
Nixon administration; his signal contribution as a civil servant was a
paper about overriding the laws preventing the imposition of martial
law. Many defence contractors have flourished in Silicon Valley in the
decades since: weapons contractors United Technologies and Lockheed
Martin, as well as sundry makers of drone, satellite and spying
equipment and military robotics. Silicon Valley made technology for the
military, and the military sponsored research that benefited Silicon
Valley. The first supercomputer, made by New York’s Remington Rand, was
for nuclear weapons research at the Bay Area’s Lawrence Livermore
National Laboratory.

The internet itself, people sometimes
remember, was created by the military, and publicly funded research has
done a lot to make the hardware, the software and the vast private
fortunes possible. Which you wouldn’t know from the hyperlibertarian
language of the tech world’s kings. Even the mildest of them, Bill
Gates, said in 1998: ‘There isn’t an industry in America that is more
creative, more alive and more competitive. And the amazing thing is that
all this happened without any government involvement.’ The current
lords talk of various kinds of secession, quite literally at the
Seasteading Institute, an organisation that’s looking into building
artificial islands outside all national laws and regulations. And taxes.
Let someone else subsidise all that research."

...

"

So there’s a disconnect in values and goals: Silicon Valley workers
seem to want to inhabit the anti-war, social-justice, mutual-aid heart
of San Francisco (and the Bay Area). To do so they often displace San
Franciscans from their homes. One often hears objections: it isn’t the
tech workers coming here who are carrying out the evictions. But they
are moving into homes from which people have been evicted. Ivory
collectors in China aren’t shooting elephants in Africa, but the
elephants are being shot for them. Native sons and daughters also work
in the industry, and many of the newcomers may be compassionate,
progressive people, but I have seen few signs of resistance, refusal to
participate, or even chagrin about their impact from within their ranks.

2013
may be the year San Francisco turned on Silicon Valley and may be the
year the world did too. Edward Snowden’s revelations began to flow in
June: Silicon Valley was sharing our private data with the National
Security Agency. Many statements were made about how reluctantly it was
done, how outraged the executives were, but all the relevant companies –
Yahoo, Google, Facebook – complied without telling us. These days it
appears that the NSA is not their enemy so much as their rival; Facebook
and Google are themselves apparently harvesting far more data from us
than the US government. Last year, Facebook’s chief security officer
went to work for the NSA, and the New York Times said the move

underscores
the increasingly deep connections between Silicon Valley and the agency
and the degree to which they are now in the same business. Both hunt
for ways to collect, analyse and exploit large pools of data about
millions of Americans. The only difference is that the NSA does it for
intelligence, and Silicon Valley does it to make money.
The
corporations doing this are not the counterculture, or the underground
or bohemia, only the avant-garde of an Orwellian future.
City of
Refuge, a church serving people of colour and queer people, left San
Francisco, a city that has long considered itself a refuge, last
September and moved to Oakland. ‘It became clear,’ its pastor said,
‘what the neighbourhood was saying to us: This is not a haven for social
services.’ The current boom is dislodging bookstores, bars, Latino
businesses, black businesses, environmental and social-services groups,
as well as longtime residents, many of them disabled and elderly. Mary
Elizabeth Phillips, who arrived in San Francisco after getting married
in 1937, will be 98 when she is driven out of her home of more than half
a century.

In many other places eviction means you go and find a
comparable place to live: in San Francisco that’s impossible for anyone
who’s been here a while and is paying less than the market rate. Money
isn’t the only issue: even people who can pay huge sums can’t find
anything to rent, because the competition is so fierce. Jonathan Klein, a
travel-agency owner in his sixties living with Aids, jumped off the
Golden Gate Bridge last year after being driven out of his home, with
his business in the Castro facing eviction. ‘EVICTION = DEATH’, a sign at the memorial said, echoing the old ‘SILENCE = DEATH’ slogan of the Aids-activist era.

When
it comes to buying a home, your income needs to be nearly one and a
half times higher in San Francisco than in the next most expensive city
in the US. What began as vague anxiety a couple of years ago has turned
into fear, rage and grief. It has also driven people to develop
strategies aimed at changing the local and statewide laws that permit
the evictions.

When a Google bus was surrounded on 9 December, it made the news all
over the English-speaking world. Though what the blockaders wanted
wasn’t so easily heard. They were attacked as people who don’t like
carpools, by people who don’t get that the buses compete with public
transport and that their passengers displace economically vulnerable San
Franciscans. It’s as though death came riding in on a pale horse and
someone said: ‘What? You don’t like horses?’ Many of the displaced then
become commuters but they don’t have luxury coaches pulling up in their
neighbourhoods to take them to their jobs and schools in San Francisco:
they drive, or patch together routes on public transport, or sink into
oblivion and exile. So the Google bus and the Apple bus don’t reduce
commuting’s impact. They just transfer it to poorer people.

San
Francisco was excoriated again and again by lovers of development and
the free market for not being dense enough, on the grounds that if we
just built and built and built, everyone would be happily housed. ‘Let
San Francisco have the same housing density as Tokyo & Taipei, both
earthquake zones, then watch rental costs crater,’ a tech worker
tweeted. (His feed also features photographs of a toy mule, the mascot
of the company he works for, and occasional outbursts aimed at Edward
Snowden.) Another day he insisted with the blithe confidence Silicon
Valley seems to beget (as well as the oversimplification Twitter more or
less requires): ‘Higher minimum wage and looser, pro-development zoning
laws, housing problem in San Francisco goes away. Simple as that.’
(Minimum wage would have to be more than $50 an hour for someone to be
able to buy a house in San Francisco, or to ensure that a $3200 a month
rent accounted for no more than a third of their pre-tax income.)

San
Francisco is already the second densest major metropolitan area in the
US, but this isn’t mentioned much, nor is the fact that the densest, New
York, is also unaffordable and becoming more so even in its outer
boroughs, despite a building boom. Meanwhile San Francisco developers
are building 48,000 more units of housing in the few cracks and
interstices not already filled in, mostly upscale condominiums far out
of most people’s reach, and most of which won’t be available in time to
prevent the next round of evictions.

How do you diagnose what is
wrong with San Francisco now? People bandy about the word
‘gentrification’, a term usually used for neighbourhoods rather than
whole cities. You could say that San Francisco, like New York and other
US metropolises, is suffering the reversal of postwar white flight:
affluent people, many of them white, decided in the past few decades
that cities were nice places to live after all, and started to return,
pushing poorer people, many of them non-white, to the margins.

You
can also see the explosion as a variation on the new economic divide,
in which the few have more and more and the many have less and less: a
return to 19th-century social arrangements. (It gets forgotten that the
more generous arrangements of the 20th century, in much of Europe and
North America, were made in part to sedate insurrectionary fury from
below.) It’s the issue to which Occupy Wall Street drew our attention."

...

"

On the afternoon of 21 January, the city’s Municipal Transportation
Agency held a meeting to discuss putting in place a pilot programme to
study the impact of the buses and limit them to two hundred bus stops in
the city. As the San Francisco writer Anisse Gross has pointed out, if
you evade your fare on a bus, you get fined $110; if you pull a car in
at a bus stop, you get fined $271; if you just pay your fare it’s $2 per
person. But if you’re the Google bus you will now pay $1 to use the
public bus stop. This pissed off a lot of people at the hearing. Not
everyone, though. Google had dispatched some of its employees to
testify.

The corporation’s memo to the passengers had been leaked
the previous day. The memo encouraged them to go to the hearing on
company time and told them what to say:

If you do
choose to speak in favour of the proposal we thought you might
appreciate some guidance on what to say. Feel free to add your own style
and opinion:

My shuttle empowers my colleagues and I to reduce our carbon emissions by removing cars from the road.
If the shuttle programme didn’t exist, I would continue to live in San Francisco and drive to work on the peninsula.
I am a shuttle rider, SF resident, and I volunteer at …
The
idea of the memo was to make it seem that the luxury buses are
reducing, not increasing Silicon Valley’s impact on San Francisco. ‘It’s
not a luxury,’ one Google worker said of the bus: ‘It’s just a thing on
wheels that gets us to work.’ But a new study concludes that if the
buses weren’t available, half the workers wouldn’t drive their own cars
from San Francisco to Silicon Valley; nearly a third wouldn’t be willing
to live here and commute there at all.
There’s a new job category in San Francisco, though it’s probably a low-paying one: private security guard for the Google bus."









All the President’s Middlemen | The Nation

All the President’s Middlemen | The Nation

"Health-care isn’t the first boon that President Obama tried to give
us through a public-private partnership. When he took office, more than
25 percent of US home mortgages were underwater—meaning that people owed
more on their houses than they could get if they tried to sell them.
The president offered those homeowners debt relief through banks. Now
he’s offering healthcare through insurance companies.


In both cases, the administration shied away from direct government
aid. Instead, it subsidized private companies to serve the people. To
get your government-subsidized mortgage modification, you applied at
your bank; to get your government-mandated health coverage, you buy
private insurance.


Let a Hundred Middlemen Bloom
In other countries with national health plans, a variety of
independent healthcare providers—hospitals, doctors and clinics, among
others—deliver medical care, while the government doles out the
compensation. They let a hundred healthcare providers bloom, but there’s
only a single payer. If the US moved to single-payer healthcare, however, what would happen to the private health insurance business?


In the 1990s, the conservative Heritage Foundation floated the idea
of extending health coverage to more Americans via government exchanges
or “connectors
that would funnel individual buyers to competing, for-profit health
insurance companies. In other words, let a hundred middlemen bloom.


On the face of it, such a plan would seem expensive, since it means
supporting two bureaucracies, one of which would be obliged to take
profits for investors. Meanwhile, doctors would still have the expense
of trying to collect from multiple insurers with reasons to stall. But
the Heritage plan
had one great advantage. Since Harry Truman, American presidents have
tried unsuccessfully to get us national healthcare. The exchange system,
however awkward it might be, pacified the insurance companies, which
had previously spent millions of dollars to defeat other plans for
“socialized medicine.” With the support of those companies for a program
that not only kept them in the picture but also promised to deliver
millions of new, subsidized customers, Obama gave us a national
healthcare law.


The danger is that it essentially makes insurance companies our
medical receptionists, a profit-making face that greets sick people
whenever they try to use their government healthcare. That gives private
companies a lot of power to make the government look bad.


That’s why it’s important to understand how banks used Obama’s
mortgage subsidy program to sabotage debt relief and discredit
government. If we grasp how they pulled that off, we may be able to
protect the present health plan and someday even get genuine
single-payer healthcare out of it. So here’s the story.


The Home Affordable Modification Program (HAMP) offered banks
government incentives—cash bonuses—to lower the principal or interest on
underwater mortgages. Of course, health insurance companies don’t
actually provide healthcare, but banks did provide the underwater
mortgages, so, however ill-advised or fraudulent they were, those
institutions obviously had a role in negotiating their modification. The
HAMP partnership was structured so that the government’s role was to
provide cash incentives to banks, while participating banks would be
required to accept and process the applications of those who were eager
to modify their onerous mortgages. Whether they granted a modification
was, however, strictly up to them."

...

Friday, February 21, 2014

Exclusive: The Rags-To-Riches Tale Of How Jan Koum Built WhatsApp Into Facebook's New $19 Billion Baby - Forbes

Interesting background of the WhatsApp founder. Very interesting that Koum signed the Facebook deal at Socia Sevices offices in Mountain View. Can we say that WhatsApp would not have existed without the social net? 

The Rags-To-Riches Tale Of How Jan Koum Built WhatsApp Into Facebook's New $19 Billion Baby - Forbes



Thursday, February 20, 2014

More Americans Now View Afghanistan War as a Mistake - Gallup poll

More Americans Now View Afghanistan War as a Mistake

"For the first time since the U.S. initially became involved in Afghanistan in 2001, Americans are as likely to say U.S. military involvement there was a mistake as to say it was not."

Trend: Looking back, do you think the United States made a mistake sending troops to fight in Afghanistan in 2001?


Thursday, February 13, 2014

The Vampire Squid Strikes Again: The Mega Banks' Most Devious Scam Yet

I am not sure how this stuff does not cause outrage of americans?

The Vampire Squid Strikes Again: The Mega Banks' Most Devious Scam Yet | Matt Taibbi | Rolling Stone

"Today, banks like Morgan Stanley, JPMorgan Chase and Goldman Sachs
own oil tankers, run airports and control huge quantities of coal,
natural gas, heating oil, electric power and precious metals. They
likewise can now be found exerting direct control over the supply of a
whole galaxy of raw materials crucial to world industry and to society
in general, including everything from food products to metals like zinc,
copper, tin, nickel and, most infamously thanks to a recent
high-profile scandal, aluminum. And they're doing it not just here but
abroad as well: In Denmark, thousands took to the streets in protest in
recent weeks, vampire-squid banners in hand, when news came out that
Goldman Sachs was about to buy a 19 percent stake in Dong Energy, a
national electric provider. The furor inspired mass resignations of
ministers from the government's ruling coalition, as the Danish public
wondered how an American investment bank could possibly hold so much
influence over the state energy grid.


There are more eclectic interests, too. After 9/11, we found it
worrisome when foreigners started to get into the business of running
ports, but there's been little controversy as banks have done the same,
or even started dabbling in other activities with national-security
implications – Goldman Sachs, for instance, is apparently now in the
uranium business, a piece of news that attracted few headlines.

But banks aren't just buying stuff, they're buying whole industrial
processes. They're buying oil that's still in the ground, the tankers
that move it across the sea, the refineries that turn it into fuel, and
the pipelines that bring it to your home. Then, just for kicks, they're
also betting on the timing and efficiency of these same industrial
processes in the financial markets – buying and selling oil stocks on
the stock exchange, oil futures on the futures market, swaps on the
swaps market, etc.


Allowing one company to control the supply of crucial physical
commodities, and also trade in the financial products that might be
related to those markets, is an open invitation to commit mass
manipulation. It's something akin to letting casino owners who take book
on NFL games during the week also coach all the teams on Sundays.


The situation has opened a Pandora's box of horrifying new corruption
possibilities, but it's been hard for the public to notice, since
regulators have struggled to put even the slightest dent in Wall
Street's older, more familiar scams. In just the past few years we've
seen an explosion of scandals – from the multitrillion-dollar Libor saga
(major international banks gaming world interest rates), to the more
recent foreign-currency-exchange fiasco (many of the same banks
suspected of rigging prices in the $5.3-trillion-a-day currency
markets), to lesser scandals involving manipulation of interest-rate
swaps, and gold and silver prices.


But those are purely financial schemes. In these new, even scarier
kinds of manipulations, banks that own whole chains of physical business
interests have been caught rigging prices in those industries. For
instance, in just the past two years, fines in excess of $400 million
have been levied against both JPMorgan Chase and Barclays for allegedly
manipulating the delivery of electricity in several states, including
California. In the case of Barclays, which is contesting the fine,
regulators claim prices were manipulated to help the bank win financial
bets it had made on those same energy markets.


And last summer, The New York Times described how Goldman
Sachs was caught systematically delaying the delivery of metals out of a
network of warehouses it owned in order to jack up rents and
artificially boost prices.


You might not have been surprised that Goldman got caught scamming
the world again, but it was certainly news to a lot of people that an
investment bank with no industrial expertise, just five years removed
from a federal bailout, stores and controls enough of America's aluminum
supply to affect world prices."

"Do we even have a regulatory structure in place to look out for these
new forms of manipulation? (Answer: We don't.) And given that the
banking sector that came so close to ruining the world economy five
years ago has now vastly expanded its footprint, who's in charge of
preventing the next crash?"







Tuesday, February 04, 2014

Morgan Stanley to pay $1.25 billion to resolve mortgage lawsuit

Morgan Stanley to pay $1.25 billion to resolve mortgage lawsuit | Reuters

"Morgan Stanley said it would pay $1.25 billion to the U.S. regulator
for Fannie Mae and Freddie Mac to settle a lawsuit related to the sale
of mortgage-backed securities.



The Wall Street bank will add
$150 million to its legal reserves as a result of the settlement with
the Federal Housing Finance Agency, Morgan Stanley disclosed in a
regulatory filing on Tuesday"

"The FHFA in January said it had recouped
nearly $8 billion through settlements with financial institutions it
sued in 2011 over allegedly false and misleading statements relating to
some $200 billion in mortgage-backed securities sold to Fannie and
Freddie.

The housing authority commenced lawsuits against 18 financial institutions in 2011.

Last December, Deutsche Bank said it would pay $1.9 billion to settle claims, while Citigroup paid $250 million."



JPMorgan to pay $614 mln in U.S. mortgage fraud case

JPMorgan to pay $614 mln in U.S. mortgage fraud case | Reuters

"JPMorgan Chase & Co
settled the latest in a string of legal claims on Tuesday when
it agreed to pay $614 million to the U.S. government and
admitted that it defrauded federal agencies by underwriting
sub-standard mortgage loans.

JPMorgan, the largest U.S. bank by assets, said as part of
the settlement that for more than a decade it approved thousands
of insured loans that were not eligible for insurance by the
Federal Housing Administration or the Department of Veterans
Affairs, according to court papers.

As a consequence, "both the FHA and the VA incurred
substantial losses when unqualified loans failed and caused the
FHA and VA to cover the associated losses," the U.S. Justice
Department said in a statement.

JPMorgan is one of several banks that has faced similar
allegations. Citigroup Inc and Deutsche Bank AG
have also reached settlements, while the Justice Department is
seeking $2.1 billion in penalties from Bank of America Corp
after a jury found the bank liable for fraud over
mortgages sold by its Countrywide unit.

Last year, JPMorgan agreed to about $20 billion in
settlements in its drive to clear up legal claims. The deals
covered claims over other mortgage issues, as well as
derivatives and power trading."

Monday, February 03, 2014

Net worth of billionaire community up 12-fold in 15 yrs in India: IMF

Net worth of billionaire community up 12-fold in 15 yrs in India: IMF - Hindustan Times:

"Citing countries like the US and India, the two largest democratic countries, the International Monetary Fund (IMF) managing director Christen Lagarde has said that income inequality is increasing dangerously globally.

"In India, the net worth of the billionaire community increased twelve-fold in 15 years, enough to eliminate absolute poverty in this country twice over," said Lagarde delivering the Richard Dimbleby Lecture in London, according to the copy of the speech made available by the IMF."

Saturday, February 01, 2014

Losing the Propaganda War - NYTimes.com

Israel losing the Propaganda War - NYTimes.com

"The
“apartheid wall,” “apartheid roads,” colonization, administrative
arrests, travel restrictions, land confiscations and house demolitions
are the clay apartheid comparisons are made of, and cannot be hidden or
denied, for as long as Israel continues with the status quo.
Military
occupation comes with checkpoints, antiterrorist barriers, military
courts, armed soldiers and tanks. That’s the reality, no matter what
your politics, and just the ammunition the Palestinians and their
supporters need in their new war."
"..
Israel is doing almost everything it can to help its opponents achieve
their goal. Instead of focusing on peace talks, Israel continuously
signals its intention to build more settlement housing, most recently on
Jan. 10, when plans for 1,400 new homes in East Jerusalem and the West
Bank were announced. Instead of welcoming Eritrean and Sudanese refugees
seeking asylum — the way that a former Likud Party prime minister,
Menachem Begin, did in 1977 with the Vietnamese boat people, saying they
reminded him of Jewish refugees during the Holocaust — Israel is
confining today’s asylum-seekers to a camp in the desert, providing
reams of footage to those who want to prove Israel is a racist society.
And
it didn’t help when, on Dec. 15, a ministerial committee approved a
bill that would impose heavy, punitive taxes on groups like B’Tselem,
which tracks alleged human rights violations in the occupied
territories, and Adalah, the legal center for minority rights in Israel."