Simpson and Bowles and austerity's other sales people aren't really economic thinkers. They're paid to pitch a product. They didn't invent austerity any more than Alex Rodriguez invented Pepsi. But what they're peddling isn't a soft drink.
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SOLIDARITY POLITICAL COMMITTEE, Occupy Wall Street
In view of the 2008-2009 economic meltdown, some on the left felt that the global and neoliberal agenda dominant since the 1979-81 economic crisis would be jettisoned in order to stabilize global capitalism. Yet the age of austerity proclaimed as a necessity by the Toronto G20 summit is clearly a continuation of ‘there is no alternative’ to brutal and restructuring capitalism. What's now emerged in the United States is the role of the right-wing state governments (more than the federal government) in imposing a really brutal economic austerity as well as a reactionary social agenda. The Midwest states are the model (WI, OH, IN, MI), although certainly attacks in CA and NY are a part of this drive. The budget-slashing agenda is a bipartisan one, although to be sure it is most viciously imposed by Republicans (and in this country unlike Europe, the elites don't openly call it ‘austerity’). [More on the link.]
The Consumer Finance Protection Bureau unveiled plans today to learn more about the way banks charge overdraft fees.
HALAH TOURYALAI, Forbes
Ever been charged more than one overdraft fee and think the bank has its math wrong? Well, you might be on to something.
President Obama’s Consumer Finance Protection Bureau unveiled plans today to learn more about the way banks charge overdraft fees. The agency launched an inquiry asking banks for data about its overdraft practices.
Initially my reaction to the inquiry was: Didn’t we already go through this with the CARD Act? Under it, the Federal Reserve required banks to make customers opt into programs that allow them to overdraft on their accounts. If you haven’t opted in and you don’t have enough in your checking account to cover your purchase then your transaction is denied at the cashier’s counter. Embarrassing maybe, but it’s better than owing your bank $35 for a $3 cup of coffee.
So now here we are two years since the CARD Act and the CFPB wants to re-visit the overdraft issue. That’s exactly what critics of the agency (and there were many) were afraid it would do. When the agency was first announced by the Obama administration many argued that it would just be another layer of regulation for financial firms that were already being regulated else where. Banks for instance already have the Federal Reserve they answer to.
But consider one of the areas the agency wants to explore regarding overdraft fees:
Transaction Re-ordering that Increases Consumer Costs: The CFPB is concerned that overdraft practices employed by some financial institutions increase consumer costs. One such practice is commingling of all checks, bill payments, debit card transactions, and ATM withdrawals each day and processing the largest transactions first. This maximizes the number of transactions that will trigger an overdraft fee. The CFPB will examine how prevalent this practice is and how it impacts consumers. [More on link]
YVES SMITH, Naked Capitalism
A good report by Shahien Nasiripour recounts that the OCC has woken up to what a hot potato the Libor scandal has become, and has identified the mortgages that might (stress might) have been hurt by the rate diddling.To start with, the universe that might have been affected is not that large. Per the Financial Times account:
The number of US home loans in the OCC study represents 3 per cent of mortgages originated from 2005 to 2009."
As we’ve said before, it is not yet clear whether US mortgage borrowers were affected, since the priorities of the manipulators in the case of Barclays was improving the price of their derivatives positions, and then in the crisis, lowering their Libor posting to help look healthier than they were.
So far, the e-mail disclosures indicate that one month and three month Libor were manipulated, not six month Libor, which is a benchmark used for adjustable mortgages. Now it’s probably not a bad bet to figure that six month Libor was gamed now and again. But the intervention would had to have taken place on an interest reset date, and to hurt borrowers, it have had to be higher.
Even if you assume that all borrowers were adversely affected for 3 years, to the tune of 5 basis points for the period, you get $275 billion x 0.05% x 3 = $412 million. More likely is you have specific cohorts that were adversely affected for shorter periods, say $50 billion for 1 year for 10 basis points (which is still generous) or $50 million. Of course, these damages could be trebled under the Sherman Antitrust Act, but these are high side estimates. [More on link]
MARK AMES, Exiled on line
We just got this brutal video from an eXiled reader in Spain (HT: Àngel): Spanish riot police savagely attacking anti-austerity protesters in Madrid, without any apparent provocation. So far, the number of injured is at least 76 and growing, according to Àngel. The protests were fueled by today’s announcement of the largest austerity cuts in Spain since the days of fascist dictator General Franco—meaning the bankers are going in for the kill in Spain, despite false PR reports of bankers easing up on their demands.
Here is what class warfare looks like today in Spain: [Videos and pictures on the link.
Amazon.com: Liberation Technology: Social Media and the Struggle for Democracy (A Journal of Democracy Book) (9781421405674): Larry Diamond, Marc F.
The revolutions sweeping the Middle East provide dramatic evidence of the role that technology plays in mobilizing citizen protest and upending seemingly invulnerable authoritarian regimes. A grainy cell phone video of a Tunisian street vendor’s self-immolation helped spark the massive protests that toppled longtime ruler Zine El Abidine Ben Ali, and Egypt’s "Facebook revolution" forced the ruling regime out of power and into exile.
While such "liberation technology" has been instrumental in freeing Egypt and Tunisia, other cases—such as China and Iran—demonstrate that it can be deployed just as effectively by authoritarian regimes seeking to control the Internet, stifle protest, and target dissenters.
This two-sided dynamic has set off an intense technological race between "netizens" demanding freedom and authoritarians determined to retain their grip on power.
Liberation Technology brings together cutting-edge scholarship from scholars and practitioners at the forefront of this burgeoning field of study. An introductory section defines the debate with a foundational piece on liberation technology and is then followed by essays discussing the popular dichotomy of "liberation" versus "control" with regard to the Internet and the sociopolitical dimensions of such controls.
Additional chapters delve into the cases of individual countries: China, Egypt, Iran, and Tunisia.
J. SCOTT TRUBEY, The Atlanta Journal-Constitution
An appeals court ruling in favor of a Cobb County couple could leave mortgage companies liable for damages for not allowing state law in an unknown number of of Georgia foreclosures.
The 4-3 ruling probably won't undo the result of past foreclosures, lawyers say, but could open another avenue for borrowers to sue mortgage firms.
"This could breath new life into the challenges of foreclosures that took place in late 2008 and throughout 2009," said Frank Alexander, a real estate law professor at Emory University.
The number of cases where the ruling might be applicable was not immediately clear, but could be in the tens of thousands.
[More on the link]
[Austerity?No!! sez: I might have written this a bit differently BUT I certainly agree w/the observations and sentiments contained here. I think more people who are not at this reading level should be exposed to what is being stated, ASAP. This is the cultural hegemony part of endstage CRAPitalISM .. and highly relevant to the discussion.]
LYNN PARRAMORE, Alternet/Naked Capitalism
If the ghost of Ayn Rand were to suddenly manifest in your local bookstore, the Dominatrix of Capitalism would certainly get a thrill thumbing through the pages of E.L. James’ blockbuster Fifty Shades of Grey.
Rand, whose own novels bristle with sadomasochist sexy-time and praise for the male hero’s pursuit of domination, would instantly approve of Christian Grey, the handsome young billionaire CEO who bends the universe to his will.
Ingénue Anastasia Steele stumbles into his world — literally — when she trips into his sleek Seattle office for an interview for the college paper. When she calls him a “control freak,” the god-like tycoon purrs as if he has received a compliment.
“’Oh, I exercise control in all things, Miss Steele,’ he says without a trace of humor in his smile. ‘I employ over forty thousand people…That gives me a certain responsibility – power, if you will.’”
She will. Quivering with trepidation, Anastasia signs a contract to become Christian’s submissive sex partner. Reeled in by his fantastic wealth, panty-sopping charm, and less-than-convincing promise that the exchange will be to her ultimate benefit, she surrenders herself to his arbitrary rules on what to eat, what to wear, and above all, how to please him sexually. Which frequently involves getting handcuffed and spanked. “Discipline,” as Christian likes to say.
[More really good stuff on the link! iIntelligent comments included.]
YVES SMITH, Naked Capitalism
We have a video double header, with both clips addressing the question of what action officials might take as a result of the escalating Libor scandal. First is a segment on Max Keiser with journalist/broadcaster Ian Fraser. His interview starts at 11:45 of this clip and reviews when and why banks started to be treated as above the law in the UK.
Second is a Bloomberg interview with Neil Barofsky, former special inspector general for the TARP, on Geithner’s inaction when he learned of possible Libor gaming and the prospect for indictments in the US (click here if you have trouble getting the segment to load):
WASHINGTON -- In early 2011, Elizabeth Miller, a bus driver for the Port Authority in Pittsburgh, received notice that she would be laid off in 60 days, the victim of austerity measures imposed by the government.
JASON CHERKIS, Huffington Post
The stress of the looming pink slip caused her Crohn’s disease, an autoimmune disorder that affects the entire digestive tract, to flare up, and she began shedding weight rapidly. Miller lost nearly 30 pounds during her last two months on the job. By the time she clocked out from her final shift in March last year, she weighed just 99 pounds.
"That was the hardest stretch ever because we knew every day that we went to work was another day closer to our layoffs,” Miller said. “I couldn’t retain anything. It was scary.” To alleviate her symptoms, doctors considered giving her a colostomy bag.
But the worst was still to come. After losing her job, Miller lost her savings. Then she lost her house.
The austerity budget, conservatives' favored response to the Great Recession, is more than just simple belt tightening. It's not one cut or 10, but a thousand. City and neighborhood essentials like bus service become expendable, and things that we have come to depend on as part of our daily lives are slowly erased. Those teachers and firefighters Mitt Romney doesn't want to pay for? They're already part of austerity's disappeared jobs.
This austerity mindset is taking hold not just in cities and states across the United States, but around the world. While conservatives have championed austerity as eat-your-peas necessity, these massive cuts often have unintended
consequences. The Huffington Post is launching a series of articles examining the global impact of austerity, from the loss of affordable housing funds in San Francisco to increasing class sizes in New York's public schools, fewer food inspectors in Canada, loss of disability benefits in the United Kingdom, the decimation of France's solar industry and more. [More on link]
YVES SMITH, Naked Capitalism
Beware of financiers bearing gifts.A scheme proposed by a group called Mortgage Resolution Partners, which is being considered by San Bernardino, CA, to use the traditional power of eminent domain to condemn mortgages, was pretty certain to be a non-starter, so I’ve ignored it. But it’s gotten enough attention to have roused the ire of a whole host of financial services industry lobbying groups, as well as endorsements from Bob Shiller and Joe Nocera, and a thumb’s down from Felix Salmon, so it looked to be in need of serious analysis.
One of the big problems with this plan, which seems to have been overlooked so far, is that any municipality who goes down this path is likely to be the designated bagholder. Mind you, that isn’t based just on the general tendency of municipalities to be easy prey for clever bankers, but also based on the few, but nevertheless troubling, operational details that have been made public.
This is the theory of how the plan would work, from one of its prime promoters, law professor Robert Hockett:
"Protecting the citizenry and heading off blight is what municipal eminent domain authority is for…And it is for them to do so in partnership with private investors who effectively render the Plan publicly costless – just as we’ve done since the earliest days of our republic in carrying out and financing local projects."
If you believe that, I have a bridge I’d like to sell you.
No, this plan isn’t a “partnership”. There has been troubling little detail about what Mortgage Resolution Partners will do or how it will be paid. This whole process has been hidden from public view. Why wasn’t the original request for proposal made public? Why haven’t the operational arrangements, as in what the roles and obligations of the parties are, and most important, what the fees are, been reported anywhere? [more to be outraged about on the link]