Austerity? NO!!

Family homelessness barely existed until the 1980s.

Crooks and Liars

Why does Michelle Malkin hate working people?  [Go to the 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:

     "There are at least 900,000 outstanding US home loans indexed to Libor that were originated from 2005 to 2009, the period the key lending gauge may have been rigged, investigators have said. Those mortgages carry an unpaid principal balance of $275bn, according to the Office of the Comptroller of the Currency, a bank regulator…

     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]

True financial services reform demands accountability.

A new report from AARP finds that foreclosure rates for people over 75 grew eightfold from 2007 to 2011, and that the risk of “serious delinquency” on mortgages has grown fastest for people over 50.

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]

MICHAEL HUDSON, Dandelion Salad

Europe’s three needs: a debt write-down, a real central bank, and a more efficient tax system

Please push the link!    This is not to be missed.  MUST READ!

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]