Thursday, March 19, 2009

Ditch The dollar?

Reuters
U.N. panel says world should ditch dollar
By Jeremy Gaunt, European Investment Correspondent
Wed Mar 18, 2009 11:16am EDT

LUXEMBOURG (Reuters) - A U.N. panel will next week recommend that the world ditch the dollar as its reserve currency in favor of a shared basket of currencies, a member of the panel said on Wednesday, adding to pressure on the dollar.

Currency specialist Avinash Persaud, a member of the panel of experts, told a Reuters Funds Summit in Luxembourg that the proposal was to create something like the old Ecu, or European currency unit, that was a hard-traded, weighted basket.

Persaud, chairman of consultants Intelligence Capital and a former currency chief at JPMorgan, said the recommendation would be one of a number delivered to the United Nations on March 25 by the U.N. Commission of Experts on International Financial Reform.

"It is a good moment to move to a shared reserve currency," he said.

Central banks hold their reserves in a variety of currencies and gold, but the dollar has dominated as the most convincing store of value -- though its rate has wavered in recent years as the United States ran up huge twin budget and external deficits.

Some analysts said news of the U.N. panel's recommendation extended dollar losses because it fed into concerns about the future of the greenback as the main global reserve currency, raising the chances of central bank sales of dollar holdings.

"Speculation that major central banks would begin rebalancing their FX reserves has risen since the intensification of the dollar's slide between 2002 and mid-2008," CMC Markets said in a note.

Russia is also planning to propose the creation of a new reserve currency, to be issued by international financial institutions, at the April G20 meeting, according to the text of its proposals published on Monday.

It has significantly reduced the dollar's share in its own reserves in recent years....

Monday, March 16, 2009

This From Krugman

March 16, 2009
Paul Krugman: A Continent Adrift

Was European integration and the creation of a common currency a mistake?:

A Continent Adrift, by Paul Krugman, Commentary, NY Times: I’m concerned about Europe. Actually, I’m concerned about the whole world... But the situation in Europe worries me even more than the situation in America.

Just to be clear, I’m not about to rehash the standard American complaint that Europe’s taxes are too high and its benefits too generous. Big welfare states aren’t the cause of Europe’s current crisis. In fact,... they’re actually a mitigating factor.

The clear and present danger to Europe right now comes from ... the continent’s failure to respond effectively to the financial crisis.

Europe has fallen short in terms of both fiscal and monetary policy... On the fiscal side, the comparison with the United States is striking. Many economists ... have argued that the Obama administration’s stimulus plan is too small... But America’s actions dwarf anything the Europeans are doing.

The difference in monetary policy is equally striking. The European Central Bank has been far less proactive than the Federal Reserve; it has been slow to cut interest rates..., and it has shied away from any strong measures to unfreeze credit markets.

The only thing working in Europe’s favor is the very thing for which it takes the most criticism — the size and generosity of its welfare states, which are cushioning the impact of the economic slump.

This is no small matter. Guaranteed health insurance and generous unemployment benefits ensure that, at least so far, there isn’t as much sheer human suffering in Europe as there is in America. And these programs will also help sustain spending in the slump.

But such “automatic stabilizers” are no substitute for positive action.Why is Europe falling short? Poor leadership is part of the story. European banking officials ... still seem weirdly complacent. And to hear anything in America comparable to the know-nothing diatribes of Germany’s finance minister you have to listen to, well, Republicans.

But there’s a deeper problem: Europe’s economic and monetary integration has run too far ahead of its political institutions. The economies of Europe’s many nations are almost as tightly linked as the economies of America’s many states... But unlike America, Europe doesn’t have the kind of continentwide institutions needed to deal with a continentwide crisis.

This is a major reason for the lack of fiscal action: there’s no government in a position to take responsibility for the European economy as a whole. What Europe has, instead, are national governments, each of which is reluctant to ... finance a stimulus that will convey many if not most of its benefits to voters in other countries.

You might expect monetary policy to be more forceful. After all, while there isn’t a European government, there is a European Central Bank. But the E.C.B. isn’t like the Fed, which can afford to be adventurous because it’s backed by a unitary national government — a government that has already moved to share the risks of the Fed’s boldness, and will surely cover the Fed’s losses if its efforts to unfreeze financial markets go bad. The E.C.B., which must answer to 16 often-quarreling governments, can’t count on the same level of support.

Europe, in other words, is turning out to be structurally weak in a time of crisis. ... Does all this mean that Europe was wrong to let itself become so tightly integrated? Does it mean, in particular, that the creation of the euro was a mistake? Maybe.

But Europe can still prove the skeptics wrong, if its politicians start showing more leadership. Will they?

Sunday, March 15, 2009

Is your pension safe?

Another shoe about to fall:

Municipal Pension Time Bomb Set to Go Off

Think back to when property prices were going through the roof, personal spending was being turbocharged by ultra-cheap and seemingly limitless credit, and few could resist the siren song of consumerism.

Under the circumstances, you would have thought that municipal authorities would have had more than enough to gorge on in their quest to squander taxpayer funds.

Yet even with all the revenues that were flowing in from real estate, income, and sales taxes, it was not enough. Short-sighted and corrupt politicians also decided that it would be a great idea to make all sorts of open-ended commitments to a key constituency: state and local government employees.

Now, however, like all of the other extravagances of the past few decades, those poor choices are coming home to roost. In "Pension Bills to Surge Nationwide," the Wall Street Journal reports on another financial time bomb that is set to go off.

Many States and Cities Face Hard Choices Because of Market Declines

Many state and city governments reeling from financial woes are about to get whacked again, this time by an unforeseen increase in their pension bill thanks to market declines.

In an effort to stave off tax increases, New Jersey lawmakers on Monday will consider a bill that would allow municipalities to defer payment of half their annual pension bill, due April 1, for one year. Those towns, counties and schools that opt to defer would face a higher pension bill for years to come.

Other states and municipalities are facing similarly difficult choices. In Pennsylvania, the state employees and public teachers pension funds both have warned that employer contribution rates could surge seven-fold from about 4% of payroll to 28%, starting in 2012. The Detroit police and fire pension plan might have to double employer contribution rates to 50% of payroll by 2011, according to the fund's outside actuary.

Two of the nation's biggest public pension funds, New York State Common Retirement Fund and the California Public Employees' Retirement System, also have warned state employers to brace for future rate increases.

"It's going to be huge showdown" between taxpayers and public employees, said Susan Mangiero, president of Pension Governance Inc., a consulting and research firm in Trumbull, Conn. "The anger is more acute today when people are feeling economic hardship."

The specter of higher pension bills comes as many states and cities are struggling to balance their budgets or, in some cases, avoid drastic measures, such as filing for bankruptcy protection, amid falling tax revenue, foreclosures and rising unemployment costs.

In most states, retirement benefits for public employees are guaranteed by law, so governments have little choice but to pay them in full. During bull markets, that wasn't a problem. But with the median rate of return for a public plan of negative 25% in 2008, according to Wilshire Associates, many plans now may be unable to meet their obligations without further injections unless markets rebound significantly, analysts said.

The Detroit police and fire pension plan, where employees are ineligible for Social Security so the benefit plan is more generous and costly, employer contribution rates could double to 50% over the next three years unless the markets turn around, said Norman Jones of Gabriel, Roeder & Smith in Southfield, Mich., the fund's outside actuary.

For future New York City police and firefighters, Gov. David Paterson and Mayor Michael Bloomberg have proposed a minimum retirement age of 50, where no minimum currently exists. They also want to raise to 25 from 20 the number of years these employees must serve before they can collect full benefits.

Proposals pending elsewhere would move new public employees to a 401(k) plan. Some state lawmakers believe they would save money with a 401(k), which requires employees to pay a higher percentage of the contribution rate than they do under defined-benefit plans, said Alicia Munnell, director of the Center for Retirement Research at Boston College.

Municipal unions said they would oppose such a shift, and note that such efforts have failed in the past, including four years ago in California. "It's not a program that is attractive to state employees," said Richard Ferlauto, director of corporate governance at the American Federation of State, County and Municipal Employees. "It's doesn't work because you wouldn't be able to hire people."

But soaring pension costs are emboldening critics of public plans. They said local governments cannot afford to pay what are often perceived as generous benefits to government employees when the 401(k) plans held by others have shrunk, and as taxpayers already are looking at higher taxes and fewer services.

The pain is about to start in Wisconsin. The state has an unusual policy of adjusting the amount of benefits paid based on the pension fund's performance. Now, for the first time in 25 years, the majority of retirees will receive a benefit reduction.

This month, Wisconsin officials said that beginning in May nearly 150,000 retirees will face at least a 2.1% decrease in benefits, after the pension fund had a 26% negative return in 2008.

About 35,000 of retirees who held a portion of their retirement savings in an optional fund that invests entirely in stocks will be hit harder. Depending on how much of their savings they earmarked for the all-stock fund, their overall retirement income could be cut by up to 40%, according to a spokeswoman for the State of Wisconsin Investment Board.

Jim George, a 64-year-old retired elementary-school teacher in Milwaukee, estimates that his $3,700-a-month benefit check will be slashed by about $600. He is talking with his wife about where they will have to cut back: their annual January vacation to Florida, eating dinner out, maybe their high-speed Internet connection. "It's going to make things tight," he said.

His brother John George, a retired teacher in Madison, Wis., faces the 2.1% benefit reduction. But with the markets reeling this year, he is worried about what future cuts might look like. "The stock market and my pension fund are a daily worry," he said.

Optimism, in part, contributed to this quandary: Legislatures from Pennsylvania to California boosted employee benefits after the stock market boom years of the 1990s, which has added to their burden now.

Most pension funds also took the step of enacting smoothing policies, in which the benefit determination is based on average returns over five years. This was intended to dilute the impact of a particularly bad year. For the most part, this policy has worked to limit sudden or severe rate increases at most pensions.

"But these polices weren't meant to accommodate losses as big as pension funds suffered last year," said Ms. Munnell of Boston College. The college's Center for Retirement Research estimates that the average public plan's liabilities, if based on year-end 2008 market prices, now exceed its assets by 35%. For public funds in worse financial shape, including funds in Connecticut, West Virginia and Indiana, due to stock-market declines liabilities exceed assets by 50% or higher, according to the center.

Some states may decide it is easier to cut public employee benefits than it is to raise taxes, especially during hard economic times. In the Virginia General Assembly, a bill would freeze the current pension plan starting in July and replace it with a 401(k) plan for all future hires.

A state senator in Pennsylvania introduced a similar bill in 2007, and it went nowhere. But this year it is attracting attention.

If employer contribution rates in Pennsylvania jump as high as 28%, "the pension system is just not manageable," said Pat Browne, the Republican state senator who sponsored the bill. He said he expects it to be voted on this year. "We need to get it passed quickly if we are to phase out the existing plan in time to make an impact.

Sea Level

AP
Northeast US to suffer most from future sea rise



By SETH BORENSTEIN, AP Science Writer Seth Borenstein, Ap Science Writer – Sun Mar 15, 2:04 pm ET
Scientists find bigger than expected polar ice melt AFP/File – Icebergs break off the Vatnajökull Glacier before floating to sea in 2006. A major scientific study …


WASHINGTON – The northeastern U.S. coast is likely to see the world's biggest sea level rise from man-made global warming, a new study predicts.

However much the oceans rise by the end of the century, add an extra 8 inches or so for New York, Boston and other spots along the coast from the mid-Atlantic to New England. That's because of predicted changes in ocean currents, according to a study based on computer models published online Sunday in the journal Nature Geoscience.

An extra 8 inches — on top of a possible 2 or 3 feet of sea rise globally by 2100 — is a big deal, especially when nor'easters and hurricanes hit, experts said.

"It's not just waterfront homes and wetlands that are at stake here," said Donald Boesch, president of the University of Maryland Center for Environmental Science, who wasn't part of the study. "Those kind of rises in sea level when placed on top of the storm surges we see today, put in jeopardy lots of infrastructure, including the New York subway system."

For years, scientists have talked about rising sea levels due to global warming — both from warm water expanding and the melt of ice sheets in Greenland and West Antarctica. Predictions for the average worldwide sea rise keep changing along with the rate of ice melt. Recently, more scientists are saying the situation has worsened so that a 3-foot rise in sea level by 2100 is becoming a common theme.

But the oceans won't rise at the same rate everywhere, said study author Jianjun Yin of the Center for Ocean-Atmospheric Prediction Studies at Florida State University. It will be "greater and faster" for the Northeast, with Boston one of the worst hit among major cities, he said. So, if it's 3 feet, add another 8 inches for that region.

The explanation involves complicated ocean currents. Computer models forecast that as climate change continues, there will be a slowdown of the great ocean conveyor belt. That system moves heat energy in warm currents from the tropics to the North Atlantic and pushes the cooler, saltier water down, moving it farther south around Africa and into the Pacific. As the conveyor belt slows, so will the Gulf Stream and North Atlantic current. Those two fast-running currents have kept the Northeast's sea level unusually low because of a combination of physics and geography, Yin said.

Slow down the conveyor belt 33 to 43 percent as predicted by computer models, and the Northeast sea level rises faster, Yin said.

So far, the conveyor belt has not yet noticeably slowed.

A decade ago, scientists worried about the possibility that this current conveyor belt would halt altogether — something that would cause abrupt and catastrophic climate change like that shown in the movie "The Day After Tomorrow." But in recent years, they have concluded that a shutdown is unlikely to happen this century.

Other experts who reviewed Yin's work say it makes sense.

"Our coastlines aren't designed for that extra 8 inches of storm surge you get out of that sea level rise effect," said Jonathan Overpeck, director of an Earth studies institute at the University of Arizona.

While Boston and New York are looking at an additional 8 inches, other places wouldn't get that much extra rise. The study suggests Miami and much of the Southeast would get about 2 inches above the global sea rise average of perhaps 3 feet, and San Francisco would get less than an extra inch. Parts of southern Australia, northern Asia and southern and western South America would get less than the global average sea level rise.

This study along with another one last month looking at regional sea level rise from the projected melt of the west Antarctic ice sheet "provide a compelling argument for anticipating and preparing for higher rates of sea level rise," said Virginia Burkett, chief scientist for Global Change Research at the U.S. Geological Survey.

Burkett, who is based in Louisiana, said eventually New Englanders could be in the same "vulnerability situation" to storms and sea level rise as New Orleans

Friday, March 13, 2009

Baby Strikers

This from "The Economic Populist". Follow the link to go to the site. Perhaps you might just bookmark it. There's a lot of good info there.

Anyway, here's a bit of labor history few people know, or even heard of. Our concept of labor unions and workers rights have been so twisted by the right wing noise machine over the last 30 years.

Actually, ever since the passage of Taft-Hartley. Why those who benefit most from collective action seem so set against it has always confused me ---- anyway, please enjoy the following.


Baby Strikers

* labor union history

On July 3, 1835, in Paterson, New Jersey, nearly 2,000 textile workers walked off the job. The strike was notable for several reasons.

For one thing the strikers weren't demanding more money, despite the fact that they only made $2 a week (adjusted for inflation, that would be $44 a week today). Their central demand was an 11-hour day (as opposed to the 13.5-hour days they were currently working), and only 9 hours on Saturday instead of a full day.
That in itself was significant enough. The first strike in American history to limit hours had happened only 7 years earlier, and was also in Paterson, New Jersey. That strike had been crushed after a week when the militia was called in.

What made this strike worth remembering was who the strikers were - they were children, aged 10 to 18. Many of them girls.

In Paterson, New Jersey, where women and children had to be at work at 4:30 a.m. and continue to work as long as they could see, with time off for breakfast and dinner...

Before the month was out the parents of Paterson had joined together to form the "Paterson Association for the Protection of the Working Classes of Paterson". Through the Association a "vigilance committee" was formed to organize support. In 1835 there was no such thing as a labor union. Back then there were only guilds for skilled workers. Nothing like that existed for textile workers, much less for children.
The management flat-out refused to negotiate with the Association, or any worker's organization. In response, the Association appealed to help from other workers. Women textile workers in other mills around Paterson walked out. Mechanics from Newark set up a committee to raise funds and investigate the working conditions in Paterson. This is what they found:

"[conditions in the Paterson mills] belong rather to the dark ages than to the present times, and would be more congenial to the climate of his majesty the emperor and autocrat of all the Russias, than "this land of the free and home of the brave," this boasted asylum for the oppressed of all nations."

After six weeks a deal was struck between the Association and the management. They would split the difference: the children of Paterson would only have to work 12 hours a day during the week, and 9 hours on Saturday; a 69-hour week. The children who continued to hold out for the 11-hour day were fired and blacklisted.

Baby Strikers

In the writing of labor history, children have largely been portrayed as victims, and there is plenty of evidence for this view. However, that isn't the whole story. Nor does it do justice to their sacrifice. They weren't always helpless and weak. Sometimes they showed a lot more strength and courage than the adults.
You should realize that these children weren't working weekends at a Burger King so they could have money to buy beer for their friends. Some of them were orphans, and this was their livelihood. Most others were earning money so they could keep their families from starving. Either way, going out on strike was a huge decision that a child should never have to make.

Over and over again, in some of the largest, as well as the most unknown strikes, it was children that made the difference. For instance, in April of 1933, during the height of the Great Depression, tens of thousands of factory workers in the Allentown region of Pennsylvania went on strike. It was children that turned the tide for the strikers.

"I don't believe the strikers should be entitled to any unemployment relief, because they don't have souls."
- Mrs. Charles Fox, wife of D&D shirt factory owner testifying before a congressional investigation

On April 19, 1933, 400 "Baby Strikers" (as they were dubbed), ranging from 14 to 16 years of age, went to see Governor Gifford Pinchot in Harrisburg to explain the plight of their lives in sweatshops. The girl on the right of the picture above is Anna Miletics, age 15. She packed shirts in boxes for 9 cents an hour. Her earnings for eight days were $3.50, less a 10 percent cut and two cents deducted from her earnings to pay the "check tax."

One boy said he worked from 7 a. m. until 5 p. m. and then returned to the factory three nights each week to work from 7 p. m. until 3 a. m.; others told of being ordered to hide in the cellar and on fire escapes when State inspectors came to the mill; many of the girls testified they had been forced to accept the attentions of their employers or face instant dismissal.

The effort by these children had a dramatic publicity value - the governor's wife joined the children on the picket line.

When a young girl asks Mr. Pinchot if its ladylike to picket, Mrs. Pinchot responds, "You are obliged to do it out of the consideration from the many others who are suffering from the low wages if not for yourself. Our ancestors fought their revolution. We must fight our economic revolution."

Before long the sweatshop owners in the Allentown area agreed to raise wages by 10% and cut back on mandatory hours.

Bread and Roses

Quite probably the most famous instance for children making a difference in a strike was also the most unintentional.

In the early part of the 20th Century, Lawrence, Massachusetts, was one of the most important textile towns in America. The woolen and cotton mills employed over 40,000 people, mostly immigrants. The mortality rate for children who lived in company housing was a scandalous 50% by age six. 45% of the factory workers were women, and 12% were children

A study by Dr. Elizabeth Shapleigh discovered that: "A considerable number of the boys and girls die within the first two or three years after beginning work. Thirty-six out of every 100 of all the men and women who work in the mill die before or by the time they are twenty-five years of age."

When a new Massachusetts law was passed in 1912 that reduced the maximum number of hours that women and children could work to 54 hours a week, the pay of these immigrants was also cut accordingly. Since they were making less than $9 a week this meant starvation.
The American Federation of Labor never tried to organize these workers because it assumed that immigrants, largely women and children, were a lost cause. The Industrial Workers of the World, OTOH, took a different approach and enthusiastically embraced the cause of these downtrodden immigrants. In doing so the I.W.W. had their singular defining moment. It was the point where the I.W.W. went from historical footnote to labor history legend.
And it never would have happened if not for thousands of nameless children.

The company and government cracked down in a disproportionate way. When the police turned firehoses on picketers, the picketers threw ice back and broke some windows. The judge sentenced 36 strikers to a year of hard labor for those broken windows. Mass arrests and attempts to frame strike leaders followed.
When the strike wasn't broken the governor declared martial law and called in the state militia. Public gatherings were banned despite the fact that all the violence had been caused by authorities. The I.W.W. responded by setting up soup kitchens and gathering volunteer doctors. The wobblies also worked overtime getting national attention to the cause of the strikers (even while the AFL tried to break the strike).

One of the ways the wobblies helped was by organizing a network of supporters in New York and Philadelphia for strikers to send their children to in order to keep them fed and safe during the strike. It was here that things would get completely out of control.

Alarmed at the publicity this exodus was receiving, the Lawrence authorities ordered that no more children could leave the city. On February 24 when a group of 150 more children made ready to leave for Philadelphia, fifty policemen and two militia companies surrounded the Lawrence railroad station. They tore children away from their parents, threw women and children into a waiting patrol wagon, and detained thirty of them in jail. A member of the Philadelphia Women's Committee testified under oath:

When the time came to depart, the children, arranged in a long line, two by two in an orderly procession with the parents near at hand, were about to make their way to the train when the police . . . closed in on us with their clubs, beating right and left with no thought of the children who then were in desperate danger of being trampled to death. The mothers and the children were thus hurled in a mass and bodily dragged to a military truck and even then clubbed, irrespective of the cries of the panic-stricken mothers and children. We can scarcely find words with which to describe this display of brutality.

Not only was this unconscionable act of brutality by the police done in public, it was done right in front of the press who were at the train station in order to cover the event. Outrage pored in from every corner of the country.
Politicians in Washington called for an investigation, thus allowing the strikers to speak their case on a national level. The testimony by child workers provoked yet another round of outrage, and this time President Taft ordered an investigation of industrial conditions throughout the nation.

About a month after the spectacle at the train station the Lawrence mills caved into all of the strikers demands.

Afterwards

The I.W.W. was on a roll after Lawrence, and that is when they got overconfident. Instead of wrapping things up for the strikers of Lawrence, they went onto bigger fish.
Which is an ironic twist, because the bigger fish happened to be the textile mills of Paterson, New Jersey, where we started this diary. Once again the wobblies were creative, and once again the A.F.L. tried to break the strike and failed.


Paterson strike leaders

However, unlike Lawrence, the strike was eventually broken. The wobblies never recovered in the east. They turned to the miners and loggers of the Rocky Mountains, as well as the shipping ports of the Puget Sound.
But that's another story.

Thursday, March 12, 2009

Chuck Norris hates America

I don't think any comments are necessary. Wingnuttery of the first order.

At the same time -- if you live in a state that allows you access to weapons, learn to shoot, learn to protect yourself, your home, your family.

We've already had wingnuts act out. With calls to arms like Norris', there are bound to be more.

Liberals, LGBTQ folks are allowed to protect themselves.




Chuck Norris claims thousands of right wing cell groups exist and will rebel against U.S. government
March 9, 7:33 AM · 555 comments
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The call by some right wing leaders for rebellion and for the military to refuse the commander in chief’s orders is joined by Chuck Norris who claims that thousands of right wing cell groups have organized and are ready for a second American Revolution. During an appearance on the Glen Beck radio show he promised that if things get any worse from his point of view he may “run for president of Texas.” The martial artist/actor/activist claims that Texas was never formally a part of the United States in the first place and that if rebellion is to come through secession Texas would lead the way.

Today in his syndicated column on WorldNetDaily Norris reiterates the point: “That need may be a reality sooner than we think. If not me, someone someday may again be running for president of the Lone Star state, if the state of the union continues to turn into the enemy of the state.”

He continues; calling on a second American Revolution; “…we've bastardized the First Amendment, reinterpreted America's religious history and secularized our society until we ooze skepticism and circumvent religion on every level of public and private life.

How much more will Americans take? When will enough be enough? And, when that time comes, will our leaders finally listen or will history need to record a second American Revolution? We the people have the authority according to America's Declaration of Independence, which states: That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government…”

Norris claims that; “Thousands of cell groups will be united around the country in solidarity over the concerns for our nation.” The right wing cells will meet during a live telecast, "We Surround Them," on Friday March 13 at 5 p.m.

He closes with the words of Sam Houston followed by a plug for his next martial arts event.

“We view ourselves on the eve of battle."

(Note: Speaking of showdowns, Chuck is also inviting anyone near the Houston area this weekend to see a good example of the raw Texas fighting spirit by joining him and others for the national martial arts event, "Showdown in H-Town.")“

11.2 TRILLION

Reuters
U.S. 2008 household wealth fell $11.2 trillion: Fed


WASHINGTON (Reuters) – U.S. households suffered a record-large 9 percent drop in wealth and pared debt in the fourth quarter as a deepening recession battered confidence and finances, Federal Reserve data showed on Thursday.

Household net worth dropped by $5.1 trillion from the prior quarter to $51.5 trillion. For the full year, net worth dropped by $11.2 trillion, reflecting steep declines in the housing and stock markets.

The declines in household net worth were the largest since quarterly and annual records began in 1951 and 1946, respectively, the Fed said.

Since a second-quarter 2007 peak of $64.4 trillion, household wealth has dropped by about 20 percent. That has put a chill on consumer spending and added to Americans' anxiety about economic well-being.

The U.S. central bank's quarterly Flow of Funds report also showed that household borrowing contracted at a 2 percent annual rate in the fourth quarter, after increasing at a 0.2 percent pace in the previous period. This was the first quarterly decline on record.

Home mortgage debt fell at a 1.6 percent pace -- the third consecutive quarter of declines -- and consumer credit dropped at a 3.2 percent rate.

Businesses slowed their pace of borrowing to 1.7 percent from a 4.1 percent rate in the third quarter. The biggest jump in borrowing came from the federal government, coming in at a 37 percent rate in the fourth quarter.

At the end of the fourth quarter, domestic nonfinancial debt outstanding totaled $33.5 trillion, with households accounting for $13.8 trillion, nonfinancial businesses $11.1 trillion and government debt of $8.6 trillion.

Wednesday, March 11, 2009

Bill to limit credit cark rates

Bernie Sanders deserves your support


Sanders Press release Loan Sharks in Three-Piece Suits:

Sen. Bernie Sanders will introduce legislation this week to cap interest rates charged by credit card companies that now slap consumers with rates of up to 30 percent. "This is money that comes right out of their hides and it hurts," Sanders told The Burlington Free Press. His legislation would impose 15 percent interest rate ceiling. It also would limit fees. “We are going to introduce a national usury law which will prohibit any financial institution from charging these outrageous rates,” he told Thom Hartmann’s nationally-syndicated radio show. “These loan sharks wear three-piece suits, but they’re not much different than those guys who break people’s knee caps.”

At the same time that banks are receiving the largest taxpayer bailout in U.S. history and at the same time that the Federal Reserve has lowered short-term interest rates that banks pay to near zero percent, the same banks are charging consumers outrageous fees and sky-high interest rates on credit cards and other loans.

Citibank, Bank of America, Wells Fargo, and American Express recently notified customers that their interest rates are going up, in some cases to 30 percent, if a single payment is missed. They also are jacking-up interest rates on consumers who pay their bills on time and never go over their credit card limit.

More Good News

Blackstone CEO: As much as 45% of global wealth is gone
CFA Institute Financial NewsBrief
03/11/2009

Describing the event as "absolutely unprecedented in our lifetime," Stephen Schwarzman, CEO of Blackstone Group, said the credit meltdown has wiped out between 40% and 45% of the world's wealth.

He said credit-rating agencies are partly to blame for the crisis. "What's pretty clear is that if you were looking for one culprit out of the many, many, many culprits, you have to point your finger at the rating agencies," Schwarzman said. Reuters (10 Mar.)

More Bits and Pieces

U.S. federal government budget widened to $192.8 billion in February ... the second largest monthly deficit on record ... receipts dropped 17% to $87.3 billion, the lowest since February 1995.

In February, individual income taxes fell 64% to just $8.7 billion. That's the lowest monthly total for individual income taxes since May 1985.

Earlier today, the BLS released the state unemployment rates for January. Four states are now above 10%: Michigan, South Carolina, Rhode Island and California.

Tuesday, March 10, 2009

RE: Dirty Bomb

Anyone else notice that this story did not even get a passing mention in the supposed main stream media? I guess we can't really accuse white millionaires of being violently anti-American -- esp. if they are right wingers (can't get much more right than Nazism). Now, if his name was Padilla, or something like that, it would be HUGE headlines -- esp. if he was an "illegal".

Makes you want to cry.

Dirty Bomb

This from Raw Story.


Report: Slain US Nazi hated Obama, had parts for 'dirty bomb'
Stephen C. Webster
Published: Monday March 9, 2009




Claim: Depleted uranium purchased over the Internet from an American company

Trust fund millionaire James G. Cummings, an American Nazi sympathizer from Maine who was slain by his wife Amber in December, allegedly had the radioactive components necessary to construct a "dirty bomb," a newly released threat analysis report states.

The man, allegedly furious over the election of President Obama, purchased depleted uranium over the Internet from an American company.

"According to an FBI field intelligence report from the Washington Regional Threat and Analysis Center posted online by WikiLeaks, an organization that posts leaked documents, an investigation into the case revealed that radioactive materials were removed from Cummings’ home after his shooting death on Dec. 9," reported the Bangor Daily News.

"Amber (Cummings) indicated James was very upset with Barack Obama being elected President," reported the Washington Regional Threat and Analysis Center (PDF link). "She indicated James had been in contact with 'white supremacist group(s).' Amber also indicated James mixed chemicals in the kitchen sink at their residence and had mentioned 'dirty bombs.'"

"Also found was literature on how to build 'dirty bombs' and information about cesium-137, strontium-90 and cobalt-60, radioactive materials," said the Bangor Daily. "The FBI report also stated there was evidence linking James Cummings to white supremacist groups. This would seem to confirm observations by local tradesmen who worked at the Cummings home that he was an ardent admirer of Adolf Hitler and had a collection of Nazi memorabilia around the house, including a prominently displayed flag with swastika. Cummings claimed to have pieces of Hitler’s personal silverware and place settings, painter Mike Robbins said a few days after the shooting."

After Amber Cummings admitted to the murder and entered an insanity plea, Belfast, Maine police felt it necessary to bring the FBI on the scene. Bangor Daily reporter Eric Russell followed up in a filmed interview with Belfast Police Chief Jeffrey Trafton:

The paper also reported that Cummings had a long history of violence.

Public safety officials were quick to claim there was no threat.

The story of the first attempt at constructing a "dirty bomb" in the United States was not carried by any mainstream press outside of Maine.

"Conservatives apparently didn't want to draw attention to a radioactive, wealthy version of Timothy McVeigh coming from their own sphere, although nearly every day during Bush's reign saw "dirty bombs" hyped as the ultimate threat," summarized Wikileaks.

"The left didn't want to repeat another 'dirty bomb' story, the likes of which Republicans had used to drive hundreds of billions of dollars into Republican dominated military and security contractors."

In the report, an unnamed source noted, "state authorities detected radiation emissions in four small jars in the residence labeled 'uranium metal', as well as one jar labeled 'thorium.' The four jars of uranium carried the label of an identified US company."

"Further preliminary analysis on 30 December 2008 indicated an unlabeled jar to be a second jar of thorium. Each bottle of uranium contained depleted uranium 238. Analysis also indicated the two jars of thorium held thorium 232."

"An Internet search of the James B. Cummings Trust indicated that it has an annual income of $10 million," noted a report

Monday, March 9, 2009

bits and pieces

It's Monday March 9th 2009.

The U.S lost another 650,000 or so jobs (what's 5 or 10,000?).

There's a run on the English Pound. (Can you say Iceland? -- just kidding)

The global crisis wiped a staggering $50 trillion off the value of financial assets last year including $9.6 trillion of losses in developing Asia alone, the Asian Development Bank said Monday.

There are already tax protests in Ca. : "While the turnout at a recent anti-tax rally in California, detailed by the Fullerton Community Examiner in "Over 15,000 Descend on Fullerton to Protest Higher Taxes," represents an infinitesimally small fraction of the state's 37 million population, I expect it won't be long before the trickle of angry protestors turns into a flood -- in California and elsewhere."

I guess everyone wants services, everyone wants the economy to improve -- but no one wants to pay for it. We all want someone else to pay. We also blame it on "those people", while at the same time talking about "personal responsibility" -- for other people.

We don't know our history, don't know how the government works, think the USA is a "Christian Nation" -- even though the founding fathers were not Christian, and we were founded on principles of The Enlightenment. We were, and are a SECULAR nation.

we're afraid to teach our kids about sex -- so now, they're doomed to know less than their parents, and are doomed to make the very same mistakes we all made. The difference is that today the stakes are higher.

Our Media is a creature of its corporate overlords -- there is almost no news broadcast -- it's mostly propaganda.

One of our two major political parties is being run (defacto) by a fat, misogynistic, drug addict, who doesn't know the difference between the Declaration of Independence and The Constitution.

In order to fight the "horror" of "Gay Marriage" a formerly respected lawyer says a simple majority vote can strip away any and all rights from anyone. Talk about consequences.

There's talk GW Bush will be charged with war crimes. In addition folks are now saying the last eight years were a dictatorship.

Aside from those few things, things are getting worse.

Happy Monday.

Saturday, March 7, 2009

Privatising The commons

This directly from "The Economic Populist" -- I'd suggest you bookmark, and check that blog. Lot's of good stuff. Just follow the link.

here's a history lesson:

Privatizing The Commons



"Virtually everything President Bush is doing to America is, at some level, related to privatization of our commons. Today we are witnessing the middle game portion of the Corporate Takeover of Everything Agenda. It scares me to imagine what the end-game will look like."
-Scott Silver, 2003

In 2006 the Democrats narrowly defeated Bush's attempts at selling 300,000 acres of public forest land to private interests. The reason given was to simply raise money to fill a budget gap.

"It kind of reminds me of selling off the 'back 40' to pay the rent. It's short-term thinking."

This certainly isn't the first time that Republicans have gone after the Commons, and it won't be the last.

"After the last tree is felled, Christ will come back."
- James G. Watt, 1983

Starting with the Sagebrush Rebellion, continuing with Reagan's Interior Secretary, James Watt, and the Wise Use Movement of the late 80's and early 90's, and finally with the rise of the "free market environmentalism" the Republican base keeps coming and coming for undeveloped land, and they will never stop.
The pro-privatization crowd is very open with their reasoning and logic:

Some object to privatization because they believe that our national "crown jewels" (however defined) are sacred natural treasures and that no price tag can or should be attached to them. Well, one is welcome to one's beliefs, but value is subjective. Land is worth only what people will pay for it.
[...]
If there is more money to be made by turning the Grand Canyon over to the Walt Disney Co. rather than to an eco-sensitive tourism cooperative, it simply means that the public demand for Disney's services at the Grand Canyon is greater than the public's demand for Deep Green Trail Services Inc.

This is a philosophy that sees absolutely no value in anything that can't be turned into a buck. I feel no shame in saying that these people cannot be reasoned with. They can only be fought.
How can I say that with so much certainty? How can I be certain that I am right? The reason I have no doubts is because I know a little about history, and I would like to share it with you.
But to do this right, we need to go all the way back to the feudal system of England as it was coming out of the Dark Ages.

The New Tragedy Of The Commons

They hang the man and flog the woman
That steal the goose from off the common,
But let the greater villain loose
That steals the common from the goose.
— English folk poem, ca. 1764

As any student of law can tell you, the root of all American Constitutional law is English Common Law. And the root of English Common Law is the Magna Carta. This 13th Century document is so important that it has been repeatedly cited in U.S. Supreme Court rulings as recently as 1983.


The Carta De Foresta

That much you probably already know. What you most likely don't know is that the Magna Carta had a companion document known as the Charter of the Forest. In this almost forgotten legal document was the basis of The Commons. For example:

[12] Every free man may henceforth without being prosecuted make in his wood or in land he has in the forest a mill, a preserve, a pond, a marl-pit, a ditch, or arable outside the covert in arable land, on condition that it does not harm any neighbour.

[17] These liberties concerning the forests we have granted to everybody, saving to archbishops, bishops, abbots, priors, earls, barons, knights, and other persons, ecclesiastical and secular, Templars and Hospitallers, the liberties and free customs, in forests and outside, in warrens and other things, which they had previously.[...]

For centuries the Open Field System was the dominant economic agriculture system of England (and most other places in Europe). Resources were shared in the community and the community regulated its uses. This economic system existed from the neolithic period of human development all the way up to the middle ages. In other words, it is the opposite of the privatizing system being pushed through today. Unlike today's economic system, this community-based, sharing of resources is the default economic system of the human condition.

So what brought this system to an end? Contrary to what some would have you believe, it didn't die on its own. It wasn't gradually and efficiently replaced by today's capitalist system.
No, it was knifed in the back. And the hundreds of thousands that depended on this system had their livelihoods destroyed in the process, leaving a huge swath of the population homeless, penniless, and without means to feed their families.
Like most economic upheavals in history, this can be traced to a particular war. In this case, the Anglo-Scottish War of 1541.

I'm Henry The Eighth, I Am

When Henry VIII was crowned King in 1509 the country's treasury was in fine shape. But Henry had a love for starting wars with France and Scotland, and it quickly depleted the treasury. By the 1530's the country was nearly broke. It just so happens that 1531 was the year that Henry VIII declared himself Supreme Head of the Church of England, and in 1535 Henry had Thomas Cromwell visiting all the monasteries in the nation in order to a) inventory all their assets, and b) spread propaganda against the monks and nuns (using such terms as sinful "hypocrites" and "sorcerers").
[note: Cromwell was a disgusting toady of Henry's who's life ended in a deliberately botched private execution]
The following year the Dissolution of the Monasteries became law, as their property was confiscated. Abbots who resisted were executed. Around 800 of these institutions were seized. Henry didn't get as much revenue from seizing the assets of the monasteries as he thought he would, so he turned around and sold the land to the wealthy Tudor gentry at bargain basement prices.
[note: Every instance of privatizing public assets that I have ever read about, led to those assets being sold at pennies on the dollar to the politically connected wealthy. It's a good bet that this will happen every single time.]
The abbeys were one of the primary sources of charity and medical care in the country, thus gutting the weak safety net that was in place. The loss of them came at an extremely bad time. Henry VIII, now flush with quick cash went on an empire building spree.


Ireland circa 1530

For two centuries the Irish had been driving the English back towards Dublin, so that by 1541 the English controlled only an area of 20 miles in radius known simply as The Pale. But that year Henry crowned himself King of Ireland against the expressed wishes of the Pope. Combined with the process of buying off Irish Lords, Ireland soon become part of the English Empire (although not without frequent, bloody revolts).
However, Scotland was a different story. Henry was determined to convert them to Protestants, even if he had to kill every last one of them. When war broke out in 1541 Henry used his newly flush treasury to field an army to do just that. The problem was that Scotland didn't like the idea of England telling them how to worship, and created an alliance with France to help them fight the English invaders.
The war drug on year after year. Henry's armies used a scorthed-earth tactic known as "Rough Wooing" in which hundreds of villages and hamlets were burnt to the ground. At the same time Henry was conducting a full-scale invasion of France.
All of this war is expensive, and by 1542 the treasury was in danger of depletion yet again. Henry was faced with a tough choice - raise taxes or end the empire building? Raising taxes was not a choice because the English gentry had balked at paying for war three different times during the 1520's. Like George Bush and most modern politicians, he was loath to do either, and instead chose a third way - debasement of the currency.

Enclosure

Known simply as The Great Debasement, Henry did what is the modern equivalent of adding zeros to today's fiat currency. In 1542 One Pound contained 6.4 ounces of silver. By 1551 One Pound contained less than an ounce of silver.

For King Henry it created a temporary increase in the amount of cash on hand to fund his destruction and occupation of southern Scotland. For the poor, all they saw was rapidly increasing prices without a similar increase in wages. And for the wealthy landlords they saw a decrease in the value of the rents they charge.

Enclosure: The process whereby open land or common land was parcelled up into privately owned blocks or fields.

But the wealthy gentry had a way out. For more than a century the price of sheep's wool had been increasing because of strong demand on the continent (i.e. turning exports into hard currency). What stood in the way of this solution for the wealthy landlords was thousands of subsistence farmers on their lands.
But that was easy enough to fix - the farmers were evicted, the former farming lands were enclosed with ditches and hedges, and then the fields were turned to pasture for the sheep. By as early as 1516 this was becoming a problem. Thomas More wrote in his book Utopia:

But I do not think that this necessity of stealing arises only from hence; there is another cause of it, more peculiar to England.' 'What is that?' said the Cardinal: 'The increase of pasture,' said I, 'by which your sheep, which are naturally mild, and easily kept in order, may be said now to devour men and unpeople, not only villages, but towns; for wherever it is found that the sheep of any soil yield a softer and richer wool than ordinary, there the nobility and gentry, and even those holy men, the abbots not contented with the old rents which their farms yielded, nor thinking it enough that they, living at their ease, do no good to the public, resolve to do it hurt instead of good. They stop the course of agriculture, destroying houses and towns, reserving only the churches, and enclose grounds that they may lodge their sheep in them.

When The Great Debasement happened, this process was accelerated many times over. What's more, the wealthy were no longer satisfied with simply enclosing their own common land, but started enclosing land that didn't belong to them - common fens and marshes, moors and other "wastes". These were areas not owned by anyone, but that tenant farmers used for their animals to graze (along with the stubble of an open field after a harvest).
In other words this was outright theft by the powerful and wealthy of community owned land, land in which they had the right to use under the Charter of the Forest. These enclosures turned common land into owned land, whereas field enclosures only segregated land that was already owned. Access to these lands were critical to the marginal farmer, and it is no surprise when those farmers began revolting.

The Levellers: Part I

Enclosure riots began as early as the 1520's, but were usually modest in size and rarely caused violence (other than the knocking down of hedges and filling in of ditches that enclosed common lands). However, things changed for the worst in 1549, when the first round of full-scale enclosure riots began.
By 1549 the economic situation in Britain had become intolerable. Poverty rates which were normally around 20% had spiked to over 50%. And with the charity network gutted by Henry a decade earlier, these had become desperate times for many families.
The first major outbreak of violence was Kett's Rebellion during the summer of that year. Robert Kett became the unwilling leader of a rebellion of 15,000 angry farmers, almost completely unarmed, who stormed the town of Norwich after tearing down enclosures for several weeks. They amazingly beat back an attack of 14,000 of the King's militia. However, the King then sent a larger army with better leadership, which defeated the rebels in a pitched battle. Robert Kett was hung over the side of the Norwich castle, where his death was strung out over a period of several days.

Defeating Kett's rebellion did not stop periodic uprising against enclosures of the Commons. Nor did the end of the Great Debasement stop the enclosing of common land. Between 1570 and 1620 nearly 1/3 of all the land in England changed hands - from the poor and commons to the wealthy. By some accounts, 3/4ths to 9/10ths of the tenant farmers on some estates were evicted in the late medieval period.
All this enclosing of common land led to the complete depopulation of hundreds of villages and hamlets. In all, about 1,000 towns and villages ceased to exist during this period. With Scotland and Ireland coming under the thumb of the English crown, they too suffered from the same trend. Families gave up their children because they couldn't afford to feed them. People sold themselves into indentured servitude. So many thousands of families were being made homeless and destitute, with no means to support themselves, it led to skyrocketing crime rates.

The enclosure riots peaked in 1607 with the infamous Midland Revolt. Thousands of people, including women and children, took part in pulling down hedges and filling in ditches. When the local militia flat refused when called to put down revolt, the local landlords used their servants and armed thugs they hired.

The Royal Proclamation was read twice. The rioters continued in their actions and the gentry and their forces charged. A pitched battle ensued. 40-50 were killed and the ringleaders were hanged and quartered.
No memorial to the event or to those killed exists.

The Government Responds

Gradually the government responded to the social crisis they had helped create. Because the enclosing of common land was creating social instability, and, even more importantly, it was shrinking the tax base (because the homeless couldn't pay taxes), anti-enclosure laws were passed. However, they were poorly enforced and corruptly administered. Eventually the laws were simply repealed. The government was simply unable, or unwilling, to stand up to the wealthy, privileged class that had caused so much suffering.
The other method of dealing with the steadily increasing numbers of poor was stricter laws.

1495: Vagrants to be punished in the stocks for 3 days.
1531: Vagrants to be whipped.
1536: Vagrants make to work on jobs like road repairs.
1547: Vagrants could be forced to work as slaves (this law was canceled in 1549 because it was considered too harsh).
1572: Vagrants over 14 were to be whipped and have a hole made in their right ear the first time they were caught. Caught again, they could be put in prison, even hanged.
1576: Houses of Correction (Bridewells) set up where vagrants were forced to live and work.
1597: Vagrants whipped and sent back to county where they had last lived. Vagrants who kept getting caught were sent overseas to work in the colonies.

The last law listed eventually became a popular method of dealing with the flood of homeless poor. As the British Empire expanded, shipping the homeless poor off to undeveloped lands in America, and later Australia, became the default method of social administration. The colony of Georgia's early population can be largely attributed to this law.
In 1697 an act was passed requiring the poor to wear a "badge" of red or blue cloth on the right shoulder with an embroidered letter "P" and the initial of their parish.

Of course the government wasn't totally heartless. The latter part of the 16th Century saw the first Poor Laws - the first efforts in the western world at setting up a welfare state. In 1572 the first poor tax was introduced. The services rendered from the Poor Laws were exclusively reserved to those who were unable to take care of themselves such as children, the old, the crippled and sick.
In 1601 the Elizabethan Poor Law was enacted.

It made provision:

* To board out (making a payment to families willing to accept them) those young children who were orphaned or whose parents could not maintain them,
* to provide materials to "set the poor on work"
* To offer relief to people who were unable to work -- mainly those who were "lame, impotent, old, blind", and
* "The putting out of children to be apprentices"

In today's world this was a rather pathetic attempt at dealing with an impoverished society. But in 1601 this was radical thinking far ahead of its time.

The Levellers: Part II

In 1642, the English Civil War began (although fighting in Scotland and Ireland began earlier). Since the monarchy, with the aid of the Star Chamber, was the only institution that was slowing down enclosures, the eventual victory by the lords in Parliament dramatically sped up enclosures around the country.

The term levellers was used to describe the enclosure rioters for "leveling hedges". However, in November 1647, the term Levellers was used to describe a political movement among London's politicians.

The Levellers were an informal alliance of agitators and pamphleteers who came together during the English Civil War (1642-1648) to demand constitutional reform and equal rights under the law. Levellers believed all men were born free and equal and possessed natural rights that resided in the individual, not the government. They believed that each man should have freedom limited only by regard for the freedom of others. They believed the law should equally protect the poor and the wealthy. The Levellers were the social libertarians of the day (or classic liberals). "Leveller" was a term of abuse, coined by their opponents to exaggerate the threat of their ideas.

The Leveller politicians had only the most indirect connections to their namesakes, and their movement was crushed just three years later with a series of executions and assassinations.

By 1650 the rise in wool prices had ended, but by this time the fate of the Commons in Britain was sealed. There would be more enclosures and more families made homeless. The politicians in London would eventually openly side with the wealthy and institute a series of formal enclosure laws, which ended in 1801.

This from the Wall Street Journal

Top U.S., European Banks Got $50 Billion in AIG Aid

* Article
* Comments (82)

more in Politics »
By SERENA NG and CARRICK MOLLENKAMP

The beneficiaries of the government's bailout of American International Group Inc. include at least two dozen U.S. and foreign financial institutions that have been paid roughly $50 billion since the Federal Reserve first extended aid to the insurance giant.

Among those institutions are Goldman Sachs Group Inc. and Germany's Deutsche Bank AG, each of which received roughly $6 billion in payments between mid-September and December 2008, according to a confidential document and people familiar with the matter.
Covered Counterparties

Some banks that were paid by AIG after it was bailed out by the government

* Goldman Sachs
* Deutsche Bank
* Merrill Lynch
* Société Générale
* Calyon
* Barclays
* Rabobank
* Danske
* HSBC
* Royal Bank of Scotland
* Banco Santander
* Morgan Stanley
* Wachovia
* Bank of America
* Lloyds Banking Group

Source: WSJ research

Other banks that received large payouts from AIG late last year include Merrill Lynch, now part of Bank of America Corp., and French bank Société Générale SA.

More than a dozen firms with smaller exposures to AIG also received payouts, including Morgan Stanley, Royal Bank of Scotland Group PLC and HSBC Holdings PLC, according to the confidential document.

The names of all of AIG's derivative counterparties and the money they have received from taxpayers still isn't known, but The Wall Street Journal has identified some of them and is publishing others here for the first time.
Lawmakers Want Names

The AIG bailout has become a political hot potato as the risk of losses to U.S. taxpayers rises. This past week, legislators demanded that the Federal Reserve disclose names of financial firms that have received money from AIG, which Fed officials have described as too systemically important in the financial system to be allowed to fail.

In a Senate Banking Committee hearing in Washington on Thursday, Fed Vice Chairman Donald Kohn declined to identify AIG's trading partners. He said doing so would make people wary of doing business with AIG.

But Mr. Kohn told lawmakers he would take their requests to his colleagues. The Fed, through a new committee led by Mr. Kohn to discuss transparency concerns, is now weighing whether to disclose more details about the AIG transactions.

The Fed rescued AIG in September with an $85 billion credit line when investment losses and collateral demands from banks threatened to send the firm into bankruptcy court. A bankruptcy filing would have caused losses and problems for financial institutions and policyholders globally that were relying on AIG to insure them against losses.

Since September, the government has had to extend more aid to AIG as its woes have deepened; the rescue package now has swelled to more than $173 billion.

The government's rescue of AIG helped prevent its counterparties from incurring immediate losses on mortgage-backed securities and other assets they had insured through AIG. The bailout provided AIG with cash to pay the banks collateral on the money-losing trades; it also bought out underlying mortgage-linked securities, many of which are currently worth less than half their original value.

Banks and other financial companies were trading partners of AIG's financial-products unit, which operated more like a Wall Street trading firm than a conservative insurer. This AIG unit sold credit-default swaps, which acted like insurance on complex securities backed by mortgages. When the securities plunged in value last year, AIG was forced to post billions of dollars in collateral to counterparties to back up its promises to insure them against losses.
More Problems

Now, other problems are popping up for AIG. The insurer generated a sizable business helping European banks lower the amount of regulatory capital required to cushion against losses on pools of assets such as mortgages and corporate debt. It did this by writing swaps that effectively insured those assets.

Values of some of those assets are declining, too, forcing AIG to also post collateral against those positions. And if the portfolios incur losses, AIG will have to compensate the banks.

AIG had seen this business as a relatively safe bet for the company and its investors. The structures were designed to allow European banks to shuck aside high capital costs. A change in capital rules has meant that the AIG protection no longer meets regulatory requirements.

The concern has been that if AIG defaulted, banks that made use of the insurer's business to reduce their regulatory capital, most of which were headquartered in Europe, would have been forced to bring $300 billion of assets back onto their balance sheets, according to a Merrill report.
—Liam Pleven and Sudeep Reddy contributed to this article.

Gee -- what a surprise

For Release:
Weds., March 4, 2009 For More Information:
Robert Weissman, 202-387-8030; 202-360-1844 (cell)
Harvey Rosenfield, 310-345-8816

$5 BILLION IN POLITICAL CONTRIBUTIONS BOUGHT WALL STREET FREEDOM FROM REGULATION, RESTRAINT, REPORT FINDS

Steps to Financial Cataclysm Paved with Industry Dollars

March 4 - The financial sector invested more than $5 billion in political influence purchasing in Washington over the past decade, with as many as 3,000 lobbyists winning deregulation and other policy decisions that led directly to the current financial collapse, according to a 231-page report issued today by Essential Information and the Consumer Education Foundation.

The report, "Sold Out: How Wall Street and Washington Betrayed America," shows that, from 1998-2008, Wall Street investment firms, commercial banks, hedge funds, real estate companies and insurance conglomerates made $1.725 billion in political contributions and spent another $3.4 billion on lobbyists, a financial juggernaut aimed at undercutting federal regulation. Nearly 3,000 officially registered federal lobbyists worked for the industry in 2007 alone. The report documents a dozen distinct deregulatory moves that, together, led to the financial meltdown. These include prohibitions on regulating financial derivatives; the repeal of regulatory barriers between commercial banks and investment banks; a voluntary regulation scheme for big investment banks; and federal refusal to act to stop predatory subprime lending.

"The report details, step-by-step, how Washington systematically sold out to Wall Street," says Harvey Rosenfield, president of the Consumer Education Foundation, a California-based non-profit organization. "Depression-era programs that would have prevented the financial meltdown that began last year were dismantled, and the warnings of those who foresaw disaster were drowned in an ocean of political money. Americans were betrayed, and we are paying a high price -- trillions of dollars -- for that betrayal."

"Congress and the Executive Branch," says Robert Weissman of Essential Information and the lead author of the report, "responded to the legal bribes from the financial sector, rolling back common-sense standards, barring honest regulators from issuing rules to address emerging problems and trashing enforcement efforts. The progressive erosion of regulatory restraining walls led to a flood of bad loans, and a tsunami of bad bets based on those bad loans. Now, there is wreckage across the financial landscape."

12 Key Policy Decisions Led to Cataclysm

Financial deregulation led directly to the current economic meltdown. For the last three decades, government regulators, Congress and the executive branch, on a bipartisan basis, steadily eroded the regulatory system that restrained the financial sector from acting on its own worst tendencies. "Sold Out" details a dozen key steps to financial meltdown, revealing how industry pressure led to these deregulatory moves and their consequences:

1. 1. In 1999, Congress repealed the Glass-Steagall Act, which had prohibited the merger of commercial banking and investment banking.
2. Regulatory rules permitted off-balance sheet accounting -- tricks that enabled banks to hide their liabilities.
3. The Clinton administration blocked the Commodity Futures Trading Commission from regulating financial derivatives -- which became the basis for massive speculation.
4. Congress in 2000 prohibited regulation of financial derivatives when it passed the Commodity Futures Modernization Act.
5. The Securities and Exchange Commission in 2004 adopted a voluntary regulation scheme for investment banks that enabled them to incur much higher levels of debt.
6. Rules adopted by global regulators at the behest of the financial industry would enable commercial banks to determine their own capital reserve requirements, based on their internal "risk-assessment models."
7. Federal regulators refused to block widespread predatory lending practices earlier in this decade, failing to either issue appropriate regulations or even enforce existing ones.
8. Federal bank regulators claimed the power to supersede state consumer protection laws that could have diminished predatory lending and other abusive practices.
9. Federal rules prevent victims of abusive loans from suing firms that bought their loans from the banks that issued the original loan.
10. Fannie Mae and Freddie Mac expanded beyond their traditional scope of business and entered the subprime market, ultimately costing taxpayers hundreds of billions of dollars.
11. The abandonment of antitrust and related regulatory principles enabled the creation of too-big-to-fail megabanks, which engaged in much riskier practices than smaller banks.
12. Beset by conflicts of interest, private credit rating companies incorrectly assessed the quality of mortgage-backed securities; a 2006 law handcuffed the SEC from properly regulating the firms.

Financial Sector Political Money and 3000 Lobbyists Dictated Washington Policy

During the period 1998-2008:

* Commercial banks spent more than $154 million on campaign contributions, while investing $363 million in officially registered lobbying:
* Accounting firms spent $68 million on campaign contributions and $115 million on lobbying;
* Insurance companies donated more than $218 million and spent more than $1.1 billion on lobbying;
* Securities firms invested more than $504 million in campaign contributions, and an additional $576 million in lobbying. Included in this total: private equity firms contributed $56 million to federal candidates and spent $33 million on lobbying; and hedge funds spent $32 million on campaign contributions (about half in the 2008 election cycle).

The betrayal was bipartisan: about 55 percent of the political donations went to Republicans and 45 percent to Democrats, primarily reflecting the balance of power over the decade. Democrats took just more than half of the financial sector's 2008 election cycle contributions.

The financial sector buttressed its political strength by placing Wall Street expatriates in top regulatory positions, including the post of Treasury Secretary held by two former Goldman Sachs chairs, Robert Rubin and Henry Paulson.

Financial firms employed a legion of lobbyists, maintaining nearly 3,000 separate lobbyists in 2007 alone.

These companies drew heavily from government in choosing their lobbyists. Surveying 20 leading financial firms, "Sold Out" finds 142 of the lobbyists they employed from 1998-2008 were previously high-ranking officials or employees in the Executive Branch or Congress.

Friday, March 6, 2009

Credit Crunch Tent City

Follow the link. This is from The Daily Mail, by way of Financial Armageddon.

It's just stuff our corporate media does not report.


"A century and a half ago it was at the centre of the Californian gold rush, with hopeful prospectors pitching their tents along the banks of the American River.
Today, tents are once again springing up in the city of Sacramento. But this time it is for people with no hope and no prospects.
With America's economy in freefall and its housing market in crisis, California's state capital has become home to a tented city for the dispossessed."

Follow the link for the rest.

# 17

Bank Failure #17 in 2009: Freedom Bank of Georgia, Commerce, Georgia

Thursday, March 5, 2009

This From Feministing

"March 5, 2009
Originally posted on Feministing Community
New Foundation to aid women with restraining orders

Trigger Warning

I just learned about the Tiana Angelique Notice Foundation, created to aid women with restraining orders and prevent domestic violence. The foundation is named for Tiana Angelique (and created by her family), a 25 year old graduate student in CT, who was murdered by her ex-boyfriend on Feb. 14. It was the last time he violated her restraining order against him.

From a news article :

"At the time, Tiana had a restraining order that was supposed to keep Carter from contacting her. But he violated the order several times, friends and family said — once by posing as someone else and sending her e-mails.

In the end, he became emboldened, said a friend who asked not to be named. The day before Notice died, he called her three times at her job. He also wrote her a letter, which she took to the Plainville Police Department hours before she was killed, the friend said.

That was one of three police departments she visited in the week before her death to file complaints about Carter or to follow up on previous complaints. She also visited police in Waterbury, where she worked, and in Bloomfield, where Carter lived....

Alvin Notice, the victim's father, said he will push for a new law that requires the automatic arrest of anyone suspected of violating a restraining order. Tiana's sister, Natasha Smith-Notice, warned against state budget cuts that would affect domestic violence programs. And the family has already established a foundation in Tiana's name, The Tiana Angelique Notice Foundation, to help women with restraining orders and prevent domestic violence."

The most dangerous time for a survivor of dv is when and after they leave the abuser, and Tiana's story illustrates just how unsafe people can be even if they do everything right legally to try to be safe. Is it any wonder that countless people stay with their abuser rather than increase the risk of being killed because there's little they legally can do to stop the abuser from attacking/murdering them or someone they love? My heart goes out to Tiana's family and all the people like her who were able to leave their abuser but still weren't/aren't safe. Hopefully her family's activism will prompt more awareness and lead to better policies for handling dv."


I've always thought a restraining order and a handgun are better than just a restraining order. Dangerous men, men who give you cause to fear for your life will not be dissuaded by a court order. In our society many of these guys seem to see it as a direct blow to their "manhood", that imaginary construct built by movies, advertising, and constant justification of boorish, uncivilized behavior.

Learn to shoot. Learn to SAFELY handle a weapon that allows you to "reach out and touch someone" -- none of this close combat thing -- men are stronger.

It's not about hate -- it's about survival.

Wednesday, March 4, 2009

On CNN

Rick Sanchez on CNN (not exactly a "liberal bastion") just said we have more people in jail than Russia and China COMBINED.

He also pointed out that when jails are privatized, when there's a profit motive involved, it's natural to build more jails, and jail more people.

This all came about because he was talking about those judges who got kickbacks for putting kids in jail. They earned MILLIONS. Isn't that nice?

I suspect this is just the tip of the old iceberg.

It seems justice is no longer blind -- but, she has turned her back on an awful lot of folks.

The Rupture

That's right -- no "Rapture", no being lifted into some "heaven".

It's going to be "The Rupture" -- with global warming, water shortages, and a broken global economy. Aging infra-structure, massive pollution, and desertification.

Right now it's not a happy picture.

Now, don't get me wrong -- I do not think the world is going to "end". Nor do I think humans will fail / disappear -- I do think we will have massive dieoffs. famine, disease, war. Perhaps another version of "The Dark Ages", maybe centuries of theocratic bullshit -- with some pockets of civilization.

People have been dumbed down so much that many really don't care, and don't know.

What do all y'all think is the ideal population of our dear planet? Two billion? Four billion?

What will replace Capitalism when it becomes clear we must cooperate to survive?

What will all the phoney, wannabe "John Galts" do when they finally realize good old
Ayn is a phoney, and her "philosophy" is a load of crap?

I await your answers

Anal Bleaching?

Yes Virginia, there really are a multitude of Anal Bleaching products on the market. There are even Salons where you can get an "intimate" wax job -- AND get the old bung-hole bleached / touched up / etc.

I am just another old lady and really did not believe folks did this stuff -- I thought it was a joke, perhaps something from The Onion -- but, noooooo -- it's real. Just Google "Anal Bleaching" -- .14 seconds -- 393,000 results.

Earlier today, Sandra Day O'Connor said one out of three Americans cannot name the three branches of the Federal Government (they do not have a clue how the gov't works -- but they have all the answers).

In this wonderful information era folks have no idea about the workings of their Government -- but there are almost 400,000 hits for anal fucking bleaching.

Are you ready to give up yet?

("But Harry, I don't care if we're broke -- you know I have to go for my touchup.")

Tuesday, March 3, 2009

Drug Barons Discover Africa

Drug barons discover Africa

The price of cocaine is falling as traffickers use unstable nations such as Guinea as conduits. Perhaps the EU should stop them


* Caroline Sourt
* guardian.co.uk, Sunday 1 March 2009 16.00 GMT


According to the Home Office, class A drugs, which include cocaine, cost the country more than £15bn in crime and health bills every year. In Britain, a line of cocaine is now cheaper than a pint, and while there have been reports that drug use has levelled off in the last year, these statistics are soon likely to change for the worse.

What few people realise is that this is due, in part, to the new trading routes being used by traffickers. The UN's latest report on drug trafficking indicates that South American drug cartels are using west African states to stockpile shipments due for the European market. The Caribbean is still being used to smuggle cocaine out of South America, but British and American patrols have been increasingly successful in recent years and the drug barons need a new line in – no pun intended.

West African countries, particularly those that are politically unstable, are ripe for trade. One such country is Guinea. A junta now rules this small nation of 10 million people. Last December, a group of young officers calling themselves the National Council for Democracy and Development (CNDD) seized power after the death of President Lansana Conté, the country's autocratic dictator of 24 years. They promise to hold elections before the end of 2009, but if voting is to be free and fair, the logistics would make this almost impossible. Following the arrest of several officers and the dismissal of the CNDD's finance minister earlier this month, there are increasing concerns that Guinea's junta is unstable. There are high levels of insecurity, a general lawlessness outside the ruling elite and unlimited scope for corruption.

Add to that the fact that most Guineans live in poverty with no running water or electricity – the UN scores the country as the 12th poorest in the world – and it is easy to see why the Colombians are moving in.

Regular revisions in waging a war against drugs are essential to stay one step ahead of the drug barons. Barack Obama has appointed a new drug tsar to head up the Office of National Drug Control Policy. The emphasis will be on the increased use of rehabilitation centres and community service, instead of prisons, for drug offenders.

But ultimately the most efficient way of dealing with the drug problem must be by cutting off supply routes, thereby preventing the shipments from reaching the UK in the first place.

Guinea is a former French colony, and is therefore not a priority when it comes to Britain's foreign policy and sphere of influence. However the European Union Strategy for Africa already includes the goals necessary to give Guineans a viable alternative to involvement in the drug trade.

During more healthy economic times, the EU committed to increase official aid to Africa. It promised to give 0.56% of gross national income by 2010, and more specifically to spend €4bn annually in projects in sub-Saharan Africa. But according to reports in 2007, these promises are not being kept.

The EU may have a reputation for bureaucracy and for blowing its own budgets. But surely Britain and other member states would make a saving – in more ways than one – if Strasbourg turned its attention to the effect the west African drug trade is having on the price of cocaine in Europe.

Bank of america

S&P downgrades Bank of America ratings
Tuesday March 3, 4:44 pm ET

S&P cuts Bank of America ratings, outlook remains to negative, citing earnings pressures

NEW YORK (AP) -- Standard & Poor's on Tuesday downgraded Bank of America Corp. on concerns that earnings pressures for the bank may be greater than originally anticipated.

S&P cut the Charlotte, N.C.-based bank's long-term counterparty credit rating to "A" from "A+," and affirmed the "A-1" short-term rating. The outlook remains "negative," which suggests the possibility of more cuts to come.

"We downgraded BofA one notch because we believe that the economic weakness will persist and that in turn, earnings pressures will be more intense than we anticipated as recently as Dec. 19, 2008, the date of our last downgrade of BofA," Standard & Poor's credit analyst John Bartko said in a statement.

The ratings agency also lowered its ratings on the bank's subsidiaries to "A+/A-1" from "AA-/A-1+," the bank's hybrid rating to "BB-" from "BBB," and the hybrid ratings on the bank subsidiaries to "BB" from "BBB+."

"We lowered the hybrid capital rating by four notches because of our view that the risk that BofA could defer dividend payments has increased," the rating agency said, noting the move reflects heightened concern that the bank's management could decide to exercise its option not to pay dividends.

Bank of America posted a $2.39 billion loss for the three months ended in December, hours after it convinced the federal government it needed a $20 billion lifeline to survive the absorption of Merrill Lynch's hefty losses.

Merrill Lynch posted a loss of $15.31 billion for the period -- underscoring Bank of America's assertion that it needed extra U.S. aid in order to absorb the investment bank's bad mortgage bets.

Bank of America is one of the companies at the center of a storm engulfing the U.S. financial system, and has received $45 billion in emergency funding from the government.

On Monday, Bank of America chief executive Ken Lewis told the Financial Times newspaper that the second part of that aid, a $20 billion chunk to support the bank's hastily arranged purchase of Merrill Lynch & Co. last fall, was a "tactical mistake."

No Bottom yet

More great news:


* GM’s sales fell 53%
* Ford’s sales dropped 48%
* Toyota’s declined 40%
* Volkswagen U.S. fell 18%;
* Nissan sales dropped 37%
* Mercedes-Benz posted a 21% decline
* BMW’s total car sales fell about 24%
* Honda sales dropped 40%

Monday, March 2, 2009

Republic of T

I suggest you go to the blog "Republic of T".

He has a series of links to stuff he wishes he had time to write. Lots of good stuff.

Pension funds - more problems

Another front opens. This is going to worse than anyone thinks. Nationalize the banks. Get it done and throw out the "masters of the universe" who caused this debacle.

It may not cure anything right away -- but, like chicken soup - "it couldn't hurt".


Pension bombs going off
By: Paul Merrion March 02, 2009

Exploding pension fund shortfalls are blowing billion-dollar holes in the balance sheets of some of the Chicago area's biggest companies, forcing them to make huge contributions to retirement plans at a time when cash flow and credit are already under stress.

Boeing Co.'s shareholder equity is now $1.2 billion in the hole thanks to an $8.4-billion gap between its pension assets and the projected cost of its obligations for 2008. At the end of 2007, Boeing had a $4.7-billion pension surplus. If its investments don't turn around, the Chicago-based aerospace giant will have to quadruple annual contributions to its plan to about $2 billion by 2011.

Stock market losses also pounded pension funds at Abbott Laboratories Inc., Caterpillar Inc. and Exelon Corp., with others sure to emerge as companies file their annual financial reports with the Securities and Exchange Commission in coming weeks.

The pension gaps underscore a growing conundrum. Unfunded pension liabilities have to be subtracted from shareholder equity, weakening balance sheets at a time when it's already tough to borrow money. Barring a reprieve from Congress, companies may be forced to make more layoffs or curb capital investments to divert cash to shore up pensions.

"There are companies out there faced with paying their pension plan or staying in business," says Mark Ugoretz, president and CEO of the ERISA Industry Committee, a Washington, D.C., lobbying group. ERISA refers to the Employee Retirement Income Security Act of 1974, which sets standards to ensure pension plans are sufficiently funded.

The Chicago companies are symptomatic of nationwide woes. Last year, the 100 largest corporate pension funds in the U.S. saw their net assets decline by 21%, while liabilities increased 1.2%. Applying those averages to any of the region's top funds puts almost all of them into the red by at least $1 billion.

PRESSURE MOUNTS

The situation is far worse at companies that entered 2008 with plans already in poor shape. They are now even harder-pressed to come up with huge increases in pension fund contributions to erase the gap in seven years, as federal law requires.

A Boeing spokesman says the pension deficit is "clearly a situation we don't like," but adds that the company's credit rating hasn't been affected.

Stricter federal pension-funding requirements, enacted when the stock market was riding high, threaten to undermine the economy further. Business interests are lobbying for more time to close the gaps, but with lawmakers focused on the housing and banking crises, the issue hasn't gained much traction in Washington.

As a result, "many of the country's largest employers are being forced to make short-term trade-offs between maintaining employment and funding long-term obligations," Sears Holdings Corp. Chairman Edward Lampert wrote in a note to shareholders last week.

Hoffman Estates-based Sears, which announced the closings of 24 stores this year, expects its pension expense to soar as high as $175 million this year from $1 million last year due to the markets' decline.

RIPPLE EFFECTS

Underfunded pensions also are forcing borrowing costs higher for some companies.

At Peoria-based Caterpillar, shareholder equity dropped more than 25% from the previous year after the company booked a $5.8-billion pension shortfall and its plan went from 93% funded to 61% funded.

That means Cat has to pay an additional 1.5 percentage points of interest to keep its untapped credit lines intact, according to SEC filings. Its pension assets sank 30% last year, and this year's contribution will more than double to about $1 billion. A Cat spokesman declines to comment.

DOUBLE WHAMMY

A decline in interest rates last year also fueled widening pension liabilities, says Lynn Dudley, senior vice-president of policy for the American Benefits Council, another Washington, D.C., group lobbying for more time to fund plans.

Generally, the current value of a future obligation goes up when interest rates come down. In essence, last year's drop in stock prices and interest rates was a double whammy for pension funds, Ms. Dudley says.

"The law kind of slams you. In extreme markets, it's really unpredictable," she says. Absent relief from Congress, she says, "there have been some layoffs, and there are going to be more layoffs" to save cash for pension contributions.

The most notable Chicago-area exception is Moline-based Deere & Co., which began 2008 with a plan that was 17%, or $1.5 billion, overfunded.

Deere may have escaped the worst of the 21% average decline in assets. The company's fiscal year ended Sept. 30, before the worst of the stock downturn hit, and only 27% of its fund — far less than most — was in equities. A Deere spokesman declines to comment.

Sunday, March 1, 2009

Detroit

Every time I see stuff like this --- I think of "Robocop".


Detroit's outlook falls along with home prices
Motor City on the brink of bankruptcy, but still 15 people want to be mayor

By Tim Jones | Tribune correspondent
January 29, 2009

DETROIT — It may be tough to get financing for a new car these days, but in Detroit you can buy a house with a credit card.

The median price of a home sold in Detroit in December was $7,500, according to Realcomp, a listing service.

Not $75,000. Remove a zero—it's seven thousand five hundred dollars, substantially less than the lowest-price car on the new-car market.

Among the many dispiriting numbers that bleakly depict the decrepitude of this onetime industrial behemoth, the steep slide of housing values helps define the daunting challenge to anyone who wants to lead this shrinking, poverty-pocked city of about 800,000 people.

"We're always fighting ourselves out of a hole," said Wayne County Sheriff Warren Evans.

Despite the depth of the hole, Evans is running for mayor. In fact, he is one of 15 people who have raised their hands to be mayor of Detroit and fill the remaining months in office of the former mayor who now wears a green jumpsuit and resides in Evans' spartan house of justice, the Wayne County Jail.

Detroit has long been the snide remark and punch line to derogatory urban humor, and the conviction last fall of two-term Mayor Kwame Kilpatrick for lying about an extramarital affair with his chief of staff reinforced suspicions that Detroit is beyond help, let alone self-governance. But as the domestic auto industry, the city's principal private-sector employer and founding corporate father, seeks a financial bailout from Washington, formerly whispered remarks about the prospect of the nation's 11th-largest city being the first major American city to go bankrupt are now publicly discussed.

If the Obama administration is looking for a city to test new ideas for chronic urban problems, it can look to Detroit, a northern New Orleans without the French Quarter. While bedrock poverty in the Crescent City was violently laid bare by Hurricane Katrina in 2005, Detroit has been quietly slipping into social and economic crisis for 40 years. One-third of the population lives in poverty, and almost 50 percent of children are in poverty, according to data from the Detroit-Area Community Indicators System. Median household income has dropped 24 percent since 2000, according to the Census Bureau.

New York bond-rating houses this month lowered the city's bond rating to junk status, a lowly assessment shared by New Orleans and few others.

On a positive note, Detroit's homicide rate dropped 14 percent last year. That prompted mayoral candidate Stanley Christmas to tell the Detroit News recently, "I don't mean to be sarcastic, but there just isn't anyone left to kill."

Detroit voters will choose two candidates in a Feb. 24 primary who will face off in May. In the meantime, the city faces a projected budget deficit of at least $300 million, with no clear view on how to erase it. "If we don't get it right, we could be headed for a state takeover or receivership," warned Dave Bing, a mayoral candidate best known for draining jump shots for the Detroit Pistons back in the 1960s and '70s. At 64, Bing, a successful businessman, is running as the candidate of integrity in a city that, under Kilpatrick, had little.

Mayor Ken Cockrel Jr., who assumed the mayor's office by virtue of his being president of the City Council, promised he is "not going to let [receivership] happen."

Detroit, which has lost half its population in the past 50 years, is deceptively large, covering 139 square miles. Manhattan, San Francisco and Boston could, as a group, fit inside the city's boundaries. There is no major grocery chain in the city, and only two movie theaters. Much of the neighborhood economy revolves around rib joints, hot dog stands and liquor stores. The candidates travel around this sprawling city, some invoking the nostalgic era of Big Three dominance and vowing that Detroit can be great again.

Groups of them attend nearly unworkable faux debate forums about how they will solve the city's troubles, with responses to last no more than 60 seconds. Given the complexity of problems that defy sound-bite answers, their proposed solutions range from the predictable to the wacky:

More cops on the street.

Make high school graduation mandatory.

Grow your own food.

Bulldoze large stretches of the city and turn them into wind farms.

Procreate like there's no tomorrow.

Kilpatrick's election in 2001 lured Henry Hassan back to Detroit from Minnesota. Hassan, who opened a restaurant on the city's northwest side, said he was quickly disillusioned.

"You remember the riots in '67?" Hassan said, referring to the cataclysmic five days that left 43 dead and more than 2,000 buildings burned down. "It's a little worse than that right now. ... We need somebody to come in and care for the city more than they care for themselves."

The problem is more than a $300 million budget shortfall, said John Mogk, a professor at Wayne State University Law School.

"A thousand people are leaving the city every month," Mogk said, "and the city does not have the financial resources and the economic base to solve its own problems."

To be sure, progress has been made downtown: two new sports stadiums, a reinvigorated neighborhood around Wayne State and new lofts and casinos. But unlike Pittsburgh, which successfully reinvented itself after the decline of Big Steel, Detroit displays only islands of prosperity amid a dismal landscape. Neighborhoods have suffered, and foreclosures have aggravated the long-festering ill of abandoned homes.

"A lack of vision has held us back," said Nicholas Hood III, another mayoral candidate. "The auto industry was so dominant—too dominant—and we never prodded ourselves and the business community to a more expansive vision."

To the surprise of many in this overwhelmingly black city (82 percent), only 53 percent of registered voters turned out for November's presidential election, which featured the first African-American nominee. It wasn't long ago that a Democrat couldn't carry Michigan without a big turnout in Detroit. As it turned out, Detroit's votes didn't matter in the election.

"Detroit will never be the great industrial center again," said Kevin Boyle, a Detroit native and author of "Arc of Justice: A Saga of Race, Civil Rights and Murder in the Jazz Age."

"What will it look like?" Boyle said. "I don't know