Monday, October 26, 2009

Hotel owner tells Hispanic workers to change names

Hotel owner tells Hispanic workers to change names

Published - Oct 26 2009 08:57AM EDT
By MELANIE DABOVICH - Associated Press Writer

TAOS, N.M.— Larry Whitten marched into this northern New Mexico town in late July on a mission: resurrect a failing hotel.

The tough-talking former Marine immediately laid down some new rules. Among them, he forbade the Hispanic workers at the run-down, Southwestern adobe-style hotel from speaking Spanish in his presence (he thought they'd be talking about him), and ordered some to Anglicize their names.

No more Martin (Mahr-TEEN). It was plain-old Martin. No more Marcos. Now it would be Mark.
Whitten's management style had worked for him as he's turned around other distressed hotels he bought in recent years across the country.

The 63-year-old Texan, however, wasn't prepared for what followed.
His rules and his firing of several Hispanic employees angered his employees and many in this liberal enclave of 5,000 residents at the base of the Sangre de Cristo mountains, where the most alternative of lifestyles can find a home and where Spanish language, culture and traditions have a long and revered history.

"I came into this landmine of Anglos versus Spanish versus Mexicans versus Indians versus everybody up here. I'm just doing what I've always done," he says.

Former workers, their relatives and some town residents picketed across the street from the hotel.
"I do feel he's a racist, but he's a racist out of ignorance. He doesn't know that what he's doing is wrong," says protester Juanito Burns Jr., who identified himself as prime minister of an activist group called Los Brown Berets de Nuevo Mexico.

The Virginia-born Whitten had spent 40 years in the hotel business, turning around more than 20 hotels in Texas, Oklahoma, Florida and South Carolina, before moving with his wife to Taos from Abilene, Texas. He had visited Taos before, and liked its beauty. When Whitten saw that the Paragon Inn was up for sale, he jumped at

The hotel sits along narrow, two-lane Paseo del Pueblo, where souped-up lowriders radiate a just-waxed gleam in the soft sunshine as they cruise past centuries-old adobe buildings. One recent afternoon, a woman slowly rode her fat-tire bicycle along a cracked sidewalk, oversized purple butterfly wings on her back and a breeze blowing her long, blonde dreadlocks.

The community includes Taos Pueblo, an American Indian dwelling inhabited for over 1,000 years, and an adobe Catholic church made famous in a Georgia O'Keeffe painting.

After he arrived, Whitten met with the employees. He says he immediately noticed that they were hostile to his management style and worried they might start talking about him in Spanish.

"Because of that, I asked the people in my presence to speak only English because I do not understand Spanish," Whitten says. "I've been working 24 years in Texas and we have a lot of Spanish people there. I've never had to ask anyone to speak only English in front of me because I've never had a reason to."
Some employees were fired, Whitten says, because they were hostile and insubordinate. He says they called him "a white (N-word)."

Fired hotel manager Kathy Archuleta says the workers initially tried to adjust to his style. "We had already gone through four or five owners before him, so we knew what to expect," Archuleta says. "I told (the workers) we needed to give him a chance."

Then Whitten told some employees he was changing their Spanish first names. Whitten says it's a routine practice at his hotels to change first names of employees who work the front desk phones or deal directly with guests if their names are difficult to understand or pronounce.

"It has nothing to do with racism. I'm not doing it for any reason other than for the satisfaction of my guests, because people calling from all over America don't know the Spanish accents or the Spanish culture or Spanish anything," Whitten says.

Martin Gutierrez, another fired employee, says he felt disrespected when he was told to use the unaccented Martin as his name. He says he told Whitten that Spanish was spoken in New Mexico before English. "He told me he didn't care what I thought because this was his business," Gutierrez says.

"I don't have to change my name and language or heritage," he says. "I'm professional the way I am."

After the firings, the New Mexico chapter of the League of United Latin American Citizens, a national civil rights group, sent Whitten a letter, raising concerns about treatment of Hispanic workers. Whitten says he sent them a letter and posted messages on the hotel marquee, alleging that the group referred to him with a racial slur. LULAC denied the charge.

The messages and comments he made in interviews with local media, including referring to townsfolk as "mountain people" and "potheads who escaped society," further enflamed tensions.

Taos Mayor Darren Cordova says Whitten wasn't doing anything illegal. But he says Whitten failed to better familiarize himself with the town and its culture before deciding to buy the hotel for $2 million. "Taos is so unique that you would not do anything in Taos that you would do elsewhere," he says.

Whitten grew subdued as a two-hour interview with The Associated Press progressed. He said he was sorry for the misunderstanding and insisted he has never been against any culture.

"What kind of fool or idiot or poor businessman would I be to orchestrate this whole crazy thing that's costed me a lot of time, money and aggravation?" Whitten said.

Whitten should have dealt with the situation differently, especially in a majority Hispanic town, said 71-year-old Taos artist Ken O'Neil, while sipping his afternoon coffee on the town's historic plaza.
"To make demands like he did just seems over the top," he says. "Nobody won here. It's not always about winning. Sometimes, it's about what you learn."

Monday, October 12, 2009

Iceland Shrinks 8% as Prices Increase 11% in Deepest Recession

Oct. 12 (Bloomberg) -- Arni Hallgrimsson lost his job as a public relations consultant when Iceland’s three biggest banks collapsed last year, putting him out of work for the first time since 1980. After a stint cleaning the docks at a whaling station during the summer hunt, he’s unemployed again.

“Nightmares come to an end when you wake up, but this one just goes on and on and on and on,” the 53-year-old father of three said at his home in Reykjavik, Iceland’s capital. “I’ve applied for many jobs that fit my profile. Sometimes I’ve been on the short-list, but eventually not been offered the job.”

A year after the banking crisis brought Iceland to the brink of bankruptcy, the island nation is mired in the deepest recession among advanced economies. The stock market has lost 97 percent of its value, and more than 780 companies have buckled under the weight of foreign currency loans as the krona plunged. Consumers refuse to borrow at Europe’s highest interest rates, and international banks reject requests for new financing.

Prime Minister Johanna Sigurdardottir, who took office in February, pinned hopes for a recovery on the International Monetary Fund after Kaupthing hf, Landsbanki Islands hf and Glitnir Banki hf racked up $80 billion in debt, 16 times Iceland’s economic production. Now she says the economy may implode again as a dispute over Icelandic savings accounts held by overseas depositors delays a promised $5.1 billion bailout.

“It’s been a year since all hell broke loose and there hasn’t actually been much done to ease the situation,” said Almar Gudmundsson, secretary general of the Federation of Icelandic Trade, which represents importers, exporters, wholesalers and retailers. “We don’t think that we as a nation are doing enough to make the wheels get going again.”

Worst Recession

Iceland’s economy will shrink 8.5 percent this year and consumer prices will climb 11.7 percent, both the worst performances among the world’s 33 advanced economies, according to the IMF’s latest forecasts. As the rest of the world begins to recover, Iceland’s recession will stretch into next year, with the economy contracting 2 percent, more than any developed nation except Ireland.

Unemployment will rise to 8.6 percent this year, from less than 1 percent in December 2007, the IMF estimates. Iceland will still trail the eurozone average of 9.9 percent and Spain’s 18.2 percent jobless rate, the highest in the developed world.

One of the hardest-hit industries has been construction, where 202 companies filed for bankruptcy in the 11 months after the crash, 67 percent more than in the same period a year earlier, according to data compiled by Statistics Iceland.

Construction First to Go

Hallgrimsson’s firm primarily helped builders sell their projects and persuade the public that all environmental concerns were being met.

“The contractors were the first to go bust,” he said. “They couldn’t secure financing, meaning they completely threw out marketing and PR. Before we knew it, there wasn’t a single contractor on our list of clients.”

The crash followed four years in which the economy grew at an average annual rate of 4 percent following the sale of Icelandic banks to private investors from 1998 to 2002. The banks and investors, including Jon Asgeir Johannesson’s Baugur Group hf, went abroad to escape the shackles of a nation of 320,000 people. The expansion was financed by international investors who bought bonds paying as much as 10 percent. They defaulted as the credit crisis dried up financing.

Reintroducing the Banks

The chief executive officers of New Kaupthing hf, Islandsbanki hf and Landsbankinn hf, the state-owned successors of the failed banks, said they’re still trying to win the trust of overseas lenders and as yet are unable to obtain foreign- currency loans. The CEOs, all brought in after the collapse, said the banks no longer have global ambitions.

“We are starting with just introducing ourselves,” said Islandsbanki CEO Birna Einarsdottir, who worked at Royal Bank of Scotland Group Plc in Edinburgh for six years before returning to Iceland in 2004, in an interview. “What we do internationally is going to be very, very focused.”

The krona’s official exchange rate has declined 53 percent against the dollar since Nov. 2, 2007, making it the laggard of 175 currencies tracked by Bloomberg.

Iceland’s benchmark stock index plunged 77 percent on Oct. 14, 2008, when it resumed trading after a three-day suspension. It is the world’s worst-performing equity index since reaching its high in July 2007, according to data compiled by Bloomberg. Listings have dropped to 10 from 22.

The central bank left its benchmark rate unchanged last month at 12 percent, the highest in Europe. Only Pakistan and Lebanon, at 13 percent, have higher rates among the 58 central banks tracked by Bloomberg. The European Central Bank’s benchmark rate is 1 percent.

‘People Aren’t Buying’

Companies are struggling as the krona’s decline and high interest rates wipe out consumer demand on the North Atlantic island, which imports about 70 percent of the products it uses, including raw materials such as lumber and oil.

“People aren’t buying flat screens, they aren’t buying furniture, they aren’t traveling abroad or buying luxury goods,” said Bogi Thor Siguroddsson, owner of Johan Roenning hf, an importer and retailer, who says his sales volume has dropped 50 percent. “What is selling now is food, drugs and gasoline.”

Before the crash, Hallgrimsson and his wife were reducing their debts and making extra payments on their mortgage. That became harder and harder because the loans were indexed to inflation. Now he says he worries about every krona.

“Recently my daughter asked if she could take a drama class and we had to think hard about whether or not we could afford it,” Hallgrimsson said. “Eventually we decided to let her go, and I’m glad we did because she loves it, but just the fact that we had to think about it is a little sad.”

Office Waterfall

Borrowing rates charged by New Kaupthing, Islandsbanki and Landsbankinn remain at a prohibitive level of about 15 percent, New Kaupthing CEO Finnur Sveinbjoernsson said in an interview.

“Credit will be more expensive and less abundant,” he said at the bank’s waterfront offices, which sport a glass wall covered by a waterfall, warehouse-style furnishings and a coffee bar, all built during the boom. “A more responsible fiscal attitude will have to be the norm going forward.”

The government of former Prime Minister Geir Haarde, whose Independence Party oversaw the privatization of the banks, crumbled in January. Voters in April elected a coalition of Social Democrats and Left Greens, who have promised more welfare and bigger government.

IMF Debate

Sigurdardottir, 67, said this month that more transparency and tighter financial regulations are needed. She also plans to pursue European Union membership and possible adoption of the euro to protect Iceland against swings in the krona.

IMF funding hinges on efforts to settle the claims of overseas depositors who had accounts with Icesave, a unit of Landsbanki Islands. The U.K. and Dutch governments have stalled funding until Iceland agrees to cover the claims. Opposition politicians say the demands are unfair, and members of the Left Green Movement are split on the issue, threatening to leave Sigurdardottir’s government in the minority.

The government estimated Oct. 1 that Iceland will post a deficit of 182.3 billion kronur ($1.5 billion), or 14 percent of gross domestic product this year. The proposed 2010 budget includes new energy, environment and natural resources taxes.

“If the government is taxing its way through the fiscal problem, it will just prolong the crisis,” said Gudmundsson, the head of the trade federation. “We think heavy cost cuts in the expenditures of the government are necessary.”

Political Comeback

Some of those in power during the good years are beginning to make a comeback. Former Prime Minister and central bank Governor David Oddsson was named editor-in-chief of Iceland’s oldest newspaper, Morgunbladid, last month. The day before the announcement, 40 of 100 employees were fired.

Oddsson, 61, was Iceland’s longest-serving prime minister, holding office for 13 years after he was first elected in 1991. He became foreign minister in 2004 and was central bank governor in 2005. He refused to step down after the economy collapsed, so parliament passed a law that removed him from office.

Thus far no one has been charged with a crime in connection with Iceland’s economic failure. Gunnar Andersen, director of Iceland’s Financial Supervisory Authority, said Aug. 5 that 20 cases of banking malpractice have been sent to a special prosecutor, and the FSA is investigating another 20 cases.

Truth Commission

A commission, created by parliament to “seek the truth” about events that led to the banks’ downfall, is scheduled to announce its findings Nov. 1. Chairman Pall Hreinsson, a Supreme Court judge, has said that never before has any group had to break such bad news to the Icelandic people.

Icelanders have already taken it upon themselves to punish those they think are responsible, spray painting the homes of Hreidar Mar Sigurdsson and Bjarni Armannsson, the former CEOs of Kaupthing and Glitnir. A Hummer owned by Bjorgolfur Thor Bjorgolfsson, the former chairman of the Straumur investment bank, was doused with red paint.

Baugur Chairman Johannesson, 41, whose firm owned 32 percent of Glitnir, blamed the collapse on the global recession.

“Due to the size of the banks in comparison with the economy, due to a worthless currency and way too little reserves, the central bank had a limited ability to provide the banks with short-term loans or assistance,” he wrote in a letter published Dec. 29 in Morgunbladid. “The owners of all three banks didn’t have the financial capabilities to increase the banks’ capital following difficult times and recent losses, as was also the case in many places abroad.”

Baugur Claims

The banks’ freewheeling activities dragged down companies that received cheap money to speculate on financial derivatives or borrowed against shares in one business to buy stock in another. Others failed as payments on foreign-currency loans soared after the krona’s plunge.

One example was Baugur, which bought retailers in London and New York during a 10-year acquisition spree. Baugur filed for bankruptcy in March with debts that exceeded assets by 148 billion kronur. Johannesson didn’t respond to messages seeking comment.

Erlendur Gislason, an attorney with the Logos law firm in Reykjavik, has spent the past six months piecing together the financial picture at Baugur. His conclusion: little of any value is left to pay 158 claims made by 60 unsecured creditors.

“Most of the assets in Baugur were mortgaged before the bankruptcy,” Gislason said. “It’s quite a meager piece of assets that are left.”

Gambling Iceland’s Reputation

Landsbankinn took control in February of Baugur’s U.K. unit, which had stakes in department store chain House of Fraser Plc, Iceland Foods Ltd. and jewelry chain Goldsmiths.

Hekla, a 76-year-old car dealer and importer in Iceland, is now owned by New Kaupthing.

Standing in Hekla’s showroom, marketing manager Brynjar Oskarsson is surrounded by new Volkswagens and Audis. There are no customers, and Oskarsson doesn’t expect any.

People aren’t buying cars because prices have risen 66 percent in the past two years as the krona slumped in value, Oskarsson said. He estimates that just 2,100 vehicles will be sold this year in Iceland, down from a peak of 18,058 in 2005. Hekla has cut its staff to 160 workers from a high of 250.

“I feel disappointed with how a few individuals ruthlessly gambled with many of our best companies and, without blinking, used Iceland’s reputation and good image as their best weapon,” Oskarsson said.

Fishing and Tourism

The only winners in Iceland’s collapse are companies paid in foreign currency.

Along the waterfront, the smell of fish pervades the headquarters of HB Grandi hf, Iceland’s largest fishing company. Grandi hauls in 12 percent of the island’s annual catch, including cod, halibut and haddock, and exports all of its fish.

The company hasn’t laid off any of its 650 workers and employees received a raise this year.

“In today’s business world in Iceland, that’s all good news,” said CEO Eggert Gudmundsson, 45, who joined the company five years ago from a Silicon Valley technology firm, after he and his family decided to return to their native Iceland.

It’s been even better for the tourism industry as the krona’s decline makes Iceland a bargain for foreign travelers. A record 353,110 people visited the country in the first eight months of the year, selling out hotels, filling restaurants and inundating tour companies such as Ishestar travel, where a sign outside the office door reminds visitors to take off their boots after visiting the stables for Icelandic ponies.

“This difficult year has been by far our best,” said owner Einar Bollason, adding that he’s had to turn away customers because he didn’t have the capacity to serve them. “Of course, this is a wonderful problem to have.”

Smaller Banks

As for the banks, Iceland’s financial industry will probably get smaller, with consolidation likely, the CEOs said.

Johann Bergthorsson lost his part-time job at Landsbankinn’s predecessor when the lender was nationalized. He has since founded Dexoris, which is creating video games for Apple Inc.’s iPhone and iPod Touch.

“When the whole economy of the country collapses, you just have to change your plans,” said Bergthorsson, a 22-year-old mathematician. “When the bank went overboard, the decision was made. I decided to do something different, something more creative.”

The ownership of Islandsbanki, formerly Glitnir, and New Kaupthing will be determined this month when creditors decide whether to exchange debt for stakes in the banks. Landsbankinn’s future is less certain because of the Icesave talks.

‘Burned Many Bridges’

Eventually, the banks plan to sell shares to the public, the CEOs said. Such a move is probably years away, and requires rebuilding the trust of investors, they said.

“I don’t expect them to forget what happened,” Landsbankinn CEO Asmundur Stefansson, said at the bank’s wood- paneled headquarters in Reykjavik’s old downtown. “I mean, what happened was terrible. We have obviously burned many bridges in the process. We cannot deny that.”

Hallgrimsson said he can’t move on because he’s struggling to pay his bills and waiting to see whether the whaling station will hire him as a maintenance worker this winter.

“Nobody seems to have learned a thing,” he said. “Instead of dealing with the enormous tasks at hand, politicians are playing the blame game. I’m not optimistic.”

To contact the reporters on this story: Chad Thomas in Reykjavik via the Helsinki newsroom at cthomas16@bloomberg.net; Omar Valdimarsson in Reykjavik at valdimarsson@bloomberg.net.

Last Updated: October 11, 2009 19:00 EDT

Bulldoze Detroit!

Paterson sets target date for cuts

Paterson sets target date for cuts

ALBANY, N.Y. (AP) — Gov. David Paterson is asking the Legislature to give him proposals by Wednesday for cutting $2.5 billion from the current budget.

Paterson says he wants concrete ideas for continuing savings to the state.

The request comes two days after Paterson ordered cuts worth $500 million from executive branch agencies.
Paterson says he and legislative leaders now agree the current deficit is at least $3 billion in the 2009-10 budget adopted in April.

The Democrat says Thursday he also plans a meeting with the majority and minority leaders of the Senate and Assembly on Wednesday to create a consensus for how to address the deficit.

Legislative leaders have said they want the governor to propose politically dicey cuts in spending, with their responses to follow.

Banks brace for Latvia's collapse

Banks brace for Latvia's collapse
The Baltic states are once again in the eye of the storm after leaked reports that Sweden is bracing for a full-blown economic and political "breakdown" in Latvia.

By Ambrose Evans-Pritchard, International Business Editor
Published: 7:25PM BST 05 Oct 2009

Latvia's currency peg is back on the agenda The Svenska Dagbladet newspaper said Sweden's finance minister Anders Borg had told banks secretly that Latvia's political order was unravelling, advising them to prepare for the collapse of Latvia's rescue talks.

Latvia has failed to deliver draconian spending cuts agreed to secure the next tranche of its €7.5bn (£6.85bn) bail-out from the EU, the International Monetary Fund, and Sweden, balking at 20pc cuts in pensions and a further 15pc cut in public wages.

IMF's harsh aid conditions 'risked deepening financial crisis'
Euro is Ireland’s life-jacket – and straitjacket The People's Party, the largest group in the coalition, voted against austerity measures last month, raising concerns that the country is ungovernable.

Mr Borg said the world's patience is running out. "It will be very hard to continue with these international programmes if they don't fulfill the spirit and the content in the agreements they have signed."

Latvia's economy contracted by 18.2pc in the twelve months to June, trumped only by Lithuania at 20.4pc. "Latvia's currency peg is back on the agenda, " said Hans Redeker from BNP Paribas. "The government has to relax policy for social reasons. The hardship this winter is going to be unbelievable."

Youth unemployment in Latvia is already 31pc, and concentrated among ethnic Russians. Premier Valdis Dombrovskis said his chief task is to "preserve social peace".

Neil Shearing from Capital Economics said the appetite for austerity has been exhausted. Latvia is "more likely than not" to devalue, toppling pegs in Estonia and Lithuania. "Financial markets elsewhere in the region are likely to be hit by contagion, with Hungary, Romania, and Ukraine most vulnerable."

The area is better able to cope with shocks than during the panic this Spring. The G20 tripled the IMF's fire-fighting fund to $750bn in April, chiefly as an insurance for Eastern Europe. This has greatly reduced risk of a liquidity crisis. It does not alter the slow-burn damage of rising defaults.

The Baltic trio financed property booms in euros (and swiss francs) because rates were lower. It was taken for granted that eventual euro entry had eliminated the exchange risk. This has become a trap. They need to devalue to break the cycle of depression, but cannot do so because of euro mortgages. Instead they hope to claw back lost competitiveness through wage deflation. This takes years, and discipline.

Mr Shearing said Latvia's economy would shink by 30pc whether it devalues or not. The peg merely draws out the agony, and slows the pace of inevitable defaults.

Washington's Center for Economic and Policy Research said the IMF is enforcing a"pro-cyclical contractionary policy" in Latvia. Foreign banks (mostly Swedish) are being rescued at the cost of local taxpayers. The IMF deal equals 34pc of GDP. Latvia is piling up debt to defend its peg. The policy may backfire in any case. Fiscal contraction is causing tax revenues to implode, feeding a vicious circle.

Lars Christensen from Danske Bank said Latvia's political class is chiefly responsible for clinging to the peg. "It's their choice, but if they want the bail-out money, they must do what they promised. They don't seem to understand that the IMF and EU are willing to walk away now that the global economy has improved and spill-over risks have been reduced," he said.

Prospects are grim whatever happens "There is absolutely no sign of stabilisation. The economy is still contracting. It's paralysis," he said.
******************************************************************************
Oct. 12 (Bloomberg) -- Latvia will seek to strike a last- minute agreement on budget cuts today to satisfy bailout terms in the latest round of brinkmanship that has tested the patience of the country’s international loan donors.

Prime Minister Valdis Dombrovskis has signaled his Cabinet will agree on an additional 175 million lati ($362 million) in cuts at a meeting today to satisfy the International Monetary Fund, the European Union and Sweden. Coalition members are due to meet at 12 noon in Riga. European Union Monetary Affairs Commissioner Joaquin Almunia will visit Riga tomorrow.

“They’re in the clear for the time being, but similar temporary disagreements will likely recur,” said Richard Segal, a fixed-income desk strategist at Knight Libertas U.K. “There is a history of Latvian politicians becoming complacent and trying to sneak in lower budget cuts, which the EU and IMF notice at the last minute. I wouldn’t rule this out in future.”

The IMF, the EU and Sweden agreed to give Latvia a 7.5 billion-euro ($11 billion) loan in December and urged the government to adopt tougher austerity measures. Swedish Prime Minister Fredrik Reinfeldt, who holds the EU presidency, on Oct. 5 said Latvia “must correct” its deficit while Riksbank Governor Stefan Ingves has said the country risks being “left in the cold.”

‘Fruitful’

International admonitions grew more strident in tone after Latvia said it could achieve a targeted 8.5 percent deficit of gross domestic product in 2010 by cutting 325 million lati off the budget, 175 million lati less than the IMF, the EU and Sweden had demanded.

The IMF on Oct. 9 said it concluded a visit to Latvia that included “fruitful” discussions about the loan program. An IMF staff team visited Latvia as part of a technical mission in consultation with the European Commission and plans to return in November, together with the EU, for a review of the program, it said in a statement.

Finance Minister Einars Repse said if the bailout program is suspended, Latvia will be forced to balance its budget next year and “live hand to mouth.”

In the event of a suspension, Moody’s Investor’s Service will cut the Baltic country’s credit rating, and the country may have to repay part of its loan early, depleting its reserves, Repse said on national television last night.

‘Wrong Kind’

Billionaire George Soros called on the EU to ease its budget-cut demands to slash budget spending in an interview with Swedish public radio on Oct. 10.

“The pressure for them to reduce government spending when the problem is in the private sector is a wrong kind of policy that ought to be avoided,” said Soros. “I think the European Union countries are in a position and out to help Latvia more than they are currently doing,” he said. Soros said he had no currency positions in the Baltics.

Less severe loan terms might have saved both sides some pain, Knight’s Segal said, adding that Latvia, which pegs the lats to the euro, and its creditors would benefit from making agreements more flexible, with policy requirements contingent on economic developments.

Dombrovskis is trying to limit the pain the budget cuts are inflicting on the economy through legislative changes. The premier on Oct. 6 asked his civil servants to investigate the option of capping mortgage holders’ liability, a move perceived by some investors as a first step toward shielding the internal economy from a devaluation.

Little Impact

According to Segal, the proposal “would not have as much of an impact as a lot of people seem to think.”

Swedish lenders would suffer the deepest blow from the plan, which would swell loan losses. The krona dropped as much as 1.5 percent against the euro on Oct. 7, after investors learned the news. Stockholm-based Swedbank AB, the region’s biggest bank, lost 2.4 percent the same day.

Investors need to take loan losses at Swedbank and SEB AB, the second-biggest Baltic lender, into account when assessing the potential harm the mortgage proposal may inflict, Segal said.

“The impact of any plan on the future value of the Swedish banks in Latvia has to be compared with what they have already written down and I think a lot of commentators have overlooked that,” he said.

Swedbank’s gross provisions for Latvian loans were 4.5 billion kronor in the first half, or 12.77 percent of total lending, the bank said on July 17. SEB, which doesn’t provide country-specific figures for the region, said net credit losses in the Baltics for the same period were 4.93 percent. That compares with Swedbank’s 7.36 percent loss ratio for the region.

‘Bottom Occurred’

“Clearly the bottom of the economic cycle has occurred, we couldn’t have said this three or four months ago and therefore I’m pretty sure that a compromise will happen sooner or later,” Segal said.

The $34 billion Latvian economy “probably bottomed out during the second and third quarter,” Dombrovskis said on Oct. 2, citing Economy Ministry forecasts. Fitch Ratings on Oct. 6 forecast a 4 percent output contraction next year after an 18 percent slump in 2009. Swedbank expects Latvia’s GDP to shrink 2 percent next year, it said on Sept. 29.

Gov. Schwarzenegger going all-out by signing two bills at once


Sunday, October 11, 2009

Government Violates The Citizens (Again) - kdenninger

Government Violates The Citizens (Again)

Market Ticker Forum link

This is going to be an ongoing series, I suspect - tracking government abuse of the citizenry via debt-shifting.
What am I referring to?  Simple: Back-door bailouts of banks and industry (notably the auto industry) through farcical programs that con the citizens of the nation to take on unsustainable debt, thereby transferring what should be a corporate or bank failure to into a whole bunch of personal bankruptcies.
There are two programs in particular that exemplify this attempt; "cash for clunkers" and the various machinations in the housing space, including the insanely loose FHA credit procedures.
Cash for Clunkers violated two basic premises: It destroyed perfectly good capital assets (older cars that were in good running condition; indeed, it required 12 months of continual insurance coverage and registration - that is, proof of being in good running order for the past year - to qualify!) and replaced them with a vehicle that had a presumed debt load on it.
Now we find out that indeed (as I have long suspected) the government's insane FHA approvals of patently unsustainable loans was an intentional act:
Barney Frank, the Massachusetts Democrat who is chairman of the House Financial Services Committee, said in an interview that the defaults were, in essence, worth it.
“I don’t think it’s a bad thing that the bad loans occurred,” he said. “It was an effort to keep prices from falling too fast. That’s a policy.”
Got that?  It's a policy to intentionally bankrupt people so as to allow banks who have made bad mortgages a chance to avoid their own bankruptcy.
That is, those who made bad decisions as lenders, you get a pass.  Your pain is passed to consumers by intentionally lowering standards for lending beyond the point of safety, on purpose, knowing full well that this will generate a significant number defaults.
This in turn prevents prices from contracting to where you could afford the house, that is, it causes you to overpay.  This in turn causes you to go bankrupt instead of the bank that made the bad loan to the previous owner.  In addition by preventing the house from contracting in price to it's actual sound value it stops other banks who made bad loans from going bust as well.
You, on the other hand, will get foreclosed upon and possibly forced into bankruptcy, all so that the banks who did evil and unsupportable things don't have to take their medicine.
This is "a policy" according to Barney Frank.  It is, in fact, THE OFFICIAL POLICY OF THE US FEDERAL GOVERNMENT.
Feeling sore yet?
Believe me, they're just getting started.
The Dollar's depreciation is intentional.  If economic activity picks up (it hasn't yet, despite what you're told) this will instantaneously echo into oil prices.  How badly?  The last time the dollar was here oil was at $150 and gas was aiming for $5/gallon.  We're going back there - or higher.  There are people who claim the federal government's official desire is to see the dollar index (/DX) at forty or lower, a devaluation of another fifty percent, and a 2/3rds devaluation from just a few years ago.
This of course will triple the cost of imports from that point of a few years ago.  It will boost the relative wages of those in other nations by 300%, while cutting your relative wages by 2/3rds, again, all referenced to just a few years back.
Can you survive this without becoming destitute?
One in six American households currently receive food stamps and according to a report by Deutche Bank 40% of homes will be under water on their mortgage by 2011.  The government added $1.7 trillion to the public debt last fiscal year (ending September 30th), taking in $2.1 trillion in taxes and fees.  The claim is made that the "budget" was $3.1 trillion; in reality, $3.8 trillion was spent, an "overage" of $700 billion or 22%.  (As an aside the CBO claims the "deficit" was significantly smaller but they ignore the off-balance-sheet games; tax receipts and the addition of debt are hard numbers, both published, and expose the chicanery.  Performed by a private business this would be a felony violation of securities laws and result in jail time; our government lies like this daily.)
People claim that "inflation" of the money supply allows debt to be paid off easier but this is only true if your wages remain constant in inflation-adjusted terms while prices are stable, or wages keep up with prices.  The problem is that they haven't since the turn of the century.  Per-capita income has risen only 3.2% (in total, not annually!) since 2000 in inflation-adjusted terms, and this presumes you believe government inflation numbers averaging about 2.5% annually.  How does that square with your grocery bill?  Your electric bill?  The cost of medical insurance and care, college tuition, homeowners insurance or a trip to the dentist?
Remember too that these "per capita income numbers" include those who made billions bilking Americans out of their homes during the bubble years.  Subtract those "outliers" back out and middle class America really got rooked at paycheck time.
If you think this is all the punishment you're due, you're deluded.  Taxes are going to go up.  Way up.  They have to, in order to close the gap between income and outgo for the government.  Guess who will get that bill?  The mirror is right over on the bathroom wall if you're having trouble identifying the sucker.....  This of course will further squeeze that so-called "income" you once had - if you keep your job.
Just remember folks, as you are saying "please sir, would you do that to me again" that you've asked for this.  You bought into the "ownership society" and demanded that everyone be able to have a house - whether they could afford one or not.  This in turn drove up the price (supply and demand 'yanno) until people couldn't afford to pay, at which point the banks simply stopped caring about anything resembling sustainable lending.
When that blew up instead of forcing the people who made bad bets (especially those fat cat bankers) to take their medicine the government decided instead to screw you again, this time with a formal policy of allowing bad loans to be intentionally made by the FHA.  So says Barney Frank.
The surprise here is that given the rank admissions coming from both Fraud Street and our Congressfolk we have yet to see any sort of real protest.
Why not?
With over 20 million lost jobs in the last decade and 8.2 million since 2007 you'd think those folks would band together and descend on Washington DC to demand that the idiocy stop, refusing to leave until Congress resigns en-masse.  Have they?  Nope.  Why not?  Good question - are we really that dumb?  Does America truthfully not realize what is being done to them? 
I guess not.
You're being shorn and then violated America - repeatedly.
Yet America's slumber continues, as does my amazement.

Will the dollar fall? Not if you're a tight ass!


Saturday, October 10, 2009

Gasps as Obama awarded Nobel Peace Prize

OSLO (AP) - The announcement drew gasps of surprise and cries of too much, too soon. Yet President Barack Obama won the Nobel Peace Prize on Friday because the judges found his promise of disarmament and diplomacy too good to ignore.

The five-member Norwegian Nobel Committee - four of whom spoke to The Associated Press, said awarding Obama the peace prize could be seen as an early vote of confidence intended to build global support for the policies of his young administration.

They lauded the change in global mood wrought by Obama's calls for peace and cooperation, and praised his pledges to reduce the world stock of nuclear arms, ease U.S. conflicts with Muslim nations and strengthen its role in combating climate change.

"Some people say - and I understand it - 'Isn't it premature? Too early?' Well, I'd say then that it could be too late to respond three years from now," Thorbjoern Jagland, chairman of the Norwegian Nobel Committee, told the AP. "It is now that we have the opportunity to respond - all of us."

Jagland said the committee whittled down a record pool of 205 nominations and had "several candidates until the last minute," but it became more obvious that "we couldn't get around these deep changes that are taking place" under Obama.

Obama said he was surprised and deeply humbled by the honor, and planned to travel to Oslo in December to accept the prize.

"Let me be clear: I do not view it as a recognition of my own accomplishments, but rather as an affirmation of American leadership on behalf of aspirations held by people in all nations," he said at the White House. "To be honest, I do not feel that I deserve to be in the company of so many of the transformative figures who've been honored by this prize."

Obama will donate the $1.4 million cash award that comes with the prize to charity.

Archbishop Desmond Tutu of South Africa, who won the prize in 1984, said the decision showed that great things are expected from Obama and "wonderful recognition" of his effort to reach out to the Arab world after years of hostility.

"It is an award that speaks to the promise of President Obama's message of hope," Tutu said.

Many were shocked by the unexpected choice so early in a presidency that began less than two weeks before the Feb. 1 nomination deadline for the prize and has yet to yield concrete achievements in peacemaking.

"So soon? Too early. He has no contribution so far. He is only beginning to act," said former Polish President Lech Walesa, who won the peace prize in 1983.

Some around the world objected to the choice of Obama, who still oversees wars in Iraq and Afghanistan and has launched deadly counterterrorism strikes in Pakistan and Somalia.

Jagland told AP that while the war in Afghanistan was a concern, the Obama administration "immediately started to reassess the strategy."

"That itself is important, because when something goes wrong, then you need to ask yourself why is it going wrong," he said.

Obama said he was working to end the war in Iraq and "to confront a ruthless adversary that directly threatens the American people and our allies" in Afghanistan, where he is seriously considering increasing the number of U.S. troops on the ground and asking for help from others as the war enters its ninth year.

Taliban spokesman Qari Yousef Ahmadi in Afghanistan condemned the Nobel committee's decision, saying Obama had only escalated the war and had "the blood of the Afghan people on his hands."

Iranian Foreign Minister Manouchehr Mottaki called the Nobel decision "hasty."

"The appropriate time for awarding such a prize is when foreign military forces leave Iraq and Afghanistan and when one stands by the rights of the oppressed Palestinian people," he was quoted as saying by the Mehr news agency.

Aagot Valle, a lawmaker for the Socialist Left party who joined the Nobel committee this year, said she hoped the selection would be viewed as "support and a commitment for Obama."

"And I hope it will be an inspiration for all those that work with nuclear disarmament and disarmament," she told AP in a rare interview. Members of the committee usually speak only through its chairman.

The peace prize was created partly to encourage ongoing peace efforts, but Obama's efforts are at far earlier stages than those of past winners, and the committee acknowledged they may not bear fruit at all.

"If everything goes wrong, then one cannot say that this was because of Barack Obama," Jagland said. "It could be that it is because of us, all the others, that didn't respond. But I cannot exclude that Barack Obama also can contribute to the eventual failure."

In Europe and much of the world, Obama is praised for bringing the U.S. closer to mainstream global thinking on such issues as climate change and multilateralism. A 25-nation poll of 27,000 people released in July by the Pew Global Attitudes Project found double-digit boosts to the percentage of people viewing the U.S. favorably in countries around the world. That indicator had plunged across the world under President George W. Bush.

The award appeared to be at least partly a slap at Bush from a committee that harshly criticized Obama's predecessor for his largely unilateral military action in the wake of the Sept. 11 terror attacks.

"Those who were in support of Bush in his belief in war solving problems, on rearmament, and that nuclear weapons play an important role ... probably won't be happy," said Valle.

At home, the picture is more complicated. Obama is often criticized by his political opponents as he attempts to carry out his agenda - from government spending to health care to Afghanistan.

Republican Party Chairman Michael Steele said Obama won because of his "star power" rather than meaningful accomplishments.

"The real question Americans are asking is, 'What has President Obama actually accomplished?"' Steele said.

Drawing criticism from some on the left, Obama has been slow to bring troops home from Iraq and the real end of the U.S. military presence there won't come until at least 2012.

The Nobel committee said it paid special attention to Obama's vision of a nuclear-free world, laid out in a speech in Prague and in April and at the United Nations last month.

Former Peace Prize winner Mohamed ElBaradei, director general of the International Atomic Energy Agency in Vienna, said Obama has already provided outstanding leadership on nuclear non-proliferation.

"He has shown an unshakable commitment to diplomacy, mutual respect and dialogue as the best means of resolving conflicts," ElBaradei said.

In July talks in Moscow, Obama and Russian President Dmitry Medvedev agreed that their negotiators would work out a new limit on delivery vehicles for nuclear warheads of between 500 and 1,100. They also agreed that warhead limits would be reduced from the current range of 1,700-2,200 to as low as 1,500. The U.S. now has about 2,200 such warheads, compared to about 2,800 for the Russians.

There has been no word on whether either side has started to act on the reductions.

Obama also has tried to restart stalled Mideast talks with no progress yet reported.

In the Gaza Strip, leaders of the radical Hamas movement said they had heard Obama's speeches on better relations with the Islamic world but had not been moved.

"We are in need of actions, not sayings," Prime Minister Ismail Haniyeh said. "If there is no fundamental and true change in American policies toward the acknowledgment of the rights of the Palestinian people, I think this prize won't move us forward or backward."

Obama has said that battling climate change is a priority. Yet the U.S. seems likely to head into crucial international negotiations set for Copenhagen in December with Obama-backed legislation still stalled in Congress.

Unlike the other Nobel Prizes, which are awarded by Swedish institutions, the peace prize is given out by the five-member committee elected by the Norwegian Parliament. Like the Parliament, the panel has a leftist slant, with three members elected by left-of-center parties and two right-of-center members. Jagland said the decision to honor Obama was unanimous.

The secretive committee declined to say who nominated Obama. In Nobel tradition, nominations are kept secret for 50 years, unless those making the submissions go public about their picks. This year's nominations included Colombian activist Piedad Cordoba, Afghan woman's rights activist Simi Samar and Denis Mukwege, a physician in war-torn Congo who opened a clinic to help rape victims.

Nominators for the prize are broad and include former laureates; current and former members of the committee and their staff; members of national governments and legislatures; university professors of law, theology, social sciences, history and philosophy; leaders of peace research and foreign affairs institutes; and members of international courts of law.

Obama is the third sitting U.S. president to win the award: President Theodore Roosevelt won in 1906 and President Woodrow Wilson was awarded the prize in 1919.

In his 1895 will, Alfred Nobel stipulated that the peace prize should go "to the person who shall have done the most or the best work for fraternity between the nations and the abolition or reduction of standing armies and the formation and spreading of peace congresses."
List of Nobel Peace Prize winners since 1980
- 2009: U.S. President Barack Obama
- 2008: Martti Ahtisaari
- 2007: Intergovernmental Panel on Climate Change, Al Gore
- 2006: Muhammad Yunus, Grameen Bank
- 2005: International Atomic Energy Agency, Mohamed ElBaradei
- 2004: Wangari Maathai
- 2003: Shirin Ebadi
- 2002: Former U.S. President Jimmy Carter
- 2001: United Nations, Kofi Annan
- 2000: Kim Dae-jung
- 1999: Medecins Sans Frontieres
- 1998: John Hume, David Trimble
- 1997: International Campaign to Ban Landmines, Jody Williams
- 1996: Carlos Filipe Ximenes Belo, Jose Ramos-Horta
- 1995: Joseph Rotblat, Pugwash Conferences on Science and World Affairs
- 1994: Yasser Arafat, Shimon Peres, Yitzhak Rabin
- 1993: Nelson Mandela, F.W. de Klerk
- 1992: Rigoberta Menchu Tum
- 1991: Aung San Suu Kyi
- 1990: Mikhail Gorbachev
- 1989: The 14th Dalai Lama
- 1988: U.N. Peacekeeping Forces
- 1987: Oscar Arias Sanchez
- 1986: Elie Wiesel
- 1985: International Physicians for the Prevention of Nuclear War
- 1984: Desmond Tutu
- 1983: Lech Walesa
- 1982: Alva Myrdal, Alfonso Garcia Robles
- 1981: Office of the U.N. High Commissioner for Refugees
- 1980: Adolfo Perez Esquivel

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Friday, October 9, 2009

You'll Look Like Poo - Miley Cyrus Parody by Venetian Princess








Court: Joe Frazier can't sue Oneida Nation

NEW YORK (AP) - A federal appeals court ruled Thursday that former heavyweight boxing champion Joe Frazier cannot sue the Oneida Indian Nation over the use of his picture to promote a fight at a casino because of the tribe's sovereign status.
The 2nd U.S. Circuit Court of Appeals in Manhattan said Thursday that Frazier, listed in court records with the alias "Smokin' Joe," will have to take his dispute with the operator of the Turning Stone Casino to the tribe's own court.
The appeals court noted that the tribe's trial and appellate court system includes two former New York Court of Appeals judges.
Frazier sued the tribe in 2002, saying it used his picture without permission to promote a June 2001 boxing match between his daughter, Jacqui Frazier-Lyde, and the daughter of Muhammad Ali, Laila Ali. Laila Ali won the bout.
Frazier attended the fight, where he saw an allegedly unauthorized picture of himself, his daughter, and Muhammad Ali at a blackjack table in the casino, according to court records.
Frazier's lawsuit had sought $7 million in compensatory damages and $9 million in punitive damages, saying he suffered "extreme emotional damage" from the photos.
According to the lawsuit, Frazier has never let anyone use his likeness to promote commercial gambling. It said the casino and tribe "knowingly, intentionally, maliciously and unjustly profited from their improper commercial advertising."
A lower court judge had ruled that Frazier could not sue the tribe in federal court because of the tribe's sovereign status. The appeals court agreed.
Leslie R. Wolff, Frazier's business and personal manager, said he will probably advise his client to drop the case.
"In all reality, he's probably just going to let it die at this stage," Wolff said. "We're all getting older. It was quite a while ago. Joe was not a client of mine at that time."
Mark Emery, a spokesman for the Oneida Indian Nation, said: "When individuals choose to fight rather than negotiate meaningful resolutions, they risk having no resolution at all."

Sunday, October 4, 2009

Detroit: The Death — and Possible Life — of a Great City

If Detroit had been savaged by a hurricane and submerged by a ravenous flood, we'd know a lot more about it. If drought and carelessness had spread brush fires across the city, we'd see it on the evening news every night. Earthquake, tornadoes, you name it — if natural disaster had devastated the city that was once the living proof of American prosperity, the rest of the country might take notice. (See pictures of the remains of Detroit.)

But Detroit, once our fourth largest city, now 11th and slipping rapidly, has had no such luck. Its disaster has long been a slow unwinding that seemed to remove it from the rest of the country. Even the death rattle that in the past year emanated from its signature industry brought more attention to the auto executives than to the people of the city, who had for so long been victimized by their dreadful decision-making.

By any quantifiable standard, the city is on life support. Detroit's treasury is $300 million short of the funds needed to provide the barest municipal services. The school system, which six years ago was compelled by the teachers' union to reject a philanthropist's offer of $200 million to build 15 small, independent charter high schools, is in receivership. The murder rate is soaring, and 7 out of 10 remain unsolved. Three years after Katrina devastated New Orleans, unemployment in that city hit a peak of 11%. In Detroit, the unemployment rate is 28.9%. That's worth spelling out: twenty-eight point nine percent.

If, like me, you're a Detroit native who recently went home to find out what went wrong, your first instinct is to weep. If you live there still, that's not the response you're looking for. Old friends and new acquaintances, people who confront the city's agony every day, told me, "I hope this isn't going to be another article about how terrible things are in Detroit."

It is — and it isn't. That's because the story of Detroit is not simply one of a great city's collapse. It's also about the erosion of the industries that helped build the country we know today. The ultimate fate of Detroit will reveal much about the character of America in the 21st century. If what was once the most prosperous manufacturing city in the nation has been brought to its knees, what does that say about our recent past? And if it can't find a way to get up, what does that say about our future?

My City of Ruins
On my trip to Detroit, I took a long drive around my hometown. Downtown, I visited a lovely new esplanade along the riverfront, two state-of-the-sport stadiums and a classic old hotel restored to modern luxury. In leafy Grosse Pointe, I saw handsome houses anyone would want to live in (and, thanks to the crash of the auto business, available at prices most Americans haven't seen in decades). At the General Motors Technical Center, in the industrial suburb Warren, the parking lots were mostly empty — an awful lot of engineers have been thrown out of work — but the survivors showed me some pretty impressive technology. I liked the cars that "talked" to other cars, making accidents all but impossible, and I was especially impressed by a prototype Chevy fueled entirely by hydrogen. Hydrogen! (See pictures of Detroit's beautiful, horrible decline.)

But to a native, downtowns and suburbs, even suburbs hurting from an economic calamity, are not the real Detroit. The Detroit I both wanted to see and was afraid to see was the city itself, the elm-lined streets of fond memory where my friends and I grew up and went to school and lived idyllic 1950s lives, the place that America once knew as the Arsenal of Democracy.

The neighborhood where I lived as a child, where for decades orderly rows of sturdy brick homes lined each block, is now the urban equivalent of a boxer's mouth, more gaps than teeth. Some of the surviving houses look as if the wrecker's ball is the only thing that could relieve their pain. On the adjacent business streets, commercial activity is so palpably absent you'd think a neutron bomb had been detonated — except the burned-out storefronts and bricked-over windows suggest that something physically destructive happened as well. (See the most important cars of all time.)

Similar scenes are draped across most of the city's 138 sq. mi., yielding a landscape that bears a closer relation to a postapocalyptic nightmare than to the prosperous and muscular place I remember. The City of Homeowners, some called it, a city with endless miles of owner-occupied bungalows and half-capes and modest mock Tudors that were the respectable legacy of five decades of the auto industry's primacy in the American economy and Detroiters' naive faith that the industry would never run out of gas.

But it did. Detroit fell victim not to one malign actor but to a whole cast of them. For more than two decades, the insensate auto companies and their union partners and the elected officials who served at their pleasure continued to gun their engines while foreign competitors siphoned away their market share. When this played out against the city's legacy of white racism and the corrosive two-decade rule of a black politician who cared more about retribution than about resurrection, you can begin to see why Detroit careened off the road.

Who Killed Detroit?
Most of us thought Detroit was pretty wonderful back in the '50s and early '60s, its mighty industrial engine humming in top gear, filling America's roads with the nation's signifying product and the city's houses and streets with nearly 2 million people. Of course, if you were black, it was substantially less wonderful, its neighborhoods as segregated as any in America. On the northwest side, not far from where I grew up, a homebuilder had in the 1940s erected a six-foot-high concrete wall, nearly half a mile long, to separate his development from an adjacent black neighborhood. Still, white Detroit believed that the riots that ravaged Los Angeles in 1965 and a number of other cities the following summer would never burn across our town. Black people in Detroit, enlightened whites believed, had jobs and homes, and even if those homes were on the other side of an apartheid wall, their owners had a stake in the city.

Some did, but too many others, invisible to white Detroit, did not. The riots that scorched the city in July 1967, leaving 43 people dead, were the product of an unarticulated racism that few had acknowledged, and a self-deceiving blindness that had made it possible for even the best-intentioned whites to ignore the straitjacket of segregation that had crippled black neighborhoods, ill served the equally divided schools and enabled the casual brutality of a police force that was too white and too loosely supervised. (See pictures of 50 years of Motown.)

The '67 riots sent thousands of white Detroiters fleeing for the suburbs. Even if black Detroiters with financial resources wished to follow, they could not: the de facto segregation was virtually de jure in most Detroit suburbs. One suburban mayor boasted, "They can't get in here. Every time we hear of a Negro moving in ... we respond quicker than you do to a fire."

Soon Detroit became a majority-black city, and in 1973 it elected its first black mayor. Coleman Young was a talented politician who spent much of his 20 years in office devoting his talents to the politics of revenge. He called himself the "MFIC" — the IC stood for "in charge," the MF for exactly what you think. Young was at first fairly effective, when he wasn't insulting suburban political leaders and alienating most of the city's remaining white residents with a posture that could have been summed up in the phrase Now it's our turn. But by his third term, Young was governing more by rhetoric than by action. These were the years of a local phenomenon known as Devil's Night, a nihilistic orgy of arson that in one especially explosive year saw 800 houses burn to the ground in 72 hours. Violent crime soared under Young. The school system began to cave in on itself. When jobs disappeared with the small businesses boarding up their doors and abandoning the city, the mayor seemed to find it more useful to bid the business owners good riddance than to address the job losses. Detroit was dying, and its mayor chose to preside over the funeral rather than find a way to work with the suburban and state officials who now detested him every bit as much as he had demonized them.
When Young finally left office in 1993, he bragged that Detroit had achieved a "level of autonomy ... that no other city can match." He apparently didn't care that it was the autonomy of a man in a rowboat, in the middle of the ocean, without oars.

But Young isn't the only politician to blame. In 1956, when I was 8 years old, my Congressman was John D. Dingell. There are people in southeastern Michigan who are still represented by Dingell, the longest-serving member in the history of the House of Representatives. "The working men and women of Michigan and their families have always been Congressman Dingell's top priority," his website declares, and I suppose he thinks he has served them well — by resisting, in succession, tougher safety regulations, more-stringent mileage standards, relaxed trade restrictions and virtually any other measure that might have forced the American automobile industry to make cars that could stand up to foreign competition. (See the most exciting cars of 2010.)

By so ably satisfying the wishes of the auto industry — by encouraging southeastern Michigan's reliance on this single, lumbering mastodon — Dingell has in fact played a signal role in destroying Detroit. He was hardly alone; if you wanted to get elected in southeastern Michigan, you had to support the party line dictated by the Big Four — GM, Ford, Chrysler and their co-conspirator the United Auto Workers. Anything that might limit the industry's income was bad for the auto industry, and anything bad for the auto industry was deemed dangerous to Detroit.

The UAW had once been the most visionary of American unions. As early as the 1940s, UAW president Walter Reuther was urging the auto companies to produce small, inexpensive cars for the average American. In 1947 and '48 the union even offered to cut wages if the Big Three would reduce the price of their cars. But by the early 1980s, the UAW had entered into a nakedly self-interested pact with the auto companies. After the union's president joined GM's chief congressional lobbyist to defeat a tougher mileage standard in 1990, the lobbyist declared that "we would not have won without the UAW." It was, he said, "one of the proudest days of my life."

The union really can't be blamed for pushing for fabulous wages and lush benefits for its members — that game required two players, and the automakers knew only how to say yes. But the union leadership's fatal mistake was insisting that workers with comparable skills and comparable seniority be paid comparable wages, irrespective of who employed them. If a machinist at a prosperous GM deserved $25 an hour, so did a machinist who worked for a barely profitable Chrysler or for a just-holding-its-own supplier plant that made axles or wheels or windshield wipers.

This defiant inattention to market reality not only placed the less healthy firms in peril, but by pricing labor so uniformly high, it also closed off Detroit to any possible diversification of its industrial base. When the automakers' inattention to engineering, style and quality caused them to crash into a wall of consumer indifference, there was no other industry that could step forward and employ workers who would have been thrilled to make even a fraction of what they once earned. Now nearly 1 in 3 Detroit residents is out of work — and not many of the unemployed have a prayer of finding a job anytime soon.

Reviving Motown
If white racism, Coleman Young and a delusional dependence on the auto industry's belief in its own virtues put Detroit where it is today, what — if anything — can pull this tragic city out of its death spiral?
You could do worse than to begin with some form of regional government. During Young's reign and for many years thereafter, the possibility of city-suburban cooperation — which is to say, black-white cooperation — was close to nil. The black city didn't want white suburbanites telling it what to do, and white suburbanites had no interest in assuming the burden of a black city. (Read a TIME postcard from Detroit.)
L. Brooks Patterson, the long-serving and exceptionally able chief executive of suburban Oakland County, a prosperous community that borders Detroit to the north, represents the latter view well. "They say, 'As Detroit goes, so goes Oakland County,' " Patterson said a few weeks ago. "Not true!" He apparently believes that Eight Mile Road, the fabled thoroughfare that defines Detroit's northern border, is an impermeable membrane insulating his county from the city's ills. But Patterson knows that Oakland's prized AAA bond rating is in peril because the rating agencies are mindful of the county's proximity to Detroit to the south and Flint to the north. A downgrade could cost his constituents millions of dollars, and as the situation in Detroit deteriorates, he and his counterparts in adjacent counties will have no choice but to seek common solutions.
For its part, Detroit must address the fact that a 138-sq.-mi. city that once accommodated 1.85 million people is way too large for the 912,000 who remain. The fire, police and sanitation departments couldn't efficiently service the yawning stretches of barely inhabited areas even if the city could afford to maintain those operations at their former size. Detroit has to shrink its footprint, even if it means condemning decent houses in the gap-toothed areas and moving their occupants to compact neighborhoods where they might find a modicum of security and service. Build greenbelts, which are a lot cheaper to maintain than untraveled streets. Encourage urban farming. Let the barren areas revert to nature.

Most crucially, the entire region has to realize that defining itself solely by the misperceived needs of a single industry has left all of southeastern Michigan dazed and bleeding. And yet the conditions for resetting that economic model couldn't be more favorable. The collapse of the UAW's prohibitive wage scale, coupled with the vast unemployment, is turning what was once the nation's most expensive labor market into one of the cheapest. For the first time since Henry Ford offered $5 a day to the men who assembled the Model T back in 1914, Detroit is open to new industry.

America isn't so keen on national industrial policy. But in Detroit's past, you can find an idea for its future — and the nation's. Back in the '50s, the Federal Government began investing what would eventually reach half a trillion dollars in what became the interstate highway system. You could have considered that an incredible subsidy for the auto industry — which it was — but it was also an investment in the nation's future.

It's an adaptable model. The fuel-cell technology that dazzled me at the GM Tech Center is less about autos than it is about energy — energy, as hydrogen, that exists in every molecule of water. What's to stop us now from turning Detroit — its highly trained engineering talent, its skilled and unskilled workforce desperate for employment, its underutilized production facilities — into the Arsenal of the Renewable Energy Future?
If we did, Detroit could go back to building something America needs. As a nation, we could prove that we can still make things. And while we're at it, we could regenerate not just a city but our sense of who we are.

Minnesota - Nick Coleman: Need is great and growing at food shelves

Nick Coleman: Need is great and growing at food shelves

Unprecedented demand calls for unprecedented efforts to meet it.
Last update: October 3, 2009 - 4:57 PM

If you wonder whether the economy is growing fast enough to end the recession, come to the food shelf at Catholic Charities on Franklin Avenue in Minneapolis: Business is booming.
"We've never seen anything like this," says Jim Durdle, emergency services manager at the Branch I of Catholic Charities. "What we've seen this fall? Well, let me just say we never thought it could happen. We've never seen these numbers before."
The number of south Minneapolis households relying on the food shelf to stretch tight budgets to the end of each month nearly has doubled during the past year. Three hundred families visited the food shelf in September 2008. This September, there were almost 600 separate households who sought help. And with unemployment expected to rise into next year, the numbers are not going to go down.
As was reported Tuesday in the Star Tribune, there are worrisome signs that the number of Minnesotans sinking into poverty and needing to rely upon food stamps and food shelves may be about to explode:
Visits to food shelves exceeded 2 million for the first time last year, the number of households using food stamps shot up by 30 percent (one in 12 Minnesotans uses food stamps), and the full effect of growing joblessness, homelessness, hunger and government budget cuts are yet to be calculated.
Wednesday's news was more disturbing:
The number of Minnesota kids living in poverty increased about 25 percent between 2001 and last year, and the number of poor children is thought to be rising rapidly now as layoffs continue, unemployment benefits run out and an economic recovery still seems months or even years away. There may be as many as 180,000 Minnesota children living in poverty (four times the capacity of the Twins' new stadium), according to the Children's Defense Fund. And if that number hits 200,000 -- twice the number of poor children as there were eight years ago -- few will be surprised.

Whatever the number turns out to be, here's a safe bet: The kids are hungry.
And here's a scary thing: Many of their parents are working harder than ever.
"Most of the families who come here are working," says Arlene Chosa, food shelf coordinator at Branch I for 16 years. "It's just that they can't make it through the whole month. They are getting fewer hours or less pay, and the cost of everything has gone up. Then, of course, there are the people who have recently been laid off."
Research has shown, Durdle says, that even with the help of food shelves and food stamps, many of the working poor are forced to skip meals.
I spoke with a woman named Carmen who was visiting the food shelf for the first time and filling out a "shopping list" of items she was requesting while her children waited. Carmen's husband, a landscaper, has had little work this fall, and much of the family's income has been spent on medicine for a sick baby.
"We are not that bad off, and the little I get here will help us get by," she said. "I just am hoping to get some things I don't have at home now."
The average client goes home with about 55 pounds of groceries, three or four bags full. More than a ton of food a day is being handed out at this small food shelf, with the monthly total of free food having doubled in the past year from 16,000 pounds in 2008 to 32,000 pounds last month. There is no sign that the needs will decline.
The strains on the social safety net continue to grow: At the Dorothy Day Center in St. Paul (also run by Catholic Charities), almost 600 meals are being served daily, and the shelter is crowded to capacity.

"We're seeing an unprecedented level of demand at our emergency services," says Rebecca Lentz, communications director for Catholic Charities. "It's a 'perfect storm' of troubles," she added, referring to unemployment, government cuts and the weak economy that, in turn, have produced a downturn in private contributions just as the needs have risen. (Donations to Catholic Charities were down 10 percent from the previous period for the year that ended June 30.)
To volunteer, find out how to lead a food drive or contribute cash (each $1 buys $9 worth of food), go to www.cctwincities.org.
Just nine months ago, I reported the recommendations of the Legislative Commission to End Poverty. It had joined a broad coalition of religious groups, including Catholic Charities, to announce a plan to end poverty in Minnesota by 2020. Less than a year later, poverty has made a huge comeback and threatens to overwhelm the anti-poverty forces.
"Everyone has to help," says Lentz. "Everyone has to own their part in this. It's not just 'our' problem or 'their' problem. It's everyone's problem."
Now, more than ever.
Nick Coleman is a senior fellow at the Eugene J. McCarthy Center for Public Policy & Civic Engagement at the College of St. Benedict/St. John's University. He can be reached at nickcoleman@gmail.com.

Nude man accused of pounding on cars on a highway

Nude man accused of pounding on cars on a highway

Published - Oct 02 2009 04:18PM EDT
A man who told officers he was a medical marijuana provider has been arrested for allegedly standing naked in a Colorado highway, pounding on passing cars and spitting at a state trooper. Dustin Robbins, 27, of Westminster, faces 13 counts including indecent exposure, assault and driving under the influence of marijuana.

Robbins was arrested Sept. 25 on U.S. 34 east of Greeley. Witnesses told investigators he was cursing at cars and hitting some.

Two women in their 70s and 80s told deputies a naked man jumped on the hood of their car, broke windows, walked across the roof and jumped off the back. Damage was estimated at $1,200.

Authorities said Robbins spat on the state trooper who arrested him.

Deputies said he told them he was a medical marijuana provider, and they found certificates for medical marijuana but no state provider's license.

State officials said records of licensed providers aren't public.

Robbins is jailed under $50,000 bail. No phone listing could be found for him and it wasn't known if he had a lawyer.

Nearly 1 million fewer people were working in September as compared to August

September Unemployment: ACTUAL LOSS 995k


YOUCH.
Headlines: 263,000 "jobs lost" and unemployment rate up to 9.8%.


That's not good - there goes the "second derivative" argument.
Weekly earnings are also down by $1.54, which is bad news too.

But the Household Data is VASTLY worse than reported.  Here are the month-over-month changes, and they're in the realm of frightening.  (all numbers in thousands)
Civilian Labor Force: 154,879 to 153,617 this month.
Employed: 140,074 down to 139,079 this month.

That's a loss of 995,000 jobs, not 263,000, and the labor force contracted by 1,262,000 people!
The participation rate was absolutely decimated, down 0.6% this last month alone.  The people "not in the labor force" rose by a staggering 1,516,000 in the last month.
The government doesn't count people as "unemployed" who have given up and exited the labor force, but as I have repeatedly noted whether the government counts them or not the corner store owner sure as hell does!

The fact of the matter is that nearly 1 million fewer people were working in September as compared to August; there has been absolutely no improvement in that trend whatsoever.

Market Ticker Forum link 
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Rbarriera, let me do the math since I have an ex-wife:
$140K - 70K (alimony and CS) - 50K (IRS)= 20K and those are conservative numbers
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I am so sick of the "lagging indicator" BS I keep hearing on CNBS... WHERE ARE THE NEW JOBS GOING TO COME FROM???

We have outsourced our manufacturing to cheap labor in India, Vietnam, China, etc... if you are a non-college educated person, what type of jobs are you going to get? You used to be able to get a good job in a factory. After we shipped those jobs out, you could work in construction and make a good living. Now what will take the place of the construction bubble that kept so many employed? Unfortunately, we can't all be Wal-Mart greeters.

I realize that globalization is a complicated topic... but it certainly seems to have been an unqualified disaster for the lower and middle class in America. In fact, it seems as though the middle class itself is becoming an endangered species. You are either part of the financial elite, or you aren't. It's sad, what has happened.
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CHART - Employment Job Losses in various recessions
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My wife's company just got a quote on their health insurance for next year. When the rep starts with the line "I don't have good news" you know you are in trouble. Bottom line: 37% increase. Her company can't afford it either.

Next year is going to be a disaster economically.
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Dino wrote:
My story:

I lost my job back in July due to my boss being completely inept. He let me go due to there not being enough work but I had to watch as he on multiple occasions lost out on contracts due to being too expensive or just plain missing deadlines or meetings. I always told people that I was way to valuable to the company to be let go but it turned out that I was not as valuable as my bosses standard of living. Million dollar house, SUV's, boat etc. His loss.

For the past few months I have made some drastic changes. My unemployment checks amount to $1800 a month before taxes. I've got 4 or so months left plus extensions. I live in the bay area. My strategy:

1. I stopped all discretionary spending. I buy almost nothing. I have friends and the outdoors which are much more valuable than anything I can buy with a couple dollars. I own a car (No payments except insurance and I walk most places so maintenance is low) a pay as you go cell phone ($15 buck initially plus whatever I use minutes wise) an internet connection and a gym/yoga membership (to keep me sane). My total expenses for the month are maybe $1200 a month with rent and food. $1800 - $1200 = $600 to save a month. My friends have also been saying that I am actually looking better and feeling happier now than I was before. I have to agree.

2. Right now I am working for free for anyone who needs help. I know that eventually someone will see the value in me and offer me a position. I am also willing to work almost anywhere. Send me to remote Canada or war torn Africa. If times are tough I will be tougher.

I guess I am lucky in that I am 25, healthy, no debt, an excellent college degree, no dependents and a good friend/family network.
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NILF defined:
BLS wrote..
Not in the labor force (NILF). A person who did not work last week, was not temporarily absent from a job, did not actively look for work in the previous 4 weeks, or looked but was unavailable for work during the reference week; in other words, a person who was neither employed nor unemployed.


If population of "working people" goes up 1.8 million a year they are all "NILF" until they search for a job. They are then either employed or unemployed.

If the NILF number is RISING then the absorption rate for these new people coming into the workforce is NEGATIVE.
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Chainlink wrote:
As an underemployed contractor, I can vouch that gross is down about 50% to 60% the last two years, and my income is down about 75% or so. Not getting by, owe a bunch of money. Starting to climb out of the hole, however, since there are less in my field remaining. Oh When, Oh When will the South Florida statistic come out, that we've been in a DEPRESSION since '07? Even averaged statewide, we have to have crossed the 25% down threshold years ago.

US Unemployment Now Lasts Longer Than Benefits-Chart of Day

Oct. 2 (Bloomberg) -- For the first time, the average amount of time it takes fired employees to find a new job exceeds the length of their standard unemployment benefits.

The CHART OF THE DAY shows the average duration of unemployment is now 26.2 weeks, longer than the 26 weeks of state benefits normally provided to workers who lose their jobs. It’s the first time that has occurred since the Bureau of Labor Statistics began keeping records in 1948.

The jobless rate rose to 9.8 percent in September, while payrolls fell by 263,000, a Labor Department report showed today in Washington.

Congress has extended unemployment benefits twice -- first in July 2008 and then as part of the stimulus bill signed in February. Currently, the unemployed are eligible for a total of 46 weeks of benefits, and those in states where the unemployment rate is more than 6 percent are eligible for 59 weeks.

Those additional benefits expire at the end of the year, and about 1.3 million people will exhaust them by then, according to the National Employment Law Project. An extension of benefits, which was passed by the House of Representatives, is being held up in the Senate by lawmakers who object because their states would be excluded from the plan.

The purple line on the chart shows 5.4 million people have now been out of work for at least 27 weeks, representing 35.6 percent of the total number of unemployed, the most since the agency began keeping statistics in 1948.


Last Updated: October 2, 2009 14:28 EDT
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