Obama proposes pay freeze for federal workers

Obama proposes pay freeze for federal workers (Reuters) – President Barack Obama proposed a two-year freeze on Monday on the pay of federal workers and vowed to work with Republicans to cut the ballooning U.S. budget deficit. The pay freeze is part of an effort by Obama to push back against Republicans, who have labeled the president and his Democrats big spenders while taking aim at his policies such as an $814 billion stimulus package and healthcare reform. The White House estimates the worker pay freeze would save about $2 billion in the current 2011 fiscal year and $28 billion over five years. It would require congressional approval. Republicans welcomed the pay freeze but it drew silence from most top Democrats. Obama said both Republicans and Democrats faced a challenge "to get federal spending under control and bring down the deficits that have been growing for most of the last decade." But he warned that an overly abrupt reduction in federal spending could harm the fragile economic recovery.
 

Servicer-Driven Foreclosures: The Perfect Crime? – Yves Smith – As much as I’ve seen a lot of financial services industry misconduct at close range, sometimes even a cynic like me is not prepared for how bad things can be. And mortgage abuse is turning out to be one of those areas. I’ve been in contact for over the last six months with attorneys involved in foreclosure defense. Unlike the foreclosure mills, which seem to coin money, the attorneys on this front are either laboring pro bono or making considerably less than they could in other lines of work. They also can back up their views with depositions and trial transcripts.  One thing they stress is that a significant number of their clients facing foreclosure has made every single mortgage payment. . Read that again. Now how can that be? How can that square with the banks’ assertion that in every instance, their foreclosures were warranted, that the borrower was hopelessly behind? It’s actually very simple. It’s called servicing errors and fraud. And whether by mistake or design, when a borrower gets caught in the servicer hall of mirrors of compounding fees and charges, there is no way to appeal and pretty much no way out.

 

Shocking Video Evidence of "Consumer Greed" – And more examples of "consumer greed" here: Exhibit B, Exhibit C, Exhibit D, and Exhibit E.   Next time you hear somebody talk about "corporate greed" or about how greedy corporations are only concerned with profits and their "bottom lines," or that corporations "put profits before people," etc. show them these shocking examples of money-grubbing, greedy consumers who seem only concerned about one thing: their household’s bottom line, and they are so greedy that they’ll even "put low prices before people" as they trample one another to enter Target and Wal-Mart on Black Friday to snatch up low-priced items before others do.       
 
Being Happy in a Sad Place – In these quantitatively grim times, with unemployment high and growth low, the Federal Reserve Bank of San Francisco has made something of a (small) cottage industry of examining existential questions, not the least what makes us happy, sad, and perhaps suicidal. So the San Francisco Fed released a working paper in September in which three economists argue that the rich are happier than the less rich, that wealthy nations have higher levels of satisfaction than less wealthy ones, and that as national economies grow, citizens tend to become happier. This happiness trend knows no boundary of nation and culture — happiness is related to per capita gross domestic product in 69 nations. And fast-growing societies tend to be happier than stagnant nations, even if the latter have a higher standard of living.
 

Credit Market Stress Intensifying: Corporate, High Yield Issuance Tanked in November – Yves Smith – The US stock markets are harboring the fond notion that the sovereign-bank debt pile-up in Europe has no real implications across the pond, no doubt out of professional participants’ hope to retain solid gains thorugh year-end bonus setting. The debt markets are saying otherwise. Credit market risk aversion typically precedes a stock market correction, but bond markets can also send false positives.  What is noteworth is how pronounced the shift in sentiment was. From Bloomberg: Issuance has slumped 31 percent since Nov. 15, compared with the same period a year earlier, after surging 34 percent in the first half of the month, according to data compiled by Bloomberg. Plunging returns on debt of borrowers from France’s Credit Agricole SA to Bentonville, Arkansas-based Wal-Mart Stores Inc. are dragging bonds to a 1.08 percent loss in November, Bank of America Merrill Lynch index data show. And note that the jitteriness isn’t just for high yield paper, but across the board.

The Merkel crash – So what’s really behind the spike in Spanish government bond yields on Monday? How about this: because of Angela Merkel’s European Stability Mechanism the market is finally being being forced to price in default risk for eurozone countries. Simple eh? Harvinder Singh of RBS thinks so. Introducing the Merkel crash: The market is correct. This is the Merkel crash we have been outlining. If you think a country will get a high coupon for new issuance in H2-13 then it is right to see the sovereign weaker right now. Then the self-fulfilling nature of the crisis starts. For example, SPGB 10y is at 5.4% now from 4% in October. That makes the legwork much harder for Spain. We see 10y spreads at 300bp this week and then the market will test 450bp where the repo haircuts kick-in. Italy is expected to get dragged out with Spain and there should be new highs in spreads in core EMU too. We expect some flight to quality to Bunds but the fact that even German debt trades poorly reflects the fact that one way or another Germany will end up paying more.

Endgame – Peripheral eurozone bond yields spiked yesterday, as investors fear default of Greece, Ireland and Portugal; the euro continued its decline against the dollar; European Commission reduces growth forecast for eurozone, and says Spain will not hit deficit target, and must do more deficit cutting; Igantio Torreblanca blames German politics for this mess; the Greek loan will be extended to seven and a half years, as EU recognises that Greece can’t pay, won’t pay; Paul Krugman says that Ireland is insolvent at an interest rate of 5.8%; Peter Boone and Simon Johnson paint four eurozone endgame scenarios; Marshall Auerback takes a look at the role of German banks in the Irish crisis; Eurointelligence, meanwhile, has updated its table of 10-year bond yields to include a much larger number of troubled eurozone countries: This is no longer a Greek and Irish crisis. [more]

Can the eurozone afford its banks? – BBC inteview  Jim O’Neill, probably the most influential thinker at Goldman Sachs (as current head of its asset management division and erstwhile chief economist), has this morning written that "European Monetary Union (EMU) will probably survive, but it is likely to remain very messy". Which is hardly a ringing endorsement by the world’s most powerful investment bank of the most ambitious economic and financial project in Europe of our age.And, let us not forget, Goldman Sachs is not famous for issuing public statements that rile the world’s most powerful governments – which tend to be its customers.

If Ireland Doesn’t Take The Bailout . . . So a week ago as I write this, the Irish formally asked for a bailout from the European Union, acting in concert with the International Monetary Fund and the British government. And now, a week after that request, the EU finance ministers just approved the bailout of the Republic of Ireland——however . . . However, in those seven days in between, a serious shitstorm broke out in Ireland—it has been one hell of a week, over there in the Emerald Isle. And though the bailout has been approved by the EU finance drones, we still do not have an approval from the most important player of them all: The Irish people. Let’s recap:

Did New Rules Worsen Pay Situation? – A study prepared for an influential shareholder group says rule changes meant to revamp Wall Street’s pay culture have been negative, concluding that pay practices at six U.S. banks and securities firms have "worsened" since the financial crisis. The report, set to be released Tuesday and commissioned by the Council of Institutional Investors, which represents about 130 pension funds, contends that financial firms still tie too much of their compensation to short-term results and have increased salaries to offset the impact of recent regulatory curbs on pay. "Very little of any real import has changed"

Afghan UN Ambassador’s $4.2 million Manhattan apartment Kabul Press versus Afghan government’s neglect of notorious mountain pass kills hundreds Kabul Press

Food Banks Bracing For End Of Extended Unemployment Benefits – Food banks across the country are watching for the end of federally-funded extended unemployment insurance. "We are bracing for it," said Vicki Escarra, CEO of Feeding America, the nation’s largest domestic hunger-relief charity, in an interview with HuffPost. Escarra said that Feeding America’s 200 member food banks across the country feed nearly six million people every week.  "I can assure you, if these unemployment insurance benefits are not reinstated we’ll see these numbers go way up," Escarra said.  Two federal programs — Emergency Unemployment Compensation and Extended Benefits, which together provide up to 73 weeks of jobless aid on top of 26 weeks of state aid — are set to begin to expire this week because Congress has not reauthorized them. According to the Labor Department, two million long-term unemployed will be dropped from the programs by the end of December if Congress does not act.

Wikileaks: It Could Take Down a Bank Or Two – Yes. We have one related to a bank coming up, that’s a megaleak. It’s not as big a scale as the Iraq material, but it’s either tens or hundreds of thousands of documents depending on how you define it. Yes, a big U.S. bank. It will give a true and representative insight into how banks behave at the executive level in a way that will stimulate investigations and reforms, I presume. Usually when you get leaks at this level, it’s about one particular case or one particular violation. For this, there’s only one similar example. It’s like the Enron emails. Why were these so valuable? When Enron collapsed, through court processes, thousands and thousands of emails came out that were internal, and it provided a window into how the whole company was managed. It was all the little decisions that supported the flagrant violations.

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