Ron Paul Appears Poised to Irk the Fed Chief

Bernie Sanders Puts Barack Obama to Shame – Matt Taibbi – I’m bringing this up now to put into context what Bernie did on the floor of the Senate last week, standing up for eight hours and 37 minutes to make a case that the hideous deal that Barack Obama cut with the Republicans to extend the Bush tax cuts was an outrage to the very qualities that matter most to this politician, common decency and common sense. While everyone else in Washington was debating the political efficacy of the deal – the Hill actually published a piece talking cheerfully about how CEOs found a “new friend” in Obama, while the New York Times shamelessly ran a front-page “analysis” talking up the deal’s supposed benefits to the middle class and the political benefits from same that Obama would enjoy – Sanders blew all of that off and just looked at the deal’s moral implications. Which are these: this tax deal, frankly and unequivocally, is the result of a relatively small group of already-filthy rich people successfully lobbying an even smaller group of morally spineless politicians to shift an ever-bigger share of society’s burdens to the lower and (what’s left of the) middle classes. This is people who already have lots of shit just demanding more shit, for the sheer rotten sake of it.

Florida AG investigates two companies delivering foreclosure court papers – Two companies that deliver foreclosure notices to homeowners are under investigation over complaints including filing questionable statements with courts, back-dating documents and billing practices.. State regulators this month began examining Gissen & Zawyer Process Service, of Miami, because of “numerous complaints.” Among them: filing questionable statements with the court, back-dating documents and billing practices. The attorney general also has begun investigating ProVest of Tampa, one of the largest process servicing outfits in the nation, because of similar complaints.  Process servicers personally hand court summonses to defendants, notifying them that legal actions have been filed against them. In foreclosure cases, the paperwork tells the recipients they must respond in 20 days or the action will proceed.

 Ireland Credit Rating Slashed To 3 Grades Above Junk – Moody’s slashed Ireland’s credit rating five notches on Friday and warned of further downgrades if the country cannot regain command of its debts and tame its deficit.  Moody’s dropped Ireland’s rating to Baa1 – just three steps above junk-bond status – in a move similar to last week’s BBB+ downgrade by rival ratings agency Fitch. The other major agency, Standard & Poor’s, cut Ireland two notches to A on Nov. 23 and is expected to drop its grade further in coming days. Dietmar Hornung, the senior Ireland analyst for Moody’s, said it remained an open question whether Ireland could sharply reduce its deficit from its eurozone-record levels while taking tens of billions from a new EU-IMF bailout fund.

European Central Bank arms itself for Spanish crisis – The European Central Bank (ECB) is to double its capital base to cope with "credit risk" stemming from the eurozone debt crisis, paving the way for direct action to shore up the Spanish debt markets if necessary.  The ECB said it would raise its subscribed capital by €5bn (£4.2bn) to €10.76bn, the first increase since the launch of the monetary union.  "Basically they are insuring themselves in case they have to step up bond purchases, and that probably implies Spain," . "They have to be ready to dig the fire-break early on this because Spain is too large to handle, and there is risk of contagion to Italy."  The ECB’s move came as Spain braved the debt markets following a downgrade alert by Moody’s. Madrid paid the highest interest rates for a decade with yields on 10-year bonds rising to 5.45pc, compared with 4.63pc in November.  Spain’s government and banks have to refinance almost €300bn of debt next year, leaving the country prey to a buyers’ strike.

These astroturf libertarians are the real threat to internet democracy – They are the online equivalent of enclosure riots: the rick-burning, fence-toppling protests by English peasants losing their rights to the land. When MasterCard, Visa, PayPal and Amazon tried to shut WikiLeaks out of the cyber-commons, an army of hackers responded by trying to smash their way into these great estates and pull down their fences. In the WikiLeaks punch-up the commoners appear to have the upper hand. But it’s just one battle. There’s a wider cyberwar being fought, of which you hear much less. And in most cases the landlords, with the help of a mercenary army, are winning. I’m not talking here about threats to net neutrality and the danger of a two-tier internet developing, though these are real. I’m talking about the daily attempts to control and influence content in the interests of the state and corporations: attempts in which money talks.

Waltzing towards the next, inevitable implosion – Much head scratching in the latest note from Albert Edwards. The SocGen perma bear says he hasn’t got a clue what is going in financial markets at the moment or why investors believe the economic recovery is sustainable. I’ve been doing this job long enough to recognise when the markets are entering a new phase of madness that leaves me scratching my head with bemusement. The notion that we are in a sustainable economic recovery is as ludicrous as it was in 2005-2007. But investors are back on the dance floor, waltzing their way towards the next, inevitable implosion – yet another they will no doubt claim in retrospect was totally unpredictable! Unlike Ben Bernake, I like to retain some sense of humility. And it’s at times like these that I really start to think I haven;t got a clue what is going on anymore. It really is a mad, mad, mad world. However, Edwards clear on one thing – the bull market in bonds is not over – it’s just pausing for breath.

Our Dickensian Economy – The main story line of the U.S. economy over the last third of a century evokes Charles Dickens’s classic "A Christmas Carol." Starting in the late 1970s, the labor market turned ferociously against those with less education and in favor of those with more. This was not Ronald Reagan’s fault, nor George Bush’s (either one), nor Mitch McConnell’s. It just happened. And except for a brief shining moment during the Clinton boom, the Great Disequalization has continued unabated to this day.  You might have thought that the government would push back against this trend, but you’d have been wrong. Instead, our government has opted for lavish tax cuts for the haves and crumbs (or worse) for the have nots. In consequence, America may now be the greatest place on earth to be rich but an awful place to be poor.

More on Ratings Agencies and Consultants – What a bunch of quants! – If the ratings agencies don’t state anything new but only officially "time stamp" what we know already on the risk curve, why do markets insist on step change moves in response to their announcements? Are there really investors so comatose that they don’t react until a ratings agency announcement tasers them out of their torpor? Yes, apparently there are and people even pay fees to these people to manage their money. How do they justify these fees? Well, dear investor, it’s called Benchmarks and, to paraphrase the Sex Pistols (and to nick a chapter heading from from a friends book), "Never mind the benchmarks". Because benchmarks are indeed bollox. It’s all part of the cycle of unintended consequences. The investor tries to protect himself from risk by insisting that his money only be put in "safe" investments, but who decides whether they are safe or not? Enter the ratings agencies who then carve up a normal curve of risk into thick histogram buckets with Hoover Dam-like edges. The difference in real risk between a top BBB+ rated bond and a single A- may be non-existent in reality. But to the benchmark-driven, ratings agency-dependent passive bond fund, investment dicta handed down from a board of fund trustees made up of laymen advised by "consultants", it can make a difference on the order of 1000bp of performance.

Fed Proposes Rules to Cut Debit Card Fees – The Federal Reserve, fulfilling a Congressional order to examine whether merchants were being charged excessive fees to process debit card transactions, proposed new rules on Thursday that analysts said could cut those fees as much as 90 percent.  The Fed’s report went much further than the 50 percent reduction that Wall Street analysts had expected. Shares of Visa and MasterCard, which could come under increasing pressure from banks seeking to make up billions of dollars in lost revenue if the Fed proposal was adopted, plunged more than 12 percent.  As part of the Dodd-Frank Act’s overhaul of the financial code, Congress directed the central bank, which oversees the regulation of electronic payments, to ensure that the swipe fees charged by the banks and payment card networks like Visa and MasterCard were “reasonable and proportional” to the cost of processing the transaction.

Just-Released IRS Data Show Effects of Our Radical New Greed-Is-Good Culture – As the House considers a bill to extend the Bush tax cuts for the top 2%, slash corporate taxes and potentially make the Estate Tax more generous to billionaires than ever before, it’s instructive to put the move into a larger cultural/historical context. And thanks to newly released IRS documents, we can do just that.  As the Institute for Policy Studies reports, officials at the National Archives recently released a 67-year-old U.S. Treasury Department report detailing what the richest Americans once paid in taxes in the middle of the 20th century. IPS notes that "We have simply never had clearer evidence of just how much America used to expect out of individual wealthy Americans – and just how little, by comparison, we expect out of our wealthy today." Here are some of the details:

Ron Paul Appears Poised to Irk the Fed Chief – A congressman from Texas, long a dissident critic of the Federal Reserve, is scheduled to become the chairman of a House panel with jurisdiction over the central bank. It promises to be a miserable time for the Fed chairman as he is peppered with hostile questions at oversight hearings and with legislation to force complete audits of Fed operations.  So it is now, with Representative Ron Paul about to take over as chairman of the Domestic Monetary Policy Subcommittee of the House Financial Services Committee. Mr. Paul campaigned against big banks, arguing that concentrated financial power goes hand in hand with concentrated political power.  If the Fed were abolished, he wrote last year, “the national wealth would no longer be hostage to the whims of a handful of appointed bureaucrats whose interests are equally divided between serving the banking cartel and serving the most powerful politicians in Washington.”



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