Charity is never a substitute for public welfare – The personal wealth of Francis Maude, the Cabinet Office minister who has just issued a green paper on "giving" in the hope of "building culture change" in our attitudes to charity, is estimated at £3m. No doubt it was to maintain his own levels of "giving" that, having rented out a central London house he already owned, he bought a flat nearby and put £35,000 in mortgage interest on expenses. No doubt, too, he stopped to ladle out soup to the homeless on his way to board meetings of Prestbury Holdings, a financial services company that benefited handsomely from sub-prime mortgages and paid Maude more than £3,000 each time he put in an appearance. Perhaps he and the 22 millionaires among fellow ministers who attend cabinet meetings regard constructing the "big society" as a sufficiently charitable contribution in itself. That’s the trouble with charity: it doesn’t all go to what might be regarded as good causes. As a proportion of GDP, the US gives most: 1.7% against Britain’s 0.7%. But donations to religious organisations account for 60% of the difference and, though some money reaches the poor, large sums fund preachers and church premises. Other "charitable" beneficiaries include the universities Americans attended in their youth, which are thus prompted to look with a kindly eye on children of alumni when they apply for places. But we, too, have our weaknesses, such as Eton, which notoriously counts as a charity.
Dodd-Frank, the real threat to the Constitution – The Dodd-Frank legislation passed in the summer is supposed to remedy weaknesses in the U.S. financial system – ensuring transparency and accountability, and removing risks that banks are "too big to fail." Yet the bill created a structure of almost unlimited, unreviewable and sometimes secret bureaucratic discretion, with no constraints on concentration – a breakdown of the separation of powers, which were created to guard against the exercise of arbitrary authority. Take, for example, the resolution/seizure authority of Title II, ostensibly designed to end bailouts and "too big to fail" risks. The Treasury can petition federal district courts to seize not only banks that enjoy government support but any non-bank financial institution that the government thinks is in danger of default and could, in turn, pose a risk to U.S. financial stability. If the entity resists seizure, the petition proceedings go secret, with a federal district judge given 24 hours to decide "on a strictly confidential basis" whether to allow receivership.
EU wants power to block China’s technology purchasing power – The European Union’s industry commissioner wants the power to block China from buying up European tech companies. Commissioner Antonio Tajani made the comments in an interview with German daily paper Handelsblatt. Europe should establish a new authority with powers to block foreign takeovers of strategic European businesses, he said. "Chinese companies have the means to buy more and more European enterprises with key technologies in important sectors," The commissioner envisions an authority along the same lines as the United States’ Committee on Foreign Investment. The proposed E.U. authority would determine "if the acquisition (of a company) with European know-how by a private or public foreign company represented a danger or not".
No one has missed the headlines: Haphazard and possibly illegal practices at mortgage-servicing companies have called into question home foreclosures across the nation. The latest disclosures are deeply troubling, but they should not come as a big surprise. For years, both individual homeowners and consumer advocates sounded alarms that foreclosure processes were riddled with problems. While federal and state investigators are still examining exactly what has gone wrong and why, two things are clear. First, several financial services companies have already admitted that they used "robo-signers," false declarations, and other workarounds to cut corners, creating a legal nightmare that will waste time and money that could have been better spent to help this economy recover. Mortgage lenders will spend millions of dollars retracing their steps, often with the same result that families who cannot pay will lose their homes.Second, this mess might well have been avoided if the Consumer Financial Protection Bureau had been in place just a few years ago.
Ron Paul Does Not Like Elizabeth Warren Or The New Consumer Protection Agency (VIDEO) Video: Ron Paul Texas Straight Talk – The banks still win in Washington This is a difficult issue, and I understand why Congressman Paul and others from the Austrian School do not support the CFPB. He has no confidence the agency won’t eventually be captured by the industry it regulates – the banks.
Which of These Banks Was 2010’s Most Shameless Corporate Outlaw? – Bankers. The red carpet’s still being rolled out for them in Washington, but if there’s a stain on it they’ll pout for days. Jason Linkins documents the latest set of cheap white whines from very wealthy white men. (Discrimination lawsuits are a routine part of their legal troubles, too.) This time they’re upset because nobody from the six largest banks in America was invited to the president’s CEO Roundtable. They’re offended because they didn’t meet with the president? From the looks of things they’re lucky not to be meeting with the warden. Their collective rap sheet includes fraud, sex discrimination, collusion to bribe public officials… even laundering drug money for Mexican drug cartels. One of them is accused of ripping off some nuns! None of this criminal behavior has stopped them from sulking over a presidential slight. Let’s review the record for these corporate malefactors, and then decide: Which of these six banks was "America’s Most Shameless Corporate Outlaw" in 2010? (I mean, really: Nuns?)
Families £3,000 worse off – Middle-class families will be more than £3,000 a year worse off this year, with the rising cost of living pushing many to the brink of bankruptcy, research has found. A combination of higher prices, lower benefits and pay freezes will leave many struggling to cope in a tough economic climate, experts have warned. Telegraph figures show that a family of four, living in Ashford, Kent, with a single earner on £50,000 will be £3,252 worse off this year than they were in 2010. Major costs include a £488 rise in rail fares, an increase in energy bills of £161 over the year, and food bills rising by £230. Predicted rises in interest rates add a further £562 to the family’s average £150,000 variable rate mortgage. "The worst is yet to come. We are still approaching the peak in personal insolvencies. People have been putting off reducing their debts just to get through the last year. "As soon as interest rates go up, more people will struggle and personal insolvencies will rise."
Estonia joins crisis-hit euro club, others wary (Reuters) – Estonia joined the euro zone as its newest member Saturday, but the currency club’s deepening crisis is likely to put off bigger eastern European entrants from joining for up to a decade. The small Baltic state of 1.3 million became the 17th euro zone country at midnight, beginning a switch from the kroon, and was the first former Soviet state to adopt the euro. Prime Minister Andrus Ansip was the first to take euros out of a specially installed cash machine outside a theater where a ball had been held to celebrate the switchover and the new year. "It is a small step for the euro zone and a big step for Estonia," he said, holding the notes.
Euro-Zone Bonds to Start New Year With Old Problems – —With Portugal hitting the debt markets for fresh cash next week, the euro zone looks set to start the new year much as it began 2010: under threat from countries with weak economies and shaky public finances. But this time around, the first auctions of the year could be decisive. Despite the Greek and Irish bailouts, 2010 ended with debt-laden euro-zone countries facing escalating borrowing costs. "If the first 2011 issues are completed without too many difficulties, this will bode well for the rest of the year in as much as it would suggest investors have taken on board the risk presented by [countries on the bloc’s periphery]." Although these so-called peripheral countries have improved their situation through budget cuts and tax increases, their funding needs remain heavy, because most have a higher amount of debt to pay off in 2011. Portugal is the biggest question mark right now, and its borrowing costs have been soaring. Yields on its 10-year bonds jumped to 6.682% at the end of 2010, from 4.065% at the end of 2009.
Pinning down ‘Obamanomics’ –We’re two years into the Obama administration, and "change we can believe in" has become "continuity we can believe in." So far, five senior members of the president’s team have resigned their posts – and not one has been replaced with a candidate from outside the administration.That isn’t to understate the differences between members of the administration: Christina Romer, its first chair of the Council of Economic Advisers was a macroeconomist. Austen Goolsbee, her replacement, is a microeconomist. Rahm Emanuel loves cursing. His replacement, Pete Rouse, loves cats. .But two years into the Obama administration, the president seems confident in the people around him and the approach they’ve persuaded him to take. "When I reflect back on the last two years," Obama told the New York Times, "we probably spent much more time trying to get the policy right than trying to get the politics right." That self-assessment is a long way from, "It’s time for some new ideas." And it raises the question: What is the overarching policy they spent so much time getting right? What is Obamanomics?
"Threshold earners" and economic inequality – Reihan Salam discusses a theory of Tyler Cowen regarding "threshold earners," a sort of upscale version of a slacker. Here’s Cowen: A threshold earner is someone who seeks to earn a certain amount of money and no more. If wages go up, that person will respond by seeking less work or by working less hard or less often. That person simply wants to "get by" in terms of absolute earning power in order to experience other gains in the form of leisure. Salam continues:This clearly reflects the pattern of wage dispersion among my friends, particularly those who attended elite secondary schools and colleges and universities. I [Salam] know many "threshold earners," including both high and low earners who could earn much more if they chose to make the necessary sacrifices. But they are satisficers. OK, fine so far. But then the claim is made that "threshold earning" behavior increases income inequality.