The Key to Economic Growth? –

Greenland close to unavoidable meltdown – The result of an international scientific paper, based on data and models from the Danish Meteorological Institute, is suggesting that an eventual meltdown of Greenland’s ice-cap is almost unavoidable.  According to the model used in a paper published in the Journal of Hydrometeorology, irrespective of how much CO2 emissions are limited, Greenland will reach a point of no return in 2040 at the latest.  “This is a very worrying result as it shows that melting can go a lot quicker than we normally think,” says one of the report’s co-authors, Jens Hesselbjerg Christensen.  The report, entitled “Greenland Ice Sheet Surface Mass-Balance Modeling in a 131-Yr Perspective, 1950–2080” and prepared by research centres at the University of Alaska Fairbanks, the University of Colorado and the Danish Meteorological Institute says that the ice-cap mass balance: “was close to equilibrium during the relatively cold 1970s and 1980s and lost mass rapidly as the climate warmed in the 1990s and 2000s with no indication of deceleration”.

  Canadian Study Sees Global Warming for Centuries – Carbon dioxide already emitted into the atmosphere will keep contributing to global warming for centuries, eventually causing a huge Antarctic ice sheet to collapse and lift sea levels, Canadian scientists said on Sunday. Even the complete abandonment of fossil fuels and halt to emissions cannot prevent devastating ocean warming in Antarctica as well as increasing desertification in North Africa, the research finds. Even so, many of the negative consequences in the Northern Hemisphere, such as loss of Arctic sea ice, are reversible. That means global efforts to cut greenhouse gases are not a waste of effort and money, said Shawn Marshall, a University of Calgary geography professor and one of the study’s authors. "But there are some parts of the climate that have a lot of inertia and it will take many centuries before they start to reverse,"

Corporate Profits Are Booming. Why Aren’t the Jobs? – To gaze upon the world of American corporations is to see a sunny place of terrific profits and princely bonuses. American businesses reported that third-quarter profits in 2010 rose at an annual rate of $1.659 trillion, the steepest annual surge since officials began tracking such matters 60 years ago. It was the seventh consecutive quarter in which corporate profits climbed.  Staring at such balance sheets, you might almost forget that much of the nation lives under slate-gray fiscal skies, a place of 9.4 percent unemployment and record levels of foreclosures and indebtedness.  And therein lies the enduring mystery of this Great Recession and Not So Great Recovery: Why have corporate profits (and that market thermometer, the Dow) spiked even as 15 million Americans remain mired in unemployment, a number without precedent since the Great Depression? Employment tends to lag a touch behind profit growth, but history offers few parallels to what is happening today.

 Fannie and Freddie’s Managers Bought Nonprime Paper For the Same Reason Merrill Did – The Republican members of the Financial Crisis Inquiry Commission have conducted a preemptive strike. They issued a report arguing that the problem with Fannie and Freddie was regulation and politics and that Fannie and Freddie are responsible for the U.S. financial crisis – so regulation is the great evil. This subdivides into four arguments: the Community Reinvestment Act (CRA), Congress’ rejection of an administration proposal to give OFHEO greater supervisory powers, specifically, the power to place Fannie and Freddie in receivership, the ability of Fannie and Freddie to borrow due to their status as Government-Sponsored Enterprises (GSEs), and the rules on Fannie and Freddie making a rising percentage of their loans to those with below median income. The CRA argument fails on multiple levels. The CRA became law in 1977 so it is a poor candidate to explain the rise of a crisis a quarter-century later. Its enforcement did become slightly stronger under the Clinton administration, but it became far weaker under the Bush administration. If the CRA caused banks to make more bad home loans, then bad loans should have fallen this decade as enforcement efforts fell.

The New Jim Crow – The first time I encountered the idea that our criminal-justice system functions much like a racial caste system, I dismissed the notion. What a difference a decade makes. After years of working on issues of racial profiling, police brutality, and drug-law enforcement in poor communities of color as well as working with former inmates struggling to "re-enter" a society that never seemed to have much use for them, I began to suspect that I was wrong about the criminal-justice system. It was not just another institution infected with racial bias but a different beast entirely. The activists who posted the sign on the telephone pole were not crazy, nor were the smattering of lawyers and advocates around the country who were beginning to connect the dots between our current system of mass incarceration and earlier forms of racial control. Quite belatedly, I came to see that mass incarceration in the United States has, in fact, emerged as a comprehensive and well-disguised system of racialized social control that functions in a manner strikingly similar to Jim Crow.

Japan Joins China in Assisting Debt-Crisis-Hit Europe – Japan plans to buy bonds issued by Europe’s financial-aid funds, its finance minister said, joining China in assisting the region as it battles against a debt crisis that prompted bailouts of Ireland and Greece. “There is a plan for the euro zone to jointly issue a large amount of bonds late this month to raise funds to assist Ireland,” Finance Minister Yoshihiko Noda said. “It’s appropriate for Japan to make a contribution as a leading nation to increase trust in the deal. We want to buy more than 20 percent.” The euro gained against the yen as the statements of support showed that the country with the world’s second-largest foreign-exchange reserves, after China, may help stem the risk of the crisis spreading. Japan will use its foreign-exchange reserves to buy more than a fifth of bonds to be issued later in January by the European Financial Stability Facility, Noda said. Japan’s reserves total $1.096 trillion, the government said today. That compared with China’s $2.648 trillion, according to data compiled by Bloomberg.

Small-Business Sentiment Takes Step Back – After four consecutive gains, the National Federation of Independent Business index of small-business optimism fell back in December. The NFIB’s index slipped 0.6 point to 92.6 last month. “Apparently, the “management change” in Washington and marginally better retail-sales numbers weren’t enough to pump up spirits at the New Year celebrations,” the NFIB said. A big drag came from the subindex of expected business conditions in six months. It fell seven percentage points to 9%. In addition, the subindex on earnings trends fell four points to -34%. Even so, small-business owners expect an improvement in demand, with the expected sales index up two percentage points to 8%.
Ceridian-UCLA: Diesel Fuel index increases in December – This is the new UCLA Anderson Forecast and Ceridian Corporation index using real-time diesel fuel consumption data: Pulse of Commerce IndexTM This graph shows the index since January 1999. Press Release: Year-End Surge Reported in Latest Ceridian-UCLA Pulse of Commerce Index™ The Ceridian-UCLA Pulse of Commerce Index™ (PCI), a real-time measure of the flow of goods to U.S. factories, retailers and consumers, surged 2.4 percent in December and pushed the PCI above its previous 2010 peak established in May. This performance, combined with November’s 0.4 percent increase, was enough to offset three previous consecutive months of decline.

The crisis has reached Belgium – King Albert II has asked the caretaker government of Yves Leterme to draw up an austerity budget, as bond crisis spreads to Belgium; FT Alphaville says Belgium could be a bigger problem than Spain as investors had not priced in the risks in Belgium; Der Standard wonders whether Belgium could reduce reliance on foreign creditors through tax incentives to hold domestic bonds; Belgian and Italian bond spreads rose significantly yesterday amid further signs of crisis contagion; Pressure on Portugal to take up EFSF loan mounted yesterday, but the country’s political establishment remains in denial; ECB significantly stepped up interventions in Portuguese bond market leading to a slight relaxation of bond yields; the credit default swaps of several large European banks, mostly Spanish and German, shot up yesterday; Sarkozy was getting nowhere in his talks with Obama about international monetary system reform; the Financial Times, meanwhile says it is time to end the special status of senior bondholders, and to become more resolute in overcoming the crisis. [more]

Chris Hedges: Even Lost Wars Make Corporations Rich –Either you are against war or you are not. Either you use your bodies to defy the war makers and weapons manufacturers until the wars end or you do not. Either you have the dignity and strength of character to denounce those who ridicule or ignore your core moral beliefs—including Obama—or you do not. Either you stand for something or you do not. And because so many in the anti-war movement proved to be weak and naive in 2004, 2006 and 2008 we will have to start over. This time we must build an anti-war movement that will hold fast. We must defy the entire system. We must acknowledge that it is not our job to help Democrats win elections. The Democratic Party has amply proved, by its failure to stand up for working men and women, its slavishness to Wall Street and its refusal to end these wars, that it cannot be trusted. We must trust only ourselves. And we must disrupt the system. The next chance, in case you missed the last one, to protest these wars will come Saturday, March 19, the eighth anniversary of the invasion of Iraq. Street demonstrations are scheduled in San Francisco, Los Angeles, Chicago, and Washington, D.C. You can find details on

Budget Battles: Did Gates “Cut” Defense Cash? – Actually, despite what some breathless headlines say this morning, the changes that the defense secretary made to the Pentagon’s ledger are fairly modest. That $78 billion figure? In context, it means that over the next five years, the Pentagon will spend $78 billion less than it projected it would. Non-war spending will remain in the ballpark of over half a trillion dollars; Gates said the budget for fiscal 2012 will be $553 billion. What really happened is that Gates and the White House stopped increasing the military’s cash. The following years’ budgets will grow less steeply than they did in previous years — only between one and two percent higher — and by fiscal 2015, they’ll flatline. In the past, Gates has talked about the military’s financial “spigot” closing. Under this plan, the tap will flow at essentially the current rate — still more than President Bush’s first post-9/11 Pentagon budgets. With inflation, you’ll see the budgetary numbers grow somewhat over the next few years, but not significantly.

Buiter: There are no absolutely safe sovereigns – These are the conclusions that Citigroup’s Chief Economist Willem Buiter and his team have drawn regarding the ongoing sovereign debt crisis.  Their full analysis is well worth reading and is embedded below.
    • There are no absolutely safe sovereigns — ‘rates analysis’ has to be done simultaneously with ‘credit analysis’ for all sovereigns, including the G3.
    • There are likely to be several sovereign debt restructurings in the euro area  (EA) in the next few years. Liquidity support should not stop this; only  permanent bail-outs would.
    • The sovereign debt crises of the euro area periphery interact with banking sector weaknesses throughout the EU. Both need to be addressed for a lasting  solution.
    • Ireland’s financial support package will buy time, but does not address the  fundamental insolvency issues of the consolidated sovereign and banking system.
    • Portugal is likely to access the EFSF soon.
    • The current size of the liquidity facilities looks insufficient to prevent speculative attacks or even to fund Spain completely for three years.

The Ibanez case and housing-market catastrophe risk – The 16-page decision in the case of US Bank vs Ibanez does not make for easy reading. But it’s a very important case: it’s a solid precedent saying that if a bank doesn’t own a mortgage, then it can’t foreclose on a home. That was the decision of the lower court in Massachusetts, back in March 2009, and it has now been unanimously upheld on appeal to the Massachusetts supreme court. After speaking to crack Reuters reporter Jonathan Stempel, I’m even more worried about this case than I was before. The legal craziness that this decision sets in motion is going to be huge, I’m sure. Anybody who was foreclosed on in Massachusetts should now be phoning up their lawyer and trying to find out if the foreclosure was illegal. If it was — if there was a break in the chain of title somewhere which meant that the bank didn’t own the mortgage in question — then the borrower should be able to get their deed, and their home, back from the bank. This decision is retroactive, and no one has a clue how many thousands of foreclosures it might cover.

 California’s Brown Unveils $12.5 Billion in Spending Reductions – California Governor Jerry Brown’s budget will cut spending by $12.5 billion, including as much as a 10 percent pay reduction for most state employees, aides said. The largest U.S. state by population faces a $25.4 billion budget gap over the next 18 months, Brown said in a statement.  His plan will chop an amount equal to 10 percent of the current year’s $125.3 billion in spending. Cuts include $1.7 billion from Medi-Cal, the state’s version of the Medicaid program for the poor; $1.5 billion from CalWorks, a welfare-to- work program; and a combined $1 billion from the University of California and the California State University systems, which together serve 663,000 students. Additional cuts will be made to prisons and the courts. Spending on kindergarten through 12th-grade education will be spared, Brown said.Voters will be asked to extend increases in sales and income taxes as well as vehicle license fees in a special election in June, Brown said.

South Draws U.S. Blacks – The nation’s African-American population continued its southward migration over the past decade, shifting a large part of the black middle class from northern states to faster-growing economies of the South. Among 25 big U.S. metro areas with the largest growth in African-American population between 2000 and 2009, 16 were in the South—including Atlanta and Dallas—according to the Census Bureau’s American Community Survey. Among the big losers were cities in the North and West, including Detroit, Los Angeles and Cleveland. The biggest gainer was Atlanta, a magnet for black professionals. Its metro area added about 500,000 African-Americans between the 2000 and 2009 period, and more than twice the next-largest numeric gainer, Dallas, according to an analysis of Census data by William H. Frey, a demographer at the Brookings Institution in Washington, D.C. Over the same period, the share of Atlanta’s 25-and-over black population that had college degrees increased to 24.6% in 2009 from 21.5% in 2000.

Will Massachusetts Mortgage Ruling Boost House Prices? – On Friday, the Massachusetts Supreme Court ruled in two separate cases that banks have to have proof that they own a house before starting a foreclosure. In the past, banks were allowed to start the eviction process, and often even finish it, even if they didn’t have all the paperwork on hand that proved they, or their investors, owned the house. Only after the bank was challenged did it have to produce evidence that it had the right to foreclose. Sounds obvious, but for banks it’s a big deal. At the height of the real estate boom, mortgages were bought and sold by banks often into trusts owned by thousands of investors. In many cases, the paperwork that detailed those transactions was sloppy. Sometimes it was lost or destroyed. The result is that many banks don’t have the documents readily on hand to prove they own a house. If pushed, most can establish that they have the right to foreclose. But that’s a costly process, so mostly banks have been trying to only produce that paperwork when pushed after foreclosures have already been filed. While the ruling may reduce the number of houses for sale for the next few months, it’s not clear that it would boost housing prices.
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