Fed Delays Volcker Rule, Giving Wall Street Another Holiday Gift

by Zach Carter, Huffington Post

Christmas came early for Wall Street this year. The Federal Reserve on Thursday granted banks an extra year to comply with a key provision of the Volcker Rule, a move that gives financial lobbyists more time to kill the new regulation before it goes into effect.

The Volcker Rule is a key element of the 2010 Dodd-Frank financial reform law that bans banks from engaging in proprietary trading — speculative deals that are designed only to benefit the bank itself, rather than its clients. Thursday’s move by the Fed gives banks an additional year to unwind investments in private equity firms, hedge funds and specialty securities projects. The central bank also said it plans to extend the deadline by another 12 months next year, which would give Wall Street a two-year reprieve through the 2016 presidential election.

The Fed’s delay comes less than a week after Congress granted Wall Street a reprieve from another reform that had been mandated by the 2010 Dodd-Frank financial reform law. The measure, known as the swaps push-out rule had eliminated federal subsidies for trading in risky derivatives — the complex contracts at the heart of the 2008 banking meltdown. Bank watchdogs say the Volcker Rule delay adds insult to injury.

[read more here]

Detroit auctions city assets for pennies on the dollar

by Seraphine Collins and Andre Damon, from the WSWS

On the side of the Lodge Freeway, a few blocks from Detroit’s historic Boston-Edison neighborhood, stand, row upon row, acre upon acre, hundreds of city maintenance vehicles—backhoes, snow plows, and lighting and utility trucks—all newly-painted and cleaned.

It looks as though these vehicles have been lined up for some great task; perhaps, at any moment, thousands of workers will arrive at the lot, man the cabins, and stream into America’s poorest large city to repair its thousands of broken street and traffic lights, fill the potholes that mar nearly every street, prepare its antiquated drainage system for the harsh Michigan winter, and remove the trash piled up in neighborhoods and parks.

But these vehicles have been assembled to a different end. As part of the largest municipal bankruptcy in history, the city has turned over nearly 500 vehicles and other pieces of city infrastructure, the vast majority of them in completely functional condition, for auction to the highest bidder.

Over 130 public lighting vehicles, 120 garbage trucks, more than 70 busses, and 24 lift buckets are parked in the vacant lot of the Herman Kiefer Health Complex, which was shuttered earlier this year and is itself being auctioned off.

The city sold the vehicles to Hilco Industrial and Miedema Auctioneering and Appraisals, who are conducting the auction, for $5 million. The garbage trucks alone, new, cost more than three times that amount.

“Historic” was the word that Isidor Strom, the co-owner of a small used truck parts business who was browsing the vehicles Wednesday, used to describe the sale. “Earth shattering. The biggest auction I have ever seen.”

Asked why the city was selling off the vehicles, Isidor did not mince words. “To f**k the workers in the city of Detroit.” He made his attitude clear: “I’m not happy about it; I don’t like it.”

[read more here]

The US Housing Market is Still “Flat on its Back”

from Mike Whitney, CounterPunch

Get a load of this chart from DataQuick’s National Home Sales Snapshot. It’ll tell you everything need to know about housing.

As you can see, prices are flatlining or drifting lower while sales are sinking like a stone. That’s the whole ball of wax, isn’t it?

Sure, sales will increase in the spring (as they always do), but judging by the sharp dropoff in last year’s hottest markets, this could be the crappiest spring selling season since the crash.

Why?

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(Note: MSA=metropolitan statistical area)

Because prices are too high, rates are too high, “organic” demand is too weak, credit is too tight, and the pool of potential buyers has shrunk to the size of a walnut, that’s why.The banks have reduced the percentage of distressed homes (foreclosures and short sales) on the market to roughly 11 percent from 59 percent in 2009. Fewer distressed homes mean higher prices, but higher prices mean fewer sales. It’s a trade-off. The banks get their money, but the market goes to hell. That’s how it works. According to most estimates, there are roughly 4.5 million homes in some stage of foreclosure. That means that –at the present pace–we should get through this Housing Depression a few weeks before Judgment Day. But don’t hold me to that.

Did you catch this gem on Bloomberg last week? It’s about the big private equity guys exiting the market. Take a look:

“Blackstone Group LP is slowing its purchases of houses to rent amid soaring prices after a buying binge made it the biggest U.S. single-family home landlord. Blackstone’s acquisition pace has declined 70 percent from its peak last year, when the private equity firm was spending more than $100 million a week on properties, said Jonathan Gray, global head of real estate for the New York-based firm…” (Blackstone’s Home Buying Binge Ends as Prices Surge, Bloomberg)

Okay, so the speculators are getting out of housing. How’s that going to effect the market?

No one really knows yet, but it can’t be good, after all, all-cash deals amounted to nearly 50 percent of all homes sales in many of the hotter markets last year. That’s why prices went up even though the economy was still in the shitter, because the fatcats were loading up on cheap real estate. Now it looks like they’re headed for the hills. That’s NOT going to be good for sales.

Did you know that existing home sales have dropped for six months straight, dipping below trend to the same level they were at in 1998?

But how can that be, you ask, when everyone’s blabbing about the recovery? How can that be when the Fed has purchased more than $1.4 trillion in mortgage-backed securities (MBS) and rates are a measly 4.5%? How can that be prices have been climbing higher for more than a year?

[read the rest, here]

Five years of Obama’s “recovery”

by Patrick Martin, WSWS

This week marks five years since the New York Stock Exchange hit its low point at the bottom of the financial crash that erupted with the collapse of Lehman Brothers investment bank. On March 6, 2009, Dow Jones Industrial Average hit its post-collapse low of 6,443. Three days later, on March 9, 2009, the S&P 500 hit its post-collapse low of 676.

Yesterday, at the close of stock trading for the week, the Dow Jones average closed at 16,452, up a colossal 10,000 points over five years, or 154 percent. The S&P 500 stood at 1,878, rising even faster than the Dow, gaining 170 percent over five years.

These are only the most striking of a barrage of numbers reported in recent weeks, demonstrating that for the US financial aristocracy, the Crash of 2008 has been used to engineer a historic redistribution of wealth.

Continue reading

Ukraine’s Brown Revolution: Brought to you by your friends at the IMF

by Scott Creighton

Just a couple of quotes from recent articles to put all of this Ukrainian “democracy” into perspective for you.

  • Among the reasons Mr. Yanukovych turned away from signing political and trade accords with Europe in November was his unwillingness to carry out austerity measures and other reforms that the International Monetary Fund had demanded in exchange for a large assistance packageNew York Times
  • A $15 billion bailout package secured by Mr. Yanukovych from Russia in December has been suspended, and Ukraine is now hurtling toward default. New York Times
  • Arseniy P. Yatsenyuk, the leader in Parliament of the Fatherland Party and a leading contender to serve as acting prime minister, pleaded with colleagues to swiftly reach an agreement on the designation of an interim government, which is needed to formally request emergency economic assistance from the International Monetary Fund. New York Times
  • The International Monetary Fund has made clear that it will demand austerity measures and other long-stalled economic changes in exchange for any assistance package. New York Times

As I have written in the past, the color revolution currently unfolding in Thailand was also brought to you by your friends at the International Monetary Fund (IMF) as was the illegal Washington backed coup in Egypt.

 

A bankers’ plan for Detroit

from the WSWS

The proposal submitted late last week by Emergency Manager Kevyn Orr to the federal court overseeing Detroit’s bankruptcy is a blueprint for a devastating attack on the working class of the city. The “plan of adjustment” would be better termed the “plan of destruction,” targeting pensions, health care and core public assets, including the world-renowned Detroit Institute of Arts (DIA).

Orr’s plan confirms the central premise of the Workers Inquiry into the Bankruptcy of Detroit held by the Socialist Equality Party on February 15: A crime is being perpetrated, one that is the product of a political conspiracy involving both big business parties and all the institutions of the state.

A New York Times article over the weekend compared, approvingly, what is taking place in Detroit to the restructuring of New Orleans after Hurricane Katrina in 2005. Indeed, the devastation wrought by Hurricane Katrina was used as an opportunity to depopulate sections of the city and go after basic social rights, including the handing over of public education to for-profit charter schools.

[read the rest, here]

Sudden Improvements in Egypt Suggest a Campaign to Undermine Morsi

(When big business wants a fascist dictatorship because it’s better for big business, they are willing to do whatever it takes to facilitate a speedy transition. They will lay off workers, close stores, strip shelves of product… whatever it takes to frustrate the public and help create an atmosphere for “CHANGE”. Kissinger famously said he had to make the economy of Chile scream because the people voted the wrong way when they elected Salvador Allende. “Revelations that President Richard Nixon had ordered the CIA to “make the economy scream” in Chile to “prevent Allende from coming to power or to unseat him,” prompted a major scandal in the mid-1970s” . We see the same thing happened in Egypt. Big business wants fascism because it puts them in charge and they will use whatever leverage they can in order to see it happen. Take for instance Wal Mart’s recent threat to the city of Washington where they promised to pull out all of their stores immediately if the “Living Wage” ordinance was passed. It’s a small example but a good one. Big business is at war with us right now while simultaneously depending on us, on the government’s collusion with them AGAINST us, to generate the massive profit margins they have become accustomed to. Any so-called “plan” to address the situation we are in that does NOT address this key aspect is not a plan, it’s a distraction. The Business Plot of 1934 is upon us once again and we need to understand it for what it is.)

from the New York Times

The streets seethe with protests and government ministers are on the run or in jail, but since the military ousted President Mohamed Morsi, life has somehow gotten better for many people across Egypt: Gas lines have disappeared, power cuts have stopped and the police have returned to the street.

The apparently miraculous end to the crippling energy shortages, and the re-emergence of the police, seems to show that the legions of personnel left in place after former President Hosni Mubarak was ousted in 2011 played a significant role — intentionally or not — in undermining the overall quality of life under the Islamist administration of Mr. Morsi.

And as the interim government struggles to unite a divided nation, the Muslim Brotherhood and Mr. Morsi’s supporters say the sudden turnaround proves that their opponents conspired to make Mr. Morsi fail. Not only did police officers seem to disappear, but the state agencies responsible for providing electricity and ensuring gas supplies failed so fundamentally that gas lines and rolling blackouts fed widespread anger and frustration.

“This was preparing for the coup,” said Naser el-Farash, who served as the spokesman for the Ministry of Supply and Internal Trade under Mr. Morsi. “Different circles in the state, from the storage facilities to the cars that transport petrol products to the gas stations, all participated in creating the crisis.”

Working behind the scenes, members of the old establishment, some of them close to Mr. Mubarak and the country’s top generals, also helped finance, advise and organize those determined to topple the Islamist leadership, including Naguib Sawiris, a billionaire and an outspoken foe of the Brotherhood; Tahani El-Gebali, a former judge on the Supreme Constitutional Court who is close to the ruling generals; and Shawki al-Sayed, a legal adviser to Ahmed Shafik, Mr. Mubarak’s last prime minister, who lost the presidential race to Mr. Morsi…

Mr. Sawiris, one of Egypt’s richest men and a titan of the old establishment, said Wednesday that he had supported an upstart group called “tamarrod,” Arabic for “rebellion,” that led a petition drive seeking Mr. Morsi’s ouster. He donated use of the nationwide offices and infrastructure of the political party he built, the Free Egyptians. He provided publicity through his popular television network and his major interest in Egypt’s largest private newspaper. He even commissioned the production of a popular music video that played heavily on his network.

Tamarrod did not even know it was me!” he said. “I am not ashamed of it.”

[read the rest, here]

(There’s your “real revolution”… bought, paid for, fabricated by the fascist businessmen of the Mubarak era (along with help from various U.S. NGOs of course). The climate of frustration was created by them, the failing state of Egypt was their gift to their country in order to bring back pure dictatorial fascism. There’s your “real revolution”)

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