Daily FINANCIAL CRISIS CAPSULE: HOW BAD IS IT?, Americans Moving to Mexico For Work

November 22nd, 2009 - by: danny

Let me start with this: A scene setter: funny, but not so funny, from Barbara Flaska.

The economy is so bad Ã¢â‚¬Â¦ (How bad IS it?!) Ã¢â‚¬Â¦

I got a pre-declined credit card in the mail.

I ordered a burger at McDonalds and the kid behind the counter asked, “Can you afford fries with that?”

CEO’s are now playing miniature golf.

If the bank returns your check marked “Insufficient Funds,” you call them and ask if they meant you or them.

Hot Wheels and Matchbox stocks are trading higher than GM.

McDonalds is selling the 1/4 Ounce.

Parents in Beverly Hills fired their nannies and learned their children’s names.

A truckload of Americans was caught sneaking into Mexico .

Dick Cheney took his stockbroker hunting.

Motel Six won’t leave the light on anymore.

The Mafia is laying off judges.

Exxon-Mobil laid off 25 Congressmen.

The economy is worse than divorce. I lost half my money and still have the wife.

Congress says they are looking into this Bernard Madoff scandal.
Oh Great!! The guy who made $50 Billion disappear is being investigated by the people who made $1.5 Trillion disappear.

A teen-ager was seen picking up a penny.

OK, NOW THE CRISIS NEWS

TAX HAVENS

NEW CRACKDOWN ON FINANCIAL FRAUD PROMISED

WASHINGTON, Nov 17 (Reuters) – The Obama administration created a new task force on Tuesday to crack down on financial fraud, an increasingly important political issue after a spike in mortgage scams and big Wall Street trading scandals.

President Barack Obama signed an executive order directing the task force, led by the Justice Department, to investigate and prosecute financial crimes connected to the past year’s financial crisis and to try to deter future fraud.

The stakes are high for the administration, particularly with a weak economy, anger about huge Wall Street bonuses and outrage that securities regulators missed one of the biggest frauds in U.S. history involving Bernard Madoff, who bilked investors of as much as $65 billion in a decades-long scheme.

“We will be relentless in our investigation of corporate and financial wrongdoing and we will not hesitate to bring charges, where appropriate, for criminal misconduct on the part of businesses and business executives,” U.S. Attorney General Eric Holder told a news conference.

The administration has long pledged to be more aggressive in fighting financial crime, but has faced a few setbacks like Madoff and losing a high-profile case against two hedge fund managers accused of fraud in the early days of the crisis.

The task force replaced a similar one established by the Bush administration in 2002 after corporate scandals like the collapse of Enron Corp, the giant energy trader.

NEW LAWYER PICKED TO LEAD FRAUD FIGHT

A legal publication reports:

Lanny Breuer has found his rock star to run the Justice Department’s Fraud Section: a veteran white collar criminal defense lawyer who is a former prosecution supervisor in the U.S. Attorney’s Office in Manhattan.

Yesterday, Breuer announced that Davis Polk & Wardwell partner Denis McInerney has accepted the top slot in the Criminal Division’s Fraud Section. The retiring chief, Steve Tyrrell, is jumping to the private sector. “We’re very excited for Denis to build on the terrific work that Steve and his team has done,” Breuer said.

There may be excitement in the front office, but some career prosecutors in the Fraud Section are concerned that McInerney hasn’t prosecuted cases for 15 years. The search for a section chief in recent months generated angst in the section. Change in the Fraud Section is coming. Earlier this week, Breuer publicly praised the work of deputy chief Mark Mendelsohn, who is leaving for work in the private sector. Breuer called Mendelsohn an “exceptional public servant and a visionary steward” of the Foreign Corrupt Practice Act program.

McInerney’s prosecution experience stems from his work in the U.S. District Court for the Southern District of New York. McInerney was a lead prosecutor in the racketeering and money laundering case against Gary Singer, chairman of the Cooper Companies, an eye-care products company. Singer, represented by Theodore Wells Jr. of Paul, Weiss, Rifkind, Wharton & Garrison, was sentenced to probation and ordered to pay a $1.8 million fine. Wells called McInerney a “fantastic” pick. “I have known him as both a prosecutor and as a defense lawyer and he can best be described as a lawyers’ lawyer with great judgment and integrity,” he said.

WHERE IS THE OVERSIGHT?

“An arcane legal matter has left the agency charged with overseeing Fannie Mae and Freddie Mac without an independent inspector general for nearly one year, setting off a storm of finger pointing and raising concerns from members of Congress over why the agency has gone without independent oversight for so long.”

BLACK CAUCUS STOPS VOTE on the Financial Services Committee.

“The recession has created a unique systemic risk that threatens all parts of the African-American community, including the poor and the middle class,” said Rep. Maxine Waters (D-Calif.), a subcommittee chair, in a statement after shutting down the vote. “I have always been committed to addressing that risk and will continue to do so. This is a critical issue for my constituents.”

The bill was scheduled to be considered on the House floor during the second week of December. Today’s vote was postponed until the Tuesday after the Thanksgiving break. In the meantime, the Democratic leadership is working on job-creating legislation they want to pass before Christmas.

“Nothing is lost by waiting ten days,” said Frank. That’s assuming, he added, that he can put the bill’s coalition back together. “Obviously, if there are not the votes for the bill, it will not come up.”

Economic Crisis Is Getting Bloody — Violent Deaths Are Now Following Evictions, Foreclosures and Job Losses
By Nick Turse, AlterNet

Despite ever rosier economic predictions and a surging stock market, the body count from the economic crisis is destined only to grow in the weeks and months ahead.

JOHN PERKINS: Economic Meltdown — A Call for Systemic Change

We have been hoodwinked into believing that a mutant form of capitalism espoused by Milton Friedman and promoted by President Reagan and every president since – one that has resulted in a world where less than 5% of us (in the United States) consume more than 25% of the resources and nearly half the rest live in poverty – is acceptable.

NAKED CAPITALISM

US capacity utilisation rates are around 70 per cent and even lower in Manufacturing.
The official unemployment rate was 10.2 per cent in October 2009

The BLS U6 broader labour underutilisation rate is at 17.5 per cent in October Ã¢â‚¬Â¦ can I repeat that Ã¢â‚¬Â¦ 17.5 per cent. That, as Ed Harrison has pointed out repeatedly, is a DEPRESSION-like number.

Foreclosures are still rising and are at dangerously high levels in terms of the viability of the overall housing market

“US children face the worst poverty of all in the in Western world”.

Our children are increasingly being fed by food stamps. In some black neighbourhoods “around 90 per cent live in homes that receive food stamps at one stage or another”

WHAT BERNANKE IS AND IS NOT SAYING

UN BURIED BODDIES IN DETROIT

BOSTON GLOBE: MORE FORECLOSURES IN 2010

AP: OBAMA PLEASED WITH ASIA TRIP

WASHINGTON – President Barack Obama’s eight-day trip to Asia produced no
tangible wins for the United States, though he is citing talks with Asian
allies that he says could help create thousands of jobs and open new markets
for American goods in the future.

Citing progress on a trip that took him from Tokyo to Seoul, Obama noted
that “Asia is a region where we now buy more goods and do more trade with
than any other place in the world – commerce that supports millions of jobs
back home.”

“I spoke with leaders in every nation I visited about what we can do to
sustain this economic recovery and bring back jobs and prosperity for our
people – a task I will continue to focus on relentlessly in the weeks and
months ahead,” Obama said in his weekly radio and Internet address taped
while he was in Seoul, the South Korean capital, and released Saturday.

The president pitched his trip as a way to reintroduce the U.S. to those
trading partners, including China.

James Galbraith (son of the legendary John Kenneth Galbraith) on financial reform, and building momentum for it.

Business journalist Gary Weiss on David Brooks and Tim Geihner:

David Brooks’ New York Times op-ed column on Tim Geithner (mentioning in the lead my Portfolio cover story) misses the point, I think.

The problem with Geithner’s approach is not whether or not the banks are recovering because of the TARP program, but the degree to which the profits of the biggest banks have not been matched by a commensurate ability to lend.

Money is still tight. A couple of weeks ago, the Federal Reserve reported that banks “kept tightening lending standards for companies and consumers last quarter, reinforcing the central bank’s decision to leave its benchmark interest rates at record lows for a long time.”

Simply put, the absence of a continued bank-caused financial crisis is not a reason to cheer. The public is justifiably upset that all those billions of dollars have made bankers richer without showing any benefits in terms of loosened lending policies. That’s not an unreasonable expectation, and enough time has passed that people have a right to ask: what’s in it for me? Why have we not seen any benefits to the population as a whole (apart from the banking system not falling apart) from the TARP program?

I don’t believe that history will be kind to Geithner, or President Obama, if all he can show for his efforts, and our billions, is the absence of a crisis.

US WORKERS FLEEING TO MEXICO FOR WORK

Americans Running South: Why We are Flocking to Mexico for Work

By: Michael Wildes, Immigration Attorney, Wildes & Weinberg (www.wildesweinberg.com)

Americans are moving to Mexico for work? This seems quite anomalous to many, considering that historically and currently millions of Mexicans continue to immigrate, legally and illegally, to the United States in search of a better (and more lucrative) life, not emigrate from it.

But in reality, more than one million Americans have chosen to make Mexico their home in the recent past — a trend that is showing no signs of slowing down — for a variety of reasons, such as a healthier environment in which to raise children, a warmer climate, inexpensive healthcare, an affordable and relaxing retirement destination and, more than ever before, a job.””

FT: SOVEREIGN DEBT A RISK?

Gillian Tett: Could sovereign debt be the new subprime?

Government bonds remained liquid during the recent crisis. It appears appealing to hold more of them, particularly given that sovereign debt is also widely presumed to be ultra safe; so safe that the yield on government bonds is known as the “risk-fr

Nouriel Roubini’s RGE MONITOR: Is Another Bubble in the Making? Could Central Banks Lose Control?

Bill Gross of PIMCO: “Moving out on the risk asset spectrum has worked wonders since March of this year, but it comes with the risk of principal loss — failing to receive the return of your money. China may abandon its dollar peg within six months’ time and with it, its own easy monetary policy that has fostered more significant mini-bubbles of lending and asset appreciation on the Chinese mainland. With renewed upward appreciation of the yuan may come potentially volatile global asset price reactions to the downside — higher Treasury yields, and lower stock prices — which the Fed must surely be leery of before making any upward move, of its own. Policy makers recognize that asset prices must be supported in order to generate positive future nominal GDP growth somewhere close to historical norms. Investors must recognize that if assets appreciate with nominal GDP, a 4—5% return is about all they can expect even with abnormally low policy rates.” In order to avoid debt deflation in the real economy, nominal GDP must grow in the 4%-6% range.

PAUL KRUGMAN: FEARS OF WALL STREET HOBBLED ADMINISTRATION…..TRANSLATION: NO GUTS, NO RECOVERY

WATCH: NEW REPORT ON CREDIT CARDS, “THE CARD GAME,” TUESDAY ON FRONTLINE ( 9 PM ON PBS)

The News Dissector