Central Perk

duminică, 27 martie 2011

Mish's Global Economic Trend Analysis

Poisonous Illinois; Caterpillar CEO Threatens to Leave Illinois over Taxes; Illinois Attorney General Wins Dubious Honor "Prevailing Wage Award"

Posted: 27 Mar 2011 12:43 PM PDT

To prove how totally fooked the state of Illinois is, simply read Madigan honored with "prevailing wage" award

So allied are the unions with Madigan, they honored her in Bloomington on Wednesday. As WJBC reported:

Illinois Attorney General Lisa Madigan accepted an award from the state's Building Trades Council in Bloomington for her previous pro-union legislation. The Reuben G. Soderstrom Prevailing Wage Award is given annually. Madigan says she's honored and will continue with the same work. She says she's now working on a bill to enhance penalties for criminal violations of the prevailing wage act. Madigan says under the law, violations would be a class four felony.

Madigan says it would penalize people evading the law, and create a level playing field for those following the law. The bill also allows state, local and federal law enforcement agencies to get relevant documents from contractors and reduces the notice time contractors have before government inspection of documents.

Prevailing Wages Laws are Criminal

If there is anything criminal here it is prevailing wage laws. They force cities, municipalities, counties to pay a "prevailing wage" which means a union wage. It does no good to send out bids when all the bids will be based on the same wage. It's no use going to a non-union shop because you have to pay a union wage regardless of what you do.

Pat Quinn wants businesses to move to Illinois. No business in their right mind could possibly think Illinois is a good place to do business. Some are stuck here because moving costs are too high, and I suppose some might want to come here specifically to take part in Illinois graft, undoubtedly the highest in the nation.

The fact remains Illinois is owned lock-stock-and-barrel by unions. Everything here costs more because of it.

Caterpillar CEO Threatens to Leave Illinois

Please consider Caterpillar CEO's letter talks of leaving Illinois

The chairman and CEO of Peoria-based Caterpillar Inc. is raising the specter of moving the heavy equipment maker out of Illinois.

In a letter sent March 21 to Gov. Pat Quinn, Caterpillar chief executive officer Doug Oberhelman said officials in at least four other states have approached the company about relocating since Illinois raised its income tax in January.

"I want to stay here. But as the leader of this business, I have to do what's right for Caterpillar when making decisions about where to invest," Oberhelman wrote in the letter obtained Friday by the Lee Enterprises Springfield bureau. "The direction that this state is headed in is not favorable to business and I'd like to work with you to change that."

Oberhelman said he's being actively courted to move.

"I have been called, 'cornered' in meetings and 'wined and dined' -- the heat is on," Oberhelman wrote. "Before, I never really considered living anywhere else and certainly never considered the possibility of Caterpillar relocating. But I have to admit, the policymakers in Springfield seem to make it harder by the day."

Oberhelman also sent along correspondence Cat has received from other states.

"I stand ready to help convince you to relocate or expand in the fiscally conservative, low-tax Lone Star State," wrote Texas Gov. Rick Perry in a Jan. 24 letter.

"I encourage you to consider South Dakota as a place for your business to grow and prosper," noted J. Pat Costello, secretary of the South Dakota governor's economic development office.

Nebraska Gov. Dave Heineman wrote in February to say, "In Nebraska, we balance our budget by controlling spending, not by raising taxes."

Republican leaders, who unsuccessfully fought Quinn on the tax hike, say the letter confirms why they were opposed to the increase.

"These are the kinds of letters we fear," said Patty Schuh, spokeswoman for Senate Minority Leader Christine Radogno, R-Lemont. "Even more worrisome are the hundreds of businesses being wooed that we don't know about."

Schuh said the tax hike and the state's worker compensation costs on businesses "make Illinois a hostile environment, prime for the picking."

Poisonous Illinois

Illinois is not "hostile" to business, Illinois is downright "poisonous" because of high corporate taxes, absurd prevailing wage laws, forced collective bargaining, a massive pension mess, and copious amounts of taxpayer unfriendly legislation.

It is time for national right-to-work laws to end the forced slavery of collective bargaining and it's also time to kill Davis-Bacon and all poisonous prevailing wage laws at the state level as well.

Unions like to point out studies that show union work is no more expensive than non-union work. It's true because of poisonous prevailing wage laws force it to be true.

For details please see Thoughts on the Davis Bacon Act

For details regarding the slavery aspect of collective bargaining, please see

Paul Krugman, Stephen Colbert, Bill Maher, others, Ignore Extortion, Bribery, Coercion, and Slavery; No One Should Own You!

Collective Bargaining neither a Privilege nor a Right

Illinois desperately needs right-to-work legislation. Lisa Madigan is hell-bent on taking things the opposite direction.

One might think that Illinois would get the the message given changes that are happening in Wisconsin, New Jersey, New York, and to some extent even California. However, Illinois Governor Pat Quinn, House Speaker Michael Madigan, Attorney General Lisa Madigan (daughter of Michael Madigan), are bound and determined to suck every drop of taxpayer blood in Illinois and give it to the unions.

Why Caterpillar would think of staying in this corrupt union hellhole if they have any reasonable choice is beyond me.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

100,000+ Protest in London against Budget Cuts; Growth Expectations Fall Short; UK Standard of Living to Decline; US vs. UK Deficit Reduction Plans

Posted: 27 Mar 2011 01:16 AM PDT

By some estimates, as many as a quarter million people took to the streets in London protesting budget cuts by British Prime Minister David Cameron. The protesters held signs "Defend Our Public Services".

Those signs should have read "I Want to Raise Your Taxes".

As with every public union protest everywhere, the rally in London has nothing to do with defending public services and everything to do with "Save My Sorry Ass".

Thus, it's no surprise that Cameron's budget plans have not gone over very well with the 300,000 public workers who will lose their jobs under his austerity package.

Moreover, Prime Minister Cameron and Chancellor George Osborne are sticking with plans to balance the budget by 2015 even though recent growth expectations have fallen far short of the mark.

Tens of thousands march in London to protest budget cuts

The International Business Times reports Tens of thousands march in London to protest budget cuts

Violence has broken out on the streets of central London, England has tens of thousands of people have demonstrated to express their opposition to drastic spending cuts by the British government.

Organizers claim that more than a quarter of a million people have appeared at the march, far more than expected.

It is believed to be the largest union-organized event in Britain in more than two decades years; and the biggest overall public march in the nation since the invasion of Iraq in March 2003.

The Conservative-Liberal Democrat coalition led by Prime Minister David Cameron plans spending cuts of about $131-billion over the next five years, including slashing about 300,000 public sector jobs.

Protesters marched from Victoria Embankment to Hyde Park, where Brendan Barber, the general secretary of the Trades Union Congress (TUC), which organized the march, spoke.

Many protesters held up banners which read: "Don't Break Britain", "No to Cuts" and "Defend Our Public Services",

"The noise in Whitehall was deafening as thousands of protesters banged drums, blew whistles and shouted anti-cut slogans, slowly making their way towards Trafalgar Square," a BBC reporter said.

Interest on National Debt is Part of the Undisclosed State of Affairs

Chancellor Osborne is not exactly being 100% forthright about the UK's fiscal state even if they can balance the budget by 2015, something I highly doubt.

Please consider Britain's leaders should come clean on the true depth of the fiscal crisis

The UK's fiscal retrenchment, we are told, is being conducted at an "extraordinarily ambitious pace". Last week's annual Budget statement pledged to "eliminate the structural deficit by 2014/15".

George Osborne told the House of Commons that "Britain has a plan and is sticking to it". The Chancellor won't be cowed by claims his efforts to get the UK back on the fiscal straight and narrow will do more harm than good. He is right, of course – but only up to a point.

The Labour party's most senior figures, in defiance of their education and intelligence, keep claiming that Osborne's actions are "driven by ideology, rather than necessity". This is absurd. Anyone who argues that rapidly addressing the fiscal catastrophe Labour left behind is anything other than absolutely crucial either knows nothing about global bond markets, or is so blindly ambitious, so determined to close their eyes to the facts, as to be unfit for public office.

Having said that, Osborne is also ignoring the facts – if to a slightly lesser degree. Because the UK's fiscal retrenchment won't be over by 2015 – when the deficit, on last week's numbers, falls roughly to zero. That won't be the end of our budgetary problems. It won't even be the beginning of the end. It will merely be, if we're lucky, the end of the beginning.

In 2009, the UK spent £31bn – around 6pc of total tax receipts – on debt interest payments. That's money down the drain. By 2015, we won't have reached, in Churchill's words, some "broad sunlit upland". After four more years of deficits, debt services costs, according to last week's Budget, will by then be £67bn a year – or almost 10pc of total tax receipts. These shocking numbers are also likely to be under-estimates, given the UK's massive "off-balance-sheet" liabilities and the Treasury's benign assumption of future gilt rates.

The lack of true fiscal retrenchment, together with rising inflation and its impact on welfare payments, means that the Office for Budget Responsibility now estimates debt service costs will be £4.7bn higher during the current fiscal year than Osborne forecast during his last budget. That's equal to more than a penny on income tax. Over the next five years, on last week's numbers, total debt service costs will now be some £18bn higher than before.

Why aren't Osborne and Co. explaining these catastrophic realities and their impact on our medium-term ability to maintain our public services, using them to rally support for austerity measures that are long overdue? Why aren't such stark facts thrown back into the face of those who claim that the Tories' retrenchment plans are "driven by ideology rather than necessity"? The answer is fear and a lack of respect. Fear that the British public would be critical of such candour. And a lack of respect for their intelligence.

Budget Estimate Falls Short

Inquiring minds note Billions added to 2011 budget after growth falls short of the forecasts expectations

Even as he proclaimed a Budget for Growth, George Osborne admitted that the economy would expand more slowly this year than he had hoped.

The Chancellor was also forced to set out plans to borrow £45.6 billion more than planned over the five years starting next month.

The office blamed the gloomier forecasts on the economy shrinking in the final three months of last year and higher-than-expected inflation.

Overall, the Government will have to borrow £45.6 billion more than expected between 2011-12 and 2015-16.

Despite steady reductions in the annual government deficit, the national debt – the total stock of outstanding borrowing – will continue to rise, reaching £1.36 trillion by 2015-16.

The interest Britain pays on that debt will also rise.

The OBR said that debt interest will be £48.6 billion in 2011-12, £4.7 billion higher than its last forecast. By 2015-16, the Government will be paying £66.8 billion on debt interest, more than the budget for the Department of Education.

Standard of living to fall for two years

The Telegraph helps explain the state of affairs with this comic on Standard of Living.

Bright Side of Things

I seriously doubt Cameron can balance the budget in 4 years. However, being the ever-optimist, I feel obliged point out the bright side of things:

Over the long haul, the fewer the government workers the better.
The bigger the miss in budget expectations, the more public workers will have to be fired to balance the budget.

The pertinent question is "Will Prime Minister Cameron lose his nerve?" On that unfortunately, I am not so optimistic.

UK vs. US in Budget Balancing

Assuming government does not give into demands, it's a sign of success when hundreds of thousands of public workers protest budget cuts.

Measured by protests alone, the British appear to be making some sort of effort to rein in the deficit. Hats off to the British.

Unfortunately, there is little success in the US except at the state level.

On this side of the Atlantic, we are stuck with Republicans and Democrats who will not cut defense, Democrats who will not cut entitlements, and neither party willing to do anything but bicker on how to cut anything more than $20 billion out of a massive $1.6 trillion deficit.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

SEOmoz Daily SEO Blog

4 SEO Presentations w/ Tips, Graphics + Data You Can Use

Posted: 26 Mar 2011 02:25 PM PDT

Posted by randfish

NOTE: All of the slide decks in this post are free to download and distribute, as are any of the stats/graphics in them (please reference the source if you do). Hopefully they'll be helpful learning tools and will make your deck-building processes easier than mine have been!

The past few weeks have been a whirlwind for me, and they're not slowing down anytime soon. Just 2 weeks ago, I jetted off to San Marino (a small country in the northeastern part of Italy) with my travel blogging wife, Hannah Smith from Distilled, Marcus Tandler + Niels Dorje of TandlerDorje, Gianluca Fiorelli and Google's Avinash Kaushik (along with several great local speakers). Below are two of my presentations from that event (Be-Wizard):

The Evolution of Google's Rankings

View more presentations from randfish

Social Media Marketing for Traffic + SEO

View more presentations from randfish

From there, I headed to Rome, where, thanks to the US State Department and LUISS University, I gave a talk on entrepreneurship and told the story of SEOmoz, which contains my usual level of oversharing and transparency:

The Story of Moz: 1981-2011

View more presentations from randfish

In Rome, I also did a video interview with Robin Good of MasterNewMedia on a number of SEO related topics. After our interview, he filmed my presentation of the "Story of Moz" deck above, which, depending on quality, may be available sometime in the near future.

Next up was London for the awesome Link Building event from Distilled (can't share decks from that, sorry) followed by 2 days at home in Seattle and then a mad dash to Phoenix for Infusioncon (just before Link Building V2 in New Orleans). At InfusionCon, I gave a fairly comprehensive, SEO 101 style talk that was quite well received:

10 Steps to Great SEO: InfusionCon 2011

View more presentations from randfish

One thing I've noticed that's very powerful as a marketing/influence tactic for me personally is the sharing of my slidedecks on services like Slideshare. Because I'll often tweet the link to the presentation as I go on stage or just prior, I'm able to give the audience an opportunity to download and follow along. This has several cool effects:

The slideshow URL gets tweeted and re-tweeted and seen by thousands more people than just the few hundred usually in the room. Those attendees are often the most active sharers, resulting in a terrific, positive re-inforcement cycle (so long as I do a good job) :-)
Having the slideshow seen by so many often means it goes to the frontpage of Slideshare, getting even more exposure. When I spend a dozen or more hours making a slide deck for a presentation to 300 people, it's great to know that there's the potential to get much more exposure via inbound marketing of that content afterward
The slideshow pages contain lots of links, which drives visits to many web marketing sites I reference, as well as SEOmoz itself. Those sites who get traffic often send me notes of thanks (when it's I who should be thanking them for making my job easier) and everyone wins as the audience gets valuable links and the sites, Moz included, get high quality, relevant traffic.

If you're on the road at events large or small, let me highly recommend this approach. And, hopefully, these slide decks prove useful, too!

My next few trips will take me to SMX Munich, where I'll be leaking our first results from the user surveys and correlation data collected for the 2011 version of the Search Engine Ranking Factors. After that, I'm off to SMX Sydney, where I'll be on a number of panels around SEO topics. In late May, we're working to hold an informal, free Moz meetup with Avi Wilensky's ProMediaCorp in New York City (dates/specifics TBD) followed immediately by Distilled's Boston PRO Training seminar and, finally a keynote of SMX France in Paris in early June.

I'm looking forward to seeing many of you at one of these events!

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Seth's Blog : Accepting false limits

Accepting false limits

I will never be able to dunk a basketball.

This is beyond discussion.

Imagine, though, a co-worker who says, "I'll never be able to use a knife and fork. No, I have to use my hands."

Or a colleague who says, "I can't possibly learn Chinese. I'm not smart enough."

This is a mystery to me. A billion people have learned Chinese, and the failure rate for new kids is close to zero. If a well functioning adult puts in sufficient time and the effort, she''ll succeed.

The key to this disconnect is the unspoken part about time and effort and fear. I agree that you will never ship that product or close that sale or invent that device unless you put in the time and put in the effort and overcome the fear. But I don't accept for a minute that there's some sort of natural limit on your ability to do just about anything that involves creating and selling ideas.

This attitude gets me in trouble sometimes. Perhaps I shouldn't be pushing people who want something but have been taught not to push themselves. Somewhere along the way, it seems, I forgot that it's none of my business if people choose to accept what they've got, to forget their dreams and to not seek to help those around them achieve what matters to them.

Not sure if you'll forgive me, but no, I'm not going to believe that only a few people are permitted to be gatekeepers or creators or generous leaders. I have no intention of apologizing for believing in people, for insisting that we all use this moment and these assets to create some art and improve the world around us.

To do anything less than that is a crime.

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sâmbătă, 26 martie 2011

Mish's Global Economic Trend Analysis

Constitutional Amendment in North Dakota Would Abolish Property Taxes
Libyan Rebels Retake Ajdabiya; Scores Killed in Syria Protests; French President Warns Arab Rulers of More Libya-Type Intervention; Ivory Coast Next?
FDIC "Cash for Keys" Proposal Would Pay Underwater Homeowners $21,000 to Walk Away; In Prison for Taking a Liar Loan

Constitutional Amendment in North Dakota Would Abolish Property Taxes

Posted: 26 Mar 2011 04:41 PM PDT

One of the best constitutional amendment proposals I have seen in years comes from a taxpayer group in North Dakota.

Please consider Amendment would abolish ND property taxes, order Legislature to figure out new revenue plan

Backers of a constitutional amendment to abolish North Dakota property taxes believe they have enough petition signatures to put the idea on the ballot, even though the number they thought they needed has risen.

"It's a new idea. It's something a lot of people hadn't even considered until we put it in front of them," said Charlene Nelson, of Casselton, who is chairwoman of the initiative campaign.

The amendment bars the state and local governments from levying any property tax, beginning Jan. 1. It says the Legislature must use other revenue sources, such as taxes on sales, income and energy, to decide how to replace the revenue that local governments will lose.

North Dakota's Constitution allows voters to bypass the Legislature and put a constitutional amendment directly to a vote if the proposal's supporters can gather enough petition signatures.

Property owners were billed $774.6 million in property taxes in 2009, according to the most recent North Dakota Tax Department data. Local school districts' share was about 41 percent, while cities billed 28 percent and counties 26 percent, the data say.

By comparison, the state collected $883.3 million in sales taxes during its 2010 budget year, which ended June 30, according to the state's most recent comprehensive annual financial report.

Individual and corporate income taxes raised $380.1 million during the same period, while taxes on oil, natural gas and coal raised $633.5 million.

Property taxes on a person's home means he or she never owns it, even after its mortgage is paid, Nelson said. The annual property tax bill is due regardless of a person's income, while taxes on income and sales depend on the amount of money a person has to spend, she said.

The proposed property tax ban "goes to the core of the lot of the problems that people in this state are facing. Economics, low-paying jobs, seeing their young children move out to other states," Nelson said. "The public debate, I think, is going to be the most healthy thing that comes out of this.

Never Owning Your Own Home

I agree with nelson that paying property taxes on your home means you can never own it. It is an insidious tax that hits those on fixed income the hardest.

Of course school districts love it. They collect more taxes over time, then waste the money. When valuations crash, they want to raise the tax rate to "make up for it".

Unlike California Property 13 type non-solutions that create huge winners and losers, everyone but the tax recipients win by abolishing them completely. Even renters win because landlords will not be struggling to pass on property tax hikes. Abolishing property taxes also helps out struggling businesses and creates an incentive for property owners to move businesses to states without such taxes.

I am also against taxes on store-bought food, medicine, and clothes priced below a certain amount. Although everyone would benefit from such tax relief, elimination of taxes on food, shelter, medicine, and clothes especially helps those who spend most of their money on such items.

Because of the new census, the petition gatherers do not have the signature cushion they thought. However, they still have a slim cushion and they have until Midnight Tuesday to gather more signatures. Good luck to them.

Side Benefit

As a side benefit, cities, towns, and counties would be able to fire all the local assessors, lawyers, and assistants associated with figuring out the tax and collecting it.

I would love to see a wave of proposals by states to abolish property taxes along with the other taxes I mentioned. So would the real estate industry, a group I generally do not side with. Such a move could hardly come at a better time for the real estate industry.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Libyan Rebels Retake Ajdabiya; Scores Killed in Syria Protests; French President Warns Arab Rulers of More Libya-Type Intervention; Ivory Coast Next?

Posted: 26 Mar 2011 01:44 PM PDT

In top Mideast and regional news...

Libyan rebels have retaken the strategic town of Ajdabiya

Scores are dead in violent protests in Syria

French president Nicholas Sarkozy has warned all Arab rulers that they risk Libya-type intervention if governments cross a certain line of violence against their own people.

Sarkozy suggested the Ivory Coast could be next in line for a UN vote on intervention.

Libyan Rebels Retake Ajdabiya

The New York times reports Qaddafi Forces Pull Back as Rebels Retake Ajdabiya

In Ajdabiya, the charred hulls of government tanks hit by allied missile strikes and strafing runs through the night were still smoldering on Saturday at the city's gates, where they had driven back rebel assaults over the past few days. But on Saturday, hundreds of rebels streamed in, honking their horns, shooting weapons into the air and waving their tricolored flags in celebration.

As night fell, rebel forces had not only recaptured Ajdabiya, a crucial hub city in eastern Libya, but had also driven almost uncontested to the town of Brega, erasing weeks of loss as the airstrikes opened the way.

There was evidence on Saturday that the allied military effort was having an effect not just in the rebel-held east, but in the west as well. In Misurata, where Libya's military has kept up a tight siege against the last opposition redoubt in the western part of the country, rebel commanders said the allied airstrikes had allowed them to hold out.

Fighting around Misurata erupted again on Saturday, according to a rebel spokesman using the name Aiman. He said tanks and artillery resumed firing into the city on Saturday morning until three waves of airstrikes forced them back.

Protests Continue in Syria, Scores Dead

Bloomberg reports Assad's Promise Fails to Halt Syria Unrest as Scores Die During Protests

Syrian President Bashar Al-Assad's security forces clashed with protesters in several cities after his promises of freedoms and pay increases failed to prevent dissent from spreading across the country.

The protests that started earlier this month in the southern province of Daraa may have resulted in the deaths of 55 people, London-based Amnesty International said in a statement on its website yesterday. Security forces opened fire on protesters in the town of al-Sanamein in Daraa and carried out arrests in the capital, Damascus, it said.

Protests began earlier this month, making Syria the latest Middle Eastern country to be hit by the wave of uprisings that ousted longtime rulers in Egypt and Tunisia, and sparked a civil war in Libya. Assad's regime is an ally of Iran and a key power broker in neighboring Lebanon, where it supports Hezbollah, a Shiite Muslim group that has a guerilla army.

"Security elements are firing live bullets on protesters," a man who identified himself as Omar al-Masri, told BBC Arabic television in a telephone interview from Daraa. "We are not gangs. We are peaceful protesters."

Sarkozy Warns Arab Rulers, Cites Ivory Coast

The EU Observer reports Sarkozy warns Arab rulers about Libya precedent

French President Nicolas Sarkozy has warned all Arab rulers that they risk Libya-type intervention if they cross a certain line of violence against their own people.

The president told press at an EU summit in Brussels on Thursday (24 March) that UN Security Council resolution 1973 authorising air strikes on Libya has created a legal and political precedent on the "responsibility to protect."

Referring to deadly violence in Syria, he explained: "Every ruler should understand, and especially every Arab ruler should understand that the reaction of the international community and of Europe will from this moment on each time be the same: we will be on the side of peaceful protesters who must not be repressed with violence."

Sarkozy indicated that he is ready to tolerate a certain level of violence, but that any country which orders its army to open fire on crowds will cross a red line.

"In any democracy there can be demonstrations which can turn violent. But no democracy can accept that the army shoots live ammunition at protesters. This is the position of France and it does not change no matter what the country concerned."

He suggested that the Ivory Coast, where President Laurent Gbago's forces recently fired a heavy artillery shell into a market square, will be next in line for a UN vote on intervention.

Recalling the "extremely moving" scenes of Libyan rebels in Benghazi celebrating the arrival of French warplanes and the "extreme importance" of the United Arab Emirates' and Qatari involvement in the coalition, he called Libya a "historic opportunity" for "reconciliation between the two worlds."

The hawkish speech comes amid criticism of EU "double standards" on tolerating violence in strategically important countries such as Bahrain, Syria and Yemen. Palestinian diplomats have also pointed out the EU did nothing when Israeli jets bombed civilians in Gaza in 2009.

The Mideast and Africa will be a big mess in a hurry if there is going to be military intervention in every country where there is violence.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

FDIC "Cash for Keys" Proposal Would Pay Underwater Homeowners $21,000 to Walk Away; In Prison for Taking a Liar Loan

Posted: 25 Mar 2011 11:32 PM PDT

The Financial Times reports US Banks in 'Cash for Keys' Foreclosure Talks

The five biggest US mortgage servicers were told this week at a private meeting with regulators to consider paying delinquent borrowers up to $21,000 each as part of a broader settlement of the foreclosure crisis.

People who attended the meeting, chaired by the Federal Deposit Insurance Corporation on Monday, said the industry-wide "cash for keys" program would involve the biggest servicers, led by Bank of America paying borrowers as an incentive to leave their homes.

Banks would pay borrowers who are more than 90 days behind on mortgage payments up to $1,000 to seek independent financial advice and up to $20,000 in cash as a "fresh start" payment towards living costs in a new home. They would have to vacate their properties quickly and leave them in good condition.

Sheila Bair, FDIC chairman, raised the idea but people involved said it was not an official government proposal and was rejected strongly by some of the banks.

The Department of Justice; state attorneys-general; banking regulators, including the FDIC; the Treasury; and the new Consumer Financial Protection Bureau are among the agencies trying to come to a settlement with the industry. A combined penalty of about $20 billion has been discussed, with one idea to use the money to write down the outstanding debt of struggling homeowners.

However, prospects for a single "mega settlement" have worsened because officials disagree on the level of penalty and whether money raised in fines should be used for a principal writedown. The banking regulators, who do not agree among themselves, are nonetheless keen to come to an agreement quickly.

One way through the gridlock, which has been discussed among officials, is giving the servicers a menu of options for settlement, which might include principal writedown or a "cash for keys" scheme.

No Winnable Actions

If this absurd proposal were to pass, can someone tell me who the hell the banks would sell those properties to, how fast, and at what loss?

Of course I also want to know what valuation these distressed properties are kept on bank balance sheets if banks do not immediately take possession.

Is there a winning action here?

Obama's $20 Billion Civil Fine Scheme

Bear in mind the FDIC discussion stems from Obama's request for $20 Billion in Civil Fines, Money to be Used for Loan Modifications.

How Far would the Money Go?

Let's assume this proposal is adopted. How many would benefit? The answer of course depends on the criteria. However, but the goal seems to be to help those in distress, so let's use those currently in distress as a starting point.

Total Non-Current and Delinquent Loans

The above chart and following stats from the LPS Mortgage Monitor, January Observations

As of December 2010 there were 2,117,845 90+ day delinquent loans.
As of December 2010 there were 2,555,799 30-60 day delinquent loans.
As of December 2010 there were 2,195,940 in foreclosure.
As of December 2010 there were 6,869,584 in total non-current loans

Those in foreclosure are clearly too far gone to help. If we take $20 billion and spread it out over the rest, we can calculate mortgage principal reductions several ways.

$20 billion divided by 2,555,799 would give everyone 30-60 days late a principal reduction of $7,825
$20 billion divided by 2,118,845 would give everyone 90+ days late a principal reduction of $9,439
$20 billion divided by both groups would give everyone a principal reduction of $4,278

This is supposed to help?

By the way, history suggests once someone gets to 90+ days late, the situation is hopeless. Even if the $20 billion was entirely thrown at those 30-60 days late, we are talking about principal reductions of under $8,000.

Doing Nothing Not a Solution

Assuming banks gave everyone $20,000, they would help 1 million people. However, what would banks do with those 1 million "cash for keys" houses?

If banks helped 2 million people at 10,000 each, what would banks do with another 2 million houses?

However, doing nothing is not a solution given there are 6,869,584 in total non-current loans of which 2,195,940 are already in the foreclosure process.

One irony is that previous programs attempted to halt foreclosures, this would speed it up.

While I see merit in speeding things up, I see little merit in forcing banks to pay $20 billion to kick people out of their houses.

Kicking the Can

The administration, the banks, the FDIC, and the Fed have collectively managed to kick the can down the road. Meanwhile the problem keeps growing.

In Prison for Taking a Liar Loan

Of all the crooked bankers from the top on down, of all the millions of potential cases, government managed to go after a one person who took out two liar loans.

Please consider In Prison for Taking a Liar Loan

This story is truly amazing, you have to read it to appreciate it.

I do not condone liar loans but sending someone to prison for that is more than a bit ridiculous. The punishment should fit the crime.

By the way what does it cost to imprison someone for 2 years? Meanwhile let's recap my rolling list of bank fraud and what little was done about it.

Rolling List of High Profile Fraud Targets

October 10, 2010: FDIC Authorizes $1 Billion Lawsuits Against Failed-Bank Executives; Token Search for Low-Profile Scapegoats

April 29, 2010: Barofsky Threatens Criminal Charges in AIG Coverup, Goldman Sachs Abacus Deal, TARP Insider Trading; New York Fed Implicated

April 16, 2010: Rant of the Day: No Ethics, No Fiduciary Responsibility, No Separation of Duty; Complete Ethics Overhaul Needed

March 2, 2010: Geithner's Illegal Money-Laundering Scheme Exposed; Harry Markopolos Says "Don't Trust Your Government"

January 31, 2010: 77 Fraud, Money Laundering, Insider Trading, and Tax Evasion Investigations Underway Regarding TARP

January 28, 2010: Secret Deals Involving No One; AIG Coverup Conspiracy Unravels

January 26, 2010: Questions Geithner Cannot Escape

January 07, 2010: Time To Indict Geithner For Securities Fraud

October 20, 2009: Bernanke Guilty of Coercion and Market Manipulation

July 17, 2009: Paulson Admits Coercion; Where are the Indictments?

June 26, 2009: Bernanke Suffers From Selective Memory Loss; Paulson Calls Bank of America "Turd in the Punchbowl"

April 24, 2009: Let the Criminal Indictments Begin: Paulson, Bernanke, Lewis

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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Damn Cool Pics

Zidane, The Greatest Player Ever Destroying A Goalkeeper
Architecture-Inspired Typography
Canine Commandos Being Trained

Zidane, The Greatest Player Ever Destroying A Goalkeeper

Posted: 25 Mar 2011 09:08 PM PDT

Zidane embarrasses a young goalie in training, but then apologizes to him afterwards. What a class act.

Architecture-Inspired Typography

Posted: 25 Mar 2011 08:10 PM PDT

Scotland-based artist Christopher Labrooy sure knows how to make words come alive! He combines graphic design and typography to creates three-dimensional worlds filled with wit and whimsy. Experience modern fonts and see the names of famous architects Frank Gehry, Zaha Hadid, Toyo Ito, and Oscar Niemeyer like never before. Cool bonus? At then end, check out some funky fresh typographic illustrations designed for the New York summer streets festival.

Source: mymodernmet

Canine Commandos Being Trained

Posted: 25 Mar 2011 07:46 PM PDT

These dogs are being trained st the Wolfgrey K9 training facility that is located close to Bangalore, India. They are used to prevent the violence in the cities and towns including riots, terrorist threats and domestic aggression. These K9s make great partners. The breeds over here are German Shepherd's, Dutch Shepherd's and Belgian Shepherd's.