Saturday Reads Around The Internets - Death By 1,000 Euros

Welcome to the weekly roundup of great articles, facts and figures. These are the weekly finds that made our eyes pop.


Fed Chair Bernanke Warns on Europe, Jobs Crisis

It's astounding to me, that even the big banker in chief knows the jobs crisis and what's going on in Europe can bring the U.S. to it's knees, unlike most of the punditry these days:

Although the Fed would obviously do all that we could to maintain stability and to keep monetary policy as easy as necessary to try to minimize the damage, I don't think we would be able to escape the consequences of a blow-up in Europe


Global Warming

If we don't immediately reduce CO2 emissions the effects will be irreversible in 5 years:

International Energy Agency (IEA) realeased its 2011 World Energy Outlook today in London. The report warns that if urgent action is not taken the world is headed for irreversible climate change within five years. "If we do not have an international agreement whose effect is put in place by 2017, then the door will be closed forever," IEA Chief Economist Fatih Birol warned.

Oh yeah, oil will never be cheap again. Probably a good thing since it's killing the planet.


Corporate Audits

Who can forget Enron and Arthur Anderson? Seems quite a few. David Cay Johnston goes into a little history of audits and asks this:

Why do we let corporations pick their auditors? Why do we have only four big firms instead of a dozen, a score or more? Why doesn’t government do the audits, as the IRS does tax audits? Why is law enforcement handcuffed by inadequate budgets and rules that hinder investigations? Why are auditors allowed to quietly resign instead of being required to blow the whistle?



Naked Capitalism has found a comprehensible legal analysis of MERS, the electronic registry and trading of mortgages.

The persistence of MERS as Lender A’s agent in the public record in effect accomplished with smoke and mirrors—and it conjures a host of evils. Yes, every MERS member establishes its own agency relationship with MERS. But immediately upon transfer of the mortgage from Lender A the agency relationship between MERS Lender A ends. The agency between MERS and Owner B is in fact a new and distinct agency relationship—and, given the functional identity between principal and agent, a new and distinct “MERS” as well. Again, in the absence of a valid assignment, the status of MERS as the mortgagee in the public records becomes a misrepresentation of material fact at the very instant the mortgage is assigned by Lender A, and from that point on the mortgage industry is, in effect, using a ghost to do its bidding—and one of dubious character at that. Only the name “MERS” remains; the “continuity” is a chimera, an illusion, the purpose of which is to make an end run around the need for a formal assignment. It has also served as a red herring, distracting courts from the sober fact that the role of MERS as a “common agent,” for all of its theoretical elegance and self-proclaimed validity, simply cannot in its present form be fit into the framework of existing law without inflicting collateral damage upon the very principles of fairness and transparency on which that framework has been built over many years and through many efforts and sacrifices. What this all boils down to it this: in order for MERS to remain the mortgagee of record at the local land office without fraudulently misrepresenting itself as such three things must occur.

We've covered the MERS mortgage fraud scandal for sometime.


Slave Labor Trading Desk - The Web

By now most have seen websites forcing workers to bid on projects which mean they are working for 24¢ an hour in the end. Finally someone else notices these auction sites are glorified slavery auctions in electronic form.

For $25, Daniel H will help debug your software. Valerie asks just $20 to pick your folks up from the airport. Miss Minty, for $50, will teach you to drive a stick-shift. Those are some of the services being offered on Coffee and Power, a web site that looks to match up tasks with willing workers. Like it or not, it may be the future of work — and pay.


Illegal Immigrants? Try Illegal Employers

We all know corporations and special interests put out article plants to promote whatever agenda they want in the press. This, from Bloomberg is quite amusing. It's supposed to say how we must have illegals to do the jobs America won't do, but ends up documenting slave labor conditions. Not intentional, the article shows exactly why the U.S. Chamber of Commerce and Big Agriculture demand illegal labor. It's all about no benefits, wages below minimum and even no bathroom breaks.

Since heading into the fields at 7 a.m., they haven’t stopped for more than the few seconds it takes to swig some water. They’ll work until 6 p.m., earning $2 for each 25-pound basket they fill. The men figure they’ll take home around $60 apiece.

You got immigrants doing more than what blacks or whites will. Look at them, they just work and work all day. They don’t look at it like it’s a hard job. They don’t take breaks!”

It's more than illegals shouldn't be taking jobs. What those employers are demanding is also illegal....last time I checked any labor laws.


Europe to Regulate Credit Rating Agencies

Did you know, unlike the United States, Europe is looking to regulate the credit rating agencies? Just about the time their rules are going into effect, seems S&P made a huge mistake on France:

Just days before it was to propose sweeping regulations for credit rating agencies, the European Commission on Friday joined calls for an investigation into Standard & Poor’s after the company erroneously sent out an e-mail suggesting that it had lowered the rating on France’s sovereign debt.


Republicans Target American Workers

Someone over at Market Watch notices the GOP agenda is all about hurting the U.S. workforce:

It’s a mark of how far right the national conversation has swung that we’ve heard endlessly about the Obama administration’s so-called “War on Business” with little notice of the Republicans’ strategy of targeting workers.

Stripping workers of their rights — their right to a fair wage, their right to organize and bargain, their right to a secure retirement — is at the center of the economic plan of congressional Republicans.

The Republicans’ ideas to fix the economy hinge heavily on the bizarre notion that what plagues American business is high costs: High labor costs, high taxes and too many regulations.

It’s not so. Labor costs are cheap, and falling.


Death of the Euro

Paul Krugman in predicting the Euro's demise, explains why debt is such an issue for Spain, Greece and Italy:

What has happened, it turns out, is that by going on the euro, Spain and Italy in effect reduced themselves to the status of third-world countries that have to borrow in someone else’s currency, with all the loss of flexibility that implies. In particular, since euro-area countries can’t print money even in an emergency, they’re subject to funding disruptions in a way that nations that kept their own currencies aren’t — and the result is what you see right now. America, which borrows in dollars, doesn’t have that problem.


Work life Sucks and We're Depressed About It

This is a no brainer, 25% of workers are depressed.

The survey, which rogenSi calls its “Global Mindset Index,” also found that 92% of workers “responded that their emotions were in someway being controlled by the results they have been achieving at work” as opposed to more positive factors such as their own belief in self.

Why anyone gives any credibility to an employer these days, beyond doing what it takes to keep the paycheck, is beyond me. Why look for help with self-esteem to a glorified slave overseer?


Dr. Doom Predicts End of Eurozone

He's back....and predicting the inevitable, the Eurozone will break apart:

The eurozone's problems are much deeper. They are structural, and they severely affect at least four other economies: Ireland, Portugal, Cyprus, and Spain.

For the last decade, the PIIGS (Portugal, Ireland, Italy, Greece, and Spain) were the eurozone's consumers of first and last resort, spending more than their income and running ever-larger current-account deficits. Meanwhile, the eurozone core (Germany, the Netherlands, Austria, and France) comprised the producers of first and last resort, spending below their incomes and running ever-larger current-account surpluses.


Banks Try to Stop Customers From Closing Accounts

Dailykos stopped their never ending unlimited migration, if you don't agree, you're a racist xenophobe, text stream for a second to write up a useful post, complete with videos, showing banks trying to stop customers from closing accounts. This is true, in case you don't believe the videos. I had a similar problem when closing my Wells Fargo account earlier this year.



honorable mention

The WSJ is running a series, generation jobless on NCG's and their denial of work and absurd student debt. Yeah, right, we need to bring in foreign guest workers on Visas who take these very jobs these people need.

Sorry for no articles yesterday, was out of office, so to speak.

Kudo for headline 'Try Illegal Employers'

Don't just try them, apply RICO to them. A piece of land is worked by illegals for years but enforcement is impossible because all you can do is prosecute labor contractors (overseers of slaves) who disappear with the wind only to reemerge under a new name the next day ... EXCEPT ... yes, you can, it is lawful, to seize the land under RICO! But that possibility has only been attempted once that I know of, and that was by someone in an obscure Office of County Attorney in Idaho a few years ago, underreported of course.

Think about it: land repeatedly used to abuse immigration law and labor standards law and no way to successfully prosecute those responsible ... EXCEPT ... it's the textbook-perfect case for RICO seizure. And it would undoubtedly work! Just a few cases could do more to stop illegal immigration than any fence at the border! (And it'd be good for the budget deficit!)

Why doesn't it happen? Something to do with politics?

quite the backfire on propaganda reports

The piece was supposed to be about why we need illegals and Alabama is a bunch of racist xenophobes. Instead it shows Alabama and big Agriculture in particular, are so used to slave labor, they cannot even grasp that they need to offer wages and provide working conditions at least as good as what they would give their own dog.

This situation with anything immigration is so horrific, it's fairly clear corporations and special interests are gearing up for some unlimited migration, guest worker, whatever bill.

We'll stay true to labor econ 101, that yes, this affects labor supply and of course does and can squeeze out workers already here, now students too, all other factors static.

Korean public against US-Korea deal

Saturday Reads may have missed this report from the EP-linked Public Citizen's Eyes on Trade, 11 November 2011 -- worth reading!

Who wudda thunk that the Korean people had any say in whether the Korea-USA FTA passes or not?

Ah, Koreans ... never short on courage for kung-ho activism! If the North and South ever manage unification, they'll conquer the world ... and probably make it a much more democratic place!

David Cay Johnston doesn't mince words

"The failures of auditors to uncover cooked books ... are a cancer on the accounting industry."  --  David Cay Johnston

Here's more from Johnston's Reuters blog, 11 November 2011 --

Arthur Levitt, chairman of the Securities and Exchange Commission under President Bill Clinton, said in a speech at New York University in 1998 that corporate managers, auditors and analysts were taking part in a “game of nods and winks.” ....

He cited “a gray area where the accounting is being perverted; where managers are cutting corners; and, where earnings reports reflect the desires of management rather than the underlying financial performance of the company.” ....

Professor Prem Sikka, a reformer at the University of Essex in Britain, notes surveys showing that “as many as 70 percent of auditors admit to falsified audit work” in surveys of countries around the world. ....

Why do we let corporations pick their auditors? Why do we have only four big firms instead of a dozen, a score or more? Why doesn’t government do the audits, as the IRS does tax audits? Why is law enforcement handcuffed by inadequate budgets and rules that hinder investigations? Why are auditors allowed to quietly resign instead of being required to blow the whistle?

Auditing needs a shakeup, fundamental restructuring and the accounting firms need a serious debate about their failings, practical and moral. ....

Until we get structural reform the history of gross failings by all of the Big Four are sure to continue. And that means no one’s investments can be safe.

Ugly American looks at Europe

Can Ben Bernanke, Paul Krugman, Dr. Roubini  and so many others ... all be wrong?

Being one of your ugly Americans with a myopic view of the world, the big question in my mind is what this all means for the USA.

Europe's problems seem to me to have the potential to be good news for us in the short run, but also potentially a part of some global bad news that would include us. Still, I think it would be a bad idea for the US Treasury or the Fed to get involved in any attempt to bail out Europe or otherwise imagine that we can somehow help them through a critical rough spot without setting ourselves up to be dragged down with them. We really have to get over our $uperAmerica delusional system, not to mention our Eurocentrism! But that's just my opinion.

It has come to my attention that Chris Martenson in an 'alert' earlier last week (on or about 7 November 2011) took a pessimistic view of the prospects for the EU and ECB, warning that the effects will surely slop over into the USA, possibly creating a banking crisis here. Based on an estimate that the chance of such a crisis is too great not to take precautionary action in anticipation of it, CM advises that Americans withdraw enough of that plain old green stuff (USDs) from their banks and hold onto that green stuff as a hedge against a banking crisis -- at least hold enough of it to comfortably weather three months of a bank failure or freeze-up (ATMs not working).

To me, this alert from CM was almost incredible -- hard to believe that it was from CM himself. The reason for my reaction is that the CM website is a bastion of goldbug doom-saying on three fronts: Peak Oil, hyperinflation (collapse of 'fiat currencies', especially the USD), and, societal break-down (including the ultimate threat, break-down of the food-supply chain). The mantra there has been 'Put not your faith in paper but in gold, or other PMs, physically held in your own vault underneath your well-defended residence." (Well, that's probably an over-simplification, but I'm giving the overall thrust of the website.) Atypically, CM failed in his recent alert to include any tip about either longing -- or shorting -- PMs ... except that CM said that maybe a little later in 2012, he himself would be prepared to re-enter the PM markets with a strong bullish recommendation.

After the past week and with gold pushing $1800, CM may already or very soon be making a bullish recommendation on gold ... except that platinum is still just barely above $1650 ... go figure. Markets never cease to amaze.

Myself, I have been not exactly bullish on silver, but contrarian with respect to the recent shorting of silver and talk about an expected "correction in the silver market." Also, I think that there has to be some pressure on European banks to quietly sell some of their gold bullion.

I'm not saying that gold can't reach $2100 by the end of 2011, or that such would be unrealistic as a rational gold price ... just that I don't see that happening this year. I think the buzz about the recent rise in oil and gold is overblown, and it's mostly reflecting the talk about Iran. Of course, the talk could get worse, or could even turn into something more than just talk ... like the end of the world as we know it.

But what I mainly see happening here in the USA is strengthening of the USD as fall-out from the Euro crisis. So, unless we find the Fed moving toward the justly (IMO) dreaded QE3, what we can expect is stabilization of the USD despite QE1 and QE2. Martenson, of course, finds QE3 to be as inevitable as the collapse of the Euro, sometime within the next few months.

We shall see what we shall see. Meanwhile here's where we are in November 2011: goldbugs are recommended to increase their holding of 'physical' paper! Go figure. And that's all because of the Euro!

The USD is so stabilized in the short term, thanks to the Euro's problems, that goldbugs are actually holding 'physical' paper!

Ah, the irony of it!

Fed & Gold

Federal Reserve is already bailing out Europe. We wrote about it when announced. They are open to short term lending.

Gold, is part fear and hype, but the dollar becoming stronger I don't think the Fed wants that, globally, so seems QE3 could pop up as a result.

Fed, QE3, Euro, PM

"Federal Reserve is already bailing out Europe. We wrote about it when announced. They are open to short term lending." -- Robert Oak

Yes, I recall EP's coverage on bail-out and QE USDs going to Europe. Some watchers are using terms like 'USDEuro system', and of course there has to be something like that, at least to a limited extent ... at a minimum, some kind of overnight clearing of accounts.

I think that Ron Paul's frankness along with his substantial presence restrains the Fed in the context of the approaching 2012 election, not to mention Dennis Kucinich's NEED Act, incorporating  all provisions of the Monetary Reform Act. I don't think the Fed feels as free to act, or as impregnable to criticism, as they did just a few years ago or even one year ago.

If the Fed does decide on QE3 (and there's a good chance of that, of course), it will be framed as targeting MBS, which could be to the advantage of both domestic and foreign banks (or other financial institutions). There's been talk not only from Tarullo but also from Bernanke about that kind of thing --

See, Reuters 'Macroscope' article 'Bernanke backs Tarullo', 3 November 2011

Given the delicate balance of power on the FOMC, I tend to give recent remarks by Vice Chair Janet Yellen a lot of respect as predictive of what the Fed may, or might not do, respecting the Euro crisis.

While U.S. banks have "manageable" direct exposure to sovereign debt in the smaller European countries, they have substantial links to banks in larger European countries, some of which are facing funding difficulties, Yellen said.

"In light of such international linkages, further intensification of financial disruptions in Europe could lead to a deterioration of financial conditions in the United States," she said. "We are monitoring European developments very closely, and we will continue to do all that we can to mitigate the consequence of any adverse developments abroad on the U.S. financial system."

In her talk, largely an overview of the regulatory steps the Fed has and will take to shore up the stability of the financial system, Yellen said she would not rule out using monetary policy as a stabilizing tool, "at least on the margin."  ....

Yellen urged European officials to solidify and follow through on rescue pledges. While a euro zone crisis-fighting plan announced in October was a step in the right direction, details remain murky, she said.

"The continued rise in sovereign debt spreads for some countries, more generalized market volatility, and political turmoil that we have seen in recent days speak to the need for forceful action to stabilize the situation," she said.

-- excerpted from Reuters story by Ann Saphir, 11 November 2011


IMO, 'housing-targeted' QE3 is looking likely, but is still what I believe to be a bad idea, because it will tend toward socio-economic instability rather than toward stability. It will reduce to more bail-out for banks and probably will accelerate flight to PM, without making any contribution to reducing unemployment or other underlying economic problems.  Of course, keeping the USD down can contribute to increased US manufacturing exports, but that can also result in  increased crude oil prices in dollar-terms.