Just A Few Bank Burglaries?

Felix Salmon writing in Reuters’ Analysis and Opinion

In order to know that cases like these are “a tiny percentage of foreclosures,” you need to know what that percentage is, n’est-ce pas? So this defense is not particularly convincing, unless and until we can see some numbers. Surely, mistakes like these would happen occasionally even during the boom years. But if the percentages are rising, that’s clear empirical evidence that overwhelmed servicers are doing an increasingly shoddy job.

Next time a newspaper wants to write about this particular trend, then, let’s get the names of those bank representatives on the record, let’s ask them how they know that the proportion of dreadful mistakes they make is “tiny” or “minuscule,” and let’s be a bit more determined that we should be the ones making the determination as to how small the percentage is, rather than the bank’s own flacks.

Exactly. I made the same point several months ago when the banks said that only a handful of mortgages had been mishandled. The banks were lying about the scale of the problem. It turned out there were minimally hundreds of thousands. This does not give one confidence in bank claims of “just a few cases,” “a few bad apples,” and all those other things you say when you don’t want to admit the scale of your crimes.

I don’t believe Mr. Salmon is mistaken in his assessment. Breaking into people’s homes and taking their stuff is an extremely intimidating tactic. You can just imagine the desk bound suits chortling over a business lunch about how they forced the deadbeats out.

Let’s get some lawsuits going. They are the public’s last line of defense and we can be quite sure law enforcement, politicians and regulatory agencies will sit this one out.

James Pilant

Net Neutrality – Obama Caves, A Young Turks Interview With Timothy Karr

This is 18 minutes and 23 second. A bit long for many of my readers. Nevertheless, this is a good explanation about how the new rules amount to a surrender on net neutrality.

James Pilant

Will Wall Street Ever Pay For Its Crimes? Or Just Its Fair Share Of Taxes?

These are brief interviews with Les Leopold. Here is a sample of his writing from Huffington Post

We got into this crisis because Wall Street invented and pedaled fantasy financial instruments that turned out to be junk. While their party lasted, those complex derivatives were a gold mine for the largest financial institutions. According to the New York Times, the profits from the nine largest commercial banks “from early 2004 until the middle of 2007 were a combined $305 billion. But since 2007, those banks have marked down their valuations on loans and other assets by just over that amount.” In other words, the profits weren’t real.

He also has a book called The Looting of America: How Wall Street’s Game of Fantasy Finance Destroyed Our Jobs, Pensions, and Prosperity—and What We Can Do About It.

News Of Death Net Neutrality Working Through The Media

Okay, watching this thing is just painful. Not only are sites like mine going to suffer, if you want a decent internet speed so you can watch movies, you’re going to have to pay more for it.

It highlights once again, the President’s ability to take a solemn pledge on an issue, break it, and then declare victory.

Today, the White House hales a victory on Net Neutrality. Maybe they can sell that to the rubes but I can read law.

James Pilant

A 12 Cent Credit Card Fee?

From the Houston Chronicle

A proposed cap on the fees that banks charge for debit card transactions would substantially reduce the cost for businesses. But it’s started a death watch for debit card rewards and renewed predictions that free checking is done for.

At issue is who will ultimately benefit from the savings? The Federal Reserve’s proposal to cap these fees, officially known as interchange fees, at 12 cents per transaction would enable retailers to pass on annual savings of $10 billion to $13 billion to consumers. But banks and card networks maintain that retailers will pocket the savings. This would leave consumers to bear the brunt of the new law through higher costs for banking and reduced rewards programs.

In releasing its proposal Thursday, Fed staff members said they found the cost to banks for processing is between 7 cents and 12 cents per transaction. Yet every time a customer swipes a debit card, the average fee is 44 cents.

The banks are making out like bandits and then telling us it’s for our benefit. I always worry when someone says they are doing something for my own good. I can’t help but feel that someone is going to hit me.

Banks love to bill as if some dedicated employee was carefulling examining the transaction, which was undoubtedly true in 1947. The actual current circumstances is a high speed computer instantly calculating the transaction.

We can adjust for the times.

James Pilant

Commerce Department Calls For Internet Privacy!

From the Star Tribune

The Commerce Department is calling for the creation of a “privacy bill of rights” for Internet users to set ground rules for companies that collect consumer data online and use that information for marketing and other purposes.

The proposal, outlined in a report Thursday, is intended to address growing unease about the vast amounts of personal information that companies are scooping up on the Internet — from Web browsing habits to smart phone locations to Facebook preferences. That data is often mined to target advertising.

The new report is intended to guide lawmakers, industry and a White House group looking at the issues surrounding Internet privacy.

Absolutely necessary.

There’s enough tracking software on my computer to slow it down (and I play Fallout 3, that means power). We don’t even know who these people are. Who is playing with our data? Who’s selling it? And for what purpose? Scammers? Is is the Russian Mafia, the Communist Chinese or the North Koreans operating in the only area where their technology is equal to the West (there might be another exception for counterfeiting, they’re really good at that)?

This proposal is important and I hope something comes of it.

James Pilant

Obama To Lower Corporate Tax Rate!

From Reuters

Democrats and Republicans should begin a conversation next year about a broad overhaul of the tax code that would involve lowering rates while eliminating tax breaks for favored groups, President Barack Obama said in an interview broadcast on Friday.

The Republicans now have a majority in the House. Shouldn’t this have been something done during the first two years?

Obama said any effort to streamline the multilayered U.S. tax code would be challenging but if successful, it could set the stage for more robust growth.

Okay guys, I’ve been around the block a few times and when ever someone talks about simplifying the tax code, the middle class is about to get nailed hard. By the way, “robust growth” is a code word for lower corporate taxed and business benefits like subsidies.

Tax reform is an idea backed by many in the business community who say the current corporate tax structure puts American firms at a competitive disadvantage.

For “many in the business world,” read every corporate lobbyist is salivating like a hungry German Shepherd in front of filet mignon.

“Typically, the idea is, simplifying the system, hopefully lowering rates, broadening the base — that’s something that I think most economists think would help us propel economic growth,” Obama told National Public Radio in an interview. “But it’s a very complicated conversation.”

Verbiage – means nothing.

“So what I believe is, is that we’ve got to start that conversation next year. I think we can get some broad bipartisan agreement that it needs to be done. But it’s going to require a lot of hard work to actually make it happen,” he said.

For “work” read continuous concessions stretched out over months so that the lack of backbone, resolve and political intelligence of the Obama White House will be fully revealed.

“Change You Can Believe In.” Yes, in the same way I believe in post-apocalyptic waste lands.

Explain this to me. For decades large corporations have been directly evading, off shoring their corporate headquarters, sometimes just not paying taxes, and blackmailing every State, county and city humanly possible to cut their taxes, so we reward them with lower rates?

And here I am again trying to teach business ethics to my students who will observe the real life machinations of our President, which means, I get to say, “Okay, do the right thing, everyone from the President on down will reward the other guys, but you still be good.”

Then I get to go into “good for your soul” argument which is pretty much all I got left at that point.

Writing a business ethics web blog under this Presidency has all the benefits of being a medieval flagellant.

James Pilant

Gift Card Hidden Fees

From CBS Money Watch

You might think that new gift card rules have made the holiday shopping season safe for those wanting to give plastic rather than presents, but you’d be wrong. New rules limit hidden fees on “gift” cards, but if you call your plastic a “prepaid” card, none of the new rules apply.

More than 30 reloadable debit cards geared to teens are being launched in the first week of December, just in time for the holiday rush, according to the New York Times. These teen-oriented cards, like the just-cancelled Kardashian Kard, can charge outrageous fees with impunity.

How high are the fees? The Kardashian Kard broke all previous records, charging a minimum of $99 for one-year’s use. But other cards have a plethora of hidden fees that can eat up the value of the plastic in no time.

Look guys, they have these things called checks, money orders and cash. If you give those, people can choose what they want to buy.

Some cards are regulated by the government. Some for all intents and purposes are not.

You have to read the contract.

In most cases, for most things, it doesn’t matter what the contract says, when you upgrade software and host of other things, you sign or nothing.

This is not one of those.

You have to read the contract.

Annual fees of 99 dollars on a gift card is ridiculous and if you didn’t read the print, you’ll be paying that if you buy the wrong card at the wrong place.

Have some good holidays! Don’t get stolen from! The crooks and scum are hunting you like so many rabbits.

James Pilant

Deficit Commission Recommends Further Destruction Of The Middle Class

The future of the Middle Class - ruins.
From the BBC

A presidential panel set up to help trim the US budget deficit has called for steep spending cuts and tax rises.

The proposal would cut defence, social security and other spending, slashing a total of $4.1tn (£2.62tn) from the budget deficit by 2020.

But analysts say the panel is unlikely to ratify the plan with a vote, calling into question whether the US Congress will act on its recommendations.

“The solution will be painful,” the plan reads. “There is no easy way out.”

The US had a budget deficit of $1.3tn in the year to September, and critics have said the government should do more to narrow the gap.

Social Security pays for itself for another twenty years and its surplus is used in the U.S. to fund things like defense. Social Security taxes are only taken out of the first, 100,000 dollars or so out of income. If we raised the limit even slightly the fund would be intact for many decades.

Why is social security under attack? It’s doctrinal. Friedman economics says that government can do nothing right. Therefore, social security must by its very government nature be a failure. The numbers, the facts, the experience, – mean nothing. It’s very similar to a religion.

It’s why instead of the military rebuilding the Iraqi infrastructure, we used private firms. By the Friedman doctrines, this colossal incompetence and theft of government funds would have been much worse if the government had done the job.

Private and public means to accomplish ends are choices. There is no complete superiority of one over another. There never will be. There are just tools to accomplish things, no more.

That people are able to build a strange worshipful doctrine toward “free enterprise” is a symptom of larger moral and ethical problems. But above all, it’s the result of a successful sales job paid for over decades with millions and billions of dollars and preached by dozens of well financed foundations and other advocacy organizations.

Let’s read another section from the BBC coverage –

The panel’s chairman, Mr Bowles, said the panel’s work had – at the very least – made America engage in substantive debate on the deficit issue.

“The era of debt denial and the denial of its consequences is over,” he said. “We have started an adult conversation that will dominate the debate until the elected leadership in Washington does something real.”

This is nonsense. These measures have been preached for decades by “free market” conservatives.

Besides the real issues aren’t even on the table. Why do we allow companies based and operating in the United States to offshore their tax burden? What is fair tax code and what do we need to do to enforce it? I could go on.

But if you want to quickly discover the intellectual and moral absence in the committee’s recommendations, you only have to examine the question of a bank tax.

What is a bank tax, you say?

It is the phrase that must not be spoken.

Formerly, the United States was a manufacturing giant, so it gathered its taxes from a well paid middle class and by taxes on goods. Now we live in a nation based on finance and “play” money. Financial speculation is the rule of the day. Since our economy is now based on finance, doesn’t it make sense to change the nature of our tax structure to reflect our current realities? What we have now is a shrinking manufacturing base and a deteriorating middle class. We also have a banking and financial industry wedded at the hip to tax rescues and government guarantees. That merits taxation. Yet, a tax to raise a mere twenty billion dollars to help pay for another bailout was defeated in the middle of this year.

Let’s try another phrase, financial transaction tax.

No one seems to talk about this one either. Did the debt commission talk about this for page after page? You’re going to read more about it here.

A report on this kind of tax suggests that even a small, simple tax will produce 100 billion dollars in revenue each. Obviously, a trillion in a decade.

That’s deficit reduction.

There is much more to talk about. But there seems little likelihood of a genuine discussion outside of the limits established by the beltway pundits. We can only talk about Medicare, Social Security and a PR campaign of little significance to rein in defense spending. I see nothing else in the proposals likely of actual action except the mortgage deduction.

President Obama stacked the committee with those who had long wanted to attack social programs. Those programs that benefit the middle class are those that will be successfully attacked. The middle class has been targeted for four decades with continued success. There is no reason for Washington to stop now.

James Pilant

Google Investigated

The BBC reports that a European Investigation will be launched over complaints about Google.

EU launches antitrust probe into alleged Google abuses

The European Commission has launched an investigation into Google after other search engines complained that the firm had abused its dominant position.

The EC will examine whether the world’s largest search engine penalised competing services in its results.

The probe follows complaints by firms including price comparison site Foundem and legal search engine ejustice.fr.

What we are talking about here is search results. You enter a search on Google and ten results come up on the first page. There are often thousands and, on occasion, millions of hits. The order of these hits is vital to web site success. If you are selling something, for instance, like coffee and your search result puts you at 213, you’re not going to sell very much coffee.

Google’s competitors are alleging that the company manipulates its search results to make competitors, well, less competitive. They allege that their place in the hierarchy, say fifteenth in a search, would be seventh if the “real” results were posted.

This is the kind of problem you can expect with a company that controls a very large part of the market and has components that compete with other companies that use the Internet.

James Pilant