Thursday April 16 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

The Dark Side of Dubai - (www.independent.co.uk) Karen Andrews can't speak. Every time she starts to tell her story, she puts her head down and crumples. She is slim and angular and has the faded radiance of the once-rich, even though her clothes are as creased as her forehead. I find her in the car park of one of Dubai's finest international hotels, where she is living, in her Range Rover. She has been sleeping here for months, thanks to the kindness of the Bangladeshi car park attendants who don't have the heart to move her on. This is not where she thought her Dubai dream would end. Her story comes out in stutters, over four hours. At times, her old voice – witty and warm – breaks through. Karen came here from Canada when her husband was offered a job in the senior division of a famous multinational. "When he said Dubai, I said – if you want me to wear black and quit booze, baby, you've got the wrong girl. But he asked me to give it a chance. And I loved him." All her worries melted when she touched down in Dubai in 2005. "It was an adult Disneyland, where Sheikh Mohammed is the mouse," she says. "Life was fantastic. You had these amazing big apartments, you had a whole army of your own staff, you pay no taxes at all. It seemed like everyone was a CEO. We were partying the whole time." Her husband, Daniel, bought two properties. "We were drunk on Dubai," she says. But for the first time in his life, he was beginning to mismanage their finances. "We're not talking huge sums, but he was getting confused. It was so unlike Daniel, I was surprised. We got into a little bit of debt." After a year, she found out why: Daniel was diagnosed with a brain tumour. One doctor told him he had a year to live; another said it was benign and he'd be okay. But the debts were growing. "Before I came here, I didn't know anything about Dubai law. I assumed if all these big companies come here, it must be pretty like Canada's or any other liberal democracy's," she says. Nobody told her there is no concept of bankruptcy. If you get into debt and you can't pay, you go to prison. "When we realised that, I sat Daniel down and told him: listen, we need to get out of here. He knew he was guaranteed a pay-off when he resigned, so we said – right, let's take the pay-off, clear the debt, and go." So Daniel resigned – but he was given a lower pay-off than his contract suggested. The debt remained. As soon as you quit your job in Dubai, your employer has to inform your bank. If you have any outstanding debts that aren't covered by your savings, then all your accounts are frozen, and you are forbidden to leave the country. "Suddenly our cards stopped working. We had nothing. We were thrown out of our apartment." Karen can't speak about what happened next for a long time; she is shaking. Daniel was arrested and taken away on the day of their eviction. It was six days before she could talk to him. "He told me he was put in a cell with another debtor, a Sri Lankan guy who was only 27, who said he couldn't face the shame to his family. Daniel woke up and the boy had swallowed razor-blades. He banged for help, but nobody came, and the boy died in front of him." Karen managed to beg from her friends for a few weeks, "but it was so humiliating. I've never lived like this. I worked in the fashion industry. I had my own shops. I've never..." She peters out. Daniel was sentenced to six months' imprisonment at a trial he couldn't understand. It was in Arabic, and there was no translation. "Now I'm here illegally, too," Karen says I've got no money, nothing. I have to last nine months until he's out, somehow." Looking away, almost paralysed with embarrassment, she asks if I could buy her a meal. She is not alone. All over the city, there are maxed-out expats sleeping secretly in the sand-dunes or the airport or in their cars.

Communities Print Their Own Currency to Keep Cash Flowing - (www.usatoday.com) A small but growing number of cash-strapped communities are printing their own money. Borrowing from a Depression-era idea, they are aiming to help consumers make ends meet and support struggling local businesses. The systems generally work like this: Businesses and individuals form a network to print currency. Shoppers buy it at a discount — say, 95 cents for $1 value — and spend the full value at stores that accept the currency. Workers with dwindling wages are paying for groceries, yoga classes and fuel with Detroit Cheers, Ithaca Hours in New York, Plenty in North Carolina or BerkShares in Massachusetts. Ed Collom, a University of Southern Maine sociologist who has studied local currencies, says they encourage people to buy locally. Merchants, hurting because customers have cut back on spending, benefit as consumers spend the local cash. "We wanted to make new options available," says Jackie Smith of South Bend, Ind., who is working to launch a local currency. "It reinforces the message that having more control of the economy in local hands can help you cushion yourself from the blows of the marketplace." About a dozen communities have local currencies, says Susan Witt, founder of BerkShares in the Berkshires region of western Massachusetts. She expects more to do it. Under the BerkShares system, a buyer goes to one of 12 banks and pays $95 for $100 worth of BerkShares, which can be spent in 370 local businesses. Since its start in 2006, the system, the largest of its kind in the country, has circulated $2.3 million worth of BerkShares. In Detroit, three business owners are printing $4,500 worth of Detroit Cheers, which they are handing out to customers to spend in one of 12 shops. During the Depression, local governments, businesses and individuals issued currency, known as scrip, to keep commerce flowing when bank closings led to a cash shortage. By law, local money may not resemble federal bills or be promoted as legal tender of the United States, says Claudia Dickens of the Bureau of Engraving and Printing.

Banks 'colluding to swap assets at inflated prices using taxpayers' dollars.' - (www.alternet.org) Recall the Geithner Bank Plan in a nutshell: private investors will partner with the government to buy those "toxic" assets off of struggling "zombie banks." The buyers would put about 7 percent of the purchase price down, and the Treasury Department would match that with another 7 or so percent. Then the FDIC would offer government-backed loans for the remainder. If the assets were to recover their value and turn a profit down the road, the investors would split the profits with the government. But if they don't -- if their values continue to tank, and it's entirely likely many will -- then you and I and everyone else we know who pays taxes will be on the hook for the lion's share of the losses. In other words, we're letting bargain-hunters pick up the "troubled assets" that are burdening a number of financial institutions for pennies on the dollar, and limiting their downside risk if it doesn't turn out well. It's a pretty sweet deal for those investors. And, as I wrote when Geithner first announced the plan, it's also pretty much the definition of "moral hazard." That background is important in order to understand just how incredibly infuriating this report from The Financial Times is: US banks that have received government aid, including Citigroup, Goldman Sachs, Morgan Stanley and JPMorgan Chase, are considering buying toxic assets to be sold by rivals under the Treasury’s $1,000bn (£680bn) plan to revive the financial system. The plans proved controversial, with critics charging that the government’s public-private partnership - which provide generous loans to investors - are intended to help banks sell, rather than acquire, troubled securities and loans.

Economist Special Report: Manning the Barricades - (a330.g.akamai.net) Who's at risk as deepening economic distress foments social unrest? Collapsing credit has plunged the world economy into the deepest recession in more than 70 years. What began as a property bubble in the US has spread rapidly as troubled banks have stopped lending and consumers and businesses have stopped spending. As demand in the US and Europe evaporates, once-thriving emerging markets are losing their best customers and biggest investors. An increasingly synchronised global economy will contract in 2009 for the first time since World War II. Eighteen months after it began, this economic chain reaction from banks to markets to consumers to companies.is entering a new phase. Economic pain, reflected in millions of lost jobs and destroyed savings, has entered the political realm, causing some governments to collapse and threatening others. The risk of political instability is leading to a wave of trade protectionism, which is rippling across the globe. It was just such a political response in the 1930s, exemplified by America’s infamous Smoot-Hawley tariffs, that deepened and prolonged the Great Depression. This special report is the third by the Economist Intelligence Unit since the credit crisis erupted in August 2007. In the first report, we looked at the implications of a financial meltdown on the global economy. In the second, we considered the wider economic effects, including the risk of a 1990s, Japan-style collapse in the US. This time we focus on the political fallout from the crisis. To sharpen that analysis, we have created a new social unrest index that identifies where the risks are greatest. We have paired that with a new set of scenarios that chart possible paths for the global economy. The political risks from the economic crisis are increasingly dire. Dennis Blair, America’s new intelligence chief, says political turmoil from the global recession has replaced terrorism as the country’s biggest security threat. Ferenc Gyurcsany, Hungary’s prime minister, warns that an economic collapse in eastern Europe could tear apart the European Union and create a new Iron Curtain. Further east, the slowdown in China’s economy and the lack of political freedom is creating fertile ground for social turmoil. Millions of migrant Chinese factory workers who returned to the countryside for the lunar New Year holiday earlier this year had no jobs to return to.

The Nation: The Crash of 09, the Collapse of '10 - (www.nation.com.pk) Many American analysts are saying that America's real economic collapse could come by the end of this year. "It will come to be known as 'The Crash of 09', they say. Others, especially a Russian political analyst, are predicting its physical collapse too. There's no doubt that the country is up the dirtiest of imaginable creeks without a paddle. But what's amazing is that America remains mired in stunning denial, continuing to make bad situations worse with useless bailout plans and messing around with the world instead of facing up to the reality that its time as a hyper-power is up, that's its economic system has failed and that its only recourse is to end its adversarial doctrine and get out of its lost wars as painlessly and honourably as possible. There's no point in going on flogging dead horses. The only sensible thing that survival demands is to craft a new moral economic and financial system and a moral foreign policy. The deep recession verging on depression that we have seen so far was caused by the crash in the US housing market. Since other developed industrialised nations, especially of Europe, were aping the shenanigans of unchecked and poorly regulated American bankers and financiers, the collapse of their markets, banks and economies followed like dominoes. Iceland was the first to officially declare bankruptcy. Its GDP is only about $6.5 billion but its banks had lent something like $65 billion while its regulators were asleep on the wheel. Britain has not declared bankruptcy officially but we all know that it is bankrupt for all intents and purposes and none of its banks and financial institutions has any legs left. However, this is only the aperitif. Wait for the crash of US commercial real estate, which analysts think will happen by autumn this year. Shops are closing down and there's no one to rent them. Companies are retrenching and freeing up a lot of office space or closing down entirely and vacating even more precious office space with no one to rent it again. Huge skyscrapers are becoming ghost-scrapers. All this expensive commercial real estate is mortgaged to the hilt. With no rental income coming in, the loans against them will become difficult to service and there will be fearsome default. There's insurance and re-insurance here also and the amounts involved are mind-boggling. No bailout plan would come even close to coping. When the commercial real estate collapse comes, all hell will break loose. And if multinationals like General Motors and Ford call it a day, it won't just be thousands upon thousands of people unemployed (though its heartless to use the word 'just' here). Two entire towns will be become ghost towns. That's terrible. If you count the number of people - wives, children and parents - who are dependent on those incomes, it becomes worse than terrible. It becomes absolutely and totally unconscionable, while corrupt and greedy bankers and the likes of Bernie Madoff have made off with billions - perhaps trillions - of dollars and are still doing so because "our contracts say so."

Dallas Area 'Modern Survivalists' Ready for Layoffs - or War! - (www.star-telegram.com) Jack Spirko owns a media company, is married to a nurse and has a son in college. He has two dogs and lives in a nice house with a pool in a diversified neighborhood in Arlington. Spirko, 36, considers himself an average guy with a normal life. But for the past few years, Spirko has been stockpiling food, water, gas, guns and ammunition. He also has a load of red wine, Starbucks coffee and deodorant stashed away. "I refer to myself as a modern survivalist, which means I don’t do without," Spirko explained. "I have a nice TV; I have nice furniture. We are not living in the sticks, but I take all of these things very seriously." Spirko, an Army veteran and self-described "stark-raving-mad Libertarian," is part of a growing movement of people who are preparing for a disaster — natural, economic or man-made. Referred to as "modern survivalists" or "preppers," they are taking steps to protect and provide for their families should something bad happen. Theirs is a different breed of survivalist, far from the right-wing militants or religious extremists who hole up in bunkers, live off the land and wait for the apocalypse. Preppers are regular people with regular jobs who decided after 9-11, after Hurricane Katrina or when their 401(k)s tanked that they can’t rely on someone else to help them if something goes awry. "We are normal people just like you," Spirko said. "We just understand that, sometimes, stuff goes wrong."

As Home Values Fall, Property Tax Revolt Brews - (abcnews.go.com) In many cities across the US, homeowners are filing record numbers of assessment appeals, wanting their property taxes to reflect their shrinking value of their houses. Homeowners watching the value of their houses slowly ebb are storming tax offices from Ann Arbor, Mich., to Atlanta, demanding that county officials reassess their homes and lower their property taxes. It is a question of fairness, says Gene Burleson of Atlanta, who stood in line April 1 to appeal his assessment. His house has lost 25 percent of its value since it was last assessed, he adds: "I'm just trying to insulate myself from coming tax increases." Property taxes have become a rallying point for disgruntled Americans because, unlike sales or income taxes, they can be challenged directly by individual citizens: Some 40 percent of assessment appeals are successful. Yet the movement threatens already stressed counties, putting the tax receipts that pays for schools and police at risk.

Obama Wants to Control the Banks - (online.wsj.com) I must be naive. I really thought the administration would welcome the return of bank bailout money. Some $340 million in TARP cash flowed back this week from four small banks in Louisiana, New York, Indiana and California. This isn't much when we routinely talk in trillions, but clearly that money has not been wasted or otherwise sunk down Wall Street's black hole. So why no cheering as the cash comes back? My answer: The government wants to control the banks, just as it now controls GM and Chrysler, and will surely control the health industry in the not-too-distant future. Keeping them TARP-stuffed is the key to control. And for this intensely political president, mere influence is not enough. The White House wants to tell 'em what to do. Control. Direct. Command. It is not for nothing that rage has been turned on those wicked financiers. The banks are at the core of the administration's thrust: By managing the money, government can steer the whole economy even more firmly down the left fork in the road. If the banks are forced to keep TARP cash -- which was often forced on them in the first place -- the Obama team can work its will on the financial system to unprecedented degree. That's what's happening right now. Here's a true story first reported by my Fox News colleague Andrew Napolitano (with the names and some details obscured to prevent retaliation). Under the Bush team a prominent and profitable bank, under threat of a damaging public audit, was forced to accept less than $1 billion of TARP money. The government insisted on buying a new class of preferred stock which gave it a tiny, minority position. The money flowed to the bank. Arguably, back then, the Bush administration was acting for purely economic reasons. It wanted to recapitalize the banks to halt a financial panic.

GM Is In 'Intense' Preparations For Possible Bankruptcy Filing - (www.cnbc.com) General Motors is in "intense" and "earnest" preparations for a possible bankruptcy filing, a source familiar with the company's plans told Reuters Tuesday



OTHER STORIES:

Banks May Improve: Whitney - (www.cnbc.com)
Goldman Sachs CEO: Financial Crisis 'Deeply Humbling' - (www.cnbc.com)
Foreclosures Worsen, Blocking Housing Recovery - (www.cnbc.com)
Banks' Toxic Debts Could Hit $4 Trillion: Report - (www.cnbc.com)
Bailout Psychology Destroying the Economy - (www.sfgate.com)
Geithner Open to Ousting More CEOs - (www.nytimes.com)Sun/IBM Talks Break Down - (www.bloomberg.com)
Investors Be Wary of Stocks, Treasurys: Pimco's El-Erian - (www.cnbc.com)
US Recovery Far Off: Soros - (www.cnbc.com)
Consumers fall behind on loans at record rate - (www.usatoday.com)
Switzerland Tipping Towards Deflation - (www.telegraph.co.uk)
Paul Craig Roberts: How Freedom Was Lost - (www.opednews.com)
US Underemployment at 15.6% - (www.bloomberg.com)
IRS Gives Financial Companies a Pass on Audits - (taxprof.typepad.com)
The Financial New World Order: Towards a Global Currency and World Government - (www.globalresearch.ca)

GM, Segway to Make Vehicle - (online.wsj.com)
RBS to Cut 9,000 - (www.bloomberg.com)
Pinched Courts Squeeze the Poor - (www.nytimes.com)
Conyers Wants Holder To Appoint A Special Counsel To Probe Bush Crimes - (www.pubrecord.org)
US Collapse Driven by Fraud; Geithner Covering Up Bank Insolvency... - (www.rawstory.com)
...The Moyers Interview with William K. Black - (www.pbs.org)
TeaParty Tax Day Protest! April 15 - (www.reteaparty.com)
Taxpayer Cost for Bailout Jumps - (www.reuters.com)
The Idiotic Idea to Ban Short Selling - (www.nytimes.com)