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Providence Mayor Wants to Tax College Students - (news.yahoo.com/s/ap) The mayor of Providence wants to slap a $150-per-semester tax on the 25,000 full-time students at Brown University and three other private colleges in the city, saying they use resources and should help ease the burden on struggling taxpayers. Mayor David Cicilline (sis-ah-LEEN-ee) said the fee would raise between $6 million and $8 million a year for the city, which is facing a $17 million deficit. If enacted, it would apparently be the first time a U.S. city has directly taxed students just for being enrolled. The proposal is still in its early stages. But it has riled some students, who say it would unfairly saddle them with the city's financial woes and overlook their volunteer work and other contributions, including money spent in restaurants, bars and stores. "We want to support the city as best we can, but financially is not really what we can afford to give," said Heather Lee, president of the Brown Graduate Student Council. "We're more able to provide labor, we're more able to apply the things that we're learning in the classroom, than we are to write a $300 check." Cities often look for revenue from universities to compensate for their tax-exempt status, and many schools already make voluntary payments to local governments. Providence's four private schools — Brown, Providence College, Johnson & Wales University and the Rhode Island School of Design — agreed in 2003 to pay the city nearly $50 million over 20 years. The idea of a student head tax has been floated before in other cities, generally to start discussions about collecting money from universities in lieu of taxes.
Barney Frank Wants Government To Enter Municipal Bond Insurance Business - (Mish at http://globaleconomicanalysis.blogspot.com) Some people never learn. Representative Barney Frank of Massachusetts is one of them. One might hope that Frank would have learned something from the Fannie Mae and AIG debacles. Sadly that hope is misguided. Barney Frank now wants the government to enter the municipal bond business. Please consider Cities Ask Treasury for $5 Billion to Fund Public Bond Insurer. The National League of Cities says it will ask the U.S. Treasury today for a $5 billion interest-free loan to capitalize a new municipal bond insurer it plans to create. The Issuers Mutual Bond Assurance Co. would be the first publicly owned U.S. financial guarantor. The $5 billion capitalization would make it the biggest in the industry, eclipsing MBIA Inc.’s capital base of $3.8 billion and the $1.1 billion of current market leader Assured Guaranty Inc. The company will apply to the Treasury for a ruling that its income be tax-exempt, said Cathy Spain, director of the League of Cities’ Center for Member Programs. “Fifteen shareholder-owned municipal bond insurers have failed because of the intense pressure to produce 15 percent to 25 percent annual returns for their shareholders,” according to a copy of the preliminary business plan the League submitted to Treasury. In response to the collapse of the bond insurers, a number of would-be replacements said they would enter the field. Rep. Barney Frank of Massachusetts, the Democratic chairman of the House Financial Services Committee, said in February that the federal government should enter the business. IMBAC, as the new insurer would be known, is asking Treasury for $3 billion in cash upfront. It said it would seek to insure only general obligation and essential-purpose revenue bonds. In its cash-flow projections, the firm said it would charge premiums equal to about 70 basis points on a 25-year bond. IMBAC said it would insure $20 billion in bonds during its first year in operation, $40.8 billion in the second year and $108 billion by the fifth year. The firm’s plan estimates that the business would require a staff of at least 30. Pure Insanity: The IMBAC proposal is pure insanity. The government has proven it no idea how to price risk, and even if it did, government ought not be competing with private enterprise. Fannie Mae (FNM) and Freddie Mac (FRE) are proof enough. Warren Buffett previously expressed an interest in this area, even agreeing to reinsure debt of Ambac (ABK) and MBIA (MBI). If municipal bond insurance makes any sense at all, then let Berkshire Hathaway (BRK) sort it out.
Union reluctant to grab wheel in Detroit - (money.cnn.com) Yes, because they know they will drive the company into the ground, and will not be able to blame anyone else. The United Auto Workers union could end up owning a majority of Chrysler and a large stake at GM. But it's not happy about that. The current plans to restructure General Motors and Chrysler LLC will leave the United Auto Workers union in the driver's seat at both companies. But it appears that the union would rather be in the back seat. The UAW is set to receive a 55% stake in Chrysler through its union trust fund once that automaker emerges from bankruptcy. The trust fund will also likely get up to 38% of GM's stock as part of its reorganization. But that doesn't mean the union will be calling the shots at either company. In fact, UAW president Ron Gettelfinger said the union hopes to sell its stake in both companies quickly because he is more interested in raising cash to cover retiree health care costs than having an ownership stake in GM (GM, Fortune 500) and Chrysler. "Let somebody else take the stock. Give us the money," Gettelfinger said at a recent press conference. "We are trading debt for equity, and what is the value of the equity? Let's be honest, it's zero today." Since the trust fund, and not individual union members or the union itself, will own the stakes in GM and Chrysler, it is expected that the UAW will not use its newfound role as a large shareholder to push for major changes at either company.
Some on Left Souring on Obama - (www.digg.com) When President Barack Obama speaks to the Notre Dame commencement Sunday afternoon, television cameras will search the sea of graduates, looking for turned backs and defaced mortar boards that abortion opponents will likely use to register their disagreement with the president. But the attention to protests from conservatives who don’t support Obama – and almost certainly never would – could obscure the far more significant political threat he now faces. Barely four months into his presidency, Obama is confronting growing dissatisfaction among members of his liberal base, who feel spurned by a series of his early decisions on issues ranging from guns to torture to immigration to gay rights. The list got longer last week as Obama reversed his earlier decision to release photos of detainees abused in U.S. military custody and announced plans to try some terror suspects before military commissions – though on the campaign trail he railed against earlier versions of the tribunals. A few, like MSNBC’s Rachel Maddow, have even hurled the left’s ultimate epithet – suggesting that Obama’s turning into George W. Bush. The building anger comes at a critical moment – just as Obama’s about to announce his choice for the Supreme Court. Fulfill their dreams of a “liberal Scalia,” a firebrand from the left, and much would be forgiven. But if Obama opts instead for a decidedly centrist nominee aimed at winning a large number of Republican votes in the Senate, the growing concern could develop into something more politically dangerous. “Even though I think he can get away with a more centrist candidate, he has to be careful not to be spitting in the eyes of his base,” said Laura Murphy, a lobbyist and former head of the American Civil Liberties Union’s Washington office.
Your Credit Card Company Is Building A Psychological Profile Of You - (www.consumerist.com) The next time you apply for a credit card, your credit report and income will be only a part of the criteria used to determine your creditworthiness. For that matter, as long as you have the card, what you use it for will be noted and added to a growing set of data that makes up your psychological profile, which will then be referred to every time the bank deals with your or reevaluates your risk as a customer. The New York Times Magazine takes a look at this new method of determining credit risk, pioneered by Canadian Tire executive J.P. Martin about 6 years ago. Martin's measurements were so precise that he could tell you the "riskiest" drinking establishment in Canada - Sharx Pool Bar in Montreal, where 47 percent of the patrons who used their Canadian Tire card missed four payments over 12 months. He could also tell you the "safest" products - premium birdseed and a device called a "snow roof rake" that homeowners use to remove high-up snowdrifts so they don't fall on pedestrians. It's not just that what you buy reflects your socioeconomic level and current financial status, however; what Martin did was take the raw data and tease out personality traits that explained the the purchases while predicting future behavior. Why did birdseed and snow-rake buyers pay off their debts? The answer, research indicated, was that those consumers felt a sense of responsibility toward the world, manifested in their spending on birds they didn't own and pedestrians they might not know. Why were felt-pad buyers so upstanding? Because they wanted to protect their belongings, be they hardwood floors or credit scores. Why did chrome-skull owners skip out on their debts? "The person who buys a skull for their car, they are like people who go to a bar named Sharx," Martin told me. "Would you give them a loan?" Lenders have been using this sort of data mining ever since, but until recently they've kept it on the down-low to avoid triggering any privacy fears from customers. Now, with billions of dollars of losses from formerly profitable customers (i.e. the slightly risker ones) who suddenly can't pay, the lenders are using their psychological data not only to screen for the "right" sorts of customers but also to try to convince the bad ones to pay off their debts.
Dr. Marc Faber: Capitalism Could Fail Like Communism - (www.cnbc.com) A sustainable recovery will occur only when the corporate system will be cleaned of losses and capitalism risks collapsing if this does not happen, Marc Faber, the author of "The Gloom, Boom & Doom Report," told CNBC Friday. The central banks will continue to print money at full speed, but long-term this strategy will lead to a fall in purchasing power and living standards, especially in developed countries, Faber said. The years 2006 and 2007 were "the peak of prosperity" and the world economy is not likely to return soon to that level, he added. "I think the final low in markets will occur when the system is cleaned out," Faber said.
Condo associations dying as fees dry up - (www.tampabay.com) Homeowner associations, the de facto local government in much of Florida, are getting desperate. Assessment payments are as low as 50 percent in some communities, causing some board members to consider measures that might include publicly shaming those who are delinquent. "When I tell you it is an unadulterated nightmare out there, I mean it," said Harry Burnard, who owns Qualified Property Management in New Port Richey, plus a side business that fronts the dues and collects the debts. The problem exists nationwide, most notably in communities built during the boom years. "I haven't seen bake sales yet or carwashes," said association attorney Robert Tankel of Dunedin. "But I have suggested that people who don't pay need to consider doing that. Sell their flat-screen TVs." Things are so bad that the Southpointe condominium association in Orlando sent a letter to all of its members, listing units with unpaid dues. "I thought I'd be getting a lot more rotten eggs," said Malcolm Galvin, an attorney for the association. "I was kind of amazed that most of the feedback was favorable to the association." The urge to shame: Most area attorneys are advising their boards against any kind of public humiliation. "The nature of communities anymore is that nobody knows their neighbors anyway," Tankel said. But it's been suggested at a lot of homeowner meetings. IKare community newsletter publisher Karen Uhlig, when asked if she would have a problem with such a practice, said, "Personally, not at all. But professionally, I'd have to check for legal advice." One of her clients, the Nassau Pointe townhome section of New Tampa's Heritage Isles, could be among the first to publicize delinquent accounts. "We've been tossing the idea around," said board member Barbara Adams. "We don't want to do it, but we're just having little choice when they ignore us." About 30 percent of her neighbors are not paying the $228 monthly fee. "In our community, it covers cable and water," she said. Dues also pay to landscape the grounds and repair the roof. Uhlig, who serves on two boards in her own Wesley Chapel community, knows associations that are filing liens over very small amounts. Tankel advocates suing quickly instead of waiting for banks to foreclose, essentially beating them to the courthouse steps. Some boards have members literally knocking on doors, a practice attorneys discourage. "You never know when you are going to meet Mister Doberman, or Mister 9-millimeter," Tankel said.
2 Firms Accused of Deceiving Consumers Seeking Debt Relief - (www.nytimes.com) The New York attorney general, Andrew M. Cuomo, sued two large debt settlement companies Tuesday, saying they had engaged in fraudulent and deceptive business practices and false advertising. Skip to next paragraphThe suits seek to enjoin the companies, Nationwide Asset Services and Credit Solutions of America, from many of their business practices, including charging customers before any settlement work is done. They also seek restitution and damages for dissatisfied customers. “These companies claim to be the light at the end of the tunnel, but time after time they have shown that they only add to the burdens of Americans dealing with debt,” Mr. Cuomo said in a statement. Credit Solutions enrolled 18,000 customers in New York State in the last five years, earning $17 million in fees, but settled the debts of fewer than 2,000 of them, the attorney general said. Nationwide signed up 1,981 New York residents in three years, the suit against it says, but only 64 completed the program. Twenty-seven of those ended up paying more than they originally owed because of Nationwide’s fees, the suit alleges. Mark Walling, a lawyer for Phoenix-based Nationwide, said he had not seen the suit. “My client denies any wrongdoing,” he said. Credit Solutions, based in Richardson, Tex., disputed liability over the complaints and practices in the suit, saying in a statement that they had largely occurred when the company was under different ownership in 2007.
OTHER STORIES:
"Deadbeats" Beware: The Credit Card Business is Changing - (www.nytimes.com)
American Express to Cut 4,000 - (www.bloomberg.com)
China's Gold Reserves May Back Yuan - (online.wsj.com)
5000 Cases of Swine Flu in US - (www.reuters.com)
Credit Card Defaults At Record Highs But Worst Is Yet To Come - (globaleconomicanalysis.blogspot.com)
S&P 500 Earnings Fall 90% - (www.chartoftheday.com)
As Detroit Crumbles, China Emerges as Auto Epicenter - (www.washingtonpost.com)
China’s Stockpiles Are New Sovereign Wealth Strategy, RBC Says - (www.bloomberg.com)
Obama Reverses on Releasing Detainee Photos - (www.politico.com)
Obama Considers Detaining Terror Suspects Indefinitely - (online.wsj.com)
Gitmo Detainee's 'Genitals Were Sliced With A Scalpel' - (www.digg.com)
Socialist Norway Thrives in Meltdown - (www.nytimes.com)
One of the simplest explanations of Swine Flu is that it’s a laboratory escape - (www.bloomberg.com)
Southern California house prices down 51% from 2007 peak, falling - (www.latimes.com)
San Francisco price declines accelerating - (www.sfgate.com)
Hamptons Houses Drop Most Since Records Kept - (www.bloomberg.com)
Housing Starts May Have a Way to Fall - (norris.blogs.nytimes.com)
Government Punishing Responsible People - (www.patrick.net)
Wary of U.S. debt, China shifts gears on investment - (www.reuters.com)
The Destructive Implications of the Bailout - (www.hussmanfunds.com)
Obama's Magic Bubble Deflator - (www.mises.org)
Audit the Fed, Then End It - (rocktrueblood.blogspot.com)
The Truth: Debt Means Financial Death - (thelastgoodidea.blogspotcom)
Banks "can't find anyone with authority" to talk to foreclosees - (www.dailybusinessreview)
Is Buying a House Catching Falling Knife or Inflation Hedge? - (Charles Hugh Smith at www.oftwominds.com)
Obama for Single-Payer Before He Was Against It - (www.healthcare-now.org)
Credit Crunch Game - (www.bbc.co.uk)
It Is Time For Vermont To Secede - (ashizashiz.blogspot.com)
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