KeNo's Housing and Economic Portal: Saturday September 12 Housing and Economic stories

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Was Lockerbie bomber freed for oil? - (www.rawstory.com) The Scottish government's decision to release the only person convicted in the 1988 bombing of Pan Am flight 103 was made because the United Kingdom is busy trying to secure oil deposits in Libya, several UK newspapers reported Sunday. Abdelbaset Ali al-Megrahi was released from prison in Scotland earlier this month on grounds of compassion. The former Libyan agent is dying of pancreatic cancer. He arrived in Libya to a hero's welcome after his release, raising the ire of the American families of the Pan Am bombing's victims. The UK's Sunday Observer says it has obtained documents showing "ministers and senior civil servants met [with British-Dutch oil giant] Shell to discuss the company's oil interests in Libya on at least 11 occasions and perhaps as many as 26 times in less than four years." The revelations "lend weight to claims that commercial interest lay behind last week's decision to release the Lockerbie bomber," the paper writes. The Observer quotes Mika Minio-Paluello, an activist with the human rights group Platform, who says: "These documents show the deep and long-term foreign policy backing provided by the British government to Shell in its efforts to break into Libya. Corporate executives have easy access to the highest level of Whitehall, while democracy advocates and social movements remain shut out on the street." SHELL ... OR BRITISH PETROLEUM? Meanwhile, the Times of London says it has obtained British governmental correspondence that states it is “in the overwhelming interests of the United Kingdom” to return the Pan Am bomber to Libya. "[British Prime Minister] Gordon Brown’s government made the decision after discussions between Libya and [British oil concern] BP over a multi-million-pound oil exploration deal had hit difficulties," theTimes reports. "These were resolved soon afterwards." Initially, British Foreign Secretary Jack Straw had wanted al-Megrahi excluded from a British-Libyan agreement that would allow the countries to exchange prisoners so that citizens of the two countries can carry out their sentences in their home country. But, the Times states, Straw changed his mind when Libya decided to use al-Megrahi as a bargaining chip in the negotiation of a $30-billion oil deal between Libya and BP. The Times quotes the words of Saif Qaddafi, the son of Libyan leader Muamar Qaddafi, to back up its claim. “The fight to get the [transfer] agreement lasted a long time and was very political, but I want to make clear that we didn’t mention Mr Megrahi. “At all times we talked about the [prisoner transfer agreement]. It was obvious we were talking about him. We all knew that was what we were talking about. “People should not get angry because we were talking about commerce or oil. We signed an oil deal at the same time. The commerce and oil deals were all with the [prisoner transfer agreement].”

Even higher taxes coming for Californians - (www.latimes.com) While Californians are still feeling the sting of income and sales tax hikes signed into law earlier this year, now comes news that state tax authorities plan to take a little more from their pockets. For only the second time in 30 years, the tax board is lowering the point where each tax bracket begins, bumping many people into a higher category. At the same time, officials are cutting back some deductions. Everyone will pay more, even people whose bracket or income doesn't change. The extra sums will total as much as $140 per family, on top of the increases previously enacted. Officials said the latest adjustments have been triggered by inflation, or rather the lack of it. This year, the state's inflation index was a negative numberfor the first time since 1983. When the economy takes a deep plunge, so do tax brackets. The new changes apply to the 2009 tax year. Residents are already paying hundreds -- even thousands -- of additional income tax dollars under the quarter-point rate increase and other tax hikes approved in February as part of a budget deal. "Everything is going up, up, up," said Othman Rabie, owner of a sandwich shop in downtown Sacramento. "And business is going down." Back in February, state lawmakers and Gov. Arnold Schwarzenegger approved a slate of temporary tax increases in an effort to balance California's perennially out-of-whack books. In addition to the income tax rate rising 0.25%, the dependent credit was slashed by more than two-thirds. The vehicle license fee nearly doubled to 1.15% of a car's value. The state sales tax climbed 1%. This summer, lawmakers and Schwarzenegger decided to withhold 10% more from workers' paychecks starting Nov. 1 -- an accounting scheme to collect taxes faster. Under another bookkeeping maneuver, individuals and businesses that make estimated tax payments will pony up more of that money sooner starting in the first half of next year. And some local taxes are on the way up. In Los Angeles County, a half-cent-higher sales tax approved by voters took effect in July to fund transportation projects.

The Ascent of Money Episode 2: Bonds of War - (www.pbs.org) Great video by Niall Ferguson on John Law and his Louisiana territory Ponzi scheme; bond markets support warfare in Europe; globalization accelerates with the economic invasion of the Far East.

Realtor brags to magazine about unethical practices - (www.lasvegassun.com) Since bragging to magazine about unethical practices she’s off job, under scrutiny. A Las Vegas real estate agent who landed a prominent role in a Time magazine cover story is being scrutinized by state licensing officials because of her comments, has left her employer and is lying low. The story by Joel Stein in the Aug. 24 issue, “Less Vegas,” is a high-spirited and high-altitude view of the troubles facing Las Vegas, which he calls both “our most American city” and “an entire city of John Dillingers.” In the story, Brooke Boemio — “a bouncy, sweet, recently remarried 31-year-old mom” — is cast as one of the Dillingers. She helps Stein break into a foreclosed home and brags about helping clients who are underwater on their mortgages buy a second house on the cheap and stop making payments on their first mortgages, pressuring the bank into selling the houses for a loss. Everybody’s doing it, she says in the story. In fact, she said, she did it herself. Since the story appeared, Boemio and her employer have, in the words of Coldwell Banker Wardley Real Estate President Jeff Sommers, “parted ways.” Sommers also said his company has conducted an internal investigation and has been unable to find any cases of Boemio engaging in the behavior described in the story. The buy-and-bail tactics described in the story, he said, are serious allegations and “really just in direct opposition to everything in our policies.” In a further statement released online, Sommers said Boemio told him she had been misquoted and misrepresented by Time. Boemio did not reply to the Sun’s telephone, text and e-mail messages. When the story was published, it referenced a video on Time’s Web site titled “Breaking and Entering,” of Stein and Boemio entering an unoccupied home on the west side of town. Since then, the video has been removed from the Web site for what Time spokeswoman Betsy Burton described as “some sensitivity with various issues.” A Metro Police spokeswoman said Stein’s description of his and Boemio’s entrance into the home appears to meet the definition of misdemeanor trespassing. Boemio could face further trouble with the agency that licenses Nevada real estate agents. The Real Estate Division of the Business and Industry Department is “aware of the article and is taking appropriate action,” spokeswoman Elisabeth Daniels wrote in an e-mail. Real estate agents are required to deal fairly with and disclose relevant information to all parties in a transaction and by statute must have “a good reputation for honesty, trustworthiness and integrity.” Sue Naumann, president of the Greater Las Vegas Association of Realtors, released a statement Tuesday saying that although Boemio had applied for membership, she is not a member of the association. Officials with the organization said Boemio had not taken its ethics class.

Property taxes out of line with lower values - (www.miamiherald.com) Tax notices were mailed out this week, and a majority of Miami-Dade homeowners, no doubt, were disappointed that their properties weren't appraised for tax purposes in line with the current low values in their neighborhoods. The main reason for this disparity is that Property Appraiser Pedro Garcia has disregarded foreclosure sales, even though they make up more than 50 percent of our county's current real-estate sales market. Yet in Broward County, Appraiser Lori Parrish is including all sales, to include foreclosures and short sales to establish taxes on home values. Why Broward and not Miami-Dade? Unfortunately, if you are trying to sell your home, financial institutions are using all sold-homes data, including shorts sales and foreclosures, to appraise the value of your property. In many instances, all of the properties sold within your neighborhood may have been sold as distressed, so the sellers have to adapt to this market value or the banks will not approve their sale. Yet for tax purposes we will pay a higher value to accommodate the politicians. It's unfortunate that elected officials continue to make up their own rules in order to push higher taxes even when it's not warranted and in the midst of an economic struggle that we face. Our local and state governments took in windfall tax revenues during the boom years of real estate. What did they do with this extra revenue? They forgot to save for a rainy day. They spent it on pet projects, while the rest of us were doing the responsible thing and cutting spending. As a real-estate agent, I am appalled at the corruption and lack of integrity or responsibility by our government officials. We must unite to fight this; it is destroying our communities and our country. Let elected officials know that this is wrong and that we are not going to allow them to tax and spend as they please anymore.

FDIC's 'problem list' of troubled banks tops 400 - (www.marketwatch.com) The Federal Deposit Insurance Corp. reported Thursday that the number of distressed banks rose to the highest level in 15 years as its insurance fund continued to shrink. More lenders ran into financial trouble during the second quarter with recession saddling banks with soured loans, according to the report. The FDIC said that the number of troubled banks rose to 416 at the end of June from 305 at the end of March. This is the largest number of banks on its "problem list" since June 30, 1994, when 434 banks were on the list, which isn't disclosed by the FDIC. Assets at troubled banks totaled $299.8 billion, the highest level since Dec. 31, 1993, the agency said. Banks insured by the FDIC swung to a total quarterly loss of $3.7 billion from last year when they reported a total profit of $4.8 billion. Total reserves of the Deposit Insurance Fund stood at $42 billion, with the contingent loss reserve falling to $10.4 billion from $13 billion over the second quarter. Some analysts have been warning that growing bank failures could put pressure on the FDIC fund. "While challenges remain, evidence is building that the U.S. economy is starting to grow again," said FDIC Chairman Sheila Bair in a press release. "The banking industry, too, can look forward to better times ahead," she added. "But, for now, the difficult and necessary process of recognizing loan losses and cleaning up balance sheets continues to be reflected in the industry's bottom line." Bair said the FDIC has "ample resources" to protect depositors. "No insured depositor has ever lost a penny of insured deposits ... and no one ever will," she asserted. More than 28% of all insured institutions reported a net loss in the second quarter, compared with 18% in the year-ago quarter. "Deteriorating loan quality is having the greatest impact on industry earnings as insured institutions continue to set aside reserves to cover loan losses," Bair said.

For FDIC, a long tunnel and little light - (blogs.reuters.com) There’s good news and bad news in the FDIC’s quarterly profile of the banking sector. The good news is that FDIC has more resources than you think to handle the problem banks on its radar. The bad news is that the too-big-to-fail banks aren’t on it. The balance in the FDIC’s deposit insurance fund ended the quarter at $10.4 billion — its lowest since the savings and loan debacle — but it isn’t the only security blanket protecting insured depositors. The agency also has a “contingent loss reserve.” If you add the loss reserve to the deposit insurance fund balance, the FDIC’s total resources were $42 billion at the end of the second quarter. Despite 24 bank failures during the quarter, that total actually increased by half a billion dollars. How could that be? The biggest reason is that the FDIC is finally getting serious about charging premiums for the insurance it provides. Member banks were charged $9.1 billion to replenish the fund last quarter. That’s up from $2.6 billion in the first quarter and $640 million a year ago. A similar amount may be raised this quarter if the agency charges banks another “special assessment.” While that decision won’t be made till next month, it looks likely. That’s great news for taxpayers who would otherwise have to plug the hole if the FDIC runs out of money. Banks complain that special assessments put too much pressure on them at a tough time. But it’s their own fault the deposit insurance fund is running so low. According to a Boston Globe article by Michael Kranish earlier this year, about 95 percent of banks paid nothing for their deposit insurance from 1996-2006. But that wasn’t FDIC’s fault; they were prevented by law from charging premiums. Congress didn’t think it was necessary. Oops. So the deposit insurance fund will be under pressure for some time. FDIC’s problem bank list grew to 416 at the end of last quarter. These banks have $300 billion of assets. In total, FDIC estimates the banking sector is wrestling with $332 billion worth of loans and leases on which borrowers have stopped making payments. That excludes hundreds of billions worth of underwater loans that may be current now but will ultimately default. Many banks, including the largest ones, are likely to struggle for some time.

Real US unemployment rate at 16% - (www.rawstory.com) The real US unemployment rate is 16 percent if persons who have dropped out of the labor pool and those working less than they would like are counted, a Federal Reserve official said Wednesday. "If one considers the people who would like a job but have stopped looking -- so-called discouraged workers -- and those who are working fewer hours than they want, the unemployment rate would move from the official 9.4 percent to 16 percent, said Atlanta Fed chief Dennis Lockhart. He underscored that he was expressing his own views, which did "do not necessarily reflect those of my colleagues on the Federal Open Market Committee," the policy-setting body of the central bank. Lockhart pointed out in a speech to a chamber of commerce in Chattanooga, Tennessee that those two categories of people are not taken into account in the Labor Department's monthly report on the unemployment rate. The official July jobless rate was 9.4 percent. Lockhart, who heads the Atlanta, Georgia, division of the Fed, is the first central bank official to acknowledge the depth of unemployment amid the worst US recession since the Great Depression. Lockhart said the US economy was improving but "still fragile," and the beginning stages of a sluggish recovery were underway. "My forecast for a slow recovery implies a protracted period of high unemployment," he said, adding that it would be difficult to stimulate jobs through additional public spending. "Further fiscal stimulus has been mentioned, but the full effects of the first stimulus package are not yet clear, and the concern over adding to the federal deficit and the resulting national debt is warranted," he said. President Barack Obama's administration has resisted calls for more public spending, arguing that the 787-billion-dollar stimulus passed in February needs time to work its way through the economy.

Critics skewer bill as giving White House control of the Internet - (www.rawstory.com) A bill being composed by aides of Sen. Jay Rockefeller (D-W.Va) is causing concern among technology advocates for strikingly broad language in describing how the White House should direct private sector networks in the event of a cybersecurity emergency. Effectively, it’s critics state, the bill would give the White House control over the American Internet in the event of a major electronic attack on the nation’s infrastructure or other emergency circumstance as declared by the President. But, does it? The answer to that is as ambiguous as the bill’s language, though the Senate Commerce Committee insists that it does not. Concern over the bill mainly stems from passages on pages 25 and 26 (PDF link) of the 55-page draft bill. In S.773, it states: in the event of an immediate threat to strategic national interests involving compromised Federal Government or United States critical infrastructure information system or network— (A) may declare a cybersecurity emergency; and (B) may, if the President finds it necessary for the national defense and security, and in coordination with relevant industry sectors, direct the national response to the cyber threat and the timely restoration of the affected critical infrastructure information system or network; (3) shall, in coordination with various critical infrastructure industry sectors, develop detailed cyber emergency response and restoration plans for each critical infrastructure industry sector; C-Net writer Declan McCullagh reports: “I think the redraft, while improved, remains troubling due to its vagueness,” said Larry Clinton, president of the Internet Security Alliance, which counts representatives of Verizon, Verisign, Nortel, and Carnegie Mellon University on its board. “It is unclear what authority Sen. Rockefeller thinks is necessary over the private sector. Unless this is clarified, we cannot properly analyze, let alone support the bill.” An original version of the bill, presented in April, was alleged to yield power to the White House direct a shutdown of “critical” networks, similar to controls given with regards to air traffic. However, it did not specify what constitutes a cybersecurity emergency. The most recent draft still lacks this language.