KeNo's Housing and Economic Portal: Monday November 2 Housing and Economic stories

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Ron Paul: Saving Face in Afghanistan - (www.dailypaul.com) This past week there has been a lot of discussion and debate on the continuing war in Afghanistan. Lasting twice as long as World War II and with no end in sight, the war in Afghanistan has been one of the longest conflicts in which our country has ever been involved. The situation has only gotten worse with recent escalations. The current debate is focused entirely on the question of troop levels. How many more troops should be sent over in order to pursue the war? The administration has already approved an additional 21,000 American service men and women to be deployed by November, which will increase our troop levels to 68,000. Will another 40,000 do the job? Or should we eventually build up the levels to 100,000 in addition to that? Why not 500,000 – just to be “safe”? And how will public support be brought back around to supporting this war again when 58 percent are now against it?

I get quite annoyed at this very narrow line of questioning. I have other questions. We overthrew the Taliban government in 2001 with less than 10,000 American troops. Why does it now seem that the more troops we send, the worse things get? If the Soviets bankrupted themselves in Afghanistan with troop levels of 100,000 and were eventually forced to leave in humiliating defeat, why are we determined to follow their example? Most importantly, what is there to be gained from all this? We’ve invested billions of dollars and thousands of precious lives – for what? The truth is it is no coincidence that the more troops we send the worse things get. Things are getting worse precisely because we are sending more troops and escalating the violence. We are hoping that good leadership wins out in Afghanistan, but the pool of potential honest leaders from which to draw have been fleeing the violence, leaving a tremendous power vacuum behind. War does not quell bad leaders. It creates them. And the more war we visit on this country, the more bad leaders we will inadvertently create. Another thing that war does is create anger with its indiscriminate violence and injustice. How many innocent civilians have been harmed from clumsy bombings and mistakes that end up costing lives? People die from simply being in the wrong place at the wrong time in a war zone, but the killers never face consequences. Imagine the resentment and anger survivors must feel when a family member is killed and nothing is done about it. When there are no other jobs available because all the businesses have fled, what else is there to do, but join ranks with the resistance where there is a paycheck and also an opportunity for revenge? This is no justification for our enemies over there, but we have to accept that when we push people, they will push back. The real question is why are we there at all? What do our efforts now have to do with the original authorization of the use of force? We are no longer dealing with anything or anyone involved in the attacks of 9/11. At this point we are only strengthening the resolve and the ranks of our enemies. We have nothing left to win. We are only there to save face, and in the end we will not even be able to do that.

CIT, the loaner of last resort for millions of small businesses, is toppling into bankruptcy, and unlike Morgan Stanley or AIG, no one at the Treasury or Fed cares. Of course no one at the Treasury or Fed ever ran a small business and CIT's leaders never worked for Goldman Sachs. - (finance.yahoo.com) CIT Group Inc (NYSE:CIT - News) is seeing little interest from bondholders in a debt exchange offer aimed at repairing its fragile balance sheet, making bankruptcy increasingly likely, sources familiar with the matter said. The lender to small and medium-sized businesses said earlier this month it was looking for investors to approve a large debt exchange that would reduce its borrowings, or to approve a prepackaged bankruptcy. CIT is now more likely to try a prepackaged bankruptcy, two people familiar with the matter said. They declined to be identified because the exchange offer is ongoing and information about its progress is private. But separately, investors in CIT securities said it is possible the company will not find enough debtholder approval for a prepackaged bankruptcy, which requires sufficient support before the company files for protection from creditors. Instead, CIT might have to aim for a prenegotiated bankruptcy, which typically has less support before the actual filing. CIT spokesman Curt Ritter declined to comment. CIT has limited time to work out its debt difficulties. It has about $3 billion of debt to repay in the fourth quarter, including both secured and unsecured obligations, according to a CIT quarterly filing with regulators. CIT has lost access to unsecured debt markets, but has billions to refinance in coming years. In three of the next four years, it will have more debt to repay than cash to pay it back. CIT has roughly 1 million customers and more than $70 billion of assets, but many of its borrowers are struggling amid the worst recession since the Great Depression. The company's debt exchange aims to reduce CIT's borrowings by at least $5.7 billion, with specific targets for lowering the company's liabilities through 2012. The exchange offer expires on October 29. AT LEAST TWO WANT MORE: At least two groups of investors are pushing for better terms in a bankruptcy than those suggested by the company earlier this month, one of the sources and investors said. A subordinated debt holder said last week he was hoping to press for either more equity, or for a promise from the company to pay extra money to current subordinated debt holders if the company's assets perform well enough. Separately, investors holding debt that funded CIT business in Canada are pushing for greater consideration in any bankruptcy plan, too. These investors are entitled to recover money from Canadian assets and the parent company in the United States and could therefore get close to 100 cents on the dollar in any bankruptcy. One investor that would take a hit in a CIT bankruptcy is the U.S. government. The United States' Troubled Asset Relief Program invested $2.3 billion in CIT in December and much or all of that could be lost if the company files for bankruptcy, analysts said. But many debt investors are likely to end up with much more than zero if CIT files for bankruptcy. One group of bondholders lent $3 billion to the company in July. That loan is collateralized by an estimated $30 billion of assets, which would ensure that the July loan could likely be paid back in full.

Geithner Aides Made Millions on Wall Street - (www.ft.com) Obama administration officials now working on fixing and regulating the financial system were beneficiaries of several million dollars in pay from Wall Street and private equity companies, it has been revealed. Financial disclosure forms show that prior to joining the government, Gene Sperling, a senior Treasury adviser, was paid $887,727 by Goldman Sachs and $158,000 for speeches to companies that included Stanford Group, the company run by Sir Allen Stanford, who has since been charged with fraud. Mr Sperling’s compensation from Goldman was for work on a philanthropic project. His overall pay, including for his main job at the Council on Foreign Relations, totalled $2.2m in the 13 months to January. The forms, which were first obtained by Bloomberg, showed that Matthew Kabaker, another adviser in the Treasury, earned $5.8m at Blackstone, the private equity firm, in the two years before joining the administration to work on plans to support banks and spur lending. Much of the compensation was in stock. Lewis Alexander, another adviser, was chief economist to Citigroup before joining the administration; he was paid $2.4m in the last two years. Even though some of the officials whose previous salaries were disclosed are senior, many were appointed as “counselors”, meaning they escaped Senate confirmation hearings which could have highlighted their past remuneration and employment at a time of heightened animosity towards the financial industry. Earlier this month the release of the telephone call logs of Tim Geithner, Treasury secretary, showed he had numerous conversations with a number of Wall Street executives, sparking allegations that the administration was too close to the industry. Officials argued then and on Wednesday that it was important to have skilled people working for the government as it crafted complicated financial rescues and for Mr Geithner to communicate with financial sector executives. Mr Geithner, the former president of the Federal Reserve Bank of New York, has never worked on Wall Street. Mr Obama, however, has hit out at the culture that he said prevailed before last year’s financial crisis – at a time when many of the Treasury officials were working on Wall Street and related businesses. “We will not go back to the days of reckless behaviour and unchecked excess that was at the heart of this crisis, where too many were motivated only by the appetite for quick kills and bloated bonuses,” he said at a speech in New York last month. Previous releases of disclosure forms revealed the $5.2m paid to Lawrence Summers, chief economic adviser to the White House, by DE Shaw, the hedge fund, in the two years before he joined the administration. The disclosures come during a complicated time for the relationship between the Obama administration and business, with officials accused of being too close to companies on the one hand and encountering increased criticism from business lobby groups on the other. The US Chamber of Commerce on Wednesday launched its “campaign for free enterprise”, arguing the private sector was under threat from various over-reaching government plans, including for a Consumer Financial Protection Agency and a cap-and-trade scheme to reduce carbon emissions.

Arianna Huffington: Why Joe Biden Should Resign - (www.huffingtonpost.com) oe Biden met with CENTCOM chief Gen. David Petraeus this morning to talk about Afghanistan -- an issue that has pushed the vice president into the spotlight, landing him on the cover of the latest Newsweek. I have an idea for how he can capitalize on all the attention, and do what generations to come will always be grateful for: resign. The centerpiece of Newsweek's story is how Biden has become the chief White House skeptic on escalating the war in Afghanistan, specifically arguing against Gen. McChrystal's request for 40,000 more troops to pursue a counterinsurgency strategy there. The piece, by Holly Bailey and Evan Thomas, opens with details of a September 13th national security meeting at the White House. Biden speaks up: "Can I just clarify a factual point? How much will we spend this year on Afghanistan?" Someone provided the figure: $65 billion. "And how much will we spend on Pakistan?" Another figure was supplied: $2.25 billion. "Well, by my calculations that's a 30-to-1 ratio in favor of Afghanistan. So I have a question. Al Qaeda is almost all in Pakistan, and Pakistan has nuclear weapons. And yet for every dollar we're spending in Pakistan, we're spending $30 in Afghanistan. Does that make strategic sense?" The White House Situation Room fell silent. Being Greek, I'm partial to Biden's classic use of the Socratic method -- skillfully eliciting facts in a way that lets people connect the dots that show how misguided our involvement in Afghanistan has become. It's been known for a while that Biden has been on the other side of McChrystal's desire for a big escalation of our forces there -- the New York Times reported last month that he has "deep reservations" about it. So if the president does decide to escalate, Biden, for the good of the country, should escalate his willingness to act on those reservations…....Sen. Dianne Feinstein offered up a few rationales for why Obama should rubber stamp Gen. McChrystal's wishes. First, she said, "there has to be a process of finding out, which of these people can we work with and which can we not." Really? Seven years in and we still haven't checked that one off our to-do list? Feinstein then broke out the latest trendy, new-for-fall reason why we need to up the ante in Afghanistan -- it's all about the women. " I particularly worry about women in Afghanistan," Feinstein said, "acid in the face of children, girl children who go to school, women who can't work when they're widowed, huddled on the streets, begging, women beaten and shot in stadiums, you know, Sharia law with all of its violence." This is indeed very tragic, and I share her concern. But missing from the discussion was the fact that "Sharia law with all of its violence" has just been made the law of the land by President Karzai -- you know, our man in Kabul. The Sharia Personal Status Law, signed by Karzai, became operational in July. Among its provisions: custody rights are granted to fathers and grandfathers, women can work only with the permission of their husbands, and husbands can withhold food from wives who don't want to have sex with them. On the plus side, if a man rapes a mentally ill woman or child, he must pay a fine. Of course, even with America standing guard, only 4 percent of girls in Afghanistan make it to the 10th grade, and up to 80 percent of Afghani women are subjected to domestic violence. As one of the Afghan women interviewed in Rethink Afghanistan sums up the current situation: "The cases of violence against women are more now than in the Taliban time."

Lazy Journalists Love Detroit - (www.viceland.com) After suffering through the nation’s worst and most concentrated examples of racial violence, industrial collapse, serial arson, crack war, and municipal bankruptcy following years of municipal kleptocracy, Detroit is being descended on by a plague of reporters. If you live on a block near one of the city’s tens of thousands of abandoned buildings, you can’t toss a chunk of Fordite without hitting some schmuck with a camera worth more than your house. The interest in coverage is legitimate—if you search places like Digg or Reddit for Detroit stories, even totally boring news items like a hiring jump at the local wind-energy plant number in the thousands. And God help you if the piece has anything to do with urban decay. When Vice UK ran a little series of photos by James Griffioen of the demolished interior of an abandoned Detroit public school, it tripled our website’s traffic for nearly a week. The problem is it’s reached the point where the potential for popularity or “stickiness” or whatever you’re supposed to call it now is driving the coverage more than any sort of newsworthiness of the subject. There’s a total gold-rush mentality about the D right now, and all the excitement has led to some real lapses in basic journalistic ethics and judgment. Like the French filmmaker who came to Detroit to shoot a documentary about all the deer and pheasants and other wildlife that have been returning to the city. After several days without seeing a wild one he had to be talked out of renting a trained fox to run through the streets for the camera. Or the Dutch crew who decided to go explore the old project tower where Smokey Robinson grew up and promptly got jacked for their thousands of dollars’ worth of equipment. The flip side is a simultaneous influx of reporters who don’t want anything to do with the city but feel compelled by the times to get a Detroit story under their belts, like it’s the journalistic version of cutting a grunge record. “Time magazine sent a 24-year-old guy to Detroit,” James Griffioen told me. “They wouldn’t let him rent a car, so he was dropped off in a cab downtown. He’s there for six hours and he’s supposed to write a feature article on Detroit. For Time. He had a meeting with the mayor in the morning, the mayor stood him up, then he had a meeting with me, and that was it.” For a while James was getting four to five calls a week from outside journalists looking for someone to sherpa them to the city’s best shitholes, but they’ve finally begun leaving him alone since he started telling them to fuck off. “At first, you’re really flattered by it, like, ‘Whoa, these professional guys are interested in what I have to say and show them.’ But you get worn down trying to show them all the different sides of the city, then watching them go back and write the same story as everyone else. The photographers are the worst. Basically the only thing they’re interested in shooting is ruin porn.”