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Crop
Insurance Set to Expand Despite Growing Fraud Worries - CNBC
- (www.cnbc.com) Farming can be a tough
business. The work is hard, the hours are long, and the profits unpredictable
at best. But
Robert Warren had a secret weapon: crop insurance. It helped make the man who
describes himself as “just a dumb farmer” into a multi-millionaire, with
properties in North Carolina, South Carolina and Tennessee. It turned out that
Warren made his millions by abusing the taxpayer-backed federal crop insurance
program for years, collecting more than $9 million in bogus claims. He pleaded
guilty to two conspiracy counts in 2005 after authorities found he had directed
his workers to scatter ice cubes and mothballs in one of his tomato fields in
Cocke County, Tenn., then sent in the pictures to show his plants were damaged
by a “hailstorm.” That claim alone netted Warren more than $80,000, according
to court documents. Warren’s wife, two employees, an insurance agent and a
claims adjuster also pleaded guilty. “The defendants’ involvement with the
(crop insurance) program was conceived and born in fraud,” wrote Assistant
United States Attorney Richard Lee Edwards in Warren’s 2005 sentencing
memorandum. “(T)hese defendants simply sat around the kitchen table and created
the production history figures which they submitted to the insurance company
and the USDA.”
FHA
mortgage delinquencies skyrocket more than 25% - (www.ochousingnews.com) The mortgage market appears
to finally be stabilizing — as long as you ignore loans backed by the Federal
Housing Administration. Increasingly, FHA-insured loans are falling into
foreclosure or serious delinquency, moving in the opposite direction of loans
guaranteed by Fannie Mae and Freddie Mac or those held by banks, which are all
showing signs of improvement. Does anyone really believe bank-held mortgages
delinquency rates are down 39%? Based on the charts of shadow inventory, the
number of 90-day delinquent loans hasn’t declined much at all over the last
year. We know the banks have not been foreclosing in earnest, and they have
billions in non-performing HELOCs and second mortgages on their books. I don’t
see how they could have reduced their delinquency rates that much. Perhaps the
include the loan modifications which temporarily cure the loans. And taxpayers could ultimately be on the hook
for FHA’s growing number of troubled mortgages. The agency’s finances are
already on shaky ground, and additional losses from loans going sour could
prompt the need for a federal bailout, experts said. “We can’t escape this
one,” said Joseph Gyourko, a real estate professor at the University of
Pennsylvania’s Wharton School. “This is an arm of the U.S. government.” The
share of government-guaranteed loans, a majority of which are backed by FHA,
that were 90 days or more delinquent soared nearly 27% during the year ending
March 31. Foreclosures jumped nearly 17%, according to a report published
recently by federal regulators.
Spain borrowing rate hits bailout danger zone of 7 pct - (www.washingtonpost.com) Spain’s struggling banks and
the country’s punishing borrowing costs will be the main subject of discussions
at this week’s meetings in Brussels of Europe’s finance ministers. Representatives
from the 17 countries that use the euro are to meet later on Monday to discuss
the terms of a €100 billion ($124 billion) lifeline from other members of the
17-country eurozone for Spain’s banking industry. The discussions are all the
more pressing as Spain’s borrowing costs rose to dangerously high levels
Monday. The interest rate, or yield, on the country’s 10-year bonds hit 7
percent, a level that market-watchers consider is unaffordable for a country to
raise money on the bond markets in the long term and the point at which Greece,
Ireland and Portugal all sought an international bailout. Stocks on Madrid’s
benchmark share index fell 0.7 percent.
2013 perfect storm may surpass 2008 crisis: Roubini - (www.economonitor.com) Video… Nouriel Roubini
discusses “greedy” bankers, the euro-zone crisis and risks facing the global
economy in 2013. He speaks in Aix-en-Provence, France, with Bloomberg
Television’s Caroline Connan.
In Lost Opportunity of 1932, Are There Lessons for Today? -
(www.nytimes.com) By the summer of 1932, the
Great Depression was three years old with no end in sight. The Hoover
administration, like Republicans today, was adamant that economic stimulus was
wrongheaded, that the big problem was business confidence, which would be
restored by keeping the budget under control, and that under no circumstances
should the Federal Reserve adopt policies that would ignite inflation. However, it was painfully clear to farmers and
business people that deflation – falling prices – was the root of the economy’s
problem. Between 1929 and 1932, the consumer price index fell 20 percent and
prices for many commodities had fallen much more. As a consequence, producers
could not make a profit, which led them to lay off workers. As workers lost
income, they reduced their purchases, which intensified the downward pressure
on prices. By early 1932, a growing number of prominent economists were openly
advocating “reflation” – just enough inflation to get the price level back to
where it was in 1929.
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