10 months ago
Monday, August 23 Nine Circles of Hell!
The Nine Circles of Hell! – all the news that gives you fits in print – for Monday, August 23, 2010, are:
Credit card interest rates are through the roof
Credit card interest rates soared in the second quarter to a nine-year spike, according to the market research company Synovate.
The average interest rate on existing cards jumped to 14.7% last quarter, up from 13.1% a year earlier, Synovate said. Synovate is the market research arm of Aegis Group plc.
The jump created a dramatic spread of 11.45 percentage points between the average credit card interest rate and the prime rate — the largest margin in 22 years, according to Synovate.
Synovate study director Lauren Guenveur said the increase in interest rates was driven primarily by the Credit Card Accountability Responsibility and Disclosure Act of 2009. She said the so-called CARD Act gave credit card companies a limited amount of time to raise rates, “before they could no longer do so freely.” This put pressure on issuers to aggressively raise rates, she said.
Guenveur added that the recession and nation’s high unemployment were also driving the increase, because it was causing the default rate to go up.
“This is largely due to consumers still charging on their credit cards, but being unable to pay,” she said. “Default rates should remain high as long as unemployment remains high.”
Synovate spokeswoman Jennifer Chhatlani also attributed the rate increase to “returning confidence” in the credit card sector. The second quarter of 2010 saw the second-highest level of credit card spending ever, Synovate said.
“People shouldn’t look at a home as a way to make money”
The New York Times
Housing Fades as a Means to Build Wealth, Analysts Say
Housing will eventually recover from its great swoon. But many real estate experts now believe that home ownership will never again yield rewards like those enjoyed in the second half of the 20th century, when houses not only provided shelter but also a plump nest egg.
The wealth generated by housing in those decades, particularly on the coasts, did more than assure the owners a comfortable retirement. It powered the economy, paying for the education of children and grandchildren, keeping the cruise ships and golf courses full and the restaurants humming.
More than likely, that era is gone for good.
“There is no iron law that real estate must appreciate,” said Stan Humphries, chief economist for the real estate site Zillow. “All those theories advanced during the boom about why housing is special — that more people are choosing to spend more on housing, that more people are moving to the coasts, that we were running out of usable land — didn’t hold up.”
Instead, Mr. Humphries and other economists say, housing values will only keep up with inflation. A home will return the money an owner puts in each month, but will not multiply the investment.
(Past This is Hell! guest) Dean Baker, co-director of the Center for Economic and Policy Research, estimates that it will take 20 years to recoup the $6 trillion of housing wealth that has been lost since 2005. After adjusting for inflation, values will never catch up.
“People shouldn’t look at a home as a way to make money because it won’t,” Mr. Baker said.
Desperate cities, states selling off public goods at low prices
The Wall Street Journal
Facing Budget Gaps, Cities Sell Parking, Airports, Zoo
Cities and states across the nation are selling and leasing everything from airports to zoos—a fire sale that could help plug budget holes now but worsen their financial woes over the long run.
California is looking to shed state office buildings. Milwaukee has proposed selling its water supply; in Chicago and New Haven, Conn., it’s parking meters. In Louisiana and Georgia, airports are up for grabs.
About 35 deals now are in the pipeline in the U.S., according to research by Royal Bank of Scotland’s RBS Global Banking & Markets. Those assets have a market value of about $45 billion—more than ten times the $4 billion or so two years ago, estimates Dana Levenson, head of infrastructure banking at RBS. Hundreds more deals are being considered, analysts say.
The deals illustrate the increasingly tight financial squeeze gripping communities. Many are using asset sales to balance budgets ravaged by declines in tax revenues and unfunded pensions. In recent congressional testimony, billionaire investor Warren Buffett said he worried about how municipalities will pay for public workers’ retirement and health benefits and suggested that the federal government may ultimately be compelled to bail out states.
“Privatization”—selling government-owned property to private corporations and other entities—has been popular for years in Europe, Canada and Australia, where government once owned big chunks of the economy.
In many cases, the private takeover of government-controlled industry or services can result in more efficient and profitable operations. On a toll road, for example, a private operator may have more money to pump into repairs and would bear the brunt of losses if drivers used the road less.
While asset sales can create efficiencies, critics say the way these current sales are being handled could hurt communities over the long run. Some properties are being sold at fire-sale prices into a weak market. The deals mean cities are giving up long-term, recurring income streams in exchange for lump-sum payments to plug one-time budget gaps.
The deals are threatening credit ratings in some cases and affecting the quality and cost of basic utilities such as electricity and water. Critics say many of the moves are akin to individuals using their retirement plans to pay for immediate needs, instead of planning for the future.
“The deals are part of a broader restructuring of our economy that carries big risks because of revenue losses over time,” says Michael Likosky, a professor at New York University who specializes in public finance law.
The libertarian oil fortune family behind attacks on Obama
The New Yorker
On May 17th, a black-tie audience at the Metropolitan Opera House applauded as a tall, jovial-looking billionaire took the stage. It was the seventieth annual spring gala of American Ballet Theatre, and David H. Koch was being celebrated for his generosity as a member of the board of trustees; he had recently donated $2.5 million toward the company’s upcoming season, and had given many millions before that. Koch received an award while flanked by two of the gala’s co-chairs, Blaine Trump, in a peach-colored gown, and Caroline Kennedy Schlossberg, in emerald green. Kennedy’s mother, Jacqueline Kennedy Onassis, had been a patron of the ballet and, coincidentally, the previous owner of a Fifth Avenue apartment that Koch had bought, in 1995, and then sold, eleven years later, for thirty-two million dollars, having found it too small.
The gala marked the social ascent of Koch, who, at the age of seventy, has become one of the city’s most prominent philanthropists. In 2008, he donated a hundred million dollars to modernize Lincoln Center’s New York State Theatre building, which now bears his name. He has given twenty million to the American Museum of Natural History, whose dinosaur wing is named for him. This spring, after noticing the decrepit state of the fountains outside the Metropolitan Museum of Art, Koch pledged at least ten million dollars for their renovation. He is a trustee of the museum, perhaps the most coveted social prize in the city, and serves on the board of Memorial Sloan-Kettering Cancer Center, where, after he donated more than forty million dollars, an endowed chair and a research center were named for him.
One dignitary was conspicuously absent from the gala: the event’s third honorary co-chair, Michelle Obama. Her office said that a scheduling conflict had prevented her from attending. Yet had the First Lady shared the stage with Koch it might have created an awkward tableau. In Washington, Koch is best known as part of a family that has repeatedly funded stealth attacks on the federal government, and on the Obama Administration in particular.
With his brother Charles, who is seventy-four, David Koch owns virtually all of Koch Industries, a conglomerate, headquartered in Wichita, Kansas, whose annual revenues are estimated to be a hundred billion dollars. The company has grown spectacularly since their father, Fred, died, in 1967, and the brothers took charge. The Kochs operate oil refineries in Alaska, Texas, and Minnesota, and control some four thousand miles of pipeline. Koch Industries owns Brawny paper towels, Dixie cups, Georgia-Pacific lumber, Stainmaster carpet, and Lycra, among other products. Forbes ranks it as the second-largest private company in the country, after Cargill, and its consistent profitability has made David and Charles Koch—who, years ago, bought out two other brothers—among the richest men in America. Their combined fortune of thirty-five billion dollars is exceeded only by those of Bill Gates and Warren Buffett.
The Kochs are longtime libertarians who believe in drastically lower personal and corporate taxes, minimal social services for the needy, and much less oversight of industry—especially environmental regulation. These views dovetail with the brothers’ corporate interests. In a study released this spring, the University of Massachusetts at Amherst’s Political Economy Research Institute named Koch Industries one of the top ten air polluters in the United States. And Greenpeace issued a report identifying the company as a “kingpin of climate science denial.” The report showed that, from 2005 to 2008, the Kochs vastly outdid ExxonMobil in giving money to organizations fighting legislation related to climate change, underwriting a huge network of foundations, think tanks, and political front groups. Indeed, the brothers have funded opposition campaigns against so many Obama Administration policies—from health-care reform to the economic-stimulus program—that, in political circles, their ideological network is known as the Kochtopus.
“Armed Christian conservative” group to help church burn Koran
All Headline News
Church To Burn Koran Despite City’s Denial Of Permit
The city of Gainesville has prohibited a church from holding an “International Burn a Koran Day” next month. The event has drawn worldwide attention and incited anger among conservative and liberal members of the local community, who plan to hold an interfaith gathering in protest of the burning.
City officials have refused to issue a permit for the Dove World Outreach Center to burn the Koran on Sept. 11. According to the Gainesville Sun, the fire ordinance bans open burning and outdoor burning unless otherwise specified.
Dove World Outreach Center, which last month held a rally outside the city’s Islamic Center, has sent out a newsletter to the Sun saying it will go ahead with its the burning despite the denial of a permit. The church would likely be fined if it holds its event.
Mayor Craig Lowe, who was the subject of a protest this month from the group for his being the city’s first openly gay mayor, has condemned the planned event as “offensive.”
“The Dove World Outreach Center is a tiny fringe group and an embarrassment to our community,” Lowe said in a statement early this month.
“Gainesville is a place that values every person. We may be of different religions, sexual orientations, races, genders, national origins, or ages, but all are welcome here in our efforts to build a better community both locally and globally.”
Over the weekend, however, a group that describes itself as an “armed Christian conservative” organization warned it would protect the controversial church.
“We fully support Dove World Outreach Center and its efforts to put an end to the notion that Islam is a peaceful religion. Islam is a violent cult with the goal of world domination,” Shannon Carson, founder of Right Wing Extreme, said in a statement to World Correspondents.
Dove World Outreach Center, a New Testament Church, says it will burn the Koran on the anniversary of 9/11 this year “to stand against the evil of Islam.” Its senior pastor, Terry Jones, is author of a book, “Islam is of the Devil.”
“Last full US combat brigade” leaves Iraq, but 49,000 troops remain
Combat brigades in Iraq under different name
As the final convoy of the Army’s 4th Stryker Brigade Combat Team, based at Fort Lewis, Wash., entered Kuwait early Thursday, a different Stryker brigade remained in Iraq.
Soldiers from the 2nd Stryker Brigade Combat Team of the 25th Infantry Division are deployed in Iraq as members of an Advise and Assist Brigade, the Army’s designation for brigades selected to conduct security force assistance.
So while the “last full U.S. combat brigade” have left Iraq, just under 50,000 soldiers from specially trained heavy, infantry and Stryker brigades will stay, as well as two combat aviation brigades.
Compared with the 49,000 soldiers in Iraq, there are close to 67,000 in Afghanistan and another 9,700 in Kuwait, according to the latest Army chart on global commitments dated Aug. 17. Under an agreement with the Iraqi government, all U.S. troops must be out of Iraq by Dec. 31, 2011.
There are seven Advise and Assist Brigades in Iraq, as well as two additional National Guard infantry brigades “for security,” said Army spokesman Lt. Col. Craig Ratcliff …
Of the seven Advise and Assist Brigades still in Iraq, four are from the 3rd Infantry Division, based at Fort Stewart, Ga. The 1st Heavy Brigade of the 1st Armored Division, based at Fort Bliss, and the 3rd Brigade Combat Team of the 4th Infantry Division, based at Fort Carson, Colo., are also serving as Advise and Assist Brigades.
The 2nd Stryker Brigade Combat Team of the 25th Infantry Division is based at Schofield Barracks, Hawaii. A combat medic from that unit was killed Aug. 15 when his Stryker combat vehicle was hit with grenades, according to press reports.
Two combat aviation brigades also remain in Iraq, according to Dan O’Boyle, Redstone Arsenal spokesman. Three more are deployed in Afghanistan, where there are currently no Advise and Assist Brigades.
Outages force Egypt to buy back natural gas from Israel at loss
Ma’an News Agency
Report: Egypt to re-purchase natural gas sold to Israel
The Egyptian government is seeking to re-buy approximately 1.5 billion cubic meters of natural gas it sold to Israel as the country faces a gas crisis, Egyptian media reported.
Unnamed sources told the Egyptian daily Ash-Sha’b that the Ministry of Petroleum and Mineral Resources said at least half of the natural gas sold to Israel would have to be repurchased for $14 billion, although it was originally sold for $2 billion.
In January, the petroleum minister announced that Egypt would need to import natural gas to cover huge shortfalls in domestic-use gas and industrial diesel. He retracted his statement shortly after over concerns of a backlash from those opposed to exporting natural gas to Israel.
The minister had also said that Egypt’s natural gas reserve would serve the country for 38 years, and said it was increasing particularly in the Mediterranean and Nile Delta.
The report follows increased anxiety in Egypt over ongoing power cuts and water cuts, and a surge in wheat prices, Agence France-Presse reported Sunday.
The independent daily Shorouk reported Saturday that the power outages and recriminations between the oil and electricity ministries over who is responsible for them have embarrassed the ruling party, AFP reported.
There is also renewed protest against a gas deal that supplies Israel with an estimated third of its natural gas consumption, with some linking the power cuts to gas shortages, the newspaper reported.
Female Israeli soldiers speaking out against Palestine occupation
Israeli army’s female recruits denounce treatment of Palestinians
It was a single word scrawled on a wall at the Hebrew University of Jerusalem that unlocked something deep inside Inbar Michelzon, two years after she had completed compulsory military service in the Israeli Defence Force.
The word was “occupation”. “I really felt like someone was speaking the unspoken,” she recalled last week in a Tel Aviv cafe. “It was really shocking to me. There was graffiti saying, ‘end the occupation’. And I felt like, OK, now I can talk about what I saw.”
Michelzon became one of a handful of former Israeli servicewomen who have spoken out about their military experiences, a move that has brought accusations of betrayal and disloyalty. It is impossible to know how representative their testimonies are, but they provide an alternative picture of the “most moral army in the world”, as the IDF describes itself.
Concerns about Israeli army culture were raised last week following the publication on Facebook of photographs of a servicewoman posing alongside blindfolded and handcuffed Palestinians. The images were reminiscent of the Abu Ghraib scandal in Iraq. But the former soldier, Eden Abergil, said she didn’t understand what was wrong with the pictures, which were described by the IDF as “ugly and callous”.
Israel is unique in enlisting women at the age of 18 into two years of compulsory military service. The experience can be brutalising for the 10% who serve in the occupied territories, as Michelzon did.
“I left the army with a ticking bomb in my belly,” she said. “I felt I saw the backyard of Israel. I saw something that people don’t speak about. It’s almost like I know a dirty secret of a nation and I need to speak out” …
The psychological impact of military service on women is undeniable, according to the testimonies of Michelzon and others, particularly those who serve in the occupied territories. “If you want to survive as a woman in the army, you have to be manly,” she said. “There is no room for feeling. It’s like a competition to see who can be tougher. A lot of the time girls are trying to be more aggressive than the guys.”
Her experience is echoed by that of Dana Golan, who served in the West Bank city of Hebron in 2001-02 as one of about 25 women among 300 male soldiers. Like Michelzon, Golan only spoke out after finishing her service. “If I had raised my anxieties, it would have been seen as a weakness,” she said …
Both Michelzon and Golan have no regrets about speaking out. “For two years I saw people suffering and I didn’t do anything – and that’s really scary,” said Michelzon. “At the end, it felt like the army betrayed me – they used me, I couldn’t recognise myself. What we call protecting our country is destroying lives.”
Pakistan flood aid lacking, distribution chaotic
Pakistan floods: Painfully slow progress of aid effort
Like a river that became a sea, the Indus now sprawls for miles.
The “great mother”, as it has been affectionately known because of the fertility it has brought to the land, has now drowned hundreds and left millions homeless.
Sindh is the worst-hit province in Pakistan, and some of the places we visited there have only been flooded in the last few days as the monsoon waters have moved inexorably south.
As the UN secretary general said, this is a tsunami in slow motion …
We flew on a mission with the Afghan National Army, dropping relief supplies from the air near Sukkur.
It was too dangerous for the helicopter to land – partly because there’s very little dry land any more, and partly because desperate people would surround the aircraft and could get hit by the rotor blades.
So instead the helicopter crews drop box loads of high-energy biscuits from the air.
We watched people run and swim through the floodwater to get to the aid drops, and sometimes fight each other for the rations. It is survival of the fittest.
The boxes being dropped are from the UN World Food Programme, and were originally meant for the people of Afghanistan.
On the ground too in Sukkur, aid distributions are chaotic.
The Sindh police force organised one – with supplies they had paid for with their own salaries.
Sadly it descended into chaos, with flood victims pushing and shoving each other so badly the distribution had to be abandoned.
“I can’t blame them,” said Assistant Inspector General Javed Iqbal.
“They need food to give to their families tomorrow.”