Costarikker

Bingo! European brain cells at wor—finally!

 

LONDON — After forcing German banks that received state aid to drastically shrink, the European competition commissioner is now causing unease among some of their British rivals by saying that they are next.

The Royal Bank of Scotland and the Lloyds Banking Group were singled out by the commissioner, Neelie Kroes, at a news conference Tuesday in London.

Why should they? Because being in the European Union, they can pass their disease around 27 member nations.

It’s actually funny because the banks now have state money that has allowed them an unfair competitive advantage over other banks in the Union, something that sounds like what people are complaining about here in the States in reference to bailed out, TARP banks.

The two banks mentioned are making cuts, however. I was thinking that this is what should be done here in addition to reducing the total number of banks. I’ve just read that some banks are nothing but buckets holding cash for other banks.

I was wondering why Bank of America bought Merrill Lynch at all. They were getting into this type of problem with municipal accounts all over the place, but they still bought them.

Judge Denny Chin of United States District Court in Manhattan granted lead plaintiff status on Tuesday to funds including the State Teachers Retirement System of Ohio, the Ohio Public Employees Retirement System and the Teachers Retirement System of Texas.

Investors are accusing Bank of America of misleading them about the state of Merrill’s health ahead of the Jan. 1 closing, even as it was becoming clear Merrill was on its way to what would be a loss of $15.84 billion in its fourth quarter.

The same mistake as before—speaking for Merrill Lynch.

Yet another strange bank arrangement:

Rather than simply wooing local customers, they have turned to out-of-state brokers who deliver billions of dollars in bulk deposits, widely known as “hot money,” from investors nationwide. In fast-growing regions like this one in central Georgia, the money produced record bank profits and financed whole new communities, built at a phenomenal rate.

But the hot money also came with a high cost. To lure the money from brokers, banks typically had to offer unusually high rates. That, in turn, often led them to make ever riskier loans, leaving them vulnerable when the economy collapsed. Magnet failed early this year and Security Bank is barely hanging on.

I had never heard of it until now. Hot money, i.e. brokered deposits; what a concept.

The question then is why start a bank? The reason had to be those mortgage-backed securities again, something that resembles crack cocaine for the banking industry more and more as I read about it. In reality, who wants just deposits? People want interest on loans. Deposits are quantities that provide cash but do not belong to the bank. They are paper money.

As the excerpt indicates, they are failing now; a combination of high interest paid for deposits and loan defaults. Oddly enough, the FDIC now has to paid for the deposits. It turns out that banks have been running these shoddy operations for over three decades are now copping an attitude as if this was good business practice. In other words, they are defending the virtual bank, one that can take deposits from anywhere and simultaneously make loans anywhere.

So far the banks are winning, and the hot money continues to fuel bank growth. The industry has even invented variants to get around the few rules that have been put in place by regulators.

Banks defend the use of brokered deposits as an important tool to bring in money to help communities grow. But even some industry executives acknowledge that certain banks became too dependent on the deposits, and that this abuse caused banks to fail. The consequences can be seen across the country.

Consequences:

 

The 79 banks that have failed in the United States over the last two years had an average load of brokered deposits four times the national norm, according to an analysis performed for The New York Times by Foresight Analytics, an industry research firm based in California. And a third of the failed banks, the analysis shows, had both an unusually high level of brokered deposits and an extremely high growth rate — often a disastrous recipe for banks.

Unbelievable. It seems as if everything banks invent starts failing right from the start. This must be their way to get even for having to pay fees to the FDIC.

The report continues by saying that some banks are using this tactic to survive.

 It is the same mix — rapid increases in hot money and heavy lending for risky real estate development — that brought down many of the savings and loans in the late 1980s.

When the bank fails, other banks don’t want them because they don’t bring any new business. After all, those are not their deposits.

Nevertheless, hot money has created a contingent of BS bankers:

To make their case, a delegation of nearly 50 Georgia bankers assembled at the F.D.I.C.’s headquarters in May to plead with regulators to ease restrictions on brokered deposits.

In other words, they didn’t get the money—they are useless to other banks.

Who are their customers?

The brokers receive much of the money from investment firms like Merrill Lynch, which are looking to park high-interest certificates of deposits they have sold to clients. Merrill customers get two things out of the arrangement: high returns on their investments and a haven because the money is placed in a bank insured by the F.D.I.C. One brokerage firm, Finance 500, in Irvine, Calif., started a hot money program in 1997 with seven bank customers. A decade later, it delivered $14 billion to more than 1,500 banks.

It’s only when something goes wrong that you find out what is really happening to your investment. You can rest assured that Merrill Lynch took a slice of the high interest payments.

Basically, these people, because they don’t really have a customer base banks can withdraw their deposits on short notice and leave the vault empty), these banks are just dynamite waiting to explode in the FDIC’s face.

California Governor Arnold Schwarzenegger has made a key budget concession—he won’t cut education spending.

In the meantime, everyone remains allergic to higher taxes and is seeking to leverage the state budget with even more debt.

When it comes to money, no one seems to be able to get away with much—even a State of the Union such as California. The state is effectively short. Not completely broke, just really short in cash. Its credit rating is hovering at inferior levels. Borrowing in the public markets would just make everything worst. They would have to issue IOUs on the IOUs they are issuing now.

Time traces their problems back to an era that not too many people remember, back when California was the future; back when the East Coast was becoming some kind of antiquated region and losing much cultural influence because California had already asserted its power over the media.

The source:

They begin with the 1978 property tax revolt and the victory of Proposition 13. As California experienced a dramatic escalation in home values, property tax assessments skyrocketed. Especially vulnerable were seniors on fixed incomes. When then Gov. Jerry Brown and the legislature dithered, conservative activists led by Howard Jarvis put a seductively simple sounding proposition on the ballot. Under Proposition 13, the annual real estate tax on a parcel of property would be limited to 1% of its assessed value and this assessed value would only increase by a maximum of 2% per year, until a change in ownership. Voters responded and Proposition 13 scored a dramatic victory with 65% of the vote. Property tax rates dropped an average of 57%.

It sounds very good and Democratic, but they are now having financial problems that are more severe than those of other states because the cuts they are making apparently aren’t working at all:

Schwarzenegger on Thursday ordered a third unpaid furlough day for 235,000 state employees.

If understand this correctly, with a workweek being a standard 5-day week and state employees having forfeited two days of pay already, a third day brings them down to the level of glorified part-timers, i.e. part-time employees with benefits.

Of course, I can see that the idea would be expand the workday as needed. Nevertheless, government offices are notorious because they usually cannot handle all the volume, since too often it arrives all at once. It is more about filling chairs than actually receiving fast service. It’s mostly bureaucratic boondoggle. Hence there is an opportunity for the government of California to put some of these agencies out to pasture. The state legislature could also help by passing legislation that rescinds their mandatory existence.

Aftermath of Proposition 13:

 

While homeowners celebrated, city, county and school district officials sat in stunned disbelief. There were predictions of drastic cuts to education and social services. But the ax did not fall as Sacramento, flush with a multibillion-dollar surplus, bailed out local governments and the schools. But the state rescue was accompanied by a loss of local control. As a result of Proposition 13, school districts, county governments and cities were forced to compete with state priorities for a slice of the state budget.

"In the first years after Proposition 13 passed, the state was able to get by because it had a surplus," says David Menefee-Libey, a political scientist at Pomona College. "But because the state is now responsible for funding local government and school districts the demands on state resources became too great. The second strategy followed by [Governors Gray] Davis and [Arnold] Schwarzenegger has been to finesse the fiscal crisis by using budget gimmicks and by borrowing to bridge the yearly budget shortfall. Now both options are exhausted.”

In other words, because Proposition 13 was the Will, albeit a twisted one, of the People, politicians simply didn’t fight it back and simply shifted the problem around where no one could see it; which is what they are usually good at.

Proposition 13 required two-thirds of the legislature to vote for any tax increase. According to Time, a 34% minority in Sacramento has made this impossible.

For more than 30 years California has been living with a system of minority rule in which 34% of the legislature or a local community can stonewall the majority. Facing this post-Proposition 13 system, California's various interest groups have increasingly used the ballot box to protect themselves - but by so doing have mandated budgetary havoc.

As a result, the quality of education in  California dropped. The state fell to 48th place in the list of best public schools. Noticing this, they passed Proposition 98, which allocated 40% of the state budget to  K-14 education. Additionally, they continued to act in a flaky manner:

In the past three decades, other special interests have authored - and voters have passed - numerous ballot measures dictating that millions in state funds go to various pet causes.

Again, you can see that politicians, holding on to their crummy political influence, didn’t fight this back. This is like working for someone who is suicidal and letting them kill themselves because they ordered you not to stop them. It is the responsibility of politicians to fight ridiculous laws. They can’t leave it all to the Governor, he is only one branch of the Government; the one that has to go out and implement this nonsense. The article says that Californians, including the Governator. pass measures that don’t even have funding, thus taking away from other parts of the budget:

Many of these measures [pet causes], including a preschool initiative sponsored by Schwarzenegger in 2002, mandate a program but fail to provide a source of funding. Each proposal alone might have merit, but collectively these ballot measures have locked most of California's budget in place.

Proposition 13 is said to be another Conservative California Anglo creation:

As the state's population has become diverse and Anglo voters have seen their own children grow up and leave the public schools, there has been a backlash of the first against the second, as seen in conservative ballot measures such as Proposition 13 (property taxes), Proposition 187 (illegal immigration) and Proposition 8 (gay marriage). Conservative Anglos, a minority of the state's population as a whole, are vocal and continue to exert power beyond their census numbers because they vote in relatively higher percentages, and because GOP votes are required to pass a budget or enact new taxes under the state's unusual two- thirds majority requirements.

The Cultural Clash travesty is over, is all I can say.

Do Iranians really eat this nonsense? The opposition leader is a US agent just because he refuses to be quiet?

The accusation comes from one of the Supreme Leader’s top smurfs, Hossein Shariatmadari. If this is true, Mousavi would be up on charges for treason.

The evidence? Shariatmadari feels that “it looks that way“

 

In the editorial against Mousavi, Shariatmadari wrote, "It has to be asked whether the actions of (Mousavi and his supporters) are in response to instructions of American authorities."

He added that Mousavi was trying to "escape punishment for murdering innocent people, holding riots, cooperating with foreigners and acting as America's fifth column inside the country" and called for Mousavi and former reformist President Mohammad Khatami to be tried in court for "horrible crimes and treason."

In other words, good Iranians wouldn’t do that.

Notice how he is blaming Mousavi for all the needless casualties the Iranian Revolutionary Government forces have caused. One thing is when a tire is burned. Another is when someone’s skull is split in four places with a Billy club.

I can see that not being able find an actual source of “American instructions,” the Revolutionary Forces decided that the “transmitter” was inside the British Embassy. If it weren’t for the blood and the violence, the Iranian government would just be cartoonish and no more.

Now they are engaged in “getting confessions” from other opposing leaders. This doesn’t sound sincere:

 

The semi-official news agency Fars reported this week that another prominent reformer, former Vice President Mohammad Ali Abtahi, had "confessed that he has provoked people and students to anarchy and riots and velvet revolution." It also said Mohammad Ghoochani, editor of the Etemad-e-Melli newspaper, had confessed to receiving training overseas to "organize a velvet revolution.”

Did they wear….Blue……Velvet?

The phrase refers to the huge demonstrations in Czechoslovakia in 1989 that forced the Communist regime to abandon power. Western-oriented intellectuals and activists were at the heart of those demonstrations, and Iran's frequent use of the phrase underlines authorities' contention that the postelection protests were fomented by foreign influence. Iran blames the United States and Britain in particular.

Czechoslovakia was under a Communist regime. I think there wasn’t much you could vote for. The Commies pretended that all you needed were union leaders. Hence everyone was in the labor union pertaining to his company. I don’t remember the structure well, but I do remember that voting was an exercise in futility, which is why a few countries had some bloody uprisings put down by—who else?—the Soviet Union. Another factor is that makes the Velvet Revolution different is the fact that there were no opposition parties in Czechoslovakia. Under Communism, every country had a One-Party system. It is the same in Cuba. Communism, being a secular ideology, supplants the roles of civilian and religious leadership and doesn’t accept dissent.

To get the confession, the government “shook them up” a little bit:

Their families have rejected the charges as baseless saying confessions obtained under pressure were worthless.

The Fear of God is effective indeed, especially when transmitted through kicking and punching. Who knows? The Revolutionary Forces may have water-boarded these people to help them see the error of their ways.

At the British embassy, who was arrested? Hossein Rassam, a political analyst at the embassy. He was charged with “acting against national security.” Basically, he is Iranian and he is “working for them.” The chances that this man  is a dual Iranian-British citizen are high since the British government has not received any notification that he is being charged with anything.

Britain is still asking the rest of the European Union to withdraw its ambassadors. I think they spoke too soon. I think the Iranian government would arrest them all, if it felt like it.

Here’s an example of another dual citizen being thrashed:

Newsweek correspondent Maziar Bahari, a dual Iranian-Canadian citizen, also in custody, faces the same charge, the lawyer said.

The rest of the world needs them because of their knowledge and expertise in Iranian culture, but Iran puts them through the fire.

At some members of the thug squad, Ahmadinejad’s Basij dirtbags are getting their comeuppance:

Police say more than a thousand people have been detained in total and 20 "rioters" killed during the violence. Eight members of the paramilitary Basij militia tasked with putting down the protests have also been killed.

The Iranian government apparently beats on the opposition simply out of contempt. Even other religious leaders are expressing doubt about the elections:

Only one of the top clerics in the religious center of Qom, however, has congratulated Ahmadinejad on his re-election. Other Qom clerics have even openly supported Mousavi, condemned the government's tactics against demonstrators and expressed doubts about the election results.

 

"A large portion of the people have not been convinced over the ambiguities in the election. ... Due to the lack of public support, the government may face legal and civil problems and a lack of competency," Grand Ayatollah Youssef Saanei said in a statement on his Web site Friday.

I’d say that part of it is the use of the Basij goon squad. President Mahmoud Ahmadinejad could easily kidnap the clerics and force them to support him. It is obvious that the Revolutionary Forces can’t be everywhere. That’s why dictators use goon squads. That may also be the reason why, as I notice from this article, no one seems to stop expressing their dissenting opinions.

Now, because the confounded City of New Haven failed to do the right thing and promote firefighters who scored high on the captain’s exam, and of which there weren’t any, and because Judge Sonia Sotomayor was on the appeals panel that ruled against them, documents from her work at the Puerto Rican Legal Defense fund have turned up a fight against job tests.

The particular ocassion was almost identical, but in reverse. The Connecticut firefighters were fighting to keep their test scores and get the promotion. In the PRLD case, it was truly different:

The Puerto Rican Legal Defense and Education Fund represented Hispanic sanitation workers in New York City who wanted to stop white employees from getting promotions because, they argued, the qualifying exam unfairly disadvantaged minorities. The case unfolded as Sotomayor chaired the organization's board of directors' litigation committee, although there is no evidence that she had any role in the group's decision to participate in the lawsuits, or in formulating or drafting any of their legal arguments.

I was just wondering what in the world is the deal and the allergy some people have about tests. Well, I realized that to become a firefighter, all you need is a high diploma!

It is needless to start talking about the bad reputation that public education has nationwide. To achieve anything through testing after graduating from that system, the average person, which occasionally drops out simply out of a lack of interest, would have to study very hard in order to score high in those tests.

The tests take longer than the average high school test. I don’t know if this the norm, but I always knew what group of people would score low or flunk because they never took more than 20 minutes to take a test. After 12 years of this, a graduate of the public school system would have a hard time concentrating on a test for the usual three to six hours. There are three in the morning, apparently the worst time on the planet to take a test because you have to be physiologically prepared to sit there for that long, and then there are another three hours in the afternoon, a time by which you have already peaked. Forget about the nighttime.

Regardless of average or  higher intelligence, many people are not used to this long period of time engaged in the same activity. The only way to overcome is to study your brains out--literally. In fact, civil service exams are notorious worldwide to have brought on the demise of some very eager candidates who turned out to have cerebral abnormalities that could not be detected until their brains were subjected to long hours of study for extended periods of time. In summary, people have died studying for exams.

Firefighting is a practical job where a person would have to learn their tools and procedures thoroughly. A test cannot test that. Only the job can. Hence the opposition to testing.

Another thing about occupations such as firefighting, police, and many other trades is that these are jobs taken by people from communities where this is the primary occupation. Most civil servants today have relatives who are also civil servants. Anyone, like in the case of the minority Connecticut firefighters, who are first-generation civil service, will have a hard time advancing in the system in the beginning. The worst scenario is that because they are not advancing, they will abandon the service and break yet another link to that career path; one that although often reviled as low quality when economic conditions are at their best, is often, through seniority, somewhat more conducive to job, and hence financial, security.

Finally, job testing is not a dishonest method of hiring and promotion. It is in fact the only thing that allowed people at the bottom of some societies to rise at all. You can ask the Chinese about that. Whatever others see in this situation, it is proving that people who want to advance will have to consider polishing, enhancing, and improving what little education they obtained in public school. For the most part, if you went to public school in an urban area, you have sustained a high degree of educational damage. Not only you would need to upgrade your reading comprehension and other written, verbal, and oral skills, but you might need some psychological counseling to break the irrational fear of tests. I admit it, they are easy to hate; but sometimes they are the only road to advancement. In the military, for instance, testing is one of two official requirements for advancement. The other one is your performance evaluation; whether you are doing your job.

It appears that people have tired of all the BS stock market advice and are now sticking to cash. Money market funds are yielding a miserly 1.3.

Analysts are saying that these could hurt both the stock market and the economy simultaneously. Even pension funds are holding back:

The California Public Employees' Retirement System, also known as CalPERS, announced June 15 that it had boosted the target cash exposure of its $183 billion investment portfolio from zero to 2 percent.

The point is that the credit crunch has created a liquidity squeeze and people cannot be out of cash at any given time in this economic environment. The stock market will simply have to wait until people need less cash. Since we have been leveraged for so long, the urgent need for cash at all times is no surprise.

The State of Washington has claimed national attention because it is on the verge of becoming the only place in America without a major newspaper. Its most well-known, the Seattle Intelligencer, went online only a few months back to cut printing costs.

Since we are now in a time of strange ideas, the state government has proposed cutting their taxes. Many reporters are not too comfortable with this because it brings attention over the role of the press in reporting on the government. They feel that if they take any financial assistance from the government, the public won’t view them as impartial in government matters.

There was a time when people couldn’t wait for someone to retire (or die) in order for a promotion or a job opening to come about. Today, thanks to the health insurance industry and its relentless rejection of people over 29, many people are shunned by employers. As they say in the Godfather movies, “It is nothing personal. Just business.”

It’s hard to believe. The country, our politics, is run by people over 40 and yet the private job market doesn’t want them. The evidence is disgusting:

WASHINGTON – Like many unemployed older workers, 64-year old Allan Kellum fears his age has made it harder to find a new job. At a recent job fair, Kellum expressed interest in a supervisory role coordinating an international health assistance program. A recruiter set him straight: "The people applying for that are young."

More…

Despite their years of experience, out-of-work older people are finding it harder than other adults to find new jobs. And attempts to appear younger on resumes and in person — some are even taking Botox injections — may be no match for the squeeze this recession is putting on employers.

Right. Then you show them your driver’s license and that’s all she wrote.

What is the problem?

• Many employers assume they're more expensive or won't stay long in jobs that pay less than they've earned previously
• That sounds like a denial that this an employer’s market. Could they be so ignorant?
• Candidate is overqualified
• For this job market? I don’t think so. Mass layoffs have thrown qualifications right into the sewer. Too much is just as good as recent college graduate. It’s the paycheck, stupid!
• Older workers are less flexible
• Really? I thought that unemployed people had all the time in the world. Moreover, aren’t older people past the child-raising stages of life? That in itself is flexibility
• Less agile in technology
• Are there really any people in the white collar world left who don’t use technology? Weren’t all those Neanderthals put out to pasture a little over a decade ago when everyone started using the Internet? That was grandma, stupid! Grandma doesn’t work here any more!

The way people are coping with this, as usual, is ridiculous. They are getting Botox injections (Does your birth certificate get one too?); they are leaving out their college graduation date (Didn’t that used to mean that you never finished your degree, thus giving your prospective employer cause to check on it?), and many other tricks.

It is needless to say that everyone is theorizing. I think employers had better brace themselves for something no one thought would become common—age discrimination lawsuits. As with any lawsuit that doesn’t involve race or sex discrimination, an employer can be seriously hurt. It’s a fact that it is never easy to thrash your dad. When you don’t hire someone’s dad, or mom, you are in effect betraying the society that brought you into this world and made you the monstrosity that you are today.  Perhaps employer’s attitudes are the punishment for previous generations for creating these narcissistic monsters that are now pumping as many people as possible onto the unemployment rolls.

Currently, there is much low impact coping:

Once at the interview stage, Armstrong urges clients to prepare for questions like, "Aren't you overqualified?" Older job seekers say they hear that frequently. Armstrong suggests they show enthusiasm for the job and make sure not to seem to be applying out of desperation. AARP also urges older job hunters to stress their skills and achievements — not their years of experience.

Who isn’t desperate these days? What kind of world are we living in? Laying off half a million people a month is not normal! It never was! Employers have in effect created desperation throughout the job market. Maybe they ought to start fixing it before some government deus ex machina fixes it for them. They are lucky that people are still stuck with going to this low-batting average government agency:

Complaints of age bias to the Equal Employment Opportunity Commission jumped 29 percent to 24,852 in the year that ended in September, the most recent 12-month period for which figures are available. That's the highest such total on records dating back 16 years. The number of such complaints has continued at a high pace this year, the EEOC said.

In that place, complaints pile high and beads of sweat fill the faces of civil servants working there. It’s like Legal Aid. There are never enough people in that agency. What is worst is that it is a civil litigation agency and has no criminal justice powers.

Employers at the moment are not acting seriously:

Tina Lurie, 49, a Washington, D.C.-based broadcasting technician who was laid off in January, doesn't respond to job listings that note, "Great for recent college graduate," even if the job sounds like a good fit. Those employers, Lurie said, are unlikely to value her 25 years' experience.

Why don’t they just print “$6.50/hr“ on the advertisement? Because that’s what it is telling people. You are looking for someone who is only two notches above an illegal immigrant. The first notch is American citizenship and the second is the college degree.

Although this is a very tough job market, we are beginning to see that other than for certain trades (plumber, electrician, etc), experience isn’t really required. In the past, no one did this. In fact, smaller companies wouldn’t dare:

 Companies are now more likely to make permanent job cuts than in previous recessions, economists say. Industries from autos to financial services won't soon return to their pre-recession employment levels. That shift hurts older workers more, because skills and experience they amassed over many years in one industry are often not relevant to another.

People who don’t appreciate experience and trade it off for lower labor cost have lots of money. Hence they are idiots with lots of money.

The next situation probably involves smaller companies.  There you would lose clients and everything if you don’t use experienced personnel. Customers are far less tolerant of smaller companies sending them rookies.

…the severity of the recession has kept more older Americans working past the age when they hoped to retire — or pulled them back into the labor force after they had left. Their 401(k)s have lost years of accumulated savings. Their home equity has shrunk. So older people are now more likely to want to keep working, even after a layoff.

More job market idiocy:

Rapid changes in workplace technology may be another factor, Johnson said. Some employers fear older workers can't keep pace.

Gregg Cygan, a 60-year old graphics consultant based near Chicago, has decades of experience with technology and was a charter member of AOL's e-mail service. Yet he said some people consider his AOL.com e-mail address out of step.

"They only think you're hip if you have a Gmail account," Cygan said, referring to Google's e-mail service.

I have yet to find an email service that can do more than just bore me to death. I don’t have gmail. Want to know why? I’M SICK OF SPAM! I answered an email from someone on gmail and I got severely spammed. I think everybody in Nigeria has my email address thanks to this gmail BS.

Employers may talk a lot of crap about technology, but I know better. I still see people who go “Wow!” when they see a spreadsheet program being used to create a chart.

Technology savvy people are people who like technology. If you are not in that category, you will have problems; adolescent , adult or senior citizen notwithstanding. Lots of schools have computers to day and still kids flunk!

The bottom line is that there are no jobs out there.

The sale of GM Opel is still in the negotiation process and Magna is still the top bidder, even though China’s BJIAH is also bidding. The German government is keeping all bids open because Magna is bringing a Russian bank, Sberbank. The Russian government is acting very greedy lately and the presence of Sberbank may signal the end of auto production in Germany, and hence a loss of jobs to Russia.

GM is said to want a fast sale:

FRANKFURT (Reuters) – General Motors Europe President Carl-Peter Forster expects to sell German unit Opel to Canadian auto parts supplier Magna soon, he told a German newspaper.

GM wants to dump the company by July.

Magna plans to become apparent company running its auto parts business and Opel as its auto manufacturing subsidiary. It is planning to issue Opel stock.

China’s Beijing Automotive Industry Corp (BAIC) and the hedge fund Belgian holding company RHJ International are still on the sideline as bidders.

BAIC has placed itself on a “let me know” basis by making a nonbinding offer. It is possible that jobs are still the biggest issue in this deal. Germany should perhaps give it up by now. Some are taking the fact that there is a Russian bank involved as evidence of corruption:

 

German Deputy Economics Minister Jochen Homann on Friday expressed skepticism over Magna's concept for Opel and said that vested interests praising the auto parts supplier's offer as the best left the German government open to "extortion.”

Russians now have a bad reputation as economic gangsters.

As time moves on, it is becoming more obvious that workers in the Thuringia, Germany plant will have to face unemployment. If talks fail with Magna, I think the Belgians and the Chinese are going to lowball the plant out of existence.

Russia seems to be experiencing some kind of identity crisis. It apparently wants to return to being a world power.

According to this Associated Press article, Russia is now using what is called “checkbook diplomacy” in order to bring back former Iron Curtain countries under its sphere of influence. One can only find it odd because the famous ‘influence’ always seemed no more than that of someone’s jailor. We can’t deny that Russia may have provided some sort of financing in these countries, but they kept their Armies in just about every single one of them. Therefore, they were charging these countries for the ‘service.’

For too long, information about what it was like behind the Iron Curtain was submerged under political propaganda. Since there was really no gunfire war, but just a ‘Cold’ War, each side, Commies and ‘Capitalists,’ spent most of their time bad-mouthing each other. If any outward display of power had to be made, it was done in some dark corner of the planet in the set of countries known as the Third World. They suffered. They were killed. They saw war.

What the Russians as ‘Soviets‘ probably had was a captive market. In other words, those countries were forced to buy from Russia. There used to be food and everything shortages in Russia proper all the time. In retrospect, I think they were selling their production to these satellite countries at exorbitant prices. Unfortunately, as I said above, information about this place was obscure and channel feeds were opaque. Nonetheless, this new checkbook diplomacy, one in which Russia can participate in the same degree that the IMF could because of its natural resources and so many energy-dependent countries as clients, shows that Russia wants to recapture that captive market.

According to the article, Russia also has economic problems, but it doesn’t want to sit back:

Instead, armed with cash hoarded during years of high oil prices, Russia has gone on a cash offensive — pledging loans and aid to Belarus, Kyrgyzstan, Moldova and Armenia. It has tied in its neighbors to crucial energy deals, and has talked about lending billions of dollars to Ukraine and Serbia.

Since it is no longer King of All Soviets, many strange things happen these days:

But the global crisis has hit demand for gas, and Gazprom attempted to renege on its contracts — much to Ashgabat's irritation. Turkmenistan accused Gazprom of blowing up the gas pipeline between the two countries — a charge that Gazprom denied — prompting an outage in exports and a deepening rift in relations.

What happened there?

Now China , who wants natural gas, is courting Turkmenistan and  Russia  is running back with its checkbook to buy them back.

Former Soviet Republics apparently detect Russia’s desperation to regain its former empire and now everyone seems to be playing them off against other new suitors:

Belarus, too, has attempted to play Russia off other powers — in this case Europe. Talks with Minsk to extend the final $500 million tranche of a $2 billion loan collapsed in acrimony recently.

Lukashenko may feel he has little choice but to mend relations with an annoyed Kremlin. Belarus, despite recently joining the European Union's six-nation Eastern Partnership, still has limited ties with the West. Instead, it remains heavily dependent on Russia for cheap loans, inexpensive energy and vital trade ties.

In other words, it has nothing to sell.

From what I see here, Russia is really having a hard time keeping its former Muslim republics in the fold. So far, no one is predicting a rosy future and a newly rebuilt, solid sphere of influence:

"Once you start building relationships based on financial aid, you have to keep that flow of aid coming," said Weafer. "If some day you can't afford to write the check, somebody else will."

In other words, Russia may be gathering a collection of parasites and people who could care less. Everyone knows how hard it is to get rid of social parasites once a relationship has been established for some time. As for the indifferent, you know that as soon as they find something better, they simply won’t take your calls; totally unreliable.

In reality, Russia could have become a truly capitalist society, but their reputation for severe corruption is spreading worldwide. I am sure that former soviet republics knew about this, but the game has changed. Everyone is running separately now. There are no guarantees any more.

Someone is finally suing an investment bank over these monstrosities called subprime mortgage securities. All we have been hearing is everyone’s portfolio has been thinned out and not a pip from investors other than cashing out of their investment. Well, not at Access Industries.

There was a billion dollars in the investment account and it sustained $98 million in losses. When you talk to these financial advisors, they ask you about your investment objectives:

The lawsuit contends that Access hired JPMorgan to manage the investment account, called CMMF, with conservative objectives and specific diversification and liquidity requirements..

Instead, the bank and Ufferfilge invested the fund in risky and illiquid mortgage-related securities..

"JPMorgan and Mr. Ufferfilge made the reckless and unnecessary decision to saturate CMMF's portfolio with the riskiest and most illiquid residential real estate securities," according to the lawsuit.

 

These investments for Access were made at the same time as companies affiliated with JPMorgan were dumping similar real estate securities from their own portfolios, the lawsuit says.

The “I-Can-Beat-Obama” GOP Syndrome has just begun. Alaska Governor Sarah Palin has just announced her resignation as governor leaving a two-year balance in her term.

This sudden move is viewed as  preparation for the 2012 Presidential election. There are others who opine that Minnesota Governor Tim Pawlenty is also foregoing reelection for the same reason.

Palin hinted she had a bigger role in mind, saying she wanted to make a "positive change outside government." But she kept supporters in suspense, promising on Twitter: "We'll soon attach info on decision to not seek re-election ... this is in Alaska's best interest, my family's happy ... it is good. Stay tuned."

I think that with so many states going through budget problems, many governors are going to be in some deep, hot water this year. Pawlenty and Palin , to me, are simply stepping out of the kitchen just in time before everything starts to boil. We are living in a bureaucrat’s paradise—an all but eviscerate economy. What apparatchik would want to lead during these tough times. It’s inevitable. It will cost you your career. People are not going to believe that you are doing the best you can as either their unemployment benefits are running out, they  lose their homes to foreclosure, and end up either living with relatives while receiving food stamps, welfare or both. This is the type of situation where it probably helps if you are totally unpopular. In that way, you would just do your job, period.

I think Governor Palin doesn’t want to become unpopular and that, yes, a probable run as the Female Candidate for the Presidential Election in 2012 may have something to do with it. We already know that it will never be Hilary, who was actually asked to step aside during the last electoral campaign. Therefore, this lady is GOP Candidate 2012.

I’ve been noticing that she has been getting a ton of attention since the first day when McCain introduced her to the public. He lost because they didn’t want him. Unfortunately, at that point, they couldn’t swap. She was brought out at the last minute because Hilary was in the race, and that would have been enough to overshadow her stage presence. After all, Hilary now has a very long political resume while because of Governor Palin, we now remember that Alaska has far more than penguins, Eskimos, polar bears and the leftover oil patches from the Exxon-Valdez spill. There’s American people up there.

It is needless to say that her reasons are lame:

"Many just accept that lame duck status, and they hit that road. They draw a paycheck. They kind of milk it. And I'm not going to put Alaskans through that," she said.

So, why did you run for a second term? We all know that the second term is the time when a governor’s enemies start honing their meat cleavers for the kill.

She alluded to how she could help change the country and help military members — code that she didn't think her time on the national stage was over.

Help our military members do what? Can you, or will you bring them back? By now, everyone wishes that the government just wrapped it up in the Middle East, but who knows? Maybe we are due for a political bubble involving the war that will show that we were there just wasting our time; that it was just pork for the defense contractor and supplier industry.

Maybe her governorship was also a bubble and it’s about to burst.

When you see major companies  complaining about corruption, you know that corruption in that particular country is pretty bad.

Russia is corrupt. When it comes to foreign companies , its official are more corrupt because the companies are perceived as trying to steal national resources.

The President is heading over to Russia for a Russia-US business summit on Tuesday and the business sector companies that do business there want the President to address those two issues.

U.S. businessmen say corruption, a weak rule of law and the bad experiences of some companies in Russia deter both trade and investment.

Not only that, but we do as much business with Poland as we do with Russia. Not much incentive there. People have to remember that Russia used to copy every single thing we did during the Cold War Era. I doubt if their arrogance has abated since the collapse of the Soviet Union.

During this meeting, the Russian government is already acting weird. It reduced the number of executives that will attend the meeting from 10 from each side to  18. It also moved the meeting to the Kremlin. Reporters may also be kicked out of the meeting on short notice.

What is the purpose of all this? They reduce the number of participants, is it because there are ton of complainants and they can’t intimidate all of them at once, so they pick 10 and perhaps threaten them? I mean, they will be at Russia’s House of Pain, the Kremlin? Are there still dungeons in that place?

What are some of the complaints from foreign businesses? What else? “Stability and sanctity of contracts.” The business sector has become so middle class that everyone has forgotten how up to not too long ago, breaking the sanctity of contracts led to major league shootouts, duels, etc.

Nevertheless, a broken contract can always be Scotch-taped and placed back in operation. The stability of contracts, however, must remain intact. If corruption is a factor, that means that the  other party is selling you out every second of the day. I guess you have to roll a dice in Russia to figure out if your contract will either be renewed or that other party will come through.

The above is one of the reasons why the Rule of Law comes into play. These people over there apparently go into contracts, go home and discuss it with their paisans, who then tell that they are getting ripped off. So they come back and rip you off. It’s like the villagers versus the 21st Century.

As in everything politicians do, they simply turn on the political hamburger helper machine on and make promises; which, of course, are meant to be broken.

 

Medvedev, like his predecessor and now Prime Minister Vladimir Putin, has promised to crack down on corruption.

Right. He’s going to review his little, black payment book and see who has been a bad boy (stiffed him) and “crack down” on them; meaning a payment on demand move.

If anyone ever wonders why the Third World is so poor, here is one good reason:

 

But U.S. businessmen say they have seen no real change in an opaque system which tends to favor Russian companies.

Although Russia never qualified as a Third World Country, they have apparently gotten stuck in the mentality that countrymen can do everything foreigners can and just as well. The first part, “can do,” is true. It’s the second part that is flawed. The only reason why they were able to catch up with us in the arms race is because they ensured that they had people who knew what they were doing. In fact, we, during the Oppenheimer Project (Atomic Bomb), did the same thing. We collected the best mathematical and physics talent around and we did it. We beat Nazi Germany, who were also researching the Atom Bomb but turned out to have the wrong cooling system to control the bomb during testing.

I don’t think the rest, if not most, of Russian industry is properly developed. You can tell by the foreign companies involved:

The chief executive of U.S. oil major Chevron, David O'Reilly, was close to buying Russian oil firm YUKOS before its owner Mikhail Khodorkovsky was arrested and sentenced to 8 years on what his defense described as politically motivated charges.

If Chevron is there, that means that your oil is in some kind of jungle. From what I’ve read (about Nigeria, Colombia, Ecuador), this is Chevron’s specialty—totally undeveloped areas.

O'Reilly has kept his criticism of Russia low profile unlike his peer from ExxonMobil, Rex Tillerson, whose Sakhalin-1 project was banned from selling gas to China.

In other words, they just want ExxonMobil to build the infrastructure , make as little money as possible, and then sell the operation to Russia for cheap. We don’t even have to discuss how much money ExxonMobil can make by selling to China, a country that will soon need all the oil it can get to run its factories.

The Russian judicial system is apparently of no help when it comes to enforcing contracts. Their most common opinion must be, “What do you want from me? The guy don’t want to pay? Come on!“

Russian commercial courts have a bad reputation as it stands.

What makes the dispute [Russia v. Bank of New York Mellon] unique is that Russia has filed the suit not in "any appropriate United States district court," as the RICO statute contemplates, but in a Russian court. Moscow's commercial court is widely regarded as not only a place susceptible to corruption but one in which judges simply lack the judicial independence required to rule against important state interests.

That was a case where a Russian branch of the bank helped some Russian citizens smuggle electronically about $7 billion out of the country. The Russians demanded tax payment and fines for a total of $22.5 billion dollars. That was 10 years ago.

When it comes to the Russian government as litigant, the other party loses every time:

In recent years Russia has often used the selective enforcement of its laws to advance policy objectives - most notably the nationalization of natural resources. From 2003 to 2006 it cited tax claims as the basis for seizing the assets of Yukos, then its largest oil company; in 2006 it alleged environmental violations in forcing Shell (RDSA), Mitsui (MITSY), and Mitsubishi (MSBHY) to cough up half their stake in their Sakhalin Island oil franchise; and in recent months it has invoked transgressions of labor, migration, and tax laws to wring concessions from the Western half of the TNK-BP (BP) oil joint venture, including the ouster of its American CEO, Richard Dudley.

Talk about the ‘man’ sticking it to the man.

According to the CNN Money article, the top people, or the richest, in Russia do not want to pay taxes—literally. Bank of New York Mellon comes in with banking software in the 1990s, back when this was still new and banks were not using websites for that purpose.

In the Bank of New York case, the reasons for putting up with harassment from the Russian government are strategic:

 

While a judgment in Moscow might well not be enforceable in the U.S., the Bank of New York does business in more than 100 countries, and the judgment would almost certainly be enforceable in some of them. Moreover, as a multinational operation, the Bank of New York does not relish the prospect of defying any country's judiciary. After an 80-year presence in Russia, it also dreads the prospect of having to pull out now, when Russia is the world's sixth-largest economy, its second-largest producer of oil, and a global superpower once again.

In other words, they are just waiting for a set money figure that they can pay and move on to getting their hands on better Russian customers. In fact, an offer had already been made:

Before filing suit, Marks met in the spring of 2006 with the Bank of New York's executive vice president and deputy general counsel, Matt Biben. Marks has acknowledged that on behalf of Russia he asked the bank to fork over $600 million if it wished to avoid litigation. Biben had joined the bank in 2004, after spending 12 years as a federal prosecutor - six in Manhattan - and having brought many criminal RICO suits himself. Biben had also personally negotiated the language of the Bank of New York's nonprosecution agreement in 2005. Biben says that Marks offered no documentation or written analysis for his demand, which Biben rejected. "It was certainly not the type of information that any corporation would make a serious decision based upon," he says.

The suit was one from depositors at a Russian bank that were ripped off by the money-laundering team of Lucy and Edwards, former Bank of New York employees at the Russian branch.

There is a consensus that Russian “Arbitrazh” Courts are no better than traffic court here in the States, if not worst.

According to three academics consulted by Fortune, the Moscow arbitrazh court's objectivity in any matter is likely to be inversely proportional to the state's interest in the case. In addition, three of the American legal experts who are currently serving as retained experts for Russia in the Bank of New York case, including Notre Dame law professor G. Robert Blakey, are listed as co-counsels on a brief submitted in a different case just two years ago that argued "Russian courts are highly susceptible to corruption, and a foreign [party] cannot expect to receive an impartial trial against major Russian interests."

Russian courts are also unpopular in Europe:

MOSCOW, June 23 -- A special European investigator issued a stinging report Tuesday that alleges widespread political abuse of the Russian courts and urges countries not to extradite people to Russia if they might be denied a fair trial.

The number of cases filed in the [European Court of Human Rights] against Russia each year has climbed sharply, from 8 percent of all cases in 2000 to nearly 30 percent last year, and the Kremlin has bristled at recent rulings that highlight torture and judicial corruption in Russia.

Those dungeons in the Kremlin must be really busy—or were they ever idle? I see why Bank of New York would want to settle with the Russian government. The place hasn’t changed much when it comes to law enforcement, I see.

She said she found prosecutors with "almost unchecked" power to put people behind bars and subservient judges "subject to an increasing level of pressure aimed at ensuring convictions in almost all cases."

Don’t use the right morality! Use these cue cards instead, or wait for that phone call. I wonder if judges in Russia have some light on their desk that flashes when the case starts to indicate to judges that they have to burn the other party. I didn’t read far enough:

The practice of "telephone justice" -- an official calling and telling a judge how to rule -- has evolved for the worse, she wrote: Russian judges are now so worried about making a mistake and being disciplined or dismissed that they pick up the phone themselves to ask for instructions.

Now that is royally….!!!! The real judge is at some coffee shop somewhere.

What happens if you go through with the case?

Defense lawyers, she said, are "frequently subjected to searches and seizures and other forms of pressure."

Amazing! Your lawyer gets thrashed! Way to go! LOL.

The report then recommends a pay raise for the judges. What’s the use? They are already told how to judge. A pay raise would require them to convict even more people! She says it “will reduce the temptation for corruption.” Maybe if they sign away their pay raises to their handlers, maybe then  they could pass real judgment. I could just imagine those guys: “Oops! My boss is here! Guilty as charged! Next!“ LOL.

Russia is a very big country, yet here they have crooks pulling Third World , and crooker corporation, shenanigans:

In 2007, police allegedly seized seals and documents from Hermitage's offices that were then used to transfer ownership of the firm to a shell company. In an elaborate ruse involving forged contracts and lawyers claiming to represent Hermitage, other shell companies sued the new owner and obtained judgments totaling about $1 billion, Hermitage chief executive Bill Browder said.

Hermitage had already moved its assets overseas and suffered no losses. But it says the officials used the judgments to obtain a tax refund of $230 million from the Russian treasury that then disappeared into offshore accounts.

A country so large and you can’t keep your money there? Come on, Russia, grow up!

Small countries involved in offshore banking do so because they have a nonpolitical reputation. Every other country knows that if they are invaded, whatever is in the treasury is gone. In fact, it’ll be the first thing to go. For most countries, it helps to be large, especially if your neighbor has it in for you.

If there is any doubt that corporate people can be hurt by Russia’s legal system through fines and imprisonment, stop doubting—they can:

Mikhail Khodorkovsky and Platon Lebedev, two former managers of Yukos Oil. They have been imprisoned since 2003 and are serving eight-year sentences after being convicted in 2005 of tax evasion and fraud. Long the subject of controversy, the case is once again in the public spotlight after Russian authorities brought fresh charges against the two accused, which would potentially lead to them serving many more years behind bars. Critics have argued that the charges are politically motivated.

Prosecutors accuse the ex-Yukos managers of embezzling 350 million metric tons of oil, equivalent to Yukos' entire oil output for six years. Defense lawyers and several independent legal observers have expressed bewilderment at the new claims. They note that in their previous trial, the two managers were convicted of underpaying taxes on this same output, implying that it was legal business activity. The alleged embezzlement occurred when Yukos was Russia's largest oil company and one of its most visible companies overall.

If that’s the case, then Double Jeopardy is no joke.

More info on what happened to Hermitage Capital:

Hermitage Capital, once the largest foreign investor in the Russian stock market, along with its trustee, the leading British bank HSBC (HBC). The case, described by the Council of Europe as "almost unbelievable," concerns the expropriation of three Hermitage subsidiaries in Russia by organized criminals, and the subsequent theft of $230 million in taxes from the Russian government, allegedly with the participation of Russian police officials. More recently, Hermitage lawyers responsible for exposing the frauds have been arrested or have fled the country.

In its analysis of the case, the Council of Europe pulls no punches. The report states bluntly that "The Hermitage Fund has become the victim of the corruption and collusion of senior police officials and organised criminals." The report also draws attention to the incoherence of Russia's top law enforcement bodies in responding to the allegations.

when she approached Russia's Investigative Committee of top lawmen for information about the detention of one Hermitage lawyer, the Committee apparently denied that the lawyer had ever been detained. (In fact the lawyer, Sergei Magnitsky, has been detained without trial since last November.)

Let’s not even talk about the same official and certain bodily functions.

Another report about the true reasons, political, for imprisoning Khodorkovsky is punishment for “challenging then-President Vladimir Putin.” Not only that, but here is what really happened at Yukos:

On August 1, 2006, one headline dominated business news around the world: A Russian court had declared Yukos, one of the largest private oil producers in the world, bankrupt. Soon, its CEO and founder, Mikhail Khodorkovsky, saw his company's assets sold off for a fraction of their value to the state-owned Rosneft Oil Company and found himself behind bars, charged with tax evasion. The downfall of Yukos has unofficially become known as the most sensational example of high-end corporate raiding in the history of the post-Soviet economy.

According to the Wharton report, “approximately 70,000 Russian companies a year become targets of raider attacks. Billions of dollars in assets are tied up in complex legal schemes, which some have dubbed "a new wave of property repossession.” It sounds more like a new Kleptocracy. Here is the “old way” of corporate raiding in post-Soviet Russia:

In the mid-1990s, reports of AK-47 wielding masked men storming the headquarters of up-and-coming companies, seizing assets and forcing owners to sign a variety of property transfer documents were all too common.

For sure. I mean, who were you going to all, the KGB?

Types of Corporate Raiders

Color-coded Teams

These raiding teams are commonly divided into "black," "grey" and "white" firms based on the degree of illegality of their tactics. "Black" raiders are known for the blatant use of criminal force, as was done in the mid-1990s. "Grey" raiders utilize milder forms of criminal activity, relying largely on judicial bribes. "White" raiders are most similar to their Western counterparts and use tools such as organized strikes and unplanned inspections by regulatory officials.

The point is that the criminal raider is the most common type. According to the report, the legality of these teams is questionable. They enter a company legally, i.e. they buy stock up to the limit where they can become a major shareholder, nominally 5% of common shares outstanding.

Even if, in some cases, the particular tactics of Russian corporate raiders could be considered legitimate in the West (e.g., share buy-back), the manner of execution could be illegal (e.g., extortion of existing shareholders). The main methods of raiding include falsification, greenmail, forceful takeovers and share buyout.

Russia is starting to sound like just a place with a bunch of people living there. Granted that there were no social classes during the long Soviet period and only over-privileged bureaucrats, there are things that are totally unacceptable when you want to have a normal business environment. If you want a company, have the money ready and take your proposal to the shareholders. Everything else is no different than robbing a bank.

Here’s another tactic similar to being paralyzed by snake saliva:

Raider tactics differ greatly. Falsification includes the creation of fraudulent property ownership documentation, forgery of signatures and bribing of judges and governmental officials. This type of "grey" raiding occurs, for instance, when raiders bribe a court to file a lawsuit against a targeted company. While the lawsuit may be fictitious, it can result in a legal "arrest" of all outstanding shares of the company and deprive the executive board of its decision-making power. A company whose shares are "under arrest" cannot undertake significant business transactions or human resources decisions, or obtain financing. Galina Krylova, a Russian lawyer who has worked extensively with victims of raiding, states that the consequences often force "the owner to sell the operations to the attackers for a fraction of their actual value. Or, the lawsuits simply continue until the company is bankrupt."

Can anyone believe that? Company operations are frozen because a bunch of hoodlums filed a lawsuit that later turns out to be false.

Finally, Russia doesn’t have a bar exam for lawyers. Judges take bribes. Everyone takes bribes and people file lawsuits wherever they feel like without adhering to any jurisdictional requirements. You can take your junk anywhere in Russia.

Meanwhile, President Medvedev just calls this situation legal nihilism, which is not because judges are being influenced. In nihilism, you would have judges doing whatever they feel like, which may include taking bribes, but which will not provide predictable results. Even hoodlums wouldn’t pay for that. There is predictability in those courts, if you talk to the “right people.” I can’t believe that Russians would actually think that their system resembles that of the West. They had better straighten that out because once foreign investment steps out, it’s Third World time all over again.

Russia is just too large to think it can sustain this situation just because it has extensive national resources. The disorder described in all reports mentioned is enough to consume and obliterate any surplus in the Russian treasury. Once Russian businesspeople in general, and not just those who keep sending their money to offshore banks, realize that the ruble is as good as toilet paper in world markets, these hoodlums are going to know what is what.

 It is hard to believe that a builder would actually go ahead with construction where the home will start to crack and slide away from its foundation. In fact, one wonders if they did build a foundation.

A homeowner couple out in California thought that the ‘popping’ sound they kept hearing was the fall of harmless acorns over their roof. It turned out that the home was both cracking and shifting toward a nearby golf course. They checked around the neighborhood and found that others also had the same problem. Now comes the hardest part.

They are currently suing for defective construction. However,builders that engage in shoddy construction are hard to sue. They usually dissolve or bankrupt the company. Once they accomplish either one, everyone disappears. Many people end up facing the real estate broker to no avail.

Little did we know it was the house cracking,” says Mrs. Lynn, 67 years old. Mr. Lynn, 68, says they bought the property in 2002 for $357,000 as a weekend home and an investment. The stucco house was moving and shifting, with part of it subtly pitching toward the golf course, resulting in cracks and fissures in the walls, ceiling and floors, the couple says.

I read something similar in a blog. That house was in Arizona and, in that particular case the house was built on a thin foundation. The builder was supposed to use slabs of particular thickness to counteract the expansion of the soil as it built up moisture from underground water sources. The slabs would keep the mud packed in. Instead, the builder used the minimum specification and then proceeded to use an even smaller slab size. As the weather and water content of the ground changed,the house was being pushed up during the humid season. In the dry season, the house would come down, but unfortunately, not evenly. Hence the cracks. Eventually, the moisture situation became so bad that mold took over the home. Mold is a living organism. It colonizes an area, grows and then releases spores that can lodge themselves in your lungs; another moist area. It is needless to say that the homeowner abandoned the home. When they tried to sue, they found out that the builder had gone bankrupt. Oddly enough, the homeowner was also around the same age as the two mentioned from California.

Many of their neighbors say they had similar problems. In the Sacramento Valley subdivision of about 250 houses, more than half the residents have reported some type of flaw. The Lynns and dozens of their neighbors last year filed construction-defect lawsuits against the builders, and the lead case is expected to go to trial next week. They are seeking enough money to permanently repair the houses, a figure expected to total millions of dollars.

In this case, another technicality has propped up—warranty on the home:

…a response the company’s attorneys filed with California Superior Court said time limits for some of the plaintiffs’ claims had run out.

utterly criminal

. It is unacceptable

civil engineering

. A home with that kind of problem should not, regardless of state minimum regulations and requirements, be built by a licensed builder. What if the house slides, falls apart, and kills someone? What are they going to say? That the warranty on their shoddy building methods has expired? There’s no statute of limitation on what amounts to manslaughter. Involuntary, but manslaughter nonetheless.

Shoddy civil engineering is apparently the norm when it comes to new homes:

.

Whatever the outcome of the case, hundreds of thousands of people from California to Georgia say their almost-new homes need costly repairs because of construction defects. The furious pace of home building from the late 1990s through the first half of the 2000s contributed to a surge in defects, experts say. It caused shortages of both skilled construction workers and quality materials. Many municipalities also fell behind inspecting and certifying new homes.

So they went ahead and built anyway, as if we had some kind of population boom running in tandem with the construction boom. As we can see from the multitude of foreclosures, there was no need for any of those people with ‘shortages’ to get any permits. The amount of empty homes is proof that it was all in vain. A waste of time for everyone except the companies that collected money during the sale of the home.

At the height of the boom in 2005, more than two million houses were built in the U.S., according to the National Association of Home Builders, a trade group. Criterium Engineers, a national building-inspection firm, estimates that 17% of newly constructed houses built in 2006 had at least two significant defects, up from 15% in 2003.

As I already mentioned, the builders usually go bankrupt after getting their fill:

Owners of defective properties say they’re finding it even harder to get repairs now because of rising builder bankruptcies. Some builders, especially smaller ones, also carried inadequate liability insurance, construction experts say. Other homeowners say they are hamstrung by mandatory binding arbitration clauses in purchase contracts and new-home warranties, as well as “right to cure” laws, which require homeowners to notify builders and give them a chance to remedy a defect before the homeowners can file a lawsuit. More than 30 states have some type of right-to-cure legislation, according to the home-builders group.

Isn’t that something? The whole building industry operated as if it were in a Third World country, places where you simply ‘build’ and do not worry about the consequences.

The home mentioned in this article has a familiar problem—seasonal moisture:

In Rancho Murieta, residents say they just want to save their homes. It turned out that much of Blue Oaks Estates was built on clay soil that expands in the rainy season and contracts in the scorching summers, the builder, Reynen & Bardis, acknowledges. This is damaging the homes’ foundations and subtly twisting the frames, causing homes to slowly pull apart—as evidenced by cracking floors, walls and ceilings, separating gutters, and jammed windows and doors.

Those of us who live in the Northeast will immediately recognize one thing that ensures that the foundation was properly built—those homes don’t have a basement! So you can’t tell what’s going to happen when the seasons change.

There are certainly a multitude of business ignorant companies in the building industry. The next one apparently can’t figure out how much money it would have saved had it used proper civil engineering:

At first Reynen & Bardis made numerous attempts to address the problems, repurchasing about 50 houses, and installing new drainage systems and foundation underpinnings on scores of others, the company says. But it stopped making repairs on houses in the subdivision in November 2007, saying it could no longer afford them.

You know why you “can no longer afford them“? Because you couldn’t afford them before for that number of homes. Had they built everything properly, they would have only been able to sell about a third of the homes they sold. Good work has a cost and, again, they are lucky the homes aren’t killing people when they are inside.

California has a good law for home defect warranties—10 years. Nonetheless, it apparently gave everyone, including dogs and cats, the green light to build every which way they pleased.

As for those who are not on the shaky side of town, they have problems with the bank:

Even Rancho Murieta residents whose homes are OK say they are being affected. Michael Yager, 61, a retired real-estate agent and firefighter, says his bank would not refinance his mortgage unless he paid for a $7,000 engineering study certifying the house is structurally sound. Mr. Yager’s home was built later with a different type of foundation and hasn’t had problems.

States notorious for this type of problem: California, Texas and Florida, Nevada. Basically, states leading the housing bust.

As much as our stock market is obsessed with the housing market, here is proof that it is not all that great:

New research found that more than 25% of mortgage loan defaults are strategic -- that is, a quarter of homeowners who default on their mortgages are walking away from their homes even if they can afford to make their payments.

The report found that homeowners often won't default as long as negative equity doesn't exceed 10% of the value of the home. However, 17% of households would default -- even if they could afford their mortgage payments -- when their equity shortfall reaches 50% of the value of their home, according to the paper. In numerous housing markets, home prices have suffered declines of more than 30%.Read more about the study

One of the reasons why so many people are defaulting is apparently that far too many were actually speculating, holding property for sale in the near future and not the usual seven years necessary to build home equity. Marketwatch mentions that there is little stigma to defaulting on a loan, especially in areas where many people have done the same thing and earned none or few repercussions. One would figure that the person would declare bankruptcy at least, but they apparently do not even have to do that. A default is a default.

When it comes to finding fault for the banking crisis, we can’t deny that everyone involved carries some blame.

The bankers are to blame for extending easy credit. The borrowers can be blamed because they actually believed that nothing for nothing yields something. The government, which is ultimately responsible for maintaining the banks liquid as the lender of last resort is to blame for not assessing the systemic risk increasing right under its nose. Finally, the Bush administration can also be blamed simply because it was the government at the time.

Finally, common sense has returned to immigration enforcement.

The Bush administration, after being caught looking the other way, turned around and victimized illegal immigrants. It’s easy; the immigrants do not expect it; and the racialist degenerates amongst us applauded the measure.

There was no need for any of those raids. In fact, here is what was needed:

On Wednesday, Immigration and Customs Enforcement, the federal agency known as ICE, said it had sent notices announcing audits of hiring records, like the one it conducted at American Apparel, to 652 other companies across the country. Officials said they were picking up the pace of such audits, after performing 503 of them in 2008.

After all, the immigrants are here for the jobs. If the documents do not match by the time the auditors arrive, they are then not only fired, but they are subject to deportation. Hence there was no need for all the cowboy horse manure that went on since 2007.

Iran is truly run by a bunch of fleabags. Step out of line and then man really comes and takes you away.  Mohammad Khatami condemnd the election results, but he also says about the mass arrest of protesters :

“If these people have committed crimes, why are their legal rights as citizens not preserved, why don’t they have access to a lawyer, why are they not tried in a court, why haven’t they been charged?”

The IRG’s response through its Interior Ministry:

This week, the Interior Ministry said it would withdraw the permit for the Combatant Clergy, a political party to which Mr. Khatami belongs, as well as two other reformist parties that have thrown their support behind him in the past.

Imagine renting from the Interior Ministry. I hope they issue driver’s licensees too.

Although the European Union has listened to Britain’s demand that all EU ambassadors be pulled from Iran, it is only a choice under consideration. Some members probably won't do it, or say that they can’t:

Before the Iranian threat on Friday, European diplomats said, the idea of a withdrawal of ambassadors was one of several options under consideration, and European Union officials had decided that the threat of such retaliation should not be completely withdrawn. Equally, though, some European countries, notably Germany and Italy, had been reluctant to seem too tough.

Too tough, or is that you are getting far too much oil from Iran? I think that is the case.

If a nation trades with another, it is nearly impossible to keep everything going smoothly without having some kind of diplomatic relationship. Britain actually produces oil in the North Sea. Other countries are oil-deficient in every way.

Should the European Union withdraw all 27 ambassadors . It might have to. It has been created as a political entity and it must carry out its political duty to defend the rights of its members internationally as well.

In reality, that is not a problem. The problem arises from cutting off diplomatic ties. The embassies can just be moved nearby to another country. In fact, I think this is what the other embassies ought to do. They ought to start evacuating employees and sending them to neighboring nations while simply leaving  a note to the Iranian government that if they need anything from the embassy, they can contact them next door. The idea is not to get into a mess where no one can pick up or deliver anything to Iran because of the temporary break-off in diplomatic relationships between Iran and any other country. We already saw what happened when Russia cut off the Ukrainian gas pipe. That was another situation when the whole EU could have protested.

Then again, Russia is not the Ultra-Demonic Iranian Guardian Council either. I mean, they are tough customers, but they do listen to reason, and this is in itself the reason why Europe never cut off with Moscow. Sure, some would say that it’s because they are only a stone’s throw from major European cities, but that’s not the case.

The ultra-demonic Iranian Guardian Council has started its inquisition tactics. It will seek "confessions" from the British embassy employees it is holding hostage.

News reports on Friday quoted Ayatollah Ahmad Jannati, the head of the influential Guardian Council and an ally of Iran’s supreme leader, Ayatollah Ali Khamenei, as telling worshipers at Friday Prayers in Tehran that the local employees would be tried after they “made confessions.”

What “confession” would that be? That they are not Muslims?

Since they are mentioning worshippers, and I have seen footage of an Iranian hanging (They used a very tall crane to lift the guy in the air. He was a rapist), I think the mullahs are promising a big spectacle. “Come and see the show!” They are saying.

 The  Iranian Government has returned to embassy-bashing. It is currently holding employees of the British embassy hostage. It is now planning to put some of them on trial:

The Iranian authorities accused the local employees of fomenting and orchestrating protests, but pro-democracy Iranians ascribed the violence on the streets to a widespread crackdown by government security forces.

Of course, this is probably impossible in practice. What the clerics are doing is placing the British government on trial vicariously through its representatives, the embassy staff. They are being held accountable for the opinions of the British government on the Iranian post-election protests.

Iran has become a place in serious need of infiltration by the West. The British Foreign Office is getting conflicting reports about how many of its embassy workers have been arrested and how many will go to trial.

No one knows how many have been detained. European Union President, Swedish Foreign Minister Carl Bildt says that more than one staff member remained in custody.

The Iranian government has gone back to messing with embassies. This time, the British embassy.

Not only are they being held hostage, the Permanent Iranian Inquisition Crew, the Clerics, plan to put them on trial. Let’s see. If they are not Muslims, well, then that’s it. They’re guilty! Sure, they’ll ask themselves guilty of what?

According to the Times article, this would trigger a diplomatic crisis. Shouldn’t that be the case right now? Entering someone’s embassy can be viewed as an act of war at any time. Ambassadors are normally asked to leave and not placed under arrest, let alone put through a trial.