Daily Digest

Daily Digest - June 1

Tuesday, June 1, 2010, 9:48 AM
  • Beijing In A Sweat As China's Economy Overheats
  • Greece Urged To Give Up Euro 
  • German President Koehler Quits Amid Row Over Military
  • A Worldwide Financial Crisis Couldn't Happen Again. Could It?
  • Memorial Day Musings
  • U.S. Expands Gulf Fishing Ban; States Brace For Oil
  • BP Clashes With Scientists Over Deep Sea Oil Pollution
  • Mobile Phones Possibly Responsible For Disappearance Of Honey Bee
  • Proposed Solution(s) to Gulf BP Oil Spill


Beijing In A Sweat As China's Economy Overheats (SolidSwede)

China is struggling to contain the threat of an overheating economy in the face of rising house prices, inflationary wage increases and a continuing surge in money supply, the head of the country’s second-largest bank has warned.

Greece Urged To Give Up Euro (Saxplayer00o1)

THE Greek government has been advised by British economists to leave the euro and default on its €300 billion (£255 billion) debt to save its economy. The Centre for Economics and Business Research (CEBR), a London-based consultancy, has warned Greek ministers they will be unable to escape their debt trap without devaluing their own currency to boost exports. The only way this can happen is if Greece returns to its own currency.

German President Koehler Quits Amid Row Over Military (Regina F.)

He made the controversial remarks in a radio interview after a brief visit to Afghanistan earlier this month.

He said that for an export-orientated country like Germany, it was sometimes necessary to deploy troops "to protect our interests- for example free trade routes".

A Worldwide Financial Crisis Couldn't Happen Again. Could It? (SolidSwede)

"It's true that there are negative dynamics in terms of sovereign risks, in terms of banks, boom and bust risks in emerging markets and regulatory uncertainty. But when I look around the world, the fact is the economy continues to gain momentum," says Michala Marcussen, global chief economist at Société Générale. "The recovery is here. It doesn't mean there is no risk. But we also have to be careful about getting a situation where we say there's no solution. Even Iceland is still here."

Memorial Day Musings (Ilene)

In the best commentary yet on the global situation, the 6 month-old “Best Party,” which is headed by a comedian, won the Reykjavik elections, after campaigning with the catch slogan “Whatever Works.” The Best Party promises to get a polar bear for the zoo and preaches the benefits of “anarcho-surrealism.” While the Best Party’s critics implored its team of comedians, actors and musicians to end their campaign, soon to be-mayor Jon Gnarr insisted he would follow through to the end. It was the best way to expose the “ridiculous” state of traditional politics, he said.


U.S. Expands Gulf Fishing Ban; States Brace For Oil (Nickbert)

The federal government has closed all commercial and recreational fishing across nearly 62,000 square miles, or nearly 26% of federal waters in the Gulf, up from about 60,600 square miles closed on Friday, NOAA said.

BP Clashes With Scientists Over Deep Sea Oil Pollution (Nickbert)

BP's chief executive, Tony Hayward, said it had no evidence of underwater oil clouds. "The oil is on the surface," he said. "Oil has a specific gravity that's about half that of water. It wants to get to the surface because of the difference in specific gravity." Hayward's assertion flies in the face of studies by scientists at universities in Florida, Georgia and Mississippi, among other institutions, who say they have detected huge underwater plumes of oil, including one 120 metres (400ft) deep about 50 miles from the destroyed rig.

Mobile Phones Possibly Responsible For Disappearance Of Honey Bee (joemanc)

Now researchers from Chandigarh's Punjab University claim they have found the cause which could be the first step in reversing the decline: They have established that radiation from mobile telephones is a key factor in the phenomenon and say that it probably interfering with the bee's navigation senses.

Proposed Solution(s) to Gulf BP Oil Spill (tomadkins)

The following is the proposed technical and governmental approached(s) to immediately addressing the Gulf Oil Spill since BP cannot stop the well with a “Top Kill” approach by forcing mud and cement into the well to stop the flow. The secondary tap directly into the underground (beneath the sea floor) pipe-casing that is directing the high pressure oil and gas from the reservoir into the damaged BP (Blow-Out) Preventer to redirect the oil into a new pipe casing could be used to install an explosive (i.e. nuclear charge at 18000 ft – technique claimed by Matt Simmons to have been used by the Russians to stop massive underwater oil well blowouts) to break the high pressure pipeline feeding the oil and gas to the surface since the BP “Top Kill” does not work.

Please send article submissions to: [email protected]


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Re: Daily Digest - June 1

"May 31 (Bloomberg) -- Italian municipalities face losses of about 1.1 billion euros ($1.4 billion) on derivative contracts with the country’s banks, outstripping gains by 11 times.

Combined losses at the end of March 2010 compared with an estimated 100 million euros of gains on derivatives among Italian regions, cities and towns, data from the Bank of Italy show. "

...................1A) Italian Bond Insurance Cost Hits Record

"June 1 (Bloomberg) -- Europe’s banks will have to write off 195 billion euros ($237 billion) of bad debts by 2011 and their ability to sell bonds may be curtailed as governments finance fiscal deficits, the European Central Bank said.

With governments facing “heavy financing requirements over the coming years” there’s a “risk of bank bond issuance being crowded out,” the Frankfurt-based ECB said in its biannual Financial Stability Report yesterday. “The risk that this implies for bank funding costs also raises the possibility of a setback to the recovery in banking sector profitability.” "

.................2A) ECB sees 'second wave' of bank losses

"The European Central Bank says euro zone banks face another €195 billion in potential write-downs to the end of 2011 in a second wave of losses from the financial crisis."

................2B) ECB Warns Write-Downs Could Reach $239 Billion

"The cost of protecting government debt against default in France as well as other peripheral euro zone countries rose on Tuesday as investors remained anxious about sovereign ratings.

Five-year credit default swaps (CDS) on French government debt rose to 74.6 basis points from 68.6 bps at the New York close on Friday, according to CDS monitor CMA DataVision."

....................3A) France Worries About AAA Rating (Mish)

"Water demand in the next two decades will double in India and rise 32 percent in China, according to the 2030 Water Resources Group, a research collaboration between the World Bank, management consulting firm McKinsey & Co. and industrial water users such as Coca-Cola.

China's 1.33 billion people each have 2,117 cubic meters of water available per year, compared with 1,614 cubic meters in India and as much as 9,943 cubic meters in the United States, according to the Food and Agriculture Organization of the United Nations. The 1.2 billion people in India, where farmers use 80 percent of available water, will exhaust their fresh-water supplies by 2050 at the current rate, the World Bank estimates."

"Days after a federal judge blocked his efforts to furlough half the state work force, Gov. David A. Paterson is drafting a plan that would lay off thousands of government workers at the beginning of next year, a move officials say is necessary to help balance the state budget."

"BEIJING — China's housing market problems are worse than those in the United States before the global downturn as they could stoke public discontent, a central bank adviser has warned.

The comments were made before China's State Council, or cabinet, announced it would "gradually reform the real estate tax" -- the first official sign of a possible annual levy on residential housing aimed at reining in soaring prices.

"The housing market problem in China is actually much, much more fundamental, much bigger than the housing market problem in the US and UK before your financial crisis," said Li Daokui, a member of the bank's monetary policy committee.

"It is more than (just) a bubble problem," he told the Financial Times in an interview published Tuesday."

"SAN DIEGO — The rate Medicare pays doctors will be cut by 21 percent starting Tuesday. Physicians in San Diego County warn seniors may have trouble getting care if Congress doesn't rescind the cut.

The Medicare pay reduction is mandated by a bill passed in 1997.

Congress has delayed the pay cut three times this year. The House passed a bill that would have blocked it once again, but the Senate failed to act in time.

Dr. Ted Mazer is an ear, nose, and throat specialist in San Diego. He says he can't absorb a 21 percent pay cut.

"That would basically take reimbursement well below the level of the actual cost of services," Mazer complains. "For me, in the short term, it could put me under water. If it doesn't get fixed in the long term, it basically tells me to drop contracts and stop seeing Medicare." "

...................7A) Congress Misses Medicare Payment Cut Deadline

"More than 750,000 low-income Virginians depend on it to stay healthy. It costs more than the state's college system and prisons"

"It was about 5 percent of the state general fund budget in 1985. Soon it will be nearly 20 percent, or about $3 billion, second only to public education spending.

"This already out-of-control, unsustainable level of increase in Medicaid funding... has got to be arrested," Gov. Bob McDonnell said recently. "We cannot continue to sustain the same level of funding in the Medicaid process.""

"NEW YORK (CNNMoney.com) -- Think Greece and Spain are drowning in debt? Look a little closer to home. Seven U.S. cities recently had their municipal bonds downgraded below investment grade. Their debt is now, junk, considered more worthless than that of the so-called PIIGS.

"America's short-term budget crises, long-term growth perspectives and needs for austerity are similar [to Greece]," said Matt Fabian, managing director at Concord, Mass.-based consulting firm Municipal Market Advisors.

Last quarter, Moody's Investor Services declared the debt issued by Harrisburg, Penn., and Woonsocket, R.I., to be junk, or below-investment grade. Meanwhile, Fitch Ratings currently has four other cities in the basement -- Detroit and Pontiac, Mich.; Harvey, Ill.; and Littlefield, Texas -- while Standard and Poor's has one -- Central Falls, R.I."

"MADRID (MarketWatch) -- The stream of negative news from Spain's savings bank sector continued on Tuesday, with a report in a local newspaper that the second largest, Caja Madrid, will ask the government for up to 3 billion euros ($3.6 billion) from its rescue fund.

A spokesman for Caja Madrid would not comment, saying only that the report, which appeared in several Spanish newspapers, was "speculation." The savings bank said last Friday it was in talks to merge with several regional cajas -- Caja de Avila, Caja Insular de Canarias, Caixa Laietana, Caja Segovia and Caja Rioja."

.................10A) Spanish markets see worst month since Lehman collapse

"FRESNO, Calif. (KFSN) -- Driving through the City of Fresno at night may soon be a little more difficult. The city is facing a $30-million dollar budget shortfall and Mayor Ashley Swearengin is hoping to cut into that deficit by turning off thousands of street lights.

Street lights are an essential part to navigating your way through the city at night, but with Fresno facing a $30.6-million budget shortfall, city officials believe de-energizing some of the lights will help save money."

"As Orlando City Hall explores ways to pare its workforce in the face of a huge deficit, city leaders may find that saving money is an expensive proposition.

Orlando officials had been trying to figure out how to deal with a budget shortfall of $49 million. Last week, they found out property values had fallen even more than expected, meaning that the budget gap now has climbed to an estimated $55 million."

"WASHINGTON (MarketWatch) - Hewlett-Packard Co. on Tuesday said it will invest $1 billion to automate its data centers and eliminate 9,000 jobs over a "multiyear" period."

"More than 25 per cent of the company's share value, or an astonishing £29.3billion, has been wiped out since the start of the crisis. And if you think this is a matter of concern only to a few 'fat cat' investors in the City of London, then think again.

For many years now, BP shares have been a mainstay of the FTSE index, and thus of most major British investment funds. As a result, there is scarcely an occupational pensions scheme or insurance policy that does not feature BP shares as a part of its portfolio of investments.

Just as damaging is the potential impact on the Government's finances. As the Chancellor, George Osborne, grapples with Britain's £150billion budget deficit, he now faces losing the enormous amount of revenue that BP normally pays the Exchequer in Corporation tax.

Last year, BP was among the nation's biggest taxpayers - contributing £5billion to the coffers in 2009 and a magnificent £10billion a year earlier, when oil prices were higher"

"Unemployment continued to rise in the eurozone in April, to 10.1 per cent, the highest level of joblessness in more than a decade.

Policymakers had hoped that unemployment had reached a plateau at March’s 10.0 per cent level, where it had stayed for two months before April’s modest rise.

Unemployment in the 16 countries that use the euro is now at its highest level since before the inception of the European single currency in 1999, according to seasonally-adjusted data from the European Union’s statistical arm.

Youth unemployment breached the 20 per cent mark, up from 19.9 per cent in March. It is now once again above 40 per cent in Spain."

"The Government Accounting Standards Board is preparing to release a document that could send shivers through public pension systems and the taxpayers who fund them.

The document, tagged a preliminary view of proposed pension accounting reforms, is scheduled for release this week. Statements on the board's website suggest coming disclosure standards that could ramp up the need for higher contributions to keep public pension funds on a stable footing.

Economist Andrew Biggs, a senior fellow at the American Enterprise Institute and former deputy commissioner for the Social Security Administration, said it is not clear exactly how the standards would work, but it appears they could require state and local governments, struggling with pension obligations, to dig deeper and set aside more cash each year for pensions.

"If the final rules are the way the draft is laid out, it would probably raise market liability by one-third to one-fourth," Biggs said."

"Reuters) - Hardened U.S. oil men might be able to do deals in dangerous parts of the world and stay cool under perennial political fire, but the gravity of the Gulf of Mexico disaster has left some of them feeling shell-shocked."

"Black & Veatch Chief Executive Len Rodman, whose company does engineering for energy projects, said huge tragedies have changed the trajectory of the energy business before, such as the partial core meltdown in a unit at Pennsylvania's Three Mile Island nuclear power plant in 1979.

"That disaster literally put a stop to nuclear power in the U.S.," Rodman said at the summit. "I'm not sure Three Mile Island was as big as what has happened (in the Gulf).""


  • Other headlines and news stories:

Gold could reach $1400: Credit Suisse strategists

Bundesbank Attacks ECB Bond-Buying Plan  ("Stealth bailout of euro-zone banks holding Greek debt")

ECB's Noyer Says Rating Firms Aggravating Crisis

China's May Property Sales Drop in Shanghai, Beijing (As much as 70%)

Fed's Evans: Central Banks Must Guard Against 'Black Swans'

Poland's foreign debt service costs poised to rise

Thousands of Romanian state workers go on strike

Fin Min: Greece Short On Revenue Targets, Vows Tax-Evasion Crackdown

Corporate Bond Risk Rises in Europe, Credit-Default Swaps Show

Dubai Holding unit makes $6.2bn full-year loss and Dubai Holding unit mulls asset sales after 2009 loss

Municipalities suffer income-tax decline (Ohio)

Police officers post billboards to stop layoffs in Stockton and Patrols stripped down by layoffs (Stockton)

Toledo squeezing revenue from red light camera tickets (News video)

School District may face budget shortfall in 2011-12 (Florida...$31 million)

Spain is trapped in a 'perverse spiral' as wage cuts deepen the crisis (Ambrose Evans-Pritchard)

Bankruptcy filings jump 34.4% (Hawaii)

States passing budget cuts onto local governments

Euro sinks to four-year low

Survey: City officials have growing concerns about meeting service needs (Minnesota)

Landlords 'considering selling up over capital gains tax hike' (UK)

HAMP Modifications Have Just a 50% Success Rate: Moody's (From May 28)

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Re: Daily Digest - June 1

Owners Stop Paying Mortgages, And Stop Fretting


For Alex Pemberton and Susan Reboyras, foreclosure is becoming a way of life — something they did not want but are in no hurry to get out of.



     Foreclosure has allowed them to stabilize the family business. Go to Outback occasionally for a steak. Take their gas-guzzling airboat out for the weekend. Visit the Hard Rock Casino.

“Instead of the house dragging us down, it’s become a life raft,” said Mr. Pemberton, who stopped paying the mortgage on their house here last summer. “It’s really been a blessing.”

A growing number of the people whose homes are in foreclosure are refusing to slink away in shame. They are fashioning a sort of homemade mortgage modification, one that brings their payments all the way down to zero. They use the money they save to get back on their feet or just get by.

This type of modification does not beg for a lender’s permission but is delivered as an ultimatum: Force me out if you can. Any moral qualms are overshadowed by a conviction that the banks created the crisis by snookering homeowners with loans that got them in over their heads.

“I tried to explain my situation to the lender, but they wouldn’t help,” said Mr. Pemberton’s mother, Wendy Pemberton, herself in foreclosure on a small house a few blocks away from her son’s. She stopped paying her mortgage two years ago after a bout with lung cancer. “They’re all crooks.”

Foreclosure procedures have been initiated against 1.7 million of the nation’s households. The pace of resolving these problem loans is slow and getting slower because of legal challenges, foreclosure moratoriums, government pressure to offer modifications and the inability of the lenders to cope with so many souring mortgages.

The average borrower in foreclosure has been delinquent for 438 days before actually being evicted, up from 251 days in January 2008, according to LPS Applied Analytics.

While there are no firm figures on how many households are following the Pemberton-Reboyras path of passive resistance, real estate agents and other experts say the number of overextended borrowers taking the “free rent” approach is on the rise.

There is no question, though, that for some borrowers in default, foreclosure is only a theoretical threat for a long time.

More than 650,000 households had not paid in 18 months, LPS calculated earlier this year. With 19 percent of those homes, the lender had not even begun to take action to repossess the property — double the rate of a year earlier.

In some states, including California and Texas, lenders can pursue foreclosures outside of the courts. With the lender in control, the pace can be brisk. But in Florida, New York and 19 other states, judicial foreclosure is the rule, which slows the process substantially.

One reason the house is worth so much less than the debt is because of the real estate crash. But the couple also refinanced at the height of the market, taking out cash to buy a truck they used as a contest prize for their hired animal trappers.

Mark P. Stopa is a lawyer who says he has 350 clients in foreclosure, each paying him $1,500 a year in fees.

It was a stupid move by their lender, according to Mr. Pemberton. “They went outside their own guidelines on debt to income,” he said. “And when they did, they put themselves in jeopardy.”

His mother, Wendy Pemberton, who has been cutting hair at the same barber shop for 30 years, has been in default since spring 2008. Mrs. Pemberton, 68, refinanced several times during the boom but says she benefited only once, when she got enough money for a new roof. The other times, she said, unscrupulous salesmen promised her lower rates but simply charged her high fees.

Even without the burden of paying $938 a month for her decaying house, Mrs. Pemberton is having a tough time. Most of her customers are senior citizens who pay only $8 for a cut, and they are spacing out their visits.

“The longer I’m in foreclosure, the better,” she said.

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Re: Daily Digest - June 1

I strongly encourage everyone interested in following the events in the Gulf of Mexico to check out the Oil Drum - www.theoildrum.com for a highly technical discussion of efforts to cap the well that is currently gushing out of control.  Many of the posters on that site have been working on the front lines of the oil industry for years and have a deep understanding of the challenges presented by the depth of this well.  Today they have posted an illuminating description of BP's latest approach to controlling the well.

There is another very interesting blog from a research ship investigating the oil plumes in the Gulf:




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Re: Daily Digest - June 1

here's the real story on the bees:

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Re: Daily Digest - June 1


Woody Tasch, the founder of Slow Money, recently read the Slow Money blog post and thread and provided the reply below which he asked me to post.  I've posted it to the Slow Money thread as well, but wanted to be sure that more people had the opportunity to run across it here.  So here it is.



I am extremely honored to have Chris' hat thrown into the Slow Money ring. And very happy to see all the conversation it elicited.

As that conversation indicated, the idea of slow money sparks a deep discussion about the nature not just of food systems, but of the economy, corporations, fiat currency, profits, growth.

That's why my book is called Inquiries in to the Nature of Slow Money. As in: if we don't ask the right questions, we will only find ourselves manipulating the wrong data and formulating the wrong answers. Slow Money is, first, a new inquiry into the nature of money, looked at through the lens of the soil and principles of fertility and diversity--economic, cultural and biological diversity. In a culture that is all about the deal, all about the transaction and the portfolio, all about ready, fire, aim, nothing is more important than taking the time to think differently. Most of what passes for social investing today is trapped in the old benchmarks, the old measures of success, so structural change remains elusive. We must dare to think differently, in fundamentally different terms, about money and the soil, or we risk doing the same thing over and over again, hoping for a different outcome.

So, as someone who has been working in venture capital, social investing and philanthropy for 30 years, I do not see the Slow Money Principles as just "a petition." Or as "words" that do not equal "action." They are the beginning of a fundamental shift in economic thinking, underpinning a whole generation of action in the decades to come. This is a generational shift we are about and "well begun" depends upon a new set of values that will inform a qualitatively different kind of investing.

Over the last 18 months, I've interacted with thousands of folks in scores of places, and it is wonderful to see so many people eager to: 1) acknowledge how broken our current system is; and, 2) start doing something about it. Which in our case means: investing in small food enterprises.

As to the "what are they actually doing" questions that a few of you asked, here's an overview.

First, we are building national and regional networks of people who want to put their money into local food systems. In the lingo of triple bottom line, we can call this "building social capital." Real relationships between folks who share values and are committed to investing directly in the place in which they live. This process is well underway. We've got Slow Money networks emerging in more than a dozen locales, including Austin, Boston, Madison, Santa Fe, Seattle, the Bay Area and the Research Triangle. Reports from folks in these regions can be read in our first newsletter, which came out in March.

Second, we are convening national and regional gatherings at which small food enterprises connect with funders. At our first national gathering last fall, 450 people came together from 34 states and six countries. From the group of 25 presenting small food enterprises, four raised a total of $260,000--a small but important beginning. Last year, we also hosted three regional Slow Money Institutes, in Bellingham, WA, Hudson, NY and Madison, WI.

Third, we are building our website over time--it's still in its infancy--into a robust portal that offers options for folks who want to find places to put their money into small food enterprises and local food systems.

Fourth, we are launching, at our upcoming Vermont gathering, the Soil Trust. The first "grassroots, philanthropic nurture capital fund." Say what??? A pool of donations, of any size, that will be used as seed capital to build local food investing intermediaries around the country. Will one million Americans contribute $25 per annum to the Soil Trust? We shall see. . .If this begins to scale, it will mark a major innovation in philanthropy and social investing. We will use this as guarantees, seed capital or co-investment capital, to help build local intermediaries and prime the pump of local investment around the country.

(Now, the Soil Trust is sufficiently new, and sufficiently "integral" along the boundaries of investing and philanthropy that you have to pause to think about it. If we are about "putting back into the soil more than we take out," what could be more natural than a pool of philanthropic dollars that is INVESTED in small food enterprises? That is, all returns stay in the fund to be reinvested. I believe this is the future of philanthropy: philanthropy as investing, rather than as grantmaking. This is a big topic, too big to be explored further here. Stay tuned.)

Fifth, we are developing new investment products and funds, on the for-profit investment side. Think: Slow Munis, municipal bonds dedicated to local food systems. We are early in this process, but indications are promising. Think: Calvert Foundation Slow Money Notes. They don't exist yet, but we are exploring such possibilities with our friends at Calvert.

All of this points us in the direction of our long-term goal: a million investors putting 1% of their assets into local food systems within a decade. It's funny how some people view this goal as insufficiently audacious. Only a million folks? Only 1%? Well, that would be billions of dollars per annum, and if we can get this ball rolling, no one will be happier than I to see it go further or. . .faster. . .

In the meantime, let's get a lot us facing in the same direction. We've got around 11,000 signatories for the Principles. We've got around 1,100 members of the Slow Money Alliance. And we're just announcing the Soil Trust.

Join us.

And let's begin fixing the economy from the ground up.

In friendship,

Woody Tasch
Founder, Slow Money

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Re: Daily Digest - June 1

As a farmer, I wonder what "soil affiliations" Slow Money supports. I'm familiar with the "Slow food Movement" and at the outside this appears the same.

Robie,husband,father,farmer,optometrist, disciple of Wendell Berry,Gene Logsdon,Charles Walters,Allan Nation,(Chris Martenson :-)...  

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Re: Daily Digest - June 1


While I am prepared to accept RJS may be correct regarding the virus, I wonder if we shouldn't also take a precautionary approach regarding putting hives near mobile base stations.

The article in the Telegraph says: 'Tim Lovett, of the British Beekeepers Association, said that hives have been successful in London where there was high mobile phone use.'

In London, there are thousands of mobile base stations, so any individual phone or base station will not have to produce a very strong signal to communicate. It is in the countryside where there is a potential problem in my view.

I used to live in a house in an 'Area of Outstanding Natural Beauty' where the nearest base station was ten miles away. A new next door neighbour moved in, and I started getting headaches. I worked out that his carphone had to give out such a strong signal to communicate, that the signal was affecting me. I sold the house last year. If a carphone can cause me to move house, I would guess it can do the same to bees.

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BREAKING NEWS: Japanese Prime Minister Resigns

Here we go again

Prime Minister of Japan Tells Nation He Plans to Quit

Yen down on the news, but stock market up... We may argue that people outside the country see this as a bad thing, while people inside the country, a good news...Undecided


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Re: Daily Digest - June 1


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Re: Daily Digest - June 1
rjs wrote:

here's the real story on the bees:

BTW, apparently Japanese honey bees are not affected by whatever is killing the European honey bees... They are however a bit more aggressive, but a couple of stings per day is sure to put some pep into your life ;)


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Re: Daily Digest - June 1
idoctor wrote:

Owners Stop Paying Mortgages, And Stop Fretting

For Alex Pemberton and Susan Reboyras, foreclosure is becoming a way of life - something they did not want but are in no hurry to get out of...

       Foreclosure has allowed them to stabilize the family business. Go to Outback occasionally for a steak. Take their gas-guzzling airboat out for the weekend. Visit the Hard Rock Casino....



Thanks for sharing this.

Did anyone else think some of these quotes were really "precious":

"One reason the house is worth so much less than the debt is because of the real estate crash. But the couple also refinanced at the height of the market, taking out cash to buy a truck they used as a contest prize for their hired animal trappers."

"It was a stupid move by their lender, according to Mr. Pemberton. 'They went outside their own guidelines on debt to income,' he said. 'And when they did, they put themselves in jeopardy.'"

"'I tried to explain my situation to the lender, but they wouldn’t help,' said Mr. Pemberton’s mother, Wendy Pemberton, herself in foreclosure on a small house a few blocks away from her son’s. She stopped paying her mortgage two years ago after a bout with lung cancer. 'They’re all crooks.'"

It's one thing to decide to stop paying the mortgage and default. If you do it, you've done it. You've crossed the Rubicon. It's not something to be proud of, but it is understandable. Taking care of one's family or fighting cancer are higher priorities that come first.

However, it's another thing to make up self-righteous justifications for it, and that's what really galls me. They signed these mortgage loan contracts after applying for them. They accepted the amounts and the terms. They took equity out to buy a truck as a contest prize. But now they're blaming the banks and not themselves. So what if the banks won't work with them? That's still not an excuse. Having to take care of the kids or put food on the table, not being able to work or having to fight cancer is an excuse, heck, even "just doesn't make sense financially" could be considered reasons that are based on a responsible acknowledgement of being unable to meet an obligation entered into.

The bank not being willing to negotiate or the bank "should have known not to loan so much" - that kind of thinking bothers me. It's not acknowledging personal responsibility.


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