Two men set themselves on fire protesting Italian economy
Friday, March 30, 2012 1:33:10 AM
--iolnews.com--

Italy was in shock on Thursday after an Italian builder on trial for tax evasion and a Moroccan man who had not been paid for months set themselves on fire in separate incidents.

Giuseppe C, 58, wrote suicide notes to the tax agency, friends and his wife before setting himself alight in Bologna on Wednesday. He was saved by a traffic warden and is in a critical condition in a severe burns unit.

“It's a terrible sign of desperation, a single case of distress which sums up a moment of great difficulty,” former premier Romano Prodi said Thursday.

“I hope he survives, but he is in a very serious state,” he said.

The Moroccan, a 27-year-old resident of Verona who is also a builder, set his arms and head on fire in a street on Thursday in an apparent copycat protest after yelling that he had not be paid for four months, police said.

“He shouted out that he hadn't been paid for four months and poured petrol over himself before setting himself alight. Police raced to put the flames out and he has been taken to hospital,” Pasquale d'Antonio from Verona police said.

Giuseppe C. had been due to attend the first hearing of a court case against him for 104 000 euros ($138 000) in unpaid tax and fines dating from 2007.

“On fire for tax: the taxman is killing the country,” read the front page headline of the right-wing Il Giornale daily, while the Repubblica wrote of “the tragedy of a handyman strangled by the economic crisis.”

Prime Minister Mario Monti's government has launched a wide-ranging crackdown on tax evasion as Italy struggles under a vast debt mountain.

The builder had set himself alight in his Fiat Punto in the car park of a former tax agency office. In his note, extracts of which were published in the Corriere della Sera newspaper, he told the agency “I've always paid my taxes.”

He asked for forgiveness and told them to “leave my wife alone.”

His wife Tiziana told the Corriere that she “had never seen any sign of money problems. He didn't want to trouble me with it.”

In his letter to her, Giuseppe C. had written: “I wanted to say goodbye, but you were sleeping so peacefully. Today is a terrible day.” - AFP



Italians shocked by self-immolation protests Continue
29 March 2012 Last updated at 16:54 ET
--bbc.co.uk--

Italians have been left shocked by two cases of men setting themselves on fire in the past two days in protest at their financial hardship.

A 58-year-old builder accused of tax evasion set himself alight in his car in Bologna on Wednesday.

Another builder, a 27-year-old Moroccan, set himself on fire outside the town hall in Verona on Thursday, saying that he had not been paid for four months.

Both men are being treated in hospital.

The man in the first incident had reportedly left a suicide note to the tax agency, protesting his innocence.

With Italy in such serious economic trouble, there is now a much more rigorous pursuit of those who do not pay what they owe the state, the BBC's Alan Johnston in Rome reports.

There has been much sympathy in the Italian media for the man in Verona, with one newspaper describing him as a man who had been crushed by the economic crisis, he adds.

The same paper listed several people in Italy who it said had recently been driven to suicide by their money worries.

Particularly on the political left, stories like these are seen as symptomatic of the growing pressure and desperation felt by many as Italy's economic climate worsens, our correspondent adds.

Chinese See Communist Land Sales Hurting Mao’s Poor to Pay Rich
November 02, 2011, 5:34 AM EDT - Bloomberg.com

Oct. 24 (Bloomberg) -- Bulldozers razed Li Liguang’s farmhouse four years ago after officials in the Chinese city of Loudi told him the land was needed for a 30,000-seat stadium.

What Li, 28, says they didn’t tell him is that he would be paid a fraction of what his plot was worth and get stuck living in a cinder-block home, looking on as officials do what he never could: Grow rich off his family’s land.

It’s a reversal of one of the core principles of the Communist Revolution. Mao Zedong won the hearts of the masses by redistributing land from rich landlords to penniless peasants. Now, powerful local officials are snatching it back, sometimes violently, to make way for luxury apartment blocks, malls and sports complexes in a debt-fueled building binge.

City governments rely on land sales for much of their revenue because they have few sources of income such as property taxes. They’re increasingly seeking to cash in on real estate prices that have risen 140 percent since 1998 by appropriating land and flipping it to developers for huge profits.

“The high price of land leads to local governments being predatory,” said Andy Xie, an independent economist based in Shanghai who was formerly Morgan Stanley’s chief Asia economist. “China’s land policy is really screwed up.”

The evictions are alarming the nation’s leaders, who have taken steps to tackle the problem and are concerned about social stability. Land disputes are the leading cause of surging unrest across China, according to an official study published in June. The number of so-called mass incidents -- protests, riots, strikes and other disturbances -- doubled in five years to almost 500 a day in 2010, according to Sun Liping, a sociology professor at Beijing’s Tsinghua University.

Final Insult

There’s more to come. Some 60 million farmers will be uprooted over the next two decades as the urbanization that propelled China to the world’s second-largest economy gathers pace, according to an estimate by the Chinese Academy of Social Sciences in Beijing. In many cases, officials take land they don’t use, an August report from the academy said.

That was the final insult for Li. The rice and bean plot his family farmed for generations still lies empty, weeds sprouting from the red earth. Villagers are convinced that the city has sold it to developers, even though they can’t point to any documentation to prove it.

“They flattened the land and still haven’t used it,” says Li, a wiry man with short-cropped hair, sitting inside the hut he built in a garbage-strewn alleyway across a main road from the stadium. “They sold it for I don’t know how many millions of yuan.”

Officials in Loudi, located in central China in Mao’s home province of Hunan, wouldn’t answer questions about whether plots in Li’s village were sold or what they will be used for.

50 Million Evicted

Li is among 50 million farmers who’ve lost their homes over the past three decades since Deng Xiaoping began breaking up Mao’s collectivized farms to make way for factories, roads and airports, according to numbers from the academy. Turning people like him into more economically active citizens is part of an urbanization policy that has swelled city dwellers to about 50 percent of the population, from 21 percent in 1982, according to official census data.

Termed “chaiqian” in Chinese, the demolition and relocation of communities has become increasingly controversial. Cities have been grabbing land to finance operations and pay back or restructure mushrooming debt that reached at least 10.7 trillion yuan ($1.68 trillion) by the end of 2010. Almost a quarter of that is backed by land, according to China’s National Audit Office.

The money paid for the building spree that was designed to maintain China’s economic growth in the wake of the global recession. Loans were obtained through more than 10,000 financing vehicles cities created to get around laws prohibiting them from borrowing, according to a central bank count.

Low Compensation

Cities may have to accelerate land sales as they struggle to repay the debt, said Victor Shih, a professor at Northwestern University in Evanston, Illinois, who studies China’s local- government finances. There’s also an incentive for officials to keep payments to farmers as low as possible, he said.

“Without suppressing land compensation, local governments can’t make the margins to pay back the banks,” Shih said. “In essence, they are the engines of inequality in China. Land development is the redistribution of income from average households to rich households.”

Loudi is one of 186 local authorities from Guangxi on the Vietnamese frontier in the south to Heilongjiang on the Russian border in the north that issued bonds or short-term notes through financing vehicles in the first nine months of this year. Some 105 of them said they engage in “chaiqian,” according to their prospectuses.

Rights Violated

The seizures frequently lead to local officials violating farmers’ rights that the national government has sought to improve since 1998 when it gave them 30-year tenure over their land, said Gao Yu, China director for Landesa, a Seattle-based group formerly known as the Rural Development Institute that studies global land issues.

Rules that prohibit authorities leaving land like Li’s idle for more than two years are also often broken, Gao said. Across China, compensation given to farmers is at least 15 times lower than prices for land sold to development, according to Landesa.

“The local governments earn a lot of money from the price difference between what they compensate farmers and villagers for their land and what they sell to developers,” said Wang Erping, a scholar at the Chinese Academy of Sciences in Beijing who studies social unrest. “This is really objectionable, but these governments don’t have any alternative to raise money.”

Collision Course

Land sales make up 30 percent of total local government revenue and in some cities account for more than half, according to Wang Tao, a Hong Kong-based economist for UBS AG.

That’s putting city bosses on a collision course with national leaders who were already struggling to contain lending to local governments and reverse rising property prices. A central government circular in April said some local governments took excessive land for property development, resulting in the forced eviction of farmers. Such evictions are considered a “gross violation of human rights” by the United Nations.

President Hu Jintao said in August that developers should stop using arable land for building new projects, while Premier Wen Jiabao in September criticized the role local officials are playing in land grabs, according to state media.

Premier’s Criticism

“Right now, some areas just brutally destroy farmers’ homes without paying attention to their rights, and put the farmers in apartment blocks,” Wen, 69, said at a symposium in Beijing to discuss the safeguarding of China’s cultural traditions, according to the account in the state media. In March, Wen called for urbanization to be accelerated.

A crackdown has led to 57 officials being punished for 11 demolitions that resulted in deaths of residents so far this year, the government said on Sept. 25.

Videos of people being forced out of their homes, sometimes by gangs wielding sticks, have caused public outrage when posted online on websites.

One farmer from the city of Fuzhou in Jiangxi province, first took his anger out on weibo, China’s version of Twitter. Qian Mingqi wrote that he had lost 2 million yuan because of inadequate compensation after he said officials illegally demolished his home to make way for a highway.

Then, on May 26, he detonated three bombs by government buildings killing himself and two others, the official Xinhua News Agency reported.

Fuzhou’s investment vehicle went to the country’s bond market this year for the first time, raising 800 million yuan to build sewage treatment works and flood control works. In its prospectus, the company said its main business included construction, land development and “resettlement.”

‘Avalanche of Demolitions’

“Forced evictions are one of the biggest sources of public unrest and public dissatisfaction with the government because they are unstoppable,” said Phelim Kine, a senior Asia researcher with New York-based Human Rights Watch. “We’ve seen an avalanche of forced evictions and illegal demolitions.”

The trend is also exacerbating rural-urban wealth disparity that Landesa’s Gao says is the greatest challenge confronting China’s leaders today. Incomes in cities are now more than three times those in rural areas, wider than at any time since Deng started economic reforms.

The government is working on ways to increase farmers’ income, Zhou Qiang, the Communist Party secretary in Hunan Province where Loudi is located, said in an interview in Beijing on Oct. 19. That includes providing skills training to make them employable in cities and ensuring farmers are adequately covered by social security, he said.

Land acquisition and relocation must be done according to law and there are “clear policy and legal provisions” to protect farmers’ interests, he said.

Artificially High prices

One problem is that the value of urban land is artificially inflated because it’s kept scarce by China’s quota of maintaining 1.8 billion mu (120 million hectares) of arable land, says analyst Xie.

Officials in Loudi have run up more than 4 billion yuan in debt, expanding a provincial town into a city of 4 million people with a new railway station, six-lane expressway and a white colonnaded government building.

Where Li and about 70 other villagers for generations tended plots in Dawu village, now sits the freshly built stadium, a bulb-shaped gymnasium and a wavy-glass-covered aquatic center where kids line up to swim.

Family of Nine

Li’s family of nine -- including his wife, first child, parents and brother’s family -- had lived in a 400-square-meter two-story farmhouse on almost a half-acre of land. He said he didn’t worry about feeding them, and he was able to pay for extras by selling his vegetables a couple times a month in the city and doing odd jobs.

“It was a reliable income,” said Li. “Before we had food to eat. Now if I don’t work as a laborer, we don’t have anything.”

Then came the evictions. The sports bureau took about 47 acres of land in Dawu and another village, issuing notices -- and verbal threats -- in 2006 saying it was needed for the stadium.

“They told us that if we didn’t move, they would send a lot of people to destroy our house,” Li said. “If you didn’t agree they would detain you.”

Villagers were initially relocated to the alleyway where they built shanties with tarp and corrugated-tin roofs. The only bright notes are the red scrolls bearing the Chinese characters for good fortune that adorn some front doors.

From the lane, Li can see the stadium gleaming at one end and new luxury high-rise buildings to the other.

Temporary Home

Li’s shelter was supposed to be a temporary home while he builds a house on the 70-square-meter (754 sq. ft) plot the city gave him about 100 meters further south. He said his family of nine received 280,000 yuan in compensation, not enough to finish construction of their new home. Unable to get bank loans, he borrowed 100,000 yuan from family and friends.

That still wasn’t enough, putting Li in a Catch 22: without a loan he can’t finish his house, and without a house he has no collateral for a loan.

Most of Li’s income is spent on groceries, he said. Food inflation in China was running at 13.4 percent in September.

“The renminbi is appreciating everywhere in the world, but in China it’s depreciating,” Li said one late August evening, smoking a White Sand cigarette and sipping bootleg liquor in a restaurant overlooking paddy fields.

Putrid Stream

The only beans the family grows now are cultivated by Li’s mother on a four-square meter plot behind the temporary home, where the stench of a putrid bright green stream hangs in the air. Stooped, with gray hair, she recalls the well water they had access to before that was so clean she could wash with it.

Officials say the development is benefitting Loudi residents as it seeks to cash in on its location on a major high-speed rail route linking Shanghai in the east to Kunming in the west. The stadium was partly funded by a 1.2 billion yuan bond issue in March by the city’s financing vehicle -- Loudi City Construction Investment Group Co. -- that pledged to repay with proceeds from selling land.

“People’s lives have improved,” Yang Haibo, an official at the city’s financing vehicle, said during an interview at his office in June. Yang wouldn’t talk in follow-up calls and the company didn’t respond to faxed requests for comment. The city government also didn’t respond to calls and faxes.

‘Hoarding Land’

Some Dawu villagers say their lives have gotten worse, not better.

Wu Zifei, 27 and a father of two, takes out a compact disc with pictures of his old house one July afternoon in his family’s store in the new Dawu village. Li likes to play cards there with friends on days when they can’t find work.

“The older place was much better,” said Wu, a thin man who waves his arms as he talks. Wu continued to use the old family plot -- which like Li’s has been left unused behind a mound of earth at the edge of the stadium construction site -- until June, when a mudslide killed his crop of corn.

“They are hoarding land, waiting for the prices to rise,” he said. “I really can’t stand the way authorities do things.”

Other Dawu residents say they were left homeless because they weren’t allocated any city land. Zou Fuqiu’s home was demolished in 2010, following an eviction order in August 2009.

“It breaks my heart that they demolished my home,” said Zou, 59, a stout man who rolls his white shirt up above his stomach to cool himself from Hunan’s mid-summer heat. “It was the best house in the village, but they didn’t compensate us accordingly.”

Wife Cried

He went to see the village cadre at his office to plead for land, where he says his wife sat crying beside him for three hours. It was no use. Instead, Zou built a shack on unoccupied wasteland where he hangs two old black and white photos of his parents in revolutionary jackets and a portrait of Mao, near a small Buddhist shrine.

“They tore my house down with no regard for where I would live, but they themselves live in high-class homes,” said Zou of the officials. Behind him in the dusk, a chandelier turns on inside one of the stadium buildings.

Loudi city officials work in a building with five white domes and an archway entrance, nicknamed “the White House” by locals. There have been two separate purges for corruption in the past five years, including the removal of 16 officials in August, according to the official Hunan Daily newspaper.

Hundreds of meters from the main entrance to the building, a small door has a gold plaque that says petitioners can be received there. Petitioning is the practice dating from imperial times by which people take their complaints either to local officials or directly to the capital.

Low Compensation

The compensation that Dawu villagers say they received works out at about 6 percent of what the city was selling land for in 2008, a year after they were evicted. Dawu natives said they received 38,000 yuan per mu, a Chinese measure of land that is about one-sixth of an acre. That’s less than half the average of 85,420 yuan the Loudi city government says it paid, according to a notice on the website of its land resources bureau.

The land is worth many times even the higher figure. Loudi city in 2008 sold its land to developers for 600,000 yuan per mu, according to the bond prospectus. A similar plot to Li’s near the stadium sold in March for 1.2 million yuan per mu, according to the website of the city’s State Land Resources Bureau.

It would take Li 92 years to earn enough to buy back his still-vacant plot at that price based on his present wage rate as a day laborer.

Daily Struggle

Li’s focus is on the daily struggle to feed his family and finish his new home. He wishes officials would start building on his land, giving him the chance to pick up some work. Ultimately, he hopes to use the home as collateral to borrow money to buy a digger so he can earn more money at construction sites.

In his hut, where the only decoration is a vase of yellow plastic flowers and a 2009 calendar celebrating the 60th anniversary of the Communist state, he laments the loss of his old, simpler way of life.

“Our house was not like this before,” he said. “Five years ago I had my own house, and everything surrounding it was mine.”

--Henry Sanderson, Michael Forsythe. With assistance from Bob Ivry in New York and Neil Western in Hong Kong. Editors: Neil Western, Melissa Pozsgay.

To contact Bloomberg News staff for this story: Henry Sanderson in Beijing at hsanderson@bloomberg.net. Michael Forsythe in Beijing at mforsythe@bloomberg.net

To contact the editors responsible for this story: Melissa Pozsgay at mpozsgay@bloomberg.net. Peter Hirschberg at phirschberg@bloomberg.net Shelley Smith at ssmith118@bloomberg.net

Nine percent of Americans blame President Barack Obama and the U.S. government for this year's spike in gasoline prices, according to a new Washington Post/Pew Research Center poll.

DAN BERMAN | 5/6/11 9:04 AM EDT
--politico--

An additional 5 percent cited "not drilling enough" as an answer to the poll's open-ended question of who or what is to blame for high prices. By contrast, 30 percent blamed a combination of greed, profit and speculation. Nineteen percent pegged unrest in the Middle East and North Africa. As of Friday morning, the average price of a gallon of regular gas was $3.984, down a tenth of a cent from Thursday, according to AAA. The poll was conducted by phone with 1,006 respondents from April 28 to May 1, with a sampling error of plus or minus 3.5 percentage points.

Boehner gas gaffe creates opening
By: Jonathan Allen and Darren Goode
April 26, 2011 07:45 PM EDT

Democrats think Speaker John Boehner stepped in a tar pit when he tried to dance around a question about taxing Big Oil, and now a White House concerned about its own vulnerability to rising gas prices is working overtime to make sure he's stuck.

The Ohio Republican left the door open to hiking taxes on oil and gas companies during a Monday night interview with ABC’s Jonathan Karl, saying Congress “certainly ought’ to take a look at it.” By midday Tuesday, the Democratic communications machine was pumping out an easily refined message: Agreed.

"It is almost too good to be true, but gas hitting $4 per gallon seems to have finally caused Speaker Boehner to see the light on the insanity of providing subsidies to profit-soaked Big Oil companies," New York Sen. Chuck Schumer, the Democratic message maven in the Senate, said in a statement.

It's little wonder that Democrats were ready to pounce when they saw an opportunity to box Boehner into either defending oil companies or adopting Democratic-backed subsidy cuts. President Barack Obama and his Democratic allies on Capitol Hill already know they face serious voter backlash if gas prices don't settle down before the 2012 election.

Obama has addressed that vulnerability in the past, and a new Washington Post-ABC News poll suggests he's right to be worried. Sixty percent of independents who are feeling pain at the pump say they definitely will not back Obama for reelection, the survey found.

As Republicans prepare a series of hearings and votes intended to put heat on Obama over gas prices during the spring and summer months, Democrats hope the Boehner slip-up will give them a more even playing field on the issue. But Democrats still haven't explained how cutting profits would lead to lower — rather than higher — prices for consumers, and there's little chance that Boehner's half-dodge of an answer will turn the tables in the president's favor if gas prices remain high.

"Everybody's entitled to have a bad day. And he had a bad day," GOP strategist Mike McKenna said of Boehner's remark.

If nothing else, it turned Tuesday into a field day for Democratic politicians.
"I was heartened that Speaker Boehner yesterday expressed openness to eliminate these tax subsidies for the oil and gas industry," the president wrote to Boehner, House Minority Leader Nancy Pelosi, Senate Majority Leader Harry Reid and Senate Minority Leader Mitch McConnell.

Republicans, worried about losing their advantage on an issue they have been hammering away on, sought Tuesday to make clear that they're not a bit interested in eliminating the tax breaks — which they say would lead to higher gas prices because oil companies would simply pass on their higher costs to consumers paying at the pump.


"The president's latest call to raise taxes on U.S. energy is as predictable as it is counterproductive," McConnell said in a statement. "If someone in the administration can show me that raising taxes on American energy production will lower gas prices and create jobs, then I will gladly discuss it. But since nobody can, and the president’s letter to Congress today doesn’t, this is merely an attempt to deflect from the policies of the past two years."

Tuesday's partisan blow up did nothing to lower the price of a gallon of gas, but it did reinforce two political realities of which both parties are well aware: There's almost nothing Washington can do to affect short-term gas prices, and voters become furious when a dollar doesn't get them as far as it used to.

Boehner's camp says the speaker won't raise taxes and that his intentions were misconstrued when he tried to avoid being pinned into defending oil companies. It's a sensitive topic for Republicans: Rep. Joe Barton (R-Texas) took bipartisan criticism after apologizing to BP in the wake of the Deepwater Horizon spill last year.

"The speaker made clear in the interview that raising taxes was a nonstarter, and he’s told the president that. He simply wasn’t going to take the bait and fall into the trap of defending Big Oil companies," Boehner spokesman Michael Steel said. "Boehner believes, as he stated in the interview, that expanding American energy production will help lower gas prices and create more American jobs. We'll look at any reasonable policy that lowers gas prices. Unfortunately, what the president has suggested so far would simply raise taxes and increase the price at the pump.”

But the transcript shows that Boehner was open to the idea of raising taxes on oil companies. Asked whether he would favor eliminating some of the subsidies, he replied, "We certainly oughta take a look at it. ... We're in a time when — when the federal government is short on revenues. We need to control spending but we need to have revenues to keep the government movin'. And they oughta be payin' their fair share."

Grover Norquist, president of Americans for Tax Reform and the likeliest source to take on any Republican who seeks to raise taxes, told POLITICO that he's satisfied that Boehner would not approve of a net tax increase.
It won't be long before Republicans are back on offense on energy policy. They are expected to bring a bill to the House floor next week that would require the Interior Department to decide within 30 days whether to grant offshore drilling permits in the Gulf of Mexico. For permits that weren't approved before a moratorium was imposed last year, Interior could extend the window by 15 days twice.

Two more energy bills approved by the House Natural Resources Committee could be considered as early as the following week.

This article first appeared on POLITICO Pro at 7:33 p.m. on April 26, 2011.

Boehner opens door to cutting U.S. oil tax breaks
--reuters--

The U.S. Congress should "take a look" at multibillion-dollar subsidies to oil companies amid rising concern over skyrocketing gas prices, House of Representatives Speaker John Boehner said on Monday.

Standard and Poor's Ethics in Question
Written by Dean Baker
Tuesday, 19 April 2011 05:30
--Center for Economic and Policy Research--

S&P managed to capture the headlines yesterday when it announced that it had a negative outlook for the credit rating of the United States. After all, an actual credit downgrade for the United States government would be big news. While the immediate response was a boost to the deficit hawks’ efforts to cut programs like Social Security and Medicare, it is worth asking a few questions before we surrender these programs to the Wall Street numbers mavens.

The last time S&P was in the headlines it was for giving investment grade ratings to hundreds of billions of dollars of securities that were backed by subprime and ALT-A mortgages. These mortgages were used to buy over-priced homes at the peak of the housing bubble. Many of these mortgages not only carried high risks, but were fraudulent, with lenders having filled in false information to allow homebuyers to qualify for loans that their assets and income would not justify.

Serious people should ask what S&P has done to improve its ratings systems. Have they changed their procedures? Did the S&P analysts who gave AAA or other investment grade ratings to toxic junk get fired or at least get demoted? If not, should we assume that S&P used the same care in assigning a negative outlook to U.S. government debt as it did in assigning investment grade ratings to toxic assets?

Of course it was not just bad mortgage debt that stumped the S&P gang. It gave top quality investment grade ratings to Lehman until just before it imploded in the largest bankruptcy in history. The same was true of AIG, which would have faced a similar fate without a government rescue. Bear Stearns also had a top rating until the very end, as did Enron. In short, S&P has a quite a track record in missing the boat when it comes to assessing creditworthiness.

The markets seem to recognize S&P weak track record in assessing creditworthiness. It downgraded Japan’s government debt in 2002. The interest rate on 10-year government debt in Japan is currently under 1.5 percent, the lowest for any country in the world. Does S&P think that investors are mistaken in being willing to lend Japan money at such low rates?

It is worth noting that interest rates on U.S. bonds fell yesterday, suggesting that S&P’s negative outlook did not scare people who actually have money on the line. (Not to get too technical with our friends at S&P, but it is not even clear what a default on U.S. government debt would mean. After all, the debt is issued in dollars and as a practical matter we can print as many dollars as we want. But, we’ll leave that one for another day.)

Finally, we must remember that S&P is first and foremost a corporation that is run for profit. This is why they rated hundreds of billions of toxic trash as investment grade during the housing bubble. They were paid tens of millions of dollars to do it.

S&P and the other bond rating agencies had their lobbyists working overtime in the financial reform debate. The Senate had approved an amendment by Senator Franken, which would have taken away the power of the issuer to select the agency that rated its bonds. Under the Franken amendment this power would instead be given to the Securities and Exchange Commission.

This amendment removed an obvious source of corruption. If the company issuing debt gets to pick the agency that rates the debt, then the bond-rating agency has an obvious incentive to give the debt a positive rating. Otherwise they will lose business. This likely explains how hundreds of billions of subprime mortgage backed securities got investment grade ratings.

However, the Franken amendment never took effect. In the conference committee, Representative Barney Frank, who was then head of the House Financial Services Committee, got language that delayed the implementation for at least two years. In the mean time, the current system, in which the issuer picks the rating agency, remains in place.

This should raise the obvious question: does S&P hope to influence the final resolution of the Franken amendment with its negative outlook on U.S. debt? It’s a terrible thing that we have to ask if the umpire is taking payoffs, but we do have to ask.

After all, this is Washington and Wall Street, a truly toxic combination. And we all know that S&P’s first commitment is to its bottom line, not to provide accurate information to investors. So who is S&P serving in its negative outlook on U.S. government debt?

The scam behind the rise in oil, food prices
Speculation on the futures market, rather than supply and demand, is driving up costs, analysts say.
--aljazeera--
Danny Schechter Last Modified: 19 Apr 2011 13:18


The global economy and its recovery, and the living standards of millions of plain folks, are now at risk from the sudden rise in oil and commodity prices. Gas at the pump is up, and going higher. Food prices are following.

The consequences are catastrophic for the global poor as their costs go up while their income doesn't. It's menacing American workers too, who in large part have not seen a meaningful raise since the days of Reagan (keeping it this way is clearly behind the current flurry of attacks on unions).

Already, unrest in the Middle East and many African countries is being blamed for these dramatic increases. It seems as if this threat to global stability is being largely ignored in our media, one that treats the oil business as just another mystical world of free market trading.

Why is it happening? Why all the volatility? Is oil getting scarcer, leading to price increases? Is the cost of food, similarly, a reflection of naturally increasing commodity prices?

Oil speculating

While it's true that natural disasters and droughts play some role in this unchecked price inflation, it also seems apparent that something else is attracting increasing attention, even if most of our media fails to explore what is a political time bomb, while most political leaders shrug their shoulder and ignore it.

President Obama recently said there is nothing he can do about the hike in oil and food prices.

Critics say the problem is that government and media outlets alike refuse to recognise what's really going on: unchecked speculation!

Not everyone buys into this suspicion. In fact, it is one of more intense subjects of debate in economics.

Princeton University economist Paul Krugman pooh-poohs the impact of speculation counter-posing the traditional argument that oil prices are set by supply and demand.

The Economist agrees, summing up its views with a pithy phrase, "Speculation does not drive the oil price. Driving does."

Others, like oil industry analyst Michael Klare of Hampshire College in the US, sees demand outdistancing supply:

Consider the recent rise in the price of oil just a faint and early tremor heralding the oilquake to come. Oil won't disappear from international markets, but in the coming decades it will never reach the volumes needed to satisfy projected world demand, which means that, sooner rather than later, scarcity will become the dominant market condition.

Usually you hear this debate in scholarly circles or read it in political tracts where orthodox views collide with more alarmist projections about the oil supply "peaking".

But officials in the Third World don't see the subject as academic. Reserve Bank of India Governor Duvvuri Subbarao charges that: "Speculative movements in commodity derivative markets are also causing volatility in prices".

The World Bank has held meetings on the issue, because it is seen as a matter of "utmost urgency".

"The price of food is a matter of life and death for the very poorest people in the world," said Tom Arnold, CEO of Concern Worldwide, the international humanitarian agency, ahead of his participation at The Open Forum on Food at World Bank headquarters.

"With many families spending up to 80 per cent of their income on basic foods to survive, even the slightest increase in price can have devastating effects and become a crises for the poorest," he said.

Journalist Josh Clark argues on the website "How Stuff Works" that much of the oil speculation is rooted in the financial crisis:

The next time you drive to the gas station, only to find prices are still sky high compared to just a few years ago, take notice of the rows of foreclosed houses you'll pass along the way. They may seem like two parts of a spell of economic bad luck, but high gas prices and home foreclosures are actually very much inter-related. Before most people were even aware there was an economic crisis, investment managers abandoned failing mortgage-backed securities and looked for other lucrative investments. What they settled on was oil futures.


Whistleblowers on oil speculation

The debate within the industry is more subdued, perhaps to avoid a public fight between suppliers and distributors who don't want to rock the boat.

But some officials like Dan Gilligan, president of the Petroleum Marketers Association, representing 8,000 retail and wholesale suppliers has spoken out.

"Approximately 60 to 70 percent of the oil contracts in the futures markets are now held by speculative entities," he argues. "Not by companies that need oil, not by the airlines, not by the oil companies. But by investors who profit money from their speculative positions."

Now, a prominent and popular market analyst is throwing caution to the wind by blowing the whistle on speculators.

Finance expert Phil Davis runs a website and widely read newsletter to monitor stocks and options trades. He's a professional's professional, whose grandfather taught him to buy stocks when he was just ten years old.

His website is Phil's Stock World, and stocks are his world. He's subtitled the site: "High Finance for Real People."

He is usually a sober and calm analyst, not known as maverick or dissenter.

When I met Phil the other night, he was on fire, enraged by what he believes is the scam of the century that no one wants to talk about, because so many powerful people armed with legions of lawyers want unquestioning allegiance, and will sue you into silence.

He studies the oil/food issue carefully and has concluded:

It's a scam folks, it's nothing but a huge scam and it's destroying the US economy as well as the entire global economy but no one complains because they are 'only' stealing about $1.50 per gallon from each individual person in the industrialised world.
It's the top 0.01 per cent robbing the next 39.99 per cent – the bottom 60 per cent can't afford cars anyway (they just starve quietly to death, as food prices climb on fuel costs). If someone breaks into your car and steals a $500 stereo, you go to the police, but if someone charges you an extra $30 every time you fill up your tank 50 times a year ($1,500) you shut up and pay your bill. Great system, right?


Phil is just getting started, as he delves into the intricacies of the NYMEX market that handles these trades:

The great thing about the NYMEX is that the traders don't have to take delivery on their contracts, they can simply pay to roll them over to the next settlement price, even if no one is actually buying the barrels. That's how we have developed a massive glut of 677 million barrels worth of contracts in the front four months on the NYMEX and, come rollover day – that will be the amount of barrels "on order" for the front 3 months, unless a lot barrels get dumped at market prices fast.
Keep in mind that the entire United States uses 'just' 18M barrels of oil a day, so 677M barrels is a 37-day supply of oil. But, we also make 9M barrels of our own oil and import 'just' 9M barrels per day, and 5M barrels of that is from Canada and Mexico who, last I heard, aren't even having revolutions. So, ignoring North Sea oil Brazil and Venezuela and lumping Africa in with OPEC, we are importing 3Mbd from unreliable sources and there is a 225-day supply under contract for delivery at the current price or cheaper plus we have a Strategic Petroleum Reserve that holds another 727 Million barrels (full) plus 370M barrels of commercial storage in the US (also full) which is another 365.6 days of marginal oil already here in storage in addition to the 225 days under contract for delivery.


These contracts for oil outnumber their actual delivery, a sign of speculation and market manipulation, as oil companies win government authorisations for wells but then don't open them for exploration or exploitation.

It's all a game of manipulating oil supply to keep prices up. And no one seems to be regulating it.

Danger met with silence

What Phil sees is a giant but intricate game of market manipulation and rigging by a cartel – not just an industry – that actually has loaded tankers criss-crossing the oceans but only landing when the price is right.

There is nothing that the conga-line of tankers between here and OPEC would like to do more than unload an extra 277 million barrels of crude at $112.79 per barrel (Friday's close on open contracts and price) but, unfortunately, as I mentioned last week, Cushing, Oklahoma (Where oil is stored) is already packed to the gills with oil and can only handle 45M barrels if it started out empty so it is, very simply, physically impossible for those barrels to be delivered. This did not, however, stop 287M barrels worth of May contracts from trading on Friday and GAINING $2.49 on the day.


He asks: "Who is buying 287,494 contracts (1,000 barrels per contract) for May delivery that can't possibly be delivered for $2.49 more than they were priced the day before? These are the kind of questions that you would think regulators would be asking – if we had any."

The TV news magazine 60 minutes spoke with Dan Gilligan who noted that investors don't actually take delivery of the oil. "All they do is buy the paper, and hope that they can sell it for more than they paid for it. Before they have to take delivery."

He says they make their fortunes "on the volatility that exists in the market. They make it going up and down."

Payam Sharifi, at the University of Missouri-Kansas City, notes that even as the rise in oil prices threatens the world economy, there is almost total silence on the danger:

This issue ought to be discussed again with a renewed interest – but the media and much of the populace at large have simply accepted high food and oil prices as an unavoidable fact of life, without any discussion of the causes of these price rises aside from platitudes.

News Dissector Danny Schechter made the film Plunder The Crime of Our Time (Plunderthecrimeofourtime.com) on the financial crisis as a crime story. He wrote an introduction to the recent reissue of a classic two-volume expose of John D. Rockefeller's The Standard Oil Company, one of the top ten works top works of investigative reporting in America. (Cosimo Books) Comments to dissector@mediachannel.org

Tax the Rich
Poll: Taxing the rich favored over Medicare cuts
JENNIFER EPSTEIN | 4/20/11 6:10 AM EDT

The potential solution to the debt crisis that gets the strongest support is raising taxes on Americans who make $250,000 or more annually, an idea that Obama campaigned on in 2008, backed away from last year to make a legislative deal with Republicans, but has returned to as he’s begun discussing his vision for long-term fiscal responsibility. Of those surveyed, 72 percent said they support tax increases on people with incomes of more than $250,000, including 54 percent who strongly support them. Twenty-seven percent are opposed, including 17 percent strongly.

JP Morgan Making a Fortune Off of American Poverty
By Mary Bottari, Bankster USA
--alternet.org--Earnings and bonus reports are rolling in and the big, bailed-out banks are back in the black. In 2010, total compensation and benefits at publicly traded Wall Street banks and securities firms hit a record of $135 billion -- up almost six percent from 2009 according to the Wall Street Journal. JPMorgan Chase CEO Jamie Dimon may take home the biggest bonus check, an eye-popping $17 million.

While the Wall Street economy is booming, the real economy is in a dead stall. Only 36,000 jobs were created in January 2011. A roundup of recent headlines shines a light on how big banks like JPMorgan Chase make their big bucks.

No Saving Private Ryan

U.S. foreclosure filings are projected to reach 9 million in 2011. An increasing number of the foreclosed are U.S. service members even though they have access to special protections and programs. USA Today reports that foreclosure filings near military bases jumped 32 percent since 2008. More than 20,000 veterans, reservists and active-duty troops lost the homes to foreclosure in 2010, the highest number since 2003. This report comes hard on the heels of an NBC expose showing that JPMorgan Chase illegally overcharged 4,000 active service members for their mortgages improperly foreclosing on a number of them.

Diane Thompson from the National Consumer Law Center points out that big banks and mortgage service firms have perverse financial incentives that spur them to foreclose. “The servicer’s expenses, other than the financing costs associated with advances, will be paid first out of the proceeds of a foreclosure. . . Whether and when costs are recovered in a modification is more uncertain.”

In other words, big banks and mortgage firms are rushing to kick American families to the curb to pocket more fees. Thanks for the service boys!

Profiting on Poverty

In these hard times, some 43 million American families rely on food stamps. To the surprise of many, JPMorgan Chase is the largest processor of food stamp benefits in the United States. The bank is contracted to provide food stamp debit cards in 26 U.S. states and the District of Columbia.

The firm is paid per customer. This means that when the number of food stamp recipients goes up, so do JPMorgan profits. Talk about perverse incentives. JPMorgan is taking its responsibility to keep the U.S. unemployment rate high by offshoring the servicing of many of these contracts to India, according to ABC News.

Michael Snyder of the Seeking Alpha blog put it best: “There are just some things that are a little too creepy to be outsourced to private corporations.“

Aiding and Abetting Bernie Madoff

According to documents in a lawsuit made public Thursday, senior executives at JPMorgan Chase expressed doubts about Bernie Madoff’s miraculous investment returns more than 18 months before Madoff's Ponzi scheme collapsed, but continued to serve as his primary bank and failed to report him to federal authorities.

The lawsuit was filed against JPMorgan and other firms by the bankruptcy trustee gathering assets for Madoff’s victims. The suit alleges that JPMorgan allowed Madoff to move billions of dollars of investors’ cash in and out of his bank accounts right until the day of his arrest even though there were an abundance of red flags.

The bank “had only to glance at the bizarre activity” in the Madoff accounts “to realize that Madoff was not operating a legitimate business,” the trustee asserts. The unusual activity should have tripped the banks anti-money laundering software. The suit also alleges J.P. Morgan was creating products to leverage off of this relationship with Madoff. JP Morgan denies any wrongdoing.

Covering Up Fraud at Bear Sterns

Another lawsuit filed in 2008 by mortgage insurer Ambac Assurance Corp against Bear Stearns and JPMorgan was recently unsealed. A trove of documents reviewed by Atlantic Monthly suggest that Bear Stern executives cheated clients out of billions by double dipping on securities sales they knew to be flawed. In a stack of damning emails, Bear Sterns top executives crow over selling investors a "sack of shit.

The lawsuit also alleges a cover up by JPMorgan Chase (which bought Bear in 2008). Ambac recently won a court order to add misrepresentation claims against JPMorgan to its suit, which can double or triple lawsuit award. JPMorgan, of course, denies any wrongdoing.

"Not Fair," says Dimon

At last week's World Economic Forum in Davos, Switzerland, Jamie Dimon lambasted the media and politicians for portraying all bankers as greedy evil-doers. “I just think this constant refrain [of] ‘bankers, bankers, bankers,’ -- it’s just a really unproductive and unfair way of treating people. It’s not fair to lump all banks together,” he steamed. Don't worry Jamie, you are on a level all of your own.

* * * * *

Learn more about JPMorgan Chase and its role in the financial crisis at Sourcewatch.org.


Mary Bottari is the Director of the Center for Media and Democracy’s Real Economy Project and editor of the www.BanksterUSA.org site for bank busting activists.