A record 6 million people -- or 27.2 percent of the population -- are unemployed in Spain, the highest level for the country since it began keeping records in 1976. Luckily, there is a silver lining: authorities say the rate of the increase has at least slowed since the recession first began. Spain’s economy -- the fourth largest in Europe -- has relied heavily on the major central banks, but the country has been left in recession by deep spending cuts. “These figures are worse than expected,” said Jose Luis Martinez, a strategist at Citi in Madrid. Spanish President Mariano Rajoy is expected to unveil a new reform plan Friday, but thousands of protesters still converged in Madrid on Thursday.
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- Bank of America
- Brian Moynihan
- Caymen Islands
- Chris Van Hollen
- Corporate Tax Dodging Prevention Act (S.250)
- Countrywide Financial
- Economic Crisis
- Eli Lilly
- Fannie Mae
- Federal Reserve
- Federal prosecutors
- Freddie Mac
- Goldman Sacs
- Harry Reid
- Home Values
- Housing Crisis
- JPMorgan Chase
- Koch Brothers
- Leon Panetta
- Lindsay Graham
- Michelle Bachmann
- Mike Lofgren
- Mitch McConnell
- National Suicide Prevention Hotline
- Occupy Wall Street
- Rescue Loan
- South Carolina
- The Party is Over: How Republicans Went Crazy, Democrats Became Useless, and the Middle Class Got Shafted
- Todd Akin
- Wall Street
- apocalyptic cult
- budget cuts
- congressional staffer
- corporate welfare
- credit cards
- culture war
- defense spending
- drug patents
- economic suicides
- housing bubble
- illegal behavior
- lending giant
- mortgage fraud
- offshore tax schemes
- record high
- risky loans
- selective amnesia
- senator bernie sanders
- shell corporations
- social services
- spending cuts
- tax havens
When the greed, recklessness, and illegal behavior on Wall Street drove this country into the deepest recession since the 1930s, the largest financial institutions in the United States took every advantage of being American. They just loved their country - and the willingness of the American people to provide them with the largest bailout in world history. In 2008, Congress approved a $700 billion gift to Wall Street. Another $16 trillion in virtually zero interest loans and other financial assistance came from the Federal Reserve. America. What a great country.
But just two years later, as soon as these giant financial institutions started making record-breaking profits again, they suddenly lost their love for their native country. At a time when the nation was suffering from a huge deficit, largely created by the recession that Wall Street caused, the major financial institutions did everything they could to avoid paying American taxes by establishing shell corporations in the Cayman Islands and other tax havens.
In 2010, Bank of America set up more than 200 subsidiaries in the Cayman Islands (which has a corporate tax rate of 0.0 percent) to avoid paying U.S. taxes. It worked. Not only did Bank of America pay nothing in federal income taxes, but it received a rebate from the IRS worth $1.9 billion that year. They are not alone. In 2010, JP Morgan Chase operated 83 subsidiaries incorporated in offshore tax havens to avoid paying some $4.9 billion in U.S. taxes. That same year Goldman Sachs operated 39 subsidiaries in offshore tax havens to avoid an estimated $3.3 billion in U.S. taxes. Citigroup has paid no federal income taxes for the last four years after receiving a total of $2.5 trillion in financial assistance from the Federal Reserve during the financial crisis.
[Madrid protests via Flickr]
Sixty percent of those under 25 in Spain have no job, and the nation faces its the highest unemployment levels since the 1970s, according data released by the government Thursday. The nationwide jobless rate rose to 26 percent, or 5.97 million people, according to the National Statistics Institute—up from 25 percent the previous quarter. It’s not over yet, either: with the recession likely to last until the end of 2013, net job creation looks increasingly unlikely.
Moments before Ameia Egana, aged 53, was to be evicted from her fourth floor apartment, she clambered over the balcony railing and jumped to her death. Police at the scene said she died on impact. It is the second suicide in Spain in a matter of weeks; a man facing eviction in Grenada was found hanging in his home. A local judge called to the scene said the law on evictions must be changed. Al Jazeera's Peter Sharp reports.
On Monday, Spanish Economy Minister Luis de Guindos promised that no needy family will go homeless over mortgage arrears, responding to public fury over Egana's suicide as she was being evicted.
Facing accusations that politicians and banks are complicit in de facto "murder", Spain's banking association said its members would suspend eviction orders for two years for those borrowers worst hit by economic crisis and record unemployment.
Banks have repossessed close to 400,000 homes in Spain since a property bubble burst in 2008 and the nation subsequently sank into recession, throwing millions out of work and unable to keep up mortgage payments to the banks.
Nearly one million homes now sit vacant in Spain. A citizens' movement called "Stop Evictions" asked the banks earlier this year to forgive mortgage debt for properties worth less than 200,000 euros, and where all family members are unemployed. Currently under Spanish law, even when borrowers turn their home over to the banks, they must still pay the entire amount of the mortgage.
Police unions have agreed to support officers who refuse to participate in eviction proceedings. But until government finalizes reforms to eviction laws, there are those who will still face eviction and homelessness. Meanwhile, the banks are set to receive part of an up to 100 billion euro European bailout to offset their financial hardships as so many are unable to pay their mortgage debts.
Federal prosecutors hit Bank of America with a $1 billion lawsuit Wedesday, accusing the bank of mortgage fraud that contributed to the housing crisis. Bank of America became entangled in the scheme -- known as “High-Speed Swim Lane” or “Hustle” -- when it purchased Countrywide Financial in July 2008, just as the economy was slipping into recession. Countrywide, a mortgage lending giant, was already known for approving risky loans when it introduced its “Hustle” program to churn out more loans, effectively eliminating a system that ensured the mortgages were being made to buyers who could afford them. A top U.S. attorney said the bank’s fraud was “spectacularly brazen in scope.”
Wednesday's case, originally brought by a whistleblower, is the U.S. Department of Justice's first civil fraud lawsuit over mortgage loans sold to the big mortgage financiers, which were bailed out in 2008.
It also compounds the legal problems that Bank of America Chief Executive Brian Moynihan faces over the second-largest U.S. bank's disastrous July 2008 purchase of Countrywide Financial Corp, once the nation's largest mortgage lender.
According to a complaint filed in Manhattan federal court, Countrywide in 2007 invented and Bank of America continued a scheme known as the "Hustle" to speed up processing of residential home loans.
Operating under the motto "Loans Move Forward, Never Backward," mortgage executives tried to eliminate "toll gates" designed to ensure that loans were sound and not tainted by fraud, the government said.
This led to "defect rates" that approached 40 percent, roughly nine times the industry norm, but Countrywide concealed this from Fannie Mae and Freddie Mac, and even awarded bonuses to staff to "rebut" the problems being found, it added.
Defaults and foreclosures soared, yet the bank has resisted buying back many of the defaulted loans from the scheme, which ran through 2009, the government added.
Much more at Reuters.
During an interview on "Moyers & Company" recently, Bill talked with Mike Lofgren, a long-time Republican who describes the modern dysfunction of both the Republican and Democratic parties. In Lofgren’s view, Republicans have become overly obsessed with obstructing President Obama, and the Democrats suffer from political complacency. Lofgren’s new book is "The Party is Over: How Republicans Went Crazy, Democrats Became Useless, and the Middle Class Got Shafted."
Here's a snippet from the transcript:
BILL MOYERS: The Republican Party now has the super rich and its corporate wing funding it and the religious right provides the ground troops. Why are so many everyday folks out there in the pews defending the prerogatives of the rich?
MIKE LOFGREN: That's something of a mystery. The Federal Reserve, in one of their recent reports, found that net household income fell about 40 percent since 2007. That's a tremendous drop. Yet, here we have as the nominee for one of the two major parties, we only have a binary choice in this country, is by all accounts the richest man ever to run for president and was a leverage buyout artist.
The party is really oriented towards the concerns of the rich. It's about cutting their taxes, reducing regulation on business, making things wide open for Wall Street. Now you're not going to get anybody to the polls and consciously pull the lever for the Republicans if they say, "Our agenda is to further entrench the rich and, oh by the way, your pension may take a hit."
So they use the culture wars quite cynically, as essentially rube bait to get people to the polls. And that explains why, for instance, the Koch brothers were early funders of Michele Bachmann, who is a darling of the religious right. They don't care particularly, I would assume, about her religious foibles. What they care about is the bottom line. And these religious right candidates, many of them believing in the health and wealth, name it and claim it prosperity gospel, believe that the rich are sanctified and the poor punished
BILL MOYERS: Many of those people on the right would tell you that the fall in the income of middleclass people and others has been because of Obama's economic policies.
MIKE LOFGREN: I think they're suffering from selective amnesia. They also don't understand that George Bush doubled the national debt, that the original meltdown on Wall Street occurred during George Bush's watch, and by the time Obama became president in 2009, we were already well into the recession. Now I don't defend him in every way. I don't say that everything he's done is right by any means. I have all kinds of issues with him on the health care legislation. For instance, his willingness to play ball with pharma made the bill cost a lot more than it need.
BILL MOYERS: The pharmaceutical industry?
MIKE LOFGREN: Yes. That said, he was legitimately elected. We were in a very, very serious situation in this country. If the economy had fallen any further, it would be comparable to the Great Depression. So what is Minority Leader Mitch McConnell in the Senate, what is his first priority for the country? Is it getting jobs for people? Is it restoring the solvency of the financial system? Is it foreign policy? Is it any of those things? No, it's making sure Obama is a one-term president.
BILL MOYERS: It seems that some of these people are willing to see the government go down in order to win.
MIKE LOFGREN: That would be the case. I grew up in a party that believed in the traditions of Eisenhower, and for that matter, even Reagan. He raised taxes several times when the deficit threatened to get out of control. He pleaded with Congress to send him a clean debt limit extension bill without any extraneous riders on it. He knew what the stakes were.
But now it's basically obstruct. They're no longer a parliamentary loyal opposition. They want to seize up the wheels of government. And to most people that means you don't have federal inspectors of airliners. You don't have federal inspection of food safety. Your national parks will be closed. Federal law enforcement will go home. That's what that means.
BILL MOYERS: Why did you leave the party? You'd been a Republican, what, all your life?
MIKE LOFGREN: I left the party because it was becoming an apocalyptic cult. Because you cannot govern a country of 310 million people that is the greatest economic power on earth and the greatest military power on earth as if it's a banana republic. You can't govern it with people who think that Obama was born overseas or who believe in all manner of nonsense about climate change. They don't even know, apparently, where babies come from, if we're to believe Todd Akin.
Really a great interview, the full transcript is available here.
The 'Economic Suicides':
“I have no solution in front of me." -- Antonis Perris of Greece, unemployed for two years before he took the hand of his 90-year-old mother and climbed to the roof of their apartment building and leapt to their death.
In his last note on an online music discussion site, Perris wrote that his mother had Alzheimer’s disease and that he had recently learned he was ill. He had not expected a recession, so he had not saved money. His credit cards were maxed out. He had started selling his family’s possessions but saw no permanent solution to his problems. He blamed the “powerful of this Earth” for his situation.
Giuseppe Campaniello of Italy set himself on fire outside a government tax office in Bologna on March 28 after his company collapsed.
“I see no other solution than this dignified end to my life, so I don’t find myself fishing through garbage cans for my sustenance.” — Retired pharmacist Dimitris Christoulas, 77, who shot himself in Athens’s central square on April 4.
“Violence is to work 40 years for peanuts and to wonder if you’ll ever get to retire. . . . Violence is unemployment.” — Savvas Metoikidis, 44, who hanged himself in his father’s warehouse in Thessaloniki on April 21.
“I hope my grandchildren will never be born in Greece.” — A 61-year-old electrician who hanged himself from a tree in Athens on May 30.
To date there have been 7,387 Occupy protesters arrested in the United States alone. Bankers? Zero.
More articles on economic suicide:
A plan heavily favored by Republican leaders to cut 8 percent of the Pentagon’s budget effective January 2nd now has them scrambling to undo their own handiwork. The effects the military will undergo as a result of the 10-year, $600 billion round of cuts remains unclear, but Senator Lindsey Graham of South Carolina and other legislators have said that the belt-tightening measures, which will rein the defense budget back down to its 2007 level, would force the military to make choices that will effect local communities. “The soft underbelly that I’m trying to exploit is, ‘What does this mean to your state?’” Graham told reporters.
With the first round of cuts starting with the 2013 budget -- which begins on October 1st -- Republicans are warning that the defense cuts could be disastrous. Leading Democrats don't seem to be showing them any mercy, either.
Senator Harry Reid of Nevada, the majority leader, has given no indication that he will undo the cuts without a broader deficit reduction deal that would include revenue increases — and no such negotiations are under way.
Representative Chris Van Hollen of Maryland, the ranking Democrat on the House Budget Committee, said Republicans were given the choice during the debt ceiling negotiations between automatic defense cuts or automatic tax increases in the event that the so-called supercommittee failed to reach a deficit deal. They chose the defense cuts.
“The consistent pattern here is they have chosen to defend special interest tax breaks over defense spending,” Mr. Van Hollen said. “They made that choice.”
Secretary of Defense Leon Panetta is echoing the same dire warnings as the Republicans, especially since the administration has already agreed that the Pentagon will contribute around $450 billion in deficit reduction over the next decade. "Tack on $600 billion more and the impact will be debilitating," Pentagon officials say:
Congress has already been warned that the automatic spending cuts early next year — especially from the Pentagon — could help trigger another recession.
But the $1.2 trillion ax to defense and domestic spending might trigger something else: an election loss.
One study showed that deep defense cuts would cost 1 million jobs nationwide — hitting heavily in California, Virginia and Florida.
Lindsay Graham of South Carolina has been warning his state, which thrives on Pentagon spending, of the impending defense cuts. It seems he may be weakening when it comes to raising taxes...
For now, Democrats and Republicans are waiting for the other side to blink. And the pressure may be working. Mr. Graham said the sentiment for raising revenues by closing tax loopholes or imposing higher fees on items like federal oil leases is expanding in his party.
Asked about the “no new taxes” pledge almost all Republicans have signed, he shrugged: “I’ve crossed the Rubicon on that.”
Lawmakers backed drastic cuts in wages, pensions and jobs on Sunday as the price of a 130 billion euro ($170 billion) bailout by the European Union and International Monetary Fund to avert a messy default that would send shockwaves through the euro zone.
The cuts include a 22 percent reduction in the minimum wage and 150,000 jobs from the public sector workforce by 2015.
Scenes of running battles between police and rioters and flames engulfing cinemas, shops and banks underscored a sense of deepening turmoil in the country after more than four years of recession and two of punishing austerity.
The riots spread to Greece's second city of Thessaloniki, towns across the country and the islands of Crete and Corfu. In all, 150 shops were looted in the capital and 93 buildings set ablaze, wrecked or seriously damaged.
Occupy United claimed that 15 of the burned buildings were banks.
About 100 people - including 68 police - were wounded and 130 detained.
Athens city authorities said some of the wrecked buildings were of particular cultural, historic and architectural value.
The Attikon cinema, housed in a neo-classical building dating from 1870, was left a blackened shell.
The rioters were a minority, say various reports, yet others claim they numbered over 100,000 and spoke to the groundswell of anger among Greeks who say their living standards are already collapsing and more austerity will only deepen their misery.
Unemployment in Greece reached 20.9 percent in November, and half of young Greeks are jobless.
Meanwhile, on Twitter, photographs began circulating that identify several members of Greek parliament who were relaxing and watching a football game allegedly as the city of Athens burned.
Yet another good reason to occupy homes: Foreclosure thieves have gone high tech. They know when evictions are occurring because they're posted online. And they will follow the sheriff. They're usually there that afternoon or that evening.
Across America, recession-fueled foreclosures and plummeting home values have left countless properties abandoned and vulnerable to looting. As Scott Pelley reports in the above video, the problem has gotten so bad in Cleveland, Ohio, that county officials have demolished more than 1,000 homes this year - and plan to demolish 20,000 more - rather than let the blight spread and render nearby homes worthless.
Jim Rokakis, a former county treasurer, explains why to 60 Minutes:
Jim Rokakis: We're looking at a neighborhood that has almost as many vacant houses awaiting demolition as there are houses with people living in them. We have one here. One here. One here. One there.
Rokakis is leading the effort to tear down thousands of abandoned homes because they're rotting their neighborhoods from the inside out. It often starts, he told us, when a vacant house becomes an open house to thieves.
Scott Pelley: It's a nice house from the roof to about here. And then down here it's been ripped to pieces. What's goin' on?
Rokakis: Well this is typical because this is as high as they could reach without using ladders. They ripped off the aluminum siding, which you'll see on most of these houses. The aluminum and the vinyl siding comes off. It's getting' about a buck a pound.
Pelley: Essentially foreclosure scavengers have been through here?
Rokakis: The thieves have gone high tech. They know when evictions are occurring 'cause they're posted online. And they will follow the sheriff. They're usually there that afternoon or that evening.
CBS reports that 11 million homeowners are said to be "underwater," or owing more than their house is worth. It's believed that even more neighborhoods would fall into ruin if it weren't for the people who refuse to walk away from their homes, even it might be best for them financially.
Pelley speaks with Linda Bizzelle of Cleveland, who has refused to give up on her home:
Her house is worth 50,000, she owes a hundred. A financial planner might tell her to put something away for retirement rather than pay a mortgage that will never recover. Especially, since she lost her job in nursing last April.
Pelley: What have you been cutting back on?
Bizzelle: Sometimes food. I would go to the food bank in order to make up the difference, so that I wouldn't be completely hungry. Sometimes I wouldn't get my medications renewed and I would have difficulty with that because I really need my medications. I take medication for high blood pressure. And my doctor could always tell when I didn't take 'em and I said, "Oh no, you can't do that. No No."
Pelley: You're living on unemployment right now?
Pelley: What about the next mortgage payment?
Bizzelle: I'm gonna pray. That's the best I can do. I'm gonna pray that I find a job.
More homeowners like Linda Bizelle in the program, and you can view the entire transcript online here.
Part 2 of the video below the fold.