Links 10/11/13

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Elephants know what it means to point to something, no training required ScienceDaily

The End of Chocolate Truthdig (Chuck L)

Chemical Arms Monitors Win Peace Prize New York Times

Google shifts €8.8bn royalties to Bermuda Financial Times

The rise and rise of rent-seeking MacroBusiness

EU methane warning threat to UK fracking Telegraph

US Cuts to Egyptian Military Won’t Weaken Coup Regime Real News Network

Shutdown Showdown

Shutdown showdown: Have the Democrats already lost? BBC (Carol B)

The year the government broke Politico

Did Paul Ryan Win The 2012 Election? DSWright, Firedoglake (Carol B)

Shutdown’s effects begin to ripple out Washington Post

Patriot Act author’s bill to curb NSA Guardian

US debt impasse provokes Chinese ire Financial Times

Obama Says Real Boss in Default Showdown Means Bonds Call Shots Bloomberg

Big Brother is Watching You Watch

Can You Trust NIST? – IEEE Spectrum. Chuck L: “You know Snowden has had an effect when an establishment publication such as the IEEE Spectrum is on it.”

Several top websites use device fingerprinting to secretly track users PhysOrg

C.I.A. Warning on Snowden Fell Through the Cracks New York Times

The NSA and the Emancipatory Limits of Legal Liberalism CounterPunch (Carol B)

GALLUP: Obama’s Approval Level Drops — Economic Confidence Steady But Still Pretty Terrible Clusterstock

Agree With His Policies or Not, Christie Crushes This Woman to a Place She’d Rather Not Be Independent Journal Review (Chuck L)

Dynamics of Minneapolis mayoral race unprecedented on many levels MinnPost (Chuck L)

Jobless Claims Surge on the Blowback From The Backlog EconoMonitor

Yellen to maintain status quo as economy struggles MacroBusiness

The Yellen put Financial Times. Barely beat the FT on invoking the obvious.

Hunger, Metrics, and SOFI 13 Triple Crisis

McDonald’s Employee Confronts Executive: I Can’t Afford Shoes For My Children Real News Network

Battle looms over mortgage guarantee threshold Financial Times. Given that the private label mortgage market 1. remains broken and 2. was never big even in its heyday ex the CDO Ponzi, if this happens it slaughters the housing market. It would have been a good idea 30 years ago, but as Yankees say, “You can’t get there from here.” Update: see comments section as to why this is more significant than the small $ reduction would lead you to believe.

Antidote du jour:

amusing_animal_world (3)

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  1. dearieme

    What on earth would be the point of making a small reduction in the mortgage threshold? Why not just freeze it so that house price inflation (should there be any) eats it away?

    1. Yves Smith Post author

      Should have explained my point. too eager to launch before our 7AM email cutoff. You are correct that in and of itself this does not mean much. But there really is not much of a jumbo market. IIRC, lest than 17,000 mortgages in total since 2008, average home value $1.26 million, 35% avg. down payment, FICO of 750.

      The idea is that this is a first step of phasing out gov’t guarantees. If this proposal does not freak everyone out, expect them to try more reductions in the future.

      1. Will

        Why would banks want the gov’t to stop guaranteeing loans? I can’t view the FT article, so apologies if the answer is in there. However, don’t the gov’t loan guarantees make mortgages risk-free profits for banks/investors?

      2. cwaltz

        I don’t understand why there isn’t a cap on the guarantee based on the median price of housing. I think it is good to encourage home ownership but I don’t understand why the taxpayer is asked to backstop houses that are way above what the average American is paying.
        I feel the same way about mortgage interest. It’s a perk that benefits the rich because it allows them to write off the interest on their million dollar home. Meanwhile the guy who has a $25,000 a year job doesn’t end up having that luxury because he can’t afford home ownership.

        1. Yves Smith Post author

          Less than 1% of all mortgages that were securitized since the crisis were not government guaranteed. Banks keep maybe another 9% or so on their balance sheet. Those are believed to be on average for bigger mortgages.

          As I explained in another posts, there is just not much appetite for mortgage credit risk among investors. Period. So if you get rid of gov’t guaranteed mortgages, you will most assuredly kill the housing market, which means destroying the equity of middle class homeowners. On balance sheet bank lending is much more costly (as in interest rates would be much higher).

          Look, in an ideal world, we wouldn’t be where we are. But tanking housing prices when the economy is already not strong and is getting a whack thanks to the budget drama, is like putting a bullet in its head.

          1. financial matters

            I agree that without NINJA type fraud, employment and income again become relevant. This alone will cause home prices to fall. Hedge funds had the opportunity to buy foreclosed properties and now they want to package these to unsuspecting investors since they are unable to get a good rental flow so this aberration still has to clear.

            What would interest rates be if banks really accepted the risk of the loan and didn’t have the Fed exchanging their mortgage backed securities for US Treasuries? Ie taking away the federal backstop on mortgages.

            Right now the average house price is $192,000 and the average income for those lucky enough to have one is $50,000. I think this is a mismatch and an example of how asset prices aren’t reflective of the real economy.

            This excess leverage is being squeezed out of the system because an MBS shouldn’t equal a US Treasury. US Treasuries need to be backed by labor and real production. MBS should be backed by risk/benefit ratios of making the loan.

            People need affordable housing especially since wages have been stagnant.

  2. skippy

    Quire… why is Buffet selling so much stuff ie sold roughly 19 million shares of Johnson & Johnson, and reduced his overall stake in “consumer product stocks” by 21%. Berkshire Hathaway also sold its entire stake in California-based computer parts supplier Intel.

    Skippy… bit of liquidity to take advantage when blood is in the streets?

  3. aet

    A more sanguine – yet less sanguinary – contrary take on those particular actions would be that Mr. Buffet’s Company is setting itself up to illustrate the truth of the old saying: “Everybody makes mistakes”.

  4. 12312399

    “Several top websites use device fingerprinting to secretly track users”

    no shock. the debate about cookies is ‘fighting the last war.’

    just google “panoptclick” to see how easy it is to permanantly track your computer, phone, tablet, iNest, networked refrigerator.

    1. Ned Ludd

      Device fingerprinting requires either Flash or Javascript. The Firefox extension NoScript – which has over 2 million users – “allows JavaScript, Java, Flash and other plugins to be executed only by trusted web sites of your choice”.

      Dissidents and journalists communicating with sensitive sources should use Tails. According to page 7 of the NSA slides on Tor, it “Adds Severe CNE misery to equation”.

      1. MyLessThanPrimeBeef

        It’s like everything today.

        If you fell victim to a bankster, you failed to be vigilant financially.

        If you got sick from GM foods, you failed to shop organically.

        If you are being tracked, you failed to take the appropriate actions.

        Where is the government when you need it? Oh, that’s right, they are the ones tracking you, after partying with GM corporations and banksters.

        1. Expat

          Agree, absolutely. You encapsulate the kind of economic system we live in. The burden of finding information and sorting through the enormous mass of lies and self-serving self-promotion falls on the individual consumer, whose time and options are limited. Instead of a bell curve in which the actions of most consumers are the most protected, only those who go out of their way, pay more and seek more information get the service they thought they were buying. As somebody put it years ago, the government seems to be operating on the principle that rich people are in danger of not getting enough services and privileges while the rest of us are suspected of getting too much.

  5. Jim Haygood

    No Black Friday hordes of frantic shoppers at healthcare-dot-gov:

    Just 51,000 people completed Obamacare applications during the first week the website was online, according to two sources inside the Department of Health and Human Services who gave MailOnline an exclusive look at the earliest enrollment numbers.

    The career civil servants, who process data inside the agency, confirmed independently that just 6,200 Americans applied for health insurance through the problem-plagued website on October 1, the day it first opened to the public.

    If the first week’s total were an indication of how many Americans will sign up during that time through the Obama administration’s website, its final tally would reach a paltry 1.32 million.

    If the state-run exchanges were to have a similar response rate for six months, the national enrollment total would be approximately 2 million. That number is less than 29 per cent of the 7 million the Obama administration would need, according to the nonpartisan Congressional Budget Office, in order to balance the new health insurance system’s books and keep it from financial collapse.

    No info is available on the age breakdown of the early ‘consumers.’ But since coverage is effectively subsidized for the middle aged by overcharging young adults, one would expect a heavy geezer tilt. With no cost controls, that means next year (if there is a next year), insurers will crank premiums higher by double digits, or just walk.

    Obamanomics, comrades: it’s the calculus of value subtraction. Pretty soon that 29% of target is gonna be Obama’s approval rating. Who ever came up with the harebrained idea of having the government peddle health coverage at IRS gunpoint?

    1. Jim Haygood

      Pravda on Hudson exults in the flood tide of ‘walking around money’ to promote Obamacare:

      Covered California’s public outreach effort can seem akin to a huge political campaign. The state is spending $94 million to help local health clinics, community groups and labor unions reach residents. The Obama administration has poured more than $910 million into the effort because California’s uninsured represent an estimated 15 percent of those without insurance nationwide.

      There are radio and television commercials galore, along with Twitter and Facebook posts and scores of highway billboards. There are armies of outreach workers who speak Spanish, Tagalog, Cambodian, Mandarin and Cantonese, all flocking to county fairs, farmers markets, street festivals and back-to-school nights across the state. There are even dinner parties in Latino neighborhoods designed to reach one family at a time.

      Free dinnah — que rico! Let’s do some math, my hungry friends. If a million Californians sign up (approximately Kali’s share of the national 7 million goal), then the billion dollars of state and federal ‘walking around money’ represents a thousand dollars per consumer — presumably, enough to pay several months of premiums for most of them.

      She said don’t I know you
      From the healthcare navigators party
      I said who am i
      To blow against the wind

        1. SMK

          It gives the more idealistic peons a chance to think that they’re MAKING! A! DIFFERENCE! when they’ve really just expending enormous amounts of personal energy achieving a sub-mediocre result.

          Same principle as having volunteers run themselves ragged organizing “voter registration drives” instead of just having a government agency mail everyone the forms. (When was the last time you saw an “IRS registration drive”?)

  6. AbyNormal

    Map: These are the cities that climate change will hit first
    “It looks a little better! The world average, in this hypothetical version, would pass climate departure in 2069. D.C. would pass it in 2071. As a sign of how deeply the climate is already changing, though, Kingston would still hit it in 2028* — a delay of only five years.”

    BoB n WhalerS/Survival 79′

    1. Paul Tioxon

      Thom Hartman has a film available on YouTube.

      He discussed the content on RT news last night. It presents the geologists perspective on the current climate change crisis. 5 previous global warming driven events produced planetary mass extinction events that eliminated 95% of all life, not just human, on land and in the sea. Think of the disappearance of dinosaurs. Although that is the only event not directly caused by the simple increase of CO 2 into the atmosphere, the problem for us now is the Arctic Methane pack. It is being melted into a gaseous form and bubbling out the ocean in a column a meter wide. Methane as you may know is much worse than burning coal, oil or natgas. The tremendous amounts of methane that are inert in a solid form are being released in virtuous spiral of warming that melts the Arctic icepack, freeing the methane to accelerate the atmospheric warming trend, melting more ice, freeing more methane. Our current coal and oil phase is the trigger to set off the bigger bomb of methane that can wipe out most life on both land and sea.

      “While climate scientists rarely study mass extinctions, geologists are quite familiar with them. And, increasingly, they are speaking out about how our extraction of carbon fuels from beneath the earth and burning of them into the atmosphere is mimicking processes that, in the deep geologic past, have caused mass extinctions.

      “Geology is a patient teacher and it repeats its lessons over and over again,” says Last Hours co-producer George DiCaprio. “”Last Hours’ explains that the same chemical circumstances will yield the same results… there is no reason to suppose otherwise. It’s time to tell everyone that global warming may cause a calamity; we have no time to waste.”

      “This film is meant to be an asset for the climate movement and to generate momentum for the global reduction of carbon emissions,” said Leila Conners, director of the film, which was produced by George DiCaprio, Earl Katz and Mathew Schmid. Conners added, “We must move toward renewable energy and to create a real solution, hopefully well before or at the COP 21 in Paris in 2015.”

      1. susan the other

        All well and good except for the bete noire of global warming: Doing renewables, with our current technology, causes measurably more global warming than just sticking with fossil fuels. The only effective thing we can do now is economize. Stop making and driving cars asap. (IEEE)

          1. Paul Tioxon

            Well l-h, I’ll try harder. How about this.

            Just what is netzero in this context? For starters, housing and construction in general that uses no external outputs from a commercial energy source to operate as suitable human habitation.

            NZE A net-zero energy home is one that is designed, modelled and constructed to produce as much energy as it consumes on an annual basis.

            This will be achieved through a combination of energy efficiency measures and onsite renewable energy generation.

            Additionally, there is the long standing work of Amory Lovins at the Rocky Mountain Institute:


            As far as taking a cue from a 10 minute film, this is a starting point. Especially for people who do not know much about the subject other than the confusing tit for tat arguments over whatever imprecision bugs you this hour of this day. But, the warnings are now coming from not only climatologists but geologists as well. I think its good to know that people who have a geological time perspective, that is a very long term perspective, can point out that climate change, from whatever source, involves CO 2 and methane being released into the atmosphere. The tipping point may not be precisely known, but the time it takes us to act, to transfer our economic base to a non-carbon burning base will only increase our odds of living in a more hospitable environment, no matter how long it takes. If we have moved beyond a point of no return, oh well, easy come easy go.

          2. MyLessThanPrimeBeef

            There is absolutely no bad side effect to CEOs flying private jets less often, even if they can get jet fuel at subsidized rates from Uncle Sam.

            In fact, to stop over bingeing is spiritually healthy.

    2. MyLessThanPrimeBeef

      Maybe we go back to the past where humans avoided living close to the sea.

      Almost the great ancient cities – Thebes, Roma, Susa, Xian, Loyang, Teotehuacan, Cuzco, Angkor Wat, etc – they weren’t next to an ocean. It was unnatural to go sea bathing.

    3. davidgmills

      An inconvenient fact — from the National Snow and Ice Data Center:

      This summer, Arctic sea ice loss was held in check by relatively cool and stormy conditions. As a result, 2013 saw substantially more ice at summer’s end, compared to last year’s record low extent. The Greenland Ice Sheet also showed less extensive surface melt than in 2012. Meanwhile, in the Antarctic, sea ice reached the highest extent recorded in the satellite record.

      I want to repeat that last sentence: Meanwhile, in the Antarctic, sea ice reached the highest extent recorded in the satellite record.

      The overall ice of the world has been remarkably stable for the last 20 years or so. Artic ice has been declining but overall Antarctic ice (which is much bigger ice sheet than Arctic ice) has been increasing despite a certain part of Antarctica (always reported on) having lost some ice.

  7. fresno dan

    “That was my turning point,” Polanco says in an interview put together by Communities United for Police Reform. “That was the time I said, ‘You know what? Why should I do this to a kid who is just walking home from school, that we know is not doing anything wrong?’ Why should I do that? It’s not what I became a cop for. This is not what I wanted to do.”

    Polanco also talks about how his views on stop and frisk have evolved since the NYPD imposed quotas in 2009 that led to an all-time high of 685,724 stops in 2011.

  8. ohmyheck

    Check. It. Out!

    “Edward Snowden (3rd R) receives the Sam Adams Associates for Integrity in Intelligence Award (SAAII) alongside UK WikiLeaks journalist Sarah Harrison (2nd R) who took Snowden from Hong Kong to Moscow and obtained his asylum and the United States government whistleblowers who presented the award (L-R) Coleen Rowley (FBI), Thomas Drake (NSA), Jesselyn Raddack (DoJ) and Ray McGovern (CIA) on October 9, 2013 in Moscow, Russia.”

    Some of my favoritest peeps! Good on them.

    (Not to mention that seeing Edward Snowden out in public is quite notable.)

    1. hunkerdown

      Compare the Murdoch version. The print headline is even more charming: “Traitors’ convention”.

      How do we make people afraid to work for Murdoch? Do we need a team of cat burglars with night vision goggles to visit people in their sleep?

      1. scraping_by

        Well, every time I just skim the text, when I hit “Murdoch” I always read “Moloch.”

        But he’s a kindly old buffer who gets hit in the face by pies, right? No throwing babies into bonfires or that stuff.

  9. AbyNormal

    Over 865,200 Gallons of Fracked Oil Spill in ND, Public In Dark For Days Due to Government Shutdown
    by Steve Horn, DeSmogBlog, October 10, 2013

    Over 20,600 barrels of oil fracked from the Bakken Shale has spilled from aTesoro Logistics pipeline in Tioga, North Dakota, in one of the biggest onshore oil spills in recent U.S. history.
    Though the spill occurred on September 29, the U.S. National Response Center – tasked with responding to chemical and oil spills – did not make the report available until October 8 due to the ongoing government shutdown.

    1. SubjectivObject

      And the money shot is:

      “North Dakota Petroleum Council Responds
      North Dakota Petroleum Council’s response to the largest fracked oil spill in U.S. history and one of the biggest onshore spills in U.S. history? Ho-hum.
      “You know, this is an industrial business and sometimes things happen and the companies are certainly responsible to take care of these things when they happen,” Petroleum Council President Ron Ness told KQCD.
      John Berger, Manager of Tesoro’s Mandan, ND, refinery, sits on the Petroleum Council’s Board of Directors.”

  10. MyLessThanPrimeBeef

    Shutdown showdown: Have the Dems lost already?

    This you will never see from an imperial propaganda organ (yes, that empire, which was so much better to live in than the void of the Dark Ages that people voluntarily risked travelling across an ocean to live amongst total strangers in a totally ‘uncivilized’ world darker than the Dark Ages – gasp! no central government!): Have the 99.99% already lost?

  11. diptherio

    Wells Fargo just got fined another 3 million dollars for willfully and egregiously violating its own contracts as well as several laws:$3-million-in-damages_8-13.pdf

    Here’s a sample:

    The evidence of Wells Fargo’s misconduct was staggering. Certain evidence in particular highlights Wells Fargo’s indifference to its customers. Wells Fargo charged the Estate for lawn care of the property (i.e., cutting the grass), even though no grass was actually cut. The reason for this was that Wells Fargo claimed that pursuant to the Freddie Mac guidelines, it was required to have the grass cut every 25-30 days; thus, it believed it was appropriate to bill the Estate for this regardless of whether it was necessary. The property at issue did not have a lawn…

    Compelling evidence was presented that Wells Fargo acted intentionally by improperly assessing fees and costs against the estate, misapplying the MLIC insurance proceeds check, failing to follow the Freddie Mac servicer guidelines, failing to credit the account with the MLIC check when it was received and assessing interest against the account for the five days it did not credit the MLIC check, improperly initiating a foreclosure action, misrepresenting the status of the foreclosure to the Court in pleadings, sending collection letters/monthly statements to the estate claiming amounts not due, and improperly assessing fees against the estate for inspections which were not necessary. All of Wells Fargo’s actions were designed to increase its profits without regard for the decedent or his family, and in many instances, violated the terms of the Note.

    Contrary to Wells Fargo’s arguments the mistakes were not “minor.” During the pendency of the litigation, and at trial, Wells Fargo used its computer-driven systems as an excuse for its “mistakes”. However, the evidence established that this misconduct was systematic and not the result of an isolated error, or an error because of some unique fact.

  12. MyLessThanPrimeBeef

    US debt impasse…Chinese ire.

    Let’s see.

    Debt is money.

    We are a monetary sovereign and thus a monarch over US debt.

    It doesn’t matter how many imperial dragon feathery scales are ruffled, US monetary sovereignty can not be violated.

    Better to just grab a seat, sit back and watch the show like the rest of us.

  13. rich

    5,000,000 Gns World Record At Tattersalls

    9th October 2013
    The World record for a yearling filly at auction was smashed at Tattersalls on the second day of the October Yearling Sale Book 1 when Qatar’s Sheikh Joaan bought the GALILEO sister to the Oaks winner WAS for 5,000,000 guineas. The sale also represents the highest price in European auction history, beating the 4.6m guineas that MAGICAL ROMANCE realised at the 2006 Tattersalls December Mare Sale. The sale price of 5,000,000 guineas is equivalent to $8.4m and Euros 6.2m.

    Exclusive: Red Cross launches emergency food aid plan for UK’s hungry Welfare cuts and the economic downturn send soaring numbers of people to soup kitchens and food banks across Europe

    The Red Cross will this winter start collecting and distributing food aid to the needy in Britain for the first time since the Second World War, as welfare cuts and the economic downturn send soaring numbers of people to soup kitchens and food banks across Europe.

    In what could be the start of an increased role in Britain for the Geneva-based charity best known for its work in disaster zones, its volunteers will be mobilised to go into supermarkets across the country at the end of November and ask shoppers to donate dry goods. The British Red Cross will then help FareShare, a charity working with the Trussell Trust and Tesco, distribute the packets and tins to food banks nationwide.

    Britain is just one of many countries where families are struggling to put food on the table. In a report released today into the devastating humanitarian impact of Europe’s financial crisis, the Red Cross recorded a 75 per cent increase in the number of people relying on their food aid over the last three years. At least 43 million people across the Continent are not getting enough to eat each day and 120 million are at risk of poverty.

    Red Cross officials called on European governments to try and find new ways to address to the crisis, as austerity programmes plunge millions into poverty and hunger.

    it was the best of times, it was…

    keep believing….

    1. MyLessThanPrimeBeef

      To more and more people, joining the imperial army is the only way out.

      Perhaps we can militarize the entire European population…to fight evil somewhere, or perhaps it’s everywhere but home.

  14. MyLessThanPrimeBeef

    Chemical arms monitors win peach prize.

    I hope they decline the prize for the reason that their work is not done, for way too many other countries still have chemical arms and they haven’t done enough (or anything realistic at all) about them.

    1. craazyman

      I saw that dude’s picture and name on the side of a bus and have no idea who he is.

      It’s weird to live in a world that I frankly have no interest in, almost, at all.

      People get vexed and heated over something some dude write on the internet somewhere. Somehow the dude or woman version of a dude gets to the point their picture is on a bus. I have no idea how that happens.

      It all disappears before it reaches my head. It’s like an invisible helmet, when I think about it. Ignorance. It’s bliss. Or if not bliss, then certainly a form of benevolence. Maybe it’s just luck.

      For me reality is when I look up in the sky and see Orion, rising, through the bare branches of trees. That is real. That is amazing.

      There are other pictures on the bus. Not just his. They often seem slightly deranged like they’re obeying voices in their head but don’t realize the voices aren’t theirs. It’s hard to tell whose. Not mine, that’s for sure. What a horrible fate to have other people waiting for you to tell them what to do. It makes me want to shut up. hahahahah

    1. lambert strether

      Seems a little sketchy, yes. Good catch.

      “Air Force officials said Maj. Gen. Michael Carey was fired for “personal misbehavior” while on temporary duty at an unspecified location outside his usual command. The officials would not describe the behavior, other than to say that it did not involve any sexual improprieties, drug use, gambling, or criminal conduct.”

      Sap and impurify all of our vital bodily fluids?

  15. ++

    “The market is the final arbiter of any policy, the ultimate barometer and enforcement mechanism.”

    Make one slight change – substitute one awkwardly reified and essentially meaningless abstraction of a predatory institution – and you get

    “Big Brother is the final arbiter of any policy…”

    Totalitarianism rebranded to give arbitrary institutional arrangements the ineluctable force of nature or a deity. Yet Little Brother Bloomberg’s proles lap it up.

    1. ++

      A radical re-forging! So that’s what we call it now when criminals get caught breaking the law.

      In the same way, former Democratic Party precinct captain John Wayne Gacy undertook a radical re-forging of his personal principles regarding handcuffing boys and fcking them and strangling them and burying them in his crawlspace, when he got caught.

      The conclusions Gacy reached are likely to be confirmed by the criminal aggressors of the Obama administration: “Kiss my ass.”

      We’re going to have to execute them, too.

  16. peace

    Whoa! Your link to this chart shows a huge spike in the annual change in “Jobless Claims…” due to a computer updating “glitch” and subsequent corrections. The result is the 3rd hightest annual increase in jobless claims in the past 3 years.

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