george galloway: "à bientôt, canada. we will hold your crooked government to account."

George Galloway, on the close of his 12-city, ban-busting tour of Canada. He'll be back!

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Much Maligned Bondholders Do God's Work; ECB Creates Incentive to Gamble

Thanks in part to European Central Bank President Jean-Claude Trichet, German Chancellor Angela Merkel's proposal to make bondholders suffer losses from poor investment decisions was shoved aside.

Said ECB president Trichet in an exclusive interview...

"This is a victory for much maligned bondholders everywhere. I am pleased to announce we have effectively removed the word investing from the vocabulary of bondholders."

"Starting today, bondholders need not be concerned with who they lend money to, why, or what risks there are in doing so."

"Not only will this help ease turmoil in the markets, but bondholders can now think in terms of winning rather than the more mundane investing because the ECB and IMF will backstop all losses from trading bonds."

The above is a translation from today's issue of Le Monde. An official transcript will appear on the ECB's website later today.

In the meantime, Bloomberg has a few sketchy details of the announcement in an article appropriately titled Germany Drops Bond Threat

European governments sought to quell the market turmoil menacing the euro, handing debt-strapped Ireland an 85 billion-euro ($113 billion) aid package and diluting proposals to force bondholders to cover a share of future bailouts.

European finance chiefs ended crisis talks in Brussels yesterday by endorsing a Franco-German compromise on post-2013 rescues that means investors won’t automatically take losses to share the cost with taxpayers as German Chancellor Angela Merkel initially proposed to the consternation of bond traders.

The first test of the twin decisions come today with markets resuming trading after speculation intensified last week that Portugal and perhaps even Spain will require external support. In a third move, Greece was told it could have an extra four-and-a-half years to repay emergency loans totaling 110 billion euros to match the seven-year term under Ireland’s deal.

The German push ran into criticism from policy makers elsewhere, who called it mistimed, and from European Central Bank President Jean-Claude Trichet, who warned it would unsettle bondholders. Germany yesterday backed away from the pitch for an automatic penalty, agreeing to give the International Monetary Fund a role in determining losses on a case-by-case basis.

Bondholders Do God's Work

In a followup interview Trichet commented, "The debt crisis is over. We are willing to grant Greece and Ireland as much time as they need. If an extra-four-and-a-half years to repay emergency loans proves insufficient, we are willing to wait an extra-hundred-and-a-half years".

When asked if he meant 150 years or 100.5 years, Trichet replied, "I mean as long as it takes to make the ECB whole, forever if necessary. The important thing is for bondholders to never suffer losses. Heaven forbid we should ever unsettle bondholders by insinuating they may have to take some losses. Bondholders in general, not just Goldman Sachs bondholders, do God's work."

Incentive to Gamble

Please consider ECB's Noyer assures cagey markets over Ireland rescue

Noyer, the first member of the ECB's policy council to speak after euro zone ministers sealed an 85 billion euro ($115 billion) loan package for Ireland on Sunday, said he was confident the deal would bring down Dublin's borrowing costs to more normal levels.

"There is no reason to doubt the recovery plans of the two countries," Noyer said in a speech in Tokyo, referring to Ireland and Greece.

The new European Stability Mechanism outlined on Sunday would make private investors share the pain in the case of a debt default or restructuring, but it would apply only to debt issued after 2013.

Noyer, who is also governor of the Bank of France, said that he believed even then it should remain only a theoretical possibility.

"As far as I'm concerned, I exclude that there will be haircuts in the future."

Lovely. Just lovey. If there is no possibility of haircuts, why shouldn't banks invest in the riskiest garbage there is?

In fact, fools like Trichet and Noyer are effectively saying there is no such thing as risky garbage, only misguided perceptions of risky garbage.

The thing is they are lying, hoping to calm the markets. If their lies work at all, they won't work for long.

Addendum:

Several people have asked for confirmation of those Trichet quotes. I guess I need to be even more outrageous. Those quotes of Trichet were a spoof.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

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TBC: Hockey Is A Battle

Teebz's Book Club has primarily been keeping readers up-to-date on a lot of the newer books being published. However, there is a lot that one can learn from older books that may now be out of circulation, and I encourage you to seek out some of these books at bookstores. I was lucky enough to discover one such book at a little bookstore in a small town as I passed through this summer during a road trip, and Teebz's Book Club is proud to bring you Hockey Is A Battle, written by Punch Imlach and Scott Young, and published by Pocket Books, a division of Simon & Schuster Limited. The paperback version I have of this book is even older than the image to the left, and it's still in great condition! And much like Imlach's stories in the book, this book is a timeless classic.

While Punch Imlach is a fairly well-known name in hockey circles, Scott Young may not be. Young was a Canadian sportswriter and journalist who wound up writing more than 45 books for readers throughout his career. Young was born in Cypress River, Manitoba on April 14, 1918, and was hired as a copyboy for the Winnipeg Free Press in 1936 before becoming a sports reporter. In 1940, he married Edna "Rassy" Ragland, the two had two sons: Bob Young, born in 1942, and Neil Young, in November of 1945. Young moved to Toronto shortly before World War II had started, and worked for a number of publications as a short-story writer and reporter, including the Globe & Mail on a number of occasions.

In 1988, Young received hockey's highest honour for a writer as he received the Elmer Ferguson Memorial Award from the Hockey Hall of Fame as selected by the Professional Hockey Writers' Association, and was also inducted into the Manitoba Hockey Hall of Fame. Young passed away on June 12, 2005 at the age of 87.

Hockey Is A Battle is somewhat unique as it is written in Imlach's own words in a stream-of-consciousness style. Reading the book feels like listening to your grandfather or father tell stories of "old-time hockey" and the way it used to be in hockey. However, make no mistake in that Imlach's personality and insight into these stories are not conveyed. If anything, Young brings the stories to life by keeping Imlach's personality intact throughout each chapter of the book.

The chapter I found most interesting was Chapter 12 where the Maple Leafs and Punch Imlach prepared for the 1967 NHL Expansion. In this chapter, Imlach discusses how the Expansion Draft would affect each of the Original Six teams, and how difficult it was to keep the Maple Leafs together after winning the 1967 Stanley Cup. This entire chapter was extremely interesting to read in terms of the historical aspects of the game, and Imlach's insight as the General Manager and Coach of the Toronto Maple Leafs provides amazing information for the reader.

There are many fascinating stories in the book besides what is found in Chapter 12, though. From the proposed Frank Mahovolich trade to Chicago that fell through in 1962 to Andy Bathgate's falling out with Imlach to how George Imlach got the nickname "Punch", it is all chronicled in Hockey Is A Battle. He talks of coaching Jean Béliveau with the Quebec Aces, how his minor-league career got him into Maple Leaf Gardens, and where he decided coaching was his lot in life. Again, Young's conversational style of writing makes it seem that Imlach is speaking directly to you, giving you some great insight on Imlach's thinking.

There's no doubt that I would have never been able to read some of these stories had I not been able to find Hockey Is A Battle. While the book itself might be hard to find in a local bookstore, I highly recommend purchasing a used copy from Amazon if you have the means. Hockey Is A Battle is an excellent book to read, and really shows off Young's writing talents. Because of Imlach's great stories and Young's abilities, Hockey Is A Battle certainly deserves the Teebz's Book Club Seal of Approval!

Until next time, keep your sticks on the ice!

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Why Pay the Mortgage or Rent when you can have 16 Months of Free Shelter? How to Deal with this Important Question

Those deeply underwater on their homes have a nice option that renters and those with equity in their homes don't. That option is to stop making home payments, effectively living in their home or condo scotfree, for as long as they can.

Millions have take the option, and with each person doing so, the longer the delays. Thus, the more who take that option, the greater the reward for all who do.

The Wall Street Journal reports that it takes 492 Days From Default to Foreclosure, up from 244 days in August 2007.

The average borrower in the foreclosure process hadn’t made a payment in 492 days as of the end of October, according to LPS [LPS Applied Analytics]. That compares to 382 days a year ago and a low of 244 days in August 2007.

In other words, people who default on their mortgages can reasonably expect, on average, to stay in their homes rent-free more than 16 months. In some states such as New York and Florida, the number is closer to 20 months.

Speeding up the process won’t be easy, as demonstrated by the banks’ continuing legal troubles related to robo-signers, bank employees who signed foreclosure affidavits without properly checking the required loan documentation.

Millions of Americans still are paying their mortgages even though they owe more than their homes are worth. The more banks’ backlog grows, the more likely they are to join it, adding to the already giant pile of foreclosures weighing on the housing market.

Imperative to Speed Up Foreclosures

Clearly it is imperative to speed up the foreclosure process. To not do so is inequitable and creates moral hazards.

However, some who do not like the current system pretend to be worried about the .0004% or whatever preposterously low number of homeowners who might be kicked out of their homes allegedly in error.

Making matters even worse, a large and growing number of misguided souls think it is "unjustifiable" to boot homeowners unless and until someone can "produce the note".

Such thinking encourages still more defaults, weighs down the courts, and does nothing to produce an equitable solution, for anyone.

Simple Undeniable Facts

The simple, undeniable fact of the situation is that anyone who has not paid their mortgage for over 90 days deserves to lose their home, except in very limited conditions I describe below.

The acid test for me is the simple question "Have the mortgage payments been made, and if not, then why not?" If the answer is no, then the home owner should be given a chance to become current or lose the house.

The "limited exception" is as follows: If a homeowner can provide reasonable evidence he is late due to fault of the lender or processor, then we need to work out a suitable remedy. One equitable approach would be to remove all penalties and late fees and fine the hell out of the processor or lender, especially if there are repeated errors, perhaps giving some of those fines or fees to the homeowner.

That's it. You either paid your mortgage or didn't, either through your fault or the fault of the lender (e.g. They misapplied your mortgage payment, jacked up late fees while doing so, and did not address your concerns when you brought them up).

Anyone care to address the percentage of loans that meet that criteria?

Otherwise, booting out the homeowners for nonpayment is an equitable solution. If the lender wants to work out other solutions, that is fine by me as long as there is no requirement lenders have to make such attempts.

If a lender thinks it is in their best interest to foreclose (providing the borrower has not made payments), then foreclosure it should be.

Addressing Fraud

A second situation arises because booting out homeowners does not address robo-signings and other errors by lenders and processors, of which some are mistakes, others clearly fraudulent.

Equity in those situations can (and should) be dealt with via severe fines, suspensions, and firing those involved, all the way to the top of the pyramid.

The key point is there are two separate and distinct issues that do not have to be solved simultaneously, regardless of how many misguided souls try to portray two issues as one.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

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mom of canadian soldier in afghanistan protests extension of war

Canadian Press:

The mother of a Canadian soldier in Afghanistan picketed outside Liberal MP Bob Rae’s Toronto office on Saturday to urge the federal Conservative government to bring the troops home next year.

Josie Forcadilla is upset about the extension of a Canadian military presence in Afghanistan until 2014. The government announced this month that a contingent of troops will remain to train Afghan troops after the combat mission ends in July 2011.

“Whether the mission is combat or non-combat, the soldiers will still be at risk,” she said, noting some of the 153 Canadian soldiers who have died in support of the Afghan mission were trainers.

Forcadilla, 54, was among roughly a dozen people protesting outside Rae’s constituency office Saturday afternoon.

The Opposition Liberals have supported the idea of Canadian soldiers remaining in Afghanistan, provided it’s a non-combat role.

The group meant to bring Rae an anti-war petition with 10,000 signatures, but found his office closed.

Volunteers instead handed out postcards and encouraged passersby to write their MPs about ending the mission, rather than extending it.

“We’re going to make sure he still hears from his constituents,” said Sid Lacombe, coordinator for the Canadian Peace Alliance.

Ray Northcott, a Toronto resident, signed a postcard because he is “generally opposed to the war” and wants Canada to withdraw unconditionally from Afghanistan.

Forcadilla, whose son is scheduled to return from a six-month tour in December, says she’ll continue to protest against the war as long as there are Canadian troops in Afghanistan.

Josie Forcadilla in her own words.

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Unthinking Economic Parrots and Deflation Fighting Madness

The ineptitude of Japan's policies hoping to combat deflation is staggering. Worse yet, unthinking economic parrots talking about the "economic damages of deflation" have no idea what they are even saying.

Please consider Japan passes new $61bn stimulus package

Japan's parliament has passed a stimulus package worth about $61bn (£39bn), designed to kick-start the country's fragile economic recovery. The stimulus was designed to create jobs, Prime Minister Nato Kan said, through measures to help small businesses and boost consumer spending.

Earlier, figures showed that Japanese consumer prices fell for the 20th month in a row in October.

The vote in favour of the latest stimulus measures represents a victory for the government, which has struggled to get the package through parliament. The move is in marked contrast to European governments' policies, which are focusing on cutting spending to secure growth.

Japan has been struggling with weak growth, a high yen and deflation.

The core consumer price index fell by 0.6% in October compared with a year earlier, official figures showed. This was a slight improvement on the 1.1% price falls seen in September.

Deflation is particularly damaging to economic growth as consumers delay purchases until prices fall further.

Idiotic Premise

I stopped quoting the article on the frequently repeated premise "Deflation is particularly damaging to economic growth as consumers delay purchases until prices fall further."

I wish economic writers had the ability to think rather than parrot ideas espoused by Keynesian clowns.

Series of Questions

• If your refrigerator conks out, will you buy a new one or wait 6 months to take advantage of lower prices?
• If the transmission on your car fails will you wait 6 months to get it fixed?
• If your pantry is bare, will you wait 1 month to buy food even if you expect food prices to drop?
• If you need a new winter coat, will you wait and if so, how long?
  

The answer to that last question is "Perhaps for a bit, but you will not wait 3 years even if you expect prices will be even lower 3 years from now."

Short of assets like stocks, bonds, and housing (and except for periods of hyperinflation) it is tough to cite any examples where inflation expectations mean a damn thing.

Unthinking Economic Parrots

Yet week in and week out, articles like the above parrot misguided ideas about inflation expectations. Worse yet, they spew forth nonsense that falling ideas are a bad thing.

Ask anyone on fixed income if falling prices are a bad thing. Ask students or those on minimum wage if falling prices are a bad thing.

Think you will have many takers? From either group?

The only people who say falling prices are unwelcome are the bankers, the stock brokers, government and economic parrots who misguidedly trumpet economic claptrap from the bankers, the stock brokers, government, all of whom benefit from inflation because of rising taxes and/or because they have first access to money.

In effect, parrots serve as pawns for the wealthy, for central bankers, and for government officials who wants a bigger piece of your paycheck via rising sales taxes, rising property taxes, and rising income taxes.

In reality, inflation is theft from the middle and lower classes for the benefit of government, the wealthy, and also public union workers who have inflation adjusted benefits written into many of their contracts.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

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highway fun, highway blues in pennsylvania

We always spend the last night of our US Thanksgiving trip at the home of my brother and sister-in-law in central New Jersey (near the city of New Brunswick, for those who know the state). We stay up late talking and drinking wine with some combination of friends - who happen to be siblings, nieces, nephews, and their respective partners - then wake up early to hit the road. The drive takes us through a part of New Jersey to Pennsylvania, through the Delaware Water Gap, up through the Poconos to New York State, then straight up through New York, emerging at the New York State Thruway at Syracuse.

We usually stop for a late breakfast near Scranton. (You may know the name from "The Office". It is indeed a real town in Pennsylvania.) But on this trip, we got horribly lost after leaving my brother's home - trying to correct a simple wrong turn just got worse and worse, and we wasted nearly two hours of drive-time. Because of this, we didn't want to take an hour for breakfast at a crowded Denny's, but we don't eat fast food. We especially gave up eating fast food on car trips many years ago. Driving around trying to find a supermarket would be more time-consuming than Denny's. On the way down, we stop at Whole Foods in Oakville for their amazing salad bar, but this is not an affluent area where we're likely to find one of those. What to do?

Through this dilemma, we discovered Sheetz, my new favourite pit-stop. Sheetz is a chain of gas stations and convenience stores in Pennsylvania, Virginia, North Carolina, Maryland and northeastern Ohio. What makes it special is fresh, fast food made to order. You order by touch-screen from a menu that includes the usual less-than-healthy but yummy items like burgers, breakfast sandwiches, shakes and plenty of fried things, but also salads and wraps with a good variety of ingredients. Any fast-er food franchise where you control exactly what you order - such as Subway or Blimpie - is already a much healthier option.

I see how the touch-screen order system is designed to encourage you to order more food, as you see all kinds of options that you might not otherwise think of, from double meat or dressing to fried things on the side. But the choices are extensive, there are many healthy options, and it's very inexpensive. I was way impressed. Here's Sheetz in their own words, and here's a map of where you find them.

* * * *

Despite Sheetz, Allan and I will be in no hurry to drive through Pennsylvania again. Driving through the Poconos area on a winding two-lane highway, we were cruising along in the right lane, doing no more than five miles an hour over the speed limit. After discovering what two speeding tickets will do to your car insurance, we are determined to never get another speeding ticket again. It takes us a bit longer to get places, but we don't care: we don't speed. Thus imagine our surprise when a state trooper with lights flashing pulled up behind us.

The officer informed us that there is a law in Pennsylvania that requires motorists passing emergency vehicles to move to the left lane if possible. This trooper was parked in a turn-off with his lights flashing - although no emergency was taking place - waiting for cars to not pull over, so he could ticket them. And, we suspect, waiting specifically for cars with out of state plates.

We were doing 70 mph (the limit was 65) in the right lane, and when we saw him, slowed a bit. To our left, cars were zipping by at top speeds, on a road filled with curves. It was far safer to simply drive slowly without changing lanes - especially because we could see there was no actual emergency, merely a police car with lights flashing, no other vehicle present - than it would be to move into the faster lane. Of course we didn't argue with the state trooper, as that can only result in a greater fine.

When he went back to his car to check license and registration, I assumed we would be issued a warning. I was wrong. He ticketed us. He said the fine can range from $25 to $250, and he generously gave us the minimum. As we drove away, I read the citation. Twenty-five dollars? Not quite. The citation includes:
- Fine: $25
- EMS: $10
- Mcare: $30.00
- Costs: $34.50
- JCP/ATJ: $10

I had to look up that last one: it's the cost of checking your information via computer from the cop car. Grand total for the ticket: $109.50.

In the fine print, it says that in order to contest the ticket without cost, you must appear in person. If you plead not-guilty by mail, you are required to send the full amount of the ticket plus a $7.00 processing fee, to be held as "collateral". If you are found not guilty, the money will be returned.

I don't know if being found non-guilty comes before or after pigs fly and hell freezes over, but obviously out-of-state drivers are unlikely to be aware of this lane-changing law, and are probably unable to contest a ticket in person. So the Commonwealth of Pennsylvania has state troopers faking an emergency, likely waiting for out-of-state plates to pass, in order to fund the state's EMS, Medicare and mobile toys. Do I even have to tell you we're not paying this?

As an additional irritant, the trooper asked us where we were coming from, why we were traveling, and where we were going. Why is a state trooper asking us those questions? He's not working for federal border control or customs. If we have a valid license and registration, and are using the highway in a lawful manner, what the hell business is it of Pennsylvania's where we are going and why? Yet if we had politely answered, "We are not required to tell you that," things would have gotten much worse. That is an abuse of power.

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