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Greenspan had a big hand in the Social Security brouhaha. Back in 1981 Reagan appointed Greenspan head of a Social Security Commission that was supposed to fix the system. How did he fix it? By recommending the most regressive tax we have ever had in U.S.: the payroll tax, which applies only to workers at the bottom and the middle class. His recommendations became law in 1983. He tried later to reduce worker benefit increases without success. In 2001 he was in favor of Bush's tax cuts and recently for Social Security privatization, even though they both would increase the deficit. He says he is for low taxes. But he recommends tax cuts to take care of the rich and a payroll tax to take care of the poor. After being for tax cuts for the rich he asked Congress to follow their pay-go approach when legislating for the poor. Then he had the gall to complain about the huge deficit when he had previously recommended the huge tax cuts.
However, there was an outfit called Long Term Capital Management (LTCM), a highly risky hedge fund for super-wealthy investors. It had "only" $3.5 billion, but borrowed $100 billion to invest. The borrowed money and the $3.5 billion equity disappeared. What do you think Greenspan did? He bailed out LTCM. Yes, we must have de-regulation. However, we cannot allow such a big, rich, influential company to die.
Edmund L. Andrews reports in today's NYTimes (12-18-07) that Greenspan ignored repeated warnings on the dangers of subprime mortgages from Federal Reserve governor Edward M. Gramlich nearly seven years ago, in 2001 from senior Treasury Department official, Sheila C. Bair, and from leaders of a housing advocacy group in California, John C. Gamboa and Robert L. Gnaizda who warned that deception was increasing and unscrupulous practices were spreading. "He never gave us a good reason, but he didn't want to do it (press lenders to adopt a voluntary code of conduct). He just wasn't interested."
In the article, Burry said he began seeing problems in the housing market as far back as 2004 with the reappearance of interest-only mortgages. “Increasingly, lenders concerned themselves more with the quantity of mortgages they sold than with their quality,” Burry wrote. At the same time, the Federal Bureau of Investigation reported cases in mortgage fraud increased fivefold between 2001 and 2004, Burry said.
The New York Democrat is a member of both the Senate Committee on Finance and the Senate Committee on Banking, Housing, and Urban Affairs, and he's received so much money from Wall Street over the years—more than $14 million—that he actually shut down his personal fundraising efforts between 2005 and 2008. Since then he's raised a staggering $284 million for the Democratic Senatorial Campaign Committee, which he headed until recently, and much of it has come from Wall Street. In June 2007 alone, when lobbying for the carried interest rule reached a fever pitch, employees of private equity firms contributed nearly $800,000 to the DSCC.
The defense lobby? Pikers. They contributed $24 million to individuals and PACs during the last election cycle. The farm lobby? $65 million. Health care? We're getting warmer. Health care was the No. 2 industry, at $167 million. And the finance lobby? They're No. 1, with a very, very big bullet. They contributed an astonishing $475 million during the 2008 election cycle. That's up from $60 million almost two decades ago.
April 27 (Bloomberg) -- Harrisburg, Pennsylvania, which has missed $6 million in debt payments since Jan. 1, should consider seeking Chapter 9 bankruptcy protection, City Controller Dan Miller told a three-hour special committee hearing.
Miller, the first of four people to testify last night in an “informational session” on insolvency convened by Gloria Martin-Roberts, council president, said bankruptcy may offer Harrisburg relief from $68 million in debt-service payments this year tied to a waste-to-energy incinerator project. Martin- Roberts opposes a bankruptcy filing.
Harrisburg, the capital of Pennsylvania, the sixth-most populous U.S. state, has guaranteed payments on $282 million in bonds on the incinerator, run by the Harrisburg Authority. The payments on the bonds and on a working-capital loan this year add up to four times the amount the city collects in property taxes each year, budget documents show.
S&P downgrades Spain to ‘AA’ with a negative outlook, saying the country is likely to have an extended period of subdued economic growth.
Markets react: DJIA plummets from +23 to –22 in seconds after S&P drops Spain’s debt rating. And the sovereign debt nightmare is only beginning. The UK is next. But the USA borrows more money faster than anyone
The head of the International Monetary Fund has warned that the crisis in Greece could spread throughout Europe.
World financial markets, recovering slightly on Wednesday, have been badly hit by fears of contagion from Greece.
"We also need to restore confidence... I'm confident that the problem will be fixed. But if we don't fix it in Greece, it may have a lot of consequences on the European Union," Mr Strauss-Kahn said.
The aid package being offered by the EU and IMF is currently 45bn euros ($59bn; £39bn).
But support for the bail-out in Germany will not be helped by claims that the total cost of the proposed package could be up to 120bn euros over three years.
An unprecedented financial crisis afflicting the nation's largest court system is in the hands of the policy making California Judicial Council, with Los Angeles court officials awaiting its decision on their plea for an infusion of cash.
The Los Angeles court system has already closed 17 courtrooms and another 50 will be shut down come September unless something is done to find more money. The closures have disrupted everything from divorce and custody proceedings to traffic ticket disputes.
The judicial council scheduled a meeting Friday to deal with the request from presiding Superior Court Judge Charles W. McCoy Jr. to divert $47 million in funds from the courthouse construction budget to help stave off more courtroom closings and staff layoffs.
McCoy predicts chaos and a logjam of civil and family law cases if additional funds are not found.
He said the Los Angeles court's budgetary shortfall is $133 million which will be permanent each year unless there is an influx of funds from somewhere.