The Big Picture

---

• Occupy Movement . . . Gaining Strength?
• 10 Tuesday PM Reads
• Media Appearance: Dylan Ratigan Show (12/6/11)
• After Banks’ Mistakes, Homeowners Pick Up Pieces
• Wall Street’s Recidivists
• Astronomers Find Biggest Black Holes Yet
• European Banks Reluctant To Lend To One Another
• Howard Davies on Europe’s Debt Crisis, Solutions
• QOTD: Ratings Agencies Jobs
• 10 Tuesday AM Reads

Occupy Movement . . . Gaining Strength? Posted: 06 Dec 2011 07:33 PM PST OWS: Down, But Not Out … While some might assume that the Occupy movement is dead – given that scenes of large protests have been absent from the news recently – but the truth is quite different. The city of Cleveland has passed a resolution endorsing the Occupy movement, calling on congress to reform financial regulations, and to prosecute the big banks. The vote passed 18-1. Other cities have passed similar resolutions. As Zero Hedge notes today: While the general media may be ignoring the latest peculiar twist on the "Occupy" theme, or in this case the "occupyourhomes.org", Bank of America is taking it quote seriously. As a reminder, "Tuesday, December 6th is the National Day of Action to stop and reverse foreclosures. The Occupy Homes movement is holding actions around the country in support of homeowners and people fighting to have a home. Find an event near you and join in our day of action tomorrow!. There are actions happening in over 20 cities nationwide. Events are taking place in Brooklyn, Buffalo and Rochester New York; Los Angeles, Oakland, San Francisco, San Diego, San Jose, Petaluma, Sacramento, Paradise and Contra Costa California; Lake Worth, Florida; Atlanta, Fayetteville, and DeKalb Georgia; Chicago, Illinois; Bloomington, Indiana; Minneapolis, Minnesota; Cleveland, Ohio; Denver, Colorado; Detroit and Southgate Michigan; St. Louis, Missouri; Portland, Oregon; and Seattle, Washington." And if you have not heard about today's protest on the conventional media that is understandable: as BAC says internally, this event "could impact our industry." Here are the specific warnings to BAC "field services" agents: i) Your safety is our primary concern, so do not engage with the protesters; ii) While in neighborhoods, please take notice of vacant BAC Field Services managed homes and ensure they are secured; iii) Remind all parties of the bank's media policy and report any media incidents. Aside from the superficial implications, what is more important is that the big banks are showing precisely what the weakest links in the system are, and what makes them the most nervous: it is not protesters living in tents in a major metropolitan city: it is protesters disrupting the lifeblood of the broken banking system – the home selling/repossession pathway. Expect many more such protests now that Bank of America has tipped its hand. Richard Eskow writes: Widespread criminality … created the Wall Street mortgage boom and led to our ongoing financial crisis. [There is] overwhelming evidence of illegal activity on the part of big banks, [yet] none of those banks' executives have been prosecuted. As ugly as the situation is, there is some logic behind the government's actions — and its inactions. They're acting on a tragically incorrect (but internally coherent) set of assumptions that can be summed up in one sentence. It goes something like this: "To preserve the health of the American economy, banks must be allowed to keep preying on their consumers." That's it. That's the logic. But there are two exciting 'Occupy' developments this week that could change the equation — 'Take Back the Capitol' in the District of Columbia, and Tuesday's 'Occupy Our Homes' events around the country. Think of them as complementary actions: One is taking place at the site of our greatest government power. The other is bringing the action to homes where people have been victimized by bankers. *** The thinking goes something like this: Our largest banks are too big to fail, and since we lack the will or the motivation to break them up or regulate them we must protect them at all costs. We've propped them up with TARP, quantitative easing, and $7.7 trillion in secret Federal Reserve loans, but they're still shaky as hell. If we prosecute any of their executives, their stock prices will fall and they'll collapse again. And they'll take the entire economic system with them. That leads to some grotesque miscarriages of justice. Nobody at Wells Fargo has been indicted for money laundering, for example, despite the fact that the bank has paid millions to settle charges of laundering cash for the Mexican drug cartels that have murdered more than 35,000 people. As an experienced bank investigator working for the Senate observed, "There's no capacity to regulate or punish them because they're too big to be threatened with failure." *** Some powerful folks are afraid the banks will fail if they're forced to write off the bad loans on their books, or to stop profiting from loans sold deceptively or irresponsibly. TARP may be over, but there's another massive bank rescue going on. Who's funding it? We are. Every time we pay a usurious interest fee on a credit card, we're propping up the banks. Every time we make another month's payment on an underwater mortgage, we're propping them up too. Every time we pay an overpriced consumer loan of any kind, we're making another payment into the consumer-funded bailout that's keeping the big banks afloat. It would be great if politicians in Washington stopped using American consumers to subsidize banks that shouldn't even exist. But they haven't. That's where "Occupy Our Homes" comes in. *** Tuesday, December 6, has been declared a National Day of Action to Occupy Our Homes. Its goal is to focus attention on the corrupt banking practices that led to the mortgage boom and today's ongoing economic misery for most of the 99 percent. It's also a day for helping people in our communities who have been victimized by predatory lending, criminal bank forgery, unfair or illegal foreclosure practices, and other bank abuses that victimize the public. Occupy Minnesota has already occupied an illegally-foreclosed home, and plans to do the same thing with another home tomorrow. Here in Los Angeles, where an inspiring victory has already taken place, OccupyLA will help two brave families re-occupy their illegally foreclosed homes. *** Resisting illegal foreclosures is a good first step. It brings attention to Wall Street's criminality, venality, and plain old inhumanity toward the people they call their"customers" – but treat like serfs. It does something else important: It counteracts the brainwashing, driven by Wall Street and dutifully echoed by the media, which has demonized the victims of bank misbehavior…. What about the millions of people who have suffered because of the banks' predatory mortgage lending but aren't behind in payments or in the foreclosure process? We need to re-open the debate about the fairness of forcing any underwater homeowners to pay underwater principal on homes that their banks knew, or should have known, were going to decrease in value. After all, the same conglomeration of banks and corporate media that demonize homeowners as "greedy" and "irresponsible" spent most of the last twenty years convincing people that real estate was a sure-fire investment. *** What will happen if consumers stopped blaming themselves? What if they demanded that the banks take responsibility for their irresponsible and/or predatory lending? What if they refused to stop this country's perverse economic role reversal, where customers have become the ATMs while banks keep making the withdrawals? If 10% of America's homeowners declared a mortgage strike it would rock the banking world. If everybody paying exorbitant credit card interest declared a moratorium on payments all at once, Wall Street would change forever. Think about it: "Occupy ALL Our Homes." "Occupy Our Credit Cards … Our Payday Loans … Our Buy-and-Drive Loans …" I'm not saying these are necessarily the right tactics, although they very well may be. But what's most important is that we understand that consumers have far more power than we usually realize – provided we act together. Many of Washington's leaders will cringe at the thought, of course. "That could hurt our biggest banks," they say. It would be tempting to reply, You say that like it's a bad thing. Here's a better response: Then start planning to break them up in an orderly fashion. We're done living a life of indentured servitude just so we can subsidize their greed. Those are the discussions that we should be having. If powerful people on Wall Street and in Washington aren't worried about Occupy Our Homes , they're not paying attention. But with any luck, they soon will. (If you are understandably squeamish about deadbeats not honoring their debts, please read this.) Occupy is also attempting to shut down all West Coast ports on December 12th. Occupy protesters have started to arrive in Washington, D.C. to protest political corruption, and are aiming for one million tents set up by January 17th. A top Republican strategist – and the world's top expert on framing mainstream Republican ideas in language which persuades people, Frank Luntz – said (via Think Progress): Luntz told attendees that he's "scared of this anti-Wall Street effort. I'm frightened to death." The pollster warned that the movement is "having an impact on what the American people think of capitalism." So the pollster offered some advice for them about how to fight back. Here's a few snippets of what he said [:] *** Luntz instructed attendees to tell protesters that they "get it": "First off, here are three words for you all: 'I get it.' … 'I get that you're. I get that you've seen inequality. I get that you want to fix the system." (The other top framing expert – George Lakoff, a liberal – supports OWS.) Ron Paul also respects the Occupy movement: And Democrats are feeling the anger of the Occupy protesters as well, given their complicity in selling out the people to benefit the big banks and support for police state tactics against the American people. While police have resorted to brutal military tactics to try to shut down the protests, such tactics have drawn world-wide condemnation, including condemnation from the United Nations, former police chiefs (and see this), and the inventor of pepper spray. And do you know how the police have denied protesters the use of megaphones as a way to try to silence them (hence the famous "Human Mic")? There's a new iPhone App the 'Inhuman Microphone' which circumvents the megaphone ban by unifying all the smart phone speakers into one voice. So Occupy is down, but not out … and arguably growing stronger than ever. This posting includes an audio/video/photo media file: Download Now

10 Tuesday PM Reads Posted: 06 Dec 2011 01:30 PM PST Afternoon LIRR reading: • Nobel economist: Euro zone needs own bonds and tax  (Reuters) see also Downgrade Threat Irks Governments (WSJ) • Tiny Tax on Financial Trades Gains Advocates (NYT) • Don't get mad at Wall Street, get even (Market Watch) • Municipal Finance in the Face of Falling Property Values (Cleveland Fed) • Swaps & Derivatives Traders in a Tizzy (Court House News) • Raising Taxes on the Rich: Not Whether, but How (Economix) see also Tax Rates, Inequality and the 1% (WSJ) • We Still Shop at the Mall for a Bunch of Reasons (Atlantic Wire) • Derek Boogaard: A Brain 'Going Bad' (NYT) • Newt's second act (NY Post) see also Obama Could Win if GOP Blocks Payroll Tax Cut (The Fiscal Times) • The 45 Most Powerful Images Of 2011 (Buzz Feed) What are you reading? > via WSJ

Media Appearance: Dylan Ratigan Show (12/6/11) Posted: 06 Dec 2011 01:00 PM PST > This afternoon ~4:15pm we will be discussing the EuroZone, Derivatives and Swaps. Bullet points: • Swaps and Derivatives serve a purpose, but thanks to CFMA legislation, they were radically deregulated. • These look like Insurance products, only they lack the infrastructure. No oversight, little in way of guarantees or reserves. • There is an ongoing counter-party risk. Its a zero sum game with specific winners and losers, and if you win too big, there may be no money from the loser to pay you. More to come later. >

After Banks’ Mistakes, Homeowners Pick Up Pieces Posted: 06 Dec 2011 12:30 PM PST Source: After Banks’ Mistakes, Homeowners Pick Up Pieces by Chris Arnold

Wall Street’s Recidivists Posted: 06 Dec 2011 11:30 AM PST Wall Street firms continue to look at SEC settlements as the cost of doing business. Despite promises to not repeat the same law, they seem to run afoul again and again. Here is the NYT analysis of Securities and Exchange Commission documents showing 51 repeat violations  since 1996 by a handful of firms. Bank of America and Citigroup are tied for the lead (six repeat violations), while Merrill Lynch and UBS share 3rd and 4th place (five apiece). > Source: Wall Street's Repeat Violations, Despite Repeated Promises NYT, November 2011

Astronomers Find Biggest Black Holes Yet Posted: 06 Dec 2011 11:00 AM PST An illustration of a black hole the size of nearly 10 billion Suns. Inside it, where gravity is so in- tense that not even light can escape, our solar system is shown to scale. An artist’s conception of stars moving in the central regions of a giant elliptical galaxy that harbors a black hole. Source: Astronomers Find Biggest Black Holes Yet NYT, December 5, 2011

European Banks Reluctant To Lend To One Another Posted: 06 Dec 2011 09:30 AM PST Source: Arbor Research > Banks in the EU seem to be going to their central banks a lot more frequently then they used to: “Euro-zone banks' overnight deposits with the European Central Bank hit yet another fresh 2011 high Friday ahead of a week that many observers regard as key to solving the euro zone's sovereign-debt crisis. Banks deposited €332.705 billion ($445.49 billion) with the ECB, the ECB said Monday, hitting a 2011 record for the third day in a row. The deposits were up from €313.763 billion Thursday, hitting a level last seen in June 2010 while edging closer to the all-time high. When markets are functioning properly, banks deposit a few hundred million euros at the ECB overnight. With the deepening of the euro-zone debt crisis, banks have become reluctant to lend to one another and place their funds with the ECB instead, in the fear that their counterparty may be exposed to week euro-zone sovereign debt. It is amazing how fragile trust can be . . . > Source: ECB Deposits Hit New High MARGIT FEHER Wall Street Journal, DECEMBER 5, 2011 http://online.wsj.com/article/SB10001424052970204903804577079760645447248.html

Howard Davies on Europe’s Debt Crisis, Solutions Posted: 06 Dec 2011 09:23 AM PST Howard Davies, former deputy governor of the Bank of England and former director of the London School of Economics, talks about the outlook for a resolution to Europe’s sovereign-debt crisis. Davies speaks with Erik Schatzker and Sara Eisen on Bloomberg Television’s “InsideTrack.” Source: Bloomberg, Dec. 6 On Merkel and Sarkozy’s latest proposals to resolve the EU debt crisis: “They’ve still not got there. There has been a lot more lunches than concrete agreements…It’s a huge gastronomic investment going on in France.” “I think yesterday’s package is about trying to persuade German politicians and German voters that they have done enough on the fiscal tightness in discipline and on the austerity f ront – Germans love austerity as you know – in order to unblock the political resistance to the ECB acting to help countries whose debt is still very difficult to sell in the market.” On Germany’s attitude towards the EU: “The German attitude is that if they bail out people, what’s to stop them doing the same thing again? That is the moral hazard argument.” “The ECB problem is a slightly different one. It would be fine for the European Central Bank to say, ok, we’ll go and buy Italian debt, but at the moment we know that would just stack up losses on the balance sheet of the ECB. Who would pay for those? Ultimately there has to be a European finance minister. Ultimately it comes back to us taxpayers to fill in a hole if they buy stuff for more than it’s worth.” On whether it’s a good idea for banks to get bailed out and not take losses on European debt: “I think it probably is. I know it sticks in the craw somewhat to say, Let’s bail the bankers out of this. The difficulty is regulators and the central banks did actually tell the banks that these were safe assets. The regulators told the banks that they ought to be holding more sovereign debt and that was counted as AAA and solid liquidity.” “I think it’s wrong to try to deal with the sovereign debt problem via the banking system. I think you have to deal with it direct, rather than telling the banks that they have to take all these write-offs and load themselves up with new capital.” On what would happen if S&P downgrades the eurozone: “There is still one AAA credit and I used to represent it officially because the UK is not on this list. I don’t quite know why, to be frank.” “As we saw in the S&P case in the United States, it doesn’t necessarily make that much difference if a AAA goes down. It didn’t disturb the markets a great deal in this country, I don’t think. If they do it to everybody and they simply say there is just greater uncertainty about sovereigns in the rest of the world, I’m not sure that will make a huge amount of difference.”

QOTD: Ratings Agencies Jobs Posted: 06 Dec 2011 07:30 AM PST What is the function of Ratings Agencies? The answer to that question was most pithily expressed thusly: might “The function of a ratings agency is to visit the field at the end of the battle and shoot the wounded.” -John Heimann, Spring 1998 (former U.S. Comptroller of the Currency and later vice chairman of Merrill Lynch and chairman of the Financial Stability Forum) Sourced from Brookings

10 Tuesday AM Reads Posted: 06 Dec 2011 06:30 AM PST My morning reading material: • Behold the incredible shrinking work force (NY Post) • What happens in Europe won't stay in Europe (Market Watch) see also The eurozone's terrible mistake (Reuters) • S&P Jumps Into Politics Again With EU Warning (Bloomberg) • Financial Crimes Bedevil Prosecutors (WSJ) • "Flip This House": Investor Speculation and the Housing Bubble (NY Fed) • When you depend on collateralised collateral (Alphaville) • Analysis: “Cold War” with Iran heats up across Mideast (Reuters) see also Iran’s Revolutionary Guards prepare for war (Telegraph) • Bernie Madoff Had Everything to Do With Reyes's Leaving NYMets (NYT) • New Approach to Climate Modeling (US News) • Lap Dances Find Academic Champion as Cities Rein in Strip Clubs (Bloomberg) What are you reading? >

You are subscribed to email updates from The Big Picture To stop receiving these emails, you may unsubscribe now.	Email delivery powered by Google
Google Inc., 20 West Kinzie, Chicago IL USA 60610

.