Month: November 2013

What Could Possibly Go Wrong?

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Yes, the folks who gave you complex financial instruments based on mortgage backed securities that nearly destroyed the world, are looking to apply their special genius to the rental market:

You’d think that investors would run away from a new Wall Street innovation as fast as Congress runs away from a good idea.………

Ummmm, no. Wall Street’s primary model is to convince a potential investor is that there is another idiot further down the chain that they sell this crap to.

So, no, I do not think that investors would run away.

………But instead, they’re flocking to the latest product peddled by large banking interests, even though they look almost exactly like the mortgage-backed securities that were a primary driver of the financial crisis. These new securities, backed by rental payments, also have real-world implications for millions of renters, who could end up turning in their monthly checks to Wall Street-based absentee slumlords.

 Over the past couple years, private equity firms and hedge funds have bought up over 200,000 single-family homes, mostly discounted foreclosed properties in communities wrecked by the housing crash, such as Phoenix, Atlanta, Tampa, Sacramento, Los Angeles and Riverside, California. They have spent billions to scoop up these vacant homes at fire-sale prices, renovate them, and rent them out, promising investors double-digit annual returns on the rental revenue. Private equity firms like Blackstone, which owns more than 40,000 single-family homes, think they can build an entirely new asset class out of this scheme, controlling the rental market for single-family homes. The irony is rich: Wall Street created the conditions for millions of foreclosures, then they sweep in to buy up the homes and rent them out, often to the same people they kicked onto the street.

 ………

 Like mortgage-backed securities, the bonds would get sold in tranches, with the senior levels getting rental revenue first, and the junior tranches taking the rest. Rating agencies like Kroll, Morningstar and Moody’s have blessed the deal, presenting the senior tranches with a triple-A rating, essentially labeling it as perfectly safe for investors. You’ll remember that mortgage-backed securities were bestowed triple-A ratings during the housing bubble, and that this spurred massive purchases, fueling demand for more and more home loans to create more securities. You can see the same thing happening in the rental market if these securities catch on. In fact, while the most attractive foreclosed properties have already been snapped up, homebuilders are constructing new properties specifically for single-family rentals. Some analysts are concerned that this gold rush will create a new housing bubble in the communities where Wall Street firms are purchasing homes.

 ………

 But securitizing rental revenue is beset with unknowns. The rating agency Fitch underscored many of these concerns when they justified their opposition to rating the Blackstone bond.

So, this sh%$ is so toxic that even the massively corrupt ratings agencies won’t touch it.

The consequences for 14 million single-family renters in America could be worse. Fears that Wall Street firms would try to trim costs by ignoring maintenance and upkeep have so far been realized. As Ben Hallman at The Huffington Post recently detailed, Wall Street-owned rental homes are riddled with mechanical and plumbing problems. The firms basically freshened up foreclosed properties with a coat of paint and rented them out, ignoring serious deficiencies like broken toilets and even vermin infestations. And predictably, the landlords are impossible to reach to get repairs done. “I’ve been renting homes for 15 years and I’ve never had a landlord be this ridiculous about getting stuff repaired,” said one renter of Invitation Homes, Blackstone’s single-family rental subsidiary.

 ………

 Plus there’s the concern that securitization of rental payments will lead to the same kind of risky, illegal practices we saw with securitization of mortgages. Nobody should welcome a return of innovations like CDOs (where the riskiest tranches get sliced up and repackaged as “safe” securities) or adjustable payments (what if renters were sold “teaser” rates on their monthly payments that reset to prices they couldn’t afford?). And nobody wants to think about the strong-arm tactics that would be applied to force payments out of tenants, regardless of the circumstances. This is a rerun, and the first movie ended rather badly.

We know how the banks handled managing mortgages.  They sucked.  They screwed it up even when all they needed to do was sit back and collect the money.

Their response to tenants demanding that their homes be maintained will be a hearty f%$# you, followed by an aggressive use of bribes political donations so that they can continue to extract rents completely without consequence.

If this sort of bribery worked in DC to emasculate financial regulations, it will work on Teaneck New Jersey zoning board.

Rinse, lather, repeat.

Seriously, Charlie, How Do You Really Feel?

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Let us be plain. Ralph Reed is a con-man who would sell his gray-haired granny to the Somali pirates for fifty cents worth of consulting fees. He has nothing worth contributing to the national dialogue. This should be plain by now to all but the deliberately dim. The people who put this mess together every morning are not as embarrassing as the allegedly important people who appear on it, and nowhere near as embarrassing as the people who take it seriously, some of whom rule us.

—Charles P. Pierce

Always a pleasure to read.

Well, This Explains a Lot

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Talking Points Memo has discovered that insurance companies are deceiving their customers in an attempt to extract higher premiums out of them:

Donna received the letter canceling her insurance plan on Sept. 16. Her insurance company, LifeWise of Washington, told her that they’d identified a new plan for her. If she did nothing, she’d be covered.

 A 56-year-old Seattle resident with a 57-year-old husband and 15-year-old daughter, Donna had been looking forward to the savings that the Affordable Care Act had to offer.

 But that’s not what she found. Instead, she’d be paying an additional $300 a month for coverage. The letter made no mention of the health insurance marketplace that would soon open in Washington, where she could shop for competitive plans, and only an oblique reference to financial help that she might qualify for, if she made the effort to call and find out.

 Otherwise, she’d be automatically rolled over to a new plan — and, as the letter said, “If you’re happy with this plan, do nothing.”

 If Donna had done nothing, she would have ended up spending about $1,000 more a month for insurance than she will now that she went to the marketplace, picked the best plan for her family and accessed tax credits at the heart of the health care reform law.

 “The info that we were sent by LifeWise was totally bogus. Why the heck did they try to screw us?” Donna said. “People who are afraid of the ACA should be much more afraid of the insurance companies who will exploit their fear and end up overcharging them.”

 Donna is not alone.

Why the heck are they trying to screw you?

Because they are Insurance Companies, theat’s why they are trying to screw you.

Like the scorpion said to the turtle,  “It’s my Nature.”

A Couple of Important Education Stories from New York State

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I would note that the New York Daily News has looked at administrator salaries, and discovered that executives at 16 charter schools in the city are payed more than the New York City school chancellor.

Like I said, looterz want to loot.

More significant is that the Southold School District Superintendent on Long Island has demanded that all student data be removed from Bill Gates’ latest attempt to monetize our children:

After finding out that student data is being shared through the New York State Department of Education Department with a private third-party vendor, Southold School District Superintendent David Gamberg has formally requested to have its students’ data removed from the controversial software system, citing privacy concerns.

 Newsday has reported that although student data is currently kept on state computer systems, New York is moving toward contracting with nonprofit Atlanta data company inBloom, Inc. to “store student test scores, disciplinary records, disabilities and other vital subjects.”

 Mr. Gamberg fired off a letter to inBloom CEO Iwan Streichenberger on Monday, requesting to “opt-out” from its data storing system, known as the Shared Learning Infrastructure. He has found a clause in the contract that allows districts to request their records be removed from the system, according to Mr. Gamberg’s letter.

 “It is our position that this data contains sensitive and highly personal student information that we prefer not be subjected to the potential for breach, unintentional distribution, access, or abuse without parental consent.,” Mr. Gamberg wrote.

Gee, you think?

I figured out that it was evil when I heard Bill Gates.

We Have Some Election Results

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First, as promised, Bridgeport F%$#ing Connecticut, where the people trying to prevent a corporate takeover of public schools won:

The city Board of Education slipped out of the hands of Mayor Bill Finch and Schools Superintendent Paul Vallas on Tuesday despite the surprise win of a Republican school board candidate.

The majority of the nine-member school board tipped in favor of the Connecticut Working Families Party.

The winners include Democrats Howard Gardner, Dave Hennessey and Andre Baker, joined by incumbent Working Families member Sauda Baraka and Republican Joe Larcheveque.

………

The race pitted the Democratic party machine against the combined efforts of the Working Families Party, sympathetic Democrats and strong support from the city teacher’s union. To many, more was at stake than control of one the most troubled school districts in the state. Some had pegged it as the epicenter of a nationwide struggle over the control of public schools, a fight against efforts to cede control to corporate interest groups that seek to privatize educations.

Vallas was brought into the district in late 2011 after the local elected board was replaced by the state, a move later overturned by the state Supreme Court.

During the primary, the Democrats who won made it clear they are not fond of Vallas, and the Working Families Party has actively worked to remove him. In a statement issued early in the day Tuesday, Working Families Party Chair Lindsay Farrell made it clear replacing Vallas would be tops on their agenda.

Menwhile, in Virginia, it looks like the marginally less repugnant candidate, Terry McAuliffe, beat Ken Cooccinelli, who ran his campaign against oral sex (only exaggerating slightly):

Terry McAuliffe, a businessman and former head of the Democratic National Committee, captured the Virginia governor’s seat Tuesday, defeating Republican Ken Cuccinelli II, the state attorney general whose conservative crusades made him an icon of the tea party movement.

With 98 percent of the precincts reporting, McAuliffe led Cuccinelli by more than 30,000 votes, or less than 2 percent.

“I’m very disappointed,” Cuccinelli told supporters assembled in a hotel ballroom in Richmond, adding that he was also “immensely proud of the campaign we ran.”

Despite his defeat, Cuccinelli called the election a referendum on President Obama’s Affordable Health Act, saying that the campaign was close even though McAuliffe had a massive fundraising advantage.

“Despite being outspent by an unprecedented $15 million,” he said,”this race came down to the wire because of Obamacare. That message will go out across America tonight.”

McAuliffe was expected to speak at 11 p.m.

Ralph Northam, the Democratic candidate for lieutenant governor, defeated Republican E.W. Jackson, the Chesapeake minister whose history of inflammatory remarks about gays and abortion became a flash-point of the campaign.

Mark Obenshain, the Republican candidate for attorney general, led Mark Herring by less than 1 percent, with 98 percent of the precincts counted.

Don’t fret, Republicans, the new Attorney General, Mark Obenshain is likely just has insane as Cuccinelli.

In New York and New Jersey, the Amazingly Tall Mayor, and Jabba the Governor both won as expected.

The Rest of Europe Begins to Realize that Germany, and Not Greece, is the Problem in the Euro Zone

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When Romano Prodi, generally known as “Mr. Euro,” says that, “Germany won’t sell another Mercedes in Europe,” it is clear that Europe’s “Very Serious People” are beginning to understand than Germany’s policy demands are fundamentally inimical to the continuing existence of the Euro Zone, and perhaps the whole EU:

The plot is thickening fast in Italy. Romano Prodi – Mr Euro himself – is calling for a Latin Front to rise up against Germany and force through a reflation policy before the whole experiment of monetary union spins out of control.

 “France, Italy, and Spain should together pound their fists on the table, but they are not doing so because they delude themselves that they can go it alone,” he told Quotidiano Nazionale

 Should Germany persist in imposing its contractionary ruin on Europe – “should the euro break apart, with one exchange rate in the North and one in the South”, as he puts it – Germany itself will reap as it has sown. “Their exchange rate will double and they will not sell a single Mercedes in Europe. German industrialists know this but all they manage to secure are slight changes, not enough to end the crisis.”

 Professor Prodi is the prime minister who prepared Italy for EMU in the 1990s, and then presided over the launch of the euro as European Commission chief.………

I would note that the German belief in their own inherent virtue and it’s destiny to dominate its neighbors has a very bad history.

Heck of a Job, Barry………

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What a surprise we do another drone strike, a “success”, and transformed the person that we assassinated from public enemy number one to a martyr and hero:

In life, Hakimullah Mehsud, the leader of the Pakistani Taliban, was Public Enemy No. 1: a ruthless figure who devoted his career to bloodshed and mayhem, whom Pakistani pundits occasionally accused of being a pawn of Indian, or even American, intelligence.

 But after his death, it seems, Pakistani hearts have grown fonder.

 Since missiles fired by American drones killed Mr. Mehsud in his vehicle on Friday, Pakistan’s political leaders have reacted with unusual vehemence. The interior minister, Chaudhry Nisar Ali Khan, denounced the strike as sabotage of incipient government peace talks with the Taliban. Media commentators fulminated about American treachery. And the former cricket star Imran Khan, now a politician, renewed his threats to block NATO military supply lines through Khyber-Pakhtunkhwa — a province his Tehreek-e-Insaf party controls — with a parliamentary vote scheduled for Monday.

 Virtually nobody openly welcomed the demise of Mr. Mehsud, who was responsible for the deaths of thousands of Pakistani civilians. To some American security analysts, the furious reaction was another sign of the perversity and ingratitude that they say have scarred Pakistan’s relationship with the United States.

 “It’s another stab in the back,” said Bill Roggio, whose website, the Long War Journal, monitors drone strikes. “Even those of us who watch Pakistan closely don’t know where they stand anymore. It’s such a double game.”

 To many Pakistanis, though, it is the United States that is double-dealing, and sentiments like Mr. Roggio’s exemplify typical American arrogance. Shireen Mazari, a senior official in Mr. Khan’s party, has urged the Pakistani military to shoot down drones.

Does anyone really really think that this makes us any safer?

It might temporarily increase the safety of our imperial contingent in Afghanistan, but our incessant drone strikes, and the resultant terror that this engenders in the population creates people who want to kill us.

It is worse than a crime, it is a mistake.

Yes, the Texas Voter Suppression Law is Working

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It just prevented former Speaker of the House James Wright from voting:

Former House Speaker Jim Wright was denied a voter ID card Saturday at a Texas Department of Public Safety office.

 “Nobody was ugly to us, but they insisted that they wouldn’t give me an ID,” Wright said.

 The legendary Texas political figure says that he has worked things out with DPS and that he will get a state-issued personal identification card in time for him to vote Tuesday in the state and local elections.

 But after the difficulty he had this weekend getting a proper ID card, Wright, 90, expressed concern that such problems could deter others from voting and stifle turnout. After spending much of his life fighting to make it easier to vote, the Democratic Party icon said he is troubled by what he’s seeing happen under the state’s new voter ID law.

 “I earnestly hope these unduly stringent requirements on voters won’t dramatically reduce the number of people who vote,” Wright told the Star-Telegram. “I think they will reduce the number to some extent.”

 Wright and his assistant, Norma Ritchson, went to the DPS office on Woodway Drive to get a State of Texas Election Identification Certificate. Wright said he realized earlier in the week that the photo identifications he had — a Texas driver’s license that expired in 2010 and a TCU faculty ID — do not satisfy requirements of the voter ID law, enacted in 2011 by the Legislature. DPS officials concurred.

But Wright and Ritchson will return to the office Monday with a certified copy of Wright’s birth certificate, which the DPS employees assured them would be good enough for the Texas personal identification card, designed specifically for people who do not drive.

 “It can be used for anything, not just voting,” Ritchson said.

 While Wright will be able to vote, Ritchson worried that others of his age may find the obstacles and inconvenience she and Wright encountered so off-putting that they just don’t vote.

Preventing old people, young people, black people, and brown people from voting is the goal of the Texas ‘Phants.

Mission f%$#ing Accomplished.

Can we please give them back to Mexico?

Tomorrow, I’m Going to Write About ……… School Board Elections?!?!!? In Bridgeport F%$#ing Connecticut?!?!?

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Why yes, I will be writing about the returns in Bridgeport, because it is ground zero of attempts by the Education-Industrial complex to turn our school children into profit centers for Wall Street:

Education reform lightning rod Paul Vallas – who courted controversy helming school districts in Philadelphia, New Orleans and Chicago — isn’t on the ballot tomorrow. But a school board election in Bridgeport, Conn. – the latest district to tap Vallas to oversee reforms — could effectively spell his fate. Tomorrow’s vote will offer the latest referendum on the bipartisan, billionaire-backed mainstream education reform movement, and on a multi-year effort by local Democrats – aided by the likes of Michael Bloomberg and Michelle Rhee — to defeat or disempower labor-backed dissenters.

 “As I’ve gone around the country, I always point to Bridgeport as one of the signs that the people can beat the power,” former U.S. Assistant Secretary of Education and high-profile reform critic Diane Ravitch told activists on a conference call last month. Tuesday’s election is the latest round in a long-running war over ed reform, and who should shape it, in the largest city in one of the country’s most unequal states.

 For the sake of shielding Vallas and his agenda, activists allege that the city’s Democratic machine has acted indifferent or even hostile to defeating Republicans tomorrow.

 “What’s at stake is the future direction of Bridgeport schools,” said Connecticut Working Families Party executive director Lindsay Farrell, citing issues including testing and class size. “And I think, in a broader sense, the direction of public education in this country.”

As I’ve reported, Bridgeport’s school board became a battleground in 2009, when two of its Republican members were ousted in an election by candidates from the labor-backed Working Families Party. While Bridgeport is overwhelmingly Democratic, by law no more than two-thirds of its nine school board seats can be held by the same party. While the board’s Democrats and Republicans had often seen eye to eye on education, the WFP didn’t. “They were very effective at questioning the status quo,” Bridgeport Education Association vice president Rob Traber told Salon last year, and when Mayor Bill Finch’s superintendent pushed unpopular cuts in 2011, the Democratic machine and its business allies got “afraid that they might lose control of the board.”

Vallas has been failing down for years, practicing pump and dump, where focuses on standardized tests to the exclusion of real educations, eats his seed corn, and is forced out when it all implodes, when he blames the teachers.

All the while, he sells gives the schools to the hedge fund managers to that they can loot the public school systems.

His tenure in Connecticut it gets even worse, because he did not meet the legal requirements to be CEO, so they set up a no-show phony class for him to check off the necessary boxes.

Interestingly enough, following the WFP victory in the Democratic primaries, the Democratic Party establishment appears to be pulling strings for the Republicans:

The WFP notes a sharp contrast between the Democratic Party’s efforts on behalf of its pro-Vallas candidates in the primary, and its approach to tomorrow’s showdown with the GOP. “The Democratic Party put a lot of resources into the mayor’s slate in the primary, and a lot of money,” said Farrell. “We haven’t really seen them doing anything to help the challengers who won in the primary in the general election.” She told Salon that “education budgets are large chunks of money, and you know, we’ve been really stunned by the lengths to which Mayor Bill Finch, and the Democratic Chair Mario Testa, and Paul Vallas will go to maintain power over those budgets.”

 Some Bridgeport progressives take their allegations another step. Retired Judge Carmen Lopez, the local activist who filed the lawsuit against Vallas, told Salon she believes the mayor and his allies were “working to make sure that the Republicans win” because “that’s the only way that Finch could get what he wants, which is for Vallas to stay in power.” Voter Jessica Allen told Salon that City Council president Thomas McCarthy visited her house and, when she asked about education, told her that while “under normal circumstances I would never tell anybody to vote Republican,” in this case “you should be voting for [GOP contender] Larcheveque.” Allen said McCarthy told her the mayor “tried to make these fantastic changes, but everything that we try to do keeps getting blocked …” (Allen, a registered independent, told Salon she thinks “the schools are really screwed up” and “I don’t know what the right answer is.”) But Council member McCarthy told Salon in an email that he was “encouraging my constituents to vote all of Row B, the Democratic line.”

When you consider the proportion of a typical municipal budget that goes to education, it’s clear that there are a whole bunch of politicians in Bridgeport who are siding with the folks dedicated to ripping off the taxpayers.

Yes, I’m also wondering if the Republicans’ attempt to vote Ken Cuccinelli into the Governor’s office, but I really think that Bridgeport is a bigger deal.