Legal Blog of the Law Offices of J. Michael McBride

Greece Faces Strike, Will Riots Follow?

mcbride — Fri, 05 Feb 2010 14:56:36 +0000

“Stock markets sank Thursday in Greece, Portugal and Spain amid worries over the European Union’s debt woes, with Greek customs and tax officials walking off the job in opposition to cutbacks aimed at digging the government out of a budget crisis that has shaken the entire EU.

The 48-hour Greek customs strike is expected to choke imports until next week, with fuel supplies the most likely to suffer. Lines of trucks were already forming at the country’s borders, with customs workers allowing through only those carrying perishable goods or pharmaceuticals.”

Here is a link: http://apnews.myway.com/article/20100204/D9DLDI680.html

Michael

Jingle Mail on the Rise

mcbride — Thu, 04 Feb 2010 14:57:48 +0000

The idea of just sending the keys to your house or condo back to the lender would have been unthinkable just a year or so ago; now underwater owners are doing just that all over the country. This is especially true once they lose any hope for lender assistance in making their payments and realize that all the bail out money went to large institutions, with precious little for individuals who are behind on their mortgage. A New York Times article gives one example: “It was April 2006, a moment when the perpetual rise of real estate was considered practically a law of physics. Mr. Koellmann was 23, a management consultant new to Miami. Financially cautious by nature, he bought a small, plain one-bedroom apartment for $215,000, much less than his agent told him he could afford. He put down 20 percent and received a fixed-rate loan from Countrywide Financial. Not quite four years later, apartments in the building are selling in foreclosure for $90,000. “There is no financial sense in staying,” Mr. Koellmann said. With the $1,500 he is paying each month for his mortgage, taxes and insurance, he could rent a nicer place on the beach, one with a gym, security and valet parking.” What sealed the deal for Mr. Koellmann was when his lender (Bank of America) refused any assistance in reducing his payments when his income had fallen. So, he gave it back.

Here is a link to the entire article: http://www.nytimes.com/2010/02/03/business/03walk.html?pagewanted=1

Michael

Early Draft of the Constitution Discovered

mcbride — Wed, 03 Feb 2010 21:45:02 +0000

(This author will confess that he loves these kind of discoveries!) It was known that on the back of one draft of the Constitution was another text by James Wilson, but that version stopped abruptly. The rest of that early draft has now been “discovered” and may be placed with the other drafts of the Constitution rather than in Wilson’s archives. “[The half finished draft was a] …mystery, Toler thought, until she examined other Wilson papers from the Historical Society’s vault in Philadelphia and found what appeared to be the rest of the draft, titled ‘The Continuation of the Scheme.’ The document - one of 21 million in the Historical Society’s collection - was known to scholars, but probably should have been placed with the other drafts… ‘This was the kind of moment historians dream about,’ said Toler, 30, a lawyer and founding president of the Constitutional Sources Project (www.ConSource.org), a nonprofit organization, based in Washington, that promotes an understanding of and access to U.S. Constitution documents.”

Here is a link to the full article: http://www.philly.com/philly/news/nation_world/20100202_Early_draft_of_the_Constitution_found_in_Phila_.html

Michael

New TARP Money for Small Businesses

mcbride — Tue, 02 Feb 2010 14:57:37 +0000

A new initiative should be announced today which is to help small businesses grow and add employees. No doubt this is an effort to balance criticism that the bail out money has been more directed at saving the big banks and not the small businesses who made no risky investments, nor took fat bonuses for their “management”. It calls for the establishment of “…a new $30 billion “small-business lending fund” created from TARP money. The fund would be available to community banks with assets of $10 billion or less for small-business lending, say senior administration officials, who didn’t want to be identified because the president had not yet formally announced the program.” Here is a link to that article: http://www.usatoday.com/money/smallbusiness/2010-02-01-obama-small-business_N.htm

Michael

Saab Lives On

mcbride — Wed, 27 Jan 2010 16:56:07 +0000

“Spyker [the tiny exotic automaker who has long been negotiating for Saab ownership] has agreed to pay $74 million in cash and $326 million in preferred stock in a new Saab that will emerge from this deal. The Swedish government has agreed to guarantee a $563 million (400 million Euro) European Investment Bank loan for Saab….Saab had been on the verge of launching two new models, a redesigned 9-5 mid-size car and the new 9-4X crossover SUV. Those launches will now continue, Smith said, with GM providing parts and support. The 9-5 is already being produced Sweden, Spyker said. GM is producing the 9-4X, which is closely related to the new Cadillac SRX, in its Mexican factory. Saab Spyker is expected to take over relationships with Saab’s U.S. dealer network, Smith said. Warranty support will continue without interruption, he said. ‘A bright spot for Saab, and potentially why Spyker worked so hard to acquire it, is some of the solid new product in its GM-based pipeline,’ said James Bell, an analyst with the Kelley Blue Book’s KBB.com.” Here is a link: http://money.cnn.com/2010/01/26/autos/saab_spyker_deal/

Michael

Don’t Ya Hate it When This Happens?

mcbride — Mon, 25 Jan 2010 19:39:07 +0000

Someone lost their balance, fell and ripped a Picasso at the Met. (I am so glad it wasn’t me….) “The accident occurred in a second-floor gallery of early Picasso works when a patron participating in one of the museum’s art classes lost her balance and fell on the canvas, the museum said. It happened during regular visiting hours when other visitors were in the gallery. People who attend the art classes typically roam through the museum in a group stopping in front of works of interest. “The Actor” was donated to the Met in 1952 by art patron Thelma Chrysler Foy, the elder daughter of auto magnate Walter Chrysler.” Here is a link, with a picture of the work: http://www.msnbc.msn.com/id/35058401/from/ET?GT1=43001

Michael

Markets All Headed Down Fast And Hard

mcbride — Mon, 25 Jan 2010 18:06:49 +0000

The best prognosticators I know of are at Elliott Wave. I have referred to their work here many times. If I have not made their views clear before, then I shall do so now. From their January 14, 201 Theorist: “the fact that investors are still giddy – which is an apt word for today’s readings on sentiment indicators – is consistent with our Elliott wave case that the bear market has barely begun. The year 2010 should get people to understand what we have been saying throughout this time: (1) the peak in 200 was not just the end of a Primary –degree bull market but the peak of a Grand-Supercycle-degree wave that lasted over 200 years, and (2) the current bear market will prove to be the deepest and longest since the 1700’s.” They are predicting the Dow to fall steeply to 1,000 and then bounce around for a while before falling to 400. Before writing their words off totally, please look at their recent history for predicting the top of the markets, the fall and the bounce which we have just experienced. It is eerily accurate. Here is their web site: www.elliottwave.com

Michael

Polarization as Part of a Bear Market

mcbride — Mon, 25 Jan 2010 15:04:18 +0000

As a follow up to the post on Jan. 19, 2010 regarding the increase in hate crimes and “us versus them” mentality during a major bear market, which is what we are in now (according to the folks at Elliott Wave Int’l. – the group I most respect on matters financial), news out today says that the Obama administration has been the most polarized first year of any administration ever. “The 65 percentage-point gap between Democrats’ (88%) and Republicans’ (23%) average job approval ratings for Barack Obama is easily the largest for any president in his first year in office, greatly exceeding the prior high of 52 points for Bill Clinton.” Here is a link to the whole article: http://www.gallup.com/poll/125345/Obama-Approval-Polarized-First-Year-President.aspx . If as I fear, the markets continue to fall at a rapid, steep pace – then sadly we can expect more hate crimes, more “let’s blame __” and more general discontent which may erupt into riots, if the jobless rate gets high enough.

Michael

Policy Shift: Geithner Wanes, Volker Waxes

mcbride — Fri, 22 Jan 2010 17:05:34 +0000

Here is a great article which provides insight into the new rules on banking: “At its heart, Volcker’s plan restricts banks from making speculative investments that do not benefit their customers. He has argued that such speculative activity played a key role in the financial crisis. The administration also wants to limit the ability of the largest banks to use borrowed money to fund expansion plans.”

Perhaps more interesting is the shift in reliance from Treasury Secretary Geithner (who along with current Fed Chair Bernanke, has engineered most of the administration’s response to the current financial crisis by growly increasing the money supply) to ex Federal Reserve Chairman Volker (who was known to have worked to increase the value of the dollar by raising interest rates in the late 1970’s): “Thursday morning at the White House, it seemed as if the two men had swapped places. A beaming Volcker stood at Obama’s right as the president endorsed his proposal and branded it the “Volcker Rule.” Geithner stood farther away, compelled to accommodate a stance he once considered less effective than his own.

The moment was the product of Volcker’s persistence and a desire by the White House to impose sharper checks on the financial industry than Geithner had been advocating, according to some government sources and political analysts. It was Obama’s most visible break yet from the reform philosophy that Geithner and his allies had been promoting earlier.”

Here is a link (free sign in required): http://www.washingtonpost.com/wp-dyn/content/article/2010/01/21/AR2010012104935.html?hpid=topnews

Michael

Bail Out Success Story…?

mcbride — Thu, 21 Jan 2010 15:23:49 +0000

Goldman Sachs has announced that it “earned” 13.4 billion in profit in 2009 and was set to pay 16.2 million in bonuses, which equates to around a half million per employee, although the bonus money will not be evenly spread around the firm. “Since the financial crisis, all Wall Street banks have benefited from an array of federal programs and low interest rate policies that enabled the industry to roar back in profitability in 2009.” And let us not forget “yesterday’s news” that “[a]n arm of the Federal Reserve, then led by now-Treasury Secretary Timothy Geithner, told bailed-out insurance giant AIG to withhold key details from the public about overpayments that put billions of extra tax dollars in the coffers of major Wall Street firms, most notably Goldman Sachs….Wall Street firms like Goldman Sachs, Merrill Lynch and Wachovia got full value for their derivatives contracts with AIG, and taxpayers got stuck with the bill. In total, $27.1 billion of public money was transferred to companies that did business with AIG. It was largely seen as a “backdoor bailout” for firms like Goldman.”

Here is a link to the Goldman “profit” article: http://www.nytimes.com/2010/01/22/business/22goldman.html?partner=rss&emc=rss

Here is a link to the “how Geithner engineered a secret bail out for Goldman” story: http://www.huffingtonpost.com/2010/01/07/geithners-new-york-fed-to_n_414449.html

Michael