In about a year, the next U.S. Census will be upon us. However, one group participating in the survey is already driving some lawmakers nuts.
In February, The Association of Community Organizations for Reform Now (ACORN) signed a partnership with the Census Bureau to “assist with the recruitment of the 1.4 million temporary workers needed to go door-to-door to count every person in the United States.”
While the bureau currently has partnerships with more than 250 national organizations from the NAACP to TARGET, ACORN’s past allegations of fraud have raised the most concern.
The organization – a non-partisan group of low-and moderate-income people – came under fire in 2007, when several paid employees were alleged to have created more than 1,700 fraudulent voter registrations. In 2008, another worker in Pennsylvania was sentenced for creating 29 phony registration forms.
The census is used to “determine distribution of taxpayer money through grants and appropriations and the appointment of the 435 seats in the House of Representatives” and lawmakers do not want any fraudulent computing.
Spokespeople for both ACORN and the Census Bureau have refuted any suggestion that “any group will fraudulently and unduly influence the results of the census.”
Though doubts still remain, the bureau is now focusing on the more than 1 million applicants for 140,000 census taker positions, which is where assistance from organizations such as ACORN becomes needed.
Government accountability is under attack – as it was during the Bush administration, so shall it be under Obama. Given ACORN’s past reputation, confidence in the census itself could come up for question.
Executive compensation schemes at American International Group (AIG) have been under investigation by the New York State Attorney General, Andrew Cuomo since last fall. He is ramping up the investigation now, given the news over the weekend of new bonus disbursements, to determine if the bonus contracts are unenforceable for fraud under New York law. AIG agreed with Cuomo last October not to use their own “deferred compensation pool” to pay bonuses – and then bargained with executives to make the payments anyway! AIG execs got contracts in early 2008 that guaranteed their bonuses – information that former Treasury Secretary Paulson and current Treasury Secretary Geithner (former President of the New York Federal Reserve Bank) had when they initiated the original bailout.
Jim Borel, a VP at DuPont Co stated that "fundamentally, food demand is there," as "people need to eat," which "helps to stabilize things." According to Reuters such claims were echoed by other participants, including Mark Palmquist, CEO of CHS Inc, who noted that the world keeps "adding mouths to feed," and that "food demand... tends to be pretty insensitive to what the global economy is doing."
While there appears to be some anticipation of stability at large agribusiness corporations, such optimism may be tempered among farmers, who have seen commodity prices drop by 50% or more over the past year. Such drops will create a more difficult business environment for producers. However, there is some hope that the strong prices received by farmers over the past couple of years will make them better able to, as one agricultural official in Wisconsin stated recently, "ride it out for somewhat longer than otherwise would have been the case".
On Sunday March 15, 2009, American International Group, Inc. revealed the identities of some of the beneficiaries of about half of the nearly $180 billion the US government has committed ($173 billion actually paid out so far) to support the ailing international financial giant. As we now know, AIG sold credit default swaps (CDS) that paid off if the market value of some bonds fell. (I use the term “bond” here generally to refer to the alphabet soup of CDO, CLO, MBS, etc. – all of which are debt that is sold to the public.) Most CDS only pay off if the borrower fails to make payments – something that hasn’t happened in the case where AIG is making payments. The geniuses at AIG – and we know they are geniuses because they earned $165 million in bonuses for the effort – took on completely unknown risks for, apparently, insufficient premiums, resulting in the need for an emergency $85 billion loan last September from the Federal Reserve Bank of New York (courtesy of my buddy Tim Geithner) to “avoid severe financial disruptions”… as if that worked!
Whatever. So, now AIG is letting us know who got our money: $22.4 billion for payouts on the CDS and $27.1 billion to buy the bonds underlying the CDS (so some of the CDS could be cancelled). That’s about $50 billion so far for derivatives – no one knows how much more they’ll need. Here’s a summary by the country where the recipients are based:
Numbers in billions. $4.1 billion paid to “other” not included here. Numbers won’t total to $49.5 billion due to rounding.
There was also $12.1 billion paid to US municipalities (states, cities, school districts, etc.) – where states invested, for example, bond proceeds prior to expenditure. In those cases, the municipalities invested in assets with guaranteed rates of return (another genius idea at AIG!). The bigger numbers belong to the states that had recent large bond issues – for example, $1.02 billion to California which has yet to distribute a dime of the bond money raised for stem cell research (due to on-going litigation).
The most interesting bit, perhaps, are payments of $43.7 billion to securities lenders – those stock and bond holders who lend out their shares to enable short sellers. This means that AIG borrowed stocks so they could short sell them – make an investment that paid off only if the prices fell. (If you don’t know what short selling is, here’s a five minute video that explains it in a light-hearted way.) Bottom line – it gave AIG incentives to push down market prices. And their announcements and actions at the end of 2008 certainly achieved that goal. Way to go, geniuses!
A day or so after he was on CNBC, Warren Buffett went on Bloomberg Television and told them that he’ll continue to sell derivatives contracts. He’s getting deeper into investments that he has called “financial weapons of mass destruction.” Apparently he’s betting that there will not be a crash (which would require a payout) in corporate junk bonds, muni bonds or stock markets in the UK, Europe and Japan. Here’s the punch line: his stock is up 17.2% since he started talking!
Berkshire Hathaway shares peaked last year at $147,000 each when Buffett was buying energy companies. The price is so very high because they have a policy of never paying dividends. Therefore, all the company’s earnings are put back into investments. If you tried to use a standard finance model to determine the appropriate price for these shares, the answer would be “infinity” because you can’t divide by $0 dividends. Anyway, two months after the peak, the shares were in the tank – relatively speaking – at $77,500 per share. By the end of the week before his TV appearances, the shares were even lower, at $72,400. The day of the CNBC interview: Berkshire Hathaway shares closed at $84,844 – a cool 17.2% gain. Remember, this is the man who said he is fearful when people are greedy and greedy when people are fearful.
On March 12, Berkshire Hathaway lost its triple-A credit rating from Fitch Ratings because of potential losses from those derivatives. Not that we should believe everything Fitch says – Fitch is among the credit rating agencies that gave triple-A ratings to subprime mortgage bonds, and look what happened to those investments! For what it’s worth, Fitch gives Berkshire a “negative” outlook, meaning another cut is possible within a couple of years. The two other big ratings agencies, Moody's Investors Service and Standard & Poor's, still rate Berkshire triple-A.
Former Illinois Governor Rod Blagojevich's arrest, impeachment and removal from office assured his place as another famous name in our state’s corruption hall of disrepute. But it turns out the selling of President Obama’s Senate Seat was only a minor part of Blagojevich’s misdoings – and some of this could have greater national political fall-out than is commonly imagined.
As the Justice Department looks at Blagojevich’s machinations, the scope is likely to widen. Operation Board Games, the formal name of Justice Department's investigation of Blagojevich, is about more than just Blago’s seat-selling or about Democratic Party political fundraiser Tony Rezko shaking down individuals for campaign contributions.
Perhaps the most fertile ground for the investigation centers on the awarding of a gambling license in the Chicago suburb of Rosemont, as The Chicago Tribune reported in 2005. Because of the negative attention drawn to placing a casino located in the Chicago Mob-linked suburb of Rosemont, Blagojevich needed to make the situation look more respectable.
So who was brought in to try and make Rosemont look acceptable? None other than Eric Holder, the current newly installed Attorney General. Rosemont didn't get the casino because of pressure applied by former FBI agent Jim Wagner on the Illinois Gaming board. Wagner is the guy who publicly raised the question of Eric Holder's connection with Blagojevich.
A day before his arrest, former Gov. Rod Blagojevich was hit with a sweeping federal subpoena seeking eight years of calendars, correspondence, e-mails, logs, notes and other records involving everyone from his wife to Chicago Tribune owner Sam Zell
The "everyone" includes Valerie Jarrett and David Axerod, individuals who are very close to President Obama.Tony Rezko appears to be a link between Rod Blagojevich and Barack Obama. All of this could get pretty messy before it’s all done.
The second part in the series on East St. Louis gives views of downtown today, shows how its history can be seen in the city, and explains why the city could still be a good place for new development.
Part I discusses the origins and development of East St. Louis as an industrial city.
Part III will explore ideas put forward for (re)development of the city, including cultural tourism based on the city's African American heritage and use of vacant land for farming to create a local food source for the St. Louis metropolitan area.
Michael R. Allen is the Assistant Director at Landmarks Association of St. Louis. He edits the blog Ecology of Absence, "a voice for historic preservation and a chronicle of architectural change in St. Louis, Missouri and its region".
Alex Lotz is an undergraduate film student in his final year at Chapman University.
Democratic lawmakers from California recently took a break in the midst of “intense state budget negotiations” to travel up to a wine-country lodge complete with gourmet food, rooms, and cocktails with a trio of interests footing the $14,000 bill.
At the time of the retreat, the Consumer Attorneys of California (who, along with labor unions, had been pushing to roll back some labor rules) the California Professional Firefighters (seeking to protect funding for fire safety programs) and the Northern California Carpenters Regional Council (lobbying for greater roles for private contractors in state construction) all had strong interest in the proceedings.
The getaway came a day after Gov. Schwarzenegger declared a state of fiscal emergency and ordered the Legislature to discuss a series of proposals to plug a projected $42-bilion budget gap.
For the most part, each group had its interests protected in the budget package passed in February – though each group denied the retreat had anything to do with the budget.
Such extravagance gifted to lawmakers is not uncommon; groups with business before the state commonly bankroll such outings. Dinner at Morton’s Steakhouse with a $144 price tag, tickets to Disneyland, and $13,211 trip to Egypt, Jordan, and Israel, among many others, were revealed last week in documents filed by lawmakers.
Indecent lobbying goes down best with a vintage cabernet.
Over the past year, transit ridership has risen and that is a good thing. At the same time, driving has declined, due to both higher gasoline prices and the economic downturn. Some analysts have implied that people are giving up driving and using transit instead. An analysis of just released transit and urban roadway usage indicates no such thing. During the fourth quarter, the transit increase from a year earlier represented just 0.7 percent of the driving decline. This is even lower than the 2 to 3 percent figures registered in the first through third quarters. Of course, the principal reason why people do not substitute transit for driving is that it is not available for the overwhelming majority of urban trips.
A reader forwarded along this video of a bustling recent weekend at La Gran Plaza, a shopping center serving the Latino market in Fort Worth, TX. Just a few years ago, La Gran Plaza was a failing conventional shopping center before developers purchased it and completely redesigned and repurposed the mall to cater to Latinos. Partly because it serves a more insular, cash based clientele and largely because of brilliant design and programming choices, this mall seems to be thriving during a very tough period for retailers.