Wednesday, January 11, 2012

Now investors pay to lend money to Britain, which has become a safe haven thanks to the eurozone crisis

Investors paid for the right to lend money to the UK yesterday, amid fresh fears over the future of the eurozone. The Government sold £700million of bonds – long-term IOUs – in an extraordinary auction that saw it charge lenders to take on the debt.

Governments usually have to pay to borrow on international money markets, but Britain’s austerity measures mean it has emerged as a safe haven while the single currency crisis rages.

Once inflation is taken into account, the interest rate charged by lenders for 35-year bonds hit minus 0.116 per cent – meaning the Government will make rather than lose money on the deal. By contrast, debt-stricken countries in the eurozone are being charged higher and higher rates to borrow.

To make matters worse, ratings agency Fitch warned yesterday that a number of countries – including Italy – could see their credit ratings downgraded by the end of this month. It claimed that Italy is the biggest cause for alarm – and added that bailed-out Greece could crash out of the single currency by the end of the year.

Yet as fears grow about the ability of many European nations to pay their way, Britain and Germany are emerging as the countries of choice for investors seeking shelter from the financial storm.

A source close to Chancellor George Osborne said of yesterday’s events: ‘This reinforces how our plan is delivering fiscal credibility, which in turn is delivering low interest rates for families and businesses up and down the country. Labour would put all that at risk.’

Michael Hewson, an analyst at CMC Markets, said the negative yield – the situation whereby investors must pay to lend – was ‘unusual but indicative of the times we are trading in’. He added: ‘Our economy is not immune to the eurozone troubles, but the UK won’t default because the Bank [of England] will print more money. Whether it will be the same value is another thing, but you will always get your money back.’

Another City analyst, David Buik of BGC Partners, agreed that the auction was a testament to Britain’s strength. ‘It is another classic illustration of a flight to quality created by an immeasurable slew of fear of the unknown,’ he said.

David Miller, a partner at Cheviot Asset Management, said investors ‘view Britain as a safe haven and a beacon of sanity in Europe’. He continued: ‘The low borrowing rate will give us a firm foundation for economic recovery.’



As U.S. home prices fall, more borrowers walk away

When David Martin and his wife bought their north Seattle condo five years ago, they figured they had plenty of time to downsize if they needed to before they retired.

Now, with the property worth roughly $60,000 less than the balance of their mortgage, Martin, 68, has been giving serious thought to just walking away, a process lenders call "strategic default."

"Guilt and morality are one side, and objective financial analysis are on the other side," Martin said. "They're coming to two opposite conclusions. I wonder how many other people are struggling with the same question."

Strategic defaults like the one contemplated by Martin are on the rise. A survey last year by two Chicago-area finance professors, Paola Sapienza at Northwestern University and Luigi Zingales at the University of Chicago, found that roughly three out of 10 mortgage defaults in 2010 were by homeowners who could afford to make their payments, up from 22 percent in 2009.

Researchers point to a number of forces that are driving borrowers to walk away from their mortgages. At the top of the list is the estimated 12 million homes that are underwater, meaning the owners owe more than they are worth.

Until recently, borrowers like Martin and many industry analysts held out hope that a housing recovery would reverse the rising tide of "negative equity." But after stabilizing this summer, home prices began falling again, dropping 7.5 percent in the third quarter alone and leaving more homeowners underwater.

In the early stages of the housing bust, the main causes of defaults included unemployment or other financial setbacks and adjustable mortgages that reset to unaffordable levels, according to researchers. Now, five years into the housing recession, strategic defaults are growing as financially healthy borrowers learn of friends or family who have decided to walk away.

Researchers say strategic default is also more common among borrowers who feel no personal connection to the party on the other end of the transaction. Gone are the days when you walked into a bank and met with a lender who shepherded your application and congratulated you when the loan was approved, said Michael Seiler, a finance professor at Old Dominion University and a co-author of the MBA study.

"If you defaulted, it was like you were defaulting on your friend," he said. "Your kids might go to the same school. You all might go to the same church. And you're constantly reminded of who you're defaulting on."

That scenario is a far cry from the modern system of mortgage finance, where loans are sold over the phone or online, chopped up into pieces and then sold to multiple, anonymous investors. Many underwater homeowners who try to negotiate with their lender can't even find out who owns their loan.

"We're finding that people are much more willing to walk away when the other party is unknown or what you might call a 'bad bank,'" said Seiler. "Those are the ones that received a lot of bailout funds or were active in the subprime market, giving loans to people who couldn't afford them and they knew that."

The mortgage lending industry's widespread reluctance to modify loan terms has also changed homeowner attitudes about walking away, according to Maddux. "They feel much better about doing it if they've tried to contact the lender and the lender won't budge," he said. "They feel justified about it because they've tried to do their best to work it out."

Still, there are much more serious consequences to strategic default than pangs of guilt. Any loan default will damage a borrower's credit score. But some strategic defaulters are finding that the impact isn't as long-lasting as widely believed, according to Maddux. "You don’t destroy your credit, you wound your credit," he said. "Just like a wound, it heals over time."

Maddux said surveys of the roughly 8,000 customers who have signed up for his service in the last four years found that some strategic defaulters are able to restore their credit in as little as a year and a half.

"There's a process to strategic default and a lot of people don't know how to do it," said Kopcak. "They don't really know what their options are. People really need to talk to a lawyer who knows the process."



Leftism Makes You Meaner

Only a fool believes that all those with whom he differs are bad people. Moreover, just about all of us live the reality -- often within our own family -- of knowing good and loving people with whom we strongly differ on political, religious, social and economic issues. That said, I have come to believe that the more committed one is to leftism, the more likely one is to become meaner.

Two examples in just the past week offer compelling evidence.

Prominent left-wing commentators used the way in which Rick Santorum and his wife handled the death of one of their children to attack -- make that mock -- the former Pennsylvania senator.

In a lifetime of observing and participating in political debate, I have seen a lot of meanness. But one just assumes that some things -- not many, just some -- are off limits to political pundits and activists. Among these few things, one has to believe, is the death of a child. But I was wrong.

In 1996, Karen Santorum gave birth to a premature baby boy who died two hours later. After spending the night in the hospital with their baby son between them, the grieving parents brought the lifeless infant home for a brief period because, Santorum explained, it was important to them for their other children to "know they had a brother." The Santorums didn't want Gabriel Michael Santorum to be an abstraction to his siblings.

First, Alan Colmes on Fox News: "Once (voters) get a load of some of the crazy things he's said and done, like taking his 2-hour-old baby who died right after childbirth home and played with it for a couple of hours so his other children would know that the child was real ..."

Colmes was then interrupted by Rich Lowry: "You are mocking him. They lost a child, Alan. That's very serious and it's not something you should be mocking on national TV." Colmes' response: "I'm not mocking the losing of the child. But what I'm saying is I think it shows a certain unusual attitude toward taking a 2-hour-baby home who died to play with his other children."

In addition to engaging in a cheap and mean shot, Colmes simply made up the notion that the Santorums had brought the baby home for their other children "to play with."

The next day, Eugene Robinson, Pulitzer-Prize winning left-wing columnist for The Washington Post, said on MSNBC, Santorum is "not a little weird. He's really weird. Some of his positions he's taken are just so weird that I think some Republicans are going to be off-put. Not everybody is going to be down, for example, with the story of how he and his wife handled the stillborn child whose body they took home to kind of sleep with and introduce to the rest of the family. It's a very weird story."

Four times Robinson calls Santorum "weird," using the story about the death of the child as evidence. He was wrong on an important detail -- the child was not "stillborn." And, like Colmes, he made up a mocking detail -- that they took the child home "to kind of sleep with."

The meanness of these comments is self-evident, as Alan Colmes realized and later apologized to Santorum. Robinson, on the other hand, never apologized -- as RealClearPolitics, which has no political agenda, correctly reported -- even though repeatedly challenged to do so on MSNBC.

I raise these issues for only one reason: to provide further evidence of my belief that leftism makes more than a few of its adherents meaner people.

I have had many interactions with Alan Colmes, and while we always differ, I never found him to be mean-spirited. I still don't think he is mean-spirited, and though I am not the directly offended party, like Santorum, I accept his apology, because I believe he meant it.

So why did he say what he said? Because leftism fills many of its adherents with contempt and hatred. It takes a person of great character and self-control to continually imbibe and mouth the mantras of the left -- that everyone on the right is sexist, intolerant, xenophobic, homophobic, islamophobic, racist and bigoted -- and not become a meaner human being. If I believed just about everyone with left-wing views was despicable, I would be meaner, too.

In a previous column, I wrote about Thomas Friedman making one of the classic anti-Semitic libels when he wrote that the reason the Senate and the House gave Israeli Prime Minister Benjamin Netanyahu standing ovations was because "that ovation was bought and paid for by the Israel lobby."

How does a Jew write an anti-Semitic libel? Because he's on the left. That was the reason Rep. Andre Carson said that members of Congress who support the Tea Party want to see blacks "hanging on a tree." Because he's on the left.

Leftists' meanness toward those with whom they differ has no echo on the normative right. Those on the left need to do some soul-searching. Because as long as they continue to believe that people on the right are not merely wrong but vile, they will get increasingly mean. The problem for the left, however, is that the moment it stops painting the right as vile, it has to argue the issues.



Retiring Mississippi governor pardons four savage killers

A disgusting RINO. He's got a very mixed record as a Republican. More like an old Southern Democrat. A real "Good ol' boy"

Governor Haley Barbour, who is not seeking reelection, outraged victims' families by pardoning four murderers, one of whom had been denied parole just two weeks earlier.

All four convicted killers were trusties who worked in the Governor's Mansion, cooking, cleaning, and performing other tasks. According to MSNBC, Barbour said back in 2008 that pardoning criminals who worked in the governor's home was a long standing tradition in Mississippi.

Neither Barbour, who leaves office today, nor the Mississippi government publicized the pardons. But the families of the victims were notified by the Mississippi Department of Corrections that the men had been released last Sunday. It was family members who went to the media.

The pardon that caused the greatest controversy was that of David Gatlin, 40. Gatlin had applied for parole; an application that was just denied by the Mississippi Parole Board on Dec. 27.

In 1993, Gatlin broke into a residence, put a gun to the head of his estranged wife, Tammy Ellis Gatlin, and pulled the trigger, killing her. At the time she was shot, she was holding her 2-month-old son. Gatlin then shot Tammy's friend, Randy Walker, also in the head. Walker survived his injuries.

In 1994 Gatlin was convicted and was sentenced to life imprisonment for the murder. He was also sentenced to 20 years in jail for aggravated assault and 10 years for residential burglary. But apparently Barbour was pleased with the work Gatlin did in the Governor's Mansion so he pardoned him. According to the Mississippi Department of Corrections, Gatlin had been working at the governor's residence since Nov. 19, 2009.

The Jackson Clarion-Ledger quoted Crystal Walker, Randy Walker's wife, as saying her family was notified last Friday that Gatlin had been denied parole. The next day they found out he was about to be pardoned. Said Crystal: "On parole he'd at least have to check in and have some supervision. Now he could live beside us, or we could run into him at Walmart. You're always looking over your shoulder."

Tiffany Ellis Brewer, Tammy's sister, said: "He shot her in the head while she was holding a baby. He's a cold-blooded murderer."

But according to Barbour, Gatlin "proved to be a diligent and dedicated workman."

The other three killers pardoned by the governor were Joseph Ozment, Anthony McCray, and Charles Hooker. All three men committed murder in the early 1990s. McCray killed his wife while Ozment killed a man in the course of a robbery.

The state's Democrats announced they will be introducing legislation to prevent future governors from doing what the outgoing Republican governor did. Under the proposals, public hearings would have to be held before someone with a felony conviction could receive a pardon.




Obama’s power grab sets precedent Democrats will regret: "What's next? Appointing executive branch officials when the Senate is taking a lunch or bathroom break? In November 2007, Senate Majority Leader Harry Reid declared the Senate in pro forma session for the two-week Thanksgiving break. Every three days, a handful of senators would gavel the Senate into session and gavel it out just a few minutes later. ... Republicans were furious at this deliberate ploy to keep Bush from making recess appointments by never declaring a formal recess."

Why the movie studios and record companies want to kill YouTube — SOPA ain’t what you think it is!: "In 10 years it’s a dead cinch Freddie will be directing more and better full-blown movies. No question. Will there be a studio as his 'master?' I’d bet against it! He might well cut deals with direct-to-online outlets like Hulu, or sell exclusive-for-a-while rights to anybody from Netflix to DirecTV, and later break out completely into theaters. THIS is the threat the major media sees out of Youtube -- not piracy!"



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