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Let's hope somone on staff in DC reads this re-printed article from Xinhua. Summary to your boss: "The new Iraq, created in our name, is coming apart at a seam. If half of the following article is true, a larger war rapily over the horizon comes."
Chinese Newws
News Analysis: Arabs-Kurds escalating tension endangers security in Iraq
www.chinaview.cn 2009-07-25 16:35:32 Print
by Xinhua writers Fu Yiming and Gao Shan
ARBIL, Iraq, July 25 (Xinhua) -- Iraq's semi-autonomous Kurdish region started its general elections on Saturday amid a simmering land and oil controversy that may endanger security in Iraq.
While Kurdish people are longing for their independence, recent escalating tension between Kurdish Regional Government (KRG) and the Baghdad central government overshadowed its outlook.
Last month, the KRG parliament in Arbil approved a new draft constitution for their autonomous region, legalizing its claims to the oil-rich Kirkuk as well as other disputed areas in Nineveh and Diyala Provinces.
Despite a delayed referendum -- generally regarded would pass by a majority -- the move, though condemned by Arabs as annexing disputed territories and a final secession.
"Kirkuk is Kurdish, like Arbil, Sulaimaniyah or Dohuk, and is part of Kurdistan," KRG President Massud Barzani said, "all of the historical and geographical documents prove this."
Back in Baghdad, Prime Minister Nuri al-Maliki is already not on speaking terms with Massud Barzani. Iraqi political leaders have denounced the constitution as a step toward splintering Iraq.
"This lays the foundation for a separate state. It is not a constitution for a region," said Osama al-Nujaifi, a Sunni Arab member of the national Parliament, "it is a declaration of hostile intent and confrontation. Of course it will lead to escalation."
Multiple clashes between the Iraqi army and the Kurdish Peshmerga militia in disputed region of Nineveh and Diyala Provinces, highlighted since the summer of last year, almost resulted in military confrontations.
On August 10 last year, the central government deployed army forces to northern Diyala and ordered the Kurdish Peshmerga militia to withdraw within 24 hours. They even forced KRG staff out of their government buildings a week later, and triggered a final crossfire between the two sides in late September.
After the general elections of Iraq in January, some Kurd-dominant regions in Nineveh and Diyala Provinces rejected new officials close to Maliki government to take office, and the Peshmerga militia even blocked those officials out of towns.
The incident resulted into a massive troop deployment from the central government to disputed areas. If officials from both sides joined by U.S. counterparts had not sat together for negotiation, bloodshed might have well happened.
KRG President Barzani has said in public that military clashes may happen in some regions. Unsatisfied with the hard stance of Maliki's central government, some Kurdish officials even called Maliki "another Saddam."
As both sides get more impatient, little room seems to be left for compromise, and chances for violence are mounting.
U.S. diplomats and military officials have repeatedly warned the potential for a confrontation between Iraqi central government and the KRG, which is emerging as "a threat as worrisome to Iraq's fate as the remnants of the insurgency."
The complication between Iraqi central government and the KRG involves many ethnic, territorial and international factors that may jeopardize the hard-gained security improvement in Iraq -- a sign that worries all -- if the confrontation upgrades further.
An expanded Kurdistan secession may trigger the string effects in neighboring countries like Turkey and Iran, which are all against Kurdish independence on their territories. Even Iraqi President Jalal Talabani, as a Kurd, said earlier this year that an independent Kurdish state is just a dream and won't happen.
With the back of the United States, the United Nations has proposed a compromise solution in which Kirkuk would be given a special status with links to both the central government and the KRG. But so far the proposal has failed to win much favor from either side.
During a visit to Washington on Thursday, Maliki acknowledged that these tensions were among "the most dangerous challenges that have been a concern for all the Iraqi government." But he said such controversies in politics could only be solved through constitutional means, instead of force.
Saturday, July 25, 2009
Monday, July 06, 2009
Residential Loan Losses Mounting
July 5, 2009
Fair Game
So Many Foreclosures, So Little Logic
By GRETCHEN MORGENSON
www.nytimes.com
LAST week, the stock market tumbled on news that housing foreclosures and delinquencies rose again in the first quarter. The Office of the Comptroller of the Currency said that among the 34 million loans it tracks, foreclosures in progress rose 22 percent, to 844,389. That figure was 73 percent higher than in the same period last year.
But the comptroller’s office also said that amid the gloom, there was promising data about loan modifications: they rose 55 percent in the quarter. That growth came on a very low base, of course, but the move encouraged John C. Dugan, head of the comptroller’s office.
“As the administration’s ‘Making Home Affordable’ program gains traction and helps offset the impact of this very difficult economic cycle,” he said in a statement, “we should continue to see progress in future reports.”
A glimpse of second-quarter mortgage data, however, indicates that the progress Mr. Dugan and his colleagues in Washington are hoping for may take longer to emerge — raising questions about whether policymakers and banks are moving quickly or intelligently enough on the foreclosure problem.
Foreclosures remain one of the great financial ills for the economy. The Bush administration largely overlooked foreclosures affecting average homeowners, focusing instead on propping up elite, troubled financial institutions with taxpayer funds. The Obama administration has said it wants to wrestle the foreclosure issue to the ground by encouraging mortgage loan modifications, but its efforts have gotten little traction.
Loan modifications occur when a lender agrees to change terms of a troubled borrower’s mortgage; the most common approach is to reduce the loan’s interest rate. Cutting the amount of principal owed — an option that could be of more help to a borrower — is rare because it means homeowners pay less money back to the bank over time.
Lenders and their representatives, however, don’t like to modify loans through interest rate cuts or principal reductions because, of course, it reduces the income they receive from borrowers. No surprise, then, that loan modifications have been a trickle amid the recent foreclosure flood.
Enter the government, with the program it announced in March to encourage modifications. It offers incentives to loan servicers to change mortgage terms, providing $1,000 for each loan they modify. The program focuses on making payments more affordable through lower interest rates, but delinquent amounts and late fees are typically tacked onto the mortgage balance. “Making Home Affordable” does not compel lenders to reduce mortgage balances.
Servicers signed on to the program in April. The program’s early months were not covered by the O.C.C.’s first-quarter report. But other figures on modifications conducted in April, May and June are available. And they show a decline in modifications, not an increase as the government hoped.
Alan M. White, an assistant professor at the Valparaiso University law school in Indiana, analyzed data on 3.5 million subprime and alt-A mortgages in securitization pools overseen by Wells Fargo. The loans were written in 2005 through 2007; data on their performance is provided to the trusts’ investors. Mortgages handled by five of the nation’s largest loan servicing companies — Bank of America, Chase Home Finance and Litton Loan Servicing among them — are contained in the Wells Fargo data.
Mr. White found that mortgage modifications peaked in February and have declined in all but one month since. While servicers modified 23,749 loans in these trusts in February, they changed only 19,041 in May and 18,179 in June. This is exactly when servicers were supposed to be responding to the government’s loan modification urgings.
Foreclosures, meanwhile, keep rising. In June, 281,560 were in process, slightly above the 277,847 in May. Last January, there were about 242,000 foreclosures in the pipeline among the Wells Fargo trusts.
“I was hoping we would see some impact in June of the government’s program,” Mr. White said. “Is ‘Home Affordable’ working? My short answer is no.”
To be sure, the government’s data differs from that which Mr. White analyzed, and its loan modification figures for the second quarter may look better as a result. The O.C.C. includes prime loans as well as subprime, for example, while the Wells Fargo data contains no prime loans.
Nevertheless, Mr. White has collected the figures since November 2008, and he said that in the months since, the performance of the 3.5 million mortgages that he analyzes tracked the O.C.C. data pretty closely.
THE Wells Fargo data is illuminating. It shows that in June, 58 percent of modifications cut the payments that the borrower has to pay, a slightly smaller percentage than in April or May. The average reduction in June was $173 a month.
But the most fascinating, and frightening, figures in the data detail how much money is lost when foreclosed homes are sold. In June, the data show almost 32,000 liquidation sales; the average loss on those was 64.7 percent of the original loan balance.
Here are the numbers: the average loan balance began at almost $223,000. But in the liquidation sale, the property sold for $144,000 less, on average. Perhaps no other single figure shows how wildly the mortgage mania pumped up home prices. It also bodes poorly for the quality of the mortgage-related assets lurking in banks’ books.
Loss severities, like foreclosures, are rising. In November, losses averaged 56.1 percent of the original loan balance; in February, 63.3 percent.
Given losses like these, Mr. White said he was perplexed that lenders and their representatives were resisting reducing principal when they modify loans. His data shows how rare it is for lenders to reduce principal. In June, for example, 3,135 loans — just 17.2 percent of the total modified — involved write-downs of principal, interest or fees. The total loss from these write-downs was just $45 million in June.
And yet, the losses incurred in foreclosure sales involving loans in the securitization trusts were a staggering $4.59 billion in June. “There is 100 times as much money lost in foreclosure sales as there was in writing down balances in modifications,” Mr. White said. “That is not rational economic behavior.”
If banks have written down the value of these loans to the 40 cents on the dollar that they are fetching on foreclosures — the only true value for these homes right now — then why don’t they bite the bullet and reduce the loan amount outstanding for the troubled borrowers? That type of modification would be far more likely to succeed than larding a borrower who is hopelessly underwater with yet more arrears.
“You can reduce payments with a lot of gimmicks similar to those built into subprime loans — temporary rate reductions that defer a lot of principal, balloon payments,” Mr. White said. “To me that leads to a situation where American homeowners are paying 50 to 60 percent of their incomes for mortgages which reset in 2011 and 2012. That is not solving the problem.”
Certainly not for borrowers, that is. And because many of these losses will ultimately be passed on to taxpayers, it’s not solving our problem, either.
REPRINTED FOR COMMENT @ http://portlandhousing.blogspot.com/2009/07/gresham-mayor-averts-foreclosure.html
Fair Game
So Many Foreclosures, So Little Logic
By GRETCHEN MORGENSON
www.nytimes.com
LAST week, the stock market tumbled on news that housing foreclosures and delinquencies rose again in the first quarter. The Office of the Comptroller of the Currency said that among the 34 million loans it tracks, foreclosures in progress rose 22 percent, to 844,389. That figure was 73 percent higher than in the same period last year.
But the comptroller’s office also said that amid the gloom, there was promising data about loan modifications: they rose 55 percent in the quarter. That growth came on a very low base, of course, but the move encouraged John C. Dugan, head of the comptroller’s office.
“As the administration’s ‘Making Home Affordable’ program gains traction and helps offset the impact of this very difficult economic cycle,” he said in a statement, “we should continue to see progress in future reports.”
A glimpse of second-quarter mortgage data, however, indicates that the progress Mr. Dugan and his colleagues in Washington are hoping for may take longer to emerge — raising questions about whether policymakers and banks are moving quickly or intelligently enough on the foreclosure problem.
Foreclosures remain one of the great financial ills for the economy. The Bush administration largely overlooked foreclosures affecting average homeowners, focusing instead on propping up elite, troubled financial institutions with taxpayer funds. The Obama administration has said it wants to wrestle the foreclosure issue to the ground by encouraging mortgage loan modifications, but its efforts have gotten little traction.
Loan modifications occur when a lender agrees to change terms of a troubled borrower’s mortgage; the most common approach is to reduce the loan’s interest rate. Cutting the amount of principal owed — an option that could be of more help to a borrower — is rare because it means homeowners pay less money back to the bank over time.
Lenders and their representatives, however, don’t like to modify loans through interest rate cuts or principal reductions because, of course, it reduces the income they receive from borrowers. No surprise, then, that loan modifications have been a trickle amid the recent foreclosure flood.
Enter the government, with the program it announced in March to encourage modifications. It offers incentives to loan servicers to change mortgage terms, providing $1,000 for each loan they modify. The program focuses on making payments more affordable through lower interest rates, but delinquent amounts and late fees are typically tacked onto the mortgage balance. “Making Home Affordable” does not compel lenders to reduce mortgage balances.
Servicers signed on to the program in April. The program’s early months were not covered by the O.C.C.’s first-quarter report. But other figures on modifications conducted in April, May and June are available. And they show a decline in modifications, not an increase as the government hoped.
Alan M. White, an assistant professor at the Valparaiso University law school in Indiana, analyzed data on 3.5 million subprime and alt-A mortgages in securitization pools overseen by Wells Fargo. The loans were written in 2005 through 2007; data on their performance is provided to the trusts’ investors. Mortgages handled by five of the nation’s largest loan servicing companies — Bank of America, Chase Home Finance and Litton Loan Servicing among them — are contained in the Wells Fargo data.
Mr. White found that mortgage modifications peaked in February and have declined in all but one month since. While servicers modified 23,749 loans in these trusts in February, they changed only 19,041 in May and 18,179 in June. This is exactly when servicers were supposed to be responding to the government’s loan modification urgings.
Foreclosures, meanwhile, keep rising. In June, 281,560 were in process, slightly above the 277,847 in May. Last January, there were about 242,000 foreclosures in the pipeline among the Wells Fargo trusts.
“I was hoping we would see some impact in June of the government’s program,” Mr. White said. “Is ‘Home Affordable’ working? My short answer is no.”
To be sure, the government’s data differs from that which Mr. White analyzed, and its loan modification figures for the second quarter may look better as a result. The O.C.C. includes prime loans as well as subprime, for example, while the Wells Fargo data contains no prime loans.
Nevertheless, Mr. White has collected the figures since November 2008, and he said that in the months since, the performance of the 3.5 million mortgages that he analyzes tracked the O.C.C. data pretty closely.
THE Wells Fargo data is illuminating. It shows that in June, 58 percent of modifications cut the payments that the borrower has to pay, a slightly smaller percentage than in April or May. The average reduction in June was $173 a month.
But the most fascinating, and frightening, figures in the data detail how much money is lost when foreclosed homes are sold. In June, the data show almost 32,000 liquidation sales; the average loss on those was 64.7 percent of the original loan balance.
Here are the numbers: the average loan balance began at almost $223,000. But in the liquidation sale, the property sold for $144,000 less, on average. Perhaps no other single figure shows how wildly the mortgage mania pumped up home prices. It also bodes poorly for the quality of the mortgage-related assets lurking in banks’ books.
Loss severities, like foreclosures, are rising. In November, losses averaged 56.1 percent of the original loan balance; in February, 63.3 percent.
Given losses like these, Mr. White said he was perplexed that lenders and their representatives were resisting reducing principal when they modify loans. His data shows how rare it is for lenders to reduce principal. In June, for example, 3,135 loans — just 17.2 percent of the total modified — involved write-downs of principal, interest or fees. The total loss from these write-downs was just $45 million in June.
And yet, the losses incurred in foreclosure sales involving loans in the securitization trusts were a staggering $4.59 billion in June. “There is 100 times as much money lost in foreclosure sales as there was in writing down balances in modifications,” Mr. White said. “That is not rational economic behavior.”
If banks have written down the value of these loans to the 40 cents on the dollar that they are fetching on foreclosures — the only true value for these homes right now — then why don’t they bite the bullet and reduce the loan amount outstanding for the troubled borrowers? That type of modification would be far more likely to succeed than larding a borrower who is hopelessly underwater with yet more arrears.
“You can reduce payments with a lot of gimmicks similar to those built into subprime loans — temporary rate reductions that defer a lot of principal, balloon payments,” Mr. White said. “To me that leads to a situation where American homeowners are paying 50 to 60 percent of their incomes for mortgages which reset in 2011 and 2012. That is not solving the problem.”
Certainly not for borrowers, that is. And because many of these losses will ultimately be passed on to taxpayers, it’s not solving our problem, either.
REPRINTED FOR COMMENT @ http://portlandhousing.blogspot.com/2009/07/gresham-mayor-averts-foreclosure.html
Yes, We Can... Spend Recklessly
Fattening the Beast
Obama's Twist on a GOP Budget Strategy
By Fred Hiatt
Monday, July 6, 2009
Since the Reagan era, some conservatives have hoped to shrink government by "starving the beast." Refuse to raise taxes, they figured, and eventually spending would have to fall.
It's beginning to look as though the new team may have a similar strategy, in reverse: Increase spending, and eventually taxes will have to be raised.
No official has articulated that to me as a strategy. But look at the evidence.
George Bush bequeathed to President Obama a nation heading slowly but surely toward fiscal disaster. Because of an aging population and rising health-care costs, spending -- primarily on Medicare, Medicaid and Social Security -- will steadily rise in coming years, as the nonpartisan and authoritative Congressional Budget Office explained in a report last month. Revenue is not projected to rise nearly as quickly. The result, if the government does not alter course: crushing debt that could lead to hyperinflation, prolonged depression, or both. Poor people would suffer most, and there would be many more of them.
"The systematic widening of budget shortfalls projected under CBO's long-term scenarios has never been observed in U.S. history," the CBO pointed out in its usual dry style. And: "All in all, the U.S. economy could contract sharply for a long period."
Obama's response has been to acknowledge the seriousness of the problem -- and make it worse. I'm not talking about his record-breaking stimulus plan, which was essential (if not ideally shaped) given the recession he also inherited. Rather, it is Obama's long-term budget that would more than double the projected deficit over the next 10 years, to $9 trillion, by extending most of the Bush tax cuts and limiting the alternative minimum tax while creating new programs and entitlements (to college tuition scholarships, for example) and refusing to cut back on existing ones.
And that's not to mention his top priority, universal access to health care. Obama has said that reform must be paid for, and he hopes it will lead to a slowing in the growth of health-care costs. That would hugely improve the long-term budget outlook.
But the prospects of cost control are tenuous, experimental, distant and politically fraught; by comparison, creating an expensive new entitlement is easy. Obama has proposed to pay for part of universal access by collecting more income tax from the wealthy, which would make the existing deficit that much harder to close. The cost of the entitlement could rise more quickly than the revenue paying for it. There is a good chance, in other words, that whatever emerges from Congress this summer will worsen the budget prognosis.
The bottom line is this: You cannot run a progressive government of the kind Obama favors by collecting only 18 percent of the gross domestic product in taxes, which has been the norm over the past 40 years. Nor can you increase the tax take to 24.5 percent of GDP -- which is what Obama proposes to be spending in 2019 -- simply by making the rich pay more.
But rather than level with the American people about this, or lay out a plan to raise the needed taxes, the Obama administration and the Democratic Congress are putting the spending pieces of progressive government in place and apparently counting on the tax piece to fall into place later.
Just to be clear: I support universal access to health care, and I don't think there's any natural law that says the U.S. economy couldn't function with higher taxes -- say, 22 percent of GDP. But you can't get there without wrenching changes -- abolishing the mortgage and charitable deductions, for example, or instituting a nationwide consumption tax. And unless you raise taxes so high that you risk choking economic growth, you also will have to trim Medicare and Social Security benefits.
It would be foolishly counterproductive to begin closing the gap in the midst of recession. But you could be setting long-term changes in motion -- adjusting rules for people who will retire five or 10 years from now, for example.
Obama and his economic team understand all this, and maybe they have a plan to get from here to there. Maybe they'll do the popular stuff first, and then next year, or next term -- as global investors become alarmed at the U.S. fiscal outlook and begin driving our interest rates higher -- persuade Congress to take its medicine and get the fiscal house in order.
But let's not forget how that starving-the-beast thing worked out. Conservatives were happy to cut taxes, but cutting spending didn't appeal all that much, and deficits soared. By postponing all the "hard choices" he warns of, Obama may be scripting a sequel.
Obama's Twist on a GOP Budget Strategy
By Fred Hiatt
Monday, July 6, 2009
Since the Reagan era, some conservatives have hoped to shrink government by "starving the beast." Refuse to raise taxes, they figured, and eventually spending would have to fall.
It's beginning to look as though the new team may have a similar strategy, in reverse: Increase spending, and eventually taxes will have to be raised.
No official has articulated that to me as a strategy. But look at the evidence.
George Bush bequeathed to President Obama a nation heading slowly but surely toward fiscal disaster. Because of an aging population and rising health-care costs, spending -- primarily on Medicare, Medicaid and Social Security -- will steadily rise in coming years, as the nonpartisan and authoritative Congressional Budget Office explained in a report last month. Revenue is not projected to rise nearly as quickly. The result, if the government does not alter course: crushing debt that could lead to hyperinflation, prolonged depression, or both. Poor people would suffer most, and there would be many more of them.
"The systematic widening of budget shortfalls projected under CBO's long-term scenarios has never been observed in U.S. history," the CBO pointed out in its usual dry style. And: "All in all, the U.S. economy could contract sharply for a long period."
Obama's response has been to acknowledge the seriousness of the problem -- and make it worse. I'm not talking about his record-breaking stimulus plan, which was essential (if not ideally shaped) given the recession he also inherited. Rather, it is Obama's long-term budget that would more than double the projected deficit over the next 10 years, to $9 trillion, by extending most of the Bush tax cuts and limiting the alternative minimum tax while creating new programs and entitlements (to college tuition scholarships, for example) and refusing to cut back on existing ones.
And that's not to mention his top priority, universal access to health care. Obama has said that reform must be paid for, and he hopes it will lead to a slowing in the growth of health-care costs. That would hugely improve the long-term budget outlook.
But the prospects of cost control are tenuous, experimental, distant and politically fraught; by comparison, creating an expensive new entitlement is easy. Obama has proposed to pay for part of universal access by collecting more income tax from the wealthy, which would make the existing deficit that much harder to close. The cost of the entitlement could rise more quickly than the revenue paying for it. There is a good chance, in other words, that whatever emerges from Congress this summer will worsen the budget prognosis.
The bottom line is this: You cannot run a progressive government of the kind Obama favors by collecting only 18 percent of the gross domestic product in taxes, which has been the norm over the past 40 years. Nor can you increase the tax take to 24.5 percent of GDP -- which is what Obama proposes to be spending in 2019 -- simply by making the rich pay more.
But rather than level with the American people about this, or lay out a plan to raise the needed taxes, the Obama administration and the Democratic Congress are putting the spending pieces of progressive government in place and apparently counting on the tax piece to fall into place later.
Just to be clear: I support universal access to health care, and I don't think there's any natural law that says the U.S. economy couldn't function with higher taxes -- say, 22 percent of GDP. But you can't get there without wrenching changes -- abolishing the mortgage and charitable deductions, for example, or instituting a nationwide consumption tax. And unless you raise taxes so high that you risk choking economic growth, you also will have to trim Medicare and Social Security benefits.
It would be foolishly counterproductive to begin closing the gap in the midst of recession. But you could be setting long-term changes in motion -- adjusting rules for people who will retire five or 10 years from now, for example.
Obama and his economic team understand all this, and maybe they have a plan to get from here to there. Maybe they'll do the popular stuff first, and then next year, or next term -- as global investors become alarmed at the U.S. fiscal outlook and begin driving our interest rates higher -- persuade Congress to take its medicine and get the fiscal house in order.
But let's not forget how that starving-the-beast thing worked out. Conservatives were happy to cut taxes, but cutting spending didn't appeal all that much, and deficits soared. By postponing all the "hard choices" he warns of, Obama may be scripting a sequel.
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