Economic crisis worsens, KBR scoops up loot

Obama’s embracing his inner Dubya

From “The Poetry of Death: Patterns of State Terror,” an essay by Chris Floyd on the Obama administration’s continuities with and expansions of some of Dubya’s most dubious dirty deeds. Found at Floyd’s website, Empire Burlesque.

Where Bush was content with smirks and hints about his assassination program, Obama is bold, sending his security chief to declare openly before Congress that the president now has the unrestricted right and power to murder anyone, Americans included, in cold blood, by the simple expedient of declaring his victim a suspected terrorist of some vague description. Whereas Bush and Cheney usually resorted to backroom bureaucratic knife-twisting or bombastic but empty public threats to try to silence and cow officials who expose high crimes of state, the Obama Administration brazenly brings down the draconian power of federal prosecution against whistleblowers. Our progressives-in-power will not just take away your government job or bluster at your editors if you give your fellow citizens a glimpse of the blood-soaked sausage-making that goes on behind the imperial curtain; no, they will put you in the penitentiary, to rot away with murderers and child abusers, which is where they rank all such treacherous tellers of truth.

Doug Thompson has a similarly disturbing post at Capitol Hill Blue.

Recovery? We don’t got no stinkin’ recovery.

The housing implosion continues, as documented by Calculated Risk, one of the best indicators sites around.

The combined REO (Real Estate Owned) inventory for Fannie, Freddie and the FHA increased by 22% in Q1 2010 from Q4 2009. The REO inventory (foreclosed homes) increased 59% compared to Q1 2009 (year-over-year comparison).


Even with all the delays in foreclosure, the REO inventory has increased sharply over the last three quarters, from 135,868 at the end of Q2 2009, to 153,007 in Q3 2009, 172,357 at the end of Q4 2009 and now 209,500 at the end of Q4 2010.

These are new records for all three agencies.

Remember this is just a portion of the total REO inventory. Private label securities and banks and thrifts hold an even larger number of REOs.

Further evidence of the ongoing debacle, also from Calculated Risk: One home in four still ‘underwater’

CoreLogic reported today that more than 11.2 million, or 24

percent, of all residential properties with mortgages, were in negative equity at the end of the f irst quarter of 2010, down slightly from 11.3 million and 24 percent from the fourth quarter of 2009. An additional 2.3 million borrowers had less than five percent equity. Together, negative equity and near-negative equity mortgages accounted for over 28 percent of all residential properties with a mortgage nationwide.

From the report:

Negative equity continues to be concentrated in five states: Nevada, which had the highest percentage negative equity with 70 percent of all of its mortgaged properties underwater, followed by Arizona (51 percent), Florida (48 percent), Michigan (39 percent) and California (34 percent). Las Vegas remains the top ranked CBSA with 75% of mortgaged properties being underwater, followed by Stockton (65%), Modesto (62%), Vallejo-Fairfield (60%) and Phoenix (58%). Phoenix had more than 550,000 underwater borrowers, the most households of any metropolitan market in the country. Riverside (463,000), Los Angeles (406,000) Atlanta (399,000) and Chicago (365,000) round out the top five markets.

There’s a lot more bad news at the site.

Yet another sign of crisis: Corporate bond collapse

From a Saturday piece by Bloomberg’s Shannon D. Harrington:

U.S. corporate bond sales fell 86 percent this week to the lowest this year, Bloomberg data show. Beazer Homes USA Inc., the Atlanta-based homebuilder, and Lennox International Inc., the Richardson, Texas-based maker of heating and air- conditioning systems, led $2.55 billion of debt issuance, compared with a 2010 weekly average of $23.9 billion.

In Europe, corporate bond sales have mostly evaporated as investors retreated from riskier assets, with issuance this week of 1.3 billion euros.

Crisis destabilizes German government

From Bloomberg’s Brian Parkin:

Chancellor Angela Merkel’s party unexpectedly lost control of Germany’s most populous state in a regional election, television projections showed, potentially swinging the balance of power in Berlin and dealing Merkel a blow after criticism of her handling of the Greek crisis.

Merkel’s Christian Democratic Union, or CDU, took 34.3 percent in today’s election in North Rhine-Westphalia, and the opposition Social Democrats 34.7 percent, latest projections showed. The Greens took 12.3 percent, the Free Democrats 6.7 percent and the Left Party 5.7 percent, enough to win seats in the state parliament in Dusseldorf for the first time.

The results may give the Social Democrats and Greens a slim majority, ending the CDU-led coalition that has governed North Rhine-Westphalia, or NRW, since 2005. That would cost Merkel her majority in the upper house of parliament in Berlin, where Germany’s 16 states are represented.


Hermann Groehe, general secretary of Merkel’s party, attributed the loss in North Rhine-Westphalia to “concerns over the stability of the euro and the situation in Greece,” he said on ZDF television. The state’s CDU prime minister, Juergen Ruettgers, also cited Greece for the results.

With national polls showing public opposition to the lifeline running high, Greece “spilled over into the NRW vote,” said Manfred Guellner, head of Berlin-based polling company Forsa.

The Great Depression of the XXI Century

From the Preface of a new book, The Global Economic Crisis, The Great Depression of the XXI Century, edited by Michel Chossudovsky and Andrew Gavin Marshall of Global Research:

An outright “economic war” resulting in unemployment, poverty and disease is carried out through the free market. People’s lives are in a freefall and their purchasing power is destroyed. In a very real sense, the last twenty years of global “free market” economy have resulted, through poverty and social destitution, in the lives of millions of people.

Rather than addressing an impending social catastrophe, Western governments, which serve the interests of the economic elites, have installed a “Big Brother” police state, with a mandate to confront and repress all forms of opposition and social dissent.

An accompanying collection of charts assembled by Gus Lubin is here.

And speaking of charts. . .

Here’s one that show one of the factors that makes this crisis unique: Long-term unemployment has hit Great Depression levels.

Meanwhile, for the corporateers, business as usual

From Business Week’s Tony Capaccio comes proof that for the loot-n-scoot crowd, nothing has changed.

KBR Inc. was selected for a no-bid contract worth as much as $568 million through 2011 for military support services in Iraq, the Army said.

The Army announced its decision yesterday only hours after the Justice Department said it will pursue a lawsuit accusing the Houston-based company of taking kickbacks from two subcontractors on Iraq-related work. The Army also awarded the work to KBR over objections from members of Congress, who have pushed the Pentagon to seek bids for further logistics contracts.

The Justice Department said the government will join a suit filed by whistleblowers alleging that two freight-forwarding firms gave KBR transportation department employees kickbacks in the form of meals, drinks, sports tickets and golf outings.

“Defense contractors cannot take advantage of the ongoing war effort by accepting unlawful kickbacks,” Assistant Attorney General Tony West said in a statement.

Doesn’t it make you proud to be an American, don’t it?

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