LyrArc Article Gist
Credit card companies do not disclose how much of the profits are from penalty fees. These companes target borrowers who rarely default but often pay penalty fees. The new bill makes high margins from this practice and lending to subprime borrowers difficult.

LyrArc Article Gist
Gordon and Dowell report in WSJ on F-16's and Houthi use of radar turned on at the last minute. Ballistic missile aimed at aircraft carrier Harry Truman that caused it to change direction. Stretched forces in the Gulf region a warning from Gen Dan Caine of the US Air Force on capabilities. This is an account of the lessons learned from the Operation Rough Rider to get the Houthis to stop attacks on shipping in the Red Sea Suez route, including an attack on a Greek ship that had 1 million barrels of oil which after damage could have truned into an environmental disaster worse than the Exxon Valdez.  It shows the risks of the war, risks of stretching the forces and the fleet, the calculated risks taken each time as the US faces both the need to keep peace and shipping safe in the region and also address challenges in Taiwan and the Pacific, challenges closer to home in Latin America to keep America safe with the Monroe Doctrine. Every bit helps including the US doing the right thing, not being belligerant but standing up where it is right, working with the Russians and Chinese, and the Indians, with the Europeans, for what is fair and does good for the world at large. And working with the Europeans on a settlement of conflict in Europe that detracts from the need for addressing challenges that hurt the well being of the people of the world in Asia, Latin America, and the rest of the world. ...

LyrArc Article Gist
Pulitzer prize winning journalist reporting on the Middle East and Saudi Arabia, Karen Elliott House, describes the changes in Saudi society and politics against the backdrop of the changes in the Middle East. Her exceptional reporting and insights provide a look into the Middle East at a time when young people make up the largest demographic and are looking for jobs and economic opportunity, with political structures lagging far behind in meeting the growing aspirations. The larger backdrop of the region extends into South Asia, with large Muslim populations unable to make the right choices for freedom and economic progress because of internal divisions, widespread illiteracy and lack of education of the rural population, and poor leadership. The lag affects western society in different ways, including the threat of terrorism, sporadic involvement in the region's conflicts, and a sense of not being able to do the right thing by its own ideals.

LyrArc Article Gist
The government is focussing on tangible common equity ratio which for Citigroup is at a low of 1.5%. A 3% TCE is considered safe. The tier 1 capital ratio for Citigroup is 11.8% above the level that shows capital adequacy. To boost the Citigroup TCE ratio the government is expected to convert its preferred stock into common stock that would give it about 40% of Citigroup's common stock.

LyrArc Article Gist
The New York Times editorial page on the day following the passage of the second bailout or rescue plan of $700 billion in the Senate after it was voted down in the House of Representatives. It points out that the bailout bill does little to prevent a wave of foreclosures which the NYT estimates at six million people expected to default in the rest of this year and 2009. It faults lenders unwillingness to reduce the loan balances amount. At a Congressional hearing for the Hope for Homeowners program in which the governmet wold insure upto $300 bilonin new affordable loans for troubled borrowers if the lenders voluntarily refinance delinquent mortgages by reducing loan balances to 90% of the homes' current market value, lending banks were lukewarm about taking these losses in exchange for bigger losses in foreclosures. These lenders include Wels Fargo, Chase, Bank of America and Citigroup. The FDIC's Sheila Barr has also advocated reducing loan balances in her proposal for tackling the housing crisis presented after the Bear Stearns crisis. She is taking this approach to banks that like IndyMac were taken over by FDIC. But the numbers are not large letters were sent to 28,000 delinquent borrowers of IndyMac recently to reduce loan balances. This is a serious problem and either Congress and Treasury are leaving this problem to the next administration taking office 3 months from now as there is no real consensus on this issue even today or they are missing the impact this has in dropping home price values even further in neigborhoods across the nation as foreclosures drive prices down even further compounding the problem. For the financial institutions it would appear that they are letting this drag out because their capital is at frighteningly low levels and taking losses at one time is harder than taking the foreclosure losses dragged out over 1-3 years and they are also looking for a way in which they can let the government bear the burden of losses as the crisis intensifies which can make sense from the point of view of each institution. According to a report in the Wall Street Journal on September 29, 2008, Sheila Barr told Congress this month that in recent years troubled loan portfolios have yielded about 32% of book value, compared with more than 87% for loans in which the borrower is current. These are strong statistics in favor of lenders taking an informed decision to lower loan balances voluntarily with some government help along the way but the fact that this is not happening leads one to think that something is falling between the cracks, initial lender reluctance to take losses through voluntary balance reduction at the time of Bear Stearns crisis given taxpayer reluctance and lack of government initiative to help lenders in doing this, sort of what Martin Feldstein suggested in a series of articles during the time before and after the Bear Steans crisis. And then as the credit crisis worsened with collapse of Lehman, WaMu, Freddie, Fannie and Wachovia in September 2008 fear gripping the markets and LIBOR interbank lending rate at close to 8%, banks gripped by the fear prevailing in the market, frozen practically about any steps other than preserving their hammered capital, and reluctant to take losses which would further impair their capital. Also in the WSJ Sept 8, on help for homeowners, Deutsche Bank estimates 40% of homeowners or about 20 million households will owe more than their home is worth by the time the housing market stabilizes. This will lead to some homeowners making the rational decision as Martin Feldstein argued to walk away from their homes, leading to more foreclosure losses for th banks. This article Rescue Includes Steps to Help Borrowers Keep Homes by Ruth Simon also has some information that confirms the NYT editorial. An analysis it says of 144 mortgage modifications by the Massachusetts Attorney General's office found that none reduced mortgage balances and onoly a handful reduced monthly payments. Even with interest rate reductions, the study showed borrrowers wound up paying more because of missed paymmets penalties and fees. Another study by Credit Suisse mentioned in the same article points out that the percentage of borrowers who were behind 6 months after loan modifications dropped to 17% when lenders reduced the loan balances and 13% when mortgage companies froze the interest rate of adjustable rate mortgages. A bigger problem is the effect on consumption, if 40% of homeowners end up owing more to the bank than their home is worth as Deutsche Bank estimates, combined with higher unemployment and higher parttime employment, by the time things stabilize. And this is the big looming problem for a new administration in January even if the bailout plan passes Congress this week after revisions and eases the crisis in the credit markets. ...

LyrArc Article Gist
In his farewell address Mr. Trump stated there were no new wars during his presidency- "the first president in decades who started no new wars." He also stated that he stood up to China- "we rallied the nations of the world to stand up to China like never before."

About the controversies that dogged his administration he said - "I did not take the easiest course, by far it was actually the most difficult. I did not seek the path that would get the least criticism. I took on the tough battles, the hardest fights, the most difficult choices, that's what you elected me to do."

He urged prayers for the new administration.

About the movement he started to defend borders, bring back American factories, Mr. Trump said - "The movement we started is just beginning. There has never been anything like it."

LyrArc Article Gist
Immigration to the U.S. from Mexico declines by 2013, when China and India passed Mexico in the the number of immigrants from each country. About two thirds of people of Mexican origin are native born compared to two thirds of people of Asian origin being foreign born.

LyrArc Article Gist
Private credit market has grown to $2 trillion in 2025 in 10 years  reaching $3.5 trillion in 2028 yet remains unregulated. Private credit is when investment funds such as Blackstone and Apollo, others, loan money to large companies. After the 2009 financial crisis bank regulation was tightened so that riskier loans were kept off the banks books to avoid another financial crisis. This led to the private credit market as a source of loans for small companies.Over 10 years the loans are now going to large companies and it is growing fast. As is typical in the capitalist economies regulation falls behind new financial developments or tech developments. Congress is always playing catchup and is distracted by other issues or has lobbyists asking for less regulation.  This report in the WSJ says when companies like Blackstone have private credit loans of $260 billion this can pose substantial risks for the US economy when this area of lending has no regulation as is required for a modern economy to function correctly. Private credit offers returns of 14-16% for these funds with risks associated and regulators are not asked to set the required rules. It only makes bank regulation ineffective as lending goes to unregulated parts of the economy. ...

LyrArc Article Gist
This editorial in The Guardian calls the new British Health Secretary Sajid Javid's actions after only 4 months on the job a bit of breathtaking cynicism, and a slap in the face of family physicians in the UK. In 2015 the Tory government promised to increase the number of family physicians by 5000, instead numbers have dropped today by 4.5% to 28096, even as demand has increased. The complete lack of sensitivity of the new Health Secretary to the level of burnout in family practice in the UK, and the difficulty attracting young doctors to family practice, has aroused a furious backlash in the UK. He has called for an end to social distancing and more face to face appointments when government policy had decreased face to face appointments following lockdowns. Britain has one of the lowest numbers of doctors per capita in Europe, says the Guardian, and that the government is tackling the wrong problem beggars belief.

LyrArc Article Gist
The lack of vaccine supplies is affecting countries such as the Philippines, Bangladesh, Brazil and Mexico as cases rise. Porto Alegre and Manila are being hit particularly hard.