Just a brief note directing you to a site called naked capitalism, which has a post here that explains how a  new program aimed at helping homeowners underwater with their mortgages, may in fact not be a help but a program enriching bankers and encouraging predatory lending.

Let’s take a look at some hypothetical home borrowers who currently owe $400,000 in various mortgages with difficult terms or high rates, and whose home is presently worth $320,000. They jump on the new FHFA Home Affordable Refinance Program and refinance into a single 30-year fixed-rate loan at a 5.75% interest rate with a 125% loan-to-value ratio…

With the home value appreciation tweaked to a slightly less rosy scenario, it takes 17 years before our couple can break even selling their house….

If the goal of this new 125% loan-to-value program is to financially imprison people in their current homes for a decade or more, then it looks like it could be a rousing success. However, I’m not sure how many currently struggling home borrowers would really consider that to be much of a “help.”

Beezer here.  Plus, in California at least, a refinanced mortgage is a recourse loan, whereas the original mortgage was non-recourse:  You can walk away from the original mortgage and begin anew, but if you use the FHFA plan and refinance, you can’t walk away, you’re stuck!

Some deal huh?

Every once in a while I post something outside my normal realm.  Today’s post is such a case.  I’m reprinting an email I received from a source I believe to be knowledgeable on the subject.  Without comment.

This came via an NTSB Accident Investigator. You saw him on TV when
Kennedy Jr. dumped his plane in the Atlantic

The press is having a field day turning “Sully” Sullenberger
into a Lindbergh-like hero. I attended his welcoming home reception in
Danville , CA

There are stories circulating now about how the flight computers
helped “save” the aircraft by insuring the ditching was done properly.
The stories themselves are absolute nonsense and the contention that the
flight computers ensured the proper attitude was maintained for ditching is
pure fabrication.

So what’s wrong with Airbus wanting to steal a little glory for
their computerized drones? There is a good chance it was the computers
that put the aircraft into the water!

I readily admit I heartily dislike Airbus because of their
design philosophy, I will never set foot in an A-380 (the superjumbo) as I
consider it a really bad accident looking for a place to happen. I am not
much happier with the rest of them but especially the A-320 which has killed
several folks, while the engineers try to perfect software that can
replace a human brain that has a talent for flying… something that I,
rather naturally, don’t believe possible.

It is well known that I love Boeings. I love to fly them.
Beyond the sheer joy of just flying the Boeing, I also believe in their
design philosophy that the last word has to be with the pilot, not the 
machine.

No pilot, no matter how hard he tries, can turn an A-320 upside
down. It just won’t do it. Airbus believes it has designed a computer
that is smarter than a pilot (the evidence of dead bodies scattered around
Mulhouse , France

What follows is an e-mail from a retired US Air Pilot who has
flown the Airbus A320 just like the one that ended up in the Hudson

I don’t know him. I’ve seen him in the crew room and around the
system but never met him. He was former PSA and I was former Piedmont

Don’t be surprised if the Airbus fly by wire computers didn’t
put a perfectly good airplane in the water. In an older generation
airplane like the 727 or 737-300/400, the throttles are hooked to the fuel
controllers on the engine by a steel throttle cable just like a TBM or a
Comanche.

On the Airbus nothing in the cockpit is real. Everything is
electronic. The throttles, rudder and brake pedals and the side stick
are hooked to rheostats who talk to a computer who talks to a electric
hydraulic servo valve which in turn hopefully moves something.

In a older generation airplane when you hit birds the engines
keep screaming or they blow up but they don’t both roll back to idle
simultaneously like happened to Flt. 1549. All it would take is for bird
guts to plug a pressure sensor or knock the pitot probe off or plug it
and the computers would roll the engines back to idle thinking they were
over boosting because the computers were getting bad data.

The Airbus is a real pile of shit. I don’t like riding on them.
Google the Airbus A320 Crash at the Paris

It’s kind of funny to hear the Wall Street apologists complain about “Class Warfare” when the Government begins to become interested again in regulation.

Obviously the poor, if they’ve been conducting class warfare, haven’t been doing a very good job of it.  On the other hand, the Rich must be doing a very good job of it.   As it turns out the rich have recently been doing a remarkably good job of it, even by historical standards.  Which as it turns out can be quantified (other than just pointing out someone has a ton of money).

This from an article in the Financial Times here.

“The answer is capitalism’s dirty little secret: excessive lending was the only way to maintain the living standards of the vast bulk of the population at a time when wealth was being concentrated in the hands of an elite.

The amount by which the elite has benefited is startling, and illustrates the problem with lightly regulated free markets: the rich get much richer while the rest do not get richer at all. According to Société Générale economists, the inflation-adjusted income of the highest-paid fifth of US earners has risen by 60 per cent since 1970, while it has fallen by more than 10 per cent for the rest. As was recently pointed out in the New York Review of Books, the Walton family, of Wal-Mart fame, is wealthier than the bottom third of the US population put together – about 100m people. These are staggering statistics, confirmed by measures such as the US and UK’s ever-rising Gini coefficients, which estimate income disparity. Another way of putting this is that the share of profits in gross domestic product is at a 100-year high, or was until very recently.”

Beezer here.  And the financial crisis that has ensued (income disparities rose dramatically leading up to the stock market crash of 1929 and the Great Depression) has merely sped up the necessary adjustments for deleveraging.  There was a three year gap, it should be noted, between the stock market crash and when the national economy officially plunged into depression.  In fact the stock market recovered nearly all of its losses by 1930, but then rolled over down to the lowest levels of the 20th century not to return to the previous levels until 1954!

In Massachusetts since August, citizens have bought $1.2 billion in state bonds to support state spending needs.  During WWII the US issued War Bonds in denominations small enough for average folks to buy.  It was a tremendous effort, both in terms of money raised and in terms of building public support for the War effort.

Today almost 3/4 of America’s Treasury debt is being bought by overseas investors, central banks and sovereign funds.  It’s an unhealthy situation and compromises the country’s independence.

The Treasury should be issuing bonds each of which will direct money into important national efforts.  They should issue Energy Bonds to raise domestic investment in our effort to transform our energy system to a sustainable model, as one obvious example.  They should issue HealthCare bonds to help fund our transition to a more equitable, affordable national health care system.

Common sense, combined with a little effort, can and would make a big difference.  Taxes are taxes but they go who knows where.  This type of investment will not reduce tax income, but it will increase overall funding for achieving important goals.

Tying specific Treasury securities to a national program will increase America’s investment in itself.  And it will reduce the country’s corrosive dependence upon foreigners to sustain our improvements.

Just a reminder.  Since it’s inception in 1980, taxpayers have spent something on the order of $45 billion to clean up environmental damage created by America’s longstanding failure to husband it’s resources.

This is just a small taste of what lies ahead if America continues to ignore environmental damage that continues unabated today.  Witness the coal industry’s miserable record of environmental destruction: Entire mountaintops leveled, aquifers polluted, just to name two that to this day are still tolerated.

The Superfund and brownfield site cleanups came about as a result of the Love Canal scandal.  In case you forgot about this, or are too young to even know about Love Canal, here is a brief Wiki recount.

Love Canal is a neighborhood in Niagara Falls, New York, which became the subject of national and international attention, controversy, and eventual environmental notoriety following the discovery of 21,000 tons of toxic waste buried beneath the neighborhood by Hooker Chemical. Love Canal officially covers 36 square blocks in the far southeastern corner of the city, along 99th Street and Read Avenue. Two bodies of water define the northern and southern boundaries of the neighborhood: Bergholtz Creek to the north and the Niagara River one-quarter mile (400 m) to the south. In this area, Grand Island is situated on the south shore of the Niagara River.

The Niagara Falls School Board chose to construct a school on this site, even though being fully aware of the fact that Hooker Chemical had dumped an appreciable amount of hazardous waste there, and the City of Niagara Falls permitted the building of homes and rental units on this tainted property. The construction efforts of the development released the chemical waste, leading to a public health emergency, an urban planning scandal, and a finding of liability on the part of the former owner. In the words of a state health commissioner, “Among its legacies, Love Canal will likely long endure as a ‘national symbol of a failure to exercise a sense of concern for future generations.”^[1] It was indeed a situation where the inhabitants of Love Canal “overflowed into the wastes instead of the other way around.” ^[2]

But we have not learned our lesson.  We still refuse to husband our resources or be decent stewards of our environment.

The Communist Dictator Stalin was said to have remarked “A single death is a tragedy.  A million deaths a statistic.”  Love Canal was a tragedy.  Forty five billion dollars is a statistic.

If we continue our ways, the mounting statistics will become a tragedy for us all.

Mother Nature has a way of suppressing or even eliminating species that overextend their natural domain: Including the human species.

If you have no knowledge of chemicals classified as endocrine disruptors, you should.  You’re likely to be consuming them all the time.  The problem with these chemicals is that they can mimic and affect your hormones.  And they do so at extremely low dosage levels, which means normal toxicology testing won’t protect you.

Here’s an explanation from The Endocrine Disruption Exchange.

“The endocrine system is the exquisitely balanced system of glands and hormones that regulates such vital functions as body growth, response to stress, sexual development and behavior, production and utilization of insulin, rate of metabolism, intelligence and behavior, and the ability to reproduce. Hormones are chemicals such as insulin, thyroxin, estrogen, and testosterone that interact with specific target cells. The interactions occur through a number of mechanisms, the easiest of which to conceptualize is the lock and key. For example, target cells such as those in the uterus contain receptors (locks) into which specific estrogenic hormones (keys) can attach and thereby cause specific biological actions, such as regulating ovulation or terminating pregnancy. Other endocrine disrupting mechanisms include binding hormone transport proteins or other proteins involved in signaling pathways, inhibiting or inducing enzymes, interfering with uptake and export from cells, and modifying gene expression.

Over the past 60 years, through technological advances a growing number of synthetic chemicals have been used in the production of almost everything we purchase. They have become a part of our indoor environment, found in cosmetics, cleaning compounds, baby and children’s toys, food storage containers, furniture and carpets, computers, phones, and appliances.

We encounter them as plastics and resins every day in our cars, trucks, planes, trains, sporting goods, outdoor equipment, medical equipment, dental sealants, and pharmaceuticals. Without fire retardants we would not be using our computers or lighting our homes. Instead of steel and wood, plastics and resins are now being used to build homes and offices, schools, etc. A large portion of pesticides are endocrine disruptors. What this constant everyday low-dose exposure means in terms of public health is just beginning to be explored by the academic community.”

What kind of effects might these chemicals develop in our bodies?  From a Scientific American article here.

“For example, bisphenol A (BPA), a primary component of some plastics, reacts with cells in the same way as the female hormone estrogen and could be acting synergistically with other pseudoestrogens in the bloodstream to produce heart disease, diabetes or liver failure. Such effects have been observed in animal studies in the lab as well as in frogs in the field for chemicals ranging from the phthalates (used to help perfumes scent linger and make plastics soft) to ubiquitous herbicides like atrazine, linked to malformation in frogs……

Among health issues that some advocates have linked to chemical exposures: early pubescence in girls (BPA hastens the onset of pubescence in juvenile rats); asthma (car and truck exhaust can induce or worsen lung inflammation), and genital malformation (phthalates have been linked to lower sperm count and deformed penises in rats). The rise in autism is also believed by some to be at least partially linked to an environmental cause; NIEHS began in 2006 a study of mothers of autistic children who are pregnant again to see if there is any association with particular environmental exposures.”

The issue is finally broken into the major media.  Here’s an article in the NYT by Nicholas Kristof entitled “It’s Time to Learn From Frogs.”

Kristof writes in his article “Now scientists are connecting the dots with evidence of increasing abnormalities among humans, particularly large increases in numbers of genital deformities among newborn boys. For example, up to 7 percent of boys are now born with undescended testicles, although this often self-corrects over time. And up to 1 percent of boys in the United States are now born with hypospadias, in which the urethra exits the penis improperly, such as at the base rather than the tip.”

And further on in the article Kristof reports:

“A lot of these compounds act as weak estrogen, so that’s why developing males — whether smallmouth bass or humans — tend to be more sensitive,” said Robert Lawrence, a professor of environmental health sciences at the Johns Hopkins Bloomberg School of Public Health. “It’s scary, very scary.”

The scientific case is still far from proven, as chemical companies emphasize, and the uncertainties for humans are vast. But there is accumulating evidence that male sperm count is dropping and that genital abnormalities in newborn boys are increasing. Some studies show correlations between these abnormalities and mothers who have greater exposure to these chemicals during pregnancy, through everything from hair spray to the water they drink.

Endocrine disruptors also affect females. It is now well established that DES, a synthetic estrogen given to many pregnant women from the 1930s to the 1970s to prevent miscarriages, caused abnormalities in the children. They seemed fine at birth, but girls born to those women have been more likely to develop misshaped sexual organs and cancer.”

None other than the prestigious Endocrine Society is sounding a strong warning.

“There is growing interest in the possible health threat posed by endocrine-disrupting chemicals (EDCs), which are substances in our environment, food, and consumer products that interfere with hormone biosynthesis, metabolism, or action resulting in a deviation from normal homeostatic control or reproduction. In this first Scientific Statement of The Endocrine Society, we present the evidence that endocrine disruptors have effects on male and female reproduction, breast development and cancer, prostate cancer, neuroendocrinology, thyroid, metabolism and obesity, and cardiovascular endocrinology. Results from animal models, human clinical observations, and epidemiological studies converge to implicate EDCs as a significant concern to public health. The mechanisms of EDCs involve divergent pathways including (but not limited to) estrogenic, antiandrogenic, thyroid, peroxisome proliferator-activated receptor , retinoid, and actions through other nuclear receptors; steroidogenic enzymes; neurotransmitter receptors and systems; and many other pathways that are highly conserved in wildlife and humans, and which can be modeled in laboratory in vitro and in vivo models. Furthermore, EDCs represent a broad class of molecules such as organochlorinated pesticides and industrial chemicals, plastics and plasticizers, fuels, and many other chemicals that are present in the environment or are in widespread use. We make a number of recommendations to increase understanding of effects of EDCs, including enhancing increased basic and clinical research, invoking the precautionary principle, and advocating involvement of individual and scientific society stakeholders in communicating and implementing changes in public policy and awareness….”

 So it’s time to become more aware.  The EPA is beginning to test these chemicals, but they are going to use outdated technologies that won’t flag low dose dangers.  Again from the Scientific American here.

“Each test and assay was designed under the surveillance of corporate lawyers who had bottom lines to protect and assorted toxicologists who were not trained in endocrinology and developmental biology. For over a decade, EPA has ignored the vast wealth of information on endocrine disruption from independent academic researchers funded by the United States and other governments in Europe and Asia. This 21st century research is based on different assumptions than the toxicological assumptions that drove the EPA test designs. And most important, because of the limited scope of its test battery, EPA is not in a position to address the pandemics of endocrine-related disorders that pose a threat to every child born today.”

Sound familiar in our political landscape?  Corporate interests interfere with the public’s safety, whether their physical safety such as that endangered by endocrine disruptors, or their financial safety which was recently severely damaged by a Wall Street protected by Washington.

President Obama promised us change.  I wonder if even he underestimated the amount of change that’s so desperately needed.