JPMorgan Swap Deals Spur Probe as Default Stalks Alabama County

May 22 (Bloomberg) -- As nighttime temperatures plunged in Birmingham, Alabama, last October, Dora Bonner had a choice: either pay the gas bill so she could heat the home she shares with four grandchildren, or send the Birmingham Water Works a $250 check for her water and sewer bill.

Bonner, who is 73 and lives on Social Security, decided to keep the house from freezing.

``I couldn't afford the water, so they shut it off,'' she says.

Bonner's sewer bills have risen more than fourfold in the past decade. So have those of others in Jefferson County, which has 659,000 residents and includes Birmingham, the state's largest city.

What's threatening to increase them even more isn't the high cost of treating waste; it's the way county officials chose to finance the $3.2 billion in debt they took on to build a new sewer system. The county relied on advice from a bank, JPMorgan Chase & Co., to arrange its funding, rather than use competitive bidding.

Like homeowners who took out mortgages they couldn't afford and didn't understand, Jefferson County officials rejected fixed- rate debt and borrowed instead at rates that varied with the market.

The county paid banks $120 million in fees -- six times the prevailing rate -- for $5.8 billion in interest-rate swaps. That was supposed to protect the county from rising rates for their bonds. Lending rates went the wrong way, putting the county $277 million deeper into debt.

Read the whole sorry tale.

In the long run, we're all dead. John Maynard Keynes

Hamish McRae: Don't believe everything George Soros says

If George Soros thinks Britain is likely to have a recession, it must be so? Er, no

(...)

I think at a time like this it is important to be measured. This is not unknown territory. We have a lot of experience of post-war economic cycles and you have to be profoundly gloomy to believe that this one will be outside the boundaries that these define. I would go further: you have to be profoundly gloomy to believe that the next few years will be as bad as the 1970s, in economic terms the most difficult of the post-war decades. Then there was double-digit inflation and a double-dip recession in most developed countries, followed in the 1980s by double-digit unemployment in many of them as inflation was slowly ground out of the system.

(...)

This time it looks as though unemployment may rise a little but to nothing like the early 1980s or early 1990s. Instead it will be the living standards of most of us, those in jobs and those who have retired that will take the strain.

In one sense this is welcome: much better that we should all feel some burden of adjustment rather than have this burden carried disproportionately by the unemployed. But actually there will still be a big random element. People in the public sector will be better protected than in the private; pensioners with indexed pensions will do particularly well.

All is fine, says Hamish McRae. Is he NuLabor?


In the long run, we're all dead. John Maynard Keynes

Fuelling fears over high energy costs

Energy prices are rising faster here than anywhere in Europe, MPs were warned.

Customer champion Energywatch blamed rocketing bills on lack of competition - 10 years ago there were 20 energy firms vying for business, now there are just six.

Energywatch chief Allan Asher told the Commons Business and Enterprise Committee: "There is a myth about vigorous price competition between suppliers.

"For the product they most actively sell - direct debit for 'dual fuel' gas and electricity - the price difference between the cheapest and the most expensive is about £30 a year, a few pence a week."

What's funny here is that if you had perfect competition, prices should be identical between all suppliers (in theory).

In the long run, we're all dead. John Maynard Keynes

The Economist seems to think that there is no benefit to the protection of local agriculture unless it is "market-oriented".  I'm curious if the sense on the ground is that the CAP is actually a good thing for the European consumer and environment, or whether it is actually some archaic thing that needs to be totally revamped, or is it something else entirely that I just don't see?

My only exposure was my trip through France down to St. Emelion and a couple of days walking and biking around the Bourdeaux region-seemed awfully nice to me.

"I said, 'Wait a minute, Chester, You know I'm a peaceful man...'" Robbie Robertson

Kunstler's most widely known work is The Long Emergency about how society unravels when oil production doesn't live up to demand. Essentially the World Made by Hand is fictionalized version of The Long Emergency.

The novel is bleak. It is set in upstate New York. The United States has collapsed through a series of events -- war, terrorism, coup d'état -- followed by the flu epidemics and civil strife that winnow out the remaining population. Law disappears, real estate collapses, and towns transform agrarian outposts.

In some ways his book is post-apocalyptic disaster porn. Globalism is dead, of course, and while there is no mention of Europe so far in the novel, there are some things I think that can be extrapolated on the impact to Europe. The U.S. is very spread out, especially the western part of the country. Cities have failed and he hints of ethnic cleansing between groups. Evangelical faith communities are all the rage.

Rural communities that have local agriculture are better off than urban sprawl. Older houses -- built before the 20th century oil economy -- hold up better. Therefore, in Kunstler's world -- European communties may revert back to the 1800s better than most of the United States.

It is an interesting book. The writing is not great and the message is utterly depressing, but it is a very quick read. And somehow making it fiction impacted me more than reading the same thing with his non-fiction.

The message of the post-peak oil U.S. for me is -- I am doomed. I have the wrong skills, wrong house, and wrong supplies for a World Made by Hand. My best bet is to hoard some things, such as matches and spices from Asia, now to barter and trade later.

Unfortunately, biofuel=green looks like it's being pushed.  Heavily.  :(

Asia to cut subsidies as oil hits $135

Asian governments on Thursday moved to cut energy subsidies to protect their finances and those of state-owned energy companies in the face of soaring oil prices.

As crude oil pushed through $135 a barrel for the first time, Taiwan, Malaysia and Indonesia announced plans for urgent action to free prices or cut subsidy costs. China denied rumours of an imminent increase in retail prices, but may relax price controls.

Now that would be a major, major policy change. A welcome one, but a momentous one, with lots of potentially nasty politicla consequences.

In the long run, we're all dead. John Maynard Keynes

Just in time for the debate on the 42 day limit, an attempted suicide bombing in Exeter. No, I don't think it was a Govt conspiracy, just some Islamists who know how to turn the screw to best effect. After all, Exeter isn't your category A target, so I think they were just working within the limitations of their patsy.

A man arrested in connection with a city centre explosion was tonight named by police as 22-year-old Nicky Reilly - who police believe had adopted the Islamic faith.

He suffered lacerations to his eye and some facial burning after a device he had on him partially exploded.

Another device found in the vicinity of the restaurant did not explode

Labour was tonight preparing itself for an electoral hammering as it awaited the results of the Crewe and Nantwich byelection.

Party sources have admitted that Labour could lose by as many as 8,000 votes in what is being billed as the most important byelection for more than a decade.

The polls close at 10pm and the result is expected between 2am and 3am. Some activists on the ground in Crewe said that turnout had been higher than expected.

If it is of that order Brown has little chance of surviving to the next election, possibly not till Xmas. Of course, there is the minor problem that there isn't a credible replacement but right now allowing Brown to walk in unopposed last year is looking to be a mistake of clinton AUMF proportions. An election losing fatal error that can never be washed away.

keep to the Fen Causeway

Interviewer: What do you believe is behind this recent increase in terrorist bombings? Helpmann: Bad sportsmanship