More Banks — 11 in Brazil — Face Credit Downgrades

Thursday, 28 June 2012 15:06

More Banks — 11 in Brazil — Face Credit Downgrades

Moody’s downgraded the credit ratings of 11 Brazilian banks on June 27 — some a single level, and some three levels. This action was tied to the sovereign debt credit rating of the government of Brazil. All major banks that had credit ratings higher than the Brazilian sovereign debt rating of Baa2 were affected, and these included Banco do Brasil SA, Banco Sanfra, Banco Santander (Brasil), HSBC Bank Brasil — Banco Multiplo SA HSBAR.UL, Banco Bradesco, Banco Itau and Banco Itau Unibanco SA. Moody’s put it thus: “
Our review indicated that there are few, if any, reasons to believe that these banks would be insulated from
a government debt crisis.”
The number of loans defined as “bad loans” in the Brazilian banking system hit as 10-year high in May to $1.03 trillion. Dilma Rousseff, the president of Brazil, had been encouraging banks to grant more loans in order to stoke the economy and this was following the policies of her predecessor, former President Luiz Inada Lula da Silva. 
This action by Moody’s comes on the heels of a review of the ratings of European banks. On June 25, Moody’s reduced the credit ratings of 28 out of 33 Spanish banks which had ratings. The reduction, in some cases by as much as four levels, came a few weeks after Moody’s reduced the sovereign debt credit rating of the government of Spain to a level just above junk bonds. 
Moody's concerns about Spain were similar to those related to Brazil: "The reduced creditworthiness of the Spanish sovereign ... affects the government's ability to support the banks. The banks' exposures to commercial real estate will likely cause higher losses, which might increase the likelihood that these banks will require external support."
In May 2012, Moody’s downgraded the credit rating of 26 Italian banks. Perhaps more ominously, Moody’s also in February 2012 announced that the credit ratings of 114 different financial institutions in 16 different European nations were on review for possible downgrade, citing the sovereign debt crisis of the eurozone as a primary reason for the possible downgrades.
There has been action by Moody’s since February. On March 28, seven Portuguese banks were downgraded one to two levels. On May 17, Moody’s downgraded 16 Spanish banks by one to three levels. At the end of May, Moody’s had downgraded the credit rating of nine Danish financial institutions by one to three levels. On June 6, Moody’s downgraded the credit rating of the three largest Austrian banks by two levels.
Not only Europe has been affected by these downgrades in credit rating. On June 22, 2012 Moody’s reduced the credit rating of 15 banks, five of which are American banks, including Bank of America, Goldman-Sachs, J.P. Morgan-Chase, and Citigroup.
Other rating services, notably Standard & Poor’s and Fitch, had already downgraded many European banks last year. This past April Standard & Poor’s downgraded the credit rating of 16 different Spanish banks. Last December Fitch downgraded the credit rating of seven very large banks on both sides of the Atlantic. Moody’s actions reflect a general concern by private credit rating services.
Analysts are not viewing these downgrades as anything but bad news. Phllipe Boderau of Pacific Investment Management in London stated: “I’d like to say the views of the rating agencies don’t matter anymore but, unfortunately, they do. This is a setback for the banks, particularly when you consider how much progress they have made in making themselves safer and more transparent.”
Huw van Steenis, a banking analyst at Morgan Stanley in London, notes: “The more the cost of wholesale funding goes up, the more likely it is that banks will want to retreat closer to a loan- to-deposit ratio of one. That adds to the intense pressure to deleverage, which will be a drag anchor on European economic recovery.”
The interconnectivity of banks and governments compounds the problem of these credit reductions. When the sovereign debt of government bonds of European nations is downgraded, then the value of those bonds as assets in bank portfolios drops, when means that the asset-to-debt ratio of banks holding the sovereign debt of these nations drops too and the ability of the banks to loan money shrinks (or the credit rating of banks which continue to have loans at the same monetary level is downgraded).
Banks also hold assets in the form of various corporate security interests such as stocks and bonds. The general decline economically caused by the sovereign debt crisis in Europe means that the value of these assets drops too. Stock loses market value and debt instruments of private corporations held by banks is downgraded.
The light at the end of the tunnel, if there is any, is faint and very far away. 

Obama Admin. Uses Prison Labor to Advance “Green” Agenda

Obama Admin. Uses Prison Labor to Advance “Green” Agenda

The Obama administration is utilizing the U.S. prison system to help bolster its green-energy agenda, while boosting foreign companies and funneling cash into the hands of Obama’s largest campaign donors,
according to a startling new report by the Washington Free Beacon.
Federal Prison Industries, more commonly known as UNICOR, is a wholly owned corporation of the U.S. government that uses penal labor from the Federal Bureau of Prisons to produce various products and services. Established in 1934, the organization was designed as a voluntary vocational-training program for federal prisoners, but has recently gone into business providing green-energy technology to federal agencies.
Federal inmates in Oregon and New York are earning between $.23 and $1.15 per hour building solar
panels, which are then sold to a range of government agencies. In rationalizing the program, administration officials say it provides federal agencies with an opportunity to buy solar panels from domestic manufacturers. UNICOR emphasizes this rationale on its website, asserting that its panels “are domestically sourced and produced, meeting the requirements of the Buy American Act, Trade Agreement Act, and the American Recovery and Reinvestment Act.”
However, in 2009 UNICOR entered into a $219-million contract with a Taiwanese company that supplies the solar cells used to build the panels. It’s the typical maneuver to work around the “Buy American” rhetoric, Rep. Bill Huizenga (R-Mich.) charged, because products built using foreign parts are still considered “American-made” as long as they are physically assembled in the United States. “It’s yet another outrage on what is happening with our tax dollars,” Huizenga said in an interview with the Beacon.
One of the more evident problems is that the effort produces virtually no benefit to the private sector, as the parts are foreign-made, and everything is assembled by prison inmates. And if that’s not enough, the law requires that government agencies buy the products from, ironically, the government agency itself.
Officials contend that the effort “prepar[es] inmates for the green economy” and that it “reduces the recidivism rate among prisoners.” However, as the Beacon affirms, a 2011 report by the Congressional Research Service debunks those claims, asserting that they are “not conclusive.”
Further yet, UNICOR has an extensive history of undercutting private enterprise. For example, a military clothing manufacturer with a long history of selling to the Defense Department was recently undercut by UNICOR for a $45-million contract. The company’s CEO, Steven Eisen, said he had to lay off about 100 workers after losing the contract. “Our government screams, howls and yells how the rest of the world is using prisoners or slave labor to manufacture items, and here we take the items right out of the mouths of people who need it,” he charged.
Such practices have become so widespread that Senate Minority Leader Mitch McConnell (R-Ky.) intervened to prevent UNICOR from pirating business from the private sector in his home state.
UNICOR oftentimes partners with private businesses to install the solar panels and assist government agencies in implementing other energy-efficient measures. One prominent beneficiary is Constellation Energy, an energy-efficient supplier that was recently acquired by the Exelon Corporation, a Chicago-based utility company intimately tied to the Obama administration.
Only weeks after the two companies merged, Constellation was awarded a 20-year contract to supply renewable energy to 10 State Department buildings, as well as a segment of the White House campus. In what was called a “first-of-its-kind federal contract,” the effort will help “contribute to President Obama's executive order to reduce federal-wide greenhouse gas emissions 28 percent by 2020,” according to a press release from the company.
Constellation has secured a market that the bankrupt solar firm Solyndra sought to tap before it filed for bankruptcy late last year, despite raking in a half-billion-dollar, taxpayer-backed loan guarantee from the federal government. Like Solyndra, Constellation collected hundreds of millions of dollars from Obama’s 2009 economic stimulus package.
The firm’s new parent company, Exelon, has become one of the most politically connected companies in the country, and has been a prominent investor in Obama’s campaign endeavors. Company employees, including many top executives, have doled out more than $240,000 to the President since 2007. “Chicago-based Exelon stands out as one of the best patrons throughout Obama’s political career,” Politico recently reported. “Its employees make up the largest group of donors this cycle from the energy and natural resource sector.”
Exelon was the President’s fourth-largest campaign donor during his 2006 Senate run, funneling more than $73,000 to Obama’s campaign. Frank Clark, a retired CEO of another Exelon subsidiary, was an advisor to Obama before his 2008 presidential campaign. The Beacon reported further:

Exelon board member John Rogers has bundled more than $500,000 for the president this cycle, as he did in 2008, and has personally contributed at least $100,000 to the pro-Obama Super PAC Priorities Action. Rogers, who played on the Princeton basketball team with Obama’s brother-in-law, Craig Robinson, recently attended the wedding of senior White House adviser Valeria Jarrett’s daughter in Chicago.

The connections extend well beyond the large campaign contributions of top executives. Obama campaign adviser David Axelrod is a former consultant to the company. Former White House chief of staff Rahm Emanuel helped broker the $8.2-billion merger between PECO Energy and Unicom that led to the firm’s creation in 2000. It was the biggest deal of Emanuel’s two-year career as an investment banker in Chicago, during which he pocketed more than $16.2 million, according to congressional disclosure forms.

All in all, the intimate relationship between the green-energy industry and the Obama White House has been prolific, and UNICOR has been a driving force in forging these two parties together. “Why are we going to use taxpayer dollars to purchase materials that are literally taking business away from the private sector?” Rep. Huizenga asked. “And let’s be honest, let’s pull the pin on the hand grenade. If this was Chinese prison labor, we’d be rejecting every single one of these imports.”

Photo: AP Images

German Court: Circumcision of Young Boys Constitutes "Illegal Bodily Harm"

German Court: Circumcision of Young Boys Constitutes "Illegal Bodily Harm"

A regional court in Cologne, Germany, has determined that religious circumcision of young boys constitutes “illegal bodily harm,” even when performed with the consent of the parents, and that the “fundamental rights of the child to bodily integrity outweighed the fundamental rights of the parents.”
The case arose after the circumcision of a four-year-old Muslim boy led to severe bleeding and other complications. The German physician who performed the operation, identified in the proceeding only as “Dr K,” was charged by German prosecutors. The Cologne court declined to convict the physician, noting that “Dr K” had no way of knowing that the circumcision would be ruled illegal; however, the court held that the
procedure itself was criminal.

The ruling provoked immediate outrage from Germany's Muslim community as well as its Jewish citizens. Dieter Graumann, president of the Jewish Central Council, declared that the verdict constituted

an unprecedented and dramatic intervention in the religious communities’ right to self-determination. The book of Genesis instructs believers that men should be circumcised. Circumcision of newborn boys is a fixed part of the Jewish religion and has been practiced worldwide for centuries. This religious right is respected in every part of the world.

Ali Demir, Chairman of the Islamic Religious Community in Germany, protested:

This is a harmless procedure with thousands of years of tradition behind it and high symbolic value. The decision of the Cologne State Court that the religious circumcision of boys is illegal and punishable by law is a wholly inappropriate interference with freedom of religion. I feel the ruling is hostile to integration and discriminatory for those affected.

The Cologne ruling is part of a general repudiation of the rights of religious communities in Europe to practice the laws of their faith if it notionally violates human, or even animal, rights. In April of this year, the Federal Constitutional Court of Germany upheld lower court rulings which banned the halal slaughter of animals — the ritual killing of animals by a single cut to the throat — which is required under both Islamic and Jewish law.
In this case as well, devout Jews in Germany have sided with Muslims. Rabbi Reuven Yaacobov of Berlin is a shochet — a Jewish man who slaughters animals for human consumption according to the laws of Kashrut (or Kosher killing). The rabbi points out that the kosher and the halal method of butchering animals is actually more humane that non-religious methods of slaughter.
Rabbi Yaacobov explains: The knife does not have a point. Its shape is rectangular so it cannot be used to stab only to cut. And it must be as sharp as a razorblade.”
Not only is the kosher (and halal) slaughter of animals relatively painless, but kosher killing acknowledges the sacrifice of the animal and recognizes the inherent value of its life.
The state regulation of religious practices of Jews in Germany has unsavory roots. The Nazis banned kosher slaughter on the grounds of cruelty to animals. The first law passed by the Nazi government in East Prussia was to ban vivisection — the use of live animals in experiments. Some old Nazi propaganda posters show a room of grateful animals, wearing swastikas, returning a salute to Hermann Göring, dictator of Prussia, after he made vivisection a crime. On August 17, 1933, Göring announced that anyone in Prussia performing a vivisection of any kind on any animal would be sent to a concentration camp.
Though many find such a stance odd, given the Nazis' widespread use of human beings in brutal medical experiments, Heinrich Himmler, for instance, was not only a vegetarian but also a keen supporter of animal rights. And Adolf Hitler had for decades publicly supported the humane treatment of animals and often spoke of his love of animals. Wallace in 1942 wrote that “Hitler … abhors the taking of all animal life.”
The Soviet Union also banned ritual circumcision (as well as almost every other practice of religious Jewish life). On holy days, the Soviets organized vitriolic anti-Semitic street campaigns, and Jews in the Soviet Union were not even able to find something as simple as a Jewish calendar. By a decree which came into force on November 1, 1930, "all…rabbis, Jewish cantors, Kosher slaughterers [were to be] deprived of ration cards.”  The Soviets, like the Nazis, relentlessly persecuted Jewish and Christian religious practices, and more than one writer at the time noted that devout Jews and Christians were “canaries in the mineshaft.”
What Germany is doing today reflects a direction taken by much of Europe. The Netherlands last June passed a law which banned the kosher or halal killing of animals. Avi Beker, former Secretary-General of the World Jewish Congress, noted that Sweden, another country which banned kosher killing, has also tried to pass legislation which would criminalize ritual circumcision: “This is a trend that is very much worrying us.  We regard this as interference in Jewish religious practices,” stated Beker.
This movement is not limited to Europe. San Francisco recently had a ballot initiative to ban circumcision, although the author’s connection with an overtly anti-Semitic online comic book ended that effort. Tina Kimmel, a secular Jew and a retired physician, led this campaign to ban circumcision. As she put it, “We protect children from their parents all the time, in the case of child abuse, kidnapping and torture. A lot of that applies when you’re talking about holding a boy down, cutting off the most sensitive part of his body, and throwing it away.”
As is true with much of medicine, there is no consensus about either the harm or benefits of circumcision, which is also routinely performed on Christian babies in America. Removal of the foreskin has been found to help prevent the spread of HIV and other infections. Studies in Africa, where HIV infection is an extremely serious public health issue, the World Heath Organization has found that the rate of HIV infection in circumcised males is 60 percent lower than among uncircumcised males. As a consequence, the organization had said that circumcision is a valuable weapon in fighting HIV infection.

Eugenics Becomes Hot Political Issue in Europe

Eugenics Becomes Hot Political Issue in Europe

Eugenics is a system of controlling life through sterilization of unwelcome members of a species or through the destruction of those unwelcome members. In modern parlance, the species is generally considered to be the human race. In the last century eugenics had some heady supporters. The Nazis, as most people know, practiced eugenics via the Holocaust and other methods. Other people, whose names are not normally associated with totalitarianism, supported eugenics too: Winston Churchill, Teddy Roosevelt, George

Bernard Shaw, and H.G. Wells, among others.
Almost no one objects to eugenics practiced for agricultural or horticultural purposes. The selective breeding of livestock and of grains, vegetables and fruits — and even the cross-breeding of these forms of life — has been a significant method of advancing human prosperity and health.  Dog shows, state fair competitions, and garden shows all incorporate the best breeding of pets, pigs, and petunias.
Human eugenics, however, is a different process entirely. It implies that some of us are able to judge into extinction less worthy members of our species. One of the most odious chapters of government intervention in human life during our nation’s history was the period in which poor blacks were sterilized, often without their knowledge, as a means of diminishing the numbers of "undesirable" Americans. When Hitler began his campaign to judge life worthy of perpetuation, he chose what seemed to him to be the types of life best to snip off at the bud: retarded people, the congenitally handicapped, and human carriers of genetically transmitted diseases. Today in Europe eugenics is back in vogue, although using different methods and new technology. Ultrasound examinations of unborn babies can reveal much about the child, and other tests provide more information. It is fairly easy, for example, to determine the sex of a child, so to families in China and India, where boys are much more welcome than girls, prenatal infanticide can prevent the baby girl from ever entering the world.
Now as CyberNewsSystem reports, in Europe, the killing of unborn children with health problems is becoming a major political issue. Anita Kruzmane of Latvia gave birth in June 2002 to a girl with Down syndrome and she is arguing that the failure to detect that illness, which would have given her enough information to choose to abort the child, was a failure in the health care system to provide adequate “prenatal care.” In France, where that sort of screening is routine, 96 percent of all babies in the womb with Down syndrome are aborted.
The European Center for Law and Justice (ECLJ) is an affiliate of the American Center for Law and Justice. It is planning a meeting on June 28 to review just how far eugenics has penetrated European society and law. Gregor Puppinck, director of the organization, said that this meeting “is intended to raise the awareness of institutions about the eugenic current of European society.” He noted that: “This is the first time that so many organizations, dedicated to persons with Down syndrome and disabilities, have mobilized at the European level to denounce eugenics and discrimination. Under European and international law, States have an obligation to protect the life and health of every person, in particular people with disabilities. People with disabilities, like other categories of people in other times, today have an obligation to demonstrate their humanity in order to enjoy the protection of human rights. Faced with this, we must work, not only to humanize our view of disability, but also to ‘rehumanize’ human rights, because there is a tendency to develop a very abstract and disembodied idea of man, an idea which may finally prove inhuman, as demonstrated by the consecration of a ‘right to eugenics.’”
ECLJ has specifically cited Article 8 of the European Convention of Human Rights, which states:

Everyone has the right to respect for his private and family life, his home and his correspondence. There shall be no interference by a public authority with the exercise of this right except such as is in accordance with the law and is necessary in a democratic society in the interests of national security, public safety or the economic well-being of the country, for the prevention of disorder or crime, for the protection of health or morals, or for the protection of the rights and freedoms of others.

The National Down Syndrome Society reports that in the United States one in every 691 live births is a child with Down syndrome and more than 400,000 people in the U.S. have Down syndrome. It also notes the progress that has been made in ameliorating the effects of the disease:

Life expectancy for people with Down syndrome has increased dramatically in recent decades — from 25 in 1983 to 60 today. People with Down syndrome attend school, work, participate in decisions that affect them and contribute to society in many wonderful ways.

Columnist George Will and Governor Sarah Palin both have experienced firsthand being the parent of a child with Down syndrome. The Palin family knew in advance that Trig would have Down syndrome and Governor Palin did not think for a moment of aborting her unborn son. George Will and his wife did not know — the testing was not as good or as consistent — but Will has movingly described the joy of his son, who was born on Will’s own birthday and who turned 40 years old last month. Will describes Frederick as the best “birthday present” he could have wished to receive. 
What will happen in Europe, where the birth of the wrong sort of child is considered by some to be a curse and not a blessing? The answer to that question will also answer other questions about whether or not Europe can survive in the 21st century.