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Last updated Wednesday, January 28, 2015

They’re at it again: Those fine folk on Wall Street who ushered in the ‘Great Recession’ in 2007 with subprime mortgages are now pushing the same scheme with car loans. As the New York Times put it, they are out to build investment riches on the backs of the poor. What struck me when I read the article is that sophisticated investors and investment managers must have terribly short memories. Only now, more than six years later, is the U.S. economy getting healthy. Many Americans, however, are not yet seeing the benefits and they’re the very people who are targeted to become potential victims all over again. As the Times reported, “Across the country, there is a booming business in lending to the working poor – those Americans with impaired credit who need cars to get to work. But this market is as much about Wall Street’s perpetual demand for high returns as it is about used cars. An influx of investor money is making more loans possible, but all that money may also be enabling excessive risk-taking that could have repercussions throughout the financial system, analysts and regulators caution.” In case you’ve forgotten, here’s how it works. Lenders using a sure-you-can-afford-it pitch to attract borrowers, many of whom, they know, can’t afford it. The loans carry interest rates of 11% and up. If it’s obvious up front that a borrower cannot carry the obligation, dealers accept – and even encourage – providing false employment and other financial data on the application. The loans are then ‘bundled’ and sold as securities to investors, including mutual funds, insurance companies and hedge funds. Led by companies like Santander Consumer; G.M. Financial, General Motors’ lending unit; and Exeter Finance, an arm of the Blackstone Group, such securitizations have grown three-fold, to $20.2 billion, since 2010, according to the Times article. Even as rising delinquencies and other signs of stress in the market emerged last year, subprime securitizations increased 28% from 2013. If there’s any truth in the old caution not to trust used-car salesmen – who sell most of cars and make the deals – it applies in spades to those who offer to take care the financing.

Tuesday, January 27, 2015

Undeniable warning: Arrival of a remote-controlled drone on the south lawn of the White House early Monday morning shown a glaring spotlight on a growing threat. A so-far unidentified man reportedly called authorities several hours later and told them he was using the device recreationally and had not intended for it to penetrate White House grounds. Many questions are unanswered. How close was he to 1600 Pennsylvania Avenue? Why was he recreating there at three o’clock in the morning? More importantly –  Why was the Secret Service unable to detect the drone as it came in? It didn’t set off any alarms. Guards evidently didn’t know it was there until one of them happened to spot it. Are there any defenses against such an intrusion? This time the device, two feet in diameter, evidently was harmless. But it could have carried an explosive or a chemical agent or who knows what else. It doesn’t take an alarmist to speculate on what might happen, for instance, if a drone were aimed at a presidential motorcade. From what I’ve read, the Air Force can direct its drones from many miles away to within a few feet on an intended target. Devices available to the public may not be that sophisticated – at least not yet. This incident should be an early warning, though, that something must be done quickly to bring a technology capable of doing unthinkable harm under effective control.

Missed again: We here in northern Delaware were spared what was being forecast as one of the so-called snowstorms of the century. It is plastering New York and New England as this is being written. So this was only a false alarm to those of us fortunate enough to live outside that region. I think it’s stupid to complain about being alerted to a potential danger which turns out not to be one.  Let’s not criticize weather predictors for giving out wrong information when reason tells us that some times they will be – and often are – right.

Monday, January 26, 2015

More cops headed to city streets: The Wilmington police department will deploy 28 additional officers, drawn from special units, to ‘hot spot crime areas’, according to an announcement today by Mayor Dennis Williams. “Placing additional officers on the street will increase the visible presence of law enforcement, in addition to strengthening the relationships with residents who live in these neighborhoods by more police officers conducting foot patrols,” the mayor’s press statement said. The force, headed by a lieutenant and five sergeants, will focus on suspects involved in criminal activity identified through intelligence and crime analysis data, conduct routine pedestrian and vehicle stops, address nighttime curfew violations by juveniles and serve warrants on criminals living in the area.

Did I read it right?: Hey, is this guy a Republican? It was hard to believe some of what I was reading in the Washington Post about what Jeb Bush had to say in San Francisco last Friday. Get this – “Sixty percent of Americans believe that we’re still in a recession. They’re not dumb. It’s because they are in a recession. They’re frustrated, and they see a small portion of the population on the economy’s up escalator. Portfolios are strong, but paychecks are weak. Millions of Americans want to move forward in their lives — they want to rise — but they’re losing hope.” We’ve heard that before, but not from the guys he pals around with. In a paid talk at the National Automobile Dealers Association’s annual convention the former Florida governor, who, despite being somewhat cagey about it, wants to follow his brother and father into the White House come 2016, called for “adult conversations” he said are lacking in Washington. Bush was sharply critical of Washington –  not only of President Obama but also of the Republican-controlled Congress – saying there were too many “academic and political hacks” with “hard-core ideology” who are running the country without making progress, the Post reported. It’s much too early, of course, to weigh preferences in an election that’s 21 months away and Mr. Bush has a reputation as a political flip-flopper. If  he actually believes what he says, though,  he’s certainly worth watching.

Long time coming: I pulled into a gas station along Concord Pike yesterday and filled up at $1.99 a gallon. I think the last time gasoline cost less that $2 Theodore Roosevelt was President. Well, maybe not. But it was a good sensation.

Sunday, January 25, 2015

Totally incomprehensible: The North Miami, Fla., police department had been using photographs of actual people for target practice. The photos, according to an article in the Miami Herald, were old mug shots. It’s not clear from what I’ve read how long the practice had been going on. Police Chief J. Scott Dennis said the mug shots were being used in facial recognition exercises for sharpshooter training. The practice came to light when an Army National Guard sergeant went to a firing range for weapons training last month. She found a discarded target with several bullet holes which had been left behind by a police group which used the range immediately before the Guard unit. The target contained photos of six black men and she recognized that one of them was of her brother. He had been arrested 15 years ago and served four years in prison, but said he’s now working, a husband and a father. The sergeant told her and his story to a local television station. At a public meeting last week Dennis and other city officials apologized to the largely black community and announced that the practice has been stopped and the department will now purchase generic photos from a commercial vendor. Another police official said that mug shots that have been used were not just of black men. The sharpshooter unit is racially integrated. The furor went nationwide when it reached a closed Facebook group for Evangelical Lutheran clergy. The pastors decided they had to respond to something that was emblematic of a deeper systematic problem by sending photos of themselves to North Miami. They spread the word to clergy of other faiths and this weekend a stack of 66 ‘use me instead’ photos of mostly white pastors was sent off. While acknowledging that things like this are sporadic, I would urge that organizations, public and private, scour their houses and eliminate any offensive practices and policies that are found.

Saturday, January 24, 2015

Airgate: Several years ago there was a popular song entitled ‘Who Let the Dogs Out?’ Why it was popular I can’t say, but its lilting lyrics come to mind on the eve of the Super Bowl. Maybe it’ll be revived under a new title, ‘Who Let the Air Out?’, and, who knows, it could again be a hit. We’ll probably never know for sure whether the New England Patriots earned the opportunity to compete this year or whether they got to face the Seattle Seahawks in Phoenix by way of some creative cheating. It seems that National Football League rules say that air pressure inside game balls must be at least 12.5 pounds per square inch. I never knew that, but then I’m not what you’d call a football aficionado. There are folk who say a pound or two less makes a football easier to catch. I didn’t know that either, but, then, as far as I can recall, that never made any significant difference in how I led my life. While I’ll admit there are some people who do care, I’m happy to see that we have a completely meaningless controversy to occupy our minds while we’re engaged in watching Super Bowl – XLIX, isn’t it. I’m not sure I know how to pronounce that but then I never managed to get past high school Latin back in the days when getting a passing mark in high school Latin for some reason mattered.

Friday, January 23, 2015

Primary candidate: Claymont appears to be near the head of the line for a significant ‘brownfields’ project as the county Department of Land Use and Economic Development Office begin a cooperative effort to attract jobs-generating industry. Development Director Marcus Henry, however, indicated that Delaware’s landmark Coastal Zone Act could stand in the way. “There is a lot of discussion about [that law] going on right now,” he told a meeting of County Council’s economic development committee this week. There recently have been rumblings in the business community to the effect that the law’s tight restrictions against locating new industry in a corridor the length of the state bordering Delaware River and Delaware Bay is having a detrimental effect on state economic development efforts. The issue is thought likely to emerge after the General Assembly returns in March from its budget-hearings recess. The law has been in effect, without any changes, since the early 1970s. Beyond noting that the law prohibits a new use for an existing industrial site and that it’s unlikely another steel company could be attracted to replace Evraz Steel, which shut down its Claymont plant in December, Henry didn’t elaborate. Councilman John Cartier, who represents the area, said it is hoped that a deal to buy the site can be reached soon. St. Louis, Mo.-based Commercial Development Co., which buys, cleans up and resells property, has announced plans to acquire the large Evraz site. “They’re still negotiating,” Cartier said. On the other hand, he added, he is encouraged about Claymont’s future. Sunoco, he said, has begun reverse operation of a long-existing pipeline which used to carry petroleum from the company’s Marcus Hook refinery to western Pennsylvania and will be used to feed natural gas to a transshipment port on the Pennsylvania side of the refinery, which straddles the states’ border. The port, which would not be subject to the Coastal Zone Act, will provide for a major influx of jobs for residents of both states, Cartier said. A proposal a few years ago by B.P. Oil to establish a port in New Jersey opposite Claymont to inport natural gas from North Africa was blocked because unloading ships would necessarily require facilities extending into the river and the U.S. Supreme Court has ruled that Delaware jurisdiction extends to the low water mark on the Jersey side. Ellen Fogarty, general manager of the land use department, said contact has been made with out-of-state owners of Tri-State Mall, another Claymont site, and they seem open to redeveloping the nearly-derelict shopping center. She also indicated at the committee meeting that her department intends to soon bring an ordinance to Council to replace the county’s dormant ‘brownfields’ law. A ‘brownfield’ is an older site with infrastructure in place that is abandoned or under-used because of environmental problems.

 

All content, unless otherwise noted, by Jim Parks

 

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