Why This Real Estate Bust Is Different

Unrealistic assumptions, layers of investors, sky-high prices, and possible fraud will make it hard to clean up the mess in commercial real estate

When Goldman Sachs (GS) sold complex bonds backed by the Arizona Grand Resort and other commercial properties in 2006, it suggested the returns would be strong. The 164-acre luxury Arizona Grand, set against the Sonoran Desert in Phoenix, boasted an award-winning golf course, deluxe spa, and several swank restaurants. The on-site water park was named one of the best in the country by the Travel Channel. With the resort's new owners planning to refurbish hotel rooms and common areas, Goldman told investors that the renovations would help boost cash flow.

As was so often the case during the real estate boom, the lofty projections didn't pan out. When the economy softened and business travel slumped, Arizona Grand's bookings slipped to 67%, from 80%. The resort defaulted on the $190 million underlying loan in 2009—a hit that alone could largely wipe out investors who bought the riskier pieces of the Goldman mortgage-backed securities deal.

"It's one of the largest losses we have forecasted for an individual loan," says Steve Kuritz, a senior vice-president at Realpoint, an independent credit-rating agency. The property, once valued at $246 million, is now worth just $93 million. A spokesman for Goldman says the pricing on the bonds was in line with market levels at the time and not above what investors could get on similar securities. Grossman Co. Properties, which owns Arizona Grand, didn't return calls for comment.

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Two Battles Won: PATRIOT Reform AND State Secrets Reform Bills Pass House Committee

After a long two days of legislative battle, the House Judiciary Committee just finished its second day of debate on Chairman Conyers' PATRIOT reform bill, HR 3845 (see our wrap-up of the first day). Thanks in no small part to those of you who used our action alert, the Committee rejected almost all amendments that would have weakened the bill's reforms and voted to recommend the bill to the House floor by a vote of 16 to 10.

Even better, the Committee kept going after it was finished with PATRIOT to consider Representative Nadler's State Secret Protection Act (HR 984), which would reform the state secrets privilege that the government has repeatedly used to try and throw EFF's warrantless wiretapping cases out of court. After an impassioned defense by Mr. Nadler, who described how the government has used the privilege like a "magic incantation" to cover-up wrongdoing and warned that state secrecy "is the greatest threat to liberty at present," the bill passed with even better numbers than the PATRIOT bill, 18 to 12!

It was, to say the least, a busy couple of days in the House Judiciary Committee. If you want the entire blow-by-blow of both day's meetings, check out our Twitter stream at @EFF.

Admittedly, the PATRIOT bill isn't all we had hoped for — as we described yesterday, it's been weakened in a number of ways due to quiet pressure from the Obama Administration — but it passed through the Committee with most of its major reforms intact, and it is a substantial improvement over the PATRIOT bill approved by the Senate Judiciary Committee last month.

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An unpopular war

SOURCE: FINANCIAL TIMES

Britain’s military effort in Helmand has suffered many setbacks in the three years since UK forces were first deployed there. This week, however, marks the lowest point yet in the nation’s Afghan campaign. On Wednesday, five British soldiers were killed by a rogue Afghan policemen who they had been mentoring in good faith. The same day, Kim Howells, a respected Labour figure, called for UK troops to come home. All this has come on top of the debacle over the Afghan elections, with Hamid Karzai this week re-apppointed as president in a process that was manifestly flawed.

Gordon Brown has again tried to contain public unease over the war, in which 93 British soldiers have been killed this year. The arguments in his speech on Friday on Afghanistan are sound. He insisted that the biggest domestic threat to the UK comes from the mountains of Pakistan and Afghanistan – and that Britain cannot resile from “the first line of defence”. He said the core task of mentoring the Afghan national army must continue, despite this week’s horrific shootings. Above all, he made the most forthright demand yet by any western leader for Mr Karzai to root out corrupt practice and improve governance. As Mr Brown put it, there is no way that UK troops can go on dying in the name of a civilian partner that “has become a byword for corruption”.

Yet this is not enough. The difficulty for Mr Brown is that, while his arguments are sound, the British public increasingly turns a deaf ear to them. Two weeks ago, a YouGov poll showed that 25 per cent of Britons wanted troops out now. Now, that figure is 35 per cent. Astonishingly, three-quarters of the British public now want troops out within a year.

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California bank failure will cost FDIC $1.4 billion

SAN FRANCISCO (MarketWatch) -- Five more banks, including a California-based institution that reportedly received federal bailout funds in 2008, were closed Friday by regulators, bringing the 2009 total to 120 failed banks.

The latest banks to be taken over were United Security Bank of Sparta, Ga.; Home Federal Savings Bank of Detroit; United Commercial Bank of San Francisco; Gateway Bank of St. Louis and Prosperan Bank of Oakdale, Minn., according to the Federal Deposit Insurance Corp.

United Commercial, which had branches across the U.S. and also in Hong Kong and Shanghai, focused on the Chinese-American market in the U.S. and had obtained a very difficult to get banking license in China, the Los Angeles Times reported.

The Times said United Commercial received $299 million in federal bailout funds last year.

The FDIC estimated United Commercial's failure would cost its insurance deposit fund $1.4 billion.

It said United Commercial, whose U.S. and Chinese operations will be taken over by East West Bank of Pasadena, Calif., had assets of $11.2 billion and deposits of $7.5 billion as of Oct. 23.

The FDIC estimated the total impact on its deposit insurance fund from the four smaller banks would be $132.7 million.

The last time more than 100 banks failed in a single year was 1992. By number, banks in Georgia account for one-fifth of all U.S. institutions closing in 2009, with 21 failures, followed by Illinois with 209, California with 14 and Florida with nine.

Prospect of More U.S. Troops Worries Afghan Public

CHARIKAR, Afghanistan — As Americans, including President Obama’s top advisers, tensely debate whether to send more American troops to Afghanistan, Afghans themselves are having a similar discussion and voicing serious doubts.

In bazaars and university corridors across the country, eight years of war have left people exhausted and impatient. They are increasingly skeptical that the Taliban can be defeated. Nearly everyone agrees that the Afghan government must negotiate with the insurgents. If more American forces do arrive, many here say, they should come to train Afghans to take over the fight, so the foreigners can leave.

“What have the Americans done in eight years?” asked Abdullah Wasay, 60, a pharmacist in Charikar, a market town about 25 miles north of Kabul, expressing a view typical of many here. “Americans are saying that with their planes they can see an egg 18 kilometers away, so why can’t they see the Taliban?”

Such sentiments were repeated in conversation after conversation with more than 30 Afghans in Kabul and nearby rural areas and with local officials in outlying provinces. The comments point to the difficulties that American and Afghan officials face if they choose to add more foreign troops.

If the foreign forces are not seen so by Afghans already, they are on the cusp of being regarded as occupiers, with little to show people for their extended presence, fueling wild conspiracies about why they remain here.

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NATO Air Strike Said to Have Killed Afghan Soldiers

Afghanistan's Defense Ministry said Saturday that a NATO airstrike in the western province of Badghis mistakenly hit a joint base housing coalition troops and Afghan security forces, killing four Afghan soldiers and three policemen.

NATO would not comment on whether an airstrike had taken place.

Defense Ministry spokesman Gen. Mohammad Zahir Azimi said an Afghan army commando unit, district police members and foreign forces were in the base in the Bala Marghab district at the time of the airstrike Friday afternoon. Roauf Ahmadi, a spokesman for the western regional police commander, said the airstrike also wounded 15 Afghan soldiers and one policeman.

''During an air attack by NATO forces in Badghis province, seven Afghan forces were killed,'' the Defense Ministry said in a statement.

The ministry said NATO and Afghan authorities were investigating the incident and would issue a report soon.

On Friday, NATO headquarters in Kabul said more than 25 NATO and Afghan security forces members were injured during a search for two U.S. paratroopers missing from a resupply mission since Wednesday.

Lt. Col. Todd Breasseale, a NATO spokesman, said Friday that initial reports indicated they had been wounded due to insurgent activity.

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Mind Control: America's Secret War

U.S. intelligence agencies spent millions on top-secret mind control projects with a goal of creating totally dependable, programmable human robots. The projects involved brutal, often terminal experiments on thousands of unwitting citizens in direct defiance of law, all ethical codes, and the most basic human rights. We talk to author John Marks, who broke the story of the CIA's experiments known as MK-ULTRA and a woman whose past was erased by a brainwashing experiment.

Produced and broadcast by the History Channel - 07/04/06 Runtime 50 Minutes

H1N1: Homo Galacticus and the Illuminati

By DREKX OMEGA | PAOWEB

The most important factors within the H1N1 vaccine are, as speculated, intended to reduce Earth’s population and that is why they are targeting the long term sick, children and pregnant women. Mercury & squalene are sufficient to create complications for these particular categories of Human beings, as even brain development in children, leading to illness and death, can be achieved using mercury. An effect similar to lead poisoning via leaded petroleum fumes. This will also effect the unborn fetus within pregnant women and the squalene will effect the nervous system creating chronic pain, thus neutralising further reproductive capacity. The chronically ill will be curtailed completely by the squaline and mercury combined. THAT IS THEIR FIRST TARGET POPULATION….!

What then of those who do not fall into the categories in their first wave?? These others are particularly feared by the Illuminoids because they have health, intelligence and potential to resist the NWO. The use of nano-particles in a shot for this category has a dual purpose. It is intended to insert the much feared “chip” in people that can then be tracked and controlled, and generally used as slave labourers, skilled and otherwise. All populations across the globe will be targeted thus, they hope.

But, there is an even more secret reason for the intention to introduce this vaccine to all groups, surviving the vaccine or not, and that is to do with curtailing the ongoing mutation of Human RNA/DNA, first noticed in all global populations from the mid-1980s onwards. The famous double-helix DNA discovered by Watson & Crick, has a central area thought to be evolutionary “junk,” but is actually a growing third strand, increasingly communicating with the other two strands.

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Pentagon pursuing new investigation into Bush propaganda program

The Pentagon’s Office of Inspector General is conducting a new investigation into a covert Bush administration Defense Department program that used retired military analysts to produce positive wartime news coverage.

Last May, the Inspector General’s office rescinded and repudiated a prior internal investigation’s report on the retired military analyst program, which had been issued by the Bush administration, because it “did not meet accepted quality standards for an Inspector General work product.” Yet, in recent interviews with Raw Story, Pentagon officials who took part in the program were still defending it by referencing this invalidated report.

Gary Comerford, Inspector General spokesman for the Defense Department, told Raw Story last week that his office is conducting an investigation into the retired military analyst program and confirmed that the investigation began during the summer.

Asked when his office expects to conclude the investigation, Comerford said, “As a matter of policy we do not set deadlines since any number of variables or factors could result in a delay.”

He did confirm that investigators in his office have read Raw Story’s recent articles on the topic.

Congressman John F. Tierney (D-MA), Chairman of the Subcommittee on National Security and Foreign Affairs, issued a press release (cache link) this past June, announcing that Pentagon Inspector General Gordon Heddell had begun the new investigation.

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Repost: Charts, Lies and Chalkboards

"In the case of Khalid Sheik Muhammed, by the time it was over he was not was not only talking, he was practically conducting a seminar, complete with chalkboards and charts. It turned out he had a professorial side, and our guys didn’t mind at all if classes ran long. At some point, the mastermind of 9/11 became an expansive briefer on the operations and plans of al-Qaeda. It happened in the course of enhanced interrogations. All the evidence, and common sense as well, tells us why he started to talk." --- Dick Cheney

BY ALICIA HOPE | GANGSTER GOVERNMENT

Dick Cheney needs to be on trial, not KSM! It's unbelievable to me that this man is still ranting about the legality of torture. It's like a ginormous Broadway play has ended, the curtain is down but the actor doesn't know that the audience has left the building. It is insane behavior. Is Mr Cheney hoping the audience will return? Is he speaking to the janitors and clean up crew that have to pick up the trash and garbage after a packed house? We, the audience, want our money back. The acting was horrific! The evidence is clear! The WTC buildings in New York were destroyed by high-tech explosives.

The former CFR director wants us to believe that the war games on 9/11 were a coincidence. Correct me if I'm wrong but KSM didn't schedule the war games that were occuring on 9/11. Elements within the US government had to implement Vigilant Guardian, Global Guardian and the other exercises. How could KSM plan an attack at the same time as the war games? That is preposterous. We'd have to be complete idiots to buy into that supposition!

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Dick Cheney goes for the jugular

SOURCE: LONDON GUARDIAN

In response to Dick Cheney's idiotic attack on Barack Obama's Afghanistan policy, newly-minted progressive hero Alan Grayson said what many of us have often thought: "When he was done speaking, did he just then turn into a bat and fly away?"

If only it were so easy to get rid of the former vice-president. While Cheney may disappear into an undisclosed location for a period of time, before you know it he slinks on back, more excruciating than ever.

Look, there's Dick – the guy who had absolutely no clue or care about Afghanistan for eight years – attacking Obama for supposedly employing the Bush administration's strategy there, or at least one "bearing a striking resemblance to the strategy we passed to them".

Really? Does that mean Obama will appropriate other groundbreaking national security stratagems too? Should we expect to see Obama outing covert CIA agents working on stopping the proliferation of weapons of mass destruction? Hiring felons as his top advisers? Talking tough because he's perhaps just a bit insecure about dodging the draft five times?

And if only we were cursed with just one Cheney on the scene. The vice-president's daughter Liz has also been popping up to defend that patented assault on our founding fathers' vision of our republic called "harsh interrogation techniques", also known by their maiden name: torture.

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Hawaii Update: DoH Confirms They Maintain A Birth Record For Obama Dated From August 1961

SOURCE: NATURAL BORN CITIZEN

After various responses from the DoH giving unclear answers to UIPA requests which exclusively pertained to birth documents for Obama dating back to August 1961 – specifically documents which caused his birth to have been “Filed by Registrar August 8, 1961″ – I requested assistance from the OIP.  Their interpretation of the DoH response was that of a denial of access.  But the OIP also issued guidance as to how I could properly refine my request.

I took the OIP advice and issued a 6th UIPA request asking for the same documents and limiting any possible wiggle room.

And to this request I recently received  a clear denial of access from the DoH by way of an official OIP form.  I also received clear response forms from the DoH as to my previous UIPA requests.

The form I received is the same posted at the OIP web site.  The box which says “denied in its entirety” was checked.

SIGNIFICANCE

Prior on target UIPA requests by other researchers had more than one box checked.  The denied box was checked and other boxes were checked which could also mean that the DoH did not maintain the record.  That policy – at least for my UIPA requests – has now changed as the DoH only checked the “DENIED IN ITS ENTIRETY” box.

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Afghans protest against U.S. after missile strike

LASHKAR GAH, Afghanistan, Nov 5 (Reuters) - Angry Afghan villagers protested on Thursday against what they said was the killing of 11 civilians by foreign troops, but local authorities said only fighters were killed.

The NATO-led force said it had fired a rocket from the ground at a group it believed to be planting a roadside bomb in Babaji in Helmand province. It said it was not aware of any civilians in the area and was investigating the incident.

Civilian casualties caused by Western forces have stoked anger toward foreign troops, which the NATO commander, U.S. army General Stanley McChrystal, says undermines the Western mission. [ID:nSP489707]

Some 300 protesters paraded dead bodies of the strike victims on streets of Lashkar Gah, capital of restive southern Helmand province, where 10,000 U.S. Marines and 9,000 British troops have fought the war's heaviest battles.

A spokesman for Helmand's governor said an air strike had taken place and had killed eight Taliban insurgents. A press officer for NATO troops said there was no air strike, only a surface-to-surface missile strike.

Demonstrators chanted slogans against the government and the United States. A Reuters reporter in Lashkar Gah said the dead bodies shown at the demonstration included young male teenagers.

"Are they Taliban or civilians?" asked one demonstrator in tears.

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Could America go broke?

SOURCE: WASHINGTON POST

The idea that the government of a major advanced country would default on its debt -- that is, tell lenders that it won't repay them all they're owed -- was, until recently, a preposterous proposition. Argentina and Russia have stiffed their creditors, but surely the likes of the United States, Japan or Britain wouldn't. Well, it's still a very, very long shot, but it's no longer entirely unimaginable. Governments of rich countries are borrowing so much that it's conceivable that one day the twin assumptions underlying their burgeoning debt (that lenders will continue to lend and that governments will continue to pay) might collapse. What happens then?

The question is so unfamiliar that the past provides few clues to the future. Psychology is crucial. To take a parallel example: the dollar. The fear is that foreigners (and Americans, too) will lose confidence in its value and dump it for yen, euros, gold or oil. If too many investors do that, a self-fulfilling stampede could trigger sell-offs in U.S. stocks and bonds. People have predicted such a crisis for decades. It hasn't happened yet. The currency's decline has been orderly, because the dollar retains a bedrock confidence based on America's political stability, openness, wealth and low inflation. But something could shatter that confidence -- tomorrow or 10 years from tomorrow.

The same logic applies to exploding government debt. We have moved into uncharted territory and are prisoners of psychology. Consider Japan. In 2009, its budget deficit -- the gap between spending and taxes -- amounts to 10 percent or more of gross domestic product (GDP).

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Tegan Millspaw: On transparency, Obama is worse than Bush

SOURCE: WASHINGTON EXAMINER

After President Obama's criticisms of transparency under the Bush administration, he created Freedom of Information Act guidelines that were supposed to "usher in a new era of open government." His administration was going to work "in a spirit of cooperation," and "unnecessary bureaucratic hurdles" would be removed.

Unfortunately, his administration is quickly becoming more secretive than Bush's ever was.

In documents returned from requests, more information is blacked out (often incorrectly or illegally), and there are far more flat-out denials. The Bush administration might have taken months or even years to respond to a FOIA request, but the Obama administration is more likely to just say no, or claim that it is incapable of even finding records.

Take the Department of Housing and Urban Development. In five separate requests, HUD said its records system was so unorganized finding anything was impossible. One FOIA officer even claimed that she had never heard of ACORN, even though HUD has been responsible for giving the organization millions of dollars in grants.

The Obama administration is also very fond of stonewalling. In a request to the Department of Justice regarding Attorney General Eric Holder's investigation of Dick Cheney and detainee abuse, DOJ closed the request by claiming it was too broad.

The request was extremely specific. Also, agencies are supposed to ask for clarification instead of just saying no.

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Afghan Police Penetrated by Taliban at ‘Every Level’

Following this morning’s incident, in which a long-serving Afghan policeman shot five British soldiers and then disappeared into the Helmand Province, the status of the nation’s police force in increasingly coming under question.

Officials say the police have been successfully infiltrated “at every level” by the Taliban, meaning even seemingly loyal police, today’s attacker served without incident for three years for instance, could be ticking time bombs just waiting for the order to attack.

Corruption and incompetence are long-standing issues with the nation’s police force – as one British soldier put it “we were literally training them how to point a gun on the ranges, and telling them why you should not stop cars and demand ‘taxes.’”

Even with this training police extorting the public is a routine occurrence. Now it seems that on top of worrying about that foreign troops have to contend with the very real possibility that the police are Taliban plants.

The latest incident has drawn renewed interest to the war, long unpopular with the British public, among the nation’s press which is increasingly asking uncomfortable questions to a government determined to continue the war at any cost.

The British government so far seems to be trying to portray this as an isolated incident, yet the heavy toll for a nation not used to losing soldiers in foreign wars (at least in the modern era) likely will not lend itself to simple excuses.

EXCLUSIVE: Convicted CIA Spy Says "We Broke the Law"

One of the 23 Americans convicted yesterday by an Italian court says the United States "broke the law" in the CIA kidnapping of a Muslim cleric Abu Omar in Milan in 2003.

"And we are paying for the mistakes right now, whoever authorized and approved this," said former CIA officer Sabrina deSousa in an interview on ABC's World News with Charles Gibson.

DeSousa says the U.S. "abandoned and betrayed" her and the others who were put on trial for the kidnapping. She was sentenced in absentia to five years in prison.

Representative Pete Hoekstra (R-MI), a member of the House Intelligence Committee told ABC News that the trial was a disaster for CIA officers like DeSousa on the frontline.

"I think these people have been put out there. They've been hung out to dry. They're taking the fall potentially for a decision that was made by their superiors in our agencies. It's the wrong place to go."

Italian prosecutors said deSousa was a CIA officer who helped organized the kidnapping using her diplomat cover at the U.S. Consulate in Milan. Several former U.S. intelligence officials confirm to ABC News deSousa's role in the operation.

Without confirming her CIA role, deSousa said her status as a State Department diplomat should have protected her, but that the U.S. refused to invoke diplomatic immunity.

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Former UK ambassador: CIA sent people to be ‘raped with broken bottles’

The CIA relied on intelligence based on torture in prisons in Uzbekistan, a place where widespread torture practices include raping suspects with broken bottles and boiling them alive, says a former British ambassador to the central Asian country.

Craig Murray, the rector of the University of Dundee in Scotland and until 2004 the UK's ambassador to Uzbekistan, said the CIA not only relied on confessions gleaned through extreme torture, it sent terror war suspects to Uzbekistan as part of its extraordinary rendition program.

"I'm talking of people being raped with broken bottles," he said at a lecture late last month that was re-broadcast by the Real News Network. "I'm talking of people having their children tortured in front of them until they sign a confession. I'm talking of people being boiled alive. And the intelligence from these torture sessions was being received by the CIA, and was being passed on."

Human rights groups have long been raising the alarm about the legal system in Uzbekistan. In 2007, Human Rights Watch declared that torture is "endemic" to the country's justice system.

Murray said he only realized after his stint as ambassador that the CIA was sending people to be tortured in Uzbekistan, country he describes as a "totalitarian" state that has never moved on from its communist era, when it was a part of the Soviet Union.

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UN pulls out half its Afghanistan staff and threatens total withdrawal

The United Nations today temporarily pulled half its international staff out of Afghanistan and threatened that a complete and permanent withdrawal could follow.

Amid an atmosphere of increasing gloom in Afghanistan, the UN Special Representative in Kabul, Kai Eide delivered a pointed warning to the government of Hamid Karzai.

“There is a belief among some, that the international community (presence) will continue whatever happens because of the strategic importance of Afghanistan,” he told a press conference this morning. “I would like to emphasise that that’s not true.”

He added that the Afghan government must demonstrate a willingness to reform and address corruption and the power of warlords.

Of the 1,100 foreign UN workers, 600 will now leave until the situation improves. The remaining UN workers are to be relocated inside Kabul from the current network of 93 different UN guesthouses, many of them privately run civilian houses, to a one large compound which is currently used for the European Union police training mission. The new arrangement will echo the ‘Green Zone’ found in Baghdad.

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Ukraine's Pneumonic Plague: A New Strain of Flu Many Times More Lethal Than H1N1

There is a very organized and structured system among us to coordinate the release of a weaponized flu with the goal of killing people at unprecedented rates. The pneumonic plague now being witnessed
in the Ukraine may be just the beginning of this global effort.

SARS, Avian Flu, and Swine flu appear to have been just trials for deadlier killers such as the current pneumonic plague which is likely another weaponized strain similar to H1N1. Perhaps the pneumonic plague itself is another trial for something more lethal.

There are many questions that have yet to be addressed. How did this virus spread so quickly? Why are the actual numbers not being reported? What has changed in the H1N1 virus to cause this plague or is it a completely new virus? Who is benefiting from the hype or reality of the situation?

The statistics being reported by the Ukrainian government are very misleading. The reported cases have doubled in two days. According to the latest updates, there are 478,456 Influenza/ARI cases, 24,003 have been hospitalized, 60 on ventilators and 81 deaths, although the actual figures may be exponentially higher.

With the so-called Mexican Swine Flu, we saw the gross ineffectiveness of national governments and the World Health Organization in preventing the spread of A/H1N1, which is a mild virus. This new lab produced virus is a certainly a killer and we can likely expect it to spread throughout the world in the next few weeks or months.

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