About Those Tax-Havens.......

21st Century Straw-Man: What These Senators Conveniently "Forget" to Tell You about Tax Havens
Sky-high gasoline and oil prices, thousands of home mortgage foreclosures daily, U.S. troops dying in two foreign wars. It's all driving Americans to distraction.Meanwhile, up in the rarefied atmosphere of Capitol Hill, the U.S. Senate is engaged in a phony war on offshore tax havens. Eager Senators are playing to the news media gallery with bombastic and false statements about these so-called billions in lost taxes offshore.Last week, it was that dynamic duo of the U.S. Senate Finance Committee, Baucus (D-Mont) and Grassley (R-Iowa). These senators are dumping all over the Cayman Islands. They claim any American corporations with a subsidiary company offshore (which is fully legal) should be treated as suspect tax dodgers.
The Baucus/Grassley show was based on a report the two senatorial pals ordered the Government Accountability Office to write. The senators asked this congressional watchdog agency to investigate a five-story building (Ugland House) in the Caymans that is listed as the business address for corporate subsidiaries of more than 18,500 U.S. companies. That number has nearly doubled in the past four years.About half of the companies that list their address as the Ugland House are American. The principal tenant of the building is the well-respected international law firm of Maples and Calder, which performs incorporations for global clients.
The So-Called Sinister Building...a Political Straw-Man
Possibly trying to keep a straight face, Senator Baucus said that "this building in the Caymans" is "one of the most likely places shady tax transactions could be sheltered. If American companies are setting up shop at the beach just to avoid their tax obligations, we can't keep our heads in the sand. We must make sure honest American taxpayers are not footing the bill for corporations that aren't paying their fair share." Bravo, Senator! Go get 'em!
But please note the false premise of this Baucus syllogism, (i.e. his deductive scheme of formal argument, consisting of a major and a minor premise and a conclusion). His false premise is that "if" a U.S. company has an address at this building, then on that ground alone, the company automatically is suspect of tax evasion. That's a ridiculous notion at best. Not to mention a totally false conclusion.When I was in politics this sort of exercise was called setting up a "straw-man." You define an object on your own terms, then attack it for fun and political profit.
A Bunch of Phony Numbers to Support a Shaky Theory
American corporations form offshore companies so they can take advantage of U.S. tax laws (yes, I said "U.S. tax laws") that allow tax credits and other tax breaks for offshore earnings. If done properly, American corporations can use these laws to legally avoid the onerous U.S. corporate tax rate of 35%. The U.S. has one of the highest corporate tax rates in the world, so it's no wonder U.S. companies have a tough time competing globally. By the way, senators, that high tax means lost American jobs and fewer taxes paid by U.S. workers.U.S. companies also use offshore tax havens like the Cayman Islands to reduce their foreign tax liability. For example, an American company with operations in Japan can create an affiliate in the Cayman Islands. The American company can structure it so that the Cayman affiliate is earning interest, which is tax-deductible in Japan.Much of this anti-tax haven baloney consists of senators making up higher and higher numbers of how much the IRS loses to offshore tax evasion.In recent years, Senator Carl Levin has upped the fictitious lost tax number he invented from US$50 billion to US$100 billion. But at the Finance Committee hearing, Senator Baucus blew the roof off that number. He claimed the Senate must "find legislative solutions to pressure the IRS and better enable them to collect on the nearly US$345 billion annually of legally owed but unpaid taxes," according to Tax News.com. (Why stop there? Do I hear US$1 trillion senators?)

The Biggest Tax Haven of All: The United States
Several economists and tax experts dispute even the US$100 billion number. They say a surge in the number of companies in the Cayman Islands does not correlate with lost taxes. By comparison, they point out that America itself is one of the largest tax havens in the world, (for foreigners, but not for Americans). In fact, more than 850,000 companies are registered in the State of Delaware alone, including one Wilmington building where more than 200,000 companies have an address. (Better rush right up to Wilmington and investigate that spooky building, senators!)American companies also want to legally defer U.S. taxation of foreign income. Unlike many countries, including the European Union, America taxes income earned both at home and abroad. But if this money is reinvested abroad, the tax is deferred. (Thus the need for offshore subsidiaries.) The lost tax revenue from the legal deferral of income from American investments abroad totaled US$11.9 billion last year. This number is expected to reach US$12.8 billion by the end of this year, according to estimates from the Office of Management and Budget. By 2010, that number will reach US$14.6 billion, OMB estimates.
The Ruse that Jack Built
Predictable as clockwork, the Baucus/Grassley dream team called on good old Jack Blum to prove their case. Blum is a lawyer at the Washington D.C. law firm Baker & Hostetler. But more importantly, he's a paid IRS "consultant" and self-appointed specialist in innuendo. For years, senators have hauled out Jack to repeat his tired spiel for nearly every congressional anti-offshore tax hearing.
Not content with phony attacks on the Cayman Islands, professional witness Blum also went after three other Caribbean island tax havens, the British Virgin Islands (BVI), Nevis, and Belize.As if it were some sort of crime, Blum intoned: "The BVI has more than 500,000 shell companies." Not content with this implied smear he added: "It is important to understand that the structures are mere pieces of paper with no commercial reality," while insisting that in his narrow, biased opinion, "offshore tax evasion is a massive threat to the U.S. tax system."No doubt Blum knows better, but tax truth does not match his canned agenda. These "mere pieces of paper" are actually incorporation documents that allow offshore companies to qualify for legal tax breaks worth billions annually. The U.S. Internal Revenue Code authorizes these legal documents so they comply with U.S. tax code. By the way, Congress could change the law that approves these documents if they really wanted to.
What the Lazy "Journalists" Forget to Tell You
Damn, if I don't get tired doing the job of a lazy, and no doubt, biased, "news" media. These journalists just don't seem to care one bit about the truth concerning offshore tax havens."Tax havens don't necessarily detract from real investment," a professor at Harvard Business School, Mihir Desai, says. "It can actually be beneficial to tax mobile capital less than immobile capital. Otherwise the mobile capital will just go elsewhere. I would imagine that the presence of tax havens may well cost tax revenue, but that does not necessarily mean it is bad to have them around," Mr. Desai said: "Tax havens can also facilitate investment by allowing investors to reduce their tax burdens."But the politicians in Congress in both parties are far more concerned about getting headlines and their own re-election than they are about helping American business or American taxpayers.
Good Old Tom Said It:
I leave you to ponder this quote, from the late President and leading agriculturist, Thomas Jefferson of Monticello:"The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants. It is its natural manure." And there is no place in the world where you'll find more natural manure (or tyrants) than in Washington, D.C. — especially on Capitol Hill.

IRS Lying About Missed Revenue To Increase Taxes

The Numbers Don't Add Up!
As I mentioned a moment ago, the IRS believes small businesses are evading taxes to the tune of US$100 billion annually. That's the number IRS Commissioner Mark Everson dangled in front of the Senate Budget Committee in 2006. Everson also said that if Congress unleashed the IRS against small business, it could recover "between US$50 billion and US$100 billion without changing the dynamic between the IRS and the people."Now, Congress has done exactly that. Only the numbers don't add up. A more recent study from the Treasury Department says that credit card transaction reporting would net less than US$10 billion in added revenue. And indeed, according to the Congressional Budget Office, the new provisions will raise slightly less. The Budget Office estimated they'll raise a total of US$9.8 billion over a 10-year period.
The Hidden Agenda for Reporting Credit Card Transactions
That's a lot of dough, although it's a pittance for the tax-and-spenders inside the beltway. For that reason, I don't think matching up credit card transactions with eBay power sellers is the real reason Congress enacted this part of the housing bailout bill. Instead, I think there's a hidden agenda for a much bigger take. I could be wrong, but it seems to me that setting up an infrastructure that matches credit card transactions with payments to Internet merchants is a tailor-made solution to help collect sales tax. Right now, most Internet transactions still aren't subject to any form of sales tax. States will be chomping at the bit to get the IRS to share this data with them, so they can directly bill merchants for in-state sales. Any company that does business on the Internet, but doesn't charge sales tax is at risk. It's not necessarily simple to "know what you owe," either. In addition to the sales tax regimes in effect in nearly all 50 states, online merchants that collect sales tax must negotiate a maze of city, county, and municipal taxes. Plus, they must file sales tax returns in the jurisdictions in which they sell goods or provide services. Small merchants that can't justify investing thousands of dollars in software that can make the necessary calculations, and file the necessary returns, will be forced out of business. Then there are the periodic calls for some kind of future national sales tax or value-added-tax. The infrastructure this bill creates will make this tax easy to collect. Everything will be in place, and the IRS can simply send a bill to merchants that don't pay the tax. Even if this worst-case scenario doesn't come to pass, it's quite clear that if you operate a small business, the IRS has you in its sights. And come 2011, you'd better have the data to track every dollar you spend in business expenses against the gross income reported to the IRS. And if you don't, you can count on a tax inquisition.

AND THIS:

Is the IRS About to Extend Their Reach?
IRS officials just revealed plans to tighten the rules of their so-called "Qualified Intermediary" (QI) program. Under the QI program, foreign banks have held billions of dollars offshore for American clients without legally having to disclose their names to the IRS. In exchange, the banks promised to know who their clients are, withhold any taxes due on U.S. securities in their accounts and send that money to the IRS. More than 7,000 foreign banks are enrolled in the program and paid about US$2 billion to the IRS last year.This all began in 2001. Since then, the IRS has forced foreign banks and financial institutions to become IRS informants, a.k.a. "qualified intermediaries" (QI). To put it plainly, it's just like how the IRS forced American bankers to spy on their customers with the Bank Secrecy Act and the PATRIOT Act. In the same way, the QI program turned offshore bankers into spies on their U.S. clients, at least in certain defined situations.
Since the IRS imposed the QI rules, U.S. persons holding U.S.-based investments purchased through their offshore banks did have a choice:
1. They could either have offshore banks report the American holdings to the IRS.2. Or they could have the bank withhold a 30% tax on all interest and dividends paid to them. .
To avoid either event, the U.S. investor could (and we have recommended) not hold any U.S.-based investments through an offshore bank or financial institution. If you don't have U.S. investments, then you're not required to report under the 2001 QI rules. By comparison, if you held foreign, non-U.S. investments offshore, you would have been exempt both from the QI reporting and the QI tax withholding rules...until now.

They're Going To Tax Internet Sales To Pay For Homeowner Jerks

Small Business Owners Beware: Say Goodbye to Tax-Free Internet Sales
If you can take the IRS at their word, then supposedly the U.S. Treasury loses nearly US$100 billion in unpaid taxes from small businesses. That's a big number, and I believe it's a gross overstatement. I'll explain why in just a moment. But in reality whatever the number is, the new housing bailout bill is designed to dramatically reduce it.The IRS believes that America's small businesses are evading billions of dollars in taxes through unreported credit card transactions. And for that reason, it's long been at the top of their legislative agenda to require credit card issuers and electronic payment systems like PayPal to report sales data to the IRS.
Tax Inquisition Planned to Bailout Deadbeat Homeowners
The housing bailout bill does just that, broken down in terms of payments to businesses accepting the cards. Essentially, the bill requires Visa, MasterCard, Discover, American Express, PayPal, Amazon, Google Checkpoint, and virtually every other "electronic payment system" to track, aggregate, and report to the IRS, information on nearly every electronic transaction. They must report:
The gross amount of payment card and third-party network transactions
The name, address, and taxpayer identification number of the participating merchant
However, the bill gives these systems more than two years to gear up for these requirements. Mandatory reporting won't come into effect until 2011. Basically, what the bill does is to give the IRS a way to check what a credit card company or electronic payment system is actually paying a small business compared to what the business owners are reporting on their tax returns. If the two numbers are wildly out-of-sync, then you're likely to be audited.
eBay Powersellers, Beware!
How might this bill affect you? If you're an eBay Powerseller, for instance, and sell US$40,000 of cosmetics each year over the Internet, at the moment, eBay doesn't have to tell the IRS anything about the sales. But starting in 2011, eBay will have to send you - and the IRS - an annual report. The report would say for example that Connie's Cosmic Cosmetics received US$40,172.13 in gross payments from eBay for that year. And here's where it might get very dicey with the IRS. People who operate businesses are supposed to declare their gross income on Schedule C (or a corporate tax return). Then they're supposed to deduct all the costs of doing business to arrive at a net figure of taxable income. However, a lot of small businesses don't keep particularly good records. All the owners may know are what they have left at the end of the year. And that's what they report as their income, without accounting for their gross income or their expenses. Any Internet business that takes this approach after 2011 will be in for a serious wake-up call!

Nicely Said...................Scary Too!

Ludwig von Mises warned us that governments will destroy free markets long before they ever understand how they work. I would like to add that governments will destroy free-markets if they do not like the message of the market. Government intervention after all is nothing but a blatant attempt to thwart the will of market participants in a bald manipulation to change the market’s message about the price of some good or service. - James Turk

Smell That? It's "Catastrophe" In The Air...............

Experience in Catastrophe
"One of the things that he finds worrisome is that 'things may even be worse than I first thought', which probably shows why he was not selected to be the Republican presidential nominee; he is inexperienced in catastrophe."
by The Mogambo Guru
"The Crisis Is Upon Us" is an essay by Ron Paul, a retired pediatrician and the only guy in Congress that I would trust with the future of The United States of America by electing him President, and am inconsolable that he is not the Republican nominee, and now I must instead choose between some old white guy who has never had a job where he was not either mindlessly taking orders (the military, then Vietnamese captors) or screwing things up (he is currently one of the lowlife, numbskull, corrupt, yahoo Congresspersons that got us into this economic mess that is going to destroy America), or alternatively choosing to vote for some Leftist/Marxist affirmative-action black guy who knows absolutely nothing about real life (and is also currently one of the lowlife, numbskull, corrupt, yahoo Congresspersons that got us into this economic mess that is going to destroy America).
But this is not about how Mr. Paul would have made a great President instead of Ronald Reagan after Paul Volcker got rid of the horrendous inflation that consumed the '70s because he understands economics and he wouldn't have allowed the Fed to create all that excess money and credit that is causing inflation in consumer prices nor any of the other inflations/busts in asset prices, but about how that knowledge about economics leads him to ominously say, "I have days - growing more frequent all the time - when I'm convinced the time is now upon us that some Big Events are about to occur. The world economy and political system will share in the chaos about to be unleashed."
I know what you are thinking. You are saying to yourself, "Hey! That sounds a lot like what the Stupid Loudmouth Mogambo (SLM) is always yammering about, right before he starts getting hysterical about how it is all caused by the Federal Reserve creating too much money and credit, and proceeding from there to heaping justified insults on Congress (except Ron Paul), most of the Supreme Court, the United Nations, all foreigners and malevolent alien beings from outer space who are here to undermine the system prior to conquest by flying saucers and ray guns, which predictably leads to how we are freaking doomed, and if you are not buying gold and silver then you are some kind of drooling idiot!"
As correct as that is, it gets even MORE eerily reminiscent of the Loud And Fearful Mogambo (LAFM), off on one of his rambunctious toots as Mr. Paul goes on to list inflations ("gasoline prices over $4 a gallon; skyrocketing education and medical-care costs"), deflations ("the collapse of the housing bubble; the bursting of the NASDAQ bubble; stock markets plunging"), personal miseries ("unemployment rising; massive underemployment") and the crushing debts that are becoming un-payable ("excessive government debt; and unmanageable personal debt"), all caused by Alan Greenspan and the Federal Reserve.
That is why Mr. Paul says, "The financial crisis, still in its early stages, is apparent to everyone", and that there is "little doubt" about "whether we'll get stagflation. The question that will soon be asked is: When will the stagflation become an inflationary depression?"
One of the things that he finds worrisome is that "things may even be worse than I first thought", which probably shows why he was not selected to be the Republican presidential nominee; he is inexperienced in catastrophe.
In case you were wondering, this lack of experience with catastrophe is NOT the reason that I, The Mogambo, was not nominated to be the Republican candidate. In fact, I have lots and LOTS of experience in catastrophes, mostly in the vein of coming home after midnight stinking of cheap liquor and cheaper perfume, or showing up at work both late and ditto the liquor and perfume, but mostly because I am stupid, rude and impetuous, and which are the reasons why I never get promoted around here and am still stuck in this stupid, dead-end job and which, in turn, explains my constant hostility, vengeful paranoia and sour disposition, which IS the reason I was not nominated to be President.
The point is that with my wealth of experience, I know that things are ALWAYS going to be worse than you first thought. Usually a lot worse! Hahahaha!
And George Ure atUrbanSurvival.com seems to agree with Mr. Paul's "Big Event" prediction, and says, "We're now inside the 90-day window to what I expect will be the 'Fall in the Fall' of the markets for any number of reasons."
And, apparently, Ambrose Evans-Pritchard at The Telegraph in London agrees with us, too, and writes, "we are now at the point of maximum danger. The US may soon tip into a second leg of this crisis as the fiscal package runs out and Americans lose jobs in earnest."
The reason he says this is, "US bank credit has contracted for three months" and "Real US wages fell at almost 10 percent (annualised) over May and June" (which is calculated as nominal wages less the inflationary fall in purchasing power), which makes for "a ferocious squeeze for an economy already in the grip of the property and debt crunch."
All I can say for them to do is to do what I do when a creditor calls me up demanding that I pay back some money; I say, "Mogambo fella him gone, no come back. Me no speakee English!" and hang up.

Ron paul With Some Texas Straight Talk

The Dangers of Neo-Conservative Economic Policies
The dangers inherent in the foreign policy advocated by the neo-conservatives are well known. While many Americans have become increasingly aware of those dangers, far less attention has been focused on the dangers of neo-conservative economic policies. This issue is of critical importance right now, because many are mistakenly pointing their fingers at the free market as the culprit behind our current economic plight.

There are only a few in elected office who have any real loyalty to free markets and limited government. The agenda of neo-conservatives in the economy calls for a very active central government. Indeed, while there are some neo-conservatives who continue to use the rhetoric of limited government, and who oppose increases in the federal income tax as a way to maintain the political benefits that apply to those who talk about free markets, it is now the neo-conservatives who promote fiat monetary policies even more than those on the liberal left.

While I have been a strong proponent of cutting taxes on all Americans, and therefore supported the tax reductions offered by President Bush, the neo-cons argue that tax rate reduction alone is the key to “getting the government out of the way” of economic growth. Moreover, they invariably argue for tax reductions targeted toward the wealthy, and toward multinational corporations.

Over the years, I have offered several tax plans designed to assist hard working middle-class Americans to pay for their needs, whether these needs be health-care related, educational or to pay the costs of fuel. A few years back when I introduced one such bill, a prominent Republican approached me on the House Floor and asked, half in anger and half in amazement “why did you do that?” Shortly after that, the committee chairman at the time, also a Republican, sent out a release strongly attacking my tax cut bill.

So, while the liberal economic agenda includes more taxes and spending, the neo-con economic program simply looks to target some tax cuts to preferred groups, but ignore the economic big picture. The neo-con economic agenda is to “borrow and spend” and it is that agenda, even more than the tax and spend ways of many liberals, that has cast us in economic peril at this time.

Simply, on spending, the neo-cons and the liberals share views, just as they share similar views on foreign policy. While each side tries to claim the mantle of change, reality is that more of the same is not change.

The fiat monetary policy we now follow is the most significant factor contributing to our economic peril, and it is central to the neo-con agenda. As we hear new calls to empower the Federal Reserve Board, we should be aware that underlying all neo-conservative policies is the idea of monetary inflation. Inflation is the technique used to pay for the regulatory-state and the costs of policing the world.

Nicely Said...........................

"Our political way of life is by laws of nature, of nature's God, and of course presupposes the existence of God, the moral ruler of the universe, and a rule of right and wrong, of just and unjust, binding upon man, preceding all institutions of human society and of government." -John Adams

Silver Boys At It Again..............A Good Read

FINANCIAL SURVIVAL 101
By James R. Cook
Mid-July 2008
Most people are oblivious to what’s going on in America. They don’t "get it." You may not either. If so, I’m going to give it to you straight. It’s time for a wake-up call. It’s time for you to "get it." If you don’t "get it", your financial future is dim.
Last week I was talking with my 72-year old corporate counsel, who is planning to retire. I told him he couldn’t afford to retire. "You only have a million dollars," I said. "Subtract a $100,000 a year for inflation. In nine years you have the purchasing power of $100,000. You’ll be greeting people at Wal-Mart." I was only guessing about his net worth. Perhaps he’s got $2 million or more. I continued, "You’ve got guys managing your money who don’t "get it.". You’ve got these establishment guys with conventional investments in stocks and bonds, and they don’t see the big pictures. They could wipe you out." "I suppose," he mumbled.
My lawyer doesn’t "get it," doesn’t want to "get it." I understand that because almost nobody "gets it." It’s over for the America we’ve known. We’re on the down escalator. The assets we’ve relied on to keep us secure are now riskier than ever.
In the fall of 1999 I wrote a newsletter that warned about a pending crash in the stock market. The NASDAQ collapsed a month later. Subsequently, I wrote a newsletter about a coming crash in residential real estate. In 1999 I wrote a novel about gold rising to $1,000, people losing their homes, high inflation and a bad economy. It was right on the money. I’m not bragging, I’m making a point. How did I write such accurate forecasts? I learned the economics of sound money and free markets. There are incontrovertible truths in economics and when they are violated, the outcome is easy to predict. It’s no particular brilliance on my part, only common sense conclusions that any unbiased reader would arrive at.
Eighty years ago, in 1928, Babe Ruth, the greatest baseball player of all time, made $50,000 a year. Alex Rodriguez, a Yankee star of today, makes $28 million. The Babe made 1/5 of 1% of Rodriguez’s salary. That’s .002. In a way, you could say the money of 1928 has become virtually worthless.
Let’s go back 40 years – half way to 1928. In 1968 Willie Mays was voted the most valuable player in the All-Star game. He made $120,000 that year. Do you "get it"? $50,000 - $120,000 - $28,000,000. The rate of depreciation of the dollar is increasing exponentially (the bigger it gets, the faster it grows). Somewhere in America today (or in South America), a two year old kid tosses around a rubber ball. In less than 30 years he will earn one-billion dollars a year to play baseball.
In 1934 the politicians gained control of the money. The free market had determined that gold and silver were money. (Remember, the free market is the clearinghouse for the buying choices of the citizens. In the free market the consumer is king, not the government. The consumers decide who succeeds and who fails through their buying choices. The free market is the essential component of liberty.) I’m not stumping for a return to the gold standard. There isn’t enough silver available to be money on Wake Island and gold would have to be $40,000 to $50,000 an ounce. However, the one thing to remember about the gold standard is that politicians couldn’t create it out of thin air. That’s why it was good, and that’s why they got rid of it.
When government gained the monopoly on money, abolished the gold standard and allowed politicians to gain control over spending and money creation, the die was cast. It opened the door to ever-expanding social programs, wars and deficits. Before long, money and credit creation were used to stimulate the economy. Artificially low interest rates (not free market rates) spawned booms that invariably turned into recessions when the money growth slowed or interest rates rose. Today’s bubbles are created by excessive money and credit. We currently have bubbles in farmland, commercial real estate, art, antiques and collectors items. It’s the consequence of inflationary money and credit. In 1928, the national debt was $17 billion, in 1968 $347 billion, in 2008 $9 trillion. You see it’s running away.
Wall Street doesn’t "get it," the public doesn’t "get it," the politicians and bureaucrats most certainly don’t "get it" and, it seems that even the Federal Reserve doesn’t "get it." They just keep spending, borrowing and printing more money. Government liabilities may now exceed $60 trillion and the astronomical expenses from government social programs are going ballistic. Furthermore, the current crisis is calling for billions to finance bailouts and other guarantees. There’s no possibility of paying for all this without debasing the currency. Washington claims the inflation rate is under 4% and Wall Street, Main Street and the media buy it hook, line and sinker. Truly they don’t "get it."
The high inflation of today ruins the plans of retirees and throws many of them into poverty. Our inflation rate of 15% (my estimate) also acts as a hidden tax. It impacts the poor, low income workers and those on fixed incomes at exactly the same rate as the rich who can better afford it. This cruel tax, brought to us exclusively by the government, makes poorer those who can least afford it. No person, rich or poor, escapes this terrible depreciation of their money and the subtraction of their purchasing power.
That’s not all. Historically, inflation stokes hatred towards business persons and free enterprise. It elevates left-wing demagogues who promise redistribution. It encourages a bigger nanny state, more lobbying, political corruption and loud demonstrations by subsidized activist group. Ultimately, runaway inflation leads to enormous social unrest, civil disobedience, riots, strikes, radical politics and other destabilizing upheavals.
In the history of severe inflations (including the Weimar Republic and two fiat money episodes in 18th century France) only a few nimble investors and speculators survived and prospered. The vast majority of people lost their shirt. Most of them didn’t know or understand what was happening. They didn’t "get it." There was much speculation gambling, debt and leverage, but in the end, all was lost.
Figure it out for yourself. Stocks are down 20% and inflation is 15% (Shadowstats.com says inflation is 12%). That means many investors are out 1/3, and if inflation stays at this level, in twelve months they will be down 50%. Virtually everyone will argue with this viewpoint. That’s because they don’t "get it." Eventually they face ruin.
Savers and bondholders are also taking a shellacking. Back in 1980 there was an elderly currency analyst by the name of Franz Pick who spoke at monetary conferences. He was fond of saying, "Bonds are certificates of guaranteed confiscation." He may have been premature in 1980, but no longer. In 2000 I bought an old Superman comic book. This high-grade 1941 copy has more than doubled. So far in this century comic books have been better than government bonds.
The secret to financial survival now and in your retirement is to own tangible assets that will appreciate at a level that exceeds the rate of inflation. Convert depreciating paper assets into tangible assets. Make sure they are not in a bubble, and still promise appreciation. Don’t use leverage. Never try to make a killing. Be patient. Do not wind up on the financial scrap heap with the vast army of inflation-ravaged investors who didn’t "get it." Most investors are going to get killed. Be one of the select few who "gets it." Remember that in every big inflation those who listened to government spokesmen were ruined.
I don’t want to terrify you, but there is one more thing I see happening. It could happen soon or it could be a long way off. Pray it’s the latter. Foreigners who hold trillions of U.S. dollars are losing billions as the dollar sinks. The Asians could have losses approaching $2 trillion. Chinese exports to the U.S. amounted to only 2.1% of their rapidly growing economy last year. The world doesn’t need our business as they once did. The stronger the world economy outside of the U.S., the less they’re going to be willing to hold depreciating dollars. Plus, many countries would like to stick it to us.
If too many countries abandon the dollar as the world’s reserve currency, and if a few large Asian countries are unwilling to buy our bonds, our government would soon be insolvent. The dollar would be next to worthless and a paralyzing hyperinflationary depression would lay the U.S. low. Don’t think it’s impossible. We can’t live beyond our means for decades, bury ourselves in debt, and consume more than we produce without a day of reckoning. That sad day is coming, I promise you.
THE SOLE SILVER PRICE DEPRESSANT
By Theodore Butler
(This essay was written by silver analyst Theodore Butler, an independent consultant. Investment Rarities does not necessarily endorse these views, which may or may not prove to be correct.)
In a recent article, I likened the silver market to a multi-ringed circus, with several activities occurring at once. Among the factors combining to push prices higher are investment flows, supply and demand fundamentals, and a long-term depletion of world silver inventories. Current fears concerning financial system stability increase demand for silver as a flight to quality asset.
In stark contrast to the myriad bullish factors in silver, stands a single force depressing the price - a small group of short sellers. Without these short sellers, the price of silver would be multiples of the current price. To be sure, the dedicated small group of short sellers, operating primarily on the COMEX (and now also in the big silver ETF, SLV) are aided and abetted by the issuers of unbacked silver certificates and pool accounts. But without the COMEX short sellers, the low price of silver would not exist.
For positions held as of July 1st, the commercials, as a group, increased their net short position by 35 million ounces on the recent $2 rally. The eight largest traders accounted for most of that amount, increasing their net short silver futures position to a two-month high of 70,728 contracts, or more than 353 million ounces. That’s the equivalent of more than 196 days of world mine production. No other commodity comes close to that.
The eight largest COMEX silver traders now hold more than 79% of the net
short position of the entire COMEX silver futures market (all spreads removed). This level of concentration is unquestionably manipulative. This would not be tolerated by the regulators on the long side of silver or gold or any other market. This is a level of concentration only exceeded by the COMEX gold market, at more than 81%. In gold, the commercial net short position increased by more than 40,000 contracts for the week, the largest weekly increase in almost a year. If silver and gold sell-off sharply, it will be engineered by the commercials.
At 353 million ounces, the documented net short position of the eight largest COMEX traders is almost equal to all the known silver in the world. The only problem is that the concentrated shorts don’t own all, or even a significant chunk, of the known silver in the world. If they did, the CFTC and COMEX would have responded to my complaints of manipulation by proclaiming real silver backs up the short positions.
Why are they short? I have asked myself that question everyday for more than 25 years, since first discovering the outsized COMEX silver short position. The most plausible explanation is that, years ago the short position grew so large it took on a life of its own. It had become so large that it could not be resolved without a scandal and disorderly market.
Yes, the short players have changed over the years. Yes, the shorts have been incredibly nimble in managing their positions profitably (thanks to their counterparties, the tech funds). Yes, the regulators have looked the other way. Yes, the price has climbed sharply over the past few years. In spite of all these things, the short position has endured. If the silver short position had been reduced to levels comparable to other commodities, I would have dropped the matter. But the short position has only grown larger and more concentrated over the years.
Much like a parasitic tapeworm or tumor that has grown larger in mass than its host victim, the removal or resolution of the silver short position threatens the very existence of the silver market. More precisely, the resolution of the short position threatens the continued existence of the silver manipulation and guarantees sharply higher prices.
In addition to the documented concentrated short position on the COMEX, strong circumstantial evidence has surfaced of a new unreported silver short position in the big silver ETF, SLV. In an article three weeks ago, "A Hidden Silver Default?," I speculated that unreported naked short selling of SLV shares amounted to as much as the equivalent of 50 million ounces of silver, or more. In the past three weeks I would estimate as much as the equivalent of ten million additional ounces have been shorted. I base my figures on several facts.
The canned response and denial that everyone received from Barclays was tepid and weak. They should have been outraged by my allegations, and issued a strong and unequivocal denial. Instead, they merely acknowledged that short selling existed and it was normal. Barclays inadvertently confirmed my allegations.
The same methodology (SLV share volume and price action), that led me to conclude that up to 50 million equivalent ounces had been sold short from April 15 to early June, tells me up to 10 million additional ounces have been sold short in the past three weeks. In addition, the 2 million ounces of gold deposited into the big gold ETF over that period makes the lack of any silver added to the SLV more suspect. After all, silver’s price had advanced as much as gold’s price and we had previously witnessed growth in silver deposits while GLD’s holdings actually declined. All other public and objective evidence (such as US Mint statistics and reports from retail dealers) confirm stronger silver demand than gold. The most plausible explanation for the lack of growth in SLV holdings is unreported naked short selling.
While I believe the large concentrated short sellers on the COMEX and in SLV shares are largely one and the same, there is a critical and important distinction in the motives behind the short selling on the two venues. Sure, the short selling in both markets share a price capping or manipulation motive, but the selling in SLV shares goes beyond price control.
I am convinced the prime motive in the unreported short selling in SLV is incredibly simple and straight-forward - the physical silver needed to be purchased to back up new share issuance is just not available. It’s not there without immediately forcing the price of silver sharply higher. Since the real silver isn’t available for purchase at near current prices, the market makers in the SLV have no choice but to sell short the new shares being purchased by investors without depositing the required new silver.
What I have just described is a default and a massive fraud. It is illegal by any possible definition. It is a desperate, last-ditch attempt by the manipulative short sellers to buy time before silver explodes in price. Will that desperation translate into a final sell-off? Maybe. Should this concern the long-term silver investor? Not in the least. That’s because the desperate and illegal short selling in SLV proves one thing beyond doubt - that we are in the midst of a bona fide wholesale silver shortage.
I believe the naked and unreported short selling in SLV shares is occurring because if the real silver was being purchased, as it should be, industrial users around the world would be denied the silver they depend on for their operations. If industrial users were denied silver, that would set off a silver inventory buying panic the likes of which the world has never seen.
So, the shorts in SLV, who are also the wholesale silver suppliers to the industrial users, have made the choice to supply the users at the expense of SLV investors. In reality, there is little choice. Meeting the fiduciary requirements to SLV investors to have 10 ounces of silver behind every share issued would cause the silver manipulation jig to be up. After all, it is possible to short sell to SLV investors, while there is no way to short sell a silver delivery to a user. Either you deliver to a user or you don’t. If and when you don’t, all hell will break loose.
Long-term silver investors should be positioning themselves for the inevitable day when the silver shortage causes all hell to break loose. If I knew which day that was, I would tell you. What I do know is that the evidence shows that day is closer than ever.
A PENALTY ON PROGRESS
By James R. Cook
"People who make more are taxed more. That’s being punished for being more productive. And then you’re being rewarded for being a parasite. If you don’t do anything, if you’re just a bum, why, you can go on relief. You get something for nothing. That’s a violation of rationality and morality in the short run too. The less you do, the more you get. The more you do, the more you’re punished. That’s a fine standard for a culture! The most productive people are punished the most for being productive; the ones who produce the least are rewarded for being parasites. Now, if I tried to design an irrational structure of a society, this is exactly what I’d pick." Andrew J. Galambos
In the winter I spend some time on a little island in southwest Florida. This tropical paradise runs seven miles long and is two blocks wide. A small toll bridge connects it to the mainland. For the most part, the four thousand residents (in peak season) are wealthy. One or two are in the Forbes 400.
Every morning a constant stream of autos and trucks cross onto the island. They contain people who work on the homes and the yards of the affluent. This constant flow of carpenters, maids, plumbers, landscapers, air conditioning contractors, handymen, pool cleaners, security guards, repair men, cable guys, gardeners and decorators make their livelihood off the rich. When taxes are raised on the wealthy, fewer of these workers will be employed.
Left-wing schemes to raise taxes to 60% are aimed exclusively at high-income earners. This money will supposedly go to equalize the low incomes of the subsidized underclass. The late economist, Murray Rothbard, had this to say about this tax gouging. "The modern welfare state, highly touted as soaking the rich to subsidize the poor, does no such thing. In fact, soaking the rich would have disastrous effects, not just for the rich but for the poor and middle class themselves. For it is the rich who provide a proportionately greater amount of saving, investment capital, entrepreneurial foresight, and financing of technological innovation, that has brought the United States to by far the highest standard of living – for the mass of the people – of any country in history."
Rich people and people attempting to get rich create the jobs. Unemployment will rise when taxes are increased. If you want to impoverish the populace of a country, tax the rich out of existence. In that way you can turn the country into a third world hellhole. There are no millionaires in Bangladesh or similar economic backwaters. The more million-aires and billionaires in a country, the higher the standard of living. All the former communist countries have learned this lesson. They continue to push tax rates lower towards 10%. Their economies are on fire. Eventually their standard of living will pass ours.
Our liberals and socialists intend to raise taxes and somehow pass out money to alleviate income inequality. That’s the main plank of their campaign. Unfortunately, this redistribution scheme does just the opposite. It makes everybody worse off. Taking money from those who earned it for the government to waste on a myriad of follies reduces our national wealth and prosperity.
The emotional mix of envy and altruism, which comprises modern liberalism, pays no heed to century old lessons of economics. Rather, it relies on socialist misconceptions. The liberal tax agenda is the harbinger of economic retrogression and national failure. Every citizen at every economic level will suffer because of it.
OPPORTUNITY
In a memo to our brokers last week, Ted Butler had this to say, "You have the opportunity to sell something to your customers that can’t possibly hurt them long term and will, most likely, enhance their financial circumstances dramatically, just like it has over the past 7-8 years. You have the opportunity to rescue them from something that can hurt them and put them into something that can truly help them. Silver can’t go bankrupt or just disappear overnight. It is not dependent on government guarantees, which become shakier by the day. It will not be influenced by an accounting or reporting rule change. None of us should be rooting for bad times, but bad times shouldn’t hurt, but should help silver.
"It may sound corny, but I tell Jim Cook often that you should bless each day silver is under $20, as those days are numbered. If I were to be worried about anything, it would be in not fully utilizing the present opportunity to have your customers buy as much silver at what will be looked back upon as bargain prices. There is precious little time remaining. Everyday we stay here or move lower is a blessing."

Tough Road Ahead For WTO (Couldn't Happen To A Bunch Of Nicer Pricks)

Global fallout over trade talks hints at tough future for WTO

By Ethan McNern
CHINA blamed "selfish" wealthy western nations yesterday for the latest failure to conclude long-running talks to free up global trade, while Asian rival Japan pointed the finger at the region's emerging giants.
China's official news agency, Xinhua, said the negotiations at World Trade Organisation headquarters in Geneva collapsed ultimately because the United States and the European Union were unwilling to scrap huge subsidies they pay their farmers. But
Japan upbraided China and India, as growing economic powers, for not shouldering greater responsibilities in the WTO.The talks collapsed on Tuesday over a proposal to help poor farmers deal with floods of imports.Xinhua said rich countries cared too much about their own interests and too little about those of developing nations.Not only were Washington and Brussels unwilling to face down their farm lobbies, but they put huge pressure on poor countries to slash tariffs on industrial imports and throw open their financial services markets to western banks and insurers."This selfishness and short-sighted behaviour has directly caused the failure of this WTO ministerial meeting, which will have a number of serious consequences," Xinhua said.But the Japanese government said China was less sinned against than sinning. "Frankly, I'd have to wonder whether China and India weighed their words and actions commensurate with their responsibility and how much they considered the overall global economy as they focused too much on their own interests," Nobutaka Machimura, the chief cabinet secretary, said. Both India and China now wield more economic influence than they did when the trade talks were launched in Doha, the capital of Qatar, in 2001, Mr Machimura added."In other words, their responsibilities have also grown bigger, too," he said. "I hope China and India will address international negotiations like the WTO talks with a sense of how big a role they play in the world economy."China, too, chided India for the way the talks ended, in what the commerce minister, Chen Deming, called "tragic failure". But trade experts in India dismissed any idea that New Delhi had been obstructionist.The recriminations reflect the many fault-lines running through the WTO talks, which must reconcile the different political and economic priorities of the body's 153 members.China was ready to intensify its bilateral links with other WTO members, especially developing countries, Mr Chen said.The number of preferential trade deals involving Asia- Pacific countries has exploded in recent years, largely due to the deadlock in the WTO, and experts expect the trend to continue.

Nicely Said...................

"Taxes come from the sweat of the American people." -Ron Paul

Does It Scare Anyone Else How Much These Institutions Are "Borrowing" From The Fed???

Banks, Wall Street firms step up Fed borrowing

By JEANNINE AVERSA
AP Economics Writer
WASHINGTON (AP) -- Banks and Wall Street firms stepped up their borrowing over the past week from the Federal Reserve's emergency lending program.
A Fed report released Thursday said commercial banks averaged $17.5 billion in daily borrowing over the past week. That compared with $16.4 billion in the previous week.
Investment houses in March were given similar loan privileges as commercial banks after a run on Bear Stearns pushed the nation's fifth-largest investment bank to the brink of bankruptcy. The situation raised fears that other Wall Street firms might be in jeopardy.
Bear Stearns was eventually taken over by JPMorgan Chase & Co. in a deal that involved the Fed's financial backing.
For the week ending July 30, Wall Street firms averaged $3 million in daily borrowing. In the prior week, the companies didn't draw such loans. Their borrowing rose as high as $38.1 billion in early April.
The identities of commercial banks and investment houses are not released. Commercial banks and investment companies now pay 2.25 percent in interest for the loans.
In the broadest use of the central bank's lending power since the 1930s, the Fed in March scrambled to avert a market meltdown by giving investment houses a place to go for emergency overnight loans. The Fed extended those loan privileges into next year. Originally they were supposed to last only through mid-September.
Trying to stem eroding investor confidence, the Fed earlier this month said mortgage giants Fannie Mae and Freddie Mac could draw emergency loans from the central bank if they needed. There was no indication in the weekly report that they had done so. Shares of the mortgage giants were clobbered last week as investors grew worried about the companies' financial shape.
Separately, as part of efforts to relieve credit strains, the Fed auctioned nearly $28.1 billion in Treasury securities to investment companies Thursday.
In exchange for the 28-day loans of Treasury securities, bidding companies can put up as collateral more risky investments. These include certain mortgage-backed securities and bonds secured by federally guaranteed student loans.
The auction program, which began March 27, is intended to make investment companies more inclined to lend to each other. A second goal is providing relief to the distressed market for mortgage-linked securities and for student loans.

New York to sell roads, bridges, tunnels to close budget gap?

{I'm more and more amazed that stories like this pop up and Americans don't remind their elected civil servants that the roads were paid for long ago; and aren't really in the domain of politicians to sell.......................This is all FUBAR Ed. SOC}

CRISIS PUTS NY IN 'SELL' HELL

July 30, 2008 --
ALBANY - Warning of an approaching economic calamity, Gov. Paterson yesterday called an emergency session of the state Legislature - and raised the specter that New York may have to sell off roads, bridges and tunnels to close a massive budget deficit.
In a rare televised address, the Democratic governor cited "private-public partnerships" involving the sale of state assets - widely condemned by critics as fiscal gimmickry - as one way to stem a tide of red ink brought on by the sagging economy and woes on Wall Street.

"We can't wait and hope that this problem will resolve itself," Paterson said. "These times call for action, and today I promise you there will be action."
Profit-tax collections from the state's 16 biggest banks, which were at $173 million in June 2007, fell to $5 million last month, Paterson noted. That's a shocking 97 percent plunge.
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But the governor's five-minute speech offered few specific solutions to a three-year budget deficit. The gap has ballooned to $26.2 billion from $21.5 billion - a whopping 22 percent increase - in just 90 days.
Next year alone, the state expects to face a budget deficit of $6.4 billion, up from a projection in March of $5 billion.
Paterson promised to examine ways to trim the state work force and consider deeper budget cuts beyond the 3.3 percent he ordered after taking office this spring.
"We're going to end the legislators' vacations and bring them back to Albany to reprioritize the way we manage New York state's finances," he said.
Paterson said he would ask lawmakers during the session on Aug. 19 to take up his proposal to cap school property taxes at 4 percent a year.
In a nod to the tax cap's chief opponent, Assembly Speaker Sheldon Silver (D-Manhattan), the governor also promised action on Silver's pet proposal to increase home-heating subsidies.
But Silver reacted coolly.
"If it is our intention to ask working families to shoulder the burden of these cuts, we must ensure that our most affluent citizens share that burden," he said.
Senate Majority Leader Dean Skelos (R-LI) cautioned Paterson that any cuts to school funding were off the table.
The "sale" of state assets has been tried in the past during difficult economic times and has been met with condemnation from budget watchdogs.
The most famous - or infamous - example: former Gov. Mario Cuomo's sale of Attica prison to a semi-independent state agency in 1991 to raise $200 million. Many critics noted that the bond sale cost the state hundreds of millions extra over the next few years.
"One gets a little concerned when 'selling off state assets' and 'budget deficits' get mentioned in the same sentence," said Elizabeth Lynam, a state policy expert with the Citizens Budget Commission.
"If it's used to close a budget gap, it's a one-shot. It's doesn't help you in the long run. It's a fiscal gimmick."
Mayor Bloomberg last night praised Paterson's effort "to tackle the serious problems we face" this year.
"The governor demonstrated that he is ready to stand up to the interest groups that will no doubt protest before the State House, just as they took to the steps of City Hall earlier this year," Bloomberg said.

Aliens Run Free

Illegals off the hook? ICE tells aliens: 'Deport yourself'

Now illegal aliens can get a free ticket home by turning themselves in to Immigration and Customs Enforcement rather than spend time in prisons.
The newest government plan to cut back on an ever-increasing population of illegals will be unveiled next week, the San Antonio Express-News reports.
ICE director Julie Myers announced the idea to a Spanish television network Sunday.
"The program basically gives an opportunity to those seeking an organized way to self-deport," Myers told Univisión anchor Jorge Ramos.
"Operation Scheduled Departure" will give illegal aliens who don't have criminal histories a chance to turn themselves in and avoid detention.
Myers said the plan was hatched in response to illegal alien complaints. Many detainees said they would rather go home than spend time in immigration prisons.
The illegals can now walk into ICE, schedule their departure, have several weeks to pack their belongings and fly or bus out of the country without facing arrest. She said the program helps illegals dodge home and work raids, but it doesn't offer incentives for self-deportation.
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According to the Express-News, illegal immigration supporters called the program laughable and said it would not work without providing additional rewards to those who turn themselves in.
"It's pure fantasy," said Doug Rivlin, spokesman for National Immigration Forum. "An attempt to entice people to sign away their rights and get out of the country as quickly as possible before even talking to a lawyer."
Rivlin said illegals would buy a bus or plane ticket home rather than check into ICE.
Ira Mehlman, spokesman for the Federation for American Immigration Reform, one of the nation's chief anti-illegal-immigration lobbies, said he agrees with Rivlin's point that the government would need to offer an incentive. He suggested allowing illegals the opportunity to apply for legal citizenship in return for turning themselves in to authorities.
"It certainly makes sense to create conditions to make people understand that if they're here illegally, it's not going to benefit them to stick around," he said.
According to the Express-News, the same idea has worked well for the U.S. Marshals Service. "Fugitive Safe Surrender" allows nonviolent U.S. criminals to self-arrest rather than be hunted down. More than 16,000 offenders have turned themselves in.

Oil? Ah, Let Russia Have It.....................

Oil? Ah, let Russia have it

State Department gives away 125,000 square miles of Alaskan ocean floor

Even if Congress follows President Bush's lead in opening off-shore oil exploration, there exist over 125,000 square miles of sea bottom that won't be explored, because the State Department – amid controversy and against the will of Alaskans – has surrendered the land to Russia.
Eight islands and their surrounding sea floors were ceded to the former Soviet Union as part of the U.S.-U.S.S.R. Maritime Boundary Treaty in 1991, a treaty signed by the U.S. Senate and President George Bush but never ratified by the Soviets. Nonetheless, an executive agreement enforcing the terms of the treaty until ratification has been in place through three presidencies, meaning the State Department officially recognizes the islands as Russian territory.
Alaskan legislators, who were given no input or authority on the island giveaway, have long protested the treaty, declaring it null and void without Russian ratification.
And since last week's U.S. Geological Survey estimating that 90 billion barrels of oil lie undiscovered and technically recoverable above the Arctic Circle, those 125,000 square miles of seabed have taken on newly appreciated value. Five of the islands lie north of the Artic Circle, and the other three sit at the western end of Alaska's Aleutian island chain.
Carl Olson, a retired U.S. Navy Lieutenant Commander and chairman of State Department Watch, a nonpartisan foreign policy watchdog group, explained to WND the significance of the State Department's stance: "The area off the coast of an island that a nation may use is called the exclusive economic zone. The group in charge of defining that is the State Department. So (the president and Congress) can say the off-shore areas are opened up, but still not recognize these quarter of a million square miles available for American oil exploration."
Alaska state Rep. John B. Coghill told WND earlier, "The issues involve not only state sovereignty over vital territories but also significant national defense concerns and substantial economic losses over fisheries and petroleum."
The Alaskan legislature and a sympathetic California legislature have both passed resolutions asking Congress to allow Alaska at the bargaining table with Russia to resolve the islands' ownership. After almost 20 years of official protests, the U.S. State Department has yet to acknowledge Alaska's arguments.
"It's totally anti-public, anti-Congress, anti-state actions – but unfortunately the State Department thinks it has the power to adopt this boundary line with the Russians without anybody's consent outside themselves, " Olson told WND. "The State Department is basically chopping off a piece of Alaska and giving it to a foreign government without Alaska having any say in it."


The lands in dispute include the islands of Herald, Bennett, Henrietta, Jeanette, Copper Island, Sea Lion Rock, Sea Otter Rock, and Wrangel, which is the largest of the eight, roughly the size of Rhode Island and Delaware combined.
The U.S. purchased Alaska from Russia in 1867, including the Aleutian Islands, which presumably would include Copper Island, Sea Otter Rock and Sea Lion Rock. In 1881, U.S. Captain Calvin L. Hooper landed on Wrangel Island and claimed it for the U.S. Also in 1881, the U.S. Navy claimed the islands of Bennett, Jeannette, and Henrietta. The British held Herald Island, but they gave up that claim, permitting the U.S. to take it.
American citizens had occupied Wrangel Island from approximately 1881 to 1924, when Russian soldiers landed and forcibly removed the American occupants from its shores. The Russians then reportedly used the island as a concentration camp.
Many Alaskan legislators believe the islands were part of their state, even after the Wrangel invasion, though the U.S. State Department officially disagrees. Without a ratified treaty designating them as Russian, those same legislators and Carl Olson believe the islands still are American territory and can be reverted to the U.S. easily.
The only thing binding the islands to Russia is "in the form of an executive agreement," Olson told WND, "which means it can be changed with the stroke of a pen by the president, because it has no force of law."
"We have been steadily maintaining the pressure," said Olson. "It's just a matter of finding sympathetic people in Washington and the other states to go for it. There's plenty of organizations who have endorsed our efforts, so we keep up the drumbeat."
Coghill has also sought the support of other states, claiming that the federal State Department has overstepped its authority in giving away a state's land. "If they can do this to Alaska," he warns, "they can do this to any state."
U.S. State Department officials did not return WND telephone calls to discuss the matter, but a State Department webpage devoted to the island controversy denies that islands were ever claimed by the United States and explains that though the treaty between the U.S. and Russian Federation was never fully ratified, "In a separate exchange of diplomatic notes, the two countries agreed to apply the agreement provisionally."
The webpage concludes, "The U.S. has no intention of reopening discussion of the 1990 Maritime Boundary Treaty."

Reparations.....................OH BOY, HERE WE GO!

Obama suggests reparations to blacks, Native Americans

'The most important thing to do is not just offer words, but offer deeds'
Posted: July 30, 20088:50 pm Eastern

Sen. Barack Obama told a meeting in Chicago the U.S. should review how it can make amends for "offenses" committed during its history.
And one author is speculating that might even include reparations for al-Qaida soldiers, since, after all, they've been held in violation of their "rights."
Obama's comments came in a meeting with members of UNITY '08, an event for journalists who claim membership in various minorities.
Obama, according to the report in the Honolulu Star-Bulletin, stopped just short of endorsing an official U.S. apology to various groups. He said instead the nation should acknowledge treating certain groups poorly.
"There's no doubt that when it comes to our treatment of Native Americans as well as other persons of color in this country, we've got some very sad and difficult things to account for," Obama told the convention.
He has told Hawaii reporters he supports a federal plan to recognize native Hawaiians. He was asked for his thoughts about a formal U.S. apology to American Indians.

"I personally would want to see our tragic history, or the tragic elements of our history, acknowledged," he told conventioneers.
"I consistently believe that when it comes to whether it's Native Americans or African-American issues or reparations, the most important thing for the U.S. government to do is not just offer words, but offer deeds," he said.
The issue of reparations to African-Americans for the historic slave trade or Native Americans for the "invasion" by Europeans periodically has been raised. Several years ago a lawsuit was filed claiming damages for labor at a current value of $1.4 trillion.
At Renew America, Michael Gaynor also publicly wondered about Obama's statements to a recent "Meet the Press."
Obama said, "The biggest problem that we have in terms of race relations, I think, is dealing with the legacy of past discrimination which has resulted in extreme disparities in terms of poverty, in terms of wealth and in terms of income. Our inner cities are a legacy of what happened in the past. And the question is less assigning blame or rooting out active racism, because that's not the reason that those inner cities are in such bad shape, but rather figuring out are we willing to make the investments to deal with that past history so we can move forward to a brighter future? And that involves investing in early childhood education, fixing the schools in those communities, being willing to work in terms of job retraining. And those are serious investments."
Asked Gaynor, "Is 'serious investments' code for 'reparations'? And how expensive and devastating would Obama's income redistribution policy be?"
The comments were being discussed just as the U.S. House of Representatives issued an apology to black Americans for the "fundamental injustice, cruelty, brutality and inhumanity of slavery and Jim Crow" segregation."
The resolution sponsored by Rep. Steve Cohen, D-Tenn., a white Jew who earlier this year tried unsuccessfully to join the Congressional Black Caucus, was passed on a voice vote.
In February, the Senate apologized to Native Americans, and in 2005 it apologized for standing by during the lynching of blacks last century.
But at the American Spectator, Jeffrey Lord, CEO of QubeTV and former Reagan White House political director, said the logical extension of such thought obviously could include reparations for al-Qaida.
"Does Barack Obama believe it's time for America to apologize to al-Qaida?" he asked. "You think I'm joking, right? Wrong."
"The push has begun among Obama's fellow-liberals for reparations to Osama bin Laden's al-Qaida warriors. Look no further than the Los Angeles Times review of the new book by liberal journalist Jane Mayer, 'The Dark Side: The Inside Story of How The War on Terror Turned Into a War on American Ideals.' Mayer's indictment of the Bush administration's fight against terrorism has predictably received glowing reviews from the gatekeepers of liberalism, including a July 15th review from Times staff writer Tim Rutten.
"In wonderfully liberal style that is beyond parody, Rutten uses a book review to endorse the idea of paying money to Osama's fighters who, in the eyes of liberals, have been denied their 'right' of habeas corpus at Guantanamo. The denial of habeas to non-Americans captured on foreign battlefields is, of course, also a major campaign point for Senator Obama. Obama, restating his long-held position about captured al-Qaida fighters having the right of habeas corpus, was prompted by the recent 5-4 Supreme Court decision in Boumediene v. Bush.
"The liberals on the Court, with the mind-boggling addition of Reagan appointee Anthony Kennedy, held that contrary to Bush administration and congressional policy, not to mention all of American history, the prisoners of war or 'detainees' picked up off the battlefields (in this case Afghanistan and Iraq) are in fact entitled to the same constitutional rights as American citizens."
Obama's allies now are "lobbying not simply for habeas corpus rights for al-Qaida but reparations as well," Lord wrote.
"In other words, if you have been captured on the field of battle fighting the U.S. military on behalf of the global jihad and, as a result, are now on an extended stay at Gitmo, liberals feel the appropriate policy of the United States government is to 1) apologize for capturing you and 2) pay you some cold American cash to ease your pain and humiliation."
Lord cited the Nuremberg trials for war criminals from Nazi Germany. "We still gave them a day in court and that taught the entire world about who we are but also the basic principles of rule of law," he quoted Obama saying.
But he said that's wrong. "If America's only problem was with a sum total of about 1,800 German soldiers, why all that disturbing fuss known as World War II."
In reality, half a million prisoners of war were "stashed in 511 internment camps sprinkled all around the good old USA from North Carolina to Iowa to California," he wrote. "Not a single one of these men were given their habeas corpus rights. They were not tried. Not one. They were held as prisoners, forced to do whatever labor their American captors thought suitable until America had won the war."
He continued: "Will Obama … have the courage to follow [the] arguments to their logical conclusions? If the idea is to have American taxpayers fork over damages to Osama's men, why not Hitler's? Where are the trial lawyers who have been flocking to Guantanamo? The size of the damage pot in a suit against the U.S. government for the treatment of Nazis would, one suspects, be considerable."
"What is the difference between, say, German detainees Hans, "R," and Jerry and an al-Qaida Gitmo resident named Abdullah Salih al Ajmi? The first three remained lawyerless while they waited out World War II in Iowa and Minnesota. The last, Abdullah, went through Gitmo's thoroughly lawyered process and was released. On March 23, 2008, he showed up in Mosul, Iraq, when he drove a truck packed with 5,000 to 10,000 pounds of explosives into an Iraqi Army base. He killed 13 Iraqi soldiers and wounded 42 on his last mission, a mission that would never have occurred were he still in Gitmo."

Surviving This Depression

Depression Survival 101

Source: James West, Midas Letter 07/28/2008
Watching the complete collapse of share prices in the resource sector would be doubly disheartening if were not occurring around the globe irregardless of sector. From tech stocks to transports, from China to Brazil, markets are in a slow steady freefall. The question of “how do I profit from my investments?” is rapidly evolving into one of “how do I keep my house and investments and 401K from becoming worthless?”On Wednesday last week, the House passed a bill that essentially creates another $800 billion worth of U.S. dollar funny money out of thin air by raising the national debt ceiling to $10.6 trillion from $9.815 trillion. Treasury Secretary Hank Paulson now has carte blanche to inject as much effervescent capital in stroke-inflicted Fannie Mae and Freddie Mac as is required to keep the patients breathing, including buying up their stock if deemed necessary.The bottom line here for the American tax-payer is that whereas we’re going to use this emergency bailout package to stay foreclosures (until 2009 at least), we’re going to reach into your other pocket at the same time and exchange those dollar bills for lumps of coal. (No…wait a sec…coal has value!). Worse, we’re going to put you down for another $3,200 as your contribution to the national bottomless pit we call the National Debt. The greatest threat to a relatively comfortable standard of living comes from the diminished purchasing power of the dollar should a global vote of no confidence take it down til it's on par with the peso or yen. So far, the U.S. government has tackled the problem of too much currency by printing more currency. Now with global U.S. denominated foreign assets plummeting in value, most sovereign banks and funds are in the uncomfortable position of having to play along and support the dollar through the acquisition of U.S. Treasuries, or else watch the value of their portfolios collapse. An inadvertent (or so we’re to believe) case of self-inflicted blackmail.Never mind recession...this is the road to full-scale depression. At some point, hyperinflation a la 1923 Germany is a very likely possibility. During this period at its worst, one U.S. dollar was equal to 80 billion Mark. Germans used bundles of the notes for firewood because they burned longer than an equivalent amount of firewood that could be purchased with them.In the spirit of disaster planning, as individuals it's beyond time to hope for best and plan for the worst. That said, these are the measures as I see them that will best preserve what equity you may have:

1. If you own any U.S. dollar denominated assets, sell them and put them into gold and silver. As the dollar plummets, these metal prices, expressed in U.S. dollars, will rise, thereby preserving value.

2. If you own your house, sit tight. Don’t sell it and whatever you do, don’t mortgage it. One of the direst outcomes of hyperinflationary or stagflationary periods is high interest rates. Remember the 80’s when interest rates suddenly soared to 20% and beyond. In December of 1980, interest rates averaged 21.50 percent on mortgage loans.

3. If the bank owns your house, you might consider mailing them the keys, and walking away – especially if the mortgage you’re carrying is more than your house is valued at. If you think it’s a struggle now trying to make ends meet, just wait til food and energy prices continue their upward trajectory, and the U.S. dollar purchasing power continues its downward trajectory. Besides, having a bad credit rating rating for seven years might just be the discipline you need so that “no” becomes part of your vocabulary again. No matter that you’re being told no instead of saying no yourself. Consider it “rehabilitation”.

4. If you own anything that consumes lots of gasoline or diesel, sell it. I’m riding around on a scooter these days that costs me about $40 a month in fuel. Takes some getting used to, especially on rainy days, but it’s the best hedge against high gas prices yet. One important thing to bear in mind.

Right now, it may not look like things are so bad. Sure we’re in a spot of trouble, but it will be no more than dealing with a hangover after a particularly exuberant party that goes on for too long. That would be a normally optimistic approach.But his party has been going on for years. In fact, it's more analogous to career in alcoholism. The many health conditions that evolve from such a profession have wide-reaching and long lasting systemic deteriorative effects. And whereas it may seem that nothing is going to happen overnight, the condition of the global economy is like going out for an afternoon in a sailboat.One minute, you’re cruising along in perfect conditions, and suddenly, everything turns to mayhem as a gale comes up out of the southeast and you’re suddenly healed over and clinging to the rails for dear life.

"Speculators?" or the Statist Establishment Controlling Food Supply?

Speculators Trying to Buy Control of Food Supply
adminPrison PlanetJuly 29, 2008
[1] George Washington’s Blog Tuesday, July 29, 2008
According to the [2] New York Times, [3] Financial Times, and [4] others, hedge funds and other investors are buying up farms, farmland, fertilizer, grain elevators, shipping equipment and other necessities for producing food.
Given the meltdown in the housing and financial sectors and the weakness in the U.S. economy, large investors figure that everyone has to eat, and so investing in food production is a sure thing.
That means that speculators will drive up food prices.

As Jim Hightower [5] puts it:
“By ‘owning structure,’ they mean centralizing control of food in the hands of financial manipulators who have only one crop in mind: fat profits.
***Price? Aha! That’s what consolidation of farms and storage facilities is all about. If you can lock down production and stockpile the supply – you can control price. If corn prices are lower than what investors want them to be, simply store the corn and force prices up. Or, if corn prices are down in the U.S., ship it to Japan or wherever else might be more profitable. And if these distortments cause a food crash? Hey, the speculators will already have sucked out billions in profits, and they will just move to the next hot investment.
Hedge funds bring nothing but greed and grief to the farm economy and our food supply, and they should be banned from ‘owning structure.’”

Hightower may be right: we should demand that Congress prevent speculators from buying up one of the main necessities.
Moreover, this just strengthens my conviction that we should guarantee our access to inexpensive and healthy food. See [6] this and [7] this.

Funny That CNN Is Ripping Alternative Energy Choices...................REAL FUNNY

Wind power: A reality check
Plans are afoot to prod the nation into using much more renewable energy. Can it be done, and what's the cost?
By Steve Hargreaves, CNNMoney.com staff writer
Last Updated: July 24, 2008: 11:04 AM EDT
NEW YORK (CNNMoney.com) -- High-profile personalities have been telling the nation to ditch that dirty fossil fuel and turn to renewable energy.
T. Boone Pickens, the billionaire oilman, has been hitting the airwaves, pitching a plan to use wind to replace all the natural gas that's used to produce electricity, then using that saved natural gas to fuel cars.
In addition to weaning the nation from foreign oil, Pickens' plan is not entirely altruistic. He's investing hundreds of millions of dollars on a giant wind farm in the Texas panhandle, and his hedge fund, BP Capital, is said to own stakes in several companies that equip cars to run on natural gas. If his energy efforts pan out, he could get even richer in the process.
Then there's Al Gore. The former U.S. vice president and Nobel Prize winner said last week that electricity generation should be completely fossil-fuel free in 10 years.
The question is, are these plans realistic or just dreams?
"It's not out of the realm of technical feasibility," said Chris Namovicz, a renewable energy analyst at the government's Energy Information Agency. "But they come with pretty significant price tags."
The order is indeed tall.
The nation currently relies on coal - the dirtiest of all fossil fuels - for 50% of its electricity production. Natural gas makes up about 21%, and nuclear power comprises about 20%. Hydro and oil each contribute a bit as well, while traditional renewables - wind, solar, biomass and geothermal - ring in at only 3% combined, according to the EIA.
Pickens has a loosely detailed plan to replace the natural-gas-produced electricity with wind energy. He says it could be done in 10 years.
"That is extremely aggressive," said Dave Hamilton, director for global warming and energy projects at the Sierra Club. "But it's in the right direction. It's a good thing we have an oilman saying we can't drill our way out of this problem."
Unpredictable wind
One of the big challenges with using wind to replace natural gas is that, unlike the steady flame from natural gas, the wind doesn't blow all the time.
To make sure enough power is available when the wind isn't blowing, backup generators would be needed, said Paul Fremont, an electric-utility analyst at the investment bank Jefferies & Co.
That could mean maintaining those natural gas plants in case of emergency, or implementing even more novel ideas like systems in Europe that use excess wind electricity to pump water uphill when the wind is blowing, then release it through hydro dams when the wind stops.
Either way, any type of backup system comes with a price.
"It's very costly, and very inefficient for society as a whole," said Fremont. "Policy makers will have to decide if the benefits are worth it."
The utility industry also has reservations about using wind on a large scale, again pointing to the fact that it doesn't blow all the time.
The Sierra Club's Becker downplayed the problem. While a challenge now, he said technological advances will allow several wind farms from varying regions of the country to be tied together in the same electricity grid; when some are idle, others could make up the difference.
"The more we focus on how to get this done, the quicker we'll solve our problems," he said.
Government regulations
Another impediment to large-scale wind generation is a lack of turbines and infrastructure, said Hamilton. Companies like General Electric (GE, Fortune 500), India's Suzlon and Spain's Gamesa, which make wind turbines, aren't building enough of those turbines to meet demandbecause government tax credits offered to energy producers expire every two years. These tax credits are a big incentive for people to invest in wind energy - Pickens would net $60 million a year, according to Jefferies' Fremont, and that is likely why he's currently pitching his plan to lawmakers.
Companies fear that, if the tax credits aren't renewed, they will be stuck with unwanted wind turbines if energy producers scale back their demand for wind power.
Also impeding the development of wind power is the fact that the government is unclear about how or whether it will regulate greenhouse gas emissions. If regulations were enacted, investments in wind energy would likely increase as utilities seek cleaner sources of power.
Wind farms also could benefit when companies or people buy carbon offsets - essentially payments to producers of clean energy and others who take steps in reducing greenhouse gasses.
Despite these challenges, wind power's ability to produce 21% of the nation's electricity needs isn't out of the question. While wind currently only makes up 0.8% of the country's total electricity production, and would need to grow well over 20 times that to replace gas, it's worth noting that wind capacity has increased twelvefold since 1990, according to the EIA.
The second part of Pickens' plan - using natural gas to power vehicles - is perhaps easier.
While automakers are betting on electric cars as the vehicle of the future, those electric cars will still need backup engines to recharge the battery on long trips, at least for the foreseeable future.
Those backup engines could run on natural gas, said Julius Pretterebner, a vehicles and alternative-fuels expert at Cambridge Energy Research Associates.
Pretterebner also pointed to a host of other reasons why natural gas in cars is a good idea: It's about half as expensive as gasoline and 30% cleaner; the infrastructure to get it to service stations already exists; it's relatively cheap to convert existing cars ($500 to $2,000 per car, he said); and natural gas can be carbon neutral, if it's made from plants, a process he said requires no new technology.
"It's maybe the best alternative fuel we have, and the quickest way to get off foreign imports," he said.
As for Gore's call, there aren't any specific measures to analyze. But if Pickens' timetable is aggressive, Gore's is like Pickens' gone wild.
"It's completely impractical to imagine that we could totally wean ourselves off fossil fuels," said Jim Owen, a spokesman for the Edison Electric Institute, the utility industry's trade association.
Impractical, maybe. But using more renewables is certainly worth looking into. The EIA estimates that by 2015, wind energy will cost 7 cents per kilowatt-hour to produce, just a half-cent more than coal or natural gas.
The EIA says if strict greenhouse gas restrictions become law, renewables might go from 3% percent of the nation's electricity mix to around 25%. Coal, meanwhile, would likely go from more than half to less than a quarter. The EIA said that under the worst-case scenario in bringing about this shift, electricity prices may double.
Given the dangers global warming may pose - U.N. scientists predict severe droughts and floods unless greenhouse gasses are drastically reduced - more-expensive electricity may be a cost Americans are willing to bear.

Nancy Pelosi Hates Your Car (And Your Mobility)

Pelosi Blocks Gas Price Relief

July 29, 2008
House Speaker Nancy Pelosi told CNN that she would block any vote to allow offshore drilling. This remarkable stance comes in the face of the latest poll that says 73 percent of Americans favor offshore drilling, while only 27 percent oppose it. Nancy Pelosi again displays her contempt for her employer, the American people. Her arrogance and wrong-headed philosophy have led Congress to an approval rating of a staggering 14 percent, the lowest ever.
The arguments she advances in defense of her position are, at best, silly, and at worst, devious. She says she will not allow additional reserves to be drilled because oil companies already hold leases on 68 million acres of federal land that are not being drilled. She ignores the testimony of oil company representatives who tell her that had they found oil under these lands, they would be pumping it. The oil companies need to drill where the oil is.
There is plenty of oil to drill. Known reserves offshore, in Alaska, the Bakken fields of North Dakota and Montana, and elsewhere, can meet the energy demand for at least 100 years. But Pelosi and her colleagues don't want this oil produced. Pelosi says that it will take 10 years for this new oil supply to reach the pump, and then, it would reduce the price by only two-cents per gallon. This price projection is pure fiction.
As an alternative, she says the president should release 70 million barrels of oil from the strategic reserves, which would provide immediate price relief. Is this silly, stupid, or just more of Pelosi's political doublespeak? This alternative would supply less than four days of the U.S. demand, which would not likely even be noticed at the pump. It would do nothing to solve the underlying problem of too little supply.
Pelosi, like Al Gore, wants to end America's reliance on oil, and switch to new, exotic, yet-to-be-developed energy sources such as wind, solar, hydrogen, and in particular, electric cars. America has been investing heavily in research in all these areas for years. Some significant progress has been made. No one in their right mind -- which includes Al Gore -- can think this new technology can be available within the next ten years, with enough distribution to make hydrogen filling stations and recharging for electric cars viable options. It is certain, however, that by developing known oil reserves, the U.S. energy demand can be met in 10 years, or less.
There is a big disconnect between the rush to convert automobiles to batteries, and the reality that the electricity to recharge those batteries would require a massive new generating capacity. The same flawed excuse of "protecting the environment," has also blocked the expansion of electricity generating capacity. If the self-appointed gods of environmental protection won't allow the expansion of electricity generation, how are the batteries of all these new electric vehicles going to be recharged every night?
Another major disconnect between the rush to replace oil with renewable sources such as wind and solar is the negative environmental impact of these renewable technologies. For example, to replace a single 50-megawatt coal-fired generating plant, which may occupy as much as 20 acres of land, approximately 3,000 acres of land would have to be occupied by wind turbines. To produce 50-megawatts of electricity from solar panels would virtually cover even more land. How can these protectors of the environment justify blanketing the land with whirling bird-killers and solar panels that block the sun from all forms of life beneath them?
Some environmental purists genuinely want America and the world to return to the stone-age. Nancy Pelosi is no environmental purist. She is a political creature, which is a person so intoxicated by power that the instinct to retain and expand it overwhelms common sense, logic, ethics, morality, or anything else that might get in the way.
By her refusal to even allow debate on proposals to expand oil development -- where oil is known to exist -- she stands like a barricade between thirsty consumers and a new mountain stream. She apparently sees herself as a self-appointed savior; she is, in truth, acting as judge and jury, condemning a nation desperate for more energy to spiraling energy costs for possibly another generation.
This is not a new posture for Democrat leadership. Democrats in the House, the Senate, and the White House have blocked expansion of oil supplies for more than a decade. Had Bill Clinton not vetoed the bill that would have opened the Arctic National Wildlife Refuge more than a decade ago, gas prices would not be as high as they are today. Millions of jobs would have been created, and every American could have saved the money needlessly paid to foreign sources for oil, simply because one man played God and defied the express will of the people.
Nancy Pelosi is now playing God, standing where Bill Clinton stood more than a decade ago, defying the expressed will of the people by blocking access to the known oil reserves that are so desperately needed by the entire nation.

Obama’s “change” promises a continued path towards world government

Barack Obama’s July 24th speech in Berlin brought to light the Democratic Presidential candidates’ globalist views, mirroring those of the Council on Foreign Relations and other globalist think tanks. Obama’s praise of the European Union, calls for the “tearing down” of walls between nations and religions, and finally for world unity against climate change and terrorism reveal that an Obama Presidency will not bring change, but rather a continued erosion of national sovereignty and steps closer to world government.
Interestingly, Obama’s speech was delivered beneath the “victory angel” statue in Berlin. [3] As the Guardian reported on the 21st,
“The centrepiece of the European leg of Obama’s visit will be his Berlin speech. Liberal and conservative politicians in Germany expressed consternation that Obama plans to address the crowds from beneath the golden angel statue which graces Berlin’s Siegessäule, a landmark which Hitler moved to its present location as part of his bid to transform Berlin into the world capital Germania.”
[4] Obama’s speech stated in part:
“That is why the greatest danger of all is to allow new walls to divide us from one another. The walls between old allies on either side of the Atlantic cannot stand. The walls between the countries with the most and those with the least cannot stand. The walls between races and tribes; natives and immigrants; Christian and Muslim and Jew cannot stand. These now are the walls we must tear down.”
…
“Yes, there have been differences between America and Europe. No doubt, there will be differences in the future. But the burdens of global citizenship continue to bind us together. A change of leadership in Washington will not lift this burden. In this new century, Americans and Europeans alike will be required to do more — not less. Partnership and cooperation among nations is not a choice; it is the one way, the only way, to protect our common security and advance our common humanity.”
…
“The terrorists of September 11th plotted in Hamburg and trained in Kandahar and Karachi before killing thousands from all over the globe on American soil.As we speak, cars in Boston and factories in Beijing are melting the ice caps in the Arctic, shrinking coastlines in the Atlantic, and bringing drought to farms from Kansas to Kenya.

In this new world, such dangerous currents have swept along faster than our efforts to contain them. That is why we cannot afford to be divided. No one nation, no matter how large or powerful, can defeat such challenges alone. None of us can deny these threats, or escape responsibility in meeting them. Yet, in the absence of Soviet tanks and a terrible wall, it has become easy to forget this truth. And if we’re honest with each other, we know that sometimes, on both sides of the Atlantic, we have drifted apart, and forgotten our shared destiny.”
Barack Obama’s remarks mirror those of Richard Haass, the president of the Council on Foreign Relations, who stated that the problems of climate change and terrorism would [5] require a surrender of national sovereignty and ultimately the formation of a world government. “Some governments are prepared to give up elements of sovereignty to address the threat of global climate change,” stated Haass. “The goal should be to redefine sovereignty for the era of globalization, to find a balance between a world of fully sovereign states and an international system of either world government or anarchy.”
Obama [6] is not the only presidential candidate with globalist ideals. John McCain’s proposed League of Democracies and [7] support of North American integration is one example. Hillary Clinton’s open support for world government is another.
Obama’s promise of “change” will bring no such thing. A continuation of globalist policy towards world government and weakened national sovereignty will undoubtedly be pursued.

Ugh................More Bailouts, Just Like The Airlines........

Massive $25 Billion PriceTag Put On Planned Bailout of Big Banks
July 28, 2008
Sunday, July 28, 2008
AS CONGRESS STRUGGLED with the housing crisis, it voted to reward crooked banksters and greedy consumers who deliberately bought homes they could not afford. True, some Americans were simply misinformed or uneducated about buying a home and easily manipulated by the loan industry. Perhaps they should be more pitied than censored.
But, amazingly, it develops that most home buyers were well-informed, if not by banksters, by their own lawyer, real estate agent or financial advisor about buying a home where the initially low interest rates would surge in a year or so, adding hundreds of dollars to their monthly mortgage payment and driving them into foreclosure.
This was addressed by Michael J. Derevlany, a lawyer in Wynantskill, N.Y. in a letter to the August, 2008 Readers Digest: “As an attorney, I saw far too many clients with unusual financing. I always brought it to their attention, but people want what they want. A colleague and I called these crazy deals, half in jest, the ‘foreclosures of the future.’ Sadly, that’s what some have become.”

About 1.5 million mortgages entered foreclosure in 2007 and that will increase to up to 2.5 million in 2008, Treasury Secretary Henry Paulson said during congressional hearings.
The frivolous attitudes Americans have about spending money they don’t have is demonstrated in their use of credit cards. In recent years, Americans, on average, have run up credit card bills of $10,000, paying only the interest. A few years ago, these credit-card bills were run up to buy shiny things, not essentials. Now, many Americans are jerking around different credit cards to buy food.
Nationwide, home prices have fallen about 17 percent from their peaks in 2006, according to the closely watched S&P/Case-Schiller Home Price Index.
Analysts predict that house prices will continue to fall for at least another year and futures market indicate prices could drop another 20 percent. Evil leaders offered these “subprime” loans without regard to a homeowner’s ability to pay them back. Those who expressed concern about paying the mortgage when the rates would automatically leap were assured they could easily refinance before the increase because home prices would increase. But falling prices meant those homeowners were unable to refinance and obtain affordable interest rates.
Certainly, bankers who thus deceived and victimized ignorant Americans should be dealt with harshly. Fannie Mae and Freddie Mac? These government-chartered institutions deserve harsh punishment instead of the blank-check credit Congress authorized. But together, they are buying off Congress. According to the Center for Responsive Politics, Fannie and Freddie have contributed nearly $20 million to congressional campaigns since 1990. They have spent $170 million lobbying in the past 10 years. They have donated $1.68 million to the current congressional campaigns.A federal rescue of Fannie and Freddie could cost taxpayers $25 billion, according to the non-partisan Congressional Budget Office.
But Congress is throwing them a lifeline. It’s part of a plan to let hundreds of thousands of homeowners facing foreclosure refinance into more affordable, government backed loans at fixed rates.
The bill also sent $4 billion to neighborhoods hit hardest by the housing crisis—mostly black, inner-city ghettos. President Bush threatened to veto the bill unless this item is dropped. But he reversed himself and said he would sign the measure.
There’s much wrong with this legislation and Sen. Jim Bunning (R-Ky.), writing in USA Today, says it best. Bunning has been in Congress many years but may be best known as one of the greatest pitchers in the history of the Cincinnati Reds. The Senate has passed a similar housing bill.

Record Deficit...........Really?

White House sees record budget gap in 2009
Janet Whitman, Financial Post
NEW YORK -- Inflated by the sagging economy and the payout of taxpayer rebate cheques, the U.S. budget deficit is set to balloon to a record of nearly half a trillion dollars in fiscal 2009, it was revealed on Monday.
The whopping budget gap is bound to put a spotlight on the fiscal policies of presidential hopefuls Barack Obama and John McCain.
As part of its mid-season budget review, the White House projected a budget deficit of US$482-billion for fiscal 2009, which begins on Oct. 1. The estimate jumped US$74-billion from the Bush administration's estimate in February.
The deficit for the current fiscal year is forecast to total US$389-billion, US$21-billion less than the administration's previous forecast.
When U.S. President Bush took office in 2001, budget surpluses were forecast to continue for years, bolstered by a decade of strong economic growth. But the budget soon sank into the red, sapped by the Sept. 11 terrorist attacks, a recession and lost revenue from massive tax cuts from the Bush administration.
The administration is forecasting the budget will return to black ink in 2012. But many economists believe that view is overly optimistic given the struggling economy and the projection doesn't include spending on the wars in Iraq and Afghanistan beyond 2009.
The 2009 budget is being dragged into the red in part by the US$117-billion worth of rebate cheques mailed out to 130 million Americans and other pieces of the bipartisan stimulus package aimed at keeping the U.S. economy from stumbling into a full-blown recession.
The deficit will easily exceed the nominal record of $413-billion set in fiscal 2004.
"If they gave out Olympic medals for fiscal irresponsibility, President Bush would take the gold, silver and bronze," said Sen. Kent Conrad, D-N.D., chairman of the Senate Budget Committee. "With his eight years in office, he will have had the five highest deficits ever recorded."
Economists point out, however, that although it's hitting a record nominally, the projection for 2009 falls within historical norms when measured as an overall percentage of U.S. gross domestic product.
For 2008 and 2009, the budget gaps represent roughly 2.7% and 3.3% of GDP, respectively. That's only a little above historic norms for the past four decades and well below 2004's record.
Still, the gap will leave the next U.S. president with huge challenges.
Senator McCain, the Republican presidential hopeful and a harsh critic of government spending, yesterday reiterated his pledge to balance the budget by the end of his first term if elected.
"[Monday's] news makes that job harder, but should not change our resolve to make the tough decisions and the genuine effort to reach across the aisle that are needed to ensure a lasting solution to the spending problem that threatens the very stability of our economy."
Senator Obama, the Democratic presidential contender, has pledged to repeal some of President Bush's tax cuts. He met in Washington D.C. on Monday with a group of high-powered financial experts, including former treasury secretary Paul O'Neill, former Federal Reserve chairman Paul Volcker and Google chairman Eric Schmidt, among others, to discuss the faltering economy. Billionare investor Warren Buffett participated by telephone.
More than simply balancing the budget, the big fiscal challenge the next U.S. president faces will be grappling with the skyrocketting costs of Social Security and Medicare, said Brian Riedl of the conservative Heritage.
"I'm less worried about the US$15-trillion in public debt than I am about the US$43-trillion hole in Social Security and Medicare over the next 70 years," Mr Riedl told the National Post in an interview. "The debt right now is not big enough to have a substantial impact on the economy."

Remember Folks, The Airline Industry Was In Trouble Way Before 9/11

Airline fee orgy has nothing to do with fuel prices
Bob Crandall is right. The latest airline crisis, which has unleashed an avalanche of new fees and surcharges on passengers, has nothing to do with high fuel prices. It’s about bad management.
But we don’t need American Airlines’ former chief executive to tell us that. We just need to wait a while.
When fuel prices come back down — as they are almost certain to — just pay close attention to all the new extras that have sprung up in the last few months.
The $15 fee for the first checked bag. The $2 per soft drink charge. The surcharges for redeeming our “free” award tickets.
Does anyone think airlines will back off when times are better?
Of course not. Airlines have been waiting for an excuse to charge us for anything that isn’t bolted down on the plane. They’ve been looking at Ryanair for years, envious of its ability to charge passengers for everything.
No, none of these fees are going to go away.
So are the airlines lying to us? Yes and no.
Sure, fuel costs more. No doubt, it’s far more difficult to make a buck in the airline business than it was just six months ago because of sky-high oil prices. But that’s not the whole story.
Airlines have always wanted to add these fees, and in that sense, the higher fuel costs are nothing more than a smokescreen. They are not giving us what we want, as United Airlines disingenuously claimed when it announced its new surcharges yesterday.
They are giving us what they want.

Here's A Partial Rebuttal To Picken's Plan

Windmill farms: Just a bunch of hot air

Taxpayers may be forced to pay fortune for turbine power
Posted: July 27, 20088:07 pm Eastern© 2008 WorldNetDaily
Plans to combat energy crisis with wind turbine farms could backfire
With oilman T. Boone Pickins running television ads promoting wind power as a solution to the energy crisis, a report emerging from Great Britain argues that actual operating statistics from wind-turbine farms indicates generating electricity by wind turbines uses more hydrocarbon fuel than is saved.
Moreover, industrial wind power turns out to be exceptionally costly to consumers, once the required backup infrastructure is factored into the equation.
Wind power has generated excitement among energy analysts anxious to find renewable energy resources.

The U.S. Department of Energy released in May an enthusiastic report claiming the technical feasibility of harnessing wind power could provide up to 20 percent of the nation's total electricity needs by 2030.
The Economist is reporting Pickens's oil company, Mesa Oil, has invested $2 billion to build the world's largest wind farm in Pampa, Texas, a small town in the panhandle.
Pickens, whose net worth is estimated at $4 billion, told a Senate committee in June that he plans to pay for the transmission lines to carry Pampa wind-generated electricity into the infrastructure of the Dallas electricity grid.
He has created a new website proclaiming that "America is blessed with the world's greatest wind power corridor."
PickensPlan claims we can reach the Department of Energy's goal of using new wind generation facilities to generate 20 percent of U.S. electricity needs within 10 years.

I Don't Believe This For A Second......It's A False Surrender

Father of North American Community concedes dream 'is dead'

Says critics have blocked alignment of U.S., Mexico and Canada
Posted: July 28, 20089:46 pm Eastern
By Jerome R. Corsi© 2008 WorldNetDaily
North American Model Parliament
The Security and Prosperity Partnership of North America is dead, says Robert A. Pastor, the American University professor who for more than a decade has been a major proponent of building a North American Community.
"The new president will probably discard the SPP," Pastor wrote in an article titled "The Future of North America," published in the current July/August issue of the Council on Foreign Relations magazine Foreign Affairs.
The SPP, which critics contend is a step toward a North American Union, is an agreement to increase cooperation on security and economic issues signed by the leaders of the U.S., Mexico and Canada in 2005. Despite having no authorization from Congress, the Bush administration launched extensive working-group activity to implement the agreement. The working groups – ranging from e-commerce, to aviation policy, to borders and immigration – have counterparts in Mexico and Canada.
"The April summit meeting was probably the last hurrah for the SPP," Pastor wrote, referring to the fourth annual SPP meeting held in April in New Orleans.
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Pastor attributes the failure of SPP to its largely bureaucratic nature and the decision policy makers made to keep SPP largely below the radar of public opinion.
"The strategy of acting on technical issues in an incremental, bureaucratic way and keeping the issues away from public view has generated more suspicion than accomplishments," Pastor admitted.
Pastor blames critics for the failure of the SPP, charging it has come under attack from both ends of the political spectrum.
"From the right have come attacks based on cultural anxieties of being overrun by Mexican immigrants and fears that cooperation with Canada and Mexico could lead down a slippery slope toward a North American Union," he wrote. "From the left came attacks based on economic fears of jobs lost due to unfair trading practices."
"These two sets of fears came together in a perfect storm that was pushed forward by a surplus of hot air from talk-show hosts on radio and television," he continued. "In the face of this criticism, the Bush administration was silent, and the Democratic candidates competed for votes in the rust-belt states, where unions and many working people have come to see NAFTA and globalization much as (commentator Lou) Dobbs does."
Pastor denied he had ever urged the creation of a North American Union.
"Dobbs, among others, viewed a report by a 2005 Council on Foreign Relations task force (which I chaired), 'Building a North American Community,' as the manifesto of a conspiracy to subvert American sovereignty," he asserted. "Dobbs claimed that the CFR study proposed a North American Union, although it did not."
Pastor has argued consistently for a "North American Community," as suggested by the title of his 2001 book entitled "Toward a North American Community."
In a commentary authored for WND, Pastor stressed, "I do not propose a North American Union; I propose a North American Community."
Pastor argued the two were different in that North American Community would involve "three sovereign governments that seek to strengthen bonds of cooperation."
Noting that the European Community was a transitional state between the European Common Market and the European Union, Pastor conceded to WND that, "I don't think a political union of North America is an inherently bad idea, nor do I think it is a good idea for right now."
Despite the SPP setback, Pastor remains determined to advise a different approach to his continued goal of integrating the U.S., Mexico and Canada into a North American Community.
"The three heads of state must also commit to building a new consciousness, a new way of thinking about one's neighbors and about the continental agenda," he said. "Americans, Canadians and Mexicans can be nationals and North Americans at the same time."
To correct the defects of the SPP bureaucratic closed-door process, Pastor's CFR article recommended creating new North American institutions, including a North American Investment Fund of at least $20 billion a year "to connect central and southern Mexico to the United States with roads, ports, and communications."
Sen. John Cornyn, R-Texas, dropped his support for Senate bill 3622 in the 109th Congress when WND reported the North American Investment Fund proposed by the legislation would enact a key proposal Pastor has frequently made for advancing his North American Community agenda.
In his CFR article, Pastor also called for the continuation of annual North American heads-of-state summits and the appointment in the next administration of a national adviser for North American affairs, who would chair a cabinet-level committee to formulate a comprehensive plan for North America.
Pastor also encouraged creating a dozen university centers for North American studies "to educate a new generation of students to think North American."
WND reported on the fourth annual North American Model Parliament held this year in Montreal, Canada, for 100 university students from the U.S., Canada and Mexico.
The North American Model Parliament is sponsored by the North American Forum on Integration, on which Pastor serves as a board member.

Limping, Limp Republicans

I get the impression that Republicans are growing more flaccid by the day—and it’s not because John McCain, their presidential pick, blushes at the mention of masculinity-enhancing medication.

McCain thinks you commune with God by amnestying illegal aliens. Time and again, the mushy McCain has scolded the few remaining plucky Republicans daring to defile the Democrats. Why, McCain even condemned any and all who dwelled on Obama’s umbilical ties to his spiritual guide of 20 years, the diabolical Rev. Wright. For some reason, Obama’s dwelling in the house of the devil for two decades McCain considers off limits—irrelevant to the man’s abilities as president. Or so McCain insisted.

Unsurprisingly, McCain recently condemned, in that soporific drone, a display, paid for by the last remaining Republican Party loyalist, depicting the burning Twin Towers, and exhorting fellow Floridians not to vote Democratic. McCain would have knocked the stuffing out of this feisty fellow, but he was otherwise busy prostrating himself before the National Association for the Advancement of Colored People. McCain had taken time off to campaign for Barry at the NAACP. Obama was an “impressive fellow,” he informed an already captive crowd.

Songbird Sen. Orrin Hatch is another tender heart. The Republican representative from Utah has been serenading “legendary liberal” Teddy Kennedy.

Here’s some of what the “Praise Singer” wrote for Kennedy:

Through the darkness, we can find a pathway,
that will take us halfway to the stars.
Shoo the shadows and doubts away, and touch the legacy that is ours, yours and mine.

He might be a lousy poet, but Hatch is keenly attuned to his and Kennedy’s place in history—which makes him a good court poet. When he’s not praying to Kennedy, Hatch can be found praying for him: “I pray for him several times a day,” he told the Boston Globe correspondent.

In case you wondered where your own representative was—and why he hasn’t responded to your calls—he, like Hatch, is otherwise occupied: “A lot of Republicans are praying for [Teddy],” divulged Hatch.

That a popular women’s television show features females who’re soft in the head is to be expected. But, once again, the Republican led the way.

Elizabeth Hasselbeck is the Republican’s brain trust on a show called “The View.” Her conservative credentials include support for breast cancer prevention and research, the Amber Alert Initiative, the war, Our Leader, and, more generally, being blond and bubbly. Whoopi Goldberg, I’m sorry to say, is this show’s smartest panelist.

To Socratic debate, Hasselbeck has contributed the sob, the wide-eyed stare, and extravagant gesticulation. When words and wild gestures fail, she weeps.

After Jesse Jackson called Obama by the “N” word, a debate ensued on “The View” as to whether it’s ever appropriate to use that word. (And I know this how? All cable channels and others ostensible news outlets reported “The View” vignette.)

Hasselbeck took sanctimony to a new level. She bawled:

“How are we supposed to move forward if we keep using words that bring back that pain?” Such self-indulgent showy sentimentality should never be confused with compassion. However, in America, crying automatically vests the blubberer with moral virtue.

Unlike the “virtuous” Hasselbeck, I’ve had my fill of “black pain,” which I hold between the tongs of quotation marks for a reason. This lady’s convulsions were even more off-putting than the sight of Al Sharpton and Sean Hannity during one of their love-ins on Fox News.

Recall, Hasselbeck’s other philosophically “conservative” stand was to have declared the following about the lynch-mob driven firing of Imus, a politically incorrect, popular broadcaster: “the market has spoken.”

As to the “N” word’s proper use, Goldberg was quick to brief the bleeding hearts who wanted to practically ban it. Blacks bandy about the word among themselves. They also use it in the course of producing that “50 Cent” electronica that Obama has called an ingenious “art form”: hip hop. In other words, blacks have a sense of humor. They have fun with this nasty word. Etiquette and good breeding dictate that whites steer clear.

Self-deprecation doesn’t work when others deprecate you. To me, that seems straightforward.

I’ve made the odd outlandish quip with respect to the Jewish experience. Coming from a gentile, however, it would be in bad taste, rude. By the same token, if whites can recognize that blacks have different cultural references; blacks should reciprocate. Now that’ll be the day!

In any event, if Republicans weren’t so soft, their bubbleheads wouldn’t be doubling up in phony pain, begging for bad words and bad men to be banned. And their Beta Males would quit lavishing praise on Alpha Obama and pathos on Kennedy.

Nicely Said................

"The nature of another sovereign state's internal regime is not the business of either Britain or America. To admit the opposite principle that pre-emptive war is legitimized by moral and political disapproval would be to open the way to international anarchy." -Correlli Barnett

Mogambo Rants

Mr. Foreign Investor's Neighborhood
"Perhaps the reason that Treasury Secretary Paulson wants to bail out Government Sponsored Entities (GSEs) like Fannie Mae and Freddy Mac is because of who owns the shares of the companies, which will go to zero if Fannie and Freddie are allowed to fail like they deserve to do."
by The Mogambo Guru
I was looking at how Treasury Gross Public Debt is now officially over $9.5 trillion, and was thinking of using that particular bit of terrifying insanity as an excuse to get really hammered, when I suddenly remembered that I didn't have any money or credit with which to buy inexpensive but tasty alcoholic beverages, or even a burrito to get that subtle taste of anti-freeze out of my mouth. Damn!
Recently, I had already forged a lot of IOUs in my kids' names at various bars around town, and already people were getting suspicious about them, unduly limiting my subsequent issuances of more IOUs, and I was out of ideas for a new scam.
So it was somewhat coincidental and startling that at the very next moment I read where Gary North in his Reality Check newsletter at garynorth.com wrote, "Americans would regard the son's inheritance of a father's debt as tyrannical. But, with the help of Congress, Americans have adopted the same system, but on a far larger scale. We have passed our IOUs on to the children of our neighbors' children."
This brings up one of the points of disagreement between Mr. North and me, as he thinks of these creditors as "neighbors", while I refer to them as "vicious foreign devils", and not just because I am a xenophobic, fearful, hateful, paranoid whack-job, but because every lynch mob I have ever seen in the movies or heard about in real life is always comprised of somebody's "neighbors".
In fact, these "neighbors" to which he refers are actually foreigners, who actually live in some foreign country, and who actually speak some stupid foreign languages whenever I am around so that I can't understand the words, but I know what they are plotting! I know EXACTLY what they are plotting! And that is why I hate them as much as they hate me!
Apparently, I made my point, as Mr. North immediately admits that I was right, and that these "neighbors" are actually foreigners, and that "Today, the Treasury sells its IOUs to foreign investors, especially foreign central banks. Something in the range of 40% of the on-budget Federal debt of $9 trillion is held by foreigners."
Notice the part about "on-budget" federal debt, which implies that there is an "off-budget" federal debt, too, which is so corrupt that it is amazing that it is allowed to even exist! This is where you find the secret money that government goon squads use to harass me, like last week when the air conditioner started acting weird! For five years it has worked perfectly, and now suddenly it doesn't, and I am supposed to think that government agents/saboteurs are NOT involved? Ha! As Jim Rockford, private investigator in The Rockford Files, would say, "My coincidence meter is red-lined!"
Perhaps the reason that Treasury Secretary Paulson wants to bail out Government Sponsored Entities (GSEs) like Fannie Mae and Freddy Mac is because of who owns the shares of the companies, which will go to zero if Fannie and Freddie are allowed to fail like they deserve to do.
It's something to think about when gangsters own your "paper", as I infer from Bill Bonner here at The Daily Reckoning writing, "Today, fully 21% of Russia's monetary reserves are invested in the obligations of Fannie, Freddie and the Home Loan Banks. And the largest holder of Fannie and Freddie debt is another friendly foreigner, China", which he says, "owns $376 billion worth of U.S. agency bonds. Altogether, foreigners hold $1.3 trillion of them."
In fact, it is said that purchases of Fannie/Freddie debt by foreigners covered a third of the U.S. current account deficit of $700 billion over the last year! Hahahaha!
And anyway, this $9.5 trillion dollar national debt is pretty much chickenfeed when looking at bigger intractable problems, as we gather from a speech given by Richard Fisher, the head of the Dallas Federal Reserve Bank, who said, "Add together the unfunded liabilities from Medicare and Social Security, and it comes to $99.2 trillion over the infinite horizon."
First off, he is wrong; it comes to infinity at the infinite horizon, not some piddly $99.2 trillion, and you would think that the president of the Dallas Federal Reserve Bank would know such a thing. And then you realize that total Gross Domestic Product (GDP) of the USA is only about $13 trillion, and suddenly this seems like a lot more than is even comprehensible! Your brain whirls! Income that is 0.013% the size of liabilities!
Naturally, the mind cries out in its anguish, "No! No! No!" as it is staggered by the sheer enormity of $100 trillion of liabilities, and you wonder aloud, "Has there been a mistake in addition?"
Apparently not, as the total breaks down as, "Traditional Medicare composes about 69 percent, the new drug benefit roughly 17 percent and Social Security the remaining 14 percent." What? The prescription drug benefit is now going to cost more than Social Security itself? Yikes!
Apparently, he does not want to get into a discussion about that, and tried to impress me by correctly saying, "We know from centuries of evidence in countless economies, from ancient Rome to today's Zimbabwe, that running the printing press to pay off today's bills leads to much worse problems later on. The inflation that results from the flood of money into the economy turns out to be far worse than the fiscal pain those countries hoped to avoid", which is exactly true and I am surprised to hear him say that!
And it almost makes you proud when he says, "Purging rampant inflation and a debased currency requires administering a harsh medicine. Even the perception that the Fed is pursuing a cheap-money strategy to accommodate fiscal burdens, should it take root, is a paramount risk to the long-term welfare of the U.S. economy. The Federal Reserve will never let this happen. It is not an option. Ever. Period."
Then you are driven to ask, "If so, then why in the hell are we here, you lying, complicit, moron Federal Reserve bastard?" He never answered me, which is all the answer I need, and it is all the justification you need to buy as much gold and silver as you can.
It is going to be bad. Very bad. Very, very bad. Ugh.

Morgan On Silver

Silver -Euphoria

By David Morgan
July 24, 2008
This week we took a look back into a recent issue of The Morgan Report and decided to reprint an answer we received from one of our subscribers. It seems many including us are frustrated with what is going on with the junior mining sector. In our opinion we are far from over this major bull market, but we are still in the skeptical phase where many are of the opinion that the mining sector stocks and in particular the junior mining stocks are through.
From a few months ago I received the following question, subscribers have direct access in the members only section.
Dear Mr. Morgan:
Congratulations on a great call for March. Gold hasn’t gone down greatly but junior stocks certainly have! You said 12-18months ago that in the 2nd part of the bull market it's the large caps that increase dramatically and that it's only in the last part of the precious metals bull market that the juniors have their day.
At the time I didn't fully believe you, as I had never experienced such a thing before. Did these types of market conditions prevail in the late ’70s in that bull market period? If so how long did these conditions last? What would you suggest for those subscribers who didn't fully believe you 12 months ago and have invested in junior stocks?
Foreseeing or believing that this scenario would come to pass at a time when juniors were flying high 18 months ago was difficult. However, I thank you for your warnings.
Editor’s Response to Part A: Let me be a bit more specific. First, the junior market does do well in the initial stages of a new bull market. This is pretty much self-evident. Many companies with merit and many without merit did rise in price dramatically during the first leg up in the precious metals bull market. Also, let me be clear that exceptions can always be found; we are speaking in general terms here. The bull market was similar in the 1970s and I have written about it in the past. Once we enter the optimistic phase of this market, which right now I am forecasting to begin around the August to September 2008 timeframe, we will see the junior sector perk up.
However, some junior mining companies may have run out of money and/or given up. Near the end of the cycle where we enter the most lucrative but also the most dangerous phase of the market, the “euphoric” phase, we will see the junior market absolutely fly. The reason is psychological—people love cheap stocks, and many of the best companies in the industry will be trading well over $50 per share and many well above that. Those who are very late to the party will buy stocks based upon the “story” surrounding the stock and also the price.
During this euphoric mania it is possible to see penny stocks go from prices under a dollar to $10, $20, and even $30 per share. This is the exception, not the rule, but in general terms the junior market is so small and the amount of people flooding into the market so great that almost all “cheap” mining stocks get pushed higher.
The key is to not get too greedy, and take profits off the table—do not expect to sell at the exact top. As I have taught all along, especially for those who trade the futures market, it is always better to sell into strength. The euphoria lasts a very short time, usually a matter of weeks. At that time, it will be most difficult for me to not only remain objective but also to put up with the amount of e-mails that I will receive telling me I am wrong, the market is “different” this time, and I have become a traitor to the cause by even suggesting selling. However, I am fully prepared and plan to do the very best job possible, regardless of how much flack will be flying my way at the top. I still expect the ultimate top to be in the 2010-2012 timeframe, subject to change, as we get closer.

Evidence of the US Banking System Teetering on the Brink of Collapse

1. Paulson appears on Face The Nation and says "Our banking system is a safe and a sound one." If the banking system was safe and sound, everyone would know it (or at least think it). There would be no need to say it.

2. Paulson says the list of troubled banks "is a very manageable situation". The reality is there are 90 banks on the list of problem banks. Indymac was not one of them until a month before it collapsed. How many other banks will magically appear on the list a month before they collapse?
3. In a Northern Rock moment, depositors at Indymac pull out their cash. Police had to be called in to ensure order.

4. Washington Mutual (WM), another troubled bank, refused to honor Indymac cashier's checks. The irony is it makes no sense for customers to pull insured deposits out of Indymac after it went into receivership. The second irony is the last place one would want to put those funds would be Washington Mutual. Eventually Washington Mutual decided it would take those checks but with an 8 week hold. Will Washington Mutual even be around 8 weeks from now?

5. Paulson asked for "Congressional authority to buy unlimited stakes in and lend to Fannie Mae (FNM) and Freddie Mac (FRE)" just days after he said "Financial Institutions Must Be Allowed To Fail". Obviously Paulson is reporting from the 5th dimension. In some alternate universe, his statements just might make sense.

6. Former Fed Governor William Poole says "Fannie Mae, Freddie Losses Makes Them Insolvent".

7. Paulson says Fannie Mae and Freddie Mac are "essential" because they represent the only "functioning" part of the home loan market. The firms own or guarantee about half of the $12 trillion in U.S. mortgages. Is it possible to have a sound banking system when the only "functioning" part of the mortgage market is insolvent?

8. Bernanke testified before Congress on monetary policy but did not comment on either money supply or interest rates. The word "money" did not appear at all in his testimony. The only time "interest rate" appeared in his testimony was in relation to consumer credit card rates. How can you have any reasonable economic policy when the Fed chairman is scared half to death to discuss interest rates and money supply?

9. The SEC issued a protective order to protect those most responsible for naked short selling. As long as the investment banks and brokers were making money engaging in naked shorting of stocks, there was no problem. However, when the bears began using the tactic against the big financials, it became time to selectively enforce the existing regulation.

10. The Fed takes emergency actions twice during options expirations week in regards to the discount window and rate cuts.

11. The SEC takes emergency action during options expirations week regarding short sales.

12. The Fed has implemented an alphabet soup of pawn shop lending facilities whereby the Fed accepts garbage as collateral in exchange for treasuries. Those new Fed lending facilities are called the Term Auction Facility (TAF), the Term Security Lending Facility (TSLF), and the Primary Dealer Credit Facility (PDCF).

13. Citigroup (C), Lehman (LEH), Morgan Stanley(MS), Goldman Sachs (GS) and Merrill Lynch (MER) all have a huge percentage of level 3 assets. Level 3 assets are commonly known as "marked to fantasy" assets. In other words, the value of those assets is significantly if not ridiculously overvalued in comparison to what those assets would fetch on the open market. It is debatable if any of the above firms survive in their present form. Some may not survive in any form.

14. Bernanke openly solicits private equity firms to invest in banks. Is this even close to a remotely normal action for Fed chairman to take?

15. Bear Stearns was taken over by JPMorgan (JPM) days after insuring investors it had plenty of capital. Fears are high that Lehman will suffer the same fate. Worse yet, the Fed had to guarantee the shotgun marriage between Bear Stearns and JP Morgan by providing as much as $30 billion in capital. JPMorgan is responsible for only the first 1/2 billion. Taxpayers are on the hook for all the rest. Was this a legal action for the Fed to take? Does the Fed care?

16. Citigroup needed a cash injection from Abu Dhabi and a second one elsewhere. Then after announcing it would not need more capital is raising still more. The latest news is Citigroup will sell $500 billion in assets. To who? At what price?

17. Merrill Lynch raised $6.6 billion in capital from Kuwait Mizuho, announced it did not need to raise more capital, then raised more capital a few week later.

18. Morgan Stanley sold a 9.9% equity stake to China International Corp. CEO John Mack compensated by not taking his bonus. How generous. Morgan Stanley fell from $72 to $37. Did CEO John Mack deserve a paycheck at all?

19. Bank of America (BAC) agreed to take over Countywide Financial (CFC) and twice announced Countrywide will add profits to B of A. Inquiring minds were asking "How the hell can Countrywide add to Bank of America earnings?" Here's how. Bank of America just announced it will not guarantee $38.1 billion in Countrywide debt. Questions over "Fraudulent Conveyance" are now surfacing.

20. Washington Mutual agreed to a death spiral cash infusion of $7 billion accepting an offer at $8.75 when the stock was over $13 at the time. Washington Mutual has since fallen in waterfall fashion from $40 and is now trading near $5.00 after a huge rally.

21. Shares of Ambac (ABK) fell from $90 to $2.50. Shares of MBIA (MBI) fell from $70 to $5. Sadly, the top three rating agencies kept their rating on the pair at AAA nearly all the way down. No one can believe anything the government sponsored rating agencies say.

22. In a panic set of moves, the Fed slashed interest rates from 5.25% to 2%. This was the fastest, steepest drop on record. Ironically, the Fed chairman spoke of inflation concerns the entire drop down. Bernanke clearly cannot tell the truth. He does not have to. Actions speak louder than words.

23. FDIC Chairman Sheila Bair said the FDIC is looking for ways to shore up its depleted deposit fund, including charging higher premiums on riskier brokered deposits.

24. There is roughly $6.84 Trillion in bank deposits. $2.60 Trillion of that is uninsured. There is only $53 billion in FDIC insurance to cover $6.84 Trillion in bank deposits. Indymac will eat up roughly $8 billion of that.

25. Of the $6.84 Trillion in bank deposits, the total cash on hand at banks is a mere $273.7 Billion. Where is the rest of the loot? The answer is in off balance sheet SIVs, imploding commercial real estate deals, Alt-A liar loans, Fannie Mae and Freddie Mac bonds, toggle bonds where debt is amazingly paid back with more debt, and all sorts of other silly (and arguably fraudulent) financial wizardry schemes that have bank and brokerage firms leveraged at 30-1 or more. Those loans cannot be paid back. What cannot be paid back will be defaulted on. If you did not know it before, you do now. The entire US banking system is insolvent.
By Mike "Mish" Shedlock

Nicely Said......................

"The rascals in Washington bask in the imagined glory of being a "superpower" but does it buy you or me anything? It buys us not a damn thing! We support it with our sons and our treasure." -Michael Peirce

Put Some More Gasoline On The Fire, Earl.....

Let's Add Another Few Hundred Billion to Our Deficit, Shall We?
Housing legislation in the United States moved closer to becoming law this week. The majority 272 Congressmen voted in favor of a rescue package versus 152 against. The bill was just introduced in the House of Representatives and now moves to the Senate. It's highly likely the Senate will give this bill a green light before the Presidential elections this fall.The bill would authorize the government to invest US$30 billion in Fannie Mae and Freddie Mac while insuring up to US$300 billion in refinanced mortgages. The housing crisis is now in its second year, and shows no signs of stopping. This crisis also triggered the sub-prime mortgage debacle 12 months ago. Other assets, including stocks, bonds and some commercial real estate sectors have all deflated since mid-2007. So what's the bottom line for the United States and investors?As a result of footing this enormous bailout, the government will raise its debt ceiling to US$10.6 trillion dollars from the current cap of US$9.8 trillion dollars. Heck, what's a few hundred billion dollars when you're the Fed and you print your own fiat currency?The nationalization of American housing has therefore begun. And not everyone in Congress and the public is pleased with this new legislative proposal. Dissenting Senators exclaimed the bill would ultimately cost taxpayers more than US$1 trillion. Adjusted for inflation since 1991, the last rescue (Savings & Loans) cost about US$400 billion. Also, once again the government is coming to the rescue of big financial firms. These giants, like Bear Stearns, are too big to fail. The sad truth is that if the government did NOT bailout Bear Stearns and rescue Fannie and Freddie, the global financial system would suffer a severe blow. Banks would tumble like dominos, a string of mortgage defaults would occur nationwide and a hard recession or worse would ensue. Morale hazard argues against government bailouts. But at what point is a bailout justified if it saves or delays the economic day of reckoning? Is a government bailout warranted if it saves the financial system?

T.Boone Sees It Worse Than We Do

Pickens sees $300 oil unless U.S. cuts imports
July 23, 2008
Timothy Gardner[1] ReutersWednesday, July 23, 2008
WASHINGTON — Oil prices will hit $300 US a barrel in 10 years if the United States fails to reduce its dependence on foreign imports, billionaire oil investor T. Boone Pickens told U.S. lawmakers on Tuesday.
The U.S. imports nearly 70 per cent of its oil and Pickens said the world’s top petroleum-consuming nation would import 80 per cent in a decade if it does not aggressively tap its own natural gas and renewable resources.
He testified as the Senate planned to debate energy legislation amid calls for more drilling to help lower oil prices which hit a record $147 a barrel this month.
Pickens is pushing a plan under which domestic natural gas supplies would be used to power cars instead of electrical power plants. The federal government and private investors would build a massive wind farm system in the middle of the country from Mexico to Canada to provide electricity.
Pickens, who heads the hedge fund BP Capital, stands to benefit from such a program. He’s building a 4,000-megawatt, $10-billion wind farm in northern Texas that should start generating power in 2011.
Industry group the American Wind Energy Association (AWEA) has said the Pickens plan could work if the government renews the production tax credit for renewable energy, preferably for longer than a year or two.
Growth in U.S. wind power has been dramatic. Preliminary figures show the United States in July may have surpassed Germany as the world’s largest generator of wind power, AWEA said.
“We’re on track to doing that, if it hasn’t happened already,” an AWEA spokes-person said.

Yikes! Dow Dump!

Visualizing Dow 6,000

MIKE WHITNEYCounterpunchThursday, July 24, 2008
Last Wednesday, at an improvised press conference, George Bush gave what may have been the most comical performance of his eight year presidency. Looking like the skipper on the flight-deck of the Hindenburg, Bush tried his best to reassure the public that “all’s well” with the economy and that everyone’s deposits were perfectly safe in the rapidly disintegrating US banking system. Leaning lazily on the presidential podium, Bush shrugged his shoulders and said,
“My hope is that people take a deep breath and realize that their deposits are protected by our government. We’re not seeing the growth we’d like to see, but the financial system is basically sound.”
Right. “Breath deep” and chill out; no need to panic. One shouldn’t let the long lines of anxious depositors who are presently trying to extract what’s left of their life savings from the now-defunct Indymac Bank upset one’s basic equanimity. The banking system is perfectly safe, you heard it from President Trickledown himself.
(Article continues below)
At the same time Bush was offering his soothing words on all the major TV news networks, Fed chairman Ben Bernanke was on the other side of Washington giving a decidedly grimmer assessment of the economy:
“The contraction in housing activity that began in 2006 and the associated deterioration in mortgage markets that became evident last year have led to sizable losses at financial institutions and a sharp tightening in overall credit conditions. The effects of the housing contraction and of the financial headwinds on spending and economic activity have been compounded by rapid increases in the prices of energy and other commodities, which have sapped household purchasing power even as they have boosted inflation. Against this backdrop, economic activity has advanced at a sluggish pace during the first half of this year, while inflation has remained elevated.”
Keep in mind, that these two events were perfectly coordinated to take place at exactly the same time; 10:20 AM Wednesday. Quite a coincidence, eh? Just another masterful public relations coup engineered by the Bush PR team, the last functioning agency in the entire bureaucracy. To no one’s surprise, the collusive media managed to divert attention from the impending financial firestorm long enough to lull the American people into believing that nothing is really wrong; the economy is just hunky-dory.
Fed-chief Bernanke again:
“The economy continues to face numerous difficulties, including ongoing strains in financial markets, declining house prices, a softening labor market, and rising prices of oil, food, and some other commodities….The deteriorating performance of subprime mortgages in the United States triggered turbulence in domestic and international financial markets as investors became markedly less willing to bear credit risks of any type….Many financial markets and institutions remain under considerable stress, in part because the outlook for the economy, and thus for credit quality, remains uncertain.”
As Bernanke delivered one hammer-blow after another, our engaging Commander in Chief was busy swapping funny stories and rough-housing with his pals in the Washington press corps. The media confab turned out to be a typical Bush frat-party with plenty of back-slapping and hee-haws to go around.
“You had a question, Stretch?” (Ha, ha)
And that was that. Bernanke’s candid and (frankly) scary assessment of the economy was dwarfed by Bush’s diversionary palavering and bravado; another stunning victory for the White House spinmeisters. Even so, the Fed chairman’s testimony should be dug up and examined by anyone who is interested in knowing how bad things really are so they can prepare themselves for the hard times ahead. (Find it here: Bernanke’s Semiannual Monetary Policy Report to Congress)
Bernanke again:
“In the housing sector, activity continues to weaken…Home prices are falling, particularly in regions that experienced the largest price increases earlier this decade. The declines in home prices have contributed to the rising tide of foreclosures; by adding to the stock of vacant homes for sale, these foreclosures have, in turn, intensified the downward pressure on home prices in some areas….The declines in home prices have contributed to the rising tide of foreclosures; by adding to the stock of vacant homes for sale, these foreclosures have, in turn, intensified the downward pressure on home prices in some areas……Surveys of capital spending plans indicate that firms remain concerned about the economic and financial environment, including sharply rising costs of inputs and indications of tightening credit, and they are likely to be cautious with spending in the second half of the year.”
The economic sky is quickly darkening and Bernanke made no effort to hide his concern. His testimony was as close to the truth as one gets in Washington where honesty is usually eradicated like a malignant tumor. In any event, it is worth wading through Bernanke’s speech word by word even if it only reinforces one’s belief that the economy is about to take a sleigh-ride through a deflationary blast-furnace which will ultimately result in the demise of Breton Woods, the disorderly replacement of the dollar as the world’s reserve currency, and an end to the United States short-lived dominance as the world’s lone superpower. The American Century has about run out of steam just eight years into the new mellenium. Bernanke’s presentation confirms what the econo-bloggers have been saying for the past three years; the end is nigh, get your house in order.
Personal consumption is down, the labor market is softening, and food and fuel prices are soaring. Housing values are plummeting, wages have stagnated, and American households are more overextended, underpaid and stressed out than anytime in history. It’s all bad. No wonder consumer confidence is at its nadir.“THE SUMMER OF 1931″?
The next shoe to drop is the stock market. Its not that complicated either; when wholesale prices on supplies and raw materials go up, but businesses can’t pass along those costs because consumers are already maxed-out, then corporate profits plummet and the stock market crashes down with the force of an avalanche.Journalist Ambrose Evans-Pritchard summed it up like this:
“It feels like the summer of 1931. The world’s two biggest financial institutions have had a heart attack. The global currency system is breaking down. The policy doctrines that got us into this mess are bankrupt. No world leader seems able to discern the problem, let alone forge a solution. The International Monetary Fund has abdicated into schizophrenia….My view is that a dollar crash will be averted as it becomes clearer that contagion has spread worldwide. But we are now at the point of maximum danger.” (Ambrose Evans- Pritchard, “The Global Economy is at the point of maximum danger”, UK Telegraph)
“Maximum danger”, indeed. Stock market mayhem is just around the corner. Visualize the Dow at 6,000 and then hang on for dear life. The indexes will tumble and Wall Street will be reduced to Dresden-type rubble, nothing left but toxic fumes and twisted iron. By the end of 2009, the last few bulls will be driven out of the exchanges and onto the streets where they’ll be slaughtered one by one. It won’t be pretty.
According to Bloomberg News: “Investors worldwide are betting more than $1 trillion on a collapse in stock prices”.
But no matter how bad it gets, the media will still bang-out its “Sunny Jim” market-forecasts while reiterating every mangled phrase and muddled thought from our alcohol-addled Dear Leader. The lines from the shelters, pawn shops and soup kitchens may stretch from the Golden Gate to the Statue of Liberty, but the perennially upbeat predictions of a “bottom in housing” or an “economic turnaround” will continue to blast from every media bullhorn in the nation. America’s financial media is an never-ending source of baseless optimism and hogwash.
It’s funny; while Bush was hosting his faux-press conference, live-footage was appearing on other media of fully-armed LA policemen being dispatched to the various Indymac locations. Their task was to remind the gathering of elderly “blue-hair” women and middle-aged white guys in Tommy Bahama T-shirts that any public display of outrage would be swiftly met with Rodney King-style justice. Hmmm. So now withdrawing one’s savings from the bank is not only riskier; it’s tantamount to committing a felony. My, how America has changed.
Just imagine the frustration of spending $5 a gallon for gas to drive to the local Indymac branch to get whatever is left of your savings only to get roughed-up by the local constabulary. Nice touch, eh?
Going to the bank? Don’t forget the protective head-gear!
The truth is the banking system is built on a foundation of pure quicksand and its only a matter of time before the Bush’s truncheon-wielding Robocops start tasering old ladies and gassing portly white guys for massing in front of the boarded up doors of their local bank. Move along, now.
Market Ticker’s Denniger made this insightful observation about about the present condition of the banking system. He said, “Why does Paulson keep telling us that the banking system is sound every time he gets within 200′ of a microphone? Maybe it is because the banking system is on the verge of all-out collapse, and he knows you could blow it over with a feather!” (The Market-Ticker)
It is worth noting that the demise of Indymac is expected to cost the FDIC around $8 billion of its meager $53 billion of reserves. 4 or 5 bank failures of equal size and the FDIC will be underwater, which is a serious problem since even conservative estimates expect bank failures to run into the hundreds. The Fed will be forced to monetize the debt, further weakening the dollar.
But Indymac is small potatoes compared to the liabilities of the two mortgage behemoths, Fannie Mae and Freddie Mac. Years of sketchy accounting, risky investments, abusive lending, and political cronyism have eroded the two Government Sponsored Enterprises (GSEs) balance sheets and pushed them to the brink of insolvency. If they fail, it will be disastrous for the US taxpayer who will be expected to guarantee $5.2 trillion of US residential mortgages, hundreds of billions of which was lent to borrowers who will likely default on their loans in the next few years. As the housing bubble continues to fizzle; Fannie and Freddie will face losses of $500 billion or more, forcing disgruntled foreign investors to ditch their bonds and make for the exits. When that happens, long-term interest rates will skyrocket and the ailing dollar will collapse in a heap. The Bush administration can’t allow that to happen, which means that Henry Paulson will push for emergency funding from the congress (which he is doing now) so he can rebuild investor confidence and stop the hemorrhaging of foreign capital. Whether Fannie and Freddie are saved or not, it is bound to be a drain on the dollar which can only get weaker as deficits soar and confidence wanes. There’s really very little chance the dollar will survive as the “international currency”.
Economist Nouriel Roubini summed it up like this:
“The existence of GSEs…is a major part of the overall U.S. subsidization of housing capital that will eventually lead to the bankruptcy of the U.S. economy. For the last 70 years investment in housing –- the most unproductive form of accumulation of capital -– has been heavily subsidized in 100 different ways in the U.S.: tax benefits, tax-deductibility of interest on mortgages, use of the FHA, massive role of Fannie and Freddie, role of the Federal Home Loan Bank system, and a host of other legislative and regulatory measures.
The reality is that the U.S. has invested too much – especially in the last eight years – in building its stock of wasteful housing capital (whose effect on the productivity of labor is zero) and has not invested enough in the accumulation of productive physical capital (equipment, machinery, etc.) that leads to an increase in the productivity of labor and increases long run economic growth. This financial crisis is a crisis of accumulation of too much debt —by the household sector, the government and the country –- to finance the accumulation of the most useless and unproductive form of capital, housing, that provides only housing services to consumers and has zippo effect on the productivity of labor.” (Seeking Alpha, “Just How Terrible is Housing as an Asset Class? Roubini Weighs In”)
Fannie and Freddie made a big mistake by shifting into mortgage-backed securities (MBS) in the 1990s. From 1997 to 2007, Fannie’s portfolio of dodgy MBS jumped from $18.5 billion to $127.8 billion by the end of 2007. The numbers at Freddie were even higher. Now they’re caught in the same downgrading-spiral as the investment banks, with billions of dollars of assets steadily losing value every month. It’s death by a thousand cuts. The losses have left the two GSEs cash-starved and searching frantically for new sources of capital to build their cushion. Regrettably, foreign sovereign wealth funds feel like they were burned in the Citigroup bailout and are no longer in the market for destitute US investment banks.
Here’s “The Economist” shedding a little more light of Fannie and Freddie’s creative bookkeeping:
“The companies have also been unwilling to accept the pain of market prices in acknowledging delinquent loans. When borrowers fail to keep up payments on mortgages in the pool that supports asset-backed loans, Fannie and Freddie must buy back the loan. But that requires an immediate write-off at a time when the market prices of asset-backed loans are depressed. Instead, the twins sometimes pay the interest into the pool to keep the loans afloat. In Mr Rosner’s view, this merely pushes the losses into the future.” (The Economist, “The End of Illusions”)
Nice, eh? Wouldn’t it be great if guys didn’t have to explain to their wives why they pissed away their paycheck at the race track? Apparently, it’s okay for Fannie and Freddie; just keep paying the interest on bad loans and no one’s the wiser. What a racket. This is the type of sleazy Enron-type accounting that goes unchallenged in Washington where everyone fudges the numbers to hide their losses from their shareholders or taxpayers, as the case may be. That’s why the namby-pamby regulators at the SEC need to be replaced with a few knuckle-dragging Abu Ghraib interrogators. There’s nothing going on at Fannie and Freddie that a set of leg-irons and a few lively dunks on a waterboard wouldn’t fix.
THE ROAD TO PERDITION: Paulson’s Scatterbrain Capitalism
Something has gone terribly wrong with the economy, but no one wants to say what it is. This is more than just a typical downturn in the demand-cycle or a temporary “rough patch”. In fact, it’s not a recession at all; it is a meltdown of the financial system. And it’s obvious. The “deep pocketed” Federal Reserve is currently providing hundreds of billions of dollars through its auction facilities to the most craven speculators on the planet, the investment banks. These very same banks have no ability to pay that money back. Show me their revenues; show me their assets; show me their capital cushion which is calculated mainly in terms of “Level 3 assets” and which allow the banks to assign their own value to the bad paper that’s overflowing from their vaults. Have you ever heard of anything more ridiculous? One blogger called Level 3 assets “mark to fantasy”. He’s right, too. It’s all smoke and mirrors. So why are we letting crooks decide what their assets are worth?
True, a few of the investment banks just reported “better than expected” earnings, but no one on Wall Street is fooled by that baloney. The SEC changed the rules on shorting bank stocks just days before their earnings reports were due; another gift from Uncle Sam to hide the dirty laundry. Also, some of the banks have started extending their “write downs” from 120 days to 160 days, buying themselves a little more time to deceive their shareholders about the size of their losses. It’s all one big swindle following another. The whole business stinks to high heaven and the Bush administration is right there in bed with them, snuggling up close and holding their hands.
If the public grasped the significance of the Bear Stearns fiasco, they’d understand how grave the situation really is. The technical details are irrelevant; don’t bother with them. What IS important is that the Fed acknowledged that the investment speculators had so polluted the financial system with their toxic, unregulated garbage,(Credit default swaps) that if the transaction with JP Morgan flopped, the entire system would have imploded. Think about that. In other words, the legitimate, “Real Economy” is now inextricably lashed to a massive $500 trillion dollar unregulated shadow banking system that operates without rules, supervision or sufficient capital. Over the counter derivatives trading is a cancer that has spread to every part of the system and is devouring it from the inside. It’s only a matter of time before the patient succumbs. That’s what the Bear bailout really means; the rest is bunkum.
The banking system is broke, busted, penniless; and yet the Fed and the G-7 allow this comedy to persist like nothing is wrong. When will the American people wake up?
And, will someone please explain how free markets can exist when speculators are subsidized by the state, or when the risk is removed from risky investing? That’s what it means when the Fed opens its auction facilities to the investment banks and brokerage houses. It makes no sense at all. Government “safety nets” are anathema to free market capitalism. “You pays yer money and you takes yer chances”. That’s finance capitalism; deal with it.
What we are seeing is a hybridized version of capitalism; “Paulson’s Scatterbrain Capitalism”; a hodge-podge of taxpayer bailouts, government intervention and free market mumbo jumbo. It’s a toxic mix on off-balance sheets operations, over-the-counter “unregulated” derivatives, dark pool trading, opaque hedge funds, dodgy Enron-style accounting, and complex, hard-to-pronounce debt-instruments wrapped up into one, cheesy, unsustainable shell game, managed by Harvard-educated flim flam men and backed by a 100% government guarantee. That’s the system we’re supporting with our tax dollars and that’s the system that is dragging us headlong to ruin.
It ain’t capitalism, my friend. It’s a crooked system run by corporate carpetbaggers and banking scalawags who’ve shot the Golden Goose in hopes of keeping the larder at the cottage on the New Jersey coast chock-full of Dom Perignon and halibut fillets. They created this nightmare and they’ve doomed us all.
As long as we prop up the existing system, the economy will continue to flounder, unemployment will continue to rise, foreclosures will continue to soar, banks will continue to be shuddered, and the wobbly old greenback will continue its inexorable march towards Pesoville. It’s time to clean house and we can start by firing Paulson.

Growing Terrorist Watch List

Are You On the Terror Watch List? Good Luck Getting Off It
July 24, 2008
After having begun a series of investigative stories criticizing the Transportation Security Administration (TSA) in May 2008, CNN reporter Drew Griffin reports being placed with more than a million other names on TSA’s swollen terrorism watch list.
Although TSA insists Griffin’s name is not on the list and pooh-poohs any possibility of retaliation for Griffin’s negative reporting, the reporter has been hassled by various airlines on 11 flights since May. The airlines insist that Griffin’s name is on the list.
Congress has asked TSA to look into the tribulations of this prominent passenger.

In a recent op-ed in the Washington Post, probably responding to the controversy over Griffin, Leonard Boyle, the director of the Terrorist Screening Center, defended the watch list, claiming that because terrorists have multiple aliases, the names on the list boiled down to only about 400,000 actual people.
If there are 400,000 terrorists lying in wait to attack the United States, we are all in trouble.
But wait a minute. There has been no major terrorist attack on U.S. soil since 9/11 — almost seven years ago. Where are all these nefarious evildoers?
Boyle says 95 percent of these people are not American citizens or legal residents and the vast majority aren’t even in the United States. He rather sheepishly defends the size of the list by writing, “Its size corresponds to the threat. It’s a big world.”
That brings up a very important issue. The U.S. government regularly tries to police the world and combat threats to other nations — in the process, usually generating more enemies.
Examining the 44 organizations on the State Department’s highly politicized list of Foreign Terrorist Organizations (FTO), one finds that only a very few currently focus their efforts on U.S. targets. And the U.S. government has even flirted with one anti-Iranian group, the Mujahedin-e Khalq, which was put on the FTO list long ago.
Similarly, the State Department’s list of five state sponsors of terrorism has included Cuba and North Korea — neither of which has actively participated in terrorist attacks in decades. These two countries continued to be on the list for other reasons — namely U.S. government aversion to them.
On its Web site, the State Department even admits that, “The Democratic People’s Republic of Korea (DPRK) was not known to have sponsored any terrorist acts since the bombing of a Korean Airlines flight in 1987.”
The Web site also contains an implicit admission that keeping selected countries on the state sponsors list can reap ulterior political benefits for the United States. The Web site notes that under the umbrella of the Six-Party Talks, the United States intends to remove North Korea from the list as that nation takes actions toward getting rid of its nuclear weapons program.
Even the remaining three nations on the list that do sponsor terrorism — Syria, Iran and Sudan — don’t support groups that focus their attacks on the U.S. Thus, the humongous terrorist watch list for airline travel and the excessively large FTO and state sponsors lists are a few more examples of the United States taking on other nations’ security burdens.
Trying to be the “big man on (the world) campus,” however, comes at a horrendous cost to American freedom at home.
The terrorist watch list is downright unconstitutional. Under the Fourth Amendment to the Constitution, no warrants shall be issued unless there is probable cause that a crime has been committed.
If the government has such probable cause that a passenger is conspiring to commit a terrorist act on an airplane, it should not hassle that person at the airport when trying to fly or ban him or her from flying; it should arrest them.
But of course the government does not have the evidence to do that for the vast majority of the 400,000 people on the watch list.
And it’s apparently not easy to get yourself off the list once you are on it. Although Boyle claims that the TSA constantly scrubs the list for possible mistaken identities of people who have frequent “encounters” with the list, even if they don’t file a complaint, Griffin uncovered an innocent passenger with a common name — James Robinson — who has complained endlessly and has received no resolution of his case.
Senator Edward Kennedy — also with a common name — experienced endless hassles and red tape trying to get his name off the list. If such a well-known figure has such problems, the average misidentified traveler is in big trouble.
And as the economists would say, what about opportunity cost to real security?
The U.S. government should spend the time it devotes to scrutinizing 400,000 people on the watch list, and the vast majority of the 44 FTOs and all of the five countries who don’t sponsor anti-U.S. terrorism, on the again rising principal threat from Osama bin Laden, Ayman al-Zawahiri and their tens of hard-core al-Qaeda followers operating out of Pakistan.
The American public would be much safer. As the famous Prussian military ruler Fredrick the Great (and closet economist) said, “To defend everything is to defend nothing.”
Moreover, under current government policy, we have neither liberty nor security.

Dems Don't Feel Your Pain, And They Don't Care

Why Democrats don't want to lower gas prices

Senator lets cat out of the bag on Bloomberg TV show
Posted: July 22, 200810:22 pm Eastern
WorldNetDaily
Sen. Maria Cantwell, D-Wash.WASHINGTON – A Democratic senator on the Energy and Natural Resources Committee inadvertently explained why her colleagues have no intention of ending the moratorium on offshore oil drilling or increasing the areas open for exploration and production – no matter how popular the idea might be with gas prices soaring.
In an interview with Bloomberg TV's "Money and Politics" last night, Sen. Maria Cantwell, D-Wash., explained Democrats don't want to increase supplies of oil and gasoline because they want to wean Americans off of petroleum products.
Asked point-blank if Democrats in the Senate would consider how increasing the supply of oil would lower the prices that are pinching U.S. consumers, Cantwell replied: "Oh, we definitely want to move beyond petroleum. And so there will be a supply side offered by the Democrats and it will include everything from battery technology to making sure that we have good home domestic supply, and looking, as I said about moving faster on those kind of things like wind and solar that can help us with our high cost of natural gas."
In other words, no.

The point was underlined by Sen. Kay Bailey Hutchison, R-Texas, who said Democrats are not even permitting debate on legislation and amendments designed to increase the supply of oil and gasoline to U.S. consumers.
"Today, the appropriations markup that was going to include amendments that would open up the outer continental shelf and maybe even shale in Colorado and Utah was canceled," she told the same Bloomberg interviewer. "It wasn't postponed, it was canceled. So that indicates to me that the majority is not going to try to have an open debate, but I hope I'm wrong. If they have an open debate, and we're allowed to have amendments, and we have a balanced plan that includes production in all the sectors, then I believe we can meet this problem in a bipartisan way, and that's what we should be doing for America."
WND's Joseph Farah is spearheading a grassroots battle to flood Congress – and particularly the Democratic leadership – with e-mails, phone calls, letters and text messages demanding action that can lead the country in the direction of energy independence.
"Right now, that means lifting the moratorium," he says. "That's the first step. If we can't agree on that as Americans today, then we are in for a long period of national economic decline. If we can't push Congress to do the right thing with even a strong majority of Democrats behind us, then this country is simply no longer a place where the will of the people means anything."
Farah's goal is to force Congress to act in the next two months – before it adjourns for the year.
"There's an election coming up one month after that adjournment date and even the most entrenched incumbents know how sensitive this issue is," says Farah. "Now is the time to let them hear you."
Farah's plan is simple: "I want to bring Congress to its knees," he says. "I want to melt down their phones. I want to flood their e-mail boxes. I want to hold them as political hostages. The ransom demand is to unleash the free market to begin exploring and pumping domestic crude oil and getting it to market as fast as possible. We've got two months to make our voices heard. Let's make history by bringing this recalcitrant body of elitists into compliance with the will of the people and the rule of law."
After eagerly waiting for someone else to take the lead on demanding action of Congress, Farah came to the conclusion no one else was going to do it.
"We're running out of time," Farah says. "If we let these rascals, these scoundrels, leave town before they lift all their ridiculous bans and restrictions on drilling for domestic oil, this country is headed for a major recession. Even worse, we'll head into a new year and a new presidency with the Washington elite thinking they put one over on us again."
Farah says the only thing that can prevent the disaster of gasoline prices of $6, $7, even $8 a gallon in the near future is a general uprising of the American people.
Besides the call to action, Farah is also devoting the current issue of Whistleblower magazine, the monthly print complement to WND, to the critical topic of "the energy independence revolution."
"It's time to stop business as usual," he says. "Every day, you need to make some phone calls, you need to write some emails, you need to use Skype and text messages and even send some letters through the Post Office. This grass-roots movement has to build steadily for the next two months. We cannot allow Congress to adjourn without lifting the ban on drilling in ANWR, offshore and on public lands under which we know there are vast reserves of oil."
Farah says it's a national emergency and needs to be treated as such.
"I hope radio talk show hosts across the country will embrace this bipartisan, non-partisan movement," he says. "There is no question in my mind this is what the American people want. Now it's just time for them to impose their will on their elected representatives who, in their chauffeured limousines and taxpayer-supported travel, are hopelessly out of touch with their constituents, with people who are finding it difficult to make ends meet."
Farah says he is convinced Congress will act only if the people steamroll members into action. He points to the way the Dubai port deal and so-called "comprehensive immigration reform" were killed by popular uprisings in recent years.
"We can make this happen, again," he says. "But this time, we won't just be stopping something bad from happening. We will be doing something that is very good for the country – something that will improve the lives of all of us, something that will improve national security, something vital for the future of the nation."
Congress is set to adjourn in late September.
"I'm going to do everything in my power to push Congress into action in the next two months," Farah says. "I know I can't do it by myself. But I know if the American people get mobilized nothing can stop them. You have to let members of Congress know you are serious. You have to persuade them and their staffs they are not returning to Washington next year if they fail to act in America's interest before they leave town."
Before then, you can reach members of the House by calling 202-224-3121 or 202-225-1904. The official House website contains web pages for all members and includes email addresses for most.
You can reach members of the U.S. Senate by calling 202-224-3121. The official Senate website also contains web pages for all members and includes email address for some.

Ladies & Gentlemen: Harry Reid, a.k.a. Senator ASSHOLE

Reid: $5-a-gallon gas is no problem

Senate majority leader says: 'We will have to wait and see'
Posted: July 24, 200812:00 am Eastern
WorldNetDaily
Sen. Harry Reid, D-Nev.WASHINGTON – Asked if he thinks he has the votes to block legislation lifting the moratorium on offshore oil drilling, Senate Majority Leader Harry Reid said: "We will have to wait and see."
Wait and see?
Reid and House Speaker Nancy Pelosi oppose lifting the ban on domestic oil drilling – and they are hoping the American people will just quietly accept gas prices topping $5 a gallon or even higher.
They say the key to lowering the price is conservation.
WND's Joseph Farah is not accepting that and is organizing efforts to flood Congress with emails, phone calls, letters and text messages demanding action that can lead the country in the direction of energy independence.
"Right now, that means lifting the moratorium," he says. "That's the first step. If we can't agree on that as Americans today, then we are in for a long period of national economic decline. If we can't push Congress to do the right thing with even a strong majority of Democrats behind us, then this country is simply no longer a place where the will of the people means anything."
Farah's goal is to force Congress to act in the next 73 days – before it adjourns for the year.
"There's an election coming up one month after that adjournment date, and even the most entrenched incumbents know how sensitive this issue is," says Farah. "Now is the time to let them hear you."

Farah's plan is simple: "I want to bring Congress to its knees," he says. "I want to melt down their phones. I want to flood their e-mail boxes. I want to hold them as political hostages. The ransom demand is to unleash the free market to begin exploring and pumping domestic crude oil and getting it to market as fast as possible. We've got 73 days to make our voices heard. Let's make history by bringing this recalcitrant body of elitists into compliance with the will of the people and the rule of law."
After eagerly waiting for someone else to take the lead on demanding action of Congress, Farah came to the conclusion no one else was going to do it.
"We're running out of time," Farah says. "If we let these rascals, these scoundrels, leave town before they lift all their ridiculous bans and restrictions on drilling for domestic oil, this country is headed for a major recession. Even worse, we'll head into a new year and a new presidency with the Washington elite thinking they put one over on us again."
Farah says the only thing that can prevent the disaster of gasoline prices of $6, $7, even $8 a gallon in the near future is a general uprising of the American people.
Besides the call to action, Farah is also devoting the current issue of Whistleblower magazine, the monthly print complement to WND, to the critical topic of "the energy independence revolution."
"It's time to stop business as usual," he says. "Every day, you need to make some phone calls, you need to write some emails, you need to use Skype and text messages and even send some letters through the Post Office. This grass-roots movement has to build steadily for the next 73 days. We cannot allow Congress to adjourn without lifting the ban on drilling in ANWR, off shore and on public lands under which we know there are vast reserves of oil."
Farah says it's a national emergency and needs to be treated as such.
"I hope radio talk show hosts across the country will embrace this bipartisan, non-partisan movement," he says. "There is no question in my mind this is what the American people want. Now it's just time for them to impose their will on their elected representatives who, in their chauffeured limousines and taxpayer-supported travel, are hopelessly out of touch with their constituents, with people who are finding it difficult to make ends meet."
Farah says he is convinced Congress will act only if the people steamroll members into action. He points to the way the Dubai port deal and so-called "comprehensive immigration reform" were killed by popular uprisings in recent years.
"We can make this happen, again," he says. "But this time, we won't just be stopping something bad from happening. We will be doing something that is very good for the country – something that will improve the lives of all of us, something that will improve national security, something vital for the future of the nation."
Congress is set to adjourn on or about Oct. 3.
"I'm going to do everything in my power to push Congress into action in the next 73 days," Farah says. "I know I can't do it by myself. But I know if the American people get mobilized nothing can stop them. You have to let members of Congress know you are serious. You have to persuade them and their staffs they are not returning to Washington next year if they fail to act in America's interest before they leave town."
Before then, you can reach members of the House by calling 202-224-3121 or 202-225-1904. The official House website contains web pages for all members and includes email addresses for most.
You can reach members of the U.S. Senate by calling 202-224-3121. The official Senate website also contains web pages for all members and includes email address for some.

U.S. government: We know parenting better than you

Proposals would give Washington unprecedented control over kids
Posted: July 24, 200812:00 am Eastern
By Chelsea Schilling
WorldNetDaily
The U.S. House of Representatives is scheduled to debate two bills that could give the federal government unprecedented control over the way parents raise their children – even providing funds for state workers to come into homes and screen babies for emotional and developmental problems.
The Pre-K Act (HR 3289) and the Education Begins at Home Act (HR 2343) are two bills geared toward military and families who fall below state poverty lines. The measures are said to be a way to prevent child abuse, close the achievement gap in education between poor and minority infants versus middle-class children and evaluate babies younger than 5 for medical conditions.
'Education Begins at Home Act' – HR 2343
HR 2343 is sponsored by Rep. Danny Davis, D-Ill., and cosponsored by 55 Democrats and 11 Republicans. The Congressional Budget Office estimates that implementing the Education Begins at Home Act would cost taxpayers $190 million for state home visiting plus "such sums as may be necessary" for in-hospital parent education.
While the bill may appear to be well-intentioned, Pediatrician Karen Effrem told WND government provisions in HR 2343 to evaluate children for developmental problems go too far.
"The federal definition of developmental screening for special education also includes what they call socioemotional screening, which is mental health screening," Effrem said. "Mental health screening is very subjective no matter what age you do it. Obviously it is incredibly subjective when we are talking about very young children."
While the program may not be mandatory for low-income and military families, there is no wording in the Education Begins at Home Act requiring parental permission for treatment or ongoing care once the family is enrolled – a point that leads some to ask where parental rights end and the government takes over. Also, critics ask how agents of the government plan to acquire private medical and financial records to offer the home visiting program.
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"There's no consent mentioned in the bill for any kind of screening – medical, health or developmental," Effrem said. "There are privacy concerns because when home visitors come into the home they assess everything about the family: Their financial situation, social situation, parenting practices, everything. All of that is put into a database."
Effrem said it does not specify whether parents are allowed to decline evaluations, drugs or treatment for their children once they are diagnosed with developmental or medical conditions.
"How free is someone who has been tagged as needing this program in the case of home visiting – like a military family or a poor family?" she asked. "How free are they to refuse? Even their refusal will be documented somewhere. There are plenty of instances where families have felt they can't refuse because they would lose benefits, be accused of not being good parents or potentially have their children taken away."
When WND asked Effrem how long state-diagnosed conditions would remain in a child's permanent medical history, she responded:
"Forever. As far as I know, there isn't any statute of limitations. The child's record follows them through school and potentially college, employment and military service."
Effrem said conflicts could also arise when parents do not agree with parenting standards of government home visitors.
"Who decides how cultural tolerance is going to be manifested?" she asked. "There's some blather in the language of the bill about having cultural awareness of the differences in parenting practices, but it seems like that never applies to Christian parents."
'Providing Resources Early for Kids'
The Pre-K Act, or HR 3289, is sponsored by Rep. Mazie Hirono, D-Hawaii, and cosponsored by 116 Democrats and Rep. Ileana Ros-Lehtinen, R-Fla. Estimated to cost $500 million for each of fiscal years 2008 through 2013, the bill provides funds for state-approved education. Government workers would reach mothers and fathers in the hospital after a baby has been delivered to promote Pre-K programs.
"They give them information about Child Care Resource and Referral Network so they can get the child into a preschool or daycare that follows the state standards and get the mom working as quickly as possible," she said. "It's always that sort of thing: It's a list of resources, it's intruding on parental autonomy and authority and it's not necessarily accurate or welcome information."
While parents may choose to be involved in preschool programs, Effrem said the Pre-K Act poses similar concerns about government trumping parents' rights.
"Once they are involved, they don't have any say over curriculum," she said. "There's plenty of evidence of preschool curriculum that deals with issues that have nothing to do with a child's academic development – like gender, gender identity, careers, environmentalism, multiculturalism, feminism and all of that – things that don't amount to a hill of beans as far as a child learning how to read."
Effrem said the Pre-K Act extends a "really messed-up K-12 system" to include even younger, more vulnerable children.
"This is an expansion of the federal government into education when there really is no constitutional provision for it to do so."
Note: Concerned individuals may contact their representatives and senators.

Is federal government stockpiling survival food?

'These circumstances certainly raise red flags'
Posted: July 24, 200812:00 am Eastern
WorldNetDaily
A Wall Street Journal columnist has advised people to "start stockpiling food" and an ABC News Report says "there are worrying signs appearing in the United States where some … locals are beginning to hoard supplies." Now there's concern that the U.S. government may be competing with consumers for stocks of storable food.
"We're told that the feds bought the entire container of canned butter when it hit the California docks. (Something's up!)," said officials at Best Prices Storable Foods in an advisory to customers.
Spokesman Bruce Hopkins told WND he also has had trouble obtaining No. 10 cans of various products from one of the world's larger suppliers of food stores, Oregon Freeze Dry.
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He said a company official told him on the telephone when he discussed the status of his order that it was because the government had purchased massive quantities of products, leaving none for other customers.
That, however, was denied by Oregon Freeze Dry. In a website statement, the company confirmed it cannot assure supplying some items to customers.
"We regret to inform you Oregon Freeze Dry cannot satisfy all Mountain House #10 can orders and we have removed #10 cans from our website temporarily," the company tells frustrated customers. "The reason for this is sales of #10 cans have continued to increase. OFD is allocating as much production capacity as possible to this market segment, but we must maintain capacity for our other market segments as well."
The company statement continues, "We want to clarify inaccurate information we’ve seen on the Internet. This situation is not due to sales to the government domestically or in Iraq. We do sell products to this market, but we also sell other market segments … The reason for this decision is solely due to an unprecedented sales spike in #10 cans sales.
"We expect this situation to be necessary for several months although this isn’t a guarantee. We will update this information as soon as we know more. We apologize for this inconvenience and appreciate your patience. We sincerely hope you will continue to be Mountain House customers in the future," the company statement said.
But Hopkins wasn't backing away from his concerns.
"The government just came in and said they're buying it. They did pay for it," he told WND about the summertime shipment of long-term storage butter. "They took it and no one else could have it.
"We don't know why. The feds then went to freeze dried companies, and bought most of their canned stock," he said.
A spokeswoman for Oregon Freeze Dry, sales manager Melanie Cornutt, told WND that the increasing demand for food that can be stored has been on the rise since Hurricane Katrina devastated large sections of the Gulf Coast, cutting off ordinary supply routes.
"We are currently out of stock on our cans. We are not selling any of our cans," she confirmed.
She then raised the issue of government purchases herself.
"We do sell to the government [but] it is not the reason [for company sales limits]," she said.
Officials with the Federal Emergency Management Agency told WND whatever government agency is buying in a surge it isn't them. They reported a stockpile of about six million meals which has not changed significantly in an extended period.
But Hopkins said it was his opinion the government is purchasing huge quantities of food for stockpiles, and Americans will have to surmise why.
"We don't have shelters that [are being] stocked with food. We're not doing this for the public. My only conclusion is that they're stocking up for themselves," he said of government officials.
Blogger Holly Deyo issued an alert this week announcing, "Unprecedented demand cleans out major storable food supplier through 2009."
"It came to our attention today, that the world's largest producer of storable foods, Mountain House, is currently out of stock of ALL #10 cans of freeze dried foods, not just the Turkey Tetrazzini. They will NOT have product now through 2009," she said.
"This information was learned by a Mountain House dealer who shared it with me this morning. In personally talking with the company immediately after, Mountain House verified the information is true. Customer service stated, 'I'm surprised they don't have this posted on the website yet.' She said they have such a backlog of orders, Mountain House will not be taking any #10 can food requests through the remainder of this year and all of the next.
"Mountain House claims this situation is due to a backlog of orders, which may very well be true, but who is purchasing all of their food? This is a massive global corporation.
"One idea: the military. Tensions are ramping up with Iran and news segments debate whether or not we will implement a preemptive strike in conjunction with Israel," she wrote.
Hopkins raised some of the same concerns, suggesting a military conflict could cause oil supplies to plummet, triggering a huge increase in the cost of food – when it would be available – because of the transportation issues.
The ABC report from just a few weeks ago quoted Jim Rawles, a former U.S. intelligence officer who runs a survival blog, saying food shortages soon could become a matter of survival in the U.S.
"I think that families should be prepared for times of crisis, whether it's a man-made disaster or a natural disaster, and I think it's wise and prudent to stock up on food," he told ABC.
"If you get into a situation where fuel supplies are disrupted or even if the power grid were to go down for short periods of time, people can work around that," he said. "But you can't work around a lack of food – people starve, people panic and you end up with chaos in the streets."
At his California ranch, the location of which is kept secret, he said, "We have more than a three-year supply of food here."
In the Wall Street Journal, columnist Brett Arends warned, "Maybe it's time for Americans to start stockpiling food.
"No, this is not a drill," he wrote.
His concern was about various food shortages around the globe, and the fact that in a global market, prices in the U.S. reflect difficulties in other parts of the world quickly.
Professor Lawrence F. Roberge, a biologist who has worked with a number of universities and has taught online courses, told WND he's been following the growing concern over food supplies.
He also confirmed to WND reports of the government purchasing vast quantities of long-term storable foods.
He said that naturally would be kept secret to avoid panicking the public, such as when word leaks out to customers that a bank may be insolvent, and depositors frantically try to retrieve their cash.
"[These] circumstances certainly raise red flags," he said.

Mortgages Go BOOM!

JP Morgan’s Dimon: Prime Mortgages Look “Terrible”
By: PAUL JACKSONJuly 17, 2008

While second quarter earnings Thursday from JP Morgan Chase & Co. (JPM: 39.14 -6.72%) beat analyst expectations and helped set the stage for another rally in stocks ahead of market open, executives at the company sounded a strong warning bell over growing trouble in the nation’s mortgage market.
JP Morgan said that net income for the second quarter was $2 billion, or 54 cents a share, a drop of 53 percent from year-ago totals; analysts had been expecting 44 cents per share, according to a Bloomberg News report.
The firm recorded markdowns of $1.1 billion related to leveraged lending and mortgage-related positions; it also absorbed $540 million net loss on the late May merger with Bear Stearns.
While investors took heart in the second major financial company to report better-than-expected earnings — Wells Fargo & Co. (WFC: 29.15 -4.27%) set the stage for a market rally on Wednesday by beating analyst estimates — JP Morgan’s no-nonsense CEO Jamie Dimon was clearly trying to temper investors’ newfound enthusiasm with a dose of market reality.
“Our expectation is for the economic environment to continue to be weak – and to likely get weaker – and for the capital markets to remain under stress,” he said in a press statement. “We remain conscious that since substantial risks still remain on our balance sheet, these factors will likely affect our business for the remainder of the year or longer.”
Parsing mortgagesPart of that weak economic outlook can clearly be attributed to mortgages. In a surprisingly short conference call with analysts, Dimon suggested that losses in JP Morgan’s prime mortgage book could triple in the foreseeable future as the credit mess moves out of subprime and into Alt-A and jumbo loans.

30-day delinquency trending among JP Morgan’s prime mortgage portfolio. (Source: investor presentation)
“Prime looks terrible,” he told analysts on the call. “And we’re sorry, and there’s nothing else we can say.”
The company currently holds $34.4 billion of jumbo mortgages, along with $2.5 billion of Alt-A mortgages. Net charge-offs among prime loans in the second quarter rose to $104 million, more than double the $50 million recorded just one quarter earlier. JP Morgan jumped in headlong into jumbos and Alt-A mortgages during 2007 — obviously an ill-timed bet, given where the market has headed.
“We were wrong, we obviously wish we hadn’t done it,” Dimon told analysts. “We’re very early in the loss curve.”
Home equity loans are also proving to be problematic; JP Morgan holds $95.1 billion in the category, and saw net charge-offs rise to $511 million in Q2 from $447 one quarter earlier. High CLTV seconds in particular are “performing poorly,” according to the company’s investor presentation.
Chief financial officer Michael Cavanagh suggested that roughly 10 percent of the seconds on JP Morgan’s books are currently underwater — meaning that the borrower owes more on their combined mortgages than their home is worth.
“That could be headed to 20 [percent],” he said on the earnings call. “We can’t predict how homeowners will react when they go into negative equity.
“We’re assuming they won’t act well, but it’s possible things aren’t as bad as we expect.”
Subprime losses aren’t going away, either, thanks to housing price declines; net charge-offs in Q2 reached $192 million, up from $26 million one year earlier and $149 million in Q1. 30-day delinquencies also continued to post increases, suggesting that more losses are yet in the offing.
Total provisions for credit losses — including mortgages — hit $3.46 billion during Q2, more than double year-ago totals, although a $969 million drop from first quarter’s provision charges.
Despite headwinds in mortgage credit quality, the company’s mortgage banking operations turned in a solid second quarter. Mortgage loan originations were $56.1 billion, up 27 percent from the prior year and 19 percent from the prior quarter; total third-party mortgage loans serviced were $659.1 billion, an increase of $86.7 billion, or 15 percent.
Shares in JP Morgan were at $40.58, up nearly 13 percent, when this story was published.

Gold Coin Advice........But You Really Should Have Bought These Long Ago

Why Buy U.S. Gold Eagles?
Recently, a reader contacted me about a recommendation I made in Austrian Money Secrets. In my book, I recommended purchasing U.S. gold eagles, rather than other gold bullion coins. I stated that for U.S. persons, unlike other forms of gold, eagles are eligible for the reduced 15% tax rate on capital gains. However, that's only true if you're in the 15% tax bracket (e.g., married filing jointly with an adjusted gross income under US$63,700). Gold eagles along with all other forms of gold bullion are considered "collectibles." If you've held them for over one year, your gains are taxed at your marginal tax bracket. For collectibles, the maximum rate is 28%, not 35%. However, if you're concerned about the government confiscating gold (as FDR did back in 1933) you may want to purchase gold eagles instead of some other form of gold. The 1985 legislation that authorized producing the coins, now known as gold and silver Eagles, stipulates that these coins are to be considered "numismatic items." They're not specifically exempted from any future government confiscation of gold. However, the terms of the emergency order President Franklin D. Roosevelt issued in 1933 that forced owners of privately owned gold to sell their holdings to the government specifically exempted "gold coins having recognized special value to collectors of rare and unusual coins." I don't think another gold confiscation is particularly likely, mainly because the takings would be pretty slim. If the federal government gets desperate enough to begin confiscating property under some emergency decree, it would likely start with assets that are easy to identify and with a much greater value. That includes real estate, stocks, pension funds, etc. However, if you do believe a confiscation could happen, then you should consider you purchasing the only coins specifically defined in U.S. law as "numismatic."

Bankapocalypse On Hiatus, But Not For Long......

The Calm Before the Next Bank Storm
As expected, stocks are charging higher since Wednesday following weeks of protracted selling. That's not a surprise. I've been saying we could see a big rally because the VIX was heavily overbought.A dose of good news finally arrived last Thursday following Wells Fargo's (NYSE-WFC) Q2 earnings report. A day earlier, State Street Bank (NYSE-STT) also delivered better than expected numbers. And this morning, Bank of America announced their Q2 profit fell less than expected. The result, of course, is an incredible rally for financials. Heading into Wednesday's trading, the financials were down more than 55% from their highs last summer. Since financials also represent the largest index weightings for international indices, it's no wonder foreign markets are also running hard along with Wall Street.On Wednesday, bank stocks posted their best single-day rally since 1989, gaining more than 17%. More of the same is expected today following J.P. Morgan's numbers.I'm not sure those numbers are worth uncorking a bottle of champagne. From where I see it, these results are just forecasting worse things to come. All we're seeing now is a dead-cat bounce following weeks of relentless financial sector pounding. The sub-prime debacle has now largely been written off by most American, Canadian and European banks. But what lies ahead is worse. Consumer loans are now coming undone. Banks are witnessing a significant rise in delinquencies, which I expect to rise dramatically as the economy and employment trends worsen over the next several months. In a bear market, a dead-cat bounce is typical market action following weeks of pervasive selling. More banks will fail this year, more write-downs will occur and the Fed can't reduce interest rates any further because of the highest inflation in 15 years. Sell into market strength.

DMV Nightmare

Expect a Bureaucratic Nightmare when You Renew Your Driver's License Next Time
If you have an outstanding violation in any other state — even an unpaid speeding ticket from decades ago — you won't get your new license next time you go to renew. It's all thanks to an obscure provision the Congressional kleptocrats snuck into the military spending bill in 2005. Among other things, this bill creates a massive database by linking state driving databases together, so your state Motor Vehicles Department must check your driving record in all 50 states before you can renew.Jim Walsh, a resident of the state of Washington, found that out the hard way. He couldn't renew his license because computer records from Massachusetts revealed a 20-year-old unpaid speeding ticket. In fact, Jim had paid the ticket, but he couldn't produce a canceled check from 1988. Here's what he's had to go through to get the problem resolved.First, Jim called the Massachusetts Registry of Motor Vehicles (MRMV) to see if their records indicated that he had NOT paid the ticket. After waiting for 90 minutes on hold, a rude clerk confirmed that unfortunate "fact." The clerk would not accept a second payment. He would have to send in another check to the county court that issued the ticket. Next, Jim contacted the appropriate county court in Massachusetts. A clerk helpfully provided instructions on how to pay the ticket a second time. After receiving Jim's duplicate payment, the county court sent a payment confirmation to the MRMV. Now it was time to call the MRMV again. After another extended period on hold, another rude clerk told Jim that the payment confirmation didn't match the required Department of Homeland Security format. To have the payment acknowledged in the required format, Jim would have to produce a court order issued by county judge where the ticket was issued. So he had to call the county clerk again. They told him it would be no problem to request a judge to issue the court order. However, Jim would need to make a personal appearance before a judge to request the court order. Since Massachusetts is 2,500 miles from Washington, he would have to pay several hundred dollars in travel expenses. When Liberty Magazine published this article about Jim, he still hadn't been able to renew his driver's license. The court clerk in Massachusetts suggested that it might be possible for Jim to hire a local attorney in lieu of a court order to satisfy the MRMV. But there are no guarantees.If you have any out-standing tickets, make sure you pay them before you try to renew your license the next time. And get proof that your tickets were paid, so you can avoid a similar nightmare.

Carl Levin: Ballwasher To The Pro-Tax Crowd

Levinism: The Truth Behind the Obvious Lies
"Tax havens are engaged in economic warfare against the United States and honest, hardworking American taxpayers." Economic warfare? Oh please. That's the Big Lie U.S. Sen. Carl Levin, (D-Mich) mouthed to the press last week. You may know Senator Levin from his past anti-tax haven diatribes. But what many don't know is Levin's histrionic performance is more than a little ironic.For starters, he chairs the same notorious Senate subcommittee that the late Senator Joseph R. McCarthy (R-Wisc) headed up over a half century ago. McCarthy became this subcommittee's chairman in 1953. It was McCarthy's allegedly reckless use of this subcommittee in pursuing Communists in the U.S. government that gave rise to the term "McCarthyism."To this day, McCarthyism is still defined as "the practice of making unfair allegations or using unfair investigative techniques, in many instances unsupported by proof or based on slight, doubtful, or irrelevant evidence." (Random House Unabridged Dictionary, 2006)
Levinism — The New McCarthyism
Let me suggest a new odious term to describe the phony attacks on the world's legitimate tax havens: "Levinism." For an exact definition, especially as it pertains to tax havens, see McCarthyism above.Last week Levinism, with all its bombastic hyperbole, was on display under the approving gaze of the Senator's carefully courted media attention. Once again, he chose targets that were straw men of his own creation: Those so-called unjust tax havens.
Same Argument, Different Day
This Levinism hearing is only one in a series that dates back several years. All of these hearings adhere to the same theatrical theme of wild accusations based on little proof. Basically: Levin likes to say that the IRS supposedly loses US$100 billion a year because thousands of American tax payers use offshore tax havens and banks to hide their income and evade taxes. (That mythical US$100 billion figure has never been proven, in spite of a four inch long footnote #1 in the subcommittees latest "report" that accompanied the hearing.)Levin's star witness against tax havens surely lacks credibility. In fact, he didn't even show up at the hearing. Instead, Levin provided a videotaped testimony by Heinrich Kieber. The videotape showed him as a silhouette against a white screen, as a shadowy crook with eyeglasses and a balding head. Kieber is said to be living under a new name in an undisclosed "witness protection program." He's wanted by Interpol and Liechtenstein police for grand theft and violation of bank secrecy laws. The German secret police agency, the Federal Intelligence Service (BND), (equivalent of the U.S. Central Intelligence Agency), paid an illegal €5 million ($ 7.3 mil) bribe to Keiber, a disgruntled employee of LGT Bank in Liechtenstein. And this is what Levinism passes off as a credible witness.

The Other "Star Witness" Is None Other Than UBS
The other star witness actually showed up — Mark Branson, chief financial officer of UBS's global wealth management. He surprised the hearing by saying UBS, allegedly having been caught assisting tax evasion, regrets "any compliance failures that may have occurred." UBS's solution: They will no longer provide banking services to U.S. citizens. He said the bank is also working to sell out its estimated 19,000 American clients to the IRS. The bank wants to help identify those involved in U.S. "tax fraud" — although under Swiss law failing to pay your taxes is not a crime. Also, UBS probably will be violating Swiss law if they rat on the clients they allegedly helped avoid taxes.
This Outlandish Statement Is Patently Absurd
But let's go back to Senator Levin's McCarthyite statement that "tax havens are engaged in economic warfare against the United States and honest, hardworking American taxpayers."This is a patent and absurd lie. It's typical of Levinism at its demagogic worst.Daniel J. Mitchell, senior Cato Institute fellow specializing in tax issues, has pointed out that competition from tax havens has reduced taxes worldwide and that the leading tax havens (for non-citizens) in the world are the United States and the United Kingdom.
A Moral Case for Tax Havens
Mitchell adds: "Finally, there is even a moral case for tax havens: They play a critical role in protecting people who are subject to religious, ethnic, sexual, political, or racial persecution. Most of the world's population lives in regimes that have inadequate human-rights protections, and people with assets often are targets of oppressive governments.""The ability to put money in a tax haven offers important protections for these potential victims. Even the United Nations, in a 1998 report attacking tax havens, felt compelled to admit that, "For much of the twentieth century, governments around the world spied on their citizens to maintain political control. Political freedom can depend on the ability to hide purely personal information from a government."Tax havens are free and independent jurisdictions in most cases. These countries are freely making their successful way in this world of global economics by offering low or no taxes on foreigners who do business there. Unlike the United States, where Levinism has made certain financial privacy dead and gone, tax havens guarantee financial privacy by law. Unfortunately, money grubbing crooks such as Levin's darling witness, Herr Heinrich Kieber, sometimes violate those laws.As a matter of fact, tax havens and global tax competition are positive goods that should not be curtailed, but rather expanded. I say that if individual Americans are violating tax laws let the IRS prosecute them as they have thousands before.But let us put an end to reckless Levinism that spreads outright lies about tax havens. Group guilt is not only illogical prejudice, but in America it has always been unconstitutional

Nicely Said........Let's Hope It Comes True!

"When the income tax is repealed, every dollar you earn will be yours - to spend, to save, to give away as you see fit." -Harry Browne

Nicely Said....................

Nothing beats a little cash in a bear market, of course, and the oldest form of cash is gold. - James Grant

Schiff With More Wisdom (Watch Him On the Fox Business Block on Saturday Mornings; He's Brilliant!)

Demand Destruction Stops at the Border
As the price of oil reverses course again and closes in on the unheard of price of $150 per barrel, Americans are finally responding to the pressure and have cut back on gasoline consumption. According to a report this week, Americans used 3.3% less gasoline than at the same time last year and usage now stands at a five-year low. Although the relative merits of slowing energy consumption is a subject upon which reasonable minds can disagree, the drop is nonetheless an extremely rare event in American economic history. Many on Wall Street are cheering the possibility that further “demand destruction” will ultimately lead to significantly lower oil prices. After all, this is basic economics. Prices are a function of supply and demand, and as demand drops, prices must follow. This is simple logic, wrongly applied.What is missing from this analysis is that oil is a global commodity, and its price is not simply a function of demand in America. As demand is destroyed here, it is being created abroad. The result will be rising oil prices, despite the fact that Americans will be using much less.In countries where currencies have risen against the dollar, oil price rises have been much milder. Given the strengthening economies overseas, and the slower price increases in those markets, foreign demand continues to rise, just as higher U.S. dollar prices cause it to fall here. In addition, central banks in nations where currencies are pegged are continuing to print huge quantities of money. This huge monetary stimulus is feeding oil demand, as foreign consumers use the new cash to buy gasoline.In addition, as economic growth abroad far exceeds it here at home, foreigners are using their increased wealth to buy more automobiles. So while car sales are falling though the floor in America, they are rising briskly around the world. Take a look at what is happen in Russia, where booming car sales have resulted in Russia surpassing Germany as Europe’s largest automobile market. We are talking about the former Soviet Union, where not too long ago many comrades still traveled in mule-drawn buggies. So as poorer Americans drive fewer miles, wealthier Russians more than make up the difference.Here lies the source of our problems. When the dollar was king, demand here was strong. American consumers, armed with the mighty greenback, flexed their muscle and priced foreign consumers out of the market. Now that the dollar is a 98 pound weakling, foreign consumers are returning the favor, and are kicking sand in our faces. So as more goods and resources are consumed abroad, Americans will be forced to consume less. Demand creation abroad leads to demand destruction at home.More importantly, demand destruction in America will not be limited to gasoline, but will encompass a wide variety of resources and consumer goods, as strong demand abroad prices more Americans out of more markets. In the end, America’s gargantuan trade deficit will return to surplus, not because of a highly overhyped export boom, but of an import bust.

Mogambo Rants.......Things Are As Ugly As Expected

Economy Forces Strippers to Jockey for Pole Position
"An adult-club owner named Joe Redner says that although business is down 25%, 'the economy does have one upside for the business - it's bringing out more women willing to give pole dancing a try.' Hahaha!"
by The Mogambo Guru
The inflation in the prices of stuff has now affected Americans to a material new degree for the first times in our lives; we are gambling less, we are driving less, we are eating in restaurants less, and we are (in general) suffering a falling standard of living because we can't buy as much stuff, and especially can't afford to buy as much pleasurable stuff, anymore, and believe me when I tell you that nobody is more grumpy about it than I.
One reason is made manifest when one notes that this includes, according to the AP, the Association of Club Executives, which is "a group that represents adult entertainment clubs" and whose spokesperson Angelina Spencer says she, "fields calls every day from strip club owners feeling the pinch of a bad economy."
An adult-club owner named Joe Redner says that although business is down 25%, "the economy does have one upside for the business - it's bringing out more women willing to give pole dancing a try." Hahaha!
If you are a man, I know what you are thinking. You are saying to yourself, "Hey! I could use some extra money, too! I'm willing to give pole dancing a try!"
To that I say, "Hold it right there, my darling impetuous one." I can save you a lot of trouble and heartache when I reveal to you that even if you finally, finally, finally succeed in convincing the club owner to let you give pole dancing a try, your dreams will inevitably turn to ashes as the audience always turns out to be a bunch of no-class jerks who have nothing but hooting and criticism for my (in the original Italian) prima ballerina a la pole, disdain for my tiara ("He's covering his bald spot with it!"), my performance (tip: don't try pole dancing while eating a burrito!), ridiculing my darling pink ballerina outfit, my moustache and every damned little picky, picky little detail, like, "At least shave your legs and your chest, for crying out loud! Jeez! Gross!" and you will run home, crying, to lock yourself in your backyard bunker where you arm yourself to the teeth with large-caliber weapons and vow to kill the first person who asks, "How did it go?"
But inflation is ugly, and it is getting ugly all around the world, and to cite one example to support that contention, I heard a Chinese newscast the other day, and although I do not speak Chinese, I instinctively knew by the tone of their voices that they were talking about the roaring inflation in consumer prices and how they are pretty cheesed off about the whole thing.
The bored look on the face of Adrian Ash of BullionVault.com tells me that he denies ever hearing anything about such a Chinese broadcast, and he obviously doesn't believe me when I tell him about it just because I lie about everything to try to make myself look important and smart, and says only that he believes Stephen Platt at Archer Financial Services when he says, "There really is no other place to hide. Gold's about the only real currency out there that might hold value."
"Might" hold value? Hahahaha! Mr. Platt is this week's winner of the Mogambo Award For Understatement (MAFU)! Hahaha!
I could tell that Mr. Ash is suddenly envious of Mr. Platt getting the coveted MAFU, and decides to go for the Mogambo Award For Surprising Statistics (MAFSS) using (obviously, to get on my good side and try and influence the judge giving out the award, namely me), gold as the example.
So how high can gold go? My usual answer is to first demand an estimate of, "How low can the dollar can go?", which is the same as asking "How low WILL the dollar go?", which is the easiest question on the whole mid-term exam; the answer is that it can, and will, go to zero.
How do I know that the dollar will go to zero value? Because it is a fiat currency, and all of the other thousands of fiat currencies tried by different countries over the millennia have ALL gone to zero! All!
So the height to which gold can go, in dollars, is infinity! And "infinity" is the answer to another question on the mid-term exam, namely, "How much is the market price of gold in dollars if the dollar is worth zero?"
Mr. Ash shows no interest in my stupid mid-term exam, but seemingly agrees with me when he says, "Even after trebling in price from the low of eight years ago, there may be plenty of room for gold to rise from here."
I was pretty unimpressed at such an unsubstantiated estimate until he quoted Peter Bernstein in his classic book, The Power of Gold, who wrote, "In 1959, the amount invested in gold was about one-fifth of the market value of all US common stocks. In 1980, the $1.6 trillion invested in gold exceeded the market value of $1.4 trillion in US stocks." Wow! The fact that gold went from 20% to more than 100% of market value of financial assets is a very interesting precedent, reached when gold reached the pinnacle of its previous high of $850 per ounce!
In fact, it's all even MORE unbalanced today, as they go on, "The sum total of gold investment lags far behind the value of stock and bond markets today. Indeed, a 2005 study from Tocqueville Asset Management noted that, if taken altogether, 'the market cap of all above-ground gold - including central bank reserves - [now] equals about 1.4% of global financial assets.'"
Once gold held for investment was worth more than the U.S. stock market, and now total gold in less than 1.4% of financial assets? Wow! The inescapable conclusion is that there is a lot of room for gold to go higher and higher and higher, just like history predicts it will! Whee!
The historical record of monetary policies as regards fiat money sure makes investing easy, as it does not even involve using a calculator, working, or even thinking! Buy gold, silver and oil! Whee!

Nicely Said..................

"The world is changing very fast. Big will not beat small anymore. It will be the fast beating the slow." -Rupert Murdoch

The Coming Chaos

Vox Day warns readers to buckle financial seatbelts
Posted: July 21, 20081:00 am Eastern

A few weeks ago, a friend of mine who is a player in the global financial markets returned from London. By his own admission, he's been a great beneficiary of the unprecedented economic expansion that has proceeded almost uninterrupted since the end of the 1990-1991 recession. (The three quarters of economic contraction in 2001 barely qualify as a recession.) Given his four homes on three continents, he has an unusually global perspective on things.
He's also of a generally optimistic temperament, so it was with some surprise that I heard his pronouncement that "America is [verb indicating violent intercourse, past tense]!" I have, of course, been of that opinion for quite some time, as long-time readers know, but it was nevertheless alarming to hear confirmation from a party that had been hitherto staunchly contrarian. The fall of Bear Stearns and IndyMac, the recent declines in the equity markets and the ongoing collapse of Fannie Mae and Freddie Mac not only come as no surprise, they were entirely predictable warning signs of the recession that is already well under way. Ominously, the same sort of thing is happening in other countries, especially Britain, where similar bank failures have been grabbing the headlines.
It's important to understand that expecting the financial news to accurately relay economic information, particularly negative information, is irrational for three reasons. First, the economic data that is presented is a snapshot of the past, usually at least three months in the past. Second, much of that data is fraudulent; for example, the reported inflation rate is so massively twisted and contorted that it may underestimate actual inflation of the money supply by as much as 300 percent. If the Consumer Price Index was still being calculated today as it was in 1980, inflation would have averaged around 8 percent per year since 1990, four times more than the officially reported 2 percent.
Third, remember that the financial media has a direct interest in economic good news. During times of expansion, everyone gets excited about investing and pays a great deal of attention to buying and selling stocks, houses or whatever the commodity of the moment happens to be. For example, the reason there are far more real estate shows on television in place of the financial shows that launched entire networks is that the real estate bubble popped a few years later than the equity bubble. As housing prices continue to fall, housing inventories grow and more mortgage banks go bankrupt, those television shows will go off the air.

So, if the economic news is much worse than is commonly reported or understood, what can you do to prepare yourself for the negative climate? Unfortunately, it's difficult to give precise recommendations at the moment, mostly because the primary question of hyperinflation or deflation remains unsettled. The Federal Reserve's natural tendency is to pursue inflation, and certainly Bernanke's refusal to follow Paul Volcker's lead and aggressively raise interest rates tends to indicate higher inflation is in order. However, inflation rates have been very high for more than a decade and have only made matters worse, and there is also a school of thought which insists that deflation is inevitable even if the Fed unleashes the full power of the printing press and sends out the hyperinflating helicopters.
It's worth noting, however, that the existing credit crunch was predicted by the deflationists, not the hyperinflationists, even though the sky high prices of oil, gold and other commodities tends to support the latter. But regardless of which way things play out, there are a few basic principles that almost anyone, regardless of their financial situation, can apply to their lives now.
1. Cut your costs. Don't waste money buying things you don't need. Spend your dollars on things that are reusable rather than one-shot deals, such as video games rather than movies, a nice flatscreen rather than game tickets and cookware rather than restaurants.
2. Diversify your income. Take a second job, preferably in a field unrelated to your main occupation. This has the benefit of both increasing your income and reducing the financial blow should you find yourself laid off.
3. Be proactive. You should know if your employer is in good shape or not. If they're not, it's time to start looking elsewhere.
4. Start a garden. As food prices continue to get higher, why not raise a bit of your own?
5. Exit equities. Big daily rallies are signs of a bear market, not a bull. Use those big 400-point up days to exit your positions; that's what the big boys are doing.
6. Buy a rifle for each adult in the household. They tend to be surprisingly good investments, and the worse things get, the more potentially useful they are. It's your constitutional right, so don't hesitate to use it.
Above all, learn to watch the signs and read between the lines. Neither John McCain nor Barack Obama can hold back the contraction any more than King Canute could hold back the waves, so put not your trust in politicians.

Banks On The Tipping Point

1930s bank runs are back; As many as 150 U.S. financial institutions could fail in next year


Fears of U.S. bank failures reached a fever pitch not witnessed since 1930 last week, according to a report in Jerome Corsi's Red Alert.
Concerns intensified with the Federal Reserve and Treasury combining to bail out Freddie Mac and Fannie Mae with abundant loans and an offer to buy stock.
Next came the federal takeover of IndyMac, following Sen. Chuck Schumer's, D-N.Y., ill-advised public release of his June 26 letter to the Office of Thrift Supervision and the Federal Deposit Insurance Corporation expressing concern over the bank's solvency.
The bailout of Freddie Mac and Fannie Mae will not be complete until Congress approves. Many analysts question whether the bailout is a good idea.

Wall Street Journal editorial writer Holman W. Jenkins, Jr. made a strong argument that Freddie and Fannie ought to be privatized and their assets sold, with the goal of putting both quasi-governmental entities out of business once and for all.
What is certain is that more bank failures are likely in the coming months, as the crisis resulting from the bursting of the mortgage bubble works its way through billions of dollars in near worthless or deeply depreciated collateralized mortgage securities held by U.S. financial institutions in their asset portfolios.
As many as 150 out of the 7,500 banks in the U.S. could fail in the next 12 to 18 months.
Is the FDIC keeping a secret list of 90 troubled banks?

Only In America:We're In A Depression And The Gov't Wants Higher Gas Taxes

Lawmakers Could Consider Gas Tax Hike, After Gas Tax Holiday Fails
Sunday , July 20, 2008

WASHINGTON — The political vision of a summer gas tax holiday died a quick death in Congress, losing to a view that federal excise taxes on gasoline and diesel fuel will have to go up if they go anywhere.
Despite calls from the presidential campaign trail for a Memorial Day-to-Labor Day tax freeze, lawmakers quickly concluded — with a prod from the construction industry — that having $9 billion less to spend on highways could create a pre-election specter of thousands of lost jobs.
Now, lawmakers quietly are talking about raising fuel taxes by a dime from the current 18.4 cents a gallon on gasoline and 24.3 cents on diesel fuel.
With gas prices setting records daily, Republican presidential hopeful John McCain and former Democratic candidate Hillary Rodham Clinton called for a 90-day suspension of the federal fuel tax to give drivers a little relief at the pump. The fuel taxes go into the Highway Trust Fund, which is used for road construction and repair and mass transit.
Clinton suggested making up for the loss by imposing a windfall profit tax on oil companies, an idea that Republicans rejected. McCain said the money could come out of the general Treasury fund, in effect adding to the federal deficit, and is still getting mileage from the idea.
"Some economists don't think much of my gas tax holiday," he said in a speech this month. "But the American people like it, and so do small business owners."
Barack Obama, the likely Democratic nominee, opposed the idea from the beginning and the White House gave it a cold shoulder. Depriving the 52-year-old Highway Trust Fund of $9 billion at a time when it is heading into the red doomed the notion of a gas tax holiday in Congress.
The chairman of the House Transportation and Infrastructure Committee, Rep. James Oberstar, and the chairman of the highway subcommittee, Rep. Peter DeFazio, presented fellow lawmakers with a list of how many jobs and how much money each state would lose. It ranged from $30 million and 1,000 jobs in Vermont to $664 million and 23,000 jobs in California.
"Because the trust fund is already looking at a looming shortfall, it would have moved project cancellations into the construction season," DeFazio, D-Ore., said in an interview. He said it was "highly unlikely" that oil companies would have passed savings along to consumers.
Just three years ago, that trust fund enjoyed a surplus of $10 billion. Even without a tax freeze, the fund is projected to finish 2009 with a deficit of $3 billion. That that could grow as Americans drive less and buy less gas because of higher pump prices.
The consequence is that only about $27 billion in federal money will be available next year to states and local governments for new infrastructure investment even though the current highway act calls for spending $41 billion a year. For many, the solution is to raise rather than suspend or cut federal fuel taxes, which haven't changed since 1993.
The Transportation Construction Coalition, a group of industry companies and unions, said that if Congress does not do something about the shortfall, states will lose about one-third of their road and bridge money in the budget year starting Oct. 1. That would put 485,000 more jobs at risk.
That message carried the day this summer. But now Congress has the bigger task of dealing with the short-term deficit crisis in the fund and coming up with a new spending plan, including revisiting the gas tax issue, when the current six-year, $286 billion highway-transit act expires in September 2009.
Senate Democrats in May tried to add $5 billion to an aviation overhaul bill to replenish the highway trust fund next year; Republicans objected. Democrats tried again in June, but this time for $8 billion; Republicans objected to that, too.
Congress should first reduce spending on pet projects, known as earmarks, argued Sen. Jim DeMint, R-S.C. "I'm not going to let the Senate spend all this money when nobody is looking, especially when we refuse to stop wasting billions of taxpayer dollars on earmarks."
Oberstar, D-Minn., said his committee is working on the next long-term highway bill. He estimated it will take between $450 billion and $500 billion over six years to address safety and congestion issues with highways, bridges and transit systems.
"We'll put all things on the table," Oberstar said, but the gas tax "is the cornerstone. Nothing else will work without the underpinning of the higher user fee gas tax."
At the very least, the gas tax should be indexed to construction cost inflation, DeFazio said.
The nonpartisan National Surface Transportation Policy and Revenue Study Commission concluded in a report this year that the U.S. needs to spend $225 billion annually over the next 50 years to create a highway and transit system capable of sustaining strong economic growth. Current spending, at federal, state and local levels, is about $90 billion a year.
Among other revenue-raising possibilities, the commission recommended gradually increasing the current federal fuel taxes to 40 cents a gallon.
The American Road & Transportation Builders Association is calling for a 10-cent-a-gallon raise and indexing the tax to inflation. With construction costs soaring because of competition for building materials from China and other developing nations, the tax rate would have to be about 29 cents a gallon to achieve the same purchasing power as the 18.4-cent rate imposed in 1993, the association says.
Including state and local levies, people in the U.S. pay about 47 cents on average in taxes for a gallon of gasoline. Fuel in many European countries costs $8 to $9 a gallon, with half or more of that going to taxes.
Other ideas that will be on the table when lawmakers write a bill next year including more toll roads and public-private partnerships, congestion pricing and user fees where drivers pay a tax based on how many miles they drive.

Y'know, 75,000 british Gone Might Just Make The Planet A Better Place

'Inevitable' flu pandemic will kill 75,000 Britons and 50 million worldwide, warn Lords
By Tamara CohenLast updated at 8:26 AM on 21st July 2008


Threat: The committee slammed Britain's 'poorly coordinated' disease control systems
Britain is facing an 'inevitable' and 'devastating' flu pandemic which will kill up to 75,000 people, a government committee revealed today.
The outbreak – most likely a strain of bird flu which could claim the lives of up to 50 million worldwide – will be on a scale not seen for decades.
The pandemic will require an ‘urgent’ response to prevent the rapid spread of infection, the powerful House of Lords Intergovernmental Organisations Committee warned.
They slammed Britain’s ‘poorly coordinated’ disease control systems, which are run by too many similar groups.
And the Lords also attacked the World Health Organisation (WHO) as ‘dysfunctional’ and lacking the ‘organisation and resources’ to curb a major outbreak.
The next pandemic will kill between two and 50 million people worldwide and a fair fraction of that in the UK, it said.
Echoing the report, the Government said: ‘While there has not been a pandemic since 1968, another one is inevitable.
‘Estimates are that the next pandemic will kill between two million and 50 million people and between 50,000 and 75,000 in the UK. Socio-economic disruption will be massive.’
Peers are calling for international alert systems for disease threats, which will spread rapidly due to our changing lifestyles.
The last pandemics to hit Britain, caused by mild influenza, were in 1918 and 1968.
But the report raised concerns that an outbreak caused by the H5N1 strain, found in birds and poultry, could be utterly devastating, as prevention methods were ‘less comprehensive’ than for human illnesses.
It predicted human-to-human transmission ‘in the near future.’
Three-quarters of newly-emerging human infections come from animals, but experts have warned that they are currently only identified after humans have been infected.
Committee chairman Lord Soley said: ‘The last 100 years have seen great advances in public health and disease control through the world, but globalisation and changes in lifestyles are giving rise to new infections and providing opportunities for them to spread rapidly throughout the world.
‘We were particularly concerned about the link with animal health. Three quarters of new human infectious diseases start in animals.
‘We urgently need better surveillance systems to deal with this problem.’

TIME Magazine Shows Big Government Bias

{Don't you wish you had a dime for everytime a liberal-shithead journalist claimed to have the pulse of Americans and that they yearned for bigger government with more taxes and oppression?}

Time Editor: America Has ‘Appetite for Big Government’
Friday, July 18, 2008
Time magazine Managing Editor Richard Stengel told the hosts of MSNBC’s “Morning Joe” on July 17 that “there’s incredible despair out there and there’s a sense that, that something needs to be done and people have kind of an appetite for big government in a way” in America.
Stengel was citing a new poll, but the interview did not discuss the fact that the poll also found 80 percent of respondents said they should be responsible for carrying their own financial burdens.
The poll was a joint effort of Time magazine and the Rockefeller Foundation, an organization Stengel characterized as “on a mission themselves to help the American worker and find out about the economy.”

He suggested an appetite for big government might help Democratic presidential nominee Sen. Barack Obama (Ill.). “If you say that favors Barack Obama, maybe it does, I don’t know,” Stengel said.
There is an “appetite of the American electorate for the federal government to take action,” Stengel said. “There’s 85 or 88 percent of people support public works projects.”
The interview touched on several aspects of the poll, including the finding that 85 percent of respondents believe the country is on the wrong track economically. That statistic is covered in the current issue of Time.
A few questions included in the poll that were not discussed on the show may have led Stengel to his “big government” conclusion:
“Are state and local governments helping you a great deal in achieving economic security, helping somewhat, hurting somewhat, hurting a great deal, or not having much effect one way or another?”
“How much are each of the following a part of achieving the American dream in your mind?” Respondents were asked to rate a group of statements, including the following: “Being economically secure and not having to worry about being able to afford things.”“Having the time to enjoy the good things in life without having to work too many hours.”“Being able to feed myself and my family.”“Reducing the effects of global warming.”
“Do you agree or disagree with this statement? ‘The social contract of the 20th century has been broken and needs to be rewritten to reflect the current realities of life today.’”
Stengel has a history of offering his own interpretation of what America needs.
The editor appeared on MSNBC April 17 advocating for a government led “cap-and-trade policy” and saying the United States needed to make a “massive effort” to fight climate change. He’s also said people shouldn’t look for objective journalism.
“But this notion that journalism is objective, or must be objective is something that has always bothered me – because the notion about objectivity is in some ways a fantasy,” Stengel said. “I don’t know that there is as such a thing as objectivity.”
He later said as for journalistic ethics, “We sort of make it up as we go along and I think that is what will continue to happen.”
The Rockefeller Foundation describes itself on its Web site as a foundation that “ has sought to identify and attack at their source the underlying causes of human suffering.” The foundation also says that it focuses on areas like “ repairing weak, outmoded health systems” and “reweaving frayed social contracts.”
The July 17 broadcast appearance by Stengel was to promote the most recent issue of Time that focuses on the war in Afghanistan, where fighting has increased as the summer months began.

More Bankruptcies, But Where's The Panic?

Commercial bankruptcies soar, reflecting widening economic woes
Tony Pugh McClatchy Newspapers
last updated: July 19, 2008 05:01:14 PM
WASHINGTON — Driven by a sour economy and skittish consumers, U.S. business bankruptcies saw their sharpest quarterly rise in two years, jumping 17 percent in the second quarter of 2008, according to an analysis by McClatchy.
Commercial filings for the first half of 2008 are up 45 percent from last year, as the national climate for commerce continues to deteriorate amid rising energy and food costs, mounting job losses, tighter credit and a reticence among consumers to part with discretionary income.
From April through June, 15,471 U.S. businesses called it quits, according to data from Automated Access to Court Electronic Records, an Oklahoma City bankruptcy management and data company.
States that saw the biggest increase in filings were Delaware, Montana, Oregon, Maryland and Connecticut, suggesting that the economic gloom is spreading beyond large population centers.
It was the 10th straight quarter that business bankruptcy filings have increased. Nearly 29,000 companies filed in the first half of 2008.
Another 60,000 to 90,000 others probably have closed, because roughly two to three businesses fold for every one that files for bankruptcy, said Jack Williams, resident scholar at the American Bankruptcy Institute.
The vast majority of these failed companies are among the nation's 23 million small businesses, with fewer than 100 employees. Their fortunes have tumbled as the national economic downturn has deepened.
"The climate is turning desperate for small businesses," said George Cloutier, founder of American Management Services, a consulting firm that helps small companies increase profits. "They are in crisis, and, as these numbers show, it's getting worse and worse."
Larger enterprises typically have more capital to weather downturns, but many of them also are reeling from the sputtering economy.
"I've been doing this for 36 years, and this is clearly the worst I've ever seen," said Harding Dawahare, the president of the Lexington, Ky.-based Dawahare's clothing store chain, which employs more than 400 people.
It was 1907 when Dawahare's Syrian immigrant grandfather, Serur Dawahare, began packing his mules with bags of fabric and linens and peddling his goods door to door to coal miners in Eastern Kentucky.
From those modest beginnings, Dawahare's grew to a 32-store clothing chain with outlets throughout Kentucky and a few stores in Tennessee and West Virginia.
However, Harding Dawahare did the unthinkable recently and filed for bankruptcy after amassing more than $9 million in debts. He said his problems began after a tough year in 2006, but it was the 2007 holiday season that did him in.
"We had a great third quarter, but if you don't have a good fourth quarter, you're not gonna make it. And that's essentially what happened. The economy tanked in late November and it never came back, and we just couldn't overcome it."
More than 20 percent of the newly shuttered businesses were in California, which logged 3,141 bankruptcies in the second quarter.
Texas fielded the next highest number of bankruptcies with 1,168, followed by Michigan with 702 and Florida with 635. New York was next, with 618 petitions, and Colorado had 547.
Commercial bankruptcy filings reported by Automated Access to Court Electronic Records are typically higher than official government figures due to a more thorough reading of the petitions.
Robert Lawless, a law professor at the University of Illinois and a bankruptcy expert, has researched and written about the federal government's underreporting of business bankruptcies. He estimates that roughly one in seven people who file for consumer bankruptcy do so in connection with their businesses.
Tom Clements' pet shop in Tampa, Fla., started seeing steep declines in business in April of last year.
"We didn't know what it was at the time, so we were trying to work through it," Clements said.
But as sales stayed flat for the next 15 months, Clements, 62, realized that the economy was forcing customers to make tough choices. "Obviously a puppy isn't something that everybody has to have."
With listed assets of about $2,605, Clements filed for Chapter 7 bankruptcy in June, owing more than $260,000 for back taxes, a property lease, auto leases, unpaid inventory, dog food, phone service, advertising, pest control, waste removal and other services.
"I absolutely loved that business," Clements said wistfully. "It's the kind of business where people were happy. You come, get a puppy or a dog, you go home happy. Unfortunately, I'm not a philanthropist."
Clements said the lingering debt and the money he invested had jeopardized his and his wife's retirement.
"That's why I wouldn't ever consider going back into something like that again," he said.
Williams of the bankruptcy institute said that because bankruptcies were lagging economic indicators, they probably would "continue to increase at least for the next year to 18 months at the rate that we're seeing right now."
Cloutier wants the federal government to create a $10 billion emergency-loan fund to help struggling small businesses avoid bankruptcy. Williams is skeptical.
"I think most of the business problems are not simply market-driven, they're operational. So there's a mix. Throwing more money at a poor operation means you just spent more money, but the operation is still poor."
Jodi and Steven Carbaugh of Waynesboro, Pa., ended up in bankruptcy court after they tried to expand their Cupo' Joe coffee shop in Greencastle, Pa.
In 2006, the couple used their home as collateral to buy a nearby Amish-owned bakery. "Big mistake," Jodi Carbaugh said.
As their debt increased, the couple tried to juggle four business-related loans and their home mortgage as well as pay vendors, employees, utilities and insurance. At the same time, business at the coffee shop began to slow.
Some 70 miles outside Washington, the Cupo' Joe was a favorite morning launching pad for residents who drive to work in the nation's capital. But as gas prices increased, Jodi Carbaugh noticed that business began to wane, falling 40 percent since last year.
"People had to spend more money to buy gas to get to D.C. instead of buying lattes and specialty breads," Carbaugh said. At the same time, food prices spiked. A case of eggs tripled to $60 and a 50-pound bag of flour went from about $20 to more than $50.
"The price of goods increased so drastically that we couldn't ask folks to pay what it cost to make the products," Carbaugh said.
Their fortunes bottomed out in June, when they filed for Chapter 13 bankruptcy protection.
"We worked as hard as we could for as long as we could," Carbaugh said of their failed ventures. " . . . Some of life's lessons aren't so easily learned, but we learned our lesson."

Funny How Articles Like This Aren't In American Papers

The global economy is at the point of maximum danger

By Ambrose Evans- Pritchard
Last Updated: 6:53am BST 21/07/2008
Have your say Read comments
It feels like the summer of 1931. The world's two biggest financial institutions have had a heart attack. The global currency system is breaking down. The policy doctrines that got us into this mess are bankrupt. No world leader seems able to discern the problem, let alone forge a solution.
The International Monetary Fund has abdicated into schizophrenia. It has upgraded its 2008 world forecast from 3.7pc to 4.1pc growth, whilst warning of a "chance of a global recession". Plainly, the IMF cannot or will not offer any useful insights.
Its "mean-reversion" model misses the entire point of this crisis, which is that central banks have pushed debt to fatal levels by holding interest too low for a generation, and now the chickens have come home to roost. True "mean-reversion" would imply debt deflation on such a scale that would, if abrupt, threaten democracy.
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The risk is that these same central banks will commit a fresh error, this time overreacting to the oil spike. The European Central Bank has raised rates, warning of a 1970s wage-price spiral. Fixated on the rear-view mirror, it is not looking through the windscreen.

The eurozone is falling into recession before the US itself. Its level of credit stress is worse, if measured by Euribor or the iTraxx bond indexes. Core inflation has fallen over the last year from 1.9pc to 1.8pc.
The US may soon tip into a second leg of this crisis as the fiscal package runs out and Americans lose jobs in earnest. US bank credit has contracted for three months. Real US wages fell at almost 10pc (annualised) over May and June. This is a ferocious squeeze for an economy already in the grip of the property and debt crunch.
No doubt the rescue of Fannie Mae and Freddie Mac - $5.3 trillion pillars of America's mortgage market - stinks of moral hazard. The Treasury is to buy shares: the Fed has opened its window yet wider. Risks have been socialised. Any rewards will go to capitalists.
Alas, no Scandinavian discipline for Wall Street. When Norway's banks fell below critical capital levels in the early 1990s, the Storting authorised seizure. Shareholders were stiffed.
But Nordic purism in the vast universe of US credit would court fate. The Californian lender IndyMac was indeed seized after depositors panicked on the streets of Encino. The police had to restore order. This was America's Northern Rock moment.
IndyMac will deplete a tenth of the $53bn reserve of the Federal Deposit Insurance Corporation. The FDIC has some 90 "troubled" lenders on watch. IndyMac was not one of them.
The awful reality is that Washington has its back to the wall. Fed chief Ben Bernanke thought the US could always get out of trouble by monetary stimulus "à l'outrance", and letting the dollar slide. He has learned that the world is a more complicated place.
Oil has queered the pitch. So has America's fatal reliance on foreign debt. The Fannie/Freddie rescue, incidentally, has just lifted the US national debt from German 'AAA' levels to Italian 'AA-' levels.
China, Russia, petro-powers and other foreign states own $985bn of US agency debt, besides holdings of US Treasuries. Purchases of Fannie/Freddie debt covered a third of the US current account deficit of $700bn over the last year. Alex Patelis from Merrill Lynch says America faces the risk of a "financing crisis" within months. Foreigners have a veto over US policy.
Japan did not have this problem during its Lost Decade. As the world's supplier of credit, it could let the yen slide. It also had a savings rate of 15pc. Albert Edwards from Société Générale says this has fallen to 3pc today. It has cushioned the slump. Americans are under water before they start.
My view is that a dollar crash will be averted as it becomes clearer that contagion has spread worldwide. But we are now at the point of maximum danger. Britain, Japan, and the Antipodes are stalling. Denmark is in recession. Germany contracted in the second quarter. May industrial output fell 6pc in Holland and 5.5pc in Sweden.
The coalitions in Belgium and Austria have just collapsed. Germany's left-right team is fraying. One German banker told me that the doctrines of "left Nazism" (Otto Strasser's group, purged by Hitler) had captured the rising Die Linke party. The Social Democrats are picking up its themes to protect their flank.
This is the healthy part of Europe. Further south, we are not far away from civic protest. BNP Paribas has just issued a hurricane alert for Spain.
Finance minister Pedro Solbes said Spain is facing the "most complex" economic crisis in its history. Actually, it is very simple. The country was lulled into a trap by giveaway interest rates of 2pc under EMU, leading to a current account deficit of 10pc of GDP.
A manic property bubble was funded by foreigners buying covered bonds and securities. This market has dried up. Monetary policy is now being tightened into the crunch by the ECB, hence the bankruptcy last week of Martinsa-Fadesa (€5.1bn). With Franco-era labour markets (70pc of wages are inflation-linked), the adjustment will occur through closure of the job marts.
China, India, East Europe and emerging Asia have all stolen growth from the future by condoning credit excess. To varying degrees, they are now being forced to pay back their own "inter-temporal overdrafts".
If we are lucky, America will start to stabilise before Asia goes down. Should our leaders mismanage affairs, almost every part of the global system will go down together. Then we are in trouble.

Five Signs That You're Living Beyond Your Means

{Yeah, this is bascic stuff, but some people out there may need a basic refresher. ED.~SOC}

Many people in America are living beyond their means, as personal savings rates are at their lowest levels since the Great Depression, according to the U.S. Bureau of Economic Analysis. Dwindling savings mean that U.S. households are taking on more debt and are less able to absorb a financial blow like the loss of a job or a downturn in the economy.
If you are concerned that your finances could be in danger, there is a way to tell whether you're in over your head. This article will provide you with five key indicators to watch for. If you find that one or more of them apply to you, it is likely time to reevaluate your spending and work on a long-term financial plan. Recognizing the problem is the first step to finding a solution.
Sign No. 1 - Your Credit Score is Below 600
Credit bureaus keep track of your payment history, outstanding loan balances and legal judgments against you. They then use this information to compile a credit score that reflects your credit worthiness. The numerical rankings go from a low of 300 to high of 850. The higher the better. It's this score that lenders use to determine whether they'll grant a loan. In general, any credit score below 600 means that you are probably in over your head.
If you aren't sure what your credit score is, contact any of the major credit bureaus (TransUnion, Equifax, Experian) and have them send you a copy of your credit report. This document will tell you what the bureaus - and ultimately lenders and financial institutions - think of your finances.
Sign No. 2 - You are Saving Less Than 5%
In 2005, the average rate of personal savings was an astonishing -0.5%, according to the U.S. Bureau of Economic Analysis. That means that not only were we spending all of our income, but also that a good number of us were also dipping into personal savings. This was the worst savings rate that Americans have recorded since 1933 when it was -0.7% during the Great Depression. The rate has bounced back into positive territory, but in 2008, it still hadn't cracked 1%

A savings rate below 5% means you could be in real danger of financial ruin if someone in your family were to have a medical emergency, or your family home were to burn to the ground. With savings this low, it likely means you wouldn't even have the money to pay the necessary insurance deductibles.
Ideally, everyone should try to save as much as they can, but in terms of targets, the rule most financial advisors suggest is 10% of your gross income. Beginning at age 30, if you were to save 10% of your $100,000 annual income in your 401(k), or $10,000 every year, and earn a rate of return of 5%, that money would grow to more than $900,000 by age 65.
Sign No. 3 - Your Credit Card Balances are Rising
If you are one of those people who pays only the minimum due on their credit card balance each month, or if you send in only a small contribution toward the principal balance, then you are most likely in over your head.
Ideally, you should only charge what you can pay off at the end of each month. When you can't afford to pay off the balance in its entirety, you should try to make at least some contribution toward the outstanding principal.
The importance of paying down credit card balances as soon as possible cannot be understated. A person with $5,000 in credit card debt that makes the minimum payment of just $200 per month will end up spending more than $8,000 and take almost 13 years to pay off that debt.
Sign No. 4 - More Than 28% of Income Goes To Your House
Calculate what percentage of your monthly income goes toward your mortgage, property taxes and insurance. If it's more than 28% of your gross income, then you are likely in over your head.
Why is 28% the magic number? Historically, conservative lenders have used the 28% threshold because their experience has told them that this is the rate at which the average person can get by, make their mortgage payments and still enjoy a reasonable standard of living. Certainly, some homeowners can get by spending a higher percentage on their homes, particularly if they cut back elsewhere, but it's a dangerous line to walk.

Sign No. 5 - Your Bills are Spiraling Out of Control
Buying on credit and paying by installment has become a national pastime. It's much easier to buy a new flatscreeen TV when the salesman breaks down the price in monthly installments. What's an extra $50 per month, right? The problem is that all of these bills start to add up, and you end up nickel and diming yourself into bankruptcy. If your monthly income is being sliced and diced to pay for dozens of unnecessary installment purchases and services, you are likely in over your head.
Lay out all of your monthly bills on your kitchen table, and go through them one by one. Do you have a cell phone bill, a PDA bill, an internet bill, a premium cable TV package, a satellite radio bill, and all of those other gadgets that generate countless monthly bills? Ask yourself whether each product or service is really necessary. For example, do you really need a 500-channel premium cable TV package, or would you really notice the difference if you had fewer channels (and paid less)?
Some of the best places to find savings include your telephone bills (cell and land line), your utility bills (turn off the lights, and don't run the air conditioning if nobody is home) and your entertainment expenses (you could stand to dine out less and to pack a lunch for work).
Bottom Line
As a nation, we are digging ourselves ever deeper into debt. To avoid becoming part of the gloomy bankruptcy and foreclosure statistics, it's important to measure your financial health regularly. The five signs presented here are not a death sentence; instead, they should be seen as symptoms that allow you to diagnose a problem before it gets worse.

5 Steps To Take If Your Identity Is Stolen

"Step 1: Place a fraud alert on your credit files and monitor your credit reports regularly."

Contact at least one, but preferably, all three of the credit reporting companies and tell them to place a fraud alert on your credit report. Also provide a "victim's statement" asking them to notify you before making changes on current accounts or opening new accounts. You can reach the credit bureaus a few different ways:
Equifax : 1-800-525-6285; P.O. Box 740241, Atlanta, GA 30374-0241
Experian : 1-888-EXPERIAN (397-3742); P.O. Box 9532, Allen, TX 75013
TransUnion : 1-800-680-7289; Fraud Victim Assistance Division, P.O. Box 6790, Fullerton, CA 92834-6790
There are also several other ways to get your credit report and a monitoring service.
"Step 2: Close the accounts that you know, or believe, are not opened by you or have been tampered."

Call each creditor and close any account that has been compromised by the identity thief. Request that the accounts be "closed by creditor's request," a simple "closed account" can reflect negatively on your credit report. Ask each creditor to send you the transaction records the identity thief made on your account. Creditors must provide this service, and do so at no charge.
If you encounter difficulty getting these records, send your requests by certified mail with return receipt requested so you have a document of when the creditor received your request.
"Step 3: File a complaint with the Federal Trade Commission (FTC) ."

You can file a complaint with the FTC online by filling out an online complaint form or you can call them at the Identity Theft Hotline at 1-877- 438-4338; TTY: 1-866-653-4261. You can also notify them by sending a letter to Identity Theft Clearinghouse, Federal Trade Commission, 600 Pennsylvania Avenue, NW, Washington, DC 20580.
"Step 4: Contact your local police or the police in that community where the identity theft took place and lodge a complaint."

Contact and inform your local police department about the crime and submit as much proof as you can. It is recommended to supply them with a copy of your FTC ID Complaint form, your cover letter and any other paperwork that support your claims of identity theft. Once you make sure the police report contains all the affected accounts, send it to all the applicable creditors.
"Step 5: Change all your account passwords."

If the identity theft involves your ATM or debit card, change their PINs. Add passwords to any account that doesn't have one and avoid obvious passwords.

Potential Bank Failures: Watch This List To Grow!

10 Banks That Could Be Next To Go Under
IndyMac bank going under probably has you wondering, is my bank next? Various analysts are predicting that hundreds of small and regional banks could collapse in the next year. Here's the top 10 list of the nation's most troubled banks...
The list is determined by dividing the bank's non-performing loans by the sum of its tangible equity capital and loan loss reserves, what is termed the "Texas-ratio." Any bank with a ratio higher than 100 means they have more bad loans on the books than money to pay for them. The good news is that all the banks are FDIC-insured, which means that up to the first $100,000 of your deposits are guaranteed by the federal government.

UBS Betrays American Depositors

UBS closes Swiss accounts of US clients
Tom Bawden in New York

UBS caved in to mounting pressure from the US Government yesterday and announced plans to close the Swiss bank accounts of all its American customers and prepared to lift the veil of secrecy that has protected its clients for centuries.
Mark Branson, the chief financial officer of UBS's global wealth-management unit, told a Senate hearing into tax evasion in Washington: “We have decided entirely to exit the business. UBS will no longer provide offshore banking or securities services to US residents through our bank branches.”
Mr Branson said: “While we are winding down this business there will be no new accounts opened and Swiss-based client advisers will not be permitted to travel to the United States for the purpose of meeting with US clients.”
Closing Swiss accounts to US clients does not affect UBS's general wealth-management business in America, Mr Branson said. UBS, the world's largest wealth-management group, will still offer US-based services through three subsidiaries.
The US Government and the Internal Revenue Service (IRS) have been turning the screw on banks suspected of helping clients to evade tax through undeclared offshore accounts.
They have been pressing UBS to give details of 19,000 US clients with $17.9 billion (£8.9 billion) in undeclared Swiss bank accounts.
An investigation, whose report was issued yesterday, found that only 1,000 of UBS's 20,000 American clients with Swiss bank accounts had declared their accounts to the IRS.
UBS will not hand over identities of all 19,000 of these customers because, sources say, it does not follow that every undeclared account has broken US tax law. Instead it will identify only those it believes may have engaged in tax fraud, although that number is expected to run into thousands.
Yesterday's developments amount to a double whammy of bad news for UBS. Although UBS offered to relocate its offshore banking customers to subsidiary UBS entities, registered by the US Securities and Exchange Commission, analysts did not expect many clients to switch, cutting off significant income.
Furthermore, the guarantee of anonymity was a big draw for many rich UBS clients and its loss will dent confidence in the bank.
Two weeks ago a US court authorised the IRS to demand names of US accountholders from UBS as part of an attack on tax evasion, estimated to cost America $100 billion a year in unpaid tax. UBS, in response, hinted that releasing names could break Swiss law requiring bank confidentiality.
However, Mr Branson indicated yesterday that Swiss law would not be relevant to many of its US offshore clients and that UBS would hand over an undisclosed number of their names.
He said: “We are working with the US Government to identify the names of US clients who may have engaged in tax fraud. Client identity is generally protected from disclosure under Swiss law. But such privacy protections do not apply when disclosure of client names is requested in connection with an investigation of tax fraud and where the requests are presented to the Swiss Government.”

Nicely Said...................

"The best way to understand this whole issue is to look at what the government does: it takes money from some people, keeps a bunch of it, and gives the rest to other people." -Dave Barry

Guess Who Owns Your Mortgage?

One out of every 10 U.S. mortgages is now owned by a foreign government.
We credit The New York Times for wrangling up the global tally of foreign-owned “agency debt” -- the bonds issued by government-sponsored enterprises Fannie Mae, Freddie Mac and Sallie Mae. Might want to sit down for this one…
Of the $10-11 trillion U.S. mortgage market, Fannie and Freddie control over half. Since they have the actual capital to back up about 1% of those mortgages, they’ve issued bonds a few trillion times over to keep the money flowing in (to buy more mortgages, of course).
Foreign hands have snatched up over $1.5 trillion of agency debt… enough Fannie and Freddie paper to give them ipso facto ownership of about 10% of all U.S. mortgages.

Big Banks Crumbing Down...................

Investors were celebrating Bank of America’s 41% crash in profits this morning. Quarterly earnings were nearly cut in half from this time last year, as the bank struggled to cap $2.3 billion quarterly losses stemming from its recent acquisition of Countrywide.
But as with Citi and J.P. Morgan last week, losses weren’t as bad as the Street expected. Thus, BAC shares are up 7% as we write, and the financials rebound chugs along.
“Our guess – and its only a guess,” advises our investment director Eric Fry, “is that investors should keep on selling the lousy stocks they were selling two weeks ago and keep on buying the good stocks they were too afraid to buy two weeks ago. In other words, the shares of finance companies might bounce a bit -- they might even bounce a lot -- but investors would probably fare much better to buy the shares of companies that are GROWING, not those that are SHRINKING. The only thing growing at most finance companies is the share count, as these desperate, near-bankrupt enterprises issue gobs of new shares in exchange for cash infusions.”
Mr. Fry and Dan Amoss will both be slammin’ shooters at the Whiskey Bar on Wednesday here in Vancouver… again, more on that below.
“It’s very early in the loss curves,” said J.P. Morgan CEO Jamie Dimon on a conference call last week. He’s talking about mortgage-related losses for the legendary brokerage house… let’s listen in for a sec:
“You saw subprime go first, and then, on a slight lag, you saw home equity and now in the lag, you’re seeing prime go. And it’s exactly the same loss factors. But remember, the components of where we are in the states…[are] very different. And we started doing more jumbos in ’07, so a lot of that is -- part of that is ’07 vintage, which I think I told you at the time we were going to do and grow our balance sheet and gain share. And we were wrong. You know, we, obviously, wish we hadn’t done it… “Prime looks terrible, and we’re sorry.”
Sorry… hmnn. That ought to do it.

Paulson's Warning

"I think it's going to be months that we're working our way through this period - clearly months," Treasury Secretary Hank Paulson said last night. The former Goldman Sachs CEO tried to calm America by appearing all over the boob tube yesterday… but accidentally assured us that the worst might not be behind us.
“We're going through a challenging time with our economy. This is a tough time. The three big issues we're facing right now are, first, the housing correction, which is at the heart of the slowdown; secondly, turmoil of the capital markets; and thirdly, the high oil prices, which are going to prolong the slowdown.”
Paulson gave particular warning to the financial sector, hinting that the FDIC’s list of troubled banks was sure to expand. "Of course, the list is going to grow longer given the stresses we have in the marketplace, given the housing correction.”

Chinese Slant Drilling American Oil Off Of Our Shores!

CHINA STARTS OIL DRILLING OFF FLORIDA
WHILE AMERICA TWIDDLES THUMBS, CHINESE TAP BILLIONS OF BARRELS

By Mike Blair
While Washington dithers over exploiting oil and gas reserves off the coast of Florida, China has seized the opportunity to gobble up these deposits, which run throughout Latin America, the Caribbean and along the U.S. Gulf coast.The Chinese have forged a deal with Cuban leader Fidel Castro to explore and tap into massive oil reserves almost within sight of Key West, Florida. At the same time, Venezuelan President Hugo Chavez, who controls the largest oil reserves in the Western Hemisphere, is making deals to sell his country�s oil to China, oil that is currently coming to the United States.Meanwhile, a new left-wing populist regime in Bolivia has nationalized the natural gas industry, threatening to cut off supplies to the United States.SLANT DRILLING There are new reports out circulating that Chinese firms are planning to slant drill off the Cuban coast near the Florida Straits, tapping into U.S. oil reserves that are estimated at 4.6 billion to 9.3 billion barrels. This compares with 4 billion to 10 billion barrels believed to be beneath the Alaska National Wildlife Refuge, where drilling is held up in Congress due to the objections of environmental groups which warn of endangering caribou. Permission to drill in the refuge, which experts are certain will not present any environmental hazard, has failed by just two votes in the Senate.As Chinese business increases its reach around the world, it is seeking oil, which it lacks domestically. After elections in Mexico in early July, when a new regime hostile to Washington is expected to take power, the United States might be without supplies of Mexican crude oil. The United States gets about 40 percent of its imported oil from Mexico and Venezuela.China is eager to tap into oil reserves in the Florida Straits and then make a deal with Castro to control it. The Chinese have already reopened an abandoned Russian oil refinery in Cuba. Much of the gas refined there is believed to be destined for Freeport in the Bahamas, where the Chinese, through front company Hutchison-Whampoa, has developed a massive port facility and airfield. With the refinery reopened and expanded it will also meet the needs of Castro.Sen. Larry Craig (R-Idaho) has introduced legislation to ease U.S. restrictions that prevent dealing with Cuba to drill in the Florida Straits. It is hoped that Florida regulations that prevent U.S. oil drilling off the state�s coasts could also be eased.The irony is that Chinese drilling could be even more of an environmental hazard since China is not as concerned about or equipped to deal with any potential ecological disaster as a result of a spill, said Craig.

PROJECT BLUEBEAM H A A R P

Something to think about....................conjecture?

Coke Ups Price? damn It! Where Do I Get My Caffeinne Fix Now????!!!!!

Coca-Cola drinkers to pay more after Labor Day
Drinkers of Coca-Cola can expect to pay more starting this fall after the company's biggest bottler said Thursday that it would raise prices.
By VINNEE TONG
AP Business Writer
Drinkers of Coca-Cola can expect to pay more starting this fall after the company's biggest bottler said Thursday that it would raise prices.
The issues at the bottler also hurt Coca-Cola Co.'s bottom line, since it owns about 35 percent of that business. The world's biggest beverage company said its profit fell 23 percent in the second quarter as it took a charge because of the bottler's woes.
Coca-Cola Enterprises, which has about 80 percent of the U.S. market for Coke, said it would raise prices after Labor Day because of higher commodity costs and declining U.S. soda sales. Bottlers set prices for retailers like grocery stores.
At Coca-Cola Co., the results were again led by the international operations.
The company is facing declining soda sales in the U.S., and managed to keep U.S. sales volume steady in the second quarter thanks to a boost from Glaceau's Vitaminwater, which it bought for $4.1 billion last June. International sales rose 5 percent even as they were hurt by natural disasters in Asia and labor strikes in Europe.
"I know what is top of mind for all of you - the current macroeconomic environment and its impact on our results," said Chief Executive Muhtar Kent, who succeeded Neville Isdell on July 1. "It is clear we will face with some challenges around the globe."
The Atlanta-based drinks company earned $1.42 billion, or 61 cents per share, down from $1.85 billion, or 80 cents per share, in the year-ago quarter. The results included a charge of 40 cents per share related to Coca-Cola Enterprises. Excluding one-time items, the per share figure came to $1.01. Revenue rose 17 percent to $9.05 billion from $7.73 billion.
Analysts polled by Thomson Financial had expected a profit of 96 cents per share on revenue of $8.93 billion, on average. But the company's shares fell about 4 percent.
Volume growth for the overall business was 3 percent, which disappointed analysts. Bill Pecoriello of Morgan Stanley said Wall Street had expected volume growth of 4 percent to 5 percent, although he reiterated his "Overweight" rating on the shares.
In the long term, Coca-Cola Co. expects volume growth of 3 percent to 4 percent, operating income growth of 6 percent to 8 percent and earnings per share growth in the high single digits.
The company also said it has initiated a cost-cutting plan to save $400 million to $500 million a year by 2011.
Coca-Cola Co. shares fell $2, or 3.8 percent, to close at $50.34 Thursday. Shares in Coca-Cola Enterprises fell 1 cent to $16.83, after hitting a multi-year low of $15.99 earlier in the session.
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"Investors are probably spooked a little that growth is slowing overseas," Edward Jones analyst Jack Russo said. Russo said he expected slower international growth over the next couple quarters because the slowing economy is having a greater impact in some emerging markets than in the U.S.
Demand was soft in Russia and Brazil, Goldman Sachs analyst Judy Hong noted. "Results may signal a macro-driven turn in consumption trends abroad," she wrote to investors.
The bottler posted a second-quarter loss Thursday of $3.17 billion, or $6.52 per share, compared with profit of $270 million, or 56 cents per share, in the year-ago quarter. The company said the loss included a $5.3 billion write-down in the value of a franchise license in North America due to an expected decline in operating income, higher commodity prices and its falling share price.
Chief Executive John Brock said the company would review its supply chain, operations and price strategy as well as "put into motion the essential changes required" to improve its performance in the U.S. The company said it would raise prices by a mid-single digit to high single-digit percentage.
Analysts have said that if the bottler raised prices, then Coca-Cola may also want to raise prices on the concentrate it supplies to the bottlers.
"We think this is the right move for the bottlers and concentrate companies to be making given the realities of the environment," Pecoriello wrote about the bottler's price hike.
Kent declined to say on Thursday whether Coca-Cola would in fact charge bottlers more for concentrate. He said the company has a strong working relationship with its bottlers and would weigh the trade-off between volume and price to maintain growth and market share.

Legally Avoiding Taxes Under Attack

Witness tells how US taxes evaded abroad
By DESMOND BUTLER
Associated Press Writer
A man wanted by Liechtenstein for leaking secret banking information that identified millionaire tax cheats across Europe and the United States has described to congressional investigators how money was concealed.
Lawmakers played a videotape of the testimony by Heinrich Kieber at a congressional hearing Thursday that revealed rare details of offshore practices at two European banks. At the hearing, Swiss banking giant, UBS AG, announced that because of recent revelations, it will stop offering U.S. clients offshore services through branches based abroad.
Kieber appeared only as a silhouette against a white screen with eyeglasses and a balding head apparent. Kieber is living under a new name in an undisclosed witness protection program, according to lawmakers. He has never spoken publicly about his role in exposing tax shelters he says were used by Liechtenstein's LGT group.
In the videotaped interview with the congressional investigators, he described ruses that he saw while working at the bank, which he said were used to cover the tracks of money moved into accounts.
The hearing by the Senate Homeland Security and Governmental Affairs investigations subcommittee highlighted offshore tax abuses that they believe cost the U.S. government about $100 billion a year.
The hearing came a day after the panel released a 109-page report that took aim at LGT, owned by Liechtenstein's royal family, and UBS, one the world's largest wealth managers.
Mark Branson, chief financial officer of UBS' global wealth management, said at the hearing that the bank regrets "any compliance failures that may have occurred" and will now provide banking or security services to U.S. citizens only through companies licensed in the United States. He said the bank also is working with U.S. authorities to identify clients involved in U.S. tax fraud.
LGT refused to send a representative but said in a statement that it had cooperated by sending a senior official for a lengthy interview and providing all the documents requested by the panel.
Both LGT and UBS came under withering criticism from the lawmakers.
"Tax havens are engaged in economic warfare against the United States and honest, hardworking American taxpayers," said Democratic Sen. Carl Levin, chairman of the subcommittee. "Today we will look at two banks that relied on secrecy and deception to hide, not just the tax avoidance schemes of their clients but the actions they themselves took to facilitate U.S. tax evasion."
UBS has said it is cooperating with a Swiss investigation as well as an expanding U.S. probe of taxpayers who may have used overseas accounts to hide assets and avoid taxes. UBS has promised to disclose records involving U.S. clients who might have broken tax laws. It also has banned its Swiss bankers from traveling to the United States.
U.S. authorities also have asked the Swiss government to help in the U.S. investigation.
Swiss Finance Ministry spokesman Jean-Michel Treyvaud said that Swiss tax authorities received a U.S. request for "administrative assistance" on Thursday.
He said the request would now be analyzed, but he said nothing further.
The subcommittee report said that UBS bankers searched out wealthy U.S. clients and aggressively marketed services to taxpayers who otherwise would not have opened Swiss accounts. It said the bank's practices resulted in billions of dollars of U.S. taxpayer money in accounts that were not disclosed to tax authorities.
The report said UBS has estimated that it has 1,000 declared accounts in Switzerland for U.S. clients against 19,000 undeclared, with a combined value of $17.9 billion.
Investigations linked to LGT have been launched in a number of countries since German authorities obtained in February the CD-ROM of some 1,400 alleged tax cheats with accounts at the bank that Liechtenstein says Kieber leaked. Germany has since passed the file to other countries, including the United States.
In his videotaped testimony, Kieber described shell companies used as "high grade camouflage." Money was often transferred through bank-controlled legal entities registered in numerous countries with lax regulations, including Panama, the British Virgin Islands and Nigeria, he said.
Additional concealment was provided by fake transactions designed to make it look like clients had withdrawn cash from a bank, when in reality they were credited into a LGT account.
"The only purpose of all of this is to make it extremely complicated for law enforcement agencies to follow the trail, as each step serves as a filter to hide the track of the client's money," he said.
He said that clients were advised how to avoid scrutiny, including not telling anyone including lawyers and family members about hidden money. Clients were also encouraged to use pay phones to contact bank representatives on cell phones from Switzerland and Austria and to use code words in communications.
LGT questions Kieber's objectivity and accuses him of stealing the information, according to Michael Robinson, a spokesman for the bank. It says that much of the information that Kieber has provided involves records going back to the 1970s and 1980s.
"LGT's practices were consistent with accepted industry standards of the time and do not reflect the way in which LGT conducts business today," he said.

Yup, attack The Rich And watch Them Leave.....You Think This Might Be A Plan?

Hundreds of Super Rich Under Investigation
Senate Committee Wants To Question Secret Account Holders & Bank Officials
By BRIAN ROSS, RHONDA SCHWARTZ, and AVNI PATEL
July 16, 2008—
Hundreds of rich Americans whose names and secret foreign bank account information were turned over to US tax authorities could face criminal prosecution. A Senate committee is scheduled to convene tomorrow and among those called to testify are foreign bank account holders, including one of the wealthiest men in Los Angeles.
48 year-old Peter Lowy and his family own the giant Westfield shopping center fortune and will control the retail space in the rebuilt World Trade Center in New York. Bob Bennett, a lawyer for Lowy, who is a prominent contributor to both Democratic and Republican candidates, told ABC News that Lowy's name was on the list of secret accounts from a Liechtenstein bank but that Lowy did nothing wrong.
Bennett said Lowy is out of the country tomorrow and will not be available to testify.
For years, the LGT Bank in the tiny European principality of Liechtenstein, tucked between Austria and Switzerland, has been regarded as a safe haven for wealthy Americans trying to hide their money from the IRS. It helps that the reigning prince there, Hans-Adams II, and his family own the bank and strictly enforce the country's bank secrecy laws.
"Liechtenstein is regarded as one of the most secretive places in the world," said John Christensen of the London-based Tax Justice Network.
But all that changed when a disgruntled computer technician at LGT, Heinrich Kieber, downloaded all the names and secret accounts on to two CDs and turned them over to tax authorities in the US and Europe.
"It completely exposed the fact that Liechtenstein is nothing but a place to hide your money from tax collectors, and any other police who might be interested," said Kieber's Washington-based attorney Jack Blum. Kieber is now wanted in Liechtenstein for violating bank secrecy laws there, but his attorney says it is the tax cheats that are the real criminals.
"They are the people who are taking advantage of the rest of us, who are withholding and paying," said Blum. "They're the crooks."
LGT Bank says that while the Royal Family does own the bank it does not "operate" the bank. While LGT did decline to have officials testify before the Senate committee, they say they did provide a "compliance" officer who answered questions from Senate staffers for nearly ten hours last Friday. (click here to read the full statement from LGT Bank)
Also called to testify tomorrow are current and former officials of the giant Swiss bank UBS, including the head of the private wealth management Americas office, Martin Liechti, who was briefly detained by US authorities in Miami in May.
In court documents, federal prosecutors say UBS bankers helped set up many of the secret accounts in Liechtenstein and, overall, hid as much $20 billion belonging to US citizens.
"Sums are enormous and UBS appears to have been particularly aggressive in the way they marketed their activities in the US and elsewhere," said Christensen. "So UBS is extremely vulnerable to losing their license in the US."
One UBS banker, Bradley Birkenfeld, pleaded guilty last month and admitted to smuggling cash and diamonds for Americans trying to hide their wealth from the IRS.
In federal court documents obtained by ABC News, federal prosecutors allege that Birkenfeld's bank trained bankers traveling to the US in "techniques to avoid detection" by law enforcement authorities, "including training bankers to falsely state on customs forms that they were traveling into the United States for pleasure and not business".
Prosecutors say part of the Swiss bank scam was for the bank managers to have a third party who would set up sham entities for the US clients in tax havens, such as Panama or the British Virgin Islands, and pose as the owners of the entities.
"By concealing the US clients' ownership and control in the assets held offshore," the prosecutors say the Swiss bank and its managers "defrauded the IRS and evaded United States income taxes." (click here to read more of the court documents)
"The Americans were probably very shocked when their information wound up in the hands of the Internal Revenue Service," said Blum.

Europeans Having A Financial Blowout Too

European recession looms as Spain crumbles

By Ambrose Evans-Pritchard
Last Updated: 1:08am BST 18/07/2008

The eurozone is tipping into a deeper downturn than America itself despite the tremors in the US mortgage industry, and may already be in full recession for the first time since the launch of the single currency.

No longer safe as houses: Buildings under construction near Barcelona
Industrial production for the EMU bloc fell 1.9pc in May, according to fresh Eurostat data. It is the sharpest one-month decline for the region since the exchange rate crisis in 1992. Officials in Berlin have warned that Germany's economy could contract by as much as 1.5pc in the second quarter as export orders crumble.Industrial output in both Italy and Greece has slumped 6.6pc over the past year. Portugal is off 6.2pc. "It is a very ugly picture: we're on maximum alert," said Emma Marcegaglia, head of Italy's business federation Confindustria.Rome is now lobbying for a "New Deal" to revive Italy's economy through massive infrastructure projects. The idea is to use bonds issued by the European Investment Bank, allowing EU states to circumvent the 3pc limit on budget deficits imposed by the Maastricht Treaty.

Jacques Cailloux, Europe economist at the Royal Bank of Scotland, said a "reverse decoupling" is now under way as Europe goes down harder than the US - just as it did after the dotcom bust. "There is loss of momentum across the board. We can't exclude a recession," he said.
Spain is now spiralling into the worst crisis since the Franco dictatorship. "The economy is in dire straits," said Dominic Bryant, Spain expert at BNP Paribas.
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"Some of the housebuilders are going to go bust, it is as simple as that. Over 10pc of Spain's economy has been building houses. This compares with 6pc-7pc in the US at the height of the bubble. The adjustment will be enormous," he said.
Fear haunted the Spanish property sector yesterday after the share price of developer Martinsa-Fadesa crashed by more than 50pc in two days, leading to a suspension in trading by the Madrid bourse. The real estate and shopping mall group has so far failed to secure refinancing for its €5.1bn (£4.1bn) debt. The board held an emergency meeting yesterday.
Finance minister Pedro Solbes said the Martinsa-Fadesa crisis was turning "more complicated" but denied that there is any risk of a chain reaction across the sector. Banco Popular is understood to be the most exposed bank.
The crunch engulfing Spain's property market is rapidly turning into a full-fledged national drama. The developers' association APCE said house prices had already fallen 15pc since September. Unemployment has risen by 425,000 over the past year, reaching 9.9pc.
Deutsche Bank said the property crisis is more serious that the collapse in the early 1990s. It expects a 35pc fall in real house prices by 2011 as the market slowly clears the vast overhang of property, now estimated at nearly 700,000 homes.
In Castilla-La Mancha - Don Quixote's region - some 69pc of all houses built over the past three years are still unsold.
Spain's premier, Jose Luis Zapatero, blamed the European Central Bank for making matters worse by raising interest rates into the teeth of the crisis last week. He called the move "irresponsible". More than 98pc of home loans in Spain are priced off floating rates linked to Euribor, which has risen 145 basis points since August.
Mr Zapatero has resorted to a fiscal boost worth 1.5pc of GDP to help cushion the slump. But Spain's budget surplus is turning into a deficit as tax revenues collapse. Car sales, for instance, fell 31pc in May. The Bank of Spain is concerned about the health of smaller regional lenders with heavy exposure to the mortgage market. Deputy governor Jose Vinals has called on banks to set aside more against bad debts. "Provisions need to keep rising throughout the year. Prudent coverage levels are needed to face this situation with confidence," he said.
The precipitous slide now under way in Europe has yet to cause investors to lose their ardour for the euro, but a number of analysts, including Bill Gross, head of the giant bond fund Pimco, say there is no justification for the euro's 25pc to 30pc over-valuation against the US dollar. "We're turning incredibly bearish on the euro," said BNP Paribas.
The counter argument is that the US has merely stolen growth from the future with this spring's one-off fiscal stimulus package. Dollar bears expect a nasty second leg to the crisis later this year, forcing the Fed to slash interest rates to 1pc or lower.
Goldman Sachs said Europe is the "tie-breaker" for the whole global economy.

SWF's Flee US Dollar

The US Is Losing Support
One of the Persian Gulf's biggest sovereign wealth funds has cut its US dollar-denominated exposures from 80% one year ago to 60% today, the London Financial Times' Henry Sender reports.
This may not seem like a big deal, but it has to be seen in the context of just how much money the rest of the world has effectively lent to the US. As recently as the last twelve months Middle Eastern sovereign wealth funds have been investing, some might say naively, in beaten-down US commercial and investment banks and mortgage lenders in what they thought at the time should have been a bargain-hunting trade. The sovereign funds received some pretty impressive interest rates, but any coupon now seems irrelevant in the face of ongoing losses in US financial institutions.
Sovereign wealth funds have lost a lot of money.
While the Gulf states contemplate going elsewhere for their investments, China's State Administration of Foreign Exchange (SAFE) has been actively looking to undertake deals with private equity firms in Europe as part of an attempt to mitigate the risk of their US investments. SAFE holds the majority of China's US$1.6 trillion of foreign currency reserves in US dollar instruments and has not been as quick as other government authorities, such as Singapore's, to diversify currency exposure.
The Qatar Investment Authority has suggested the outlook for the US dollar is a significant issue for investors contemplating US-related investments. Behind the scenes at SAFE, Sender reports, fund officials are questioning the credibility of the Fed and US Treasury in defending the US dollar and maintaining US stability. Last year long term US ally Kuwait cuts its currency peg to the US dollar, sparking a concern about the intentions of other Gulf states. This is unlikely to occur as long as the UAE stays pegged, but rumblings at the world's largest sovereign wealth fund - the Abu Dhabi Investment Authority - suggest dissatisfaction with having to import US inflation.
The ADIA is the world's biggest investment fund. The world's tallest building is in Tapei at the moment, but it will soon be in Dubai. The largest publicly-listed company is in Beijing. The world's biggest oil refinery is currently being built in India. What's wrong with this picture?
The largest movie industry is not in Hollywood, it's in Bollywood. The largest shopping mall in the US would not even make it into today's top ten. Only two of today's richest people are American.
The Barbarians are at the gates.
The world's two largest mortgage lenders remain, nevertheless, American. They are Fannie Mae and Freddie Mac, which between them control some US$5.3 trillion of US mortgages. Merrill Lynch analysts in the US warned yesterday that the US could face a "financing crisis" within months as the full consequences of the perilous state of Fannie & Freddie spread through the world.
The US is currently running a current account deficit (it is a net borrower) of some US$700 billion, mostly financed by Asia, Russia and the Middle East. When the Nikkei bubble burst in the early 1990s, Japan was forced to deal with the problem internally and cut its interest rate to zero, where it has pretty much stayed ever since. However, the heavily-borrowed US could not afford to do this without losing all support from its creditors. Things are already bad enough at 2%. And the world is pointing, with hindsight, to the folly of Alan Greenspan's 2004 level of 1%.
Brian Bethune, chief financial economist at Global Insight said yesterday, as reported by the London Daily Telegraph's Ambrose Evans-Pritchard, "This is not the time for [US] policy-makers to underestimate, once gain, the systemic risks to the financial system and the huge damage this would impose on the economy. Bold, aggressive action is needed, and needed now". Bethune suggested the US Treasury has only days to put real money, not just promises, behind Fannie & Freddie or face a dangerous crisis that could spiral out of control. Arguments over "moral hazard" are only holding up the solution.
While the increased dividend from Wells Fargo last night may have sparked a short-covering rally on Wall Street, on Main Street the queues only get ever longer outside IndyMac branches, and small depositors are beginning to heed the media's warning to take anything above US$100,000 out of any other bank account, as it will not be insured by the FDIC.
Evans-Pritchard notes that to acknowledge Fannie & Freddie as making up almost half the US$12 trillion US mortgage industry is still to understate the vital importance of these institutions. Fannie & Freddie are currently acting as a lender of the last resort to the battered US home loan market, providing 80% of all new mortgages. Some US$1.5 trillion of Fannie & Freddie AAA-rated debt is held in foreign hands. How patient will these investors be if the US dollar continues to slide?
Hiroshi Watanabe, Japan's chief regulator, yesterday urged Japanese banks and insurance companies to treat US agency debt with caution. But most of it is held in the Middle East, Russia and China. Were these countries to decide it was no longer in their interest to do so, their withdrawal could cause a run on the US dollar and "bring the United States to its knees", Evans-Pritchard warns.
It is unlikely they would do so, as the ramifications would be self-defeating. However, a mere slowing of dollar-denominated investment (and diversification away) could still cause major problems.
Merrill Lynch noted that aforementioned foreign governments had acquired US$241 billion of US agency debt in the past year alone as their own foreign currency reserves exploded. They now own US$985 trillion, which is estimated to include US$400 billion in China, US$150 billion in Russia, and another US$200 billion in Saudi Arabia and the other Gulf states. Rampant inflation in Asia and elsewhere is forcing interest rates to be raised as the US has cut, drawing more capital away from the US. (The interest rate spread between Australia and the US is now 5.25% and the Aussie dollar is pushing towards parity as foreign money flows in).
The survival of the US is thus in the hands of tenuous Middle East allies, Russia - from which Premier Putin has often stated that his country is now in a new Cold War with the US in reference to proposed European missile sites - and China. China is the country which has recently drawn a US hate-campaign over dodgy imported products and a new protectionist movement in Congress over trading imbalances.

Even Merrill Lynch Knows We Are FUCKED

US faces global funding crisis, warns Merrill Lynch
Last Updated: 1:07am BST 18/07/2008

The US Treasury is running out of time before foreign patience snaps, writes Ambrose Evans-Pritchard
Merrill Lynch has warned that the United States could face a foreign "financing crisis" within months as the full consequences of the Fannie Mae and Freddie Mac mortgage debacle spread through the world.

The country depends on Asian, Russian and Middle Eastern investors to fund much of its $700bn (£350bn) current account deficit, leaving it far more vulnerable to a collapse of confidence than Japan in the early 1990s after the Nikkei bubble burst. Britain and other Anglo-Saxon deficit states could face a similar retreat by foreign investors.
"Japan was able to cut its interest rates to zero," said Alex Patelis, Merrill's head of international economics.
"It would be very difficult for the US to do this. Foreigners will not be willing to supply the capital. Nobody knows where the limit lies."
Brian Bethune, chief financial economist at Global Insight, said the US Treasury had two or three days to put real money behind its rescue plan for Fannie and Freddie or face a dangerous crisis that could spiral out of control.
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"This is not the time for policy-makers to underestimate, once again, the systemic risks to the financial system and the huge damage this would impose on the economy. Bold, aggressive action is needed, and needed now," he said.
Mr Bethune said the Treasury would have to inject up $20bn in fresh capital. This in turn might draw in a further $20bn in private money. Funds on this scale would be enough to see the two agencies through any scenario short of a meltdown in the US prime property market.

He said concerns about "moral hazard" - stoked by hard-line free-marketeers at the White House and vocal parts of the US media - were holding up a solution. "We can't dither. The markets can be brutal. We have to break the chain of contagion before confidence is destroyed."
Fannie and Freddie - the world's two biggest financial institutions - make up almost half the $12 trillion US mortgage industry. But that understates their vital importance at this juncture. They are now serving as lender of last resort to the housing market, providing 80pc of all new home loans.
Roughly $1.5 trillion of Fannie and Freddie AAA-rated debt - as well as other US "government-sponsored enterprises" - is now in foreign hands. The great unknown is whether foreign patience will snap as losses mount and the dollar slides.
Hiroshi Watanabe, Japan's chief regulator, rattled the markets yesterday when he urged Japanese banks and life insurance companies to treat US agency debt with caution. The two sets of institutions hold an estimated $56bn of these bonds. Mitsubishi UFJ holds $3bn. Nippon Life has $2.5bn.

But the lion's share is held by the central banks of China, Russia and petro-powers. These countries could all too easily precipitate a run on the dollar in the current climate and bring the United States to its knees, should they decide that it is in their strategic interest to do so.
Mr Patelis said it was unlikely that any would want to trigger a fire-sale by dumping their holdings on the market. Instead, they will probably accumulate US and Anglo-Saxon debt at a slower rate. That alone will be enough to leave deficit countries struggling to plug the capital gap. "I don't see how the current situation can continue beyond six months," he said.
Merrill Lynch said foreign governments had added $241bn of US agency debt over the past year alone as their foreign reserves exploded, accounting for a third of total financing for the US current account deficit. (They now own $985bn in all.) By most estimates, China holds around $400bn, Russia $150bn and Saudi Arabia and other Gulf states at least $200bn.
Could gold hit $2,000?

Global inflation is now intruding with a vengeance as well. Much of Asia is having to raise rates aggressively, drawing capital away from North America. This may push up yields on US Treasuries and bonds, tightening the credit screw at a time when the US is already mired in slump.
Russia's deputy finance minister, Dmitry Pankin, said the collapse in the share prices of Fannie and Freddie over the past week was irrelevant because their debt has been effectively guaranteed by the US government under the rescue package.
"We don't see a reason to change anything because the rating of the debt of those agencies hasn't changed," he said.
Foreign policy experts doubt that the picture is so simple. Russia is likely to use its $530bn reserves as an implicit bargaining chip in high-stakes diplomacy, perhaps to discourage the US from extending Nato membership to the Ukraine and Georgia.
Vladimir Putin, now Russia's premier, has stated repeatedly that his country is engaged in a new Cold War with the United States. It is clear that Moscow would relish any chance to humiliate the United States, provided the costs of doing so were not too high for Russia itself.
China is regarded as a more reliable partner, with a greater desire for global stability. Treasury Secretary Hank Paulson has intimate relations with the Chinese elite, dating from his days at Goldman Sachs when he visited the country over 70 times.
Brad Setser, from the US Council on Foreign Relations, said the Chinese have a stake in upholding Fannie and Freddie, not least to ensure that their loans are "honoured on time and in full".
David Bloom, currency chief at HSBC, said fears that regional banks could start toppling after the Fed takeover of IndyMac last week were now the biggest threat to the dollar.
"We have a pure dollar sell-off," he said. "It's a hating competition: at the moment the markets hate the dollar more than they hate the euro, even though German's ZEW confidence indicator was absolutely atrocious."

26,000 Pastors for Martial Law Continuity of Government

Video compilation about continuity of government plans for martial law including the KSLA News report of the 26,000 pastors recruited for handling the people during a martial law take over.

There are over 800 camps throughout the United States.
Recently 26,000 pastors were recruited by FEMA(Federal Emergency Management Association) to instruct their congregations that in case of an emergency they are to peacefully hand over their arms and their children and go to the camps.
In a case like Hurricane Katrina, people were starving, and had no home.
They had no choice but to go to the FEMA camps or die of starvation.
Is this the choice you want to be left with in the event of a local or national emergency, or might it be smarter to prepare now with emergency food, water and supplies?

Believe it Or Not, News Of a Heartening Trend On Sound Of Cannons

Micro Generation and Micro Farming: Combating High Energy Prices, High Food Prices, and Tyranny

George Washington’s Blog Thursday, July 17, 2008
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