A-Holes at the J-Hole

"This convention, which I routinely dub 'A-holes at the J-Hole', still makes me smile because it so perfectly describes my Disdainful And Highly Scornful (DAHS) attitude towards them all because of their Complete And Utter Failure (CAUF)…"
by The Mogambo Guru
Fortunately, I was cowering in the Mogambo Big Brawny Bunker (MBBB) when I looked at Total Fed Credit (TFC) and saw that it was up by $4.6 billion last week, which is $4.6 billion in new credit that has magically appeared in the banks, created by a special little button that the Federal Reserve can push, anytime it likes, to make credit appear, either in its own account or in the accounts of the banks. "How handy!", one thinks!
What makes this so important is that this magical, out-of-nowhere credit turns into money when someone borrows it, which inflates the money supply, which will soon (after a few iterations of the economic system) make the prices of some things go up, and then make the prices of most things go up, and then finally make the prices of everything rise in a burning, incinerating general inflation as too much money chases too few goods, and money, money, money everywhere bids up prices, more and more all the freaking time, worse and worse until the society implodes because prices are so freaking high that nobody can afford to buy things or even feed their crying, whining children, and pretty soon all that incessant children's whining and crying is driving you freaking crazy, and then there is rioting in the street when prices rise like that after the money supply is allowed to increase like that!
So you can see why I spend a LOT of time in this fortified bunker, doors locked, armed to the teeth; somebody has to baby sit those damned crying kids while their parents are rioting in the streets, and it sure ain't a-gonna be me! Hahaha!
This money supply/inflation thing is important because the world's biggest collection of idiots in the field of economics (featuring the clueless academic Ben Bernanke, chairman at the Federal Reserve) are convening at Jackson Hole, Wyoming, for the big annual conference on monetary policy where they will try and come up with some new scam or scheme that will hopefully correct the problems they caused with their last scam or scheme, which predictably failed.
This convention, which I routinely dub "A-holes at the J-Hole", still makes me smile because it so perfectly describes my Disdainful And Highly Scornful (DAHS) attitude towards them all because of their Complete And Utter Failure (CAUF), an acronym that I used to see only on my Annual Employee Performance Evaluations, so you are talking to an expert of a guy who knows what CAUF really means, first-hand!
The theme of the Jackson Hole seminar this year, (and you gotta have a "theme" if you are going to sell T-shirts and coffee mugs as souvenirs!), is this week's proud winner of the coveted Mogambo Award For Sheer Economic Crap (MAFSEC). The theme and winning entry is "Maintaining Stability in a Changing Financial System"! Hahaha!
The Lex Column in the Financial Times describes Ben Bernanke's address at the Jackson Hole confab with a little disdain of his own, as he reports, "The Fed chairman's last speech - delivered, appropriately enough, in a Hole - was on 'maintaining stability'", which I gather is apparently to be achieved through keeping "Wall Street on life support until it wakes up into a nightmarish world of tighter regulation - the central thrust of his Jackson Hole address." Gaaaahhh!
This corrupt commingling of Wall Street with the banks at the control of the Fed is scary enough to warrant bringing back the Glass Steagall Act without delay and throwing Bill Clinton and Robert Rubin into prison for having repealed it in the first place.
But before I could get up a lynch mob or even mild interest in anybody, I was distracted by another part of the speech by Mr. Bernanke that is even more horrifying, as he is apparently "banking on recession hammering commodity prices enough to see off the inflationary threat posed by negative real interest rates at home and looser monetary conditions in emerging markets." Hahahaha!
I can't stop laughing! This is so bizarre, so "theater of the absurd", that my mind is stuck in laughing mode! Hahahaha!
Jim Puplava at FinancialSense.com humorously explains,"Now, if you follow the logic here, they're saying commodity prices are weakening because of slowing economic growth, but at the same time economic growth is going to go up because of falling commodity prices." Hahaha! That's exactly what they are, apparently, counting on! Hahaha!
Now I am really laughing hard that the Federal Reserve actually thinks that a spontaneous recession will offset negative real interest rates and massive growth in the world's money supply! Hahaha! I am laughing so hard that my stomach is starting to hurt and I think I might have peed in my pants! Hahaha!
Of course, everybody in the office sees my paralyzed-with-laughter condition, and they decide to seize the opportunity to steal some of the twelve color-coded staplers that I have neatly arranged on my desk, which they do just because they keep "losing" their own stupid staplers, which I say just proves that they are stealing office supplies, the thieving, lying bastards.
It's sort of like how the Federal Reserve is stealing all the buying power from our money, except that with a stapler you can at least bind two pieces of paper together, while the theft of the buying power by the Fed just makes the stapler cost more.
"Maintaining Stability in a Changing Financial System"? What a load of crap!

Mogambo Sez.................

Intaxicating Rebate
Checks

"The worst inflation in consumer prices is, in case you were wondering, in Venezuela, suffering a terrifying 33.7% inflation, followed by Pakistan at 24.3%, with Japan being the best at 2% inflation! A 2% inflation is the best in the world! Yikes!"
by The Mogambo Guru
The Leading Indicator, which is supposed to presage economic conditions up to a year in the future, fell dramatically in July, going down to 101.2 from 101.9, which is a hell of a big loss. This means, as one can readily deduce from the title "Leading Indicator", that the economic situation down the road, say nine months to a year or so, looks bleak.
The Coincident Indicator, measuring economic conditions Right This Very Minute (RTVM), was actually a little positive, as it blipped up the minimum amount possible (one tick), taking this indicator up a little to 106.8 from 106.7. Not very impressive.
Finally, as you would expect from rampant inflation that is raging everywhere, the Lagging Indicator (which is where you find burdens and inflation), zoomed to 112.1 from 111.7! Wow! Big move!
A lot of that inflation is probably because of food prices skyrocketing, which may have been what prompted Junior Mogambo Ranger (JMR) Dan B. to say that even with commodities rising, "There is very little focus on agriculture", which he thinks is a big mistake, and that things are so bad, and likely to get worse, that his watchwords are "Dirt, Diesel and Gold"!
Even with all of this exposure to the terrifying inflations raging around the world, I was still stunned to see that The Economist magazine's table of "Economic and financial indicators" for the 50-or-so largest economies in the world shows that we ALL have raging inflation in consumer prices!
Even Japan! Japan, where inflation has been negative for a decade and was the sole bright spot in the whole table as concerns inflation, now has 2% inflation!
The worst inflation in consumer prices is, in case you were wondering, in Venezuela, suffering a terrifying 33.7% inflation, followed by Pakistan at 24.3%, with Japan being the best at 2% inflation! A 2% inflation is the best in the world! Yikes!
Historically, this is the same 2% inflation that was the historical beginning of the "warning zone" of inflation, that narrow band that provided a little leeway before hitting the "danger zone" of 3% inflation! Now inflation is typically running in the double digits, and nobody cares! Hahaha!! We are all so, so, so freaking doomed!
You can probably tell by the way I am now talking to you through a speakerphone from the Mogambo Impervious Bunker (MIB), and how I am looking at you through the crosshairs of a periscope, that this is not only Bad, Bad News (BBN), but that I am very freaked out of my frightened little pea-brain mind about it, too, which explains why I was carefully lining up the crosshairs right between your squinty little eyes and my finger was on the trigger when I suddenly realized that "shooting first and asking questions later" is not a conscious act, but something that just "happens" because you are just (pause) so (pause) freaked (pause) out. Like right freaking now!
And if you want more inflation, look at the inflated prices of houses, which reminds me that Junior Mogambo Ranger (JMR) Ajit V. sent some humorous neologisms that were created by combining parts of two existing words, and some of them fit the current situation exactly, such as "Cashtration (n.): The act of buying a house, which renders the subject financially impotent for an indefinite period of time." Hahaha! Good one!
I naturally thought that this was going to be a clever lead-in to another new word in the same vein, but this time referring to how the prices of houses are falling dramatically, with something like, "Screwedage payment (n.): monthly payment on a mortgage for a house on which you owe more than the damned house is worth, but you can't just walk away, and so you have to sit in it, night after night, thinking about how you can't afford this damned house, and how it and these damned expensive kids are dragging you into the financial gutter, and what you really, really want to know is two things; one, who is responsible since nothing is ever your own fault, and two, who do you sue, or, alternatively, give those damned kids to?"
Well, no such luck on the house or kids thing, but it did have the "it's funny-because-it's-true" new word "Intaxication: Euphoria at getting a tax refund, which lasts until you realize it was your money to start with." Hahaha!
At first I laughed at this, too, as you can tell by the way "Hahaha" is actually written right after it, and I remember that I cheerfully said, "Let's have a toast to intaxification, and to all the 'stimulus checks' that we will receive in the years to come!"
Then I downed a shot of Wild Turkey, wiped my slippery, slobbery lips on my sleeve, and was getting ready to be a really nice guy and helpfully tell the guy sitting next to me at the bar that he looked like one of those common Earthling morons who is NOT buying gold, silver and oil in response to the monetary mayhem happening all around them, which proves that he is an idiot who is as stupid as he looks, and my advice is to go home, sober up and spend some time at Mises.org to get a little smarts about real Austrian economics, when I suddenly realized, "Hey! It never was my money, as I owe more than I can pay, and creditors have first lien! It was the money of somebody else, and yet it belonged to yet someone else, and then to someone else, on and so on, until you find that, at the end, it was the bank's money! It's all the bank's money, in the final analysis! Hahaha!"
The moral is that using the money in the meantime to buy gold, silver and oil, which WILL belong to me, so as to make a huge, huge profit (HHP) when their prices soar due to the stupidity of governments and bankers, seems such a delicious revenge.
And how could you turn such a tasty dish down? Whee!

What??!! No Krugerrands??

World's Largest Gold Refiner Runs Out of Krugerrands
By Claudia Carpenter
Aug. 28 (Bloomberg) -- Rand Refinery Ltd., the world's largest gold refinery, ran out of South African Krugerrands after an ``unusually large'' order from a buyer in Switzerland.
The order was for 5,000 ounces and it will take until Sept. 3 for inventories to be replenished, said Johan Botha, a spokesman for Rand Refinery in Germiston, east of Johannesburg. He declined to identify the buyer.
Coins and bars of precious metals are attracting investors as a haven against a sliding dollar and conflict between Russia and its neighbor Georgia. The U.S. Mint suspended sales of one- ounce ``American Eagle'' gold coins, Johnson Matthey Plc stopped taking orders for 100-ounce silver bars at its Salt Lake City refinery and Heraeus Holding GmbH has a delivery waiting list of as long as two weeks for orders of gold bars in Europe.
``A lot of people are worried about the dollar, they're worried about inflation and now we have geopolitical risk with what's happening in Russia,'' said Mark O'Byrne, managing director of brokerage Gold and Silver Investments Ltd. in Dublin. O'Byrne said his company's sales are up fourfold this year, heading for a record since its founding in 2003.
Gold rose to a record in March and is 25 percent higher than this time last year, while the dollar dropped 7.4 percent against the euro. Silver is up 15 percent in the period.
Salt Lake
French Foreign Minister Bernard Kouchner said European Union leaders meeting in Brussels Sept. 1 will discuss sanctions against Russia after it recognized the independence of two regions of Georgia. U.K. Foreign Secretary David Miliband said yesterday Russia was trying to ``redraw the map'' of Europe.
Johnson Matthey's Salt Lake City refinery doesn't have the capacity to meet investor demand for 100-ounce silver bars, said spokesman Ian Godwin in London. He wouldn't comment on whether the company may expand capacity or end production.
The refinery usually gets orders for 1,000 ounce bars from banks and silver grains from jewelers, Godwin said.
Rand Refinery has manufactured, marketed and delivered more than 46 million ounces of Krugerrands since the gold coin was introduced in 1967, according to the company's Web site. Krugerrands are minted at the South African Mint from gold coin blanks supplied by Rand Refinery.
Gold for immediate delivery rose $2.29 to $829.19 an ounce by 5:24 p.m. in London. Silver gained 10.5 cents to $13.60.

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

"As always, the lesson of political history is the same: Save us from our saviors." -James Bovard

FDIC is broke and looking to "borrow" money from Treasury - but Treasury doesn't have money to loan.It will come from taxpayers through Fed Reserve

FDIC may borrow money from Treasury: report
Wed Aug 27, 2008 2:23pm EDT
(Reuters) - Federal Deposit Insurance Corp (FDIC) might have to borrow money from the Treasury Department to see it through an expected wave of bank failures, the Wall Street Journal reported.
The borrowing could be needed to cover short-term cash-flow pressures caused by reimbursing depositors immediately after the failure of a bank, the paper said.
The borrowed money would be repaid once the assets of that failed bank are sold.
"I would not rule out the possibility that at some point we may need to tap into (short-term) lines of credit with the Treasury for working capital, not to cover our losses," Chairman Sheila Bair said in an interview with the paper.
Bair said such a scenario was unlikely in the "near term." With a rise in the number of troubled banks, the FDIC's Deposit Insurance Fund used to repay insured deposits at failed banks has been drained.
In a bid to replenish the $45.2 billion fund, Bair had said on Tuesday that the FDIC will consider a plan in October to raise the premium rates banks pay into the fund, a move that will further squeeze the industry.
The agency also plans to charge banks that engage in risky lending practices significantly higher premiums than other U.S. banks, Bair said.
The last time the FDIC had borrowed funds from the Treasury was at nearly the tail end of the savings-and-loan crisis in the early 1990s after thousands of banks were shuttered.
The fact that the agency is considering the option again, after the collapse of just nine banks this year, illustrates the concern among Washington regulators about the weakness of the U.S. banking system in the wake of the credit crisis, the Journal said.

Ron Paul: 'There's no difference' between McCain and Obama

Former Republican presidential candidate Ron Paul has declined to endorse either John McCain or Barack Obama, and he told CNN's Kiran Chetry on Thursday that he sees "no difference" between them because both espouse foreign policies that only create more threats to our national interests.Chetry asked Paul, "Do you think it's a valid argument ... that a John McCain administration would be a four-year extension of the Bush administration?""Sure, but I think that's what's going to happen with Obama, too," Paul replied. "There's no difference." "Their foreign policies are identical," Paul explained. "They want more troops in Afghanistan. They want to send more support to Georgia to protect the oil line there. Neither one says bring home the troops from Iraq from the bases -- you know the bases are going to stay there, the embassy as big as the Vatican, that's going to remain. So their foreign policies are exactly the same. They're both very, very aggressive with Iran. So I would say there's no difference.""How would you handle these global threats, then, if it's not to send our troops there and make sure that we're protected?" Chetry asked."We create the threats!" Paul replied emphatically. "Why are we on the borders of Russia provoking the Russians? I mean, the Georgians initiated the military attack against these enclaves where there were mostly Russians. ... It's the fact that we're over there that we create these crises.""Isn't it part of our duty, though, to support these fledgling democracies that ask for our help?" asked Chetry."No, it's not our responsibility to do that," Paul said firmly. "We should endorse the principle but not send troops and money. ... Once we get over there, we just aggravate the situation.""We bombed Serbia in order for Kosovo to become independent," Paul concluded. "Now the Russians are doing the same thing. ... It's this total inconsistency."

News reporter arrested in Denver for shooting video on a public sidewalk. Why? Because he was documenting who attended a "big-donor" event for the Dem

ABC Reporter's Attorneys Want All Charges Dropped
Civil Rights Groups Calling for Renewed Protection of First Amendment Rights
From the Blotter
Aug. 28, 2008—
Lawyers for an ABC reporter and civil rights groups are demanding that Denver police drop all charges against a reporter who was arrested yesterday while trying to shoot video on a public sidewalk outside the Brown Palace Hotel in Denver.
Asa Eslocker and a camera crew were attempting to film and talk to Democratic senators and VIP donors leaving a private meeting at the hotel as part of a nightly news series on the corporate lobbyists and wealthy donors at the Democratic National Convention. Police arrested Eslocker and charged him with trespassing, failure to follow a lawful order, and interference with a police officer.
Eslocker's attorneys said Thursday that their client is "innocent of all three crimes."
"He and his news crew were standing on public sidewalks covering an event of public significance and performing a press function protected by the First Amendment," said a statement issued today by Eslocker's attorneys, Daniel Recht and Steven Zansberg.
Video of the arrest shows a cigar-smoking Denver police sergeant, accompanied by a team of five other officers, first put his hands on Eslocker's neck, then twisting his arm behind him to put on handcuffs.
"Frankly, we are outraged at the conduct of the individual officers. Their interactions with Mr. Eslocker are captured on tape." (click here to read the full statement by Eslocker's attorneys)
Civil rights groups also reacted today saying Eslocker's arrest is the latest in a series of incidents at the DNC that exemplify an assault on the First Amendment.
"Arresting a reporter for simply doing his job is both unconstitutional and un-American," said Anthony Romero, Executive Director of the American Civil Liberties Union. "That free speech is curtailed during the Democratic National Convention underscores the need for continued protection of civil liberties, regardless of the party in power."
Reporters Without Borders echoed calls for the charges to be dropped.
"The use of unnecessary force and the arrest of a journalist who was reporting an important political story is deeply troubling and unacceptable," the group said.
Attempts by ABC News to reach a press contact for the Denver police department were not successful.
Denver police Lt. Ron Saunier told the Associated Press that "the Denver Police Department is committed to looking into each and every allegation of unnecessary force," Saunier said.
Saunier said authorities have tried to accommodate the news media this week. "One instance with the media shouldn't paint the entire event," he said.

July Money Goes Boom!

July incomes drop by largest amount in 3 years

WASHINGTON (AP) — Personal incomes plunged in July while consumer spending slowed significantly as the impact of billions of dollars in government rebate checks began to wane.
The Commerce Department reported Friday that personal incomes fell by 0.7 percent in July, the biggest drop in nearly three years and a far larger decline than the 0.1 percent decrease that analysts had expected.
Consumer spending edged up a modest 0.2 percent, in line with expectations, but far below June's 0.6 percent rise. When the impact of rising prices was factored in, spending actually dropped by 0.4 percent in July, the weakest showing for inflation-adjusted spending in more than four years.
The July performance for incomes and spending reinforced worries that the economy, which posted better-than-expected growth in the spring because of the rebate checks, could stumble in coming months as their impact fades.
Some economists worry that overall economic growth, which rose at a 3.3 percent annual rate from April-June, could come in at less than half that pace in the current quarter, and could actually dip into negative territory in the final three months of this year and the first quarter of 2009. Back-to-back declines in the gross domestic product would meet one rule of thumb for a recession.

Privacy In Switzerland

Switzerland Still Has the Guts to Fight for Your Privacy - Even if UBS Doesn't

Two months ago a U.S. District Court judge in Miami, Florida, authorized the U.S. Internal Revenue Service to go after information from Switzerland's largest bank, UBS. In other words, the court gave its blessing for the IRS to go on a fishing expedition for supposed American tax evaders at UBS. In my opinion, the court was wrong to make this blanket assumption. But then again, I have already stated my views on the invalidity of this U.S. court trying to override the Swiss laws.In any case, the court order allowed the IRS to serve a summons on UBS. In short, the IRS wants information (including identities) on 19,000 Americans with UBS accounts in Switzerland. It's important to note that UBS has extensive operations and thousands of employees in the United States.
UBS May Have Hung Their American Clients Out to Dry... But Switzerland Isn't Budging
This court order came about because the UBS private bankers may have been stupid enough to advise wealthy Americans on how to evade taxes (at least according to the IRS). The UBS situation was the subject of a series of noisy, demagogic anti-tax haven hearings in the Democrat-controlled U.S. Senate last month.At the time I wrote: "The big question now is whether UBS, the supposed giant of Swiss banking, will have the guts to take a strong stand based on the Swiss bank secrecy laws and fight for the principle of its clients' financial privacy...""Even if UBS is willing to abandon its American customers to the IRS, I suspect that official Switzerland...[is] going to stand and fight for their basic bank secrecy laws -- laws that have been revised and updated to accommodate reasonable law enforcement requirements."Well, UBS went beyond abandoning their American clients in one respect. They announced then and there that the Swiss-based UBS is abruptly ending its private banking services to Americans. In other words, if you're an American banking in Switzerland at UBS, you're out of luck. In fact, thousands of Americans with UBS accounts were suddenly left high and dry. Our Swiss banking contacts tell us that other Swiss banks are refusing to accept UBS American clients seeking new banks there. They obviously don't want to inherit alleged UBS tax evasion problems with the IRS.U.S. clients are especially nervous because the UBS statement said it would work with the U.S. government to identify the names of its clients who may have engaged in "tax fraud." (That phrase has special meaning in Swiss law because tax evasion per se is not a crime in Switzerland.)
You Can't Shake the Swiss Government
But as I predicted, while the spineless UBS bends, the Swiss government is standing firm. That official firmness may be cloaked in the diplomatic Swiss language (that has made Switzerland so famous) but it's still a firm stance nonetheless.Example: This week the Swiss government informally asked the U.S. not to pressure UBS for client data located within the Alpine country. Swiss State Secretary Michael Ambuehl told his U.S. counterparts that any request for client data must be decided by the Swiss government. It's a government issue because UBS would be breaching Swiss bank secrecy law by voluntarily revealing bank account records."I reaffirmed the offer by the Swiss government to cooperate constructively with the U.S.,'' Ambuehl said in his Bern office on Aug. 19. "I underlined, however, that we expect them not to take unilateral steps against UBS to obtain information which is located in Switzerland as long as the agreed, bilateral legal cooperation is ongoing.'' This was undoubtedly a reference to the Swiss-U.S. mutual tax treaty and the mutual legal assistance treaty (MLAT) between the two countries.
Tax Evasion Isn't a Crime in Switzerland
"UBS is seeking to address these requests with both Swiss and U.S. government authorities within the legal framework for intergovernmental cooperation and assistance established between Switzerland and the U.S.,'' a UBS spokesman said in Zurich.According to Swiss law, bank secrecy can only be lifted in connection with a criminal offense, such as tax fraud or money laundering. But tax evasion isn't a crime in Switzerland. Should the finance ministry agree that UBS release the account details, then account holders will be informed before their details are handed over. This gives them the option to go to court to oppose the release, a Swiss official said.Ambuehl said pressure from the U.S. and the European Union for Switzerland to amend bank secrecy laws hasn't increased. He also sees no need to revise them, because they include "strict internal rules and good external cooperation.''
No One Is Abandoning Swiss Policy Here
An alarmed Teodoro Cocca, formerly with Zurich University's Swiss Banking Institute said at the time of the UBS revelations: "This is a direct and coordinated attack on the heart of the Swiss financial system. This is a long-term threat that will not go away, and there is not too much Switzerland can do."It appears that the professor was right about the gravity of the situation, but wrong to think that the Swiss government would supinely abandon the cornerstone of their banking success - strict bank secrecy.There is a great deal the Swiss can do to defend their laws - and they are doing it.By the way, it's worth noting that The Sovereign Society has NEVER recommended UBS. We have always thought they were too cavalier with their client's privacy. Indeed for the last decade, we have advised U.S. depositors considering Swiss banks to avoid UBS AG and any other Swiss bank with U.S. based branches, affiliates or banking operations, other than a mere "representative office." However, that doesn't mean you should abandon the country of Switzerland altogether. As you can see, Switzerland still has some of the strongest banking laws in the world - and the local Swiss government is even willing to take on American politicians to keep that bank secrecy their policy.

Uh-Oh.........Mad Max Is Coming!!!

The Western World Running on “E”
Western nations — the U.S., in particular — are now experiencing the bow wave of a profound change in the current and future availability of oil. According to recently published data, oil output from all major Western oil companies is on an ominous decline trend. Exxon Mobil, for example, announced that its average oil output has fallen by 614,000 barrels per day in 2008.
Western oil majors like Exxon are finding it harder than ever to identify new prospects and successfully complete new oil projects. This comes despite the fact that the oil industry is flush with profits from upstream operations, and is eager to expand.
BP’s Thunder Horse project in the Gulf of Mexico, for example, is finally coming online in 2008, with an anticipated output of nearly 250,000 barrels per day. But this one project has taken almost 20 years to complete, at a cost in excess of $6 billion.
And Chevron’s recent success with its Jack 2 project in the Gulf came at a cost of over $240 million for just one test well. And this prospect is still years away from being a successful oil-producing prospect.
These sorts of developments have implications far beyond the Peak Oil argument, as valid as that thesis may be.
One of the key reasons for the decline in oil output from major Western companies is world politics. In the 1990s, the key strategic development in the wake of the fall of the Berlin Wall and the decline of communism was the trend toward globalization. Much of the world opened up to the West figuratively, as well as literally. And the oil industry was one beneficiary, making significant investments in unexplored or underexplored regions from South America to the Caspian Sea.
But the key strategic development in the first decade of the 2000s has been, arguably, the concept of “resource nationalism.” That is, in the many nations that were formerly friendly toward Western companies, the attitudes toward foreign investment have fundamentally changed. Western oil companies have found themselves squeezed in resource-rich areas.
Western companies have experienced outright nationalizations, such as what occurred with Exxon Mobil and ConocoPhillips in Venezuela. Or Western companies have been shown the door through intimidation and bullying legal tactics under the guise of “tax laws” or “environmental enforcement,” such as what happened with Shell Oil Co. at its Sakhalin project in Russia.
Even Brazil has shown its nationalistic teeth to foreign investment. Recently, Brazil withdrew numerous areas from prospective lease sales after it became apparent that the odds of finding oil were quite good. Why not just save it for Petrobras?
Whatever the case might be, Western companies have been shunted aside or, in the best cases, forced to renegotiate contracts on less favorable terms. The traditional model of resource development, in which Western companies obtain legal title and control over oil and gas deposits in the ground, is fighting a losing battle. Assertive host governments are gaming the rules to favor their state-owned national oil companies (NOCs).
As recently as the late 1970s, Western oil companies controlled well over half of the world’s oil production. But now the NOCs — such as Saudi Aramco, National Iranian Oil Co., Kuwait Oil Co., Petroleos de Venezuela, Petroleos Mexicanos (Pemex), etc. — control over 85% of the world’s oil resources. Western majors control about 7% of the world’s oil resource base.

All the while, oil output from mature regions is in decline. From the North Sea to the Alaska North Slope, the Western oil companies are faced with lower volumes from existing oil holdings. And there is a much thinner book of potential business elsewhere in the world. According to Amy Myers Jaffe, who studies the oil business from her chair at Rice University, “This is an industry in crisis.”
This sense of crisis also helps explain why Western oil companies are fighting to expand their options for offshore drilling in the U.S., as well as to expand access to areas like northern Alaska. The U.S. offshore, and other frontier areas such as the Arctic National Wildlife Refuge (ANWR) are among the few options remaining for Western oil companies.
So one key point that the Western oil industry makes is that its resource base and reserves are in decline. And over the medium to long term, this means that the economic importance of the Western companies will erode. Despite any plans or efforts at conservation and efficiency, as well as a large-scale shift to alternative energy sources, the Western world will become increasingly dependent on NOCs for oil.
From the standpoint of energy and strategy, this will not be a good thing for the West.

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

"I came into this world, not chiefly to make this a good place to live in, but to live in it, be it good or bad." -Henry David Thoreau

The Inflation Monster Reareth...........

The Inflation Story Nobody Is Telling You...

The vast majority of consumers see "inflation" as what we're paying for groceries, gas, a Starbucks coffee, and electricity.
Yes, it's true that rising prices for these necessities has been the poster child for inflation lately. But there's much more to inflation than just forking over more at the gas station or coffeehouse. When it comes to Europe, wage push inflation plays a crucial role.
Producers Pass the Inflation Buck to You - the Consumer
Producer prices are simply the costs required to produce goods and services. Naturally, when producers have to pay higher costs to produce goods, they'll demand higher prices for the goods they're selling. In other words, they pass their higher costs to you, the buyer.
Rising commodity prices tend to be a big reason why producers' costs rise. More money spent in production means smaller profit margins at current prices. If a producer wants to make up for shrinking profit margins but can't control his input costs, then he must pass on these costs in the form of higher prices. Excess money creation is what drives this type of inflation, affording higher prices.
No doubt, this is exactly why rising energy costs have been such a huge driver of the inflationary environment we've trudged through over the last several months.
The debate is heating up among whether this global inflationary period is coming to an end. I tend to believe it is. But, more importantly, economic growth and available credit across the globe is rolling over at the same time surging commodities have left inflation concerns on everyone's mind.
For this reason central bank policy makers are struggling.
The cost of energy has buoyed the cost for producers, consumers, and everyone in between. But what happens when this pressure eases for a considerable stretch of time?
Inflation Is a Little Bit Different on the Other Side of the Pond
They don't serve ice cubes in their drinks. They can drive on the left-hand side of the road. And inflation is also a little bit different in Europe. Despite this fact, inflation analysis in these respective regions often focuses on generalities and overlooks one particular difference. Let me explain...
Let's focus only on two countries and two central banks: The Federal Reserve and the European Central Bank. If you haven't been hiding under a rock for the last year, then you probably have some kind of idea how their respective policies vary.
The Federal Reserve has knocked off more than 3% from its benchmark interest rate in the last year. In that same time, the European Central Bank has mostly stood its ground, mixing in one rate hike of 25 basis points that brought its benchmark up to 4.25%.
And if you've been following my currency articles lately, you also probably know that this monetary policy discrepancy has been a boon to the euro, and a detriment to the buck. For many months, even years now, the relative performance of each currency has been primarily based upon expectations for this rate differential to change.
As you might imagine, inflation expectations play an enormous role in monetary policy expectations. Even though inflation has received plenty of attention over the last several months, many analysts have neglected an important difference between European inflation and U.S. inflation.
Now's the time to pay closer attention.
What All the Analysts Have Missed Over the Last Few Months
In the last few weeks, commodity prices (particularly crude oil) have cracked. With that abrupt downturn also came a reprieve in inflation expectations. And that's got many accepting the potential for a lasting shift towards even lower prices and less inflation pressure.
With that in mind, the dollar has managed to rally on two simple facts:
1. The U.S. Federal Reserve has already lopped off a considerable portion of its benchmark interest rate. So they're now ahead of the rate-cut curve, which has helped maintain some growth in the U.S. relative to Europe.
2. The European Central Bank will be forced to bailout their deteriorating economy by cutting their benchmark interest rate.
Up until this point, the European Central Bank had a good reason to keep fighting inflation. But with commodity prices easing up, now may be the time for ECB policy makers to take action. Here's why they've struggled...
Why Hasn't the ECB Joined the Worldwide Rate Cutting Party Yet?
With many threats to global growth and concerns over several Eurozone member countries, many have been surprised the ECB has gone so long without letting up on the interest rate front. After all...
~The Federal Reserve has made several moves to lower rates
~The Bank of Canada has followed suit
~The Bank of England has gotten the ball rolling
~So has the Reserve Bank of New Zealand
The Reserve Bank of Australia is likely next
If you're wondering why the ECB hasn't budged, look no further than labor unions. Simply put: Wage contracts put in place via labor unions have employees' wages moving higher in lock-step with inflation.
There's really no thought to profitability (the point when workers typically consider demanding higher wages). In other words, rising headline inflation fuels this wage-spiral. And this wage-spiral spurs greater headline inflation. And it continues on like this. That's something Ben Bernanke hasn't had to deal with.
You see, the Fed has been able to react to weakening growth by cutting interest rates. The plan: As growth moderates, or rolls over, inflation is likely to follow. But that assumption is more difficult to make when you've got rising wages keeping prices unnaturally high. The ECB hasn't yet been able to make that assumption. Its interest rates remain high.But here's what you should expect...
When the ECB finally decides to cut rates, they will do so substantially and they will do so quickly. It will be their way of reloading. Because we know, with the labor unions continually eroding profit margins and forcing prices higher, the ECB will need some fire power for their next inflation shoot-out.
If they cut back rates now, they'll be able to hike rates and combat inflation when the time comes again. All you need to do is be prepared to act accordingly.

While The Education Sysstem Screams For More And More Money............

SAT Scores Remain at 10-Year Low
By AP/ALAN SCHER ZAGIER
For a second straight year, SAT scores for the most recent high school graduating class remained at the lowest level in nearly a decade, a trend attributed to a record number of students now taking the test.
The 1.52 million students who took the test is a slight increase from last year but a jump of nearly 30 percent over the past decade. Minority students accounted for 40 percent of test-takers, and 36 percent were the first in their families to attend college. Nearly one in seven had a low enough family income to take the test for free.
"More than ever, the SAT reflects the face of education in this country," said Gaston Caperton, president of the College Board, which owns the test and released the results Tuesday.
The class of 2008 scored an average of 515 out of a possible 800 points on the math section of the college entrance exam, a performance identical to graduating seniors in the previous year.
Scores in the critical reading component among last spring's high school seniors also held steady at 502, but the decline over time has been more dramatic: the past two years represent the lowest reading average since 1994, when graduating seniors scored 499.
By comparison, the highest average reading score in recent decades was 530 by the class of 1972, although that score dropped dramatically within five years to near present levels. The latest math average is just five points below the 35-year high of 520, reached three years ago.
Those historical highs are tempered by the test's more selective reach a generation ago, said Jim Hull, a policy analyst for the Center for Public Education, which is affiliated with the National School Boards Association.
"You only had the best of the best taking the test," he said. "The SAT has become far more inclusive."
Average scores also remained constant on the writing portion of the SAT, which was added to the entrance exam in 2006. For the second year in a row, the average score was 494 — a three-point drop from its debut year.
The writing test is still a work in progress, with many colleges waiting for several years of data before factoring that portion into admissions decisions.
But the College Board released data Tuesday suggesting that scores on the newest portion of the exam are the most accurate gauge of first-year success in college. Studies by the University of Georgia and the University of California support the group's findings, it reported.
Males on average scored four points higher than females on the reading section (504 vs. 500) and 33 points higher on the math test (533 vs. 500), but females on average outscored their counterparts on the writing test, 501 to 488.
Average ACT scores released earlier this month showed a slight decrease, for the class of 2008 — 21.1 compared to 21.2 a year ago, on a scale of 1 to 36. With 1.42 million test-takers, the rival exam still lags behind the more-entrenched SAT, but is growing at a faster rate.
That trend is only likely to continue, said SAT critic Bob Schaeffer of the National Center for Fair and Open Testing, who called the new three-part SAT a "flop." Nearly 800 colleges now consider the SAT an optional test for admissions, according to the group.

Hillary's Loss: SOC Was Totally Wrong When We Thought She Was Inevitable. But I don't Think This Will Be The Last We've Heard From Her......

Why Hillary lost? Study finds Americans prefer male leaders

WASHINGTON — Men and women agree that women are more honest, intelligent, compassionate, outgoing and creative, according to a survey out Monday. But men still get a significant edge as leaders — and from both sexes.
The finding, in a survey commissioned by the Pew Research Center, may help to explain why Hillary Clinton isn't making an acceptance speech this week and why acceptance of women as leaders in politics and business has been slow.
Among men and women whom Pew surveyed, a large majority — 69 percent — thought that men and women made equally strong leaders. But only 6 percent said women made better leaders while 21 percent said men did. Men and women held those views almost equally.
"You've got a public that on some level has a complex mix of views on this subject: admiring of women, admiring of traits that they associate with leadership, (but) not yet admiring of women in top leadership roles," said Paul Taylor, the lead author of the report and the executive vice president at the research center.
He said the researchers hadn't "cracked the code" for the contradictory findings.
The findings are based on phone interviews with 1,060 men and 1,190 women from June 16 to July 16 by Princeton Research Survey International. The margin of error was plus or minus 2.3 percentage points.
Respondents, who were questioned about eight leadership traits, rated men and women as equal on two of them: being hardworking and ambitious. Men ranked higher only in decisiveness.
Only a few more men than women thought men made better leaders. The margin was also small for women who chose men.
Carol Hardy-Fanta, the director of the Center for Women in Politics and Public Policy at the University of Massachusetts in Boston, said that women yielded too much when they favored men over women as leaders.
"If women are not distinguished from men in their view of men and women in politics, then there is no hope for change," she said. She said that America's bias for male leaders cost Clinton the election.
Researchers conducted a separate analysis to see whether respondents had skewed their answers to avoid appearing prejudiced. They found no such hidden bias.

US Postal Service Losing (Even More) Money

Tough economic times hurt post office
By BETSY TAYLOR – 1 day ago
ST. LOUIS (AP) — The U.S. Postal Service could lose about $2 billion this year due to tough economic times, and it needs to change to meet the demands of the public, Postmaster General John Potter said Monday.
Potter told the National Association of Postmasters of the United States at their convention in St. Louis that the postal service is grappling with issues that many businesses are facing — like how to handle high fuel prices.
"We simply cannot control it," he said. But, he pointed to the postal service's large fleet of alternative-fuel vehicles as a positive step.
Potter praised postmasters and postal workers for their commitment to service and reliability, but said more needs to be done to reduce bureaucracy, cut costs and embrace technology.
"We're probably going to lose somewhere in the neighborhood of $2 billion this year," he said. "If we don't act, we'll lose $2 billion or more the following year."
Earlier this month, the Postal Service reported it lost $1.1 billion in its third quarter ended June 30. Operating revenue was $17.9 billion, down $437 million, or 2.4 percent, compared with the same period last year. Operating expenses totaled $19.0 billion, an increase of $178 million from the third quarter last year.
Total mail volume was 48.5 billion pieces, a 5.5 percent drop from the same period last year.
For the first nine months of its fiscal year, then agency said it lost $1.13 billion.
Postage rates rose a penny in May to the current 42-cent price. Another increase is expected next May, with the amount to be announced in February. Any increase is limited to the rate of inflation.
Potter said Monday improvements to the postal service's Web site and better bar-code technology for mail should yield improved results. He said there are also opportunities to increase the amount of advertising that's done through the mail, and said working with small and mid-sized businesses was the postal service's biggest opportunity for growth.
The keynote speaker, U.S. Rep. Jo Ann Emerson, R-Mo., expressed concern that financial concerns could threaten rural post offices. She said they should remain open, as they often serve as a community's communication hub and help towns preserve their identities.
"I believe very strongly that our rural communities are a whole lot more than a 5-digit or 9-digit zip code," she said.
Larry Jacobs, the retired postmaster of Bloomington, Ind., said there are safeguards in place to make it hard to close a post office because they are so often integral to keeping small towns thriving.

US Mint Fires Back Up......

U.S. Mint resumes gold coin orders on limited basis
Mon Aug 25, 2008 12:08pm EDT
NEW YORK (Reuters) - The U.S. Mint said it must allocate the American Eagle bullion coins among dealers to cope with overwhelming demand as it resumed taking orders for the popular coins on Monday.
"The unprecedented demand for American Eagle gold one-ounce bullion coins necessitates our allocating these coins among the authorized purchasers on a weekly basis until we are able to meet demand," the U.S. Mint told its authorized American Eagle dealers in a memo dated August 22.
Last week, soaring demand forced the U.S. Mint to suspend temporarily sales of the American Eagles, creating a shortage in the one-ounce version of the coins, which are also available in other weights and denominations.
American Eagle gold coins have been popular novelties among collectors and investors since their introduction in 1986. The coins offer people an easy, tangible way to invest in the gold market, as opposed to buying an exchange-traded fund or other financial instrument.
Coin dealers from the United States and Canada reported a surge in buying of bullion coins and other gold products since prices plummeted from highs last month, contributing to supply fears.
The buying spree and the subsequent shortage of the Eagles have improved momentum in gold as market participants interpret it as a sign of increasing retail investor interest in gold and other precious metals.
The Mint said that it will equally divide its Eagles inventory available for sale each week into two equal pools, with the first allocated equally among all authorized dealers, and the second pool distributed according to the dealers' past sales performance.
Allocation will continue for the American Eagle silver bullion coins, another popular item, the U.S. Mint said.
In addition, the Mint said that it currently has inventory for American Buffalo one-ounce 24-karat gold coins, American Eagle gold fractional coins, including the half-ounce, quarter-ounce and 1-10th ounce, and American Eagle Platinum in all denominations.
Spot gold traded at $822 an ounce on Monday, sharply below its all-time high of $1,030.80 on March 17.

Russian Chest Thumping

MOSCOW, Aug 26, (Thomson Financial) - Russia is not afraid of a new Cold War taking hold and is ready for "anything," Russian President Dmitry Medvedev said on Tuesday in a television interview.
"We're not afraid of anything (including) the prospect of a Cold War. Of course we don't need that ... Everything depends on the stance of our partners and the world community and our partners in the West," Medvedev told the Russia Today channel in comments translated into English.
Asked whether Russia was ready for the consequences of recognising Abkhazia and South Ossetia, Medvedev said: "If they want to preserve good relations with Russia, they will understand the reason for taking such a decision and the situation will be calm."

I Love It When Ottomans Comment On World Affairs

Turkish prez says US must share power in ‘new world order’
Aug 16, 2008
For controversial Turkish President Abdullah Gül, the recent war in Georgia signals a “new world order” that will emerge from the rubble of South Ossetia and force the United States to share its power, The Guardian[2] reported.
Gül said America’s inability to prevent Russia’s invasion shows that the US can no longer shape world politics as it once did.
“I don’t think you can control all the world from one centre,” Gül said. “There are big nations. There are huge populations. There is unbelievable economic development in some parts of the world. So what we have to do is, instead of unilateral actions, act all together, make common decisions and have consultations with the world. A new world order, if I can say it, should emerge.”

The geopolitical turmoil in the Caucusus — a region between Europe and Asia that includes the nations of Georgia and Turkey — has placed Turkey in a difficult position between pleasing its neighbor Russia and not hurting its relationship with the US.
The conflict in Georgia proved Turkey’s tenuous position regarding energy when Russian tanks cut the flow of oil to Turkey from a pipeline running through Georgia, Reuters reported.
Turkey’s energy problems have forced it to seek gas from Russia and Iran, prompting an outcry from Washington.
Gül spoke to The Guardian shortly before a meeting with Iran’s President Mahmoud Ahmadinejad.
The US warned Turkey on Thursday against striking an energy deal with Iran after learning of the two presidents’ meeting, Financial Times reported.
US officials claim the deal will undermine international efforts to curb Iran’s nuclear program.
“Such a deal by Turkey with Iran would send the wrong message at a time when the Iranian regime has repeatedly failed to comply with its UN Security Council and IAEA obligations,” the US state department said.
Gül said he doesn’t want Iran to have nuclear weapons, but he “doesn’t want to think about” the United States attack on Iran.
“I don’t want to think about that. Everybody should take a lesson from what happened in Iraq,” he said. “Diplomatic solutions are always better than hard solutions.”

Created Societies: Interesting Concept

Two Examples of Scientifically Created Artificial Societies: Japan and Soviet Russia

Monday, Aug 25, 2008
“No sharp line can be drawn between scientific technique and traditional arts and crafts. The essential characteristic of scientific technique is the utilization of natural forces in ways not evident to the totally uninstructed.” - Bertrand Russell, 1931 (p137)
This article will describe the creation of two artificial societies including the design and implementation of a new religion specifically for that new planned society as discussed in Bertrand Russell’s 1931 book The Scientific Outlook [1]. The two societies described are: Japan following their 1867 revolution and Russia following the Bolshevik revolution.
Bertrand Arthur William Russell, 3rd Earl Russell (1872-1970) was a renowned British philosopher and mathematician who was an adamant internationalist and worked extensively on the education of young children. This included running an experimental school in the 1920’s with his second wife Dora Black. He was the founder of the [2] Pugwash movement which used the spectre of Cold War nuclear annihilation to push for world government. Among many other prizes, Russell was awarded the [3] Nobel Prize in Literature in 1950 and UNESCO’s (United Nations Educational, Scientific, and Cultural Organization) [4] Kalinga prize for the popularization of science in 1957.
[5] Part 1 of this series examined science as power-thought and the use of scientific technique to increase the power of an elite scientific minority over the unscientific masses. [6] Part 2 examined the composition of the society of experts who would use scientific technique to dominate the masses. At the forefront of this society of experts is the expert “manipulator”, whom Lenin is the archetype. This society would also aim to conceal its power and influence behind political veils like democracy. [7] Part 3 explored the application of scientific technique to education with an emphasis on the distinction between education for the “governing class” and “working class”. [8] Part 4 looked at the use of education, the Press, radio and Hollywood as forms of propaganda. [9] Part 5 examined the use of behaviourism, psycho-analysis and physiological manipulation as applied to education. [10] Part 6 examined the application of scientific technique to the reproduction of human beings including the separate breeding techniques to be applied to the “governing class” compared with the “working class”. [11] Part 7 explored the changes to freedom and equality in the scientific society. This includes changes in the relationship between individual freedom and the collective good, freedom of speech and the Press, freedom to choose ones own career and the freedom to have children. [12] Part 8 examined the changes to free trade and labour in the scientific. Including the removal of competition and the choice between pre-determined work or prison.

“As we approach modern times, the changes deliberately brought about in social structure become greater. This is especially the case where revolutions are concerned. The American Revolution and the French Revolution deliberately created certain societies with certain characteristics, but in the main these characteristics were political, and their effects in other directions formed no part of the primary intentions of the revolutionaries. But scientific technique has so enormously increased the power of governments that it has now become possible to produce much more profound and intimate changes in social structure than any that were contemplated by Jefferson or Robespierre. Science first taught us to create machines; it is now teaching us by Mendelian breeding and experimental embryology to create new plants and animals. There can be little doubt that similar methods will before long give us power, within wide limits, to create new human individuals differing in predetermined ways from the individuals produced by unaided nature. And by means of psychological and economic technique it is becoming possible to create societies as artificial as the steam engine, and as different from anything that would grow up of its own accord without deliberate intention on the part of human agents.
Such artificial societies will, of course, until social science is much more perfected than it is at present, have many unintended characteristics, even if their creators succeed in giving them all the characteristics that were intended. The unintended characteristics may easily prove more important than those that were foreseen, and may cause the artificially constructed societies to break down in one way or another. But I do not think it is open to doubt that the artificial creation of societies will continue and increase so long as scientific technique persists. The pleasure in planned construction is one of the most powerful motives in men who combine intelligence with energy; whatever can be constructed according to a plan, such men will endeavour to construct. So long as the technique for creating a new type of society exists there will be men seeking to employ this technique. They are likely to suppose themselves actuated by some idealistic motive, and it is possible that such motives may play a part in determining what sort of society they shall aim at creating. But the desire to create is not itself idealistic, since it is a form of the love of power, and while the power to create exists there will be men desirous of using this power even if unaided nature would produce a better result than any that can be brought about by deliberate intention.” - 204
“There are in the world at the present time two Powers which illustrate the possibility of artificial creation. The two Powers in question are Japan and Soviet Russia.” - 206
Japan
“Modern Japan [1930] is almost exactly what it was intended to be by the men who made the revolution in 1867. This is one of the most remarkable political achievements in all history, in spite of the fact that the purpose which inspired the innovators was simple and such as every Japanese might be expected to sympathize with. The purpose was, in fact, nothing more recondite than the preservation of national independence. China had been found impotent to resist the Western Powers, and Japan appeared to be in like case. Certain Japanese statesman perceived that the military and naval power of the Western nations rested upon Western education and Western industrial technique. They decided to introduce both, with such modifications as Japanese history and circumstances demanded. But whereas industrialism had grown up in the West with very little assistance from the State, and scientific knowledge had developed very far before the Western Governments undertook the task of universal education, Japan, being pressed for time, was obliged to impose education and science and industrialism by governmental pressure. It was clearly impossible to effect so great a change in the mentality of the average citizen by mere appeals to reason and self-interest. The reformers, therefore, skilfully enlisted the divine person of the Mikado and the divine authority of the Shinto religion on the side of modern science. The Mikado had been for centuries obscure and unimportant, but he had already been restored to power once before in the year A.D. 645, so that there was a precedent of respectable antiquity for what was being done. The Shinto religion, unlike Buddhism, was indigenous to Japan, but had been for ages thrust into the background by the foreign religion imported from China and Korea. The reformers very wisely decided that in introducing Christian military technique they would not attempt to introduce the theology with which it had hitherto been correlated, but would have a nationalistic theology of their own, Shinto, as now taught by the State in Japan, is a powerful weapon of nationalism; its gods are Japanese, and its cosmogony teaches that Japan was created sooner than other countries. The Mikado is descended from the Sun Goddess, and is therefore superior to the mere earthly rulers of other States. Shinto, as now taught, is so different from the old indigenous beliefs that competent students have described it as a new religion. As a result of this skilful combination of enlightened technique with unenlightened theology, the Japanese have succeeded not merely in repelling the Western menace, but in becoming one of the Great Powers and achieving the third place on the sea.
Japan has shown extraordinary sagacity in the adaptation of science to political needs. Science as an intellectual force is sceptical and somewhat destructive of social coherence, while as a technical force it has precisely the opposite qualities. The technical developments due to science have increased the size and intensity of organizations, and have more particularly greatly augmented the power of Governments. Governments have, therefore, good reason to be friendly to science, so long as it can be kept from dangerous and subversive speculations. In the main the men of science have shown themselves amenable. The State favours one set of superstitions in Japan, and another in the West, but the scientists both in Japan and of the West have, with some exceptions, been willing to acquiesce in governmental doctrines, because most of them are citizens first, and servants of truth only in the second place.
In spite of the extraordinary success of Japanese policy, there are certain unintended effects which are likely in time to cause serious difficulties. The sudden change of habits and of conscious opinions has induced a certain nervous strain, at any rate in the urban part of the population. This may produce a tendency to hysteria in time of national stress; indeed, such a tendency was shown in the massacres of Koreans that occurred after the earthquake of Tokio. What is more serious, the position of Japan demands the growth of both industrialism and armaments. Owing to the expense of the latter the industrial workers are poor; they tend, consequently, to acquire a rebellious mentality, and the circumstances of their work make it difficult for them to preserve that close family organization upon which Japanese society is built. If Japan should become engaged in an unsuccessful war, these stances might produce a revolution analogous to the Russian Revolution. The present social structure in Japan is likely therefore in time to become unstable, but it may be that the same skill which has rendered possible the triumphant career of Japan throughout the last seventy years will enable the Japanese to adapt themselves to changing circumstances gradually without any violent upheaval. The one thing that seems fairly certain is that, whether gradually or by revolution, the social structure in Japan will have to be profoundly modified. Remarkable as it is, therefore, it is not a perfect example of scientific construction. I do not mean by this that it could have been bettered at the time, but only that it is not in all respects a model for the future.” - 206
Soviet Russia
“The attempt at scientific construction which is being made by the Soviet Government is more ambitious than that which was carried through by the Japanese innovators in 1867; it aims at a much greater change in social institutions, and at the creation of a society far more different from anything previously known than is that of Japan. The experiment is still in progress, and only a rash man would venture to predict whether it will succeed or fail; the attitude both of friends and enemies towards it has been singularly unscientific. For my part, I am not anxious to appraise the good or evil in the Soviet system, but merely to point out those elements of deliberate planning which make it so far the most complete example of a scientific society. In the first place, all the major factors of production and distribution are controlled by the State; in the second place, all education is designed to stimulate activity in support of the official experiment; in the third place, the State does what it can to substitute its religion for the various traditional beliefs which have existed within the territory of the U.S.S.R.; in the forth place, literature and the Press are controlled by the Government, and are such as are thought likely to help it in its constructive purposes; in the fifth place, the family, in so far as it represents a loyalty which competes with loyalty to the State, is being gradually weakened; in the sixth place, the Five Year Plan is bending the whole constructive energies of the nation to the realization of a certain economic balance and productive efficiency, by means of which it is hoped that a sufficient degree of material comfort will be secured for everyone. In every other society of the world there is enormously less central direction than under the Soviet Government. It is true that during the war the energies of the nations were, to a considerable extent, centrally organized, but everyone knew that this was temporary, and even at its height the organization was not so all-pervasive as it is in Russia. The Five Year Plan, as its name implies, is supposed to be temporary, and to belong to a time of stress not wholly unlike that of the Great War, but it is to be expected that if it succeeds, other plans will take its place, since the central organization of the vast nation’s activities is too attractive to the organizers to be abandoned readily.
The Russian experiment may succeed or may fail, but even if it fails, it will be followed by others which will share its most interesting characteristic, namely, the unitary direction of a whole nation’s activities. This was impossible in earlier days, since it depends upon the technique of propaganda, i.e., upon universal education, newspapers, the cinema, and the wireless. The State had already been strengthened by railways and the telegraph, which made possible the rapid transmission of news and concentration of troops. In addition to modern methods of propaganda, modern methods of warfare have strengthened the State as against discontented elements; aeroplanes and poison gasses have made revolt difficult unless it obtains the support of aeronauts and chemists. Any prudent Government will favour these two classes and take pains to secure their loyalty. As the example of Russia has shown, it is now possible for men of energy and intelligence, if they once become possessed of the governmental machine, to retain power even though at first they may have to face the opposition of the majority of the population. We must therefore increasingly expect to see government falling into the hands of oligarchies, not of birth but of opinion. In countries long accustomed to democracy, the empire of these oligarchies may be concealed behind democratic forms, as was that of Augustus in Rome, but elsewhere their rule will be undisguised. If there is to be scientific experimentation in the construction of new kinds of societies, the rule of an oligarchy of opinion is essential. It may be expected that there will be conflicts between different oligarchies, but that ultimately some one oligarchy will acquire world dominion, and will produce a world-wide organization as complete and elaborate as that now existing in the U.S.S.R.” - 209

Arctic Invaders Coming......

"We have to prepare for the world coming to the Arctic," Coast Guard Adm. Gene Brooks said last week. Brooks is referring to the rapidly melting ice in the northern most portion of our planet. Whether you sympathize with Al Gore or not, there’s about half as much polar sea ice up there today than there was in the 1960s.
“At issue,” explains Chris Mayer, “are the increasingly ice-free shipping lanes that can cut shipping times by a third or more. And the oil and gas that lie in the seabed and in the shallow waters off tiny islands. The U.S. Geological Survey estimates that one quarter of undiscovered oil and gas lies in the Arctic. Suddenly, the murky borders and clouded claims long left unresolved and neglected have become important.
“A future battleground? Could be. Russians are conducting naval exercises in the Arctic. Canada sent soldiers north in the spring. More likely, at least in the short term, we’ll see a lot of novel legal arguments and history aired out in trying to establish rightful claims. The shipping lanes are a big deal, not only because they shave off a lot of time compared with existing routes, but also because the existing shipping lanes are about tapped out. There are a handful of energy chokepoints that handle nearly all of the world’s oil shipments. The fate of these chokepoints, and the consequences of failure at any point, could have huge impacts on the oil markets.”

And The Stormwatch Continues..........

“The financial storm that reached gale force some weeks before our last meeting,” uttered Ben Bernanke on Friday, “has not yet subsided."
The Fed chairman must have found inspiration for that soaring metaphor atop Grand Teton… he and a brood of monetary thinkers gathered in Jackson Hole again this year to justify current policies and have an excuse to wear fleece 24/7.
Bernanke stuck with the status quo -- the Fed is still more concerned with “downside risks to growth” than inflation. In fact, Bernanke told the world he found the recent dollar rally and commodity correction “encouraging.”
"If not reversed, these developments, together with a pace of growth that is likely to fall short of potential for a time, should lead inflation to moderate later this year and next."
That’s a big “if.” For whatever it’s worth, the market has largely interpreted Bernanke’s speech as a signal for rates to stay the same in the near term.
Economists around the country agree. 46% of American economists believe a “financial crisis” is the biggest current threat to the economy , reports the National Association for Business Economics today. While that crisis remains the most popular concern among the nation’s economists, we notice a particular change from the NABE’s last survey, in March.
Specifically, that “financial crisis” group has shrunken from 52% of respondents in March. And this time around, 16% of those surveyed said energy prices were the chief economic concern, up from 5%. Likewise, 15% said inflation is our economy’s greatest threat, up from 10% in March.
And here comes that next financial crisis: Fannie Mae and Freddie Mac are suffering from another round of bad news this morning.
First, early Friday morning, Warren Buffett puckered up for a kiss of death from the private sector. “They're looking for help, obviously,” he told CNBC. Buffett told Becky Quick that he had been approached by Fannie and Freddie for help, and that he took a pass. “The scale of help is such that I don't think it can come from the private sector."
Later that day, Moody’s downgraded Fannie and Freddie debt by five notches, to Baa3. That’s that lowest possible rating a company can garner and still be considered “investment grade.” In other words, Fannie and Freddie are one step away from being “junk” bonds. Think about that for a second… pathetic.
And this morning, we hear China’s second largest bank is dumping its Fannie and Freddie paper. China Construction Bank reduced its bond- and mortgage-backed securities by 37% at the end of July, CCB President Zhang Jianguo told reporters. That’s scaling back by “only” $1.2 billion, but it’s a trend we expect to accelerate in the near future.

Gold Reserves more important than before-Bundesbank

BERLIN, Aug 22 (Reuters) - Germany's Bundesbank on Friday rejected calls that it should sell some of its gold reserves to help boost the slowing German economy, telling Reuters financial and political uncertainty make the reserves even more important than before.
"Gold sales are not a suitable way to sustainably consolidate the public accounts," the Bundesbank said after a query about trade union proposals that it sell gold to fund some of a 25 billion euro ($37 billion) economic stimulus package.
"National gold reserves have a confidence and stability-building function for the single currency in a monetary union. This function has become even more important given the geopolitical situation and the risks present in financial market developments."
The Bundesbank is the world's second-largest holder of gold after the U.S. Federal Reserve, and has sold just 20 tonnes out of total reserves of over 3,000 tonnes in the past five years.
These sales were to allow the German finance ministry to mint gold coins, unlike the much more active sales programmes of other central banks which wanted to shift their portfolios from gold to a more diverse array of assets.
To reduce volatility in the price of gold , 15 European central banks agreed in 2004 to limit gold sales to 500 tonnes a year over the next five years.
The Bundesbank is expected to make a formal statement about any gold sale plans around September, when the final year of the Central Bank Gold Agreement starts.
"The Bundesbank reaches decisions about the nature and size of reserves autonomously. The board of the Bundesbank decides every year afresh about changes in the level of its gold holdings," the central bank said.

Russia Throwing It's Weight Around

Russia warns Moldova against "Georgian mistake"
Mon Aug 25, 2008 8:31am EDT
By Denis Dyomkin
SOCHI, Russia (Reuters) - Russian President Dmitry Medvedev warned ex-Soviet Moldova on Monday against repeating Georgia's mistake of trying to use force to seize back control of a breakaway region.
Russia sent peacekeepers to Moldova in the early 1990s to end a conflict between Chisinau and its breakaway Transdniestria region and is trying to mediate a deal between the two sides.
Transdniestria, one of a number of "frozen conflicts" on the territory of the former Soviet Union, mirrored the standoff between Georgia and its rebel regions of South Ossetia and Abkhazia until they erupted in war earlier this month.
Russia sent troops to Georgia to crush Tbilisi's military push into South Ossetia and Moscow says Georgia has now lost the chance of ever re-integrating the breakaway provinces.
"After the Georgian leadership lost their marbles, as they say, all the problems got worse and a military conflict erupted," Medvedev told Moldovan President Vladimir Voronin.
"This is a serious warning, a warning to all," he added. "And I believe we should handle other existing conflicts in this context."
As the two leaders spoke in Medvedev's Black Sea residence in Sochi, Russian lawmakers were voting non-binding resolutions urging the Kremlin to recognize Abkhazia and South Ossetia as independent states.
That would be a nightmare scenario for Moldova which fears Russia could recognize Transdniestria, a pro-Moscow region in Moldova.
Medvedev, keen to limit diplomatic damage caused by the Russian operation in Georgia, made clear Moldova had no reason to worry for now.
"We have agreed ... to meet and discuss the Transdniestria settlement," he told Voronin. "I think there is a good reason to do this today. I see good prospects of reaching a settlement."
Medvedev's spokeswoman Natalya Timakova later told reporters the two leaders had agreed to hold a fresh round of talks on Transdniestria soon.
"Russia is ready to continue its efforts towards finally solving the Transdniestrian crisis," she told reporters.
Russia is currently trying to forge a deal between Chisinau and Transdniestrian separatists which would keep the rebel region as part of Moldova but give it broad autonomy.
The Russian-brokered deal would also allow Transdniestria to leave Moldova should the former Soviet state decide to join their ethnic kin in EU member Romania.
Several years ago, Moldova rejected a similar deal under a strong pressure from NATO. But now Voronin appears to treat the Russian mediation more favorably.
The Moldovan leader told Medvedev he had indeed learned the lesson: "Thank God, during all these years...we had enough brains and reserve not to allow a similar deterioration of situation."
"Frozen conflicts are a real volcano which can blow up anytime," Voronin added. "That is why taking into account what had happened elsewhere it would be useful if we exercised again such wisdom not to allow such things to repeat in our country."

Sharpest Contraction in Modern History

Sharp US money supply contraction points to Wall Street crunch ahead

By Ambrose Evans-Pritchard
Last Updated: 3:04pm BST 19/08/2008
The US money supply has experienced the sharpest contraction in modern history, heightening the risk of a Wall Street crunch and a severe economic slowdown in coming months.
Data compiled by Lombard Street Research shows that the M3 ''broad money" aggregates fell by almost $50bn (£26.8bn) in July, the biggest one-month fall since modern records began in 1959.
"Monthly data for July show that the broad money growth has almost collapsed," said Gabriel Stein, the group's leading monetary economist.
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On a three-month basis, the M3 growth rate has fallen from almost 19pc earlier this year to just 2.1pc (annualised) for the period from May to July. This is below the rate of inflation, implying a shrinkage in real terms.
The growth in bank loans has turned negative to a halt since March.
"It's obviously worrying. People either can't borrow, or don't want to borrow even if they can," said Mr Stein.
Monetarists say it is the sharpness of the drop that is most disturbing, rather than the absolute level. Moves of this speed are extremely rare.
The overall debt burden in the US economy is currently at record levels, raising concerns that a recession - if it occurs - could set off a sharp downward spiral.

Household debt is now 131pc of disposable income, compared with 93pc at the top the dotcom bubble, 79pc in the property boom of the late-1980s, and 62pc at the end of the 1970s.
The M3 data measures both cash and a wide range of bank instruments. It tends to provide an early warning signal of major shifts in the economy, although the US Federal Reserve took the controversial decision to stop reporting the statistics in 2005 on the grounds that the modern financial system had rendered the data obsolete.
Monetarists insist that shifts in M3 are a lead indicator of asset prices moves, typically six months or so ahead. If so, the latest collapse points to a grim autumn for Wall Street and for the American property market. As a rule of thumb, the data gives a one-year advance signal on economic growth, and a two-year signal on future inflation.
"There are always short-term blips but over the long run M3 has repeatedly shown itself good leading indicator," said Mr Stein.
He cautioned that the three-month shifts in M3 can be highly volatile.
M3 surged after the onset of the credit crunch, but this was chiefly a distortion caused by the near total paralysis in parts of the American commercial paper market. Borrowers were forced to take out bank loans instead. The commercial paper market has yet to recover.
The University of Michigan's index of consumer sentiment has fallen to the lowest level since the 1980s recession.
The US economy is without doubt facing severe headwinds going into the autumn.
Richard Fisher, the ultra-hawkish head of the Dallas Federal Reserve, warned over the weekend that growth would be near "zero" in the second half of the year.

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

"Everyone wants to live at the expense of the state. They forget that the state lives at the expense of everyone." -Frederic Bastiat

An Investment To Keep Track Of:

Here’s something to keep your eye on: The first dry shipping ETF debuts today.
If you’re bullish on mining stocks and commodities, chances are you also think highly of the shippers of the world tasked with moving them around. And if you can’t pick your fave, check out ticker “SEA” today. It’s officially called the Claymore/Delta Global Shipping Index ETF.
Caveat emptor, of course.

The Crisis In Words

Here’s what a credit crisis looks like on a chart:

Despite the Fed’s best efforts, the broadest measure of money supply in the U.S., including outstanding credit -- known as M3 -- has fallen off a cliff. July saw the biggest one-month drop in M3 since the government started keeping track in 1959.
“It takes new money to keep a credit bubble inflated (or to keep it from deflating),” says Dan Denning, watching events from down under. “If the figures from the Fed can be trusted, and if they show that new money isn't forthcoming, then it may be a sign of even greater financial asset deflation in the months ahead.
“Translation: It's going to get a lot worse. If stocks are cheap, they're going to get even cheaper. It means if good resource projects are good values now, they'll be even better values as the market falls.
“Not that it's an easy thing to stomach. But let's remember what we're watching here. As investors delever and pay down debts, they sell assets to raise cash. It's a bull market in cash. And money that is used to pay down debt is money that is not spent on stocks or new cars or the things people spend money on when they aren't worried about debt.”
As if to put a point on the issue, mortgage applications fell to their lowest level in nearly eight years last week. The Mortgage Bankers Association’s application index fell to 419.3 today, the worst score since December 2000 and a 61% crash in volume since February 2008. For reference, that same index peaked at 1,856.7 in 2003.
“The U.S. is not out of the woods,” chimed in Harvard professor and former IMF chief Kenneth Rogoff this week. “I think the financial crisis is at the halfway point, perhaps. I would even go further to say the worst is to come.”
Speaking at a conference in Singapore, the former head of the IMF said, “We're not just going to see midsized banks go under in the next few months; we're going to see a whopper, we're going to see a big one, one of the big investment banks or big banks… Probably Fannie Mae and Freddie Mac -- despite what U.S. Treasury Secretary Hank Paulson said -- these giant mortgage guarantee agencies are not going to exist in their present forms in a few years."
Goldman Sachs also warned today it expects this fall may not be such a great time for financials. Goldman analysts cut third-quarter and full-year forecasts for Citi, J.P. Morgan Chase, Lehman Brothers, Merrill Lynch and Morgan Stanley yesterday -- all in one fell swoop.
“We believe a major recovery is still a few quarters away," wrote lead analyst William Tanona. “We assume no or negative earnings for the majority of firms in our universe this quarter.”
Heh. Not that we disagree with Goldman on this one, but it must be nice to be able to downgrade all your major competitors. Nope, no conflict of interest there.
One last word on Goldman… quants on the other side of the building reiterated their call for $149 oil today. Back in early summer, Goldman said oil was poised for a “superspike” to $200 sometime before 2009. In June, they promised $149 barrels by the end of the year, and today they proudly claim they are holding fast.

Bears Vs. Eagles; and Not the football kind.......

Who Started Cold War II?
by Patrick J. Buchanan
The American people should be eternally grateful to Old Europe for having spiked the Bush-McCain plan to bring Georgia into NATO.
Had Georgia been in NATO when Mikheil Saakashvili invaded South Ossetia, we would be eyeball to eyeball with Russia, facing war in the Caucasus, where Moscow's superiority is as great as U.S. superiority in the Caribbean during the Cuban missile crisis.
If the Russia-Georgia war proves nothing else, it is the insanity of giving erratic hotheads in volatile nations the power to drag the United States into war.
From Harry Truman to Ronald Reagan, as Defense Secretary Robert Gates said, U.S. presidents have sought to avoid shooting wars with Russia, even when the Bear was at its most beastly.
Truman refused to use force to break Stalin's Berlin blockade. Ike refused to intervene when the Butcher of Budapest drowned the Hungarian Revolution in blood. LBJ sat impotent as Leonid Brezhnev's tanks crushed the Prague Spring. Jimmy Carter's response to Brezhnev's invasion of Afghanistan was to boycott the Moscow Olympics. When Brezhnev ordered his Warsaw satraps to crush Solidarity and shot down a South Korean airliner killing scores of U.S. citizens, including a congressman, Reagan did – nothing.
These presidents were not cowards. They simply would not go to war when no vital U.S. interest was at risk to justify a war. Yet, had George W. Bush prevailed and were Georgia in NATO, U.S. Marines could be fighting Russian troops over whose flag should fly over a province of 70,000 South Ossetians who prefer Russians to Georgians.
The arrogant folly of the architects of U.S. post-Cold War policy is today on display. By bringing three ex-Soviet republics into NATO, we have moved the U.S. red line for war from the Elbe almost to within artillery range of the old Leningrad.
Should America admit Ukraine into NATO, Yalta, vacation resort of the czars, will be a NATO port and Sevastopol, traditional home of the Russian Black Sea Fleet, will become a naval base for the U.S. Sixth Fleet. This is altogether a bridge too far.
And can we not understand how a Russian patriot like Vladimir Putin would be incensed by this U.S. encirclement after Russia shed its empire and sought our friendship? How would Andy Jackson have reacted to such crowding by the British Empire?
As of 1991, the oil of Kazakhstan, Turkmenistan, and Azerbaijan belonged to Moscow. Can we not understand why Putin would smolder as avaricious Yankees built pipelines to siphon the oil and gas of the Caspian Basin through breakaway Georgia to the West?
For a dozen years, Putin & Co. watched as U.S. agents helped to dump over regimes in Ukraine and Georgia that were friendly to Moscow.
If Cold War II is coming, who started it, if not us?
The swift and decisive action of Putin's army in running the Georgian forces out of South Ossetia in 24 hours after Saakashvili began his barrage and invasion suggests Putin knew exactly what Saakashvili was up to and dropped the hammer on him.
What did we know? Did we know Georgia was about to walk into Putin's trap? Did we not see the Russians lying in wait north of the border? Did we give Saakashvili a green light?
Joe Biden ought to be conducting public hearings on who caused this U.S. humiliation.
The war in Georgia has exposed the dangerous overextension of U.S. power. There is no way America can fight a war with Russia in the Caucasus with our army tied down in Afghanistan and Iraq. Nor should we. Hence, it is demented to be offering, as John McCain and Barack Obama are, NATO membership to Tbilisi.
The United States must decide whether it wants a partner in a flawed Russia or a second Cold War. For if we want another Cold War, we are, by cutting Russia out of the oil of the Caspian and pushing NATO into her face, going about it exactly the right way.
Vladimir Putin is no Stalin. He is a nationalist determined, as ruler of a proud and powerful country, to assert his nation's primacy in its own sphere, just as U.S. presidents from James Monroe to Bush have done on our side of the Atlantic.
A resurgent Russia is no threat to any vital interests of the United States. It is a threat to an American Empire that presumes some God-given right to plant U.S. military power in the backyard or on the front porch of Mother Russia.
Who rules Abkhazia and South Ossetia is none of our business. And after this madcap adventure of Saakashvili, why not let the people of these provinces decide their own future in plebiscites conducted by the United Nations or the Organization for Security and Cooperation in Europe?
As for Saakashvili, he's probably toast in Tbilisi after this stunt. Let the neocons find him an endowed chair at the American Enterprise Institute.

Government Goes Hunting For The Wicker Man

Eh Gad! Do the Politicians Spot Another Mythical Scandal?
Throughout my long lifetime American politicians have used class warfare as a tool in their efforts to stir up class envy and gain votes. The formula is always the same: Create a hated straw man, attack it, then promise to right the mythical wrong. The theme is always "rich vs. poor," "corporations vs. the people," "them vs. us," and so forth, ad nauseam. No better example of this crass demagoguery can be found than the reaction of some of the Democrat Party's "leaders" to a recent Government Accountability Office study.According to IRS figures, 72% of all foreign corporations doing business in America and 55% of all U.S. corporations paid no U.S. federal income taxes in at least one year between 1998 and 2005. During that same time period, 57% of foreign corporations and 42% of U.S. corporations paid no federal income taxes for two or more years, the GAO found. That led to an Associated Press story with the startling headline, "Most Companies in U.S. Avoid Federal Income Taxes,'' and it also inspired leading Democrats to launch into a round of business bashing.Eh gad! Corporations paying no taxes! What's this? Is it another nefarious plot by those greedy capitalists? While average, hard working taxpayers are left to foot the bill? Quick Congress - do something!Of course, U.S. Senators Carl Levin (D-MI) and Bryon Dorgan (D-ND) threw their own cries in when this GAO report hit the papers. Like Claude Rains' gambling Inspector Renau in Casablanca, Senator Dorgan was shocked! Shocked! He called the GAO conclusions "a shocking indictment of the current tax system." The Wicked Liberal of the West, House Speaker Nancy Pelosi (D-CA), piled on too and called for reform. "When two-thirds of corporations pay no taxes,'' Pelosi intoned, "American workers are forced to pay too much in taxes even as they cope with rising prices and falling wages.''This is nonsense. If the GAO study had done a little more research, it might have commented on why so many corporations pay no U.S. taxes. The Tax Foundation found that among those companies, 85% of them also made no profits that year, so they didn't owe any taxes. When all major U.S. airlines and General Motors, among many others, are losing billions, they don't have to pay taxes. Duh!Also, the United States continues to impose the second highest combined federal-state corporate tax rate among industrialized countries at 39.3%. So is it any wonder that American businesses go offshore where they can save on taxes?

Some Tips On Wealth Protection

Stealth Wealth Protection: What It Is and How to Get It
Lots of people contact me because they're interested in protecting their assets. Yet, in setting up "asset protection plans" for clients, I always caution them never to refer to it as, well, an "asset protection plan." Why it that? It's because "asset protection" has a negative connotation, especially in the United States. The United States has a very "creditor friendly" court system. If you put your assets outside a creditor's reach, many judges will view you as a deadbeat who doesn't want to pay your bills.
Whatever You Do, Don't Say "Asset Protection"
For that reason, when you set up an asset protection plan, there needs to be other reasons for your plan to exist other than just asset protection. If you can prove that these other reasons actually exist, then the asset protection part of the plan has a much better chance of holding up in court. Here's an example. Let's say that you decide you want to set up an "asset protection trust." You consult with a trust company in, say, the Cook Islands, and the company obligingly sets up a Cook Island international trust. What have you accomplished? Yes, you now have a trust in the Cook Islands, with one of the world's strongest asset protection laws. But it also looks like you set up a standalone structure that screams "deadbeat" to U.S. judges. To force "deadbeats" to pay their bills, judges have a variety of tools at their disposal, including jailing a debtor. This last remedy isn't common, but it does exist most notably, in situations where a debtor or the debtor's legal advisors have made serious planning errors.
Understanding and Avoiding the "Anderson Fiasco"
One of the most famous examples of jailing a debtor happened in the Anderson case. Mr. and Mrs. Anderson were allegedly engaged in a Ponzi scheme. The Federal Trade Commission (FTC) sued the Andersons in federal court and obtained a US$20 million judgment. When the Andersons claimed that they couldn't pay the judgment, the FTC obtained a court order requiring the couple to repatriate US$8 million in assets from their Cook Islands trust. The Andersons failed to obey this order and the judge jailed the couple for civil contempt. A federal appeals court affirmed this decision. The judge released the Andersons from jail only after they:
Appointed a company controlled by the FTC as the new trustee for their trust
Amended the trust to remove the FTC from the definition of "excluded persons" under the trust deed
Resigned as their own trust protectors However let me put you at ease. The Anderson case was a phenomenon, not the rule. They experienced these problems because there were serious errors in their trust. The Andersons' biggest mistake was they named themselves as both the trust's co-trustees and co-protectors. They only gave up that position once their trial began.
It Doesn't Have to Be This Way
Let me assure you: This was truly the worst case scenario. You don't have to go to jail to protect your assets. There are plenty of perfectly legal domestic and offshore plans you can use to shield your assets. But the most important thing to remember is: Make sure asset protection isn't transparently the sole purpose of your plan. Returning to your example, let's say after consulting with a qualified attorney in the United States, you jointly decide that a Cook Islands trust should be part of your asset protection plan. Only, instead of having the trust being the only element of the plan, your trust exists as part of a larger structure that accomplishes other goals.For instance, an integrated structure that includes a Cook Islands trust might also contain your last will and testament, a living trust, and possibly a domestic limited partnership. At your death, your residual assets "pour over" from the will into the living trust. Properly structured, this configuration serves several purposes that are completely unrelated to asset protection:
~Provides convenient access to non-U.S. investments
~Doubles the estate tax exemptions for a married couple
~Provides the opportunity for valuation discounts for gift tax purposes through gifts of limited partnership interests
~Serves as the primary estate planning device after your death
Depending on your particular needs, many other elements can be brought into this structure. The important point, though, is that asset protection is no longer the only exclusive purpose for your plan. Asset protection is simply a byproduct of a more diversified plan, because the assets will be safely tucked away offshore, safe from creditors. In this way, you're getting what I call "asset protection by stealth." It's not obvious to anyone looking at your plan, but it's a useful, undisclosed perk of your overall plan.
Don't Wait! Take Action Now Before It's Too Late
The time to set up this type of plan isn't after you've received notice of a lawsuit. You should form it when there are no pending claims against you, or that you even know about. If you wait until after you have claims against you or a pending lawsuit, then a court can later declare your plan was intended to "hinder, delay or defraud" creditors. This makes the asset transfer a voidable "fraudulent conveyance" in the eyes of the law. Please make sure you speak to a qualified asset protection attorney to find out if this is the best time for you to set up this type of plan. This way you can ensure your actions won't constitute a "fraudulent conveyance." Bottom line: It's not hard to avoid an Anderson-type fiasco. Simply make sure your plan has other legitimate purposes besides asset protection. Plus, by properly structuring your plan this way, you can secure additional perks like investment diversification and estate planning while getting the asset protection you desired all along.

Passport Card The New National ID?!

The U.S. "Passport Card:" Your New National ID
Back in 2005, Congress enacted the "Real ID" Act. They passed this law unanimously, with no discussion, and without even reading the bill. And it imposed national standards to insure state-issued identity documents couldn't be counterfeited or falsified. Real ID seemed relatively harmless, except for one key component: the creation of inter-connected state databases to include details on nearly 250 million licensed drivers. Any state could interrogate any other state's database. And naturally, the federal government could interrogate any state database. As such, critics, including myself, accused Congress of imposing a national ID card through the backdoor. Three years later, the Real ID initiative is waning. Legislators in nearly 30 states have refused to go along with this federal mandate. And while the Department of Homeland Security has issued "extensions" to the May 2008 compliance deadline, most states appear to have no intention of complying. Perhaps that's the reason that on July 22, 2008, in a joint press release from Departments of State and Homeland Security, the government announced that it's now producing something called the "U.S. passport card."

As I said, most states have rejected the Real ID Act that would have essentially transformed your driver's license into a National ID card. Perhaps that's why the government announced that it's now producing something called the "U.S. passport card." According to the news release, "The passport card facilitates entry and expedites document processing at U.S. land and sea ports-of-entry when arriving from Canada, Mexico, the Caribbean and Bermuda. The card may not be used to travel by air. Otherwise, it carries the rights and privileges of the U.S. passport book and is adjudicated to the exact same standards."Sounds harmless enough. But I think there may a hidden agenda. First, consider that any company must now verify the identity and employment eligibility of all new employees. Wouldn't it be great if the new passport card could be used for that purpose? Well, it can...what a coincidence! Second, consider that according to the news release: "To facilitate the frequent travel of U.S. citizens living in border communities and to meet DHS's operational needs at land borders, the passport card contains a vicinity-read radio frequency identification (RFID) chip. This chip points to a stored record in secure government databases. There is no personal information written to the RFID chip itself." So, what do we have here? Essentially, we have an identity document you can use both to confirm your identity in the United States and at U.S. borders. What's more, because it's equipped with a RFID chip, the government can add driver's license data any time it wants. I wouldn't be surprised if after a decent interval - six to 12 months - DHS issues another press release to announce that the passport card can be used for all "federal purposes" that the Real ID initiative was supposed to address. In plain English, that means you'll need Real ID compliant driver's license, a passport card (or an actual passport) to travel on an airplane or enter any secured federal facility, such as a federal courthouse or even a Social Security Office. Of course, since the passport card is a federal initiative all along, there's no longer a need for a national interconnected database of drivers' license information. The feds will have something even more valuable - and dangerous - a national database they can use for whatever purpose they deem suitable without any state-imposed restrictions. Should this scenario come to pass, the government will have effectively bypassed state opposition to the Real ID Act and imposed a national ID, in a very sneaky way. I hope that I'm wrong, but if not, you read it here first.

Is The US Mint Going To Suspend Coin Sales Forever?

U.S. Mint Says: "No More Coin Sales!"
Launched in 1986, the American eagle bullion program has grown into a popular way for investors to buy gold and silver coins. This strategy to collect and invest in bullion has morphed into an outright bonanza for coin dealers this decade as gold prices have soared. But for the first time in almost 20 years since its inception, the U.S. Mint halted the sale of coins last Friday. According to the U.S. Mint, inventories of gold and silver coins simply ran out on August 15. The institution has sold 311,000 ounces of the coins this year - about 50% more than in 2007. Despite the big drop in gold and silver prices since July, buyers accumulated 63,500 ounces of the precious metals' coins the first two weeks of August alone.If you check out the gold-lovers' blogs, you'll find that some investors and collectors think the government is behind a plan to hoard its inventory. The ongoing credit crisis, now in its 12th month, shows no signs of stopping. Interbank lending rates remain elevated, housing values continue to plummet and bank lending continues to tighten. So is the government anticipating a financial meltdown, and if so is banning physical gold ownership on the horizon?We'll never know the motives behind last week's termination of gold coin sales. Government hoarding might be part of the mystery - but not the whole story.I've got a feeling supply is a major problem, too. Global mine production has declined markedly since 2006. Major producers in South Africa and Australia are producing far less gold compared to just 10 years ago. And despite the big decline in Indian fabrication demand this year, net supplies are still tight for gold. If you can't buy gold coins domestically for whatever reason, consider opening a foreign bank account in Switzerland or Austria and buy your gold and silver overseas. You can do this easily through the purchase of gold certificates or physical delivery, which is much more expensive. Exchange traded funds (ETFs) are also convenient but don't provide direct ownership and leave the possibility open to confiscation. If you can only own gold through an ETF then do this in Switzerland where four precious metals ETFs trade in Zurich under the ZKB ETF umbrella. Maybe the gold window is starting to close again. Tough economic times usually imply drastic measures. Before it's too late, make sure you have at least 10% of your net wealth stored in physical gold.

Elevator Psychology

Conformity is inherently dangerous...........

Jim Rogers.........Truer Words never Communicated

Supply and Demand Shape Commodity Markets
The commodity bull market has a long way to go. This bull market is not magic. It’s not some crazy “cycle theory” I have. It does not fall out of the sky. It’s supply and demand. It’s simple stuff.
In the 80s and 90s, when people were calling you to buy mutual fund and stocks, no one called to say, “Let’s invest in a sugar plantation.” No one called and said, “Let’s invest in a lead mine.” Commodities were in a bear market and in bear markets people do not invest in a productive capacity. They never have. Perhaps they should have, but they’ve never done it throughout history and probably never will. There has been only one lead mine opened in the world the last 25 years. There’s been no major elephant oil fields [of more than a billion barrels] discovered in over 40 years.

Many of you were not even born the last time the world discovered a huge elephant oil field. Think about all the elephant fields in the world that you know about. Alaskan oil fields are in decline; Mexican oil fields are in rapid decline; the North Sea is in decline. The UK has been exporting oil for 27 years now. Within the decade, the UK is going to be a major importer of oil again. Indonesia is a member of OPEC. Indonesia is going to get thrown out because they no longer export oil, they are now net importers of oil.
Malaysia has been one of the great exporting countries in the world for decades. Within the decade, Malaysia is going to be importing oil. 10 years ago, China was one of the major exporters of oil, now they are the second largest importer of oil in the world. Oil fields deplete, mines depletes. This is the way the world’s been working for a few thousand years and it will always work this way. So supply has been going down for 25 years.
Meanwhile, you know what’s happening to demand. Asia’s been booming. There are three billion people in Asia. America’s growing. Most of the world has been growing for the last 25 years. So supply has gone down and demand has gone up for 25 years. That’s called a bull market.
One of the things you’ll find if you go back and do your research is that whenever stocks have done well, such as the 1980s and 90s, commodities have done badly. But conversely, you find that whenever commodities have done well, such as the 1970s, stocks have done poorly. I have a theory as to why this always works, but it doesn’t matter about my theory. The fact is that it always works this way and it’s working this way now.
So before I set off to my second trip around the world, I came to the conclusion that the bear market in commodities was coming to and end. So I started a commodities index fund. This is an index fund. I do not manage it. It’s a basket of commodities we put in the corner. If it goes up we make money; if it goes down we lose money. But since Aug 1st 1998, when the fund started, it is up 471%.
I [mention this index] to show you that the commodity bull market is not something that will happen someday. It’s in process right now, and it’s going to go on for years to come, because supply and demand are out of balance. And by the time we get to the end of the bull market, commodities will go through the roof. There will be setbacks along the way. I don’t know when or why, but I know they are coming, because markets always work that way. Commodities have done 15 times better than stocks in this decade and they’re going to continue that [trend].
My 5-year old daughter knows this. She never owns stocks or bonds; she only owns commodities. She’s very happy owning commodities. She doesn’t care about stocks and bonds, but she knows about gold. I assure you, she knows about gold.
Some of you probably diversify, or believe in diversification. I do not diversify; I am not a fan of diversification. This is something that stockbrokers came up with to protect themselves. But you’re never going to get rich diversifying. I assure you. But if you DO diversify, commodities are the best anchor because they are not going to do what the rest of your assets are going to do.
I will give you one brief case study about oil, because it’s one of the most important commodities. Some of you know that a company called ARAMCO owns oil in Saudi Arabia. It was nationalized in the 70s. They threw out BP and Shell and Exxon. But the last Western company to leave did an audit [of Saudi oil reserves] and came to the conclusion that Saudi Arabia had 245 billion barrels of oil. Then in 1980, after 10 years, Saudi Arabia suddenly announced that it had 260 billion barrels of oil. Every year since 1988 – 20 years in a row - Saudi Arabia has announced, “We have 260 billion barrels of oil.”

It is the damndest thing. 20 years; it never goes up, it never goes down, and they have produced 67 billion barrels of oil in this period of time. When nuts like me go to Saudi, we ask, “How can this be? How can it be that they always have 260 billion barrels of oil?” (By the way, last year they said they have 261 billion barrel of oil). And the Saudis say, “You either believe us or you don’t,” and that’s the end of the conversation.
I have never been to the Saudi oil fields, and even if I had, I wouldn’t know what I was looking at. But I do know something is wrong. I know that every oil country in the world has a reserve problem, except Saudi Arabia of course. I know that every oil company in the world has declining reserves. So I know that unless someone discovers a lot of oil quickly, the surprise to most people is going to be how high the price of oil stays and how high it goes eventually. That is the supply side. Let’s look at the demand side.
The Indians use 1/20th as much oil as their neighbors in Japan and Korea use. The Chinese use 1/10th as much per capita. There are 2.3 billion people in India and China alone. Well, the Indians are going to get more electricity. The Indians are going to get motor scooters. They are going to start using more energy, so are the Chinese. But if the Indians just doubled the amount of oil used per capita, they would still use only 1/10th of what the Koreans use. If the Chinese doubled their oil use, they would still be using only 1/5th what the Japanese and the Koreans are using. So you can see what kind of pressures there are on the demand side for oil and energy, at a time of terrible stress on the supply side. These are simple things.
So I would urge you to take a lesson from my little girls. My little girls are learning Chinese. My little girls are getting out of the US dollar. My little girls own a lot of commodities. I would urge you to do the same.
Regards,

Jim Rogers

Another Big bank Will Break Down..........

Credit crunch may take out large US bank warns former IMF chief

The deepening toll from the global financial crisis could trigger the failure of a large US bank within months, a respected former chief economist of the International Monetary Fund claimed today, fuelling another battering for banking shares.
Professor Kenneth Rogoff, a leading academic economist, said there was yet worse news to come from the worldwide credit crunch and financial turmoil, particularly in the United States, and that a high-profile casualty among American banks was highly likely.
“The US is not out of the woods. I think the financial crisis is at the halfway point, perhaps. I would even go further to say the worst is to come,” Prof Rogoff said at a conference in Singapore.
In an ominous warning, he added: “We’re not just going to see mid-sized banks go under in the next few months, we’re going to see a whopper, we’re going to see a big one — one of the big investment banks or big banks,” he said.
Rising anxieties over “worse to come” in the credit crisis sent shares tumbling in Europe and Asia.
In London, the FTSE 100 index extended opening losses as widespread fears over the financial sector's woes led to another battering for stocks. The FTSE closed 129.8 points, or 2.38 per cent, lower at 5,320.4, pushing it into bear market territory — a level 20 per cent below the October 12, 2007 peak of 6730.71 — for the sixth time in two months. Germany's Dax shed 2.4%, while the CAC 40 in Paris lost 2.5%.
Professor Rogoff, who was chief economist at the IMF from 2001 to 2004, predicted that the crisis would foster a new wave of consolidation in the US financial sector before it was over, with mergers between large institutions.
He also suggested that Fannie Mae and Freddie Mac, the struggling US secondary mortgage lending giants, were likely to cease to exist in their present form within a few years.
His prediction over the fate of Fannie and Freddie came after investors dumped the two groups’ shares on Monday after reports suggested that the US Treasury may have no choice but to effectively nationalise them.
The professor also sounded a warning over rising US inflation, which rose last month to its highest since 1991, and criticised the Federal Reserve for having cut American interest rates too drastically. “Cutting interest rates is going to lead to a lot of inflation in the next few years in the United States,” he said.
As investors' edginess over the threat of further financial turbulence sent equity markets into a further spin, bank shares were hit hardest. Among the biggest fallers in London trade were HBOS, down 6 per cent, Royal Bank of Scotland, whose shares plunged by 5 per cent, while HSBC fell 3.6 per cent. In continental Europe, Spain's Banco Santander was off 2.35 per cent, and BNP Paribas lost 3.8 per cent.
Persistent worries over the rapidly deteriorating economic outlook in the UK also saw sterling succumb to fresh losses. The pound lost almost a cent against the dollar, dropping to $1.881, above the near-two year lows plumbed on Friday.
Earlier, there were fresh jitters in Asia, with the region's leading bourses in sharp retreat after a dire overnight performance by Wall Street left the Dow Jones Industrial Average down by more than 180 points. Both Asian markets and Wall Street were unnerved by suggestions over the prospects for Fannie Mae and Freddie Mac.
While Japanese banks have remained relatively under-exposed to sub-prime mortgage products, many fear that they would be heavily exposed to a nationalisation of Fannie and Freddie. The large Japanese financial houses hold around Y9.6 trillion (£47 billion) in bonds and mortgage-backed paper issued by housing finance groups in the US.
“If the recapitalisation talk is realised, there are no assurances that the securities that have been issued [by U.S. mortgage firms] will be 100 per cent guaranteed,” said Yutaka Shiraki, a senior equity strategist at Mitsubishi UFJ Securities.
Financial sector shares were particularly badly hit in Tokyo, where they led the Nikkei 225 Index into a 300-point decline. The selling continued throughout the day, and peaked after a declaration by the Bank of Japan that the world’s second largest economy was now looking “sluggish”.
Although the central bank’s downbeat economic report included vague predictions of a return to growth over time, traders said that the comments had shattered any last hope that Asia’s export-led economy might somehow “decouple” from the woes in the US.
The picture was somewhat more stable in Shanghai, which spent a day in relative limbo following Monday’s 5.3 per cent nosedive. With Chinese stocks beating a daily retreat, investors are focused on the 2001 index high of 2,245-points. Some believe that level will hold up as a technical floor on the selling, others believe that it may shortly fail and unleash a much deeper collapse in stock values.

At Least The British Admit It.......

Recession a step closer as economy grinds to a halt for the first time since 1992 with growth at 0%
By Justin Harper

Britain slipped nearer recession yesterday when figures showed the economy had finally ground to a halt.
For the first time in 63 consecutive quarters going back to 1992, growth was officially zero per cent.
The dismal figures put paid to Gordon Brown's boast that the economy had grown in every quarter since Labour came to power.

Recession fears: The UK economy has ground to a complete halt and some experts believe the we are already in a recession
The Office for National Statistics had predicted output for the quarter from April to June to be 0.2 per cent, but even that level of growth could not be achieved.
While a recession technically happens after two quarters of falling economic growth, some experts believe we are already in one.
George Buckley, economist at Deutsche Bank, said: 'The figures are very weak and suggest the UK economy is already in recession.'

More...
Relief for homeowners as fixed rate deals return to levels of a year ago
Economists warned that the recession would be a prolonged one unless the Bank of England steps in with an urgent cut in interest rates.
Stewart Robertson, of Morley Fund Management, said: 'The Bank needs to do something to prevent a fairly shallow recession from getting worse. They need to cut rates this year.'
Brian Hilliard, of Societe Generale, said: 'This really does put a rate cut firmly on the agenda, although it is unlikely to come until we have seen the peak in inflation.'
The value of the pound also took a battering in response to the economy's stagnation.
Sterling skidded to a near 12-year low against the dollar as investors were scared off. But while pressure is growing on the Bank to cut interest rates to try to kickstart the economy, it has its hands tied in other respects because it is trying to fight the growing problem of inflation.
A rate cut could boost the economy, but would also create further inflationary pressures.
Jonathan Loynes, at Capital Economics, said: 'While the Bank of England expected the economy to slow down this news is still pretty devastating. We see the recession becoming deep as it gathers pace.
'The biggest casualty will be some sizeable job cuts.'
The gloomy figures, which bring an end to the longest period of uninterrupted growth for more than a century, also showed how families have been struggling with soaring energy bills and food costs.
Household spending fell by 0.1 per cent - the lowest level for three years as Britons tighten their belts in the credit crunch.
The track record of continuous economic growth has been one of Labour's greatest achievements since coming to power and the cornerstone of Gordon Brown's success as a Chancellor.
The Shadow Chancellor George Osborne said: 'Now economic growth has ground to a halt and Brown's bubble has burst.
'Millions of people are paying an unfair price for Labour's economic incompetence.'
The housing market slump, squeeze on consumer spending and business investment all point to a grim outlook for UK plc for months to come.
All parts of the economy are suffering with the once-healthy services sector stuttering to just 0.2 per cent growth.
This is its worst performance for almost 18 years.
The U.S. is also following the same economic course with multi-billionaire investor Warren Buffet saying its recessionary woes won't be shaken off until next year.
Buffet, the world's richest man according to Forbes magazine, said: 'You always find out who's been swimming naked when the tide goes out.
'We found out that Wall Street has been kind of a nudist beach.'

Very Nicely Said...................

"The kind of people who survive in the game of politics long enough to become president are, almost necessarily, pathological liars." -Doug Casey

Our Anti-Obama Stance Is Now Documented.........

World-Class Socialists Never Bring Anything New To The Table....Marx Did It For Them.......

Silver Is Taking Us For A Wild Ride.........

The Silver “Reverse” Bubble of 2008
August 15, 2008
As an investor, speculator and researcher in the silver market for over 5 years, I have to say that I am (temporarily) stunned at the extraordinary recent events in the silver market this summer. It is an incredible contrast…
In Physical silver….there are shortages and delays everywhere. The U.S. Mint even made the recent announcement that they would essentially ration the issuance of Silver Eagles. I think that Jason Hommel has done an excellent job documenting the problems with physical silver supplies and delivery at the retail level. Check out his recent article at http://www.silverstockreport.com/.
In “paper” silver (such as in silver futures and silver-related investments such as mining stocks and ETFs) the extreme opposite seems apparent. The price of silver in the futures market has in recent weeks been decimated.
It is a incredibly stark contrast…physical silver has growing demand and shrinking supply while paper silver’s price gives you the opposite impression. Silver hit a recent high (March 2008) of about $21 yet is being pummeled today (the morning of 8/15/08) to the $12.90 level (a pullback of almost 40%). What is behind this extreme anomaly? What is the reality? Why the apparent madness in the silver market?
Yes…it is the summer slow season. Traditionally it is a thinly traded market and silver typically corrects at this time of year. Usually, the corrections are sharp and it is not uncommon for silver to pull back 20-30 and even 40%. Silver has had pull-backs in price of about 40% several times in recent years. The most prominent corrections have been Summer 2006 (during an election year) and now (again during an election year). Winter and summer are typically weak seasons for silver while Spring and Summer are typically strong.
Silver has been zig-zagging upward since the beginning of the decade and has rewarded patient, disciplined investors. Even after this extreme correction, silver has still tripled since 2000. It is important to put things in perspective. Think about what has happened from January 2000 to August 2008 (calculating from highs & lows in 2000 to today):
Gold – UP OVER 200%
Silver- UP OVER 210%
Oil- UP OVER 600%
General commodities- UP OVER 200% (that’s a minimum)
Meanwhile (after a full 8 ½ years)…
The Dow- DOWN about 1%
Nasdaq- DOWN 51%
S&p 500- DOWN 13%
The Dollar- DOWN 40%
I think the last 8 and a half years give you a strong indication about the coming years since nothing has fundamentally changed with these markets. If anything, the fundamentals have strengthened. So what explains the recent pounding that silver (as well as gold, oil and other commodities, etc.) has experienced? It seems very unusual and quite suspicious. First let’s remember something very important…
The short-term can be irrational while the long-term is much more rational.
Stay focused on the long-term because the short-term can fool you.
Everyone is stampeding out of commodities in general because they think (wrongly) that the “commodities bubble has popped”. The extreme selling is coming from two sources:
Investors and traders selling off their positions for various reasons (they are bearish, etc.). “More sellers” than buyers will make prices go down and this is a natural market event. This is coupled with…
Artificial intervention. Either the government or large private entities (that government either sanctions or allows) or both intervene to exact certain outcomes. It is no coincidence that this happens during an election season as well as during thinly traded markets (such as the summer time).
I understand (and embrace) reason #1 but I strongly condemn reason #2. Frequently, reason #2 is a catalyst for reason #1. The unfortunate reality of today’s markets is that government (and entities that it works with) are players in the financial markets in both obvious and subtle ways. It used to be a “referee” but know it is both “referee” and participant.
Look at the “recent strength” of the U.S. dollar (which is a major reason given by the financial media for plunging commodities & precious metals prices). A few weeks ago the U.S. Treasury Secretary essentially admitted that the government would intervene to protect the dollar’s decline. Then…amid many headlines about a bad economy…the dollar rallies tremendously for apparently no fundamental reason. This scenario is best explained in James Turk’s recent essay at http://www.goldmoney.com/ entitled “Mystery Solved.” Of course, it is no coincidence that a “strong dollar rally” is the catalyst for falling prices in oil, gold, etc.
In recent years, a host of government officials (starting with Alan Greenspan) have indicated that the government can (and will) intervene to exact outcomes that they feel are beneficial for the economy and financial markets. These interventions work in the short-term but they tend to fail in the long-term. Let’s keep this in mind…
In the short-term, government intervention can usually “win” over the market.
But over the longer term, it is the market that usually wins.
5,000 years of economic history bear this out.
During this summer, government action has worked and helped to (temporarily) influence the market to get the prices of commodities (especially precious metals and energy) down. Sometimes a government action is not necessary; just the threat of government action is enough to influence the market. This leads us to understanding how the government can have a major, short-term impact on prices. The impact can be purposeful or accidental. IN any case, it is time to understand what a bubble is (then you will see what a “reverse bubble” is).
In recent years, there has been a lot of talk about BUBBLES. There has been plenty about the Internet & Tech stock bubble of 2000-2002 and the Housing Bubble of 2005-07. Then there was the talk earlier this year about the “oil bubble” and the “commodities bubble”. People that never noticed the bubbles in stocks and housing all of a sudden saw one in commodities. LET’S GET THIS STRAIGHT. You should know the difference between what is a “bull market” and a “bubble”. Then please explain it to the politicos and pundits out there confusing the investing public. Here is the major, simple difference between a bull market and a bubble:
A bull market is a NATURAL event. A bubble is an ARTIFICIAL event.
A bull market occurs when there are more buyers than sellers of a particular asset (stocks, metals, etc.). This is a healthy and natural event driven by demand and supply. Bull markets can last a long time; years or decades. There is nothing wrong with a bull market. A bear market is when demand & supply manifests itself as a market where there are more sellers than buyers. Got it?
A bubble is an artificial event in that the market is injected with an oversupply of currency and/or credit. Currency and credit in our current economy originates from the Federal Reserve (America’s central bank; a governmental entity). Since 1995, The Federal Reserve has been expanding the money supply at double-digit annual rates. Since the middle of this decade, most of the world’s central banks (translation: governments!) have been increasing their respective money supply at double-digit rates. The more you produce of something then the less each individual unit of it is worth. This is why things of more limited supply (food, energy, precious metals and other commodities) have seen their prices more than triple since the beginning of the decade.
Therefore, a bubble is an artificial event where there is intervention (more credit, etc.) in that particular market which then dramatically warps demand and supply as the price of that particular asset is driven higher (inflating the bubble; also called a “boom”). Usually, what punctures the bubble is that the artificial demand over-stimulates supply which is when the bubble finally pops. The oversupply results in a recessionary condition in that particular market. This is exactly what happened in recent bubbles, especially the housing market. That market is still experiencing an excess inventory of homes along with record levels of foreclosures and defaults. Many homeowners now have mortgages that are greater in value that the property itself. Then you have seen the wave of defaults on mortgages which became the “sub-prime fiasco” which in turn harmed the holders of these demolished debt instruments such as banks and brokerage firms. Now…how about “reverse” bubbles?
As you can guess by now, the “reverse” bubble is an artificial event similar to the typical bubble but it is the direct opposite. In the bubble, the price of the asset in question is driven artificially higher. In the reverse bubble, the price of the asset in question is driven artificially lower.
This is what is happening…right now…with silver (and to a lesser extent, gold). Even though there are acute supply problems (delays and shortages) with physical silver, there is artificial selling (extreme “shorting” by a few, large entities) coupled with panic selling which is forcing prices of silver down dramatically. In the past few weeks, silver fell through its 200-day moving average (DMA). To get a feel about how the huge short position in silver has been extreme, check out the recent essays by Ted Butler at http://www.investmentrarities.com/. He has done a fantastic job in painstakingly documenting the major forces affecting the silver market in recent years.
This summer, silver’s correction became more extreme than usual. Silver was forced past its 200 DMA and it went under $16. I was a buyer at this level. Then it went to $15 and I was still a buyer. The next “line in the sand” for silver after the 200 DMA was the 50-week DMA and silver fell through that. Again, I was a buyer. The next level was silver’s cost to produce it (for silver miners) which is about $14 per ounce (given today’s mining costs). It then fell below that! In other words, silver’s price is at this moment cheaper than it costs to mine it (you got it….I was buying again). Gee…why mine silver at all if it is cheaper to simply buy it at the futures exchange for much less?! THE PRICE OF SILVER HAS BEEN FORCED TO BELOW COST.
The SILVER “REVERSE” BUBBLE is here and now in the summer of 2008. In the same way that a bubble deflates and the asset price comes tumbling down, a “reverse” bubble is like forcing a huge balloon under water. Sooner or later, the artificially low price can’t hold and the market will ultimately force the price up to its natural level. Most silver experts (such as David Morgan at http://www.silver-investor.com/ and Roger Wiegand of http://www.tradertracks.com/) agree that the near-term natural price of silver is north of $20 and that the long-term price is much, much higher than that. Just for silver to reach its old high of $50 (January 1980) on an inflation-adjusted level alone means that its natural long-term price is in triple digits.
Unfortunately, many folks are panicking or depressed about silver, gold and other commodities. I think that we need to remind ourselves about the legendary Jesse Livermore when he said to be “right and sit tight.” Silver, gold, oil and other commodities are on a long, zig-zag upward march that can’t be stopped by any firm or government agency. The commodities super-bull market is alive and well because the fundamentals are too powerful to suppress. Don’t get fooled or spooked by the irrational and ill-conceived short-term gyrations. Stick with the fundamentals and stay focused on the long-term. I know that I am.

GM & Ford Want Handouts For Being Incompetent

GM, Ford Seek $50 Billion From U.S., Double Request
By Jeff Green
Aug. 22 (Bloomberg) -- General Motors Corp., Ford Motor Co., Chrysler LLC and U.S. auto-parts makers are seeking $50 billion in government-backed loans, double their initial request, to develop and build more fuel-efficient vehicles.
The U.S. automakers and the suppliers want Congress to appropriate $3.75 billion needed to back $25 billion in U.S. loans approved in last year's energy bill and add $25 billion in new loans over subsequent years, according to people familiar with the strategy. The industry is also seeking fewer restrictions on how the funding is used, the people said today.
GM and Ford lost $24.1 billion in the second quarter as consumers, battered by record gasoline prices, abandoned the trucks that provide most of U.S. companies' profit and embraced cars that benefit overseas competitors such as Honda Motor Co. U.S. auto sales may drop to a 15-year low this year and fall even more in 2009, analysts have said.
``Next year is going to be a make-or-break year in terms of survival,'' said Mirko Mikelic, senior portfolio manager at Fifth Third Asset Management in Grand Rapids, Michigan, which oversees $22 billion in assets, including GM and Ford bonds. ``Any help like these government loans would be a huge boost.''
Standard & Poor's said Aug. 19 that U.S. light-vehicle sales will fall to 14.2 million units this year from 16.1 million in 2007 and drop again to 14.1 million next year. The ratings company said there is a 20 percent chance that this year's sales will be as low as 13.6 million and 11.7 million next, presenting an ``overwhelming challenge'' for U.S.-based companies.
Plans at Risk
``Our plans, which require significant investments, are at risk because of limited access to capital,'' said Greg Martin, a spokesman for Detroit-based GM. He declined to comment on whether GM is seeking more than the original $25 billion. ``This program will open capital that is necessary to make sure our transformational plans continue at full speed and give us the best chance to succeed.''
Mike Moran, a spokesman for Deaborn, Michigan-based Ford, said the automaker had no comment on any funding beyond the $25 billion already approved.
``The priority is to get the appropriation that has already been approved,'' said Linda Becker, a spokeswoman for privately held Chrysler, based in Auburn Hills, Michigan. ``Conversations as to why or how we should expand that amount are ongoing.''
Upfront Cost
Congress needs to appropriate about $3.75 billion to cover the upfront cost of the government loans, according to a July 25 estimate in a letter to House and Senate leaders. The letter was sent by 71 members of Congress urging support on the issue.
Presidential candidate and presumptive Republican nominee Sen. John McCain today gave his support to the proposal.
``Our auto companies are rising to the challenge building the next generation of American cars, but are doing so in times when credit conditions cripple the funding for the facilities and technologies to take the steps to the future,'' he said in an e- mailed statement.
``We should fund it and take action that will assist Detroit and its suppliers in making it through this difficult time of transition,'' he said in the statement.
Others disagreed with the proposal to put taxpayer funds at stake
``This is a horrible idea, another transfer of funds to failed ventures,'' said David Littmann, senior economist for the Mackinac Center for Public Policy in Midland, Michigan, which describes itself as a supporter of free-market ideals. ``If this were a good idea, the market would price the debt accordingly and give them the money.''
Cost of Upgrading
Auto-industry lobbyists want Congress to set rules that will allow the initial $25 billion to pay the full cost of upgrading assembly plants, parts production or engineering to improve fuel efficiency, said the people, who didn't want to be identified because the plans are still being developed. The current rules limit loans to 30 percent of the cost.
The industry is also seeking a broader interpretation of what projects are eligible. That might allow the funds to cover the conversion of truck plants into car plants, for example, in addition to paying for vehicles with the highest mileage, such as hybrid-electric cars or fuel-cell models, the people said.
The loans were authorized in last year's Energy Independence and Security Act. Rules to free up the funding are supposed to be written within a year of its December passage, Representative John Dingell said in an Aug. 4 letter to U.S. Department of Energy Secretary Samuel Bodman.
The auto industry wants funding for the loans approved before the current legislative session ends next month. Dingell and other lawmakers have said Congress needs to consider the impact the companies have on the U.S. economy.
GM, Ford and Chrysler employ 240,000 people in the U.S. and account for 7 out 10 U.S. auto workers, according to a report released this year by the Automotive Trade Policy Council in Washington, which represents trade interests of U.S. automakers. The companies support another 5 million jobs at auto dealerships, suppliers and service providers.
The automakers purchased $156 billion in auto parts last year and have invested $225 billion in U.S. plants and equipment since 1980, including $10 billion last year, according to the report.
GM has fallen 58 percent this year, and Ford has tumbled 34 percent. GM rose 52 cents to $10.44 at 4:15 p.m. in New York Stock Exchange composite trading, while Ford was up 5 cents to $4.47.
``We've seen these kinds of bailouts for the financial companies, why not the automakers?'' said Aaron Bragman, a Troy, Michigan-based auto analyst for Global Insight Inc. ``The big problem is that a lot of people in Washington don't see a value in the U.S. auto industry because they have a foreign plant in their district that is doing just fine.''

Ted Says The Fix Is In............

The Smoking Gun

By: Theodore Butler
-- Posted 22 August, 2008
For years, the data contained in the weekly Commitment of Traders Report (COT), issued by the CFTC, have indicated that several large COMEX traders have manipulated the price of silver and gold. For an equal number of years, the CFTC has reluctantly responded to public pressure over this issue with blanket denials of any wrongdoing. Many analysts have agreed with the CFTC’s position, conjuring up various ways to explain why a massive short position held by a handful of traders is not manipulative.
The recent widespread shortage of silver for retail purchase coupled with a price collapse appears to have shaken these analysts’ confidence that the COMEX silver market is operating ‘fair and square.’ Well it should, since there is no rational explanation for a significant price decline going hand in hand with product shortages other than collusive manipulation.
For any remaining doubters that COMEX silver and gold pricing is manipulated, the following CFTC data should be considered. This data is taken from a monthly report issued by the CFTC, called the Bank Participation Report. Here’s the link for the report -
http://www.cftc.gov/marketreports/bankparticipation/index.htm The relevant data is found in the July and August futures sections. I will condense it.
These facts speak for themselves. Here are the facts. As of July 1, 2008, two U.S. banks were short 6,199 contracts of COMEX silver (30,995,000 ounces). As of August 5, 2008, two U.S. banks were short 33,805 contracts of COMEX silver (169,025,000 ounces), an increase of more than five-fold. This is the largest such position by U.S. banks I can find in the data, ever. Between July 14 and August 15th, the price of COMEX silver declined from a peak high of $19.55 (basis September) to a low of $12.22 for a decline of 38%.
For gold, 3 U.S. banks held a short position of 7,787 contracts (778,700 ounces) in July, and 3 U.S. banks held a short position of 86,398 contracts (8,639,800 ounces) in August, an eleven-fold increase and coinciding with a gold price decline of more than $150 per ounce. As was the case with silver, this is the largest short position ever by US banks in the data listed on the CFTC’s site. This was put on as one massive position just before the market collapsed in price.
This data suggests other questions should be answered by banking regulators, the CFTC, or by those analysts who still doubt this market is rigged. Is there a connection between 2 U.S. banks selling an additional 27,606 silver futures contracts (138 million ounces) in a month, followed shortly thereafter by a severe decline in the price of silver? That’s equal to 20% of annual world mine production or the entire COMEX warehouse stockpile, the second largest inventory in the world. How could the concentrated sale of such quantities in such a short time not influence the price?
Is there a connection between 3 U.S. banks selling an additional 78,611 gold futures contracts (7,861,100 ounces) in a month, followed shortly by a severe price decline in gold? That’s equal to 10% of annual world production and amounts to more than $7 billion worth of gold futures being sold by 3 U.S. banks in a month. How can this extraordinary concentrated trading size not be manipulative?
Because prices fell so sharply after the short sales were taken (with the appropriate dirty tricks as I have previously explained) holders of known physical silver in the world suffered a decline in value of more than $2.5 billion and long COMEX silver futures holders suffered a similar $2.5 billion decline in the value of their contracts. In gold, because the dollar value held is much greater than silver, investor losses were much greater, on the order of hundreds of billions of dollars on their physical holdings. Declines in the value of mining shares adds many billions more. Was this loss of value caused by the concentrated short selling of 2 or 3 U.S. banks?
What real legitimate business do 2 or 3 U.S. banks suddenly have for selling short such quantities of speculative instruments over a brief time period? Do we want banks to be engaging in this type of activity? If the manipulation was not successful, would U.S. taxpayers be called on to bail out yet another bank speculation gone bad?
Do the traders who lost money in the recent price collapse of silver have a reason to believe that their money is now in the pockets of these two or three U.S. banks? If so, do they have recourse?
The data in the Bank Participation report is clear and compelling. that it is hard to conclude anything but manipulation. It is beyond credulity to conclude other than two or three banks caused one of the most severe price collapses in precious metals history. The CFTC has a lot to answer for as the regulatory agency responsible for preventing this type of blatant manipulation.

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

"Nine tenths of the laws passed every winter at the Federal Capitol, and all the State Capitols, are not only unneeded laws, but positive nuisances, jobs got up for the service of special classes or persons." -Walt Whitman

We're Still Astounded At What's Going On.......

Breath-Taking Collapse

The speed and volatility of credit and share markets’ collapse this week has been astounding.
While tout TV, international banksters and market manipulators did their level best to hide it, prime supports are caving-in with scary rapidity. Most all global stock markets have posted the arbitrary 20% declines, or more taking them “officially into recession.” The USA was there long ago but has not been recognized for several nefarious reasons. Canada is the last major nation not in official recession. Stock markets tell us the future for months in advance and it’s not at all pretty. Bond markets take it a step further as these traders forecast credit standards and interest rate trends with remarkable accuracy. In many respects, the bond traders predict more than the manipulated shares’ markets. As we’ve been shaken and rudely reminded by the bond boys; credit, bonds and cash are driving the bus not share markets.
We were hoping Chopper Ben and nervous Hank could hold it altogether with Federal Reserve and US Treasury chewing gum and bailing wire. It’s only not working but it appears another soon-to-be-named monster corporation or global bank is going over the falls into a gigantic smash. Worse yet, Australia, a leading commodity indicator and shining light mining provider had a big bank post a massive derivative write down ala Merrill Lynch. This super nasty event sets the credit quality bar infinitely lower than their credit system can manage. As in America, they are on the edge with a cataclysmic firestorm at their backs.
In the worlds’ of trading and finance, exiting holders of small positions have little affect on price. But when a nation has six dominant banks mutually holding piles of derivatives and one sells out with a BK-like discount what do you suppose the other five banks’ stuff is worth? All it takes is one and they all cave-in with massive write-downs and a falling domino lack of confidence in this paper.
It appeared earlier this week that new bottoms were found in commodities including our favorites. We’ve been snake bit before years ago when being a tad too eager. This is why our forecast for a new beginning was either 8-15-08 or, 8-18-08 for this new rally. Considering more damage done yesterday overseas and a large trading error in silver last night, the repairs might take even more time.
We checked with our broker this morning and he figured somebody had a large silver futures order posted with thousands of contracts and didn’t meet a margin call. The broker had to close ‘em out and silver skidded $2.00; a rather large negative move to say the least. Since this apparently happened in the night during thin electronic trading, there was nobody on the other side of this failed trade to help.
Silver fell from roughly 14.30 to 12.30 on the December, 2008 futures. This morning it came back to 13.19 by 10:16am and we predict it could close at 14.32 to 14.48 for this Friday, if it can recover. Monday is another day and hopefully better realigned after this mess to base and rally some more. We would suggest the worse case recovery could now be in the last week of August or after Labor Day next month. The only caveat would be if some other outlier or Black Swan (vulture) came flying in out of nowhere and hit us again.
Currency Disruptions Real and Accidental
Central banks of the world including the USA noticed the August 15, 2008 breakout time was due for precious metals on the historical cycles and Mr. US Dollar was looking pretty punk. Further, there has been an increasing storm of foreign whining (deservedly so) about the dollar’s sinking valuations. Lots of folks have been increasing upset about taking dollars for manufactured stuff and then watching their newly acquired paper skid toward trash levels. This is why Asia, Europe and others, forced to take US bonds, notes and currencies have been spending it with vigor to purchase hard assets of value.
The intake of dollars into China, Japan, India, Europe and Middle East for oil has been offset with follow-on trades for exiting those dollars. First these nations moved dollars into stronger currencies but now those formerly stronger currencies like the Euro are sinking, too. Next secret sovereign banks used dollars to buy US shares. The embarrassment of riches is too much so any hard asset is the last resort and that is where off-loaded dollars are moving right now.
Currency traders yahooed the new dollar rally saying it had improved. Wrongo! The dollar is just as crummy as before, it’s just that the Yuan, Euros and others dumped over and are selling BRIEFLY, faster than our dollars. This is a temporary re-jiggering of currencies in the marketplace. Soon the dollar resumes its skid into oblivion. None of these fiat currencies is backed by gold so the next great trade is toward the Swiss Franc, long considered the premier, blue chip currency, yet un-backed by gold.
These so-called superior credits of US Treasury bills, notes and bonds have already posted lower credit scores as somebody wrote two weeks ago the USA national credit is AA not AAA. Traders need to keep currency valuations in perspective to get a better handle on speeds of up-down trading, overall volatility and relationships in dominant groups.
For example, the UK’s British Pound has been hammered as they are suffering a housing bubble and related credit mess even worse than in the US if you can imagine that one. Now that Australia has tripped and our F&F Fannie and Freddie specious rescue plan’s in place, it seems everybody is going one notch closer to Armageddon, or at least crash city.
The End Game
We’ve watched this rolling disaster with unblinking amazement as Benny and Hank furiously stomp out the weekly forest fires. We’ve learned throwing mountains of taxpayer cash is not a solution. With each succeeding fire, it takes more credit, more lying, and more taxpayer robbery to snuff the latest conflagration. These credit firemen are about out of water as next they face the largest hurdle of all-consumer collapse.
The entire saga goes back first to give-away real estate lending and related companion derivatives. Since consumers have been the traditional locomotive of America’s economy we now reside in some really deep pasture piles.
The green guy pumped real estate to avoid a recession after 2000 when the Nasdaq dumped. It worked but made things much worse only delaying the inevitable.
Foolish unqualified consumers got nearly free money not only for houses but subsequent crazy inflation enabled them to buy lots more stuff using the follow-on transparent, phony ATM house equity.
New York seized the moment packaging and re-packaging mortgages, selling them several times into a derivative abyss.
Everybody loved the game. Consumers got a freebie new home and lots of Monopoly Money. Banks and brokers got rich on fat fees and derivative peddlers got really rich selling billions of this crap. The latest scorecard this week says the banks must payback $50 billion collectively but the real damage was more like $350 billion; or worse.
As in any 60-70 year Bubblemania event, the bubbles burst and we all fall down. It’s called the Kondratieff Cycle. We think it keeps happening as the last bunch that went through it died of old age. So the new and inexperienced bunch learns the same lesson all over again-the same old hard way.
After bubble time is over governments are dealing with a depression, angry Sheeple, and finger pointing becomes the new indoor sport. From there government must invent a catastrophe to start a war as a war is the monetary engine of recovery. It puts everybody to work or fighting this new war effort working in the factories. Roosevelt did it when he jumped into Europe and ignored the warnings about Pearl Harbor after cutting off Japanese oil and gas. He gave them no choice but to fight.
Since the US is busy in Iraq, Afghanistan and maybe next in Iran, we would suggest all western nations including the US stay extra vigilant for another manufactured event ala Reichstag in Germany in the early 1930’s. Could we see another 9/11? I think it’s entirely possible. I doubt our country would mount such an illegal event but would they stop one if it could be used for political gain? Probably not. These are very harsh criticisms of the west and others but if you suggest I’m full of prunes read history and not the homogenized phony versions either. War profiteering is very big business. Those making the big money never send their sons into battle. They make better arrangements ahead of time.
What’s Next? This is 1938.
Read history about Europe, Asia and the United States from 1920 to 1945 and expect a re-run with some new nasty twists. Further, if you think the government will be there to bail you out after they mess everything up forget it. You are on you own. Either get busy and take intelligent measures to protect your family, home and self or try to endure years of misery. The western world’s standard of living is falling and the spoiled American brats will be hurt the worst. We wish we were wrong on all of this stuff but we read a lot and we know how to count. This simply doesn’t add up. Be careful out there.
As they say so often when lightening bolts hit us out of the blue; “This too shall pass.”
Gold and silver traders, shares’ investors and those with enough foresight to prepare, will endure this mayhem without too much disruption and can in fact be handsomely rewarded.
Late Summer Buying Cycle Arrives Near August 18-September 8, 2008
Watch for new rallies in most all commodities markets after the current profit-taking event. Channelized mini-rallies in gold and silver are completed. Now its time to buy. Our late summer forecast is a completing haircut in most stock shares including precious metals. The only action to prevent selling is our stunningly time-worthy Plunge Protection Team who had multiple recent failures propping shares. Will they win during the summer-fall push-‘em-up event? We think with all the other market dangers they will prop their little hearts out and not permit the Dow and S&P 500 to get out of control. In our newsletter, Trader Tracks, we provide weekly guidance and extra e-mail alerts to report our best new trades and offer suggestions for trade management. Visit our website at webeatthestreet.com for more information on our spectacular futures and commodities trading record.
Whatever you do, make a concerted effort to stay with the trend and hang onto your core holdings of preferred shares, cash, and coins. Physical gold should never be sold or, traded but rather accumulated steadily on a monthly savings plan and squirreled away. Big traders are always ready to buy on the dips and normally never sell their gold and silver. You would be amazed how quickly your physical gold and silver will accumulate using this strategy. -Traderrog

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

"Democrats and Republicans have been reduced to yelping angrily at one another over differences so comically trivial that one wonders seriously about their sanity." -Tony Snow

Silver Shortage May Be Short-Circuiting Bullion Prices.....We'll Wait And See

Silver Shortage Causes Price Disconnect
(Manipulation begins to fail, paper prices fall.)
Silver Stock Report
by Jason Hommel, August 17, 2008
Franklin Sanders understands, and explains that physical silver and gold are selling for higher prices than paper silver and gold.
http://rs6.net/tn.jsp?e=001E8n7iChg-HM34aDH-SC4NYOrSWlai1ZvuzPqDk8GwF9uL3GKODc6bFvJDZCbs-xrfIoblCKXdlvbKQ1F4XzpfReMrV8zbZC6vTgnnAje8ztfEcIE699Q2EoUvnhSnr7qH_6K15eYxImqwsv1su0jpg==http://rs6.net/tn.jsp?e=001E8n7iChg-HNUBNUyys1lFBWDpDMh8ZOiFOBkZGyjkpdrQFlbrZXqbV6Wd7aCsuNc1Xy45phEqp8FAw8QK8cQp8K40_VvHqfpHkZPeaVqDi2B3xPlYJg2sZ2U1b_M7atR
James Turk reveals in his article today, "A Fabrication Bottleneck or Something More": http://rs6.net/tn.jsp?e=001E8n7iChg-HMA3xGwjpo3uW14_xLEQbm5Uq40jqvtQHMP80g5VGCcNsC39URR4Dp7hxTfrAV7VvDK_7DVNVb9Vdr8pKlTxeRgtEBG4VWl5Zc=
Turk acknowledges, "In other words, there is presently a huge disconnect between the paper market and the physical market."
But Turk says goldmoney is not yet having trouble finding large, 1000 oz. LBMA bars.
Here are several points to keep in mind about 1000 oz. bars:
First, there are position limits! This means there are silver shortages for the super rich, ever since the days of the Hunt Brothers in 1980. The limit is 1500 contracts in a given month; a limit of 7.5 million ounces. I believe Turk is not noticing any shortage, because he has never needed to order more than that in a given month.
Second, just because people own bars, or that bars are listed in inventory at the NYMEX exchange, does not mean they are available for purchase at today's prices! The total ounces at the NYMEX seem to remain at about 130 million ounces. That's not just "unwanted" silver; it's owned by funds, speculators and investors, who may actually understand silver, who might not be willing to let it go except at much higher prices, especially as they come to understand the facts about the shortage of silver. Third, David at Wexford Coin notes that he's "not a fan of 1000 oz. bars for the average client since shipping them back to distributors is a nightmare if the bar packs higher than 75 pounds in a Flat Rate Priority Mail box using Registered Mail. Just about the only method for retail customer to ship WITH INSURANCE unless they have such a large quantity that distributor will arrange a carrier pickup at a business address." Wexford, one of my favorite and most trusted and highly recommended dealers, now has a minimum order size of $10,000.http://rs6.net/tn.jsp?e=001E8n7iChg-HNYR8UnGxSw0wMJ9A34Uw0hMyh9lCiUJcHrKmLvKQeycvkeB1AH1bNjFsUxOckc2wC3ZlWsfIrAPHQH4EpwOlbbh1mY72BHg7OPyA_ftlYWkA==
David at Wexford is extremely busy with buyers, and emails me to say he cannot return all of his phone messages.
But there is a shortage of 100 oz. bars!
Producing more 100 oz. bars should be easy. They can pour 100 oz. bars nearly as easily as 1000 oz. bars. I know for a fact that the machines to make them are not running at capacity!
Why is it that people think that pouring silver bars is a difficult or skillful or time consuming activity? Men have been pouring silver bars since Biblical times.
There is, indeed, a "production bottleneck".
But that's happening because demand has greatly increased, and years of old supply has run out!
Most silver purchased by investors is NOT recently manufactured. Only a little is "made fresh".
See, it's a fundamental attribute of silver that it does not spoil. It lasts 1000's of years!
Therefore, most silver that used to be available for purchase, when you could buy it, was manufactured sometime within the last 30-40 years. (Perhaps 1/2 of all silver was mined in the last 50 years.) It is not uncommon to find 1 ounce rounds that say they were made in 1970 or earlier! Those are cool to hold in your hand, because you know from prior price history that that very coin burned some hands as the price collapsed from 1980. Silver, itself, is usually a form of history in your hands.
As another example, Englehard 100 oz. bars are no longer manufactured, but they are a "staple" or "standard form" of silver for the industry, right along with the currently manufactured Johnson Matthey bars.
Therefore, in order for retail investor forms of silver to develop a shortage, then all or most of the inventory that was manufactured in the last 30-40 years has been purchased and is no longer available at present prices.
Or, new product is mis-priced at below market prices, which thwarts the free-market clearing process.
That's called a shortage when years and years of stockpiled & produced product runs out! What else would or could you call it, or how else could it be described?
It used to be that the old silver products were sold by the coin dealers to the refiners, but that's no longer happening. The flow is reversed, and it changed around January/February, 2008, when demand from the public increased by about a factor of 10 at many coin shops.
So, the "production bottleneck" isn't because some machines broke down and need to be fixed.
It's at least partly because pre-existing old manufactured silver is no longer being sold to the refiners that would melt it down to be manufactured into new silver products in the first place!
It's at least partly because newly manufactured silver is among the only supply left!

Here's the next big misunderstanding people have:
Dealers are not just "withholding inventory" they bought at higher prices. Proof? They will take your money now, to lock in a price now, and they will hedge by buying paper futures contracts, until they can find product to buy.
The other key here is that if they do have product, they won't want to sell it, unless they can get more, and they can't get more, because the public is no longer selling, and there is a pronounced production bottleneck! Why should they sell out, if they can't restock?
Many major dealers will hedge with futures.
But a futures contract is not the type of silver they want, as David Wexford explains above, so they have to sell that contract for real 100 oz. bar or 1 oz. round silver, eventually.
The honest dealers sell only what they have. If they don't have it, they don't sell it. Tulving, CNI, Wexford, Miles Franklin, etc.
Many major dealers are reporting no silver in "the dealer network". If I'm hearing lies, prove it. People who say there is no shortage should put up, or shut up. Sell it to Tulving, Franklin Sanders, Miles Franklin, etc., they will buy your silver.
http://rs6.net/tn.jsp?e=001E8n7iChg-HMizQj129nsvrdfw-sCOkMekack5rCa5GG33j0O6CM1AqIi7kU8BRW0mrRtYa-b0Scmp6OrnMTUAMuO7Eb6W7s24iRA_tXO_Rqlps6MewrGq7BSyEo6L0bEZt3tBUPySUA=
Other dealers will take your order now, for inventory that will take 8-10 weeks to deliver.
Who has such crazy policies as that? Perth, Kitco, Northwest Territorial Mint, Johnson Matthey, and others. You should avoid them, in my opinion.
And if you have to wait 30-60-90 days for silver from any seller, it means they are selling what they do not have, and hope to get it from someone else that does not have it today either! That means they are short, (they owe you silver) that they do not have!
And if there is a "regular" 60 day delay, where they have you pay for it all up front, instead of a tiny 5% deposit down payment, then they are "floating" on your money, like you gave them an operating loan!
Proof that they sell what they don't have:http://rs6.net/tn.jsp?e=001E8n7iChg-HMtIr6jnx5tRh6YO82R0z9_gG95nbz_lKC_SC1Wa9-tHt3IksCm2V27-ZKDG_uHcj3H56mJI0aPknpS0JCvDi4kw0lV7o7VUzI4KydPAndQTw==SOLD OUT, with a warning:
IMPORTANT NEW NOTICE: Due to market volatility and higher demand in the entire industry, we are anticipating delays in supply of all bullion products. Please note that you can continue to place orders and prices will be guaranteed; however, cancellation fees will still be applicable regardless of the length of the delay. Consequently once inventory is received there may also be delays in processing and shipping by our vaults.
I find Kitco's notice hilarious, and sad. Kitco is essentially saying they will lock you in on price, for silver that they don't have, and cannot find, and their disclaimer seems to indicate that they can delay you indefinitely, and if you want your money back, you have to pay a fee!!!
That smells like a default in the making, to me.
How can Kitco sponsor Nadler's editorials saying there is no shortage, and then put up a big disclaimer about a shortage? Yeah, I'm the ignorant one who doesn't get that.

Gold Eagle Sales Suspended?? Gee!!!! Why Do You Think That's Happening?

U.S. mint suspends gold coin sales; futures price is a fiction
Submitted by cpowell on Fri, 2008-08-15 04:27. Section: Daily Dispatches
12:25a ET Friday, August 15, 2008

The U.S. Mint has suspended sales of American eagle gold coins and is refusing orders from dealers, two coin and bullion dealers confirmed Thursday.
The mint's suspension of gold coin sales follows its tight rationing of sales of silver eagle coins, begun in May, when sales to the public were terminated and sales to the mint's 13 authorized dealers were tightly limited.
Word of the mint's suspension of gold coin sales came from the American Precious Metals Exchange in Edmond, Oklahoma, (http://apmexdealer.blogspot.com/2008/08/news-alert-us-mint-suspends-sales-of.html) and from Centennial Precious Metals in Denver, Colorado.
The suspension is overwhelming evidence that the futures contract price of gold on the commodities exchanges is substantially below the physical market price and that, indeed, the commodities exchanges are being used as GATA long has maintained -- as part of a massive scheme of manipulation of the precious metals, currency, and bond markets.
Michael Kosares, proprietor of Centennial Precious Metals and host of its Internet bulletin board, the USAGold Forum (http://www.usagold.com/cpmforum/), explained Thursday:
"The U.S. Mint buys direct from the refiners, and this suspension of gold eagle sales may be an indication that the supply line is already backing up, or that the mint expects that it will back up for the rest of the year. I wonder who would give up physical metal at these prices and under these circumstances except distressed sellers. The central banks are in a hunker-down mode as far as I can determine, and it's the mines that supply the refiners. So if the mint, which buys from the refiners, is having a difficult time locating metal, what does that tell you? I keep saying that we may get a surprising rubber-band effect later in the year when the pre-holiday/festival season kicks off in September/October. It may happen sooner. One of our indicators of approaching a bottom in gold is how many calls Centennial Precious Metals gets from our U.S.-based Indian clientele. Here's a quote from my office's report to me at the end of the day today: 'Today was a good day. ... There must have been an Indian convention where someone was handing out USAGold business cards.' That may give you a clue as to thinking in India proper and probably the rest of the Asian rim."
That is, through their agents the bullion banks the Western central banks, desperate to prop up a corrupt and totteringt financial system, have put gold so much on sale that even the U.S. Mint can't find any now. The price reported from the commodities markets is a fiction -- a scary one, perhaps, but a fiction no less.
You can strike a blow at the market riggers who are defrauding the world -- just buy a little real metal. The dealers listed at the bottom right of this dispatch will be glad to help you do it.

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

"The theory of democracy is that politicians rob 49% of the populaton to buy the votes of the other 51%. The practice of democracy is that politicians rob 98% of the population to reward the politically organized 2%." -Foster Morrison

Taxes Are The Increased Obligations The Private Sector Has To The Public Sector Leeches

Property tax bills climb as values dip
Facing tough economy, homeowners feel pinch
By Matt Carroll
Globe Staff / August 17, 2008
The average assessed value for single-family homes in Massachusetts fell for the first time in more than a decade last year, even as property tax bills continued to climb.
Interactive graphic Values and tax of single-family homes in Massachusetts, 2008
The average single-family home was valued at $403,695, a slight dip from $406,673 in 2007, according to data from the state Department of Revenue for the fiscal year that ended June 30. It was the first drop since 1994. More than 140 communities lost value last year, with the biggest drop recorded in Peabody, at nearly 10 percent.
But property taxes continued to rise statewide. The average single-family bill increased $149 to $4,111, up 3.7 percent from a year ago, according to Department of Revenue data analyzed by the Globe. Taxes jumped more than 5 percent in 30 communities.
"Values go down and tax rates go up and everyone pays a little more and they aren't happy," said James C. Judge, the assistant assessor in Kingston, where the average bill jumped 9.8 percent, following a tax override, and assessed values dropped nearly 5 percent.
The combined drop in assessed values and continued tax increases is a double dose of bad news for homeowners at a time when they are already reeling from higher energy costs that could impose substantial hardships this winter.
In previous years, homeowners facing tax hikes could console themselves with the knowledge that their home's value had increased. Statewide property values had double-digit percent gains each year between 2001 and 2005, according to the state.
But that's not the case this year, and it could get worse because of the sagging real estate market.
Assessed values that communities use to calculate property taxes actually lag behind the market. The assessed values for fiscal 2008 are based on what a home was worth on Jan. 1, 2007, according to assessors.
In the first half of 2008, home sales in Massachusetts were down 19.1 percent and prices fell 9.2 percent compared with the first half of 2007, according to the Warren Group, which tracks real estate sales.
"When values have gone down, people have to understand there is a lag time and it doesn't reflect market value," said Richard Gorden, a member of the Sharon Board of Assessors and also a real estate agent with Re/Max Landmark. "There's no way around that."
Real estate woes aside, 11 communities had homes with average assessed values of more than $1 million, led by Chilmark, at $1.7 million - which was down a fraction from last year. Four of the towns are on Martha's Vineyard.
One of those communities, Aquinnah, actually saw the largest percent gain in value, nearly 30 percent, to $1.3 million, although assistant assessor Angela Cywinski said the gains should more properly be spread over the past three years. The small town of 432 homes last year had a 1,500-square-foot waterfront property on six acres sell for $3.5 million.

Higher taxes, meantime, are never popular, regardless of valuation, and property owners in Massachusetts are increasingly weary of the steady increase.
Interactive graphic Values and tax of single-family homes in Massachusetts, 2008
The statewide average dollar amount increase for the year ending June 30 was the smallest since 2001. Increases have ranged from about $160 to more than $200 since 2001.
For the past year, Weston homeowners paid the highest average tax bills in the state, a staggering $14,537. Six other communities, all but one in the suburbs west of Boston, had bills averaging more than $10,000.
In Boston, assessments for owner-occupied single family homes dropped by about $10,000, to $409,478, and taxes fell by about $140, to $2,949, according to the city. Taxes rose slightly in Brookline, and fell in Cambridge, according to the state data.
Elsewhere around the state, many towns with big jumps in average tax bills have passed property tax overrides recently. In Wenham, which approved an override last year, the average tax bill climbed more than 10 percent. Residents can take solace from the fact that property values rose slightly, to nearly an average of $640,000.
"The hurting is not as bad as in other communities," said Steve Gasperoni, principal assessor in Wenham.
Westwood, where taxes increased more than 10 percent, also passed an override in 2007, and its effect on taxes apparently caught some folks by surprise, judging from their comments, said Debbie Robbins, town assessor.
"An average house in this town is probably [assessed] at slightly over $500,000, so you're talking about a $550 increase in taxes," said Robbins. "I don't know about you, but I think that's a lot to swallow."
Home prices appear to have stabilized in at least some communities, according to some observers, but where prices are headed is open to debate.
Prices appear to have stopped falling in Boston, although they are still dropping in communities hit hard by foreclosures, such as Brockton and Lawrence, said Karl E. Case, a cofounder of the S&P Case Shiller National Home Price Index, which tracks housing prices across the country.
Still, it's hard for homeowners to mentally adjust to falling assessments and rising taxes, after more than a decade of solid gains in values.
"Psychologically, it bothers people," said Case, who is also a professor of economics at Wellesley College. "In an absolute sense it feels worse because houses went down in value."
The situation makes it all that more difficult for financially beleaguered towns to persuade homeowners to raise taxes through overrides or other measures, said Michael J. Widmer, the president of the Massachusetts Taxpayers Foundation. "The combination of declining property value and increasing property tax creates anxiety for people," he said.
Voters are increasingly reluctant to support tax overrides. Less than half of overrides passed over the last three years. Between 2000 and 2005, however, more than half passed.
Matt Carroll can be reached

Crossing Borders Will Cost An Entrance Fee

U.S., Mexican states may charge to cross border
Fri Aug 15, 9:08 PM ET
LOS ANGELES (Reuters) - U.S. and Mexican states are considering charging a fee for border crossings to raise money for infrastructure improvements that would reduce congestion at border posts, California Gov. Arnold Schwarzenegger said on Friday.
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The news came after governors from the 10 border states met with U.S. Department of Homeland Security Secretary Michael Chertoff at the Border Governors Conference in Los Angeles.
"Everyone agrees that we need to expand the pipe ... which means that we can get more people across quicker, more efficiently," Schwarzenegger told reporters at a news conference. "And there is a lack of money right now ... maybe people pay a certain amount to come cross. Let's assume $5. Don't hold me to that but that would then pay the bonds so we can develop infrastructure."
Other options, Schwarzenegger said, include charging to use certain lanes of traffic at the border.
"All of this has to be thought through," he said, referring to such a plan as a "public-private partnership."
Such plans will be critical to making all kinds of infrastructure improvements throughout California in the years to come, Schwarzenegger said, adding that the state would need $500 billion of investment in infrastructure in the next 20 years.
In a joint statement the governors called for a substantial reduction in wait times to cross the border by 2013, and backed a drive by U.S. and Mexican federal agencies for funding to hire more border inspectors.
They also backed measures to curb crime in the borderlands, including human and gun trafficking.

Controversial Subject: But Worth A Thought

Suburban Legend
The American suburb was the greatest misallocation of resources in the history of the world… Why? Because it has no future, because we’re not going to be able to run it…. We don’t have the resource base to run it.
A lot of the delusions that are now rampant in the country all focus on the alternative energy scene. I want to be very clear about this, I am in favor of alternative energy. I think we’re going to do everything we possibly can. But the key to understanding alternative energy is this: First of all, we are going to be disappointed by what it can do for us, and second, it is not going to change the fact that we have to make other arrangements for all the important activities of daily life…

We’re having an incoherent conversation about that in our society right now because of the psychology of previous investment. We’ve invested so much of our wealth and even our identity in the [existing American] way of life that we can’t imagine letting go of it… But the “project of suburbia” is over as a period in our history and the homebuilders are going down and they will not be coming back.
We’re in the process now of losing somewhere between $1.5 and $3 trillion worth of capital. That capital is going to be lost. It went into a black hole and things don’t come out of black holes. We’re not going to have money to lend to people, least of all for mortgages. In fact, the whole idea of mortgage in America may be similar to what happened back in France after the Mississippi bubble. They didn’t even use the word “bank” for 150 years, it was such a toxic word.
And we are facing a huge problem with food. All of the systems of our daily life are going to have to be reformed, whether we like it or not…really. We’re going to have to grow more of our food closer to home. The age of the 3,000-mile Caesar salad is over! We don’t know how much food close to home we are going to have to grow, but at least more than we do now…probably a lot more… This is going to change completely our idea of how we value our rural, so-called undeveloped, land. Right now, we’re still in the frame of mind where undeveloped means undeveloped for suburban crap. But that’s going to be over. From now on it’s going to be land that has needs to be used for agriculture…
But let me step back for a moment, just to give you an idea of the differences between suburban development and urbanism. In suburbia, everything is rigorously and relentlessly segregated from everything else.
You’re not allowed to live near the shopping mall; the school cannot be anywhere near the business. Everything is separated and everybody has to get in the car and go out to the “collector boulevard” then go into the pod, whether it’s the education pod, the business pod, the housing pod and we can’t do that anymore. We can’t afford it, especially from 38 miles outside of Dallas and Minneapolis.
By contrast, traditional urbanism networks of interconnected streets mix use with people living close to the schools, the shopping and the business and it will become self-evident that very soon that that is superior way to live…
We don’t know what the city of the future is going to be like, but I believe our large cities are going to contract substantially, even while they “densify” at their centers… And one of the things we’re going to learn again, as the automobile begins to diminish its presence in our life is how wonderful the composition of the urban block can be, because the center of it is not going to be for parking… We are going to re-learn the design and assembly of human habitat and that too will be a self-organizing process, as we’re compelled to respond to the circumstances of the global energy emergency…

We need a self-image that informs us that we’re confident and that we are competent and that we are capable people. And that’s why one of the first things we have to do is rebuild the railroad systems in America, because it’s the one thing we can do right away that will have the greatest impact on our oil use. It will put thousands and thousands of people to work in all layers and skills. The infrastructure for running it is lying out there rusting in the rain and it’s the one project that we can do right away that will allow us to demonstrate that we can actually do something. We can do a collective project as a nation, as a society, as a people that can actually accomplish something important at this time.
You know…the kids in the college lectures are always asking me if I can give them hope. And the one thing that the college students don’t understand is that they have to become the generators of the hope. They have to generate it themselves within themselves by demonstrating that they are capable people who understand the signals reality is sending to them about the kind of world they are going to be living in the next 20–30 years…
We’ve got to build a different world here in North America now and we don’t have any time to waste. We don’t have time to be crybabies about it. We don’t have time to point fingers. We have too many things to do right away. We’ve got to reform the way we produce our food; we’ve got to change the way we do commerce and trade; we’ve got to change the way we get from point “A” to point “B,” and we have to inhabit the landscape differently and, as far as investors are concerned, we’ve got to find a way to do finance that’s not based on getting something for nothing, because that is what has gotten us into this situation we’re in now.

Massive Economic Collapse

WAG THE DOG: HOW TO CONCEAL MASSIVE ECONOMIC COLLAPSE
Ellen Brown, August 14th, 2008
“I’m in show business, why come to me?” “War is show business, that’s why we’re here.” – “Wag the Dog” (1997 film)
Last week, Fannie Mae and Freddie Mac had just announced record losses, and so had most reporting corporations. Unemployment was mounting, the foreclosure crisis was deepening, state budgets were in shambles, and massive bailouts were everywhere. Investors had every reason to expect the dollar and the stock market to plummet, and gold and oil to shoot up. Strangely, the Dow Jones Industrial Average gained 300 points, the dollar strengthened, and gold and oil were crushed. What happened?
It hardly took psychic powers to see that the Plunge Protection Team had come to the rescue. Formally known as the President’s Working Group on Financial Markets, the PPT was once concealed and its very existence denied as if it were a matter of strict national security. But the PPT has now come out of the closet. What was once a legally questionable “manipulator” of markets has become a sanctioned stabilizer and protector of markets. The new tone was set in January 2008, when global markets took their worst tumble since September 11, 2001. Senator Hillary Clinton said in a statement reported by the State News Service:
“I think it’s imperative that the following step be taken. The President should have already and should do so very quickly, convene the President’s Working Group on Financial Markets. That’s something that he can ask the Secretary of the Treasury to do. . . . This has to be coordinated across markets with the regulators here and obviously with regulators and central banks around the world.” 1
The mystery over what was going on with the dollar the first week in August was solved by James Turk, founder of GoldMoney, who wrote on August 7:
“[T]he banking problems in the United States continue to mount, while the federal government’s deficit continues to soar out of control. . . . So what happened to cause the dollar to rally over the past three weeks? In a word, intervention. Central banks have propped up the dollar, and here’s the proof.
“When central banks intervene in the currency markets, they exchange their currency for dollars. Central banks then use the dollars they acquire to buy US government debt instruments so that they can earn interest on their money. The debt instruments central banks acquire are held in custody for them at the Federal Reserve, which reports this amount weekly.
“On July 16, 2008 . . . , the Federal Reserve reported holding $2,349 billion of US government paper in custody for central banks. In its report released today, this amount had grown over the past three weeks to $2,401 billion, a 38.4% annual rate of growth. . . . So central banks were accumulating dollars over the past three weeks at a rate far above what one would expect as a result of the US trade deficit. The logical conclusion is that they were intervening in currency markets. They were buying dollars for the purpose of propping it up, to keep the dollar from falling off the edge of the cliff and doing so ignited a short covering rally, which is not too difficult to do given the leverage employed in the markets these days by hedge funds and others.”2
Just as central banks manipulate currencies in concert, so gold can be manipulated by massive selling of central bank reserves. Oil and any other market can be manipulated as well. But markets can be manipulated by only so much and for only so long without fixing the underlying problem. There is more bad news coming down the pike, news of such magnitude that no amount of ordinary manipulation is liable to conceal it.
For one thing, roughly $400 billion in ARMs (adjustable rate mortgages) have or will reset between March and October of this year. Assuming 3 to 6 months for strapped debtors to actually hit the wall with their payments, a huge wave of defaults is about to strike, continuing through March 2009 – just in time for the next huge wave of resets, in option ARMs.3 Option ARMs are loans with the option to pay even less than just the interest on the loan monthly, increasing the loan balance until the loan reaches a certain amount (typically 110% to 125% of the original loan balance), when it resets. The $800 billion credit line recently opened to Fannie Mae and Freddie Mac may be not only tapped but tapped out, at taxpayer expense. The underlying problem is little discussed but impossible to repair – a one quadrillion dollar derivatives scheme that is now imploding. Banks everywhere are facing massive writeoffs, putting the whole banking system on the brink of collapse. Only public bailouts will save it, but they could bankrupt the nation.
What to do? War and threats of war have been used historically to distract the population and deflect public scrutiny from economic calamity. As the scheme was summed up in the trailer to the 1997 movie “Wag the Dog” --
“There’s a crisis in the White House, and to save the election, they’d have to fake a war.”
Perhaps that explains the sudden breakout of war in the Eurasian country of Georgia on August 8, just 3 months before the November elections. August 8 was the day the Olympic Games began in Beijing, a distraction that may have been timed to keep China from intervening on Russia’s behalf. The mainstream media version of events is that Russia, the bully on the block, invaded its tiny neighbor Georgia; but not all commentators agree. Mikhail Gorbachev, writing in The Washington Post on August 12, observed:
“What happened on the night of Aug. 7 is beyond comprehension. The Georgian military attacked the South Ossetian capital of Tskhinvali with multiple rocket launchers designed to devastate large areas. Russia had to respond. To accuse it of aggression against ‘small, defenseless Georgia’ is not just hypocritical but shows a lack of humanity. . . . The Georgian leadership could do this only with the perceived support and encouragement of a much more powerful force.” 4
Bruce Gagnon, coordinator of the Global Network against Weapons and Nuclear Power, commented in OpEdNews on August 11:
“The U.S. has long been involved in supporting ‘freedom movements’ throughout this region that have been attempting to replace Russian influence with U.S. corporate control. The CIA, National Endowment for Democracy . . . , and Freedom House (includes Zbigniew Brzezinski, former CIA director James Woolsey, and Obama foreign policy adviser Anthony Lake) have been key funders and supporters of placing politicians in power throughout Central Asia that would play ball with ‘our side’. . . . None of this is about the good guys versus the bad guys. It is power bloc politics . . . . Big money is at stake . . . . [B]oth parties (Republican and Democrat) share a bi-partisan history and agenda of advancing corporate interests in this part of the world. Obama’s advisers, just like McCain’s (one of his top advisers was recently a lobbyist for the current government in Georgia) are thick in this stew.”5
Brzezinski, who is now Obama’s adviser, was Jimmy Carter’s foreign policy adviser in the 1970s. He also served in the 1970s as director of the Trilateral Commission, which he co-founded with David Rockefeller Sr., considered by some to be the “master spider” of the Wall Street banking network.6 Brzezinski, who wrote a book called The Grand Chessboard, later boasted of drawing Russia into war with Afghanistan in 1979, “giving to the Soviet Union its Vietnam War.”7 Is the Georgia affair an attempted repeat of that coup? Mike Whitney, a popular Internet commentator, observed on August 11:
“Washington’s bloody fingerprints are all over the invasion of South Ossetia. Georgia President Mikhail Saakashvili would never dream of launching a massive military attack unless he got explicit orders from his bosses at 1600 Pennsylvania Ave. After all, Saakashvili owes his entire political career to American power-brokers and US intelligence agencies. If he disobeyed them, he’d be gone in a fortnight. Besides an operation like this takes months of planning and logistical support; especially if it’s perfectly timed to coincide with the beginning of the Olympic games. (another petty neocon touch) That means Pentagon planners must have been working hand in hand with Georgian generals for months in advance. Nothing was left to chance.”8
Part of that careful planning may have been the unprecedented propping up of the dollar and bombing of gold and oil the week before the curtain opened on the scene. Gold and oil had to be pushed down hard to give them room to rise before anyone shouted “hyperinflation!” As we watch the curtain rise on war in Eurasia, it is well to remember that things are not always as they seem. Markets are manipulated and wars are staged by Grand Chessmen behind the scenes.

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

"The PATRIOT Act treats every citizen like a suspected terrorist and every federal agent as a proven angel." -James Bovard

Mogambo Rants Unemployment

UNEMPLOYMENT SURVIVAL GUIDE

by The Mogambo Guru
Judy Stark, the Homes and Garden editor for the St. Petersburg Times , writes that it is a “sign of the times” when a local county-sponsored workshop on vegetable gardening has suddenly hit the 200-person capacity of the room.
She says that this means, “there is great interest in growing your own food so you know what’s in it or on it, and avoid high prices at the grocery store.”
Fabulous! So now we know that the economic miracle that Alan Greenspan at the Federal Reserve was supposed to be delivering to us with all of that excessive creation of money and credit to finance the creation of permanent government programs, permanent inflation in the money supply, permanent inflation in consumer prices and permanent inflation in government employment has now required some people to take up subsistence farming to survive!
And it may be Canadians becoming small-scale farmers again, too, as Forextv.com reports that “Economists Say Canadian Labour Force Drop Shows Job Boom Is Over”, which is the reaction to a CEP News report that “55,200 Canadian jobs disappeared in July, the largest monthly drop since the early 1990s. The unemployment rate actually shrank, dropping a tenth of a point to 6.1% as an even larger number of people – more than 74,000 of them – dropped out of the labour force during the month.”
The numbers are similar in Quebec, as the unemployment rate there “edged up by two ticks to 7.4% while in Ontario, the rate fell to 6.4% from 6.7% in June as 42,000 people left the labour market.”
It makes you wonder how people “left the labor market”, as this would imply that their families did not constantly hound them and harass them to get another job right away, right now, now, now, now, and how me just sitting there on the couch in nothing but a pair of underwear and sucking down yet another bottle of cold brew proves that “Mom was right! You are a terrible, worthless, lazy father who doesn’t care about us!” and I am screaming back at them, “I could have told you that, you stupid damned kids!”
As I interpret it, Forex.com figures that the government is gearing up for a frontal assault on the people, where they will herd us mercilessly into processing facilities to turn us into Soylent Green, as is suggested by the fact that “A gain of nearly 30,000 public sector positions partially offset the loss of 95,000 in the private sector.”
In fact, “Since July of 2007, employment in the public sector has grown by 6.1% compared with +0.5% for the private sector.” Yikes!
All of this unemployment must be impacting demand for goods and services, which may be what prompted Jim Sinclair of jsmineset.com to ask a lot of questions, including “Do you really believe that present inflation is demand driven?”
This is the crux of the argument by Mark Gertler, a professor at New York University, who unbelievably writes to the Financial Times to take issue with the whole idea “that monetary policy is the root cause of the recent increase in the relative prices of energy and food.” Huh? Astonishingly, he says that concentrating on the increases in the supply of money “dismisses the critical non-monetary factors, including increasing commodity demand from strong capacity growth of the global economy, coupled with short-run supply constraints and various government distortions.”
To this, I laugh out loud and make rude noises in his direction as if someone farted, which makes me laugh out loud some more, and so I make more farting noises, which makes me laugh even louder, and then I am laughing so hard that I actually fart for real, which makes it even FUNNIER and pretty soon I am laughing so hard I can’t catch my breath, which is good because it smells like someone farted.
Well, I soon realized that the farting thing was not my most brilliant attention-getting device, as I can see the security guards gathering to plan their rush upon my position and hustle me out of here.
So, not wasting another precious moment and obviously without waiting to be asked why I am frantically waving my hand in the air like a lunatic and shouting, “Hey! Hey!” over and over, I instead shout out, “Hold on there, doofus! Demand is but desire made manifest, and there is no limit on desire! And if you don’t believe me, take your New York University butt over to my house and ask my family something like ‘Hey, how would you like a nice burrito?’ and you will notice they all say they would love to have a burrito!
“Then ask them ‘Hey, how would you like a new car?’ and they will all say that they would love to have a new car AND a burrito! And when you ask them, ‘And how are you going to pay for this stuff, you greedy little bastards?’ you will learn the ugly fact (as they have learned the ugly fact), that without the money to finance infinite desires, ‘demand’ doesn’t really mean squat.
“And so you can also forget about ‘capacity growth’, too, because without the money to fuel the demand growth, there ain’t no stinking capacity growth, and thus there won’t be any ‘short-run supply constraints’, although there will always be ‘various government distortions.’”
In short, the availability of money (the increase in the money supply) must come first if you are going to get systemic inflation in prices, and not the other way around, which you would think some hotshot economist from New York University would know!
And I’ll bet he doesn’t know that gold and silver are the “investment of choice” in response to such monetary insanity, either, so he’ll get his comeuppance, which pleases me greatly, for some reason! Hahahaha!

What A Load Of Crap!

World's farmers turn to raw sewage for irrigation


The future may not smell too rosy – it may lie in sewage. As cities and industries suck up ever more of the world’s scarce water resources, agriculture is destined to rely increasingly on recycling the contents of urban sewers, according to a new international study of “wastewater agriculture”.
The good news – for farmers at least – is that the irrigation water from sewers comes with free fertiliser in the form of the nitrates and phosphates bound up in human faeces. The bad news is that this coprological cornucopia is filling vegetables sold in city markets with heavy metals, pathogenic bacteria and worms.
An estimated one fifth of the world’s food is growing in urban areas, with perishables like vegetables to the fore. But a 50-city study by the International Water Management Institute (IWMI) – a World Bank-backed research agency based in Sri Lanka – finds that often the only source of the essential irrigation water to grow many of those crops is city sewage.
A market near you?
Half of urban fields are irrigated with sewage, suggesting that a tenth of the world’s food is already grown this way. IWMI’s director Colin Chartres warned this week: “This figure is bound to increase as growing cities coincide with escalating food shortages to create a squeeze on agricultural water supply.”
Theoretically, irrigating food crops with untreated wastewater is banned in many countries, one reason why there is virtually no research on the practice. But “while it may be theoretically forbidden, it is unofficially tolerated”, says the report’s authors, who found that city authorities in Faisalabad in Pakistan auction untreated sewage to farmers during droughts.
Some countries, including Israel, Mexico and Tunisia, treat sewage before delivering it to farmers, which removes bacteria and lumps, at least. But this is rare. In the Ghanaian capital Accra, 200,000 people buy vegetables grown on urban fields irrigated with tanker loads of wastewater that is untreated because the city’s sewage treatment works long since ceased to function.
Toxic build-up
“I am worried about the toxins, especially heavy metals, accumulating in foods like root crops," says Chartres. "But often there is simply no other water. In many ways it is a great use of the waste and the nutrients it contains.” He says the best answer is not to ban the practice, but to improve it.
“Even without expensive infrastructure, common sense measures can make wastewater irrigation safer.” Storing the wastewater in ponds allows solids to settle out, including the eggs of intestinal worms. And farmers should wash vegetables in clean water before selling them to markets.
The bottom line is that increasing numbers of people will starve, and many more will lose their livelihoods, without the benefits of recycled sewage.

Government Is Not Waiting To Reduce Social Security Benefits

Social Security: a controversial call to raise age of eligibility
Change would amount to a 14 percent reduction in benefits, on average.
By David R. Francis
from the August 11, 2008 edition
Bernard Wasow was making light of the disappearance of a favorite topic of his work, Social Security. "It has sunk out of sight," says the senior fellow at the Century Foundation, a liberal think tank.
Well, not quite. Last week the American Academy of Actuaries issued a rare "public interest" statement advocating raising Social Security's age when an eligible retiree receives full pension benefits another two years to 69. (A 1983 law boosted the age gradually from 65 to 67.)
"Holding the retirement age constant is a certain prescription for future financial problems," the 16,000-member academy stated. "Raising it to reflect increasing longevity would contribute to solving those problems."
Such a change would be equivalent to about a 14 percent average cut in Social Security retirement benefits.
Since 1 in 4 American families receive some form of Social Security benefit and since the two presumed presidential candidates differ sharply on their reform proposals for the nation's most popular safety net, the issue will likely be in the news again before the fall election.
Certainly the Democrats hope it will. They are trying to paint Republican presidential candidate John McCain as seeking the same failed goal as President Bush, the partial privatization of Social Security for younger workers.
Social Security popped up last month when Senator McCain said during a town hall meeting in Denver: "Americans have got to understand that we are paying present-day retirees with the taxes paid by young workers in America today. And that's a disgrace. It's an absolute disgrace, and it's got to be fixed."
Democrats and liberals leaped on this remark. They noted that Social Security benefits have always been financed by the working generation, that indeed this money transfer accounts for one-fifth of the entire federal budget.
It remains something of a mystery what changes in Social Security McCain would advocate if he wins the election. He promises not to raise the Social Security payroll tax, but then says everything is on the table. McCain's official campaign website (johnmccain.com) lists 16 topics as "issues" and deals with them in some detail. But not Social Security.
Barack Obama's website (barackobama.com) devotes almost three pages to Social Security. It notes his opposition to both hiking the retirement age "for hardworking seniors" and to privatizing Social Security. Senator Obama's plan calls for "shoring up" the program by applying the 6.2 percent payroll tax to income above $250,000 a year. This year, the cap subject to the tax stands at $102,000 (higher than the $97,500 cited on his website). So income between $102,000 and $250,000 would not be subject to the payroll tax. His proposal, in effect, would hit only high-income folks, about 3 percent of taxpayers.
Some of McCain's past statements on Social Security are collected at ontheissues.org, a nonpartisan website that provides information about the candidates. The statements indicate he sees Social Security finances as "a ticking time bomb," that surplus Social Security payroll tax revenues should not be used to finance other federal programs (as they are now), and that workers should be allowed to invest a portion of their Social Security taxes in private investment accounts (described by opponents as "partial privatization"). Again, whether these are his present views remains unclear.
Any plan for changing Social Security remains highly controversial. David Langer, a New York consulting actuary, sees the actuary group's call to raise the retirement age as inappropriate for a professional group and highly conservative and political, if not partisan, in its content.
Thomas Terry, an author of the academy statement, says its statement is based on recent annual reports of the Social Security Trustees indicating that the program is in actuarial imbalance. "I'm not sure what [political] means," he says.
Mr. Langer regards Social Security finances as actually in actuarial balance in its 75-year projections for the future and not needing further benefit cuts than the 25 percent already made or in the works since 1983.
To the Century Foundation's Mr. Wasow, the Social Security system definitely doesn't have a crisis "looking at us in the face." For one thing, any 75-year projection is highly problematical. The system was created in 1935 and its first 75 years will not be reached until 2010. Its founders would not have known of the end of the Great Depression, World War II, the cold war, legislative changes, and other factors impinging on its finances since 1935.
Wasow would not automatically oppose boosting the retirement age and other measures improving the system's financial soundness. He talks of hiking the cap on payroll taxes and at the same time increasing benefits for the well-to-do, though not nearly as much as the cap hike.
One problem, he notes, is statistics indicate longevity is on average closely associated with income. Those with low incomes are more likely to die at an earlier age than those with higher incomes. So the poor would be hit hardest by an increase in the retirement age.

Amazing. We're Going To Pay Reparations To A Terrorist Country. Just What Is Next?

Libya to receive reparations for Reagan air strikeCountry will be paid 'settlement' for U.S. retaliation after terrorist attack

Despite 189 American lives lost in the Pan Am Flight 103 bombing, the U.S. settled all lawsuits against Libya for terrorist killings and restored diplomatic relations with the country today – with reparations to be paid to Libya.
President Ronald Reagan ordered air strikes on Tripoli and Benghazi on April 15, 1986, after Libyan terrorists planted 6 pounds of plastic explosives packed with shrapnel on the dance floor of La Belle discotheque in Berlin, killing three people – including two U.S. soldiers – and maiming 200 others.

Two years later, Pan Am Flight 103 exploded in a terrorist attack by a Libyan intelligence agent. The blast killed 268 people from 21 countries, including 189 Americans. U.S. families filed 26 lawsuits against Libya for the 1988 bombing of the plane en route to New York from London.
The Bush administration began to consider restoring a relationship with the country in 2003 after Libyan leader Moammar Gadhafi promised to end production of weapons of mass destruction, halt terrorist activities and reimburse U.S. families of victims of the bombing of Pan Am Flight 103 and other terrorist bombings. Following its pledge, U.N., U.S. and European sanctions were lifted, Libya was taken off the State Department's list of state sponsors of terrorism and the country was granted membership in the U.N. Security Council.
An agreement required Libya to complete $2.7 billion in payments it had said it would provide to the families of victims. According to Associated Press reports, a senior Libyan government official claims there were also three lawsuits filed on behalf of Libyan citizens in response to Reagan's air strikes – attacks that Libya says killed 41 of its people and Gadhafi's adopted daughter.
Susan Cohen, mother of a 20-year-old woman killed in the Pan Am Flight 103, expressed outrage upon hearing news of the U.S.-Libya settlement.
"Gadhafi is an absolute horror," Cohen told WND. "He has done many, many terrible things. He blew up the French plane, and he blew up the American plane. And what does the Bush administration do? The Bush administration is far more on the side of the Libyans than it is as far as the victims of terrorism go, though it talks a good line about caring about terrorism. If they can make friends with Moammar Gadhafi because they want his oil, then that tells you where they stand."
Cohen said she cannot understand why the U.S. would reimburse Libyans for Reagan's air strikes – attacks that were a result of Gadhafi's bombing of the disco. She believes the U.S. pushed for diplomatic relations because the agreement could result in more contracts for American oil companies.
"I think this is absolutely horrible," she said. "It's really sickening, and it's really dirty. They are being very private and secretive about it."
While Libya has given $8 million of the $10 million it owed to many of the 268 families involved in the Pan Am explosion, it had refused to pay $2 million because of a disagreement with the U.S. about reciprocal obligations.

Nicole Thompson, a State Department spokeswoman, told WND, "The settlement goes to both sides. The settlement is for outstanding claims on the part of Libya as well as the United States."
When asked whether the U.S. will make payments to Libya, Thompson responded, "Yes."
An Associated Press report reveals that foreign companies conducting business in Libya – including U.S. companies – will begin paying into a fund to award damages to both Libyan and American claimants.

When WND asked the State Department spokeswoman if oil companies would have any part in paying reparations, she said, "I don't have any information on that, but it has been established. I have no information on what the financial agreement will be or the financial compensation that will be paid."
While Thompson said Libyans will receive a settlement as part of the agreement, she declined to reveal the source of the money.
"None of this will be U.S. government funding," she said.
The State Department has provided little information about the agreement. It issued a short press release stating only the following:
The United States and Libya concluded a comprehensive claims settlement agreement on August 14 in Tripoli. Both parties welcomed the establishment of a process to provide fair compensation for their respective nationals, and thereby turn their focus to the future of their bilateral relationship. They also underscored the benefits an expansion of ties would provide for both countries as well as for the American and Libyan peoples.
The U.S now plans to open an embassy in Tripoli, confirm a U.S. ambassador to Libya and grant Gadhafi's government immunity from more terror-related lawsuits, according to the Associated Press. Secretary of State Condoleezza Rice plans to visit Libya before the year's end.
"Condoleezza Rice is going to Libya to kiss Gadhafi's feet," Cohen said. "So this is what has come? He blew up an American plane. And I am supposed to have faith in the government of this country?"
U.S. diplomat David Welch delivered a personal letter from President George Bush to Gadhafi and signed the new agreement with Ahmed al-Fatouri, head of America affairs in Libya's Foreign Ministry.
"We went through a long path of negotiations until we reached this agreement," al-Fatouri said. "It opens new horizons for relations based on mutual respect. ... The agreement turns the page on the negative past forever."
However, Cohen doesn't share his sentiment.
"This is done after the murder of my innocent daughter and 270 people killed," she said. "Gadhafi was the one who was behind the attack on that disco, and Reagan responded. Does that mean the Republican administration is saying that Ronald Reagan and Gadhafi are equivalent terrorists?"

Citibank, Bank of America, and, Fraud? Cuomo to the Rescue!

An Interesting take On the Credit Crisis.....worth watching.

Citibank, Bank of America, and, Fraud? Cuomo to the Rescue!

An Interesting take On the Credit Crisis.....worth watching.

Environmental Hysteria 1/3:

Who Says "Sound Of cannons" Doesn't Have A Sense Of Humor?

Ron Paul on the Alex Jones Show 7/24/08

Ron Paul has the answers, but America won't listen.

Environmental Hysteria 1/3:

Who Says "Sound Of cannons" Doesn't Have A Sense Of Humor?

Sinclair With A Good Checklist Of Questions

It is time to regroup, recognizing that nothing has changed. What we saw today in the seven trillion dollar a day global marketplace were hedge funds, black boxes and terrified longs all heading through the same door at the exact same time.
The door is big enough but can seem awfully narrow when panicked participants head for the exits at the same time. Like the entrance way to a good rock concert, however, the traffic can be equally as heavy in both directions. Fear is an anomaly to witness. It appears as a stampede, with people kicking and shoving to get out of the same burning building. The awful truth is that there really was no fire - although perception is often worse than reality.

Ask yourself the following questions:

1. Are US banks more trustworthy today than they were on Monday?
2. Are you aware of a new problem called Auction Rate Bonds which are estimated at between $400 to $500 Billion? The Fed will have to pony this money up as the problem is focused on just those institutions that are already at the Fed Begging Bowl window. Logically, if they are borrowing to retain wiggling room, it is simple logic to understand the new problem is very much the Fed?s problem, which in turn is another problem for your kids to bear.
3. Do you really believe that because technicals are presently supporting the dollar it will regain its prior position as the universal Reserve Currency of choice?
4. Do you really believe that your retirement funds will regain the value that has been stripped away by all forms of Securitized Investment Vehicles?
5. Do you really believe that there is such a thing as global demand destruction in the energy sector as Asia keeps ticking at high economic levels?
6. Do you really believe that after the Olympics are over that China will collapse?
7. Do you really believe that Europe's economic situation will be more severe that the USA's? Have you noted that the USA had a rather good head start towards a severe recession?
8. Do you really believe that any currency is a better storehouse of value than gold?
9. Do you really believe that all the OTC derivative problems are now behind us?
10. Do you really believe that the credit market is loosening up enough to benefit credit-starved businesses?
11. Do you really believe that the public entities whose entire business involves insuring the value of debt instruments can really make good as bankruptcies increase?
12. Do you really believe that present inflation is demand driven?
13. Do you not know that the price increases now being witnessed are a product of monetary inflation for which increased interest rates render no effect?
14. Do you not know that the ECB?s action of leaving rates unchanged favors the euro over the dollar?
15. Do you really believe that the next move of rates in the US is up?
16. Do you really believe that all those central banks seeking to diversify out of the US dollar have changed their minds?
17. Do you feel certain that Israel will permit Iran to reach that point where a push of a button can incinerate its citizens?
18. Are you sure that Pakistan holds no challenge to life as we know it on this planet? If the answer to all the above is yes then buy some cheap financials, sell all your non-dollar currencies and go long the good old greenback. If you do not accept all the above as reality then be calm. As long as you are not on margin you have no problem. The only result of this week?s market action may be to postpone gold's ascent to $1,200 by 90 days. That is a big maybe, however. I accept the responsibility of my words offered to you in truth to reinforce what is correct. Today was made difficult through the din of fear and the bullying of hedge fund fiends.

Why Is The US Dollar Rebounding?

Mystery Solved
On July 15th the US Dollar Index closed at 71.87, the lowest close since reaching its record low in April. This index was in the process of breaking down, and in fact it had actually fallen out of its uptrend channel on the following chart.
However, rather than continue lower and fall off the edge of the cliff, the Dollar Index suddenly and mysteriously reversed course. It has now risen on 12 of the 17 trading days since reaching that low, and closed today at 74.55, a 5-month high. What caused this index to suddenly pull back from the brink and then reverse course to shoot higher over the past three weeks?
The Federal Reserve did not suddenly contract the amount of dollars in circulation. Its latest H.6 report shows that both M1 and M2 expanded in recent weeks, so there was no shortage of supply.
The Federal Reserve did not raise interest rates during this period. Consequently, inflation adjusted interest rates remain negative. In other words, the annual inflation rate is higher than the amount of interest one can earn on a 1-year dollar deposit, which is highly inflationary and a major disincentive to holding dollars.
There has not been any news exceptionally favorable to the dollar. In fact, the banking problems in the United States continue to mount, while the federal government's deficit continues to soar out of control. On July 28th Reuters reported that "The Bush administration on Monday plans to project the U.S. budget deficit will soar to a new record...because of the slowing economy and an economic stimulus plan approved this year."
So what happened to cause the dollar to rally over the past three weeks? In a word, intervention. Central banks have propped up the dollar, and here's the proof.
When central banks intervene in the currency markets, they exchange their currency for dollars. Central banks then use the dollars they acquire to buy US government debt instruments so that they can earn interest on their money. The debt instruments central banks acquire are held in custody for them at the Federal Reserve, which reports this amount weekly.
On July 16, 2008 (the closest date of the weekly reports to the July 15th low in the Dollar Index), the Federal Reserve reported holding $2,349 billion of US government paper in custody for central banks. In its report released today, this amount had grown over the past three weeks to $2,401 billion, a 38.4% annual rate of growth. To put this phenomenally high growth rate into perspective, for the twelve months ending this past July 16th, assets in the Federal Reserve's custody account grew by 17.3%, which is less than one-half the growth rate experienced over the past three weeks.
So central banks were accumulating dollars over the past three weeks at a rate far above what one would expect as a result of the US trade deficit. The logical conclusion is that they were intervening in currency markets. They were buying dollars for the purpose of propping it up, to keep the dollar from falling off the edge of the cliff and doing so ignited a short covering rally, which is not too difficult to do given the leverage employed in the markets these days by hedge funds and others. So central banks pushed in one direction and funds and traders then stepped on board. In other words, central banks ignited the fuse of a bear market rally.
With this intervention, central banks have bought some time. But alas, they have not fixed the problem. Central bank intervention does not make the dollar "as good as gold", the description that once accurately described the dollar.
In the final analysis, it is fundamental factors that determine the course of markets and the process of price discovery that results from them. Central bank intervention - like fiat currency itself - is ephemeral. In contrast, gold lasts throughout the ages. So what would you rather own? A sick dollar that it requires central bank intervention to prop it up? Or gold?

Bloomberg Calls Ratio Out Of Whack........Hmmmmmmm

Gold, Oil Ratio `Out of Whack' After Declines: Chart of the Day
By Claudia Carpenter

Aug. 8 (Bloomberg) -- Gold may outperform crude oil in the next six months as buyers in India, the world's biggest consumer of gold, stock up on the metal, according to Patrick Chidley, an analyst at Barnard Jacobs Mellet USA LLC.
Gold jewelry demand in India and Turkey was ``extremely strong'' in the past week, with sales to India the highest since this time last year as buyers took advantage of lower prices and rebuilt inventories, according to UBS AG. Gold has dropped 16 percent from a record in March as lower oil prices eroded demand for the metal as an inflation hedge and jewelry demand waned.
The CHART OF THE DAY highlights the ``black gold ratio,'' showing how much gold it would take to buy a barrel of oil. The ratio rose to 0.1538 of an ounce on June 12, the highest since at least 1950, and averaged 0.066 since 1970. Based on historical averages, if oil falls to $100, gold would go to $1,515 an ounce.
Gold traded at $862.65 an ounce as of 10:46 a.m. in London, while crude oil was at $118.05 a barrel in New York.
``This ratio is way out of whack,'' Chidley said from Stamford, Connecticut. ``As we've seen the oil price come off, that relationship could come back into focus and I see the relationship below 0.1 in the next six months with gold coming up. Indian jewelers have to come back to the market.''
The October-December period is the busiest season in India for jewelry sales, spurred by the wedding season and Diwali, the Festival of Light.

Sinclair Offers Some Explanations To This Turbulent Market

What definitions and explanations can be derived from the gold and Euro action last week? Here they are:

1. The intervention without any doubt has established that gold is a currency. Because the Euro will trade at $2 or more before this drama has finally ended, gold is guaranteed to follow - probably in multiples of the Euro?s action.
2. In hindsight, intervention started when the Euro was at $1.5975. This reveals the point above which no intervention can have any appreciable impact. That level is $1.6025 three times for 24 hours in a row.
3. Paulson's desire not to remain Secretary of the Treasury says that any plan currently in place will play out in 161 days at the most. That does not say that current markets have a 161 life but rather that everything between now and day 161 is short term, camouflage, spin and inherently weak from a market perspective. Paulson's decision not to remain in this most prestigious financial position speaks to the degree of danger that the psychologist-packed Plunge Protection Team (PPT) has worked so diligently to keep mass perception from being focused upon.
Summary: Everything remains the same but the fear factor has increased. What's happening in the stock market at the moment is no more than another bear market rally in which the purchase of index puts on the Rhino (when the market appreciation resembles a Rhino horn) makes sense. Gold will rise to $1,200 possibly 90 days later than anticipated. Gold will trade at $1,650 or more before the second week of January 2011. The US dollar will trade at .62 USDX and after great efforts to stop the decline trade at .52 USDX. Black Boxes are primarily momentum driven so keep an eye on that fact in terms of the US dollar versus the Euro.

Invisibility? This Stuff Freaks Me Out!!!

Invisibility cloak one step closer, scientists say
Sun Aug 10, 2008 6:54pm EDT
By Maggie Fox, Health and Science Editor
WASHINGTON (Reuters) - Scientists have created two new types of materials that can bend light the wrong way, creating the first step toward an invisibility cloaking device.
One approach uses a type of fishnet of metal layers to reverse the direction of light, while another uses tiny silver wires, both at the nanoscale level.
Both are so-called metamaterials -- artificially engineered structures that have properties not seen in nature, such as negative refractive index.
The two teams were working separately under the direction of Xiang Zhang of the Nanoscale Science and Engineering Center at the University of California, Berkeley with U.S. government funding. One team reported its findings in the journal Science and the other in the journal Nature.
Each new material works to reverse light in limited wavelengths, so no one will be using them to hide buildings from satellites, said Jason Valentine, who worked on one of the projects.
"We are not actually cloaking anything," Valentine said in a telephone interview. "I don't think we have to worry about invisible people walking around any time soon. To be honest, we are just at the beginning of doing anything like that."
Valentine's team made a material that affects light near the visible spectrum, in a region used in fiber optics.
"In naturally occurring material, the index of refraction, a measure of how light bends in a medium, is positive," he said.
"When you see a fish in the water, the fish will appear to be in front of the position it really is. Or if you put a stick in the water, the stick seems to bend away from you."
These are illusions caused by the light bending when it moves between water and air.
NEGATIVE REFRACTION
The negative refraction achieved by the teams at Berkeley would be different.
"Instead of the fish appearing to be slightly ahead of where it is in the water, it would actually appear to be above the water's surface," Valentine said. "It's kind of weird."
For a metamaterial to produce negative refraction, it must have a structural array smaller than the wavelength of the electromagnetic radiation being used. This was done using microwaves in 2006 by David Smith of Duke University in North Carolina and John Pendry of Imperial College London.
Visible light is harder. Some groups managed it with very thin layers, virtually only one atom thick, but these materials were not practical to work with and absorbed a great deal of the light directed at it.
"What we have done is taken that material and made it much thicker," Valentine said.
His team, whose work is reported in Nature, used stacked silver and metal dielectric layers stacked on top of each other and then punched through with holes. "We call it a fishnet," Valentine said.
The other team, reporting in Science, used an oxide template and grew silver nanowires inside porous aluminum oxide at tiny distances apart, smaller than the wavelength of visible light. This material refracts visible light.
Immediate applications might be superior optical devices, Valentine said -- perhaps a microscope that could see a living virus.
"However, cloaking may be something that this material could be used for in the future," he said. "You'd have to wrap whatever you wanted to cloak in the material. It would just send light around. By sending light around the object that is to be cloaked, you don't see it."

An Interesting Take On The GOP............(They're Goofballs)

The Moronic Party
Monday, Aug 11, 2008
“Although it is not true that all conservatives are stupid people, it is true that most stupid people are conservative.”
– John Stuart Mill
Many years ago, during the 1970s if memory serves, neoconservative Irving Kristol, echoing John Stuart Mill, called his conservative party, the Republican Party, “the stupid party.”
Kristol was referring to the Republican’s inability to compete on the policy front. Jack Kemp and Ronald Reagan led the Republicans out of the wilderness, but now Republicans have reverted to the stupid party, or more precisely the moronic party.
Take a minute to examine the presidential campaign propaganda that Republicans send around the Internet, and you will see what I mean. For example, recently while Obama was traveling abroad, showing himself to the remnant of our allies, Republican political operatives blitzed the Internet with the suggestion that Obama might not be an American citizen. Doubt was cast on either of his parents being American citizens. The message went on to suggest that Obama refused to produce his birth certificate. All the while, Obama was traveling abroad on a US passport, a document that cannot be obtained without a US birth certificate.

Considering that the Republican candidate, John McCain, was born in the Panama Canal Zone, only the GOP would be dumb enough to make an issue over whether the Democrats’ candidate was born in one of the 50 states.
The innuendo and negativism with which the Republicans are conducting their presidential campaign are unprecedented. There is no sign of issues in McCain’s Karl Rovian campaign. Issues have been superseded by hate, lies, and war.
Republicans stand for war without end, a police state to make us “safe,” and “energy independence,” which means drilling for oil in the Arctic National Wildlife Preserve and offshore of Florida’s Gulf Coast beaches.
What Republicans really mean by “energy independence” is prevailing over environmentalists. Republicans lump environmentalists in the same category with abortionists, gays, feminists, food stamp recipients, trade unionists and terrorists. To a Republican, saving America means prevailing over these people.
The notion that Americans can achieve energy independence by drilling offshore wells and in the arctic is absurd. A number of experts have pointed out that the best data do not support any such possibility.
For example, Robert Kaufman at Boston University, citing US government data, reports that the US might have 40 billion barrels of oil in undeveloped reserves which are not off limits. Another 19 billion might be in off limit offshore sites and in the Arctic National Wildlife preserve.
All of this oil cannot be brought up at once, and apparently none before 2017. Bringing it all into production would, experts think, increase US oil production by 1-4 percent. In other words, nothing. Currently the US uses 21 million barrels a day, and the entire world uses 86 million barrels a day. At best, the Arctic Wildlife Refuge could by 2017 produce 1 million barrels a day, about one-twentieth of current US use and one-eighty-sixth of current world use.
This is not energy independence, and it would have no material effect on price. Indeed, the offshoring by US corporations of US jobs has a much greater effect on the dollar price of oil by inflating the US trade deficit and driving down the exchange value of the US dollar. But, of course, here we are talking about facts, and facts are of no interest to Republicans.
Republicans are interested in prevailing over the “bad guys.” The fact that the bad guys are Bush, Cheney, Rice, Wolfowitz, Perle, Billy Kristol, and other such is beyond the Republicans’ imagination. Bad guys are “towel heads” with beards and robes and are “over there” where they must be killed before the come “over here.” The extent of the Republican intellect boils down to “over here” vs. “over there.”
The other great bugaboo of Republicans is “the liberal media.” Fox “News” has Republicans convinced that “the liberal media” is endangering America by siding with terrorists.
Clearly, Republicans never look at “the liberal media.” It was Judith Miller at the “liberal” New York Times who served up as fact all the neocon disinformation about Saddam Hussein and his weapons of mass destruction and al Qaeda connections. Without the New York Times leading the way, the neocons could never have pulled off their illegal invasions.
On July 18, 2008, the New York Times allowed the Israeli historian Benny Morris to spew lies about Iran that he used to justify an attack on that country possibly even involving nuclear weapons. This is the same New York Times that the idiot conservatives believe is part of “the liberal media.”
It was ABC News that served up the neocon disinformation that the anthrax had been traced to Saddam Hussein. And, today, August 9, 2008, as I write, it is the “liberal” Washington Post that has written an editorial urging the US to go to war with Russia.
With its editorial, “Stopping Russia: the US and its allies must unite against Moscow’s war on Georgia,” the Washington Post has established a world record for the maximum number of lies in the minimum number of words.
Except for the Washington Post, the entire world knows that Georgia (the birthplace of Joseph Stalin, not Georgia USA) initiated the aggression that killed Russian peacekeepers and hundreds of civilians in South Ossetia, peacekeepers who were there with the blessing of Georgia and international agreements.
The true facts are available all over the world press. But the “liberal” Washington Post serves up the lie that Russia has attacked Georgia and conceivably plans to conquer all of Georgia. “This is a grave challenge to the United States and Europe,” thunders the Bush Regime’s mouthpiece, aka, “the liberal media.”
Thirsting for blood, the “liberal media” declares: “The United States and its NATO allies must together impose a price on Russia.”
Here we see the combination of idiocy and delusion in one sentence. The United States has proved that it is incapable of occupying Iraq, much less Afghanistan. Russia has a large trade surplus. America’s NATO allies are dependent on Russian natural gas. Yet the “liberal” Washington Post wants a bankrupt US and “its NATO allies” who are dependent on Russian energy “to impose a price on Russia” for defending its peacekeepers!
Seldom has the world seen such total insanity as the neoconservative Washington Post, a propaganda sheet as far from “liberal media” is it is possible to be.
Georgia was part of Old Russia and the Soviet Union for two centuries. After Soviet communism collapsed, the US taxpayer funded neoconservative National Endowment for Democracy broke every agreement that President Reagan had made with Gorbachev and began using US taxpayers’ money to rig and purchase elections in former constituent parts of the Russian/Soviet empire.
The Endowment for Democracy purchased Georgia as a US colony. The affront to Russia was extreme, but at the time Russia was weak. Oligarchs with outside money had grabbed control over Russian resources, and Russia was in dire straits and could not resist American imperialism.
Putin corrected the situation for Russia.
Now using American weapons Georgia for reasons yet to be revealed has violated its own agreement with Russia and attacked South Ossetia, killing in the process Russian peacekeepers. Vladimir Vasilyev, chairman of the Russian State Duma Committee for Security told the press: “The things that were happening in Kosovo, the things that were happening in Iraq – we are now following the same path. The further the situation unfolds, the more the world will understand that Georgia would never be able to do all this without America.”
Yes, without America there would be no war in Ossetia and no war between Russia and its former constituent part.
Without America there would be no war in Afghanistan. No war in Iraq.
Without America there would not be 1.2 million dead Iraqis and 4 million displaced Iraqis. We have no idea of the toll on Afghan civilians, although women and children appear to be the prime targets of the US/NATO forces that are “bringing peace and freedom to Afghanistan.”
Recently, US Secretary of State Condi Rice said that the US government could not prevent an Israeli attack on Iran. Israel is an independent country, said the American Secretary of State. What an extraordinary lie.
Israel cannot exist without American weapons and money. Israel cannot attack Iran without overflying Iraq, which the US air force can easily prevent. It is clear as day that the Bush Regime has given the green light to Israel to attack Iran so that the Bush Regime can rush to “Israel’s defense.”
Meanwhile the “liberal” media is urging the US to get involved in a war between Russia and Georgia. The insanity will lead to the unloosening of nuclear weapons.

Temporarily We're Relieved, But Not For Long......

Supply crunch may bring $200 oil in 5-10 yrs-study
Thu Aug 7, 2008 7:01pm EDTBy Adrian CroftLONDON, Aug 8 (Reuters) - The world faces a serious oil supply crunch within five to 10 years that may drive prices up to more than $200 a barrel, a British think tank said on Friday.The Chatham House report says $200 oil is possible, barring a collapse in demand, because of inadequate investment by oil companies in raising output -- not because of a lack of oil underground.A supply crunch appears likely around 2013, "even allowing for some increase in capacity over the next few years," says the report by Paul Stevens, a senior research fellow at Chatham House."The implication is that it will quickly translate into a price spike although there is a question over how strategic stocks might be used to alleviate this," the report adds, concluding that "a spike of over $200 is possible."The report concedes that it uses a "controversial and extremely bullish" forecast of future oil demand and supply.It assumes Saudi production capacity will remain flat after reaching 12.5 million barrels per day in 2009 and that the capacity of other OPEC countries remains flat after 2008.Oil prices have risen sharply in the last few years, with U.S. crude shooting to a record of more than $147 a barrel in July before easing back to around $120 now.The report said investment in new oil supplies has been and will be inadequate, partly because international oil companies have incentives to return dividends to shareholders rather than reinvest them.It also cited "resource nationalism" in some producer countries that exclude international oil companies from helping develop production capacity. It also noted that some governments limit investment in their national oil companies.The report noted that governments in industrialised countries have been reluctant to intervene in energy markets. It said markets alone could not provide sufficient incentives for conservation or to bring more energy on-stream, and that a price spike might break down opposition to intervention.Stevens told Reuters he favoured greater government intervention, but said it should be "intelligent intervention.""A good example is energy conservation and improved energy efficiency. If you leave that to the market it is simply not going to happen, or is going to happen very, very slowly," he said.Stevens had mixed feelings about the scenario his report paints."At one level we should be worried because it means we are going to be running into energy shortages. On the other hand maybe it's a good thing, maybe that's what we need -- much higher prices -- to actually get people to start doing sensible things about energy," he said.

Gee Hank, Why Wouldn't You Stay On????

Paulson rules out staying on at Treasury

Aug 10 04:49 PM US/Eastern

Treasury Secretary Henry Paulson believes the US housing market will remain in a slump through the rest of the year, but does not intend to stay on to help the next president cope with the crisis.
In an interview with NBC News airing Sunday from Beijing, Paulson said he did not plan to inject public money into two troubled US mortgage giants, and laid out the case for new regulation to keep capital markets under control.
Whether the next president is John McCain or Barack Obama, "I will do everything I can to make for a smooth transition, to work closely with my successor in Treasury," he said.
There has been media speculation that the Republican McCain or even his Democratic rival Obama could ask Paulson to stay on to help unwind the housing crisis buffeting US consumers and Wall Street.
"But I'm focused on getting everything done I can get done between now and January 19th," the former Goldman Sachs boss said, referring to the last full day of President George W. Bush's administration.
"I'm going to do everything I can to step up to any problems that are going to face the country, but again, I look forward to doing other things, you know, next year."
In the interview, which was taped Saturday, Paulson reaffirmed that "I believe it is going to take us well beyond the end of the year to work through all of the housing problems."
Until the housing market starts to recover, "we're going to continue to have turmoil in our capital markets."
But he stressed that in the global rankings of major economies, "the long-term economic fundamentals of the United States compare very favorably."
The Treasury chief defended a government lifeline thrown to the mortgage finance giants Freddie Mac and Fannie Mae, which together account for about 70 percent of all US home loans.
Plunging share values and shocking losses have raised new questions about the two firms' solvency, but Paulson said he had no plans to tap his new authority to buy equity in the companies to boost their capital.
"Well, we have no plans to insert money in either of those institutions," he told NBC.
"I think it was very important that we get these temporary backup facilities, because Fannie and Freddie are important to our capital markets broadly," he said.
Paulson disagreed with Democratic leaders including Obama who want a second stimulus plan to boost the US economy, following a 168-billion-dollar package stuffed with tax rebates that was enacted in February.
He said that following US economic growth of 1.9 percent in the second quarter, which was better than the first quarter's 0.9 percent pace, "my view would be let's see how this program works in the third quarter."
Paulson, agreeing with Bush that Wall Street had got "drunk" and was now suffering a hangover, said new regulation was needed to cope with the daunting complexity of modern banking's investment practices.
"We have a regulatory system that is very outdated. It was put in place many years ago," he said, calling for a legal revamp "across the board."

Land Grab By The Elite

LOST SOVEREIGNITY
OIL-RICH FUND EYEING FORECLOSED US HOMES
By TERI BUHL

There's a new land grab starting in America.
Foreign money, which up to now has focused its attention on investing in iconic commercial real estate - like Barneys New York and the Chrysler Building - is now moving to scoop up tens of thousands of discounted foreclosed homes across the country.
One sovereign fund, said to have earmarked $29 billion to purchase foreclosed residential real estate, recently hired a West Coast mortgage broker and is starting to search for bargains, The Post has learned.
The search, which is being carried out, in part, by Field Check Group mortgage consultant Mark Hanson, who was retained by the broker, Steve Iversen, is concentrating on single- and multi-family REO (real estate owned) homes, or homes that have already been taken over by the mortgagee.
Neither Iversen nor Hanson would disclose the name of the client, but sources told The Post it's a sovereign fund.
The unidentified fund joins individual US investors, hedge funds and Wall Street banks in kicking the tires of REO homes, which have fallen in value so much that they are now tempting investments.
A sovereign fund would have two distinct advantages over other investors - the depressed value of the US dollar makes the homes a bargain, and sovereign funds have deeper pockets.
The sovereign fund of Abu Dhabi, for example, has a reported $875 billion in assets, while Norway has $391 billion, Singapore has $303 billion and Kuwait has $264 billion in their sovereign funds, which are funded by proceeds from oil sales.
The Abu Dhabi Investment Authority is expected to announce next month what type of US distressed assets they will be investing in and real estate is at the top of the list, according to a report in Financial Times last week.
ADIA did not respond to an e-mail question about REO investments.
So far, prices on bulk sales of REO properties vary based on location and are selling from 60 cents to 80 cents on the dollar. Hanson started out offering 40 cents on the dollar for about $2.5 billion worth of California properties owned by IndyMac and Washington Mutual but was turned down. The banks refused to comment.
Hanson is now willing to pay 50 cents to 60 cents on the dollar for a collection of California REOs worth at least $500 million.
In fact, this week Hanson's team negotiated a $2 billion package mixed with homes across the country for 31 cents on the dollar. While progress seems slow, Hanson reminds us this is only a nine-month old industry.
Some market experts think such deeply discounted REOs, like the deal Hanson just closed, are more fiction than fact.
"The size and discount of that type of deal isn't the norm yet," said Robert Pardes, with Recourse Recovery Management Services, a provider of mortgage advisory services.
"The critical mass of bulk REO is in well-capitalized institutions that don't need to sell yet in bulk at a deep discount because they are better off not taking substantial hits to the capital just to get the assets off their books,"
This may change, should the market become more crowded with bank failures and distressed institutions, he said.
Enoch Lawrence, senior vice president of CB Richard Ellis, says "This type of bulk buy would make an impact on the market. They are in a unique position because they have a long time horizon to invest and a cheap cost of capital. It's actually a perfect time for them to acquire these REO assets."

Y'Know, We Ignored Russia When They Attacked the Czechs Back In The Day!

Georgia on our minds

Russian attack response to Kosovo independence, message to Ukraine

WASHINGTON – If you want to understand why Russia chose this moment to invade U.S.-ally Georgia in hopes of reclaiming South Ossetia, a province with fewer than 100,000 residents, you need to think globally, according to a report from Joseph Farah's G2 Bulletin.
This is much more than the regional conflict it is portrayed as by Russian Prime Minister Vladimir Putin.
In fact, it has as much to do with the West's plans for Kosovo independence and Russian territorial disputes with Ukraine than it does with Russia's desire to punish Georgia, a former Soviet republic Moscow blames for the breakup of its empire nearly two decades ago.
NATO is moving forward with plans for independence for the Serbian province of Kosovo, a move that can only be understood in the context of an appeasement of the Islamic world. Kosovo has always been part of Serbia. It has never been an independent nation. But NATO chose to back a Muslim push for independence from Russian-ally Serbia.

Now Russia believes it has the moral authority to push for the same kind of "independence" for South Ossetia.
Combine Russia's humiliation over Kosovo with NATO's flirtation with admitting Georgia as a member and you begin to get an idea of how Moscow was feeling isolated. But it gets even more complicated.
Russia has similar territorial disputes with former Soviet republic Ukraine. The invasion of Georgia was also a message to Ukraine that Russia is serious about recapturing some of the glory of its former imperial ambitions.
In fact, Russia is already blaming Ukraine for supporting Georgia in a preposterous bid to "ethnically cleanse" South Ossetia of Russian nationals.
"The Ukrainian government, which has been enthusiastically arming Georgian troops from top to bottom, was in fact encouraging Georgia to attack and carry out ethnic cleansing in South Ossetia," the Russian foreign ministry said in a statement.
There are other Russian neighbors watching the conflict warily -- Kazakhstan, Nagorno-Karabakh and the Balts.
How will the U.S. respond to the Russian aggression? Probably with no more than words, because the Russians know Washington is still preoccupied in Iraq and Afghanistan and deeply concerned about developments in Iran.

Reparations? Yeah, The French Kings Stole From My Ancestors! I Need A Handout!

Democratic convention chiefwants reparations for blacksShares controversial 'liberation' theology with Obama's ex-pastor Jeremiah Wright

The leader anointed by the Democratic Party to assemble the coronation of a 2008 presidential candidate in Denver in two weeks espouses the same black liberation theology pursue by Rev. Jeremiah Wright, whose church presumptive nominee Barack Obama was forced to leave because of its controversies.
Those included Wright's condemnation of America, a vicious attack on Hillary Clinton from the pulpit and others, and WND reported when, finally, the Obama campaign announced he was resigning his 20-year membership in the controversial organization.
Now a profile in the New York Times has revealed that Rev. Daughtry, whose father, Herbert Daughtry, who served prison time during his 20s for armed robbery and bad checks, also runs a church, shares popular "black liberation theology" beliefs such as the "debt" the United States "owes" all blacks as reparations for the existence of slavery two centuries back.
In a description of the church where family members have preached for decades, the Times said, "Below the sanctuary, in the fellowship hall, a banner for slavery reparations proclaimed, 'They Owe Us.' Fliers recounted Herbert Daughtry's arrest, a few weeks earlier, as he led marchers protesting the not-guilty verdict in the police killing of Sean Bell, an unarmed black man. His ministry has always combined consuming spirituality with black liberation theology – the theology Jeremiah Wright invoked this spring to defend his controversial sermons – and zealous political activism. Leah holds these forces within her."

Judi McLeod, a former Toronto Sun columnist, reported it will be, "Rev. Jeremiah Wright in a skirt" as CEO of the Democratic National Convention in Denver.
"While the media hounded Wright for his anti-American rants and while presidential hopeful Sen. Barack Hussein Obama divorced him as his personal pastor, Obama's head will be crowned by Leah Daughtry, who ardently believes in the same Marcist 'Black Liberation Theology' preached by Wright," McLeod wrote on Canada Free Press.
When Howard Dean, chairman of the DNC, announced Rev. Daughtry's appointment to the post of CEO in Denver, he cited her "strong guidance, skilled leadership and counsel."
She previously, he wrote, had served at the U.S. Department of Labor as assistant secretary of administration and management during the Clinton administration.
"We are thrilled to have Leah Daughtry leading our 2008 Democratic Convention team," Dean said at her 2007 appointment.
"I am honored to be a part of this exciting endeavor," Rev. Daughtry, of the House of the Lord Church in Washington, D.C., said then.
"Like Wright, Daughtry is in your face about her activism: 'That’s why I work in politics. My family, we're activists,' she described herself to TheHill.com in May 2007," wrote McLeod.
That interview included a number of revealing questions and answers.
Rev. Daughtry said her Pentecostal faith fits perfectly with the Democrat Party. "Why wouldn't it fit?" she suggested. "The Democratic Party is full of people of faith."
"Have you been to our conventions? Music and waving and happiness, it's perfect," she told The Hill.
Said McLeod: "Some would say with Marxist Momma in the top job, it's little wonder why Barack Obama is the DNC's Golden Boy coming to Denver with mainstream media garnered rock star status."
Daughtry also told The Hill it actually "makes me angry" that the "far right" has cornered the market on religion.
The Times reported Daughtry, 44, "is leading the Democratic Party's new mission to make religious believers – particular ardent Christian believers – view the party and its candidates as receptive to, and often impelled by, the dictates of faith."
Dean himself, during his 2004 campaign, had exposed his own biblical ignorance by naming Job as his favorite book in the New Testament, the Times said.
Dean told the Times Daughtry's arguments for acknowledging religion hit with the strength of revelation and Rev. Daughtry has a way "to connect with people's inner core."
Daughtry, who has not named her "favorite" for the nomination, however, has expressed pleasure over the Democrats' claim to be a party of members of faith.
"I think it's wonderful," she told the Times.
"Daughtry's mission, directed from within Democratic headquarters in Washington and the convention offices in Denver, is essential to transforming the party's reputation. So E. Terri LaVelle, an evangelical … who said, within a few minutes of our sitting down to talk, 'On the last Saturday in February 1973, I accepted the Lord Jesus Christ as my savior,' has traveled to evangelical events around the country, seeking to strike up relationships with leaders like the megachurch pastors Rick Warren and Joel Hunter and hoping that, at the very least, the party's new attention and respect, its desire to listen and engaged with evangelical issues, including abortion, is recognized," the Times reported.
She supports abortion, as does her father's church.
"God allows us to choose in the biggest matter whether to accept Him in our lives. How then can we take away choice on other profound issues?" she said.
Throughout her Times interview, "She didn't put any distance between herself and [the] book 'A Black Theology of Liberation," the report said. "At the basis of black liberation theology is the understanding that God has a special place in His heart for those at the bottom of the ladder," Rev. Daughtry said.

American Bailouts The Envy Of Socialist Assholes EVERYWHERE..............

The Great American Bailout: Costs, Repercussions and the End of U.S. Financial Domination

Inflate or die. That's the Federal Reserve's mantra since the sub-prime credit crisis first hit the investment scene last August.
Since then, this crisis has taken a destructive path and pummeled global equity and bond markets along the way. Global banks have also lost a combined US$1.6 trillion worth of stock market capitalization since last August. That makes this past year the worst year-over-year loss in history.
Before it's all over, Americans, Sovereign Wealth Funds (SWFs) and other investors will pay an astronomical price to rescue the battered U.S. financial system.
The Death of a 24-Year-Old Bull Market
The bull market for financial services stocks first began in 1982. And this bull market hit a crushing dead-end in August 2007. It will be years before this sector fully recovers.
Let's start with banks. Right now, large and small banks are desperate to recapitalize their smashed-out balance sheets. They continue to dilute shareholder equity through massive rights offerings and new issues. Dividends have been sliced and diced.
Since last August, banks have written off or lost a cumulative US$476 billion during the worst credit crisis in a generation.

We're Postponing, NOT Avoiding Systemic Risk
Over the last 12 months, the Federal Reserve and the U.S. Treasury have dreamed up and orchestrated spectacular bailouts to preserve the financial system and avoid systemic risk.
But what are they really achieving? Long-term the consequences of the Fed's actions will be horrendous. In the not-too-distant future, you'll see existing and future generations of Americans paying dearly for our leaders rescuing one financial institution after another.
There is no "avoiding" systemic risk. The final consequence of Morale Hazard is a larger, more threatening financial panic down the road.
When the government bails out institutions and nationalizes failed enterprises, they only increase long-term inflation. For starters, they have to pay for those bailouts. So the government ultimately turns to taxpayers to fund the expansion of credit. By interfering with capitalism's natural progression, the government delays its own financial reckoning.
In my opinion, an insolvent institution must be allowed to fail.
Morale hazard has played a major role on Wall Street and at the Bernanke Fed since March. Investors and analysts have seriously questioned the Fed's unorthodox role as lender of last resort.
What business does the central bank have to collateralize a failed institution's almost worthless debt with Treasury securities? That's what the Fed did with Bear Stearns Cos. in March. The Fed did the same thing for other troubled but unnamed investment banks and banks over the same period.
Is Morale Hazard Justified?
Is a bailout justified if that institution mismanaged its business model? More importantly, should the government rescue a financial firm in the interest of deterring systemic risk?
It's true that the Bear Stearns bailout deflected a major financial panic. But what really happened there? Contrary to most financial news reports in March, several large hedge funds were in the process of liquidating their accounts at Bear Stearns (Bear Stearns was a leading prime broker for hedge funds).
One of the largest hedge funds in the world actually sparked a run by other hedge funds to get out of Bear Stearns. The entire gamut of players scrambled to get their assets out before it was too late. There's no doubt a major global financial panic would have ensued on March 17 without some sort of rescue.
In July, the government officially assured investors that Uncle Sam would guarantee GSEs or Government Sponsored Enterprises, Fannie Mae and Freddie Mac. Prior to Secretary Treasury Paulson's assurances in mid-July, markets were reeling at the prospects of a Fannie and Freddie collapse.
Again, a failure of both mortgage giants would have caused sheer panic in global markets because of the significant role they play in mortgage financing, debt issuance, and liquidity to banks. So some will argue it was a good short-term solution...but at what cost?
The Piper Will Come Calling - Eventually
Bailouts and Morale Hazard have been highly subjective topics among investors and policymakers since March.
In the end, the United States will have to finance these and future financial bailouts with enormous amounts of credit, mostly from taxpayers. It's inevitable that all this credit will eventually drain on the economy, American capital markets, and ultimately the dollar.
The United States is already losing its financial supremacy to London, Frankfurt, Hong Kong, Singapore, and Dubai this decade.
Capital flows to safe, tax-efficient shores. We're likely to see new regulations in the U.S. as a consequence of the sub-prime mortgage debacle and other banking oversights. As a result, the United States will increasingly lose more market share to other international financial capitals.
Eventually, other financial systems will also feel strained by America's slow but progressive financial dilution.
The United States still plays a vital role in global finance. So it would be naïve to think Dubai or Singapore won't be affected by another major U.S. financial crisis in the future. That's why I continue to buy gold. All governments are tied in one form or another to each other as global trade and capital flows have grown increasingly inter-connected. There's no safe-haven overseas ahead of the next major crisis.
The dollar and other mismanaged currencies are just a bunch of drinks shaken and stirred by a warped bartender. Fiat paper is a poor store of absolute value compared to gold and other tangible assets like oil and gas.
Hedge your future with gold and other hard assets - paper money won't protect your purchasing power from the upcoming inflationary storm in the United States and eventually, everywhere else.

Trouble Brewing In The Financial Que

Wall Street’s got a whole new thorn in its side: auction-rate securities.
As you might know, the $330 billion market for these debt instruments completely froze in February. To the best of our knowledge, there hasn’t been a bid for one of these puppies in months.
Yesterday, Citigroup reached a sudden settlement with the New York attorney general that orders Citi to buy back $7.3 billion auction-rate securities from retail customers. The N.Y. regulator accused Citi of selling these securities to clients as safe, totally liquid methods of protecting income. Heh… judging by Citi’s quick offer to make a deal, those allegations seem rooted in truth.
Under the agreement, Citi will buy back those ARSs at 100% of their original sale value. Citi’s also agreed to help clients unload (in other words, borrow against or trade for something else) another $12 billion worth of auction-rate securities. It’ll pay regulators a $100 million fine, too… since a good deed by the government should NEVER go unrewarded.
And not long after Citi’s announcement, other auction-rate securities dealers started coming out of the woodwork. Merrill Lynch “volunteered” to buy back $12 billion in ARS. Like Citi, Merrill is being investigated by a Massachusetts regulator for “misstating the stability of the auction market.” Also, like Citi, the rush to make a deal makes Merrill look less than innocent.
And this morning, The Boston Globe rumored that UBS would soon launch a $19 billion buyback. Details are the same as Citi and Merrill… state and federal investigations, rushed settlements, shady circumstances.
All the banks involved claim the actual losses on these buybacks will be minimal. We’ll let you know if they’re telling the truth (ha!) this time around. Morgan Stanley is also a big player in the auction-rate securities market, although we haven’t heard much from them yet. Stay tuned.
Also moving the market this morning is the latest Fannie Mae earnings report. Like Freddie earlier this week, Fannie dropped a wretched quarterly statement today. The company shed $2.3 billion in its fourth straight quarterly net loss. That boils down to about $2.54 a share, more than three times the losses Wall Street analysts expected. Also, as with Freddie earlier this week, Fannie announced today that its dividend will be slashed to basically nothing.
Fannie Mae was already down 27% since Freddie’s release on the 6th. This morning, shares have fallen an extra 11%. If there’s any bright side to the government’s impending bailout of Fannie and Freddie, it’s this: By the time Washington finalizes the plan to buy shares, they’ll be very, very cheap.

US Citizens Aren't The Brightest Bulbs

With all the hemming and hawing about how “lousy” the economy is, you’d think consumers would be coming to their senses, spending less and borrowing less, right?
Right. Well, if you thought that, you’d be wrong.
Consumer credit rose $14.3 billion in June, the Federal Reserve announced yesterday. That’s more than double what Washington wonks and Wall Street quants expected. And it clocks in as the fastest accumulation of revolving consumer debt since last November -- during the height of the holiday buying season.
Thus, consumer credit has grown to over $2.5 trillion this year -- a number larger than the entire annual GDP of France, the world’s sixth largest economy. Incroyable.

Congress approves another $30 billion in aid for Israel defense. Will be paid by Americans through inflation.

US Congress approves Israel aid increase


WASHINGTON (AFP) — The US Congress has approved a 170 million dollar increase in security assistance to Israel as part of its new 10-year, 30 billion dollar defense aid commitment to the Jewish state.
The money for Israel was part of a larger supplemental spending bill that included 162 billion dollars for the wars in Iraq and Afghanistan. The legislation gained final approval in a 92-6 Senate vote late Thursday.
America's pro-Israel lobby, the American Israel Public Affairs Committee, welcomed the congressional action, saying it would increase US aid to Israel to 2.55 billion dollars in fiscal year 2009, up from 2.38 billion dollars this year.

"The US commitment to maintaining Israel's qualitative military edge is the cornerstone of American policy in the region," AIPAC said in a statement Friday.

There's A Reason The US Dollar Is Rallying, Because Europe's Banks Are Falling Apart At The Seams!

Royal Bank of Scotland poised for biggest loss in UK banking history
Britain's second largest bank expected to reveal it has lost £1 billion in first half

THE Royal Bank of Scotland is poised to unveil the biggest loss in UK banking history after taking a hit of almost £6 billion from the credit crisis.
Britain’s second-largest bank is this week expected to reveal a pre-tax loss of at least £1 billion for the first six months of the year, with analysts warning it could slide to as much as £1.7 billion in the red.
The loss would be roughly five times higher than the deficit racked up by Barclays in 1992 at the height of the last recession.
RBS chairman Sir Tom McKillop is already under pressure from investors after the bank’s recent £12 billion rights issue. His chief executive, Sir Fred Goodwin, who marks 10 years at the bank this weekend, also faces shareholder scrutiny.
The bank is scouring the world to find three new non-executive directors to shore up its board in response to shareholder concerns.
The RBS figures will cap another terrible week for Britain’s biggest banks as the credit crisis continues to take its toll.
HSBC is expected to write off almost $7 billion (£3.5 billion) in bad debts at its struggling American business from the first six months of the year. The charge will drag its profits roughly 30% lower to about $10 billion.
Barclays is forecast to reveal a 35% drop in profits to £2.6 billion as bad debts around the world, particularly in South Africa, combine with further losses from its exposure to the credit markets.
Some analysts believe Barclays could chalk up another £3 billion of writedowns, in addition to the £1.7 billion it recorded in the first quarter.
The only bright spot will be results from Standard Chartered, which makes its money in emerging markets, particularly in Asia. The bank is expected to announce a 21% jump in profits to $2.4 billion.
Across the banking sector, analysts and investors are fretting about rising bad debts. Figures from HBOS and Lloyds TSB last week revealed that the credit crisis has now worked its way into the real economy, with individuals and companies struggling in almost equal measure.
Both banks announced that bad debts had jumped more than 30%. Alliance & Leicester, which is poised to be sold to Spain’s Santander, revealed that its profits had been wiped out by problems caused by the credit crunch.
All Britain’s big banks are considering selling parts of their businesses. HBOS confirmed last week that it was reviewing a number of potential asset disposals, and admitted it had begun to wind down its off-balance-sheet funding vehicle, Grampian.
Expectations are mounting that the bank’s Australian business could be put up for sale.
RBS is in advanced talks with Allstate, the American insurance group, about a sale of its insurance operations, which include Direct Line and Churchill. Allstate is said to be willing to pay substantially less than the £7 billion asking price attached to the business when RBS put it up for auction in April.
However, RBS holds the business on its balance sheet at a carrying value of only £3 billion. Even a sale priced at £5 billion may prove tempting to Goodwin, who has promised investors that he will generate £4 billion of capital from disposals before the end of the year.
The £3.6 billion sale of Angel Trains, coupled with the £1 billion sale of Tesco Personal Finance and a handful of smaller deals, are thought to have generated about a quarter of the total target.
RBS is also thought to be close to selling an Australian corporate-finance business, acquired when it took over ABN Amro, to Commonwealth Bank of Australia. A sale of Saudi Hollandi Bank could also be on the cards.

No Money From Home-Equity Lines: This Is Going To Hurt A Lot Of People

Morgan Stanley Said to Freeze Home-Equity Credit Withdrawals
By Christine Harper

Aug. 6 (Bloomberg) -- Morgan Stanley, the second-biggest U.S. securities firm, told thousands of clients this week that they won't be allowed to withdraw money on their home-equity credit lines, said a person familiar with the situation.
Most of the clients had properties that have lost value, according to the person, who declined to be identified because the information isn't public. The New York-based investment bank will review home-equity lines of credit, or HELOCs, monthly from now on, the person said yesterday.
Wall Street firms including Morgan Stanley are ratcheting back on risks after the collapse of the subprime mortgage market and ensuing credit contraction saddled banks and brokerages with almost $500 billion of writedowns and losses. Consumers fell behind on home-equity credit lines at the fastest pace in two decades in the first quarter, the American Bankers Association reported last month.
``Morgan Stanley periodically reassesses client property values and risk profiles,'' said Christine Pollak, a Morgan Stanley spokeswoman in Purchase, New York. ``A segment of clients was recently notified of a change in the status of their home- equity line of credit, or HELOC, due to a change in the value of their property and/or their credit profile.''
Pollak declined to specify the dollar amount of the frozen credit lines. The firm's global wealth management division, which doesn't disclose how many clients it serves, had 8,350 advisers managing $739 billion of customer assets at the end of May, according to its second-quarter earnings report.
No Recovery Seen
``It's evidence that they don't think the economy is going to recover quickly,'' said Brad Hintz, an analyst at Sanford C. Bernstein & Co. in New York who rates Morgan Stanley shares ``outperform'' and who owns some of the stock. ``The fact that they're trying to get ahead of the problem is very good.''
Morgan Stanley has already taken about $14.4 billion of losses related to leveraged loans and collateralized debt obligations. The clampdown on home-equity loans mirrors similar efforts by commercial banks, said David Hendler, an analyst at Credit Sights Inc. in New York.
``All consumer lenders and home-equity lenders are reassessing the environment given the pressure on housing and the economy,'' Hendler said.
JPMorgan Chase & Co., the second-biggest U.S. bank by market value after Bank of America Corp., has notified 150,000 customers about changes in their home-equity lines of credit since March, said Christine Holevas, a Chicago-based spokeswoman.
Changes Made
In some cases the lines have been reduced and in other cases they've been suspended, depending on the change in home values, she said. The changes affect about 15 percent of JPMorgan's home- equity credit customers, Holevas said.
Bank of America and Washington Mutual Inc. are among the other lenders that have frozen home-equity credit lines this year.
``Morgan Stanley customers are typically coming out of their wealth management side, so typically a high net worth customer,'' said Christopher Whalen, co-founder of Institutional Risk Analytics in Torrance, California. ``This shows you they are under the same pressures as everybody else.''

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

"Government implies the power of making laws. It is essential to the idea of a law, that it be attended with a sanction; or, in other words, a penalty or punishment for disobedience." -Alexander Hamilton

Uh-Oh..........................

FANNIE AND FREDDIE: GIVING AWAY THE FARM
Ellen Hodgson BrownAugust 7, 2008
Last week, Congress passed a housing bill that gave the Treasury Department a blank check to inject billions of U.S. taxpayer dollars into mortgage giants Fannie Mae and Freddie Mac, snatching them from insolvency. To accommodate this blank check, Congress obligingly raised its debt ceiling by $800 billion. Ouch! That’s nearly a trillion dollars. Why was it necessary to incur this potentially crippling public debt to bail out two completely private, for-profit behemoths, which have run themselves into bankruptcy with their own risky investment schemes? Policymakers said it was essential to maintain the country’s creditworthiness with foreign lenders, which today hold about one-fifth of Fannie and Freddie securities. According to a July 21 report by Heather Timmons in The New York Times:
“One out of 10 American mortgages is, in effect, in the hands of institutions and governments outside the United States.”1
Ten percent of American mortgages are now owned by foreigners? Doesn’t that defeat the whole purpose of Fannie Mae (the Federal National Mortgage Association) and Freddie Mac (the Federal Home Mortgage Corporation)? They were supposedly set up to fund “the American dream” – home ownership by Americans. Today, American homes are owned by anonymous pools of private investors, many of whom are foreign governments and foreign central banks. How did we manage to give away the farm? And why are we bowing to the interests of foreign investors to the point of driving our own government into bankruptcy? The federal debt is already nearly ten trillion dollars, more than the government can ever possibly repay with taxes.
According to analysts, the bailout of the two mortgage giants is necessary “because America’s relations with a host of countries are intricately tied to Fannie and Freddie,” and because we need to assure “Americans’ future ability to gain access to credit. If foreign companies and governments abandon United States investments, home, auto and credit card loans will be much more difficult to come by.”2
The same sort of argument was once made by U.S. banks to get Third World countries to pay up on their foreign loans. The U.S., it seems, has finally achieved Third World debtor-nation status. For the last half century, the push for “free trade” has been all about preserving profitable opportunities for investment, finding ways to “make money” without actually making anything, exploiting the work of others by buying up corporations around the world and drawing profits off the top. But now the tables have turned. We have gone from being the world’s largest creditor to the world’s largest debtor. We spent our dollars abroad and now they are coming back to shop for our own real estate and corporate assets. Timmons observes:
“Asian institutions and investors hold some $800 billion in securities issued by Fannie and Freddie, the bulk of that in China and Japan. China held $376 billion and Japan $228 billion as of June 2007 . . . . Russian buyers hold $75 billion. Sovereign wealth funds in the Middle East are also believed to be big investors in Fannie and Freddie debt.”
Sovereign wealth funds (investment funds of sovereign nations and their central banks) are now busily buying up U.S. assets, in what Bill Bonner has called “the biggest transfer of wealth in history.” Writing in The Daily Reckoning on July 11, he observed:
“[T]he balance sheet of the U.S. Fed shows $2.3 trillion of US treasury debt held in custody for foreign central banks. The harder the Fed fights the [economic] correction . . . the more money and credit it puts out. This monetary inflation causes prices for oil and imports to rise . . . and more money goes into foreign reserves and Sovereign Wealth Funds in the East, to be used to buy more assets in the West. Thanks to America’s mad monetary policy, these private assets are being taken into public ownership. Some of America’s most important properties are being nationalized . . . but by other nations.”3
The ultimate irony is that these other nations may be buying our federal bonds and mortgage-backed securities with money they simply created on a printing press. John Succo is a hedge fund manager who writes on the Internet as “Mr. Practical.” He estimates that as much as 90 percent of foreign money used to buy U.S. securities comes from foreign central banks, which print their own local currencies, buy U.S. dollars with them, and then use the dollars to buy U.S. securities.4 These nations are doing what Congress itself has declined to do: exercising the sovereign right of governments to print their own money.
Unlike the U.S. Federal Reserve, which is wholly owned by a consortium of private banks, the People’s Bank of China (PBoC) is actually owned by the Chinese government. When Chinese merchants, awash with U.S. dollars, cash them in for local currency to pay their workers, the PBoC obliges by swapping dollars for government-issued renminbi. The workers get paid in local currency, and the PBoC gets the dollars for the cost of printing the renminbi. The PBoC then uses the dollars to buy either U.S. interest-bearing bonds or Fannie and Freddie securities, which have conveniently opened up U.S. real estate to foreign investment. In effect, American citizens are paying a foreign government to turn U.S. debt into money, using currency the foreign government issued by fiat (Latin for “let it be” or “so be it” – money simply ordered into existence by the sovereign).
Why doesn’t the U.S. government just issue its own fiat money? That solution may seem radical now, but it could start to look better if Congress has to do what President Roosevelt did in 1933 – declare national bankruptcy and call for a plan of reorganization. There is simply not enough money in the public till to bail out Bear Stearns, IndyMac, and now the private mortgage giants Fannie Mae and Freddie Mac, as well as pay $500 billion annually to service a gargantuan federal debt, and still have enough money left over to repair our failing infrastructure, develop sustainable energy systems, and generally provide for the Common Wealth. The cookie jar is empty, and it is empty because private profiteers have been helping themselves to the cookies.
If the Federal Reserve were made a truly “federal” agency, Federal Reserve Notes (dollar bills) could simply be issued by the U.S. government, instead of being borrowed from a private banking system that creates them with accounting entries and charges interest for the privilege. (See E. Brown, “Putting the ‘Federal’ Back in the Federal Reserve,” www.webofdebt.com/articles, July 26, 2008.) Rather than scrambling to find foreign investors to roll over a $10 trillion debt, Congress could just pay off the debt as the bonds came due, using the same sort of money that foreign central banks used to purchase the bonds in the first place – government-issued national currency. Congress would just be giving them their fiat money back.
As for Fannie and Freddie, they are too big to fail; but they aren’t too big to be nationalized. If we the people are paying the bills, we should get the stock. Fannie Mae began in the 1930s as a truly federal agency, funded by a wholly government-owned bank. The Reconstruction Finance Corporation (RFC) advanced its own federal credit, which was used to fund not only the New Deal but the rapid industrialization that led to victory in World War II.5 The result was to make America the world leader in industry and productivity for most of the rest of the century. It may be time to try that experiment again. The RFC had some flaws, but they could be worked out. That is another subject, to be covered in another article. The bottom line here is that the deed to the farm needs to remain on these shores, and so does the sovereign power to issue money and credit. The existing system of banking and credit creation is teetering on the brink of a collapse brought about by its own internal contradictions and corruption. The system has long since failed in its primary mission of channeling this country’s resources towards investment in a sustainable future. As it stumbles from crisis to crisis, we have neither the time nor the resources to give it yet another chance to do the job. The time has come to clear the boards and begin a new game with new rules.

Hedge Funds Teetering.................

Hedge Fund Outlook Is `Much Worse' Than 1998, LTCM Veteran Says
By Tom Cahill
Aug. 8 (Bloomberg) -- The $1.9 trillion hedge fund industry, mired in its worst performance in two decades, faces ``much worse'' conditions than in 1998, when Long-Term Capital Management LP collapsed, a veteran of that fund said.
``It's definitely a trickier environment,'' said Hans Hufschmid, chief executive officer of GlobeOp Financial Services LP, and a former partner at LTCM and co-head of its London office. ``The market is much worse that it was in 1998. Then it was just LTCM, but this impacts everybody.''
Hedge funds are concerned for the first time about risks related to prime brokers after Bear Stearns Cos.' forced merger with JPMorgan Chase & Co., said Hufschmid, 52, whose London-based company is administrator to funds managing about $104 billion.
Banks and brokerages have written down $495 billion and raised $356 billion in capital since the start of 2007 as the U.S. subprime mortgage market collapsed. Banks' increasing reluctance to lend has hurt hedge-fund operations, Hufschmid said in a telephone interview yesterday.
``Hedge funds live on credit and leverage and the ability to finance esoteric positions for a long time,'' said Hufschmid. ``To the extent liquidity is drying up as it is now, that becomes more difficult.''
Greenwich, Connecticut-based LTCM leveraged $2.3 billion of capital into holdings of about $125 billion before its collapse, which roiled financial markets and led to a bailout organized by the Federal Reserve. The company lost $4.6 billion and received a $3.5 billion bailout from 14 lenders in 1998.
July ranks among the worst months of performance for hedge funds. Chicago-based Hedge Fund Research Inc.'s Weighted Composite Index, based on data from more than 2,000 funds, fell 2.4 percent in the month and is down 3.5 percent year-to-date, which would be the worst annual performance since at least 1990.
`Giving Up'
An HFR index based on daily net-asset-value estimates from 55 funds showed a drop of 2.8 percent in the month, the biggest drop for that measure in five years.
The industry's worst month remains August 1998, when the HFR's Weighted Composite Index fell 8.7 percent as Long-Term Capital Management collapsed after $4 billion in losses.
This year's poor results mean fewer funds are starting, Hufschmid said. GlobeOp said none of the ``seven or eight'' clients it had ready to launch funds with $500 million to $2 billion in the first six months of the year had started.
``Some of them have given up,'' said Hufschmid. ``A year or two ago they would have started. New funds right now have a problem.''