Sound Of Cannons Warned You About This 2-Years Ago...But For Those Late To The Party....

Move Your Money Out of the Country…and Soon
We are patriots. We have proudly served in our country’s military, have extended a helping hand to its public sector, and have plowed our entrepreneurial enterprise into its once fertile soil. We love America, but these days, America does not love us back. It takes without giving and squelches free enterprise. These days, America is no longer the land of the free, especially when it comes to the market.
Just look at the headlines, seemingly ripped from the pages of Atlas Shrugged: Unconscionably large bank bailouts. Punishing regulations and tax requirements. An arctic business climate. Government money bombs. Riots and protests. Slowing trade. Protectionist rhetoric. Demonized corporate executives. Even pirates hijacking cargo ships. One can guess what will happen next.
We predict the next several years will usher in larger, more obtrusive governments, resulting in a decline of personal liberty and financial privacy. The world will become increasingly polarized between two groups: those who consider government intervention a great idea, and the rest of us who happen to be sane.
As such, you can bet your last falling dollar on some absolute certainties: bank nationalization is a given, at least de facto if not de jure; taxes are going up on those of us with any money left; the Fed’s money blitzkriegs will spark a blaze of inflation; and financial privacy will be a thing of the past in the United States.
The obvious and necessary solution is to position one’s finances outside of the United States, and to do so now, while the narrow and finite window of opportunity is still open.
To be clear, evading (or even avoiding) taxes at this point is not a wise move, given the size and scope of the ever-growing IRS. But there are significant advantages to expatriating your capital now:
For starters, you will actually have control of your own money. Yes, in certain instances you’ll be obliged to tell the IRS exactly where it is and what you’re doing with it, but no government agency will have the authority to reach into your overseas pocket and freeze or expropriate (read: steal) on a whim just so Team Obama can give it away to pay for someone else’s McMansion. Plus, when exchange controls are implemented and Americans are forbidden from wiring money overseas, your capital will already be secured in another jurisdiction, where you will be free to do what you want with it.
Secondly, you will no longer have to assume the risk of insolvent banks or go through the hassle of petitioning the government to get your FDIC insurance bailout. Many overseas banks are far better capitalized than those in the United States, and some of them are in jurisdictions with constitutionally protected banking privacy.
Lastly, and probably most importantly, moving money overseas gives you a last chance at diversifying out of the dollar, which, in a very short period of time, will barely be worth the paper on which it’s printed.
Bank and Brokerage Accounts
Opening a foreign bank or brokerage account is easier said than done; the United States government severely restricts where and under what terms you can open a bank account, invest in a fund, or engage in other economic activities that facilitate the protection of and access to your assets. As the signatory on an overseas account, you are required by law to inform the federal government on Treasury form TDF 90.22 by the end of June each year. Ostensibly, this has been done in the name of fighting money laundering, but it has the effect of severely restricting your freedom of financial movement.
Many foreign banks simply won’t work with you…don’t worry, it’s nothing personal. Uncle Sam has been beating them down since the Reagan years, and between Qualified Intermediary rules, tax treaties, and the USA PATRIOT Act, Sammy gives himself a lot of regulation to bury the opposition with.
There are some jurisdictions that are still excellent banking centers; Switzerland may have rolled over, but Panama, Uruguay, Singapore, and the United Arab Emirates have thus far ignored the call for “greater transparency” (read: government access to private finance).
Some individual banks, like Credicorp and Global Bank in Panama, or Banco Itau in Uruguay will not work with U.S. citizens anymore, but there is still opportunity with the hundreds of remaining banks in these jurisdictions.
Similarly, opening a foreign brokerage account is a shrewd move, not only to move your money overseas but also to have greater access to financial markets. Remember when world markets tanked on Martin Luther King Day 2008? If you were a U.S.-based investor and wanted to sell, sell, sell, you had to wait a full 24 hours until the markets opened after the holiday on Tuesday morning. If you had been invested with global depository shares through a foreign brokerage, you could have saved yourself several points and gotten out in time.
We would suggest looking at Verdmont Capital and PanaAmerican Capital in Panama, and Saxo Bank in Denmark.

Bullion Storage
If you have gold, it would be highly beneficial to get it out of the U.S. — stat. If you do keep it in the U.S., your only truly reliable and private option is to store it yourself in a safe that you bury in your backyard. Otherwise, move it out of the U.S. now before Team Obama pulls an FDR and takes your gold from you.
At the moment, gold is not considered a monetary instrument by the U.S. Customs and Border Patrol, so there is no legal requirement to declare your bullion upon leaving the United States. Some countries, like Taiwan and Uruguay, require you to declare gold in excess of a certain value to customs officials upon entry.
We recommend Panama, Austria, Switzerland, and the United Arab Emirates as locations to store bullion; one particular favorite is a location called Das Safe (http://clicks.whiskeyandgunpowder.com//t/AQ/Eiw/FV0/G7s/AQ/AaoQzw/pE8S) in Vienna where anonymous safes start at 400 euro/year.
Real Estate
It might sound counterintuitive after the subprime debacle, but real estate is a sound option for moving money outside of the United States; there are zero reporting requirements. It’s your business where you own property, and (so far) no one else’s. You can purchase property in a private way by setting up a corporate structure to hold the assets so that they’re not in your name (Panama is an excellent jurisdiction to set this up), and although there are many places with depressed real estate markets, there are also many with good growth potential: in Latin America, we would recommend Panama, Colombia, Uruguay, and Chile. In Europe: Slovakia, Albania, and Poland. In the rest of the world: Lebanon, Hainan Island (China), the Philippines, Cambodia, and New Zealand.
Time is of the essence — start looking for your safe haven now.

Oddly Said..............

The government should allow every distressed bank to go bankrupt and set up a fresh banking system under temporary state control rather than cripple the country by propping up a corrupt edifice. - Joseph Stiglitz

For The Warfare We're Really Not Prepared For......

Pentagon preps for economic warfare

By: Eamon Javers April 9, 2009 04:18 AM EST
The Pentagon sponsored a first-of-its-kind war game last month focused not on bullets and bombs — but on how hostile nations might seek to cripple the U.S. economy, a scenario made all the more real by the global financial crisis. The two-day event near Ft. Meade, Maryland, had all the earmarks of a regular war game. Participants sat along a V-shaped set of desks beneath an enormous wall of video monitors displaying economic data, according to the accounts of three participants. “It felt a little bit like Dr. Strangelove,” one person who was at the previously undisclosed exercise told POLITICO. But instead of military brass plotting America’s defense, it was hedge-fund managers, professors and executives from at least one investment bank, UBS – all invited by the Pentagon to play out global scenarios that could shift the balance of power between the world’s leading economies. Their efforts were carefully observed and recorded by uniformed military officers and members of the U.S. intelligence community. In the end, there was sobering news for the United States – the savviest economic warrior proved to be China, a growing economic power that strengthened its position the most over the course of the war-game. The United States remained the world’s largest economy but significantly degraded its standing in a series of financial skirmishes with Russia, participants said.

The war game demonstrated that in post-Sept. 11 world, the Pentagon is thinking about a wide range of threats to America’s position in the world, including some that could come far from the battlefield. And it’s hardly science fiction. China recently shook the value of the dollar in global currency markets merely by questioning whether the recession put China’s $1 trillion in U.S. government bond holdings at risk – forcing President Barack Obama to issue a hasty defense of the dollar. “This was an example of the changing nature of conflict,” said Paul Bracken, a professor and expert in private equity at the Yale School of Management who attended the sessions. “The purpose of the game is not really to predict the future, but to discover the issues you need to be thinking about.” Several participants said the event had been in the planning stages well before the stock market crash of September, but the real-world market calamity was on the minds of many in the room. “It loomed large over what everybody was doing,” said Bracken. “Why would the military care about global capital flows at all?” asked another person who was there. “Because as the global financial crisis plays out, there could be real world consequences, including failed states. We’ve already seen riots in the United Kingdom and the Balkans.” The Office of the Secretary of Defense hosted the two-day event March 17 and 18 at the Warfare Analysis Laboratory in Laurel, MD. That facility, run by the Johns Hopkins University Applied Physics Laboratory, typically hosts military officials planning intricate combat scenarios. A spokesperson for the Applied Physics Laboratory confirmed the event, and said it was the first purely economic war game the facility has hosted. All three participants said they had been told it was the first time the Pentagon hosted a purely economic war game. A Pentagon spokesman would say only that he was not aware of the exercise.

The event was unclassified but has not been made public before. It is regarded as so sensitive that several people who participated declined to discuss the details with POLITICO. Said Steven Halliwell, managing director of a hedge fund called River Capital Management, “I’m not prepared to talk about this. I’m sorry, but I can’t talk to you.” Officials at UBS also declined to comment. Participants described the event as a series of simulated global calamities, including the collapse of North Korea, Russian manipulation of natural gas prices, and increasing tension between China and Taiwan. “They wanted to see who makes loans to help out, what does each team do to get the other countries involved, and who decides to simply let the North Koreans collapse,” said a participant. There were five teams: The United States, Russia, China, East Asia and “all others.” They were overseen by a “White Cell” group that functioned as referees, who decided the impact of the moves made by each team as they struggled for economic dominance. At the end of the two days, the Chinese team emerged as the victors of the overall game – largely because the Russian and American teams had made so many moves against each other that they damaged their own standing to the benefit of the Chinese. Bracken says he left the event with two important insights – first, that the United States needs an integrated approach to managing financial and what the Pentagon calls “kinetic” – or shooting – wars. For example he says, the U.S. Navy is involved in blockading Iran, and the U.S. is also conducting economic war against Iran in the form of sanctions. But he argues there isn’t enough coordination between the two efforts. And second, Bracken says, the event left him questioning one prevailing assumption about economic warfare, that the Chinese would never dump dollars on the global market to attack the US economy because it would harm their own holdings at the same time. Bracken said the Chinese have a middle option between dumping and holding US dollars – they could sell dollars in increments, ratcheting up economic uncertainty in the United States without wiping out their own savings. “There’s a graduated spectrum of options here,” Bracken said. For those who hadn’t been to a Pentagon event before, the sheer technological capacity of the Warfare Analysis Laboratory was impressive. “It was surprisingly realistic,” said a participant. Still, the event conjures images of the ultimate Hollywood take on computer strategizing: the 1983 film “War Games” in which a young computer hacker nearly triggers a nuclear apocalypse. The film and the reality had one similarity: The characters in the movie used a computer called WOPR, or War Operation Plan Response. The computer system used by the real life war-gamers? It was called WALRUS, or Warfare Analysis Laboratory Registration and User Website.

Small Towns.............Yeah, I Lived In One

The Death of the Small Town
The death of the small town has been widely exaggerated. On the contrary, small towns are thriving just as they have for decades, in perfect balance. Population is steady, infrastructure is sufficient, all goods and services required are available, and it is rarely more than 25 miles to the nearest Wally World — an outing everyone enjoys. There is very little unemployment; kids know that they will either take over the family farm or business or that they will have to seek their futures elsewhere, or some combination of working elsewhere until family concerns or opportunities call them back.
This model has functioned beautifully since...well, since forever, in one form or another. The wealthy Roman’s latifundia had workers who produced everything in what was virtually a small city needed from food to harnesses, from wine to clothing, or traded for what could not be grown or manufactured. The same was true on feudal estates during the Dark Ages; the serfs produced, using the local Baron’s resources, what was needed to sustain life and such comforts as the period afforded.
Just as England was getting too crowded, the colonies provided room for the expanding population to move to an area that offered living room. Germany has been seeking “lebensraum,” which means the same thing, for centuries. In general America was settled by westward expansion as each area reached sustainable population. When the land and population reached a good balance the more adventurous or those wanting more than was available moved on. The main thing wrong with earth is that interplanetary travel has not evolved! Malthus was right, although it is taking longer than he expected, and government land grabs have tied up vast chunks suitable for establishing new self-sufficient social units.
It is only in the last hundred years that vast metroplexes have sprawled across America breeding crime and problems that never existed before. Instead of the increased population becoming self-sufficient in small cohesive groups, as had been the norm since colonial days, people now huddle in cities selling things to each other.
James Howard Kunstler proposed that the salvation of America was deactivating urban and suburban sprawl in a vast migration to the country. As much as one must admire Mr. Kunstler’s analysis of the problem, that “solution” simply will not work: The housing is not there, the jobs are not there, the schools and water systems are not sufficient, and room for gentle growth is not there. If it were, the young would not go off to the big cities. Starting a small town from scratch isn’t plausible, either.
The usual small town of about 2,500 has two grocery stores, two feed stores, a couple of veterinarians, a “good” restaurant, a burger joint and a Mexican restaurant, a beauty shop, a lawyer or three, an insurance agent, a hardware store, and a pharmacy. You might find a nail salon and a movie house that is open Friday and Saturday nights. It can’t absorb many newcomers because everything is already in balance, sufficient for the needs of the area, but neither lacking nor needing to expand.
Has spreading the sprawl to the country on purpose been tried? Yes, it has. Consider Roundrock, a charming little Texas town until a very few years ago when Dell decided to locate there to build computers. It would be easy to get excited and think of a large corporation bringing new jobs, new commerce, and an increased tax base, envisioning a gentle absorption process whereby the Dell people became part of the community and the indigenous population benefited from increased trade opportunities.
WERE new jobs created? Yes, jobs were brought in but personnel were imported to fill them. Very few of the jobs were available to locals.
Well, there had to be an increase in commerce, didn’t there? Absolutely. The new workers and management needed housing, groceries, gasoline, and some professional services such as a CPA or title company. However, this did not lead to expansion by established businesses in the area; like Ford deciding there was a 5% market niche for the Edsel, Chili’s et al. decided Roundrock was now big enough (or was becoming big enough) to justify opening franchises. Local restaurants did not see a vast influx of customers. In very short order Roundrock has become indistinguishable from New Braunfels or San Marcos (absorbed as the ‘burbs reach out from San Antonio towards Austin, and vice versa) or innumerable small towns in the DFW area that have been surrounded and overrun. Large chain grocers moved in, rather than the newcomers patronizing Godwin’s and Brookshire Br others. An army of ants dumped “civilization” on a nice place to live in very short order, and very soon afterwards it stopped being a nice place to live.
Housing? Oh, yes. The newcomers have their own — “ghetto” is too harsh — enclave where the sort of housing they are accustomed to is being built. There are now billboards advertising “homes from the 110’s to the 190’s!” in an area where the median house value was more on the order of $50,000. The newcomers huddle together in their own separate area, doing their own separate things...and criticize how Roundrock is and most residents would much have prefered it to stay.

“They said this was progress and to live with it,” a small business owner said in angry frustration. “I told them to progress elsewhere!”
The newcomers have banded together and are running their own candidates locally! An office seeker whose slogan is “efficient...sustainable...environmentally friendly” is not the descendant of those who have lived in Roundrock since 1843. (That phrase, with “green” for the last clause is to be found in the G-20 report, a classic of the C. North Parkinson school which was written before the meeting took place and is couched in such terms that the few who were responsible for content can claim it covers anything they want to do, and then claim success, in the unlikely event they have any.) Roundrock was actually living that way and didn’t need outsiders clamoring for new services to solve problems expansion brought.
Locals are bitter over losing a quarter-mile swath of prime farmland to build the large highway Dell requires to do business. The land is gone, fields are cut up badly, and all the long time residents get out of it is increased traffic (they had been blissfully ignorant of rush hour traffic heretofore) from a lot of people they didn’t want there in the first place.
For the most part there will be two Roundrocks from now on: The old guard, and the newcomers. They have almost nothing in common and little to cooperate on even if either side wanted to. The Dellians want to recreate the cities from which they came, and the Roundrockians for the most part want the good old days back. They can’t have it.
“Increased tax base!” proponents might cry. “What about THAT? You can’t deny that there is more tax money to do good.” Ah...that’s one of the major problems. The big city’s idea of “good” isn’t that of the local populace, and the problems the Dellians want to solve weren’t problems until they got there. Worse, there are now or will be big, new bond issues to fund increased school facilities, a hospital, expansion of water lines (bear in mind that Roundrock is bordering on the Hill Country and water is in less supply than areas with more rainfall), and buses. There aren’t in bus routes in small town America because they are neither needed nor wanted! Bureaucracy is on the rise, of course, which will necessitate more building and more taxes. A large sign urges donating because “There were 558 cases of child abuse here last yea r! Five children died.” Old Roundrock didn’t have child abuse. Dell built an arena/stadium/gathering center…which the newcomers no doubt enjoy. Small town Roundrock was perfectly happy watching the kids play baseball, football, and soccer outdoors and basketball in the school gym. Watching the kids play is far more thrilling to small town dwellers than the Super Bowl is. Utter excitement is having the HS football team make it to the playoffs even if the division is AA.
A financial professional weighed in, “Yes, I have some new clients, but it isn’t worth what it cost us having Dell here.” It isn’t, either. Dell won by getting cheaper land and a lower cost of living that their presence will raise, and it was downhill from there.
Those who work for Dell got a chance to see how the other half lives and didn’t want any part of it. They want their strip malls, big movie theaters, and all the comforts of their former cities. They tend to be contemptuous of the locals and “life in the sticks.” Perhaps that means they want a tattoo parlor and a porn bookstore, but it also conveys that they aren’t comfortable with life in the slow lane. They don’t understand an unhurried lifestyle and think Roundrockians need stirring up to become “useful members of society.” The long-time residents still think low crime, low unemployment, traditional schools (ever harder to hold on to), helping their neighbors because they want to, and a stable, “efficient” and “sustainable” life are what America is all about. They already had those.
The locals lost most of all. Against their will, their traditional lifestyle is being destroyed. They have to fight traffic, hunt for parking places, stand in lines, hear what they were proud of denigrated, and attempt to battle the “progress” the invaders are determined to have. Chances are the kids are whining, “Jimmy has...” and “Susie’s mom lets her...”

They’re back to the same old issue that has plagued mankind since the Saxons and the Normans: Those who are tied to the land and their communities, and those who believe in conquest and commerce. Big government vs. small, a leisurely life vs. the rat race, the “good” of anonymous, idle others vs. standing on our own two feet and offering a deserving neighbor an occasional steadying hand.
If you get a chance, visit Roundrock while the flavor is still there. The natives are friendly, sensible, and outgoing. If you are able, find a similar small town and move there yourself.
Just don’t take a corporation with you.

TerraForming Obama-style

The Government Is Already “Geo-Engineering” The Environment
The Associated Press reports that Obama administration is considering radical terra forming programs to stop “global warming,” but universities and government agencies are already doing it, while mass aerosol spraying campaigns have been ongoing for over a decade through the use of chemtrails

Wednesday, April 8, 2009
The Associated Press reports today that the Obama administration has held discussions regarding the possibility of “geo-engineering” the earth’s climate to counter global warming by “shooting pollution particles into the upper atmosphere to reflect the sun’s rays.” However, such programs are already being conducted by government-affiliated universities, government agencies, and on a mass scale through chemtrail spraying.
The AP report states that Obama’s science advisor John Holdren is pushing for radical terra forming programs to be explored such as creating an “artificial volcano”. Despite Holdren’s admission that such measures could have “grave side effects,” he added that, “we might get desperate enough to want to use it.”
“Holdren, a 65-year-old physicist, is far from alone in taking geoengineering more seriously. The National Academy of Science is making climate tinkering the subject of its first workshop in its new multidiscipline climate challenges program. The British parliament has also discussed the idea,” reports AP.
“The American Meteorological Society is crafting a policy statement on geoengineering that says “it is prudent to consider geoengineering’s potential, to understand its limits and to avoid rash deployment.”

However, a study of past and ongoing upper atmosphere aerosol programs confirms that the government has been active in this field for years.


The Atmospheric Radiation Measurement (ARM) Program was created in 1989 with funding from the U.S. Department of Energy (DOE) and is sponsored by the DOE’s Office of Science and managed by the Office of Biological and Environmental Research.
One of ARM’s programs, entitled Indirect and Semi-Direct Aerosol Campaign (ISDAC), is aimed at measuring “cloud simulations” and “aerosol retrievals”.
Another program under the Department of Energy’s Atmospheric Science Program is directed towards, “developing comprehensive understanding of the atmospheric processes that control the transport, transformation, and fate of energy related trace chemicals and particulate matter.”
The DOE website states that, “The current focus of the program is aerosol radiative forcing of climate: aerosol formation and evolution and aerosol properties that affect direct and indirect influences on climate and climate change.”
U.S. government scientists are already bombarding the skies with the acid-rain causing pollutant sulphur dioxide in an attempt to fight global warming by “geo-engineering” the planet, despite the fact that injecting aerosols into the upper atmosphere carries with it a host of both known and unknown dangers.
The proposal to disperse sulphur dioxide in an attempt to reflect sunlight was discussed in a September 2008 London Guardian article entitled, Geoengineering: The radical ideas to combat global warming, in which Ken Caldeira, a leading climate scientist based at the Carnegie Institution in Stanford, California, promoted the idea of injecting the atmosphere with aerosols.
“One approach is to insert “scatterers” into the stratosphere,” states the article. “Caldeira cites an idea to deploy jumbo jets into the upper atmosphere and deposit clouds of tiny particles there, such as sulphur dioxide. Dispersing around 1m tonnes of sulphur dioxide per year across 10m square kilometres of the atmosphere would be enough to reflect away sufficient amounts of sunlight.”
Experiments similar to Caldeira’s proposal are already being carried out by U.S. government -backed scientists, such as those at the U.S. Department of Energy’s (DOE) Savannah River National Laboratory in Aiken, S.C, who last year began conducting studies which involved shooting huge amounts of particulate matter, in this case “porous-walled glass microspheres,” into the stratosphere.
The project is closely tied to an idea by Nobel Prize winner Paul Crutzen, who “proposed sending aircraft 747s to dump huge quantities of sulfur particles into the far-reaches of the stratosphere to cool down the atmosphere.”
Such programs merely scratch the surface of what is likely to be a gargantuan and overarching black-budget funded project to geo-engineer the planet, with little or no care for the unknown environmental consequences this could engender.
What is known about what happens when the environment is loaded with sulphur dioxide is bad enough, since the compound is the main component of acid rain, which according to the EPA “Causes acidification of lakes and streams and contributes to the damage of trees at high elevations (for example, red spruce trees above 2,000 feet) and many sensitive forest soils. In addition, acid rain accelerates the decay of building materials and paints, including irreplaceable buildings, statues, and sculptures that are part of our nation’s cultural heritage.”
The health effects of bombarding the skies with sulphur dioxide alone are enough to raise serious questions about whether such programs should even be allowed to proceed.
The following health effects are linked with exposure to sulphur.
- Neurological effects and behavioral changes

- Disturbance of blood circulation

- Heart damage

- Effects on eyes and eyesight

- Reproductive failure

- Damage to immune systems

- Stomach and gastrointestinal disorder

- Damage to liver and kidney functions

- Hearing defects

- Disturbance of the hormonal metabolism

- Dermatological effects

- Suffocation and lung embolism
According to the LennTech website, “Laboratory tests with test animals have indicated that sulfur can cause serious vascular damage in veins of the brains, the heart and the kidneys. These tests have also indicated that certain forms of sulfur can cause foetal damage and congenital effects. Mothers can even carry sulfur poisoning over to their children through mother milk. Finally, sulfur can damage the internal enzyme systems of animals.”
Fred Singer, president of the Science Environmental Policy Project and a skeptic of man-made global warming theories, warns that the consequences of tinkering with the planet’s delicate eco-system could have far-reaching dangers.
“If you do this on a continuous basis, you would depress the ozone layer and cause all kinds of other problems that people would rather avoid,” said Singer.
Even Greenpeace’s chief UK scientist - a staunch advocate of the man-made global warming explanation - Doug Parr has slammed attempts to geo-engineer the planet as “outlandish” and “dangerous”.
Stephen Schneider of Stanford University, who recently proposed a bizarre plan to send spaceships into the upper atmosphere that would be used to block out the Sun, admits that geo-engineering could cause “conflicts between nations if geoengineering projects go wrong.”
Given all the immediate dangers associated with bombarding the atmosphere with sulphur dioxide, along with the unknown dangers of other geo-engineering projects, many people are concerned that “chemtrails” are a secret component of the same agenda to alter the Earth’s eco-system.
This graphic proposes, “Spraying aluminum powder and barium oxide into high levels of the atmosphere, again delivered by aircraft, to increase planetary reflectance (albedo) and cloud cover.” High levels of barium have been found in substances associated with chemtrails.
Reports of chemtrails, jet plumes emitted from planes that hang in the air for hours and do not dissipate, often blanketing the sky in criss-cross patterns, have increased dramatically over the last 10 years. Many have speculated that they are part of a government program to alter climate, inoculate humans against certain pathogens, or even to toxify humans as part of a population reduction agenda.
In conducting Google searches, one finds discussion, such as this example, of using sulphur dioxide as a jet fuel additive to be dispersed over the world during routine commercial flights.
“I suggest that both the sulphur dioxide and the silica particles could be delivered into the stratosphere by dissolving an additive in jet aviation fuel,” writes engineer John Gorman, who has conducted experiments to test the feasibility of such a scenario.
“We would want to burn fuel containing the additive specifically when the aircraft was cruising in the lower stratosphere,” he adds.
Earlier this year, KSLA news investigation found that a substance that fell to earth from a high altitude chemtrail contained high levels of Barium (6.8 ppm) and Lead (8.2 ppm) as well as trace amounts of other chemicals including arsenic, chromium, cadmium, selenium and silver. Of these, all but one are metals, some are toxic while several are rarely or never found in nature.
The newscast focuses on Barium, which its research shows is a “hallmark of chemtrails.” KSLA found Barium levels in its samples at 6.8 ppm or “more than six times the toxic level set by the EPA.” The Louisiana Department of Environmental Quality confirmed that the high levels of Barium were “very unusual,” but commented that “proving the source was a whole other matter” in its discussion with KSLA.
KSLA also asked Mark Ryan, Director of the Poison Control Center, about the effects of Barium on the human body. Ryan commented that “short term exposure can lead to anything from stomach to chest pains and that long term exposure causes blood pressure problems.” The Poison Control Center further reported that long-term exposure, as with any harmful substance, would contribute to weakening the immune system, which many speculate is the purpose of such man-made chemical trails.
Indeed, barium oxide has cropped up repeatedly as a contaminant from suspected geoengineering experimentation.
KSLA also put aerosolized-chemical testing in its historical context, citing a voluminous number of unclassified tests exposed in 1977 Senate hearings. The tests included experimenting with biochemical compounds on the public. KSLA reports that “239 populated areas were contaminated with biological agents between 1949 and 1969.”
One of the accepted truisms of scientific study is the fact that if scientists are proposing an idea, then those scientists with access to the bottomless pit of black-budget secret government funding are already doing it.
It is highly likely that chemtrails are merely one manifestation of “geo-engineering” that is taking place without proper debate, notification or any form of legality, and with a callous disregard for the potential dangers to both our health and our environment.

Treasury will not provide information. The panel was created just to calm the public, not really do anything.

Watchdogs: Treasury won't disclose bank bailout details
Chris Adams McClatchy Newspapers
last updated: March 31, 2009 08:14:54 PM
WASHINGTON — The massive programs designed to rescue the nation's financial sector are operating without adequate oversight, with vague goals and limited disclosure of their details to the taxpayers who are paying for them, government watchdogs told a Senate panel Tuesday.
The Troubled Asset Relief Program, or TARP, was launched in the midst of last fall's collapse of the nation's banking system and is designed to get loans flowing to businesses and individuals.
But "without a clearer explanation" about parts of the program, "it is not possible to exercise meaningful oversight over Treasury's actions," said Elizabeth Warren, a Harvard Law School professor who leads a special congressional oversight panel monitoring the TARP program. Her comments came in a Senate Finance Committee hearing on the bailout program.
Noting that TARP passed Congress six months ago, Warren said that her group has repeatedly called on the Treasury Department to provide a clear strategy for the program — and that "the absence of such a vision hampers effective oversight."
Although she has asked Treasury to explain its strategy, "Congress and the American public have no clear answer to that question."
TARP is one of several programs the government has launched in recent months to help ailing institutions and even bolster healthy banks. Warren singled out one program, known as TALF, for appearing to involve "substantial downside risk and high costs for the American taxpayer" while offering big potential rewards for private interests. She said the public information about that program was "contradictory, promoting substantial confusion."
The Government Accountability Office shared some of the same concerns, saying in a new report that "Treasury continues to struggle with developing an effective overall communication strategy" for the TARP program.
Beyond that, the GAO's report pointed out the difficulty in even measuring whether TARP is working. As of March 27, the Treasury Department had handed out more than $300 billion of the $700 billion in approved TARP funds, the GAO said.
The majority of that money went to banks large and small around the country. And there are signs that credit is flowing from those banks; the GAO said that several hundred billion dollars in new loans were processed by the largest TARP recipients in December and January.
But crediting TARP for that is difficult, given the range of actions the government has taken since October. "Isolating the effect of TARP's activities continues to be difficult," the GAO's Gene Dodaro said in his prepared testimony.
The Treasury Department, in a statement, said that "transparency and accountability are central to ensuring that taxpayer funds are spent wisely," and noted that the department is actively working to respond to the recommendations of GAO and other oversight bodies. Among other things, the department has hired more staff and expanded its survey on bank lending activities.
Iowa Sen. Charles Grassley, the panel's ranking Republican, described himself as "disappointed and frustrated" in the amount of information available about the program. "You can't measure effectiveness when you don't know what the goals and objectives of a program are, or how the program is being run," he said.
Warren's oversight panel made news earlier this year with its report that Treasury's bailout programs had overpaid by an estimated $78 billion in its transactions with the nation's ailing financial institutions. She said that issue is still under investigation.

Russian leaders favor adding gold to the "basket" of currencies to back new global money. Media will call it a "gold standard" but is merely tokenism

Russia backs return to Gold Standard to solve financial crisis
Russia has become the first major country to call for a partial restoration of the Gold Standard to uphold discipline in the world financial system.

By Ambrose Evans-Pritchard

Last Updated: 10:33AM BST 31 Mar 2009

Arkady Dvorkevich, the Kremlin's chief economic adviser, said Russia would favour the inclusion of gold bullion in the basket-weighting of a new world currency based on Special Drawing Rights issued by the International Monetary Fund.
Chinese and Russian leaders both plan to open debate on an SDR-based reserve currency as an alternative to the US dollar at the G20 summit in London this week, although the world may not yet be ready for such a radical proposal.

Mr Dvorkevich said it was "logical" that the new currency should include the rouble and the yuan, adding that "we could also think about more effective use of gold in this system".
The Gold Standard was the anchor of world finance in the 19th Century but began breaking down during the First World War as governments engaged in unprecedented spending. It collapsed in the 1930s when the British Empire, the US, and France all abandoned their parities.
It was revived as part of fixed dollar system until US inflation caused by the Vietnam War and "Great Society" social spending forced President Richard Nixon to close the gold window in 1971.
The world's fiat paper currencies have lacked any external anchor ever since. It is widely argued that the financial excesses and extreme debt leverage of the last quarter century would have been impossible - or less likely - under the discipline of gold.
Russia is a major gold producer with large untapped reserves of ore so it has a clear interest in promoting the idea. The Kremlin has already instructed the central bank of gradually raise the gold share of foreign reserves to 10pc.
China's government has floated a variant of this idea, suggesting a currency based on 30 commodities along the lines of the "Bancor" proposed by John Maynard Keynes in 1944.

Proposed bill would give the president power to close down or control flow of information over Internet for any reason so long as he claims

Should Obama Control the Internet?
A new bill would give the President emergency authority to halt web traffic and access private data.
—By Steve Aquino

Thu April 2, 2009 12:33 PM PST
Should President Obama have the power to shut down domestic Internet traffic during a state of emergency?
Senators John Rockefeller (D-W. Va.) and Olympia Snowe (R-Maine) think so. On Wednesday they introduced a bill to establish the Office of the National Cybersecurity Advisor—an arm of the executive branch that would have vast power to monitor and control Internet traffic to protect against threats to critical cyber infrastructure. That broad power is rattling some civil libertarians.

The Cybersecurity Act of 2009 (PDF) gives the president the ability to "declare a cybersecurity emergency" and shut down or limit Internet traffic in any "critical" information network "in the interest of national security." The bill does not define a critical information network or a cybersecurity emergency. That definition would be left to the president.
The bill does not only add to the power of the president. It also grants the Secretary of Commerce "access to all relevant data concerning [critical] networks without regard to any provision of law, regulation, rule, or policy restricting such access." This means he or she can monitor or access any data on private or public networks without regard to privacy laws.
Rockefeller made cybersecurity one of his key issues as a member of the Senate intelligence committee, which he chaired until last year. He now heads the Committee on Commerce, Science and Transportation, which will take up this bill.
"We must protect our critical infrastructure at all costs—from our water to our electricity, to banking, traffic lights and electronic health records—the list goes on," Rockefeller said in a statement. Snowe echoed her colleague, saying, "if we fail to take swift action, we, regrettably, risk a cyber-Katrina."
But the wide powers outlined in the Rockefeller-Snowe legislation has at least one Internet advocacy group worried. "The cybersecurity threat is real," says Leslie Harris, head of the Center for Democracy and Technology (CDT), "but such a drastic federal intervention in private communications technology and networks could harm both security and privacy."
The bill could undermine the Electronic Communications Privacy Act (ECPA), says CDT senior counsel Greg Nojeim. That law, enacted in the mid '80s, requires law enforcement seek a warrant before tapping in to data transmissions between computers.
"It's an incredibly broad authority," Nojeim says, pointing out that existing privacy laws "could fall to this authority."
Jennifer Granick, civil liberties director at the Electronic Frontier Foundation, says that granting such power to the Commerce secretary could actually cause networks to be less safe. When one person can access all information on a network, "it makes it more vulnerable to intruders," Granick says. "You've basically established a path for the bad guys to skip down."
The bill's scope, she says, is "contrary to what the Constitution promises us." That's because of the impact it could have on Internet users' privacy rights: If the Commerce Department uncovers evidence of illegal activity when accessing "critical" networks, that information could be used against a potential defendant, even if the department never had the intent to find incriminating evidence. And this might violate the Constitutional protection against searches without cause.
"Once information is accessed, it can be used for whatever purpose, no matter the original reason for accessing something," Granick says. "Who's interested in this [bill]? Law enforcement and people in the security industry who want to ensure more government dollars go to them."
Nojeim, though, thinks it's possible the bill's powers could be trimmed as it moves through Congress. "We will be working with them to clarify just what is needed and how to accomplish that," he says. "We're hopeful that some of the very broad powers that the bill would confer won't be included."

Experts claim that Chinese have planted sabotage programs into power-grid computers to close down electrical power to coincide with massive attack.

Has power grid been hacked? U.S. won't say
Steve Holland And Randall Mikkelsen
WASHINGTON (Reuters) – U.S. concerns about the potential for cyber-attacks on critical infrastructure extended to the American electrical power grid on Wednesday and experts pointed the finger anew at Chinese hackers, among others.
U.S. Homeland Security Secretary Janet Napolitano told reporters the power grid is vulnerable to potentially disabling computer attacks, while declining to comment on reports that an intrusion had taken place.
"The vulnerability is something that the Department of Homeland Security and the energy sector have known about for years," she said. "We acknowledge that ... in this world, in an increasingly cyber world, these are increasing risks."
Napolitano spoke after the Wall Street Journal reported that cyberspies had penetrated the U.S. electrical grid and left behind software programs that could be used to disrupt the system.
The Journal said the intruders have not sought to damage the power grid or other key infrastructure but could try during a crisis or war.
The United States for several years has accused the Chinese and Russians, among others, of using cyber-attacks to try to steal American trade secrets, military secrets and government secrets.
The Chinese have been particularly active, a former U.S. security official told Reuters.
"They are all over the place," said the official, who spoke on condition of anonymity. "They're getting into university systems, contractor systems, hacking government systems. There's no reason to think that the electrical system would be immune as well."
Eric Rosenbach, executive director for research at Harvard University's Kennedy School of Government's Belfer Center, said that if true, it showed that the Chinese and Russians are thinking strategically about how to either constrain the United States or inflict more damage if they ever felt they needed to do so.
'POTENTIAL WEAKNESS'
"I think that China recognizes if in a very strategic sense you want to ensure you have the ability to exploit another country's potential weakness or vulnerability but do it in a way that isn't confrontational or cause an international crisis, then this is a very good way of doing that," he said.
President Barack Obama, aware of the concerns about the vulnerability of infrastructure, has launched a cyber review that is expected to be completed in the coming weeks.
"The president takes the issue of cybersecurity very seriously, which is why he ordered a top-to-bottom review shortly after taking office," said White House spokesman Nick Shapiro.
He said the White House was not aware of "any disruptions to the power grid caused by deliberate cyber-activity here in the United States."
"The Department of Homeland Security works with industry to identify vulnerabilities and to help industry enhance the security of control system networks. The federal government is also working to ensure that security is built in as we develop the next generation of 'smart grid' networks," Shapiro said.
Mississippi Democratic Representative Bennie Thompson, chairman of the House of Representatives Homeland Security Committee, said he would introduce legislation to address the grid's vulnerability to cyber-attack.
"Our electric system is critical to our way of life, and we cannot afford to leave it vulnerable to attack. Our oversight indicates there is a significant gap in current regulation to effectively secure this infrastructure," he said.
The United States is not alone. CIA analyst Tom Donahue told a power-industry conference last year that "we have information from multiple regions outside the United States, of cyber-intrusion into utilities followed by extortion demands."
The North American Electric Reliability Corp, the industry group with responsibility for grid reliability and security for the United States and Canada, said it was unaware of any cyber-attacks that have led to disruptions of electric service. The group has been working for several years with the industry to create and implement cybersecurity measures.
"NERC and industry leaders are taking steps in the right direction to improve preparedness and response to potential cyberthreats," the group said. "There is definitely more to be done."
American Electric Power Co spokeswoman Melissa McHenry said the utility takes security and reliability of the grid seriously.
"We long ago identified that there are numerous scans and probes of our networks from external sources and have put in place a very comprehensive multilayered security system to protect it from internal and external intrusion attempts," she said.
Still, she said, "We realize that there are no guarantees that you can always be completely safe from a cyber-attack. We continually monitor the effectiveness of our systems and seek to enhance them."

Finally, Someone Says Obama Hates The US (and is right about it!)

The Elephant in the Room: Obama vs. United States
The president is contemptuous of American values. And one key nominee prefers the judgment of other countries and global elites.

By Rick Santorum

Watching President Obama apologize last week for America's arrogance - before a French audience that owes its freedom to the sacrifices of Americans - helped convince me that he has a deep-seated antipathy toward American values and traditions. His nomination of former Yale Law School Dean Harold Koh to be the State Department's top lawyer constitutes further evidence of his disdain for American values.

This seemingly obscure position in Foggy Bottom's bureaucratic maze is one of the most important in any administration, shaping foreign policy in the courts and playing a critical role in international negotiations and treaties.

Let's set aside Koh's disputed comments about the possible application of Sharia law in American jurisprudence. The pick is alarming for more fundamental reasons having to do with national sovereignty and constitutional self-governance.

What is indisputable is that Koh calls himself a "transnationalist." He believes U.S. courts "must look beyond national interest to the mutual interests of all nations in a smoothly functioning international legal regime. ..." He thinks the courts have "a central role to play in domesticating international law into U.S. law" and should "use their interpretive powers to promote the development of a global legal system."

Koh's "transnationalism" stands in contrast to good, old-fashioned notions of national sovereignty, in which our Constitution is the highest law of the land. In the traditional view, controversial matters, whatever they may be, are subject to democratic debate here. They should be resolved by the American people and their representatives, not "internationalized." What Holland or Belgium or Kenya or any other nation or coalition of nations thinks has no bearing on our exercise of executive, legislative, or judicial power.

Koh disagrees. He would decide such matters based on the views of other countries or transnational organizations - or, rather, those entities' elites.

Unsurprisingly, Koh is a strong supporter of the International Criminal Court, which could subject U.S. soldiers and officials to foreign criminal trials for their actions while fighting for our security. He has recommended that American lawyers work to "undermine" official American opposition to the court.

If only Koh's transnationalism ended there. Our Eighth Amendment's prohibition on cruel and unusual punishment? Koh believes it should be reinterpreted in light of foreign and international law to pay "decent respect to the opinions of humankind."

Old fogies like me believe we ought to pay more attention to the opinions of the Founders who wrote the Constitution and the people who have lived under it. If Americans want to end the death penalty, they can do so through their elected state representatives.

If foreign opinions trump those of Pennsylvanians on capital punishment, why not on other issues? Why not, indeed: Koh thinks "international comity" trumps American sovereignty. He believes that, since certain nations recognize a right to same-sex marriage, our courts should, too. He wrote that "the principles of human dignity and autonomy that are the essence of the modern right-protecting democracy demand that civil marriage be available to all couples and that the equality of all citizens triumph over historical attitudes."

What's beneath this legal jargon? Simply this: Even if marriage in Pennsylvania has always been understood as involving one man and one woman - even if Pennsylvanians, through referendum or constitutional amendment, decide it should remain so - none of that should count. What should count are the views of courts in other nations or international bodies.

"I'd rather have [Supreme Court Justice Harry] Blackmun, who used the wrong reasoning in Roe to get the right results," Koh wrote of the landmark abortion case, "and let other people figure out the right reasoning."

Stunning and revealing: Koh tells us it doesn't matter if the right to abortion can be found in the Constitution. In fact, he concedes that Blackmun's reasoning was wrong. But it is up to others to get it right. How? By finding out what the United Nations, European Union, or particular European nations think.

Koh tops the list of Obama's potential Supreme Court nominees. Is this what Sen. John Kerry meant when he once suggested that American policy must pass a "global test"? Or what Barack Obama meant when he said last week that we have failed to "appreciate Europe's leading role in the world"? Or when he spoke of "change we can believe in"? And just who are "we"?

All This Is Getting More Amazing By The Day

The Banksters Take a Page From Enron

by Justice Litle

No matter how cynical you get, it’s impossible to keep up. - Lily Tomlin
Somewhere along the continuum, there is a point at which tragedy turns into farce. I’m starting to think we may have passed that point with this whole TARP/TALF fiasco.
From a comedy perspective, Turbo Timmy and his madcap schemes are the gift that keeps on giving. We’re scaling the heights of utter absurdity now... it’s like a Kurt Vonnegut novel come to life.
Just take this recent snippet from The Wall Street Journal, for instance:
The Treasury Department, facing criticism over its bank-rescue program, said it may allow a broader group of private investors to purchase toxic securities...
Last month, the Treasury said it would select fund managers based on certain criteria, including an ability to raise private capital and a minimum of $10 billion of eligible assets under management.
On Monday, the Treasury said a proposal won't necessarily be disqualified if firms don't meet all the criteria. The Treasury added that it is particularly interested in program participation by small, minority- or woman-owned businesses.
Hmm. Okay, so let me get this straight. First they start out with an eligibility hurdle so ridiculous, it sounds like a leftover Dr. Evil catchphrase from the Austin Powers movie. “You must have ten BILLION dollars...”

Then it hits them that gosh, ya know, that might have been a dumb idea.
So in a stroke of belated genius, they decide to 1) disregard their own proposal criteria – not change it, but just ignore it, mind you – and 2) turn the bank rescue program into some kind of warm and fuzzy feel-good “help the little guy” exercise, like an SBA loan program writ large.
Read the following in John Lovitz “liar” voice: We want to take all your money and give it to the banksters. No, wait. That sounds bad. We want to help the, ah, the billionaires. The poor, poor billionaires. No, wait – crap. That’s bad too. Here it is: We want to help minorities. Minorities and women. Yeah! Yeah, that’s the ticket...
An American Classic
The REALLY funny news, though, is that the PPIP (as it has been so christened) rescue plan now seems to be taking a page from one of the all-time greats of fraud and deceit.
I have to take this opportunity to share one of my favorite nuggets, a little story that was making its way around trading desks circa 2002:
Once there was a country bumpkin named Kenny – Kenny boy to his friends – and Kenny boy found himself in need of some money. Trouble was, he didn’t have a job and didn’t own a thing except a recently deceased pet goat. But Kenny boy was smart, and it didn’t take long for him to hatch a plan. Kenny boy called up all the farmers in the county and arranged a raffle for a blue-ribbon Holstein milking cow. On the day of the raffle, 100 farmers showed up and paid $50 per ticket, giving Kenny boy $5,000 to put in his pocket. Kenny boy drew the winning ticket and everybody went home. The next day, the raffle winner came by Kenny boy’s place to collect his prize. Kenny trotted out his expired pet. The farmer scratched his head and said “Son, that’s not a prize milking cow. That’s a dead goat.” So Kenny boy gave the farmer his fifty dollars back.
And as you might have guessed, Kenny boy’s last name was Lay and he grew up to found Enron.
Ah, Enron. Remember those guys? The giant tilted “E,” the ridiculous hubris, the bizarre commercials with the computerized “Why” voice... Classic stuff.
Enron worked hard to rip off rubes like the public officials of the state of California, who didn’t realize that deregulating electricity markets without knowing how the game was played was the rough equivalent of dumping a bucket of chum into a shark tank.
Enron also did all kinds of neat innovative things with “side pockets” and “special investment vehicles” and “off-balance-sheet partnerships,” even going so far as to use really cool Star-Wars-themed names like “Death Star” and “Chewco.”
In retrospect, who could have known that even as Enron was going down the tubes, our current crop of banksters were busy taking notes?
Move Over Darth Vader
I bring up Enron in light of new revelations that propel this whole rescue plan debacle to new heights of criminality and avarice. Feast your eyes on this tidbit from a recent Financial Times piece, “Bail-out banks eye toxic asset buys”:

US banks that have received government aid, including Citigroup, Goldman Sachs, Morgan Stanley and JPMorgan Chase, are considering buying toxic assets to be sold by rivals [emphasis mine] under the Treasury’s $1,000bn (£680bn) plan to revive the financial system.
Spencer Bachus, the top Republican on the House financial services committee, vowed after being told of the plans by the FT to introduce legislation to stop financial institutions ”gaming the system to reap taxpayer-subsidised windfalls.”
Mr. Bachus added it would mark ”a new level of absurdity” if financial institutions were ”colluding to swap assets at inflated prices using taxpayers’ dollars.”
“Death Star” my foot... If this true, it makes the Enron chicanery of days past look positively Ewok-scaled in comparison.
And most likely it is true... a few weeks prior to the FT exclusive, the New York Post reported that Citigroup and Bank of America had already begun using TARP funds – billions given to them by the government that they were supposed to use to make loans – to instead “aggressively scoop up” more of the very toxic assets that blew them up in the first place.
The very idea that these banks could be buying up each other’s garbage – that they are even considering it – well, it just hurts my head, it’s so mind boggling. To understand why, let’s walk through a quick analogy.
Lawn Mowers and Government Loans
Imagine, for a moment, that I have a beat-up old mini-fridge in the back of my garage. It has a coolant leak, it’s a little moldy, and it smells like stale beer, but I’m pretty sure it still works.
Meanwhile, you happen to be in possession of a rusty old lawn mower. The blade is caked beyond recognition with fossilized grass clippings, the gunk that passes for oil has never been changed, and the thing takes twenty or thirty pulls to start... but you, too, are fairly certain your lawn mower “works.”
Now imagine that you and I make a deal. I will sell you my disgusting mini-fridge for the princely sum of a hundred thousand dollars. You, in turn, will sell me your ancient lawn mower for a hundred thousand dollars. I write a six-figure check out to you, and you write a six-figure check out to me.
Nothing’s really happened, right? All we’ve done is swap two crap assets, neither one worth fifteen bucks in the real world, and furthermore swapped an identical large chunk of change ($100,000) between our respective bank accounts.
But hold on! Did I mention that we both employ highly creative accountants?
Here’s the good news about our little swap. Thanks to our exchange, I can record a massive profit on my books... to the tune of $99,900, or whatever sum is left over above and beyond the book-entry carrying cost for my fridge. And you can do the same with your lawn mower.
In the real world, the only thing that happened is junk got swapped with junk. In fantasy-land accounting world, however, you and I both just conjured up fantastic profits out of thin air.
And it gets even better... did I mention that the government has generously granted me a non-recourse loan in order to provide the funds with which to buy your $100,000 lawn mower?
Ready to Take Some Revenge on Wall Street?Our revenge-hungry Macro Trader is smacking the gains right out of Wall Street. They’ve nailed 93%... 54%... 50%... 82%... and they are just getting started.
I didn’t actually have to move $100K out of my bank account and into yours, because $93,000 of it was covered by government loan. The same privilege was extended to you, of course.
And of course the proceeds of my loan were sent to you as cash... and the proceeds of YOUR loan were sent to ME as cash... which means the wonderful taxpayer ponied up TWICE – to the tune of $186,000 – to fund our little phantom transaction with real dollars.
See how great this is? We swap crap assets worth zilch, pretending they are actually worth $100,000... we record a massive profit on our books... and we collect real profit in the form of a $93,000 handout to both of us (the non-recourse loan).
Of course, someone will eventually scratch their head (just like Kenny boy’s farmer) and say, “Hey. We don’t have anything worth $100,000 here. We’ve got a disgusting mini-fridge and a rusty lawn mower.”
But by the time that happens, you and I will be in clover... and by definition we never had to pay back the loans anyway! Ain’t giant handouts grand?
To understand what the banks plan to do under the guise of the PPIP “rescue plan” by way of swapping toxic assets with each other, simply replace “mini-fridge” and “lawn mower” in the above example with “toxic asset A” and “toxic asset B.”
Then up the scale from $100,000 to hundreds of billions – all the way up to a cool trillion maybe – and there you go.
This is the fabulous Enron-style solution Turbo Timmy at the Treasury and Sheila Bair at the FDIC have laid out for us: “Death Star” and “Chewco” on steroids. They want to Enronize the whole damn financial system in an effort to save their connected masters (and grateful future employers) on Wall Street.
Something fun to think about as we pay our taxes, no?
Maybe if we send a few choice words to Washington, they’ll think twice about letting this travesty unfold. What would you tell your congressman if you had him in the room?

Barry Wants To Control The Banks

Obama Wants to Control the Banks
There's a reason he refuses to accept repayment of TARP money.

By STUART VARNEY
I must be naive. I really thought the administration would welcome the return of bank bailout money. Some $340 million in TARP cash flowed back this week from four small banks in Louisiana, New York, Indiana and California. This isn't much when we routinely talk in trillions, but clearly that money has not been wasted or otherwise sunk down Wall Street's black hole. So why no cheering as the cash comes back?
My answer: The government wants to control the banks, just as it now controls GM and Chrysler, and will surely control the health industry in the not-too-distant future. Keeping them TARP-stuffed is the key to control. And for this intensely political president, mere influence is not enough. The White House wants to tell 'em what to do. Control. Direct. Command.
It is not for nothing that rage has been turned on those wicked financiers. The banks are at the core of the administration's thrust: By managing the money, government can steer the whole economy even more firmly down the left fork in the road.
If the banks are forced to keep TARP cash -- which was often forced on them in the first place -- the Obama team can work its will on the financial system to unprecedented degree. That's what's happening right now.
Here's a true story first reported by my Fox News colleague Andrew Napolitano (with the names and some details obscured to prevent retaliation). Under the Bush team a prominent and profitable bank, under threat of a damaging public audit, was forced to accept less than $1 billion of TARP money. The government insisted on buying a new class of preferred stock which gave it a tiny, minority position. The money flowed to the bank. Arguably, back then, the Bush administration was acting for purely economic reasons. It wanted to recapitalize the banks to halt a financial panic.
Fast forward to today, and that same bank is begging to give the money back. The chairman offers to write a check, now, with interest. He's been sitting on the cash for months and has felt the dead hand of government threatening to run his business and dictate pay scales. He sees the writing on the wall and he wants out. But the Obama team says no, since unlike the smaller banks that gave their TARP money back, this bank is far more prominent. The bank has also been threatened with "adverse" consequences if its chairman persists. That's politics talking, not economics.
Think about it: If Rick Wagoner can be fired and compact cars can be mandated, why can't a bank with a vault full of TARP money be told where to lend? And since politics drives this administration, why can't special loans and terms be offered to favored constituents, favored industries, or even favored regions? Our prosperity has never been based on the political allocation of credit -- until now.
Which brings me to the Pay for Performance Act, just passed by the House. This is an outstanding example of class warfare. I'm an Englishman. We invented class warfare, and I know it when I see it. This legislation allows the administration to dictate pay for anyone working in any company that takes a dime of TARP money. This is a whip with which to thrash the unpopular bankers, a tool to advance the Obama administration's goal of controlling the financial system.
After 35 years in America, I never thought I would see this. I still can't quite believe we will sit by as this crisis is used to hand control of our economy over to government. But here we are, on the brink. Clearly, I have been naive.

The Economic Buffoon, Larry Summers

Summers says economic "free-fall" to end soon

By Corbett B. Daly and David Lawder
WASHINGTON (Reuters) - The sense of "freefall" for the U.S. economy is likely to end in the middle of the year, though the road to recovery could take some time, Lawrence Summers, U.S. President Barack Obama's top White House economic policy aide, said on Thursday.
"I think the sense of a ball falling off the table -- which is what the economy has felt like since the middle of last fall -- I think we can be reasonably confident that that's going to end within the next few months and you will no longer have that sense of freefall," said Summers, director of the White House National Economic Council.
The recovery is likely to be slowed by "substantial downdrafts" in the economy.
"Economies don't go from losing 600,000 jobs a month to a terribly happy path overnight," Summers said in remarks to the Economic Club of Washington, noting that there are "still substantial strains in credit markets."
The economy lost 663,000 jobs in March, leaving the economy down 5.1 million jobs since the start of the downturn in December 2007.
The decorated economist said it remained unclear how long it would take for the economy to return to strong, sustained growth, though he did cite "anecdotal" signs of improvements in credit markets that would allow inventory cycles to return to normal.
The U.S. unemployment rate, at a quarter century high of 8.5 percent, is likely to edge higher because unemployment typically lags an economic rebound and needs the economy to grow at a rate of 2.5 percent to remain stable.
"Even if we got a return to positive growth, an economy that was growing at 1 percent would be an economy with rising unemployment. I don't think we can hold out the prospect we'll stabilize at the current level," he said, deliberately declining to provide a forecast for peak unemployment.
The economy contracted at a 6.3 percent annual rate in the fourth quarter of last year, the steepest pace since 1982.
Summers said policy-makers needed to be wary of risks for both inflation and deflation, adding that near term deflation risks were part of the reason for the Obama administration's strong fiscal stimulus efforts and programs to support credit markets.
"I don't think the concern about deflation in the nearer term is one that can be entirely discounted," he said.
Asked about the ability of the world's largest economy to sell its debt going forward, the former Treasury secretary said the United States benefits from the fact that the U.S. dollar is regarded as a safe currency and should protect its status.
"On days when the markets are suggesting increased uncertainty, increased doubt about the global economy....those are days almost always when Treasury bond prices rise," Summers said.
"So it's important to remember how fortunate we are as a country to have a currency and a bond market that is seen in every way as a source of strength and it's a huge responsibility for us to keep it that way."
China has suggested that some thought should be given to letting some other measure of value be considered as the world's reserve currency, an idea the Obama administration has greeted coolly.
Summers called on U.S. trading partners to boost demand because the United States cannot be the single engine of economic growth for the world economy.
"It's clear that that can't be the growth paradigm going forward," Summers said.
Partway into his talk, two protesters rushed on to the stage and unfurled a pink banner behind Summers emblazoned with the words "We want our money back!"
The Code Pink activists called on Summers to resign because of revelations earlier this month that he received $5.2 million during the past year from hedge fund D.E. Shaw.

This Saddens Us At Sound Of Cannons Towers More Than A Lot Of What We Read.....

Land of the free sours on capitalism: US poll

Bad news for those fearful of "creeping socialism" in the United States -- ...

Bad news for those fearful of "creeping socialism" in the United States -- only 53 percent of Americans now believe capitalism is the better system, according to a new poll Thursday.
Fully 20 percent in the Rasmussen Reports survey said that socialism was their preferred economic system -- a startling number that suggests growing disaffection as the "land of the free" fights its worst recession in decades.

Republican critics fret that President Barack Obama's big-spending recovery policies amount to an un-American "creeping socialism," but Rasmussen said its findings pointed to suspicion of business and government elites alike.
It noted that in another survey last month, two out of three Americans said that big government and big business often collude to undermine the interests of consumers and investors.
Meanwhile in another Rasmussen survey in late December, as Obama prepared to take power, 70 percent of respondents said they preferred a free-market economy.
"The fact that a 'free-market economy' attracts substantially more support than 'capitalism' may suggest some skepticism about whether capitalism in the United States today relies on free markets," the pollsters said.
Rasmussen said its poll question did not define capitalism or socialism. Twenty-seven percent were not sure which is better.
The telephone survey of 1,000 people was conducted April 6-7, and has an error margin of three percentage points.

Sometimes A Pithy Phrase Captures It All.....

Sovereignty? What's That?

American Sovereignty in Danger
By Bob Bauman
I happen to hold to the old fashioned notion that America's national sovereignty is the foundation of our freedom as a people and of our individual liberty.
Sovereignty is the status, dominion, supreme authority and independent power held and exercised by a government. In America the prevalent founding theory was that the people rule as sovereign. Indeed, we gained out sovereignty by a famous revolution that stirred much of the world to emulate our system of government.
If that be true, then sovereignty rests strictly with the American people. We cannot allow foreign countries or international organizations to make decisions and impose policies that should be our own exclusive province. And that is true of every other sovereign nation.
End of History?
Robert Kagan, the noted author and a senior associate at the Carnegie Endowment for International Peace, writing in The New Republic (The End of the End of History, April 23, 2008) noted that "For three centuries, international law, with its strictures against interference in the internal affairs of nations, has tended to protect autocracies. Now the democratic world is in the process of removing that protection, while the autocrats rush to defend the principle of sovereign inviolability."
He quoted "...no less an authority than Henry Kissinger [who] warned that 'the abrupt abandonment of the concept of national sovereignty' risked a world unmoored from any notion of international legal order."
The New Autocracy
"Autocracy" used to be defined as a government in which one person has uncontrolled or unlimited authority over others, as in the government by an absolute monarch.
But I suggest, based on the outcome of the infamous G-20 London meeting last week, that the "new autocracy" should be defined as government imposed on the majority of the people by an elite group of politicians and their allied activists who think they know what is best for everyone else.Their righteous certainties include plans for economics, politics, trade, international relations, but also for our lives – prescriptions that determine the extent of our freedom and liberty, our privacy, even our right to earn and accumulate wealth and private property.
Illegitimate Acts
What raised my concern was the utter disregard shown by the leaders of the G-20 countries, including President Obama, for American sovereignty, as well as the sovereignty of other nations as well.Put aside Mr. Obama's mistaken surrender of the theoretical control of our national currency, our financial and banking systems and our economy to some newly formed, nebulous international groups. That betrayal is bad enough in and of itself.
Acts of War
But Mr. Obama, the world conciliator who likes to contrast himself as a man of peace compared to his bellicose predecessor, Mr. Bush, didn't blink an eye in his endorsement of a frontal attack just short of war aimed at numerous independent jurisdictions that the G-20 scornfully calls "tax havens."
It seems this new American leader never considered what he, (or the millions of Americans he represents), would do if the United States similarly was threatened with an organized global boycott, blacklisted as a financial pariah, subjected to trade and banking restrictions, and punishment was promised for foreigners who dared to do business with America. Yet that is what the President of the United States (and the other G-20 London delegates) have decreed is to be the fate of a fluctuating number of countries (and British colonies) that arbitrarily have been smeared by a blacklist drawn up by a non-government group known as the Organization for Economic and Community Development (OECD).
(I would suggest, based on its overt selective hostility towards some communities, the last word of its name be change to the more appropriate, "Destruction.")
Far less serious international acts between and among nations have produced not only border conflicts, but all-out prolonged military actions.
Abominable List & Sanctions
Good guys:Argentina, Australia, Barbados, Canada, China, Cyprus, Czech Republic, Denmark, Finland, France, Germany, Greece, Guernsey, Hungary, Iceland, Ireland, Isle of Man, Italy, Japan, Jersey, Korea, Malta, Mauritius, Mexico, Netherlands, New Zealand, Norway, Poland, Portugal, Russian Federation, Seychelles, Slovak Republic, South Africa, Spain, Sweden, Turkey, United Arab Emirates, United Kingdom, United States, U.S. Virgin Islands.
Bad guys: Andorra, Anguilla, Antigua and Barbuda, Aruba, The Bahamas, Bahrain, Belize, Bermuda, British Virgin Islands, Cayman Islands, Cook Islands, Dominica, Gibraltar, Grenada, Liberia, Liechtenstein, Marshall Islands, Monaco, Montserrat, Nauru, Antilles, Niue, Panama, St Kitts and Nevis, St Lucia, St Vincent & Grenadines, Samoa, San Marino, Turks and Caicos Islands, Vanuatu. Malaysia, Costa Rica, Philippines, Uruguay. Source: OECD Above is a list of the OECD's good and bad guys, the sole OECD criterion being which countries automatically will turn over requested tax information about foreigners with bank or financial accounts in those countries. Note that every major country (the ones that wrote the list), listed itself as one of the good guys, whether that is true or not.
I have checked news sources and here's a list of the possible sanctions that various denigrators of national sovereignty want to impose on the tax havens that refuse to follow OECD orders:
* French Finance Minister Christine Lagarde said national regulators should increase capital requirements for domestic banks that do business in tax havens with looser financial and fiscal regulation to compensate for the additional risk.

* Asked if the government should prevent banks in Germany that have accepted government bailouts funds from doing active business in tax havens, Foreign Minister Peer Steinbrueck told Berlin's Taz newspaper: "The answer is yes."

* A task force is being formed by the Obama administration that will issue a report in December detailing still more sanctions to attack the tax havens.

* U.S. trade unions and politicians are opposing the U.S.-Panama free trade agreement on the grounds that Panama is on the OECD blacklist.

* British Virgin Island's Premier Ralph T. O'Neal, says it smacks of colonialism when developed nations dictate standards for financial operations, especially when they don't comply with the rules themselves.

* U.S. Senator Carl Levin said that the OECD did not go far enough and he will still push his Anti-Tax Haven legislation that could bar Americans from doing business in tax havens and would presume any American who did so was engaged in tax evasion.

* OECD Secretary-General Angel Gurría, said what the OECD wants is "...is an exchange of tax information on demand."
As I was saying, what ever happened to national sovereignty?

Gee, You Think????

GFMS: Gold can reach $1 100

Apr 07 2009 20:26

Johannesburg - Gold prices could "easily re-attain the $1 000 mark and may well push up towards and perhaps even through the $1 100 barrier in the coming months", precious metals consultancy GFMS predicted on Tuesday.
"The price may have pulled back a fair bit from the February highs but that was largely just the market's reaction to jewellery demand crumbling and scrap booming," said GFMS executive chairperson Philip Klapwijk.
"It's far from game over for investors, and it will be that crowd which sets the price alight," Klapwijk said.
Releasing its latest review on the gold market, Gold Survey 2009, GFMS singled out the fiscal and monetary policies currently being enacted, especially by the US administration, as the root cause of gold's potential.
GFMS also expect central banks to be reluctant to raise interest rates while the prospects for economic growth are shaky and that the solidity of the US dollar has to be called into question, chiefly as a result of doubts over others' desire or ability to continue financing an explosion in US government debt.
Strength in investment will certainly be needed to overcome weakness in the fundamentals.
No straight line rally
"So far this year, we've seen times when major fabricating countries like Turkey have been exporting bullion because jewellery demand had collapsed and scrap was so strong. There's no way that's sustainable even in the medium term and I'd argue that's the main reason the rally this year failed in the US$980s," said Klapwijk.
But the consultancy cautioned that it may well not be a straight line rally as a summer lull or the need for inflationary pressures to build could mean sub-$900 prices in the short term.
The report details a similar complex path last year as heavy net investment and record prices highs in the first quarter, on the back of surging oil prices, a weak dollar and financial turmoil such as the collapse of Bear Stearns, was followed by periods of heavy selling through into the fourth quarter.
Much of this was ascribed to the general sell-off in commodities as economic growth foundered, a turnaround in the dollar and, towards the end of this phase, funds being obliged to sell in order to cover losses elsewhere, to meet margin calls and so forth.
In the final four months, GFMS noted a ground swell in investment in physical gold, reflecting distrust in financial institutions, especially after the collapse of Lehman Brothers, and a more general desire for wealth preservation, with this buying centred on Western Europe and North America.
This desire for investment in physical form was illustrated in the 40% rise in official coin minting - the only area of fabrication to register an increase in 2008, according to the latest GFMS report.
In contrast, jewellery demand fell by just over 10% in response to high and volatile prices and the slowdown in economic growth.
The year was far from uniform, but Klapwijk said jewellery demand came back in force in the late summer as prices sank through the $800 mark, and even more so as it headed for $700.
"And if that buying hadn't appeared, we could have easily seen far lower prices than was the case," Klapwijk said.
Demand in other quarters was seen as mixed with electronics offtake, for example, withered as the economic crisis developed and de-hedging by producers fell sharply in the second half, after a surprisingly buoyant first half.
"It's a concern for the stability of prices that we're entering a period in which for the first time in many years de-hedging will be running at trivial levels, although that's only a function of the much reduced hedge book," said Klapwijk.
Surge in scrap prices "We're still seeing very limited interest in strategic hedging," he added.
Actual mine production was reported to have continued its declining trend, with notable losses seen in South Africa and Indonesia.
The scale of the drop came as something of a surprise, but of far greater importance to the price was the surge in scrap to a record high.
Much was driven by high prices in the developing world, especially the Middle East and in particular Turkey, although distress selling as a product of the economic crisis featured as a reason behind high levels of recycling in the industrialised world.
A good part of the overall increase in scrap, however, was neutralised by the marked drop in net official sector sales.
This was said to be chiefly the result of low levels of selling by the Central Bank Gold Agreement countries, although net buying by countries outside this grouping also featured, particularly in the fourth quarter.

The Liberal Media Bias

'Journalism' Goes from Low Standards to No Standards

It's frightening what is happening in this country. On the one hand, we have a collection of elected officials in Washington such as Obama, Pelosi, and Reid who are hell bent on driving America as far left as possible. Don't work or strive to be better, just rely on the government... that's their motto.
On the other hand, we have a media that's delighted to help them. Rather than simply covering news events (which they do with a liberal spin), they also set out to make new events. Through "features," interviews, and "analysis" pieces, they create stories out of thin air in order to move the American public more to the left. But now, it's hit a new low. It turns out that not only is Katie Couric's interview with Gov. and then Vice-Presidential candidate Sarah Palin considered "solid reporting," it is being rewarded with a "prestigious" award. What is the world coming to?
That's right... On April 15, Couric will receive the Walter Cronkite Award for Excellence in Television Journalism. It is unbelievable that the words "excellence" and "journalism" are allowed to appear in the same sentence, since journalism has moved beyond reporting to advocacy. They have "their" issues. They have "their" candidates. They have "their" agenda. And, they will promote it above all else.
Forget journalistic standards. Those only apply if a liberal is being scrutinized. If it's a conservative, forget it! All bets are off, and anything goes.
The Walter Cronkite Award for Excellence in Television Journalism is being presented by the University of Southern California's Annenberg School of Communication. Couric's award in particular is under the category of "Special Achievement for National Impact on the 2008 Campaign." I can't read it without rolling my eyes. Since when is "gotcha journalism" considered a "special achievement?"
The award description is even more laughable. Apparently, Couric is being recognized for her "extraordinary, persistent and detailed multi-part interviews with Republican vice-presidential candidate Sarah Palin which judges called a "defining moment in the 2008 presidential campaign."
As documentary filmmaker John Ziegler writes in an op-ed on FOXNews.com, "[F]or Katie Couric, the poster child of news as 'infotainment,' to be the recipient of such an 'honor' is like giving John Murtha or Barney Frank a trophy for frugal spending in Congress."
It is obvious that Couric is being rewarded for the political result of her interview -- the shooting down of a conservative superstar just in time to save the Obama campaign. It’s not about the “journalism” at all. But even that truth is not the most outrageous aspect of this absurdity. What’s even more absurd is that not only shouldn’t Couric be getting rewarded for her Palin interview, if we lived in a world where journalistic standards still mattered at all, she would have been roundly condemned for it.
Ziegler is about to release his documentary titled Media Malpractice. In it, he talks at length with Gov. Palin about the media coverage she received during the campaign. Here is a portion:
Any one who has followed what I have written about Gov. Palin knows that I have my ups and downs. I love and appreciate her conservative credentials. I also admire her no-nonsense approach to relaying those issues to the American public. It's what I try to do in all my writings... get to the point, let people know exactly where you stand, and give people the facts they need to make important decisions. On the flip side, there is no doubt she could have handled the interviews better. She was a journalism major and working in broadcasting! Anyone can see these "gotcha" questions coming from a mile away. She needs to do a better job explaining the issues that concern voters. They WILL NOT elect someone who can't talk about the issues of the day.
That being said, her response to the Couric questions does not justify Couric asking those questions. It was like the interview when then Gov. George W. Bush was asked to provide the name of a particular country's leader. He didn't know the answer, and it made the news. The fact is that there are tons of questions reporters can ask to stump a candidate, and the American people should recognize that such a practice is wrong. Couric did nothing but act as a tool for Obama and the liberal elite.
Organizations like the New York Times wonder why their circulation is going down, and MSNBC wonders why no one watches their political shows. It's amazing. More Americans consider themselves to be conservative rather than liberal, but the media preaches as if anyone who is conservative is out of touch. Rewarding Couric for her "journalism" is a slap in the face of any American who actually has a brain.

Commercial Real Estate Stormwatch

As I've mentioned before, look out for the upcoming crash in the Commercial real estate market. In a story posted at The Wall Street Journal yesterday..."Commercial landlords continue to lose retail tenants at an accelerating pace, indicating that the industry's troubles are worsening. The amount of occupied space in U.S. shopping centers and malls declined a net 8.7 million square feet in the first quarter of 2009, more than the total amount of space retailers gave back to landlords in all of 2008 and any other year in recent history." And this is just the start.

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

The worst is over without a doubt. - James J. Davis, Secretary of Labor, 29 August 1930

Audit the Fed!

Ron Paul, who has been correct in all his financial prognostications. His words are best listened to.

A Cautionary Tale

We Almost Lost the Straits of Hormuz
For many years, we in the West have worried about Iran closing the Straits of Hormuz to oil tanker traffic. An abrupt closure would instantly spike oil prices well into three-digits, and immediately change the energy equation of the world. Indeed, many geostrategic scholars believe that closing the Straits of Hormuz would be tantamount to an act of war. But what if it was the US that closed the Straits of Hormuz? What would the world think if the US directly precipitated the end of ship traffic in the Straits, or at least severe restrictions on transit and passage?
Closing Hormuz? We Almost Found Out…
Well, we almost found out last Friday, March 20. That was when two US Navy ships collided during an otherwise routine transit through the Straits of Hormuz. And one of the vessels was a nuclear-powered submarine, the USS Hartford (SSN-768). Hartford is a Los Angeles-Class attack submarine. In those dark hours of collision and confusion — and as is often his custom and courtesy — the god of the sea Poseidon favored the US Navy. That is, we did not experience the catastrophe of a nuclear submarine sinking in the Straits of Hormuz. Now THAT would have altered the shipping and energy patterns of the world. But one cannot but wonder “what if” in situations like this? “What if” worse things had happened? “What if” the worst occurred? Remember the Russian submarine Kursk, which tragically sank in 2000 in the icy waters off northern Russia.
Here Is What We Know...
Early in the morning of March 20, submarine Hartford was transiting into the Persian Gulf through the Hormuz Straits. Hartford was accompanying an amphibious surface ship, the USS New Orleans (LPD-18) which was making her first extended deployment. Hartford was “submerged but near the surface” at the time of the collision, according to Navy officials. For reasons not yet known, the two ships collided. According to one report, submarine Hartford rolled 85-degrees to starboard. The impact and rolling caused injuries to 15 Sailors onboard. The bow planes and sail of the submerged Hartford ripped into the hull of New Orleans. According to a Navy statement, the collision punched a 16-by-18 foot hole in the fuel tanks of New Orleans. Two interior ballast tanks were also damaged, the statement said. USS New Orleans lost about 25,000 gallons of diesel fuel, which rapidly dissipated in the ocean and could not be tracked after a few days. There were no injuries to New Orleans crew of 360 or the embarked unit of 700 US Marines. Nuclear-powered submarine Hartford was severely damaged. Indeed, the submarine’s sail was torn from its mountings to the vessel’s pressure hull. (See photos below, courtesy of US 5th Fleet.) The submarine’s sail is clearly bent by several degrees to starboard. It’s not part of the builder’s specs, that’s for sure. Apparently, the submarine’s communication masts and periscope are warped and inoperable. The watertight integrity of the pressure hull is suspect. After the collision, Hartford transited on the surface to Bahrain, where the vessel tied up to a military pier.
“It’s important to point out that Hartford’s [nuclear] power plant was not affected in this at all,” said a Navy spokesperson. Also, according to the Navy, “Despite the roll, engineering investigations have confirmed the propulsion plant of the submarine was unaffected by this collision… However, Hartford sustained damage to its sail and periscope, as well as the port bow plane.”

Deployment Ending, Now for the Long Trek Home
According to a report in the latest issue of Navy Times, this is a “deployment ending” event for the USS Hartford. The submarine cannot fulfill its combat mission. The vessel must move to a nuclear-capable shipyard to undergo extensive repairs, costing “in the tens of millions of dollars” according to one source. Coincidentally, USS Hartford ran aground in 2003 near La Maddalena, Italy, damaging its bottom and rudder. Repairs then cost near $10 million and involved installing equipment that had to be cannibalized from another, decommissioned submarine. In all likelihood, in its current state Hartford will be restricted from submerging. So the question is how to bring the damaged vessel on a long, transoceanic trek back to the US for repairs. The submarine may be able to transit back to a nuclear-capable shipyard in the US under her own power. A voyage like that would have to be made entirely on the surface, due to the risks of submerging the damaged pressure hull. Nothing is easy, however. A surface transit would require extensive preparations and effort, to include armed Navy escort. Sailing a damaged nuclear submarine from the Middle East to the US would likely require avoiding many of the busy sea-lanes of the Indian and Atlantic Oceans. Just the fact of a damaged nuclear submarine re-transiting the Straits of Hormuz, on the surface and within sight of Iranian spotters, must give chills to US Navy planners.
Suez? Or the Cape of Good Hope?
The shortest route home would involve transiting the Red Sea, Suez Canal and Mediterranean Sea. But this is problematic, considering the public relations nightmare of a damaged US nuclear-powered vessel moving through busy seas adjacent to densely populated regions that are critical to world commerce.
Or Hartford could transit south around Africa, and sail around the Cape of Good Hope. Doubtless, the South African Navy would take an interest in any southerly transit by USS Hartford. South Africa has a fine, modern navy that includes three brand-new, German-built Type-209 diesel-electric submarines. Indeed, the South African Navy Base at Simons Town — home-port to its Type-209s, relatively remote and very secure — might be a suitable locale for the US Navy to consider for logistic and/or emergency support. However the South African government might also be concerned at the presence of a damaged nuclear vessel in or near its waters. Last fall, the South African nuclear regulatory authorities waited until almost the last minute to give approval for a port call at Cape Town by the (undamaged) nuclear powered aircraft carrier, USS Theodore Roosevelt (CVN-71). If Hartford does not sail home on her own, the US Navy would have to arrange a “lift” for Hartford. This would entail placing and securing the 2,800-ton submarine on the flat deck of a large transport vessel, such as occurred with the USS Cole in 2000 after that ship was bombed while at anchor in port in Yemen. But removing Hartford’s hull from the sea would also require jury-rigging a continuous means to pump seawater and cool the ship’s nuclear reactor. Nothing like this has ever been done before.

Money, Assets, Favors, Political Capital — and Luck
Whatever happens, the damage to the USS Hartford is going to take much money, many Navy assets, and a lot of favors and political capital to fix. We in the US are certainly not finished hearing about the USS Hartford, let alone paying for it. Then again, we were very lucky. For both our Navy and our country, it could have been much, much worse. As a long-time student of both Naval history and disaster, I commend Poseidon that, once again, he has favored the US Navy — even in adversity — and that the Straits of Hormuz are still open. Going forward, we had better absorb the lessons and not press our luck.

Call This G20 Picture "Goofs On Parade!"

So it seems the new “masters of the universe” have fixed all our worldly woes… time for glamour shots!
Oh, my. Where do we begin?
As a snarky economic commentator -- really -- pictures like this are what dreams are made of: Berlusconi’s vintage moment of Italian overaffection… Medvedev’s uncomfortable “can’t believe you’re touching me” expression… Gordon Brown looks like he’s lost… both Asian representatives sticking to typically straight, honorable postures… Africa’s reprehensive (Meles Zenawi) off to the side, clearly an outsider… Saudi King Abdullah is looking awfully mischievous… and of course, our commander in chief, thumbs up and as confident as ever. If there is a picture out there that better captures the current state of global leadership, we haven’t seen it.
“Let the G-20 leaders have their self-congratulatory moment in the New World Order sun,” “Their plan is a failure because it blames the credit crisis on deregulation, fraud, free markets and bad bankers. This is a deliberate attempt to obscure the origins of the credit crisis and the recession/depression we now face: the credit boom that preceded it.
“Governments themselves were largely responsible for that credit boom. Their coordinated interest rate cuts and the dollar-pegged global currency system led to an explosion in money, credit and, inevitably, leverage, risk-taking and now losses. They are trying to prevent those losses by throwing more borrowed money at the recession to ‘fight it.’
“That's moronic.
“We think this counterattack by Big Government to stave off the second wave of the credit crisis gives you time to sell stocks into a rally and diversify your assets ahead of the coming devaluations and inflation. Ultimately, the credibility of national governments and their currencies will be eroded and damaged beyond repair, based on unsustainable fiscal and monetary policies.”

Swiss Economy Failing

Swiss slide into deflation signals the next chapter of this global crisis
Watch Switzerland closely. It is tipping into deflation, the first Western country to succumb to Japan's disease.


Swiss consumer prices fell 0.4pc in March (year-on-year). Swiss CPI will be minus 1pc at least by July, nearing the level where spending psychology changes. By the time you have a self-feeding spiral, it is too late.
"This is something that we must prevent at all costs. The current situation is extraordinarily serious," said Philipp Hildebrand, a governor of the Swiss National Bank.

The SNB is not easily spooked. It is the world's benchmark bank, the keeper of the monetary flame. Yet even the SNB's hard men have thrown away the rule book, taking emergency action to force down the exchange rate of the Swiss franc.
Here lies the danger. If other countries try to export deflation by this means, we will face a second phase of the global crisis. Taiwan is already devaluing. Korea, Singapore, and Sweden all seem tempted to follow. Japan is chomping at the bit.
"We don't fully realise in the West what a catastrophic collapse Japan has suffered," says Albert Edwards, global strategist at Société Générale. "The West has dumped a large part of its economic downturn onto Japan by devaluing against the yen."
This is about to go into reverse as Tokyo hits the ping-pong ball back across the net. "As the unfolding collapse in the yen gathers pace, the West will see its green shoots incinerated to dust," he said.
Japan's industrial output fell 38pc in February (year-on-year), mostly concentrated into the last four months. No major economy imploded at this speed in the 1930s. The country has been hit by a double shock. As an export power it has taken the brunt of Anglo-Saxon belt-tightening: as the world's top creditor it is cursed by a "safe-haven" currency that soars in moments of danger – largely because the Japanese bring home their wealth till the storm passes. Normally, Japan can cope. This time, the yen's rise has pushed the economy over a cliff.
The yen must come back down to earth, and soon, or Japanese society will start to disintegrate. If necessary, the Bank of Japan will force it down by intervention, as occurred in 2003-2004.
Will China stand idly by as Japanese unleashes a shock to the global system through competitive devaluation? That depends whether you think China's spring recovery is the real thing, or an inventory build-up before the next downward slide. The Communist Party says 20m jobs have been lost since the bubble burst. This cannot be tolerated for long.
It is remarkable that China's fall into deflation has attracted so little notice. China's CPI was minus 1.6pc in February. The country has built too many factories producing goods that the world cannot absorb. The temptation is to shunt this excess capacity abroad. A faction of the politburo is already itching to devalue the yuan.
Of course, Britain has already played the currency card. That is different. The pound's fall, though welcome, is a side-effect of the Bank of England efforts to stem the credit crunch. There has been no currency intervention.
Crucially, Britain has a current account deficit. Many countries toying with devaluation are exporters with surpluses – 15.4pc of GDP for Singapore, 8.4pc for Switzerland, and 6.1pc for China. If these countries refuse to let their imbalances correct, world demand must implode.
Mr Hildebrand denies that the SNB is pursuing a "beggar-thy-neighbour' strategy. Like the yen, the franc suffers from the safe-haven curse: everybody buys it in a storm. This tightens monetary conditions. The SNB cannot easily offset this. It has already cut interest rates to near zero. There are not enough Swiss government bonds in the market to rely on the sort of "QE" asset purchases being carried out by the Bank.
Ultimately, I suspect this crisis may mark the moment when the Swiss franc loses its safe-haven role. Credit default swaps (CDS) measuring risk on five-year government debt have reached 127 for Switzerland, higher than Britain at 118. Norway has the world's lowest CDS at 48, reflecting its status as a petro-democracy.
Switzerland's banks are over-leveraged. Loans to emerging markets equal 50pc of GDP (half to Eastern Europe). Banking secrecy is dying. Fortunately for the Swiss, they have built up $700bn in net foreign assets for a rainy day. Improvident Britons are less lucky. But that is another story. What we risk now is a game of deflation "pass-the-parcel" worldwide. The economic establishment was caught off guard from 2003 to 2007 because it overlooked the way that Asia's unbalanced relationship with the West was feeding a credit bubble.
It may be caught again as the same warped structure leads to a chain of (panicked) devaluations.
Enjoy the "bear-trap" rally on global bourses this spring. But remember, we have only just begun to see the mass lay-offs and hardship caused by this slump. The politicians will act to save their skins. Markets may not like the result.

Everyone's Dirty Secret

Geithner's dirty little secret

By F William Engdahl

US Treasury Secretary Tim Geithner, in unveiling his long-awaited plan to put the US banking system back in order, has refused to tell the dirty little secret of the present financial crisis. By refusing to do so, he is trying to save de facto bankrupt US banks that threaten to bring the entire global system down in a new more devastating phase of wealth destruction. The Geithner proposal, his so-called Public-Private Partnership Investment Program, or PPPIP, is not designed to restore a healthy lending system that would funnel credit to business and consumers. Rather it is yet another intricate scheme to pour even more hundreds of billions of dollars directly to the leading banks and Wall Street firms responsible for the current mess in world
credit markets, without demanding they change their business model. Yet, one might say, won't this eventually help the problem by getting the banks back to health? Not the way the Barack Obama administration is proceeding. In defending his plan on US TV recently, Geithner, a protege of Henry Kissinger and before his present posting president of the New York Federal Reserve Bank, argued that his intent was "not to sustain weak banks at the expense of strong". Yet this is precisely what the PPPIP does. The weak banks are the five largest banks in the system. The "dirty little secret" that Geithner is going to great degrees to obscure from the public is very simple. There are only at most perhaps five US banks that are the source of the toxic poison causing such dislocation in the world financial system. What Geithner is desperately trying to protect is that reality. The heart of the present problem, and the reason ordinary loan losses are not the problem as in prior bank crises, is a variety of exotic financial derivatives, most especially credit default swaps. In the Bill Clinton administration of 2000, the Treasury secretary was Larry Summers, who had just been promoted from number two under former Goldman Sachs banker Robert Rubin to be number one when Rubin left Washington to take up the post of Citigroup vice chairman. As I describe in detail in my new book, Power of Money: The Rise and Fall of the American Century, to be released this summer, Summers convinced president Clinton to sign several Republican bills into law that opened the floodgates for banks to abuse their powers. The fact that the Wall Street big banks spent some US$5 billion in lobbying for these changes after 1998 was likely not lost on Clinton. One significant law was the repeal of the 1933 Depression-era Glass-Steagall Act, which prohibited mergers of commercial banks, insurance companies and brokerage firms such as Merrill Lynch or Goldman Sachs. A second law backed by Treasury secretary Summers in 2000 was an obscure but deadly important Commodity Futures Modernization Act of 2000. That law prevented the responsible US government regulatory agency, Commodity Futures Trading Corporation (CFTC), from having any oversight over the trading of financial derivatives. The new CFMA law stipulated that so-called over-the-counter (OTC) derivatives like credit default swaps, such as those involved in the AIG insurance disaster, (and which investor Warren Buffett once called "weapons of mass financial destruction"), be free from government regulation. At the time Summers was busy opening the floodgates of financial abuse for the Wall Street Money Trust, his assistant was none other than Tim Geithner, the man who today is US Treasury Secretary, while Geithner's old boss, the self-same Summers, is President Obama's chief economic adviser as head of the White House Economic Council. To have Geithner and Summers responsible for cleaning up the financial mess is tantamount to putting the proverbial fox in to guard the henhouse. What Geithner does not want the public to understand, his "dirty little secret", is that the repeal of Glass-Steagall and the passage of the Commodity Futures Modernization Act in 2000 allowed the creation of a tiny handful of banks that would virtually monopolize key parts of the global "off-balance sheet" or OTC derivatives issuance. Today, five US banks, according to data in the just-released Federal Office of Comptroller of the Currency's Quarterly Report on Bank Trading and Derivatives Activity, hold 96% of all US bank derivatives positions in terms of nominal values, and an eye-popping 81% of the total net credit risk exposure in event of default. The top three are, in declining order of importance: JPMorgan Chase, which holds a staggering $88 trillion in derivatives; Bank of America with $38 trillion, and Citibank with $32 trillion. Number four in the derivatives sweepstakes is Goldman Sachs, with a mere $30 trillion in derivatives; number five, the merged Wells Fargo-Wachovia Bank, drops dramatically in size to $5 trillion. Number six, Britain's HSBC Bank USA, has $3.7 trillion. After that the size of US bank exposure to these explosive off-balance-sheet unregulated derivative obligations falls off dramatically. Continuing to pour taxpayer money into these five banks without changing their operating system, is tantamount to treating an alcoholic with unlimited free booze. The government bailout of AIG, at more than $180 billion so far, has primarily gone to pay off AIG's credit default swap obligations to counterparty gamblers Goldman Sachs, Citibank, JP Morgan Chase and Bank of America, the banks who believe they are "too big to fail". In effect, these institutions today believe they are so large that they can dictate the policy of the federal government. Some have called it a bankers' coup d'etat. It definitely is not healthy. Geithner and Wall Street are desperately trying to hide this dirty little secret because it would focus voter attention on real solutions. The federal government has long had laws in place to deal with insolvent banks. The Federal Deposit Insurance Corporation (FDIC) places the bank into receivership, its assets and liabilities are sorted out by independent audit. The irresponsible management is purged, stockholders lose and the purged bank is eventually split into smaller units and when healthy, sold to the public. The power of the five mega banks to blackmail the entire nation would thereby be cut down to size. Ooohh. Uh Huh? This is what Wall Street and Geithner are frantically trying to prevent. The problem is concentrated in these five large banks. The financial cancer must be isolated and contained by a federal agency in order for the host, the real economy, to return to healthy function. This is what must be put into bankruptcy receivership, or nationalization. Every hour the Obama administration delays that, and refuses to demand a full independent government audit of the true solvency or insolvency of these five or so banks, costs to the US and to the world economy will inevitably snowball as derivatives losses explode. That is pre-programmed, as a worsening economic recession mean corporate bankruptcies are rising, home mortgage defaults are exploding, unemployment is shooting up. This is a situation that is deliberately being allowed to run out of (responsible government) control by Treasury Secretary Geithner, Summers and ultimately the president, whether or not he has taken the time to grasp what is at stake. Once the five problem banks have been put into isolation by the FDIC and the Treasury, the administration must introduce legislation to immediately repeal the Larry Summers bank deregulation including restoration of Glass-Steagall and the repeal of the Commodity Futures Modernization Act of 2000 that allowed the present criminal abuse of the banking trust. Then serious financial reform can begin to be discussed, starting with steps to "federalize" the Federal Reserve and take the power of money out of the hands of private bankers such as JP Morgan Chase, Citibank or Goldman Sachs.

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

President Hoover predicted today that the worst effect of the crash upon unemployment will have been passed during the next sixty days. - 03 August 1930, Washington Dispatch

Days Of The Bear

Strange Days
Even while a wave of reflex nausea washed over America last week, and the unemployment rolls swelled by much more than another half million, the greatest stock market suckers’ rally in seventy years pulled in the last of the credulous. These are strange days. The earth is heaving and the buds swelling again — at least north of the equator, where most of the action is — and the global economy, which was supposed to be a permanent new add-on to the human condition, is sloughing away in big horrid gobs. But no one in charge of anything can believe it. The banking fiasco has introduced so much noise into the system that world leadership can’t think straight.

What they’re missing is real simple: peak oil means no more ability to service debt at all levels, personal, corporate, and government. End of story. All the other exertions being performed in opposition to this basic fact-of-life amount to a spastic soft-shoe performed before a smokescreen concealing a world of hurt. If the “quantitative easing” (money creation) and fiscal legerdemain (TARPs, TARFs, et cetera) happen to jack up the “velocity” of the new funny-money, and the world resumes its previous level of oil use, the price of oil would rise again — this time astronomically because the previous crash of oil prices crushed the development of new oil projects to offset depletion — and the global economy will crash again. Only the next phase of the disease is liable to move beyond the financial and into the social and political realms. Disorder of various ki nds will rule — toppled governments, civil unrest, international tension and conflict.
The US is doing everything possible to avoid these awful realities, but probably the worst self-deception is the idea that everything would be okay if we could just “re-start lending.” That’s just not going to happen. There is no more capacity to service the debt we’ve already piled on. Americans borrowed too much, and the bankers who made obscene fortunes in fees and bonuses in fraudulent lending managed to leverage this unpayable debt into the greatest collective swindle the world has ever known. The swindle has sent poison into every cell of the macro socio-economic organism, and further swindles are unlikely to revive it.
The rally in stocks, the financials in particular, could go on for another month or two. In the meantime, banks are striving desperately to avoid calling in more bad loans — especially in commercial real estate, malls, strip malls, Big Box power centers — because they don’t want any more losses on their balance sheets. That can only go on for so long, too. Sooner or later the daisy chain of credibility in the fundamental transactions of business lose legitimacy and something’s got to give.
My guess is it will first take the form, sometime after Memorial Day (but maybe sooner) of wholesale liquidations of everything under the North American sun: companies, households, chattels, US Treasury paper of all kinds, and, of course, the S&P 500. We’ll soon find out whether an organism the size of the United States can run an economy based on one family selling the contents of its garage to the family next door. My guess is that this type of economy won’t support the standards of living previously enjoyed in places like Dallas and Minneapolis.
The socio-political fallout from the inherent anger and disappointment in all this is liable to be severe. The public is already warming up for it, with cheerleaders such as Glenn Beck on Fox News calling for the formation of militias, and gun sales moving out-of-sight. One mistake that the banking elite and their lawyer paladins made the past decade was their show of conspicuous acquisition — of houses especially — in easy-to-get-to places where anyone can see them, for instance an angry mob in Fairfield County, Connecticut, or Easthampton, New York. Unlike the beleaguered elites of South Africa (where I visited recently), who live behind layers of fortification, the executives of Citibank, Goldman Sachs, J.P. Morgan, and a long list of hedge funds, will be found cringing in their wine-lockers behind a measly layer of privet hedge when the tattooed minions of Glenn Beck come a’calli ng.
This could perhaps be avoided if someone in authority like US Attorney General Eric Holder took an aggressive interest in the multiple swindles of the decade past, and commenced some prosecutions. But the window of opportunity for this sort of meliorating action may close sooner than the government and the mainstream media believe. Social phase-change, as in the formations of mobs, is nothing to screw around with. Once the first window is broken, all bets are off for social stability. My guess is that the various bailout gifts to the bankers are long past having gone too far in the eyes of this increasingly flammable public.
We have no previous experience with this type of social unrest. The violence of the Vietnam era will look very limited and reasonable in comparison — in the sense that it was an uprising on the grounds of principle, not survival. And the Civil War was a wholly regimented affair between two rival factions. This time, people with little interest in principle beyond some dim idea of economic fairness, will be hoisting the flaming brands out of sheer grievance and malice. By the time Lloyd Blankfein sees the torches flickering through his privet, it will be too late to defend the honor of his cappuccino machine.

As I’ve averred more than a few times in this space before, the standard of living in America has got to come way down. We mortgaged our future and the future has now begun. Tough noogies for us. But the broad public won’t accept the reality of this as long as the grandees of finance and their myrmidons appear to still enjoy the high life. They’ve got to be brought down hard, perhaps even disgraced and humiliated in the courts, and certainly parted from some of their fortunes — if only in lawyer’s fees. Mr. Obama pretty much served notice to this effect last week, telling a delegation of bankers in the White House that he was the only thing standing between them and “the pitchforks.” It’s possible he understands the situation.

SEC UnVeils New Rules

The SEC is currently mulling new rules each designed to make short selling harder. Here’s the gist of the three made public:
~The infamous uptick rule… regulators are considering reinstating a rule that requires a stock to be bid up before a short seller can sell the stock down
~Two of the proposed new rules would build what the SEC calls “circuit breakers.” Essentially, short selling could be halted on any stock that falls a certain percentage in a certain amount of time. Or as one proposal suggests, after falling a certain amount, a stock would have to pass a bid test -- meaning someone would have to buy a large portion of shares -- before short sellers could continue their evil “bear raids.”

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“The SEC is making progress on efforts that should maintain the reputation of honest short selling,” writes our resident short side analyst, Dan Amoss. “Hopefully, it will dispel the myths and conspiracy theories about short selling -- myths promoted by people like Dick Fuld, former CEO of Lehman Bros. Fuld was busy attacking short sellers while he was overstating the value of the toxic assets on Lehman’s balance sheet by hundreds of billions of dollars. ‘Naked short selling’ and ‘bear raids’ are the most popular excuses for executive incompetence.
“The uptick rule will probably be reinstated, and that’s not necessarily a bad thing for short sellers. The uptick rule will probably increase transaction costs, but most short sellers have never relied on rapid-fire selling as part of their trading strategy; most are patient and wait for their short thesis to play out over months and years.”

Banks Boosting Gold

Many central banks are boosting their gold holdings.

“The Russians are no fools. They’ve nearly doubled their exposure to gold since the end of 2008. Russia’s gold holdings now make up 4% of its foreign reserves, compared with only 2.2% at the beginning of the year.
“Smaller central banks are also being crafty. Ecuador’s gold holdings have more than doubled since the start of the year -- to 54.7 tons, from only 26.3 tons. Gold now represents 32% of that country’s reserves. Even Venezuela is buying gold. Gold now makes up 36% of its reserves, compared with only 23% in 2009.
“Perhaps central bankers see more clearly than most what the effect of all their money creation will be. In recent months, we’ve seen a truly unprecedented boom in bank reserves. Bank reserves drive money creation.
“More money means money buys less -- and the gold price should rise.”

Bigger Than The Depression?

I need to tell you about the guy who really threw a cat among the pigeons yesterday. In fact, he single-handedly caused a BIG scare and sell-off of risky assets in the markets yesterday, including foreign currencies...
His name is Mike Mayo, and he used to work at Deutsche Bank, and now works as a banking analyst at Caylon Securities. And brother, can he ever move a market!
To make a long story short, Mr. Mayo basically said yesterday in a report that, "Bank Loan Losses Will Exceed Depression Levels."
With that one sentence, Mr. Mayo basically erased all that James Brown, feeling good times, that started last week with the G-20.
The Wall Street Journal printed the following...
"One reason why he (Mayo) believes the banks will face more pressure is because the legacy loans they hold on their balance sheets have not been marked to market – he estimates the marks at about 98 cents on the dollar, a much higher estimate than what others would come up with.
“We see more downside with government programs regarding those bank stocks with more traditional banking since this business – aside from when involving an acquisition – is not marked to market," he writes.
“As a result, he believes the government's help will either result in rosier-than-expected projections that allow the banks to maintain their unwanted assets on their balance sheets, or hammer them with demands for more capital, which will "hurt traditional banking more."
Okay, back to me... I want to make perfectly clear that Mr. Mayo isn't talking about all banks. There are a handful of banks that did NOT get caught up in this "fee income mania," as the big money center banks did.
But no matter who he’s pointing fingers at, the market did sell-off. More importantly, foreign currencies were caught up in the tidal wave of selling. The euro, which was trading at 1.35 when I wrote you yesterday morning, dropped all the way down to 1.3365 at the end of the day. And in the overnight market, Forex traders sold off the euro even further – all the way down to 1.3275.
Of course, the news this morning about the deepening Eurozone recession didn’t help matters. An unexpected downward revision to Eurozone fourth quarter GDP put additional pressure on the euro. Final data showed GDP contracting 1.6% in the fourth quarter.

Daniel Hannan MEP: The devalued Prime Minister of a devalued Government

I could listen to this type of honest and well-worded political criticism all day! What a breath of fresh air! I'd vote for him given half a chance!

Wow! It Takes Property Taxes To Wake Americans Up??!!!

As Home Values Fall, Property Tax Revolt Brews
In many cities across the US, homeowners are filing record numbers of assessment appeals, wanting their property taxes to reflect their shrinking value of their houses.
By PATRIK JONSSON
ATLANTA, April 5, 2009 —
Homeowners watching the value of their houses slowly ebb are storming tax offices from Ann Arbor, Mich., to Atlanta, demanding that county officials reassess their homes and lower their property taxes.
It is a question of fairness, says Gene Burleson of Atlanta, who stood in line April 1 to appeal his assessment. His house has lost 25 percent of its value since it was last assessed, he adds: "I'm just trying to insulate myself from coming tax increases."
Property taxes have become a rallying point for disgruntled Americans because, unlike sales or income taxes, they can be challenged directly by individual citizens: Some 40 percent of assessment appeals are successful. Yet the movement threatens already stressed counties, putting the tax receipts that pays for schools and police at risk.
"The property tax is the only tax where [a citizen] can go in and eyeball the guy," says Billy Cook, executive director of the Institute for Professionals in Taxation in Atlanta, noting that appeals often lead to small-claims-style hearings to press one's case against the county's tax valuation.
"Think of all the taxes in the U.S.: The taxpayer renders their returns and the government audits to make sure you do it right," adds Cook. "The only tax where the taxpayer audits the government is the property tax."
In many areas across the U.S., home values have dropped so rapidly that assessors have not been able to keep up. Even as their home values depreciate, homeowners are likely to see increases in their tax rates, because appraisals sometimes have been done years earlier.
"You have a lot of things coming together right now" resulting in the rush on tax assessors' offices, says Joan Youngman of the Lincoln Institute of Land Policy in Cambridge, Mass. "You have homeowners knowing that the value has dropped. You have rapid shifts in the market. And on top of that, it's harder for assessors. ... It's more likely that there'll be inaccuracies now than when everything is stable."
Tax Appeals From Georgia to Nevada
Assessment appeals are up in cities nationwide:
In metro Atlanta, more than 50,000 people -- a 10-fold increase over last year -- filed appeals ahead of the April 1 tax deadline. The result was long lines of grumbling taxpayers. Little wonder: A survey released Tuesday said average home prices in Atlanta are down to 1996 levels.
In Scio Township, Mich., record numbers of appeal-seekers flooded Town Hall recently to batter the Board of Equalization with questions and complaints.
In Nevada's Lyon County, appeals are up 30-fold. One reason: Unemployment is at 15 percent, the highest in the state.
Some assessors say the trend is being driven more by dramatic headlines than by real shifts in property values.
"I think there's a genuine concern for what property values have done, but I think there's also a reaction to national headlines that are reflective of markets in far worse condition than ours," says Phil Hogsed, chief assessor of Georgia's Cobb County, north of Atlanta.
Still, the onslaught highlights the delicate balance of property-tax assessments. While the tax assessor's job is technically nonpolitical -- they assess value, while politicians set the tax rate based on that value for their revenue needs -- there's constant pressure to keep valuations high to maximize revenue.
Assessments can be political, as a recent Supreme Court case in Nevada showed. The court ruled that dramatic differences in assessments in different counties bordering Lake Tahoe suggested that more than just the real value of the homes and properties was taken into account.
"Politicians ... put pressure on the local assessor to keep that value as high as possible so they don't have to raise the tax rate," says Cook of the Institute for Professionals in Taxation.
Given what's happening now, however, elected officials will be under increasing pressure to debate publicly the prospect of higher taxes to fund government, Cook says. Many states' expenditures were growing by 10 percent a year before the recession began.
"If house prices are down 30 percent in any given market, then the property tax rate has got to go up ... or the government's got to shrink by 30 percent  something's got to give," says John Baen, a real estate expert at the University of North Texas in Denton. "Any taxing authority taxing real estate is always [eager] to increase values based on a few select sales of some cherry-picked, high-priced properties ... yet on the way down they're slow to react."
Why Appeal Taxes? 'I Just Don't Believe the Assessment'
Atlanta IT specialist Jacquay Waller stood in line this week at the Fulton County government complex. He bought his house in the Sandtown neighborhood for $350,000 two years ago. The county assessed it at $380,000. If he were to sell it today, Waller doesn't think he'd get more than $250,000, based on comparable sales in the neighborhood.
"I just don't believe the assessment," says Waller. "I just don't want to pay more in taxes on an amount that I could never sell it for."
In good times, few people worried about their assessments and even saw high valuations as a good omen for their properties. Now, especially for those homeowners who bought at the height of the market, those values are a burden.
"People who bought in recent times at the highest prices are the ones whose values have fallen tremendously," says Tom Richardson, a tax attorney in Ann Arbor, Mich., which has seen a record number of tax appeals this year. "It's the people who have taken the worst hit who are now at risk.
Along with looming tax increases, those shaky valuations are forcing a secondary standoff between government and the people, says Sharron Angle, a former Nevada assemblywoman: "When people don't feel like they can spend money because the government is going to tax them, and [homeowners] need money to forestall whatever attack the government is going to make on their pocketbook, it pits the government against the people and stagnates the economy."
The National Taxpayer Union, an antitax lobbying group in Washington, claims that as many as 60 percent of homes in the U.S. are overassessed. For the 722,000 homes in New Jersey that are potentially overassessed, average savings on the tax bill could equal nearly $2,000, according to the website EasyTaxFix.com.
"It's a muddled situation out there with what is a house's true value right now," says Verenda Smith, a spokeswoman for the Federation of Tax Administrators in Washington. "Everything is just an educated guess."
"The standard wisdom is that homeowners win on the upside and lose on the downside and over time that evens out," she says. "But they don't want to hear that it evens out when they're worried about their job and their house value."