Monday, August 31, 2009

Mogambo About Fiat



Driving a Fiat Currency into a Tree
by The Mogambo Guru
Tampa Bay, Florida

Floy Lilley at the Mises Institute, in her essay at LewRockwell.com, notes that the gold-standard dollar "provided us with nothing less than relative peace and prosperity over a span of 136 years" until that fateful year, 1913.
So how does she quantify "relative peace and security"? Well, one good way is to look at the value of the dollar, which would be strong if the country was a good investment, which it was, and in fact, "It had not only retained one hundred percent of its value, it had gained eleven percent. That’s right. The dollar we started with in 1776 bought us eleven percent more after almost seven generations."
Then, on the "quiet 23rd of December in 1913", J.P. Morgan and buddies got Congressional quislings to pass legislation authorizing the creation of the Federal Reserve, and to which I add that the jerk Woodrow Wilson then signed it, thus going down in history as the disastrous guy who set in motion the destruction of the dollar by the Federal Reserve creating excess money and credit.
She doesn’t make a point of it, but back then, the dollar was still gold, and thanks to the loathsome Federal Reserve creating the money to finance the bubbles of The Roaring Twenties that resulted in the Great Depression, the despicable Supreme Court infamously ruled in 1933 (and upheld by every traitorous Supreme Court case since then) that, contrary to what the Constitution said, the dollar did not have to be made of silver or gold, and that a paper "fiat" currency could be created, without limit, for any reason, even at a mere whim, anytime, day or night, 24/7, including holidays, not realizing that they were the idiots that REALLY destroyed the dollar! Gaahhh!
With this kind of disastrous stupidity, I dryly and humorlessly ask that you don’t talk to me about any "wisdom" emanating from the Supreme Court.
I was hoping that Ms. Lilley would spontaneously pick up on the theme of "heap scorn on the Federal Reserve for creating too much money and credit out of thin air and the despicable Supreme Court for letting them."
I was going to suggest that she could, you know, maybe even put in an endorsement for the Mogambo Mindless Mob (MMM) brand of products, like the popular Mogambo Pitchfork (very effective when brandished
threateningly) and the classic Mogambo Flaming Torches that will be so hard to get when the proletariat bozos start forming mindless mobs bent on revenge after so much hurting from the horrifying inflation in consumer prices, the pervasive, lingering economic depression, ruination, bankruptcy and the embarrassment of realizing that it was caused by the people we elected to Congress, who picked the people to run the Federal Reserve, which is the biggest failure one can imagine and should be immediately abolished, how Ben Bernanke, its chairman, should be turned over to me for some sessions at my new Mogambo Re- Education Center, where our muscular, trained technicians will slap the hell out of his stupid face, and the stupid faces of Congresspersons (except Ron Paul), and the stupid faces of anyone who still believes in getting, or giving, a free lunch to, or from, anyone, especially the government, which is so corrupt that it once gave smallpox-infected blankets to the American Indians, which is only marginally worse than destroying the currency of the country and makes you reflexively scream in horror every time you see the money supply go up.
Well, it does me, anyway.
Instead, she goes on that the result was that since then, "the purchasing power of a dollar has plummeted over 95%", which means that "We now pay twenty times more than J.P. Morgan did for any item."
Yikes!
Suddenly, my ears pricked up as she said, "Few have written on the mechanics of getting back to sound money", which I immediately noticed makes me a genius, meaning that people should worship my gigantic brain, my wife and kids should stop calling me "idiot" and saying how much they hate me and maybe I should get a Nobel Prize.
The reason I am suddenly so enamored of my intellect is that achieving a "sound money" is the easiest thing in the world! Just stop creating more of it! That’s all you need! It’s simple! It is my Profound Mogambo Genius (PMG) that has solved the puzzle!
Okay, I am embarrassed that I got carried away there, and I admit that I am not very smart, and that is why I stole the whole idea from the fact that this is all the gold standard did; it prevented increases in the money supply, and the only thing that Congress had to worry about was doing smart things so that gold came into the country (increasing our money supply) and not doing something so stupid that it went someplace else better (decreasing our money supply).
But those days are all over now, and the only people who are buying gold, along with silver and oil, are the people who know what happens to an unsound, fiat currency (like the dollar) in the hands of a government composed of a bunch of socialist, commie-think yahoos (like the US Congress) that willingly deficit-spends insane amounts of money thanks to a central bank (like the Federal Reserve) creating it and a population sitting around saying, "Duh! Okay with us!" Hahaha!
We’re freaking doomed!

Canadian Doctor Sounds Off About Socialized Medicine


A VOICE FROM CANADA SAYS THAT, IN SOCIALIZED MEDICINE, WE LOSE A LOT MORE THAN GOOD HEALTH CARE

2009 Aug 21


As a licensed naturopathic doctor in Canada, I'm privy to a lot of the failings of socialized medicine. The only true benefit to Canadians is in the form of emergency medicine. When you are in a motor vehicle accident and clinging to life, it's nice to know there is a safety net to save your life without financially ruining you. BUT the danger in our socialized system is that because everyone perceives it as a "free" system, which couldn't be further from the truth, there is less personal responsibility to act preventatively to take care of one's health, and it's easy to go see the doctor for every little cold, tying up an already overly burdened system. The practitioners in this medical system also lack a certain financial accountability to the patient. If someone doesn't like the medical service I provide, then they won't pay the money to see me again. I also have the freedom to not charge someone if I see fit, as a form of charitability, to a patient or family who I know could use that gift. So I am supporting the healthcare of another out of freedom of choice, because it makes my heart sing to give back to humanity when possible, not siphoned against my will in the form of taxation and applied by a VERY inefficient bureaucratic overlord. But the medical doctor can have no problem billing for the visit and for the writing of a prescription, and for the ordering of a blood test, and for the reading of a blood test, etc. and rushing you in and out without fully addressing your questions and needs, because if you complain, the system is so overbooked someone else will fill your spot. And for the exorbitant charges that have been billed to the system, the patient doesn't care if they've been ripped off with inefficiency and bad service because IT DIDN'T COME OUT OF THEIR POCKET (at least not directly). So, for both doctor AND patient, much accountability is thrown out the window, leading to massive inefficiency.While these are all points many people can easily see, there is one that seems heretofore unrecognized. In a government controlled system of any kind, where benefits are received, the cost is loss of freedom and complete access to human rights. When you get a government health card, you sign up to be the "legal representative" of the entity given the same as yours, all capitalized, personified by the ID number associated with your name. This entity is a government creation, and hence has the rights the government ascribes to it. By signing on, you are tacitly agreeing to forego your human rights for these government-ascribed ones. An example of this I see all the time in my practice is that a medical doctor can refuse treatment to a patient if the patient is responsibly supplementing themselves with natural health products and the doctor disagrees with this supplementation due to ignorance of the science behind their healing properties. This then scares most patients to do what the doctor says for fear of losing that doctor and having to go back onto a many-months-long waiting list for another available doctor. So, if you want the socialized health system to take care of you, you must play by their rules or else they can deny you service. As a human being with basic human rights of equality, they shouldn't be able to show this kind of prejudice, but because you basically give up these rights to take advantage of the government benefits of socialized healthcare, you can no longer plug into those rights. This is the case with anything you register for. You don't register your shoes so the government can't take your shoes from you, even if you're recklessly endangering yourself by walking around with untied laces. However, because you register your car and apply for a license, you've given up absolute rights of ownership and the government can take your car away if they don't like how you are driving (ie not wearing a seatbelt repeatedly, going through a stop sign at an open intersection in the middle of night with no other cars present, etc...). The cost of a government-run system IS loss of rights and freedoms, and any discussion of socialized healthcare needs to discuss the rights and freedoms to be lost. Mr Griffin is so correct in his analysis of government-run healthcare being more susceptible to manipulation by special interests, because special interests can push for monopolization by pushing to classify alternative healing systems as illegal. In Canada, we've recently lost access to many very effective natural healing compounds because Canada's version of the corrupt FDA (which is under the same Big Pharma control) had deemed these substances as being conveniently unproven as safe, even after years of safe anecdotal use. So, with socialized healthcare comes more control of what you are "allowed" to take to help yourself heal. And control of what we are "allowed" to take provides a much bigger potential benefit to Big Pharma than the current system in America, as much of a rip-off as it is. If the socialized medicine was somehow able to only cover emergency life-threatening procedures (although I'm not sure who could even be trusted with that classification), then perhaps there could be some workability, but otherwise, BEWARE. There are huge pitfalls for giving up rights and freedoms for the feeling that Big Brother will catch us if we fall.

A black hole called the Federal Reserve

Good video and well worth the watch.

Friday, August 28, 2009

Ted Kennedy's top drunken episodes. R.I.P.


The real-life Mayor Quimby and America’s answer to Boris Yeltsin, Senator Edward “Ted”, “Teddy”, “Somebody Tell That Drunk Guy To Put Some Clothes On and Get Out of My Restaurant”, Kennedy is dead.
Edward Moore Kennedy’s place in the hierarchy of great Kennedy men might have been foreshadowed at his birth when his father chose to name him after the family chauffeur, and he most likely would not have risen as fast in politics or remained out of incarceration for as long had he not been to the oyster house born. That said, what he lacked in the ability to shape history and inspire generations, he more than made up for in shameless debauchery. And as the authors of the definitive book on the subject, we can appreciate that.
While the standard tributes roll in, and Kennedy’s years in the US Senate are celebrated as something other than the constant reminder of failed promise they must have been for a guy everybody thought would be president, we thought we would pay tribute to a side of Kennedy that kept late-night comedians in material for decades: the shameless, drunkard side that entertained and horrified people from around the world. One of the great debauched sons of privilege has died and while we could not hope to cover even a fraction of the man’s legendary exploits, we figured we would at least offer you a highlight reel of some of those not kicked under the carpet or to which the local constabulary did not turn a blind eye.
Here then are Ted Kennedy’s Top Drunk Moments!

Cadillac Eddie would have been proud.
1951-1959 — Cadillac Eddie No Ablo Espanol: Ted Kennedy got into Harvard on the family name, but was kicked out in his sophomore year for paying another student to take a Spanish test for him.We would like to imagine he was drunk when he decided to risk tarnishing the family name for the sake of passing what was in all likelihood a bird course, but his law school days at the University of Virginia certainly involved a few bent elbows. It was there that Kennedy was dubbed Cadillac Eddie for his propensity to drive — presumably not in a Ford Pinto — around town at reckless speeds, without his lights on, and treating every red light he saw like a bull would a matador cape. Basically he was a pretty fun guy to hang around in college, but that same propensity to lead foot it with a snootful would ruin him in the end.
April 1969 — The “Eskimo Power” Incident: All great legends begin somewhere, and Teddy Kennedy’s legend as one of the great drunkards in politics was truly born on a return flight following a congressional trip to visit poor natives in Alaska. Kennedy must have taken the wheels off the drinks trolley because it apparently didn’t go far past him on that fateful flight. He got bladdered drunk, hit reporters and his aides with pillows and, inspired no doubt by the plight of the people he had just visited, expressed his solidarity with a chant of “Eskimo power!” as he ran up and down the aisles. It should be said that he did just lose his brother to an assassination the year previous, so this could be seen as a response to grief… had this drunken timeline stopped here.
July 1969 — Well so much for a Kennedy in the White House: Likely the only item here that will be mentioned in most obits on the man, the Chappaquiddick incident ruined any hope that he would be able to inherit JFK’s presidency the same way he did his Senate seat and his penchant for strange bed partners. Details are disputed but basically gentlemen Ted offered to drive a former staffer of his brother Robert’s home following a “no-wives” party. He took her on a drunken (he denied being in said state, but when was the last time you were sober at a no-wives party?) joyride and drove off a bridge. Abandoning the “women and children” first code of conduct, he got the hell out of the sinking car without a backwards glance. Leaving her in the car, he went back to his hotel to sleep — stress, and booze, bad mix, need nap — passing several houses and not telling a soul what happened, while the woman in the car, who could have been saved had he alerted authorities, drowned. What should have meant jail time thankfully for Kennedy occurred on family turf and amid the sort of look the other way while my boss’s cousin commits a felony sort of policing usually reserved for the American South in films. Kennedy harbored hopes of becoming president for years after that, but his chances of being elected after such a grim episode were slim. On the bright side, he wasn’t dead and could go on with his life without having learned a single lesson from the incident.

You did not want to get between these two. Really.
1985 — The Two Amigos: Teddy liked to party with Senator Christopher Dodd of Connecticut and in 1985 the pair were involved in a couple of headline-grabbing drunken moments. The Washingtonian magazine reported how in a moment of drunken reverie, Kennedy spotted Dodd’s photo on the wall, asked “Who’s this guy?” pulled it off, and smashed it on the floor. Dodd returned the gesture for Kennedy. This “Mexican Hat Dance” became the talk of the town.
December 1985 — A Waitress Sandwich With Mouldy Bread: Kennedy was dining and boozing in a private room at Capitol Hill’s Brasserie restaurant once again with Dodd, so the story goes (we’re obliged to present this all under the banner of “alleged” as Dodd is, to the best of our knowledge, still alive enough to call a lawyer), when a waitress entered the room and — according to witnesses she told immediately after the incident — was first thrown on the table by Kennedy, then picked up by the husky scion to the Kennedy throne and tossed into Dodd’s waiting lap. Kennedy is then alleged to have jumped on the woman and given her the old subway hump. The incident broke up and the waitress ran off when another server happened upon the scene. Displaying that New England wit, Kennedy is said to have quipped: “Makes you wonder about the leaders of this country!”
September 1987 — The Senator Has the Floor: Apparently play-mounting the wait staff was not considered a ban-able offence at Brasserie, as Kennedy had no problem booking a private room for himself and a woman, said to be a lobbyist (likely not there on the abstinence first league’s behalf), where the two downed a couple of bottles of Chardonnay and got frisky. It seemed the good senator was unable to differentiate between a restaurant and an outbuilding at a Kennedy compound because as the unlucky waitress who happened upon the couple told a friend Kennedy’s pants were in ankle position, the woman “had her dress up” and the two “were screwing on the floor”.
January 1989 — NYC Bar Fracas: The good senator wins some points with this one. Kennedy showed up at a Manhattan bar called American Trash (not to be confused with Brooklyn’s excellent The Trash Bar). Striking up a conversation with any stranger at that point in the evening is unwise, particularly if you have a name recognizable enough to ridicule. Ted threw his drink in the face of an off-duty bouncer, who may or may not have done something to deserve it. His press secretary said it was because the bouncer insulted the Kennedy brothers. But regardless, bouncers are always guilty until proven innocent.

Thursday, August 27, 2009

Machines That Read Your Mind


The Dawning Age of Mind-Reading Machines
By Hilmar Schmundt
Imagine controlling machines, typing text or juggling balls using nothing but the power of thought. What sounds like far-fetched science fiction is gradually becoming possible, providing hope for disabled patients -- and new gimmicks for the computer gaming industry.
DIZ SENTENS IS WRUTEN WID TAUGHTS. No keyboard, no hands, no blinking even. I think, therefore I write.
My original plan was to write this article with nothing but the power of thought, but the technology of transforming ideas into characters is still crude and prone to error. The first word alone took a few minutes, and even after that the result was still "diz" instead of "this."
Still, that little sentence is like a little miracle. The old dream of mind-reading is slowly becoming reality -- though this time around it is the product of machines rather than the minds of fiction writers.
"The advances are tremendous," says Christoph Guger, the developer of a brain-reading system. "In the past, you would have had to train for days. Today, entering text takes only a few minutes."
Guger is an engineer and a businessman. But with his hair falling past his jacket's collar, he looks the part of a start-up entrepreneur. Still, he is certainly not new to the business. His company, Guger Technologies, which is based in the Austrian city of Graz, has been a supplier to countless brain-research laboratories for years. In addition to scalpels and medications, though, Guger also sells thought-transport technology.
Guger recently presented his latest thought-reading system at a workshop entitled "Brain-Computer Interfaces" held at Berlin's Charité, one of Europe's largest university hospitals. The new electronic interfaces between brain and computer are referred to as BCI.
Hardware and Wetware
The goal of BCI is to enable the user to use thoughts -- instead of a keyboard, mouse or touch screen -- to control a computer's actions. But what sounds like telepathy is, in fact, quite banal. First the user puts on a device that looks like a bathing cap. Then an electrically conductive gel is squeezed through small holes in the cap onto the scalp. Finally, eight electrodes are plugged into the cap, and a colorful array of dreadlock-resembling cables are attached to the electrodes. The cables are then connected to the computer through a signal amplifying interface. So much for the hardware.
Then the "wetware" -- the term IT researchers sometimes use to refer to the brain -- takes over. An alphabet flickers across a screen in front of the subject, and the letters light up one at a time. The user waits until the letter he or she wants to use appears. When it lights up, the brain has an involuntary reaction that produces a small "electric potential," a tiny increase in voltage of about 15 microvolts, which is 100,000 times weaker than the voltage generated by a flashlight battery.
The principle is based on the tried-and-tested EEG, or electroencephalogram. The brain's small gray cells fire off electrical signals, which can be measured on the surface of the scalp. Guger's special method is called P300, a reference to the sudden fluctuation in voltage he is looking for, which appears in the visual cortex of the brain 300 milliseconds after each expected letter flashes on the screen.
This method is very rudimentary in the sense that it doesn't really read a thought but, rather, merely the average activity of millions of neurons. Likewise, those neurons may not be reacting only to letters, but also to someone else's sneeze or to tightness in the subject's left shoe. Guger's current task is to filter all of these interfering signals out of the chaotic flow of thoughts in the brain.
Brain Caps for Pinball
As challenging as this task might be, there was still a lot of excitement at the Berlin workshop. The project involves a rapidly growing group of researchers hoping to capture thoughts with what can best be described as an electronic camera. "Ten years ago, there were perhaps a dozen research groups in this field," says Klaus-Robert Müller, the director of the Machine Learning/Intelligent Data Analysis Group at the Technical University of Berlin. "Now there are more than 200."
Müller has also developed a BCI that works in a similar way to Guger's mental typewriter. His system isn't based on tediously poking around in a jumble of letters but, rather, on lightning-fast reactions. To develop the system, Müller has his subjects use their brain caps to play pinball.
When they think "right," the lever on the right side pops up. As if moved by the hand of a ghost, it flings the ball back into the game without anyone having touched the controls.
Müller is working closely with John-Dylan Haynes, one of the stars of the elite thought-reading community. Haynes attracted attention last year when he reported that, using a magnetic resonance imaging (MRI) machine, he had correctly guessed the decisions of his subjects before they were able to act in more than half of the cases. A full seven seconds before they moved a finger, Haynes could see that they were planning to press a specific button.
After Müller's presentation, Niels Birbaumer stood up to speak at the Berlin conference. Birbaumer is the director of the Institute of Medical Psychology and Behavioral Neurobiology at the University of Tübingen in southwestern Germany and is considered a pioneer in the field. For years, he has been trying to teach people with physical handicaps to control their wheelchairs or prosthetic limbs using only the power of thought. "Our successes are still modest," he says, "but I'm already totally crazy with hope." He expects that within two years he will be able to use his system with locked-in patients -- that is, paralyzed individuals who are fully aware of their surroundings but can move nothing other than their eyes -- for the first time within two years.
Communication with these types of patients is something of a Holy Grail in the profession because it promises to make it possible to help locked-in people like the lead character in the 2007 film "The Diving Bell and the Butterfly." In the film, an almost totally paralyzed patient dictates his memories to his therapist using the only means of communication he has left: blinking.
Eavesdropping on Dreams
Completely locked-in patients, on the other hand, can't even blink. All they can still control is their neurons.
The prospect of getting a glimpse of those thoughts is by no means hopeless. Birbaumer has already demonstrated that the brain waves of locked-in patients respond to various pieces of music, familiar faces and grammatical errors.
The BCI experts now believe that their technology is on the verge of a major breakthrough. Their successes are indeed astonishing, but they still have a long way to go before realizing their ambitions. Last fall, Japanese researchers reported in the journal Neuron that -- with the help of a technology known as functional magnetic resonance tomography -- they had observed the brain processing certain images. This promptly led them to speculate that one day it might even be possible to eavesdrop on the "illusions and dreams" of the brain.
In an atmosphere in which everything seems possible, though, there is a great temptation to hope that the power of thought can somehow make the pitfalls of technology magically disappear. But we still haven't reach a point yet where we can control things with thoughts alone. For example, for many years now, the American firm Emotiv has advertised a system that allows paralyzed people to control their wheelchairs. But neither emotions nor thoughts are involved. Instead, Emotiv's technology is based primarily on signals produced by facial muscles. It has everything to do with smiling and blinking -- and nothing to do with controlling with your thoughts.
But what happens if the day comes when we actually are able to drive cars -- or even fly fighter jets -- using our thoughts alone? The US Department of Defense finds this vision so promising that it has already invested $4 million (€2.8 million) to develop a certain kind of telepathy. The goal of the project -- dubbed "Silent Talk" -- is to enable soldiers to communicate with each other "on the battlefield without the use of vocalized speech through analyis of neural signals."
Opinions vary on how much of this research is science and how much is science fiction. A report by the MITRE Corporation, a consulting firm headquartered in Virginia, derisively describes brain control as a crude technology. According to the report, the problem is "in part due to the early stage of development of the associated technologies, and in part due to limited understanding of the central nervous system." The report soberly concludes that "the possibility for using such brain control in a military scenario is not readily apparent."
Even the prophets of the new era cannot deny that many systems are highly prone to error. In most cases, the detection rate is around 70 percent. In addition to the cable cap, the conductive gel and a computer, users also need a great deal of patience. Another problem is that about 30 percent of subjects have proven to be "EEG-illiterate." In other words, their brains remain impervious to the machines.
All too often, exorbitant promises are associated with this visionary technology. For example, in the game "Mindball," two players wearing EEG headbands compete by becoming as relaxed as possible. The player who is better able to relax his brain -- and thereby occasion uniform vibrations -- can drive a ball the farthest onto his opponent's side of the game table.
According to the companies that sell the game, it can provide significant benefits to players. They cite a study "conducted by London's prestigious Imperial College demonstrated that EEG feedback can improve academic performance and creativity."
Electrifying Audiences
The distinctions between science, art and slapstick are often vague, especially when people do things like artist Adi Hoesle, who produces "EEG sculptures" or sells colorful swirls on a canvas while claiming that they are images of his thoughts. One of his works is titled: "I'm so surprised by the red in my head." Meanwhile, an orchestra in which some of the instruments are brain-controlled is performing in small theaters around Europe. Its musicians wear gimmicky, brightly colored EEG caps on stage.
Such theatrical effects are part of a long tradition, a sort of colorful flipside of science. For example, when so-called "natural philosophers" were studying electricity around 1750, they developed parlor games, such as producing sparks when a couple kissed. They also hoped to use therapeutic bursts of electricity to help lame people walk again. Their audiences were -- literally -- electrified.
Even a company like Mattel, known mainly for its Barbie Doll products, has now discovered the allure of brain control. The new system Mattel is introducing at computer trade shows is called "Mindflex." According to the company's fact sheet: "A true mental marathon, Mindflex exercises the brain in an entirely new way as players learn to continuously control their brain activity."
So, you ask, how does it work? To train the brain, the user puts on a headband with sensors at the temples and a cable connected to something that looks like a mini miniature golf course. Then the user tries to master the first task: balancing a small ball above an air current, causing it to levitate and making it pass through a plastic ring.
A cluster of curious onlookers has formed at the trade show. The players are doing their best not to get nervous, collect their thoughts and concentrate on the ball. Sure enough, the more they are able to descend into mental nothingness, the higher the ball hovers in the air.
Mattel refuses to divulge how the device works. Experts assume that the headband -- like the sensors used in Mindball -- measures alpha waves that pulse through the cerebral cortex at about 10 times a second when a person relaxes.
In any event, playing these thought-controlled games produces an indescribable sensation. It's as if you were using a new muscle that you had only heard about but never experienced -- the organ underneath the top of the skull. Astonished audiences must have felt a similar sensation in the 18th century, when a kiss produced a spark.
It took another 200 years before it was discovered that what was once a cheap party trick could have many other uses and that the science on which it is based keeps the Internet, the stock markets, the global economy -- and thoughts -- running today.

Expatriation In Merry Ol'England


Elle Macpherson Can’t Counter London Gloom as Americans Flee

By Tommy Stubbington and Andrew MacAskill
Aug. 26 (Bloomberg) -- Andrew Wesbecher moved to London from New York in 2006 to sell software to banks and hedge funds. This month he joined the exodus of American expatriates fleeing high taxes and the city’s shrinking financial industry.
“I’m the last guy to leave that I know,” said Wesbecher, 29, who worked for Tibco Software Inc. and lived in Notting Hill, the London neighborhood that’s home to billionaire Richard Branson and model Elle Macpherson. “We are all packing up.”
The number of U.S. citizens in Britain fell 3.8 percent to 126,000 in the 12 months through September, according to the Office for National Statistics. The trend probably continued this year, with the Confederation of British Industry estimating the U.K. financial industry will lose about 45,000 jobs in the first nine months of 2009, or 4.3 percent of the total.
Americans are heading home as Britain plans a 50 percent tax rate for those who earn more than 150,000 pounds ($248,000) a year and employers cut benefits for workers living abroad, reducing the allure of London. That comes a year after the U.K. said foreigners who have lived in the country for more than seven years must pay 30,000 pounds annually or give up the special status that shields overseas income from British taxes.
“Expats feel the tone has changed; it’s less welcoming,” said Mark Tilden, a consultant at CRA International Inc. who wrote a report for the City of London last year on the impact of taxation on corporate relocation decisions. “London’s ability to attract talent has gone down.”
‘We Are Fed Up’
The worst recession since World War II has left U.K. residents facing tax increases and spending cuts after Britain’s monthly budget deficit ballooned to a record 8 billion pounds in July. In addition, some employers are reducing benefits such as tax equalization, school tuition for children and cost-of-living allowances that supplement expatriate salaries.
Schools catering to international students report a drop in enrollment for the first time in seven years, and relocation companies say they are moving fewer people to Britain.
Janet Sherbow lives in London’s Chelsea district with her husband, Nikos Mourkogiannis, the former chief executive officer at the European arm of Cambridge, Massachusetts-based management consulting firm Monitor Co. The family plans to move to Greece after their daughter finishes high school next year.
“We are fed up with all the stealth taxes, the non-doms levy, and now the 50 percent tax rate,” Sherbow said. “Six American families have moved from my street in the last six months.”
Quality of Life
Forty-one percent of employers plan to review expatriate programs, according to a study by KPMG International. KPMG surveyed about 100 companies, 60 percent based in the U.S., and found that 22 percent had recalled overseas workers or turned them into local employees in the past 12 months.
Huddling under an umbrella during a July downpour, Wesbecher said he was no longer willing to put up with the frustrations of life in London after his commissions dropped and Palo Alto, California-based Tibco eliminated his expatriate benefits, cutting his take-home pay by 75 percent.
“This is what passes for summer in London,” he said, sipping an iced latte in the city’s main financial district. “The quality of life is a lot harder. Things are more expensive and the houses are smaller. Even public transport is cramped. A New York subway car is like real estate in comparison.”
The economic picture is also gloomier in Britain. The U.K. economy shrank 5.6 percent in the year through June, compared with 3.9 percent in the U.S. London’s financial industry lost 29,371 jobs, or 8.3 percent of the total, last year, according to the Centre for Economic and Business Research. Financial companies in New York cut 20,200 jobs, or 4.3 percent, data from the state Labor Department show.
‘Highly Competitive’
“The U.K. remains a highly competitive center for finance and investment and has excellent infrastructure for businesses,” the Treasury said in an e-mailed response to questions.
The American School in England, based outside London in Thorpe, Surrey, expects enrollment to fall 4 percent this year, the first drop since the Sept. 11 terror attacks, said Karen House, interim admissions director. The school charges about 29,000 pounds for boarders, and 70 percent of its 750 students are American.
ACS International Schools, which has 2,500 students on three campuses in the London area, will see a “small decline” in student numbers, said marketing manager Mark London. Fees for boarding students run about 33,000 pounds a year.
“Overall, this year we won’t be at capacity,” London said. “The majority of our families are expat families who are working in London or the U.K. on an assignment. Undoubtedly, major companies will be cutting back on those.”
‘Anything to Make Money’
Transfers to Britain from the U.S. fell 25 percent in the past year, according to Primacy Relocation LLC, a Memphis, Tennessee-based company that moves more than 50,000 people a year for corporate clients around the world. Repatriations were almost unchanged, suggesting the net American population is declining, said CEO Matt Spinolo.
There are signs of recovery, said Sharon Gulden, co-founder of Basingstoke, England-based Phoenix ARC Corporate Relocation. U.S. to U.K. traffic has increased to about 10 percent of its peak after dropping to “almost zero” 18 months ago, she said.
“It’s just starting,” Gulden said. “Green shoots of recovery, as they say.”
Wesbecher isn’t convinced the boom times will return.
“The ethos of the ambitious, high-earning American is ‘I will do anything to make money, even if it means moving my family,’” he said. “When the performance bonuses go away, the value of being in this country goes away.”

Barney The A**Hole


August 25, 1989 World News Tonight, Sam Donaldson reported:

"Massachusetts Representative Barney Frank, an acknowledged homosexual, today confirmed that his Washington apartment had been used as a callboy headquarters by a male pro&&itute for a year and a half until late 1987. Responding to a story in today's Washington Times, Frank said he had hired the pro$$itute out of his own funds as a personal aide and fired him when he found out what was going on."Imagine if that was a republican representative.


For 16 years reformers in Congress tried to increase oversight of Fannie Mae and Freddie Mac and prevent the government-chartered companies from putting the housing market and the economy at risk. All that time, Frank was involved in efforts to block those attempts, and in the last eight years before the failure he was a leader of those efforts.


In 2002, shortly before accounting irregularities were exposed at both companies, Frank said, “I do not regard Fannie Mae and Freddie Mac as problems,” The Wall Street Journal reported. After the Freddie Mac accounting scandal in 2003, Frank said, “I do not think we are facing any kind of a crisis.”


Up until months before the collapse Frank was stating that there were no problems at Fannie or Freddie.Barney received more than $40,000 in contributions from Fannie Mae, and was living with Herb Moses a Fannie Senior Executive while he sat on the congressional committee overseeing them.


I guess we could say Barney was getting as much "Fannie" as he could handle.

Stay Away From Domestic REITS For Awhile


REITs Compete to Dump Properties


With vacation season ending in the Northern Hemisphere, we’ll start to see analysis rooted in experience and common sense driving stock prices. Through much of the summer, trading has been dominated by “quant” funds that are prone to “garbage in, garbage out” decision systems. You can see it in the tick-by-tick movements and in Level 2 quotes. These quant funds typically use backward-looking data on the U.S. economy to drive trading decisions, rather than assess how the outlook for the global economy has changed in the wake of last fall’s panic.


Consider this likely scenario: The heavy retail investor inflows into corporate bond funds last spring (far in advance of the peak in defaults, by the way) undoubtedly helped push corporate bond spreads down. The quant funds’ models detected this movement, concluded that the recession might be over, and proceeded to buy stocks that are highly sensitive to future U.S. consumer spending — including banks and REITs. This scenario likely explains some of the rally in bank and REIT shares, which occurred far in advance of the peak in credit losses. This type of scenario could easily reverse this fall as experienced stock and bond fund managers start to question why they own barely solvent financial companies at valuations that imply 4-5% real GDP growth over the next two years. Huge swathes of the financial sector are insolvent (the mark-to-market value of assets is less than liabilities), and the debate over mark-to-market accounting boils down to whether losses should be recognized up front or over long periods of time. The losses are not going away, and were baked in the cake as soon as the bubble-era loans were made. Last fall’s panic was not really a “black swan” event; it was the realization that much of the banking system was insolvent and at the mercy of electronic bank runs. Last fall, I thought that at the very least, the authorities had a plan to wind down Lehman in a controlled manner. Instead, Lehman went into forced liquidation and took the “shadow” banking system down with it. Our Lehman puts were huge winners, but even I was surprised at how quickly Lehman stock went to zero.The issue facing REITs parallels that of the banks: an industry-wide solvency crisis. Only REITs lack access to enormous subsidies from the Federal Reserve, which include the manipulation of borrowing rates down to the range of 1%, resulting in a profitable spread on new lending. If you carefully consider the combined statistics on commercial mortgage debt, equity, and future rental cash flows, you come to the conclusion that the value of many REITs is permanently impaired. Even if a core group of higher-quality REITs escapes bankruptcy, their equity will still be impaired because lenders will only refinance properties on very tight terms: strict covenants, high interest rates, and requirements of hefty equity infusions into upside-down properties. This is a transfer of wealth from REIT shareholders to creditors. This wealth transfer is occurring through many channels, but the most important one relates to claims on future rental cash flow, which will be bleak regardless of who owns it:
Creditors will take a higher share of those rental cash flows via higher interest rates
Of the cash flows that trickle down to shareholders, they will be divided up among more and more REIT shares as we see more and more dilutive secondary offerings This unprecedented collapse in commercial real estate fundamentals means that for the next few years, you can throw out the analyses that rely on “cap rates” to value REITs. Distressed sellers and vulture buyers will make up the bulk of commercial real estate transactions for at least the next few years. Equity looking to invest will be scarce, so it will demand very low prices and high potential returns to invest.Between now and 2013, $1.6 trillion in commercial real estate debt will mature. Bankers know this, so they’re going to keep conditions very tight for any refinancing that they grant. Plus, a hefty chunk of this debt is held by commercial mortgage-backed securities (CMBS), in which the lenders cannot sit across the table and renegotiate with stressed borrowers; owners of senior CMBS tranches will want to liquidate the collateral to get paid back, while owners of the junior tranches will want to refinance and pray for a recovery in value. I expect the motives of the senior lenders to win out, resulting in lots of property liquidations.


REITs Selling Must Compete to Dump Properties Lots of REITs have plans to sell properties to pay down debts but... Sell to whom? And at what sort of price? Yet REIT investors seem unaware the hundreds of billions in new equity that creditors will require to refinance mortgages that were made during the 2006-2007 peak in values — and what that catalyst will do to the value of their equity.On Wednesday, The Wall Street Journal ran a story that relates to this theme: “Tishman Faces Office Downturn.” The article describes the tough choices facing privately owned real estate investment partnership Tishman Speyer, which owns Manhattan landmarks like the Chrysler Building and Rockefeller Center. Tishman also owns a levered portfolio of Washington, D.C., properties named CarrAmerica. You’d think that with all the crony capitalists flocking to Washington the lobbying business is booming. But apparently, even lobbying is not a strong enough business to justify CarrAmerica charging the pricey rents it needs to pay its mortgages. The WSJ describes the financing problem:
The Tishman partnership that bought the CarrAmerica portfolio has been in talks with its lenders, led by Lehman Brothers Holdings Inc., since late 2008 about modifying the credit agreement, according to S&P. But so far, nothing has happened and, until now, the talks have been kept quiet. “We have confidence in the long-term value of the properties,” Rob Speyer said.
S&P warned even if Tishman wins new covenants, its ability to refinance the loans in 2011 “will likely require additional capital investment or a recapitalization.” [emphasis added] The Tishman mortgages were one of many credits that Lehman was marking at fantasy levels. As it turns out, the bears on Lehman were right: The loans that Lehman provided to Tishman to finance its acquisition of Archstone-Smith were impaired soon after they were underwritten.What will the Tishman family do about its privately held portfolio? How much debt is carried against Tishman Speyer’s properties? I get the impression that it’s a lot, considering Tishman’s aggressive behavior at the market peak (as opposed to, say, Sam Zell, who unloaded a ton of properties onto Blackstone and Maguire, which will both wind up losing most or all of their equity). Tishman Speyer will probably hit a lot of low bids on its second-rate properties to raise the cash that banks will require as new injections in order to refinance — and keep to deeds to — its trophy properties. The smart money in commercial real estate — including Sam Zell — certainly sees the mountain of debt maturities coming down the pike. Investors will certainly be looking for bargains in commercial real estate, and they will find the best deals in either foreclosure auctions or purchasing commercial mortgages from stressed banks at a discount.

Obama's Agenda


Obama and ‘Redistributive Change’

Forget the recession and the “uninsured.” Obama has bigger fish to fry.

By Victor Davis Hanson

The first seven months of the Obama administration seemingly make no sense. Why squander public approval by running up astronomical deficits in a time of pre-existing staggering national debt?Why polarize opponents after promising bipartisan transcendence?Why create vast new programs when the efficacy of big government is already seen as dubious?But that is exactly the wrong way to look at these first seven months of Obamist policy-making.


Take increased federal spending and the growing government absorption of GDP. Given the resiliency of the U.S. economy, it would have been easy to ride out the recession. In that case we would still have had to deal with a burgeoning and unsustainable annual federal deficit that would have approached $1 trillion.Instead, Obama may nearly double that amount of annual indebtedness with more federal stimuli and bailouts, newly envisioned cap-and-trade legislation, and a variety of fresh entitlements. Was that fiscally irresponsible? Yes, of course.But I think the key was not so much the spending excess or new entitlements. The point instead was the consequence of the resulting deficits, which will require radically new taxation for generations. If on April 15 the federal and state governments, local entities, the Social Security system, and the new health-care programs can claim 70 percent of the income of the top 5 percent of taxpayers, then that is considered a public good — every bit as valuable as funding new programs, and one worth risking insolvency.Individual compensation is now seen as arbitrary and, by extension, inherently unfair. A high income is now rationalized as having less to do with market-driven needs, acquired skills, a higher level of education, innate intelligence, inheritance, hard work, or accepting risk. Rather income is seen more as luck-driven, cruelly capricious, unfair — even immoral, in that some are rewarded arbitrarily on the basis of race, class, and gender advantages, others for their overweening greed and ambition, and still more for their quasi-criminality.“Patriotic” federal healers must then step in to “spread the wealth.” Through redistributive tax rates, they can “treat” the illness that the private sector has caused. After all, there is no intrinsic reason why an auto fabricator makes $60 in hourly wages and benefits, while a young investment banker finagles $500.Or, in the president’s own language, the government must equalize the circumstances of the “waitress” with those of the “lucky.” It is thus a fitting and proper role of the new federal government to rectify imbalances of compensation — at least for those outside the anointed Guardian class. In a 2001 interview Obama in fact outlined the desirable political circumstances that would lead government to enforce equality of results when he elaborated on what he called an “actual coalition of powers through which you bring about redistributive change.”Still, why would intelligent politicians try to ram through, in mere weeks, a thousand pages of health-care gibberish — its details outsourced to far-left elements in the Congress (and their staffers) — that few in the cabinet had ever read or even knew much about?Once again, I don’t think health care per se was ever really the issue. When pressed, no one in the administration seemed to know whether illegal aliens were covered. Few cared why young people do not divert some of their entertainment expenditures to a modest investment in private catastrophic coverage.Warnings that Canadians already have their health care rationed, wait in long lines, and are denied timely and critical procedures also did not seem to matter. And no attention was paid to statistics suggesting that, if we exclude homicides and auto accidents, Americans live as long on average as anyone in the industrial world, and have better chances of surviving longer with heart disease and cancer. That the average American did not wish to radically alter his existing plan, and that he understood that the uninsured really did have access to health care, albeit in a wasteful manner at the emergency room, was likewise of no concern.The issue again was larger, and involved a vast reinterpretation of how America receives health care. Whether more or fewer Americans would get better or worse access and cheaper or more expensive care, or whether the government can or cannot afford such new entitlements, oddly seemed largely secondary to the crux of the debate.Instead, the notion that the state will assume control, in Canada-like fashion, and level the health-care playing field was the real concern. “They” (the few) will now have the same care as “we” (the many). Whether the result is worse or better for everyone involved is extraneous, since sameness is the overarching principle.We can discern this same mandated egalitarianism beneath many of the administration’s recent policy initiatives. Obama is not a pragmatist, as he insisted, nor even a liberal, as charged.Rather, he is a statist. The president believes that a select group of affluent, highly educated technocrats — cosmopolitan, noble-minded, and properly progressive — supported by a phalanx of whiz-kids fresh out of blue-chip universities with little or no experience in the marketplace, can direct our lives far better than we can ourselves. By “better” I do not mean in a fashion that, measured by disinterested criteria, makes us necessarily wealthier, happier, more productive, or freer.Instead, “better” means “fairer,” or more “equal.” We may “make” different amounts of money, but we will end up with more or less similar net incomes. We may know friendly doctors, be aware of the latest procedures, and have the capital to buy blue-chip health insurance, but no matter. Now we will all alike queue up with our government-issued insurance cards to wait our turn at the ubiquitous corner clinic. None of this equality-of-results thinking is new.When radical leaders over the last 2,500 years have sought to enforce equality of results, their prescriptions were usually predictable: redistribution of property; cancellation of debts; incentives to bring out the vote and increase political participation among the poor; stigmatizing of the wealthy, whether through the extreme measure of ostracism or the more mundane forced liturgies; use of the court system to even the playing field by targeting the more prominent citizens; radical growth in government and government employment; the use of state employees as defenders of the egalitarian faith; bread-and-circus entitlements; inflation of the currency and greater national debt to lessen the power of accumulated capital; and radical sloganeering about reactionary enemies of the new state.The modern versions of much of the above already seem to be guiding the Obama administration — evident each time we hear of another proposal to make it easier to renounce personal debt; federal action to curtail property or water rights; efforts to make voter registration and vote casting easier; radically higher taxes on the top 5 percent; takeover of private business; expansion of the federal government and an increase in government employees; or massive inflationary borrowing. The current class-warfare “them/us” rhetoric was predictable.Usually such ideologies do not take hold in America, given its tradition of liberty, frontier self-reliance, and emphasis on personal freedom rather than mandated fraternity and egalitarianism. At times, however, the stars line up, when a national catastrophe, like war or depression, coincides with the appearance of an unusually gifted, highly polished, and eloquent populist. But the anointed one must be savvy enough to run first as a centrist in order later to govern as a statist.Given the September 2008 financial meltdown, the unhappiness over the war, the ongoing recession, and Barack Obama’s postracial claims and singular hope-and-change rhetoric, we found ourselves in just such a situation. For one of the rare times in American history, statism could take hold, and the country could be pushed far to the left.That goal is the touchstone that explains the seemingly inexplicable — and explains also why, when Obama is losing independents, conservative Democrats, and moderate Republicans, his anxious base nevertheless keeps pushing him to become even more partisan, more left-wing, angrier, and more in a hurry to rush things through. They understand the unpopularity of the agenda and the brief shelf life of the president’s charm. One term may be enough to establish lasting institutional change.Obama and his supporters at times are quite candid about such a radical spread-the-wealth agenda, voiced best by Rahm Emanuel — “You don’t ever want a crisis to go to waste; it’s an opportunity to do important things that you would otherwise avoid” — or more casually by Obama himself — “My attitude is that if the economy’s good for folks from the bottom up, it’s gonna be good for everybody. I think when you spread the wealth around, it’s good for everybody.”So we move at breakneck speed in order not to miss this rare opportunity when the radical leadership of the Congress and the White House for a brief moment clinch the reins of power. By the time a shell-shocked public wakes up and realizes that the prescribed chemotherapy is far worse than the existing illness, it should be too late to revive the old-style American patient.

Wednesday, August 26, 2009

US Dollar On A Downward Slope


The Dollar: Soon to Swoon?
Bearish pronouncements on the greenback from Buffett and Pimco add to the market's unease. Here's what investors need to know
By Ben Steverman
Reports of the demise of the U.S. dollar may be premature. But when some of the world's most powerful investors are warning of the currency's decline, investors take notice.
Berkshire Hathaway (BRKA) Chief Executive Warren Buffett warned in a New York Times op-ed on Aug. 19 that the U.S. debt load threatened to turn the U.S. into a "banana republic economy."
A flood of greenbacks from the Federal Reserve and the Obama and Bush Administrations may be necessary now to prop up the ailing economy, Buffett said. But the government must control its debt in the future—or risk the consequences.
"The dollar's destiny lies with Congress," Buffett wrote.
On Aug. 20, the head of the world's largest bond fund, Pimco Chief Executive Mohamed El-Erian, sounded as though the dollar's decline were a foregone conclusion.
"The question is not whether the dollar will weaken over time, but how it will weaken," El-Erian told Bloomberg, echoing Pimco founder Bill Gross, who has said the dollar could lose its status as the world's reserve currency. "The real risk is that you will get a disorderly decline," El-Erian said.
The Dollar as Safe Haven
The problem with such bold pronouncements is that the currency markets are notoriously unpredictable. An accurate currency forecast makes a correct stock pick look easy, as it requires foresight into economics, trade flows, capital flows, politics, and market psychology—all on a global scale.
In the late 1980s many worried the U.S. dollar was losing out to the Japanese yen and other world currencies. But those worries were quickly forgotten in the 1990s as U.S. deficits narrowed and growth heated up.
Last fall the value of the dollar spiked as the world sought refuge in its strongest currency. That had little to do with economic fundamentals. Ironically, it was a U.S.-born financial crisis that was causing investors to push their assets into U.S. dollars.
Perilous Predictions
This is an especially treacherous time for currency prognosticators. "I've never known a period when there were more different views about a wide range of different factors in global economics," says Giles Conway Gordon, co-chief investment officer at Cogo Wolf Asset Management.
For example, forecasts for the value of the euro vs. the U.S. dollar are all over the map. The shared European currency fetched $1.43 in trading on Aug. 20. Some respected commentators, Gordon notes, are predicting that by the end of the year the euro will be at $1.12, while others are predicting $1.60. "There are huge variations," he says.
One wild card remains the financial crisis, which continues to bounce currencies around, says Jessica Hoversen, analyst at MF Global (MF). The dollar, still viewed as a safe haven, inevitably rises on days that investors are more skittish and stock markets fall, she says. For most investors, the crisis isn't over. "They're still very cautious," she says.
Another big factor for dollar-watchers is politics. Governments have ways of subtly and not-so-subtly pushing currencies up or down.
Impact on Commodity Prices
"It's in nobody's interest to see a substantial weakening of the dollar," says Brian Dolan, chief currency strategist at Forex.com, a division of Gain Capital Group. Yes, a weaker dollar would help American manufacturers sell goods overseas, increasing U.S. exports and allowing U.S. companies to report stronger profits from abroad.
But a weaker buck would hurt global businesses that import into the U.S. And a softer dollar usually increases prices of commodities, such as oil, which are bought and sold in dollars. "If the dollar were to weaken, commodity prices would increase fairly rapidly," Dolan says. In the U.S., "that would hamper a consumer-led recovery."
In the longer term, panics and politics may be less important for the dollar's future than economic fundamentals. This is Buffett's point, with his concern about America's fiscal situation. It's also reflected in worries that the U.S. dollar is losing its preeminent status among global currencies.
Counter Influences
One counterpoint to these concerns is the reality that currencies trade on a relative basis. "We're not alone in running up these massive deficits," Dolan says.
Also, as many observers have pointed out, the rush into dollars during the financial crisis demonstrated that, for now, there are no viable alternatives to the U.S. dollar as the world's preeminent currency.
Though inflation could hurt the U.S. dollar, economists and other observers say it's difficult, perhaps impossible, to suffer inflation in an economy hit this hard by an economic downturn.
"There is no present danger of inflation," says University of Virginia professor Herman Schwartz, author of Subprime Nation: American Power, Global Capital, and the Housing Bubble. With so many factories idled and so many Americans out of work, the economy has plenty of excess capacity before inflation starts to threaten the dollar's value. "We've got a long way to go before we get there," Schwartz says.
Longer-Term Danger
That doesn't mean Buffett wasn't right to warn investors and policymakers that inflation could eventually sap the value of the dollar. Schwartz sees Buffett's editorial as a "warning shot across the bow of the Administration."
The federal government needed to pump money into the economy, says Cornell University professor Jonathan Kirshner. "We did the right thing and prevented the economy from totally cratering," he says. "But this leaves in its wake serious issues."
The solution to the heavy U.S. debt load isn't to slash spending or hike taxes now, he says. Doing so would hurt the economy. Rather, President Barack Obama needs to show over the next couple of years a "path to sustainability"—a plausible scenario whereby the U.S. can begin to pay off the big bills racked up in 2008 and 2009.
The future of the U.S. dollar may well be determined by simple, big-picture questions: What will U.S. inflation or economic growth look like, relative to other countries? But the currency markets are also places where subtlety and nuance matter. For example, a gradual decline in the dollar would do less damage than a rapid drop—and might even help parts of the U.S. economy in the process.
Like other investors, Buffett is hoping that Obama and other policymakers have the requisite skill to navigate an economy beset by ballooning deficits and subpar growth without doing damage to the U.S. currency. That will be a tall order.

Gee Bigger Debt From The Dems, Who'du Thunk?


White House projects bigger deficits, bigger debt
JIM KUHNHENN
The Associated Press
WASHINGTON - The federal government faces exploding deficits and mounting debt over the next decade, White House officials predicted Tuesday in a fiscal assessment far bleaker than what the Obama administration had estimated just a few months ago.
Figures released by the White House budget office foresee a cumulative $9 trillion deficit from 2010-2019, $2 trillion more than the administration estimated in May. Moreover, the figures show the public debt doubling by 2019 and reaching three-quarters the size of the entire national economy.
Obama economic adviser Christina Romer predicted unemployment could reach 10 percent this year and begin a slow decline next year. Still, she said, the average unemployment will be 9.3 in 2009 and 9.8 percent in 2010.
"This recession was simply worse than the information that we and other forecasters had back in last fall and early this winter," Romer said.
The grim administration projections came on a day of competing economic news. The Congressional Budget Office, which has predicted less economic growth than the White House in the past, was also scheduled to announce revised budget projections on Tuesday.
Obama himself may have drowned out the rising deficit news with the announcement Tuesday that he intends to nominate Ben Bernanke to a second term as chairman of the Federal Reserve. The Bernanke news could neutralize any disturbance in the financial markets caused by the high deficit projections.
The deeper red ink and the gloomy unemployment forecast present President Barack Obama with an enormous challenge. The new numbers come as he prods Congress to enact a major overhaul of the health care system , one that could cost $1 trillion or more over 10 years. Obama has said he doesn't want the measure to add to the deficit, but lawmakers have been unable to agree on revenues that cover the cost.
What's more, the high unemployment could last well into the congressional election campaign next year, turning the contests into a referendum on Obama's economic policies.
Republicans were ready to pounce.
"The alarm bells on our nation's fiscal condition have now become a siren," Senate Minority Leader Mitch McConnell, R-Ky., said. "If anyone had any doubts that this burden on future generations is unsustainable, they're gone , spending, borrowing and debt are out of control."
The revised estimates project that the economy will contract by 2.8 percent this year, more than twice what the White House predicted earlier this year. Romer projected that the economy would expand in 2010, but by 2 percent instead of the 3.2 percent growth the White House predicted in May. By 2011, Romer estimated, the economy would be humming at 3.6 percent growth.
Both Romer and budget director Peter Orszag said this year's contraction would have been far worse without money from the $787 billion economic stimulus package that Obama pushed through Congress as one of his first major acts as president.
At the same time, the continuing stresses on the economy have, in effect, increased the size of the stimulus package because the government will have to spend more in unemployment insurance and food stamps, Orszag said. He said the cost of the stimulus package , which spends most of its money in fiscal year 2010 , will grow by tens of billions of dollars above the original $787 billion.
For now, while the country tries to come out of a recession, neither spending cuts nor broad tax increases would be prudent deficit-fighting measures. But Obama is likely to face those choices once the economy shows signs of a steady recovery, and it could test his vow to only raise taxes on individuals making more than $200,000.
Still, 10-year budget projections can be "wildly inaccurate," said Stan Collender, a partner at Qorvis Communications and a former congressional budget official. Collender notes that there will be five congressional elections over the next 10 years and any number of foreign and domestic challenges that will make actual deficit figures very different from the estimates.
The Obama administration did tout one number in its budget review: The 2009 deficit was expected to be $1.58 trillion, $263 billion less than projected in May. That's largely because the White House removed a $250 billion item that it had inserted as a "place holder" in case banks needed another bailout.
Orszag, anticipating backlash over the deficit numbers, conceded that the long-term deficits are "higher than desirable." The annual negative balances amount to about 4 percent of the gross domestic product, a number that many economists say is unsustainable.

Wise Words From Our Man Doug Casey


Doug Casey on Protecting Your Cash
(Interviewed by Louis James, International Speculator)
L: Doug, we talked last week about getting assets out of your home country, especially the U.S., where to take them and what to do with them. In so doing, you touched on the inevitability of currency controls just ahead, especially for Americans. Can you tell us more about that?
Doug: Yes, I’m quite serious about what I said about “the grim reality of impending currency controls.” As the global economy continues to deteriorate, governments will have to appear to be “doing something.” It’s going to become very fashionable to institute some sort of foreign exchange control.
Why might that be? Because obviously, people who are taking their money out of the country are unpatriotic…
L: Those bastards.
Doug: That’s right. Jingoistic Americans naturally, but stupidly, see taking money out of the country as being unpatriotic. They don’t understand that it’s mainly those prudent people who will be able to supply the capital to rebuild a devastated economy later. Besides, getting money abroad is obviously something that only rich people would do… and of course, it’s time to eat the rich, as well. For those two reasons, there won’t be much resistance to controls. And the state gets to appear to be “doing something.”
And when they do, more people – at least those with any sense – will get scared and really try to get their money out, which will exacerbate the run to the exits. The bottom line is that if you want to get your money out, the time to do it is now. Beat the last-minute rush.
I don’t know what form the exchange controls are going to take, but there are two general possibilities: regulation and taxation.
The regulations might take the form of a rule prohibiting you from taking more than X-thousands of dollars abroad per year without special permission. No expensive vacations, no foreign asset purchases without state approval.
As for the taxation, if you want to, say, buy foreign stocks or real estate, you might have to pay an “Interest Equalization Tax” or some such. So, you could do it, but it’d cost you a lot of money to do it.
Something like either of these, or both, is definitely in the cards.
L: But aren’t FX controls something from the past? I mean, where do they exist today?
Doug: Well, FX controls have been used since the days of the Roman Empire. A country debases its currency, raises taxes beyond a certain level, and makes regulations too onerous – and productive people naturally react by getting their capital, and then themselves, out of Dodge. But the government can’t have that, so it puts on FX controls. They’re almost inevitable at this point.
Almost every country – except for the U.S., Canada, Switzerland, and a few others –had them until at least the ‘70s. I remember leaving Britain once in the ‘60s, and a border guy searched me to see if I had more than 50 pounds on me. In those days currency violations in the Soviet Bloc countries could get you the death penalty. Things liberalized around the world with Reagan and Thatcher, and then the collapse of the USSR. But you have to remember that that was in the context of the Long Boom. Now, during the Greater Depression, things will become much stricter again.
Right now, the U.S. just has reporting requirements. But some places, like South Africa, make it very expensive and inconvenient to get money out. South Africa, perversely, may serve as a model for the U.S.
L: Okay, so, we talked last week about Americans at least setting up a Canadian bank account and safe deposit box, and better yet going in person to Panama, Uruguay, Malaysia, or a similar place to do the same. And once there, you advised getting with a lawyer, either referred by someone you trust or found through an interview process, to set up a corporation that can handle your assets and investments for you. This all needs to be reported but it’s wise to do it in advance of the higher costs or other limitations to come.
Doug: Yes. While U.S. persons must report foreign bank and brokerage accounts, safe deposit boxes are not – at least not yet – reportable. This leads me to the biggest and best “loophole” when it comes to potential foreign exchange controls, and that’s foreign real estate.
I’m of the opinion that, broadly speaking, real estate as an asset class is going to be a poor performer for a long time to come – but that won’t be equally true across all countries. Real estate in countries that rely on mortgage debt to buy and sell will continue to be the worst hit.
People don’t understand that buying property with a mortgage is just the same as buying stocks on margin. It’s caused speculative bubbles and malinvestment. Until the malinvestment in those countries is entirely liquidated, you don’t want to invest in real estate in them. But a lot of countries, especially in the third world, have no mortgage debt whatsoever. Zero mortgage debt. You want a piece of property, you pay for it in cash. That keeps prices down and the market much more stable. And it makes for more interesting speculations, because if a mortgage market develops in the future, it could light a fire under prices.
But, from the viewpoint of FX controls, the nice thing about real estate is that there is no way they can make you repatriate it. Other than owning a business abroad, real estate is the only sure way to legally keep your capital offshore.
L: I suppose it would be difficult for even Uncle Sam to seize your estancia in Argentina… not without starting a war.
Doug: Yes. Although I don’t doubt he’ll be starting more wars as well… [Laughs]
L: So, part of your thinking here isn’t just speculative. You’re talking about strategies for wealth preservation, not just in the face of foreign exchange controls, but more aggressive, predatory taxation and confiscation by the state – they can seize your assets, even real estate, in the U.S., but not abroad.
Doug: Exactly. Argentina is excellent from that point of view; rights to real property are, if anything, better than those in the U.S. In many ways, Argentina is culturally and demographically more like Europe than Europe. Uruguay is also excellent, although culturally it’s like a backward province of Argentina. Paraguay is quite secure – but a bit weird as a place to live.
I’m not currently up-to-date on the Chilean real estate market, but Chile is definitely now the richest and most advanced South American country, and an excellent choice. Brazil is fine. Colombia is improving greatly. Ecuador has a goofy president, but parts of it are very nice, and it’s about as cheap as Argentina. Eastern Bolivia is interesting, actually, despite Morales. Only Venezuela is out of the question in South America – but Chavez won’t last forever. It’s just a pity they have all that oil, which is always a corrupting influence.
L: Well, then, what about Central America? I know you prefer South America for speculative purposes, but what if someone wants to park a lot of wealth by buying a couple miles of beautiful beachfront property in Costa Rica, or some place like that?
Doug: I was a big fan of Costa Rica for many years… The first time I went down there was 35 years ago – but it’s a different place now. Then, it was very cheap, and now it’s very expensive. And it’s totally overrun with gringos. So, Costa Rica is not of that much interest to me at this point; it’s pleasant, but there’s limited upside.
I think an excellent place to be in Central America is Belize. Although culturally and ethnically, it’s not really part of Central America; it’s part of the Caribbean.
L: And they speak English there.
Doug: They do indeed, though things are changing. The Guatemalan government has always regarded British Honduras, which is what Belize used to be called, as part of Guatemala. There have actually been confrontations between Britain and Guatemala over this. But that’s in the past; now there’s a different problem. Guatemalans are rolling over the border in much the same way that Mexicans are in Texas, New Mexico, Arizona, and California.
So, the character of Belize is changing, but for the foreseeable future, it’s still going to be Belize, and I rather like it. Aside from Panama, Belize would be my first choice in Central America.
The problem with Central America, however, is that it’s a bunch of small countries that have historically been very unstable. And culturally backward. Most are under the thumb of the United States… there’s a long history of U.S. invasions, most recently in Panama with Noriega. There are Frito Banditos running around these places…
The most culturally advanced country in Central America, not counting Mexico, of course, since it’s in North America, is Guatemala. But Guatemala has had huge troubles with violence, which has only recently come to an end… I hate going through checkpoints at night, manned by jumpy, uneducated, heavily armed teenagers.
Nicaragua is the low-cost alternative, but it’s relatively backward. Panama is probably the best choice. It’s very international, very urban (in Panama City), and it’s very sophisticated, infrastructure-wise.
If I didn’t like Argentina and Uruguay so much, I would put Panama at the top of my shopping list.
L: Got it. Back to the exchange controls themselves. Do you think people will have any warning at all? It seems to me that this is the sort of thing the Powers That Be would want to spring on people.
Doug: I think it’s going to come out of left field. It always does, with at most an official denial just before it happens. In August 1971, Nixon devalued the dollar, which immediately dropped against gold and all foreign currencies. I think there’s a reasonable probability that the government will do that again. Gold may not be part of the equation, but they may decide to put in some sort of fixed exchange rate between the dollar and various foreign currencies.
The reason for thinking this is simple: with all the dollars outside the United States devalued by that much, that much of a liability just vanishes into thin air. And in the short term – it’s never a long-term fix – U.S. exports would go up. This would “stimulate” the domestic economy. Imports to the U.S. would go down, which would make for fewer dollars leaving the U.S. and adding to the $7 trillion overhang the U.S. already has.
L: I know you hate making predictions, but can you tell us if your “guru sense” is tingling on this so strongly that you think it could happen this year? Or is this more of a 2010 possibility? 2011?
Doug: The timing on this is really unpredictable. These people don’t have a plan. They’re acting “ad hoc” to whatever seems most urgent. All the so-called “economists” around government today are really just political hacks. Their world views are totally unsound.
If you don’t believe me, check out the YouTube video of the clueless chief inspector of the Fed that’s circulating on the Internet. (See: http://www.youtube.com/watch?v=PXlxBeAvsB8)
L: With all the problems the U.S. has, do you think this could happen now? Could we be reading about new exchange controls on CNN.com this afternoon?
Doug: Sure. Although they typically pull these stunts over a weekend. I expect something of this nature to happen any time between tomorrow morning and two years from now. If some form of currency controls are not instituted within two years, I’m going to be genuinely surprised.
So, if you’re going to take action, you should start heading for the exits now. Not next month, and certainly not next year.
L: For those who don’t take action until it’s too late, under the scenarios you mentioned, they’ll still be able to get money out. It’s just that it might be more difficult, time consuming, humiliating, and certainly more expensive to do. For every $100,000 they move, only $90,000, or $70,000, or whatever will get to where it’s supposed to go. Can you foresee a more Stalinesque alternative, where they simply can’t get anything out at all?
Doug: Hopefully not. Anything is possible, and things can change so rapidly… but I’d hate to think of what conditions would be like if they ever became that draconian. It’d be so bad on other fronts that there would be all sorts of even more urgent things on your mind – Americans would get a very quick and unpleasant education in the real meaning of Maslow’s hierarchy.
L: Like the Mad Max-style neobarbarians at the door with a battering ram.
Doug: Exactly – that’s when you’ll definitely want to be in more pleasant climes. I’d want to be watching it on my wide-screen, in comfort, not out my front window.
L: We’re talking about extremes here…
Doug: You know, back in the 1970s there was a spate of books published on financial privacy. In those days, financial privacy was still possible. Now, it’s not only no longer truly possible, short of embracing a completely outlaw lifestyle, it’s very dangerous to write about it or even talk about it. I kid you not. These days, people who ask too many questions about privacy techniques may well be government stooges…
There’s lots of handwriting on the wall. All those books on financial privacy were published in the ‘70s – if you look on Amazon, you can still find them. But there’s nothing really worth reading that’s been written on the subject in 20 years. It’s actively discouraged by the government. I could name – but I won’t – at least two authors that got themselves into a real jackpot this way. Forget about the First Amendment.
In fact, I even feel uncomfortable talking about it in this interview.
So let me once again emphasize that I advise everyone to stay fully within the bounds of the law.
That’s not for moral reasons, of course; there is no morality to the law. It’s strictly for reasons of practicality. Risk-reward ratio.
L: Understood. Loud and clear. Any more investment implications, besides foreign real estate, that you want to draw attention to here?
Doug: Yes – and it’s another reason for those so very clever boys in Washington to embrace currency controls. They will be disastrous for the U.S. economy, but there’s a very good chance that, in the short run, they’ll be very good for the stock market. That’s partly for the reasons I already mentioned about it temporarily boosting U.S. exports, and hence earnings of U.S. exporters, but also because all that money that can’t leave the U.S. will have to go into something.
Investors will probably want to put it into equity, rather than debt, while the dollar is depreciating. Again, it’s disastrous over the long term, but as a short-term play, buying the blue chips the day the exchange controls are instituted could be a good move.
L: You’d buy the Dow?
Doug: I might, if I couldn’t think of anything more intelligent or original to do. We’ll just have to see what the situation is like.
L: This will be a development we’ll have to keep an eye out for in The Casey Report, then.
Doug: Yes, we will. The more politically controlled an environment, the more distortions are created. And the better it is for a speculator.
L: Thanks again, Doug – you’ve given us a lot to think about.

Grassley Is A Phuckhead....But He's Right About At Least One Thing.....


Senator warns of hyperinflation rivaling the 1980
@ 10:04 am by Michael O'Brien
The economy could spiral into hyperinflation not seen since the early 1980s if the Federal Reserve does not tighten its monetary policy soon, Sen. Chuck Grassley (R-Iowa) warned Tuesday.
Grassley, speaking about the renomination of Federal Reserve Chairman Ben Bernanke to a second term as head of the Fed, asserted that Bernanke's ability to hold down inflation would be the metric by which the Fed's success would be measured.
"We won't know for a year if he's done a good job so far, because he shoveled money out of an airplane to save banks and the financial system," Grassley said in a conference call with Iowa reporters. "But shoveling money out of an airplane to solve problems can be inflationary — in this case, hyperinflationary — if he doesn't start mopping up some of the money that's out there."
Grassley, the ranking member of the Senate Finance Committee, said that inflation as a result from government spending on bailouts could result in inflation rivaling rates in 1980, when it hit a peak of 13.5 percent.
"The Fed has the ability to put money out, it's got the ability to take money back in, and if they don't do that, we will have hyperinflation worse than we had in 1980 and '81," Grassley said. "And I hope he demonstrates that ability."
Grassley argued that while it would be a year until lawmakers will know whether Bernanke has been successful at bringing inflation under control, it would probably be best to keep the chairman on board for a second term as head of the Federal Reserve.
"I would suggest that right now, when everybody's nervous about the economy, that you don't change horses in the middle of the stream, and consequently, it would probably be detrimental to not have him reappointed," he said.

{This is where Chuck comes off as a stupid big-government lackey once again. Real economists know that they just gave gasoline to the arsonist with bernanke's reappointment. Keeping the same bozos who got us into this trouble in charge amounts to treason and attack on the American economy~ED. SOC}

Full transparency....Not The Peep Show Kind


Drunk-On-Credit Fed Chief Claims “Full Transparency”
What had me hopping mad yesterday while the President (our new cheerleader) was on TV, a new headline that flashed across CNBC…
The headline said Bernanke claims he was always a proponent for an "Open and Transparent" Federal Reserve.
At the risk of sounding like Ron Paul, this is completely contrary to what Bernanke has been so far as our Fed Chief. There has been complete secrecy regarding the Fed's operations. The Bill to Audit the Federal Reserve and its actions was stopped cold in the Senate on July 9th using procedural grounds.
Oh! Don't we love politicians who speak from both sides of their mouth?
The honest truth folks is that Obama does not want any checks and balances on the nation's check book and wants to retain the ability to print as much money as his misguided policy desires.
Me - I feel like creating my own printing press in my garage too! Difference is if I did that, I would go to jail while Bernanke is being lauded as the "savior" of the U.S. economy.
But of course, that’s what it’s like in this Government for the People, for the People.

Now We Know Why The Left Lies


Scientists Confirm the Effectiveness of The Big Lie – People Will Go To Extraordinary Lengths to Create False Justifications for Government Misdeeds
Wednesday, August 26, 2009



Adolph Hitler wrote in Mein Kampf:
All this was inspired by the principle–which is quite true in itself–that in the big lie there is always a certain force of credibility; because the broad masses of a nation are always more easily corrupted in the deeper strata of their emotional nature than consciously or voluntarily; and thus in the primitive simplicity of their minds they more readily fall victims to the big lie than the small lie, since they themselves often tell small lies in little matters but would be ashamed to resort to large-scale falsehoods. It would never come into their heads to fabricate colossal untruths, and they would not believe that others could have the impudence to distort the truth so infamously. Even though the facts which prove this to be so may be brought clearly to their minds, they will still doubt and waver and will continue to think that there may be some other explanation. For the grossly impudent lie always leaves traces behind it, even after it has been nailed down, a fact which is known to all expert liars in this world and to all who conspire together in the art of lying.
Similarly, Hitler’s propaganda minister, Joseph Goebbels, wrote:
That is of course rather painful for those involved. One should not as a rule reveal one’s secrets, since one does not know if and when one may need them again. The essential English leadership secret does not depend on particular intelligence. Rather, it depends on a remarkably stupid thick-headedness. The English follow the principle that when one lies, one should lie big, and stick to it. They keep up their lies, even at the risk of looking ridiculous.
Science has now helped to explain why the big lie is effective.
Specifically, sociologists from four major research institutions investigated why so many Americans believed that Saddam Hussein was behind 9/11, years after it became obvious that Iraq had nothing to do with 9/11.
The researchers found, as described in an article in the journal Sociological Inquiry (and re-printed by Newsweek):
Many Americans felt an urgent need to seek justification for a war already in progress
Rather than search rationally for information that either confirms or disconfirms a particular belief, people actually seek out information that confirms what they already believe.
“For the most part people completely ignore contrary information.”
“The study demonstrates voters’ ability to develop elaborate rationalizations based on faulty information”
People get deeply attached to their beliefs, and form emotional attachments that get wrapped up in their personal identity and sense of morality, irrespective of the facts of the matter.
“We refer to this as ‘inferred justification, because for these voters, the sheer fact that we were engaged in war led to a post-hoc search for a justification for that war.
“People were basically making up justifications for the fact that we were at war”
“They wanted to believe in the link [between 9/11 and Iraq] because it helped them make sense of a current reality. So voters’ ability to develop elaborate rationalizations based on faulty information, whether we think that is good or bad for democratic practice, does at least demonstrate an impressive form of creativity.
As the study notes, this tendency of many people to make up false stories to explain why we went to war and then to hold on to such false beliefs in the face of contrary evidence is “a serious challenge to democratic theory and practice”. Until people learn to think more clearly and rationally, they are easily manipulated.
All a government has to do is tell a big enough lie, and many people will swallow it hook, line and sinker. Or the government can just do something big – like starting a war for no good reason (or giving trillions in bailouts to the wealthiest corporations instead of the “little people” who most need it?) – and many people will struggle mightily to themselves concoct false justifications for doing so.