Fear and Loathing in America

US, Iran Hold Secret Talks

2008-04-14T01:36:00.000-07:00

Iran and the United States have been engaged in secret "back channel" discussions for the past five years on Iran's nuclear programme and the broader relationship between the two sworn enemies, The Independent can reveal.

One of the participants, former senior US diplomat Thomas Pickering, explained that a group of former American diplomats and experts had been meeting with Iranian academics and policy advisers "in a lot of different places, although not in the US or Iran".

"Some of the Iranians were connected to official institutions inside Iran," he said in a telephone interview from Washington. The group was organised by the UN Association of the USA, a pro-UN organisation. Its work was facilitated by the Stockholm International Peace Research Institute, a government-funded think-tank chaired by the former chief UN weapons inspector for Iraq, Rolf Ekeus.

While the nuclear issue was "prominent", Mr Pickering said, "we discussed what's going on domestically in both countries and wide-ranging issues" affecting the US-Iran relationship. Although none of the group members was from the US or Iranian governments, he said that "each side kept their officials informed". The Bush administration "did not discourage us," he added.

Mr Pickering declined to go into greater detail for fear of jeopardising future meetings of the group of about a dozen Americans and Iranians, although the number of participants varies. Back- channel talks have often provided crucial impetus in solving the world's most intractable disputes. They usually only become public in case of agreement, as seen with Northern Ireland and the Oslo accords on the Middle East, or failure, as in the case of an Israeli-Syrian informal channel.

NATO Gives Weapons to the Taliban.

2008-04-13T14:03:00.001-07:00

KABUL, Afghanistan: A coalition helicopter trying to supply Afghan police with munitions dropped supplies in the wrong location and Taliban fighters later recovered the weaponry, an intelligence official said Sunday.

A member of parliament, however, said he didn't believe the arms drop was an accident.

Amrullah Saleh, the head of Afghanistan's intelligence service, told a parliament security committee "coalition forces" intended to place weapons, ammunition and food at a police checkpoint in a remote section of the southern province of Zabul in late March.

"By mistake it was dropped somewhere far from the checkpoint. Later the Taliban came and they picked it up," Saleh later told reporters.

In his testimony he said a "small box" had been dropped but did not say how many weapons were inside.

It was not clear whose helicopter left the supplies. NATO's International Security Assistance Force and the U.S.-led coalition said it was not theirs.

Hamidullah Tukhi, a lawmaker from Zabul, told the security commission the weapons were placed 100 meters (300 feet) from the home of a Taliban commander named Mullah Mohammad Alam. He said the supply drop contained heavy machine guns, AK-47s, rockets and food.

Lawmakers discussed the issue with President Hamid Karzai and U.S. Gen. Dan McNeill, the top NATO commander in Afghanistan, he said.

"I think Gen. McNeill himself said that it was a mistake, but I don't believe it," Tukhi said, adding he did not know which nation dropped the supplies.

Saleh told journalists Tukhi's version of events was based on "rumors."

Maj. Richelle Dowdell, a spokeswoman for NATO's ISAF, said the helicopter involved was not NATO's. Lt. Richard Ulsh, a spokesman at the U.S. base at Bagram, said the U.S.-led coalition was not involved either.

Chavez; IMF is Selling Gold Cheap.

2008-04-13T06:26:00.000-07:00

CARACAS, Venezuela -- Venezuelan President Hugo Chavez said Saturday that his government could afford to buy some of the International Monetary Fund's gold reserves as the Washington-based lender faces hard times.

Chavez raised that idea with a chuckle as the IMF, the lender of last resort for countries in trouble, considers trimming costs by selling off some of its gold reserves.

"Look at how the U.S. empire must be in unimpeded decline, that the International Monetary Fund ... is selling its crown jewels," Chavez said during a speech at a military parade.

"The International Monetary Fund is selling what gold it has left to be able to pay salaries," Chavez said. "We could give a loan to the monetary fund. ... We could buy some gold bars. ... I think they're selling gold cheap."

Chavez spoke as the IMF and World Bank were holding weekend discussions in Washington. One proposal on the agenda would trim 15 percent of the IMF's staff and sell about $11 billion in the institutions' vast gold reserves.

A vociferous critic of the U.S. government, Chavez also has long opposed the policies of the IMF and the World Bank. He called the IMF "the financial arm of the empire."

The leftist leader spoke during a parade marking the anniversary of a failed 2002 coup that briefly drove him from power. He accuses U.S. President George W. Bush's government of being behind the coup, which U.S. officials deny.

Speaking to troops, Chavez said of the U.S.: "It's an empire in decline, but it's still very dangerous."

Has the Constitution Been Suspended Since 2001?

2008-04-12T14:40:00.000-07:00

George Washington's Blog:

In two previous posts (here and here), I showed that Continuity of Government (COG) plans were implemented on September 11th, and I argued that it is possible that they have never been suspended.

Now, one of the top investigative journalists in the country, Larisa Alexandrovna (the lead journalist at Raw Story), says:

"it seems to me that this administration has justified its crimes by NOT suspending the state of emergency that went up on September 11, 2001. They are using emergency powers if you look at the whole of the spying, military actions inside the US, etc. I would wager that if asked, this administration will admit that we have been in a state of emergency for their tenure in office."

Remember that Continuity of Government plans -- that is, the measures that go into effect in case of emergency -- suspend the Constitutional form of government, cut elected officials out of the loop, and may even allow the government to tell the media what it can and cannot report.

Remember also that the entire Homeland Security Committee of the U.S. Congress has been denied access to the government's Continuity of Government Plans even though it has clearance to view such plans (video; or here is the transcript). Indeed, a member of that Committee has said "Maybe the people who think there's a conspiracy out there are right".

If we are in a state of emergency and COG plans are in effect, then Congress acting even more obviously like corporate and military lapdogs than normal and totally ignoring the will of the people would make sense. It would make sense that "impeachment is off the table", because Congress would not even be sitting at the table under a non-constitutional COG form of government; and Congress certainly would not be a co-equal branch of government with the Executive branch.

If we are in a state of emergency and COG plans are in effect, then the corporate media's acting even more obviously like the disinformation arm of the government than usual would make sense.

Given the stakes, it is vital that we demand that Congress and the White House state on the record whether or not Continuity of Government plans are currently in effect. We're not going to make any progress on whatever issue is most important to us -- peace, liberty, election integrity/vote fraud, 9/11 truth, etc. -- if we are living under a COG regime and we don't even know it.

And our strategy will be different depending on whether we are living under a COG regime or a Constitutional form of government.

We have to find out one way or another.

Peter Dale Scott has researched the history of COG extensively. Here he is discussing COG and Cheney's role therein:

Dark Side of the Hill.

2008-04-12T14:38:00.000-07:00

Pink Floyd’s Roger Waters has attacked democratic hopeful Hillary Clinton – calling the senator from New York “ghastly”.

Waters, who admits to being a fan of Clinton’s rival for the democratic nomination, Barack Obama, said that Clinton would invade Iran if she was elected America’s next president.

“I was so disappointed the other night when the ghastly Hillary got Texas and kept the whole thing going," he told the Independent.

"Please God, let's not have this woman! Hillary will want to make her mark and show that she can be just as good as a male president, and she will fucking invade Iran.

“Trust me. She voted to declare the Iranian Republican Guard a terrorist organisation!"

Despite being ineligible to vote, Waters, who lives in New York, said he would “buy a whole page in The New York Times” in order to “fly Obama's flag”.

“But I would be terribly afraid they'd go, 'This is that pinko shitbag who's attacking our President in time of war',” he added.

Clinton and Obama next face off against each other in the Philadelphia primary on April 22nd.

The eventual winner of the democratic nomination will go head-to-head with Republican John McCain in the battle to become the country’s president in November.

UN Official Calls For Study of Neocons' Role in 9/11

2008-04-11T04:50:00.000-07:00

NY SUN:

A new U.N. Human Rights Council official assigned to monitor Israel is calling for an official commission to study the role neoconservatives may have played in the September 11, 2001 terrorist attacks.

On March 26, Richard Falk, Milbank professor of international law emeritus at Princeton University, was named by unanimous vote to a newly created position to report on human rights in the conflict between Israel and the Palestinian Arabs. While Mr. Falk's specialty is human rights and international law, since the attacks in 2001, he has devoted some of his time to challenging what he calls the "9-11 official version."

On March 24 in an interview with a radio host and former University of Wisconsin instructor, Kevin Barrett, Mr. Falk said, "It is possibly true that especially the neoconservatives thought there was a situation in the country and in the world where something had to happen to wake up the American people. Whether they are innocent about the contention that they made that something happen or not, I don't think we can answer definitively at this point. All we can say is there is a lot of grounds for suspicion, there should be an official investigation of the sort the 9/11 commission did not engage in and that the failure to do these things is cheating the American people and in some sense the people of the world of a greater confidence in what really happened than they presently possess."

Mr. Barrett, who is the co-founder of the Muslim-Jewish-Christian Alliance for 9/11 Truth, said in an interview yesterday of Mr. Falk, "I would put him on a list of scholars who are sympathetic to the 9/11 truth movement."

He added, "Unlike most public intellectuals today, he is both honest and very, very knowledgeable in that he understands the probable reality of 9/11. He understands that the evidence that it was a false flag operation is very strong."

The narrative that the attacks from 2001 were a "false flag" operation is a recurring theme in the literature challenging the consensus that 19 Al Qaeda hijackers flew commercial jets into the World Trade Center and the Pentagon. False flag refers to espionage or covert actions taken by one government made to seem like the work of another. The false flag thesis has it that the Bush administration is somehow responsible for the September 11 attacks as a pretext for the wars in Afghanistan and Iraq.

Mr. Falk yesterday did not return e-mails and phone calls asking for a comment. But in 2004 he wrote the foreword to the book "The New Pearl Harbor," by David Ray Griffin. Mr. Griffin has posited that such an inside job is the likely explanation for the attacks.

In the preface, Mr. Falk writes, "There have been questions raised here and there and allegations of official complicity made almost from the day of the attacks, especially in Europe, but no one until Griffin has had the patience, the fortitude, the courage, and the intelligence to put the pieces together in a single coherent account."

When asked for a comment about the appointment of Mr. Falk, a former American ambassador to the United Nations, John Bolton said, "This is exactly why we voted against the new human rights council." A spokesman for the American embassy at the United Nations offered no comment yesterday when asked.

A spokeswoman at the United Nations, Nancy Groves, yesterday also declined to comment. "I would not make a comment on how the member states vote on appointments. It is their council, they make their decisions," she said.

Mr. Falk's selection to the post as rapporteur has already prompted the government of Israel formally to request that Mr. Falk not be sent to their country. The Israeli press has reported that he may even be barred from entering the country.

The deputy permanent representative of Israel to the United Nations in New York, Daniel Carmon said, "We are asking the U.N. not to send him. We cannot agree to Mr. Falk's entrance into Israel in his capacity as the rapporteur."

One reason the Israelis are concerned about his appointment is that Mr. Falk has compared Israel's treatment of Palestinian Arabs to the Nazi treatment of Jews in the holocaust. In an April 8 BBC interview, Mr. Falk said he stood by the Israel-Nazi comparison.

The national director of the Anti-Defamation League, Abraham Foxman, issued a statement yesterday saying, "This was clearly a singularly inappropriate choice for this position. Falk's startling record of anti-Israel prejudice should have been enough to preclude him from a position where an unbiased observer is needed to report on the status of human rights in the territories."

In a February 16, 1979, op-ed for the New York Times, Mr. Falk praised Ayatollah Khomeini and bemoaned his ill treatment in the American press. He wrote, "The depiction of him as fanatical, reactionary and the bearer of crude prejudices seems certainly and happily false."Nearly nine months later, student followers of Khomeini invaded the American embassy in Tehran and held 52 diplomats hostage for the following 444 days.

Germany Cancels Biofuels Plans.

2008-04-11T04:24:00.000-07:00

Earth Times:

Berlin - Amid growing fears that biofuel farming is harming the environment and driving up world food prices, Germany cancelled on Friday plans to mix more ethanol made from plants with petrol. Environment Minister Sigmar Gabriel said the decision was taken because 10 per cent ethanol in petrol would rot the hoses and gaskets of millions of auto engines. But he said an order for diesel fuel to contain 7 per cent ethanol remained in place.

Gabriel rejected accusations of blundering and cast blame on car manufacturers for not telling him in time that 3 million engines were vulnerable if the current ethanol supplements were increased.

He said he refused to force millions of German motorists to buy a more expensive, ethanol-free grade of petrol.

At a news conference, he acknowledged the wider criticism of ethanol, saying, "It's now being asked if producing ethanol actually causes more damage to the climate than the fuel it is meant to replace."

The change of mind over petrol means Germany must reduce its overall 2009 target for biofuel addition to motor spirits from 6.25 per cent to 5 per cent, as measured by by energy yield, Gabriel said.

But he insisted a European Union target of 10 per cent overall by 2020 remained achievable. The conversion to ethanol had been hailed as an indirect way of reducing Europe's carbon-dioxide emissions.

There has been a storm of criticism of Gabriel, a Social Democrat, since he foreshadowed the climbdown on Wednesday. Opponents said he ought to have known much sooner about the ethanol problems.

Biofuel plans are under attack round the world because of forest clearances and because of the recent run-up in world grain prices. India banned rice exports Monday in response to the shortage.

Economists say the diversion of land to fuel growing is reducing the world's potential to grow food at a time when grain demand in Asia is soaring.

Iraq, Iran and Oil for Dummies feat Prof. Palast

2008-04-09T16:15:00.000-07:00

India, Venezuela Sign Energy Pact.

2008-04-09T14:22:00.000-07:00

There goes Exxon's oil. Wave, Exxon.

India has signed a five-year, $400m joint venture with Venezuela to drill for oil and gas in Venezuela's south-eastern Orinoco region, officials say.

The state-owned Petroleos de Venezuela (PDVSA) will hold a 60% stake, and India's Oil and Natural Gas Corporation (ONGC) will control the remaining 40%.

The ONGC will invest $450m in the project.

Venezuela is Latin America's leading oil producer, with an estimated 100 billion barrels of crude oil reserves.

The venture is likely to double Orinoco's oil production to 60,000 barrels a day.

'First step'

Venezuelan officials say that the deal is expected that production will start within three years, and that the project will yield 232 million barrels of crude over the next 25 years.

"It's the first association agreement between the two countries," said Venezuelan Oil and Energy Minister Rafael Ramirez, adding that it was "a first step" towards further energy cooperation.

The Fading US Economy.

2008-04-09T13:12:00.000-07:00

By Paul Craig Roberts

09/04/08 "ICH " --- - According to the Bureau of Labor Statistics, the US economy lost 98,000 private sector jobs in March, half of which were in manufacturing. Today 13,643,000 Americans are employed in manufacturing, of which 9,849,000 are production workers.

Government employs 22,387,000 Americans, 8,744,000 more than manufacturing. Even the category leisure and hospitality employs 13,682,000 Americans, slightly more than manufacturing. There are as many waitresses and bartenders as production workers.

Wholesale and retail trade employ 21,467,000 Americans. Professional and business services employ 18,036,000 Americans of which 8,368,000 are in administrative and waste services. Education and health services employ 18,699,000 Americans.

Financial activities employ 8,228,000 Americans. The information sector employs 3,010,000. Transportation and warehousing employ 4,532,000. Construction employs 7,338,000, and natural resources, mining and logging employ 751,000. Other services such as repair, laundry, and membership associations employ 5,516,000 Americans.

This is the portrait of the US economy according to the Bureau of Labor Statistics. It is an economy in which government is the largest employer. Manufacturing employment comprises just under 10% of total employment and about 12% of private sector employment. Everything else is services, and not particularly high level services.

Is this a portrait of a super economy?

To help answer the question, consider that US imports in 2007 were 17% of US GDP, according to the National Income and Product Account tables provided by the Bureau of Economic Affairs. In contrast, the BEA industry tables show that in 2006 (2007 data not yet available) US manufacturing comprised only 11.7% of US GDP.

If US imports actually exceed total US manufacturing output by 5% of GDP, it does not seem possible that the US can close its massive trade deficit. Even if every item manufactured in the US was exported, the US would still have a large trade deficit.

The NIPA and industry tables from which the percentages come are not calculated identically, and I do not know to what extent differences might exaggerate the differences between the percentages. However, it seems unlikely that mere calculation differences would account for US imports exceeding US manufacturing output.

If the US cannot close its trade deficit, it is unlikely that the US dollar can remain the world reserve currency. If the dollar were to lose the reserve currency role, the US government would not be able to finance its annual red ink budget by borrowing from foreigners, as the US saving rate is about zero, and the US would not be able to pay its import bill in its own currency. The rest of the world continues to hold depreciating US currency, because the dollar is the world reserve currency. The dollar is certainly not a good investment having declined dramatically against other traded currencies.

From March 2007 to March 2008 the US economy created 1.5 million new jobs (in services). Legal and illegal immigration and work visas for foreigners exceed US job creation.

During the current school year, 3.3 million high school students are expected to graduate. If we assume that half will go on to college, that leaves 1.6 million entering the work force. College enrollment in 2007 totaled 18 million. If we assume 20% graduate, that makes another 3.6 million job seekers for a total of 5.2 million. Clearly, immigration, work visas, and high school and college graduates exceed the 1.5 million jobs created by the economy. Unless retirements opened up enough jobs for graduates, the unemployment rate has to rise.

The US unemployment rate is creeping up, and according to John Williams, the official unemployment rate greatly understates the real rate of unemployment. Williams has followed the changes that government has made to the official indices over the years in order to spin a more politically palatable picture. Williams uses the original methodology prior to the decades of spin. The original way of measuring unemployment indicates the current rate of unemployment in the US to be 13%, much higher than the 5.1% official number. http://www.shadowstats.com/alternate_data

Williams also calculates the CPI according to the same way it was officially calculated prior to the recent decades of spin. Williams estimates the current CPI at 12%, three times higher than the official 4% figure.

Williams reports that upward growth biases built into GDP modeling since the early 1980s “have rendered this important series nearly worthless as an indicator of economic activity.” http://www.shadowstats.com/article/57 Williams estimates that US GDP growth has been in negative territory during almost all of the 21st century. The notion that the US is just now entering a recession is nonsense if we have in fact been in recession for most of the 21st century.

America’s post-World War II economic dominance was based on the destruction of other economies by war and socialism. It is a different world now, and Americans have given little thought to the economic challenges of the 21st century.

The Swiss are the New Al Qaeda, and Iran is their Bin Laden.

2008-04-08T10:06:00.000-07:00

"A major US Jewish organization on Tuesday stepped up opposition to a multibillion-dollar Swiss-Iranian natural gas deal by claiming it makes Switzerland "the world's newest financier of terrorism."

'When you finance a terrorist state, you finance terrorism,'' said the New York-based Anti-Defamation League in full-page advertisements in major Swiss newspapers and in similar ads in The New York Times, The International Herald Tribune and The Wall Street Journal.

The US government and the World Jewish Congress have criticized Switzerland for the deal, saying it gives encouragement to Tehran's hard-liners.

"ADL is concerned that Iran's profits from the energy deal could help the regime to accelerate and complete its nuclear weapons program and provide tens of thousands of additional missiles to Hizbullah and Hamas, two terrorist groups and sworn enemies of Israel who routinely benefit from Tehran's largess," said a statement on the league's Web site."

The problem with the ADL is not their chutzpah, though they clearly have that in abundance, but rather that their hysterical accusations of anti-semitism are becoming laughable because their charges are just outlandish. Israel's own policies in the region are threatening her very existence.

But back to the main point: It is not anti-semitic to have business ties with Iran.

Case in point, this story:

"Israel imports Iranian oil on a large scale even though contacts with Iran and purchasing of its products are officially boycotted by Israel. Israel gets around the boycott by having the oil delivered via Europe. A reliable Israeli energy newsletter, EnergiaNews, reported this last week [March 18] ...

"EnergiaNews got the information about the Iran trade from sources with ties to the management of Israeli Oil Refineries Ltd ... According to EnergiaNews the Iranian oil is liked in Israel because its quality is better than other crude oils.

"The report by EnergiaNews editor Moshe Shalev states that the Iranian oil reaches various European ports, mainly in Rotterdam. It is bought by Israelis and the necessary European bill of lading and insurance papers are supplied. Then it is transported to Haifa in Israel. The importer is the Eilat-Ashkelon Pipeline Co (EAPC), which keeps its oil sources secret." (Guardian)

Where's your righteous indignation now, ADL? Shitheads.

And let's not forget terror and violence being perpetrated by Israel against Iran, with the assistance of sympathetic groups such as the MEK and PJAK. That terrorism doesn't get mentioned.

So, Who's Going to Jail Here?

2008-04-05T07:51:00.001-07:00

VANCOUVER — — The Purdy Crawford-led road show for commercial paper investors reached a dramatic crescendo yesterday as the rarely frazzled lawyer appeared to lose his cool, raising his voice to tell one angry questioner that more would be done for individual investors.

Mr. Crawford faced his largest and most vocal crowd by far in Vancouver as he wrapped up the five-city cross-country tour he undertook to present to investors the plan his committee came up with to fix Canada's frozen $32-billion commercial paper market.

Many investors said it wasn't enough. One woman cried after telling Mr. Crawford she had to go back to work at age 65 because of her third-party asset-backed commercial paper investments.

Mr. Crawford's breaking point appeared to come as Bill Galine, executive vice-president of Universal Uranium Ltd., lobbed in a number of questions, including "who is going to jail here?"

Edwards Won't Endorse Either Candidate.

2008-04-04T07:30:00.000-07:00

LAS VEGAS (Reuters) - Former Democratic presidential candidate John Edwards said on Thursday he would not accept the nomination for U.S. vice president as he did four years ago.

Edwards, a former senator from North Carolina, dropped out of the 2008 race that is still being contested by the two remaining Democrats, Barack Obama and Hillary Clinton, to see who represents the party in the November 4 general election.

One day Edwards is belting out fiery anti-corporate stump speeches, saying he's "in it till the end" and then he disappeared-- he was nowhere to be found. He was likely threatened, which would explain his sudden and unanticipated withdrawal, not to mention the subsequent vanishing act. That would also explain why he doesn't want to get involved with either of the factions vying for control. Fair play, really.

China's Great Leap Into Gold.

2008-04-03T03:05:00.000-07:00

GOLD-BUG fever is spreading.

From China to the Middle East, new ways to invest in gold are rapidly popping up in developing countries.

It's transforming the market for one of mankind's most venerable ways to sock away wealth.

The door is opening to a new class of investors who previously wouldn't have had access to gold futures and other tools.

Their rush to invest has helped fuel soaring prices - gold crossed $US900 an ounce for a time in the past week, and there are some calls for $US1000 - while adding volatile new dynamics to the market.

On January 9, thousands of Chinese investors jumped into the bullion market when the country's first gold futures contract were launched. Futures are agreements to buy or sell something at an agreed upon price in the future, and are traditionally the domain of the pros, not individuals. [...]

A slew of other new investments like these are planned in markets from Dubai to Mumbai.

In India, the top lender, State Bank of India, plans this year to launch an exchange traded fund that focuses on gold - enabling investors to trade gold much like a regular stock.

The World Gold Council, a London-based gold-mining industry group, says it is seeking to roll out its first gold ETF in Dubai this year, pending regulatory approval.

Last August, the Osaka Securities Exchange in Japan rolled out a gold-linked bond aimed at smaller investors. [...]

Chinese officials have suggested their country's growing demand for commodities is a reason that its three commodity futures exchanges should play a greater role in global pricing.

Sun Zhaoxue, chairman of China Gold Association, is quoted on the Shanghai Futures Exchange's website as saying the new gold contract will "improve China's influence on the global metals market and pave the way for China to set the prices in the market".
(The Australian)

George W. Bush Sewage Plant proposed in SF

2008-04-03T02:52:00.000-07:00

"Looking to honor the forty-third President of the United States of America, George W. Bush, the recently formed Presidential Memorial Commission of San Francisco is looking to change the name of the Oceanside Wastewater Treatment Facility. It seems the group would like to rename the SF Zoo adjacent facility to the 'George W Bush Sewage Plant,' SFist reports. The grassroots movement is "proposing an ordinance initiative for the November 2008 San Francisco ballot" (HuffPo)

Through the Looking Glass.

2008-04-03T02:42:00.001-07:00

That's where we've gone. Check out these headlines:

Karl Rove said he's 'lived in fear' of Barbara Bush

Cheney Nixed Ban on Chemical Weapons

Secret Memo Justifies Warantless Surveillance after 9/11

Docs Show Pentagon Now Using FBI to Spy on Americans.

High Level Bush Officials Pressured Underlings to Use Torture.

All on one day, and all from the same site(Raw Story).

This upcoming election is such a spectacle that people don't even pay attention to these stories anymore. All I know is, none of the candidates is talking about these most important stories(except the Barbara Bush one).

Ron Paul Lectures Bernanke About Fascism.

2008-04-02T22:45:00.000-07:00

Where We're At.

2008-03-30T21:13:00.000-07:00

Courtesy Mish:

Housing is imploding.
There are $500 Trillion in derivatives that no one can possibly understand the financial risks on.
A huge portion of those derivatives are with JP Morgan (JPM).
Bear Stearns stock went from $170 to $10 in a year in Shotgun Wedding between Bear Stearns and JP Morgan arranged by the Fed
Questions Linger Over Lehman's Balance Sheet as Lehman Brothers (LEH) is leveraged 31.7 times.
Citigroup (C) had to be bailed out by Abu Dhabi Deal Raises Questions About Citigroup's Health
Merrill Lynch needed $6.6 Billion Bailout From Kuwait, Mizuho.
Cost of Capital "Ratchets Up" at Citigroup and Merrill
Morgan Stanley (MS) sold 9.9% of the firm to China after handing out huge bonuses.
People are walking away from homes
Businesses Are Advised To Walk Away from agreed upon deals.
There is an open public debate on Moral Obligations Of Walking Away
1 in 10 of the entire state of Ohio is on food stamps.
Florida, Ohio, and Michigan are in an economic depression.
There is No market for Asset Backed Commercial Paper (ABCP)
German Banks Fears Global Meltdown caused by US subprime debt
There is a $1.1 Trillion HELOC Problem
Unemployment is poised to soar.
Commercial real estate is massively overbuilt and poised to plunge.
Goldman Sachs (GS) is calling for another $460 billion in writedowns.
The SEC Openly Invites Corporations To Lie.

Iranian Navy Receives Stealth-Capable Submarine.

2008-03-30T20:11:00.001-07:00

RIA Novosti:

TEHRAN, November 28 (RIA Novosti) - Iran's Navy commissioned Wednesday a domestically designed and produced light submarine featuring extended stealth capability and strong firepower, state television reported.

The submarine, dubbed Ghadir, is reportedly fitted with noise-reduction features and is capable of firing missiles and torpedoes simultaneously.

"This submarine is equipped with advanced weapons and electronics systems. It has been developed in the last decade by [Iranian] scientists and engineers," a TV program quoted Navy commander, Admiral Habib Sayyari, as saying.

The admiral also said the Navy commissioned a destroyer and a missile boat.

According to various intelligence reports, Iran has been spending a considerable share of its defense budget on modernizing its naval forces over the last decade.

"The Iranian Navy - surface ships, submarines and naval bases - is equipped with all the necessary modern weaponry, including missiles," Sayyari said. "Their [the missiles] range is sufficient to protect effectively our southern flank in the Persian Gulf."

In a separate development, Iran, which received no invitation to the Mideast peace conference in Annapolis, announced on Tuesday that it had produced a ballistic missile with a range of 2,000 kilometers (1,240 miles). The missile's range would allow it to reach Israel, as well as United States military bases in the Middle East.

Russia and Japan Form Nuclear Alliance

2008-03-30T20:05:00.000-07:00

The plot thickens. America's military is tied up and bloodied. America's banks are enfeebled by financial fraud and are insolvent. Next play: move in on America's corporations.

RIA Novosti:

MOSCOW. (RIA Novosti commentator Tatyana Sinitsyna) - Paris is in shock: nuclear giants Atomenergoprom and Toshiba have decided to form an alliance in civilian nuclear power operations, including power plant construction and fuel production.

The two companies signed a framework agreement last week, under which the Russian company will enrich uranium produced in Kazakhstan, while Toshiba will produce nuclear fuel and undertake the designing and engineering of nuclear power plants.

The firms may establish a strategic partnership in the future, Toshiba said. By securing a stable supply of nuclear fuel through the alliance with Atomenergoprom, Toshiba hopes to sharpen its competitive edge.

Experts predict that the alliance will become the world's leader in the nuclear sector.

Previously, the market was divided between four players: the French-German alliance of Areva and Siemens, two American-Japanese groups, Toshiba-Westinghouse and GE-Hitachi, and Russia's Atomenergoprom.

The Russian-Japanese alliance will cut the number of players to three. Moreover, Toshiba now owns a 70% stake in Westinghouse.

John Cusack on Real Time.

2008-03-30T15:25:00.000-07:00

When a Superpower Goes Mad.

2008-03-30T03:40:00.000-07:00

Consortium News:

During the post-World War II trials at Nuremberg, the United States led the world in decrying aggressive war as “the supreme international crime differing only from other war crimes in that it contains within itself the accumulated evil of the whole.”

Yet, Frontline and other mainstream U.S. news outlets shy away from this central fact of the Iraq War: by invading Iraq without the approval of the U.N. Security Council and under false pretenses, the Bush administration released upon the Iraqi people “the accumulated evil of the whole” – and committed the “supreme” war crime.

An obvious reason why the mainstream U.S. press can’t handle this truth is that to do so would mean that President Bush, Vice President Dick Cheney, a host of other U.S. officials and even some prominent journalists could be regarded as war criminals.

To accept that reality would, in turn, create a moral imperative to take action. And that would require a great disruption in the existing U.S. power structure, which hasn’t changed much since Bush won authorization from Congress in October 2002 to use force and then invaded Iraq in March 2003.

Not only are Bush and Cheney still in office – and two of the three remaining presidential candidates, John McCain and Hillary Clinton, voted for the war – but the roster of top Washington journalists remains remarkably intact from five years ago.

UN: Syria Did Not Kill Former Lebanese PM

2008-03-30T03:37:00.000-07:00

CCNWO: UN panel says Hariri killed by "criminal network"

WMR previously reported that the "criminal network" was composed of Lebanese and rogue Syrian intelligence agents connected to Israel's Mossad and a White House operation run by National Security Council senior staff member Elliott Abrams, the formerly convicted Iran-contra figure.

Although for political reasons the UN refrained from identifying the members of the "criminal element," WMR has reported it included rogue Syrians, Druze, and Palestinian intelligence operatives in Lebanon, as well as mercenaries linked to now jailed international arms smuggler Viktor Bout and members of the Russian-Israeli "organizatsiya" criminal syndicate.

WMR was criticized by the neocon press when it first reported on the actual elements behind Hariri's assassination and charges of "anti-Semitism" were the rule rather than the exception.

The UN revelations about Hariri's assassination removes a large predicate being pushed by the neocons for a military attack on Syria."

Nouriel Roubini: Superbear Says More to Come.

2008-03-29T00:49:00.000-07:00

By Janet Morrissey March 24, 2008, Investment News

Nouriel Roubini, one of the biggest bears on Wall Street, wasn't surprised by the fire sale at The Bear Stearns Cos Inc. of New York. He said it just reinforces his 12-point gloom-and-doom outlook, which he unleashed on Wall Street in February, and he now thinks that total financial losses in the credit debacle may top the $1 trillion he previously projected.

Mr. Roubini, 49, a professor at New York University's Stern School of Business and founder of RGE Monitor, a New York-based economic research firm, was met by skepticism when he first predicted a downturn in a July 2006 report, "A Coming Recession in the U.S. Economy." Today, few doubt his early insight.

Since then, his predictions have become even more dire, with forecasts of mounting financial losses and a possible "catastrophic" meltdown in U.S. financial markets.

Mr. Roubini's 12-point outlook forecasts that housing prices will plummet 20% to 30% from their peak, subprime mortgage losses will exceed $300 billion and credit losses will spread outside the subprime arena to credit cards, auto loans and other areas.

He further expects monoline companies, which insure against defaults on certain municipal bonds and mortgage-related securities, to be downgraded, leading to more write-downs.

Other predictions include a meltdown in commercial real estate (see story, Page 44), a wave of defaults on corporate debt and credit default swaps and a sharp drop in liquidity, which could lead to fire sales of assets.

Reached by phone in Stockholm, Mr. Roubini spoke about current conditions and what he expects next.

Q. You have been quite bearish about the economy and financial markets. What was your reaction to the takeout of Bear Stearns?

A. It was not a surprise to me. Last month, I wrote a piece on 12 steps to financial disaster and my Step 9 said that one or two major financial or broker-dealer firms would go belly up, so I saw it coming, quite frankly. I put it in the context of a shadow financial system that is composed of not just broker-dealers, but hedge funds, money market funds, SIVs, conduits and so on that are all subject to a liquidity risk in addition to the credit risk. So, to me, this is just the beginning of a generalized run on these.

Q. Will we see more major banking institutions collapse or get taken out at fire sale prices?

A. Certainly some of the other broker-dealers, like Lehman Brothers [Inc. of New York], have exposure to toxic stuff like mortgage-backed securities and collateralized debt obligations, as Bear Stearns did. And all of the institutions have the characteristics of being highly leveraged, having funded themselves in forms that are very short and liquid and having done investments that are now highly liquid and highly risky. So I see other institutions being at risk — absolutely.

Q. The Fed agreed to provide financing of up to $30 billion to cover the Bear assets that were less attractive to JPMorgan Chase & Co., and this marked the first time the Fed has offered a bailout to a non-regulated bank since the Great Depression. Are you concerned?

A. It's the beginning of a radical change in monetary policy. It's not just the $30 billion that the Fed confirmed to Bear Stearns via JPMorgan — there were two other major options that went in the same direction. One was the decision [two weeks ago] to provide $200 billion so that all primary dealers, including non-bank financial institutions, would be able to swap their illiquid and toxic MBS [paper] for safe Treasuries. The other was the Fed giving any primary dealer, including non-banks, access to the Fed discount window on the same terms as banking institutions. This is a radical change; we haven't seen anything like this since the Great Depression.

These are financial institutions that are not regulated or supervised by the Fed. The Fed has no idea of whether they are just illiquid or insolvent, which creates a massive moral hazard problem. It's a radical shift in the way the Fed operates — and a dangerous way, I would argue.

Q. Dangerous in what way?

A. You're telling people that even if they have made reckless lending and investment decisions, mismanaged risk or continue to do stupid things, the government will bail them out. We are in a systemic financial crisis.

Q. In your 12-step prediction, you estimated total financial losses from subprime lending, credit cards and auto loans at $1 trillion. Has your view changed after Bear Stearns?

A. The losses that we're facing at this point — $1 trillion — is the floor, not the ceiling. Losses might be much bigger than that. Even if you believe subprime losses might be in the order of $300 billion to $400 billion, more losses are going to be derived from commercial real estate, credit cards, auto loans, student loans and leverage loans, as well as from corporate defaults and losses from city assets.

Eventually the monolines will be downgraded, which means we'll see another round of write-downs on the things that they insured.

Q. Where are home prices going?

A. Two years ago, I predicted home prices would fall cumulatively 20%, but now I believe it will be at least 30%.

With a 20% fall in home prices, about 16 million households are under water. They have negative equity, which means the value of their homes is below the value of their mortgages. With a 30% drop in prices, you have 21 million households that are in negative equity. And since the mortgages are no-recourse loans, essentially they can walk away.

Even if only half of the 16 million households were to walk away, that alone could lead to losses for the financial system of $1 trillion. Even a 20% drop in home values may imply losses of $1 trillion that are not priced into the market today. So that's the floor. Again, it could be higher — as much as $2 trillion — if prices fall 30% and more people walk.

Q. You are predicting problems in commercial real estate, which we haven't seen yet. When do you expect the crisis to hit?

A. The same kind of reckless lending practices that occurred in subprime also occurred in commercial real estate — things like really high loan-to-value ratios and inflated estimations of how much rent would increase. If you look at the CMBX index (which tracks bonds backed by real estate loans), the spreads imply a huge number of defaults on existing commercial real estate loans. More important, the market for new commercial real estate loans is totally frozen, like the one for subprime new originations.

Q. But when will this happen?

A. That shoe has not dropped yet. But I expect the severe recession in residential housing will lead to a severe recession in commercial real estate. The reason is simple: If you go west, you have entire ghost towns outside of Phoenix, Las Vegas and throughout California. Who is going to be building new shopping centers, shopping malls, offices and stores where you have ghost towns? Also, there has been a lot of commercial real estate activity in the last couple of years, including a huge increase in retail capacity at a time of consumer-led recession. So, I expect [a commercial real estate] collapse will occur in the next few quarters.

Q. How bad will things get?

A. I would argue this is the worst financial crisis the U.S. has had since the Great Depression. We haven't seen this type of real financial turmoil for the last 70 years. Of course, it's not going to be as bad as the Great Depression. But this isn't your typical run-of-the-mill recession that in the last two episodes lasted only eight months with a minor contraction in output. This is going to last at least 12 months and more likely 18 months, which is something we haven't seen in decades.

Q. So you expect the economy to start turning around in mid-2009?

A. The real economic activity, yes. But some parts of the system are going to be in a severe contraction for much longer; home prices are going to keep falling for another three years, in my view. And the financial mess is going to take years to clean up.

Pakistan Beware: They Are Cornering China

2008-03-28T21:37:00.000-07:00

28/03/08 "Global Politician" -- -- ISLAMABAD, Pakistan—Next to her bad Collagen-injected facelift job, Nancy Pelosi has given us one of the worst lessons in deceitful diplomacy on behalf of the United States. Pelosi, who is third in line of power in Washington after George Bush and Dick Cheney, flew halfway around the world to our neighborhood last week. Her mission? To further stoke the fire in China’s Tibet.

Tibet is striking a nerve in Islamabad because it is a classic example of the oldest trick in modern espionage: a host country, India, facilitates a superpower, the United States, to use Indian soil to create and sustain ethnic unrest in Tibet, China’s backwater joined at the hip with India.

For Islamabad, it’s déjà vu. Last year, a calculated U.S. media blitz and suspected espionage helped American strategists plead the case for military intervention in Pakistan. A false case was built around Pakistani nukes. Now it’s Beijing’s turn. And the pretext is Tibet which erupted in flames surprisingly just in time to tarnish China’s impressive 2008 Olympic preparations.

We in Pakistan are too busy to pay attention. But let’s remember: The politicization of the 1936 Berlin Olympics by the United States and Britain helped spark a world war three years later. Washington is convinced that China’s economic rise is undermining its political and economic hegemony. China must be drawn into a conflict sooner than later.

This is not a false alarm. Tibet can never emerge as an issue without the primary western support. The only non-western country playing a dirty role in this charade is India, host to the wily Dalai Lama, aptly described by the people who know him as a ‘wolf in a monk’s garb.’

Led by the Americans, the western bloc is all set to spoil the Beijing Olympics. The western rhetoric over Tibet is just a smokescreen that hides a disgustingly larger agenda that goes as far as stopping Chinese investments in African oilfields, where the Americans and the British are dazed at how the Chinese have outspent them on buying up oil concessions.

As soon as the riots erupted in Tibet, Ms. Pelosi, the first woman speaker of the U.S. House of Representatives, dashed to New Delhi to meet the Dalai Lama. No question here about how urgent the matter is for U.S. foreign policy. More nauseating was her self-righteous sermon on Tibet. “If freedom loving people throughout the world do no speak out,” she said, “we have lost all moral authority to speak on human rights anywhere in the world.” This coming from a country that stands culpable for the murder of almost 300,000 Iraqis in five years of brutal American occupation.

Once Ms. Pelosi set the tone, ganging up on China was just a matter of tactics. John McCain, quietly being groomed by Mr. Bush to take the reigns in Washington, leaving Obama and Clinton to slug it out till death, was quick to say in Paris that “mistreatment” in Tibet was an “unacceptable conduct for a world power.” Says who? The United States?

And now it’s getting outright dirty. Britain’s former defense minister, Michael Portillo, a celebrated gay who bowed out after a scandal in the 1990s, turned on Sunday into a Mafiosi and openly asked western countries to blackmail China using Tibet against the Olympics. In a London newspaper, he came out with this headline, ‘Tibet: the West can use the Olympics as a weapon against Beijing.”

Opening a new front to punish China’s economic might, and as a proof that this anti-China campaign is deeply malicious, Steven Spielberg, hired by the Chinese as a creative consultant for the opening ceremony of the Olympics, resigned from the assignment to protest China’s huge investments in oilfields in Sudan. Mr. Spielberg’s excuse is that Sudan is embroiled in Darfur.

Of course no American journalist will ask Mr. Spielberg how come his snub to China is calculated to coincide with the Tibet riots? Surely he could have taken this principled stand before getting his advance payment from the Chinese government. Darfur is an old story after all. Nothing new about Hollywood becoming another discreet instrument of U.S. foreign policy.

This blackmail against China is so widespread that ‘report cards’ are being issued in the U.S. giving failing grades to companies that sponsor Beijing Olympics and don’t take a stand over Darfur, the oil-rich part of Sudan that Washington wants to see separated, to protect human rights of course.

The hypocritical posturing by the bigwigs – Ms. Pelosi, Mr. Spielberg, and Mr. McCain – hides the ugly reality of what the Dalai Lama and his U.S.-sponsored separatists have done during the Tibet riots. They burned five young waitresses alive in a restaurant. They snatched a young Chinese boy from his father, put him on the ground and then stomped on his chest and abdomen. An ethnic Tibetan doctor who tried to save the Chinese boy’s life was beaten by Dalai Lama’s insurgents. The Tibetan doctor is hospitalized in Lhasa, the Tibetan capital. The kid couldn’t make it. How about the infant who was burned alive in her parents’ apartment set on fire by the separatists? Ms. Pelosi won’t see this of course. The agenda trumps everything else.

And please don’t believe the U.S. propaganda depicting the riots as some kind of a Tibetan backlash against Chinese oppression. Lhasa, the Tibetan capital, is far ahead in modernization than India’s biggest northern cities across the border. This is the place where China spent a staggering U.S. $ 4.1 billion just to build the world’s highest rail track, a luxury service stretching 1,142km from Beijing to Lhasa. It’s part of an elaborate Chinese vision to ‘open up’ the country’s sparsely populated western regions and make them key to China’s growth in the 21st century.

The western focus now is to push the Chinese government to make one wrong move so that Washington and other ‘allied’ governments could drag Beijing into a costly confrontation. The good news is that no Chinese citizen, even those third- or fourth-generation Americans, joined this anti-China campaign. Over the weekend, only 150 anti-China protesters showed up at a park in California. That’s less than the customers of any Chinese restaurant in San Francisco’s ‘Little China’.

In Pakistan, we should be worried at this fresh push to corner China. It is in our interest not to allow this. And the best way to do it is through diplomacy and media. With the massive failures of our state-run media, the onus lies with Pakistan’s vibrant independent television networks to help spread the message. They will get their chance on April 16, when the Olympic torch reaches Islamabad.

Last year, they destabilized us. Today it’s China. The tactics are the same. Let’s keep our eyes open.

Ahmed Quraishi is a Pakistani public affairs professional. He heads the Pakistan Task Force at FurmaanRealpolitik, an independent Pakistani think tank based in Islamabad. He also produces and hosts a weekly foreign policy show for PTV World.

Cheney's Portfolio Revisited.

2008-03-28T20:10:00.000-07:00

An old one from Mike Whitney: Is Cheney Betting on Economic Collapse?

Wouldn't you like to know where Dick Cheney puts his money? Then you'd know whether his "deficits don't matter" claim is just baloney or not.

Well, as it turns out, Kiplinger Magazine ran an article based on Cheney's financial disclosure statement and, sure enough, found out that the VP is lying to the American people for the umpteenth time. Deficits do matter and Cheney has invested his money accordingly.

The article is called "Cheney's betting on bad news" and provides an account of where Cheney has socked away more than $25 million. While the figures may be estimates, the investments are not. According to Tom Blackburn of the Palm Beach Post, Cheney has invested heavily in "a fund that specializes in short-term municipal bonds, a tax-exempt money market fund and an inflation protected securities fund. The first two hold up if interest rates rise with inflation. The third is protected against inflation."

Cheney has dumped another (estimated) $10 to $25 million in a European bond fund which tells us that he is counting on a steadily weakening dollar. So, while working class Americans are loosing ground to inflation and rising energy costs, Darth Cheney will be enhancing his wealth in "Old Europe". As Blackburn sagely notes, "Not all bad news' is bad for everybody."

This should put to rest once and for all the foolish notion that the "Bush Economic Plan" is anything more than a scam aimed at looting the public till. The whole deal is intended to shift the nation's wealth from one class to another. It's also clear that Bush-Cheney couldn't have carried this off without the tacit approval of the thieves at the Federal Reserve who engineered the low-interest rate boondoggle to put the American people to sleep while they picked their pockets.

Reasonable people can dispute that Bush is "intentionally" skewering the dollar with his lavish tax cuts, but how does that explain Cheney's portfolio?

It doesn't. And, one thing we can say with metaphysical certainty is that the miserly Cheney would never plunk his money into an investment that wasn't a sure thing. If Cheney is counting on the dollar tanking and interest rates going up, then, by Gawd, that's what'll happen.

The Bush-Cheney team has racked up another $3 trillion in debt in just 6 years. The US national debt now stands at $8.4 trillion dollars while the trade deficit has ballooned to $800 billion nearly 7% of GDP.

This is lunacy. No country, however powerful, can maintain these staggering numbers. The country is in hock up to its neck and has to borrow $2.5 billion per day just to stay above water. Presently, the Fed is expanding the money supply and buying back its own treasuries to hide the hemorrhaging from the public. Its utter madness.

Last month the trade deficit climbed to $70 billion. More importantly, foreign central banks only purchased a meager $47 billion in treasuries to shore up our ravenous appetite for cheap junk from China.

Do the math! They're not investing in America anymore. They are decreasing their stockpiles of dollars. We're sinking fast and Cheney and his pals are manning the lifeboats while the public is diverted with gay marriage amendments and "American Celebrity".

The American manufacturing sector has been hollowed out by cutthroat corporations who've abandoned their country to make a fast-buck in China or Mexico. The $3 trillion housing (equity) bubble is quickly loosing air while the anemic dollar continues to sag. All the signs indicate that the economy is slowing at the same time that energy prices continue to rise.

This is the onset of stagflation; the dreaded combo of a slowing economy and inflation.

Did Americans really think they'd be spared the same type of economic colonization that has been applied throughout the developing world under the rubric of "neoliberalism"?

Well, think again. The American economy is barrel-rolling towards earth and there are only enough parachutes for Cheney and the gang.

The country has lost 3 million jobs from outsourcing since Bush took office; more than 200,000 of those are the high-paying, high-tech jobs that are the life's-blood of every economy.

Consider this from the Council on Foreign Relations (CFR) June edition of Foreign Affairs, the Bible of globalists and plutocrats:

"Between 2000 and 2003 alone, foreign firms built 60,000manufacturing plants in China. European chemical companies, Japanese carmakers, and US industrial conglomerates are all building factories in China to supply export markets around the world. Similarly, banks, insurance companies, professional-service firms, and IT companies are building R&D and service centers in India to support employees, customers, and production worldwide." ("The Globally integrated Enterprise" Samuel Palmisano, Foreign Affairs page 130)

"60,000 manufacturing plants" in 3 years?!?

"Banks, insurance companies, professional-service firms, and IT companies"?

No job is safe. American elites and corporate tycoons are loading the boats and heading for foreign shores. The only thing they're leaving behind is the insurmountable debt that will be shackled to our children into perpetuity and the carefully arranged levers of a modern police-surveillance state.

Welcome to Bush's 21st Century gulag; third world luxury in a Guantanamo-type setting.

Take another look at Cheney's investment strategy; it tells the whole ugly story. Interest rates are going up, the middle class is going down, and the poor dollar is headed for the dumpster. The country is not simply teetering on the brink of financial collapse; it is being thrust headfirst by the blackguards in office and their satrapies at Federal Reserve.

LOL

2008-03-28T04:12:00.000-07:00

The eXile:

Dear Vlad,

I was very "impressed" with your drunken arguments indulging in rhetorical ammunition to defend your point of Russia as emerging power in contrast with collapsing American empire with its massive "retarded" way of thinking. However, you'd rather stop looking into the mirror and look out of the window.

Here are some of my thoughts, based on some facts. I understand that it is very easy to blame your country's misfortunes on somebody else. As you claim that Yeltsin-era banking system collapsed under American guidance, so be it, but it was Russians not Americans who voted for Yeltsin for almost 8 years, reelecting him in 1994. If people were oblivious of Yeltsin being pro-Western and not suitable for the presidency then it was their own mistake to reelect him, as the States were maintaining their foreign policy in accordance with National Security program for which they were not to be blamed (every country has its right to maintain one). Besides Russians had opportunities to withstand American influence before the collapse of Soviet Union and allow the invisible hand of the market finally penetrate their state-controlled economy, which they failed to do. Blame bureaucrats, blame government, blame people longing for political and economic freedom.

It's nice you mentioned Russian "trade surplus", as it rises another argument. Commonly-known fact is that post-Soviet economy has been mostly about rising prices for its mineral recourses: country's trade surplus has been generated by its limited product range, making Russia another "Saudi-Arabia-type" country.

I am half-American, and somehow you hurt my feelings. Americans stand for reforms as well as effective national security programs. I know we are in need of change, but so do Russians with their persevering paranoia about nationalism and foreign aggressors. And I must disappoint you that there will be hundreds of years before our Power State collapses, as there are too many countries reliant on States' economy.

I understand you shifted from rational discourse to the emotionally-laden "pro-Russian"="anti-American" dispute, which is quite a standard practice. And I must be a complete dittohead to think you will publish my "retarded" response, as my prime concern was to defend my rights in the first place

Best regards,

Retarded Little Mind with Fat Fucking Face.

Mary Morgan

Dear Ms. Morgan,

Your letter is…like sex for us. We’ve worked years and years aiming for a perfect letter like this, a pure expression if there ever was one of The eXile causing a smug American to squeal in pure raw pain. You know, all the poverty, all the problems we go through, all of them are worth it when we get letters like yours. You’ve got a [sic] t-shirt coming your way. Wear it proud, Mary.

Awesome.

Don't get me wrong, I have no schadenfreude for any nation or its people, but Russia's been through hell and back since the fall of the CCCP, and Americans are, on the average, so ill-informed about Russia that they are more likely to recognize Putin as a modern day Hitler rather than the one man who's probably single handedly held off WWIII.

Occupations Are Not Won, They Are Ended.

2008-03-27T14:15:00.000-07:00

Watch this.

FEMA Drills for Nuclear Attack on US Soil.

2008-03-27T02:35:00.000-07:00

RAW STORY:

A once-abandoned town in the middle of the New Mexico desert now is victim to "more bombings than Jerusalem ... more terrorist attacks that Baghdad," the Associated Press reports.

A video report profiles Playas, NM, a full-scale training ground for Federal Emergency Management Agency classes that give law enforcement agencies experience dealing with all manners of disasters.

"Just a few years ago it was a ghost town abandoned after a large mining company pulled out," the AP's Rich Matthews reports. "Today, it's a training ground for the unthinkable: Nuclear attacks, invasions and suicide bombings in the United States."

If a nuke or dirty bomb detonates in the States, it will not be because of Iran or Syria or 'terrorists'.

Pakistan: "We're No Longer Your Killing Field"

2008-03-27T01:34:00.001-07:00

Guardian UK:

The Bush administration is scrambling to engage with Pakistan's new rulers as power flows from its strong ally, President Pervez Musharraf, to a powerful civilian government buoyed by anti-American sentiment.

Top diplomats John Negroponte and Richard Boucher travelled to a mountain fortress near the Afghan border yesterday as part of a hastily announced visit that has received a tepid reception.

On Tuesday, senior coalition partner Nawaz Sharif gave the visiting Americans a public scolding for using Pakistan as a "killing field" and relying too much on Musharraf.

Yesterday the new prime minister, Yousaf Raza Gilani, said he warned President George Bush in a phone conversation that he would prioritise talking as well as shooting in the battle against Islamist extremism. "He said that a comprehensive approach is required in this regard, specially combining a political approach with development," a statement said.

But Gilani also reassured Bush that Pakistan would "continue to fight against terrorism", it said.

Brazil: Staying Out of FTAA 'A Good Thing'.

2008-03-27T01:28:00.000-07:00

The largest regional power in Latin America just told the US to go suck it. Economically speaking, that is. And so they should. They're doing just fine.

Brazzilmag:

With Venezuela included Mercosur has "the potential of becoming a trade block of the whole of South America" said Brazilian Foreign minister Celso Amorim who also stated that keeping out of the Washington inspired Free Trade Area of the Americas, FTAA, "has been positive".

"With the incorporation of Venezuela, Mercosur potential is to become the common market or at the least the integration process for the whole of South America", underlined Amorim in an interview with Venezuelan and Brazilian television.

Brazilian president Luiz Inácio Lula da Silva begins today, March 26, an official visit to Venezuela where he will be meeting with his counterpart Hugo Chavez to discuss industrial and agricultural cooperation.

Regarding FTAA Amorim argued "it was better for Brazil not to join", because if not "we would have suffered the impact of the home and credit crisis in the United States".

Memories of Iran-Contra.

2008-03-26T22:01:00.000-07:00

Larisa Alexandrovna:

I am not sure how Bush (more likely his handlers) selected the following people for the rare Bush pardon, but I find the crimes of those selected most interesting. My comments about each person are pure speculation, but something to consider nevertheless:

William Marcus McDonald Wetumpka, Alabama
Offense: Distribution of cocaine, possession of cocaine with intent to distribute, use of cocaine, possession of cocaine, use of marijuana; Article 134, U.C.M.J.

Sentence: May 2, 1984; U.S. Air Force general court-martial convened at Moody Air Force Base, Georgia; four years confinement at hard labor, forfeiture of $300 pay per month for four years, reduction in rank to basic airman, and a bad conduct discharge.

So, an Air Force officer is running coke, during the period of Iran- Contra (not saying as part of Iran Contra, just the time-frame). I cannot find much on McDonald. Was he wrongly convicted? What is the reason for the pardon? He only got four years for distributing coke? Wow, assuming this guy was rightly convicted, seems to me that he got off rather light to begin with.

Robert Michael Milroy Cinnaminson, New Jersey
Offense: Importation of heroin; 21 U.S.C. §§ 960(a)(1), 952(a), and 843(b).
Sentence: April 2, 1975; Eastern District of Virginia; seven and one-half years imprisonment, six years special parole, and three years probation.

Again, the time-frame of the sentence is most intriguing. Again, the same questions apply with regard to why this man was pardoned.

William L. Baker Spokane, Washington
Offense: Distribution of a controlled substance, 21 U.S.C. §§ 841(a)(1), 841(b)(2); falsifying records, 21 U.S.C. §§ 827(a)(3), 843(a)(4).
Sentence: July 15, 1980; District of Wyoming; 24 months imprisonment, one year special parole.

Not a clue what this guy is about or why someone who served a two year sentence 28 years ago needs a pardon now. Was he wrongly convicted?

William Bruce Butt London, Kentucky
Offense: Bank embezzlement; 18 U.S.C. § 656.
Sentence: June 20, 1990; Eastern District of Kentucky; three years probation.

Okay, this guy never put a foot in jail. He got probation almost 20 years ago. But the time-frame would place this guy in the period of the S&L scandals. I am of course speculating, but since we are not yet given the reason for this and the other pardons, speculation will have to do for now - and a bit of Google-digging I think.

Mariano Garza Caballero Brownsville, Texas
Offense: Dealing in firearms without a federal firearms license; 18 U.S.C. §§ 922(a)(1) and (2).
Sentence: November 1, 1984; Southern District of Texas; 34 days imprisonment, four years probation, and a $1,000 fine.

This guy spent 34 days in jail over 20 years ago. Again, I have to ask why this man needs a pardon. Was he wrongly convicted?

A
nthony C. Foglio, Santee, California aka Tony Foley
Offense: Distribution of marijuana; 21 U.S.C. § 841(a)(1). Sentence:
October 15, 1996; Northern District of West Virginia; three years probation.

Yet another guy who appears to have served no jail time. Does anyone find this odd?

Carl Harry Hachmeister Denton, Texas
Offense: Conspiracy (to commit wire and mail fraud); 18 U.S.C. § 371.
Sentence: January 22, 1985; District of Utah; three years probation and $39,330 restitution.

And again another person who serves no jail time over 20 years ago.

Among all of the more pressing cases of people sitting on death row, our president pardons mostly drug dealers, an arms dealer, and an embezzler and fraudster, all of whom spent little to no time in prison to begin with, 20+ years ago at that. What, there were no better and more urgent candidates to pardon?

On a side note, two guys selling bird parts were pardoned as well. I think we need to do some digging into these people. Who suggested them and why? Consider the countless cases of wrongful conviction, or civil liberties violations, or an extreme sentence for a non-violent crime. Surely there are plenty of people who would be better served by a pardon, as would justice, no?

FOX Business Attacks Cramer.

2008-03-25T20:27:00.000-07:00

Wow.

Chavez to Start Charging IOCs a 'Windfall Tax'

2008-03-25T01:39:00.000-07:00

March 24 (Bloomberg) -- Venezuela, home to one of the world's biggest oil deposits, will add a new oil tax in response to crude's rise above $100 a barrel.

President Hugo Chavez said the government has already drafted a bill to pass the new windfall, or ``sudden gains'' tax. The rate the government will charge is still under discussion, the president said today in comments broadcast by state television.

Foreign oil companies in Venezuela ``are earning money that they haven't counted on in any calculation,'' Chavez said. ``It's not the product of any extraordinary effort.''

In 2006 and 2007 Chavez threw out oil contracts and forced companies including Chevron Corp. and Total SA to accept minority stakes in all oil projects. The new joint ventures are still restarting their drilling their programs and billing systems, according to company securities filings.

And why shouldn't he? Oil's the biggest power lever he wields, and BushCo is doing everything it can to antagonize Chavez.

Sinbad's Not Dead and Hillary's a Liar.

2008-03-25T01:15:00.000-07:00

Bob Parry of Consortium News:

To the dismay of some Hillary Clinton supporters, Consortiumnews.com has noted a disturbing trend in the candidate’s handling of the truth, as she and her advisers have exaggerated her accomplishments and sometimes distorted Barack Obama’s words.

The Washington Post reached a similar conclusion in awarding Sen. Clinton the maximum of “four Pinocchios” for telling a “whopper” in her claims about derring-do during her 1996 trip to war-torn Bosnia.

Sen. Clinton claimed to have undertaken the mission to Bosnia when it was considered too dangerous for her husband, then-President Bill Clinton.

In a speech at George Washington University on March 17, Clinton elaborated further: “I remember landing under sniper fire. There was supposed to be some kind of greeting ceremony at the [Tuzla] airport, but instead we just ran with our heads down to get into vehicles to get to our base.”

In a fact-checking article on March 22, the Post’s Michael Dobbs concluded that “Clinton's tale of landing at Tuzla airport ‘under sniper fire’ and then running for cover is simply not credible. Photographs and video of the arrival ceremony, combined with contemporaneous news reports, tell a very different story.”

Comedian Sinbad, who along with singer Sheryl Crow accompanied the then-First Lady, said the "scariest" part of the trip was deciding where to eat.

Heh. Sinbad's not dead. Who knew?

Paul Craig Roberts: America's Next 9/11

2008-03-24T15:25:00.001-07:00

Information Clearinghouse:

The investigative journalist Edward Jay Epstein has taken up the Litvinenko case.
The media used the Litvinenko case as sensational propaganda against Russian President Putin and then tossed it aside. For those whose memories of the case have faded, Alexander Litvinenko was a former KGB officer living in England who died in 2006, apparently from the radioactive isotope Polonium-210.

The British government encouraged the tale that Russian President Putin had sent Andrei Lugovoi to poison Litvinenko’s tea at a meeting on November 1, 2006. The story appealed to people brought up on James Bond thrillers, but the story never made any sense. Polonium 2-10 is a rare and tightly controlled substance as likely to contaminate the assassin as the victim. There are far easier and more effective ways of killing someone.

Moreover, there is no evidence to connect Russia to Litvinenko’s death. But this didn’t stop the British government from grandstanding, sending an extradition request for Lugovoi in July 2007. The British government sent the request despite the facts that there is no extradition treaty between Britain and Russia and the Russian constitution prohibits the extradition of Russian citizens. Epstein suggests that the purpose of the extradition request was to block the Russian government from investigating Litvinenko’s death in London. Litvinenko had a false passport provided by the British government. A real investigtion might have opened up the shadowy world of security consultants in which Litvinenko rubbed shoulders with former British police and intelligence officials.

The Russians asked to see the evidence. The case file delivered by the British contained nothing of substance. Not even the autopsy report was provided to the Russians. Epstein managed to convince the Russians to let him see the file and to question them about the case. In brief, if the British have a case, they are withholding the evidence.

The charge that Putin was behind Litvinenko’s death seems to have originated with Boris Berezovsky, one of the Russian Jewish oligarchs who had grabbed the lion’s share of privatized Soviet assets during Yeltsin’s presidency. http://www.edwardjayepstein.com/Berezovsky.htm Epstein reports that Berezovsky’s protector in Russia was Litvinenko, the deputy head of the organized crime unit of the Russian Federal Security Service (FSB), the successor to the KGB. When Berezovsky fled Russia to escape fraud charges, Litvinenko followed. Epstein reports that Berezovsky has declared an agenda of “overtrowing the regime of his archenemy, Mr. Putin.” According to Epstein, “Alex Goldfarb, the executive director of Mr. Berezovsky’s foundation, prepared for Litvinenko’s end by writing out his ‘deathbed’ statement, which, according to Mr. Goldfarb, was drawn from statements Litvinenko had dictated to him.”

Epstein writes: “A few hours after Litvinenko died on November 23, 2006, Mr. Goldfarb arranged a press conference and released the sensational deathbed statement accusing Mr. Putin of the poisoning.” Web sites supported by Berezovsky spread the story that Litvinenko was murdered by the FSB.

The effort to link Putin and the FSB to Litvinenko’s death might be a tale designed to cover-up a more serious crime in the making. Polonium-210 is an indication that someone is trying to build a nuclear weapon. Epstein finds reasons to suspect that Litvinenko had, and perhaps Berezovsky has, connections to a Polonium smuggling scheme, and Litvinenko’s death resulted from accidental or careless exposure to Polonium-210.

Who would be trying to build a secret nuclear weapon or perhaps only a “dirty bomb” that would serve to spread some radiation and massive amounts of fear and hysteria? The public has been carefully prepared to suspect Iran. If such a device were exploded somewhere in the United States, Bush, Cheney, and the neocon nazis would have their second new Pearl Harbor to justify their planned attack on Iran.

We know that the Bush regime wants to attack Iran. Despite the NIE report that Iran abandoned its nuclear weapons program several years ago and despite no signs of a weapons program having been uncovered by IAEA inspectors, Bush, Cheney, and the neocon nazis continue to agitate for striking Iran “before it is too late.” Their politicized military commander in Iraq, Gen. Petraeus, keeps insisting that Iran is training Iraqi insurgents and supplying weapons that are killing US troops. Bush and Cheney themselves have made trips to Europe and the Middle East trying to marshall support for an attack on Iran. Anyone who is not deaf, blind and stupid knows that the Bush regime is doing everything it can to create circumstances that will permit a US attack on Iran.

We know for a fact that the Bush regime created false evidence, lied, and deceived in order to attack Iraq. All the reasons given for the US invasion have proven to be false. The real agenda has never been declared. Yet, five years later the traitors in high office who deceived Americans into a war in behalf of a hidden agenda have not been held accountable. As Agatha Christie said, getting away with one murder makes it easy to commit another.

There is so much that Americans do not know about secret schemes serving undeclared agendas. Those who have attempted to clue in fellow citizens are invariably frustrated, because Americans have been trained to dismiss the messenger who brings news of “false flag” events as a “conspiracy theorist.”

Best-selling author Steve Alten in his recently published book, The Shell Game, attempts to reach Americans with a thriller that mixes fiction with fact. Alten describes a conspiracy, beginning in 2007 and ending in 2012, by a Black Op group in a Republican administration to set off nuclear weapons in two American cities, with planted evidence pointing to Iran. It is a historical thriller predictive of our immediate future by an author who has no illusions about the US Government or the interest groups that control it.

Alten’s book is a first class thriller set in the real world of today. It is a perfect read for Americans who need their dose of reality to be watered down with fiction and delivered as entertainment.

Brad deLong Sounds the Alarm.

2008-03-24T15:22:00.001-07:00

Montreal Gazette Advises People Re: Gold.

2008-03-24T13:33:00.001-07:00

Be Wary of the Gold Bug:

Q: Gold seems to be on a tear lately. Am I too late to get in on it?

A: With the price of gold reaching an all-time high in early 2008, a new frenzy predictably emerged for the precious metal.

Unfortunately, over the long term, gold has a track record of disappointing investors, so caution is warranted if you are considering the addition of either gold stocks or bullion to your portfolio.

True, but it's more than triple its 2001 price, while the stock markets are down nominally. The DOW and NASDAQ are actually down in real terms because the US dollar is worth so much less.

Three reasons are typically cited in support of investing in gold, and each should be challenged and critically analyzed.

The first reason is to protect against inflation. In reality, the recent rise in gold occurred while inflation has been generally low and expectations about future inflation have also remained low.

Really? Let's examine this assertion.

First of all, gold isn't a local commodity -- it's global. This should be obvious to anyone with half a brain cell, and as such, it becomes necessary to look at inflation globally.

The US dollar is the world's reserve currency and the US economy is the 'consumer of last resort', in that US consumption has historically been the engine driving global economic growth. The US floods the world with paper dollars in exchange for real goods.

As the US money supply increases(this is how Austrian economists actually *define* inflation, and it's increasing at 17% year/year!) the US exports its inflation to its trading partners and nations whose currencies are pegged to the dollar. Inflation in China is at 7%. Inflation throughout the Middle East is at over 10%. And the US continues to cut rates and print money, faster than ever!

Inflation is a global phenomenon, as nations' money supplies have been growing out of sync with economic productivity, which is part of the reason we have a global credit bubble in the first place. And, we're not immune from this bubble in Canada either.

As a result, instead of gold, which doesn't always move with inflation, you might want to consider owning inflation-protected real-return bonds. As their name suggests, these bonds pay interest rates that adjust with inflation, thereby minimizing the impact of any increase in inflation.

That's a fantastic way to lose your shirt. People are far too trusting.

In buying inflation protected bonds, one is implicitly trusting that the government is reporting real inflation. Been food shopping or filled up with gas lately? Does that feel like a 3% increase?

It's true to an extent that (price) inflation has been contained in Canada -- the rising Canadian dollar has partly offset those effects, but a quick look at the USD/CAD chart shows that the Canadian dollar is no longer rising versus the greenback -- it's holding in a tight range.

All those jokes about the US dollar being weak and plunging miss this most important point. If this continues, it means that the US dollar is going to drag the CDN dollar with it.

Is this what the new Bank of Canada Governor is planning? Not employment targeting, not inflation targeting, but exchange rate targeting? We're doomed!

The second reason people invest in gold is to benefit from a falling U.S. dollar. Because gold is priced in U.S. dollars, it historically has tended to move in the opposite direction of the greenback. That occurred last September, when the U.S. dollar dropped and gold rose. However, the price of gold has risen more than the dollar has declined, suggesting that its movements are affected by more than the U.S. currency.

With that in mind, you may find that investing in a global portfolio of stocks and bonds is a more prudent option. That portfolio could hold its value even if the U.S. dollar declines further.
It's also important to understand that stocks and bonds have historically provided better returns than gold. Consider what would have happened had someone bought gold and the stocks of the TSX at the beginning of any month since 1970 and held those investments for a period of 10 years.

That person would have found that stocks outperformed gold eight per cent to five per cent. In addition, gold punished investors with a negative rate of return 38 per cent of the time, while stocks did not produce a negative rate of return.

This reporter must have shit for brains. Invest in global stocks and bonds? Now? Good luck!!

I see no indications of any real insight into The Big Picture here. Embarassing, really.

What is happening right now is the demise of the current global monetary system. It's been backed by nothing for 37 years, and now it's getting wobbly. It's hard to say what a dollar is today. JP Morgan has $90T in derivatives, but the whole world economy is only worth some $50T. See what I mean?

And THIS is why people are moving to gold and silver most of all. It's money you can hold in your hand, with intrinsic value.

The third reason for investing in gold relates to diversification, and the ability to offset declines in other investments. However, there is no proof that gold provides this advantage. In recent market declines, gold prices have dropped along with stocks.

HAHAHA. This writer is such a tool. I'm ashamed my hometown paper published this.

Gold has been among the best performing assets since 2001. THE TSX Composite index hasn't even come close.

If finance is about using information about the past and present to plan for the future, this writer's lost in the woods. Seriously. One day he will be hungry and looking for food, and I hope people take pity on him.

It is true that gold could regain its position as an "unrelated asset," but you may find your best option is to stick with a wide variety of investments.

While diversification does not guarantee a profit or protect against a loss in declining markets, if you're a disciplined, long-term investor, you may discover diversification is a much better strategy for the long haul than counting on gold.

Before you invest or make changes to your portfolio, speak with your financial adviser to determine which investments would be appropriate to help you reach your long-term goal.

Finally some decent advice. Of course people should diversify. Hold some cash, hold some gold, hold some silver, hold some select stocks/ETFs(eg: Agriculture, Energy) and, say, inverse ETFs.

Better advice: Find an adviser who understands WHY the economy today is the way it is. This clown doesn't seem to have a clue.

U.S. Cocaine-Plane Invasion Spooking Latin America

2008-03-24T01:58:00.001-07:00

Narco News::

"Two Florida-based companies that have exported a total of at least 11 aircraft to Venezuelan buyers since 2003 are linked to four cocaine planes and what appears to be an elaborate covert intelligence operation, an ongoing Narco News investigation shows.

The covert program, law enforcement sources contend, likely involves the CIA and components of Defense Department intelligence agencies, and is focused, in part, on penetrating, or even propping up, narco-trafficking groups in Venezuela. That country’s outspoken leader, Hugo Chávez, is regularly demonized by U.S. policymakers for, among other things, supposedly allowing his country to become a haven for narco-traffickers.

The operation also appears to prioritize intelligence objectives over law enforcement goals, which means tons of cocaine might well be getting a free pass into the United States.

Foreign law enforcement authorities confiscated two of these cocaine planes — one in the Dominican Republic and one in Nicaragua, (tail numbers N1100M and N391SA, respectively) — on suspicion of cocaine trafficking. A third plane (tail number N12DT) is cited along with N1100M in a pending FBI money laundering case involving a Venezuelan-based drug-trafficking organization.

The fourth aircraft, a Gulfstream II jet (tail number N987SA), crashed in Mexico in late September last year with a payload of some four tons of cocaine onboard.

The companies at the center of this parade of cocaine planes are Skyway Aircraft Inc. of St. Petersburg, Fla., and Planes and Parts Enterprises LLC of Doral, Fla.

In addition, a third Florida company, also named Skyway Aircraft Inc., but based in Clearwater, Fla. (just north of St Petersburg in the greater Tampa area), is linked to a fifth cocaine plane, a DC-9 jet (tail number N900SA), which was apprehended by Mexican authorities in April 2006 with some 5.5 tons of white powder onboard. The DC-9 had been sold to an unknown Venezuelan buyer only days before it was busted in Mexico.

Two of these cocaine planes – the Gulfstream II and a Beech 200 (N391SA) found in Nicaragua with the false tail number N168D – have been tied to the CIA’s terrorist rendition program via their Federal Aviation Administration-issued tail numbers, according to European investigators."

Took Em Long Enough.

2008-03-23T19:56:00.001-07:00

Guardian UK: Iraq War Was to Contain China?

Neoconservatives and hardline nationalists in the US wanted to invade Iraq for three reasons - it was an established bogeyman in US minds, it would be an easy target, and it would provide a potential base from which the US could permanently dominate the Gulf region and, if need be, deny oil to China.

In sum, the US invasion was not driven by Middle East considerations at all - it had more to do with the emergence of China. That is the interesting theory at the start of Gwynne Dyer's book After Iraq: what next for the Middle East?

Published to coincide with the fifth anniversary of the invasion of Iraq, the book is concise, incisive and thoroughly entertaining. At times, despite the serious subject matter, it is laugh out loud funny because of its irreverent style, not least in the way it debunks what pass for established facts.

Take Mahmoud Ahmadinejad's call for Israel to be wiped off his map. Dyer points the reader to a translation of the 2006 speech by Juan Cole, a professor and respected blogger, who offers this version of the offending statement:

"The imam said that this regime occupying Jerusalem must [vanish from] the pages of time". For Dyer, what Ahmadinejad was calling for was an end to the "Zionist regime" in Israel, not for the extermination of the Jewish people.

With opinions like this, it is no wonder that Conrad Black, the former media magnate now in jail, dropped Dyer's column from the Jerusalem Post and other Canadian publications he owned.

Dyer, a Canadian academic turned journalist, has little time for the fashionable theory of the "Shia crescent" or the fear of Shia expansion in the Arab world at the expense of the majority Sunnis now Shias dominate Iraq as well as Iran.

The notion of an Iranian military threat to the Arab world belongs to the realm of fantasy.

The regional balance of power has shifted and Iran has much more weight than it used to, but this does not mean that Iranian armoured divisions will soon be racing across the Fertile Crescent and seizing the Arab oil fields on the Arab side of the Gulf.

For one thing, Iranian armoured divisions do not race; they move at an arthritic crawl ... for another why would Iran want to rule some tens of millions of rebellious Arabs and a bunch of burning oil fields.

Dyer believes the US has lost the war in Iraq and will soon be pulling out, notwithstanding any success from the troop "surge".

Getting out of Iraq, he argues, is the least bad thing for the US - and the sooner the better. He sees a serious possibility that the US will not only retreat from Iraq, but very substantially reduce its military presence in the entire Middle East - "not necessarily a Bad Thing for the region, or the world".

The Middle East desperately needs change from its stagnant state, which is not solely the fault of the US, Dyer says, but American presence and policies have upheld the status quo of authoritarian and corrupt regimes.

But what about the Islamists waiting in the wings?

Dyer does not believe Arabs will vote for radical Islamists if there is political liberalisation.

"Arabs are not fools, and most find it hard to believe that the solutions to all their problems were quite as simple as the Islamists contend," he argues.

The one place where they had a whiff of success was Algeria, where elections were cancelled when it looked as though Islamists would win.

During the ensuing civil war, the Islamists' barbaric tactics and extreme ideas turned popular opinion against them.

Russia, Egypt to Sign Nuclear Accord.

2008-03-23T17:50:00.001-07:00

PressTV:

Egyptian President Hosni Mubarak will sing an accord for cooperation in civilian nuclear energy with Russia during his trip to Moscow.

Egypt's Foreign Minister Ahmed Abul Gheit said the agreement is expected to be signed during Egyptian President Hosni Mubarak's visit to Moscow Monday and Tuesday, RIA Novosti reported Sunday.

"This agreement will enable Egypt to use Russia's extensive experience in the peaceful use of nuclear energy," Gheit was quoted as saying.

The Russian news service said the international agreement does not automatically mean that Russian companies will build nuclear power plants in Egypt.

Mubarak announced in October that Egypt would be looking for contractors to go on with the $1.5-1.8 billion project.

Now this is interesting -- the plot thickens.

Lets hear what Olmert has to say about this.

The Role of the CIA: Behind the Dalai Lama's Holy Cloak.

2008-03-23T15:44:00.001-07:00

CRG:

Rarely do journalists challenge the Dalai Lama.

Partly it is because he is so charming and engaging. Most published accounts of him breeze on as airily as the subject, for whom a good giggle and a quaint parable are substitutes for hard answers. But this is the man who advocates greater autonomy for millions of people who are currently Chinese citizens, presumably with him as head of their government. So, why not hold him accountable as a political figure?

No mere spiritual leader, he was the head of Tibet's government when he went into exile in 1959. It was a state apparatus run by aristocratic, nepotistic monks that collected taxes, jailed and tortured dissenters and engaged in all the usual political intrigues. (The Dalai Lama's own father was almost certainly murdered in 1946, the consequence of a coup plot.)

The government set up in exile in India and, at least until the 1970s, received $US1.7 million a year from the CIA.

The money was to pay for guerilla operations against the Chinese, notwithstanding the Dalai Lama's public stance in support of non-violence, for which he was awarded the Nobel Peace Prize in 1989.

The Dalai Lama himself was on the CIA's payroll from the late 1950s until 1974, reportedly receiving $US15,000 a month ($US180,000 a year).

The funds were paid to him personally, but he used all or most of them for Tibetan government-in-exile activities, principally to fund offices in New York and Geneva, and to lobby internationally.

Details of the government-in-exile's funding today are far from clear. Structurally, it comprises seven departments and several other special offices. There have also been charitable trusts, a publishing company, hotels in India and Nepal, and a handicrafts distribution company in the US and in Australia, all grouped under the government-in-exile's Department of Finance.

The government was involved in running 24 businesses in all, but decided in 2003 that it would withdraw from these because such commercial involvement was not appropriate.

Several years ago, I asked the Dalai Lama's Department of Finance for details of its budget. In response, it claimed then to have annual revenue of about $US22 million, which it spent on various health, education, religious and cultural programs.

The biggest item was for politically related expenditure, at $US7 million. The next biggest was administration, which ran to $US4.5 million. Almost $US2 million was allocated to running the government-in-exile's overseas offices.

For all that the government-in-exile claims to do, these sums seemed remarkably low.

It is not clear how donations enter its budgeting. These are likely to run to many millions annually, but the Dalai Lama's Department of Finance provided no explicit acknowledgment of them or of their sources.

Certainly, there are plenty of rumours among expatriate Tibetans of endemic corruption and misuse of monies collected in the name of the Dalai Lama.

Many donations are channelled through the New York-based Tibet Fund, set up in 1981 by Tibetan refugees and US citizens. It has grown into a multimillion-dollar organisation that disburses $US3 million each year to its various programs.

Part of its funding comes from the US State Department's Bureau for Refugee Programs.

Like many Asian politicians, the Dalai Lama has been remarkably nepotistic, appointing members of his family to many positions of prominence. In recent years, three of the six members of the Kashag, or cabinet, the highest executive branch of the Tibetan government-in-exile, have been close relatives of the Dalai Lama.

An older brother served as chairman of the Kashag and as the minister of security. He also headed the CIA-backed Tibetan contra movement in the 1960s.

A sister-in-law served as head of the government-in-exile's planning council and its Department of Health.

A younger sister served as health and education minister and her husband served as head of the government-in-exile's Department of Information and International Relations.

Their daughter was made a member of the Tibetan parliament in exile. A younger brother has served as a senior member of the private office of the Dalai Lama and his wife has served as education minister.

The second wife of a brother-in-law serves as the representative of the Tibetan government-in-exile for northern Europe and head of international relations for the government-in-exile. All these positions give the Dalai Lama's family access to millions of dollars collected on behalf of the government-in-exile.

The Dalai Lama might now be well-known but few really know much about him. For example, contrary to widespread belief, he is not a vegetarian. He eats meat. He has done so (he claims) on a doctor's advice following liver complications from hepatitis. I have checked with several doctors but none agrees that meat consumption is necessary or even desirable for a damaged liver.

What has the Dalai Lama actually achieved for Tibetans inside Tibet?

If his goal has been independence for Tibet or, more recently, greater autonomy, then he has been a miserable failure.

He has kept Tibet on the front pages around the world, but to what end? The main achievement seems to have been to become a celebrity. Possibly, had he stayed quiet, fewer Tibetans might have been tortured, killed and generally suppressed by China.

In any event, the current Dalai Lama is 72 years old. His successor — a reincarnation — will be appointed as a child and it will be many years before he plays a meaningful role. As far as China is concerned, that is one problem that will take care of itself, irrespective of whether or not John Howard or Kevin Rudd meet the current Dalai Lama.

No, we have no Silver Today!

2008-03-23T02:49:00.001-07:00

Canadian Silver Bug:

"A fellow I know was considering entering the market so I called him this morning and said 'If your going to do it, this week's correction is the perfect time'

So off we went down to Scotia Bank where there was a modest line of people making currency and metal transactions.

Being 5th in line it took about 10 minutes for us to get to the front giving me time to watch those being served and be nosey. In that time I saw at least 3 metal transactions take place and 7 oz or more of gold leave the building. One person asked a question and walked away muttering.

When I got to a teller I found out quickly what the previous client was probably annoyed by;

There was no silver

None, zip, squat, zilch.

No silver maples, no silver bars large or small, they had nothing.
Scotia claimed they should have got at least some maples this week but did not, they said 'try again later'.

There has been recent talk of silver shortage at the retail level and I now have proof. I tried 2 currency exchange places which had nothing and I still plan on dropping in to a coin store but I know they don't readjust their prices to market (at least downward) in a timely manner.

As far as I'm concerned today was an excellent entry point and it's a shame my friend missed this opportunity.

If the retail supply is this tight the banks should be drawing off the COMEX to re mint and fill orders but I somehow don't think they will bother. The banks while selling metals have been involved in shady behaviour for decades, case in point the Morgan Stanely incident where they were not buying bullion when certificates where purchased.
The big banks have little interest in supporting metal ownership over fiat currency and have great interest in NOT seeing the COMEX stocks drawn down.

I'm at a loss on how to advise you to acquire silver at this time. APMEX is short, Northwest Territorial Mint has been habitually late in filling orders and smaller vendors are scrambling to find bullion. The U.S.mint has not been able to keep up with silver eagle orders and even Ebay listings are thinner than I remember 2 years ago.

All I can say is try every vendor you can find, the price is too good to ignore. If you already hold metals don't panic, this kind of correction was expected and is not a problem."

It's Not the Crime, It's the Cover-Up.

2008-03-22T16:54:00.001-07:00

(AP) - Older White House computer hard drives have been destroyed, the White House disclosed to a federal court Friday in a controversy over millions of possibly missing e-mails from 2003 to 2005.

The White House revealed new information about how it handles its computers in an effort to persuade a federal magistrate it would be fruitless to undertake an e-mail recovery plan that the court proposed.

"When workstations are at the end of their lifecycle and retired ... the hard drives are generally sent offsite to another government entity for physical destruction," the White House said in a sworn declaration filed with U.S. Magistrate Judge John Facciola.

It has been the goal of a White House Office of Administration "refresh program" to replace one-third of its workstations every year in the Executive Office of the President, according to the declaration.

Some, but not necessarily all, of the data on old hard drives is moved to new computer hard drives, the declaration added.

GLOBALISATION: So, Back to Regulation, Then

2008-03-22T03:07:00.001-07:00

IPS:

"BERLIN, Mar 20 (IPS) - The financial crisis around the world marks the end of neo-liberal globalisation and the beginning of a new era of regulation of the global economy, political leaders and economists say.

Germany is beginning to see signs of that – as a part of a pattern spreading fast across Europe and beyond.

Amidst growing concern that the global financial crisis could push more private banks into bankruptcy, German bank managers and political leaders are calling for the state to step in and avert a major economic recession, both national and international.

Josef Ackermann, chief executive officer of Deutsche Bank, the largest private bank in Germany, said in a remarkable speech Mar. 17 that he did not believe any more in 'self-regulatory forces of the market.' Given the dimensions of the crisis over the last couple of months, 'governments must intervene to influence the market,' he said.

Ackermann's position was echoed by Deutsche Bank head economist Norbert Walter and by other leading economists. Walter said at a press conference that the financial crisis could last until late 2009. 'We need a new organisation and new thinking on regulation of the financial markets.'

Michael Heise, head economist at the Allianz/Dresdner Bank, warned that numerous international banks would go bankrupt in the months to come, both in Germany and elsewhere, as a consequence of the financial crisis.

The comments came after the U.S. private bank Bear Stearns sank into a grave liquidity crisis due to its failed speculation with the so-called sub-prime mortgages. These mortgages have involved heavy lending to parties with limited means to repay loans.

Numerous other private banks in the U.S., Britain, Germany, France, and elsewhere in Europe are facing similar difficulties due to failed investments in financial derivatives based on U.S. mortgages excesses.

In Britain, the government nationalised Northern Rock bank last month, which was practically bankrupt due to hazardous investments in the U.S. mortgage market.

Nationalisation of the bank, better known now as 'Northern Wreck', will cost British taxpayers anything between 55 billion to over 100 billion pounds, (between 110 and 220 billion dollars), according to various estimates. About 100,000 small shareholders have launched an investigation into the affairs of the bank.

State and private banks in Germany face similar problems. The state-owned IKB bank which operates as a private institution, has received state guarantees of 15 billion dollars to avert collapse over failed investments in U.S. mortgages.

The government has been looking in vain for a buyer for the bank. IKB managers admitted Wednesday Mar. 20 that they have had to write off bad loans worth a billion dollars.

State-owned banks in the federal states Saxony, Bavaria and North Rhine-Westphalia have also received heavy public financial support to rescue them from bankruptcy.

In the face of the failure of neo-liberal policies, Oskar Lafontaine, former finance minister in the Social-Democratic government and now leader of the newly founded Left Party, invited Ackermann to join his party.

'With calls such as that of Ackermann's, we can see how deep the crisis is,' Lafontaine said in the interview with the newspaper Saarbruecker Zeitung.

Lafontaine called for worldwide re-introduction of regulation mechanisms to control capital flows. He also demanded a tax on speculative financial transactions, in line with the proposal by economist and Nobel laureate James Tobin. 'We need investments in the real economy, not speculative transactions,' Lafontaine said.

Juergen Trittin, leader of the Green party, and former minister for the environment between 1998 and 2005, said the financial crisis represents the bankruptcy of neo-liberal globalisation.

'Banks first gambled away their clients' money in hazardous speculation, and now expect that the clients, as taxpayers, foot the bill,' Trittin told IPS.

Trittin pointed out that until very recently, Ackermann and Walter had been asking the state to keep its hands out of the economy. 'Now, it is the state who must play the saviour.'

In France too, banks are facing the consequences of a lack of control over speculative transactions. The Société Générale bank lost more than 9 billion dollars in speculative operations in January, and was on the brink of losing up to 75 billion dollars in transactions stopped at the very last minute.

The Société Générale has admitted that it ignored 74 alarms by its own surveillance system, and let pass transactions carried out by its trader Jêrome Kerviel. Similar failures of internal controls have occurred in banks across the globe.

These internal failures come with the incapacity of the market to regulate itself. As Ferdinand Lancina, former Austrian minister of finance between 1985 and 1996, said in an interview with the Vienna newspaper Der Standard, 'Neo-liberalism is dead, and for a very long time.' (END/2008) "

Revealed: How SWFs Were Left Nursing Multi-Billion Dollar Losses.

2008-03-22T01:01:00.001-07:00

The Guardian:

"The financial crisis enveloping the world banking sector has left the sovereign wealth funds, controlled by governments from Singapore and China to Abu Dhabi and Kuwait, nursing multibillion-dollar losses after helping to bail out major western banks.

In recent months, banks including Citigroup, Morgan Stanley and UBS have turned to investment funds, including the Government of Singapore Investment Corp (GIC), its sister fund, Temasek, and China Investment Corp, for funding that western investors were unwilling to give as stockmarkets plunged.

But the dramatic fire sale of the US investment bank Bear Stearns and subsequent stockmarket run on HBOS this week have depressed banking stocks further and deepened the climate of fear in the world's stockmarkets.

Singapore's GIC, for example, which with funds of more than $330bn (£166bn) is one of the world's largest sovereign wealth funds, spent more than £5.5bn on a 9% stake in UBS last year. Shares in the Swiss bank are down 46% so far this year. It spent a further $6.88bn in January as part of a $14.5bn funding round for the embattled US bank Citigroup,

Two months before, the Abu Dhabi Investment Authority (ADIA), which with assets estimated at up to $900bn is reckoned to be the world's largest sovereign wealth fund, invested $7.5bn in Citigroup bonds that will convert to shares in 2010 and 2011 at prices from $31 to $37.

But since then Citigroup has become one of the most high-profile casualties of the sub-prime mortgage crisis in the US, and its share price has plunged as low as $20 - nearly 40% lower than when the ADIA made its investment.

The pain shows no sign of letting up. Two months ago, Citigroup announced it had plunged into the red over the past three months of 2007 and sliced its dividend almost in half as it wiped more than $18bn off the value of its assets because of exposure to sub-prime mortgages. But Wall Street analysts reckon the firm could record a further $15bn write-down for this financial quarter.

China Investment Corporation's investment in Morgan Stanley, made just before Christmas, is also facing a significant loss. The securities it picked up for $5bn will convert to stock at $48 to $57 a share in two years' time. At present, however, Morgan Stanley's share price is closer to $42.

Another Beijing-backed money manager, China Development Bank, has also suffered as the stake in Barclays it bought in July has plunged in value. When it acquired the 3.1% shareholding, the bank's shares were trading at about 680p each. On Thursday, they were at 429p.

The Singaporean fund Temasek is also nursing losses on the 2.1% Barclays stake it bought last year, although its investment in the London-listed bank Standard Chartered has fared better. The bank, which has little involvement in the US sub-prime crisis, has weathered the storm better than many of its peers.

The losses sustained by sovereign wealth funds are relatively insignificant when compared with the $3.2tr they are believed to have at their control. Morgan Stanley reckons that with the price of commodities such as oil set to remain high, this amount will balloon to $12tr by 2015. But the losses may dampen their appetite for further involvement in bailing out western banks.

Western politicians are increasingly concerned about the power of sovereign wealth funds in their markets. Earlier this week the US government agreed voluntary principles with ADIA and Singapore's GIC to regulate their investments."

Tent Cities. In the USA.

2008-03-21T22:56:00.001-07:00

Cliffs Notes on the Financial Tsunami, by Jim Willie.

2008-03-21T22:40:00.000-07:00

As the financial markets stare at the abyss, contemplate the cliff, suffering massive falls in selective stocks, a review of ‘Cliff Notes’ might be appropriate. The financial maelstrom is gathering force and fury. The Bear Stearns story has a story behind it, as usual in the Grand Manhattan Den, where violent financial battles give false appearances as desperate measures are played out behind the scenes. The drama on Wall Street will make history. These guys are killing each other, while they cooperate with each other. Like crows, they killed and devoured one of their own.

BROKERAGE FIRMS REEL

Bear Stearns was fed to the wolves, an easy correct forecast from last early autumn. Denials nowadays constitute confirmations, from mere mention. Their refusal in 1998 during the LongTerm Capital Mgmt bailout to act like a Wall Street team player was the hidden motive to carve them into pieces. One must ask why last Friday it traded around the $30/share price all day long after 10am. The answer is easy, as they wanted to give insiders a chance to sell most of the 186 million shares, a gift of $5 billion sure to anger many. My view is that JPMorgan took its best assets at discount, tossed much of the damaged assets into their Wall Street garbage can, which is never emptied, never sees any balance sheet, blessed by the US Federal Reserve, protected to new security laws. If Bear Stearns share holders reject the JPM seizure takeover, then the gem Bear Stearns headquarter building in Manhattan can be bought by JPM for a song. Actually, JPM might have only started the bidding process, sure to result in JPM upping their own bid. BStearns has (or had) 14 thousand workers, most having been paid in stock share bonuses in recent months. The economy in New York City is sure to be badly harmed, worse than already. Wall Street jobs account for 35% of NYCity wages.

The other story not told is that Bear Stearns was dissolved before the wrecked investment bank had a chance to take advantage of the Term Security Lending Facility. It will be made available by the USFed at the end of March. The sleazy hogs on Wall Street wanted to remove one player at that window. The other story not told is that a liquidation of Bear Stearns would inevitably have resulted in a massive credit derivative meltdown. The consequences cannot be estimated. The derivative upside down pyramid is mammoth. No precedent exists for its partial unwind or dissolution. The pyramid holds together the entire USTreasury complex, attached to interest rate swaps, attached to credit default swaps of various types, and so on. This pyramid is leveraged 70 to 1. The talk is funny though, since the USFed has backstopped only $30 billion in Bear Stearns securities. What about the other $800 to $1500 billion rancid bonds floating within striking distance to Wall Street and major bank balance sheets? In truth, we might later learn that Bear Stearns helped to bail out JPMorgan, in helping to shore up its credit derivatives, in providing some emergency collateral, soon to bust, to prevent a JPMorgan failure!!! JPMorgan owns $7.778 trillion of credit derivatives, two and half times as much as Citigroup, the same toxic stuff that crippled Citigroup. JPMorgan skated on this one without publicity.

The other story is that Bear Stearns CEO Alan Schwartz assured just last week that all was well, liquidity was adequate, and the company was in good shape. Enron CEO Ken Lay said the same thing. And lest one forget, Enron and Bear Stearns have a common denominator in JPMorgan being a key player in the operations and agent during the demise of the two firms. JPM taught Enron everything they knew about offshore special purpose entity firms, yet they escaped all legal challenges by losing clients in court. When the USFed frees JPM from liability on any losses from collateral submitted by Bear Stearns, one has to giggle since the USFed is JPMorgan. Think consolidation of the best bond assets in JPMorgan’s hands. Think more damage and consolidation upon the next victim, like Lehman Brothers. Think building the Fed Reserve bank system. The Mussolini Fascist Business Model might be opening a new chapter.

The XBD banker broker dealer stock index had a horrible day on Monday, with some repair on Tuesday and Wednesday. The XBD stock index fell 11% in a visit to hell and back, rendering big technical damage to many component stocks, especially Lehman Brothers. LEH fell by 19% on Monday. Goldman Sachs was down 10% early in the day, closing down 4%. Citigroup lost another 7% after being down almost 10%, UBS lost 11%, Morgan Stanley lost 8%, Merrill Lynch lost 4% after being down 8%. The stock price action tells the wary observer to expect a challenge or near death experience for Lehman Brothers, possibly worse. Their portfolio is similar to Bear Stearns, only larger. The mortgage bond damage will next shift to the prime adjustable mortgages, so reckless in their innovation. They will crater this summer upon rate reset, victims of their own written time bombs. Thus the deserved name of Exploding ARMs. Even USFed Chairman Bernanke acknowledged last week that 40% of all mortgage defaults are prime, not subprime. On two days, the XBD broker dealers recovered most of the loss. The broker dealers play a significant role, to manage the execution of official policy, full of the requisite manipulation and corruption of markets. See the management of the credit derivative pyramid, the gold ambushes, the currency interventions, the collusion with the debt ratings agencies, and even possibly the intimidation of the monoline bond insurers to serve as the bagholders in the historically unprecedented international sale of fraudulent mortgage bonds. Can anyone defend against my claim that the Untied States upper echelons represent institutionalized and protected dishonesty???

My warning quip to the idealists among us has been often used lately, when people salivate over the prospect of chronic conmen suffering deep losses, enduring insolvency, incapable of shame, yet almost certain to end up in some form of bankruptcy. My stated line is “Beware when billionaires face bankruptcy, since they make a phone call and change the rules. Often those rules conflict with your strategy and plans.” This time the rules might be concerning gathering wealth from strategies that oppose the defense of a national financial integrity. This time those attempting to secure their wealth and protect it from illicit national grabs and seizures might be labeled as unpatriotic. This time the system has been virtually broken by decades of destructive inflation, of misspent funds, of grand theft (see Fannie Mae and military contractors), of encouraged abandonment of the manufacturing sector, of destructive emphasis of a war economy footing, of irresponsible Medicare guarantees, of harmful demographic shifts, and lately of incredibly deep bond fraud. The bond fraud episode is the crowning finale of the US banking system, with toxic outlets to most global banking centers. One might wonder if it were planned.

REMINISCENT OF GREAT DEPRESSION

When Bear Stearns was dissolved and its assets rescued, the USFed and JPMorgan invoked a feature of banking policies not used since the Great Depression. Too many other comparisons can be made to that dreaded era. The bank insolvency is the biggest commonality. The ability to print money, shovel printing press output from one room to another easily, permit phony accounting of balance sheets, hide within offshore subsidiaries, and extend the risk model to great heights, these are new & better innovations not available 70 years ago. Well tragically, these innovations are being unmasked as thin, flimsy, unable to withstand storms, and possibly even fraudulent. As the stock market and bond market suffer blow after blow, fail to stabilize, fail to recover, only to endure more breakdown in the structure, memories come to the Great Depression, when recoveries only led to deeper losses as the catastrophe unfolded. This time around, another catastrophe is expected in a bank system meltdown, a bond system total seizure, and a risk model system dissolved.

Amidst all this maelstrom, one must ask if wisdom prevailed during the Clinton Administration to repeal the Glass Steagall Law from the Great Depression era. That law created the Federal Deposit Insurance Corp for insuring individual banks and depositors, up to $100k per account. The law also blocked any attempt to merge banks, brokerage firms, and insurance companies. The legislation intended to protect a meltdown to spread to all critical structural elements of the financial system. With the Glass Steagall repeal, one has to wonder if some destruction was planned, or else a major consolidation was the ultimate goal. My belief is firm, that powers in Old Europe and London that control the USFed more than is publicly known are restoring power back to Switzerland. They have resented the arrogant and reckless US bankers for two generations.

By the way, the FDIC insures bank accounts. But the SIPC guarantees participating brokerage accounts up to a $500k limit, plus $100k on cash accounts. People might soon hear more about their stock protection if giant financial conglomerates go bust. Some stock accounts might be frozen, as the courts sort it all out. When an SIPC member becomes insolvent, SIPC will ask the court to appoint a trustee to supervise the liquidation of firm assets and to process investor claims. Coverage of bank and brokerage accounts will be a popular topic soon.

3 SCARY GRAPHS: BANKS, MONEY & HOUSEHOLDS

Some have asked in private emails whether the bigger the bank, the safer their future. My answer is simple. The bigger the bank, the more likely they are to hold a much riskier portfolio, and thus the more likely their failure. Most big Wall Street banks and broker dealers, along with a scattering of major US banks are in the same pickle, from owning too many mortgage bonds and related credit derivatives leveraged from them, even being saddled with bonds scheduled for interrupted private equity deals. Bank assets have vanished. The neighborhood bank with branches of operation only within a corner of their resident state is probably much more insulated from the bond market debacle. They likely originated loans, own some, but might have recycled most of them through Fannie Mae in order to continue to earn fees on new loans. Some have asked if the USFed can make unlimited number of bank bailouts, can refund on unlimited number of mortgage bonds submitted by banks. Well yes, sure, but the accumulating risk to the USDollar is being recognized and felt. The US$ decline is not done; it is going lower.

The US banking system is teetering at the precipice, the brink of collapse. Almost two years ago, in the Hat Trick Letter, my forecast was made crystal clear, that the housing crisis and mortgage debacle would topple and destroy the US banking system, just like what happened to Japan in the 1990 decade. The US banking system cannot withstand insolvency like the stronger Japanese banking system, which survived temporarily as vampire entities. Weekly events point to wrecked mechanisms in the US banking system. They will continue to worsen unfortunately. The financial condition of institutions within the US banking system has gone critical, with core assets gone negative. Total deposits held, free of borrowed USFed reserves, have vanished. US banks have burned through their entire capital core, melted down from disastrous mortgage portfolios, their bonds, and related CDO leveraged bond derivatives. They must now rely upon borrowed reserves from the USFed in order to continue to function as lending institutions. They have turned heavily to the USFed Term Auction Facility and now the Term Security Lending Facility for resupplied capital. That is not injected, donated, free money. It must be returned, or such is the plan. With the TSLF, the USFed now extends loans for AAA-rated mortgage bonds of private vintage, not just Fannie & Freddie type. They expanded to $200 billion per month and 28 days in duration, with a lowered 3.25% borrowing rate, and likely renewable feature. As we know, many AAA bonds are crappy. So banks might be unloading some rancid meat. The masters who control the USFed cannot be happy.

The US banks by early December had about $43 billion in total reserves. The current statement by the Federal Reserve offers a daily average ‘Non-Borrowed Reserves’ at MINUS $20 billion. Worse, the Fed Reserve estimates by early April that amount will be MINUS $60 billion. The US banks are living off borrowed money, and time. Be prepared for some high profile bank failures, a process already begun. Home loan defaults have combined with falling home collateral valuation to destroy mortgage bonds and related securities to the extent that banks have lost their entire capital. The only way to recover from this situation is for banks to find a way to make a lot of money really fast. The time has grown urgent to inflate rapidly, or else face an unstoppable chain reaction of bond failures followed by bank failures. Big banks do not have adequate loan loss reserves set aside. Money and wealth will be destroyed either from falling home portfolios and mortgage bond values, from reckless lending and much fraud at all levels.

The shocking reality is that the banking system has gone from a 10% reserve requirement to a minus 5% requirement. Still too much bank capital is in illiquid overvalued bonds. The USFed is trying to increase the money supply faster than banks can write down losses. Keep in mind what New York University economics professor Nouriel Roubini says, “For every dollar loss of capital, you reduce lending by ten dollars.” The Shadow Govt Statistics folks do such great work in removing deceptive games and gimmicks. They report the US$ money supply is growing at an annual 18.0% rate, March 2007 over March 2007. The sitting Secy of Inflation Bernanke, when pressed in Congress recently to comment on the monetary inflation gone haywire, simply said they monitor the Consumer Price Inflation only. Wow! Talk about riding a horse while sitting backwards on the saddle! What a hack! What a lousy cowboy!

Many standing loans involve homeowners who owe a greater loan balance than the home is worth, the home equity having evaporated. And home prices are heading lower. Chronicling the Great American Tragedy, the New York Times writes, “Not since the Depression has a larger share of Americans owed more on their homes than they are worth. With the collapse of the housing boom, nearly 8.8 million homeowners, or 10.3% of the total are underwater. That is more than double the percentage just a year ago.” To this date, USFed, Dept Treasury, and USGovt efforts have not accomplished much toward reversing this trend. Tragically, of mortgages originated from 2006 onward in recent vintage, 30% are now burdened by negative equity. The ratio of under-water mortgages, those with negative equity, the ‘Upside Down’ loans, for these more recent loans is forecasted to rise to more than 50%. The mortgages of older vintage are also rising in their negative equity ratio. They are catching up to the newer vintage home loans. The national housing foundation is going underwater. Contrast with falling home values, which might not stabilize in 2008 as the graph shows. Note two different scales describe the two series.

The latest data on home foreclosures, delinquencies, late payments, existing home inventory, new home inventory, and median home value does not indicate in any manner whatsoever that the housing market has even remotely stabilized. More mortgage bond pain and bank writeoffs are to be expected by anyone not hindered by rose colored glasses, banker public relations motives, or USGovt mental handicaps. California and Florida continue to bear more than their share of national foreclosures. The two states accounted for 30% of mortgages entering the foreclosure process. Arizona and Nevada are sure to increase sharply in the next couple quarters. The big new twist is voluntary foreclosures, abandonment of homes and their loans, in direct response to running under-water with home equity gone, perhaps negative. People are choosing not to service debt on a deflating failed asset.

CENTRAL BANK INTERVENTION NEXT

As the USDollar continues to reel, to decline to low levels never seen before, support does not exist. Clearly, some form of central bank intervention is next. However, in order for such extraordinary action to be effective and not futile, monetary policy must be coordinated and cooperative. The major central banks must work together to support the USDollar. They must cut official interest rates in concert with the USFed. That means the Euro Central Bank must agree to an official cut in its rigid interest rate. They might employ an interim rate cut. Even a 25 basis point cut would be significant. They must publicly state that they are defending against a rising euro currency, and that price inflation will be a risk to stomach. The planned goal would be to end the US$ decline. The extra benefit would be seen in the bond market and banking system, from added liquidity and soon housing price stability. Without dispute, the underlying problem is the housing crisis and price declines in collateral.

My attention is squarely focused on the Euro Central Bank, which has the greatest potential to quickly change the awful sentiment plaguing the USDollar. The USFed just cut interest rates again by 75 basis points. The USDollar had moved down in anticipation of this latest cut. The Bank of Canada has cut twice its interest rate. The Bank of England has also cut its official rate, only once, and surely will again. The Bank of Japan is talking about a rate cut. But the Europeans are dominated by the Germans, who want no rate cut at all. The Germans warned of the precise problems seen right now, do not wish to fix a problem with more of the same actions that produced the problem, and resent having to foot the bill during the aftermath of these problems.

The gold price will not stop at the $1000 milestone. The silver price will not stop at the $20 milestone, and will vastly outperform gold. The crude oil price might go below the $100 milestone briefly, but will return and shoot past the century mark. No no no!!! All are heading much higher, because the banking problem is not to be soon fixed, the bond problem is not to be soon fixed, the economy is not to be soon fixed, household distress is not to be soon fixed. Maybe none can be fixed, even as money thrown at the problem accelerates parabolically. The limited power of USFed solutions, and limited arsenal of devices to treat the problem, will ensure that monetary inflation will be the main tool. Still, adding liquidity in rescues, repairs, and bailouts is not seen as the cause of the problem. It still is seen as the immediate solution. SUCH IS THE HERESY THAT HAS DESTROYED THE US BANKING SYSTEM. They operate under an objective to revitalize the housing market, and stop its price decline. They must enable the bank system to become solvent. All that administered inflation means much more gains to gold, silver, and even crude oil. Bigger problems than rising gold, silver, and crude oil come if Consumer Price Inflation starts to grow without bounds. The USTreasury Bond market will suffer heart attacks, the beneficiary being gold, silver, and crude oil!!!

Remarkably, when the USFed was about to predictably cut the official interest rate again, gold mysteriously got hit on Monday. On the day of the rate cut Tuesday and the following day Wednesday, gold got hit again and the USDollar rallied. The Boyz were busy. The smackdown of gold under $950 and of silver under $19 only managed to remove and cleanse these two important metals markets of their overbought situation. The Boyz have cleared the path for gold to reach $1100 and for silver to reach $26. Nothing has been solved yet on most critical battle fronts. The bigger moves up are yet to come!

Copyright © 2008 Jim Willie, CB

Bahahaha

2008-03-21T20:08:00.001-07:00

Rome (BBC) -- Pope Benedict XVI refused a recent request by US Secretary of State Condoleezza Rice to discuss the Middle East and Iraq, Vatican sources say.

But they have so much in common! Prada shoes, for example...

New York Governor ‘Destroyed’ Over Threat To Probe Larry Silverstein

2008-03-20T23:12:00.001-07:00

Reports consuming the US propaganda media organs and political elite today are centering upon the charges leveled against the Governor of New York, Eliot Spitzer, and who is said to have paid for the services of a high priced prostitute.

FSB reports circulating in the Kremlin today, however, point to a much more sinister effort behind the toppling of Governor Spitzer as he had just begun a new probe into Larry Silverstein, the owner of the World Trade Center brought down in the September 11, 2001 attacks upon the US, and the Bush Families Carlyle Group.

The focus of Governor Spitzer’s investigation, these reports state, revolve around the growing crisis embroiling the Carlyle Group as it nears total collapse and is facing insolvency due to Larry Silverstone’s withdrawal of over $14 billion from the embattled groups coffers, and which could see the loss to New York States already troubled massive pension fund of over $10 billion.

Governor Spitzer has long battled with the former comptroller for New York States Pension Fund, Alan G. Hevesi, who holds duel Israeli-American citizenship, and prompted a US Federal Probe that charged Comptroller Hevesi of using the over $100 billion of funds entrusted to him for the personal benefit of his friends and family, and to which Mr. Hevesi pled guilty for and paid a $5,000 fine.

Prior to his taking office as New York States Governor, these reports continue, Mr. Spitzer, as a prosecutor, had long targeted the United States Banking System for their vast theft of money from the American people, and had won billions in judgments against Bear Stearns, Credit Suisse First Boston, Deutsche Bank, Goldman Sachs, J.P. Morgan Chase, Lehman Brothers, Merrill Lynch, Morgan Stanley, Salomon Smith Barney and UBS Warburg.

It is more than interesting to note, too, that these are the exact same International Banking Giants who are now reeling under the Global assault against them, with Bear Stearns becoming the latest victim, and as we can read as reported by Britain’s Independent News Service:

"Panic swept the credit markets on reports of an insolvency crunch at both the US investment bank Bear Stearns and the mortgage giant Fannie Mae, triggering a dramatic surge in default insurance and rumours of yet another emergency rate cut by the US Federal Reserve."

As Governor Spitzer becomes yet another victim to vast power of the West’s war, political and media elite assault against him, and by their introduction of sex charges against him, as they have done to so many of their adversaries in order to destroy their credibility, the truest warnings of these events to the American people will no doubt be lost, again.

And, with the most dangerous of these warnings coming from the World’s richest man, Warren Buffet, and as we can read as reported by the Market Watch News Service in their article titled "Buffett and Gross warn: $516 trillion bubble is a disaster waiting to happen", and which says:

"In short, despite Buffett's clear warnings, a massive new derivatives bubble is driving the domestic and global economies, a bubble that continues growing today parallel with the subprime-credit meltdown triggering a bear-recession.

Data on the five-fold growth of derivatives to $516 trillion in five years comes from the most recent survey by the Bank of International Settlements, the world's clearinghouse for central banks in Basel, Switzerland. The BIS is like the cashier's window at a racetrack or casino, where you'd place a bet or cash in chips, except on a massive scale: BIS is where the U.S. settles trade imbalances with Saudi Arabia for all that oil we guzzle and gives China IOUs for the tainted drugs and lead-based toys we buy."

There used to be a time when warnings were prudent to be given to the American people so that they could, in some small measure, protect themselves, but, and sadly, those times are now gone as these people have nearly completed their descent into the abyss of total slavery to their masters with virtually no knowledge of the horrific future that lies before them. (Liveleak)

How to Invest With $5 000 to $10 000.

2008-03-20T21:28:00.001-07:00

There are many ways to invest in the precious metals and natural resource sector. Many analysts would first suggest investors purchase gold and silver bullion or coins, then focus on some of the larger capitalized mining companies (most of which are selling for over $35 per share). You might consider the GLD or the SLV, the Exchange Traded Funds for gold and silver currently selling for $96 and $197, respectively. Not all investors have the financial resources necessary to purchase these alternatives.

So we ask, what about the individual with only $5,000 to $10,000 available to invest? Are they to be left out of this bull market? With limited investment funds, the above ideas are of little value due to the cost of each and the difficulty of diversifying your choices.

For individuals with limited resources, not only can we suggest some different vehicles for you to purchase, but how you can diversify with positions in several different companies.

Let’s explore the use of options, leaps and warrants allowing you to limit your investment exposure but still having the incredible power of leverage working for you. By selecting the right companies, options, leaps and warrants will provide you with the potential of increasing your $5,000 to $10,000 many times over.

Many call options, leaps and warrants are selling for pennies allowing your $5,000 to $10,000 to be spread/diversified over several different companies. Frankly, I would suggest purchasing call options, leaps or warrants on 4 or 5 different companies. You could pick a junior gold company, a silver company, a uranium company or an oil & gas company, thus diversifying your holdings and giving yourself more chances of being correct.

If you are unfamiliar with options, leaps and warrants, here is a brief overview:

Options and leaps trade on the Chicago Board Option Exchange (CBOE). They are a contract giving you, the investor, the right, but not the obligation, to purchase the underlying security at a specific price and expiring on a specific date in the future. Call options may have a life of 30 days to 1 year, while leaps may have a life of up to 2 years. Your loss is limited to your investment for these contracts and no margin is used. The potential gains are great, if you are correct in your timing and company selection.

Warrants are slightly different in that warrants trade like a stock and are issued by a company usually in an initial public offering or in a financing arrangement. Many sophisticated investors are not aware that there are many warrants trading. While it is very common for warrants to be issued in private placements, particularly in the mining sector, these warrants do not trade and thus cannot be purchased. What is of particular interest, is there are numerous warrants trading which have a remaining life of 3 years or more.

Think about the possibility of a long-term warrant on one of your favorite resource companies with several years of time remaining. We consider long-term warrants to be an investment not speculation.

Warrants will provide you with the opportunity to participate in this bull market with time on your side, a much lower cost than purchasing the common shares and the power of leverage working for you. As with options and leaps, your potential loss with warrants is limited to your cost and there is no margin.

In summary, investors with limited resources to invest can have a stake in this bull market and the opportunity for incredible gains by considering the use of options, leaps and warrants. Actually, I have recently purchased some call options on a large silver company which did not have warrants trading. I am investor first and seek out the best opportunities whether that is acquiring the common shares, options, leaps or warrants.

For subscribers to our service, we provide a table of all resource companies with options, leaps and warrants which are currently available to assist you with making your investment decisions.

We invite you to visit our website, view and listen to our new video tutorials, spend some time in learning center and sign up for our free Saturday email, The Warrant Report.

March 13, 2008
Dudley Pierce Baker
Guadalajara/Ajijic, Mexico
Email: info@preciousmetalswarrants.com
Website: PreciousMetalsWarrants.com

When Should I Sell My Silver??

2008-03-20T21:26:00.001-07:00

Larry LaBorde
Mar 18, 2008

People are always asking me, "When should I sell my silver?" Well that question is much easier to ask than to answer. I often times tell them whenever the government starts acting responsibly and not only balances the budget but finally decides that it has grown too fat and announces they are going on a fiscal diet.

Many people want an actual dollar target to write down so that they will know exactly when to get out. Well since the dollar is shrinking that target number keeps getting bigger. That is exactly the problem with a shrinking yardstick. It is hard to measure something today and for it to have any meaning in the future. So what can we use instead of dollars to measure when to sell our silver? Because make no mistake, there will be a time to sell sometime in the future.

Robert Kiyosaki, author of "Rich Dad, Poor Dad" recently stated that he has a large position in silver and plans to exit when his target is met. He says when the cost of a median priced single family home in the US sells for 500 oz of silver (or 40 oz of gold) he believes it will be time to exit the silver market. Of course he says he will not go back into dollars but most likely trade his silver for undervalued income producing real estate. So in other words he believes silver is still VERY undervalued at this point. As a matter of fact since the average existing single family home is now $218,000 it would take a silver price of $436/oz in today's money for 500 oz of silver to purchase it. So he is looking for another x 20 rise in silver value before the top is reached ($21 x 20 = $420/oz). Of course do not write $420/oz on the wall as your exit point because by the time we get there in the next 5 to 15 years that amount of federal reserve notes will not mean the same thing. You just have to stop thinking in terms of FRNs or dollars and start thinking in terms of value or what your silver will purchase.

Perhaps you may want to think in terms of how much oil your silver will purchase. In 1980 the average price of a single barrel of oil was equal to a single oz of silver or 1:1. After the 1980 silver price spike for the next 25 years the average price of a bbl of oil was just under 4.5 oz of silver (with a high of 2 to a low of 10). Today it is around 5 oz of silver for one bbl of oil. In the past 3 years the extremes have been a high of 4 to a low of 9 oz of silver per bbl of oil. Even though there has been a lot of volatility in both the oil and silver markets the average has remained around 4 to 6 oz of silver per bbl of oil. So perhaps the next drop to par with oil or 1:1 it may be time to sell your silver and trade for oil. Currently that would represent an increase of 5 times its current value.

Another consideration is the gold / silver ratio. The gold / silver ratio has been between 12 and 17 throughout most of recorded history. Only in my life time has the ratio gotten so out of balance. The high was reached in 1991 when it went up to 91 (1 oz of gold = 91 oz of silver). Since that time it has been trending downward. Currently the ratio is around 48:1 (1 oz of gold = 48 oz of silver). It is my opinion that the ratio will come back to its traditional value of 15 or 16. Since it has been so far above its ratio it may even overshoot it and drop down somewhere below 10 before it settles back to 15 or so. Therefore a ratio of 10:1 would put silver at $102.50/oz in today's dollars. A ratio of 15:1 would set silvers current price at $68/oz.

Another value would be the dow jones industrial average priced in oz of silver. The low for the DJIA / silver was 18:1 in 1980 (18 oz of silver could buy the DJIA). During the 2000 stock market peak the DJIA / silver was 2,500:1 (yep, it took 2,500 oz of silver to buy the DJIA). Currently it is about 570:1. So if it approached the extreme low of 18:1 then silver would currently have to sell for $665/oz (or 30 times higher). So maybe you should consider selling when the DJIA / silver ratio gets near 20:1.

So whether it is 20 times, 5 times or 30 times higher than it is right now I feel fairly confident telling anyone that the time to sell is NOT YET! Buy more and hang on for the ride of your life.

AP president: US arrests journalist in Iraq to 'control' information

2008-03-20T21:25:00.001-07:00

AP:

"Associated Press president Tom Curley says his news organization does not buy the government's argument that one of its photographers arrested in Iraq was working on behalf of the enemy, and he alleged the US is rounding up journalists in an attempt to control information.

'To say the least, we see things very differently,' Curley commented dryly, regarding photographer Bilal Hussein, who was arrested two years ago and remains in military custody.

Noting that at least a dozen other Iraqi photographers have been detained or arrested, Curley stated, 'It's impossible not to conclude that the words and pictures these journalists produced were considered unhelpful to the war effort and that their arrests would have served a broader strategy of information control.'"

Hands Off Venezuela.

2008-03-19T01:06:00.001-07:00

A London High Court judge on Tuesday suspended a court order which froze 12 billion dollars (7.6 billion euros) of assets owned by Venezuela state oil firm PDVSA in a dispute with US energy giant ExxonMobil.

"The judge hasn't allowed his court or his country to be an instrument'' of Exxon, Samuel Moncada, Venezuela's ambassador to the U.K., said in an interview. ``This decision should have an effect on any reasonable court in the world.''

Addressing a group of solidarity activists gathered to hear the ruling, Moncada added: "Over 2 weeks it has been argued, and an English judge has decided not to support the Exxon case, but to support the Venezuelan case. Your slogan, Hands off Venezuela, is more relevant than ever, today."

Yen vs DJIA

2008-03-18T17:52:00.000-07:00

America Was Conned: Who Will Pay?

2008-03-17T23:47:00.001-07:00

Guardian UK:

Bear Stearns marks the moment when the global financial crisis went critical. Up until last Friday, it had been possible - just about - to believe that the worst was over and that things were about to get better. That pretence was stripped away when JP Morgan, at the behest of the Federal Reserve, stepped in when the hedge funds pulled the plug on the fifth-biggest US investment bank.

It is now clear that no end is in sight to the turmoil, and the reason for that is that the Fed and the US treasury are no closer to solving the underlying problem than they were eight months ago. The crisis will only end when house prices stop falling and banks stop racking up huge losses on their loans. Doing that, however, will require the US government to intervene directly in the real estate market to end the wave of foreclosures. Ideologically, it is ill-equipped to take that step and, as a result, property prices will fall and the financial meltdown will go on and on.

Ultimately, though, action will be taken because there will be political pressure for it. Indeed, it is somewhat surprising that there is not already rioting in the streets, given the gigantic fraud perpetrated by the financial elite at the expense of ordinary Americans.

The US has just had its weakest period of expansion since the 1950s. Consumption growth has been poor. Investment growth has been modest. Exports have been sluggish. But if you are at the top of the tree, the years since the last recession in 2001 has been a veritable golden age. Salaries for executives have rocketed and profits have soared, because the productivity gains from a growing economy have been disproportionately skewed towards capital.

Patriotic

For ordinary Americans, though, it has been a different story. Real wages have been growing slowly; at just 1.6% a year on average over the latest upswing, well down on the experience of earlier decades. Business, of course, needs consumers to carry on spending in order to make money, so a way had to be found to persuade households to do their patriotic duty. The method chosen was simple. Whip up a colossal housing bubble, convince consumers that it makes sense to borrow money against the rising value of their homes to supplement their meagre real wage growth and watch the profits roll in.

As they did - for a while. Now it's payback time and the mood could get very ugly. Americans, to put it bluntly, have been conned. They have been duped by a bunch of serpent-tongued hucksters who packed up the wagon and made it across the county line before a lynch mob could be formed.

The debate now is not about whether the US is in recession but how deep and long that recession will be. Super-bears have started to say that this is perhaps "The Big One", by which they mean the onset of a new Great Depression. The need to rescue Bear Stearns has done little to still those voices.

As the economics team at HSBC recently pointed out, there has been a "catastrophic breakdown" of trust, and when that has happened in the past - the US in the 1930s, Japan in the 1990s - chucking extra money at the banks in the hope that they will start lending again proves ineffective.

It's not hard to see why trust has become such a rare commodity: Wall Street at the height of the securitisation mania had, in effect, become London at the time of the South Sea Bubble crisis in 1720. Vast quantities of funny paper were changing hands even though those involved in the deals had no idea of their true worth. Nor did they care. Inevitably, now the bubble has burst and the huge Ponzi securitisation scam has been exposed, there has been a reaction. The securitisation market is dead, there is less money sloshing round the system, banks are hoarding their cash.

Having allowed the housing boom to rage out of control for too long and then delaying cuts in interest rates until the housing market was gripped by recessionary forces, the Fed is now trying to make up for lost time with a burst of hyperactivity. It will cut interest rates on Wednesday and keep cutting them: financial markets expect the Fed funds rate to be 1% by the summer, and they are probably right. In most downturns, easier monetary policy does the trick. Lower interest rates make it cheaper to borrow and also change the trade-off between saving and spending. This may not be the usual sort of downturn, however, with consumers going through a period of debt revulsion after the excesses of recent years, even so the consensus is that after two or three quarters of falling output, a slow and sluggish recovery will be under way.

Deflation

These hopes are likely to be dashed, unless there is intervention at home and internationally to tackle the crisis. Domestically, the priority should be to stop homes that have been foreclosed being auctioned on the open market, since by selling them at a 50% discount property prices are driven down. The US does not seem to have learned the lessons from Japan, which encouraged a fire sale of property in the 1990s and was sucked into a classic debt deflation trap as a result. Those who argue, with some force, that it would be counter-productive to intervene in the market because the US needs to work the rottenness out of its system must recognise that the cold turkey option will be very long and painful.

The second form of intervention should be to shore up the dollar, the collapse of which is worrying countries that rely heavily on exports and is the main reason for the surge in commodity prices. Co-ordinated intervention by the major central banks needs to be at the top of the agenda at next month's G7 meeting in Washington, and there could be action even sooner if the dollar continues to tank.

In the longer term, lessons must be learnt from the turmoil. One is that you don't solve the problems of a collapsing bubble by blowing up another, which is what Alan Greenspan did after the dotcom fiasco in 2001 - the most irresponsible behaviour of any central banker in living memory.

The second lesson is that there has to be far stricter regulation not just of the US real estate market but of Wall Street, to prevent the return of irresponsible lending as soon as the recovery is firmly under way. If this is, heaven help us, The Big One, one of the only consolations will be that the repugnance at the orgy of speculation that has sapped the strength of the US economy will put a new New Deal on the political agenda.

But for this to happen there has to be a political response and even though this year's presidential election will be held in the shadow of recession, there appears not to be a potential FDR among the contenders for the White House. Yet if this crisis really does get as bad as some are forecasting, the public will rightly demand more than a slap on the wrist for Wall Street.

James Turk: Could Citi Go Under?

2008-03-17T03:58:00.001-07:00

Could Citibank Go Under?
FN Arena News - March 17 2008

By Greg Peel

James Turk is an international banking specialist who directs most of his attention to the gold and silver markets. But in the light of the Bear Stearns collapse, Turk has decided to have a closer look at US banks.

As questions arose last week, notes Turk, about the quality of Bear Stearns' US$395bn of assets carried on only US$12bn of equity, its customers and other brokers became unwilling to accept the counterparty risk that arises with transacting with Bear, while its lenders began worrying about repayment. Given that extent of leverage, it only takes a small decline in asset value to significantly erode the firm's equity base.

Bear is now gone, for the paltry sum of of around US$236m. But even though the 85-year old company was America's fifth largest investment bank, when you stack it up against the big US commercial banks it is merely a small fish. (Perhaps not the whale GaveKal has been anticipating). Unlike investment banks, which engage mostly in broking and dealing in capital markets, commercial banks are deposit and loan centres for the individual citizens and businesses of America's 300 million population. As such they are protected by the central bank lender of the last resort facility, which in turn requires the banks to maintain a certain level of capital adequacy. JP Morgan Chase, buyer of Bear, is America's second largest commercial bank, and it also has an investment banking business. The largest is Citibank, part of Citigroup. Citigroup also has an investment banking business.

Citibank nearly went under in 1991 (mirroring Westpac's experience in Australia) following on from the '87 crash, the junk bond/leveraged buyout boom, and the Savings & Loans crisis and a commercial real estate crash. It was then saved by Saudi Prince Al-Waleed bin Talal via an investment of US$590m. Turk suggests total losses in the financial system back then were about US$100bn. The numbers touted this time around are in the range of US$500-600bn. Around US$140bn has been written off to date. The London Daily Telegraph noted, following the US$200bn made available to investment banks by the Fed last Friday, in a long line of liquidity injections (or bail-outs by any other name), that "as the bail-outs are getting bigger, then clearly the problems causing them are getting bigger".

In which case size does not matter. The same problems which beset Bear Stearns are currently besetting every financial institution, including Citibank. But commercial banks enjoy certain advantages. As well as that Fed support, they have a Harry Potter-style "cloak of invisibility". While investment banks are required to mark their assets to market - the process which has forced all the write-downs - commercial banks are not. The argument in support is that loans on commercial bank books, such as mortgages, are not packaged up as tradeable securities. Instead they are held to maturity, in which case it matters not what value they may hold before that time. Nor are they beholden to ratings agency credit downgrades on corporates. Commercial banks can make up their own minds on what a loan to a company is worth.

Commercial banks do own tradeable securities, but these can be transferred into investment portfolios if they are not performing, again making them effectively disappear until maturity. But while this cloak might have its reasons, it doesn't hide the fact commercial banks still operate with a good deal of leverage.

Turk notes Citibank's leverage, measured as total liabilities divided by stockholders' equity, has increased each quarter from December 2005 to December 2007 - from 12.3x to 18.2x. This implies equity as a percentage of liabilities has declined in this period from 8.1% to 5.5%. However Citibank, like all banks, has intangible assets and goodwill forming part of its equity. These have also increased since 2005. Intangible assets and goodwill are worthless in a crisis, so removing these from the equation increases leverage to 41.6x.

(Clearly Bear Stearns is an example here of valueless intangible assets, given the brand name of the venerable 85-year old firm was effectively assigned a negative valuation as the company sold for less than the value of its premises. However, one might note the recent Westpac swoop on RAMS Home Loans, where the bank paid up to acquire the lender's brand name and distribution network. The latter case suggests intangible assets are not always valueless.)

On this basis Citibank's ratio of equity to tangible assets is 2.3%. Given the cloak of invisibility, it's impossible to determine the quality of those assets, but we do know that their value need only fall 2.3% before Citi is technically insolvent, even if it is still liquid and trading.

So what are the assets potentially worth?

Bear Stearns' total of Level 3 assets (derivatives the value of which are unknown except for a best guess given they rarely trade, eg CDOs) was US$28bn. According to the US Comptroller of Currency, Citi is a counterparty to derivatives positions with a notional value of US$34 trillion. Turk is not taking this number as gospel, employing the use of the editors' "(sic)" in his missive. This is understandable, as it is a fairly rubbery figure. The notional value of derivatives can be skewed by extreme leverage and risk open-endedness. And a number like US$34trn evokes a fantasy land of Monopoly money. Let's just say Citi's total exposure is a BIG number.

JP Morgan has warned that Wall Street is facing a "systematic margin call" on subprime mortgage securities alone of US$325bn. Citibank accounts for 10% of the capital of all US banks so taking US$32.5bn off Citi's capital would leave just US$17.2bn of tangible capital. This is before we start talking about calls on all the other now distressed securities. Turk notes Citi has already taken a credit-related loss of US$20bn in the second half of 2007, and in theory the first half of 2008 will only be worse. And banks do not perform well in recessions.

To reduce its leverage back to its December 2005 levels Citi would either have to raise US$46.9bn, meaning double it, or sell US$384.1bn of assets, Turk calculates. It can't sell assets because this would knock down security valuations further and thus erode it's own capital again, so it would be self-destructive. As to raising US$47bn, how could that be achieved in this current market?

For a conclusion, Turk turns to a statement made by David Rubenstein, co-founder of the private equity firm Carlyle Group. The Bear Stearns fiasco stole the financial headlines from last week's news of the collapse of Carlyle Capital, a securities investment hedge fund managed by the Group. Carlyle Capital defaulted on its loans to Citi, among others.

"This is the tip of the iceberg. People are looking at our situation and saying, 'There but for the grace of God go I'. There are others out there hanging on by their fingernails."

Lord Rothschild Throws Fundraiser for McCain.

2008-03-16T12:03:00.001-07:00

Sen. John McCain plans at least one campaign event on his week-long congressional trip to Europe and the Middle East: a March 20 fundraiser in London. An invitation sent out by the campaign says the luncheon will be held at Spencer House, St. James's Place, "by kind permission of Lord Rothschild OM GBE and the Hon Nathaniel Rothschild." Tickets to the invitation-only event cost $1,000 to $2,300. Attire is listed as "lounge suits."

Why The Fed's Wall Street Bailouts Won't Work.

2008-03-16T01:03:00.001-07:00

Former Labor Secretary Bob Reich:

So now the New York Fed is bailing out Bear Stearns. Earlier, Bernanke's Fed created an unprecedented $200 billion lending fund to Wall Street, offering Treasury securities in exchange for mortgage-backed securities. And there's talk of further Fed bailouts of Wall Street.

These bailouts won't work because the Street’s big banks are still sitting on what may be another three to four hundred billion dollars of bad debt. The rest of the world economy, through the magic of securitization, may be sitting on another few hundred billion. And because no one knows precisely how much or where this bad debt is, the risk premium is even higher. Which is why credit markets will remain more or less frozen.

We won’t be out of this mess until the speculative bubble that was created when the Fed cut slashed interest rates six years ago fully pops. For that to happen, Wall Street will have to face its real losses and write off another several hundred billion. And home owners across America will have to face their losses and watch the value of their houses drop another 10 percent, about to where they were before the bubble.

The Fed bailing out the big banks is like someone with an helium tank blowing more air into a leaky balloon. It only postpones the inevitable, which is that the balloon will lose its air and float back to earth. For markets to work again, speculative bubbles have to burst, one way or another.

The immediate practical question is how to manage the burst. A Wall Street bailout can help avoid runs on banks and runs on the dollar -- but only if conditioned on Wall Street pricing its assets close to their real market values.

The next question is how to cushion the blow for middle and lower-income people who might lose their homes or their jobs, cars, medical insurance, and large chunks of their pensions. This may require federally-subsidized insurance -- mortgage insurance so homeowners can meet payments, along with expanded unemployment insurance, health insurance, maybe even pension insurance. All hard to accomplish, but ultimately more important than bailing out the big banks.

Staglation/Hyperinflation Just The End of Your Way of Life?

2008-03-16T00:56:00.001-07:00

Craig Harris:

I haven't written anything for public consumption in a while, because I've been busy living in what I like to call, "the real world" and making my living by trading my own money. That's what I do these days. I'm a fly on the wall with electronic access to the dens of thieves.

If I come out on top then I transfer those digits for things I need.

Yes I'm still long gold from $290, and crude from $60 but whatever, I've been doing ok. I've been doing ok that is, if the money I have was worth what it used to be, but it isn't. So rather than just slap a label on what it is when words have already arguably lost their meaning, let's discuss it.

I am personally more concerned about quality of life issues than I am about money given the current circumstances.

The last time when I wrote publicly, I was talking about the decline of the empire and the end of the pre eminence of the US dollar...war, that sort of thing.

So that's what's going on now, what I was talking about then.

The US is currently in what I like to call a period of "decay". It is in a period of decay in every possible way. If you live in the real world like I do, it is evident. If you consume a diet of the corporate media cheerleading squad, then you don't live in the real world and it could be difficult for us to communicate during the rest of this essay. We've got people charged with cleaning up the corrupt broken system going out with an $80,000 hooker bill and being replaced by a blind man. The current El Presidente is a wind-up doll for a bunch that should all be in orange jumpsuits. It would be comical if it weren't so sad to watch it all go down. It is a modern day tragedy being played out in real time in the context of a giant government/corporate media theatre production.

It's amazing to me how people who are into politics or religion or whatever will violently oppose some opinions, when people simply report the facts they see around them. Anyway, again... another subject. Politics and religion are both the same thing. They are both simply effective methods to control large masses of people. I just figured that one out not too long ago when I was into my learning the history of the world project. It has always been that way and always will be.

So anyway, that's all I do to make my living. I assimilate the facts I see around me and invest accordingly. I keep a diary of what I think and why, and I even publish it. If I'm right I make money and if I'm wrong I lose money. I like it that way. It keeps me honest.

That's one reason I don't write a lot publicly these days. It is becoming increasingly difficult for people who live in the real world to communicate with those who don't, and there is an increasing number of those who don't just simply because most people believe what they are told and the lies they are being told are now monumental. Astronomical in size. That's one of those universal rules about human beings; the majority will always go along with whatever you tell them. That's just the way it always has been and always will be. All good propagandists know that.

For those who do think for themselves and live in the real world however, everything that is happening today has been entirely predictable and even expected. I mean, the corporate media will say "no one ever saw this" or "they never saw that" and really the case is they just choose not to have those people appear. That's a whole subject in itself however.

I was noting to my subscribers the other evening that if you take a look at a picture of a pump price for gas from ten years ago until now, that's around an 18% increase annualized every year for ten years. All the other prices in the real world have risen at commensurate levels like healthcare and all the big items people like me in the real world need to spend money on.

Furthermore, if you plot energy in the last five years, the numbers are bigger. If you plot the last two the numbers are bigger yet. The last one, bigger yet. So what we have here in the real world are prices accelerating at an ever-increasing double-digit rate. Call that what you want. We have real wages basically constant and good jobs are harder to come by. We have a middle class that is going away. We have the majority of the citizens having their wealth, if they still have any, confiscated due to the ravages of inflation, or with toxic financial contact with the healthcare/pharma, legal or government money machines. So in the "not real world" big brother and his corporate media outlets wants you to believe that there really hasn't been much inflation or any significant changes to the status quoand that lie is so big that you may even believe it.

So if you do, then you don't live in the real world and we cannot communicate effectively because what you think you know is the product of a corporate boardroom. What I know is the product of living.

The other big thing that has happened since I last wrote is that the guys on Wall Street figured out how to loan a bunch of money to people that had no ability or even real desire to repay that money except for the fact that house prices were sure to go ever higher which is the definition of a mania. So working through a little bit of that math, with an estimated 30% of homeowners currently upside down on their mortgages, that works out to around ten trillion dollars of real estate still to be walked away from according to simple math and a few basic assumptions I worked out the other night.

In the "not real world" they have told you from the outset that first there was no real estate bubble, then that there might have been one, then that it would be over quickly and now they aren't sure when it will be over and the PR firms are busy working on what to tell you next.

It's not going to be over any time soon. The big question in my mind is whether the whole thing is about to go kaput or if we are just going to witness a continuous decay as the wealth shifts into a very small percentage of the population... as the middle class flames out. Again, that is a subject in itself. That is the subject of the Straussian nightmare; a change in the form of government that is pitched as the same thing as the old government.

So on top of this Wall Street genius of loaning money to people who could not pay, you have the cure for all this mess being printing more money (creating more debt). So they're going to fix a problem of too much debt by creating more debt. Perfect. They're even monetizing it by taking nearly worthless debt for brand new money created with the push of a button and an organized media campaign to tell you what they did and why it was good and why it was not monetization or covert nationalization of the banking system. It is what it is, call it what you want.

So the idea is that by pushing buttons you can cure these ills, but the reality is that big pile of new money is diluting the old money and sending the US dollar into the toilet. I mean, they're pitching it as all good, and what's left of the free markets are in sharp disagreement with the party line.

Now; the only reason the USA has gotten away with the idea that this balance sheet was compatible with the idea of being the world's reserve currency was that the USA was the global kingpin, the Mac daddy... until the empire did what all empires do and that's get too big for their britches.

Then they always start going off expanding the empire into places that are too expensive to maintain, imposing their will on people who don't want their will imposed on, and then that all gets so expensive and they start making so many enemies they start going bankrupt. That's what always happens. It always does. That's probably another one of those human nature things.

So in the real world right now, we have a situation where the banks are bankrupt, the government is bankrupt, the people are bankrupt, and the cure for this is to lower interest rates and create more money (debt) by pushing a button... diluting the value of the money further and causing everything we have going on now. It all makes sense here in the real world. All the pieces to the puzzle fit and none don't.

So is this stagflation or is this hyperinflation? Well, I'm not carrying a wheelbarrow around with my money in it yet, but I do know the prices and costs of everything I need to live are going up at an ever-increasing rate.
The shape of that curve is a polynomial consistent with ever accelerating inflation which some would call hyperinflation. I know that if I earn a 20% return, then I might be keeping up with the increase in the costs of everything I need to maintain my personal status quo. If you can balance a checkbook and multiply, then you know. If you are one of the ones who believe everything you're told, then you have to not believe your lying eyes or not be able to balance a checkbook.

When the cure for all problems can only be to lower interest rates and dilute the supply of the money by creating more money, then that is a vicious cycle consistent with acceleration or hyperinflation.

I really don't like it when people casually compare what is going on right now to 1929, because in 1929 the cure was basically to spend less and now the cure is basically to spend more. Even worse, being the geniuses we are, we figured out a way to amplify spending, called derivatives. They're based on the real thing but amplifiedlike 100 times. So we've already been doing the "cure" for so long that maybe the patient is no longer responding?

So what we are currently seeing, in both gold and crude oil is a loss of confidence. It's a loss of confidence that this whole thing makes any sense.

It's a loss of confidence in the absurd idea that you can create wealth by pushing a button. Since this whole thing now relies solely on confidence and not any intrinsic value, commodities, especially gold and crude oil, are acting as alternative wealth storage devices to paper currency.

If you have a bushel of corn, then you know what that is. You can eat it, or do a bunch of other stuff with it. With a piece of paper with a picture and official looking numbers on it, well you aren't as sure as you were yesterday what you can do with that. There will be no run on the banks this time around, because the banks can always be refilled with ever more worthless money. Instead of a run on the banks, there will be a run on the dollar. A run on the dollar (or run into commodities) is the modern equivalent to a run on the banks back then, for the reasons I'll get into shortly.

So there is a loss of confidence roughly equal to people's confidence in the government and the banking system. This decreased confidence is fueled by the fact that they are creating too much money. The idea with fiat money is that you only grow the amount of it as the total output of the economy increases otherwise you are diluting it. The thought experiment for that goes like this. You have one giant pile of stuff, and one giant pile of money. Right now there is enough money so that one-dollar gets one pound of stuff. Now, if you double the amount of that money, then it takes two dollars to equal one pound of that stuff. Unless the pound of stuff doubles in size, you have just caused 100% price inflation. So, operations like just zapping a half a trillion or so into existence out of thin air means just a bigger pile of money going after the same amount of stuff. So that's what we have going on now. These are financial engineering acts of desperation to save a system by giving it more of what got it to this point in the first place... debt. So when regular people like me think about that, they think, that doesn't make any sense, and they lose confidence.

That's in the real world. On TV things are still good though. So if you don't like what you're reading here, then go turn on the TV. You'll feel better.

I hate to simplify things too much, but this is the reason Mr. Greenspan called gold the conscience of the central bankers back in the 60's before he lost his mind or whatever happened. Maybe he couldn't resist the power of the ring or something... I don't know. Anyway, it's their conscience because they can't just zap gold into existence with the stroke of a pen.

Guess what? They can zap money into existence now. Poof - you've got money.

Any amount you want. That's why this is fundamentally different from the great depression. This time, they can just increase the giant pile of money. they can just drop it out of helicopters if they have to. They even said so... and it isn't going to buy as much stuff. It doesn't already.

So you still have the same basic problem from a human standpoint. That's the really interesting thing. In other words, whether you have a deflation like in the 30's or an inflation like now, the people suffer similar effects. It's hard to find a job, you can't make ends meet, city and government functions and services are understaffed and underfunded, and you are hungry. They are both a state of decay. Both usually end in war too.

The last one did. This one is different however in a lot of ways... and it's much more serious. It is fundamentally different because it is the end of the world's first experiment in government by the people and it has been replaced by something new.

So if you're into labels, then maybe you can find a label for what to call this. I like to quote Lenin on that:
"Fascism is capitalism in decay." -Vladimir Lenin

So I really don't want to get into all that implies in a short essay, but I will condense it all and say the US is in a state of decay. Political, socioeconomic, leadership, influence, status, any label you can think of.

The US is losing power and influence in the world, and it only has 5% of the world's populationand they're all bankrupt. I like to think of it like a continuum from the US coming out on top after WWII to a banana republic run by El Presidente. That's what I call them now, whoever he or she is, El Presidente because that's what they are. A corporate spokesman who is put there, bought and paid for by Acme corp.

The country has lost its way and is increasingly operating at the whim of the corporate lobbyists and special interests that own the politicians as the stench of it all starts to smell so foul that even the corporate media disinformation campaign can't convince your lying eyes. It is not what it appears to be. It is Rome circa 400's. It has already bankrupted itself policing an unsustainably large global empire. You have to live through the decline.

So that all gets into people living in the real world versus those who are not. Again, it's safe to say that the world is voting with its dollars... and the 5% of the world's population are going down hard on 95% leverage. They aren't going to like it either.

Tune in next time to hear which states secede first.

Market Panic.

2008-03-15T23:53:00.001-07:00

JS Mineset:

We are watching the biggest panic in global financial markets that has occurred in my 65 years of life and 50 years of stock, bond and commodities investing.

It’s the Saint Patrick’s Day weekend and old Saint Patrick would probably be fascinated to see all the rich and worldly people running around in a panic.

Yesterday, JP Morgan and the U.S. Federal Reserve began a credit lifeline to Bear Stearns. This is a long and complicated story but I will attempt to summarize.

Bear Stearns had a run much like the bank runs of the late 19th and early 20th centuries. It had something to do with Bear Stearns itself but not as much as you would think if you were an average, fairly sophisticated citizen with some understanding of how the financial markets work.

I believe that most financial professionals may not completely understand what is happening. The lifeline and financing was done not to protect Bear Stearns alone but to protect the entire global banking system.

Bear Stearns is a PRIMARY DEALER IN U.S. GOVERNMENT BONDS. This is a very small and very important club. They have also been a leader in the business of prime brokerage and in the field of trade settlement and clearing - two very profitable mostly fee-based businesses that have been the envy of many other financial institutions. These have been their cash cows and very attractive businesses that have long been sought by other buyers.

Although Bear Stearns is quite large, it is the smallest of the top U.S. government bond dealers. So if someone wants to attack the system they will attack the smallest of the truly powerful bond houses. Bear Stearns, like all major mostly bond dealers and traders, also trades in mortgage bonds and derivatives and this is where its problems arose.

Bear Stearns' CEO said on Wednesday that the company was well capitalized and that its balance sheet is strong. I believe he was telling the truth. However, they are not immune to a run on the bank. IN FACT, NEITHER IS ANY OTHER MAJOR BANK OR INVESTMENT BANK IN THE ENTIRE WORLD.

BEAR STEARNS AS A PRIMARY DEALER CANNOT BE ALLOWED TO FAIL WITHOUT UNDERMIINING THE CONFIDENCE IN THE U.S. AND THE WORLD FINANCIAL SYSTEM.

BEAR STEARNS WAS PROTECTED FROM FAILING TO MEET ITS COMMITMENTS TO COUNTERPARTIES BECAUSE TO LET A PRIMARY DEALER FAIL WOULD MEAN A RUN ON EVERY MAJOR BANKING AND INVESTMENT BANKING INSTITUTION IN THE DEVELOPED WORLD. AND THAT WOULD ALMOST CERTAINLY LEAD TO A MASSIVE GLOBAL DEPRESSION. THIS IS MY CONSIDERED AND FIRM OPINION.

CONCLUSION

Events seem to be validating the opinion that Jim Sinclair and I have been propounding on these pages for a long time.

NO MAJOR U.S. BANKING INSTITUITON WILL BE ALLOWED TO FAIL TO MEET ITS COMMITMENTS TO DEPOSITORS AND COUNTERPARTIES. To do so would be an admission of defeat by the governmental agencies and institutions that exist to prevent events like these from happening including the Great Depression of the 1930’s.

CENTRAL BANKS EVERYWHERE HAVE NO OPTION BUT TO REFLATE AND SUPPLY LIQUIDITY TO THE WORLD FINANCIAL SYSTEM. FURTHERMORE, THEY HAVE BEEN DOING THAT SINCE THE CRISIS BECAME OBVIOUS ABOUT 6 MONTHS AGO.

All of the themes that I said had to be fulfilled to solve the problem are not yet finalized. But congress is working to create an agency to buy bad loans and the U.S. Federal Reserve has been doing it for months now.

Some countries have been slower than others to recognize the problem. But now all do and they will make haste with liquidity, government bail out programs for banks, bank nationalizations if necessary, government aid to mortgage holders and many other programs designed to get the problem behind us as soon as possible and to buy votes in the process.

WHAT LIES AHEAD?

THE SHORT ANSWER TO WHAT THE FUTURE HOLDS IS MORE INFLATION, HIGHER GOLD PRICES, HIGHER COMMODITY PRICES AND A LOT LOWER PRICES FOR BONDS.

If you review the statements by Jim and by myself in the past several years all of the events currently taking place have been predicted and explained.

Jim Sinclair: This Is It!

2008-03-15T13:43:00.001-07:00

Jim Sinclair's MineSet:

"Never in economic history has there been a night like tonight. I am writing later than usual because of the enormity of all the converging forces. The euro reaches for $1.60, the Middle East oil producers are in shock, and the IMF tells the world to ‘plan for the worst.’

The reason this missive is late is because I am reverberating at the speed of the disintegration. These cursed OTC derivatives and their makers, who incidentally made the international banking community rich beyond your wildest dreams, are now unwinding at lightening speed.

Do you think any entity with any OTC derivative now has faith in the paper?

This paper is $550 trillion plus dollars in notional value. The horrible fact is that in bankruptcy notional value becomes real value with the capacity to destroy the world financial system.

The above is no wild assumption. It is hard, cold fact.

• Expect currency intervention to slow down the rise of the euro.
• Intervention has never worked. It will not now. In fact, it will backfire so fast that the effort will be abandoned, making things even worse.
• Intervention in currency, the dollar, will only provide the capacity for other central banks, oil producers and holders of high risk long US treasury paper to diversify out in huge amounts of decaying dollars at singular prices.
• I could go through a tome on how intervention works, but accept that any rise in short rates will break the bank immediately. Intervention in the euro/dollar is another practical impossibility except as a bluff.
• There is no practical solution to today’s TERMINAL problems and that means you are up to your eyeballs in alligators.
• You must protect yourselves.
• Gold is going to $1650. In all probability my major error will be in forecasting a price that is much too low for gold.
• The ratio spread long the major gold producers, short the juniors, is going to kill the math whizzes that think they are in the captain’s seat. The reason is the only value still in precious metals shares lies in the best junior issues these geeks have been hammering.
• The prayer that a junior with quality assets has is that the illegal short position is enormous.

This is it!"

Marc Faber on the Financial Markets.

2008-03-14T21:00:00.001-07:00

The $200 billion bail-out for predator banks and Spitzer charges are intimately linked

2008-03-14T18:25:00.001-07:00

By Greg Palast
Reporting for Air America Radio’s Clout

While New York Governor Eliot Spitzer was paying an ‘escort’ $4,300 in a hotel room in Washington, just down the road, George Bush’s new Federal Reserve Board Chairman, Ben Bernanke, was secretly handing over $200 billion in a tryst with mortgage bank industry speculators.

Both acts were wanton, wicked and lewd. But there’s a BIG difference. The Governor was using his own checkbook. Bush’s man Bernanke was using ours.

This week, Bernanke’s Fed, for the first time in its history, loaned a selected coterie of banks one-fifth of a trillion dollars to guarantee these banks’ mortgage-backed junk bonds. The deluge of public loot was an eye-popping windfall to the very banking predators who have brought two million families to the brink of foreclosure.

Up until Wednesday, there was one single, lonely politician who stood in the way of this creepy little assignation at the bankers’ bordello: Eliot Spitzer.

Who are they kidding? Spitzer’s lynching and the bankers’ enriching are intimately tied.

How? Follow the money.

The press has swallowed Wall Street’s line that millions of US families are about to lose their homes because they bought homes they couldn’t afford or took loans too big for their wallets. Ba-LON-ey. That’s blaming the victim.

Here’s what happened. Since the Bush regime came to power, a new species of loan became the norm, the ‘sub-prime’ mortgage and its variants including loans with teeny “introductory” interest rates. From out of nowhere, a company called ‘Countrywide’ became America’s top mortgage lender, accounting for one in five home loans, a large chunk of these ‘sub-prime.’

Here’s how it worked: The Grinning Family, with US average household income, gets a $200,000 mortgage at 4% for two years. Their $955 monthly payment is 25% of their income. No problem. Their banker promises them a new mortgage, again at the cheap rate, in two years. But in two years, the promise ain’t worth a can of spam and the Grinnings are told to scram - because their house is now worth less than the mortgage. Now, the mortgage hits 9% or $1,609 plus fees to recover the “discount” they had for two years. Suddenly, payments equal 42% to 50% of pre-tax income. The Grinnings move into their Toyota.

Now, what kind of American is ‘sub-prime.’ Guess. No peeking. Here’s a hint: 73% of HIGH INCOME Black and Hispanic borrowers were given sub-prime loans versus 17% of similar-income Whites. Dark-skinned borrowers aren’t stupid – they had no choice. They were ‘steered’ as it’s called in the mortgage sharking business.

‘Steering,’ sub-prime loans with usurious kickers, fake inducements to over-borrow, called ‘fraudulent conveyance’ or ‘predatory lending’ under US law, were almost completely forbidden in the olden days (Clinton Administration and earlier) by federal regulators and state laws as nothing more than fancy loan-sharking.

But when the Bush regime took over, Countrywide and its banking brethren were told to party hearty – it was OK now to steer’m, fake’m, charge’m and take’m.

But there was this annoying party-pooper. The Attorney General of New York, Eliot Spitzer, who sued these guys to a fare-thee-well. Or tried to.

Instead of regulating the banks that had run amok, Bush’s regulators went on the warpath against Spitzer and states attempting to stop predatory practices. Making an unprecedented use of the legal power of “federal pre-emption,” Bush-bots ordered the states to NOT enforce their consumer protection laws.

Indeed, the feds actually filed a lawsuit to block Spitzer’s investigation of ugly racial mortgage steering. Bush’s banking buddies were especially steamed that Spitzer hammered bank practices across the nation using New York State laws.

Spitzer not only took on Countrywide, he took on their predatory enablers in the investment banking community. Behind Countrywide was the Mother Shark, its funder and now owner, Bank of America. Others joined the sharkfest: Goldman Sachs, Merrill Lynch and Citigroup’s Citibank made mortgage usury their major profit centers. They did this through a bit of financial legerdemain called “securitization.”

What that means is that they took a bunch of junk mortgages, like the Grinning’s, loans about to go down the toilet and re-packaged them into “tranches” of bonds which were stamped “AAA” - top grade - by bond rating agencies. These gold-painted turds were sold as sparkling safe investments to US school district pension funds and town governments in Finland (really).

When the housing bubble burst and the paint flaked off, investors were left with the poop and the bankers were left with bonuses. Countrywide’s top man, Angelo Mozilo, will ‘earn’ a $77 million buy-out bonus this year on top of the $656 million - over half a billion dollars – he pulled in from 1998 through 2007.

But there were rumblings that the party would soon be over. Angry regulators, burned investors and the weight of millions of homes about to be boarded up were causing the sharks to sink. Countrywide’s stock was down 50%, and Citigroup was off 38%, not pleasing to the Gulf sheiks who now control its biggest share blocks.

Then, on Wednesday of this week, the unthinkable happened. Carlyle Capital went bankrupt. Who? That’s Carlyle as in Carlyle Group. James Baker, Senior Counsel. Notable partners, former and past: George Bush, the Bin Laden family and more dictators, potentates, pirates and presidents than you can count.

The Fed had to act. Bernanke opened the vault and dumped $200 billion on the poor little suffering bankers. They got the public treasure – and got to keep the Grinning’s house. There was no ‘quid’ of a foreclosure moratorium for the ‘pro quo’ of public bailout. Not one family was saved – but not one banker was left behind.

Every mortgage sharking operation shot up in value. Mozilo’s Countrywide stock rose 17% in one day. The Citi sheiks saw their company’s stock rise $10 billion in an afternoon.

And that very same day the bail-out was decided – what a coinkydink! – the man called, ‘The Sheriff of Wall Street’ was cuffed. Spitzer was silenced.

Do I believe the banks called Justice and said, “Take him down today!” Naw, that’s not how the system works. But the big players knew that unless Spitzer was taken out, he would create enough ruckus to spoil the party. Headlines in the financial press – one was “Wall Street Declares War on Spitzer” - made clear to Bush’s enforcers at Justice who their number one target should be. And it wasn’t Bin Laden.

It was the night of February 13 when Spitzer made the bone-headed choice to order take-out in his Washington Hotel room. He had just finished signing these words for the Washington Post about predatory loans:

“Not only did the Bush administration do nothing to protect consumers, it embarked on an aggressive and unprecedented campaign to prevent states from protecting their residents from the very problems to which the federal government was turning a blind eye.”

Bush, Spitzer said right in the headline, was the “Predator Lenders’ Partner in Crime.” The President, said Spitzer, was a fugitive from justice. And Spitzer was in Washington to launch a campaign to take on the Bush regime and the biggest financial powers on the planet.

Spitzer wrote, “When history tells the story of the subprime lending crisis and recounts its devastating effects on the lives of so many innocent homeowners the Bush administration will not be judged favorably.”

But now, the Administration can rest assured that this love story – of Bush and his bankers - will not be told by history at all – now that the Sheriff of Wall Street has fallen on his own gun.

A note on “Prosecutorial Indiscretion.”

Back in the day when I was an investigator of racketeers for government, the federal prosecutor I was assisting was deciding whether to launch a case based on his negotiations for airtime with 60 Minutes. I’m not allowed to tell you the prosecutor’s name, but I want to mention he was recently seen shouting, “Florida is Rudi country! Florida is Rudi country!”

Not all crimes lead to federal bust or even public exposure. It’s up to something called “prosecutorial discretion.”

Funny thing, this ‘discretion.’ For example, Senator David Vitter, Republican of Louisiana, paid Washington DC prostitutes to put him in diapers (ewww!), yet the Senator was not exposed by the US prosecutors busting the pimp-ring that pampered him.
Naming and shaming and ruining Spitzer – rarely done in these cases - was made at the ‘discretion’ of Bush’s Justice Department.

Or maybe we should say, ‘indiscretion.’

************
Greg Palast, former investigator of financial fraud, is the author of the New York Times bestsellers Armed Madhouse and The Best Democracy Money Can Buy.

¡Caliente!

2008-03-14T18:16:00.001-07:00

CARACAS (Dow Jones)--Venezuela's Petroleos de Venezuela, PdVSA, is now demanding euros instead of dollars in payment for some oil sales, a company spokeswoman confirmed Friday.

"Oil Minister Rafael Ramirez has noted that PdVSA has has worked on some deals to make sure it receives european currency as payment," a spokeswoman for PdVSA confirmed.

No details were made available regarding what kind of oil deals are included in this new payment form.

A move towards euros comes after President Hugo Chavez and Minister Ramirez have long vowed to move away from U.S. currency to price the country's oil.

Venezuela and Iran have both been strong advocates within the Organization of Petroleum Exporting Countries, OPEC, to adopt a currency basket as a way to price the crude of member countries. So far the proposal has failed to gain traction.

and theeeeeeeen

QUITO, Ecuador: Ecuador's president is challenging U.S. President George W. Bush to send troops to the Andean nation's border with Colombia "or shut your mouth" about

Rafael Correa made the comments late Thursday in angry response to Bush's strong support for Colombia after it raided a rebel camp on Ecuadorean soil on March 1 — an act that Correa denounced as an attack on his country's sovereignty.

"Bring your soldiers Mr. Bush," Correa said during a heated speech late Thursday. "Let it be your soldiers who die along the southern border with Colombia. We'll see if the Americans, the citizens of the United States will accept tremendous atrocity.

"If not, shut your mouth and understand what is happening in Latin America."

and theeeeeeen

Chavez Says US Can 'Shove' Terror List

By JORGE RUEDA – 44 minutes ago

CARACAS, Venezuela (AP) — President Hugo Chavez dared the U.S. on Friday to put Venezuela on a list of countries accused of supporting terrorism, calling it one more attempt by Washington to undermine him for political reasons.

Chavez said the "threat to include us on the terrorist list" is Washington's response to his government's successes in the region.

U.S. lawmakers including Reps. Connie Mack and Ileana Ros-Lehtinen, both Florida Republicans, have called for the State Department to add Venezuela to its list of terror sponsors, which includes North Korea, Iran, Syria, Sudan and Cuba. They have expressed concerns about what they call Chavez's close ties to Colombia's leftist rebels.

"Let them make that list and shove it in their pocket," Chavez said in a televised speech.

"We shouldn't forget for an instant that we're in a battle against North American imperialism," Chavez said. "On this continent, they have us as enemy No. 1."

Iran, Venezuela vs. The Petrodollar.

2008-03-14T18:13:00.001-07:00

WND:

Iran and Venezuela have joined forces in an effort to undermine the U.S. dollar. In October 2005, Venezuelan President Hugo Chavez announced that Venezuela was ready to move the country's foreign-exchange holdings out of the dollar and into the euro. He also called for the creation of a South American central bank designed to hold in euros all the foreign-exchange holdings of the participating countries.

Beginning in 2003, Iran began demanding oil payment in euros, not dollars, although the oil itself was still priced in dollars. Iran has announced the intention of opening an Iranian Oil Bourse in March to challenge NYMEX (the New York Mercantile Exchange) and IPE (London's International Petroleum Exchange).

Saddam Hussein may well have signed his death warrant in 2000 when he began the process of convincing the United Nations that Iraq could sell Iraqi oil for euros, not dollars. Saddam ultimately received U.N. permission to convert Iraq's $10 billion oil-for-food foreign reserves from dollars to euros.

The risk to the United States does not involve how oil is priced -- oil could conceivably be priced in any liquid currency, since pricing is a largely technical issue needed to establish transaction values. The real issue is foreign-currency reserves.

The United States relies on approximately 70 percent of all foreign-exchange currency to be held in dollars because we sell Treasury debt into that foreign-exchange market. Should Venezuela and Iran succeed in creating a worldwide flight of foreign-exchange reserves away from the dollar and into the euro, the move could depress the value of the dollar.

Dwindling foreign exchange dollar holdings could end up pushing the Treasury to sell debt into a smaller international supply of dollars, with the dollar not being as strong as it is today. Increasing the cost of our "twin deficits" -- the budget deficit and the trade deficit -- would have detrimental effects on the U.S. economy and on a Bush administration which seems to have lost traditional Republican budgetary discipline.

As the world's foreign-exchange currency market expands, we should probably expect some reduction in the dollar holdings of central banks. A move to hold more euros may simply represent a decision by a central bank to diversify their foreign-currency holdings, thereby hedging their risk from fluctuations in the dollar. Venezuela and Iran have in mind a politically motivated decision to move out of foreign-exchange currency holdings in the dollar as a conscious decision to wage economic war against America.

In 2004, the Switzerland-based Bank for International Settlement reported that the U.S. dollar-denominated deposits of OPEC countries fell from 75 percent of their total deposits in the third quarter of 2001 to 61.5 percent by the end of 2003. In the same period, the share of euro-denominated deposits of OPEC countries rose from 12 percent to 20 percent. OPEC member euro-denominated deposits reached 44 billion in June 2004, nearly double the 23.4 billion euros these countries held in the third quarter of 2001. In the same period of time, the dollar holdings of the OPEC member countries decreased from $145.3 billion to $132.1 billion.

In 2005, China negotiated major oil and natural-gas rights from Iran. Now under pressure of being referred to the Security Council over their nuclear program, Iran is counting on China to veto any strong move by the United States to have Iran sanctioned.

After Japan, China has the world's second-largest cache of foreign-exchange currency -- some $800 billion today -- an amount that is expected to grow to $1 trillion this year. In January 2006, China announced an intention to reduce 75 percent of its foreign-exchange reserves currently held in the dollar. Economists widely expect China's move will put downward pressure on the dollar, depending on how much diversification China decides to make into other world currencies. As Iran struggles to fight off world pressure over the defiant path it has chosen to take in pursuing nuclear technologies, Iran might well seek to convince China to hold significantly fewer dollars in their foreign-exchange reserves.

Venezuela and Iran have much in common -- both countries are radically anti-America, both have extensive oil reserves, both are resolved to use oil as an economic weapon against the United States. The three countries voting against the IAEA resolution on Feb. 4 were Cuba, Syria and Venezuela. Iranian President Mahmoud Ahmadinejad has just accepted an invitation from Fidel Castro to visit Havana to attend the Sept. 11-16 Non-Aligned Summit and most likely to address the Cuban National Assembly.

A Tehran-Caracas Axis clearly extends also to Havana and Damascus. Whether we realize it or not, we are already involved in an economic war that could easily turn into a shooting war, starting with Iran.

Paul Craig Roberts: Death of the Dollar.

2008-03-14T17:39:00.001-07:00

I’ve been watching the dollar die all my life. I sometimes think I will outlast it.

When I was a young man, gold was $35 an ounce. Today one ounce gold bullion coins, such as the Canadian Maple Leaf, cost more than $1,000.

Our coinage was silver. Our dimes, quarters, and half dollars had purchasing power. Even the nickel could purchase a candy bar, ice cream cone or soft drink, and a penny could purchase bubble gum or hard candy. If a kid could collect 5 discarded soft drink bottles from a construction site, the 2 cents deposit on the returnable bottles was enough for the Saturday afternoon movie. Gasoline was 32 cents a gallon. A dollar’s worth was enough for a Saturday night date.

Our silver coinage was 90 per cent silver. People sometimes melted coins in order to make silver spoons, known as coin silver, which can still be found in antique shops. Except for the reduced silver (40 per cent) Kennedy half dollar which continued until 1970, 1964 was the last year of America’s silver coinage. The copper penny departed in 1982. As Assistant Secretary of the Treasury, I opposed the demise of America’s last commodity money, but I couldn’t prevent the copper penny’s death.

During World War II (1941-1945), nickel was diverted from coinage to war, and the US mint issued a wartime silver (35 per cent) nickel.

It is not easy to find items to purchase with today’s US coins, but the silver coins of the same face value still have purchasing power. The 10 cent piece of my youth contains $1.42 worth of silver at today’s silver price. The quarter is worth $3.55, and the half dollar contains $7.10 of silver. The silver dollar is worth 15.2 times its face value. These are just the silver values of coins that might be worth far more depending on condition and rarity. The silver in the wartime nickel is worth $1.10, which is 22 times the coin’s face value. Even the copper penny is worth 2.5 cents.

When I was a young man enjoying travels in Europe, the German mark or Swiss franc traded four to one US dollar. The euro, which is today’s equivalent to the mark, costs $1.55.

People who haven’t accumulated much age have little idea of the corrosive power of “acceptable” inflation. Unlike gold and silver, fiat money has no intrinsic value. When money is created faster than goods and services it drives up prices, thus driving down the value of the money. If freely traded currencies are excessively printed or if inflation, budget deficits, and trade deficits drive currencies off their fixed exchange rates, prices of imports rise as the foreign exchange value of the currency falls.

Today the US, heavily dependent on imports, is subject to double-barrel inflation from both domestic money creation and decline in the dollar’s foreign exchange value.

The US inflation rate is about twice as high as the government’s inflation measures report. In order to hold down Social Security payments, the government changed the way it measures inflation. In the old measure, inflation measured the nominal cost of a defined standard of living. If the price of steak rose, up went the inflation rate. Today if the price of steak rises, the government assumes that people switch to hamburger. Inflation doesn’t go up. Instead, the standard of living it measures goes down.

This is just one of the many ways that the government pulls the wool over our eyes.

With the dollar value of the euro rising through the roof, today a vacation in Europe is far more costly than in the past. Thanks to China, so far Americans have been sheltered from the greatest effects of the dollar’s declining value. Our greatest trade deficit is with China. The prices of the goods from China have not risen, because China keeps its currency pegged to the dollar. As the dollar goes down, China’s currency goes with it, thus holding down price rises.

The resignation of Admiral William Fallon as US military commander in the Middle East probably signals a Bush Regime attack on Iran. Fallon said that there would be no US attack on Iran on his watch. As there was no reason for Fallon to resign, it is not farfetched to conclude that Bush has removed an obstacle to war with Iran.

The US is already over stretched both militarily and economically. An attack on Iran is likely to be the straw that breaks the camel’s back.

Chinese Strategy.

2008-03-14T13:00:00.001-07:00

ATOL:

The ancient Chinese generally didn't want a bloody fight, especially if there were high odds of losing, Moriya argues. Today's officials, wary of the 1989 Tiananmen massacre, know they would lose an international public relations battle if they used violence against protesting citizens. So they, and other modern Chinese in schools, offices and even big messy families, use some of these old battle strategies to get one over on perceived adversaries while minimizing aftershocks.

The strategies, taken from the I Ching, which was theoretically written almost 5,000 years ago, rely on deception and other psych-outs, eliminating the need for much real firepower, Moriya effectively explains. His 255-page guide to shafting your enemy concisely describes each strategy and gives examples of how Chinese dynastic leaders would wield it in battle. Several chapters describe how Mao Zedong's armies applied the theories, and how those ruses were adopted by the former Soviet Union and Germany in World War II and elsewhere.

Among the more memorable strategies: Make an enemy think you're doing one thing while you sneakily do another; divide a strong army geographically and then reduce it by attacking the weak points; exploit dissent within enemy ranks and keep faking attacks until an enemy thinks you're not really up for a real fight - then finally wage war when least expected. A garrison commander during the Tang Dynasty, for example, twice lowered 1,000 soldier-like straw mannequins down a fortress wall in front of rebel forces, who rolled their collective eyes. When he sent in real soldiers later, the enemy imagined mannequins again and quickly lost the battle.

Another strategy explains how ancient Chinese would delude an enemy into suspecting internal dissent among powerful leaders, leading to the elimination of the people most likely to win a battle. In that spirit, Stalin executed a top general, Marshal Tohachevski, after Hitler secretly fabricated documents that accused him of treason.

"Recent times have produced good examples of this strategy, even though you might think that such a transparent, wedge-driving ploy would no longer be effective," Moriya writes. He adds that this strategy "has an equally comfortable home in the relations between individuals as well".

Other lessons, we learn, can be used to beat bigger rivals in business, say by introducing niche products that mega-companies haven't produced. "I would request strongly that it be read as a book whose practices can enliven our present world," Moriya writes.

US in 'Checkbook War' with China.

2008-03-14T12:56:00.001-07:00

ATOL:

One might assume that the approaching end of the George W Bush presidency is the beginning of the end of the American empire, at least as empire-building is usually seen - as an attempt to impose power on others by force.

The reason is simple: US forces in Iraq and Afghanistan are badly stretched, and the pleas of US Secretary of Defense Robert Gates to European countries to send more combat troops have fallen on deaf ears. Still, John McCain, the Republican presidential nominee, notes that the war could proceed "for a hundred years".

The war in the Middle East is qualitatively different from the Vietnam War, in which McCain participated. In withdrawing from Southeast Asia, the US actually put itself out of danger, its battered prestige notwithstanding. The point is that Vietnam would not make any attempt to create problems for the US at the end of formal hostilities.

The situation is entirely different in Iraq and Afghanistan, where the US debacle will lead to intensifying efforts to harm American interests - and not only those of the US, but countries all over the globe.

From this perspective, the current wars are open-ended conflicts from which the US cannot extricate itself. Therefore, one could argue that the American empire is coming to its end and its global span could well be replaced by other powers, with China as the major candidate. The present situation in Africa serves as a prime example.

Recently, Bush visited Africa. While on the surface this was an expression of goodwill and an indication of US concern for African problems - poverty and the spread of pandemic disease, mostly - there were other purely pragmatic implications of the visit. One of these was Washington's attempt to counter China's growing influence. And in this competition with China, the US employs a weapon quite different from those used in Afghanistan and Iraq: the checkbook.

Financial and economic assistance was widely used during the Cold War. In fact, in Africa, as well as in other parts of the world, attachment to either "socialism" or "capitalism" was directly connected to the amount of cash or assistance received from the respective superpowers. And while the former Soviet Union could often prevail in the case of direct military confrontation between its proxy and the Americans' proxy, it usually failed when the checkbook was employed. The US could easily outspend its rival, as at the time it was engaged in a "checkbook war" on a global scale.

These goodwill trips, which often went along with the distribution of American largesse, were one of the important aspects of US foreign policy of the period. Nothing of this sort can be seen today. For example, in Bush's recent visit to Africa, undertaken on the last leg of his presidency, the amount distributed to African countries has already been given or pledged by Beijing.

The increasing inability of the US to compete with China was voiced some time ago by former World Bank president Paul Wolfowitz, who stated there is a moral reason why the US cannot provide financial help to as many countries as China. Wolfowitz claimed the US helps only those countries with solid democratic credentials, whereas China provides funds to anyone, even to regimes that grossly violate human rights. This assumption does not hold water, for in the past the US has provided generous funding to any regime, regardless if this was in Washington's best interests.

The problem with present-day moralizing is not due to any alleged increase in the US's moral sensitivity, but is much more related to the simple fact that US resources for a "cash war" are dwindling, at least in comparison to the war chests of the other players, such as China.

It can be stated that the decline of American influence is of no interest to the majority of average Americans. Moreover, many assume that the so-called end of the US empire will mean more American money will be spent at home. Still, the shrinking of the US's imperial presence in Africa and elsewhere would correspondingly shrink its access to vital natural resources. At the same time, access to these resources will increase China's economic might and influence all over the world, the US included.

This aspect of America's global influence has not been discussed by any of the contenders for the presidency. And this is easily understood: the average Joe believes that the American system in both its internal and external applications works perfectly well. Just replace a "bad" president with a "good" one, whoever he or she will be, and the problems will be solved.

This is completely understood by those competing for the White House, and none of the presidential candidates will tell the public about losing the "checkbook" war to China and the implications of the defeat, which might be more serious in the long run than American defeats in Iraq and Afghanistan.

Dmitry Shlapentokh, PhD, is associate professor of history, College of Liberal Arts and Sciences, Indiana University South Bend. He is author of East Against West: The First Encounter - The Life of Themistocles, 2005.

Russia Offers to Help NATO in Aghanistan[???]

2008-03-14T12:54:00.001-07:00

Russia throws a wrench in NATO's works

By M K Bhadrakumar

For the first time in the 60-year history of the North Atlantic Treaty Organization (NATO), Russia will attend the alliance's summit meeting on April 2-4 in Bucharest, Romania.

It is clear that NATO will defer to a future date any decision to put Ukraine and Georgia on its Membership Action Plan. This means effectively that the two former Soviet republics cannot draw closer to NATO for another year at the very least, which in turn implies that the earliest the two countries can realize their membership claim would be in a four-year timeframe.

That is a huge gesture by NATO to Moscow's sensitivities. Conceivably, it clears the decks for what could prove to be a turning point in Russia-NATO relations. Russia may be about to join hands with NATO in Afghanistan. A clearer picture will emerge out of the intensive consultations of the foreign and defense ministers of Russia and the United States within the so-called "2+2" format due to take place in Moscow from Monday through Tuesday next week. From the guarded comments by both sides and the flurry of US diplomatic activity, it appears highly probable that Russia is being brought into the solution of the Afghanistan problem, along with NATO.

According to the Russian newspaper Kommersant and the Financial Times of London, the initiative came from Russia when its new ambassador to NATO, Dmitry Rogozin - erstwhile Russian politician with a controversial record as a staunch Russian nationalist who routinely berated the West - signaled a strong interest in this area at a recent meeting of the NATO-Russia Council at Brussels. The plan involves Russia providing a land corridor for NATO to transport its goods - "non-military materials" - destined for the mission in Afghanistan. Intensive talks have been going on since then over a framework agreement.

From the feverish pace of diplomatic activity, the expectation of the two sides seems to be that an agreement could be formalized at NATO's Bucharest summit. In an interview with German publication Der Spiegel on Monday, Rogozin confirmed this expectation, saying, "We [Russia] support the anti-terror campaign against the Taliban and al-Qaeda. I hope we can manage to reach a series of very important agreements with our Western partners at the Bucharest summit. We will demonstrate that we are ready to contribute to the reconstruction of Afghanistan."

Russian diplomats have been quoted as saying that Moscow is engaged in consultations with the governments of Kazakhstan and Uzbekistan as regards the proposed land corridor to be made available to NATO.

Given the complicated history of Russia-NATO relations, the issue is loaded with geopolitics. Russian President Vladimir Putin hinted as much at a joint press conference with visiting German Chancellor Angela Merkel in Moscow last Saturday. He said, "NATO is already overstepping its limits today. We have no problem to helping Afghanistan, but it is another matter when it is NATO that is providing the assistance. This is a matter beyond the bounds of the North Atlantic, as you are well aware."

Putin also took the opportunity to harshly criticize NATO's expansion plans: "At a time when we no longer have confrontation between two rival systems, the endless expansion of a military and political bloc seems to us not only unnecessary but also harmful and counter-productive. The impression is that attempts are being made to create an organization that would replace the United Nations, but the international community in its entirety is hardly likely to agree to such a structure for our future international relations. I think the potential for conflict would be only set to grow. These are arguments of a philosophical nature. You can agree or disagree."

The implications are obvious. Russia would be willing to cooperate with NATO, but on an equal and comprehensive basis, and, secondly, the sort of selective engagement of Russia by NATO that the US has been advocating will be unacceptable to Moscow. Significantly, Putin frontally questioned the standing of NATO's monopoly of conflict resolution in Afghanistan.

Russian Foreign Minister Sergei Lavrov has also separately signaled Russia's readiness to provide military transit to Afghanistan for NATO provided "an agreement is concluded on all aspects of the Afghan problem between NATO and the Collective Security Treaty Organization [CSTO]". Significantly, Lavrov was speaking immediately after the 7th session of the Russian-French Cooperation Council on Security Issues in Paris on Tuesday. He asserted that "most NATO members, including France", favor Moscow's idea of a NATO-CSTO cooperative framework over Afghanistan. Lavrov all but suggested that Washington was blocking such cooperation between NATO and the Russian-led CSTO.

On the face of it, Washington should jump at the Russian offer of support to the NATO mission in Afghanistan. Pakistan has proved to be an unreliable partner in the "war on terror". The growing political uncertainties in Pakistan put question marks on the wisdom of the US continuing to depend so heavily on Pakistan for ferrying supplies for its troops in Afghanistan.

US military spokesmen are on record as saying that about three fourths of all supplies are currently dispatched to Afghanistan via Pakistan. There are fundamental issues as well, such as the US's continued ability to influence Pakistani politics and, indeed, the evolution of Pakistan's political economy as such in the coming critical period.

The coming to power of the Awami National Party (ANP), an avowedly Pashtun nationalist leftist party, in the sensitive North-West Frontier Province of Pakistan, further complicates political alignments.

ANP leader Amir Haider Khan Hoti bluntly told Radio Free Europe/Radio Liberty in an exclusive interview this week, "Our priorities are clear. We first want to move toward peace through negotiations [with the Taliban], jirgas [tribal councils], and dialogue. God willing, we will learn from [failed talks and jirgas in the past] and will try not to repeat the same mistakes. We will try to take into confidence our people, our tribal leaders, and our [clerics] - and together with them, we will try to move toward peace through negotiations."

Hoti didn't speak a word about the "war on terror" or the George W Bush administration's expectations of Pakistani military operations in the tribal areas. It remains a riddle why the Bush administration should have so far kept out of conflict resolution in Afghanistan countries such as Russia and China, whose interests are vitally affected, perhaps even more immediately than the US or European countries. As US statesman Henry Kissinger wrote in an article in the International Herald Tribune on Monday, "A strategic consensus remains imperative ... Pakistan's stability should not be viewed as an exclusively American challenge."

The million-dollar question is whether there is political will on the part of the Bush administration to reach a "strategic consensus" over Afghanistan with Russia at the forthcoming NATO summit. Clearly, Moscow is willing. NATO old-timers such as France and Germany, too, are conscious that the alliance may suffer a defeat in Afghanistan, which would be a catastrophic blow to its standing, and that NATO and Russia after all share the same goals in Afghanistan.

The Kremlin has badly cornered the Bush administration. Taking Russia's help at this critical juncture makes eminent sense for NATO. The alliance is struggling to cope with the war in Afghanistan. By the analogy of Iraq, some observers estimate that a force level close to half a million troops will be required to stabilize Afghanistan, given its size and difficult terrain.

But cooperation with Russia involves NATO embarking on cooperation with CSTO and possibly with the Shanghai Cooperation Organization as well. (Russian ambassador to the United Nations, Vitaly Churkin, addressing the Security Council in New York on Wednesday, proposed that for effectively combating drug trafficking originating from Afghanistan, a system of security rings promoted by Russia in the Central Asian region in recent years would be useful and that the potential of CSTO and SCO should be utilized.)

What worries the US is that any such link up between NATO and CSTO and SCO would undermine its "containment" policy toward Russia (and China), apart from jeopardizing the US global strategy of projecting NATO as a political organization on the world arena.

The most damaging part is that Russia-NATO cooperation will inevitably strengthen Russia's ties with European countries and that, in turn, would weaken the US's trans-Atlantic leadership role in the 21st century.

At the meeting of the foreign ministers of the alliance at Brussels on March 6, French Foreign Minister Bernard Kouchner urged the NATO Council to "take into account Russia's sensitivity and the important role it plays". Moreover, he argued, relations with Russia are already strained over Kosovo and the US's planned missile defense shield based in Europe, and should not be subjected to further strain. The French newspaper Le Monde quoted him as saying, "We [France] think that EU-Russia relations are absolutely important. And France is not the only country wanting to maintain a relationship with Russia as a great nation." (France is assuming the rotating EU presidency in July.)

Indeed, France is not alone in this respect. Germany also has lately shifted to equidistance between the US and Russia on global security issues and is reaching out once again - reminiscent of the Gerhard Schroeder era - as a strategic partner to Russia in European Union-Russia relations.

Two days after her recent visit to Moscow, Merkel addressed the prestigious forum of the German armed forces' top brass (Kommandeurtagung) in Berlin on Monday, where in the presence of NATO Secretary General Jaap de Hoop Scheffer, she brusquely proceeded to bury the proposals on NATO membership of Ukraine and Georgia even ahead of the Bucharest summit.

"Countries that are involved in regional or internal conflicts cannot become members," she said. Merkel added that aspiring countries must ensure that "qualitatively significant" domestic political support would be available for their accession to NATO. Germany has virtually blocked NATO's further expansion into the territories of the former Soviet Union - a declared goal of Russia.

By putting forth a bold blueprint of cooperation with NATO over Afghanistan, Russia has effectively challenged the US to make a choice. It is by no means an easy choice for Washington. How do you deal in the world of tomorrow with a country whose energy exports are close to reaching a milestone of US$1 billion per day? Russia's benchmark Urals crude topped a record of $100 per barrel this week and once it trades at $107.5 per barrel, the daily value of crude, refined products and gas exports will hit $1 billion. And, Russia's 2008 budget is based on an average Urals price of $65 per barrel.

Besides, post-Soviet Russia's influence in Central Asia has peaked even as the first real possibility of the emergence of a "gas OPEC" involving Russia and the Central Asian countries has appeared. This may well outshine all other foreign policy legacies of Russia in the Putin era. Russia has been for long seeking an association of former Soviet gas producers and exporters on the pattern of the oil cartel. Russia and the Central Asian suppliers - Kazakhstan, Uzbekistan and Turkmenistan - have now agreed that starting in 2009, they will switch to the European price formula.

The move, which bears all the hallmarks of the Kremlin, elevates energy cooperation between Russia and the Central Asian producers to an altogether higher level of coordination and common strategy in foreign markets. The implications are far-reaching for European countries and the US. Russia has checkmated US-sponsored trans-Caspian energy pipeline projects.

Surely, the great shortfall in the Putin legacy has been the failure of his presidency to make Russia a full-fledged partner of Europe. He has now made an offer to NATO that is irresistible - making Russia a participant in the alliance's Afghan mission. The Russian offer comes at a time when the war in Afghanistan is going badly and NATO can afford to take help from whichever quarter help is available.

Washington faces an acute predicament insofar as Moscow won't settle for selective engagement by NATO as a mere transit route but will incrementally broaden and deepen the engagement, and major European allies might welcome it. Moscow insists on the involvement of the CSTO and even SCO. On the other hand, Russia's involvement could invigorate the NATO mission in Afghanistan and ensure that the mission is not predicated on the highly unpredictable factor of Pakistan's partnership.

Will Washington bite? Putin, with his trademark fighting spirit of a black belt in karate, could well be counting that his presidency still has five or six weeks to go and that is a lot of time for making Russia NATO's number one partner globally and ensuring a durable place for Russia within the common European home.

At the very least, history comes full circle when Putin arrives in Bucharest in the next 18 days for the gala 60th anniversary summit of the alliance. That would be 54 years since the Soviet Union suggested it should join NATO to preserve peace in Europe.

M K Bhadrakumar served as a career diplomat in the Indian Foreign Service for over 29 years, with postings including India's ambassador to Uzbekistan (1995-1998) and to Turkey (1998-2001).

Asia Times Online :: Asian news and current affairs

2008-03-14T12:22:00.001-07:00

Mogambo Freakout(General Angst Edition):

"The dinosaur gold-standard economy
By The Mogambo Guru

Peter Schiff of Euro Pacific Capital is justifiably upset that CNBC, on which he has appeared many, many times over the years, professes to be surprised at current events, even though they are the same things he has consistently predicted on their show! I know! I've seen him!

Schiff writes, 'The current line at CNBC is that, prior to the 'unexpected' contagion emanating from the subprime mess, the US economy was experiencing a 'Goldilocks' era of optimal health.' To prove his case, he offers a link to a video of a 'CNBC match up from August 2006 between me and Arthur Laffer, a CNBC favorite', which he says is 'priceless' because it contains 'Some of Laffer's best one-liners' which include, 'the US economy has never been in better shape' and 'monetary policy is spectacular'. Hahaha! He's right! Priceless!

I was envious at how everyone laughed when he looked directly into the camera and, milking every drop of deadpan comedy out of it, dryly said, 'I kid you not.' So I leap to my feet to try and claim a little jealous attention, too, and exclaim, 'Apparently, the theory of non-linear mathematics, popularly known as the Butterfly Effect, nor news of the statistical proof of the certainty of sudden, calamitous discontinuities, popularly known as Black Swan events, has penetrated CNBC, both of which make a cruel mockery of the very idea that anyone could have continuous, uninterrupted, healthy economic growth by using gigantic expansions of the money supply via a fiat currency in an unlimited fractional-reserve banking system to supply evermore cash to a wildly expansionist government!'

A slight titter of nervous laughter barely rippled through the room, which was very gratifying to me, but it seems to have rattled Mr Schiff, who nonetheless still managed to upstage me in the laughter department by cleverly saying that CNBC still believes that 'if the Fed and the Government can divine the right combination of fiscal and monetary policy, Goldilocks will once again be blissfully picking daisies ... or more precisely, buying SUV's.' Hahaha! Goldilocks in an SUV! An interesting metaphor!

But the point is not that Mr Schiff is funnier than me without even trying, but that we are freaking doomed, and CNBC would have known that if they had tuned into the Daily Mogambo Business Network (DMBN), where they would have learned during the course of any of numerous Raging Mogambo Editorial Rants (RMER) that the Butterfly Effect proves that all money will influence, after just a few iterations of the financial system, all other money, which means that to laughably think that the subprime problem could be 'contained' is absolutely ludicrous; the truth is that it will literally affect every other piece of money around the world, and to an unknown degree!

And, if they had taken the time to tune into the DMBN show, maybe snuggled down with a bowl of hot popcorn and a cold beverage, or a soggy pizza and a bottle of cheap tequila, they would also have learned the on-air report of the recently discovered fascinating fact that the dinosaurs had a monetary system based on gold, which explains why the historical record shows absolutely no inflation in prices during the entire Jurassic period, and anyone who says otherwise is a lying bag of crap.

The other news is that the dinosaur economy nevertheless had the Mother Of All Black Swan Events when a giant meteor smashed into the Yucatan Peninsula, destroying most of the life forms on the planet, and all of that fabled dinosaur monetary conservatism was for naught.

But it is one thing for CNBC to not report the crucial discovery of the dinosaur gold-standard economy and its stability, but it is quite another for CNBC to actually believe that the Fed and the federal government can 'divine the right combination of fiscal and monetary policy' to put everything aright!

This is obviously where I would normally insert a Scathing Mogambo Laugh Of Contempt (SMLOC) at such preposterousness, but actually, upon reflection, CNBC is right! With wildly inflationary monetary policy and bizarre, giveaway fiscal and regulatory policies, they actually CAN get things perking again! Nothing could be easier!

I mean, how much is a house worth if a homebuyer could get back, in cash via a tax credit, all of their interest payments on the loan? Or a tax credit for all of the interest payments PLUS 10% of the principal?

How about if the government sent every taxpayer $1,000 per month for the next year? How about $10,000 per month? How's THAT for an economic stimulus? Hahahaha!

I've said it before, and I'll say it again; Ben Bernanke, now chairman of the Federal Reserve (which is neither federal nor a reserve of anything, but is a private bank that suspiciously signs its email with a 'dotgov' suffix) was absolutely, positively, 100% correct when he said that with a printing press that can create money at almost zero cost, a determined government could always create inflation, a horror which he is now obligated to inflict on us since he has long, and now famously, shot his mouth off about how he is so smart and how he is such an expert on the Great Depression, and how he knows exactly what those idiots back in the '20s and '30s should have done, which is to keep pounding, pounding, pounding money into the economy with lower and lower interest rates and buying up a constant, huge stream of new government debt, and buying up all kinds of things, irrespective of the resultant ruinous inflation in prices at such horrifying monetary excesses.

It's too bad that Mr Bernanke is too busy to look at Zimbabwe to see how that has worked out in actual practice, as Bill Bonner says, 'What happens to a paper currency when its custodians decide to destroy it? We have the answer to that question illustrated for us in the headlines from Zimbabwe. Last we heard, inflation was running at 100,000% per year. The average employee made millions per day ... but could barely buy a can of beans with the money. Worse still, the beans - and everything else - had disappeared from the shops ... hyperinflation has destroyed the economy.'

Is there a lesson in all this total destruction by inflation? Yes! The lesson is, according to the Mogambo Big Book Of Economics (MBBOE), 'Don't start inflating the money supply, moron, because you will get inflation in consumer prices, which will cause economic misery, and finally food riots and societal disintegration will break out, and so that is why I called you a moron at the beginning of the sentence, because only a moron would attempt such a thing when the entire history of economic mankind shows that inflating the money supply has ruined everyone who has ever, ever tried it!'

I look at Mr Bonner and he reluctantly agrees, 'Yes, that's what happens. First the money. Then, the economy. Finally, the society itself.'

And then raving gold-bug lunatics like me and the Austrian Business Cycle Theory prove to be right after all, and we take over the joint because we bought gold, and now we are rich, rich, rich!

And when a creepy little jerk like The Mogambo gets that kind of money and power, then you know that Mr Bonner was right; decent people in a civil society, and society itself, don't have a chance against such outrageous and shameless hedonistic gluttony. Ahhh! Gold!"

IMF warns of global economic collapse

2008-03-14T12:15:00.001-07:00

FT:

"Governments might have to intervene with taxpayers' money to shore up the financial system and prevent a 'downward credit spiral' from taking hold, the International Monetary Fund said yesterday.

John Lipsky, the IMF's first deputy managing director, said: 'We must keep all options on the table, including the potential use of public funds to safeguard the financial system.'

The statement by the senior IMF official marks the second radical policy intervention from the IMF this year. It had previously called on governments to consider using fiscal policy to offset the impact of the credit crisis on growth.

Mr Lipsky said: 'I fully recognise an appropriate role for public sector intervention after market solutions have been exhausted.'

He urged policymakers to 'think the unthinkable' and prepare now for what they would do if the worst case scenarios materialised and 'low probability but high impact events' threatened to jeopardise global financial stability.

He warned of the risk that a 'global financial decelerator' could take hold, in which rising defaults and margin calls from lenders triggered forced asset sales, driving down the value of collateral and forcing further forced sales.

The IMF deputy managing director's comments make it clear that the fund is open in principle to the possibility of taxpayer-funded intervention in the market for mortgage securities as well as intervention to save individual banks from bankruptcy.

Mr Lipsky warned: 'The risks of further escalation of this crisis are rising and decisive policy action will be needed.'

He said this crisis was different from recent past crises because both the financial markets and the banking system 'have faltered simultaneously'. The first priority had to be to reverse the 'spreading strains' in global financial markets and restore the functioning of the financial system in advanced economies.

Mr Lipsky said there should be no let up in the pressure on financial institutions to disclose losses but said pressure to deleverage 'needs to be kept orderly'.

He also urged banks to recapitalise to avoid shrinking their balance sheet.

Stressing that this was a global problem - not one confined to the US - he said it would have to be addressed in a 'global -context'.

Mr Lipsky said the 'first line of defence' remained monetary policy and interest rates. But monetary policy was 'hampered' by problems in the credit markets and 'there is a risk of a broader and more intense tightening in credit conditions'.

This was why the IMF was making the case that 'there is likely to be a role in some countries for stepped-up counter-cyclical macroeconomic policy measures to help support demand'. Fiscal policy was the 'second line of defence'.

But Mr Lipsky said 'macroeconomic policies may not be sufficient to cushion the blow if an extreme event occurs' - making it essential that policymakers prepared for the possible need to intervene."

Bear Stearns Gets Emergency Funds From JPMorgan, Fed

2008-03-14T12:06:00.001-07:00

Signs of the Times News:

"Bear Stearns Cos. plummeted a record 45 percent in New York trading after the New York Federal Reserve and JPMorgan Chase & Co. stepped in to rescue the fifth-largest U.S. securities firm with an emergency bailout.

After denying for three days that access to capital was at risk, Bear Stearns said today that its cash position had ''significantly deteriorated.'' The New York Fed agreed to provide financing through JPMorgan for up to 28 days, the bank said in a statement today.

Bear Stearns acted in response to ''market rumors'' of a liquidity crisis, Chief Executive Officer Alan Schwartz said in a separate statement. Schwartz said earlier this week that the company's ''liquidity cushion'' was sufficient to weather the credit-market contraction. Traders have been reluctant to engage in long-term transactions with Bear Stearns as the counterparty, the Wall Street Journal reported yesterday.

''We have tried to confront and dispel these rumors and parse fact from fiction,'' Schwartz said in the New York-based company's statement today. ''Nevertheless, amidst this market chatter, our liquidity position in the last 24 hours had significantly deteriorated.''

Bear Stearns said it was in talks with New York-based JPMorgan ''regarding permanent funding or other alternatives.''

Bear Stearns plummeted to a nine-year low of $31.58 at 10:59 a.m. in New York Stock Exchange composite trading. The shares fell to as low as $26.85 earlier today, and have lost 63 percent of their value this year.

Fed Watching 'Closely'

The Fed said it's ''monitoring market developments closely and will continue to provide liquidity as necessary to promote the orderly functioning of the financial system.'' The vote to approve the financing was unanimous, the Fed said.

Bear Stearns led Wall Street shares lower this year as the world's largest banks and securities firms wrote down $195 billion of assets linked to the subprime mortgage market. The company's fourth-quarter loss of $854 million was its first, and analysts in the past month have lowered expectations for earnings in the first quarter.

''The issue now is whether Bear Stearns customers will stick around,'' said Bruce Foerster, president of South Beach Capital Markets and a former Wall Street executive. ''Some others have gotten through the same kind of troubles, some ended up being shut down or sold. I'm hoping Bear can get past it.''

JPMorgan's participation in the bailout follows a long tradition of the 209-year-old bank helping rescue the financial markets from crisis, according to Charles Geisst, a finance professor at Manhattan College in Riverdale, New York, and the author of ''100 Years on Wall Street.''

Feather in the Cap

''It may be a feather in JPMorgan's cap that they're considered able to do this,'' Geisst said. ''The Fed could have chosen any number of banks to do this, and they chose JPMorgan.''

A collapse of Bear Stearns would be the biggest failure of a U.S. financial institution since the insolvency of Continental Illinois National Bank and Trust Co. in 1984, according to Geisst.

Continental Illinois had $40.7 billion of assets at the end of 1983, just before its failure and bailout by the Fed and the Federal Deposit Insurance Corp., according to the FDIC. Bear Stearns had $39.5 billion of assets as of Nov. 30"

A Dangerous Turn.

2008-03-14T11:58:00.001-07:00

Consortiumnews.com:

"Two seemingly disconnected events have created a suddenly dangerous turn regarding the future of U.S. wars in the Middle East.

One was the abrupt resignation of the person who has been the biggest obstacle to a U.S. military strike against Iran, Admiral William Fallon, the chief of Central Command which oversees U.S. military operations in the volatile region.

The second is the ugly direction that the Democratic presidential competition has taken, with Hillary Clinton’s campaign intensifying its harsh rhetoric against Barack Obama, reducing the likelihood that he can win the presidency – and thus raising the odds that the next president will be either John McCain or Sen. Clinton, both hawks on Iran.

Throughout the campaign, Clinton has mocked Obama as inexperienced for his desire to engage in presidential-level diplomacy with Iran and other adversarial states. And she recently judged him as unqualified to serve as Commander in Chief, while declaring that both she and Sen. McCain have crossed that ‘threshold.’

The cumulative effect of Clinton’s attacks on Obama’s qualifications – combined with her campaign’s efforts to turn many white voters against him as the ‘black candidate’ – has buoyed Republican hopes for November.

By simultaneously marginalizing and dirtying up Obama, the Clinton campaign also has tamped down the excitement of many Democrats, especially the young, for a candidate that they see as offering a refreshing message of hope and change.

Replacing Obama’s message of reform and reconciliation is a Clinton message of resentment and victimization, as voiced by former Rep. Geraldine Ferraro who claimed that Clinton confronts ‘sexist media’ bias as a woman while Obama gets an easy ride because he’s black.

‘If Obama was a white man, he would not be in this position,’ Ferraro, the former Democratic vice presidential candidate, told The Daily Breeze of California. ‘And if he was a woman (of any color) he would not be in this position. He happens to be very lucky to be who he is.’

The idea that a black man in America, who was raised by a single mother and who bears an exotic foreign-sounding name, would be deemed ‘very lucky’ struck many Americans as a bizarre choice of words. But it fits with a key sub rosa theme of the Clinton campaign, that an unqualified black man was cutting line in front of a better qualified white woman.

Clinton gingerly distanced herself from Ferraro’s comments and Ferraro resigned from Clinton’s finance committee. But even political analysts who are fond of Clinton found the larger picture of her campaign strategic demeaning of Obama offensive.

MSNBC’s Keith Olbermann said he decided reluctantly that he must speak out against the Clinton campaign’s behavior.

‘As it has reached its apex in their tone-deaf, arrogant and insensitive reaction to the remarks of Geraldine Ferraro, your own advisers are slowly killing your chances to become president,’ Olbermann said in a ‘Special Comment’ on March 12.

‘Senator, their words, and your own, are now slowly killing the chances for any Democrat to become president. … You are now campaigning as if Barack Obama were the Democrat and you were the Republican. As Shakespeare wrote, Senator, that way madness lies.’

Into the Abyss

If followed to its logical – yet crazed – conclusion, the madness also might be leading the United States into the ever deepening abyss of Middle East wars.

After all, both McCain and Clinton were staunch supporters of the Iraq War, now nearing its fifth anniversary with no end in sight.

McCain remains an Iraq War advocate, even he says if the U.S. occupation must last a century or more. Clinton only reversed herself on the war as she prepared to run for the Democratic nomination, realigning herself with the anti-war views of most Democrats, but she refused to admit that her 2002 war-authorization vote was a mistake.

Both McCain and Clinton also favor a hard line toward Iran.

During a South Carolina campaign stop in April 2007, as the Bush administration was pounding the war drums with Iran, McCain veered off into a musical rendition, changing the lyrics of an old Beach Boys song to ‘Bomb, bomb, bomb, bomb, bomb Iran.’

In September 2007, Clinton supported a Senate resolution co-sponsored by neoconservative Sen. Joe Lieberman that sought to have Iran’s Revolutionary Guard designated a ‘global terrorist organization,’ a move that Sen. James Webb, D-Virginia, warned could be tantamount to a declaration of war.

A month later, however, President George W. Bush opted for a less extreme position than the one Sen. Clinton favored. He designated only the Quds Force, a special operations branch of the Revolutionary Guard, as a ‘global terrorist’ group.

Now, however, the abrupt resignation of Admiral Fallon, who had publicly challenged the saber-rattling toward Iran coming from the White House, removed one of the chief obstacles to the use of military force against Iran over its nuclear program.

Intelligence sources have told me that President Bush and Vice President Dick Cheney were eyeing possible air strikes against Iranian targets in 2007 before they encountered Fallon’s stiff opposition.

The White House hardliners also met resistance from the U.S. intelligence community, which released a National Intelligence Estimate reporting that Iran had shut down a key element of its nuclear weapons program.

Since Fallon’s sudden resignation, intelligence sources have said they do not foresee an imminent U.S. assault on Iran, although one source said Fallon quit, in part, over a new White House demand for an updated attack plan.

More likely, the sources say, the issue of how to deal with Iran will pass to the next president. In that regard, McCain and Clinton promise more tough talk and belligerence, while Obama vows to speak directly with Iran’s leaders over how to reduce tensions.

Yet, the combined events of the past several days – the sudden ouster of the chief military opponent of an expanded war in the Middle East and the apparent decline in the political fortunes of the most dovish candidate – suggest that the Bush-Cheney belligerent strategies may well outlast their terms of office.

Robert Parry broke many of the Iran-Contra stories in the 1980s for the Associated Press and Newsweek. His latest book, Neck Deep: The Disastrous Presidency of George W. Bush, was written with two of his sons, Sam and Nat, and can be ordered at neckdeepbook.com. His two previous books, Secrecy & Privilege: The Rise of the Bush Dynasty from Watergate to Iraq and Lost History: Contras, Cocaine, the Press & 'Project Truth' are also available there. Or go to Amazon.com."

A Vicious Circle: Ethanol Mandates Make For Horrible Policy.

2008-03-13T21:05:00.001-07:00

From the Oil Drum:

A few days ago, someone here posted a link to a story about skyrocketing farmland prices in the Midwest. It really made me angry to think about the inflationary chain reaction and the vicious chain of events our politicians have set into motion with these ethanol mandates. It made me even angrier to think that the few who benefit from these policies defend their right to siphon money from the rest of us and into their pockets. (I will be the first to say that surging energy prices are a big component of surging inflation, but with the ethanol mandates we are throwing jet fuel on an already raging fire).

This all started out innocently enough. Oil prices were climbing. Our energy production was shifting to an ever greater extent to countries that are hostile to the U.S.

So, Step 1 in the chain is to propose a solution:

1. The government should subsidize ethanol production to encourage production of home-grown fuels, which will enhance energy security and create jobs in the Midwest.

However, subsidies didn’t work as expected. It was still too expensive to produce ethanol. People continued to choose gasoline over more expensive ethanol. We had to move to Step 2.

2. The government should mandate ethanol usage.

When the mandate was added to the equation, things change. Now, the fuel doesn’t have to be economically priced. It is going into the fuel supply regardless of the price. This mandate generates an immediate market for ethanol, and kicks off a massive expansion of ethanol capacity.

But it isn’t long before we notice that too many people are building ethanol plants. This is causing a glut of ethanol, and putting downward pressure on the price of ethanol. On the other side, it is raising the price of corn. This lowers the margins for ethanol producers, and some producers start to go bankrupt. Projects are delayed or cancelled. The solution? Proceed to Step 3, which is entirely predictable:

3. We need to increase the mandate for ethanol usage.

Unfortunately this leads to more of the problems that arose from the original mandate. Corn prices go even higher. Land prices continue to climb. Land is shifted to corn production, forcing commodity prices up in other areas. Very few segments of the population are experiencing true benefits. The arms race continues, and we find ethanol producers will once again call for higher mandates. It is an entirely predictable consequence of the current policies we have in place.

Who Benefits

The primary beneficiaries are commercial corn (and other commodity) farmers who purchased their land prior to the mandates. They are truly experiencing a windfall from these policies, and thus will fight the hardest to continue down this ill-advised road. A lot of millionaires have been made in Iowa as farmland prices quadrupled.

Secondary beneficiaries are lobbyists who defend the practice, those who are willing to write papers (commissioned by the National Corn Growers Association) that shift the blame, and pandering politicians with constituents that benefit from the current policies.

Who Doesn't

The ethanol producer isn’t even consistently benefiting (unless they are also corn farmers). Ethanol producers are starting to realize that the energy business is often low margin (and cyclical), and not as lucrative as they once thought. When an overbuilding cycle occurs, prices crash. When prices crash, the call for more mandates is raised by ethanol producers who are facing financial trouble. Wash, rinse, repeat. After all, we must bail those out who make poor financial decisions. This is national security, for God's sake! If we don't bail them out with more mandates, the terrorists win. More mandates are certainly needed to rectify this.

The cattle rancher (like my Dad) and pig and poultry farmers get hurt from higher feed prices that cut into already razor-thin (or negative) margins. For our corn farming friends who love to defend these mandates, I would really appreciate it if you would explain to me why it’s OK for you to pull money out of my Dad’s pocket and put it into yours. I know your argument is that you deserve to make a good living. Well, so does he (don't we all!), but your profits are at his expense. But hey, you are getting yours, so you will defend the practice. Just don't expect me to keep quiet about the impacts.

The person trying to buy farmland is hurt by land prices that have exploded as a result of the mandates (unless they inherit family land).

The environment suffers as the mandated corn production means more herbicide, pesticide, and fertilizer usage, some of which ends up in our waterways.

The person who eats is hurt because higher commodity prices ripple through their food budgets, already stretched because of increasing energy costs.

Money for Everyone - and It's Good for the Environment

So what's the solution to this mess that has been made? I think it is simple, really. We all need to become either corn lobbyists or corn farmers. That way we all profit and we can afford to pay the financial consequences of spiralling inflation resulting from these mandates. (I suppose we will need to be subsidized for our farm purchase, since farms have gotten pretty expensive).

Now some may suggest that this would negatively impact the environment. I have a solution for this. We can simply commission a study to show that there is in fact no negative impact on the environment. Problem solved. I suppose I also need to commission a study that shows that aquifers are actually depleting because people are drinking a lot more water than they used to.

For those who support the mandates, why don't we create more wealth by mandating that everyone buy a new computer or a new Ford every 3 or 4 years? Wouldn't that create jobs? Heck, maybe we can make everyone wealthy and create jobs for all with more mandates. Unless of course, there is a downside to these mandates that I am missing….

Fed takes boldest action since the Depression to rescue US mortgage industry

2008-03-13T13:51:00.001-07:00

Daily Telegraph:

"By Ambrose Evans-Pritchard, International Business Editor
Last Updated: 4:04pm GMT 13/03/2008

The US Federal Reserve has taken the boldest action since the 1930s, accepting $200bn of housing debt as collateral to prevent an implosion of the mortgage finance industry and head off a full-blown economic crisis.

The Bank of England, the key European central banks, and the Bank of Canada all joined in a co-ordinated move with a mix of policies to halt the dowward spiral in the credit markets, expanding on the "shock and awe" tactics used late last year.

The Fed's dramatic step came after an emergency conference call by governors on Monday night. It followed the melt-down of the US chartered agencies -- Fannie Mae, Freddie Mac, and other lenders -- which together guarantee 60pc of the entire US home loan market. Fannie Mae's share price fell 19pc in panic trading on Monday after Barron's magazine said it may need a rescue package.

'The agency crisis was a Tsunami event,' said Tim Bond, global strategist at Barclays Capital.

'The market was starting to question the solvency of bodies that stand at the top of the credit pile. These agencies together wrap or insure $6 trillion of mortgages. They cannot be allowed to fail because it would cause a financial disaster. The fact that this sector has blown up has caught everybody's attention in Washington,' he said.

The Fed action set off a powerful relief rally, lifting the Dow Jones index over 340 points in early trading. Both US and European equities have been hovering on key support lines in recent days, threatening to break down through 18-month lows in a second, brutal leg to the bear market.

Stress indicators across almost all parts of the global credit system fell from extreme levels on the Fed news. The CDX and iTraxx Europe indexes that serve as a default barometer for corporate bonds retreated from record highs, although it is too early to judge whether the latest action will start to thaw the credit freeze. The stock market rally after the last central bank intervention in December fizzled out after just one day.

'This is not going to be enough,' said Hans Redeker, currency chief at BNP Paribas.

'The Fed is doing absolutely the right thing by soaking up mortgage debt that nobody else wants. This will have an impact on spreads, but we're seeing the deflation of a major bubble. The Fed is still going to have to cut interest rates by 75 basis points next week,' he said.

It is a ground-breaking move for the Fed to accept mortgage collateral, even if the debt is theoretically 'AAA-grade' debt. The Fed is constrained by Article 13 of the Federal Reserve Act from buying mortgage bonds outright, but it can achieve a similar effect by letting banks roll over collateral indefinitely. The European Central Bank is already doing this, shielding Dutch, Spanish, German, and some British banks from the full impact of the credit crunch.

The Fed is to create a new facility that allows banks to swap their mortgage bonds for US Treasuries. It is a well-targeted 'sterilized' move to avoid adding fuel to inflationary fire. It follows the Fed's separate pledge last Friday to add up to $200bn in liquidity.

The Bank of England also announced that it was widening the range of elligible collateral as it offers £10bn of three-month loans, saying pressures in the money markets 'have recently increased again.' The ECB and the Swiss have boosted swap agreements with the Fed to provide $30bn and $6bn respectively in dollar liquidity to their own lenders.

Bernard Connolly, global strategist at Banque AIG, said the Fed action may help calm the markets for now, but it cannot solve the root problem of eroded of bank capital.

'There is the risk of a very damaging credit contraction. We face the most serious global crisis since the Great Depression. But this time at least the North American central banks are doing their best to stop it spreading to the real economy,' he said.

The emergency actions appear to have been co-ordinated by the Fed's top two figures, Ben Bernanke and Donald Kohn, working closely with the Bank of Canada's Mark Carney. 'We should be thankful that we have people in charge who appreciate the gravity of the situation,' said Mr Connolly.

The travails at Fannie Mae and Freddie Mac -- once rock-solid institutions -- had combined in a deadly cocktail with a fresh wave of panic over the solvency of the investment banks with heavy exposure to sub-prime debt.

Bear Stearns was forced to deny reports that it was running out of capital and may seek Chapter 11 bankruptcy protection. The spreads measuring default risk on its debt rocketed from 246 to 792 on Monday.

Mr Bond said the mortgage agencies may ultimately need to be nationalized. Fannie Mae has already seen its stock price drop 70pc since October at a cost of $50bn in market value, even though it has an implicit federal guarantee. 'There is going to have to be a very big bail-out,' he said."

$1000 Gold.

2008-03-13T13:39:00.001-07:00

(Globe & Mail) -- Gold prices are skyrocketing to record highs above $1,000 (U.S.) an ounce. The sharp rise is being driven by a faltering U.S. economy and struggling greenback, leading wary investors to pile into gold in search of a hedge against inflation. Strategists are divided on whether the precious metal’s bull run has gotten ahead of itself, with some predicting a correction and others calling for gold to hit $2,000 an ounce, or more, in the next year.

UK to Hand Sovereignty to EU without Referendum

2008-03-13T13:37:00.001-07:00

"One thousand years of British history have been extinguished without a shot being fired."

By Hilary White

LONDON, March 6, 2008 (LifeSiteNews.com) - Britain's MPs voted yesterday to deny the public a referendum on the Treaty of Lisbon, the European Union's substitute for the Constitution that failed in 2005 after being defeated by Dutch and French plebiscites. The House of Commons vote, 311 to 248 - a majority of 63 - defeated a Conservative amendment that would have allowed the British public a say in whether the treaty would come into effect in the country. Commentators and activists fighting the issue have called the vote yesterday in the House of Commons the effective end of British sovereignty.

The Conservative opposition are planning to reintroduce their amendment in the House of Lords later this year. The Lords, however, have little power to defeat legislation.

The vote followed closely on the heels of ten local "mini-polls" held last week in Labour and Liberal Democrat constituencies that resulted in 88 per cent support for a referendum. In the 2005 election all three major parties promised a referendum on any attempt to revive the defeated Euro-Constitution.

The Lisbon Treaty will see the creation of a permanent EU president, foreign minister and diplomatic service that are not subject to scrutiny by Parliament or accountable to the electorate, and surrenders nearly 50 national vetoes to Brussels. The new EU president will be a full-time Brussels official, serving a two-and-half-year term and will be chosen by Europe's leaders. A Brussels-appointed foreign minister will be able to make foreign policy, binding upon member states, without a full British national veto.

Critics charge that the Treaty, signed by Gordon Brown last year, will restrict Britain's ability to police its borders, control immigration, fight crime and domestic terrorism, reject EU regulations on employment law and energy policy, and leave it dependent upon an outside power in foreign policy decisions. The Treaty is to come into force January 1, 2009, in time for the 2009 European elections later that year.

The Daily Telegraph, the paper that led the charge for a referendum, called the vote "a singularly squalid example of bullying and gerrymandering that has left even hardened participants in the Commons open-mouthed at government cynicism".

Iain Martin wrote, "When the entire story is told by historians, future generations will be surprised that the Euro-fanatics who plotted to sell out British sovereignty and democracy avoided being sent to the Tower for treason."

Melanie Philips, a columnist for the Daily Mail and the author of "Londonistan", wrote that the process of the Treaty through the House of Lords is a mere formality. She wrote, "At a stroke, much of what remains of the UK's power of self-government will now be negated and the rest will surely follow in due course."

When the Treaty of Lisbon surfaced as a political issue last year, Tony Blair's successor, Prime Minister Gordon Brown, refused to allow a plebiscite, claiming that the Treaty was "substantially different" from the defeated Constitution. He made assurances that British sovereignty in key areas such as criminal law enforcement and anti-terror measures were protected. His assurances were widely rejected and have become the focus of widespread discontent with Labour's policies and the increasing power of Brussels.

The Treaty's authors and some of its European political supporters have admitted that the document is little changed from that rejected in 2005. Only ten of its 250 proposals are different from the original Constitution and the Treaty's critics say those ten are of little consequence.

The author of the Constitution, Valery Giscard d'Estaing, said, "All the earlier proposals will be in the new text, but will be hidden and disguised in some way."

The Spanish Prime Minister Jose Zapatero admitted, "We have not let a single substantial point of the Constitutional Treaty go." German Chancellor Angela Merkel said, "The substance of the Constitution is preserved. That is a fact."

Melanie Philips wrote, "One thousand years of British history have been extinguished without a shot being fired." She says that the only possible recourse now is to remove Britain entirely from the European Union: "There is not one good reason why it is in Britain's interests to continue to stay in. We should come out in order to save British democracy. End of story."

John Redwood, MP for Wokingham, a senior Tory and political theorist, wrote that the vote had emboldened the Labour government to push forward with universal ID cards, a scheme that has been promoted as a means of combating terrorism, but that many outside the Labour party have condemned as a step further towards a police state in which innocent citizens are closely monitored by the state.

Redwood wrote, "Everywhere we hear the smack of autocracy, as an out of touch government continues its battle against the British people and their liberties...The visceral hatred of democracy and liberty emanating from the government is now nauseating."

Neoconservatives’ achievements in Iraq: A benchmark

2008-03-12T20:47:00.001-07:00

Online Journal:

Five years after the invasion of Iraq, the neoconservatives may well have a good reason to celebrate its outcome and congratulate themselves for a job well done. While some quarters in Washington and other parts of the world assert that the invasion has not achieved its officially stated goals -- democratization of the Middle East -- others tend to blame unforeseen events for the lack of tangible progress in building a free, democratic, and unified Iraq. Both accounts, however, misrepresent the scope and depth of the neoconservatives’ intentions and discount their remarkable progress in Iraq.

Neoconservatives are shrewd students of history. Since their emergence after the 1967 Six-Day War, they have correctly viewed Iraq, at times a country of great potential and the heart of Arab progressive thinking and revivalism, as an obstacle to their Middle East design. Whether they are motivated by Biblical prophecies (Christian Zionists) or by the love of and identity with Israel (founding fathers of and secular neoconservatives), the neoconservatives’ camp appears, in its foreign policy directions, to be motivated by sustaining the superiority and security of Israel.

The London Observer (Feb. 23, 2003) asserted that religion plays a significant role in shaping the neoconservatives outlook stating that Karl Rove (then Bush advisor) and Paul Wolfowitz, deputy secretary of defense, are the masterminds behind the invasion of Iraq and that “Rove’s position dovetailed with the beliefs of Paul Wolfowitz, and the axis between conservative Southern Protestantism and fervent . . . East Coast Zionism was gorged -- each as zealous about their religion as the other.” This led, according to Israeli political commentator, Aluf Benn (Feb. 17, 2003), to a policy that “is still focused on transforming the Middle East into an area under U.S. protection, in which Israel will enjoy privileged status.”

Since the early 1920s and until Saddam’s total grasp on power in the late 1970s, liberal and progressive thinking dominated Iraqi public discourse and Iraqis displayed an outward outlook and were hopeful and optimistic for a promising and prosperous future. While people in other Arab countries viewed this situation as a model to be emulated and a source for pride, the neoconservatives treated it as a menace for their design for the Middle East and the security of Israel.

Driven by their messianic and or dogmatic beliefs, the neoconservatives were determined to steer events in Iraq away from its progressive democratic path toward chaotic eventuality. For them a free and prosperous Iraq is contrary to a divine design and is inconsistent with their aggressively promoted image of the Arabs as pathetics, underachievers, and a backward people. Subsequently, obstructing Iraq’s progress and incapacitating its cultural, political, and economic institutions have topped their list of priorities.

Most political commentators and analysts have accepted at face value the neoconservatives’ official claim that the invasion of Iraq would transfer the country into a democratic model for the whole Middle East. Unfortunately, this uncritical acceptance has prevented both intellectual and ordinary people from recognizing the fact that the neoconservatives’ plan for Iraq has gone through various stages: suppression (docile and alienate, late 1970s-2003), starvation (late 1990s) and humiliation (occupation and demoralization, 2003-).

During the first two stages, the neoconservatives facilitated the rise of Saddam to power and enabled him to get rid of the progressive and patriotic elements in Iraq, including those in Saddam’s ruling Ba’ath Party, and encouraged him to invade Iran, thereby wasting Iraqi’s resources and destroying its capabilities. The cooperation between the neoconservatives and Saddam was exemplified not by Rumsfeld’s visit to Saddam and the unlimited support for him offered by the Reagan administration, but also in considering Saddam as a strategic ally in redesigning the Middle East.

Neoconservative thinkers such as Daniel Pipes and Laurie Mylroie wrote in the New Republic (April 27, 1987) that supporting Saddam served U.S. national security in the long term. Indeed, Saddam’s ambassador in Washington, Nazar Hamdoon, was the favorite speaker at neoconservative think tanks such as the Hoover and Hudson Institutes and was published in the Midstream, the magazine of the American Zionists. It is only when neoconservatives felt that Saddam failed to completely demoralize and polarize Iraqis that they decided to step in and directly colonize Iraq in 2003.

In an interview with The New York Times Magazine in 2002, neoconservative strategist and Deputy Secretary of Defense Paul Wolfowitz concisely outlined neoconservatives’ goals: invading Iraq, ensuring the security of Israel, and “reforming” Islam. Michael Ladeen, a new conservative thinker and the under secretary of state, articulated in 2001 the long-term objectives stating, “we will not be sated until we have had the blood of every miserable little tyrant in the Middle East, until . . . every last drooling anti-Semitic and anti-American mullah, imam, sheikh, and ayatollah is either singing the praises of the United States of America, or pumping gasoline, for a dime a gallon, on an American military base near the Arctic Circle.”

Known for their keen skepticism and sense of history, Iraqi intellectuals and ordinary people alike recognized that the neoconservatives’ plan for the invasion of their country would be a prescription for disaster and have catastrophic consequences. Just before the invasion, an Iraqi opposition newspaper, Al-ishteraki (January 2003), published an analysis, Iraqi Invasion and the Undeclared Objectives. The analysis grouped the objectives into short-term and long-term.

To confirm whether or not the neoconservatives achieved their short-term goals, these are stated in their original order as they appeared in Al-ishteraki. Furthermore, a benchmark is provided to measure the degree to which each objective has been met:

1. Divert World Public Opinion from the Tragedy of the Iraqi People Resulting from U.S.-led Economic Sanctions. The invasion and subsequently the occupation overshadowed what was done to Iraqis over 13 years as a result of harsh, unforgiving economic sanctions. In Orwellian terms, the invasion of Iraq not only “accomplishes the necessary destruction, but accomplishes it in a psychologically acceptable way” as it alters history and erases memory.

2. Changing the Iraqi Social Composition and Legitimizing Crimes Committed Against the Iraqi People During the 1991 Invasion and its Aftermath. The world appears to not only overlook the turning of Iraq, as James Baker proudly claimed, into a pre-industrial era but also the death of hundreds of thousands of Iraqis, especially those who lost their lives on the “death road” between Basra and Kuwait and the seven thousand who were buried alive in the desert near Samawa, southwest of Iraq, around March 1991.

3. Preventing any Popular or Military Movement from Coming to Power in Iraq and Directly Controlling Iraqi Government Affairs to Inhibit Genuine Democratic Transformation. This has been institutionalized through two strategies: placing former exiled organizations in the governing council and later facilitating their monopoly on power and marginalizing and forcefully suppressing emerging and homegrown popular groups. Likewise, through careful manipulation of events and infiltration of their ranks, the neoconservatives have been effective in steering these groups from patriotic issues and more toward sectarian and communal causes.

4. Strengthening Sectarian and Ethnic Discourse and Outlook and Setting the Stage for Partitioning Iraq and Putting an End to Its Cultural and Intellectual Role. Faced with popular demand to hand authority to Iraqis and end occupation, the occupation authority was able to recruit communal and sectarian individuals and ethnic warlords to assume power. It managed to obscure national and patriotic issues, while highlighting differences rather than integration. Paul Wolfowitz recruited Noah Feldman and Larry Diamond to develop a flawed interim constitution in defiance of the will and desire of the majority of the Iraqi people. This interim document was applied as the platform for framing the new Iraqi constitution which is full of contradictions and practically institutionalizes division and sectarian strife.

5. Paralyzing and Obstructing the Role of Culture and Religious Centers, Especially That of the Religious Authority, and Cultural and Heritage Centers in Najaf and Karbala. The neoconservatives embarked initially on four strategies: restraining and intimidating religious authority to prevent the voicing of patriotic concerns, institutionalizing the divisional representation of two Muslim communities, using members of the former exiled groups to further preach and inflame sectarian discord, and establishing new religious organizations and committees to further fragment and weaken well established authorities.

6. Marginalizing the Role of the Patriotic and Religious Forces While Introducing Iraqi Exiled Groups . . . as a Substitute for Iraqi Movements Which Have Never Left the Country and Have a Strong Popular Base. Those Iraqis in exile who accompanied the invading forces and showed a commitment to the presence of foreign troops and agenda have been situated in the center of power and have been lavishly rewarded. Consequently, these groups have developed vast interests in the continuation and the presence of foreign troops and in inciting instability and chaos.

7. Engaging in Intense Propaganda Against the Arab and Muslim People by Focusing on Saddam Hussein and His Alleged Weapons of Mass Destruction to Legitimize Any Action to Suppress their Civic, Political, and Economic Rights. While this goal has been gradually met at home, it is overseas where neoconservatives have been exceptionally successful in motivating Arab and Muslim dictators to severely limit freedom of expression and association for their people. Since then, foreign troops have been given the freedom to attack Arab and Muslim countries (e.g., Iraq, Lebanon, Sudan, Somalia, Pakistan, etc.) disguised as a “war against terror.”

In the context of long-term objectives, Al-ishteraki identified five goals. These are:

1. Using Iraq as a Staging Ground to Strike Arab and Muslim Liberation Movements and Intimidating Existing Arab Governments to Go Along With the Neoconservatives’ Design. Mobilizing foreign troops along Iranian and Syrian borders and stationing troops in Qatar, UAE, Saudi Arabia, Morocco, Djibouti, etc. have been instrumental in silencing popular voices and strengthening dictators.

2. Obliterating Iraq from its Arab National Identity and Partitioning it into Warring Sectarian and Ethnic Entities. This has been forced into the new neoconservative-backed Iraqi constitution, by the sharing of power in Baghdad based on ethnic and sectarian affiliation, and practical separation of the northern part from the rest of the country.

3. Redesigning the Arab Political Map and Strengthening Arab Fragmentation and Alienation. This is an on-going project which has seen its fruition, so far, in Sudan, Lebanon, and occupied Palestine.

4. Waging Intense Propaganda against Islam and Changing Its Foundations and Pillars by Spreading Extremism and Intolerance and Projecting Them as Islamic Concepts and Ideology. The emergence of al-Qaeda and other extremist groups and the slaughtering of Muslims by these groups in places like Iraq, Pakistan, Algeria, and Afghanistan demonstrate the effectiveness of the alliances between the neoconservatives and Arab dictators, not only in profoundly altering the image of Islam but also in institutionalizing chaos in the Arab world.

5. Monopolizing and Controlling the Source of Energy in the Arab World and Central Asia and Utilizing That as an Instrument to Dictate the Fate of Other People. Oil in Saudi Arabia and many Arab and Central Asian countries have been mortgaged to Western oil companies.

Collectively, it appears that the neoconservatives have done exceptionally well in reaching their immediate goals and have made reasonable progress in achieving long-term goals. They have not only initiated a perpetual war but also legitimized cruelty and full scale destruction of what once used to be functional and economically thriving societies (e.g., Iraq, Lebanon). Underestimating their achievements may desensitize the public from grasping the depth of the threat which the neoconservative ideology poses to civilization and the international community.

Indeed, neoconservatives have neither experienced setbacks nor have they have made mistakes in their Iraqi venture. Their invasion of Iraq and the continuing bloodshed there demonstrates without doubt that the neoconservatives have reached a milestone in realizing their grand goals of militarizing the globe, the globalization of fear, and the institutionalization of chaos in the Middle East.

In Phony-Baloney Money We Trust?

2008-03-12T20:08:00.001-07:00

by The Mogambo Guru:

My emotions ran the gamut as I prepared to learn of the latest level of Total Fed Credit, ranging from a carefree, 'What in the hell do I care? I'm rich! Or at least I will be when gold soars in response to the Inflationary Bonfires From Hell (IBFH) that the Fed is unleashing on us with their disastrous, 'the-sky's-the-limit' monetary policy!', to the distinctly more hostile, 'Kill everyone and burn their houses to ashes before they can get me!', which is where you always get bogged down wrestling with that old question, 'Does this include family members, too?'

So I was ready for anything, even family members trying to kill me with a pre-emptive strike (which is now, of course, legitimized as the new theory and practice of the damned federal government), when I saw that Total Fed Credit was up $6.7 billion last week, which is a hefty sum, taking the total to $873.3 billion, which may seem like a lot of money to you and me, but is apparently just chump change for the average CEO these days, no matter how incompetent.

And to help out, foreign central banks bought up another $8.6 billion in government and agency debt and stuffed it into their custody account at the Fed, bringing their total ownership of American future debt obligations and American future tax dollars, in this one account alone, to $2.15 trillion! Hahaha! We're freaking doomed!

I shake my head in bewilderment that America can wail in dismay about how slavery was common, Bible-sanctioned and perfectly legal for the last 30,000 years up until about 150 years ago, and then enact legislation bestowing wildly un-Constitutional special rights and privileges on black people and all minorities to somehow atone for it, but this same country is completely guilt-free about happily selling its children, and grandchildren, and great-grandchildren, and great-great-grandchildren into financial bondage to foreigners in exchange for some money to splurge on itself today! Hahaha!

Of course, since we are talking about hypocritical America, this is the same intellectually bankrupt country whose own Constitution literally requires that inflation in prices be zero (through the handy and fool-proof expedient of money being only coins of gold and silver), but which is a country that actually has a money that is neither gold nor silver, but instead its exact freaking opposite; a 100% phony-baloney fiat money! Hahaha! How corrupt can you freaking get?

And this fake money is multiplied over and over through unlimited fractional-reserve banking, so that the banks can take a measly $1 of a new deposit and use that as a 'reserve' to make $10 of new loans, or make $100 of new loans, or make $1,000 of new loans, or $1,000,000,000 of new loans, or any number you can think of, as it is literally unlimited, and the only thing standing in their way is a lack of qualified borrowers.

And then one is terrified when one is reminded that all of that new money is actually the classical definition of 'inflation', and the effect of inflation in the money supply is the disastrous inflation in consumer prices, and there are food riots everywhere, and pretty soon the desperate and the curious start nosing around the Mogambo Bunker Of Defensive Hostility (MBODH), which is the worst mistake they will have made all day and a huge expenditure in ammunition for me.

And inflation in prices will grow worse with all the slashing of interest rates by the Federal Reserve as it grows evermore desperate to administer soothing monetary palliatives as the economy thrashes painfully around in its death throes, and everybody will be dragged down, like interest rates on Certificates of Deposit going waaaAAAAaaay down, delivering a devastating whack to the wallet to people foolish enough to try and save money by buying Certificates of Deposit. Hahaha!

I laugh like this because the average rate that actual small-time savers will receive on a six-month bank CD, as reported in Barron's, is a ludicrous, laughably low 2.75%. Hell, the best-case-scenario, 'official government estimate' of inflation is 4.3%! So buyers of bank Certificates of Deposit are down 1.55% from the get-go! Yikes!

So, as astonishing as it is to say, every dollar is losing purchasing power at the rate of 4.3%, but a bank CD pays a lousy 2.75%, meaning that not only is the investor taking a real (inflation adjusted) loss, but that lousy, stinking 2.75% of interest income is fully taxable, compounding your loss! Hahaha! We're freaking doomed, because this is the nation's own government and central bank doing this to people!

And the good news is that CD buyers are looking downright intelligent compared to the morons buying two-year notes, which have been bid up so high that they are nominally yielding less than 1.5%! This means that, after deducting 10% for taxes and 12% for inflation, these notes are yielding a highly NEGATIVE interest rate of over 10%! Hahaha! Morons!

In discussing possible alternatives, I am sorry to announce that the Mogambo Hedge Fund (MHF) has gone 'belly up', or would have, if any investors had been stupid enough to put any real money into it. Fortunately, nobody did, and the whole thing never got past the drawing board.

Of course, that has not stopped me from trying some other scam, since investors have proved themselves to be idiots, especially when you dangle the promise of big returns. So, I have cleverly used this as a central marketing tool, and I am peddling the new Mogambo High Yield Bonds (MHYB) with an interest rate of 25%, which is higher than you get anywhere else! Anywhere!

And yet, as unbelievable as it sounds, I am unable to unload this massive issue of worthless bonds! I'm offering 25% interest, but nobody wants them!

Well, to be fair to the intelligence of the investors, it is not exactly a big secret that none of the previous issues of Mogambo High Yield Bonds (MHYB) have ever paid any money in interest payments, and in fact every previous MHYB has immediately defaulted and gone into bankruptcy and everybody lost everything, where it was subsequently revealed that this was my Mogambo Business Plan (MBP) all along; sell bonds that were worthless, and use a slow Ponzi scheme to pay myself a huge salary and benefit program with a lot of the money, as I dole out a few outsized dribbles to the early investors, saving the rest to hire lawyers to defend me against the inevitable lawsuits filed by the late investors who got nothing (Hahaha! Nothing! Suckers!) and to legally drag, drag, drag things out until the plaintiffs grow old and die or just get tired of pursuing me or something. Hahaha! What a great plan!

My legal defense is two-pronged, in that I not only claim that a Ponzi scam is the essence of most bonds these days, especially government bonds, but I also allege that the bond market is predicated on pure idiocy, because it is idiocy to think that the M3 money supply can inflate at 17% a year (Thanks, John Williams at shadowstats.com!), consumer prices can inflate at over 10% a year in real life (and at still-staggering 4.3% in 'government life'), have both the CRB the PPI indexes of inflation running north of 10%, oil selling at over $100 per barrel, and yet in light of this staggering evidence of roaring inflation in prices, providing ample warning to 'Keep away! Overly-expensive! Guaranteed loser! Run for your freaking life!', you are nonetheless buying 10-year bonds that yield 3.6 percent and 30-year bonds that yield less than 5 percent? Hahaha!

Pardon me for laughing, but losing purchasing power at the rate of about 10% a year to lock in a long-term return of less than 5% a year makes me squeal, 'Caution; professional money manager at work'! Hahahaha!

British Training Afghan Terrorists.

2008-03-12T17:38:00.001-07:00

In Pursuit of Happiness:

"By: Sorcha Faal

February 6, 2008

Russian Military Analysts are reporting today that the government of Afghanistan is ‘enraged’ over the discovery by Afghan Secret Police of a top secret British Military computer memory stick revealing the United Kingdoms plan to train over 2,000 Taliban rebel fighters and provide them with a base of operations.

British Prime Minister Gordon Brown had previously stated to his Parliament on contacting their Afghan enemy that ‘Our objective is to defeat the insurgency by isolating and eliminating their leaders. We will not enter into any negotiations with these people.’, which with the discovery of their plans showed the duplicity of the United Kingdom and its US allies.

Upon their learning of the treachery by their British NATO allies, Germany was quick to state that they would send no further troops to Afghanistan and the Canadian Prime Minister, Steven Harper, has, also, told his French counterpart, Nicolas Sarkozy, that Canadian Military forces could soon leave Afghanistan.

So serious has the Western Allies mission NATO mission in Afghanistan been compromised by these new charges against Britain that European support for the US led war has erupted in fresh tensions among the West, and as we can read as reported by Britain’s Guardian News Service:

‘The past fortnight, leading up to a Nato defence ministers’ meeting in Lithuania tomorrow and then a summit in Romania in April, has witnessed a transatlantic shouting match between the Pentagon and Europe over mismatched abilities, alleged cowardice and incompetence from Kunduz to Helmand.

The Dutch called in the US ambassador for a dressing down after Robert Gates, the US defence secretary, said the Europeans were no good at counter-insurgency. Gates climbed down, partly, but then fired off a letter to Berlin demanding the Germans put their lives on the line in combat in the south rather than enjoying the relatively cushy conditions of the north. A furious German response followed.’

According to these reports, however, the most catastrophic revelation contained on the captured British Military computer memory stick were plans by the United Kingdom, and their American ally, to ‘utilize’ these 2,000 Afghan Taliban rebel fighters as terrorists against UK, European and US civilian ‘targets’ in a bid to further their effort towards igniting their populations passion for Total World War.

The West’s greatest fears, these reports state, are being further fueled by Russia and Irans growing blockade of Afghan opium supplies which have supplied the coffers of the British and Americans vast spy apparatus’ with untold billions of dollars of hidden wealth since 2002.

The United Nations is also reporting that ‘Afghanistan, the world’s biggest opium producer, is set for another bumper crop in 2008’. But, with the inability to for Afghan opium to reach their Global markets, the United States and Britain are left with only their protected cocaine revenues from Colombia, as Israel has refused to share their revenues generated from their Global Ecstasy trade, and which leaves them with a serious shortfall of monies to fund their growing police states.

As the former Taliban rulers had nearly wiped out Afghanistan’s opium crop, as reported by the United Nations in 2001, Russian historians have long stated that the ‘roadmap’ being followed by the United Kingdom and their American allies is that of the British Empires flooding China with opium in the 19th century which destroyed the Chinese people and led to their defeat by Britain.

To the Western people themselves, and who are intended by their rulers to be victims, there remains no appetite among them to know the truest state of a World which is rapidly plunging into the chaos of Total War, and all the misery it entails. No greater evidence of this fact can be found than a newly released poll which finds that, astoundingly, 1 in 4 British citizens believe that their own World War II Leader, Winston Churchill, is a mythical person.

One can only wonder how these people can be saved from themselves before all is lost for them."

$110.00

2008-03-12T13:08:00.001-07:00

Price of a barrel of oil(per April Futures contracts).

Total Information Awareness Is Back

2008-03-12T12:45:00.001-07:00

Total Information Awareness Is Back:

"WASHINGTON – The American Civil Liberties Union responded today to a stunning new report that the NSA has effectively revived the Orwellian 'Total Information Awareness' domestic-spying program that was banned by Congress in 2003. In response, the ACLU said that it was filing a Freedom of Information Act (FOIA) request for more information about the spying. And, the group announced that it was moving its 'Surveillance Clock' one minute closer to midnight.

'Congress shut down TIA because it represented a massive and unjustified governmental intrusion into the personal lives of Americans,' said Caroline Fredrickson, Director of the Washington Legislative Office of the ACLU. 'Now we find out that the security agencies are pushing ahead with the program anyway, despite that clear congressional prohibition. The program described by current and former intelligence officials in Monday's Wall Street Journal could be modeled on Orwell’s Big Brother.'

The ACLU said the new report confirmed its past warnings that the NSA was engaging in extremely broad-based data mining that was violating the privacy of vast numbers of Americans.

The Total Information Awareness (TIA) program was a mammoth data mining program that envisioned programming computers to trawl through an extensive list of databases containing personal information about Americans – including communications, medical, travel, education and financial data – in an attempt to detect supposedly 'suspicious' patterns. Congress shut down the program amid bipartisan objections that it was the most far-reaching domestic surveillance proposal that had ever been offered."

UN Official Seeks To Halt Biofuel Production

2008-03-12T10:20:00.001-07:00

This is an older article... just putting it up here so I know where to find it again.

UN expert seeks to halt biofuel output
By Edith M Lederer, Associated Press

A U.N. expert on Friday called the growing practice of converting food crops into biofuel "a crime against humanity," saying it is creating food shortages and price jumps that cause millions of poor people to go hungry.

Jean Ziegler, who has been the United Nations' independent expert on the right to food since the position was established in 2000, called for a five-year moratorium on biofuel production to halt what he called a growing "catastrophe" for the poor.

Scientific research is progressing very quickly, he said, "and in five years it will be possible to make biofuel and biodiesel from agricultural waste" rather than wheat, corn, sugar cane and other food crops.

Using biofuel instead of gasoline in cars is generally considered to cut carbon dioxide emissions, which contribute to global warming, although some scientists say greenhouse gases released during the production of biofuel could offset those gains.

The use of crops for biofuel has being pursued especially in Brazil and the United States.

Last March, President Bush and Brazilian President Luiz Inacio Lula da Silva signed an agreement committing their countries to boosting ethanol production. They said increasing use of alternative fuels would lead to more jobs, a cleaner environment and greater independence from the whims of the oil market.

Ziegler called their motives legitimate, but said that "the effect of transforming hundreds and hundreds of thousands of tons of maize, of wheat, of beans, of palm oil, into agricultural fuel is absolutely catastrophic for the hungry people."

The world price of wheat doubled in one year and the price of corn quadrupled, leaving poor countries, especially in Africa, unable to pay for the imported food needed to feed their people, he said. And poor people in those countries are unable to pay the soaring prices for the food that does come in, he added.

"So it's a crime against humanity" to devote agricultural land to biofuel production, Ziegler said a news conference. "What has to be stopped is ... the growing catastrophe of the massacre (by) hunger in the world," he said.

As an example, he said, it takes 510 pounds of corn to produce 13 gallons of ethanol. That much corn could feed a child in Zambia or Mexico for a year, he said.

Benjamin Chang, a spokesman for the U.S. mission to the United Nations, said the Bush administration didn't consider biofuel development a threat to the poor.

"It's clear we have a commitment to the development of biofuels," he said. "It's also clear that we are committed to combatting poverty and supporting economic development around the world as the leading contributor of overseas development assistance in the world."

Ziegler, a sociology professor at the University of Geneva and the University of the Sorbonne in Paris, presented a report Thursday to the U.N. General Assembly's human rights committee saying a five-year moratorium on biofuel production would allow time for new technologies for using agricultural byproducts instead of food itself.

Researchers are looking at crop residues such as corn cobs, rice husks and banana leaves, he said. "The cultivation of Jatropha Curcas, a shrub that produces large oil-bearing seeds, appears to offer a good solution as it can be grown in arid lands that are not normally suitable for food crops," he said.

Jim Rogers: Abolish the Fed.

2008-03-12T09:51:00.001-07:00

This man makes a lot of sense. On CNBC, no less!

Government report forecasts US recession

2008-03-11T20:25:00.001-07:00

FT:

"A US government report on Tuesday forecasted for the first time that the country’s economy would enter recession in 2008.

The Energy Information Administration, the statistical arm of the Department of Energy, said in its monthly oil report that the ‘US real gross domestic product is expected to decline slightly in the first half of the year’.

It added that the economy would start to growth again in the third quarter, ‘with growth for 2008 as a whole at 1.3 per cent, the slowest annual rate since 2001’.

Last month, the EIA did not call for a recession and forecasted that real gross domestic product was ‘expected to grow by 1.6 per cent’ in 2008.

The EIA report did not specifically say that the US economy would fall into recession, but two quarters of negative growth is a common definition of recession among economists.

The National Bureau of Economic Research, an economic think-tank, is usually in charge of tracking recession in the US and sometimes it uses other definitions, analysts said.

The EIA’s Short Term Energy Outlook monthly report focuses on energy supply and demand forecast, but it makes a monthly assumption on US economic growth, weather and other economic data.

The White House has until now maintained that economic growth is weak, but has not said that the economy would fall into recession in 2008. The Federal Reserve, the US central bank, has also said that economic growth was weak.

The EIA said that US petroleum consumption would fall by 90,000 barrels a day in 2008 due to the slowing economy combined with high petroleum prices. Last year petroleum consumption rose by 10,000 b/d.

Copyright The Financial Times Limited 2008"

"Global Momentous Threat"

2008-03-11T15:15:00.001-07:00

Michael McDonnell – Mar 2008

Trying to précis two points, I quote below from the Intelligencer.ca posted by Hielema Bert

"We are not experiencing a "remake" of the 1929 crisis nor a repetition of the 1970s oil crises or 1987 stock market crisis. What we will have, instead, is truly a global momentous threat - a true turning point affecting the entire planet and questioning the very foundations of the international system upon which the world was organized in the last decades."

The "very foundations of the international system" essentially, if not simply, are fractional reserve banking where money is brazenly deemed into existence, though once upon a time it was backed by Statutory Reserve Deposits which today are de facto zero. Fractional finance implies tyranny overwhelming national governments globally; once upon a time but no longer, since the emergence of the BRIC superpowers, Latin American hope, and the freeing of ASEAN nations from the IMF/World Bank's hegemony.

If money evaporates now, many economies can feasibly seek governmental protection from the globalist tyranny now in terminal crisis. In 1933, Hitler proceeded with fatal innocence to soak up Germany’s six million unemployed by funding huge public works with government credits, that is, with money deemed into existence by printing bank notes, hoping the paper would be accepted as payment for work. He gambled that deemed or fiat money would be gradually replaced by real savings earned by work of real value. The scheme worked so successfully that by 1936, unemployment was gone and the deutschmark, restricted to the volume of real wealth, was coveted on black-markets. But by generating the nation’s own wealth and avoiding national debt, he had committed the unmentionable mortal sin of threatening power which, in light of a world drowning in hyper-violence, can properly be understood as bestial power. It is now coming down like Sauron's tower.

I am suggesting that the perfectly rational prophecies of economic doom pertain not globally but only to the peoples of the Anglo-American and NATO nations: Wherever governments are free to allow people to create wealth I would expect economies to survive. But we in the "West," perhaps we should hoard cigarettes, because our governments obey their financiers.

Aldo Moro: US envoy admits role in former Italian prime minister killing

2008-03-11T14:54:00.001-07:00

SOTT:

"An American envoy has claimed that he played a critical role in the fate of Aldo Moro, the former Italian prime minister who was murdered by terrorists in 1978.

Steve Pieczenik, an international crisis manager and hostage negotiator in the State Department, said that Moro had been 'sacrificed' for the 'stability' of Italy.

In a new book called We Killed Aldo Moro, Mr Pieczenik said he was sent to Italy by President Jimmy Carter on the day that Moro was kidnapped by the Red Brigades, a far-Left terrorist group.

Moro, who had been prime minister for a total of more than five years between 1963 and 1976, was snatched at gunpoint from his car in Rome.

He had been heading to parliament for a crucial vote on a ground-breaking alliance he had proposed between the Christian Democrat Party and the Italian Communist Party.

The alliance enraged both sides of the political spectrum in Italy, and also upset both Moscow and Washington.

Moro's widow, Eleonora, later said Henry Kissinger had warned her husband against his strategy. 'You will pay dearly for it,' he is alleged to have said.

Mr Pieczenik said he was part of a 'crisis committee' headed by Francesco Cossiga, the interior minister.

Moro was held for 54 days. Mr Pieczenik said the committee was jolted into action by the fear that Moro would reveal state secrets in an attempt to free himself.

A false statement, attributed to the Red Brigades, was leaked saying that Moro was dead.

Mr Pieczenick said that this had a dual purpose; to prepare the Italian public for the worst, and to let the Red Brigades know that the state would not negotiate for Moro, and considered him already dead.

The following month, Moro was shot and placed in the back of a car in central Rome, midway between the headquarters of the Communist Party and the Christian Democrats.

In a documentary on French television last weekend, Mr Cossiga admitted the committee had taken the decision to release the false statement."

Al Martin: $70/barrel Oil?

2008-03-11T13:09:00.001-07:00

(3-10-08) A major meltdown in the markets was narrowly averted on Friday, March 7, when the Federal Reserve announced a doubling of its Term Auction Facility (TAF) money auction from $50 to $100 billion dollars per month (which is effectively 28 day money). In its announcement, the Fed said that the reason it was doing this was because of continuing illiquidity in the nation’s subprime markets, subprime municipal junk and junk bond market. In other words, by this action, the Fed is saying that $50 billion a month is not enough. It is not providing enough short-term liquidity to allow the financial institutions that carry inventories and make markets in these securities to do what they are in business to do -- to maintain liquid markets in these securities. This is very serious indeed

The equity and debt markets initially acted favorably to the Fed’s action, and it did prevent what could have been, and what many floor traders expected to be a major meltdown in domestic equity markets on Friday. This didn’t take place, probably, because of this announcement.

People should understand that the initial reaction by the unwashed, or those who do not understand economics, is that this is a “good thing” -- that the Fed understands that there is a problem, that they are doubling the amount of money being put out on these 28-day auction sales in an effort to liquefy markets. The smart money people, however, look at this as a negative because the Fed was forced to do it. They didn’t do it voluntarily. They did it because they had to do it. It was simply a last minute drastic emergency measure.

The Fed’s action shows clearly that there is a big, big problem, since the Fed not only had to double the size of TAF money auctions, but also had to loosen what are called “pledge standards.” In other words, they are now allowing a much greater variety of securities even than before. It is now “all collateral loans.”

The Fed then is adopting a policy that all collateral will be used for this TAF money and this bespeaks of how dire and desperate the situation has become. It shows just how illiquid the bond markets have become.

Other news was that the February unemployment report, which showed payroll loses of 63,000, was much worse than expected, since it is now the second consecutive month of so-called red numbers, or in other words payroll jobs falling.

What is a little deceptive, and another reason why equity markets didn’t melt down as much as they probably otherwise would have, is that the job losses in this report were much larger than expected. The actual unemployment rate fell from 4.9% to 4.8%, but the reason it did is because the number of employable persons fell.

That is how the statistics are calculated by the Bureau of Labor Statistics and is based on what is called the “total employable pool.” The total employable pool fell by 4 million. That made the unemployment rate look better that it actually is. What we are seeing now is the same thing you saw from 2001 to 2003, where there is an increasing number of people dropping out of what is called the payroll survey. These are job seekers who have effectively given up looking for jobs.

In fact this is confirmed in what is called the weekly wage survey, one of the subcomponents of which is called “continuing claims.” Continuing claims means long-term unemployed, or those who have been unemployed for more than 18 months. That number has risen sharply in the last 3 months -- from 2 million to 2.8 million. This continuing claims number, peaked at 3.8 million in the middle of 2003 at the height of the what I have called the “Bushonian Job Export Program.”

Other news released Friday included the monthly numbers by the NAR (National Association of Realtors) and the NMBA (National Mortgage Brokers Association). Markets did not initially react to this release because they were stunned by the numbers. That is the only way to put it.

Total foreclosure rate in the month of February rose to 5.82%. Total mortgage arrearage rose to 8%. Total property tax arrearages, which include homeowners who are in arrears of their property tax for more than one year, rose to 17%.

Most worrisome of all, however, was the fact that what is called the national homeowners’ average debt to equity ratio fell below 50% for the first time since the Great Depression of the 1930s.

This was also perceived very negatively by the markets. As a matter of fact, I think the markets did not react to it as much as they should have, because traders are in disbelief of how the housing sector in this country have deteriorated. People are simply in a state of disbelief and denial because of it. It was much worse than expected.

The National Association of Realtors has been pressing the U. S. Treasury Department that there is only one ultimate solution here – and of course pro-Bush faction Republicans are diametrically opposed to this – that some sort of U.S. Treasury guarantee and bail out, has to come. It is the only thing that is going to be able to re-liquefy the real estate markets. The capital base of both commercial and investment banks, brokerage firms, insurance firms, and pension firms are now so depleted that they cannot in some confederation mount any type of real rescue effort.

We saw how weakened the capital basis of the nation’s investment banks have become when they tried on Thursday to bail out AMBAC, one of the big bond insurers. AMBAC is on the precipice of losing its triple A rating. It had been suspended, but what a group of banks led by Citibank did was proffer a $1 ½ billion dollar share offering in AMBAC on Thursday. They raised $1 ½ billion dollars by peddling AMBAC, which was already down more than $2.00 on Thursday at a further 9% discount. They have thus effectively diluted shareholder equity at AMBAC to a negative number.

Citibank, which led the consortium, would not even put in $1 ½ billion dollars of its own money, not because they didn’t have it but because they were frightened of an endless or open-ended commitment -- if you try to come in and save them, like Bank of America is trying to do with Countrywide..

BofA bought Countrywide, but they are finding that it is a bottomless pit into which they are having to throw money because the leverage of mortgage derivatives is 30/1 or 40/1 so that if $1billion dollars of mortgage paper collapses, the counter party, or risk exposure might be $30-40 billion dollars. No one actually knows. That is the reason why they are afraid to bail these firms out.

This is the derivative time bomb going off, as has been predicted by many, including Warren Buffett. Last week the nation’s second largest mortgage provider, Fremont General, collapsed. The nation’s largest so-called Tier 1 mortgage provider, which provides mortgages of more than $600,000, Thornburg Mortgage also collapsed. Now they can’t write any more mortgages, so they are effectively out of business.

Mortgages that they have underwritten will continue to exist as service entities but they have collapsed as ongoing businesses. They have depleted their capital.

The collection part of their business is typically farmed out, but since they actually own or are the syndicators of the underlying paper that has been packaged-up and sold out in different so-called tranches, they have to stay in business at least in a collection/ supervisory role. But we have seen two large mortgage firms collapse last week and one of the big ten bond insurers, SCA, also collapsed.

As the National Mortgage Brokers Association pointed out regarding last week’s collapses in the mortgage issuance arena, there has been a contraction in this country. Only half of the mortgage providers in this country that were in business when the Bush-Cheney Regime came into power are still in business today.

We have an even greater story about commodities. As we have been warning our readers on Al Martin Raw and InsiderIntelligence.com, there is this “second speculative bubble” that has been created in commodity prices, and what we saw late week is the speculative bubble in commodities prices is beginning to unwind.

In that case, people have said – well, when can we expect $70 per barrel oil? How soon will we be seeing this -- if the rise in oil prices to $100 a barrel is not justified by near-term fundamentals, especially when you consider the capacity of OPEC and the falling growth in demand?

The answer is this -- what’s called the “supply/demand value” of oil is right now about $70, even though different firms calculate it differently.

The facts are pointing to a lower price for oil – but when? For instance, the International Energy Agency has revised global oil demand downward for 2008 by 600,000 barrels a day, or 6.8%, since last summer. In fact the EIA revised its global oil consumption forecast for 2008 for the third time reducing its estimates of oil consumption. So with the falling demand and the fact that OPEC will be well covered with the rising supply, it should be remembered that during the first half of 2007, oil prices went down to around $56 per barrel.

So what breaks the back of speculative bubbles is not the same as it used to be because what feeds speculative bubbles (namely unlimited monies being put into commodity funds) has changed the way commodity prices react to economic fundamentals, by completely and totally distancing commodity prices from underlying supply/demand fundamentals.

What broke the back of the first speculative bubble in commodities in late 2006 to 2007 was the fact that the commodity funds ran out of money. Also the so-called free money derivative trade based on the Japanese yen ran out of steam. In other words, this was a situation wherein you could create money through trading the spread of the yen against the dollar and other currencies.

This was the leverage created by the so-called “yen carry trade,” wherein you could create in essence free money. That has collapsed. The yen carry trade no longer exists. The big firms that sponsor the commodity funds, like Merrill Lynch, Goldman Sachs, Morgan Stanley, Lehman, etc. have themselves become substantially illiquid. They are all in dire financial straits.

I’ve been asked – what’s the likelihood of $70 a barrel oil in 2009? I say. You will see $70 per barrel oil by the end of this year. Why? Because this bubble will have to pop.

We began to see what happened last week when Morgan Stanley, Goldman Sachs, Merrill Lynch, Lehman Brothers, et al, who are the sponsors of the big commodities funds, saw their capital bases become so eroded and their fiscal conditions became so dire, that they had to get more money. So where do they go for money? To their commodity funds. They force the commodity funds that they manage to liquidate long positions in commodities that they have a profit in. Because of that, we saw a sharp back off Thursday and Friday in coffee, cocoa, sugar, orange juice, and cotton.

What people don’t understand about all this, however, is that the prices that commodities trade at are no longer a reflection of their underlying supply/demand fundamentals. They are now a function of how high prices can be pushed by what I call the Bullish Shills.

People must understand that commodity prices now have become completely artificial. They bear no supply/demand reality. And the end result is a speculative bubble in all commodities, the magnitude of which has never been reached before..

This speculative bubble has been driven by commodity funds (this time under the mantra because they need a mantra) of “Inflation. Inflation. Inflation. The Fed is reducing rates which is creating inflation.” Which in fact it is. However it’s short-term.

The Fed’s counter to this is that inflation will begin to fall later in the year as the recession in the United States deepens and as global economic growth falls, and they are right. Inflation will begin to fall in the second half of this year because consumption will begin to fall, which is already falling, and it will continue to fall.

Some people might even construe this as good news. What you haven’t seen break yet is the oil, the gold and the silver, and the reason why you haven’t seen them break yet is because they have the greatest concentration of what is called “deep-pockets spec long money.” Also they are the most inflation-sensitive commodities. Therefore you can still bang the inflationary drum to bring in Joe Six Pack buyers of one and two lots, who are always convinced that gold is going to $2000 tomorrow, and who are convinced that silver and oil, will move higher.

People don’t believe they are undervalued, but they are being sold on the concept of a hedge against this enormous round of new inflation that Fed action is going to create, which is a lie.

So when does oil break? When do these commodities get their backs broken like the backs of soft and tropical commodities last week? We also saw grains start to come down last week. When they get their backs broken is when Merrill Lynch, Goldman Sachs and Morgan Stanley get sufficiently starved for cash. So the big long interest starts to come out of the oil and the gold. It has nothing to do with the supposed inflation, and nothing to do with supply/demand.

These are the new realities of today’s capital marketplaces.

* AL MARTIN is an independent economic-political analyst with 25 years of experience as a trader on NYMEX, CME, CBOT and CFTC. As a former contributor to the Presidential Council of Economic Advisors, Al Martin is considered to be a source of independent analysis for financially sophisticated and market savvy investors.

Buffett and Gross warn: $516 trillion Derivative bubble is a disaster waiting to happen

2008-03-11T12:55:00.001-07:00

MarketWatch:

"ARROYO GRANDE, Calif. -- 'Charlie and I believe Berkshire should be a fortress of financial strength' wrote Warren Buffett. That was five years before the subprime-credit meltdown.

'We try to be alert to any sort of mega-catastrophe risk, and that posture may make us unduly appreciative about the burgeoning quantities of long-term derivatives contracts and the massive amount of uncollateralized receivables that are growing alongside. In our view, however, derivatives are financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal.'

That warning was in Buffett's 2002 letter to Berkshire shareholders. He saw a future that many others chose to ignore. The Iraq war build-up was at a fever-pitch. The imagery of WMDs and a mushroom cloud fresh in his mind.

Also fresh on Buffett's mind: His acquisition of General Re four years earlier, about the time the Long-Term Capital Management hedge fund almost killed the global monetary system. How? This is crucial: LTCM nearly killed the system with a relatively small $5 billion trading loss. Peanuts compared with the hundreds of billions of dollars of subprime-credit write-offs now making Wall Street's big shots look like amateurs.

Buffett tried to sell off Gen Re's derivatives group. No buyers. Unwinding it was costly, but led to his warning that derivatives are a 'financial weapon of mass destruction.' That was 2002.
Derivatives bubble explodes five times bigger in five years
Wall Street didn't listen to Buffett. Derivatives grew into a massive bubble, from about $100 trillion to $516 trillion by 2007. The new derivatives bubble was fueled by five key economic and political trends:

1. Sarbanes-Oxley increased corporate disclosures and government oversight

2. Federal Reserve's cheap money policies created the subprime-housing boom

3. War budgets burdened the U.S. Treasury and future entitlements programs

4. Trade deficits with China and others destroyed the value of the U.S. dollar

5. Oil and commodity rich nations demanding equity payments rather than debt

In short, despite Buffett's clear warnings, a massive new derivatives bubble is driving the domestic and global economies, a bubble that continues growing today parallel with the subprime-credit meltdown triggering a bear-recession.

Data on the five-fold growth of derivatives to $516 trillion in five years comes from the most recent survey by the Bank of International Settlements, the world's clearinghouse for central banks in Basel, Switzerland. The BIS is like the cashier's window at a racetrack or casino, where you'd place a bet or cash in chips, except on a massive scale: BIS is where the U.S. settles trade imbalances with Saudi Arabia for all that oil we guzzle and gives China IOUs for the tainted drugs and lead-based toys we buy.

To grasp how significant this five-fold bubble increase is, let's put that $516 trillion in the context of some other domestic and international monetary data:

* U.S. annual gross domestic product is about $15 trillion

* U.S. money supply is also about $15 trillion

* Current proposed U.S. federal budget is $3 trillion

* U.S. government's maximum legal debt is $9 trillion

* U.S. mutual fund companies manage about $12 trillion

* World's GDPs for all nations is approximately $50 trillion

* Unfunded Social Security and Medicare benefits $50 trillion to $65 trillion

* Total value of the world's real estate is estimated at about $75 trillion

* Total value of world's stock and bond markets is more than $100 trillion

* BIS valuation of world's derivatives back in 2002 was about $100 trillion

* BIS 2007 valuation of the world's derivatives is now a whopping $516 trillion

Moreover, the folks at BIS tell me their estimate of $516 trillion only includes 'transactions in which a major private dealer (bank) is involved on at least one side of the transaction,' but doesn't include private deals between two 'non-reporting entities.' They did, however, add that their reporting central banks estimate that the coverage of the survey is around 95% on average.
Also, keep in mind that while the $516 trillion 'notional' value (maximum in case of a meltdown) of the deals is a good measure of the market's size, the 2007 BIS study notes that the $11 trillion 'gross market values provides a more accurate measure of the scale of financial risk transfer taking place in derivatives markets.'

Bubbles, domino effects and the 'bad 2%'

However, while that may be true as far as the parties to an individual deal, there are broader risks to the world's economies. Remember back in 1998 when LTCM's little $5 billion loss nearly brought down the world's banking system. That 'domino effect' is now repeating many times over, straining the world's monetary, economic and political system as the subprime housing mess metastasizes, taking the U.S. stock market and the world economy down with it.
This cascading 'domino effect' was brilliantly described in 'The $300 Trillion Time Bomb: If Buffett can't figure out derivatives, can anybody?' published early last year in Portfolio magazine, a couple months before the subprime meltdown. Columnist Jesse Eisinger's $300 trillion figure came from an earlier study of the derivatives market as it was growing from $100 trillion to $516 trillion over five years. Eisinger concluded:

'There's nothing intrinsically scary about derivatives, except when the bad 2% blow up.' Unfortunately, that 'bad 2%' did blow up a few months afterwards, even as Bernanke and Paulson were assuring America that the subprime mess was 'contained.'

Bottom line: Little things leverage a heck of a big wallop. It only takes a little spark from a 'bad 2% deal' to ignite this $516 trillion weapon of mass destruction. Think of this entire unregulated derivatives market like an unsecured, unpredictable nuclear bomb in a Pakistan stockpile. It's only a matter of time.

World's newest and biggest 'black market'

The fact is, derivatives have become the world's biggest 'black market,' exceeding the illicit traffic in stuff like arms, drugs, alcohol, gambling, cigarettes, stolen art and pirated movies. Why? Because like all black markets, derivatives are a perfect way of getting rich while avoiding taxes and government regulations. And in today's slowdown, plus a volatile global market, Wall Street knows derivatives remain a lucrative business.
Recently Pimco's bond fund king Bill Gross said 'What we are witnessing is essentially the breakdown of our modern-day banking system, a complex of leveraged lending so hard to understand that Federal Reserve Chairman Ben Bernanke required a face-to-face refresher course from hedge fund managers in mid-August.' In short, not only Warren Buffett, but Bond King Bill Gross, our Fed Chairman Ben Bernanke, the Treasury Secretary Henry Paulson and the rest of America's leaders can't 'figure out' the world's $516 trillion derivatives.

Why? Gross says we are creating a new 'shadow banking system.' Derivatives are now not just risk management tools. As Gross and others see it, the real problem is that derivatives are now a new way of creating money outside the normal central bank liquidity rules. How? Because they're private contracts between two companies or institutions.

BIS is primarily a records-keeper, a toothless tiger that merely collects data giving a legitimacy and false sense of security to this chaotic 'shadow banking system' that has become the world's biggest 'black market.'

That's crucial, folks. Why? Because central banks require reserves like stock brokers require margins, something backing up the transaction. Derivatives don't. They're not 'real money.' They're paper promises closer to 'Monopoly' money than real U.S. dollars.

And it takes place outside normal business channels, out there in the 'free market.' That's the wonderful world of derivatives, and it's creating a massive bubble that could soon implode."

Ex-Taliban explains how U.S. funds insurgents

2008-03-10T20:31:00.001-07:00

Signs of the Times News:

"In a secret meeting with a Taliban commander, I learned how Bush administration aid to Pakistan helps fund insurgents who kill U.S. troops.

A stocky, bearded figure in a gray vest, a faded brown shalwar kameez and a cream-colored Pashtun shawl appeared at the door. He removed his shoes and walked on cracked, callused feet over the carpet to sit cross-legged beside me. Our meeting was conducted in secrecy. My guest was, until early 2007, a Taliban commander of 50 fighters in North Waziristan, Pakistan, one of the Federally Administered Tribal Areas (FATA) near the Afghan border where both al-Qaida and Taliban insurgents operate. Ever since he left the Taliban, he has been living in fear of assassination for treason. I thanked him in English for his willingness to meet, and he answered me in Pashto, the chief language of southern and eastern Afghanistan and Pakistan's Tribal Areas, without a trace of emotion.

'If you had tried to interview me this time last year,' he said, 'I would have killed you.' Then he reached past my feet and poured himself a glass of sugary green tea.

Over the course of several hours in the Kabul office, 'Haji Muhammed,' as we agreed he would be called, spun a gemstone ring absently around his finger and ran his hands through his thinning hair as he described for me his firsthand experience of an American foreign-policy debacle. The U.S. is paying for both sides of the war in Afghanistan. As is becoming increasingly clear, for at least two and a half years, and perhaps far longer, the Pakistani government has been receiving massive U.S. aid while its intelligence agency and elements of its military have been pursuing their own anti-American agenda within Afghanistan. The U.S. has given the Musharraf regime $10 billion since Sept. 11, 2001, but Pakistan's Inter-Services Intelligence (ISI) and factions within the Pakistan army, while helping the U.S. track al-Qaida with one hand, have been aiding the Taliban with the other, both inside Afghanistan and across the Pakistani border in Tribal Areas like North Waziristan. In part because of Pakistani help, the Taliban have made a steady comeback and American and Afghan casualties are at their highest annual levels since the war began.

Islamabad has denied complicity and Washington has maintained official silence, but the double-dealing is not surprising. It's just the continuation of the Pakistani government's former alliance with the Taliban, which was itself an outgrowth of a decades-old Pakistani policy of trying to exert control over the internal affairs of its chaotic neighbor. It was the recognition of Pakistan's motives that drove Muhammed to defect. 'I left the Taliban because I could no longer stand Pakistan's hand in Afghanistan,' Muhammed told me through a translator. 'For years we were trained and helped, and fought alongside ISI and [Pakistan] army officers. But they are not mujahedin, they want to keep Afghanistan weak.'

Muhammed said the ISI had helped train and arm him to fight inside Afghanistan against U.S. and international coalition forces since 2002. 'If the world can know what happens inside the Tribal Areas, maybe Afghanistan has a chance to survive,' he said. 'Like this the war will not end.'

For nearly two years now, the military situation inside Afghanistan has deteriorated. Violence has increased, security has shrunk and the Taliban have brought the war to Kabul. Coalition casualties increased more than 20 percent last year and estimates of civilian deaths for 2007 range as high as 6,000. My own repeated trips to the country have convinced me that not only are Haji Muhammed's assertions about Pakistan's role in the violence true, but that the U.S. -- or at least its representatives on the ground in Afghanistan -- has long been aware of the problem.

Interviews with Afghan and U.S. intelligence officials involved in covert U.S. operations along the border suggest that U.S. intelligence operatives have known since 2005 that the Pakistan army and the ISI have been training and arming insurgents in the Tribal Areas who cross into Afghanistan to kill Afghan, U.S. and coalition forces. 'Our guys are getting killed because Pakistan has a double policy,' said an American policy advisor who travels frequently to U.S military and CIA bases near the border. But the same advisor says intelligence officials have only recently gotten through to their superiors in Washington that Pakistan is part of the problem."

Putting 2 and 2 Together

2008-03-10T17:53:00.001-07:00

Putting 2 and 2 Together:

"Another headline from Bloomberg rounds out the picture: 'Gasoline at record $3.20 a gallon.'

We will put 2 and 2 together. Falling employment means families have less to spend. Rising prices mean they will need to spend more to stay in the same place. And here, Dear Reader, do you see what has happened? The immoveable force of deflation has run smack into the irresistible force of inflation right in Americans' own backyards. And we will tell you how the smash up will resolve itself: standards of living will fall.

And here comes the New York Times with even more bad news. 'Seeing an end to the good times,' begins its report. Then, it allows as how the good times weren't really so good after all. The median household earned $49,244 in '99. Now, it earns $48,201. It is a strange boom that doesn't boost family incomes. But heck, we've been saying that it was a freak and an imposter all along."

America: Lying Politicians, Gullible Voters and the Long Slide Ahead

2008-03-10T16:43:00.001-07:00

AfterDowningStreet.org:

By Dave Lindorff

Well, fellow Americans, we are finally going to get our just rewards.

That ‘Almighty Dollar’ you used to hear about is heading straight towards the scrap heap of junk currencies (think Ruble, Rupee, Lira, Escudo).

Several decades of foolishly voting for charlatan politicians, who assured us we could rule the world as we saw fit with a military whose costs were greater than the rest of the world’s armies combined, and who assured us we didn’t need to pay for our wars and our military might because we could just borrow money to keep the government running, have finally run us up against a wall. Nobody wants to hold those dollar debts anymore.

Would you?

The same is true with the policy of globalization which those same charlatans have sold us, claiming that allowing our industrial base to pick up and move to Asia or Latin America would be a cost-free way of keeping inflation in check by providing us with all our manufactured crap on the cheap. Forget about lost jobs, they told us. You’ll all end up retraining and becoming lawyers and accountants and MBAs scooping up the good new jobs. Forget about a trade deficit, too, they told us. The US, with its brilliant educated workforce, will be providing the world with intellectual products, from our peerless movies and video games to our wonderful high-tech and medical inventions.

Now we see that those promises were a joke too. Indian and Chinese scientists and engineers are proving to be just as smart as our own. And as our bankrupted communities, their tax revenues withering with the collapse of the real estate bubble, and our financially strapped states, their tax revenues battered by rising unemployment and falling incomes, slash funding for public education and for colleges.

The jobs are gone, the schools are overcrowded holding pens, the public has run itself into massive debt trying to maintain a semblance of old living standards, the bridges are falling down, the roads are filling with potholes and cracks, fully one percent of the population (mostly people unable to find jobs) is in jail, and the troops are mired off in Iraq and Afghanistan, where they’re blowing through $12 billion a month just trying to stay alive and to stave off defeat.

Meanwhile, here at home, we’re watching the price of gas drift upwards towards $4/gallon, as producing countries from Iran to Venezuela, and Saudi Arabia in between, look at their crude stockpiles and think, ‘Do I want to get paid in greenbacks for this stuff?’

Increasingly, they’re thinking, ‘No. What do they take us for? Chumps? We want Euros.’

Over in China, the folks who make everything we use, from car and plane parts to the toys our kids play with and the food we eat, they’re thinking the same thing.

When they all eventually decide they’ve had it with the dollar, it will really start to plummet, and no amount of interest rate hiking by the Federal Reserve will be able to make it look attractive enough to hold onto.

But wait, the Fed can’t raise interest anyhow! It has to lower interest rates, because the US economy is sinking into a recession. That’s why the Fed has already lowered interest rates to 3 percent.

You may not have noticed, because the banks haven’t followed suit by lowering mortgage rates and consumer credit rates. They can’t do that, because they have so many loans going bust they need to keep sucking profits out of the remaining borrowers who so far can still meet their monthly payments.

The politicians who lured us into this disaster are now talking about how they will fix everything, but it’s all smoke and mirrors. John McCain may say the US will be stationing troops in Iraq for 100 years, but how’s he planning to pay for that? Hillary Clinton may say she wants to bring jobs back to Ohio, but who’s going to hire Ohio's workers? (Incentally, the phone Hillary picks up in her infamous 'hot-line phone' ad was made in China, and the child in the ad, itself lifted from stock footage taken years ago, was of a girl, now 17, who is today an Obama activist.) Barack Obama may say he’s going to ensure that Americans can continue to maintain their lifestyles and afford the things they need, but how does he plan to keep incomes—and the currency itself—afloat?

The only way to salvage the US economy is for us American voters to admit that we’ve been buying a lie, and that these candidates vying to replace the Liar-in-Chief, and the candidates running for the Congress, are lying to us still.

We need to acknowledge that the US is not exceptional, and that it has to be part of the community of nations. We can no longer rule a ‘new world order’ as ‘the sole surviving superpower.’ That way lies the fate of the Roman Empire.

We need to bring the troops home—not just from Iraq and Afghanistan, but from all 800 of the places we have them stationed around the globe. We need to make reefs of our aircraft battle groups, and new forests of our many, many airfields and military bases.

We need to put the hundreds of thousands of men and women who unproductively march around in ugly desert uniforms to productive work as teachers, scientists, technicians, builders, healthcare workers and reforestation workers.

We need to take the trillion dollars a year we annually blow on the military and start putting it into our education system, our health system, our retirement system and, most critically, into R&D on ways to save the planet from climate disaster.

There is probably still time to pull the US out of a permanent dive into third-class nationhood, but not much. Especially if the idiots currently at the wheel are allowed to make things worse by attacking Iran.

We can start by demanding that the current candidates for President and Congress stop their lies. None of them can bring about any ‘change’ in America, or rescue the country from its growing crisis, without slashing our absurd military budget, and without ending the con game called ‘globalization’ that is hollowing out the economy.

If we don’t demand that kind of honesty of our political class, we have only ourselves to blame for the wreckage that will ensue.

If you want to see what it’s going to look like if we continue down our present path, take a trip to Rome and walk through the ruins of the Forum. Those structures went from gleaming marble to piles of bricks in a matter of decades, during which Rome went from the capital of a pan-European empire to a fetid swamp (much like a post-collapse Washington would be). But a word of warning. If you go to Rome, bring a sleeping bag and a lunch pail. Your dollar will not get you a hotel room or pay for lunch at even a run-of-the-mill eatery these days, so plan on camping and eating from the grocery store while there.

Atlanta Federal Reserve releases DVD aimed at helping banks prepare for disasters

2008-03-10T12:05:00.001-07:00

Link:

"Press Release: Federal Reserve Bank of Atlanta

In the aftermath of a disaster, banks play a vital role, distributing cash to their customers and ensuring that their customers are able to meet the financial needs of their families and their businesses.

Drawing on the experience of bankers who have weathered crisis situations, the Federal Reserve Bank of Atlanta developed Crisis Preparedness: Reconnecting the Financial Lifeline, a DVD designed to assist bankers with their institutions' emergency preparedness efforts. Each section of the DVD profiles a facet of crisis preparedness, from preparing and testing a plan to caring for employees to providing cash to customers to working with banks and first responders.

The DVD features interviews with bankers and Atlanta Fed staff. The examples featured in the DVD emphasize the need for crisis preparedness and practical steps institutions can take to be prepared. The DVD includes supplemental in-depth interviews with these featured bankers.

The DVD can be downloaded or ordered at the Atlanta Fed's Web site:
http://www.frbatlanta.org/bank_info/crisis_preparedness.cfm.

The Federal Reserve Bank of Atlanta serves the Sixth Federal Reserve District, which encompasses Alabama, Florida, Georgia and parts of Louisiana, Mississippi and Tennessee. As part of the nation’s central banking system, the Atlanta Fed participates in setting national monetary policy, supervises numerous commercial banks and provides a variety of financial services to depository institutions and the U.S. government. The Atlanta Fed offers economic and financial education outreach to teachers, students, and others through a variety of programs and activities."

The Great Betrayal.

2008-03-10T09:42:00.001-07:00

Another Milestone on the Road to Serfdom, by Scott Horton:

"The Torture President

And all this simply clears the path for Bush’s shining act of glory set for later today. He will veto the intelligence authorizations act of 2008 because it clarifies, for the third or fourth time now, that acts of torture are a violation of the law. But George W. Bush is the law, and he will not hear any differently from this Congress. Indeed, Bush’s claim to be the law is manifested in one thing above all others, and that is his power to torture. By defending and upholding this right, Bush shows that unlike generations of predecessors in the White House, he is King. He sets the law, and his will determines how it will be enforced and against whom. That is his own, very personal vision of ‘justice,’ measured in terms of personal prerogative and power. Torture is the measure and definition of his authority as a President with monarchical pretense.

So Bush will veto the latest anti-torture legislation, and it will have no effect. Or rather, his veto will be cited as yet another instance in which his personal will triumphs over the Law.

The curtain continues to fall over American democracy. Americans understandably are sickened by the tragi-comedy that spreads itself across this stage. But their faith in another presidential election and another leader is misplaced. They need to reserve their faith not for the new, but for the old: for the constitutional model that the Founders left. It needs to be forced to work. And all those who undermine it must be held to account. That includes the should-be watchdogs, who slobbering at the prospect of a few drug-drenched sirloins hurled their way, are failing in their duty to protect their true masters: the American people.

We live in the age of the Great Betrayal, in an age in which too few are willing to state the obvious. There is still time to check the progress of tyrannical power, but the hour grows late, and the sounds of alarm no longer seem to register with a somnolent populace."