Tuesday, November 15, 2011

Peter Hollard @ Google+

This shows just how precarious the situation is ....From the webLenders' funding fears see LIBOR rocket to 1%Mortgage StrategyThree-month LIBOR last week rose to 1% for the first time since July 2009 as lenders' funding and liquidity fears deepened on the back of the eurozone crisis. LIBOR has risen from 0.83% since August, steadily increasing the gap between it and the 0.5% base rate, which in normal trading ...Recommended by Google+

Saturday, November 12, 2011

Brazil-China: too close for comfort?

Once upon a time the US would have provided this finance..Brazil-China: too close for comfort?It is hard to say no to a trillionaire. That is what Brazil and its oil industry partners are finding as China continually steps up to the plate to provide much-needed capital for the development of g...

China threatens US with new debt downgrade

The head of China's biggest ratings agency, Dagong Global Credit Rating, is warning that it may downgrade the US's sovereign debt rating again because of Washington's failure to tackle the federal budget deficit. The remarks by Dagong's chairman, Guan Jianzhong, to be broadcast in an interview with al-Jazeera on Saturday morning, come at the end of another week of deep turmoil for the world economy. Dagong, which has maintained a pessimistic outlook on US fiscal policy, has been leading the charge to downgrade US debt over the last 12 months, lowering the US rating from AA to A+ a year ago. http://m.guardian.co.uk/business/2011/nov/12/chins-threatens-us-with-new-debt...

Monday, October 3, 2011

Steven Cohen: The Battle between Money and the Majority

The battle between money and the majority is the story of American politics and has been the central theme of the evolution of American democracy. It starts with the historic deal providing for representation of property or land in the U.S. Senate and representation of people in the House of Representatives. It continues through Dred Scott, slavery, the Suffragettes, the Voting Rights Act, and recent Supreme Court decisions equating the right to spend money with political speech.

The extreme concentration of wealth in the United States is not an accident, but a reflection of our political structure and a strong strain of American ideology and values that idealizes unregulated free enterprise. When the majority of Americans feel they have the chance to better themselves financially and that their children will someday live better than they do, they support the ideal of unregulated capitalism. When that hope disappears, the majority moves in the other direction, and we see politics like the New Deal and what I think will soon resume here in America.

The role of money in politics is not always obvious and is often quite subtle. Political scientists sometimes call this non-decision making the ability to keep issues off of the political agenda. For example, we see a concerted effort to delegitimize regulation. Politicos with their hands out for corporate donations keep talking about "job killing regulations." They are so effective that even our once "hopeful" President goes along and kills air pollution regulations that he knows create rather than destroy jobs. The impact of money in this case is that it sets the agenda and defines the issue of regulation in ways that benefit the short-term interest of a few wealthy interests. According to this definition, regulation is anti-freedom. You could say the same thing about traffic lights, but most of us are happy to comply with them.

Americans are being told they get the same choice that is offered to impoverished Chinese workers. You get a job, but the river turns orange, the air is toxic, and your family may get sick. But maybe one of your children will thrive and go to college. We in America already lived through that. Our rivers caught fire. The cars in Pittsburgh were once coated in orange dust every morning and taxpayers have spent over a trillion dollars in health care and toxic waste clean-up costs in the aftermath of America's toxic mess. The factories moved out anyway- not because of "job killing regulations" but because of cheaper labor and the opportunity to build newer, more competitive plants overseas.

While the deck is stacked against the majority, the rules still allow everyone to have a voice. Sometimes that voice acts in ways that money doesn't understand and can't control. Both rich and ordinary folks have made lots of money off of social media, the internet and cell phones, but it also turns out those technologies make it easier and far cheaper to organize political demonstrations. When my friends and I protested against the Vietnam War forty years ago, we lugged boxes of printed filers on the subway back to Brooklyn from print shops on the west side of Manhattan. Today, protestors just set up a Facebook page and email their "friends." Barack Obama raised hundreds of millions of dollars in small campaign donations through a viral internet campaign that required little purchase of expensive advertising time.

Today we may be seeing the start of a new mass political movement in protests in New York and Boston. While the message is not going out without distortion by the corporate funded mass media, the protestors on Wall Street and on the Brooklyn Bridge are getting their message out about the extreme concentration of wealth and the decline of opportunity. The smarter elected officials like New York City Mayor Michael Bloomberg recognize the danger of a nation without economic opportunity for its young people. Last month on his radio show he observed that:

"You have a lot of kids graduating college who can't find jobs. That's what happened in Cairo. That's what happened in Madrid. You don't want those kinds of riots here."

When faced with demonstrations here in New York last weekend, Mayor Bloomberg took the interesting approach of arguing that the protestors were attacking the wrong target, trying to pretend that they were attacking the typical Wall Street office worker. That is of course nonsense. The protests are acts of symbolic political speech. They are the low-cost way of getting the message of economic distress and injustice on the political agenda. Modern communications technology makes them difficult to stop. But it is also difficult for the protestors to control how their message is disseminated to the American public through the mass media.

The voices promoting unregulated capitalism dominate the airwaves as they argue for the end of the social safety net begun during FDR's time. While conservatives advocate for the elimination of government programs and regulation, other voices are starting to be heard as well. Unlike the Tea Party, these other voices do not have the advantage of being amplified by the corporate funded mass media and elected officials. But they have the advantage of grass roots legitimacy.

It is actually the message of FDR that the wealthy in this nation ought to be remembering. Roosevelt was considered a "traitor to his class" for proposing the New Deal. However, he understood that unregulated free enterprise without a safety net for the less fortunate could not survive. Obviously, the New Deal did not kill America's free enterprise system, it saved it. The advantages of free enterprise were obvious to Roosevelt and they are obvious today. The technology that today's protestors rely on are products of a global economic system that combines public resources with private entrepreneurship. The food we all eat comes from the same source. We need the productivity and creativity of private enterprise and the profit motive. But we also need the long-term perspective, protection, and safety that typically comes from the public sector. We need a well-balanced, well-managed mixed economy. We need to avoid both unregulated corporations and unresponsive, rule-laden governments.

The American public is used to economic growth and opportunity. The global challenges of emerging economies and sustainable development require new thinking if America is to thrive. I think President Obama's broad support in 2008 came from people who sensed the need for such a new approach and hoped that he might be the transformative figure that FDR was in the 1930s. The roots of the Tea Party and of the protests in Lower Manhattan can be found in our collective disappointment that such a transformation was never even tried. Someone should tell the President that it's not too late to start.

Follow Steven Cohen on Twitter: www.twitter.com/earthinstitute

Friday, September 16, 2011

Canon S100: The New Pocket Powerhouse Point-and-Shoot


Canon's S95 was our favorite pocket camera. Um, it's probably not anymore. Meet the S100. What's new? Oh, Canon's first Digic V processor. A wider 24mm zoom lens. A 12-megapixel CMOS sensor (up from a 10MP CCD). 1080p video. And GPS built-in

Thursday, July 28, 2011

The Financial Rebalancing Act

Since the return of convertibility among the currencies of most major industrial countries at the beginning of 1959, a crisis affecting at least one major currency has threatened each year; the U.S. balance of payments has been in continuous large deficit; and the stability of the convertible gold-dollar and sterling system has been increasingly questioned. With the transition to convertibility proving to be so turbulent, doubts have arisen over the adequacy of liquidity arrangements for the future and calls for a great reform of the international monetary system have quite understandably been intensified.

Sunday, July 3, 2011

QE3, Geithner’s Stepping Down(?) and Bill Clinton’s Principal Writedown Solution

Since QE2 ended today (and they are still proceeding with zero Fed Funds Rate and reinvestment of MBS and Agency Bond principal payments into Treasuries), the wisdom is the there will be NO QE3.

Yes, probably for July. But I predict that QE3 will be coming shortly. Why? Who wants to buy our debt when The Fed (more specifically, The Fed on New York) stops buying it?

Greece will ultimately default, despite votes for austerity. It’s just a waiting game. Like the James Bond movie, “Die Another Day,” Greece’s Parliament, the ECB, the IMF and others are simply stalling on Greece’s economic death. Along with other peripheral members of the European Union. The collapse of Europe will send money our way — as long as we as the reserve currency for the world.

But China wants to be the Global Reserve Currency, or at least another reserve currency. Why, because China is facing a hard landing because loan losses are huge and growing. Those phantom cities are expensive and don’t generate a heap of rental income to cover debt service. So, China is against a hard wall in terms of THEIR debt issuance. Again, the world will come to us since there isn’t a lot of love for China’s reckless spending policies.

I am guessing that we won’t see a surge in non-Fed Treasuries purchases. So either Treasury will have to offer HIGHER interest rates on their bonds (might be explain Geithner’s hints at leaving as Treasury Secretary), or the Fed will step in and do QE3. We will be watching closely over the summer.

So, either Treasury rates will rise or The Fed will set sail on QE3. Take your pick.

Ex-President Bill Clinton, the architect of the massive surge in mortgage financing through Fannie Mae and Freddie Mac (which ultimately blew up) is now offering his opinions on how to clean up the mess that he helped create. Austerity? Tighten your belts? Move to less expensive rental property? Nope. He is suggesting that Bank of America (and other banks) write down principal on mortgage loans.

“By unclogging the housing market, “you lift not only an economic, but a psychological burden off of the homeowners and the banks,” Clinton said. “And we’re free to start lending again, we’re free to engage in normal economic activity.””

Of course, Clinton is not alone. A number of advocates exist for massive principal write downs (including Glenn Hubbard and Chris Mayer of Columbia University and Laurie Goodman of Amherst Securities). They have mixed motivations (including saving second liens for hedge funds), but the question I always have is the same one: WHO pays for the principal write downs?

Answer: The American taxpayer. That is why Ed DeMarco of FHFA (Fannie Mae and Freddie Mac’s Regulator) is against principal reductions. It is VERY expensive with no clear evidence that it would work. And it would create a “Fool’s Gold” Rush of borrower’s threatening to default on their mortgage. Throw in the massive borrower fraud problem and you have a fiasco on your hands.

Then again, President Clinton didn’t foresee the fiasco that he pushed into motion with Fannie, Freddie and the Affordable Housing Mandates. So, why would he correctly foresee the fiasco of pushing Bank of America or Fannie Mae and Freddie Mac into making principal reductions.

Imagine the amount of Tier 1 capital that banks would have to raise to meet the demands for principal reductions? Hint: look at the difficulty Treasury is having issuing debt. Suppose that a run on principal write downs leads to systemic bank failure because the banks can’t handle the requests?

President Clinton, stick to the Clinton Foundation. If the Foundation wants to fund principal reductions, that would be fantastic. Otherwise, stick to whatever else you do. Your housing policies were ultimately devastating.

Saturday, July 2, 2011

Will Germany-China Ties Hurt the U.S.? - The Curious Capitalist - TIME.com

The chummy pow wow between Chinese Prime Minister Wen Jiabao and German Chancellor Angela Merkel in Germany this week seemed like all peas and gravy. Fourteen economic deals? Great. Twenty-two cooperation agreements? Even better. Any business is good business in a fragile global economy, right? Not so much. Growing ties between Beijing and Berlin don't all bode well for the U.S., not to mention greater Europe.

For their part, Europeans fear China is taking over their continent by buying its way in. China's recent purchases of Spanish and Greek bonds, for instance, have made it the flailing eurozone's lender of last resort. China's interests are clear: a surviving euro fuels demand for Chinese goods and allows China to diversify its massive dollar holdings. All the better for Germany. China's "bond diplomacy" toward Greece is a godsend for Greek-debt-laden German banks that fear a Greek default.

As Europe's ringleader, Germany could express its gratitude by softening its stance towards China on trade, the environment, and human rights. For example, China wants the EU to designate it a "market economy" within the WTO, which would make trade disputes against China more difficult, a demand the EU has so far resisted. Germany is also vying for the EU to drop its long-held arms embargo with China, a move the U.S. has long opposed.

Ultimately, growing trade ties to China could pull Berlin away from the West. As Marcus Walker argues in the Wall Street Journal this week: "When you've carved out a lucrative niche selling precision machinery and luxury cars to fast-growing emerging economies such as China, who needs stodgy old Europe?" There are already small signs of Germany peeling away. Germany sided with China and Russia in abstaining from NATO's Libya intervention, and it has walked away from the ailing eurozone on numerous occasions.


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Thursday, June 30, 2011

Public Versus Private Risk: Heed the Lesson from Greece | Jagadeesh Gokhale | Cato Institute: Commentary

Greece's current debt problems were created by government officials who used underhanded financial mechanisms to hide the size of the nation's debt and exposure to risky assets from their foreign creditors. Once these problems were revealed, the Greek economy began an endless downward spiral.

In order to protect its own banks from exposure to debts in Greece and other fiscally struggling nations, the European Central Bank created the European Stability Fund to provide bailouts. But these payments are conditional on recipient nations adopting very stiff austerity policies.

The latest round of Greek austerity measures is meeting with violent resistance on the nation's streets. The next vote could support or sink the entire bailout enterprise, with potentially huge consequences for the ECB's financial sectors and the survival of the euro.

There is a limit to how much taxpayers can bear... that limit gets ever closer

Stimulus to Nowhere - Reason Magazine

Mired in excruciating negotiations over the budget and the debt ceiling, President Barack Obama might reflect that things didn't have to turn out this way. The impasse grows mainly out of one major decision he made early on: pushing through a giant stimulus.

When he took office in January 2009, this was his first priority. The following month, Obama signed the American Recovery and Reinvestment Act, with a price tag eventually put at $862 billion.

It was, he said at the time, the most sweeping economic recovery package in our history," and would "create or save three and a half million jobs over the next two years."

The president was right about the first claim. As a share of gross domestic output, it was the largest fiscal stimulus program ever tried in this country. But the second claim doesn't stand up so well. Today, total nonfarm employment is down by more than a million jobs.

What Obama didn't foresee is that his program would spark a populist backlash and give rise to the tea party. Where would Michele Bachmann be if the stimulus had never been enacted—or if it had been a brilliant success?

To say it has not been is to understate the obvious. The administration says the results look meager because the economy was weaker than anyone realized. Maybe so, but fiscal policy is a clumsy and uncertain tool for stimulating growth, which the past two years have not vindicated.

Wednesday, June 29, 2011

Inside Google+ — How the Search Giant Plans to Go Social | Epicenter | Wired.com

Parts of it certainly seem to appear similar to what we’ve seen before. One significant component is a continuous scroll called “the stream” that’s an alternative to Facebook’s news feed — a hub of personalized content. It has a companion called “Sparks,” related to one’s specified interests. Together they are designed to be a primary attention-suck of Google users. Google hopes that eventually people will gravitate to the stream in the same way that members of Facebook or Twitter constantly check those continuous scrolls of personalized information.

The second important app is Circles, an improved way to share information with one’s friends, family, contacts and the public at large. It’s an management tool that’s a necessary component of any social network — a way to organize (and recruit) fellow members of the service.

But as I learned in almost year of following the project’s development, with multiple interviews with the team and its executives, Google+ is not a typical release. Developed under the code name Emerald Sea, it is the result of a lengthy and urgent effort involving almost all of the company’s products. Hundreds of engineers were involved in the effort. It has been a key focus for new CEO Larry Page.

The parts announced Tuesday represent only a portion of Google’s plans. In an approach the company refers to as “rolling thunder,” Google has been quietly been pushing out pieces of its ambitious social strategy — there are well over 100 launches on its calendar. When some launches were greeted by yawns, the Emerald Sea team leaders weren’t ruffled at all — lack of drama is part of the plan. Google has consciously refrained from contextualizing those products into its overall strategy.

Tuesday, June 28, 2011

Is Dodd-Frank reviving the Shadow Banks? - The Curious Capitalist - TIME.com

They're back.

In the past few months, it appears, shadow banks, financial firms that make loans but aren't actual banks, seem to be making a come back. In case you have forgotten about these things already, shadow banks are financial firms, like hedge funds or money market funds or even insurance companies, that aren't real banks - no deposits, no branches, no ATMs - but make loans nonetheless. And, oh yeah, they might have caused the financial crisis.

Paul Krugman said, shortly after the financial crisis was over, that one of the main things financial reform must do was to bring "non-bank banking out of the shadows." But Dodd-Frank, according to some recent reports, is doing exactly the opposite. Here's why:

Earlier this month, the NYT's Dealbook reported that a number of start-ups were turning to hedge funds to get loans after being rejected by their bank. The company in the article Rentech, which is in the clean energy business, got $100 million loan from a hedge fund. The NYT says the business was moving to hedge funds because banks were worried about making risky loans. But an article in Financial Times today puts the revival of shawdow banking square at the feet of Dodd-Frank.

Many believe, along with Wes Edens, founder of Fortress Investment Group, that this is the golden age of non-bank financial companies; a lot of smaller companies and individuals need credit but rather than do it through banks hamstrung by regulation, they can provide it far more profitably and flexibly through non-banks.


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Saturday, June 25, 2011

Athens struggles to win backing for austerity plan - Business - Mail & Guardian Online

Greece's government faces an electorate vehemently opposed to austerity measures which must be passed in Parliament next week to avert default, but progress is being made in persuading banks to take part in a second bailout.

An opinion poll on Friday put Greece's conservative opposition -- which is refusing to support the plan -- 2.1 points ahead of Prime Minister George Papandreou's PASOK party and showed three quarters of Greeks were opposed to the raft of tax hikes and spending cuts that will hit them hard.

European Union leaders meeting in Brussels promised more money to help Greece stave off looming bankruptcy, provided its Parliament enacts the debt-cutting plan, finalised in fraught last-minute talks with international lenders.

"We have agreed that there will be a new programme for Greece on which the Greek Parliament will have to vote next week," German Chancellor Angela Merkel told reporters at an EU summit in Brussels.

If Parliament does not pass the measures, the EU and International Monetary Fund have said they will not release a vital €12-billion funding tranche and Athens will run out of cash within days.

Papandreou, who won a confidence vote this week with 155 votes in the 300-strong Parliament, has ditched his former finance minister and appointed party rival Evangelos Venizelos to sell the five-year plan to his party and a sceptical public.


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Saturday, June 18, 2011

Analysis - Greece in turmoil: Run into the ground

Stelios, a 28-year-old electrician, has been spending several evenings a week at a tent camp outside the Greek parliament run by Indignant Citizens, a new protest movement. He joins hundreds of others attending a self-styled “popular assembly” – a nightly open-microphone event at which Greeks vent their anxieties and frustrations with the country’s disastrous economic and political situation.

“I’m lucky because I’m still in work,” he says. “But my mother’s pension was cut last year and she’s struggling. It’s a relief to get out there and discuss stuff – and maybe the protest will help make things less bad.”

In addition to promoting public debate, the Indignants have succeeded in reducing violence at demonstrations by chasing off hooded extremists who mingle with marchers and trigger clashes with riot police. They have even scrubbed the tarmac around the square to remove the chemical residue left by tear gas. But Stelios admits the protesters’ chances of persuading MPs to vote down a €28bn ($40bn) austerity package are slim. “Greece is broke – we need the money, so the European Union and the International Monetary Fund hold all the cards,” he says.

If the package is rejected, George Papandreou, the prime minister, will have to call a snap election. Greece would not receive a €12bn loan tranche due in July and would risk defaulting on repayments of principal and interest on its debt.

via ft.com

Wednesday, June 15, 2011

The Gold Standard: Myths and Lies - Robert P. Murphy - Mises Daily

With various states debating measures to elevate the monetary status of gold, the gold standard is more politically relevant now than it has been in decades. When the LA Times (to pick just one example) runs an article stating matter-of-factly that "economists" uniformly oppose gold, you know the defenders of the current system are getting nervous.

Precisely because a gold standard is such a hot topic lately, it's important for people to understand its rationale. In the present article I'll try to clear up a few misconceptions.

Tuesday, June 14, 2011

#615 | The popular assembly of Syntagma square calls for the blockade of Parliament – the new IMF agreement shall not pass | From the Greek Streets

Last night (June 11th) the popular assembly of Syntagma square announced a call to blockade the Greek parliament ahead of the voting of the so-called Mid-term agreement between the Greek government and the troika (IMF/ECB/EU). The new agreement includes wild tax increases, the further slashing of wages and pensions and the lay-off of approximately more 100,000 civil servants in the next few years.

The call-out for the blockade below is one of the most important acts we have seen by the Syntagma assembly so far. June 15th is gearing up to become a historical day in Greece, a crucial chance to block off the charge-ahead of neoliberalism here.

Don’t be a spectator to this – translate and disseminate the text below; organise a gathering where you are, or come join us at Syntagma. This is the struggle for and of our lives.


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Monday, June 13, 2011

The Fall of the House of Assad - By Robin Yassin-Kassab | Foreign Policy

Even after at least 1,300 deaths and more than 10,000 detentions, according to human rights groups, "selmiyyeh" still resounds on Syrian streets. It's obvious why protest organizers want to keep it that way. Controlling the big guns and fielding the best-trained fighters, the regime would emerge victorious from any pitched battle. Oppositional violence, moreover, would alienate those constituencies the uprising is working so hard to win over: the upper-middle class, religious minorities, the stability-firsters. It would push the uprising off the moral high ground and thereby relieve international pressure against the regime. It would also serve regime propaganda, which against all evidence portrays the unarmed protesters as highly organized groups of armed infiltrators and Salafi terrorists.

The regime is exaggerating the numbers, but soldiers are undoubtedly being killed. Firm evidence is lost in the fog, but there are reliable and consistent reports, backed by YouTube videos, of mutinous soldiers being shot by security forces. Defecting soldiers have reported mukhabarat lined up behind them as they fire on civilians, watching for any soldier's disobedience. A tank battle and aerial bombardment were reported after a small-scale mutiny in the Homs region. Tensions within the military are expanding.

Saturday, June 11, 2011

Record IMF Greek Lending May Intensify Favoritism Concerns - Real Time Economics - WSJ

International Monetary Fund lending to Greece has already blown away any previous borrowing records based on country contributions to the world’s last-chance bank.

That fact, along with the increasing likelihood the IMF will lend the failed economy even more cash and hasn’t required talks with private creditors, is underscoring concerns by emerging markets that the fund favors rich countries and may further undermine the bank’s perceived legitimacy.

The IMF says the extraordinary lending is not just to save Greece, but the world economy. “Our programs are designed to of course support an individual country so that they can restore financial stability, but the goal is to support the global international system,” said fund spokeswoman Caroline Atkinson.

IMF officials say the risk of European contagion is ring-fenced. But economists say the sheer size of the loan compared to Greece’s contribution to the fund, called its quota, indicates how scared the IMF is about Greece’s failure affecting the euro zone.


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Thursday, June 9, 2011

Jim Rogers: "Bernanke Is A Disaster" Who Will "Bring QE Back" | zero hedge

Jim Rogers spoke to a very dramatic and even more hoarse Bartiromo, touching on old and well-known themes, namely that the administration is essentially using up its last stimulus bullet with the current recession: "When the problems arisenext time what arethey going to do? They can’t quadruple the debt again. They cannot print that much more money. It’s gonna be worse the next time around." Alas,as Obama appears to be preparing, "they" will simply do more of thesame: the same payroll tax that was supposed to cure all evilsin December. The fact thatnobody anticipated something so stupid is probably indicative of the administration's genius. Or lunacy. Followed by more dollar printing of course. On what needs to be done to avoid the debt ceiling breach which will shut down the government, Faber believes that nothing short of Draconian measures will be relevant: "We’ve got troops in 150 countries around the world. They’re not doing us any good, they’re making enemies. They’re costing us a fortune." On the other hand he acknowledges: "we can never pay off these debts." Asusual,Rogerssaved the best for Bernanke: "Since the first day Mr Benanke went to Washington I knew he was going to be a disaster. He has never been right about anything in the 7 or 8 years he has been there. I hope he doesn't come back with QE3 but that's all he knows. The only thing he knows to do is to print money. He doesn't understand finance, he doesn't understand currencies, he doesn't understand economics. He understandsprinting money. It's the wrong thing to do but that's what he'll do... They're gonna bring QE back because he will be terrified and Washington will be terrified," he said


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The American Spectator : Truth, Lies, and Euros

As Europe's financial crisis worsens, it's increasingly apparent that the economic woes of countries like Portugal, Spain, and Greece have resulted from more than just bad policy. With each passing day, evidence mounts that one dynamic driving the crisis is that of untruth: a disturbing European pattern of fabrication about levels of public spending and debt.

The latest proof for this thesis is the discovery by newly-elected Spanish regional and local governments of concealed debts run up by their predecessors. This contradicts claims by Spain's Socialist Finance Minister, Elena Salgado, that Spain's regions had no "hidden deficits" on their accounts. Spain's business community, however, has long complained about local governments pressuring private companies to do business with them "off the books."

One reason for such behavior is that Spain's government knows that the greater Spain's real overall-public debt, the higher will be the interest-rates demanded by financial markets and the more stringent will be the conditions attached to any "financial assistance package" (i.e., bailout) that Spain might, like Portugal and Greece, eventually need.

Unfortunately, financial sleight-of-hand in today's EU has a longer history than the present turmoil. It's characterized the entire monetary union project from the start


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Tuesday, June 7, 2011

Decline and fall of the American empire - Business - Mail & Guardian Online

The experience of both Rome and Britain suggests that it is hard to stop the rot once it has set in, so here are a few of the warning signs of trouble ahead: military overstretch, a widening gulf between rich and poor, a hollowed-out economy, citizens using debt to live beyond their means, and once-effective policies no longer working. The high levels of violent crime, epidemic of obesity, addiction to pornography and excessive use of energy may be telling us something: the US is in an advanced state of cultural decadence.

Empires decline for many different reasons but certain factors recur. There is an initial reluctance to admit that there is much to fret about, and there is the arrival of a challenger (or several challengers) to the settled international order. In Spain's case, the rival was Britain. In Britain's case, it was America. In America's case, the threat comes from China.


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Monday, June 6, 2011

allAfrica.com: Africa: Time to Bury the IMF (Page 1 of 3)

t was a fitting metaphor as Dominique Strauss-Kahn, managing director of the International Monetary Fund (IMF) was arrested on charges ofassault, attempted rape and sexual abuse. The charges were brought after Strauss-Kahn assaulted an African woman from Guinea, who worked as a housekeeper in a hotel in New York City.

The image of Strauss-Kahn in handcuffs was fitting insofar as this is the image that should be presented of the entire international financial system thatis anchored in the Bretton Woods Institutions. For over 60 years, these institutions (the IMF and the World Bank) raped citizens of the world, especially the citizens of the poor countries, on behalf the United States and the top capitalist nations in Europe.

The IMF has been a front for the lords of finance of Wall Streetin the USA, and the linkages between the IMF/Wall Street and the US Treasury ensured that the poor of the world subsidised the US military. As junior partners in the imperial chain of domination, the Europeans worked with the Wall Street-Treasury alliance to ensure that despite presenting arguments about free market competition, agriculture in Europe andthe USA was subsidised. In pursuit of the alliance of financial rapists and economic terrorists, it was an unwritten rule that the managing director of the IMF should be a European.

The current French finance minister is campaigning hard to becoming the next managing director and has received the support of an institution that is as moribund as the IMF, the Group of 8 (G8). It is a measure of the disrespect that the capitalists have for Africa that they could propose Christine Lagarde as the candidate to be the next managing director


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Sunday, June 5, 2011

US house price fall 'beats Great Depression slide' - Business News, Business - The Independent

The ailing US housing market passed a grim milestone in the first quarter of this year, posting a further deterioration that means the fall in house prices is now greater than that suffered during the Great Depression. The brief recovery in prices in 2009, spurred by government aid to first-time buyers, has now been entirely snuffed out, and the average American home now costs 33 per cent less than it did at the peak of the housing bubble in 2007. The peak-to-trough fall in house prices in the 1930s Depression was 31 per cent – and prices took 19 years to recover after that downturn. The latest Case-Shiller house price index was just one of a slew of disappointing economic data from the US yesterday, which suggested ebbing confidence in the recovery of the world's largest economy. The Chicago PMI manufacturing index showed a sharp slowdown in the pace of expansion in May, missing Wall Street forecasts and sending the index to its lowest since November 2009. And in the latest Conference Board consumer confidence survey more people expressed uncertainty over their future economic prospects. The confidence index fell unexpectedly to 60.8 from a revised 66.0, when economists had expected it to rise to 67.0. Falling house prices and negative equity combined with high petrol and food prices and a still-weak jobs market to raise consumers' fears for the future.


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Saturday, June 4, 2011

The American Spectator : Africa in the Eye of the Beholder

Africa's potential economic development is a staple of commentary in publications on international affairs. What's important about this fact is that it's been this way for years, nay decades. It seems that Africa -- by which is meant sub-Saharan Africa -- is always filled with potential. Unfortunately there is very little analysis showing that potential realized.

There seems to be a very effective effort to place the ultimate blame for Africa's inability to progress in economic and political terms on what William Wallis, the experienced Financial Times editor on African affairs, refers to as "the relative failure of Europe's mission during colonial times, and more recently through development aid, to introduce rules-based systems."

In stating this, Wallis has sought to explain why some observers believe that China and industrial powers of the developing world, such as Brazil and India, are more capable of dealing with Africa's needs and desires. One only can surmise that the rough and tumble of African business life, and ultimately its entire economic status, is more suitable to the less complicated and purportedly less sophisticated commercial controls and methodology of these developing industrial countries.

In a certain sense this might be a correct assumption. The Americans, for example, have a host of federal laws (including the Foreign Corrupt Practices Act) that prevent U.S. firms from making the kind of corporate/government commitment that allows host country officials and local politicians to participate in or benefit from the projects under consideration. E.U. nations are now similarly constrained, though former colonial powers among them most often have had local companies operating under less restrictive charters and laws for many decades.


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Wednesday, June 1, 2011

Home Prices in 20 U.S. Cities Decline to Eight-Year Low, Case-Shiller Says - Bloomberg

Home prices in 20 U.S. cities dropped in March to the lowest level since 2003, showing housing remains mired in a slump almost two years into the economic recovery.

The S&P/Case-Shiller index of property values in 20 cities fell 3.6 percent from March 2010, the biggest year-over-year decline since November 2009, the group said today in New York. At 138.16, the gauge was the weakest since March 2003.

A backlog of foreclosures poised to reach the market means prices may stay depressed, dissuading builders from taking on new-home construction projects. Unemployment at 9 percent and stricter lending conditions are signs that any recovery in housing may take years.

“With the foreclosure pipeline still full to bursting, it’s hard to see this downward pressure on prices abating,” said Paul Dales, a senior U.S. economist at Capital Economics Ltd. in Toronto. “I wouldn’t be surprised to see prices continue to fall this year and maybe into next year.”


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Sunday, May 29, 2011

Spiegel Greek Hit Piece #2: Bailout Troika Finds "Greece Missed All Fiscal Targets" - Next Steps: Game Over? | zero hedge

Germany's Der Spiegel seems hell bent on getting sued to hell and back by Greece. After a few weeks ago it "broke" the news of a secret meeting that would consider the expulsion of the country from the Eurozone, it is once again stirring passions with an article claiming that Greece has missed all fiscal targets agreed under its bailout plan, according to a mission from an international inspection team, putting further funding for Athens at risk, Reuters summarizes. "The troika (aka the International Monetary Fund,the European Commission and the European Central Bank) asserts in its report to be presented next week that Greece had missed all its agreed fiscal targets," weekly Spiegel magazine reported in a prerelease. In other words, this could be the political game over for Greece, whose fate as has been disclosed recently, is intimately tied with the perception that it is following the troika's demands for fiscal change. If the three key bailout institutions are already leaking that Greece is done, next week could well be the beginning of the end for the €. In about 48 hours, even as America is enjoying a Monday off (or precisely because to that, to avoid a market panic), the European market could be digesting a very bitter pill of testing just how well pre-provisioned all those German, French and Dutch banks really are.


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Saturday, May 28, 2011

Guest Post: The Economic Death Spiral Has Been Triggered | zero hedge

For nearly 30 years we have had two Global Strategies working in a symbiotic fashion that has created a virtuous economic growth spiral. Unfortunately, the economic underpinnings were flawed and as a consequence, the virtuous cycle has ended. It is now in the process of reversing and becoming a vicious downward economic spiral.

One of the strategies is the Asian Mercantile Strategy. The other is the US Dollar ReserveCurrency Strategy.

These two strategieshaveworked in harmony because they fed off each other, each reinforcing the other. However, today the realities of debt saturation have brought the virtuous spiral to an end.

One of the two global strategiesenabled theAsian Tigersto emerge and grow to the extent that they are now the manufacturing and potentially future economic engine of the world.

The other allowed the US to live far beyond its means with massive fiscal deficits, chronic trade imbalances and more recently, current account imbalances. The US during this period has gone from being the richest country on the face of the globe to the biggest debtor nation in the world.

First we need to explore each strategy, how they worked symbiotically, what has changed and then why thevirtuous cycle is now accelerating into a vicious downward spiral.


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Friday, May 27, 2011

Capital Markets - Markets

"Events in Greece have brought the euro area to a crossroads: the future character of European monetary union will be determined by the way in which this situation is handled." Jens Weidmann, Bundesbank president and European Central Bank governing council member, Hamburg, May 20.

By rights, the ECB could have abandoned Greece long ago. Nothing in the rule book says it must prop up countries at risk of economic collapse. If anything, the architects of the monetary union, launched in 1999, envisaged the opposite. Because members would share a currency but not spending and tax policies, governments were meant to take responsibility for their own finances –the "no bail-out" principle was enshrined in a European Union treaty. Logically, a nation that flouted the rules as recklessly as Greece should be left to its fate.

Faced in recent weeks, however, with the renewed fears of a Greek default, the ECB has balked. With increasing vehemence, the euro's monetary guardian has warned of catastrophic effects across the 17-country currency union. Jean-Claude Trichet, ECB president –with less than six months before his eight-year term expires –has refused to discuss any debt restructuring for the nation, storming out of a meeting of eurozone finance ministers in Luxembourg this month when it was raised.

His colleagues, including Mr Weidmann of the Bundesbank, have raised the stakes. They warn that if politicians take even a modest step towards a restructuring, the ECB will cut Greek banks off from its lifesaving liquidity supply, triggering a financial collapse that would push the country's economy into the abyss. It is the central bank equivalent of nuclear deterrence: defy us and we will blow up the world.


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Thursday, May 26, 2011

$2,000 Gold Will Come From the East | The Motley Fool

For every investor in the Western world who sells an ounce of gold, picture a multitude of eager buyers in the East who are thrilled by the long-term investment opportunity.

Though not a particularly technical means of understanding the complex dynamics of global supply and demand for gold, that image does illustrate an important aspect of the bullish trend for gold demand that continues to play out on the world's stage.

Much has been made recently of the decision by George Soros to sell the vast majority of his fund's stake in the SPDR Gold Trust (NYSE: GLD) during the first quarter of 2011, emboldening the predictable chorus of bubble babble that plays incessantly in the background behind gold's symphony of sustained upward momentum. But while Soros and several other fund managers were busy locking in impressive gains from gold, an incredible surge in gold demand from Asia continues to pave a rising concrete floor beneath long-term gold prices.

The World Gold Council released its quarterly review of global demand last week,which revealed that China's total investment demand surged an astonishing 123% over the prior-year quarter to oust India from the No. 1 position with 90.9 tons of demand. Thanks to a world-dominating market for gold jewelry, India retains the lead for total gold demand, but the growth trend visible from China strongly suggests an imminent ascent to become the world's foremost market for physical gold.


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Tuesday, May 24, 2011

How the euro crisis end game might look - Telegraph

After the fiasco of Collateralised Debt Obligations, anything the clowns of the credit-rating agencies have to say about Europe's sovereign debt crisis deserves to be taken with a sack full of salt.

Unfortunately, continued use of ratings for regulatory and asset allocation purposes ensures they remain as powerful a force as ever.

Having largely failed to warn about the dangers of eurozone debt, Standard & Poor's has upheld a long tradition of making a bad situation worse by putting Italy on negative credit watch, thereby generating a fresh bout of nerves in already dangerously unsettled markets. There were other contributing factors, obviously, but S&P's missive scarcely helped.

To repeatedly – and ridiculously, given that the horse has long since bolted – downgrade Greece, Ireland and Portugal is one thing, but to target Europe's third-largest economy is another entirely. Spain and Italy had been regarded as relatively stable, but both are now being made to look ever more vulnerable. For either of them to be denied access to markets would surely test European appetite for bail-outs to breaking point.

It's no part of a rating agency's job to support the euro, but actually Italy makes an odd choice to be put on negative watch. True enough, the country already has very high net public indebtedness at some 116pc of GDP. The crisis of the past three years has wiped out all the work Italy achieved in the previous decade in managing down its debt.

Yet if the eurozone periphery crisis is seen as essentially a banking crisis which has transmogrified into a sovereign debt crisis, then Italy has little to worry about. Its banking sector is quite small relative both to others and to the size of the Italian economy.


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Friday, May 20, 2011

Asia Pacific - World

China overtook India to become the largest market for gold bars and coins in the first quarter of this year, as rising inflation inspired a surge in bullion investment.

Chinese investors bought 93.5 tonnes of gold between January and March in the form of coins, bars and medallions, a 55 per cent increase from the previous quarter and more than double the level of a year earlier, according to data released by the World Gold Council on Thursday.

The surge in Chinese buying has supported prices, even as some investors in the west were cutting exposure to gold amid expectations that improving economic conditions and rising interest rates would mark an end to the gold rally.

George Soros's hedge fund sold almost all its holdings in the largest gold exchange-traded fund, SPDR Gold Shares, in the first quarter, according to a regulatory filing this week.

"You're seeing eastern demand picking up any of the gold coming out of the hands of western investors," said Marcus Grubb, managing director for investment at the World Gold Council, a lobby group backed by the gold mining industry.

India, the top buyer of gold jewellery, remains the largest overall consumer of the yellow metal, although Chinese jewellery consumption is rising rapidly.


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Thursday, May 19, 2011


The European Central Bank has criticised proposals for a possible restructuring of Greek sovereign debts, laying bare a behind-the-scenes row between ECB technocrats and European Union politicians over Greece’s debt crisis.

The ECB officials warned that any move to delay repayments would be a dangerous distraction from Athens’ economic and fiscal reform plans.

This month Jean-Claude Trichet, ECB president, walked out of a meeting hosted by Jean-Claude Juncker, Luxembourg’s prime minister. According to people familiar with events at the meeting, Mr Trichet was angry at talk of a so-called “soft” restructuring that could involve an extension of Greek debt maturities.

After a meeting of eurozone finance ministers on Monday, Mr Juncker said a soft restructuring of Greek debt would be an option once Athens had taken further steps to bring its public finances under control.

Lorenzo Bini Smaghi, an ECB executive board member, responded on Wednesday, saying: “Given how markets work, one should beware of using meaningless phrases, as Greece will then have to pay a price.”

The ECB fears a soft restructuring would be seen as a precursor to a “hard” restructuring and spook markets across the eurozone. ECB officials instead want Greece to accelerate its privatisation programme. Mr Bini Smaghi said Athens needed to “convince its citizens to pay taxes” and “retire at 65 as everyone else does in the western world”.


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Wednesday, May 18, 2011

The Google Pharm Case - Llewellyn H. Rockwell Jr.

The American pharmaceutical system is a highly controlled apparatus for restricting access to much-needed drugs and violating the rights of those who want to purchase them. This has long been true.

Vast amounts of those drugs that people should be permitted to purchase of their own free will are withheld from the market. Instead, people who know what they need are forced first to fork over to a physician — who then gets overpaid by insurance — then part of the buck is passed to the overtrained checkout clerks at the pharmacy. We are all treated like babies in order to sustain and fund an industry filled with bamboozlers in white coats.

The commercial Internet in its early days (perhaps 1998 to 2008) represented a wonderful alternative to this apparatus. Suppliers all over the world popped up to give us what we want, bypassing the whole cage of government regulations and private monopolists who rule them like prison wardens. You know what you need, so just click and buy it!

So the pharmaceutical industry solicited the help of government. Together, they worked to crack down on "counterfeit" medicines — meaning the real thing that bypasses patent restrictions and supplier monopolies. In their view, people must not be allowed to get prescription medications without doctor approval — or else an entire fake industry could collapse. So they banded together and instituted a medieval guild system for the digital age.

Sunday, May 15, 2011

'Secret, dark debates' fan flames of eurozone turmoil - Telegraph

Political union frays at the edges as tensions and resentments rise ahead of a critical meeting on Monday on the debt crisis in Greece and a bail-out for Portugal.

An undercurrent of anger, suspicion and mistrust will per-meate on Monday night's critical meeting of eurozone ministers in Brussels as they grapple with a spiralling Greek debt crisis and try to seal a €78bn (£69bn) bail-out for Portugal. As if the euro's problems were not enough, seething resentments will add a new political dimension to the talks.

The inclement mood was set 10 days earlier beside a gently babbling brook and old water mill that speaks of Europe's troubled past. On Friday May 6, Jean-Claude Juncker, Luxembourg's prime minister and the chairman of the eurogroup of single currency members, called a secret meeting of the European Union's most powerful countries at the picturesque Chateau de Senningen on the outskirts of the tiny Duchy state.

Gathered at the 18th century former paper mill, which served as an artists' retreat during the Nazi occupation, were finance ministers from Germany, France, Italy and Spain – the euro's G20 members, Jean-Claude Trichet, president of the European Central Bank (ECB), and Olli Rehn, EU commissioner for monetary affairs. Top of the agenda was the fate of Greece, after the International Monetary Fund (IMF) – on the hook for €30bn of the original €110bn rescue –demanded that the EU come up with a new strategy as the Mediterranean country continued to plunge into debt and recession.

Sparking rumours that Athens was set to leave the euro, George Papaconstantinou, the Greek finance minister, was summoned to Senningen to explain how his country could take further savage austerity measures and speed up privatisation of lucrative state-owned industries.

As news of the meeting leaked out, financial markets went into spasm sending the euro into a nosedive. In a desperate bid to end the turmoil, Mr Juncker, who had not informed other eurozone finance ministers of the meeting, chose to lie. "I totally deny there is a meeting," said his spokesman, as speculation mounted. Mr Juncker had already horrified many of his counterparts by openly bragging last month that he often "had to lie" to suppress public debate over eurozone econo-mic policies which, he claimed, were too important for open contemplation.

"I am for secret, dark debates," he said. "When the going gets tough, you have to lie."


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Saturday, May 14, 2011

Foreclosures crush home prices; down 30% from 2006 peak - May. 10, 2011

NEW YORK (CNNMoney) -- Home prices continued to plummet during the first three months of 2011, falling 4.6% from a year earlier.

The U.S. median price, according to the National Association of Realtors (NAR), dropped to $158,700 for a single family house. Condo prices fell even harder -- 10.4% to $152,900.

The median home price has now slumped 30% from its 2006 high of $227,100, and prices have fallen nearly 7% so far this year.

"We're seeing prices dropping faster than they did in 2010," said Pat Newport, an analyst with IHS Global Insight. "That's troubling. Falling home prices precipitated the recession and are slowing the recovery."

NAR blamed much of the latest price drop on sales of foreclosed properties. These "distressed" property sales accounted for 39% of the market, up from 36% from a year earlier.

Distressed properties, often in poor condition and are priced to move, sell for about 20% less than conventional home sales.

Those sales attract speculators, investors and cash buyers who gravitate toward lower priced homes, said Lawrence Yun, chief economist for NAR. (How to buy a foreclosure)

The market for distressed properties may further expand over the next few months. Falling prices have sent more mortgage borrowers underwater, owing more on their mortgage balances than their homes are worth. That makes them more likely to default on loans.


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Wednesday, May 11, 2011

The Vigilante - Atlantic Mobile

IN FEBRUARY 1993, as the fledgling Clinton administration grappled with the nation’s budget woes, campaign adviser James Carville groused to The Wall Street Journal: “I used to think if there was reincarnation, I wanted to come back as the president or the pope or a .400 baseball hitter. But now I want to come back as the bond market. You can intimidate everyone.” If Carville were serving in the Obama administration today, he’d be seeking reincarnation as Bill Gross. The founder and co–chief investment officer of PIMCO, Gross runs his firm’s Total Return Fund—the world’s largest mutual fund, with holdings entirely in bonds. And for some time, he has been an outspoken critic of U.S. economic policy.

Gross demurred when I suggested that James Carville might want to be him. “I thought the remark was striking at the time,” he said, “but no, I didn’t feel that they were catering to us at every turn.”

But Democrats wrestling with the legacy of Ronald Reagan’s deficits resented the influence of what the analyst Ed Yardeni had dubbed “the bond vigilantes”: the investors who enforce fiscal and monetary discipline when governments won’t. If your political system inflates its currency, or fails to align its spending with its tax revenues, the bond vigilantes will raise your interest rates until you either get it together … or catapult into a crisis.


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Monday, May 9, 2011

Pakistan Prime Minister to warn US over Osama bin Laden raid - Telegraph

Yusuf Raza Gilani will seek to restore some dignity in an address to the nation after the humiliation caused when American forces killed Osama bin Laden at a compound close to Pakistan's main military academy in Abbottabad last week without alerting Pakistan.

A senior government source close to the prime minister said while Mr Gilani will take an aggressive stand to shore up the government's position.

The source said: "The Prime Minister will say that the United States should not have bypassed Pakistan. We have made a huge contribution in fighting terrorism. We've arrested close to 100 al-Qaeda people, including Khalid Sheikh Mohammed.

"We'll take appropriate action if any further violation takes place. We will defend our air space by any means we have."

He will say that Washington's decision to launch the raid without consulting Islamabad had plunged military and political relations between the frosty allies to a new low.


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Sunday, May 8, 2011

Paper vs Real: Exit From Normal, Ecological Economics, and Probabilistic Regimes in One Chart | Gregor.us

A 20 year chart of the US 30 Year Treasury Bond vs. a broad commodity index is the occassion to make several macroeconomic observations. The comparison reveals how the purchasing power of the long-dated US Treasury Bond has fared against a basket of commodities over the period. Tracking the ability of the US Treasury bond, denominated in US Dollars, to maintain its viability as a capital storage unit is not arcane. Rather, it is central. All institutions and individuals eventually use financial assets to purchase energy, natural resources, and labor. | see: 30 Year Treasury Bond by Price vs. The Reuters CRB Index–CCI Continuous.

Monday, May 2, 2011

Red Alert: Osama bin Laden Killed | STRATFOR

United States has killed al Qaeda leader Osama bin Laden and recovered his body, according to numerous media reports May 1 citing U.S. officials. U.S. President Barack Obama is scheduled to make an announcement on the subject. It is not clear precisely how bin Laden was killed or how his body was recovered, but the assertion that he is dead is significant.

Bin Laden had become the symbol of al Qaeda, even though the degree to which he commanded the organization was questionable. The symbolic value of his death is obvious. The United States can claim a great victory. Al Qaeda can proclaim his martyrdom.

It is difficult to understand what this means at this moment, but it permits the Obama administration to claim victory, at least partially, over al Qaeda. It also opens the door for the beginning of a withdrawal from Afghanistan, regardless of the practical impact of bin Laden’s death. The mission in Afghanistan was to defeat al Qaeda, and with his death, a plausible claim can be made that the mission is complete. Again speculatively, it will be interesting to see how this affects U.S. strategy there.

Equally possible is that this will trigger action by al Qaeda in bin Laden’s name. We do not know how viable al Qaeda is or how deeply compromised it was. It is clear that bin Laden’s cover had been sufficiently penetrated to kill him. If bin Laden’s cover was penetrated, then the question becomes how much of the rest of the organization’s cover was penetrated. It is unlikely, however, that al Qaeda is so compromised that it cannot take further action.

At this early hour, the only thing possible is speculation on the consequences of bin Laden’s death, and that speculation is inherently flawed. Still, the importance of his death has its consequences. Certainly one consequence will be a sense of triumph in the United States. To others, this will be another false claim by the United States. For others it will be a call to war. We know little beyond what we have been told, but we know it matters.


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Red Alert: Osama bin Laden Killed | STRATFOR

The United States has killed al Qaeda leader Osama bin Laden and recovered his body, according to numerous media reports May 1 citing U.S. officials. U.S. President Barack Obama is scheduled to make an announcement on the subject. It is not clear precisely how bin Laden was killed or how his body was recovered, but the assertion that he is dead is significant.

Bin Laden had become the symbol of al Qaeda, even though the degree to which he commanded the organization was questionable. The symbolic value of his death is obvious. The United States can claim a great victory. Al Qaeda can proclaim his martyrdom.

It is difficult to understand what this means at this moment, but it permits the Obama administration to claim victory, at least partially, over al Qaeda. It also opens the door for the beginning of a withdrawal from Afghanistan, regardless of the practical impact of bin Laden’s death. The mission in Afghanistan was to defeat al Qaeda, and with his death, a plausible claim can be made that the mission is complete. Again speculatively, it will be interesting to see how this affects U.S. strategy there.

Equally possible is that this will trigger action by al Qaeda in bin Laden’s name. We do not know how viable al Qaeda is or how deeply compromised it was. It is clear that bin Laden’s cover had been sufficiently penetrated to kill him. If bin Laden’s cover was penetrated, then the question becomes how much of the rest of the organization’s cover was penetrated. It is unlikely, however, that al Qaeda is so compromised that it cannot take further action.

At this early hour, the only thing possible is speculation on the consequences of bin Laden’s death, and that speculation is inherently flawed. Still, the importance of his death has its consequences. Certainly one consequence will be a sense of triumph in the United States. To others, this will be another false claim by the United States. For others it will be a call to war. We know little beyond what we have been told, but we know it matters.


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Financials - Companies

Each evening, as darkness descends on Athens, police in riot gear wait in buses that line the side streets of the city centre. Some fidget with mobile phones, others stare into the night. What they are waiting for, nobody is sure. But everyone in the Greek capital agrees something could happen any time.

A year after agreeing a €110bn European Union and International Monetary Fund bail-out and economic reform plan, times are hard. Greece is in deep recession: its economy contracted by 4.5 per cent last year; a further 3 per cent fall is expected in 2011. The capital's boarded-up shops and piles of uncollected rubbish testify to the scale of the economic shock and the angry mood of trade unionists.

Beyond Greece, fears are intensifying that the socialist government of George Papandreou –scion of a family that produced two previous left-of-centre prime ministers –will fail to modernise the country's sclerotic economy, or even bring it close to rivalling European peers.

If Mr Papandreou fails, policymakers in other European capitals and Washington will face a dilemma –whether to give Greece another chance or let the country fall into the abyss of default, with potentially devastating consequences on financial systems and economic confidence across the eurozone. The risk premium demanded on Greek debt by international investors has rocketed. Greece's banks are scurrying to shore up their finances.


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Saturday, April 30, 2011

America's reckless money-printing could put the world back into crisis - Telegraph

Traders took these words to mean that the Federal Reserve won't hike rates until the first few months of 2012 at the earliest.

Bernanke also pledged to do whatever is required to keep America's economic recovery on track – confirming that the second programme of "quantitative easing", or QE2, would be completed. These two related announcements – the "reprieve" and the "sugar rush" – sent Wall Street into renewed spasms of synthetic joy.

In the real world, US growth is slowing sharply. Annualised GDP rose just 1.8pc during the first three months of 2011, down from 3.1pc the quarter before. America remains mired in sovereign, commercial and household debt.

Yet as the Fed chairman spoke, US stocks hit their highest level since before the sub-prime crisis. The tech-heavy Nasdaq, incredibly, closed at a 10-year peak.

So the Fed will keep on "printing" virtual money – at least for now. By the end of June, it will have purchased $600bn (£363bn) of longer-term Treasuries, with the US government effectively buying its own debt from funds created ex nihilo. That's on top of the original $1,750bn (£1,048bn) QE scheme, launched in late 2008.

The reckless behavior of the US and their unwillingness to accept responsibility for the financial crisis started by US banks and not implementing an austerity program can result in the whole world paying a heavy price.

Thursday, April 28, 2011

Time to Choose - WSJ.com

America is now facing the most difficult governmental choices since the end of World War II, 66 years ago. Back then our debt as a percentage of gross domestic product had just exceeded 100%. In about a decade it will exceed that again, and if we continue our current economic policies the Congressional Budget Office projects it will approach 800% in another 66 years.

So the American people now have an important choice to make: Shall we continue to increase the size of government—in spending and debt—as President Obama consistently will do, or shall we make increasing economic growth, jobs and income our top public-policy goals?

Our country is facing very real challenges. On top of our national debt climbing significantly, economic growth continues to lag, our unemployment rate stays over 8%, and inflation is coming toward us. The White House wants to keep increasing government spending and, as soon as it can, to raise taxes on businesses, individuals, and families. Or as the president said earlier this month at George Washington University, we just don't want to spend "a trillion dollars on tax cuts for millionaires and billionaires," never mind that they currently make up just 0.2% of taxpayers but pay 24% of individual income taxes. The government cannot balance the large budget by just supertaxing "the rich." Without major spending cuts, it will have to spread down the tax increases to middle-class Americans.

According to CBO, the median-income family of four is at risk of seeing its income and payroll taxes go up from 15% to 25% of its income. This risk is real because the president and the former Democratic Congress intended to raise federal spending, which has averaged 18% since World War II, to 25% or more this year, and then keep it at 22% to 23% going forward. And that, of course, leads to a demand for higher taxes.


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Review & Outlook: The Gas Price Freakout - WSJ.com

Man-at-the-pump angst is harming President Obama politically almost as much as gas prices surging toward $4 are hurting the middle class economically, which explains the energy panic that Washington began in earnest this week. The 2011 debate isn't likely to be any more instructive than its 2000, 2005, 2006 or 2008 vintages, but maybe this time politicians can keep things in the general vicinity of planet earth.

They're off to a lousy start. Mr. Obama usually begins his gas price narrative, now a campaign trail staple, by explaining that there aren't easy solutions. That's true—there's not a lot the political class can do to change gas prices in the short run—but then the President goes on to mention that there happens to be one easy solution: raising taxes on the oil and gas industry. This is also his stock answer on the budget deficit, world hunger and everything else.

In a letter to Congressional leaders Tuesday, Mr. Obama called for repealing some $4 billion a year in "subsidies" in the tax code, and even Speaker John Boehner chimed in that oil companies "ought to be paying their fair share." No doubt the reporting of first-quarter profits this week will be a demagogic moment, but really? The junk economic theory is that increasing the U.S. costs of investor-owned oil producers—which together hold a mere 6% of world reserves—is supposed to lower the price of a global commodity.

Oh, and Mr. Obama wants to devote the proceeds to even more spending on "clean energy." The problem here is that some renewables (ethanol) increase the cost of driving, while the others (wind, solar) are irrelevant in transportation. We trust anyone not recharging his federally subsidized $109,000 electric sportscar at his personal windmill is blinking in amazement.


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Wednesday, April 27, 2011

EDITORIAL: Obama running on empty - Washington Times

Skyrocketing gasoline prices have sent President Obama’s public-approval ratings plummeting. The White House is searching for someone to blame, but the problem rests not with the pumps but with the president.

Mr. Obama maintains that lack of supply is not driving up prices. However, domestic demand is not the issue either, since U.S. energy use per capita has been on the decline. So the White House has formed an interagency working group to root out the “traders and speculators” whom he says are responsible for America’s gasoline woes. This type of populist blame-game is typical of the Obama administration’s approach to policy challenges, and diverts attention from the true proximate causes of the oil spike, such as the crises in the Middle East.

If prices are being manipulated, perhaps Mr. Obama should take it up with the OPEC potentates who are the most direct beneficiaries. Mr. Obama also said he wants to end what he says is a $4 billion annual taxpayer subsidy to oil and gas companies, though how removing a subsidy will lower gasoline prices has yet to be explained.

Mr. Obama’s scapegoat safari notwithstanding, the current energy crisis underscores the general failure of administration energy policies. The promised brave new world of green technologies is slow in coming, and the government is quickly putting reliable domestic fossil fuels further out of reach. Even as vast new energy reserves are being discovered, such as the Saudi-topping Bakken formation in North Dakota, domestic production is declining. Mr. Obama has banned new domestic offshore drilling while subsidizing it in Brazil. This week, Shell Oil Company announced that it is abandoning Arctic Ocean drilling plans because the Environmental Protection Agency is blocking key permits, sacrificing 27 billion barrels of oil. Last month, the U.S. Energy Information Administration (EIA) projected a reduction in total U.S. crude oil production of 110,000 barrels per day in 2011 and a further 130,000 barrels per day in 2012. Given the current profitability of oil production, the blame can only rest with the White House.

Friday, April 22, 2011

Pentagon: Robot War Over Libya Begins in 3, 2, 1 … | Danger Room | Wired.com

Thursday marks the end of U.S. strike missions in Libya. In a press conference, Defense Secretary Robert Gates and Gen. James Cartwright, the vice chairman of the Joint Chiefs of Staff, announced that armed Predator drones have been approved for use in Libya. They flew for the first time on Thursday, but “the weather wasn’t good enough, so we had to bring them back,” Cartwright said.

Recall Gates told Congress three weeks ago that the U.S. strike role would end once NATO took command of the war. U.S. pilots continued to bomb targets to enforce the no-fly zone, but left the hard work of attacking Gadhafi’s ground forces to NATO pilots. The arrival of the Predators — two combat air patrols, Cartwright said, so probably five drones — reverses all that.

Cartwright justified the move by saying the drones are “uniquely suited” for attacking dug-in forces in “urban areas,” where Gadhafi’s loyalists are. The Predators fly lower than gunships like the AC-130 or attack planes like the A-10. Their sensor and camera suites give them better visibility than human pilots have, reducing the risk of collateral damage. And they can fly for 24 hours at a time, providing “extended persistence.” It’s quite a contrast to the archaic weapons used by Libyan rebels.


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Thursday, April 21, 2011

Review & Outlook: Fleeing the Dollar Flood - WSJ.com

Members of the International Monetary Fund emerged from their huddle in Washington last weekend resolved to keep every option open to slow the flood of dollars pouring into their countries, including capital controls. That's a dangerous game, given the need for investment to drive economic development. But it's also increasingly typical of the world's reaction to America's mismanagement of the dollar and its eroding financial leadership.

The dollar is the world's reserve currency, and as such the Federal Reserve is the closest thing we have to a global central bank. Yet for at least a decade, and especially since late 2008, the Fed has operated as if its only concern is the U.S. domestic economy.

The Fed's relentlessly easy monetary policy combined with Congress's reckless spending have driven investors out of the United States and into Asia, South America and elsewhere in search of higher returns and more sustainable growth. The IMF estimates that between the third quarter of 2009 and second quarter of 2010, Turkey saw a 6.9% inflow in capital as a percentage of GDP, South Africa 6.6%, Thailand 5%, and so on.

This incoming wall of money puts the central bankers in these countries in a bind. If they do nothing, the result can be asset bubbles and inflation. Brazil (6.3%) and China (5.4% officially but no doubt higher in fact) are both enduring bursts of inflation, as are many other countries. These nations can raise interest rates or let their own currencies appreciate, at the risk of slower economic growth. Rather than endure that adjustment, many countries are resorting to capital controls and other administrative measures to try to stop the inflow.


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Wednesday, April 20, 2011

NYT: As British Help Libyan Rebels,

As NATO struggles to break a deepening stalemate in Libya, the British announced on Tuesday that they were sending military advisers to help build up a rebel army that has stumbled against the superior forces of Col. Muammar el-Qaddafi.

The first question the British will face is "Whose army?"

For they will find themselves advising a ragtag rebel force that cannot even agree on who its top officer is, amid squabbling between two generals who both come with unsavory baggage.

The dysfunction was on full display here this week. "I control everybody, the rebels and the regular army forces," one of the two, Gen. Khalifa Hifter, said in an interview on Monday. "I am the field commander, and Gen. Abdul Fattah Younes is chief of staff. His job is to support us in the field, and my job is to lead the fighting."

The rebels' civilian leadership, the Transitional National Council, has insisted, however, that General Younes remains in charge of the military. "This is not true," an official close to the council said Tuesday when told of General Hifter's claims. "General Younes is over him, this is for sure, and General Hifter is under him."


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