Saturday, July 24, 2010

New jets look like a bad bargain

The Times Colonist provided the following comparison figures:

The CF-18s currently in use have a top speed of Mach 1.8, range of 3,700 kilometres and 138 planes are available. They cost $29 million each.

The F35s have a lower top speed, at Mach 1.67, reduced range at 2,200 kilometres and 65 planes will—maybe—be available for use in six years. They will cost $139 million each.

It appears we are paying five times as much for a machine with poorer performance and, at the same time, cutting the size of our fleet by 50 per cent.

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I am an 80-year-old retired airline transport pilot and aviation educator.

On Feb, 20, 1959, then-prime minister John Diefenbaker announced the cancellation of the CF-105 Arrow program.

He ordered five completed superb machines, in flying condition, to be torched into small pieces and junked.

This appalling act of vandalism was perpetrated on five aircraft that the prime minister had indicated had cost the taxpayers approximately $60 million. This cancellation caused about 14,000 skilled employees at A.V. Roe’s plants in Malton and another 15,000 employed by some 2,500 subcontractors to be put abruptly out of work.

Now, 50 years later, Defence Minister Peter MacKay has announced a plan to buy 65 F35 fighters to replace 138 CF-18 fighters, which we have just spent $2.6 billion to upgrade.

The F35s are to cost $9 billion.

The Times Colonist provided the following comparison figures:

The CF-18s currently in use have a top speed of Mach 1.8, range of 3,700 kilometres and 138 planes are available. They cost $29 million each.

The F35s have a lower top speed, at Mach 1.67, reduced range at 2,200 kilometres and 65 planes will—maybe—be available for use in six years. They will cost $139 million each.

It appears we are paying five times as much for a machine with poorer performance and, at the same time, cutting the size of our fleet by 50 per cent.

Tom Brenan

Campbell River

http://www2.canada.com/victoriatimescolonist/news/comment/story.html?id=1f8b6e51-ce47-462b-8650-35664e7e7534

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Yes we can? Question is what!

Saturday, June 19, 2010

Bhopal, BP and karma

http://atimes.com/atimes/Global_Economy/LF19Dj01.html

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BP chief executive Tony Hayward (in a stiff British accent): “Members of congress, I come here not to apologize but to express my irritation at being here in the first place. BP is a foreign company, and we operated Deepwater in the Gulf of Mexico as an offshore facility regulated as a ship (not a drilling well) under US law. Everything we did was acceptable under US law. We cut corners and costs, in order to produce the oil demanded by your people. Our suppliers such as Halliburton and Transocean are American companies so this is all your fault really. You bought our oil for all this time, and made our shareholders rich, so thank you for that.

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Accidents happen, and I am afraid you will have to live with the consequences of this one. Look at the positive side of things. If no oil had leaked, we would have simply sold all of it to your SUV
drivers and the resulting carbon dioxide - or C02 - emissions would have polluted the whole world. Instead, all that leaking oil only pollutes the waters off the southern USA, a relatively small part of the world.

If you don’t like my answer, I have one word for you: Bhopal.”

A fictitious exchange between BP and the US Congress, in a parallel universe.

Watching Hayward being mauled in front of congress on Thursday, the thoughts in the back of my mind related not so much to sympathy for the American point of view but rather for the CEO. Instead of agreeing with the generally held opinion that BP is to blame for all the problems in the Gulf of Mexico - a view that has been cemented by an apparent history of cost-cutting that led to the mishap - my feelings are now tending towards the Karmic perspective, that is, that what BP is doing to America is pretty much what American companies have done and are doing to the rest of the world.

Perhaps BP, formerly British Petroleum, is merely exacting vengeance on Americans on behalf of Britain’s former colony, India. Two wrongs don’t make a right for sure, but when Americans sit around bawling about the sheer injustice of it all, the rest of the world could well use examples like Bhopal to still feel less than sympathetic.

The worst such incident by any measure is Bhopal. In 1984, an American company, Union Carbide, faced a similar litany of problems in a plant making pesticide. It was located right in the middle of a densely populated city in central India, Bhopal. Reacting to the declining profitability of the plant in the early 1980s, management enacted a number of cost savings as well as holding back much-needed capital expenditure that would have helped restore various safety systems to acceptable standards.

The end result was that on December 3, 1984, water entered tanks storing methyl isocyanate (MIC), a poisonous gas that should never have been stored in this form in the first place; the resulting build-up of pressure caused a leak that spread the gas over Bhopal, killing more than 2,000 people, according to the official figure, and maiming tens of thousands more. Additionally, subsequent generations of people in Bhopal have shown the effects of MIC poisoning with deformities, congenital health problems, cancer and painful deaths. (Some estimates say that more than 15,000 people died after the initial leak.)

Adding insult to injury, US courts ruled that Union Carbide couldn’t be tried in US courts for the crimes against Indians (it is interesting that various US politicians make the case for trying foreigners for alleged crimes against Americans even though its own citizens can never be tried for crimes against foreigners in their courts). The parent company, Union Carbide, was put into liquidation and subsequently acquired by another company (Dow Chemical). After this acquisition, the name Union Carbide is still used, even though Dow Chemical has refuted all responsibility for the 1984 catastrophe.

The response of Union Carbide to Indians has been on the lines of “Accidents happen. You can use the Bhopal plant as collateral to take any payments that will be used to compensate our victims. Make that your victims.”

After years of meandering through the Indian court system, the verdict on the 1984 catastrophe was handed down in an Indian court earlier this month. Britain’s Guardian newspaper reported:
An Indian court today convicted seven former senior employees of Union Carbide’s Indian subsidiary of causing “death by negligence” over their part in the Bhopal gas tragedy in which an estimated 15,000 people died more than 25 years ago.

The subsidiary company, Union Carbide India Ltd, which no longer exists, was convicted of the same charge. The former employees, many now in their 70s, face up to two years in prison ...

... Union Carbide was bought by the Dow Chemical Co in 2001. Dow says the legal case was resolved in 1989 when Union Carbide settled with the Indian government for US$470m ... and that all responsibility for the factory now rested with the government of the state of Madhya Pradesh, which owns the site.
So there you have it, courtesy of a British newspaper - the exact strategy that BP needs to follow against America. Put up a few of its American employees for trial (at vast public expense), hand over the Gulf of Mexico site to the government, and pretty much say “Ta”.

Karma
Americans have mass cognitive dissonance with respect to their self-image. In their own minds, they view the American system as “fair, equitable, meritocratic, innovative and good”. They also perceive that this view is considerably different in the minds of foreigners: “greedy, evil, litigious, hypocritical, lazy”. Americans view their enterprise system through companies like Apple, Google and Boeing. The rest of the world views the system through the eyes of companies like GM, Goldman Sachs and McDonald’s.

Reaction in the US media after the Bhopal verdict on June 7 was muted. My random sweep through Google revealed factual news items, but virtually no expression of outrage in the American or European media. Sure, there was much outrage expressed in the Indian media but then again, that appears to have been directed (justifiably) against their own courts and politicians rather than (also justifiably) a foreign company.

The evils of Union Carbide cannot be swept under the carpet. There cannot be sympathy for the American plight after accidents like BP, when the same accidents in the rest of the world (at much higher cost to people and livelihood) are underplayed.

Over the past three years, American claims to innovation have been severely tested. The “innovative” approach to providing mortgage financing for undeserving borrowers has erupted into the greatest financial crisis the world has seen since 1929. American investment and commercial banks stand accused of gross incompetence, greed and malice in their dealings with financial institutions in the rest of the world. American industry is suffering and has all the characteristics of a terminal decline. American policymakers have blithely ignored the advice they so willingly proffered to the rest of the world, and indulged in rampant moral-hazard actions instead.

The lack of reaction to the Union Carbide issue renders comical the US media reaction to the BP situation where a “mere” 11 people died compared with the thousands in India. It is a big environmental disaster, but then again, if all that oil hadn’t been lost to the sea it would have simply ended up in the gas tanks of American vehicles and polluted the whole world. In that respect, having it leak and polluting “only” the swamplands of southern US can be considered a “good” thing for the rest of the world. 

Thursday, May 20, 2010

NYSE expects all U.S. stocks to have circuit breakers

Can somebody tell me which sane person would trade on NYSE?

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(Reuters) - All U.S. stocks will probably be subject to so-called circuit breakers by the end of this year, Duncan Niederauer, chief executive officer of stock exchange operator NYSE Euronext, said on Thursday.

The circuit breakers, a mechanism to halt trading in a stock for five minutes if it falls more than 10 percent within five minutes, will initially apply to stocks in the Standard & Poor’s 500 index under a proposal by the Securities and Exchange Commission as regulators try to avoid a repeat of the mysterious May 6 market slide that quickly spiralled out of control.

“They need to be applied to all the markets, not just some of the markets,” Niederauer said, suggesting the circuit breakers also apply to exchange-traded funds, something the SEC has said may happen later.

“Our expectation is that they will be more aligned with the underlying liquidity of the individual securities, probably by the end of the year, which will be coincidental with some other changes the SEC is contemplating for revaluating the market structure of the United States on a more comprehensive basis.”

For example, some stocks need to fall 10 percent to trigger the circuit breaker mechanism while some others only need to fall 5 percent or 2 percent, he said.

Speaking in Shanghai, from where the New York Stock Exchange will be remotely opened on Thursday, Niederauer also said he expected China to allow foreign companies to list on its stock markets by the end of this year or early next year.

“A number of multinational companies listed on our exchange ... are expressing more and more interest in listing on the international board in Shanghai,” Niederauer said.

NYSE Euronext’s board has discussed a potential Shanghai listing on several occasions, and “we’re still interested and very focused on this initiative,” he said.

China plans to allow domestic listings of overseas firms as part of efforts to deregulate its capital markets.

Chief Operating Officer Larry Leibowitz told Reuters in March that NYSE Euronext hoped to be one of the first foreign companies to list on the Shanghai Stock Exchange, but the process has been slow.

NYSE Euronext, created in 2007 after the combination of NYSE Group and Euronext N.V., is the world’s most liquid equities exchange group and home to some of the world’s biggest companies

Thursday, May 06, 2010

NYSE, Nasdaq Cancel Some Trades at Height of Thursday’s Volatility

Now NYSE also!! Never has this happened that I can remember!!

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The New York Stock Exchange and the Nasdaq OMX Group say they will cancel trades involving stocks that saw sharp volatility at the height of the market’s steep intraday decline Thursday afternoon.

The NYSE Arca unit of NYSE Euronext (NYX: 29.85, -1.08, -3.49%) and Nasdaq, as well as other markets, planned to cancel all trades executed at prices that were greater than or less than 60% away from the last printed price prior to 2:40 p.m. Eastern time, up to 3 p.m.

The cancelled trades could change how the major indexes actually closed. For instance, there was a questionable trade in Procter & Gamble (PG: 60.76, -1.39, -2.24%) that many in the market blamed for accelerating the selloff, which, at its nadir, saw the Dow Jones Industrial Average off 998 points. It eventually closed down 347.80 points to close as 10520.32. There were also market rumors that a trader made an erroneous sell order for billions of shares of the e-mini futures traded at the Chicago Mercantile Exchange. CME Group (CME: 321.39, -3.28, -1.01%) said in a statement that its markets functioned properly and without issue.

READ List of Stocks Affected by Trading Cancellations

READ Nasdaq Rule 11890 on ‘Clearly Erroneous Transactions’

Under the Nasdaq’s cancelled-trades notice, the P&G stock price would conceivably stand, but furious electronic trading caused several stocks to lose almost all of their paper value. Consulting firm Accenture (ACN: 41.08, -1.11, -2.63%), for instance, started the day at $41.94 a share, but a trade crossed for the stock at just 1 cent a share. That would effectively have wiped out $30 billion in market capitalization in a single trade.

Likewise, energy company Exelon Corp. (EXC: 41.836, -1.844, -4.22%) had a print cross at zero cents, wiping out nearly $29 billion in value.

Both stocks closed with far more modest losses. Neither trade actually crossed at the New York Stock Exchange, where both are listed. Rather, they were traded on electronic platforms.

The frantic selling is sure to revive calls for curbs on what’s known as high-frequency trading, which relies on computerized trades executed within fractions of seconds of either news or trades in other stocks. It is believed that the P&G trade – at $39.37, off an opening price of $61.91—prompted a steep drop in the value of the Dow, which, in turn, prompted programmed selling that cascaded into a freefall. Within 10 minutes, the Dow Jones Industrials fell close to 700 points – an unheard-of drop for a major stock average. But computers acting on algorithms, rather than traders, were in control of many of the transactions during that period.

Depending on which trades are cancelled, the calculations for the Nasdaq Composite and some of the Standard & Poor’s indexes could be adjusted. Conceivably, if P&G’s questionable trade is also cancelled, the Dow Jones Industrial Average could be recalculated, according to a Dow Jones spokeswoman. That would also mean that, at least from a historical perspective, the indexes never really had such sharp drops.

Still, because of the electronic trading and the steep slide, many stocks likely fell victim to collateral damage and those trades will have to stand.

There were other reasons to sell stocks, outside of the potential for bad trades, notably fears that Europe’s sovereign debt crisis will spiral out of control.

The Dow Jones Industrial Average fell 347.80 points, or 3.20%, to 10520.32, the Standard & Poor’s 500 dropped 37.75 points, or 3.24%, to 1128.15 and the Nasdaq Composite lost 82.65 points, or 3.44%, to 2319.64. The FOX 50 sank 28.40 points, or 3.33%, to 823.99.

The selloff, which left the Dow at its lowest point since early March, gained momentum as television images of protests outside Greece’s parliament triggered big fears that Europe won’t have the political will to get its debt crisis under control.

“The tone and tenor of the global debt crisis has taken over the market. Everything else has taken a back seat,” said Peter Kenny, managing director at Knight Capital Partners. “This is a currency crisis that has the potential to blow up into a global financial crisis. The only thing that’s going to turn this thing around is action.”

“Calmer heads prevailed. The U.S. is in a much better place than the rest of the world,” said Brian Belski, chief investment strategist at Oppenheimer. “This is what capitulation feels like.”

Regardless, the Dow still posted its steepest percentage drop since April 2009 and largest point drop since Feb. 2009 amid growing fears that Greece’s debt crisis will spread to other high-debt European nations like Portugal and Spain. Underscoring the volatility on Wall Street, the VIX, or so-called fear gauge, soared 50% to fresh 52-week highs.

“The market went into a panic. No one made markets. You had all the machines trying to [sell] things into an abyss,” said Peter Boockvar, equity strategist at Miller Tabak.

At their lows, the blue chips were on track for their point decline in history, exceeding the 777-point drop in 2008 when the House of Representatives voted down the TARP bailout resolution.

In addition to the bad trades and the global worries that have weighed on U.S. markets, stocks were hurt by weaker-than-expected same-store sales reports from a number of retailers, including Target (TGT: 54.92, -1.17, -2.09%), Gap (GPS: 22.88, -1.77, -7.18%) and Aeropostale (ARO: 27.67, -1.96, -6.61%).

All 30 blue-chip stocks lost ground. The Dow has tumbled 631.5 points, or 5.66%, over the past three sessions, its largest three-day percentage drop since March 2009 and first three-day decline of any kind since late January.

The euro plunged 1.58% to $1.2619 as cash fled to the relative safety of the U.S. dollar. The stronger greenback sparked a wave of selling in commodities and multinationals. Crude tumbled to a fresh 11-week low, losing $2.86 a barrel, or 3.58%, to $7 down as much as $22.79 at one point.

The debt woes also rattled the bond markets as the yield on the ten-year note fell to its lowest level since Dec. 2009 amid the flight to safety. Bond prices experienced heavy volatility, mirroring the action on Wall Street.

“In my 25 years in the business I have never seen bonds have that type of move in a 20-minute period,” said Tom Digaloma, head of bond trading at Guggenheim Securities.

Wall Street was also hurt by weak sales reports from a number of retailers, raising concern about consumers’ ability to continue to withstand high unemployment. Surprisingly strong consumer spending, which accounts for 70% of the U.S. economy, has helped propel the markets and the economy. According to Thomson Reuters, April retail sales were up just 0.5% from a year ago, missing forecasts from analysts for a 1.7% rise. In fact, almost 70% of retailers reporting results missed expectations.

Friday’s jobs report, which tends to be one of the most influential reports of the month, was completely overshadowed by the global jitters. Economists expect the Labor Department will say the U.S. created 185,000 jobs last month and the unemployment rate stayed steady.

Ahead of that report, the government said Thursday the number of people who filed for unemployment insurance fell last week by 7,000 to 444,000, nearly matching the Street’s view. Continuing claims, which are filed by those on unemployment insurance for more than a week, fell by 59,000 claims. 

http://www.foxbusiness.com/story/markets/nyse-nasdaq-cancel-trades-height-volatility-thursday/

Sunday, April 18, 2010

Russia Reports Over 2 Million Dead In US As Mysterious Die-Off Accelerates

A most chilling report circulating in the Kremlin today prepared by the Russian Academy of Medical and Technical Science for Prime Minister Putin states that a “mysterious die-off” in the United States has claimed over 2,000,000 lives since 2008 and is “more than likely” linked to a “crossover” plant disease linked to genetically modified grains and foods.

According to these reports this mysterious, and as yet unidentified, lung disease responsible for this mass die-off began during the spring of 2008 in the US agricultural State of Iowa where (very ironically) at least 36 people attending a Lung Association event at the Governors mansion were stricken.

Important to note about Iowa is that it is one of the largest corn producing regions in the World harvesting over 2 billon bushels of this valuable grain farmed on nearly 32 million acres of its farmland, over 99% of which are genetically modified varieties made by the US agricultural giant Monsanto and idententifeid by their trade names of Mon 863, insecticide-producing Mon 810, and Roundup® herbicide-absorbing NK 603.

Not reported to the American people about these genetically modified corn varieties made by Monsanto was the study released by the International Journal of Biological Sciences warning that they were linked to organ damage. Monsanto quickly responded to this study, stating that the research was “based on faulty analytical methods and reasoning and do not call into question the safety findings for these products.”

Russian scientists in these reports, however, call Monsanto’s claim of their genetically modified Mon 863 corn as being safe for human or animal consumption “totally without validation”, a finding supported by the French biomolecular engineering commission, the Commission du Génie Biomoléculaire (CGB) who stated in their report, “with the present data it cannot be concluded that GM corn MON 863 is a safe product.”

Further supporting the findings of Russian scientists was Greenpeace International, who in their report titled “MON 863: A chronicle of systematic deception” warned that the campaign to unearth and evaluate data about this most dangerous of genetically modified grains demonstrates, beyond all doubt, that MON863 is unfit for consumption.

Most unfortunately for the American people though, all of these warnings have been ignored by their government masters who have allowed the mass planting of these genetically modified crops to such an extent that in the United States today fully 80% of their corn and 93% of their soybeans are of these dangerous varieties and leading one Russian scientist in these reports to warn that our World is now on the verge of experiencing an ecological disaster of “Biblical proportions”.

And according to these reports this ecological disaster is well underway in the United States and supported by American death statistics showing that of the nearly 2.5 million deaths reported by them each year the number of “sudden deaths” has increased to 40% equaling out to over 2 million “mysterious and unexplained” deaths from early 2008 to March, 2010.

Now of these “mysterious and unexplained” American deaths, these reports continue, nearly all of them are lung related and being erroneously documented as being caused by influenza and pneumonia type diseases so as not to panic these peoples, but have, instead, been caused by as an yet unidentified plant virus that has successfully jumped the species barrier to human beings.

Supporting Russian scientists in these conclusions is new research being conducted by the Didier Raoult of the University of the Mediterranean in Marseilles, France, where for the first time in human history a plant virus has been found to cause problems in people.

Russian scientists further claim in these reports that the United States mass vaccination of their population this past year for the supposed H1N1 Swine Flu epidemic was instead a “very clumsy attempt” to stop the spreading of this mysterious lung disease by injecting into these peoples a DNA “fix” to this genetically modified corn, and which by all the evidence available, they state, appears to have failed.

For those wondering how the United States government could ever allow such a monstrous outrage to be committed on their citizens one only need know that over the past 10 years Monsanto has paid over $500 million in bribing those American officials responsible for food safety while at the same time has joined US corporate giants General Electric and Exxon Mobil in not paying any taxes despite the billions in profits they have reaped.

And for those Americans believing that President Obama will protect them from these outrages they couldn’t be more mistaken, and as we can read as reported by the Huffington Post News Service in their article titled “You’re Appointing Who? Please Obama, Say It’s Not So!” and which, in part, says:

“The person who may be responsible for more food-related illness and death than anyone in history has just been made the US food safety czar. This is no joke.

Here’s the back story.

When FDA scientists were asked to weigh in on what was to become the most radical and potentially dangerous change in our food supply — the introduction of genetically modified (GM) foods — secret documents now reveal that the experts were very concerned. Memo after memo described toxins, new diseases, nutritional deficiencies, and hard-to-detect allergens. They were adamant that the technology carried “serious health hazards,” and required careful, long-term research, including human studies, before any genetically modified organisms (GMOs) could be safely released into the food supply.

But the biotech industry had rigged the game so that neither science nor scientists would stand in their way. They had placed their own man in charge of FDA policy and he wasn’t going to be swayed by feeble arguments related to food safety. No, he was going to do what corporations had done for decades to get past these types of pesky concerns. He was going to lie.”

Even worse for these American people are those believing they will be able to change their government in the upcoming National elections to be held in the United States this coming November, but which new reports are showing that Obama is also preparing for with a special military unit called the “Consequence Management Response Force” said ready to deploy during these elections at his command from his White House fortress the Washington Post writes has now become more like “Soviet-era Moscow” then the house of the people it used to be should these Americans begin to rise up against the growing corporate-run police state surrounding them.

New reports from America are also warning that Obama’s growing police state government is further moving against its own citizens by ordering their Internet giants to turn over all emails written by every citizen in their country, an insidious move Yahoo, for one, has vowed to fight.

To the final outcome of all of these events it is not in our knowing, other than to note that in the same week that one of Obama’s Federal Courts has outlawed all Americans from celebrating their National Prayer Day, and Obama has vowed to rid the United States of all of its nuclear weapons, President Putin, on the other hand, stated that Russia’s internal and external security depends upon two things – “its traditional religions and its nuclear forces”…and leaving no doubt whatsoever that our World has, indeed, turned upside down as the US descends into tyranny and Russia moves toward freedom.

Saturday, April 10, 2010

Bank Of International Settlements Sees US Debt/GDP At Over 400% By 2040

Bank of EnglandBaseline ScenarioBRICsCongressional Budget OfficeFranceGermanyGETCOGreeceGross Domestic ProductIrelandItalyJapanMedicareMonetary PolicyrecoveryRoman EmpireSovereign DefaultUnemploymentUnited Kingdom

It’s one thing to hear fringe bloggers raving breathlessly against the collision course that the US economy is on. It is something else to see the Bank of International Settlements call for the baseline projection for US debt/GDP to hit over 400% by 2040. And this excludes the bankrupt GSEs, bankrupt Social Security, and the soon to be bankrupt Medicare. In a must read report, the BIS (of the central bankers’ central bank) provides the much needed segue to the work of Reinhart and Rogoff, and in not so many words confirms that the entire developed world is now bankrupt on a discounted basis. With Debt/GDP ratios for virtually everyone expected to jump to over 400% in the bank’s baseline scenario, it is no surprise why the Dow may well hit 1 quadrillion on nothing but Weimar and Zimbabwean ponzification, before it crashes instantaneously to zero. We exaggerate about the quadrillion, we do not exaggerate about the sovereign default. The current and previous administrations have doomed this country, just as all other administrations of the developed world have done the same, in order to bail out the banking system, in the greatest fatally flawed private-public risk transfer experiment ever attempted. Those who will walk out of it with virtually infinite wealth are about 0.1% of the US population (the same people who tell you now that all is well, and that their bonuses are fully justified). Those who won’t, and will end up doing bad things to the aforementioned cohort, is everyone else. And the “everyone else” is getting angrier by the day, as they realize just how massive the wealth transfer scam truly is… if only they could tear themselves away from the iCrap, watching Tiger Woods’ nonsensical Nike ads, or glower in schadenfreude as Simon Cowell rips another wanna be singer from head to toe.

Some key snippets fromn the BIS report:

Should we be concerned about high and sharply rising public debts? Several advanced economies have experienced higher levels of public debt than we see today. In the aftermath of World War II, for example, government debts in excess of 100% of GDP were common. And none of these led to default. In more recent times, Japan has been living with a public debt ratio of over 150% without any adverse effect on its cost. So it is possible that investors will continue to put strong faith in industrial countries’ ability to repay, and that worries about excessive public debts are exaggerated. Indeed, with only a few exceptions, during the crisis, nominal government bond yields have fallen and remained low. So far, at least, investors have continued to view government bonds as relatively safe.

But bond traders are notoriously short-sighted, assuming they can get out before the storm hits: their time horizons are days or weeks, not years or decades. We take a longer and less benign view of current developments, arguing that the aftermath of the financial crisis is poised to bring a simmering fiscal problem in industrial economies to boiling point. In the face of rapidly ageing populations, for many countries the path of pre-crisis future revenues was insufficient to finance promised expenditure.

There is no need to repeat just how horrendous the fiscal deficit picture is. Yet we will:

Overall fiscal balances have been deteriorating sharply – by 20–30 percentage points of GDP in just three years. And, unless action is taken almost immediately, there is little hope that these deficits will decline significantly in 2011. Even more worrying is the fact that most of the projected deficits are structural rather than cyclical in nature. So, in the absence of immediate corrective action, we can expect these deficits to persist even during the cyclical recovery.

Based on a very comprehensive data set, Reinhart and Rogoff (2009a) report that three years after a typical banking crisis the absolute level of public debt is on average about 86% higher than prior to the crisis. In those countries where the crisis was most severe, debt almost trebled. This time around, several countries are beyond this historical average: Ireland with increases in public debt of 98% between 2007 and 2009; and the United Kingdom with projected rises of 111% by 2011. Meanwhile, the United States and Spain – with projected increases of 75% and 78%, respectively, by 2011 – are not far behind.

We doubt that the current crisis will be typical in its impact on deficits and debt. The reason is that, in many countries, employment and growth are unlikely to return to their pre-crisis levels in the foreseeable future.8 As a result, unemployment and other benefits will need to be paid for several years, and high levels of public investment might also have to be maintained

It also bears repeating that recently the Bank of England estimated that the total loss in output as a result of the banking crisis could be large as $200 trillion. That’s a lot of money.

Next, the BIS covers a favorite topic of ours, which continues to get virtually no coverage in the mainstream media - the increasingly problematic demographic shift, as all those deferred retirement obligations will finally need to start getting paid out.

More worryingly, the current expansionary fiscal policy has coincided with rising, and largely unfunded, age-related spending (pension and health care costs). Driven by the countries’ demographic profiles, the ratio of old-age population to working-age population is projected to rise sharply. Interestingly, this rise is concentrated in countries such as Japan, Spain, Italy and Greece, which are already laden with relatively high debts (Graph 2, left-hand panel). Added to the effects of population ageing is the problem posed by rising per capita health care costs.

This leads us to the obvious conclusion that any assessment of the government fiscal situation based on a short-term perspective is incomplete and at best misleading. A key question is to what extent such accrued liabilities should be reflected in debt estimates. Concerns about both fiscal sustainability and intergenerational equity demand that the accumulated net discounted value of all future revenues and expenditure commitments scheduled in current laws be added to the current debt stock. Currently, however, there is no unique source providing such estimates. And uncertainty about future policy, demography and productivity growth raises issues about how this information should be presented and used (see eg Auerbach (2008) for a discussion).

That said, existing studies report that the magnitude of the long-term fiscal imbalance – the present value of unfunded liabilities arising from ageing – is very large. Hauner et al (2007) estimate the change in the primary balance required to equate the net present discounted value of all future revenues and non-interest expenditures to the debt levels prevailing at the end of 2005 for seven major industrial countries (Canada, France, Germany, Italy, Japan, the United Kingdom and the United States). The authors report that in order for these countries to pay off all their financial liabilities, they would require an average improvement in their budget balance excluding interest payments of 4.5% of GDP. For the United States and Japan, the estimate is 6.9% and 6.2%, respectively.

The persistent stickiness of low interest rates is another troubling point, and the BIS discusses this as well.

So far, the build-up of public debt in industrial countries has taken place against the backdrop of an exceedingly low interest rate environment. Despite low inflation, the real interest rate (in effective terms) at which governments are able to finance their deficits and roll over outstanding debt obligations has been falling since the late 1990s, reaching almost zero in some countries in the wake of the monetary policy response to the financial crisis (Graph 3, left-hand panel). However, as the graph reveals, the situation is changing quickly even without a change in monetary policy-controlled interest rates. Real borrowing rates rose through 2009, and are poised to continue increasing with the reversal of the current zero interest rate policy. Added to this is the fact that the crisis is likely to reduce the potential output growth rate for some time to come (Cecchetti and Zhu (2009)).

The right-hand panel of Graph 3 is indicative of the severity of the problems that governments face. It plots a measure of the difference between the real interest rate and real growth on the horizontal axis and the ratio of the primary surplus to total debt on the vertical axis. The higher the differential between the real interest rate and potential output growth, the larger the required structural primary surplus as a proportion of the previous-period debt level needed to maintain a stable debt/GDP ratio. Turning to the graph, for debt/GDP to remain stable, a country must be above the 45-degree line on the graph (which appears relatively flat due to the differences in the horizontal and vertical scale). The data show that the current fiscal policy is unsustainable in every country in the graph. Drastic improvements in the structural primary balance will be necessary to prevent debt ratios from exploding in future.

And if the last chart was not enough to stop you dead in your tracks, the next one is the piece de resistance.

Presented without commentary:

Well, one little comment - essentially at this point the entire world is bankrupt. Yet the bankers will keep on trending the market higher and higher on ever declining volumes, to perpetuate the illusion that things are getting better. If that means that GETCO will quote a market of 1,000,000 x 1,000,000,000 for 2 shares of SPY at some point in the future, we would not be surprised. It is merely an artifice for the financial kleptocrats to cash out from as high a point as possible as they try to sucker ever greater numbers of people into the parabolic phase of the ponzi. Yet the numbers don’t lie. No matter what Obama does, no matter how he spins the CBO data, or how much healthcare reform is presented as revenue generating, the final outcome is now certain, and it involves the chain bankruptcies of every developed nation. And since the developed world is merely a cheap source of commodities and processed products for the developed world, the BRICs of the world will be next.

Previously, few dared to discuss the ponzi openly. With the BIS now getting into the fray, the issue of sovereign insolvency is now front and center. Of course, few will dare to forecast when the great unravelling will begin. And neither will we, suffice to say that as more and more people read disclosure such as the above, coming from the most legitimate of financial institutions, the more people will awake to the true cataclysm that has now enveloped Western society, which if the Roman empire was any indication, is in last days. Except unlike the Roman case study, the barbarians are not at the gate: they represent 90% of the population of America itself and are already inside the gate. And they are getting angrier with each passing day.

Full must read BIS report link.

http://www.zerohedge.com/article/bank-international-settlements-sees-us-debtgdp-over-400-2040

Tuesday, March 30, 2010

Sell-Off in U.S. Treasuries Raises Sovereign Debt Fears

The yield on 10-year Treasuries – the benchmark price of global capital – surged 30 basis points in just two days last week to over 3.9pc, the highest level since the Lehman crisis. Alan Greenspan, ex-head of the US Federal Reserve, said the abrupt move may be “the canary in the coal mine”, a warning to Washington that it can no longer borrow with impunity. He said there is a “huge overhang of federal debt, which we have never seen before”.

David Rosenberg at Gluskin Sheff said Treasury yields have ratcheted up 90 basis points since December in a “destabilising fashion”, for the wrong reasons. Growth has not been strong enough to revive fears of inflation. Commodity prices peaked in January and US home sales have fallen for the last three months, pointing to a double-dip in the housing market.

Mr Rosenberg said the yield spike recalls the move in the spring of 2007 just as the credit system started to unravel. “The question is how the equity market is going to handle this back-up in rates,” he said.

The trigger for last week’s sell-off was poor demand at Treasury auctions, linked to the passage of the Obama health care reform. Critics say it will add $1 trillion (£670bn) to America’s debt over the next decade, a claim disputed fiercely by Democrats.

It is unclear whether China is selling US Treasuries after cutting its holdings for three months in a row, or what its motive may be. There are concerns that Beijing may be sending a coded message before the US Treasury rules next month on whether China is a “currency manipulator”, though experts say China is clearly still buying dollar assets because it is holding down the yuan against the greenback. Some investors may be selling Treasuries as a precaution against a trade spat.

Looming over everything is the worry that markets will not be able to absorb the glut of US debt as the Fed winds down its policy of bond purchases, starting with an exit from mortgage-backed securities. It currently holds a quarter of the $5 trillion of the MBS market.

The rise in US bond yields has set off mayhem in the 10-year US swaps markets. Spreads turned negative last week, touching the lowest level in 20 years. The effect was to drive credit costs for high-grade companies such as Berkshire Hathaway below that of the US government. This may have been a technical aberration.

http://www.blacklistednews.com/news-8043-0-13-13--.html

Dollar illusions

Coming into 2010, there was a prominent view that a US dollar rally would spur renewed global market risk aversion and reignite deflationary forces. Year-to-date, the Dollar Index has gained 4.8%. Yet the dollar’s recovery has thus far done little to dampen global risk embracement or impinge the heady flows into risk assets. Emerging equities markets for the most part have retained or even added to 2009’s spectacular gains. Emerging debt markets have been even more impressive, with emerging debt spreads ending today at near two-year lows. Corporate debt spreads here at home have moved to near two-year lows. Across the board, risk premiums have contracted further.

Despite the dollar’s rally, crude oil prices have posted a small year-to-date advance. Gold, silver and metals prices are up about a percent. And the Goldman Sachs Commodities Index has declined only 2.2% so far this year. One is hard-pressed to locate indicators pointing to an imminent outbreak of deflation. The so-called commodities currencies have performed well this year, in most cases building on last year’s huge gains. To be sure, this period of dollar strength has nothing in common with the crisis-induced dollar rally and global deleverging fiasco back in 2008.

The resilience of global risk markets has been especially noteworthy in the face of a confluence of issues including the Greek debt crisis, Chinese tightening fears, and the winding down of Federal Reserve monetization of mortgage-backed securities (MBS). Even last week, a meaningful jump in global yields had little impact on equities or risk assets generally. Here at home in the United States, a series of dismal debt auctions and the worst week in the Treasury market in awhile seemed to go virtually unnoticed in the increasingly ebullient stock market.

The S&P Homebuilding index jumped 7.1% this week, increasing year-to-date gains to 25.1%. The regional bank index added 0.4%, increasing 2010 gains to 27.4%. The Morgan Stanley Retail index rose 2.7%, boosting its rise so far this year to 17.0%. The Morgan Stanley Retail index enjoys a one-year gain of 87.4%.

It has been my thesis that the 2008 bursting of the Wall Street/mortgage finance bubble provided the catalyst for last year’s unleashing of the global government finance bubble. This bubble appears to have gained momentum and has become more entrenched. As such, I believe a credit and bubble-centric analytical framework is helpful in our efforts to make sense out of today’s extraordinary backdrop. In particular, bubble and speculative dynamics are at work and playing a prominent role throughout global markets.

It is the nature of bubbles to expand and broaden as long as they are accommodated by loose financial conditions; speculative forces become increasingly robust. And it is the nature of markets to accommodate bubbles, with participants enticed by strong returns (asset inflation) and a perceived favorable risk versus reward backdrop (often with the assumption of some type of governmental backstop underpinning market prices). The longer bubbles are allowed to progress the more speculation dominates the pricing, issuance and flow of finance. At their core, bubble dynamics are dictated by a proclivity for nurturing a self-reinforcing mispricing of finance, with resulting distortions to both the flow of finance and the market’s perception of risk.

With the above comments in mind, I’ll briefly address this year’s dollar strength. It is my view that dollar strength is specifically not based on sound fundamentals - it’s a facet of the global bubble. The markets have gravitated to US financial assets because of the perception that the US enjoys a global competitive advantage in reflationary policymaking.

Let me attempt an explanation: US financial assets - hence the dollar - are perceived to benefit from a relative advantage versus other major currencies based upon, on the one hand, the virtual unlimited capacity for the Treasury to run massive deficits and, on the other, the Fed’s seemingly endless capacity to purchase (monetize) US debt instruments and essentially peg interest-rates (short-term, and only to a lesser extent longer-term market yields). This extraordinary capacity and willingness by US fiscal and monetary policymakers to inflate credit and meddle (in the markets and economy) today bolsters marketplace confidence in the sustainability of economic recovery. As importantly, it cements the view that the soundness of credit instruments throughout the entire system - Treasuries, mortgages, financial sector debt, corporates, munis, etcetera - is underpinned by current and prospective reflationary policymaking. The markets’ perception of “too big to fail” has inflated US securities pricing - reduced risk premiums - throughout the entire system.

The Greek and, to a much lesser extent, periphery Europe debt crisis has been a major development. Markets are in the process of disciplining politicians and bankers in Greece and elsewhere in Europe (most notably Portugal, Spain, and Italy). In stark contrast to the Treasury and the Fed, Greek politicians have lost their ability to attempt to inflate their way out of structural debt problems. The economy in Greece is forced to retrench, as fiscal discipline is imposed upon Athens. A painful period of economic restructuring has commenced. And as much as this is necessary for ensuring long-term stability, the short-term consequences are market unfriendly. Greece’s inability to inflate credit and monetize its debt has created a situation of great marketplace uncertainty as to the value of its obligations and the soundness of its financial sector more generally.

The downfall of Greece - and, perhaps, European - debt profligacy has, in a way, restored the reign of King Dollar. There might be consternation as to the size of current and prospective US deficits (as well as governmental market and economic intervention), but for the most part the marketplace just loves US debt these days. In contrast to the hamstrung Greeks, the view holds that US policymakers certainly will not let anything stymie economic and financial recovery. If additional stimulus is needed, loads will be immediately forthcoming. Massive deficits are fine, as they ensure sustainable recovery. If zero interest rates are required for years, Fed chairman Ben Bernanke, his colleague Janet Yellen and others will faithfully deliver. The Federal Reserve may be winding down its various emergency programs and trillion dollar monetization, but the Fed surely wouldn’t hesitate using these incredibly successful tools as needed. No Japan here. In short, dollar securities are underpinned by the markets’ perception of a potent and comprehensive federal backstop.

As I noted above, markets have a dangerous proclivity for accommodating bubbles. I see ample evidence of such dynamics throughout currency, debt, and equities markets - at home and abroad. I would argue that the reinstatement of King Dollar is not, as some had expected, impinging global reflation. Indeed, rather than restraining reflationary forces, dollar strength may today be reinforcing them. I would argue that the dollar’s newfound muscle has not yet impinged credit systems overseas, especially overheated credit in the “periphery”. Meanwhile, it has helped underpin “core” US debt markets generally, which has played a prominent role in the ongoing reflation of the world’s largest economy and stock market.

Last week, California sold US$3.4 billion of new debt, including $2.5 billion of 30-year Build America Bonds. Heightened demand, especially from international investors, compelled the state to significantly increase the size of this offering. I would argue that without Washington’s massive fiscal and monetary stimulus there would be little demand today for long-term California debt obligations - especially from foreigners. While many have compared California’s structural debt problems to those of Greece, the markets are doing anything but imposing discipline and restructuring upon our golden state. In many ways California is a microcosm for the structural debt and economic issues of the US as a whole: reflation is simply postponing the day of reckoning. An increasingly speculative marketplace is happy to focus on the here and now.

The markets are not oblivious to our structural debt problems. Yet a view has taken hold that it’s more of a longer-term issue; nothing imminent to fret too much about. After all, the distressing scope of our federal, state and local, and household debt problems virtually ensures the Fed will maintain extraordinarily loose financial conditions for some years to come. This view supports asset market reflation, underpins debt market confidence and, most certainly, stokes speculative fervor. It’s textbook bubble dynamics, and such a backdrop has been supporting the dollar while also underpinning risk markets globally. Moreover, European debt fragilities are perceived in the markets as one more reason to be confident that the Fed, Eurpean Central Bank, People’s Bank of China and the Bank of Japan will cling to extraordinarily loose monetary policies.

Ten-year Treasury yields jumped 16 basis points (bps) last week to 3.85%. It is my view that a significant jump in Treasury and agency yields would prove problematic for US recovery. But at this point I would tend to view last week’s backup in yields as more a “normalization” of yields. Bond yields had diverged too much from the reflationary realities evidenced by inflating equities prices. The bond market must look at stocks - and central bank dovishness - with rising apprehension. But at least thus far, rising Treasury yields have not incited a widening of credit spreads.

I believe US reflation will be in jeopardy when a jump in yields occurs simultaneously with increasing risk premiums and waning credit availability. And I wouldn’t be surprised if such a scenario unfolds in response to renewed dollar weakness. Considering the backdrop, call me a King Dollar skeptic. I wouldn’t be at all surprised if the prevailing sanguine view regarding US policymaking and structural debt issues proves rather ephemeral. At the end of the day, the soundness of the US currency will be determined by the health and sustainability of our economic structure and the size of our debt load. A restoration, albeit temporary, of King Dollar doesn’t appear constructive for either.

WEEKLY WATCH
For the week, the S&P500 added 0.6% (up 4.6% y-t-d), and the Dow gained 1.0% (up 4.1%). The Banks jumped 2.3%, increasing 2010 gains to 22.5%. The Broker/Dealers declined 1.3% (up 1.4%). The Morgan Stanley Cyclicals rose 2.2% (up 8.7%), and the Transports declined 0.8% (up 5.9%). The Morgan Stanley Consumer index added 0.6% (up 5.1%), and the Utilities fell 1.6% (down 5.0%). The S&P 400 Mid-Caps added 0.2% (up 8.3%), and the small cap Russell 2000 gained 0.8% (up 8.6%). The Nasdaq100 increased 1.0% (up 5.0%), and the Morgan Stanley High Tech index gained 0.9% (up 4.1%). The Semiconductors rallied 2.0% (up 0.8%). The InteractiveWeek Internet index increased 0.8% (up 5.9%). The Biotechs gained 1.9%, increasing 2010 gains to 32.1%. Although bullion added a buck, the HUI gold index fell 3.6% (down 6.6%).

One-month Treasury bill rates ended the week at 10 bps, and three-month bills closed at 13bps. Two-year government yields were unchanged at 0.95%. Five-year T-note yields jumped 9 bps to 2.51%. Ten-year yields surged 16 bps to 3.85%. Long bond yields jumped 17 bps to 4.75%. Benchmark Fannie MBS yields rose 7 bps to 4.44%. The spread between 10-year Treasury and benchmark MBS yields dropped 9 bps to 59 bps. Agency 10-yr debt spreads declined 5 bps to 32 bps. The implied yield on December 2010 eurodollar futures declined 2.5 bps to 0.87%. The 10-year dollar swap spread declined 10 to negative 5.75, and the 30-year swap spread declined 10.5 to negative 24.75. Corporate bond spreads were resilient. An index of investment grade bond spreads widened one to 88 bps, while an index of junk spreads narrowed 4 to 507 bps.

Commentary and weekly watch by Doug Noland

It was another strong week of debt issuance. Investment grade issuers included Wal-Mart $2.0bn, Northwestern Mutual Life $1.75bn, Wells Fargo $1.25bn, Anheuser-Busch $3.25bn, PG&E $950 million, Football Trust $835 million, Florida Power $600 million, Vornado Realty $500 million, Brambles $750 million, Duke Energy $450 million, Endurance Specialty $335 million, and Duke Realty $250 million.

March 22 - Bloomberg (John Glover and Bryan Keogh): “Companies are selling high-yield, high-risk bonds at the fastest pace since credit markets seized up in 2007 amid signs the economic recovery is gaining momentum. Renault SA ... and other speculative-grade borrowers issued $24.2 billion of high-yield notes in March through last week, putting this month on course to be the busiest since June 2007 ... “

March 26 - Bloomberg (Anna-Louise Jackson): “Frontier Communications Corp., the phone company serving rural US markets, sold $3.2 billion of notes in the largest high-yield corporate debt sale of the year.”

Junk flows reported inflows of $954 million (EPFR). Junk issuers included New Communications $3.2bn, Consol Energy $2.75 million, LBI Escrow $2.25bn, Lear $700 million, Coffeyville Resources $500 million, El Paso Pipeline $425 million, ITC Deltacom $325 million, Oversees Shipbuilding Group $300 million, Plains Exploration $300 million, Nationstar Mortgage $250 million, Martin Midstream $200 million, and Wyle Services $175 million.

Convert issues included Cemex SAB $715 million.

International dollar debt sales remain robust. Issuers included America Movil $4.0bn, Svenska Handelsbanken $1.85bn, Santander $1.5bn, Rabobank $1.5bn, Deutsche Bank $1.5bn, Portugal $1.25bn, Eksportanfinans $1.0bn, Votorantim Participacoes $750 million, Rearden $400 million, and Axis Bank $350 million.

U.K. 10-year gilt yields jumped 8 bps to 4.03%, and German bund yields increased 4 bps to 3.15%. Bond yields in Greece dropped 15 bps to 6.19%. The German DAX equities index rose 2.3% (up 2.7% y-t-d). Japanese 10-year “JGB” yields increased 1.5 bps to 1.375%. The Nikkei 225 jumped 2.3% (up 4.3%). Emerging markets were stable. For the week, Brazil’s Bovespa equities index slipped 0.2% (up 0.1%), while the Mexico’s Bolsa added 0.4% (up 3.2%). Russia’s RTS equities index declined 0.4% (up 5.1%). India’s Sensex equities index rose 0.7% (up 1.0%). China’s Shanghai Exchange dipped 0.3% (down 6.6%). Brazil’s benchmark dollar bond yields rose 12 bps to 4.97%, and Mexico’s benchmark bond yields gained 6 bps to 4.84%.

Freddie Mac 30-year fixed mortgage rates increased 3 bps to 4.99% (up 14bps y-o-y). Fifteen-year fixed rates added one basis point to 4.34% (down 24bps y-o-y). One-year ARMs jumped 8 bps to 4.20% (down 65bps y-o-y). Bankrate’s survey of jumbo mortgage borrowing costs had 30-yr fixed jumbo rates up one basis point to 5.82% (down 64bps y-o-y).

Federal Reserve Credit increased $5.3bn last week to a record $2.297 TN. Fed Credit was up $247bn, or 12.0%, from a year ago. Elsewhere, Fed Foreign Holdings of Treasury, Agency Debt this past week (ended 3/24) surged $15.8bn to a record $3.013 TN. “Custody holdings” have increased $57.2bn y-t-d, with a one-year rise of $418bn, or 16.1%.

M2 (narrow) “money” supply dropped $23.3bn to $8.490 TN (week of 3/15). Narrow “money” has declined $22bn y-t-d. Over the past year, M2 expanded 0.9%. For the week, Currency was little changed, while Demand & Checkable Deposits rose $7.7bn. Savings Deposits dropped $12.2bn, and Small Denominated Deposits fell $5.5bn. Retail Money Funds sank $13.5bn.

Total Money Market Fund assets (from Invest Co Inst) declined $4.0bn to $3.013 TN. In the first 12 weeks of the year, money fund assets have dropped $281bn, with a one-year drop of $843bn, or 21.9%.

Total Commercial Paper outstanding declined $7.9bn last week to $1.114 TN. CP has declined $55.6bn, or 20.6% annualized year-to-date, and was down $377bn over the past year (25.3%).

International reserve assets (excluding gold) - as tallied by Bloomberg’s Alex Tanzi - were up $1.189 TN y-o-y, or 17.9%, to a record $7.834 TN.

Global Credit Market Watch
March 24 - Bloomberg (Matthew Brown): “Portugal’s credit grade was cut by Fitch Ratings, underscoring growing concern that Europe’s weakest economies will struggle to meet their debt commitments as finances deteriorate. The rating was lowered one step to AA- with a ‘negative’ outlook, Fitch said ... “

March 25 - Bloomberg (Sarah McDonald and Bryan Keogh): “Ambac Financial Group Inc.’s bond insurance unit will hand control of subprime mortgage-related contracts to a regulator amid concern the second-largest bond insurer’s collapse would trigger losses for municipal noteholders. Ambac Assurance Corp., which guarantees $696 billion of debt payments, will set up a segregated account for insurance contracts linked to credit-default swaps, residential mortgage- backed securities and other structured finance transactions ... “

Global Government Finance Bubble Watch
March 22 - Bloomberg (Joyce Koh): “Advanced economies face ‘acute’ challenges in tackling high public debt, and unwinding existing stimulus measures will not come close to bringing deficits back to prudent levels, said John Lipsky, first deputy managing director of the International Monetary Fund. All G7 countries, except Canada and Germany, will have debt-to-GDP ratios close to or exceeding 100% by 2014, Lipsky said ... Already this year, the average ratio in advanced economies is expected to reach the levels seen in 1950, after World War II, he said. The government debt ratio in some emerging-market nations has also reached a ‘worrisome level,’ he said. ‘This surge in government debt is occurring at a time when pressure from rising health and pension spending is building up,’ Lipsky said. Stimulus measures account for about one-tenth of the projected debt increase, and rolling them back won’t be enough to bring deficits and debt ratios back to prudent levels.”

March 21 - New York Times (Keith Bradsher and Sewell Chan): “The global economic crisis has left ‘deep scars’ in the fiscal balances of the world’s advanced economies, which should begin to rein in spending next year as the recovery continues, the No. 2 official at the International Monetary Fund said ... In a speech at the China Development Forum in Beijing, the I.M.F. official, John P. Lipsky ... offered a grim prognosis for the world’s wealthiest countries, which are at a level of indebtedness not recorded since the aftermath of World War II. For the United States, ‘a higher public savings rate will be required to ensure long-term fiscal sustainability,’ Mr. Lipsky said.”

March 22 - Bloomberg (Daniel Kruger and Bryan Keogh): “The bond market is saying that it’s safer to lend to Warren Buffett than Barack Obama. Two-year notes sold by the billionaire’s Berkshire Hathaway Inc. in February yield 3.5 basis points less than Treasuries of similar maturity ... Procter & Gamble Co., Johnson & Johnson and Lowe’s Cos. debt also traded at lower yields in recent weeks ... The $2.59 trillion of Treasury Department sales since the start of 2009 have created a glut as the budget deficit swelled to a post-World War II-record 10% of the economy and raised concerns whether the US deserves its AAA credit rating.”

March 26 - MarketNews International (Sheila Mullan): “Paul McCulley ... downplayed the odds of a downgrade of the United States’ current ‘AAA’ rating ... ‘I tended to look at ratings that they are about default risk ... Fiat currencies are not going to default on their debt. Now, could you get inflation? Yes, but the AAA is not a benchmark of whether you are going to have price stability, it is a benchmark of whether you are going to default or not.’ He added, ‘So the notion that the ratings agencies would downgrade America when our debt is denominated in our own currency befuddles me, as an analytical concept.’”

March 22 - Bloomberg (Michael B. Marois): “California boosted the size of a planned taxable bond sale this week by about 25 percent to $2.5 billion, according to the spokesman for Treasurer Bill Lockyer. The state plans to sell $1.61 billion of federally subsidized Build America Bonds and $890 million in other taxable debt ... “

March 24 - Bloomberg (Alan Ohnsman and William Selway): “Los Angeles ... may win federal support this year that’s required to sell as much as $8.8 billion in bonds to jump-start subway and light-rail expansion, Mayor Antonio Villaraigosa said. The borrowing would be backed by the federal government and repaid with Los Angeles County sales taxes ... ‘We can’t actually come to market with it until we know there’s federal participation,’ Villaraigosa said. ‘As soon as we get the federal guarantee we can finance it almost immediately.’”

March 25 - Bloomberg (Arif Sharif and Anthony DiPaola): “Dubai will support Dubai World’s debt restructuring with $9.5 billion as the state-owned holding company asks creditors to wait up to eight years to get all their money back. The additional funds double to $20 billion the amount the government paid to the emirate’s holding company.”

March 25 - Bloomberg (Yusuke Miyazawa and David Yong): “Japanese government guarantees are cutting costs for developing nations to sell Samurai bonds and luring pension funds, prompting Mizuho Securities Co. to forecast the biggest year for the debt since 2001. Sales in Japan by emerging-market countries may climb 27% to 350 billion yen ($3.8 billion) in 2010 as the Japan Bank for International Cooperation widens an Asian guarantee program to all nations ... “

March 24 - Bloomberg (Theresa Barraclough and Garfield Reynolds): “Investors are withdrawing from money-market funds at the fastest pace in at least two decades, reducing holdings that peaked at $3.9 trillion in January 2009 ... ‘The draining of cash from money-market funds shows people are becoming more comfortable taking risk, so equities are going up and bonds are also being well supported and the yield curve is flattening,’ said Christian Carrillo, a senior interest-rate strategist ... at Societe Generale SA. ‘Such behavior can give some comfort to the Fed that it’s okay to reduce the size of its balance sheet, which is a pre-requisite for rate hikes.’”
March 23 - Bloomberg (Agnes Lovasz): “Emerging European governments are bringing forward debt sales and investors are lining up to buy it as the region benefits from an anti-Greece sentiment that’s overshadowing the euro area, said analysts at RBC Capital, BNP Paribas S.A. and Societe Generale S.A. Governments from Poland to Romania ‘are trying to issue as much as possible in the first half of the year because the conditions are favorable,’ said Bartosz Pawlowski, a ... emerging-market strategist at BNP Paribas ... ‘Central and Eastern Europe have been the beneficiaries. They are trying to frontload.’”

March 22 - Bloomberg (John Gittelsohn): “Lennar Corp., the third-largest US homebuilder, is investing in failed bank loans and distressed real estate assets to boost revenue as demand for new houses shows few signs of revival. The ... company’s purchase last month of a share of $3.05 billion of delinquent loans seized by the Federal Deposit Insurance Corp. from failed lenders takes the builder into territory so far dominated by private equity firms ... “

Currency Watch
March 22 - Bloomberg: “China warned the US against imposing sanctions over the value of the yuan, arguing that the exchange rate issue has been politicized and that a rise in protectionism threatens the global economic recovery. Pressure on China to strengthen the yuan does ‘no good to anyone,’ China’s Commerce Minister Chen Deming said ... Tensions over China’s currency are mounting ... “

The dollar index jumped 1.1% this week to 81.63. (up 4.8% y-t-d). For the week on the upside, the Mexican peso increased 0.7% For the week on the downside, the Japanese yen declined 2.1%, the Norwegian krone 2.1%, the South African rand 1.3%, the Australian dollar 1.2%, the Swedish krona 1.2%, the Brazilian real 1.0%, the Danish krone 0.9%, the Canadian dollar 0.9%, and the Euro 0.9%.

Commodities Watch
March 22 - Bloomberg (Whitney McFerron): “Hog futures rose to a 12-year high on signs that US pork supplies are shrinking after farmers trimmed herds.”

The CRB index declined 1.9% (down 5.7% y-t-d). The Goldman Sachs Commodities Index (GSCI) fell 1.6% (down 2.2% y-t-d). Gold was little changed at $1,108 (up 1% y-t-d). Silver slipped 0.6% to $16.93 (up 0.5% y-t-d). April Crude declined 83 cents to $80.14 (up 1% y-t-d). April Gasoline declined 2.0% (up 7.7% y-t-d), and April Natural Gas sank 7.2% (down 30.6% y-t-d). May Copper gained 1.3% (up 2% y-t-d). May Wheat sank 3.9% (down 14% y-t-d), and May Corn dropped 4.7% (down 14% y-t-d).

China Bubble Watch
March 25 - Bloomberg: “China central bank Deputy Governor Zhu Min said interest rates are a ‘heavy-duty weapon’ and alternative tools for addressing liquidity are working well, helping to explain why the bank hasn’t raised borrowing costs. ‘We are very careful on the interest rate, because it is a heavy-duty weapon,’ Zhu said ... ‘We are very careful managing liquidity’ with other instruments, and it looks like that “works very well,” he said ... “

March 24 - Bloomberg: “China’s government needs evidence of a “very certain” recovery before it can roll back stimulus measures adopted during the crisis, central bank Governor Zhou Xiaochuan said. ‘If you can be sure about the recovery, and then some of the extraordinary stimulus policies can gradually fade out,’ Zhou said ... ‘On the other hand, you should know that it’s not a W-shaped recovery,’ with a renewed slowdown following the current rebound, he said. China has yet to raise interest rates or allow its exchange rate to appreciate, keeping in place some of the extraordinary measures even as inflation and asset prices accelerate.”

March 23 - Bloomberg: “Bank of China Ltd., the nation’s third-largest lender by market value, posted a more than fourfold increase in fourth-quarter profit, helped by a credit boom and lower impairment losses on assets. Net income climbed to 18.8 billion yuan ($2.8 billion) from 4.42 billion yuan a year earlier ... “

Japan Watch
March 24 - Bloomberg (Keiko Ujikane): “Japan’s exports climbed at the fastest pace in 30 years in February as global trade recovered from the worst postwar recession ... Shipments abroad increased 45.3% from a year earlier, helping the trade surplus expand the most since 1982 ... “

India Watch
March 22 - Bloomberg (Weiyi Lim): “India is still ‘complacent’ about inflation risks and will need to keep boosting interest rates after the nation’s first increase in almost two years, according to Goldman Sachs ... ‘The key point with India is that we looked all around the region; the economy we felt was most in need of raising rates and where the consensus was, we thought most complacent, was India,’ Timothy Moe, the bank’s chief Asian strategist, said ... ‘India has the highest inflation of any of the economies currently around Asia.’”

Asia Bubble Watch
March 24 - Bloomberg (Stephanie Phang and Ranjeetha Pakiam): “Malaysia’s central bank raised the country’s 2010 economic forecast, pledging that its monetary policy will continue to support growth even as it begins to ‘normalize’ interest rates amid an ‘uneven’ global recovery. Southeast Asia’s third-largest economy may expand 4.5% to 5.5% this year ... “

March 24 - Bloomberg (Jason Folkmanis): “Vietnamese inflation accelerated to a one-year high in March as a devalued dong pushed up import costs and the government raised power prices ... Consumer prices jumped 9.46% from a year earlier ... “

Latin America Bubble Watch
March 22 - Bloomberg (Andre Soliani and Katia Cortes): “Brazil’s current account gap will exceed inflows from foreign direct investment in 2010 for the first time in nine years, according to central bank forecasts ... The current account deficit, the broadest measure of trade in goods and services, will widen to a record $49 billion this year, up from an earlier forecast of a $40 billion gap ... “
Unbalanced Global Economy Watch
March 24 - Bloomberg (Maria Levitov): “Russia’s economy will grow faster than previously forecast this year as higher wages and pensions stoke household spending ... the World Bank said. Gross domestic product may rise between 5% and 5.5%, the bank said ... “

Fiscal Watch
March 26 - Bloomberg (Rebecca Christie and Kate Andersen Brower): “The Obama administration plans to announce programs to help homeowners avoid foreclosure, including subsidies for borrowers who owe more than their home is worth. The plan ... would expand Treasury Department and Federal Housing Administration programs and use funds from the $700 billion Troubled Asset Relief Program ... ‘It’s almost like a triage policy,’ said Eric Barden, chief investment officer of Barden Capital Management in Austin, Texas. “It limits the losses of the most overvalued properties and it also limits the losses to the borrowers that are in the most distress.’”

Central Bank Watch
March 23 - Dow Jones (Michael S. Derby): “In a speech that said there’s no urgency to tighten monetary policy any time soon, a key central bank official also asserted her reputation as an inflation fighter. ‘I don’t believe this is yet the time to be tightening monetary policy,” Federal Reserve Bank of San Francisco President Janet Yellen said ... The current policy of essentially zero-percent interest rates is ‘accommodative’ and ‘is currently appropriate ... because the economy is operating well below its potential and inflation is subdued.’ Yellen said she is expecting at best a gradual recovery and a slow ebb in high levels of unemployment, all of which argues for supportive monetary policy. But she warned that ‘as recovery takes firm root and economic output moves toward its potential, a time will come when it is appropriate to boost short-term interest rates.’”

March 25 - Bloomberg (Scott Lanman and Joshua Zumbrun): “Federal Reserve Vice Chairman Donald Kohn said he expects the Fed will tighten credit early enough to prevent unprecedented stimulus, including $1 trillion in excess bank reserves, from causing an inflationary surge. ‘I am confident the Federal Reserve can and will tighten policy well in advance of any threat to price stability, and successful execution of this exit will demonstrate that these emergency steps need not lead to higher inflation,’ Kohn said ... “

Real Estate Watch
March 24 - Bloomberg (Hui-yong Yu): “Twelve US cities, including Boulder, Colorado, and Providence, Rhode Island, are showing extended declines in housing values, reversing signs of a sustained recovery last year, according to Zillow.com. The number of markets in a ‘double dip’ jumped in January from five in December ... “

March 22 - Bloomberg (Brian Louis): “U.S. commercial property values rose for a third month in January as the economy grew, according to Moody’s ... The Moody’s/REAL Commercial Property Price Index climbed 1% from December ... Values are 40% lower than the peak in October 2007. The index fell 24% from a year earlier.”

March 24 - Wall Street Journal (Josh Barbanel): “A Manhattan condominium owned by a financially troubled Italian film producer was sold in a foreclosure auction for $33.2 million, the highest price paid for Manhattan apartment this year ... A Chinese businessman who was not identified purchased the 5,500-square-foot apartment with 20-foot ceilings and views of Central Park ... The price in the current deal underscores signs of recovery in luxury housing in Manhattan in the last few months ... “

Muni Watch
March 20 - Wall Street Journal (Mark Gongloff and Ianthe Jeanne Dugan): “At a time of voracious market appetite for traditionally safe municipal bonds, some market watchers are warning municipal-debt investors to be choosy. A still-struggling economy is squeezing municipal budgets across the board, but many larger governments are passing on their pain by choking off the flow of cash to the local level ... ‘I prefer large states and cities, as problems within those areas are pushed to local governments,’ Larry Fink, chief executive of BlackRock ... ‘The assumption that an investment-grade rating is merited for all municipal debt is less tenable every day,’ said Kenneth Buckfire, CEO ... of Miller Buckfire & Co. ‘This is eerily reminiscent of the early days of the subprime crisis, where everybody was comforted by the investment-grade ratings but nobody did any analysis.’”

New York Watch
March 25 - Bloomberg (Michael Quint): “New York Assembly Democrats proposed narrowing the state’s more than $9 billion deficit with $2 billion of bonds and $4.3 billion of spending reductions, a plan that Governor David Paterson said doesn’t cut enough.”

Doug Noland is a market strategist for the Prudent Bear Funds.

http://www.atimes.com/atimes/Global_Economy/LC30Dj03.html

Sunday, March 28, 2010

Obama Declares Afghan War ‘Absolutely Essential’. Please, tell me this is not happening.

Insists America Will Never Abandon Conflict
by Jason Ditz, March 28, 2010
http://news.antiwar.com/2010/03/28/obama-declares-afghan-war-absolutely-essential/

Underscoring his administration’s commitment to continue the already eight and a half year long occupation of Afghanistan, President Barack Obama made a surprise visit today and delivered a speech declaring the war ‘absolutely essential.’

Citing 9/11, President Obama insisted that continuing the conflict makes all Americans safer, and assured the troops that “everyone” knows the importance of the continued occupation of the landlocked nation.

He also threw water on the notion that the war might come to an end any time soon, saying “the United States of America does not quit once we start on something.” He reiterated his confidence that the US would ultimately prevail.

But despite pledging to give the troops a clear mission and a clear goal, and insisting that they would “get the job done,” he didn’t make it at all clear what exactly this job was. His only hint at any mission beyond endless conflict was a reference to al-Qaeda in the region, though administration officials have repeatedly conceded that there are virtually no al-Qaeda members left in Afghanistan, and have not been in some time. Yet momentum and a sufficiently hawkish administration suggests the conflict will continue to find enemies wherever it can and continue indefinitely.
545t55dddd

…………………………………………………………………
Obama’s Oratory Skills

Obama, a complete idiot.
http://www.youtube.com/watch?v=of61E1FesPU
Obama The Bumbling Idiot
http://www.youtube.com/watch?v=QAUZFMHXbD8&NR=1

Uh, uh, uh Demigod Obama, eh, eh, yeah, yeah The Chosen One
http://www.youtube.com/watch?v=JnfmHI9InDE&feature=related

Barack Obama “Uh” Count
http://www.youtube.com/watch?v=ThEAO0lt4Dw&NR=1&feature=fvwp

Obam uh
http://www.youtube.com/watch?v=Qp0hU1THjuc&NR=1

Obama Claims He’s Visited 57 States
http://www.youtube.com/watch?v=EpGH02DtIws
Interviews Obama Supporterslike Vigorous
http://www.youtube.com/watch?v=GqAiarOhC2U&feature=related

Obama’s Latest Gaffe 4/27/09 Teleprompter In Chief - Priceless
http://www.youtube.com/watch?v=GeJsyoKIabY&feature=related

How Obama Got Elected… Interviews With Obama Voters
http://www.youtube.com/watch?v=mm1KOBMg1Y8&feature=related

Thursday, March 25, 2010

Obama Presses for $33 Billion War Supplement

Most Funding Will Go Toward Afghan War

In a move that was widely expected, Obama Administration officials headed to the Senate to press for approval of a $33 billion war supplemental bill, with most of the money going to pay for the Afghan War.

The $33 billion supplement would be in addition to the record $708 billion military budget reported in January. The Obama Administration had defended the record military funding by saying that the war costs would be folded into the military bill instead of being part of a supplement, though at the time they had already conceded that they would need a supplement.

The Obama Administration was already reporting the $33 billion request in January, on the grounds that the latest escalation into Afghanistan was not covered in the budget. At the same time, however, portions of the request did not involve the escalation, including around $1 billion in funding for Iraq.

Members of Congress reportedly expressed concern about the spiraling war costs and the lack of a deadline for ending the conflicts. Yet if $700 billion war budgets are not enough to make them balk, it is unclear what will

http://news.antiwar.com/2010/03/25/obama-presses-for-33-billion-war-supplement/

Russia Russia says no arms reduction deal without missile defense clause

MultimediaInfographics:Strategic Arms Reduction Treaty (START I)
Russia insists on the inclusion of U.S. missile defenses in Europe in a new strategic arms reduction treaty between the two countries in order to ensure nuclear parity, Russia’s top military commander said.

Russia and the United States have been negotiating a replacement to the Strategic Arms Reduction Treaty since presidents Dmitry Medvedev and Barack Obama met in April last year, but finalizing a document has dragged on, with U.S. plans for missile defense in Europe a particular sticking point.

START 1, the cornerstone of post-Cold War arms control, expired on December 5.

“The treaty is some 95% ready, but we still have to resolve some issues, including getting the U.S. agreement to include the missile defense issues in the treaty,” General Nikolai Makarov said in an interview with the Rossiyskaya Gazeta daily published on Tuesday.

Makarov said the previous treaty was skewed in favor of the United States and harmed Russia’s national interests. This time, Moscow wants to make sure that a new deal is based on parity and stability.

“If the Americans continue to expand their missile defenses, they will certainly target our nuclear capability and in this case the balance of forces will shift in favor of the United States,” the general said.

He added that the development of missile defenses would inevitably lead to a new round of the arms race and undermine the true nature of nuclear arms reductions.

Moscow hoped that the controversy over the U.S. missile shield in Europe had been resolved after the Obama administration scrapped plans last year for interceptor missiles in Poland and a radar in the Czech Republic.

But the new U.S. phased-in approach for European missile defense, which adds a naval component and could involve not only Poland and the Czech Republic, but also Romania and Bulgaria makes the potential threat to Russian nuclear deterrent even stronger.

The planned deployment of U.S. interceptor missiles in the Black Sea region has triggered fierce criticism from Moscow.

Makarov said the Russian and the U.S. presidents were deeply involved in the negotiations on the issues that are still holding back the conclusion of the new treaty.

“Whether the new treaty is signed, and how soon this will be, depends on the sides’ readiness to consider each other’s interests,” he said.

“All I can say with certainty is that the issue will be resolved on a parity basis and without any harm to Russia,” the general concluded.

MOSCOW, March 23 (RIA Novosti)

http://en.rian.ru/russia/20100323/158284

Saturday, March 13, 2010

The Rogue Nation

Three strikes and you’re out, Mr. Obama. Your government stands for preemptive killing and missile strikes on people living in countries with which America is not at war, lets torturers and torture enablers go free, and has asserted the right to assassinate its own citizens anywhere in the world based on secret evidence. Ronald Reagan once described his vision of America as a shining city on a hill. Over the past ten years the shining city has become the ultimate rogue nation, pumped up with power and hubris in spite of the clearly visible signs of decline and moving inexorably towards a catastrophic fall.

In spite of the fact that the United States faces no enemy anywhere in the world capable of opposing it on a battlefield, the Defense budget for 2011 will go up 7.1 percent from current levels. A lot of the new spending will be on drones, America’s latest contribution to western civilization, capable of surveilling large areas on the ground and delivering death from the skies. It is a peculiarly American vision of warfare, with a “pilot” sitting at a desk half a world away and pressing a button that can kill a target far below. Hygienic and mechanical, it is a bit like a video game with no messy cleanup afterwards. The recently released United States Quadrennial Defense Review reports how the Pentagon will be developing a new generation of super drones that can stay airborne for long periods of time and can strike anywhere in the world and at any time to kill America’s enemies. The super drones will include some that can fly at supersonic speeds and others that will be large enough to carry nuclear weapons. Some of the new drones will be designed for the navy, able to take off from aircraft carriers and project US power to even more distant hot spots. Drones are particularly esteemed by policymakers because as they are unmanned and can fly low to the ground they can violate someone’s airspace “accidentally” without necessarily resulting in a diplomatic incident.

Washington’s embrace of drones as the weapon of choice for international assassination is one major reason why the United States has become the evil empire. Drones are the extended fist of what used to be referred to as the Bush Doctrine. Under the Bush Doctrine Washington asserted that it had a right to use its military force preemptively against anyone in the world at any time if the White House were to determine that such action might be construed as defending the United States. Vice President Dick Cheney defined the policy in percentage terms, asserting that if there was a 1% chance that any development anywhere in the world could endanger Americans, the United States government was obligated to act. It should be noted that President Barack Obama has not repudiated either the Bush doctrine or the 1% solution of Dick Cheney and has actually gone so far as to assert that America is fighting Christianity-approved “just wars,” a position disputed by Pope Benedict XVI among others. Far from eschewing war and killing, the number and intensity of drone attacks has increased under Obama, as has the number of civilian casualties, referred to by the splendid bloodless euphemism “collateral damage.”

Drones are currently killing people in Afghanistan, Pakistan, Yemen, and Somalia. It should be noted that the United States is not at war with any of those countries, which should mean in a sane world that the killing is illegal under both international law and the US Constitution. America’s Founding Fathers used constitutional restraints to make it difficult for Americans to go to war, requiring an act of war by Congress. Unfortunately it has not worked out that way. The US has been involved in almost constant warfare since the Second World War but the most recent actual declaration of war was on December 8, 1941. And then there are the special and clandestine operations that span the globe. Apart from Israel, no other country in the world has an openly declared policy of going around and killing people. One would think that the international community would consequently regard both Tel Aviv and Washington as pariahs, but fear of offending the world’s only super power and its principal client state has aborted most criticism. Most nations are resigned to letting assassination teams and hellfire armed drones operate as they please. If Iran were operating the drones and bumping off its enemies in places like Dubai you can be sure the reaction would be quite different.

And it doesn’t stop there. Obama’s Attorney General Eric Holder has effectively blocked any inquiry into the use of torture by US government officials, mostly from the CIA. The Administration claims to have stopped the practice but has declared that no one will be punished for obeying orders to waterboard prisoners, an argument that was not acceptable at the Nuremberg trials in 1946 and should not be acceptable now. The United States is a signatory to the international agreement on torture and there are also both federal and state laws that prohibit either carrying out or enabling the practice, so the ruling by Holder is essentially a decision to ignore serious crimes that were committed against individuals who, in many cases, were both helpless and completely innocent. It also ignores the participation of Justice Department lawyers and CIA doctors in the process, involvement that most would consider both immoral and unethical. Worst of all, it lets off the hook the real war criminals, people like George Tenet and those in the White House who approved the practice. Tenet, one recalls, received the Presidential Medal of Freedom and a $4 million book deal. He still teaches at Georgetown University. Justice Department lawyers John Yoo and Jay Bybee, who made the legal arguments for torture are now respectively a tenured professor at Berkeley and a federal appeals court justice. One assumes that the actual CIA torturers continue to be employed by the federal government or are enjoying a comfortable retirement. So much for accountability for war crimes under President Obama.

Finally there is assassination. On February 3rd Director of National Intelligence Dennis Blair commented during a congressional briefing that the United States reserves the right to kill American citizens overseas who are actively “involved” with groups regarded as terrorist. Involvement is, of course, a very slippery expression providing maximum latitude for those seeking to make a case for summary execution. The death list involves a due process of sorts in that a government official makes the decision who shall be on it based on guidelines but it does not allow the accused to challenge or dispute evidence. It should also be noted that no one in Congress objected to the Blair statement and the media hardly reported the story, suggesting that tolerance of illegal and immoral activity now pervades the system. As former Reagan Deputy Attorney General Bruce Fein has commented, the claimed authority to suspend one’s constitutional rights overseas can be extended to anyone in the United States by declaring one an enemy combatant under the terms of the Military Commissions Act. Jose Padilla was denied his constitutional rights to a fair trial even though he was an American citizen and was arrested in Chicago, not overseas. Can we anticipate extrajudicial killing of American citizens in America as part of the war on terror? Of course we can.

Friday, February 26, 2010

Hillary Clinton blasts Greenspan on deficit

Thu Feb 25, 1:42 pm ET
WASHINGTON (Reuters) – Secretary of State Hillary Clinton on Thursday said she was heartbroken by the state of U.S. finances and laid the blame in part on “outrageous” advice from former Federal Reserve Chairman Alan Greenspan.
Clinton, appearing before a congressional panel to defend the State Department’s $52.8 billion budget request for the 2011 fiscal year, said the Obama administration was well aware of the fiscal pressures battering average Americans.
“It breaks my heart that 10 years ago we had a balanced budget, that we were on the way of paying down the debt of the United States of America,” Clinton said.
“I served on the budget committee in the Senate, and I remember as vividly as if it were yesterday when we had a hearing in which Alan Greenspan came and justified increasing spending and cutting taxes, saying that we didn’t really need to pay down the debt—outrageous in my view,” she said.
Greenspan was named central bank chief by President Ronald Reagan in 1987 and held the office until 2006, serving throughout the presidency of Clinton’s husband, former President Bill Clinton.
Seen an economic oracle when in office, Greenspan’s words regularly moved financial markets.
But his image became tarnished after he retired, with many blaming him for helping inflate a housing bubble that eventually burst, setting off a grave financial crisis and plunging the economy into recession.
Public concern about the debt mounted after the government posted a record $1.4 trillion deficit for the fiscal year that ended September 30. The issue looms large ahead of congressional elections in November.
Greenspan, known as a deficit hawk, late last year endorsed a proposed bipartisan commission to help make tough calls needed to bring U.S. debt under control.
Clinton noted that the 2011 budget request for the State Department and the U.S. Agency for International Development represented a $4.9 billion increase over 2010, most of which would fund work in the “frontline states” of Iraq, Pakistan and Afghanistan.
“We are now assuming so many of the post-conflict responsibilities, and that is the bulk of our increase,” Clinton said.

Republican Representative Ron Paul, who has helped lead congressional efforts to rein in the deficit, pressed Clinton on U.S. diplomatic spending including a plan for an expensive new U.S. embassy building in London
Clinton said the costs of the proposed modernist glass cube would be offset by savings on rent for satellite offices that embassy personnel must now use.
“I believe I can make the case that we’re not asking for new money,” she said.

Reuters

Wednesday, February 24, 2010

Mass Layoffs by U.S. Manufacturers Surge in January

By definition, a mass layoff in the United States is those job cuts that involve 50 or more workers from the same company. Those types of events increased by 35 in January 2010 to 1,761, according to data released.

This is odd in that it has been asserted by government officials that we’re on the edge of new jobs being created in the U.S. economy. That doesn’t seem likely in the light of the real numbers and not just wishful thinking by politicians.

I believe the reason for the discrepancy is that companies were replenishing supplies, as I’ve mentioned before here, and those needs have probably been met in general, so as expected, the manufacturing jobs to produce them are no longer needed. At least that would be part of the reason for increase in mass layoffs.

The fact that there was an increase in mass layoffs shows there is a decline in demand for products; it’s as simple as that. So that means in a number of industries people and companies are tightening up again.

My view and the data so far seem to confirm it, is there is nothing in the numbers that confirm we’re on the verge of jobs being created in the United States any time soon.

In the manufacturing sector, there were 486 mass layoffs in January, with the consequences of 62,556 workers filing claims for unemployment.

I think one reason officials believed there was going to be an increase in jobs creation was because mass layoffs had been receding since August, giving the illusion that things had turned around. But, again, it’s the replenishment which was the major factor in the mix, not a real and sustainable change in the economy.

Since the latter part of 2007, jobs in the United States have been lost to the tune of 8.4 million.

Over the last 26 months, the Labor Department says mass layoffs have been at a huge 53,739 during that period of time to January, with 5,425,101 workers losing their jobs as a res

Sunday, January 31, 2010

America’s Addiction to Disaster Porn

By David Sirota

January 29, 2010 ”Information Clearing House”—The black t-shirt — so tight, so come-hither. And oh, those safari button-downs — joke-worthy on Eddie Bauer mannequins, but on news correspondents, so ... enticing.

America missed these sartorial seductions, pined for their sweet suggestive nothings. And now, finally, a nation of television addicts can thank its disaster pornographers for bringing back the lurid garments — and the lustful voyeurism they evoke.

Yes, thousands of miles from the San Fernando Valley’s seedy studios, the adult entertainment business is alive and panting in Haiti. This year’s luminaries aren’t the industry’s typical muscle-bound mustaches of machismo — they are NBC’s Brian Williams pillow-talking to the camera in his Indiana Jones garb, CNN’s Sanjay Gupta playing doctor and, of course, CNN’s Anderson Cooper in that two-sizes-too-small t-shirt “rarely missing an opportunity to showcase his buff physique,” as The New York Times gushed. They are all the disaster porn stars in the media with visions of Peabodys and Pulitzers dancing in their heads.

And We the Ogling People drink it in.

Like any X-rated content, this smut is all flesh and no substantive plot. The lens flits between body parts and journalists pulling perverse Cronkite-in-Vietnam impressions (at one point, CNN showed Cooper and his t-shirt saving a child). But there is little discussion of how western Hispaniola was a man-made disaster before an earthquake made it a natural one.

Though neighboring the planet’s wealthiest nation, Haiti has long been one of the world’s poorest places. It sports 80 percent unemployment and a GDP smaller than the annual executive bonus fund at a single Wall Street bank. The destitution is tragic — and a reflection, in part, of colonial domination.

For much of the last two centuries, Western powers used embargo threats to force the country’s population of erstwhile slaves to reimburse their former European masters for lost “property.” As Harvard’s Henry Louis Gates recounts, America aided these efforts from the beginning because President Thomas Jefferson feared a successful black republic would “inspire slave insurrections throughout the American South.”

Crushed by this oppression, Haiti was then assaulted in the 1990s by American “free” trade policies that destroyed its agriculture economy and tried to turn the country into the world’s sweatshop.
In recent years, as the menace of Western-backed coups lurked, Haiti has at times been compelled to pay more interest on its debt than it received in foreign aid.

This is the real story of Haiti that the black t-shirts and safari button-downs (and, alas, their viewers) have never cared about. They’ve only noticed the country when a cataclysm provided more telegenic images than the daily death and despair of the island’s pre-earthquake squalor.

Even now, as the casualty count rises, disaster pornographers barely mention the macabre history. They know that doing so would break unspoken rules against holding up a foreign policy mirror to America and against riling the politicians and business interests that contributed to Haiti’s demise.

Rather than reporting on what made Haiti so poor and therefore its infrastructure so susceptible to collapse, we get clips of Haitians momentarily cheering “USA!” as food packages trickle into their devastated capital. Rather than inquiries about how poverty made Haiti so ill-prepared for rescue operations, the disaster pornographers instead obediently follow George W. Bush, who self-servingly says, “You’ve got to deal with the desperation and there ought to be no politicization of that.”

“Politicization” — so that’s the safe-for-TV euphemism they’re using these days, huh? Evidently, it must be avoided — evidently, nothing kills an audience’s heaving passion faster than “politics” or (God forbid) contextualized news.

Anything like that — anything beyond the exploitation of raw disaster porn — well, it might ruin the money shot.