2/16/09 News Radar

by JASON | 10:29 AM in |

Worldwide deflation - i.e. collapse in demand

Feb. 16 (Bloomberg) -- Japan’s economy shrank at an annual 12.7 percent pace last quarter, the most since the 1974 oil shock, as recessions in the U.S. and Europe triggered a record drop in exports.

Gross domestic product fell for a third straight quarter in the three months ended Dec. 31, the Cabinet Office said today in Tokyo. The median estimate of 26 economists surveyed by Bloomberg News was for an 11.6 percent contraction.

Exports plunged an unprecedented 13.9 percent from the third quarter as demand for Corolla cars and Bravia televisions collapsed amid a slump that the Group of Seven nations said will persist for most of 2009.

TOKYO (Reuters) - Japan sank deeper into recession with its worst quarterly contraction since the oil crisis in the 1970s, its reliance on exports and soft domestic demand dragging down the world's second-largest economy.

Feb. 16 (Bloomberg) -- South Korea faces a “deeper and longer” recession than during the 1997-1998 Asian financial crisis as the global slump pummels exports and indebted consumers and companies cut spending, Nomura Holdings Inc. said.

“The biggest difference this time around is the country’s exports won’t provide a cushion for a drop in local demand,” Nomura’s Hong Kong-based economist Kwon Young Sun said.

Asia’s fourth-largest economy will shrink 6.8 percent on average for the four quarters from the final three months of 2008, when the current recession began, Kwon estimates. That’s more than an average 4.5 percent contraction for the same period from the fourth quarter of 1997, he said.

Unlike during the Asian collapse a decade ago, the major overseas markets of the U.S., Europe and China have all faltered and that has led to a plunge in demand for Korean-made cars, mobile phones and computer chips. Overseas shipments accounted for 63.5 percent of GDP in 2008, more than double the 29.4 percent in 1997, Kwon said.

An interim budget delivered by the Indian government on Monday ahead of parliamentary elections sparked fears that the country may return to an era of big budget deficits as it tries to protect itself from the global financial crisis.

Pranab Mukherjee, the acting finance minister, said India had temporarily set aside its tight public spending targets, recognising that a high fiscal deficit was “inevitable” to weather the challenges posed by recession in big economies.

The government forecasts economic growth this year of 7.1 per cent. A tough year lies ahead, with many independent estimates seeing growth falling towards 5 per cent as a cyclical downturn and global recession take their toll on the Indian economy.

Fears are growing that Ireland could default on its national debt after the cost to insure against possible losses on loans to the country rose to record highs at the end of last week.

Credit ratings agency Moody's recently followed rival Standard & Poor's in warning it might downgrade Irish debt, amid fears that one of Europe's former success stories is falling into a deepening recession. The cost to hedge against losses on Irish debt tripled last week to a record 355 basis points - meaning that for every £100 of debt, investors have to pay £3.55 to insure against default, according to data firm CMA Datavision. It was about 262 basis points at the end of January.

Moody's has warned there is a more than 50% chance Ireland will lose its triple A rating within 12 to 18 months.

Feb. 16 (Bloomberg) -- White & Case LLP, the New York-based law firm with more than 60 lawyers in its three China offices, has allied itself with Hong Kong dispute resolution boutique Laracy Gall in readiness for a flood of corporate failures.

“It’s a perfect storm,” John Hartley, head of White & Case’s Asia bank finance and restructuring practice, said in an interview in Hong Kong. “There’s a large amount of refinancing coming up, and capital is retreating with banks retracting lending and private equity and distressed opportunities funds facing redemptions.”

Banks are curbing lending as shrinking earnings increase the risk companies will be unable to repay their debts. New loan agreements in Asia-Pacific excluding Japan dwindled to $4 billion this year from $32 billion in the same period a year earlier, data compiled by Bloomberg show. The global default rate on speculative-grade debt will peak at 16.4 percent in November, worse than in the Great Depression, according to Moody’s Investors Service.

Statistics released Thursday by the European Union's Eurostat agency reveal that production plummeted across Europe at the end of 2008. The figures announced were far worse than analysts had anticipated. Industrial production declined across Europe by 2.6 percent in December compared to the previous month. On a year-to-year basis, European production has slumped 12 percent.

For some time, leading European politicians have attempted to put a positive gloss on declining figures for European production, but the results released Thursday ushered in a new tone. European Union Industry Commissioner Günter Verheugen told the Financial Times Deutschland, "The extent and speed of the crisis is completely new."

One day previously, an Ifo Institute for Economic Research survey revealed that business sentiment within the 16-country common-currency eurozone declined for the sixth consecutive quarter, plunging to its lowest point since the survey began 16 years ago. The European Central Bank (ECB) also issued a warning that the recession gripping Europe will not be short-lived. Rather, it will be a "long-lasting and clear downturn," the ECB said.

The response of the individual European nations to the growing crisis has been to embrace a raft of protectionist measures. Italian Premier Silvio Berlusconi recently warned appliance maker Indesit SpA not to transfer production and jobs to Poland, and in Britain, trade unions and politicians are demanding "British jobs for British workers."

On Wednesday, the acting EU Council president, Czech Prime Minister Mirek Topolanek, appeared before the press in Brussels and warned of a "protectionist race" in Europe, while acknowledging that national economies in the European Union were being hit hard by the international crisis and losing ground with unanticipated speed.

Topolanek said, "Problems are emerging in the wake of the economic and financial crisis which the European Union considered to be relics of the past century and long since solved."

After a meeting with EU Commission President José Manuel Barroso, Topolanek described the situation in Europe "as worse than it has ever been." The confidence of citizens in the economic and political system had been shaken, he said, and warned that the battening down of national markets endangered the European domestic market and the world economy.

On January 20th, an illegally and incompetently conducted raid on activists and tenants protesting their forced eviction from central Seoul left 6 dead. This incident ignited immediate and continuing demonstrations against police violence, massive redevelopment, and the administration that has exacerbated both of these issues. South Korea's redevelopment projects have always met with fierce resistance, as landless poor were sacrificed for the profits of wealthy conglomerates. This violent crackdown in Yongsan neighborhood, however, has lead to an unprecedented show of support among diverse populations in solidarity with those struggling for housing and survival.

On Monday, January 19th, evictee-protesters members from Jun Chul Yun, or the Federation Against House Demolition, including tenants from the neighborhood as well as other areas, occupied a five story building in Yongsan4ga neighborhood and assembled a defensive shelter on the roof. Roof-top access was blocked to prevent the police from removing them. The evictee-protesters prepared themselves for an occupation and struggle, supplied with, among other items, paint thinner and molotov cocktails.

A 1,500 strong police force was dispatched to disperse about 50 protesters. At 10pm, the night before the police raid, "contract workers" hired by the landowners, referred to by many as "construction thugs" for their traditional role in threatening and attacking evictees, gathered on the second floor of the building. The police threatened to use force against the protestors unless they ended their sit-in. In an apparent attempt to intimidate the protesters, the construction thugs set fire to used tires on the third floor of the building.

At 6am, Tuesday the 20th, the police sent a SWAT team into the building, and mobilized three water trucks to spray the roof with water. In an unprecedentedly short period of time for dealing with protests and sit-ins, a SWAT team was deployed in an "anti-terror" operation. According to Yongsan District police chief Baek Dong-san, they took such swift action because the protesters continued hurling cocktails, bricks and golf balls and spraying acid at officers and passers-by. There were 42 activists on the roof. Access to the roof being blocked off from inside the building, the police used a crane to lift the SWAT team above the roof in a metal storage container unit. The police sprayed the roof from the container box with a water hose, while the protesters resisted, throwing molotov cocktails. At 7:30, a fire, of unknown origins broke out within the makeshift fort. The police continued to spray water cannons and hoses at the roof, the water mixing with paint thinner and spreading the fire throughout the building. The smoke grew thicker and flames bigger, and protesters struggled to evacuate the shed. As the shed filled with water, the paint-thinner, being lighter than water, floated on the surface and prevented the fire from being extinguished. Cans of paint thinner were seen being frantically thrown out of small windows in the shed, in an attempt to prevent the growth of the fire. One protester, seeking to flee the flames, hung from a window, eventually falling four floors to the ground. He suffered severe injuries from the fall, as the police had not prepared any mattresses around the building. The fire was ultimately extinguished by 8am. Five protesters and a police officer died. The cause of death of all six individuals is under investigation.

No place in the United States is likely to escape a long and deep recession. Nonetheless, as the crisis continues to spread outward from New York, through industrial centers like Detroit, and into the Sun Belt, it will undoubtedly settle much more heavily on some places than on others. Some cities and regions will eventually spring back stronger than before. Others may never come back at all. As the crisis deepens, it will permanently and profoundly alter the country’s economic landscape. I believe it marks the end of a chapter in American economic history, and indeed, the end of a whole way of life.

US States, Cities, & Counties

TOPEKA, Kan. - Kansas has suspended income tax refunds and may not be able to pay employees on time, the state's budget director said Monday.

The state doesn't have enough money in its main bank account to pay its bills, prompting Democratic Gov. Kathleen Sebelius to suggest transferring $225 million from other accounts throughout state government. But the move required approval from legislative leaders, and the GOP refused Monday.

Budget Director Duane Goossen said that without the money, he's not sure the state can meet its payroll. State employees are due to be paid again Friday.

Goossen said the state stopped processing income tax refunds last week.

GOP leaders are hoping to pressure Sebelius into signing a bill making $326 million in adjustments to the budget for the fiscal year that ends June 30.

Legislators approved that bill last week, but it has not reached her desk.

Goossen said the state might also have to delay payments to public schools and to doctors who provide care to Kansans under the Medicaid program.

Feb. 16 (Bloomberg) -- California’s legislature adjourned from a marathon budget debate after falling one vote short of a $40 billion package of tax increases, spending cuts and borrowing aimed at reducing a record deficit.

Failure of the package would prolong a four-month stalemate over how to counter a record $42 billion deficit that drained California of cash, left it with the lowest credit rating among U.S. states, forced officials to delay paying bills totaling $3.7 billion and halted $3.8 billion of bond-financed construction on schools, roads and other public works.

The draft bills include plans to raise the state sales-tax rate to 8.25 percent from 7.25 percent; boost vehicle license fees to 1.15 percent from 0.65 percent of the value of an automobile; add 12 cents to the per-gallon gasoline tax; reduce the dependant-care tax credit to $100 from $300 and impose a surcharge on income taxes of up to 5 percent. Combined, the measures would raise taxes and fees by $14 billion, cut spending $16 billion and add $10 billion to the state’s debt. Another $2 billion in reserves would be created from funds moved on balance sheets.

The state controller has said more payments to vendors and to counties for health and human services will be delayed and he may begin paying bills with IOUs in April if the impasse isn’t quickly resolved.

Ever see Dumb and Dumber? How do you pay a bill with an IOU?

But the timing and immensity of the current downturn in retail are dire, and not just for the employees who lose jobs, the company shareholders and the shoppers who no longer can buy from their favorite stores. Cities — entire regions, even — that boomed as Americans shopped till they almost dropped for more than a decade are struggling mightily because spending has almost slammed to a stop.

The resulting store closures (150,000 are expected this year), steep declines in sales taxes collected by cities and states, and the plethora of empty buildings are wreaking havoc on budgets, wrecking town center plans and ruining dreams for revitalization.

Outside St. Louis, the decline of Crestwood Court mall, which is more than half vacant, is crushing the city's budget. About half of the city's $14 million in revenue in 2008 came from sales taxes, which were down almost 10% last year.

Well before President Obama’s stimulus package completed its tortuous path through Congress last week, state and local officials facing multimillion-dollar budget deficits, crumbling infrastructure and the prospect of massive reductions in services were already jockeying for the upper hand in deciding how the money should be spent.

In Missouri, the Department of Transportation says that within 180 days of Mr. Obama’s signing the legislation it is prepared to begin 34 transportation projects, costing $510 million and with the promise of 14,000 jobs.

When Mr. Obama signs the stimulus bill in Denver on Tuesday, it will release the biggest influx of federal dollars since the days of President Lyndon B. Johnson’s Great Society program. Along with the money, there are complex rules to the sprawling, $787 billion federal plan that local politicians from governors to small-town mayors say they are only now beginning to grasp.

“For every job the bill creates, American taxpayers will spend $223,000,” Mr. Sanford wrote in an opinion article in The State newspaper on Sunday. “If we add the cost of this bill to the previous efforts of the federal government to deal with the financial crisis, the American taxpayer is on the hook for $9.7 trillion.” He went on to write, “If the stimulus bill were a country, it would be the 15th-largest country in the world.”

In Arkansas and North Carolina, state authorities said they were concerned, though uncertain, whether they would receive less education money than other states. Neither state has a shortfall in its education budget, the officials said, and thus might not be eligible for as much education financing under the federal plan.

“We don’t want to be penalized for not having a deficit,” said Chrissy Pearson, a spokeswoman for Gov. Bev Perdue of North Carolina.

The total funding for the states provided in the Obama economic stimulus package will not be enough to get many through this year's crisis, and next year might be even worse, Jerome Corsi's Red Alert reports.

California is leading the nation with a budget deficit projected to be $42 billion by mid-2010 that does not appear to be easing, despite Gov. Arnold Schwarzenegger's declaration 14 weeks ago that the state is facing a budgetary emergency. Schwarzenegger has threatened to lay off 20,000 state workers.

"Will Obama come back to Congress for another windfall of $1 trillion dollars in deficit spending to keep the states afloat through the remainder of this year, or a third trillion?" Corsi wrote. "How about next year?"

Corsi expressed doubt that the stimulus plan will create the 4 million jobs Obama has promised. Without job creation, he said the economic downturn could become more severe, with states plunging deeper into the red.

Cities are also facing massive budget deficits. Mayor Michael Bloomberg noted that New York City has cut $2 billion from planned spending over the last two years and plans to cut yet another $1 billion this year.

Despite these cuts, Bloomberg still warned the city still faces "a multibillion-dollar deficit."

"We are hopeful that the federal stimulus package will provide some help," Bloomberg wrote in a New York Daily News editorial, "but we cannot expect either the federal or state government to bail us out."

– The Obama administration economic stimulus package is going to force the Treasury to borrow approximately $2.5 trillion in 2009 and another $4 trillion in 2010, with the result of increasing the current $10 trillion national debt by 65 percent in just two years.

If the Obama administration increases the national debt by 65 percent every two years, the debt will be $16.5 trillion in 2010 and $27.225 trillion by 2012, the year of the next presidential election.

If you had gone into business on the day Jesus was born, and your business lost a million dollars a day, 365 days a year, it would take you until October 2737 to lose $1 trillion. One trillion dollars divided by 300 million Americans comes out to $3,333 per person. One trillion one-dollar bills stacked one on top of the other would reach nearly 68,000 miles into the sky, about a third of the way from the Earth to the moon.

Craig Smith, founder and CEO of Swiss America, estimates it would take approximately four generations of Americans to pay off the interest of the U.S. Treasury bonds sold as debt to create the $1 trillion stimulus package, factoring in a 3 percent growth rate in the economy throughout that time.

The Bush administration added more than $4 trillion to the national debt, increasing it more than 70 percent from the time George W. Bush took office Jan. 20, 2001.

The Bank of International Settlements now estimates that derivatives, the complex bets financial institutions and sophisticated investors make with one another on everything from commodities options to credit swaps, now top $650 trillion worldwide – that’s $ 0.65 quadrillion. A quadrillion, a trillion multiplied by 1,000, is a 1 followed by 15 zeroes, as in: 1,000,000,000,000,000.

Obama’s deficit is problematic. It is a massive deficit, far beyond anything ever before financed on planet earth. It is arriving at a time when pressures on the dollar as reserve currency have mounted from decades of rising trade deficits. The deficit is hitting the financial markets when the rest of the world is in turmoil from ingestion of toxic Wall Street financial instruments. The US must service massive debt when the US economy is hollowed out from the offshoring of manufacturing and professional service jobs. The Obama deficit is a far more serious deficit than the “Reagan deficits.”

State and local governments have set aside virtually no money to pay $1 trillion or more in medical benefits for retired civil servants, a USA TODAY survey found.

With bills coming due as Baby Boomers start to retire, states, cities, school districts and other governments may be forced to raise taxes, cut benefits or both — a task made especially difficult in an economic downturn.

IN NEBRASKA: Retiree health care issue 'goes nowhere'

State governments have unfunded obligations worth $445 billion to subsidize health insurance for teachers, judges and other civil servants after they retire, according to a USA TODAY survey of state financial reports.

Cities, school systems, park districts, water authorities and other local governments have even bigger obligations, in excess of $500 billion, although the exact number isn't known.

Banking Nationalization - i.e. banking roll-up strategy

Republican Sen. Lindsey Graham of South Carolina of the Senate Budget Committee said today on "This Week" that he is open to "nationalizing the banks."

"I think if you put most of our major banks under a 'stress test,' they're going to fail," Graham told me.

"This idea of nationalizing bank is not comfortable but I think we have got so many toxic assets spread throughout the banking and financial community throughout the world that we're going to have to do something that no one ever envisioned a year ago, no one likes," he said.

"To me banking and housing are the root cause of this program," Graham said. "I would not take off [the table] the idea of nationalizing the banks."

Two smart and meticulous financial analysts - Reggie Middleton and Mish - argue that Wells Fargo is insolvent. In yesterday's update to his June 11, 2008 analysis, Reggie shows that the lion's share of Wells Fargo's assets are in mortgages in the California, Florida and Arizona markets, which are all tanking. He concludes:

Wells Fargo has an impaired balance sheet. Marking mortgage assets ANYWHERE near what they are worth results in insolvency.

Mish, who has also been covering Wells for a long time, wrote on February 2nd that Wells is drowning in loan defaults, and has hidden staggering amounts of toxic losses off of its balance sheets, just like Citigroup:

[Despite its claim that it is saving mortgages by reworking their terms,] 30% of Wells Fargo's reworked mortgage loans are 90 days past due or longer, one year after loan modification. ***

Wells Fargo claims it is "well capitalized". Is it? By what measure? What is hidden off its balance sheet that we do not know enough about? Can anyone believe what any financial institution says when it is perfectly clear all these games are being played?

It's not just Citigroup and Bank of America that are in trouble . . . other big banks like Wells are also on the ropes.

More Wells Fargo analysis...

There is a bottom-line to the banking crisis which the Obama administration appears intent on trying to avoid: some number of financial giants are simply insolvent. A recent analysis by NYU economist Nouriel Roubini -- known as "Doctor Doom" for his dire predictions about the collapse of the financial trading system, predictions that have since become painfully true -- estimated that the losses facing the American financial sector will reach $3.6 trillion dollars.

Once considered a radical move, even fiscal conservatives like Senator Lindsey Graham (R-SC), have suggested that this might be the least-expensive route to saving a financial system on the brink of collapse. On ABC's This Week, Graham said, "This idea of nationalizing banks is not comfortable. But I think we've got so many toxic assets spread throughout the banking and financial community, throughout the world, that we're going to have to do something that no one ever envisioned a year ago." "I would not take off [the table] the idea of nationalizing the banks," he concluded.

But so far, the Obama administration has done exactly that, and while the president has said that his team is loathe to nationalize falling financial giants because of the complexities involved, a closer look suggests that his team is avoiding the move on ideological grounds rather than practical considerations. The New York Times reports, "President Obama's top aides have steered clear of the word entirely," and the Washington Post notes, "Administration officials are … trying to offer federal assistance to financial firms without nationalizing them outright, according to a source who has been in contact with senior Treasury officials." Obama's Treasury Secretary, Tim Geithner, told reporters, "We have a financial system that is run by private shareholders, managed by private institutions, and we'd like to do our best to preserve that system."

But they may not end up having a choice. Contrary to Graham's assertion, many of the "toxic assets" we're hearing so much about these days are concentrated in a handful of institutions, and the first step of the plan outlined last week -- with sparse details -- by Geithner is to dig into these institutions' books and see exactly how healthy or unhealthy they really are. Some see that as a first step to nationalization, even if it were to go by another name -- "restructuring" or "receivership."

TARP Recipients Paid Out $114 Million for Politicking Last Year

Beneficiaries of the $700 billion bailout spent a total of $114.2 million on lobbying in the past year and contributions toward the 2008 election. From the federal government's Troubled Asset Relief Program (TARP), they have received $295.2 billion, a return of 258,449 percent. Those companies may consider their contributions to be the smartest investments they've made in years.

As the Obama administration pushes through Congress its $800 billion deficit-spending economic stimulus plan, the American public is largely unaware that the true deficit of the federal government already is measured in trillions of dollars, and in fact its $65.5 trillion in total obligations exceeds the gross domestic product of the world.

The total U.S. obligations, including Social Security and Medicare benefits to be paid in the future, effectively have placed the U.S. government in bankruptcy, even before new continuing social welfare obligation embedded in the massive spending plan are taken into account.

The real 2008 federal budget deficit was $5.1 trillion, not the $455 billion previously reported by the Congressional Budget Office, according to the "2008 Financial Report of the United States Government" as released by the U.S. Department of Treasury.

The difference between the $455 billion "official" budget deficit numbers and the $5.1 trillion budget deficit cited by "2008 Financial Report of the United States Government" is that the official budget deficit is calculated on a cash basis, where all tax receipts, including Social Security tax receipts, are used to pay government liabilities as they occur.

But the numbers in the 2008 report are calculated on a GAAP basis ("Generally Accepted Accounting
Practices") that include year-for-year changes in the net present value of unfunded liabilities in social insurance programs such as Social Security and Medicare.

Under cash accounting, the government makes no provision for future Social Security and Medicare benefits in the year in which those benefits accrue.

"As bad as 2008 was, the $455 billion budget deficit on a cash basis and the $5.1 trillion federal budget deficit on a GAAP accounting basis does not reflect any significant money [from] the financial bailout or Troubled Asset Relief Program, or TARP, which was approved after the close of the fiscal year," economist John Williams, who publishes the Internet website Shadow Government Statistics, told WND.


WASHINGTON - - New York Sen. Kirsten Gillibrand, who argues her pro-gun stance aims to protect hunters' rights and the Second Amendment, last week said she and her husband, Jonathan, keep two rifles under their bed to protect their upstate home.

Gillibrand said neither she nor her husband is a hunter, and in a general discussion of gun control said, "If I want to protect my family, if I want to have a weapon in the home, that should be my right."

But even after living in Manhattan with its gun violence for 12 years, Gillibrand, who as a House member won the National Rifle Association's top rating, rejects city gun bans or limits on legally owned guns.

"It's a false debate," she said. "It's political rhetoric that's sucking you in to believe that hunters owning a gun or an American citizen who wants to protect his home owning a gun somehow increases gun violence."

WELLINGTON — A masked gunman died early this morning after he exchanged fire with a resident inside a Wellington home, authorities said. Sheriff's spokesman Sgt. Pete Palenzuela said Heath Miller, a school teacher, killed the intruder, who police have not yet identified.

When deputies arrived, they found a man with a .40 caliber gun, dressed in all black and wearing a black mask, just inside a sliding door at the back of the home, Palenzuela said. The intruder appeared to be in his late teens or early 20s, Palenzuela said. He would not say where in the body the dead man was struck.

Driving and school records show Heath Miller, 34, lives at that address and teaches music at H.L. Watkins Middle School in Palm Beach Gardens. According to the 2007 Watkins yearbook, Miller was selected the school's most popular teacher.

The couple told police they were awake in their bedroom when their dogs, a Jack Russell terrier and a German Shepherd, alerted them.

"One of the dogs went back to the bedroom and growled and alerted the resident that the intruder was making his way to the bedroom," Palenzuela said.

Inside, Miller, who owns a .38-caliber pistol and a .22-caliber rifle, and his wife huddled in their bedroom as the intruder moved toward them in the dark. Miller got out his pistol and held it at the ready. Through the bedroom doorway, he saw the robber's silhouette moving toward him. A gunfight ensued. It wasn't immediately clear who fired the first shot, but after a brief exchange the masked intruder stumbled bleeding back toward the glass door, where he collapsed and died, the spokesman said.

Neither of the residents was injured, Palenzuela said. Witnesses told investigators the couple are well-regarded in the neighborhood.

Just a few weeks after the Los Angeles City Council approved a batch of new gun and ammunition ordinances tightening restrictions on ammunition vendors, council members Jack Weiss and Janice Hahn are proposing a new law that would make it more difficult for individuals convicted of certain misdemeanors to own guns.

The proposal, which Weiss and Hahn plan to introduce as early as today's council meeting, would expand on a state law that bars possession of a gun for 10 years if convicted of certain crimes, including assault, illegal weapons sales or threatening a public official or a witness.

Weiss and Hahn's measure would add other offenses to the list, including carrying a concealed weapon, possession of an assault weapon, burglary and misdemeanor gang crimes.

Noting that there have been 138 victims of gun violence in L.A. this year, Weiss said it was "time for more aggressive and more creative measures to stop the killing."

Hahn said the measure was intended to target gangs.

Great...add it to the list of laws they are already breaking...

COLUMBIA, S.C. – Police in South Carolina gave away roses on Valentine's Day. All you had to do to get one for your sweetie was turn in a gun.

Hoping to get the weapons off the streets with the "Guns for Roses" program, authorities in two central South Carolina cities set up a program where anyone who turned in a gun received a free rose and a Best Buy gift card.

Secret Police

LONDON – Jacqui Smith, the United Kingdom's home secretary who already is embattled over claims she has "misappropriated" housing allowances, now has approved a new and ultra-secret intelligence unit to spy on groups opposed to government policies, according to a report from Joseph Farah's G2 Bulletin.

Called the Confidential Intelligence Unit, the agency will be housed in a high-security annex at Scotland Yard and will report directly to Smith.

The unit will have the same powers as MI5 to mount secret surveillance operations and recruit informers who will provide details of "domestic extremists" – this will include those in discussion to call strikes affecting rail and air transport.

Alarmed human rights organizations have described CIU as being "no different to the East German Stasi or the old KGB."

War on Terror

A US missile strike against suspected militants in a tribal area of Pakistan killed 30 people today, as Islamabad announced a peace deal with extremists in another region that includes the imposition of Islamic law.

The missile attack targeted a house used by a Taliban commander in Kurram, close to the Afghan border. It is the fourth such strike since Barack Obama entered the White House, showing that his administration intends to continue the policy of firing missiles into Pakistani territory despite loud opposition in Pakistan.

The attacks, which have increased in frequency since September, have concentrated on Waziristan, the southern tip of the tribal borderland, which is a stronghold for Taliban and al-Qaida. There have been no known previous hits in Kurram and the decision to go after militants there is a sign of how deeply entrenched they are across the tribal region. Unlike most of the tribal region, in Kurram the principal cause of unrest is a sectarian conflict between Shia and Sunni clans.

Interesting bits and pieces
A US-based Iranian doctor working to discover an antitoxin therapy of biological weapons has purportedly died a "suspicious death."

One of the leading bioweapon researchers and a regular keynote speaker at international conferences, Dr. Nasser Talebzadeh Ordoubadi died on Saturday in what his doctors described as a "suspicious death".

Media reports have linked Dr. Talebzadeh Ordoubadi's mysterious death to his notable accomplishments in discovering an antitoxin treatment for bioweapons.

The use of biological and chemical weapons -- which is considered illegal under The Hague convention on rules of warfare -- is feared by many experts more than the use of nuclear weapons.

Biological weapons can kill, incapacitate, or seriously impede an individual as well as entire cities or places where they are used.

While there are antibiotic and penicillin treatments for different types of bioweapons, some of them such as Botulism and Ricin still remain without any antitoxin or vaccine to cure those subjected to the poisonous weapon.

According to Tabnak, Dr. Talebzadeh's achievements in finding a cure to bioweapons had made him the target of various accusations from the government of the United States -- one of the possessors of biological weapons -- since 1992.

In 2000, the Iranian doctor was sentenced to 35 months in prison on charges of health care and mail fraud under the new HIPAA regulations (Health Insurance Portability and Accountability Act of 1996).

His jail sentence, which prompted him to change his name to Noah McKay, came after years of government attempts to level various accusations against him.

The charges, which were never substantiated, proven or confirmed, included "money laundering, funding Middle Eastern terrorists, and connections to the Russian mafia in Seattle".

While serving in the federal prison camp in Sheridan, Oregon, he told one of his lawyers "my life is in danger and I should change my name and request transfer to another prison."

Caught in the shock and awe of 9/11, we allowed our military to be transformed into a neocon imperial police force. Now, approaching our eighth year in Afghanistan and sixth year in Iraq, what exactly is that force defending? Before President Obama acts to double the number of American boots-on-the-ground in Afghanistan -- before even more of our troops are sucked deeper into yet another quagmire -- shouldn't we ask this question with renewed urgency? Shouldn't we wonder just why, despite all the reverent words about "our troops," we really seem to care so little about sending them back into the wilderness again and again?

Stretched thin in Afghanistan and Iraq, the American military will begin recruiting skilled immigrants who are living in this country with temporary visas, offering them the chance to become United States citizens in as little as six months.

The specter of social unrest was raised at the U.S. Army War College in November in a monograph [click on Policypointers' pdf link to see the report] titled "Known Unknowns: Unconventional ‘Strategic Shocks' in Defense Strategy Development." The military must be prepared, the document warned, for a "violent, strategic dislocation inside the United States," which could be provoked by "unforeseen economic collapse," "purposeful domestic resistance," "pervasive public health emergencies" or "loss of functioning political and legal order." The "widespread civil violence," the document said, "would force the defense establishment to reorient priorities in extremis to defend basic domestic order and human security."

"An American government and defense establishment lulled into complacency by a long-secure domestic order would be forced to rapidly divest some or most external security commitments in order to address rapidly expanding human insecurity at home," it went on.

"Under the most extreme circumstances, this might include use of military force against hostile groups inside the United States. Further, DoD [the Department of Defense] would be, by necessity, an essential enabling hub for the continuity of political authority in a multi-state or nationwide civil conflict or disturbance," the document read.

In plain English, something bureaucrats and the military seem incapable of employing, this translates into the imposition of martial law and a de facto government being run out of the Department of Defense. They are considering it. So should you.

Adm. Blair warned the Senate that "roughly a quarter of the countries in the world have already experienced low-level instability such as government changes because of the current slowdown." He noted that the "bulk of anti-state demonstrations" internationally have been seen in Europe and the former Soviet Union, but this did not mean they could not spread to the United States. He told the senators that the collapse of the global financial system is "likely to produce a wave of economic crises in emerging market nations over the next year." He added that "much of Latin America, former Soviet Union states and sub-Saharan Africa lack sufficient cash reserves, access to international aid or credit, or other coping mechanism."

"When those growth rates go down, my gut tells me that there are going to be problems coming out of that, and we're looking for that," he said. He referred to "statistical modeling" showing that "economic crises increase the risk of regime-threatening instability if they persist over a one to two year period."

Blair articulated the newest narrative of fear. As the economic unraveling accelerates we will be told it is not the bearded Islamic extremists, although those in power will drag them out of the Halloween closet when they need to give us an exotic shock, but instead the domestic riffraff, environmentalists, anarchists, unions and enraged members of our dispossessed working class who threaten us. Crime, as it always does in times of turmoil, will grow. Those who oppose the iron fist of the state security apparatus will be lumped together in slick, corporate news reports with the growing criminal underclass.

Link to PDF article mentioned...

Unrest rocks the streets of China, France, Russia, Mexico, and elsewhere. And it is spreading...

This Is Your University, on Drugs

In 2002, an independent study on hormone replacement therapy was halted, because the drugs were strongly linked to an “increased risk for breast cancer, heart disease, stroke and blood clots” in women. The same year, the University of Wisconsin-Madison began offering an online course, “funded entirely by a $12 million grant from Wyeth Pharmaceuticals,” that “promoted hormone therapy, touted its benefits and downplayed its risks.” Wyeth makes two hormone therapy drugs, Prempro and Premarin. “The course material was developed largely by DesignWrite, a new Jersey-based firm paid by Wyeth,” and offered under the name of the “Council on Hormone Education,” whose members are Wyeth, DesignWrite and the UW. “Thirty-four of the 40 council member physicians have financial ties to Wyeth,” reports the Journal Sentinel. Medical professionals without ties to Wyeth called the course materials “not good science” and “pure, undisguised marketing.” The UW also offers “a smoking cessation course, funded by Pfizer, the maker of a smoking cessation drug; a program on restless legs syndrome, funded by Boehringer Ingelheim, the maker of a drug that treats the condition; and a course on premenstrual dysphoric disorder, funded by Bayer HealthCare Pharmaceuticals.” Recently, Senator Charles Grassley asked the UW about surgeon and researcher Thomas Zdeblick, who received $19 million over five years from the spinal device company Medtronic. University disclosures simply required Zdeblick to indicate he had received “$20,000 or more” from the company each year.

February 15, 2009 "Financial Sense" -- -The gathering of the world’s economic elites in Davos, Switzerland is a reflection of the reigning power dynamic of the modern world. Officially titled, the World Economic Forum, Davos is sponsored by the world’s most powerful and wealthy corporations and presents itself as a “not-for-profit” entity.

However, if you believe the annual gathering in Davos is not-for-profit, you probably also believe that JFK died of natural causes while sightseeing in Dallas. Those who attend Davos—the Davo’tees of Mammon—are the winners in the game of capitalism, a game based on debt controlled by bankers through their issuance of credit.

Investment bankers by virtue of their privileged position at the spigots of credit haveover the years garnered for themselves a disproportionate slice of the world’s wealth. The best description of their wealth is from a banker himself, Sir Josiah Stamp, at the time in1927 the 2nd richest man in England and former head of The Bank of England:

Banking was conceived in iniquity and was born in sin. The bankers own the earth. Take it away from them, but leave them the power to create money, and with the flick of the pen they will create enough deposits to buy it back again. However, take it away from them, and all the great fortunes like mine will disappear and they ought to disappear, for this would be a happier and better world to live in. But, if you wish to remain the slaves of bankers and pay the cost of your own slavery, let them continue to create money.

The fact that in 2008 bankers became victims in the game they created has profound implications for capitalism itself. Capitalism, which began in 1694 with the issuance of debt-based money from The Bank of England, has now over three hundred years later reached its last and final stage.

Capitalism is not ending because those enslaved by bankers revolted. Capitalism is ending because the bankers’ insatiable greed destroyed the mechanism by which bankers indebt others. The sad truth is that those enslaved by debt still wish to remain the slaves of bankers and pay the cost of [their] own slavery [and] let them [the bankers] continue to create money.

Although debtors fervently hope the bankers’ system of debt will continue, they will not have a say in the matter. Neither will the bankers. Davos will never again be the same.

February 16, 2009 "The Independent " -- In what could turn out to be the greatest fraud in US history, American authorities have started to investigate the alleged role of senior military officers in the misuse of $125bn (£88bn) in a US -directed effort to reconstruct Iraq after the fall of Saddam Hussein.

The exact sum missing may never be clear, but a report by the US Special Inspector General for Iraq Reconstruction (SIGIR) suggests it may exceed $50bn, making it an even bigger theft than Bernard Madoff's notorious Ponzi scheme.

"I believe the real looting of Iraq after the invasion was by US officials and contractors, and not by people from the slums of Baghdad," said one US businessman active in Iraq since 2003.

In one case, auditors working for SIGIR discovered that $57.8m was sent in "pallet upon pallet of hundred-dollar bills" to the US comptroller for south-central Iraq, Robert J Stein Jr, who had himself photographed standing with the mound of money. He is among the few US officials who were in Iraq to be convicted of fraud and money-laundering.

Despite the vast sums expended on rebuilding by the US since 2003, there have been no cranes visible on the Baghdad skyline except those at work building a new US embassy and others rusting beside a half-built giant mosque that Saddam was constructing when he was overthrown. One of the few visible signs of government work on Baghdad's infrastructure is a tireless attention to planting palm trees and flowers in the centre strip between main roads. Those are then dug up and replanted a few months later.

Iraqi leaders are convinced that the theft or waste of huge sums of US and Iraqi government money could have happened only if senior US officials were themselves involved in the corruption. In 2004-05, the entire Iraq military procurement budget of $1.3bn was siphoned off from the Iraqi Defence Ministry in return for 28-year-old Soviet helicopters too obsolete to fly and armoured cars easily penetrated by rifle bullets. Iraqi officials were blamed for the theft, but US military officials were largely in control of the Defence Ministry at the time and must have been either highly negligent or participants in the fraud.

In Mayor Michael Bloomberg’s upcoming bid for a third term, a third term which, in principal, had previously been nixed twice by New York City voters, Bloomberg decided not long before our last election date to reverse that double mandate of the people, and have his lackey City Council, not the people, toss out the two-term limit.

If that wasn’t bad enough, the New York Times in one of its best-researched, hardest-hitting, fact-finding articles reports Bloomberg Campaigners Taste the High Life. In other words, Bloomberg’s buying his victory with Wall Street level perks. Perhaps we should call him, Boss Bloomberg, as in the Boss Tweed Tammany Hall era of excess.

Do I exaggerate? Well, let’s see. To quote Michael Barbaro’s article: “Aides to Mayor Michael R. Bloomberg hopscotch around the world on two Falcon 900 private jets, where wine and sushi are served. They stay at the Four Seasons in London (about $400 a night), the Intercontinental in Paris ($320) and the King David in Jerusalem ($345). Room service? The mayor pays for it all. Even the laundry. And invitations to dinner parties at Mr. Bloomberg’s Upper East Side town house rarely disappoint: Kofi Annan and Nora Ephron are regulars.” Well, excuse me for livin.’

Barbaro says, “The billionaire mayor is turning heads these days with the hiring of high-profile operatives for his re-election campaign, including several who had previously worked for his rivals in the race. And as he seeks to entice talent to come aboard the campaign, and possibly to a third term in City Hall, Mr. Bloomberg wields a powerful tool: the perks of inhabiting his world.” Need more?

Let’s move for a minute from Boss Bloomberg’s lavish victory launch to another aspect of his business, Bloomberg L.P., duly noted in a Village Voice story: What Cooked the World’s Economy? by attorney James Lieber.

Among the many reasons for the economy’s roasting, Lieber points a finger towards the “OTC [over the counter] swaps trade . . .” He writes that “the Bloomberg L.P.’s computer terminals are the road, bridges, and tunnels for ‘real-time’ transactions. The L.P.’s promotional materials declare: ‘You’re either in front of a Bloomberg or behind it.’” Well, fancy that.

The promotional piece continues, “In terms of electronic trading of certain securities, including credit default swaps: ‘Access to a dealer’s inventory is based upon client relationships with Bloomberg as the only conduit.’ In short, the L.P. looks like a dominant player, a monopoly. If it has a true competitor, I [Leiber] can’t find it. But then, this is a very dark market.” Ah, yes.

Leiber goes on to say, “Did Bloomberg L.P. do anything illegal? Absolutely not. We prosecute hit-and-run drivers, not roads. But there are many questions -- about the size of the derivatives market, the names of the counterparties, the amount of replication of derivatives, the role of securities ratings in Bloomberg calculations (in other words, could puffing up be detected and potentially stop a swap?), and how the OTC industry should be reported and regulated in order to prevent future catastrophes. Bloomberg is a privately held company -- to the chagrin of would-be investors -- and quite private about its business, so this information probably won’t surface without subpoenas.” Whatever happened to corporate transparency?

So, another Master of the Universe in mayor’s clothing, plays via Bloomberg L.P. with derivatives, the lethal credit default swaps trade.

Dust of last Tuesday’s voting battle settled down and the battle of forming the next Israeli government has just begun. With Benjamin Netanyahu poised for premiership and Avigdor Lieberman, leader of a “racist and fascist” party (as condemned by Talia Sasson of the Merez party) very well positioned to be the king or queen maker of the next ruling coalition, the Palestinian people and the whole region will have to brace next month for an Israeli government of war.

First on the agenda of the new government will be the approval of 2.4 billion shekels ordered last Monday by outgoing Prime Minister Ehud Olmert to re-equip the army after the war on Gaza as well as an extra military funding of one billion shekels.

Ironically, the Israelis went to early elections as a way out of a government crisis, but the narrowly won victory of Kadima and the inconclusive results of Tuesday’s elections have put Israel in disarray and plunged it into a political limbo, with both Tzipi Livni of Kadima and Netanyahu of Likud claiming victory, while a kingmaker role is awarded to Avigdor Lieberman and his anti-Arab platform. The tie set the stage for weeks of agonizing coalition negotiations. But what is more important, in view of historic experience, is that whenever Israel was in an internal crisis it used to resort to war as a way to unify its ranks, at least for awhile. The present crisis is no exception and it doesn’t bode well for the Palestinians and the region.

The close ties between Rep. John Murtha and a Washington lobbying firm raided by the FBI have put the powerful Pennsylvania Democrat under greater scrutiny. The lobbyists at PMA Group have been Murtha's fifth most generous campaign donor over time, but he is just one of 284 members of the 111th Congress who have collected money from the firm, which specializes in securing federal earmarks for its clients. In total, PMA Group's employees and its political action committee have given current members of Congress $3.4 million since 1989, with 79 percent of that going to Democrats.

In a blow to the struggling auto industry that has financially supported Rep. John Dingell (D-Mich.) for years, the House Energy & Commerce Committee chairman was ousted this year, replaced by Waxman, who hasn't received a penny from the industry. Waxman has vowed to re-direct the committee to focus on more stringent regulations that curb global warming and on health care reform. Waxman has been in Congress since 1974.

Money Summary: Waxman has raised a total of $5.1 million since 1989 and has spent $4.5 million of that on his campaigns. During the 2008 election cycle, he spent 75 percent of the $989,900 he raised, despite running unopposed. He continues to receive major support from his own constituents, collecting more from the Los Angeles/Long Beach metro area since 1989 than any other metro area, at $412,650. D.C. is next at $320,800, while New York comes in a far third at $33,500. About 62 percent of the total Waxman has raised since 1989 has come from the political action committees of unions, corporations and other organizations, rather than from individuals.

Campaign Donors: The new agenda that Waxman has set for the Energy & Commerce Committee is reflected in the industries that have funded his campaigns. The congressman has said the committee will send comprehensive global warming legislation to the House floor by Memorial Day. Unlike Dingell, who acted consistently in the best interests of his state's largest industry (and one of his biggest contributors), carmakers, Waxman's policy is more in line with environmentalists, who have given him at least $13,400 since 1989--not much money, but they're an influential segment of his Southern California constituency. The Democrat supports a cap-and-trade program to limit harmful emissions of carbon dioxide, which many business representatives fear will be overly burdensome for companies and will force some abroad. Waxman has not received any money from business associations, at least not since 1989 when CRP started tracking this information.

Waxman's most generous donors are health professionals, who have given him $656,700. The health sector overall has contributed $1.3 million to his campaigns and some of his largest contributors over time include the American Hospital Association ($71,000), American Medical Association ($65,000) and the American Society of Anesthesiologists ($52,500). Labor unions, many of which push for better health care for workers, have helped prop up Waxman's campaigns, giving him $902,700 over time. Waxman has said that he's committed to passing a major health care bill this year to extend health insurance coverage to Americans who don't currently have it. He has also promised more regulation and oversight of the insurance industry, which has given him $113,300 since 1989. Recently, he has been a vocal supporter of the provisions in this year's stimulus bill that temporarily subsidize health insurance coverage for the unemployed.

The Federal Election Commission (FEC) notified Judicial Watch this week that it has "closed the file
" on our complaint against Senator Barack Obama for allegedly accepting a below market rate mortgage loan in 2005 not available to the general consumer. In its factual and legal analysis, however, the FEC does confirm that Obama obtained a discounted loan but said no laws were violated.

So, to sum: Yes Barack Obama did receive a special below-market loan the rest of us couldn't get. And a big "no" to the idea that he ought to be held accountable for it. Upset? So are we.

In covering the drug war along the U.S./Mexican border over the past five years, I’ve discovered that there are two kinds of stories: the ones that only make sense on the surface and those that are layered with the complexity of reality.

The former, unfortunately, often serve as the whips wielded by interest groups seeking to cower politicians into promoting measures that further militarize the border. The latter, however, rarely get played beyond a single news cycle, if they make the news cycle at all.

But it is those complex stories, the ones that don’t make for easy talking points, that are always closer to the truth of the drug war — which like the border itself exists in a zone where the line between what is Mexico and what is the United States evaporates like a mirage as you move closer to it.

MEXICO CITY (Reuters) - The former head of Mexico's special organized crime bureau has been charged with selling information to one of the country's most powerful drug cartels, the attorney general's office said on Sunday.

Noe Ramirez, who stepped down as chief of the SIEDO federal investigation unit in July last year, was detained in November for allegedly receiving $450,000 for passing secrets to the Sinaloa cartel, headed by Mexico's top drug fugitive Joaquin "Shorty" Guzman.

Mexico's police force is riddled with corruption and the arrest of the country's top drug prosecutor has been the biggest catch so far in a sweeping probe to smoke out cops and government officials working for drug smugglers.

Two other anti-drug agents were jailed in 2008 for taking bribes of up to $500,000 from the Beltran Leyva gang, which recently split from the northern Pacific Coast Sinaloa cartel.

President Felipe Calderon's two-year-old crackdown on drug cartels has sparked turf wars between rival gangs that led to the deaths of around 6,000 people last year.

Blackwater has probably been used for U.S. Government narcotics trafficking operations before, but it looks like that is going to be a major component of their business going forward.

Note the phrase “aviation support” in the story below. Aviation support is synonymous with narcotics trafficking. If you read, Compromised: Clinton, Bush and the CIA, this will all make much more sense.

Also note the mention of West Africa as a venue for increased Blackwater/Xe activity.

ACCRA, Ghana — West Africa is an unlikely center for the international cocaine trade. It is not a producer of the drug nor is it a consumer, as the vast majority of its people are very poor.

Yet a startling 50 tons of cocaine is transported through West Africa each year, according to the latest United Nations estimates. The value of this illicit trade dwarfs entire economies and has the potential to corrupt the region’s fragile states, which are just pulling out of decades of bitter civil wars.

In the past Africa has been a treasure trove looted by covetous colonialists, voracious rebels and kleptocratic rulers — over the last 300 years think slaves, ivory, gold, diamonds, tin and coltan. Now it is a transit point and storeroom for the cocaine trade.

BY JACK FOLEY • The Salinas Californian • February 6, 2009

Police opened fire on an unarmed couple during a routine traffic stop late Tuesday night because one officer "thought he was shot," a high-ranking Salinas Police Department official said Thursday.

"He saw what he perceived as a threat and thought he was shot, and based on that both officers discharged their firearms," said Dino Bardoni, commander of investigations.

No one was hurt in the 11:24 p.m. incident at North Sanborn Road and Freedom Parkway, but the couple's SUV was riddled with bullet holes and its rear window was shattered.

Terrified onlookers were heard screaming when the mysterious "fireballs" were filmed mid-morning on Sunday. They were captured by television cameras recording a marathon in the state capital Austin. No one has explained where the debris has come from, amid numerous reports of sightings to the Federal Aviation Administration.


It feels like Armageddon.

Part of Australia becomes a raging inferno, killing more than 180 people and perhaps millions of animals, and elsewhere Down Under, floods have forced people from their homes and into watery streets they now share with crocodiles.

Costa Rica is still reeling from an earthquake and subsequent landslides last month, which killed more than two dozen people and left hundreds homeless.

In parts of the continental United States, ice storms and tornadoes in the last two weeks have caused death and destruction.

Meanwhile in Alaska, a volcano near the Cook Inlet appears ready to blow its top and threatens to rain smoke and ash over much of the Pacific Northwest.

All of this -- plus a good deal more, I'm sure -- at a time when the economy, thanks to years of corporate greed and consumer naivete, has tumbled into an abyss so deep and gooey it might not climb out for years.

Reaction: What is the cause of all this? Can anyone age 50 or younger recall a more depressing or frightening time on this planet? Are all of these disasters some karmic response to man's blight-like existence on earth, or pure coincidence?


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