2/2/09 News Radar

by JASON | 8:06 AM in |

MEXICO CITY - Mexico City shut down a main water pipeline under a new conservation program, cutting service to more than 2 million residents Sunday after some reservoirs dropped to their lowest levels in 16 years.

The Mexico City government and the National Water Commission will interrupt service for three days every month until May, when the rainy season begins.

Mexico City's government says the plan will affect everyone from those living in million-dollar mansions to cement hovels. Another 13 cities in the metro area of 20 million also will see service reduced, the National Water Commission said.

Reporting from Sacramento -- There doesn't appear to be a lot of philosophical or practical daylight between Joseph A. Dear, the new chief investment officer of the country's largest public pension fund, and the labor-oriented board that hired him.

And he doesn't see much daylight in gloomy financial markets, either. Dear concedes that he faces both "a challenge and an opportunity" in helping the giant pension fund stabilize its value and try to recoup a stunning loss of $62.4 billion, or 26%, since July 1, as financial markets worldwide plummeted.

Fixed pensions "are a major tool for securing economic security in retirement," he said. "It's of interest to everyone in the country and the state of California."

But from the viewpoint of non-government workers, the risk is that CalPERS' investments won't be sufficient to cover promised benefits -- leaving taxpayers to pony up, at a time when their own retirement savings have dwindled.

CalPERS already has warned state and local government units that they may have to increase contributions to the fund to preserve promised benefits if the portfolio doesn't recover.

The Southern California real estate crash has finally reached the high-end areas of the Westside. Home prices in Beverly Hills, Santa Monica and Malibu -- which continued to soar well into 2008 -- finally tanked at the end of the year, losing between 26% and 30% of their value in just a few months, the latest data show. It's still a lot of money for a basic one-story house. But in Conn's wealthy neighborhood, few residents thought anything would drop below $2 million.

"I didn't believe it until the end," Conn said.

But it's true.

SAN FRANCISCO (Reuters) – Like thousands of other Californians, Marcus Sanders would like a tax refund to help his family as recession tightens its grip on the economy and while he looks for full-time work.

When California's state government will release its refunds, however, is uncertain.

The payments were due to start on Monday but State Controller John Chiang has said he will hold back the refunds for at least 30 days because the state must close a $15 billion shortfall in its current budget and needs its dwindling cash for more pressing payments, including debt service.

California's unemployment rate jumped to 9.3 percent in December, well above its 5.9 percent a year earlier and the month's national average of 7.2 percent. Economists predict the state's rate will soon cross into double-digits, compounding its government's financial troubles, rooted in worse a than expected fall in revenues.

One of the state government's most pressing troubles is that its cash account will be tapped out within weeks unless Gov. Arnold Schwarzenegger and lawmakers close the state's current budget shortfall -- then they must close the next fiscal year's budget gap, projected at $25 billion.

California's financial crisis has unnerved Wall Street -- it has warned of possible downgrades to the state's already low general obligation bond rating -- and is adding to a gloomy outlook in storefronts, government offices, labor halls and corporate boardrooms across the state.

"Everybody is concerned about this. The state is on the edge of going into the abyss," said Bill Hauck, president of the California Business Roundtable, which represents the state's largest employers.

More than 20m rural migrant workers in China have lost their jobs and returned home as a result of the global economic crisis according to government figures, raising the spectre of widespread unrest in the authoritarian country.

By the start of the Chinese New Year Spring Festival on 25 January, 15.3 per cent of China’s 130m migrant workers had lost their jobs and returned from manufacturing centres in the south and east of the country to their home villages or towns, according to Chen Xiwen, Director of the Office of Central Rural Work Leading Group, who was quoting a survey from the Ministry of Agriculture.

Makes the US numbers look very small in comparison.

TOKYO (AP) — Auto sales in Japan sank to a 37-year low in January as worried consumers held off on big buys, an industry group said Monday.

Some 174,281 vehicles were sold for the month, a plunge of 27.9 percent from a year earlier and the biggest fall on record for January sales, the Japan Automobile Dealers Association said.

Auto sales had been stagnant for years as younger Japanese lose interest in car ownership. But falling demand has worsened since last year's U.S. financial crisis.

The drop was the worst for January since the association began to keep such records in 1968, and the vehicles tally was the fewest since January 1972, when about 168,000 vehicles were sold, it said.

WASHINGTON (AP) — Americans are hunkering down and saving more. For a recession-battered economy, it couldn't be happening at a worse time.

Economists call it the "paradox of thrift." What's good for individuals — spending less, saving more — is bad for the economy when everyone does it.

On Friday, the government reported Americans' savings rate, as a percentage of after-tax incomes, rose to 2.9 percent in the last three months of 2008. That's up sharply from 1.2 percent in the third quarter and less than 1 percent a year ago.

Feb. 2 (Bloomberg) -- Consumer spending in the U.S. fell in December for a record sixth consecutive month, capping the worst year since 1961, a slump that is likely to persist as companies slash payrolls.

The 1 percent drop in purchases was larger than forecast and followed a 0.8 percent decrease in November, the Commerce Department said today in Washington. The Federal Reserve’s preferred measure of inflation was little changed for a third month.

DEBKAfile's counter-terror sources report that last week the Lebanese Hizballah put together a large number of terrorist teams and deployed them in six countries for attacks on Israeli targets.

This intelligence prompted the counter-terror bureau in Jerusalem to publish Sunday, Feb. 1, an exceptionally high alert for traveling Israelis to be on the lookout for terrorist attacks including abductions. Security is also high in Israel and at embassies and Jewish institutions worldwide.

The Shiite terrorists have sworn to avenge the death of their military chief Imad Mughniyeh whom they accuse Israel of killing in Damascus a year ago. They also hope to disrupt Israel's general election on Feb. 10. Hizballah's secretary general Hassan Nasrallah is recently quoted as say that the Israeli poll could be cancelled by the assassination of one or more senior officials – and not only overseas.

Israeli officials were advised to be especially vigilant, but all nationals are warned to take precautions. The danger, the counter-terror bureau warned, is concrete, immediate and serious.

According to our sources, most of the terrorist teams were sent out from places outside Lebanon, drawn from the covert spy and terror cells Hizballah maintains in other parts of the Middle East as well as Africa and Europe. A large number were deployed in the hope that if most of them miss, at last one will achieve a spectacular hit.

Last week, Nasrallah told a news conference in Beirut that revenge for Mughniyeh's martyrdom was not enough. He pledged never-ending retaliation "that would never be put behind Hizballah, but always be ahead."

U.S. partner, not Hamas, firing rockets into Israel
While terrorists promise cease-fire, American 'allies' provoke violence
HERZLIYA, Israel – With Hamas signaling it is willing to enter a cease-fire with Israel, it was the U.S.-backed Fatah party of Palestinian Authority President Mahmoud Abbas whose so-called military wing took responsibility for a barrage of rockets and mortars fired from the Gaza Strip today.

Fatah's Al Aqsa Martyrs Brigades called WND and also released an official pamphlet to take credit for firing at least five rockets and four mortars today, lightly wounding two Israeli soldiers and one civilian. Also taking responsibility was a cell claiming it was working on behalf of the Iranian-backed, Hamas-allied Islamic Jihad terrorist organization.

The Obama administration has quietly initiated previously undisclosed back-channel negotiations with both Iran and Syria, according to an Agence France-Presse report.

Even before winning the November 4 election, Obama initiated "two track" discussions with Iran and Syria, using top-level experts to begin talks, according to Jeffrey Boutwell, the executive director for the U.S. branch of the Pugwash Group, an international organization of scientists who champion international nuclear disarmament.

Former Defense Secretary William Perry, who served in Obama's election campaign, participated in some of these meetings covering "a wide range of issues that separate Iran from the West: not only their nuclear program but the Middle East peace process," Boutwell told AFP.

"We had very, very senior figures from both the Iranian policy establishment and from the United States," Boutwell said, "people who have very close, good access to the top leaders in both countries."

In an interview broadcast Monday, Obama said the United States would offer arch-foe Iran an extended hand of diplomacy if the Islamic Republic's leaders "unclenched their fist."

Meanwhile, his secretary of state Hillary Clinton warned that the Israeli-Syrian track of the Middle East peace negotiations took a back seat to the Israeli-Palestinian track, especially because of the recent war in Gaza.

The Obama administration asked the military's Joint Chiefs of Staff to cut the Pentagon budget for fiscal year 2010 by $55 billion, more than 10 percent of last year's $512 billion defense budget.

Rep. Alcee L. Hastings, D-Fla., has introduced to the House of Representatives a new bill, H.R. 645, calling for the secretary of homeland security to establish no fewer than six national emergency centers for corralling civilians on military installations.

The proposed bill, which has received little mainstream media attention, appears designed to create the type of detention center that those concerned about use of the military in domestic affairs fear could be used as concentration camps for political dissidents, such as occurred in Nazi Germany.

The bill also appears to expand the president's emergency power, much as the executive order signed by President Bush on May 9, 2007, that, as WND reported, gave the president the authority to declare an emergency and take over the direction of all federal, state, local, territorial and tribal governments without even consulting Congress.

As WND also reported, DHS has awarded a $385 million contract to Houston-based KBR, Halliburton's former engineering and construction subsidiary, to build temporary detention centers on an "as-needed" basis in national emergency situations.

A Teenage pupil has been withdrawn from her school after CCTV cameras were installed in the pupils' toilets.

Anthony White, from Llandysul said the cameras at Ysgol Dyffryn Teifi in Ceredigion were an "outrageous invasion" of his daughter Jade's privacy. Jade, 14, said: "I am not going back while the cameras are there. It must be against the law to have them there."

Ceredigion Council said it had installed the cameras after incidents of "major concern".

Spokeswoman Anwen Francis said: "Any such viewing of CCTV footage is undertaken by senior members of staff having Criminal Records Bureau (CRB) clearance."

Jan. 31 (Bloomberg) -- Banks in Florida, Maryland and Utah were closed yesterday as regulators wrapped up the busiest month for failures since the housing slump began in 2006.

Ocala National Bank in Florida and Suburban Federal Savings Bank of Crofton, Maryland, were shut by federal regulators, according to statements sent by the Federal Deposit Insurance Corp. MagnetBank of Salt Lake City was seized by the Utah Department of Financial Institutions. The banks had total assets of $876.4 million and deposits of $790 million.

Six banks have failed this month as tumbling home prices and a 16-year high in unemployment boost foreclosures. The FDIC classified 171 banks as “problem” in the third quarter, a 46 percent jump from the previous period amid the worst housing crisis since the Great Depression.

The president of the peanut company linked to a nationwide salmonella outbreak serves on an industry advisory board that helps the U.S. Department of Agriculture set quality standards for peanuts.

Stewart Parnell, president of Peanut Corp. of America, based in Lynchburg, Va., was first appointed to the USDA’s Peanut Standards Board in July 2005 and was reappointed in October for a second term that runs until June 2011, according to the USDA.

France paralysed by a wave of strike action, the boulevards of Paris resembling a debris-strewn battlefield. The Hungarian currency sinks to its lowest level ever against the euro, as the unemployment figure rises. Greek farmers block the road into Bulgaria in protest at low prices for their produce. New figures from the biggest bank in the Baltic show that the three post-Soviet states there face the biggest recessions in Europe.

It's a snapshot of a single day – yesterday – in a Europe sinking into the bleakest of times. But while the outlook may be dark in the big wealthy democracies of western Europe, it is in the young, poor, vulnerable states of central and eastern Europe that the trauma of crash, slump and meltdown looks graver.

Exactly 20 years ago, in serial revolutionary rejoicing, they ditched communism to put their faith in a capitalism now in crisis and by which they feel betrayed. The result has been the biggest protests across the former communist bloc since the days of people power.

Europe's time of troubles is gathering depth and scale. Governments are trembling. Revolt is in the air.

Mr. Obama had promised change. Few have detected just how radical that change has already been in the foreign-policy arena.

Writing for the Guardian newspaper, Martin Kettle declares, “Never mind the vaunted first 100 days. The first 10 days alone have already seen an opening to the Muslim world, the abandonment of military tribunals at Guantánamo Bay, the dispatch of a senior Middle East envoy, the unveiling of a new green agenda, the removal of the abortion bar on foreign aid programs, an eye-wateringly large fiscal stimulus package, major moves to increase government transparency, and now, as the Guardian reported yesterday, a decisive change of approach towards revolutionary Iran” (January 30).

ATHENS: Two protesters were injured Monday when the Greek riot police clashed with hundreds of farmers from the southern island of Crete who sailed to the Greek port of Pireaus and tried to drive tractors and farm vehicles to Athens to press demands for government financial aid.

The clashes highlighted growing social unrest in Greece. The center-right government of Prime Minister Kostas Karamanlis is struggling to restore its credibility after student riots in December. The violence in Greece on Monday follows protests in others parts Europe - most recently in France and Britain - as the global economic crisis bites into jobs and incomes.

In the clashes on Monday, Cretan farmers driving some 300 tractors, trucks and other farming vehicles tried to ram a police van that was blocking the port gates in Piraeus to prevent the farmers from driving to Athens.

Live television broadcasts showed at least two people injured in the scuffle, including a female lawmaker who was knocked down by one of the tractors. Two protesters were arrested for pelting police with rocks, potatoes and tomatoes.

ACCORDING to The New York Times, the United States cash welfare system remains steady, despite the worst economic crisis in years.

Nationally, the number of people receiving cash assistance has stayed at or near lowest records in more than 40 years.

Based on an analysis of state data collected by The New York Times, the information questions how well the US welfare system is coping.

Welfare rolls - lists of those registered to receive welfare payments in that state - show that Michigan cut its rolls by 13 per cent even though its unemployment rate in October was more than 9 per cent.

Rhode Island, also with an unemployment rate of 9 per cent, had the US' largest welfare list reduction; down by 17 per cent.

Out of 12 states with rapidly growing unemployment, eight reduced or held steady the number of people on their welfare rolls.

However, critics argue that the years of cutting the rolls has left a programme that does little to assist people in need.

The programme was designed around fixed federal finance, with the states expected to pay for increased costs if lists blow out.

Another option, the food-stamp programme, is however paid almost entirely by the federal government and has expanded in every state. Across the nation it grew by 12 per cent last year.

Kentucky Governor Steve Beshear made the unprecedented move of activating the entire Kentucky National Guard to help with cleanup and relief efforts after a snow and ice storm caused an estimated 23 deaths. On Saturday, Gov. Beshear directed Kentucky's Adjutant General, Maj. Gen. Edward W. Tonini to call up all Kentucky Army National Guard units, along with selected portions of the Kentucky Air National Guard.

"This is the largest state call up of Kentucky National Guard forces in the history of the Commonwealth," said Gov. Beshear in a statement on Jan. 31. "It represents the strongest possible effort to relieve human suffering and ensure the safety and well-being of our citizens."

BEIJING—Communist China, wary of growing unrest and facing "multiple security threats", called for unity in its armed forces on Sunday and absolute obedience to the Communist Party.

The call came at a Central Military Commission meeting presided over by Communist leader and commission chairman, Hu Jintao, just weeks after the Communist-ruled country warned of the risk of separatist groups at home.

NEW YORK—The U.S. economy shrank at the fastest rate since Ronald Reagan's presidency, Japan's business outlook worsened, and European inflation tumbled, adding pressure on policymakers to quickly stimulate growth.

U.S. gross domestic product fell at an annualized 3.8 percent in the fourth quarter, as consumers spent less for a second straight three-month period.

TOKYO—Japanese industrial production fell a record 9.6 percent in December, while core annual inflation almost evaporated, reinforcing expectations of a record economic contraction as the global financial crisis worsens.

Unemployment hit a three-year high, household spending dipped, and manufacturers saw no quick turnaround in the outlook for industry—the main driver of the world's second-biggest economy—as inventories hit record highs despite factory closures and lay-offs.

A very large delivery of US weaponry to Israel consisting of 3,000 tons of "ammunition" is scheduled to sail to Israel. The size and nature of the shipments are described as "unusual":

"Shipping 3,000-odd tons of ammunition in one go is a lot," one broker said, on condition of anonymity.

"This (kind of request) is pretty rare and we haven't seen much of it quoted in the market over the years," he added.

"Shipping brokers in London who have specialized in moving arms for the British and U.S. military in the past said such ship charters to Israel were rare. (Reuters, Jan 10, 2009)

Idiocy is usually described as "endlessly repeating the same process, hoping for a different result". Lawrence Summers, Timothy Geithner, Nancy Pelosi, Joe Biden et al are straining at the leash to get the Bailout Ball rolling once again. The stabilization of the financial sector, as elusive as it has been so far, has become the Holy Grail of Economic salvation. That makes $8.5 Trillion worth of trying and $0 of result. The Knights of the Oval Table are gathered to plan their mission as their beleaguered subjects are trying to batter down the castle gates. It's no small wonder that Geithner wants to get the money out the door as soon as the end of this week.

The most recent report from the Comptroller of the Currency seems to have gone unnoticed in Washington and the press. If banks are not lending because of increased capital requirements in the face of Credit Default Swaps, other derivatives and loan defaults then the report goes a long way in describing exactly why.

The assets comprise largely of Real estate, residential mortgage, student, car and credit card loans. With the rise in defaulting mortgages, delinquent credit card and other debt the problem can only get worse. To recapitalize the banks to the point where exposure is low enough to encourage lending would take trillions and that's before any more fallout from the collapsing economy. Lending also requires creditworthy borrowers, the number of which is in a nosedive. The $165 Trillion in notional derivatives and the associated credit risk related to $15 Trillion in Credit Default Swaps illustrated below is the poison apple that the taxpayer has been forced to bite into.

When the "credit crunch" began and Washington began the rush to solve the problem with taxpayer cash, no accounting of this derivative nightmare was ever brought to bear. In all the deliberations and press releases there was not a single mention of the fact that the primary cause of the bank collapse was due to these "instruments of mass destruction". It was widely discussed in the blogosphere but, like the real reasons for invading Iraq, never made it in to the mainstream media. As with Iraq, one would have to assume that the reason was to obfuscate the facts and cajole a shocked public in to accepting as a remedy whatever was proposed by Paulson, Bernanke and Bush. The latter had to be completely aware of the OCC data at the time and to assume that they did not is simply not credible. It would have been completely obvious that $700 Billion would do absolutely nothing to alleviate the crisis. As witnessed in the ensuing months since the TARP bill, how the money was used has been obfuscated and concealed.This was always a scam.