Conchscooter's Common Sense

Settlements Galore!

2012-02-18T00:01:00.002-05:00

The Chilean curmudgeon Gonzalo Lira http://gonzalolira.blogspot.com/ says settlements announced in the US and Europe are more smoke and mirrors in a world economy about to be raped by high inflation rates. He makes an interesting case but I remain in the deflation not in flation camp when it comes to contemplating the future.

So this week there were two big settlements: Greece, and the Mortgage Mess.

Completely independent of each other, both settlements not only happened on the same day, they happen to highlight two issues which ought to be bugging us all like cockroaches crawling through our underwear.

Issue One is how in both cases, the Too Big To Fail banksters won—and they won big. Again. Insofar as the mortgage settlement goes, they got what amounted to a speeding ticket, while getting a Get-Out-of-Jail-Free card on the worst of the robo-signing and illegal foreclosures scandal. And insofar as the Greek situation goes, the banksters have gotten the IMF, the ECB and the EC to essentially put the Greek people’s collective nuts in a vise and squeeze until they scream “θείος!” (“Uncle!”)

Issue Two is the mainstream media’s spin on these two settlements: How the completely cheerleadery, near-sycophancy of the MSM serves to both obscure how big the banksters won in both settlements, and to give us all a false sense of security. From the MSM, we hear that Greece has been “bailed out” and the Mortgage Mess has been “fixed”, and that the banksters are “getting their comeuppance”—so we get the false sense that the world is right as rain, and everything can slowly go back to normal.

But the world is not right. We will not be going back to normal any time soon. The banksters are not getting righteous justice.

Rather, the two settlements go to show how crony-corrupt our particular epoch’s Global Capitalism really is: The banksters rape the people of two countries, and the mainstream media cheers.

Let’s go over each of the two settlements, and pick apart their implications.

The Mortgage “Settlement”

The ballyhooed “Mortgage Settlement” is a big ol’ pile of crap—plain and simple. President Obama called the $25 billion deal the biggest settlement since the one with Big Tobacco—but that settlement, at $350 billion, was over ten times the size of this one. Actually, 14 times bigger, to be precise. And when you look at actual out-of-pocket costs (which I will below), you realize the Big Tobacco settlement was sixty times bigger.

And of course, the mortgage mess is a helluva lot bigger than the suits involving Big Tobacco.

To understand why the settlement is a steaming pile of shit, we have to understand two things: What the problem is, and what the settlement brings to the table to solve the problem.

This is the problem: About 20% of all homeowners are underwater, adding up to about $700 billion in negative equity in the U.S. housing market today. That is, if you add up the difference between what underwater homeowners owe on their mortgages and what they could realistically get in the current housing market, it totals $700 billion. On average, that’s about $50,000 per house.

Additionally, 750,000 people lost their homes to foreclosure between 2008 and 2011—of which many (most?) were processed improperly. Processed illegally, in many (most?) cases.

As to whether “many”, “most” or “all” of those foreclosures were processed merely improperly or in fact criminally, we’ll now never know: The settlement releases the banks from prosecution for these 750,000 foreclosures.

That was one part of the settlement: No Federal prosecutions.

The other part of the settlement was how much the banks had to pay. And that dollar figure is pathetic when you look at the headline number—but even worse when you look at the actual number.

The mortgage settlement totals just shy of $25 billion. But of that figure, only $5.8 billion is “fresh money”—that is, money that the banks have to put up out of pocket.

The rest is loan modifications—that is, changing one loan for another. Essentially an accounting move, not a cash-bleeding penalty.

So the banks are paying out—in total—a mere $5.8 billion, while they are getting bullet-proofed from Federal prosecution for all the mortgage shenanigans they were carrying out.

That is what the ballyhooed “Mortgage Settlement” comes down to: The Obama administration plea-bargained a serial killer down to a speeding ticket.

And insofar as the rest of the settlement money goes—the refinancing of about $19 billion—the refinancing marginally lowers the payments for some of the 14,000,000 homeowners who are underwater. Less than half actually, as the settlement does not cover mortgages held by Fannie Mae and Freddie Mac. But it guarantees that the banks have first dibs to recover their money, if and when some of these 14,000,000 homeowners begin to default.

(Yves Smith at naked capitalism has a much more detailed discussion of the financial implications of the settlement here. Her reporting and analysis have been the best in the business, insofar as the Mortgage Mess and this execrable settlement is concerned.)

In other words, the banksters won—again.

The most despicable part is how much the banksters will have to pay to those families whose homes were improperly—illegally—fraudulently—foreclosed upon:

The princely sum of between $1,500 and $2,000.

Now, I’m not saying that someone who didn’t keep up with their mortgage payments and lost their home to foreclosure should get their house back for free just because of faulty paperwork—I’m not saying that at all. Nor am I saying they should get a gazillion dollars from the bank for screwing up the paperwork in a foreclosure that was justified.

The problem is, a non-trivial number of those 750,000 lost their homes even though they were up to date on their payments. Hell, there were even cases where people who were foreclosed upon and had their homes taken away from them who did not owe a mortgage loan on their property. (Example here.)

All of this happened because of the foreclosure mills and the famed robo-signing. Banks declared a loan in default, fobbed off the property to a specialty law firm—a “foreclosure mill”—which then in turn hired minimum wage workers to illegally sign the documentation to carry out the foreclosures. That was “robo-signing”.

The robo-signing was forgery—plain and simple. It was fraud. The fact that many—perhaps even most—of these foreclosures were justified does not excuse the use of fraud to carry out the foreclosures. And the fact that a non-trivial number of those foreclosures were completely unjustified—and in some cases amounted to the bank stealing people’s homes—makes this settlement unconscionable.

With this settlement, there will be no more criminal prosecution—even for cases where the bank literally stole people’s houses!

All the bank has to do is pay between $1,500 and $2,000. For stealing your house.

Prosecuting the robo-signers would have led to prosecutions of the foreclosure mills—which would have led to prosecutions of the banks which pressured the foreclosure mills to hire the robo-signers—which would have meant jail-time for the bank executives who ordered this criminal activity.

That’s how prosecutors work: They go after the small-fry, then get ‘em to flip on the big-fry.

However, with this settlement, the banks are released from further investigation of robo-signing—and therefore, of the improperly foreclosed houses—and therefore, the executives who ordered these illegalities and ordered this fraud are bullet-proofed from prosecution—and thus shielded from their richly deserved jail-time.

Sure, New York’s Attorney General can still proceed with his suit of MERS, the mortgage service provider—but MERS doesn’t have deep pockets, and isn’t even really the instigator of this whole mess.

It was the Too Big To Fail banks, and the criminal banksters who lead them. They were the ones who should be prosecuted, tried, convicted, and jailed.

But the banksters got off scot free: Serial killers, who plea-bargained their way down to a speeding ticket.

The Greek “Bailout”

On March 20, Greece has to pay out roughly €15 billion, to cover maturing bonds. Of course, they don’t have €15 billion. So they need a bailout. Again.

Greece is broke—there’s no other way to put it. It has debts which total 160% of GDP. So they’ve been negotiating with the International Monetary Fund (IMF), the European Central Bank (ECB), and the European Commission (EC), trying to get more money to avoid bankruptcy.

The Greeks want to avoid bankruptcy—while the Troika of the IMF, the ECB and the EC want to avoid a default. If there is a default, all sorts of events are triggered involving derivatives and other nasty pieces of financial weaponry, which will send the eurozone’s banking system into a tailspin.

Will the European financial system go bankrupt in the event of a Greek default? No one really knows—and no one really wants to find out.

So both sides have an incentive to sit at the table and reach an agreement.

However, because of the ongoing crisis, there is one inescapable problem that both parties are facing:

Greece’s economy is shrinking—fast. Year-over-year, tax revenue has fallen close to 20%. Businesses are shutting down—and the businesses that are opening up are mostly unemployed professionals trying to set up one-man shops. Unemployment is steadily rising, especially youth unemployment, which inevitably leads to streets protests and social unrest.

So when a country’s economy begins to shrink—and its tax revenue falls—and it begins to teeter on the edge of social instability—it begins to lose the ability to meet its financial obligations.

This is what is happening in Greece, because of the four months it has taken to finally find some kind of deal to save Greece.

Now, the deal on the table is for Greek bondholders to take a €100 billion haircut on €350 billion of outstanding debt—which is actually not that much, considering Greek yields are in the 32% range, but whatever.

What’s key is, the European financie ministers are insisting that the Greek levels of indebtedness shrink from 160% of GDP to 120% of GDP by 2020—

—even as the austerity measures the Troika is imposing severely cuts the public sector, reduces the minimum wage by 22% to €8,200 a year, and overall forcibly shrinks the Greek GDP on top of the natural shrinkage taking place because of the Greek depression.

I’m no Keynesian, as Paul Krugman can tell you. But the fact is, if you fire big chunks of your public sector, reduce the minimum wage, and squeeze higher taxes from the population, the GDP is gonna shrink.

So if the GDP starts to shrink, no way can you reduce debt levels from 160% of current GDP to 120% of 2020’s GDP.

In fact, if you’re hell-bent-for-leather on squeezing a country and insisting it pay down the debt, you are essentially setting the country up to ask for yet another bailout in the near-term future.

This is what the Troika is doing—all so that it can keep the European financial sector from realizing the losses on its stupid Greek loans.

So Greece and the Greek citizenry suffer, so that European banks don’t take a giant crap on top of Angela Merkel, Nicolas Sarkozy, Mario Draghi and Jean-Claude Juncker.

Ironically, had Greece been allowed to default and/or go broke back in May of 2010, when this mess first reared its ugly head, the Greeks and the eurozone would have been in much better shape today: Greece would have suffered Iceland’s short term fate—a crash—but then recovered, albeit slowly and painfully, but on a much sounder financial footing.

But in the European banker’s efforts to save their Greek investments, they have prolonged the Greek agony, while killing the Greek economy worse than an outright default and bankruptcy.

In fact, it is still possible to allow Greece to fail and let the chips fall where they may. But the eurozone leaders are so adamant about saving their banking sector, that they refuse to consider the possibility.

So rather than cutting off the gangrenous limb, they’re letting the gangrene spread, and get a lot worse—all in order to save the fucking banks. Again.

The MSM Cheerleading

This is what the New York Times had to say about the mortgage “settlement” when the news came out:

Advocates for homeowners facing foreclosure expressed cautious optimism after the settlement was announced Thursday morning in Washington. “We’re hopeful,” said Joseph Sant, a lawyer at Staten Island Legal Services’ homeowner defense project. “But we had a lot of programs that are good on paper. What will make the difference is that it’s vigorously enforced.”
President Obama declared the deal the largest federal-state settlement in the nation’s history.
“No compensation, no amount of money, no measure of justice is enough to make it right for a family who’s had their piece of the American dream wrongly taken from them,” he said. “And no action, no matter how meaningful, is going to by itself entirely heal the housing market. But this settlement is a start.”
Of course, the Times fails to point out that this settlement is not “a start”—rather, it is the end: The end of prosecutions against the banksters for their fraudulent foreclosures, the end of meaningful reform.

The mortgage settlement is a speeding ticket for a serial killer.

Yet the Times has the gall to add:

More than just an attempt to aid consumers and stabilize the housing market, government officials cast the settlement as an effort to finally hold banks accountable for their misdeeds, more than three years after the mortgage collapse brought on a full-scale financial crisis.
“Accountable”. Right. At $2,000 a pop for in many cases outright stealing a home, that’s the New American Accountability.

And talk about burying the lead! The Times piece waits four paragraphs to mention that fraudulently foreclosed homeowners are getting $1,500 to $2,000 as settlement for the illegal foreclosures. And then it waits another twenty paragraphs before acknowledging that it’s pretty paltry, the amount that will be paid to illegally foreclosed homeowners.

But then, the Times gets worse: Almost as if to add insult to injury, this morning—the day after the mortgage “settlement” announcement—it ran an editorial about—get this—how the mortgage settlement highlights the crappy architecture that the housing boom created in America! And how this crappy architecture ought to be fixed somehow! As part of the mortgage settlement!

Other MSM outlets had similar milquetoast coverage.

Over at Salon, Obama apologist Andrew Leonard can’t really spin the agreement as anything other than a complete disaster—so I guess kudos for having at least a shred of honesty for giving the true facts and meaning of the settlement in the first few paragraphs of his piece.

But then Leonard goes and writes:

A more interesting question to consider, however, is how the housing relief contained in this settlement fits into other administration housing policy efforts currently in the works.
First off, government negotiators are still working on roping another nine mortgage providers into the deal, which could raise the overall settlement total from $26 billion to around $40 billion. [Whoopie: All of $14 billion, thrown up at a $700 billion problem.] In March, the rejiggered HARP refinance program will kick in, presumably allowing hundreds of thousands of homeowners to refinance at currently rock bottom mortgage rates. There is also strong pressure coming from the Federal Reserve and the White House to convert currently unoccupied foreclosed homes owned by the Fannie Mae and Freddie Mac into rental properties, a step that would remove excess inventory from the housing market. [And of course, create excess rental inventory.]
Each individual nibble here is unlikely to make a profound difference, but taken together, all these initiatives add up to the most concerted effort the Obama administration has taken to date to bring relief to the housing sector. It’s also worth noting that it’s all happening without any help whatsoever from Congress. The approach does not address the desire for punishment that so many would like to see meted out upon the banks, but it will likely help spur additional economic growth. At a point when the economy already seems to have solid momentum toward recovery, every extra bit of help is gravy.

[Bracketed text and boldface by yours truly.]

I said that Leonard has at least some honesty left in him—but Felix Salmon at Reuters has absolutely none.

His lead sentence:

The long-awaited mortgage settlement is here! And it looks like a good one.
I’m fucking not kidding.

Then Felix Salmon—or rather, Felix Shill—goes on:

If you’re a bank shareholder breathing a sigh of relief, then, don’t. The only thing you’re protected against, now, is lawsuits over robosigning. [But then robosigning and fraudulent foreclosures were the biggest potential criminal and civil litigation issues.] Were those likely to cost $25 billion if they had gone to court? It seems unlikely to me that they could have raised that much. Other big-money lawsuits over securitization can and almost certainly will still be brought — which means that the big banks all still have significant litigation risk hanging over their heads.
So why did they do this deal? Well, for one thing, it’s not nearly as expensive as it might look at first glance. It’s not like they’re paying out $25 billion and getting nothing but a bit of immunity in return. A huge chunk of the money will go towards principal reductions on underwater mortgages — which means that it’s not really a cash outlay at all.
Notice how he starts off saying that bank shareholders shouldn’t breathe a sigh of relief—then deceptively says how the banks are shelling out $25 billion, when in fact it’s only $5.8 billion in fresh cash. But then at the end of the quoted passage, he admits how “a huge chunk of the money” is “not really a cash outlay at all”—as if this is a good thing.

Well, actually, it is a good thing—for the banksters and the bank shareholders. Which is Felix Shill’s—I mean, Felix Salmon’s real audience.

In Geneva recently, I had lunch with FT Alphaville’s Izabella Kaminska, in a restaurant in the old section of town. Izabella is a very smart woman: She was of the opinion that mainstream financial journalists aren’t deliberately dense, or beholden to vested interests—rather, she thought that they were simply sloppy: Pressed for time, not entirely familiar with the matters at hand, Izabella thought that they tended to take the easy way out, by simply regurgitating what they were told by bankers and authorities, and not applying critical thinking.

I wish I could agree with her—but I can’t. The Times piece might be excusable: Though it doesn’t highlight the real issues, and it buries some of the outrageousness of the settlement, there is an underlying tone of not-quite-buying it with regards to the mortgage “settlement”.

That very tone points to how the Times writers and editors realize that the settlement was a bunch of bullshit—a pass on the banksters.

Yet they didn’t follow through. They didn’t slice-and-dice the settlement, and report how pathetic it really is.

Someone like Andrew Leonard—an essentially partisan journalist who nevertheless tries to be somewhat fair—made a try at honesty with regards the mortgage settlement. But then spent a big chunk of his piece saying, basically, “Though it’s just crumbs off the banksters table, we ought to be thankful, because enough crumbs almost make a slice of bread!”

The most despicable is Felix Salmon: He is rah-rah-banksters-hurrah!, insofar as the settlement is concerned—which proves that he is nothing but a shill for the banksters, trying to get in good with them, at the cost of his intellectual honesty, not to mention his moral soul.

That’s the state of the financial MSM: Yeay us.

Bank Lobbying

2012-02-17T00:01:00.002-05:00

From the Charlotte Observer this dissection of banks and their leverage with politicians. Whoever pays the piper plays the tune is the old, old saying. Never more true than today.

Commercial banks spent nearly $62 million last year on lobbying, another record total for an industry that has become one of the most active voices in the political arena.
While their return on that investment is difficult to quantify, this much is clear: The financial industry's spending helped slow down the pace of new regulation and gained it at least a few partial victories in a year filled with anti-bank rhetoric.
Last year's lobbying expenditures by the commercial banking industry were up 9 percent from the year before, marking the sixth straight year of increased spending, according to data from the Center for Responsive Politics.
The financial sector as a whole spent more than $472 million.
That made the sector the third-biggest lobbying spender, behind the health care industry and general business associations like the U.S. Chamber of Commerce.
Among the six biggest banking spenders - including Bank of America Corp. and Wells Fargo & Co. - the increase was 6 percent, to $36 million, according to data from the U.S. Senate-run disclosure database, where all lobbying activity must be recorded.
Bank organizations say they are committed to making sure new regulations help the consumer, businesses and the economy.
And despite the spending, banks didn't have a great year politically.
Banks drew fire from the populist Occupy Wall Street movement that spread around the country.
And Democratic leaders, including President Barack Obama, piled on criticism as banks briefly toyed with the idea of monthly debit-card fees.
"It's wrong to say they did exactly what we wanted," said Scott Talbott, senior vice president of government affairs for the Financial Services Roundtable, one of the industry's chief advocates. "The goal of the industry, as well as the regulators, as well as any interested parties, should be the best public policy."
'A remarkable job'
But consumer advocates contend the banking industry's lobbying is making a significant impact.
They point to missed deadlines for crafting regulations, proposed rules with numerous exemptions, and a protracted political battle over the Consumer Financial Protection Bureau.
"They've done a remarkable job," said John Dunbar of the nonpartisan Center for Public Integrity. "They've earned every penny."
San Francisco-based Wells Fargo finished the year as the most dominant bank in the Washington lobbying arena.
Once a small presence on K Street, the bank spent more than its peers, increasing 46 percent to $7.8 million.
Wells declined to comment on its lobbying strategy.
Bank of America spent less on lobbying in 2011 than it had the year before, and far less than it did during the height of the 2008 financial crisis.
The bank arguably took the biggest hit to its image and its political standing.
"The focus of our lobbying was and will continue to be on being constructive to help ensure that regulatory reform is thoughtfully done and fosters sound, competitive banking that benefits our customers," Bank of America spokeswoman Shirley Norton wrote in a statement.
The bank declined to comment further.
Winning through attrition
When the Dodd-Frank financial reform law was passed in summer 2010, it left federal agencies with more than 400 rules to craft.
Progress has been slow.
More than 70 percent of the 225 rules scheduled to go into effect so far have missed their deadlines, according to the corporate law firm Davis Polk, which issues closely watched reports on Dodd-Frank's progress.
Part of the reason: scores of meetings between banks and regulators, and the time-consuming cycle of proposed rules and public comment periods.
Bank of America lobbyists or executives had more than 50 meetings with federal agencies in 2011, according to data from the Washington-based Sunlight Foundation.
Wells Fargo held 34.
And with many proposed rules, banks flood regulators with hundreds of pages of commentary.
The Financial Services Roundtable said in June that it had filed its 100th comment letter related to Dodd-Frank, compared with an average of 12 to 14 comment letters per year on financial topics before the law was passed.
"One of the ways they win the battle is by attrition, by ensuring that there's so much activity that things get delayed," said Nancy Watzman, a consultant with the Sunlight Foundation, a Washington-based nonprofit.
She pointed to the Volcker Rule as a prime example.
The rule is meant to prevent banks from taking risky bets with their own money, a practice known as proprietary trading.
What former Federal Reserve Chairman Paul Volcker called a simple idea morphed into a complex proposal hundreds of pages long.
"That's something they've worked on more than anything else," Dunbar said. "They have plenty of time and plenty of money. They will wear you down."
Talbott said the banks' goal is not to slow down the process but to make sure the final rules represent sound public policy.
"We're talking about new, uncharted topics. It's important for the regulators to do it quickly, but if it takes a little extra time to get it right, that's time well spent," he said. "Those legislative deadlines are aggressive, and sometimes difficult if not impossible to meet."
Consumer protection clash
Further evidence of the bank lobby's power came amid the political battle over who would lead the Consumer Financial Protection Bureau, a new regulatory agency prescribed in Dodd-Frank, Dunbar said.
Republicans argued the director would wield too much power, and vowed to block any nominee until changes were made to the agency's structure.
They were backed by industry groups such as the American Bankers Association.
Obama ended up using a controversial recess appointment to install Richard Cordray as director.
Republicans bashed the move as unconstitutional and an overreach.
Experts, pointing to possible legal challenges, said the move ultimately could weaken the agency's influence.
"The banking lobby is enormous and powerful and smart," Dunbar said. "They'll keep chipping away at anything they think will be harmful to them."
Organizations like the Financial Services Roundtable and the American Bankers Association have promoted their involvement in the implementation of Dodd-Frank.
They argue that some Dodd-Frank provisions, such as capital requirements, could hurt the economy by keeping banks from lending as much to businesses that create jobs, the Financial Services Roundtable said in October.
"It's incorrect to say we are opposed to Dodd-Frank. We actually support a lot of Dodd-Frank," Talbott said. "We are working to provide our input, our thoughts, on the best way or most effective way to implement it."

Greek Social Failure

2012-02-16T00:01:00.003-05:00

Call me a conspiracy theorist but I am more convinced than ever that the one percent are actively seeking to wreck the post world war two social order in Europe. Out of the wreckage of the last huge conflagration Western European leaders built, in their various countries, a network of social welfare programs designed to banish hopeless misery from the continent. Now that the Cold war is over and Communist propaganda is no longer on tap to remind us that there is an alternative to free market starvation, we are faced with the austerity in Europe that will dismantle the social gains made since 1945. Yves Smith of naked capitalism says Greek hospitals are heading rapidly down the drain:

Many writers tend to depict the effects of austerity in purely economic terms: loss of wealth and income, lesser income/social mobility. But depressions and accompanying changes in social norms can and do have more serious consequences.

A story in Bloomberg illustrates how the combination of budgets slashed thanks to austerity policies leads directly to deaths. The Wall Street Journal described last year how distress in the Greek economy had produced a significant increase in suicides. A new Bloomberg story recounts how severe cutbacks in hospital staffing have enabled superbugs that is hard to combat even under normal circumstances to inflict even more fatalities than usual in Greek hospitals. An ugly side to this problem is that overreliance on antibiotics in Greece created the conditions that helped these potent infectious agents to develop.

From Bloomberg:

Greek doctors are fighting a new invisible foe every day at their hospitals: a pneumonia-causing superbug that most existing antibiotics can’t kill.. The hospital-acquired germ killed as many as half of people with blood cancers infected at Laiko General Hospital, a 500-bed facility in central Athens.

The drug-resistant K. pneumoniae bacteria have a genetic mutation that allows them to evade such powerful drugs as AstraZeneca Plc’s Merrem and Johnson & Johnson’s Doribax. A 2010 survey found 49 percent of K. pneumoniae samples in Greece aren’t killed by the antibiotics of last resort, known as carbapenems, according to the European Antimicrobial Resistance Surveillance Network. Many doctors have even tried colistin, a 50-year-old drug so potent that it can damage kidneys…

Greece has the lowest nurse-to-patient ratio in Europe and one of the highest rates of antibiotic use — and abuse — on the continent, hindering the attack on the infection…

The superbug, dubbed KPC, first appeared in Greece in 2007 after spreading through the U.S. and then Israel. By 2010, Austria, Cyprus, Hungary and Italy were also experiencing an increase in cases, the European Centre for Disease Prevention and Control said in a surveillance report in December.

In the worst outbreaks, as many as half of the people who develop a blood infection due to KPC are killed…

While Greece is striving to curb KPC, the country faces fewer problems with multi-drug resistant, so-called Gram- positive bacteria such as methicillin-resistant Staphylococcus aureus, the superbug better known as MRSA, than do other nations, said Spyros Pournaras, an associate professor of medical microbiology at the University Hospital of Larissa…

“We have problems,” he said in an interview in Athens. “But let’s not generalize that we’re a threat for Europe.” Greece also doesn’t have so-called Gram-negative bacteria with gene mutations known as NDM, IMP and OXA-48, which are common elsewhere, Pournaras said…

Another issue is the lack of nurses, Dimopoulos said. For example, an overworked nurse might change a catheter or a wound dressing without washing her hands, he said — a prime opportunity for bacteria to hop from one patient to another.

He held up his hands. “This is number one,” Dimopoulos said, for transmission of the bacteria. “This and the stethoscope.”

I don’t know about you, but this has a Dickensian sound to it. People dying in droves due to chronic hospital understaffing sits uncomfortably with the pristine, efficient image of modern medicine. But this is far from the only instance where the crisis has served to reinstitute a more brutal social order

Big Wind

2012-02-15T00:01:00.000-05:00

This essay from http://www.counterpunch.org/ discusses the noise problems created by large wind turbines located close to human dwellings. One can only assume that wildlife suffer in similar fashion. It's quite the headache produced as usual by over sized projects, subsidies which promote political solutions at the expense of community solutions and the desire to make a buck at all costs. Alternative energy can be promoted as a sustainable system at the very individual level, small generators created to power homes rather than towns. But good intentions create problems all too frequently not reported. This problem is reported here and leaves one wondering what to do. Just as Keys Energy is finally trying to get up off it's ass and do something sustainable with its new turbines on Cudjoe Key...

The installation of wind turbines too close to houses and personal property is a major headache for the wind power industry, but headache scarcely begins to describe their impact to nearby property owners and neighbors. My property and home are scarcely three quarters of a mile from a three 1.5 megawatt turbine wind farm that went online in November 2009 with blades stretching nearly 400 feet into the air.

Large scale wind turbines represent a tiny and lucrative—thanks to federal tax incentives—corner of the electric power industry. By siting large turbine facilities close to population centers, the industry hopes to minimize the cost of expensive new transmission lines, but it faces a whirlwind of resistance from citizens objecting to the destruction of mountains, seascapes, wilderness areas, and natural quiet.

Opponents argue that wind power is a bad deal for everyone but shareholders who use subsidies to prop up an industry that is otherwise not economically viable. But on Vinalhaven, a small island in Penobscot Bay—where only three turbines are in operation—neighbors have opened up the industry’s Achilles heel: excessive noise.

New permit applications in towns across New England are raising hackles of anyone who pays attention to the way citizen dissent has been throttled in Maine where wind warriors mobilized to breach protective legislative barriers erected by the wind industry.

Vinalhaven is a small port town of only a few thousand residents whose primary business is lobstering. During the project’s planning phase in the early 2000’s I understood that my viewscape would change. My neighbors and I wanted to believe the promise of the promoters that our lives would otherwise be unaffected.

As an environmentalist who has often been on the receiving end of the NIMBY argument—opposing ill-advised developments that threaten the Everglades and water quality in Florida—I didn’t want to be part of a movement against wind. Environmentalists can’t wait to jettison hydrocarbons driving our economy, but the lessons of the past three years have tempered my perspective. Wind power is the easiest to seize the popular imagination. It is also the breeziest. There are massive obstacles to bring wind power technology to useful grid scale. Wind is intermittent. Storage of electricity when winds fall is highly problematic. Homeowners and businesses skeptical about noise impacts of wind turbines should revisit sitting on the proverbial fence: if the Maine experience is any guide, NIMBY means that the “next idiot might be you.”

The wind power industry and its local advocates on Vinalhaven insist that turbine noise is an inevitable cost supported by the public. On Vinalhaven, they trumpet that the vote to approve wind turbines was 380 in favor and only 5 against.

Neighbors have spent three years trying to get the State of Maine to enforce its own inadequate noise standards. As a veteran of wars against water pollution, I never expected that a place of solace and respite would prove the point that government can be its own worst scofflaw. It would be one thing if the small size of our community, fad or preference for local control over state or federal mandates, brought closer to resolution a problem that needs to be fixed. Instead of equity and fairness, neighbors are buried in procedural curliques tied to proving violations of state noise standards. We might as well be hog-tied to those spinning wind turbine blades.

Proving noise pollution is no trivial matter. On Vinalhaven, George Baker, a former Harvard Business School professor and executive of the local wind power facility, claims that the noise of the wind turbines is masked by the wind in the trees.

On a summer morning, there is scarcely a whisper of wind in the trees. The sky is blue and the early morning light casts long shadows in anticipation of day. Twenty five years ago I bought my property for its peace and quiet. In the background, the turbines churn like a rotating drum powered by Blakean bellows. What is so distracting is that the quality of sound varies from moment to moment. This is not the noise of a highway, a factory, an airport, or even the noise scape of a city. Turbine noise is as variable as the shifting wind, cementing one’s attention to intermittency like the rotating lights on a police cruiser. That is on the good days.

Neighbors can be woken in the middle of the night with an unidentifiable pounding; it is either in one’s head or chest or the walls of one’s house. From aural flickering to a constant disturbance: either way; having to spend significant time, energy and money to prove the point compounds the despair.

The worst are the hours shrouded in fog that I treasured. They now pulse with turbine noise. The Maine fog associates with a weather pattern—wind shear– that the wind turbine promoters knew about but ignored. They knew because in 2008 their experts told them so. It can be dead still on the ground and hundreds of feet in the air, the wind is howling. Not only did the project supporters omit informing neighbors of wind shear during the permitting phase of the Vinalhaven project, they obstructed discovery of the consultant report and, now, are spending ratepayer resources to contest a legal challenge in state superior court. Their objection: that neighbors do not have a judicial line of appeal. It is incorporated, they say, in a 2008 state energy law that few legislators read much less questioned before passing.

If wind power isn’t economically viable because wind is intermittent by nature, the costs to my life and property are continuous. There is not a single regulation against excessive noise– at the state, local or federal level– to enforce and protect. Given the level of controversy and impact, one would think that industrial wind turbine noise is a public threat where the nation’s environmental agency, the US EPA, ought to engage. But the sole staffer of the EPA’s Office of Noise Abatement retired years ago.

A 2010 petition to the EPA by Maine residents —triggered by the Vinalhaven controversy—implored the agency to involve itself in regulating wind turbine noise. It was rejected by EPA and an administrator who referred petitioners back to the same state regulator in Maine who subsequently resigned after the regulatory effort to tame turbine noise was thwarted by political meddling.

Dead still. So quiet that a conversation can carry a mile. Hundreds of feet above the island, wind shear picks up the turbine blades and hurls them around (The sardonic anthem of turbine advocates on Vinalhaven is “Spin, baby, spin”.) casting sound pulses through moisture heavy air. At other times, sound from the turbines skips like a rock on the surface of a cove.

Think of the sounds from a wind turbine as of a thunderstorm. The noise metric, called the dbA scale, captures the peal of thunderbolts. It fails to capture the low rumble of the storm; the vibration and hum of the turbines. Most wind noise controversies are framed around the dbA level because that is how the industry established the metric for sound in the 1990’s. At nighttime in Maine, for instance, the upper limit is set at 45dbA. For ordinary homeowners, though, to prove 45dbA is more complicated than pointing an acoustic measurement instrument and registering its results. Our neighbor group has chased in the middle of the night, in the middle of the freezing cold, pointing microphones and instrumentation at the pitch black sky in an effort to provide statistics and samples that state-hired consultants will accept. You can’t pick up the phone and complain. You have to pay for tests to prove your complaint. On that playing field, ie. what constitutes a verifiable and legitimate complaint, the goal posts keep moving. So far as low frequency noise is concerned, the goal posts that citizens are trying to reach might as well be on the other side of the world.

Various terms have been used to describe the low frequency sound output of wind turbines: a droning noise or the dreaded thump that alternates or morphs into and out of a woosh. Sometimes, it is like the low sonic end of a spinning dryer. Depending on the wind and direction, the thrum quickens or slows. It can change from the whine of a jet engine to a pulse in the space of seconds. For unfortunate homeowners who live even closer to wind turbines, the effects are mind-blowing. Those who live closest—within half a mile– report their entire dwelling can throb and pulse in time with the swoosh of the turbine blades.

For neighbors in Vinalhaven, learning how to provide data deemed valid by state regulators, including its own consultant, to prove violations by the wind turbine operator (whose shareholders are soundly sleeping, tucked away in their quiet quarters) required learning, spending and acquiring a level of acoustic expertise no homeowner should be required to produce under any circumstances simply to protect themselves. But that is not how it works with industrial pollution.

All neighbors wanted was peace and quiet, and all neighbors have are data files of acoustics measuring turbine noise in the gigabytes. All neighbors wanted was quiet, and all neighbors have is the enmity, indifference, or silence of those who know an injustice was done on Vinalhaven but feel powerless to solve it. The fact that local electric rates on Vinalhaven have significantly increased in recent years while the cost of merchant power in the region has remained stable is an embarrassment of someone else’s riches.

The industry understands that chasing citizens around the dbA scale is a fool’s errand. The Vinalhaven neighbors pursued Maine state regulators up the regulatory ladder from the bottom only to find at the top, that lobbyists pressured the governor’s office to intervene against neighbors on their behalf. There ought to be a law, and indeed there should. It is not exactly an insight to point out that polluters are expert at erecting high legal hurdles to keep citizens at bay. It is a good regulation, in other words, so long as it is one they wrote. The wind industry spends in states where those “should’s” are likely to change the playing field.

Every large law firm in the state is under restrictive agreements with the wind industry. Well-placed lobbyists and shareholders rotate in and out of government office and appointments. The state environmental agency’s top regulator, Patty Aho, is a former lobbyist for the law firm representing the wind turbine utility on Vinalhaven. Aho “did what she was told” by throttling provisions that might have offered hope to Vinalhaven neighbors in future compliance measurement and enforcement. At a July 2011 public hearing at the state capitol on revisions to the state noise regulation—ostensibly to stiffen them to protect people—Aho affirmed that the purpose of regulatory review was to assist industry.

A former governor, Angus King, is a large shareholder of a wind turbine company, First Wind. He wrote in a Maine business publication that he spent last July 4th on Vinalhaven and didn’t meet a single opponent of the wind turbines. He also didn’t seek the neighbors out. A recent single-question poll by First Wind claimed to measure public support for wind power. A similar poll question, limited to a single question, might solicit the opinion of neighbors who live within three miles of industrial scale wind turbines.

The public is ill-informed about wind turbine noise for a variety of reasons. Usually, a gag order accompanies payment when homeowners are bought out—often after a exhausting, protracted struggle. The industry counters with arguments; wind noise disturbs different people in different ways. The inference is that if you object to noise, you are a complainer in the great scheme of freeing energy tied to oil. In small communities like Vinalhaven, these formulas can be used to great effect, dividing the local population.

In the early phase of permitting the Vinalhaven project, a sound consultant to the project developers wrote tellingly that the site chosen for the wind turbines was likely to generate noise complaints from nearby homeowners and residents. Instead of dealing with property owners up front as the consultant recommended, the wind turbine operator buried the report and hired another consultant. In doing so, Mr. Baker, the former Harvard Business School professor and chief executive of the Vinalhaven turbine operation, made an implicit decision that pit islanders against each other. The result imposed a significant cost on the turbine neighbors; let them fight the state.

Divide and conquer is not the last refuge of polluters but it certainly is a popular one. At a public hearing last July when citizens battled industry on the outline of regulatory reform, a neighbor of a wind turbine installation in another part of the state despaired to me privately– she would not be quoted– that her livestock fences had been cut and garbage dumped in her rural driveway when she spoke out against the turbines in the permitting phase. Now that the turbines roar, her children can’t play in their backyard. The noise is so relentless in her home, another mother testified, that when her children go to bed she asks every night: “Did you brush your teeth, say your prayers, and take your sleeping pills?”

On Vinalhaven, supporters of the wind farm project—goaded by the local utility board and executives—posted a drawing of goat heads in a bucket of blood on a Facebook page, wishing the worst for neighbors who subsequently moved—for health and safety reasons. There are nights when the lobsterman Arthur Farnham, whose home is only seven hundred feet from the nearest turbine, turns his television volume to high, the fans on, and still can’t drown out the noise. It is worst in the winter. But the Harvard Business School professor and turbine operator insisted and the state acquiesced so that wind noise for compliance would only be measured in summer months on Vinalhaven.

Unless you have had something of deep value stripped from you, you don’t understand what the noise does to a fine summer morning on Long Cove or a deep winter night when the noise is roaring in your head or in your house.

The solutions are expensive to polluters. 1) Require fair market price buy-outs or property value guarantees for property owners within two and a half miles of turbines, 2) apply 35 dbA limits to nighttime operations immediately, 3) require the wind turbine industry to pay for the costs of noise monitoring and make all data available through web sites in real time, and 4) develop metrics that capture and regulations that protect against low frequency noise.

As stories pile up of citizens driven from their homes by turbine noise—sometimes health and property values ruined —the absence of effective wind turbine noise standards reflects the quest of polluters and their shareholders to demonize regulations. Shifting the costs of noise pollution has created a new caste of politically connected entrepreneurs who in turn have hired consultants, attorneys and lobbyists to obscure the wind power industry’s most inconvenient truth.

In its brutal outline, regulating noise from wind turbines illustrates the struggle of our times: whether government regulation can protect public health, or, whether private industry should be left alone to do a better job, whether or not it can demonstrate the results. Industry responds by hiding in the deep weeds of “complexity” and “disagreement with interpreting facts”. They buy time for an industry desperate to keep federal subsidies flowing; subsidies set to expire at the end of 2012. The wind power industry hopes Congress and the White House will ignore the fact that people, property values, and natural quiet are collateral damage to popular enthusiasms whose economics have failed to pan out.

We used to say with pride, “this couldn’t happen in the United States”. But wherever the costs of pollution are unallocated, it happens every day the wind blows.

Alan Farago is a writer living in Coral Gables, Florida and president of Friends of the Everglades. His website is alanfarago.wordpress.com.

US Proxies

2012-02-14T00:01:00.000-05:00

The suggestion that the US has a few fingers in the various Arab Spring pies comes as a surprise to quite a few people yet history shows the US has always been busy taking on the important business of destabilization and intervention. Just as much today as ever. From Global Research:

On February 5, 2012 - Reuters reported, "Tunisia "to withdraw recognition" of Syria government," and specifically that newly appointed Tunisian president Moncef Marzouki made the announcement on his Facebook page. Reuters also notes "Tunisia's decision to sever ties with Damascus carries moral weight because the north African country's revolution last year started off the "Arab Spring" upheavals which later spread throughout the Middle East, including to Syria." What Reuters of course fails to mention is that the "Arab Spring" was engineered years in advance, planned, funded, and directed by the US State Department, with Moncef Marzouki a direct recipient on record of such support which ultimately paved his way from obscurity to now president of the North African nation.

Last December, the BBC hailed Tunisia's assembly and their election of a new president in their article, "Tunisian activist, Moncef Marzouki, named president." What the BBC predictably failed to mention was that Marzouki's organization, the Tunisian League for Human Rights, was a US National Endowment for Democracy and George Soros Open Society-funded International Federation for Human Rights (FIDH) member organization. And Moncef Marzouki, is a veteran Western collaborator whose last two decades of political activity have been supported and subsidized by the US government and US corporate-financier funded foundations.

It was earlier reported in "Soros Celebrates the Fall of Tunisia," that Marzouki was named "interim-president" of Tunisia and that the myriad of NGOs and opposition organizations that worked with him to overthrow the government of Tunisia were fully subsidized and backed by the US government and US corporate-funded foundations.

Marzouki, who spent two decades in exile in Paris, France, was also founder and head of the Arab Commission for Human Rights, a collaborating institution with the US NED World Movement for Democracy (WMD) including for a "Conference on Human Rights Activists in Exile" and a participant in the WMD "third assembly" alongside Marzouki's Tunisian League for Human Rights, sponsored by NED, Soros' Open Society, and USAID.

Marzouki, along with his Libyan counterpart Abdurrahim el-Keib, formally of the Petroleum Institute, sponsored by British Petroleum (BP), Shell, France's Total, the Japan Oil Development Company, and the Abu Dhabi National Oil Company, makes for the second Western proxy installed into power either by covert sedition or overt military aggression, during the US-engineered "Arab Spring."

Now, it is quite clear how Marzouki is reciprocating the foreign-backed plot that thrust him into power - complete servitude toward Wall Street and London's foreign policy in backing this very same foreign-funded gambit now playing out in Syria.

Syria has been slated for regime change since as early as 1991. In 2002, then US Under Secretary of State John Bolton added Syria to the growing "Axis of Evil." It would be later revealed that Bolton's threats against Syria manifested themselves as covert funding and support for opposition groups inside of Syria spanning both the Bush and Obama administrations.

In an April 2011 CNN article, acting State Department spokesman Mark Toner stated, "We're not working to undermine that [Syrian] government. What we are trying to do in Syria, through our civil society support, is to build the kind of democratic institutions, frankly, that we're trying to do in countries around the globe. What's different, I think, in this situation is that the Syrian government perceives this kind of assistance as a threat to its control over the Syrian people."

Toner's remarks came after the Washington Post released cables indicating the US has been funding Syrian opposition groups since at least 2005 and continued until today.

In an April 2011 AFP report, Michael Posner, the assistant US Secretary of State for Human Rights and Labor, stated that the "US government has budgeted $50 million in the last two years to develop new technologies to help activists protect themselves from arrest and prosecution by authoritarian governments."

The report went on to explain that the US "organized training sessions for 5,000 activists in different parts of the world. A session held in the Middle East about six weeks ago gathered activists from Tunisia, Egypt, Syria and Lebanon who returned to their countries with the aim of training their colleagues there," (emphasis added). Posner would add, "They went back and there's a ripple effect." That ripple effect of course is the "Arab Spring," and in Syria's case, the impetus for the current unrest threatening to unhinge the nation and invite in foreign intervention."

Quite clearly the orchestrated reordering of the Arab World was done in a specific order, so that easier nations to topple would be able to eventually contribute to fueling the downfall of more difficult targets as US proxy regimes were installed. Tunisia's diplomatic attack against Syria is just one example. The despoiling and destruction of Libya by NATO-backed LIFG terrorists has provided a base of operation for the international mercenaries who are now verifiably sending fighters into Syria, led by notorious LIFG commander Abdul Belhaj.

It may be the threat of foreign-funded destabilization hanging over the heads of despotic regimes like Saudi Arabia, Qatar, and the United Arab Emirates that have them jumping through diplomatic and tactical hoops in support for Wall Street and London's geopolitical ambitions. Of course, ultimately, the destabilization of Syria is directed at weakening and ultimately attacking Iran as well.

This illustrates yet another justification for Russia and China, and other nations to begin fully resisting the mafioso protection racket that is the UN Security Council and yet another attempt to foist a war of aggression and conquest onto the population of the world. Ultimately, however, it is up to the people, worldwide to identify the corporate-financier power structures that provide the foundation from which this sweeping genocidal, domineering campaign is being carried out - and then boycott and replace them utterly out of existence. Because when the parasitic global elite are done picking the bones of nations afar, they will turn in on their own people - as has always happened throughout human history.

Tony Cartalucci is a frequent contributor to Global Research.

Reverse Globalization

2012-02-13T00:01:00.000-05:00

I read this on Bloomberg Businessweek by Matthew Philips suggesting some corporations are finding it better to manufacture in the US.

Thirteen days before his State of the Union address, President Barack Obama held a meeting at the White House to discuss how to bring outsourced jobs back home. Among the 25 participants was Harry Moser, ex-president of machine-tool firm GF AgieCharmilles, and founder of the Reshoring Initiative, a group of companies and trade associations trying to bring manufacturing jobs back to the U.S.

When asked by the President what costs manufacturers typically ignore when making decisions on where to make products, Moser mentioned the total cost of ownership. That includes factors such as intellectual-property risk, the cost and time of travel to visit distant suppliers, and the negative impact of separating manufacturing from engineering staff back at headquarters. Using data compiled from 10 manufacturers that compared the costs of products and components made in the U.S. vs. China, Moser told Obama that when measured on price, the U.S. was on average 108 percent higher. When Moser analyzed the total cost of ownership, which includes 28 additional factors, the U.S. averaged 12 percent higher. In six cases, the total cost for the U.S. was lower than China by an average of 22 percent. “The U.S. is a lot more competitive than people realize,” he says. “Over the last several years, firms got caught up in the outsourcing trend without thinking through the costs.”

Manufacturers, including Caterpillar (CAT), Ford (F), and General Electric (GE), are starting to move some production back to the U.S., although it’s still just a trickle. The two factors that drove companies overseas, cheap fuel and labor, no longer favor far-flung ventures. The average price of a barrel of oil has gone from $22.81 in 2002 to $87.48 last year, so the price of shipping finished goods has jumped. China’s wages have risen 15 percent a year in that time. Measured against more than 20 other currencies, the dollar has declined 23 percent since its peak in 2002. As a result, the cost of factory labor in dollar terms fell 11 percent in the U.S. from 2002 to 2010, according to the Bureau of Labor Statistics. America’s cheap natural gas is especially appealing to the metals and chemicals industries, particularly since natural gas prices in China are more than twice as expensive, according to research by the Jefferies Global Energy Team.

As companies have gotten better at reducing inventory and adopting just-in-time delivery, supply chains stretching around the world have started to look like liabilities. The fragility of global supply chains became vividly apparent when the tsunami in Japan and floods in Thailand last year caused major disruptions for companies.

A survey of 150 shipping companies by transportation research firm Wolfe Trahan showed a dramatic shift over the last year in their clients’ thinking. Among companies planning to move production, those considering an increase in outsourcing to China fell to 9 percent in October from 18 percent in April 2011. Those expecting to shift production back to the U.S. rose to 21 percent from 10 percent. Supply chain analysts at researcher Gartner (IT) recently predicted that by 2014, the production of 20 percent of goods now made in Asia and destined for U.S. consumers will shift to the Americas. In a recent study by Accenture (ACN) entitled “Manufacturing’s Secret Shift,” 61 percent of 287 manufacturers surveyed reported that they’re thinking of moving operations closer to customers.

Don’t expect a hiring frenzy if some factories return. “It’s a marginal improvement, not a tidal wave,” says Daniel J. Meckstroth, chief economist for the Manufacturers Alliance for Productivity & Innovation, a public policy and economics research firm. Manufacturing employment peaked in 1979 at about 20 million jobs and stands at 11.5 million jobs today. Over the past 15 years, U.S. manufacturing productivity has increased about 4 percent a year, while the economy has grown on average by 3 percent. “If manufacturing grew as fast as the economy, right there the math says you don’t need a single new job,” says Meckstroth.

The bottom line: China’s wages have risen 15 percent a year over the last decade, prompting U.S. companies to rethink where they manufacture.

Yuan versus Dollar

2012-02-12T00:01:00.004-05:00

Bretton Woods, New Hampshire, was the place where the winners of World War Two hammered out currency and exchange control agreements for the post war governments to come. "Bretton Woods" is international shorthand for currency agreements and now the subject is coming up when discussing the dominance of the Chinese currency's buying power. A new "Bretton Woods" may be in the offing according to Philip Coggan of The Economist who argues in this essay from Bloomberg that China has a way to go yet before dominating the dollar's dominance. However Coggan also suggests debt service may play a role in persuading the US to pass the baton. That would be shock treatment indeed for a national currency used to supremacy.

When the world economy heads into crisis, the international currency system often breaks down. This occurs either because debtors can’t meet their obligations, or because creditors fear they are not being repaid in sound money. The first condition exists today in the euro zone; the second is likely to emerge in the China-U.S. relationship.

So how might these conditions change the system? Much discussion concerns whether the U.S. dollar will be replaced as the global reserve currency by the Chinese yuan or whether it will simply be one of a number of reserve currencies that includes the euro, yuan and yen.

The global reserve currency is the one that forms the largest proportion of the holdings of central banks. More broadly, it is also the currency most likely to be accepted by merchants worldwide. In my view, the debate about whether the dollar will be replaced by the yuan is a bit of a red herring because such a shift will not occur quickly.

As of 2010, about 60 percent of all foreign-exchange reserves were denominated in dollars, giving the U.S. currency a critical mass. Investors are still comfortable with holding it; despite the country’s fiscal problems, in times of crisis, the dollar is regarded as a haven. It will take a long while for international investors to become confident that a Communist-led government will always respect their rights.

By 2020, if current trends are realized, China will become the world’s largest economy. The nation’s foreign-exchange reserves already give it significant power as a creditor nation. But even if foreigners wanted to hold yuan instead of dollars, there would be constraints on their doing so. And removing the constraints would probably cause the yuan to soar, something that the Chinese are keen to avoid.

So it seems unlikely that the next 10 years will see a yuan standard replacing a dollar standard. But might the present crisis conditions lead to some other sort of change? Might countries, for example, be driven to enter a new arrangement comparable to the 1944 Bretton Woods pact, in which the world’s major industrial states agreed to adhere to a global gold standard to stabilize international currencies?

At this juncture, an agreement on this scale would be very difficult. Bretton Woods was made possible because of the limited number of participants and the urgency of wartime. Much of Europe was under Nazi occupation and could not take part; the Soviet Union had little intellectual input; and the developing world was consulted on a fairly cursory basis. The Americans were in charge, but listened to John Maynard Keynes out of respect for his intellect.

A modern agreement would have to get consensus from the U.S., China, the European Union, India, Brazil, and so on. This would be tricky. But perhaps there could be an arrangement less formal than Bretton Woods. In November 2010, Robert Zoellick, a former U.S. Treasury official who runs the World Bank, wrote of a concept in which countries would agree on structural reforms to boost growth, forswear currency intervention and build a “co- operative monetary system.” This system, he continued, “should also consider employing gold as an international reference point of market expectations about inflation, deflation and future currency values.”

Some saw this mild suggestion as a call for a return to the gold standard, which, barring desperate circumstances, is unlikely. But before we dismiss all ideas for reform, we should remember that the world operates under what some call a Bretton Woods II regime, with the Americans buying Chinese goods and the Chinese supplying the finance. The implications of this process are everlasting U.S. trade deficits and an ever-greater investment by the Chinese people in U.S. government debt.

The system may have suited the Chinese until now because they were eager to find manufacturing jobs for their rural population. At some point, however, the Chinese may feel the need to do something else with their trillions of dollars in reserves. Already they are looking to diversify by acquiring natural resources in the developing world. They have also criticized the U.S. for its economic policy, calling on the Americans to limit their budget deficit.

Despite the strength of this rhetoric, the Chinese will not abandon the dollar outright. They already own so much in the way of U.S. government debt that any indication of their intention to sell would cause a plunge in bond prices. The fates of creditor and debtor are locked together. So the answer might be some kind of managed deal, with the Chinese agreeing to let their currency strengthen and to limit their current account surplus while the Americans agree to tackle their budget deficit. The currencies would trade in a range while the deficit would have a target.

Timothy Geithner, the U.S. Treasury secretary, hinted at such a solution in October 2010, suggesting a limit on current account surpluses of about 4 percent of gross domestic product. A Group of 20 meeting of finance ministers nodded mildly in the direction of this proposal. But nothing will happen overnight. Neither the Chinese nor the Americans will want to accept constraints on their behavior.

The Chinese will change tack if they believe such a shift is in their own interest. This might be because they face losses on their government-bond holdings, or because they wish to shift to a consumption-based, rather than an export-led, model to court domestic popularity.

To some, the idea that the U.S. would accept constraints on the independence of its economic policy might seem a fantasy. It is hard enough for a president to get his own plans through Congress, let alone get approval for a set of policies dictated from abroad. As a result, one would expect a new system to arise only as part of a further crisis.

In a speech in October 2010, Mervyn King, the governor of the Bank of England, called for a “grand bargain” among the major players in the world economy. “The risk,” he said, “is that, unless agreement on a common path of adjustment is reached, conflicting policies will result in an undesirably low level of world output, with all countries worse off as a result.”

The fundamental problem is the imbalance between the saving and the spending nations. In a sense, the situation resembles that of the late 1920s when the Americans and French owned a huge proportion of the world’s gold reserves; this time it is the Asian and OPEC countries that have too much squirreled away. What should naturally happen in such circumstances is for the exchange rates of the surplus nations to appreciate. But countries have been attempting to hold their currencies down, either by intervening in the markets or by imposing capital controls. All currencies, however, cannot fall; some must rise and risk deflation in the process.

Any target for exchange rates, or current-account surpluses, would have to be flexible. Fixed exchange rates require either subordination of monetary policy or capital controls to be effective. The Chinese, who already restrict investment, might favor capital controls, but it is hard to see the U.S., with its huge financial-services industry, agreeing to a worldwide restriction.

However, there is one factor that might persuade the U.S. government to change its mind: its debt burden. As has already been discussed, reducing debt via an austerity program is unpalatable, and outright default is almost unthinkable. But governments did manage to reduce their debt burdens after World War II, under the auspices of the Bretton Woods system.

Only with capital controls can government debt burdens be inflated away. Private savings can be more easily forced into public-sector debt.

How would a managed exchange-rate system work today? Even under Bretton Woods, after all, it eventually proved impossible to keep exchange rates pegged. But the system did work for a quarter of a century. And if an exchange-rate peg gives speculators a tempting target, the answer would be to curb the speculators. Again, if the Chinese set the rules, such a move would seem more likely. They regard Western governments as foolish for allowing their economic policies to be at the mercy of the markets.

If the U.K. set the terms of the gold standard, and the U.S. set those of Bretton Woods, then the terms of the next financial system are likely to be set by the world’s biggest creditor: China. And that system may look a lot different to the one we have become used to over the past 30 years.

Philip Coggan is a columnist for the Economist.

Mortgage Settlement Bails Out Banks

2012-02-11T00:01:00.004-05:00

From the naked capitalism site this breakdown of the terms proposed for a nationwide settlement of outstanding mortgage loans. The idea basically is to get the banks off the hook at taxpayer expense for the loans they made to unqualified borrowers on properties not worth the value of the loans. The banks want an escape clause and in an effort to secure an election win the President is buying the bankers votes by giving them just that. At the peoples' expense. Try finding this analysis on the mainstream press.

In case you had any doubts about what the mortgage settlement was really about and why banks that were so keenly opposed to it are now willing to go ahead, the news of the last two days should settle any doubts.

As we had indicated earlier, one of the many leaks about the settlement showed that there had been a major shift its parameters. Of the $25 billion that has been bandied about as a settlement total for the biggest banks, comparatively little (less than $5 billion) is in cash. The rest comes in the form of credits for principal modifications of mortgages.

Originally, that was to come only from mortgages held by banks, meaning they would bear the costs. The fact that this meant that whether a homeowner might benefit would be random (were you one of the lucky ones whose mortgage had not been securitized?) was apparently used as an excuse to morph the deal into a huge win for them: allowing the banks to get credit for modifying mortgages that they don’t own.

The first rule of finance (well, maybe second, “fees are not negotiable” might be number one) is always use other people’s money before your own. So giving the banks permission to modify loans they don’t own guarantees that that is where the overwhelming majority of mortgage modifications will take place, ex those the banks would have done anyhow on their own loans. And the design of the program, that securitized loans will be given only half the credit towards the total, versus 100% for loans the banks own, merely assures that even more damage will be done to investors to pay for the servicers’ misdeeds.

Let me stress: this is a huge bailout for the banks. The settlement amounts to a transfer from retirement accounts (pension funds, 401 (k)s) and insurers to the banks. And without this subsidy, the biggest banks would be in serious trouble

Why? As leading mortgage analyst Laurie Goodman pointed out in a late 2010 presentation, just over half of the private label (non Fannie/Freddie) securitizations have second liens behind them (overwhelmingly home equity lines of credit). Moreover, homes with first liens only have far lower delinquency rates than homes with both first and second liens. Separately, various studies have found that defaults are also correlated with how far underwater a borrower is. If a borrower is too far in negative equity territory, it makes less sense for them to struggle to stay current, no matter how much they love their home.

The second liens pose a huge problem to the banks.

Compare these totals with the book value of their equity as of the same date: $42 billion in seconds for Citi versus $177 billion in equity; BofA, $121 billion in seconds versus $230 billion in equity: JP Morgan, $97 billion in seconds versus $182 billion in equity; Well, $109 billion in seconds versus $139 billion in equity. One of my mortgage investor mavens says that BofA’s seconds should bve written down by about $100 billion and JP Morgan’s by $60 billion. That writeoff would exceed BofA’s market cap and would make a major dent in Jamie Dimon’s touted “fortress balance sheet.” And a similar magnitude of haircut to Wells would expose it as being grossly undercapitalized.

Now the banks contend that the seconds are current or not all that delinquent, and hence no writeoffs are warranted. Please. Banks are doing everything in their power to preserve that fiction. First, they are engaging in far more aggressive debt collection against seconds than firsts, even though they service both. In addition, they can and do make insolvent borrowers look whole. They will reduce the minimum payment due when a borrower is close to being officially delinquent, and tell them to send a small amount and declare the loan current. Or they simply increase the credit line on the home equity line and let the borrower pay them with new funds lent to them. Neat, eh?

Finally, they also have been modifying first liens to preserve their second liens. If you reduce the payments on the first mortgage, the borrower has more money left to pay the second lien. From the transcript of Goodman’s 2010 presentation:

Clearly there’s a differential standard of managing second liens and securitizations versus second liens in bank portfolios. It’s very clear banks are doing all they can to get the, to keep, to get the first lien modified in order to keep the second intact, and that is just a huge conflict of interest.

Legally, the hierarchy of payment OUGHT to be clear: a second should be wiped out before a first lien is touched. That’s how it works in a foreclosure or a bankruptcy: only after the first lien was paid in full would a second lien get anything. But that isn’t what is happening now.

An important post by Dave Dayen, “HUD Secretary Expects “Substantial” Payment of Foreclosure Fraud Settlement with MBS Investor Money,” on a small group interview of Shaun Donovan, makes it clear that the Administration is well aware of, indeed almost giddy, about the way investor oxen are about to be gored. Guess they haven’t given enough to Obama to save their hides.

Per Dayen:

Donovan claimed that the money available in the settlement for principal reduction for underwater borrowers would actually come to $35-$40 billion, over double the $17 billion in nominal principal reduction that has been widely reported…

But how exactly does Donovan get to $35-$40 billion when the reports all claim $17 billion (as well as $8 billion in various penalties and checks for wrongful foreclosures, adding up to a $25 billion settlement)? He said that the topline numbers have always reflected the settlement with the five largest servicers. When you throw in the other 9 servicers who have been in discussions on the settlement, the level rises to more like $30 billion. Furthermore, “not all write-downs are created equal” in the settlement, Donovan said. The $17 billion on principal reduction always reflected “credits,” a number that the servicers would have to hit to comply with the settlement terms. Some of the credits are not dollar-for-dollar. For instance, principal reduction on loans that are over 175% LTV (loan-to-value ratio) would not get full credit because it would be a “reduction” on a house that will probably go into foreclosure anyway. “If a servicer is writing down a current first-lien mortgage, that has more value than a second lien 180 days delinquent,” Donovan gave by way of a separate example.

When you add all this up, Donovan asserted, “For every dollar of credit, we’ll be getting on average $2 or more of principal reduction. That’s how you get from $17 billion to $35-$40 billion.”

Notice that Donovan skips over the biggest item that will lead to bigger reductions than the nominal amount: the 50% credit that we noted above and in earlier posts, per a report by Shahien Nasiripour of the Financial Times, for modifications of loans that the banks don’t own.

Donovan tried to tell the journalists that there would be no problem with banks modifying these loans. That seems like a big stretch. The Pooling and Servicing Agreements all have a provision that says that the servicer is required to service the loan in the best interest of the certificateholders, meaning the investors. Modifying first liens owned by those investors pursuant to a settlement of legal and regulatory violations would not seem to pass muster. In addition, as we have reported earlier, a “safe harbor” provision, which was intended to provide air cover for banks to make mods as part of HAMP, was removed during reconciliation even though it had passed both houses. Why? Some investors had said that that provision amounted to a 5th Amendment violation, since it was taking property from private investors without providing compensation (note this is arguably a taking by government because preventing losses at BofA and Wells, which would be next in line if BofA were revealed to be insolvent, has the effect of benefitting the FDIC).

How does the Schneiderman MERS suit play into this? The consensus reaction to his Friday filing of a suit on MERS abuses seemed to be that he had at a minimum redeemed himself for taking the wind out of the dissenting AG effort by joining a Federal task force that looks likely to produce little and becoming coy on where he stood on the settlement deal. After Friday’s filing, some even thought he had outplayed Obama, by getting him to commit in a very public way to investigations and then filing a suit that put robosigning and other foreclosure abuses front and center. It looked as if he had gotten to have his cake and eat it too.

I’m skeptical of this cheery view. As readers know, I doubt that this investigation will produce much except some suits against small or at best medium fry. As Charles Ferguson of Inside Job put it, “Let Them Eat Task Forces.” There is a well established art form to stymieing people like Schneiderman: do the least important 60% of what they asked you to do, slowly.

Schneiderman got to be on a not-likely-to-do-much task force. What did he get? He allegedly gets more resources, and he might get more information, but the Administration scored a huge win by dragging out the settlement talks over a year and running out the statute of limitations on some of the best legal theories. I have to admit I was snookered. I thought the ongoing joke of the Tom Miller “we’re gonna have a deal any day now” was an embarrassing bug, but it was a feature. The AGs were being strung along as long as possible to keep them from filing suits. A few like Beau Biden, Martha Coakley, and Catherine Cortez Masto still did, but not soon enough or in enough numbers to embarrass some of the other fence-sitters into action (Lisa Madigan is an exception that proves the rule).

So what does his MERS suit mean? I’m mainly focusing on how it relates to the bigger game of the settlement, but let me make a few observations about his filing qua filing. It is gratifying to see a long form description of the MERS horrorshow. And this suit could be used to shift focus back to an issue that everyone in the mortgage industrial complex seems to want to push aside: servicers seem unable to foreclose legally and chain of title is a mess. Settlement deals and compensation to abused homeowners could be useful, but they don’t address the underlying mess (and neither do phony baloney OCC consent decrees).

And the media keeps taking the industry line on foreclosure problems. It keeps touting how long it takes to foreclose in New York as if this is the fault of the borrowers and the courts. In fact, it is the fault of the industry. In October 2010, New York implemented a requirement that all attorneys in residential foreclosures certify that they take “reasonable” measures to verify the accuracy of documents submitted to the court. From a formal standpoint, all this did was reaffirm existing law, but procedurally, it makes it much easier for borrower’s counsel to get attorneys who play fast and loose sanctioned.

So foreclosures had already effectively stopped because there are now real consequences to submitting bogus documentation. The Schneiderman filing ups the ante by telling servicers that they are subject to fines of $5,000 per violation (arguably, per each piece of improper paperwork submitted).

But how does this suit move forward in practice? Even though the filing mentioned $2 billion lost recording fees, his filing does not seek any damages for that. Readers are invited to chime in, but I see that he has two big hurdles. The first is pinning liability on the banks, as opposed to MERS. MERS has fewer than 50 employees and I guarantee its only meaningful asset is its screwed-up database. It can’t pay any meaningful damages or do much of anything to fix the mess it created. The banks will seek to argue that any liability sits with MERS, LPS and its ilk, and the foreclosure mills. It will probably take some doing to establish bank culpability.

Second is establishing the number of violations per bank. In aggregate, it looks to be massive, but the AG needs to come up with some basis for arguing at least roughly how many violations took place. That probably means establishing how many foreclosures in the relevant time frame had liens recorded in the MERS system and coming up with a solid minimum number of violations per foreclosure. How do you do that? Maybe sampling 100 foreclosures with MERS assignments per bank? The only good news is the foreclosure procedures were so awful that the banks would be hard pressed to find any foreclosures that didn’t have document problems.

Let’s do some rough math. The chart above shows 153 foreclosures a day for September 2010. Let’s assume an average of 150 a day for 2008-2010 and half that for 2007, with 250 work days a year (the court calendar does drop to nada in late August and December). Further assume that the three big banks listed accounted for 30% of the foreclosure filings, and half of those used MERS. That’s roughly 20,000 foreclosures. Assume 2 violations per foreclosure, which is $10,000, plus the $2,000 in expenses per homeowner (this was a separate claim in the filing). $12,000 X 20,000 is $240 million, or $80 million per bank. If you think I’ve been conservative, double that. The point is you don’t get to bank-crippling numbers from this suit. And remember, this litigation will probably be settled, and settlements are for less that the full value of what the plaintiff might win (there’s no reason to settle if the defendant has to pay out the full amount he’s exposed to if he loses in court).

That means it might be better for Schneiderman to use this suit to keep the negative PR about the banks coming (the reputational damage is likely to sting more than the amount they’d need to pay to make the case go away) and to press for real solutions to servicing and foreclosure practices. That has FAR more value than what he looks likely to recover.

This is a long-winded digression. Back to the settlement jousting. Obama succeeded in getting Schneiderman on the sidelines as a leader of the dissenting AGs as the Administration mounted a final push. That destablized the opposition and fed the now widespread impression that the settlement is inevitable (remember, before the Schneiderman announcement, it looked like the Administration would have significant defections of Democratic AGs. At least one AG who had met with the dissenters, Oregon’s John Kroger, has now joined the settlement).

But does the Schneiderman MERS suit hinder or help the settlement effort? Perversely, it may help the Administration push it over the line. If the leak about the scope of the release via Mike Lux is to be believed, MERS-related liability is excluded from the waiver. Schneiderman has just demonstrated you can file what amounts to a robosigning lawsuit using the MERS exclusion. You won’t get the securitizations outside of MERS where the notes weren’t transferred properly, but you’ll get a large proportion of the defective securitizations.

Now why should the banks sign onto a deal to settle robosigning claims that leaves them exposed in a big way to robosiging claims? If they thought the Schneiderman suit revealed a problem in the release, you’d expect them to demand that the negotiations be reopened. It may be too soon to tell, but I’ve seen no sign of bank pushback, and this deal has been so heavily lawyered I am sure the banks were well aware of this issue. Similarly, as reader Pwelder pointed out, all the banks that were targeted in the suit were up on Friday markedly more than the market overall, indicating that investors do not see this suit as threatening.

So the fact that they seem so keen to go ahead on a deal that does not very much to shield them from attorney general suits on robosigning confirms our suspicions: the banks are willing to pay several billion of hard cash among themselves to create the impression that they are Doing Something for Homeowners as cover for a bailout. Nicely played all around.

And Donovon’s cheerleading confirms the Administration’s sense of priorities. He regards robo-signing, foreclosure fraud, and making a mess of title as unimportant, and applauds the this settlement as a way to get principal reductions and allow the banks to escape any meaningful liability or responsibility.

The Obama Administration may have decided that investors have acted enough like patsies, given how they have failed to react to rampant servicer abuses, that they judge the risk of investor litigation and a related PR embarrassment to be small. But this battle is not yet over. The rumblings I am hearing from investor-land remind of the sections of the Lord of the Rings when the Ents were finally roused. It isn’t yet clear that investors will act, but if they do, the Administration will be unprepared for the vehemence of their response.

The State of US Surveillance

2012-02-10T00:01:00.001-05:00

Submitted by Doug Hornig of Casey Research to zero hedge and I reproduce it here without comment as we all know that this is not such a great thing.

The State of US Surveillance

Lovers of liberty have seemingly had a good bit to celebrate recently.

First, there was an unprecedented outpouring of negative public sentiment about the Congressional bills SOPA (House) and PIPA (Senate); they are legislation that would have thrown a large governmental monkey wrench into the relatively smooth-running cogs of the Internet. Millions of Americans signed online petitions against the bills after seeing websites' various protests. Google shrouded its search page in black; Wikipedia and Reddit went dark entirely (although Wikipedia could be accessed if one read the information available via clicking the sole link on its protest page); Facebook and Twitter urged users to contact their representatives; and many other core Internet businesses also raised their voices in opposition.

Such was the outpouring of dissent that even Washington, D.C. had to listen. The bills, which a week earlier had seem assured of swift passage, suddenly turned to poison. Supporters, forced to concede that the public really was pissed off this time, fled. Leadership in both houses tabled the legislation, pending further review and revision.

But before we get too self-congratulatory, however, it's wise to note that this victory dish is probably best enjoyed with a serving of caution. As Casey Extraordinary Technology editor Alex Daley summed up the situation for us here at Casey Research: "Be sure this will come back again, likely post-election, and snuck through as part of a bigger package. It arrests power from the judiciary, and the legislature likes nothing more than to thumb its nose at those ridiculous judges and all their due process this and Constitution that. It will eventually pass, just not like this." We can't now go to sleep on this one.

Second, the Supreme Court recently ruled 9-0 that police may not attach a GPS tracking device to a suspect's car without a search warrant. This is a landmark decision to be sure, but one that was carefully circumscribed by the justices. The placing of the device constituted a physical intrusion on the suspect, they wrote, and thus was impermissible. Left unruled upon was the larger question of tracking someone's movements when there was no physical violation, as would be the case when, say, police access signals from a GPS-enabled smartphone. Though it wasn't directly addressed, the concurring opinions strongly suggest that the justices might be more sharply divided on that issue.

A lapse of vigilance in these matters would be a mistake.

This is probably a good time to review how individual freedom fared over the past year vis à vis the technology of surveillance in general.

But before I do, I need to make a couple of things clear.

Where We Stand

We are not technophobes at Casey Research. We don't think that it would be a good thing to retreat to the woods and live out our days spearing game and cooking it over fires. Quite the contrary. We're technophiles who appreciate what tech has done to improve human living conditions, and we believe that it holds the key to the solution of many, if not all, of our present problems. We like to err on the side of hope.

In addition, we understand that society has a powerful interest in maintaining a certain level of order. It's intolerable that personal disputes should be settled by gun battles in the streets or that serious infringements on the rights of others – whether it be physical crimes such as robbery, rape, or murder, or non-physical ones like fraud – should be ignored. The most ardent libertarian would generally agree that a government ought to have the authority to prevent or punish the aggression of one individual upon another and to enforce contracts freely entered into. Thus tradeoffs with our basic right to do as we see fit must be made if man's worst impulses are to be deterred.

That said, the tricky part is deciding where to draw the line between reasonable and overzealous laws and enforcements. Surveillance technology is at the center of this debate. It's good and getting ever better. Even the most law-abiding of citizens have been subjected to steadily increasing levels of governmental – as well as private sector – watchfulness over their daily lives. That has occurred with no indication that the public is yet prepared to say, "Enough. This is where we draw that line in the sand."

The past year was no exception. I won't go into developments I've already written about, such as the growth of the TSA's VIPR operations, last summer's lemonade-stand busts, the ghastly E-Verify proposal , and the Fed's Social Listening Program. But the sad truth is that there are plenty more from which to choose. Space considerations permit a close examination of only a few.

It's a Bird, It's a Plane, It's…

… a drone.

Remote-controlled drone aircraft, like the famed Predator, have become a staple of the nightly news. We see them launching missiles against terrorists, conducting spy missions over Pakistan, patrolling the borders looking for drug smugglers and alien infiltrators. Now we're going to have to get used to seeing them in the skies over, well, all of us.

Yes, those same Predator drones are being used increasingly by local law enforcement in the US.

That was unknown to most Americans before late last year, when the great North Dakota cattle-rustling incident hit the press. It seems that back in June, six neighbors' cows had the misfortune to wander onto a 3,000-acre farm in eastern North Dakota owned by the Brossart family, whose members allegedly belong to the Sovereign Citizen Movement, an anti-government group that the FBI considers extremist and violent.

When the sheriff attempted to reclaim the cows, the family refused to give them up, ordering him off its property at gunpoint. A 16-hour standoff ensued, with the sheriff requesting the usual reinforcements: state highway patrol, a regional SWAT team, a bomb squad, and deputy sheriffs from three other counties. But he also called nearby Grand Forks Air Force Base and asked for help from a $154 million MQ-9 Predator B drone, normally used to secure the Canadian border for the Department of Homeland Security (DHS).

Long story short, the drone silently surveilled the farm from two miles up, relaying information from its sophisticated sensors as to what the Brossarts were doing. When the surveillance showed that the family members had put their weapons down (yes, it can see that well at that distance), the authorities moved in, neutralizing the Brossarts and making the first known, drone-assisted arrests of US citizens.

Law enforcement was pleased, perhaps rightly so. No blood was spilled. Another Ruby Ridge was avoided. The cows – street value $6,000, but now rather a bit more costly – were recovered.

But that was just the beginning. Local North Dakota police say they have used the Grand Forks Predators to fly at least two dozen surveillance flights since June. The FBI and Drug Enforcement Administration have also used Predators for domestic investigations, officials admit. And Michael Kostelnik, a retired Air Force general who heads the office that supervises the drones, says that Predators are flown "in many areas around the country, not only for federal operators, but also for state and local law enforcement and emergency responders in times of crisis." [emphasis mine]

Who knew?

Apparently not Congress, for one. Spokespersons for Customs, which owns the drones, claim there is legal authorization for this usage because it was clearly indicated in the purchase request for the Predators that one purpose was "interior law enforcement support." But those four words sailed right by Congresswoman Jane Harman – Chair of the Homeland Security Subcommittee at the time the drone purchases were approved – who insists that "no one ever discussed using Predators to help local police." So this expanded civilian use of military surveillance hardware came about with no new law, no public discussion, not even a written regulation… just a few words buried in a budget request that no one in charge of approving it noticed.

There will be mission creep here, as there always is. Expect drones to gather data on any large political demonstration, for example – only, to be fully accurate, you won't be noticing them above you. They fly too high and are too silent for that.

Internet Surveillance

In addition to SOPA/PIPA, there is PCIP. SOPA/PIPA were about shutting down Internet sites that the federal government deems offensive. PCIP is about gathering information.

As is so often the case with "well-meaning" legislation, the Protecting Children from Internet Pornographers Act of 2011 (H.R. 1981, or PCIP) is allegedly aimed at something about which all agree. Nobody argues against shielding kids from pornographers.

Not that the problem addressed isn't real. The Internet has proven to be a fertile stalking ground for sexual predators. As a society, we have already agreed to a certain level of cyber-entrapment, allowing police to run online sting operations against those who are actively targeting kids. If that catches some innocent people in the net, so be it. The public majority is willing to accept such collateral damage so long as the real bad guys are found and put away.

And yes, H.R. 1981 also contains some non-controversial provisions. Stricter punishment for interstate commerce transactions that promote child porn? Sure. Bolstering laws to protect child witnesses? No problem.

But, as always, the details are alive with devils. PCIP is also about pre-crimes – i.e., it entails gathering evidence before any crime is committed… perhaps even before said crime is contemplated. The goal is that, in the event of an arrest, supporting online records can quickly and easily be subpoenaed.

In order to accomplish that, everyone must be considered a potential criminal. Everyone.

What PCIP will mandate is that Internet providers keep detailed records about each one of us, including: name, address, bank account numbers, credit card numbers, all Internet activity for the previous 12 months (something sure to be extended after the first successful busts), and any IP addresses assigned to you – without a search warrant, court order, or even the slightest suspicion of criminal activity.

In other words, the government is proposing to expand the ranks of de facto private-sector cops, the same way that banks are now forced to report any "suspicious financial activity." The legislation would enlist – nay, require – ISPs to compile detailed dossiers on every citizen, and to have them readily accessible for whatever "crime-fighting" or other purposes authorities want them. This thereby saves federal government officials the trouble and expense of doing it themselves. It's breathtaking. You almost have to admire the elegance of their solution to the universal 'Net surveillance problem that's vexed them for some time.

No wonder the Electronic Frontier Foundation has scornfully tabbed this the "Data Retention Bill," warning that the stored data "could become available to civil litigants in private lawsuits – whether it's the RIAA trying to identify downloaders, a company trying to uncover and retaliate against an anonymous critic, or a divorce lawyer looking for dirty laundry." And in a grotesque illustration of the law of unintended consequences, the EFF adds: "These databases would also be a new and valuable target for black hat hackers, be they criminals trying to steal identities or foreign governments trying to unmask anonymous dissidents."

H.R. 1981 sailed through the House Judiciary Committee in late July of last year but is yet to be voted on (although it was slated for "expedited consideration" in mid-December). Will it provoke the kind of public outcry directed against SOPA? Don't count on it. What politician in his or her right mind would dare oppose legislation that "protects kids from pornographers?"

Reverse Surveillance

Meaning: when we turn the cameras on the government.

In a sense, we are all now street journalists. Most famously, the name "Rodney King" would mean nothing to anyone today but for a bystander with a cell phone camera. As these devices have become all but ubiquitous, we ordinary citizens now have an unprecedented ability to record crimes in progress, regardless of what side of the law the perpetrators are on.

Or do we?

While police understandably have welcomed citizen recordings that help them with their cases, they are again understandably not so sanguine when they themselves are the potential lawbreakers. And they're hitting back. People filming unfolding events are routinely ordered away from the scene by the police, even if they happen to be standing on their own private property – and threatened with arrest if they don't put the camera away.

Considering the First Amendment to the Constitution, that's been a bluff… at least until recently.

Now authorities are asserting their right to charge video- or audiographers of police events with crimes ranging from obstruction of justice to eavesdropping to illegal wiretapping.

So far, to their credit, the courts have been mostly unsympathetic. In August, a jury acquitted a Chicago woman who used her cell phone to secretly record a conversation with police investigators about a sexual harassment complaint she was filing against the department. Also in August, the US Circuit Court of Appeals in Boston ruled in favor of the defendant in a case involving a complaint filed by a Boston man who filmed the scene of an October 2007 arrest on his cell phone, only to be arrested himself and charged with a violation of Massachusetts wiretapping laws.

In Illinois in September, a judge threw out five eavesdropping indictments – which carried maximum penalties of 15 years in prison on each count – against a man who had recorded conversations with local police officers who he claimed were harassing him on his own property. In a stinging rebuke to the prosecution, the judge wrote, "A statute intended to prevent unwarranted intrusions into a citizen's privacy cannot be used as a shield for public officials who cannot assert a comparable right of privacy in their public duties. Such action impedes the free flow of information concerning public officials and violates the First Amendment right to gather such information."

So far, so good. Still, these kinds of busts are on the rise nationwide. Even if they're all laughed out of court, the mere threat of arrest (and the potential concomitant bodily harm) is often enough to make most people think twice about the wisdom of challenging a police order.

And, truthfully, would you trust the current Supreme Court – a majority of which has consistently supported government rights over that of citizens – to rule correctly on this?

Target: Casey Research!

One of the most ominous developments for us personally crawled out from under its rock in November. Again without any public debate, DHS unleashed its National Operations Center's Media Monitoring Initiative. Yep, it's exactly what it sounds like: The NOC's Office of Operations Coordination and Planning is going to collect information from news anchors, journalists, reporters, or anyone who may use "traditional and/or social media in real time to keep their audience situationally aware and informed."

Thus Washington, D.C. unilaterally grants itself the right to monitor what you say. Doesn't matter if you're the New York Times, Brian Williams, a basement blogger, an online whistleblower, or known government critics like ourselves. They're gonna take note of your utterances and file them away for future use.

Journalists are not the only targets, by the way. Also included among those subject to this surveillance are government officials (domestic or not) who make public statements; private-sector employees who do the same; and "persons known to have been involved in major crimes of Homeland Security interest," however large that umbrella might be.

At Casey Research, we're not about to engage in self-censorship just because some bureaucrat somewhere has nothing better to do than watch what we're saying. They're welcome to it, and we'll save them the trouble of archiving it; most of it's preserved on our website, anyway.

The larger speculation is: what's the endgame here?

Data Storage Capacity

Back in 1997, I wrote an article entitled Here's Looking at You, which examined the ways in which big government was encroaching upon our private lives. The piece was published in February 1998 in a very popular national men's magazine. (In my defense, I hasten to add that these glossy periodicals were among the very few public outlets, before Casey Research was born, for journalists who wrote about such "fringe" topics.)

As I was writing this piece you are now reading, I couldn't help but take a look back fourteen years. It seems almost like a prehistoric era… before 9/11, the PATRIOT Act, wars in Iraq and Afghanistan, drones, "free-speech zones" at political conventions, wall-penetrating radar, iPhones, and wholesale government monitoring of email and phone conversations, among a zillion other things. Heck, even the Internet was still more or less a novelty: I found that I had cautioned readers to be mindful of an insidious newfangled thing called "cookies."

The tech of today is light-years more advanced. But even back then, I was concerned. And I predicted where I saw the trend heading. Naturally enough, not all of my predictions came to pass – I was certain for instance that by now we'd have a national ID card – but unfortunately, most of them did.

The reason I bring this up here is not to tout myself as particularly prescient. It's to note something of actual importance. In 1998, I could still maintain that our saving grace was that data-storage capabilities were way insufficient for the total surveillance of hundreds of millions of Americans and probably would be for a long time to come.

How wrong I was.

It is already technologically feasible for governments to record nearly everything that is said or done within their borders – every phone conversation, electronic message, social media interaction, the movements of nearly every person and vehicle, and video from every street corner.

Before long, it'll also be financially feasible to archive it, according to a sobering report published last December by the Brookings Center for Technology Innovation.

The report concludes that: "Plummeting digital storage costs will soon make it possible for authoritarian regimes to not only monitor known dissidents, but to also store the complete set of digital data associated with everyone within their borders. These enormous databases of captured information will create what amounts to a surveillance time machine, enabling state security services to retroactively eavesdrop on people in the months and years before they were designated as surveillance targets. This will fundamentally change the dynamics of dissent, insurgency and revolution."

Emphasis mine. Consider the implications.

The key, according to the Brookings report: "Over the past three decades, [data] storage costs have declined by a factor of 10 approximately every 4 years, reducing the per-gigabyte cost from approximately $85,000 (in 2011 dollars) in mid-1984 to about five cents today." Using GPS, mobile phone and WiFi inputs, "identifying the location of each of one million people to [a 15-foot] accuracy at 5-minute intervals, 24 hours a day for a full year could easily be stored in 1,000 gigabytes, which would cost slightly over $50 at today's prices." Fourteen cents a day to archive the collective movements of any selected million of us.

Phone calls? "The audio for all of the telephone calls made by a single person over the course of one year could be stored using roughly 3.3 gigabytes. On a per capita basis, the cost to store all phone calls will fall from about 17 cents per person per year today to under 2 cents in 2015."

Video storage takes far more space, of course, and there are also major logistical problems involved in managing such a huge amount of data. But the point is made. Technological innovation will provide the tools. And as soon as government can do something, they invariably will do it.

Diet Soda

2012-02-09T00:01:00.003-05:00

Diet drinks are poison if you listen to some researchers. I was surprised to learn that diet drinks provoke insulin production as the sweetness in the "diet" soda fools the body into thinking it has ingested sugar. Diet drinks are bad for one it seems in a different way from the sugared drinks that aren't labeled "diet." I have taken to drinking a lot more tea, black and green, and enjoying the (potentially deleterious) caffeine that way. You might too after reading this report from Canada's Global Research:

As in politics and other endeavors where mind-control plays a prominent role, advertising and propaganda are the most effective tools of those who are pitching a program or a product. The reasons for large infusions of cash could be to cover corporate wrongdoing, agency corruption, incompetency or just to hide plain carelessness but usually, profit motive is the driving force.

Ethical business practices should promote periodic reviews but it appears that the only aspartame reviews have been on the annual reports. Of course, there are reports of side effects but why would that not have triggered an ongoing review by the agency responsible for approval in the first place? The FDA says that they monitor scientific literature for indication of potential health issues but they are not aware of credible evidence at this time to reverse the approval of aspartame. Perhaps they have not heard of Dr. Morando Soffritti?

On April 23, 2007, Morando Soffritti, MD was honored with the Collegium Ramazzini's third Irving J. Selikoff Award at the Mount Sinai School of Medicine in New York, USA. Dr. Soffritti was recognized for his "outstanding contributions to the identification of environmental and industrial carcinogens and his promotion of independent scientific research.”

The attitude of the FDA and industry would present the case that the only credible scientific evidence comes from government agencies or from corporate sources. Danger signs anyone? Could it be that we are so taken in by the all-encompassing custodial nature of total government that we have lost the ability to think and act on matters that concern our most vital possession, our health?

On a personal level there is no in-between on diet drinks, either you like them or you hate them. No matter what the Food and Drug Administration (FDA) says or what any critical medical study shows, people are fiercely loyal to their diet drinks. There are also unimaginable numbers of other products that contain aspartame besides diet drinks but these products do not generate the intense loyalty as the fizzy cola thirst-quenchers. Included in these unnecessarily altered products are medicines, toothpaste, yogurt, baked goods and other specialty drinks.

Commercialism forges ahead of good science and another man-made substance of questionable value has been added to the food chain. The detractors don't buy it but those addicted purchase it with an irrational compulsion. Like those with a narcotic habit, they don't seem to mind paying to satisfy the craving. And pay they do, to the tune of billions of dollars a year.

Just what is this magical potion, aspartame? It is a combination of methanol and two amino acids, phenylalanine and aspartic acid. In 1965, James Schlattler, a chemist working at G.D. Searle discovered the substance quite by accident while working on a drug for another medical purpose. It was found to be many, many times sweeter than sugar but without the calories.

The chemistry of aspartame as it breaks down in the human body is well documented but acceptance of the science depends on one's alliance with the industry or with the skeptic side. Regardless of one's position on the subject, metabolism of aspartame in the human body and the side-effects, or lack thereof, continues to be a intensely controversial subject.

National Institutes of Health (NIH) describes a metabolite as any substance produced during metabolism (digestion or other bodily chemical processes). In medical terms, a metabolite usually refers to the product that remains after the drug is broken down (metabolized) by the body.

Virtually all industry funded studies discount any adverse effects of aspartame metabolites. Typical “friendly” clinical reviews of aspartame toxicity will most likely find the authors are closely related to the producers of aspartame. Conversely, and almost without fail, independent studies claim serious and deleterious consequences as result of aspartame consumption.

A similar parallel could be drawn from the life-cycle of a popular non-food product. The Model 35 Beech Bonanza airplane was fast, comfortable, sexy and was immediately recognizable with its unique v-tail. Together, these attributes made it an easy sell to eager post-war consumers. It quickly became the darling of those who could afford the luxury and prestige of traveling in their own Rolls-Royce with wings. It was also very deadly.

From its initial debut in 1947, to its end of production in 1982, the plane had suffered about 250, in-flight structural failures which resulted in hundreds of deaths of its pilots and innocent passengers.

An engineering ethics study done at the University of Texas found that depending on year model, either the wings separated or the v-tail assembly failed. In 1952, the Federal Aviation Administration (FAA) conducted a 12-year study and found out what they already knew; the airplane had an unusually high incidence of in-flight structural failures. No further action was taken and the study was terminated.

As compared to the aspartame controversy a similar triumvirate of players were involved; the designer/manufacturer, the government agency that certified the design and the consumer. In the aviation example, Beech presented their design to the FAA; the FAA did their certification which assured the public that the product was airworthy and the aviation community quickly made it one of the most successful private airplanes ever produced. Never mind it also produced an inordinate number of fatalities.

Concerning the lethal attributes of this airplane, the manufacturer could say the design was approved by the FAA so it was certified safe, therefore any crash must have been due to pilot error. The FAA said that it followed routine design certification procedures so they could find no reason to ground the airplane. Someone has to be culpable so it was necessary to shift the blame to the last one holding the controls. And so it was for about 35 years.

After the introduction of the Model 33 and later, the Model 36 (same airframe except both of these models had the more conventional straight tails), it was found that the v-tails had 24 times the number of in-flight structural failures. So much for the engineering ethics and invincibility of manufacturers and government agencies. Admitting mistakes and correcting deficiencies comes hard for these two groups. Now, back to the controversial aspartame story.

The diet food and drink industry is a multibillion dollar industry and the ravenous consumption by the thirsty public defies comprehension. As in the airplane example, success and profit motives are not necessarily bad things but any industry can be its own worst enemy if its ethics are less than scrupulous.The story of aspartame, its evolution and time-line from its discovery to FDA approval is replete with political maneuvering, suspected malfeasance and intrigue. It is rather difficult not to suspect wrong-doing when all the parts of the puzzle are laid on the table.

The U.S. Food and Drug Administration (FDA), as the final authority to control the introduction of certain additives into the food chain should have exercised the most extreme caution in blessing this product which could conceivably effect the lives and health of millions of people. Many of these people are children and other trusting or unsuspecting individuals incapable of exercising caution. However, in all fairness, this is indeed exactly what they did from the mid-sixties until 1983, when greed, ego and politics triumphed over sound judgment, good science and ethics.

As we have seen before, sometimes as little as five thousand dollars worth of potential personal gain can trigger an unethical act, especially if it is thought that no one is watching. When potential profits range in the neighborhood of hundreds of millions of dollars the temptation for concealing critical information about one's products might become too much to resist.

When greed, gain and other human frailties are considered, a cynical person could suspect therein exists a possible root-cause for wrongdoing. A colossal industry is at stake and it is only natural for those companies that manufacture it or those that use it in their products to protect their industry and cash flow, even when their products have the potential to harm untold numbers, including children.

Early testing was conducted in the fall of 1967 when Dr. Harold Waisman, a biochemist at the University of Wisconsin, led aspartame safety tests on infant monkeys on behalf of the Searle Company. Of the seven monkeys that were being fed aspartame mixed with milk, one died and five others had grand mal seizures. The entire file can be found online at www.dorway.com/raoreport.pdf .

On January 21, 1981, the day after Ronald Reagan's inauguration, Searle re-applied to the FDA for approval to use aspartame in food sweeteners, and Reagan's new FDA commissioner, Arthur Hayes Hull, Jr., appointed a 5-person Scientific Commission to review the board of inquiry's decision. It soon became clear that the panel would uphold the ban by a 3-2 decision, but Hull then installed a sixth member on the commission, and the vote became deadlocked. He then personally broke the tie in aspartame's favor. Hull later left the FDA under allegations of impropriety, served briefly as Provost at New York Medical College, and then took a position with Burston-Marsteller, the chief public relations firm for both Monsanto and G.D. Searle. Since that time he has never spoken publicly about aspartame.

The preceding three paragraphs were reported by the National Institute of Science, Law, and Public Policy, Washington, D.C.

While the components of the additive are well known, the team that pushed the approval process were perhaps not quite as well known. Donald H. Rumsfeld was Chief Executive Officer at G.D. Searle from 1977 to 1985 which was during the aspartame approval process. As a hard-driving business executive at Searle he was awarded the "Outstanding Chief Executive Officer" in 1980 and 1981 for his efforts to reshape the company. He may have helped reshape America too with the help of the FDA and the diet food and drink industry. Cronyism scored a direct hit.

Since 1983, when the FDA approved aspartame for human use in diet drinks, the public has taken the bait for an easy fix to get rid of a flabby gut and extra pounds. Why not drink yourself out of obesity? It would seem, at the onset, a completely rational thing to do; watch the pounds float away by drinking a sugar-free can or bottle of pop, many times a day.

Ka-ching, ka-ching, the profits roll in on a mix of carbonated water, caramel flavoring and coloring, sweetened with a white crystalline powder called aspartame. The FDA says it's safe so every day millions of people drink, eat and brush their teeth with concoctions laden with aspartame. As noted earlier, many medications even contain the substance. A Massachusetts pharmacist created a list of about 150 aspartame-containing drug products of which many are targeted for children (not including generics).

The retailers wrap the package with usual advertising gimmickry and the campaign rolls on with insidious get-thin quick implications. It even goes to war; we supply our troops with a refreshing drink of home, never mind that it has been reported to trigger aggressive behavior and anger. On the other hand, maybe a little bottled road-rage on the battlefield is desirable? Not to worry, any long-term medical consequences to our best and brightest can be shoved over to the Veterans Administration where the budget is already strained to the breaking point.

It is unfortunate that studies like the following have to be done after and not before the genie gets out of the bottle. Studies such as those done by the Ramazzini-Soffritti group in Italy and by P. Humphries, E. Pretorius and H. Naudé at the University of Pretoria, South Africa, show that aspartame is a potent neurotoxin and endocrine disruptor. The latter study was published in European Journal of Clinical Nutrition in 2008. A neurotoxin is like rattlesnake venom or poison from a black widow spider. Endocrine glands include the thyroid, adrenal and pituitary glands.

On the pro-aspartame side, company scientists report that certain fruits contain more methanol than does aspartame. While this fact may be true, what they don't say is that ethyl alcohol is also found in natural fruits which is the antidote for methanol. On the left side, independent medical doctors, scientists and chemists say that is an essential and critical difference. When consumed alone, methanol (wood alcohol) is extremely dangerous and can cause blindness and even death.

According to the U. S. Environmental Protection Agency (EPA), animal data and human historical epidemiological information show that methanol may produce acute toxicity. Casarett and Doull's Toxicology (Klaassen et al 1986) points out that whenever access to ethanol had been restricted (e.g., during Prohibition in the 1920s), the incidence of methanol poisoning has increased. “The characteristic results of an epidemic are that a third of those exposed to methanol recover with no residues, a third have severe visual loss or blindness, and a third die. Thus in sufficiently high doses methanol has profound systemic effects."

The General Foods study by Roak-Foltz and Leveille, found that the average adult will ingest approximately 87 mg of methanol on a daily basis when substituting artificial sweeteners in their food. Since this date was gathered in 1977-1978, it is likely the amounts have increased substantially.

Both the U.S. Air Force magazine "Flying Safety" and the U.S. Navy magazine, "Navy Physiology" published articles warning about the many dangers of aspartame including the cumulative deleterious effects of methanol and other reactions. The articles note that the ingestion of aspartame may make pilots more susceptible to seizures and vertigo (U.S. Air Force 1992). Many pilots appear to be particularly susceptible to the effects of aspartame ingestion, probably because of trying to stay hydrated in a low-humidity atmosphere. They have reported numerous serious toxicity effects including grand mal seizures in the cockpit. A grand mal seizure is caused by abnormal electrical activity throughout the brain. If it is not a good idea to see a pilot at the controls experience a grand mal seizure one would assume it would be equally disturbing to see a passenger at 30,000 feet undergo the same physical incapacitation.

The National Center for Biotechnology Information (NCBI) published a study done by the Department of Experimental Physiology, Medical School, University of Athens, Greece, on the the effect of aspartame metabolites on human erythrocyte membrane acetylcholinesterase (AChE) activity. It is concluded that low concentrations of ASP (aspartame) metabolites had no effect on the membrane enzyme activity, whereas high or toxic concentrations partially or remarkably decreased the membrane AChE activity, respectively. Additionally, neurological symptoms, including learning and memory processes, may be related to the high or toxic concentrations of the sweetener metabolites.This was a short-term study done on healthy adults. It is therefore not difficult to predict the same or even more dramatic effects when infants and children consume diet products throughout their formative years.

The same information was published by the EPA at their Health & Environmental Research Online (HERO) website. Their stated purpose is to provide an easy way to view the scientific literature behind EPA science assessments. HERO is an EVERGREEN database which means that scientists can keep abreast of new research. There are more than 300,000 scientific articles from peer-reviewed literature and new studies are continuously added. HERO is part of the open government directive to conduct business with transparency, participation and collaboration. Through HERO, the public can participate in the decision-making process. One would assume that the FDA and the EPA would share or coordinate scientific studies.

Need we go further? The academic and medical community apparently thought yes, the safety of aspartame must be fully explored since it is being offered in a wide variety of food and drink products which are consumed by the general public and heavily used by children.

An aspartame study by C. Trocho et al, was conducted by the staff of the Biology Department at the University of Barcelona. It clearly shows that aspartame which was labeled with carbon 14 isotope was transformed into formaldehyde in the bodies of the living specimens and that when they were examined later, the radioactive tagged formaldehyde was found throughout the vital organs of their bodies.

This conclusively proves that aspartame does indeed convert to formaldehyde in the bodies of aspartame consumers, and that many of the symptoms reported by victims of aspartame toxicity are indeed those associated with the poisonous and cumulative effects of formaldehyde.

Merriam-Webster describes formaldehyde as a colorless, toxic, potentially carcinogenic, water-soluble gas, CH 2 O, having a suffocating odor, usually derived from methyl alcohol by oxidation: used chiefly in aqueous solution, as a disinfectant and preservative, and in the manufacture of various resins and plastics. What would renowned French Chef Julia Child have had to say about this metabolite of aspartame? You can be assured it would not have been “bon appétit”. Beyond Ms. Child, the International Agency for Research on Cancer, an intergovernmental agency part of the United Nations World Health Organization classifies formaldehyde as a Group 1 carcinogen.

In a study at the Cesare Maltoni Cancer Research Center of the European Ramazzini Foundation it was demonstrated for the first time that aspartame is a multipotent carcinogenic agent when various doses are administered with feed to Sprague-Dawley rats from 8 weeks of age throughout the life span. In the second Ramazzini-Soffritti study it was concluded that the results reinforced the first study and when life-span exposure to aspartame begins at fetal life, its carcinogenic effects are increased.

When considering what should have been done to protect the public there is little doubt in many minds that the ethics of the FDA and its safety net for the general public were severely compromised at best, non-existent at worst.

Some of the adverse symptoms that have been reported include the following: impotence, reduced female response, numbness, tingling nerves, aggressive behavior, spontaneous anger, anxiety, aggravation of phobias, depression, grand mal seizures and a combination of symptoms that mimic a heart attack. Since another aspartame constituent (phenylalanine) tends to inhibit serotonin process in the human body, it might be important to examine another phenylalanine/serotonin imbalance. That imbalance shows cause for concern.

Professor Michele Ernandes and colleagues at the University of Palermo offer an explanation of the relationship of reduced brain serotonin synthesis and behavioral consequences. In their studies the reduced brain serotonin synthesis was brought on by a specific dietary imbalance. Could it be that a similar dietary imbalance occurs when large amounts of aspartame are introduced into the diet? Ernandes states that serotonin deficiency involves several behavioral consequences such as tendency towards aggressive behavior, increase of intraspecific competition, increase of magic thought or religious fanaticism. The professor focuses on cereals utilized for human feeding. His target is maize which has a very low “trp/LNAAs” value (tryptophan/Large Neutral Amino Acids ratio).

Maize was firstly and largely utilized by Native American peoples and this is particularly interesting in the study of the Aztec human sacrifice/cannibalism complex. Historical data reveal that cannibalism occurred in period of the year when maize dependence was greater, supporting the hypothesis of Ernandes and his associates that serotonin deficiency among the Aztecs might have accentuated their religious and aggressive behavior patterns on the one hand, and on the other it might have led them unconsciously, towards anthropophagy in order to attenuate it (rising “trp/LNAAs” value by means of human proteins) when it became too strong.

It would seem that the study by the Ernandes group would have a correlation with many of other studies that show adverse behavioral consequences of aspartame consumption.

There are also numerous other neurological symptoms that have been reported. If any of these conditions are present, would it not be beneficial to eliminate consumption of any product that contains aspartame? It will take some label-reading but it is a cost-free endeavor. After a few months of abstention from all products that contain aspartame you may feel like a new person or perhaps your mate will feel like you're a new person. If not, you've possibly lost nothing but a few pounds. Could it be that the low pH of soft drinks (around 3.0) causes the body to retain fluids trying to re-balance the body's natural pH balance of 6.5 or so?

The Harvard School of Public Health reports that a eight-year study conducted by Department of Medicine, Division of Clinical Epidemiology, The University of Texas Health Science Center at San Antonio, Texas, found that of nearly 3,700 residents of San Antonio, Texas, those who averaged three or more artificially sweetened beverages a day were more likely to have gained weight over an eight-year period than those who didn't drink artificially sweetened beverages. Although this finding is suggestive, keep in mind that it doesn't prove that artificially sweetened soft drinks caused the weight gain.

The San Antonio study group went on to say that their findings raise the question whether AS (artificial sweeteners) use might be fueling--rather than fighting--our escalating obesity epidemic.

If you are a regular or long-time consumer of artificially sweetened products and have not yet experienced any side effects of aspartame and its metabolites, perhaps you are just lucky or have a natural immunity to carcinogens and/or neurotoxins. If however, you don't like the odds or have doubts about natural immunity or about the controversial science, there might be an easy way to protect yourself.

For fundamentalists there is a long-term, pragmatic approach; simply drink water. God created it to be used for human consumption about the same time he created man, some 6,000 years ago. For those who believe in the Big-Bang theory of evolution, water has a phenomenal record of satiating the thirst of man, beast and fowl for millions of years.

For the person climbing the corporate ladder or for an individual on the fast-track to the top of the class, there are some sheik, expensive and exotic waters from many parts of the world that will make a statement on fashion or status while at the same time quenching one's thirst.

By choosing clear, uncontaminated natural waters as your favorite thirst-quencher you just might be rewarded with serene composure, vitality, good mental and physical health, strength and stamina, a steady hand and freedom of pain.

Stay thirsty my friends! But remember, "caveat emptor” is the catch-phrase when reading the labels on products that you intend to introduce into your body.

Charles Foerster is a former Naval Aviator and professional pilot and contributes to www.globalresearch.ca/

Mortgage Smokescreen

2012-02-08T00:01:00.001-05:00

By Mike Whitney of the superb Counterpunch newsletter, http://www.counterpunch.org/ this discussion of the President's new and latest and freshest plan to salvage housing and mortgages and the tired old American Dream of home ownership. Really all the President is doing is trying to have his cake and eat it in an election year. Sounds good and is less filling than a real attempt to help homeowners would be. That might cost the banks and they own the President so we get this dreck:

Barack Obama’s new housing refinance plan has nothing to do with “lowering monthly mortgage payments so responsible borrowers can stay in their homes”. That’s all public relations bunkum. The truth is the banks want to offload their garbage mortgages onto Uncle Sam to avoid hundreds of billions of dollars in losses. That’s what this refi-ruse is really all about.

The administration estimates that 3.5 million people with private label mortgages will be eligible to refinance into loans backed by the Federal Housing Administration (FHA) Many of these are high risk mortgages that will eventually go into foreclosure which is why the banks want to get them off their books. Regrettably, Obama is only too happy to help them achieve that goal. Here’s a little background from the Christian Science Monitor:

“The nation now has about 30 million mortgages backed by government-sponsored enterprises (GSEs), mainly Fannie or Freddie…. About 3 million of those are “under water,” meaning the loan is now bigger than home value. Another 20 million or more have been underwritten entirely by private lenders. Some 35 percent of those, 7 million or more, are under water.” (“Obama plan to lower mortgage payments could help, but how much?”, Christian Science Monitor)

Why are so many more “private label” mortgages underwater than loans that were issued by
Fannie or Freddie?

Because the banks were lending money to every Tom, Dick and Harry who could fog a mirror. It was all a big joke. The banks didn’t really give a hoot if the borrowers were creditworthy or not because they were bundling the mortgages together into mortgage backed securities (MBS) and selling them off to investors around the world, so documentation and loan standards didn’t really matter to them. They got their pound of flesh whether the loans blew up or not. Here’s a little refresher from the Washington Post on how we got to where we are today:

“The biggest culprits in the housing fiasco came from the private sector, and more specifically from a mortgage industry that was out of control. These included lenders who originated home
loans, investment bankers who packaged them into securities, rating agencies that misjudged these securities, and global investors who bought them without much, if any, study….

Between 2004 and 2007, private lenders originated three quarters of all subprime and alt-A mortgage loans. These were loans to financially fragile homeowners with credit scores under 660, well below the U.S. average, which is closer to 700. But only a fourth of such loans were originated by government agencies, including Fannie, Freddie and the Federal Housing Administration.

The dollar amount of subprime and alt-A loans made during this period by the private sector was jaw-dropping, reaching nearly $600 billion at the height of the lending frenzy in 2006. …. By contrast, government lenders made just over $100 billion in subprime and alt-A loans in 2006. Even in 2007, when the housing market was beginning its free fall, private lenders still handed out more than $300 billion via these very shaky mortgage loans…(“Fannie and Freddie don’t deserve blame for bubble,” Mark Zandi, Washington Post)

The vast amount of bad mortgages were generated by privately-owned banks, not government-sponsored entities. Keep that in mind the next time your loudmouth brother-in-law starts spouting off about how the GSE’s or the Community Reinvestment Act (CRA) caused the financial meltdown. The banks were 100 percent responsible. And now they’re back for a double-dip because they still have tons of these wilting loans in their vaults and they need to get rid of them pronto. And that’s where Obama comes in. The banks are counting on the dissembler in chief to make it look like this refi-claptrap is really an effort to “provide a bit of relief for an ailing economy” or “to help working folks make their mortgage payment”. It’s all hogwash.

The reason the banks have waited this long (for another bailout) is because the 50-state robosigning case has dragged on longer than they’d anticipated. They figured the 50 state Attorneys General would roll over and play dead like the other politicians they deal with. But that hasn’t happened. The legal fight continues with no end in sight. What the banks are hoping for is a ruling “that prevents states from effectively challenging future foreclosure actions that are based on faulty prior assignments.” In other words, they want to be able to boot you out of your home whether they have proper documentation or not.

Meanwhile, the backlog of homes (that’s in some stage of foreclosure) continues to grow to record levels. When the sluice-gates finally open, an ocean of distressed homes will surge onto the market sending prices plunging and leaving bank balance sheets deep in the red. Here’s more from CNBC’s Diana Olick:

“To give you an idea of just how much the “robo” scandal is toying with the numbers, LPS compared states that require foreclosures to go through the courts versus states that don’t (judicial versus non-judicial) and found the following:

- 50 percent of loans in foreclosure in judicial states have not made a payment in two years, as opposed to 28 percent in non-judicial states.

Foreclosure sale rates in non-judicial states are about four times those in judicial states.” (“Robo-Reality: Final Foreclosures Fall as Pipeline Swells” Realty Check, CNBC)

The backlog of distressed homes is much greater than the data would indicate. Neither the official nor the shadow inventory accurately accounts for the bulging number of homes (10 million) currently in the pipeline.

That’s why the administration is looking for creative ways to whittle down the supply. One idea is to sell foreclosures in bulk to deep-pocket investors with the proviso that they convert them into rentals. But why give Wall Street fatcats the privilege of buying foreclosures at a discount when mom and pop investors are already scarfing them up like hotcakes? How fair is that?

The driving force behind the foreclosures-to-rental scam is that the banks want to remove the GSE’s stock of distressed homes from the competition so they can fetch a better price when their REO’s hit the market. Once again, the policy is being tailored to meet the needs of the banks not the people. Here’s more from Olick about the risks this poses to FHA:

“Critics will also argue that the FHA, which now has an inordinately, historically large share of the mortgage market, is in no position to take on any more risk. The FHA could be considered “underwater” itself, guaranteeing about $1 trillion in mortgages but sitting on just a $1.2 billion dollar cushion to cover losses.

To that end, officials say they could create a separate fund for these loans, not the regular mutual mortgage insurance fund (MMI). This would be a special risk fund, designed to handle high losses.” (“Obama’s Mortgage Refi Plan to Go Through FHA”, CNBC)

How do you like that? The FHA is already leveraged at 100-to-1 and the banks want to add even more debt. And they want to do it in the most deceptive way possible, by creating an off-balance sheet investment vehicle where the red ink can be hidden from public view.

To be eligible for Obama’s refi-program, borrowers will need a credit score (FICO) above 580,(which is extremely low), they’ll have to be employed, and they’ll have to be current on their mortgage payments. (for the last 6 months) In other words, lending standards are being eased so the banks can dump as many high-risk mortgages on the FHA as possible. Obama breezily refers to these abysmal lending standards as “cutting through the red tape.”

Applicants will also be able to refinance under the Obama’s program with loan balances up to (get this) 140 percent of the value of their home. So, even if you owe $560,000 on a home that is currently worth $400,000–and you don’t have a dime’s worth of equity in the house–have no fear–you can still get money from Uncle Sugar. This isn’t a good way to keep people in their homes. It just turns them into debt slaves.

One last thing, all the talk about a “bank tax” is pure blather. The banks will be more than happy to cough-up $5 billion or so if it means they’ll be able to jettison the hundreds of billions in crappy loans on their books. As far as they’re concerned, that’s money “well spent”.

Greek Tragedy

2012-02-07T00:01:00.001-05:00

We have been living in a bit of a bubble as the manipulators massage US statistics to help the President weave his way to another certain victory in the voting this Fall. Meanwhile Europe continues to thrash about struggling to figure out how to escape crushing debt. From zero hedge this analysis of the Greek fiasco as it continues to unfold:

Following up on our report from this morning that according to former Greek defense minister, German submarine chief procurer, and not to mention Jenny Twenty repeat offender, Evangelos "Xanax" Venizelos, we learn that the god of Deus Ex Machinae is about to abandon Greece, after an announcement by that most magic unicorn-infatuated of bureaucrats, Eurogroup head Jean-Claude Juncker made it clear that Greece is all but finished. As Reuters reports, "The possibility of a sovereign default by Greece cannot be ruled out, Jean-Claude Juncker, head of the Eurogroup of finance ministers from the single currency zone, said in a German magazine on Saturday." Translation: A Greek default on that €14.5 billion bond maturity D-day of March 20, is now inevitable. In an advance copy of comments to news weekly Der Spiegel, Jean-Claude Juncker was quoted as saying Greece could no longer expect solidarity from other euro zone members if it cannot implement reforms it has agreed. "If we were to establish that everything has gone wrong in Greece, there would be no new programme, and that would mean that in March they have to declare bankruptcy," he said. So after years of delaying the inevitable sovereign Lehman weekend, it is finally here. As a reminder, when Lehman filed, everyone, at least those in charge, thought the fall out could be contained. It couldn't, and the Fed had to step in with roughly $30 trillion in backstops, guarantees, and asset purchases. The same will happen this time.

Curiously, it was none other than Zero Hedge who said back in April of 2010, that Greece should just cut the cord and get on with it, because "Not only will a delay in defaulting do nothing for the economy except bleed it to death slowly, but ever more frequent risk flare episodes culminating in bank runs will intensify the deposit outflows and impair the banking system beyond repair (for depositors to keep their money in Greek banks, they need to be compensated for the risks: double digit rates sound about right), thus dooming any hope for an economic recovery." Funny how correct we were on that assessment, just two years ahead of the Eurozone's kleptocrats. On the other hand, having called Europe's bluff for as long as it did, is also an admirable development, if only instead of recycling the cash mooched out of Germany to pay European banks, it had been injected back into the economy and not into German submarines....

As for next steps, the only question now is what happens in that critical interval between February 29 when the second ECB 3-year LTRO takes place, and March 13, when the next FOMC statement is due, incidentally just after the BLS announce that all the labor numbers in the past few months were really just a joke, and the economic contraction is about to hit the US despite what those who believe that the market, and thus the economy, is really just a reflection of one month's seasonal labor adjustment.

And while in the past imminent deadlines were always promptly forgotten this time around, Greece may have boxed itself into a corner, having said earlier today that all must be set in under 24 hours or else the bailout is off the table. Alas, there will be no resolution tomorrow.

On the brink of bankruptcy, Greece must wrap up talks with foreign lenders on the bailout and quickly get political approval to ensure funds begin flowing in time for it to pay back 14.5 billion euros of bonds falling due in mid-March.

But negotiations with its 'troika' of international lenders have stumbled over their demands that include cutting labour costs by axing holiday bonuses and lowering the minimum wage - proposals strongly opposed by Greek political party leaders.

Some more from Reuters why tomorrow may be finally the day when the foreplay officially ends:

Euro zone finance ministers told Greece on Saturday it could not go ahead with an agreed deal to restructure privately-held debt until it guaranteed it would implement reforms needed to secure a second financing package from the euro zone and the IMF.

Euro zone ministers had hoped to meet on Monday to finalize the second Greek bailout, which has to be in place by mid-March if Athens is to avoid a chaotic default. But the meeting was postponed because of Greek reluctance to commit to reforms.

Instead, the ministers held a conference call on Saturday to take stock of progress on the second financing package, which euro zone leaders set at 130 billion euros back in October.

"There was a very clear message that was conveyed from all participants of the teleconference ... to the Greeks that enough is enough," one euro zone official said. "There is a great sense of frustration that they are dragging their feet.

"They should get their act together and start talking honestly, decisively and speedily with the Troika on the aspects of the programme that remain to be finalized - on fiscal and labor market reforms," the official said.

"There is a great sense of frustration with Minister Venizelos, who is very hard to get hold of because he is very busy campaigning for the leadership of (the Greek party) PASOK, so he is not available to meet with Troika members," the first official said.

"He is preparing his own political future, rather than the future of his country. People are seriously disgruntled about that and have conveyed this very clearly to him this afternoon," the official said.

"There is an increasing sense of frustration that why should we honour our part of the bargain, which we have in the past, while Greece does not seem to care that much, and has not delivered their part of the bargain," the official said.

Alas, if Venixanax is now unreachable, it pretty much seals the deal. Or lack thereof.

Still Occupying

2012-02-06T00:01:00.003-05:00

Reuters reports police tore down an Occupy site in the nation's capital while from California we have a report of continuing Occupy protests in Oakland. With the onset of winter there was speculation that occupiers, like Napoleon's Russian Army would collapse in the face of unrelenting winter. It turns out they haven't vanished at all, it's just the coverage.

Police removed protesters as they confiscated bedding and most tents on Saturday from an "Occupy" protest site just blocks from the White House, enforcing a no-camping rule for the public McPherson Square they had ignored for months.

Dozens of mounted police and police on foot in riot gear earlier sealed off the square, which is administered by the National Park Service, and moved in before dawn to enforce the no-camping regulation.

Demonstrators have been in the square since early October to target the growing income gap, corporate greed and what they see as an unfair tax structure favoring the richest Americans.

By early evening, police had scuffled with protesters and moved all but one out of the park as they cleared most of the encampment. Police said the move was only an enforcement of park rules but Occupy demonstrators called the action a "full force eviction" and said the police had beaten them with batons and pushed them out so violently that several people were trampled.

Police said there had been eight arrests and one injury to a police officer who was hit in the face with a brick. Protesters said a protester had been beaten unconscious but the police did not confirm the injury.

"They pushed and beat us out." said Sam Jewler, a protester, 23, from the nation's capital who has been camping in the square for months.

The National Park Service has repeatedly warned protesters it would start enforcing a ban against camping in the square alongside K Street, home to many of the powerful lobbyists who seek to influence lawmakers, and at the Occupy movement's site at Freedom Plaza, both a few blocks from the White House.

"They can go back in," said U.S. Park Police Sergeant David Schlosser, who said the police were just moving protesters out in sections while they implemented the no camping rule. Earlier in the day he told reporters the police action was not an eviction but just "nuisance abatement."

Guarded by police, sanitation workers cleared away most tents and heaps of bedding, palettes, crates, tarpaulins, full-sized mattresses, books, clothes, straw and other debris that had accumulated over the four months of occupation.

By evening, only a handful of empty tents remained. The police had also taken down one of the group's most sentimental symbols of resistance, a large blue tarpaulin decorated with moons and stars and the words "Tent of Dreams" in reference to the ban on sleeping in the park.

Many demonstrators had packed up their belongings and left, but a group of about 60 stood in a cold drizzle just feet from police blocking entry into the park and vowed to continue the movement in some form and retake part of the park on Sunday for a meeting to reassess their next move.

'AN EVOLUTION'

Some protesters vowed to sleep on sidewalks in sight of the park and some planned to seek shelter in nearby houses and a local church. While some demonstrators berated the police, others appeared defeated. One woman cried while a nearby protester kept his arm around her.

"The most important thing is to maintain our presence. That is the plan," said Edward Sahadi, 47, a baker from Key West, Florida, who has been at the site for more than three months.

Others hinted the movement could move on beyond the camp.

"This is not an ending. It's just an evolution. ... We occupied spaces. We can occupy more than that. We can occupy ideas," said Sariel Lehyani, 28, of Washington.

The Occupy movement began when protesters set up camp in New York's Zuccotti Park on September 17, sparking demonstrations across the United States and elsewhere in the world. Its message of economic equality has become a recurrent theme in the U.S. presidential race.

But the eviction of Occupy Wall Street protesters and others in public spaces in other U.S. cities in November and December has made the protests less visible and organizers are now struggling to maintain momentum without the physical camps.

Local media in Austin, Texas, reported that police had cleared an Occupy encampment there, with seven arrests. A spokesman for the Austin Police Department was not immediately available to comment.

Demonstrations in the U.S. capital have survived so long because of an unusually warm winter and a permissive approach by federal authorities reluctant to provoke a confrontation.

But the McPherson Square had encampment has drawn increasing complaints from members of Congress and city officials because of the rising costs of policing, squalor and rats. The protest site has also drawn a number of homeless people.

Despite their small numbers, the Washington protesters have received outsized media attention because their camps are near the White House.

The National Park Service forbids camping on federal land not designated as a campground. Park rules allow tents or temporary structures as part of protests but they cannot have bedding and a tent flap or side of the structure must be open.

There was no sign of police activity at the second protest site, Freedom Plaza. Schlosser said: "We'll address Freedom Plaza at a later time."

Jeffrey Light, an attorney advising the Occupy protesters, said police had been removing tents that were in compliance with regulations. The clearing operation "is what has happened in so many other cities and it's going to happen here," he said.

Meanwhile the Mercury News reports people spoke of peace at the latest Occupy Oakland gathering and march Saturday night, a week after more than 400 arrests, flag burnings, tear gas and chaos filled the same streets during the weekly anti-police protest.

About 150 people gathered on the grass at Frank H. Ogawa Plaza in front of Oakland City Hall about 7 p.m. in a mellow mood before a planned march at 9 p.m.

Late Saturday, demonstrators began marching toward police headquarters; police followed them, mostly keeping their distance. Some protesters covered their faces with ski masks or bandannas and held signs, which included "End the war in Oakland," "No justice, no peace," and "We are the 99%."

The rally and march followed a midday rally a week earlier, when protesters tore down a fence and attempted to enter the vacant Henry J. Kaiser Convention Center. They were met with tear gas, and the confrontation kicked off a chaotic Saturday, culminating with more confrontations outside a YMCA and a flag burning outside City Hall. Police arrested 403 protesters, and 12 received stay-away orders.

Oakland resident Parker Anderson said he was arrested when police blocked protesters and forced them into the YMCA when they were attempting to get back to the plaza.

Following the arrests, he said police crammed 24 people into jail cells that fit five, did not allow them to make phone calls and prevented sick people from getting medications.

"Something needs to change, and I think that's what we're trying to do," he said.

Vicki McGuire, an Oakland psychotherapist, said she dropped back from the protests on Jan. 28 after it became clear that trouble was brewing. "Whether you're a pacifist or a 'diversity of tactics' person, police are accountable for their actions," she said.

McGuire said she initially began supporting the Occupy movement after seeing groups at her child's school compete for arts grants of $20,000, which she considered a pittance. She said she would continue to support the movement despite fissures between peaceful protesters and others.

"We're working on it," she said. "We're not giving up."

Information on the Occupy Oakland website said that those who "identify as peaceful" and are likely to interfere with the actions of fellow protesters may not want to attend the night's march and rally.

"It is a militant action. It attracts anti-capitalists, anti-fascists and other comrades of a revolutionary bent. It is not a march intended for people who are not fully comfortable with diversity of tactics," the message read.

But Occupy Oakland activists said "diversity of tactics" should not be read as being in favor of violence.

"Tonight's tactics is nonviolence," said one man with a megaphone. "End the war in Oakland."

Tibetan Travails

2012-02-05T00:01:00.000-05:00

From Global post network this story on protests no longer reported in Tibet.

China has ratcheted up security in the Tibetan region, cutting Internet and some mobile phone services in large swatches as patrols clamp down on protest.

The state-run Global Times newspaper reported from a Tibetan part of Sichuan province on Friday, saying that Internet and phone services were cut in a 50-square-kilometer area around protest sites.

The nationalistic newspaper published one of the only available reports in English from the Tibetan region, as foreign journalists in China have been blocked from reporting on the situation.

In a lengthy piece under the headline, "Monks Run Amok," the newspaper focused on a Han Chinese man who said his house and possessions were destroyed when "a knife-wielding mob shouting death threats," stormed his home. The piece said his house was targeted because his brother is a local police official.

More from GlobalPost: China says "no sweat" over Tibet

Tibetan activists based outside of China have documented wide protests across Tibet since late last year, and the Chinese security response, which they say is heavy-handed.

It's been impossible for most foreign journalists to reach the area to independently investigate or verify what has happened.

The Global Times took a party line in painting the conflict, in which several Tibetan monks have set themselves on fire to protest Chinese rule, saying that it was driven by forces outside of China and not an ethnic dispute. The man whose house was destroyed told the newspaper: "There's no conflict between Han and Tibetan people. All the crimes were committed by political monks in foreign countries."

That thinly veiled reference to the Dalai Lama comes a day after the newspaper hinted that China would outlast the Tibetan spiritual leader by waiting for him to die.

The Falkland Islands Again

2012-02-04T19:17:00.000-05:00

From UPI:

Tensions over the Falkland Islands have been increasing ahead of the 30th anniversary of Argentina's invasion in 1982.

The latest escalation was prompted by the decision of Mercosur, a South American trading bloc, to close its ports to ships flying the Falkland Islands flag in December.

When British Prime Minister David Cameron then accused Argentina of "colonialism", the Argentine Senate passed a motion condemning his comments.

There were also demonstrations - with the Union flag burning - outside the British embassy in Buenos Aires.

Then the Royal Navy announced that it was sending the destroyer HMS Dauntless to the South Atlantic, off the Falklands.

The British government said the move was routine, but it will do little to ease tensions in the region.

National consensus

HMS Dauntless is among the largest and most powerful air defence destroyers The status of the islands, known as the Malvinas in Argentina, is still a very sensitive issue for Buenos Aires.

In the capital, it is common to see posters highlighting the country's claim to the islands. Many Argentine cities also have monuments to the war, in which more than 600 soldiers died.

It is not uncommon either to see youngsters with tattoos of a Falklands map in the colours of the Argentine flag.

At a political level, feelings are no less intense.

National politics may be extremely polarised, but there is consensus between the government and the opposition over the country's claim to the islands.

"It is the centrepiece of Argentina's foreign policy," says Jorge Battaglino, lecturer in international relations at Torcuato di Tella University in Buenos Aires.

Growing support

Analysts agree that commemorations of the war will be more prominent this year than ever before.

Some say this is because it is the 30th anniversary. But it also coincides with a change of tack by the government, which is pushing more forcefully for talks with the UK.

Continue reading the main story
“
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The war only managed to delay the possible start of negotiations between Argentina and Britain”
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Atilio Boron

Argentine sociologist
Britain insists it will not open negotiation on the Falklands, as most islanders wish to retain British sovereignty.

Pollster Ibarometro says support among Argentines for the country's claim to the islands is traditionally at about 65-70%, but that Mr Cameron's comments boosted that to nearly 74%.

Ibarometro's director Pablo Lopez also says that there is growing support for the government's more aggressive approach.

"Since 2009, backing for the government's strategy has jumped from about 40% to 67%," he says.

A military government was in power in Argentina at the time of the 1982 invasion.

It was a time of social unrest, and the state was leading its so-called "dirty war" - a crackdown on left-wing activists which left an estimated of 30,000 people dead.

Yet support for the war was high.

For years, this has complicated the issue for Argentines, who have tried to disassociate support for the Falklands from support for the military dictatorship.

"People today have managed to separate both views," says sociologist Vicente Palermo.

"The Malvinas are seen as a national cause, regardless of whether there was a war over the islands sparked by an unpopular military government."

Cameron factor

Britain has held the islands since the 1830s, but Argentina insists it has a prior claim.

The Falklands dispute is an old national cause in Argentina "It is an old national cause, and the military took advantage of this popular feeling to try to maintain their grip on the country," says sociologist Atilio Boron.

"The war only managed to delay the possible start of negotiations between Argentina and Britain," he adds.

After the war, Argentina suffered decades of internal economic and political strife, but the relative calm of the past decade has allowed foreign policy to come to the fore.

The election of Nestor Kirchner as president in 2003 marked an increase in Argentina's efforts to claim the islands, and the government has since actively sought support from other nations in the region and the UN.

Mr Kirchner and his wife Cristina - the current president - grew up in the Argentine Patagonia, in the south of the country, where the issue runs high because of the relative proximity to the disputed territory.

There is some debate in Argentina as to whether this explains the government's interest in the issue.

Some, like Mr Palermo, say that the official position is just an accurate representation of public opinion.

He says President Fernandez may also be using the Falklands to deflect attention from domestic issues.

Not everyone agrees.

"Why would the president do that? She has just been re-elected with strong support, the economy is growing and her popularity is high," says Mr Battaglino.

"It is David Cameron who is trying to deflect attention from domestic issues," says Mr Boron.

"The UK's economy is no better than Argentina's. It was not Buenos Aires that had social unrest and riots last year, but London," he adds.

The Argentine government believes the recent support from other countries in the region to their claim to the islands may have improved the prospects of Britain agreeing to open negotiations on the issue.

But so far, from the Foreign Office in London, there has been no indication of any change in the British stance.

Canadian Health Care

2012-02-02T00:01:00.002-05:00

This story by Kari Huus, of www.msnbc.com highlights what a failed medical system we have in the US embarrassing as it is. It's something obvious to anyone paying attention but it's mainstream stories like this one that hopefully will wake more zombies to the issue.

Since the death of Canadian skier Sarah Burke in January, fans and supporters from around the world have donated over $300,000 – more than enough to cover the massive U.S. medical bill generated by efforts to save her.

The outpouring of grief for Burke and the influx of funds are a tribute to a young woman who was a pioneer and legend in her sport. The need for a fundraiser — to help her grieving family avert bankruptcy — was viewed by some Canadians and U.S. observers as a condemnation of the U.S. health care system.

"The irony is that had the accident occurred in Canada… her care would have been covered because, unlike the U.S., Canada has a system of universal coverage," wrote Wendell Potter, an insurance executive-turned-whistleblower who writes for iWatch at the Center for Public Integrity. "No one in Canada finds themselves in that predicament, nor do they face losing their homes as many Americans do when they become critically ill or suffer an injury..."

Burke, who died at 29, was on skis by age five, and pursuing a professional skiing career before she left high school. She pioneered women’s halfpipe skiing and was instrumental in getting the event included in the X-Games, according to a profile in Sportsnet magazine of Canada.

"She was to freeskiing what Wayne Gretzky was to hockey or Michael Jordan was to basketball — the iconic face of a sport,” wrote Sportsnet reporter Dan Robson. "She built her world by conquering limits, both on the hill and off it."

After Burke’s crash while training on the Eagle Superpipe at Park City Mountain Resort in Utah on Jan 10, doctors fought to save her for nine days. She died Jan. 19, from a torn vertebral artery in her neck that caused bleeding in her brain,

Burke’s contribution to sport — not to mention her youth, beauty, charisma and fame — has no doubt helped the effort to generate donations to cover an operation, countless tests, care and hospitalization. The fundraising page on GiveForward.com late Monday showed that $302,535 had been raised. Burke’s publicist said that medical costs were expected to be about $200,000.

The fundraising page said that future contributions would go to a foundation “to honor Sarah's legacy and promote the ideals she valued and embodied."

The loss of Sarah Burke is no less painful for her loved ones, but with medical care covered through donations, the aftermath will not bring them additional hardship.

For many Americans, the hardship persists.

On Monday, Potter pointed to the plight of a 13-year-old Caroline Richmond on life support in Alabama after collapsing from a stroke, which turned out to be caused by leukemia. Her self-employed parents do not have health coverage.

“As it turns out, Caroline is one of more than 50 million men, women and children who do not have health insurance in the United States, which is why her family is in the same predicament as Sarah Burke’s,” Potter wrote.

The community has launched a multi-pronged effort to raise money to cover mounting medical costs for Carolyn — car washes, a bake sale, a fish fry and so on — but like most people who have life threatening medical conditions, she is not famous.

An estimated 700,000 American families file for bankruptcy every year because of medical debt, Potter said.

Gradual Disintegration

2012-02-01T00:01:00.000-05:00

It does happen from to time that the duo that runs Automatic Earth put out an essay that delves deeper and more clearly into the state of the economy than any other website. It seems Greece's debt is gradually being conceded as being ungovernable and Germany is going to get the Greek economy taken over by European (ie: German) technocrats. Greece as a German colony is but one of the bizarre changes coming to the developed world. Worse to follow says The Automatic Earth.

For today’s global financial problems, there are no solutions that are favorable to either incumbent politicians or wannabe leaders (unless they’re extremists, perhaps), let alone to the people they claim to represent. All our herd of leaders can do is to postpone the inevitable outcome of inevitable processes as long as possible.

That's why we see Obama presenting yet another housing plan that won't work, and Europe setting up the umptieth Save Greece concoction that is doomed to fail before it's signed - if that happens at all -. Obama knows it, and so do Europe's leaders.

The disaster they're seeking to avert, it seems, is not so much economic depression as it is their being voted out of office. And this pattern is not going to change, not as long as they can keep up appearances by seizing ever more of our children's future wealth, not as long as we let them.

Greece is negotiating a deal with investors to achieve a 70% haircut on existing bonds, up from 21% hardly more than half a year ago, and it still won't be enough. The 49% increase since last summer should be a huge red flag for everyone.

Why that increase? Well, first of all of course because 21% was always ridiculously low. But something else is happening too: the biggest developing problem for Europe is that a Greek default can increasingly be enormously profitable for certain parties in the market. And why should they then work to "save" Greece?

It has been clear for a long time now that Greek bonds have no value left at all. During that time, the smarter kids in the class have been able to position themselves according to that fact. Therefore the noose around the EU and ECB necks gets pulled in tighter as we go along. And as the ridiculous notion of the 70% haircut being labeled as "voluntary" keeps being touted.

The IMF is pressuring the ECB to also take a haircut. Other central banks and sovereigns are next in line. Hello, Fed! Hey, China! The ECB wants to sell its Greek paper to one of the European emergency funds, which can then take the haircut. Musical chairs is making a come-back as a highly popular game these days.

The smarter kids are laughing all the way to all the banks as they are paid all the money they want by all the bankrupt nations seeking to hide their insolvency from their own citizens, squandering those very citizens' scarce remaining wealth in the process.

We can only keep our societies alive and running by telling a seemingly neverending series of lies. And if everyone had the same interests, this delusion could last quite a while; we’ve been doing it for 4-5 years already, after all (and arguably for much longer). But not everybody has the same interests, not anymore.

This lying eyes mirage system is almost perfect, but, in the words of Leonard Cohen: "there's a crack in everything; that's how the light gets in". Still, people believe most of the lies, and add their own with impunity, because they don't want to see things for what they are. So we just keep talking about economic growth, and we'll make up the numbers we need to prove it as we go along.

The plans discussed for Greece involve interest payments on new bonds of 4-5% or so. It doesn't matter one bit what percentage they come up with. Greece won’t be able to pay any interest, never mind principal, for many years to come. And everybody with a seat at the table knows it. These are your proverbial exercises in futility. They're all that's left us.

Financially bankrupt, politically bankrupt, morally bankrupt. As every additional dollar issued as debt no longer adds to GDP, but instead subtracts from it, there's no doubt where this is going. But yes, it's true, we can still choose to look the other way and wait for it to hit us over the head. Matter of preference.

If houses in countries like the US, Britain, Holland, Spain, China are ever to reach a level where they become affordable, we will find they no longer are, no matter how low prices become - receding horizons in reverse, sort of -. Because if they do reach that level, the entire contraption that is our economy will have crumbled.

So governments choose to prop up home prices. Helped in arriving at that decision by the knowledge that homeowners are a formidable political force they don’t want to turn against them. But propping up home prices means supporting price levels that were established by hot air credit in combination with liar loans and other "criminal legalities" in the first decade of the millennium.

The hot air credit is rapidly vanishing because it's put everyone and their pet hamster neck deep into debt. People can't afford to borrow anymore, a simple truth that is almost entirely ignored. Hence, to prop up today's prices at yesterday's levels, governments themselves need to step in. Can't have that ole market working its magic. What this does is it lets every single citizen pay for every single underwater homeowner's debt. And why should people who already have a hard time pay for someone else's home?

Obama's State of the Union mortgage plan, provided it doesn't simmer down and die like all the preceding plans, is based on refinancing at lower interest rates. If nothing else, this will put potentially substantial ($100 billion? $300 billion?) additional pressure on Fannie and Freddie. Which already have negative capitalization rates. And sit on trillions of dollars "worth" of highly dubious paper, most of which has not been written down to anything like reasonable, realistic levels.

Of course all the negative aspects of this were dealt with a few years back through the brilliant move to let everyone decide their own accounting standards. A move that is as dangerous as it is brilliant, however. Because nobody knows what anything is truly worth anymore. You can have lender A having a home loan on its books for $200,000, while bank B has issued securities for a strikingly similar home next door "worth" $400,000, and the just as similar home next to that one has been sold for $50,000 just last week.

Now if the "owners" of either the first or the second home default, what happens to the value of those loans and/or securities written on them? At some point, someone will demand to know the truth. But neither the government, nor the lenders, nor the borrowers want that truth to be known. Small wonder that banks would rather let homes sit empty or let borrowers stay put for years without paying. Price discovery is a bitch, and never more so than after a long period of lying about that price.

There's only one thing a government can reasonably do when faced with a conundrum such as this: nothing. Unfortunately, that's not what governments think they're for, doing nothing, and - luckily for them - neither does the majority of people they represent. In this particular case, all those homeowners want action. They demand that the government protect the value of - what they see as- their property. And so we have another plan.

America likes to tout its status of a free market country. But that's just nuts. Delusional nuts. And no, it's not that all of a sudden we see socialism or communism, popular as those accusations may be; that just comes from people who don't understand what those words mean.

What has happened is that America is electing a Liar-in-Chief every four years. His/her job is to keep the herd in the faith, to let them buy stuff all the time, preferably with borrowed money. To keep all noses pointing in the same direction, namely perpetual growth, especially when there isn't any.

The Liar-in-Chief is far more a religious leader than a political one. You can't have the herd disperse and separate and all its members running off in different direction to go and do their own thing. Nothing to do with Obama specifically either, it's simply in the job description. Taking the job, though, is indeed his own responsibility.

If Obama were a political instead of a faith-based leader, he would take his hands off the US real estate market, and let the market do what it does best: price discovery. Shut down Fannie and Freddie and their ilk, the biggest economic disaster in US history, and sell off their "assets" to the highest bidder. Write down all the losses, let holders of loans and securities take the haircuts they are entitled to, and go on with life. Look at the future instead of being stuck in the past.

There is zero chance that US home prices will ever reach their recent peak again, unless some sort of huge inflation were to take place, and that is obviously not in the cards for many years (if it were, it would have been here already) . So before that happens, other factors will have made sure that home prices are driven down relentlessly. Like, for instance, most Americans, or the ones that have jobs at least, a select group, making the kinds of wages that are current today among burgerflippers in China or Vietnam.

Fannie and Freddie are to a significant extent responsible for the fact that the financial sector has been able to take over and govern US society, including its political sphere. Whenever I say things like this, there are always people that point to all the good the GSEs have done: allowed ordinary people to afford a home etc. But in fact, from the get-go, they have driven up prices by "raising affordability", and that has allowed for the banking sector to get a stranglehold on the US population.

Today this has culminated in a situation where personal debt levels and federal debt levels have reached ridiculous levels. Debts which will never ever be serviced. All that's left is trying to let people continue to believe that they will, until creditors bring down the guillotine. Which they will, simply because there's a profit to be made.

Releasing Fannie and Freddie from their misery would amount to certain election defeat, or so goes the perceived wisdom. So that's not going to happen. We're going to have to wait for the markets to judge that the time has come when profits from wagers are more attractive than hand-outs and bail-outs. At that point, governments and central banks will be exposed as being absolutely powerless to influence anything at all, and least of all interest rates or home prices.

And that is a sad reality. For all of us who don't have seats at the big casino tables in Washington and Brussels and Davos.

It's not like I'm alone in my judgment of Fannie and Freddie, even if that's a small consolation in view of the enormity of the consequences of the decision to let an election victory prevail over the health of an economy. If you ever wonder what kind of person wants a job like POTUS anyway, keep that in mind.

Mike Mish Shedlock is one of the few people I know who shares - some of - my views. He had this to say last week:

Time To Concede Home 'Ownership' Is A Fraud

I have long-stated the best thing to do is nothing. Indeed if nothing is done, home prices will drop low enough that investors will want to buy them. Delays in foreclosures only serve to delay the housing recovery.

Ilargi: Mish then quotes his friend BC, who provides a very astute observation:

The only long-term durable solution to the unreal estate mess is to cease further securitization by agencies and shut them down.

It's time to concede that "homeownership" is a fraud.

When there is $16 trillion in mortgage and consumer debt outstanding and an estimated $16 trillion in residential unreal estate value, with the risk of another 20% decline in prices, there is no "ownership".

Rather, virtually everyone with a mortgage is renting debt-money from a lender and leasing the land from a local taxing authority. The mortgagees have a "dead pledge" in the value of the debt owed, not an "asset". The lenders and taxing authorities are the "owners" of a lien (a bond or constraint on the real property), which entitles them to income in the form of compounding interest and tax receipts in perpetuity.

Ilargi: Well, it’s not going to happen on a voluntary basis, this admission of fraud. We're going to see the financial markets having to tear the delusion of ownership and economic recovery from the cold dead hands of all those implicated in that fraud, from lenders to investors to borrowers and governments. And that will be a pleasant. sight to behold.

George Soros is in his eighties. He seems to now feel free to speak out on what he sees coming, to hold his cards a little less close to his chest. Soros is dead on, and, if anything, holding back in this Daily Beast piece.

George Soros on the Coming U.S. Class War

"We are facing an extremely difficult time, comparable in many ways to the 1930s, the Great Depression. We are facing now a general retrenchment in the developed world, which threatens to put us in a decade of more stagnation, or worse. The best-case scenario is a deflationary environment. The worst-case scenario is a collapse of the financial system."

Soros draws on his past to argue that the global economic crisis is as significant, and unpredictable, as the end of communism. "The collapse of the Soviet system was a pretty extraordinary event, and we are currently experiencing something similar in the developed world, without fully realizing what’s happening."

To Soros, the spectacular debunking of the credo of efficient markets—the notion that markets are rational and can regulate themselves to avert disaster—"is comparable to the collapse of Marxism as a political system. The prevailing interpretation has turned out to be very misleading. It assumes perfect knowledge, which is very far removed from reality. We need to move from the Age of Reason to the Age of Fallibility in order to have a proper understanding of the problems."

Take Europe. He’s now convinced that "if you have a disorderly collapse of the euro, you have the danger of a revival of the political conflicts that have torn Europe apart over the centuries—an extreme form of nationalism, which manifests itself in xenophobia, the exclusion of foreigners and ethnic groups. In Hitler’s time, that was focused on the Jews. Today, you have that with the Gypsies, the Roma, which is a small minority, and also, of course, Muslim immigrants."

As anger rises, riots on the streets of American cities are inevitable. "Yes, yes, yes," he says, almost gleefully. The response to the unrest could be more damaging than the violence itself. "It will be an excuse for cracking down and using strong-arm tactics to maintain law and order, which, carried to an extreme, could bring about a repressive political system, a society where individual liberty is much more constrained, which would be a break with the tradition of the United States."

Ilargi: Ironically and unfortunately, the economic growth faith delusion is too strong to make people, even if they acknowledge that harder times lie ahead, understand that they need to focus some place other than how much their gold is worth today, or their pension. That things other than monetary items will be much more important to their survival and well-being.

That land and community and practical skills will in the future trump all the things they've ever seen as valuable. And, to be honest, how can you be expected to change your myopic points of view when everyone around you holds on to them in the exact same way that you do? You look around, and everything seems alright, nothing a spoonful of austerity and hard work can't cure.

But, just as the only good thing to do for Obama right now is to abolish Fannie and Freddie and Sallie Mae and the FHA and FHFA, to get out, which he won’t, there's an equivalent for Jill and Jack on Main Street. And that is also to get out. Get out and cut, to the extent possible, all dependence on the government that makes its decisions for all the wrong reasons, and on all other top-down systems that rely on it.

Because those systems are going to crash, and there's no doubt that they will bring all the Jack and Jills that depend on them, down with them. Obama and Merkel won't get out of the way, and that increases the urgency for Jack and Jill to do so.

There are people whose role in this unfolding tragedy will be to Occupy Wall Street or Tahrir Square. And there are people whose role it will be to find and occupy their own space. Those are the only main roles that will be available for this movie. The extras will all be cast as cannon fodder.

Health Care

2012-01-31T00:01:00.000-05:00

Gonzalo Lira makes the case against the US Health care System, such as it is and if you check his website, http://gonzalolira.blogspot.com/ , you will find the trolls arguing that we have it better in the US. Perhaps but the anxiety levels in the US about health insurance tell another story.It is my belief that the one percent would rather see European social-democracy wrecked by debt problems thus holding out no hope for real reform in the US of a medical system that is rationed, doesn't work and yields no security:

These facts are from the CIA—and they are undisputed:

• Infant mortality rate in the United States: 6.06 per 1,000 live births.

• Infant mortality rate in France: 3.29 per 1,000 live births.

• Average life expectancy in the United States: 78.37 years (75.92 for men, 80.93 for women).

• Average life expectancy in France: 81.19 years (78.20 for men, 84.54 for women).

• Total expenditure on health care in the United States: 16.2% of GDP (2009).

• Total expenditure on health care in France: 3.5% of GDP (2009).

• Expenditure on health care in the United States per capita: $7,517 per year (2009).

• Expenditure on health care in France per capita: $1,148 per year (2009).

So . . . to make it clear: France has a Socialist-Commie health care system, while the United States has “the best health care system in the world”—

—and yet the French live longer, have an infant mortality rate roughly half the United States’, and yet still manage to spend less than Americans on health care.

A lot less—in fact, the Socialist-Commie Frogs spend less than a quarter of what the United States does, as a proportion of GDP.

And when you break it down per person per year? The French spend less than one-sixth what the United States spends—yet live longer, and have a lower infant mortality rate

These are the facts—and they are undisputed.

So! One of two things is going on: Either the French—as a people—are simply better than Americans; made of finer stuff; simply superior physical specimens.

Or . . .

Big Pharma, Big Med and Big Insurance are stealing from the American people every last bit of money they can get their hands on, while the Federal government refuses—out of incompetence, stupidity or corruption—to do anything about this rampant, blatant theft.

Too harsh, you say? Well, next time you go bankrupt from your medical bills, tell me again if I’m being too harsh. Because if you go bankrupt in America, there’s a 60% chance it will be because of medical bills. And if you do go bankrupt because of medical expenses? There’s a 40% chance you actually did have medical insurance—yet went bankrupt anyway! (Source here)

These are the facts—and they are undisputed.

This is America today.

Newt Gingrich

2012-01-30T00:01:00.002-05:00

From the AlterNet website this discussion of the merits or otherwise of the candidate that is attracting Republican attention in this race. Florida's Primary is tomorrow and may help to decide who else needs to drop out:

More American families went on food-stamps during George W. Bush's term in office than under any other president in history – almost a half-million more than under Barack Obama. Facts don't matter much in a GOP primary contest, however; and Newt Gingrich catapulted himself to victory in South Carolina in large part by calling Obama “the food stamp president” and then picking a fight about it with Fox News pundit Juan Williams during a January 16 debate.

Gingrich had set a brilliant trap for a Republican primary contest. Most people understood the food stamp president line to be a classic example of the racist “dog-whistle” – the kind of rhetoric that has long been at the heart of the GOP's “Southern Strategy” -- and Newt was confident that he'd be called on it.

Williams obliged. “My e-mail account, my Twitter account, has been inundated with people of all races who are asking if your comments are not intended to belittle the poor and racial minorities,” he said.

Gingrich's response was practiced, and perfectly tuned for the Republican base. “Well, first of all, Juan, the fact is that more people have been put on food stamps by Barack Obama than any president in American history. I know, among the politically correct, you’re not supposed to use facts that are uncomfortable... and if that makes liberals unhappy...I’m going to continue to find ways to help poor people learn how to get a job, learn how to get a better job, and learn, some day, to own the job.”

Newt earned a standing ovation from the audience, and immediately after the debate Team Gingrich turned the exchange into an online ad titled, “The Moment.” Five polls taken in South Carolina in the days leading up to the debate had Mitt Romney up by an average of 11 points. Six polls in the following three days found Gingrich up by an average of just under three points, and a week later – after another testy exchange with CNN's John King – Gingrich beat the former Massachusetts governor by 12 percentage points in the Palmetto State's primary.

Newt Gingrich is a deeply flawed candidate. But fresh off his South Carolina trouncing of Romney, who has long been anointed the GOP front-runner, the political establishment is beginning to wonder – with horror or enthusiasm, as the case may be – if the veteran pol actually has a shot at becoming the Republicans' standard-bearer in 2012.

He does, although Romney still has formidable advantages in fundraising and organization on the ground. If Gingrich does manage to pull off an unlikely victory in the nominating contest, it will be the result of running a picture-perfect, almost archetypal right-populist campaign that is perfectly suited to this moment, with the ascendancy of the hard-right Tea Party among Republican primary voters.

The right-populist storyline is simple, and compelling for many at a time when Americans have seen an unprecedented loss of economic security. According to the right-populist narrative, the working class – especially the white working class -- is caught in a vice between two pernicious forces: an elite festering with corruption at the top and a legion of undeserving freeloaders at the bottom.

Sandwiched between these two forces is the “real America,” as Sarah Palin put it during the last election cycle. Gingrich defines the “middle-class” broadly enough to include white-collar professionals and all but the most affluent “entrepreneurs.”

Whereas traditional populism pits working people against corrupt bankers and the titans of big business, Gingrich's brand of right-populism is directed at cultural elites – intellectuals, the media and “latté liberals.”

During his exchange with CNN's John King, Gingrich was again happy to have the media serve as his foil. “I think the destructive, vicious, negative nature of much of the news media makes it harder to govern this country,” he said to King, who'd had the temerity to ask about Gingrich's past marital infidelities, before adding: “I am tired of the elite media protecting Barack Obama by attacking Republicans.” Again, the crowd went wild.

Later, during his victory speech, Gingrich drove the point home: “The American people,” he said, “feel that they have elites who have been trying for a half century to force us to quit being American and become some other kind of system.” At the same time, Gingrich said that the “African-American community should demand paychecks and not be satisfied with food stamps."

It's an updated version of Ronald Reagan's mythical “welfare queens” – suggesting that those receiving nutritional assistance are “undeserving” blacks content to live off the public teat. Never mind the fact that almost 60 percent of food-stamp recipients are children and the elderly – people who can't be expected to “demand paychecks” – or that only 8 percent of beneficiaries receive welfare. Never mind that whites make up the largest share of food-stamp households. In the right-populist view, lazy people of color are living high on the hog on an average benefit of $287 per month.

While he heaps scorn on those families that require some nutritional assistance during the worst economy America has seen for 70 years, warning that we are fast becoming an “entitlement society,” Newt's other big selling-point is his promise to bring Obama down to size in a series of unmoderated “Lincoln-Douglas-style” debates. It's a pitch that taps directly into the Right's sense of being talked down to by liberals – specifically, by a smartypants president with a degree from Harvard Law School. The GOP base wants nothing more than to see the elitist food-stamp president humbled intellectually – it lies at the heart of their bizarre obsession with the fact that he uses a teleprompter like every other pol -- and Gingrich is offering them an opportunity to do it vicariously through his bulldog campaign.

Conservatives have come to believe that their grievances are universally held by the American people. One of the most interesting tidbits from the South Carolina exit polls is that among those voters who said that the ability to defeat Obama in November was the most important characteristic in a candidate, Gingrich won by 14 points. That, despite the fact that Obama is leading Romney by less than two points in head-to-head polling but crushing Gingrich by 11 percentage points.

Ultimately, if Newt Gingrich does manage to claw his way to the nomination on the back of grievance politics, it could swing the election decisively to Obama. A poll released January 17 (PDF) found that Gingrich had a net positive favorability rating of 5 points among Republicans, but Americans as a whole view him unfavorably by a whopping 60-26 point margin.

Joshua Holland is an editor and senior writer at AlterNet.

US Shadow Banking

2012-01-29T00:01:00.000-05:00

Ellen Brown has produced another devastating essay on the state of banking in the US:

The Wall Street Journal reported on January 19th that the Obama Administration was pushing heavily to get the 50 state attorneys general to agree to a settlement with five major banks in the “robo-signing” scandal. The scandal involves employees signing names not their own, under titles they did not really have, attesting to the veracity of documents they had not really reviewed. Investigation reveals that it did not just happen occasionally but was an industry-wide practice, dating back to the late 1990s; and that it may have clouded the titles of millions of homes. If the settlement is agreed to, it will let Wall Street bankers off the hook for crimes that would land the rest of us in jail – fraud, forgery, securities violations and tax evasion.

To the President’s credit, however, he seems to have shifted his position on the settlement in response to protests before his State of the Union address. In his speech on January 24th, President Obama did not mention the settlement but announced instead that he would be creating a mortgage crisis unit to investigate wrongdoing related to real estate lending. “This new unit will hold accountable those who broke the law, speed assistance to homeowners, and help turn the page on an era of recklessness that hurt so many Americans,” he said.

The Deeper Question Is Why

Whether massive robo-signing occurred is no longer in issue. The question that needs to be investigated is why it was being done. The alleged justification—that the bankers were so busy that they cut corners—hardly seems credible given the extent of the practice.

The robo-signing largely involved assignments of mortgage notes to mortgage servicers or trusts representing the investors who put up the loan money. Assignment was necessary to give the trusts legal title to the loans. But assignment was delayed until it was necessary to foreclose on the homes, when it had to be done through the forgery and fraud of robo-signing. Why had it been delayed? Why did the banks not assign the mortgages to the trusts when and as required by law?

Here is a working hypothesis, suggested by Martin Andelman: securitized mortgages are the “pawns” used in the pawn shop known as the “repo market.” “Repos” are overnight sales and repurchases of collateral. Yale economist Gary Gorton explains that repos are the “deposit insurance” for the shadow banking system, which is now larger than the conventional banking system and is necessary for the conventional system to operate. The problem is that repos require “sales,” which means the mortgage notes have to remain free to be bought and sold. The mortgages are left unendorsed so they can be used in this repo market.

The Evolution of the Shadow Banking System

Gorton observes that there is a massive and growing demand for banking by large institutional investors – pension funds, mutual funds, hedge funds, sovereign wealth funds – which have millions of dollars to park somewhere between investments. But FDIC insurance covers only up to $250,000. FDIC insurance was resisted in the 1930s by bankers and government officials and was pushed through as a populist movement: the people demanded it. What they got was enough insurance to cover the deposits of individuals and no more. Today, the large institutional investors want similar coverage. They want an investment that is secure, that provides them with a little interest, and that is liquid like a traditional deposit account, allowing quick withdrawal.

The shadow banking system evolved in response to this need, operating largely through the repo market. “Repos” are sales and repurchases of highly liquid collateral, typically Treasury debt or mortgage-backed securities—the securitized units into which American real estate has been ground up and packaged, sausage-fashion. The collateral is bought by a “special purpose vehicle” (SPV), which acts as the shadow bank. The investors put their money in the SPV and keep the securities, which substitute for FDIC insurance in a traditional bank. (If the SPV fails to pay up, the investors can foreclose on the securities.) To satisfy the demand for liquidity, the repos are one-day or short-term deals, continually rolled over until the money is withdrawn. This money is used by the banks for other lending, investing or speculating. Gorton writes:

This banking system (the “shadow” or “parallel” banking system)—repo based on securitization—is a genuine banking system, as large as the traditional, regulated banking system. It is of critical importance to the economy because it is the funding basis for the traditional banking system. Without it, traditional banks will not lend and credit, which is essential for job creation, will not be created.

All Behind the Curtain of MERS

The housing shell game was made possible because it was all concealed behind an electronic smokescreen called MERS (an acronym for Mortgage Electronic Registration Systems, Inc.). MERS allowed houses to be shuffled around among multiple, rapidly changing owners while circumventing local recording laws. Title would be recorded in the name of MERS as a place holder for the investors, and MERS would foreclose on behalf of the investors. Payments would be received by the mortgage servicer, which was typically the bank that signed the mortgage with the homeowner. The homeowner usually thinks the servicer is the lender, but in fact it is an amorphous group of investors.

This all worked until courts started questioning whether MERS, which admitted that it was a mere conduit without title, had standing to foreclose. Courts have increasingly held that it does not.

Making matters worse for the servicing banks, Fannie Mae sent out a memo telling servicers that in order to be reimbursed under HAMP—a government loan modification program designed to help at-risk homeowners meet their mortgage payments—the servicers would have to produce the paperwork showing the loan had been assigned to the trust.

The hasty solution was a rash of assignments signed by an army of “robosigners,” to be filed in the public records. But the documents are patent forgeries, making a shambles of county title records.

Complicating all this are tax issues. Since 1986, mortgage-backed securities have been issued to investors through SPVs called REMICs (Real Estate Mortgage Investment Conduits). REMICs are designed as tax shelters; but to qualify for that status, they must be “static.” Mortgages can’t be transferred in and out once the closing date has occurred. The REMIC Pooling and Servicing Agreement typically states that any transfer significantly after the closing date is invalid. Yet the newly robo-signed documents, which are required to begin foreclosure proceedings, are almost always executed long after the trust’s closing date. The whole business is quite complicated, but the bottom line is that title has been clouded not only by MERS but because the trusts purporting to foreclose do not own the properties by the terms of their own documents.

John O’Brien, Register of Deeds for the Southern Essex District of Massachusetts, calls it a “criminal enterprise.” On January 18th, he called for a full scale criminal investigation, including a grand jury to look into the evidence. He sent to Massachusetts Attorney General Martha Coakley, U.S. Attorney General Eric Holder and U.S. Attorney Carmen Ortiz over 30,000 documents recorded in the Salem Registry that he says are fraudulent.

From Lending Machines to Borrowing Machines

The bankers have engaged in what amounts to a massive fraud, not necessarily because they started out with criminal intent, but because they have been required to in order to come up with the collateral (in this case real estate) to back their loans. It is the way our system is set up: the banks are not really creating credit and advancing it to us, counting on our future productivity to pay it off, the way they once did under the deceptive but functional façade of fractional reserve lending. Instead, they are vacuuming up our money and lending it back to us at higher rates.

“Instead of lending into the economy,” says British money reformer Ann Pettifor, “bankers are borrowing from the real economy.” She wrote in the Huffington Post in October 2010:

The crazy facts are these: bankers now borrow from their customers and from taxpayers. They are effectively draining funds from household bank accounts, small businesses, corporations, government Treasuries and from e.g. the Federal Reserve. They do so by charging high rates of interest and fees; by demanding early repayment of loans; by illegally foreclosing on homeowners, and by appropriating, and then speculating with trillions of dollars of taxpayer-backed resources.

Not only has the system destroyed county title records, but it is highly vulnerable to bank runs and systemic collapse. In the shadow banking system, as in the old fractional reserve banking system, the collateral is being double-counted: it is owed to the borrowers and the depositors at the same time. This allows for expansion of the money supply, but bank runs can occur when the borrowers and the depositors demand their money at the same time. And unlike the conventional banking system, the shadow banking system is largely unregulated. It doesn’t have the backup of FDIC insurance to prevent bank runs.

That is what happened in September 2008 following the bankruptcy of Lehman Brothers, a major investment bank. Gary Gorton explains that it was a run on the shadow banking system that caused the credit collapse that followed. Investors rushed to pull their money out overnight. LIBOR—the London interbank lending rate for short-term loans—shot up to around 5%. Since the cost of borrowing the money to cover loans was too high for banks to turn a profit, lending abruptly came to a halt.

Fixing the System

The question is how to eliminate this systemic risk. As noted by The Business Insider:

Regulate shadow banking more tightly, and you probably have to also provide government backstops. Shudder. Try to shut the thing down or restrict it and you suck credit out of the system, credit which much of the non-financial “'real” economy uses and needs.

Interestingly, countries with strong public sector banking systems largely escaped the 2008 credit crisis. These include the BRIC countries—Brazil Russia, India, and China—which contain 40% of the global population and are today’s fastest growing economies. They escaped because their public sector banks do not need to rely on repos and securitizations to back their loans. The banks are owned and operated by the ultimate guarantor—the government itself. The public sector banking model deserves further study.

Whatever the solution, a system that requires the slicing and dicing of mortgages behind an electronic smokescreen so they can be bought and sold as collateral for the pawn shop of the repo market is obviously fraught with perils and is unsustainable. Please contact your state attorney general and urge him or her not to go through with the robo-signing settlement, which will be granting immunity for crimes that are not yet fully known. Phone numbers are here. The surface of this great shadowy second banking system has barely been scratched. It needs a very thorough investigation.

Ellen Brown is an attorney and president of the Public Banking Institute, http://publicbankinginstitute.org/. Her websites are http://webofdebt.com/ and http://ellenbrown.com/.

State Of The Union

2012-01-28T00:01:00.001-05:00

This consideration of the President's speech from Global Research in Montreal suggests everything that is s aid and done this year is a function of an election year:

"If we have to use force, it is because we are America. We are the indispensable nation. We stand tall. We see further into the future." Secretary of State Madeleine Albright, 1998

“America remains the one indispensable nation in world affairs—and as long as I’m President, I intend to keep it that way.” President Barack Obama, State of the Union message, 2012

President Barack Obama’s 2012 State of the Union message is an object lesson in contemporary U.S. class politics. Obama came into office three years ago on a wave of progressive hopes and even euphoria, very understandable given the bitter history of racism in this country and the fact that he was taking the place of his widely despised predecessor, George W. Bush.

What the last three years as well as this speech have reaffirmed is that, regardless of the particular personality or characteristics of the person assuming the U.S. presidency, it is a job that comes with a specific job description: CEO of the imperialist ruling class.

For militarism and chauvinism, combined with empty liberal rhetoric, President Barack Obama’s 2012 State of the Union message would be hard to beat. That it was lavished with uncritical praise by liberal Democratic Party units like MoveOn.org—an allegedly “anti-war” group—was just another reminder that 2012 is an election year.

The president began by hailing the U.S. war on Iraq, a war he supposedly opposed when he was candidate Obama in 2008. Back then he was perceived by millions as the “peace candidate,” a critical element in his election victory.

“Last month, I went to Andrews Air Force Base and welcomed home some of our last troops to serve in Iraq,” said Obama. “Together, we offered a final, proud salute to the colors under which more than a million of our fellow citizens fought—and several thousand gave their lives. We gather tonight knowing that this generation of heroes has made the United States safer and more respected around the world.”

Really?

In fact, the war in Iraq largely destroyed a country that posed no threat whatsoever to the U.S. Millions of Iraqis were killed, wounded or forced into exile and its society torn to shreds. Not only did thousands of U.S. soldiers die in a war fought on entirely false pretenses, hundreds of thousands more suffered severe physical and psychological wounds. The total cost of the war will exceed $3 trillion—$3,000,000,000,000.

Obama portrayed the Afghanistan war as another impending success: “The Taliban’s momentum has been broken. ...” Even his top advisers, however, view the war as a stalemate, one where the U.S.—despite more than three decades of inflicting devastation on Afghanistan—cannot achieve a military victory.

He lauded the NATO overthrow of the government in Libya and predicted a similar outcome in Syria. But, of course, not a hint of criticism of the absolute monarchies that rule Saudi Arabia and other oil-rich countries in the Gulf.

Continuing his triumphalist world tour: “Ending the Iraq war has allowed us to strike decisive blows against our enemies. From Pakistan to Yemen, the al-Qaeda operatives who remain are scrambling, knowing they can’t escape the reach of the United States of America.”

US targets China

“We’ve made it clear that America [sic] is a Pacific power.” The primary target of the U.S. military buildup in Asia is China. The anti-China campaign is economic as well: “We’ve brought trade cases against China at nearly twice the rate as the last administration. Tonight I’m announcing the creation of a Trade Enforcement Unit that will be charged with investigating unfair trade practices in countries like China.”

Near the end of his remarks, Obama celebrated the damage that “crippling sanctions” are having on the Iranian people, and once again threatened Iran with military attack, including the use of nuclear weapons: “America [sic] is determined to prevent Iran from getting a nuclear weapon, and I will take no options off the table to achieve that goal.”

Regarding the only country in the Middle East that actually possesses nuclear weapons, the president declared: “Our iron-clad commitment to Israel’s security has meant the closest military cooperation between our two countries in history.” Not even the usual ritual mention of the Palestinians this time around.

In between his imperialistic international pronouncements, the president lamented about the difficulties of life for workers without jobs and students burdened by high-interest debt, and called on employers, universities and Congress to do better. He spent a good deal of time advocating a “fairer” tax system. But he projected no actual new programs.

When it came to helping Big Oil, it was a very different story: “Tonight I’m directing my administration to open up more than 75 percent of our potential offshore oil and gas resources.” In addition he expressed unambiguous support for “fracking,” the extremely hazardous extraction of gas from underground shale rock by blasting it apart using massive amounts of water and chemicals. Fracking has polluted water supplies, has sickened many people and recently has caused earthquakes in non-quake-prone areas.

While on the one hand calling for “comprehensive immigration reform” and something like the Dream Act, he boasted of stepping up the militarization of the border with Mexico: “That’s why my administration has put more boots on the border than ever before.”

Financial crimes go unpunished

Following more lamenting about bad things done by Wall Street and the big banks that led to the financial/economic crisis, what seemed to excite loyal Democrats more than anything else was this announcement by Obama: “We will also establish a Financial Crimes Unit of highly trained investigators to crack down on large-scale fraud and protect people’s investments. Some financial firms violate major anti-fraud laws because there’s no real penalty for being a repeat offender.”

But these two sentences raise more than a few questions, starting with, “What took so long?” followed by, “What—there is no real penalty for financial firms that repeatedly violate major anti-fraud laws?”

President Obama took office as the biggest financial/economic crisis since the Great Depression of the 1930s was breaking. Countless articles and whole books dissecting widespread fraud, particularly in the multi-trillion-dollar mortgage banking business, have been written. Virtually none of those who reaped immense profits from these fraudulent operations have gone to jail or even lost their fortunes. The famous exception is Bernie Madoff, who made the mistake of stealing mainly from the rich.

There is no particular reason to believe that three years later, the“Financial Crimes Unit” is anything but another election ploy. Under capitalism, all are not equal before the law. The “justice system” is administered by the rich against the rest.

Echoing the words of Madeleine Albright, President Clinton’s war-mongering secretary of state from 1997 to 2001, Obama thundered: “America remains the one indispensable nation in world affairs—and as long as I’m President, I intend to keep it that way.” The implication, of course, is that all other countries and nations in the world are … dispensable.

Richard Becker is a frequent contributor to Global Research.

Pensions Failure

2012-01-27T01:10:00.002-05:00

From IceCap Asset Management January Investor Presentation we get this essay via zero hedge reminding us that the payout of pensions in the Western World seems a bit iffy just at the moment. Pension plans are relying on excessively optimistic promises of high returns:

Most Canadian pension funds are banking on 7% annual returns forever. Over the next few years, this unrealistic expectation will cost the respective governments and companies millions in shortfalls.

In the USA, the California Public Employees Retirement System assumes it will earn over 7.75% annual returns. This false hope will result in over $6 billion a year in lower than expected investment income, that will also have to be paid by the financially challenged state (ie. taxpayers).

Meanwhile, Thelma O’Keefe continues to quietly sock away 5% of her paycheck each and every week and has no idea what all the fuss will be about when she is eventually told her pension benefits will be slightly less than originally promised.

Over 50 years ago, the average worker started to earn pension benefits and has been dreaming of working less, and golfing more, ever since. The Defined Benefit Pension Plan has been the rock of this dreamy foundation and is certainly a costly beast to say the least. Once the auditors, actuaries, custodians, lawyers, administrators, consultants, performance measurement guys, trustees and investment managers have been paid for their services, is there little wonder most of these retirement funds are running a little short.

Yet, the primary reason most people fall asleep with even a slight mention of the words “pension funds” is due to the complexities and confusion resulting from this cumbersome investment scheme.

However, after 3 quick espressos you’ll see that the entire pension spectrum boils down to an educated guess as to how much money the pension plan will have to pay out to its retirees, and how much money its investments will pay in to the pension plan itself.

This “pay-out-in” dynamic is a precarious balancing act to say the least. Should guesstimates for either one fall short, the difference will have to be made up by tax payers for government pension plans, and by profits for company pension plans.

It is widely known by now that practically every government in the Western World is drowning in debt with no signs of growth anywhere on the horizon. Unfortunately, this looming pension funding problem could not have come at a worse time for these government supported pension funds.

Meanwhile, most companies are certainly flush with cash and are infinitely better off than their public pension fund counterparts. However, even this enviable position will not help due to the expectations of great stock and bond market returns.

Ever since the Western World pushed the debt envelope too far and proceeded to allow its governments to orchestrate one ill conceived bailout after another, investors of all shapes and sizes – including billion dollar pension funds and the little old ladies, have had to push their risk envelope too far and assume way too much risk in an effort to increase their investment returns.

Euro Muddle

2012-01-26T00:01:00.000-05:00

From Wolf Richter of http://www.testosteronepit.com/ this discussion of the newest European dead. Read it if you dare:

"The case of Greece is hopeless," Otmar Issing said today during an interview. He should know. He was a member of the Executive Board of the Bundesbank and of the Governing Council of the ECB. Another substantive voice in an increasingly loud chorus.

But it’s legally impossible to kick Greece out of the Eurozone. So he suggested a procedure: Tell the country that it has to implement reforms as a condition for financial help. When implementation is lacking, the basis for financial help disappears, and “you have to end it,” he said. “Then it's up to the Greeks to think about what they want to do."

That has been happening all along. The bailout troika (EU, ECB, and IMF) has offered money in exchange for a broad range of tough reforms. At first, it was easy for Greece to agree to reforms in return for bailout billions, but adequate implementation turned out to be impossible. Demonstrations, strikes, and riots, an unwilling bureaucracy, a political power struggle, morose economic conditions—all have seen to it that the unpopular German dictate, as it’s called, would fail.

“Greece must implement the agreed measures and reforms,” German Finance Minister Wolfgang Schäuble told reporters in Brussels. “And of course, all Greek parties must agree to the measures."

Another set of German must’s that Greece won’t be able to fulfill. By design. It gives German and Greek politicians an out—no one wants to be tagged with having made the first historic step in breaking up the Eurozone.

So, they’re going through a drawn-out step-by-step procedure of demands for reforms, promises, failed implementations, rebukes, withheld bailout transfers that then might still be made, and so on. The idea is to keep markets from panicking, give governments time to prepare for the inevitable, and render politicians blameless for Greece’s exit from the monetary union.

Return to Otmar Issing. "A monetary union without political union is absurd,” he said. “The keyword today is fiscal union. But a fiscal union cannot function without a political union. Yet decisions in that direction have to be democratically legitimate ... and that takes time. Those that defend the concept of a fiscal union know that."

So, Chancellor Angela Merkel, Schäuble, and the hordes of proponents of a fiscal union know that it cannot function without a political union—and yet they keep paying lip service to it. Beneath the surface, are they loosening the ties of the monetary union? Because the price of saving the impossible is just too high? It seems. And word is getting out.

“The fact that we profit massively from the euro doesn’t mean we have to accept every political horse-trade to save it,” said the president of Germany's Association of Exporters. For how the German industrial elite opened up about exiting the Eurozone, read.... ‘The Old Europe’ Is ‘Not An Option For Germany.’

In Greece, the economic tailspin continues. Squeezed from all sides, and faced with oil prices that have nearly doubled in 2011, Greeks have been heading into public woods to chop down trees; they need logs for their fireplaces to make it through the winter. Authorities filed 1,500 criminal complaints in 2011, twice as many as in the prior year.

But not everything is doom and gloom in Greece. Tourism set a record in 2011: 16.5 million tourists, up by 10% from 2010, and responsible for a 1% increase in GDP, according to the Association of Greek Tourism Companies (SETE). And it expects another record in 2012. While the number of tourists from the EU declined, Russians increased by 88%. And the uptrend is expected to continue. Easier visa requirements, it seems; sometimes, the Greek government does something right.

And Greece’s exit from the Eurozone? According to the SETE, the drachma would turn Greece into a tourist mecca for all budgets, and business would boom. So the only major growth industry in Greece declares that it would be even better off if Greece left the Eurozone. A ringing endorsement.

Indeed. Austerity measures are taking their daily toll. Suicides jumped by 22.5%. Pharmacies are having difficulties obtaining medications. More cuts are coming. If there is no agreement on the debt swap and with the bailout Troika, Greece will default in March. But now, even the Troika is in disarray.

A Cuban View Of Iran

2012-01-25T00:01:00.001-05:00

Looked at from this side of the Straits of Florida war with Iran sounds ever more likely and as a path out of intolerable debt, war has always been the answer, unfortunately. However this essay by Fidel Castro Ruz, President Emeritus (as it were) of Cuba presents an alternative view, offered to us by Global Research in Montreal.

I recently had the satisfaction of having a pleasant conversation with Mahmoud Ahmadinejad. I had not seen him since 2006, more than five years ago, when he visited our country to participate in the 14th Summit of the Non-Aligned Movement of Countries in Havana. During the summit, Cuba was elected for the second time as president of the organization for a three-year term.

I had become gravely ill on July 26, 2006, a month and a half prior to the summit, and could barely sit up in bed. Many of the most distinguished leaders who participated in the event were kind enough to visit me. Chavez and Evo visited me several times. One afternoon four visitors came by whom I will always remember: UN Secretary General Kofi Annan; an old friend, Abdelaziz Buteflika, the president of Algeria; Mahmoud Ahmadinejad, the president of Iran; and the vice minister of Foreign Affairs and current Foreign Minister of China, Yang Jiechi, on behalf of the leader of the Communist Party and the president of China, Hu Jintao. It was really an important time for me; I was in the midst of intense physiotherapy on my right hand that I had seriously injured when I fell in Santa Clara.

With all four I spoke about some of the difficulties facing the world at the time; problems that have become progressively more complex.

During our meeting yesterday, I noted that the Iranian president was absolutely calm and tranquil, completely unconcerned about the Yankee threats and, fully confident in the capacity of his people to confront any aggression and in the effectiveness of their arms —which, in large part, they produce themselves— to inflict an unpayable price on its aggressors.

In reality, we hardly spoke about the topic of war. Mahmoud Ahmadinejad was focused on the ideas he had presented at the Main Hall of the University of Havana during his conference on the struggle of humankind: “Moving towards reaching and achieving peace, security, respect and human dignity as a fundamental desire of all human beings throughout history.”

I am convinced that Iran will not commit any rash actions that might contribute to setting off a war. If a war were to be unleashed, it would inevitably be completely as a result of the recklessness and congenital irresponsibility of the Yankee Empire.

I believe that the political situation surrounding Iran and the associated risks of a nuclear war that involves us all —regardless of whether one possess nuclear weapons— are extremely delicate because they threaten the very existence of our species. The Middle East has become the most troubled region on the planet, the same region that produces the energy resources vital for the world’s economy.

The destructive power and the mass sufferings caused by some of the weapons used in World War Two led to a strong movement to ban weapons such as asphyxiating gas and others. Nevertheless, conflicting interests and the huge profits made by arms manufacturers led to the production of crueler and more destructive weapons; modern technology has now added the means and material to build weapons that if used in a world war would lead to extinction.

I support the opinion, undoubtedly shared by all those with a basic sense of responsibility, that no country big or small has the right to possess nuclear weapons.

They never should have been used to attack two defenseless cities such as Hiroshima and Nagasaki, killing and irradiating with horrible and long-lasting effects hundreds of thousands of men, women and children, in a country that had already been militarily defeated.

If fascism indeed forced the allied nations against Nazism to compete with this enemy of humanity in the production of such weapons, once the war ended and the United Nations was created, the first duty of this organization should have been to prohibit nuclear weapons without exception.

However, the United States, the strongest and richest power, forced the rest of the world to follow its lead. Today, they have hundreds of satellites that spy and monitor the entire world from outer space. Their naval, air and land forces are equipped with thousands of nuclear weapons; and they control the world’s finances and investments at their whim via the International Monetary Fund.

Analyzing the history of each Latin American nation, from Mexico to Patagonia, by way of Santo Domingo and Haiti, one can observe that each and every country, without exception, have suffered for 200 years, from the beginning of the 19th century up until today. And, in one way or another, they are increasingly suffering the worst crimes that power and force can commit against the rights of a people. Brilliant Latin American writers are emerging in an increasing number. One of them, Eduardo Galeano, author of the book Open Veins of Latin America: Five Centuries of the Pillage of a Continent that describes the aforementioned, has just been invited to open the prestigious Casa de Las Americas Awards as a recognition to his outstanding body of work.

Events happen incredibly fast; but technologies report them to the public even faster. On any given day, like today, important news comes out a dizzying pace. A cable report dated from January 11 states: “The Danish presidency of the European Union confirmed on Wednesday that a new series of more severe European sanctions against Iran, because of its nuclear program, will be discussed on January 23. The new sanctions will not only target the oil industry but also the Central Bank.”

During a meeting with international journalists, Danish Foreign Minister Villy Soevndal said that “We will increase sanctions against the oil industry in addition to sanctions against financial structures.” This clearly demonstrates that, in order to impede nuclear proliferation, Israel can go on accumulating hundreds of nuclear warheads while Iran is not allowed to produce 20% enriched uranium.

Another article, from a respected British news agency, states that “China gave no hint on Wednesday of giving ground to U.S. demands to curb Iran’s oil revenues, rejecting Washington’s sanctions on Tehran as overstepping …”

The sheer tranquility with which the United States and civilized Europe carry out this campaign with incredible and systematic acts of terrorism is enough to shock anybody. Just look at these lines reported by another important European news agency: “The murder on Wednesday of Iranian nuclear specialist Mostafa Ahmadi Roshan [a scientist at the Natanz nuclear plant] was the fourth attack to kill a leading scientist in the country in almost exactly two years.”

On January 12, 2010: “Massoud Ali Mohammadi, a particle physics professor at Tehran University is killed when a booby-trapped motorcycle explodes outside his home in the capital. “

On November 29, 2010: “Two attacks target leading Iranian nuclear scientists on the same day. Majid Shahriari, a key member of Iran’s Atomic Energy Agency, is killed in Tehran by a limpet bomb attached to his car. His colleague Fereydoon Abbasi Davani is also targeted by a bomb attached to his car, but escapes.” The car was parked in front of the Shahid Beheshti University in Tehran where both men worked as professors.

On July 23, 2011: “Gunmen shoot dead Dariush Rezaei-Nejad, a senior scientist who is reportedly associated with the defense ministry, and wound his wife as they waited for their child outside a Tehran kindergarten.”

On January 11, 2012 —the same day that Ahmadinejad travelled from Nicaragua to Cuba to give a conference at the University of Havana—, scientist Mostafa Ahmadi Roshan, “a deputy director at the Natanz nuclear enrichment facility, is killed in a car bomb blast outside the [Allameh Tabatabai] University in east Tehran.” As in previous years “Iran once again accused the United States and Israel.”

The killings represent a systematic and selective slaughter of brilliant Iranian scientists. I have read articles by known Israeli sympathizers who write about crimes carried out by Israeli intelligence services in cooperation with the United States and NATO as if they were the most normal occurrence.

At the same time, Moscow news agencies report that “Russia warned that in Syria a similar scenario is developing as to that in Libya, and added that this time the attack will be launched from neighboring Turkey.

“The secretary of the Russian Security Council, Nikolai Patrushev, said the West wants to ‘punish Damascus not as much for repressing the opposition, but because it is unwilling to sever ties with Tehran.’”

“…NATO members and some Persian Gulf states, operating according to the Libya scenario, intend to move from indirect intervention in Syrian affairs to direct military intervention…This time the main strikes forces will not be provided by France, the U.K. or Italy, but possibly by neighboring Turkey.”

“Washington and Ankara are now assumed to be negotiating a “no-fly” zone over Syria, where Syrian armed insurgents can be trained and concentrated, added Patrushev.”

News is not only coming out of Iran and the Middle East, but also from other parts of Central Asia near the Middle East. These reports show the great complexity of the problems that can arise from this dangerous region.

The United States has been led by its contradictory and absurd imperial policy to get involved in serious problems in countries such as Pakistan, whose borders with Afghanistan were drawn up by the colonialists without taking into account culture or ethnicities.

In Afghanistan, which defended its independence against English colonialism for centuries, drug production has multiplied in the wake of the Yankee invasion. Meanwhile, European soldiers, supported by drone airplanes and armed with sophisticated US weapons, carry out deplorable massacres that increase the people’s hatred and ward off any possibilities of peace. All this and other dirty actions are also reported by Western news agencies.

“WASHINGTON, January 12, 2012 – US Secretary of Defense Leon Panetta called the actions of four U.S. marines who urinated on corpses in Afghanistan “utterly deplorable” The video of the act was circulated in the Internet.

“’I have seen the footage, and I find the behavior depicted in it utterly deplorable…’

“’This conduct is entirely inappropriate for members of the United States military and does not reflect the standards of values our armed forces are sworn to uphold…’”

In reality, Panetta neither confirms nor denies the action, and anyone, including the Secretary of Defense himself, may harbor doubt.

But it is also extremely inhumane that men, women and children, or an Afghani combatant fighting against the foreign occupation, be murdered by bombs dropped by drone planes. Another very serious incident: dozens of Pakistani soldiers and officials who safeguarded the country’s borders have been killed by these bombs.

Afghani President Karzai stated that the outrage committed against the bodies was “simply inhumane.” He asked for the US government “to urgently investigate the video and apply the most severe punishment to anyone found guilty in this crime.”

Meanwhile Taliban spokespersons declared that “over the last ten years, hundreds of similar acts have been carried out that were not reported…”

One even feels sorry for those soldiers, thousands of kilometers away from their family, friends and country, sent to fight in countries that they might not have even heard of during their school days, where they are assigned the task of killing or dying to enrich transnational companies, arms manufacturers and unscrupulous politicians who each year squander funds needed to feed and educate the uncountable millions of hungry and illiterate people around the world.

Many of these soldiers, victims of the trauma suffered, end up taking their own lives.

Is it an exaggeration to say that world peace is hanging by a thread?

A National Foreclosure Law

2012-01-24T00:01:00.000-05:00

It is my belief that the outcome of the presidential race has already been decided, not by the vote of the people or even the ridiculous Electoral College but instead by the one percent. In an effort to keep his seat the sitting President is playing a double edged game, sounding populist drum beat for our benefit and acquiescence while at the same time reassuring the one percent their assets and status are safe. With this move to create a new national foreclosure law the one percent protect their assets at our expense and any President willing to sell his soul to achieve this will get their backing. This essay by Yves Smith at naked capitalism:

There is a slow moving but nevertheless troubling effort underway to change foreclosure laws across the US. The Uniform Law Commission, the same body that created the Uniform Commercial Code, a model set of laws that sought to harmonize commercial laws in all 50 states, has had two full day public but not well publicized meeting of a “study group” on mortgage foreclosure. Note that it took over a decade to draft the first version of the UCC and a protracted period for it to be implemented by states (most states have adopted the updated version of the UCC, although certain articles of the new version have not been implemented in any states).

Given its august history, one would think the ULC would be above political influences. That would appear to be a naive assumption these days. The study committee’s public meetings meetings to solicit opinion from “stakeholders” on “problems” with foreclosures. Curiously enough, these “stakeholder” meetings had no representation of investors (Tom Deutsch of the American Securitization Forum would claim he played that role, but everyone in mortgage land knows the ASF is a sell side organization) and effectively no input from homeowners or consumer advocates (none at the first meeting, and only, at the second, in Washington last week).

I got reports from three people who attended the latest session, in Washington, last week, na all were disheartening. Tom Cox, the Maine attorney who broke the robosigning scandal, provided a memorandum that argues that the commission has effectively assumed that the “problems” require a legislative solution:

Before there can be a determination made as to whether there is a need for a new uniform act dealing with foreclosure issues, there must be an clear accounting of (1) what the problems are that cause legislation to be considered, (2) what has caused those problems to occur, and (3) only then, whether the problems lend themselves to a legislative solution that would be offered by a new uniform act. Unfortunately, it appears that the JEBURPA letter of May 30, 2011 and all of the subsequent steps leading to this stakeholders’ meeting have failed to conduct the step 2 analysis. Further, it appears that the assumption has been made that new legislation is the solution to the perceived problems without there having been analysis of whether other non-‐legislative solutions might be more appropriate.

Cox provided a detailed account of the January 13 meeting. Despite the fact that he and the academics present (including Kurt Eggert, Adam Levitin, and Alan White) all argued that the there is nothing wrong with existing laws, the problem is that they aren’t being followed, and a new statue won’t solve that. (Interestingly, the senior counsel of the American Bankers Association was the only other party present to speak against the initiative. Some participants, namely Judge Mize of the National Center for State Courts, and Dennis Ceuvas of the National Association of Attorneys General, said they were neutral).

The most disturbing part of Cox’s report is that this plan is NOT to develop a model statute, a la the UCC, which state legislatures would then have to approve, but that Professor William Breetz (the chairman) and member Barry Nekritz (the American Bar Association representative to the Committee) want to create an overlay statue. Moreover, he was apparently the only person in the room with any foreclosure experience, and a considerable amount of disiformation was conveyed by industry participants.

His comments were considerable more moderate than those of another observer, who wrote:

I wanted to vomit. I don’t think it’s going anywhere fast, but I wanted to scrub off the subtle corruption that permeated the area.

Cox also reported his understanding is that the Study Committee is making a recommendation that a uniform act drafting process begin and that ULC president Michael Houghton and executive director John Sebart are keen to see the project move forward.

Not only is it disheartening that this sort of effort is underway, but its slow timetable and largely invisible nature (until it is too late) will make it hard to organize against it. At a minimum, investors and consumer groups need to make their voices heard. The idea that elite attorneys from banks, financial services lobbying organizations, the Fed, and academia amount to “stakeholders” is offensive and absurd, particularly on an issue of importance to most citizens, the integrity of the laws protecting their biggest asset.

War Is Peace

2012-01-23T00:01:00.001-05:00

It seems as though war is one way nations have historically managed to get out of overwhelming debt obligations. Iran seems to be the next favored target according to this essay from Global Research, which strikes an unnecessarily somber note in my opinion about all out nuclear war. It will be bad enough if oil supplies are badly disrupted for even a short while:

President Obama's government is using its Ministry of Propaganda, a.k.a., the American media, to spread the story that President Obama, Pentagon chief Panetta, and other high US officials are delivering strong warnings to Israel not to attack Iran.

For someone as familiar with Washington as I am, I recognize these reports for what they are. They are Br’er Rabbit telling Br’er Fox “please don’t throw me in the briar patch.”

If you don’t know the Uncle Remus stories, you have missed a lot. Br’er Rabbit was born and raised in the briar patch.

What these “leaked” stories of Washington’s warnings and protests to Israel are all about is to avoid Washington’s responsibility for the war Washington has prepared. If the war gets out of hand, and if Russia and China intervene or nukes start flying, Washington wants the blame to rest on Israel, and Israel seems willing to accept the blame. Nikolai Patrushev, who heads Russia’s Security Council, has apparently been deceived by Washington’s manipulation of the media. According to the Interfax news agency, Patrushev condemned Israel for pushing the US towards war with Iran.

You get the picture. The helpless Americans. They are being bullied by Israel into acquiescing to a dangerous war. Otherwise, no more campaign contributions.

The facts are different. If Washington did not want war with Iran it would not have provided the necessary weapons to Israel. It would not have deployed thousands of US troops to Israel, with a view toward the American soldiers being killed in an Iranian response to Israel’s attack, thus “forcing” the US to enter the war. Washington would not have built a missile defense system for Israel and would not be conducting joint exercises with the Israeli military to make sure it works.

If Washington did not want Israel to start the war, Washington would inform the Israeli government in no uncertain words that an Israeli strike on Iran means that the US will NOT veto the UN’s denunciation of Israel and the sanctions that would be placed on Israel as a war criminal state. Washington would tell Israel that it is good-bye to the billions of dollars that the bilked American taxpayers, foreclosed from their homes by fraudulent mortgages and from jobs by offshoring, hand over by compulsion to Israel to support Israel’’s crimes against humanity.

But, of course, Washington won’t prevent the war that it so fervently desires.

Neither will Washington’s NATO puppets. “Great” Britain does as it is told, subservient and occupied Germany, bankrupt France, Italy occupied with US air bases with a government infiltrated by the CIA, bankrupt Spain and Greece will all, in hopes of an outpouring of US dollars and devoid of any dignity or honor, support the new war that could end life on earth.

Only Russia and China can prevent the war.

Russia took the first step when the newly appointed Deputy Prime Minister for military affairs, Demitry Rogozin told a press conference in Brussels that Russia would regard an attack on Iran as “a direct threat to our security.”

Washington is counting on subverting Russia’s opposition to Washington’s next war. Washington can time the attack on Iran right after the March elections in Russia. When Putin wins again, the treasonous Russian opposition parties, financed by the CIA, will unleash protests in the streets. The subservient and utterly corrupt Western media will denounce Putin for stealing the election. The orchestrated protests in Russia will turn violent and discredit, if not prevent, any Russian response to the naked aggression against Iran.

For Rogozin’s warning to be effective in preventing war, China needs to enter the fray. Washington is banking on China’s caution. China deliberates and never rushes into anything. China’s deliberation will serve Washington’s war.

It is possible that the crazed neocon Washington government will have one more “victory” before Russia and China comprehend that they are next on the extermination list. As this date cannot be far off, life on earth might expire before the unpayable debts of US and EU countries come due.

Paul Craig Roberts is a frequent contributor to Global Research.

Housing Hijinks Continue

2012-01-22T00:01:00.000-05:00

It seems plans are afoot to let loose private investment on foreclosed homes as a way to allow the surplus of foreclosed homes to ab absorbed back into the housing market. This plan appears to have all the hallmarks of another massive public bailout of private wastrels. As this essay from Counterpunch points out, the easy way to help homeowners involves no moral hazard that might encourage future investors to expect public bailouts. Why we are expected to put up with more socialism for the banks at the expense of the people and public services is beyond me but mention Occupy Wall Street and face scorn. Yet it seems to me any 99 percenter who supports the plans outlined here needs to think again.

Federal Reserve chairman Ben Bernanke wants US taxpayers to purchase more of the garbage loans and mortgage-backed securities (MBS) that the big banks still have on their books. (Cash for trash) That’s the impetus behind the Fed’s 26-page white paper that was delivered to Congress last Wednesday. The document outlines the Fed’s plan for ‘stabilizing the housing market’, which is a phrase that Bernanke employs when he wants to provide more buy-backs, giveaways, subsidies and other corporate welfare to big finance.

“Restoring the health of the housing market is a necessary part of a broader strategy for economic recovery,” Bernanke opined in a letter to the Senate Banking and House Financial Services committees.

Indeed. The housing depression continues into its 5th year with no end in sight, mainly because the people who created the crisis are still in positions of power. And, they’re still offering the same remedies, too, like handing the banks another blank check to save them from losses on their bad bets. That’s what this new “housing stabilization” boondoggle is really all about, bailing out the bankers. Here’s a summary from Bloomberg:

“Bernanke’s Fed study said “more might be done,” including eliminating entirely the reduced fees for risky loans, “more comprehensively” cutting lenders’ put-back risks; and further streamlining refinancing for other Fannie Mae and Freddie Mac borrowers. The U.S. also should consider having Fannie Mae and Freddie Mac refinance loans not already backed by the government, which would add credit risk for the companies, according to the report….” (Bloomberg)

First of all, Fannie and Freddie only return loans (“put-backs”) that don’t meet their standards and which the banks foisted on them so they wouldn’t have to face the losses. The idea that the publicly-funded GSE’s should just “eat the losses” is ridiculous.

And, why–in heaven’s name–would congress want to take on more risk when they can keep millions of people in their homes by simply reducing the principal on their mortgages to the present value of the house? (aka–”Cramdowns”) Naturally, the losses would have to be absorbed by the banks who–by everyone’s admission–were
responsible for the present crisis due to their lax lending standards and, oftentimes, fraudulent behavior. This would lead to a restructuring of the country’s biggest banks through a Resolution Trust Corporation (RTC) so their toxic assets and backlog of foreclosed properties can be auctioned off as soon as possible.

This is a straightforward way to fix the housing market and it should have been done long ago. Bernanke’s solution is not only unreasonable, it’s also deceitful. Here’s more from the Fed’s paper: “Continued weakness in the housing market poses a significant barrier to a more vigorous economic recovery”..(without action)…“the adjustment process will take longer and incur more deadweight losses, pushing house prices lower and thereby prolonging the downward pressure on the wealth of current homeowners and the resultant drag on the economy at large.”

Did it really take Bernanke 5 years to figure out that housing is a “drag on the economy”?

No, of course not. So, what’s going on now that has suddenly spurred him to act?

Well, for one thing, the banks are losing a great deal of money on the mortgage-backed securities (MBS) that they bought in the last few years. Here’s the story in the Wall Street Journal:

“After flickering to life early in 2011, the market for subprime- and other risky residential-mortgage bonds has returned to its comatose state. And many investors believe a revival could be years away.

Prices on some bonds, which are backed by mortgages that don’t meet the standards needed to get backing from government-controlled companies like Fannie Mae and Freddie Mac, plummeted as much as 30% last year. The ABX, an index that tracks the value of subprime bonds, ended the year at 43.44 cents on the dollar, down from 59.90 cents at year-end 2010 and a peak of 62.68 cents in February 2011

While that decline pushed yields up to as much as 17%—bond yields rise as prices fall—many fund managers have pulled out of the market due to worries about further price declines. Moreover, repeated downgrades have left too few investment-grade securities for them to own. Wall Street banks, which traditionally have played a key role in the market matching buyers and sellers, are backing away ahead of new regulations that will make it more expensive to hold riskier assets.” (Investors Sour on Subprime Bonds, WSJ)

So, Wall Street’s financial geniuses got back into the MBS-biz (for a second time) and got whacked again? That’s right; and now they want John Q. Public to pay for it with another bailout.

And, there’s more to this story, too. European banks own roughly $100 billion of these mortgage-backed turkeys which they’re presently shedding like crazy in order to meet new capital requirements. That means US bank balance sheets are dripping red as the value of their financial asset-stockpile continues to plunge. That’s why Sugar Daddy Bernanke has stepped in, because it’s time for another multi-billion dollar bank rescue.

Look, the Fed has already purchased over $1.25 trillion of these toxic MBS which represents humongous long-term losses for the taxpayer. Do we really need more of this sludge?

Bernanke promised that the first round of quantitative easing (QE1) would boost employment (It hasn’t) and improve housing sales (it never happened) The only uptick in sales occurred because the colluding banks deliberately reduced the supply of foreclosed homes they put on the market. The reduction has led to a massive 1.7 million backlog of housing units (shadow inventory) that will eventually be dumped onto the market triggering another sharp decline in housing prices. Bernanke wants to do something about the bulging inventory as well as prop up the value of sagging MBS. So, the Fed’s plan actually has two main objectives; in other words, it’s the double whammy. Here’s more from Bloomberg:

“Since the Fed started buying $1.25 trillion of mortgage bonds in January 2009, the value of U.S. housing has fallen 4.1 percent, and is down 32 percent from its 2006 peak, according to an S&P/Case-Shiller index. The central bank is poised to buy about $200 billion this year, or more than 20 percent of new loans, as it reinvests debt that’s being paid off. Some Fed officials have said they may support additional purchases that Barclays Capital estimates could total as much as $750 billion.”

Did you catch that? Taxpayers are going to get slammed for another $750 billion. That’s nearly as much as Obama’s American Recovery and Reinvestment Act (ARRA), the fiscal stimulus that added 2 percent to GDP and kept unemployment from rocketing to 13 percent. Bernanke wants to throw that same amount down a Wall Street sinkhole.

So maybe you think this won’t happen, after all, could Congress really be so gullible as to fall for Bernanke’s fearmongering flim-flam again?

Maybe and maybe not. But there are some pretty wealthy and well-connected people who are betting that the Fed will do as it’s told and pave the way for another hefty bailout. In fact, the world’s largest bond fund (Pimco) has stumped up a mountain of cash betting that good buddy Bernanke will get the printing presses whirring sometime in mid-January. Here’s the story from Zero Hedge:

”….in December the fund (Total Return Fund or TRF) doubled down on its QE3 all in bet, by “borrowing” even more cash, or a record $78 billion, using the proceeds to buy even more MBS, as well as Treasurys, which hit a combined 31% of the TRF’s holdings. In other words, between MBS and USTs, Pimco holds a whopping 79% of total, mostly in very long duration exposure. In fact, this combination of long duration and pre-QE exposure has not been seen at PIMCO since late 2008, early 2009, meaning that as many banks have been suggesting, (Bill) Gross is convinced that the Fed will announce if not outright QE3 this January, then at least intimate it is coming.”(“Pimco Doubles Down On All In Bet Fed Will Monetize MBS”, Zero Hedge)

So what does Pimco know that we don’t know? More importantly, from whom are they getting their information?

And, there’s another thing, too. This whole deal about converting foreclosed homes into rental properties is another scam. Here’s the scoop from another article in the Wall Street Journal:

“The paper also signaled that the Fed…. will try to involve banks more directly in housing-revival approaches… One area involves efforts to turn foreclosed homes into rental properties….

Banking regulations typically direct banks to sell foreclosed homes quickly, although the rules do recognize this isn’t always practical and so these properties can be held up to five years. The Fed said it is now “contemplating issuing guidance” to banks and regulators that would possibly allow banks to turn some of these foreclosed homes into rental properties…..The hope is this may help stanch the flow of foreclosed properties into markets…” (“Fed Up With the Depressed State of Housing”, Wall Street Journal)

Bingo. The banks are not only sitting on 1.7 million shadow inventory of homes they’ve stockpiled to keep prices artificially high. They also have millions more in the pipeline when a settlement is finally reached on the robo-signing scandal. So, what are they going to do with all that backlog?

That’s easy. They’ll schluff it off on the taxpayer by creating a foreclosure-to-rental swindle where the government provides lavish incentives for banks and private equity scavengers to buy the homes (in bulk) for pennies on the dollar with loans provided by–you guessed it–Uncle Sam. Here’s a summary of what’s going on behind the scenes:

“As the Obama administration and federal regulators work on a program to sell government-owned foreclosures in bulk to investors, those investors aren’t wasting any time stockpiling cash and buying foreclosed properties at auction and from the major banks.

Oakland, California-based Waypoint Real Estate Group, a major acquirer of so-called “REO to Rental” (Real Estate Owned) just announced a partnership with a private equity firm, Menlo Park, California-based GI Partners, to buy foreclosed properties….

“Our approach to buying distressed single-family houses, renovating them, and leasing to residents who are committed to a path to future home ownership is a viable solution to our nation’s housing crisis,” said Colin Wiel, managing director and co-founder of Waypoint in a press release. “Our partnership with GI Partners ensures we can take the next step in our company’s evolution.”

GI is taking an increasingly popular bet on distressed real estate, closing on a $400 million fund with Waypoint, which has plans to purchase $1 billion in distressed real estate assets over the next two years, according to its release. (“Private Equity Readying a Run on Foreclosures”, Diana Olick, CNBC)

So, what do these guys know that we don’t know? And why are they plunking down big money when the details have not even been released yet?

None of this really passes the smell test, does it? The only thing we know for sure is that the “fix is in” and that Bernanke will do what he always does when the banks are in a pinch. Throw them a lifeline.

MIKE WHITNEY lives in Washington State. He is a contributor to "Hopeless: Barack Obama and the Politics of Illusion," forthcoming from AK Press.

Fukushima Update

2012-01-21T00:01:00.002-05:00

It is no longer headline news but the Japanese power plant destruction has led to radioactivity being detected worldwide. And this article from Global Research in Canada suggests the levels may be rising.

The University of California at Berkeley detected cesium levels in San Francisco area milk above over EPA limits … and even higher than they were 6 months ago.

Finnish public television says that cesium from Fukushima has been detected in lichens, fungi and elk and reindeer meat in Finland.

The Australian Radiation Protection and Nuclear Safety Agency confirmed a radiation cloud over the East Coast of Australia.

The West Coast of Canada is getting hit by debris from Japan … and at least some of it is likely radioactive.

The authors of the controversial study claiming 14,000 deaths in the U.S. so far from Fukushima are now upping their figure to 20,000. I spoke with nuclear health expert Chris Busby about their study, and he said that mortality figures fluctuate pretty substantially in the normal course, and so it is hard to know at this point one way or the other whether their figures are accurate.

And while there is no evidence linking them to Fukushima, Bed Bath and Beyond has recalled radioactive tissue holders after they set off police radiation monitors aboard a delivery truck This may just be an example of the incredibly lax handling of radioactive materials.

And thyroid cancers are – mysteriously – on the rise in the U.S.

But don’t worry: The owner of the Fukushima plant has the plant in cold shutdown, so everything is “under control” … Although temperatures have apparently jumped inside Fukushima’s number 2 reactor, and the Japanese have no idea where the nuclear fuel has gone, so they are drilling a hole into the containment vessel to try to find it.

Syrians Love Their Leader

2012-01-20T00:01:00.000-05:00

From Jonathan Steele of the Guardian newspaper in England reports things in Syria may not be as they seem to those of us who watch events through the western press. This provocative article should give pause to anyone who wonders why the rebellion in Syria has failed signally to follow in the footsteps of the other "uprisings" in the Arab world. I find it hard sometimes to remind myself that reality comes in many different forms and the mainstream press is just one of them. The other reality? Perhaps that's the one that suggests, mildly, that most people don't care about politics and just want peace, even in Syria.

Suppose a respectable opinion poll found that most Syrians are in favour of Bashar al-Assad remaining as president, would that not be major news? Especially as the finding would go against the dominant narrative about the Syrian crisis, and the media considers the unexpected more newsworthy than the obvious.

Alas, not in every case. When coverage of an unfolding drama ceases to be fair and turns into a propaganda weapon, inconvenient facts get suppressed. So it is with the results of a recent YouGov Siraj poll on Syria commissioned by The Doha Debates, funded by the Qatar Foundation. Qatar's royal family has taken one of the most hawkish lines against Assad – the emir has just called for Arab troops to intervene – so it was good that The Doha Debates published the poll on its website. The pity is that it was ignored by almost all media outlets in every western country whose government has called for Assad to go.

The key finding was that while most Arabs outside Syria feel the president should resign, attitudes in the country are different. Some 55% of Syrians want Assad to stay, motivated by fear of civil war – a spectre that is not theoretical as it is for those who live outside Syria's borders. What is less good news for the Assad regime is that the poll also found that half the Syrians who accept him staying in power believe he must usher in free elections in the near future. Assad claims he is about to do that, a point he has repeated in his latest speeches. But it is vital that he publishes the election law as soon as possible, permits political parties and makes a commitment to allow independent monitors to watch the poll.

Biased media coverage also continues to distort the Arab League's observer mission in Syria. When the league endorsed a no-fly zone in Libya last spring, there was high praise in the west for its action. Its decision to mediate in Syria was less welcome to western governments, and to high-profile Syrian opposition groups, who increasingly support a military rather than a political solution. So the league's move was promptly called into doubt by western leaders, and most western media echoed the line. Attacks were launched on the credentials of the mission's Sudanese chairman. Criticisms of the mission's performance by one of its 165 members were headlined. Demands were made that the mission pull out in favour of UN intervention.

The critics presumably feared that the Arab observers would report that armed violence is no longer confined to the regime's forces, and the image of peaceful protests brutally suppressed by army and police is false. Homs and a few other Syrian cities are becoming like Beirut in the 1980s or Sarajevo in the 1990s, with battles between militias raging across sectarian and ethnic fault lines.

As for foreign military intervention, it has already started. It is not following the Libyan pattern since Russia and China are furious at the west's deception in the security council last year. They will not accept a new United Nations resolution that allows any use of force. The model is an older one, going back to the era of the cold war, before "humanitarian intervention" and the "responsibility to protect" were developed and often misused. Remember Ronald Reagan's support for the Contras, whom he armed and trained to try to topple Nicaragua's Sandinistas from bases in Honduras? For Honduras read Turkey, the safe haven where the so-called Free Syrian Army has set up.

Here too western media silence is dramatic. No reporters have followed up on a significant recent article by Philip Giraldi, a former CIA officer who now writes for the American Conservative – a magazine that criticises the American military-industrial complex from a non-neocon position on the lines of Ron Paul, who came second in last week's New Hampshire Republican primary. Giraldi states that Turkey, a Nato member, has become Washington's proxy and that unmarked Nato warplanes have been arriving at Iskenderum, near the Syrian border, delivering Libyan volunteers and weapons seized from the late Muammar Gaddafi's arsenal. "French and British special forces trainers are on the ground," he writes, "assisting the Syrian rebels, while the CIA and US Spec Ops are providing communications equipment and intelligence to assist the rebel cause, enabling the fighters to avoid concentrations of Syrian soldiers …"

As the danger of full-scale war increases, Arab League foreign ministers are preparing to meet in Cairo this weekend to discuss the future of their Syrian mission. No doubt there will be western media reports highlighting remarks by those ministers who feel the mission has "lost credibility", "been duped by the regime" or "failed to stop the violence". Counter-arguments will be played down or suppressed.

In spite of the provocations from all sides the league should stand its ground. Its mission in Syria has seen peaceful demonstrations both for and against the regime. It has witnessed, and in some cases suffered from, violence by opposing forces. But it has not yet had enough time or a large enough team to talk to a comprehensive range of Syrian actors and then come up with a clear set of recommendations. Above all, it has not even started to fulfil that part of its mandate requiring it to help produce a dialogue between the regime and its critics. The mission needs to stay in Syria and not be bullied out.

Inconvenient Crews

2012-01-19T00:01:00.000-05:00

Maritime law has a long history of flag flying as a means of signalling intent. 19th century warships used to fly the enemy's flag as a ruse while the ships approached each other swapping flags at the last minute before opening fire on an unsuspecting enemy. From Counterpunch http://www.counterpunch.org/ this essay about modern flag swapping by Karl Grossman who dissects how cruise ship companies short change passengers and crew by playing the odds of flying the wrong flag. And these would be the flags we want flying over ever larger cruise ships visiting Key West through an enlarged channel dredged for their convenience?

The disdain of much of the cruise ship industry for safety (as well as labor and environmental) laws is signaled by flags that fly on the stern of more than half of cruise ships. They are called “flags of convenience.”

Some 60 percent of cruise ships are now registered in Panama, Liberia and the Bahamas. By doing this—by obtaining “flags of convenience” from these and other countries—ship owners can avoid the laws of the nation from which they actually operate and take advantage of weak safety, labor and environmental standards.

The Costa Concordia and the other Costa ships are registered in Italy, although for years Costa ships flew the “flag of convenience” of Panama. Most of the other 100 ships of Costa’s owner, Florida-headquartered Carnival Corporation., sail, however, under “flags of convenience” of Panama and the Bahamas.

There has been sharp criticism through the years of this practice.

“Maritime lawlessness isn’t confined to pirates. Thanks to a system of ship registration called ‘flags of convenience,’ it is all too easy for unscrupulous ship owners to get away with criminal behavior,” wrote Rose George in an op-ed piece in the New York Times last year. “They have evaded prosecution for environmental damage like oil spills, as well as poor labor conditions, forcing crews to work like slaves without adequate pay or rest. But unlike piracy, which seems intractable, the appalling conditions on some merchant ships could be stopped.”

It used to be that ships flew the flag of the nation where they were from—and abided by its laws. “A ship is considered the territory of the country in which it is registered,” noted S.J. Tomlinson in a 2007 essay in the Villanova Sports and Entertainment Law Journal.

It was in the U.S. in the 1920s that the practice of registering ships in foreign nations began. Ship owners were frustrated by increased regulation and rising labor costs and also were seeking a way around Prohibition. Panama was an early haven. Liberia later became popular.

And the Bahamas later joined in. Other nations now involved include the Marshall Islands.

Indeed, the Deepwater Horizon oil rig at which an explosion in 2010 killed 11 crewmen and set off the massive Gulf of Mexico oil spill was registered in the Marshall Islands. It was considered to be a vessel requiring a national flag.

Many of these nations that provide “flags of convenience” at a price “lack the capacity or will to monitor the safety and working conditions on ships or to investigate accidents,” said George. “Instead, ship safety certificates are given out by private classification societies. Owners are allowed to choose which society they want—and the worst predictably choose the least demanding, This self-policing has been compared to registering a car in Bali so you can drive it in Australia with faulty brakes.”

Stated M.J. Wing in a 2003 essay in the Tulane Maritime Law Journal: “Those nations whose open registries have become the most popular also tend to be those who possess the most lax labor, safety, and environmental codes.”

CBS News travel editor Peter Greenberg, believes that “when you have a ship that’s home-ported in the United States, U.S. law should prevail.” There needs to be a change of law, he said.

He made the comment after a 2010 fire aboard the Carnival Splendor which left 4,500 passengers and crew stranded at sea. The National Transportation Safety Board had said it would lead the investigation into what happened, but Carnival argued that the U.S. didn’t have jurisdiction because the ship was registered in Panama.

“With all due respect to the Panamanian authorities,” commented Greenberg. “I have not seen a show called ‘CSI Panama’ lately. I really want guys who know what they’re doing, who really live this work, to do the investigation.”

What began in the 1920s has now become a maritime industry norm. Meanwhile, the cruise industry has been exploding—growing at a rate as high as 7 percent annually in recent years. Ships have grown to be humongous. Oasis of the Seas, a ship of Florida-headquartered Royal Caribbean International, which went into service in 2009, can carry more than 6,000 passengers. It’s a model for other megaships. And the gargantuan floating hotel is registered in the Bahamas.

Carnival Corporation proudly announced last April that it had added its “100th cruise ship to its fleet with the delivery of the Carnival Magic. It can carry more than 5,400 passengers. It is registered in Panama. Carnival described itself as “a global cruise company and one of the largest vacation companies in the world. Our portfolio of leading cruise brands includes Carnival Cruise Lines, Holland America Line, Princess Cruises and Seabourn…P&O Cruises…Cunard Line…AIDA…Costa Cruises…and Iberocruceros.”

Carnival categorizes its Carnival Magic as a ship in its “Dream Class.”
The cruise ship industry has become a huge business—and like most big businesses has no problem avoiding rules. The traditional antidote has been government regulation, but the “flags of convenience” system offers an end-run to that.

The sea is not forgiving to those who would cut corners. The dream of a cruise at sea can easily become a nightmare—as it became for the passengers on the Costa Concordia.

Major changes need to be made in the maritime industry—including the end of the “flags of convenience” system. There should be an international ban on “flags of convenience.” As for the United States, all forms of public transportation—airplane, train, car, truck and much of ship transport—are accompanied by comprehensive government regulation. This needs to happen to all seagoing vessels emanating from U.S. ports—without the scam of licenses from Panama, Liberia and the Bahamas. The years of ship owners doing what they want must end. Large numbers of lives are at stake. The anarchy on the high seas cannot be allowed to continue.

Karl Grossman, professor of journalism at the State University of New York/College of New York, is the author of the book, The Wrong Stuff: The Space’s Program’s Nuclear Threat to Our Planet (Common Courage Press).

Mortgage Settlement Fades

2012-01-18T00:01:00.000-05:00

According to Yves Smith at naked capitalism the mortgage fiasco that was supposed to be worked out in a fifty state agreement has now slipped into a truly comatose state. Smith says the states declining to [participate in the "50 state" talks may have increased from five to twelve and the number of "defectors" may be increasing. Chaos seems to be the order of the day for a while on this subject.

At least when Penelope was resisting her suitors, it was clear what her objectives were. She was holding out on her belief that her husband Odysseus would return. And the suitors come off like real boors, so maybe she had also decided the single life was a better option than marrying any of them.

By contrast, it seems as if the Obama administration has completely lost the plot in what was formerly called the 50 state attorney general negotiations, and that appears to have fed directly into the news today of meetings of a breakaway group interested in concrete results.

Remember that despite the successful effort of by the Feds to make the AG group the face of the effort, this drill is being quietly guided by the Administration (the DoJ, HUD, and other federal regulators are participating in the negotiations). A telling moment occurred when Iowa AG Tom Miller, the leader of the state AGs, practically fawned over then assistant Treasury secretary Michael Barr in Congressional hearings in late 2010.

When the talks started, it was clear that the Administration wanted to get the housing mess out of the headlines, based on the false premise that the use of enough cheap credit, regulatory forbearance (official speak for “extend and pretend”) plus some helpful-around-the-margins programs to distract the peasants, would allow the housing market to heal on its own. The evidence is overwhelmingly to the contrary. Housing credit is entirely dependent on government support, and there is not even a remote chance that this will change any time soon. The authorities are not only oblivious to the way servicers abuse investors, but New York Fed president William Dudley made it clear that he thinks it’s a great idea to reverse the creditor hierarchy and burn first mortgage investors to save second lien investors, who happen to be banks. And the supposedly helpful programs like HAMP turned out to be utter disasters.

But the most remarkable to see federal regulators do the equivalent of sticking fingers in their ears and yelling “Lalala” whenever the issue of servicer and foreclosure mill fraud comes up (they give servicing deficiencies plenty of lip service in testimony and speeches, but their actions convey a completely different message). As Michael Olenick discussed in a recent post, there is a massive overhang of shadow housing inventory. Buyers are reluctant to come into the market if they think (correctly in many locales) that prices have not bottomed. In states that for various reasons now have more teeth in foreclosure documentation requirements (New York, Nevada, and New Jersey), foreclosures have come to a near standstill. That’s a de facto admission that the parties representing creditors (almost always securities trusts) failed to live up to their promises to investors in the pooling & servicing agreements. It also raises the ugly likelihood that the borrower IOU, the note, never made it to the trust, but is in limbo earlier in the transfer chain.

So the Administration’s puppets, the cooperating attorneys general, have been engaged in truly bizarre negotiations. The banks know the real objective is to “reduce uncertainty” which is really “get possible sources of trouble neutralized”. AG suits can be very powerful, as Eliot Spitzer’s prosecutions of big corporate accounting abuses and dubious behavior by sell side analysts demonstrated. They change perceptions of what will be tolerated and also pave the way for private lawsuits. And as we’ve pointed out repeatedly, the banks keep asking for more and more at the negotiating table. That’s a bad faith bargaining strategy, one you pursue only if you are certain the other side is desperate to get a deal done. But the whole process has looked less and less plausible as the banks keep upping their demands and Tom Miller keeps saying, month after month, that a deal is mere weeks away.

But the pretense started to crack as important states exited the talks: New York, Delaware, Nevada, Massachusetts, and California. The Miller camp keeps mentioning that California may come back with no evidence to support that spin (non-developments or old news on the California front has been misrepresented more than once, a sign of desperation to keep a brave front up).

But today’s leak is a biggie. A little birdie had told me a bigger group was discussing an settlement in opposition to the AG format a couple of months ago, but this is apparently the first in person meeting of a group this large. The report by Loren Berlin at Huffington Post says as many as 15 states are participating, and Hawaii, New Hampshire, Missouri, Mississippi, Maryland, Kentucky and Minnesota joined the five states that had already abandoned the talks in pow-wow in Washington last Tuesday. So the known total of the possible breakaway group is 12, and we’ve heard past rumors of Colorado and Oregon as being not very keen with the Miller-led talks. Key extracts:

The meeting was prompted by the slow pace at which a national foreclosure settlement led by the Obama administration is progressing, and is likely to be the first in a series..

“The talks weren’t just about investigations,” said a source with knowledge of the discussions. “They were also about the attorneys general offices feeling uninvolved in a process by which their federal colleagues have been negotiating on their behalf.”

Hah, so we have confirmation of who is really driving this train.

Notice that this group includes only Democrats (Colorado is Republican but not confirmed as on the outs). However, even a group of 12 Democratic AGs is significant. First, it is a direct repudiation to the Obamap-led effort to sweep the mortgage mess under the rug. Second, 12 or more departures would undermine the status of the settlement. Per Dave Dayen in an earlier post:

The master settlement agreement with the tobacco industry in 1998 eventually got the agreement of 46 AGs, with the other four coming aboard later. That would be similar to the necessary outcome here; to become the official position of the National Association of Attorneys General, at least 38-41 of the AGs would have to sign on. And even that has no binding force to supersede state law.

In addition, despite the effort of Tom Miller to pretend that there is unanimity among the AG group, he not only has dissenters on the left but also on the right. Four Republican attorneys general said in a letter last April that they were firmly opposed to any principal reductions of mortgages as part of the deal, and that IS now part of the deal. So in the unlikely event the Miller talks get closer to resolution, these AGs are also likely to bolt.

So perhaps there is some Penelope-like logic behind the neverending negotiations. Bringing them to a close would reveal, finally, what we said all along: that there is no deal to be had among the participants. Since the objective is reducing uncertainty, Mr. Market will be happier with his fantasy that a settlement deal may finally take place than the recognition that attorneys general no longer have pretend negotiations keeping them from doing their job of pursuing mortgage miscreants.

Banking Wars

2012-01-17T00:01:00.003-05:00

By the pseudonym George Washington at the zero hedge website this discussion about the drive to control central banks world wide and especially in the Middle East. Weird but true it seems. The evidence as offered here is though provoking.

The Middle Eastern and North African wars – planned 20 years ago – don’t necessarily have much to do with fighting terrorism. They are, in reality, about oil and protecting Israel (and read the section entitled “Securing the Realm” here). However as AFP reports there is another major motivation for the expanding wars:

The latest round of American sanctions are aimed at shutting down Iran’s central bank, a senior US official said Thursday, spelling out that intention directly for the first time.

“We do need to close down the Central Bank of Iran (CBI),” the official told reporters on condition of anonymity, while adding that the United States is moving quickly to implement the sanctions, signed into law last month.

Foreign central banks that deal with the Iranian central bank on oil transactions could also face similar restrictions under the new law, which has sparked fears of damage to US ties with nations like Russia and China.

“If a correspondent bank of a US bank wants to do business with us and they’re doing business with CBI or other designated Iranian banks… then they’re going to get in trouble with us,” the US official said.

Why is the U.S. targeting Iran’s central bank?

Well, multi-billionaire Hugo Salinas Price told King World News:

What happened to Mr. Gaddafi, many speculate the real reason he was ousted was that he was planning an all-African currency for conducting trade. The same thing happened to him that happened to Saddam because the US doesn’t want any solid competing currency out there vs the dollar. You know Gaddafi was talking about a gold dinar.

As I noted in August:

Ellen Brown argues in the Asia Times that there were even deeper reasons for the war than gold, oil or middle eastern regime change.

Brown argues that Libya – like Iraq under Hussein – challenged the supremacy of the dollar and the Western banks:

Later, the same general said they planned to take out seven countries in five years: Iraq, Syria, Lebanon, Libya, Somalia, Sudan, and Iran.

What do these seven countries have in common? In the context of banking, one that sticks out is that none of them is listed among the 56 member banks of the Bank for International Settlements (BIS). That evidently puts them outside the long regulatory arm of the central bankers’ central bank in Switzerland.

The most renegade of the lot could be Libya and Iraq, the two that have actually been attacked. Kenneth Schortgen Jr, writing on Examiner.com, noted that “[s]ix months before the US moved into Iraq to take down Saddam Hussein, the oil nation had made the move to accept euros instead of dollars for oil, and this became a threat to the global dominance of the dollar as the reserve currency, and its dominion as the petrodollar.”

According to a Russian article titled “Bombing of Libya – Punishment for Ghaddafi for His Attempt to Refuse US Dollar”, Gaddafi made a similarly bold move: he initiated a movement to refuse the dollar and the euro, and called on Arab and African nations to use a new currency instead, the gold dinar. Gaddafi suggested establishing a united African continent, with its 200 million people using this single currency.

***

And that brings us back to the puzzle of the Libyan central bank. In an article posted on the Market Oracle, Eric Encina observed:

One seldom mentioned fact by western politicians and media pundits: the Central Bank of Libya is 100% State Owned … Currently, the Libyan government creates its own money, the Libyan Dinar, through the facilities of its own central bank. Few can argue that Libya is a sovereign nation with its own great resources, able to sustain its own economic destiny. One major problem for globalist banking cartels is that in order to do business with Libya, they must go through the Libyan Central Bank and its national currency, a place where they have absolutely zero dominion or power-broking ability. Hence, taking down the Central Bank of Libya (CBL) may not appear in the speeches of Obama, Cameron and Sarkozy but this is certainly at the top of the globalist agenda for absorbing Libya into its hive of compliant nations.

Alex Newman wrote in November:

According to more than a few observers, Gadhafi’s plan to quit selling Libyan oil in U.S. dollars — demanding payment instead in gold-backed “dinars” (a single African currency made from gold) — was the real cause [of the Libyan war and killing of Gadhafi]. The regime, sitting on massive amounts of gold, estimated at close to 150 tons, was also pushing other African and Middle Eastern governments to follow suit.

And it literally had the potential to bring down the dollar and the world monetary system by extension, according to analysts. French President Nicolas Sarkozy reportedly went so far as to call Libya a “threat” to the financial security of the world. The “Insiders” were apparently panicking over Gadhafi’s plan.

“Any move such as that would certainly not be welcomed by the power elite today, who are responsible for controlling the world’s central banks,” noted financial analyst Anthony Wile, editor of the free market-oriented Daily Bell, in an interview with RT. “So yes, that would certainly be something that would cause his immediate dismissal and the need for other reasons to be brought forward [for] removing him from power.”

According to Wile, Gadhafi’s plan would have strengthened the whole continent of Africa in the eyes of economists backing sound money — not to mention investors. But it would have been especially devastating for the U.S. economy, the American dollar, and particularly the elite in charge of the system.

“The central banking Ponzi scheme requires an ever-increasing base of demand and the immediate silencing of those who would threaten its existence,” Wile noted in a piece entitled “Gaddafi Planned Gold Dinar, Now Under Attack” earlier this year. “Perhaps that is what the hurry [was] in removing Gaddafi in particular and those who might have been sympathetic to his monetary idea.”

Investor newsletters and commentaries have been buzzing for months with speculation about the link between Gadhafi’s gold dinar and the NATO-backed overthrow of the Libyan regime. Conservative analysts pounced on the potential relationship, too.

“In 2009 — in his capacity as head of the African Union — Libya’s Moammar Gadhafi had proposed that the economically crippled continent adopt the ‘Gold Dinar,’” noted Ilana Mercer in an August opinion piece for WorldNetDaily. “I do not know if Col. Gadhafi continued to agitate for ditching the dollar and adopting the Gold Dinar — or if the Agitator from Chicago got wind of Gadhafi’s (uncharacteristic) sanity about things monetary.”

But if Arab and African nations had begun adopting a gold-backed currency, it would have had major repercussions for debt-laden Western governments that would be far more significant than the purported “democratic” uprisings sweeping the region this year. And it would have spelled big trouble for the elite who benefit from “freshly counterfeited funny-money,” Mercer pointed out.

“Had Gadhafi sparked a gold-driven monetary revolution, he would have done well for his own people, and for the world at large,” she concluded. “A Gadhafi-driven gold revolution would have, however, imperiled the positions of central bankers and their political and media power-brokers.”

Adding credence to the theory about why Gadhafi had to be overthrown, as The New American reported in March, was the rebels’ odd decision to create a central bank to replace Gadhafi’s state-owned monetary authority. The decision was broadcast to the world in the early weeks of the conflict.

In a statement describing a March 19 meeting, the rebel council announced, among other things, the creation of a new oil company. And more importantly: “Designation of the Central Bank of Benghazi as a monetary authority competent in monetary policies in Libya and appointment of a Governor to the Central Bank of Libya, with a temporary headquarters in Benghazi.”

The creation of a new central bank, even more so than the new national oil regime, left analysts scratching their heads. “I have never before heard of a central bank being created in just a matter of weeks out of a popular uprising,” noted Robert Wenzel in an analysis for the Economic Policy Journal. “This suggests we have a bit more than a rag tag bunch of rebels running around and that there are some pretty sophisticated influences,” he added. Wenzel also noted that the uprising looked like a “major oil and money play, with the true disaffected rebels being used as puppets and cover” while the transfer of control over money and oil supplies takes place.

Other analysts, even in the mainstream press, were equally shocked. “Is this the first time a revolutionary group has created a central bank while it is still in the midst of fighting the entrenched political power?” wondered CNBC senior editor John Carney. “It certainly seems to indicate how extraordinarily powerful central bankers have become in our era.”

Similar scenarios involving the global monetary system — based on the U.S. dollar as a global reserve currency, backed by the fact that oil is traded in American money — have also been associated with other targets of the U.S. government. Some analysts even say a pattern is developing.

Iran, for example, is one of the few nations left in the world with a state-owned central bank. And Iraqi despot Saddam Hussein, once armed by the U.S. government to make war on Iran, was threatening to start selling oil in currencies other than the dollar just prior to the Bush administration’s “regime change” mission. While most of the establishment press in America has been silent on the issue of Gadhafi’s gold dinar scheme, in Russia, China, and the global alternative media, the theory has exploded in popularity.

A reader comments:

No one is paying attention to the petro-dollars and the current desperation of European and US banks. Even Iran prices oil in $$$s per the treaty after WWII, but no one wants $$$s any more because it has been such a poor investment vehicle. Gold has been much better. Iraq did not want $$$s, was invaded. Libya did not want $$$s, was invaded (I believe they wanted gold). Iran does not want $$$. The dollars are deposited in US and European banks. The dollars standing as the finacial reserve currency of the world was / is being threatened, and thus the Federal Reserve Banks ability to print unlimited dollars!

Wind Energy

2012-01-16T00:01:00.000-05:00

I have just recently noticed a couple of wind turbines at the sub station on Cudjoe Key and i was mentally congratulating Keys Energy for finally getting on with at least one feeble attempt at creating some renewable energy in these the sunshine islands... But it seems renewables aren't the source of the future according to this scientist. Bummer. Well it would be a bummer if this essay debunking renewables wasn't published by an oil industry supported website! http://oilprice.com/

Britain is the pioneer in offshore wind energy, with more turbines placed out at sea than by any other nation. However, constructing such offshore wind farms is far tougher and more expensive than land based wind energy. In the dockyards at Belfast in Northern Ireland, where the Titanic was built, are blades longer than the entire wingspan of a Jumbo jet at 61.5 metres and weighing 22 tonnes. The blades are made of fibreglass and become thicker toward their point of attachment where they are fixed by 128 massive bolts in a ring to the rotor hub of the machine. Once the three blades are fitted, an extraordinarily delicate crane operation ensues with cutting-edge technology to raise the turbine and ferry it onto the barge which takes it out to sea. But how reliable is the technology? The turbines are intended to run for 20 years but in some cases they have had to be pulled-in after only 8 years. It remains to be seen whether this is a particular feature of the North Sea conditions or a more general aspect and if the latter, it must seriously jeopardise the future of offshore wind energy.

One wind farm subsided on its foundations which have to be sunk 14 metres into the ocean floor. Transportation costs are high both for taking the turbine out to sea in the first place and for subsequent maintenance operations. Curbing carbon emissions using wind-power is an expensive option and one such farm in the Irish Sea is costed at £500 million ($774 million). The sea-jack is raised on four legs, looking rather like an oil platform and the tower is assembled. The lower section is first attached and the giant tube is rotated into section and finally guided by hand into place, being monitored from the deck by remote control.

Next the nacelle is raised into place which contains the gearbox, the generator and control systems that will be located at the top of the turbine tower. The final stage of the work is lifting the giant set of blades up to the top of the tower. Again guided by hand to prevent damage to the tip of a blade, the hub is finally put into place, and fixed there. The barge then returns to Belfast for another load of components. Each turbine has a rated capacity of 5 MW and it is claimed that 200 of them are needed to match the output of a conventional power station. However, the capacity factor (efficiency) is probably only 20 -30%, and so a mean output from 200 turbines will be nearer 300 MW, far short of the 1,000 MW power output of a typical fossil-fuel fired or nuclear power station.

It is claimed that the wind-farm in the Irish Sea will supply enough electricity for 100,000 homes when the wind spins all of its 30 turbines. Of course, this is not a consistent situation, due to the variable nature of wind-force. The UK plans to get one quarter of its electricity from offshore wind by 2020. However, to place this in perspective, at around 11 GW of generating power, at least 7,000 turbines will need to be installed (ignoring for a moment the inconsistency of supply) and it being the start of 2012, this must be done at a rate of 2-3 per day which is an acutely challenging undertaking. Germany, Denmark and Holland also have serious plans for wind farms at sea.

At present there is no real indication for a global offshore wind farm effort. While good locations exist across the globe where wind-farms might be placed offshore, prevailing weather conditions must also be taken into consideration. In Asia, storms and typhoons can cause severe damage and there is the issue of cost. In Europe, such projects are supported by generous subsidies. In principle, wind farms produce electricity without generating greenhouse gases and the level of imported energy is reduced. Oil and gas prices are expected to increase over next decade which makes a case to pursue home-grown electricity. However, is this a halcyon vision of green energy in a zero-carbon world or a gamble with uncertain technology in an already overstretched economy?

Indeed, there are plans for wind farms on a scale far greater than anything existing now, and it has been mooted that these along with solar energy might best feed into a European super-grid, including the import of electricity from North Africa into Southern Europe. In the UK, my fear is we are placing all our energy eggs in one basket and should the technology not prove as robust as has been thought, or be far more lengthy and expensive to implement, we will be in serious trouble both economically and in meeting our green energy targets as promised to the European Commission.

By. Professor Chris Rhodes

Professor Chris Rhodes is a writer and researcher. He studied chemistry at Sussex University, earning both a B.Sc and a Doctoral degree (D.Phil.); rising to become the youngest professor of physical chemistry in the U.K. at the age of 34.

Numbers For The Year Ahead

2012-01-15T00:01:00.000-05:00

From http://theeconomiccollapseblog.com/ this essay listing a whole series of statistics that don't bode well for the coming year. The future is hard to predict as they say, but as always looking at the numbers we get a clear idea that things are getting worse and not better. We get a lot of cheerful talk from our leaders but its the numbers I keep looking at. Here they are:

2012 is shaping up to be a very tough year for the global economy. All over the world there are signs that economic activity is significantly slowing down. Many of these signs are detailed later on in this article. But most people don't understand what is happening because they don't put all of the pieces together. If you just look at one or two pieces of data, it may not seem that impressive. But when you examine all of the pieces of evidence that we are on the verge of a devastating global recession all at once, it paints a very frightening picture. Asia is slowing down, Europe is slowing down and there are lots of trouble signs for the U.S. economy. It has gotten to a point where the global debt crisis is almost ready to boil over, and nobody is quite sure what is going to happen next. The last global recession was absolutely nightmarish, and we should all hope that we don't see another one like that any time soon. Unfortunately, things do not look good at this point.

The following are 22 signs that we are on the verge of a devastating global recession....

#1 On Thursday it was announced that U.S. jobless claims had soared to a six-week high.

#2 Hostess Brands, the maker of Twinkies and Wonder Bread, has filed for bankruptcy protection.

#3 Sears recently announced that somewhere between 100 and 120 Sears and Kmart stores will be closing, and Sears stock has fallen nearly 60% in just the past year.

#4 Over the past 12 months, dozens of prominent retailers have closed stores all over America, and one consulting firm is projecting that there will be more than 5,000 more store closings in 2012.

#5 Richard Bove, an analyst at Rochdale Securities, is projecting that the global financial industry will lose approximately 150,000 jobs over the next 12 to 18 months.

#6 Investors are pulling money out of the stock market at a rapid pace right now. In fact, as an article posted on CNBC recently noted, investors pulled more money out of mutual funds than they put into mutual funds for 9 weeks in a row. Are there some people out there that are quietly repositioning their money for tough times ahead?....

Investors yanked money out of U.S. equity mutual funds for a ninth-consecutive week despite a bullish 2012 outlook from Wall Street and a December rally that’s carried over into the New Year.
#7 There are signs that the Chinese economy is seriously slowing down. The following comes from a recent article in the Guardian....

Growth had slowed to an annual rate of 1.5% in the second and third quarters of 2011, below the "stall speed" that historically led to recession.
#8 The Bank of Japan says that the economic recovery in that country "has paused".

#9 Manufacturing activity in the euro zone has fallen for five months in a row.

#10 Germany's economy actually contracted during the 4th quarter of 2011. At this point many economists believe that Germany is already experiencing a recession.

#11 According to a recent article by Bloomberg, it is being projected that the French economy is heading into a recession....

The French economy will shrink this quarter and next, suggesting the nation is in a recession as investment and consumer spending stagnate, national statistics office Insee said.
#12 There are a multitude of statistics that indicate that the UK economy is definitely slowing down.

#13 The credit ratings of Italy, Spain, Portugal, France and Austria all just got downgraded.

#14 It is being reported that the Spanish economy contracted during the 4th quarter of 2011.

#15 Bad loans in Spain recently hit a 17-year high and the unemployment rate is at a 15-year high.

#16 According to a recent article in the Telegraph, the Italian government is forecasting that there will be a recession for the Italian economy in 2012....

The Italian government predicts GDP will contract 0.4pc next year, but many economists fear the figure is optimistic.
"We can say without mincing words that we have already slipped into recession," said Intesa Sanpaolo analyst Paolo Mameli. "We expect GDP to keep contracting for the next 3-4 quarters."
#17 Italy's youth unemployment rate has hit the highest level ever.

#18 The unemployment rate in Greece for those under the age of 24 is now at 39 percent.

#19 Greece is already experiencing a full-blown economic depression. About a third of the country is now living in poverty and extreme medicine shortages are being reported. Things have gotten so bad that entire families are being ripped apart. According to the Daily Mail, hundreds of Greek children are being abandoned because the economy has gotten so bad that their parents simply cannot afford to take care of them anymore. The note that one mother left with her child was absolutely heartbreaking....

One mother, it said, ran away after handing over her two-year-old daughter Natasha.

Four-year-old Anna was found by a teacher clutching a note that read: 'I will not be coming to pick up Anna today because I cannot afford to look after her. Please take good care of her. Sorry.'
#20 In Greece, large numbers of people are simply giving up on life. Sadly, the number of suicides in Greece has increased by 40 percent in just the past year.

#21 In many European countries, the money supply continues to contract rapidly. The following comes from a recent article in the Telegraph....

Simon Ward from Henderson Global Investors said "narrow" M1 money – which includes cash and overnight deposits, and signals short-term spending plans – shows an alarming split between North and South.

While real M1 deposits are still holding up in the German bloc, the rate of fall over the last six months (annualised) has been 20.7pc in Greece, 16.3pc in Portugal, 11.8pc in Ireland, and 8.1pc in Spain, and 6.7pc in Italy. The pace of decline in Italy has been accelerating, partly due to capital flight. "This rate of contraction is greater than in early 2008 and implies an even deeper recession, both for Italy and the whole periphery," said Mr Ward.
#22 The major industrialized nations of the world must roll over trillions upon trillions of dollars in debt during 2012. At a time when credit is becoming much tighter, this is going to be quite a challenge. The following list compiled by Bloomberg shows the amount of debt that some large nations must roll over in 2012....

Japan: 3,000 billion
U.S.: 2,783 billion
Italy: 428 billion
France: 367 billion
Germany: 285 billion
Canada: 221 billion
Brazil: 169 billion
U.K.: 165 billion
China: 121 billion
India: 57 billion
Russia: 13 billion

Keep in mind that those numbers do not include any new borrowing. Those are just old debts that must be refinanced.

As I mentioned at the top of this article, things do not look good.

The last thing that we need is another devastating global recession.

As I wrote about yesterday, the U.S. economy is in the midst of a nightmarish long-term decline. The last major global recession helped to significantly accelerate that decline.

So what will happen if this next global recession is worse than the last one?

Sadly, the people that will get hurt the most by another recession will not be the wealthy.

The people that will get hurt the most will be the poor and the middle class.

So what should all of us be doing about this?

We should use the time during this "calm before the storm" to prepare for the hard times that are coming.

As always, let us hope for the best and let us prepare for the worst.

But things certainly do not look promising for the global economy in 2012.

Euro Lies And Statistics

2012-01-14T00:01:00.004-05:00

Nine European countries listed below have had their credit ratings cut according to Reuters, listed in the composite photo below, which includes the French President facing re-election woes with this blow to his status. Furthermore some economic speculators suggest the Eurozone faces a much higher likelihood of splitting in 2012. All bad news as extend and pretend continues to waste money trying to stave off disaster. meanwhile the root causes of economic recession now sweeping all of Europe, including Germany, goes unaddressed.

The European Central Bank should ramp up its buying of troubled euro zone debt to support Italy and prevent a "cataclysmic" collapse of the euro, David Riley, the head of sovereign ratings for Fitch, has warned.

Speaking to investors as part of a European roadshow, Mr Riley said a collapse of the euro would be disastrous for the global economy, and while it is not Fitch's baseline scenario, it could happen if Italy did not find a way out of its debt problems.

"The end of the euro would be cataclysmic. The euro is a reserve currency," Mr Riley said overnight. "What would that do in terms of financial and political stability?"

Advertisement: Story continues below "It is hard to believe the euro will survive if Italy does not make it through," he said, adding that while many saw Italy as too politically and economically important to be allowed to fail, "one might also argue that it is too big to rescue."

The warning pushed the euro down towards a 16-month low versus the US dollar.

Mr Riley urged the European Central Bank to abandon its current reluctance to scaling up its purchases of troubled euro zone debt such as Italy's and drop its resistance to the bloc's bailout fund, the EFSF, borrowing directly from it.

"Can the euro be saved without more active engagement from the ECB? Quite frankly we think no," Mr Riley said, adding that the bank had plenty of scope to expand its balance sheet without unleashing a wave of inflation across the euro zone.

"Why not have the ECB come out and say 'We are going to cap interest rates', say 'We are not going to allow interest rates to exceed 7 per cent' or whatever level they see is the limit?.. Why not turn the EFSF into a bank so it can borrow from the ECB so it doesn't have to go to the market?"

Greece the joker in the pack

Fitch has warned that the economic outlook for the euro zone has darkened further in recent months and has said there is a high chance it too will downgrade Italy, Spain, Belgium, Ireland, Slovenia and Cyprus by one or two notches by the end of this month.

But unlike larger rival Standard & Poor's, which has cut ratings, Fitch has said it does not expect to strip Paris of its triple-A status for this year at least.

Still, Mr Riley cautioned the euro zone's second-biggest economy was in a precarious position as the crisis rumbled on and France got a credit downgrade along with eight other Euro nations.

"France was the weakest AAA country in the euro zone," he said, adding it had the additional burden of being the main country alongside Germany underpinning the euro zone's bailout fund.

Speaking on the sidelines of the event, he also said that Germany's robust finances meant it would require a serious escalation of the euro zone's crisis to bring its triple A rating under threat.

Greece, meanwhile, remained a major threat for the euro zone.

Last year's move to force investors to take losses on their Greek bonds had destroyed the pre-crisis assumption that no euro zone country would default, while the current debate on Greece potentially leaving the euro was forcing investors to fundamentally rethink their view of the single currency.

"Arguably Greece leaving the euro could be the beginning of the end for the euro," Mr Riley said. "Greece is still the joker in the pack. It still has the potential to plunge the euro zone into crisis."

But he reiterated that a euro split was not Fitch's current expectation. "We don't think Greece will leave the euro. The cost benefit analysis doesn't add up," Mr Riley said.

Florida Attorney General Scam

2012-01-13T00:01:00.003-05:00

An investigation into the firing of two employees of the state attorney general's office has found no wrong doing in their departure and has thus supported the state attorney general's intimacy with powerful bankers in the state's unraveling housing market. Yves Smith of naked capitalism has some rather harsh but well found comments on this cover up:

The usual stereotype of corruption on the US state level is that, depending on the day, Louisiana or Mississippi tops the list. But the cesspool created by the widening foreclosure crisis in Florida puts anything in kudzu-land to shame.

The object lesson is a statement issued by the Florida Office of the Inspector General concerning its decision not to investigate the firing (or more accurately, resignation under duress) of two lawyers in the attorneys general’s office, June Clarkson and Theresa Edwards, who believe they were canned for political reasons, namely, for being too aggressive in investigating foreclosure abuses. Note that these firings came shortly after they received exemplary performance reviews.

Now narrowly, there may indeed be nothing to investigate relative to their firing, in that workers in the US have pretty close to zero rights and a boss can indeed fire someone simply for not sharing his sense of priorities. But there is a more general question of public interest as to whether a firing in a public office was indeed politically motivated, particularly if the investigators were ruffling the feathers of parties that the AG did not want to annoy (and as the brief one page conclusion notes, Florida does have statutes against “misuse of a public position” but query how that is interpreted in practice).

As we will discuss further, this astonishingly shoddy document tries to bury the matter by publishing write-ups of long complaints by the parties immediately involved in the firing (Associate AG Richard Lawson, Assistant AGs Trish Conners and Carlos Muniz) and by one of the parties targeted, namely, a letter from Lender Processing Services. Regular readers of this blog will know LPS is engaged in questionable conduct and has been the subject of investigations by the US Trustee’s office, a branch of the Department of Justice. It is currently the target of a wide-ranging lawsuit by the Nevada State attorney general Catherine Cortez Masto, an investigation by the FDIC, has signed a consent decree with the OCC for questionable conduct, and is subject of private lawsuits, including one joined by the Chapter 13 trustees as a class, for impermissible legal fee sharing. (We’ve also described how LPS lied in SEC filings).

Effectively, this “review” is an effort at reputation/character assassination via the release of pretty much only one side of a “he said, she said” (Clarkson and Edwards were given a brief phone interview which was limited to two conversations Lawson had with them about their performance; they were given no opportunity to contest the allegations made in the subsequent interviews, which were not just with Lawson, Conners, and Muniz, but also five other members of the AG’s office).

To put it mildly, if you read the 85 page document and didn’t know the context (the extensive, widespread evidence of bad conduct and strained pleadings by the foreclosure mills and LPS, and the prior tip top reviews received by Clarkson and Edwards), you’d think they were fuckups of the first order and were lucky to have jobs. This is heresay presented as unvarished truth, and the unsupported (and as we will discuss later, often obviously untrue or at best misleading) charges extend to two Florida foreclosure fraud investigators, Lisa Epstein and Lynn Szymoniak.

To back up and give a bit more context first (and do read the very good overview by Dave Dayen), the Florida attorney’s general office recently underwent a regime change. The old AG, Bill McCollum, was a Republican but nevertheless launched some investigations into foreclosure abuses, specifically against the biggest foreclosure mills in the state. He left leave last January, replaced by Pam Bondi, who clearly has a much more conciliatory posture towards the mortgage industrial complex (she is on the executive committee of the now multi-state foreclosure settlement effort). In keeping, the old head of the economic crimes division was replaced by the aforementioned Richard Lawson, who was in the business of defending white collar criminals, primarily banksters. And he made it clear that he wanted the fraud investigations to be treated “with great sensitivity.” I have to tell you, both in context and based on his actions, that means “go easy and do everything you can to protect the reputations of the parties charged.” Do you think this is even remotely the right priority for the head of an economic crimes unit?

The irony of this report are the repeated complaints about the “unprofessional” conduct of Clarkson and Edwards. Given that the IG considers a barely ordered document dump to be tantamount to a report, I find it hard to believe that the standard of professionalism among legal officers in the Florida government is measurable, let alone high enough for the two canned attorneys to fall short of it.

Similarly, for anyone who has been in the private sector (and that is where Lawson came from) the conduct of the firing was highly irregular. It’s normal for even routing firings to go through a process: the employee is given a warning and/or put on probation, with a witness present, they are told what concrete steps they need to take to improve performance, and notes of the conversation are entered into their personnel file. And most important, firings are always done with a witness present. Instead, Lawson had a one conversations with Edwards and Clarkson, and seems to conveyed his unhappiness primarily through their immediate boss, Robert Julian, who found Clarkson and Edwards to be “invaluable.” From what I can tell, assistant chief AG Robert Julian fired both Clarkson and Edwards verbally via Edwards alone, again a mind-boggling procedure. Lawson operated like a rank amateur, yet keeps harping on “professionalism.” More than a bit of projection at work?

There may be validity in the some substantive complaints. For instance, Lawson claims the duo mistakenly said the SEC was going after LPS when it was the FDIC who was probing LPS. They also called Fidelity a f/k/a (formerly known as) of LPS when it is the reverse (LPS was spun out of Fidelity). But these mistakes were in internal communications, and while they might be worrisome, what matters is what gets out the door. Another complaint is the case files being transferred from Clarkson and Edwards another attorney being in disorder. But we have no context. If Lawson made the assignment abruptly and didn’t give them Clarkson and Edwards time to organize them (and the state apparently lacks a document management system), it shouldn’t be a surprise that the materials were not well organized. In addition, at various points Lawson asked these investigators if they had evidence of allegations made against LPS, such as not being paid by the servicer, and Clarkson and Edwards saying “no”. Just because they did not have evidence in hand did not mean the allegations were untrue and not provable.

The reason I view even these complaints with skepticism is that much of what Lawson says that can be evaluated ranges from strained to embarrassing. Here are some examples.

In the “you cannot make this up” category, Lawson, a law enforcement official, defends forgeries.
Huh, is he SERIOUSLY trying to say that if, say, the janitor signs a corporate check he found lying around the office to pay the company electrical bill, it isn’t fraud? The knowledge in our culture that people sign documents only in their own name is so widely shared that it seems utterly implausible that ANYONE, let alone people in the business of preparing documents involved in legal procedures, could think forgeries are legitimate. The LPS filings by Masto have barely-above-minimum wage witnesses saying they were uncomfortable with “surrogate signing,” a recent Orwellianism for forgery, even after multiple management assurances that it was fine. Lawson’s formulation gets us into Humpty Dumpty “forgery is not forgery if I say it is not forgery” land. He is trying to wind the clock back to before the 1677 Statue of Frauds.

Similarly, Lawson also seeks to blame fallure of efforts against foreclosure mill Shapiro & Fishman on inadequate fact gathering by Clarkson and Edwards, when it fact that case was lost pure and simple JURISDICTIONAL reasons. The state Supreme court said the AG could not go after attorneys, that this was a matter for the judicial branch.

Lawson again criticizes Clarkson’s and Edward’s legal work because they were looking into dubious looking mortgage assignments. Lawson says he looked in a few legal reference books and concluded the lien didn’t matter, all that counted was the note. So he was effectively saying they were operating on a bad legal theory and off on a wild goose chase.

It might help if he’s get familiar with relevant decisions in his own state. Florida’s Fourth District Court of Appeals ruled specifically that this is not correct: a valid assignment is necessary before filing a foreclosure. And even more troubling, the attorneys in Bondi’s office did not inform the OIG investigator after this clarification, as required by the Code of Professional Conduct prohibiting lawyers from misleading a tribunal.

Lawson attacks a PowerPoint presentation by Clarkson and Edwards containing evidence of foreclosure abuses and forgeries. Lawson is unhappy with both the fact that it was released as well as its substance. Yet Dave Dayen points out it was requested and approved by the prior regime. It should have been excluded entirely from this investigation.

The most bizarre subtext is the complaint about the dealing with Szymoniak and Epstein. First, Lawson complains more than once about his staffers dealing with “foreclosure defense attorneys.” Ahem, if you are conducting an investigation, one of the first places you go is to parties making charges against the people you are targeting. Second, he criticizes them from accepting and using the documents they sent, when they are ALL public domain. Third, he seems upset that they obtained information via Florida’s public disclosure laws, which are arguably the most open in the nation. He tries charging that information was sent from the state improperly because they could not find evidence of written requests, when verbal requests are permitted under state statutes.

Par for the failure to validate any of the claims, we have this charge from the interview with Carlos Muniz that the subpoena was not released by the blogger in question, Lisa Epstein (again, part for stenography masquerading as a preliminary investigation, no one contacted either Epstein or Szymoniak even though both are mentioned repeatedly in the document). In fact, it appears that the first public mention of the Illinois subpoena of LPS was by the Illinois attorney general’s office on May 25, 2011 as reported by CNN. So if the AG released the subpoena, why would they call the Florida AG’s office to complain? In fact, AGs usually like publicity of their investigations. It seems far more likely that any complaint came from LPS.

So the message is loud and clear: if you take fraud seriously and try to combat it, you are at risk of career limiting attacks by people who care more about the reputations of the perps than about justice. The only hope here is that this report has so much in it that it patently untrue in it that it will blow up on the people trying to peddle the disinformation.

The Year Of Living Dangerously

2012-01-12T00:01:00.000-05:00

If you don't know what the Fourth Turning is you might want to google it and check out how for those that understand that history is cyclical not linear there are periods when history just takes a bad turn. We appear to be in one such period and 2012 may be the year many of these negative trends come together. That is a statement that allows every looney off the chain and into the land of wild speculation. This lengthy article from The Burning Platform takes a straightforward look at the numbers and their implications.

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2012 - The Year Of Living Dangerously by Jim Quinn

“In retrospect, the spark might seem as ominous as a financial crash, as ordinary as a national election, or as trivial as a Tea Party. The catalyst will unfold according to a basic Crisis dynamic that underlies all of these scenarios: An initial spark will trigger a chain reaction of unyielding responses and further emergencies. The core elements of these scenarios (debt, civic decay, global disorder) will matter more than the details, which the catalyst will juxtapose and connect in some unknowable way. If foreign societies are also entering a Fourth Turning, this could accelerate the chain reaction. At home and abroad, these events will reflect the tearing of the civic fabric at points of extreme vulnerability – problem areas where America will have neglected, denied, or delayed needed action.” – Strauss & Howe – The Fourth Turning - 1997

In December 2010 I wrote an article called Will 2012 Be as Critical as 1860?, that pondered what might happen with the 2012 presidential election and the possible scenarios that might play out based on that election. Well, 2012 has arrived and every blogger and mainstream media pundit is making their predictions for 2012. The benefit of delaying my predictions until the first week of 2012 is that I’ve been able to read the wise ponderings of Mike Shedlock, Jesse, Karl Denninger, and some other brilliant truth seeking analysts regarding what might happen during 2012. The passage above from Strauss & Howe was written fifteen years ago and captured the essence of what has happened since 2007 and what will drive all the events over the next decade. Predicting specific events is a futile human endeavor. The world is so complex and individual human beings so impulsive and driven by emotion, that the possible number of particular outcomes is almost infinite.

But, as Strauss and Howe point out, the core elements that created this Crisis and the reaction of generational cohorts to the implications of debt, civic decay and global disorder will drive all the events that will occur in 2012 and for as far as the eye can see. Linear thinkers in mega-corporations, mainstream media and Washington D.C. focus on retaining the status quo, their power and their wealth. They believe an economic recovery can be manufactured through monetary manipulation and Keynesian borrowing and spending. They are blind to the fact that history is cyclical, not linear. In order to have an understanding of what could happen in the coming year, it is essential to keep the big picture in focus. As we enter the fifth year of this twenty year Crisis period, there is absolutely no chance that 2012 will see an improvement in our economy, political atmosphere or world situation. Fourth Turnings never de-intensify. They exhaust themselves after years of chaos, conflict and turmoil. I can guarantee you that 2012 will see increased mayhem, riots, violent protests, recessions, bear markets, and a presidential election that will confound the establishment. All the episodes which will occur in 2012 will have at their core one of the three elements described by Strauss & Howe in 1997: Debt, Civic Decay, or Global Disorder.

Debt – On the Road to Serfdom
The world is awash in debt. Everyone is focused on the PIIGS with their debt to GDP ratios exceeding the Rogoff & Reinhart’s 90% point of no return. But, the supposedly fiscally responsible countries like Germany, France, U.K., and the U.S. have already breached the 90% level. Japan is off the charts, with debt exceeding 200% of GDP. These figures are just for the official government debt. If countries were required to report their debt like a corporation, their unfunded entitlement promises to future generations are four to six times more than their official government debt.

The debt crisis took decades of terrible choices and bogus promises to produce. The world is now in the midst of a debt driven catastrophe. At best, the excessive levels of sovereign debt will slow economic growth to zero or below in 2012. At worst, interest rates will soar as counties attempt to rollover their debt and rolling defaults across Europe will plunge the continent into a depression. The largest banks in Europe are leveraged 40 to 1, therefore a 3% reduction in their capital will cause bankruptcy. Once you pass 90% debt to GDP, your fate is sealed.

“Those who remain unconvinced that rising debt levels pose a risk to growth should ask themselves why, historically, levels of debt of more than 90 percent of GDP are relatively rare and those exceeding 120 percent are extremely rare. Is it because generations of politicians failed to realize that they could have kept spending without risk? Or, more likely, is it because at some point, even advanced economies hit a ceiling where the pressure of rising borrowing costs forces policy makers to increase tax rates and cut government spending, sometimes precipitously, and sometimes in conjunction with inflation and financial repression (which is also a tax)?” – Rogoff & Reinhart

The ECB doubling their balance sheet and funneling trillions to European banks will not solve anything. The truth that no one wants to acknowledge is the standard of living for every person in Europe, the United States and Japan will decline. The choice is whether the decline happens rapidly by accepting debt default and restructuring or methodically through central bank created inflation that devours the wealth of the middle class. Debt default would result in rich bankers losing vast sums of wealth and politicians accepting the consequences of their phony promises. Bankers and politicians will choose inflation. They believe they can control the levers of inflation, but they have proven to be incompetent, hubristic, and myopic. The European Union will not survive 2012 in its current form. Countries are already preparing for the dissolution. Politicians and bankers will lie and print until the day they pull the plug on the doomed Euro experiment.

The false storyline of debt being paid down in the United States continues to be propagated by the mainstream press and decried by Paul Krugman. The age of austerity storyline gets full play on a daily basis. Total credit market debt in 2000 was $27 trillion. It skyrocket to $42 trillion by 2005 as George Bush and Alan Greenspan encouraged delusional Americans to defeat terrorism by leasing SUVs and live the American dream by putting zero down on a $600,000 McMansion, financing it with a negative amortization no doc loan. Paul Krugman got his wish as a housing bubble replaced the dotcom bubble. Debt accumulation went into hyper-speed in 2006 and 2007 as Wall Street sharks conducted a fraudulent feeding frenzy by peddling their derivatives of mass destruction around the globe. By the end of 2007, total credit market debt reached $51 trillion.

In a world inhabited by sincere sane leaders, willing to level with the citizens and disposed to allow financial institutions that took world crushing risks to fail through an orderly bankruptcy process, debt would have been written off and a sharp short contraction would have occurred. The stockholders, bondholders and executives of the Wall Street banks would have taken the losses they deserved. Instead Wall Street used their undue influence, wealth and power to force their politician puppets to funnel $5 trillion to the bankers that created the crisis while dumping the debt on taxpayers and unborn generations. The Wall Street controlled Federal Reserve provided risk free funding and took toxic mortgage assets off their balance sheets. The result is total credit market debt higher today than it was at the peak of the financial crisis in March 2009.
Our leaders have done the exact opposite of what needed to be done to address this debt crisis. The country is adding $3.7 billion per day to the National Debt. With the debt at $15.2 trillion, we have now surpassed the 100% to GDP mark. The National Debt will be $16.5 trillion when the next president takes office in January 2013. Ben Bernanke has been able to keep short term interest rates near zero and the non-existent U.S. economic growth and European disaster has resulted in keeping long-term rates near record lows. Despite these historic low rates, interest on the National Debt totaled $454 billion in 2011, an all-time high. The effective interest rate was approximately 3%. If rates stay at current levels, interest will be between $400 and $500 billion in 2012. Each 1% increase in rates would cost American taxpayers an additional $150 billion. A rapid increase in rates to the 7% level would ratchet interest expense above $1 trillion and destroy the last remaining vestiges of Bernanke’s credibility. It can’t possibly happen in 2012. Right? The world has total confidence in pieces of paper being produced at a rate of $3.7 billion per day. Confidence in Ben Bernanke, Barack Obama and the U.S. Congress is all that stands between continued stability and complete chaos. What could go wrong?

Debt related issues that will likely rear their head in 2012 are as follows:

A debt saturated society cannot grow. As debt servicing grows by the day, the economy losses steam. The excessive and increasing debt levels will lead to a renewed recession in 2012 as clearly detailed by ECRI, John Hussman and Hoisington Investment Management.

“Here’s what ECRI’s recession call really says: if you think this is a bad economy, you haven’t seen anything yet. And that has profound implications for both Main Street and Wall Street.” – ECRI

At present, we observe agreement across a broad ensemble of models, even restricting data to indicators available since 1950 (broader data since 1970 imply virtual certainty of recession). The uniformity of recessionary evidence we observe today has never been seen except during or just prior to other historical recessions.- John Hussman

Negative economic growth will probably be registered in the U.S. during the fourth quarter of 2011, and in subsequent quarters in 2012. Though partially caused by monetary and fiscal actions and excessive indebtedness, this contraction has been further aggravated by three current cyclical developments: a) declining productivity, b) elevated inventory investment, and c) contracting real wage income. In summary, the case for an impending recession rests not only on cyclical precursors evident in productivity, real wages, and inventory investment, but also on the disfunctionality of monetary and fiscal policy. – Van Hoisington

The onrushing recession will send housing down for the count. With 2.2 million homes already in the foreclosure process and another 13 million homes with negative or near negative equity, the recession will push more people over the edge. As foreclosures rise a self reinforcing loop will develop. Home prices will fall as banks dump houses at lower prices, pushing millions more into a negative equity position. Home prices will fall another 5% to 10% in 2012, with a couple years to go before bottoming.
The recession will result in companies laying off more workers. It won’t be as dramatic as 2008-2009 because companies have already shed 6 million jobs. The working age population will increase by 1.7 million, the number of people employed will go up by 1 million, but the official unemployment rate will drop to 7% as the BLS reveals that 10 million people decided to relax and leave the workforce. Surely I jest. The government manipulated unemployment rate will rise above 9%, while the real rate will surpass 25%.

The American people rationally increased their savings rate to 6.2% in the 2nd Quarter of 2009. When you are over-indebted and the country heads into recession, spending less and saving more is a sane option. Consumer expenditures accounted for 69% of GDP in 2007, prior to the economic collapse. The “recovery” of 2010-2011 has been driven by Ben’s zero interest rate policy, the resumption of easy credit peddling by the Wall Street banks, and consumers convinced that going further into hock to attain the American dream is rational. Consumer spending as a percentage of GDP has actually risen to 71% and the savings rate has plunged to 3.6%. The 20% drop in gas prices since April bottomed in December. This decline temporarily boosted consumer spending, but prices are on the rise again. With the State and local governments reducing spending, do the Wall Street Ivy League economists really believe consumers will increase their consumption to 73% of GDP and reduce their savings rate to 1%? If you open your local newspaper you will see the master plan. Car dealers are offering 0% financing with nothing down for 60 months. The GMAC/Ditech/Ally Bank zombie lives as subprime auto loans are back. The “strong” auto sales are a debt financed illusion. Ashley Furniture is offering 0% financing for 50 months with no payments through Wells Fargo Bank. When the Federal Reserve provides the Wall Street banks with 0% funding, banks are willing to take big risks knowing that Uncle Ben and the naive American taxpayer will be there to bail them out when it blows up again.

With recession a certainty as fiscal stimulus wears off, home prices fall, employment stagnates, and consumer spending grinds to a halt, what will happen to the stock market? The Wall Street shills paraded on CNBC and interviewed by the multi-millionaire talking head twits assure you that stocks are undervalued and the market will surely be up 10% to 15% by 2013. It’s a mortal lock, just as it has been for the last twelve years, with the S&P 500 at the same level as January 1999. The fact is the stock market drops 30% on average during a recession. The talking heads declare that corporate profits are at record levels and will continue higher. Not bloody likely. Corporate profit margins are at an all-time peak about 50% above their historical norms. Profits always revert to their mean. These profits are not sustainable as they were generated by firing millions of workers, zero interest rates for banks, fraudulent accounting by the banks, and trillions in handouts from the middle class taxpayers to corporate America.

In a true free market excess profits will draw more competitors and profits will fall due to competition. When corporate profits exceed the mean by such a large amount, you can conclude that crony capitalism has replaced the free market. Government bureaucrats have been picking the winners (Wall Street, War Industry, Big Media, Big Healthcare) and the American people are the losers. Corporate oligarchs prefer no competition so they can reap obscene risk free profits and reward themselves with king-like compensation. Mean reversion will eventually be a bitch. Real S&P earnings have reached the 2007 historic peak. To believe they will soar higher as we enter a recession takes the same kind of faith shown by Americans buying a $600,000 McMansion in Stockton with no money down in 2005. The result will be the same. Do you ever wonder how corporations are doing so well while the average American sinks further into debt, despair and poverty?

The brilliant John Hussman captures the gist of an investor’s dilemma in his latest article:

“With 10-year Treasury yields below 2%, 30-year yields below 3%, corporate bond yields below 4%, and S&P 500 projected 10-year total returns below 5%, we presently have one of the worst menus of prospective return that long-term investors have ever faced. The outcome of this situation will not be surprisingly pleasant for any sustained period of time, but promises to be difficult, volatile, and unrewarding. The proper response is to accept risk in proportion to the compensation available for taking that risk. Presently, that compensation is very thin. This will change, and much better opportunities to accept risk will emerge. The key is for investors to avoid the allure of excessive short-term speculation in a market that promises – bends to its knees, stares straight into investors’ eyes, and promises – to treat them terribly over the long-term.”

Ben Bernanke, Wall Street shysters and Barack Obama want you to be drawn in by the allure of short-term gains based on hopes of QE3. The stock market will be volatile in 2012 with stocks falling 20% when it becomes evident the country is going back into recession. Ben will try to ride to the rescue with QE3 as he buys up more toxic mortgage debt. Wall Street will do their usual touchdown dance celebration, but the bloom will fall off this rose fast, as quantitative easing has proven to be a failure in stimulating economic growth.Gridlock in Washington D.C., chaotic national conventions, and the implosion of Europe will contribute to the market finishing down by at least 15% for the year.

Even though the U.S. economy has been stagnant for the past year and Europe is back in recession, oil is trading at $102 a barrel (Brent – $113 a barrel). This is a classic Catch-22 for Bernanke and his central banker buddies. The higher the price goes, the more recessionary economies become as energy and food costs rise. This would normally decrease demand and lower prices, but the massive money printing by the Fed and ECB artificially inflates the price of oil. The Canadian oil sands are only viable at $90 a barrel. Saudi Arabia needs $90 oil to balance their budgets. The onset of peak cheap oil, lack of Libyan supply, possible war with Iran, and increased demand from the developing world (China, India) will put a floor of $80 to $90 a barrel under oil. A shooting war with Iran would result in $150 a barrel of oil overnight. The trend in gasoline prices over the last three years is not your friend:
January 2009 $1.65

January 2010 $2.57

January 2011 $3.04

January 2012 $3.29

Gas prices are rising during the lowest usage time of the year. The average price of oil will exceed $100 during 2012 resulting in the highest average gas price in history for American drivers. These high prices, along with various weather related issues will keep food prices elevated, with 5% or higher increases likely. This should spur a few more peasant revolutions around the globe.

The question of whether gold can keep its streak of 11 consecutive positive return years in a row intact is an easy one. Will Obama and Congress spend $1.3 trillion more than they bring in during 2012? Will Ben Bernanke and other central bankers around the globe keep printing pieces of paper and calling it currency? If the answer to these two questions is yes, then gold will finish the year higher. As always, it will be volatile and manipulated by the powers that be. A drop below $1,500 in the beginning of the year is possible, but when Ben announces QE3, it will be off to the races. I expect gold to reach $1,900 by year end. Silver will be more volatile, but will likely reach $40 by year end.

Civic Decay – Occupying, Plundering, Capturing

Civic decay revealed itself dramatically in 2011 as millions of young people across the country occupied parks and town squares in a fruitless effort to correctly point out how the ruthless oligarchs inhabiting Wall Street bank executive suites, Mega-corporation boardrooms, the Marriner S. Eccles Federal Reserve Board Building, and the hallways of Congress had pillaged the wealth of the middle class through inflation, taxation, fraud and outright thievery. The majority of over-medicated, lethargic, uninterested, ignorant Americans yawned at this selfless display of courage and civil disobedience as they chose to occupy lines for hours to get the latest iPad or $3 waffle-maker at Wal-Mart. Delusional, non-thinking dolts across the land watched on their 60 inch HDTVs as young protestors got clubbed, beaten, tear gassed, tasered, maced, and brutalized by paid mercenaries for the ruling oligarchy. They treated the horrific scenes of brutality as if it was just one of their 30 favorite reality TV shows like I Didn’t Know I Was Pregnant or Toddlers & Tiaras. They thought this was a new show called Mace A Millenial.

Despite controlling the media, the money and the levers of power in Washington D.C., those in power cannot spin the reality of a middle class being systematically wiped out by the policies put in place by the corporate fascist oligarchs running this country. As Wall Street profits and bonuses flow like honey, the lines at food banks look like the lines at Best Buy on Black Friday and homeless shelters overflow with former members of the middle class. The ministry of propaganda (BLS, BEA) reports improving economic conditions while the number of Americans in the food stamp program has jumped from 38 million when the recession officially ended in late 2009 to 46.3 million today. Having 15% of the population surviving on food stamps is surely a sign of economic recovery.

The mainstream media methodically spews misinformation and happy talk about increased consumer spending and retail sales above expectations as if Americans borrowing to buy another laptop, TV, Kindle, or Rolex proves we have a real recovery. Meanwhile, old line mall based retailers like Sears and J.C. Penney die a slow agonizing death as they stagger into the sunset like Montgomery Ward, Circuit City and thousands before them. There is a disconnect in society as high end retailers like Saks, Tiffany, and Neiman Marcus report record sales as the 1% feel confident and flush with cash. Meanwhile, real median income is lower than it was in 2001. It seems tax cuts didn’t lift all boats, just the yachts. The average Joe pays twice as much for a gallon of gas and 50% more for food since 2001 while taking home less pay. The ruling elite can’t figure out why the peasants are getting restless.

The wealthy elite have been out in force over the last few months broadcasting their storyline about 50% of Americans not paying taxes. They and their media mouthpieces pound this message home unceasingly. They portray themselves as job creators, when the facts prove they have destroyed jobs here in America. They successfully painted the Occupy Movement as a bunch of lazy good for nothing socialists who needed to get a job. Then they unleashed the full fury of their brute strength upon these citizens practicing their right to assembly and free speech by crushing them with their hired police thugs, while the ignorant by choice public looked away. Controlling the message is essential for the oligarchs to retain their wealth, power and control. Aldous Huxley’s understanding of the American people is as true today as it was eighty years ago:

“Most ignorance is vincible ignorance. We don’t know because we don’t want to know.”

It is time to not choose ignorance. The storyline peddled to the masses is false. The ruling oligarchy will do everything in their power to obscure and manipulate the truth. It is true that 50% of American workers pay no Federal income tax. It is also true that 50% of American workers make less than $25,000 per year. If these workers are employed in Philadelphia they pay 4% city income tax, 3% state income tax, 7.65% Social Security and Medicare tax, 6% sales tax on everything they buy, 15% state and federal taxes on gasoline, and they pay city and county property taxes whether they own or rent. They also pay the various sewer, trash, and myriad of other fees inflicted on them by government drones. Maybe someone should inform multi-billionaire hedge fund guru Steve Schwarzman that lower income families actually have most of their skin in the game. They can’t hire hoards of high powered lawyers and tax accountants to minimize their tax burden while contributing millions to politicians who write the laws to protect the oligarchs. I wonder why hedge fund managers don’t pay taxes on their profits.

Asked if he were willing to pay more taxes in a Nov. 30 interview with Bloomberg Television, Blackstone Group LP CEO Stephen Schwarzman spoke about lower-income U.S. families who pay no income tax. “You have to have skin in the game,” said Schwarzman, 64. “I’m not saying how much people should do. But we should all be part of the system.”

We are all part of the system, and the system is rigged. The middle class is systematically being obliterated as high paying jobs were shipped to low paying countries by mega-corporations. Their huge cost advantages have driven small domestic “job creating” firms out of business. The middle class has the majority of their wealth tied up in their homes, and they continue to see that wealth decline on a daily basis. The culprits in the housing collapse – the major Wall Street banks – have seen their profits skyrocket as they held the middle class hostage to a multi-trillion dollar banker bailout. Americans don’t hate the wealthy. Wealthy men like Steve Jobs and Bill Gates have been admired and emulated by Americans because they exhibited the true admirable traits of entrepreneurship, creativity, hard work, taking chances, and creating a better society. Wall Street shysters create nothing. They exhibit the worst traits of greed, avarice, and non-existent empathy for their fellow man.

Matt Taibbi summed up how the system is rigged rather succinctly in a recent article:

“And in the bigger picture, of course, you need the state and the private sector both to be functioning well enough to provide you with regular work, and a safe place to raise your children, and clean water and clean air. The entire ethos of modern Wall Street, on the other hand, is complete indifference to all of these matters. The very rich on today’s Wall Street are now so rich that they buy their own social infrastructure. They hire private security, they live on gated mansions on islands and other tax havens, and most notably, they buy their own justice and their own government.

But citizens of the stateless archipelago where people like Schwarzman live spend millions a year lobbying and donating to political campaigns so that they can jump the line. They don’t need to make sure the government is fulfilling its customer-service obligations, because they buy special access to the government, and get the special service and the metaphorical comped bottle of VIP-room Cristal afforded to select customers.”

The wealth inequality in this country did not occur because half the population is lazy and stupid. It didn’t happen because the 1% is intellectually superior, more highly motivated, or more entrepreneurial than the 99%. If any of these statements were true, the inequality would be consistent across decades and centuries. But, as the chart below details, the phenomenon has happened since 1979. Interestingly, it also occurred just prior to the 1929 stock market crash and Great Depression.

Masive debt and wealth inequality is the basis of all aristocracies, which are merely the institutionalization of privilege. Once they make it they bloody well want to change the rules to hang on to it, and take the risk out of their equation. They foster a culture of two sets of books, two sets of rules, and two systems of justice. They are given over in their personal and professional lives to the benefits of hypocrisy and cheating, with little conscience to restrain them. There is a predatory class that is nationless, without allegiance to anything, any principle, but their own greed and lust for power.”

What has happened over the last three decades is not particular to the United States. It is a flaw in all humanity. The majority of humans are inherently honest and if raised by good parents will do the right thing most of the time. When society allows psychopaths and evil men to attain high status in government and business through chosen ignorance, lack of vigilance, casting aside the rule of law, or admiration for wealth attained by any means, then wealth disparity reaches extreme levels. The fatal defect of the Wall Street psychopaths is their hubris. Too much is never enough. They are like sharks, always needing more to satiate their hunger. They will eventually go too far and collapse their crony capitalist system resulting in revolution and ultimately their demise. We are very close to the tipping point and 2012 is likely to reveal deep cracks in the foundation of our warped dysfunctional corporate fascist economic system. These are a few things I expect to happen in 2012:

The Occupy Movement will become more extreme with more disruptions of the economic system with less warning so the authorities don’t have time to prepare. I expect more cyber hacking into Wall Street, government, and media computer networks, causing disarray and uncertainty regarding financial information. I expect the Democratic and Republican presidential conventions to be overrun by protestors. The authorities will respond with excessive force, resulting in further violent protests in other cities.
Two simultaneous trends will eventually result in a domestic conflict. The Federal government grows ever more panicked by the knowledge that its ponzi scheme economy is going to collapse. This is why passage of the NDAA and the future passage of SOPA are so important to them. Imprisonment of citizens without charge and shutting down the only remaining means of truth – the Internet – are essential to retaining their power and control over the masses. At the same time, gun sales are at record levels. Critical thinking Americans can see the writing on the wall and no longer trust corrupt politicians of either party. Arming yourself and buying physical gold and silver is a prudent act in today’s world. If the financial system implodes in 2012 and an MF Global like stealing of customer funds from IRAs, 401ks, and bank accounts happens, all hell could break loose.
The ruling elite hand selected puppets for the 2012 presidential election are Obama and Romney. They are virtually interchangeable and both are acceptable to the Wall Street oligarchs. The monkey wrench in the gears is Ron Paul. His message of freedom, liberty, non-interventionism, living within our means, self reliance, and a sound currency are poison to the establishment. His message appeals to young people and a growing number of realists who understand we are already bankrupt. He will run as a 3rd Party candidate and focus a light on the crony capitalism that passes for free markets in America today. He will be vilified by both parties and their media mouthpieces, but if he gains traction I fear an unfortunate accident will befall him. Either way, he will have a dramatic impact on the debate and the outcome of the 2012 election.
The question for 2012 is whether the gaping multitude will come to their senses and respond accordingly against the ruling oligarchy.

“Modern fanaticism thrives in proportion to the quantity of contradictions and nonsense it pours down the throats of the gaping multitude, and the jargon and mysticism it offers to their wonder and credulity.” – William Hazlitt

Global Disorder – War, Oil, Religion
“We do not have to visit a madhouse to find disordered minds; our planet is the mental institution of the universe.” – Johann Wolfgang von Goethe

Disorder is an understatement when describing what is happening on the global scene. It seems like the inmates are running the insane asylum. The beauty of globalization, sold to Americans by the corporate oligarchs, is being revealed for all to see. Besides seeing millions of jobs shipped overseas by mega-corporation executives and our industrial base gutted beyond repair, the other “benefits” are aplenty. The interconnectedness of the global economy insures that a recession in Europe and the U.S. will spread across the world. The producing countries will fall when the consuming countries run out of fiat currency to spur consumption. Federal Reserve created inflation in the United States instantaneously spreads around the world creating revolutions across the Middle East and social unrest in China as food and energy prices surge to levels of pain which cause the poor to revolt against the ruling establishment. People lose it when they have nothing to lose.

But, the biggest gift of globalization has been provided by whom else – the Wall Street banks and the large European banks. The European banks did their part by loaning hundreds of billions to PIIGS that could never pay them back. Next, they leveraged their balance sheets 40 to 1, insuring that a 3% loss on their capital wipes them out. When their losses clearly exceeded 40%, the bankers employed their politician puppets running the insolvent countries across the continent to dump the losses on the taxpayers through austerity measures that insure a deep European recession. Since derivatives of mass destruction link the insolvent Wall Street banks to the insolvent European banks, the Federal Reserve has now stepped into the breach with American taxpayer money by providing swap lines to European banks. The oligarchs are perfectly willing to destroy the lives of hundreds of millions of citizens across the globe to insure their wealth and power remains intact.

The other crucial component of global disorder is oil. The storyline currently being peddled to the masses is the return of energy independence for America. The political class and their lapdog media pundits blatantly lie to the American public with stories of 100 years of oil supply under our soil. GOP candidates declare we can be energy independent in two years if we just drill, drill, drill. Meanwhile, in the real world 33 billion barrels of oil are consumed every year, with the U.S. consuming 7 billion barrels per year, of which 3.3 billion barrels are imported. Total U.S. oil production continues its 40 year decline, despite the shale oil boom in the Dakotas and the massive fracking hype touted by the gas industry. If Americans used some critical thinking skills they would conclude that our oil dependent society is balanced on the head of a pin. The chart below paints a picture of current and future global disorder.

The average person in Muslim oil rich countries wants a chance for a better life, food, clothing, and hope for their children’s future. They are not the evil, freedom hating, religious fanatic terrorists portrayed by the neo-cons and war mongers like Santorum, Gingrich and Romney. American troops are stationed in or around the countries with the most oil. Any dictator that fails to play along with the U.S. and its oil demands isn’t around for long. Hussein and Gaddafi learned the hard way. It’s just a matter of time for Ahmadinejad. Expect the rhetoric about the dangerous Chavez to escalate in the near future. Controlling 300 billion barrels of oil will be essential to keeping our suburban sprawl society functioning. Soccer moms will become irate when they can’t fill up their GMC Yukon with 39 gallons of precious fuel. Our own military clearly documented why the War on Terror will never end in their 2010 Joint Operating Environment report:

A severe energy crunch is inevitable without a massive expansion of production and refining capacity. While it is difficult to predict precisely what economic, political, and strategic effects such a shortfall might produce, it surely would reduce the prospects for growth in both the developing and developed worlds. Such an economic slowdown would exacerbate other unresolved tensions, push fragile and failing states further down the path toward collapse, and perhaps have serious economic impact on both China and India. One should not forget that the Great Depression spawned a number of totalitarian regimes that sought economic prosperity for their nations by ruthless conquest. By 2012, surplus oil production capacity could entirely disappear, and as early as 2015, the shortfall in output could reach nearly 10 MBD.

The likeliest global events which will make 2012 a year to remember include:

The disintegration of the European Union with outright default by Greece and the exit from the Union by Italy, Spain, and Portugal. A default and currency devaluation would bankrupt banks across Europe and would guarantee a worldwide recession and possibly depression.
It seems more likely by the day that someone will do something stupid in or around Iran and the Persian Gulf will explode into a virtual hell on earth. The unintended consequences of such a development will far outweigh the intended consequences.
The revolutions, protests, and brewing civil wars in Egypt, Syria, Libya and Iraq will flare up even if Iran doesn’t explode into a shooting war. The tensions in the Middle East will keep oil prices above $100, despite a world plunging into recession.
China’s hard landing will arrive in 2012. Keynesianism on steroids has failed as they’ve built more than enough vacant malls, vacant cities, vacant condo towers, and bridges to nowhere. Property prices will plunge, exports will decline, and peasants will revolt as food and energy prices push them over the edge. Chinese leaders will look for a foreign bogeyman so they can rally their 1 billion peasants around the flag. With 11% of their oil supply coming from Iran, it could get very interesting.
Just as no one saw the most significant events of 2011 (Arab Spring, Mubarak & Gaddafi overthrown, Japanese earthquake, tsunami, nuclear meltdown, and Occupy Wall Street) in advance, 2012 will surely have some surprises. Possibilities include:

An earthquake on the New Madrid fault or off the coast of California causing a tsunami to hit the west coast.
One or more hurricanes entering the Gulf of Mexico causing widespread oil rig destruction and causing oil and natural gas prices to soar.
A new bird flu or swine flu pandemic that spreads around the world.
An actual terrorist attack in the United States in a mall, hotel or public venue that provokes a massive over response by our government could change this country forever.
The assassination of political leaders and prominent bankers around the world as radicals take retribution into their own hands.
We have now entered the fifth year of this Fourth Turning Crisis. George Washington and his troops were barely holding on at Valley Forge during the fifth year of the American Revolution Fourth Turning. By year five of the Civil War Fourth Turning 700,000 Americans were dead, the South left in ruins, a President assassinated and a military victory attained that felt like defeat. By the fifth year of the Great Depression/World War II Fourth Turning, FDR’s New Deal was in place and Adolf Hitler had been democratically elected and was formulating big plans for his Third Reich. The insight from prior Fourth Turnings that applies to 2012 is that things will not improve. They call it a Crisis because the risk of calamity is constant. There is zero percent chance that 2012 will result in a recovery and return to normalcy. Not one of the issues that caused our economic collapse has been solved. The “solutions” implemented since 2008 have exacerbated the problems of debt, civic decay and global disorder. The choices we make as a nation in 2012 will determine the future course of this Fourth Turning. If we fail in our duty, this Fourth Turning could go catastrophically wrong. I pray we choose wisely. Have a great 2012.

“The risk of catastrophe will be very high. The nation could erupt into insurrection or civil violence, crack up geographically, or succumb to authoritarian rule. Thus might the next Fourth Turning end in apocalypse – or glory. The nation could be ruined, its democracy destroyed, and millions of people scattered or killed. Or America could enter a new golden age, triumphantly applying shared values to improve the human condition. The rhythms of history do not reveal the outcome of the coming Crisis; all they suggest is the timing and dimension.” – Strauss & Howe

Selling Foreclosures

2012-01-11T00:01:00.005-05:00

We have read horror stories of Bank of America bulldozing empty homes after their struggling owners were kicked out. Now there is a plan in the works, according to CNBC to make these vast tracts of empty homes appealing to investors. Not to make them appealing or affordable to struggling Americans.

The Obama administration, in conjunction with federal regulators and led by the overseer of Fannie Mae and Freddie Mac, is very close to announcing a pilot program to sell government-owned foreclosures in bulk to investors as rentals, according to administration officials.

There currently are about a quarter of a million foreclosed properties on the books of Fannie Mae, Freddie Mac, and the Federal Housing Administration (FHA), and millions more are coming.

The foreclosure processing delays of last year created a mammoth backlog of properties yet to be processed, which are just now being re-started. One of the initiatives of this program is for the federal government to be in the position to mitigate and manage any new wave of foreclosures, sources say.

Late-stage delinquencies still in the pipeline number close to two million, according to a new report from Lender Processing Services. Foreclosure starts outnumber foreclosure sales by two to one and "the trend toward fewer loans becoming delinquent, which dominated 2010 and the first quarter of 2011, appears to have halted," according to LPS.

Knowing this all too well, the Treasury Department, Federal Reserve, HUD, FDIC, Fannie Mae and Freddie Mac, with their conservator, the Federal Housing Finance Agency (FHFA) at the helm, are engaged in a collaborative effort to face this new wave of foreclosures head on and figure out a way to keep these properties from sitting on the books of the government and sitting empty in the nation's neighborhoods.

As the Federal Reserve alluded to in its white paper on housing last week, "A government-facilitated REO-to-rental program has the potential to help the housing market and improve loss recoveries on reo portfolios." REO's (Real Estate Owned) are bank-owned properties, or, in this case, properties owned by the government-sponsored enterprises and the FHA. Three Fed governors pushed for similar plans in speeches last week, as well.

"I think there is a fair amount of money in the wings waiting to buy, investors doing cash raises to buy properties on a large scale.”

A pilot sales program will be starting in the very near future, according to administration officials. They are working on what the market potential is, what pricing would be, how government can partner with private investors, and who has the operational experience to manage so many properties.

"I think there is a fair amount of money in the wings waiting to buy, investors doing cash raises to buy properties on a large scale," says Laurie Goodman of Amherst Securities. "But that means they have to build out a rental organization; it means they build out a management company, because if you're accumulating a hundred homes in Dallas that's very different than running a multifamily building."

A number of institutional investors have shown appetite and interest in bulk REO deals, according to officials, but the plan has to incorporate ways to help facilitate financing. That has been one of the biggest roadblocks to deals already in the works between hedge funds and the major banks. Sources close to these private bank negotiations say there is plenty of cash to buy properties, but building out a management structure for the rentals is pricey, and some investors are finding the math doesn't add up to make it worth their while.

Larger investors want to be able to get real scale in any government program, in the range of 50, 100, 500 properties per deal, or $1 billion-plus in assets, say officials close to the plan. That's why the government is looking to test a combination of different approaches. Fannie Mae did a $50 million sale last June, but that was on the small side. Officials are evaluating at what larger asset sales beyond that would look like.

“We expect several pilots that will involve both local investors and institutional investors. The goal here is to reduce supply by converting foreclosed homes into rental units,” says Jaret Seiberg of Guggenheim Securities. “Less supply — even less fear about a flood of foreclosed homes hitting the market — could stabilize home prices.”

While much of this program will focus on local areas of distress, officials say they are looking at where the assets are today but are really more focused on where all the foreclosures will be in the future. It's not about the stock of foreclosures currently, it's about the flow of them over time and alternative ways to manage that flow.

Officials say they want to bring back private capital and help support rental opportunities for households, particularly when rent rates are up at the same time home prices are down.

2012 Looks Grim

2012-01-10T00:01:00.001-05:00

From Paul Craig Roberts at http://www.infowars.com we get a discussion of 2012's outlook and its all grim, in defiance of the absurd claims made in the mainstream. In so many respects the US Empire is collapsing in the way other empires collapsed in the past, through stupid spending, warfare and excessive debt. Now its our turn:

Jobs offshoring, financial deregulation, and ten years of wars have severely damaged the US economy and the economic prospects of 90% of the American population. The signs are everywhere in front of our eyes. They are in the income distribution data, the BLS jobs data, the Census data, the poverty figures, and the high number of food stamp recipients.

There is no safety in a police state and a debauched currency.The signs are in the foreclosed and boarded up homes and the accompanying homelessness. They are in closed strip malls, in office building, warehouse, and shopping mall vacancies, and in the huge population losses of America’s manufacturing cities.

The New Economy was a hoax, like Saddam Hussein’s “weapons of mass destruction” and the “war on terror.” Americans were deceived by “their” corrupt government, by greed-driven corporations, and by corporate shills among economists and the pundit class into believing that they were trading middle class “dirty fingernail” jobs in manufacturing for better middle class “clean fingernail” high-tech service jobs. Instead, reasonably paid manufacturing and professional skill jobs, such as software engineering and information technology, were traded for lowly paid jobs as waitresses and bartenders and for jobs in ambulatory health care.

Consequently, real median US income fell for the vast majority of the population. To keep consumers spending when they had no raises, the Federal Reserve used low interest rates to create a real estate and credit bubble. The low interest rates drove up housing prices, and Americans refinanced their mortgages and spent the equity in their homes. Americans maxed out credit cards. The rise in consumer indebtedness kept consumer demand growing and the economy afloat.

But there is a limit to how far debt can outpace income, and the bubble burst. And when it burst the financial fraud that had been hidden in the euphoria was revealed. That set off the financial crisis.

As the US government is controlled by financial and armaments interests and not by the people, the government responded to the financial crisis by shoveling more debt and more hardships on the American people in order that financial interests did not have to pay for their own mistakes and crimes. Instead of blaming the responsible parties, “our” government handed the bill to the American people.

An important part of the bill is the huge number of new dollars being created in order to keep “banks too big to fail” afloat and in order to finance the federal government’s enormous budget deficit from its illegal wars. Sooner or later, the proliferation of dollars will cost the American people sharply higher prices.

We will return to the dollar crisis later in this column. First, lets look at what the loss of manufacturing and manufacturing related jobs have done to the economy and the prospects of US citizens.

In the first decade of the 21st century, Detroit, Michigan, lost 25% of its population. Gary, Indiana, lost 22%. Flint, Michigan, lost 18%. Cleveland, Ohio, lost 17%. In St. Louis, Missouri, 19% of the housing is vacant. These population losses were not the result of the Black Plague or killer viruses or a nuclear attack. They were the result of corporate CEOs, pushed by their own greed, by the greed of Wall Street and that of large retailers such as Wal-Mart, aided and abetted by “our” government, into moving millions of manufacturing, software engineering, information technology, engineering, research, development, and design jobs offshore.

The process of moving American jobs offshore left cities, counties, and states with shrunken tax base. The resulting state and local budget deficits are being used to dismantle public sector unions and to cut social services. Public assets, such as water companies, and future income streams from parking meters, toll roads and bridges, are being sold off to foreign buyers in order to insure another year of local and state government solvency.

In the first decade of the 21st century, Americans lost 5,500,000 manufacturing jobs. US employment in the manufacture of computer and electronic products fell by 40%; in the production of machinery by 30%, in motor vehicles and and parts by 44%, and in the manufacture of clothing by 66%.

In other words, in ten years the US economy was decimated by jobs offshoring for the sole purpose of higher rewards to capital in the form of multi-million dollar executive bonuses and large shareholder capital gains. A few hedge fund executives were paid a billion dollars in annual renumeration and a couple of dozen of them were paid $500 million in annual compensation. What sense does that make? Huge fortunes paid for one year’s work, not in productive activity but in destroying the financial system and the value of pensions that tens of millions of Americans had worked their lives to achieve.

While this was happening, “our” government squandered several trillion dollars in Iraq and Afghanistan on wars based on lies and deception. The American people were lied to and deceived, and continue to be, in order that arms industries can enjoy record profits and in order that crazed neoconservative war criminals could pursue their ideology of world hegemony and empire. We were even lied to about US war casualties. As Dennis Loo points out in his book, Globalization and the Demolition of Society (2011), the 4,801 Americans killed in action in Iraq leaves out the 50,000 suicides of veterans and active duty US troops. The truth of the matter is that the casualties of the Iraq war are as high as those of the Vietnam war.

With all income gains redirected to the financial and war sectors, the distribution of income in the US has become, according to the Organization for Economic Co-operation and Development (OECD), the worst of all developed countries. The Central Intelligence Agency–yes, the CIA–concluded that America had achieved not only the worst income distribution of all developed countries but also a worst income distribution than Brazil, Mexico, Zimbabwe, Rwanda, Mozambique, and Bulgaria. (Source)

The economic “recovery” that Washington and the financial press hype is all talk and no reality. The “recovery” is produced by understating the inflation rate, which overstates GDP growth, and by dropping the long-term unemployed out of the measurement of unemployment. An economy, the driving engine of which has been moved offshore, cannot recover unless the economy is brought back home, and that requires the repeal of Globalism.

Overstatement is common in order to produce good news, but eventually it catches up with the spinmeisters. Last month the National Association of Realtors reported that it had overstated home sales by 3.5 million. Statistician John Williams (shadowstats.com) reports that the “birth/death” model, which the Bureau of Labor Statistics uses to estimate the net affect on jobs data of unreported business closures and new start-ups, overstates the annual number of new jobs during troubled economic times by approximately one million jobs annually. Each year the accumulated monthly overstatements are quietly revised away by BLS.

Similarly, data can be understated in order to hide bad news. The understatement of inflation results from basing the Consumer Price Index (CPI) on substitution rather than on a fixed basket of goods, the traditional method. During the “progressive” Clinton regime, a deceptive change was made to the CPI. If the price of a good rises, for example, sirloin steak, the higher price does not appear in the index. Instead, the CPI assumes that consumers switch from sirloin to a cheaper cut, such as round steak. Thus, the rise in prices is negated by substituting goods that represent a lower standard of living.

By understating inflation, the government has been able to produce a “recovery,” when in fact the positive economic growth number is created by counting inflation or nominal GDP growth as real GDP growth. John Williams says that when inflation is measured in the old way, prior to Clinton, the US has experienced essentially no real GDP growth in the 21st century. In other words, we have had a decade of essentially no growth in the GDP while the presstitutes in the media proclaim “recovery.”

The government’s forecasts of its budget deficits are based on the assumption that an economic recovery is underway. If in fact there is no recovery and the economy is about to worsen, the trillion dollar plus deficits that the government forecasts for as far as the eye can see will be even larger. As more debt creation likely means more money creation by the Federal Reserve, the future purchasing power of the US dollar appears to be dismal.

The federal government’s reckless issuance of debt in order to finance its hegemonic wars and the Federal Reserve’s misuse of its authority to create $16.1 trillion in secret loans to US and European banks (as revealed by the GAO audit of the Fed) have created an enormous number of new dollars. In addition, financial deregulation has resulted in banks creating paper claims on real assets that far exceed the value of the underlying real assets. This is an untenable situation. How is it likely to be resolved?

This is a two-part question: there is the banks’ debt and there is the federal government’s debt. Both are serious problems.

Mortgage-backed derivatives exceed the value of the homes, and Credit Default Swaps and other financial innovations have resulted in the paper claims on assets exceeding the value of the underlying real assets. Consider Credit Default Swaps, a form of unreserved “insurance.” Investors, really speculators, do not have to own a Greek government bond or a mortgage-backed derivative in order to purchase a “swap” that insures its value. Thus, the total value of swaps issued on Greek bonds, for example, can far exceed the total value of Greek bonds. The value of swaps issued on mortgage-backed securities can exceed the total value of mortgaged real estate.

Financial institutions, such as US banks, that sold “swaps” on Greek bonds were gambling that Greece would be bailed out and would not default. The financial institutions regarded as gravy the fees paid to them for “guarantees” on which they cannot make good. I don’t know the extent of swaps on sovereign debt, but I recently saw a report that the Bank of America alone has sold $2.1 trillion in swaps on sovereign debt. Imagine the crisis if the Bank of America had to pay off these swaps.

Obviously, if European sovereign debt blows up, the US financial crisis will become deeper.

The GAO audit of the Federal Reserve showed that the Fed made secret loans to banks of $16.1 trillion between December 2007 and June 2010. To put that figure in perspective, it is larger than the US GDP and larger than the US public debt. In other words, it took a tremendous amount of new money to keep the financial system from collapsing. Despite this huge sum pumped into the banking system, the banks are still regarded as weak and troubled. The insecurity of bank depositors is reflected in the one basis point interest rate on Treasury bill money funds. Many Americans are willing to receive a negative interest rate in order to have their money in instruments that can be paid off with newly created money.

When the paper claims on assets exceed the value of the underlying assets, one solution could be slow write downs of bad paper over time as the banks’ profits permit. This would require suspending the mark-to-market rule and permitting the banks to remain “solvent” by counting bad assets as good until profits permitted write-downs.

This would be a sensible solution if the banks have profitable prospects. But with consumers too indebted and broke to borrow and the consumer market too impaired for good sales prospects for businesses, what profitable prospects do banks have? Only those created by the Federal Reserve’s support of the “carry trade,” the ability of financial institutions to borrow from the Federal Reserve at essentially zero interest rates and to put the money in Greek and Italian sovereign debt. This is gambling, otherwise known as “casino banking.”

If reality rules out the solution of gradual write-downs, all that remains is bankruptcy or inflation. The Federal Reserve and the US government have ruled out permitting the banks to fail. That leaves inflation.

Except for a relatively few indexed Treasury bonds, financial instruments are in nominal values. Thus bad debts can be inflated away by driving up the nominal values of the underlying real assets and the nominal values of wages and salaries. It seems that the path that policymakers are taking is to reduce the purchasing power of money in order to drive up nominal asset values so that they exceed the claims against them.

For example, consider a person with a $200,000 mortgage whose home, if he could sell it, is only worth $175,000. This person’s asset is under water. However, if inflation drives up the price of his home to $250,000, the person has gone from a balance sheet $25,000 in the red to one $50,000 in the black. It seems clear that in order to save the financial institutions and itself, the government will sacrifice the purchasing power of the dollar.

Thus, the same solution appears to be in effect for the government’s growing debt. For the moment the US dollar is benefitting from flight from the euro due to the hyped sovereign debt crisis in Europe. As in the past, a scared financial world takes refuge in the dollar and in US Treasury debt instruments. The main difference between Greece’s indebtedness and America’s is that Greece cannot print euros, but the US can print dollars. Thus holders of US debt can always get back the nominal dollar value of Treasury debt issues. Of course, the real purchasing power of these printed dollars can be very low.

The dollar as a refuge is a short-run phenomenon. Once the transfer out of euros into dollars has occurred, how does the Treasury sell the next round of bonds to finance trillion dollar deficits? Sooner or later the Federal Reserve will be back to monetizing the new Treasury bond issues, that is, the Federal Reserve will create new money with which to purchase the new Treasury bond issues.

Sooner or later the new money will find its way into the economy and drive up prices, or the continual monetization of new US Treasury debt will cause the world to lose confidence in the dollar. Heavy sales of US dollars in currency markets would drive down the exchange value of the dollar and raise the prices of imports such as energy, manufactured goods, and food. Either way inflation is the result. Indeed, both can occur together, which is the likely result.

Normally, inflation is associated with a booming economy, but as too much of the US economy has been moved offshore, there is little left to boom other than prices. Therefore, the combination of high inflation with high unemployment is a likely fate that awaits Americans.

I cannot predict how long policymakers can hold economic armageddon at bay with spin, money creation, currency swaps, intervention in gold and silver markets, and outright lies. The onset could be sudden and take place this year, but we shouldn’t underestimate the power of spin over a gullible public that trusts “their” government and fervently believes that Muslim terrorists are out to get them and that the demise of the Constitution, the product of a eight hundred year struggle that produced Anglo-American civil liberty, is worth the price of “safety.”

There is no safety in a police state and a debauched currency. The comfortable world that Americans have known is falling apart at the seams.

Black America And The Elections

2012-01-09T00:01:00.001-05:00

From black agenda report this consideration of the meaning of this year's elections for Black America:

Neither Democrats nor Republicans want to prosecute the Wall Street criminals who crashed the housing market and walked away with a fifth or more of all the nation's $401K savings in the last few years. “

A full three years since our First Black President assumed power in January 2009 with thumping majorities in both the House and Senate, and with a full year of campaigning ahead of us, it's time for black America to ask the obvious question.

Once black America gets beyond bragging rights, what difference have presidential and congressional politics made lately? What, if anything is likely to change when Democrats or Republicans win or lose Congress and/or the White House in 2012? Can we really say that who wins or loses this election will really change how and how well we live? The honest answer is probably not.

Neither Democrats nor Republicans will do anything to stop the nationwide wave of foreclosures that have cut the average net worth of black families in half the last four years? Neither Democrats nor Republicans want to prosecute the Wall Street criminals who crashed the housing market and walked away with a fifth or more of all the nation's $401K savings in the last few years. Democrats and Republicans agree that US citizens, and citizens of anyplace else can pretty much be kidnapped, tortured, imprisoned for life or killed without being convicted, or even charged with anything in particular. Neither of the two parties will wind down the oil and resource wars the US is waging from Afghanistan and Yemen to Somalia and the Congo, bring the troops home from 140 foreign countries and spend that money on schools, libraries, transit, job creation and neighborhoods near you. Both parties agree on the runaway privatizations of roads, schools, the post office, public utilities and broadcast frequencies. Neither cares about urban gentrification, the loss of black-owned farmland, or mass incarceration. Both agree on laying off public school teachers an d letting corporate criminals who poison our rivers, our air, our people and environment, and neither intends to protect and expand social security.

Expecting or demanding these things isn't naïve. It's expecting and demanding democracy. It's not “asking the president to wave a magic wand.” It's expecting and demanding reasonable, achievable things a president with or without Congress in his pocket could have done, but didn't. Why didn't Obama even try to do any of these things? Better still, why has the First Black President doubled down on just about every Bush policy from bankster bailouts to wars abroad to ravaging social security, preventive detention, privatizing public education and exempting telecoms, mortgage fraudsters and torturers from prosecution? Why doesn't the First Black President do anything for his base voting constituencies?

“...the political bargain black America struck with itself over his career has been to be a sort of black wall around this president and this administration...”

Economist Michael Hudson has a clue. Hudson explains that the job description of modern day politicians is to deliver their voting constituencies to their campaign contributors. The job of Republicans is to deliver the mandate of their mainly white, often upscale rural, exurban and suburban voters to Big Oil, to energy companies, military contractors, telecoms, Big Pharma, real estate lobbies and Wall Street. And the job of Democrats like our First Black President is to deliver the mandate of younger and poorer voters, blacks and Latinos and women to the same players. Thus while Republicans and Democrats sound a bit different on the campaign trail, they govern pretty much alike, with a few important differences.

The biggest difference, in the case of the First Black President, is that the political bargain black America struck with itself over his career has been to be a sort of black wall around this president and this administration, a wall that protects him from his constituents but not from his campaign contributors. It's the guarantee of solid zip-your-lip-or-the-racists-win black support for President Obama, no matter what he says or does, that makes him, and the system he sits at the head of people-proof and democracy-proof. As long as our support is guaranteed, he is free to follow the wishes of his contributors and ignore the plight of his constituents.

It's an advantage a Republican president could never hope to have. By simply placing a black man in the White House, even one who unswervingly follows the Republican agenda, giving the banksters five or more times what Bush did, enacting preventive detention and telecom immunity laws Bush could never hope to get through Congress --- especially a Democratic Congress --- th e interests who finance the campaigns of both parties have shut down nearly all organized black opposition to their policies. It's a neat trick, and it's worked well for the duration of Obama's 2008 campaign and his first three years in office.

“Beyond the bragging rights and the pretty pictures, what's in it for us?”

The question is how long will black America muzzle itself for the dubious benefit of prolonging the career of Barack Hussein Obama. Nobody can say for sure. Though strong black support for the president has softened somewhat, the “it's-us-or-the-racist-Republicans” line is still a potent one. It's about all that Barack Obama has left. For the black guy to win this time, the crowd of Republican challengers have to be a gaggle of incompetent racist pygmies and greedheads. And they are. Which leaves black America with the big question.

Beyond the bragging rights and the pretty pictures, what's in it for us? Does a choice between this season's Democrats and Republicans really make a difference to our folks on the ground? Has electing the First Black President improved the living conditions, the health, wealth of our black communities? And if it hasn't, what is the 2012 election about?

Bruce A. Dixon is managing editor of Black Agenda Report.

War With Iran

2012-01-08T04:46:00.002-05:00

Outside the mainstream press there is the sense that war is coming with Iran and China and Russia have said if that happens the war will go global. It seems idiotic that in the twilight of superpower hegemony we would risk annihilation for no clear reason. Yet it seems possible that war is coming. The Israeli government has issued gas masks to all its citizens and the US and Israeli military are putting on a war game show. From Global Research this assessment:

Article 2 (3) of the United Nations Charter requires the pacific settlement of the international dispute between the United States and Iran. To the same effect is article 33 and the entirety of Chapter VI of the United Nations Charter that mandate and set up numerous procedures for the pacific settlement of the international dispute between the United States and Iran. And of course Article 2(4) of the U.N. Charter prohibits both the threat and use of force by the United States against Iran.

Furthermore, both Iran and the United States are parties to the Kellogg-Briand Peace Pact of 1928, upon which legal basis the Nazi Leaders were prosecuted by the United States, inter alia, at Nuremberg for Crimes against Peace, sentenced to death, and executed. In Article I thereof the States Parties “condemn recourse to war for the solution of international controversies, and renounce it, as an instrument of national policy in their relations with one another." The United States has been illegally threatening war against Iran going back to the Bush Jr. Administration. Article II requires the United States only to pursue a pacific settlement of its international dispute with Iran: “The High Contracting Parties agree that the settlement or solution of all disputes or conflicts of whatever nature or of whatever origin they may be, which may arise among them, shall never be sought except by pacific means.”

Finally, both the United States and Iran are parties to the 1899 Hague Convention for the Pacific Settlement of International Disputes. This seminal Hague Peace Convention establishes numerous mechanisms for the pacific settlement of international disputes between contracting parties that are too numerous to analyze here. But they are discussed in detail in my book Foundations of World Order (Duke University Press: 1999). According to article 27 thereof, if a serious dispute threatens to break out between contracting powers, it was the DUTY of the other contracting powers to remind them that the Permanent Court of Arbitration in The Hague is open to them, and such reminder could not be treated as an unfriendly act of intervention by the disputants. Today the world needs one State party to either the 1899 Hague Convention for the Pacific Settlement of International Disputes or the 1907 Hague Convention for the Pacific Settlement of International Disputes to publicly remind both the United States and Iran that the Permanent Court of Arbitration in The Hague, together with its International Bureau and the entirety of the 1899 Hague Convention for the Pacific Settlement of International Disputes , are available to the two States in order to resolve their dispute in a peaceful manner.

After the terrorist assassination of Archduke Francis Ferdinand in Sarajevo in June of 1914, Serbia made an offer to Austria to submit the entire dispute to “the International Tribunal of The Hague”—i.e.,to the Permanent Court of Arbitration in The Hague. Austria did not accept the offer, the First World War broke out, and about 10 Million Human Beings were needlessly slaughtered.

The death toll from World War III will be incalculable. Humanity must not allow our history to repeat itself! Otherwise, that could be the end of our Humanity.

Francis A. Boyle is Professor of International Law

Fading Middle Class

2012-01-06T00:01:00.002-05:00

From the Rice Farmer website a list of numbers that tell a story. This is becoming an obvious tale to many who previously declined to believe it.

Once upon a time, the United States had the largest and most vibrant middle class that the world has ever seen. Unfortunately, that is rapidly changing. The statistics that you are about to read prove beyond a reasonable doubt that the U.S. middle class is dying right in front of our eyes as we enter 2012. The decline of the middle class is not something that has happened all of a sudden. Rather, there has been a relentless grinding down of the middle class over the last several decades. Millions of our jobs have been shipped overseas, the rate of inflation has far outpaced the rate that our wages have grown, and overwhelming debt has choked the financial life out of millions of American families. Every single day, more Americans fall out of the middle class and into poverty. In fact, more Americans fell into poverty last year than has ever been recorded before. The number of middle class jobs and middle class neighborhoods continues to decline at a staggering pace. As I have written about previously, America as a whole is getting poorer as a nation, and as this happens wealth is becoming increasingly concentrated at the very top of the income scale. This is not how capitalism is supposed to work, and it is not good for America.

Today I went over to Safeway and I was absolutely appalled at the prices. I honestly don't know how most families make it these days. I ended up paying over 140 dollars for about two-thirds of a cart of food. That was after I "saved" 67 dollars on sale items.

When the cost of the basic things that we need - housing, food, gas, electricity - go up faster than our incomes do, that means that we are getting poorer.

Sadly, if you look at the long-term numbers, some very clear negative trends emerge....

-The number of good jobs continues to decrease.

-The rate of inflation continues to outpace the rate that our wages are going up.

-American consumers are going into almost unbelievable amounts of debt.

-The number of Americans that are considered to be "poor" continues to grow.

-The number of Americans that are forced to turn to the government for financial assistance continues to go up.

After you read the information below, it should become abundantly clear that the U.S. middle class is in a whole heap of trouble.

The following are 30 statistics that show that the middle class is dying right in front of our eyes as we enter 2012....

#1 Today, only 55.3 percent of all Americans between the ages of 16 and 29 have jobs.

#2 In the United States today, there are 240 million working age people. Only about 140 million of them are working.

#3 According to CareerBuilder, only 23 percent of American companies plan to hire more employees in 2012.

#4 Since the year 2000, the United States has lost 10% of its middle class jobs. In the year 2000 there were about 72 million middle class jobs in the United States but today there are only about 65 million middle class jobs.

#5 According to the New York Times, approximately 100 million Americans are either living in poverty or in "the fretful zone just above it".

#6 According to that same article in the New York Times, 34 percent of all elderly Americans are living in poverty or "near poverty", and 39 percent of all children in America are living in poverty or "near poverty".

#7 In 1984, the median net worth of households led by someone 65 or older was 10 times larger than the median net worth of households led by someone 35 or younger. Today, the median net worth of households led by someone 65 or older is 47 times larger than the median net worth of households led by someone 35 or younger.

#8 Since the year 2000, incomes for U.S. households led by someone between the ages of 25 and 34 have fallen by about 12 percent after you adjust for inflation.

#9 The total value of household real estate in the U.S. has declined from $22.7 trillion in 2006 to $16.2 trillion today. Most of that wealth has been lost by the middle class.

#10 Many formerly great manufacturing cities are turning into ghost towns. Since 1950, the population of Pittsburgh, Pennsylvania has declined by more than 50 percent. In Dayton, Ohio 18.9 percent of all houses now stand empty.

#11 Since 1971, consumer debt in the United States has increased by a whopping 1700%.

#12 The number of pages of federal tax rules and regulations has increased by 18,000% since 1913. The wealthy know how to avoid taxes, but most of those in the middle class do not.

#13 The number of Americans that fell into poverty (2.6 million) set a new all-time record last year and extreme poverty (6.7%) is at the highest level ever measured in the United States.

#14 According to one study, between 1969 and 2009 the median wages earned by American men between the ages of 30 and 50 dropped by 27 percent after you account for inflation.

#15 According to U.S. Representative Betty Sutton, America has lost an average of 15 manufacturing facilities a day over the last 10 years. During 2010 it got even worse. Last year, an average of 23 manufacturing facilities a day shut down in the United States.

#16 Back in 1980, less than 30% of all jobs in the United States were low income jobs. Today, more than 40% of all jobs in the United States are low income jobs.

#17 Most Americans are scratching and clawing and doing whatever they can to make a living these days. Half of all American workers now earn $505 or less per week.

#18 Food prices continue to rise at a very brisk pace. The price of beef is up 9.8% over the past year, the price of eggs is up 10.2% over the past year and the price of potatoes is up 12% over the past year.

#19 Electricity bills in the United States have risen faster than the overall rate of inflation for five years in a row.

#20 The average American household will have spent a staggering $4,155 on gasoline by the end of 2011.

#21 If inflation was measured the exact same way that it was measured back in 1980, the rate of inflation in the United States would be well over 10 percent.

#22 If the number of Americans considered to be "looking for work" was the same today as it was back in 2007, the "official" unemployment rate put out by the U.S. government would be up to 11 percent.

#23 According to the Student Loan Debt Clock, total student loan debt in the United States will surpass the 1 trillion dollar mark at some point in 2012. Most of that debt is owed by members of the middle class.

#24 Incredibly, more than one out of every seven Americans is on food stamps and one out of every four American children is on food stamps at this point.

#25 Since Barack Obama took office, the number of Americans on food stamps has increased by 14.3 million.

#26 In 2010, 42 percent of all single mothers in the United States were on food stamps.

#27 In 1970, 65 percent of all Americans lived in "middle class neighborhoods". By 2007, only 44 percent of all Americans lived in "middle class neighborhoods".

#28 According to a recent report produced by Pew Charitable Trusts, approximately one out of every three Americans that grew up in a middle class household has slipped down the income ladder.

#29 In the United States today, the wealthiest one percent of all Americans have a greater net worth than the bottom 90 percent combined.

#30 The poorest 50 percent of all Americans now collectively own just 2.5% of all the wealth in the United States.

Sadly, this article could have been much, much longer. There are so many other statistics about the middle class that could have been included.

For even more insane economic numbers that show just how dramatically the U.S. economy is declining, just check out this article: "50 Economic Numbers From 2011 That Are Almost Too Crazy To Believe".

What is even more frightening is that this is about as good as things are going to get.

We have already had "the economic recovery", such as it was.

Now we are heading for another major financial crisis. Just like back in 2008, the entire world is going to feel the pain.

But we never recovered from the last financial crisis. We are like a boxer that is not ready to handle another blow.

And who is going to get hurt the most? It will be those at the bottom of the food chain of course. Tens of millions of Americans that are living in poverty will experience a massive amount of pain, and millions more Americans will fall out of the middle class and will join them.

If you have a good job, do your best to hang on to it. If you don't have a job, do your best to get one while you still can. Jobs will become very precious in the years ahead.

But also try to do what you can to become less dependent on the system. Almost anyone can find ways to make some extra money on the side. Yes, it will likely cut into your television time. If someday you were to lose your job you don't want to be left with zero income.

Right now, the U.S. economy is slowly dying and as time goes by the number of middle class Americans it will be able to support will continue to decrease.