美國‧FBI擴大警告警方加強戒備‧酒店成恐襲高風險區

（美國‧紐約）美國國土安全部和聯邦調查局（FBI）正在調查丹佛和紐約可能發生的炸彈恐襲陰謀，並將恐襲警告擴大至體育館、酒店以及娛樂設施。

警方在高風險地區提高保安措施。加派警員穿上防彈衣、佩帶步鎗，以及帶著警犬，在紐約大中央車站戒備。便衣刑警則在車站附近的酒店發派傳單，傳單寫著：“如果你發現可疑的恐怖活動，通知紐約警方。”

被捕司機曾在基地受訓

當局正在調查涉嫌恐怖陰謀的24歲丹佛機場巴士司機那吉布拉。當局指出，那吉布拉曾在巴基斯坦接受“基地”組織的爆炸訓練，於兩週前的911恐襲紀念日抵達紐約市，其電腦存有製造炸彈指引。

那吉布拉上週在科羅拉多州被捕，促使奧巴馬政府首度擴大恐襲警告。

兩位不具名執法官員向美聯社指出，目前被調查的恐怖陰謀份子超過6人。FBI表示，他們來自美國、巴基斯坦等地。

聯邦反恐官員週一（9月21日）向警察部門發出兩項公告，呼吁執法部門對體育館、娛樂場所和酒店安全保持警惕。

基地老二又發表講話

另外，“基地”組織二號人物艾曼22日發表一段106分鐘的錄影講話，指美國總統奧巴馬“將被回教世界趕下台”。

錄像名為“西方國家和黑暗隧道”，艾曼將奧巴馬和小布什做了類比。他說：“美國扮出一副新的虛偽嘴臉。朝我們微笑，但是用小布什用過的同一把刀子捅我們。”

美國‧奧巴馬選副總統‧米歇爾阻希拉里入選

（美國‧華盛頓）一本最近出版的新書披露，由於米歇爾的反對，希拉里最終未能成為奧巴馬競選總統的副手，以致副總統一職落在拜登手中。

暢銷書作者安德森新作《巴拉克和米歇爾：一段美國婚姻的寫照》（Barack and Michelle︰Portrait of an American Marriage）一書，寫出了第一夫人米歇爾對奧巴馬的影響力。

書中說，奧巴馬曾考慮提名希拉里為副總統，但米歇爾對他說：“你真的希望克林頓夫婦跟你一起在白宮工作嗎？你受得了嗎？”最後，希拉里被提名為國務卿。

書中又披露，2004年奧巴馬競選參議員時，米歇爾極力勸說丈夫使用“Yes We Can”這個口號，當時奧巴馬認為這口號“幼稚”和“老土”，但米歇爾對他說：“相信我，這口號有效的。”結果奧巴馬在選舉中勝出。

中國‧20國領袖投票定奪‧爭取擴大在IMF角色

（中國‧北京）正在爭取提高國際貨幣基金（IMF）地位的北京呼吁，20國集團領袖應在即將在匹茲堡登場的領導人峰會上履行承諾，增加發展中國國家的投票權。

與此同時，據IMF總裁透露，中國在IMF的投票權將獲得最大幅度的增加。

20國集團已原則上同意增加發展中國家的投票權，但可能仍面對一些阻力：主要控制IMF組織理事會的歐洲政府拒絕接受改變，擔心此舉將削弱他們在IMF的地位。

20國集團峰會將於9月24日至25日登場，議程包括可能限制銀行家薪資，聯合經濟政策及是否開始調降刺激經濟方案的開支。但是就中國而言，今次20國集團峰會有望宣佈提高在這個組織的地位，北京認為此舉將能影響全球經濟政策。

中國今年9月2日宣佈，中國將以人民幣購買這組織首次發行的約500億美元的債券。這是IMF組織為拯救受全球金融海嘯影響的經濟體，而發行債券，旨於籌措經費。一般相信，此舉可能將提高人民幣的國際地位。

Andrew Einhorn on Alex Jones Tv:Police Taking Your Blood Under Color of Law

www.infowars.com

Marc Faber - Buy Stocks because US Dollars will be worthless 09/22/09

Check this link ....... http://bit.ly/H4WJh

Why capitalism fails

Since the global financial system started unraveling in dramatic fashion two years ago, distinguished economists have suffered a crisis of their own. Ivy League professors who had trumpeted the dawn of a new era of stability have scrambled to explain how, exactly, the worst financial crisis since the Great Depression had ambushed their entire profession.

Amid the hand-wringing and the self-flagellation, a few more cerebral commentators started to speak about the arrival of a “Minsky moment,” and a growing number of insiders began to warn of a coming “Minsky meltdown.”

“Minsky” was shorthand for Hyman Minsky, a hitherto obscure macroeconomist who died over a decade ago. Many economists had never heard of him when the crisis struck, and he remains a shadowy figure in the profession. But lately he has begun emerging as perhaps the most prescient big-picture thinker about what, exactly, we are going through. A contrarian amid the conformity of postwar America, an expert in the then-unfashionable subfields of finance and crisis, Minsky was one economist who saw what was coming. He predicted, decades ago, almost exactly the kind of meltdown that recently hammered the global economy.

In recent months Minsky’s star has only risen. Nobel Prize-winning economists talk about incorporating his insights, and copies of his books are back in print and selling well. He’s gone from being a nearly forgotten figure to a key player in the debate over how to fix the financial system.

But if Minsky was as right as he seems to have been, the news is not exactly encouraging. He believed in capitalism, but also believed it had almost a genetic weakness. Modern finance, he

argued, was far from the stabilizing force that mainstream economics portrayed: rather, it was a system that created the illusion of stability while simultaneously creating the conditions for an inevitable and dramatic collapse.

In other words, the one person who foresaw the crisis also believed that our whole financial system contains the seeds of its own destruction. “Instability,” he wrote, “is an inherent and inescapable flaw of capitalism.”

Minsky’s vision might have been dark, but he was not a fatalist; he believed it was possible to craft policies that could blunt the collateral damage caused by financial crises. But with a growing number of economists eager to declare the recession over, and the crisis itself apparently behind us, these policies may prove as discomforting as the theories that prompted them in the first place. Indeed, as economists re-embrace Minsky’s prophetic insights, it is far from clear that they’re ready to reckon with the full implications of what he saw.

In an ideal world, a profession dedicated to the study of capitalism would be as freewheeling and innovative as its ostensible subject. But economics has often been subject to powerful orthodoxies, and never more so than when Minsky arrived on the scene.

That orthodoxy, born in the years after World War II, was known as the neoclassical synthesis. The older belief in a self-regulating, self-stabilizing free market had selectively absorbed a few insights from John Maynard Keynes, the great economist of the 1930s who wrote extensively of the ways that capitalism might fail to maintain full employment. Most economists still believed that free-market capitalism was a fundamentally stable basis for an economy, though thanks to Keynes, some now acknowledged that government might under certain circumstances play a role in keeping the economy - and employment - on an even keel.

Economists like Paul Samuelson became the public face of the new establishment; he and others at a handful of top universities became deeply influential in Washington. In theory, Minsky could have been an academic star in this new establishment: Like Samuelson, he earned his doctorate in economics at Harvard University, where he studied with legendary Austrian economist Joseph Schumpeter, as well as future Nobel laureate Wassily Leontief.

But Minsky was cut from different cloth than many of the other big names. The descendent of immigrants from Minsk, in modern-day Belarus, Minsky was a red-diaper baby, the son of Menshevik socialists. While most economists spent the 1950s and 1960s toiling over mathematical models, Minsky pursued research on poverty, hardly the hottest subfield of economics. With long, wild, white hair, Minsky was closer to the counterculture than to mainstream economics. He was, recalls the economist L. Randall Wray, a former student, a “character.”

So while his colleagues from graduate school went on to win Nobel prizes and rise to the top of academia, Minsky languished. He drifted from Brown to Berkeley and eventually to Washington University. Indeed, many economists weren’t even aware of his work. One assessment of Minsky published in 1997 simply noted that his “work has not had a major influence in the macroeconomic discussions of the last thirty years.”

Yet he was busy. In addition to poverty, Minsky began to delve into the field of finance, which despite its seeming importance had no place in the theories formulated by Samuelson and others. He also began to ask a simple, if disturbing question: “Can ‘it’ happen again?” - where “it” was, like Harry Potter’s nemesis Voldemort, the thing that could not be named: the Great Depression.

In his writings, Minsky looked to his intellectual hero, Keynes, arguably the greatest economist of the 20th century. But where most economists drew a single, simplistic lesson from Keynes - that government could step in and micromanage the economy, smooth out the business cycle, and keep things on an even keel - Minsky had no interest in what he and a handful of other dissident economists came to call “bastard Keynesianism.”

Instead, Minsky drew his own, far darker, lessons from Keynes’s landmark writings, which dealt not only with the problem of unemployment, but with money and banking. Although Keynes had never stated this explicitly, Minsky argued that Keynes’s collective work amounted to a powerful argument that capitalism was by its very nature unstable and prone to collapse. Far from trending toward some magical state of equilibrium, capitalism would inevitably do the opposite. It would lurch over a cliff.

This insight bore the stamp of his advisor Joseph Schumpeter, the noted Austrian economist now famous for documenting capitalism’s ceaseless process of “creative destruction.” But Minsky spent more time thinking about destruction than creation. In doing so, he formulated an intriguing theory: not only was capitalism prone to collapse, he argued, it was precisely its periods of economic stability that would set the stage for monumental crises.

Minsky called his idea the “Financial Instability Hypothesis.” In the wake of a depression, he noted, financial institutions are extraordinarily conservative, as are businesses. With the borrowers and the lenders who fuel the economy all steering clear of high-risk deals, things go smoothly: loans are almost always paid on time, businesses generally succeed, and everyone does well. That success, however, inevitably encourages borrowers and lenders to take on more risk in the reasonable hope of making more money. As Minsky observed, “Success breeds a disregard of the possibility of failure.”

As people forget that failure is a possibility, a “euphoric economy” eventually develops, fueled by the rise of far riskier borrowers - what he called speculative borrowers, those whose income would cover interest payments but not the principal; and those he called “Ponzi borrowers,” those whose income could cover neither, and could only pay their bills by borrowing still further. As these latter categories grew, the overall economy would shift from a conservative but profitable environment to a much more freewheeling system dominated by players whose survival depended not on sound business plans, but on borrowed money and freely available credit.

Once that kind of economy had developed, any panic could wreck the market. The failure of a single firm, for example, or the revelation of a staggering fraud could trigger fear and a sudden, economy-wide attempt to shed debt. This watershed moment - what was later dubbed the “Minsky moment” - would create an environment deeply inhospitable to all borrowers. The speculators and Ponzi borrowers would collapse first, as they lost access to the credit they needed to survive. Even the more stable players might find themselves unable to pay their debt without selling off assets; their forced sales would send asset prices spiraling downward, and inevitably, the entire rickety financial edifice would start to collapse. Businesses would falter, and the crisis would spill over to the “real” economy that depended on the now-collapsing financial system.

From the 1960s onward, Minsky elaborated on this hypothesis. At the time he believed that this shift was already underway: postwar stability, financial innovation, and the receding memory of the Great Depression were gradually setting the stage for a crisis of epic proportions. Most of what he had to say fell on deaf ears. The 1960s were an era of solid growth, and although the economic stagnation of the 1970s was a blow to mainstream neo-Keynesian economics, it did not send policymakers scurrying to Minsky. Instead, a new free market fundamentalism took root: government was the problem, not the solution.

Moreover, the new dogma coincided with a remarkable era of stability. The period from the late 1980s onward has been dubbed the “Great Moderation,” a time of shallow recessions and great resilience among most major industrial economies. Things had never been more stable. The likelihood that “it” could happen again now seemed laughable.

Yet throughout this period, the financial system - not the economy, but finance as an industry - was growing by leaps and bounds. Minsky spent the last years of his life, in the early 1990s, warning of the dangers of securitization and other forms of financial innovation, but few economists listened. Nor did they pay attention to consumers’ and companies’ growing dependence on debt, and the growing use of leverage within the financial system.

By the end of the 20th century, the financial system that Minsky had warned about had materialized, complete with speculative borrowers, Ponzi borrowers, and precious few of the conservative borrowers who were the bedrock of a truly stable economy. Over decades, we really had forgotten the meaning of risk. When storied financial firms started to fall, sending shockwaves through the “real” economy, his predictions started to look a lot like a road map.

“This wasn’t a Minsky moment,” explains Randall Wray. “It was a Minsky half-century.”

Minsky is now all the rage. A year ago, an influential Financial Times columnist confided to readers that rereading Minsky’s 1986 “masterpiece” - “Stabilizing an Unstable Economy” - “helped clear my mind on this crisis.” Others joined the chorus. Earlier this year, two economic heavyweights - Paul Krugman and Brad DeLong - both tipped their hats to him in public forums. Indeed, the Nobel Prize-winning Krugman titled one of the Robbins lectures at the London School of Economics “The Night They Re-read Minsky.”

Today most economists, it’s safe to say, are probably reading Minsky for the first time, trying to fit his unconventional insights into the theoretical scaffolding of their profession. If Minsky were alive today, he would no doubt applaud this belated acknowledgment, even if it has come at a terrible cost. As he once wryly observed, “There is nothing wrong with macroeconomics that another depression [won’t] cure.”

But does Minsky’s work offer us any practical help? If capitalism is inherently self-destructive and unstable - never mind that it produces inequality and unemployment, as Keynes had observed - now what?

After spending his life warning of the perils of the complacency that comes with stability - and having it fall on deaf ears - Minsky was understandably pessimistic about the ability to short-circuit the tragic cycle of boom and bust. But he did believe that much could be done to ameliorate the damage.

To prevent the Minsky moment from becoming a national calamity, part of his solution (which was shared with other economists) was to have the Federal Reserve - what he liked to call the “Big Bank” - step into the breach and act as a lender of last resort to firms under siege. By throwing lines of liquidity to foundering firms, the Federal Reserve could break the cycle and stabilize the financial system. It failed to do so during the Great Depression, when it stood by and let a banking crisis spiral out of control. This time, under the leadership of Ben Bernanke - like Minsky, a scholar of the Depression - it took a very different approach, becoming a lender of last resort to everything from hedge funds to investment banks to money market funds.

Minsky’s other solution, however, was considerably more radical and less palatable politically. The preferred mainstream tactic for pulling the economy out of a crisis was - and is - based on the Keynesian notion of “priming the pump” by sending money that will employ lots of high-skilled, unionized labor - by building a new high-speed train line, for example.

Minsky, however, argued for a “bubble-up” approach, sending money to the poor and unskilled first. The government - or what he liked to call “Big Government” - should become the “employer of last resort,” he said, offering a job to anyone who wanted one at a set minimum wage. It would be paid to workers who would supply child care, clean streets, and provide services that would give taxpayers a visible return on their dollars. In being available to everyone, it would be even more ambitious than the New Deal, sharply reducing the welfare rolls by guaranteeing a job for anyone who was able to work. Such a program would not only help the poor and unskilled, he believed, but would put a floor beneath everyone else’s wages too, preventing salaries of more skilled workers from falling too precipitously, and sending benefits up the socioeconomic ladder.

While economists may be acknowledging some of Minsky’s points on financial instability, it’s safe to say that even liberal policymakers are still a long way from thinking about such an expanded role for the American government. If nothing else, an expensive full-employment program would veer far too close to socialism for the comfort of politicians. For his part, Wray thinks that the critics are apt to misunderstand Minsky. “He saw these ideas as perfectly consistent with capitalism,” says Wray. “They would make capitalism better.”

But not perfect. Indeed, if there’s anything to be drawn from Minsky’s collected work, it’s that perfection, like stability and equilibrium, are mirages. Minsky did not share his profession’s quaint belief that everything could be reduced to a tidy model, or a pat theory. His was a kind of existential economics: capitalism, like life itself, is difficult, even tragic. “There is no simple answer to the problems of our capitalism,” wrote Minsky. “There is no solution that can be transformed into a catchy phrase and carried on banners.”

It’s a sentiment that may limit the extent to which Minsky becomes part of any new orthodoxy. But that’s probably how he would have preferred it, believes liberal economist James Galbraith. “I think he would resist being domesticated,” says Galbraith. “He spent his career in professional isolation.”

By Stephen Mihm
Stephen Mihm is a history professor at the University of Georgia and author of “A Nation of Counterfeiters” (Harvard, 2007).

© Copyright 2009 Globe Newspaper Company.

Stadiums, hotels put on alert amid terror probe

NEW YORK – The government expanded a terrorism warning from transit systems to U.S. stadiums, hotels and entertainment complexes as investigators searched for more suspects Tuesday in a possible al-Qaida plot to set off hydrogen-peroxide bombs hidden in backpacks.

Police bolstered their presence at high-profile locations. Extra officers with bulletproof vests, rifles and dogs were assigned to spots such as Grand Central Terminal in New York. Plainclothes officers handed out fliers at a nearby hotel with a warning in large block letters: "If you suspect terrorism, call the NYPD."

The warnings come amid an investigation centering on Najibullah Zazi, a 24-year-old Denver airport shuttle driver who authorities say received al-Qaida explosives training in Pakistan and was found entering New York City two weeks ago with bomb-making instructions on his computer.

Zazi's arrest in Colorado last week touched off the most intense flurry of government terror warnings and advisories to come to light since President Barack Obama took office.

Though Zazi is charged only with lying to the government, law enforcement officials said he may have been plotting with others to detonate backpack bombs on New York trains in a scheme similar to the attacks on the London subway and Madrid's rail system. Backpacks and cell phones were seized in raids on apartments Zazi visited in New York.

Two law enforcement officials speaking on condition of anonymity because they were not authorized to discuss details of the investigation told The Associated Press that more than a half-dozen people were being scrutinized in the alleged plot. The FBI said "several individuals in the United States, Pakistan and elsewhere" are being investigated.

"There's a lot more work to be done," said Police Commissioner Raymond Kelly, cautioning that the probe was still in its early stages.

In two bulletins sent to police departments Monday and obtained by the AP, federal counterterrorism officials urged law enforcement and private companies to be vigilant at stadiums, entertainment complexes and hotels.

The bulletin on stadiums noted that an al-Qaida training manual specifically lists "blasting and destroying the places of amusement, immorality and sin ... and attacking vital economic centers." Counterterrorism officials are also advising police officers to be on the lookout for any possible bomb-making at self-storage facilities, noting that terrorists have used such places to build bombs.

The bulletins came just days after similar warnings about the vulnerability of the nation's mass transit systems and the danger of hydrogen peroxide-based explosives.

In a statement, the FBI and Homeland Security said that while the agencies "have no information regarding the timing, location or target of any planned attack, we believe it is prudent to raise the security awareness of our local law enforcement partners regarding the targets and tactics of previous terrorist activity."

A half-dozen terrorism warnings and alerts have been issued in the past week amid the investigations in New York and Denver. Bulletins — particularly about hotels as possible terrorist targets — are common, and often don't make news. In fact, they are so common that many Americans in the past few years have accused Washington of fearmongering.

Some Americans were blase about the latest warnings.

"If it happens, it happens," said Lynn Calhoun, an Indianapolis computer programmer who visited Conseco Fieldhouse, the home of the NBA's Indiana Pacers, to buy a ticket for a Trans-Siberian Orchestra concert there in December. "Where are you going to go? What are you going to do? You can't just go and hide out in Canada for a month."

James Orash waited for a commuter train outside Camden Yards, Baltimore's ballpark, with his wife.

"If they're going to hit us, there, that's where they're going to hit us," Orash said, looking at the stadium. "They already took two buildings down once. Eventually, that's what's going to happen. If they hit us next time, it's going to be big."

In the lobby of New York's Grand Hyatt, 81-year-old Barbara Kane's eyes widened when she heard of the warning.

"If something were to happen, what do people do?" said Kane, of Lafayette, Ind. "Do they run? Do they get into a building? Do they stay out in the open?"

"Hold my cross?" she added, fingering her crucifix.

New York's transit agency said it increased the police presence around the city. The vigilance is playing out during a meeting of the U.N. General Assembly, with Obama and other leaders from around the world in town. Also, thousands of policymakers and other visitors are arriving in Pittsburgh for a two-day economic summit of wealthy and developing nations.

New York's Police Department produced a 10-minute videotape it has begun showing at roll call instructing officers to be on the lookout for potential bomb-making ingredients. The video puts special emphasis on hydrogen peroxide — a common ingredient in homemade explosives — as well as cans of acetone and bags of ammonium nitrate.

Stadiums around the country provided few specifics about how they were responding but stressed that they have been vigilant ever since the Sept. 11, 2001, attacks.

"We're aware of the memo," said Bob Moore, spokesman for the Kansas City Chiefs, who play at Arrowhead Stadium. "It just underscores the high levels of security we've had and will continue to maintain. We've been in that mode for some time."

In New Jersey, home of Giants Stadium, the state homeland security office said there will be an increased police presence at key locations, random bag searches and greater use of surveillance cameras and undercover operations.

A spokesman for InterContinental Hotels Group, which operates more than 4,300 hotels worldwide, including InterContinental, Crowne Plaza, Holiday Inn and Holiday Inn Express hotels, would not discuss specific security measures.

Julie May was visiting Denver from London, taking in the sights in the city where Zazi worked.

"I live in London, and terrorist bulletins are a way of life for me," she said. "So if it was to stop me doing things, I would never do anything."

By TOM HAYS and DEVLIN BARRETT
Associated Press Writers Eileen Sullivan in Washington, Samantha Gross in New York, Don Mitchell and P. Solomon Banda in Denver, Alex Dominguez in Baltimore, Charles Wilson in Indianapolis, Beth DeFalco in Trenton, N.J., Ashley M. Hehrer in Chicago contributed to this report.

Committee looks at taxing Michigan doctors to help avert 12 percent Medicaid cuts

Michigan State Rep. Gary McDowell, D-Rudyard, said today that the Michigan House-Senate Conference Committee, which is looking for ways to erase a $2.8 billion budget deficit for fiscal 2010, is considering imposing a 3 percent provider tax on more than 15,000 physicians who practice in the state.

McDowell said the physician tax could raise $300 million to $400 million and help reduce 8 percent to 12 percent Medicaid cuts, which are being discussed in the conference committee.

The state Legislature must approve a budget before Oct. 1 or face a government shutdown.

The possible physician tax, known as a Quality Assurance Assessment Program fee, would be used to increase federal matching share dollars for the state’s Medicaid program. For every $1 the state raises, the federal government matches with another $1.72.

“Hospitals, HMOs and community mental health providers pay a QAAP provider tax,” McDowell said. “It is fair for doctors” to help fund the Medicaid program.

The Michigan State Medical Society has opposed the QAAP tax on physicians the past several years, said Dr. Richard Smith, medical society president. In 2005, Gov. Jennifer Granholm first proposed the physician QAAP tax.

“We cannot support that type of tax because it does not address the fundamental problem of underfunding with the Medicaid program,” said Smith, an obstetrician with Henry Ford Medical Group in Detroit. “This would be a third tax. Doctors already pay income tax and some pay a small business tax.”

Smith said cutting Medicaid and public health is not a good idea on the eve of possible outbreak of the swine flu, or H1NI.

Instead of a physician tax, Smith said legislators should approve a bill to prohibit smoking in the workplace, including restaurants. “This would help to reduce health care costs because fewer people would get chronic diseases,” he said.

Primarily because of declining Medicaid reimbursement, Smith said fewer physicians are participating in Medicaid. In 2005, only 64 percent of physicians participated in Medicaid, down from 88 percent in 1999.

McDowell said the conference committee is looking at a combination of budget cuts and increased taxes to avoid making deeper cuts in the Medicaid program.

Earlier, the Michigan Senate approved legislation to cut 8 percent out of Medicaid, but reduced tax revenue has forced legislators to look at tax increases or deeper budget cuts. The House did not take action on the Senate bill, forcing a conference committee.

“I don’t see how we can accept these budget cuts,” McDowell said. “We will have nursing homes close, hospitals cut services and community health agencies will be hard-pressed to provide services to 18 to 24-year olds.”

The Michigan Health and Hospital Association estimates that a 12 percent Medicaid budget cut would amount to $203 million in lost funding, including $54 million in general funds and $149 million is lost federal matching funds.

For hospitals, an 8 percent cut to inpatient and outpatient rates would total more than $135 million, including $36 million in general funds and $99 million lost in federal matching funds, said.

If the Medicaid cut is only 8 percent, nursing homes face more than $114 million in budget cuts, $40 million general funds and $74 million in lost federal matching dollars for fiscal 2010, said the Health Care Association of Michigan. There are about 400 nursing homes in Michigan.

By Jay Greene

LANDMARK DECISION PROMISES MASSIVE RELIEF FOR HOMEOWNERS AND TROUBLE FOR BANKS

A landmark ruling in a recent Kansas Supreme Court case may have given millions of distressed homeowners the legal wedge they need to avoid foreclosure. In Landmark National Bank v. Kesler, 2009 Kan. LEXIS 834, the Kansas Supreme Court held that a nominee company called MERS has no right or standing to bring an action for foreclosure. MERS is an acronym for Mortgage Electronic Registration Systems, a private company that registers mortgages electronically and tracks changes in ownership. The significance of the holding is that if MERS has no standing to foreclose, then nobody has standing to foreclose – on 60 million mortgages. That is the number of American mortgages currently reported to be held by MERS. Over half of all new U.S. residential mortgage loans are registered with MERS and recorded in its name. Holdings of the Kansas Supreme Court are not binding on the rest of the country, but they are dicta of which other courts take note; and the reasoning behind the decision is sound.

Eliminating the “Straw Man” Shielding Lenders and Investors from Liability

The development of “electronic” mortgages managed by MERS went hand in hand with the “securitization” of mortgage loans – chopping them into pieces and selling them off to investors. In the heyday of mortgage securitizations, before investors got wise to their risks, lenders would slice up loans, bundle them into “financial products” called “collateralized debt obligations” (CDOs), ostensibly insure them against default by wrapping them in derivatives called “credit default swaps,” and sell them to pension funds, municipal funds, foreign investment funds, and so forth. There were many secured parties, and the pieces kept changing hands; but MERS supposedly kept track of all these changes electronically. MERS would register and record mortgage loans in its name, and it would bring foreclosure actions in its name. MERS not only facilitated the rapid turnover of mortgages and mortgage-backed securities, but it has served as a sort of “corporate shield” that protects investors from claims by borrowers concerning predatory lending practices. California attorney Timothy McCandless describes the problem like this:

“[MERS] has reduced transparency in the mortgage market in two ways. First, consumers and their counsel can no longer turn to the public recording systems to learn the identity of the holder of their note. Today, county recording systems are increasingly full of one meaningless name, MERS, repeated over and over again. But more importantly, all across the country, MERS now brings foreclosure proceedings in its own name – even though it is not the financial party in interest. This is problematic because MERS is not prepared for or equipped to provide responses to consumers’ discovery requests with respect to predatory lending claims and defenses. In effect, the securitization conduit attempts to use a faceless and seemingly innocent proxy with no knowledge of predatory origination or servicing behavior to do the dirty work of seizing the consumer’s home. . . . So imposing is this opaque corporate wall, that in a “vast” number of foreclosures, MERS actually succeeds in foreclosing without producing the original note – the legal sine qua non of foreclosure – much less documentation that could support predatory lending defenses.”

The real parties in interest concealed behind MERS have been made so faceless, however, that there is now no party with standing to foreclose. The Kansas Supreme Court stated that MERS’ relationship “is more akin to that of a straw man than to a party possessing all the rights given a buyer.” The court opined:

“By statute, assignment of the mortgage carries with it the assignment of the debt. . . . Indeed, in the event that a mortgage loan somehow separates interests of the note and the deed of trust, with the deed of trust lying with some independent entity, the mortgage may become unenforceable. The practical effect of splitting the deed of trust from the promissory note is to make it impossible for the holder of the note to foreclose, unless the holder of the deed of trust is the agent of the holder of the note. Without the agency relationship, the person holding only the note lacks the power to foreclose in the event of default. The person holding only the deed of trust will never experience default because only the holder of the note is entitled to payment of the underlying obligation. The mortgage loan becomes ineffectual when the note holder did not also hold the deed of trust.” [Citations omitted; emphasis added.]

MERS as straw man lacks standing to foreclose, but so does original lender, although it was a signatory to the deal. The lender lacks standing because title had to pass to the secured parties for the arrangement to legally qualify as a “security.” The lender has been paid in full and has no further legal interest in the claim. Only the securities holders have skin in the game; but they have no standing to foreclose, because they were not signatories to the original agreement. They cannot satisfy the basic requirement of contract law that a plaintiff suing on a written contract must produce a signed contract proving he is entitled to relief.

The Potential Impact of 60 Million Fatally Flawed Mortgages

The banks arranging these mortgage-backed securities have typically served as trustees for the investors. When the trustees could not present timely written proof of ownership entitling them to foreclose, they would in the past file “lost-note affidavits” with the court; and judges usually let these foreclosures proceed without objection. But in October 2007, an intrepid federal judge in Cleveland put a halt to the practice. U.S. District Court Judge Christopher Boyko ruled that Deutsche Bank had not filed the proper paperwork to establish its right to foreclose on fourteen homes it was suing to repossess as trustee. Judges in many other states then came out with similar rulings.

Following the Boyko decision, in December 2007 attorney Sean Olender suggested in an article in The San Francisco Chronicle that the real reason for the bailout schemes being proposed by then-Treasury Secretary Henry Paulson was not to keep strapped borrowers in their homes so much as to stave off a spate of lawsuits against the banks. Olender wrote:

“The sole goal of the [bailout schemes] is to prevent owners of mortgage-backed securities, many of them foreigners, from suing U.S. banks and forcing them to buy back worthless mortgage securities at face value – right now almost 10 times their market worth. The ticking time bomb in the U.S. banking system is not resetting subprime mortgage rates. The real problem is the contractual ability of investors in mortgage bonds to require banks to buy back the loans at face value if there was fraud in the origination process.

“. . . The catastrophic consequences of bond investors forcing originators to buy back loans at face value are beyond the current media discussion. The loans at issue dwarf the capital available at the largest U.S. banks combined, and investor lawsuits would raise stunning liability sufficient to cause even the largest U.S. banks to fail, resulting in massive taxpayer-funded bailouts of Fannie and Freddie, and even FDIC . . . .

“What would be prudent and logical is for the banks that sold this toxic waste to buy it back and for a lot of people to go to prison. If they knew about the fraud, they should have to buy the bonds back.”

Needless to say, however, the banks did not buy back their toxic waste, and no bank officials went to jail. As Olender predicted, in the fall of 2008, massive taxpayer-funded bailouts of Fannie and Freddie were pushed through by Henry Paulson, whose former firm Goldman Sachs was an active player in creating CDOs when he was at its helm as CEO. Paulson also hastily engineered the $85 billion bailout of insurer American International Group (AIG), a major counterparty to Goldmans’ massive holdings of CDOs. The insolvency of AIG was a huge crisis for Goldman, a principal beneficiary of the AIG bailout.

In a December 2007 New York Times article titled “The Long and Short of It at Goldman Sachs,” Ben Stein wrote:

“For decades now, . . . I have been receiving letters [warning] me about the dangers of a secret government running the world . . . . [T]he closest I have recently seen to such a world-running body would have to be a certain large investment bank, whose alums are routinely Treasury secretaries, high advisers to presidents, and occasionally a governor or United States senator.”

The pirates seem to have captured the ship, and until now there has been no one to stop them. But 60 million mortgages with fatal defects in title could give aggrieved homeowners and securities holders the crowbar they need to exert some serious leverage on Congress – serious enough perhaps even to pry the legislature loose from the powerful banking lobbies that now hold it in thrall.

by Ellen Brown
Ellen Brown developed her research skills as an attorney practicing civil litigation in Los Angeles. In Web of Debt, her latest book, she turns those skills to an analysis of the Federal Reserve and “the money trust.” She shows how this private cartel has usurped the power to create money from the people themselves, and how we the people can get it back. Her earlier books focused on the pharmaceutical cartel that gets its power from “the money trust.” Her eleven books include Forbidden Medicine, Nature’s Pharmacy (co-authored with Dr. Lynne Walker), and The Key to Ultimate Health (co-authored with Dr. Richard Hansen). Her websites are www.webofdebt.com and www.ellenbrown.com.

More questions on 9/11

Osama "dead or alive" bin Laden would rather lose his kidney than pass up the opportunity to celebrate the eighth anniversary of September 11, 2001, on the United States. And like clockwork, he resurfaced in an 11-minute, al-Sahab-produced audiotape last week (sorry, no video, just a still picture), where he states how a series of grievances had "pushed us to undertake the events of [September 11]".

But there may be no mobile dialysis machine operating in a mysterious cave somewhere in one of the Waziristan tribal areas of Pakistan after all. According to David Ray Griffin's new book, Osama bin Laden: Dead or Alive? and based on a Taliban leader's remarks at the time, the mellifluous Saudi jihadi died of kidney failure in Tora Bora on December 13, 2001. Problem is, by that time, according to local mujahideen, Bin Laden had already escaped across the mountains with a bunch of al-Qaeda diehards to Parachinar, in Pakistan, and then to a shadowy underworld.

A decoy? A ghost? The devil himself? Who cares? Bin Laden, the brand, is still very good for ("war on terror") business. All this with the Barack Obama administration insisting the US is fighting the elusive, seemingly eternal Taliban leader Mullah Omar and the Taliban plus al-Qaeda in Afghanistan, while General Stanley McChrystal - General David Petraeus' former top death squad operator in Iraq - insists there is no al-Qaeda in Afghanistan (but he wants up to 40,000 extra troops anyway).

Last week, Asia Times Online published Fifty Question on 9/11. The article stressed the questions were only a taste of the immense, mysterious 9/11 riddle. (Arguably the best 9/11 timeline on the net may be seen here.

Due to overwhelming reader response, here's a follow-up with 20 more questions - with a hat-tip to all who joined the debate.

1. In the first months of 2001, three years after Bin Laden's 1998 fatwa against the US, Mullah Omar wanted to "resolve or dissolve" the Osama-Taliban nexus in exchange for Washington maneuvering to lift United Nations sanctions. Would anyone from the first George W Bush administration confirm a solid Taliban offer? Kabir Mohabbat, a Houston-based, Paktia (Afghanistan)-born businessman also involved in the (failed) 1990s negotiation for the Turkmenistan-Afghanistan pipeline, and then named by Bush's National Security Council as a key Taliban contact, has sustained that was the case.

2. Eight names on the "original" Federal Bureau of Investigation (FBI) list of 19 Muslim hijackers happened to be found alive and living in different countries; the FBI has always sustained that the identity of the hijackers was established from DNA collected at all four sites - the World Trade Center (WTC), the Pentagon and the Shanksville, Pennsylvania, crash site. Would the FBI explain how is that remotely possible?

3. All four planes referenced in the official narrative have thousands of parts with a serial number, plus tail numbers. Any one of these would have been enough to identify the plane(s). How come all of these parts disintegrated or vaporized? Why was not a single one of them recovered and/or matched up with all the mass of data about these four flights?

4. How come cell phones miraculously find a signal and work properly at 10,000 meters?

5. How to explain the enormous surge in "option puts" on both United Airlines and American Airlines on September 10?

6. How come the passport of alleged hijacker Satam al Suqami (and not Mohammed Atta, as reported) was miraculously found amid massive World Trade Center debris - either by "police and FBI" or by "a passerby who gave it to the NYPD", according to different versions?

7.Why was a military grade of thermite - a super-explosive - found at all sample sites surrounding Ground Zero? A peer-reviewed, scientific journal analysis is here.

8. How come Barry Jennings, who worked for New York City's Housing Department, reported on 9/11 to ABC News how he heard an explosion on the 8th floor of WTC 7? Jennings happened to die just a few days before the release of the NIST report on the WTC 7 collapse. A great number of actual 9/11 witnesses also heard and saw explosions going off inside the Twin Towers long before their collapse. A montage of news reports about these explosions can be seen here.

9. Why did the BBC confirm live on air the collapse of the WTC 7 building - which was not even hit by any plane - no less than 23 minutes before it actually collapsed? In the BBC live report, the WTC7 building is shot still standing.

10. Why there has been no investigation of Dov Zakheim? He was a prominent member of the Project for the New American Century group, and chief executive officer of SPC - a company making systems for remote control of airplanes - for four years prior to 9/11. Six months before 9/11, he became supervisor of a group of Pentagon comptrollers responsible for tracking no less than $2.3 trillion missing from the Pentagon books; many of these comptrollers died on 9/11.

11. The "five dancing Israelis" question. How come Oded Ellner, Omer Marmari, Paul Kurzberg, Sivan Kurzberg and Yaron Shmuel had set up a video camera on top of their white van pointing at the Twin Towers even before they were hit? Later they were seen celebrating. The FBI established that two were Mossad agents and that their employer, Urban Moving Systems, was a front operation. The investigation about them was killed by the White House. After being deported from the US, they admitted on Israeli TV that they had been sent to New York to "document" the attacks. How about other reports of vans packed with tons of explosives intercepted on New York bridges?

12. How come two US employees of Odigo, an Israeli instant messaging company based in Herzliya, the headquarters of Mossad, received an SMS about an attack on the WTC two hours before the fact?

13. How come there was no investigation of ICTS International, owned by Ezra Harel and Menachem Atzmon, and crammed with former Israeli Shin Bet agents? This was the company responsible for airport security at Dulles, Logan and Newark airports on 9/11.

14. Why was there no full investigation of the circumstances related to how Larry Silverstein leased the WTC only seven weeks before 9/11 - as facilitated by New York Port Authority chairman Lewis Eisenberg? Silverstein over-insured the WTC against terrorism and made an astonishing profit.

15. Why were anthrax packages mailed to the only two US senators who voted against the Patriot Act?

16. Why did situation room director Deborah Loewer follow Bush to Florida on 9/11 - considering that's not part of her job description?

17. Where are the full tapes from the Pentagon's security cameras? The hole in the Pentagon may be the most glaring hole in the official narrative - as the destruction caused by a Boeing 757 was simply not compatible with the size of the hole. Why were no significant plane debris and remains of passengers ever found?

18. Why did the 9/11 Commission not consult reputed engineers and architects to show that in the real world, steel and concrete skyscrapers simply cannot dissolve into molten metal and fine powder in only 10 seconds after very localized and relatively low-temperature fires? Kerosene simply cannot melt steel.

19. Why did the 9/11 Commission not consult airline specialists who insist trainee pilots who had practiced on very light aircraft for a few weeks simply cannot land a jet on the ground floor of the Pentagon after allegedly slicing through half a dozen light poles and evading a series of trees, cars and overpasses?

20. How come no one investigated claims by the two co-chairs of the 9/11 Commission, Thomas Kean and Lee Hamilton, who wrote in the New York Times on January 2008 that the Central Intelligence Agency "failed to respond to our lawful requests for information about the 9/11 plot [and] obstructed our investigation?"

Pepe Escobar is the author of Globalistan: How the Globalized World is Dissolving into Liquid War (Nimble Books, 2007) and Red Zone Blues: a snapshot of Baghdad during the surge. His new book, just out, is Obama does Globalistan (Nimble Books, 2009).

By Pepe Escobar

(Copyright 2009 Asia Times Online (Holdings) Ltd. All rights reserved. Please contact us about sales, syndication and republishing.)

Is THIS how the bank bailout money is being used?

Check this link ......... http://bit.ly/16GSpe

GAO: AIG improving but may never fully repay gov't

WASHINGTON (AP) -- Despite some progress, congressional investigators say it's still too soon to judge whether efforts by American International Group Inc. to restructure its operations and pay back the government will prove successful.

The government has provided $182.3 billion to the insurance giant. The Government Accountability Office says that as of early September, AIG's outstanding balance of aid was $120.7 billion.

The GAO found "some progress in AIG's ability to repay the federal assistance." But improvement in the company's stability depends on its long-term health, market conditions and continued government support.

The report concludes that "the ultimate success of AIG's restructuring and repayment efforts remains uncertain."

BY JEANNINE AVERSA AP Economics Writer

(Copyright 2009 by The Associated Press. All Rights Reserved.)

Associated Press

Shocking Video Hillary Does NOT Want You To See 2 of 2

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Power Up

China's resource nationalism is on the rise as it hoards minerals essential for batteries, cell phones, computers, and the green revolution.

Mike Goldwater / Getty Images

China's Shanxi Province, one source of China's "rare-earth" metals, shows why developed countries like Australia and the United States gave up mining the crucial minerals.

For some countries, trade policy is the stuff of arcane rules and wonky bureaucracy. But for centuries in China, trade has been the biggest bugaboo of foreign affairs. Every Chinese knows about the moment their country was forcibly "opened" to the West: British merchants compelled Beijing to allow imports of opium—a baleful product that many Chinese nonetheless desired—in the 19th century. More recently, though, the tables have turned. China has come to possess a raft of things coveted by those same foreign powers: cheap labor, abundant capital, and, as it turns out, the world's greatest supply of so-called rare earths—metals essential for everything from hybrid cars to iPods to precision-guided weaponry.

Which is why this past weekend's Sino-U.S. row isn't just about lowly rubber and poultry. (On Friday, President Barack Obama decided to impose a tariff of up to 35 percent on Chinese tires for the next three years; in response, Beijing threatened to return the favor with possible tariffs on American auto parts and chicken meat.) A Chinese Foreign Ministry spokeswoman called the U.S. move a "grave" form of protectionism, but episodes like these also give nationalistic Chinese an excuse to demand that Beijing hoard those rare-earth metals. It is already doing so, and its own protectionism may end up reshaping the global economy.

You're not alone if you can't name any of these rare-earth minerals. Words like yttrium, holmium, lanthanum, and thulium don't exactly roll off the tongue. All you have to know is that China has a near stranglehold on such ores, currently producing 95 percent of the world's supply and claiming about 60 percent of known reserves within its borders, mostly in the region of Inner Mongolia. The region's vice governor, Zhao Shuanglian, declared in early September that China planned to streamline the domestic rare-earth industry, impose export controls, and establish a national reserve mechanism. "We're not taking a short-term view of just trying to prop up rare-earth prices," he maintained.

Over the past decade, China has honed its competitive edge in producing rare earths, thanks to cheap labor, improved quality, and economies of scale. Extraction is a dirty job—in some cases crushed ore is doused with hot sulfuric acid—and therefore requires costly environmental-protection measures in developed countries. The combination of these factors, and a flood of cheap Chinese ores in the '90s, persuaded many mining enterprises in other countries with rare-earth reserves—from the United States to Russia—to reduce or even cease production. The biggest U.S. rare-earth mine at Mountain Pass, Calif., was closed, for instance, though it's now being revived by Molycorp Minerals.

Problem is, it takes up to a decade to develop a rare-earth mine on a commercial scale. Yet these 15 metallic elements happen to be essential in many emerging green technologies. They go into electric vehicles, into all the methods yet conceived for reducing carbon monoxide and microparticles in engine exhaust, and into high-performance metallurgy behind wind gearboxes. To name just one use that is bound to grow: rare earths are a key component (reportedly at least 12 kilos' worth per battery) in Toyota's famous green car, the Prius. Jack Lifton, a freelance analyst who works on rare-earths, estimates that global trade in these metals is roughly $2 billion annually, but the total market for the products that depend on them is up to $100 billion per year.

But just as these elements are becoming more essential, China is undertaking a new bout of resource nationalism. For some time, intellectuals representing what they call "patriotic" Chinese (that is, those who are hawkish about defending their country's national interests and skeptical of Western intentions) have demanded that their government play hardball in international trade–including rare-earth exports—and the decibel level has risen significantly since Western excesses triggered the global financial crisis almost exactly a year ago.

The government has fallen in line. China has already moved dramatically to curb export quotas for rare earths: last month a draft report by China's Ministry of Industry and Information Technology called for a total ban on shipments of terbium (a key ingredient in low-energy lightbulbs), dysprosium (used in the nuclear industry and lasers), yttrium (present in LEDs and TVs), thulium (which enhances medical imaging), and lutetium (used in alloys and polymerization). Other minerals, such as neodymium (crucial for hard-disk drives and wind turbines), europium (used in lasers), cerium (which reduces carbon monoxide in engine exhaust), and lanthanum (key for many hybrid and electric-car batteries), would face a combined export quota of 35,000 tons annually—woefully insufficient to fill global needs. World demand this year is an estimated 124,000 tons, and is expected to double by 2015.

Beijing officials say their goal is not to squirrel away the ores for themselves but rather to persuade manufacturers to build plants in China if they want to use Chinese-produced rare earths in manufacturing. But jitters have already swept through the Japanese government, which has drafted a "Strategy for Ensuring Stable Supplies of Rare Metals" that calls for stockpiling and securing supplies abroad. Japanese authorities are especially worried because their industries' hunger for rare earths is skyrocketing—it was 40,000 tons in 2008, meaning Tokyo's demand alone exceeded China's new export quota. Already, some Japanese users are compelled to rely on smuggled or illegally mined rare earths.

Other countries—namely Australia, the United States, Canada, and South Africa—are redoubling efforts to exploit their own reserves of rare earths. Molycorp (the owner of the Mountain Pass mine in California) and two Australian mining firms are slated to ramp up rare-earth production to some 50,000 tons by middecade. But these alternative producers cannot reach optimum capacity right away, so a crunch is inevitable. Among China's trading partners, there's some talk of invoking WTO commitments to try to prod the regime into more generous exports. But it'll be hard to force Beijing into magnanimity when it claims domestic supplies are needed just to meet internal demand. Worried about their own shortfalls, Chinese firms have scrambled to hook up with Australian rare-earth producers. One Chinese company doubled its stake (to 25 percent) in Arafura Resources Ltd., and another is awaiting Canberra's approval of its bid for majority share of Lynas Corp. Ltd.

In other words, rare earths are the sword of Damocles hanging over Beijing's trading partners. If and when they anger China, the People's Republic can cut them off on these essential elements. And nationalistic citizens will surely call on their government to play that card if China finds itself in a trade war like the one it is now spiraling toward with the United States. The effect would be felt across the developed world desperate for the technologies these metals enable. Tension would beset China's ties with the U.S. and Japan. And the long-term economic repercussions would affect the renewable-energy initiatives and defense industries of tomorrow—not merely the tires, car parts, and chickens at the heart of today's dispute.

By Melinda Liu | Newsweek Web Exclusive

Exporting Empty Containers Declining. Consumer Credit is contracting at Rapid Pace. Is the Consumer Treadmill Showing Signs of Exhaustion?

If you know where to look, the American consumer is not buying into the U.S. Treasury and Federal Reserve great debt experiment. Port traffic is still declining and indicators show no sign of a major resurgence. If you look at the recent weak outbound pace of containers that are empty what we can expect is continued weak demand for imported consumer goods. Given that most of our goods are imported, this is a bad sign for our local economy but also global economies that produce those goods.

It is rather startling that so little focus has been given to job creation. 21 full months into the recession and there is still no concerted effort on stemming the massive unemployment problem. This issue is directly tied into the weak consumer demand. The American consumer is not in a spending mood. We can expand the access of credit available to banks but the access to credit is limited if they have no viable customers to lend to. Apparently banks now realize that giving money to those with no income history or capacity to pay debt back was a bad move. So why are they asking for so much liquidity even though they refuse to lend? The answer unfortunately is that they are borrowing liquidity to patch up their own problems. The American consumer is on their own.

If we look at the port traffic again, we show no immediate sign of consumer demand:

Source: Federal Reserve Board, Atlanta

We’ve been in negative territory on a year over year basis since early 2007, before the official start of the recession. Now this is an interesting data point. We should see an increase in traffic of empty cargo containers if demand picks up. Why? These containers are shipping off to pick up consumer goods. It cost money to move ships back and forth from one continent to another and without any demand, the containers just sit at port.

In what is a perfect example of this idle demand, we had some stunning pictures of “ghost fleets” of ships that are virtually parked in the middle of the sea waiting for consumer demand:

“(DailyMail) Here, on a sleepy stretch of shoreline at the far end of Asia, is surely the biggest and most secretive gathering of ships in maritime history. Their numbers are equivalent to the entire British and American navies combined; their tonnage is far greater. Container ships, bulk carriers, oil tankers - all should be steaming fully laden between China, Britain, Europe and the US, stocking camera shops, PC Worlds and Argos depots ahead of the retail pandemonium of 2009. But their water has been stolen.

They are a powerful and tangible representation of the hurricanes that have been wrought by the global economic crisis; an iron curtain drawn along the coastline of the southern edge of Malaysia’s rural Johor state, 50 miles east of Singapore harbour.

It is so far off‑ the beaten track that nobody ever really comes close, which is why these ships are here. The world’s ship owners and government economists would prefer you not to see this symbol of the depths of the plague still crippling the world’s economies.”

Logic would tell you that these ships are sitting idly by because of the decrease in consumer demand. The chart above showing a crash in outbound empty cargo containers should tell you that Americans are showing no immediate appetite for consumption. Given that the U.S. consumer is 70 percent of the economy, it is hard to understand where the stock market rally is coming from.

The U.S. consumer has seen a rise of $2.2 trillion in their net worth over the second quarter. This is still off by $12 trillion from the peak. And total consumer credit is still declining:

So the consumer is having less access to debt and has a weaker appetite for consumption. Yet the market is rallying? One reason could be the massive slam in the U.S. dollar since Q1 of 2009:

What a coincidence that during this time of a 50 percent consumer absent market rally that the U.S. dollar has fallen 15 percent. Much of this rally is because of a weaker dollar but also, massive injections of liquidity into the banking system. Unable to lend to consumers, many Wall Street casinos have decided it would be a better risk to gamble in stocks than to give out loans to American consumers. In the end, the bailouts were essentially a credit line extension to the biggest gambler in the casino who hit a major losing streak and is expecting to double down through the night to recover the losses. Chasing bad money with good is like seeing empty ships carrying no cargo and expecting that to be a sign of healthy consumer demand.

RPT-UPDATE 1-China weighs purchase of IMF gold -report

* China could consider IMF's sale of 403 tonnes of gold

* China looking to diversify, has 1,054 tonnes already

* Market value of IMF sale around $13 billion (Adds comments of central bank officials, paragraphs 7- 15)

BEIJING, Sept 21 (Reuters) - China is considering buying gold being offered for sale by the International Monetary Fund, Market News International said on Monday, citing two unnamed government sources, but the report could not immediately be confirmed.

"China will consider buying if the price is right and the return is relatively high," MNI quoted one of the government sources as saying.

Gold XAU=, which had dipped just below $1,000 an ounce, rebounded to $1,003.45 after the report. That would put the market value of the 403.3 tonnes on offer from the IMF at close to $13 billion.

"There was a small reaction to the news that China may discuss its gold plans at the G20, it recovered a little, but overall the market isn't overly concerned, not yet anyway," a Europe-based trader said.

China, the world's biggest producer and buyer of gold, revealed earlier this year that it had lifted its own stocks of gold to 1,054 tonnes from 400 tonnes when it last reported its holdings in 2003.

The IMF formally endorsed a plan on Friday to sell 403.3 tonnes of gold, one eighth of its holdings, to central banks or in the gold market. [ID:nN18272627]

Two Chinese central bank officials not directly involved in the issue told Reuters China should consider buying the gold being put up for sale by the IMF, but only at a big discount.

The officials, neither of whom had direct knowledge of the gold strategy, said they were expressing personal opinions.

"China only has about 1,000 tonnes of gold reserves and the investments in other assets are performing not very well," said one official, who declined to be named.

"I think we should build up more gold with foreign reserves, but when to buy is the key. It's a good idea if China can buy the gold from IMF at prices well below market level."

The official said he had no idea if the sale would be on the agenda for the G20 summit.

"I personally think China should buy the IMF gold. It will help China to diversify its reserve assets," the second official said. "For the purpose of reserve safety, it is also good to increase the proportion of gold by a suitable amount."

The estimated $13 billion cost of the is small beer for the Chinese exchequer, with foreign exchange reserves of more than $2 trillion. If it decided to buy the gold, China would be likely to seek a discount for the bulk purchase, since a market sale would put heavy pressure on the price.

The IMF has said it will try to sell the gold, one-eighth of its holdings, to central banks. If there are no takers, it could sell to the market, which saw world gold demand of 3,880 tonnes last year, according to World Gold Council figures.

The huge increase in reserves that China announced earlier this year had had little impact on the market because the gold was accumulated over a long period and mainly through direct purchases from Chinese producers. (Reporting by Eadie Chen and Tom Miles; Editing by Clarence Fernandez)