Saturday, February 6, 2010
Capability of the People’s Republic of China to Conduct Cyber Warfare and Computer Network Exploitation
The Greek debt crisis has spread to Spain and Portugal in a dangerous escalation as global markets test whether Europe is willing to shore up monetary union with muscle rather than mere words.
Julian Callow from Barclays Capital said the EU may to need to invoke emergency treaty powers under Article 122 to halt the contagion, issuing an EU guarantee for Greek debt. “If not contained, this could result in a `Lehman-style’ tsunami spreading across much of the EU.”
Credit default swaps (CDS) measuring bankruptcy risk on Portuguese debt surged 28 basis points on Thursday to a record 222 on reports that Jose Socrates was about to resign as prime minister after failing to secure enough votes in parliament to carry out austerity measures.
Parliament minister Jorge Lacao said the political dispute has raised fears that the country is no longer governable. “What is at stake is the credibility of the Portuguese state,” he said.
Portugal has been in political crisis since the Maoist-Trotskyist Bloco won 10pc of the vote last year. This is rapidly turning into a market crisis as well as investors digest a revised budget deficit of 9.3pc of GDP for 2009, much higher than thought. A €500m debt auction failed on Wednesday. The yield spread on 10-year Portuguese bonds has risen to 155 basis points over German bunds.
Daniel Gross from the Centre for European Policy Studies said Portgual and Greece need to cut consumption by 10pc to clean house, but such draconian measures risk street protests. “This is what is making the markets so nervous,” he said.
In Spain, default insurance surged 16 basis points after Nobel economist Paul Krugman said that “the biggest trouble spot isn’t Greece, it’s Spain”. He blamed EMU’s one-size-fits-all monetary system, which has left the country with no defence against an adverse shock. The Madrid’s IBEX index fell 6pc.
Finance minister Elena Salgado said Professor Krugman did not “understand” the eurozone, but reserved her full wrath for the EU economics commissioner, Joaquin Almunia, who helped trigger the panic flight from Iberian debt by blurting out that Spain and Portugal were in much the same mess as Greece.
Mrs Salgado called the comparison simplistic and imprudent. “In Spain we have time for measures to overcome the crisis,” she said. It is precisely this assumption that is now in doubt. The budget deficit exploded to 11.4pc last year, yet the economy is still contracting.
Jacques Cailloux, Europe economist at RBS, said markets want the EU to spell out exactly how it is going to shore up Club Med states. “They are working on a different time-horizon from the EU. They don’t think words are enough: they want action now. They are basically testing the solidarity of monetary union. That is why contagion risk is growing,” he said.
“In my view they underestimate the political cohesion of the EMU Project. What the Commission did this week in calling for surveillance of Greece has never been done before,” he said.
Mr Callow of Barclays said EU leaders will come to the rescue in the end, but Germany has yet to blink in this game of “brinkmanship”. The core issue is that EMU’s credit bubble has left southern Europe with huge foreign liabilities: Spain at 91pc of GDP (€950bn); Portugal 108pc (€177bn). This compares with 87pc for Greece (€208bn). By this gauge, Iberian imbalances are worse than those of Greece, and the sums are far greater. The danger is that foreign creditors will cut off funding, setting off an internal EMU version of the Asian financial crisis in 1998.
Jean-Claude Trichet, head of the European Central Bank, gave no hint yesterday that Frankfurt will bend to help these countries, either through loans or a more subtle form of bail-out through looser monetary policy or lax rules on collateral. The ultra-hawkish ECB has instead let the M3 money supply contract over recent months.
Mr Trichet said euro members drew down their benefits in advance -- "ex ante" -- when they joined EMU and enjoyed "very easy financing" for their current account deficits. They cannot expect "ex post" help if they get into trouble later. These are the rules of the club.
Hasbro has unveiled the design of the new 75th anniversary edition of their classic board game, Monopoly, set to hit stores in fall of 2010. "Monopoly: Revolution Edition" is slick and round instead of dull and square, with debit cards and an ATM instead of paper money and a banker, clear plastic representations of the classic tokens (bye-bye, little boot!), and clips of popular songs (like Rihanna’s "Umbrella," Daniel Powter’s "Bad Day," and Beyonce's "Crazy in Love") that play after certain actions.
This is not the first game to get a modern reboot (there’s an update to the classic Trivial Pursuit, and Scrabble got a face-lift for its 60th anniversary), but Monopoly’s changes will undoubtedly appeal to the 21st century's techie youngsters. For one thing, the adjusted-for-inflation prizes are more impressive.
Players can collect $2 million dollars for passing “Go” instead of a mere $200 — practically what the average kid gets for losing a tooth these days. But it's bound to annoy die-hard fans of the comforting classic version, who might send it directly to jail come next fall. (At least they can take comfort in the fact that Monopoly: Revolution retains the classic Atlantic City-based street system.)
So far, the Internet echo chamber's biggest criticism focuses on the new version's tight security. It seems that when it comes to Monopoly, half the fun comes from cheating by stealing from the till when nobody's looking, a loophole the new version closes with its fancy electronic banking. (However, an electronic banking version has actually been on the market for years.) Surely our nation's tech-savvy youth will somehow find a way to game the "Monopoly" system, assuming they can be pried away from screens long enough to start a game.
How do fish get caught? They open their mouth. How do investors get ensnared or misled? They believe in non-existent phenomenons like a “jobless recovery.”
Surprising as it is, for nearly a year, investors have shrugged off mounting jobless claims and rising unemployment as an ingredient that is not really required for an economic recovery.
Yesterday’s (2-4-10) announcement by the Department of Labor that claims for unemployment benefits rose by 8,000 to 480,000 sent stocks spiraling.
The Dow Jones Industrial Average (DJI: ^DJI), S&P 500 (SNP: ^GSPC), and Nasdaq Composite (Nasdaq: ^IXIC) lost about 3% each, marking the first time in months that concerns over unemployment were raising suspicion.
Does that mean that the trend of the “new bull market” in stocks has changed? Or are we in for further declines?
The real numbers
Today’s headline numbers report was that the unemployment numbers, "surprisingly fell to a five-month low of 9.7%," according to today’s government report.
In reality, unemployment spiked to an all-time high of 18%. Yes, 18%! This is the official number reported by the Bureau of Labor Statistics (BLS).
The BLS publishes different sets of data on a regular basis. The main focus tends to be on the U-3 unemployment rate (currently 9.7%, seasonally adjusted).
U-3 is the “official” unemployment rate and illustrates total unemployed persons as a percentage of the civilian labor force. U-4 is another category that includes unemployed workers plus discouraged workers. A discouraged worker is someone who’s available to work but has stopped actively seeking for work.
U-5 unemployment includes the number of unemployed workers, plus discouraged workers, plus marginally attached workers. A marginally attached worker is someone who is able and willing to work but is not actively seeking work.
U-6 is as close to the real unemployment figure as government reporting gets. This number includes unemployed workers, plus discouraged workers, plus marginally attached workers, plus workers that are forced to work part-time because they are not able to find a full-time job. Put another way, it's the most realistic picture of today's job market as any.
According to the Bureau of Labor Statistics, the number of U-6 unemployed workers is 18% (not seasonally adjusted – 16.5%). This is the highest number of record.
Keep in mind that neither of the above categories encompasses another important element of the labor force; “unemployed self-employed" workers. If you’re a handyman or contractor next door, or a small business owner who can’t secure work, you are not included! Adding these folks to the mix would put the real unemployment number above 20%!
No one is spared
Unfortunately, job cuts have affected every industry sector. Job cuts in the technology sector (NYSEArca: XLK) have reached the highest level in four years.
Even WalMart, a low-price leader and a virtually recession proof outfit, continues to cut jobs. This trend has spilled over and continues in the entire consumer staples (NYSEArca: XLP) and consumer discretionary sector (NYSEArca: XLY). Ericsson and Pfizer are just a few companies eliminating employees at a record pace.
According to a report by global outplacement firm Challenger, Gray & Christmas, U.S. employers began the year 2010 by announcing 71,482 planned job cuts, the highest tally in five months. The report, however, said that the increase in layoffs should not be seen as a sign of “recession relapse.”
How do you define a recession relapse? How do you even figure a recession is over?
There has been a huge disconnect between what’s happening on Wall Street and on Main Street. Since March 2009, the U.S. stock market (NYSEArca: TMW) has been steadily rising, as has unemployment. You’d expect stock prices to go up and unemployment claims to go down, but that hasn’t been the case.
When putting the pieces together, it helps to understand why stocks have been able to stage a relentless ten-month rally.
From October 2007 to March 2009, the Dow Jones (NYSEArca: DIA), S&P 500 (NYSEArca: SPY) and secondary indexes like the MidCap SPDRs (NYSEArca: MDY) and small caps (NYSEArca: IWM) have lost more than half their value. Financials (NYSEArca: XLF) lost over three quarters of the market capitalization.
In March, investor pessimism has reached an extreme of historic proportions. In fact, on March 9th, the Wall Street Journal made a case for Dow 5,000 and Goldman Sachs slashed earnings growth by over 37%.
Exactly at that time, the ETF Profit Strategy Newsletter send out a Trend Change Alert (on March 2, 2009) predicting the biggest rally since the October 2007 all-time highs with a upper target range of Dow 10,000. For 18 months (10-2007 – 3-2009) investors had resisted their urge to buy. This was about to change.
I want what I want
It was this pent-up urge to buy that sent stocks higher. No bad news could prevent the market from rising. Investors simply wanted to own stocks again and recapture some of their hefty losses.
Just as extreme pessimism marked the bottom of the down-turn, the ETF Profit Strategy Newsletter predicted that extreme optimism would make a top. In fact, the late stages of this rally could be identified by a “the worst is over” sentiment.
No progress but much change
Throughout the fourth quarter of 2009 stocks moved higher. Even though the major indexes gained only a few percentage points from October – January, the resilience against any bad news had transformed a record number of investors into long-term bulls.
By early January, investor optimism had reached extremes not seen since 1987, 2000 and 2007 (depending on the data used). For the first time investors had more money invested in stocks than at the height of the technology boom in early 2000.
For contrarian investors, this was a huge red flag. On January 15, 2010, the ETF Profit Strategy Newsletter’s Market Meter stated the following: “Dow 10,710 and S&P 1,148 might very well mark the high water mark for 2010. A major trend reversal at current prices would be consistent with all our indicators.”
The market staged one more minor high two trading days later and has fallen precipitously since. Recommended ETFs like the Direxion Daily Financial Bear 3x Shares (NYSEArca: FAZ), UltraShort QQQ ProShares (NYSEArca: QID), and UltraShort Financial ProShares (NYSEArca: SKF) have gained 10%, 15% and more.
The one constant
On a daily basis, economic news comes and goes. Some will influence the market, others won’t. If you’ve been following news reports and corresponding stock prices, you will have noticed that the correlation between good news and higher prices or bad news and lower prices is less than obvious.
What remains constant, however, is the pattern of behavior investors have established for hundreds of years. Extremes in sentiment which invariably result in extreme reactions. This is called the herding effect and is rather predictable.
Crowd behavior of investors is largely driven by perception. The perception that stocks will continue to rise is starting to change, if it hasn’t already. Soon investors will refocus on valuations to see if a stock is worth its price tag. It was the return to due diligence that pummeled stock prices throughout 2008.
Interestingly, the 2008 declines were also preceded by extreme optimism and a feeling that stocks have nowhere to go but up.
Historically, stocks are grossly overvalued and due for another major correction. How major?
The ETF Profit Strategy Newsletter includes a detailed short, mid and long-term forecast along with a target-range for the ultimate market bottom based on historically indisputable evidence.
How did we end up with so much short-term debt? Like most entities that have far too much debt - whether subprime borrowers, GM, Fannie, or GE - the U.S. Treasury has tried to minimize its interest burden by borrowing for short durations and then "rolling over" the loans when they come due. As they say on Wall Street, "a rolling debt collects no moss." What they mean is, as long as you can extend the debt, you have no problem. Unfortunately, that leads folks to take on ever greater amounts of debt... at ever shorter durations... at ever lower interest rates. Sooner or later, the creditors wake up and ask themselves: What are the chances I will ever actually be repaid? And that's when the trouble starts. Interest rates go up dramatically. Funding costs soar. The party is over. Bankruptcy is next.
When governments go bankrupt it's called "a default." Currency speculators figured out how to accurately predict when a country would default. Two well-known economists - Alan Greenspan and Pablo Guidotti - published the secret formula in a 1999 academic paper. That's why the formula is called the Greenspan-Guidotti rule. The rule states: To avoid a default, countries should maintain hard currency reserves equal to at least 100% of their short-term foreign debt maturities. The world's largest money management firm, PIMCO, explains the rule this way: "The minimum benchmark of reserves equal to at least 100% of short-term external debt is known as the Greenspan-Guidotti rule. Greenspan-Guidotti is perhaps the single concept of reserve adequacy that has the most adherents and empirical support."
The principle behind the rule is simple. If you can't pay off all of your foreign debts in the next 12 months, you're a terrible credit risk. Speculators are going to target your bonds and your currency, making it impossible to refinance your debts. A default is assured.
So how does America rank on the Greenspan-Guidotti scale? It's a guaranteed default. The U.S. holds gold, oil, and foreign currency in reserve. The U.S. has 8,133.5 metric tonnes of gold (it is the world's largest holder). That's 16,267,000 pounds. At current dollar values, it's worth around $300 billion. The U.S. strategic petroleum reserve shows a current total position of 725 million barrels. At current dollar prices, that's roughly $58 billion worth of oil. And according to the IMF, the U.S. has $136 billion in foreign currency reserves. So altogether... that's around $500 billion of reserves. Our short-term foreign debts are far bigger.
According to the U.S. Treasury, $2 trillion worth of debt will mature in the next 12 months. So looking only at short-term debt, we know the Treasury will have to finance at least $2 trillion worth of maturing debt in the next 12 months. That might not cause a crisis if we were still funding our national debt internally. But since 1985, we've been a net debtor to the world. Today, foreigners own 44% of all our debts, which means we owe foreign creditors at least $880 billion in the next 12 months - an amount far larger than our reserves.
Keep in mind, this only covers our existing debts. The Office of Management and Budget is predicting a $1.5 trillion budget deficit over the next year. That puts our total funding requirements on the order of $3.5 trillion over the next 12 months.
So... where will the money come from? Total domestic savings in the U.S. are only around $600 billion annually. Even if we all put every penny of our savings into U.S. Treasury debt, we're still going to come up nearly $3 trillion short. That's an annual funding requirement equal to roughly 40% of GDP. Where is the money going to come from? From our foreign creditors? Not according to Greenspan-Guidotti. And not according to the Indian or the Russian central bank, which have stopped buying Treasury bills and begun to buy enormous amounts of gold. The Indians bought 200 metric tonnes this month. Sources in Russia say the central bank there will double its gold reserves.
So where will the money come from? The printing press. The Federal Reserve has already monetized nearly $2 trillion worth of Treasury debt and mortgage debt. This weakens the value of the dollar and devalues our existing Treasury bonds. Sooner or later, our creditors will face a stark choice: Hold our bonds and continue to see the value diminish slowly, or try to escape to gold and see the value of their U.S. bonds plummet.
One thing they're not going to do is buy more of our debt. Which central banks will abandon the dollar next? Brazil, Korea, and Chile. These are the three largest central banks that own the least amount of gold. None own even 1% of their total reserves in gold.
I examined these issues in much greater detail in the most recent issue of my newsletter, Porter Stansberry's Investment Advisory, which we published last Friday. Coincidentally, the New York Times repeated our warnings - nearly word for word - in its paper today. (They didn't mention Greenspan-Guidotti, however... It's a real secret of international speculators.)
Crux Note: The S&A Digest comes free with a subscription to Porter Stansberry's Investment Advisory. Porter says his latest issue is the most important he's ever written. If you don't act right now to protect yourself from the dollar, he thinks the odds are very high you'll be wiped out over the next 12 months. To learn more, click here.
Tax receipts miss for a 16th month despite adjusted estimates
Groundhog Day may have already passed, but it doesn't feel like it in Gov. Mitch
This time, Indiana's January tax receipts were $74.8 million less than predicted.
"It missed again," Daniels said.
Despite a new revenue forecast issued in December -- one in which Daniels ordered economists to take an even more conservative approach -- the state's receipts still fell short.
In fact, the only encouragement was that the shortfall wasn't as steep as some under the previous forecast -- such as the miss of more than $162 million in September.
"Well, the leakage is less than it has been," Daniels said. "But there's no candy-coating this. It reflects an ongoing weakness in the overall economy of this country."
There was one glimmer of good news: The state's sales
January's revenue reflects tax receipts from the holiday shopping season, and those were almost not as bad as last year. Almost.
The $573 million in sales tax for January was only 1.3 percent below last year, while total revenue lags 7 percent from 2009.
"We're just going to have to keep taking this month by month, and we cannot say for certain that the revenues will begin to match the forecast," Daniels said. "If there's any good news we find in this report, it is that sales taxes -- our single biggest source of revenue -- have begun to catch up to the previous year."The governor already has ordered several rounds of budget cuts, including a 6 percent cut to public universities and a 3 percent reduction to K-12 education funding. Assuming Indiana's revenues stay on pace with the current forecast -- a big if -- the state is on pace to spend all of its $1 billion in reserves by the end of the budget cycle in June 2011.
Daniels has made clear that tax increases and operating in the red are not options, so if revenue continues to miss projections, more budget cuts will be on the way.For this fiscal year alone, which started July 1, the state has collected at least $550 million less than expected.
Daniels did take the opportunity to push for the General Assembly to pass measures his administration has proposed to save more money.
Topping the list is a proposal to merge administration of the Public Employees Retirement Fund and the Teachers Retirement Fund, a move his administration has said would save $50 million per year. Daniels also has pitched a plan to siphon money from some non-essential, dedicated funds that his budget agency has determined have more cash than they need."This underscores, yet again, how essential it is that the legislature help us to control spending," Daniels said, "and that we be as careful as we possibly can be until we again see revenue that allows us to pay for what we'd all like to pay for."
COLUMBUS - Ohio's books are back in the red.
Ms. Sabety said collections had been close to their target for the first six months.
As U.S. Intelligence officials claim that Al-Qaeda will attack the U.S. within the next few months ~ please review BBC's 2004 video The Power Of Nightmares which reveals how the Al-Qaeda illusion was originally created by the Neo Cons and how the War on Terror is an ongoing campaign of fear mongering to politically justify the gargantuan Military-Industrial complex : Allen L Roland
I chuckled and smiled knowingly when I heard that top U.S. Intelligence officials recently predicted that an attempted Al Qaeda attack in the United States in the next three to six months was all but "certain". http://snipurl.com/u9kgl
Of course, it should be obvious. The Patriot Act is now up for renewal in Congress as certain provisions are set to expire this February. And as is typical, Congress is once again being fear-mongered into voting for it, along with what the ACLU says is even more freedom-curtailing provisions than before.
I immediately thought of BBC's incredible documentary The Power Of Nightmares which was broadcast on November 3, 2004 and is still more than relevant today.
Mike Conley's transcript says it all ~ " Increasingly, politicians are seen simply as managers of public life. But now, they have discovered a new role that restores their power and authority. Instead of delivering dreams, politicians now promise to protect us from nightmares. They say that they will rescue us from dreadful dangers that we cannot see and do not understand. And the greatest danger of all is international terrorism. A powerful and sinister network, with sleeper cells in countries across the world. A threat that needs to be fought by a war on terror. But much of this threat is a fantasy, which has been exaggerated and distorted by politicians. It's a dark illusion that has spread unquestioned through governments around the world, the security services, and the international media."
Watch part three ~ it's about 59 minutes but well worth the time as you again watch the Neo-cons hard at work. That includes the Prince of darkness Richard Pearle, the sleazy Paul Wolfowitz, the arrogant Donald Rumsfeld, Darth Vader Cheney and their deceitful mouthpiece George W Bush ~ as they spin Al-Qaeda and the War on Terror into a world wide threat while the main stream media, politicians and America willingly swallow this illusion.
And believe me, it's still going on ! John Mueller of Ohio State demonstrated years ago in a book entitled Overblown: How Politicians and the Terrorism Industry Inflate National Security Threats and Why We Believe Them ~ The extent to which "our reaction against terrorism has caused more harm than the threat warrants ~ not just to civil liberties, not just to the economy, but even to human lives." http://www.scribd.com/doc/15892315/Mueller-Overblown-2006-Synopsis
The Power of Nightmares definitively explains how the illusion was created and who really benefits from it. ( Part Three)http://www.informationclearinghouse.info/video1040.htm
Allen L Roland http://blogs.salon.com/0002255/2010/02/05.html
Allen L Roland is a practicing psychotherapist, author and lecturer who also shares a daily political and social commentary on his weblog and website allenroland.com He also guest hosts a monthly national radio show TRUTHTALK on www.conscioustalk.net
Cartoon courtesy of Chuck Shacochis
Former porn star Veronica Daniels, aka Joslyn James, has lashed out at a Canadian company for making a set of golf balls featuring images of Tiger Woods' alleged mistresses.
At news conference in Los Angeles Daniels, 39, said: "I have come forward today because I feel that it is wrong for a golf ball to have my picture on it, because golfers hit their balls with a lot of force."
"As a victim of violence myself, it bothered me to think that someone would be standing with a dangerous club hitting balls with my face on them," she said.
"I don't think that Tiger Woods would want my picture on a golf ball and I know that I don't."
Ms Daniels lawyer said: "We have pointed out that encouraging golfers to use clubs to hit a woman's face that is portrayed on a golf ball is a dangerous and reprehensible act because it encourages violence against women."
Creator Mike Caldwell, 63, owner of Creative Classics, said the claims were frivolous and the allegations have "no basis at all."
Caldwell said he has been swamped with orders for the collection - claiming to have sold $40,000 worth of balls in three days.
"It's been crazy. Over 2,000 people from 17 countries have placed orders. One order from Japan was for $15,000!"
Caldwell sells a set of 12 for $44.95 and a 'display' set for $50.
"Those are for the person who wants to put their balls on the mantel," he said.
International Criminal Court complaint filed against Bush, Cheney, Rumsfeld, Tenet, Rice and Gonzales
Request for international arrest warrants
A leading US professor of law has filed a complaint with the International Criminal Court prosecutor against former US President George W. Bush and a number of his senior lieutenants alleging crimes against humanity for their policy and practice of “extraordinary rendition” and requesting that the ICC prosecutor obtain international arrest warrants against Mr Bush and his co-accused.
Professor Francis A. Boyle of the University of Illinois College of Law in Champaign, USA, has filed a complaint with the prosecutor for the International Criminal Court (ICC) in The Hague against US citizens George W. Bush, Richard Cheney, Donald Rumsfeld, George Tenet, Condoleezza Rice and Alberto Gonzales (the “Accused”) for their criminal policy and practice of “extraordinary rendition” perpetrated upon about 100 human beings.
“Extraordinary rendition” is a euphemism for the enforced disappearance of persons and their consequent torture. This criminal policy and practice by the Accused constitutes crimes against humanity in violation of the Rome Statute establishing the ICC.
The United States is not a party to the Rome Statute. Nevertheless, the Accused have ordered and been responsible for the commission of actions considered as crimes under the ICC statute within the respective territories of many ICC member states, including several in Europe. Consequently, the ICC has jurisdiction to prosecute the Accused for their ICC statutory crimes under Rome Statute Article 12(2)(a) that affords the ICC jurisdiction to prosecute for ICC statutory crimes committed in ICC member states.
The complaint requests:
- That the ICC prosecutor open an investigation of the Accused on his own accord under Rome Statute article 15(1); and
- That the ICC Prosecutor also formally “submit to the [ICC] Pre-Trial Chamber a request for authorization of an investigation” of the Accused under Rome Statute Article 15(3).
For similar reasons, the highest level officials of the Obama administration risk the filing of a follow-up complaint with the ICC if they do not immediately terminate the Accused’s criminal policy and practice of “extraordinary rendition, which the Obama administration has continued to implement.
The complaint concludes with a request that the ICC prosecutor obtain international arrest warrants for the Accused from the ICC in accordance with Rome Statute articles 58(1)(a), 58(1)(b)(i), 58(1)(b)(ii), and 58(1)(b)(iii).
Please contacting the ICC prosecutor by letter, fax or email – contact details below – to demonstrate your support for this complaint.
The Honourable Luis Moreno-Ocampo
Office of the Prosecutor
International Criminal Court
Post Office Box 19519
2500 CM, The Hague
Fax No.: 31-70-515-8555
A copy of the submission to the ICC prosecutor is below and is also available here.
Previous Russell Lecturers have included E.P. Thompson, Elena Bonner, Edward Said, Ramsey Clark, Nobel Peace Prize Winner Joseph Rotblat, Johan Galtung and Noam Chomsky.
Professor Boyle teaches international law at the University of Illinois, Champaign and is author of, inter alia, The Future of International Law and American Foreign Policy, Foundations of World Order, The Criminality of Nuclear Deterrence, Palestine, Palestinians and International Law, Destroying World Order, Biowarfare and Terrorism and Tackling America’s Toughest Questions. He holds a Doctor of Law Magna Cum Laude as well as a PhD in Political Science, both from Harvard University.
Representatives from 24 central banks and monetary authorities including the US Federal Reserve and European Central Bank landed in Sydney to meet tomorrow at a secret location, the Herald Sun reports.
Organised by the Bank for International Settlements last year, the two-day talks are shrouded in secrecy with high-level security believed to have been invoked by law enforcement agencies.
Speculation that the chairman of the US Federal Reserve, Dr Ben Bernanke, would make an appearance could not be confirmed last night.
The event will be dominated by Asian delegations and is expected to include governors of the Peoples Bank of China, the Bank of Japan and the Reserve Bank of India.
The arrival of the high-powered gathering coincided with a fresh meltdown on world sharemarkets, sparked by renewed concerns about global growth and sovereign debt.
Fears countries including Greece, Portugal, Spain and Dubai could default on debt repayments combined with disappointing US jobs data to spook investors.
Australia's ASX 200 slumped 2.4 per cent, to a its lowest close since November 5, echoing a sharp fall on Wall Street.
Asian share markets were also pummelled, with Japan's Nikkei 225 down almost 3 per cent and Hong Kong's Hang Seng slumping 3.3 per cent.
The damage was also being felt by European markets last night with London's FTSE 100 down sagging 1 per cent in early trade.
Sovereign debt fears rippled through to the Australian dollar which was hammered to a four-month low of US86.43 and was trading at US86.77 cents last night.
"This does feel like '08 and '07 all over again whereby we had these sort of little fires pop up and they are supposedly contained but in reality they are not quite contained,'' said H3 Global Advisors chief executive Andrew Kaleel.
"Dubai should have been an isolated incident and now we are seeing issues with Greece, Portugal and Spain.''
It wasn't all bad news with the RBA yesterday upping its Australian growth forecasts and flagging more interest rate rises this year.
The central bank estimates the economy grew 2 per cent in 2009, and will expand by 3.25 per cent in 2010, and by 3.5 per cent in 2011.
The outlook for global growth is likely to be a key theme of the high level central bank talks.
The gathering also comes at an important time for the BIS as it initiates an overhaul of the global banking system which will include new capital rules applying to banks and more stringent standards regulating executive pay.
A key part of the two-day talkfest will be a special meeting of Asian central bankers chaired by the governor of the Central Bank of Malaysia, Dr Zeti Akhtar Aziz.
Influential BIS general manager Jaime Caruana is also expected to take a prominent role in the talks.Federal Treasurer Wayne Swan will address the central bank officials at a dinner on Monday night.
“We’re going to have to make some very, very difficult decisions,” Henry said, adding that he has very good relationship with the Republican legislative leadership.
And while he said he and the Republican leaders are “working very well together,” critics have been attacking him, casting doubt on his decisions and areas of government that will be cut.
“I haven’t heard any of the critics put their budget on the table or offer solutions for the people of Oklahoma,” Henry said. “It’s not acceptable to sit on the sidelines and criticize.”
“The people of Oklahoma elected us to be statesmen, not critics,” added a clearly perturbed Henry. “To the critics out there, ‘what are your ideas’?”
“I think we have to talk about efficiency measures in government,” Henry said, noting the one-year elimination of funding for the Rural Economic Action Plan (REAP). The one-year holiday for REAP has resulted in a backlash from rural legislators who say the economic development of small towns in rural districts rely on REAP funds.
“I value REAP,” Henry said. “I said, ‘Let’s take a one-year holiday. Let’s take a one-year holiday on tax credits.’”
Henry delved into the issue of sales taxes on Internet purchases. Henry announced a proposal to force out-of-state companies to pay sales taxes on items sold to Oklahomans over the Internet.
“The tax code, as it is currently written … is an unlevel and unfair playing field for Oklahoma businesses,” Henry said. “$180 million a year is lost through online sales.”
Again, Henry directed his comments to his detractors, adding, “What’s your plan?”
Henry then tried to sound optimistic, adding, “The storm clouds will pass and the sun will shine again.”
And the all-important issue of the Rainy Day Fund was re-examined before the OPA gathering. Henry said while protecting the Rainy Day Fund is important, it is required that the state use as much of its reserve cash before it can use stimulus funds from the federal government.
“I believe it’s appropriate to use the Rainy Day Fund to address (the economic crisis),” Henry said. “Stimulus dollars have helped us a great deal.”
During the question and answer portion, Henry was asked about the state’s 532 public school districts and whether or not, in light of the budget crunch, he would take a serious look at consolidating some school districts, particularly in rural areas.
“It’s a very, very difficult issue,” he said. “I think everything is on the table for discussion. I’ve never been in favor of forced consolidation of school districts.”
Another question had to do with President Obama tapping Henry for the newly-formed Council of Governors. Authorized late last year by Obama via an executive order, Henry would work on a bi-partisan panel featuring governors from across America. According to an article in today’s The Oklahoman, Henry and the other governors would “work closely with the secretary of defense, the secretary of Homeland Security and national security advisers” and discuss issues related to national defense and security issues.
“I’m very pleased, through the Council, to seek input from the states and develop better partnerships with states on issues of preparedness,” Henry said. “Not just terrorism but epidemics … and how we are prepared to respond to that.”
Henry said the first meeting of the Council of Governors would be Feb. 23 at the White House.
And to read an Oklahoma Watchdog blog post about Henry and the Council of Governors, click on the link.
By Andrew W. Griffin
And why not? After all, Russia only had some $450 BILLION invested in the US and that is not counting the various steel plants and other assets owned by Russian companies. Why not just throw away all that money, surely it could never be the fact that the US, government and people and corporations, are debt drunk and indentured fools who can not live within their means and spend and continue to spend like maniacs. It is almost like an alcoholic in his final stages of death, knowing its all over, why the hell not just drink like crazy, the liver is done anyways? Or a man dieing from lung cancer who just keeps chain smoking, not going to make any difference at this point anyways.
But Henry Paulson is an egotist and a former top official who obviously 1. does not want to be seen as the fool and boob that he is and 2. go to jail or worse get lynched by angry mobs. So, he does what any failed US government or business hack does, who can try and get away with it: he blames it on Russia. Russia, the evil tyrant, the ones who have a spy under every bed, an assassin with a uranium filled syringe, in every closet and a banker with a nuclear money bomb at every stock market.
This is no different from the usual: blame Russia for Georgia's aggression, committed by a maniac US puppet. Blame Russia for a hyper armed Middle East, while the US hands out $12 billion in weapons to the Middle East, most of it to Islamics, each and every year. Blame Russia for Syria, while the US pays Syria to run black ops prisons and torture captives the US delivers. Blame Russia for Hamas and the PLO while the US saves the PLO from Israeli-Lebanese Christian extermination and then legitimizes them and arms them. Blame Russia for Serbia, while the US arms Islamic fanatics and wages a terror war of genocide on Orthodox Christian Serbs. Why not?
So now, while US banks and their lap dog English fellow sociopaths, were conning and robbing the world blind, till it all collapsed, lets now blame Russia for this to.
Of course, the US media is more than happy to join in and head lines are a buzz. Just to do a google search for the English versions. "Russia's risky roulette" declares the New York Post.
A rout in stock markets that began in Europe spread to Wall Street on Thursday and around the globe to Asia on Friday, amid fears that Europe may be the world’s next financial flashpoint. Pressure has been mounting across the Atlantic as Greece, Portugal and a handful of struggling countries that use the euro scramble to pay off mountains of debt accumulated from years of profligate spending.
The Dow Jones industrial average slid 2.61 percent, or 268.37 points, to 10,002.18 Thursday, after briefly falling below 10,000 for the first time since November, as American investors grew more uncertain about Europe’s economy.
Stock markets across Europe slumped as much as 6 percent, and worries that the troubles might push even big European nations like Spain into a financial crisis drove the euro to $1.37, a seven-month low against the dollar.
Markets in Europe slipped further on Friday, after a sharp sell-off in Asia, amid continued worries about government debt in several European countries and about the state of the U.S. labor market.
“The question now is, how big is this fire going to be?” said Uri D. Landesman, head of global growth at ING. “What is panic, and what is legitimate? We don’t know at this point.”
Like the United States, Europe has been slow to exit recession. France and Germany — the biggest of the 16 countries that use the euro as their currency — have tried to put their financial houses back in order quickly. But countries on the fringe, including Greece, Portugal, Spain and Ireland, are having trouble paying for years of debt-driven expansion.
Now the bill is coming due. In the worst case, they could default on their debts, prolonging the economic downturn.
While the tension simmering in Europe has gone largely unnoticed by most Americans, the mounting pressure on these countries to discipline their finances has raised questions about whether the currency union that has peacefully bound Europe’s economies for more than a decade risks unwinding.
Adding to the anxiety among investors Thursday was a bleaker-than-expected report on the United States labor market. Investors are watching unemployment closely as they try to gauge the strength of the recovery and determine whether it will be severely constrained by tepid consumer spending.
On Thursday, the eve of the release of the Labor Department’s monthly employment snapshot, the government said the number of people filing first-time claims for unemployment increased to 480,000 last week, above Wall Street’s estimates of 455,000. Analysts expect Friday’s employment report to show that the jobless rate remained at 10 percent in January, and that 15,000 jobs were created.
The Standard & Poor’s 500-stock index plunged 34.17 points, or 3.11 percent on Thursday, to 1,063.11, and the Nasdaq composite index fell 65.48 points, or 2.99 percent, to 2,125.43.
How Europe decides to deal with its problems will shape its future political landscape — and the future of the euro itself.
Fearful investors have started asking whether France, Germany and other rich countries should be forced to bail out their poorer cousins, or simply allow them to default — an outcome that would have major repercussions for Europe and financial markets worldwide.
The crisis in these areas “is reaching new proportions, and the contagion effect is getting more serious,” two Royal Bank of Scotland officials, Jacques Cailloux and Harvinder Sian, wrote in a note to investors.
The current troubles began in Greece, which qualified for membership in the euro club in 2001. But the government never curbed shortfalls in its budget when times were good, and drastically expanded employment by adding to government rolls, even as an inefficient tax collection system reduced tax receipts.
While investors initially brushed off these problems, their worries resurfaced in October when the government conceded it had again buffed up its statistics to suggest a bright fiscal picture. Now, Greece has acknowledged its budget deficit stands at nearly 13 percent of gross domestic product, while debt levels are among the highest in the European Union — well beyond what the rules of euro membership allow.
Greek officials are now trying to manage the country’s deficit by partially freezing the pay of civil servants and increasing the fuel tax.
The European Union endorsed those measures on Wednesday, but the proposals have met resistance from other quarters. Greek customs and tax officials began a 48-hour walkout on Thursday, choking the flow of imports, and there were threats of more strikes.
Meanwhile, the dispute has put Greece’s credit rating under renewed threat, and stoked worries that Greek government bonds might no longer be accepted as collateral by the European Central Bank.
The president of the bank, Jean-Claude Trichet, sought to temper the doubts about Greece on Thursday. He cautioned, however, that large deficits could be a problem for other euro-zone countries, unsettling investors. “When you share a common currency,” Mr. Trichet warned, “the counterpart is that you have to behave properly.”
Nonetheless, Europe’s politicians, and global investors, have become deeply unsettled about other European countries with huge debt and deficits, including Spain, Portugal and Ireland. Investors have been demanding bigger premiums to hold the debt of these countries, and this week drove the cost of insuring their debt to new highs.
These worries deepened Thursday as Spain, saddled with 19 percent unemployment and huge debt from an American-style housing bust, played down fears of a budget deficit that has ballooned to 11.4 percent of its gross domestic product.
Portugal, whose deficits have also spooked investors, suddenly had trouble raising as much short-term credit as it wanted.
There have been whispers that Europe’s better-off countries — France, Germany and the Netherlands among them — might come to the rescue with a bailout. If they do not, economists worry about the ripple effects of a default.
“There is a realization that the economy is still on very fragile footing globally,” said David Riedel, founder of Riedel Research, which provides market analysis. “There are definitely another couple of shoes to drop here with the European crisis.”
Amid the tumult, the European Central Bank and the Bank of England left their benchmark interest rates unchanged at record lows of 1 percent and 0.5 percent, respectively.
But in an illustration of the ragged nature of Europe’s recovery, the British central bank took steps to freeze measures to stimulate the economy. The bank, reacting to rising inflation and evidence that Britain has emerged from recession, announced that it would not extend its large purchases of government bonds.
In the United States, interest rates were lower. The Treasury’s benchmark 10-year note jumped 25/32, to 98 3/32 and the yield fell to 3.61 percent, from 3.70 percent late Wednesday.
NEW YORK, Feb 5 (Reuters) - U.S. commercial real estate prices fell 4.9 percent in the fourth quarter, setting a new low for the current downturn, according to a leading property index released on Friday.
The slide to 139.25 points wiped out a 4 percent rise recorded in the third quarter and takes the index -- by the MIT Center for Real Estate (MIT/CRE) -- below 140.06, the cycle's previous low reached in the second quarter.
For the year, the index, which includes prices for commercial property sold by major institutional investors, is down 22.5 percent since the end of 2008. At the end of the 2009, the index was 39.5 percent below the second quarter 2007 peak of 230.26.
"It is a bit disappointing that we couldn't put together two back-to-back positive quarters, but in the big picture, I regard the index as suggesting that the market has essentially flattened out since the end of the first half of the year, which is a lot better than continuing the drastic fall that had happened the previous year," David Geltner, director of research at MIT/CRE, said in a statement.
MIT/CRE publishes not only the price index based on closed deals, but also compiles indexes that separately gauge movements on the demand side and the supply side of the institutional property market.
The demand-side index tracks the changes in prices that potential buyers are willing to pay. That index fell for eight continuous quarters from mid-2007 to mid-2009, to 48 percent below its peak of 253.87. It rebounded 12 percent in the third quarter. But succumbed to the negative side in the fourth quarter, down 4.5 percent to 44 percent below its peak.
The supply-side index, which gauges the prices property owners are willing to accept, also fell in the fourth quarter, down 5.3 percent, to 35.5 percent below its peak in first quarter of 2008 of 212.84.
"There remains a gap in pricing perception between the two sides of the market, which is keeping trading volume low by historical standards," said MIT/CRE research technician Holly Horrigan. (Reporting by Ilaina Jonas; editing by Andre Grenon)
THE Greek debt crisis has spread to Spain and Portugal in a dangerous escalation as global markets test whether Europe is willing to shore up monetary union with muscle rather than mere words.
Julian Callow from Barclays Capital said the European Union might need to invoke emergency treaty powers to halt the contagion by issuing an EU guarantee for Greek debt. "If not contained, this could result in a 'Lehman-style' tsunami spreading across much of the EU," he said.
Credit default swaps measuring bankruptcy risk on Portuguese debt surged 28 basis points on Thursday to a record 222 on reports that Jose Socrates was about to resign as prime minister after failing to secure enough votes in parliament to carry out austerity measures.
Parliament minister Jorge Lacao said the political dispute had raised fears that the country was no longer governable. "What is at stake is the credibility of the Portuguese state," he said.
Portugal has been in crisis since the Maoist-Trotskyist bloc won 10 per cent of the vote last year. This is rapidly turning into a market crisis as well as investors digest a revised budget deficit of 9.3 per cent of gross domestic product for 2009, much higher than expected. A €500 million ($791 million) debt auction failed on Wednesday. The yield spread on 10-year Portuguese bonds has risen to 155 basis points over German bunds.
Daniel Gross, from the Centre for European Policy Studies, said Portugal and Greece needed to cut consumption by 10 per cent but such measures risked street protests.
In Spain, default insurance surged 16 basis points after economist Paul Krugman said "the biggest trouble spot isn't Greece, it's Spain". He blamed the Economic and Monetary Union's one-size-fits-all monetary system, which has left the country with no defence against a shock.
The Finance Minister, Elena Salgado, reacted angrily to the EU economics commissioner, Joaquin Almunia, who helped trigger the flight from Iberian debt by saying Spain and Portugal were in much the same mess as Greece. She said the comparison was simplistic and imprudent. "In Spain we have time for measures to overcome the crisis," she said.
It is this assumption that is now in doubt. The budget deficit rose to 11.4 per cent last year, yet the economy is still contracting.
Jacques Cailloux, Europe economist at Royal Bank of Scotland, said markets wanted the EU to spell out how it would shore up Club Med states. "They are working on a different time horizon from the EU. They don't think words are enough: they want action now. They are basically testing the solidarity of monetary union.''
Mr Callow of Barclays said EU leaders would come to the rescue in the end but Germany had yet to blink in this game of "brinkmanship". The core issue is that the EMU's credit bubble has left southern Europe with huge foreign liabilities - Spain at 91 per cent of GDP and €950 billion; Portugal 108 per cent (€177 billion. This compares with 87 per cent for Greece (€208 billion). By this gauge, Iberian imbalances are worse than those of Greece and the sums far greater. The danger is that foreign creditors will cut off funding, setting off an internal EMU version of the Asian financial crisis of 1998.
Jean-Claude Trichet, president of the European Central Bank, gave no hint yesterday that Frankfurt would help these countries, either through loans or a more subtle form of bail-out. He said euro members drew down their benefits in advance when they joined EMU and enjoyed ''very easy financing'' for their current account deficits. They could not expect help if they got into trouble later.
The so-called fear gauge jumped nearly 20% as stocks took a tumble and looked ready to close at their lowest point of the year.
After closing Wednesday at 21.6, the Chicago Board Options Exchange's volatility index, or VIX, spiked to an intraday high of 25.49.
The move signals a growing amount of nervousness and uncertainty among investors, who watched the Dow Jones Industrial Average slip more than 200 points.
The spike in volatility also underscores the jitters across financial markets about exposure to risky assets, amid swirling concerns about a mounting sovereign debt crisis in Europe.
An unexpected increase in new U.S. jobless claims—coming just one day before crucial monthly jobs data is due—erased optimism stemming from strong housing and manufacturing data early in the week.
But it was the growing cost of insuring the debt of several European economies, including Greece and Portugal, that spooked investors. Throughout the day, they fled currencies and markets seen taking the biggest hit should debt troubles in Greece or elsewhere lead to a full-blown crisis.
The VIX tracks prices that investors are willing to pay for options on the Standard & Poor's 500 index—often to protect themselves against declines. As a result, the VIX tends to move up when stocks move down, and vice versa.
And more to come, data predict
The year-end figures, scheduled to be released Thursday by the Woodstock Institute, paint a picture of a local housing market brutalized by foreclosures over the past three years. Last year, more than 70,000 homeowners in the six-county area, including 24,053 in the fourth quarter alone, received initial notices of mortgage defaults, the first step in the foreclosure process, and those defaults increasingly were in more affluent neighborhoods, the report showed.
What the data doesn't show, but what is widely predicted, is that there will be no slowdown in foreclosures this year. Despite almost yearlong efforts to stem the tide of foreclosures, high unemployment rates are causing more homeowners to miss mortgage payments. Some observers expect both the number of people in foreclosure and the number of vacant properties on the market to increase as consumers fall out of loan mitigation programs and lenders release their foreclosure inventory onto the real estate market.
"Lenders are continuing to proceed with foreclosures while also trying to negotiate, in theory, the loan modifications and do the trial mods," said Geoff Smith, Woodstock senior vice president. "My sense of what's going to happen is the economy is still weak, you still have the underwater homeowner issue, and there's concern that any modest recovery of the housing market will go away with the [homebuyer] tax credit."
Woodstock found that for Chicago, initial foreclosure filings increased by 10.2 percent, but the activity varied widely by neighborhood. Some of the largest percentage gains last year were in Lincoln Park, up 103 percent; Near South Side, up 46 percent; and Near North Side, up 37 percent.
At the same time, some of the communities hardest hit by the first waves of the foreclosure crisis — neighborhoods such as Austin, Hyde Park, Auburn Gresham and Englewood — reported fewer foreclosure filings last year than in 2008.
"In '06, '07 and early '08, the main driver was badly written loans," Smith said. "As those loans cycle out of the system through the foreclosure process, the economy hasn't improved, you see that [unemployment] is maybe more of a factor."
At the end of October, almost 10.5 percent of mortgages in Illinois were at least one month past due but not yet in foreclosure, and another 10 percent of loans were in foreclosure and at least 90 days delinquent, according to the Mortgage Bankers Association.
Local housing counselors continue to marshal their resources to accommodate delinquent borrowers, but organizations say borrowers still must wait several weeks for an appointment.
Aware of the trends, the city will increase to six the number of fix-your-mortgage events this year, compared with two last year, said Ellen Sahli, first deputy commissioner of Chicago's Department of Community Development.
Meanwhile, Chicago's efforts to revitalize neighborhoods most affected by foreclosure are just getting off the ground.
The city has received more than $150 million in Neighborhood Stabilization Program funds since July to rehab more than 2,000 foreclosed homes into affordable housing in targeted neighborhoods. Forty-three developers are participating in the program, and renovations are under way on the first few homes.
"This is going to be a long-term issue," said William Goldsmith, regional president of Mercy Portfolio Services Inc., which is coordinating Chicago's program. "If you don't hold onto the urban core, what's that going to do to the market? Isn't that 90 percent of what we're trying to do here, protect consumer confidence?
"In this environment, that's about the best you can do unless the federal government gives you $2 billion."
Chicago mirrors the patterns being seen in other major metropolitan areas. A report last week by a State Foreclosure Prevention Working Group found six out of 10 seriously delinquent borrowers are not receiving loan modification assistance.
"We're going to experience more, not less, foreclosures and abandoned properties in 2010 than we experienced last year," said Craig Nickerson, president of the National Community Stabilization Trust. "In 2009, it was almost a calm before the storm. Many of the things that slowed down (foreclosures) will become a reality in 2010. Almost every financial institution has told us that.
"The resources pale in comparison to the problem."
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