Davos: The Bomb Shelter

Predators and parasites recently gathered in Davos to discuss the mounting problems of their prey. All present agreed the problem needed urgent attention.

Historian David Hackett Fisher describes this passing era as the period of Victorian Equilibrium. England’s Victorian Equilibrium, however, was built on banker’s credit, a foundation of sand; and like the story of Cinderella where the carriage turns into a pumpkin at midnight, the banker’s credit has now turned into defaulting debt and the fairy-tale world it built is collapsing.

Lies, lies and more lies

On February 5th, a Bloomberg headline reported: US Economy, Unemployment Unexpected Falls To 9.7%. Bloomberg’s headline wasattempting to convey a more positive outlook for those considering additional borrowings to help restart the banker’s stalled engine of credit and debt (their credit and your debt); but the following chart tells the real story about US unemployment, a far different version than the optimistic story being spun by Bloomberg:

Note: If you still listen to, read or watch mainstream media for your news, you could believe any or all of the following: (1) the “recession” is over, (2) Iraq had weapons of mass destruction, (3) 9-11 was the work of terrorists and (4) Lee Harvey Oswald killed JFK. If you believe any of the above, you don’t need sleep aids as you are sleeping quite well on your own.

http://www.calculatedriskblog.com/2010/02/employment-report-20k-jobs-lost-97.html

The real US unemployment picture is one reason why the parasites and predators who gather in Davos are so concerned. Their 300 year-old system of credit and debt concocted to drain the productivity of others has succeeded beyond their wildest dreams; but it has come at a cost—their host, society, upon which their profits depend is now collapsing.

Their concern is genuine, similar to that of plantation owners whose slaves are falling prey to disease and death brought on by age and overwork. That such was inevitable did not occur to them so inured were they from living off the labor of others; and, now, while their dilemma is obvious the solution is not.

Were it not for the trillions of dollars of government aid in 2009, the global banking system would have already collapsed and the world would again be deep in the throes of another depression, where credit-driven demand sinks in an ocean of debt and settles on the bottom where it slowly drowns.

But the collapse has not been averted, it has only been delayed. The trillions of dollars spent to postpone the day of reckoning were borrowed and soon the bill will be proffered and payment demanded for having done so.

Despite the apparent resolve of those attending Davos, there is no way out except complete systemic collapse. All beginnings have endings and the end of the three hundred year system of economic slavery by credit and debt has arrived.

THE DAYS OF YORE ARE NO MORE

In the not too distant past, the punchbowls at Davos were overflowing with Dom Perignon, bankers were celebrating billion-dollar bonuses and tall high-priced call girls were as common as the short wealthy men who paid them The reason for such exuberant celebration is clear. The following chart shows why:

Beginning in 1990, the profits of the financial sector began to increase relative to the rest of the economy. This, of course, did not happen by accident. It happened because Alan Greenspan, the maestro of America’s demise, began to allow Wall Street more “freedom” during his tenure as Fed chairman; and, as we all know, freedom is a good thing—except, of course, when, in the name of freedom and free markets you turn the keys to the country over to thieves and robbers for ideological reasons, e.g. Republicans, and financial contributions, e g. Democrats.

This is what happened when Bill Clinton sold out America to the bankers. Because Wall Street already owned the Republicans, when Bill Clinton and the Democrats entered into their time-share agreement with the bankers, the fate of America was sealed.

Under the tenure of “Easy Al” Greenspan who never saw a problem easy credit couldn’t delay and the “welcome to the henhouse” policy extended by Bill Clinton to Goldman Sachs and their Wall Street cohorts, the stage was set for the climactic economic gang-bang of America that was to happen under Republican George Bush, Jr.

It was truly a bipartisan effort where both Republicans and Democrats united to give Wall Street carte-blanche to bet and lose the savings of Americans and allow bankers to obscenely profit no matter the outcome of their bets.

CELEBRATION DAVOS 2007
CONCERN DAVOS 2008
SHOCK DAVOS 2009
FEAR DAVOS 2010

The days of ostentatious celebration at Davos are over. Attending bankers and politicians are no longer smug and confident, their arrogance now replaced by vacillating indecision and enervating fear; and, today, if they don’t use enough deodorant, most would be politely asked to leave public areas. In Davos, despite its lofty altitude, the smell of change is in the air and it isn’t pleasant.

The present system of debt-based money and debt-based markets introduced by England’s bankers in 1694 is beyond redemption. Paul Volker, the hero of the 1980 clampdown on credit which gave capitalism one last putsch (1982-2007), has suggested reforming the banking sector in order to extend their now flagging run; and, as much as its victims would wish for it to succeed, it won’t. It’s too little, too late. The pumpkin is already waiting outside.

DO YOU KNOW WHERE YOUR CENTRAL BANKER IS?

Just five days after the bankers left Davos, the world’s top central bankers secretly reconvened in Sydney, Australia to discuss in emergency session the deterioration of global financial markets. On February 6th the Australian news media reported:

Representatives from 24 central banks and monetary authorities including the US Federal Reserve and European Central Bank landed in Sydney to meet..at a secret location…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…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…echoing a sharp fall on Wall Street…Asian share markets were also pummeled, 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.” http://www.news.com.au/business/secret-summit-of-top-bankers/story-e6frfm1i-1225827289543

When bankers began arriving in Sydney on Friday, one hour before markets closed in New York, US markets began to suddenly rally in the last hour of trading to close almost in positive territory, a suspicious sign of renewed market intervention by the US plunge protection team.

That western capital markets are subject to government intervention and interference has been true for decades. When the house controls the manufacture and supply of chips it matters little to the house if the gaming tables are fixed or free; but, to the punters, as long as some come out ahead, most don’t care.

When their underwear is soiled, free-market advocates often become Keynesians

THE BREAKDOWN

If you are reading this, the odds of you having been in Australia to attend the secret meetings of central bankers are remote. Nonetheless, we do share something with those who were inside eating and drinking on the public dime. Indeed, our fates are intertwined and not in a good way.

All of us, including the bankers, are in the above picture but we may not be where we think we are. Nonetheless, it is an accurate depiction of the current situation. The ship has hit an iceberg and is sinking. Only the time and manner of its demise are still unknown.

Some hope the ship can still be saved. It can’t. We are in the endgame predicted by those who warned us; and now it is too late to do what could only have been done before. We chose to do nothing and by so doing allowed the current tragedy to happen.

The dawning realization of what is happening has come too late to save the nation. The warnings by America’s founding fathers were ignored by all and the consequences are coming to pass as predicted.

America’s military, the world’s largest standing army, drained America of its once considerable wealth and private bankers have indebted the nation, its businesses and citizens beyond their ability to repay. Thomas Jefferson warned it could be so. We ignored his warnings and, now, it is too late.

The political process has proven singularly inadequate to prevent the collapse of the nation. Today, the political dialogue in America resembles a bitter domestic dispute in which the entire family will lose.

WHERE ARE YOU?

Hoping for change, Americans voted for Barack Obama and instead got more of the same, the same foreign policy, the same bankers, the same problems. If voting doesn’t lead to change, the question then becomes, what will?

BETTER TIMES ARE AHEAD

In March, 25-29 in Szombathely, Hungary, Professor Antal Fekete, I and others will discuss the question, Is the Global Financial Crisis Really Over?; and, while the question may be rhetorical, much depends on its resolution.(to attend, contact GSUL@t-online.hu)

It is my opinion that the crisis will end in a complete breakdown of the banker’s system of credit and debt, a collapse so great that the past will become exactly that, the past; and the future, when it does arrive, will be far different than the present.

Historian David Hackett Fisher wrote that all great epochs, e.g. feudal, renaissance, enlightenment, etc. end in complete devastation and economic collapse. It will be the same with the present epoch, the age of Victorian Equilibrium. Fisher also noted that after the collapse of each era, another and, in many respects, superior era took its place.

A new era and better era can be expected; but, first, the bankers’ system of fraudulent money must collapse. The good news is that it will. The bad news is that when it does, hardship and suffering will result.

But suffering and hardship must be seen in a larger context. Just as Buckminster Fuller believed that mistakes are necessary for learning, crises are necessary for growth. Had we a choice, we would avoid all crises and all mistakes; and, as a consequence, all growth and all learning.

Emergence through emergency
Buckminster Fuller

Buckminster Fuller wrote in 1981 in The Critical Path…that mankind would soon be entering a period of unprecedented crisis, a crisis universally intended to bring about the transformation of humanity. If we could, we would resist this crisis. But we can’t and since we can’t, let us succeed.

The transformation of humanity depends on us doing so.

Buy gold, buy silver, have faith.

Harrisburg, Pennsylvania, Bond Rating Cut by Moody’s (Update1)

Feb. 10 (Bloomberg) -- Pennsylvania’s capital of Harrisburg was downgraded to five levels below investment grade by Moody’s Investors Service, as the city considers bankruptcy in the face of $68 million in debt payments this year.

Moody’s lowered its grade on Harrisburg’s general obligation bonds to B2 yesterday, from Ba2, and kept a negative outlook on the city of 47,000, according to John Cline, a Moody’s vice president for ratings communications in New York. He declined to discuss reasons for the move in an e-mail today.

The cut is Moody’s second for Harrisburg since October, when the assessment was reduced from investment grade to two levels below. Issuers or bonds rated B “demonstrate weak creditworthiness relative to other U.S. municipal or tax-exempt issuers or issues,” according to an explanation on Moody’s Web site.

Harrisburg’s city council and controller, Dan Miller, have said Chapter 9 bankruptcy protection is one option under consideration as the city contends with debt payments this year that exceed the size of its general fund budget for services such as police and parks.

“I don’t know what may happen,” Miller said in a telephone interview yesterday. He said the city may not have the money to meet $2 million in debt service payments March 1 that it has guaranteed on behalf of the Harrisburg Authority, operators of a trash-to-energy waste incinerator.

2010 Budget

City Council members are considering a 2010 budget that would attempt to raise $69 million for bond payments on the incinerator this year by selling assets such as an historic downtown market, an island in the Susquehanna River that includes the city’s minor-league baseball stadium, and the city’s parking, sewer and water systems.

Lower bond ratings often lead to higher borrowing costs as investors seek more yield to compensate for greater risk.

A $24.3 million 30-year Harrisburg Authority bond maturing in 2034, which is one of the bonds Harrisburg is scheduled to make a payment on March 1, was sold to yield about 5.7 percent Feb. 8, the most recent customer sale listed on the Municipal Securities Rulemaking Board’s Electronic Municipal Market Access site. The average 25-year municipal revenue bond yielded 4.96 percent Feb. 4, according to the Bond Buyer 25-year index.

All Options

Council members, who rejected the asset liquidation plan last year, will consider bankruptcy along with tax increases, asset sales and enrollment in a state monitoring program called Act 47, according to Susan Brown-Wilson, chairwoman of the Budget and Finance Committee. The council is scheduled to consider final adoption of their 2010 budget tomorrow.

The $68 million in debt payments Harrisburg faces this year is four times what the city expects to raise through property taxes, and $4 million more than the city’s entire proposed operating budget.

Harrisburg skipped more than $3.5 million in debt-service and interest-rate swap payments last year, prompting draws on reserves and back-up payments by Dauphin County, where Harrisburg is located. The county has sued the city to recover its payments.

Harrisburg faces a $164 million deficit over the next five years, mostly because of debt created by the incinerator, according to Management Partners Inc. of Cincinnati, a consulting firm hired to study the city’s finances as part of a state review.

--Editors: Mark Tannenbaum, Pete Young, Stacie Servetah

Rival automakers expect to gain from Toyota's pain

DETROIT (AP) -- In a few short weeks, Toyota has done what General Motors, Ford and other automakers have failed to accomplish for decades: Erase the perception that the Japanese automaker's cars are of much higher quality than those of its rivals.

A series of recent safety recalls -- now totaling more than 8.5 million vehicles worldwide -- has cracked Toyota's bulletproof reputation and given rivals an opportunity to capture some of its customers.

Toyota stumbled as industry sales are just starting to climb after the worst slump in 30 years. It's not yet clear which automakers will benefit most, but several stand to benefit and are wooing Toyota drivers with new ads and incentives.

"The perception game has changed," said James Bell, an executive market analyst for the vehicle information company Kelley Blue Book.

According to Kelley, 27 percent of new car shoppers who were considering a Toyota before the recall are no longer contemplating the brand. Nearly half of the buyers who have defected from Toyota say they may never consider the brand again. Kelley questioned 406 people before the recall and 285 after it. All were U.S. buyers who said they planned to buy a car in the next 12 months.

Ford, Chevrolet, Hyundai and Honda have made the biggest gains with those customers, Kelley Blue Book said. Sixteen percent of new-car buyers said they weren't considering Ford before the recall, but are now.

David Tompkins, vice president of analytics with Edmunds.com, said the crisis also is starting to affect Lexus, Toyota's luxury brand, which has seen the number of buyers intending to purchase the brand drop by 25 percent in the last two weeks. Those customers are now looking at Audi, Acura and Volvo. His data is based on 3.5 million Web site visits per week.

Publicly, rivals insist they're not gloating.

"There may be an opportunity for us to get some consideration from folks that we didn't get before. We'd like to sell them our vehicles based on the merits," GM's North American President Mark Reuss said Wednesday at the Chicago Auto Show.

At Ford, chief U.S. sales analyst George Pipas noted that CEO Alan Mulally has long admired Toyota and implemented its global production system at Ford.

But Bell said that at a recent executive-level meeting at one of Toyota's rivals, participants were grinning from ear to ear.

"GM and Ford in particular are really rubbing their hands together and saying, 'Here's our chance,'" he said.

Shortly after Toyota announced the recall of 2.3 million U.S. vehicles to address sticking accelerators, General Motors, Ford, Hyundai and some Honda dealers began offering incentives of $1,000 or more to drivers who traded in Toyotas. New TV ads from Ford say, in bold letters, "Ford quality can't be beat by Honda or Toyota." GM isn't running ads that mention Toyota, but continues its "May the Best Car Win" campaign, which has taken on new meaning after the recall.

"If someone loses, someone wins," said Natsuno Asanuma, manager of public relations at Honda Motor Co.

Homer Benavides, 37, a civil engineer and father of three from Waukegan, Ill., had agreed to buy a Toyota Sequoia sport utility vehicle before the recall. He canceled the sale after the recall and is now considering the Chevrolet Tahoe.

"Toyota has made millions of vehicles, and millions of people are driving them, but if you are the fraction of one percent to have a problem, you don't want to be that one person," he said. "I do like Toyota, but safety is first and foremost."

Dave Sargent, vice president of vehicle research at J.D. Power and Associates, said it's unclear how long buyers will stay away from Toyota. Recalls don't necessarily kill sales. The Ford Explorer, which was recalled in 2000 and 2001 because of tire tread separation, saw one of its best sales years ever -- with 433,837 sold -- in 2002.

"Clearly, there will be some long-term impact, but the magnitude is a little hard to predict right now," he said.

Some analysts say South Korea's Hyundai is particularly well positioned to benefit, with a new Sonata sedan going on sale in the U.S. in a few weeks. The Sonata is already 10 percent cheaper than the Toyota Camry, said Michael Sohn, an analyst at Woori Investment & Securities in Seoul.

"Hyundai is very aggressively trying to attack the U.S. market," he said, noting that the company just ran ads during the Super Bowl, including a spot that touted its 10-year, 100,000-mile warranty. The ad was created prior to the recalls.

Sargent said his firm is seeing Toyota buyers defect to well established brands like Honda, Ford and Chevrolet.

"Toyota owners want high quality and high resale values. When they don't buy Toyota, they look for those things in other brands," he said.

But Tompkins said GM may have some trouble luring buyers because the automaker still owes billions to the federal government and buyers are unsure of its cars long-term values. He predicts Hyundai, Honda and Ford will win Toyota's business, with Mazda, Subaru and Volkswagen right behind.

AP Writers Malcolm Foster and Kelly Olsen contributed from Tokyo. Dave Carpenter contributed from Chicago.

Copyright © 2007 The Associated Press. All rights reserved. The information contained in the AP News report may not be published, broadcast, rewritten or redistributed without the prior written authority of The Associated Press.

Jobless rate unchanged by billions in stimulus spending

Money for roads, bridges doesn't ease unemployment on local level, analysis finds

WASHINGTON: A federal spending surge of more than $20 billion for roads and bridges in President Barack Obama's first stimulus has had no effect on local unemployment rates, raising questions about his argument for billions more to address an ''urgent need to accelerate job growth.''

An Associated Press analysis of stimulus spending found that it didn't matter if a lot of money was spent on highways or none at all: Local unemployment rates rose and fell regardless. And the stimulus spending only barely helped the beleaguered construction industry, the analysis showed.

With the nation's unemployment rate at 10 percent and expected to rise, Obama wants a second stimulus bill from Congress including billions of additional dollars for roads and bridges — projects the president says are ''at the heart of our effort to accelerate job growth.''

Transportation Secretary Ray LaHood defended the administration's recovery program Monday, writing on his blog that ''[Department of Transportation]-administered stimulus spending is the only thing propping up the transportation construction industry.''

Road spending would total nearly $28 billion of the Jobs for Main Street Act, a $75 billion second stimulus to help lower the unemployment rate and improve the dismal job market for construction workers. The Senate is expected to consider the House-approved bill this month.

Strategy questioned

But AP's analysis, which was reviewed by independent economists at five universities, showed the strategy of pumping transportation money into counties hasn't affected local unemployment rates so far.

''There seems to me to be very little evidence that it's making a difference,'' said Todd Steen, an economics professor at Hope College in Michigan who reviewed the AP analysis.

And there's concern about relying on transportation spending a second time.

''My bottom line is, I'd be skeptical about putting too much more money into a second stimulus until we've seen broader effects from the first stimulus,'' said Aaron Jackson, a Bentley University economist who also reviewed AP's analysis.

For the analysis, the AP reviewed Transportation Department data on more than $21 billion in stimulus projects in every state and Washington, D.C., and the Labor Department's monthly unemployment data to assess the effects of road and bridge spending on local unemployment and construction employment. The analysis did not try to measure results of the broader aid that also was in the first stimulus such as tax cuts, unemployment benefits or money for states.

Even within the construction industry, which stood to benefit most from transportation money, the AP's analysis found there was nearly no connection between stimulus money and the number of construction workers hired or fired since Congress passed the recovery program. The effect was so small, one economist compared it to trying to move the Empire State Building by pushing against it.

''As a policy tool for creating jobs, this doesn't seem to have much bite,'' said Emory University economist Thomas Smith, who supported the stimulus and reviewed AP's analysis. ''In terms of creating jobs, it doesn't seem like it's created very many. It may well be employing lots of people but those two things are very different.''

Trying again

Despite the disconnect, Congress is moving quickly to give Obama the additional road money he requested.

''We have a ton of need for repairing our national infrastructure and a ton of unemployed workers to do it. Marrying those two concepts strikes me as good stimulus and good policy,'' White House economic adviser Jared Bernstein said. ''When you invest in this kind of infrastructure, you're creating good jobs for people who need them.''

Even so, transportation spending is too small of a pebble to create waves in the nation's $14 trillion economy. And starting a road project, even one considered ''shovel ready,'' can take many months, meaning any modest effects of a second burst of transportation spending are unlikely to be felt for some time.

''It would be unlikely that even $20 billion spent all at once would be enough to move the needle of the huge decline we've seen, even in construction, much less the economy. The job destruction is way too big,'' said Kenneth D. Simonson, chief economist for the Associated General Contractors of America.

County still reeling

Few counties received more road money per capita than Marshall County, Tenn., about 90 minutes south of Nashville.

Obama's stimulus is paying the salaries of dozens of workers there, but local officials said the unemployment rate continues to rise and is expected to top 20 percent soon. The new money for road projects isn't enough to offset the thousands of local jobs lost from the closing of manufacturing plants and automotive parts suppliers.

''The stimulus has not benefited the working-class people of Marshall County at all,'' said Isaac Zimmerle, a local contractor who has seen his construction business slowly dry up since 2008.

The stimulus has produced some jobs. And economic evidence suggests that government programs, including a $700 billion bank bailout program and the $787 billion stimulus, have helped ease the recession.

The Great Highway Robbery Continues: How The FDIC Is Legally Transferring Billions In Taxpayer Money To Hedge Funds

It is not a secret to anyone who has been closely following the FDIC's quasi criminal bank takeover practices over the past year, that acquirors of failed banks end up receiving a massive and risk-free gift in the form of taxpayer benefits via the FDIC when it comes to funding losses on a given bank acquisition. Should there be a short sale resulting in a loss to the full principal (not the cost basis mind you)? Not to worry, Sheila Bair is there to hand out taxpayer money to the hedge funds/banks owning the newly transferred assets. A recent example of this was the glaring insider trading which preceded the acquisition of failed AmTrust Bank by New York Community Bancorp, in which both NYB and those who bought calls in advance of information being made public, made massive illegal profits. And as the SEC continues to pretend like this episode never happened, we remind the intellectually subprime Mary Schapiro to finally pursue those involved, and will continue doing so for as long as it takes. But back to the FDIC: the folks at Think Big Work Small have compiled a terrific video detailing exactly how several hedge funds, currently owners of recently created shell holding company OneWest Bank, are picking apart the carcass of failed IndyMac, all the while encouraging short sales (instead of loan mods) as only that way do they get to benefit fully from the taxpayer funded FDIC loss-share arrangements which makes the IndyMac transaction an immediate slam dunk for everyone involved...except America's taxpayers, and the FDIC's ever depleting DIF reserve.

As the authors appropriately title the video, this is indeed a slap in our face. And this goes on every single bailout Friday when the FDIC continues handing out billions of dollars under the guise of "loss sharing" arrangements, which is simply a guaranteed profit from the acquirors' cost basis to 90% of the original loan value: an instantaneous 30% risk free IRR.

Full must watch video after the link (click on the icon below).

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U.S. Bond Auctions Are Starting to Fail

Both long and short U.S. bond auctions are starting to fail. See this, this, this and this.

Tyler Durden concludes:

China is finally coming through on its Bond boycott promises.

For background, see this.

How the Federal Reserve Created the US Recession

Click this link ..... http://video.google.com/videoplay?docid=-2550156453790090544#docid=-9150285606457

Peter Schiff On FOX Business 02/08/2010 - Hedging Against The FED

Click this link ...... http://eclipptv.com/viewVideo.php?video_id=9983

Global Financial Crisis is 'over' - Treasury boss Ken Henry

Treasury Secretary Ken Henry believes the GFC is over. Picture: James Croucher Source: The Australian

TREASURY boss Ken Henry has declared the global financial crisis is over as Australia's unemployment rate fell to an 11-month low.

Australian Bureau of Statistics figures showed business was booming nationally and employing both full-time and part-time workers, with Australia's jobless figure falling to 5.3 per cent from 5.5 per cent.

The decrease came as Dr Henry told a Senate Estimates hearing yesterday the worst of the downturn had passed.

"What people have called the global financial crisis, that has passed, I think it's safe to say," Dr Henry said. "But that isn't to say that there will not be further adverse shocks for financial markets down the track and some of those shocks . . . could be of some significance for individual countries, but I don't imagine (they would be) shocks of the sort that would be globally significant."

Despite the jump in job numbers Dr Henry said that there was "substantial spare capacity at this point" in the economy.

He said he did not expect the economy to confront capacity constraints until the jobless rate was up to a percentage point lower than it is now, The Australian reports.

Concerns emerged this week about rising job losses in the US and fears that Greece may default on its loans without a bailout package.

Grattan Institute economist Saul Eslake said he would largely agree with Dr Henry but added that some of the consequences of the crisis - like high unemployment and tight credit markets - would linger for a long time.

Opposition Treasury spokesman Joe Hockey seized on the jobless figures, demanding an end to the stimulus package.

"This signals the end of the recession rhetoric and it must be the end of the recession spending," he said.

Treasurer Wayne Swan said the unemployment results were a tribute to the Government's $42 billion stimulus package.

"What we particularly celebrate about these figures today is the thought that 52,700 Australians have told their families in January that they got a job," he told Parliament.

The results prompted Premier Anna Bligh to boldly claim her election pledge of creating 100,000 jobs was on track.

Economists noted the headline figures masked a 1 per cent fall in aggregate hours worked.

FAA and NORAD Changed Records to Accord with Cheney Lies

A senior Counsel for the 9/11 Commission, John Farmer, has written a book exposing the degree to which our response to 9/11 was disorganized and outdated–geared to respond to an attack from Russia rather than from terrorists. Most significantly, Farmer reveals that FAA and NORAD altered their chronologies of the day only after a briefing at the White House.

Perhaps nothing perturbs Farmer more than the contention that high-ranking officials responded quickly and effectively to the revelation that Qaeda attacks were taking place. Nothing, Farmer indicates, could be further from the truth: President George W. Bush and other officials were mostly irrelevant during the hijackings; instead, it was the ground-level commanders who made operational decisions in an ad hoc fashion.

[snip]

Yet both Deputy Defense Secretary Paul Wolfowitz and Vice President Dick Cheney, Farmer says, provided palpably false versions that touted the military’s readiness to shoot down United 93 before it could hit Washington. Planes were never in place to intercept it. By the time the Northeast Air Defense Sector had been informed of the hijacking, United 93 had already crashed. Farmer scrutinizes F.A.A. and Norad rec­ords to provide irrefragable evidence that a day after a Sept. 17 White House briefing, both agencies suddenly altered their chronologies to produce a coherent timeline and story that “fit together nicely with the account provided publicly by Deputy Defense Secretary Wolfowitz and Vice President Cheney.”

We’ve know for a long time that the FAA records, in particular, were politicized. Given already documented proof that Cheney lied to hide the fact that he violated the chain of command on 9/11 it’s not surprising that that politicization served Dick Cheney’s false narrative of leadership.

But we can add this book to the long list of proof that Cheney’s a big liar trying to hide his own incompetence.

Congressional Panel "Deeply Concerned" over Commercial Real Estate

I guess I didn't need the Congressional Oversight Panel for the TARP to tell me that commercial real estate was in trouble, but somehow it's a bit more poignant when they do.

The Panel's February report opens pretty clearly:

Over the next few years, a wave of commercial real estate loan failures could threaten America‘s already-weakened financial system. The Congressional Oversight Panel is deeply concerned that commercial loan losses could jeopardize the stability of many banks, particularly the nation‘s mid-size and smaller banks, and that as the damage spreads beyond individual banks that it will contribute to prolonged weakness throughout the economy.

Over the next four years, according to the report, about $1.4 trillion in commercial real estate loans will reach the end of their terms, and nearly half of those are currently underwater, thanks to property values which have fallen more than 40 percent wince their peak in 2007.

In an interview on CNBC's Squawkbox this morning, COP chair Elizabeth Warren said simply, "Well it's bad."

Then she explained, "We're looking at a situation where about half of all commercial real estate loans are going to be underwater by the end of this year, and that is going to have a direct impact on about 3,000 community banks, or about 40 percent of our entire banking system." Not good.

These, she notes, are mostly community banks, which do a disproportionate amount of commercial and small business lending. "To the extent that they get socked on the commercial real estate, they see these coming losses, so they tend to husband their money, and that means that the money is not available for their other customers, for the small businesses."

Mortgages

30 yr fixed 5.13% 5.26% 30 yr fixed jumbo 5.92% 6.02% 15 yr fixed 4.43% 4.66% 15 yr fixed jumbo 5.46% 5.64% 5/1 ARM 4.06% 3.59% 5/1 jumbo ARM 4.56% 3.77%

Find personalized rates: Bankrate.com

Warren, however, makes it clear that COP is just "sounding the alarm" and that that doesn't mean government should run in with a bailout.

I asked Dr. Sam Chandan, global chief economist over at Real Capital Analytics, if he thinks the government will step in:

Significant government support for commercial real estate specifically is unlikely in the current environment. From a policy perspective, any intervention will be the result of commercial mortgages weighing on bank performance and undermining the stability of community or regional banks in a systemic manner. The potential for further deterioration in the commercial real estate mortgage pool to introduce systemic risks for a class of lending institutions is a credible risk.

So he agrees with Warren, but doesn't see government bailing out the commercial borrowers the way it's bailing out residential borrowers.

Forecasting with a Grain of Salt

Bloomberg News is out with its latest monthly survey of economists' forecasts and, according to those polled, the U.S. economy "will grow 3 percent this year and next, more than anticipated a month ago."

Good news, right?

Well, maybe not. If you go back and look at how the experts have fared when forecasting the pace of growth for any given quarter, let alone for the year ahead, their tea leaf reading skills have left a lot to be desired.

Based on an analysis of Bloomberg monthly surveys published just prior to or at the beginning of each quarter over the course of the past decade, the professional prognosticators as a group have rarely been close to the mark.

Except for the last quarter of 2007, when the economists' prediction (published in September) came within 5 percent of the reported result, the differences in percentage points between their estimates and the actual readings have been in the double digits -- at a minimum.

In fact, on three occasions -- the first quarter of 2000, the fourth quarter of 2002, and the third quarter of 2006 -- the economists overestimated the pace of quarterly GDP by 1,133 percent, 2,400 percent, and 2,900 percent, respectively.

Aside from the fact that many of the so-called experts still haven't quite figured out that what the economy has been going through is anything but a garden-variety downturn, their history of poor calls on the near-term outlook suggest their longer-term forecasts should be taken with a grain of salt.

Hillary's eligibility challenged in Supreme Court

Can political branch evade 'clear and precise language' of Constitution?

A brief filed with the U.S. Supreme Court by Judicial Watch, which investigates and prosecutes government corruption, questions whether members of the "political branches of the government" can "evade the clear and precise language of a provision of the Constitution through the use of a legislative 'fix.'"

The dispute is over former Sen. Hillary Clinton's eligibility to be secretary of state.

The U.S. Constitution, Article I, section 6, clause 2, provides: "No senator or representative shall, during the time for which he was elected, be appointed to any civil office under the authority of the United States, which shall have been created, or the emoluments whereof shall have been [increased] during such time."

The case brought on behalf of a career government employee outlines how during Clinton's tenure in the U.S. Senate, the salary for the secretary of state was raised to $186,600, then to $191,300, and then again to $196,700.

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The complaint challenges whether a resolution adopted by Congress as Clinton was preparing for the position that rolled back the compensation to the level of Jan. 1, 2007, could remove the obstacle to Clinton's appointment.

WND reported when Judicial Watch filed its notice that it would bring the arguments to the Supreme Court, and now the brief in the case has been submitted.

The lawsuit asserts Clinton is ineligible because she was serving as a senator from New York immediately prior to her selection by President Obama as secretary of state.

The case notes the text of the provision is an absolute prohibition and does not allow for any exceptions.

The case was brought on behalf of U.S. Foreign Service Officer David C. Rodearmel, who argues that "compensation and other emoluments" of the office of secretary of state rose during Clinton's tenure in the Senate.

A special three-judge panel of the U.S. District Court for the District of Columbia dismissed the case, concluding Rodearmel lacked standing.

But Judicial Watch has argued Rodearmel cannot be forced to serve under the former senator as it would violate the oath he took as a Foreign Service Officer in 1991 to "support and defend" and "bear true faith and allegiance" to the U.S. Constitution.

"Our client's goal is to vindicate the U.S. Constitution," said Judicial Watch President Tom Fitton. "The Constitution clearly prohibits Hillary Clinton from serving as secretary of state until 2013. We hope the Supreme Court assumes jurisdiction over this matter and puts a stop to this attempt to do an end-run around the Constitution."

The newly filed brief states "the salary of the U.S. Secretary of State was increased three times during Mrs. Clinton's second term in the U.S. Senate. A subsequent 'rollback' of the salary by Congress does nothing to remedy this ineligibility for office, as no such 'work around' is authorized by the Constitution and cannot alter the fact that these increases in salary occurred."

"The Joint Resolution did not and cannot change the historical fact that the 'compensation and other emoluments' of the office … increased during Mrs. Clinton's tenure in the U.S. Senate.

"At the core of the case is the casual disregard of a clear and unambiguous directive of the Constitution," the brief states.

The case raises two key questions for the Supreme Court:

• Whether an officer of the United States, when placed in a position where he must either violate his oath of office or risk substantial, adverse consequences to his employment, has standing to maintain a challenge to the appointment of a constitutionally ineligible superior.
  
  
• And whether members of Congress who are otherwise ineligible for appointment to an office in the executive branch under the plain language of Article I, section 6 of the Constitution, can have their eligibility restored by an act of Congress.

"The Supreme Court has an obligation to settle the Ineligibility Clause issue once and for all," said Fitton. "If our government and courts will not observe even the plain and unambiguous provisions of the Constitution, then we are cut adrift from the anchor of law and liberty and the rule of law is in jeopardy. We hope the Supreme Court takes this opportunity to vindicate the Constitution."

Investigators declare, “Obama never attended Columbia University”

American Grand Jury has archived extensive records over the past year which we used in our jury hearings. We now believe beyond a reasonable doubt that Obama is not a “natural born” citizen and it is even possible that he may be an illegal alien.

We also have records showing the Democratic National Convention fraudulently declared Obama constitutionally eligible while never vetting the “natural born” requirement with the electorate.

Now, new evidence has come to light whereby Dr. James Manning has declared that Obama never attended Columbia University [New York].

Dr. Manning has hired a team of investigators to comb over every bit of available evidence to validate his declaration.

Manning’s investigators conclusively state that:

1) Columbia University will not divulge whether the “alleged” diploma issued was in the name of Barry Soetoro or Barack Hussein Obama. No public record exists regarding the diploma.

2) Obama alleges he attended Columbia in 1982, 1983. But, the investigators have been UNABLE to turn up a single shred of written documentation for the years 1981, 1982, 1983, 1984 that show where Obama appeared on a school roster, register, faculty memo, bulletin board, school awards, dean’s list; where Obama’s name appeared in a yearbook, club record, fraternity record, extra curricular activity member roster, student newspaper, student radio or tv activity; where Obama appeared in any records as a worker, employee, laborer in or about Columbia University; where Obama enrolled in any sports activity or program.

3) As a graduating senior in 1983 he does not appear in any Political Science (his major) or Granduating Class yearbook or invitation records.

4) There is absolutely no documentation of any kind to show Obama attended, lived, worked or played at Columbia University during the investigated 4 years.

5) Interviewed professors, college employees, students (who were at Columbia during the years in question) have failed to turn up a single person that can remember Obama. This is irrefutable evidence. Think about your own situation if Obama had attended your college? A “now-famous” person went to your school? Many would be able to say, “of course I remember.” At Columbia, not a single person has been able to say he or she remembers Obama.

Below is a audio file of Dr. Manning going over the investigated information. Have a listen as he declares, “Obama never attended Columbia University.”

Crisis in California – Everything Touched by Capital Turns Toxic

California dreaming turns to California nightmare as decades of agribusiness, real estate development and exploitation of migrant workers take their toxic toll. Gifford Hartman takes us on a guided tour of the Golden State’s darkside
I should be very much pleased if you could find me something good (meaty) on economic conditions in California [...]. California is very important for me because nowhere else has the upheaval most shamelessly caused by capitalist centralization taken place with such speed. – Letter from Karl Marx to Friedrich Sorge, 1880
Read More Here

Higher interest rates ahead, Bernanke says

WASHINGTON --- Prepare for the end of record-low interest rates, Federal Reserve Chairman Ben Bernanke says. Just not yet.

Higher rates on credit cards, home equity loans and some mortgages will follow the Fed's eventual pullback of the trillions it injected into the economy. Savers will benefit, though. As rates gradually climb, certificates of deposit and savings accounts will finally pay more.

Bernanke indicated Wednesday the Fed is still months away from raising rates or draining most of the stimulus money it injected to rescue the financial system.

For now, the global recovery remains too fragile to pull back much on government stimulus. Europe is facing a debt crisis. And President Obama is making a push to cut taxes to stimulate job creation.

Bernanke discussed the Fed's plans in prepared remarks to a House committee hearing that was postponed because of the East Coast snowstorm. Bernanke chose to release the testimony because of interest from investors and others.

His testimony outlined the Fed's strategy for reeling in stimulus money once the economic recovery is more firmly rooted.

To fight the financial crises, the Fed pumped so much money into the economy for lending programs that its balance sheet swelled to $2.2 trillion -- more than double the pre-crisis level.

Bernanke said the central bank will likely start to tighten credit by boosting the rate it pays banks on money they leave at the central bank. Doing so would raise rates tied to commercial banks' prime rate and affect consumer loans.

Bernanke sought to bolster confidence on Wall Street and in Congress that once the economy is strong enough, the Fed has the tools and the will to raise rates and withdraw stimulus aid -- without causing another recession. The goal would be to prevent another speculative asset bubble from forming, such as in stocks or commodities, and ward off inflation.

The stock market initially sank, then steadied itself after hearing Bernanke's plans. Investors seemed relieved the plans didn't mark a shift in policy, and that they set a path for a more normal financial system. The Dow Jones industrial average closed with a modest loss of 20 points.

Using the rate it pays on banks' excess reserves to tighten credit would be a new strategy.

U.S. trade deficit surge signals rebound

WASHINGTON --- The U.S. trade deficit surged to a larger-than-expected $40.18 billion in December, the biggest imbalance in 12 months. The wider deficit reflected a rebounding economy that is pushing up demand for oil and other imports.

The Commerce Department said the December deficit was 10.4 percent higher than the November imbalance. It was larger than the $36 billion deficit economists had expected with much of the increase coming from a big jump in oil imports.

For December, exports of goods and services rose for an eighth consecutive month, climbing 3.3 percent to $142.70 billion. The increase was led by strong gains in sales of commercial aircraft, industrial machinery and U.S.-made autos and auto parts.

Imports were up 4.8 percent in December to $182.88 billion, led by a 14.8 percent surge in oil imports, which rose to the highest level since October 2008.

For all of 2009, the deficit totaled $380.66 billion, the smallest imbalance in eight years, as a deep recession cut into imports. However, economists believe the deficit will rise in 2010 as U.S. demand for imports outpaces U.S. export sales.

Franco-German bailout of Athens expected to avert euro collapse

Summit may see moves to guarantee Greek solvency, as prospect of action by Paris and Berlin buoys markets

Pigheaded protests: As discussions took place across EU capitals over whether to bail Greece out, protesters marched through Athens over the Greek government’s plans to reduce the debt deficit. Photograph: Simela Pantzartzi/EPA

Germany and France are tomorrow expected to move to guarantee Greek solvency and to shore up the euro against assault from gamblers on the financial markets.

At a summit of EU leaders in Brussels which looks like being overwhelmed by the implications of Greece's debt and deficit emergency, Chancellor Angela Merkel and President Nicolas Sarkozy, said senior EU sources, should deliver a joint Franco-German signal that they stand ready to come to Athens' rescue if need be.

Herman Van Rompuy, the new European Council president steeringtomorrow's summit, expects the planned response to the Greek crisis to overtake an agenda focused on medium-term European economic strategy.

Helena Smith: 'Bilateral loans to Greece are being discussed' Link to this audio

Signs of action buoyed financial markets for the third successive day – with the cost of insuring Greek debt falling again and European stock markets, including the FTSE, climbing after falls last week. The possibility of a rescue also eased pressure on the euro, which could lead to heavy losses for hedge funds and other speculators who have bet that the currency will collapse.

The Germans, apparently determined to avert any euro crisis, are leading the drive to concoct a Greek bailout. They may not reveal full details tomorrow, but they are certain to insist on punitive terms for loans or loan guarantees, and also may dash hopes of a "European" bailout plan in favour of bilateral pacts between national governments and Athens. Berlin is said to believe this will confer greater clout and rigour in forcing Greece to meet a bailout's terms – major public spending cuts, better revenue collection, reliable data, and reforms to the pension, health, and civil service systems.

Expectations of a Franco-German initiative hardened tonight after a day of frantic discussions in Brussels and across European capitals over what to do about Greece and the mixed signals over the timing and substance of the response.

Finance ministers of the eurozone, as well as Jean-Claude Trichet, the European Central Bank president, and Olli Rehn of Finland, the European commissioner for economic and monetary affairs, rehearsed their options by video-conference.

Sources close to Van Rompuy, conceded that tomorrow's summit had to deliver a strong message to the markets. But his eight-page paper on economic strategy sent out to government leaders for the summit omitted all mention of the crisis.

Analysts said much was riding on how EU leaders responded but those speculators betting on a fall of the euro will have to rush back to the market to cover up their "short" positions to limit their losses.

"If a deal is done and Greece is rescued, we could see a rally because a lot of people are short and they will have to wind up their positions," said Neil Mellor, a Bank of New York Mellon currency strategist.

Others said the markets were confused. "If Greece doesn't get support from the EU, the question in the markets will be why should we [buy Greek bonds]. The concern then is that knocks sentiment. The market will look at who is next, and Portugal will be next," said Gary Jenkins, of stock brokers Evo Securities.

There are divisions among the 16 eurozone countries and the 11 other EU states over whether Europe can weather the crisis or whether the International Monetary Fund should be called in. But those splits also extend to within the eurozone.

"The EU initiative must be placed in a common framework, which is that of the IMF," Belgium's finance minister, Didier Reynders, told Le Monde. "Greece has a right to assistance from the IMF, of which it is a member. If not, there is no point in being a member."

Reflecting a common view that an IMF rescue would be a grievous blow to European self-esteem and perhaps afford the Americans an inroad into ECB monetary policy-making, a senior official in Brussels said: "From a legal point of view, the IMF is possible. But politically, it's inconceivable that the IMF will rescue Greece. Because we have a monetary union, a system for supporting the currency."

As well as battling a budget deficit nudging 13% of GDP, Greece owes nearly €300bn (£264bn) to foreign banks. With French and German banks the biggest lenders, exposed to around one third of the total, Berlin and Paris appear to be reaching the conclusion that helping Athens would be helping themselves, as they would be among the biggest victims of a Greek default.

Citi plans crisis derivatives

Credit specialists at Citi are considering launching the first derivatives intended to pay out in the event of a financial crisis. The firm has drawn up plans for a tradable liquidity index, known as the CLX, on which products could be structured that allow buyers to hedge a spike in funding costs.

Like the untraded US rates liquidity index (USRLI), the CLX is constructed as a sum of the Sharpe ratio – deviations from the mean divided by volatility – of various market factors, such as equity volatilities, Treasury rates, swap spreads, corporate bond swaption-implied volatilities, and structured credit spreads. Citi will make the CLX tradable by using fixed historical values for the mean and volatility parameters, eliminating the need for costly recomputation from lengthy time series.

Although the design of the index serves as a proxy measure for liquidity, Terry Benzschawel, a managing director of quantitative credit trading strategy at Citi in New York and head of the team researching the product, says it also tracks more traditional measures such as bid-ask spreads, trading volumes and the USRLI. He compares the potential impact of CLX to that of the interest rate swaps market.

"The great thing about the index is that it hedges your funding costs while being very simple to trade. I believe it will reduce the systemic risk in the industry, akin to how the advent of swaps means people don't worry about interest-rate exposures any more – they just pay a fee to hedge it," he says.

Like a swap, the contracts envisaged by Citi would be entered into without an up-front premium, with money changing hands according to the index's movements around a fair strike value.

The team is in talks with multi-dealer platforms over distribution rights, although Benzschawel expects most large banks, including Citi, to move into the market eventually. He has also drawn up a hedging strategy for sellers of the index, although he would not comment on the details.

"We are focused on viewing it from a brokers' perspective – we want to get natural buyers and sellers of liquidity together. But we do have an explicit hedging programme, based on the underlying assets in the index. There is a basis risk, but the beauty is that as this widens, the strategy involves buying up assets whose prices are falling, thereby providing liquidity to the market," he says.

However, there is concern from academic circles that the counterparty risks involved in such a product could create moral hazard. Chris Rogers, chair of statistical science at Cambridge University, said the only participants able to sell CLX-based products would probably be those who are too big to fail.

"This is basically a kind of insurance product. The main issue is: how good is the party issuing it? If it's going to be paying out huge numbers in the event of a crisis, will it be able to meet it obligations? Insurers can buy reinsurance for their liabilities, but the buck has to stop somewhere – there's a limit to how much a private insurer can pay out. Only the government can cover unlimited losses," he says.