Japanese PM Naoto Kan warns of Greece-level 'collapse' under debt pile

Sasahara/AP

Japan's Prime Minister Naoto Kan delivers his grim policy speech at Parliament in Tokyo on Friday.

TOKYO - New Japanese Prime Minister Naoto Kan, seeking to lay the groundwork for a future sales tax rise, warned on Friday that the country risked defaulting on its borrowing if it failed to rein in its massive public debt.

Kan, who took over the nation's top job after his unpopular predecessor quit abruptly last week, has made tackling a public debt that is already twice the size of Japan's GDP a top priority amid market concerns about sovereign debt risk.

"We cannot sustain public finance that overly relies on issuing bonds," Kan told parliament in his first policy speech.

"As we can see in the euro zone confusion that started from Greece, there is a risk of default if the growing public debt is neglected and if trust is lost in the bond market."

Kan spoke hours after his banking minister Shizuka Kamei -- an advocate of big spending, said he would quit the cabinet, improving the chances Kan can forge ahead with fiscal reform.

The departure of the outspoken Kamei, sparked by a spat over a controversial bill to roll back postal privatization, removes one obstacle, but how aggressively Kan can implement fiscal reforms will depend on the results of an upper house election, likely on July 11.

Support for the Democrats, who must win the July vote, has jumped since Kan took over, and Kamei's resignation could be another plus, analysts said.

"It was a bit unusual for somebody from such a tiny political party to have this much importance, and with him gone the Kan administration is likely to strengthen its foundation going into the election," said Nagayuki Yamagishi, a strategist at Mitsubishi UFJ Morgan Stanley Securities

"This could perhaps even lead to Kamei's party leaving the coalition -- and while this might seem like political instability to some foreign investors, this will really allow Kan's government a chance to stabilize."

PNP Secretary-General Shozaburo Jimi, an upper house lawmaker, was expected to be given the portfolio, since Kamei's small People's New Party (PNP) remains in the ruling coalition.

National Strategy Minister Satoshi Arai told reporters the government was aiming to compile a medium- and long-term plan for reining in debt by June 22 at the latest, and that he wanted to base the program on capping government bond issuance at 44.3 trillion yen ($484.6 billion) in the year to March 31, 2012.

Kan, Japan's fifth premier in three years, has called for a bipartisan debate on raising Japan's 5 percent sales tax to help fund bulging social welfare costs in an aging society, while Kamei has been cautious about such a move.

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In the Summer of 2010

Are you ready for interesting times and an exodus from the United States? A possibly apocryphal ancient Chinese curse goes "May you live in interesting times." Those words may derive from an authentic Chinese proverb: "It is better to be a dog in a peaceful time than be a man in chaos."

Either way, the message is easy to understand for anyone living in the summer of 2010. As I look over at Lucky, my golden retriever whose only concerns are when do we eat and when do we go back in the ocean to play ball, I can see the advantages of being a dog. But as a man I know it is time to defend my freedom and secure my wealth for myself and for my posterity.

The U.S. is wandering through a fake recovery, an expanding sovereign debt crisis, a stock market downturn and a double-dip real estate collapse. Meanwhile, the Swiss franc is moving to historic highs to the euro. And what does the conventional press want to tell us about? The "strong" dollar, who's to blame for the oil disaster, the newest episodes in a host of foreign and domestic political soap operas and – a fresh diversion – which politicians are telling the biggest lies about their military records.

Welcome to the Fake, Jobless Economic Recovery

Last Friday, The Feds announced that the U.S. economy has added 431,000 jobs. The boldest spokespersons tried to announce this as good news, but the details revealed that only 40,000 of the total are private-sector jobs – the kind that produce things people want and are willing to pay for. The rest are little more than assignments in make-work projects designed to buy votes and beef-up the statistics on a fake recovery.

The American financial press asks hourly, "Will the euro survive as a currency?" And every time, the question is a prelude to "Again the dollar's strength indicates it remains the world's safe-haven reserve currency." My response is, "Oh, really?" This is just more lies from Washington and Wall Street that you believe at your peril.

"Lies, damnable lies and statistics." It's an expression attributed to Benjamin Disraeli, one of my favorite British historical figures. He was prime minister twice, but in his early years he had been a stock promoter. When a boom in South American mining stocks collapsed in 1825, he lost everything, much as a later Prime Minister, Winston Churchill, did in 1929. Both Disraeli and Churchill turned to writing to repair their finances (Disraeli also married a rich widow many years his senior). Again like Churchill, Disraeli went into politics with success, and both secured loans from the Rothschild banks.

Interesting to some, though perhaps not to others. But British history over the last century is a worthwhile topic for all of us. It's a model of what happens when an empire reaches its pinnacle and then slides into decline. It's a model of what is happening to America today.

The Swiss Franc Benefits

As I've written before, the Swiss National Bank tries to keep the franc aligned with the euro, in order to protect cross-border financial relationships and trade. If the dollar goes down, usually the euro and Swiss franc both go up. If the dollar goes up, both the euro and Swiss franc go down, although not always at the same rate.

Just days ago the Swiss franc hit an all-time high verses the euro, so although both have lost some value relative to the dollar, the franc's retreat is more modest. The real challenge for the Swiss National Bank is to limit the franc's appreciation when billions of investor euros are flooding into Switzerland and bidding for the local currency. Contrary to what you'll read in the American financial press, the smart money is moving into Switzerland in big volume.

Exodus Then & Now

The establishment media have been covering the challenges to Israel's Gaza blockade with references to the excellent 1960 epic/propaganda film, Exodus. There are quite a few similarities between the British blockade of Palestine in 1947 and what Israel is doing now, including forced boarding in international waters, resistance by ship passengers, the death of Americans, a widely published film record of events and complaints of excessive use of force.

If it's presented artfully, overreaction by those in power can feed public support for the target and sometimes allows the weaker party to prevail. The image of Gandhi and his followers being imprisoned by the British for harvesting salt from the ocean supported the formation of the state of India. The story of the SS Exodus and the British Navy sending Holocaust survivors back to Germany helped bring about the establishment of Israel. Pictures of "Bull" Connor attacking civil rights protestors in Birmingham, Alabama led to the Civil Rights Act of 1964. Whether the Palestinians and their allies will succeed in playing the victim card, time will tell.

The British resistance to the 1947 Exodus demonstrated how incompetent and cruel a collapsing empire can be. While this might be news to the general public, it isn't news to freedom-loving entrepreneurs who are making plans to avoid the turmoil, taxes and terror coming from our desperate politicians in Washington.

Hence the exodus from America of productive, innovative Americans acting to get themselves and their wealth out before it is too late. This outflow of talent and wealth doesn't get much coverage in the establishment news media.

The media are too busy with the pushing and shoving in the Middle East, the sovereign debt problems in Europe, the volatility of the U.S. markets and the BP oil spill in the Gulf of Mexico. Those things are important (the oil trail from the Gulf may eventually run past my home in the U.S., which is on a coastal island). But an exodus from the Land of Immigrants is a far bigger story. Saving what is left of the American Dream calls for you to get at least your wealth outside the disaster zone of Washington incompetence, as one remarkable American is now doing.

The New American Exodus Begins With Entrepreneur Steve Wynn

On May 28, Steve Wynn, the entrepreneur who led the rebirth and explosive expansion of the Las Vegas Strip in the early 1990's, made it clear that he's had enough of the United States government. To listen to his astounding CNBC interview, Click Here. In just 4 minutes, Winn lays out a shocking indictment and heartfelt critique of the failures of Washington and the U.S. political system. Here are some excerpts:

"The climate for business is frightening here," he says, and that's why he's moving half his operation to Macau.

"Common sense has disappeared in Washington DC."

"There's more stability and predictability in China than in Washington these days."

"Those hypocritical SOBs in Congress, the one thing they didn't do in the new healthcare law was to control frivolous lawsuits."

"We're on our way to Greece, in the hands of a confused, foolish government. It's got to stop. It's got to stop."

That's the verdict from the 468th richest man in the world. The successful, the best and the brightest are heading to the lifeboats.

Baron Nathan Mayer Rothschild boasted, "I care not what puppet is placed upon the throne of England to rule the Empire on which the sun never sets. The man that controls Britain's money supply controls the British Empire, and I control the British money supply."

What Rothschild said about England is just as true today in the United States. All political offices, from prime minister to president, congress and parliament, can be vacated by election, threat, bribe or scandal. The incumbents all serve at the pleasure of international monetary elites and their allied interests; an officeholder is merely a front man on a long leash. He has plenty of freedom to pursue pet projects and policies as long as he doesn't stray from the reservation and threaten key policy and legislative goals.

Most economic, political and military events are just business as usual for financial elites and the industries beholden to them. They take advantage of real or contrived economic crises, military operations and foreign conflicts the way stockbrokers churn stocks to generate commissions. The collateral damage, causalities, wealth transfers, confiscation and mass hardship are just tricks of the trade.

Steve Wynn didn't become the 468th richest man in the world without knowing the odds and understanding that the house always wins. If he thinks the game is rigged here in the U.S., I suggest you join him by cashing in your chips and securing your wealth so that one day you can play again in a game with reasonable odds and fair returns. It's time to head for the cashier window, settle up and get out of the American casino.

June 11, 2010

BP Oil Disaster Could Hit Europe Via the Powerful Gulf Stream Current

The Obama Administration and senior BP officials are frantically working not to stop the world’s worst oil disaster, but to hide the true extent of the actual ecological catastrophe. Senior researchers tell us that the BP drilling hit one of the oil migration channels and that the leakage could continue for years unless decisive steps are undertaken, something that seems far from the present strategy.

In a recent discussion, Vladimir Kutcherov, Professor at the Royal Institute of Technology in Sweden and the Russian State University of Oil and Gas, predicted that the present oil spill flooding the Gulf Coast shores of the United States “could go on for years and years … many years.”

According to Kutcherov, a leading specialist in the theory of abiogenic deep origin of petroleum, “What BP drilled into was what we call a ‘migration channel,’ a deep fault on which hydrocarbons generated in the depth of our planet migrate to the crust and are accumulated in rocks, something like Ghawar in Saudi Arabia.” Ghawar, the world’s most prolific oilfield has been producing millions of barrels daily for almost 70 years with no end in sight. According to the abiotic science, Ghawar like all elephant and giant oil and gas deposits all over the world, is located on a migration channel similar to that in the oil-rich Gulf of Mexico.

As I wrote at the time of the January 2010 Haiti earthquake disaster, Haiti had been identified as having potentially huge hydrocasrbon reserves, as has neighboring Cuba. Kutcherov estimates that the entire Gulf of Mexico is one of the planet’s most abundant accessible locations to extract oil and gas, at least before the Deepwater Horizon event this April.

“In my view the heads of BP reacted with panic at the scale of the oil spewing out of the well,” Kutcherov adds. “What is inexplicable at this point is why they are trying one thing, failing, then trying a second, failing, then a third. Given the scale of the disaster they should try every conceivable option, even if it is ten, all at once in hope one works. Otherwise, this oil source could spew oil for years given the volumes coming to the surface already.”

He stresses, “It is difficult to estimate how big this leakage is. There is no objective information available.” But taking into consideration information about the last BP ‘giant’ discovery in the Gulf of Mexico, the Tiber field, some six miles deep, Kutcherov agrees with Ira Leifer a researcher in the Marine Science Institute at the University of California, Santa Barbara who says the oil may be gushing out at a rate of more than 100,000 barrels a day.

What the enormoity of the oil spill does is to also further discredit clearly the oil companies’ myth of “peak oil” which claims that the world is at or near the “peak” of economical oil extraction. That myth, which has been propagated in recent years by circles close to former oilman and Bush Vice President, Dick Cheney, has been effectively used by the giant oil majors to justify far higher oil prices than would be politically possible otherwise, by claiming a non-existent petroleum scarcity crisis.
Obama & BP Try to Hide

According to a report from Washington investigative journalist Wayne Madsen, “the Obama White House and British Petroleum are covering up the magnitude of the volcanic-level oil disaster in the Gulf of Mexico and working together to limit BP’s liability for damage caused by what can be called a ‘mega-disaster.’” Madsen cites sources within the US Army Corps of Engineers, FEMA, and Florida Department of Environmental Protection for his assertion.

Obama and his senior White House staff, as well as Interior Secretary Salazar, are working with BP’s chief executive officer Tony Hayward on legislation that would raise the cap on liability for damage claims from those affected by the oil disaster from $75 million to $10 billion. According to informed estimates cited by Madsen, however, the disaster has a real potential cost of at least $1,000 billion ($1 trillion). That estimate would support the pessimistic assessment of Kutcherov that the spill, if not rapidly controlled, “will destroy the entire coastline of the United States.”

According to the Washington report of Madsen, BP statements that one of the leaks has been contained, are “pure public relations disinformation designed to avoid panic and demands for greater action by the Obama administration., according to FEMA and Corps of Engineers sources.”

The White House has been resisting releasing any “damaging information” about the oil disaster. Coast Guard and Corps of Engineers experts estimate that if the ocean oil geyser is not stopped within 90 days, there will be irreversible damage to the marine eco-systems of the Gulf of Mexico, north Atlantic Ocean, and beyond. At best, some Corps of Engineers experts say it could take two years to cement the chasm on the floor of the Gulf of Mexico.

Only after the magnitude of the disaster became evident did Obama order Homeland Security Secretary Napolitano to declare the oil disaster a “national security issue.” Although the Coast Guard and FEMA are part of her department, Napolitano’s actual reasoning for invoking national security, according to Madsen, was merely to block media coverage of the immensity of the disaster that is unfolding for the Gulf of Mexico and Atlantic Ocean and their coastlines.

The Obama administration also conspired with BP to hide the extent of the oil leak, according to the cited federal and state sources. After the oil rig exploded and sank, the government stated that 42,000 gallons per day were gushing from the seabed chasm. Five days later, the federal government upped the leakage to 210,000 gallons a day. However, submersibles monitoring the escaping oil from the Gulf seabed are viewing television pictures of what they describe as a “volcanic-like” eruption of oil.

When the Army Corps of Engineers first attempted to obtain NASA imagery of the Gulf oil slick, which is larger than is being reported by the media, it was reportedly denied the access. By chance, National Geographic managed to obtain satellite imagery shots of the extent of the disaster and posted them on their web site. Other satellite imagery reportedly being withheld by the Obama administration, shows that what lies under the gaping chasm spewing oil at an ever-alarming rate is a cavern estimated to be the size of Mount Everest. This information has been given an almost national security-level classification to keep it from the public, according to Madsen’s sources.

The Corps of Engineers and FEMA are reported to be highly critical of the lack of support for quick action after the oil disaster by the Obama White House and the US Coast Guard. Only now has the Coast Guard understood the magnitude of the disaster, dispatching nearly 70 vessels to the affected area. Under the loose regulatory measures implemented by the Bush-Cheney Administration, the US Interior Department’s Minerals Management Service became a simple “rubber stamp,” approving whatever the oil companies wanted in terms of safety precautions that could have averted such a disaster. Madsen describes a state of “criminal collusion” between Cheney’s former firm, Halliburton, and the Interior Department’s MMS, and that the potential for similar disasters exists with the other 30,000 off-shore rigs that use the same shut-off valves.

Silence from Eco groups?... Follow the money

Without doubt at this point we are in the midst of what could be the greatest ecological catastrophe in history. The oil platform explosion took place almost within the current loop where the Gulf Stream originates. This has huge ecological and climatological consequences.

A cursory look at a map of the Gulf Stream shows that the oil is not just going to cover the beaches in the Gulf, it will spread to the Atlantic coasts up through North Carolina then on to the North Sea and Iceland. And beyond the damage to the beaches, sea life and water supplies, the Gulf stream has a very distinct chemistry, composition (marine organisms), density, temperature. What happens if the oil and the dispersants and all the toxic compounds they create actually change the nature of the Gulf Stream? No one can rule out potential changes including changes in the path of the Gulf Stream, and even small changes could have huge impacts. Europe, including England, is not an icy wasteland due to the warming from the Gulf Stream.

Yet there is a deafening silence from the very environmental organizations which ought to be at the barricades demanding that BP, the US Government and others act decisively.

That deafening silence of leading green or ecology organizations such as Greenpeace, Nature Conservancy, Sierra Club and others may well be tied to a money trail that leads right back to the oil industry, notably to BP. Leading environmental organizations have gotten significant financial payoffs in recent years from BP in order that the oil company could remake itself with an “environment-friendly face,” as in “beyond petroleum” the company’s new branding.

The Nature Conservancy, described as “the world’s most powerful environmental group,” has awarded BP a seat on its International Leadership Council after the oil company gave the organization more than $10 million in recent years.

Until recently, the Conservancy and other environmental groups worked with BP in a coalition that lobbied Congress on climate-change issues. An employee of BP Exploration serves as an unpaid Conservancy trustee in Alaska. In addition, according to a recent report published by the Washington Post, Conservation International, another environmental group, has accepted $2 million in donations from BP and worked with the company on a number of projects, including one examining oil-extraction methods. From 2000 to 2006, John Browne, then BP's chief executive, sat on the CI board.

Further, The Environmental Defense Fund, another influential ecologist organization, joined with BP, Shell and other major corporations to form a Partnership for Climate Action, to promote ‘market-based mechanisms’ (sic) to reduce greenhouse gas emissions.

Environmental non-profit groups that have accepted donations from or joined in projects with BP include Nature Conservancy, Conservation International, Environmental Defense Fund, Sierra Club and Audubon. That could explain why the political outcry to date for decisive action in the Gulf has been so muted.

Of course those organizations are not going to be the ones to solve this catastrophe. The central point at this point is who is prepared to put the urgently demanded federal and international scientific resources into solving this crisis. Further actions of the likes of that from the Obama White House to date or from BP can only lead to the conclusion that some very powerful people want this debacle to continue. The next weeks will be critical to that assessment.

THE WORLD CUP AND APARTHEID

‘At Least Under Apartheid…’: South Africa on the Eve of the World Cup

Dave Zirin

At long last, soccer fans, the moment is here. On Friday, when South Africa takes the field against Mexico, the World Cup will officially be underway. Nothing attracts the global gaze quite like it.

Nothing creates such an undeniably electric atmosphere with enough energy to put British Petroleum, Exxon/Mobil and Chevron out of business for good.

And finally, after eighty years, the World Cup has come to Africa. We should take a moment to celebrate that this most global of sports has finally made its way to the African continent, nesting in the bucolic country of South Africa. And yet as we celebrate the cup’s long awaited arrival in the cradle of civilization, there are realities on the ground that would be insane to ignore. To paraphrase an old African saying, “When the elephants party, the grass will suffer.” In the hands of FIFA and the ruling African National Congress, the World Cup has been a neoliberal Trojan Horse, enacting a series of policies that the citizens of this proud nation would never have accepted if not wrapped in the honor of hosting the cup. This includes $9.5 billion in state deficit spending ($4.3 billion in direct subsidies and another $5.2 billion in luxury transport infrastructure). This works out to about $200 per citizen.

As the Anti-Privatization Forum of South Africa has written, “Our government has managed, in a fairly short period of time, to deliver ‘world class’ facilities and infrastructure that the majority of South Africans will never benefit from or be able to enjoy. The APF feels that those who have been so denied, need to show all South Africans as well as the rest of the world who will be tuning into the World Cup, that all is not well in this country, that a month long sporting event cannot and will not be the panacea for our problems. This World Cup is not for the poor – it is the soccer elites of FIFA, the elites of domestic and international corporate capital and the political elites who are making billions and who will be benefiting at the expense of the poor.”

On Thursday morning I was apoplectic and an umpire was the target of my rage. Yes it was irrational. Yes I probably need to start putting Prozac on my pancakes. But my anger was real.

That most exotic of baseball specimens—the perfect game—was yanked away from Detroit Tigers pitcher Armando Galarraga by first base umpire Jim Joyce. As if the city of Detroit hasn’t suffered enough!

In South Africa, the ANC government has a word for those who would dare raise these concerns. They call it “Afropessimism.” If you dissent from being an uncritical World Cup booster, you are only feeding the idea that Africa is not up to the task of hosting such an event. Danny Jordaan the portentously titled Chief Executive Officer of the 2010 FIFA World Cup South Africa, lamented to Reuters, “For the first time in history, Africa really will be the centre of the world’s attention—for all the right reasons—and we are looking forward to showing our continent in its most positive light.”

To ensure that the “positive light” is the only light on the proceedings, the government has suspended the right to protest for a series of planned demonstrations. When the APF marches to present their concerns, they will be risking arrest or even state violence. Against expectations, they have been granted the right to march, but only if they stay at least 1.5 km from FIFA headquarters in Soccer City. If they stray a step closer, it’s known that the results could be brutal.

You could choke on the irony. The right to protest was one of the major victories after the overthrow of apartheid. The idea that these rights are now being suspended in the name of “showing South Africa…in a positive light” is reality writ by Orwell.
Yet state efforts to squelch dissent have been met with resistance. Last month, there was a three-week transport strike that won serious wage increases for workers. The trade union federation COSATU has threatened to break with the ANC and strike during the World Cup if double-digit electricity increases aren’t lowered. The National Health and Allied Workers Union have also threatened to strike later this month if they don’t receive pay increases of 2 percent over the rate of inflation.

In addition, June 16 is the anniversary of the Soweto uprising, which saw 1,000 school children murdered by the apartheid state in 1976. It is a traditional day of celebration and protest. This could be a conflict waiting to happen, and how terrible it would be if it’s the ANC wields the clubs this time around.

The anger flows from a sentiment repeated to me time and again when I walked the streets of this remarkable, resilient, country. Racial apartheid is over, but it’s been replaced by a class apartheid that governs people’s lives. Since the fall of the apartheid regime, white income has risen by 24 percent, while black wealth has actually dropped by 1 percent. But even that doesn’t tell the whole story, since there has been the attendant development of a new black political elite and middle class. Therefore, for the mass of people, economic conditions—unemployment, access to goods and services—has dramatically worsened. This is so utterly obvious even the Wall Street Journal published a piece titled, “As World Cup Opens, South Africa’s Poor Complain of Neglect.”

The article quotes Maureen Mnisi, a spokeswoman for the Landless People’s Movement in Soweto, saying, “At least under apartheid, there was employment—people knew where to go for jobs.

Officials were accountable.” Anytime someone has to start a sentence with “At least under apartheid…,” that in and of itself is a searing indictment of an ANC regime best described as isolated, sclerotic and utterly alienated from its original mission of a South Africa of shared prosperity. A major party is coming to South Africa. But it’s the ANC that will have to deal with the hangover.

Source

Hypocrisy Reigns

Things internationally are so dispiriting there's nothing left to do but fantasize. I picture Turkey, as a member of NATO, demanding that the alliance come to its defense after being attacked by Israel. Under Article 5 of the NATO charter an armed attack on one member is deemed to constitute an armed attack on all members. That is the ostensible reason NATO is fighting in Afghanistan — the attack against the United States on September 11, 2001 is regarded as an attack on all NATO members (disregarding the awkward fact that Afghanistan as a country had nothing to do with the attack). The Israeli attack on a Turkish-flagged ship, operated by a Turkish humanitarian organization, killing nine Turkish nationals and wounding many more can certainly constitute an attack upon a NATO member.

So, after the United States, the UK, Germany, France and other leading NATO members offer their ridiculous non-sequitur excuses why they can't ... umm ... er ... invoke Article 5, and the international media swallows it all without any indigestion, Turkey demands that Israel should at least lose its formal association with NATO as a member of the Mediterranean Dialogue. This too is dismissed with scorn by the eminent NATO world powers on the grounds that it would constitute a victory for terrorism. And anti-Semitism of course.

Turkey then withdraws from NATO. Azerbaijan and five other Central Asian members of NATO's Partnership for Peace with Turkic constituencies do the same. NATO falls into a crisis. Remaining member countries begin to question the organization's policies as never before ... like please tell us again why our young men are killing and dying in Afghanistan, and why we send them to Kosovo and Iraq and other places the Americans deem essential to their endlessly-threatened national security.

When Vice President Biden tells the eminent conservative-in-liberal-clothing pseudo-intellectual Charlie Rose on TV that "We have put as much pressure and as much cajoling on Israel as we can to allow them [Gaza] to get building materials in," 1Rose for once rises to the occasion and acts like a real journalist, asking Biden: "Have you threatened Israel with ending all military and economic aid? ... Have you put the names of Israeli officials on your list of foreigners who can not enter the United States and whose bank accounts in the US are frozen, as you've done with numerous foreign officials who were not supporters of the empire? ... Since Israel has committed both crimes against the peace and crimes against humanity, and since these are crimes that have international jurisdiction, certain Israeli political and military personnel can be named in trials held in any country of the world. Will you be instructing the Attorney General to proceed with such an indictment? Or if some other country which is a member of the International Criminal Court calls upon the ICC to prosecute these individuals, will the United States try to block the move? ... Why hasn't the United States itself delivered building materials to Gaza?"

When Israel justifies its murders on the grounds of "self-defense", late-night TV comedians Jay Leno and David Letterman find great humor in this, pointing out that a new memoir by China's premier at the time of the 1989 Tiananmen Square violent suppression defends the military action by saying that soldiers acted in "self-defense" when they fired on the democracy activists. (2)

When Israel labels as "terrorists" the ship passengers who offered some resistance to the Israeli invaders, the New York Times points out that the passengers who resisted the 9-11 highjackers on the plane which crashed in Pennsylvania are called "heroes". (As an aside, it's worth noting that the United States uses 9-11 as Israel uses the Holocaust — as excuse and justification for all manner of illegal and violent international behavior.)

Meanwhile, the Washington Post reminds its readers that in 2009 Israel attacked a boat on international waters carrying medical aid to Gaza with former congresswoman Cynthia McKinney aboard; and that in 1967 Israel attacked an American ship, the USS Liberty, killing 34 and wounding about 173, and that President Johnson did then just what President Obama is doing now and would have done then — nothing.

And finally, Secretary of State Clinton declares that she's had a revelation. She realizes that what she recently said about North Korea when it was accused of having torpedoed a South Korean warship applies as well to Israel. Mrs. Clinton had demanded that Pyongyang "stop its provocative behavior, halt its policy of threats of belligerence towards its neighbors, and take irreversible steps to fulfill its denuclearization commitments and comply with international law." (3) She adds that the North Korean guilt is by no means conclusive, while Israel doesn't deny its attack on the ship at all; moreover, it's not known for sure if North Korea actually possesses nuclear weapons, whereas there's no uncertainty about Israel's large stockpile.

So there you have it. Hypocrisy reigns. Despite my best fantasizing. Is hypocrisy a moral failing or a failure of the intellect? When President Obama says, as he has often, "No one is above the law" and in his next breath makes it clear that his administration will not seek to indict Bush or Cheney for any crimes, does he think that no one will notice the contradiction, the hypocrisy? That's a callous disregard for public opinion and/or a dumbness worthy of his predecessor.

And when he declares: "The future does not belong to those who gather armies on a field of battle or bury missiles in the ground", (4) does it not occur to him at all that he's predicting a bleak outlook for the United States? Or that his conscious, deliberate policy is to increase the size of America's army and its stockpile of missiles?

Comrades, can the hypocrisy and the lies reach such a magnitude that enough American true believers begin to question their cherished faith, so that their number reaches a critical mass and explodes? Well, it's already happened with countless Americans, but it's an awfully formidable task keeping pace with what is turned out by the mass media and education factories. They're awfully good at what they do. Too bad. But don't forsake the struggle. What better way is there to live this life? And remember, just because the world has been taken over by lying, hypocritical, mass-murdering madmen doesn't mean we can't have a good time.

Notes.

1. Charlie Rose Live, June 2, 2010 program

2. Associated Press, June 4, 2010

3. State Department press conference, May 24, 2010

4. Talk given in Moscow, July 7, 2009, text released by the White House

Boehner: Government--i.e. Taxpayers--Should Help Pay For Oil Spill

Congressional Democrats and the White House are toying with different ways to force BP to cover the costs of damages from the Gulf oil spill. But they face stiff opposition from industry...and it seems leading Republicans. In response to a question from TPMDC, House Minority Leader John Boehner said he believes taxpayers should help pick up the tab for the clean up.

"I think the people responsible in the oil spill--BP and the federal government--should take full responsibility for what's happening there," Boehner said at his weekly press conference this morning.

Boehner's statement followed comments last Friday by US Chamber of Commerce CEO Tom Donohue who said he opposes efforts to stick BP, a member of the Chamber, with the bill. "It is generally not the practice of this country to change the laws after the game," he said. "Everybody is going to contribute to this clean up. We are all going to have to do it. We are going to have to get the money from the government and from the companies and we will figure out a way to do that."

So today I asked Boehner, "Do you agree with Tom Donohue of the Chamber that the government and taxpayers should pitch in to clean up the oil spill?" The shorter answer is yes.

The Chamber is extremely influential in Republican politics, so on that level it's not particularly surprising that Boehner has Donohue's back on this one. But the politics of asking the federal government (i.e. taxpayers) to help cover the multi-billion dollar cleanup and rescue efforts are deadly. Look for Democrats to jump all over this one.

Late update: Boehner spokesman Michael Steel emails to say "Boehner made a general statement about who is responsible for the spill, and the federal government oversight was clearly lacking, but he has said repeatedly that BP is responsible for the cost of the cleanup."

Hypocrisy Reigns. "The World has been taken over by Lying, Hypocritical, Mass-murdering Madmen"

Things internationally are so dispiriting there's nothing left to do but fantasize. I picture Turkey, as a member of NATO, demanding that the alliance come to its defense after being attacked by Israel. Under Article 5 of the NATO charter an armed attack on one member is deemed to constitute an armed attack on all members. That is the ostensible reason NATO is fighting in Afghanistan — the attack against the United States on September 11, 2001 is regarded as an attack on all NATO members (disregarding the awkward fact that Afghanistan as a country had nothing to do with the attack). The Israeli attack on a Turkish-flagged ship, operated by a Turkish humanitarian organization, killing nine Turkish nationals and wounding many more can certainly constitute an attack upon a NATO member.

So, after the United States, the UK, Germany, France and other leading NATO members offer their ridiculous non-sequitur excuses why they can't ... umm ... er ... invoke Article 5, and the international media swallows it all without any indigestion, Turkey demands that Israel should at least lose its formal association with NATO as a member of the Mediterranean Dialogue. This too is dismissed with scorn by the eminent NATO world powers on the grounds that it would constitute a victory for terrorism. And anti-Semitism of course.

Turkey then withdraws from NATO. Azerbaijan and five other Central Asian members of NATO's Partnership for Peace with Turkic constituencies do the same. NATO falls into a crisis. Remaining member countries begin to question the organization's policies as never before ... like please tell us again why our young men are killing and dying in Afghanistan, and why we send them to Kosovo and Iraq and other places the Americans deem essential to their endlessly-threatened national security.

When Vice President Biden tells the eminent conservative-in-liberal-clothing pseudo-intellectual Charlie Rose on TV that "We have put as much pressure and as much cajoling on Israel as we can to allow them [Gaza] to get building materials in," [1] Rose for once rises to the occasion and acts like a real journalist, asking Biden: "Have you threatened Israel with ending all military and economic aid? ... Have you put the names of Israeli officials on your list of foreigners who can not enter the United States and whose bank accounts in the US are frozen, as you've done with numerous foreign officials who were not supporters of the empire? ... Since Israel has committed both crimes against the peace and crimes against humanity, and since these are crimes that have international jurisdiction, certain Israeli political and military personnel can be named in trials held in any country of the world. Will you be instructing the Attorney General to proceed with such an indictment? Or if some other country which is a member of the International Criminal Court calls upon the ICC to prosecute these individuals, will the United States try to block the move? ... Why hasn't the United States itself delivered building materials to Gaza?"

When Israel justifies its murders on the grounds of "self-defense", late-night TV comedians Jay Leno and David Letterman find great humor in this, pointing out that a new memoir by China's premier at the time of the 1989 Tiananmen Square violent suppression defends the military action by saying that soldiers acted in "self-defense" when they fired on the democracy activists. [2]

When Israel labels as "terrorists" the ship passengers who offered some resistance to the Israeli invaders, the New York Times points out that the passengers who resisted the 9-11 highjackers on the plane which crashed in Pennsylvania are called "heroes". (As an aside, it's worth noting that the United States uses 9-11 as Israel uses the Holocaust — as excuse and justification for all manner of illegal and violent international behavior.)

Meanwhile, the Washington Post reminds its readers that in 2009 Israel attacked a boat on international waters carrying medical aid to Gaza with former congresswoman Cynthia McKinney aboard; and that in 1967 Israel attacked an American ship, the USS Liberty, killing 34 and wounding about 173, and that President Johnson did then just what President Obama is doing now and would have done then — nothing.

And finally, Secretary of State Clinton declares that she's had a revelation. She realizes that what she recently said about North Korea when it was accused of having torpedoed a South Korean warship applies as well to Israel. Mrs. Clinton had demanded that Pyongyang "stop its provocative behavior, halt its policy of threats of belligerence towards its neighbors, and take irreversible steps to fulfill its denuclearization commitments and comply with international law." [3] She adds that the North Korean guilt is by no means conclusive, while Israel doesn't deny its attack on the ship at all; moreover, it's not known for sure if North Korea actually possesses nuclear weapons, whereas there's no uncertainty about Israel's large stockpile.

So there you have it. Hypocrisy reigns. Despite my best fantasizing. Is hypocrisy a moral failing or a failure of the intellect? When President Obama says, as he has often, "No one is above the law" and in his next breath makes it clear that his administration will not seek to indict Bush or Cheney for any crimes, does he think that no one will notice the contradiction, the hypocrisy? That's a callous disregard for public opinion and/or a dumbness worthy of his predecessor.

And when he declares: "The future does not belong to those who gather armies on a field of battle or bury missiles in the ground", [4] does it not occur to him at all that he's predicting a bleak outlook for the United States? Or that his conscious, deliberate policy is to increase the size of America's army and its stockpile of missiles?

Comrades, can the hypocrisy and the lies reach such a magnitude that enough American true believers begin to question their cherished faith, so that their number reaches a critical mass and explodes? Well, it's already happened with countless Americans, but it's an awfully formidable task keeping pace with what is turned out by the mass media and education factories. They're awfully good at what they do. Too bad. But don't forsake the struggle. What better way is there to live this life? And remember, just because the world has been taken over by lying, hypocritical, mass-murdering madmen doesn't mean we can't have a good time.

Bad guys and good guys

In Lahore, Pakistan, reported the Washington Post on May 29, "Militants staged coordinated attacks ... on two mosques of a minority Muslim sect, taking hostages and killing at least 80 people. ... At least seven men armed with grenades, high-powered rifles and suicide vests stormed the mosques as Friday prayers ended."

Nice, really nice, very civilized. It's no wonder that decent Americans think that this is what the United States is fighting against — Islamic fanatics, homicidal maniacs, who kill their own kind over some esoteric piece of religious dogma, who want to kill Americans over some other imagined holy sin, because we're "infidels". How can we reason with such people? Where is the common humanity the naive pacifists and anti-war activists would like us to honor?

And then we come to the very last paragraph of the story: "Elsewhere in Pakistan on Friday, a suspected U.S. drone-fired missile struck a Taliban compound in the South Waziristan tribal area, killing eight, according to two officials in the region." This, we are asked to believe by our leaders, is a higher level of humanity. The United States does this every other day, sending robotic death machines called Predators flying over Afghanistan and Pakistan, to send Hellfire missiles screaming into wedding parties, funerals, homes, not knowing who the victims are, not caring who the victims are, many hundreds of them by now, as long as Washington can claim each time — whether correctly or not — that amongst their number was a prominent infidel, call him Taliban, or al Qaeda, or insurgent, or militant. How can one reason with such people, the ones in the CIA who operate the drone flights? What is the difference between them and a suicide bomber? The suicide bomber becomes one of the victims himself and sees his victims up close before killing them. The CIA murderer bomber sits safely in a room in Nevada or California and pretends he's playing a video game, then goes out to dinner while his victims lay dying. The suicide bomber believes passionately in something called paradise. The murderer bomber believes passionately in something called flag and country.

The State Department's Legal Advisor justifies the Predator bombings as ... yes, "self-defense". 5 Try reasoning with that.

These American drone bombings are of course the height of aggression, the ultimate international crime. They were used over Iraq as well beginning in the 1990s. In December 2002, shortly before the US invasion in March, the Iraqis finally managed to shoot one down. This prompted a spokesman for the US Central Command, which oversees US military operations in the Middle East, to call it another sign of Iraqi President Saddam Hussein's "campaign of military aggression." 6

This particular piece of hypocrisy may have actually been outdone by Secretary of Defense Donald Rumsfeld's comment about the US flights and bombings over Iraq during that period: "It bothers the dickens out of me that US and British pilots are getting fired at day after day after day, with impunity." 7

Send me a stamped self-addressed envelope for a copy of the revised edition of "An arsonist's guide to the homes of Pentagon officials".

When politicians misbehave. By speaking the truth.

The German president, Horst Koehler, resigned last week because he said something government officials are not supposed to say. He said that Germany was fighting in Afghanistan for economic reasons. No reference to democracy. Nothing about freedom. Not a word about Good Guys fighting Bad Guys. The word "terrorism" was not mentioned at all. Neither was "God". On a trip to German troops in Afghanistan he had declared that a country such as Germany, dependent on exports and free trade, must be prepared to use military force. The country, he said, had to act "to protect our interests, for example, free trade routes, or to prevent regional instability which might certainly have a negative effect on our trade, jobs and earnings".

"Koehler has said something openly that has been obvious from the beginning," said the head of Germany's Left Party. "German soldiers are risking life and limb in Afghanistan to defend the export interests of big economic interests." [8]

Other opposition politicians had called for Koehler to take back the remarks and accused him of damaging public acceptance of German military missions abroad. [9]

As T.S. Eliot famously observed: "Humankind can not bear very much reality."

What is the opposite of being a conspiracy theorist?

David Remnick, editor of the New Yorker magazine and former Washington Post reporter, has a new book out, "The Bridge: The Life and Rise of Barack Obama". In the three pages Remnick devotes to Obama's 1983-4 employment at Business International Corporation in New York he makes no mention of the well-known ties between BIC and the CIA. In 1977, for example, the New York Times revealed that BIC had provided cover for four CIA employees in various countries during earlier years of the Cold War; [10] BIC also attempted to penetrate the radical left, including Students for a Democratic Society (SDS). [11]

Did Remnick not think it at all interesting and worthy of mention that the future president worked for more than a year with a company that was a CIA asset? Even if the company and the CIA made no attempt to recruit Obama, which in fact they may have done? It's this kind of obvious omission that helps feed the left's conspiracy thinking.

Because Remnick has impeccable establishment credentials the book has been widely reviewed. But none of the many reviewers has seen fit to mention this omission. And the way it works of course is that if it's not mentioned, it didn't happen. And if you mention such a thing, you're a pathetic conspiracy theorist. Like me, who discussed it in the January edition of this report. [12]

William Blum is the author of Killing Hope: US Military and CIA Interventions Since World War 2, Rogue State: A Guide to the World's Only Superpower, West-Bloc Dissident: A Cold War Memoir, Freeing the World to Death: Essays on the American Empire, Portions of the books can be read, and signed copies purchased, at www.killinghope.org

Notes

1. Charlie Rose Live, June 2, 2010 program
2. Associated Press, June 4, 2010

3. State Department press conference, May 24, 2010

4. Talk given in Moscow, July 7, 2009, text released by the White House

5. National Public Radio, March 26, 2010

6. Washington Post, December 24, 2002

7. Associated Press, September 30, 2002

8. London Times Online, May 31, 2010

9. Associated Press, May 31, 2010

10. New York Times, December 27, 1977, p.40
11. Carl Oglesby, "Ravens in the Storm: A Personal History of the 1960s Antiwar Movement" (2008), passim

12. William Blum, The Anti-Empire Report, January 3rd, 2009

Global Research Articles by William Blum

BP oil leak aftermath: Slow-motion tragedy unfolds for marine life

The wildlife haven Grand Isle is at the heart of the environmental catastrophe engulfing Louisiana

A dead crab sits among the oil from the Deepwater Horizon oil spill on a beach in Grand Isle. Photograph: Lee Celano/Reuters

Out on the water, it starts as a slight rainbow shimmer, then turns to wide orange streamers of oil whipping through the waves. Later, on the beach, we witness a vast, Olympic-sized swimming pool of dark chocolatey syrup left behind at low tide, and thick dark patches of crude bubbling on the sand.

The smell of the oil on the beach is so strong it burns your nostrils, and leaves you feeling dizzy and headachey even after a few minutes away from it.

According to marine biologist Rick Steiner, my companion on a boat ride through the slick, this is the most volatile and toxic form of crude oil in the waters and lapping on to the beaches of Grand Isle, the area at the heart of the slowly unfolding environmental apocalypse that has engulfed Louisiana, and is now moving eastwards, threatening Mississippi, Alabama, and the Florida Panhandle.

Fifty-three days after BP's ruptured well began spewing crude oil from 5,000ft below the sea, the wholesale slaughter of dolphins, pelicans, hermit crab and other marine life is only now becoming readily visible to humans.

So too is the futility of the Obama administration's response effort, with protective boom left to float uselessly at sea or – in the case of the Queen Bess pelican sanctuary which we visit – trapping the oil in vulnerable nesting grounds.

Steiner, 57, a marine biologist from the University of Alaska and a veteran of America's last oil spill disaster, the Exxon Valdez, says he is in the Gulf of Mexico "to bear witness", and for days he has been taking to the beaches and the waters in a Greenpeace boat gathering evidence.

The first casualties on Steiner's tour appear minutes after our boat leaves the marina and moves through Barataria Pass, prime feeding ground for bottlenose dolphins. Several appear, swimming, eating, even mating in waters criss-crossed by wide burnt-orange streamers of oil. All are at risk of absorbing toxins, from the original spill and from more than 1.2m gallons of chemicals dumped into the Gulf to try to break up the slick, says Steiner.

"They get it in their eyes. They get it in the fish they eat and it is also possible when they come to the surface and open their blowhole to breathe that they are inhaling some of it," he says.

The Greenpeace crew turn up the throttle and the boat pulls up to the orange and yellow protective boom around Queen Bess island, which was intended as a haven for the brown pelican. These birds, until recently, were on the federal government's list of endangered species and were doing OK – but now that recovery appears to have been abruptly reversed.

A dark tideline of oil encircles the island, and has crept into the marsh grasses, where the pelican nest. Many, if not most, of the adult birds had patches of oil on their chest feathers. Nearly all are doomed, says Steiner, if not now, then at some point in the future. "The risks in here to birds are not just acute mortality right here right now," he says. "There is mortality we won't see for a month or two months, or even a year."

He points out a pelican standing so still it looks like it's been made out of a slab of chocolate, another frantically flapping its spread wings to try to shake off the oil, and then another manically pecking at the spots on its chest. "He could be a candidate for cleaning, and he may survive," Steiner says. "He obviously won't if he's not cleaned."

Rescue teams have plucked hundreds of birds from the muck. But stripping oil from the feathers of stricken birds is a slow and delicate operation, and there is no assurance of the birds' survival. About a third of the rescued birds have died so far.

As we pull up to Queen Bess island, two crew boats are at work shoring up the two lines of defence for the island: an outer ring of orange and yellow protective boom intended to push the oil back out to sea, as well as an inner ring of white absorbent material that is supposed to suck up any of the crude that gets through.

Since oil began lapping at the Louisiana coast, the government has set down 2.25m ft of containment boom and 2.55m ft of absorbent material. But local sports fishermen on Grand Isle complain response crews bungled the protection zone for Queen Bess because they only put a portion of the island behind the orange and yellow barrier boom. That turned the boom into traps which pushed even greater quantities of oil onshore. Steiner agrees: "I would say 70% or 80% of the booms are doing absolutely nothing at all."

The efforts on the beaches seem equally futile. By day workers in white protective suits march along the sands of the state park on the eastern end of Grand Isle, trying to suck up the oil. But as the tide goes out there is only more oil to be found, and dozens of dead hermit crab that have struggled to flee to shore.

Steiner says he has seen it all before, after the Exxon Valdez went aground in 1989, and then in other oil spills he has monitored around the world from Lebanon to Pakistan. There is, he says, a drearily familiar pattern. "Industry always habitually understate the size of a spill and impact as well as habitually overstate the effectiveness of the response."

In the case of the Exxon Valdez, he says, the environmental impacts persisted for months or years after the tanker went aground. That catastrophe, which saw 11m gallons of crude dumped into the pristine waters of Alaska, occurred within the space of six hours.

This spill is much worse. BP's well on the ocean floor has been spewing greater volumes of crude oil into the water for 53 days. Even by the administration's most optimistic forecasts, it will keep gushing until August, and the clean-up could last well into the autumn.

"This is just the start. It is going to keep coming in even if they shut the damn thing off today," says Steiner.

Hispanics abandon Arizona, fleeing economy, immigration law

Arizona’s hard-hitting immigration law is driving Hispanics out of the state weeks before the controversial law goes into effect.

Although concrete figures are not available, anecdotal evidence suggests Hispanics, both legal residents and illegal immigrants, are starting to flee.

Schools in Hispanic neighborhoods are reporting abnormal enrollment drops, and businesses that serve Hispanics also report that business is down, according to a USA Today report published Wednesday.

The report suggests that the immigration law is compounding demographic trends that have already significantly curtailed illegal immigration during the past two years. The bad economy has been the primary deterrent to many Hispanic immigrants seeking to enter Arizona, says Jeffrey Passel, a demographer at the Pew Hispanic Center in Washington.

“If you have a bad economy and a hostile environment, then that’s likely to cause people to think twice about coming, and possibly even to leave,” Mr. Passel says.

Arizona’s new immigration law requires that police conducting routine traffic stops or other checks ask people about their immigration status if there is "reasonable suspicion" that they're in the country illegally.

The law also makes it a state crime to be in the country illegally or to disrupt traffic when hiring day laborers, regardless of a worker's immigration status. It would also become a crime for illegal immigrants to solicit work.

Critics contend the law could lead to racial profiling of Hispanics. It could also force an exodus of scared immigrants – legal and illegal. Nearly 100,000 illegal immigrants left Arizona after it passed a 2007 law that penalized businesses that hired them, according to the Department of Homeland Security.

The importance of the economy

Yet the economy is a far more powerful factor in immigration, says David Gutierrez, a professor of immigration history, at the University of California San Diego.

Arizona’s immigrant population, which is more than 90 percent Mexican, has already been leveling off for two years now, due to the recession.

“The economy is always the primary factor in determining migration flows,” says Professor Gutierrez. “It might appear as if these laws are turning back demographic tide in Arizona, but economic forces are a much more important aspect of that development recently.”

The Pew Hispanic Center reports a 40 to 45 percent drop in people coming to the US from Mexico, says Passel. That’s supported by data on border apprehensions, which have dropped 25 percent for two years in a row, he adds.

What’s more, more Hispanics have been leaving Arizona since the recession began.

A recent Census report suggests roughly 40,000 Hispanics left the state in 2008.

Leaving Arizona, going where?

Where are they going?

About 450,000 Mexicans return to Mexico from around the world, but “those numbers have been flat as a pancake for three years now,” Passel says.

It’s more likely, they’re migrating within the US, says Gutierrez.

“It’s got to be an exceedingly difficult decision [to leave],” he says. “Once they return to Mexico, it’s much harder to come back. It’s much more likely we’re seeing internal migration.”

Most Hispanics who flee Arizona will join friends, family, or other Hispanic communities in California, Texas, New Mexico, and other states with large Hispanic populations.

For his part, Gutierrez is skeptical of claims that the law will begin an exodus. “I don’t see a historical trend that has been in place for 100 years will be reversed because you’ve got a few hyper-conservative white legislators trying to turn back the clock, turn back the tides of history.”

Any loss, however, will be a loss for the Arizona economy, Gutierrez suggests.

“Latinos...are a highly flexible, highly exploitable work force, a buffer to economic downturns,” he says. “Many of the industries here – agriculture, service industries, low-end manufacturing, construction – are massively dependent on undocumented workers.

“If I were able to conduct an experiment and pay all of Arizona’s undocumented workers to not work for two weeks, the economy would come to a screeching, crashing halt instantaneously.”

Debt Facade Cracking in U.K. as Sovereign Contagion Spreads

When Greece’s markets first started cracking wide open, a lot of claptrap spewed forth from Wall Street. The general consensus:

• The problems in Athens would stay bottled up in Athens.

• They would remain “contained.”

• They didn’t mean anything for larger economies, including the rest of Europe, the U.K., or the U.S.

Me? I told you the exact opposite …

I said the implosion in Greece’s stock and interest rate markets — stemming from concerns about that country’s massive debt and deficit problems — were a huge red flag. They foretold a collapse in other sovereign debt markets, with collateral damage in currencies and equities.

Lo and behold, markets are now weakening worldwide. And this week, the contagion spread to the U.K. The British pound got hammered, while the FTSE 100 Index rolled over, amid concern the U.K. would be the next domino to fall!

The U.K. Gets Its Turn In the Docks

What triggered the latest batch of trouble?

On Monday, the country’s new prime minister, David Cameron, warned that the U.K.’s fiscal position is “even worse than we thought.” He went on to say that “How we deal with these things will affect our economy, our society — indeed our whole way of life.”

You have to admire PM Cameron for telling it like it really is.

The real “money quote” though came when he said:

“Greece stands as a warning of what happens to countries that lose their credibility, or whose governments pretend that difficult decisions can be avoided.”

That’s exactly what I’ve been saying for months. And it’s good to finally see a courageous politician acknowledge reality. The problem is that the U.K. is in such dire financial straits, it will take drastic action to get the country back on track.

The U.K.’s budget deficit equals more than 11 percent of gross domestic product. Meanwhile, its total debt load has already risen to $1.12 trillion — and it’s on track to DOUBLE in just the next five years!

Ratings agencies are also starting to lose patience with the government there …

Fitch weighed in with a debt warning this week, calling the country’s fiscal challenges “formidable” and warning that its debt reduction plan wasn’t aggressive enough. Fitch could soon cut the U.K.’s AAA debt rating, a move that would lead to even more dislocations in the country’s equity, debt, and currency markets.

As if that weren’t enough, yet ANOTHER European sovereign market blew up in recent days. I’m talking about Hungary …

A government official there said the economy was in a “very grave situation,” raising fears the country could default on its debt. That’s amazing considering Hungary just got a $24 billion bailout back in 2008.

A Hungarian official’s remark spooked investors, triggering a slide in its currency, bonds and stock market.

The result? The yield on Hungarian bonds soared relative to U.S. Treasuries. The Hungarian currency, the forint, plunged in value. And the Budapest Stock Exchange index collapsed almost 1,300 points, or 5 percent, over the span of five days.

Bottom line: The sovereign debt crisis is spreading like wildfire, with no sign of letting up.

What It Means to You …

The U.S. has still not suffered the consequences of its profligacy. Our bond market is hanging in there, while our interest rates haven’t surged … yet. But I still believe it’s only a matter of time.

Meanwhile, while our bond market is temporarily ignoring these problems, the stock market sure isn’t. The Dow plunged more than 320 points last Friday and another 115 points on Monday before experiencing a minor dead cat bounce.

My big picture view?

It looks like the easy money, “bought and paid for” rally is coming to an end. Investors are waking up to the fact that governments can’t keep borrowing and spending forever without torpedoing their own balance sheets.

Worse, if private spending doesn’t ramp up as government spending ebbs, the global economy will careen into a double-dip recession. The latest economic data suggests that scenario may very well be unfolding.

For conservative investors, that means it’s time to once again focus on bear market strategies. Among them? Hedging with options, selling down positions, and selectively using inverse ETFs to generate profits from stock market declines.

Until next time,

Mike