The True National Debt

When I read Paul Krugman and the other Keynesian boneheads saying that our debt is not a problem, they quote figures about our debt of $13.3 trillion versus our GDP of $14.6 trillion not being so bad. That is only 91% of GDP. They point to World War II when our national debt reached 120% of GDP. They say everything worked out after that.

Well lets analyze that comparison for just a second. In 1945, Europe, Russia and Asia lay in ruins. The devastation was epic. The United States stood alone as the only unscathed country in the world. America became the manufacturer to the world. We rebuilt Europe and Asia. Our GDP soared, as our National Debt declined from $269 billion in 1946 to $255 billion in 1951, remaining below $300 billion until 1963.

Today our reported National Debt is $13.362 TRILLION. This is the first big lie. There are two entities named Fannie Mae and Freddie Mac that happen to be 80% owned by the US government. Anyone who thinks these two companies can operate without the backing of the US Government is delusional. The US taxpayer is on the hook for these two disastrously run companies. Somehow, government accounting doesn’t require their debt to be considered the responsibility of the US taxpayer. This is a fraud, pure and simple. Their debt is our debt.

According to their latest 10Q filed in early August (links below), their debts are:

Fannie Mae $3.257 Trillion

Freddie Mac $2.345 Trillion

The true National Debt of the United States is $18.964 Trillion. Therefore, our debt as a percentage of GDP is really 130%. This is beyond the level reached during World War II. We are no longer the manufacturer to the world. We are the consumer to the world. The country adds $4 Billion per day to the National Debt. Our GDP is stagnating with future growth no better than 2% being realistic.

Kenneth Rogoff and Carmen Reinhart, after analyzing data over 200 years throughout the world, have concluded that once debt reaches 90% of GDP, a tipping point is reached. Crisis and collapse will ensue.

"After looking at data from 44 countries spanning 200 years, they’ve concluded that at ratios of debt to GDP up to 90%, there’s not much correlation between government debt and economic growth. Above 90%, however, median economic growth rates fall by one percentage point and average economic growth rates fall by about four percentage points. That makes the 90% level a kind of make-or-break point for countries that are hoping to grow their way out of debt. If the government debt load climbs above 90% of GDP, economic growth slows so much that growth is no longer a viable solution to reducing that debt. Above the 90% level, governments serious about reducing their debt load have to increasingly rely on "solutions" such as reducing wages and depreciating their currencies, which might over time increase global economic competitiveness enough to give a boost to national economic growth. In the short to medium term, however, these "solutions" inflict real pain on the citizens of the countries since they reduce standards of living."

The U.S. is well beyond the tipping point. By the time Obama exits Washington DC in 2012, the ratio will be 140% of GDP. That is if the currency collapse doesn’t happen first.

August 27, 2010

Jim Quinn [send him mail] is Senior Director of Strategic Planning at an Ivy League university. This article reflects the personal views of Jim Quinn. It does not necessarily represent the views of his employer, and is not sponsored or endorsed by them.

Copyright © 2010 Jim Quinn

Its Official: China is Unloading its Treasury Bonds

It looks like the smart money these days is found in China. While American investors have been scrambling over each other to buy more Treasury bonds at historically low yields, China has begun quietly unloading some of its own enormous holdings. In June, the Middle Kingdom sold $21.2 billion of paper, reducing its net long to $839.7 billion. This is little more than 10% of the total $8.18 trillion in federal debt that Uncle Sam has outstanding.

Total foreign ownership of US Treasury bonds amounts to $4 trillion, up from $2.4 trillion in three years. Instead, the Chinese have been buying Japanese government bonds, which today carry a paltry 0.9% yield, but have the merit that they are denominated in a rapidly appreciating currency. The Mandarins in Beijing have also been picking up a variety of bonds in Europe which have seen yields pushed to near records, thanks to the debt crisis there.

Officials at the People's Bank of China say that it is all part of a broader diversification effort away from the greenback. PIMCO's Bill Gross has apparently been taking Mandarin lessons on the sly because he has also been paring back his own massive holdings in longer dated Treasuries. To understand why, take a look at the chart below of the spread between the Dow dividend yield and the ten year Treasury yield which has turned positive for the first time since 1955.

Courtesy: Mad Hedge Fund Trader

Banks back switch to renminbi for trade

Major banks are launching roadshows to promote the use of China's renminbi currency in international trade

Hong Kong, China (FT) -- A number of the world's biggest banks have launched international roadshows promoting the use of the renminbi to corporate customers instead of the dollar for trade deals with China.

HSBC, which recently moved its chief executive from London to Hong Kong, and Standard Chartered, are offering discounted transaction fees and other financial incentives to companies that choose to settle trade in the Chinese currency.

"We're now capable of doing renminbi settlement in many parts of the world," said Chris Lewis, HSBC's head of trade for greater China. "All the other major international banks are frantically trying to do the same thing."

HSBC and StanChart are among a slew of global banks -- including Citigroup and JPMorgan -- holding roadshows across Asia, Europe and the US to promote the renminbi to companies.

The move aligns the banks favourably with Beijing's policy priorities and positions them to profit from what is expected to be a rapidly growing line of business in the future.

The phenomenon will accelerate Beijing's drive to transform the renminbi from a domestic currency into a global medium of exchange like the dollar and euro.

Chinese central bank officials accompanied StanChart bankers on a roadshow to Korea and Japan in June. The bank held similar events in London, Frankfurt and Paris.

Lisa Robins, JPMorgan's head of treasury and securities services for China, said there had been a "spike in interest" from international clients.

An increasing number of Chinese companies have been asking foreign trading partners to accept renminbi as payment, said Carmen Ling, Hong Kong head of global transaction services at Citi.

BBVA, Spain's second-biggest bank, is also drawing up plans for a global marketing campaign that will focus on Latin American companies that export to China.

Banks started establishing renminbi trade settlement operations in mid-2009, when Beijing introduced a pilot scheme allowing companies to use the renminbi for trade outside China.

The scramble has intensified in recent months as Beijing has substantially expanded the scheme -- from a handful of Asian countries to the whole world -- and introduced other liberalisations to its currency regime.

Cross-border trade in renminbi totalled Rmb70.6bn ($10bn) in the first half of the year -- about 20 times the Rmb3.6bn recorded in the second half of 2009.

But those figures remain tiny compared to the $2,800bn worth of goods and services that were traded across China's borders last year, most of which was settled in dollars or euros.

With renminbi trade settlement volumes expected to increase rapidly, banks are under pressure to establish a foothold in the nascent market and demonstrate to Chinese officials that they are committed to the scheme.

China has taken several steps in recent months to boost the international use of its currency and to establish Hong Kong, the special administrative region, as the global centre for offshore renminbi business.

McDonald's, the US burger chain and icon of globalisation, took advantage of the new rules this month when it became the first foreign multinational to issue renminbi-denominated bonds in Hong Kong.

FBI paid informant in Bronx synagogue bomb plot $97K, who provided terror suspects with fake bombs

The jury in the Bronx synagogue bomb plot case was told Wednesday that the informant who provided the four suspects with phony bombs and missiles was paid $97,000 by the FBI.

The FBI gave Pakistani immigrant Shahed Hussain $44,000 for expenses and $53,000 for "his services" over a three-year period, agent Robert Fuller said.

Fuller, the first prosecution witness in the trial that started Tuesday, showed the jury one of the unexploded bombs the would-be terrorists planned to use to blow up one of two Riverdale synagogues.

Defense lawyers contend that without the informant - who they say entrapped the suspects - their bumbling clients would never have tried to blow up two synagogues in Riverdale and shoot down missiles.

James Cromitie, 44, and co-defendants David Williams, 29, Onta Williams, 34, and Laguerre Payen, 28, were caught in May 2009.

Hussain met them at an upstate mosque, where he was sent by the feds. The trial continues today in Manhattan Federal Court. The four suspects face life in prison if convicted.

FEMA was in New York the Night Before 9/11

Click HERE for a RealAudio recording of a statement made by FEMA spokesman Tom Kenney to Dan Rather on Wednesday, September 12th, 2001. In this interview, Kenney states that FEMA was deployed to New York on Monday night, September 10th, to be ready to go into action on Tuesday morning, September 11th.

Kenney: "We're currently one of the first teams that was deployed to support the city of New York for this disaster. We arrived on late Monday night, and went into action on Tuesday morning. And not until today did we get a full opportunity to work the entire site."

Needless to say, this recording caused quite a stir. The official reaction was Kenney was simply confused about the dates.

The Federal Emergency Management Agency has said it did not have urban search and rescue teams in place in New York City prior to the Sept. 11 attacks, contrary to an Internet-based rumor alleging otherwise. ... FEMA officials said Kenney, in the heat of the moment, misstated his team's arrival date. [WorldNetDaily 11/15/01]

However, on the recording Kenney is complaining about not getting full access to the site until "today". Kenney talks about a Monday, a Tuesday, and "today". That's three days.

Ifthe above recording was made on Wednesday, September 12th as claimed, then the explanation that Kenney was simply confused about the days doesn't work, because there is one more day than can be accounted for.

Some news sources went to great lengths to dismiss Kenney's remarks...

Information provided through FOIA requests ... show that FEMA had no personnel in place Sept. 10, 2001 - the day before Sept. 11, 2001 - which would have suggested the agency had prior knowledge of the terrorist attacks. "This interview [with Tom Kenney] took place sometime on the 13th, two full days after all hell had broken loose," [Devvy Kidd - former head of the now-defunct Wallace Institute] said, noting that she has an audio copy of Rather's interview. "Kenney sounds winded on the audio as if he had been exerting himself. It is more than likely Kenney, having worked virtually nonstop since his arrival in NYC, had his days run together, and his statement simply came out wrong." [WorldNetDaily 11/27/02]

...but the cover story was blown when Rudolph Guliani testified before the 9/11 Commission:

Long Debunked "Rumor" Validated by Giuliani FEMA in NYC prior to 9-11 for Project TRIPOD terror drill, scheduled for 9-12 As of this writing, June 2, 2004, the transcript of former New York City Mayor Rudy Giuliani's testimony to the 9-11 Commission during the May 18-19, 2004 hearings in New York is the only transcript of that hearing omitted from the Commission website (http://www.9-11commission.gov). Did Rudy say something wrong? "... the reason Pier 92 was selected as a command center was because on the next day, on September 12, Pier 92 was going to have a drill, it had hundreds of people here, from FEMA, from the Federal Government, from the State, from the State Emergency Management Office, and they were getting ready for a drill for biochemical attack. So that was gonna be the place they were going to have the drill. The equipment was already there, so we were able to establish a command center there, within three days, that was two and a half to three times bigger than the command center that we had lost at 7 World Trade Center. And it was from there that the rest of the search and rescue effort was completed." Major questions exist as to why FEMA would deny being in New York City prior to 9/11 without mentioning the 9/12 bioterror drill. These questions must now be addressed as the initial suspicions of those who learned of the Tom Kenney statement have been clearly validated. The coincidental presence of a large FEMA team in NYC at the location, Pier 92, which became the Command Center for the entire emergency operation is disturbing. An alert press and a legitimate 9-11 Commission should have raised this issue long ago. [Scoop]

WTC targeted on FEMA book covers (click images for full size)
1997	1999

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Flashback: Pearl Harbor was orchestrated - emergency teams were in place:

Shortly before the attack in 1941 President Roosevelt called him [Smith] to the White House for a meeting concerning a Top Secret matter. At this meeting the President advised my father that his intelligence staff had informed him of a pending attack on Pearl Harbor, by the Japanese. He anticipated many casualties and much loss, he instructed my father to send workers and supplies to a holding area at a P.O.E. [port of entry] on the West Coast where they would await further orders to ship out, no destination was to be revealed. He left no doubt in my father's mind that none of the Naval and Military officials in Hawaii were to be informed and he was not to advise the Red Cross officers who were already stationed in the area. When he protested to the President, President Roosevelt told him that the American people would never agree to enter the war in Europe unless they were attack [sic] within their own borders. [USNI]

[In 2000] a project set up by the men who now surround George W Bush said what America needed was "a new Pearl Harbor". [John Pilger]

Like his father, Bush tries to keep a daily diary of his thoughts and observations. [On 9/11], he dictated: "The Pearl Harbor of the 21st century took place today." [Washington Post]

The Most Fiscally Irresponsible Government in U.S. History

There is an instinctive conclusion among the American public that President Obama's stimulus package

has failed to create a sustained recovery. Unemployment has increased, not declined; consumers have retrenched; housing starts have crashed along with mortgage applications; and there is a fear that a double-dip recession may very well be in the pipeline. The public perception, reflected in Pew Research/National Journal polls, is that the measures to combat the Great Recession have mostly helped large banks and financial institutions, and that's a view common to Republicans (75 percent) and Democrats (73 percent). Only one third of either political leaning thinks government policies have done a great deal or a fair amount for the poor.

There is another instinctive conclusion among the American people. It is that the national deficit, and the debts we have accumulated, are of critical political importance. On the national debt, the money the government has spent without the tax revenues to pay for it has produced mind-numbing numbers so large as to be disconnected from reality. Zeros from here to infinity. The sums are hard to describe; it is hard to describe an elephant, but you know one when you see one. The public knows that, shuffle the numbers as you may, the level of debt is unsustainable.

Who could be surprised since millions of voters have discovered that for themselves? As one realizes the morning after the night before, there is an unavoidable penalty for excess. It is unnerving to wake up and learn that you have a mortgage on your home that exceeds the value of the property. Or, and too often both, you have a credit card line that you cannot repay and the issuer has you on the rack for ever bigger compound interest on the debt. The lesson has been well and truly learned that debt catches up with you. Millions understand that they are just going to have to find a way to live within their means—and then still eke out some savings to pay down debt. And there are well over 14 million Americans without a paying job, so the level of discontent is very high. Just how are they going to regain control of their lives?

In a usnews.com post on July 26, Jodie Allen of the Pew Research Center reported that in recent weeks more academic and market economists have been urging the government to defer budget cuts and tax increases and instead provide additional stimulus to a still-fragile economy, some by continuing the Bush tax cuts. But among the public there has been a suggestive shift of opinion the other way, reflecting worries about debt. "Deficit and government spending" has jumped from 10th or 11th place as a priority for the federal government to one that is second only to job creation and economic growth. The drift of opinion is manifest in other recent polls. For instance, a CBS poll conducted July 9-12 assessed the most important problem facing the country as the economy and jobs (38 percent), with concern about the budget deficit and national debt way down at 5 percent. Yet CNN (July 16-21) has 47 percent preoccupied first with the economy, and 13 percent with the federal deficit. In a recent Time magazine poll, two thirds of the respondents say they oppose a second government stimulus program and more than half say the country would have been better off without the first one.

People see the stimulus, fashioned and passed by Congress in such a hurry, as a metaphor for wasted money. They are highly critical about the lack of discipline among our political leaders. The question that naturally arises is how to forestall a long-term economic decline.

The Fed has lowered rates dramatically to keep the economy ticking and maybe continue the painfully slow recovery, but at the receiving end there is no feeling of relief at all. People know that the stimulus is about to stop stimulating. They know that money is petering out. They know that states are preparing to cut $200 billion to balance their budgets. They realize that the Great Recession has wiped out huge amounts of wealth and that, unlike other recessions, this will not be followed by the kind of economic boom when people who had sat on their money during the lean years unleash pent-up demand for all sorts of goods and services.

There is no sign of that happening this time around. Households and businesses have kept their hands in their pockets. And so while many think that the only way to revive the economy and to inject more money into it is through governmental spending, the general feeling is that we can't afford that right now. The government will be writing more IOUs on top of those we already can't afford. Why plan a second stimulus if the first stimulus couldn't prevent high unemployment?

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‘HOME SWEET HOMELESS’

The 5th anniversary of Katrina is approaching. Many stories are being told, including ones about police shooting and beating Black people as they tried to escape the flood waters. It is now known that the Bush administration knew the levees weren’t holding and told no one. The story of what happened there is a story of genocide, pure and simple. Less than half the poor blacks that were scattered all over the south have been able to return. The rest are permanent refugees.

No “Home Sweet Home”
Five years after Katrina

Matt Pascarella and I encountered Patricia Thomas while she was breaking into a home at the Lafitte Housing Project in New Orleans. It was her own home. Nevertheless, if caught, she’d end up in the slammer. So would we. Matt was my producer for the film, Big Easy to Big Empty, and he encouraged my worst habits. I’d worked for the New Orleans Housing Authority years back and knew they wanted the poor black folk out of these pretty townhouses near the French Quarter. Katrina was an excuse for ethnic cleansing, American style. Matt and I skipped cuffs on this shoot, but were charged later by Homeland Security (see below). While I recorded the story of hidden evils on film, Matt gathered a story which no camera can capture. Here it is. – Greg Palast

by Matt Pascarella *

Four years ago, on the one-year anniversary of Hurricane Katrina, I sat with Patricia Thomas. Greg Palast and I had just helped her break into her home in the Lafitte Projects. She had been locked out for a year. She showed us her former home, her belongings scattered everywhere, and wrestled out endless stories of post-Katrina life: how she struggled to find shelter over the last year, how they came and put bars on her doors and windows and locked her out, how it was “man made.”

I picked up a photo of her at Mardi Gras, taken a few years earlier, and compared it to what she looked like now. In the picture her hair was longer, her face younger, her smile deeper. Now her arms were wasted and thin, her eyes sunken into her face, and her bottom front teeth were gone. On most days, she told me, she wore her dead mother’s dentures, but today she had forgotten to put them in. Her own teeth broke off when escaping the rising waters. She had fallen face first onto the concrete slab that was her front porch. The very spot where we were sitting was where it had happened. Over my left shoulder, running the length of the building, was a scar, a stain from the water line.

August in Louisiana is unbearably hot for a Northern boy. Beads of sweat poured from my face, down my neck. Patricia went inside, found an old roll of paper towels in a kitchen cabinet and brought me one. The quilted paper had a kitschy design – a giant heart with words that said, “Home Sweet Home.”

I looked at her and wondered how this could happen in my country.

A few weeks before, I was in Mexico City with Palast covering the Presidential Election. A presidency had been stolen. People were on the streets screaming “Vota por Vota, Casilla por Casilla!” Count the votes! “Vote by Vote, box by box!” I had seen the aftermath of a massacre in a small village outside Mexico City. I had seen people from all over the country rise up in anger taking to the streets. I had seen the Zapatistas march and Subcomandante Marcos himself flanked by young women acting as a protective barrier. I had seen the house where Trotsky was stabbed in the back of the head with an ice pick.

When I finally left Mexico City, I remember being deeply confused. The kind of confusion that tears at the soul and has the ability to completely dismantle any preconceived notions of how to view the world. I was inspired to see so many people fighting for democracy, and yet a deep depression sunk in as the plane took off. I knew their efforts would not matter. I had seen the American ‘consultants’, the DC hacks, in the offices of the ruling party and I knew it was over.

Now, here I was – back home in the United States – outside a decimated house near the levees, trying to understand why a New Orleans native, Brod Bagert, was calling a friend who worked with the fire department. Brod was asking his old friend what the number “5″ below the giant orange spray-painted X on the front of the house meant. But Brod already knew what it meant.

Here I was watching Brod, one year later, trying to convince himself that what had happened to his neighbors didn’t actually happen. After many long days of hearing countless horrifying stories and walking through miles of destruction, I now stood next to a grown man who was desperately trying to lie to himself simply because the alternative was too painful. I couldn’t hold back the tears. It was the first, and only, time in my professional life that I had to walk away from an interview. I hid out behind a smashed up, rotted out BMW and cried.

After a few minutes I returned to Brod. He hung up the phone, looked at Palast and me, and slowly choked, “Five people died here.”

He finally gave in to what had happened here: the sprayed “9-16″ above that X meant that those five bodies had been left to decompose for nearly 19 days before being discovered by rescue crews.

Brod rubbed his eyes and we went inside the house. His fathomless sadness hardened into anger. We walked through a sand dune littered with toys into what was once the living room. I tried not to imagine the mom and dad and kids as water crushed them against the ceiling; as they clawed for one more breath.

Brod took us down the street to his home, that is, the sticks that were left of his home. He was breathing hard, he was shaking. “Old ladies watched the water come up to their nose, over their eyes and they drowned in houses just like this, in this neighborhood, because of reckless negligence that is unanswered for.”

I think back now, to those words, spoken four years ago and wonder if it will ever be answered.

We then met Stephen Smith. He worked at the Marriott hotel, but had no car and no way to get out when the Mayor said to get out. Stephen pulled a dozen neighbors to a bridge over the rising water for four days as helicopters whirled overhead. Four days in the humid sun. No food. An old man gave his grandchildren his only bottle of water; then the old man died of dehydration. Stephen now works in a grocery store in Houston where FEMA ultimately dumped him. His kids live in Baton Rouge.

The next day Palast and I drove up to Baton Rouge to confront the company that was contracted to come up with an evacuation plan for the City of New Orleans. They had refused all of our interview requests, so we showed up at their offices to request a copy of the plan in person. We were quickly thrown out, they threatened to call security. They knew what we knew: There was no plan.

We drove out to the town of Baker. There, we surreptitiously passed through a security checkpoint before funneling into a massive FEMA trailer park. Here we met Pamela Lewis who told us her story of escaping the flood. Despite having MS, she pushed a boat with her 86-year-old mother, other relatives and neighbors through the streets of New Orleans. When she got to a bridge, armed men yelled at her, called her a nigger, and commanded her to turn around. They didn’t want a boat full of black people coming into their neighborhood. She then managed to make it to the Superdome where she was sprayed down by hoses, tossed on a bus, and then told to pay a fare and get off. She had no idea where she was.

We finished filming. Pamela stood in front of the car next to her trailer, and I locked eyes with her. I put the car in reverse and backed out, leaving her there, alone, not knowing what she was going to do with her life.

We drove back to New Orleans, passing an Exxon Oil Refinery – the only thing near Pamela’s trailer park. Several weeks later, at the request of Exxon, Homeland Security would file a criminal complaint against me and Palast under the anti-terrorism PATRIOT Act for filming “critical infrastructure.” The only thing critical about that refinery was the pollution it was spewing near what had become a refugee camp.

Five years have gone by and it is rare if a week passes that I don’t think of New Orleans. Nearly two thousand people lost their lives. An entire city was decimated. People were killed by the very police officers who were supposed to be protecting them. Hundreds of thousands lost their homes and livelihoods. To this day there are some still living in FEMA trailers. Patricia died a few years back in a horrible car accident; Lafitte, her home, has since been demolished.

My job was to go, to report, and then go home. My job was to leave Patricia, Pamela, Brod and countless others whom I had encountered, behind – to place them in a compartment in my mind, and to move on to the next story. Yet I never quite managed to do that with New Orleans. Maybe it was easier for me to cope in places like Mexico, but New Orleans was America. It happened in my country. All of the people I met in New Orleans – their images, their words – have, over the years, crystallized into a vivid sense of disenchantment with the romantic narrative of America I was taught as a child.

I sit here now, thumb through my old notebook that is labeled in black marker “NOLA” and find the paper towel Patricia gave me. It still reads, next to that big, faded heart, “Home Sweet Home.”

*********

Sun storm to hit with 'force of 100m bombs'

• Sun ramping up for Solar Max
• First Max event since mid-80s
• US studies effects of 'digital bomb'
• ISS search for dark matter, anti-universe

AFTER 10 years of comparative slumber, the sun is waking up - and it's got astronomers on full alert.

This week several US media outlets reported that NASA was warning the massive flare that caused spectacular light shows on Earth earlier this month was just a precursor to a massive solar storm building that had the potential to wipe out the entire planet's power grid.

NASA has since rebutted those reports, saying it could come "100 years away or just 100 days", but an Australian astronomer says the space community is betting on the sooner scenario rather than the latter.

Despite its rebuttal, NASA's been watching out for this storm since 2006 and reports from the US this week claim the storms could hit on that most Hollywood of disaster dates - 2012.

Similar storms back in 1859 and 1921 caused worldwide chaos, wiping out telegraph wires on a massive scale.

The 2012 storm has the potential to be even more disruptive.

"The general consensus among general astronomers (and certainly solar astronomers) is that this coming Solar maximum (2012 but possibly later into 2013) will be the most violent in 100 years," astronomy lecturer and columnist Dave Reneke said.

"A bold statement and one taken seriously by those it will affect most, namely airline companies, communications companies and anyone working with modern GPS systems.

"They can even trip circuit breakers and knock out orbiting satellites, as has already been done this year."

Regardless, the point astronomers are making is it doesn't matter if the next Solar Max isn't the worst in history, or even as bad as the 1859 storms.

It's the fact that there hasn't been one since the mid-80s. Commodore had just launched the Amiga and the only digital storm making the news was Tetris.

No one really knows what effect the 2012-2013 Solar Max will have on today's digital-reliant society.

Dr Richard Fisher, director of NASA’s Heliophysics division, told Mr Reneke the super storm would hit like "a bolt of lightning”, causing catastrophic consequences for the world’s health, emergency services and national security unless precautions are taken.

US government officials earlier this year took part in a "tabletop exercise" in Boulder, Colorado, to map out what might happen if the Earth was hit with a storm as intense as the 1859 and 1921 storms.

The 1859 storm was of a similar size to that predicted by NASA to hit within the next three years – one of decreased activity, but more powerful eruptions.

NASA said that a recent report by the National Academy of Sciences found that if a similar storm occurred today, it could cause “$1 to 2 trillion in damages to society's high-tech infrastructure and require four to 10 years for complete recovery”.

Staff at the Space Weather Prediction Center in Colorado, which hosted the exercise, said with our reliance on satellite technology, such an event could hit the Earth with the magnitude of a global hurricane or earthquake.

The reason for the concern comes as the sun enters a phase known as Solar Cycle 24.

All the alarming news building around the event is being fuelled by two things.

The first is a book by disaster expert Lawrence E. Joseph, Guilty of Apocalypse: The Case Against 2012, in which he claims the "Hurricane Katrina for the Earth" may cause unprecedented planetwide upheaval.

The second is a theory that claims sunspots travel through the sun on a "conveyor belt" similar to the Great Ocean Conveyor Belt which controls weather on Earth.

The belt carries magnetic fields through the sun. When they hit the surface, they explode as sunspots.

Weakened, they then travel back through the sun's core to recharge.

It all happens on a rough 40-50-year cycle, according to solar physicist David Hathaway of the National Space Science and Technology Center in the US.

He says when the belt speeds up, lots of magnetic fields are collected, which points to more intense future activity.

"The belt was turning fast in 1986-1996," Prof Hathaway said.

"Old magnetic fields swept up then should reappear as big sunspots in 2010-2011."

Most experts agree, although those who put the date of Solar Max in 2012 are getting the most press.

They claim satellites will be aged by 50 years, rendering GPS even more useless than ever, and the blast will have the equivalent energy of 100 million hydrogen bombs.

“We know it is coming but we don’t know how bad it is going to be,” Dr Fisher told Mr Reneke in the most recent issue of Australasian Science.

“Systems will just not work. The flares change the magnetic field on the Earth and it’s rapid, just like a lightning bolt.

"That’s the solar effect.”

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Collapse Survival Will Be Tribal: Begin Recruiting Now

Everyone on earth knows how fragile the economy is. It has pushed first-world countries to the brink of revolution. The pushing can't withstand much more before the pillars of civilization begin to fall. And once they begin falling, there may be no stopping them from collapsing society altogether. Unfortunately, the signs of further economic erosion are disturbingly obvious to the onlookers, and the remaining pillars are hanging on by a thread.

What's more, the controllers are orchestrating the collapse of the American economy and society right now, albeit in slow motion, but it is already crumbling. The economy and the environment have surpassed their critical tipping points, where dollars will inevitably be worthless and resources will be out-of-reach expensive for most of humanity. We are likely to see astronomically-high gas prices ultimately causing food and medicine to be quickly wiped out of the box stores -- first by nesters, then by desperate looters. One only has to witness the panic buying before predicted snow storms to imagine what a sustained blizzard would do. It's well past the 11th hour and survival and real solutions must rule the day.

The collapse will surely be a desperate time for many, especially those who live in major cities. Even some suburbs will not be immune for those who didn't see it coming and plan accordingly. Jobs will be far scarcer, money will not go nearly as far for essentials like food and energy, and what will be left of the cities will be roving gangs desperate for resources. The poor helpless citizens will most likely be taken to FEMA "dormitories" as is already being proposed.

If there is one bright spot about the Elite engineering the collapse, it is the fact that they will lose central control of vast areas of the country where control will be in the hands of local tribes, gangs, and clans. There will be communties that planned, adapted through cooperation, as well as armored "Green Zones" that maintain some semblance of normalcy. Paul Craig Roberts wrote that local territories will be run by clans, probably headed by police or a band of armed citizens. Just as these gangs and clans will likely rule over a certain territory, you must begin to create your tribe in order to survive and flourish.

Obviously, you will have to find like-minded folks who may offer skills, resources, and loyalty to your tribe. Friends and family should be the first place to start. If they are still asleep to what is coming, call meetings and have movie parties with wake-up material. Do what you can to get them on board. Remember what Arthur Schopenhauer said about truth:

All truth passes through three stages. First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as being self-evident.

Luckily for us, many activists have already done the heavy lifting of ridicule for us. Now, as we surpass the 11th hour, we must march forward with the truth, because we are rapidly approaching the "violently opposed" stage. Sadly, it will only become self-evident to many once it is too late . . . when they are in a FEMA dorm watching their children be dragged off to war.

A good place to begin finding tribe members that are already building local self-sufficient survival infrastructure are organic food cooperatives. These cooperatives usually encourage trade amongst members and may have a variety of local producers of food and other goods and services. If you live in a city, or congested suburbs when a dramatic collapse takes place, your tribe better have an escape plan, route, and sustainable destination. You will have to prepare go-bags with well-organized resources and tools.

In many early civilizations, there was no hierarchical governance; the tribe members simply had different job titles according to their skills and passions. The natural leader had the burden of final decision making; the person most skilled in medicine kept the tribe healthy; and skilled hunters provided food -- in these communities no one acquired more material wealth for their efforts than did another. Most importantly, the well-being of each individual was recognized as essential to the overall survival, health, and happiness of the tribe. For those who have a natural aversion to community concepts and equality (Socialism, or Communism), it should be understood that this tribal egalitarianism is based on individual skill contribution -- not individual sacrifice to a government structure of ruling Elites.

Preparing for the collapse with a good tribe will be essential for survival -- recruiting season is here.

Trade: Obama team acts to stem practice of 'dumping' imports in US

Commerce Department says its proposals will tighten enforcement of existing trade laws, cracking down on alleged product dumping and illegal import practices by China and other Asian nations.

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Shipping containers are unloaded at the Port of Miami in July. Imports have been rebounding faster than exports, hindering the recovery of the US gross domestic product.

Wilfredo Lee/AP/File

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The Obama admistration announced steps Thursday designed to strengthen enforcement of US trade laws – a move intended to combat Asian nations' alleged "dumping" of products at artificially low prices.

Citing the goal of a "level playing field for US companies," the Commerce Department proposed a range of measures that could go into effect as early as this fall, after a period of public comment and review.

Although many of the proposals target allegedly illegal import practices by China and other nations, the moves come as part of a broader administration effort focused on improving the climate for US exports. President Obama has set a goal of doubling US exports within five years through a National Export Initiative, and creating as many as 2 million new jobs in the process.

“The Obama administration is committed to aggressively enforcing our trade laws to ensure a level playing field for U.S. companies and their workers – the engines of our economic growth,” Commerce Secretary Gary Locke said in a statement announcing the proposals. “Today’s announcement is another demonstration of our continuing efforts to sharpen our trade enforcement tools.”

Both before and after the onset of recession in 2007, trade has been a trouble spot in the US economy. Imports perennially outpace American exports, at a rate that many economists say will prove unsustainable. This trade deficit in effect means that the nation is borrowing to finance present-day consumption by households.

The trade deficit narrowed during the recession, as the financial crisis took a harsh toll on global commerce. Recently, however, imports have been rebounding faster than exports. Because exports add to the US gross domestic product, and imports subtract from it, this trend represents a headwind to the US economic recovery.

The problem can also be phrased in stark political terms: Some critics of US policy say too many of the stimulus dollars from Washington are flowing, in the end, to overseas corporations rather than helping to create new jobs in the US.

At the same time, even economists who worry about the trade deficit aren't necessarily advocates of a get-tough trade policy. Many argue that efforts to crack down on trade violations could backfire, crimping commerce that, despite the trade deficit, benefits consumers and economic growth.

The Commerce Department proposals would be subtle efforts to tighten US policy. Some examples include:

• Expanded use of random sampling to select companies for investigation for suspected dumping, rather than choosing the largest exporters.

• Clarifying a rule to require companies from nonmarket economies to report broad production-inputs data – not data from facilities that produced merchandise destined for the United States (for use in dumping calculations).

• Strengthening the accountability of attorneys and nonattorneys practicing before Commerce.

• Tightening the deadlines for submitting new factual information in antidumping cases.

Already, a branch of the Commerce Department has increased dumping investigations, with 34 probes initiated in 2009 versus 19 the previous year.

Cousteau, other experts “stunned” by island “littered” with “many dead birds” — It’s “clear” birds poisoned by BP disaster (VIDEO)

Dead Bird Island, Paul Orr, Lower Mississippi Riverkeeper , August 23, 2010:

On Thursday, August 19, 2010 LEAN/LMRKwent on a sampling trip into Terrebonne Bay… accompanied by Alexandra Cousteau, granddaughter of Jacques Cousteau…

What we encountered [Modoto Island] stunned us all. The ground was littered with… [s]o many dead birds that we aren’t sure how many were out there, many dozens of dead birds just in the small area which we surveyed on the island… [in] various states of decay, from scattered bones to a tern that couldn’t have been dead for more than a day and everything in between, that this is an ongoing situation.

We also saw a juvenile gull that was in distress. It could hardly walk and was very unsteady… By the time we finished our sampling and were ready to leave the island the bird had died. …

It is clear to me that these birds are somehow being poisoned by the BP event.

Read the article here.

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One in four lap dancers has a degree, study finds

'Women motivated by career and economic choices, not coercion,' says report

The first academic research project into lap dancing has found that, rather than being uneducated young women who have been coerced into the industry, one in four dancers has a degree and has been attracted by the money.

Dancers took home an average of £232 a shift after paying commission and fees to the club, with most working between two and four shifts a week – giving them annual incomes of between £24,000 and £48,000 a year.

The researchers found no evidence of trafficking in the industry, and concluded that career and economic choices were motivations for dancing rather than drug use or coercion.

Aspiring actresses, models and artists used exotic dancing as a career strategy which fitted alongside their other work, training or studies.

Unemployed new graduates – mainly with arts degrees – were also dancing because they could not find graduate jobs and found that lap dancing paid much better than bar work.

The research by Dr Teela Sanders and Kate Hardy, from the University of Leeds, found the vast majority of dancers reported high rates of job satisfaction.

The main attraction of the work was the flexibility it offered to combine different work options and studying.

However, the researchers also found dancers' welfare was often disregarded. They called for better regulation to improve dancers' safety and security, including the banning of private booths in clubs, arguing that women could be in danger when alone with customers or that standards could be lowered by women offering more than was allowed in dances. Dancers were also open to financial exploitation by the clubs who could impose charges and fines.

One dancer told researchers: "There's not enough security. I know of girls who have been raped and abused at work. You cannot go to the police as you are a stripper, so there's no legal standing."

The research comes at a pivotal time for lap dancing clubs. After an explosion of clubs across UK high streets, a change in the law earlier this year saw their reclassification as sexual entertainment venues, giving local authorities more powers to limit the number of clubs in their area and to take objections into consideration.

The change in the licensing laws governing lap-dancing clubs came after a campaign by the Fawcett Society and Object, the women's rights organisations. They have welcomed the change in the law but called for it to go further, saying "lap-dance clubs are a form of commercial sexual exploitation and promote the sexist view that women are sex objects".

Dr Sanders said she had been surprised at the "endless supply of women" wanting to be lap dancers. She said: "These women are incredibly body confident. I think there is something of a generational cultural difference. These young women do not buy the line that they are being exploited, because they are the ones making the money out of a three-minute dance and a bit of a chat. You have got to have a certain way about you to do it. They say 80 per cent of the job is talking. These women do work hard for their money – you don't just turn up and wiggle your bum.

"But there is an issue about whether these women become trapped in the job because of the money. I think people often stay longer than they want."

The preliminary findings of the year-long study, which will include interviews with 300 dancers, reveal that all the women interviewed had finished school and gained some qualifications.

Most (87 per cent) had at least completed a further education course, while one in four had undergraduate degrees.

Just over one in three dancers were in some form of education, with 13.9 per cent using dancing to help fund an undergraduate degree, 6.3 per cent to help fund a postgraduate degree, and 3.8 per cent using it to fund further education courses.

Some women begin dancing after graduating from university and not being able to find work. The researchers found arts degree graduates were most likely to report that they had turned to dancing after being unable to find other work. Others used dancing to provide a more steady and reliable income when working in more unstable arts jobs.

One dancer had been doing a law degree which included a work placement during her third year. While working, she got used to earning a good wage, decided she would struggle when she returned to university without an income, and began dancing as soon as she went back to finish her degree.

Case study: 'It's your job to flatter men into buying dances'

Amber gave up a career as a financial journalist seven years ago, and now earns around £40,000 a year working as a stripper in pubs in London's East End.

The 32-year-old, who has three A-levels and a journalism degree, said: "I had always been fascinated by the idea of being a stripper. I was disillusioned about the work I was doing. I think many people who have worked hard at school and university get out into the real world and find it's not what they expected. Someone I knew had a partner who worked as a stripper, so I went to see her perform at a pub in the East End.

"I think it's everyone's dream to be self-employed, to not have a boss and to work as much or as little as you want. In journalism, it didn't matter how many hours of overtime I put in, I still got paid the same. Now I can work really hard one week and earn good money, and then I can have a week when I don't work so hard and don't earn so much.

"At first, I combined the stripping with my office job, but then I thought I could come back to sitting behind a desk when I'm older. I've started to move away from pub stripping now, moving more into burlesque and pole and podium dancing.

"I've tried the big clubs, but it didn't suit me. In a funny way, I'm not money-motivated enough. I don't like flattering people's egos if I think they're a bit of an idiot. In a club, it's your job to flatter the men into buying private dances. It's a sales job, and the girls who do that job do it really well. You have to suss out someone's body language, look at their clothes and watch to suss out how much money they've got, and look at how they behave in the group they're in.

"I enjoy a proper strip show. I get to choose my own music, my own clothes and perform my own show. In the pubs, I pay £15 on average as a house fee, then you make your money by collecting £1 from everybody. There's no typical earnings – it depends how many people are there.

"It doesn't surprise me that dancers are well educated, although in my experience they tend to be from not traditionally academic families. One personality trait most share is being very driven. You need that to get good qualifications if you're not from a traditional academic background.

"I've met dancers who have degrees in astrophysics from top universities. They've pushed themselves hard to get those qualifications and now they're pushing themselves to be successful dancers."

Proposing an Overnight Gold Fund

There is much debate within the precious metals industry regarding the alleged suppression, or at least manipulation to an extent, by either central banks or the proprietary trading divisions of large banks, or a combination of the two.

In April the US Commodity Futures Trading Commission CFTC fined Hedge Fund Moore Capital for manipulation of the New York platinum and palladium futures market, as the firm was found to be “banging the close”, which involves entering orders in a manner designed to inflate the closing price, which other various derivatives contracts could be based on. So that is irrefutable evidence that the precious metals futures market is, at least to some extent, being manipulated. However a large concentration of this debate is based not on platinum and palladium, but on gold and silver, and particularly gold.

Numerous hypothesises have been put forward as to the motive behind alleged suppression of the gold, ranging from a central bank conspiracy to keep gold prices low, to large trading banks simply exploiting their market dominance for easy profits, or even a combination of the two with the central banks and large bullion trading operations working together in some kind for cartel to keep gold prices low.

This article does not intend to discuss the merits of these theories, however plausible or implausible various parties believe them to be. Instead we will focus on finding out if a discrepancy exists and if it does, can one take advantage of it and use it for profitable trading strategies.

Firstly we would like to recommend an excellent article by Adrian Douglas, editor of Market Force Analysis and a GATA board member entitled “Gold Market is not “Fixed”, it’s Rigged” which goes into great detail on the statistics behind the difference between how gold trades between the AM and PM fix, and how it trades from the PM to AM fix. The very fact that there appears to be a significance difference sets our alarm bells ringing. Whether gold trades in New York, London, Tokyo or Timbuktu, gold is still gold and so one would expect that it would trade in a similar fashion across these timeframes over a long period of time.

If we take the change in the gold price from the AM to PM fix (intraday gold) compare it to the change in the gold price from the PM to AM fix (overnight gold), we can see the startling difference between the two periods of trading.

We will demonstrate this by showing what would have happened if one had theoretically invested in the intraday gold market from 2001 to present. Starting in 2001 with an indexed based at 100, the chart below shows what would have happened to that investment of 100 if it had been used to purchase gold at the AM fix and sell gold at the PM fix, replicating the daily percentage performance of gold in the intraday market.

As the chart above shows, the performance is dismal. For example a hypothetical gold investment fund starting with $100m in 2001, and using it to buy gold at the AM fix and sell it at the PM fix would now be left with just $40million, a 60% loss in just under ten years. Over the same time period gold prices have risen over 350%.

From this we can infer that in fact it was possible to make money shorting gold everyday for the last decade. If a hedge fund were to have sold gold at the AM fix and covered that short position at the PM fix, for each day of this terrific bull market run in gold, that fund would have doubled their starting capital.

This appears to be a remarkable result, as one would presume that shorting gold everyday during a period where the yellow metal has risen 350% would have devastated any portfolio, not caused a 107.5% increase.

Those who do not believe in theories of gold price suppression, often cite the fact that gold prices are at an all time high as a major piece of evidence to discredit any suggestions of price suppression. After all how can the price be being suppressed if prices are sky rocketing?

Well the answer to that question is that if the gold traders at the large banks accused of such manipulation are just trading during the intraday market between the AM to PM fix, they are not too concerned about how gold trades overnight (provided they are not holding positions overnight of course). What matters is how gold trades during this intraday period, and if more often than not gold is falling during this time, and more often than not the banks are short gold during this period, then they are making money regardless of the overnight price action.

It would appear that subtle manipulation is more likely that blatant price suppression.

So the question on the mind of many gold bulls might be; how do I remove this downward manipulation during the intraday period? Even if I do not believe in manipulation, suppression or any other conspiracy theories, how do I eliminate this statistical fact that gold is underperforming during the intraday period?
The answer is to buy gold at the PM fix and sell it the following day at the AM fix, or more simply put, just be long gold overnight.

The graph above shows how rewarding this strategy would have been, with a return of 947% in less than ten years, a return 2.7 times greater than the 350% that would have been made simply buying gold in 2001 holding until now.

With many investors and traders looking for the best way to lever their gold returns, from pouring over drill results to identify the best gold stocks to experimenting with leveraged gold ETFs and ETNs, a more simple solution could be simply to only have long exposure to gold overnight.

For the more cavalier traders, going long gold overnight and then short gold for the intraday period, makes for an even more profitable strategy.

Consider a hedge fund starting in 2001 with $100m, with the strategy of being long gold from the PM to AM fix, and short gold from the AM to PM fix. That hedge fund would be worth $2.16billion today, before any fees and expenses.

This should be enough to catch any investor’s attention. Even without shorting gold during the intraday period, limiting exposure to gold to just the overnight period enhances returns enough to justify using this as a basis for a trading strategy.

As stated at the beginning of this article, our focus is not what or who is causing this discrepancy nor any potential motives for such a discrepancy, but what action to take in order to profit from it.

In addition to incorporating these patterns into our trading strategy at SK Options Trading, we are also looking into the feasibility of launching some form of fund to take advantage of the opportunities discussed in this article. As part of this feasibility study we are looking to gauge investor interest and so would welcome any comments, suggestions or ideas that people may wish to contribute, simply email skoptionstrading@gmail.com

Stay on your toes volatility will be the order of the day and have a good one.

Newark submits plan to eliminate nearly 1,000 city jobs

NEWARK — Newark submitted a layoff plan to the state Civil Service Commission this week, taking a crucial step toward the biggest purge of workers the city has seen in decades.

In the next two years, nearly 1,000 city jobs — a quarter of the current workforce — will be eliminated through layoffs and attrition, according to city budget officials and documents. Personnel costs comprise roughly 70 percent of the city’s annual spending. Since winning re-election in May, Mayor Cory Booker has sounded the alarm on reducing those costs, saying they are the single biggest contributor to the city’s persistent deficit.

"What we have to do right now is achieve approximately $200 million in personnel savings — period," Booker said in a budget presentation earlier this summer, but added that because of severance packages, pensions, and unemployment insurance, "We won’t get the full credit of that until 2012, 2013."

But Booker has already begun to take the blame.

The sanitation department — slated to lose 250 workers to privatization — has been protesting regularly in front of City Hall since early August.

Police unions, who stand to lose 167 officers have taken out billboards that read "Welcome to Newark — Stop Laying Off Cops and call Cory Booker."

Firefighter unions have warned of public safety debacles if they lose the 96 employees targeted by the mayor.

"This could set the city back 10 or 20 years. People are going to have second thoughts about sending people to school here and to Devils’ games," said John Sandela, president of the Newark Fire Officers Union. "The idea that Newark has become a destination city is going to come an end."

Saed Hindash/The Star-Ledger The Newark police officer's union has taken out billboards like this one at the intersection of Broad Street and South Street in Newark, to encourage residents to complain to Mayor Cory Booker about laying off hundreds of city employees.

Public safety has been the biggest priority for Booker since taking office and he routinely cites a drop in crime as his most important achievement. Law enforcement and union officials say if the layoffs go through, the city will lose precious ground in fighting crime.

"There’s no way in hell that any officer should be laid off here in the city of Newark especially with the incidents that are occurring more frequently," said Derrick Hatcher, president of the Fraternal Order of Police which represents about 1,300 officers. "There have been some major shooting and homicides in the last few weeks and I think that causes alarm to citizens."

Booker has repeatedly said the city can get through its budget crisis without layoffs if the unions agree to certain concessions such as uniform allowances and gas cards. Hatcher argues that their contract was negotiated at the end of 2008 and began in 2009. If Booker knew there was trouble then, he said, he shouldn’t have agreed to a deal.

"We negotiated fairly," said Hatcher. "Why should we give back?"

Sanitation workers won’t have the option of renegotiating as the department is being eyed for privatization. According to an internal budget analysis obtained by The Star-Ledger, the city could potentially save $7 million annually by outsourcing garbage collection to a private company.

Neither the state nor the city would comment on the layoff plan today. The Civil Service Commission has 30 days to approve the proposal.

Top economists: The second Great Depression has arrived

David Rosenberg, market guru, has officially declared that the US economy is in a state of depression, and he sees the economic superpowers woes worsening.

On the heels of that bleak forecast, the statistics for existing home sales for July were released and the numbers were ugly. The weak housing market collapsed. Reflecting the worst slump in American history, existing housing sales had plummeted a stunning 27 percent and there's no sign on the horizon that sales will stabilize any time soon.

The bottom line, argues Rosenberg and others: the US economy has collapsed into another Great Depression.

Citing the period from 1929 to 1932 and the eerie similarities, Rosenberg said, "We may well be reliving history here. If you're keeping score, we have recorded four quarterly advances in real GDP, and the average is only 3 percent." The same happened during the early 1930s stock market rebound of 50 percent after the 1929 crash.

The Great Depression followed the brief economic upswing.

As long as two years ago, one of Britain's top economists predicted a decade-long depression, $45 trillion in debt defaults and unemployment in the US and UK approaching 25% or higher.

During October 2008, economist Fred Harrison told the Foreign Press Association in London,""The massive contraction in demand caused by this 'wealth effect' will condemn the western economy to a decade-long depression."

Like some economists who alerted the Clinton and Bush administrations about the approaching economic crisis, Harrison warned future Prime Minister Gordon Brown of the looming financial danger when Brown was appointed Chancellor of the Exchequer in 1997. Brown, like Presidents Clinton and Bush, ignored the warning.

"Brown blames America for the global crisis. But every country in the world permitted property speculation, which is at the heart of boom/busts. Brown now defends himself by claiming that he tried to get global agreement on a stabilization plan. But he failed to tell the other governments about the tax reforms that could have prevented the crisis," Harrison explained in his speech in London.

Two years later, more economists agree with Harrison. Such luminaries as Arthur Laffer and Paul Krugman are two. Although at the opposite ends of the political spectrum, both see dire times ahead for the United States: higher unemployment, a worsening of the credit crisis and housing slump, more loan defaults, more business failures and more foreclosures. Add to this economic witch's brew the possibility of simultaneous currency deflation and inflation and you have every ingredient necessary for another extended Great Depression.

In fact some economists have begun using the term, Great Depression II.

Harrison concurs and believes that the situation has become so serious that whole nations could fail and something unseen in the West for hundreds of years could appear again: wholesale starvation of peoples in some Western countries.

Back in 2008, Spectator Business reported that "Harrison's predictions earned him the epithet 'Prophet of Doom' until his forecasts proved correct. He is now described as 'the canary in the housing mine…(his) prediction is chilling: Nostradamus...could scarcely have been more accurate."

On the other side of the pond, in the US, sits Arthur Laffer. The author of several important books on economic theory including his latest, "Return to Prosperity: How America Can Regain Its Economic Superpower Status," Laffer was also an adviser to the Reagan Administration during the 1980s and a member of the Economic Policy Advisory Board.

His economic models have been proven to work and withstood the test of time. Now Laffer has declared that the US economy is heading for a very big fall early in 2011.

The economist, best known for his economic model called the 'Laffer Curve," came to national prominence when his model was adopted by Ronald Reagan in an effort to turn the economy around after the disastrous economic policies of Jimmy Carter.

Back in the late 1970s the media kept track of 'the misery index' an informal gauge of inflation, stagnation and taxation that put a damper on the economy for years. Laffer's recommendation—to cut federal taxes significantly and roll back the rate of government spending—was employed in 1981 after Carter's bid for a second term was roundly routed by an angry American electorate.

Laffer's 'prescription' created an economic boom that carried into the Clinton presidency. It also surprised many critics of the model when it achieved what Laffer had predicted: higher revenues to the treasury despite the deep tax rate cuts.

Now Arther Laffer has analyzed the direction of the federal government over the past two years and hears alarm bells going off. The savvy economist has studied the potential impact of the historic debt, an economy hovering just above a depression, and the building pressure to raise interest rates when inflation rises in the future, and compares the ship of state to the Titanic.

"Today's corporate profits reflect an income shift into 2010. These profits will tumble next year, preceded most likely by the stock market," writes Laffer in the Wall Street Journal article, Tax Hikes and the 2011 Economic Collapse.

Laffer calls attention to the one thing that has kept the economy partially afloat, as poor as the economy has been: the Bush tax cuts. When they expire (on January 1, 2011), "federal, state and local tax rates are scheduled to rise quite sharply." Dividend tax will skyrocket from 15 percent to a whopping 39.6 percent, the capital gains tax will increase 25% and the estate tax will jump from zero to 55 percent.

These taxes—a triple whammy to the economy—will serve to further depress business growth and hiring, depress real estate further and add an even greater burden on the ability of the consumer to spend discretionary income, which will sink like a rock. To all that must be added the re-introduction of the infamous "marriage penalty" that could lead to more home foreclosures.

If all that is not bad enough, tax rates will be raised further on income earned outside the US, payroll taxes will rise in 2013 squeezing the middle-class wage earner more, the alternative minimum tax will affect people at lower income levels and taxes are scheduled to be imposed on so-called "Cadillac health care plans."

Nobel Prize winning Paul Krugman, a liberal economist, concurs, but for different reasons. He believes the federal government has not spent enough fast enough. Much of the so-called "stimulus money" authorized by Congress is languishing, unspent. Some hundred billion went to dubious projects and grants designed to stimulate nothing.

Krugman is furious. Writing in a New York Times OpEd piece recently, he condemned the current administration's economic policies and predicted a Second Great Depression. He also raised a rather bellicose alarm against Treasury and other responsible for US monetary policy—including the Fed. Krugman is convinced that tens of millions will never find work again and the economy will worsen in 2011 and 2012.

All economic indicators echo 1929 - 1933

Finally, Robin Griffiths [http://www.financial-gurus.co m/gurus/9511/Robin-Griffiths/] devines the future economy from a technical market approach. Griffiths is a strategist at Cazenove Capital who recently shared with viewers of CNBC that "the world has entered significant financial depression."

According to Griffiths “Equities are for losers and bond markets for winners. Equities are simply for people who like losing money,” Griffiths said.

“A double-dip is inevitable and imminent, as Keynesian stimulus measures have never worked anywhere. We are in the equivalent of a Great Depression following 3 years of credit crisis,” he added.

Griffith has taken a seat at the economic banquet of scarcity, austerity and gloom. The entrees at that table offer very slim pickings indeed: charts depicting a 20-year economic downturn; zero growth; possible additional contraction; massive unemployment, and the imminent collapse of governments globally.

If all that's not enough, Griffiths points out that the United States' shrinking M3 money supply now matches the average decline seen from 1929 to 1933.

Despite the gloom and doom, it's best to remember that things could always be worse.

How? Well, an asteroid could hit Earth tomorrow...

Frozen fruit bars recalled after typhoid outbreak

SANTA FE SPRINGS, Calif. – Fruiti Pops, Inc. of Santa Fe Springs has recalled its mamey (mah-MAY') frozen fruit bars because of a possible link to a rare U.S. outbreak of typhoid fever.

The company said Thursday that the fruit bars were distributed in California, Arizona and Texas since May 2009.

Fruiti Pops says retail stores, ice cream trucks and vending machines sold the frozen fruit bars, which have the UPC number 763734000097.

The company says the frozen fruit bars were made from contaminated mamey pulp that Goya Foods, Inc. voluntarily recalled on Aug. 12, after it was linked to a typhoid fever outbreak in California and Nevada. So far no illnesses have been reported from the mamey fruit bars.

Mamey or zapote (zah-POH'-teh), is a fruit popular in Latin America and the Carribean.