Het Tunesische leger is constant betrokken in gevechten met Europese huurlingen. Bij deze vuurgevechten zijn een aantal van deze huurlingen gedood. Verder zijn er Duitse, Zweedse en Franse huurlingen opgepakt. Bij hun arrestatie werden wapens en munitie aangetroffen. Het lijkt erop dat Europese huurlingen zijn ingezet om de Tunesische opstand neer te slaan en chaos in het land te creëren. De beelden spreken voor zich.
A little context -- this was recorded last Friday at the Washington Ideas Forum. The humor is that the previous speaker, on the same stage and to the same audience, was Tim Geithner, spreading TARP bailout propaganda and lies. Geithner finishes, and out walks Taleb who says squarely -- I'm paraphrasing:
"Don't listen to Geithner. He's a corrupt, failed regulator."
Deficits "will break the Fed" and it will be replaced, he predicted.
"The Romans had a saying," Taleb added: "The grandchildren should not bear the debt of the grandparents."
That debt is made more dangerous, Taleb said, by the increasingly complexities of the financial system, a problem that he said has not been ameliorated during the last three years. "Debt and complexity are not friends," he said, because "complexity causes unpredictability," and heavy debt burdens mean one false move, whether by an individual actor or a system, could spell disaster.
Nobel Prize-winning economist Paul Krugman, a popular columnist for The New York Times, "doesn't understand" the economic situation the U.S. finds itself in, Taleb claimed, nor do most economists.
Because of the significant rise in debt, within 25 years "anything fragile will break," Taleb said. That includes the Fed, he argued, because the Fed "fragilized this country."
#
This is the full discussion -- inlcuding Geithner, FED and other comments.
Taleb explained his simple metric for judging whose economic opinions are worth his time:
"Did someone predict the crisis before it happened? ... If the answer is no, I don't want to hear what the person says. If the person saw the crisis coming, then I want to hear what they have to say."
"You have a million people on this planet who call themselves economists," Taleb said. "How many people understood the risks of the system [before the crisis]? ... Paul Krugman was not one of them."
Taleb took issue with Krugman's support of deficit spending.
"This transformation of private debt, with all the moral hazard it entails, into public debt is, number one, from a risk standpoint, bad," he said. "And from an ethical standpoint, I find it immoral. The grandchildren should not bear the debts of the grandparents."
Asked where the economy would be in 25 years, Taleb gave the vague response that:
"...everything fragile will break." Oh, and that the Fed won't exist anymore. It will be replaced by something "I think more organic and that makes more sense."
Quote was buried within a Bloomberg piece on JP Morgan's conference call...
---
Source - Today's JPM Conference Call
While Dimon called the U.S. housing market still “terrible,” he said it’s better than it was a year ago. The bank put $1.5 billion in litigation reserves to cover costs related to buying back faulty mortgages. It also set aside $2.1 billion more against soured loans from Washington Mutual, the lender JPMorgan bought in 2008.
Dimon said most of the new litigation reserves are intended for so-called private-label mortgages, which are not insured by the federal government or federally controlled mortgage companies Fannie Mae and Freddie Mac. He said it will take years to resolve those disputes and to determine the ultimate cost to JPMorgan.
“It’s going to be a long ugly mess, but it won’t be life- threatening to JPMorgan,” he told analysts on a separate call. “We will be talking about this for every quarter over the next three years.”
Anti-poverty campaigners renewed their call for new taxes on the financial sector after JP Morgan Chase set aside almost $10bn to cover basic pay and bonuses for its investment banking division.
The Robin Hood Tax campaign said it was "outrageous" that JP Morgan Chase's investment bankers are to receive an average payout of $369,651 (£233,000) for 2010. The group, which supports a global tax on banks' financial transactions, said the size of the payments were "a slap in the face to ordinary people".
"If banks can afford to pay billions in bonuses, they can clearly afford to be taxed a great deal more. A £20bn Robin Hood tax in the UK would help avoid the worst of the cuts and show we are all in this together," said David Hillman, spokesman for the Robin Hood Tax campaign.
And Dimon made headlines Wednesday with this comment...
Dimon Says More U.S. Municipalities May File for Bankruptcy
(Bloomberg) -- JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon said he expects more U.S. municipalities to declare bankruptcy and urged caution when investing in the $2.9 trillion public-debt market.
“There have been six or seven municipal bankruptcies already,” Dimon, 54, said yesterday at his company’s annual health-care conference in San Francisco. “I think unfortunately you will see more.”
Cities including Detroit and Harrisburg, Pennsylvania, have raised the prospect of bankruptcy. Still, the number of filings has declined. Five municipal entities sought protection in 2010 compared with 10 in 2009, according to data compiled by James Spiotto, head of the bankruptcy practice at Chapman & Cutler, a Chicago law firm. The biggest last year was a South Carolina toll road with more than $300 million in debt, he said.
U.S. states will contend with about $140 billion in deficits in the next fiscal year, the Center on Budget and Policy Priorities, a Washington research group, said in a report issued Dec. 16. Edmund “Ted” Kelly, CEO of Liberty Mutual Holding Co., said yesterday that his firm had reduced holdings of municipal debt in Connecticut, California and Illinois.
“The market is being held up to some extent by the belief that the federal government will bail out” state and local issuers, Kelly said in an interview.
The Daily Bell is pleased to present an exclusive interview by Ellen Brown (left).
Introduction: Ellen Brown developed her research skills as an attorney practicing civil litigation in Los Angeles. In Web of Debt, her latest book, she turns those skills to an analysis of the Federal Reserve and "the money trust." She shows how this private cartel has usurped the power to create money from the people themselves, and how we the people can get it back. Brown developed an interest in the developing world and its problems while living abroad for eleven years in Kenya, Honduras, Guatemala and Nicaragua. She returned to practicing law when she was asked to join the legal team of a popular Tijuana healer with an innovative cancer therapy, who was targeted by the chemotherapy industry in the 1990s. That experience produced her book Forbidden Medicine, which traces the suppression of natural health treatments to the same corrupting influences that have captured the money system. Brown's eleven books include the bestselling Nature's Pharmacy, co-authored with Dr. Lynne Walker, which has sold 285,000 copies.
Daily Bell: Hello again. We've interviewed you before. But for those unfamiliar, please give us a sense of how you came to be interested in monetary issues and how you came to write Web of Debt.
Ellen Brown: As Mike Whitney says, I'm really just a writer in search of a good subject. My first degree was in English literature from Berkeley, but when I figured out that I couldn't make a living as a writer in my twenties I went to law school (UCLA). I married another law student, practiced civil litigation for 10 years in L.A. and had two delightful children. My husband (now ex-husband) finally burned out on Beverly Hills law and signed up to be a lawyer for USAID, taking us abroad for 11 years – to Kenya, Honduras, Guatemala and Nicaragua – giving me a chance to try my hand at writing again. I wrote 10 books on health and the politics of health, including one co-authored bestseller that sold 285,000 copies ("Nature's Pharmacy").
I jumped from there into economics after reading Ed Griffin's "World Without Cancer," linking the pharmaceutical cartel to the banking cartel, which actually got its power through the private creation of money. When I discovered that "The Wizard of Oz" was written as a monetary allegory, growing out of the populist money reform movement of the 1890s, I had the plot line to make a dry subject interesting, and I proceeded to write.
I spent six years exploring the issues and perfecting my prose, until the two Bear Stearns hedge funds collapsed in June 2007, when I figured it was time to forget about art and rush to press. "Web of Debt" was in print two weeks later, self-published by print on demand through Lightning Source.
Daily Bell: For those new to this subject, what is Web of Debt's main thesis?
Ellen Brown: The thesis is that the power to create money has been usurped by a private international banking cartel, which issues our money as debt and lends it back to us at interest. The cartel makes it appear that governments are creating our money, and governments get blamed when things go wrong; but they are actually just pawns of the cartel. We the people can get back our government and our republic only by reclaiming the power to create our own money. We can use the same credit system that private banks use, but administered as a public utility, monitored and overseen by public servants on the model of libraries and courts. To be a sustainable system, profits need to be returned to the community rather than siphoned off into private coffers.
Daily Bell: Can you expand on debt-based money versus money that is issued into the economy without debt – and why the latter is preferable. Some would say the latter exercise comes with debt as well ...
Ellen Brown: I don't think debt is necessarily bad. The flip side of debt is credit, which is a very good thing. Inventing credit is probably the most innovative thing bankers ever did. But because the Italian bankers who first came up with that scheme were on a gold-based system, they had to do it essentially by cheating, pretending to have more money than they actually had. There would be periodic runs on the banks and the system would collapse. A public banking system would acknowledge credit to be just a legal agreement to pay over time. Creditworthy borrowers would get credit. Their access to credit needn't be contingent on someone else's agreement to give it up. The system would be mathematically sustainable.
Daily Bell: Let's back up. You believe that gold and silver only circulated as money once government got involved? True? Can you expand on this?
Ellen Brown: I think that's true by definition. Webster's dictionary defines a "coin" as "a usually flat piece of metal issued by governmental authority as money." Wikipedia says: "King Croesus, ruler of Lydia (560–546 BC), began issuing the first true gold coins, . . . with a standardized purity, for general circulation. They were quite crude, and were made of electrum, a naturally occurring pale yellow mixture of gold and silver."
Daily Bell: What about ancient archeology showing drowned cities off the coast of India?
Ellen Brown: I made an effort to look that up, since you asked; but I could find nothing to support your contention. If you would point me to some specific research, I could formulate a better answer. My research indicates that Indian gold coins came in later, and like coins generally were issued by the government. Here's what came up on a quick search:
"Although the world's first coins were Greek coins made in Lydia about 640 BC, it seems clear that India and China both invented coins independently within a few centuries of the Lydians. The earliest Indian coins were silver, and it was not until about 100 AD that the Kushan emperor Vima Kadaphises introduced the first Indian gold coin, which was a gold dinar bearing the image of Shiva."
Daily Bell: What makes you think that gold and silver, mined together as electrum, were not a store of value prior to the temple period?
Ellen Brown: Define the temple period please. The Sumerian temple period? That would be the third millennium B.C. The Sumerians did not use coins as money. Rather, they had what could be characterized as the first public banking system, based on accounting entries on cuneiform tablets. To say gold and silver were a store of value is a bit vague. Gold wedding rings are a store of value, but I wouldn't classify them as money.
Daily Bell: Why do you believe that government is superior to the free market?
Ellen Brown: Why do you believe that I believe government is superior to the free market? I believe government is necessary to have a free market. Otherwise you have the law of the jungle, the exploitation of the weak by the strong.
Daily Bell: Do you believe that government is effective at all levels big and small?
Ellen Brown: Without meaning to be rude, I have to say I'm slapping my forehead at some of these questions. Government can be effective at a variety of levels. Not all government is effective. Some government is very ineffective. It depends largely on the political structure.
Daily Bell: Do you believe in central banking so long as it is publicly controlled?
Ellen Brown: A publicly-owned central bank can be very effective in serving the people. The Commonwealth Bank of Australia is my favorite model. Not all publicly-owned banks, however, are effective for that purpose. I often hear British money reformers complaining that the publicly-owned Bank of England is still serving the interests of the private banking establishment, just as when it was private. It is public in name only.
Daily Bell: Do you believe that government was responsible for a good deal of mayhem in the 20th century?
Ellen Brown: Sure, but somebody manipulates governments into wars and other mayhem. I believe a government could be structured so that it actually served the people; but first, it would have to recapture control of its monetary system. Few governments are in that position today.
Daily Bell: Do you believe in the Invisible Hand? Do you believe in Misesian human action. How can you reconcile it with your preference for government decision-making.
Ellen Brown: You'll have to define your terms. I'd say the Invisible Hand that is at work right now is chiefly the hand of Goldman Sachs.
Daily Bell: OK, what are some triumphs of big government in your opinion?
Ellen Brown: National highway systems, bridges, waterways, dams, FDIC insurance, Medicare and social security, to name a few. If you doubt the latter two, consider what life was like in the depression of the 1890s, when there was no Medicare or social security, and people froze in the fields or starved. My grandmother, for whom I was named, died in Detroit during the Great Depression at age 42, trying to self-abort her eighth child, at a time when my grandfather was an unemployed auto worker and they could barely feed the other seven. My father was the oldest child and supported the family on a paper route. He never really recovered from that traumatic period. I suspect he is hovering about and prodding me on.
Daily Bell: Do you still believe the DARPA and the US federal government invented the Internet.
Ellen Brown: So says Wikipedia, http://en.wikipedia.org/wiki/History_of_the_Internet. I read an interesting article that I can't find now called something like, "The Government Does Some Things Right," I think in the L.A. Times. It said the inventor of the internet went from one major private company to another and got rejected for funding. Only the government was willing to do research for its own sake, just because it was a good idea, simply to see what could be developed from it.
Daily Bell: You've used China and India as examples of public central banking in a positive sense. Yet both these countries have terrible inflation now. (As in too much money.) How do you respond to that?
Ellen Brown: China and India are the fastest growing economies in the world. They are hot investor targets, so money has been flowing in, both as foreign currency and as credit expansion for new projects. This is largely speculative investment, which has driven up prices because goods and services have not increased in tandem.
As Max Keiser observed recently, India is suffering more from inflated prices in commodities than we are because food and staples are a substantially larger proportion of the average Indian's budget than of ours. Commodities are going up for a variety of reasons, including (a) heavy competition for these scarce goods from developing countries, whose economies are growing much faster than ours; (b) in the case of soaring food prices, disastrous weather patterns; (c) the flight of "hot money" from the real estate market, which has nowhere else to go; (d) speculation, which is fanning the flames; (e) the growth of ETFs, which have made it easy for ordinary investors to jump in and out of commodities; and (f) the U.S. dollar carry trade created by the extremely low interest rates made available by the Fed to its banking constituents following the credit crisis of 2008.
Daily Bell: Define inflation.
Ellen Brown: There are two types of inflation, price inflation (an increase in prices over time) and inflation of the money supply (an increase in the amount of money circulating in the economy). These are often confused. Individual prices may be going up (as commodities are today), yet the overall money supply may be falling (as it is today). Many factors can be involved in price inflation. An excess of demand (money) over supply (goods and services) is one possibility; but price inflation can also result from an increase in costs (including interest costs, scarcity of raw materials, etc.) or from speculation, with "hot money" rushing from one investment to another and competitively driving prices up.
Daily Bell: Is it monetary?
Ellen Brown: The question needs to be refined. "Monetary" means pertaining to money, which inflation obviously does.
Daily Bell: Is the US money supply shrinking in your view?
Ellen Brown: Per the NY Times, it's because banks are making fewer loans, largely because capital requirements have been raised. My proposed solution would be to supplement the supply of credit through state-owned banks, which have huge potential capital and deposit bases that can be leveraged into credit for local needs.
Daily Bell: How do you define the money supply?
Ellen Brown: I'll go with the NY Times: MZM (the liquid money supply in the economy); M1, M2, M3 (the broadest measure).
Daily Bell: How do you define deflation?
Ellen Brown: A shrinking MZM, creating insufficient liquidity to maintain business and productivity at optimum levels.
Daily Bell: Are you aware that some of your supporters want to shift the responsibility for printing money from the Fed to the Treasury in America? Do you agree with this?
Ellen Brown: I'm aware of a particular school of money reform that you may be talking about, but I doubt they would look charitably on being called my supporters. My own preferred alternative would be to nationalize the Federal Reserve.
Of course you realize that money is not actually printed by the Fed. It is printed by the Bureau of Engraving and Printing, which is already part of the Department of the Treasury. http://www.moneyfactory.gov/aboutthebep.html.
Daily Bell: Do you believe your movement has been penetrated by military intelligence?
Ellen Brown: Not to my knowledge. I don't know why they would take an interest. I haven't even seen any Wall Street bankers take an interest. The opposition so far all seems to be from the other money reformers!
Daily Bell: Hard money economist Dr. North has made many criticisms of your work. How do you respond?
Ellen Brown: I haven't actually spent much time reading Dr. North's theories. He said in an email that I was a threat to the Tea Party movement, that his intent was to destroy me, and that there would be no compromise, so I've decided that arguing with him is an unproductive venture. He can have his theories and I'll have mine; may the best human win. If you want to present me with a particular criticism, I could respond to that. ***
Daily Bell: You've stated that you will no longer use Benjamin Franklin's Pennsylvania money or the Nazi era as examples of successful public money. What will you use?
Ellen Brown: Au contraire, I will definitely continue to use the Pennsylvania colonial bank, America's first publicly-owned bank, as an example. I think it's an excellent model. It wasn't "Benjamin Franklin's money" though; the bank was established by the Quakers, who came from England. Franklin just saw how well it worked and wrote about it in glowing terms. I won't mention 1930s Germany unless it comes up, because it's too controversial. My favorite modern-day models are the Bank of North Dakota and the Commonwealth Bank of Australia.
Daily Bell: How can anyone know how much money is enough money? Or when to stop lending in your paradigm?
Ellen Brown: Lending is an organic process, responding to the needs of the borrowers. Contrary to popular belief, banks do not lend their own money or their depositors' money; they create new money on their books every time they make a loan. I think lending is a much more natural and efficient way to get new money into the money supply than to have an independent body trying to dictate what the economy needs. But private banking institutions have proven they cannot be trusted with this powerful tool. Except for coins, which are a very marginal part of the money supply, all money today is just credit – the credit of the people. It should be a public utility, administered through publicly-owned banks.
Daily Bell: Won't your paradigm end up injecting too much money into the economy nonetheless?
Ellen Brown: No. Loans grow organically in response to the demands of trade, and that credit-money disappears when the loans are paid off. When demand for loans is low, the money supply shrinks naturally. You may be thinking of the paradigm of another school, which in your last article you referred to as representing a "Brownian Schism." I'm flattered, but they actually came first.
Daily Bell: How will you value the land and other goods used to secure the loan?
Ellen Brown: Just as bankers do now. I'm not talking about putting politicians in charge of running the banks. Publicly-owned banks are run by bankers, just as privately-owned banks are. See, e.g., the very well run Bank of North Dakota. The Commonwealth Bank of Australia worked so well because it was set up by a professional banker who decided to apply his insider knowledge to serve the public interest. Knowing that banks simply created credit on their books, he proceeded to finance massive infrastructure with this sort of book-created credit – and it worked, brilliantly well.
Daily Bell: Who will make the decisions? Won't they inevitably be corrupted?
Ellen Brown: What decisions? The question is too vague. At the Bank of North Dakota, the decision to advance loans is made by professional loan officers, just as it is elsewhere. Creditworthy borrowers get loans.
Daily Bell: Didn't Franklin disown state money as inflationary before he died?
Ellen Brown: Not to my knowledge. Anyway, it was set up by the Quakers. He just wrote about it.
Daily Bell: Why not fight for freedom instead of government intervention?
Ellen Brown: I am fighting for freedom – freedom from a corrupt banking monopoly that collects tribute for letting us use our own public credit. Freedom from starvation and disease resulting from an artificial scarcity imposed by a private monopoly over the creation of money and credit.
Daily Bell: What do you think is responsible for human progress – individual human action or government?
Ellen Brown: Both are obviously responsible. Without government you would not have roads, bridges, court systems, etc. Government sets the rules and provides a protective umbrella under which individual human endeavor can bear fruit.
Daily Bell: Does government create and invent things?
Ellen Brown: Sure, many things. My brother comes to mind. He has degrees in physics and engineering and works for SLAC, the Stanford Linear Accelerator Center, a government-funded agency. It says in its mission statement:
"SLAC programs explore the ultimate structure and dynamics of matter and the properties of energy, space and time – at the smallest and largest scales, in the fastest processes and at the highest energies – through robust scientific programs, excellent accelerator based user facilities and valuable partnerships."
Government researchers can do "pure research" -- research for its own sake – because they aren't focused on quarterly profits. My brother took reduced pay at a government job for that reason: he did not want to sell out to industry. Mondragon, a large and very successful cooperative in France, has a "department of good ideas," where people can go with their creative inventions and get them developed.
Daily Bell: What makes you think that a government based public money system wouldn't be taken over by powerful private forces just like this one has been? We call it mercantilism. If you give government power, won't the wealthiest end up with their hands on the levers of government?
Ellen Brown: That hasn't happened in North Dakota, which currently has the only state-owned bank in the country. Certainly a public institution that returns its profits to the public, which has full public accountability and transparency, and employs civil servants who make no bonuses or commissions for churning loans, has a better chance of serving the public than the corrupt private system we have now.
Daily Bell: Isn't there a small group of Anglo-American banking families that has hijacked the West and intends to build a world government?
Ellen Brown: So I have read.
Daily Bell: Would you be in favor of one world government?
Ellen Brown: Definitely not of the sort projected by that group. I think national and state sovereignty is very important, particularly in matters of money. But the internet and global trade are increasingly bringing us closer together, and we probably do need some sort of international rules to keep things running smoothly. For example, I think there needs to be a global yardstick for measuring the value of currencies against each other – not the "floating" exchange rates we have now, which are subject to speculative manipulation, but something based on the real cost of goods and services in each country. I have a chapter on that in Web of Debt, including a proposed model.
Daily Bell: OK, thanks for answering the tough questions again. How is your movement doing?
Ellen Brown: Very well, thank you! I did two presentations in the California Bay Area in December, which generated so much interest that we have just launched a Public Banking Institute to follow though. The website is http://www.publicbankinginstitute.org.
Daily Bell: Are banks being established in the US that conform to your model?
Ellen Brown: Not yet, but legislation is pending or being proposed in a number of states, and there has been a great deal of interest in the idea. That's why we set up the Public Banking Institute -- to handle inquiries, do research, generate literature, and advise interested groups.
Daily Bell: Where do you go from here?
Ellen Brown: I'm trying to get another book out on public banking, but I seriously need a staff. My mother's caregiver used to do some computer work for me, but she has moved on to become a nurse practitioner. Hopefully the Public Banking Institute will relieve me of some of my networking functions.
Daily Bell: What recent books and articles would you refer our readers to?
Ellen Brown: I used to be an avid reader of books but I no longer have time! My own articles are posted here: http://www.webofdebt.com/articles
Daily Bell: Thank you for your time and courtesy as always.
Ellen Brown: And thank you for yours!
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***Editor's Note: In fact, Ellen Brown did respond in detail to Gary North (see feedback thread, below, for link). The back and forth is considerable – and detailed. In the After Thoughts below we have tried to focus on a larger overview to try to return the discussion to the simplest and most fundamental issue, which is state control versus the free market.
"The Federal Reserve was set up by bankers for bankers, and it has served them well.
"O
ut of the blue, it came up with $12.3 trillion in nearly interest-free cr
edit to bail the banks out of a credit crunch they created. That same credit
crisis has plunged state and local governments into insolvency, but the Fed has now delivered its ultimatum: there will be no “quantitative easing” for municipal governments." - Ellen Brown.
On January 7, according to the Wall Street Journal, Federal Reserve Chairman Ben Bernanke announced that the Fed had ruled out a central bank bailout of state and local governments."We have no expectation or intention to get involved in state and local finance," he said in testimony before the Senate Budget Committee. The states "should not expect loans from the Fed."
Marvin Berkowitz had fled to Jerusalem and was arrested there in August 2009; prosecutors say scam was worth $54 million.
A Chicago man who authorities say led an Israeli-American crime ring specializing in tax fraud and money laundering has pleaded guilty to conspiracy and mail fraud charges.
The Chicago Tribune reports that 64-year-old Marvin Berkowitz entered the plea Friday as part of an agreement weeks before his trial was to begin in federal court in Chicago.
Prosecutors say Berkowitz stole the identities of dead people and federal prisoners to file for tax refunds in 28 states. He fled to Jerusalem to avoid charges in a 2003 tax fraud case and was arrested there in August 2009 in operation codenamed "American Pie."
Prosecutors say the scam was worth about $54 million.
Berkowitz's son, David Berkowitz of Hollywood, Calif., has already pleaded guilty. Charges are pending against two other relatives.
China is sending a strong message to the US and countries in the region that China’s military modernisation is unstoppable, and China is determined to become this region’s dominant actor
BY quietly building up its stash of high-tech weaponry, China is threatening US military supremacy in the Pacific, worrying its neighbours and contributing to a renewed arms race in Asia, analysts say.
Just days before Chinese President Hu Jintao’s visit to Washington and as US Defence Secretary Robert Gates was in Beijing this week to patch up frayed defence ties, China’s military sent its first stealth fighter into the skies.
Analysts agree the test flight of the J-20 carried out by the People’s Liberation Army (PLA), which surprised many military observers, was no coincidence.
‘China is sending a strong message to the US and countries in the region that China’s military modernisation is unstoppable, and China is determined to become this region’s dominant actor,’ said Taiwan-based PLA expert Arthur Ding. The emergence of the first photos of the J-20 just before Gates’ visit forced the Pentagon chief to admit that China ‘may be somewhat further along in the development of that aircraft than our intelligence had predicted’.
Analysts who have studied every pixel of these shots say while it is difficult to estimate just how advanced the plane - seen as an eventual rival to the US Air Force’s F-22A - really is, the message sent by Beijing is clear. ‘While it does not truly demonstrate China’s capability in terms of developing the latest-technology military equipment, it certainly does demonstrate their ambition,’ said Gareth Jennings, an aviation expert at Jane’s Missiles & Rockets magazine.
The PLA - the largest army in the world - is hugely secretive about its defence programmes, which benefit from a big military budget boosted by the nation’s runaway economic growth.
Officially, China says its military technology is 20 to 30 years behind that of the United States, and maintains that the modernisation of its army is purely defensive in nature. But its neighbours are worried. Japan last month labelled Beijing’s military build-up a global ‘concern’, citing its increased assertiveness in the East and South China Seas. Analysts say Beijing’s stated position no longer corresponds to the facts.
China, without formally acknowledging it, is building at least one aircraft carrier, which more than anything else will showcase its ability to project its military might further afield.
‘They have equipment that is far from being defensive. More and more they have planes capable of striking ground targets,’ a Western military expert based in Beijing, who refused to be named, told. ‘What is the use of that when you say you want to defend yourself?’
In 2007, China - a nuclear power - sparked international concern when it destroyed one of its satellites with a missile strike. And last January, the Chinese military intercepted an airborne missile. Now, it is developing a ballistic missile capable of striking aircraft carriers - a move that threatens US supremacy in the Pacific.
Admiral Mike Mullen, head of the US Joint Chiefs of Staff, warned Wednesday that China’s new weapons programmes, including the J-20, appeared to be directed against the United States.
Observers worry that the balance of power will shift in East Asia, where there are several potential sources of conflict revolving around Taiwan, North Korea and territorial disputes with neighbouring states. They say a new arms race seems inevitable.
‘Today, nobody knows for sure how many J-20s the PLA will eventually deploy, nor how many ballistic missiles,’ said Dennis Blasko, an expert on the PLA based in the United States. ‘Neither can we predict the size and composition of US and allied forces beyond four or five years.’ Dean Cheng, a China expert at the Heritage Foundation, a US think tank, said there was ‘still time for the US to take corrective measures to hedge against these Chinese capabilities, both in its own arsenals and in what it provides Taiwan.’
The self-ruled island is a sore point in China-US military ties. Last year’s multi-billion-dollar arms deal between Washington and Taipei angered Beijing so much it suspended defence relations with the United States. But for Rick Fisher of the International Assessment and Strategy Centre, the United States and its allies ‘have a very short timeframe to get really smart about the PLA’s intentions and technology directions’. ‘If this cannot be done, for reasons of lack of information or lack of political will, Washington could soon find itself increasingly following China, and not leading the arms race,’ Fisher said. afp
The stated purpose of quantitative easing was to drive down interest rates on U.S. treasury bonds.
But as U.S. News and World Reported noted last month:
By now, you've probably heard that the Fed is purchasing $600 billion in treasuries in hopes that it will push interest rates even lower, spur lending, and help jump-start the economy. Two years ago, the Fed set the federal funds rate (the interest rate at which banks lend to each other) to virtually zero, and this second round of quantitative easing--commonly referred to as QE2--is one of the few tools it has left to help boost economic growth. In spite of all this, a funny thing has happened. Treasury yields have actually risen since the Fed's announcement.
The following charts from Doug Short update this trend:
Of course, rather than admit that the Fed is failing at driving down rates, rising rates are now being heralded as a sign of success. As the New York Times reported Monday:
The trouble is [rates] they have risen since it was formally announced in November, leaving many in the markets puzzled about the value of the Fed’s bond-buying program.
***
But the biggest reason for the rise in interest rates was probably that the economy was, at last, growing faster. And that’s good news.
“Rates have risen for the reasons we were hoping for: investors are more optimistic about the recovery,” said Mr. Sack. “It is a good sign.”
Last November, after it started to become apparent that rates were moving in the wrong direction, Bernanke pulled a bait-and-switch, defending quantitative easing on other grounds:
This approach eased financial conditions in the past and, so far, looks to be effective again. Stock prices rose and long-term interest rates fell when investors began to anticipate the most recent action. Easier financial conditions will promote economic growth. For example, lower mortgage rates will make housing more affordable and allow more homeowners to refinance. Lower corporate bond rates will encourage investment. And higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending. Increased spending will lead to higher incomes and profits that, in a virtuous circle, will further support economic expansion.
As former chief Merrill Lynch economist David Rosenberg writes today:
So the Fed Chairman seems non-plussed that Treasury yields have shot up and that the mortgage rates and car loan rates have done likewise, even though he said this back in early November in his op-ed piece in the Washington Post, regarding the need for lower long-term yields:
“For example, lower mortgage rates will make housing more affordable and allow more homeowners to refinance. Lower corporate bond rates will encourage investment.”
But the Fed Chairman is at least getting what he wants in the equity market. Recall what he said back then — “higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending. Increased spending will lead to higher incomes and profits that, in a virtuous circle, will further support economic expansion.”
So now the Fed has added a third mandate to its charter:
1. Full employment 2. Low and stable inflation 3. Higher equity valuation
The real question we should be asking is why Ben didn’t add this third policy objective back in 2007 and save us from a whole lot of pain over the next 18 months?
And higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending.
Indeed, leading economic consulting firm Trim Tabs (25% of the top 50 hedge funds in the world use TrimTabs' research for market timing) wrote on Wednesday:
The Federal Reserve’s quantitative easing programs have helped stock market participants, financial institutions, and large companies but have done little to address the structural problems of the economy, according to TrimTabs Investment Research.
“Quantitative easing is supposed to produce stronger economic growth and lower unemployment,” said Madeline Schnapp, Director of Macroeconomic Research at TrimTabs. “While QE1 and QE2 have worked wonders on the stock market, their impact on GDP and jobs has been anemic at best.”
The Fed no longer even denies that the purpose of its latest blast of bond purchases, or QE2, is to drive up Wall Street, perhaps because it has so signally failed to achieve its other purpose of driving down borrowing costs.
Unfortunately, a rising stock market doesn't help the average American as much as you might assume.
We have examined the wealth effect with a cross-sectional time-series data sets that are more comprehensive than any applied to the wealth effect before and with a number of different econometric specifications. The statistical results are variable depending on econometric specification, and so any conclusion must be tentative. Nevertheless, the evidence of a stock market wealth effect is weak; the common presumption that there is strong evidence for the wealth effect is not supported in our results. However, we do find strong evidence that variations in housing market wealth have important effects upon consumption. This evidence arises consistently using panels of U.S. states and individual countries and is robust to differences in model specification. The housing market appears to be more important than the stock market in influencing consumption in developed countries.
Even Alan Greenspan recently called the recovery "extremely unbalanced," driven largely by high earners benefiting from recovering stock markets and large corporations.
***
As economics professor and former Secretary of Labor Robert Reich writes today in an outstanding piece:
Some cheerleaders say rising stock prices make consumers feel wealthier and therefore readier to spend. But to the extent most Americans have any assets at all their net worth is mostly in their homes, and those homes are still worth less than they were in 2007. The "wealth effect" is relevant mainly to the richest 10 percent of Americans, most of whose net worth is in stocks and bonds.
As of 2007, the bottom 50% of the U.S. population owned only one-half of one percent of all stocks, bonds and mutual funds in the U.S. On the other hand, the top 1% owned owned 50.9%.
***
(Of course, the divergence between the wealthiest and the rest has only increased since 2007.)
And last month Professor G. William Domhoff updated his "Who Rules America" study, showing that the richest 10% own 98.5% of all financial securities, and that:
The top 10% have 80% to 90% of stocks, bonds, trust funds, and business equity, and over 75% of non-home real estate. Since financial wealth is what counts as far as the control of income-producing assets, we can say that just 10% of the people own the United States of America.
The bottom line is that quantitative easing is not really helping the average American very much ... and is certainly not worth trillions of dollars.
This weekend a tight-lipped group of power brokers elected two new members into Kappa Beta Phi, Wall Street's secret society founded in 1929, Bloomberg reported.
The organization, dubbed "Wall Street's Frat" by the WSJ elected Barclays M&A chief Paul Parker and Leon Black, a senior managing director at buyout firm the Apollo Group, in a posh ceremony at Manhattan's St. Regis Hotel.
While the group's members aren't fond of talking to the press, there is reportedly a loose hierarchy of members. The group reportedly uses titles like "grand swipe, grand smudge and grand loaf," Bloomberg notes.
Bloomberg reporter Max Abelson was seated outside the lobby and relayed this strange anecdote. Here's Abelson:
"As the evening began, a reporter seated in the lobby watched people enter the hotel, where a night in the Astor Suite costs about $1,050. When a man appeared holding a photograph of the reporter in a gray T-shirt giving a thumbs-up sign -- a profile photo from his Facebook page -- the reporter promptly left."
Film-maker who hated A-list success turns tables on industry in revealing documentary
Tom Shadyac has turned his camera on Hollywood. Photograph by Kevin Parry/WireImage
Tom Shadyac had it all and was living the dream. Or at least that is what people in Hollywood told him. He was a hugely successful movie director with a string of comedy hits. He had earned himself millions of dollars and had an A-list lifestyle with all the trappings of excess.
Then, in 2007, an already disillusioned Shadyac had a bike accident and became gripped by a profoundly non-showbiz desire: to give his wealth away. Several years later, he has swapped his luxury jetsetting for economy class and his 17,000-square ft mansion in Los Angeles for a trailer park in Malibu.
He has not, however, stopped making films – even if his new one couldn't be more different from the goofball comedies of his big box office days. I Am, coming out in the United States next month, is a documentary that explores not only Shadyac's remarkable journey from riches to rags but the world's ever-growing addiction to materialism.
"I really did not want to die with this conversation buried inside of me," he told the Observer, citing his cycling crash in Virginia as the trigger for his radical turnaround. For months after the fall from his bike Shadyac was ill, suffering debilitating headaches and an acute sensitivity to light and noise that saw him shut himself away in darkness and quiet. It was then that he knew he had to delve deeper into the new life journey he felt he was on. "I had been shifting my life already but the bike accident really made me want to make the film," he said.
In I Am, Shadyac embarks on a journey to talk to world figures who inspired him. He ends up interviewing a list of top scientists, religious leaders and philosophers that includes Archbishop Desmond Tutu, Noam Chomsky and leftwing historian Howard Zinn. About as far from previous hits such as Jim Carrey classics Ace Ventura and Liar, Liar, the documentary is already creating a buzz in film festivals and special screenings at colleges. He has no regrets.
"I didn't like the values that I saw. I was part of the problem and I wanted to stop the hypocrisy. I did not want to preach about the gap between the poor and rich when I represented that gap," said Shadyac, 52, who gave his fortune away to a variety of good causes.
The movie is ambitious in its aims, setting out to explore the notion that our economy and way of life are based on selfish materialism that actually go against our true nature, which is to co-operate and unite. These are themes he explores with Chomsky and Tutu as well as lesser-known figures like author Lynne McTaggart and environmentalist David Suzuki. Shadyac examines the common ground between science and forms of spirituality and examines new discoveries in both areas.
He wants people who watch the film to come away with a changed view of the world and a belief that the power to alter things lies in their own hands. Shadyac points out that Al Gore's climate change film An Inconvenient Truth had similarly humble beginnings but became globally influential. "There has to be a change. I want to be the straw on the camel's back. An Inconvenient Truth caught a zeitgeist and I think I Am can catch a zeitgeist too. It has to," he said.
If the reactions of audiences so far are any indication, then Shadyac could be on to something. He has been taking I Am to colleges and small film festivals giving after-show talks and dealing with packed crowds. "The reaction has been incredible. At our very first screening we got a 20-minute standing ovation. I am not joking," he said. While Shadyac has various plans for his future – more documentaries or perhaps hosting a television show tackling the issues raised in I Am – he is sure of one thing: he will stick to his new values and not become rich again, no matter how well his films do.
He remembers with a shudder the huge amounts of money that flowed into his life after Liar, Liar hit cinema screens. "I thought: 'This is wrong.' It was disconnecting me with art," he said. He said he now saw no difference between himself as a director and anyone else working on his films. "I am not more valuable than a cook on set or the guy who lays the cables. The person cleaning the set is just as valuable to the art," he said.
Those are the sort of egalitarian sentiments that many big names in Hollywood occasionally voice. But Shadyac has lived up to them and is not looking back with envy at his old days of luxury and glamour. "I definitely was not as happy as I am now," he said.
Get ready to stretch your wallet. We're already seeing the signs of prices creeping up in just the infancy days of 2011. So be prepared to open wide for:
1. A Trip to the Grocery Store The USDA forecasts a 2% to 3% hike in the cost of all foods in 2011. Higher corn and soybean prices are the main force behind the increase. Remember, farm animals have to be fed and when those costs go up, so does what you pay. Expect a big spike in the dairy case and meat counter, where pork alone is forecast to rise between 3% and 4%.
If it's any comfort, in 2008 food costs overall rose more than 5.5%. And you still didn't lose weight.
Solution: Sign up for sites that offer grocery coupons. Shop the weekly sales and the manager's specials. Plan your meals for the week and make a list of what you need before you go to the market. Don't buy impulse items, even if they're on sale. Consider a grocery co-op if your neighborhood has one. Don't be afraid to try planting a vegetable garden, at least for your fresh herbs.
2. The Cost of Gas and Heating Fuel If you are hanging on to that Hummer, now might be the time to unload it. Some fast-and-loose talk by former Shell Oil President John Hofmeister says gas will be back to $5 a gallon this year. That's about $2 more per gallon than the current average price of $3.05, says the Department of Energy. Blame it on the weather. Unexpectedly harsh winters here and in Europe have created a higher-than-usual demand for heating fuels. Add to that the increased demand for fossil fuels in places like China and India and the depreciation of the U.S. dollar -- and dare we mention the overall greed of the oil industry? -- and there you have it.
Solution: Demand dictates price, so use less. Carpool, car share, combine your errands, ride a bike, walk. At home, wear a sweater and keep your thermostat set low. Consider solar panels and absolutely seal any cracks or leaks around your windows.
For those with too much time on their hands, the price-tracking Gas Predictor can tell you whether you should fill up the car today or tomorrow.
3. Health Insurance and Medical Costs Blue Shield in California said it was going to raise premiums by almost 60% and you can bet that your insurer has something similar planned.
Don't look for much help from the government here. The Obama administration wants individual and small-group insurers to justify when they raise rates by 10% or more. But it's a toothless gesture. The Department of Health and Human Services wasn't given enforcement authority to do anything about it even if the hikes are deemed unreasonable.
Solution: Consider a catastrophic or high-deductible health plan, something that will kick in only for big-ticket medical bills. Experts recommend carrying insurance for the things you can't handle yourself. You might be able to handle $10,000 in medical bills, but not $100,000 -- hence a catastrophic plan could save you a lot in premiums. Also consider dropping dental insurance. Costco has a $87-a-year plan that just might get you what you need, assuming you don't need to see your own particular dentist.
Solution: Fortunately, you do have a choice. Don't buy it. Thrift store shopping has enjoyed a renaissance this recession. Organize a kids' clothing swap at your school or a clothing swap party among your friends. Dare we suggest you even drag the old sewing machine down from the attic?
5. Colleges and Universities For the 2010-2011 school year, tuitions are up by almost 8% at public, four-year colleges and 4.5% at private colleges. Expect more hikes for 2011-2012 as schools try to cope with a reduction in alumni giving, state funding and more students asking for financial aid.
Solution: No, we're not going to advise that you don't go to college. But you might want to consider enrolling in a community college for two years, or at least taking some of your courses there over the summer. Community colleges are cheaper. The economic sentiment at the moment is that student loans will only be burdens to you later on. Consider working for a year and socking away your money so that you get your education on a pay-as-you-go basis.
6. Raising Kids Let's face it: Kids aren't cheap. It isn't just feeding and clothing them, it's also sending them to soccer camp, arranging after-school care, paying for the math tutor. Babysitters charge as much as $12 to $15 an hour, even higher for late nights. Public schools are turning to parents to help them make up budget deficits.
Solution: Hillary was right; it takes a village. Look for opportunities to barter parenting services. You help my kid in calculus and I'll help yours learn to write an essay. Form homework clubs instead of hiring tutors. Form babysitting cooperatives instead of hiring a nanny. Maybe this isn't the summer of the sleep-away camp, but surely a tent in the backyard with five friends sleeping over helps ease the pain. Some families have even exchanged homes for vacations.
7. Bank and Bank Card Fees Checking fees, ATM fees, safety deposit box fees, talking to a teller fees. Our bank just charged us $3 to view a check that was cashed from our account; we had forgotten who we wrote it to and clicked on the online "view" button. Silly us. Lesson learned. New banking laws have meant new banking fees.
Solution: The only thing you can do is shop around. Some banks are better than others. Figure out what you need from your bank -- and it likely isn't yet another credit card -- and then do some comparison shopping.
Co-op and condo owners will pay sharply higher property taxes next year in NYC, under a preliminary assessment roll released Friday by the Bloomberg administration, WSJ reports. The city attributed the rises, due to take effect in July, to higher market values placed on apartment buildings by tax assessors.
Taxes collections are expected to rise by 7.5% for co-op owners, and 9.6% for condo owners across the city, according to a summary report released by the Department of Finance.
These are, of course, higher assessments than the actual property value increases. It's Bloomberg's sneaky way of raising tax revenue. But there has been some strength in the NYC market to provide cover for Bloomberg's high assessments.
Fed Chairman Bernanke's first money pump (QE1) went directly to Wall Street and that's why you see the higher assessments in NYC, but QE2 is about the rest of the country.
What's going on in NYC is what Bernanke wants nationwide. One of the main reasons he is goosing the money supply is so that state and local governments will collect more in taxes to pay off their huge debts. If he can get an uptick in property values nationwide, then the assessors will takeover from there, and spike the valuations. Bottom line: Expect much higher assessments across the country over the next two years.
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