Fed Injects Record $100 Billion Cash Into Foreign Banks Operating In The US In Past Week

Those who have been following our exclusive series of the Fed's direct bailout of European banks (here, here, here and here), and, indirectly of Europe, will not be surprised at all to learn that in the week ended February 27, or the week in which Europe went into a however brief tailspin following the shocking defeat of Bersani in the Italian elections, and an even more shocking victory by Berlusconi and Grillo, leading to a political vacuum and a hung parliament, the Fed injected a record $99 billion of excess reserves into foreign banks. As the most recent H.8 statement makes very clear, soared from $836 billion to a near-record $936 billion, or a $99.3 billion reserve "reallocation" in the form of cash - very, very fungible cash - into foreign (read European) banks in one week.

Furthermore, as we first showed, virtually all the "reserves" created by the Fed end up allocated as cash at commercial banks operating in the US: both domestically-chartered (small and large), but more importantly, foreign. And of the $1.884 trillion in very fungible cash parked in various domestic and international US banks, just half of it, or $949 billion is actually allocated to US banks. The other half, or $936 billion, is parked within, again, very fungible cash accounts of foreign (read European) banks operating in the US. This is shown in the chart below (green area is cash of foreign banks), and what is also shown is the total change in the Fed's excess reserves, which proves, once more, that the Fed continues to fund European banks with hundreds of billions in cash on a week by week basis. And what is perhaps most important, is that of the $250 billion in new reserves created under QEternity, all of it has gone to foreign (read European) banks.

It may anger American to learn that by the time the Fed is done with QEternity (if ever), all of the newly created cash will have gone to mostly European banks. Because with every passing week, whatever new reserves are created by the Fed in exchange for monetizing the US deficit, end up as cash solely at European banks: a sad reality we have seen non-stop since the advent of QE2 when US bank cash balances remained relatively flat in the ~$800 billion range, and every incremental dollar went straight to Europe.
As a reminder, we don't know how, via assorted shadow banking and other repo pathways, these banks manage to use said cash in other fungible activities. Recall that as we said, "So whether European banks will continue buying the EURUSD, or redirect their Fed-cash into purchasing the ES outright, or invest in other even riskier assets, remains unknown." It is also unknown is the Fed's reserves, reappearing as cash, and then siphoned over to European bank HoldCo via payables, is then used by, say, Italian and Spanish banks to purchase BTPs and Bonos, and give the impression that all is well. Because unlike before, keeping the EURUSD high is not as critical any more. But what is critical is to give the impression that Italian and Spanish sovereign risk is contained. And after all, let's not forget that as of January, Italian bank holdings of Italy state bonds just hit a record of EUR200 billion.
Is it possible that the Fed, in all its generosity, transferred over several hundred billion over to these same Italian banks, courtesy of the cover provided by QE, so that the same Italian banks may monetize Italian bank bonds? And the same for Spain. Any wonder then that we got news of how flyingly great Spanish and Italian bond auction were in the past week?
After all, in Europe Germany has a heart attack whenever anyone perceives the ECB as monetizing, or even greenlighting the monetization of local sovereign bonds. But Germany has never said what it thinks about the Fed, indirectly, doing the same, using Italian and Spanish banks as conduits.
Finally, while we don't know what the cash is being used for, we know that sooner or later, sometime around December 2013, when European, pardon, foreign bank holdings of US reserves, i.e., USD cash, hits well over $1.5 trillion, and when the Interest on Excess Reserves starts going up and the Fed is directly providing tens of billions in interest payment to European banks, some Americans may be angry to quite angry with that development.
But for now, everyone is blissfully unaware and even if they were, nobody cares. Why just look at the Dow Jones Industrial Average: how can one possibly allege that all is not well with the world...
Source: H.8

Every "Record" Dow Jones Point Costs $200 Million In Federal Debt

The past week brought us history: on Tuesday, GETCO and Citadel's HFT algos were used by the Primary Dealers and the Fed to send the Dow Jones to all time highs, subsequently pushing it to new all time highs every single day of the week, and higher on 8 of the past 9 days: a 5ish sigma event. But there is never such a thing as a free lunch. And here is the invoice: in the past 5 days alone, total Federal Debt rose from$16.640 trillion to $16.701 trillion as of moments ago: an increase of $61 billion in five days, amounting to $198,697,068 for every of the 307 Dow Jones Industrial Average points "gained" this week. Because remember: US debt is the asset that allows the Fed to engage in monetization and as a result, hand over trillions in fungible reserves to banks... mostly foreign banks.

From Debt to the Penny:

The good news is that debt is no longer and issue, and only the level of the stock market matters. Because if the wealth effect at $16.7 trillion and a record DJIA is staggering, just wait until the Obama administration takes the debt to $22 trillion in under 4 years.
At that point, nobody will have ever ever have had more money. Sadly, at some point, all that money will be used to buy a loaf of bread....

Greece may still have to quit euro: Merkel ally

(Reuters) - Greece remains the biggest risk for the euro zone despite a calming of its economic and political crisis and may still have to leave the common currency, a senior conservative ally of German Chancellor Angela Merkel said.
Alexander Dobrindt, general secretary of the Christian Social Union (CSU), the Bavaria-based sister party of Merkel's Christian Democrats (CDU), has long argued that Greece would be better off outside the euro zone.
But German conservatives' criticism of Greece has eased since the conservative-led government of Prime Minister Antonis Samaras accelerated harsh austerity measures demanded by Germany and the EU as part of its bailout program.
"The greatest risk for the euro is still Greece... I still believe that Greece's exit would be a possible long-term alternative, for Europe and for Greece itself," Dobrindt told Die Welt am Sonntag newspaper, according to advance excerpts of the interview released on Saturday.
"We have created a situation that gives Greece a chance to return to stability and restore competitiveness. But I still hold that, if Greece is not able or willing to restore stability, then there must be a way outside the euro zone."
Dobrindt urged the European Commission, the EU's executive arm, to prepare the legal ground to allow for the legal bankruptcy of a euro zone member state and its exit from the currency union.
Dobrindt's comments contrasted with those of the CSU chairman and Bavarian state premier, Horst Seehofer, who expressed solidarity with Greece and said it was on the "right path" when Samaras visited Munich last December.
Seehofer's conciliatory tone echoed that of Merkel who, for all her frustration with the slow pace of Greek reforms, has decided that a "Grexit" would be far more costly for Germany and Europe than pressing on with the bailout program.
Merkel is also keen to avoid renewed market turbulence in the euro zone ahead of Germany's federal election in September. Bavaria also holds a state election in the autumn which the CSU is tipped to win.
Dobrindt made headlines last summer when he suggested Greece should start paying half of its pensions and state salaries in drachmas - the national Greek currency before the euro - as part of a gradual exit from the euro zone.
With Athens now enjoying relative political stability, German lawmakers have recently been more focused on how to rescue Cyprus, which is negotiating a bailout after its banks suffered big losses due to their heavy exposure to Greece.
Italy, the euro zone's third largest economy, also poses a bigger challenge after a majority of voters there rejected German-backed austerity policies in an election last month that has left no party with a clear majority to govern.
(Reporting by Gareth Jones; Editing by Mark Heinrich)

Heinz Insider Trading Came From Goldman Sachs Account

Another black eye for Blankfein.
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Suspicious Heinz Trading Came From Goldman Sachs Account
Bloomberg
The SEC on Feb. 15 sued “unknown” traders over suspicious trading of Heinz’s options through an account at Goldman Sachs.  The New York-based bank told SEC senior counsel Megan Bergstrom that the account holder is a Zurich private wealth client.
The unidentified traders are “foreign traders and trade through a foreign account."
U.S. District Judge Jed Rakoff, who is presiding over the case, temporarily froze the assets in the account on Feb. 15 at the SEC’s request.
The SEC yesterday asked Rakoff to keep the assets frozen until the case is resolved, saying there is a “serious risk that the substantial proceeds from the defendants trading will leave the jurisdiction of the U.S. courts in the next few days and may never be recovered,” according to a court filing.
The defendants, using the Goldman Sachs account, invested almost $90,000 in option positions the day before the deal was announced, the SEC said. As a result, their position increased to more than $1.8 million, a rise of almost 2,000 percent.
The SEC said that the traders had advance material nonpublic information about the impending deal when they used an omnibus account in Zurich to buy 2,533 out-of-the-money June call options, which had a strike price of $65 on Feb. 13. Shares closed that day at $60.48.
Continue reading...
***

UPDATE - Warren Buffett Betrayed By Insider Trading At Heinz


Last week's Barron's Cover by William Banzai7...

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Marc Faber: Stock Market Rally ‘Will End Badly’ So Buy Gold

Marc Faber, publisher of the Gloom, Boom & Doom Report, thinks stocks have shot to overvalued levels; therefore, it continues to make sense to own gold.

Stocks will either endure a 20 percent correction this year before making a definitive move higher, or they will suffer through a 1987-style crash, when the market rose early in the year then dropped more than 20 percent in a single day in October, he tells CNBC.

Stocks already have soared more than 100 percent from their March 2009 lows, Faber notes. “I think investors who today are rushing to stocks need to be reminded” of the market bottom exactly four years ago.

Editor's Note: Get David Skarica's Gold Stock Adviser — Click Here Now!

“It will end badly this year.”

Faber sees gold’s 18 percent drop from its record September 2011 high (to $1,569 an ounce early Friday) as a correction.

“I want to have something that is not a financial asset,” Faber says. “I have bonds, I have real estate and I have equities.” Equities and real estate are similar, even though they don’t always move in tandem, he adds.

“A lot of these are paper assets, whereas gold physically held in a safe deposit box outside the U.S. has relatively low risk.”

In addition, Faber notes, “I would rather buy something that is relatively depressed than something that is relatively high.”

Meanwhile, some gold market participants see the 236,000 gain in U.S. February payrolls as a bearish sign for the precious metal.

“The employment data is very positive and is pushing gold down,” Adam Klopfenstein, senior market strategist at Archer Financial Services, tells Bloomberg.

“This is a black eye for gold, as this data brings back the assessment of when quantitative easing may end.”

Editor's Note: Get David Skarica's Gold Stock Adviser — Click Here Now!

© 2013 Moneynews. All rights reserved.

Jamie Dimon: 'That's Why I'm Richer Than You'

Arrogant bastard caught on tape.  Dimon loves leverage.
Dimon responds to analyst Mike Mayo on capital ratios.
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Why Jamie Dimon Is Richer Than You
Reuters
That, indeed, is why Dimon is richer than most of us.  He's not gotten rich running a bank on 19th-century lines, conservative with high capital to make its tony clients comfortable.  He's gotten rich, and he's not alone, running banks with high leverage under loose regulatory regimes.
J.P. Morgan shareholders, it should be noted, have done a lot less well.  Since Dimon became president and COO in July 2004, the bank's stock is up about 30 percent.  Since he became both chairman and CEO in 2006 it is up barely at all.
The real issue isn't who is rich, but rather whose interests are being fairly served and whose aren't.  Dimon's approach gives short shrift to both shareholders and taxpayers who, by the way, are still carrying substantial risks for which they are not being compensated.
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More on leverage.
Henry Paulson, when he was still CEO of Goldman in 2004, successfully lobbied the SEC to change the rules on capital ratios.
A true must read:

• Paulson's SEC Rule Change - New York Times

Photo - Banzai explains why Jamie Dimon is richer than you...

Bob Rice Explains: 'How Central Banks Lease Their Gold'

Excellent clip.
Explaining 'Gold Lease' - How central banks monetize gold reserves.  Bob Rice of Tangent Capital Partners speaks with Bloomberg's Sara Eisen.
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Related:

• Bob Explains: 'Rehypothecation'

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Neil Weinberg, Stephen Roach, & Ron Paul: Evidence of a New Banking Bubble Is Growing. BOJ, Fed Currency Weakening Won’t End in ‘Pretty Way’

American Banker’s Weinberg: Evidence of a New Banking Bubble Is Growing

Bad habits at big banks are returning because of low lending margins and because the allure of thriving financial markets is reviving too much risk taking.
The result? There is evidence a new bubble may be forming, Neil Weinberg, editor in chief of American Banker, wrote in a column.
“Tops is the fact that with interest rates so low, there’s been a breakdown in the traditional “3-5-3” banking model — pay 3 percent on deposits, lend the money out at 5 percent and be on the golf course by 3 p.m.,” he said.
….
Weinberg said an industry insider told him many smaller banks are trying to sell, which may present fresh temptations. “With a high price tag as their beacon, the temptation to pretty the financials is strong. That may help explain the fevered competition to write commercial and industrial loans.”
It could all end badly, even in the face of federal scrutiny, according to Weinberg.
…

Stephen Roach Says BOJ, Fed Currency Weakening Won’t End in ‘Pretty Way’

Former Morgan Stanley banker and now Yale professor says the US and Japan’s currency war will end badly. I

Unemployment Rate Drops to 7.7%, Jobs Con Continues On

The unemployment rate fell to 7.7% following February’s Jobs Report and the mainstream propaganda machine is claiming yet another economic boom.  The mainstream’s credibility rating has dropped to 6%, even lower than the rating for Congress, which is lower than a cockroach.  The jobs numbers that just came out are a fraud and here is why.
It is reported that 296,000 jobs were created in February and we are being told that this is sufficient to drop the unemployment rate.  Let’s look at these 296,000 jobs and, just for the sake of argument, say that they were all created in the United States. 
In the month of February there were 1,395,000 new jobless claims filed. Now we will be extremely generous and say that a quarter of those went straight back to work within the month, which leaves 1,046,250 newly unemployed.  Now take that number away from the 296,000 jobs they say they created and you have a deficit of 750,250 unemployed. That is a negative number and we are not done yet.
100,000 foreigners are coming to this country every month on work visas, so that is 100,000 more of those created jobs that American nationals did not get.  So we must deduct them from the number.  Now the deficit is at 850,250 and we are not done yet.
By this fraudulent government’s own admission, there are 350,000 new workers added to the workforce each month, comprised of those graduating high school and college and coming into the workforce for the first time and they could not have gotten those jobs, as they did not exist as evidenced by the negative number, so they too must be deducted.
In the end equation we have a deficit of jobs to potentially employable Americans for the month of February at 1,200,250 and somehow this negative number is transformed into a positive number causing a drop in the unemployment rate.  The 7.7% rate is a fraud as dictated by the math.
The government and the mainstream propagandists know without any question that they are putting out false numbers and those perpetrating the fraud of the stock market know the numbers are a fraud, yet they use them as an indicator as to why the stock market keeps going up.
As a part of this con to sell us on this phony boom, we are being told that the average American’s wealth is increasing through the increase in reference to home prices.  Yet again, a mathematical equation is being manipulated.  Home prices are going up, but the buying power of the equity in the home is going down as the dollar continues to decrease in value, as more foreigners are coming into our country and buying up real estate, which drives up the price of real estate, as the bringing in of the foreign owned fiat dollars further drags the value of the dollar down.
This, coupled with the obvious net decline in American jobs, is a swirl that is sucking the wealth out of our nation and the powers that be will continue to push this façade until they have squeezed every dollar from private savings accounts into the stock market that the fools who still have wealth will allow themselves to be conned out of.
Then we are going to see the great crash and we are going to see it on every front, as we realize the extent of the fraud we have allowed these foreign insurgents to perpetrate upon us for the past hundred years.
Do not be deceived.  This is not rocket science.  In fact it is only third grade math, well it used to be third grade math.  With any luck, maybe those with a couple years of college can figure it out.  Suffice to say that anyone who buys into this con deserves exactly what they will be getting.
God bless the Republic, death to the international corporate mafia, we shall prevail.

The Coming Crash in the Bond Market

It is my contention that the 70-year debt supercycle has come to an end.
To put the current financial situation in perspective, here's a long-term history of the debt-to-GDP ratio, which reached a record high at the beginning of the current crisis. It was a dramatic change in 2009, unlike anything since the aftermath of the Great Depression.

The highest the debt-to-GDP ratio had previously been for the United States was 301% at the bottom of the depression in 1933 when GDP collapsed and debt was high. The level became unsustainable in 2009, despite low interest rates. Weak borrowers were signing up to finance houses that they thought would increase in price forever. The point of the chart is that this downturn is different from all the recessions since World War II.
Total market debt includes debt of the federal government, state governments, households, business, financial institutions, and to foreigners. The components of the above total debt are shown below, so you can see which ones are stabilizing and which may be approaching unsustainable levels.
Looking forward, the most important problem is that the federal government has inserted itself into the economy with huge deficits to try to combat the slowing of the private sector. As you can see, private-sector borrowing has not increased, even as federal government deficits have ballooned to unprecedented levels. In essence, we are building our recovery on government debt.

The clear driver of this extreme expansion of government debt that I call a "Bond Bubble" is the Federal Reserve's flooding of markets with liquidity to drive rates to zero. The chart below shows a projection what will happen to the Fed's balance sheet as it continues to distort the rate to zero by extending its monthly purchases of $40 billion of mortgage-backed securities (MBS) and $45 billion of Treasuries out to 2016:

It is my contention that the actions of the Fed, which were started to counter the credit crisis of 2008 with four programs of quantitative easing, have brought us the incredibly low interest rates (aka, the Bond Bubble) we have today. By purchasing so many credit assets, the Fed is driving the price of bonds higher, and thus interest rates much lower, than they would otherwise be.
The black line in the chart above is the 10-year Treasury rate – you can see that it drops with each of the big balance sheet expansions. The resulting asset bubbles in stocks and housing are a direct result of the monetary creation by the Fed.
The growth in Fed purchases will likely continue so that the low rates of the Bond Bubble don't collapse. But the effects of the Fed's economic stimulus decline with each new injection of money.
There will come a time when the Fed announces a new program of balance sheet expansion by asset purchases that will cause the interest rate to rise because of fears of inflation from money creation, rather than fall as the Fed desires. At that point, we'll know the Fed's power to manipulate the economy has dissipated.

Just How Low Can Interest Rates Go?

The chart of 10-year Treasuries below shows that the current level of 2% is lower than it has ever been, except for a brief low of 1.5% last fall (blue line). It is the lowest in 240 years. This is happening in spite of government deficits expanding at a trillion dollars per year as far as the eye can see. We are at the bottom of a 32-year bull market in bonds (drop in rate).
To get a view of how extreme today's rate is, I added the red line, which is 100 divided by the interest rate. It shows a rise as rates fall and makes the bubble of low rates more obvious – which is currently higher than ever.

The point is that these extremely low rates are unprecedented, even when looking back to the last Great Depression. They could spring back a long way.
The low rates induced by the Fed are transmitted to many other market rates, as shown in the following charts. These charts need little comment, except that all of them confirm the simultaneous movement to many-decade lows.

During the credit crisis, junk bonds were the worst performers as investors feared they would lose their money in default. Rates rose on BBB corporate debt as well. At the same time, government debt became the safe haven, and as people moved to the safe haven, they drove the price of Treasuries up and their interest rate down. The premium has gone out of the lower-rated markets, with rates even lower than before this crisis started. It's not that risk has disappeared: I think it is more likely that the flood of excess money is chasing any kind of return it can find, and that is driving rates to record-low levels.

Inflation spiked dramatically in the 1973 and 1979 oil crises. More recently, official government numbers haven't shown wild inflation. Prices for energy, food and domestic services – like medical care and education – have had big jumps. But thanks to cheap foreign manufacturing, we are able to import goods at attractive prices, so overall inflation doesn't reflect the extreme money creation by the Fed. Wage growth is nonexistent, largely due to foreign competition and high unemployment from offshoring manufacturing.
The forces of inflation can easily overcome a weak economy to destroy a currency: this has happened in countries like Zimbabwe, Argentina or Yugoslavia. Once things get out of hand, it is hard to say whether it is the weak economy that causes the government spending and further deficit destruction of the currency, or the reverse. But that doesn't matter once people lose confidence in the government and its paper issuance.
The chart below shows government numbers for inflation that seem awfully low compared to what most people experience. The erratic behavior of commodities is likely to continue, so I think prices will continue to rise.

But even using these conservative government numbers, when we subtract the inflation from the interest rate to show the real return to an investor, we get negative numbers. This, too, is unsustainable.

A Look at Interest Rates Worldwide

I've written extensively in previous articles about central bank expansion, but it's worth reminding ourselves that excessive money creation is not just a US phenomenon but a worldwide experiment. Once this feeds back on itself as ordinary people recognize the destruction of the fiat currency systems, we can expect inflation on a worldwide basis. The similar decline in interest rates in Germany and Japan is the result of their central bank interventions to support their economies by driving rates lower.

The chart below, which shows the interest rates of 187 countries, has some underlying patterns. At first blush it just looks like spaghetti, but if you step back, you can see that rates were rising into 1980. Then many fell until the recent crisis, after which new deviations appear. In Europe, rates went both ways: up for the PIIGS and down for the safe havens like Germany.

And here is a simplification of the above by just averaging the numbers to a single line in which you can see an imprecise confirmation that, despite wide variability, there is an underlying pattern in world markets.

The above six charts confirm that rates of all kinds are at 50-year record lows.

Debt and Interest Rates Suggest Higher Rates Are Possible

The chart below shows the comparison of Greece's growing debt (in blue) and the resulting rise in interest rate. You can see that as Greece's debt to GDP rose above 100%, the interest rate rose toward 20%. Lenders lost confidence in the ability of the Greek government to actually pay back its debt.

In contrast, the stronger countries have been able to accommodate their government debt increase and still maintain moderate interest rates. The United States is shown in the following chart. Central banks have aided the government in managing to keep rates low despite big deficits, by buying the debt. Balance sheets of the world's central banks are growing rapidly to support government deficits while forcing rates to low levels. It is a bubble.

When you buy Treasury bonds, you are putting your fate in the hands of the government, expecting it to give back your purchasing power and a reasonable amount of interest to you, in return for the use of your money. Should you trust these authorities with your money? I believe we are headed for a serious loss of confidence in the value of the dollar, which will be accompanied by a burst of the Bond Bubble.
This Ponzi scheme is getting ready to explode.

Between now and that day of reckoning, you can rest assured the purchasing power of your money will continue to erode. This, of course, means that to make a profit, you have outpace inflation. One of the best approaches you can take is to follow the lead of contrarian investing legend Doug Casey and invest in emerging trends…

British exit from EU would be catastrophic, says German finance minister Wolfgang Schaeuble

A British exit from the European Union would be a catastrophe despite disagreements over capping banker bonuses that have left London increasingly isolated, German Finance Minister Wolfgang Schaeuble told an Austrian newspaper.

His comments are his strongest so far in trying to avoid a messy split that would send shock waves through politics and financial markets.
Britain failed this week to secure backing to water down new EU rules limiting bonuses, a measure that could threaten London's dominance as a financial centre.
Schaeuble acknowledged Britain's interest in the subject, given the major role its financial centre plays, but told Der Standard:
"I would prefer that the British could also agree, especially since I would not like the British to be driven out of the EU in the end. It is German policy that one does not support the voices that can imagine an EU without the UK."
He spoke of the damage such a move would inflict on the EU.
"Try then to explain to an Indonesian: Europe is an incredibly strong, dynamic entity but unfortunately not in a position to keep a globally oriented country like Britain as a member. This loss of reputation alone would be a catastrophe."
The rules, which would limit bankers' bonuses to the equivalent of their salary, or two times their salary if shareholders agree, are set to be introduced next year and would represent the toughest bonus regime anywhere in the world.
They threaten Britain's financial industry the most, raising the risk that some banks and their top bankers could relocate to other financial centres outside the European Union.
Schaeuble took a hard line in the interview, however, saying: "The regulations will not be weakened under any circumstances."
REUTERS

The U.S. can’t afford a Chinese economic collapse

Source: Reuters
Is China about to collapse? That question has been front and center in the past weeks as the country completes its leadership transition and after the exposure of its various real estate bubbles during a widely watched 60 Minutes exposé this past weekend.
Concerns about soaring property prices throughout China are hardly new, but they have been given added weight by the government itself. Recognizing that a rapid implosion of the property market would disrupt economic growth, the central government recently announced far-reaching measures designed to dent the rampant speculation. Higher down payments, limiting the purchases of investment properties, and a capital gains tax on real estate transactions designed to make flipping properties less lucrative were included.
These measures, in conjunction with the new government’s announcing more modest growth targets of 7.5 percent a year, sent Chinese equities plunging and led to a slew of commentary in the United States saying China would be the next shoe to drop in the global system.
Yet there is more here than simple alarm over the viability of China’s economic growth. There is the not-so-veiled undercurrent of rooting against China. It is difficult to find someone who explicitly wants it to collapse, but the tone of much of the discourse suggests bloodlust. Given that China largely escaped the crises that so afflicted the United States and the eurozone, the desire to see it stumble may be understandable. No one really likes a global winner if that winner isn’t you.
The need to see China fail verges on jingoism. Americans distrust the Chinese model, find that its business practices verge on the immoral and illegal, that its reporting and accounting standards are sub-par at best and that its system is one of crony capitalism run by crony communists. On Wall Street, the presumption usually seems to be that any Chinese company is a ponzi scheme masquerading as a viable business. In various conversations and debates, I have rarely heard China’s economic model mentioned without disdain. Take, as just one example, Gordon Chang in Forbes: “Beijing’s technocrats can postpone a reckoning, but they have not repealed the laws of economics. There will be a crash.”
The consequences of a Chinese collapse, however, would be severe for the United States and for the world. There could be no major Chinese contraction without a concomitant contraction in the United States. That would mean sharply curtailed Chinese purchases of U.S. Treasury bonds, far less revenue for companies like General Motors, Nike, KFC and Apple that have robust business in China (Apple made $6.83 billion in the fourth quarter of 2012, up from $4.08 billion a year prior), and far fewer Chinese imports of high-end goods from American and Asian companies. It would also mean a collapse of Chinese imports of materials such as copper, which would in turn harm economic growth in emerging countries that continue to be a prime market for American, Asian and European goods.
China is now the world’s second-largest economy, and property booms have been one aspect of its growth. Individual Chinese cannot invest outside of the country, and the limited options of China’s stock exchanges and almost nonexistent bond market mean that if you are middle class and want to do more than keep your money in cash or low-yielding bank accounts, you buy either luxury goods or apartments. That has meant a series of property bubbles over the past decade and a series of measures by state and local officials to contain them. These recent measures are hardly the first, and they are not likely to be the last.
The past 10 years have seen wild swings in property prices, and as recently as 2011 the government took steps to cool them; the number of transactions plummeted and prices slumped in hot markets like Shanghai as much as 30, 40 and even 50 percent. You could go back year by year in the 2000s and see similar bubbles forming and popping, as the government reacted to sharp run-ups with restrictions and then eased them when the pendulum threatened to swing too far.
China has had a series of property bubbles and a series of property busts. It has also had massive urbanization that in time has absorbed the excess supply generated by massive development. Today much of that supply is priced far above what workers flooding into China’s cities can afford. But that has always been true, and that housing has in time been purchased and used by Chinese families who are moving up the income spectrum, much as U.S. suburbs evolved in the second half of the 20^th century.
More to the point, all property bubbles are not created equal. The housing bubbles in the United States and Spain, for instance, would never had been so disruptive without the massive amount of debt and the financial instruments and derivatives based on them. A bursting housing bubble absent those would have been a hit to growth but not a systemic crisis. In China, most buyers pay cash, and there is no derivative market around mortgages (at most there’s a small shadow market). Yes, there are all sorts of unofficial transactions with high-interest loans, but even there, the consequences of busts are not the same as they were in the United States and Europe in recent years.
Two issues converge whenever China is discussed in the United States: fear of the next global crisis, and distrust and dislike of the country. Concern is fine; we should always be attentive to possible risks. But China’s property bubbles are an unlikely risk, because of the absence of derivatives and because the central government is clearly alert to the market’s behavior.
Suspicion and antipathy, however, are not constructive. They speak to the ongoing difficulty China poses to Americans’ sense of global economic dominance and to the belief in the superiority of free-market capitalism to China’s state-managed capitalism. The U.S. system may prove to be more resilient over time; it has certainly proven successful to date. Its success does not require China’s failure, nor will China’s success invalidate the American model. For our own self-interest we should be rooting for their efforts, and not jingoistically wishing for them to fail.

The Children Going Hungry In America, Gold Confiscation

America’s ‘invincible’ city brought to its knees by poverty, violence
In America’s most dangerous and poorest city, Camden, N.J., bullet holes are visible in a church’s stained glass window, crosses commemorating the murdered line the outside of city hall and the police staff is so outnumbered and outgunned, drug deals occur in the open. Rock Center’s Brian Williams visits Camden and talks to those fighting to turn around the forgotten city.
http://inplainsight.nbcnews.com/_news/2013/03/07/17225824-americas-invincible-city-brought-to-its-knees-by-poverty-violence?lite
Governments Worldwide are Implementing Orwellian Gold Confiscation Today. You Just Haven’t Realized it Yet.
http://www.zerohedge.com/contributed/2013-03-07/governments-worldwide-are-implementing-orwellian-gold-confiscation-today-yo-0
Bulgaria suffers massive power shortage
Sofia—In a rundown area on the edge of Bulgaria’s capital, where violent protests over power prices brought down the government last month, some residents are risking their lives and their neighbours’ wrath to steal electricity.
http://pakobserver.net/detailnews.asp?id=199058
The children going hungry in America
Child poverty in the US has reached record levels, with almost 17 million children now affected. A growing number are also going hungry on a daily basis.
http://www.bbc.co.uk/news/magazine-21636723

Economical with the truth? Independent financial watchdog the OBR slaps down David Cameron over claims that high taxes and cuts don't hurt growth

David Cameron was slapped down by his own independent fiscal watchdog yesterday, provoking a politically charged row over the economic impact of the Coalition’s austerity programme.

Robert Chote, the chairman of the Office for Budget Responsibility, wrote to Downing Street to protest that Mr Cameron had misrepresented its view on the reasons for the economy’s feeble performance in recent years.
The Treasury was rocked by the dramatic intervention, which follows several rebukes from the UK Statistics Authority for the Government’s handling and presentation of official figures on the economy and spending.
Last night Labour accused Mr Cameron of playing “fast and loose with the facts”.
Mr Chote’s letter came after a speech two days ago in which the Prime Minister blamed the economy’s anaemic state on factors such as high oil prices and the crisis in the Eurozone.
Mr Cameron denied that Coalition policies were to blame, naming the OBR as support his argument. He said the forecaster was “absolutely clear” that the spending cuts and tax rises pushed through since it came to power in May 2010 were not responsible for Britain slipping into its first double-dip recession since the 1970s.
Mr Cameron said: “They are absolutely clear that the deficit reduction plan is not responsible – in fact, quite the opposite.”
But Mr Chote, in unprecedentedly critical comments from the independent watchdog, objected that the OBR had always been very clear austerity measures would serve as a drag on growth.
“For the avoidance of doubt” he wrote “it is important to point out that every forecast published by the OBR since June 2010 has incorporated the widely held assumption that tax increases and spending cuts reduce economic growth in the short term”.
Mr Chote added: “We believe that fiscal consolidation measures have reduced economic growth over the past couple of years.”
Ed Balls, the shadow Chancellor, described the comments as an “embarrassing rebuke”.
He said: “David Cameron’s attempts to defend his failing economic policy are getting more and more desperate but as Prime Minister he has an obligation to be straight with people and not play fast and loose with the facts.”
A Downing Street spokesman responded: “The OBR has today again highlighted external inflation shocks, the eurozone and financial sector difficulties as the reasons why their forecasts have come in lower than expected. That is precisely the point the Prime Minister was underlining.”
Jonathan Portes, the director of the National Institute of Economic and Social Research, said the OBR was right to clarify its position. “I’m very pleased to see it” he said. “I’m sure it was not intentionally misleading [from Mr Cameron], but anyone who was not familiar with the debate would have got the wrong impression.”
Sir Alan Budd, the first OBR chairman, told BBC Radio 4's PM programme: “It could be regarded as something of a rebuke.
“I think he is correcting a statement the Prime Minister has made and the important thing is the Prime Minister is attributing a view to the OBR which it doesn't hold and I think when that happens it is absolutely right to write to the Prime Minister and point out he has made an error.”
The UK’s GDP today is around 6 per cent smaller than the OBR forecast at the time of George Osborne’s first Budget in June 2010, when the Chancellor chose to accelerate Labour’s deficit reduction programme.
Some economists have argued the OBR underestimated the negative impact of the cuts, particularly its cuts to infrastructure spending, which has been slashed by 40 per cent over the past two years. Senior economists from the International Monetary Fund argue that many forecasters – including itself – misjudged the size of these so-called “fiscal multipliers” three years ago.
In an internal analysis last year looking at why it got its forecasts so wrong, the OBR concluded that turmoil in the eurozone and an unexpected global spike in energy prices were more likely to be responsible for the forecast error than the possibility that it had miscalculated the size of the UK’s fiscal multipliers. But Mr Chote conceded yesterday it was “clearly possible” that the fiscal consolidation had exerted a greater drag on the economy than it first though, although he said the OBR was “not yet persuaded” on that front.
Mr Chote took up the reins at the OBR in October 2011 Before that he was the director of the respected think tank the Institute for Fiscal Studies. He began his career as an economics reporter on The Independent.

Black Money (Full Version)

In Black Money, Frontline correspondent Lowell Bergman investigates this shadowy side of international business, shedding light on multinational companies that have routinely made secret payments — often referred to as “black money” — to win billions in business. “The thing about black money is you can claim it’s being used for all kinds of things,” the British reporter David Leigh tells Bergman. “You get pots of black money that nobody sees, nobody has to account for, … you can do anything you like with. Mostly what happens with black money is people steal it because they can.”
Leigh knows. In his groundbreaking reporting for The Guardian newspaper, he helped uncover one of the biggest and most complicated cases currently under investigation — a story involving a British aerospace giant, the Saudi royal family, and an $80 billion international arms deal known as Al Yamamah, or “The Dove” in Arabic. “If there was one person who was the main man behind this arms deal, it turned out it was the U.S. ambassador, Prince Bandar bin Sultan,” says Leigh.
It all started back in 1985, when the charismatic Prince Bandar was put in charge of acquiring new fighter jets for the Saudi Arabian air force. The Israeli lobby in Congress reportedly stood in the way of the United States making a deal with the Saudis, so President Ronald Reagan sent Bandar to the British. The prince approached a willing Prime Minister Margaret Thatcher, and they sealed the massive deal between the United Kingdom, BAE Systems (formerly British Aerospace) and the Royal Saudi Air Force.
Rumors swirled that billions in bribes had changed hands to secure the deal, but British officials denied wrongdoing. “Of course there is suspicion, and of course people are entitled to be suspicious,” says Lord Timothy Bell, who was involved in the deal from the beginning on behalf of the Thatcher government. “But as far as I’m concerned, if the British government … and the Saudi government reached a sovereign agreement over an arms contract that resulted in a tremendous number of jobs in Britain, a great deal of wealth creation in Britain, … and enabled Saudi Arabians to defend themselves, … I think that’s a jolly good contract.”

Forget the Good Jobs Report, Long-Term Unemployment Is Still Terrifying

There isn't a more urgent crisis than putting the long-term jobless back to work

(Reuters)

Jobs! The economy added 236,000 of them in February, which is good. And, as my colleague Derek Thompson points out, it added more construction jobs than at any time since March of 2007, which is even better. After all, housing is what makes recoveries go boom.

But let's be honest. Even with our nascent housing recovery, the overall recovery is still leaving behind far too many for far too long. People looking for work for 6-months or longer -- the long-term unemployed -- jumped by 89,000 last month. It's been three years since the labor market bottomed, but the long-term unemployment rate is still higher than it's been at any point since 1948. Technically-speaking, we're still in a deep hole.

Well, that's not quite true. The hole is depressingly deep for the long-term unemployed, but not so much for others. We increasingly have a bifurcated labor market. As I pointed out back in December, the Boston Fed has found that the job market looks normal for people who have been out of work for less than 6-months, and horribly dysfunctional for people who have been out of work longer than that. It doesn't matter how old you are, or the industry you are in, or even how much education you have -- the only thing that matters, as far as employers are concerned, is how long you have been unemployed.

Why?

It's about loss of skills, loss of trust, and loss of networks. The longer people are out of work, the more they presumably forget. That's the loss of skills. But even if that's not actually true, and it might not be, employers assume it is -- there's a stigma to being out of work that long. That's the loss of trust. Now, that's particularly hard for the long-term unemployed to overcome since being unemployed for so long hurts the kind of professional networks that are often so important to finding a job. The only way for the long-term unemployed to get a job is to already have one. It's a vicious catch-22.

In other words, the long-term unemployed are at the back of the jobs line. And it's quite a long line. As you can see below, the job calculator from the Hamilton Project estimates it would take us 8 years to get back to full employment at our current 3-month average of 190,000 jobs-a-month. The long-term unemployed will be unemployable by then.

It gets worse. As the Bipartisan Policy Center points out, the sequester cuts long-term unemployment benefits by 10 percent. (And if you think those benefits are disincentivizing them from finding work, ask yourself why there hasn't been any shift in the Beveridge Curve for the shorter-term unemployed, who also get benefits). 

What is to be done? Well, as Megan McArdle argues, the easiest way to put the long-term unemployed to work is ... to directly put them back to work. In other words, the federal government should become a hirer-of-last-resort for the long-term jobless -- or, at the very least, create a hiring preference for them. It's probably the fiscally conservative thing to do. Long-term unemployment isn't just an individual tragedy; it's a collective one too. Left to linger, it decreases our productive capacity and increases the strain on our safety net. 

It's no time to turn to the deficit. Not when so many people are still waiting for the recovery to show up for them.

Jobs numbers are far worse than they look - Millions who want full-time work can’t get it

by Mike "Mish" Shedlock - Prairie Grove, Ill.

Economists were surprised by the massive "beat" in Friday's reported job numbers.

The unemployment rate dropped 0.2 percentage points to 7.7% and the economy allegedly added 236,000 jobs.

But is that what really happened? Not really.

According to the household survey (on which the unemployment rate is based), the economy added a healthy 170,000 jobs.

The survey also shows a tremendous increase of 446,000 part-time jobs.

What this means is that the economy actually shed 276,000 full-time jobs.

The Bureau of Labor Statistics labeled those 446,000 part-time jobs as "voluntary,” but I am not so sure.

Read more: Why the unemployment rate is so misleading http://www.marketwatch.com/story/why-the-unemployment-rate-is-so-misleading-2013-03-08

A Gallup survey on jobs released Thursday shows the percentage of workers working part time but wanting full-time work was 10.1% in February,

an increase from 9.6% in January and the highest rate measured since January 2012.

Gallup notes "Although fewer people are unemployed now than a year ago, they are not migrating to full-time jobs for an employer.

In fact, fewer Americans are working full-time for an employer than were doing so a year ago, and more Americans are working part time.

Although part-time work is clearly better than no work at all, these are not the types of good jobs that millions of Americans are still searching for.

‘Obamacare effect’

Obamacare is in play. Recall that under Obamacare, the definition of full-time employment is 30 hours. The BLS cutoff is 34 hours.

At 30 hours, companies gave to pay medical benefits so they have been slashing the number of hours people work.

This reduced the number of hours people worked and provided an incentive for many to take on an extra job.

We can see the effect in actual BLS data.

After declining for years, the percentage of those working two or more jobs is again on the rise.

In the past month there was a surge of 679,000 in the number of people working multiple jobs.

The seasonally-adjusted increase was 340,000.

One can look at the data two ways.

Either the economy is getting better and more jobs are available,

or people are working more jobs because their hours were cut and they need a second job.

Evidence suggests more of the latter than the former.

Look out below

The reported 236,000 surge in the establishment survey is not real.

It will be revised away. Here’s why:

In the household survey one is either working or not, thus multiple jobs do not distort the reported unemployment rate

(although there are many other distortions such as the participation rate and declining labor force).

The establishment survey, however, is distorted by people working multiple jobs.

A surge in multiple-job workers would artificially hike the baseline number.

I expect revisions later — huge downward revisions.

Claire Rivero's Music - Lord Help Us Make This World A Better Place

5 cities where houses are still cheap - Buyers can still find plenty of deals in distressed properties

Average REO sales price/Town

$-57,782 Cleveland

$111,260 Charlotte, N.C.

$124,555 Las Vegas

$149,094 Phoenix

$283,825 Santa Barbara, Calif.

Despite rising home prices in many markets, buyers can still find plenty of deals in foreclosures and other distressed properties.

In contrast, with distressed properties, buyers still can save hundreds of thousands of dollars. Working in their favor, in part, is that banks are more willing to unload homes as short sales than in previous years. Some banks are offering homeowners who are behind on mortgage payments cash in exchange for selling the home in a short sale. (Bank of America, for instance, has been offering as much as $30,000 to qualifying homeowners since last year.) That’s led to more short sales selling at a discount. And after years of a growing backlog of foreclosures, more of these listings are hitting the market, says Daren Blomquist, vice president with RealtyTrac, as courts process more of these cases. (Many states require court approval before a home can be repossessed by a bank.)

Experts warn that purchasing a distressed property is not typically an easy process. Buyers could end up waiting four months or longer to find out from a bank whether their offer on a short sale has been approved. And real-estate agents say bidding wars have intensified, with purchase prices of distressed homes often surpassing asking prices. In Charlotte, N.C., for instance, purchases of bank-owned properties (those that the banks have repossessed) increased 109% in the fourth quarter of 2012 from a year prior, according to RealtyTrac. Mike Hege, a real-estate agent with Pridemore Properties in Charlotte, says these homes often receive offers from 20 different buyers. Buyers should also consider the condition these properties are in and how much cash they’ll have to spend for repairs.

Even with such price pressures, buyers can find big discounts on distressed homes in several markets.

Here are five cities where homes are still cheap.

Cleveland

- Average REO sales price: $57,782

- Average discount vs. nondistressed sales: 56%

Cheap prices have helped give a boost to home sales in Cleveland. Buyers looking for rock-bottom prices turned to bank-owned properties — also known as real-estate owned or REO properties, homes that lenders repossessed after foreclosure — which were selling for less than $60,000 on average during the end of 2012, a 56% discount off regular listings in the city. During the fourth quarter of 2012, there was a 141% increase in buyers purchasing these properties from a year ago — the largest purchase spike for REOs nationwide, according to RealtyTrac.

Experts say deals are unlikely to go away soon. Home sales have been dropping since mid-2012, according to data from Trulia.com. And many existing homeowners are facing foreclosure. One in 10 homeowners in the Cleveland metro area was 90 days past due or in foreclosure in the fourth quarter, according to the Mortgage Bankers Association.

Of course, while real estate is cheap, buying property in Cleveland isn’t without risk. While the city’s unemployment rate is lower than the national average, job losses have contributed to home price declines.

Charlotte, N.C.

- Average REO sales price: $111,260

- Average discount vs. nondistressed sales: 43%

Sales of bank-owned properties shot up 109% in the fourth quarter of 2012, according to RealtyTrac. Real-estate agents say investors and individual buyers who want to occupy the homes are behind the sales. Hege, of Pridemore Properties, who specializes in REOs and short sales, says he sold roughly 20 bank-owned homes last year, about double the number in 2011.

Cheap pricing is creating an opportunity for buyers who are relocating from pricier markets, like New York and Boston, he says. After selling their homes, these buyers often have enough cash to buy a home outright in Charlotte, he says.

The state is also home to several other markets with big spikes in REO purchases, including Winston-Salem and Greensboro. According to RealtyTrac, those homes sold at an average discount of 49% and 40%, respectively, compared with regular listings during the fourth quarter.

Las Vegas

- Average short-sale price: $124,555

- Average discount vs. nondistressed sales: 33.4%

Despite being ground zero for the housing bust, there are a lot more short-sale listings to come to Las Vegas, says Paul Rowe, director of short sales at Shelter Realty, a real-estate brokerage based in Henderson, Nev. Nearly 8,000 homeowners in Vegas are currently in default on their mortgages, according to RealtyTrac — and their properties could turn into short sales or foreclosures. “[Short sales] aren’t going anywhere for another two to three years,” Rowe says.

That could give more options to buyers looking for a deal. There are roughly 16,600 listings in Las Vegas, down 24% from a year ago, according to the Department of Numbers, which tracks real-estate data. While that’s pushed up prices roughly 17% over the past year, prices could reverse course if there’s an influx of short-sale listings.

Phoenix

- Average short-sale price: $149,094

- Average discount vs. nondistressed sales: 37.84%

Buyers have been rushing into Phoenix in search of big deals. Short-sale purchases increased 43% during the fourth quarter of 2012 compared with a year prior, according to RealtyTrac. It’s not just investors who are behind the trend. Owner occupants are also competing for these properties. Given the competition, experts say, buyers looking to pick up a short sale will have a better shot if they come to the table with an all-cash offer.

But real-estate agents warn that the window of opportunity to snatch up distressed properties at real discounts is closing. Short-sale inventory is falling: There are currently 3,700 short-sale listings in Phoenix, down 56% from a year ago and down 76% from two years prior, says Brian North, cofounder of Green Street Realty, a boutique brokerage in Phoenix that specializes in short sales.

And buyers are more likely to encounter bidding wars, which will likely drive the purchase price up, he says. They should consider how much work the property will need in repairs to make sure that the short sale will be cheaper than buying a regular listing.

Santa Barbara, Calif.

- Average short-sale price: $283,825

- Average discount vs. nondistressed sales: 42.69%

Santa Barbara experienced the biggest increase in short-sale purchases, which rose 107% during the fourth quarter from a year prior, nationwide, according to RealtyTrac. Real-estate agents say buyers returned to the market late last year in search of deals as home prices appeared to bottom out: the median sales price of all properties in the city was roughly $600,000 at the end of 2012, down from about $700,000 in 2010 and approximately $800,000 in 2008, according to listings site Trulia.

Many of these buyers encountered limited inventory, so they broadened their search to short sales, says Rick Hannay, owner broker of Avalar Real Estate of Santa Barbara. In total, there were just 436 listings in Santa Barbara in December, down 20% from a month prior and down 31% from a year prior, according to Sotheby’s International Realty.

Buying short sales also came with another perk: bigger discounts. Short sales in this market sold at a 43% average discount compared with regular listings, according to RealtyTrac. The discounts could have been bigger were it not for bidding wars, says Hannay. It’s common for short sales to receive up to a dozen offers within their first few days on the market, he adds, which results in a purchase price that’s higher than the listing offer.
http://www.marketwatch.com/story/5-cities-where-houses-are-cheap-2013-03-08

Dr Doom Roubini sees market correction in 2nd half of 2013

Dr Doom says the U.S. fiscal drag will eventually catch up with the stock market.

In a CNBC interview on Friday, economist Nouriel Roubini, who is known for his pessimistic outlooks,

hence earning his nickname (Remember, he called the global financial crisis back in 2006), says investors should prepare for disappointment later this year.

Speaking at an international economic conference, the Ambrosetti Forum, held on the shores of Lake Como, Italy (poor guy),

Roubini warned that higher taxes and spending cuts will knock U.S. economic growth this year.

“Payroll taxes, taxes for the rich, are going to significantly reduce disposable income, and retail sales have been a disaster,” Roubini said.

Well he must be pretty concerned, because he said something similar to Bloomberg last week.

He also gave an interview to Bloomberg News on Friday in which he predicted a bigger economic bubble coming in 2013 than 2004.

“And there are already signals of consumption growth slowing down, as well as the sequester,

and the fiscal drag this year will be 1.5% of [gross domestic product] for an economy that was barely growing last year,” he told CNBC.

At best, the U.S. economy will grow 1.5% in 2013, Roubini predicted.

And ever the party pooper, he said markets could ultimately get a shock from the scale of the slowdown in the U.S. economy later in the year.

The Dow Jones Industrial Average notched another record high Thursday.

“I think that the market is going to be surpised by how much the U.S. is going to slow down, even compared to last year,” Roubini said.

TWEET 6:44 AM - 08 Mar 13 Nouriel Roubini  @Nouriel

The weather is cloudy & gloomy at the Ambrosetti Forum on the Lake of Como. Just like the Italian political climate

As a result, his baseline estimates for earnings and revenue growth point to disappointment in the second half of the year.

“The U.S. stock market could correct somehow,” said Roubini.

He made similar comments to Bloomberg News.

He said there was a bigger economic bubble coming in 2013 than 2004.

Similar comments were heard on Friday from a Nordea Bank senior strategist.

Henrik Drusebjerg told MarketWatch that financial markets seem a bit detached from what’s going on politically:

“In a  low-growth environment, ignoring that this [sequester effects] is in front of us,

I’m a bit surprised to see both sentiment indicators and real data being as positive as it is,

and also seeing financial markets keep on climbing as if there were no tomorrow.

What I fear is in the coming months weeks we will get some of a reality check on numbers because sequester will showing effects.”

It could also be (though not likely) that the weather was getting Roubini down — 50 degrees and chilly down on Lake Como right now.

$36 Billion of Military Hardware Could Be Destroyed in Afghan Pullout

The Obama White House is cutting $65 billion in the sequester, but it could easily leave or torch 750,000 pieces of major military hardware — worth $36 billion — in Afghanistan after U.S. troops pull out by the end of next year.

Here are the options, according to Face the Facts USA of the George Washington University: Leave the equipment — or destroy it — in Afghanistan; move it to other U.S. military outposts; or transfer it to another U.S. agency or to another country.

The estimated cost for the latter two options: $5.7 billion.

The equipment includes trucks, aircraft, and armored vehicles — most of which are controlled by the Army.

Because the Afghanistan terrain is mountainous and landlocked, transport would be difficult. But leaving it behind intact could put the equipment in the wrong hands.

So, is it best to torch $36 billion in U.S. military assets?

Urgent: Obama or GOP: Who’s to Blame for Budget Crisis? Vote Now