Thursday, June 18, 2009

US Stocks Higher As Financial Stks Rebound, Positive Data

Financial stocks rebounded on Thursday, helping to lead the broader market modestly higher after three days of losses.

The Dow Jones Industrial Average recently rose 65 points to 8563, recovering from a three-day slide in which it has shed more than 300 points. The S&P 500 was up 0.6% as its financial sector posted a 1.9% gain.

Banking stocks had led the market lower on Wednesday after President Barack Obama proposed a sweeping revamp of the financial regulatory system. But the sector's bellwether were back on their feet Thursday, with Bank of America and J.P. Morgan Chase gaining more than 2%. Goldman Sachs Group rose 1.6%.

Health-care stocks also pushed higher, extending a trend that has lasted most of the week. The S&P 500's health-care sector rose 2.3%, while Dow components Merck and Pfizer gained more than 3% each.

"Health care continues to do well on the premise all the legislation priced into the market won't be as bad or as timely as we thought it was going to be," said Burt White, chief investment officer for LPL Financial.

Economic data also supported the market. The number of workers filing new claims for jobless benefits rose slightly last week, while continuing claims fell by the most since November 2001, breaking a streak of 21 straight increases. The Federal Reserve Bank of Philadelphia said that mid-Atlantic manufacturers turned in their best performance since September in June.

White said he was encouraged by both the decline in continuing claims and the Philadelphia Fed survey, though he added there was nothing in either report that was "overly exciting."

The reports were the latest in a string of recent developments that have gradually shifted traders' attention away from the risk of inflation in the U.S. economy fueled by the government's bailout and stimulus spending.

"The risk of inflation is still out there, but it's not immediate by any means," said Peter Cardillo, chief market economist at Avalon Partners in New York. "Some of the fears we saw along those lines recently were really exaggerated."

Treasury prices were mostly lower, led by the long end of the yield curve, as traders looked ahead to another round of government debt auctions next week. The 10-year note was down 21/32, yielding 3.77% in recent trading. The dollar was stronger, rising against the euro and the yen.

Asian equity markets posted a mixed finish Thursday. Tokyo's Nikkei index fell 1.4%. Stocks in Europe rose despite disappointing retail-sales numbers out of the U.K.

-Geoffrey Rogow contributed to this article.

Index futures point to higher start for Wall Street

NEW YORK (MarketWatch) -- U.S. stock index futures twisted higher early Thursday after the government said continuing jobless claims fell by 148,000 to 6.68 million last week, with investors also weighing the ramifications of the Obama administration's planned overhaul of the nation's financial regulatory system.

Up and down in near flat trading earlier on, futures moved higher after the data. The September S&P 500 futures contract was up 3.1 points at 908.4, while Nasdaq 100 futures gained 3.2 points to 1,456.8.

Futures on the Dow Jones Industrial Average were up 29 points at 8,446.

U.S. President Barack Obama on Wednesday proposed a revamp of the U.S. financial regulatory system, which would boost the power of the Federal Reserve, making it the supervisor of large, systemically vital financial institutions. The proposal would also grant it the authority to be a lender of last resort to mega-banks in extraordinary circumstances, if it first receives approval from the Treasury Department.

U.S. Treasury Secretary Timothy Geithner is expected to further outline the plan in testimony Thursday morning before the Senate Banking Committee. He's scheduled to testify before the House Financial Services Committee in the afternoon.

"Markets, I think, will respond to the Federal Reserve being the matinee idol role in neon lights, but alarm bells are starting to ring that the implementation of over-zealous regulation could well blunt the recovery of the economy," said David Buik, strategist at BGC Capital Partners, in a research note. "Maybe that is the price that has to be paid to return the banking sector to blooming health."

Meanwhile, market action remains subdued with investors posting relatively muted reaction to macroeconomic developments, noted Joshua Raymond, market strategist at City Index.

Later data includes leading indicators and the Philadelphia Fed's manufacturing index at 10 a.m. Eastern time.

The Conference Board's index of leading economic indicators is expected to show a 1.1% May rise, according to a survey of economists by MarketWatch. The June Philly Fed index is expected to rise to -15.0 after a reading of -22.6 in May.

Taken at face value, a rise in the LEI index would be consistent with a gross domestic product growth turning positive in the near term, said Paul Dales, an economist at Capital Economics.

"However, we find it hard to believe that output is on the cusp of actually increasing at a time when payroll employment is still falling by over 300,000 per month. Our take on the index is that it is only consistent with a further slowing in the rate at which activity is declining," he said, in a research note.

The Philly Fed index will be closely watched to see if it confirms signs of stabilization in the manufacturing sector signaled by other surveys, despite ongoing problems in the auto sector, said John Ryding and Conrad DeQuadros, economists at RDQ Economics.

The major stock indexes turned in a mixed performance on Wednesday, with financial shares under pressure and technology shares on the rise. The Dow Jones Industrial Average fell 7.49 points to close at 8,497.1. The S&P 500 Index lost 1.26 points to end at 910.71, while the Nasdaq Composite Index rose 11.88 points to 1,808.

The World Bank on Thursday raised its 2009 economic growth estimate for China. The institution expects China's gross domestic product to expand by 7.2% in 2009, up from its March projection of 6.5%.

Rating agency Standard & Poor's said Thursday that its AAA long-term rating on the United States is not likely to change in the near term.

"Despite significant weakening in the near-term economic outlook, projected fiscal deficits, and the high fiscal costs of government support of the U.S. financial sector, we still believe that the U.S. government's credit strengths continue to outweigh its weaknesses," said credit analyst Nikola Swann.

S&P said the U.S.'s key credit strengths include its diversified economy with unusually flexible labor, the U.S. dollar's role as the world's most used currency and the country's stable political system.

Asian equity markets posted a mixed finish Thursday. Tokyo's Nikkei index fell 1.4%. Stocks in Europe were under pressure, with the pan-Europe Stoxx 600 falling 0.6%.

Oil futures erased early gains to fall 22 cents to $70.81 a barrel.

The U.S. dollar rose versus the Japanese yen to trade at 95.90 yen, up slightly from 95.66 yen in North American trade late Wednesday.

World Bank upgrades China growth estimates

LOS ANGELES (MarketWatch) - The World Bank raised its 2009 economic estimate for China in a report released Thursday but added that the country wouldn't be able to recover its formerly breakneck pace of growth through government spending alone.

The world lender raised its Chinese gross domestic product forecast for the year to growth of 7.2%, up from its March projection of 6.5%.

"Growth in China should remain respectable this year and next, although it is too early to say a robust sustained recovery is on the way," said World Bank lead China economist Ardo Hansson.

The report said that much of the growth will be due to heavy stimulus spending by Beijing, with investment growth in the markets likely to lag.

But the report also said that China's GDP growth won't return to the rapid, double-digit pace it enjoyed before the financial crisis, or even the "high single digits," until the world economy recovers as a whole.

"There are limits to how much and how long China's growth can diverge from global growth based on government influenced spending," Hansson said. See full World Bank report on China.

Money won't stop south Thai violence, Muslims say

BAN TALUBOH, Thailand, June 18, 2009 (Reuters) — In the rustic villages of Thailand's Muslim south, Prime Minister Abhisit Vejjajiva's promise of large-scale development aid to tackle a brutal insurgency sounds all too familiar.

"Money can't change what's happening, no one can buy an end to the problems here," said Yousuf, referring to a shadowy five-year rebellion that has claimed nearly 3,500 lives in the southernmost provinces of Yala, Pattani and Narathiwat.

"It's the policies of Thai governments that are to blame," he said in a village tea shop in Pattani. "They have to understand that our way of life is different to other Thais and money won't make a difference."

Other villagers gave similar views on Abhisit's three-year plan to win "hearts and minds" by pouring 54 billion baht ($1.58 billion) into the region bordering Malaysia.

They are ethnic Malay Muslims who speak Thai as a second language, and dismiss the plan to boost fisheries, rubber and palm oil industries as another example of Buddhist Bangkok's failure to understand a region more than 1,000 kms away.

"Corrupt officials will keep the money for themselves. This is a useless idea," Arware said. "It could end up in the hands of the militant groups. Investment won't stop the violence."

Bearmah, a burly Muslim with teeth stained by sickly-sweet tea, said a better idea would be to withdraw the 30,000 soldiers deployed in the region and scrap an emergency decree that grants them broad powers of arrest with immunity from prosecution.

"The rebels are fighting the military. We don't need them here because we can protect ourselves," he said, smoking a hand-rolled cigarette.

"The emergency laws let them arrest innocent people, jail them for a month, and sometimes they torture them -- how can this win hearts and minds?," he said.


The three provinces were part of an independent Malay Muslim sultanate annexed by Buddhist Thailand a century ago, and its people have long resisted Bangkok's attempts to assimilate them.

A separatist insurgency from the 1970s and 1980s resurfaced in 2004, and attempts by successive Thai governments to quell the unrest with military force, investment and even free cable television have all failed.

The violence has intensified in the last two weeks, with Buddhists and Muslims among the 31 people killed and more than 50 wounded in the all too familiar gun and bomb attacks, for which no credible group has claimed responsibility.

The unrest has heaped more pressure on Abhisit's coalition government as it struggles to revive an economy hit by a global downturn and protracted political strife since a 2006 coup removed ex-premier Thaksin Shinawatra.

Nestled in the jungles of Pattani, villages like Ban Taluboh have been traditional strongholds of Abhisit's Democrat Party. But few here believe his government, or any other, is capable of ending the violence.

"Each government is the same," said Abdulloh, who like many southern Muslims wears a traditional "kapiyoh" skullcap and checked sarong.

"They have never listened to the people. Our culture is a Malay culture and we follow the rules of Islam."

Bearmah said the failure to arrest the gunmen who shot dead 10 Muslims at prayer in a Narathiwat mosque on June 8 had intensified peoples' feelings of injustice and resentment.

"If they really want to end this violence, they have to arrest these killers," he said, rejecting Bangkok's denials security forces were involved in the mosque attack.

"I suspect the authorities are behind it, because no one has been arrested," he said. "Muslims don't kill other Muslims praying in a mosque."

(Editing by Darren Schuettler and Jerry Norton)

Russia, China agree to boost local currencies

The presidents of Russia and China yesterday agreed to boost the use of their national currencies, the ruble and yuan, in bilateral trade.

"It is essential ... to move forward the work on the creation of favourable conditions for widening the sphere of settlement in rubles and yuan," Russian President Dmitry Medvedev and Chinese President Hu Jintao said in a joint statement. Russia, the holder of the world's third-largest reserves after China and Japan, has repeatedly called for less global reliance on the U.S. dollar.

Moscow also suggested the creation of a supranational reserve currency, possibly based on the International Monetary Fund's Special Drawing Rights.

China, which holds nearly $2 trillion (U.S.) in foreign currency reserves and wants to protect the value of its dollar assets, has not joined in the dollar criticism.

Standard & Poor's cuts ratings on 18 U.S. banks

NEW YORK–Credit ratings agency Standard & Poor's cut ratings on 18 banks yesterday amid concern about further weakening in the financial sector.

S&P said the changes reflected its assessment that volatility will remain in the financial sector and the industry is expected to face tighter regulatory oversight. S&P also said loan losses, which have plagued the industry for more than a year, are likely to continue to increase and could grow beyond expectations.

BB&T Corp., Capital One Financial Corp., Regions Financial Corp. and Wells Fargo & Co. were among the largest banks that saw their ratings cut by S&P.

Widescale changes to the industry because of the credit crisis and ongoing recession will dramatically alter the banking landscape, S&P credit analyst Rodrigo Quintanilla said in a release.

"We believe the banking industry is undergoing a structural transformation that may include radical changes with permanent repercussions," Quintanilla said. "... Such a transition period justifies lower ratings as industry players implement changes."

S&P noted recent capital-raising efforts in the sector will help defray some of the losses banks are facing.

Lower credit ratings make it more expensive for companies to borrow money and can sometimes lead to difficulty accessing credit. Low ratings can also affect investments in a company's debt as some institutional investors are required to only hold debt rated at a certain level.

Ratings of Carolina First Bank, Citizens Republic Bancorp, Huntington Bancshares, Synovus Financial and Whitney Holding were cut to junk status. Other banks' ratings remain at investment grade.

Associated Press

`Extremely difficult' times for U.S. courier

DETROIT–Package delivery giant and U.S. economic bellwether Fed-Ex Corp. said the next two quarters will be "extremely difficult" as the recession and higher fuel prices bite into its bottom line.

But CEO Fred Smith sees "signs that the worst of the recession is behind us."

His statement said, "we remain optimistic that we will see quarter-over-quarter economic improvement later this calendar year."

The package delivery firm posted a larger quarterly loss yesterday and an outlook below Wall Street estimates for the current period.

Its shares fell 1.4 per cent to close 72 cents lower at $50.70 (U.S.) on the NYSE. FedEx forecast earnings per share of 30 to 45 cents for the current quarter. Analysts were expecting 70 cents.

FedEx said its loss widened to $876 million, or $2.82 a share, in its fiscal fourth quarter ended May 31 from $241 million, or 78 cents a share, a year earlier.

Excluding previously announced charges of $1.2 billion from two units, the firm reported a profit of 64 cents a share.

Wall Street analysts on average had expected 51 cents per share.

The charges stem from a decline in the fair value of home office supply chain Kinko's Inc, bought in 2004 and now called FedEx Office, and Watkins Motor Lines, a trucker bought in 2006, now known as FedEx National LTL. FedEx said stringent cost-cutting had mitigated the impact of the recession.

FedEx, based in Memphis, Tenn., said its quarterly revenue was $7.85 billion, off more than 20 per cent from $9.87 billion a year ago.

Reuters News Agency

Mumbai police draw rebuke

Report on hotel siege takes aim at officials, procedural blunders in response to attacks

A reporter talks on her phone as smoke rises from the Taj Hotel in Mumbai, India, Nov. 27, 2008.

NEW DELHI–Ninety minutes after terrorists from Pakistan landed on the shore of Mumbai, fanned out through the city, and began a murderous rampage, Indian home minister Shivraj Patel received a phone call at his residence about a "breaking news" story on TV that demanded his attention.

It was 11 p.m. on Nov. 26 and Patel, the minister in charge of domestic security, was about to learn via the public airwaves what many Indians had already known for more than an hour: his country's commercial capital was under siege.

Four days later, Patel was forced to resign.

It's been seven months since 174 people were killed and 239 others were wounded during the Mumbai terror attacks and grim revelations about the bungled response to the attacks are still surfacing. Details of how Patel first learned of the incidents were reported just last week, and high-ranking Indian officials are still losing their jobs.

Mumbai's police chief Hassan Gafoor was ousted this week, his transfer to the Police Housing Corporation coming just days before the release of a government-commissioned report that criticized his "poor leadership" during the attacks. The report said Gafoor acted irresponsibly and failed to take charge of the situation.

Gafoor isn't the only one to come under scrutiny for his handling of the terror attacks. Among the criticisms levelled at police and other authorities in recent days:

Mumbai police failed to establish a command centre after learning of the terrorist assault, a standard operating procedure that was introduced in 1993 following a string of bomb blasts in the city.

State authorities asked for elite commandos to be deployed at 11:30 p.m., but it wasn't until 3 a.m. that 200 commandos flew from New Delhi to Mumbai. Once they landed, it was a further four hours before they began operations.

Even though there were two trained hostage negotiators in Mumbai during the assault, police never attempted to contact the terrorists, a move that could have bought police more time.

Firefighters arrived at the Taj Hotel with ladders that extended to the third floor, endangering some guests stranded on higher floors.

After landing on Mumbai's shore at about 9:30 p.m., the 10 gunmen split into small groups and within 30 minutes, had arrived at five targets: the city's main rail station, a Jewish centre, the Leopold Cafe, and the Oberoi and Taj hotels.

Newly disclosed closed-circuit TV footage showed four of the gunmen who stormed the Taj hotel entered a guest room at 12:38 a.m. on Nov. 27 and stayed there for close to two hours. With roughly 120 armed policemen on the ground floor of the hotel, police watching monitors in the hotel's security control room saw the terrorists enter the sixth-floor guest room. Yet instead of sending officers to engage the terrorists or keep them pinned in the room, Gafoor ordered police to wait for backup.

More time was wasted when police began clearing sections of the Taj. Instead of duplicating an electronic-swipe master key, police went floor-to-floor breaking doors down. With 323 rooms on 19 floors and a further 140 rooms such as the bar, restaurant and shops, it took five minutes to open or break open each room and then clear it.

"All through the night, it seems nobody had even considered whether it was possible to get duplicate swipe keys made," the Indian Express newspaper reported.

Transcripts of phone conversations between the terrorists in the Taj and their handlers in Pakistan have also come to light.

At 3:10 a.m. on Nov. 27, six hours after they stormed the Taj, four terrorists received a phone call from a contact in Pakistan.

"Greetings!" one of the terrorists answered.

"Greetings!" the caller replied. "There are three ministers and one secretary of the cabinet in your hotel. We don't know in which room."

The terrorists reply: "Oh! That is good news!

"It is the icing on the cake."

China, Russia sign five-point joint statement

MOSCOW, June 17 (Xinhua) -- China and Russia Wednesday signed a five-point statement on bilateral relations and mutual cooperation.

Chinese President Hu Jintao attended the Shanghai Cooperation Organization (SCO) summit and the meeting of BRIC (Brazil, Russia, India and China) in Yekaterinburg in central Russia on June 15 and June 16. He arrived in Moscow Tuesday for a three-day state visit.


Hu, who is on a state visit to Russia, discussed the current situation and prospect of the Sino-Russian strategic partnership of cooperation with his Russian counterpart Dmitry Medvedev. The two leaders held in-depth exchange of views on major international and regional issues and reached broad consensus.

The two sides are satisfied with the development of the Sino-Russian relations in the past year.

China and Russia thoroughly completed the boundary demarcation work between them in 2008, and ratified the Action Plan to Implement the China-Russia Treaty of Friendship, Good-Neighborliness and Cooperation (2009-2012).

The two countries have launched energy negotiations at Vice-Premier level and signed an inter-governmental agreement on cooperation in the field of crude oil.

The two leaders stressed that mutual supports on issues related to their core interests are an important part of the Sino-Russian strategic partnership of cooperation.

The Russian side reiterated that Taiwan and Tibet are inalienable parts of the Chinese territory. Russia will not change its stand on the issues concerning Taiwan and Tibet and will support the peaceful development of the cross-Straits relations and China's peaceful reunification.

The two sides emphasized that mutual supports on issues of sovereignty and territorial integrity are of vital importance. The Chinese side backed Russia's efforts in maintaining peace and stability in the region of Caucasus.


Both sides agreed that the current global financial crisis has triggered turbulence and instability in the international financial market and in the world's trade and economy, posing grave challenges to the economic growth of the two countries.

China and Russia shared the same or similar viewpoints and stance on the root cause of the current crisis, and the reform of the global financial system and the international financial institution.

Guided by the principle of equality and mutual benefits, nations around the world and international organizations should forge the broadest possible cooperation in politics, trade and economy and finance in a bid to overcome the financial crisis.

It is of special significance to try to unleash the maximum potential of various regional institutions and organizations and raise the financial market controllability.

The two leaders agreed to oppose global trade protectionism, saying the global financial system in the post-crisis era should be fair, equitable, inclusive and well-managed.

They also said that a new round of the IMF quota formula review and the reform schemes of the World Bank should be completed on time and that the emerging markets and developing countries should have a bigger say and broader representation in the international financial institutions.

The two sides stressed the importance of deepening bilateral cooperation in reforming the global financial system and in dealing with the fallout from the crisis.

A downward trend has been recorded in the trade volume, two-way investment and border trade between China and Russia due to the global financial crisis, they said. The two leaders agreed that China and Russia should work together to mitigate the negative impact of the crisis on bilateral trade and economic cooperation.

The two leaders signed a draft plan of the China-Russia investment cooperation, pledging to earnestly implement the draft plan and encourage enterprises of the two countries to carry out pragmatic cooperation in such areas as mechanical manufacturing, construction, the light industry, transportation, agriculture, communication, bank and insurance, technology, energy, the chemical industry, forestry and mining.

The two sides also made great efforts to work out a draft plan on the cooperation between northeast China and Russia's Far East and East Siberia regions.

The two leaders urged the relevant departments of the two countries to wrap up consultation at an early date on the draft plan, so that the plan could be submitted for approval when the heads of state of the two countries meet at the end of 2009.

The two leaders also spoke highly of the energy negotiation mechanisms between China and Russia and the inter-governmental agreement on oil cooperation signed by the two countries.

The two countries have been pushing forward all-round cooperation in oil, natural gas, nuclear power and electricity, which has raised the China-Russia strategic partnership of cooperation to a new high, they said.

The two sides also discussed nuclear power cooperation, one of their priorities for economic cooperation. They will launch the construction of the second phase of the Tianwan nuclear power project and the fast reactors for commercial purposes.

China and Russia should strengthen mutually beneficial cooperation in civil aviation manufacturing as well as in related projects that comply with the market needs and the civil aircraft development plan, they added.


The two presidents are satisfied with the sustainable development of the mutual humanities cooperation.

The two countries have consolidated and expanded the social basis of the China-Russian strategic partnership of cooperation through cultural and film festivals, media and sports exchanges, and activities in the fields of sanitation, tourism and archives.

The two sides will lay the emphasis on the cooperation in prevention and control of acute infectious diseases.

Both sides noted that it is significant for the two governments to hold activities on educational exchanges such as holding university art festivals, exchanges of university students and education exhibitions.

The "Year of Russian Language" in China in 2009 and the "Year of Chinese Language" in Russia in 2010 will help deepen bilateral exchanges and mutual understanding.

The two presidents said that the work on the drafting of the inter-governmental agreement on the establishment of the cultural centers in each other's country is going smoothly. The departments concerned have been instructed to conclude the agreement as soon as possible within this year.


The two heads of state agreed that the basic principles of international law should be cemented and the core functions of the United Nations be reinforced.

Both China and Russia support the Group of Eight countries in enhancing their dialogue and cooperation with major developing economies, and in promoting the establishment of an equal, mutually beneficial and win-win partnership with the developing nations.

Meanwhile, the two leaders said the international community should encourage participation by the developing countries while dealing with global issues.

They listed such issues as the fight against the global financial crisis, safeguarding the global security, the fight against terrorism and cross-border crime, ensuring food and energy security, poverty relief, improving education and the public health system, as well as the response to the global climate change.

The SCO summit at Yekaterinburg has showcased that the group has played an effective role in consolidating global and regional stability.

Both sides support the SCO in carrying out active dialogues with other nations concerned, international organizations and forums on safeguarding world peace and security and launching comprehensive economic and humanities cooperation.

Hu and Medvedev said that under the leadership of the United Nations and with the active participation by the SCO, the two countries should reinforce regional cooperation on fighting against terrorism, drug trafficking and cross-border organized crime.

China and Russia are committed to maintain close cooperation within the SCO framework of regional anti-terror institution, consolidate its legal foundation and enrich the content of counter-terrorism collaboration.

Noting that as the two mechanisms to coordinate the settlement of the pressing issues concerning the world development, the two leaders said the BRIC countries and the China-Russia-India tripartizan mechanisms will have a broad future. They expressed the willingness to strengthen cooperation on issues of common concern within the two mechanisms.

The international security is interdependent and embracive, they said. The security of a certain country should not be placed over that of other countries, nor should it be obtained by enlarging military and political alliances or by deploying global and regional anti-missile systems.

China and Russia also reaffirmed their support for the Treaty on the Non-proliferation of Nuclear Weapons, which they considered as the basis for the international community to prevent the spread of nuclear weapons.

The two countries stands for the peaceful use of outer space and oppose space weaponization.

The Chinese and Russian presidents emphasized that all countries should fully implement UN Security Council Resolution 1540, work together to commit themselves to prevent the proliferation of weapons of mass destruction and their carriers and relevant materials, especially to prevent weapons materials from reaching the hands of terrorists or terror groups.

It is of great significance to work together to fight all forms of terrorism, and to reinforce international and regional security through bilateral and multilateral channels.

China and Russia will tap the potentials of business circles, media and non-governmental organizations, and push forward dialogues between different civilizations, religions and cultures.

The two sides both stressed that they should enhance cooperation in fighting against money laundering and terrorist financing at bilateral and multilateral levels.

In view of the climate issue, the two leaders highlighted the efforts through international cooperation to tackle the climate change in line with the UN Framework Convention on Climate Change and the Kyoto Protocol as well as the principle of common but differentiated responsibility.

They said they will continue to support each other and strengthen coordination within the framework of multilateral organizations in the Asia-Pacific region, namely the Asia-Pacific Economic Cooperation (APEC), the East Asia Forum, the Asia Cooperation Dialogue (ACD), and the Conference on Interaction and Confidence-Building Measures in Asia (CICA).

China favors Russia's efforts to join the East Asia Summit and the Asia-Europe Meeting, and is willing to offer support for Russia in this regard.

The two presidents said stability, security, sustainable economic development and social progress in Central Asia serve the long-term interests of all nations in this region.

China and Russia will work with Central Asian countries both bilaterally and within the SCO framework to deepen cooperation in the fields of politics, trade, economy and security, as well as in severely cracking down on terrorism, separatism, extremism, drug trafficking and cross-border organized crime.

Both countries welcome the enforcement of the Treaty on a Nuclear-Weapon-Free Zone in Central Asia.

The two leaders expressed grave concern over the situation on the Korean Peninsula.

UN Security Council Resolution 1874 is aimed at strengthening the efforts to solve the Korean peninsula nuclear issue by political and diplomatic means, they said.

They urged an earlier resumption of the six-party talks, expressing hope that parties to the talks could fulfill their respective obligations stipulated in the joint statement of the six-party talks issued in Beijing on Sept. 19, 2005.

China and Russia are ready to contribute to easing the tension in Northeast Asia, said the two leaders. They added the parties concerned should be committed to addressing disputes through dialogue and consultation and by peaceful means, and to maintaining and consolidating regional peace and security on the basis of establishing multilateral mechanisms.

The two sides also reiterated that the Middle East issue should be tackled through a comprehensive, sustained and equitable approach in line with the widely accepted principle of international law, underlining the importance of holding an international conference on the Middle East in Moscow.

As far as the Iranian nuclear issue is concerned, the two countries said it can only be solved through political and diplomatic approaches, calling for more efforts to regain the trust from the international community over the peaceful nature of Iran's nuclear program.

They added that negotiations with Iran should be activated at an early date so as to seek a comprehensive, lasting and proper settlement of the the issue.


The talks, which were held in an atmosphere of friendship, cooperation, mutual trust and understanding, have produced significant achievements. Both sides were satisfied with the results of the meeting.

President Hu has invited Medvedev to visit China at a convenient time in 2010. Medvedev has accepted Hu's invitation.

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State Department undermines Obama reluctance over Iran with Twitter request

President Obama has ruled out direct intervention in the electoral turmoil in Iran, warning that US attempts to interfere will backfire and that America has little to gain by throwing in its lot with the opposition.

But his public reluctance to interfere has been undermined by the actions of the State Department, which took the unusual step of asking Twitter to delay planned maintenance work so that Iranian protesters can continue to use it to post images and reports of unrest.

Mr Obama is facing calls from critics at home to take a much stronger international lead in condemning events in Iran, where the regime last night raided more universities.

But Mr Obama said that America had no long term interest in backing Mir Hossein Mousavi, the opposition candidate who is disputing the poll results that returned Mahmoud Ahmadinejad, Iran's right wing president, to power with a thumping – and, to some analysts, improbable – 63 per cent of the vote.

"It is not productive, given the history of US-Iranian relations, to be seen as meddling - the US president, meddling in Iranian elections," Mr Obama told CNBC television.

Two prominent reformists were arrested in Tehran this morning. Hamid Reza Jalaipour, a sociologist and Mousavi campaigner, was held at his home and Saeed Laylaz, a political and economic analyst, was also arrested by four plainclothes officials. Both are also prominent journalists.

Mousavi supporters are planning another mass demonstration in Tehran today, and protests have been reported in the cities of Shiraz, Tabriz, Isfahan, Meshad and Qom. Teargas was reportedly used at Kharazmi university in Shiraz, with students beaten up and 100 arrests. The head of the university resigned. Riot police also stormed the university in Isfahan.

The Iranian authorities have tried hard to prevent images of the turmoil being portrayed at home and abroad. Foreign journalists have been banned from the streets, and ordered to compile their stories by telephone from the offices. Reporters' visas have not been renewed.

Twitter has gained in importance since internet sites, mobile phone and SMS texting networks have all been intermittently blocked by the authorities in a cat-and-mouse game with the demonstrators who have used them to organise more protests.

Today the Iranian Revolutionary Guard, one of the most powerful organisations in Iran, broke its silence for the first time since the elections with an ominous warning to Iranian websites and bloggers to remove any seditious materials or face legal action.

In Tehran the Iranian Foreign Ministry summoned Simon Gass, the British Ambassador, to complain about Gordon Brown’s “unconventional and impolite” remarks challenging the election’s legitimacy.

The Government also arrested what the state media described as the “main agents” of the unrest. Gholamhossein Mohseni-Ejei, the Intelligence Minister, said that about 50 people with weapons and explosives were detained, and claimed that they were supported by foreign powers. Two dozen “counter-revolutionaries” were also arrested, as were two leading reformists, including Ali Abtahi, a former Vice-President.

The state-controlled media are portraying the demonstrators as subversive criminals. They reported Monday’s deaths, but said that the victims were attending an “unauthorised gathering” and were shot as they “tried to attack a military location”.

The Council of Guardians, the powerful body of 12 senior conservative clerics, refused Mr Mousavi’s demand that the election be annulled, but did make one apparent concession to his supporters by offering a recount of Friday’s votes from stations where specific fraud was alleged.

The offer was echoed by Ayatollah Ali Khamenei, the Supreme Leader, who met last night representatives of the four top candidates. He denounced the protesters as “tension seekers” and called for calm.

Mr Obama said that he believed Iran's leaders were well aware of the scale of the concern amongst their own people about the disputed presidential election.

"It’s important to understand that although there is amazing ferment taking place in Iran, the difference between Ahmadinejad and Mousavi in terms of their actual policies may not be as great as has been advertised," he said.

"Either way we were going to be dealing with an Iranian regime that has historically been hostile to the United States, that has caused some problems in the neighbourhood and has been pursuing nuclear weapons."

He added: "When I see violence directed at peaceful protestors, when I see peaceful dissent being suppressed, wherever that takes place, it is a concern to me and it is a concern to the American people."

The US President’s response to the Iranian turmoil has been more muted than European allies such as Angela Merkel of Germany and Nicolas Sarkozy of France. President Sarkozy described the elections as a "fraud". Britain, like America, has been less outspoken.

Mr Obama has been criticised at home for not offering sufficient support to protestors in Iran.

"He should speak out that this is a corrupt, fraud, sham of an election. The Iranian people have been deprived of their rights," said John McCain, Mr Obama’s defeated 2008 election rival.

Today Twitter's co-founder Biz Stone said that it was "humbling to think that our two-year old company could be playing such a globally meaningful role that State officials find their way toward highlighting our significance".

The maintenance work would have taken the site off line during the day in Iran, at a time when young, computer-literate activists have been thwarting the censors by tweeting with dramatic videos, photographs and first person reports of the unrest under the title #iranelection.

Iranian tweets and blogs

Reliable source Isfahan hospital — many injured from last 24 hours Persiankiwi 11.30

Stay the hell out of our affairs!! We don’t need your help to have an election!!! Iranian Facebook user 14.15

Basij is after us. Slept in the streets last night. Internet is down in most of the city Change_for_Iran 14.30

I want a president like Obama to protect my people and I think so far Karoubi and Mousavi are better than the rest of those jackasses Iranian Facebook user 16.30

They are now arresting human rights activists in large scale. where is UN watchdog?! Change_for_Iran 16.40

Rally is on. Silent, calm, and peaceful. This is what we all want! Thanks for everyone who’s there, and who’s watching! parhamdoustdar 17.30

Not only that they attacked us, now they are hiding the bodies of those we lost! I will kill Ahmadinejad myself! Change_for_Iran 19.45

The Persian Empire will come back! The new age has come! Iranian Facebook user 21.15

“University Alley, University Alley, murder scene, murder scene” was the written message held aloft on a makeshift paper banner. Rather than ring out in the air, the rhythmic message reverberated inside the minds of all who read it Tehranbureaublog

Lesbian albatrosses and bisexual bonobos have last laugh on Darwin

Charles Darwin argued that sexual preferences can shape the progress of evolution, creating displays, such as the peacock’s tail, that are inexplicable by natural selection alone.

It’s safe to say, however, that he did not anticipate the lesbian albatrosses of Hawaii. Nor bisexual bonobos. Let alone sadomasochistic bat bugs or the gay penguins of New York.

Homosexuality is so widespread among some animal species that it can reshape their social dynamics and even change their DNA, according to the first peer-reviewed survey of research on the subject.

From mammals to snails, and even nematode worms, homosexual behaviour is almost universal across the animal kingdom, and Californian scientists argue that it should be considered a selective force in its own right.

“The variety and ubiquity of same-sex sexual behaviour in animals is impressive — many thousands of instances of same-sex courtship, pair bonding and copulation have been observed in a wide range of species, including mammals, birds, reptiles, amphibians, insects, molluscs and nematodes,” write Nathan Bailey and Marlene Zuk of the University of California, Riverside.

Animals engage in same-sex activity for a variety of reasons, ranging from the need for an alternative child-rearing strategy to mistaken identity. “Male fruit flies may court other males because they are lacking a gene that enables them to discriminate between the sexes,” Dr Bailey said.

“But that is different from male bottlenose dolphins, who engage in same-sex interactions to facilitate group bonding, or female Laysan albatrosses that can remain pair-bonded for life and co-operatively rear young.”

Almost a third of chick-raising pairs of Laysan albatrosses were found to be all female in one Hawaiian colony. Although they did not raise as many chicks as male-female pairs, females that shared parenting did much better than solitary females.

If these birds seem like paragons of parental rectitude, in other animals, homosexual behaviour is more fleeting — but even more common. For bottlenose dolphins, about half of male sexual encounters are with other males, while one study of the bearded vulture showed that as many as a quarter of mountings were male-to-male.

Bonobos are known to have a penchant for same-sex genital rubbing and even oral sex, and male bat bugs pierce the bodies of other males with their penises and ejaculate into their blood, just as they do to females.

Dr Bailey argues that homosexual activity could act as a selective pressure. “Same-sex behaviour can have evolutionary consequences that are beginning to be considered. For example, male-male copulations in locusts can be costly for the mounted male, and this cost may increase selection pressure for males’ tendency to release a chemical which dissuades other males from mounting them,” he said.

The indiscriminate attempt of male common toads to mate with each other also seems to have affected the way their cries have evolved, he said.

Writing in the journal Trends in Ecology & Evolution, the authors caution that it is tricky to apply human categories of sexual orientation to animals. “It is impossible to know what animals ‘desire’; we can only observe what they do,” they write.

Sexy beasts: why oposited don't always attract

African bat bugs

Males pierce the bodies of other males as well as females to deliver sperm, a process known as traumatic insemination


Females engage in a lot of same-sex sexual behavior, including genital rubbing. Males engage in kissing, fellatio and genital massage. Same-sex sexual behavior may ease social tension in the group

Bottlenose dolphins

Show one of the highest rates of same-sex sexual behaviour in any animal. Male-on–male mounting and genital contact appear to strengthen alliances and provide practice for later opposite-sex encounters

Chinstrap penguins

Penguins in captivity can form long-lasting same-sex pair bonds and engage in same-sex sexual behaviour, including copulation


Male toads do not discriminate between the sexes and will ) males as well as females. Amplected males, however, produce a call that quickly induces the other male to release

Fruit flies

Males with mutations in particular genes court other males

Laysan albatross

Birds in Hawaiian populations form long-term female–female pair bonds, which include courtship displays, copulation, mutual grooming behaviour and egg incubation

Marine snails

All snails of this species start out male, and have weak sex discrimination. If they pair with another male, then one simply changes sex


To study sex differences in mate-finding behaviour, the nervous systems of hermaphrodites, which are essentially female, were masculinised in the lab by overexpressing the gene fem-3. This caused their attraction to other hermaphrodites, a typically male behavior


About 6 per cent of domesticated rams display typical male courtship and copulatory behaviour towards other males

UW 9/11 Research Group gives Nobel Laureate, Dr. Y. Lee, WTC Thermite paper by Harrit et al

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Which Tweets From Iran Are True?

Many media organizations, present company included, have turned to social networking sites, including Twitter in the search for first-hand information on what's happening in Iran, especially since Iranian authorities have greatly restricted what foreign journalists there can report on and have stopped renewing journalists' visas.

But who can tell what's reliable and what isn't on Twitter? It's impossible to know even if what you're reading was actually written by people in Tehran or elsewhere in Iran, especially since there's a movement for as many people in the Twittersphere to use the Iranian capital as their location a là "I'm Spartacus" to make it harder for Iranian censors to stop tweets that are actually from Iran.

The unintended consequence of that move was to make it even harder for the non-Iranian censors to figure out what's really from Iran and what isn't. For instance, how do we know that Gabhan is really in Tehran and not, say, spoofing from Johannesburg?

And even if he's in Iran, how do we know his information is credible? It's even possible that some of the tweets are coming from Iranian authorities or foreign intelligence agencies issuing disinformation.

One function of mainstream media journalism is to disseminate information we've determined to be reliable. It's not easy to do and we journalists make mistakes in vetting "facts," witness much of the important reportage leading to the Iraq War. We're human.

But the reliance on Twitter and Facebook is essentially throwing the doors open to everything and anything.

All of which makes Jon Stewart's satirical riff last night on CNN's use of social-networking sites not only very funny but trenchant too.

The Daily Show With Jon StewartMon - Thurs 11p / 10c
Irandecision 2009 - CNN's Unverified Material

This isn't meant to denigrate the social-networking sites. Clearly, they are making it impossible for Iranian authorities to accomplish their goal of keeping the world ignorant of what's happening there.

But much of the information coming across those sites requires some heavy caveat emptor. We have to assume a lot of the information we're seeing on Twitter is true. We just don't know which part of the Twitter flow is and which isn't.

29 Structural & Civil Engineers Cite Evidence for Controlled Explosive Demolition in Collapses of All 3 WTC High-Rises on 9/11

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巴西‧屍體骨折及發現大塊殘骸‧法航客機或空中解體 Broken bones major clue in Air France crash mystery









SAO PAULO, Brazil–Autopsies have revealed fractures in the legs, hips and arms of Air France disaster victims, injuries that, along with the large pieces of wreckage pulled from the Atlantic, strongly suggest the plane broke up in the air, experts said yesterday.

With more than 400 bits of debris recovered from the ocean's surface, the top French investigator expressed optimism about discovering what brought down Flight 447 early on June 1, but he also called the conditions – far from land in very deep waters – "one of the worst situations ever known in an accident investigation."

French investigators are beginning to form "an image that is progressively less fuzzy," Paul-Louis Arslanian, who runs the French air accident investigation agency BEA, told a news conference outside Paris. "... It is premature for the time being to say what happened," he added.

A spokesman for Brazilian medical examiners told The Associated Press yesterday that fractures were found in autopsies on an undisclosed number of the 50 bodies recovered so far.

The official spoke on condition he not be named due to department rules.

"Typically, if you see intact bodies and multiple fractures – arm, leg, hip fractures – it's a good indicator of a mid-flight break up," said Frank Ciacco, a former forensic expert at the U.S. National Transportation Safety Board. "Especially if you're seeing large pieces of aircraft as well."








































Throwing a BRIC Through America's Window

Will the BRIC countries and Japan demand a shift away from the dollar at the G-20 summit later this month?

My prediction is that at the G-20 this month, Japan, Brazil and India will drag their feet, and that China and Russia won't turn their bark into a bite.

However, I predict that America's economic meltdown will occur so quickly that the BRIC countries and Japan will force a change in the world reserve currency within the next year.

Well, yesterday, the BRIC countries said they might be each others' bonds (and not just U.S. Treasury bonds). As Bloomberg writes:

Brazil, Russia, India and China are considering buying each other’s bonds and swapping currencies to lessen dependence on the U.S. dollar as their leaders meet for a summit in Russia’s Ural Mountains.

The leaders of the so-called BRIC countries will discuss measures to promote regional currencies, including “possibly placing part of reserves in the financial instruments of partner countries” ...

The BRIC countries have combined reserves of $2.8 trillion and are among the biggest holders of U.S. Treasuries. The first BRIC summit comes after Brazil, China and Russia announced plans to shift some foreign reserves into International Monetary Fund bonds, driving Treasuries and the dollar lower.

The BRIC countries accounted for about 22 percent of the world economy in 2008, up from 16 percent a decade earlier, based on purchasing power parity.

And today, Russia and China announced that they will greatly increase their use of yuan and rubles in trade between the two countries. Given that Russia is currently the world's largest producer of crude oil and that China holds more monetary reserves than anyone else (more than a quarter of the world’s reserves), this could be substantial.

Indeed, as AFP writes:
The dollar fell against the euro and yen on Wednesday after major emerging economies cast doubt on its long-term future as the world's main reserve currency, dealers said.
My prediction might not have been so crazy after all.
For background, see this.

World Bank Raises China 2009 Growth Forecast to 7.2% (Update3)

June 18 (Bloomberg) -- The World Bank raised its growth forecast for China this year and advised policy makers to delay until 2010 any additional stimulus plan to boost the world’s third-largest economy.

China’s economy will expand 7.2 percent in 2009 from a year earlier, up from a 6.5 percent forecast in March, the Washington-based lender said in a quarterly report released today in Beijing. Stocks gained after the announcement.

The World Bank joins Goldman Sachs Group Inc., Morgan Stanley and UBS AG. in raising growth forecasts this year after a 4 trillion yuan ($585 billion) stimulus package triggered record loans and surging investment. China, the biggest contributor to global growth in 2007, is relying on government spending as exports slump because of the world recession.

The bank said it’s “too early” to say there is a sustained recovery, citing the economy’s dependence on the stimulus and echoing a State Council caution yesterday against excessive optimism.

“Despite all the World Bank’s caution, it did feel compelled to raise its growth forecast,” said David Cohen, head of Asian forecasting at Action Economics in Singapore. “That’s indicative of increased confidence regarding the global outlook right now.”

Extra Stimulus

The bank said it’s “not necessary, and probably not appropriate” for China to add fiscal stimulus this year. Consumption is likely to slow, pushing down wages and employment, and the nation should retain room for stimulus in 2010, in case the global economy takes a turn for the worse, the bank said.

The Shanghai Composite Index rose 1.6 percent to an 11- month high. Industrial & Commercial Bank of China Ltd., the nation’s biggest listed lender, climbed 2.6 percent.

Gross domestic product grew 6.1 percent in the first quarter this year from a year earlier, the least since 1999, as exports slid because of the global recession.

The Chinese government forecasts an 8 percent expansion in 2009, which is the pace of growth it considers necessary to maintain employment and ensure stability. The economy is in a “critical” phase, the State Council said yesterday, warning that a recovery isn’t on solid foundations yet.

‘Improved Somewhat’

“Overall growth prospects have improved somewhat, compared to three months ago, but with little carry-over into 2010,” the World Bank said. “The massive monetary impulse of the first five months will support economic growth in the coming quarters.”

Goldman Sachs forecasts growth of 8.3 percent this year, Morgan Stanley estimates 7 percent and UBS predicts 7.5 percent.

“I don’t think China will see a V-shaped recovery back to high single-digit growth rates,” said Louis Kuijs, the World Bank’s senior economist for China in Beijing. “The impact of the policy stimulus next year can realistically not be as large as it has been this year.”

The World Bank, created after World War II to fight poverty, said “it may take time” before China’s currency, called the yuan or renminbi, becomes a major reserve currency.

“International experience suggests that several conditions need to be in place, including open capital markets; deep, liquid foreign exchange markets; well developed bond markets; and a more or less flexible exchange rate,” the report said. “It will take time before China has achieved these benchmarks.”

Export Slump

Exports slid for a seventh month in May, dropping by a record 26.4 percent from a year earlier. The bank’s report said trade overall is likely to subtract from growth this year.

“China is still, in a global context, not big enough that it’s going to be the locomotive for a global recovery,” said Ardo Hansson, the bank’s chief economist on China.

China contributed 19.5 percent of world growth in 2007, the most of any nation, according to the International Monetary Fund.

Other projections by the World Bank indicated a budget deficit of 4.9 percent of GDP this year, up from the 3 percent forecast by China.

The report also contains long-term advice, including the importance of educating the workforce.

“A transformation of economic growth strategy toward one that is more solidly based on efficiency and knowledge is widely recognized as essential to China’s long-term prosperity,” the World Bank said. “Although such a transformation calls for a greater capacity for innovation, Chinese enterprises are not fully ready for it.”

The lender noted that the education level of China’s labor force is similar to Taiwan’s in the 1970s.

U.K. Retail Sales Dropped in May for First Time in Three Months

June 18 (Bloomberg) -- U.K. retail sales unexpectedly dropped in May for the first time in three months as rising unemployment dissuaded shoppers from buying clothes and shoes.

Sales fell 0.6 percent from April, the Office for National Statistics said today in London. Economists predicted a 0.3 percent increase, the median of 28 forecasts in a Bloomberg News survey shows. Sales dropped 1.6 percent from a year earlier.

Bank of England Governor Mervyn King said yesterday that Britain's path to full recovery may be ``protracted'' as banks keep rationing loans to consumers. J Sainsbury Plc, the U.K.'s third-biggest supermarket owner, predicted this week that the economic environment will stay ``challenging'' for the rest of the year.

``Unemployment will keep rising,'' said Amit Kara, an economist at UBS AG in London, and a former central bank official. ``The economy will shrink in the second quarter. But it's looking better than it was a few months ago.''

On the year, the value of sales dropped 1.1 percent, the most since records began in 1988. The annual data are affected by ``unusually large'' estimates of retail sales a year earlier in May 2008, officials said.

Clothing, textiles and footwear retailers and department stores led the monthly sales decline in May, the statistics office said. Sales at non-food stores dropped 1.4 percent, outweighing a 0.3 percent increase at food stores.

M&S Profit

Marks & Spencer Group Plc, the Britain's largest clothing retailer, announced a 38 percent slump in annual profit on May 19. Home Retail Group Plc, the owner of Argos stores in the U.K., on June 11 cut its profitability forecast for Homebase and said sales at the home-improvement chain fell in May.

Chancellor of the Exchequer Alistair Darling said yesterday that he's ``confident there will be a sustained recovery.'' Britain's recession has harmed the prospects of Prime Minister Gordon Brown, who this month fought off a crisis in his government after the ruling Labour party had its worst-ever result in local elections.

Unemployment rose to the highest level since 1996 in the three months through April, the statistics office said yesterday. The Confederation of British Industry predicts the unemployment rate may rise to 9.6 percent next year, when Brown must call an election, from the current 7.2 percent.

The central bank this month continued a program to buy 125 billion pounds ($205 billion) of bonds with newly created money to stimulate the economy and kept the benchmark interest rate at 0.5 percent, a three-century low. King said yesterday that it is too early to withdraw the ``extraordinary'' stimulus in the British economy.

``The risk of a continued sharp contraction in output in the near term had receded somewhat,'' minutes of the bank's June 4 decision said yesterday. ``However, there was no reason to conclude that the medium-term outlook for the economy, and thus inflation, had changed materially.''

The retail price deflator, a measure of cost changes in shops, showed a 0.7 percent increase on the year, today's data showed. Inflation was 2.2 percent in May, faster than economists had forecast and above the central bank's 2 percent target.

By Brian Swint











Thomas Woods on Alex Jones Tv 2: Government Bailouts Will Make Things Worse

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Iceland – the banks, the bust, the fish and the history

Today is Iceland´s Independence Day. The Prime Minister held a speech in front of the Parliament telling the Icelanders, the next few years would be very hard. She also said that a new struggle for independence would have to be fought, but she added, it would mainly be about Iceland´s relationship towards other nations and Iceland´s cooperation with the international community in winning it´s trust again abroad, while the dealings of the “business-Vikings” had cost the Icelandic people a big deal of this former trust.

True,near every day new facts about insider deals and enormous corruption and waste of funds come to light. However, the bankrupcy of the banks was not exclusively caused by the corruption of the Icelandic bankers. They just followed the lead of both American and British bankers. And while doing this they were constantly lauded for their “innovative” business concept which spread risks far and wide and so minimized them.

This was the true essence of the “innovative” deregulated neo-liberal financial markets: Spread everything thin, so if one goes under everybody else will drown, too. Actually, before Lehman Brothers went under, the Icelandic banks were still swimming on credits from other banks.

What initially brought on the decline of the banks was the attack on the Icelandic Krona starting in January 2008. Some large “investors” started to massively short-sell the Krona. It dropped like a Stone. More investors pulled out, and the banks lost part of their equity and from then on were depending on inter-bank loans to stay solvent.

When the day of reckoning came the government had no choice but to re-nationalize the banks, splitting them into a domestic and a foreign part, allowing the foreign part to file for bankruptcy, while protecting the domestic banks.

The Icelandic banks held domestically all Icelandic household and business debts. With the catastrophic drop of the currency most Icelandic businesses and many households were over their head in debts, since their bankers had encouraged everyone to take on loans in foreign currencies to avoid the high Icelandic interest rates on loans.

In it´s neo-liberal sell-out spree the Icelandic government had sold the fishing quota to the Icelandic fishing industry. Like others the fishing-industrywas over it´s head debts now. If those businesses went under and were taken over by the creditors of the bankrupt banks all things would be over for Iceland. In spite of us making big strides to diversify the economy, 70% of all export revenues still come from fish. If the fishing quota goes abroad Iceland cannot survive. The Icelanders had fought two “cod-wars” with Britain coming close to shooting wars to retain their fishing waters and protect them from over-fishing by foreigners. They are the most vital part of the economy.

No fish – no bread.

This has been true since the 12. century, when the medieval climate optimum was slowly coming to an end , which made traditional Nordic agriculture more and more impossible. Icelanders are no Inuits. They, even then, were used to an European diet and for that they needed to trade: dried fish and wool and wool-clothing.

Trade was so important that in 1262 Icelanders surrendered their national independence to the Norwegian crown in order to keep the trade lines open and the ships from Norway coming. A century earlier, for probably for the same reason, an Icelandic historian had to burn his first book on Icelandic history together with all his orginal sources to write a new and “revised” edition of it.

When in 1308, due to a royal marriage, Iceland came under Danish rule, trade started to decline, poverty grew. When the Danish government put monopoly trade restrictions on Iceland, which banned Icelanders to trade with anyone other than Danish licensed traders, the anti-Danish anger grew in Iceland. The monopoly traders sold crap and spoiled food, and bought Icelandic fish and other products under value.

The trade-restrictions were the main motivation for Icelanders to start their struggle for independence from Denmark.

When Iceland became finally a fully sovereign nation in 1944, the country finally started to rise from abstract poverty and underdevelopment. Iceland was not a near socialist country, as some people claim. All industries were in private hands. Only the infrastructure was public like the roads, the schools, the post-offices, the universities, the hospitals, electricity- , hot- and cold water pipe-lines as well as the phone lines were in public hands…… and the banks.

The banks and mortgage loan funds were some owned by the central goverment, some by the local communities and some by the labor-union-connected pension funds.

And they, together with the general tax-payer, financed all the infra-structure needed for a modern society, even one with a very small population in a difficult climate on a relative large land. The banks and the pension-funds also financed the construction of new modern housing, built from steel and concrete, strong enough to withstand all the strong fall- and winter-storms and flexible enough to outlast earthquakes. There was no real rent-market in Iceland, except a few public housing blocks for handicapped and disabled people. Everyone else had to buy their house or apartment and most everyone could, even low income single mothers. The mortgages were affordable, although not cheap.

With all revenues of the banks pumped back into the economy and not siphoned out by self-interested bankers the system worked and the economy grew steadily. Before the privatization of the banks the Icelandic economy seemed to have running in a very similar way to the one of North Dakota, the rural state which also owns his own bank, and is one of the few among the 50 that isn´t broke. (Ellen Brown describes the economic system of North Dakota on her Web of Debt Blog)

Sure with the dependence on fish-prizes and exchange rates abroad, there were several periods of high inflation, but the strong domestic labor unions allowed the Icelandic working class to regain the buying power that was lost in a very short time and increasing it steadily. The Icelandic living standard was already high long before the banks were privatized, although prizes were a lot higher than in Europe and wages a bit lower. But there was close to zero unemployment most of the time, and most people worked overtime up to double the normal working hours, especially in the fishing industry. All women worked outside the home. Children started to work at least part time by the age of 14 or even 13. And the early years they also worked as long hours as their parents. Fishermen on tour worked often 16 hours a day 7 days a week and still do. Their work is backbreaking hard and until recent years used to be very dangerous also. They are the national heroes of Iceland honored with a special holiday weekend.

Of course their where ups and downs and occasional economic problems. And so the age of the neo-libs began, with their golden bullet works for all recipe: deregulation, privatization of infrastructure and foreign “investment”:

If they only would do this, the government believed, Iceland would be able to diversify it´s industry. From the 2 Aluminum melting companies, we had before, the country then could get many more. And other industries would be founded as well in every part of the country. And there would be lots of free trade.

“Free trade” that´s what the Icelandic government fell for. And so they started selling the country´s silver-ware and in the end, the banks. And the foreign advisers of the government, coming from one of the largest British banks, HSBC, also told them, that should not put any stricter regulations on the Icelandic banks than the European Union had written in their laws. That´s exactly what the government did and what brought on the catastrophy. The first one to be privatized in 2003 was Landsbanki. It was sold to a company with the name of “Samson”. (The members of the government had obviously forgotten to read their bibles.)

The economy indeed grew like crazy after that, new industries developed all over the place, but the Icelandic labor market was already over-extended, so mass-immigration followed, which again put pressure on the housing market and the prizes there sky-rocketed.

When Samson finally crashed the temple of greed upon the Icelandic people,the crash was total. The country became the one with the highest per capita debt burden in the world. Besides their own debts, the Icelanders now are obligated to also pay the Icesave debts of the bankcrupt privatized bank, Landsbanki. The debt is mainly owed to the British government now.

This makes the Icelanders really angry. They argue, that it was the British government who was responsible for at least some of Iceland´s problems. With their actions of putting Iceland on the list of terrorist countries and organizations, right next to Iran, and treating Iceland like Iran, freezing it´s assets, the Brits had driven the third and largest Icelandic bank into bankruptcy, the only which might have survived. This increased the burden on the Icelandic economy and reduced it´s revenues even further.

But when the Icelandic government considered to settle the matter of the dispute with the British government in an European court, no court would even consider to hear our case, and the whole international banking system put a total trade ban on Iceland. For weeks no money transfers whatsoever, necessary for any kind of imports or exports could be done anymore. Icelandic industries went further under water. And Icelandic retailers finally pronounced that within another three weeks, they would be running out of food. And so once again:

No fish, no bread

Without trade we cannot survive, and therefore, under pressure of the united bankers of the world and in concert with the European Union, the Icelandic government gave in to demands, all Icelanders consider to be unfair. (A new poll published today says that over 70% of Icelanders believe, the government is for the banks, not for the people.)

And so we now will pay the debts of the banks in addition to the household debts and the government debts and the debts of our industries , and hope that in the years to come some money will still be left for bread.

P.S.: Many Icelanders are now putting their hope in becoming an oil- and gas-producing country, being on the same list as Iran, after all. No joke,surveys have found there is a 98% chance of oil and gas being found in a certain area of the Icelandic sea. We just don´t have the money to drill.

Heroine of the anti-abortion lobby is exposed as a fantasist

Social worker admits she fabricated story about carrying terminally ill baby

A suburban "mother-to-be" has infuriated the right-to-life community in America by admitting a blog she had written for more than two months tracking her pregnancy with a child diagnosed with a terminal disease was nothing more than a fantasy, albeit one that had attracted an online audience of a million or more.

Beccah Beushausen, a 26-year-old social worker from the outskirts of Chicago, almost unwittingly hit a nerve in a country where the battle over abortion rights still rages.

Last month, a doctor in Kansas, George Tiller, was gunned down while serving as an usher in church. Mr Tiller was one of only a small number of doctors in the United States willing to perform late-term terminations in circumstances where the mother's life may be at risk. Even the most fervent of pro-life groups condemned the killing of Mr Tiller and reiterated their opposition to violence.

In Ms Beushausen, throngs of conservative Christians and right-to-life advocates thought they had found a living symbol of their deepest-felt beliefs: a woman who was committed to bringing to term a pregnancy she knew would give her a child – April-Rose – who was destined to live perhaps only weeks, days or even hours.

The blog, a well-written and heart-rending account of her pregnancy that was peppered with Biblical quotes and featured a Christian music track, took off in ways she now says she had not expected. Other mainstream Christian websites, many dedicated to the right-to-life cause, began channelling their readers to it. Fans of the blog began sending gifts – pairs of booties, blankets, hair bows, even money – to Ms Beushausen, who online called herself only "B".

The entry describing April-Rose's delivery informed the blog audience that the child had died hours after delivery, as her mother had feared. But "B"– she sometimes also referred to herself simply as "April's Mom" – did manage to post a picture of herself holding the infant swaddled in blankets. By then a cyber-celebrity in the world of anti-abortion activists, Ms Beushausen's post on that day lit up with nearly one million hits.

However, in her determination to sustain the illusion, Ms Beushausen had posed for the photograph not with a baby, but a plastic doll.

One reader spotted the deception and word of the deceit quickly spread. Even though Ms Beushausen moved quickly to take down the website and accounts on Twitter and Facebook, she was quickly identified.

The response among her legion of followers has ranged from fury to sympathy. For her part, Ms Beushausen acknowledged the fraud to her local newspaper, the Chicago Tribune, last weekend, and put up a last post offering her apologies. She has revealed that while the entire story was made up – the pregnancy never happened – she was using the blog in part to deal with the real sadness of having lost a baby boy four years before.

"I lied to a community of people whose only intention was to support me through this time and that is wrong, and for that I am sorrier than you could know," she said in the final post last Sunday, adding that she actually had lost babies "more than once" and had lied because she was "dealing with unresolved pain".

Ms Beushausen has said that the gifts she received have now been given to charity. "I don't feel the need to exploit either the Christian community or the sanctity of human life any further," she went on. "Forgive me and understand on some level that I am a broken woman.

"I do understand why people are mad, and so does she," Anna Beushausen, her sister, acknowledged this week. "I see pieces of her life in there. She is so remorseful, and she is in immense pain."

One of the first to become suspicious of the events described on the site – – was Elizabeth Russell, a dollmaker from upstate New York. "I have that exact doll in my house," she said. "As soon as I saw that picture, I knew it was a scam." She then started a counter-blog to expose the fabrication. For her trouble, she was bombarded with hate mail.

Jennifer McKinney of Minnesota, who has written her own blogs about a difficult pregnancy, is not impressed by the belated mea culpa. "To be honest, I think she is far from recognising the true gravity of the situation," she said.

But Raechal Myers of Tennessee, who sold T-shirts to raise money for Ms Beusheusen and sent her hundreds of dollars has no regrets. "She's someone who needed love and attention," she says, "which we gave her".

Beccah Beushausen's baby blog

The 'pregnancy'

"Everything that has happened so far seems to be setting the stage, so to speak, for a miracle. I am carrying April, still. Not knowing what will happen next. I have another appointment on Thursday and that one will hopefully bring concrete answers. Though, as much as I say I want them, I don't think I will want them when they come.

I have been completely humbled to get emails, comments, prayer requests, etc. Humbled that God is using me and April to bring Him glory."

The 'birth' (described by a friend, 'Rachael')

"B is having frequent contractions now and is up and moving around. Active labour is only just beginning and B has a lot more work to do before April comes.

B is pushing. April is doing well so far and will be here soon. Lord, be near.

April is here! Praise Jesus!"