Wall Street’s Greatest Fraud

Bernie Madoff’s Ponzi scheme has to be the greatest fraud of all time, right? Allen Stanford is likely a distant second, correct?

Well, actually, no. Madoff has certainly reserved a special place in financial ‘hell’ for his fraud, but make no mistake, the single greatest fraud ever perpetrated on investors is the collective Wall Street enterprise that marketed and distributed Auction-Rate Securities. The ARS market at its peak was a $330 BILLION market. Of that initial size, those on Wall Street tracking developments within the ARS market project that $165 BILLION held by thousands of retail and institutional investors remain frozen.

The Wall Street Journal highlights the next in what could be a long running series of ARS investigations in writing this morning, Cuomo Says Schwab Faces Fraud Suit:

In an official notice sent to Charles Schwab & Co. Friday, Attorney General Andrew Cuomo warned that his office plans to sue the largest online brokerage firm for civil fraud over its marketing and sales of auction-rate securities to clients. Emails and testimony cited in the letter show Schwab’s brokers had little idea of what they were selling and later failed to tell clients that the market was collapsing.

I am heartened to see AG Cuomo launch this action against Schwab but I wonder why he does not simultaneously take the same action against EVERY bank, broker, and investment management firm involved in the marketing and distribution of ARS.

Regular readers of Sense on Cents know that I believe the ARS trail leads back to the Wall Street self-regulatory organization, FINRA. For the benefit of our newer readers, allow me to reconnect the dots once again.

In reading FINRA’s 2007 Annual Report, I unearthed that FINRA owned $647 million ARS. In reviewing NASD’s (FINRA’s parent) 2003-2005 Annual Reports, I highlighted that the NASD did NOT account for ARS as cash. I pursued this story of FINRA’s ownership of ARS and Bloomberg broke it in late April. There is much more that needs to be exposed. The WSJ continues:

Mr. Cuomo writes in the letter that his office would be open to a settlement with Schwab, but it must agree to buy back the securities from investors still stuck with them.

Why just Schwab? Why shouldn’t every institution involved in this fraud be similarly engaged and held to the same standard right NOW!! Who are some of these outfits? Oppenheimer and Co. and PIMCO to start.

More than a dozen Wall Street firms and small brokerages agreed to pay more than $60 billion to buy back the securities from investors after investigators found they didn’t properly inform clients about the risks, or that the market was crumbling, increasing their losses. Schwab is among a handful that haven’t settled.

“The Attorney General’s allegations are without merit,” Schwab said in a statement. “They unfairly lay blame on our company for an illiquid market and improper behavior by the large Wall Street firms that created” and then stopped supporting the market.

At Charles Schwab, which uses the advertising slogan “Talk to Chuck,” brokers admitted their ignorance about the product, according to Mr. Cuomo’s letter.

“Schwab brokers, while trained to levels beyond industry standards, could not be expected to foresee and disclose market risks that even regulators and market experts did not foresee,” Schwab said.

The attorney general’s investigation of Schwab found that brokers were unaware of and misleading about the risks of the securities — promoting them to customers as cash-like investments, according to the letter. It also found that some traders and executives knew the market was cracking as early as the autumn of 2007 and took steps to protect the company, but didn’t disclose those problems to customers.

Schwab mistakenly believes they are being singled out. EVERY institution should be pursued in similar fashion. Last I checked, ignorance of the law is no excuse for perpetrating a crime.

Who is charged with protecting investors and making sure investment products are marketed and sold appropriately? FINRA (Financial Industry Regulatory Association):

The Financial Industry Regulatory Authority (FINRA), is the largest independent regulator for all securities firms doing business in the United States. All told, FINRA oversees nearly 4,850 brokerage firms, about 173,000 branch offices and approximately 649,000 registered securities representatives.

Created in July 2007 through the consolidation of NASD and the member regulation, enforcement and arbitration functions of the New York Stock Exchange, FINRA is dedicated to investor protection and market integrity through effective and efficient regulation and complementary compliance and technology-based services.

FINRA failed miserably in protecting investors from this Auction-Rate Securities fraud. Was FINRA merely asleep at the wheel and missed this fraud? Anything but.

FINRA owned $647 million ARS and liquidated them in Spring 2007. Lehman Bros. liquidated ARS positions in the same time frame. On that topic, I wrote “U.S. Attorney and SEC Investigating Lehman’s Auction-Rate Securities Sales; They Should Also Invstigate FINRA’s.”

While AG Cuomo should pursue each and every institution involved in this fraud, in my opinion, he is working from the top down. He should start at the bottom by pursuing FINRA’s actions and involvement in this fraud.

I write this commentary in hopes that interested parties are able to further pressure media outlets and regulators to address FINRA’s liquidations of ARS and lack of investor protection from this fraud.

Meanwhile, I am in the process of writing to members of the FINRA board on this topic. Will they respond?

For interested parties new to Sense on Cents, please access all information on this topic by typing Auction-Rate Securities in the search window on any page.

Thousands of investors with $165 BILLION frozen in ARS. Each and every investor deserves an immediate return of all their capital. If our markets are ever able to achieve real transparency and integrity, the public at large needs to know the full extent of the FINRA angle in this ARS fraud!! This story is not going away.

by Larry Doyle

Liberty and Safety

For a professor of law at one of the country's best law schools who was once the go-to guy in the Justice Department whenever the Bush White House needed legal cover for its truly lawless ventures outside the Constitution, John Yoo has revealed a breathtaking ignorance of American values, history, and jurisprudence.

In his startling mea culpa, published in the Wall Street Journal yesterday, Professor Yoo confessed to advising President Bush that he possessed powers from some source other than the Constitution, that in the name of public safety he could cut down all laws written for the express purpose of restraining the President, and that Americans would expect no less than this so long as they were actually kept safe as a result of it.

He advanced the argument that since the President's first job is to keep us safe, he could disregard the 1978 FISA law as "obsolete" since it was written in an era when modern day non-state terrorism was not contemplated. By this unprecedented and perverse logic, one wonders if the President was told if he could disregard as obsolete any law that was inconvenient to his purposes; even the Supreme Law of the Land itself, which the Constitution declares itself to be.

The whole purpose of FISA was to abolish the Nixonian notion that "If the President does it, it's not illegal." While FISA's statutory reduction of the constitutionally-mandated standard for obtaining a judicial search warrant – from probable cause of crime to probable cause of foreign status – is itself of dubious constitutionality, nevertheless, it is and was at the time Professor Yoo was telling President Bush to disregard it, the "exclusive" lawful means for agents of the President to wiretap foreign persons present in the U.S. Moreover, the FISA court has become the President's rubber stamp by granting well over 99% of requested warrants.

It is not painless for one who loathes this law to defend it; but it was among the laws that the President and the Professor swore to uphold, it does force the executive branch to identify and specify who and what it wishes to pursue, and it presents at least a minimum of checking and balancing by forcing the President to go before a super-secret court (without an adversary present) and seek permission to violate the Fourth Amendment-guaranteed rights of the President's targets.

The whole purpose of FISA was to abolish the Nixonian notion that "If the President does it, it's not illegal." While FISA's statutory reduction of the constitutionally-mandated standard for obtaining a judicial search warrant – from probable cause of crime to probable cause of foreign status – is itself of dubious constitutionality, nevertheless, it is and was at the time Professor Yoo was telling President Bush to disregard it, the "exclusive" lawful means for agents of the President to wiretap foreign persons present in the U.S. Moreover, the FISA court has become the President's rubber stamp by granting well over 99% of requested warrants.

It is not painless for one who loathes this law to defend it; but it was among the laws that the President and the Professor swore to uphold, it does force the executive branch to identify and specify who and what it wishes to pursue, and it presents at least a minimum of checking and balancing by forcing the President to go before a super-secret court (without an adversary present) and seek permission to violate the Fourth Amendment-guaranteed rights of the President's targets.

The time-is-of-the essence argument is nonsense. I once issued a search warrant in my gym shorts from my living room at 3 am, and I know of a former FISA court judge who did the same from his cell phone while riding a motorcycle. While neither of these situations is optimal, there are at least written records of what was done to whom and why; and that was a goal of the law which President Bush was told was obsolete.

The Framers never contemplated FISA, and I cannot conceive of Jefferson, Madison, or even Hamilton condoning it. But one thing we know the Framers would never condone is a government that refused to reside within the Constitution; "chained down" by it as Jefferson once said.

The Founders, unlike John Yoo and George Bush, feared a king who enforced only the laws he found convenient to his present needs, who dispatched his agents with their own self-generated search warrants to knock on any door and seize any thing they or the king wanted, and who claimed to be doing all this for safety's sake.

Cutting down the laws to get at the Devil is dangerous business. As Robert Bolt argued in A Man for All Seasons, the land is planted thick with laws. If you cut them down to get to the Devil, who could stand the wind that then would blow?

When President Lincoln and the Radical Republicans tried civilians in military tribunals in the North, hundreds of miles from battle, and in the South after the Civil War had ended, a unanimous Supreme Court stopped them. It declared that "The Constitution of the United States is a law for rulers and people, equally in war and in peace, and covers with the shield of its protection all classes of men, at all times, and under all circumstances."

President Bush argued frequently and forcefully that his first job was to keep us safe. He was wrong. The Constitution tells us that his sole job was to enforce the Constitution; and that means keeping us free. Free from tyrants who sought and claimed power from thin air; free from prince-like federal agents who could behave without constitutional or legal restraint; free to live with a government that obeyed its own laws. Any president who keeps us safe but unfree is rejecting his oath to the American people.

by Andrew P. Napolitano

Jakarta Police Focus on Graduate of Islamic School

JAKARTA -- Police searching for the identities of two suicide bombers who targeted the JW Marriott and Ritz Carlton hotels in Jakarta last week are believed to be focusing on a 35-year-old alleged terrorist known as Nur Sahid who attended one of Indonesia's most famous Islamic schools in the 1990s.

On Monday, state-owned media reported that police took DNA samples from the family of Mr. Sahid in the village of Temanggung in Central Java, a province on Indonesia's biggest island. Although the police have recovered the bodies of both suicide bombers involved in the attacks, which killed nine people, they have been unable to positively identify the bodies due to the extent of their injuries from the blasts. A senior national police spokesman declined to comment while the investigation into the bombers' identity was ongoing.

Intelligence officials have already said they believe Noordin Mohammad Top, one of Southeast Asia's most-wanted terrorists, was the mastermind of the bombings, though police haven't formally identified him by name, either.

Sidney Jones, an expert on Islamic terrorist groups in Southeast Asia and an adviser to the International Crisis Group, a Brussels-based peace-building advocacy body, says Mr. Sahid graduated from the Al-Mukmin Islamic boarding school in the village of Ngruki in central Java in 1995. Many of the school's alumni went on to become members of Jemaah Islamiyah, a Southeast Asian affiliate of al Qaeda that carried out attacks against nightclubs, embassies and hotels in Indonesia between 2000 and 2005, killing almost 300 people.

Ms. Jones estimates that 15 members of the class of 1995 have carried out terrorist attacks, including a previous suicide car bombing at the JW Marriott, in 2003, which killed 12 people. Mr. Sahid, she said, is "part of this very famous class."

The latest attacks have rattled many Indonesians, who had grown accustomed to several years of stability after a run of terrorist attacks earlier in the decade. On Monday, Indonesia's trade minister said she thought the suicide bombings would have a limited impact on local markets, including the stock and currency markets, and that Indonesia's economic fundamentals remain strong, with growth expected to register between 4.0% and 4.5% this year. Most analysts so far have agreed, saying they suspect the attack will be a one-off affair and that Indonesian police are more experienced in tracking down terrorists than before. Indonesian markets were closed Monday for an Islamic holiday.

"Of course, we can expect travel and tourism to be affected in the short term (but) Indonesia has demonstrated its resilience," the trade minister, Mari Pangestu, told Dow Jones Newswires in an interview. "We will also be resilient in overcoming this current unfortunate situation," she said.

Indonesian police say the latest bombings, which used homemade explosives and hit Western targets, show the hallmarks of Jemaah Islamiyah, whose goal is to create an Islamic caliphate in Southeast Asia.

Scores of the shadowy group's cadres have been arrested in recent years in security crackdowns. But Mr. Sahid evaded capture and remained in contact with Mr. Noordin. In recent years, Mr. Sahid is believed to have rented safe houses in Wonosobo, Central Java, for Mr. Noordin and his associates, Ms. Jones said. Police raided the houses in 2006, killing two Jemaah Islamiyah members, but were unable to locate Mr. Noordin or Mr. Sahid.

In recent months, the search for Mr. Noordin has focused on Cilacap, Central Java. Last week, just before the bombings, police raided a house belonging to Mr. Noordin's father-in-law in Cilacap, uncovering explosive material similar to an undetonated bomb found in the JW Marriott, according to senior antiterrorism officials. But again, they missed Mr. Noordin, whose whereabouts are unknown.

Ms. Jones said she did not think that Abu Bakar Bashir, a firebrand Islamic cleric who co-founded the Al-Mukmin boarding school in 1972, and has been described as the spiritual leader of Jemaah Islamiyah, was involved in the latest attacks. Mr. Bashir was jailed for conspiracy after the 2002 Bali nightclub bombings that killed 202 mostly Western tourists. But he was released in 2006 and Indonesia's Supreme Court later overturned his conviction.

After his release, Mr. Bashir returned to the school and set up a new above-ground Islamic group, Jemaah Ansharut Tauhid, to focus on religious education and the imposition of Shariah law in Indonesia, a secular nation.

He no longer appears to have any active involvement with current operative terrorists, Ms. Jones said.

Few graduates of Al-Mukmin since 1995 have been involved in terrorist attacks, Ms. Jones notes. Still, Mr. Bashir's two sons teach anti-democratic sermons there, she says, and a number of the children of convicted Jemaah Islamiyah members are enrolled, making it a potential recruiting ground for hard-line Islamists.

—P.R. Venkat contributed to this article.

By TOM WRIGHT

CIC to Buy Stake in Citic Capital

HONG KONG -- China Investment Corp., the sovereign wealth fund that invested over $3 billion in Blackstone Group LP, has agreed to buy a 40% stake in China-focused alternative asset management firm Citic Capital Holdings Ltd. for an undisclosed price, according to a letter sent by Citic Capital to investors.

Citic Capital manages around $2 billion through a range of alternative investment platforms including its flagship China buyout fund series.

Beijing-based CIC, which manages $200 billion in capital drawn from China's foreign exchange ...

BY RICK CAREW

Why China Will Keep Investing Abroad

BEIJING — Overshadowed by a sparkling economic report card for the second quarter, the leap in China’s official currency reserves last week is yet one more reason to bank on a transformative surge in the country’s investments abroad.

But the diplomatic storm whipped up by charges leveled by Beijing against four employees of Rio Tinto shows just how bumpy the journey overseas may be if it triggers a backlash against Chinese interests.

China has long been scouring the globe for energy and commodities to feed its thrumming economy. What is new is the leadership’s determination to increase outbound foreign direct investment, or O.F.D.I., as it weans the economy off low-value, export-oriented manufacturing. The deal by Sinopec, the largest Chinese oil refiner, to buy the Swiss oil explorer Addax for $7.24 billion last month was China’s largest overseas acquisition yet.

The government is not throwing caution to the wind. Beijing blocked Bank of China’s purchase of a stake in La Compagnie Financière Edmond de Rothschild, the French merchant bank, and has responded tepidly to a bid by Sichuan Tengzhong, a little-known machinery maker, for General Motors’ Hummer unit.

But the first half of 2009 may prove to be an inflection point for Chinese outbound foreign direct investment, said Daniel Rosen, a visiting fellow at the Peterson Institute for International Economics in Washington.

“Despite short-term anxieties, Chinese O.F.D.I. is poised to grow markedly in the medium and long term, and the importance of these investments to Chinese firms is changing fundamentally as the nation confronts the need to rebalance its growth model,” Mr. Rosen wrote in a paper whose co-author was Thilo Hanemann.

With domestic economies of scale largely exhausted, companies will have a powerful incentive to move abroad to upgrade their manufacturing and compete in more profitable areas like distribution, design and branding. “Made in China” will increasingly give way to “Made by China — abroad,” Mr. Rosen and Mr. Hanemann argued.

On top of the commercial motives, greater capital outflows would make monetary policy easier to conduct by reducing China’s balance of payments surplus. Because the central bank buys most of the foreign currency entering China to cap the yuan’s exchange rate, every dollar that can be recycled as outbound investment is one dollar less that must be bought and added to reserves.

Those reserves jumped $177.9 billion in the second quarter to $2.13 trillion, helping to generate record credit and money supply growth that economists fear may be creating asset bubbles.

“We don’t know what the right amount of domestic monetary creation is, but it’s pretty safe to say it’s much, much lower than the increase in central bank reserves,” said Michael Pettis, an economics professor at Peking University.

Hence the significance of new government rules issued last week that will make it easier for companies to finance outbound foreign direct investment.

“On top of China needing to invest — they need to secure energy supplies, they need to acquire technology — there’s also the element of recycling dollar revenues,” said Qu Hongbin, chief China economist at HSBC in Hong Kong.

China’s outbound foreign direct investment has increased steadily this decade, and the outflow of $52 billion last year was a record. Still, the historical stock of the outbound direct investment of $170 billion is puny next to China’s foreign exchange reserves and its inward foreign investment stock of $876 billion.

Mr. Qu, however, said that outflows could reach $100 billion to $150 billion a year as soon as 2012. And Mr. Rosen said in an e-mail message that sum would be “entirely conceivable” if there were no political interference from Beijing.

Mr. Rosen and Mr. Hanemann identify four areas where progress, now blocked by the state’s reluctance to take its hands off the economy, is needed to promote outbound investment.

The government must completely pull back from companies’ investment decisions. It must further liberalize access to foreign exchange and O.F.D.I. funding. It must let all companies invest overseas. And it needs a strategy that serves China’s long-term interests — defending pariah states where China has invested hurts the image of the country’s companies among consumers.

Similar reputational damage is where the detention by China of Stern Hu, an Australian and Rio’s chief negotiator in fractious iron ore pricing talks, may dim China’s ambitions to expand abroad. The perception that Beijing is exacting revenge on Rio for being outsmarted in the ore talks risks hardening attitudes far beyond Australia.

After all, critics already complain that foreign companies in China cannot trade and invest on a level playing field. So why should the West roll out the welcome mat for Chinese investors?

Mr. Pettis of Peking University said he expected outbound foreign direct investment to keep growing despite “political noise” generated by trophy transactions, but he acknowledged that Chinese attitudes toward overseas investors would hardly encourage foreigners to welcome Chinese investment.

“It’s too easy if you are opposed to a Chinese acquisition to point out the things that have happened here in China,” he said.

The “callousness” with which Beijing has blocked some inward investments raises questions about its seriousness toward cross-border investments both ways, Mr. Rosen and Mr. Hanemann said. Yet the implications of the Rio case are not clear-cut.

The charges laid at Rio’s door reflected China’s immaturity on matters of commercial regulation, Mr. Rosen wrote in his message. “On the one hand, that immaturity is an impediment to cross-border investment flows both ways. But on the other, and somewhat counterintuitively, it is one of the reasons China is so attractive as an investor and as a place to invest.”

China Says Its Forces Killed 12 During Xinjiang Mayhem

BEIJING — Twelve of the nearly 200 people killed July 5 during an ethnic riot in the city of Urumqi on July 5 were shot by Chinese security forces, the state news agency reported over the weekend. It was China’s first official accounting of the number of people killed by the police and paramilitary troops during the chaos in Urumqi, capital of the restive Xinjiang region.

Nur Bekri, the governor of Xinjiang, said policemen “resolutely shot 12 mobsters after firing guns into the air had no effects on these extremely vicious thugs,” Xinhua, the state news agency, reported Sunday. Mr. Bekri did not reveal the ethnicity of the shooting victims.

Chinese officials rarely give an accounting of people killed or injured by security forces during incidents deemed politically sensitive.

In the last two weeks, talk has spread quickly among ethnic Uighurs in Urumqi that Chinese security forces killed many Uighurs during the rioting, fueling anger toward the government.

Furthermore, many residents of Urumqi are denouncing the police and the local government for failing to halt the violence even though government officials say they knew beforehand that a protest was going to take place on July 5.

At least 197 people were killed and 1,721 injured during several hours of ethnic bloodletting in Urumqi, officials say. The vast majority of the victims were ethnic Han civilians who were pummeled or stabbed to death by young Uighurs, they say. In many cases, the heads of the Han victims were bashed in with sticks and stones.

The Han are the dominant ethnic group in China, but the Uighurs, a Turkic-speaking people who are mostly Sunni Muslim, are the largest ethnic group in Xinjiang. Many Uighurs say they face intense discrimination throughout Xinjiang.

Uighurs in Urumqi say the government has underestimated the number of Uighurs killed by security forces, and they assert that many Uighurs were killed by roving bands of Han vigilantes in the days that followed the July 5 rioting.

The government has given no estimate for the number of people killed or wounded in the revenge attacks. Hospital officials in Urumqi generally declined to allow foreign reporters to interview injured Uighurs, but allowed them to interview injured Han.

The Chinese government insists the attacks were organized and point to Rebiya Kadeer, an exiled Uighur businesswoman living in the Washington area, as the orchestrator. The government announced Sunday through a Xinhua report that violence had afflicted 50 locations around Urumqi by 9 p.m. on July 5. The government also said that the rioters appeared to have prepared caches of simple weapons in advance, and that women in black robes and headscarves issued “commands” to followers.

Though surveillance cameras are used to monitor the major avenues and plazas in Urumqi, the government has not released any tape from those cameras to show what actually happened on July 5.

An American teacher living in the Uighur quarter, Adam Grode, said in an interview that much of the violence he witnessed appeared to be spontaneous. He said clashes began after 7 p.m. when rock-throwing Uighur men and paramilitary troops with batons attacked each other as the troops were trying to contain a protest.

“It didn’t seem like there was anything organized about it,” Mr. Grode said of the violence.

Government officials also say that the police knew as early as 1 a.m. on July 5 that Uighurs were going to hold a protest in the city center. But angry Han residents say that there were few police officers in the heart of the Uighur bazaar during the rioting, and that police officers did not show up in many of the worst-hit neighborhoods until five hours after the killings began. By then, it was far too late to stop the murders.

遭鎮壓10週年 全球法輪功舉行紀念活動

7/20日是法輪功在大陸遭取締10週年的日子，世界一些地方的法輪功人士紛紛舉行紀念活動。

有評論人士指出，當年中共領導人江澤民作出鎮壓法輪功的決定不僅沒能使中國社會更加穩定，反而造就了一個人數眾多的反對群體。

美國之音今天報導，在美國的法輪功人士一個星期以來先後在華府、舊金山等地舉行遊行、燭光守夜以及集體練功等活動，並呼籲制止中國當局迫害練功者的行動。與此同時，在德國柏林、比利時布魯塞爾、澳洲雪梨，以及台灣等一些地方，也有一些類似活動。

10年前的7月20號，中國政府發出了關於取締法輪大法研究會的決定，認定法輪大法研究會及其操縱的法輪功組織為非法組織，決定予以取締。同時，中國公安 部發出禁止法輪功非法活動的通告，明確提出6條禁令。通告指出：「違反上述規定，構成犯罪的，依法追究刑事責任；尚不構成犯罪的，依法給予治安管理處罰。

」

同年7月29日，被中國官方指稱具有險惡政治用心的法輪功創始人李洪志因涉嫌擾亂公共秩序罪，經北京市人民檢察院批准逮捕。中國公安部門於是對在美國居住的李洪志發出通緝令。

此後，中國大陸各地對法輪功人士展開大規模取締和限令放棄練功的行動，當局指稱法輪功是違反科學、散佈迷信邪說的邪教。在中國大陸不少民眾當中，在法輪功 問題上也存在一些爭議。在海外堅持修煉的法輪功人士則不斷控訴中國當局有組織地迫害、折磨堅持練功者，並且常年在一些西方國家的中國使領館外面靜坐抗議。

香港開放雜誌總編輯金鐘對美國之音表示，中共當年在江澤民主持下作出的鎮壓決定沒有法律依據。

他說，「江澤民個人的判斷，個人的意志而事後用法律加以追認，強姦了法律的獨立性。是這樣一個情況造成了對法輪功的鎮壓。所以我認為，從本質上面講，我們可以說，對法輪功的鎮壓是非法的，也是沒有依據的。」

金鐘指出，法輪功不過是當時在中國大陸非常流行的氣功熱中的一種練功方法，包括一些中共高級幹部和離退休人員在內的許多中國人都熱衷於修煉這個功法。

他同時指出，當時某些法輪功人或許有些過於偏激的行為促使當局下令鎮壓。

他說，「說不同意他們的人，(法輪功成員)有時候要強行跟人家辯論，這樣一種態度。而且那一年他們包圍了中南海請願。對江澤民他們為首的中共領導集團的震 動很大。他們認為，這還得了，神不知鬼不覺地就把中南海給圍起來 (笑)。實際上，這種包圍他們只不過是一個圈，並不是真正的他們有什麼多大的實力、力量，更沒有進行暴力行為。這是民眾的是一種請願嘛。」

金鐘表示，以江澤民為首的中共統治者感到法輪功對中共專制政權構成威脅，於是採取取締法輪功的措施。他說，但是事實證明這個決策的實施反而給要確保政權穩固、營造社會和諧的政黨造就了一個人數眾多的反對力量。

公告休館一天 中正紀念堂重新掛匾

「中正紀念堂」昨天晚間公告休館一天，即將在今天早上重新掛匾，昨天晚間記者目睹大批員警已經進駐自由廣場，並且將大型機具運進園區，大忠門、杭州南路等處並有警車及拒馬出現。。

早先，國立中正紀念堂管理處19日晚間在自由廣場牌樓下張貼公告，從7/19日11時至今晚11時休館及全園區管制，對於外傳館方要將「中正紀念堂」的牌匾掛回，教育部迄今仍未證實。

中正紀念堂管理處晚間張貼公告，內容為「本處因公務需要，訂於98年7月19日晚間11:00起至7月20日晚間11:00止，休館及全園區管制，期間造成不便，敬請見諒。當時即外傳是教育部要將「中正紀念堂」牌匾掛回的前置作業，但未經教育部證實。

隨著馬政府上任，陳水扁時代的「民主紀念館」匾額也即將卸下，中正紀念堂就要再現，警方在提前進駐自由廣場，此舉深夜引發民進黨台北市議員到現場批評，並且與警方發生口角、拉扯衝突。

中正紀念堂牌匾在陳水扁政府時代、96年底更換為「台灣民主紀念館」，引起喧然大波，當時中央政府與台北市政府還因此對槓；政黨輪替以後，馬政府即明確表示，中正紀念堂名稱是法律規定，依法預定7月前掛回中正紀念堂牌匾。

立法院本屆第二會期三讀通過中央政府總預算時，也通過主決議「教育部應盡速拆除『台灣民主紀念館』牌匾，並將原先被拆除存放的『中正紀念堂』牌匾掛回原位」。

中正紀念堂管理處也在今年6月底時表示，已依法辦理工程招標，預計7月底前掛回中正紀念堂牌匾。同時，為了促進觀光效益，中正紀念堂今年1月24日起恢復禮兵交接。

冰島宣佈重組三家被紓困銀行資本結構

（中央社雷克雅維克20日法新電）冰島今天宣佈一項規模達15億歐元的計畫，以重整去年金融危機重創冰島經濟時政府被迫提供紓困的三家主要銀行的資本結構。

冰島政府將對這三家新銀行發行公債。這三家是冰島經濟支柱的最大幾家商業銀行因全球信用停滯而在去年10月被國有化後所新生的銀行。

財政部的聲明指出，政府目前準備對先前稱為格裡特利爾銀行 (Glitnir)的Islandsbanki、新Kaupthing銀行和新Landsbanki銀行進行資本調整。

依據這項計畫，政府將提供其在Islandsbanki和新Kaupthing銀行的控股權給舊銀行的股東，政府只保留部份持股。而Landsbanki銀行也準備有這種發債計畫，不過還在討論中。

財政部表示，這項發行計畫總額將達2700億克朗(15億歐元，或21.2億美元)。

冰島財政部長西格夫松（Steingrimur Sigfusson)在聲明中表示，「我們今天宣佈的協議是重建健全銀行體系的重要一步。」

他說，「今天的宣佈不僅提供未來進程的堅實基礎，也有利於這三家新銀行的客戶以及冰島的整體經濟。

」

聲明指出，這項股權銷售預定在8月14日進行，將視主管當局的核准而定。（譯者︰中央社顧恆湛）

新加坡：未來兩季就業市場仍不明朗

（中央社記者康世人新加坡20日專電）新加坡人力部長顏金勇今天在國會答詢時表示，儘管一些本地企業開始增聘員工，但未來兩季的就業市場仍不明朗，現在就對就業市場感到樂觀，仍言之過早。

顏金勇說，由於大部分企業要增聘人手與否，有賴接獲訂單狀況而定，但大部分企業反映說，他們仍無法預測第三季以後的訂單數量。

根據新加坡人力部先前公佈的今年第一季失業率，包含外國人在內的整體失業率為3.3%；不包括外國人的新加坡公民和永久居民失業率則達到4.8%，為4年來最高點。

因此，顏金勇認為，目前最重要的還是繼續協助員工找工作，及進行技能培訓。因為員工提升技能後，將增加他們的受雇能力，當就業機會增加後，他們就會作好準備，接受新的工作。

顏金勇指出，目前人力部的數據庫中，約有2萬8000名求職者，而市場也有約2萬5000個職位空缺。

井字遊戲變彩券 台彩：年創造25億元業績

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(中央社記者田裕斌台北20日電)台灣彩券今天推出新款電腦型彩券「樂線九宮格」，總經理黃志宜表示，與目前彩券主要購買族群30至59歲相比，「樂線九宮格」訴求18至39歲客層，每年可創造新業績動能。

台彩估計，「樂線九宮格」每年可有新台幣25億元業績。目前今彩539每月業績約90億元，賓果賓果每月業績約有百億元水準。

黃志宜分析，「樂線九宮格」是新遊戲，且頭獎獎金150萬元比今彩539的800萬元低，吸引高獎金的誘因相對不足，但玩法簡單、中獎容易，預估仍能吸引相當客群的青睞。

台彩表示，「樂線九宮格」選號範圍自1至36號，由小到大依序以4個號碼為1區，形成3X3的九宮格，投注時必須從九宮格的9區中個別選出1個號碼，每期開獎時皆會開出1組九宮格獎號，只要彩迷對中的號碼連成1條以上直線、橫線或對角線，就會有固定賠率的獎金。

據台彩推估，「樂線九宮格」頭獎中獎率約26萬分之1，至少中1條線的機率為1/9，如果把中央第5區的4個號碼包牌，頭獎中獎率則提高至6.5萬分之1，至少中1條線的機率也攀至1/4。

香港迪士尼樂園擴建案塵埃落定

（中央社台北20日電）香港迪士尼樂園擴建計畫終於塵埃落定，迪士尼公司將斥資64億港幣 (約新台幣272億元)增設3個新園區，包括全球獨有的「野礦山谷」和「迷離莊園」，預計2014年完工。

擴建後的香港迪士尼樂園面積將增加1/4，主題園區由4個增加到7個。中國「中央人民廣播電台」網站介紹，新增的3個園區各有特色，「野礦山谷」將設計成荒廢的淘金小鎮，以機動遊戲為主；「迷離莊園」以熱帶雨林區的大宅為背景。

在經費籌集方面，迪士尼公司以股本形式投入約35億港元，支付修建費用及施工期間樂園營運需要，同時還會把它借給主題樂園合營公司的大約27.6億港元貸款轉作股份，香港特區政府不會為擴建計畫投入資本。

但是為了降低合營公司負債，特區政府把之前借給迪士尼樂園大部分貸款轉為股權，仍然保留最少10億港元作為貸款，港府仍繼續保留大股東地位。

1998年香港受亞洲金融風暴衝擊後，特區政府為了刺激經濟復甦，第2年同意迪士尼公司在港興建樂園，迪士尼樂園隨即在2005年開幕，但經濟效益不如預期，於是有擴建計畫。

1 DAY BEFORE 911 WTC attack! DO u know what happened?WATCH!

Check this link from You Tube .......... http://bit.ly/1aDGhL

新加坡‧主控官：澳銀行月結單2筆進賬‧用仁慈款項投資還貸

（新加坡）拿仁慈醫院的錢投資印刷公司當董事，從福海禪寺匯款到澳洲支付買閣樓的分期貸款；主控官今日（週一，7月20日）早上直指明義法師，在庭上發誓後卻撒謊！

明義法師失信案週一早上在初庭續審，嘉斯萬星副檢察司週一在庭上指出，明義法師在1997年間曾向仁慈貸款20多萬元（約馬幣50多萬令吉）買下一家印刷公司的股票，並且擔任公司董事。

銀行注明來自福海禪寺

控方週一早上針對明義在澳洲曾2度置業展開盤問，明義法師聲稱他從沒動用福海禪寺替他償還澳洲置業的分期貸款。但控方且提呈他與楊志恆聯名的澳洲銀行的月結單，顯示在2004年8月份別有2筆分別是6730元及8萬733元的進賬。

針對控方的指責，明義法師表示忘了這筆6730元的用途，然而，銀行卻明白注明那8萬多元是來自福海禪寺。對此，明義又辯解說，那是他向福海禪寺取得的貸款，是用來償還買屋分期貸款的。

而明義在回答副檢察司的盤問時也承認，他事後並沒有把那家印刷公司發的股息全部還給仁慈，而是作了其他的捐獻，並聲稱那家印刷公司的主席不是他的朋友而是信徒。

買馬想當寵物又賣掉

明義表示，他當初是因為向往澳洲的平靜生活，才在柏斯買地蓋房（與仁慈前財政魏明成聯名），不過後來發現情況並不理想，就賣掉了。

而在那個時候買的馬，不是想買來騎，而是想買來當寵物的。可是，當他發現那是一匹表演跳躍的馬後，又賣了它。

提到在墨爾本買的獨立洋房，明義聲稱那是馬來西亞的一名老師父替他支付首期及部份分期貸款，以他的名義買下的；因為需要澳洲人當買主，他才和楊志恆聯名。

後來，他賣掉洋房再與楊志恆聯名另買附近的閣樓（前此，他透露是近150萬元澳幣）。

隨後，明義在回答他雇傭楊志恆的過程時，更是閃爍其辭，因此，副檢察司指責他在庭上發誓講真話卻撒了謊。

控方指宣誓後撒謊
明義當庭道歉

控方指明義法師宣誓要講真話卻在庭上撒謊，明義法師當庭道歉。

主控官嘉斯萬針對仁慈替楊志恆申請工作準證的課題盤問明義時指出，明義抗辯時聲稱他在人力部一名職員建議下，聘用楊志恆做私人助理。

赴人力部前已聘楊志恆

但控方出示證據指出，其實楊志恆早在明義法師去人力部提出上訴前的2001年6月在仁慈工作。

文件顯示，楊志恆在2001年5月12日簽署受聘書，於2001年6月1日正式工作。

文件證明明義法師是在2001年7月4日去見人力部有關職員。

主控官問︰“法師，你為何在抗辯時說假話？你說接受人力部職員建議才聘楊志恆的。”

明義答︰“我記不起了。我當時以為是見了人力部職員後才聘楊志恆的。

主控官炮轟說︰你在宣誓下在庭上撒謊。

“對不起。”明義回答。

“現在有文件證明你是在去人力部之前就請楊志恆擔任助理。”

為楊申請準證
用盡方法

“是的。對不起，我當時是記不起來。”明義答。

主控官指明義堅持要聘用楊志恆做助理，為替他申請工作準證，用盡方法，包括親自到人力部提上訴，並在上訴失敗後，前後找符喜泉和楊木光2位議員幫忙寫信。

明義承認為了楊志恆的工作準證，找過這2名議員幫忙寫上訴信。

楊志恆的工作準證最後在2004年批准。

Experts: Depleted Uranium Creates Problems for Years After Initial Impact

London, July 18, (Pal Telegraph) - We have seen many threats and accusations made against Iran and its Nuclear Research Programme with condemnations coming from the US, UK, NATO countries and the "Big Boys Club" known as the UN Security Council. Repeated warnings and many dress rehearsals for such an attack have been carried out by Israel. This cat-and-mouse game has gone on for many years but have Israel and their allies ever looked at the consequences of this ill-conceived plan?

We should look at some of the work that has been carried out by two British experts, Dr Chris Busby and Dai Williams. These two extremely dedicated men have worked tirelessly on the continued military use of Depleted Uranium (DU) weapons. These weapons are manufactured in the US and used by US, UK, NATO forces and by many other countries. It is also believed that such weapons can or have been manufactured in Israel, Pakistan and any other country that has a nuclear capability.
These two determined gentleman have very convincing evidence that not only have DU weapons been used but also a strong possibility of other uranium based weapons which could be linked to the so called "Dirty Bomb". Such evil weapons have been used in the Balkans, Kuwait, Iraq, Afghanistan, Lebanon and Gaza with possible further use in Pakistan.



DU weapons leave a trail of misery and suffering to thousands upon thousands of soldiers and innocent civilians caught up in its indiscriminate use in all the many areas of conflict. The Gulf War Syndrome is directly linked to such weapons as is the dramatic rise in all types of cancers, diabetes, still births and badly disfigured babies. Uranium based weapons have the ability to change the cell structure and DNA in all humans that come into contact with it by either inhalation or ingestion. It has the ability to contaminate the local area, region, adjacent countries and the world once it becomes an aerosol and enter the upper atmosphere.

Dai Williams and Dr Chris Busby have written with great authority on this subject and have written to the then-British Prime Minster Tony Blair highlighting the many issues relating to the manufacturing and use of DU weapons. He also decided to look into what would happen if Israeli or any of its allies carried out such an attack on Iran's nuclear facility at Natanz.

He said,"If the current conflict escalates further I anticipate that Israeli and/or American forces will find an excuse to bomb nuclear facilities in Iran in the near future" "Whether Israeli or US forces use conventional (uranium cased) bunker busters or mini-nuclear warheads the effect of igniting uranium metal stockpiles in Iran (e.g. at Natanz) will spread radioactive contamination across the whole region within 2-3 days and around the world in 3-4 weeks."

The above simulation is within 48 hours of such an attack and one can clearly see that beyond this time the entire region will be contaminated. Could one even imagine that Israel would be prepared to do this and at the same time contaminate its own country?
Dai Williams in his communication to Tony Blair summarised the following:
Possibly your last chance to prevent widespread radiation contamination in
the Middle East and Asia.

"I have tried to restrain my frustration at your support for US policies in Iraq and your apparent
apathy over Palestine for the last 3 years," he wrote. "But I can no longer stay silent.
However I also realise that you probably were not shown my previous correspondence
and that you may still be unaware of the known development and suspected
widespread use of large uranium weapons by US forces in the Balkans,
Afghanistan and Iraq."

He continued:

"UK media coverage of these hazards has been very rare since 2000 when NATO was first
confronted about mysterious deaths of Spanish and Italian troops soon after service near
US bomb targets in the Balkans. An exception was the Sunday Times report of Uranium
contamination in the UK during March/April 2003 (19 Feb 2006 available at
http://www.timesonline.co.uk/article/0,,2087-2047373,00.html ) Now that Israeli forces are using the same guided weapons in Lebanon the public is seeing their horrific effects on civilians for the first time. In Afghanistan and Iraq there was little coverage of civilian casualties from the new generation of US guided weapons".

He concluded:

"Despite the impending summer recess you have one last chance to warn the Israeli and US
Governments that further aggression and use of uranium warhead guided weapons will no
longer be tolerated by the UK Government. These systems are increasing global radiation
Levels from their own contamination. This will be several times worse if they are used on
nuclear installations. So it is strategically and environmentally essential that you oppose
any military strikes on nuclear facilities in Iran."

I have decided to republish Dai Williams information for many good reasons.

1. That Gaza has now become a victim of Israel and is being used as an experimental testing ground for US and Israeli weapons that one can only imagine goes well beyond conventional weapons.
2. That the UN War Crimes team currently carrying out investigations in Gaza must understand that they should not be restricted by time constraints.
3. That they must carry out investigations across a broad range of issues from War Crimes to the many illegal weapons used in such a disproportionate way.
Finally to all the members of the Arab League I urge you to support the people of Palestine and to denounce any such actions being taken by Israel or its allies. As you will all see from the evidence above the entire Middle East would become a victim of such and attack. It is your duty of care towards all your people to insist that this illogical thinking is stopped.

Peter Eyre, Middle East Consultant and PT Special Contributor

Commerce Secretary: Americans ‘Need to Pay’ for Chinese Emissions

With the U.S. secretaries of energy and commerce in China this week, much of the attention focused on the standoff over emissions reductions or small breakthroughs in clean-tech cooperation.

But yesterday, Commerce Secretary Gary Locke said something amazing—U.S. consumers should pay for part of Chinese greenhouse-gas emissions. From Reuters:

“It’s important that those who consume the products being made all around the world to the benefit of America — and it’s our own consumption activity that’s causing the emission of greenhouse gases, then quite frankly Americans need to pay for that,” Commerce Secretary Gary Locke told the American Chamber of Commerce in Shanghai.

The idea that rich-country consumers should pick up the tab for some of China’s industrial emissions has been gaining currency lately—but not from within the Obama administration. The argument is that many of China’s factories churn out cheap stuff for the West, not for domestic consumption, so those consumers are actually responsible for the emissions. China, of course, loves the idea.

This could just be another area for trade tensions with China over the environment. The House climate bill includes a provision for mandatory “carbon tariffs” on dirty imports from countries such as China, which might be illegal under international trade law and which have riled up Beijing. President Obama and Senate leaders have frowned on hardline trade measures.

But Secretary Locke’s statement could open up a new can of worms—right when China’s actions on energy and the environment are proving so crucial to mustering support among wavering senators for the administration’s big cap-and-trade bill.

UPDATE: The Commerce Department sent this clarification late Friday:

“Secretary Locke has been very clear on emphasizing the importance of fair trade as a part of the United States’ relationship with China. He believes U.S. companies should not be disadvantaged by Chinese imports not bound by responsible policies to reduce carbon emissions. China and the US must work together to ensure a level playing field and reduce our carbon footprints. The Secretary’s trip to China demonstrated his commitment to fair trade and his belief that both the United States and China can benefit from shared investments and cooperation in clean energy that will lead to commercial and environmental benefits for both countries.”

By Keith Johnson

Many Predict US Financial Collapse in September

Let us contemplate the day in the near future when the consequences of financial chicanery finally outpace the ability of the governments, central banks and big media to cover up and obfuscate the truth. Many respected voices have now gone on record that September 30 or thereabouts will be that day.

Bob Chapman [Internationalforecaster.com] revealed that the US State Dept has advised embassies worldwide to stock up on a year's worth of the local currency in anticipation of collapse of the US dollar. Look for a temporary banking shutdown timed for around September 2009. As under Roosevelt, some banks won't reopen. 96% of bank reserves are currently held with the Federal Reserve who tells the banks not to loan the money, but rather to save it for further banking acquisition and consolidation. Chapman foresees a bank holiday lasting 4-5 days. Chapman thinks this first bank holiday presages a much more significant bank holiday months to years later which will involve simultaneous devaluations of multiple currencies as well as other significant changes in the banking system.

Harry Shultz [as quoted in marketwatch.com] says "Some U.S. embassies worldwide are being advised to purchase massive amounts of local currencies; enough to last them a year. Some embassies are being sent enormous amounts of U.S. cash to purchase currencies from those governments, quietly. But not pound sterling. Inside the State Dept., there is a sense of sadness and foreboding that 'something' is about to happen ... within 180 days, but could be 120-150 days."

Benjamin Fulford [http://benjaminfulford.typepad.com/benjaminfulford/] states that for almost a century the US Treasury Dept has been issuing specialized debt instruments to countries with which the US has had a trade surplus. These complex debt instruments are tailored by complex treaties. Unfortunately, the recent US Treasury funding needs exceed the willingness of these creditor nations to extend additional credit. Fulford writes, "The problem is that after nearly a century of issuing these debt instruments, the chickens are coming home to roost. President Obama tried at the recent G8 plus 5 meeting in Italy to borrow more money than George Bush junior did in 8 years. He was told a resounding no. The result should be total economic chaos in the U.S. by September 30^th . "

Jim Willie [goldenjackass.com] writes of an Asian led initiative ending dollar hegemony beginning this weekend. Willie suspects that the Fed/Treasury is covertly loaning foreign central banks the money with which the central banks are now using to buy US debt. Increasingly, US debt is being bought by foreign central banks taking up the slack of investors abandoning US Treasury debt. Willie confirms Chapman's comments and says he solicited and received "multiple confirmations." He adds, "CHAOS WILL PREVAIL WITHIN SEVERAL MONTHS, PERHAPS A YEAR AT MOST{his emphasis}."

Jim Sinclair [jsmineset.com] has recently visited China meeting with its leaders. He states that China is increasingly more willing to take on the United States in its apparent maneuvers to inflate its way out of its debt crisis. In early July Sinclair started a 120 day countdown till breakdown of the US dollar ends market manipulation and all those sour economic chickens come home to roost.

OUT OF TRICKS

Seemingly the Federal Reserve/US Treasury have exhausted their bag of tricks. The Fed is fighting rising interest rates, a difficult task given the hyperinflationary debt financing it is now doing. Once rising pressure on interest rates become too much for the Fed to control, there will probably be several sudden economic and financial surprises cascading with currently known dilemmas: crashing dollar; increasing home mortgage defaults; commercial mortgage defaults reaching critical mass; falling bond and stock markets extending insolvency of pension funds; defaults on debt by state and local governments. And don't forget derivatives and further exposure of corruption and criminality on Wall Street. Bernie Madoff may soon have lots of company.

Unable to produce any more financial wizardry, the cynical federal government is arrayed in full battle dress uniform: 1] Mass forced swine flu vaccinations scheduled this fall performed under the specter of martial law; 2] Rumblings of extending the wars in Asia into Iran and Pakistan; 3] Rekindling the Korean conflict may also be in the cards. Of course, don't forget that both Iran and North Korea are client states of the British World Order. All the recent saber rattling involving Iran and North Korea is wholly orchestrated. We need the distractions from the economic crisis, so our clients Ahmadinejad and Kim provide us with the necessary theater. So what will come first, further banner headlines of dollar collapse and market crashes or the distracting theater of more war or 911 type events?

What will this fall really bring? It is not too far away so we shall soon know. Unfortunately, it may make last fall look pretty tame. When the government answers economic distress by preparing for the worst, then the worst may very well be what happens.

by Charles (A Reader)

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Dismantling the Temple

The financial crisis has propelled the Federal Reserve into an excruciating political dilemma. The Fed is at the zenith of its influence, using its extraordinary powers to rescue the economy. Yet the extreme irregularity of its behavior is producing a legitimacy crisis for the central bank. The remote technocrats at the Fed who decide money and credit policy for the nation are deliberately opaque and little understood by most Americans. For the first time in generations, they are now threatened with popular rebellion.

During the past year, the Fed has flooded the streets with money--distributing trillions of dollars to banks, financial markets and commercial interests--in an attempt to revive the credit system and get the economy growing again. As a result, the awesome authority of this cloistered institution is visible to many ordinary Americans for the first time. People and politicians are shocked and confused, and also angered, by what they see. They are beginning to ask some hard questions for which Federal Reserve governors do not have satisfactory answers.

Where did the central bank get all the money it is handing out? Basically, the Fed printed it, out of thin air. That is what central banks do. Who told the Fed governors they could do this? Nobody, really--not Congress or the president. The Federal Reserve Board, alone among government agencies, does not submit its budgets to Congress for authorization and appropriation. It raises its own money, sets its own priorities.

Representative Wright Patman, the Texas populist who was a scourge of central bankers, once described the Federal Reserve as "a pretty queer duck." Congress created the Fed in 1913 with the presumption that it would be "independent" from the rest of government, aloof from regular politics and deliberately shielded from the hot breath of voters or the grasping appetites of private interests--with one powerful exception: the bankers.

The Fed was designed as a unique hybrid in which government would share its powers with the private banking industry. Bankers collaborate closely on Fed policy. Banks are the "shareholders" who ostensibly own the twelve regional Federal Reserve banks. Bankers sit on the boards of directors, proposing interest-rate changes for Fed governors in Washington to decide. Bankers also have a special advisory council that meets privately with governors to critique monetary policy and management of the economy. Sometimes, the Fed pretends to be a private organization. Other times, it admits to being part of the government.

The antiquated quality of this institution is reflected in the map of the Fed's twelve regional banks. Five of them are located in the Midwest (better known today as the industrial Rust Belt). Missouri has two Federal Reserve banks (St. Louis and Kansas City), while the entire West Coast has only one (located in San Francisco, not Los Angeles or Seattle). Virginia has one; Florida does not. Among its functions, the Federal Reserve directly regulates the largest banks, but it also looks out for their well-being--providing regular liquidity loans for those caught short and bailing out endangered banks it deems "too big to fail." Critics look askance at these peculiar arrangements and see "conspiracy." But it's not really secret. This duck was created by an act of Congress. The Fed's favoritism toward bankers is embedded in its DNA.

This awkward reality explains the dilemma facing the Fed. It cannot stand too much visibility, nor can it easily explain or justify its peculiar status. The Federal Reserve is the black hole of our democracy--the crucial contradiction that keeps the people and their representatives from having any voice in these most important public policies. That's why the central bankers have always operated in secrecy, avoiding public controversy and inevitable accusations of special deal-making. The current crisis has blown the central bank's cover. Many in Congress are alarmed, demanding greater transparency. More than 250 House members are seeking an independent audit of Fed accounts. House Speaker Nancy Pelosi observed that the Fed seems to be poaching on Congressional functions--handing out public money without the bother of public decision-making.

"Many of us were...if not surprised, taken aback, when the Fed had $80 billion to invest in AIG just out of the blue," Pelosi said. "All of a sudden, we wake up one morning and AIG was receiving $80 billion from the Fed. So of course we're saying, Where is this money coming from? 'Oh, we have it. And not only that, we have more.'" So who needs Congress? Pelosi sounded guileless, but she knows very well where the Fed gets its money. She was slyly tweaking the central bankers on their vulnerability.

Fed chair Ben Bernanke responded with the usual aloofness. An audit, he insisted, would amount to "a takeover of monetary policy by the Congress." He did not appear to recognize how arrogant that sounded. Congress created the Fed, but it must not look too deeply into the Fed's private business. The mystique intimidates many politicians. The Fed's power depends crucially upon the people not knowing exactly what it does.

Basically, what the central bank is trying to do with its aggressive distribution of trillions is avoid repeating the great mistake the Fed made after the 1929 stock market crash. The central bankers responded hesitantly then and allowed the money supply to collapse, which led to the ultimate catastrophe of full-blown monetary deflation and created the Great Depression. Bernanke has not yet won this struggle against falling prices and production--deflationary symptoms remain visible around the world--but he has not lost either. He might get more public sympathy if Fed officials explained this dilemma in plain English. Instead, they are shielding people from understanding the full dimensions of our predicament.

President Obama inadvertently made the political problem worse for the Fed in June, when he proposed to make the central bank the supercop to guard against "systemic risk" and decide the terms for regulating the largest commercial banks and some heavyweight industrial corporations engaged in finance. The House Financial Services Committee intends to draft the legislation quickly, but many members want to learn more first. Obama's proposal gives the central bank even greater power, including broad power to pick winners and losers in the private economy and behind closed doors. Yet Obama did not propose any changes in the Fed's privileged status. Instead, he asked Fed governors to consider the matter. But perhaps it is the Federal Reserve that needs to be reformed.

Windfalls for Bankers, Resentments for the Rest

There was a time in this country when a company reporting a few billion in earnings could count its money while basking in polite, reverent applause.

That time ended Tuesday.

It was the morning that Goldman Sachs reported net income of $3.44 billion, a number that surprised even analysts who follow investment banking. JPMorgan Chase came two days later with news that it had earned $2.7 billion in the second quarter, even more than it earned in the same period last year, before the economy had a cardiac infarction.

Then on Friday, Citigroup and Bank of America — two of the great basket cases of the meltdown — reported outstanding numbers, too.

All of these companies were beneficiaries of gargantuan government bailouts, in assorted forms and varied sums, but if they assumed they’d hear bravos for prompt paybacks and quick turnarounds, they were in for a shock. At a time when so many people are struggling with foreclosures and are either unemployed or worried about losing a job, these earnings were bound to stir up some basic questions of fairness.

And along with those questions, a rebirth, perhaps, of a type of anger that hasn’t been widespread for a while: good old class resentment.

It’s making a comeback. As recently as April, President Obama could say at a news conference at a Group of 20 summit meeting, that Americans “don’t resent the rich; they want to be rich,” without raising eyebrows. Today, the first half of that comment is starting to sound like a stretch. And when it comes to people who earned their fortunes through the financial industry, it seems wrong.

Something closer to the current zeitgeist was captured last week by Bill O’Reilly, the Fox News commentator, who likened Goldman Sachs bankers to pigs during a scathing segment on his TV show. “You’ve got to make an example of the big boy,” he fumed in a rant about the company’s tax-avoidance methods, suggesting Goldman ought to be punished for failing to cough up its fair share of taxes. “And this is the big boy.”

Jon Stewart went the deadpan comedy route on his show this week: “Goldman Sachs makes $3.4 billion in profit from April to June. I guess the bailouts are working. For Goldman Sachs.”

Class resentment has waxed and waned in this country, but it is not typically a widespread, default emotion of the American middle class. This is at least in part because it’s an article of faith here that through some combination of hard work and luck, you might get rich, too. And why abuse, soak or heap scorn upon a group you at least have a theoretical chance of joining?

The recession — with its yawning gap between the bonus class on the one hand and the foreclosed upon and newly jobless on the other — is changing that. It’s not merely that Americans have, at least temporarily, abandoned the hope that they’ll earn scads of money. It’s the widespread sense that winners in this economy are produced by a game that’s rigged.

Which is why the response to last week’s earnings bonanza has been a mix of, among other things, bafflement and anger. If these companies can return to the festivities so quickly, were they really having the near-death experience they and the government claimed? And if taxpayers risked their money when they backstopped Wall Street’s misadventures, why aren’t they sharing in the upside now that the party has started again? And did these companies have the time to rethink the risk culture that landed us in this jam in the first place?

In private, Wall Street executives have questions of their own.

Like, wait a sec — isn’t returning to profitability exactly what you wanted us to do? And if the nation’s circulatory system of money is beginning to flow again, isn’t that good news? Oh and by the way, we are paying you back.

It’s telling that from politicians, there’s been mostly silence.

Neither Representative Barney Frank nor Senator Chris Dodd — respectively, the Democrats who lead the House and Senate committees that handle banks — issued press releases about those earnings last week, according members of their staffs. Neither returned a call for this article.

The Obama administration, meanwhile, sounded like it was searching for the seam between cautious optimism and cautious skepticism. Mr. Obama’s press secretary, Robert Gibbs, was quoted in Time magazine saying that “the president continues to have concerns that compensation will be based on risky behavior instead of performance.”

But class resentment can be a powerful tool in politics, and you don’t need to stoke it explicitly to enjoy its upsides. House Democrats have proposed a 5.4 percent surtax on those earning more than $1 million as a means of underwriting health care reform.

Whatever the wisdom of this idea, it is easier to imagine it catching on now that Goldman has posted its largest quarterly profit in 140 years — enough to set aside more than $11 billion for bonuses, with the year only half over.

Of course, taxing and tsk-tsking the rich might be gratifying, but like everything else in economics it is sure to have some unintended consequences. Already, conservative and libertarian scholars warn that if there’s enough blowback against bonuses, Wall Street will simply distribute windfalls in the form of salary — which might actually reduce incentives. Alternatively, the rich might just get better at shielding their wealth from the public.

And don’t expect the new class resentment to remain a Wall Street-only phenomenon for long. Last Monday, news broke that the “American Idol” host Ryan Seacrest would be paid $45 million to remain with the show for the next three years.

With other TV and radio gigs, as well as investments in restaurants and media companies, the guy is walking the one-man-conglomerate trail blazed by Dick Clark. While Mr. Clark never inspired much hostility, a palpable irritation greeted the “American Idol” announcement. (Mr. Seacrest was called the “Viscount of Vapidity” in the widely read Deadline Hollywood Daily blog.)

It’s true, Mr. Seacrest has never seemed as benign and lovable as Dick Clark. But there is also the question of timing. If you had to announce a multimillion-dollar raise, last week was the worst week ever.