Wednesday, September 9, 2009

Wall Street Meets Main Street at the Courthouse

With the gap between Wall Street and Main Street never wider, the American public is left wondering who truly is looking out for their interests. The Wall Street lobbying machine is working overtime to dilute real regulatory reform. The financial regulators themselves are increasingly exposed as overmatched and incompetent, if not worse. Where can the American public turn to get some relief? Slowly but surely the courts are taking action to address the gross injustices that the American public has had to bear at the behest of Wall Street and with the protection of Washington.

Make no mistake, the slope of the mountain of injustice is quite steep. Furthermore, we are just starting the trek. Little doubt there should be many stops along the way. You can rest assured that the Wall Street lawyers and financial lobbyists are working diligently to put out the smoldering ruins of fires and campsites which wreaked havoc upon our economic landscape. There appears, however, to be mounting evidence that the Wall Street fires were fed by Washington and financial regulators looking the other way.

Bloomberg highlights some initial progress made on behalf of the American public in the fight for truth, transparency and integrity on our financial and economic landscape. This morning Bloomberg writes, Judges Punish Wall Street as Regulators Just Talk About Reform:

As the White House and Congress debate how to regulate financial firms to avoid another economic crisis, judges have assumed the point position in punishing Wall Street for causing the worst recession since the 1930s.

The executive and legislative branches have been discussing reforms such as more regulation of hedge funds and transparency for derivatives as a response to the financial crisis that began a year ago. As that battle with a reluctant Wall Street inches forward about how to prevent another disaster, judges are taking the first steps toward the same goal, punishing executives and issuing rulings with national impact.

I can only hope the momentum in the courtroom accelerates given the slow and painstaking rope-a-dope game being played out between Wall Street and Washington. Wall Street clearly wants a ‘mulligan’ from the excessive improprieties that led to our current economic crisis. The courts are starting to get wise and adjudicating otherwise. Bloomberg highlights some recent rulings for the public and against the Wall Street-Washington cabal including:

» Last week, U.S. District Judge Shira Scheindlin threw out a key free-speech defense that credit raters had used for years to thwart investors’ fraud suits, knocking $1.5 billion off the market value of Moody’s Investors Service Inc.and the parent of Standard & Poor’s LLC.

» In sentencing imprisoned con man Bernard Madoff June 29 to the maximum penalty of 150 years in prison, U.S. District Judge Denny Chin described Madoff’s crimes as “extraordinarily evil.” He made the sentences of Madoff’s various offenses run consecutively, rather than the more common concurrent method.

» Frank DiPascali, Madoff’s chief financial officer, got harsh treatment too even though he was helping prosecutors incriminate Madoff’s other co-conspirators. After pleading guilty in August to helping his boss carry out a $65 billion Ponzi scheme, he was immediately sent to jail as a flight risk by U.S. District Judge Richard Sullivan. The judge ignored a request by prosecutors to grant DiPascali bail to make it easier for him to cooperate than if behind bars.

» Former Monster Worldwide Inc. Chief Operating Officer James Treacy, who had proposed no prison time for what his lawyer called a “technical” crime, was sentenced to two years in jail for improperly accounting for backdated stock options.

» After a jury found Eric Butler, a former Credit Suisse Group AG broker, guilty of securities fraud on Aug. 18, U.S. District Judge Jack Weinstein in Brooklyn told lawyers on both sides that, in their sentencing briefs, they should put Butler’s acts in the context of “how pernicious and pervasive was the culture of corruption” on Wall Street that “brought our financial system to its knees.” (emphasis added)

The pot that is the American public is boiling. The public is now getting wise that the improprieties and malfeasance not only occurred within financial firms but also within the regulatory structure as well. Bloomberg succinctly but appropriately writes:

Judges are also demanding more accountability from regulators and are urging rule changes to punish wrongdoers.

Will we get real accountability from the SEC? Do not bet on it. Why? The SEC receives immunity. Where and when may we begin to get accountability within our regulatory framework? When FINRA is compelled to open its books and records. In the process, we may learn if this Wall Street SRO neglected to fulfill its duty to protect investors given conflicts of interest and business relationships stemming from its internal investment portfolio.

The American public deserves nothing less.

By Larry Doyle

Selling Death: Wall Street’s Newest Bubble

When Wall Street’s commodities bubble crashed last year, I asked whether the next bubble might be in securitized body parts. Wall Street would search the world for transplantable organs, holding them in cold storage as collateral against securities sold to managed money such as pension funds. Of course, it was meant to be an apocryphal story about unregulated banksters gone wild. But as the NYT reports, Wall Street really is moving forward to market bets on death. The banksters would purchase life insurance policies, pool and tranch them, and sell securities that allow money managers to bet that the underlying “collateral” (human beings) will die an untimely death. You can’t make this stuff up.

This is just the latest Wall Street scheme to profit on death, of course. It has been marketing credit default swaps that allow one to bet on the death of firms, cities, and even nations. And the commodities futures speculation pushed by Goldman (NYSE:GS) caused starvation and death around the globe when the prices of agricultural products exploded (along with the price of gasoline) between 2004 and 2008. But now Goldman will directly cash-in on death.

Here is how it works. Goldman will package a bunch of life insurance policies of individuals with an alphabet soup of diseases: AIDS, leukemia, lung cancer, heart disease, breast cancer, diabetes, and Alzheimer’s. The idea is to diversify across diseases to protect “investors” from the horror that a cure might be found for one or more afflictions–prolonging life and reducing profits. These policies are the collateral behind securities graded by those same ratings agencies that thought subprime mortgages should be as safe as US Treasuries. Investors purchase the securities, paying fees to Wall Street originators. The underlying collateralized humans receive a single pay-out. Securities holders pay the life insurance premiums until the “collateral” dies, at which point they receive the death benefits. Naturally, managed money hopes death comes sooner rather than later.

Moral hazards abound. There is a fundamental reason why you are not permitted to take out fire insurance on your neighbor’s house: you would have a strong interest in seeing that house burn. If you held a life insurance policy on him, you probably would not warn him about the loose lug nuts on his Volvo. Heck, if you lost your job and you were sufficiently ethically challenged, you might even loosen them yourself.

Imagine the hit to portfolios of securitized death if universal health care were to make it through Congress. Or the efforts by Wall Street to keep new miracle drugs off the market if they were capable of extending life of human collateral. Who knows, perhaps the bankster’s next investment product will be gansters in the business of guaranteeing lifespans do not exceed actuarially-based estimates.

If you think all of this is far-fetched, you have not been paying attention. From Charles Keating’s admonition to his sales staff that the weak, meek and ignorant elderly widows always make good targets, to recent internal emails boasting about giving high risk ratings to toxic securities, we know that Wall Street’s contempt for the rest of us knows no bounds. Those hedge funds holding CDS “insurance” fought to force the US auto industry into bankruptcy for the simple reason that they would make more from its death than from its resurrection. And the reason that most troubled mortgages cannot obtain relief is because the firms that service the mortgages gain more from foreclosure. It is not a big step for Wall Street and global money managers with big gambling stakes at risk to slow efforts to improve health. Indeed, it is easy to see some very nice and profitable synergies developing between Wall Street sellers of death and health insurers opposed to universal, single-payer health care. As AFL-CIO Secretary Treasurer Trumka recently remarked on NPR, we already have committees deciding when to cut-off care—the private health insurers decide when to deny coverage. It would not be in the interest of securities holders or health insurers to provide expensive care that would prolong the life of human collateral—a natural synergy that someone will notice.

It should be amply evident that Wall Street intends to recreate the conditions that existed in 2005. Virtually every element that created the real estate, commodities, and CDS bubbles will be replicated in the securitization of life insurance policies. If Wall Street succeeds in this scheme, it will probably bankrupt the life insurance companies (premiums are set on the assumption that many policyholders will cancel long before death—but once securitized, the premiums will be paid so that benefits can be collected). But it is likely that the bubble will be popped long before that happens, at which point Wall Street will look for the next opportunity. Securitized pharmaceuticals? Body parts?

Here’s the problem. There is still—even after massive losses in this crisis—far too much managed money chasing far too few returns. And there are far too many “rocket scientists” looking for the next newest and bestest financial product. Each new product brings a rush of funds that narrows returns; this then spurs rising leverage ratios using borrowed funds to make up for low spreads by increasing volume; this causes risk to rise far too high to be covered by the returns. Eventually, lenders and managed money try to get out, but de-levering creates a liquidity crisis as asset prices plunge. Resulting losses are socialized as government bails-out the banksters. Repeat as often as necessary.

Reform of the US financial sector is neither possible nor would it ever be sufficient. As any student of horror films knows, you cannot reform vampires or zombies. They must be killed (stakes through the hearts of Wall Street’s vampires, bullets to the heads of zombie banks). In other words, the financial system must be downsized.

By L. Randall Wray

































Never Talk to the Police

I’ve run this very important talk before, but it is something we all need to know, understand, and internalize. (Thanks to Scott Fields)

The Alex Jones Show: Charlie Sheen Requests Meeting With Obama Over 9/11 Cover-Up

The Alex Jones Show: Charlie Sheen Requests Meeting With Obama Over 9/11
Actor demands investigation be reopened after majority of 9/11 Commission
members say government lied about official story.

AUSTIN, Texas, Sept. 8 /PRNewswire/ -- According to syndicated talk show host
Alex Jones, actor and television star Charlie Sheen has publicly requested a
meeting with President Barack Obama to urge him to reopen the official
investigation into 9/11; in light of the fact that the majority of the 9/11
Commission members have now publicly gone on record to express their
conviction that the government agreed to lie about the official story.

Sheen will appear live on The Alex Jones Show on Wednesday and Friday to
discuss the content of his "20 Minutes With The President" piece and how he
plans to move forward with this exciting new initiative. You can listen free
here or subscribe to prison to watch live streaming video.

Sheen's request takes the form of a letter to the President in the context of
a fictional meeting between the two entitled "20 Minutes With The President,"
published exclusively on radio talk show host Alex Jones' and
Prison websites. Clip: .

The letter cites evidence, backed up by a substantial online bibliography,
that alleges to prove the official story behind 9/11 is a fraud and that this
conclusion was also reached by the majority of the 9/11 Commission members, a
fact that mandates President Obama to reopen the investigation into the
terrorist attacks.

Sheen expresses his hope that President Obama will follow through on his
promises of change, accountability and government transparency by using his
executive powers to re-examine 9/11, adding that he voted for Obama with the
understanding that he would follow a different course to the Bush

However, as Sheen highlights in his letter, the course of Obama's first year
in office clearly indicates that he will do nothing to reverse policies
crafted by the Bush regime, and in fact has sought to exceed outrages of the
previous administration in areas such as warrantless wiretapping, rendition,
detention without trial, and wars in the Middle East - all of which arrived as
a consequence of 9/11.

Sheen's letter is a public declaration demanding the truth behind 9/11 as
America approaches its eighth anniversary since the tragic events of that day.
His questions are shared by a majority of victims' family members, according
to Bill Doyle, the representative of the largest 9/11 families group.

The letter focuses around the fact that no less than 60 per cent of the 9/11
commissioners have now publicly stated that the government agreed not to tell
the truth about 9/11 and that the Pentagon was engaged in deliberate deception
about their response to the attack.

Sheen also presents a plethora of other evidence to illustrate how the
official story is a fraud, including the revelations of whistle blowers like
FBI translator Sibel Edmonds, who recently broke a Federal gag order to expose
how Bin Laden and Al-Qaeda were working for the U.S. government right up until
the day of 9/11.

The issues highlighted by Sheen do not represent idle speculation or
conspiracy fodder, they are documented facts that have been deliberately
ignored by other 9/11 programming that is now airing as the anniversary
approaches, particularly last months' 9/11: Science and Conspiracy which was
aired by the National Geographic Channel and wasted little time in portraying
people who have doubts about the official 9/11 story as extremist cranks,
while failing to acknowledge that the majority of the members of the 9/11
Commission have publicly expressed similar concerns.

Charlie Sheen is once again using his prominent public platform in an attempt
to expand a national debate about the disturbing unanswered questions behind
9/11, having first spoken out on the issue in March 2006 on The Alex Jones
Show. After he first went public, Sheen was asked to do more and now he is
doing more as he feels there is a chance to get more traction behind a new
investigation with a new President in the White House.

Sheen is directly appealing to Barack Obama to read his letter and to look
into the lies surrounding 9/11 for himself.

Regardless of whether or not President Obama agrees to meet with him, Sheen is
confident that his letter will serve as a catalyst from which questions
surrounding 9/11 and other false flag events will be brought to national

This is a call to action and a declaration of war on the alleged lies of 9/11
that have formed the foundation of the endless wars abroad and the police
state at home as the Republic falls. Sheen is demanding that truth activists
and those who simply care about the future of the country stand up beside him
and speak truth to power.

Sheen is now urging grass roots political organizations and individuals across
the country to go to press conferences and other public events and demand
answers about the truth behind 9/11. As much awareness as possible around the
issue of false flag terrorism needs to be generated in order to prevent
tragedies like 9/11 from happening again. Sheen emphasizes in his letter that
we cannot let 9/11 become ancient history, try and forget about it or just
move on, because if a nation forgets its history then it is doomed to repeat

We cannot allow governments to continue to advance their political agendas by
exploiting forged pretexts, argues Sheen, and the fact that big budget hit
pieces against 9/11 truth are still being rolled out proves that the
establishment is upset that the population is waking up to false flag terror.

No matter what your views are on 9/11, Sheen is asking the thinking public to
look at how many members of the 9/11 Commission itself have questioned the
official story, along with the scores of other highly credible former and
current government officials, intelligence professionals, military officials,
scientists, structural engineers and architects, and legal scholars who have
all publicly denounced the fraud that continues to masquerade as the official
9/11 story.

For media requests on this subject email

The Alex Jones Show broadcasts live from Austin, TX from 11am - 3pm Central.
Alex Jones' show and websites and are a
focal point and a forum where many prominent figures from academia, the
political world and Hollywood have spoken out about what really happened on
September 11th.

More information:


*(Caption: Charlie Sheen. Credit: Alex Jones.)

This release was issued on behalf of the above organization by Send2Press(R),
a unit of Neotrope(R).

SOURCE The Alex Jones Show

台灣‧ 僅剩國防外交需總統親徵詢‧吳敦義:大部份人事底定










(印度‧真奈)印度J et航空公司的約400名飛機師集體請病假抗議管理層辭退兩名資深同事,導致週一(9月7日)晚上一班從印度真奈飛往吉隆坡的航班被取消。


飛機師集體請病假之舉,也導致J e t航空的約20班國內及2班國際航班無法起飛,機場一片混亂。






































Gold breaks out, U.S. dollar breaks down

Focus: Gold, U.S. dollar, ABX, KGC, GG, ERJ, PCLN, BA, GES

CINCINNATI (MarketWatch) -- For the time being, the U.S. markets continue to absorb technical challenges.

And while the near-term backdrop favors further consolidation -- at least sideways chopping around, if not a retest of the August low -- the longer-term uptrend is intact.

The hourly chart on the Standard & Poor's 500 index details the past three weeks.

After breaking down last week--- driven by 15-to-1 negative market breadth -- the S&P has reversed to the breakdown point on lighter volume.

And while its longer-term uptrend is intact, further near-term consolidation would typically be needed to work off last week's breakdown.

From current levels, initial support holds at 1,016, followed by another floor around the 1,010 mark.

Meanwhile, the Dow industrials' near-term view is similar.

Like the S&P, the Dow sold off sharply last week, before establishing support around 9,250.

It subsequently reversed to the breakdown point, keeping its near-term outlook in flux.

And the Nasdaq's near-term backdrop is the most volatile.

After bottoming last week at 1,958, it's reversed to the breakdown point, matching the upper end of its three-week range.

Widening the view to six months highlights the real technical issues taking shape.

Notice that the Nasdaq, along with all major U.S. benchmarks, is gravitating to the early-August peak.

It staged a false break higher last month and then tried to sell off, but the net result is a stalemate near the highs.

Moving to the Dow, its technical backdrop is similar.

Most importantly, the blue-chip benchmarks remains within a longer-term uptrend, but the early-August peak marks the near-term battleground for the bulls and bears.

Along with the other benchmarks, the S&P 500 has whipsawed around the early-August peak.

Its recent price action resembles the June consolidation phase, the month before the second-quarter earnings reports hit.

The current consolidation phase is arguably similar, taking shape just a month before financial results for the third quarter.

The bigger picture

As traders return from the holiday, the U.S. markets' backdrop can be broken down with three charts.

Starting with the S&P's hourly chart, it broke down last week with conviction.

The initial violation of the 1,016 area was driven by 15-to-1 negative breadth, and the index has since staged a reflexive lift to the breakdown point.

Widening the view to six months, the chart for the SPDR Trust S&P 500 /quotes/comstock/13*!spy/quotes/nls/spy (SPY 102.86, -0.08, -0.08%) furthers the "corrective-bounce" argument.

Notice last week's breakdown came on the SPY's strongest volume since April, while its subsequent lift has come on unusually light volume.

While all trends technically point higher -- the S&P holds atop its 20-day, 50-day and 200-day moving averages -- a sideways consolidation phase is likely underway.

The S&P 500's six-month view rounds out the backdrop.

Setting aside last week's volatility -- the whipsaws around the early-August peak -- this wider view points to a longer-term uptrend.

The S&P is positioned atop both its 50-day and 200-day moving averages, and both trending indicators are upward sloping.

Summing up the backdrop

Technically speaking, the U.S. markets remain within a longer-term uptrend.

Yet within this framework, the S&P has suffered two 15-to-1 downdrafts in less than three weeks, cementing S&P 1,039-to-1,044 as significant resistance.

Looking ahead, further near-term consolidation is likely in order - reduce risk, and avoid lower-quality names - but until proven otherwise, the broader uptrend is intact.

Tuesday's watch list

The charts below highlight names well positioned technically. These are intended as radar-screen names -- sectors or stocks positioned to move in the near term. For the original comments on the stocks below, check out The Technical Indicator Library.

ETF Symbol Fri Close Support Resistance
SPDR Gold Shares GLD $97.53 $96.20 New High

Drilling down to sectors, gold's breakout is the most obvious technical event taking shape.

As the chart illustrates, the SPDR Gold Shares /quotes/comstock/13*!gld/quotes/nls/gld (GLD 97.43, -0.10, -0.10%) spiked late last week, clearing resistance at the August and June peaks.

The rally came on strong volume -- meaning this is a valid breakout -- and while near-term extended, its backdrop favors eventual follow-through to record highs.

While the GLD ETF tracks spot prices, the charts below illustrate gold miners positioned to rise: Barrick Gold /quotes/comstock/13*!abx/quotes/nls/abx (ABX 39.30, -0.74, -1.85%) , Kinross Gold /quotes/comstock/13*!kgc/quotes/nls/kgc (KGC 21.80, -0.08, -0.37%) and Goldcorp /quotes/comstock/13*!gg/quotes/nls/gg (GG 40.93, -0.62, -1.49%) .

ETF Symbol Fri Close Support Resistance
U.S. Dollar Index UUP $23.25 $23.15 $23.50

In a related move, the U.S. dollar /quotes/comstock/13*!uup/quotes/nls/uup (UUP 22.99, -0.26, -1.12%) has started the week with a breakdown.

Fundamentally, gold and the dollar are inversely correlated, and the chart above reflects this relationship.

Looking ahead, a sustained posture under the August low supports the bull case for stocks, leaving the door open to another leg higher for the S&P 500.

Company Symbol Fri Close Support Resistance
Embraer ERJ $21.86 $20.60 $22.50

Embraer /quotes/comstock/13*!erj/quotes/nls/erj (ERJ 22.81, +0.95, +4.35%) is a Brazilian-based manufacturer of jets and turboprop aircraft.

Technically speaking, it broke out decisively in late July after posting strong second-quarter financial results.

By comparison, the ensuing pullback has been flat, and its near-term outlook should remain higher barring a violation of the breakout point.

Company Symbol Fri Close Support Resistance PCLN $153.79 $148.00 $156.50 /quotes/comstock/15*!pcln/quotes/nls/pcln (PCLN 157.64, +3.85, +2.50%) is a well positioned mid-cap name.

It initially gapped higher last month after posting strong quarterly results.

Since then, it's maintained a stance above the top of the gap, and its tight one-month range positions the shares to build on the initial breakout.

Company Symbol Fri Close Support Resistance
Boeing BA $49.15 $47.75 $52.50

Boeing Co. /quotes/comstock/13*!ba/quotes/nls/ba (BA 49.50, +0.35, +0.71%) is a well positioned large-cap name.

Late last month, it gapped sharply higher after announcing an earlier delivery schedule for its 787 model aircraft.

The ensuing pullback has come on lighter volume, placing the Dow component's shares at a better entry near support, and 6.5% under the August peak.

Company Symbol Fri Close Support Resistance
Guess Inc. GES $34.47 $33.50 $36.20

Initially profiled Aug. 7, Guess Inc. /quotes/comstock/13*!ges/quotes/nls/ges (GES 35.09, +0.62, +1.80%) has returned 14.1% and remains well positioned.

As the chart illustrates, it recently gapped sharply higher after reporting strong second-quarter results.

Since then, it's held the top of the gap as support, and its tight band near recent highs positions the shares to extend their gains.

By Michael Ashbaugh, MarketWatch

US commodities rattled by China derivatives stance

BEIJING/CHICAGO, Aug 31 (Reuters) - U.S. gold and soybean markets fell on Monday following a weekend report that China's state companies may default on commodity derivative contracts with banks providing over-the-counter hedging services.

Traders in other commodities markets in the United States were cautious, underscoring China's predominance as a buyer in global markets from metals to grain to oil after it played a key role in rallying prices to record highs last year.

In a measure of the country's influence over the global economy, U.S. stocks fell after the Shanghai Composite index .SSEC fell nearly 7 percent to a three-month low on fears Beijing is trying to moderate growth and choke off speculation in its stock market by tightening bank lending.

Commodities markets were chilled by a report in Caijing magazine quoting an unnamed industry source as saying Chinese state-owned companies will be allowed to default on commodity derivative contracts. The report provoked anger and dismay among investment banks that feared a damaging precedent.

China's regulator of state owned enterprises, the Assets Supervision and Administration Commission (SASAC), has told six foreign banks that SOEs reserved the right to default on contracts, the magazine said in an article published on Saturday.

A government official said that the Bureau of Financial Supervision and Evaluation under SASAC was handling the issue. The official declined to be named and did not elaborate.

"A Chinese agency said they reserve the right to walk away from bad derivatives contracts and that stirred up a lot of worry not only about the stock market but soybeans as well," said Paul Haugens, vice president at Newedge USA.

China, the world's top importer of soybeans, has been an aggressive buyer of U.S. supplies, helping drive prices higher as stockpiles fell to the lowest level in over three decades.


Chicago Board of Trade soybean futures for November delivery SX9 fell 31-1/2 cents, or 3 percent, to $9.79-1/2.

December gold GCZ9 fell $5.30 to $953.50 an ounce at the New York Mercantile Exchange's COMEX division. U.S. cotton futures fell in early trading due to the news, but closed higher on month-end position squaring.

"Historically, it is not so unusual for China to either renegotiate or abandon some deals that have been made. Some traders who have been around for a while are certainly aware of that possibility," said Bill O'Neill, managing partner at New Jersey-based LOGIC Advisors.

Spokespersons at Goldman Sachs (GS.N), UBS (UBSN.VX), JPMorgan (JPM.N) and Morgan Stanley declined to comment, along with the Securities Industry and Financial Markets Association and International Swaps and Derivatives Association Inc.

The reported letter to the six banks follows an order from SASAC in July that required all state companies trading in derivatives to make quarterly reports about their investments, including details of holdings and performance.

"I won't be surprised if more state firms emerged with big derivatives trading losses. Or else SASAC won't come out with such a radical move," a Hong Kong-based derivatives analyst said.

"As far as I know, there are another number of state firms bogged down in such losses besides those surfaced ones," said the analyst, who declined to be named due to the sensitivity of the issue.


A SASAC media official said he was waiting for the "relevant department's" official comment before clarifying the situation with the media.

The report deals another blow to investment banks hoping to sell more derivatives hedges in China, the world's fastest-expanding major economy and top commodities consumer.

"It's a handful of companies who are being encouraged by regulators to renegotiate. It's outrageous, but it's China so everyone is treading very carefully," said a banking source.

Beijing-based derivatives lawyers said the so-called "legal letter" has no legal standing -- SASAC as a shareholder of SOEs has no business relationship with international banks.

"This can also lead to market chaos. For example, a foreign bank can tell its Chinese clients that it can reserve the right to default on contracts that will bring losses to the bank," said a lawyer from the derivatives risks committee of the Beijing Lawyers Association.

No bank names were reported in the Caijing report. The SASAC media officer also declined to specify any.

Chinese state firms, especially those that have suffered big losses in derivatives trading, have been complaining that their foreign banks sometimes did not disclose full information of potential risks when selling them complicated products.

For a factbox of China's derivatives debacles: [ID:nPEK206094] (Reporting by Eadie Chen and Chen Aizhu in Beijing, Alfred Cang in Shanghai, George Chen and Michael Flaherty in Hong Kong, Sam Nelson in Chicago and Carole Vaporean and Steve Eder in New York. Writing by K.T. Arasu, Eadie Chen and Chen Aizhu; editing by Jim Marshall)

By Eadie Chen and Chen Aizhu

China's SOEs May Terminate Commodities Contracts

Any such move would be a major blow to investment banks which service commodities hedging operations for Chinese SOEs on the international market.

( China's state-owned enterprises may unilaterally terminate commodities contracts as they try to cut massive losses from financial derivatives, an industry source told Caijing on August 28.

According to the source, China's State-owned Assets Supervision and Administration Commission (SASAC) has sent notice to six foreign financial institutions informing them that several state-owned enterprise will reserve the right to default on commodities contracts signed with those institutions.

Keith Noyes, an official with the International Swaps and Derivatives Association, a trade organization, confirmed that he is aware of the matter, but provided no further comment.

Foreign brokerages usually work through their Hong Kong operations to sign over-the-counter derivative hedging contracts, according to an investment banker whose firm is involved in the business. Hong Kong and Singapore usually serve as venues for arbitration over such transactions.

Most investment banks may "just swallow" any losses arising from canceled contracts, the executive said, adding that any losses are usually made up for with compensating trades.

Investment banks "just earn less" from such transactions, he said.

But any such move would be a major blow to investment banks which service massive commodities hedging operations for Chinese SOEs on the international market, said the executive.

Chinese SOEs have suffered massive losses from hedging contracts since the onset of the global financial crisis. SASAC and the National Auditing Office has been investigating derivatives positions trading since the beginning of the year.

A source from a state-owned company told Caijing that most of China’s SOEs engaging in foreign exchange and international trade have participated in derivatives trading, involving capital topping 1 trillion yuan.

4 Signs that China is Moving Out of the Dollar

There are 3 recent signs that China is moving out of the dollar.

First, in June, China was a net seller of U.S. Treasury bonds (and shorter term notes) for the first time ever. As Mike Larson writes:

A few days ago, the U.S. Treasury Department revealed that China actually REDUCED its note and bond holdings by $25 billion in June. Although China did NOT sell shorter-term Treasury bills — and isn’t expected to — it’s still the largest amount of Treasuries China has ever sold in a single month.
Second, China will issue a non-Dollar denominated Renminbi bond sale on September 28th (6 Billion Renminbi worth).

Third, China has agreed to purchase $5o billion dollars worth of IMF bonds (denominated in the IMF Special Drawing Rights currency).

And fourth, the former vice-chairman of China's Politburo Standing Committee (the highest and most powerful decision-making body in China) - Cheng Siwei - recently said:

We will diversify incremental reserves into euros, yen, and other currencies. Gold is definitely an alternative, but when we buy, the price goes up. We have to do it carefully so as not to stimulate the markets.

As Edward Harrison correctly notes:

To be sure, there are other voices in Chinese officialdom that are striking a less alarmist tone. One cannot rely on the words of one Chinese official to represent policy makers in China. And Cheng never said the Chinese are now actively diversifying away from the U.S. dollar. Nevertheless, Chinese officials have been talking along this dollar bearish line for months now and I tend to believe their words will lead to action.

That is, at a minimum, bullish for Gold and bearish for the U.S. Dollar.

Fed: Consumers Slash Debt by Record $21.6B in July

The Federal Reserve reported Tuesday that consumers ratcheted back their credit by a larger-than-anticipated $21.6 billion from June, the most on records dating to 1943.

Consumers slashed their borrowing in July by the largest amount on record as job losses and uncertainty about the economic recovery prompted Americans to rein in their debt.

Economists expect consumers will continue to spend less, save more and trim debt to get household finances decimated by the recession into better shape. However, such action is a recipe for a lethargic revival, as consumer spending accounts for 70 percent of economic activity.

The Federal Reserve reported Tuesday that consumers ratcheted back their credit by a larger-than-anticipated $21.6 billion from June, the most on records dating to 1943. Economists expected credit to drop by $4 billion.

Wary consumers and hard-to-get credit both factor into the scaled-back borrowing. But economists are split on which force -- lack of demand by consumers or lack of supply from banks -- is having the bigger influence.

"It's really a tug of war," said Mark Williams, professor of finance and economics at Boston University and a former Fed bank examiner. "It's true that consumers are being more responsible, saying 'I don't really need that extra credit card,' but it is more related to banks clamping down on lending."

But Erik Hurst, economics professor at the University of Chicago Booth School of Business, says it is impossible to know for sure. "We are seeing declines in demand for loans from consumers but also declines in the supply of loans from banks. How much of the credit cutback is due to the decline in supply or demand, you can't really tell."

Last month, the Federal Reserve, in a survey of bank loan officers, found somewhat weaker demand for all types of consumer loans. But fewer banks reported tightening their standards on credit card and other consumer loans, the Fed survey said.

Still, a report earlier this year by the company that produces the most widely known credit scores found that companies slashed limits for an estimated 58 million card holders in the 12 months ended in April, even though a high percentage had good credit scores when their limits were cut.

The cuts affected about a third of consumers, according to the study by FICO. But most people did not see a big impact on the credit scores because lenders often cut limits on cards that were unused or lightly used.

In Tuesday's report, demand for non-revolving credit used to finance cars, vacations, education and other things fell by $15.4 billion, also a record decline. That 11.7 percent pace was on top of an 8 percent annualized decline in June.

Consumers' appetite for revolving credit, primarily credit cards, declined by $6.1 billion in July, an annualized rate of 8 percent that followed a 6.4 percent drop in June.

July's retreat translated into an annualized decline of 10.4 percent. That followed a cut of $15.5 billion in June, or a 7.4 percent annualized drop, and the most since a 16.3 percent decline in June 1975.

The latest cut left total consumer credit at $2.47 trillion.

The magnitude of the drop surprised analysts. Some thought the Cash for Clunkers program -- which began in July and aided auto sales and car loans -- would have blunted cutbacks in other lending areas.

The Fed's measure of consumer borrowing does not include debt secured by real estate, such as mortgages or home equity loans.

Even though the unemployment rate dipped in July, it jumped in August to a 26-year high of 9.7 percent. Already, the recession has snatched 6.9 million jobs and unemployment is expected to top 10 percent this year as employers keep cutting.

That will make it harder for Americans to keep up with payments on credit cards and other kinds of loans, analysts said.

"As great as the clunkers program has been, it's tough to head out and buy a big ticket item when you don't have a job," said Richard Yamarone, economist at Argus Research. "Don't expect consumer credit to increase any time soon; the job situation is dismal, at best."


t's the oldest trick in the book, dating back to Roman times; creating the enemies you need.
In 70 BC, an ambitious minor politician and extremely wealthy man, Marcus Licinius Crassus, wanted to rule Rome. Just to give you an idea of what sort of man Crassus really was, he is credited with invention of the fire brigade. But in Crassus' version, his fire-fighting slaves would race to the scene of a burning building whereupon Crassus would offer to buy it on the spot for a tiny fraction of it's worth. If the owner sold, Crassus' slaves would put out the fire. If the owner refused to sell, Crassus allowed the building to burn to the ground. By means of this device, Crassus eventually came to be the largest single private land holder in Rome, and used some of his wealth to help back Julius Caesar against Cicero.
In 70 BC Rome was still a Republic, which placed very strict limits on what Rulers could do, and more importantly NOT do. But Crassus had no intentions of enduring such limits to his personal power, and contrived a plan.

Crassus seized upon the slave revolt led by Spartacus in order to strike terror into the hearts of Rome, whose garrison Spartacus had already defeated in battle. But Spartacus had no intention of marching on Rome itself, a move he knew to be suicidal. Spartacus and his band wanted nothing to do with the Roman empire and had planned from the start merely to loot enough money from their former owners in the Italian countryside to hire a mercenary fleet in which to sail to freedom.

Sailing away was the last thing Crassus wanted Spartacus to do. He needed a convenient enemy with which to terrorize Rome itself for his personal political gain. So Crassus bribed the mercenary fleet to sail without Spartacus, then positioned two Roman legions in such a way that Spartacus had no choice but to march on Rome.

Terrified of the impending arrival of the much-feared army of gladiators, Rome declared Crassus Praetor. Crassus then crushed Spartacus' army and even though Pompey took the credit, Crassus was elected Consul of Rome the following year.

With this maneuver, the Romans surrendered their Republican form of government. Soon would follow the first Triumvirate, consisting of Crassus, Pompeii, and Julius Caesar, followed by the reign of the god-like Emperors of Rome.

The Romans were hoaxed into surrendering their Republic, and accepting the rule of Emperors.

Julius Caesar's political opponent, Cicero, for all his literary accomplishments, played the same games in his campaign against Julius Caesar, claiming that Rome was falling victim to an internal "vast right wing" conspiracy in which any expressed desire for legislative limits on government was treated as suspicious behavior. Cicero, in order to demonstrate to the Romans just how unsafe Rome has become hired thugs to cause as much disturbance as possible, and campaigned on a promise to end the internal strife if elected and granted extraordinary powers.
What Cicero only dreamed of, Adolph Hitler succeeded in doing. Elected Chancellor of Germany, Hitler, like Crassus, had no intention of living with the strict limits to his power imposed by German law. Unlike Cicero, Hitler's thugs were easy to recognize; they all wore the same brown shirts. But their actions were no different than those of their Roman predecessors. They staged beatings, set fires, caused as much trouble as they could, while Hitler made speeches promising that he could end the crime wave of subversives and terrorism if he was granted extraordinary powers.

Then the Reichstag burned down; a staged terrorist attack.

The Germans were hoaxed into surrendering their Republic, and accepting the total rule of Der Fuehrer. Hitler had German troops dressed in Polish uniforms attack the radio station at Gleiwitz, then lied to the Germans, telling them Poland had invaded, and marched Germany off into World War Two

The state-sponsored schools will never tell you this, but governments routinely rely on hoaxes to sell their agendas to an otherwise reluctant public. The Romans accepted the Emperors and the Germans accepted Hitler not because they wanted to, but because the carefully crafted illusions of threat appeared to leave no other choice.

Our government too uses hoaxes to create the illusion that We The People have no choice but the direction the government wishes us to go in.

In 1898, Joseph Pulitzer's New York World and William Randolph Hearst's New York Journal were arguing for American intervention in Cuba. Hearst is reported to have dispatched a photographer to Cuba to photograph the coming war with Spain. When the photographer asked just what war that might be, Hearst is reported to have replied, "You take the photographs, and I will provide the war". Hearst was true to his word, as his newspaper published stories of great atrocities being committed against the Cuban people, most of which turned out to be complete fabrications.

On the night of February 15, 1898, the USS Maine, lying in Havana harbor in a show of US resolve to protect her interests, exploded violently. Captain Sigsbee, the commander of the Maine, urged that no assumptions of enemy attack be made until there was a full investigation of the cause of the explosion. For this, Captain Sigsbee was excoriated in the press for "refusing to see the obvious". The Atlantic Monthly declared flat out that to suppose the explosion to be anything other than a deliberate act by Spain was "completely at defiance of the laws of probability".

Under the slogan "Remember the Maine", Americans went to war with Spain, eventually winning the Philippines (and annexing Hawaii along the way).

In 1975, an investigation led by Admiral Hyman Rickover examined the data recovered from a 1911 examination of the wreck and concluded that there had been no evidence of an external explosion. The most likely cause of the sinking was a coal dust explosion in a coal bunker imprudently located next to the ship's magazines. Captain Sigsbee's caution had been well founded.

President Franklin Delano Roosevelt needed a war. He needed the fever of a major war to mask the symptoms of a still deathly ill economy struggling back from the Great Depression (and mutating towards Socialism at the same time). Roosevelt wanted a war with Germany to stop Hitler, but despite several provocations in the Atlantic, the American people, still struggling with that troublesome economy, were opposed to any wars. Roosevelt violated neutrality with lend lease, and even ordered the sinking of several German ships in the Atlantic, but Hitler refused to be provoked.

Roosevelt needed an enemy, and if America would not willingly attack that enemy, then one would have to be maneuvered into attacking America, much as Marcus Licinius Crassus has maneuvered Spartacus into attacking Rome.

The way open to war was created when Japan signed the tripartite agreement with Italy and Germany, with all parties pledging mutual defense to each other. Whereas Hitler would never declare war on the United States no matter the provocation, the means to force Japan to do so were readily at hand.

The first step was to place oil and steel embargoes on Japan, using Japan's wars on the Asian mainland as a reason. This forced Japan to consider seizing the oil and mineral rich regions in Indonesia. With the European powers militarily exhausted by the war in Europe, the United States was the only power in the Pacific able to stop Japan from invading the Dutch East Indies, and by moving the Pacific fleet from San Diego to Pearl Harbor, Hawaii, Roosevelt made a pre-emptive strike on that fleet the mandatory first step in any Japanese plan to extend it's empire into the "southern resource area".

Roosevelt boxed in Japan just as completely as Crassus had boxed in Spartacus. Japan needed oil. They had to invade Indonesia to get it, and to do that they first had to remove the threat of the American fleet at Pearl Harbor. There never really was any other course open to them.

To enrage the American people as much as possible, Roosevelt needed the first overt attack by Japan to be as bloody as possible, appearing as a sneak attack much as the Japanese had done to the Russians. From that moment up until the attack on Pearl Harbor itself, Roosevelt and his associates made sure that the commanders in Hawaii, General Short and Admiral Kimmel, were kept in the dark as much as possible about the location of the Japanese fleet and it's intentions, then later scapegoated for the attack. (Congress recently exonerated both Short and Kimmel, posthumously restoring them to their former ranks).
But as the Army board had concluded at the time, and subsequent de-classified documents confirmed, Washington DC knew the attack was coming, knew exactly where the Japanese fleet was, and knew where it was headed.

On November 29th, Secretary of State Hull showed United Press reporter Joe Leib a message with the time and place of the attack, and the New York Times in it's special 12/8/41 Pearl Harbor edition, on page 13, reported that the time and place of the attack had been known in advance!

The much repeated claim that the Japanese fleet maintained radio silence on it's way to Hawaii was a lie. Among other intercepts still held in the Archives of the NSA is the UNCODED message sent by the Japanese tanker Shirya stating, "proceeding to a position 30.00 N, 154.20 E. Expect to arrive at that point on 3 December." (near HI)

President Lyndon Johnson wanted a war in Vietnam. He wanted it to help his friends who owned defense companies to do a little business. He needed it to get the Pentagon and CIA to quit trying to invade Cuba. And most of all, he needed a provocation to convince the American people that there was really "no other choice".

On August 5, 1964, newspapers across America reported "renewed attacks" against American destroyers operating in Vietnamese waters, specifically the Gulf of Tonkin. The official story was that North Vietnamese torpedo boats launched an "unprovoked attack" on the USS Maddox while it was on "routine patrol".

The truth is that USS Maddox was involved in aggressive intelligence gathering in coordination with actual attacks by South Vietnam and the Laotian Air Force against targets in North Vietnam. The truth is also that there was no attack by torpedo boats against the USS Maddox. Captain John J. Herrick, the task force commander in the Gulf, cabled Washington DC that the report was the result of an "over-eager" sonar man who had picked up the sounds of his own ship's screws and panicked. But even with this knowledge that the report was false, Lyndon Johnson went on national TV that night to announce the commencement of air strikes against North Vietnam, "retaliation" for an attack that had never occurred.

President George H. W. Bush wanted a war in Iraq. Like Crassus, George Bush is motivated by money. Specifically oil money. But with the OPEC alliance failing to keep limits on oil production in the Mideast, the market was being glutted with oil pumped from underneath Iraq, which sat over roughly 1/3 of the oil reserves of the entire region.
George wanted a war to stop that flow of oil, to keep prices (and profits) from falling any further than they already had. But like Roosevelt, he needed the "other side" to make the first move.

Iraq had long been trying to acquire greater access to the Persian Gulf, and felt limited confined a narrow strip of land along Kuwait's northern border, which placed Iraqi interests in close proximity with hostile Iran. George Bush, who had been covertly arming Iraq during its war with Iran, sent word via April Glaspie that the United States would not intervene if Saddam Hussein grabbed a larger part of Kuwait. Saddam fell for the bait and invaded.

Of course, Americans were not about to send their sons and daughters to risk their lives for petroleum products. So George Bush arranged a hoax, using a public relations firm which has grown rich on taxpayer money by being most industrious and creative liars! The PR firm concocted a monumental fraud in which the daughter of the Kuwaiti Ambassador to the United States, went on TV pretending to be a nurse, and related a horror story in which Iraqi troops looted the incubators from a Kuwaiti hospital, leaving the premature babies on the cold floor to die. The media, part of the swindle from the start, never bothered asking why the "nurse" didn't just pick the babies up and wrap them in blankets or something.

Enraged by the incubator story, Americans supported operation Desert Storm, which never removed Saddam Hussein from power but which did take Kuwait's oil off of the market for almost 2 years and limited Iraq's oil exports to this very day. That our sons and daughters came home with serious and lingering medical illnesses was apparently not too great a price to pay for increased oil profits.

Following the victory in Iraq, yet another war appeared to be in the offering in the mineral rich regions of Bosnia. Yet again, a hoax was used to create support for military action.

The photo (right) of Fikret Alic staring through a barbed wire fence, was used to "prove" the existence of modern day "Concentration Camps". As the headline of "Belsen 92" indicates, all possible associations with the Nazi horrors were made to sell the necessity of sending yet more American troops into someone else's nation.

But when German Journalists went to Trnopolje, the site of the supposed Concentration Camp. to film a documentary, they discovered that the photo was a fake! The camp at Trnopolje was not a concentration camp but a refugee center. Nor was it surrounded by barbed wire. Careful examination of the original photo revealed that the photographer had shot the photo through a broken section of fence surrounding a tool shed. It was the photographer who was on the inside, shooting out at the refugees.

Once again, Americans had been hoaxed into support of actions they might otherwise not have agreed with.

While several American Presidents have willingly started wars for personal purposes, perhaps no President has ever carried it to the extreme that Bill Clinton has.

Coincident with the expected public statement of Monica Lewinsky following her testimony, Bill Clinton ordered a cruise missile attack on Sudan and Afghanistan, claiming to have had irrefutable proof that bogeyman extraordinaire (and former Afghani ally) Osama Bin Ladin was creating terrorist chemical weapons there.

Examination of the photos of the debris revealed none of the expected structures one would find in a laboratory that handled lethal weapons-grade materials. Assurances from the CIA that they had a positive soil test for biological weapons fell on their face when it was revealed that there had been no open soil anywhere near the pre-bombed facility. Sudan requested that international observers come test the remains of the factory for any signs of the nerve gas Clinton had insisted was there. None was found. The Sudanese plant was a harmless aspirin factory, and the owner has sued for damages.

Later examination of the site hit in Afghanistan revealed it to be a mosque.

Click for larger image

Meanwhile, back in Kosovo, stories about genocide and atrocities were flooding the media (in time to distract from the Sudanese embarrassments), just as lurid and sensational and as it turns out often just as fictional as most of William Randolph Hearst's stories of atrocities against the Cubans.

Again, the government and the media were hoaxing Americans. The above photo was shown on all the American networks, claiming to be one of Slobodan Milosovic's Migs, shot down while attacking civilians. Closer examination (click on the photo) shows it to be stenciled in English!

Like Germany under Chancellor Hitler, there have been events in our nation which strike fear into the hearts of the citizens, such as the New York World Trade Tower bombing, the OK City Federal Building, and the Olympic Park bomb (nicely timed to divert the media from witnesses to the TWA 800 shoot down). The media has been very quick to blame such events on "radicals", "subversives", "vast right wing conspiracies", and other "enemies in our midst", no different than the lies used by Cicero and Hitler.

But on closer examination, such "domestic terrorist" events do not appear to be what they are made out to be. The FBI had an informant inside the World Trade Tower bombers, Emad Salam, who offered to sabotage the bomb. The FBI told him "no". The so-called "hot bed" of white separatism at Elohim City, occasional home to Tim McVeigh in the weeks prior to the OK City bombing, was founded and is being run by an FBI informant!

Click for larger image

And nobody has ever really explained what this second Ryder truck was doing in a secret camp half way from Elohim City to Oklahoma City two weeks before the bombing.

So, here we are today. Like the Romans of Crassus' and Cicero's time, or the Germans under a newly elected Hitler, we are being warned that a dangerous enemy threatens us, implacable, invisible, omnipresent, and invulnerable as long as our government is hamstrung by that silly old Bill of Rights. Already there have appeared articles debating whether or not "extraordinary measures" (i.e. torture) are not fully justified under certain circumstances such as those we are purported to face.

As was the case in Rome and Germany, the government continues to plead with the public for an expansion of its power and authority, to "deal with the crisis".

However, as Casio watch timers are paraded before the cameras, to the stentorian tones of the talking heads' constant dire warnings, it is legitimate to question just how real the crises is, and how much is the result of political machinations by our own leaders.

Are the terrorists really a threat, or just hired actors with bombs and Casio watches, paid for by Cicero and given brown shirts to wear by Hitler?

Is terrorism inside the United States really from outside, or is it a stage managed production, designed to cause Americans to believe they have no choice but to surrender the Republic and accept the totalitarian rule of a new emperor, or a new Fuhrer?

Indeed, given that acts of terror undermine the very public support needed by the so-called "terrorists" to bring about change, it may be argued that there are in fact no genuine acts of terror; that they are all manufactured events to be blamed on the groups wiching to challenge the status quo.

Once lost, the Romans never got their Republic back. Once lost, the Germans never got their Republic back. In both cases, the nation had to totally collapse before freedom was restored to the people.

Remember that when Crassus tells you that Spartacus approaches.

Remember that when thugs in the streets act in a manner clearly designed to provoke the public fear.

Remember that when the Reichstag burns down.

Remember that when the President lies to you about weapons of mass destruction.

by Michael Rivero