Thursday, December 17, 2009

The Worst-Run Big City in the U.S.

Spend more. Get less. We’re the city that knows how.

Despite its good intentions, San Francisco is not leading the country in gay marriage. Despite its good intentions, it is not stopping wars. Despite its spending more money per capita on homelessness than any comparable city, its homeless problem is worse than any comparable city's. Despite its spending more money per capita, period, than almost any city in the nation, San Francisco has poorly managed, budget-busting capital projects, overlapping social programs no one is certain are working, and a transportation system where the only thing running ahead of schedule is the size of its deficit.

It's time to face facts: San Francisco is spectacularly mismanaged and arguably the worst-run big city in America. This year's city budget is an astonishing $6.6 billion — more than twice the budget for the entire state of Idaho — for roughly 800,000 residents. Yet despite that stratospheric amount, San Francisco can't point to progress on many of the social issues it spends liberally to tackle — and no one is made to answer when the city comes up short.

The city's ineptitude is no secret. "I have never heard anyone, even among liberals, say, 'If only [our city] could be run like San Francisco,'" says urbanologist Joel Kotkin. "Even other liberal places wouldn't put up with the degree of dysfunction they have in San Francisco. In Houston, the exact opposite of San Francisco, I assume you'd get shot."

Who is to blame for this city's wretched state of affairs? Yomi Agunbiade, that's who. Metaphorically, that is.

An engineer by trade, Agunbiade was appointed by Mayor Gavin Newsom to head the San Francisco Recreation and Park Department in 2004. Even before Agunbiade's tenure, Rec and Park was the department other city departments pointed and laughed at — but under Agunbiade, it became Amy Poehler funny.

During his reign, an audit revealed, rec centers frequently didn't open, because staff simply didn't show up — and the department had no process to do anything about it. Good news: New rec centers were slated to open. Bad news: Agunbiade's department had no plan for how to staff them. But that wasn't enough to cost Agunbiade his job.

When the city controller's office made the common-sense recommendation that groundskeepers ought to be where they were assigned to be when they're supposed to be there, Agunbiade fought them on it for three years. Running a department where no one knows where anyone is — and no one even wants to know? Not a problem.

Then a report by the city's budget analyst found massive fiscal mismanagement at the Marina Yacht Harbor, which is run by Rec and Park. Perhaps so much money wouldn't have gone unaccounted for, the audit suggested, if the department had installed a cash register. Still, not a problem for Agunbiade. Other reports exposed one organizational or fiscal snafu after another, but his position was secure. In San Francisco, running a city department like a Franz Kafka nightmare doesn't cost a decisionmaker his job.

Then, in July 2008, we apparently discovered what does. Rec and Park spokeswoman Rose Dennis claimed that Agunbiade had been sexually and religiously harassing her for years, and produced letters he'd sent to her home as evidence. She confirmed to SF Weekly that Agunbiade's letters urged her to stop wearing revealing clothes so that she could get right with Jesus. Though she didn't release the letters publicly, Dennis did bring them to the city attorney's office — which determined that this could turn into a messy lawsuit.

Agunbiade was subsequently called in to chat with Newsom. The conversation between the mayor-who-slept-with-his-appointments-secretary and the department-head-accused-of-sexually-and-religiously-harassing-his-spokeswoman (in writing!) must have been one for the ages. Whatever was said, the outcome was this: Agunbiade resigned not long after, and Dennis this year received a $91,000 settlement from the city.

Minus the alleged harassment, city government is filled with Yomi Agunbiades — and they're hardly ever disciplined, let alone fired. When asked, former Board of Supervisors President Aaron Peskin couldn't remember the last time a higher-up in city government was removed for incompetence. "There must have been somebody," he said at last, vainly searching for a name.

Accordingly, millions of taxpayer dollars are wasted on good ideas that fail for stupid reasons, and stupid ideas that fail for good reasons, and hardly anyone is taken to task.

The intrusion of politics into government pushes the city to enter long-term labor contracts it obviously can't afford, and no one is held accountable. A belief that good intentions matter more than results leads to inordinate amounts of government responsibility being shunted to nonprofits whose only documented achievement is to lobby the city for money. Meanwhile, piles of reports on how to remedy these problems go unread. There's no outrage, and nobody is disciplined, so things don't get fixed.

San Francisco is the city that simply will not hold itself accountable.

Here are a few examples of the best of San Francisco at its worst.

Finding books in the library is easy: There are logical, organized systems in place. Finding where the money to build libraries went — that's hard. Last year, the Civil Grand Jury could not find — we reiterate, could not find — up-to-date budget numbers for the city's Branch Library Improvement Program. The numbers that were available aren't pretty: Voters approved a $106 million bond in 2000 to rebuild 19 libraries, and $28 million more was ponied up by the state and private donors. That money was spent without a coherent building plan being formulated between the Library Commission and Department of Public Works — leading to such large cost overruns and long delays that the commission abandoned five of the projects. In 2007, the city went back to the voters, asking for another $50 million for libraries — without publicizing that this would fund the five unfinished projects voters had already paid for. Voters approved it. After all, who doesn't like libraries?

In 2002, the San Francisco Chronicle revealed that the city had, for decades, been siphoning nearly $700 million from its Hetch Hetchy water system into the San Francisco General Fund instead of maintaining the aging aqueduct. Several mayors and boards of supervisors used that money to fund pet causes, and the Public Utilities Commission didn't say no. Unfortunately, spending maintenance money elsewhere doesn't diminish the need for maintenance. By 2002, the water system was in such desperate condition that voters were asked to pass a $3.6 billion bond measure to make overdue fixes. Obligingly, they did — who doesn't like water? Since then, the projected costs have swelled by $1 billion. So far.

Back in 1999, San Francisco voters were pitched a $299 million bond to "save" Laguna Honda Hospital as a 1,200-bed facility for the city's frail, elderly population. Who doesn't want to help the frail and elderly? A decade later, the Department of Public Works project is still incomplete, its price tag has swelled by nearly $200 million, and the hospital is slated to hold only 780 beds — so the city is going massively overbudget to construct a hospital only 65 percent as large as promised, which is four years behind schedule.

Amazingly, this gets worse. After securing the bond funding to save Laguna Honda as a hospital for the elderly, the Department of Public Health began transferring younger, often dangerous and mentally ill patients there and mixing them among the old people. This went about as well as you'd think: A 2006 state and federal licensing survey noted numerous instances of elder abuse, staff abuse, and patients toting drugs, alcohol, and even loaded weapons. One patient was assaulted four times in four months; to address this problem, staff erected signs reading "No Hitting." (That didn't work.) To cap it off, elder activists now worry that a 2009 Department of Public Health–commissioned report will pave the way for even more relatively young, mentally ill patients heading to Laguna Honda. The massively overbudget, behind-schedule hospital may not even end up primarily serving the elderly population that voters were promised it would.

These are dramatic examples of how the city wasted time and money and made people's lives miserable — with no apparent repercussions for those responsible. But these are far from isolated incidents (see the "Annals of Incompetence" sidebar on page 12). And in each case, it comes back to the same basic problem of accountability: Plenty of public figures make promises, but no one is responsible for keeping them.

This city is a mecca for people in search of a government handout that they can hand out. According to a 2009 analysis, San Francisco spends around 41 percent of its discretionary budget — about half a billion dollars — on nonprofits, mostly to provide social services for the poor, homeless, elderly, and others.

Many cities contract with nonprofits because it's cheaper than using city workers. Government is now paying the tab for services that used to be undertaken by families, churches — or, frankly, no one. But a 2009 University of San Francisco study notes that this city is to nonprofits what New York is to big musicals: "Per capita expenditures by operating nonprofits in San Francisco are almost double that of the rest of the Bay Area, and more than twice that found in Los Angeles or [the whole of] California."

We want the services. We're willing to pay for them, if they lead to good results. Yet whether our gargantuan investment is paying off is a question no one has an answer to. Hardly anyone even bothers to check. As far as much of the city is concerned, ignorance is bliss.

In 2007, the Department of Children, Youth, and Families (DCYF) held a seminar for the nonprofits vying for a piece of $78 million in funding. Grant seekers were told that in the next funding cycle, they would be required — for the first time — to provide quantifiable proof their programs were accomplishing something.

The room exploded with outrage. This wasn't fair. "What if we can bring in a family we've helped?" one nonprofit asked. Another offered: "We can tell you stories about the good work we do!" Not every organization is capable of demonstrating results, a nonprofit CEO complained. He suggested the city's funding process should actually penalize nonprofits able to measure results, so as to put everyone on an even footing. Heads nodded: This was a popular idea.

There are two lessons here. First, many San Francisco nonprofits believe they're entitled to money without having to prove that their programs work. Second, until 2007, the city agreed. Actually, most of the city still agrees. DCYF is the only city department that even attempts to track results. It's the model other departments are told to aspire to.

But Maria Su, DCYF's director, admitted that accountability is something her department still struggles with. It can track "output" — what a nonprofit does, how often, and with how many people — but it can't track "outcomes." It can't demonstrate that these outputs — the very things it pays nonprofits to do — are actually helping anyone.

"Believe me, there is still hostility to the idea that outcomes should be tracked," Su says. "I think we absolutely need to be able to provide that level of information. But it's still a work in progress." In the meantime, the city is spending about $500 million a year on programs that might or might not work.

This includes San Francisco's signature initiatives. Is Newsom's pet project, Care Not Cash, "meeting its goals" as his office claims? Hard to say: "We neither investigated the number or percentage of clients participating in support services by individual service, nor attempted to assess the outcomes of clients participating in services," the controller's 2008 audit reads. This means the city paid for support services for more than 2,200 homeless people, but never tracked how many were actually using the services. It also never checked whether those who were using the services were helped by them. While Care Not Cash has undoubtedly found housing for some people, it has no evidence to suggest that their lives are better because of it, or that they're not still spending time on the streets getting into the same trouble they got into before.

According to Elizabeth Boris, director of the Washington, D.C.–based Urban Institute's Center on Nonprofits and Philanthropy, effectively managed nonprofits must demonstrate "financial integrity, transparency, and some indication of what the nonprofit has accomplished over time." Right now, it's hard to conceive of most San Francisco agencies meeting those criteria.

The city continues to toss millions annually into programs that don't quantifiably help people. But the city is effectively taking cash from one program that does demonstrably help people. That would be Muni.

People don't usually yell at the Rules Committee. There are rules against it. At a July 2007 committee meeting, however, people were yelling. Mostly at Aaron Peskin.

The then-president of the Board of Supervisors had proposed sweeping Muni reforms to get the transit system running on time and on budget. National transit experts said Peskin's proposal was solid; it was later approved by the voters in 2007 as Proposition A. Since then, Muni has slashed services and raised fares, and is facing a bigger budget crisis. That shouldn't have been a surprise — Muni reform started unraveling on that June day, when dozens of transit union workers "testified" in front of the Rules Committee.

Job protection for even the most obviously unfit Muni workers is among the strongest in the city. Peskin had proposed increasing the percentage of employees who could be fired for incompetence from 1.5 to 10 percent. But if that provision were included in the measure, union reps said, they would flood the "No on A" campaign with money and volunteers. "This is a union town," one transit worker warned. "And we expect it to stay that way."

Peskin caved. He had to. This is a union town. You can't reform the city charter without winning an election; winning an election requires union support; and unions — almost by definition — don't want major reform. It would be a paradox — but that would contravene a number of union bylaws.

You can't get San Francisco running efficiently, because that would require large numbers of unionized city workers to willingly admit their redundancy and wastefulness. Inefficiency pays their salaries. "It's been going on for decades," Peskin says.

This problem comes up almost every time the city negotiates labor contracts, which is part of the reason San Francisco is constantly on the brink of fiscal ruin. Politically powerful unions — the progressives are beholden to the service unions; moderates cater to police, firefighters, and building trades; and Republicans ... what's a Republican? — negotiate contracts the city knows it can't afford. Politicians approve them, despite needing to balance the budget every year, because the budget impact of proposed contracts is examined by the Board of Supervisors only for the following year, no matter how long contracts run. According to former city controller Ed Harrington, it has become common practice not to schedule any raises for the first year of a contract, but to provide extensive raises in later years.

The result is a contract that looks affordable one year out, then blows up in the city's face. City employees receive up to 90 percent of their already generous salaries in pensions and many also receive lifetime health care — meaning that as they retire, labor costs soar.

The unions worked their magic on Peskin's Muni reform, gutting the ability of management to fire workers and getting a higher base salary out of the deal. But they did keep their word, and helped the revised Prop. A win at the ballot box. Some good should have come out of that. But it hasn't. That's because unions were only part of the toxic combination that rendered Muni reform impossible, no matter what the voters said.

Prop. A gave Muni tens of millions of dollars in parking meter money that had previously been spread around the city. But even though voters decided that money should go to Muni, city departments found novel ways to keep it for themselves — and then some. Denied funds by Prop. A after 2007, departments began charging Muni for "services" they were legally required to provide anyway. Police charged Muni whenever they went onto transit vehicles; ambulances charged Muni for picking up people off the buses. Newsom, meanwhile, paid his green advisers' hefty salaries from Muni's coffers. By 2009, this was costing Muni about $63 million — more than double what the agency was making in new revenue from Prop. A. Muni is the city's slush fund — even though that money was supposed to go to help your commute. You voted for it.

This is why it's so hard to "reform" anything in San Francisco: Pass a bill giving Muni a dedicated revenue stream, and you end up eviscerating its finances; try to hold Muni workers more accountable for their jobs, and you end up giving them a raise. Muni isn't getting fixed anytime soon, because these are the fixes.

San Francisco wasn't always this way. Take this quintessential story of old-style city politics that involves a shady land deal and copious quantities of booze.

San Francisco historian Charles Fracchia recalls Mayor George Christopher's ploy after his plan to lure the New York Giants to San Francisco hit a snag in the late 1950s. It all hinged on building Candlestick Park, and doing that hinged on buying land in Hunters Point from real estate magnate Charlie Harney for $65,000 an acre. The trouble was, the city had sold that same land to Harney only five years previously for a fraction of the price.

"There was opposition to this from high-minded people in San Francisco," Fracchia says. "So Christopher got his opponents as well as his proponents together, and had 10 cases of scotch delivered up to this meeting at the Pacific Union Club. The scotch was drunk, and everyone came to the conclusion — yes, keep Candlestick Park."

When it comes to mismanaging a city, San Francisco has pulled a 180 — in half a century, we've gone from "city fathers" (if you liked them) or "oligarchs" (if you didn't) operating with limited input from the people to a hyperdemocracy. Overpaying for a Candlesticklike bad land deal today wouldn't be settled during a drunken soirée, but via years of high-decibel public meetings, developers being made to bleed funds to nonprofits of city supervisors' choosing, and any number of bond measures or other trips to the ballot box — all of which, when put together, could conceivably cost as much as the bad land deal itself. Maybe more.

For all its scotch-soaked flaws, the city of yore did not suffer from these problems. While archaic and stridently antidemocratic by today's standards, the system of government cobbled together by a citizens' commission in 1931 largely did what our forebears wanted it to do — mind the store and eliminate rampant corruption.

From 1932 until 1996, much of city government was handled by a powerful chief administrative officer (CAO), appointed to a 10-year term and tasked with overseeing the city's largest departments. The job was to take politics out of city management. (Today's San Francisco is so intensely saturated with politics down to the minutiae that the supervisors' recent appointment of a transit expert to a transit board — and not a union plumber — was seen as a deeply political move and an affront to organized labor.) The CAO was charged with making the city's largest decisions in an apolitical manner; the major portion of the job was keeping the books on the most vital departments and making sure they were running smoothly. In a manner of speaking, the CAO was a living, breathing accountability measure. The city certainly made its share of lousy calls, but the sloth, waste, and dysfunction emblematic of today's city government would have been shocking.

Over time, however, the CAO's purview was replaced by that hyperdemocracy. The reasonable notion that the people of San Francisco should have input into how things are run has turned into the democratic equivalent of death by a thousand cuts; as everybody gets a voice, democracy votes accountability down. When everyone's in charge, no one is. "In the old days, they ran roughshod over opposing views," Fracchia says. "Today, all ya got is opposing views. Pick your poison."

San Franciscans' appetite for voting is voracious; ours may be the only city that has had to ponder what to name ballot propositions after all the letters of the alphabet have been used up. "It is extraordinary, the number of things we ask our voters to vote on," Harrington confirms. "And somebody must like it, because we keep doing it."

Voters have demonstrated a jarring mixture of selflessness and selfishness. We greenlight billions of dollars in bonds, even when the city's inability to deliver projects on time or within budget has been rendered painfully clear. Yet we also repeatedly enshrine the wishes of single-issue activists and labor unions into law, and that carries ominous long-term consequences. There's a reason in times like the present that organizations such as the Department of Public Health are always targeted for deep cuts, while the notion of downsizing librarians, cops, or firefighters is inconceivable. The latter have gone to the voters to enshrine their standing in the city charter. No one has done so for the DPH — yet.

Special interests "go to the voters and say, 'Do you like libraries? Do you like children?' Well, of course they do," Harrington says. And if voters don't care to think through the fiscal ramifications — well, neither do their elected representatives. "The board likes children, too — so does the mayor. Next year in the budget they'll say, 'Oh, shit! Children get $30 million more — what doesn't?'" If the city ran its finances this way 30 years ago, the former controller notes, the money to respond to the AIDS crisis would have been locked up and unavailable. If such a need arises in the future — well, what then? Today's city can't even pay for the things it wants to pay for.

An apolitical CAO, incidentally, probably wouldn't have pandered to public safety unions with exorbitant raises in an election year, as Newsom did in 2007.

The mayor also talks a good game on accountability. He has an Accountability Matrix and an Accountability Index, and even an Accountability Report. But, sadly, a recent audit noted that these lists were largely redundant and overlapping, and were tabulated independently of one another, a clear waste of effort. Actually reading Newsom's Matrix/Index/Report is like a trip through the looking glass (only pathologically dull): Where is this city the mayor reports upon, where everything seems to be getting done with such marvelous efficiency? Sadly, it appears to exist only within the Matrix/Index/Report.

There are many words to read here, but they say very little. What does the Matrix/Index/Report convey regarding debacles like the Branch Library Improvement Plan or Laguna Honda Hospital rebuild? Well, the former is listed as "Done/Ongoing," while the latter is "In Progress." There's no mention of vast cost overruns, service cutbacks, or years of delays. But it's not just that the Matrix/Index/Report leaves out critical information; it often doesn't say anything worth knowing. In many cases, Newsom notes that he has "called for a report" on an issue, or will "lobby" about it — and presents that as solving a problem. Perhaps fittingly, messages regarding the mayor's accountability left with his press office were not returned.

Even when Newsom actually does something, there's no way of telling whether it was a good use of time and money. For example, the Matrix notes that the mayor promised to improve security at homeless shelters, which is listed as "Done," because metal detectors were installed. Super — but did that actually improve security? Did violent incidents drop? Do staff and residents feel safer? Information that proves the problem was actually solved or the situation improved is almost never included across thousands of entries and hundreds of pages. The mayor's Accountability Matrix is completely unaccountable for the information you most want to know.

Gavin Newsom truly is the mayor San Francisco was destined to have.

There are ways San Francisco can maintain its rampant democracy while establishing a system that abhors waste and incompetence:

Return much of the day-to-day control of city operations to an unelected, long-term city manager — who would also be responsible for negotiating union contracts.

Institute detailed citywide planning to avoid waste and duplication of services, while ensuring essential city functions are provided for.

Emphasize best practices in each individual city department, and let go of workers who aren't needed because of productivity gains.

Eliminate all budget set-asides and mandatory staffing levels, and let the city develop budgets that meet the needs of today and tomorrow, not yesterday.

Fire people who are incompetent — and that includes those at the top-heavy manage-ment level.

Instead of telling us how much money has been spent on a problem, focus on whether the problems are getting solved.

Yet it would take a seismic event to spur the city to shake off caked-on layers of status quo — a literal earthquake, or a figurative one. (Perhaps a meteor vaporizing City Hall in 2012.)

The far more likely scenario is that nothing will happen. The city will continue its orgy of waste and incompetence. San Francisco can afford plenty of both: We're rich — and getting richer all the time. According to the controller's office, San Franciscans' per-capita income jumped from an already-generous $58,244 in 2004 to $74,515 last year.

Of course, for many San Franciscans, those numbers represent another failure. They point to an exodus. The city's middle class is melting away faster than polar ice. With them, economists and demographers say, goes any realistic hope that voters will demand serious change in search of long-term reform.

Research by professor Bill Watkins of California Lutheran University over the past decade reveals that San Francisco is shedding its middle-class population at double the state rate. The city, however, is not losing low-income people at nearly the state's pace — and is gaining wealthy residents at far more than California's overall rate. In short, we are replacing our middle class with a rich elite and a burgeoning underclass. Watkins' research also reveals that San Francisco is going gray. The number of city residents between ages 45 and 64 has climbed, while the count of those aged 20 to 44 has dropped. The city, it seems, has become a target destination for the wealthy and retirees. These are not the people who want to make sacrifices now to shore up the city's future.

"Wealthier people are consuming," Watkins says. "They don't want to build a future. They don't have a reason to invest in the community." For that matter, neither do young people — because their futures likely involve moving out of San Francisco. According to Joel Kotkin, "San Francisco is Disneyland for adults, or a place people go until they grow up."

The stage is set for San Francisco to run on inertia. The city's poor are unable to effect a sea change; the young, nomadic population is uninterested; and the wealthy and older are unwilling.

As long as San Francisco is an alluring destination where residents will tolerate lunacy as a tradeoff for living the city lifestyle, and tourists flood the downtown, the city will lumber along, inefficiently and without accountability. "San Francisco is like the really good-looking coed who can get away with being a jerk, while a less good-looking one couldn't," Kotkin says.

When everybody is politicking but nobody is accountable for the results, waste happens; unevaluated programs happen; Yomi Agunbiade happens — and nothing is done about it. After he resigned in disgrace, the Board of Supervisors, astonishingly, passed a resolution commending him for his years of service. He was offered the job of manager of San Francisco's wastewater improvement program. San Francisco tried to keep Agunbiade on the payroll, even after years of mismanagement, damning allegations of sexual and religious harassment, and potentially exposing the city to a massive lawsuit. The only reason he isn't working for the city today is that he apparently chose not to. He works at a private engineering firm, and did not return messages regarding this story.

Rose Dennis, the target of Agunbiade's years of alleged torment, put the situation — and, when you think about it, many of San Francisco's problems — into perspective.

"The only thing I ever wanted was for this to stop and for me to be left alone to do my job," she says. "This all could have been avoided. This was all . avoidable."

By Benjamin Wachs, Joe Eskenazi

Thousands Waiting on Extended Unemployment Benefits

Nearly six weeks after President Barack Obama extended unemployment benefits in hard-hit states like Florida, Janet Husted of St. Petersburg is still waiting for her first check.

Like thousands of Floridians, Husted can blame the waiting game on slow technology and bad timing.

Floridians who happened to exhaust their unemployment benefits after Nov. 1 were automatically enrolled to receive the new round of extended benefits, so their weekly checks kept flowing. Those whose benefits had expired before November, however, had to reapply with the Florida Agency for Workforce Innovation.

Online applications for extended benefits — up to an additional 20 weeks — in Florida became available just last week, the same time the state began notifying some people by mail that they may be eligible. Applicants were told processing could take a couple of weeks.

Husted, 70, was laid off from a customer service job in AAA's insurance operation in August 2008. She received her last weekly unemployment check for $261 three months ago.

Earlier this month, two different staffers at the Agency for Workforce Innovation told Husted she qualifies for extended benefits. But she was given conflicting information about just when that money will come. Maybe within two weeks, maybe not.

"I had one call one day and one the next, and they had a totally different story," Husted said. "The people working in Tallahassee don't seem to know one day to the next what's happening."

She doubts her first check will come before the holidays.

The Agency for Workforce Innovation, the state's agency for unemployment benefits, said it has "diligently worked" to complete "significant reprogramming" of its computer system to implement the new program. It created a special Web page to allow Floridians to see if they're eligible for the next tier of benefits.

When the latest extension was passed in early November, the government estimated about 250,000 Floridians who were exhausting benefits sometime in 2009 could be eligible. Of those, about two-thirds were expected to be automatically re-enrolled, state officials said.

AWI spokeswoman Victoria Heller said some of the newly filed extension applications are being processed immediately, but others require additional information or verification. Their claims will likely be processed and payments made within two weeks of filing, she said.

The delay is both baffling and frustrating to Richard Morsani, an unemployed electrician from Spring Hill.

First it took two months of debate in Washington before an extension was approved. Now, Morsani said, there appears to be a lack of urgency in getting money to those who need it most to pay their bills.

Morsani said he has been trying since Nov. 8 to find out if he qualifies for an extension, but he has had trouble navigating AWI's Web site. He eventually reached an AWI representative by phone but was frustrated that she wouldn't share any information about his status on the phone even as she was looking at his file.

Instead, she told him to go back online.

"She wouldn't give me any information on the screen," he said. "I was trying to be nice, but I was getting very angry. … I said, 'My Christmas is gone. I won't get any money for Christmas.' "

With an unemployment rate of 11.2 percent, Florida has already earned its spot among the cluster of high-unemployment states.

The National Employment Law Project, an advocacy group for low-wage workers that compiles unemployment benefits information, has hammered Florida for doling out an average weekly unemployment benefit of just $239, among the lowest in the country.

Now comes the added issue of delayed benefits.

"The reality, given the crumbling infrastructure of the state programs, is that it's hard to get the benefits out the door," said Maurice Emsellem, who tracks unemployment issues for the law project.

He noted that the original goal of the federal legislation was to help a surge of people who were running out of benefits in September and October. Because of the reapplication process, though, that group got pushed back as a priority.

Unlike Florida, Emsellem said, some states expedited their programs to push checks into the hands of the jobless first and verify their eligibility for renewal second.

In New York, for instance, about 40,000 people who had run out of benefits as far back as Oct. 4 were certified on Nov. 15 to receive extended benefits. That kept them in the New York system receiving checks while the process of checking into their eligibility continued.

Jeff Harrington can be reached at or (727) 893-8242.

Fewer Canadians planning and saving for retirement, says RBC survey

TORONTO - Fewer Canadians are putting money into retirement plans, according to the Royal Bank's annual RRSP poll.

Canada's largest bank said Wednesday that 32 per cent of Canadians have not started saving for retirement yet, compared to 24 per cent in 2008.

The study also found only 36 per cent say they are planning or have planned for retirement, down from 42 per cent in 2008.

The study does not say what the reasons are for the decline in RRSP investment intentions. But economists have noted that one reason may be the recession, which has pushed up the jobless rate and squeezed Canadian living standards, leaving less money for investing.

As well, high household debt may be making consumers more skittish and cutting their spendng and investment intentions.

On Wednesday, Bank of Canada governor Mark Carney issued another caution to Canadians and the chartered banks, warning that interest rates are going up and they should be careful about adding too much debt.

Expanding on previous warnings, the bank governor told a business audience in Toronto that the current low interest rate environment may be luring Canadians to borrow too much, and banks to extend loans they will later regret.

The Royal said consumers need expert advise on retirement strategies, especially in the current economic environment and growing concerns about the future health of corporate pension plans, which many companies say they can no longer afford.

"With the recent economic uncertainty, we understand it may have been difficult for many Canadians to focus on planning for retirement," said Lee Anne Davies, head of retirement strategies for Royal Bank.

"It's not easy juggling many financial priorities especially during challenging economic times. That's why we recommend working with an adviser to review both your personal and financial goals, as well as consider the unexpected that may impact your lifestyle, and develop a realistic plan of action."

In its report, the Royal said the decline is sharpest among those aged 55 and over, with 53 per cent doing any retirement planning compared to 67 per cent last year.

RBC also says just 35 per cent of Canadians have contributed to or plan to contribute to an RRSP for the 2009 tax year - the lowest percentage of contributors since 1996.

And, among those with an RRSP who are not contributing this year or who are reducing their contribution, 54 per cent say it is because of current economic conditions.

The RBC poll of 1,457 people was conducted between Oct. 21 and Nov. 2, 2009. The margin of error is plus or minus 2.56 percentage points 19 times out of 20.

Such surveys are a popular promotional tool for Canada's banks and mutual fund companies. Many use public opinion polls to gauge demand for financial products and services, promote specific brand names and learn more about the public's financial management habits.

Peter Schiff - Dollar, inflation, interest rates, Obama

Click this link .....

Ron Paul's Bill: US behind financial Iron Curtain?

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Wall St. Bonuses Boom; Luxury Sales Are Proof

A year ago, plunging stock portfolios and massive layoffs dampened year-end bonuses on Wall Street, forcing high-flying traders and hedge fund managers to put a lid on lavish spending.

Wall Street Bonus Babies Return
A year ago, Wall Street traders and hedge funders were keeping a lid on spending as the recession... Expand
(Getty Images)
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But with the stock market up sharply and financial firms from Goldman Sachs to Bank of America once again reporting soaring profits, big bonuses are expected to return to Wall Street.

Not all financial firms will be doling out big bonuses, of course. Just last week the Obama administration's pay czar, Ken Feinberg, released new rulings that will curb pay packages for some of the highest-paid employees at companies receiving what the administration deems "exceptional assistance" from the government, including AIG, Citigroup, General Motors and GMAC.

President Barack Obama lashed out at Wall Street on Sunday, calling bankers "fat cats" who "don't get it."

"I did not run for office to be helping out a bunch of fat cat bankers on Wall Street," Obama said in an interview broadcast on CBS's "60 Minutes."

Still, luxury retailers who cater to this group are already reporting a sharp rise in interest from monied financial industry employees.

"We've already seen stronger sales," said Wayne Duris, general manager of New Country Porsche of Greenwich, Conn., a Manhattan suburb packed with money managers and investment bankers.

Duris said November sales at his showroom doubled compared with last year and that December is already off to a strong start, thanks to interest from Wall Street traders. His company recently sold two new Porsches -- with price tags of more than $100,000 -- to Wall Street professionals.

"People are feeling like they can spend again as the economy gets a little bit better," Duris said.

There are other signs that bankers are loosening their wallets as bonus season approaches.

A recent auction of modern art at Sotheby's beat estimates by bringing in $182 million. Retail sales at luxury retailers such as Saks and Burberry also rose for the first time in more than a year. And five-star restaurants in Manhattan are once again packed.

One Wall Streeter recently spent about $38,000 to rent out the lower Manhattan restaurant Tribeca Grillfor 100 guests, according to a manager there. Nobu, another expensive eatery in Tribeca, has seen bookings for parties by Wall Street firms soar in recent months compared with the same period last year, the restaurant said.

Another reliable indicator that Wall Street is expecting a big bonus season: high-end real estate sales are on the rise. Kathy Cole, a property broker with Coldwell Banker Timberline Real Estate in Vail, Colo., said she has already fielded calls from several people in the financial industry wanting to see listings for ski homes with price tags north of $3 million.

In Manhattan, where the number of home sales soared 45.6 percent in the third quarter compared to the second quarter, real estate brokers report an uptick in luxury sales.

That includes the $10.5 million shelled out by William J. B. Brady, a banker atCredit Suisse who recently bought a triplex penthouse with Venetian-style arches in New York's Greenwich Village.


Analysts predict that this year's Wall Street bonuses, which will be paid early in 2010, will be higher than last year, when a recession put a clamp on year-end payouts.

Incentive pay is set to rise about 40 percent, according to Johnson Associates, a compensation consulting firm in New York. The group said fixed income and equities workers will see the biggest payouts, as both areas had strong rebuilding years.

In contrast, declines of 15 percent to 30 percent are projected at hedge funds, private-equity firms and prime-brokerage operations, as assets under management continue to suffer. The payout levels are lighter than the boom years 2006 and 2007, but the Johnson Associates survey shows a steep recovery from last year.

Goldman Sachs, Morgan Stanley and JPMorgan Chase's investment bank are expected to pay record combined bonuses this year. The firms will hand out $29.7 billion in bonuses, according to analysts' estimates. That's up 60 percent from last year and more than the previous high of $26.8 billion in 2007.

But not all investment banks are doling out cash bonuses this year.

Goldman Sachs is planning to pay top executives in restricted stock rather than cash, the company announced recently. The move comes after the company was heavily criticized for setting aside more than $16 billion for top employees.

The size of this year's bonus payments to investment bankers is also obscuring Manhattan's continued struggles in the financial sector.


The number of finance industry jobs in New York City has fallen by 41,400 in the two years through August, according to the New York State Department of Labor.

None the less, the bull market is ushering in a renewed appetite for luxury among big-spending Wall Street firms.

Todd Rome, president of Blue Star Jets in Manhattan, one of the world's largest private aircraft charter brokers, said that several groups of Wall Street traders have already chartered fully catered planes to fly to the Super Bowl in Miami in February.

"Starting last month, this business has had a facelift," said Rome, whose firm as access to over 4,000 aircraft worldwide. "It starting to feel like we never really had a recession."

Growing Up Empty: The Hunger Epidemic in America

Most Americans may find it hard to accept that millions in this nation are suffering from hunger -- an affliction most often associated with war-torn Africa or flood-ravaged Bengal. It flies in the face of everything we've been told about our nation's prosperity. First the Clinton and then the Bush administration have led us to believe that poverty is under control, pointing to the mass exodus from the welfare rolls since the 1996 reforms were launched. The $27 billion cut in food stamps? Justified, lawmakers told us, because the poor are working and feeding themselves. Hunger, it is commonly understood, has long since vanished, along with the 7 million people who no longer receive public assistance.

Yet recent U.S. Department of Agriculture statistics tell a more damning tale. A 1999 study showed that more than 36 million Americans -- one-third of them children under the age of 12 -- suffer from "limited or uncertain" access to food. In 1998, a food relief organization found that as many as 1 in 10 Americans had relied on soup kitchens and emergency food centers in order to eat.

In Growing Up Empty, Loretta Schwartz-Nobel sets out to put a human face on these and other statistics through vivid on-the-ground reporting. She witnesses children rummaging through a Philadelphia garbage can for half-eaten chicken legs. She opens the barren refrigerator of a Marine and his family in a Virginia training camp. She meets an angry rural Mississippi woman trying to feed her four children on $80 a month in food stamps. A North Philadelphia mother says she got so used to hunger that her "stomach ached like rubber bands was tied around it." The result is a harrowing compendium of human stories that tumble into one urgent message: Hunger is a pervasive, hidden, and completely avoidable disease in the United States, a nation that wastes 27 percent of its food supply.

Rampant hunger is as difficult to reconcile with our national image today as it was more than a quarter century ago when Schwartz-Nobel first encountered it. In 1974, as a young reporter, she stopped on a Philadelphia street to help a crippled 84-year-old woman. She bought the woman a bag of groceries that day and would drop by with food from time to time. Several months later, Schwartz-Nobel came calling, only to find that the woman had died alone, of hunger. The wrenching experience led the author to discover that millions of other Americans were quietly starving. In 1981, the results of her reporting were published in the award-winning book Starving in the Shadow of Plenty.

In the years that followed, the Reagan administration cut $12 billion from the federal food program, and one of his advisers boasted that "poverty has been virtually wiped out in the United States." Growing Up Empty turns that claim on its head. By all rights, our food coffers today should be far more bountiful. America is even more prosperous, and more than 140,000 food relief organizations exist today where there were only a few two decades ago. Yet hunger persists, and the reasons are a direct result of government policy. Welfare reforms shredded the financial safety net for the nation's poor while simultaneously pushing low-income workers into poverty-level jobs with no access to food relief or health insurance. No wonder that last year the U.S. Council of Mayors reported that record numbers of the working poor were standing on lines to feed their families.

Perhaps the author's most startling revelation is her exposé of deprivation among the nation's enlisted soldiers. Salaries are so low ($887.70 a month in 2000 for a newly enlisted Marine) that even with food stamps, many military families find it hard to cobble together an existence. The director of a charity for enlisted families in San Diego tells of a soldier who bought 21 McDonald's hamburgers when they were 39 cents apiece so that his pregnant wife would have something to eat while he was away on field duty. His wife ate one a day until he returned. Another young Marine admits that he is accustomed to going without meals for four days at a time when his family's food stamps run out at the end of the month.

This is a book meant to stir outrage, and it is written from the heart. Some may be put off by the author's sentimental asides when the facts are disturbing enough to speak for themselves. Others may find it troubling that she conceals the full identities of her subjects. But the powerful message cannot be ignored. A reader hears the rumbles of invisible Americans who don't have enough to eat. The suffering is plentiful, like the nation's resources.

Britain: Young mother commits suicide and kills her son after months of poverty

Earlier this month, a London Coroner’s Court heard that on June 13 this year, Christelle Pardo leapt from the sixth-floor balcony of her sister’s flat in Hackney, east London, holding her five-month-old son Kayjah in her arms. She did so after months of dire poverty. Both mother and son were killed.

Thirty-two-year-old Christelle, who was pregnant with her second child, was a French national who had been living in Britain for 11 years. She graduated from the London Metropolitan University in May 2008 with a degree in philosophy and shortly after began claiming Job Seekers Allowance (JSA)—the main benefit available for those without employment but “actively seeking work.”

In December 2008, her JSA was stopped as she was within 11 weeks of giving birth and was therefore considered unable to work. The withdrawal of JSA meant that Christelle’s entitlement to housing benefit also stopped.

The court heard that Christelle had tried to claim back-up Income Support—a means-tested benefit paid to those temporarily unable to work, with little other means of sustenance. But although she met the criteria, her application was rejected on the grounds that she had not proven she had been in continuous employment in the UK for the five years prior—despite having worked or studied in Britain since 1997.

Christelle’s application for child benefit was then rejected in April, on the grounds that she had been denied Income Support. With Hackney Council having served a demand for the repayment of £200 housing benefit, Christelle made two further appeals for Income Support, both of which were rejected.

Her attempt to challenge the Department of Works and Pensions (DWP) by taking it to tribunal was repeatedly thwarted. Time and again, she was not given a date for her hearing.

Christelle last phoned the DWP on June 12. No details are available of what was said during the phone call. One can reasonably infer, however, that she once again came up against indifference to her plight. The following day, Christelle killed herself and her son.

Her sister, Olaya, told the inquest that she had gone to the shops to buy some milk, and returned home to find the front door open. “I called for Christelle and didn’t hear anything,” Olaya said. “I went out to the balcony and when I looked over I could see my sister and Kayjah.”

Christelle died at the scene. Kayjah died in a nearby hospital later that day. At the time of their death, mother and child had been left without any financial support for seven months. They only had a roof over their heads because Olaya had taken the pair into her own home. Christelle was unable to return to France because she no longer had relations there, Olaya said. “If it had not been for me she would have been out on the street,” she told the court.

Describing the distress her sister had experienced, Olaya said that on the day of her suicide, “she was distant, she didn’t say much. She was upset and wanted a date for her tribunal.

“She was stressed about her benefits. She didn’t want her son to feel all the stress that she was going through with the paperwork.

“We talked sister to sister and she told me how she was feeling. She said she was upset because she felt that she didn’t exist.”

Olaya told the inquest, “Her application was completed—she had the right paperwork.

Also to get her student loan she needed to go through the same tests and had to be a habitual resident in the country. She received her student loan, and they could have made inferences from that.”

Recording a verdict of suicide on Christelle and one of unlawful killing for the death of her son, Coroner Dr. Andrew Reid said, “She was not in a position around the time her son was born to be actively seeking work, and was not in a position to claim Income Support, which eventually stopped her housing benefit.”

How can it be that in twenty-first century Britain, an expectant mother with a young baby could have been left without a home or income for an extended period of time?

It was not the case that Christelle “slipped through the net.” From reports, it appears that the DWP, which appeared at the inquest, was completely unrepentant—insisting that as Christelle had not proved to its satisfaction her entitlement, the decision to withhold financial aid was justified.

The sums of money involved are tiny. Income support for lone parents is just £64.50 per week, while child benefit (for the oldest child) is £20. The DWP would have been aware that Christelle had been left without any income as a result of its decision. It would also have been aware—given her repeated applications and attempt to secure a tribunal hearing—that Christelle had become increasingly desperate, especially with a second child on the way.

Yet nothing was done, and there was no one that Christelle could turn to for help in resolving the dire circumstances she faced. “She felt that she didn’t exist,” Olaya said of her sister. And her feeling was correct. She “didn’t exist,” and not simply because of bureaucratic indifference. Rather the indifference—or, more truthfully, contempt—for Christelle’s plight is the result of long-running politically motivated efforts to marginalise and pillory the poor and the unemployed.

A profusion of welfare benefits, based on differing conditions, time-scales, qualifications, etc., has been created with the aim of discouraging, if not actively preventing, their take-up. Consequently, an estimated £13 billion in benefits goes unclaimed each year. This has been accompanied by a hysterical campaign by the government and the media, in which those who do take up their legal entitlement are routinely portrayed as “scroungers,” “parasites” and potential fraudsters.

As a result, research by the Joseph Rowntree Foundation earlier this year found that the public grossly overestimated the scale of benefit fraud, which they thought was incomparably more costly than tax avoidance. The DWP itself estimates the cost of fraudulent benefit claims to be just £800 million a year. In contrast, tax avoidance by transnational corporations and the super-rich is estimated to cost as much as £80 billion a year.

The death of Christelle Pardo and her son was the outcome of this cruel and dehumanising set-up. The coroner stated that Christelle had been placed in a “very parlous situation” due to the DWP’s stance on her circumstances. Yet the verdict of suicide means that there will be no further investigation and no one will be held to account.

The inquest findings were released at the same time that news broke of directors at the Royal Bank of Scotland (RBS) threatening to resign en masse if the government carried through its threat to block their bonus payments worth millions. RBS has been a major recipient of tens of billions in taxpayers’ money over the last months, after it was effectively nationalised to prevent its collapse. The directors are insisting on their right to pay out up to £2 billion in bonuses. While the media and official parties discussed the rights and wrongs of the directors’ stance, the death of Christelle Pardo and her son received barely any coverage. Only two national newspapers reported the inquest verdict, and then without comment.

Another Al Gore Reality Check: “Rising tree mortality”?

In this Reuters story (15 December 2009) they report: “Describing a ‘runaway melt’ of the Earth’s ice, rising tree mortality and prospects of severe water scarcities, Gore told a UN audience: ‘In the face of effects like these, clear evidence that only reckless fools would ignore, I feel a sense of frustration’ at the lack of agreement so far.”

Former US Vice President Al Gore speaks at a presentation on melting ice and snow at the UN Climate Change Conference 2009 in Copenhagen December 14, 2009. Credit: REUTERS/Bob Strong

Now to most people, “rising tree mortality” raises the specter of a world with less greenery. But how does real world data compare with the virtual modeled world? Is the world getting less greener? Is there any hint of the virtual world in the real world data?

Satellite data for the real world (not the one Mr. Gore lives in) can help give us an idea.


Globally net primary productivity (NPP) has increased. As the IPCC’s WG II report (p. 106) says:

Satellite-derived estimates of global net primary production from satellite data of vegetation indexes indicate a 6% increase from 1982 to 1999, with large increases in tropical ecosystems (Nemani et al., 2003) [Figure 1]. The study by Zhou et al. (2003), also using satellite data, confirm that the Northern Hemisphere vegetation activity has increased in magnitude by 12% in Eurasia and by 8% in NorthAmerica from 1981 to 1999

Figure 1: Climate driven changes in global net primary productivity, 1982-1999. Source: Myneni (2006), p. 5. This is the same figure as in IPCC AR4WGII, p. 106, but with a different color scheme.


In a synthesis of long term ecological monitoring data across old growth Amazonia, Phillips et al (2008) find that from approximately 1988 to 2000 not only that the biomass of these tropical forests increased but that they have become more dynamic, that is, they have more stems, faster recruitment, faster mortality, faster growth and more lianas. These increases have occurred across regions and environmental gradients and through time for the lowland Neotropics and Amazonia. They note that the simplest explanation for this suite of results is that improved resource availability has increased net primary productivity, in turn increasing growth rates, which can all be explained by a long-term increase in a limiting resource. They suggest that this no-longer-limiting resource might be CO2, although other factors (e.g., insolation or diffuse radiation) may also play a role.

Gloor et al. (2009), based on analysis of data from 135 forest plots in old growth Amazonia from 1971 to 2006 show that the observed increase in aboveground biomass is not due to an artifact of limited spatial and temporal monitoring. They conclude that biomass has increased over the past 30 years (p. 2427).

These findings are consistent with satellite data that indicate that the net primary productivity of the Amazon increased substantially from 1982–99, a period that experienced considerable global warming (see Figure 1).


Satellite Imagery shows that parts of the Sahara and Sahel are greening up consistent with the trend recorded in Figure 1 (Owen 2009). The United Nations’ Africa Report (Figure 2) notes:

“Greening of the Sahel as observed from satellite images is now well established, confirming that trends in rainfall are the main but not the only driver of change in vegetation cover. For the period 1982-2003, the overall trend in monthly maximum Normalized Difference Vegetation Index (NDVI) is positive over a large portion of the Sahel region, reaching up to 50 per cent increase in parts of Mali, Mauritania and Chad, and confirming previous findings at a regional scale.” (United Nations 2008: 41). Figure 2: Source: United Nations (2008),


Similarly, an Australia-wide analysis of satellite data for 1981–2006 indicates that vegetation cover has increased average of 8% (Donohue et al. 2009).

Figure 3: Australia, 1981-2006. Change in vegetation cover, as described by the fraction of Photosynthetically Active Radiation absorbed by vegetation (fPAR). Source: Donohue et al. (2009)


With respect to the northern latitudes, 22% of the vegetated area in Canada was found to have a positive vegetation trend from 1985–2006. Of these, 40% were in northern ecozones (Pouliot et al. 2009; see Figure 4).

Figure 4: Long term changes in vegetation for Canada, 1985-2006. Source: Pouliot, D A; Latifovic, R; Olthof (2009).

Every Windows user to get pop-up menu of internet browsers

Every person who owns a computer with Microsoft Windows is to be offered their choice of internet browsers in an automatic pop-up menu following an agreement today between the software company and the European Union.

In March next year all PCs will be sent a software update that will cause a window to appear on screen offering them options to the pre-installed Microsoft Explorer.

All new PCs will also offer a selection of browser options including Mozilla’s Firefox and Google’s Chrome.

Following the deal the EU today dropped anti-trust charges against Microsoft.

The move ends a decade of action by regulators as a result of alleged anti-competitive practices by the company.

Under the terms of the deal, Microsoft will give users a choice of up to 12 other web browsers when they are using computers running on Windows, the operating system which runs the vast majority of the world’s computers.

Consumers will still be given the option to keep Internet Explorer if they want

Computer manufacturers will also be able to produce PCs without Internet Explorer in Europe.

“Millions of European consumers will benefit from this decision by having a free choice about which web browser they use," said EU Competition Commissioner Neelie Kroes.

“Such choice will not only serve to improve people’s experience of the internet now but also act as an incentive for web browser companies to innovate and offer people better browsers in the future".

The ballot screen will list the 12 most popular Web browsers running on Windows, with five featured prominently.

Users will be able to choose Apple's Safari, Google’s Chrome, Microsoft's Internet Explorer, Mozilla's Firefox, Opera, AOL, Maxthon, K-Meleon, Flock, Avant Browser, Sleipnir and Slim Browser.

The EU said around 100 million computers will display the screen by the middle of March, and around 30 million new computers will show it over the next five years. The choice of browsers will be updated every six months and those offered may change according to how popular they are at the time.

Regulators have warned that the company may still be fined up to 10 per cent of its yearly global turnover if Microsoft does not stick to the terms of the deal over the next five years.

Microsoft has already paid around $1.7 billion (£1 billion) in fines from previous enquiries into the company's business practices.

In January, the EU charged Microsoft with monopoly abuse for tying its browser, Internet Explorer to the Windows operating system software used on most desktop computers — this, they said, was an "artificial distribution advantage".

Earlier this week, the EU said that a ballot screen would eliminate these concerns when it is downloaded as an automatic update to all users of Windows XP, Windows Vista and Windows 7 in Europe who have Internet Explorer set as their default browser.

Bank Aid - Do They Loan This Christmas

Click this link .....


(伊朗‧德黑蘭)伊朗國營電視台報導,伊朗週三(12月16日)成功試射一枚自製的改進型“泥石-2”(Sejil 2)中程導彈,並稱其射程可到達以色列境內。


























(印度)美國人口統計局預測,印度將在2025年取代中國,成為世界第一人口大國。目前中國育 齡婦女平均生育率少於每人生養1.6個孩子,較1990年的2.2少了許多,導致平均人口增長率降至每年0.5%。美國統計局因而預計,中國人口頂峰將是 14億,比原先的預估數字少,而且這將在一年後來到。
































但他也指出“從日本將來50年、100年來看,他國軍隊持續駐守究竟是否合適,這當然值得商 榷。”鳩山當天在官邸與在野自民黨總裁谷垣禎一舉行上任後首次會談表示,將在2014年前實現駐沖繩美軍普天間基地遷移,這一點不會動搖。與此同時,日本 政府在今日(週四,12月17日)上午的內閣會議上通過了2010年度防衛關聯預算編制基本方針。有關涉及日本的安全保障環境,方針分析指朝鮮核與導彈問 題相當嚴重,中國等周邊國家的軍力日趨現代化,軍事活動也將逐漸頻繁。



Gulf petro-powers to launch currency in latest threat to dollar hegemony

The Arab states of the Gulf region have agreed to launch a single currency modelled on the euro, hoping to blaze a trail towards a pan-Arab monetary union swelling to the ancient borders of the Ummayad Caliphate.

Traders at the Kuwaiti Stock Exchange
Traders at the Kuwaiti Stock Exchange

“The Gulf monetary union pact has come into effect,” said Kuwait’s finance minister, Mustafa al-Shamali, speaking at a Gulf Co-operation Council (GCC) summit in Kuwait.

The move will give the hyper-rich club of oil exporters a petro-currency of their own, greatly increasing their influence in the global exchange and capital markets and potentially displacing the US dollar as the pricing currency for oil contracts. Between them they amount to regional superpower with a GDP of $1.2 trillion (£739bn), some 40pc of the world’s proven oil reserves, and financial clout equal to that of China.

Saudi Arabia, Kuwait, Bahrain, and Qatar are to launch the first phase next year, creating a Gulf Monetary Council that will evolve quickly into a full-fledged central bank.

The Emirates are staying out for now – irked that the bank will be located in Riyadh at the insistence of Saudi King Abdullah rather than in Abu Dhabi. They are expected join later, along with Oman.

The Gulf states remain divided over the wisdom of anchoring their economies to the US dollar. The Gulf currency – dubbed “Gulfo” – is likely to track a global exchange basket and may ultimately float as a regional reserve currency in its own right. “The US dollar has failed. We need to delink,” said Nahed Taher, chief executive of Bahrain’s Gulf One Investment Bank.

The project is inspired by Europe’s monetary union, seen as a huge success in the Arab world. But there are concerns that the region is trying to run before it can walk.

Europe took 40 years to reach the point where it felt ready to launch a currency. It began with the creation of the Iron & Steel Community in the 1950s, moving by steps towards a single market enforced by powerful Commission and European Court. The EMU timetable was fixed at the Masstricht in 1991 but it took another 11 for euro notes and coins to reach the streets.

Khalid Bin Ahmad Al Kalifa, Bahrain’s foreign minister, told the FIKR Arab Thought summit in Kuwait that the project would not work unless the Gulf countries first break down basic barriers to trade and capital flows.

At the moment, trucks sit paralysed at border posts for days awaiting entry clearance. Labour mobility between states is almost zero.

“The single currency should come last. We need to coordinate our economic policies and build up common infrastructure as a first step,” he said.

Mohammed El-Enein, chair of the energy and industry committee in Egypt’s parliament, said Europe’s example could help the Arab world achieve its half-century dream of a unified currency, but the task requires discipline. “We need exactly the same institutions as the EU has created. We need a commission, a court, and a bank,” he said.

The last currency to trade in souks from Marakesh, to Baghdad and Mecca, was the Ottomon Piaster, known as the “kurush”. It suffered chronic inflation as the silver coinage was debased.

There is a logic to an Arab currency. The region speaks one language, has the unifying creed of “Umma Wahida” or One Nation from the Koran, and has not torn itself apart in savage wars – ever – in quite the way that Europe has in living memory.

Yet hurdles are formidable even for the tight-knit group of Gulf states. While the eurozone is a club of rough equals – with Germany, France, Italy, and Spain each holding two votes on the ECB council – the Gulf currency will be dominated by Saudi Arabia. The risk is that other countries will feel like satellites. Monetary policy will inevitably be set for Riyadh’s needs.

Hans Redeker, currency chief at BNP Paraibas, said the Gulf states may have romanticised Europe’s achievement and need to move with great care to avoid making the same errors.

“The Greek crisis has exposed the weak foundations on which the euro is built. The gap in competitiveness between core Europe and the periphery has grown wider and wider. The obvious mistake was to launch EMU without a central fiscal authority and political union, as the Bundesbank warned in the 1990s,” he said.

“The euro was created for political reasons after the fall of the Berlin Wall to lock Germany irrevocably into Europe. It was not done for economic reasons,” he said.

Ben Simpfendorfer, Asia economist for RBS and an expert on the Middle East, told the FIKR conference that the rise of China had paradoxically disrupted the case for pan-Arab economic integration.

There was a natural fit ten years ago between rich oil state and low-wage manufacturers in Egypt and Syria, but cheap exports from China have forced poorer Arab states to retreat behind barriers to shelter their industries. “The rationale for a single currency has become weaker,” he said.

The GCC also agreed to create a joint military strike force – akin to the EU’s rapid reaction force – to tackle threats such as the incursion of Yemeni Shiite rebels into Saudi territory earlier this year.

This is a major breakthrough after years of deadlock on defence cooperation.

The Sunni Gulf states are deeply concerned about the great power ambitions of Shiite Iran and its quest for nuclear weapons, to the point where the theme of a possible war between Iran and a Saudi-led constellation of states has crept into the media debate.

They nevertheless repeated on Tuesday that “any military action against Iran” by Western powers would be unacceptable.

U.S. Must Control Debt “Or Face Possible Panic in Financial Markets”

This is a very interesting bit of news to go along with Hyperinflation Special Report by John Williams of Shadow Government Statistics from yesterday. Similar timelines.

Via: Reuters:

The U.S. government must craft a plan next year to get its ballooning debt under control or face possible panic in financial markets, a bipartisan panel of budget experts said in a report on Monday.

Though the government should hold off on immediate tax hikes and spending cuts to avoid harming the fragile economic recovery, it will need to make such painful changes by 2012 in order to keep debt at a manageable 60 percent of GDP by 2018, according to the Peterson-Pew Commission on Budget Reform.

Without action, investors could lose confidence in the United States, driving down the dollar and forcing up interest rates, said the former lawmakers and budget officials who crafted the report. That could cause a sharp decrease in the country’s standard of living.

“We will be less free if we don’t tackle this,” said Jim Nussle, a Republican member of the commission who earlier served as a White House budget director and chairman of the budget committee in the U.S. House of Representatives.

The 34-member commission published its report as Congress was poised to raise the debt limit from its current $12.1 trillion level to allow the government to continue operating.

The national debt has more than doubled since 2001, thanks to the worst recession since the 1930s, several rounds of tax cuts and wars in Iraq and Afghanistan.

A looming wave of retirements over the coming decade is expected to make the situation worse.

The national debt currently accounts for 53 percent of GDP, up from 41 percent a year ago. That’s likely to rise to 85 percent of GDP by 2018 and 200 percent of GDP by 2038 unless dramatic changes are made, the commission said.

The commission did not issue specific prescriptions but said tax increases and spending cuts would probably be needed.

Russian Federation Council gives president green light to deploy troops abroad

The upper house of the Russian parliament on Wednesday approved a bill allowing the use of Russian military forces in foreign countries, including pre-emptive strikes.

U.S. National Debt Tops Debt Limit

The latest calculation of the National Debt as posted by the Treasury Department has - at least numerically - exceeded the statutory Debt Limit approved by Congress last February as part of the Recovery Act stimulus bill.

The ceiling was set at $12.104 trillion dollars. The latest posting by Treasury shows the National Debt at nearly $12.135 trillion.

A senior Treasury official told CBS News that the department has some "extraordinary accounting tools" it can use to give the government breathing room in the range of $150-billion when the Debt exceeds the Debt Ceiling.

Were it not for those "tools," the U.S. Government would not have the statutory authority to borrow any more money. It might block issuance of Social Security checks and require a shutdown of some parts of the federal government.

Pending in Congress is a measure to increase the Debt Limit by $290 billion, which amounts to six more weeks of routine borrowing for the federal government. (The House just passed the increase, though the Senate has yet to act. It is expected to approve the measure.)

Republicans and conservative Democrats blocked moves by House leaders to pass a $1.8 trillion dollar increase in the Debt Limit so the Democratic majority would not have to face the embarrassment of raising the Debt Limit yet again before next November's midterm elections.

The Debt Limit has been raised about a hundred times since 1940, when it was $49 billion - about five days worth of federal spending now.

The White House projects a record $1.5 trillion dollars deficit this year alone, and a 5-year deficit total of $4.97 trillion.

The Debt figure goes up and down on a daily basis based on government borrowing and revenue. Technically, not all of the National Debt is subject to the Debt Limit - a small percentage is exempt.

White House Defends Citigroup Tax Break
Fed Keeps Rates Low, Strikes Upbeat Note
Al Gore Pens Apocalyptic Climate Change Poem
Schumer "Regrets" Slur of Flight Attendant
Chavez: If Climate Were Bank, U.S. Would Have Saved It
Howard Dean Steps Up Attacks on Health Care Compromise
Poll: Americans Overwhelmingly Oppose GITMO Transfer