Wednesday, December 23, 2009

FBI Concerned Over Citigroup Cyber Attack

WASHINGTON — The FBI is investigating a hacker attack on Citigroup Inc. that led to the theft of tens of millions of dollars, The Wall Street Journal reported Tuesday.

Citing anonymous government officials, the Journal reported that the hackers were connected to a Russian cyber gang. Two other computer systems, at least one of connected to a U.S. government agency, were also attacked.

Citigroup denied the report. "We had no breach of the system and there were no losses, no customer losses, no bank losses," said Joe Petro, managing director of Citigroup's Security and Investigative services. "Any allegation that the FBI is working a case at Citigroup involving tens of millions of losses is just not true."

The Journal reported that the attack on Citigroup's Citibank subsidiary was detected over the summer, although it may have occurred up to one year earlier. The FBI, the National Security Agency, the Homeland Security Department and Citigroup worked together to investigate the attack.

Cyber crime is of increasing concern to businesses and the federal government, with President Barack Obama calling it one of the "most serious economic and national security challenges we face as a nation."

Obama is expected on Tuesday to announce the appointment of Howard A. Schmidt, a former eBay and Microsoft executive, as the government's cyber security coordinator.

Joe Salerno with Judge Napolitano - Too Big Too Fail or Let Them Fail?

Click this link .....

Schiff Report Dec 21st 2009 - interest rates, death tax, health care

Click this link ......

They're All Against Jobs

December 21 2009 "Huffington Post" -- Who is against jobs in the United States? The big banks, Wall Street, the Council on Foreign Relations, the Business Roundtable, the United States Chamber of Commerce, the National Retail Federation, Corporate America, the President of the United States, Congress of the United States. Everyone is crying for jobs, but no one seems to understand why there aren't any. And the reason for those opposing jobs is money.

Beginning in 1973, big banks made most of their profit outside of the United States. Industries off-shoring, investing, banks financing the investments, transfer fees, fees and interest on the loans made for bigger profits. Long since, the big banks under the leadership of David Rockefeller have led the way to off-shore and make a bigger profit. Goldman Sachs, AIG, Citicorp and Wall Street, conspiring for a bailout and now using it for bonuses, make more money from the off-shored operations.

The Council on Foreign Relations ought to be renamed the Council on Making Money. A recent PEW poll reported fully 85% of Americans said that protecting United States jobs should be a top foreign policy priority. But only 21% of the Council on Foreign Relations agrees. Financial interests organized the Business Roundtable to continue off-shore investment and profit. The local Chamber is for Main Street America, but Tom Donahue and the United States Chamber have sold out to the financial interests and oppose jobs and producing in the United States. Thirty years ago, hundreds of thousands of Arrow shirts produced in China were a best seller in the United States. But at Christmastime, the Chinese supply ran short and the retail stores had to order the same shirt from New Jersey. They made 20% less profit on the New Jersey shirt. Retailers are all for profit from imports and against domestic production and jobs in America.

Corporate America would fight any initiative by the President, the Congress, or the government to create jobs in the United States. That is, production that faces competition offshore. In globalization, U. S. production can't make a profit, can't survive. Its competition will off-shore the same article for a lesser price, putting you out of business. Moreover, Corporate America doesn't have to bother with labor in China. The China government controls labor and you don't have to worry about a work stoppage or minimum wage. All they have is a maximum wage.

And Corporate America doesn't have to worry with clean air and clean water or the environment in China. Nor does it have to worry with OSHA and all of its safety rules. Many times the factory building is furnished and you don't have to worry with capital costs. If you make a profit, you can just reinvest it in an additional operation and not have to pay any U. S. income tax. If the operation fails, walk away with no legacy costs. Corporate America bitterly opposes its government protecting and strengthening the U. S. economy because producing again in America will put the executives back to work. They can send a Jaycee to China to watch the quality control daily and sit on the 32nd floor on Sixth Avenue with the internet, keeping check, and, leaving early for a massage and drinks. With production in China they don't have to work.

As Commander-in-Chief, the President dithered for months over the number of troops. But he can't equip the troops except for the favor of a foreign country. The War Production Act of 1950 requires the President to make sure that we can produce in- country those articles necessary for our national defense. Enforcing this law would limit the campaign contributions. Under Section 201 of the trade laws, the President is supposed to take action, like impose tariffs or quotas, when a certain production is endangered. Not only endangered, our automobile production has been bankrupted. But all the President does is give Detroit bailout welfare. The President doesn't want to limit the campaign contributions.

The same with Congress. Senator Byron Dorgan of North Dakota long ago tried to allocate the tax incentive for foreign jobs and production to domestic jobs and production. The Business Roundtable and the U. S. Chamber fought it like a tiger and killed it.

As the President said in his West Point talk, there is fierce competition in international trade and globalization. All countries move to protect and build their economies while the United States goes out of business. The one advantage that the U.S. has is its richest market in the world. It is fast becoming the poorest market and the U.S. is losing any clout to maintain a strong economy.

The economy is in the hands of Summers, Bernanke and Geithner. Campaign contributions are in the hands of David Axelrod and Rahm Emanuel. The poor President is smart, diligent and working his head off campaigning. But he is inexperienced and not governing, and the Congress is in a Mexican standoff over an archaic filibuster rule that reveres democracy by the minority.

Of course, the media, which knows this and keeps it top secret, is owned by big business.

If I don't meet you in the breadline, my children will.

Merry Christmas!

Fritz Hollings is a former South Carolina Senator.

Copyright © 2009, Inc.

Banks with political ties got bailouts, study shows

NEW YORK (Reuters) – U.S. banks that spent more money on lobbying were more likely to get government bailout money, according to a study released on Monday.

Banks whose executives served on Federal Reserve boards were more likely to receive government bailout funds from the Troubled Asset Relief Program, according to the study from Ran Duchin and Denis Sosyura, professors at the University of Michigan's Ross School of Business.

Banks with headquarters in the district of a U.S. House of Representatives member who serves on a committee or subcommittee relating to TARP also received more funds.

Political influence was most helpful for poorly performing banks, the study found.

"Political connections play an important role in a firm's access to capital," Sosyura, a University of Michigan assistant professor of finance, said in a statement.

Banks with an executive who sat on the board of a Federal Reserve Bank were 31 percent more likely to get bailouts through TARP's Capital Purchase Program, the study showed. Banks with ties to a finance committee member were 26 percent more likely to get capital purchase program funds.

As of late September, nearly 700 financial institutions had received bailouts of $205 billion under the capital purchase program, the study said.

The banking industry has long been criticized for using political influence to obtain bailouts.

Scott Talbott, a senior vice president with industry lobbying group The Financial Services Roundtable, said the study was skewed because it did not exclude nine of the largest banks that were "strongly asked" by the government to take bailouts.

Those banks included Goldman Sachs Group Inc (GS.N), JPMorgan Chase & Co (JPM.N), and Morgan Stanley (MS.N) -- all of which repaid their bailouts in June.

Bank of America Co (BAC.N) and Citigroup Inc (C.N) more recently announced plans to pay back taxpayers.

Talbott also noted that $116 billion has been repaid with interest.

"This demonstrates the banks were excellent stewards of the taxpayer's money," Talbott said.

But a watchdog for the government's bailout, the special inspector general for TARP, said last month that the broader $700 billion bailout program "almost certainly" will result in an overall loss for taxpayers.

President Obama said in October that despite the bailout, there was still too little credit flowing to small businesses.

(Reporting by Steve Eder; Editing by Gary Hill)

A Lost Decade in Stocks, Industrial Production, U.S. dollar, and Housing. How we Managed to Inflate and Destroy the Biggest Financial Bubble of our Ge

It is fitting that we end the current decade just like we started it, with the bursting of bubbles. In the early part of the decade we were dealing with the fallout of the technology bust. That was quickly replaced by the even bigger housing bubble and that has now popped as well. The trillions lost by average Americans is incredible but in reality nothing was technically lost because the entire decade was one enormous Ponzi scheme and like all Ponzi schemes the wealth created is false. Bernard Madoff was simply the mascot of a decade built on phony money spewed out by the corporatocracy of Wall Street. What is even more troubling is how the actions taken by Wall Street are not being prosecuted in the same fashion as our justice system took on Bernard Madoff. The reason for that is the corporatocracy has legalized national bank robbery.

If you had $10,000 and put it in the S&P 500 at the start of the decade you would have performed worse than a person who merely stuffed the money into a mattress. The person who put their money into the NASDAQ at the start of decade is even in worse shape. We have experienced a lost decade. With employment, we now have the same number of people working as we did back in 2000. Only difference is in 2000 we had 280 million people and today we have 308 million people living in our country.

Take a look at the S&P 500:


Even after the raging rally since the March corporatocracy bailouts, the S&P 500 is still down nearly 25 percent from its January 2000 point. One of the broadest measures of our economy and we are still down 25 percent after a decade. But this isn’t even the worst case. Take a look at the NASDAQ:


The NASDAQ is down 45 percent from the start of the decade. The only other time in history a lost decade has occurred in stocks was during the Great Depression. Of course, many try to hide this stubborn fact but this is part of the new reality. Much of the wealth created in the past decade was built on a weak foundation of sand. A form of corporate chicanery that gave too much power to Wall Street. And the power is still there since no real reform has actually taken place since the meltdown started in 2007.

Yet if we looked more closely we would have noticed the bust more quickly. We never recovered from the tech bust in terms of employment:


Employment has really taken it on the chin. Our current unemployment rate of 10 percent does not include the underemployed. With those working part-time jobs and discouraged workers included the rate goes up to over 17 percent. The above chart is troubling because it shows that the average American didn’t really enjoy the fruits of the turbo capitalism of the decade. Much of the gains have been wiped out but if we look at how the corporatocracy is doing they seem to be doing fine:


While the S&P 500 is up a stunning 63 percent from its March lows, some of the banking sector stocks are up 325 percent like Bank of America. JP Morgan is up 117 percent. Goldman Sachs is up 93 percent. The list goes on. The bailouts seem to be helping a few at the expense of the many.

The same pattern holds for the healthcare sector with the recent bills being proposed. Their stocks are soaring. Want to take a guess as to why? The corporatocracy is running the show in D.C. and the lost decade is a product of their bubble blowing excess. The problem with the current system is Wall Street is run by a bunch of gamblers looking to make a quick buck. Now this wouldn’t be such a problem if the U.S. taxpayer wasn’t funding their shenanigans. But now, Wall Street has the explicit backing of the U.S. government. That is why the U.S. dollar is getting pummeled into the abyss. And that is another thing that we have lost during this decade:


So here we are a decade later with stocks below their 2000 point, unemployment in the double-digits, the U.S. dollar down by one-third, and housing values are quickly approaching their own lost decade point. What did we really financially gain in this decade? All this supposed financial innovation and this is what we get? I would say that the so-called innovation was an absolute failure. It was one gigantic Ponzi scheme. A con to convince average Americans that allowing Wall Street free reign would somehow result in them getting a piece of the gambler’s pie. In return, Wall Street took away any financial stability Americans once enjoyed and put the bill to them as well.

Americans also took part in this excursion. Not demanding restraint from their leaders or pushing for financial prudence. Many jumped into the mania and took out billions in home equity to gamble it up. This was nonsense. Yet this doesn’t come close to the trillions in ridiculous bets Wall Street placed. Derivatives on zany risk that had nothing to do with improving our economy. It was merely sophisticated gambling. And in the end, it wasn’t all that sophisticated since it blew up in their faces yet here we are bailing them out.

Industrial production has also been hit:


And much of this has to do with the financial sector sucking up an inordinate amount of resources from the productive side of the economy. Did people really think that selling houses to one another was a cornerstone to a healthy economy? Is a global power really the one that can have the most homes with expensive Jacuzzis financed by Wall Street debt?

The corporatocracy learned well in this Ponzi decade. It realized that an important line item expense was to lobby heavily. This was a lesson not taken to the extreme in the Great Depression. Sure you had your cronies back them but nothing like our current revolving door. So today, we are left with those who created the financial bubble also at the helm trying to fix it. We had serious regulatory reforms that came after the Great Depression. One major sticking point is Glass Steagall. That is, the division between bread and butter banking and more risky cowboy banking. You would think that this would be done by now but little push is being made in Congress for this. Those that try to bring this up are smacked down by the corporatocracy and their massive lobbying machine.

In fact, banks are back to making massive amounts of profits on the same gambling that got us here in the first place. If something isn’t done soon we will be back in some major financial crisis only in a few years. These gamblers want to call what they are doing “investing” but this is just another diversion to suck money away from taxpayers.

The irony of this all is the Federal Reserve which supposedly is there to ease out the bumps is actually causa prima for the problems. Just think of all the major crises since it came about in 1913:

-The Great Depression

-1970s stagflation

-Crash of 1987

-Technology bubble

-Housing bubble

And many more in between. The fact that we still haven’t audited the Fed speaks to the Ponzi decade. They don’t want to show us what they are holding for $2 trillion because they know once we see it we will realize the gig is up. They have exchanged good money for toxic assets. They are hoping inflation kicks in so they can resell the junk and basically the average American won’t know that the Ponzi scheme is still going on. If one man Bernard Madoff was able to keep a $50 billion Ponzi scheme going for 15 years can you imagine what the central bank can do?

A lost decade indeed. With only a few more days in the decade, many are counting down and looking forward to 2010. Maybe we can start by working on building a real and sustainable economy?





































































(澳洲‧悉尼)澳洲南澳(South Australia)週三(12月23日)遭到林火侵襲,情況失控。許多民眾為保全性命已紛紛逃離家園,而當局也宣佈此州進入“災難狀態”。






Taxpayers to help with the rent at Goldman’s new office tower

As if billions in cash and government guarantees wasn't enough, it turns out investment bank Goldman Sachs will also be sucking on the taxpayers' teat when employees move into their slick new digs at the corner of West and Vesey in Manhattan next year.

The New Goldman Sachs World Headquarters -- a 43-story office tower next to the World Trade Center site -- is being built with the help of millions of dollars from taxpayers, Bloomberg news service reports.

The company that has been the focus of populist anger since the TARP bailout last year took advantage of programs the government set up to revitalize lower Manhattan after the 9/11 attacks. Setting up shop next to the WTC qualified Goldman Sachs for $49 million in "job-grant funds, tax exemptions and energy discounts," Bloomberg's Christine Harper reported.

Additionally, because then-Goldman Sachs CEO Hank Paulson raised concerns about security at the site, the city and state gave the construction project an additional $66 million in benefits. And the investment bank was also allowed to sell tax-free some $1.6 billion of Liberty Bonds -- bonds created to fund the effort to rebuild lower Manhattan. That allowed Goldman Sachs to avoid taking out a commercial loan for that amount of money, saving it an additional $175 million over 30 years, according to the Bloomberg report.

The New York Daily News reported earlier this month that the city of New York forgave Goldman Sachs about $161 million in lease payments the company would have had to make on the land where the new 43-story office tower sits. Under the agreement between the city and the company, Goldman doesn't have to pay the lease if Ground Zero remains empty.

Bloomberg reports that Goldman Sachs in on track to make $11.4 billion in profit this year, nearly tying its all-time record of $11.6 billion in 2007. In last year's bailout, the company received $10 billion in cash, had $30 billion of loans guaranteed by the government, and was re-classified as a bank holding company, which allows it to borrow cheaply from the Federal Reserve.

The new Goldman Sachs tower has been a headache -- and a hazard -- for New Yorkers. In December 2007, an architect was paralyzed when seven tons of steel fell off the building. Late last month, glass falling off the building shattered in the streets below and snarled traffic for hours.

More prime mortgages default in 3rd quarter

Also: Many homeowners with modified mortgages fall behind again. And the number of homes in foreclosure rises, though new foreclosures are steady, report shows.

Reporting from Washington - Troubled home loans continued to mount in the nation's banks in the third quarter as even once-solid borrowers increasingly fell behind on their mortgage payments.

For the first quarter ever, the number of homes in foreclosure with mortgages serviced by U.S. national banks and savings and loans topped the 1-million mark, according to figures released Monday by the Office of Thrift Supervision and the Office of the Comptroller of the Currency.

The percentage of prime borrowers whose loans were 60 or more days past due doubled from the July-to-September period a year earlier. And more than half of all homeowners whose payments had been lowered through modification plans defaulted again.

The report, which covers about 34 million loans, or about 65% of all U.S. mortgages, underscores the obstacles to strengthening the nation's rickety housing market. Stubborn unemployment is making it tough for millions of homeowners to pay their debts. In addition, many people whose monthly installments have been lowered still are unable to keep up with their payments.

Of the mortgages serviced by national banks and thrifts, only 87.2% were current and performing. It was the sixth straight quarter that the quality of those home loan portfolios had slipped.

"Mortgage performance continued to decline as a result of continuing adverse economic conditions including rising unemployment and loss in home values," the report said.

Seriously delinquent mortgages -- loans 60 or more days past due and loans to delinquent borrowers who have filed for bankruptcy -- rose to 6.2% of the servicing portfolio. That's a 16.7% increase over the second quarter and a 73.8% increase from a year earlier, the report said.

Of those seriously delinquent loans, the number of homes in the foreclosure process reached 1.09 million, about 3.2% of all the loans surveyed.

The report highlighted some troubling trends as the housing market continues to struggle despite increasing sales and prices in many areas. Difficulties increased for holders of prime mortgages, with the percentage of those loans that were 60 days or more past due increasing to 3.2%, up almost 20% from the second quarter and more than double the rate of a year earlier.

In addition, holders of mortgages whose payments had been lowered through government or private modification plans re-defaulted at high rates. More than half of all homeowners with modified loans fell 60 days or more behind in their payments within six months of the modification taking place.

But Bruce Krueger, a mortgage analyst for the Office of the Comptroller of the Currency, noted that homeowners with more-recent modifications were doing better at keeping up with their new payments, reflecting a push by the Obama administration to get mortgage servicers to come up with better plans.

About 35% of homeowners who received modifications in the third quarter of 2008 fell 60 days or more behind on their payments within three months of the modification, the report said. That figure decreased to about 19% of homeowners who received a modification in the second quarter of this year.

Still, the report's data could add pressure on Congress to give financially strapped homeowners additional help by allowing judges to lower mortgage principle as part of bankruptcy, said Jaret Seiberg, a financial policy analyst with Concept Capital's Washington Research Group.

"While the re-default rate seems to be getting better, it's still very high and it's high enough to continue causing a political problem for the industry," he said.

Mortgage modifications increased in the third quarter as the Obama administration pushed servicers to participate in its Making Home Affordable modification program. The report said servicers modified 680,000 loans through that program or their own efforts. Overall, mortgage servicers started almost twice as many modifications as new foreclosures.

Oddly, the increased attempt to keep people in their homes with lower payments contributed to the rise in the number of homes in the foreclosure process. The pace of homes beginning foreclosure proceedings remained about the same in the third quarter as it was earlier this year. But fewer of those proceedings were finished, as mortgage servicers worked with homeowners to modify some of those loans.

Monday's report comes on the heels of a private report last week that said there were 1.7 million homes headed for the market because of foreclosures or delinquency. That backlog of "shadow inventory" increased 55% in the year that ended Sept. 30, said the report by First American CoreLogic, a Santa Ana research firm.

The Obama administration has been trying to reduce foreclosures through its mortgage modification program, but reported this month that few of the three-month trial modifications were being made permanent. Of the more than 700,000 trial modifications offered by mortgage servicers, just 31,382 had been made permanent as of Nov. 30. Administration officials have increased pressure on mortgage servicers to improve that figure.

US third-quarter growth revised down to 2.2 percent

The US economy limped forward at a 2.2 percent pace in the third quarter, according to government figures Tuesday that showed a downward revision of gross domestic product (GDP).

The downward revision from last month's estimate of 2.8 percent growth came primarily from a weaker contribution from business investment, as well as slightly slower consumer spending growth.

The report nonetheless confirms that the world's biggest economy swung back to growth in the July-September period after four quarters of contraction in the worst recession in decades.

The Commerce Department revision indicates the economy's momentum in the third quarter was weaker than anticipated, suggesting that the recovery from recession may be tepid.

"The recovery is underway, but this does raise concerns about its strength and the prospects for a turnaround in the labor market," said Augustine Faucher at Moody's

"The next few quarters will be rough. The economy will expand, but weakly. The boost from fiscal stimulus is fading, the hangover from cash from clunkers will weigh on vehicle sales, and consumers and businesses remain wary."

The report showed manufacturing helping lift the economy, especially in the auto sector where the "cash for clunkers" incentives program boosted sales into August.

Motor vehicle output accounted for 1.45 percentage points of GDP in the quarter.

Scott Brown, chief economist at Raymond James & Associates, said the report was "a bit disappointing" and suggests "that underlying domestic demand is pretty soft."

Brown said he expects a jump in growth to at least 4.0 percent in the current fourth quarter, but says much of that will come from restocking of business inventories drawn down in the recession.

Looking at 2010, Brown said the economy may grow at around 3.0 percent "which is good by historical standard but not enough to bring the unemployment rate down substantially."

"It's going to take a long time before we're firing on all cylinders," he added.

The third quarter GDP report showed business investment grew at a 5.0 percent pace, revised down from an earlier estimate of 8.4 percent. Consumer spending, which accounts for the lion's share of economic activity was revised to show growth of 2.8 percent instead of 2.9 percent.

Federal government expenditures were up 8.0 percent in the quarter but state and local government spending fell 0.6 percent.

The GDP report was the final revision after two earlier estimates, the first of which showed a surprising 3.5 percent pace of growth. This was cut twice based on more complete data for the end of the quarter.

Robert Brusca at FAO Economics said the report confirms the economy is on the mend: "this setback is merely postponing the growth impact for another day."

Although some sectors were revised lower, Brusca said "still it is a positive rate of growth and represents a nearly 3.0 point acceleration from the second quarter rate of growth. And, most importantly, the recovery game is on."

Although many economists say the US recession is over, an official declaration has yet to come from the private National Bureau of Economic Research, seen as the official arbiter of business cycles.

The NBER panel does not use the definition employed in many countries of recession as two consecutive quarters of declining GDP. It says a recession is "a significant decline in economic activity spread across the economy," with drops in output, income, employment and sales.

A separate report showed sales of US existing homes surged 7.4 percent in November to the highest level since February 2007, as buyers rushed to take advantage of tax credits.

The National Association of Realtors said sales rose to a seasonally adjusted annual rate of 6.54 million units in November from 6.09 million in October.

The gains in home sales suggest a recovery in the sector at the epicenter of the global financial crisis, where a housing boom followed by a meltdown led to trillions of dollars in losses and led to a worldwide recession.

Symbolic Economies: U.S. and China

The symbiotic partners of "Chimerica" both present symbolic economies which mask the structural rot in their real economies.

I am indebted to Australian analyst John Craig of the Centre for Policy and Development Systems for the concept of a symbolic economy which is presented as "evidence" of "healthy growth." Behind the symbolic facade, the real economy is devolving toward structural implosion.

Such a substitution by the Power Elites/State partnership of symbolic prosperity for broad-based, real prosperity is what I term a simulacrum of prosperity in the Survival+ analysis.

For China, the symbolic economy is a highly suspect GDP growth rate of 8%, mostly fueled by stupendous Central Government stimulus and unprecedented borrowing. Correspondent B.C. submitted this article China May Have 8 Trillion Yuan in New Loans in 2010 (Bloomberg) and this commentary:

Lenders, under government pressure to finance part of the nation’s 4 trillion yuan stimulus plan, advanced a record 9.21 trillion yuan of new loans in the first 11 months, more than double the amount offered in the same period last year.

~30% of GDP for two successive years and 150% growth in two years?

This would be equivalent to the US expanding bank lending by $11T from '08 to '09-'10.

Assuming the bank loans/GDP ratio, US GDP would have been reported to have grown $21 trillion in two years.

The growth of China's lending is at a compounding doubling rate of 18 months. That's right, in 18 months.

This puts China's money velocity below 1.0 and the multiplier at ~0.9.

Virtually nowhere does one read in the financial press the full extent of the absolutely mind-blowingly extraordinary runaway credit expansion occurring in China. There is simply no precedent in modern economic history for a country to have expanded lending at such a rate and share of GDP in such a short period of time.

That all other more "modest" episodes throughout history resulted in the greatest bubbles and subsequent crashes in world history, we are potentially witnessing (without most of us knowing it, apparently) the prelude to a China crash that will become a financial and economic black hole into which the entire global economy is consumed.

There is absolutely NO WAY that bank lending doubling in 18 months can be prudently and efficiently intermediated.

This kind of growth of lending, production, and hoarding of commodities is akin to a full-out war mobilization effort; a kind of last surge of production and laying up of stores before the armor is put on; the women and children are safely put out of harm's way; the blades and arrow tips are carefully sharpened and honed; the breast is thoroughly beaten and war cries sufficient to summon the gods of war; the necessary sacrifices are made to the gods; and the gates of the fortress are flung open, and the well-fed dogs of war are unleashed upon the enemy.

Thank you, B.C. As noted elsewhere in the blogosphere, much of this gigantic flood of borrowed money has flowed into

1. questionable infrastructure projects

2. a massive expansion of capacity in industries which already have too much capacity

3. empty malls, towns, luxury condos and other buildings, reinflating China's real estate bubble.

In the U.S., unprecedented Federal borrowing and bailouts have created a symbolic economy of the stock market rally and bogus "recovery" statistics.

Even as measurements of the real economy show structural devolution (tax receipts continue to plummet, incomes and hours worked remain at Depression levels, jobs are still being lost, etc.), the stock market's 70% rise is in effect the symbolic evidence that the "economy is recovering." Behind this symbolic facade, the real economy lies in ruins.

How can GDP be growing at a robust 3.5% clip (oops, already adjusted down to 2.7% a few weeks ago and now it's been adjusted down again to 2.2%) while employment and tax receipts are both falling? The answer: statistics are ginned up to support the symbolic economy of recovery, rising corporate earnings and a "new Bull Market" in stocks.

As a reader noted here earlier in the year, the stock market is the sole accomplishment of this administration and Congress. Without the "feel good" "New Bull Market," then the emptiness of the real U.S. economy would be in full view.

The Powers That Be might be questioned at that point, so a facade of "recovery" and a rising stock market are presented as a symbolic U.S. economy.

Take the Chimerica facades for reality at your peril.

Sweden to Donate $1.2B to Help Developing Nations Fight Climate Change

STOCKHOLM — Sweden says it will give $1.2 billion to help developing nations fight climate change.

Government spokeswoman Roberta Alenius says Prime Minister Fredrik Reinfeldt will announce Sweden's donation to a European Union program for a so-called "fast-start" financing fund on Thursday.

The total EU donation is expected to be proposed at the meeting in Brussels.

Sweden currently holds the rotating EU presidency and is heading talks with other members of the bloc about potential contributions.

Alenius said Wednesday that not all the 27 countries would be able to assist because some are experiencing serious financial problems.

9/11 Drug Pilot & Operation Blue Lightning

Elements of the U.S. Government took a surprisingly keen interest in controversial Guyanese drug pilot Michael Brassington during 2003 and 2004, when, according to interviews with former Customs Agents, Brassington was involved in—or the subject of—a secretive Miami-based U.S. Government operation.

“Whenever Brassington entered the U.S. a special team from Miami was supposed to come up,” stated former Fort Lauderdale Customs Agent James Sanders.

Brassington was supposed to be met by Customs Agents from “Operation Blue Lightning.”

“Operation Blue Lightning is some kind of joint task force," Sanders explained. "I found out later, from a chief inspector on the team, that I wasn’t even supposed to inspect him.”

Official interest in Brassington’s activities in 2003 and 2oo4 is surprising... and suspicious, because before he was indicted in 2008—barely two weeks after the Bush Administration left office—he regularly flaunted U.S. and international law with “seeming impunity.”

A CIA 'rogue operation' in US Customs?

So while the intent of Operation Blue Lightning’s interest in Brassington remains unclear, it is fair to ask: Was Brassington’s “special handling” by Operation Blue Lightning designed to impede criminal activity? Or to facilitate it?

Operation Blue Lightning clearly fits the description provided by a top DEA official in Miami when he informed us why the DEA had not mounted an investigation into the owners of two planes caught carrying over 10 tons of cocaine in Mexico’s Yucatan:

Because the two American drug planes belonged to a “rogue” operation in U.S. Customs, explained the DEA official. So the investigation properly belonged to the Office of Investigations in the Dept of Homeland Security.

But the existence of any federal investigation in the scandal is merely a matter of speculation, we soon learned.

An official in the Dept. of Homeland Security’s Inspector General’s office said the Department’s practice is to neither confirm nor deny the existence of any internal investigation conducted by the Inspector General’s office.

Later, we learned that the lead FAA investigator on the case was called off and reassigned, under typically suspicious circumstances.

To this day Brassington has never been charged with drug trafficking.

As rookie Customs Agent James Sanders learned the hard way, Brassington was protected by top figures in the Dept of Homeland Security.

When they want to protect or cover something up, the government has a neat trick they sometimes use:

They “investigate” it.

"The red light saved my life."

Brassington goes on trial next month in Federal Court in Newark, for putting the lives of passengers in danger in a near-fatal crash of a luxury jet at Teterboro Airport in New Jersey in February 2005.

The crash was so spectacular that it led all three evening newscasts. A Challenger luxury jet, which had come in from Vegas late the night before, hurtled off the runway and across a six-lane highway busy with morning rush hour traffic. More than 20 people were injured.

Authorities expressed amazement that nobody was killed.

The crash sparked a federal criminal investigation which turned up evidence of a pattern of illegal activity so egregious that former Inspector General Mary Schiavo of the U.S. Department of Transportation called Brassington’s charter company “Loophole Airlines.”

The responsible Federal agency, the FAA, even came under rare criticism from another Federal agency, the NTSB. According to the NTSB, neither the pilot nor the co-pilot were rated to fly the flight they were flying.

The flight attendant had no safety training. She was a dancer at the Voodoo Lounge in Miami. When the plane caught fire she didn't know how to open the doors.

Dozens of drivers and passengers in cars driving along the highway next to Teterboro Airport are alive today—not because of action to safeguard passengers by the FAA or the NTSB—but because of the vagaries of traffic signals.

They were saved from death because they happened to be stopped at a red light.

"Animal House...with badges and guns"

Even for Miami, Operation Blue Lightning has a highly-checkered past and a particularly sordid pedigree, which was exposed in a series of investigative articles in the Miami Herald during the late 80’s.

Ahern’s stint as head honcho was called a “Reign of Terror” in the Miami Herald.

The paper called the Miami Customs District, then led by Jayson Ahern, “Animal House with Badges and Guns.”

And even though he'd been in the thick of it personally, amid widespread allegations of internal corruption, sexual antics, and serious security breakdowns which dogged him for years, Jayson Ahern rose to become (Acting) Customs and Border Protection Commissioner.

He was a real Teflon Don.

“They were out of control and everyone knew they were out of control, no question about it,'' the paper quoted a Customs investigator. “That group had a lot of power, and Customs did everything it could to make the case go away - merits of the complaint be damned,'' the investigator said.

“The truth of the matter was not the concern, everyone in Customs knew the truth. The concern was for saving face.”

Somebody really loved Jay Ahern. Proving the point: although by all accounts the cocaine trade boomed during the 1980’s, Ahern was among an elite group of Miami inspectors lauded in news reports for achieving "success" in the war on cocaine smugglers.

Great press. No convictions. Some people have all the luck.

And like a bad penny resurfacing again and again, after 9/11 Ahern’s Contraband Enforcement Team was brought back and rechristened "Operation Blue Lightning."

And Jayson Ahern was the man behind the firing of rookie Customs Agent Sanders, after the "complaint" by solid citizen(!) Michael Brassington.

Nixon would be proud.

A DEA look-out... and friends in high places

In an exclusive interview in the upcoming “New American DrugLords” documentary, James Sanders, a former Customs Agent in Fort Lauderdale, FL, told how he had been on duty, and in charge, late on a Tuesday night at the International Airport in Fort Lauderdale, when Brassington flew in.

While Customs Agent Sanders was still examining his narcotics record in the computer, Brassington began brandishing a letter from a top official in the U.S. Dept of Homeland Security which seemed clearly designed to smooth his re-entry into the U.S.

“I was looking at Brassington’s narcotics record on the computer,” says Sanders, still incredulous at the memory, “when he handed me a letter from Washington!”

Confused, Sanders phoned Supervisor Norm Bright at Immigrations & Customs Enforcement (ICE), whose name appeared in Brassington’s file, and was told that he was to treat Brassington as a “grave threat to national security.”

Brassington was flying in on a plane (N60S) suspected of being used for money laundering. 
His passenger,  Anthony Cirillo, was flagged in the computer for having been on suspicious flights.
Pilot Brassington himself had a “DEA look-out,” Sanders told us.

Mohamed Atta. Remember him?

This was a consequence of Brassington’s having
flown as co-pilot on a Lear jet (N351WB) 
that was busted by DEA agents at Orlando 
Executive Airport in July of 2000 carrying 
43 lbs. of heroin. 
The Learjet belonged to Wallace J. Hilliard, 
owner of the Venice Florida flight school
where Mohamed Atta was then learning to fly. 

Before being busted, the Learjet had flown, with Brassington as co-pilot, on 39 weekly drug flights between Florida and Venezuela.

Yet, despite these incriminating facts, two career Customs officials with checkered histories in Miami, Thomas Winkowski and just-retired Acting U.S. Customs Commissioner Jayson Ahern, intervened on Brassington’s behalf after he wrote a letter of complaint to Ahern, then the third highest ranking official in U.S. Customs.

Rookie Customs Agent James Sander’s encounter with Guyanese drug pilot Michael Brassington ended up costing him his job.

There at the inception

The first newspaper mention of Operation Blue Lightning was back in the spring of 1985, when United Press International called it "an unprecedented assault that rousted drug smugglers from island sanctuaries in the Bahamas into a massive military trap that netted $100 million in drugs, boats and planes."

And a familiar figure from the government was on hand at the inception of Operation Blue Lightning...

''I wish I could be with you to announce the spectacular results of Operation Blue Lightning,'' said Vice President George Bush at the news conference announcing the haul.

Bush said the seizure of cocaine and marijuana ''that won't reach our city streets to corrupt the minds of our citizens and line the pockets of drug smugglers is a significant achievement.''

Alas, statements by Presidents named Bush concerning drug trafficking cannot be taken at face value very often... Almost two decades later Bush's son George W Bush will announce the U.S. plans to get the world’s leading heroin trafficker dead or alive.

His name was Osama bin Laden. Anybody remember him?

Unemployment funds going ‘absolutely broke’

40 state programs to be emptied by the jobless tsunami within two years

The recession's jobless toll is draining unemployment-compensation funds so fast that according to federal projections, 40 state programs will go broke within two years and need $90 billion in loans to keep issuing the benefit checks.

The shortfalls are putting pressure on governments to either raise taxes or shrink the aid payments.

Debates over the state benefit programs have erupted in South Carolina, Nevada, Kansas, Vermont and Indiana. And the budget gaps are expected to spread and become more acute in the coming year, compelling legislators in many states to reconsider their operations.

Currently, 25 states have run out of unemployment money and have borrowed $24 billion from the federal government to cover the gaps. By 2011, according to Department of Labor estimates, 40 state funds will have been emptied by the jobless tsunami.

"There's immense pressure, and it's got to be faced," said Indiana state Rep. David Niezgodski (D), a sponsor of a bill that addressed the gaps in Indiana's unemployment program. "Our system was absolutely broke."

The Indiana legislation protected the aid checks, Niezgodski said, but it came after a give-and-take this spring in which Gov. Mitchell E. Daniels Jr. (R) said the state had been providing "Rolls-Royce benefits" and several thousand union workers countered by protesting proposed cuts at the state capitol. In January, the legislature is slated to consider a bill to delay the proposed tax increases intended to refill the fund.

In Nevada, Gov. Jim Gibbons (R) and legislators have feuded over the unemployment program, which is $85 million in debt to the federal government, with Gibbons accusing the legislature of "callous disregard" for not setting a tax rate.

And last week, a state task force in Kentucky recommended cutting benefits about 9 percent and imposing a week's delay in their payment. The average benefit check there is about $309 a week. The task force also proposed raising taxes.

"There were some moments of high anxiety" during the negotiations between industry and labor groups, said Joseph U. Meyer, the state's acting secretary of education and workforce development. "But in the end, the realistic options became fairly apparent."

Two choices
State unemployment-compensation funds are separated from general budgets, so when there is a shortfall, only two primary solutions are typically considered -- either cut the benefit or raise the payroll tax.

Industry and business groups often lobby against raising the payroll tax on employers, while unions and other worker groups protest benefit cuts.

"We want to make sure Kentucky remains competitive and also maintain an environment of fairness," Meyer said of the negotiations.

Nationally, the average tax is about 0.6 percent of payroll; the average weekly check is about $300.

Not prepared
The troubles the state programs face can be traced to a failure during the economic boom to properly prepare for a downturn, experts said.

Unemployment benefits are funded by the payroll tax on employers that is collected at a rate that is supposed to keep the funds solvent. Firms that fire lots of people are supposed to pay higher rates. The federal government pays for administrative costs, and in a recession, it pays for the extension of unemployment benefits beyond 26 weeks. But over the years, the drive to minimize state taxes on employers has reduced the funds to unsustainable levels.

"The benefits haven't grown -- that's not the problem," said Richard Hobbie, director of the National Association of State Workforce Agencies.

Even so, he said, he expects to see unemployment checks reduced.

A shortfall in a state unemployment fund, he said, "usually means cuts in eligibility or benefits."

In Virginia, the unemployment program has borrowed $89 million from the federal government, while Maryland has not borrowed, according to the federal data.

Wayne Vroman, an expert in unemployment insurance at the Urban Institute, said that entering the recession, state programs were on average funded at only one-third the level they should have been, according to generally accepted funding guidelines.

"If you fund a program adequately, you don't need to come to these kinds of difficult decisions," he said.

Before the recession, he said, the funding guidelines "were rarely honored."

While the amount of the states' loans from the federal government is expected to grow rapidly, it is not expected to add to the federal debt. "In the past, the federal government has always gotten its money back," Vroman said.

Struggling to fill the gap
In the meantime, however, more states are struggling to fill the gap. West Virginia imposed a freeze on benefit levels this year, and legislators in South Carolina are considering one.

"We've obviously got problems with the fund," said South Carolina House Majority Leader Kenny Bingham (R), blaming the trouble in part on the state's unemployment rate of more than 12 percent.

The state owes about $654 million to the federal government for unemployment payments.

"We're not trying to cut benefits," he said. But "if you jack rates up, those business that are struggling to hang on, you make things more difficult."

U.S. Homeless Population Up 300%

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IRS Cannot Verify Taxpayer Eligibility for 2/3 of $325 Billion of Stimulus Tax Benefits

The Treasury Inspector General for Tax Administration today released Evaluation of the Internal Revenue Service’s Capability to Ensure Proper Use of Recovery Act Funds (2010-41-011):

The Treasury Inspector General for Tax Administration today publicly released its review of the IRS’s ability to verify taxpayer eligibility for tax benefits and credits provided by the American Recovery and Reinvestment Act of 2009.

The Recovery Act contains 56 tax provisions with a potential cost of more than $325 billion that are intended to provide tax relief for individuals and businesses. These include 20 provisions for individuals that provide tax relief to working or retired Americans and their families. Thirty-six additional provisions provide tax relief and incentives for businesses, including provisions that encourage investment in sources of renewable energy and promote the hiring of unemployed veterans. They also allow for the sale of bonds to provide for construction, financing, environmental and manufacturing improvements.

TIGTA found that the IRS is unable to verify taxpayer eligibility for the majority of Recovery Act tax benefits and credits at the time a tax return is processed. This includes 13 of the 20 benefits and credits for individual taxpayers and 26 of the tax provisions benefiting businesses.

Family Guy - Visiting Ground Zero

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