Monday, January 11, 2010

China becomes biggest exporter

Experts say a resurgence in trade will put renewed pressure on China to appreciate its currency [Getty]

China has overtaken Germany as the world's biggest exporter of goods after exports rose for the first time in 14 months, data has shown.

In the last month of 2009 Chinese exports rose 17.7 per cent on the previous year, the state-run Xinhua news agency said on Sunday, quoting figures from the general administration of customs.

That made total exports for the year just over $1.2 trillion, ahead of the $1.17 trillion forecast last month for Germany, according to the BGA foreign trade organisation.

China's new status reflects the ability of its low-cost manufacturers to keep selling abroad despite a collapse in global consumer demand due to the financial crisis.

Huang Guohua, a customs agency economist, said the December rise was an "important turning point".

"We can say that China's export enterprises have completely emerged from their all-time low in exports," Huang said.

The December data broke a long string of contracted export figures stretching back to late 2008.

Trade surplus

China's politically sensitive trade surplus shrank by 34.2 per cent in 2009 to $196.07 billion, Xinhua said.

That reflected China's stronger economic growth, driven by a $586bn stimulus package, and demand for imported raw materials and consumer goods at a time when demand in the US and other foreign markets was weaker.

China's official title of world's biggest exporter is expected to be confirmed when Germany releases full-year trade figures on February 9.

Experts have said a resurgence in Chinese trade will likely bring renewed pressure on China to let its yuan currency appreciate.

The value of the yuan, which has effectively been pegged to the US dollar since mid-2008, has been an issue of contention between Beijing and its Western trading partners, who say it keeps the currency low to boost exports.

Wen Jiabao, China's premier, said last month in an interview with state media that China would not yield to foreign pressure on the yuan.

China 'overtakes Germany as world's largest exporter'

China's exports rose 17.7% in December, state media have reported, suggesting the country has overtaken Germany as the world's largest exporter.

The rise, compared to a year earlier, breaks a 13-month decline in trade as a result of the global downturn.

Xinhua said total exports for 2009 were $1.2tn (£749bn), but total foreign trade over the year was down 13.9%.

Correspondents say the figures will lead to new demands from China's competitors that it revalue the yuan.

Last year saw a continuing decrease in China's trade as the global economic downturn led to a fall in demand for its products.

But in the last few weeks of the year, there was a far greater rise than forecasters had expected, with foreign exports reaching $130.7bn, up 17.7% on the previous December.

China's General Administration of Customs (GAC) said exports overall in the year were $1.2tn, down 16% from in 2008, while imports were 11.2% down from a year earlier at $1.01tn.

The politically sensitive total trade surplus was down 34.2% to $196.1bn.

The figures suggests China will surpass Germany's export total for the whole of 2009, although this will not be confirmed until Germany's full-year data is published in February.

Yuan demand

A spokesman for GAC said the increase was "an important turning point" for the country.

Workers in a factory in Guangzhou, China (file image)
Many of China's exporters are low-cost manufacturers

"It is safe to say now that Chinese exporters have come right through the period of weakness," Xinhua quoted statistician Huang Guohua as saying.

The BBC's Chris Hogg in Shanghai says many of China's producers are low-cost manufacturers who assemble equipment such as i-Pods using foreign components.

The latest figures are being seen as an indication that those manufacturers have proved resilient in the downturn and are benefitting as their customers restock, says our correspondent.

But the figures are likely to lead to renewed complaints from China's trading competitors that its currency is undervalued, he added.

Led by the US, they say it is unfair that China has been able to make its good cheaper by keeping the yuan weak, but Prime Minister Wen Jiabao has said China "will not yield" to foreign demands that it revalue the currency.

Beijing has long said that it will not allow the yuan to trade freely until its domestic economy was strong enough to pick up any resulting decline in exports.

The slowing decline in Chinese trade has also been taken as a sign that the country's stimulus package is working.

Beijing raised tax rebates on exports several times in 2009, increased tax refunds and improved export credit insurance.

Walk Away From Your Mortgage!

John Courson, president and C.E.O. of the Mortgage Bankers Association, recently told The Wall Street Journal that homeowners who default on their mortgages should think about the “message” they will send to “their family and their kids and their friends.” Courson was implying that homeowners — record numbers of whom continue to default — have a responsibility to make good. He wasn’t referring to the people who have no choice, who can’t afford their payments. He was speaking about the rising number of folks who are voluntarily choosing not to pay.

Such voluntary defaults are a new phenomenon. Time was, Americans would do anything to pay their mortgage — forgo a new car or a vacation, even put a younger family member to work. But the housing collapse left 10.7 million families owing more than their homes are worth. So some of them are making a calculated decision to hang onto their money and let their homes go. Is this irresponsible?

Businesses — in particular Wall Street banks — make such calculations routinely. Morgan Stanley recently decided to stop making payments on five San Francisco office buildings. A Morgan Stanley fund purchased the buildings at the height of the boom, and their value has plunged. Nobody has said Morgan Stanley is immoral — perhaps because no one assumed it was moral to begin with. But the average American, as if sprung from some Franklinesque mythology, is supposed to honor his debts, or so says the mortgage industry as well as government officials. Former Treasury Secretary Henry M. Paulson Jr. declared that “any homeowner who can afford his mortgage payment but chooses to walk away from an underwater property is simply a speculator — and one who is not honoring his obligation.” (Paulson presumably was not so censorious of speculation during his 32-year career at Goldman Sachs.)

The moral suasion has continued under President Obama, who has urged that homeowners follow the “responsible” course. Indeed, HUD-approved housing counselors are supposed to counsel people against foreclosure. In many cases, this means counseling people to throw away money. Brent White, a University of Arizona law professor, notes that a family who bought a three-bedroom home in Salinas, Calif., at the market top in 2006, with no down payment (then a common-enough occurrence), could theoretically have to wait 60 years to recover their equity. On the other hand, if they walked, they could rent a similar house for a pittance of their monthly mortgage.

There are two reasons why so-called strategic defaults have been considered antisocial and perhaps amoral. One is that foreclosures depress the neighborhood and drive down prices. But in a market society, since when are people responsible for the economic effects of their actions? Every oil speculator helps to drive up gasoline prices. Every hedge fund that speculated against a bank by purchasing credit-default swaps on its bonds signaled skepticism about the bank’s creditworthiness and helped to make it more costly for the bank to borrow, and thus to issue loans. We are all economic pinballs, insensibly colliding for better or worse.

The other reason is that default (supposedly) debases the character of the borrower. Once, perhaps, when bankers held onto mortgages for 30 years, they occupied a moral high ground. These days, lenders typically unload mortgages within days (or minutes). And not just in mortgage finance, but in virtually every realm of our transaction-obsessed society, the message is that enduring relationships count for less than the value put on assets for sale.

Think of private-equity firms that close a factory — essentially deciding that the company is worth more dead than alive. Or the New York Yankees and their World Series M.V.P. Hideki Matsui, who parted company as soon as the cheering stopped. Or money-losing hedge-fund managers: rather than try to earn back their investors’ lost capital, they start new funds so they can rake in fresh incentives. Sam Zell, a billionaire, let the Tribune Company, which he had previously acquired, file for bankruptcy. Indeed, the owners of any company that defaults on bonds and chooses to let the company fail rather than invest more capital in it are practicing “strategic default.” Banks signal their complicity with this ethos when they send new credit cards to people who failed to stay current on old ones.

Mortgage holders do sign a promissory note, which is a promise to pay. But the contract explicitly details the penalty for nonpayment — surrender of the property. The borrower isn’t escaping the consequences; he is suffering them.

In some states, lenders also have recourse to the borrowers’ unmortgaged assets, like their car and savings accounts. A study by the Federal Reserve Bank of Richmond found that defaults are lower in such states, apparently because lenders threaten the borrowers with judgments against their assets. But actual lawsuits are rare.

And given that nearly a quarter of mortgages are underwater, and that 10 percent of mortgages are delinquent, White, of the University of Arizona, is surprised that more people haven’t walked. He thinks the desire to avoid shame is a factor, as are overblown fears of harm to credit ratings. Probably, homeowners also labor under a delusion that their homes will quickly return to value. White has argued that the government should stop perpetuating default “scare stories” and, indeed, should encourage borrowers to default when it’s in their economic interest. This would correct a prevailing imbalance: homeowners operate under a “powerful moral constraint” while lenders are busily trying to maximize profits. More important, it might get the system unstuck. If lenders feared an avalanche of strategic defaults, they would have an incentive to renegotiate loan terms. In theory, this could produce a wave of loan modifications — the very goal the Treasury has been pursuing to end the crisis.

No one says defaulting on a contract is pretty or that, in a perfectly functioning society, defaults would be the rule. But to put the onus for restraint on ordinary homeowners seems rather strange. If the Mortgage Bankers Association is against defaults, its members, presumably the experts in such matters, might take better care not to lend people more than their homes are worth.

Roger Lowenstein, an outside director of the Sequoia Fund, is a contributing writer for the magazine. His book “The End of Wall Street” is coming out in April.

This article has been revised to reflect the following correction:

Correction: January 10, 2010
An essay on Page 15 this weekend about underwater mortgages misstates the parties who believe their homes will go up in value quickly. It is the homeowners — not the “mortgagees,” who issue mortgages.

























































Jesse Ventura Walks Off The Opie & Anthony Show!

Click this link .......

White House Economic Adviser: Jobs Picture is 'Still Terrible'

Council of Economic Advisers chief Christina Romer said it's devastating that some workers have been unemployed for two years and that job losses were continuing nearly a year after passage of the so-called stimulus bill.

A top White House economic adviser said Sunday "you'll get no argument from" her on the need to improve the miserable jobs picture.

Council of Economic Advisers chief Christina Romer said it's devastating that some workers have been unemployed for two years and that job losses were continuing nearly a year after passage of the so-called stimulus bill.

The jobless rate remained at 10 percent in December as 660,000 people said they had left the workforce. But Romer couched the news by saying the siphoning of jobs from the market has slowed.

"In the first quarter of 2009, when we first came in, we were losing on average 691,000 jobs per month. With these new numbers in the fourth quarter, we were losing 69,000 jobs," she said. "It's still terrible. We're still losing jobs, and we absolutely have to go from losing any jobs at all to adding them at a robust rate."

Romer wouldn't predict what the unemployment rate will be in the fall, when members of Congress face re-election, but said it is "still a very realistic estimate" that job growth could begin in the spring.

She added that she wants to work on convincing firms that are considering hiring to take the plunge.

Romer also appeared to back a House effort to pump an additional $75 billion in federal spending into the struggling economy and pointed to targeted programs like longer COBRA health insurance coverage and "cash for caulkers" -- energy saving retrofits -- as ways to expand growth.

"The sense that we need to do more is overwhelming," she said.

Your request is being processed... Stockton, California Is Foreclosureville, USA, Has One Of The Worst Foreclosure Rates In The United Sat

STOCKTON, Calif. — Stockton hardly looks like the most miserable city in the country.

But the statistics and stories over the last two years make a case that it is: Since the housing crisis began, this inland port city 80 miles east of San Francisco has had one of the worst foreclosure rates in the country – for most of the time, the worst.

At the height of it, about 1 in 10 houses fell to foreclosure. Houses that sold for more than $500,000 before the crash now go for $200,000. In some neighborhoods, fixer-uppers cost less than a new Honda Fit – under $20,000.

To spend time in Stockton, a plain-jane city of single-family home neighborhoods edged by freeways and lingering farms, is to begin to understand the calamitous effects of the nation's foreclosure crisis, which has devastated so many once-booming places.

Stockton is the San Joaquin County seat. And according to the Associated Press Economic Stress Index, a month-by-month scoring of U.S. counties' rates of unemployment, bankruptcy and foreclosures, San Joaquin had a score of 23.55 in November, making it the fourth-most stressed of counties with a population over 25,000. Its foreclosure rate of 6 percent was exceeded only by metro Las Vegas, metro Fort Myers, Fla., metro Orlando, Merced County, Calif., and Kendall County, Ill.

An outsider might not notice immediately how Stockton has suffered. It boasts a downtown mall, a mix of handsome, century-old and modern architecture, a new sports stadium, even a promenade overlooking the city's canal.

But two years into the housing crisis, Stockton is a changed place. Whole neighborhoods have been decimated by the mortgage disaster. The tax base has shrunken. City services and municipal jobs have been cut. Unemployment hovers at about 16 percent. Economists predict it will take years for Stockton to recover from the housing bust.

Locals say the same about the city's reputation.

Since the housing meltdown began, journalists from around the world have parachuted in to see the city felled by sub-prime mortgages, which enticed new homeowners priced out of the San Francisco Bay area with low interest rates that reset to levels they could not afford.

"Welcome to Foreclosureville, U.S.A." wrote the Los Angeles Times. "America's Most Miserable City," declared the London Independent. That headline was inspired by Forbes' "most miserable cities" index, which ranked Stockton No. 1.

City officials say they fully expect Stockton to shake the title in 2010 (it's recently dropped to No. 4 or 5). But how far away from the top can it go? The population of 290,400 is strapped. Up to two-thirds of homeowners owe more on their properties than the houses are now worth. Housing values have dropped more than 60 percent since the height of the boom four years ago, more than any other city.

Housing developments built for commuters have been hit the hardest, since they were the ones to attract newcomers fleeing the huge spike in prices closer to the Bay area. Those whose livelihoods depend on a healthy housing environment – real estate brokers, contractors, day laborers – are barely holding on here.

Probably the happiest people are the ones scooping up foreclosures. Speculators are back, of course, but the other bargain hunters include people who only dreamed of being able to afford a house. They're now living the dream in Stockton.

By the time the whole foreclosure phenomenon is done, Stockton may well look less like the bedroom community for commuters to the Bay Area that it was becoming and more like the working-class, immigrant community ringed by Central Valley farm country that it was before.

For now, residents just hope the worst is over.


The heart of Foreclosureville, U.S.A. – the Stockton subdivision that had more bank repossessions than any other place in the country for much of the last two years – is starting to look like its old self again.

The "For Sale" signs that overwhelmed Weston Ranch are mostly gone, and the lawns where weeds grew like corn stalks are shorn.

Foreclosure businesses that sprang up, including one that spray-painted brown lawns green and another that offered a foreclosure bus tour, have folded. Every time a foreclosure hits the market, bargain hunters snap it up.

But looks are deceiving. In Weston Ranch, financial devastation struck like a natural disaster and the ground has not yet settled. Speculators are buying houses to rent out. On streets where everyone knew everyone, no one knows anyone.

Orlando Mixon and his family – wife, son and daughter – are typical Weston Ranch settlers. They moved here eight years ago from Union City, east of San Francisco, after a search for an affordable house sent them farther and farther down the freeway.

In those boom times, the Mixons paid $175,000 for a new four-bedroom, three bath split-level, more than they would have paid just five days earlier. But they were excited. They didn't know Stockton, but the subdivision of 5,000 homes was like a town unto itself, built for easy access to and from a long commute. Beige and boxy, the houses made up in size what they lacked in style.

Now, the Mixons are hanging on by their fingers. Their house, they think, is worth just over $200,000, though some on the next street sold recently for $150,000. Still, with two mortgages, they owe more than that (they won't say how much). Until last month, Mixon spent four months out of work, pushing the family toward financial ruin.

"I try not to think about that," Mixon said. He spoke while washing his blackened work clothes in the driveway: He now works on an oil rig in Los Angeles when there is work, drives the 340 miles every other week to his job, seven days on, seven off. His wife Sharon's commute is 60 miles each way, five days a week in rush hour traffic, for her job as a manager in a hospital in Hayward.

Stockton residents on average commute 46 miles each way.


The biggest bargain in Stockton stands on a street most people would choose to avoid. Old men drinking from bottles in brown paper bags lean against an empty brick building. Younger ones loiter on the corners, wearing puffy parkas, selling ... something.

Rudy Willey, a real estate broker who knows his turf, had had no great expectations for the house. But the property was worse than he had imagined: more like a package store than a single-family home. It had no land, no porch, no stoop.

Squatters had had their way with the place. Its small, low-ceilinged rooms looked lopsided. All the fixtures were gone. The bathroom, the kitchen – the whole place – needed a do-over.

"$15,000?" Willey said, locking the front door. "I think they're asking too much."

He smiled at the irony of it. Twenty-seven years of selling real estate in Stockton had not fully prepared him for what has happened to his city, his vocation and his livelihood.

At 58, nearing retirement, or so he thought, Willey is working twice as hard and making half as much as he did two years ago. In two months, he has taken just two days off.

Not three years ago, Willey couldn't keep up with the demand for half-million-dollar starter homes springing up within a 30-mile radius of Stockton. Commuters were buying in; locals were trading up.

Having seen his share of boom and bust cycles, Willey knew the times were too good to last. A wave of selling in Elk Grove, a town half an hour away that had been the fastest growing in the country in 2007, became a sign.

"When I saw the 'For Sale' signs, I thought: 'Something's happening,'" Willey said. "I thought we were due for a correction – maybe a 15 percent drop."

Now, Willey is selling houses for less than half of what they sold for then. Even so, it is harder to close a deal.

A few brokers have acquired most of the foreclosure listings. Most no longer take phone calls to hear offers. Half the time, they don't return e-mails. In some cases, Willey suspects the broker simply does not want to share a commission.

Time to work on a Plan B: Willey is taking a multimedia course at San Joaquin Delta College, a two-year school where he also teaches real estate classes. He hopes to start a Web site.

At night, he works on a book, a guide for would-be homebuyers.

And each day, he tries to look on the bright side. On an afternoon's outing to see houses below $35,000, he kept remarking on the "wonderful opportunities" working people have to own a home.

"Not bad, not bad," he said, going through an $18,000 house that had decent bones. It was in a homely neighborhood of aging bungalows. But there were no drug dealers on the corners. "Redone," Willey said, "this could be a nice little home."


Among all the bargains in Stockton, Jason Ramey had his heart set on one.

It was not on the market yet. But on its window and door was the sign of the times: an eviction notice.

This was early 2009, the height of Stockton's foreclosure boom. More than 90 percent of the houses for sale in the city were foreclosures or short sales – where the lender lets borrowers sell a property for less than they owe on it, forgiving the balance, to avoid foreclosure.

Ramey, a 31-year-old insurance agent, knew what he wanted. He had been looking at real estate listings for years. But when the market was high, he could not afford to buy. Even "shacks," as he likes to say, cost $300,000 – well above his price range.

Then came the housing disaster, and opportunity.

Ramey began scouting houses on the San Joaquin County foreclosure listings. As soon as he saw The One, a corner property in a coveted new development, he decided to wait for it.

The house had an arched entrance that reminded Ramey of a French chalet. Neighbors showed pride of place – planting rose gardens, flowering fruit trees, dooryard bougainvillea. It wasn't as big as other foreclosures in the mid-$200,000 range. But Ramey, a local boy, knows Stockton inside and out. This house had location, location, location, besides its four bedrooms, three baths. This was a place where he could see staking roots, growing a family.

Ramey waited four months for the house to come on the market. Meanwhile, he and his girlfriend took a real estate class for first-time homebuyers. Their instructor: Rudy Willey.

He taught them how to research properties, find the right mortgage, make a deal. The very morning the house showed up on the real estate listing site he'd been checking every day, Ramey called Willey.

"We put an offer in that night," Ramey said, smiling widely, then adding: "Sure enough, our offer was accepted."

They bought the house, which had sold for more than $500,000 three years earlier, for $233,000.

"Every day, we can't wait to get home," Ramey said, while giving a tour of the house. Everything in it, stainless steel appliances, tile floors, paint, looked brand spanking new. A koi pond and above-ground pool shared space in the backyard with magnolia trees and hibiscus plants.

The family that lost that house had put love and money into it. Ramey said the solar panels – which have cut their utility bills to $30 from $250 when they were renting – were appraised at over $100,000.

"You hear all these horrible stories," Ramey said. "There are so many other aspects to this. This market, the way it is, gave us the opportunity to live the American dream."

You could end up a 'dead peasant'

HOUSTON — Irma Johnson never really thought of herself as a crusader.

But the quiet widow from The Woodlands has been featured in a Michael Moore movie, watched her story retold on “Good Morning America” and is trying to let others know that their employers may have purchased secret insurance policies on their lives and stand to profit handsomely when they die.

The industry darkly refers to the policies as “dead peasant” life insurance.

And but for a post office error, Johnson might not have learned that when her husband, Dan Johnson, died of brain cancer in 2008, the bank that had fired him years earlier got $4.7 million in insurance proceeds on his life.

After accidentally destroying an envelope containing a check for nearly $1.6 million made out to Amegy Bank, the post office misdirected it to Johnson's home because Dan Johnson's name also was on the check.

Her attorney, Mike Myers of McClanahan Myers Espey in Houston, said she wasn't supposed to know Amegy had the insurance policy on her husband, a project manager whose annual salary had been about $70,000.

“How could they be profiting off my husband?” Johnson asked recently during an interview with the Houston Chronicle.

Friday, Johnson settled a lawsuit she filed to force the bank to reveal it bought policies in 2001 on more than 40 bankers, including coverage on Johnson, who'd been diagnosed with terminal brain cancer about 18 months earlier and been out sick for several months.

She was asking for the net proceeds Amegy received, $3.8 million— the death benefit minus the premiums it paid — and settled for an undisclosed amount.

“We settled to the mutual satisfaction of both parties,” Amegy Bank spokeswoman Leigh Akin said.

In Amegy's formal response in the lawsuit, the bank said it purchased life insurance policies on a group of vice presidents and other officers to offset the cost of providing employee benefits.

Amegy said taking out such policies is a “common practice among banks and other industries and is recognized and permitted by the applicable banking regulatory authorities.”

The policies were voluntary, the bank noted, and Dan Johnson understood he'd be covered indefinitely, even if he left the bank.

Banks have purchased hundreds of billions of dollars of “bank owned life insurance” on the lives of their employees. The policies typically remain in effect years after an employee leaves the bank, Myers said.

Myers said banks receive significant tax advantages on the policies. They can write off the interest they pay on loans to buy the insurance; money invested in the policies grows tax deferred; and if the insured person dies, the death benefit is tax-free.

“It's a very significant investment return for a company in the 40 percent tax bracket,” said Myers, one of the lawyers who sued Wal-Mart over its dead peasant policies and ended up settling for $15.4 million for surviving family members in Texas and Oklahoma. Cases in other states still are pending.

“There are probably a lot of former Amegy employees who are walking around right now who are worth millions of dollars dead to Amegy and they don't know it,” Myers said.

U.S. Rep. Gene Green, D-Houston, charges that companies buy the policies solely for the tax advantage. He's been pushing a bill that would remove the incentive.

“If you don't have an insurable interest in someone, it's an investment,” he said, and should be subject to regular income tax.

Green also regularly files a bill that would force employers to disclose amounts and beneficiaries of such policies. But the legislation hasn't been a front-burner issue as Congress has wrestled with health care reform, a turbulent economy and other priorities.

Dennis Nixon, chairman and president of Laredo-based International Bancshares Corp., defended the use of bank-owned life insurance policies. A bank employee can generate significant benefit costs over the length of their employment, he said, so the policies can help pay for those costs.

“People who participate in those programs consent to those programs,” Nixon said. “Most people are not concerned about it because it doesn't cost them anything.” He called the practice “as common as street addresses.”

Nixon didn't know how many policies International Bancshares has purchased on its employees' lives, but added he wouldn't disclose the number even if he did know.

Dan Johnson was diagnosed with cancer in 1999 and had to learn to speak and to walk again following operations to remove his tumor. By 2001, he was getting warnings that his once-stellar job performance was suffering and was demoted to a nonsupervisory position, according to the lawsuit.

A few months before he was fired in 2001, Johnson was told that he was eligible to receive extra life insurance, Myers said. If he died or was disabled while working at the bank, his wife would receive $150,000.

What wasn't said in the consent form, according to Myers, was that the bank would receive 67 times Johnson's annual salary. That was material information Amegy should have disclosed to its terminally ill employee, Myers argues.

Myers said he also believes the consent form wasn't valid because the bank bought the policies before obtaining permission from Johnson, and that when it did, he wasn't of sound mind.

Amegy said in its filing that it believes Dan Johnson understood the consequence of his actions. It also said he agreed not to sue in the future in exchange for settling a disability complaint he filed with the Equal Employment Opportunity Commission after his termination.

Irma Johnson, a mother of two young boys, said she was perplexed when she opened the envelope with the big check inside just before Christmas 2008 and called the insurance company. She quickly learned the policy wasn't meant for her. Nor did she ever receive the $150,000 portion that she thought she had coming to her.

Her story was featured last year in “Capitalism: A Love Story,” filmmaker Michael Moore's critical examination of U.S. economic practices.

What's especially upsetting, Johnson said, is that her husband couldn't buy life insurance to protect his own family once he found out about his cancer. Yet his employer could, she said.

“To let him go,” she said, shaking her head, “and then to cash in on him like that.”

Express-News Business Writer Patrick Danner contributed to this report

A Call to the People of the World to Support Iceland Against the Financial Blackmail of the British and Dutch Governments and the IMF

[Note: Birgitta Jónsdóttir is the leader of The Movement, a group within the Icelandic Parliament which has emerged from the mass struggle of Icelanders against the financial blackmail brought to bear against their country by the governments in London and The Hague, with the backing of the IMF, in the wake of the insolvency of three large Icelandic banks in the midst of the Lehman Brothers-AIG world financial panic of September-October2008. Birgitta Jónsdóttir is a courageous leader in the fight for national sovereignty, independence, dignity, and the economic well-being and future of her country.]

January 5, 2010 is a historical day for Icelanders. The Icelandic President Olafur Ragnar Grimsson had a tough decision to make, and difficult choices to make. To listen to the 23% of the nation that signed a petition calling on him to put the state guarantee for 5.4 billion dollars to be paid to the British and Dutch governments to a national referendum. Or to ignore the nation and sign the bill for the government, after the bill had been passed through the parliament with a narrow vote on December 30, 2009 after months of acrimonious debate, tainted with secrecy and dishonesty on the part of the government. Every day throughout the debate, new information would emerge and documents would leak to local media or wikileaks. Yesterday, the people of Iceland finally had a chance to have something to say about their fate, because if the state guarantee is accepted it will mean that Iceland will become like a third world country, spending its GDP largely on paying interest on foreign debt. Last summer, a bill for a state guarantee was passed that had a significant meaning not only for Iceland, but also for other nations around the world facing the same problems of private debt being forced on taxpayers. The bill included a reasonable and fair way of handling the interest and the debt: Icelanders would pay, but only a certain percentage of their GDP, and if there were to be another financial black hole, they would not pay during that time. Thus it comes as no surprise that the Dutch and British governments reacted so swiftly with a condemnation of Iceland’s citizens for having the audacity to think they have the right to exercise their democratic rights in deciding for themselves what is in the best economic interests of their nation.

Let’s also put this debt into perspective: 320.000 people live in Iceland, each and every person on the island, including children and the elderly, the disabled and the poor, would have to pay around $30,000 under the bill. The danger if Icelanders will accept this enormous burden is that the entire welfare system would simply collapse with no money to run it. On January 5th the Icelandic president had the courage, backed up by his nation, to place the interest of the people before that of the banks.

Of course there has been an incredible spin by the government controlled media, attacking the nation and the president for this simple and fair demand. The UK and Dutch media were also full of misleading news, saying the nation had demanded not to pay, and that we would become isolated and there were even suggestions that the British navy should flex its muscles against this nation which has no military. As if the terrorist act they imposed on us was not enough during the darkest hour of our crises to bring us further down!

The spin is failing because people around the world are finally starting to hear our side of the story, and other suppressed nations have perhaps seen this as a sign that they can also rise up against the corpocracy in our world where those with the money have as a rule always won. Let’s hope the nation will not been coaxed into fear of isolation and let’s hope the people of the world will join in this experiment of letting the interest of the peoples rise above the interests of banks, corporations, and international bullies such as the IMF. We need your support. I will soon issue a comprehensive report on the entire Icesave saga.

Love and rage from Iceland
Birgitta Jónsdóttir
Party group chairman for The Movement in the Icelandic Parliament

Documentation: I append links to the files about Icesave that were leaked to wikileaks, and which show how the EU member states blackmailed Iceland into the same corner the government helped push into by accepting the Icesave bill. This file also contains letters between the main financial adviser to the Iceland Finance Minister and Mark Flanagan of the IMF:

California Requests Billions From U.S.

SACRAMENTO, Calif. -- Republican Gov. Arnold Schwarzenegger asked for $6.9 billion in federal funds in his state-budget proposal Friday and warned that state health and welfare programs would be threatened without the emergency help.

Republican Gov. Arnold Schwarzenegger says he needs $6.9 billion in federal funds to keep the state afloat. Video courtesy of Fox News.

Mr. Schwarzenegger's proposed $82.9 billion general-fund budget for the 2010-11 fiscal year would close a $19.9 billion gap over 18 months. In addition to the federal aid, he called for $8.5 billion in cuts and $4.5 billion in alternative funding to balance the budget.

"It's time to enact long-term reforms that will change the way the most populous state and the federal government work together," Mr. Schwarzenegger said. He and state legislative leaders plan to visit Washington to lobby for bailout money. White House budget officials weren't available for comment on the governor's request.

Mr. Schwarzenegger said that without the federal aid, he would propose cutting $4.6 billion from state assistance programs and raise another $2.4 billion, largely by extending the suspension of tax breaks.

The governor said California deserved the federal help because the state sends far more tax money to Washington than it receives in return. Federal mandates, he added, "force us to spend money that we do not have."

The budget proposal said the federal government should reimburse California $2.8 billion for costs related to the state's Medicaid program, as well as more than $1 billion for special-education spending and $2.1 billion in federal-stimulus money.

Mr. Schwarzenegger called the state legislature into a special budget session. He proposed cutting $2.4 billion from health and welfare spending and $1.2 billion from prison spending. He also called for cuts in salaries and pensions for state workers.

Republicans praised the plan. "It's a good first step," said Bob Dutton, vice chairman of the state Senate's budget committee.

State Senate President Darrell Steinberg, a Democrat, said: "I have one reaction: You've got to be kidding me." He and other legislative leaders said they opposed any more cuts to welfare and health programs. Instead, they said they preferred federal help or taxes on, for example, oil drilling and tobacco sales.

"These cuts would come at a bad time because there is growing demand from families who are struggling to make ends meet," said Jean Ross, executive director of the nonprofit California Budget Project, which studies policy impacts on the poor.

Mr. Schwarzenegger has been mired in a budget crisis for much of the past two years. California revenues have plunged amid double-digit unemployment and high foreclosure rates. The state has delayed billions of dollars of payments and issued IOUs to keep the government from defaulting.

The return of partisan statehouse clashes over the budget is likely to revive worries on Wall Street over the state's ability to resolve its fiscal troubles. "My concern at this point is that the negotiations could go on longer than the amount of cash the state has on hand," said Gabriel Petek, analyst at Standard & Poor's Corp., which has California on a negative ratings outlook.

A deeply divided legislature finally closed a cumulative $60 billion shortfall last year -- long after its budget deadline.

There are signs California is beginning to slowly emerge from recession. Housing sales have been growing for several months, and state Controller John Chiang on Thursday released his December cash report that showed the month's receipts rose above estimates by $481 million, or 5.7%.

"December receipts showed signs of improvement, but the state continues to face tremendous fiscal challenges," Mr. Chiang said. "At best, this is the beginning of a long and gradual recovery."

Hawaii can't afford Congressional election

Hawaii Congress
FILE - In this Nov. 4, 2008 file photo, Hawaii residents wait in line at the McKinley High School polling station to cast their votes on election day in Honolulu. Hawaii can't afford to hold a 2010 election to replace one of its two representatives in the U.S. House, raising the possibility that more than 600,000 residents could go without representation. The state election office has only $5,000 left to last the rest of the year, far short of the $1 million a special election would cost. (AP Photo/Ronen Zilberman, File)

The Military-Industrial Compex is Ruining the Economy

Everyone knows that the too big to fails and their dishonest and footsy-playing regulators and politicians are largely responsible for trashing the economy.

But the military-industrial complex shares much of the blame.

Nobel prize winning economist Joseph Stiglitz says that the Iraq war will cost $3-5 trillion dollars.

Sure, experts say that the Iraq war has increased the threat of terrorism. See this, this, this, this, this, this and this. And we launched the Iraq war based on the false linkage of Saddam and 9/11, and knowingly false claims that Saddam had WMDs. And top British officials, former CIA director George Tenet, former Treasury Secretary Paul O'Neill and many others say that the Iraq war was planned before 9/11. But this essay is about dollars and cents.

America is also spending a pretty penny in Afghanistan. The U.S. admits there are only a small handful of Al Qaeda in Afghanistan. As ABC notes:
U.S. intelligence officials have concluded there are only about 100 al Qaeda fighters in the entire country.

With 100,000 troops in Afghanistan at an estimated yearly cost of $30 billion, it means that for every one al Qaeda fighter, the U.S. will commit 1,000 troops and $300 million a year.
Sure, the government apparently planned the Afghanistan war before 9/11 (see this and this). And the Taliban offered to turn over Bin Laden (see this and this). And we could have easily killed Bin Laden in 2001 and again in 2007, but chose not to, even though that would have saved the U.S. hundreds of billions of dollars in costs in prosecuting the Afghanistan war. But this essay is about dollars and cents.

Increasing the Debt Burden of a Nation Sinking In Debt

All of the spending on unnecessary wars adds up.

The U.S. is adding trillions to its debt burden to finance its multiple wars in Iraq, Afghanistan, Yemen, etc.

Two top American economists - Carmen Reinhart and Kenneth Rogoff - show that the more indebted a country is, with a government debt/GDP ratio of 0.9, and external debt/GDP of 0.6 being critical thresholds, the more GDP growth drops materially.

Specifically, Reinhart and Rogoff write:

The relationship between government debt and real GDP growth is weak for debt/GDP ratios below a threshold of 90 percent of GDP. Above 90 percent, median growth rates fall by one percent, and average growth falls considerably more. We find that the threshold for public debt is similar in advanced and emerging economies...
Indeed, it should be obvious to anyone who looks at the issue that deficits do matter.

A PhD economist told me:
War always causes recession. Well, if it is a very short war, then it may stimulate the economy in the short-run. But if there is not a quick victory and it drags on, then wars always put the nation waging war into a recession and hurt its economy.
You know about America's unemployment problem. You may have even heard that the U.S. may very well have suffered a permanent destruction of jobs.

But did you know that the defense employment sector is booming?

As I pointed out in August, public sector spending - and mainly defense spending - has accounted for virtually all of the new job creation in the past 10 years:
The U.S. has largely been financing job creation for ten years. Specifically, as the chief economist for BusinessWeek, Michael Mandel, points out, public spending has accounted for virtually all new job creation in the past 1o years:

Private sector job growth was almost non-existent over the past ten years. Take a look at this horrifying chart:


Between May 1999 and May 2009, employment in the private sector sector only rose by 1.1%, by far the lowest 10-year increase in the post-depression period.

It’s impossible to overstate how bad this is. Basically speaking, the private sector job machine has almost completely stalled over the past ten years. Take a look at this chart:


Over the past 10 years, the private sector has generated roughly 1.1 million additional jobs, or about 100K per year. The public sector created about 2.4 million jobs.

But even that gives the private sector too much credit. Remember that the private sector includes health care, social assistance, and education, all areas which receive a lot of government support.


Most of the industries which had positive job growth over the past ten years were in the HealthEdGov sector. In fact, financial job growth was nearly nonexistent once we take out the health insurers.

Let me finish with a final chart.


Without a decade of growing government support from rising health and education spending and soaring budget deficits, the labor market would have been flat on its back. [120]

Raw Story argues that the U.S. is building a largely military economy:

The use of the military-industrial complex as a quick, if dubious, way of jump-starting the economy is nothing new, but what is amazing is the divergence between the military economy and the civilian economy, as shown by this New York Times chart.

In the past nine years, non-industrial production in the US has declined by some 19 percent. It took about four years for manufacturing to return to levels seen before the 2001 recession -- and all those gains were wiped out in the current recession.

By contrast, military manufacturing is now 123 percent greater than it was in 2000 -- it has more than doubled while the rest of the manufacturing sector has been shrinking...

It's important to note the trajectory -- the military economy is nearly three times as large, proportionally to the rest of the economy, as it was at the beginning of the Bush administration. And it is the only manufacturing sector showing any growth. Extrapolate that trend, and what do you get?

The change in leadership in Washington does not appear to be abating that trend...[121]
So most of the job creation has been by the public sector. But because the job creation has been financed with loans from China and private banks, trillions in unnecessary interest charges have been incurred by the U.S.
So we're running up our debt (which will eventually decrease economic growth), but the only jobs we're creating are military and other public sector jobs.

PhD economist Dean Baker points out that America's massive military spending on unnecessary and unpopular wars lowers economic growth and increases unemployment:
Defense spending means that the government is pulling away resources from the uses determined by the market and instead using them to buy weapons and supplies and to pay for soldiers and other military personnel. In standard economic models, defense spending is a direct drain on the economy, reducing efficiency, slowing growth and costing jobs.
A few years ago, the Center for Economic and Policy Research commissioned Global Insight, one of the leading economic modeling firms, to project the impact of a sustained increase in defense spending equal to 1.0 percentage point of GDP. This was roughly equal to the cost of the Iraq War.

Global Insight’s model projected that after 20 years the economy would be about 0.6 percentage points smaller as a result of the additional defense spending. Slower growth would imply a loss of almost 700,000 jobs compared to a situation in which defense spending had not been increased. Construction and manufacturing were especially big job losers in the projections, losing 210,000 and 90,000 jobs, respectively.

The scenario we asked Global Insight [recognized as the most consistently accurate forecasting company in the world] to model turned out to have vastly underestimated the increase in defense spending associated with current policy. In the most recent quarter, defense spending was equal to 5.6 percent of GDP. By comparison, before the September 11th attacks, the Congressional Budget Office projected that defense spending in 2009 would be equal to just 2.4 percent of GDP. Our post-September 11th build-up was equal to 3.2 percentage points of GDP compared to the pre-attack baseline. This means that the Global Insight projections of job loss are far too low...

The projected job loss from this increase in defense spending would be close to 2 million. In other words, the standard economic models that project job loss from efforts to stem global warming also project that the increase in defense spending since 2000 will cost the economy close to 2 million jobs in the long run.
The Political Economy Research Institute at the University of Massachusetts, Amherst has also shown that non-military spending creates more jobs than military spending.

So we're running up our debt - which will eventually decrease economic growth - and creating many fewer jobs than if we spent the money on non-military purposes.

But the War on Terror is Urgent for Our National Security, Isn't It?

For those who still think that the Iraq and Afghanistan wars are necessary to fight terrorism, remember that a leading advisor to the U.S. military - the very hawkish and pro-war Rand Corporation - released a study in 2008 called "How Terrorist Groups End: Lessons for Countering al Qa'ida".

The report confirms that the war on terror is actually weakening national security. As a press release about the study states:

"Terrorists should be perceived and described as criminals, not holy warriors, and our analysis suggests that there is no battlefield solution to terrorism."

Former U.S. National Security Adviser Zbigniew Brzezinski told the Senate that the war on terror is "a mythical historical narrative". And Newsweek has now admitted that the war on terror is wholly unnecessary.

In fact, starting right after 9/11 -- at the latest -- the goal has always been to create "regime change" and instability in Iraq, Iran, Syria, Libya, Sudan, Somalia and Lebanon; the goal was never really to destroy Al Qaeda. As American reporter Gareth Porter writes in Asia Times:
Three weeks after the September 11, 2001, terror attacks, former US defense secretary Donald Rumsfeld established an official military objective of not only removing the Saddam Hussein regime by force but overturning the regime in Iran, as well as in Syria and four other countries in the Middle East, according to a document quoted extensively in then-under secretary of defense for policy Douglas Feith's recently published account of the Iraq war decisions. Feith's account further indicates that this aggressive aim of remaking the map of the Middle East by military force and the threat of force was supported explicitly by the country's top military leaders.
Feith's book, War and Decision, released last month, provides excerpts of the paper Rumsfeld sent to President George W Bush on September 30, 2001, calling for the administration to focus not on taking down Osama bin Laden's al-Qaeda network but on the aim of establishing "new regimes" in a series of states...
General Wesley Clark, who commanded the North Atlantic Treaty Organization bombing campaign in the Kosovo war, recalls in his 2003 book Winning Modern Wars being told by a friend in the Pentagon in November 2001 that the list of states that Rumsfeld and deputy secretary of defense Paul Wolfowitz wanted to take down included Iraq, Iran, Syria, Libya, Sudan and Somalia [and Lebanon].
When this writer asked Feith . . . which of the six regimes on the Clark list were included in the Rumsfeld paper, he replied, "All of them."
The Defense Department guidance document made it clear that US military aims in regard to those states would go well beyond any ties to terrorism. The document said the Defense Department would also seek to isolate and weaken those states and to "disrupt, damage or destroy" their military capacities - not necessarily limited to weapons of mass destruction (WMD)...
Rumsfeld's paper was given to the White House only two weeks after Bush had approved a US military operation in Afghanistan directed against bin Laden and the Taliban regime. Despite that decision, Rumsfeld's proposal called explicitly for postponing indefinitely US airstrikes and the use of ground forces in support of the anti-Taliban Northern Alliance in order to try to catch bin Laden.
Instead, the Rumsfeld paper argued that the US should target states that had supported anti-Israel forces such as Hezbollah and Hamas.
After the bombing of two US embassies in East Africa [in 1988] by al-Qaeda operatives, State Department counter-terrorism official Michael Sheehan proposed supporting the anti-Taliban Northern Alliance in Afghanistan against bin Laden's sponsor, the Taliban regime. However, senior US military leaders "refused to consider it", according to a 2004 account by Richard H Shultz, Junior, a military specialist at Tufts University.
A senior officer on the Joint Staff told State Department counter-terrorism director Sheehan he had heard terrorist strikes characterized more than once by colleagues as a "small price to pay for being a superpower".
If you still believe that the war on terror is necessary, please read this.

Torture is Bad for the Economy

For those who still think torture is a necessary evil, you might be interested to learn that top experts in interrogation say that, actually:

Indeed, historians tell us that torture has been used throughout history - not to gain information - but as a form of intimidation, to terrorize people into obedience. In other words, at its core, torture is a form of terrorism.

Moreover, the type of torture used by the U.S. in the last 10 years is of a special type. Senator Levin revealed that the the U.S. used torture techniques aimed at extracting false confessions.

McClatchy subsequently filled in some of the details:

Former senior U.S. intelligence official familiar with the interrogation issue said that Cheney and former Defense Secretary Donald H. Rumsfeld demanded that the interrogators find evidence of al Qaida-Iraq collaboration...

For most of 2002 and into 2003, Cheney and Rumsfeld, especially, were also demanding proof of the links between al Qaida and Iraq that (former Iraqi exile leader Ahmed) Chalabi and others had told them were there."

It was during this period that CIA interrogators waterboarded two alleged top al Qaida detainees repeatedly — Abu Zubaydah at least 83 times in August 2002 and Khalid Sheik Muhammed 183 times in March 2003 — according to a newly released Justice Department document...

When people kept coming up empty, they were told by Cheney's and Rumsfeld's people to push harder," he continued."Cheney's and Rumsfeld's people were told repeatedly, by CIA . . . and by others, that there wasn't any reliable intelligence that pointed to operational ties between bin Laden and Saddam . . .

A former U.S. Army psychiatrist, Maj. Charles Burney, told Army investigators in 2006 that interrogators at the Guantanamo Bay, Cuba, detention facility were under "pressure" to produce evidence of ties between al Qaida and Iraq.

"While we were there a large part of the time we were focused on trying to establish a link between al Qaida and Iraq and we were not successful in establishing a link between al Qaida and Iraq," Burney told staff of the Army Inspector General. "The more frustrated people got in not being able to establish that link . . . there was more and more pressure to resort to measures that might produce more immediate results."

"I think it's obvious that the administration was scrambling then to try to find a connection, a link (between al Qaida and Iraq)," [Senator] Levin said in a conference call with reporters. "They made out links where they didn't exist."

Levin recalled Cheney's assertions that a senior Iraqi intelligence officer had met Mohammad Atta, the leader of the 9/11 hijackers, in the Czech Republic capital of Prague just months before the attacks on the World Trade Center and the Pentagon.

The FBI and CIA found that no such meeting occurred.

In other words, top Bush administration officials not only knowingly lied about a non-existent connection between Al Qaida and Iraq, but they pushed and insisted that interrogators use special torture methods aimed at extracting false confessions to attempt to create such a false linkage. See also this and this.

Paul Krugman eloquently summarized the truth about the type of torture used:

Let’s say this slowly: the Bush administration wanted to use 9/11 as a pretext to invade Iraq, even though Iraq had nothing to do with 9/11. So it tortured people to make them confess to the nonexistent link.

There’s a word for this: it’s evil.
But since this essay in on dollars and cents, the important point is that terrorism is bad for the economy.

Specifically, a study by Harvard and NBER points out:
From an economic standpoint, terrorism has been described to have four main effects (see, e.g., US Congress, Joint Economic Committee, 2002). First, the capital stock (human and physical) of a country is reduced as a result of terrorist attacks. Second, the terrorist threat induces higher levels of uncertainty. Third, terrorism promotes increases in counter-terrorism expenditures, drawing resources from productive sectors for use in security. Fourth, terrorism is known to affect negatively specific industries such as tourism.
The Harvard/NBER concludes:
In accordance with the predictions of the model, higher levels of terrorist risks are associated with lower levels of net foreign direct investment positions, even after controlling for other types of country risks. On average, a standard deviation increase in the terrorist risk is associated with a fall in the net foreign direct investment position of about 5 percent of GDP.
So the more unnecessary wars American launches, the more innocent civilians we kill, and the more people we torture, the less foreign investment in America, the more destruction to our capital stock, the higher the level of uncertainty, the more counter-terrorism expenditures and the less expenditures in more productive sectors, and the greater the hit to tourism and some other industries.

Terrorism has contributed to a decline in the global economy (for example, European Commission, 2001).
So military adventurism and torture, which increase terrorism, hurt the world economy. And see this.

For the foregoing reasons, the military-industrial complex is ruining the economy.

The Surge in U.S. Personal Bankruptcies, Foreclosures and Job Losses

The number of Americans filing for personal bankruptcy rose by nearly a third in 2009, a surge largely driven by foreclosures and job losses.

And more people are filing for Chapter 7 bankruptcy, which liquidates assets to pay off some debts and absolves the filers of others. That is significant because a 2005 overhaul of federal bankruptcy laws aimed to encourage Chapter 13 filings, which force consumers to sign onto debt-repayment plans in exchange for keeping certain assets.

The changes were designed to make it more difficult for people to shed their debt, particularly in a Chapter 7 filling. A "means" test, for example, was introduced to separate those who could afford to repay their debt from those who couldn't. A Chapter 7 filing is off the table if the means test determines a person is able to pay back at least a portion of the debt after it is restructured.

The worst U.S. recession in a generation is testing the effectiveness of these laws. The economic downturn also has prompted more middle-class Americans to file for bankruptcy protection.

Overall, personal bankruptcy filings hit 1.41 million last year, up 32% from 2008, according to the National Bankruptcy Research Center, which compiles and analyzes bankruptcy data. It is the highest level of consumer-bankruptcy fillings since 2005. Consumers rushed to file in 2005 before the new bankruptcy laws took effect in October of that year.

Chapter 7 filings were up more than 42% as of November 2009, compared with the same period a year earlier, according to the research center. November is the most recent month with analyzed data available. Chapter 13 filings rose by 12% and made up less than a third of 2009 filings as of November.

"That suggests it was largely ineffective," Ronald Mann, a law professor at Columbia University, said of the 2005 overhaul. "I don't think anybody who's knowledgeable about the bankruptcy system thought the statute was well crafted."

During this recession, the housing crisis and high unemployment rate have prompted more people to file for bankruptcy who may never have considered the option before, experts said. Filings from 2008 showed more people with high income and high education levels resorting to bankruptcy petitions, according to an annual survey of consumer-bankruptcy filers' demographics by the Institute for Financial Literacy, a nonprofit that provides bankruptcy-related counseling and education services. Those demographic trends appeared to continue last year.

Mr. Mann said he believes bankruptcies reached their peak sometime last year, but bankruptcy attorneys from across the country said there was no sign that business was slowing. The 113,274 filings in December alone were a third higher than the same month a year earlier.

"I can't see over the top of the files on my desk," said Cathleen Moran, a bankruptcy attorney at Moran Law Group in Mountain View, Calif., likening it to the rush of clients before the revised law went into effect. In a three-month period before those rules changed in 2005, her firm filed five times as many cases as usual.

Ms. Moran's clients in 2008 typically were people who earned between $40,000 and $80,000. That changed last year when a rash of people who earned $100,000 to $300,000 began filing as well, she said.

Non-manufacturing sector expanded in December, but barely, according to data released Wednesday by the Institute for Supply Management. Employment within the broad sector continued to contract.

The ISM's non-manufacturing purchasing managers' index rose to 50.1 last month, from 48.7 in November. The December index was slightly below the 50.5 expected by forecasters surveyed by Dow Jones Newswires. Readings above 50 indicate expanding activity.

The ISM said its December business activity/production index rose to 53.7 last month from 49.6. The new-orders index slipped to 52.1 from 55.1 in November.

Nonfarm private employment declined by 84,000 jobs in the month of December, marking the eight straight month of a decreasing rate of job destruction.

According to the authors of the ADP National Employment Report, “employment losses are now rapidly diminishing and, if recent trends continue, private employment will begin rising within the next few months.”

Despite the improvement over the 145,000 jobs lost in November (revised up from -169,000), December's slowdown was still less than forecast. Analysts had expected a better improvement in the range of 63,000 jobs lost.

Well-known banking analyst Meredith Whitney on Tuesday cut her earnings estimates for Wall Street bank Goldman Sachs for the second time in less than a month.

Shares of Goldman Sachs (NYSE: gs) fell immediately after the news, but then rebounded higher.

Whitney, head of the Meredith Whitney Advisory Group, lowered her fourth quarter estimate for Goldman Sachs to $5.50 from $6.

She also cut her full-year estimate for Goldman for 2010 from $19.65 to $19.20; her 2011 earnings per share estimate from $20.60 to $20.25; and her 2012 estimate from $21.45 to $21.10.

Whitney had previously cut her estimates for Goldman on Dec. 17.

Whitney lowered her estimates for bank Morgan Stanley (NYSE: ms) this past December, reducing her 2010 expectations to $2.60 a share from $2.63 a share. For 2011, her firm lowered its profit estimates to $2.75 a share from $3.28 a share on the bank. It also set an earnings estimate of $2.90 a share for Morgan Stanley for 2012.

Construction spending on hotels, office buildings and retail centers may fall 13 percent this year, the second straight annual decline amid a drop in property prices, the American Institute of Architects said.

The Washington-based group’s forecast is more severe than an estimate it made in July, when it predicted a 12 percent decrease. Spending will turn “marginally” higher in 2011, the group said today.

“The magnitude of the downturn has set in,” Kermit Baker, the group’s chief economist, said in an interview. This year’s expected drop compares with a decline of about 20 percent in 2009. “Another bad year is the bottom line, but there are some prospects of recovery as we get into 2011.”

U.S. commercial real estate values sank to the lowest level in seven years in October as job losses cut demand for apartments, offices and retail space, Moody’s Investors Service Inc. said last month. Office vacancies may approach 20 percent in 2010, according to Jones Lang LaSalle Inc. and Grubb & Ellis Co. Unemployment was 10 percent in November after a 26-year high of 10.2 percent the prior month, the Labor Department said.

Commercial construction spending will probably have a “marginal increase” of 1.8 percent next year, according to the architects group.

That forecast “still implies a weak first half of 2011 and a stronger second half,” Baker said.

Industrial construction spending is likely to slump the most this year, 24 percent, and an additional 7.8 percent in 2011, the institute said.

The group expects hotel building to also fall about 24 percent this year, before rising 5.4 percent in 2011.

Spending on office buildings may drop 19 percent this year and then increase 12 percent in 2011, while retail construction is likely to decline 17 percent this year before climbing 3.2 percent next year, the group said.

The Federal Reserve Bank of New York, then led by Timothy Geithner, told American International Group Inc. to withhold details from the public about the bailed-out insurer’s payments to banks during the depths of the financial crisis, e-mails between the company and its regulator show.

AIG said in a draft of a regulatory filing that the insurer paid banks, which included Goldman Sachs Group Inc. and Societe Generale SA, 100 cents on the dollar for credit-default swaps they bought from the firm. The New York Fed crossed out the reference, according to the e-mails, and AIG excluded the language when the filing was made public on Dec. 24, 2008. The e-mails were obtained by Representative Darrell Issa, ranking member of the House Oversight and Government Reform Committee.

The New York Fed took over negotiations between AIG and the banks in November 2008 as losses on the swaps, which were contracts tied to subprime home loans, threatened to swamp the insurer weeks after its taxpayer-funded rescue. The regulator decided that Goldman Sachs and more than a dozen banks would be fully repaid for $62.1 billion of the swaps, prompting lawmakers to call the AIG rescue a “backdoor bailout” of financial firms.

“It appears that the New York Fed deliberately pressured AIG to restrict and delay the disclosure of important information,” said Issa, a California Republican. Taxpayers “deserve full and complete disclosure under our nation’s securities laws, not the withholding of politically inconvenient information.” President Barack Obama selected Geithner as Treasury secretary, a post he took last year.

Central bankers will hold talks with banking executives in Switzerland this weekend amid concern financial companies are rebuffing a push to increase regulation and temper risk-taking as the recent crisis ebbs.

The gathering to discuss regulation will take place at the Bank for International Settlements in Basel, according to two Group of Seven central bank officials. The BIS invited commercial bankers citing concerns that they are returning to the excessive-risk patterns that helped spark the global crisis in 2007, the Financial Times reported today.

The meeting comes a month after the BIS urged central banks to take greater account of financial stability and published proposals aimed at forcing banks to hold more and better-quality capital and discourage leverage. The MSCI World Index of stocks has surged 73 percent since its low of last March.

“The central bankers are clearly aiming to head off the excesses that will certainly come out of the very easy monetary policy” put in place during the crisis, said Bill Belchere, global chief economist at Mirae Asset Securities in Hong Kong. “They have no choice but to be prudent and vigilant to grapple with the potential problems and stop bubbles before they emerge.”

The BIS meetings occasionally feature sessions with private banks and this month’s gathering will be such an example, the two officials said on condition of anonymity because the agenda isn’t public. Bank executives usually attend the January meet.

The difference between two- and 10- year Treasury yields widened to within 4 basis points of the most in at least 20 years as the Federal Reserve signaled it will hold its target interest rate at a record low.

The so-called yield curve steepened after minutes of the Fed’s last meeting showed officials believe economic growth will be “rather slow relative to past recoveries.” The Treasury will announce plans for next week’s debt sales today.

“Growth and inflation concerns are pushing up longer yields, while market participants are betting that the central bank will keep rates on hold,” said Michael Markovic, a senior fixed-income strategist in Zurich at Credit Suisse.

The 10-year note yield was 3.83 percent as of 7:10 a.m. in New York, according to BGCantor Market data. The 3.375 percent security due in November 2019 was little changed at 96 9/32.

The rate is 2.82 percentage points more than two-year securities. The spread was 2.84 percentage points earlier today, within 4 basis points of the biggest gap since at least 1990. The curve widened to a record 2.88 percentage points on Dec. 22.

The government will sell $10 billion in 10-year Treasury Inflation Protected Securities on Jan. 11, $40 billion of three- year notes on Jan. 12, $21 billion of 10-year securities on Jan. 13 and $13 billion of 30-year debt on Jan. 14, according to Wrightson ICAP LLC, an economic advisory firm in Jersey City, New Jersey.

Ford Motor Co. Chief Executive Officer Alan Mulally said investments in the company’s car lineup and efforts to pay back debt are helping the automaker make “tremendous progress” in its turnaround effort.

“During this worst recession, we chose to increase our investment in new vehicles that people want and value,” he said in an interview from the Consumer Electronics Show in Las Vegas. “Now we are delivering on that product promise, and we’re actually paying the loans back and improving our balance sheet.”

Ford, which reported a 33 percent sales rise in December, gained U.S. market share last year for the first time since 1995. New models like the Ford Fusion are fueling orders at the Dearborn, Michigan-based automaker. Its shares have more than quadrupled in the past year, reaching the highest level in almost five years.

“The consumer loves a company that not only has a strong product line but is creating a strong business, and they know they are going to be around,” said Mulally, 64. “The goodwill that everyone has for Ford far outweighs the disadvantages that Ford has now.”

Ford is reaping the benefits of Mulally’s plan to invest in new models with much of the $23 billion the automaker borrowed in late 2006. Ford put up as collateral all major assets, including its name, to secure that lending, which allowed the company to stave off the bankruptcies that befell General Motors Co. and Chrysler Group LLC last year.

Treasuries were the worst performing sovereign debt market in 2009 as the U.S. sold $2.1 trillion of notes and bonds to fund extraordinary efforts to bolster the economy and financial markets.

Investors in U.S. debt lost 3.5 percent on average through Dec. 30, according to Bank of America Merrill Lynch indexes, the biggest annual slide since at least 1978. The 10-year Treasury yield reached its highest level in six months yesterday before a Labor Department report next week forecast to show payrolls were unchanged in December after the U.S. economy lost jobs in every month since January 2008.

Defense contractor Lockheed Martin of Bethesda said that it plans to cut 1,200 employees by the spring as it consolidates two of its business units and that it foresees a slowdown in its upcoming work from the Pentagon. [they have already cut 730 jobs.]

The number of Americans filing first- time claims for unemployment benefits rose less than forecast last week from the lowest level in more than a year, indicating jobs cuts are waning as companies become more confident in the economy.

Initial jobless applications increased by 1,000 to 434,000 in the week ended Jan. 2, fewer than the 439,000 claims economists anticipated, Labor Department figures showed today in Washington. The number of people receiving unemployment insurance dropped in the prior week to 4.8 million, and those receiving extended benefits increased.

Improving sales and production gains are prompting companies to slow the pace of firings as the economy recovers from the worst recession since the 1930s. Labor Department data tomorrow may show employment was unchanged in December after almost two years of job cuts.

This is clearly a strong number, said Maxwell Clarke, chief U.S. economist at IDEAglobal in New York, who forecast claims at 435,000. Looking forward, you should see slow and steady improvement and a return to positive payroll numbers.

The four-week moving average of initial claims, a less volatile measure, fell to 450,250 last week, the lowest since the Sept. 13, 2008, from 460,500 the prior one. Claims have fallen 36 percent since reaching a 26-year high of 674,000 in the week ended March 27.

The Federal Reserve's latest weekly money supply report Thursday shows seasonally adjusted M1 rose by $1.7 billion to $1.688 trillion, while M2 rose $16.4 billion to $8.413 trillion.

Two high-ranking Maricopa County officials confirmed late Thursday that they will testify next week before a federal grand jury exploring allegations that the Maricopa County Sheriff's Office has abused power.

County Manager David Smith and Assistant County Manager Sandi Wilson said they were preparing to testify before the grand jury on Wednesday.

Sheriff Joe Arpaio denied any knowledge of the grand jury, but news of sheriff's officials being called to testify before a federal panel has been circulating in county circles for months.

Republic sources have confirmed that at least three high-ranking sheriff's officials, including a captain and two chief deputies, have testified before a federal grand jury in the last four months, though the nature of their testimony remained unclear.

"I'm not going to comment on that situation," Arpaio said Thursday. "We're just going to continue doing our job and our investigations that we have in progress."

US job losses resumed in December after revisions showed payrolls rose in November for the first time in nearly two years, the Labor Department estimated Friday. Nonfarm payrolls fell by a seasonally adjusted 85,000 in December following a revised 4,000 gain in November. During 2009, payrolls fell by 4.2 million. Since the recession began two years ago, payrolls have fallen by 7.3 million. The official unemployment rate remained at 10% in December. An alternative gauge of unemployment, which includes discouraged workers and those forced to work part-time, rose to 17.3% from 17.2%. Details of the report were weak, with few signs of further improvement in labor conditions. [John Williams net unemployment figure is 22.7%, our figure is 22.5%.]

We find it comical that the Fed says it is going to wind down the control bank’s purchases of toxic mortgage securities in March and a day later says they may continue them. The excuse is they are concerned that the housing market may collapse without their assistance and 30-year fixed rate mortgage might rise to 6-1/4%. Not to mention staggering real unemployment, which stands at 22.5%.

December Challenger job cuts were at the lowest level in two years. Employers announced 45,094-planned job cuts in December, the fewest since 12/07. That was a 73% decline year-on-year.

Monster Worldwide’s barometer of online employment said its index fell to 115 in December from 119 in November, the lowest in five months.

Incidentally, there are now more government employees than goods-producing workers in the US.

For the week of January 6th, commercial paper fell by $94.2 billion to $1,076 trillion, which is substantial.

We find it of great interest that Timmy, the dwarf, Geithner, removed the bailout limitations on Fannie and Freddie on Christmas Eve, when no one was around to see the news on the major media. This is what you could expect from a habitual tax cheat and a crook.

Worse yet, as head of the NY Fed he pressured AIG to violate SEC laws by instructing them to withhold from the public details of a $200 billion taxpayer bailout of AIG. We paid these bankers 100% on the dollar for worthless paper. The dwarf should be thrown out of his job immediately and be tried for tax fraud.

In case you missed it, Barney Frank found Geithner and the Fed’s actions troubling. This proves again Washington is a criminal enterprise and a den of thieves. Where does it end? We will tell you if we can’t clear out Congress we are doomed.











Either the Fed is engaged in a policy of ‘good cop/bad copping’ the markets or there is confusion if not internecine fighting about Fed policy and economic expectation. Just a couple days ago, Bill Gross stated that the Fed would renew MBS monetization later this year. Then a Fed official and the 12/16 FOMC minutes said the same thing. It’s almost as if Gross has a direct pipeline to the Fed!

We always warn that investors and traders should heed Fed action and not its rhetoric. Our view is the Fed is removing juice but in order to keep the patrons and lemmings from a panic run to the exits, they periodically send out officials to spew ‘more juice’ talk.

The Institute for Supply Management's nonmanufacturing index doesn't get as much attention as its manufacturing index, which helped drive Monday's rally. But it should.

The nonmanufacturing sector comprises 88% of the economy, and it follows that most of the nation's jobs are in services ranging from construction to finance to pet care. While the worst of layoffs appear to be over, the services report is likely to show that hiring remains elusive…

A critical component of the services-sector index is even weaker: jobs. The employment sub-index, factored into the overall number, has contracted for 22 of the past 23 months, according to ISM. November's 41.6 reading of service-sector employment remains in contraction territory.

The Wall Street Examiner reports December tax receipts are down 7.7% yoy.

The December 2009 ISM purchasing managers manufacturing survey surged in yesterday’s (January 5th) reporting, with the seasonally- adjusted diffusion index (50.0 and above is positive) rising to 55.9 from 53.6 in November. Set annually by the Department of Commerce, however, the seasonal adjustments have changed meaningfully during and due to the recession. If the pre-recession seasonal factors used in 2007 (based on 2006) were applied, the November index would have been at 53.3 instead of 53.6, but December would have been 54.0 instead of 55.9.

Although the index still gained in December using the 2007 seasonals, the gain was 0.8 versus the 2.3 points reported. The employment component officially increased from 50.8 in November to 52.0 in December, but using the 2007 seasonals, the increase was from a contractionary 49.8 to 51.1.

Government deficits have caused the U.S. savings rate to turn negative for the first time since the Great Depression, and the gap is widening even as households and companies put away more money than ever before.

As part of the Barney Frank proposed Manager's Amendment, which will accompany HR4173, the "Wall Street Reform and Consumer Protection Act of 2009", are three little-noticed rules that, if adopted, will make shorting stocks if not impossible, then extremely problematic and difficult. It is obvious why these rules would end up in an amendment: the outcry from retail and institutional traders would have been huge had these proposals made the full text of the proper Bill, and into the full view of the Mainstream Media. So why bother with these - simple. As everyone is aware, Ponzi schemes only work when constantly growing, as otherwise they blow up, implode under their own weight, once price discovery is attempted by all.

California Gov. Arnold Schwarzenegger on Wednesday asked Washington for funds to help close his state's massive budget shortfall -- a move some other states are likely to follow in coming months as they deal with their own fiscal woes.

"The federal government is part of our budget problem," the Republican governor said in his annual State of the State address, reiterating a longstanding complaint that California sends far more money to Washington than it receives in return. Mr. Schwarzenegger also said federally mandated spending of state money has further strained California's coffers.

"We no longer can ignore what is owed to us," he said, adding that Washington owes the state billions of dollars for various programs. He criticized elements of congressional proposals to overhaul the health- care system, saying California could be saddled with billions of dollars of additional annual spending.

President Barack Obama signaled to House Democratic leaders Wednesday that they'll have to drop their opposition to taxing high-end health insurance plans to pay for health coverage for millions of uninsured Americans.

In a meeting at the White House, Obama expressed his preference for the insurance tax contained in the Senate's health overhaul bill, but largely opposed by House Democrats and organized labor, Democratic aides said. The aides spoke on condition of anonymity because the meeting was private.

As much as $9.5 million in federal stimulus dollars went to 14 zip codes in Virginia that don’t exist or are in other states, Old Dominion Watchdog ( reports. The fake zip codes were listed on, the federal Web site that is supposed to track how the stimulus money is being used. The phony zip codes are a new wrinkle in’s increasingly tattered credibility.

The US is pursuing a policy similar to what the French pursued after its Mississippi Bubble burst – protect the aristocracy but crack down on the masses. We all know what eventuated.

Tax collections nationwide declined by 10.9 percent during the third quarter of 2009, the third consecutive quarter during which tax revenues fell by double-digit percentages, according to the latest report from the Rockefeller Institute of Government.

For the fourth quarter of 2009, early data showed continuing declines, although the negative trend of the past year appeared to be moderating.

During the third quarter of 2009, personal income tax revenues for the states declined by 11.8 percent, when compared with the same period a year earlier. Personal income taxes represent one of the three major sources of revenue for the states. The other two, sales taxes and corporate income taxes, fell by 8.9 percent and 22.6 percent, respectively.

Yet US bean counters produced wonderful retail sales, income and GDP data for Q3; and US corporations reported ‘great’ earnings on cost cutting…Good thing US corporation are allowed to run two sets of books – one for taxes and one for the public.

Rents fall 0.7 percent in the fourth quarter.

The Exhaustion Rate of unemployment benefits as of November 30, 2009 is 53.78%, another new high.

For the week ended 12/19 10.42 million Americans are receiving unemployment benefits. 5.44m in ‘extended claims’ (week ended 12.19); and 4.981m of ‘continuing claims’.

Hoenig Says Fed Should Eventually Lift Main Rate to 3.5%-4.5% Federal Reserve Bank of Kansas City President Thomas Hoenig said the central bank should move “sooner rather than later” to reduce stimulus, with a goal of eventually boosting the benchmark interest rate to “probably between 3.5 and 4.5 percent.”

“The process of returning policy to a more balanced weighing of short-run and longer-run economic and financial goals should occur sooner rather than later,” Hoenig, who votes on monetary policy decisions this year, said today in a speech in Kansas City.

“Maintaining excessively low interest rates for a lengthy period runs the risk of creating new kinds of asset misallocations, more volatile and higher long-run inflation, and more unemployment -- not today, perhaps, but in the medium- and longer-run.”…

The purchases brought the U.S. central bank's purchase of mortgage bonds guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae to roughly $1.123 trillion since January of 2009…The Fed aims to buy $1.25 trillion of agency MBS in a bid to bring down mortgage rates and to stimulate the battered housing sector and the overall economy.

US House lawmakers may agree to pay for the nation’s health-care overhaul by adopting versions of Senate proposals to raise Medicare payroll taxes and tax health benefits for the first time, Democratic aides said.

The Senate measure would impose a 40 percent excise tax on employer-provided insurance plans worth more than $8,500 for individuals and $23,000 for families.

Shipping giant UPS Inc. will cut 1,800 management and administrative jobs, less than 1 percent of its global work force, as it repositions itself for a gradual economic recovery.

About 1,100 employees will be offered a voluntary separation package as part of the work force reduction, which is meant to streamline the company's U.S. small package segment. Other cuts will come through attrition and layoffs. The U.S. small package segment represents roughly 60 percent of UPS' annual revenue. It handles shipments of up to 150 pounds by ground and air.

U.S. investors oppose federal initiatives that would force them to give up control over their 401(k) accounts, the Investment Company Institute said.

Seven in 10 U.S. households object to the idea of the government requiring retirees to convert part of their savings into annuities guaranteeing a steady payment for life, according to an institute-funded report today.

“Households’ views on policy changes revealed a preference to preserve retirement account features and flexibility,” the institute, which represents the mutual-fund industry, said in the report.

The U.S. Treasury and Labor Departments will ask for public comment as soon as next week on ways to promote the conversion of 401(k) savings and Individual Retirement Accounts into annuities or other steady payment streams, according to Assistant Labor Secretary Phyllis C. Borzi and Deputy Assistant Treasury Secretary Mark Iwry, who are spearheading the effort.

The institute’s member companies manage $11.6 trillion of assets in mutual funds, including employer-sponsored 401(k) accounts. Some lawmakers have questioned the public-policy value of the tax benefits for people investing in retirement accounts, the ICI said in a report today.

The average 401(k) fund balance dropped 31 percent to $47,500 at the end of March 2009 from $69,200 at the end of 2007, according to a Fidelity Investments review of 11 million accounts it manages. The Standard & Poor’s 500 Index tumbled 46 percent in that period. The average balance of the Fidelity accounts recovered to $60,700 as of last Sept. 30 as the stock market rebounded.

Senator Herb Kohl, chairman of the Senate Special Committee on Aging, proposed legislation on Dec. 16 to require fund companies to do more to ensure 401(k) options are appropriate for workers. The Wisconsin Democrat cited reports that target- date funds designed for people retiring in 2010 invested in high-yield, high-risk corporate bonds.

Representative George Miller, a California Democrat, is advocating legislation to require more disclosure about 401(k) fees paid by investors. The Education and Labor Committee, which Miller leads, approved a bill requiring more disclosure about fees in June.

The ICI survey was based on a telephone survey of 3,000 households from Nov. 20 to Dec. 20 and had a sampling error of plus or minus 1.8 percent.

We wonder if the public realizes that all the bad debt bought up by the Fed, more than $2 trillion, will in part eventually have to be assumed by the taxpayer. Some realize the problem, and they seem to be in denial, the rest simply don’t understand. In time the gravity of the situation will become reality. The present economic buoyancy is mainly based on inventory recapitalization and accumulation, but the underlying demand has to appear and with unemployment hovering around 23% how can policymakers believe that a recovery can carry through? The bullet should have been bitten 2-1/2 years ago and the system purged. The longer they wait to solve this painful problem the worse it is going to be. As quantitative easing and higher interest rates take their toll do these elitist have the fortitude to carry their program through? We dispute that they do. The distortions are going to be deep and large, particularly in both residential and commercial real estate. The later actions will bring the US and world economy into total deflationary economic and financial depression. These ideas are considered heretical but then again this publication is usually correct, and those who disagree are more often than not in denial. Unfortunately the experts, who are usually wrong, believe we are delusional, when in fact it is they who refuse to recognize the truth, and it is they and those they council who pay the price. These are the same people who believe the people at the Fed and others are blameless in this catastrophe.

The Fed, as we have in the past, pointed out intercedes into and manipulates markets. The two markets within their historic purview have been currencies and the Treasury market. It is our opinion that in regard to the ten-year Treasury note the Fed’s efforts have reduced yields by ½%, or 50 bps, and perhaps more. Their affect on agencies such as Fannie Mae, Freddie Mac, Ginnie Mae, FHA and collateralized debt obligations has been greater by some 1% plus. The Fed purchases are presently estimated to be in the vicinity of $1 trillion or about 2/3’s of existing issues in mid-range yields. One of the big questions is who were the sellers and what were the prices paid by the Fed. They have thus far refused to release this information. The Fed has recently said they will start to slowly sell these securities. The question is at what price? The Fed may have relieved the holders, mostly banks, of the MBS, but at what price? This is simply another taxpayer bailout of the people who caused the problem in the first place. As a result the public is furious and they have sternly passed their anger on to their representatives in Congress, who were responsible for massive support of Ron Paul’s HR1207 and the bill to audit and investigate the Fed. This and the health care legislation will see many Democrats not returning to Congress next year. The public mistrusts the Fed now more than the IRS.

Even if the Fed does not raise interest rates soon the market will do it for them, and that looks like it is in progress. We see a 5%, 10-year T-note by year end, and a 6-1/4%, 30-year fixed rate mortgage. Some believe this will strengthen the dollar, hence the recent rally led by Goldman Sachs, which looks like it has failed at least for now, and a peaking in gold prices. There is no trust left in the Fed or the dollar and no confidence for the future and that is why dollar rallies born by the Fed won’t sustain. The same lack of confidence is reflected in gold prices. A small upward move in interest rates is not going to deter the rally in gold. Interest rates would have to move to 8% to become a factor in gold prices. The flight to quality is too strong for rates to overcome and at the same time higher rates are not going to have any lasting affect on the value of the dollar. That is reflected in the fall of dollar forex reserves by foreign central banks over the past six months. They fell from 64.5% to 61.8% - enough said.

We would like to believe those figures, but government’s lie so much today we have to take them with a grain of salt. Current economic figures in the US economy are all skewered. The inventory liquidation has been furious and is probably over. This has not been much of a recovery considering the massive amount of liquidity stuffed into the financial system. That said we find it difficult to see how anyone can believe that improvement can be greater than what we have already seen. We believe the employment improvement in December and again in January will be fed by retail job gains and the employment of census takers. Those events have already been discounted. We are looking forward to the February figures that will be adjusted by 885,000 phantom jobs created by the birth/death ratio. In reality that figure should be 1.7 million. Just to show you how thick the propaganda is December figures showed a loss of jobs, yet some economists said they were unchanged.

Fourth quarter GDP will probably officially be about 3.2%; the real numbers will be more like 2%.

We stand frozen as the Treasury and the Fed, instead of cutting spending and liquidity, continue to increase it. GMAC has received more taxpayer largess in the billions of course - corporatist fascism marches on. Our latest Christmas present was the perpetual funding of Fannie Mae and Freddie Mac by our Treasury. Once additionally funded those funds will clean up the rest of the CDOs in the market and bail the Fed out of the toxic waste it has been accumulating. Thus far that is about $1.2 trillion. That leaves $600 to $800 billion to go. This should swell taxpayer debt by another $3 trillion. This move is in anticipation of higher interest rates during the year. Not many people are going to qualify for loans at 6-1/4% to 6-1/2%. It looks like the Fed will continue to buy toxic waste and then roll it over to the Treasury. That will enable the Fed to make more loans they shouldn’t be making to the residential real estate market. That will lead to ever more inflation.

The elitists continue to play their game not believing that anyone understands what they are up too. Each day they delay the inevitable as more of the world public awakens via newsletters, talk radio and the Internet. The average American and those of other nations have seen their home slip away, their retirement lost and their net worth destroyed. Their jobs, now some nine million in the US, have been shipped to foreign lands by transnational conglomerates run by Illuminists, under the guise of free trade, globalization and offshoring and outsourcing. This as taxes rise along with inflation squeezing them even further. They see their markets manipulated by their government. They see the banks, Wall Street and insurance being bailed out and a bone being thrown to the public. Is it any wonder the public is disgusted.