Tuesday, January 26, 2010

Existing Home Sales Fall 16.7% in December; Largest Drop On Record

Sales of U.S. existing homes plunged 16.7% in December to a seasonally adjusted annual rate of 5.45 million from 6.54 million in November as the house purchase tax credit was set to expire. The 16.7% percentage decline from November to December was the largest on record, the National Association of Realtors reported.

Two things to keep in mind here. First, this indicates how manipulated of a "recovery" this. Once the government pulls the support from a sector, it crashes. Second, this is a winter month number. These numbers are notoriously volatile and heavily impacted by weather events.

Why Did the ‘Stimulus’ Fail to Help the Economy?

When Congress was debating President Obama’s proposed “stimulus” last year, two of the watchwords for the near-trillion-dollar boondoggle were “jobs” and “shovel-ready.” Now, given what comes out of Washington, one needs a shovel to clean up the muck, and I appreciate the politicians and the media telling us we needed to have our shovels ready.

Now that the numbers are in, however, it seems that money spent had no appreciable effect on lowering unemployment:

A federal spending surge of more than $20 billion for roads and bridges in President Barack Obama’s first stimulus has had no effect on local unemployment rates, raising questions about his argument for billions more to address an “urgent need to accelerate job growth.”

An Associated Press analysis of stimulus spending found that it didn’t matter if a lot of money was spent on highways or none at all: Local unemployment rates rose and fell regardless. And the stimulus spending only barely helped the beleaguered construction industry, the analysis showed.

Keynesians, not surprisingly, have an answer: The government did not spend enough. They reason that economic growth can occur only if “aggregate demand” is great enough to prevent an overall “glut” of unsold goods. (Like the mercantilists before them, Keynesians believe that recessions occur because businesses cannot sell all the goods they produce. Socialists similarly claim that workers are “unable to buy back the products” they make.)

Therefore if government is to prevent the recession-causing “glut,” it must spend whatever is necessary to cover any “shortfall” in private consumption and investment spending. Out of this “theory” we get the present “stimulus,” complete with the blessing of Ivy League economists (who seem to perform the role of the High Priests in today’s political economy).

Such a “theory,” however, is doomed to fail every time, and I wish to give some reasons why.

  • Individuals are purposeful creatures, so their spending also will reflect their own purposeful behavior. (It is interesting that many people who endorse the “aggregate demand” terminology also decry what they see as “mindless consumption of the masses.”)
  • The economy is not a blob into which one stirs in money the way one stirs in an ingredient into a cake. In other words, the economy does not have a “just add money” in a recipe. It is driven by people making purposeful decisions.
  • An economy has a structure of production that when working well directs resources, labor, and capital toward those areas of production that reflect the desires and needs of consumers.
  • When governments expand money through the central bank, the rush of new money distorts the production structure and changes the relative value of assets and factors of production. In the early stages of this government-inspired boom, the malinvested assets (the ones that become more valuable as a result of the artificial boom itself) expand relative to other assets.
  • The credit-fed boom ultimately cannot be sustained, and it becomes painfully clear that malinvested assets (see the housing-real estate bubble) quickly lose their value relative to other assets. This is the beginning of the recession, which is a period in which the economy begins to reassert the “consumer-preferred” value of economic assets.

Attempts to “stimulate” the economy through massive government spending may put money into the pockets of politically connected people, but it does nothing to restore the economic factors to their proper balances. Instead, the “stimulus” only serves to further distort the economic fundamentals and prolong the downturn.

That’s right. The stimulus has not staved off a major depression; instead, it has ensured the greater likelihood of a major economic collapse by keeping the factors unbalanced and distorting the structure of production.

The fact that the “elite” economists ignore (or even mock) what is known as the Austrian Theory of the Business Cycle does not change the fact that it explains why the Keynesian “solutions” are making things worse. Government can no more end a recession by pouring new money into the economy than one can end a fire by pouring on gasoline. But it can burn down our economic house.

Top Senate Democrat lays out deficit curbs

WASHINGTON (AP) - The top Senate Democrat wants to make it more difficult to run up the deficit with new tax cuts or expansions of federal benefit programs.

Majority Leader Harry Reid's plan would make it difficult to again extend emergency unemployment benefits or health insurance subsides for laid off workers. It would also make it harder to render new assistance for state Medicaid payments.

The Nevada Democrat is pressing the plan to get legislation passed permitting the government to continue to borrow money to finance its operations. Under the pay-as-you-go concept, program cuts or revenue increases would be needed to cover the cost of any new policies or programs. If not, across-the-board spending cuts would kick in.

Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Happiness in Slavery

Don’t open your eyes
You won’t like what you see
The blind have been blessed with security
Don’t open your eyes
Take it from me
I have found you can find
Happiness in slavery

Nine Inch Nails-Happiness in Slavery

Think you’re free? Think again, slave!

This week the Federal government will attempt to auction off 118 billion dollars in U.S. debt to anyone who thinks the U.S. dollar is a great place to be. Of course if you ask liars like Fed Chief Ben Bernanke or his young sidekick “tiny” Tim Geithner, they will most certainly assure you that the dollar is strong and that the U.S economy is on a miraculous rebound. But this is fiction.

Lets do our own risk assessment, shall we? After all, barring any foreign investors stupid enough to take the bait, it’s going to be you and I… and several generations of our descendants left holding the check as the fat gluttons on Wall Street lick their plates before dashing out of the restaurant. But I warn you; what you are about to read is nothing short of horrifying and should convince you – once and for all – that we are in the final stages of a freefall spiral into outright despotism.

Stewart Dougherty is a specialist in inferential analysis, the practice of identifying historic and contemporary patterns and then extrapolating their likely effects upon the future. In his recent piece, “America’s Impending Master Class Dictatorship”, Mr. Dougherty crunches some numbers for us and finds:

“According to the Federal Reserve’s most recent report on wealth, America’s private net worth was $53.4 trillion as of September, 2009. But at the same time, America’s debt and unfunded liabilities totaled at least $120,000,000,000,000.00 ($120 trillion), or 225% of the citizens’ net worth. Even if the government expropriated every dollar of private wealth in the nation, it would still have a deficit of $66,600,000,000,000.00 ($66.6 trillion), equal to $214,286.00 for every man, woman and child in America and roughly 500% of GDP. If the government does not directly seize the nation’s private wealth, then it will require $389,610 from each and every citizen to balance the country’s books.”

Sorry, but I don’t have that kind of scratch! Few of us do! And though we should feel no obligation to pay this debt, we still must bear some of the responsibility for allowing it to happen. Somewhere along the way our ancestors dropped the ball. Our fathers failed to heed the warnings of great men. They allowed their words to echo down the memory hole into oblivion only to be replaced with the words of actors, sportscasters and anchormen. They allowed great texts and historical documents in our schools to be substituted with training manuals and rulebooks for the enslaved. Their apathy has delivered us into dependence, and from there we are entering back into the final stage of a never-ending fatal sequence: bondage.

Democracy may well be the worst of all forms of government. We are often told of the virtues of democracy and taught that it was under its principles that this nation was founded. But that is not true. We were born a Republic; a representative form of government designed to protect the rights of the individual. However, from the day of our nation’s founding, insidious forces within and from without have incrementally caused our government to deteriorate into a democracy. Where once the center of power was concentrated in our elected representatives in the House and senate, that power has now been usurped by the Executive Branch. The vast majorities of Americans have considered their vote for the presidency as the single most important elected office, and as a result, have rendered their sovereignty to that single entity.

The office of the President has become a seat of power. Through signing statements and a self appointed “executive privilege”, the President has become a ruler rather than a servant of the people who acts upon the direction of Congress.

Though the author of the following passage is unknown, it has been quoted as part of a speech given in 1943 by American Industrialist H.W. Prentis though much of what he said has been attributed to late 18th Century writer Andrew Fraser Tytler. Regardless of who or when it was said, it certainly seems prophetic now in relation to the situation we currently find ourselves in…

“A democracy is always temporary in nature; it simply cannot exist as a permanent form of government. A democracy will continue to exist up until the time that voters discover that they can vote themselves generous gifts from the public treasury. From that moment on, the majority always votes for the candidates who promise the most benefits from the public treasury, with the result that every democracy will finally collapse due to loose fiscal policy, which is always followed by a dictatorship. The average age of the world’s greatest civilizations from the beginning of history has been about 200 years. During those 200 years, these nations always progressed through the following sequence:

· From bondage to spiritual faith;
· From spiritual faith to great courage;
· From courage to liberty;
· From liberty to abundance;
· From abundance to complacency;
· From complacency to apathy;
· From apathy to dependence;
· From dependence back into bondage.”

That last part, that has come to be known as the “Tytler Cycle”, could be used to chronicle our nation’s rise and fall from the day our ancestors fled the tyranny of King George (from bondage to spiritual faith), the American Revolution (from spiritual faith to great courage), the Declaration of Independence (from courage to liberty), the Industrial Revolution (from liberty to abundance), the signing of the Federal Reserve Act (from abundance to complacency), the Great Depression (from complacency to apathy), the entry into the United Nations (from apathy to dependence) and everything that has happened since: the endless wars, socialism/facism, the CIA, etc., etc., etc. … (from dependence back into BONDAGE!)

Should we accept our fate? Surely we can adapt. A frightening number of men and women whom have received long-term confinement in our nation’s prison system succumb to a thing known as “institutionalized syndrome” characterized by a loss of independence and self-confidence, erosion of desire and skills for social interaction and fear of authority. Upon the prospect of release many prefer to stay in that nightmarish environment rather than face the world alone due to excessive reliance on these institutions to provide food, clothing and shelter. Could this be where we are headed?

And what of our destiny? Will we go the way of North Korea, a communist regime that controls it’s population through hunger and fear? One only needs to read accounts of daily life in it’s largest city, Pyongyang to conclude that this is precisely what our masters have in store for us. Imagine living in tiny living quarters within towering, drab apartment complexes that siphon intermittent supplies of water and electricity while reliably feeding government propaganda through living room speakers that can never be fully turned down. A place where no citizen is allowed to drive or even own a bicycle. A place where rations of food are so miniscual that hunger and starvation are commonplace.

And though I suspect that none of us will live long enough to be forced to live under such harsh conditions, is it acceptable to use that as an excuse to leave that fate to our children? Perhaps for some of you it is. Perhaps the work that lies ahead of us is an insurmountable task. Perhaps the victories of our enemy have caused you to become complacent, even apathetic in your own personal “Tytler Cycle”? If so, then I wish you well. Hopefully you will find comfort in the distractions provided to you by our social engineers. And although you may find your liberty in short supply, be comforted in the fact that there will always be an abundance of drugs, sports, music and all manner of entertainment to keep your buzz going through these tumultuous times.

If you accept this conclusion then I offer, in parting, these words from Samuel Adams:

“If you love wealth more than liberty, the tranquility of servitude better than the animating contest of freedom, depart from us in peace. We ask not your counsel nor your arms. Crouch down and lick the hand that feeds you. May your chains rest lightly upon you and may posterity forget that you were our countrymen.”

In other words, may you find “Happiness in Slavery”.

Democrats consider dropping insurance ban on pre-existing conditions

Among the casualties of President Barack Obama's healthcare agenda may be those who suffer from pre-existing medical conditions and can't get insurance.

Thought the ban on denying health insurance coverage for pre-existing conditions was going the way of the dodo? Not so fast.

An astute blogger noted that the new proposals floated by Democrats in the wake of the massive health care bill's collapse is a provision that would bar denying coverage for those with pre-existing conditions -- but only if they were under 19. "Did someone just chuck pre-existing conditions overboard?" he wrote.

Among the measures Democrats are considering, the New York Times noted Friday, "Insurers could not deny coverage to children under the age of 19 on account of pre-existing medical conditions."

"The only reason to specify that children under the age of 19 won't be denied coverage is because you plan on letting everyone 19 and over BE denied coverage for pre-existing conditions," blogger John Aravosis replied.

The liberal blogger also discovered a carefully worded description of what may be Obama's health care fallback plan in an editorial penned for the Washington Post on Sunday by former Obama campaign manager Dan Plouffe.

"If we do pass it, dozens of protections and benefits take effect this year," Plouffe wrote. "Parents won't have to worry their children will be denied coverage just because they have a preexisting condition. Workers won't have to worry that their coverage will be dropped because they get sick. Seniors will feel relief from prescription costs. Only if the plan becomes law will the American people see that all the scary things Sarah Palin and others have predicted -- such as the so-called death panels -- were baseless."

Aravosis notes that Plouffe has again highlighted plans to jettison pre-existing conditions -- but only for children.

"Their children?" he wrote. "The original promise - even the bad Senate bill - protects everyone, of any age, from being denied coverage because of pre-existing conditions. Now it's just children?"

Democrats haven't firmly coalesced around any plan, so details remain up in the air. House Speaker Nancy Pelosi's (D-CA) office did not immediately return a request for comment from Raw Story.

If the Democrats were to back away from a fullscale ban on pre-existing conditions, liberals are sure to question President Barack Obama, who included a ban at the top of his change.gov website's health care agenda prior to taking office.

"Require insurance companies to cover pre-existing conditions so all Americans regardless of their health status or history can get comprehensive benefits at fair and stable premiums," the then-president-elect's website said.

The challenge for Democrats: a ban on denying coverage for those with pre-existing conditions went hand-in-hand with a requirement that all Americans carry insurance. Insurance companies conceded that they would accept all patients, regardless of health history, but only if everyone was required to have insurance, which would spread the cost of insuring the sick across a wider pool. Without an insurance mandate, a pre-existing ban would mean that premiums would almost certainly rise.

Liberal critics of the Senate Democratic healthcare bill -- which now appears dead -- argued that even with a pre-existing ban, a provision that allowed insurance companies to charge older patients three times as much as younger consumers effectively undermined attempts to level the insurance playing field.

ThinkProgress, the blog of the progressive Center for American Progress, notes that insurers spent at least $38 million in lobbying on the health care bill in 2009.

Outsourcing roars back to India, China: Study

WASHINGTON: Outsourcing has roared back to life in the last six months with some of it moving to countries like India, and from India to other
places like China, the Philippines, Costa Rica and even Romania, according to a new study.

"After fizzling out over the past couple years as companies simply slashed jobs rather than move them, outsourcing is back in vogue," Forbes.com reported Monday citing a new PricewaterhouseCoopers study.

"Cost is still the major factor," Charles Aird, managing director for shared services practices at PWC, was quoted as saying. "But people are also looking for greater efficiency, better quality and access to talent."

The list of what's being outsourced is growing, too, with much of the recent growth being driven by competitors playing catch-up to market leaders that slashed their costs prior to the downturn.

Not everything can be outsourced effectively, though, Forbes said suggesting, "Computer customer service that was outsourced to India, for example, was notorious for alienating customers."

"Dell eventually brought much of its call-centre support back into the US from India, while Apple has made a point of keeping support within the country in which the calls originate," it said.

In contrast, application development - a much more complicated skill set - that was outsourced to India has proved to be extremely successful, it said.

There also is a risk that outsourcing some core services can cause damage to a company Forbes said citing Aird: "The key is that you've got to tie your sourcing strategy to your business strategy."

Not everything can be outsourced to the same place. India, which was the first big outsourcing centre, is largely bound by the English-speaking world, Forbes said.

Other countries such as China, with an equivalent-size labour pool; Poland, with about 40 million workers, and others, with much smaller pools of trained workers, are stepping up their outsourcing skills training for non-English-speaking countries, it noted.

Most of these operations are fairly fluid for entry-level positions. Clerical-level staff is in an almost constant state of churn, and goes to the lowest-cost region of trained workers.

Programmers are more valuable, and to prevent poaching, the salaries have risen from about $100 a month in 1994 to about $3,000 a month now in India, Forbes noted.

Great Recession Continues

Click this link ....... http://www.youtube.com/watch?v=1NuLKMkniG0&feature=player_embedded

Signs Of The Apocalypse: The Return Of The Layoff

Layoffs in unrelated industries, even when close together in time, are just that—unrelated. That is until they begin to grow rapidly in number.

Three of America’s largest firm announced firings or signaled them during the last week. Wal-Mart (NYSE:WMT) cut the deepest, which is frightening because it is the most financially healthy company in the world. In a surprise announcement, the world’s largest retailer said it would cut 10% of its Sam’s Club division, which means nearly 12,000 workers will get axed. The news cannot be good for the staggering retail sector. Christmas was weak, but Wall St. assumed that Wal-Mart was doing as well as if not better than its smaller competitors. The Wal-Mart move will give other retail firms “permission” to take fresh looks at their staff levels without the stigma of announcing firings ahead of other large store chains.Xerox (NYSE:XRX) also unexpectedly said it would cut 2,500 people. It did so at the same time as it posted good earnings. That means Xerox believes that it can still wring more productivity from the people it will continue to use. The tech sector is still on a bumpy ride while consumers and IT managers try to decide if they can afford to upgrade to new equipment. The beginning of 2010 could cause a fresh round of reviews of how much blood can be squeezed from the employment pool stone. Large firms that made layoffs last year can now look at four quarters of what those layoffs have done to them or for them financially. If cuts worked once, they might work again.

Oracle (ORCL) is close to closing its deal to buy Sun Micro. Sun’s remarkable history of large layoffs is an example of what happens to a company when its products lose most of their relevance and R&D efforts cannot bring the firm back into alignment with customers demands. Sun will now become one of the many divisions of Oracle and that almost certainly means that many management and sales people will be gone by the end of the quarter.

U.S. Heading for Hyperinflationary Collapse, Ruling Elite Preparing for Civil War

What we've got here is failure to communicate.
Some men you just can't reach...
So, you get what we had here last week,
Which is the way he wants it !
Well, he gets it !
N' I don't like it any more than you men.

Luke Jackson, as portrayed by Paul Newman, in Cool Hand Luke is a classic American character. He is a rogue who marches to the beat of his own drummer. His stubbornness, indefatigable spirit, and nonconformity are a symbol of the timeless American spirit. His character is reminiscent of Winston Smith in Orwell’s 1984, Steve McQueen’s Virgil Hilts character in The Great Escape, and Jack Nicholson’s Randall McMurphy character in One Flew Over the Cuckoo’s Nest. Captain, played by Strother Martin, makes it his mission to beat the nonconformity out of Luke. No matter how bad he is beaten, he comes back for more. His indomitable fortitude and independent attitude inspires the other prisoners. He escapes from the prison twice and is caught and brought back. Captain thinks that he has finally broken his will as the other prisoners see him beg for mercy, but Luke escapes one final time and is shot dead. In death Luke regained all the adulation he lost among the prisoners and became a mythic hero.

Americans have a choice. They can allow their government to bully and threaten them into conforming to their view of reality like Winston Smith or they can go down swinging like Cool Hand Luke and Randall McMurphy. The cowboy spirit of the Old West is what is required today. We need tough hardened individualists who are willing to say enough is enough. Our government has been corrupted by weak men slithering around the halls of Congress soliciting for money, an evil banking cartel creating fiat money, corporate fascists paying off criminals in Washington DC, and the military industrial complex enforcing Washington’s power across the globe. The country longs for an Andrew Jackson or a Dwight Eisenhower. Instead we are stuck with Harry Reid and Nancy Pelosi. The citizens of the country have chosen a false security in place of liberty and freedom.

This country achieved greatness because Americans took chances, had the freedom to succeed or fail, picked themselves up when they failed, and lived their lives within a moral framework of fairness and honesty. That flame of independence and freedom is dying out. Americans no longer believe in shared sacrifice, working hard, honoring a sense of civic duty, morality, or modesty. A private banking cartel controls the purse strings and protects its bank owners and its protectors in Congress. The President wages wars across the globe without Constitutional approval from Congress that is required. Agencies of government operate in secret, assassinating foreign enemies, fomenting unrest in other countries, and spying on Americans. Look at the fear we’re feeding. Look at the lives we’re leading.

Look at your young men fighting
Look at your women crying
Look at your young men dying
The way they've always done before

Look at the hate we're breeding
Look at the fear we're feeding
Look at the lives we're leading
The way we've always done before
- Guns N Roses – Civil War

Brainwashed Pride

“It is forbidden to kill; therefore all murderers are punished unless they kill in large numbers and to the sound of trumpets.” - Voltaire

My hands are tied
The billions shift from side to side
And the wars go on with brainwashed pride
For the love of God and our human rights
And all these things are swept aside
By bloody hands time can't deny
And are washed away by your genocide
And history hides the lies of our civil wars
- Guns N Roses – Civil War

According to our own Declaration of Independence:

“We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.”

Do these human rights exist today in our country? Is our system conducive to justice and human dignity? I contend that we have sacrificed our liberty for security. We’ve sacrificed justice for safety. We’ve sacrificed freedom for enslavement by fascist corporatism. We’ve sacrificed peace for never ending war. Your government knows everything you are doing. They can monitor your phone calls. They can monitor your emails. They can watch your every move with satellites. They can brand you a terrorist, break down your front door and take you away. All of this can be done in the name of safety. We have allowed this to happen with virtually no debate or dissent from the masses. These choices have led our once great Republic to the edge of the abyss. As we stare into this abyss we have a choice. If we continue on our current path we are destined for a brutish future of totalitarianism, wars, resource depletion, and violent conflicts across the globe. If we display persistence and never say die attitude of Cool Hand Luke, we have a opportunity to capture this country back from the corrupt ruling privileged class. It may take a Revolution to do so, but so be it. If we choose not to fight, we are fated to wear leg chains for the rest of our incarcerated existence.

When the Legislative branch willingly delegates its Constitutional authority to declare war to the Executive branch, the citizenry has no opportunity to be heard. This is a bastardization of our Constitution as envisioned by our Founding Fathers. We have Presidents who invade other countries in the name of God.

“I am driven with a mission from God. God would tell me, 'George go and fight these terrorists in Afghanistan'. And I did. And then God would tell me 'George, go and end the tyranny in Iraq'. And I did." - George W. Bush

Of course the reason sold to the American public was weapons of mass destruction. I wonder if the American people would have rallied around the flag if they knew President Bush believed he had been instructed by God to invade Iraq. Instead our National Security Advisor was warning of imminent mushroom clouds unless we invaded.

"The problem here is that there will always be some uncertainty about how quickly he can acquire nuclear weapons. But we don't want the smoking gun to be a mushroom cloud." - Condoleezza Rice

A concerted campaign of lies and exaggerations were used to mislead the American public into supporting the invasion of Iraq. This brainwashing effort covered up the fact that plans were being discussed before 9/11. Paul O’Neill, the Treasury Secretary at the outset of the Bush administration, detailed the preparations in his book The Price of Loyalty. At the first meeting of the National Security Council on January 30, 2001, seven months before the 9/11 attacks, Rumsfeld argued, "What we really want to think about is going after Saddam." Regime change in Iraq, he argued, would allow the U.S. to enhance the situation of the pro-American Kurds, redirect Iraq toward a market economy, and guarantee a favourable oil policy.

Rumsfeld's recommendation was taken up by Dick Cheney’s National Energy Policy Development Group. This task force decided that enhanced American influence over the production and sale of Middle East oil should be "a primary focus of U.S. international energy policy," relegating both the development of alternative energy sources and domestic energy conservation measures as meaningless. By March of 2001, according to O'Neill, who was a member of both the NSC and the task force: "Actual plans.... were already being discussed to take over Iraq and occupy it -- complete with disposition of oil fields, peacekeeping forces, and war crimes tribunals -- carrying forward an unspoken doctrine of pre-emptive war." O'Neill also reported that, by the time of the 9/11 attacks on the World Trade Center and the Pentagon, the plan for conquering Iraq had been developed and that Secretary of Defense Rumsfeld indeed urged just such an attack at the first National Security Council meeting convened to discuss how the U.S. should react to the 9/11 attack.

"We know he's been absolutely devoted to trying to acquire nuclear weapons, and we believe he has, in fact, reconstituted nuclear weapons." - Dick Cheney

The result of these lies and secret plans withheld from the American public has been 5,400 dead American soldiers, 46,000 wounded soldiers, $1 trillion in costs to wage the wars, at least 150,000 civilian casualties, and oil prices that have quadrupled since 2001. The blood of all these innocent people is on the hands of those who lied, hid the truth, and committed genocide. The bitter truth is that power, oil, and money have been the driving forces of American imperialism for the last century.

Feeds the Rich While it Buries the Poor

“When the rich wage war, it's the poor who die.” - Jean-Paul Sartre

I don't need your civil war
It feeds the rich while it buries the poor
You're power hungry sellin' soldiers
In a human grocery store
Ain't that fresh
I don't need your civil war

Look at the shoes you're filling
Look at the blood we're spilling
Look at the world we're killing
The way we've always done before
Look in the doubt we've wallowed
Look at the leaders we've followed
Look at the lies we've swallowed
And I don't want to hear no more
- Guns N Roses – Civil War

George Washington, a true American warrior, understood that a large military establishment was dangerous to the Republic. He spent eight years in the field fighting for American Independence. He understood the power of a large dominant military.

“Over grown military establishments are under any form of government inauspicious to liberty, and are to be regarded as particularly hostile to republican liberty.” - George Washington

What most people do not understand is the relationship between the Federal Reserve and war. The Federal Reserve is responsible for every economic difficulty that afflicts our nation. Without a Federal Reserve creating fiat paper currency out of thin air, an empire could not wage continuous war. There is no clearer proof than evaluating major U.S. military conflicts prior to 1913 versus after the creation of the Federal Reserve. Between 1791 and 1913 (122 years) the U.S. engaged in only four major conflicts:

  • War of 1812
  • Mexican-American War
  • Civil War
  • Spanish-American War

Only the War Between the States can be considered significant and it was fought solely on U.S. soil. The Federal Reserve was created in 1913 by bankers in collusion with politicians in Washington DC. This private central bank, run by a cartel of major banks, has encouraged politicians to wage war. Continuous conflict enriches bankers, as all the money used to wage war is borrowed from them. This may explain why between 1913 and 2010 (97 years) the U.S. has engaged in eleven significant foreign conflicts:

  • World War I
  • World War II
  • Korean War
  • Vietnam War
  • Grenada Invasion
  • Panama Invasion
  • Gulf War
  • Somalia
  • Kosovo War
  • Afghan War
  • Iraq War

Above and beyond these actual conflicts, we engaged in a 46 year Cold War with the Soviet Union that involved funding opponents to communism, coups, and assassination of foreign leaders. This Cold War was used as an excuse to station troops in over a 100 foreign countries, creation of the military industrial complex and creation of a secret spy agency, the CIA. Conveniently, when the Cold War ended with the collapse of the Soviet Union, a new amorphous war was created by politicians and their bankers. The nebulous War on Terror has been exploited to create the Department of Homeland Security and passage of the Orwellian Patriot Act, which allows the government to violate Americans’ right to privacy in the name of National Security.

The War on Terror is used as the reason for invading foreign countries and using predator drones to blow up whoever our leaders feel is a threat. The cost for the War on Terror thus far has been $2.3 TRILLION. There are trillions more to be wasted because you can never win a war on terror. Who benefits from a never ending war on terror? Every dime of the $2.3 trillion has been borrowed. The beneficiaries of debt are bankers, as they reap billions in profits and pay themselves millions in bonuses. The money that is loaned to the government is then paid to the companies that constitute the military industrial complex. These companies then buy the support of Congress for their new and improved killing machines. This is the circle of death encompassing Washington DC.

Section 8 of the U.S. Constitution says Congress has the power to coin Money, regulate the Value thereof, and of foreign Coin and to declare War, grant Letters of Marque and Reprisal, and make Rules concerning Captures on Land and Water. The corrupt politicians who have controlled the country for the last century have abrogated their power to coin money to a secretive private bank run by crooked bankers. Since 1941 Congress has failed in their Constitutional duty to be the branch of government that commits citizens of the U.S. to war. They have allowed the executive branch to decide when Americans will die and for what causes. The Bush Doctrine, created by Dick Cheney, Donald Rumsfeld, and Paul Wolfowitz, is policy of preventative war, which holds that the United States should topple foreign regimes that represent a potential or perceived threat to the security of the United States, even if that threat is not immediate; a policy of spreading democracy around the world, especially in the Middle East, as a strategy for combating terrorism; and a willingness to pursue U.S. military interests in a unilateral way. Should the American people follow the doctrine of men who never served a day in the U.S. military and have no difficulty in wiping their blood stained hands all over the U.S. Constitution or a wise Founding Father who risked his life to create that Constitution?

“The Constitution vests the power of declaring war in Congress; therefore no offensive expedition of importance can be undertaken until after they shall have deliberated upon the subject and authorized such a measure.” - George Washington

Ronald Reagan increased military spending dramatically in the 1980s in an effort to bankrupt the Soviet Union. Total spending on defense in the decade reached $3.8 trillion. The collapse of the only country in the world that threatened the U.S. militarily left a vacuum in the 1990s. This peace dividend resulted in military spending decreasing to $3.3 trillion in the 1990s. Defense companies did not fare well in this decade as plants were closed and employees laid off. The 9/11 terrorist attack was a windfall for the military industrial complex, the neo-conservative Constitution burners, and privileged bankers. With no country on earth capable of competing with our immense military machine, the government used fear, loathing and false patriotism to ramp up military spending to $5.3 trillion during the just completed decade. Ask yourself who benefited from these expenditures. Are you safer? Are you better off financially today? Oil prices rose from $20 a barrel to $145 a barrel. The U.S. National debt rose from $5.7 trillion to $12.3 trillion. The financial system collapsed due to the actions of the Federal Reserve, greedy criminal bankers, and self serving corrupt politicians. And still the wars go on.

War is a Racket

"War is a racket. It always has been. It is possibly the oldest, easily the most profitable, surely the most vicious. It is the only one international in scope. It is the only one in which the profits are reckoned in dollars and the losses in lives. A racket is best described, I believe, as something that is not what it seems to the majority of the people. Only a small 'inside' group knows what it is about. It is conducted for the benefit of the very few, at the expense of the very many. Out of war a few people make huge fortunes." - General Smedley Butler

My hands are tied
For all I've seen has changed my mind
But still the wars go on as the years go by
With no love of God or our human rights
and all these dreams are swept aside
By bloody hands of the hypnotized
Who carry the cross of homicide
And history bears the scars of our civil wars

I don't need your civil war
It feeds the rich while it buries the poor
You're power hungry sellin' soldiers
In a human grocery store -
Guns N Roses – Civil War

General Smedley Butler, at the time of his death was the most decorated Marine in U.S. history. He was awarded 16 medals, 5 for heroism. His 33 year military career was marked by bravery and brilliance in command. His 1935 book, War is a Racket, detailed how profiteering by corporate fascists encouraged military imperialism by America’s leaders. He condemned the profit motive behind war and described it in no uncertain terms.

"I spent 33 years and four months in active military service and during that period I spent most of my time as a high class thug for Big Business, for Wall Street and the bankers. In short, I was a racketeer, a gangster for capitalism. I helped make Mexico and especially Tampico safe for American oil interests in 1914. I helped make Haiti and Cuba a decent place for the National City Bank boys to collect revenues in. I helped in the raping of half a dozen Central American republics for the benefit of Wall Street. I helped purify Nicaragua for the International Banking House of Brown Brothers in 1902-1912. I brought light to the Dominican Republic for the American sugar interests in 1916. I helped make Honduras right for the American fruit companies in 1903. In China in 1927 I helped see to it that Standard Oil went on its way unmolested. Looking back on it, I might have given Al Capone a few hints. The best he could do was to operate his racket in three districts. I operated on three continents." - General Smedley Butler

Smedley Butler another Cool Hand Luke character who was willing to stand up for what he knew to be right, no matter the consequences, is nowhere to be found on the political scene today. Only Ron Paul seems able to summon the courage to speak the truth in Washington DC.

“War is never economically beneficial except for those in position to profit from war expenditures. The moral and constitutional obligations of our representatives in Washington are to protect our liberty, not coddle the world, precipitating no-win wars, while bringing bankruptcy and economic turmoil to our people.” - Ron Paul

Those who profit from war are easy to determine. The chart below details the obscene profit increases of the five biggest defense contractors in the U.S. Profits soared by 205% between 2000 and 2007 to $13.5 billion. With revenue up 155%, it is interesting to note that their work forces only grew by 10%, with two of the firms decreasing their work forces. Luckily, the righteous CEOs of these distributors of death were able to increase their compensation by 173%, ranging from $10 million to $60 million per year. 9/11 has proved to be an extreme windfall for peddlers of war. I’m sure the $463 million spent by the Defense Industry to “lobby” Congressmen over the last 10 years has had no impact on these results. I’m certain Haliburton’s association with Vice President Dick Cheney did not factor in the $3.5 billion profit they generated in 2007 after generating only $500 million of profit in 2000.

War most certainly feeds the rich, while it buries the poor. The people pulling the strings in Washington DC are all rich. George Bush, Dick Cheney, Hank Pauson, Ben Bernanke, Barack Obama, and Tim Geithner are all multi-millionaires. It matters not which party controls the levers of power. The racket is perpetual. The most liberal President since FDR is submitting the largest Defense spending budget in U.S. history, exceeding $700 billion for 2010. The cumulative National Debt of the U.S. from 1791 until 1977 (186 years) totaled $699 billion. We now spend more than that every year on war.

There are no rich dying in the deserts of Iraq and Afghanistan. There are no wealthy Wall Street bankers’ sons or daughters dying in the Middle East. Isn’t it fresh that there are 237 millionaires out of 535 members of Congress and only 10 members of Congress with a son or daughter putting their lives on the line in Iraq or Afghanistan? The facts are that the lower middle class and poor die in a foreign desert like dogs for no good reason. The rich and powerful line their pockets while selling soldiers in a human grocery store. The hypnotized masses are manipulated by government propaganda, ideologue think tanks, and corporate mainstream media. Even the financial crisis benefits the military industrial complex. Before the crisis, military recruiters had tremendous difficulty in convincing enough young people to become cannon fodder for the War on Terror. When 22% of the population is unemployed, there is no such problem. Nationwide, the Air Force reached its highest number of enlistments since 2004, and the Marines Corps was able to do enough recruiting in 2009 to go from 175,000 in its ranks to 202,000. The Army has exceeded its goal of 80,000 enlistments from 2006 to 2008, and it took in more than 70,000 soldiers, with a goal of 65,000 in 2009. The grocery store shelves have been restocked.

Sometimes Nothing can be a Real Cool Hand

“How did we win the election in the year 2000? We talked about a humble foreign policy: No nation-building; don't police the world. That's conservative, it's Republican, it's pro-American - it follows the founding fathers. And, besides, it follows the Constitution.” - Ron Paul

I find it revealing that three men who occupied the top military position of the nation, led men into battle, and understood the responsibility in committing American citizens to battle were the most reflective and cautious in using the military power of the U.S. in foreign entanglements.

“Every gun that is made, every warship launched, every rocket fired, signifies in the final sense a theft from those who hunger and are not fed, those who are cold and are not clothed.” - Dwight D. Eisenhower

“Although a soldier by profession, I have never felt any sort of fondness for war, and I have never advocated it, except as a means of peace.” - Ulysses S. Grant

“Wars can be prevented just as surely as they can be provoked, and we who fail to prevent them, must share the guilt for the dead.”
Omar N. Bradley

The United States has spent $12.5 trillion on the Military over the last three decades. The U.S. National Debt totals $12.3 trillion. Essentially every dime spent on the military in the last three decades has been borrowed. We police the world using a credit card with an unlimited line of credit. The issuer of the credit card is the Federal Reserve Bank. The systematic destruction the U.S. dollar over the last 97 years has allowed politicians to steal from the middle class and enrich the corporate fascists that control the country. Dr. Edwin Vieira describes the truth of our dilemma:

“Private financial special-interest groups buy politicians; in public office these politicians empower the special-interest groups by statute to manipulate the monetary and banking systems; to the extent that these manipulations succeed, the profits are largely privatized; and to the extent that the manipulations fail, the losses are almost entirely socialized. In either case, the general public is held hostage to the racket, and foots the gargantuan bill for its operation. And the guilty parties escape scot free to steal again, and again, and again.”

We are left a hollowed out economy with a middle class that hasn’t seen their real wages increase in 30 years. Our manufacturing base has been gutted. The only thing this country has produced in the last ten years is killing machines. Is society more likely to advance by producing a computer or a humvee? Is our civilization better off with a plant producing tanks or hybrid cars? Defense spending means the government is pulling away resources from free market uses and instead using them to buy weapons and to pay for soldiers and Blackwater mercenaries. In realistic economic models, defense spending is a direct drain on the economy, reducing efficiency, slowing expansion and costing jobs. Based on the chart below, we’ve made our selection. It is a choice that will surely lead to an economic collapse as the cumulative weight of debt will capsize our ship of state.

We are now at a critical crossroads for our Republic. Normally intelligent Americans must open their eyes to the collusion between politicians, military industrial complex, Federal Reserve and corporate media that have used fear and misinformation to gain power over brainwashed American citizens. The ruling elite fear and despise the American public. The Department of Homeland Security has been given free rein to spy on American citizens, classifies Ron Paul supporters as potential domestic terrorists, considers returning Iraq veterans as a potential threat, and seems to be directing their laser focus toward suppressing domestic civil dissent. U.S. combat troops of Northern Command have been stationed on domestic soil. A list of Executive Orders gives FEMA and the President greater control over many aspects of our lives. Last week Executive Order 13528 created a Council of Governors which will coordinate the Federal and State responses to domestic crisis. The Council will coordinate:


matters involving the National Guard of the various States;


homeland defense;


civil support;


synchronization and integration of State and Federal military activities in the United States; and


other matters of mutual interest pertaining to National Guard, homeland defense, and civil support activities.

Are these the actions of a government preparing for a bright future? The ruling class sees their control slipping away. Any honest financial analyst can perceive that the country is headed for catastrophe. Hyperinflation and disintegration of the U.S. dollar are in our future. The consequence will be anger, chaos, and social unrest. The ruling elite are preparing for this by stationing troops in the U.S. and creating the means to squash any threats to their wealth and power. Now is the time to confront these traitors to the Republic. Speaking the truth, questioning authority, practicing civil disobedience, and peaceful protest are necessary to confront the evil doers today. I believe it is time for every concerned American to invoke their right to bear arms. Totalitarian states always act to install gun control laws. The biggest threat to America is from within, not from without.

“How far you can go without destroying from within what you are trying to defend from without?” - Dwight D. Eisenhower

We practice selective annihilation
Of mayors and government officials
For example to create a vacuum
Then we fill that vacuum
As popular war advances
Peace is closer

Guns N Roses – Civil War

Join me at www.TheBurningPlatform.com to discuss truth and the future of our country.

By James Quinn


James Quinn is a senior director of strategic planning for a major university. James has held financial positions with a retailer, homebuilder and university in his 22-year career. Those positions included treasurer, controller, and head of strategic planning. He is married with three boys and is writing these articles because he cares about their future. He earned a BS in accounting from Drexel University and an MBA from Villanova University. He is a certified public accountant and a certified cash manager.

These articles reflect the personal views of James Quinn. They do not necessarily represent the views of his employer, and are not sponsored or endorsed by his employer.

© 2010 Copyright James Quinn - All Rights Reserved

The Bernanke Conundrum

A Republican won in Massachusetts — and suddenly it’s not clear whether the Senate will confirm Ben Bernanke for a second term as Federal Reserve chairman. That’s not as strange as it sounds: Washington has suddenly noticed public rage over economic policies that bailed out big banks but failed to create jobs. And Mr. Bernanke has become a symbol of those policies.

Where do I stand? I deeply admire Mr. Bernanke, both as an economist and for his response to the financial crisis. (Full disclosure: before going to the Fed he headed Princeton’s economics department, and hired me for my current position there.) Yet his critics have a strong case. In the end, I favor his reappointment, but only because rejecting him could make the Fed’s policies worse, not better.

How did we get to the point where that’s the most I can say?

Mr. Bernanke is a superb research economist. And from the spring of 2008 to the spring of 2009 his academic expertise and his policy role meshed perfectly, as he used aggressive, unorthodox tactics to head off a second Great Depression.

Unfortunately, that’s not the whole story. Before the crisis struck, Mr. Bernanke was very much a conventional, mainstream Fed official, sharing fully in the institution’s complacency. Worse, after the acute phase of the crisis ended he slipped right back into that mainstream. Once again, the Fed is dangerously complacent — and once again, Mr. Bernanke seems to share that complacency.

Consider two issues: financial reform and unemployment.

Back in July, Mr. Bernanke spoke out against a key reform proposal: the creation of a new consumer financial protection agency. He urged Congress to maintain the current situation, in which protection of consumers from unfair financial practices is the Fed’s responsibility.

But here’s the thing: During the run-up to the crisis, as financial abuses proliferated, the Fed did nothing. In particular, it ignored warnings about subprime lending. So it was striking that in his testimony Mr. Bernanke didn’t acknowledge that failure, didn’t explain why it happened, and gave no reason to believe that the Fed would behave differently in the future. His message boiled down to “We know what we’re doing — trust us.”

As I said, the Fed has returned to a dangerous complacency.

And then there’s unemployment. The economy may not have collapsed, but it’s in terrible shape, with job-seekers outnumbering job openings six to one. Nor does Mr. Bernanke expect any quick improvement: last month, while predicting that unemployment will fall, he conceded that the rate of decline will be “slower than we would like.” So what does he propose doing to create jobs?

Nothing. Mr. Bernanke has offered no hint that he feels the need to adopt policies that might bring unemployment down faster. Instead, he has responded to suggestions for further Fed action with boilerplate about “the anchoring of inflation expectations.” It’s harsh but true to say that he’s acting as if it’s Mission Accomplished now that the big banks have been rescued.

What happened here? My sense is that Mr. Bernanke, like so many people who work closely with the financial sector, has ended up seeing the world through bankers’ eyes. The same can be said about Timothy Geithner, the Treasury secretary, and Larry Summers, the Obama administration’s top economist. But they’re not up before the Senate, while Mr. Bernanke is.

Given that, why not reject Mr. Bernanke? There are other people with the intellectual heft and policy savvy to take on his role: among the possible choices would be my Princeton colleague Alan Blinder, a former Fed vice chairman, and Janet Yellen, the president of the San Francisco Fed.

But — and here comes my defense of a Bernanke reappointment — any good alternative for the position would face a bruising fight in the Senate. And choosing a bad alternative would have truly dire consequences for the economy.

Furthermore, policy decisions at the Fed are made by committee vote. And while Mr. Bernanke seems insufficiently concerned about unemployment and too concerned about inflation, many of his colleagues are worse. Replacing him with someone less established, with less ability to sway the internal discussion, could end up strengthening the hands of the inflation hawks and doing even more damage to job creation.

That’s not a ringing endorsement, but it’s the best I can do.

If Mr. Bernanke is reappointed, he and his colleagues need to realize that what they consider a policy success is actually a policy failure. We have avoided a second Great Depression, but we are facing mass unemployment — unemployment that will blight the lives of millions of Americans — for years to come. And it’s the Fed’s responsibility to do all it can to end that blight.

Figures on government spending and debt


Figures on government spending and debt (last six digits are eliminated). The
government's fiscal year runs Oct. 1 through Sept. 30.
Total public debt subject to limit Jan. 22 12,245,872
Statutory debt limit 12,394,000
Total public debt outstanding Jan. 22 12,302,465
Operating balance Jan. 22 142,454
Interest fiscal year 2009 383,365
Interest fiscal year 2008 451,154
Deficit fiscal year 2009 1,417,121
Deficit fiscal year 2008 454,798
Receipts fiscal year 2009 2,104,613
Receipts fiscal year 2008 2,523,642
Outlays fiscal year 2009 3,521,734
Outlays fiscal year 2008 2,978,440
Gold assets in September 11,041

Jim Rogers Discusses Bernanke Reappointment - Fed Policy

Click this link ..... http://eclipptv.com/viewVideo.php?video_id=9675

India, China won't sign Copenhagen Accord

A giant globe placed outside a shapping mall during the UN Climate Change conference in Copenhagen in 2009. The Indian and Chinese governments have had a rethink on signing the Copenhagen Accord, officials said on Saturday. Photo: PTI
PTI A giant globe placed outside a shapping mall during the UN Climate Change conference in Copenhagen in 2009. The Indian and Chinese governments have had a rethink on signing the Copenhagen Accord, officials said on Saturday. Photo: PTI

The Indian and Chinese governments have had a rethink on signing the Copenhagen Accord, officials said on Saturday, and the UN has also indefinitely postponed its Jan 31 deadline for countries to accede to the document.

An Indian official said that though the government had been thinking of signing the accord because it “did not have any legal teeth and would be good diplomatically”; it felt irked because of repeated messages from both UN officials and developed countries to accede to it.

Prime Minister Manmohan Singh has written to UN Secretary General Ban Ki-moon seeking a number of clarifications on the implications of the accord that India -- with five other countries -- had negotiated in the last moments of the Copenhagen climate summit in December, the officials said, speaking on condition of anonymity.

“That letter, and the defeat of the Democrats in the Massachusetts bypoll, has forced the UN to postpone the deadline indefinitely,” an official said. “With the Democrats losing in one of their strongholds, the chances of the climate bill going through the US senate have receded dramatically.

“So if the US is not going to reduce its greenhouse gas emissions by 17 percent, which was a very weak target anyway, why should we make any commitment even if it does not have any legal teeth?” the official said.

China also appears in no mood to sign the accord.

“With the deadline postponed, we are not going to sign now,” said a Chinese official now here to take part in the BASIC (Brazil, South Africa, India, China) meeting to chalk out a climate strategy.

The meeting of the four environment ministers Sunday is likely to end with the announcement of a fund they will set up to help other developing countries cope with the effects of climate change, said an official of the environment ministry.

Only four countries -- Australia, Canada, Papua New Guinea and the Maldives -- have signed the Copenhagen Accord so far, though Brazil, South Africa and South Korea have also indicated their willingness to do so.

Though Australia and Canada have signed, they have not indicated the greenhouse gas emission reductions they are committing under the accord -- something developed countries are supposed to do.

America's Most Expensive Real Estate Deal Goes Bust

It’s official: the biggest real estate deal of all time has gone bust. Tishman Speyer Properties and Black Rock Realty have surrendered Stuyvesant Town and Peter Cooper village, two sprawling Manhattan housing complexes they bought for $5.4 billion for in 2006. This comes as no surprise to residents, real-estate watchers, and economists who have been awaiting the implosion of plans to turn the rent-stabilized haven for middle-class New Yorkers into another condo complex for young investment bankers.
  • Developers Got Pummeled by NYC Tenants’ Laws and a Tanking Market, Gabe Sherman explained last year in New York:
"Like so many of the deals completed at the market’s peak, the financial assumptions underlying Tishman Speyer’s bid were aggressive, assuming steadily rising rents. The buildings at Stuy Town and Peter Cooper Village were 73 percent rent stabilized, and making the deal profitable would require the messy public-relations exercise of ferreting out illegal rent-stabilized tenants."
  • What Else Did You Expect? asks a letter issued by the Stuyvesant Town-Peter Cooper Village Tenants Association in early January, after the developers defaulted on the $16 million payment. “The news is… the sad, but inevitable result, of a predatory and speculative business plan designed to drive out long term tenants of a stable, middle-class community. The default is the first step in what will likely be a long legal process.”
  • Not Much to Explain—This Deal Was Just 'Colossally Stupid,' scoffs Yves Smith at Naked Capitalism. “The acquisition of the 11,000 apartment complex known as Peter Cooper Village and Stuyvesant Town was a classic example of peak of cycle excess.” The $5.4 billion price tag was based on projected rather than actual rentals, Smith explains, and investors (stupidly) did not foresee the roadblocks Manhattan’s "tenant-friendly housing regulations" would pose to developers’ attempts to overturn rent stabilization.
  • Stuy Town Explains the Residential Housing Crisis and Heralds a Commercial One, Megan McArdle argues in the January/February issue of The Atlantic. Comparing commercial investors to residential ones, McArdle writes that the Stuyvesant players weren’t "shady subprime lenders or naive kids. Tishman Speyer has been in the real-estate business for decades, and the investors who trusted the firm with their money are sober institutions like the Hartford Financial Services Group and the California Public Employees’ Retirement System." So why the foolish deal? “Game theorists often speak of the ‘winner’s curse’: the tendency of auctions to be won by the people who are the most delusionally overoptimistic. It’s an apt description of what seems to have happened. Not just to the Tishman group, but to America."

9 banks teetering after bad land bets

After betting heavily on real estate lending, about a third of Utah's smaller community banks are teetering between collapse and survival after the worst land-value crash in memory.

Nine banks are struggling to collect on development and construction loans representing 36 percent of their combined portfolios. Many loans are overdue to the point of default and are in danger of being written off as total losses.

If the past year is a guide, some of these banks may fail. Since January 2008, federal regulators have seized three banks and one credit union, including Barnes Bank just 10 days ago. All had gambled on speculative real estate construction and land loans.

The seizure of even one more bank could further deprive cash-hungry businesses of money, potentially amplifying the credit crunch and retarding Utah's economic recovery. Community banks focus much of their lending on small businesses, which generate most jobs. Already the nine troubled banks have cut their loan volumes by an average of 16 percent, according to figures from the Federal Deposit Insurance Corp.

The banks operate in the formerly sizzling real estate markets along the Wasatch Front and in St. George. Until real estate began to slide in 2007, they were profitable; the loans produced rivers of cash. At times, construction and development loans constituted more than 70 percent of some portfolios.

They "were caught up in the land-rush mentality," said Brighton

Bank President Howard Holt, whose Salt Lake City institution remained above the fray as a frenzy of imprudence and greed swept through the real estate and financial markets.

"Contractors were out there furiously buying up tracts of land, which just kept driving prices higher and higher. Some financial institutions, including their presidents and their boards, felt that, 'If we want to grow, now is the time. We need to ride the crest of this wave.' "


Mark of turmoil » Today, with real estate values off as much as 50 percent in some areas, the nine banks -- two in St. George (SunFirst and Village Bank) and one each in Gunnison (Gunnison Valley), Ogden (Centennial), Orem (Western Community), Provo (Capital Community), Salt Lake City (First Utah), Holladay (Holladay Bank) and Woods Cross (Prime Alliance) -- are floundering. As of Sept. 30, all had lost money, and all had "troubled asset ratios" that exceeded 100 percent, meaning they had more sour loans than money put aside to cover possible losses, according to American University in Washington, D.C., which analyzed the nation's banks using FDIC data.

The troubled asset ratio isn't a definitive predictor of failure, but it is a mark of turmoil, said Wendell Cochran, senior editor at the university's Investigative Reporting Workshop.

"Of the 140 banks that failed [in the U.S.] last year, 125 had ratios of over 100. It's a pretty decent indicator of stress," Cochran said.

To be sure, most community banks are not in trouble. Many have troubled asset ratios closer to the national median of 14 percent. Cache Valley Bank in Logan had a 4.2 percent ratio of troubled assets to capital and reserves. Provo's Bonneville Bank had a ratio of 4.1 on Sept. 30.

Other factors led the nine Utah banks to the brink, from heavy reliance on so-called brokered deposits to hubris by inexperienced bank managers to regulators who pushed banks to forecast future loan losses based on past losses. Because real estate loans had always performed well, some bankers believed they would need virtually no reserves in real estate.

"We've lent millions to contractors and individuals to put families in homes. We had a total loss of less than $20,000 since 1993," said Harley Jacobs, president of Provo's Capital Community Bank, one of a handful of executives from the troubled banks who would speak on the record. One-fourth of the lender's real estate, construction and land-development loans were in danger of being written off as of Sept. 30.

"If we had been able to turn the clock back and repeat what we did through 2007, I don't think we would have done anything different. And we still feel we [did] things right," said Jacobs, who thinks his bank will survive.

Douglas Christensen, president of Bonneville Bank, which has weathered the bank crisis well, said inexperience was also a factor. He is 60. Like him, anyone running a bank in the 1970s and 1980s, when stagflation gripped the economy and the savings and loan industry imploded, looked on the real estate bubble with caution.

"We were a little leery of why the market was so high and what was driving it," Christensen said. "It felt like the market was dependent on easy money. It was getting away from the loans we like to do."


Throwing caution aside » With 90 percent of its loans in real estate, Barnes Bank had been in danger of collapse for months before its recent seizure. The Kaysville-based bank survived two world wars, the Great Depression and numerous recessions in its 119-year history. But on Sept. 30, with more than a third of its loans past due, its troubled asset ratio stood at 278 percent, 20 times the U.S. median.

Earlier this month, the Federal Reserve gave Barnes five days to increase its capital reserves or find a buyer. When it couldn't, the plug was pulled by the FDIC, which insures deposits up to $250,000.

Barnes officials haven't explained why they threw caution aside. But, according to the FDIC, the bank doubled its exposure to real estate between 2003 and 2007, from $303 million to $705 million.

That wouldn't have been a problem if borrowers could have repaid their loans. Instead, as land and home prices plummeted, unemployment increased, Utah's economy sank into its worst recession since the 1930s and defaults shot up. Forty-six percent of Barnes' construction and land-development loans were delinquent, according to FDIC figures.

"For at least five years, that was the most sought-after product by customers, and obviously the most profitable. When things are good, everybody expects things to stay good," said Larry Grant, senior lending officer at Ogden's Centennial Bank, one of Utah's troubled nine.

But in September 2007 -- Grant said that was the turning point for the bank -- the bottom fell out of the real estate market, and it hasn't recovered. As of Sept. 30, Centennial's troubled asset ratio had soared to 338 --- worst of all Utah banks.

"We've not had just a recession. We've had a huge downturn that extended outward for an extended period of time, longer than anyone anticipated," he said.

Centennial could be one of the fortunate banks, despite its distress. In September, the bank announced Orem-based Vision Bankcard would acquire controlling interest and infuse new capital, though the deal hasn't closed. The acquisition was revealed three months after the FDIC ordered Centennial to make changes, when regulators said Centennial had too many poor-quality loans and was operating "with inadequate provisions for liquidity."

Liquidity is a bank's ability to convert assets to cash to meet large volumes of unexpected withdrawals by depositors without causing damage to its finances that is impossible to repair.

In hindsight, the risk to Centennial from its ballooning exposure to real estate loans should have been obvious, Grant said. But as the bank looked at the marketplace and what its peers were doing, it was hard to pass up a good thing.


'Hot money' » Banks took enormous risks during the real estate boom, often granting loans without demanding proof of income. Others used brokered deposits to fund loans to home builders and developers.

Brokered deposits are raised by brokers who earn fees by selling certificates of deposit that pay high rates of interest to investors, often via the Internet. Amounts raised from each investor are usually slightly below $100,000 so that all interest and principal are covered by FDIC insurance. The funds are often used to make risky real estate loans.

Bankers sometimes call brokered deposits "hot money." Because the deposits aren't raised locally, they aren't loyal to banks that have them. As soon as a bank has a problem or can't match a higher rate, the deposit goes away, leaving the lender holding loans that aren't backed by sufficient capital. In a sense, the bank is upside-down.

Most of Utah's nine most troubled banks used brokered deposits in varying degrees, according to the FDIC. Tiny Gunnison Valley leaned on them enough to catch regulators' attention. In September, the FDIC ordered the Sanpete County bank to stop the practice.

"When the bottom fell out, people just walked away from their houses because they weren't worth what they were costing them," bank President Paul Andersen said, declining further comment.

Virtually all of the deposits of MagnetBank were brokered just four months before the FDIC closed the Salt Lake City lender last January. The bank had amassed $282.2 million in brokered deposits; its total deposits were $282.6 million.

Most were used to make real estate loans. It had $234.8 million in loans on its books. Eighty percent were in construction and land development.

In retrospect, MagnetBank's portfolio of loans looks like a prescription for disaster. Even so, the Utah Department of Financial Institutions allowed MagnetBank in 2007 to convert its operations to commercial lending and continue to fund itself with brokered deposits. At the time, MagnetBank had shown it was able to manage brokered funding appropriately, Tom Bay, supervisor of banks for the department, told the financial services newspaper American Banker .

Today, Bay declines to second-guess the department's decision to allow Magnet Bank to convert. He said the bank failed because of bad loans, not because its deposits were brokered.

Darryle Rude, supervisor of industrial banks at the department, is more philosophical. "In retrospect, would we approve that type of business plan today? Well, obviously in today's environment that would be a poor decision. But at the time it appeared to be a good plan."


Time to reflect » Some bankers appear chastened by their behavior. Others, such as Capital Community's Jacobs, wonder how real estate lending spun so far out of control.

"A lot of what this bank's focus was, and many of the community banks share this same position in the market, is we have been relegated to a construction lending platform. We have lost our competitiveness in many of the consumer areas we don't enjoy and others do," Jacobs said, referring to credit unions, which use their federal tax exemption to offer higher interest rates.

Credit union officials counter that they provide competition that helps drive bank rates and fees lower. Unlike banks, they also have severe restrictions on raising capital to fund their growth.

Grant, the senior lending officer at Centennial, said his bank has learned it can't just make real estate loans. It also must investigate applicants more wisely.

"We have learned to diversify. We have learned to look beyond the value of collateral and to focus on the ability of borrowers to support their debt even in bad times."


Nine banks with asset issues

First Utah, Salt Lake City

Holladay Bank and Trust, Holladay

SunFirst , St. George

Village Bank, St, George

Gunnison Valley, Gunnison

Centennial, Ogden

Western Community, Orem

Capital Community, Provo

Prime Alliance, Woods Cross

Source: American University School of Communication Investigative Reporting Workshop, FDIC data

Man hurls shoe at Sudan president


A Sudanese man hurled his shoe at President Omar al-Beshir on Monday but missed him, witnesses said, adding the assailant was promptly arrested.

The man, who was in his 40s, threw the footwear at Beshir in a hallway of the Friendship Hall, where the president hosts guests, witnesses said on condition of anonymity.

Security men quickly detained the shoe thrower.

He was later identified as Adil Mohammed Fath al-Rahman Mahjub, a man who once held a position in government and suffers from psychiatric disorders, the official news agency SUNA said without elaborating.

"He wanted to deliver a letter to the president... but was intercepted by guards of the president who told him the time and place were not appropriate. He then took off his shoe and threw it," the agency said.

The man was otherwise unarmed, SUNA said, adding the shoe thrower was treated at a psychiatric hospital before being released to his family.

Beshir has ruled Sudan since seizing power in a military coup in 1989 and he is standing for re-election in April, when Sudan holds its first general election in 24 years.

The president, who is wanted by the International Criminal Court for alleged war crimes in the restive Darfur region, is the latest leader targeted by a shoe-thrower.

In the best known incident, Iraqi journalist Muntazer al-Zaidi threw his shoe at then US president George W Bush on December 14, 2008, during his farewell visit to Baghdad.

Zaidi said at the time it was a "farewell kiss" for Bush. He was jailed for nine months but flown out of the country after being released for his own security.

The assault caused massive embarrassment to Bush and his host, Iraqi Prime Minister Nouri al-Maliki, particularly since throwing a shoe at someone is considered especially insulting and humiliating in Arab culture.

Other officials who have had shoes thrown at them include Chinese Premier Wen Jiabao while on a visit to Britain and Israel's ambassador to Sweden.

© 2010 AFP

Okinawa vote pressures Japan on US Marine base

TOKYO: Japan's prime minister said Monday he may nix a key military deal with Washington on relocating US troops, after a local election in Okinawa showed that residents oppose any new Marine base in their region.

Residents of Nago elected a mayor who is staunchly against moving a base there from a larger city nearby -- plans which Washington considers fundamental to its troop realignment in the region. An agreement on the relocation of Futenma Marine air field was made in 2006 under the previous government that lost power last year.

Okinawa vote pressures Japan on US Marine base
Anti-US base candidate Susumu Inamine, right, celebrates with his wife Ritsuko and supporters as he was virtually assured of his victory in a mayoral election of this small Okinawan city of Nago, on Sunday Jan. 24, 2010. [Agencies]

Prime Minister Yukio Hatoyama said the results of Sunday's election reflected the will of the people, and that Japan would completely re-examine its accord with the US.

"The country will start from scratch on this issue and take responsibility to reach a conclusion by the end of May," he told reporters.

Nago chose challenger Susumu Inamine -- who campaigned against any expansion of US military presence in the area -- over incumbent Yoshikazu Shimabukuro. Inamine won with 52.3 percent of the vote, according to the city's election office.

The city's mayor has little say in national policy, but with Japanese parliamentary elections coming in the summer, the results quickly reverberated throughout the country.

"It wasn't just Shimabukuro that was defeated in the election. The biggest loser was Japan's postwar military base strategy," the national Asahi daily said in a front-page editorial Monday.

The Obama administration has already expressed frustrations with Tokyo's delays in finalizing the relocation of the Futenma base -- now in the larger Okinawa city of Ginowan -- saying it is delaying the broader 2006 plan to reorganize the US military presence in Japan.

Experts said the election results makes it nearly impossible for Hatoyama to move Futenma's facilities to Nago, as was called for in the agreement struck four years ago.

"He can't make a decision now that's going to make both the Americans and Okinawans happy," said Jeff Kingston, Temple University's director of Asian Studies in Tokyo.

Hatoyama could use the vote as political cover for rejecting Nago as the relocation site by saying, "'This is how democracy works,' but that's not going to play too well in Washington," Kingston said.

The planned relocation to Nago issue sparked intense protests and dominated debate between the two mayoral candidates. Defeated mayor Shimabukuro supported the base for the jobs and investment it would bring.

Under a security pact signed in 1960, US armed forces are allowed broad use of Japanese land and facilities. In return, the US is obliged to respond to attacks on Japan and protect the country under its nuclear umbrella.

More than half of some 47,000 American troops stationed in Japan are in Okinawa, where many residents complain about noise, pollution and crime linked to the bases.

Inamine, an independent, ran with the support of Hatoyama's ruling Democratic Party. His victory Sunday will make it increasingly difficult for the prime minister to resist pressure to shelve the deal.

After securing victory, Inamine celebrated with jubilant supporters gathered at his office.

"I fought this campaign vowing to resist the base," he said Sunday. "I intend to keep that promise as we move forward."

Bush Pentagon Hired Conspiracy Theorist As Al Qaeda Specialist

When the Pentagon's internal think tank decided in 2004 it needed a better understanding of Al Qaeda, it turned to an unlikely source: the terrorism analyst Laurie Mylroie, who was known as the chief purveyor of the discredited idea that Saddam Hussein was behind Sept. 11 and many other attacks carried out by Al Qaeda.

Mylroie was paid roughly $75,000 to produce a 300-page study, "The History of Al Qaida," for the Defense Department think tank, known as the Office of Net Assessment, a DOD spokesman tells us. The study, which is dated September 2005, was posted on an intelligence blog last month.

It documents the development of Al Qaeda and spends many pages dancing around the theory that has defined Mylroie's career -- that key Qaeda leaders acted at the behest of the Iraqi regime. She also argues that group-think among U.S. analysts has obscured the true nature of the terrorist group.

Those who know Mylroie's work are shocked that the Pentagon would hire her.

"I think that she has zero credibility on these issues," says terrorism expert Peter Bergen, who dubbed Mylroie "a crackpot" in a 2003 Washington Monthly profile.

Once an assistant professor at Harvard, Mylroie made her name as a Middle East expert in the 1980s. But after the 1993 WTC attack, she became convinced that evidence ignored by virtually everyone else proved Saddam was sponsoring Al Qaeda. She expanded on that theory after the 1995 Oklahoma City bombing (which she linked to Iraq) and September 11 (ditto), culminating in the book Study of Revenge: The First World Trade Center Attack and Saddam Hussein's War against America, published by the American Enterprise Institute in October 2001.

Mylroie's allies in the Bush Administration included Iraq hawks Paul Wolfowitz, Richard Perle, and others. "The elaborate conspiracy theories she had propounded--dismissed as bizarre and implausible by the U.S. law enforcement and intelligence communities--would have enormous influence within the administration," reported David Corn and Michael Isikoff in their book Hubris.

In the 2005 Pentagon study, Mylroie floats the idea that 9/11 mastermind Khalid Sheik Mohamad and Ramzi Yousef, who planned the 1993 World Trade Center bombing, "are the trained agents of a terrorist state, the expertise and other resources of which enabled the militants to conduct attacks they were incapable of carrying out on their own." She also suggests that that state is Iraq.

The study was not a one-shot deal for Mylroie. TPMmuckraker previously reported that Mylroie produced reports on Saddam Hussein for the same DOD office as late as 2007.

Exactly who within the Pentagon decided Mylroie was the woman for the job is unclear. But the Pentagon work came at a time when her reputation had waned considerably, and her public writings were becoming less and less frequent.

Said DOD spokesman Eric Butterbaugh:

"The study was commissioned in part because of Ms. Mylroie's access to and library of documents she had that were relevant to the history of Al Qaeda. More broadly, the study was commissioned because we believed it would be useful to have a better understanding of Al Qaeda as an organization, the circumstances under which it had formed, how it had evolved over time, and the activities and attacks it had perpetrated."

Mylroie did not respond to a request for comment.

For a taste of the study, which we've posted in full, here's a passage in which Mylroie outlines what she calls Khalid Sheik Mohamed's ethnic links to Iraq. She describes these links his primary motivation for terrorism (emphasis ours):

The ethnicity of KSM's clan is significant. These men are Baluch, a Sunni Muslim people, with their own language and their own compact territory, which lies in eastern Iran and western Pakistan. Like the much better-known Kurds, the Baluch aspired to a state of their own in the twentieth century, but failed to achieve one. The United States has very little to do with the Baluch; most Americans are unfamiliar with so much as the name. The Baluch have no evident motive for these murderous terrorist attacks, save one: the former Iraqi regime of Saddam Hussein had deep and extensive ties with the Baluch on both sides of the Iranian-Pakistani border. Going back to the 1970s, Iraq used the Baluch against the Shi'a government in Tehran, with which Baghdad was long at odds, and Baghdad employed the Baluch extensively during the Iran-Iraq war (1980-1988).

Notably, these Baluch--KSM and his extended family--do not appear to be particularly religious.

"Was the Universe Created By A Big Bang?" -Several of the World's Leading Cosmologists Say "No"

Thebulk02 (1)

"What banged?" Sean Carroll, CalTech -Moore Center for Theoretical Cosmology & Physics

Several of the worlds leading astrophysicists believe there was no Big Bang that brought the universe and time into existence. Before the Big Bang, the standard theory assumes, there was no space, just nothing. Einstein merged the universe into a single entity: not space, not time, but spacetime.

Proponents of branes propose that we are trapped in a thin membrane of space-time embedded in a much larger cosmos from which neither light nor energy -except gravity- can escape or enter and that that "dark matter" is just the rest of the universe that we can't see because light can't escape from or enter into our membrane from the great bulk of the universe. And our membrane may be only one of many, all of which may warp, connect, and collide with one another in as many as 10 dimensions -a new frontier physicists call the "brane world." Stephen Hawking, among others, envisions brane worlds perculating up out of the void, giving rise to whole new universes.

One of the most important space probes of the century is the Wilkinson Microwave Anisotropy Probe (WMAP) launched in 2001 to measure the temperature differences in the Cosmic Microwave Background (CMB) radiatiion -the 14-billion year old Big Bang's remnant radiant heat . The anisotropies then in turn are used to measure the universe's geometry, content, and evolution; and, perhaps most importantly, to test the Big Bang model, and the cosmic inflation theory. WMAP data seem to support a universe that is dominated by dark energy in the form of a cosmological constant.

Perhaps not surprisingly, there is no supportative data to date for Big Bang theory, although the results aren't sensitive enough to rule out the pervasive Big Bang/inflation model.

The influence of gravitaional waves on polarization is different from that of overall energy distribution, so it should be possible to tell from polarization in the WMAP scans whether the variation is coming from contrasting energy density (heat) or gravitational waves that a Big Bang should have produced.

The world's leading astrophysicists are confidemt that with a sensitive enough probe such as that by the new Planck telescope with its more detailed CMB plots, that they can reduce the level of uncertainty low enough so that they can say definitively whether the gravitational waves that should have been created by the Big Bang as present.

If this next generation Planck Telescope shows that there is no onvious distortions caused by gravity waves, it will rule out the Big Bang plus inflation theory -an add-on theory that explains the phenomenal sudden expansion of space from a tiny point. In it's place will be new models that support what many leading cosmologists see as our universe to be proved to be one of just many in an eternal cycle of birth and rebirth.

NASA-spiral-galaxyModels of the universe that involve a bouncing brane or a Big Crunch rather than a start from scratch Big Bang predict much smaller gravity waves being produced than would come from a Big Bang. If the universe actually went through cycles of expansion and contraction, it is possible that the uneven distributions in the early post-Big Bang universe that resulted in the formation of galaxies were leftovers from the universe before.

Only gravity can't exist soley in a specific brane, but wanders where it will, leaking off our brane into what physicists call "the bulk" -- the rest of space-time. Brane theory offer an fascinating and plausable explanation for why gravity is such a weakling: Maybe it's not any weaker than the other forces, but just concentrated somewhere else in the bulk, or on another brane, providing the key to understanding the dark matter that makes up 90 % of our universe.

If our brane is but a small slice of a much larger cosmos, however, the "dark matter" might be nothing but ordinary matter trapped on another brane. Dark matter is no longer some mysterious unknown, but the force at the heart of the brane-brane interaction. With the brane model the universe goes through an eternal cosmic cycle over a vast timescale of attraction, bounce with a spread out bang, springing apart, and expansion until attraction (gravity) takes over again.Such a shadow world, Hawking speculated, might contain "shadow human beings wondering about the mass that seems to be missing from their world."

Are branes the key to understanding the origin of our universe? "Who knows?" says Sean Carroll. "they will have taught us a useful lesson that we should have known all along, which is that we don't have a clue to what's going on."

Alan Guth of the Massachusetts Institute of Technology, creator of the currently accepted model of the Big Bang, said recently "he felt a little like Rip Van Winkle -- picking up his head from a long sleep only to notice that the landscape of physics he thought he knew had suddenly, drastically, changed."

Casey Kazan.

Source Credits:



Image Credit: http://www.csudh.edu/dearhabermas/stringtheory01.htm