Tuesday, February 2, 2010

Banks raking in cash with 'highest personal loan rates in a decade'

Banks are making record profits after hitting customers with the highest personal loan interest rates in almost a decade.

Loan rates average 12.4 per cent, despite the fact the Bank of England base rate is at a 300-year low of 0.5 per cent.

According to the Bank the amount borrowed rose by £ 52million - to £226.4billion - in December, the first increase since June.

Last night there was anger that taxpayers' cash used to bail out the banks is being loaned back at extortionate interest rates.

The average rate on a £5,000 loan repayed over three years is 12.4 per cent.

This is up from 12.1 per cent a year ago and 7.8 per cent in early 2006.

In 2001 the average loan rate was 12.5 per cent, but banks only made a 6.5 per cent profit as the base rate was 6 per cent. Thanks to the current low rate, bank profit margins are 11.9 per cent.

The latest personal loan figures were collated by finance experts at the moneyfacts.co.uk website.

Spokesman Michelle Slade said: 'There is no security that a personal loan debt will be repaid.

'In such a risk-averse market, lenders are only offering loans to the most creditworthy applicants and then at a premium.

'When people are struggling, unsecured lending is one of the first debts they stop repaying.'

The best loan deal is with Alliance & Leicester, which is charging 8.9 per cent on a threeyear £5,000 loan. This works out at £157.97 a month.

Andrew Hagger of the Moneynet.co.uk said one reason that headline interest rates are up is because finance giants have been prevented from imposing rip-off charges on the Payment Protection Insurance (PPI).

Alliance & Leicester

The best value deal at the moment is offered by Alliance & Leicester at 8.9per cent on a three year £5,000 loan

The banks have made billions of pounds for years by charging sky-high premiums on the insurance sold alongside personal loans. There is evidence many people were mis-sold the insurance, which is supposed to provide payment to cover essential bills in the event of sickness or unemployment.

The Competition Commission has ordered strict controls on the cost of the insurance and hard pressure sales tactics. However, it appears the industry has responded by simply putting up the price of the loans.

Mr Hagger said: 'With unemployment at a near 13 year high of almost 2.5 million, and many families struggling financially, it is no surprise that the level of competition in the unsecured loan market has subsided.

'Not only is the risk of defaults higher in the current economic climate, the highly profitable Payment Protection Insurance cash cow is no longer there to subsidise lower loan rates.

'With banks and building societies still adopting a far more cautious stance even when it comes to mortgage lending, even with your property as collateral, it’s no surprise that the appetite for unsecured lending has pretty much dried up.'

We, The People, Call For Total National Strike April 15-18

The spark of Freedom is igniting within the hearts and minds of the people in America, as well as globally, and we all have the moral obligation to fan the flames. The time for taking our freedom for granted has passed.
It is now time to stand for freedom individually and collectively, and make the sacrifices necessary in order to reclaim it. But it is easier than most of us know.
There are only 3 things we need in order to ensure success. We must be Pro-Active, Non Violent, and Massive in numbers. There are over 300 million of us, here, in this country, trying to survive under corporate fascism. It is time to stop the so-called "Wheels of Progress" from crushing our lives and our planet.
Those of us who realize just how much peril our country, our lands, our homes, our children, our descendants, and our future are in, need now to come together in peaceful, proactive non-compliance. The system is dependent upon our cooperation, and thrives on it daily. Those of us who know where we're headed, have a duty to defend our families and our freedoms, but we no longer have to die in order to do that. This time we use our numbers, and we use brains, not bullets.
This time we participate in "Peaceful Evolution, Revolutionary Thoughts, and the Resolution to see it through". This time we stand as one. No longer will we support a corporate agenda that is able to take our money because their privately owned media misrepresents the news and lies to us in order to keep us in the dark. They exploit our ignorance, making it more and more difficult to find the truth, because they realize that if we knew what their real agenda was, we'd stop it immediately.
"You can fool some of the people all of the time; and those are the ones you have to concentrate on." -- George W. Bush "If the American people knew what we have done, they would string us up from the lamp posts." ---George H.W. Bush "There's three things to remember: claim everything, explain nothing, deny everything."--Prescott Bush, father to H.W. Bush Those are some mind blowing quotes, but it's not just about the Republicans, or the current administration. This is way beyond party lines, religions, or labels. This is about freedom or tyranny, and more and more of us are learning that every day. No longer are we content to hand our power over and believe talking figureheads who refuse to tell us just exactly where our money is going, while AIG and Goldman Sachs make billions in bonuses and expect us to foot the bill for their Wall Street gambling casino games. This is another great wall that must fall.
No more will we submit to or pay politicians who steal our money while ignoring our wishes.
No more are we willing to allow our individual freedoms and personal rights to be trampled by this out of control, "Government gone Wild", who utilize our own military and police force against us, while partying with our money at an event we're not invited to.
No longer will we submit to "Rule of Law" and U.N. troops who are called "Peace keepers", but are actually foreign troops occupying our land and confronting citizens. We will collectively refuse to place ourselves in harms way, and go about the business of living our lives and becoming as self-sufficient as possible. We will fortify ourselves within our homes and communities, and look to our local county sheriffs for protection against this out of control monopoly.
Those of us who are in the military or police force must honor the oaths that were taken when we chose our positions. We will defend our Constitution against ALL enemies, foreign and domestic. No more ignoring our Constitution & illegal Patriot Act mandates. "We the People" are taking our power back, first individually, then collectively, as we stand for freedom by totally and peacefully withdrawing our support from the government corporation that sold us out generations ago.
JOIN US! STAND FOR FREEDOM! Weekly Conference Calls: Saturday mornings, 9 am Pacific 712-775-7200 Access code 431669#

50% devaluation of the US Dollar 2010, get out of paper money

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Alan Watt: Who's Infiltrated All Patriot Groups?

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China attacks US 'Cold War' mentality over Taiwan arms sales

China has accused the United States of 'rude and unreasonable Cold War thinking' over its decision to sell £4 billion worth of arms to Taiwan.
The rhetoric in a series of venemous editorials in the government-controlled media was exceeded by thousands of anti-American comments on China's main internet portals, including a petition against the arms package that attracted more than 50,000 signatures in just a few hours.

Beijing has already announced the suspension of some key military-to-military contacts follow the announcement of the arms sales at thet weekend, but has also made the highly unusual threaten of economic sanctions against US companies supplying the arms, including the aircraft maker Boeing.
The vehement Chinese reaction followed warnings from the foreign minister, Yang Jiechi, the US risked "damaging broader relations" with China if it did not respect Beijing's sensitivities over Taiwan.

"When it comes down to it, the United States is still drawing lines based on ideology and coming up with a million ways to stymie China's development and progress," warned an editorial in the overseas edition of the People's Daily, the Communist Party's main mouthpiece.

"If the United States stubbornly persists in this Cold War thinking and ignores China's core interests and grave concerns, the United States will further damage the development of bilateral ties and the great task of world peace. In the end, it will reap what it has sown."

The Global Times urged the government to make the US manufacturers "pay a price for hurting China" while the China Daily said that China's response "no matter how vehement" is justified.

Ordinary people commenting on the internet appeared to rally to the cry, calling in sometimes bellicose, nationalistic language for boycotts of US companies like McDonalds and urging the government to get tough with the Obama administration.

Others suggested that China sell arms to Iran to see how the US would react to another nation interfering in its core security interests.

Aviation industry experts gathering in Singapore for Asia's biggest air show were waiting nervously for the details of any sanctions at a time when the civilian aircraft makers are already under pressure from the financial crisis..

Boeing China said it has yet to receive any notice of intentions, adding that China was a "very important" market for the company where it competes with Europe's Airbus. Sikorsky, which will supply Black Hawk helicopters as part of the deal, also said it was not aware the situation.

The US administration has said that it hopes the arms sales will not broader damage relations with China but made clear it would not change its stance on the issue.

"The United States is also obligated to ensure Taiwan's self-defence capability and the United States fully intends to meet every one of our obligations there and we will continue to do so into the future," said Wallace Gregson, the US assistant defence secretary.

Auditor: TARP rescue failing to meet key goals

Washington – The 700-billion-dollar US government effort to rescue the financial system has failed to meet key goals such as sparking lending and curbing risky activities by banks, a special auditor said Sunday.

The special inspector general for the Troubled Asset Relief Program said in a report to Congress that it is too soon to measure the overall success of the program passed at the height of the financial crisis in October 2008.

The quarterly report said that because of TARP, “there are clear signs that aspects of the financial system are far more stable than they were at the height of the crisis in the fall of 2008.”

But the report also stated that “many of TARP’s stated goals… have simply not been met” and that the potential for a new crisis looms without major reforms.

“Even if TARP saved our financial system from driving off a cliff back in 2008, absent meaningful reform, we are still driving on the same winding mountain road, but this time in a faster car,” the report said.

The program has fallen short in key areas such as boosting credit, curbing home foreclosures and deterring the risky behavior of financial firms that are considered “too big to fail,” said the report from inspector general Neil Barofsky.

Despite the explicit goal to increase financing to US businesses and consumers, “lending continues to decrease,” said the report from inspector general Neil Barofsky.

It also noted that TARP has failed to live up to the “explicit purpose” stated by Congress of “preserving homeownership and promoting jobs.

“The TARP foreclosure prevention program has only permanently modified a small fraction of eligible mortgages, and unemployment is the highest it has been in a generation,” it said.

“Whether these goals can effectively be met through existing TARP programs is very much an open question at this time.”

The report said that by coming to the aid of the troubled housing market, the US government effectively “has become the mortgage market, with the taxpayer shouldering the risk that had once been borne by the private investor.”

More broadly, the report said the underlying problems that led to the financial crisis remain, including the continued existence of financial firms that are “too big to fail” and engaging in practices that can destabilize the system.

“The substantial costs of TARP — in money, moral hazard effects on the market, and government credibility — will have been for naught if we do nothing to correct the fundamental problems in our financial system and end up in a similar or even greater crisis in two, or five, or 10 years’ time,” the document said.

“It is hard to see how any of the fundamental problems in the system have been addressed to date.”AFP

Pirates for America

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Longest snowy period in 30 years set to end soon

The longest snowy period in the last 30 years could end next week, meteorologists from the German Weather Service (DWD) reported over the weekend.

Even as meteorologists predicted continued winter weather for the next eight days across the country, they said that weather trends point to milder weather to follow.

Germany is in the midst of the longest snowy period since the winter of 1978/79. The snowy crust has remained on the ground without melting for some five weeks.

While residents can look forward to warmer weather to come, they’ll still have to dress warmly this week, the DWD said.

Arctic air brought by a low pressure system in southern Scandinavia will bring further snow showers on Monday, with up to 10 centimetres expected at higher altitudes, the weather service said. Temperatures will remain cold, between 1 degree Celsius in the northwest and -3 in the southeast.

More snow is expected overnight, and Tuesday will dawn cloudy and snowy in the western half of the country, where up to 10 centimetres of snow could fall. Highs will range between 1 degree and -4 degrees.

As nightfall comes, the snow will spread to the east, while lower altitudes in the west could see rainfall. More heavy cloud cover will start the day on Wednesday, as snow continues to fall across the nation. Up to 15 centimetres are expected in mountainous regions, but more rain could come down in western valleys.

Blairfaced cheek?

Tony Blair has today faced hours of relentless questioning as part of the Iraq inquiry's process. Did his performance convince you?

Tony Blair gives evidence at Iraq Inquiry

Tony Blair being questioned in public for the first time about his decision to take the UK to war against Iraq in London. Photograph: iraqinquiry.org/EPA

Was Tony Blair's performance during the Chilcot inquiry convincing?

37.3% Yes, he stood his ground with grace
62.7% No, I wasn't convinced then and am not convinced now

This poll is now closed

Banks & Telemarketers in Cahoots, Class Says

(CN) - Five national banks, including Wells Fargo and Wachovia, helped "unscrupulous telemarketers" launder millions of dollars they swiped from consumers, a class action claims in Philadelphia Federal Court.
The class sued three processing companies - NetDeposit, MP Technologies dba Modern Payments and Teledraft - and five banks: Zions First National Bank of Utah, Wells Fargo, Wachovia, National Penn Bank and Harleysville National Bank.
Named plaintiff Reynaldo Reyes says a telemarketer tricked him into revealing his bank account information and then withdrew almost $400 from his account.
Payment processors assist "fraudulent telemarketers" by opening bank accounts and transferring money from unsuspecting victims into the account, after deducting a fee for their services, according to the complaint.
Banks follow directions from their telemarketer clients, transferring funds to offshore accounts in the Caribbean, Canada and India, according to the complaint.
Reyes says that NHS Systems, one of 20 allegedly fraudulent telemarketers mentioned in the lawsuit but not named as a defendant, told him in November 2007 that he was eligible for a government grant that could be deposited directly to his bank account.
Reyes says Modern Payments took $29.95 out of his account and deposited the money in an NHS account at Zions Bank, then a week later the agency transferred $299.95 to the Zions account.
"Neither of the transactions was authorized by Mr. Reyes, nor did Mr. Reyes receive a government grant or any other consideration from NHS," according to the complaint.
Reyes says he had to pay penalties after the debits created an account overdraft.
Modern Technologies and Teledraft have more than 36,000 consumer accounts that are connected to NHS, according to the complaint.
Telemarketers often prey on senior citizens, according to the complaint: "AARP, the National Association of Attorneys General and the Federal Trade Commission have estimated that 85 percent of the victims of fraudulent telemarketing are age 65 or older."
The class claims that telemarketers and payment processors illegally transfer victims' money through an Automated Clearing House (ACH) debit or a remotely created check (RCC), but banks know to look out for a high rate of suspicious transfers as "red flags" for money laundering.
"RCCs are well known to be used by unscrupulous telemarketers to perpetrate consumer fraud," according to the complaint.
The class claims that by processing fraudulent transactions, the defendants are "clearing millions of dollars in ACH transactions for the benefit of telemarketers."
Zions "deliberately closed its eyes" to the fact that its clients were fraudulent telemarketers and it facilitated their "unlawful conduct," according to the complaint.
The class seeks treble damages for RICO violations. It is represented by Judah Labovitz with Langer, Grogan & Diver.

H1N1 needle blamed for partial paralysis

Downstairs in the rehab wing of Markham Stouffville hospital, in a private room with a sunny window, lies Donna Hartlen, a young mother who is now partially paralyzed.

The Whitby woman can’t stand without leaning on a walker and her legs are too numb to allow her to walk for more than a few steps. The right side of her face is paralyzed, she can’t properly chew solid food and her right eye is bandaged because she can no longer blink to protect it.

Until five weeks ago, she was a perfectly healthy woman spending Christmas with her family in Nova Scotia. And then on Dec. 29 she was rushed to an emergency room in Halifax, suddenly unable to stand on feet.

The doctors diagnosed her with Guillain-Barre syndrome, a rare neurological condition characterized by sudden weakness or paralysis. And while no one seems willing to discuss the likely cause, the 39-year-old knows exactly where the fault lies.

She blames the H1N1 flu shot she received on Dec. 13 - two weeks before her symptoms suddenly appeared.

Of course, there is no way to know for certain. But Hartlen has only grown more convinced since chatting by chance in the hall with the older gentleman from the hospital room next door.

Don Gibson has GBS as well, with legs so numb now that he is confined to a wheelchair. It turns out that not only was he also vaccinated against H1N1, but he got the shot just two days before Hartlen, in the very same Markham doctors’ office.

“It’s way too coincidental,” insists the slight mom, her words slurred because the right side of her face will not move. “It’s either a bad batch or a lot more people are getting this than they are talking about.”

Her 80-year-old neighbour is equally convinced that the H1N1 vaccine to blame. “It must have been a bad batch,” Gibson believes. “But nobody is saying anything. I know I signed a piece of paper and there’s no liability but it’s pretty scary.”

They are now comrades in arms, an unlikely duo who share a rare illness and a similar vaccination history that no one wants to acknowledge.

According to the Public Health Agency, there are about 600-700 new GBS cases a year in Canada, caused usually by food-borne bacteria, respiratory infections or surgery.

“The risk of getting GBS after any flu vaccine is about one case for every million doses distributed,” the website says. “The benefit of the vaccine outweighs this theoretical risk.”

So far, the agency says they haven’t had any unusual spike in GBS - there’s been 22 cases following the H1N1 vaccination - or .87 per million doses distributed. But Hartlen questions how many GBS patients are actually being reported; she says she was the one who finally called her local public health department because no medical professional seemed interested in the possible connection.

“Not a single doctor we’ve talked with will even remotely discuss that it’s the H1N1 shot,” marvels Hartlen. “They almost pretend they don’t hear you. They don’t want to alarm the public and they don’t want you to stir up trouble.”

So GBS patients like Hartlen and Gibson are on their own.

Right now, Quebec is the only province with a no-fault vaccine injury compensation program in place.

“It’s a horror story of how little Ontario will do to help patients that come down with this after the government promotes it so much,” complains her husband, Wayne Burke.

They have two little girls at home, just 4 and 2. He works full-time at Telus; she was a self-employed business systems analyst. With no family in Whitby, they flew in her parents from Nova Scotia, but the elderly couple can’t look after the kids indefinitely.

Meanwhile, Hartlen has been told it can take months - and up to a year - before she completely regains all movement. So how is the partially-paralyzed mom supposed to take care of two young children until then?

“If my kids were 10 and 12 it would be different. But a four and two-year-old need 100% attention and I can’t give it to them,” she worries.

So she’s hardly unreasonable in expecting some kind of government support. But after countless phone conversations with every level of bureaucrat, she’s learned there will be no such thing.

“They’re the ones who push this vaccine. They promote it every five minutes on TV. So I do what they say and I get GBS and they’re not going to help me?

“I need help for my kids - I’m not looking for anything extravagant. I’m not an ambulance chaser. I don’t want to sue anybody. I just want to get my kids looked after while their father is at work.”

Instead, there is only a shameful silence.

As food distribution improves, Haitians want U.S to 'take over'

PORT-AU-PRINCE, HAITI -- International relief organizations backed by American soldiers delivered hundreds of tons of rice to homeless residents of the Haitian capital Sunday, laboring to ease a food shortage that has left countless thousands struggling to find enough to eat.

But even as food-aid workers enjoyed their most successful day since the Jan. 12 earthquake, the increasingly prominent role of U.S. troops and civilians in the capital is creating high expectations that the Obama administration is struggling to contain.

The needs are extraordinary, and the common refrain is that the Americans will provide.

"I want the Americans to take over the country. The Haitian government can't do anything for us," said Jean-Louis Geffrard, a laborer who lives under a tarp in the crowded square. "When we tell the government we're hungry, the government says, 'We're hungry, too.' "

Added Canga Matthieu, a medical student whose school was destroyed: "The American government should take care of us."

"They're well organized. The United States is the richest country in the world, and they can help."

But help has its limits, U.S. officials emphasize in their public statements and in their interactions with Haitians. "You will have a friend and partner in the United States of America today and going forward," President Obama said the day after the earthquake. But U.S. officials here make it clear that the American government is not responsible for rebuilding the ravaged country.

"The military forces . . . are not here to do any reconstruction. That is not our mission," said Col. Rick Kaiser, a U.S. Army engineer overseeing emergency repairs to the Port-au-Prince docks, the electrical and water systems, and other battered infrastructure in the hemisphere's poorest country.

Administration officials, including Secretary of State Hillary Rodham Clinton, describe virtually every activity here as "Haiti-led," although the government is barely functioning and its record was checkered even before the earthquake killed more than 110,000 people and leveled an array of government ministries.

Louis Lucke, the senior U.S. Agency for International Development official in Haiti, stood in an American-run medical complex Saturday with President René Préval and told reporters that "the Haitians are leading the process in all the areas that are necessary" -- including food distribution, despite strong evidence to the contrary.

U.S. officials are doing what they can to bolster the stature of Préval and Prime Minister Jean-Max Bellerive and to promote international assistance efforts for the more-daunting work that lies ahead. In the meantime, they are deploying personnel to support projects from food delivery to the erection of a temporary hospital near Port-au-Prince.

Sgt. 1st Class Jason Jacot, an Army engineer, drove to a critical power station in the Delmas neighborhood Sunday morning to assess repairs made by Haitian and Dominican workers.

Markestre Theolien, a supervisor with Haiti Electricity, the national utility, lamented the condition of the 27-year-old transformers and asked for new ones. Asked where the help should come from, he smiled and said, "U.S.A."

"So they're expecting us to take over?" Jacot asked a translator. "No, no, no. How can we assist without completely rebuilding? We're not here to rebuild."

The discussion went back and forth cordially. Jacot said he would be talking with the utility's director to learn what was needed. Theolien defined his bottom line: "What we really want is the United States to rebuild it, to modernize."

U.S. soldiers, whose numbers within Haiti have risen to 6,500, played a central role in Sunday's food distributions, working alongside U.N. peacekeepers to prevent the pushing, shoving and occasional melees that have severely hampered deliveries. Where U.S. troops have been present in recent days, relief workers say, deliveries have gone smoothly.

By day's end, the U.N. World Food Program calculated that roughly 400 metric tons of rice had been delivered to nine sites. Five more locations will be running early in the week, a spokesman said, but increased gang violence in the Cité Soleil slums made deliveries too risky.

The generally smooth deliveries on Sunday, based on a new system of ration cards, were met with pleasure at the Place du Canape Vert, an impromptu settlement where several hundred families received large sacks marked "Product of USA" or "USA Best Rice." Yet some asked when there would be something more than rice, while others wanted to know why they were left out.

Deliveries will resume Monday as the World Food Program, bolstered by an $80 million U.S. contribution, seeks to reach 2 million people in the next two weeks. The agency hopes the system will lead to distribution of other badly needed food and relief supplies.

At the ramshackle encampment, some residents were boiling water for rice within an hour of the delivery. Some had beans or root vegetables to add, and a few had meat. Those who could afford neither complained that rice alone would not be enough.

"It's there, but we can do nothing with it. We only got rice. No oil, nothing. And it's not easy to find water," said Flore Laurent, who is eight months pregnant. But she had nothing but praise for the role of the American soldiers. "I vote for the help of the U.S., 100 percent."

A throng of people in the square discussed their lack of faith in Haitian authorities. One after another, they said their only hope is the United States.

"The Haitian government has been here for a while, and they give us nothing. The United States should take over the country," said Andrelita Laguerre, shepherding four children and a grandchild at the camp. "Most of my friends expect the United States to take over. I wish!"

Obama to urge repeal of tax on personal use of work cell phones

President Barack Obama will urge Congress to repeal a law requiring workers to pay taxes when they use employer-provided cell phones and similar equipment for personal reasons, a Treasury Department official said.

The reprieve, to be included in Obama's budget outline Feb. 1, is a victory for companies such as Little Rock, Arkansas- based Alltel Corp., Dallas-based AT&T Inc., Overland Park, Kansas-based Sprint Nextel Corp., and New York-based Verizon Communications Inc., which have complained the 20-year-old requirement was outdated.

The budget proposal would end the need for employers to keep detailed records when company-owned cell phones, BlackBerrys or similar telecommunications equipment are used for both business reasons and the personal convenience of employees, the official said. Current law, which is rarely enforced, requires employees to pay income tax on the value of any personal use. The official spoke on condition of anonymity.

Under a law adopted in 1989, employer-provided cell phones, laptop computers, BlackBerrys and similar devices are considered taxable fringe benefits for workers. Determining their use for personal reasons has proven difficult for employers to document and the IRS to enforce.

The proposal solidifies a request made by the Treasury Department in June after the Internal Revenue Service proposed rules that some business groups interpreted as an effort to enforce the rules and collect tax from workers. After some members of Congress complained, the IRS backpedaled and said a better solution would be to repeal the law.

"The passage of time, advances in technology and the nature of communication in the modern workplace have rendered this law obsolete," IRS Commissioner Doug Shulman said at the time.

In his budget proposal, Obama will propose that the fair market value of personal use of a cell phone or similar communications equipment provided primarily for business purposes would be excluded from gross income, the Treasury official said.

Legislation to ease the record-keeping rules has been introduced in the House by Representatives by Earl Pomeroy, a North Dakota Democrat and Sam Johnson, a Texas Republican, and in the Senate by Democrat John Kerry of Massachusetts.

War spending surges in President Obama's budget

President Barack Obama’s new budget, to be released Monday, forecasts two consecutive years of near $160 billion in war funding, far more than he hoped when elected and only modestly less than the last years of the Bush Administration.

In 2011 alone, the revised numbers are triple what the president included in his spending plan a year ago. And the strain shows itself in new deficit projections, already hobbled by lagging revenues due to the weak economy.

The administration appears to be projecting a deficit of near $1.6 trillion for the current year and $1.3 trillion in 2011. That is even more pessimistic than Congressional Budget Office estimates last week, and it’s only in 2012 that the projections drop to the range of $800 billion to $700 billion.

By the end of the decade, the gap again widens, and as a percentage of GDP, the average appears above the 3% target viewed as sustainable.

Obama has responded with a three-year domestic spending freeze impacting about $447 billion in annual appropriations. This leaves him less money to sustain the very rapid growth seen last year in clean water programs or the Great Lakes restoration initiative. The Environmental Protection Agency budget would be cut modestly, and to stretch his dollars, Obama wants to dramatically ramp up the Energy Department’s credit budget, a low-cost way to extend tens of billions in loan guarantees to the nuclear power industry.

But on balance, the president’s plan seems less restrictive in many areas than lawmakers had anticipated. With the Senate having just passed a $1.9 trillion debt ceiling increase last week, fiscal moderates in his own party may insist on even tighter limits.

Obama’s 2010 starting point for the freeze has a built-in cushion since billions in Census spending won’t have to be repeated in 2011. He appears to count expanded Pell Grant funding for low-income college students as a mandatory cost outside the Education Department’s discretionary budget. And both Veterans Affairs and Homeland Security, two of the fastest areas of recent spending, are exempted from the freeze.

The VA is slated to get significant new money to speed the processing of claims, and billions more will be requested this year to resolve old disputes related to soldiers and airmen exposed to Agent Orange in the Vietnam War.

In the case of education, a top priority for the president, the department’s appropriations would grow by about $3.5 billion to $49.7 billion, a 7.5% increase. But when Pell Grants are counted, the total increase is closer to $11.4 billion or 16% above current spending.

Other departments, like Health and Human Services and Labor, receive smaller increases, more in the range of inflation or less. But within these totals, the National Institutes of Health would grow by about $1 billion or 3%. Community health centers and Head Start are also promised increases, and a teen pregnancy program would be expanded from $100 million to almost $180 million.

Mindful of the strain on state and local law enforcement budgets, substantial increased funding is provided for the hiring of police officers under the COP’s program within the Justice Department.

The budget’s increased war funding is not entirely surprising given Obama’s decision to add more U.S. forces in Afghanistan. And his early estimates for 2011 in last year’s budget were always suspect and more of a “plug” than real.

Nonetheless, seeing everything in a single budget brings the war costs more into focus. Democrats are increasingly agitated by the pace of withdrawal from Iraq, and the combined costs of the two wars is striking –especially when measured against the much more hopeful rhetoric of Obama’s campaign.

The president’s 2010 defense budget a year ago requested $130 billion for operations in Afghanistan and Iraq and just $50 billion in 2011. The new budget ramps up 2010 spending to $163 billion and for 2011 requests $159 billion in overseas contingency funds for the military.

This reverses the drop in war-related spending seen in fiscal 2009, which ended last Sept 30th and was a transition year of sorts between the two administrations. When compared to the peak war spending of the Bush years, Obama is only about 10% below Bush’s annual average of $176 billion in fiscal years 2007 and 2008—the time of the Iraq war surge.

Core defense spending is also feeling the strain and the president’s $549 billion request reflects less than 2% real growth over inflation. At a time when the administration is emphasizing jobs creation, this sets up what could be bitter election-year fights with fellow Democrats over plans to halt airplane and truck production important to employment California and the Midwest.

For example, Defense Secretary Robert Gates is expected to redouble his campaign against the C-17 transport plane this year, much as he successfully went after F-22 production last year. And while the Pentagon is making a huge commitment to the F-35 joint strike fighter, production will slip a year to allow more testing and Gates wants to rollback efforts in Congress to develop an alternate engine for the fighter.

The 2011 budget debate won’t hit full stride until this spring, but Democrats may move earlier than usual on a supplemental spending bill for the current fiscal year.

The Defense Department is seeking $33 billion in additional war-related funding on top of which the State Department will also be receiving additional funds for its beefed up operations in Afghanistan. Rep. John Murtha (D-Pa.), chairman of the House defense appropriations panel, wants to include any requests related to Haiti in the same package, and the VA appears to be pursuing its own 2010 supplemental request in the new budget related to Agent Orange claims.

US consumer spending weaker than expected

US consumer spending edged up 0.2% in December, the critical shopping month, government data showed today, highlighting sluggish growth in the key driver of economic activity.

Personal incomes increased twice as much, at a pace of 0.4%, the Commerce Department reported, as consumers kept their wallets shut in the face of rising job insecurity and worries about the strength of recovery from a severe recession.

The increase in spending during the year-end Christmas shopping season was the smallest since September, according to the seasonally adjusted Commerce Department data, and followed an upwardly revised 0.7% rise in November. Most analysts had forecast a 0.3% rise in both spending and incomes.

The anemic spending rise supported expectations that the US economy will have tepid growth in 2010, after expanding in the third quarter for the first time after a year of contraction.

The government's initial estimate that fourth-quarter gross domestic product, the broad measure of the country's goods and services output, surged at a sizzling 5.7% rate was mainly driven by factors linked to inventory restocking.

Most analysts expect consumer spending, which accounts for two-thirds of US output, will remain under pressure from the double-digit unemployment rate, at 10% in December.

The Labor Department is scheduled to release the January workforce report on Friday. The Commerce Department release showed the personal savings rate - the savings ratio to disposable income - advanced to 4.8% in December, the highest level since June, while disposable income rose 0.4%, down slightly from November.

On a 12-month basis, spending was up 1.8% and incomes rose 1.5% from December 2008. Inflation related to consumer spending accelerated in the final month of 2009, pushing the annual rate above the Federal Reserve's comfort zone.

Obama’s Junk Economics: Democrats Relinquish the Populist Option to the Republicans

In a dress rehearsal for this November’s mid-term election, Democrats and Republicans vied last week for who could denounce the banks and blame the other party the most for the giveaways to Wall Street that have swollen the public debt since September 2008, pushing the federal budget into deficit and the economy into a slump.

The Republicans are winning the populist war. On the weekend before his State of the Union address on Wednesday, Mr. Obama strong-armed Democratic senators to re-appoint Ben Bernanke as Federal Reserve Chairman. His Wednesday speech did not mention this act (happily applauded by Wall Street). The President sought to defuse voter opposition by acknowledging that nobody likes the banks. But he claimed that unemployment would be much higher if they hadn’t been bailed out. So the giveaway of public funds was all for the workers. The $13 trillion that has created a new power elite was just an incidental byproduct. Unpleasant, perhaps, as American democracy slips into oligarchy. But all for the people. The least bad option. It had to be done. People might not like it, but Main Street simply cannot prosper without creating hundreds of Wall Street billionaires – without enabling them to increase their bonuses and capital gains as bank stock prices quadruple. It’s all to get credit flowing again (at 30% for credit card users, to be sure).

So the rest of us must wait for wealth to trickle down. The cover story is that this is how the world works, like it or not. At least this is the argument of the lobbyists who are drafting and censoring laws and signing off on just who is acceptable to run the Federal Reserve, Treasury and other public-subsidy agencies. The working assumption is that the economy cannot recover without enriching Wall Street.

This is the Administration’s tragic flaw. What the economy needs is to recover from the Bush-Obama supposed cure, i.e., from the mushrooming debt overhead. It needs to recover from the enrichment of Wall Street. It doesn’t need more credit, but a write-down for the unpayably high debts that the banks have imposed on American families, businesses, states and localities, real estate, and the federal government itself.

Instead of helping debtors, Mr. Obama has moved to heal the creditors, making them whole at public expense. If debtors cannot pay, the Treasury and Fed will take their IOUs and bad casino gambles onto the public sector’s balance sheet. The financial winners must come first – and it seems second and third, too. The rationale is that unless the government gives the large financial institutions what they want and saves them from taking a loss, their “incentive” to protect the economy from devastation will be gone.

Knuckling under to this protection racket is not the change that most people voted for in November 2008. So on Thursday afternoon, most Republican senators opposed a second four-year term for Bernanke. By leading the effort to re-confirm him, the Corporate Democrats (but not most of their colleagues who had to face voters this autumn) removed this albatross from the Republican neck and put it around their own.

For starters, Chairman Bernanke has convinced the President that the Fed should be the single regulator of Wall Street – ideologically kindred, and drawn from its ranks, or with its assent. Mr. Obama’s address made no reference to the Consumer Financial Products Agency he promised a year ago to be the centerpiece of financial reform. Its main sponsor, Elizabeth Warren, has been warning that hopes for reform are being overwhelmed by financial lobbyists arguing that truth-in-lending laws and anti-usury regulations threaten to reduce bank profits, forcing lenders to raise costs to consumers. In Mr. Bernanke’s world, regulations to protect consumers simply will oblige the banks to pass on the cost increase caused by this “government interference.” The more regulation there is, the more consumers will have to pay.

This is the inside-out picture drawn by bank lobbyists and purveyed by Mr. Obama’s economic team. Could George Bush have gotten away with it? Democrats have a friendlier and more compassionate face, but the substance remains the same.

Most economists believe that Mr. Obama is whistling in the dark when he says the economy will recover this year under Chairman Bernanke’s guidance. The financial screws are being tightened, yet the Fed refuses to abide by its charter and regulate credit card rates going through the roof. Instead of countercyclical federal spending to rescue the economy from debt deflation, Mr. Obama says that since we have given so much to Wall Street in the past year and a half, little is left to spend on the “real” economy. Sounding like a Republican in Democratic clothing not unlike his Senate mentor Joe Lieberman, his State of the Union speech urged creation of a bipartisan (that is, Republican-friendly) working group to agree on how to lower the deficit. The President proposes that starting next year Congress should freeze spending not already committed under entitlement programs.

Testifying Wednesday morning as a run-up to Pres. Obama’s evening speech, Messrs. Geithner and Paulson at least avoided the Washington ploy of emulating Alzheimer’s patients and saying that they couldn’t recall anything about their giveaways. Sophisticated enough to outplay their questioners in verbal tennis, the past and present Treasury Secretaries brazened it out. Using the Plausible Deniability defense, they claimed that they weren’t even in the loop when it came to paying AIG enough to turn around and pay Goldman Sachs and other arbitrageurs 100 cents on the dollar for securities worth about a fifth as much. It was all done by their subordinates. Their underlings did it. “This was a Federal Reserve loan,” Mr. Paulson explained. “They had the authority. They had the technical expertise … and I was working on many other things which were in my bailiwick.”[1] And in any case an AIG bankruptcy “would have buckled our financial system and wrought economic havoc.” Unemployment, he warned, “could have risen to 25%.” The Fed had to protect people.

When there was no way to dodge, they frankly admitted what had happened, providing helpful pieties to the effect that it is the job of Congress to change the law to make sure nothing like this happens again. Yes, there was a big giveaway, but we saved the economy. Wall Street’s loss would have been the peoples’ loss. Certainly we need new rules to protect the taxpayer, blah, blah, blah. We’re all in the same boat. If the banks took a loss, they would have to raise the price of financial services and we would all have had to pay more. Thank heavens that everything is getting back to normal now.

“A lot of people think the president of the New York Fed works for the government,” Democrat Marcy Kaptur of Ohio concluded, “but in fact he works for the banks on the board that elected you.”[2] Not so, testified New York Federal Reserve general counsel Thomas Baxter. “A.I.G. wanted to keep the information confidential, for fear that it would lose business if customers were named.” And if it lost business, “This would have had the effect of harming the taxpayers’ investment in A.I.G.” So it was all to save the taxpayers money that the Fed spent $185 billion of their money.

But was it really necessary not to let A.I.G. go bankrupt in September of 2008? The Wall Street Journal’s editorial page blew the whistle on how the government’s wheeler-dealer insiders have been changing their story again and again – not usually a sign of truthfulness. “Secretary of the Treasury Timothy Geithner and predecessor Hank Paulson said they didn’t bail out AIG to save its derivatives counterparties” from bad credit default swap contracts because if it would have asked these counterparties to “take a haircut,” credit-ratings agencies would have downgraded AIG. A lower rating would have obliged it to post even more collateral on its other swap contracts, presumably because of the higher risk.

There are a number of problems with this story, the editorial explained. First of all, Goldman Sachs and other counterparties unilaterally said the prices had declined for securities that had no market price at all, only subjective valuations. A.I.G. would have been reasonable in disputing this. In any event, as the firm’s new 80% stockholder, the U.S. Government said it would stand behind AIG. This should have removed fears of non-payment. But most important of all was the claim by Messrs. Paulson and Geithner that failure to “honor” AIG’s swaps would have threatened its far-flung insurance businesses on which so many American consumers depended. New York Insurance Superintendent Eric Dinallo, who was AIG’s principal insurance regulator at the time, testified before the Senate last year that these operations were not threatened at all! “‘The main reason why the federal government decided to rescue AIG was not because of its insurance companies.’ He was so confident in the health of the AIG subsidiaries that, before the federal bailout, he was working on a plan to transfer $20 billion of their excess reserves to the parent company.”[3]

This directly contradicts Mr. Geithner’s claim “that the ‘people responsible’ for overseeing the insurance subsidiaries ‘had no idea’ about the risks facing AIG policyholders. He’s talking about Mr. Dinallo here. Instead of being safely segregated, Mr. Geithner said the insurance businesses were ‘tightly connected’ to the parent company. Mr. Paulson added that the healthy parts of AIG had been ‘infected’ by the ‘toxic assets.’ He added, ‘One part of the company would have contaminated the other.’” Does this mean that New York’s “heavy state insurance regulation was a sham,” the newspaper asked? It would seem that “When push came to shove, policyholders were not protected from a default by the parent company.” It urges that Mr. Dinallo be brought back to straighten the matter out.

Mr. Geithner closed his own comments by saying, “if you are outraged by what happened with A.I.G., then you should be deeply committed to financial reform.”[4] This is rhetorical judo. The financial system in question is not the economy at large. It was A.I.G.’s carefully segregated bookies’ account for wealthy hedge fund gambles and Wall Street speculations that should have had little to do with the “real” economy at all.

Wall Street – and most business schools – promote the myth that the “real” economy of production and consumption cannot function without making Wall Street’s insiders immensely rich. Emulating Louis XIV, Wall Street’s spokesmen explain, “L’economie, c’est nous.” There seems nothing to be done about banks impoverishing people by extortionate credit card rates, junk securities and a debt burden so heavy that it will require one bailout after another over the next few years. Present policy is based on the assumption that the U.S. economy will crash if we don’t keep the debt overhead growing at past exponential rates. It is credit – that is, debt – that is supposed to pull real estate out of its present negative equity. Credit – that is, debt leveraging – that is supposed to raise stock market prices to enable pension funds to meet their scheduled payments. And it is credit – that is, debt –is supposed to be the key to employment growth.

Credit means giving Wall Street what it wants. Regulating it is supposed to interfere with prosperity. Truth-in-lending, for example, will increase the “cost of production” by “making” banks charge consumers even more for creating credit on their computer keyboards.

This Stockholm syndrome when it comes to Wall Street’s power-grab is junk economics. Wall Street is not “the economy.” It is a superstructure of credit and money management privileges positioned to extract as much as it can, while threatening to close down the economy if it does not get its way. High finance holds the economy hostage not only economically but also intellectually at least to the extent of having captured Mr. Obama’s brain – and also the federal budget, as money paid to Wall Street has crowded out spending on economic recovery. It has re-defined “reform” to mean putting Wall Street even more in power by making the Fed the sole regulator of Wall Street. Under these conditions, saving “the system” means saving a mess. It means saving a debt dynamic that must grow exponentially at the economy’s expense, absorbing more and more federal bailout funds and hence crowding out the spending needed to revive the economy.

Mr. Paulson’s testimony echoed the idea that the rescue of A.I.G. was necessary to keep the economy from collapsing. “We would have seen a complete collapse of our financial system,” Mr. Paulson said, “and unemployment easily could have risen to the 25 percent level reached in the Great Depression.” So it was all for the working class, for employees and consumers. It was done to save the government – a.k.a. “taxpayers” – from losing money on its investment. It was to save the economy from breaking down – or perhaps to pay off protection-racket money to Wall Street not to wreck the economy. And as we all know, taxpayers today are mainly the lower-income individuals unable to take their revenue in the form of low-taxed “capital gains” like Wall Street traders, in today’s fiscal war between finance and labor.

It seems to be merely an incidental by-product of saving taxpayers and labor that Wall Street ended up with the hundreds of billions of dollars of gains (and losses avoided) – at a $13 trillion expense of government and of about four million jobs in the overall economy whose employment is shrinking, and about four million home foreclosures in 2009-10. The cover story is that matters would have been worse otherwise. This was the price for “saving the system.” But “the system” turns out to be the Bubble Economy, in which the Obama administration has put as much faith as Bush did. This is why the same managers have been kept in place. This policy has enabled Republicans to strike a posture of denouncing the banks in preparation for this November’s mid-term election.

“Saving the economy” has become a euphemism for the policy of keeping bad debts on the books and saving high finance from writing them down to reflect the realistic ability to pay. Wall Street has used its bailout money to lobby Washington, back its political nominees to hold Congress hostage, and blame the downturn on any regulator or president who does not yield to its demands.

The resulting program is not saving the economy; it is sacrificing it. What has been saved is the debt overhead – the wrong side of the balance sheet.

The reactionary political outlook

A bipartisan compact between Corporate Democrats and Republicans is not the change voters expected in November 2008. Confronted with the “Obama surprise” – an absence of change – the only option that many voters believe they have is to change the existing party. Republicans are setting their eyes on Pres. Obama’s former Senate seat in Illinois, Vice Pres. Biden’s seat in Baltimore, and Majority Leader Reid’s seat in Nevada. Losing these and other seats would create a political standoff giving Mr. Obama further excuse for not changing course.

This kind of standoff normally would enable a popular president to ask voters to elect a majority large enough to legislate the program he outlines. But instead of a program, Mr. Obama has simply appointed the leading Bush-era administrators and brought back the Clinton “Rubinomics” team from Wall Street. His spending freeze in a shrinking economy is a Republican program, his modest “stimulus package” is over, and he has dropped the Consumer Financial Products Agency under Wall Street pressure. So if we are to look at what the administration actually is doing, its program is simply a blank check to the Fed and Treasury (under Bush-era management) to revive Wall Street fortunes – in a nutshell, more Rubinomics.

Convergence between the two parties reflects the privatization of politics by political lobbying and campaign contributions. Getting paid back with fiscal favors, sell-offs and bailouts promises to increase in the wake of the recent Supreme Court “Frankenstein” decision that corporations are virtual people when it comes to freedom of speech and the purchase of media time.

The only countervailing power is that within the Republican Party a fringe of tea partiers threatens to run against more established candidates safely sold to special interests. The Democratic Party always has been a looser coalition, which may not hold together if the Rubinomics team continues to lock out non-Corporate Democrats. So a political realignment may be in the making. Financial and fiscal restructuring issues span left and right, progressive Democrats and populist Republicans. So far, their sentiments are reactive rather than being spelled out in a policy program. But there is a widening realization that the economy has painted itself into a financial corner.

What is needed is to explain to voters how financial and tax policies are symbiotic. The tax shift off finance, insurance and real estate (FIRE) onto labor and industry since 1980 has polarized the economy between a creditor class at the top of and an indebted “real” economy below. Unless this tax favoritism is reversed, more and more revenue will be diverted away from spending on consumption and investment to pay debt service and “financialize” the economy even more.

It is natural that the world’s most debt-ridden economies – Latvia and its Baltic and post-Soviet neighbors, and Iceland – are the first to perceive the problem. They may be viewed as an object lesson for a dystopian future of debt peonage. New Europe’s debt strains are threatening to break up the core euro-currency area (aggravated from within by the Greek, Spanish and Irish public debt problems). The British economy is likewise financialized, weakening sterling. And Europe lacks the U.S. financial safeguard that enables mortgage debtors here to walk away from properties that have fallen into negative equity. Insolvent homeowners in Europe face a lifetime of literal debt peonage to make the banks (even foreign banks, which dominate Central Europe’s post-Soviet economies) whole on their bad debts as the continent’s real estate prices are plunging even more steeply than those in the United States – some 70 percent in Iceland and Latvia.

The only silver lining I can see is that perception will spread that the financial sector is an intrusive dynamic subjecting the economy to debt deflation. But at present, lawmakers are acting as if the economy is an albatross around Wall Street’s neck. (“How are we wealthy people to bear the cost of healing the sick and employing the masses?” the financial sector complains. “The cost is eating into our ability to create wealth.”) Libertarians have warned that our economy is going down the Road to Serfdom. What they do not realize is that by fighting against government power to check financial hubris, they are paving the road for centralized financial planning by Wall Street. They have been tricked into leading the parade on behalf of the financial, insurance and real estate sector – down the road to debt peonage in a monopolized and polarized economy.


[1] Serena Ng and Michael R. Crittenden, “Geithner Defends Big AIG Payouts,” Wall Street Journal, January 28, 2010.


[2] Mary Williams Walsh, “Drawing Fire, Geithner Backs Rescue of A.I.G.” The New York Times, January 28, 2010. http://www.nytimes.com/2010/01/28/business/28aig.html?scp=2&sq=Walsh,%20Geithner&st=cse

[3] “The Latest AIG Story,” Wall Street Journal editorial, January 28, 2010.

[4] Mary Williams Walsh and Sewell Chan, “Under Fire, Geithner Says A.I.G. Rescue Was Essential,” The New York Times, January 27, 2010. (http://www.nytimes.com/2010/01/28/business/28aig.html?pagewanted=2&hp)

Wells Fargo Expecting Much Higher Interest Rates

Wells Fargo reduced investments in mostly fixed-income securities by $34 billion in 2009’s second half, company filings show, according to Bloomberg.

This is big.

“The bias is for higher rates,” Chief Executive Officer John Stumpf, said on the company’s fourth-quarter earnings call. “We’re willing to wait for that to happen. We think that’s the better trade.”

Warren Buffett’s Berkshire Hathaway is the banks largest shareholder and thus this decision was likely discussed and received the approval of Buffett.

How big of a deal is this for Wells Fargo?

By scaling back on the so-called carry trade, in which banks borrow in overnight lending markets at rates near zero and invest in higher-yielding securities, Wells Fargo aims to protect against losses when rates rise, but it forgoes the interest income it would have earned by putting on the trades.

If the bank had left its investments unchanged at the end of June, it would have earned about $1.15 billion of pretax income from the carry trade during the next six months, assuming an average yield of 6.78 percent on its debt securities and a top funding cost of 3.40 percent. (The yield and funding costs were calculated by Bloomberg and are based on company filings.)

Wells Fargo isn't giving up a billion dollars worth of interest income unless it is expecting a major spike in interest rates.

So Maybe You Can't Keep Your Current Coverage...

Click this link ....... http://www.youtube.com/watch?v=czHwNR0nAOQ

Senate Burglary: CIA Domestic Black-op Team Arrested

Politico.com says all four men arrested in last week’s break-in at Senator Mary Landrieu’s New Orleans office had been trained by the CIA. One of those arrested, Stan Dai, is listed as an Operations Officer at the Department of Defense Irregular Warfare Program and a lecturer on surveillance, explosives training, assassinations and “false flag operations.” He was picked up in a car parked car blocks away with a covert receiver, managing the office bugs. Politico says as this was a covert op against US government investigations of terrorism funding and major financial crimes, it is not known who the recipient of the information might be. Potential buyers could be the Republican Party, Israel, Turkey, India, Russia, China, Venezuela, North Korea or financial institutions involved in massive money laundering schemes being investigated by the Senate Committee on Homeland Security, of which Senator Landrieu is a member. Source

Colorado Springs cuts into services considered basic by many

COLORADO SPRINGS — This tax-averse city is about to learn what it looks and feels like when budget cuts slash services most Americans consider part of the urban fabric.

More than a third of the streetlights in Colorado Springs will go dark Monday. The police helicopters are for sale on the Internet. The city is dumping firefighting jobs, a vice team, burglary investigators, beat cops — dozens of police and fire positions will go unfilled.

The parks department removed trash cans last week, replacing them with signs urging users to pack out their own litter.

Neighbors are encouraged to bring their own lawn mowers to local green spaces, because parks workers will mow them only once every two weeks. If that.

Water cutbacks mean most parks will be dead, brown turf by July; the flower and fertilizer budget is zero.

City recreation centers, indoor and outdoor pools, and a handful of museums will close for good March 31 unless they find private funding to stay open. Buses no longer run on evenings and weekends. The city won't pay for any street paving, relying instead on a regional authority that can meet only about 10 percent of the need.

"I guess we're going to find out what the tolerance level is for people," said businessman Chuck Fowler, who is helping lead a private task force brainstorming for city budget fixes. "It's a new day."

Some residents are less sanguine, arguing that cuts to bus services, drug enforcement and treatment and job development are attacks on basic needs for the working class.

"How are people supposed to live? We're not a 'Mayberry R.F.D.' anymore," said Addy Hansen, a criminal justice student who has spoken out about safety cuts. "We're the second-largest city, and growing, in Colorado. We're in trouble. We're in big trouble."

Mayor flinches at revenue

Colorado Springs' woes are more visceral versions of local and state cuts across the nation. Denver has cut salaries and human services workers, trimmed library hours and raised fees; Aurora shuttered four libraries; the state budget has seen round after round of wholesale cuts in education and personnel.

The deep recession bit into Colorado Springs sales-tax collections, while pension and health care costs for city employees continued to soar. Sales-tax updates have become a regular exercise in flinching for Mayor Lionel Rivera.

"Every month I open it up, and I look for a plus in front of the numbers instead of a minus," he said. The 2010 sales-tax forecast is almost $22 million less than 2007.

Voters in November said an emphatic no to a tripling of property tax that would have restored $27.6 million to the city's $212 million general fund budget. Fowler and many other residents say voters don't trust city government to wisely spend a general tax increase and don't believe the current cuts are the only way to balance a budget.

Dead grass, dark streets

But the 2010 spending choices are complete, and local residents and businesses are preparing for a slew of changes:

• The steep parks and recreation cuts mean a radical reshifting of resources from more than 100 neighborhood parks to a few popular regional parks. The city cut watering drastically in 2009 but "got lucky" with weekly summer rains, said parks maintenance manager Kurt Schroeder.

With even more watering cuts, "if we repeat the weather of 2008, we're at risk of losing every bit of turf we have in our neighborhood parks," Schroeder said. Six city greenhouses are shut down. The city spent $19.6 million on parks in 2007; this year it will spend $3.1 million.

"If a playground burns down, I can't replace it," Schroeder said. Park fans' only hope is the possibility of a new ballot tax pledged to recreation spending that might win over skeptical voters.

• Community center and pool closures have parents worried about day-care costs, idle teenagers and shut-in grandparents with nowhere to go.

Hillside Community Center, on the southeastern edge of downtown Colorado Springs in a low- to moderate-income neighborhood, is scrambling to find private partners to stay open. Moms such as Kirsten Williams doubt they can replace Hillside's dedicated staff and preschool rates of $200 for six-week sessions.

"It's affordable, the program is phenomenal, and the staff all grew up here," Williams said. "You can't re-create that kind of magic."

Shutting down youth services is shortsighted, she argues. "You're going to pay now, or you're going to pay later. There's trouble if kids don't have things to do."

• Though officials and citizens put public safety above all in the budget, police and firefighting still lost more than $5.5 million this year. Positions that will go empty range from a domestic violence specialist to a deputy chief to juvenile offender officers. Fire squad 108 loses three firefighters. Putting the helicopters up for sale and eliminating the officers and a mechanic banked $877,000.

• Tourism outlets have attacked budget choices that hit them precisely as they're struggling to draw choosy visitors to the West.

The city cut three economic-development positions, land-use planning, long-range strategic planning and zoning and neighborhood inspectors. It also repossessed a large portion of a dedicated lodgers and car rental tax rather than transfer it to the visitors' bureau.

"It's going to hurt. If they don't at least market Colorado Springs, it doesn't get the people here," said Nancy Stovall, owner of Pine Creek Art Gallery on the tourism strip of Old Colorado City. Other states, such as New Mexico and Wyoming, will continue to market, and tourism losses will further erode city sales-tax revenue, merchants say.

• Turning out the lights, literally, is one of the high-profile trims aggravating some residents. The city-run Colorado Springs Utilities will shut down 8,000 to 10,000 of more than 24,000 streetlights, to save $1.2 million in energy and bulb replacement.

Hansen, the criminal-justice student, grows especially exasperated when recalling a scary incident a few years ago as she waited for a bus. She said a carload of drunken men approached her until the police helicopter that had been trailing them turned a spotlight on the men and chased them off. Now the helicopter is gone, and the streetlight she was waiting under is threatened as well.

"I don't know a person in this city who doesn't think that's just the stupidest thing on the planet," Hansen said. "Colorado Springs leaders put patches on problems and hope that will handle it."

Employee pay criticized

Community business leaders have jumped into the budget debate, some questioning city spending on what they see as "Ferrari"-level benefits for employees and high salaries in middle management. Broadmoor luxury resort chief executive Steve Bartolin wrote an open letter asking why the city spends $89,000 per employee, when his enterprise has a similar number of workers and spends only $24,000 on each.

Businessman Fowler, saying he is now speaking for the task force Bartolin supports, said the city should study the Broadmoor's use of seasonal employees and realistic manager pay.

"I don't know if people are convinced that the water needed to be turned off in the parks, or the trash cans need to come out, or the lights need to go off," Fowler said. "I think we'll have a big turnover in City Council a year from April. Until we get a new group in there, people aren't really going to believe much of anything."

Mayor and council are part-time jobs in Colorado Springs, points out Mayor Rivera, that pay $6,250 a year ($250 extra for the mayor). "We have jobs, we pay taxes, we use services, just like they do," Rivera said, acknowledging there is a "level of distrust" of public officials at many levels.

Rivera said he welcomes help from Bartolin, the private task force and any other source volunteering to rethink government. He is slightly encouraged, for now, that his monthly sales-tax reports are just ahead of budget predictions.

Officials across the city know their phone lines will light up as parks go brown, trash gathers in the weeds, and streets and alleys go dark.

"There's a lot of anger, a lot of frustration about how governments spend their money," Rivera said. "It's not unique to Colorado Springs."

Paulson accuses Russia of plotting to disrupt US economy

Click this link ...... http://eclipptv.com/viewVideo.php?video_id=9787

Corporations are not people and money is not speech

In Citizens United v. Federal Election Commission, the U.S. Supreme Court overturned century-old restrictions on corporate spending in elections under the guise of protecting First Amendment free speech rights. Justice Anthony M. Kennedy, writing for the majority, said, “If the First Amendment has any force, it prohibits Congress from fining or jailing citizens, or associations of citizens, for simply engaging in political speech.” This argument of the majority decision rests on the notions that corporations are covered by the same free speech protections as individual citizens and that campaign donations or financing are the same as speech.

Corporations, however, are inherently not the same as individuals and thus cannot have the same protections as individuals. There are a slew of laws that protect corporations and their interests in the arena for which they are by definition formed—namely the marketplace. The laws that govern corporations and the rights enjoyed by them are distinct from the laws and rights of individuals. A corporation, for example, can enter into contracts like an individual, but unlike an individual, a corporation’s members can be protected by limited liability so their personal assets are not at stake.

If a corporation, then, is a distinct legal entity governed by different laws than an individual is, corporations are not protected under the First Amendment in the same way that individuals are protected. Corporations, especially in their most powerful and wealthy incarnations, are exponentially more influential than most individuals in America. The restrictions on corporate spending in elections that were overturned by the U.S. Supreme Court were meant to redress this power balance between average individuals and unduly influential businesses. Corporations already have a plethora of ways to influence politics, from political action committees to lobbyists on Capitol Hill. The framers of the Bill of Rights wanted to protect the voices of the trampled, not amplify the voices of the elite.

The other part of the Supreme Court’s premise for its decision is that the First Amendment free speech clause applies to campaign funding. While speech can be interpreted loosely as any form of expression, such an open, ambiguous definition would create a myriad of problems with all kinds of laws. An architect has a vision of a building: it is his art, his self expression, yet he cannot ignore local zoning laws that, for instance, restrict the height of his building. Should he sue the state for violation of his free speech, his right to expression? Equating money with speech also opens the door to sundry ludicrous claims by, for instance, an employer who objects to minimum wage laws since he’d like to express that his employees are only worth paying $3 an hour. There have to be restrictions on what constitutes speech to prevent a bastardization of the term and an overly liberal interpretation of the First Amendment.

A corporation already has the power to issue a statement in favor of a candidate or policy through its political action committees, and individual members of a business are welcome to contribute money as well. However, allowing a corporation to use its vast profits to directly finance the election or to remove a candidate compromises the democratic notion of a free and fair election. There are unseemly ties even now between politicians and various industries, but this new ruling would make such connections more robust and give them a veneer of legitimacy. A politician financed by a business would become completely beholden to its political agenda and not to the voters.

It’s not only the independence of politicians that’s at stake, but also the independence of our judges, who are at the very least expected to be impartial. Many states still use elections to appoint judges, which leaves them vulnerable to the influence of political spending. In a recent speech at a law school conference, former Supreme Court Justice Sandra Day O’Connor worried about the impact of corporate campaign funding in judicial elections, saying that “judicial campaigning makes last week’s decision in Citizens United an increasing problem for maintaining an independent judiciary.”

Two cornerstones of our democracy—free elections and an independent judiciary—are threatened by the Supreme Court’s activist and meddling decision. The case could have been decided much more narrowly in favor of Citizens United, but instead, the majority of the justices decided to expand the case to champion the rights of big money over the interest of the American people. Senators Dick Durbin (D-IL) and Arlen Specter (D-PA) introduced the Fair Elections Now Act last March. It would prohibit contributions from political action committees and would match individual donations, limited to $100, on a 4:1 basis so that fundraising focuses on the people. Such a system has been in place in New York City since the 1988 Campaign Finance Act. The rest of the country is long overdue to follow. Never before has the fight for public financing been more necessary.

The author is a Columbia College junior majoring in political science. She is a prospective law student.

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Russia, China and the American free lunch

The United States expects the world to support its lifestyle and wars

Christopher King considers the spurious foundations of the US economy and business relationships with the rest of the world, and argues that complacency and ignorance on the part of the British government – and the greed of business leaders – are letting the Americans have a free lunch every day.

After watching Anthony Blair’s performance at the Chilcot [Iraq] Inquiry I went to the Financial Times hoping for something cheering. The story “Paulson claims Russia tried to foment Fannie-Freddie crisis” was intriguing. Ah, those unreconstructed Commies, I thought. But no! It seems that the Russians had trustingly invested their hard earned roubles in the bastion of free market capitalism and like Americans themselves were rightly concerned about their investment. Hank Paulson of course was the US treasury secretary who presided over the US-generated global financial crisis, of whom Time magazine said: “If there is a face to this financial debacle it is now his.” He has written his memoirs and apparently none of it was his fault.

The Fannie Mae and Freddie Mac scandal

We will recall that Fannie Mae and Freddie Mac are the engagingly innocuously named companies set up by the US government to make home ownership universal. To this end they gave mortgages to anyone who still had a pulse. Literally. On welfare? No problem. These mortgages were amalgamated into packages and sold on, generating more money and bonuses to stimulate granting yet more mortgages and bonuses.

As you may know, the mortgage packages were amalgamated again in various ways and sold in numerous stages to trusting institutions such as our own banks and new converts to capitalism such as the Russians and Chinese. They became famously known as “toxic derivatives” because the identities of the original mortgages had been lost in the re-packaging and they were worthless anyway because their basis was “sub-prime” mortgages made to people who had no chance of repaying them. They were, however, excellent for generating bonuses for Freddie and Fannie executives and their resellers.

Now, there was always a strong implication, although not in writing, that having set them up, the US government guaranteed Freddie and Fannie debt. This helped to sell it on. Unhappily, that was not the case. We can imagine the Russian minister of finance or his deputy flying to Beijing and saying to his opposite Chinese colleague” “Look, we’ve billions of dollars invested in these companies; their shares are crashing and their securities are worthless. We were told that the US government guaranteed them. How do we get our money back? Let’s start unloading. The American government will have to do something.”

Chinese: “We have more of this rubbish than you but their economy is on the verge of bankruptcy. If we start unloading, other countries might realize that dollars are worth nothing and we won’t be able to spend the trillion that we have on commodities in Africa and Australia.”
Russian: “We are now subsidizing the Americans. Everyone else is selling if they can find buyers. We have to get out of dollars. It’s outrageous.”

Chinese: “Sure. But slowly. The Americans have no style but they certainly have brass balls (黃銅球 ).”
Russian (glumly): “I might join the Communist Party. We used to shoot people for this sort of thing.”

Chinese: “We still do, tovarich [comrade].”

Paulson thinks that it’s fine for the companies that the US government sponsored and its banks to generate this fraudulent garbage and sell it around the world but it’s a scandal if Russia wants to sell it back into the markets or expect the US government to take responsibility. He calls such expectations a “disruptive scheme”. The shares in Freddie Mac crashed from over 60 dollars to around one dollar as at present without Russian or Chinese assistance. If they had unloaded and demanded compensation like everyone else it wouldn’t have been just Freddie and Fanny. He should thank them for propping up the US economy as they’re doing. I think that they’re worried about what this failed state would do if its economy were actually to collapse. They’re acting more responsibly than America.

Paulson also expected the UK chancellor of the exchequer, Alistair Darling, to allow Barclays Bank to buy Lehman Brothers, the infamous bank that collapsed with massive debts. Paulson was stunned, according to the FT, to discover that the UK Financial Services Authority would not comply with this. Mr Darling, he said, “... made it clear, without a hint of apology in his voice, that there was no way Barclays would buy Lehman”.

At last I can say that Alistair Darling did something right. Why he should apologise for refusing to let Barclays commit corporate suicide I would not know. Barclays was in trouble anyway and had to call on Gulf oil money to avoid taking a taxpayer bailout – largely due to its holdings of American toxic derivatives. Barclays nevertheless benefited indirectly from the taxpayer liquidity that the government injected into the system. Qatar made one billion dollars from selling its allocation of shares a year later.

What is stunning is the American expectation that the rest of the world should give them a free lunch – every day.

Kraft – microcosm of the US economy

Let’s look at the takeover of the UK chocolate firm Cadburys by America’s Kraft Foods.

Firstly, Kraft’s profits are declining year-on-year although sales are going up. They need some profits. Here are the figures from their annual report:

2006 2007 2008 (last full year)
Sales 2006-08 (billion USD) going up: 33 36 42
Profits from sales going down: 2.9 2.4 1.8

This doesn’t look good so they sold off part of the business to boost 2008 net profits by 1.1 billion dollars to make the 2008 profits 2.9 billion dollars and gave shareholders a bigger dividend. In fairness, they sell off something every year – probably OK – but the 2008 selloff was much bigger than usual. The business isn’t doing well.

How sound is the business? That is, what is its capital position and net worth? The balance sheet, slightly reorganized, shows that for 2008 ( 2009 is much the same) it has:

Total assets – cash, property etc 63,079 million USD
Total liabilites – debts etc 40,878
Net assets 22,201
Balanced by shareholder funds 22,201

Excellent, you say, but wait! There’s an item under assets called “goodwill” (in 2009 here called “cost in excess”) valued at 27.5 billion dollars. What is this? Well, it’s a hole. It’s not cash or anything that you can sell. It’s simply the figure that Kraft put in to make the figures look alright. If you deduct it from the shareholders’ funds, they don’t have any. The net worth of Kraft as a tangible business, cash, bricks and mortar etc is MINUS 5.3 billion dollars. Kraft has spent all shareholders’ money and owes 5.3 billion (yes, that’s billion) dollars in addition, to shareholders. Actually, any company that sets out its balance sheet like Kraft is trying to baffle you with big numbers and has something to hide. Has anyone not on a bonus noticed that Kraft has pension and post-retirement health care obligations to its current staff of five billion dollars that don’t exist?

Technically, the goodwill figure is what Kraft hope that they can earn in the future, that is, the value of its brands based on customers’ future willingness to buy its products, in this case valued at 15 years net earnings from operations. That’s high for a company operating on loans and with no capital whatsoever of its own. What does it do for capital? It borrows it. It’s operating entirely on borrowed money.

So where did Kraft get the money to buy Cadburys? The same place. It borrowed it. Kraft borrowed part of its purchase funds from the Royal Bank of Scotland that is almost completely owned by British taxpayers. Probably a great deal of the rest came from the US taxpayer funds propping up US banks. It’s on these foundations that the US economy is built and this is the way that the US is exporting its instability to the UK among other countries, just as it exported its toxic derivatives. Cadbury’s jobs now depend on whichever banks are propping up Kraft and the dubious management of capital-less Kraft itself. Worse, I suspect that the US banks won’t lend Kraft any more money with its declining profits. It needs Cadbury to stay afloat.

Irene Rosenfeld, Chief Executive of Kraft, said: "We acquired Cadbury because we believe it is a fabulous business and it is our intention to protect those assets." Of course they do. “We intend to invest in the business.” She said. With what? American taxpayer money?

Kraft therefore is unlikely to bring the virtues of good management to Cadbury. The reverse is true. It needs Cadbury as a crutch to help its falling profits and doubtless executive compensation. Rosenfeld’s package was worth 17 million dollars in 2008. Although Kraft has no net assets at all and exists on borrowed money, nevertheless from the viewpoint of the US economy, this is a good deal. US banks are evidently using their bailout funds which are just notional, printed money anyway, to acquire income from other countries when they can’t earn it in their own country. It’s not even economic imperialism. It’s economic fraud. The US government probably encourages this.

So why have the Cadbury directors and shareholders approved it? Well, they’ve been bribed with taxpayer cash. It’s the American way. You can see why Royal Bank of Scotland and the American banks aren’t lending to small domestic businesses that need the money. It’s a tremendous hassle to manage a lot of accounts, profits are tied to the general economy and bonuses are small and slow in coming. These big deals are fun to negotiate, easy to manage when set up and bonuses are large and fast.

Government ignorance

Because our politicians are completely innocent of business and economics knowledge and the interaction between these, they believe that it is a matter of indifference if a company like Kraft purchases one of our largest companies. That was the case with Ferrovial, the company that bought the British Airports Authority from the government, completely on borrowed cash. When I looked last at its balance sheet the company was worth exactly zero after removing “goodwill”. This precision is because “goodwill” can be any figure you like. It’s in trouble at the moment with the Competition Commission. So when we hear expressions like “end of the recession” we should recall that the gross domestic product figure is underpinned by companies like these and huge taxpayer funding on both sides of the Atlantic.

This is the reason why Alistair Darling should take the Royal Bank of Scotland into public ownership and use it as well as other banks that the public have bought into to get money into UK businesses that actually create wealth. Although I doubt that he can read a balance sheet it would not matter if he were to consult accountants and economists rather than bankers who have no interest in the economy outside the City of London and Wall Street.

Darling’s next trick will be to sell the Royal Bank of Scotland that taxpayers already own back to the taxpayers. If not bought by UK taxpayers direct they will be bought by pension and investment funds using taxpayer deposits. It’s a swindle piled on swindles. Here’s the present position. The government:

  • Guarantees depositors funds to GBP 50,000, allowing the banks to take greater risks
  • Has used taxpayers funds to make up for bank losses due to bad management and bad investments, also to insure them against future asset losses
  • Is permitting banks to “rebuild their balance sheets” which means charging high lending rates to borrowers while giving almost no interest to savers.
  • Is permitting “investment banking” which is gambling with depositors’ and taxpayers’ funds while the government protects shareholders and executives
  • Is permitting the banks that are “too big to fail” to grow bigger through acquisitions whereas they should be broken up
  • Is permitting a few dominant banks now to act anti-competitively as an oligopoly in fleecing the public on interest rates among other items – actually they have done this for years. Why hasn’t the Competition Commission acted?

The Americans must think that it’s taking candy from a baby dealing with Brown and Darling. No wonder Hank Paulson thought that Alistair Darling should apologise for not letting Barclays take the problem of Lehman Brothers off his hands.

Our once-independent country that invented the agrarian and industrial revolutions is being managed by fools, thieves and war criminals pandering to America, a bankrupt country operating on borrowed money while executing economic and strategic wars of aggression. Can no-one in government read a balance sheet? Have our chiefs of defence staff no conception of what a war crime is? Anthony Blair set the standard for subservience and subsequent payoff. It’s now the British way. The prospects for economic recovery and state security are remote.

I’m wondering whether to join the Communist Party or to emigrate.