Monday, February 8, 2010

Bonus storm as losses hit £7bn at Royal Bank of Scotland

ROYAL BANK OF SCOTLAND is about to announce losses of more than £7 billion for 2009 but will still hand out enormous bonuses to its investment bankers.

State-controlled RBS is in the final throes of negotiations with the Treasury over its bonus scheme. The talks are expected to conclude within 10 days, ahead of the publication of the bank’s full-year results.

The Treasury is expected to approve a total bonus pool of about £1.3 billion despite the expected losses. The move will spark a fresh furore over payments at banks that were bailed out by the taxpayer.

RBS is 84%-owned by the state thanks to huge injections of government funds. It is also being supported by a government-backed insurance scheme, which has helped to restore market confidence in the bank.

Analysts think RBS’s losses will total £7 billion after a £14 billion hit on bad debts. Huge losses have been suffered on loans to businesses, on property deals and on complex derivatives. Once exceptional items are taken into account, these should be cut to £5 billion.

The only part of the bank expected to do well is its controversial investment-banking arm, which is on track to make billions of pounds in profits.

The profits are one of the key factors that will allow the bank eventually to be returned to the private sector, say analysts.

The return of bonuses across the City in recent months — Goldman Sachs, the American investment bank, handed its chief executive Lloyd Blankfein $9m (£5.8m) on Friday — has heaped pressure on RBS to make big payouts to its investment bankers to stop them being poached by rivals.

RBS has lost more than 1,000 of its top performers to rivals in the past year. It has also sacked hundreds more associated with the worst of the record losses of £28 billion the bank racked up in 2008.

Stephen Hester, chief executive, has said he will pay investment bankers “the minimum we can get away with”. Hester’s own pay package is under review by shareholders trying to tighten incentive targets that could have seen him earn up to £10m over five years.

A number of banks, including Barclays Capital, UBS and Morgan Stanley, have raised salaries by as much as 100% for some staff in exchange for reduced bonuses.

Hester has told UKFI, the body that handles the government’s investment in banks, it should stop comparing the level of bonuses RBS pays out with rivals. He wants it to compare total pay levels instead.

RBS is expected to pay about 30% of its investment-banking revenues to staff, compared with 36% at Goldman Sachs and 50% at many other banks.

Mark Kirk Ties Alexi Giannoulias' Broadway Bank to Chicago Mob

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Colts' Daniel Muir on Ben Bernanke: "He Looks Like a Crook"

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Rep. Mica encourages Geithner to resign

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Insolvency figures hit record high

A total of 134,142 people were declared insolvent in 2009 as the continued credit squeeze drove the figure above the previous record set in 2006

Insolvency figures hit a record high in 2009 in the UK, above the previous record set in 2006

Insolvency figures hit a record high of 134,142 in 2009 in the UK. Photograph: Nicholas Rigg/Getty Images

The number of people entering into insolvency in England and Wales rose to a record total of 134,142 last year, official figures from the Insolvency Service showed today, and experts say the figure is likely to rise further in 2010.

Rising unemployment and the ongoing impact of the credit squeeze drove the figure beyond the previous record of 107,288 personal insolvencies set in 2006, and meant that over the course of the year one in every 320 adults entered into formal arrangements with their creditors.

Today's figures show a total of 74,670 individuals were declared bankrupt last year, a rise of 10.7% on 2008's figure. The number of individual voluntary arrangements (IVAs) – where borrowers arrange to pay off a proportion of their debt over a set period of time – leapt by 21.8% over the year to 47,641.

A total of 11,831 of the insolvencies were in the form of debt relief orders (DROs), which were introduced in April last year and allow consumers with debts of less than £15,000 and minimal assets to write off their borrowing without entering into a full-blown bankruptcy, and have proved more popular than expected.

Insolvency experts at KPMG said they believed more than 223 people a day were choosing to petition for bankruptcy. The firm's director of personal insolvency, Chris Nutting, said: "The figures show that there are still many people experiencing serious financial difficulties, despite record low interest rates.

"Whilst the UK is technically out of recession, the harsh reality is that many people are still living beyond their means. Lessons from history show that personal insolvencies will continue to rise after the recession finally ends, and for some time to come."

Some experts had suggested the number of insolvencies would have fallen over the last quarter of last year as consumers deferred dealing with their debts until after Christmas. But the figure increased from 35,242 to 35,574.

The number of bankruptcies was down by 5.5% on the same period of the previous year, at 17,007, but the number of IVAs leapt by 26.3% to 13,219. On top of these, 5,348 DROs were granted.

Louise Brittain, partner in Deloitte's Contentious Insolvency Group, said the figures bucked a trend.

"This is unexpected, as traditionally people tend to hold off addressing financial issues during the festive season, rather saving them for the new year," she said.

"It is surprising to see the dramatic rise in the number of IVAs – up 26%. This is a result of increased creditor pressure which is unlikely to let up any time soon, and highlights the desperate financial difficulties facing individuals."

Insolvency experts said they expected there to be even more insolvencies in 2010, with Brittain predicting the number could reach 145,000. Most agree that historically low interest rates have allowed some borrowers to keep up repayments on debts which would otherwise have been unmanageable, and that any rare rise could push many more people into difficulty.

On top of this, rising awareness of DROs is likely to lead to more borrowers signing up for the orders.

Meanwhile, the number of companies going into liquidation also increased in 2009, rising to 19,077 – the highest figure since 1993. But the quarterly breakdown suggested the picture was improving for businesses as the year ended. During the last three months of last year 4,372 firms were wound up, a 4% fall on the previous quarter and down 3% year-on-year.

There was also a significant decline in the number of companies going into administration, which is often a more representative measure of corporate failures.

Between October and December 849 companies entered into administration, a fall of 58% year-on-year and the lowest number since the fourth quarter of 2007.

Howard Archer, chief UK economist at his IHS Global Insight, said the outlook for companies currently struggling would depend on how easy it became for them to access credit.

"Despite the economy staggering out of recession in the fourth quarter of 2009, economic activity is unlikely to be strong enough for some time to come to stop many more companies from going out of business, although hopefully the number failing will moderate further.

"Much will depend on to what extent credit conditions ease over the coming months, as an inability to access credit continues to plague a number of companies, particularly smaller ones."

Hillary to China: Vote for Iran Sanctions, or Face Gulf Conflagration and Oil Cutoff

For her Jan. 29 speech at the Ecole Militaire in Paris, Mrs. Clinton was evidently wearing that stylish new French perfume from the House of Sarkozy called Chantage – meaning blackmail. Mrs. Clinton gloats because she thinks she has the Chinese leadership in a bind. As she stated, she knows that China increasingly depends on oil from the Gulf. She demanded that China vote for crippling sanctions against Iran in the UN Security Council this month, while Sarkozy — the craziest of all western leaders against Iran — controls the presidency of that body. For China, approving crippling sanctions against Iran means in all probability the loss of 10% to 12% of its oil imports, the aborting of some $80 billion in development projects by Beijing in Iran, the sacrifice of hundreds of billions of dollars worth of oil which the Chinese have locked in via futures contracts, and, above all, a farewell to the best chance of getting a secure overland oil pipeline far away from the US-UK fleets — the pipeline from Iran via Pakistan into China.
If the Chinese fail to captitulate on this point, Mrs. Clinton darkly hinted, the US would no longer restrain the Israelis, who might then launch their long-threatened air attack on Iran, which the US has emphatically vetoed over the past two years. At that point, the Iranians would try to interdict Gulf maritime traffic and close the strait of Hormuz, meaning that about a third of China’s oil could be cut off. (The other 20% comes from Saudi Arabia.)
The US-UK elite is in a state of collective hysteria about the growth of Chinese economic power. China is now the largest exporter in the world, and officially about to become the second largest economy, passing Japan to challenge the US.
The US is way behind China in fast rail, and will soon fall behind in modern nuclear energy production. China is clearly aiming to put astronauts on the moon, but the Obama-Orszag NASA budget makes clear that the US is going nowhere when it comes to manned space flight. If US elites really want to keep pace, they should put aside their feckless attempts to contain China by subversion, economic warfare, and fomenting conflicts in the Guif and on the India-China border. Match the Chinese programs in nuclear reactors, fast rail, and manned space flight, or prepare for the status of has-been.
But for right now, the Iran attack scenario, which had been pushed to the back burner by the US National Intelligence Estimate of December 2007 — which stated that there was no Iranian nuclear weapons program — is once again operational, this time as a means at striking at China’s oil supply.

Tarpley talks with Priya Sridhar of Russia Today about the growing US-China confrontation.

!!! OVER 50 **UNEXPECTED** CEO & CFO resignations in the last 3 weeks!!!!!

I'm freaking. I can't remember this many heads resigning unexpectedly in such a short period.

Most notably are telecoms, banks and energy companies. People who would have insider knowledge if something huge were about to happen.

Please add any more you can find here. I stopped at 50 just to get it posted, but there are more, including lots of board members and other executives.

1. Sun Microsystems
2. Royal Bank of Scotland
3. Bank Leumi of Israel
4. Lenovo
5. Wellpoint (on March 1)
6. Ingersoll-Rand
7. Gasco
8. Syntel
9. Motion Picture Television Fund
10. GrainCorp
11. Connaught Plc
12. Netplay TV
13. AgResearch
14. Zain Telecom
15. Ethan Allen Institute
16. Fahrney-Keedy Home & Village
17. Nordzucker
18. France Telecom
19. TransWorld Entertainment
20. Parlux
21. Medical Developments International Ltd
22. PBR (on March 1)
23. Aeropostale
24. Cook Islands Tourism
25. Uranium International Corp
26. San Francisco AIDS Foundation
27. Borders Books
28. YTB International
29. Western Australia Business News
30. Bergen Group Rosenberg
31. Phumelela
32. Bartow Regional Medical Center
33. NV Energy (CFO)
34. Shanda Interactive
35. NB Power
36. Empire Aero
37. Argentina Central Bank
38. Hong Kong Exchanges & Clearing (CFO)
39. Arbitron
40. Lihir Gold Ltd
41. Meredith Corp
42. Red Bull
43. Golden Harp
44. Endo Pharma
45. Nuplex
47. Mirada (chairman)
48. Remedial Offshore
49. Abercrombie & Fitch Co
50. Commerce Resources (CFO)

Banking & Housing Payments Devoured the Middle Class Income–1/10 Americans on Food Stamps & how the Fed Slowly Devalued the Dollars in your wallet

It is a challenge to say that things are getting better when every month that goes by more Americans are losing their jobs or needing to apply for food assistance. In the latest data for food assistance through SNAP we find that 200,000 more Americans were added to the program. That now brings the total number of Americans on food assistance to 38,183,000. 1 out of 10 Americans are receiving food assistance. For 2009 this cost the government $50 billion, up from $34 billion in 2008 and $30 billion in 2007. It should be no surprise then that average Americans are questioning the viability of a middle class in the upcoming decade.

But even when we look at the balance sheet of the government, things are still not improving:

Source: U.S. Treasury

Take a look at the amount of revenue (taxes) the government brought in for the month of December. $218 billion was taken in. But look at data from December of 2008. The government at the peak of the crisis brought in $237 billion. So this December was even worse than the one ending 2008. How is this a sign of recovery? You would assume that receipts would be going up if things were in fact getting better. All we see is the spending side of the equation going up and the only sector in the economy turning a solid profit is the banking sector that is now running a new form of corporatocracy. It would be one thing if we were adding jobs each and every month but even the massive amounts of bailouts have yet to yield any visible help for average Americans.

In the past few decades Americans have seen more and more of their income being eaten up by the housing sector of the economy:

This latest decade saw a much larger share of income going to housing than any in the past. Unlike stocks, every American needs to live somewhere and will need to either pay a mortgage if they own or pay rent. The banking sector found a method of siphoning off wealth from the biggest asset Americans hold. We have seen this occur slowly over the decades:


Median household income: $3,319

Median home price: $7,354

Home price / income = Percent of 221


Median household income: $5,620

Median home price: $11,900

Home price / income = 211 percent

Running those numbers today, we find that nationwide the cost of a home eats up more and more income:

Median Household income: $52,029

Median U.S. home price: $172,600

Home price / income = 331 percent

The above data is pulled from years of Census data but shows clearly that housing has eaten more and more into the income of average Americans. In a purely fiat money system, banks can create money out of thin air. The Federal Reserve has done this through the monetization of debt. Now think about this, if a participating member bank borrows say $1 million from the Fed it can then turn around and lend the money out through loans up to $9 million courtesy of fractional reserve banking. With current interest rates, if it borrows from the Fed at near zero even a 5 percent return on bread and butter mortgages would yield $450,000 a year for doing absolutely nothing but being a middleman. And some banks have gone ahead and issued credit cards with 79.9 percent rates. When Bear Stearns and Lehman Brothers failed their leverage was even higher at 20 and even 30 to 1. The other investment banks are near those levels even today yet with full government support.

So why bring this up? In the United States debt is treated as money. In fact, without debt we wouldn’t have money. I think this is lost on many. When someone goes to a bank and takes out a mortgage with virtually no money down, all of a sudden a liability and asset of a few hundred thousand is created out of financial alchemy. So when this housing bubble burst trillions of dollars evaporated from the system but it was nothing more than erasing previous debt that really had no actual backing.

So if the Fed can create money out of thin air through their banking web why is the economy still faltering? In boom and bust cycles we see a love and revulsion towards debt. Banks can be willing to lend out money but you can’t force average Americans to borrow. This past decade we saw the absolute disregard for prudent debt lending and now, many Americans are averse to taking out loans. In fact, now that banks are actually checking and verifying incomes it turns out that many middle class Americans really don’t qualify for additional debt.

This brings us to our next chart looking at household debt:

Even after the stock market recovery, it is estimated that average Americans have seen their household net worth decline by $11 trillion since the peak of this bubble. Yet take a look at the chart above. Household debt still remains near the peak. And keep in mind that real estate was the biggest item of net worth for Americans and this has fallen by roughly $6 trillion. Yet the loans remain the same. And that is largely a reason for the flood of foreclosures and bankruptcies. While banks still have mortgages valued at peak levels the actual market value is much less. The U.S. Treasury and Federal Reserve made a troubling bet during the early days of the crisis that things would correct quickly. Actually, I tend to believe that the Fed knew all along that when push came to shove, the entire banking sector would be bailed out by the U.S. taxpayer since the Fed is simply the lender of first and last resort for member banks.

So this leaves Americans contenting with debt amounts that no longer reflect the value of their underlying asset. Yet the banking sector is now fully supported by the taxpayer. So with the current system in place, if banks do fail taxpayers are on the hook. The Fed has setup the perfect trap for middle class Americans. If average Americans decide to walk away from their underwater mortgages then the bill will be paid by taxpayers. After all, we are already told that the too big to fail by definition won’t fail. And the other option is to continue paying a mortgage on a home that is no longer worth its value. Many Americans simply cannot afford to do this. Do you notice how in no scenario the banks lose? This is another characteristic of the corporatocracy. And the FDIC which insures bank deposits is essentially insolvent:

And the FDIC backs $13 trillion in total assets with a fund that is insolvent! Now that is maximum leverage.

Over the past decade as the financial sector gained more and more power many Americans saw more and more money go to their housing payment. The housing bubble was merely the end product of the banking sector through Wall Street flooding the system with debt. If we live in a world where only one house is on the block and you have $1,000 and I have $1,000 and we both want the house the maximum we can pay for the home is $1,000 given our resources. But enter a bank that is willing to create debt of $10,000 in the form of a mortgage and say we are obsessed with the house; it is very likely we would be willing to pay $11,000 for the home. Is the home really worth $10,000 more? Of course not. But our $1,000 just got a lot less valuable. And this is the crux of a fiat money system. The government can force it as legal tender but if the value continues to erode people will begin questioning the system. It is only valuable to the point that people have faith in it. And right now many Americans are losing faith in the system.

Kill the Messenger?

The Obama administration has apparently come up with a creative way to deal with the increasingly bleak news regarding the economic position of the United States in the world. It proposes to eliminate the office in the Bureau of Labor Statistics that collects and publishes the comparative data on employment, unemployment, manufacturing productivity and labor costs, among other things. You can find it right there on page 11 among the various programs that it has marked for termination.

Through this voluntary act of blinding, the Obama gang will manage to save all of two million dollars a year, which in Pentagon parlance hardly qualifies as “budget dust.” Lost will be a ready reckoning of how the country is measuring up on the world economic front, which might well be the intended purpose of the program’s elimination.

Let us have a look at the office’s web page to get an idea of the sort of information that will not be so graphically and readily available in the future should the administration get its way. In a 10-country comparison of monthly unemployment rates adjusted to U.S. concepts—something that no international agency does—one finds that the unemployment rate in the United States is the highest and it has had the fastest rate of increase over the past year. No telling where that chart is going—quite literally if the blinders are successful.

If you want to see one reason why the NAFTA might not have been such a good idea you can consult one of the many tables the office has compiled on manufacturing compensation. Here, for instance, you can see that in the United States in 2007 production workers in manufacturing made an average of $25.27 an hour, counting fringe benefits, while in Mexico they made $2.92 an hour.

With time and a considerable amount of effort you might be able to find similar comparative data elsewhere, but for these compensation numbers, the best alternative site, the Key Indicators of the Labor Market of the International Labor Office, the source of the data is this same BLS office that is targeted for elimination.

Because of its technical nature, the targeted office’s comparative productivity report is a less-ready source of unsettling data, but the numbers are there, nonetheless. One can find, for instance, in Table B of the report that the whopping U.S. decline in manufacturing employment of 3.9 percent in 2008 was the greatest among the 17 countries compared, and one can see further that from 2000 to 2008 the United States lost manufacturing jobs at a startling rate of 3 percent a year, a huge acceleration over earlier years. Only in the United Kingdom did manufacturing employment fall faster since 2000. One may search the Internet high and low, and he will find no better indicator of this country’s relative deindustrialization.

Jobs Gone to China

Because their data collection and publication system does not generally meet advanced Western standards, good measures of China’s meteoric rise in the industrial world are notoriously hard to find. The office targeted for elimination has been a national and world leader in shining a light on Chinese economic reality. In a 2005 groundbreaking study commissioned by this BLS International Labor Comparisons office by noted demographer Judith Banister entitled “Manufacturing Employment and Compensation in China,” one will find the following passage:

In recent decades, China has become a manufacturing powerhouse. The country’s official data showed 83 million manufacturing employees in 2002, but that figure is likely to be understated; the actual number was probably closer to 109 million. By contrast, in 2002 the Group of Seven (G7) major industrialized countries had a total of 53 million manufacturing workers.

Here you see in raw numbers verification of your impression that almost everything you buy these days has a “Made in China” label on it. The G7, by the way, are the United States, Canada, Japan, France, Germany, Italy and the United Kingdom, which we still tend to think of as the world’s industrial leaders.

The BLS’s International Labor Comparisons Office has been documenting global economic change that some people would apparently prefer we not know about, whether we believe in it or not. The three-word campaign slogan of “Yes, we can,” it would seem, is to be replaced with an older three-word saying, “Ignorance is bliss.”

David Martin

British PM weeps on TV recalling daughter's death

London: In a rare outburst of emotions, British Prime Minister Gordon Brown wept in public when he spoke about the death of his daughter Jennifer and expressed fears of a premature and similar fate of his son Fraser, who has cystic fibrosis.

Brown's wife Sarah, who was present there, also sobbed in an extraordinary display of emotion during an interview of the Premier by Piers Morgan for a TV programme.

The candid exchanges, which lasted over two-and-a-half hours before a live studio audience, are to be broadcast on 'Piers Morgan's Life Stories' on ITV next Sunday.

According to a report in 'The Sunday Telegraph', Brown told how it was he, and not his wife, who was first to realise that Jennifer was not going to survive.

Ten-day-old Jennifer, the Browns' first child, died in 2002 due to a brain haemorrhage. She was born prematurely and weighted just 2lb 4oz. She died in the arms of her parents at Edinburgh's Royal Infirmary.

Brown spoke of his agony when he came to know that his three-year-old son Fraser may have a 'poor life expectancy'.

Fraser, the couple's second son, was diagnosed with cystic fibrosis five months after his birth in July 2006.

In the past, Brown has raised hopes that despite the condition, Fraser could be "a rugby player or a football player". The newspaper quoted a member of the audience saying: "It was remarkable to hear Brown talk like that.”

"He said he was the one who could tell Jennifer wasn't going to make it and he described how he held her tiny little hand until the very end.”

"He was asked if he was angry about his son's illness and said, ‘We sometimes ask, why us? But we try not to be bitter’.”

During the interview, Brown, who is generally reserved, spoke more openly than ever before about himself and his battles with Tony Blair, admitting that he had "explosive" rows with his predecessor.

He said Blair had secretly promised to hand over power to him - but that the timing lay with Blair.

He also revealed how he proposed to Sarah on a beach and said she was the only woman he had ever loved.

All Hell Could Break Loose in Europe This Week; CDS Counter-Party Risks Again

The entirely pointless G7 meeting this weekend only served to underline the fact that Europe is again entering a serious economic crisis.

At the end of the meeting yesterday, Treasury Secretary Tim Geithner told reporters, “I just want to underscore they made it clear to us, they the European authorities, that they will manage this [the Greek debt crisis] with great care.”

But the Europeans are not being careful – and it’s not just about Greece any more. Worries about government debt and associated public sector liabilities (e.g., because banking systems are in deep trouble) have spread through the eurozone to Spain and Portugal. Ireland and Italy are next up for hostile reconsideration by the markets, and the UK may not be far behind...

The IMF cannot help in any meaningful way. And the stronger EU countries are not willing to help – in part because they want to be tough, but also because they do not have effective mechanisms for providing assistance-with-strings. Unconditional bailouts are simple – just send a check. Structuring a rescue package that will garner support among the German electorate – whose current and future taxes will be on the line – is considerably more complicated.

The financial markets know all this and last week sharpened their swords. As we move into this week, expect more selling pressure across a wide range of European assets.

As this pressure mounts, we’ll see cracks appear also in the private sector. Significant banks and large hedge funds have been selling insurance against default by European sovereigns. As countries lose creditworthiness – and, under sufficient pressure, very few government credit ratings will hold up – these financial institutions will need to come up with cash to post increasing amounts of collateral against their derivative obligations (yes, the same credit default swaps that triggered the collapse last time).

Remember that none of the opaqueness of the credit default swap market has been addressed since the crisis of September 2008. And generalized counter-party risk – the fear that your insurer will fail and this will bring down all connected banks – raises its ugly head again.

In such a situation, investors scramble for the safest assets available – “cash”, which actually (and ironically, given our budget woes) means short-term US government securities. It’s not that the US is in good shape or even has anything approaching a credible medium-term fiscal framework, it’s just that everyone else is in much worse shape.

Another Lehman/AIG-type situation lurks somewhere on the European continent, and again our purported G7 (or even G20) leaders are slow to see the risk.
It may not all breakdown this week, but Johnson has the picture correct. Phase one of the double dip Great Recession, and the accompanying great demand to hold cash, has resulted in extreme financial pressure on the most profligate government spenders, who won't be able to get enough cash to meet their future debt obligations.

In the old days, these countries would simply print more money, but the PIIGS (Portugal, Italy, Ireland, Greece, Spain) are all in the Eurozone pen and it is unlikely that Germany and France will agree to debase euros, by printing more of them, to bailout the PIIGS. Thus, the continued intensifying global sovereign debt crisis

The UK is in a different situation, given that they CAN print their way out of a financial crisis, though with enormous inflationary consequences. But who is going to look at the niceties of differences during a global sovereign debt panic? The answer as to who should be looking is, of course, you.

The sophisticated play here is to go long UK debt on any weakness, while hedging the currency risk by shorting the pound. Any flight into Treasury securities should, of course, be looked at as temporary in nature and an opportunity to add to these short positions.

Egypt Restores Oldest Monastery In The World

ZAAFARANA, Egypt — Egypt's chief archaeologist unveiled on Thursday an extensive renovation of the oldest monastery in the world, touting the work at the 1,600 year-old-site as a symbol of peaceful coexistence between the country's Muslims and Christians.

It's the message Egypt's government has been emphasizing ever since a lethal drive-by shooting at a church a month ago in a southern town: No troubles here – dismissing new worries over sectarian divisions between Egypt's mainly Muslim population and the large Christian minority.

"The announcement we are making today shows to the world how we are keen to restore the monuments of our past, whether Coptic, Jewish or Muslims," he said, referring to the dominant Christian sect in Egypt.

"The incident in Upper Egypt can happen between two brothers," said Hawass when asked if there was any connection between the Jan. 6 shooting and the timing of his announcement at the monastery. "I want everyone to forgot this incident."

Egypt's Supreme Council of Antiquities spent eight years and $14.5 million dollars to carry out a comprehensive restoration and conservation of the ancient monastery, situated in the rugged desert mountains near Egypt's Red Sea coast.

It was in this remote spot, at the end of the 3rd century that renowned Christian ascetic St. Anthony took up a residence in a cave, with little more than a spring and some palm trees to sustain him.

Upon his death in A.D. 356, his followers built cells and created the world's first Christian monastery, which now houses 120 monks, the burial place of four saints, and ancient church paintings dating to the Middle Ages.

Monks say the restoration and discovery of the cells of the monks sheds important light on the early years of monasticism and bolsters the country's long monastic tradition.

"For the monastery itself, this is very important, we have found a missing part of our history with this restoration, for there is nothing written about the beginning of the monastery," said Father Maximus, who oversaw the renovation.

In the government-sponsored project, workers renovated the fortress-like ancient wall surrounding the monastery, several outbuildings, and its two main churches – the 15th century Church of the Apostles and the 4th century Church of St. Anthony.

A modern sewage system was also installed for the monastery, which receives a million visitors every year.

"The monastery has become a very important retreat for spiritual relaxation for visitors, especially when they visit the cave of St. Anthony," he said.

For Hawass, the high profile director of Egypt's antiquities department, the completion of the project was an opportunity for Egypt to show its critics the depths of its tolerance.

"I believe today is important because it can answer all the questions of the people all over the world and it can show how the Muslims can stay here eight years restoring and making impressive work," he told journalists while touring the site.

The drive by shooting in the southern Egyptian town of Nag Hamadi on Jan. 6, Coptic Christmas Eve, killed six Christians and a Muslim guard, shocking Egypt's Christians and bringing widespread condemnation internationally over sectarian relations in the country.

Egyptian officials insist the shooting was a purely criminal act, without sectarian motives. Authorities categorically deny there are any problems between Muslims and Christians and say there is national unity, with all groups living in harmony.

The state often maintains that attacks against Christians, especially in poverty-ridden southern Egypt, are isolated, criminal incidents, often related to disputes between clans.

But Youssef Sidhom, the editor of the weekly Coptic newspaper Al-Watani, dismisses the government stance on the Jan. 6 attack.

"Targeting Christians coming out of church on Christmas eve, this cannot be fully a criminal affair, it is a criminal sectarian affair," he said. "We have to face for once our bitter heritage that has accumulated during the last four decades, making such hostilities more frequent than before."

Christians, who make up about 10 percent of the population of 79 million, complain of discrimination, saying they have insufficient representation in parliament or the security forces and that education and media don't reflect their community. They also point to restrictions requiring security officials' permission to build or even repair churches.

"When the state wants to renovate a Jewish temple, an ancient church or an ancient mosque, no one can stop the state. The problem comes when we want to renovate a church, things get tough and we have to apply to the security apparatus to approve it," Sidhom said.

Leonard Leo, the chairman of the U.S. government's Commission on International Religious Freedom, said the State Department is "very worried about increased violence against Christians in Upper Egypt."

"There are quite a number of laws in Egypt which blatantly discriminate against Christians and other religious minorities in a way that creates a climate where people don't respect Christians," he told Fox News on Jan. 28.

In its splendid isolation at the foot of mountains surrounded by the crisp desert air, the monastery seems far away from troubles elsewhere. In a sign of its turbulent past, one of the restored buildings is a tall tower only accessible by a wooden drawbridge, where the monks would take refuge during assaults by hostile Bedouin tribes in the Middle Ages.

"We are living in the same land, drinking the same water – we are Egyptians, all of us. What is going on is something not normal," said Father Maximus about the shooting in Nag Hamadi.

Obama's shameful touting of misleading unemployment numbers will come back to haunt him

President Obama's repeated references to Friday's surprising decline in the unemployment rate epitomize his utter disregard toward the intellect of our citizenry. His citation of these numbers as evidence we are "climbing out of the hole we found ourselves in" reveals an assumption on his part that the folks are incapable of figuring things out for themselves. While Obama surely isn't the coldest beer in the fridge, he isn't stupid enough to actually believe Americans can't figure out this scam. No, his use of the 9.7% figure to support his position is a blatant lie. After all, his own budget plan projects unemployment will remain higher than this figure at the end of the year. Even his own economic advisor, Christina Romer contradicited the President, saying, "The monthly employment and unemployment numbers are volatile and subject to substantial revision. Therefore, it is important not to read too much into any one monthly report, positive or negative."

The surprisingly low unemployment figure, of course, occurred as a result of an inordinately large number of job seekers dropping from the record as their unemployment benefits expire and many others have simply given up all hope of procuring employment. The government's hiring of over a million temporary workers this year to perform the census also takes the edge off the numbers.

CNBC's Rick Santelli emphasized that the commonly-used U3 numbers are being grossly manipulated in an effort to hide the depth of this recession. He explained on Friday how the Obama administration has lowered the total number of jobs supposedly available in the marketplace, taking the 136 million figure down to 129 million. Thus, the percentage of employed per available jobs rises and the U3 number magically goes down.

The Bureau of Labor Statistics (BLS) provides far more data on actual unemployment than is ever reported by the mainstream media. The U6, which includes the U3 totals plus those who have given up plus part-time and temporary workers plus marginally attached workers, provides a much broader and more reliable measure of actual unemployment. The U6 doesn't require any math or massaging of the numbers. It simply represents the data from the BLS in the least manipulable manner. Incidentally, the U6 has risen every month since Obama took office - and currently sits at around 18 percent.

The President got his headlines on Friday. We lost 20,000 more jobs in January and added a million more unemployed from last year. But the U3 mysteriously shrinks to 9.7% and Obama has the temerity to proclaim we are "climbing out of the hole". This was a foolish mistake. Jobs have not been created (nor saved) and will not be in the foreseeable future. These false hopes shamefully advanced by the administration will only result in heightened frustrations down the road.

The Next Absurd Terror Ruse: Muslim Women with Exploding Breasts

Joseph Farah’s WorldNetDaily continues to break important news on the New World Order, one-world government, and the North American Union. However, the news website often serves as a propaganda outlet for all manner of neocon nonsense.

In order to continue the hyped Islamic terror threat, Joseph Farah and the neocons tell us Muslim women will have bombs surgically implanted in their breasts.

featured stories   The Next Absurd Terror Ruse: Muslim Women with Exploding Breasts
muslim women

Case in point: Farah’s G2 Bulletin, a subscription online newsletter. In the latest edition, Mr. Farah claims we should fear Muslim women because trained surgeons who hate us for our freedom to revel in the Super Bowl and other gladiatorial diversions are implanting explosives in the breasts of Muslim women.

“Agents for Britain’s MI5 intelligence service have discovered that Muslim doctors trained at some of Britain’s leading teaching hospitals have returned to their own countries to fit surgical implants filled with explosives, according to a report from Joseph Farah’s G2 Bulletin,” WND reported on February 1. “Women suicide bombers recruited by al-Qaida are known to have had the explosives inserted in their breasts under techniques similar to breast enhancing surgery. The lethal explosives – usually PETN (pentaerythritol Tetrabitrate) – are inserted during the operation inside the plastic shapes. The breast is then sewn up.”

Is this the same MI5 renown for protecting and sheltering accused terrorists? “The alleged spiritual leader of the al-Qaida terrorist network is living with his wife and children in northern England, in a safe house paid for by the intelligence services,” The Guardian reported in July, 2002.

Is it the same MI5 that was up to its neck in Ireland’s Dirty War? If not for British agents, the IRA would have never figured out how to make high-tech explosives responsible for killing dozens of people. MI5 did a bang-up job of infilitrating the terrorist organization.

Britain’s MI6 has also sponsored and supported terrorism. “Haroon Aswat – the man British Police believe was behind the London bombings – was working for MI6, it has been confirmed by leading U.S. and French intelligence asset/agents,” New Criminologist Magazine reported in September, 2005. Haroon Aswat is the primary suspect as the mastermind of the London Bombings 7/7.

“The truth is, there is no Islamic army or terrorist group called Al Qaida,” the late British Foreign Secretary Robin Cook said. “And any informed intelligence officer knows this. But there is a propaganda campaign to make the public believe in the presence of an identified entity representing the ‘devil’ only in order to drive the TV watcher to accept a unified international leadership for a war against terrorism. The country behind this propaganda is the US.”

MI5, MI6, the CIA, German intelligence, and Mossad created what he is now called al-Qaeda “inspired” terrorism. Evidence of this is certainly not difficult to find. In fact, there is an avalanche of information on this but it is simply not reported by the corporate media or the neocon press that has a vested interest in perpetuating the Islamic terror myth. It is not merely Islamophobia that drives this effort but a need to gain political power and impose their demented worldview on the rest of us.

“With the active encouragement of the CIA and Pakistan’s ISI, who wanted to turn the Afghan Jihad into a global war waged by all Muslim states against the Soviet Union, some 35,000 Muslim radicals from 40 Islamic countries joined Afghanistan’s fight between 1982 and 1992. Tens of thousands more came to study in Pakistani madrasahs. Eventually, more than 100,000 foreign Muslim radicals were directly influenced by the Afghan jihad,” noted journalist Ahmed Rashid wrote in the late 1990s.

Rockefeller minion Zbigniew Brzezinski admitted as much. “According to the official version of history, CIA aid to the Mujahideen began during 1980, that is to say, after the Soviet army invaded Afghanistan, [on] 24 December 1979. But the reality, secretly guarded until now, is completely otherwise. Indeed, it was July 3, 1979, that President Carter signed the first directive for secret aid to the opponents of the pro-Soviet regime in Kabul. And that very day, I wrote a note to the President in which I explained to him that in my opinion, this aid was going to induce a Soviet military intervention,” he told Le Nouvel Observateur in 1998.

The so-called Islamic Brigades created by the CIA and Pakistan’s ISI were later used in Bosnia, Chechnya, Macedonia, and even on the border of China. A lengthy Congressional report by the Senate Republican Party Committee in 1997 revealed as much. The RPC report accused the Clinton administration of having “helped turn Bosnia into a militant Islamic base” leading to the recruitment through the so-called “Militant Islamic Network” of thousands of Mujahideen from the Muslim world.

The U.S. went to Britain’s MI6 to arrange a training program for the KLA (Kosovo Liberation Army). NATO and Germany’s Secret Service, the BND, joined in on the joint effort. Richard Holbrooke, now Obama’s go-man on Afghanistan and Pakistan was involved with the Stalinist influenced KLA, well known for its Mafia ties and drug running.

“Bin Laden had visited Albania himself. He was one of several fundamentalist groups that had sent units to fight in Kosovo,” The Sunday Times reported November 29, 1998.

Of course, soon after September 11, 2001, the historical record of U.S., British, Pakistani, and German involvement in terrorism was shuffled off to the memory hole. “Since September 2001, this history of Al Qaeda has largely been erased. The links of successive US administrations to the ‘Islamic terror network’ is rarely mentioned,” writes Michel Chossudovsky. “A major war in the Middle East and Central Asia, supposedly ‘against international terrorism’ was launched in October 2001 by a government which had been harboring international terrorism as part of its foreign policy agenda. In other words, the main justification for waging war on Afghanistan and Iraq has been totally fabricated. The American people have been deliberately and consciously misled by their government.”

Unfortunately, Joseph Farah and his corral of neocons, among dozens of others in the corporate media, have kept this absurdist fantasy alive. They are apparently unfazed by the improbability (not to mention the xenophobia) of their claims.

According to the G2 Bulletin, the “discovery of these methods [breast bombs] was made after the London-educated Nigerian Umar Farouk Abdulmutallab came close to blowing up an airliner on Christmas Day with explosives he had stuffed inside his underpants.”

On January 27, Undersecretary for Management at the State Department, Patrick F. Kennedy, told Congress that intelligence agencies blocked revocation of Abdulmutallab’s visa and thus allowed him to be delivered to the Amsterdam airport by a shadowy individual and ultimately to Detroit. His lame exploit was videotaped by a passenger on the flight.

Do you see a pattern here? The CIA on numerous occasions has made sure operatives and patsies gained access to the United States. Ali Mohamed, aka “al-Amriki” the American, accused of participation in the 1998 bombings of the United States’ embassies in Nairobi, Kenya and in Dar es Salaam, Tanzania, worked for the CIA and the Egyptian army’s military intelligence unit. According to the Boston Globe, Ali Mohamed’s “presence in the country [was] the result of an action initiated by Langley,” according to a senior official at the CIA.

Then there is the case of the blind cleric, Sheikh Omar Abdul-Rahman, who is currently serving a life sentence for his role in the World Trade Center 1993 bombings. Beginning in the 1980s, Rahman received a number of visas into the United States courtesy of the CIA. “The CIA officers claimed they didn’t know the sheikh was one of the most notorious political figures in the Middle East and a militant on the State Department’s list of undesirables,” a New York investigator said during the sensationalized trial of the blind cleric. Abdul-Rahman, despite his inclusion on a terror watch list, was able to enter and leave the country at will (or under CIA orders).

Michael Springmann, the head U.S. consular official in Jeddah, Saudi Arabia, complained a few years ago that the CIA ordered him to grant visas to a more than 100 “unqualified applicants,” many of them jihadists working for the CIA asset Osama bin Laden. According to Springmann, the Jeddah consulate was run by the CIA and staffed almost entirely by intelligence agents and operated at least through 9/11. As it turns out, 11 of the 19 supposed 9/11 hijackers — notably Nawaf Alhazmi, Salem Alhazmi, and Khalid Almihdhar — received their U.S. visas at the Jeddah consulate.

Other visa anomalies abound. For instance, the notorious al-Qaeda mastermind Khalid Shaikh Mohammed (KSM), traveled regularly to the United States without any problems, even though it was said the CIA’s Renditions Branch had been looking for him since at least 1997 and he was under a federal terrorism indictment, having a $2 million reward on his head . Even though KSM was considered a terrorist and Osama bin Laden confidant, he received a new US visa on July 23, 2001. He applied for the visa using a Saudi passport and an alias (Abdulrahman al-Ghamdi), but the photo he submitted was really of him.

All of this and much more will eventually be shrugged off as “intelligence failures” and “missed opportunities.” It is anything but.

Instead of pointing out the vast and repeated inconsistencies surrounding 9/11 and evidence that al-Qaeda is a CIA operation, Farah and company hype nonsense about evil and immoral Muslims with explosives in their BVDs and surgically implanted in their breasts.

It can only be assumed they are part of the neocon effort to attack Islam and invade small and defenseless countries, or they are sincerely brain-dead and given to irrationality. Since Farah is an intelligent man, as evidenced by his writing and business efforts, the logical conclusion is that he is part of the neocon effort to spread wild and unsubstantiated propaganda designed to demonize Muslims and thus set the stage for more war crimes and crimes against humanity on par with the invasion of Iraq, responsible for slaughtering well over a million Iraqis.

The second wave of mortgage defaults and foreclosures will hit the economy this year

As we have been forecasting for the last two years, the second wave of mortgage defaults and foreclosures will hit the economy this year. Not only will we have failure in prime loans and option-arm loans, but we are faced with a new crop of subprime and ALT-A loans put into motion by Fannie Mae, Freddie Mac, Ginnie Mae and FHA. In addition, we find it of great interest that the FHA is changing the rules to purchase homes. That, of course, means less homes will be purchased.

The incidence of unemployment may be lessening, but it isn’t going away. Those of you who keep your ear to the ground know that real unemployment is 22.5% and in cities like Detroit it is somewhere near 45 to 50 percent. This is the result of free trade, globalization, offshoring and outsourcing. No city in America has been deprived of their livelihood more than Detroit. Yet, this is only the beginning. If allowed to continue 30 percent more of our jobs will be allowed to leave America, making our country an economic basket case over the next 20 years. The $25 billion that our federal government is about to loan to the states will help keep unemployment paying out and save some 40 states from going into bankruptcy. That will keep some Americans going but not for long.

Foreigners are buying less and less US dollar denominated assets, specifically Treasury and Agency bonds. As an example, Russia is buying Canadian dollar denominated assets. We ask how does the US fund its debt and its growing debt? The administration is planning for some sort of exchange of retirement funds for a government guaranteed annuity. That is so they can fund their enormous debt domestically as Japan has done for almost 20 years. Who would want to have a government guaranteed annuity from a bankrupt nation? It should also be noted that these retirement plans are still vastly under funded. What will happen if the Dow again revisits 6,600 and these funds’ assets again fall 40 percent? The collateral behind any annuity would be almost cut in half. We will have to see what the government comes up with but any kind of voluntary plan would in time become a mandatory plan. The funds may well be funneled to insurance companies, so they can take part of the action, but they will be buying Treasuries and Agencies with those funds, you can take that to the bank. One of the rumors floating about is that a new 5 percent tax will be foisted upon what is left of American taxpayers, in the form of forced savings, which would be in the form of an annuity. The need for funds to run the government is advancing by more than 10 percent a year, as government becomes bigger and bigger. We see no abatement in Marxist, socialist or fascists in government in their desire to spend to make government ever bigger.

The public is howling for blood, particularly from banking and Wall Street, and rightly so, but the main culprit was the Fed and in third place lies our government. In populist pose our President wants to tax Wall Street and banking for looting our economy. We might remind our President that these are the very people who financially put him in office. There is also talk emanating from the Oval Office of breaking up the banks, so that the too big to fail problem will be solved. This is the result of trillions of bailout funds for banks, which then post outsized mega profits, and little or nothing to assist the taxpayer. Investigations are going on to find out what caused the collapse of the system, but Americans believe they will go nowhere. The main brokerages and banks that caused most of the problems are the owners of the FED, the 12 regional Fed banks and the legacy, money center banks in NYC. How far do you have to investigate to find that out? Billions are being paid out to banks’ top employees, money they made with the assistance of a taxpayer bailout. The public believes it is unfair and they are right. As an example, Lloyd Blankfein, CEO of Goldman Sachs, who says, “He is doing God’s work,” will receive $100 million as the unemployment lines lengthen day by day. The President in his new budget says he will spend $100 billion creating jobs for Americans and $25 billion will be loaned to 40 states, so they can pay extended unemployment benefits. The gap between the haves and have-nots grows wider.

As a result of the changing of the guard in who rules Wall Street and Washington, JP Morgan Chase has again surged to the forefront and with them former Chairman of the Federal Reserve, Paul Volcker. This time his role will be more subdued then it was in the early 1980s. He cannot advocate a purging of the system as he did in the early 80s, because the financial system has been allowed to go too far. Any such purge would take the system down; something of that nature should have been done three years ago. Mr. Volcker wants banks to go back to taking deposits, making loans and to return to 8 to 10 to one leverage, not 40 to 70 to one. He believes banks should not have proprietary trading operations and that they should be transferred into unregulated hedge funds. That would solve very little. The change would be cosmetic. Then again isn’t that what government, Wall Street and banking are all about – subterfuge?

The administration and Congress refuse to deal with ever growing debt in spite of its decaying affect on our financial structure and banks and many other corporations are carrying two sets of books and refuse to deal with toxic assets. The Fed has purchased $900 billion of these toxic assets and they won’t tell us what they paid and from who they bought them from. Monetary growth continues and much of it sits on bank balance sheets having borrowed it from the Fed, where much of it lies gaining interest that is being paid by the taxpayer. Those are costs that are deducted from any profit the Fed makes that is returned to the Treasury. In addition, overall there is no transparency and the gambling by Wall Street and banking goes on unabated just as it has in the past - the sort of high velocity risk that caused all these problems in the first place. Much of what they do is off balance sheet. The next three years will see lenders buried in falling commercial real estate, so the death dance won’t end for some time to come.

The banks and hybrid brokerage-banks are all involved in flash trading, which is more appropriately known as front running. They continue to engage in naked shorting and the SEC stands by and does nothing. This gambling and criminal activity is funded by the Fed via very cheap loans. Then there is their business and relationship with totally unregulated hedge funds. The money center legacy banks are growing not shrinking and now control more than 70 percent of global banking assets. You add this all up and you find you have a financial oligarchy that is gaining in dominance not shrinking, as Wall Street would have you believe. While this transpires our President and Congress have doubled the federal deficit. The previous two administrations and the current one have taken debt from almost nothing to $12.3 trillion, which will be $14.3 trillion by December. Even the Fed’s debt has risen to $2.2 trillion having engorged themselves on bonds from Agencies, Treasuries and with toxic waste. The Fed is lying about their holdings; they purchased 80 percent of last year’s Treasury debt. What they did was stuff billions in purchases under other investors – household, which is ludicrous.

While the Fed went overboard lending, extending credit and buying paper, the government saw spending grow 13 percent, not counting $200 billion for wars as tax revenues fell 14%. Household debt only improved slightly but is still 165% of disposable income. That is as unsustainable as is the public making up 69.5% of GDP.

America is nowhere near solving its debt problems and in fact the situation is worsening. That means in the second half of the year we could see a drop in the US credit rating. This problem is true worldwide. US debt to GDP could be 85% by the end of the year with Germany at 80% and Ireland 83%. As you can see many nations have debt problems. All nations have and are continuing to debase their currencies versus gold, which will range higher as continued debauchery takes place.

The number of mortgage applications in the U.S. rose 21 percent last week to the highest level in more than a month as refinancing rebounded.

The Mortgage Bankers Association’s index rose to 620.7 in the week ended Jan. 29 from 513 in the prior week. The group’s refinancing gauge increased 26 percent, while the purchase gauge rose 10 percent.

The gain in purchase applications may be the first sign a renewed and expanded government tax credit is stirring demand after sales dropped late last year on expectations the incentive would expire. The market, faced with mounting foreclosures and 10 percent unemployment, may need continued government assistance to sustain gains in the second half of 2010.

“Both mortgage rates and house prices remain low, but the market lacks a catalyst for a vigorous recovery,” Michael Larson, an analyst at Weiss Research in Jupiter, Florida, said before the report. “We’re muddling through.”

The mortgage bankers group’s refinancing gauge increased to 2,854.8 from 2,260.4 the prior week. The purchase index rose to 237.8 from 215.6.

The average rate on a 30-year fixed loan fell to 5.01 percent from 5.02 percent the prior week, the group said. The rate reached 4.61 percent at the end of March, the lowest since the group’s records began in 1990.

At the current 30-year rate, monthly borrowing costs for each $100,000 of a loan would be $537.43, or about $17 less than a year ago, when the rate was 5.29 percent.

Mohamed A. El-Erian, whose firm runs the world’s biggest mutual fund, said the largest stock market decline in 11 months may worsen amid persistent U.S. joblessness and economic growth that trails analysts’ forecasts.

Investors have wrongly priced in an “orderly” withdrawal of stimulus measures, a rebound in bank lending and coordinated government policy to restore growth, the chief executive officer of Pacific Investment Management Co. wrote in a Bloomberg News column. That means Wall Street projections for gains in 2010 may prove incorrect and prices will slump, he said.

“Investors may well find that January’s global equity sell-off was just a precursor to a disappointing year for several asset classes,” El-Erian, 51, wrote. “The global financial crisis has undermined growth and job creation; it has clogged many of the pipes that allocate funds to productive uses; and it has rapidly taken public debt and the budget deficit to worrisome levels.”

A “safe harbor” agreement that protects the underlying assets of securities held by failed banks from being seized by U.S. regulators may be kept in place beyond March, a Federal Deposit Insurance Corp. official said.

FDIC officials had wanted to exempt all assets securitized through March 31 to ensure a smooth transition to a new accounting rule that rattled credit markets because of the prospect of more aggressive asset seizures.

“I think it’s safe to say that we will need to extend the March 31 safe harbor period,” Michael Krimminger, a special policy adviser to FDIC Chairman Sheila Bair, said yesterday at the American Securitization Forum’s annual conference near Washington.

New accounting rules sparked concern among bond buyers and rating firms that the FDIC would be able to tap the pools of debt underlying credit-card securities to protect its deposit insurance fund after banks fail. The concern halted sales of such bonds in October and early November after issuance totaled $10.7 billion in September, according to data compiled by Bloomberg.

Policy makers are seeking to transform the almost $4 trillion U.S. market for securitizations not created by government-supported entities. Risky lending enabled by asset- backed bonds and investor losses on debt including subprime- mortgage securities contributed to a collapse in the world’s economies.

The US economy appears to be positioning itself to make the vital turn to positive job growth by beating market expectation only losing 22,000 positions in January while forecasts had called for 35,000 persons to join the unemployment roles. 

January's figures mark the lowest job destruction recorded since February 2008 when the recession pushed the job market into negative numbers as well as the eleventh straight month of a slowdown in the number of jobs shed.

December's reading was also revised upwardly to -69,000 from the originally reported -84,000.

Employers announced 71,482 planned job cuts last month, up 59 percent from December and the most monthly job cuts since August, according to the report from Challenger, Gray & Christmas, Inc, a global outplacement consultancy.

"The increase in January is not necessarily a sign of a recession relapse. It is not uncommon to see a surge in job-cut announcements to begin the year," said John Challenger, chief executive of Challenger, Gray & Christmas, in a statement.

"Companies are making adjustments based on the previous year's results and the outlook for the year ahead. The beginning of the year is particularly rough on retail workers, as these employers enter one of the slower sales periods of the year," he said.

The January job cuts were up from 45,094 in December and marked the first increase since July. December had marked the fewest job cuts in 24 months.

Still, the planned layoffs remain well below year-ago levels, when planned job cuts hit 241,749 in January 2009, the peak of downsizing activity in the recession.

Technology wages in Silicon Valley, home to Google Inc. and Intel Corp., have declined almost 14 percent since 2000, a sign that the region has yet to recover fully from the dot-com bust.

The average compensation for technology workers was $103,850 in 2008, down from $120,064 in 2000, with the biggest drops caused by the falling value of stock-based pay, the U.S. Bureau of Labor Statistics said today in a report. Average wages increased to $105,500 in the first half of 2009.

The Internet bust triggered job cuts across Silicon Valley, with semiconductor makers, Internet startups and telecommunications companies taking the largest losses. Silicon Valley, which runs from San Francisco to San Jose, will probably be slow to recover from the latest recession, said Amar Mann, an economist with the Bureau of Labor Statistics.

“We agree with more of a U shape, a gradual rise,” Mann said today at a press conference. Declines in venture capital investment resulted in slow technology-job growth in past economic cycles, a pattern that the current recovery will likely follow, he said.

Silicon Valley has lost 134,000 technology jobs since 2000, including 30,000 during the nine months ended in June. The six- county region now has about 410,000 technology jobs, Mann said. The area lost jobs from 2000 to 2004, then added positions before the latest recession, he said. Technology accounts for about one in seven local jobs.

The end of a Federal Reserve program that helped unlock credit markets is spurring sales of asset- backed bonds with relative yields five times wider than on debt secured by car loans.

The expiration of the Fed’s Term Asset-Backed Securities Loan Facility is driving companies to sell bonds tied to loans that would otherwise require higher yields. Borrowers are offering bonds backed by subprime auto loans, mortgage-servicing payments and assets that have proved hard to sell after the worst credit seizure since the Great Depression.

“What we are seeing in the last couple of rounds are issuers in non-traditional asset classes and weaker issuers looking to fund as much as they can before the window closes,” said James Grady, a managing director at Deutsche Asset Management in New York. The firm has $240 billion in assets under management, including asset-backed securities.

Ally Bank, a Midvale, Utah-based unit of GMAC Inc., is selling $750 million in so-called floorplan securities backed by payments on loans that finance cars on lots. Nissan Motor Co., in Yokohama, Japan, issued $900 million of the debt last week. Sales total $3.35 billion this year, including deals being prepared, compared with $3.9 billion all of last year, according to Informa Global Markets in New York.

The bonds offer investors higher relative yields because the collateral is considered riskier. Ally Bank’s sale of AAA debt backed by floorplans may yield 1.75 percentage points more than swap rates, compared with a spread of 0.35 percentage point for top-rated auto-loan bonds, according to Bank of America Corp. data.

The annual revision of US employment to be issued tomorrow, February 5, will show that the US labor market was even worse off than was known during the deepest stretch of the recession when it shed 824,000 jobs from April 2008 to March 2009, reports Bloomberg. This would make it the worst 12-month period for the American worker in 18 years.
The Labor Department's annual revision adjusts the monthly figures which, according to Bloomberg, suffer a flaw in assuming that the number of company closings is offset by new ones opening, the so-called "birth/death model". This means that in times of a deep economic downturn when the number of companies going under greatly outstrips the number of those starting up, the monthly model gives a positively distorted vision of the labor market.

Service industries in the U.S. expanded less than anticipated in January, a sign the recovery will be slow to spread from manufacturing to the rest of the economy.

The Institute for Supply Management’s index of non- manufacturing businesses, which make up almost 90 percent of the economy, climbed to 50.5 from 49.8 in December, figures from the Tempe, Arizona-based group showed today. Readings above 50 signal growth. Other reports showed firings eased last month.

The Obama administration's plan to cut more than $1 trillion from the deficit over the next decade relies heavily on so-called backdoor tax increases that will result in a bigger tax bill for middle-class families.

In the 2010 budget tabled by President Barack Obama on Monday, the White House wants to let billions of dollars in tax breaks expire by the end of the year -- effectively a tax hike by stealth.

The US Treasury reports withheld taxes of $140.381B for Jan 2010; FYTD is $547.710B. For January 2009 withheld taxes are $151.285B; FYTD is $597.593B. Jan 2010 withheld taxes are down 7.2% y/y; FYTD is down 8.35%. January NFP should continue to show job losses. But it could be crafted to show unrealistic strength like the ridiculous Q4 GDP of 5.7%, or seasonally adjusted employment surveys.

Fifteen months after Fannie and Freddie were effectively nationalized; neither the Obama administration nor Congressional leaders see a quick solution to one of the thorniest problems in.

American finance: how to fix the twin mortgage giants without choking the flow of credit to homeowners and dealing a blow to a still-fragile housing market. But for now, the only real consensus is that no one quite knows what to do with the companies.

Just as the recovery of securitisation around the world was gathering momentum, the asset class is facing another disastrous blow. This time, its nemesis is the judge handling the bankruptcy of Lehman Brothers, who announced a ruling last week that threw out a crucial assumption about the subordination of failed swap counterparties.

A swathe of deals now face downgrades and new deals may be much harder to sell. William Thornhill and Matthew Davies report.

Last week a US bankruptcy court passed a judgment that threatens the future of the structured finance industry. If upheld, the ruling would have "profound effects on structured finance transactions because it challenges long-held assumptions relating to the subordination of swap termination payments to a swap counterparty following a swap counterparty bankruptcy", said Moody's.

US law firm Cleary Gottlieb Steen & Hamilton shares those concerns. "This case creates significant uncertainty regarding the enforceability of market-standard subordination provisions and threatens the legitimate commercial expectations of CDO noteholders and other participants in structured finance transactions," the firm said in a commentary explaining the significance of the ruling.

In our opinion, the conditions examiners observed during a 2007 examination provided FRB Atlanta with an opportunity to be more aggressive in addressing Neighborhood’s high speculative real estate concentration, the report said.

Zero Hedge on Obama’s proposed FY2011 budget: We are confident that not one politician will read the whole thing from cover to cover. We won't either. Not because we don't care about what's in it, but because we are much more concerned with what is not included, namely $2.8 Trillion and $1.9 Trillion of MBS guaranteed portfolios at Fannie and Freddie, and an additional $782 billion and $809 billion in company debt outstanding for the two GSEs, respectively.

This amounts to a total of $6.3 trillion in liabilities, which should be counted toward the budget. And yet, oddly, the error-checker somehow made this rather justifiable omission: after all if we were to look at a number which written out looks as follows $6,264,000,000,000.00, we would also probably just avoid it - it is somewhat difficult to hide a number that big even in the 1,420 pages of the budget's appendix. That's ok, we are here to remind them about the omission, and also to remind Mr. Orszag, who himself, in that long ago 2008, espoused that these companies should be put on the Federal Budget.

The unemployment rate in the U.S. unexpectedly declined in January to 9.7 percent, the lowest level since August, while payrolls dropped as companies boosted worker hours and overtime instead of taking on new hires.

Employment fell by 20,000 last month, reflecting a plunge in construction jobs and a drop in state and local government hiring, figures from the Labor Department in Washington showed. Economists surveyed by Bloomberg News forecast a gain. Manufacturing employment, factory hours and overtime increased.

Payrolls were forecast to increase by 15,000, according to the median estimate of 85 economists surveyed by Bloomberg News. Estimates ranged from a decrease of 100,000 to a gain of 100,000. The jobless rate fell from 10 percent in December. It was projected to hold there. Forecasts ranged from 9.8 percent to 10.3 percent.

The survey of households showed employment increased by 541,000 workers last month and the number of people in the labor force rose. The gain brought the participation rate, or the share of the population in the labor force, up to 64.7 percent in January from 64.6 percent.

In early 2009, the Obama administration’s economic advisers forecast the $787 billion stimulus plan would keep unemployment below 8 percent.

Employment declined a revised 150,000 in December and increased 64,000 a month earlier. The revisions subtracted 5,000 from payroll figures previously reported for those two months.

Government payrolls decreased by 8,000 in January. State and local governments reduced employment by 41,000 during the month, while the federal government added 33,000. The increase at the federal level reflected in part the hiring of temporary workers to conduct the 2010 census.

The Labor Department today also issued the annual benchmark update showing the economy lost 930,000 more jobs than previously estimated in the 12 months ended March 2009.

With this report, the Labor Department for the first time issued data on earnings and hours for all workers. Before today, the figures reflected changes in earnings and hours for production staff.

The average workweek for all workers rose to 33.9 hours in January from 33.8 hours the prior month. The increase signals companies making more part-time workers full-time employees. The number of part-time workers for economic reasons dropped to 8.3 million in January from 9.2 million the previous month.

Average weekly earnings increased to $761.06 from $757.46.

Factory payrolls increased 11,000 in January, the biggest gain since April 2006, after falling 23,000 in the prior month. The median forecast by economists called for a drop of 20,000.

Payrolls at builders fell 75,000 last month, after decreasing 32,000. Financial firms reduced payrolls by 16,000, after a 7,000 decline the prior month.

Service industries, which include banks, insurance companies, restaurants and retailers, added 40,000 workers after subtracting 96,000 in December.

The number of temporary workers increased 52,000 in January. Payrolls at temporary-help agencies often turn up before total employment because companies prefer to see a steady increase in demand before taking on permanent staff.

Retail payrolls increased by 42,000 after an 18,000 decline.

The so-called underemployment rate -- which includes part-time workers who’d prefer a full-time position and people who want work but have given up looking -- fell to 16.5 percent from 17.3 percent.

The economy grew at a 5.7 percent annual rate in the fourth quarter, the biggest gain in six years, according to data from the Commerce Department released last week.

The government revised its job loss numbers for November, saying the economy gained 64,000 in that month rather than 4,000. But the numbers in December were much worse than previously stated; the economy lost 150,000 jobs rather than the 85,000 originally reported.