Sunday, February 21, 2010

The future looks very bleak

The crash of the US economy has begun. Although the reasons for the now-accelerating economic fiasco have been in place for decades, the chickens are only now coming home to roost. The murder weapons used to kill the economy are "free trade," outsourcing, illegal immigration, special work visa programs, and unrestrained government spending, which have all contributed to the death of what was just a few decades ago the economic powerhouse of the world.

The balance of trade between most of our trading partners in this so called system of "free trade" is completely lopsided. For instance, the flood of products which are imported to the US just from China alone, in contrast to US exports to China, has created a trade deficit in the trillions of dollars. This sort of one-way trade is unsustainable, and if nothing drastic is done to address this situation, America's economy will be reduced to that of a third world country.

The first indicators of economic collapse have already manifested themselves in the housing industry, and the big three American auto makers. Teetering on bankruptcy, they will be the first of the large economic dominos to fall, and the rest will follow in short order. As a consequence, something on the scale of another Great Depression may be a possibility.

America has been scammed big-time over the years. The corporate wheelers and dealers, with the complicity of their bought and paid for political whores in Washington, have sold the American working man down the river, and the general welfare of the entire country as well.

Reacting to mounting criticism of the present economic status quo, the corporate crooks and their political hit men blame the miserable economic situation on their victims -- the greedy American worker, the communist labor unions, the demand of Americans to have clean air and water, and worst of all the bunker mentality of the American people to put up fences against free trade, protectionism. This unenviable anti business situation, they say, was instrumental in forcing harried U.S. corporations to locate elsewhere in more business friendly areas of the world.

Because these same corporations own most of the mass media in America, very little if any blame at all is placed upon the multi billion dollar corporations whose decisions, based entirely on greed, have set off these disastrous events in the first place.

Coinciding with the mounting economic problems of the nation is that of a growing threat to Life, Liberty, and the Pursuit of Happiness by a group of unelected conspirators who have seized control of Americas highest political office. This group of traitors, with Bush crime family member and usurper of the Office of President, George Walker Bush, has ceaselessly undermined the authority of the Constitution and laws of the United States.

Since the installation of this cabal, a series of events have unfolded not seen since Hitler's burning of the Reichstag. The attack on the World Trade Center in New York and the Pentagon in Washington DC, followed by the anthrax threat to Congress, was carefully contrived to give the Bush Cabal the support necessary to begin military operations to secure the resources of the Mideast, and to pass the PATRIOT Act and other draconian legislation, bestowing upon this illegal regime the power to spy, arrest, and torture anyone, including American citizens, they deem as enemy combatants.

With the economy failing, and the fighting in Iraq and Afghanistan continuing with no end in sight, the newly-elected Congress sits on its hands, unwilling to act. Nor are they moving to remove the 9/11 conspirators and war criminals from the White House.

This is not only a bleak scenario for the American people but for the entire world as well. Emboldened by the timidity of the new Congress, the Bush cabal is moving ahead with their plans for war with Iran, which will not be long in coming.

Although I would like to end my remarks on a positive note, at this moment I do not see anything good happening in the near future. Despite the growing disenchantment and suspicion of Bush and his policies, he and his cabal are still in firm control of the Country.

Further, it is foolish to think that after Bush leaves office, the next occupants of the White House will set things straight. This is not going to happen.

The fact of the matter is that our Government is no longer in charge of matters, but operates as a rubber stamp for those parasitic entities which have infiltrated into the core of government. In reality, policy in Washington is not determined by the wants and needs of the American people, but by the whim of the wealthy and powerful elite whose seemingly inexhaustible riches and thirst for more riches supercedes everything else. These corrupt and treasonous individuals within the halls of power will stop at nothing, including war and murder, in order to attain their diabolical ends.

We should also not delude ourselves that an economic collapse will somehow quicken the removal of the cancer which is hastening the demise of our Republic. Just as they have used the threat of terrorism to cow the people, so will they use economic failure to justify a further tightening of the screws. It is going to be a long hard struggle to rid ourselves of this evil, make no mistake about it.

The Future of the Euro in Question

At the beginning of this year, I wrote a Money and Markets column entitled “Will the Euro Become the Most Hated Currency for 2010?

At that time, the euro/dollar exchange rate was about 5 percent off of its 2009 highs. And we were just months removed from hearing the constant and broadly espoused opinions suggesting the euro would become the world’s next primary reserve currency — replacing the troubled U.S. dollar.

But the focus of global investors was starting to shift …

Concerns were beginning to turn away from the “minor hiccup” of a debt-restructuring surprise in Dubai, and toward the fiscal deficit problems in the Eurozone — specifically Greece.

Meanwhile, the euro bulls were still beating their drums …

The overall consensus was still advertising the pullback in the euro as an attractive buying opportunity. In fact, the median forecast of 43 economists polled by Bloomberg was calling for the euro to trade at 1.51 to the dollar by the end of March (a little more than a month from now).

But as I pointed out in my January 2 column, this type of market scrutiny surrounding sovereign debt can snowball quickly. In short, these problems have a history of being contagious and spreading throughout the world.

Since then …

The dollar doesn’t look so bad! And the euro has dropped another 5 percent and looks increasingly vulnerable to a break-up, or at least a structural change, of the monetary union. To sum up, it’s a decisive moment for the future of the common currency.

No-Win Situation …

With Portugal, Ireland, Italy and Spain all under the hot spotlight and the Greek situation worsening, European leaders stepped in last week in an attempt to stem the negative pressure on the Greek bond market and the euro. They said they would support Greece — a verbal commitment to do whatever was necessary. Yet they gave no details on how.

Nevertheless, a bail-out of a fellow Economic and Monetary Union (EMU) member country is a direct violation of rules set forth in the Stability and Growth Pact, the principles upon which the euro was built.

When questioned over the past month, the European Central Bank and European leaders consistently rejected any notions of a bail-out. But it appears they’ve ultimately conceded to the danger that Greece is presenting to the stability of the monetary union.

Perhaps this is why …

The Bank of International Settlements shows that European banks have $2.1 trillion exposure to sovereign debt of the weakest EMU countries (Portugal, Ireland, Greece and Spain). And it’s my guess that that exposure has only been exacerbated by the European Central Bank’s answer to “extraordinary monetary policy.”

Instead of overtly buying their own government debt, as is done by the U.S., Japan, the UK and many other countries, the European Central Bank’s liquidity strategy was to provide unlimited easy money to European banks — unlimited 1-percent funds for one year.

What did those banks do with the money? They bought up sovereign debt of the weak-link EU members, i.e. backdoor quantitative easing.

Credibility Damaged …

Regardless of the outcome, the euro’s creditability has taken a major hit.

First off, the integrity of the EMU is diminished when fiscal constraints are ignored. Secondly, the enforcement of those policies has been exposed as unenforceable. So countries have no incentive to responsibly manage their fiscal situation.

Instead, they can simply take cover under the broader monetary union, without suffering an attack on their currency.

Irreparable Moral Hazard …

Europe cannot afford to rescue Greece.” — Otmar Issing
“Europe cannot afford to rescue Greece.” — Otmar Issing

This week, former executive board member for the European Central Bank, Otmar Issing, wrote an op-ed piece in the Financial Times. He warned against a Greek bailout and, further, questioned the viability of the euro.

Here’s what he said …

“Starting monetary union without having established a political union was putting the cart before the horse.

“Once Greece was helped, the dam would be broken. A bail-out for the country that broke the rules would make it impossible to deny aid to others.”

Confidence Broken …

Just as European leaders were trying to stem the tide of negative sentiment and the sense of urgency and imminence surrounding the Greece situation, the Greece Finance Minister said publicly that they’re trying to change the “course of the Titanic” … an ominous statement for a situation so central to the future of the euro.

Then to add to the Eurozone’s problems, a controversy recently broke out exposing off-balance-sheet funding that Greece engaged in through “special currency swap” agreements with Goldman Sachs and other investment banks.

Several Eurozone countries are under investigation for their currency swap agreements.
Several Eurozone countries are under investigation for their currency swap agreements.

These special currency swaps appear to have allowed Greece to hide debt to gain entry into the currency bloc in 2001. Furthermore, other weak Eurozone countries are now being scrutinized for participating in similar accounting shenanigans.

To Sum It Up …

I’ve warned repeatedly that following such a widespread global economic crisis, synchronized with a financial crisis, the looming damage and time bombs would likely linger.

That’s why I’ve been recommending aggressive, long dollar exposure and short exposure to those currencies most vulnerable to global financial market shocks.

The global economic crisis has left the Eurozone with uneven economic performance. Some countries are recovering, many are not.

And that means countries with damaged balance sheets and a bleak outlook for growth are stuck. With a one-size fits all monetary policy and currency, they lack critical tools to work their way out.

So you can expect more problems ahead for the euro.



Board votes to close 21 of 30 state parks by June

The Arizona State Parks Board voted unanimously Friday to begin shuttering state parks, a move that will leave the parks system with fewer than one third of its properties open by June 3.

In an emotional public meeting that lasted nearly six hours, parks-board members heard from dozens of residents from across the state, pleading to keep the parks open despite steep budget cuts.

Local elected officials warned of dire economic consequences to their towns. Sheriff's deputies said they will no longer be able to patrol some lakes. Park volunteers offered to run the parks for free.

But board members said they had no choice but to close 21 of 30 parks and recreation areas following last month's special session of the Legislature, in which $8.6 million was cut from their budget. That was on top of $34 million in cuts in the previous year.

"Unfortunately, we don't have options," said Walter Armer, a member of the board.

Among the most popular parks slated for closure are Roper Lake, which drew 86,000 visitors in 2008, and Picacho Peak, which drew more than 98,000. The parks that will remain open generate revenue for the system, such as Slide Rock and Kartchner Caverns.

The parks system records more than 2.2 million total visits a year, according to the Arizona State Parks Department.

Armer added that the board would work to reopen the parks as soon as it had the funds to do so. Several proposals are making the rounds in the Legislature, including one that would add a roughly $9 fee to the cost of registering a vehicle. The money would pay for park operations, and Arizonans would then be able to get into any state park without paying an additional fee.

The proposal with the most support at the moment would refer the question of whether to impose that fee to voters, said Jay Ziemann, the department's legislative liaison.

Wittmann resident Chrissy Kondrat-Smith took her daughter, Sydney, to every state park one recent summer. The 4,000-mile journey inspired Sydney to become a junior park ranger at Red Rock State Park, which is slated to close.

Sydney, 8, recorded a video letter to Santa Claus over the holidays, asking him to keep the parks open.

Sydney began crying when she learned the parks would close. She couldn't understand why the parks can't stay open with volunteer labor, her mother said.

Others expressed concern about what will happen to the parks once staff members aren't around to protect them. Although the parks board does intend the closed parks to be patrolled, it remains unclear how many staffers will be available.

Charles Adams, a professor of archaeology at the University of Arizona, warned that closed parks would become magnets for vandals and thieves. Adams expressed particular concern for the Homolovi Ruins, an archaeological treasure that was brought into the parks system in part to protect it from theft.

"There is great concern in the archaeological community as some of these close," Adams told the board. "They are extremely vulnerable."

As the meeting concluded, members of the parks staff received word that Gov. Jan Brewer's budget proposal released Friday would make further reductions to the parks budget, which could make Arizona the first state in the nation to close its entire parks system.

"We have a huge collective fight on our hands," said Arlan Colton, a member of the board. "And that's our fight for survival."

World oil supplies are set to run out faster than expected, warn scientists

Scientists challenge major review of global reserves and warn that supplies will start to run out in four years' time

Scientists have criticised a major review of the world's remaining oil reserves, warning that the end of oil is coming sooner than governments and oil companies are prepared to admit.

BP's Statistical Review of World Energy, published yesterday, appears to show that the world still has enough "proven" reserves to provide 40 years of consumption at current rates. The assessment, based on officially reported figures, has once again pushed back the estimate of when the world will run dry.

However, scientists led by the London-based Oil Depletion Analysis Centre, say that global production of oil is set to peak in the next four years before entering a steepening decline which will have massive consequences for the world economy and the way that we live our lives.

According to "peak oil" theory our consumption of oil will catch, then outstrip our discovery of new reserves and we will begin to deplete known reserves.

Colin Campbell, the head of the depletion centre, said: "It's quite a simple theory and one that any beer drinker understands. The glass starts full and ends empty and the faster you drink it the quicker it's gone."

Dr Campbell, is a former chief geologist and vice-president at a string of oil majors including BP, Shell, Fina, Exxon and ChevronTexaco. He explains that the peak of regular oil - the cheap and easy to extract stuff - has already come and gone in 2005. Even when you factor in the more difficult to extract heavy oil, deep sea reserves, polar regions and liquid taken from gas, the peak will come as soon as 2011, he says.

This scenario is flatly denied by BP, whose chief economist Peter Davies has dismissed the arguments of "peak oil" theorists.

"We don't believe there is an absolute resource constraint. When peak oil comes, it is just as likely to come from consumption peaking, perhaps because of climate change policies as from production peaking."

In recent years the once-considerable gap between demand and supply has narrowed. Last year that gap all but disappeared. The consequences of a shortfall would be immense. If consumption begins to exceed production by even the smallest amount, the price of oil could soar above $100 a barrel. A global recession would follow.

Jeremy Leggett, like Dr Campbell, is a geologist-turned conservationist whose book Half Gone: Oil, Gas, Hot Air and the Global Energy Crisis brought " peak oil" theory to a wider audience. He compares industry and government reluctance to face up to the impending end of oil, to climate change denial.

"It reminds me of the way no one would listen for years to scientists warning about global warming," he says. "We were predicting things pretty much exactly as they have played out. Then as now we were wondering what it would take to get people to listen."

In 1999, Britain's oil reserves in the North Sea peaked, but for two years after this became apparent, Mr Leggett claims, it was heresy for anyone in official circles to say so. "Not meeting demand is not an option. In fact, it is an act of treason," he says.

One thing most oil analysts agree on is that depletion of oil fields follows a predictable bell curve. This has not changed since the Shell geologist M King Hubbert made a mathematical model in 1956 to predict what would happen to US petroleum production. The Hubbert Curveshows that at the beginning production from any oil field rises sharply, then reaches a plateau before falling into a terminal decline. His prediction that US production would peak in 1969 was ridiculed by those who claimed it could increase indefinitely. In the event it peaked in 1970 and has been in decline ever since.

In the 1970s Chris Skrebowski was a long-term planner for BP. Today he edits the Petroleum Review and is one of a growing number of industry insiders converting to peak theory. "I was extremely sceptical to start with," he now admits. "We have enough capacity coming online for the next two-and-a-half years. After that the situation deteriorates."

What no one, not even BP, disagrees with is that demand is surging. The rapid growth of China and India matched with the developed world's dependence on oil, mean that a lot more oil will have to come from somewhere. BP's review shows that world demand for oil has grown faster in the past five years than in the second half of the 1990s. Today we consume an average of 85 million barrels daily. According to the most conservative estimates from the International Energy Agency that figure will rise to 113 million barrels by 2030.

Two-thirds of the world's oil reserves lie in the Middle East and increasing demand will have to be met with massive increases in supply from this region.

BP's Statistical Review is the most widely used estimate of world oil reserves but as Dr Campbell points out it is only a summary of highly political estimates supplied by governments and oil companies.

As Dr Campbell explains: "When I was the boss of an oil company I would never tell the truth. It's not part of the game."

A survey of the four countries with the biggest reported reserves - Saudi Arabia, Iran, Iraq and Kuwait - reveals major concerns. In Kuwait last year, a journalist found documents suggesting the country's real reserves were half of what was reported. Iran this year became the first major oil producer to introduce oil rationing - an indication of the administration's view on which way oil reserves are going.

Sadad al-Huseini knows more about Saudi Arabia's oil reserves than perhaps anyone else. He retired as chief executive of the kingdom's oil corporation two years ago, and his view on how much Saudi production can be increased is sobering. "The problem is that you go from 79 million barrels a day in 2002 to 84.5 million in 2004. You're leaping by two to three million [barrels a day]" each year, he told The New York Times. "That's like a whole new Saudi Arabia every couple of years. It can't be done indefinitely."

The importance of black gold

* A reduction of as little as 10 to 15 per cent could cripple oil-dependent industrial economies. In the 1970s, a reduction of just 5 per cent caused a price increase of more than 400 per cent.

* Most farming equipment is either built in oil-powered plants or uses diesel as fuel. Nearly all pesticides and many fertilisers are made from oil.

* Most plastics, used in everything from computers and mobile phones to pipelines, clothing and carpets, are made from oil-based substances.

* Manufacturing requires huge amounts of fossil fuels. The construction of a single car in the US requires, on average, at least 20 barrels of oil.

* Most renewable energy equipment requires large amounts of oil to produce.

* Metal production - particularly aluminium - cosmetics, hair dye, ink and many common painkillers all rely on oil.

Alternative sources of power


There are still an estimated 909 billion tonnes of proven coal reserves worldwide, enough to last at least 155 years. But coal is a fossil fuel and a dirty energy source that will only add to global warming.

Natural gas

The natural gas fields in Siberia, Alaska and the Middle East should last 20 years longer than the world's oil reserves but, although cleaner than oil, natural gas is still a fossil fuel that emits pollutants. It is also expensive to extract and transport as it has to be liquefied.

Hydrogen fuel cells

Hydrogen fuel cells would provide us with a permanent, renewable, clean energy source as they combine hydrogen and oxygen chemically to produce electricity, water and heat. The difficulty, however, is that there isn't enough hydrogen to go round and the few clean ways of producing it are expensive.


Ethanol from corn and maize has become a popular alternative to oil. However, studies suggest ethanol production has a negative effect on energy investment and the environment because of the space required to grow what we need.

Renewable energy

Oil-dependent nations are turning to renewable energy sources such as hydroelectric, solar and wind power to provide an alternative to oil but the likelihood of renewable sources providing enough energy is slim.


Fears of the world's uranium supply running out have been allayed by improved reactors and the possibility of using thorium as a nuclear fuel. But an increase in the number of reactors across the globe would increase the chance of a disaster and the risk of dangerous substances getting into the hands of terrorists.

RBS braced for bonus row with planned £1.3bn payout

• Taxpayer-owned bank to announce results on Thursday
• HSBC bosses push for pay rises of up to 30%

Royal Bank of Scotland

RBS is expected to announce a bonus pool of £1.3bn next week Photograph: Shaun Curry/AFP/Getty Images

Loss-making Royal Bank of Scotland is braced for a row over City pay next week when it is expected to admit that its bonus pot for 22,000 investment bankers has reached £1.3bn – against last year's £1bn.

The Edinburgh-based bank is awaiting approval from UK Financial Investments, the body that looks after the taxpayer's 84% stake in the bank, for its proposed bonus pool. Chancellor Alistair Darling has yet to receive a formal presentation about the proposals, which he can veto. He has already said that bonuses cannot be paid in cash to anyone earning more than £39,000, which would affect most of the workforce in the investment bank.

RBS, which a year ago announced the biggest loss in British corporate history, is on Thursday expected to show that its losses have narrowed.

Lloyds Banking Group, in which the taxpayer has a 43% stake, reports on Friday and is also expected to report a heavy loss. Estimates for the deficit, which will be caused by impairment charges on loans granted by HBOS before it was rescued by Lloyds, range from £3bn to £11bn.

The heads of both banks are facing pressure to follow John Varley and Bob Diamond, the top two executives at Barclays, and refuse any bonuses this year. Under terms imposed by the Treasury neither RBS chief executive, Stephen Hester, nor his Lloyds counterpart, Eric Daniels, are permitted to take cash payouts, and any bonuses they receive must be paid in shares in three years' time.

City sources reckon the Barclays bosses' move is being scrutinised by the executive team at HSBC despite attempts by the bank to convince shareholders that they should be awarded pay rises – of up to 30% – this year.

Michael Geoghegan, the chief executive, and finance director Douglas Flint are thought to be among the executives that HSBC's remuneration committee believes should receive a rise.

Some major investors have told the remuneration committee that they do not believe pay rises on such a large scale are warranted and that the bank needs to reconsider its plans.

The Lloyds bonus pool may attract less controversy as the bank does not have an investment banking arm and largely needs to pay bonuses to its army of staff working in high street branches, where the average payout is £1,000. It is thought that its bonus pool is around £200m, considerably less than RBS's proposed amount.

Hester has already said the pressure from UKFI to restrict the way bonuses are paid has caused an exodus of staff.

It is thought that the proposal sent to UKFI would involve the bonuses being paid in shares worth £1.3bn, although some of the bank's debt may need to be used to make some of the payments, which are likely to be deferred over three years.

While the bank is prohibited from paying cash bonuses, the recipients of shares may be able to sell them shortly after receiving them – turning them into cash.

Children at top hospital had to wash in buckets

Sick children at a leading hospital were forced to wash in buckets for almost a month after bosses failed to fix the hot water supply.

More than 100 youngsters, some of them seriously ill, were left without hot running water.

Parents were forced to carry hot water in buckets from a single working tap in a sluice room so their children could wash. Youngsters suffering from brain tumours and cystic fibrosis were among those affected.

Water issue: Children were washed from sick bowls at King's College Hospital

Water issue: Children were washed from sick bowls at King's College Hospital

Despite complaints from patients and staff, management at King's College Hospital, South London, failed to fix a broken pump - and left half the children's wards without hot water for weeks.

One mother said she saw infants standing in buckets to be washed while parents carried hot water to patients' bedsides in 'sick bowls'.

Gemma Dadgostar, whose 18-month-old son Aiden was being treated for cystic fibrosis at the hospital in January, said she was shocked that management had failed to solve the problem by the time he was discharged on February 8.

'I thought it was absolutely outrageous,' Mrs Dadgostar, 29, said. 'Hot water is an absolutely basic necessity.

'Aiden was just recovering from surgery and the last thing he needed was to be bathing in lukewarm water.

'We had to carry hot water to his bedside in cardboard sick bowls. Other parents were washing their children in buckets. It was bizarre to see. In a hospital of that size it's unbelievable.'

Mrs Dadgostar said that when she complained to the hospital's Patient Advice and Liaison Services they said the problem would be fixed by the following week or the ward would close.

Aiden's grandmother Nadine Helsdown said the scene was 'absolutely disgusting' when she visited the hospital last month.

'Other parents with children on the ward were absolutely scandalised,' Mrs Helsdown, 51, said. 'The ward manager was disgusted all the staff were. They asked and asked and tried their best to sort it out, but nothing was done.

'Two bathrooms, five side wards and the toilet in Aiden's ward were affected - none had hot water. A lot of the time the ward was full . . . some of the children there had brain tumours.'

King's College is one of 18 hospitals named in a report by the Department of Health this month for failing to comply with more than ten orders to prevent people dying from accidents involving drugs, surgery or equipment.

Katherine Murphy, director of the Patients' Association, last night demanded a full inquiry into why the hospital did not act sooner. She said: 'This is absolutely appalling and shows a completely cavalier attitude to patient safety.'

The hospital said: 'We experienced intermittent problems with the hot water supply on three paediatric wards during January and February.

'The underlying problem was very difficult to trace, but it has now been identified and rectified. We would like to apologise to patients and their families who were affected by the problem.'

Mass protests greet Sarkozy visit to Haiti

French President Nicolas Sarkozy traveled for a one-day visit to Haiti on February 17, amid rising popular opposition to the Western-backed Préval government and international tensions over how to rebuild the country. The US military occupied Haiti after the devastating January 12 earthquake that killed over 200,000 people, wounded over 250,000, and destroyed much of the country’s infrastructure.

Sarkozy, the first French head of state ever to visit Haiti, was greeted with street protests by thousands of Haitians demanding the return of elected President Jean-Bertrand Aristide. Ousted by a US- and French-backed coup in 2004, Aristide was flownto the Central African Republic, a former French colony. Aristide now lives in exile in South Africa. President René Préval, a former prime minister under Aristide in the 1990s, came to power in 2006 in elections supervised by the provisional government of Boniface Alexandre that was installed by the coup.

Préval tried to address the crowd outside the presidential palace. However, crowds shouted him down, and Préval left in a luxury Jeep, surrounded by bodyguards.

Protesters held pictures of Aristide aloft and demanded that Sarkozy repay $21 billion paid to France by Haiti, a former French slave colony. In 1825 warships under the orders of France’s King Charles X—soon to be toppled by the 1830 revolution—forced Haiti to repay 90 million gold francs in exchange for its freedom. In 1794 France's revolutionary government had acknowledged the overthrow of slavery in Haiti by the slave army under the leadership of Toussaint L'Ouverture. The armed ex-slaves repulsed Napoleon's military expedition of 1803, which aimed to restore them to slavery, and subsequently declared the independence of Haiti in 1804.

The ransom paid to Charles X, the equivalent of $21.7 billion today, devastated Haiti’s economy and took 122 years to repay. In comparison, it is estimated that the post-earthquake reconstruction of Haiti will cost $14 billion—which is also less than the cost of one year of the upper-class tax cut Sarkozy pushed through upon coming to office in 2007.

Sarkozy’s visit came amid steps to transform Haiti into a military dictatorship jointly run with foreign occupation forces and aid agencies. Haiti’s legislative elections, previously scheduled for February 28-March 3, have been indefinitely postponed.

The US in particular is preparing to take over the Haitian government. On February 11 the Miami Herald reported that the US State Department had presented top Haitian officials with plans for an Interim Haiti Recovery Commission in early February. The Herald, which had seen a copy of the plan, noted the commission’s "top priority" is to "create a Haitian Development Authority to plan and coordinate billions in foreign assistance for at least 10 years."

The Herald wrote that the commission would be co-chaired by the Haitian prime minister and "a distinguished senior international figure engaged in the recovery effort." The Herald suggested that this figure would probably be former President Bill Clinton, a recent US envoy to Haiti and the husband of Secretary of State Hillary Clinton.

Trinity Washington University professor Robert Maguire, who spoke positively about the plan, told the Herald it sounded "similar to an idea that Hillary Clinton was considering long before the earthquake."

The US plan has provoked opposition from capitalist powers who do not want such an obvious US role in reconstruction plans. The Canadian government is considering a plan to funnel aid into a trust fund that would be overseen by the World Bank.

US economist Jeffrey Sachs, who has devised a similar plan involving the Inter-American Development Bank, criticized the US State Department plan: "We should not see this as a US political effort but a multilateral one." Arguing that responsibility for reconstruction plans should fall to the Haitian government alone, Sachs said a reconstruction agency "shouldn’t have a mixed membership of the [Haitian] president and international figures."

Initial details of what such "reconstruction" plans entail emerged after a January 25 conference in Montreal. They involve using a sub-minimum wage passed by Préval for the garment industry ($2.98 per day) to turn Haiti into a super-exploited export-processing zone. In a UN report, Paul Collier of Britain’s Oxford University wrote: "Due to its poverty and relatively unregulated labor market, Haiti has labor costs that are fully competitive with China, which is the global benchmark."

Sarkozy arrived in Haiti amidst speculation that his visit reflected growing divisions between Paris and Washington on how to proceed. Sarkozy arrived at Port-au-Prince airport, took a brief helicopter tour of the worst damaged areas of the city, and gave a press conference with Préval.

Sarkozy’s performance was a mixture of cynicism and imperialist arrogance. Speaking to the puppet government of a US-occupied country, he said: "The people of Haiti are standing up! ... Mr. President, Mr. Prime Minister, Ministers, you must set the conditions for a national consensus on which to base a national project that will belong to you. Haiti for the Haitians."

He announced an aid package of €326 million ($447 million), including €56 million for repaying Haiti’s currently outstanding debts to France. Even though this sum is all out of proportion to the vast cost of rebuilding Haiti, Sarkozy lectured: "If I may say so, Mr. President, please do not rebuild the way it was before."

After admonishing the Préval regime that "Wealth must profit for everyone," Sarkozy made a remarkable admission: "In my country as in yours, the question of the extreme concentration of wealth in the hands of small number of people is a problem."

As he pushes for a new round of pension cuts in France and maintains the tax cut for the wealthy, this problem is one that his own policies play a major role in exacerbating.

Sarkozy also implicitly criticized the US State Department’s plans, saying: "France does not want international tutelage for Haiti—especially when you are one of the world’s poorest countries, that you have just undergone one of the world’s most violent catastrophes."

Asked about rivalries between the countries active in rebuilding Haiti, Sarkozy pointed to fears of growing political opposition in Haiti: "First of all there should be no rivalries inside Haiti." He said, "I’m aware of your political realities—30 or so constitutions, a large number of assassinated heads of state ... one of the most abominable dictatorships the world has ever known."

Sarkozy failed to mention that after his ouster in 1986, dictator Jean-Claude "Baby Doc" Duvalier fled to France, where he lived a life of luxury despite never formally receiving political asylum. In 1998 the French government refused to act on a lawsuit demanding that France expel Duvalier as an illegal immigrant.

Sarkozy continued, "As for rivalries between the countries that are friends of Haiti ... there will be none. The Americans have done good work. They have a million Haitian [immigrants] and they are 900 km away, and I will not reproach anyone for not doing enough. Afterwards, in any emergency situation one can do things more or less well, provoke small tensions. It’s not serious compared to the essential—which is that Americans, Englishmen, Brazilians, Canadians, and everyone else, we continue to work hand-in-hand to help you."

This statement repudiates widespread criticism from aid officials of the US military occupation’s callous indifference towards Haitian lives. The US military seized the Port-au-Prince airport and blocked the arrival of humanitarian flights, costing the lives of thousands of Haitians dying from infected wounds and lack of antibiotics and other basic supplies. It also refused to admit wounded Haitians to the large sick bay of the USS Carl Vinson, a US aircraft carrier steaming off Haiti, and temporarily blocked rescue flights to Florida.

Sarkozy bluntly refused to consider reimbursing the $21 billion France extorted from Haiti in 1825, responding: "I’ve decided to reimburse Haiti’s debts towards France. ... I presume that this creates the conditions for greater cooperation between our countries."

Asked if France might give more assistance in light of the $14 billion cost of rebuilding Haiti, Sarkozy said: "We cannot condemn Haiti to a life on social assistance and kill the emergence of a private sector."

After Sarkozy had spoken, Préval took questions on the holding of future elections. He said the government faced difficulties in "purging" voter lists to "avoid fraud arising from dead voters." Ghoulishly, he explained that the earthquake made this virtually impossible: "Today, there are far more dead, there are far more displaced, there are far more potential voters who have lost their voting cards."

Préval also implied that he did not want to hold elections, given the popular mood: "And there is the question of the population’s disposition—in this difficult situation, can one decently tell them, we’re going to the elections right away?"

Asked whether December’s scheduled presidential elections would take place on time, Préval implied that they were put on hold indefinitely, pending discussions with the occupying powers: "We will have to find an adequate, exceptional mechanism to allow these elections to take place."

He continued: "By consensus among the political class, civil society, and the international community that largely finances these elections, we should be able to find a formula that would allow there to be parliamentary, local and presidential elections. That is all I can say."

Peter Schiff 02/19/2010 - Rate hike, Obama in Las Vegas

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Federal Bureau of Invention: CASE CLOSED (and Ivins did it)

But FBI's report, documents and accompanying information (only pertaining to Ivins, not to the rest of the investigation) were released on Friday afternoon... which means the FBI anticipated doubt and ridicule. And the National Academies of Science (NAS) is several months away from issuing its $879,550 report on the microbial forensics, suggesting a) asking NAS to investigate the FBI's science was just a charade to placate Congress, and/or b) NAS' investigation might be uncovering things the FBI would prefer to bury, so FBI decided to preempt the NAS panel's report.

Here are today's reports from the Justice Department, AP, Washington Post and NY Times. The WaPo article ends,

The FBI's handling of the investigation has been criticized by Ivins's colleagues and by independent analysts who have pointed out multiple gaps, including a lack of hair, fiber other physical evidence directly linking Ivins to the anthrax letters. But despite long delays and false leads, Justice officials Friday expressed satisfaction with the outcome.

The evidence "established that Dr. Ivins, alone, mailed the anthrax letters," the Justice summary stated.

Actually, the 96 page FBI report is predicated on the assumption that the anthrax letters attack was carried out by a "lone nut." The FBI report fails to entertain the possibility that the letters attack could have involved more than one actor. The FBI admits that about 400 people may have had access to Ivins' RMR-1029 anthrax preparation, but asserts all were "ruled out" as lone perpetrators. FBI never tried to rule any out as part of a conspiracy, however.

That is only the first of many holes in FBI's case. Here is a sampling of some more.

  1. The report assumes Ivins manufactured, purified and dried the spore prep in the anthrax hot room at US Army Medical Research Institute of Infectious Diseases (USAMRIID). His colleagues say the equipment available was insufficient to do so on the scale required.
  2. But even more important, the letter spores contained a Bacillus subtilis contaminant, and silicon to enhance dispersal. FBI has never found the Bacillus subtilis strain at USAMRIID, and it has never acknowledged finding silicon there, either. If the letters anthrax was made at USAMRIID, at least small amounts of both would be there.
  3. Drs. Perry Mikesell, Ayaad Assaad and Stephen Hatfill were 3 earlier suspects. All had circumstantial evidence linking them to the case. In Hatfill's case, especially, are hints he could have been "set up." Greendale, the return address on the letters, was a suburb of Harare, Zimbabwe where Hatfill attended medical school. Hatfill wrote an unpublished book about a biowarfare attack that bears some resemblance to the anthrax case. So the fact that abundant circumstantial evidence links Ivins to the case might be a reflection that he too was "set up" as a potential suspect, before the letters were sent.
  4. FBI fails to provide any discussion of why no autopsy was performed, nor why, with Ivins under 24/7 surveillance from the house next door, with even his garbage being combed through, the FBI failed to notice that he overdosed and went into a coma. Nor is there any discussion of why the FBI didn't immediately identify tylenol as the overdose substance, and notify the hospital, so that a well-known antidote for tylenol toxicity could be given (N-acetyl cysteine, or alternatively glutathione). These omissions support the suggestion that Ivins' suicide was a convenience for the FBI. It enabled them to conclude the anthrax case, in the absence of evidence that would satisfy the courts.
  5. The FBI's alleged motive is bogus. In 2001, Bioport's anthrax vaccine could not be (legally) relicensed due to potency failures, and its impending demise provided room for Ivins' newer anthrax vaccines to fill the gap. Ivins had nothing to do with developing Bioport's vaccine, although in addition to his duties working on newer vaccines, he was charged with assisting Bioport to get through licensure.
  6. FBI's report claims, "Those who worked for him knew that Nass was one of those topics to avoid discussing around Dr. Ivins" (page 41). The truth is we had friendly meetings at the Annapolis, Maryland international anthrax conference in June 2001, and several phone conversations after that. Bruce occasionally assisted me in my study of the safety and efficacy of Bioport's licensed anthrax vaccine, giving me advice and papers he and others had written. I wonder if I was mentioned negatively to discourage Ivins' other friends and associates from communicating with me, since they have been prohibited from speaking freely? Clever.
  7. The FBI's Summary states that "only a limited number of individuals ever had access to this specific spore preparation" and that the flask was under Ivins' sole and exclusive control. Yet the body of the report acknowledges hundreds of people who had access to the spores, and questions remain about the location of the spore prep during the period in question. FBI wordsmiths around this, claiming that no one at USAMRIID "legitimately" used spores from RMR1029 without the "authorization and knowledge" of Bruce Ivins. Of course, stealing spores to terrorize and kill is not a legitimate activity.
  8. FBI says that only a small number of labs had Ames anthrax, including only 3 foreign labs. Yet a quick Pub Med search of papers published between 1999 and 2004 revealed Ames anthrax was studied in at least Italy, France, the UK, Israel and South Korea as well as the US. By failing to identify all labs with access to Ames, the FBI managed to exclude potential domestic and foreign perpetrators.
  9. FBI claims that "drying anthrax is expressly forbidden by various treaties," therefore it would have to be performed clandestinely. Actually, the US government sponsored several programs that dried anthrax spores. Drying spores is not explicitly prohibited by the Biological Weapons Convention, though many would like it to be.
  10. The FBI report claims the anthrax letters envelopes were sold in Frederick, Md. Later it admits that millions of indistinguishable envelopes were made, with sales in Maryland and Virginia.
  11. FBI emphasizes Ivins' access to a photocopy machine, but fails to mention it was not the machine from which the notes that accompanied the spores were printed.
  12. FBI claims Ivins was able to make a spore prep of equivalent purity as the letter spores. However, Ivins had clumping in his spores, while the spores in the Daschle/Leahy letters had no clumps. Whether Ivins could make a pure dried prep is unknown, but there is no evidence he had ever done so.
  13. FBI asserts that Bioport and USAMRIID were nearly out of anthrax vaccine, to the point researchers might not have enough to vaccinate themselves. FBI further asserts this would end all anthrax research, derailing Ivins' career. In fact, USAMRIID has developed many dozens of vaccines (including those for anthrax) that were never licensed, but have been used by researchers to vaccinate themselves. There would be no vaccine shortage for researchers.
  14. Ivins certainly had mental problems. But that does not explain why the FBI accompanied Ivins' therapist, Ms. Duley (herself under charges for multiple DUIs) and assisted her to apply for a peace order against him. Nor does it explain why Duley then went into hiding, never to be heard from again.
  15. FBI obtained a voluntary collection of anthrax samples. Is that the way to conduct a multiple murder investigation: ask the scientists to supply you with the evidence to convict them? There is no report that spores were seized from anyone but Ivins, about 6 years after the attacks. This is a huge hole in the FBI's "scientific" methodology.
  16. FBI claims it investigated Bioport and others who had a financial motive for the letters attack, and ruled them out. However, FBI provides not a shred of evidence from such an investigation.
FBI gave this report its best shot. The report sounds good. It includes some new evidence. It certainly makes Ivins out to be a crazed, scary and pathetic figure. If you haven't followed this story intently, you may be convinced of his guilt.

On the other hand, there are reasons why a conspiracy makes better sense. If the FBI really had the goods, they would not be overreaching to pin the crime on a lone nut.

JFK, RFK, George Wallace, Martin Luther King, all felled by lone nuts. Even Ronald Reagan's would-be assassin was a lone nut. Now Bruce Ivins. The American public is supposed to believe that all these crimes required no assistance and no funds.

Does the FBI stand for the Federal Bureau of Invention?

Older information on this blog, germane to analysis of the FBI's case, includes the following:

Posts of mine that go into detail about these and other problems with the FBI's claims are here, here, here, here, here, here, here and here. Science magazine had additional questions. Vanity Fair published a fascinating article by Donald Foster that brings up more material the FBI ignored, here. Here I speculated on the emotional strain Bruce might have faced as a result of his knowledge of problems with the safety and effectiveness of currently used anthrax vaccines.

Citigroup Warns Customers It May Refuse To Allow Withdrawals

The image of banks locking their doors to keep customers from making withdrawals during a bank run is what immediately came to mind when we heard that Citigroup was telling customers it has the right to prevent any withdrawals from checking accounts for seven days.

"Effective April 1, 2010, we reserve the right to require (7) days advance notice before permitting a withdrawal from all checking accounts. While we do not currently exercise this right and have not exercised it in the past, we are required by law to notify you of this change," Citigroup said on statements received by customers all over the country.

What's going on? It seems that this is something of an error. The seven day notice policy only applies to customers in Texas, Ira Stoll reports at The Future of Capitalism. It was accidentally included on customer statements nationwide.

"Whatever the explanation, it doesn't exactly inspire confidence in Citi," Stoll writes. "But it's hard to believe a bank would be sending out a notice like that on its statements."

Medical studies show cannabis effective for treating pain, spasms

" With the results of a medical study summarized by a new report delivered to the California state legislature, the California Center for Medicinal Cannabis Research (CMCR) claims it has established scientific proof that inhaled cannabis holds medical value at or above the level of conventional prescription medicines used for a variety of ailments."
Note: Recently here in the Charlottesville area they locked up a woman for growing pot plants. Below is part of the idiotic statement made by Julia C. Dudley acting U.S. attorney. We owe her our thanks for saving the world from plants, and for protecting her job by locking up people for growing medicine. Thanks Julia for wasting taxpayer money and destroying lives for nothing. Keep collecting your paycheck. I hope you feel good about Americans rotting in jail over a plant.

Read entire article here:

" “By stopping those individuals who grow illegal drugs, we are cutting off the distribution of drugs at the source,” Julia C. Dudley, acting U.S. attorney, said in a statement." "

Campaigning for State-Owned Banks

The public bank concept is gaining ground on the state level, attracting proponents across the political spectrum.

While bank bailouts fatten Wall Street, states continue to battle the credit crisis. In the search for innovative solutions, some political candidates are proposing that states generate their own credit by setting up their own banks.

State budgets for 2010 face the largest shortfalls on record, totaling $194 billion or 28 percent of state budgets; and 2011 is expected to be worse. Unemployment has already officially hit 10 percent, and many economists expect it to rise higher. Continued high unemployment will keep state income tax receipts at low levels and increase demand for Medicaid and other essential services states provide. The existing alternatives are spending cuts or tax increases, but both will just serve to make the downturn deeper. When states cut spending, they lay off employees, cancel contracts with vendors, eliminate or lower payments to businesses and nonprofit organizations that provide direct services, and cut benefit payments to individuals. The result is a reduction in overall demand. Tax increases also remove demand, by reducing the amount of money people have to spend.

Amanda Paulson, writing in The Christian Science Monitor, quotes Arturo Pérez, fiscal analyst with the National Conference of State Legislatures, which released its survey of state budget situations in December: "Unless you’re North Dakota, you’re probably a state that has had some degree of difficulty or crisis involving finances. It’s the worst situation states have faced in decades, perhaps going as far back as the Great Depression in some states."

“Unless you’re North Dakota,” that is—a state with a sizeable budget surplus, and the only state that is adding jobs when other states are losing them. A February 13 poll ranked that weather-challenged state first in the country for citizen satisfaction with their standard of living. North Dakota’s affluence has been attributed to oil, but other states with oil are in deep financial trouble. The big drop in oil and natural gas prices propelled Oklahoma into a budget gap that is 18.5 percent of its general-fund budget. California is also resource-rich, with a $2 trillion economy; yet it has a worse credit rating than Greece. So what is so special about North Dakota? The answer seems to be that it is the only state in the union that owns its own bank. It doesn’t have to rely on a recalcitrant Wall Street for credit. It makes its own.

Candidates Across the Political Spectrum Pick Up on the Public Bank Model

In the quest to find ways to divorce the well-being of their states from the financial sector, a growing number of candidates are picking up on the public bank alternative. Florida, Illinois, Oregon, Massachusetts, Idaho and California all have candidates whose platforms contain this proposed solution to the credit crisis.

A publicly-owned bank has also been proposed on the federal level. In 2008, presidential candidate Dennis Kucinich, a Democrat, and Cynthia McKinney, the Green Party candidate, advocated nationalizing the Federal Reserve (which is not actually federal but is owned by a consortium of private banks). In 2009, Nobel laureate Joseph Stiglitz said the government would have been better off funding a federally-owned bank than doling out trillions of dollars to private investment banks and CEOs who speculated their way into bankruptcy. Speaking at the New York Society for Ethical Culture on March 6, 2009, he said:

If we had used the $700 billion to create a new financial institution, allowed it to lever 10 to 1, which is very modest compared to the 30 to 1 that we were doing, 10 to 1 would have generated $7 trillion of new lending capacity, far in excess of what our country needs. So the issue here is not about lending. It’s really about saving the bankers. And what we confused was saving the banks versus saving the bankers and their shareholders.

Though the proposals to nationalize the Federal Reserve face powerful opponents in Congress, the public bank concept is gaining ground on the state level, attracting proponents across the political spectrum, including Democrats, Republicans and Greens. The issue transcends party lines. In North Dakota, a Republican state, the state-owned bank was inaugurated by a political party appropriately called the “Non-Partisan League.”

Oregon: The Bankers’ Bank Model

In Oregon, Bill Bradbury has included a state bank platform in his bid for governor. Bradbury, a Democrat, was formerly secretary of state and has been endorsed by former Vice President Al Gore. His website declares: "It is time to put Oregonians back to work. It is also time to declare economic sovereignty from the multi-national banks that in large part are responsible for much of our current economic crisis. We can achieve these two goals by creating our own bank."

The Oregonian, Oregon’s largest newspaper, reported that Bradbury plans to deposit tax revenues in the public-interest bank, keeping Oregon’s money in Oregon. The bank would then lend the money to get the economy going again, targeting small and medium-sized businesses. Interest would be poured back into the state through more loans to start-up businesses, agriculture, and other key sectors. Currently, Oregon deposits hundreds of millions of dollars in tax revenues into large out-of-state banks, siphoning the money off from productive in-state uses. Many of these banks are the very banks that needed federal bailouts to keep from failing in 2008, after years of handing out risky mortgage loans. These banks have now grown tight-fisted with Main Street borrowers, making Bradbury’s plan to get money flowing again especially appealing to Oregonian voters.

Bradbury uses the Bank of North Dakota (BND) as his model. Like the BND, the Bank of Oregon would return a dividend to the state based on its earnings, while creating jobs and stimulating the economy through lending. The state bank would not replace private banking institutions but would partner with them, particularly with community banks, providing them with new customers and helping them provide new services. To assure the state bank’s independence from existing financial powers, Bradbury proposes that a board of directors appointed by Oregon’s Senate should govern the bank, while taking advice from an advisory committee of experts.

Idaho: Keeping State Assets in the State

In Idaho, James Stivers, a Republican candidate for the State Senate, has also proposed a state bank to fill state coffers and protect the local economy. In the first indication of a political shift among grassroots Republicans, Stivers swept a closed-ballot preference poll at the GOP District 2 Central Committee meeting in Coeur d’Alene on February 13, winning the non-binding poll 10 to zero. Stivers declares:

An important part of sovereignty is the monetary authority. Currently, banks are allowed to multiply many times over the tax receipts deposited in their institutions. This special privilege is partly responsible for the ‘sucking sound’ in our local economies, as regional banks send their assets to central banks that are playing the derivatives markets of the world.

A state bank would restore this privilege to the people in a public trust and would give us the opportunity to back our deposits with the wealth from our public lands.

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St. Petersburg's Self-destructing Economy Part 3

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The Chemist's War

The little-told story of how the U.S. government poisoned alcohol during Prohibition with deadly consequences.

It was Christmas Eve 1926, the streets aglitter with snow and lights, when the man afraid of Santa Claus stumbled into the emergency room at New York City's Bellevue Hospital. He was flushed, gasping with fear: Santa Claus, he kept telling the nurses, was just behind him, wielding a baseball bat.

Before hospital staff realized how sick he was—the alcohol-induced hallucination was just a symptom—the man died. So did another holiday partygoer. And another. As dusk fell on Christmas, the hospital staff tallied up more than 60 people made desperately ill by alcohol and eight dead from it. Within the next two days, yet another 23 people died in the city from celebrating the season.

Doctors were accustomed to alcohol poisoning by then, the routine of life in the Prohibition era. The bootlegged whiskies and so-called gins often made people sick. The liquor produced in hidden stills frequently came tainted with metals and other impurities. But this outbreak was bizarrely different. The deaths, as investigators would shortly realize, came courtesy of the U.S. government.

Frustrated that people continued to consume so much alcohol even after it was banned, federal officials had decided to try a different kind of enforcement. They ordered the poisoning of industrial alcohols manufactured in the United States, products regularly stolen by bootleggers and resold as drinkable spirits. The idea was to scare people into giving up illicit drinking. Instead, by the time Prohibition ended in 1933, the federal poisoning program, by some estimates, had killed at least 10,000 people.

Although mostly forgotten today, the "chemist's war of Prohibition" remains one of the strangest and most deadly decisions in American law-enforcement history. As one of its most outspoken opponents, Charles Norris, the chief medical examiner of New York City during the 1920s, liked to say, it was "our national experiment in extermination." Poisonous alcohol still kills—16 people died just this month after drinking lethal booze in Indonesia, where bootleggers make their own brews to avoid steep taxes—but that's due to unscrupulous businessmen rather than government order.

I learned of the federal poisoning program while researching my new book, The Poisoner's Handbook, which is set in jazz-age New York. My first reaction was that I must have gotten it wrong. "I never heard that the government poisoned people during Prohibition, did you?" I kept saying to friends, family members, colleagues.

I did, however, remember the U.S. government's controversial decision in the 1970s to spray Mexican marijuana fields with Paraquat, an herbicide. Its use was primarily intended to destroy crops, but government officials also insisted that awareness of the toxin would deter marijuana smokers. They echoed the official position of the 1920s—if some citizens ended up poisoned, well, they'd brought it upon themselves. Although Paraquat wasn't really all that toxic, the outcry forced the government to drop the plan. Still, the incident created an unsurprising lack of trust in government motives, which reveals itself in the occasional rumors circulating today that federal agencies, such as the CIA, mix poison into the illegal drug supply.

During Prohibition, however, an official sense of higher purpose kept the poisoning program in place. As the Chicago Tribune editorialized in 1927: "Normally, no American government would engage in such business. … It is only in the curious fanaticism of Prohibition that any means, however barbarous, are considered justified." Others, however, accused lawmakers opposed to the poisoning plan of being in cahoots with criminals and argued that bootleggers and their law-breaking alcoholic customers deserved no sympathy. "Must Uncle Sam guarantee safety first for souses?" asked Nebraska's Omaha Bee.

The saga began with ratification of the 18th Amendment, which banned sale and consumption of alcoholic beverages in the United States. High-minded crusaders and anti-alcohol organizations had helped push the amendment through in 1919, playing on fears of moral decay in a country just emerging from war. The Volstead Act, spelling out the rules for enforcement, passed shortly later, and Prohibition itself went into effect on Jan. 1, 1920.

But people continued to drink—and in large quantities. Alcoholism rates soared during the 1920s; insurance companies charted the increase at more than 300 more percent. Speakeasies promptly opened for business. By the decade's end, some 30,000 existed in New York City alone. Street gangs grew into bootlegging empires built on smuggling, stealing, and manufacturing illegal alcohol. The country's defiant response to the new laws shocked those who sincerely (and naively) believed that the amendment would usher in a new era of upright behavior.

Rigorous enforcement had managed to slow the smuggling of alcohol from Canada and other countries. But crime syndicates responded by stealing massive quantities of industrial alcohol—used in paints and solvents, fuels and medical supplies—and redistilling it to make it potable.

Well, sort of. Industrial alcohol is basically grain alcohol with some unpleasant chemicals mixed in to render it undrinkable. The U.S. government started requiring this "denaturing" process in 1906 for manufacturers who wanted to avoid the taxes levied on potable spirits. The U.S. Treasury Department, charged with overseeing alcohol enforcement, estimated that by the mid-1920s, some 60 million gallons of industrial alcohol were stolen annually to supply the country's drinkers. In response, in 1926, President Calvin Coolidge's government decided to turn to chemistry as an enforcement tool. Some 70 denaturing formulas existed by the 1920s. Most simply added poisonous methyl alcohol into the mix. Others used bitter-tasting compounds that were less lethal, designed to make the alcohol taste so awful that it became undrinkable.

To sell the stolen industrial alcohol, the liquor syndicates employed chemists to "renature" the products, returning them to a drinkable state. The bootleggers paid their chemists a lot more than the government did, and they excelled at their job. Stolen and redistilled alcohol became the primary source of liquor in the country. So federal officials ordered manufacturers to make their products far more deadly.

By mid-1927, the new denaturing formulas included some notable poisons—kerosene and brucine (a plant alkaloid closely related to strychnine), gasoline, benzene, cadmium, iodine, zinc, mercury salts, nicotine, ether, formaldehyde, chloroform, camphor, carbolic acid, quinine, and acetone. The Treasury Department also demanded more methyl alcohol be added—up to 10 percent of total product. It was the last that proved most deadly.

The results were immediate, starting with that horrific holiday body count in the closing days of 1926. Public health officials responded with shock. "The government knows it is not stopping drinking by putting poison in alcohol," New York City medical examiner Charles Norris said at a hastily organized press conference. "[Y]et it continues its poisoning processes, heedless of the fact that people determined to drink are daily absorbing that poison. Knowing this to be true, the United States government must be charged with the moral responsibility for the deaths that poisoned liquor causes, although it cannot be held legally responsible."

His department issued warnings to citizens, detailing the dangers in whiskey circulating in the city: "[P]ractically all the liquor that is sold in New York today is toxic," read one 1928 alert. He publicized every death by alcohol poisoning. He assigned his toxicologist, Alexander Gettler, to analyze confiscated whiskey for poisons—that long list of toxic materials I cited came in part from studies done by the New York City medical examiner's office.

Norris also condemned the federal program for its disproportionate effect on the country's poorest residents. Wealthy people, he pointed out, could afford the best whiskey available. Most of those sickened and dying were those "who cannot afford expensive protection and deal in low grade stuff."

And the numbers were not trivial. In 1926, in New York City, 1,200 were sickened by poisonous alcohol; 400 died. The following year, deaths climbed to 700. These numbers were repeated in cities around the country as public-health officials nationwide joined in the angry clamor. Furious anti-Prohibition legislators pushed for a halt in the use of lethal chemistry. "Only one possessing the instincts of a wild beast would desire to kill or make blind the man who takes a drink of liquor, even if he purchased it from one violating the Prohibition statutes," proclaimed Sen. James Reed of Missouri.

Officially, the special denaturing program ended only once the 18th Amendment was repealed in December 1933. But the chemist's war itself faded away before then. Slowly, government officials quit talking about it. And when Prohibition ended and good grain whiskey reappeared, it was almost as if the craziness of Prohibition—and the poisonous measures taken to enforce it—had never quite happened.

1001 Reasons to Own Gold

Tracking the numerous ongoing bullish factors for gold is quite a chore. There are, quite literally, so many compelling arguments for holding our favorite metal that I used to catalog them each month in our letter.
The reason there are so many “reasons” is because gold is unlike any other asset. It…

  • responds to its own supply and demand
  • protects against short-sighted government actions and interventions
  • is a bellwether of market sentiment and economic outlook
  • protects against currency devaluation and inflation
  • is global
  • is one of the most beautiful metals ever found in the earth’s crust
  • is a store of value
  • is timeless
  • is money

How many assets can you say have all those characteristics?

In spite of gold’s recent correction, the reasons haven’t decreased. In fact, the case for holding gold is stronger than ever. And over the past two weeks, a few “reasons” have surfaced that have fallen mostly under the radar. These, I believe, portend a higher gold price. In fact, it is catalysts like these that could end up in our children’s history books that, in retrospect, were obvious to see…

1. For the first time ever, China has invested in GLD, the gold exchange-traded fund. Their sovereign wealth fund, China Investment Corporation, recently invested $155 million in the ETF. The amount represents only 0.05% of the sovereign funds’ $300 billion, meaning there’s a lot more where that came from.

Those mainstream lemmings who predicted China was done buying gold now have to deal with the reality that this move more likely signals they are closer to the beginning – and not the end – of a long-term strategy to diversify into gold.

2. The Prime Minister’s Office in India is creating a stream-lined process so that the country’s state-owned corporations can “aggressively pursue the acquisition of strategic mineral resources.” The Indian government, normally known for thick-layered bureaucracy, has created a centralized body that will have “rapid strategic and decision making powers.” This is telling, both from the perspective that they see some urgency to the matter, and that the acquisition targets are minerals.

Given the country’s historic propensity to own gold, it’s not a stretch to think the yellow metal will be high on the list of “strategic investments.” Recall their government purchased almost half the IMF gold for sale last year in one fell swoop.

The upshot? Don’t be surprised to soon hear of India following China’s lead of buying precious metal companies and resources.

3. “Iran is now a nuclear state,” declared President Ahmadinejad last week. The Islamic republic has produced its first batch of high-level enriched uranium, which they claim is solely for electricity purposes but can also be used to create material for atomic weapons if enriched to 90%. In response, the U.S. imposed new sanctions, and the U.N. is considering adding more of its own sanctions, too.

The West recently proposed that Iran export its uranium for enrichment and then have it returned as fuel rods for a reactor. Iran demanded changes to that plan, which were rejected, so claimed they had “no choice” but to start enriching to higher levels on their own. “God willing,” declared Ahmadinejad, “daily production will be tripled.”

I’m sure this will all just blow over, right?

4. The U.S. government must inflate. Here’s another reason we think that sooner or later inflation trumps deflation… by 2020, government economists project that entitlement benefits (Social Security, Medicare, etc.), along with interest payments on the national debt, will devour 80% of all federal revenues.

This assumes entitlement benefits don’t grow, which, of course, they are. The overall national debt, meanwhile, will rise to 100% of GDP within a few years, an alarming level by any measure. Even Moody’s warned that our credit status could lose its triple-A rating if the nation’s finances don’t improve, an unheard-of prospect just a few years ago.

So, we’re abruptly fleeing our debt-adding habits, right? As you probably heard last month, Obama signed legislation that raised the cap on government debt from $12.4 trillion – already close to being breached – to $14.3 trillion to permit more borrowing. As Doug Casey has pointed out numerous times, this is the exact opposite of what the government should be doing and will have serious inflationary ramifications.

There’s only one way out: devalue the dollar to reduce the debt burden. And the direct result of that is a rising gold price. We may very well see another round of deflation, but the endgame is inflation.

What I would point out is that any one of these reasons would be sufficient for wanting to put some gold in your portfolio. It’s the cumulative effect that’s potentially scary, one that argues we should be overweight precious metals at this point in history. The reasons are numerous and, in my opinion, overwhelming.

Peter Schiff Fast Money CNBC 19 Feb 2010 Part 1 of 2

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British oil ambitions fuel fresh row over Falklands

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Bob Chapman on Alex Jones 1/5: Media Now Calling Attack Domestic Terrorism

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A 9/11 Victim's Family Member Asks for Help

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