Wednesday, May 5, 2010

Oil Slickonomics

“At its current leak rate of 5,000 barrels of oil per day, the spill could surpass the size of the 1969 Santa Barbara spill by next week. If the leak cannot be contained, it could exceed the size of the 1989 Exxon Valdez oil spill off Alaska by mid June.” Paul Harrison, Environmental Defense Fund
Three scenarios lie ahead. They rank as bad, worse, and ugliest (the latter being catastrophic and unprecedented). There is no “good” here.
The Bad.
Containment chambers are put in place and they catch the outflow from the three ruptures that are currently pouring 200,000 gallons of oil into the Gulf every day. If this works, it will take until June to complete. The chambers are 30-foot-high steel configurations that must be placed on the ocean floor at a depth of one mile. This has never been done before. If early containment is successful, the damages from this accident will be in the tens of billions. The cleanup will take years. The economic impact will be in the five states that have frontal coastline on the Gulf of Mexico: Texas, Louisiana, Mississippi, Alabama, and Florida.
The Worse.
The containment attempts fail and oil spews for months, until a new well can successfully be drilled to a depth of 13000 feet below the 5000-foot-deep ocean floor, and then concrete and mud are injected into the existing ruptured well until it is successfully closed and sealed. Work on this approach is already commencing. Timeframe for success is at least three months. Note the new well will have to come within about 20 feet of the existing point where the original well enters the reservoir at a distance of 3.5 miles from the surface drilling rig. Damages by this time may be measured in the hundreds of billions. Cleanup will take many, many years. Tourism, fishing, all related industries may be fundamentally changed for as much as a generation. Spread to Mexico and other Gulf geography is possible.
The Ugliest.
This spew stoppage takes longer to reach a full closure; the subsequent cleanup may take a decade. The Gulf becomes a damaged sea for a generation. The oil slick leaks beyond the western Florida coast, enters the Gulfstream and reaches the eastern coast of the United States and beyond. Use your imagination for the rest of the damage. Monetary cost is now measured in the many hundreds of billions of dollars.
Some thoughts about markets and impacts.
Usually, the first estimates in any crises are too low. That is true here. 1000 barrels a day is now 5000, and some estimates of spillage are trending higher. No one knows exactly. The containment and boom mechanism is subject to weather cooperation as we can see this weekend. Soon we are entering the hurricane season. The thoughts of a storm stirring up the Gulf, hampering any cleanup or remediation drilling effort and creating a huge 10,000 square mile black stew is frightening to every professional in the business.
This will be a financial calamity for many firms, not just BP and its partners and service providers. Their liabilities are immense and must not be underestimated. The first estimate of $12.5 billion is only a starter.
Thousands of small and independent businesses as well as larger public companies in tourism are hurt here. This is not just about the source of half the nation’s shrimp. That is already a casualty. It’s also about the bank loans for the $200,000 shrimp boat and the house the boat owner and/or his employees live in and the fact that this shock piles on a fragile financial system that is trying to recover from a three-year financial crisis. Case study, my fishing guide in the Everglades splits his time between Florida and Louisiana. His May bookings in LA have cancelled. His colleagues lost theirs and their lodge will be empty. They are busy trying to find work in the clean up. For him, his wife and eleven year old daughter, his $600 a day guide fees just went “poof”. When I asked him if he thought he had a legal claim on BP, he said he hadn’t thought about it yet but it gave him pause. As we suggested above, the $12.5 billion loss estimate is only a starter.
Federal deficit spending will certainly rise by tens, and maybe hundreds, of billions as emergency appropriations are directed at larger and larger efforts to clean up this mess. At the same time, federal and state revenues tied to Gulf-region businesses will fall. My colleague John Mousseau will be discussing the impact on state and local government debt in a separate research commentary.
We expect that the Federal Reserve will extend the timeframe that we have come to know as the “extended period” in the making of its monetary policy. We do not expect the Fed to raise interest rates at all for the rest of this year, and maybe well into next year. We expect to see the deterioration of the economic statistics for the US to reveal the onset of this oil-slick crisis in May, and the negative impact will intensify during the summer months. A “double-dip” recession probably has been made more likely by this tragedy.
We are at the highest level of cash in our US stock accounts that we have seen in over a year and a half. We expect a market correction will present entry points at lower stock prices. We have exited the financial sectors, including the insurance ETF. We now worry about the banks that are exposed. We do not own the major oil stocks now. Some of them face enormous liability payments.
In addition, the offshore-drilling energy sector will face much-increased and more costly regulation. Deepwater and all offshore drilling in the US has been set back for a generation, just as Three Mile Island set back nuclear power development for decades. No politician can win an election now with a permissive view on drilling. Sarah Palin’s “Drill, baby, drill” now condemns her to political marginalization. Off shore drilling has lurched to the top of the political agenda in this November’s election cycle.

Louisiana Oil Spill: Feds Gave Safety Prize to Transocean's Deepwater Horizon

The federal agency charged with enforcing safety on deepwater oil rigs has also played a major role in promoting the industry's claim that it is safe, and in 2009 handed out one of its top prizes for safety to Transocean's Deepwater Horizon.

Crews are trying something new to prevent damage.

Transocean's safety effort included two dance videos, one of them a hip-hop video promoting safety that was filmed on the Deepwater Horizon. The Deepwater Horizon exploded last week, killing 11 and unleashing what could become one of the worst oil spill disasters in the nation's history.

The Minerals Management Service, which falls under the U.S. Department of Interior, touts the recipients in government press releases and hosts an awards luncheon at a lavish industry association conference in Houston. This year's luncheon was scheduled for Monday before it was abruptly canceled.

"The ongoing situation with the Transocean Deepwater Horizon drilling accident has caused the MMS to dedicate considerable resources to the successful resolution of this event which will conflict with holding this ceremony next week," a statement released on the conference web site says. " The MMS will announce an alternative plan during the next several weeks."

MMS issued its SAFE award to Transocean for its performance in 2008, crediting the company's "outstanding drilling operations" and a "perfect performance period." Transocean spokesman Guy Cantwell told ABC News the awards recognized a spotless record during repeated MMS inspections, and should be taken as evidence of the company's longstanding commitment to safety.

One element of Transocean's safety campaign was a campy, and now somewhat macabre, music video that was filmed on the decks of the Deepwater Horizon rig. The video uses hip-hop songs to encourage workers to "keep your hands clear" while performing tasks. In one scene, workers in red jump suits dance on the platform's helipad.

A second video shows Transocean President and COO Steven Newman making good on a promise to do a dance if the India division had the best safety record in the company two years in a row. Newman and backup dancers perform to the sounds of music from an Indian movie at a company meeting in Mumbai in February 2009.


5/3/10 Ron Paul and Alan Grayson with Dylan Ratigan: Audit the Fed!

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April 2010 cooler than April 1998


News: the RSS AMSU data for April 2010 are out. The anomaly, 0.546, is the lowest one for 2010 so far. It is the second warmest April on their record but it's more than 0.3 °C cooler than April 1998 and April 2005 was just a bit cooler than April 2010.

Originally posted on May 1st

When you look at the daily UAH AMSU temperatures for April 2009 and April 2010, you will find out that the near-surface average brightness temperature for April 2010, -15.50 °C, was 0.4 °C warmer than that of April 2009, which was -15.90 °C.

That's a substantial year-on-year warming. However, with the anomaly around 0.55 °C using these centidegree conventions, as well as with the anomaly around 0.48 °C using these millidegree conventions, April 2009 will be the coolest month of 2010 so far.

It will be calculated to be the second warmest April on the UAH record, after April 1998 which remains the hottest month since 1978 when the UAH records began (and probably for a few centuries, too). The UAH anomaly in April 1998 was 0.76 or 0.77 °C, respectively, so the April 2010 anomaly will still be a whopping 0.2 or 0.3 °C cooler than April 1998.

The El Nino has weakened but the El Nino conditions continue and will continue through the summer. The year 2010 is likely to end up pretty close to 1998, the warmest year on the UAH record so far.

Note: the daily data contain some systematic error - because they use a "wrong" satellite - so they're not the best ones that the UAH team uses for their official figures now. But they're the best data that are instantly available on the daily basis. Sorry for the mess with the multiple datasets, it's not my fault. Because of these and various errors and confusions, my estimates must be understood as figures with a 0.05 °C error margin.

BP Offering 5000 Dollars To Gulf Residents If They Agree Not To Sue!

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The Rich Continue To Use Government To Cut Out Their Competition

One of the scams that the rich use the government for in order to stop less wealthy people from getting richer is to promote the lie that, since venture capital is “riskier” than investing in public securities on the NYSE (another lie), individuals with less than a certain minimum net worth should not be allowed to invest in these “riskier” VC investments. Bankster puppet Sen. Chris Dodd (D-CT) has inserted into the upcoming financial “reform” bill a clause that would more than double the minimum net worth of a potential venture capital investor from $1 million to $2.5 million, or require an annual salary of $450,000 for the past two years to the current annual salary requirement of $200,000 [the article mistakenly says it is $250,000] for the past two years. (Here is a link to the current minimum net worth regulations.)

Putting aside the libertarian principle that my money is my property and, therefore—just like the property of my body—it is up to me to decide what I want to do with it as far as my personal subjective risk is concerned, an important issue here is that this new rule forcibly prevents people from investing in an area that not only can bring them much higher returns than publicly-traded stocks, but it cuts down the supply of investment funds for smaller, innovative new firms which generally find it much more difficult to raise funds compared to an established big corporation—because the start-up firms’ products have not yet proven themselves in the marketplace. The bill insert also requires that a start-up firm wait up to four months to get permission from the Bankster-controlled SEC to accept the investment funds. And, get this:

“…this proposed bill also seeks to change the rules for a federal pre-emption []sic] for state regulation. Under the proposed bill, start-ups would be subject to state regulations from the 50 different states. Right now, start-ups & investors are not subject to 50 different state regulators. This would likely lead to more cost & risk for the start-up.” [emphasis mine]

Yes, this is just what our depressed economy needs now—even less businesses to employ people and provide new products to improve our lives.

[Thanks to Shelly Roche]

Fisherman have to work 17 times harder to catch fish than they did in the 19th century

Fishing stocks around Britain are so devastated that modern trawlerman have to work an average 17 times harder than their Victorian counterparts to land the same size catch, a new study claims.

Marine scientists have discovered that despite modern trawlers being 50 times more effective than their sailing equivalents in the 19th century, they only catch a third more fish.

Stocks of some varieties of fish such as halibut are so decimated that it takes 500 times as much effort to pull them from the sea as it did in 1889

Britain's fleet of trawlers – mostly powered by sail – netted 300,000 tons a year in the 1880s compared with 150,000 tons now.

The fishing fleet in England and Wales was much larger then but each vessel still netted 80 tons of fish a year. This compares with 110 tons on average per boat now despite advances in technology and far more powerful boats.

The "dramatic" and "worrying" drop is due to extreme and aggressive overfishing and researchers from York University said the problem is "far more profound" then previously thought.

Ruth Thurstan, lead researcher from the university's Environment Department, said: "Fishermen have to work 17 times harder than a 100 years ago to get the equivalent catch.

"And this is despite more powerful boats, more durable and wider nets, freezing facilities – technology that is far more sophisticated than in the last century.

"Now UK fishing trawlers are bringing in about 150,000 tonnes a year, compared to double that 100 years ago.

"The availability of certain bottom living fish like halibut, turbot, haddock and plaice has also dropped by 94 per cent.

"We were astonished to discover that we landed over four times more fish into England and Wales in 1889 than we do today.

"For all its technological sophistication and raw power, today's trawl fishing fleet has far less success than its sail-powered equivalent of the late 19th century because of the sharp declines in fish abundance."

The researchers, who also worked with the Marine Conservation Society used UK Government data on the amount of fish caught and the size and number of boats involved – the fleet's fishing power – to analyse the change in fish stocks since 1889.

The findings suggest that the damage to fisheries is greater and has taken place over a much longer period than previously thought

Professor Callum Roberts, co-author, said: "This research makes clear that the state of UK bottom fisheries – and by implication European fisheries, since the fishing grounds are shared – is far worse than even the most pessimistic of assessments currently in circulation.

"We need to build up stocks so that we can take more sustainable fish, more easily from the sea. Fish stocks are a bit like bank accounts. The more money you have in the bank the more interest you get from it."

The research is published in the journal Nature Communications.

Mayor Bloomberg: NYC Bomb Suspect Could Be Someone Who “Didn’t Like Health Bill”

Chief amongst the many questions that that still are left unanswered regarding the failed car bomb last Saturday night is who would do such a thing. While the Pakistan Taliban have claimed responsibility, experts remain skeptical. Some have surmised that the car’s proximity to the headquarters of Comedy Central’s parent company Viacom is a clue. But on tonight’s CBS Evening News Mayor Mike Bloomberg suggested that it may be someone who simply didn’t like the health care bill.

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Zionists named the bogeyman on 9-11

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Middle class getting pushed into poverty and working poor status The cloaked recovery for the middle class. How 30 percent of the poor are unemployed

Over 6.5 million of the 15 million unemployed Americans have been out of work for 27 weeks or more. As a percent, this is the highest number of long-term unemployed we have had since the Great Depression. What is not discussed in this recession is the working poor and middle class have taken on the burden of this financial calamity disproportionately. We are not all in this equally. When was the last time you heard on the mainstream press that 40 million of your fellow Americans are now receiving food assistance? And when was the last time you heard that jobs for the middle class are still largely disappearing? Since much of the media represents the top 1 percent they assume all is well because Wall Street has been on a record breaking bailout rally. At the same time, we have 30 percent unemployment at the lower end of our income scale.

The lower 30 percent are seeing depression like unemployment rates:

Source: Center for Labor Market Studies, Northeastern University

This chart really is a reflection of the current recovery. For the bottom 40 percent, this recession is still extremely painful and realistic. Yet the top 10 percent have an unemployment rate of 3.2 percent which isn’t necessarily a bad number. When we break down the numbers, we realize that the middle class in this country is struggling to get by. The 40 million on food assistance are scraping by. The Wall Street stock market casino is merely a far away distraction to this group. It would be one thing if the rally actually reflected a large boost in job growth in the real economy. Yet last month a large part of the actual added jobs came from Census hiring from the government. This is unsustainable.

If we break down the numbers further, we realize that employment is only good for the top 20 percent:

Many economists argue that a 5 percent unemployment rate is typically where a steady economy would hover around. Yet look at the above chart. You have to be in the top income deciles to even see this rate. Anyone from the seventh all the way down to lowest cutoff point is feeling unemployment rates that are elevated from the “normal” point. And part of this has to do with the top 1 percent controlling over 42 percent of all financial wealth. While most have to work to pay their bills or stay current with their mortgage, we have a tiny percentage of our country that largely make money from watching their stock portfolio throw off dividends. In fact, this has become a zero sum game. The trillions in bailout money that went to Wall Street are trillions that didn’t go to creating jobs for working poor and middle class Americans. How many jobs can you create with $13 trillion? Apparently not many if you give Wall Street most of it.

Most of the funds have been channeled into outrageous bonuses and keeping the fragile casino going further so they don’t have to go out and actually work like most Americans. The long-term unemployed are enormous and the below chart is incredible:

The chart just goes off the normal path in this recession because many of these jobs are gone forever. Many of these jobs were essentially support positions for the Wall Street casino. Now that Wall Street siphoned off enough money from the productive economy, they are now looking for other bubbles to expand. It doesn’t matter if it comes at the expense of the working poor and middle class. In fact, this is what they want people to believe. They want you to believe that they barely have enough to get by yet at the same time, are able to reward each other with billion dollar bonuses each quarter now that they have taxpayer money in hand. This kind of hypocrisy and corruption is primarily why most Americans are simply not buying the nonsense perpetrated on Wall Street any further.

And U.S. households are making due with a lot less:

“65% of American households get by with $65,000 a year or less. This number is going to be lower once we get the 2009 Census data in September but after rising health care costs, more expensive education, and rising food costs many Americans are seeing their fixed costs go up while their wages move in the opposite direction. But keep in mind there is a group that is actually benefitting from this entire cost cutting. After all, the stock market isn’t up by 70+ percent by accident.”

Since the recession started, we have added close to 500,000 per month needing food assistance:

How does this translate to a recovery? The trend hasn’t even reversed yet those on Wall Street and the mainstream press being so out of touch with most Americans thinks all is now well because their dividends are still coming in. That is clearly not the case and we stand at a crossroads to protect the middle class. If we allow Wall Street to operate unchecked and like a casino, we are only setting ourselves up for another financial crisis that will be coming up in a short time. Why wouldn’t it? We’ve been in this boom and bust casino for the last few decades and each time this happens, someone gets rich. The Goldman Sachs case is about a hedge funder who placed a major bet that American housing would collapse and made billions off of that bet. What did this add to our economy? Clearly the working poor and middle class don’t find amusement that you can bet on their failure and laugh all the way to the bank.

Congressional Hypocrites Were Betting Against Stocks As Country Collapsed

Remember all that scorn in Congress about evil shortsellers betting against America and bringing the country down?

Well, it turns out Congress-people did it, too. And they used derivatives to do it, which they now say they abhor.

(For the record, we have no problem with shortselling or derivatives, and we find the routine scapegoating of both after market crashes ludicrous. But if you're going to complain about how awful shortselling is and how evil and venal people are for doing it, you should probably abstain from the practice yourself.

And, yes, most of the folks here were just betting against stocks, not actually selling stocks short. But it's the same idea. To use their own tortured, populist logic, they were betting against the country and their 401k-holding constituents!)

Jason Zweig, Tom McGinty, and Brody Mullins in the WSJ:

Some members of Congress made risky bets with their own money that U.S. stocks or bonds would fall during the financial crisis, a Wall Street Journal analysis of congressional disclosures shows.

Senators have criticized Goldman Sachs Group Inc. for profiting from the housing collapse. And Congress is considering legislation to curb Wall Street risk-taking, including the use of financial instruments known as derivatives and of leverage, or methods that amplify returns.

According to The Journal's analysis of congressional disclosures, investment accounts of 13 members of Congress or their spouses show bearish bets made in 2008 via exchange-traded funds—portfolios that trade like stocks and mirror an index. These funds were leveraged; they used derivatives and other techniques to magnify the daily moves of the index they track.

Plunge in state revenue dashes hopes of an easy budget fix

Legislators were hoping revenue would continue to exceed projections, forestalling deeper cuts and further tax hikes. But April's total was 30% below what was expected, leaving them with few options.

State tax collections plummeted unexpectedly in April, wiping out months of steady gains that legislators hoped would ease their budget troubles and restore California's economy faster than experts predicted.

Such hope is now fading fast.

Revenue for April, the biggest revenue month because it is when most Californians pay their taxes, lagged projections by nearly 30% — roughly $3 billion, according to state officials. The drop was steep enough to erase improvements recorded in each of the four previous months.

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Economists and finance officials are scurrying to analyze the data to determine what caused the April swoon. Some suspect it sprang from new laws that changed the rhythm of tax payments. It could also reflect the growth in unemployed residents eligible for refunds.

The April collections came almost entirely from personal income taxes. Most corporate and sales taxes have not yet been reported. If they, too, come in below projections, the state's budget problem would grow worse.

The decline sets Sacramento back as next month's deadline for passing a budget approaches. Lawmakers face a deficit of $18.6 billion — about 20% of general fund spending — with no easy options left for addressing it, as they have already cut state services severely and temporarily raised income, sales and vehicle taxes.

"One pillar of the budget solution just got destroyed, and there's nothing that can happen between now and June that can get back the $3 billion," said Stephen Levy, director of the Center for Continuing Study of the California Economy.

The retraction could mean even deeper cuts in government services — schools, healthcare for the poor and services for the elderly. Lawmakers may also be forced to consider more reductions in funds for public universities, as well as tax hikes.

"It's hard to imagine how we're going to [balance the budget] without doing more severe damage to the economy," said state Sen. Denise Moreno Ducheny (D-San Diego), who chairs the Senate's budget committee.

For months, the Democrats who dominate the Legislature have hoped they would be able to balance the state's books with the help of an upswing in revenue, delaying any substantial budget cuts.

"Folks were starting to be pretty optimistic that we were going to be able to bounce our way back from a big chunk of the problem," said Michael Cohen, a deputy in the state's nonpartisan Legislative Analyst's Office. Taxes came in above expectations each month from December through March.

"April basically wiped out those" gains, Cohen said.

He said the state's economy, though on the mend, has been sending "all sorts of mixed messages." Corporations announced higher profits, but the state's stubborn unemployment rate reached a new high in March, 12.6%. Without jobs, Californians are paying fewer taxes and buying fewer goods, which depresses sales taxes.

To balance last year's budget, lawmakers tinkered heavily with the state tax code, speeding up the collection of taxes on businesses and individuals. One theory about the April revenue plunge is that those accelerated collections meant some taxes rolled into the Treasury months earlier.

"The more changes that you make, the more unpredictable it is," said Assembly Budget Committee Chairman Bob Blumenfield (D-Woodland Hills).

Another possibility, economists said, is that many Californians were owed larger-than-expected income tax refunds after losing their jobs in 2009.

Whether the revenue drop augurs an especially sluggish recovery is unclear. Fred Silva, a budget analyst with the good-government group California Forward, said the woeful April returns may reflect taxpayer income from the previous year's recession — not an up-to-date snapshot of the economy.

Ted Gibson, a former state economist, said this was not the first time rising revenue has been followed by a plunge. The flow of state tax revenue, he said, is notoriously hard to predict.

He said the jolt earlier in the year merely "gave everybody an excuse to take a timeout on dealing with the budget. Now they are pretty much back to where they were. And unfortunately, very little has been done in the meantime."

Senate budget committee Vice Chairman Bob Dutton (R-Rancho Cucamonga), who has been critical of Democrats' approach, said, "It's creating a lot of pain the longer you wait to make the necessary changes."

The Legislature's top two Democrats, Senate President Pro Tem Darrell Steinberg (D-Sacramento) and Assembly Speaker John A. Pérez (D-Los Angeles), spent Monday in Washington, pleading for aid from congressional and Obama administration officials. Steinberg said before leaving that their goal was to gather federal commitments for $3 billion to $4 billion.

Gov. Arnold Schwarzenegger is scheduled to update his proposed budget on May 14. The new fiscal year begins July 1.

Stop Dodd's Devastating Financial "Reform" Bill

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More than 80% of school districts to cut jobs

NEW YORK ( -- More than 80% of U.S. school districts are expected to eliminate jobs and more than half will likely freeze hiring during the upcoming school year, an education organization said Tuesday.

Based on a survey of school administrators from 49 states, a total of 275,000 education jobs are expected to be cut in 2011, according to the American Association of School Administrators.

"Faced with continued budgetary constraints, school leaders across the nation are forced to consider an unprecedented level of layoffs that would negatively impact economic recovery and deal a devastating blow to public education," said AASA Executive Director Dan Domenech.

While the jobs picture begins to stabilize across the broader economy, in its previous survey, the AASA projected job cuts in the education field between 2009 and 2011 to exceed the jobs created by the government in that same period.

In the survey released Tuesday, AASA said job cuts in the 2010 to 2011 school year alone would nearly negate the estimated 300,000 jobs saved or created by the government.

"This survey complements the results of our latest economic impact survey to truly illustrate that schools have yet to feel the economic relief and stability that is appearing in other sectors," said Domenech.

Of the projected job cuts, about 54% are teacher positions, 9% are support personnel, such as nurses and guidance counselors, 5% are administrative and 31% are classified, a category including maintenance employees and cafeteria workers.

The sample of Kindergarten through 12th grade public schools used in the survey accounts for about 11% of the nation's school districts.

And while 48 million students are expected to attend school next year, these significant job cuts are projected to raise the average student-to-teacher ratio from 15:1 to 17:1, AASA said.

For those districts that don't cut jobs, it's likely that they will freeze hiring instead, with 53% of districts projecting that they will not be bringing on new employees in the next school year. To top of page

CEOs rank Calif. worst for business

California ranks last among the states and Washington D.C. as a place to do business, according to Chief Executive magazine. It is the second year in a row that the state was given that dubious distinction.

Such assessments are important in the interstate wrestling match for economic growth, Chief Executive notes. “High-stakes competitions for business expansion are nothing new. But with the current unemployment rate, the stakes have gotten much higher. As a result, negotiations for business expansion in 2010 will be more complex and financially significant.”

The publication is so harsh about the California that it calls the state “the Venezuela of North America.” (Click on chart for a larger view):

Source: Chief Executive

Top ranked, for the second year in a row, is Texas followed by North Carolina and Tennessee. Just above California at the bottom of the list are New York, Michigan and New Jersey.

Among the negative factors for business in California mentioned by the magazine:

  • Among the highest state income and sales taxes in the nation
  • Unemployment statewide of 12.6%, one of the highest in the nation
  • State politics seem consumed with how to divide a shrinking pie rather than how to expand it
  • Union density is increasing, contrary to national trend, from 16.1% of workers in 1998 to 17.8% in 2002
  • Unfunded pension and health care liabilities for state workers top $500 billion and the annual pension contribution has climbed from $320 million to $7.3 billion in less than a decade.

Here’s what some CEOs said about California as a place to run a company:

“Texas is pro-business with reasonable regulations while California is anti-business with anti-business regulations.”

“California is terrible. Even when we’ve paid their high taxes in full, they still treat every conversation as adversarial. It’s the most difficult state in the nation. We have actually walked away from business rather than deal with the government in Sacramento.”

“The leadership of California has done everything in its power to kill manufacturing jobs in this state. If we could grow our crops in Reno, we’d move our plants tomorrow.”

California is the only state to receive a failing grade in the magazine’s “tax and regulation” category. Its workforce quality and living environment received “B” grades, but the worst grade given in those categories was “C-” so California didn’t improve its standing much with those higher grades. Click here to see each state’s grade in each category.

More than 650 CEOs were asked to grade states in which they do business on 16 factors within the three categories and to rate how important each factor is to them in their business. For example, one of the most important factors is the perceived attitude of government to business. That’s one of California’s lowest scores. On the other hand, California’s best score is in arts and institutions. But that is factor of least importance to the CEOs.

Here’s how California and Texas score on the 16 factors compared with the national average and importance to CEOs (click on chart for a larger view):

Source: Chief Executive

Chief Executive says, “State wars for business, employing tax incentives, training grants, land acquisitions and other devices, could become common and fierce.”

Click here to read the report.

Other business stories…

Goldman Sachs Reveals it Shorted Gulf of Mexico

NEW YORK (The Borowitz Report) - In what is looming as another public relations predicament for Goldman Sachs, the banking giant admitted today that it made "a substantial financial bet against the Gulf of Mexico" one day before the sinking of an oil rig in that body of water.

The new revelations came to light after government investigators turned up new emails from Goldman employee Fabrice "Fabulous Fab" Tourre in which he bragged to a girlfriend that the firm was taking a "big short" position on the Gulf.

"One oil rig goes down and we're going to be rolling in dough," Mr. Tourre wrote in one email. "Suck it, fishies and birdies!"

The news about Goldman's bet against the Gulf comes on the heels of embarrassing revelations that the firm had taken a short position on Lindsay Lohan's acting career. More here.

Mexico's illegals laws tougher than Arizona's

Mexican President Felipe Calderon denounced as "racial discrimination" an Arizona law giving state and local police the authority to arrest suspected illegal immigrants and vowed to use all means at his disposal to defend Mexican nationals against a law he called a "violation of human rights."

But the legislation, signed April 23 by Arizona Gov. Jan Brewer, is similar to Reglamento de la Ley General de Poblacion — the General Law on Population enacted in Mexico in April 2000, which mandates that federal, local and municipal police cooperate with federal immigration authorities in that country in the arrests of illegal immigrants.

Under the Mexican law, illegal immigration is a felony, punishable by up to two years in prison. Immigrants who are deported and attempt to re-enter can be imprisoned for 10 years. Visa violators can be sentenced to six-year terms. Mexicans who help illegal immigrants are considered criminals.

The law also says Mexico can deport foreigners who are deemed detrimental to "economic or national interests," violate Mexican law, are not "physically or mentally healthy" or lack the "necessary funds for their sustenance" and for their dependents.

"This sounds like the kind of law that a rational nation would have to protect itself against illegal immigrants — that would stop and punish the very people who are violating the law," said Rep. Steve King of Iowa, ranking Republican on the House Judiciary subcommittee on immigration, citizenship, refugees, border security and international law.

"Why would Mr. Calderon have any objections to an Arizona law that is less draconian than his own, one he has pledged to enforce?" Mr. King said.

Sen. Jon Kyl of Arizona, the ranking Republican on the Senate Judiciary subcommittee on terrorism and homeland security, described Mr. Calderon's comments as "hypocritical to say the least."

"I would have expected more from Mr. Calderon," said Mr. Kyl, who serves as the Senate minority whip. "We are spending millions of dollars to help Mexico fight the drug cartels that pose a threat to his government, and he doesn't seem to recognize our concerns. He ought to be apologizing to us instead of condemning us."

Mr. Kyl, along with fellow Arizona Republican Sen. John McCain, has introduced a 10-point comprehensive border security plan to combat illegal immigration, drug and human smuggling, and violent crime along the southwestern border. It includes the deployment of National Guard troops, an increase in U.S. Border Patrol agents and 700 miles of fencing, along with other equipment and funding upgrades.

He said skyrocketing violence on the border, including the recent killing of an Arizona rancher by an illegal immigrant he had gone to assist, has not gone unnoticed by the public, adding that until the federal government provides the necessary funding and manpower to adequately secure the southwestern border, Arizona will not long remain the only state to pass legislation to do it on its own.

John Whitehead on National ID Card

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Top Ten Reasons You Should Quit Facebook

Top Ten Reasons You Should Quit FacebookFacebook privacy policies keep going down the drain. That's enough reason for many to abandon it. Here you will find nine more:

After some reflection, I've decided to delete my account on Facebook. I'd like to encourage you to do the same. This is part altruism and part selfish. The altruism part is that I think Facebook, as a company, is unethical. The selfish part is that I'd like my own social network to migrate away from Facebook so that I'm not missing anything. In any event, here's my "Top Ten" reasons for why you should join me and many others and delete your account.

10. Facebook's Terms Of Service are completely one-sided

Let's start with the basics. Facebook's Terms Of Service state that not only do they own your data (section 2.1), but if you don't keep it up to date and accurate (section 4.6), they can terminate your account (section 14). You could argue that the terms are just protecting Facebook's interests, and are not in practice enforced, but in the context of their other activities, this defense is pretty weak. As you'll see, there's no reason to give them the benefit of the doubt. Essentially, they see their customers as unpaid employees for crowd-sourcing ad-targeting data.

9. Facebook's CEO has a documented history of unethical behavior

From the very beginning of Facebook's existence, there are questions about Zuckerberg's ethics. According to, he used Facebook user data to guess email passwords and read personal email in order to discredit his rivals. These allegations, albeit unproven and somewhat dated, nonetheless raise troubling questions about the ethics of the CEO of the world's largest social network. They're particularly compelling given that Facebook chose to fork over $65M to settle a related lawsuit alleging that Zuckerberg had actually stolen the idea for Facebook.

8. Facebook has flat out declared war on privacy

Founder and CEO of Facebook, in defense of Facebook's privacy changes last January: "People have really gotten comfortable not only sharing more information and different kinds, but more openly and with more people. That social norm is just something that has evolved over time." More recently, in introducing the Open Graph API: "... the default is now social." Essentially, this means Facebook not only wants to know everything about you, and own that data, but to make it available to everybody. Which would not, by itself, necessarily be unethical, except that ...

7. Facebook is pulling a classic bait-and-switch

At the same time that they're telling developers how to access your data with new APIs, they are relatively quiet about explaining the implications of that to members. What this amounts to is a bait-and-switch. Facebook gets you to share information that you might not otherwise share, and then they make it publicly available. Since they are in the business of monetizing information about you for advertising purposes, this amounts to tricking their users into giving advertisers information about themselves. This is why Facebook is so much worse than Twitter in this regard: Twitter has made only the simplest (and thus, more credible) privacy claims and their customers know up front that all their tweets are public. It's also why the FTC is getting involved, and people are suing them (and winning).

Check out this excellent timeline from the EFF documenting the changes to Facebook's privacy policy.

6. Facebook is a bully

When Pete Warden demonstrated just how this bait-and-switch works (by crawling all the data that Facebook's privacy settings changes had inadvertently made public) they sued him. Keep in mind, this happened just before they announced the Open Graph API and stated that the "default is now social." So why sue an independent software developer and fledgling entrepreneur for making data publicly available when you're actually already planning to do that yourself? Their real agenda is pretty clear: they don't want their membership to know how much data is really available. It's one thing to talk to developers about how great all this sharing is going to be; quite another to actually see what that means in the form of files anyone can download and load into MatLab.

5. Even your private data is shared with applications

At this point, all your data is shared with applications that you install. Which means now you're not only trusting Facebook, but the application developers, too, many of whom are too small to worry much about keeping your data secure. And some of whom might be even more ethically challenged than Facebook. In practice, what this means is that all your data - all of it - must be effectively considered public, unless you simply never use any Facebook applications at all. Coupled with the OpenGraph API, you are no longer trusting Facebook, but the Facebook ecosystem.

4. Facebook is not technically competent enough to be trusted

Even if we weren't talking about ethical issues here, I can't trust Facebook's technical competence to make sure my data isn't hijacked. For example, their recent introduction of their "Like" button makes it rather easy for spammers to gain access to my feed and spam my social network. Or how about this gem for harvesting profile data? These are just the latest of a series of Keystone Kops mistakes, such as accidentally making users' profiles completely public, or the cross-site scripting hole that took them over two weeks to fix. They either don't care too much about your privacy or don't really have very good engineers, or perhaps both.

3. Facebook makes it incredibly difficult to truly delete your account

It's one thing to make data public or even mislead users about doing so; but where I really draw the line is that, once you decide you've had enough, it's pretty tricky to really delete your account. They make no promises about deleting your data and every application you've used may keep it as well. On top of that, account deletion is incredibly (and intentionally) confusing. When you go to your account settings, you're given an option to deactivate your account, which turns out not to be the same thing as deleting it. Deactivating means you can still be tagged in photos and be spammed by Facebook (you actually have to opt out of getting emails as part of the deactivation, an incredibly easy detail to overlook, since you think you're deleting your account). Finally, the moment you log back in, you're back like nothing ever happened! In fact, it's really not much different from not logging in for awhile. To actually delete your account, you have to find a link buried in the on-line help (by "buried" I mean it takes five clicks to get there). Or you can just click here. Basically, Facebook is trying to trick their users into allowing them to keep their data even after they've "deleted" their account.

2. Facebook doesn't (really) support the Open Web

The so-called Open Graph API is named so as to disguise its fundamentally closed nature. It's bad enough that the idea here is that we all pitch in and make it easier than ever to help Facebook collect more data about you. It's bad enough that most consumers will have no idea that this data is basically public. It's bad enough that they claim to own this data and are aiming to be the one source for accessing it. But then they are disingenuous enough to call it "open," when, in fact, it is completely proprietary to Facebook. You can't use this feature unless you're on Facebook. A truly open implementation would work with whichever social network we prefer, and it would look something like OpenLike. Similarly, they implement just enough of OpenID to claim they support it, while aggressively promoting a proprietary alternative, Facebook Connect.

1. The Facebook application itself sucks

Between the farms and the mafia wars and the "top news" (which always guesses wrong - is that configurable somehow?) and the myriad privacy settings and the annoying ads (with all that data about me, the best they can apparently do is promote dating sites, because, uh, I'm single) and the thousands upon thousands of crappy applications, Facebook is almost completely useless to me at this point. Yes, I could probably customize it better, but the navigation is ridiculous, so I don't bother. (And, yet, somehow, I can't even change colors or apply themes or do anything to make my page look personalized.) Let's not even get into how slowly your feed page loads. Basically, at this point, Facebook is more annoying than anything else.

Facebook is clearly determined to add every feature of every competing social network in an attempt to take over the Web (this is a never-ending quest that goes back to AOL and those damn CDs that were practically falling out of the sky). While Twitter isn't the most usable thing in the world, at least they've tried to stay focused and aren't trying to be everything to everyone.

I often hear people talking about Facebook as though they were some sort of monopoly or public trust. Well, they aren't. They owe us nothing. They can do whatever they want, within the bounds of the laws. (And keep in mind, even those criteria are pretty murky when it comes to social networking.) But that doesn't mean we have to actually put up with them. Furthermore, their long-term success is by no means guaranteed - have we all forgotten MySpace? Oh, right, we have. Regardless of the hype, the fact remains that Sergei Brin or Bill Gates or Warren Buffett could personally acquire a majority stake in Facebook without even straining their bank account. And Facebook's revenue remains more or less a rounding error for more established tech companies.

While social networking is a fun new application category enjoying remarkable growth, Facebook isn't the only game in town. I don't like their application nor how they do business and so I've made my choice to use other providers. And so can you.


On May 4, 1970 the Ohio National Guard opened fire into a busy college campus during a school day. A total of 67 shots were fired in 13 seconds. Four students: (L to R) Allison Krause, Jeffrey Miller, William Schroeder, and Sandra Scheuer were killed. Nine students were wounded

Rahm Working With Fed To Beat Back Audit

The White House, Federal Reserve and Wall Street lobbyists are kicking up their opposition to an amendment to audit the Fed as a Senate vote approaches, Sen. Bernie Sanders (I-Vt.), the lead sponsor of the measure, said on Monday.

Banking Committee Chairman Chris Dodd (D-Conn.), who is shepherding the bill through the Senate, told Sanders Monday afternoon that "there's a shot we'll be up tomorrow," Sanders told HuffPost.

In the spring of 2009, Sanders brought a similar amendment to the Senate floor and won 59 votes. Eight senators who voted against it then are now cosponsors of his current measure.

"I think momentum is with us. But I've gotta tell you, that on this amendment, you're taking on all of Wall Street, you're taking on the Fed, obviously, and unfortunately you seem to be taking on the White House, as well. And that's a tough group to beat," said Sanders.

He's been trading calls, he said, with Rahm Emanuel, the White House chief of staff.

Earlier on Monday, HuffPost reported that former Fed Chairman Alan Greenspan wanted dissent kept secret so that people outside the Fed wouldn't involve themselves in their debates.

"We run the risk, by laying out the pros and cons of a particular argument, of inducing people to join in on the debate, and in this regard it is possible to lose control of a process that only we fully understand," Greenspan said, according to the transcripts of a March 2004 meeting. "I'm a little concerned about other people getting into the debate when they know far less than we do."
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Sanders said that Greenspan's comments are all the more reason for an audit. "I think it just adds a lot of weight to what we are trying to do," Sanders said. "It just points to the fact that if there was more transparency then it in fact would have allowed the debate to take place about the subprime mortgage [sic] unfolding crisis at that point. It may have prevented the horrendous recession that we're in now and the near collapse of the financial institutions."

Democratic leadership has yet to decide if an amendment will need 51 or 60 votes for passage, but Sanders said he thought the decision would be made to go with 60.

On April 2, 2009, 59 senators voted for the Sanders-Webb-Bunning-Feingold Amendment that would open the Fed to an audit. Then-Sen. Ted Kennedy (D-Mass.) did not vote and there are indications that his replacement, Sen. Scott Brown (R-Mass.), is supportive.

Meanwhile, eight of the 39 no votes have since signed on to a Sanders bill to audit the Fed or the amendment that will come up: Sens. John Barrasso (R-Wy.), Bob Bennett (R-Utah), Saxby Chambliss (R-Ga.), Thad Cochran (R-Miss.), Orrin Hatch (R-Utah), Johnny Isakson (R-Ga.), Lisa Murkowski (R-Alaska), and Roger Wicker (R-Miss.).

Sen. Mel Martinez (R-Fla.) voted no, but has since been replaced by Republican Sen. George LeMieux.

With Brown, the Sanders amendment would have 69 votes. It has already passed the House of Representatives.

The Yes votes in Arpil 2009 (59)

Akaka (D-HI)
Begich (D-AK)
Boxer (D-CA)
Brown (D-OH)
Brownback (R-KS)
Bunning (R-KY)
Burr (R-NC)
Burris (D-IL)
Byrd (D-WV)
Cantwell (D-WA)
Cardin (D-MD)
Casey (D-PA)
Coburn (R-OK)
Collins (R-ME)
Conrad (D-ND)
Cornyn (R-TX)
Crapo (R-ID)
DeMint (R-SC)
Dorgan (D-ND)
Durbin (D-IL)
Ensign (R-NV)
Feingold (D-WI)
Feinstein (D-CA)
Graham (R-SC)
Grassley (R-IA)
Hagan (D-NC)
Harkin (D-IA)
Hutchison (R-TX)
Inhofe (R-OK)
Inouye (D-HI)
Kerry (D-MA)
Klobuchar (D-MN)
Landrieu (D-LA)
Leahy (D-VT)
Levin (D-MI)
Lincoln (D-AR)
McCain (R-AZ)
McCaskill (D-MO)
Merkley (D-OR)
Mikulski (D-MD)
Murray (D-WA)
Nelson (D-FL)
Pryor (D-AR)
Reid (D-NV)
Risch (R-ID)
Roberts (R-KS)
Rockefeller (D-WV)
Sanders (I-VT)
Sessions (R-AL)
Snowe (R-ME)
Specter (R-PA)
Stabenow (D-MI)
Tester (D-MT)
Thune (R-SD)
Udall (D-NM)
Vitter (R-LA)
Webb (D-VA)
Whitehouse (D-RI)
Wyden (D-OR)

The no voters who have since signed on to an audit (8)

Barrasso (R-WY)
Bennett (R-UT)
Chambliss (R-GA)
Cochran (R-MS)
Hatch (R-UT)
Isakson (R-GA)
Murkowski (R-AK)
Wicker (R-MS)

The no voters who have not signed on to an audit and are still in the Senate (30)

Alexander (R-TN)
Baucus (D-MT)
Bayh (D-IN)
Bennet (D-CO)
Bingaman (D-NM)
Bond (R-MO)
Carper (D-DE)
Corker (R-TN)
Dodd (D-CT)
Enzi (R-WY)
Gillibrand (D-NY)
Gregg (R-NH)
Johanns (R-NE)
Johnson (D-SD)
Kaufman (D-DE)
Kohl (D-WI)
Kyl (R-AZ)
Lautenberg (D-NJ)
Lieberman (ID-CT)
Lugar (R-IN)
Martinez (R-FL)
McConnell (R-KY)
Menendez (D-NJ)
Nelson (D-NE)
Reed (D-RI)
Schumer (D-NY)
Shaheen (D-NH)
Shelby (R-AL)
Udall (D-CO)
Voinovich (R-OH)
Warner (D-VA)

Press TV-On the edge with Max Keiser-Goldman Sachs Fraud-04-30-2010

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Max Keiser is on the edge of the financial news where future financial scandals, market crashes and monetary crisis begin .Be there before it happens

IRS Not Part of Federal Government

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Tax chat could land you a £5,000 fine: Big Brother law threatens innocent advice

Anybody who advises a friend to take out an Isa or gives them a similar tax-saving tip risks a £5,000 fine, experts warned yesterday.

They attacked proposed 'Big Brother' powers for HM Revenue and Customs which could ensnare those simply trying to help a friend, relative or colleague to cut their tax bill.

Innocent victims could include a person who mentions to a friend in the pub that an Isa is a way of saving £10,200 a year tax-free.

Anybody who advises a friend to take out an Isa or gives them a similar tax-saving tip risks a £5,000 fine, experts are warning

Anybody who advises a friend to take out an Isa or gives them a similar tax-saving tip risks a £5,000 fine, experts are warning

Even a vicar who encourages the congregation to donate money using the Gift Aid envelopes, rather than putting cash straight into the Sunday collection, may fall into the trap.

Charities could also be hit by the draconian new 'tax avoidance' law, experts claim.

It will make it an offence to hold any conversation - even in private, with friends - if it offers clues on how to pay less tax.

Professor Anne Redston, a tax and legal expert from King's College, London, described the proposed legislation as 'dangerous, disproportionate and an erosion of fundamental freedoms'.

She warned: 'It effectively criminalises the provision of ordinary advice on taxation by the man in the street.'

The Chartered Institute of Taxation called for the draft Bill containing the powers to be 'torn up'.

Tax policy director John Whiting said the rules are 'patently absurd' and must be rewritten - or risk turning people who are trying to help into criminals.

The proposed rules are contained in the Tax Agents: Deliberate Wrongdoing draft Bill, which is trying to crack down on any 'tax agent' whose advice leads to a 'loss of tax' for HMRC.

It is the definition of a 'tax agent' which is fuelling much of the controversy as it includes anybody who gives tax advice 'free of charge' and 'otherwise than in the course of business'.

This means it is not just tax professionals, such as accountants and financial advisers, but anybody who suggests ways of cutting a tax bill, even though they are completely legal.

Tax evaders such as multi-millionaires who do not pay a penny in income tax are targeted, but so is anybody who tries to make use of legal tax-saving tips.

The consequences for offering well-meaning advice such as pointing out that saving into a pension attracts tax relief could be extremely expensive, with fines of up to £5,000.

Victims could also be forced to pay a fine worth 100 per cent of the 'lost revenue' that HMRC would have got if the advice had not been followed.

Mike Warburton, of accountants Grant Thornton, said: 'This is really draconian stuff. It is Big Brother.

'It means everybody will have to tread carefully before they talk to anybody on any financial matter.'

Experts accuse HMRC of trying to grab as much tax as possible to help fill the black hole in the nation's finances.

An HMRC spokesman said: 'The draft legislation is not intended to target anyone giving fair and honest tax advice. "Deliberate wrongdoing" means the same as "fraud" or "dishonesty".

'Providing advice to clients about how they might best order their affairs, including tax planning and tax avoidance, cannot trigger the legislation in the absence of such fraud.'

Postal vote fraud: 50 criminal inquiries nationwide amid fears bogus voters could swing election

Voter fraud could determine the outcome of the general election as evidence emerges of massive postal vote rigging.

Police have launched 50 criminal inquiries nationwide amid widespread cases of electoral rolls being packed with ‘bogus’ voters.

Officials report a flood of postal vote applications in marginal seats. With the outcome of the closest election in a generation hanging in the balance, a few thousand ‘stolen’ votes there could determine who wins the keys to Downing Street.

'Stolen': There has been a recent flood of postal vote applications in marginal seats, officials say

'Stolen': There has been a recent flood of postal vote applications in marginal seats, officials say

Anti-sleaze campaigner Martin Bell said: ‘There is actually a possibility that the result of the election could be decided by electoral fraud. That’s pretty grim.

‘We are facing a situation where we can no longer trust the integrity of our electoral system. It was a huge mistake to extend the postal vote. It opened up our system to all kinds of frauds.’

Out of a total estimated electorate of 46million, 7million have registered for postal votes.

The Metropolitan Police are examining 28 claims of major abuses across 12 boroughs - with four separate investigations in Tower Hamlets, East London.

Labour supporters stand accused of packing the electoral roll at the last minute with relatives living overseas or simply inventing phantom voters.

Officials in Tower Hamlets received 5,166 new registrations just before the April 20 deadline, and there has been no time to check them all.

In Bethnal Green, it is feared the electoral register has been deliberately stacked with fictitious names.

Yesterday the Mail visited one four-bedroom flat in the area where 18 men are apparently claiming a vote, all of whom registered within the past month.

The students living there were baffled by many of the names said to be residing with them. Another resident was surprised to learn that eight complete strangers were also registered as living in the small flat she shares with her partner.

Other addresses investigated by the Mail were linked to the Labour Party.

At a property in Rainhill Way, Bethnal Green, where Labour Party council election candidate Khales Uddin Ahmed lives with his family, seven adults have suddenly joined the electoral roll.

A few streets away, where Labour councillor Shiria Khatun is seeking re-election, her household has been boosted by three new voter registrations at her small flat within the past few weeks.

Her husband angrily slammed the door when questions were asked yesterday.

Campaign stop: Gordon Brown meets four-month-old twins Grace and Sophie Rose Lund-Conlon in Ipswich. Opinion polls indicated Britain remained on course for a parliament with no outright majority

Campaign stop: Gordon Brown meets four-month-old twins Grace and Sophie Rose Lund-Conlon in Ipswich. Opinion polls indicated Britain remained on course for a parliament with no outright majority

The Mail’s Richard Kay has learned that for the first time ever the Commonwealth is dispatching a group of election monitors – more used to supervising banana republics – to scrutinise the results on Thursday.

Opposition parties fear a concerted effort is being made to swing the election.

Tower Hamlets Conservative councillor Peter Golds said: ‘There is increasing evidence of ongoing electoral corruption. I am concerned that there will be no attempt to investigate this before election day.

‘All the dodgy addresses seem to involve Bangladeshi names, and the police are terrified of investigating that community for fear of being branded racists.

Morning jog: David Cameron runs along the seafront in Blackpool yesterday

Tight race: David Cameron runs along the seafront in Blackpool yesterday

‘At one of the addresses, a Russian woman answers the door. How many Bangladeshi men live together with a Russian woman?’

Numerous other examples of this corruption are coming to light, including a visitor from Bangladesh who arrives with a tourist visa next week, but whose postal vote has already been sent off.

The problem is not confined to London. In Yorkshire, five police investigations are under way in Bradford and Calderdale, where two arrests have been already been made.

In Derby, police are investigating several claims of electoral fraud, including one case where a female voter was allegedly intimidated by three men who demanded that she fill in and sign postal votes for the Labour Party.

In Surrey, Tory activists have received reports that two members of a rival party pretended to be Conservatives and bullied a man on a ventilator in hospital into signing over his postal vote to them.

Under election law, anyone from Commonwealth countries can vote in the general election if resident in the UK.

But names can be added to the electoral roll – and become eligible for postal votes – without anyone checking their identities or whether they are actually in the country.

In 2005 around 15 per cent of all votes were cast using a postal vote, but the Electoral Commission watchdog believes that figure will rise this time.

In the last month there were 150,000 applications and, in some areas, postal vote registrations have increased by 200 per cent since 2005.

Surveys of the most marginal seats, where the election will be decided, have revealed a surge in postal voting.

In the key marginals Edinburgh South and Barnet, postal votes are up by 60 per cent, while Brighton has seen an increase of 40 per cent in voter registration.

Nick Clegg stands with his wife Miriam Gonzalez Durantez, right and television presenter Floella Benjamin, left, at the Palace Project community centre in Streatham

Standing tall: Nick Clegg with his wife Miriam Gonzalez Durantez, right and television presenter Floella Benjamin, left, at the Palace Project community centre in Streatham

In Islington, a vital Labour-Lib Dem marginal, the numbers on the electoral roll have increased by nearly 20,000 to 135,800 in just five years.

The Electoral Commission, which oversees the elections process, warned seven years ago that widespread postal voting is open to fraud.

But rules to ensure that every voter has to provide personal ID before joining the electoral roll will not come into force for three years.

LEO MCKINSTRY: Postal passport to ballot frauds - a farce that shames democracy

The integrity of our voting system used to be taken for granted. Whatever their allegiance, voters could have absolute faith in the outcome of a General Election.

But, like so many other British traditions, the credibility of our democracy has been badly weakened during the last 13 years of Labour rule.

Thanks to the introduction of mass postal voting on demand, the stench of malpractice now hangs over the process, whether it be through serial abuses on the electoral roll or widespread fraud in the casting of postal votes.


The postal voting process is easily open to manipulation

With the result of the General Election so uncertain and the gap between the three main parties so narrow, the potential for corruption is deeply worrying.

This Thursday postal voting will play a far bigger role than in any previous contest, with more than seven million people having registered for a postal ballot.

In the last month alone, there were 150,000 applications and, in some areas, the number of registrations for postal votes has increased by 200 per cent compared with the 2005 election.

Yet, unlike voting at a polling station, the postal process is easily open to manipulation by political parties and criminals because no proper checks are made on the electors’ identities.

The same problem applies to the electoral roll, where names are added or removed without effective investigation, a flaw compounded by the phenomenal demographic upheaval caused by mass immigration.

With an annual inflow running at over 500,000 and emigration by Britons reaching almost 400,000 a year, electoral registers have increasingly turned into little more than works of fiction.

The Government and its agencies have been celebrating the recent surge in registrations and postal vote applications as evidence of a new enthusiasm for politics amongst the electorate, due partly to the TV debates.

The reality is that it has undermined the whole democratic process.

A study by the Council of Europe in 2008 stated that ‘the voting system in Great Britain is open to electoral fraud’, since it was ‘childishly simple’ to register bogus voters, while ‘postal voting provides the anonymity to carry out fraud without detection’.

Particularly disturbing is the position in the crucial marginal seats that will decide the outcome of election.

Here, in a desperate drive to boost support, all the major parties have been making intensive efforts to increase registration and postal voting.

In Edinburgh South, a vital three-way marginal, postal votes are up by 60 per cent, while in the London borough of Islington, scene of a bitter fight between Labour and the Liberal Democrats, the numbers on the electoral roll have increased by nearly 20,000 to 135,800 since 2005.

Kerry McCarthy was reported to police after she put postal vote results on her Twitter page

Kerry McCarthy was reported to police after she put postal vote results on her Twitter page

Five police investigations are under way in the Yorkshire conurbations of Bradford and Calderdale, where two arrests have been made.

In London, police are examining 28 allegations of major abuses across 12 boroughs. In one typical case, a resident of Bethnal Green was surprised to learn that eight complete strangers were also registered at the small flat she shares with her partner.

Responding to mounting concern about corruption, John Turner, chief executive of the Association of Electoral Administrators, admitted ‘fraudulent activity’ was easy to perpetrate.

‘It’s not a properly verified system and it should be.’

This growing threat to democracy has happened entirely because of decisions taken by Labour.

Despite strong opposition, it pressed ahead in 2004 with the introduction of postal voting on demand without any safeguards or tightening of the register.

Before then, voters had to provide a valid reason why they needed to vote by post, such as work commitments, disability or holiday.

The theoretical justification was to boost turnout at a time of growing public apathy. But in reality, Labour saw that an insecure-system could work to the party’s advantage in urban areas where the population is more fluid.

This is particularly true among inner-city wards dominated by Asian clan leaders who effectively control the local franchise and even set up ‘voting factories’ to process ballot papers.

Almost all the worst instances of fraud since 2000 have arisen in places with large concentrations of Asian voters, such as Blackburn, Oldham and Tower Hamlets.

In the Birmingham local elections of 2004, six Muslim men stole thousands of ballot papers and marked them for Labour candidates. The Election Commissioner, Richard Mawrey QC, said at their trial that the contest ‘would have disgraced a banana republic’.

Yet the problem remains as bad as ever. A BBC report last week found that Asian activists are targeting British Pakistanis who have relocated in their thousands to the Pakistan district of Maipur.

The activists are going door to door asking any who are still eligible for a British vote to sign over their entitlement to a proxy or postal vote.

As a result, it is claimed that many have signed forms for this week’s elections, without knowing who they are voting for.

This is a farce that shames democracy. But Labour, desperate to cling on to power, does not care about rebuilding trust. Partisan gain is all that matters.

Labour’s willingness to exploit a dodgy system was graphically illustrated in its two unexpected recent by-election triumphs in Scotland.

At Glenrothes in 2008, the neighbouring seat to Gordon Brown’s at Kirkcaldy, there was a fourfold increase in postal ballots and Labour’s opponents demanded to see the marked official register which showed whether individuals had voted or not.

Unbelievably, the Sheriff ’s Clerk’s Office in Kirkcaldy had to explain, after five months, that the register had ‘gone missing’.

And Labour’s win in Glasgow North East last November followed a dramatic increase in postal votes, with almost 2,000 applications submitted less than three days before the registration deadline.

The Electoral Commission complained that Labour ‘did not comply’ with the code of conduct on the submission of postal-vote applications.

Labour would no doubt just dismiss this as scaremongering. But the truth is that the Government’s own cynicism towards the voting process could make this the most tainted, distorted result in General Election history.

One disquieting straw in the wind could be seen last Friday, when Kerry McCarthy, Labour candidate for Bristol East, revealed details on her Twitter page of an early sample of postal votes

She has been accused of breaching electoral law, since candidates are not meant to release such information.

But even more alarming is the apparent extent of her lead, despite Labour’s fall to third place in most opinion polls. If Labour is still in power on Friday, the entire voting system will be in the dock.

Election 2010: Brown worst PM says Labour candidate

A Labour candidate has launched a personal attack on Gordon Brown, saying he is "the worst prime minister we have had in this country".

Manish Sood, who is standing in North West Norfolk, added that Mr Brown was a "disgrace".

Mr Sood called Labour ministers "corrupt" and said the party had allowed immigration to get too high.

Labour said Mr Sood's remarks were "dreadful" and the latest in a series of "bizarre comments" he has made.

The party has not suspended him, so as things stand his name will still be on the ballot paper for Labour.

'Owes apology'

Mr Sood had been speaking to a local newspaper, Lynn News.

He went on to say the prime minister "owes an apology to the people and the Queen".

Manish has been divorced from this campaign for some time
David Collis
Chairman of North West Norfolk Constituency Labour Party

Mr Sood, who is a Labour councillor in Leicester, later told the BBC News Channel that he stood by his comments.

"What he [Gordon Brown] is doing is basically making things worse and worse," said Mr Sood.

"At the end of the day if he can't do the job properly, he should give it to someone else…it is as simple as that."

Mr Sood claimed that some Labour activists in his constituency would be "happy" with his comments, because they were "fed up" with the current situation in the party.

"Those who are obviously staunch supporters of Gordon Brown will feel affected, but those who want to change and those who believe in true social moral values are obviously on my side," Mr Sood added.

David Collis, chairman of North West Norfolk Constituency Labour Party, said Mr Sood did not represent their views.

"Manish has been divorced from this campaign for some time, but clearly determined to get as much attention for himself as possible," said Mr Collis.

"Despite having such a dreadful candidate, loyal Labour members will continue to put the case for Gordon Brown as the best man to take Britain forward."

He added: "We are fully in support of Gordon Brown as leader of our party and of the excellent campaign he is running."


A Labour source told the BBC that the party had tried in the past to deselect Mr Sood, but the attempt to move him out of the constituency had foundered on a technicality.

Speaking on the BBC's Daily Politics show, Labour's Douglas Alexander said Mr Sood's comments were "very eccentric and bizarre".

"These views won't distract us from the job in hand," he said.

Meanwhile, Justice Secretary Jack Straw told BBC Radio 4's World at One that Mr Sood's statements were "completely maverick".

"You get maverick actions by Conservatives as get this at any election."

Ed Davey, the Lib Dems' chief of staff, said Mr Sood's comments were "quite amazing".

"This will add to the desperation in the Labour camp," he added.

Mr Sood's mother, Manjula Sood, also a Labour councillor in Leicester, said: "My late husband gave his life to the Labour Party and my loyalty is to the party and to what Gordon Brown has done for the country.

"My son holds his own views but I'm very angry about this and very angry with him."

The constituency of North West Norfolk was won in 2005 by Conservative candidate Henry Bellingham who is standing again, with 49.9% of the vote.

The full list of candidates in Norfolk North West is as follows:

Henry Bellingham - Conservative

David Fleming - British National Party

John Gray - UK Independence Party

Manish Sood - Labour

William Summers - Liberal Democrat

Michael de Whalley - Green