Tuesday, May 11, 2010

Fannie Mae Needs $8.4 Billion More

Fannie Mae asked the U.S. government for an additional $8.4 billion in aid after posting an $11.5 billion net loss for the first quarter, the latest sign that the bailout of the mortgage investor and its main rival, Freddie Mac, is likely to be the most expensive legacy of the U.S. housing-market bust.

Fannie's losses reflected continuing weakness in the housing market and would have been worse without accounting changes that reduced its deficit. The quarterly loss was an improvement from the $23.5 billion loss for the year-ago quarter and marked the 11th consecutive quarterly loss for the Washington-based firm.

The company has now racked up losses of nearly $145 billion, or nearly double its profits for the previous 35 years. While many of the nation's biggest banks have repaid their government loans and some are back to racking up big profits, Fannie and Freddie are still suffering from the housing-market crisis.

In recent weeks, the Treasury pointed out how private-sector banks, insurers and even auto makers have repaid loans under the Troubled Asset Relief Program. But red ink continues to gush from Fannie and Freddie because of their huge exposure to home loans.

"Everyone's trying to sweep it under the rug, but there's a very large embedded loss that hasn't been fully realized yet," says Kenneth Rosen, chairman of the Fisher Center for Real Estate and Urban Economics at the University of California, Berkeley. "Someone's going to have to write a check, and it's very large."

The government's tab for Fannie will climb to $84 billion, while Freddie's stands at $61 billion. The government took control of both companies in 2008 through a legal process known as conservatorship as rising losses threatened to wipe out their thin capital reserves.

Fannie's losses have surpassed Freddie's because its $3 trillion book of loan guarantees is nearly one-third larger than Freddie's. Delinquencies are higher at Fannie because the firm more aggressively dialed up its appetite for riskier loans at the peak of the housing boom.

Despite their losses, the firms are helping to stabilize the housing market. Fannie, Freddie and the Federal Housing Administration provided guarantees or insurance for 96.5% of the home mortgages that originated in the first quarter, according to Inside Mortgage Finance, a trade publication. The companies also play a central role in the Obama administration's loan-modification effort designed to avert foreclosures.

Losses at Fannie and Freddie continue to grow because the firms must set aside more capital to cover anticipated losses as mortgage delinquencies rise. The Treasury kicks in more capital every quarter if revenues can't meet those financial needs. Unlike many financial companies, the firms are exposed to a single asset class, holding nearly $5.5 trillion in mortgages and loan guarantees.

Fannie's capital hole would have risen by $3.3 billion without new accounting rules that took effect Jan. 1. The firm's losses were driven by deterioration in its $3 trillion book of loan guarantees, which accounted for a $12.5 billion loss.

One possible signal that losses will slow in the coming months: Fannie said 5.47% of its loans were 90 days or more past due at the end of March, down from 5.59% in February and the first monthly decline in nearly three years. That has stemmed in part from efforts to modify loans and from an uptick in liquidating delinquent loans through foreclosure. The company said Monday that credit losses could decline this year from record highs last year as delinquencies begin to level out.

The company's loan-loss reserves fell to $61 billion from $64 billion three months ago, even as its pool of nonperforming loans grew to $224 billion from $217 billion. "If I was the government, I would plead with Fannie or Freddie to reserve far more than they are right now," given the prospect of future home-price declines, said Anthony Sanders, a real-estate finance professor at George Mason University in Fairfax, Va.

But the terms of the government conservatorship, which require Fannie and Freddie to pay an annual 10% dividend on their Treasury draw, could create an incentive to reserve more conservatively. Fannie had to pay the government $1.5 billion in dividends last quarter. "They don't want to raise the reserve levels because in a sense it doesn't matter and it could be perversely damaging to them," says Mr. Sanders.

In its filings Monday, in the coming months Fannie said it wasn't likely to repay that its debt to the Treasury for the "indefinite future."

INFLATION ALERT! Costs SOAR 18.7%, Dow Illusion Vs. Gold

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Homeless in downtown tunnel get notices to leave

tunnel, homeless, tucker
May 10, 2010 - A resident of 'Hopeville,' who identified himself only as the letter 'D,' reads a final notice left by division of homeless services workers Monday morning at camp sites under Tucker Boulevard. The notice declared that people would be trespassing if they stayed past 8 a.m. on May 14. Workers also left behind large trash bags and identification tags so that homeless residents could pack their belongings before a bridge is demolished over the railroad tunnel. (Robert Cohen/P-D)

ST. LOUIS -- The city has given homeless people living in an abandoned tunnel under Tucker Boulevard a deadline to leave the site: 8 a.m. Friday.

Workers with the Division of Homeless Services handed out notices this morning to the people who have created a tent community in the tunnel. The city plans to seal off the 80-year-old tunnel system on Monday so work can begin on a $34 million project to improve a stretch of Tucker Boulevard downtown, from Washington Avenue to Cole Street.

The homeless camp has swelled to as many as 65 tents in recent weeks, with many of the supplies and equipment provided by the Rev. Larry Rice of the New Life Evangelistic Center. He is pressing the city to set aside an acre of land for the homeless, but city officials and social service agencies have accused him of aggravating the situation and exploiting homeless people by drawing more of them to the Tucker tunnel.

In addition to the notices, workers this morning handed out bags and ID tags so the tunnel dwellers can pack and keep track of their items. Bill Siedhoff, director of the city's Department of Human Services, said anyone who doesn't leave the camp by Friday morning may be arrested.

"They are trespassing right now as we speak and they need to leave that area," he said. "We don't want to arrest anyone, but if push comes to shove, and we are forced into a situation like that, those are the measures we will take. We've tried to be as reasonable as we can."

The city has also offered to help the homeless people find a shelter.

"We want everybody to leave peacefully," Siedhoff said.

A few have already left and others said today they were planning to relocate, possibly near the river so they can fish and be closer to water.

"I gotta find another place to go," said Brad Rosemann, 37, who's been homeless since being released from jail about a month ago. He added that he wasn't aware there was housing or shelter available.

Michael Large, 27, who has been one of the more outspoken tunnel residents, wasn't sure when he would leave. He's interested in waiting to see how events play out on Friday morning.

"I just want to see" what happens, he said. "That's why they call this the Show Me State."

How the Financial Elite almost took down the entire economy on May 6th, 2010

I don’t buy into the many conspiracy theories that continually seem to get resurrected, but I expect that this particular thesis, from Max Keiser, may very well have legs:

“May 6th was an unequivocal act of domestic financial terrorism in America. A day that will live in infamy.

To scare the lawmakers, themselves large owners of the very banks and stocks that they are supposed to be regulating, a financial Weapon of Mass Destruction was put to their head and they acquiesced.

As the inventor of the continuous double-auction, market-making technology (VST tech. US pat. no. 5950176) that is referenced 132 times by program trading and HFT patents since 1996, I can tell you that
Goldman, JP Morgan and the gang simply pulled the ‘buys’ from their
computer trading programs and manufactured a crash. And when the coast
was clear, and it was clear the politicians were not going to vote for
anything that would break up the ‘too big to fail’ banks; all the
’sells’ were pulled from the computers and the market roared back.

This is a Manchurian Candidate market where program trading bots start the ball rolling in whatever direction Wall St. wants the market to go – and then hundreds of thousands of day-traders watching Cramer
on CNBC jump on the momentum bandwagon and commit the crime for the
Wall St. financial terrorists, who then say, ‘It wasn’t us, it was ‘the

Amped Content goes on to note that coincidentally the day after the crash, the “break up the too big to fail banks” amendment was soundly defeated by a 61 to 33 margin in Senate. And, a deal was struck to
eliminate key provisions from the audit of the Federal Reserve bill.
And, Goldman was meeting with the SEC to work out a settlement in their
case against them.

I am always reluctant to put much stock into these nefarious “coincidences” — but I have to admit that Max’ theory here is quite intriguing . . .

British Gas profits soar as freezing winter kept Brits reaching for the thermostat

British Gas amassed thumping profits in the first three months of the year as the nation froze during the coldest winter for a generation.

The plunging temperatures forced the company's 15.9million customers to turn up the central heating and meant they used an average of 7 per cent more gas than a year ago.

That increase came against a background of a sharp fall in wholesale prices, resulting in a profits windfall for the UK's biggest energy supplier.

British Gas cut its gas price in February but the scale of the reduction did not match the lower wholesale price of gas.

The net result is that while its customers ended up with slightly lower bills for the three months compared with a year ago, the company's profits soared.

British Gas is owned by Centrica which published its latest trading statement to the City yesterday.

It did not put a specific figure on the profits for the three months, however they are thought likely to drive the total for the full year to a record high.

Profits at British Gas rose a staggering 58 per cent last year to £595million and are expected to climb yet higher this year.

All the 'big six' energy suppliers have been accused of profiteering over the winter months.

Consumer groups, charities and politicians said they had plenty of scope to cut prices before the coldest winter in 30 years.

British Gas insists its decision to delay its price cuts until February, when gas tariffs were reduced by 7 per cent, was a fair approach.

The reduction meant the average bill paid by its customers for January through to the end of March was £373, which was some £8 less than the same period last year.

Another factor in the reduction was that many people have taken steps to insulate their home to avoid the need to keep the central heating burning.

British Gas’ managing director, Phil Bentley, said: 'We are absolutely focused on helping our customers use less energy and cut their fuel bills.

'Despite the increased gas use during the severe cold snap, we are succeeding in making overall reductions in the use of gas and electricity, against the reported trend in the UK.'

British Gas' rivals - Scottish & Southern Energy, nPower, E.on, EDF and Scottish Power - delayed their tariff reductions until March, when the worst of the freeze was over.

The line taken by British Gas meant it has signed up 200,000 new residential customers so far this year, as well as 100,000 servicing contracts.

The group installed 20per cent more central heating systems than a year earlier - thanks to cheaper pricing and the Government's boiler scrappage scheme.

The cold weather also boosted profits at its business energy supply arm due to higher than expected demand.

The healthy profits from the group's energy supply arm were however offset by much tougher conditions for Centrica's upstream oil and North Sea gas production.

While gas and oil production was 59per cent ahead of the previous year - helped by acquisitions - wholesale gas prices were low due to a market glut and weak demand.

The company said it expected the lower wholesale gas prices to continue this year.

Centrica said: 'Overall the outlook for group earnings for the full year remains positive, subject to the usual variables of commodity price movements and weather patterns.'

Shares in group, which have outperformed other major British utility companies by 4per cent since the start of the year, were up by another 4.4per cent in early trading.

Fed Set to Go Nuke to Help Bailout Europe

The Federal Reserve has announced that it will re-establish the temporary U.S. dollar liquidity swap facilities with the Bank of Canada, the Bank of England, the European Central Bank (ECB), and the Swiss National Bank that it first implemented in the early part of the financial crisis.

Further details on these arrangements will be available shortly. It appears, though, that for all practical purposes, the Fed has agreed to bailout the world. Essentially, foreign central banks will print up any amount of money they want in their currency and the Fed will print up an equal amount of dollars that they will then loan to the foreign central banks (against the foreign banks newly printed money)who will then loan the funds to the banksters who will use as collateral the securities of the PIIGs, to gain the dollars.

Needless to say this is complete and utter madness. It is potentially extremely inflationary on a global scale.What's more, outside of banksters, no one in America will benefit from this move. Every one in America could suffer from the potential inflationary consequences.

The size of these swaps must be watched very closely. It does not appear that these funds will be stored as excess reserves. This means they will be out in the system. Every $100 billion added to the system in this manner (unless somehow sterilized by money drains elsewhere) will mean an immediate increase of 1.16% in M2 money supply. But this $100 billion would be high powered money. This means the final impact would be a multiple of the initial Fed money creation.

Given that the U.S. financial situation is delicate, and the Fed is likely to be called on to bailout the Treasury Department within a short-time, for the U.S. to be a major player in the bailout of Europe is sheer madness. It's the taller drunk holding up the shorter, eventually they will both collapse.

Bottom line: The Federal Reserve bank is on the edge of pushing the financial nuclear button, and print money in reckless abandon. Even if this were done for Americans it would be a terrible policy, but to do this for foreigners, where there would be little benefit for Americans reflects the extraordinary madness of the elite bankers.

The full Fed statement is in the EPJ vault, here.

Revenues down, state to tap ‘rainy day’ fund

LITTLE ROCK — State revenues fell by $41 million in April, forcing the state to again cut its forecast this fiscal year and to tap the state’s “rainy day’ fund.

Richard Weiss, director of the state Department of Finance and Administration, said the decline last month was mostly in one-time individual income tax collections.

The two economic indicators that the state closely watches, sales tax collections and tax withholdings, were both above forecast.

Gov. Mike Beebe announced he would release about $25.4 million from the state’s $40 million “rainy day’ fund to avert cuts in state services. Most of that money will go to the state’s public schools, Weiss said.

The remaining shortfall will be funded with a $17.3 million transfer from the unspent general revenue in the Education Facilities Partnership Fund, the governor said.

Despite the reduction, Beebe said the “overall economic trend remains positive.”

“If this anomaly had hit a few weeks ago, we might have been able to make up for it over time,” the governor said in a news release. “However, with only two months left in the current fiscal year, we are going to move more money, including rainy-day funds, to prevent any potential cuts in state services. We set aside rainy day money for this exact type of scenario.”

The governor cut the budget $100 million in October because of a shortfall in state revenue, and another $106 million in January before the Legislature’s budget session began.

Net available revenues in April totaled $441.7 million, 10.2 percent below April of last year and $32 million, or 6.8 percent, below forecast for the month.

Gross receipts, mostly from sales tax revenue, totaled $601.2 million, which was $49 million, or 7.5 percent, below a year ago and $41.2 million, or 6.4 percent below forecast.

Individual income tax collections brought in $364.8 million, a $50 million drop from last year, and $39.4 million, or 9.8 percent, below forecast.

Ron Paul: Euro Bailout Will Lead To Currency Collapse

As Europe is bailed out to the tune of nearly $1 trillion dollars, Congressman Ron Paul warns that the constant monetization of debt, allied with taxpayer-funded bailouts, will inevitably lead to runaway inflation and the collapse of paper currencies.

Under the terms of the Federal Reserve’s credit swap deal with the EU – in addition to an additional IMF bailout of which U.S. taxpayers will be picking up 20 per cent ($57 billion dollars) of the tab, Paul pointed out that not just taxpayers but “anybody that buys anything” will be funding the European bailout because of the attendant inflationary consequences.

“The prices are going up already, producer prices are going up, the cost of living will go up so everyone in American will suffer and eventually the whole world will suffer because we cannot carry the whole world with our dollar,” Paul told Fox Business, adding that eventually people will lose confidence in the dollar.

The Congressman agreed with the host that the bailouts would lead to the crash of paper currencies, noting that last week’s stock market turmoil was accompanied by gold acting as a currency rather than just reacting to the value of the dollar.

“Gold has been money for 6,000 years and it will remain that way and it will rule the roost,” said Paul, adding that the dollar was weak in comparison with the strength of gold.

“All paper currencies are under attack and this cannot be sustained,” said the Congressman.

Paul then explained how the ECB has completely reversed its promise that it wouldn’t monetize debt and how Bernanke had also gone back on his word that U.S. dollars would be use for this purpose. “When I talked to Bernanke last time in the Committee he said they had no intention of bailing out Greece but they are, through the IMF as well as opening up these swap lines to all the central banks, so it is on the shoulders on the burden of the American taxpayer and our dollar so all we’re doing is perpetuating a very very bad system and this is not a solution at all,” he said.

Paul agreed with the host that the bailout was merely a stunt to buy time while failing to address the underlying problem of European socialism and the entitlement culture, which is fast running out of money with which to keep itself ticking over.

Watch the clip below.

Outrage: Obama Administration Targets Military for Pay Reductions

President Barack Obama — who came to power with the help of government employee unions across the nation and has lavished on them hundreds of billions in stimulus funds to keep them on federal, state and local payrolls with no strings attached — is moving to cut spending on salaries for military personnel.

This weekend The Washington Post headlined story, "Pentagon Asking Congress to Hold Back on Generous Increases in Troop Pay,” disclosed that the Obama administration is “pleading” with Congress to give military personnel a much smaller increase in pay than lawmakers have proposed.

The Pentagon contends that Congress simply has been too generous with troops during the past decade.

In fact, lawmakers have lavished so much money on troops, according to the Post, that service members are now better compensated than workers in the private sector with similar experience and education levels.

For example, the military brass claims that an average sergeant in the Army with four years of service and one dependent would receive $52,589 in annual compensation, according to the paper. This figure includes basic pay, housing, and subsistence allowances, as well as tax benefits.

Meanwhile, a U.S. postal letter carrier, with no supervisory or hazardous duty, makes approximately $80,000 a year when all benefits are factored in.

Critics of the Obama administration’s efforts to cut soldier’s pay say America’s security has been strengthened by higher pay rates, as qualified veterans are re-enlisting at record rates, reversing the problem the military witnessed just a few years ago.

"Any attempt to link rising military personnel costs with shrinking military readiness is total nonsense," said Thomas J. Tradewell Sr., who leads the Veterans of Foreign Wars, the largest and oldest major combat veterans organization.

"If the Defense Department needs a larger budget for personnel programs, then let the VFW carry that message to Congress. Just don't pin the budget blame on service members and military retirees."

Tradewell's ire was targeted this past week at Clifford L. Stanley, the Defense undersecretary of personnel and readiness, who said during recent testimony before the personnel subcommittee of the Senate Armed Services Committee: "Rising personnel costs could dramatically affect the readiness of the department."

"What's hurtful," said Tradewell, a combat-wounded Vietnam veteran from Sussex, Wis., "is a continuing perception that DoD is more concerned about the budget than they are about recruiting and retaining a professional volunteer force that's been at war now for more than eight years."

According to Stanley, last year was the military's most successful recruiting year since the establishment of the all-volunteer force in 1973.

Although advocates for military families argue that the decade-long spending spree reverses severe cuts that the military suffered in the 1990s, Defense Secretary Robert M. Gates and other military brass fear that the spending will threaten security in the years to come. That will mean less money to buy weapons and maintain aging equipment.

On Saturday, Gates told reporters that massive deficits can impact how the president and policy makers confront emerging threats like Iran.

Lawmakers consistently have overruled the Pentagon and mandated more-generous pay raises than requested by both the Bush and Obama administrations. Congress has also rejected attempts by the Pentagon to slow soaring healthcare costs, which Gates told reporters are "eating us alive," by raising co-pays or premiums.

The military admits the improving compensation for troops is helping retention.

For example, improvements in pay and benefits have made it more likely that sailors will stick around longer, Vice Adm. Mark E. Ferguson III, the chief of naval personnel, told the Post.

A Navy survey last year found that about 60 percent of spouses wanted their sailors to make a career of Navy life, meaning a stint of at least 20 years. In 2005, only about 20 percent of spouses felt the same way.

"I think pay was previously a concern, but it's started to change," Ferguson said. Congress had been "extremely generous" but rising personnel costs were already influencing what the Navy spends to operate, maintain and modernize its fleet, he added.

The Pentagon wants a pay raise of 1.4 percent for service members next year, an increase based on the Employment Cost Index, which the Labor Department uses to measure private-sector salary increases.

Congress, as it has for the past several years, has indicated it favors a slightly bigger bump, of 1.9 percent.

Although that extra half of a percent may not seem like much, one expert told the Post that it would accrue annually and cost about $3.5 billion over the next decade.

But congressional supporters of the men and women in the Armed Services are questioning why they are being singled out for future pay cutbacks when other government agencies and unions are not.

The U.S. Postal Service, for example, is slated to give letter carriers an increase of 1.9 percent this coming year.

And postal employees are considered to be grossly overpaid compared with their private counterparts. A postal supervisor, for example, can make $70,000 or year or more, plus significant benefits.

Last year, Congress had to help fill a $3.8 billion deficit at the federally backed agency, but there has been no discussion of salary cuts for postal employees. Instead, postal officials have focused on reducing service, including Saturday delivery.

Angela Merkel punished by voters for dithering over Greek bailout

Exit polls in North Rhine Westphalia indicate Angela Merkel risks losing her majority in the upper house of parliament

Angela Merkel

Exit polls show Angela Merkel's Christian Democrats (CDU) dropped more than 10% in North Rhine-Westphalia election. Photograph: John MacDougall/AFP/Getty Images

Angela Merkel suffered a bruising defeat in a key regional election as voters turned on her centre-right alliance after a campaign that was eclipsed by the Greek debt crisis.

The German chancellor's Christian Democrats (CDU) dropped more than 10% in the election in North Rhine Westphalia, according to exit polls. The CDU, which polled 34.5%, and its coalition partner, the Free Democratic party (FDP) – which secured 6.5% – no longer have an outright majority.

The defeat is likely to cast a shadow over the rest of the Merkel government's term in office. While the campaign was dominated by regional issues such as bankrupt municipalities and education funding, it was overshadowed by the international issue of debt-ridden Greece.

Merkel was widely accused of delaying a decision over the massive Greek bailout for fear that she would isolate voters in North Rhine Westphalia. In the event it was her perceived dithering that is believed to have contributed to the CDU's loss of support, along with a local party funding scandal.

Crucially for Merkel, the poll setback means that her coalition will now lose its majority in the Bundesrat, or upper house of parliament, which will make it far more difficult for her government to push through legislation.

The opposition Social Democrats (SPD), which had run on a par with the CDU in the polls for some weeks, also appear to have won 34.5% of the vote (a loss of 2.6%), while the Greens increased their standing by 6.3% to 12.5% – not enough for the two to form a majority.

The Linke – or Left – party, a relatively new political formation with its roots in the former communist East, increased its influence by securing 6%, enabling it to enter the regional state parliament for the first time.

With the CDU/FDP unable to form a coalition, and the SPD/Greens in a similar position, options for a new administration in North Rhine Westphalia are wide open. One not unlikely constellation is a grand coalition between the CDU and the SPD, which some Merkel insiders have said she might even favour over an CDU/FDP alliance as being potentially more workable. Merkel ruled with the SPD on a national level until last year.Meanwhile her future as party leader is now expected to be a subject for fierce discussion within the CDU over the coming months.

U.S. Debt Shock May Hit In 2018, Maybe As Soon As 2013: Moody's

Spiraling debt is Uncle Sam's shock collar, and its jolt may await like an invisible pet fence.

"Nobody knows when you bump up against the limit, but you know when it happens it will really hurt," said fiscal watchdog Maya MacGuineas of the Committee for a Responsible Federal Budget.

The great uncertainty about how much debt is too much has tended to make fiscal discipline seem less urgent, rather than more. There is no obvious threshold beyond which investors will demand higher real yields for holding U.S. debt. Vague warnings from ratings agencies about the loss of America's 'AAA' status haven't added much clarity — until recently.

In the wake of the financial crisis and recession, Moody's Investors Service has brought new transparency to its sovereign ratings analysis — so much so that 2018 lights up as the year the U.S. could be in line for a downgrade if Congressional Budget Office projections hold.

The key data point in Moody's view is the size of federal interest payments on the public debt as a percentage of tax revenue. For the U.S., debt service of 18%-20% of federal revenue is the outer limit of AAA-territory, Moody's managing director Pierre Cailleteau confirmed in an e-mail.

Under the Obama budget, interest would top 18% of revenue in 2018 and 20% in 2020, CBO projects.

But under more adverse scenarios than the CBO considered, including higher interest rates, Moody's projects that debt service could hit 22.4% of revenue by 2013.

"While we see limited risk of a U.S. sovereign debt downgrade in the next 2-3 years, beyond that we cannot be so certain," wrote Societe Generale's economics team in a recent report.

The Moody's ratings framework is one that could have a significant influence on policy — particularly in a crisis.

Because debt levels and interest rates can't be lowered overnight, the obvious way of staying within the AAA limits set by Moody's would be to raise revenue.

"It would bias the remedy in favor of tax increases for countries that want to improve their bond rating," said Brian Riedl, budget analyst at the conservative Heritage Foundation.

Because economic growth is a key to fiscal health, Riedl argues that a ratings agency concerned about whether bondholders are repaid should bias spending cuts over tax increases.

Moody's says that its framework focuses on debt affordability rather than debt levels as a percentage of GDP. "The higher this ratio (interest/revenue), the more public debt constrains the formulation and delivery of other policies," Moody's analysts wrote in March.

Four Acres and Independence – A Self-Sufficient Farmstead

In this episode of Peak Moment the host gives us a tour of Mark Cooper’s homestead. Over a period of several years he’s transformed his property into a self-sufficient farm.

Fannie Mae seeks new $8.4 billion US bailout to stay afloat

US mortgage finance giant Fannie Mae said Monday it needs an additional government bailout of 8.4 billion dollars after reporting a 2010 first-quarter loss of 11.5 billion dollars.

"Our first-quarter results were driven primarily by credit-related expenses, which remain at elevated levels due to weaknesses in the economy and the housing market," the company said in a statement.

The results showed improvement from the 2009 fourth quarter, when the loss stood at 15.2 billion dollars, the firm said, reporting its results in newly adopted accounting standards.

But the company, which with sibling mortgage finance giant Freddie Mac was seized in a government rescue in September 2008 amid an escalating financial crisis after the collapse of a housing bubble, said it ended the first quarter with a net worth deficit of 8.4 billion dollars.

Fannie Mae and Freddie Mac guarantee more than 40 percent of the home loans in the United States.

Hammered by the global financial crisis and the US recession, the two publicly owned firms were bailed out at a cost of up to 200 billion dollars by the Treasury Department at the time.

Fannie Mae said Monday that its 2010 first-quarter net loss attributable to common stockholders, which included dividends on Treasury-held preferred stock, was 13.1 billion dollars.

The additional 8.4 billion dollars in aid requested would bolster 15.3 billion dollars in aid already provided by the Treasury on March 31, aimed at preventing the failure of a key pillar of the US real-estate market.

Freddie Mac last week reported a first-quarter net loss of 7.98 billion dollars and asked for 10.6 billion dollars in additional Treasury aid.

Bankers Destroy Global Economy by Design to Consolidate Power

New transfers of wealth from middle class go directly to French and German banks

Bankers Destroy Global Economy by Design to Consolidate Power 100510top

American taxpayers have been freshly liberated of hundreds of billions more dollars as part of the IMF’s new bailout package which is principally going straight to European banks, in addition to the Federal Reserve program to ship U.S. dollars to Europe, in a move that represents little more than a desperate effort to save the Euro and rescue the credibility of economic global governance.

“The Federal Reserve late Sunday opened a program to ship U.S. dollars to Europe in a move to head off a broader financial crisis on the continent,” reports the Associated Press.

“The Fed’s action reopens a program put in place during the 2008 global financial crisis under which dollars are shipped overseas through the foreign central banks. In turn, these central banks can lend the dollars out to banks in their home countries that are in need of dollar funding to prevent the European crisis from spreading further.”

As we reported last time this program was enacted, the Federal Reserve refused to say which foreign banks had received an estimated half a trillion dollars in credit swaps. The program is unconstitutional under Article 1 of the U.S. Constitution which states, “No money shall be drawn from the treasury, but in consequence of appropriations made by law.”

In addition to the credit swap program being re-enacted, the IMF portion of a separate European bailout package amounts to around $287 billion dollars. Since American taxpayers represent around 20 per cent of IMF funding, they will fork out something in the region of $57 billion dollars which which primarily go straight to French and German banks, not to mention the billions more in transfers of wealth that will occur through the Fed’s credit swap program.

“Politicians everywhere applaud this most recent rape of America’s working class, even as communism is now the global ideology,” writes Tyler Durden. “Who needs TheOnion.com when reality is now 10 times more surreal. And the direct recipients of taxpayer generosity: SocGen, AXA, Dexia, CA and all other French and German banks, which right now are all up ~20%.”

But it’s not just American taxpayers who have been looted to save the crumbling facade of the Euro single currency. British taxpayers will be forced to underwrite an estimated £10 billion pounds of the bailout as part of the IMF package.

And all for what? The two primary reasons for the bailout are to rescue ailing confidence in the globalist Euro single currency, which was forced upon European citizens against their will when it was introduced, and to prop up the casino stock markets. Neither of these justifications provide any benefit for the average citizen or the middle class, and yet we are the ones paying for it with our depreciated savings, our evaporating pension funds and our crumbling infrastructure and public services, which are all being forgotten in pursuit of one massive banker bailout after another.

Credibility in the agenda to impose global economic governance run by the Nazi-founded Bank for International Settlements rests in upholding confidence in the Euro. If the Euro collapses and ceases to exist, which many financial experts are now seriously predicting, then the entire raison d’être for centralized economic planning in pursuit of global governance will be completely discredited. The globalists must save the Euro in order to legitimize future plans for a North American Union single currency which will replace the dollar.

When the dollar sank to alarming lows against other global currencies little over two years ago, we saw none of the same concern or hand-wringing on behalf of the elite as we are seeing for the Euro. That’s because the survival of the dollar is not part of their framework of global economic governance. For all the elite cares, the dollar can crash and burn but rescuing the Euro from the same fate is imperative.

Indeed, it appears as if the chaos in Greece is being deliberately provoked and hyped in order to justify the continued re-alignment and centralization of the entire financial system into fewer globalist hands.

As The Economic Collapse Blog writes today, “Could Greece bring down the entire world economy? Hardly. The truth is that you could remove Greece from the world economy tomorrow and most people would hardly notice. The economy of Greece is only about 2% the size of the United States economy, and it takes in less than 0.1% of U.S. exports. But we are being led to believe that Greece has suddenly become the epicenter of a financial crisis which is going to bring down everything. Could it be that this Greek debt crisis is purposely being hyped and manipulated? Could it be that this Greek debt crisis is yet another example of the “problem, reaction, solution” paradigm that the global elite have employed so many times before?”

“Right now almost all of the governments in the western world operate debt-based economies that rely on ever-inflating amounts of paper money in order to survive. The elite international bankers of the world have made a killing by creating money out of nothing and loaning it to the nations of the world. The interest on those loans is the primary method by which the wealth of the world is slowly transferred into the hands of the ultra-wealthy. When the interest on the loans starts to become too much for a particular nation, they borrow even more money so that they can stay afloat. It is a debt trap that is designed to continue indefinitely. Even the most powerful nations in the world are caught in this debt trap. In fact, most people are absolutely amazed when they learn that it is mathematically impossible to pay off the national debt of the United States. But the United States is far from alone in that respect. Almost all of the other major nations in the world are in the exact same boat.”

It’s horribly ironic that the Euro, global economic governance, and the entire European project was sold under the justification that centralization meant stability, and yet now we are being told that the chaos in Greece is contagious and could spread to Spain, Portugal and Italy unless taxpayers are looted for billions and trillions more.

Reality has proven that centralization of economies under the banner of the EU and the Euro causes economic chaos to go viral. When nearly every country on a single continent uses the same currency, they infect one other with the disease. This is then habitually exploited as an excuse with which to rob taxpayers whose living standards are declining as their currency devalues and their pensions wither on the vine.

What Business is Wall Street In ?

My last two posts were designed to stimulate discussion. But lets talk the real problem that regulators, public companies, investor/shareholders and traders face. The problem is that Wall Street doesn’t know what business it is in. Regulators don’t know what the business of Wall Street is. Investor/shareholders don’t know what business Wall Street is in.

The only people who know what business Wall Street is in are the traders. They know what business Wall Street is in better than everyone else. To traders, whether day traders or high frequency or somewhere in between, Wall Street has nothing to do with creating capital for businesses, its original goal. Wall Street is a platform. It’s a platform to be exploited by every technological and intellectual means possible.

The best analogy for traders ? They are hackers. Just as hackers search for and exploit operating system and application shortcomings, traders do the same thing. A hacker wants to jump in front of your shopping cart and grab your credit card and then sell it. A high frequency trader wants to jump in front of your trade and then sell that stock to you. A hacker will tell you that they are serving a purpose by identifying the weak links in your system. A trader will tell you they deserve the pennies they are making on the trade because they provide liquidity to the market.

I recognize that one is illegal, the other is not. That isn’t the important issue.

The important issue is recognizing that Wall Street is no longer what it was designed to be. Wall Street was designed to be a market to which companies provide securities (stocks/bonds), from which they received capital that would help them start/grow/sell businesses. Investors made their money by recognizing value where others did not, or by simply committing to a company and growing with it as a shareholder, receiving dividends or appreciation in their holdings. What percentage of the market is driven by investors these days ?

I started actively trading stocks in 1992. I traded a lot. Over the years I’ve written quite a bit about the market. I have always thought I had a good handle on the market. Until recently.

Over just the past 3 years, the market has changed. It is getting increasingly difficult to just invest in companies you believe in. Discussion in the market place is not about the performance of specific companies and their returns. Discussion is about macro issues that impact all stocks. And those macro issues impact automated trading decisions, which impact any and every stock that is part of any and every index or ETF. Combine that with the leverage of derivatives tracking companies, indexes and other packages or the leveraged ETFs, and individual stocks become pawns in a much bigger game than I feel increasingly less comfortable playing. It is a game fraught with ever increasing risk.

The Pimco (who I think are the smartest guys on the Street) guys talk about a new normal as it applies to today’s state of the world economy. I think just as important is the new normal as it applies to Wall Street. Wall Street is now a huge mathematical game of chess where individual companies are just pawns. This is money in the bank for the big players like Goldman, Morgan, etc. Why ? Because the game of chess is far too complicated for 99pct of the institutions out there investing money. So to keep up, they turn to Goldman, Morgan and the like to invent products for them. “You don’t know how to play the housing boom, let us show you”. “You think the housing boom is about to crash, let us show you how to play that”. “You think that PIIGS are in trouble because they can’t print money to pay debt holders, let us create a product to allow you to play that game” The big houses have the best hackers in the business and they put together the games and sell them to the many, many institutions managing Billions and Billions of dollars. They are the ultimate Hackers selling their attacks to the highest bidder, regardless of which side they are on. That is a new normal.

Again, I’m not passing judgement one or the other. I’m just recognizing what is going on in the financial world today.

It’s rare for companies to go public these days. Just as rare for secondary offerings. The only thing that keeps me in the market is that most of the stocks (not all) pay dividends or some other sort of cash payout. For the first time in my life, I bought outside the United States. I bought Australia in a big way because it is becoming increasingly hard to find new domestic investments that are not influenced by the “hackers” and the games being played on a macro level. It’s hard to believe, but evaluating countries as an investment is now easier than evaluating companies . Even with all the unrest in Europe. Or maybe because of it.

So back to the original question. What business is Wall Street in ?

Its primary business is no longer creating capital for business. Creating capital for business has to be less than 1pct of the volume on Wall Street in any given period. (I would be curious if anyone out there knows what percentage of transactions actually return money to a company for any reason). It wouldn’t shock me that even in this environment that more money flows from companies to the market in the form of buybacks (which i think are always a mistake), then flows into companies in the form of equity.

My 2 cents is that it is important for this country to push Wall Street back to the business of creating capital for business. Whether its through a use of taxes on trades, or changing the capital gains tax structure so that there is no capital gains tax on any shares of stock (private or public company) held for 5 years or more, and no tax on dividends paid to shareholders who have held stock in the company for more than 5 years. However we need to do it, we need to get the smart money on Wall Street back to thinking about ways to use their capital to help start and grow companies. That is what will create jobs. That is where we will find the next big thing that will accelerate the world economy. It won’t come from traders trying to hack the financial system for a few pennies per trade.

And solutions won’t come from bureaucrats trying to prevent the traders from hacking the system. The only certainty when bureaucrats step in is that the law of unintended consequences will smack us all in the head and the trader/hackers will find new ways to exploit the system that makes them big money and even more money for the big institutions that develop products for the other institutions that are desperate to play the game.

Regulators have got to start to recognize that traders are not investors and vice versa and treat them differently. Different regulations. Different tax structure. Different oversight. Individual investors and the funds that just invest in stocks and bonds are not going to crash the market. Big traders who are always leveraging up and maximizing the number of trades/hacks they make will always put the system at risk. We need to recognize that they do not serve much of a purpose other than to add substantial risk to the global economy. That their stated value add of liquidity does not compensate the US and World Economy nearly enough for the risk of collapse they introduce into the system.

Wall Street as a whole needs to be in the business of creating capital for companies and selling shares to investors who believe they are shareholders. The Government needs to create incentives for this business and extract compensation from the traders/hackers for the systemic failure level of risk they introduce.

There will be another crash, because there are too many players looking for the trillion dollar score. They can’t all win, yet how many do you think wouldn’t risk everything, even what is not theirs, for that remote chance to score big ? Put another way, there is zero moral hazard attached to any trade. So why wouldn’t traders take the biggest risk possible ?

Update at 10pm 5.9.10

Deep cuts likely in updated state budget

The state budget crisis has been quiet for the past few months but will return to center stage this week as Gov. Arnold Schwarzenegger prepares to belt out some bad news.

The governor is scheduled to release an updated budget plan Friday that will probably include even deeper cuts than those he proposed in January, when he called for reductions in health and human services, prisons, education and state worker pay, among other areas.

Unexpected gains in state revenues that leaders hoped would significantly cut the deficit evaporated in the last few weeks. State Controller John Chiang reported Friday that revenues coming into state coffers from personal and corporate taxes fell $3.6 billion short of what was projected in April, the month when the bulk of revenues are collected.

That means the state's budget deficit, which started the year at $20 billion and dipped to about $18.6 billion after some midyear actions by the Legislature, could exceed the original estimate.

"One thing is for certain, not only the governor but the Legislature too is going to have to confront some difficult decisions in the coming weeks in closing this gap," said H.D. Palmer, spokesman for the state Department of Finance.

Losses carry over

State financial analysts are pointing to a significant carryover of losses from 2008 to 2009 that brought down revenues from capital gains and weakness in small business income to explain the shortfall. Some people, including state Senate President Pro Tem Darrell Steinberg, D-Sacramento, had hoped that gains in revenues from the first few months of the year would push the deficit for the 2010-11 fiscal year below $10 billion.

State leaders also hoped for billions in aid from the federal government. The governor had included $6.9 billion in federal dollars in his January budget plan, but so far the state has received just under $3 billion, according to the Finance Department.

Schwarzenegger also had counted on $140 million in proceeds from a lease for an oil drilling project off the Santa Barbara coast that would fund state parks. But last week the governor dropped his support for the proposal after the huge oil spill in the Gulf of Mexico. It is not clear how the governor plans to pay for parks now.

Both Democratic and Republican leaders in the Legislature have said they do not intend to seek higher taxes this year to bridge the gap.

All of that leaves lawmakers and the governor facing decisions such as the wholesale elimination of certain programs for children, the poor and the disabled.

The governor promised earlier in the year to spare education. He proposed an increase in funding for higher education while calling for a controversial $2 billion cut to K-12 schools that he said was consistent with the voter-approved initiative that determines education funding in California. Keeping the increase to higher education could prove tough given the deficit.

"Basically, the Legislature and the governor are faced with solutions that are largely going to be distasteful. They're going to hurt somebody either in their pocketbook or in the level of services they are receiving," said Michael Cohen, deputy analyst for the California Legislative Analyst's Office.

Deficit needs action

Cohen said that a deficit of this magnitude needs to be addressed with cuts and new revenues, such as taxes or fees.

The state Constitution requires two-thirds approval by the Legislature to pass a budget and any new taxes, giving Republicans, who have steadfastly opposed new taxes the power to block them.

Jean Ross, executive director of the California Budget Project, a public policy think tank that advocates for low-income Californians, also said leaders need to increase revenues as part of the budget solution. She said she thinks solving the deficit this year will be tougher than last year because leaders already have used up most of their options.

"I think we're likely to see some very harsh spending reductions that, if implemented, will have a long-term impact on the state's economy and a very significant impact on California families," Ross said.

41 percent of metro area single-family homes believed 'underwater'

More tough news for Twin Cities metro homeowners surfaced this morning as home values in the Minneapolis-St. Paul metropolitan area slid 4.6 percent in March from a year ago.

More troubling, the real estate website Zillow.com calculates that more than 268,000 Twin Cities area single-family homeowners with mortgages owe more than their homes are worth. That number is about 41.2 percent of the total. That compares with an estimated national average of 23.3 percent of single-family mortgages with negative equity, according to the report.

Such “underwater” mortgages in the metro area swelled by about 14,000 from December to March and pushed the metro area’s ranking up one place to No. 25among 135 metropolitan statistical areas (MSAs) tracked by Zillow.

That grim picture for the first quarter ended March 31 showed the Zillow Home Value Index (ZHVI) of $184,500 for the entire metro area also fell 0.6 percent from February to March. The home value index decline actually improved from the 5.3 percent year-over-year decline Zillow reported for February, but the number of underwater mortgages, which is only reported quarterly, continued to climb from December.

Years of easy loan terms requiring little or no money down contributed to the significant rise in mortgages with negative equity as home values slumped the past two years. In 2006, about 4 percent of home mortgages were “underwater,” according to Moody’s Economy.com. That total rose to 6 percent in 2007, 16 percent in 2008 and hit 24 percent nationwide at the end of last year.

The continuing growth in negative-equity home mortgages, combined with high unemployment, continues to feed the pipeline of home foreclosures, which some industry insiders have estimated will continue to grow through the end of next year, then level out at a higher-than-normal rate through the end of the decade.

In March 2009, the Obama Administration launched the program Making Home Affordable (MHA) program to help homeowners who may be at risk of default to modify the terms of first and second mortgages. Minnesota recently ranked 15th among the states in the number of mortgages modified under the program.

In the seven-county Minneapolis-St. Paul Statistical Metropolitan Area, only Anoka (0.2) and Scott (4.2) counties saw home values increase year over year, according to Zillow’s calculations. The largest percentage drops were charted in Minnetrista (-24.1), Independence (-24.1), Watertown (-22.5), Lilydale (-20.9), and Lake Elmo (-20.7). Cities and towns showing the largest home value increase were Centerville (12.5), Circle Pines (12.0), New Market (11.6), Lexington (11.2) and New Prague (8.7).

Different measure shows price uptick in February
Zillow.com is a real estate website that estimates the value of all homes, including condominiums, across the country and in large metropolitan areas, based on a variety of data. The widely quoted Case-Shiller Index, which is calculated from data on repeat sales of single-family homes only, most recently showed continued month-to-month declines in February for the metro area but a more hopeful year-over-year increase of 3 percent.

Zillow claims that by incorporating data beyond recent home sales, their index more accurately reflects what is happening across the spectrum of residential properties. If a particular category of home is “hot,” such as lower-priced homes have been recently, with the first-time homebuyer incentives, home value data derived only from sales can be misleading, argued Zillow spokesperson Alison Paoli. “By looking at values of all homes (including condominiums and homes that have not recently sold) the median values stays fairly constant over time,” she said.

Nationwide, U.S. home values fell 3.8 percent year over year, and 1 percent quarter over quarter, to $183,700, marking the 13th consecutive quarter of year-over-year declines, according to Zillow. Home values declined year over year in 106 of the 135 MSAs tracked by Zillow. Foreclosures reached a new peak in March, with more than one out of every thousand homes (0.11 percent) in foreclosure.

However, home values in several large California markets — the Los Angeles, San Diego, San Francisco, Santa Barbara and Ventura MSAs — have stabilized significantly in the past year, marking what Zillow says may be a bottom. Home values in those markets have risen significantly for at least the past 10 months, after values in all five markets reached a low point in April or May 2009.

Source: Zillow.com

“It’s a very positive sign that several large markets have hit what appears to be a tentative bottom in home values,” said Zillow Chief Economist Dr. Stan Humphries in a press release. “While this is no guarantee that home values there will not fall again, it is more likely than not that they will remain above their lowest point last year.

The statement continues: “However, we continue to have concerns about other factors playing out in markets across the country. We suspect that the homebuyer tax credits are, for the most part, stealing demand from later this summer, rather than creating new demand. Even with the tax credits in place during the first quarter, inventory levels were rising, and home values continued to decline at a steady clip, rather than steadying. Because of these factors, we believe national home values are more likely to reach bottom in the third quarter of 2010, rather than in the second quarter, as we had hoped. When we do get there, we expect the high rates of negative equity and foreclosures to keep national home value appreciation near zero for some time, possibly as long as five years.”

State revenues fall again after one-month reprieve

Georgia's streak of positive revenue collections ended at one.

Gov. Sonny Perdue's office said Friday that tax collections in April were down 4.2 percent from April 2009, a return to negative numbers after March's reprieve. March ended a 15-month skid of revenue declines with a 1 percent gain.

Perdue's office said the drop in April was largely the result of an increase in income tax refunds, which itself was a sign that individuals were earning less than a year ago. The state saw refunds increase in April by $57.6 million over the same period a year ago, and the overall monthly revenue collections were down by $58.5 million. Individual income tax collections, too, were down, by more than $128 million in April.

Other tax collections, meanwhile, were up. Sales tax collections rose by more than 7 percent in April, and corporate income taxes spiked by nearly 14 percent.

The monthly revenue figures are important as they guide state leaders in writing and adjusting the annual state budget. It's not immediately clear whether April's downturn will require adjustments to the current spending plan for the fiscal year that ends June 30. But the revenue collections in the current fiscal year are used to set a budget for fiscal 2011, which begins July 1, and if the numbers continue to drop over the next several months, more cuts will likely be needed.

Here is a look at how April compared with the same period a year ago:

Individual income tax collections

April 2010: $657.39 million

April 2009: $785.99 million

Difference: -- 16.4 percent

Corporate income tax collections

April 2010: $91.64 million

April 2009: $80.45 million

Difference: 13.9 percent

Sales and use tax collections

April 2010: $833.48 million

April 2009: $777.38 million

Difference: 7.2 percent

Fiscal year to date (July 1-April 31)

Overall tax collections: $11.49 billion

Same period a year ago: $12.87 billion

Difference: -10.7 percent

Double dip in housing values continues, despite tax credit/spring bump

There are so many competing sets of housing numbers floating around out there it's hard to keep score these days.

The home buyer tax credit may have sparked a surge in sales before it expired on April 30th.

But in the first quarter, Greater Boston home values continued a slide that began last fall, Zillow.com contends in its latest quarterly report.

And if present trends continue, local home values could sink below their 2009 low point, the report suggests. And, as I note below, that moment may come faster than you think.

Greater Boston home values fell to $315,000 from February to March, a .4 percent drop - the sixth month in a row that home values fell. That comes after a streak in 2009 that saw values rise for seven straight months after having fallen into a ditch during the dark days of early 2009, Zillow notes.

At $315,000, local home values are still .7 percent above the lows reached in early 2009, but, if you buy into Zillow's numbers, we may be headed below that point fairly soon.

Actually, doing a quick back-of-the-envelope calculation, at the current rate of decline, we are talking only another two or three months before we start moving down below those early 2009 numbers.

The report also has some interesting numbers on underwater mortgages as well.

The number of Greater Boston homeowners whose property values are now underwater has jumped significantly and is now over 14 percent. That is an increase of over 15 percent from the end of 2009, Zillow reports.

Meanwhile, 22 percent of all homes sold in Greater Boston in March sold for a loss, according to Zillow.

Revenue: April numbers are sobering

After a brief rally in March, Mississippi's revenue numbers tumbled again in April.

Gov. Haley Barbour said last week that April revenue was 8.5 percent below estimates - a $45.1 million shortfall.

However, Barbour says there will not be a need for additional budget cuts. He has already trimmed spending five times since the fiscal year began July 1.

Mississippi's tax collections have missed the mark 19 of the past 20 months. March was the exception.

"These numbers confirm what we have known all along: the deep global recession continues to affect our state's revenue, and it may take years for collections to fully return to pre-recessionary levels," said Barbour.

The April revenue report compounds another problem facing state government. Also in April, the National Conference of State Legislatures warned its members - including Mississippi lawmakers - that the anticipated congressional extension of an additional six months of enhanced federal matching funds for Medicaid, the so-called FMAP funds, that had appeared certain weeks ago was now "on the ropes." NCSL urged legislators across the country to bring increased pressure on member of Congress to extend the additional Medicaid funds.

For Mississippi, those additional FMAP funds would represent about $187 million. When lawmakers adjourned the 2010 regular session, they agreed on a $5.5 billion Fiscal Year 2011 budget with a contingency budget that would include the additional FMAP funds if Congress acts prior to Dec. 31 to make them available.

If Congress fails to provide the additional FMAP funds, there will be far less flexibility in the FY 2011 budget. That reality will mean that public education at all levels, corrections, mental health and public safety agencies will suffer along with Medicaid.

Congressional wavering over the enhanced FMAP funds demonstrates the wisdom of crafting a budget that assumed those funds would not be received. There are 18 states that enacted budgets with the anticipated additional funds included.

In Pennsylvania, increased FMAP funding would have meant an additional $895 million. States that enacted budgets that bet the come on FMAP will be broken before they actually become working documents.

Mississippi was also wise to keep a reasonable amount of money in the state's "rainy day fund" and in the state Health Care Trust Fund for future needs.

The FY 2012 state budget will be one that enjoys no stimulus funds support and projections are that revenues could be off to the point of forcing budget cuts that are more than 20 percent less than the original FY 2010 appropriations.

Reserve funds will be precious until state revenues are once again stable and growing.

State's revenue below projections for April

California’s controller, John Chiang, said the state’s April cash receipts fell below budget estimates by $3.6 billion, or 26.4 percent.

Cash receipts have been above estimates for the past four months, tracking more than $2.3 billion ahead of projections through March.

“Four months of positive receipts were erased in the last 10 days of April,” Chiang said in a news release. “Because a surge in revenues has not come, the governor and Legislature need to move quickly and forge the consensus needed for a balanced budget. Any delay will only limit their options and expose already struggling Californians to greater harm.”

Through april, revenue is off by about $1.3 billion.

Chiang attributes the decline in receipts mainly to personal imcome taxes, which came in $3.1 billion below projections for April and are $2.2 billion short for the year so far.

The good news is the state is spending below projections. Expenditures for April were about $102 million behind estimates through April.

The state now has a $20.2 billion cash deficit in the General Fund. The gap is being covered through $11.4 billion in internal borrowing from special funds and $8.8 billion in short-term Revenue Anticipation Notes, Chiang said.

Jeremy Scahill is a Douche Bag

It’s not so much that Scahill denies there is any reason to believe elements of the previous Bush administration facilitated the attacks of 9/11… I wouldn’t expect anyone who makes a living doing interviews on Democracy NOW! and being published in magazines like The Nation to say anything else. Its how he said it that makes Jeremy Scahill such a douche bag. How he said it and why.

There are so many question one could put to the arrogant prick, such as… how does he account for NIST’s Building 7 report that at one time said it was physically impossible for the building to have fallen at free-fall acceleration, then 3 weeks later, they admitted Building 7 fell at free-fall acceleration?

How does he account for the hundreds of eye-witness reports from the first responders who reported hearing explosions, seeing flashes all around the buildings as they came down?

How does he account for three steel and concrete skyscrapers collapsing at near free-fall acceleration, essentially due to office fires (according to NIST), for the first time in history and never again since?

How does he account for the most secure building in the world, the Pentagon, being hit nearly an hour after the first attack on the North Tower, without so much as an alarm sounding in the building?

How does he account for Rumsfeld announcing the missing 2.3 trillion dollars the day before 9/11, THEN the ONLY office that is hit on 9/11, just HAPPENS to be the office where they were doing the audit?

How does he account for the fact that the invasion plans for Afghanistan were finished and placed on George Bush’s desk on Sept. 9th, 2001?

How does he account for the fact that the UNICAL pipeline deal had effectively stalled prior to 9/11, but then were remarkably back on just after?

How does he account for the fact that it took 400+ days for the Bush administration to ok an investigation into 9/11 and then they tried to put Henry Kissinger in charge of it?

How does he account for the fact that the commission came to the conclusion that KSM planned 9/11 based almost entirely on the interrogation of the man, that they couldn’t watch, they couldn’t talk to him, they couldn’t talk to the interrogators, and they couldn’t even watch the videos of the interrogation? In fact they burned those videos.

How does he account for massive amounts of iron-rich spheres in the Ground Zero that RJ Lee said HAD to have been created by immense heat (over 6,000 degs f.) when jet fuel burns at only 1,700 deg. f and open air office fires burn at around 650?

How does he account for the fact that no agency, not FEMA, not NIST, not the 9/11 Commission Report EVER tested for traces of high explosives in that dust… but each and every one of them suggested SOMEONE ELSE SHOULD?

How does he account for the fact that the single event that set this entire Global Free Market Wars campaign in motion just HAPPENED to be what Cheney, Wolfowitz, and Rumsfeld wrote about in 2000 when they called for a “New Pearl Harbor type event”?

How does he account for the fact that 1200 architects and engineers have signed a petition calling for a new investigation into what happened on 9/11?

He can’t. He can’t account for any of those issues or any number of the hundred other serious problems with the “official conspiracy theory” of 9/11. But he does know this; the moment he comes out and even questions what happened in any way, no matter how timid, ALL of his TV APPEARENCES, go away… his BOOK SALES, go away… his Nation magazine CONTRACT, goes away.

Jeremy Scahill shouldn’t be condemned for making a statement that distances himself from this issue. After all, Jeremy has books to sell. And who am I to tell someone how much wealth they have to sacrifice to help get our country back.

Yes, he takes on Blackwater. But nothing changes when you take on Blackwater, except their name. They are still getting contracts, still cashing the checks. In fact, they are bigger and more powerful since Jeremy wrote his now famous book.

And so is Jeremy Scahill. In a way, you can say… the longer the “War on terror” goes on, the longer Blackwater will be gaming the system, and THEREFORE… the longer Jeremy Scahill remains an employed literary hero.

But he should be condemned for his attitude and making the ridiculous claim that people like myself and Richard Gage and David Ray Griffin are “insulting” the families of the victims of 9/11. This is the kind of straw-man attack that “debunkers” have been using for years now. The fact is, the victims on 9/11 died horribly. Some first responders are STILL dying horribly because the Bush administration LIED about the air quality and now the Obama administration STILL won’t help them get the medical attention they need.

But in the end, I don’t know how it is supposed to hurt someone less if they think an “angry Muslim” terrorist killed their loved one, as opposed to a “greedy fascist” terrorist. It’s still a terrorist act and whether or not it was brought about by Muslims in a cave or neocons who wrote in 2000, “The process of transformation.” The plan said, “is likely to be a long one, absent some catastrophic and catalyzing event- like a new Pearl Harbor.”

Perhaps the families of the victims of 9/11 are somehow different from those of the victims of the anthrax attacks. We all know that the story of Dr. Ivins as the “mad doctor” is bullshit. I think even Jeremy Scahill has to admit that.

So what is the difference? The difference is, the Nation magazine won’t tear up your contract if you write about Dr. Ivins being framed. That’s the difference.

So yeah, Jeremy Scahill gets a little mad at the people who ask him about 9/11. He gets mad because he feels like we should be polite enough to recognize that he can’t admit the story is bullshit because if he does it will cost him money. I guess he feels like the questions he gets asked are an imposition… but I guess that is somehow different from when he is trying to get the truth out about Eric Prince and Blackwater. Some how that is all different I suppose but forgive me if I can’t really see it.

Here’s the real difference… going after Blackwater or some congressman and his greed is one thing. It doesn’t end anything.

But you go after 9/11… well that’s different.

The Global war on Terror is over.. the militarization of the nation is over… the occupation of Afghanistan and Iraq are both over… the Drone industry dries up… the investigations start… the plea bargains start… the snitching starts… the BIPARTISAN NEOLIBERALIZATION OF AMERICA ENDS… and one more curious thing…

Once the truth comes out, people are going to eventually start asking why all our “serious” investigative journalists like… Jeremy Scahill… missed something so goddamned obvious.

Not only did they miss it, they made up shit to attack people who were actually trying to investigate it; trying to tell people.

So one day, when this does all come out, after all the confessions and the accusations and the trials, one day the attention of the angry population will eventually turn to our “serious” investigative journalists like Goodman, like Taibbi, like … Scahill…

… and they will be asked to account for how they chose their careers and their “respectability” over the Truth. A truth I know they feel in their hearts.

Knowing a day of atonement like that is coming, is bound to piss anyone off. Even Jeremy Scahill.

So I am not angry, fellow advocates, I feel sorry for him. Like all the other douche bags.

Goldman Sachs Has First Quarter With No Trading Loss (Update1)

May 10 (Bloomberg) -- Goldman Sachs Group Inc.’s traders made money every single day of the first quarter, a feat the firm has never accomplished before.

Daily trading net revenue was $25 million or higher in all of the first quarter’s 63 trading days, New York-based Goldman Sachs reported in a filing with the U.S. Securities and Exchange Commission today. The firm reaped more than $100 million on 35 of the days, or more than half the time.

Goldman Sachs, which is facing a fraud lawsuit from the SEC related to the sale of a mortgage-linked security in 2007, generated $9.74 billion in trading revenue in the first quarter, exceeding all of its Wall Street competitors. Trading accounted for 76 percent of first-quarter revenue. The lack of trading losses could add to the perception that Goldman Sachs has an unfair advantage in the markets, said one shareholder.

“It will reinforce the heads we win, tails you lose mentality that people think actually exists and promotes the concept of an unfair advantage,” said Douglas Ciocca, a managing director at Renaissance Financial Corp. in Leawood, Kansas, which oversees about $2 billion in assets including Goldman Sachs shares. “It’s too politically charged not to, how is that possible that they only make money?”

Record Earnings

The bank, which reported record earnings last year, is contesting the SEC’s lawsuit and the firm’s executives were interrogated at a Senate subcommittee hearing last month. Goldman Sachs, which maintains that it did nothing wrong, is also being investigated by federal prosecutors, said people familiar with the matter.

“This is the first time we have reported zero trading loss days in a quarter,” Samuel Robinson, a Goldman Sachs spokesman, said in an e-mail. “We believe it shows the strength of our customer franchise and risk management.”

Ciocca echoed that view, saying he thinks the performance proves the strength of the firm’s risk-management models and its ability to make money even in markets with low volatility.

“The statistical probability of going through what we did would never favor them making money every day,” Ciocca said. “It actually speaks very well of their capability to manage through different types of markets.”

Reaching Out

Ciocca said he’s had first-hand experience of Goldman Sachs’s efforts to reach out to clients in the wake of the SEC lawsuit to answer questions about the matter. He said representatives from Goldman Sachs’s asset-management division contacted his firm during the last week of April even though they hadn’t been in touch for a year before that.

“It was tactical, it was appropriate, it wasn’t patronizing, it was very sincere,” Ciocca said.

In its SEC filing today, Goldman Sachs said it is expecting further litigation related to sales of collateralized debt obligations.

“We anticipate that additional putative shareholder derivative actions and other litigation may be filed, and regulatory and other investigations and actions commenced against us with respect to offering of CDOs,” the bank said.

The company also laid out in the filing a worst-case scenario of what could happen if the firm doesn’t resolve the SEC case and can’t obtain appropriate waivers from relevant regulators.

Imposing Restrictions

The results could include “an inability to act as a registered broker-dealer or provide certain advisory and other services to U.S. registered mutual funds,” the filing said. “In addition, regulators could impose restrictions on the activities of our banking, commodities, investment advisory or other regulated businesses.”

Goldman Sachs’s first-quarter earnings were the second- highest in the company’s history.

The firm’s stock dropped 22 percent from before the SEC lawsuit was filed on April 16 through May 7, making it the worst performer among the six largest U.S. banks so far in 2010.

The shares jumped $4.61, or 3.2 percent, to $147.60 at 9:47 a.m. in New York Stock Exchange composite trading, as global stocks soared with the European loan program to end the sovereign-debt crisis.

05.08.10 Webcast Q5 - The British vs Glass-Steagall

Click this link ..... http://eclipptv.com/viewVideo.php?video_id=11779

Webster Tarpley Predicts End of The EURO on Alex Jones Tv

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US oil spill: fisherman raise alarm over chemical dispersants

Alarm over the use of dispersants to combat the huge US oil leak is being raised by Gulf fisherman and scientists alike, warning that even if the spill is held at bay, the chemicals used to do so may do untold damage.

Oil spill: fishermen employed by BP place boom on Lake Machias as the US oil crisis continues

Approximately 325,000 gallons of dispersant have been deployed so far in BP's effort to break up the spreading oil slick before it hits the fragile Gulf coast, and over 500,000 gallons more are available.

But the effects it will have on marine life, the shoreline and people spraying the chemicals are largely a mystery - an issue raising concerns in itself.

"It's an unknown quantity," marine biologist Clarence Laquet said on Sunday as he surveyed the deployment of booms on Lake Machias, one of dozens of marshy inlets along Louisiana's porous coast threatened by the gushing Gulf wellhead that is spewing some 5,000 barrels of oil, or 210,000 gallons, a day.

The dispersant effort is meant to break down the oil so that over time, the slick is reduced to smaller particles that biodegrade instead of being left as chunky, thick globs that can choke both wildlife and vegetation.

"From what we understand, everything we do in this clean-up process is some sort of trade-off... the dispersant is not as toxic as the oil and it's better to deal with it out there (in the Gulf) than here," Laquet said.

For commercial fishers, however, the prospect of any toxic chemicals in waters they rely on for their living seems just as bad as the incoming oil.

"(It's) going to kill it all off," 45-year-old shrimp boat captain Ray Nehlig said, referring to his threatened catch.

Nehlig's crewmembers scrambled Sunday to unload boom from his peeling square-bottomed vessel Barbara Jean, named after his mother, on the windy waters of Lake Machias.

"We got tons of shrimp here right now, but here we are laying boom," he lamented.

"I've been doing this for near 25 years, but the stuff (dispersant) they're putting in the water to get the oil, it's going to do just as much damage," he said.

The oil has been gushing freely for over two weeks, since the BP-leased Deepwater Horizon rig sank some 80km (50 miles) southeast of Venice, Louisiana on April 22, two days after an explosion that killed 11 workers.

Since then, efforts to contain the spread have hinged on ways to cap the leak and the use of C-130 cargo planes carpeting chemicals on vast swaths of the slick.

NALCO Energy Services of Sugar Land, Texas, manufactures the chemical dispersant for BP, which is known by its product name "Corexit."

The dispersant is a low-level hazardous chemical, posing risks for eye and skin irritations and "chemical pneumonia" but not cancer, according to NALCO data posted on the Deepwater Horizon web site.

The chemicals have been used on oil spills for years, including the notorious Exxon Valdez disaster in Alaska in 1989.

However, LuAnn White, a toxicologist at Tulane University, noted that what is being used now "is a new generation of dispersants, but we don't know what is in them because it's a trade secret.'"

Over the weekend, three top Louisiana officials from the departments of health, environmental quality, and wildlife & fisheries published a letter to British Petroleum CEO Tony Hayward requesting more information on the chemical dispersants.

The state secretaries said they had "serious concerns about the lack of information related to the use of dispersants in fighting the oil spill," as they asked for details on "what impact it could have on our people, water and air quality, as well as the wildlife, fisheries and vegetation."

Pending test results, the Environmental Protection Agency last week even mandated a complete halt to BP's unprecedented underwater use of dispersants near the well source - almost a mile down (1.6 kilometers) in the chilly Gulf waters.

"There's a lot of stuff they're not telling us" about the dispersent, George Barasich, president of the Louisiana Commercial Fishermen's Association, warned environmental activists gathered in New Orleans on Saturday, who were rallying against the calamity facing the Gulf coast.

One of the main threats, Barasich said, was the chemicals sterilizing the produce - a catastrophe for the industry in offshore and coastal Louisiana that supplies 41 percent of seafood consumed in the United States.

"The economic impact these people are looking at - they can't fathom how far it's going to reach," he said.

With ‘ Hat In Hand ‘ : American Serfdom

May 09, 2010 "Information Clearing House" -- A scene in Claude Berri’s fine 1993 film Germinal captures the essence of it all. French coal miners, circa 1880s, are enduring bleak conditions. They have no union, so a group of them ask to speak to the mine owner at his manor house. This one scene reveals the extent of a certain mindset of that day , and of now . The workers enter the study of the boss. He is seated at his desk as the group enters. They take their hats off and, to a man, seem to lower their heads in his presence. Ce le vie!

I recall when Alan Greenspan was Federal Reserve Chairman. Each time he would appear before Congress to answer questions, they treated him like.....royalty! All of a sudden, this man who represented private banks and not the citizens, was approached like the Delphic Oracle. If the hearings were not conducted indoors, we might have seen hats coming off before they questioned him.... They even began addressing him as Doctor Greenspan. Every word he uttered was received with baited breath. The CNBC financial show covered his appearance live, and all the little serfs on the trading floor stopped working to hear what he was saying. After all, if he said the right thing, the market would react upwards. If not, no cocktails later on at 4 PM. Meanwhile, it was Greenspan who helped inflate the real estate bubble by celebrating the wonders of this ownership society.

America, 2010, and nothing really has changed, with one percent of our population ( of nearly 300 million people ) controlling 40 percent of our wealth. Unions represent a modern low of 14 percent of the workforce. Yet, probably the most damaging aspect is the mindset of most 9 to 5 Americans, who wannabe ‘ Just like Mike ‘ ! Remember that powerful advertisement for Nike ( or was it Coke ? ) when Michael Jordan was the hit of the town? He was a superstar, super wealthy, with this big smile that reeked of success..... Power! All the average Joes out there wished they could be like him.....live like him! Then we had shows like Lifestyles of the Rich and Famous, and all those couch potatoes dreamed of one day being like that. We had ( and have ) all those infomercials telling us how to make money quick from real estate. I remember Erik Estrada from the old Chips cop show pushing real estate investing, with his pot belly and bloated once handsome face.... ‘ With little money down! ‘

Conversations in offices, supermarket lines, health clubs, job sites.... Everywhere it seems, are about the ‘ scandal of the day ‘ involving the rich and famous. Never do you hear discussions about the trillion dollar phony bank bailouts, or trillion dollar phony wars we taxpayers fund. The latest conversation piece, the one in between Tiger Woods and Lawrence Taylor, is about how much the stock market has folded this past week.....never about what Goldman Sachs did to the Greek government to cause their crisis. Or the news about how the Greek 9 to 5 working folks are not taking this like we here take everything. They are out, in the streets, demanding better answers instead of just taking it all on their backs and their wallets. Yet, here in La La land, all I hear from my friends is how much they are losing in their portfolios. Instead of having contempt and righteous anger for the one percent who seem to get all the breaks from this government, my neighbors walk right into the trap of ‘ Wanabee ‘.

I was driving in my car and channel surfing. Problem is, if you want to hear talk radio in my area of Central Florida, all you get is right wing **** . Limbaugh is on , simultaneously, on three different channels at the same time! Three! If you want local talk radio.... Oh boy! More of the same dribble! One guy, a local yokel who had the audacity to actually legally change his name to ‘ Big John ‘ , really takes the cake. Portraying himself as a bleeding heart independent, he spends most of his time siding with the super rich. He says he was against the invasion of Iraq, yet won’t speak of it on air ( ‘ This is a local show about local issues ‘ he parrots ). He refuses to connect the dots as to why our towns are so broke. No mention of the one trillion going to phony wars and one trillion to phony bank bailouts. Think of all the dough that Florida would be getting in Federal Block Grants to help with our red ink budgets if that money did not divert to the War and Wall Street cliques. Yesterday, he was discussing rail link ideas for this area. Currently, the local rail system is virtually nonexistent. This joker was against any rail system improvements. Then he says that, since the citizens voted for it in a referendum, it should be funded by raising the sales tax. Then, he was agreeing with his guest that we would do better with a Fair Tax AKA Consumption Tax ( Sales Tax ) instead of any state income tax ( Florida has none currently ) . For a guy who does care about the homeless, his scenario would give him more homeless to worry about. Why? Well, look carefully at the gasoline pump next time you fill up. See how much in taxes you pay for each gallon. Is it the 1% , the super wealthy , who pay out the most, or is it the rest of we serfs comprising the 99% ? How many toaster ovens and shirts and underwear can that one percent buy compared to the rest of us? Yet, it is so many serfs who trumpet the nonsense spewed out by hypocrites like ‘ Big John ‘ .

Finally, for all my fellow Christian brothers and sisters out there, let’s end with the words of two men you hold so dear. Remember, that in Jesus’ day the scribes and Pharisees represented the elites of that society.

John the Baptist - You worship God with voice and lip; your hearts are far away, and set on gold.... Your priests have bound upon the people burdens far too great to bear; they live in ease upon the hard earned wages of the poor. Your lawyers, doctors, scribes are useless cumberers of the ground; they are but tumors on the body of the state; they toil not neither do they spin, yet they consume the profits of your marts of trade. Your rulers are adulterers, extortioners and thieves, regarding not the rights of any man......

Jesus of Nazareth- Beware you of the scribes and Pharisees who pride themselves in wearing long and richly decorated robes, and love to be saluted in the market place, and seek the highest seats at feasts, and take the hard earned wages of the poor to satisfy their carnal selves, and pray in public, long and loud. These are the wolves who clothes themselves to look like sheep..... They say the things that Moses taught; they do the things of Beelzebub. They talk of mercy, yet they bind on human shoulders burdens grievous to bear. They talk of helpfulness, and yet they put not forth the slightest efforts for their brother man.

Alas, dear friends, the manor house in not a place this writer wishes to reside in..... Or even visit.

Philip A Farruggio is son and grandson of Brooklyn NYC longshoremen. He is an activist leader and free lance columnist. Since the 2000 elections, he has written over 150 columns , many posted on various sites worldwide. Recently, he is finding a home at www.dandelionsalad.com , or at his own blog at www.opensalon.com . Philip can be reached at paf1222@bellsouth.net