Friday, July 2, 2010

Time to shut down the US Federal Reserve?

Like a mad aunt, the Fed is slowly losing its marbles.

Kartik Athreya, senior economist for the Richmond Fed, has written a paper condemning economic bloggers as chronically stupid and a threat to public order.

Matters of economic policy should be reserved to a priesthood with the correct post-doctoral credentials, which would of course have excluded David Hume, Adam Smith, and arguably John Maynard Keynes (a mathematics graduate, with a tripos foray in moral sciences).

Adam Smith didn't have an economics PhD

Adam Smith didn't have an economics PhD

“Writers who have not taken a year of PhD coursework in a decent economics department (and passed their PhD qualifying exams), cannot meaningfully advance the discussion on economic policy.”

Don’t you just love that throw-away line “decent”? Dr Athreya hails from the University of Iowa.

“The response of the untrained to the crisis has been startling. The real issue is that there is an extremely low likelihood that the speculations of the untrained, on a topic almost pathologically riddled by dynamic considerations and feedback effects, will offer anything new. Moreover, there is a substantial likelihood that it will instead offer something incoherent or misleading.”

You couldn’t make it up, could you?

“Economics is hard. Really hard. You just won’t believe how vastly hugely mind-boggingly hard it is. I mean you may think doing the Sunday Times crossword is difficult, but that’s just peanuts to economics. And because it is so hard, people shouldn’t blithely go shooting their mouths off about it, and pretending like it’s so easy. In fact, we would all be better off if we just ignored these clowns.”

I hold my hand up Dr Athreya and plead guilty. I am grateful to Bruce Krasting’s blog for bringing this stinging rebuke to my attention.

However, Dr Athreya’s assertions cannot be allowed to pass. The current generation of economists have led the world into a catastrophic cul de sac. And if they think we are safely on the road to recovery, they still fail to understand what they did.

Central banks were the ultimate authors of the credit crisis since it is they who set the price of credit too low, throwing the whole incentive structure of the capitalist system out of kilter, and more or less forcing banks to chase yield and engage in destructive behaviour.

They ran ever-lower real interests with each cycle, allowed asset bubbles to run unchecked (Ben Bernanke was the cheerleader of that particular folly), blamed Anglo-Saxon over-consumption on excess Asian savings (half true, but still the silliest cop-out of all time), and believed in the neanderthal doctrine of “inflation targeting”. Have they all forgotten Keynes’s cautionary words on the “tyranny of the general price level” in the early 1930s? Yes they have.

They allowed the M3 money supply to surge at double-digit rates (16pc in the US and 11pc in euroland), and are now allowing it to collapse (minus 5.5pc in the US over the last year). Have they all forgotten the Friedman-Schwartz lessons on the quantity theory of money? Yes, they have. Have they forgotten Irving Fisher’s “Debt Deflation causes of Great Depressions”? Yes, most of them have. And of course, they completely failed to see the 2007-2009 crisis coming, or to respond to it fast enough when it occurred.

The Fed has since made a hash of quantitative easing, largely due to Bernanke’s ideological infatuation with “creditism”. QE has been large enough to horrify everybody (especially the Chinese) by its sheer size – lifting the balance sheet to $2.4 trillion – but it has been carried out in such a way that it does not gain full traction. This is the worst of both worlds. So much geo-political capital wasted to such modest and distorting effect.

The error was for the Fed to buy the bonds from the banking system (and we all hate the banks, don’t we) rather than going straight to the non-bank private sector. How about purchasing a herd of Texas Longhorn cattle? That would do it. The inevitable result of this is a collapse of money velocity as banks allow their useless reserves to swell.

And now the Fed tells us all to shut up. Fie to you sir.

The 20th Century was a horrible litany of absurd experiments and atrocities committed by intellectuals, or by elite groupings that claimed a higher knowledge. Simple folk usually have enough common sense to avoid the worst errors. Sometimes they need to take very stern action to stop intellectuals leading us to ruin.

The root error of the modern academy is to pretend (and perhaps believe, which is even less forgiveable), that economics is a science and answers to Newtonian laws.

In any case, Newton was wrong. He neglected the fourth dimension of time, as Einstein called it, and that is exactly what the new classical school of economics has done by failing to take into account the intertemporal effects of debt – now 360pc of GDP across the OECD bloc, if properly counted.

There has been a cosy self-delusion that rising debt is largely benign because it is merely money that society owes to itself. This is a bad error of judgement, one that the intuitive man in the street can see through immediately.

Debt draws forward prosperity, which leads to powerful overhang effects that are not properly incorporated into Fed models. That is the key reason why Ben Bernanke’s Fed was caught flat-footed when the crisis hit, and kept misjudging it until the events started to spin out of control.

Economics should never be treated as a science. Its claims are not falsifiable, which is why economists can disagree so violently among themselves: a rarer spectacle in science, where disputes are usually resolved one way or another by hard data.

It is a branch of anthropology and psychology, a moral discipline if you like. Anybody who loses sight of this is a public nuisance, starting with Dr Athreya.

As for the Fed, I venture to say that a common jury of 12 American men and women placed on the Federal Open Market Committee would have done a better job of setting monetary policy over the last 20 years than Doctors Bernanke and Greenspan.

Actually, Greenspan never got a Phd. His honourary doctorate was awarded later for political reasons. (He had been a Nixon speech-writer). But never mind.

40 Articles That Explain Credit Card Interest Rates

Post image for 40 Articles That Explain Credit Card Interest Rates

by Best Credit Cards Staff on June 29, 2010

Carrying a credit card has become almost inevitable in this day an age. What is not inevitable is the interest rate that the consumer has to accept. Whether it’s the first card or a replacement card there are ways to negotiate the best rate. Read beyond the APR and understand how the balance is determined. Is there a grace period and are there any “hidden fees”?

If a current card has become a nightmare there are also ways to minimize the negative impact of debt. Can the rate be negotiated down? Can the debt be settled and will the bank reduce the total balance owed? These questions, and more, are explored in the articles below. Good information is the beginning of determining the best card for your needs. Read and learn about the options available.

  1. Compare Cards: This site allows comparison of credit cards to find the best one. Several different search criteria are available.
  2. Money Now USA: The ins and outs of credit cards rates and approaches to lower rates on existing credit cards.
  3. Credit Cards: Find out what an APR is, how it affects the bill and what hidden APR charges to look out for.
  4. American Banking & Market News: Even good customers are in danger of having their credit card interest rates raised dramatically.
  5. Think Credit Cards: Benefits of low interest credit cards.
  6. Consumer Bad Credit Guide: Getting a credit card with bad credit and how long it takes to repair credit.
  7. Credit Cards Co: Learn your credit score and negotiate a better interest rate.
  8. Ideas: Do higher credit limits and lower APRs lead to higher debt?
  9. Low Cards: Different kinds of APR and how a credit score can impact them.
  10. Whale Hook Loans: Why banks charge certain interest rates and what the consumer can do.
  11. Saving Advice: Save money by reducing credit card interest rates.
  12. Investor Words: Differences between the introductory rate and the long term rate.
  13. My Two Dollars: Credit card companies continue to maintain their profits while raising consumer rates and cutting rewards.
  14. Economy Watch: Understand how credit history impacts the credit card rate.
  15. JSNET: Fees, rates and benefits to examine before getting a credit card.
  16. Banking My Way: An improving economy may mean higher interest rates.
  17. After Downing Street: Examine legal limits placed on credit card rates.
  18. Online Guide to Credit: How to read the fine print in the credit card agreement.
  19. Bill Eater: A Comparison chart of interest rates and how they impact the total cost of an item.
  20. Mother Jones: Credit card companies are raising rates. Consumers need to be wary.
  21. Made Man: Strategies for reducing credit card interest rates.
  22. Crown Financial Ministries: Understand fees on credit cards along with grace periods and how the outstanding balance is determined.
  23. Married to the Army: Understanding the impact of not paying off your cards every month.
  24. Care One Credit: The balance, and how it is calculated is as important as the APR. Find out how to determine which card has the best terms.
  25. Amateur Asset Allocator: Find out if you are eligible for interest rate reduction and how to contact your bank to ask for a reduction.
  26. ASAP Credit Card: With all the different methods of interest rate calculations it is imperative you know what your credit is costing if you don’t pay off the bill each month.
  27. UCAN: Read about the impact of the Credit Card Act of 2009.
  28. ProQuest : A guide to the economics behind consumer debt.
  29. Debt Consolidation Connection: Examine the benefits of consolidating credit card debt.
  30. Credit Card Flyers: When and why to pay off high interest debt.
  31. Money Rates: Questions to ask before accepting a credit card offer.
  32. 100 Best Credit Card Reports: A low interest rate is not enough; this site explores other considerations when signing up for a credit card.
  33. Business and Media: Banks may be raising rates due to tough economic times.
  34. Consolidated Credit Counseling: It’s important to understand your APR and know how it affects you and how to watch out for pitfalls.
  35. Credit Card Chaser: Comparing and finding the best low interest credit cards.
  36. Payments News: Banks are still raising rates in spite of a touch economic climate.
  37. Buzzle: Advice on how to look out for a teaser rate and determine the long term impact of an APR.
  38. What Really Happened : Watch out for this card with an interest rate of 79.9%.
  39. Credit Card Debt Negotiation: A guide to determine if credit card debt negotiation is in your best interest. How to do it and what questions to ask before settling your credit card debt.
  40. Wise Bread: What to look out for when interest rates rise and how to protect your credit when rates do rise.

Goldman Sachs Pressed By Born for Derivatives Data

By Matthew Leising and Shannon D. Harrington

July 1 (Bloomberg) -- Goldman Sachs Group Inc. refused a request from the Financial Crisis Inquiry Commission to reveal how much it makes trading derivatives, saying the bank doesn’t separate the figure from other businesses.

“Some other firms have provided us with that data when we’ve asked for it and Goldman Sachs hasn’t,” Commissioner Brooksley Born said today in Washington on the second day of a hearing investigating the role of derivatives in the 2008 credit crisis, which sparked the worst recession since the 1930s. “It makes one wonder why Goldman has the incentive or impetus to not release this information.”

Banks including JPMorgan Chase & Co., the biggest derivatives dealer, have provided estimates to investors. The top five U.S. commercial banks, including Goldman Sachs, generated an estimated $28 billion in revenue from privately negotiated derivatives in 2009, according to company reports collected by the Federal Reserve and people familiar with banks’ income sources.

Goldman Sachs, the most profitable Wall Street firm in history, is being questioned about credit-default swap trades with American International Group Inc., the insurer bailed out by the U.S. government after AIG was unable to meet collateral demands from trading partners on the contracts. The swaps, used by Goldman Sachs and other banks to hedge against declines in the value of mortgage-linked debt, caused losses at AIG as housing prices collapsed.

‘It’s Integrated’

Goldman Sachs Chief Financial Officer David Viniar testified today that the firm has no way of separating out its derivatives data from trading in cash securities.

“We don’t have a separate derivatives business,” Viniar told the panel. “It’s integrated into the rest of our business.”

Commissioner Byron Georgiou said he doubted Goldman Sachs was unable to provide the information.

“When you tell us that you don’t know how much you make in your derivatives business, nobody here really believes it,” Georgiou told Viniar. “Nobody here believes that you don’t know how much money you’re making on the various aspects of your business, it doesn’t make any sense.”

$49.1 Trillion

Goldman Sachs held a gross amount of $49.1 trillion of derivatives contracts as of March 31, according to an Office of the Comptroller of the Currency report last month. The bank reported total trading revenue of $7.65 billion during the first quarter. That follows total trading revenue of $23.2 billion in 2009, according to a filing with the Federal Reserve.

“It’s kind of dangerous, don’t you think, to claim to the FCIC that you don’t know the profitability of a major line of business,” said Craig Pirrong, a finance professor at the University of Houston. “How can you rationally allocate capital, for instance, if you don’t know the return to that capital?”

Under a March 2008 amendment to derivatives accounting standards, companies are exempt from breaking out gains or losses on derivatives used as part of a trading book that also includes cash securities, if other information on the trading activities is provided, according to the Financial Accounting Standards Board’s Statement No. 161.

Goldman Sachs is “definitely capable of providing the data that was asked for, but I can understand their fear of doing so,” said Brian Yelvington, head of fixed-income strategy at broker-dealer Knight Libertas LLC in Greenwich, Connecticut, and a former credit swaps trader.

Derivatives Revenue

“There is a potential for such a number to vastly overstate the amount of profit or loss captured by a particular business because much of that business may be symbiotic with another,” Yelvington said. “They may have made money on the derivatives leg of a trade, for example, and lost it on the cash leg.”

JPMorgan said in February 2009 that about 8 percent of its total revenue from 2006 to 2008 came from derivatives in its investment-banking unit, according to a presentation made to investors.

That breakdown and revenue figures from regulatory filings imply that half of JPMorgan’s $31.2 billion in trading revenue those years came from derivatives, according to Alexander Yavorsky, a senior analyst at Moody’s Investors Service in New York.

‘Highly Imprecise’

“Reporting a revenue number, just the profit on derivatives without looking at cash positions associated with hedging those, is going to be a highly imprecise exercise,” Yavorsky said in an interview today.

Goldman Sachs was subpoenaed by the commission last month after the New York-based firm sent more than a billion pages of documents to the panel, a shipment so sizable that panel members called it an attempt to hinder their probe.

“We did not ask them to pull up a dump truck to our offices and dump a bunch of rubbish,” Chairman Phil Angelides, who previously served as California’s treasurer, said June 7. “This has been a very deliberate effort over time to run out the clock.”

The commission, which will report its findings to Congress and President Barack Obama by December, said June 29 that the bank had been more responsive to information requests since being subpoenaed. Separately, Goldman Sachs faces a U.S. Securities and Exchange Commission fraud suit over sales of a mortgage-linked security. The bank has said the SEC suit is unfounded.

Born’s Warning

Born had warned in 1998, as chairman of the Commodity Futures Trading Commission, that the unregulated over-the- counter derivatives market posed a danger to the global financial system. She moved to address changes in how swaps based on interest rates, commodities or currencies were traded and was stopped by then-Federal Reserve Chairman Alan Greenspan, SEC Chairman Arthur Levitt and Treasury Secretary Robert Rubin, who all argued the market could regulate itself.

Born said last year that the banks that caused the crisis were trying to stop the congressional overhaul of the market.

“Special interests in the financial-services industry are beginning to advocate a return to business as usual,” Born said in May 2009 as she accepted a Profile in Courage award from the John F. Kennedy Library Foundation.

--With assistance from Christine Harper and Sarah Frier in New York. Editors: Dan Kraut, Alan Goldstein

House passes unemployment benefits extension

NEW YORK ( -- After a failed attempt earlier this week, the House voted to extend the deadline to file for federal jobless benefits Thursday. But the bill will be stuck in limbo as Congress takes a weeklong summer break.

The bill would extend the deadline to file for extended unemployment benefits through November, and would retroactively pay out claims to those who saw their benefits expire in May.

The legislation, which garnered a 270-153 vote, now moves on to the Senate.

That chamber, however, closed up shop Wednesday evening for the summer recess after failing to pass its own version of the bill, which would raise the deficit by $33.3 billion.

As a result, more than 2.1 million people are expected to have lost their unemployment benefits by the time legislators reconvene on July 12.

House Democrats have struggled to get support from Republicans, who oppose the extension because it adds to the nation's $1.4 trillion deficit.

Basic state-funded unemployment benefits offer 26 weeks of coverage. But after the downturn, Congress approved an extension of those benefits for up to an additional 73 weeks using federal money.

The federal benefits are divided into tiers, and the jobless must re-apply each time they move into a new tier.

Each time Congress fails to pass an extension, the jobless cannot apply to move into the next tier once their benefits run out. The recently unemployed who are still in their first 26 weeks of state-funded benefits are also unable to apply for extended federal benefits.

Senate Majority Leader Harry Reid, D-Nev., said Wednesday the Senate will vote again on its measure once a replacement is named for the late Sen. Robert Byrd, D-W. Va., who died on Monday.

IMF chief rules out double-dip global recession

WASHINGTON -- IMF chief Dominique Strauss-Kahn on Tuesday ruled out the immediate prospect of a double-dip recession scuttling the fragile global economic recovery, despite various risks.

The “recovery will go on without a double dip,” the IMF managing director said to a question at a forum hosted by the Peterson Institute for International Economics in Washington.

Global markets went into a tailspin Tuesday as sagging American consumer confidence, weak Chinese economic indicators and European financial problems renewed fears the global economic recovery may falter.

The United States and many other key economies plunged into the worst recession in decades following an American home mortage meltdown in 2007 which triggered a financial crisis sending shockwaves across the globe.

But Strauss-Kahn said “the IMF hasn't changed its views” on sustained global growth from the recession.

“It's (double-dip) not in the baseline for us... but there are high tail-risks,” he said, citing as examples the “fiscal situation” in some countries and problems created by large credit flows to relatively fast-growing Asian and other emerging nations

“There are many possible triggers for a double dip,” he said, adding “it will be ridiculous to say there are no risks at all.”

Strauss-Kahn believed the much faster-growing Asian economies could make up for any slack in economic expansion afflicting the United States or Europe, where a mounting fiscal crisis has threatened to slam the brakes on growth.

Dollar Plunges After UN Call To Ditch Greenback

U.S. economy enters “total freefall” as double-dip recession looms

Dollar Plunges After UN Call To Ditch Greenback 010710top2

The dollar plunged today following a United Nations report which called for the greenback to be replaced as the global reserve currency by the International Monetary Fund’s special drawing rights (SDRs).

The dollar’s trend of moving inversely to the stock market has seemingly been snapped, with the Dow Jones falling over 100 points at one stage today. However, as soon as markets began to claw back losses, the greenback failed to follow suit, indicating that whichever way markets move, the dollar is in big trouble.

The UN report called for “abandoning the U.S. dollar as the main global reserve currency, saying it has been unable to safeguard value,” according to Reuters.

“A new global reserve system could be created, one that no longer relies on the United States dollar as the single major reserve currency,” stated the report, adding that this new system should not be based on a basket of currencies, but on IMF-controlled SDR’s.

Following globalist moves to restore confidence in the single currency euro in the aftermath of the Bilderberg and G20 meetings, the concern has shifted from sovereign debt issues of countries like Greece and Spain, to the worsening state of the U.S. economy and the risk of a double-dip recession.

In the immediate aftermath of the 2010 Bilderberg meeting in Spain, at which globalists resolved to save the euro from collapse in an effort to restore confidence in their ultimate goal of a global single currency, the euro began to make a recovery and today rose against the dollar by over 1.5 per cent.

A cascade of negative U.S. economic data was released today, with job figures turning sour once again.

“Jobless claims were a disaster, coming in at 472k, on expectations of 455k,” reports Zero Hedge. “The economy has now entered the “total freefall” area”.

The dollar is being targeted for destruction because the financial terrorists who caused the economic collapse in the first place want to exploit the crisis in order to institute a new global currency issued by a global central bank.

In May, IMF chief Dominique Strauss-Kahn told elitists in Zurich Switzerland that the introduction of a global currency backed by a global central bank would act as the “lender of last resort” in the event of a severe economic crisis, another lurch towards fascist centralization of power in pursuit of a system of global governance.

As Gerald Celente explains in the clip below, all major currencies are doomed in the long term, which is why many European countries are beginning moves to revert back to their pre-euro denominations.

Oil Spills, Coal Disasters, Immigration Hysteria: Unlearned Lessons from 1924

Here are the news headlines in 1924: Oil spills, coal mining disasters and immigration hysteria.

On the orders of President Obama, the 1,200 National Guard troops en route to the US-Mexico border will arrive just in time for the May 28th anniversary of the official establishment of the Border Patrol in 1924.

As this seemingly ridiculous photo from a 1928 Popular Mechanics article on the Border Patrol points out, President Obama’s stop-gap measures simply repeat a reactionary historical cycle that have as much chance at inflaming the militarization of the borderlands amid Mexico’s drug war, and our own $1 trillion dollar “War on Drugs” failure, as any hope to block the forever porous borders, despite the nearly $6.7 billion “virtual” wall:

Incidentally, the Border Patrol was established in 1924, as part of the wider Immigration Act of 1924, to mainly patrol the Mexican and Canadian borders for bootleggers and “undesirable” Europeans and Asians, not Mexican immigrants.

The heated immigration debate of the time would have warmed the hearts of the carpetbaggers in Arizona and their new draconian immigration law. Senator Ellison DuRant Smith of South Carolina called on the nation to “to shut the door and to breed up a pure, unadulterated American citizenship.”

Meanwhile, in a haunting parallel to the Upper Big Branch coal mining disaster last month in West Virginia, 119 coal miners in Benwood, West Virginia lost their lives to an explosion on April 28, 1924.

The Benwood disaster, like Upper Big Branch, was a reminder of the continual state of violations and oversights for workplace safety in the coal industry.

On the eastern seaboard that year, communities were also up in arms over the reckless dumping of oil into offshore waters. Two years prior, the New Jersey State League of Municipalities had written the Army Corps of Engineers: “Oil pollution is one of the gravest economic questions confronting the Atlantic Coast navigable waterways.” At the National Coast Anti-Pollution League conference, a representative of the U.S. Bureau of the Biological Survey concluded: “Millions of birds winter along the coast from Long Island to Florida, but now many million drift ashore dead. It has been found that oil soaks their feathers and irritates their skin, leaving bare spots on their breasts and causing them to die of pneumonia. If something is not done to stop the increased pollution, a very heavy percentage will perish.”

The response from Congress was tepid, overwhelmed by the Big Oil lobby….in the 1920s! A watered-down bill, the Oil Pollution Act of 1924, outlawed the dumping of fuel oil into American coastal waters, but failed to penalize ships for any accidental spills, and provided little funds for enforcement.

Sound familiar?

Soon to be awarded the Nobel Prize for Literature in 1925, playwright George Bernard Shaw’s declaration that “Hegel was right when he said that we learn from history that man can never learn anything from history,” has never seemed so true.

Jeff Biggers is the American Book Award-winning author of Reckoning at Eagle Creek: The Secret Legacy of Coal in the Heartland (Nation/Basic Books), among other books. Visit his website:

Strange Inconsistencies in the $134.5 Billion Bearer Bond Mystery

Here’s yet another huge financial story that has been virtually blacked out by the US financial media. Although on the surface, this story appears to be a non-event, if we consider some of the released facts about this case, you will understand why I consider it to be a huge story. On June 8th, the Asia News reported the following story:

“Italy’s financial police (Guardia italiana di Finanza) has seized US bonds worth US 134.5 billion from two Japanese nationals at Chiasso (40 km from Milan) on the border between Italy and Switzerland. They include 249 US Federal Reserve bonds worth US$ 500 million each, plus ten Kennedy bonds and other US government securities worth a billion dollars each. Italian authorities have not yet determined whether they are real or fake, but if they are real the attempt to take them into Switzerland would be the largest financial smuggling operation in history; if they are fake, the matter would be even more mind-boggling because the quality of the counterfeit work is such that the fake bonds are undistinguishable from the real ones.”

Here are just a few fascinating facts about this case (at least they are being reported as “facts” at this current time):

(1) Though the smugglers have been identified in the press as “Japanese nationals” there has yet to be any confirmation if the smugglers were indeed Japanese or of some other ethnicity. How difficult is it to confirm the ethnicity of the smugglers and why is this information being kept secret?

(2) According to a brief Bloomberg article regarding this story, the seized bearer bonds allegedly were dated as of 1934. Since bearer bonds in denominations of $500 million did not exist in 1934, the bonds were deduced as fake, though the Italian police are still waiting for a declaration regarding the bonds’ authenticity from the SEC. There is something truly “off” about this declaration. How can the quality of the forged bearer bonds be so meticulous that they “are indistinguishable from the real ones”, yet the people involved in the alleged forgery so ill-informed as to not date the bearer bonds with a more recent year that would not immediately identify them as fraudulent? How hard would it have been to date the bearer bonds with a more recent year? An equivalent analogy would be if an expert art forger meticulously re-created a Picasso oil canvas and then erroneously signed the work with the wrong artist’s name. This story just does not add up.

(3) The Bloomberg story also reported that there is no known existence of the alleged 10 Kennedy bonds that were discovered in the smuggler’s suitcases, each with a denomination of $1 billion. Again, this discovery defies any logical explanation. Why would expert counterfeiters make 249 bearer bonds with denominations of $500 million apiece, each indistinguishable from the real thing, and then instead of just making 20 more such bonds, decide to make 10 bonds in denominations of $1 billion a piece in a bearer bond design that has never existed? Were the alleged counterfeiters just too lazy to confirm if Kennedy bearer bonds were ever a legitimately issued security? Again, this story makes no sense.

(4) On March 30, 2009, the US Treasury Department announced that USD $134.5 billion remained in its Troubled Asset Relief Program [TARP]. The stated amount of seized bearer bonds was $134.5 billion. Coincidence?

(5) The two well-dressed Japanese men opted to travel to Chiasso on a local train normally full of Italian manual laborers commuting to Switzerland. If they were really intent on successfully smuggling these bonds, counterfeit or real, why would they not take more care to select a travel route in which it was literally impossible for them not to stick out like two sore thumbs? Again, this part of the story defies all logic.

(6) The bearer bonds were discovered in a hidden briefcase compartment after a customs inspection. Again, if the bonds were indeed authentic and owned by a nation state, they could have been transported in a diplomatic pouch exempt from customs searches that would have guaranteed transport without detection.
Thus, all of the above irreconcilable and illogical points, other than the coincidence of the amount of the bearer bonds exactly matching the remaining TARP fund amount declared on March 30th, seem to indicate that not only were the seized bearer bonds counterfeit, but also that the smugglers were intent on being caught.
Before I continue, let’s review the purpose of bearer bonds.

Here is the Wikipedia definition of bearer bonds:

“A bearer bond is a debt security issued by a business entity, such as a corporation, or by a government. It differs from the more common types of investment securities in that it is unregistered – no records are kept of the owner, or the transactions involving ownership. Whoever physically holds the paper on which the bond is issued owns the instrument. This is useful for investors who wish to retain anonymity. The downside is that in the event of loss or theft, bearer bonds are extremely difficult to recover.”

If you recall the Michael Mann movie “Heat”, starring Robert DeNiro and Al Pacino, during a daring daytime armored car robbery, the criminals specifically targeted millions of dollars of bearer bonds for theft precisely because of the above qualities of bearer bonds that make them very difficult to trace. Again, due to the properties of bearer bonds, it seems highly unlikely that $134.5 billion of bearer bonds would be transported, if they were real, by two men with no security, since theft almost guarantees that they would be lost forever.

Thus far, about the only piece of information that appears to be reliable as reported by various news sources regarding this huge mystery is the remarkable authenticity of the 249 seized bearer bonds in denominations of USD $500 million. If any of the other facts, as they are being reported, are remotely accurate, then the bearer bonds were likely counterfeit. Still, the interesting part of this story, at least to me, is that the smugglers seemed intent on being caught with the counterfeit bonds. This leads me back to my previous question. What possible reason would the smugglers have for wanting to be caught? One of the quickest ways to sabotage and usher in the death of a currency is to raise legitimate questions about its ability to withstand counterfeiting efforts. Prove that counterfeiting is not only possible but highly likely, and the world’s confidence in the sabotaged currency will undoubtedly plummet.

In fact, this very tactic was applied during World War II when the Nazis launched Operation Bernhard in an attempt to crash the British economy by producing, by 1945, 132 million expertly counterfeited British pounds, a figure that represented roughly 15% of all real British pounds in circulation at the time. The counterfeit pounds were produced by expert printers and engravers supervised by an SS officer named Bernhard Krueger. As well, historical evidence exists that the Allies considered launching a counter-counterfeit plan against the Nazis as well. During this time, it was also alleged that the Bank of Italy counterfeited their own money by issuing the same securities twice with identical registered numbers and codes in order. The purpose of this counterfeiting was to secretly expand monetary supply without public transparency or accountability. Perhaps then, this $134.5.billion bearer bond mystery was an attempt of a nation state to shake the world’s confidence in the position of the US dollar as the world’s reserve currency.

There should be little debate that the world’s emerging economies in Russia, Brazil, China and certain Gulf Nations are at economic war today with the world’s Western nations and their economic allies. The currency war being fought today is sure to get much uglier in the foreseeable future, in both open tactics as well as secretly executed tactics. Currently, if the currency war were the world series of poker, the US and the UK would be holding a pair of 2s and relying on nothing but bluffs to keep the rest of the world at bay. Conversely, the Chinese and other emerging nations with large surpluses would be holding straight or royal flushes, and likely quietly maneuvering to go “all in” at some point.

Given that the discovery of $134.5 billion of bearer bonds in the suitcases of two Japanese nationals in Chiasso, Italy on the border of Switzerland qualifies as one of the largest smuggling operations in history, and given the various implications of such an act and the possible players involved, the silence regarding this huge story is simply stunning. It is not a huge story, per se, because of the counterfeiting operation, because accusations and revelations of massive money counterfeiting operations have occured in the past. It is a huge story, rather, due to all the inconsistencies of the story and the potential explanations that could explain these inconsistencies. The larger story at hand is, who are the players (nations) involved, and what was the intention of this likely counterfeiting operation? Maybe the future will reveal the answers to these questions. But maybe not.

Can Russia offer freedom and security to Europe?

Christopher King argues that Russia under the leadership of President Dmitriy Medvedev and Prime Minister Vladimir Putin has enormous potential for setting a course toward a positive future with Europe.

The notion of Russia offering freedom and security to Europe will appear odd to most Europeans and laughable to Americans. Nevertheless, there are influential Europeans who recognize Europe’s big problem and would like a solution.

Europe’s big problem is that its interests have been subordinated to America’s ruling class by politicians such as Anthony Blair, the most obvious among them, who is being well paid for his subversive activities.
"The Cold War is now over and the relationship [between Europe and the USA] has become one of American dominance and parasitization of Europe economically, through command of NATO and use of its armed forces as a tool of American foreign policy.”

A bleak future

There appears to have been an organized movement by business and political leaders for some form of union with America since the 1950s. This appears to have been conceived in economic and security terms during the Cold War. The Cold War is now over and the relationship has become one of American dominance and parasitization of Europe economically, through command of NATO and use of its armed forces as a tool of American foreign policy. America has bases in every European country, makes financial payments to politicians and political parties, and interferes in European political matters generally.

Europe has been dragged by the US into the disgusting wars in Iraq, Afghanistan and Pakistan and can look forward to Iran. Its politicians echo every aggressive US resolution in the United Nations. Its banks have been defrauded of trillions of dollars. Its major corporations are taken over by predatory US companies, for example, the Kraft takeover of Cadbury, within the Anglo-American version of capitalism. European countries find themselves unable to get rid of US nuclear weapons on their territory. The US has provoked a war between Georgia and Russia.

The US was probably behind the suspected assassination of the British weapons inspector Dr David Kelly on UK territory and within walking distance of his home – his autopsy report is kept secret by the British government. Other countries, e.g. Japan and South Korea, cannot rid themselves of American military bases. Together with the behaviour of the US Central Intelligence Agency in assassinating, kidnapping and torturing America’s perceived enemies and subverting sovereign governments world-wide, the trend points to a bleak future for Europe as a satrapy of the United States.

The US has been a friend in the past, albeit for qualified reasons, but Europe now receives no benefit whatever from this relationship. The United States now offers only weapons, warfare and destabilization in Europe and wherever else it goes.

“Russia must become more attractive than the United States – a more attractive place to visit, to do business and to live.”

Russia’s place in Europe

Russia is still in transition after the Soviet period, particularly in reconstructing its economy, so its institutions have considerable plasticity. Clearly, their development must be in Russia’s best interests but it is desirable that they should also be attractive to Europe. Nor is there any contradiction in this. It is a matter both of how Russia is viewed by Europeans and how Russia views itself and develops.

Russia and Europe need each other as much for material benefits as for the reason that they are neighbours on the same continent. This relationship should clearly be given top priority by both. The United States has become deeply entrenched in Europe over the last 50 years. The American narrative of bringing freedom to Europe during World War II is generally accepted, as are purported economic benefits of the association. The narrative of Russia’s role to the present time is unfailingly negative. For this reason Russia needs to take the initiative if it wishes to be a magnet for Europe. Russia must become more attractive than the United States – a more attractive place to visit, to do business and to live.

Europe and Russia have always had a business relationship, even during the Soviet period, but it is possible and desirable to go far beyond that. Competition with America for Europe cannot be on America’s military terms. It should be in terms of those elements that America prides itself it provides to others, that is, freedom and security, but which it has never in reality ever provided.

In the near future as the American economy worsens, America’s militaristic, parasitic nature will become more evident to Europeans and impossible for America and its supporters to conceal. Russia’s opportunity is to present an alternative.

“In the Euro-Russian relationship military matters have no place, although the US-NATO entity would like to make them central as a point of continual friction and distraction at will.”

This is not a matter of military threats or action. The United States is delighted with anything that confirms its narrative of a lurking Russian threat that it “contains”. That is the myth in South Korea where America commands South Korean military forces as it does NATO’s. There, it preserves confrontation with the North and frustrates South Korea’s wishes for unification. This situation, together with the recent sinking of the South Korean corvette Cheonan close to a US naval exercise, has provided an opportunity, leaving aside wider implications, for the extension of the US occupation and the sale of more weapons. Boing has just applied for an export license for 20 F-15 fighter aircraft. Another order for fighters of unspecified type is expected in two years time. South Korea and Europe, among others, are captive weapons markets. North Korean hostility is maintained as a threat to Japan.

In the Euro-Russian relationship military matters have no place, although the US-NATO entity would like to make them central as a point of continual friction and distraction at will. We see the hot/cold US attitude continuously. Rather, it is a matter of internal Russian social values and their institutional expression.

The values of the American constitution have only ever been applied to Americans themselves and not even all Americans, much less non-Americans in whose countries and to whose citizens the United States considers it may act without any constraint or respect whatsoever. Recent American administrations are now undermining their own constitution.

A reason for this appears to be that the American military establishment has developed contempt for the civilian administration and has begun to drive its direction, as a Washington Post article suggests in connection with General Stanley McChrystal’s dismissal. Ex-President of Honduras Manuel Zelaya now claims that the army coup that ousted him on 28 June 2009, (by officers trained at Fort Benning in the US) was instigated by the United States. The US administration’s denial might be partly true. The coup occurred only five months after President Barak Obama’s inauguration. I noted on 8 October 2009 that the new Obama administration appeared genuinely to have been surprised by it and that it was probably an independent military operation.

It is this behaviour by America that now provides Russia with its opportunity to provide Europe with a more attractive social alternative, to which America can have no objection, at least, not overtly.

Yulia Timoshenko, former Prime Minister of Ukraine, has done her best to provide an extensive list of constraints on Russia’s attractiveness. In considering this we should bear in mind that Timoshenko’s Orange Revolution was supported by advisors and finance from the United States . Be that as it may, we do not learn from those who agree with us. We learn from those whose views differ from our own.

“The last thing America wants is for Russia to resemble the beacon of freedom and security that it purports to be itself.”

In urging America to encourage Russian reforms, however, Timoshenko has not understood America. The last thing America wants is for Russia to resemble the beacon of freedom and security that it purports to be itself. America likes merely to criticize. It has doubtless noted that Russia’s defensiveness to criticism might actually inhibit reform.

From Russia’s viewpoint, America’s bases, armaments and nuclear weapons in Europe can be ignored. They cannot be used and are merely a provocation of which Europeans are becoming aware. Congress can pass as many NATO First Acts as it wishes. In due course American bases must go.

As the Vietnamese showed and the Pashtun in Afghanistan are demonstrating, weapons win no hearts and minds. Indeed, signs of blowback are being seen in Iraq with the cautious reappearance of the Mahdi Army. Americans are good at destroying things and killing people but they build nothing and would have those people whom they invade, bomb and shoot, believe that they are being freed.

Russia’s internal development is beyond American control and it is this that will influence European sentiments. American criticisms, threats and provocations should be exposed for what they are. Those who have ceased to believe American propaganda need facts.

The Medvedev-Putin team is a strong one that has enormous potential for continuing Russia’s development of good governance. Russia’s great progress since the death of the Georgian Stalin gives them the opportunity to achieve the prize of integration with Europe if they continue. This is not only a cost-free strategy compared with American military methods – whatever the outcome, Russia can only benefit.

Dimitry Medvedev and Vladimir Putin have the opportunity to define the character of Mother Russia. Surely she should be a warm, welcoming woman who cares for her children and presses medovnik honey cake and tea on her visitors. As an alternative to arrogant armed Americans, Europeans will know whom to visit.

Feds: Broward cops, FBI agent in mortgage fraud ring

A new mortgage fraud indictment stands out because it accuses seven current and former police officers and an FBI agent -- along with lawyers and brokers -- of conspiring to obtain millions in illegal loans.

A network of Broward County attorneys, law enforcement officers and mortgage brokers are accused of falsifying a slew of documents to obtain $16.5 million in loans that they used to buy and flip properties during the real estate boom, according to an indictment unsealed Wednesday.

Federal prosecutors said the Broward-based group was organized by ex-Plantation police officer Joseph Guaracino, who recruited five other current and former cops in that city as well as a Lauderhill officer and an FBI agent. They allegedly posed as ``straw'' buyers who pledged to buy and live in 38 condos and homes in Broward and Palm Beach counties.

The defendants, arrested Wednesday, are accused of conspiring to submit false income records, job descriptions, bank statements and loan applications to dupe lenders in South Florida and elsewhere from 2004 to 2007.

But their real goal -- disguised by the false paperwork -- was to rent the properties and then sell them, thereby ``realizing substantial profit,'' according to the indictment.

Without working together as ``straw'' buyers looking for primary residences, the individuals would never have been able to quality for so many mortgages and generate handsome profits, the indictment says. Some of the profits were used to purchase even more homes.

The real estate closings were handled by prominent Fort Lauderdale attorney Steven Stoll, who owned a title company, and Boca Raton lawyer Stephen Orchard, who worked with Stoll. The title attorneys falsely represented to the mortgage lenders the source of the down payments from borrowers needed to close the transactions, according to the indictment returned Tuesday by a federal grand jury in Fort Lauderdale.

Stoll's attorney Robert Nicholson on Wednesday defended his client, saying, ``Steve Stoll is very disappointed the government has decided to ignore the substantial evidence of his innocence.''

Two other mortgage brokers and a processor who worked for Stoll were also charged.

Although the law enforcement officers didn't use their positions to carry out the alleged mortgage scheme, their case stands out amid a recent flurry of federal loan fraud prosecutions because it involves eight current and former law enforcement officers. The 13 defendants named in the indictment will have their first appearances in federal court Thursday.


``This indictment charges a group of individuals who conspired to enrich themselves by committing mortgage fraud,'' said U.S. Attorney Wifredo Ferrer. ``It includes a number of professionals who betrayed their profession for greed, and in the process, undermined the integrity of the mortgage marketplace on which we all rely.''

Among others named in the indictment: Joseph Guaracino's brother, Dennis Guaracino Jr., and John Velez, both former Plantation police officers. Velez, a former SWAT team and Street Crimes Unit member, was named Plantation Police Department officer of the year in December 2004.

Also charged: current Plantation officers Daryl Radziwon, Casey Mittauer and Joseph DeRosa, along with Lauderhill officer Joseph LaGrasta.

FBI agent Robert DePriest, of Plantation, was also arrested. An FBI spokeswoman declined to comment.

In a statement, the Plantation Police Department said that in June 2007 it became aware that several of its officers were possibly involved in mortgage fraud and requested the assistance of the Florida Department of Law Enforcement to investigate.

FDLE, along with the U.S. attorney's office, notified the department in January that three of its officers were targets of a probe. They were immediately placed on administrative leave with pay. On Wednesday, their status was changed to unpaid leave.

One of the officers, Mittauer, used to be a volunteer assistant baseball pitching coach at Dade Christian School, his alma mater.

Lauderhill Police said Wednesday that LaGrasta was placed on paid administrative leave, but declined further comment.

The two mortgage brokers charged in the indictment were Matthew Gulla and Rene Rodriguez Jr.

Jacqueline Trumbore, who worked for Stoll's company, TurnKey Title Corp., was also named in the indictment. She handled real estate closings and later became another straw buyer in the alleged real estate scam, the charges state.


Steven Stoll and wife Rebecca are well known in Republican and philanthropic circles in Broward.

Stoll let Republican activists use his mortgage company office to phone bank for Republican candidates, and the Stolls sometimes attended fundraisers, said Bob Wolfe, a Broward Republican activist.

Stoll was one of the lawyers who fought with Broward's canvassing board about the 2000 presidential recount.

He has given to a handful of federal Republican candidates since 2000 -- including $4,800 to Gov. Charlie Crist, who is running for U.S. Senate.

Mortgage Horror Stories: The U.S. Housing Industry Will Never Recover If Qualified People Can’t Get A Home Loan

Back about five or six years ago, when the housing bubble was still rising, just about anyone could get a mortgage. Lending institutions were handing out ridiculously bloated home loans to almost anyone who breathed. It didn’t matter if you had a rotten credit history, it didn’t matter if you didn’t have a job and in some cases it didn’t even matter if you had any income at all. It was basically an orgy of mortgage lending. But now the pendulum has swung 180 degrees in the other direction. Severely burned by the subprime mortgage crash, mortgage lending institutions have been seriously tightening their lending standards. As a result, in 2010 it is extremely difficult to get a home loan or a mortgage modification. In their determination not to get burned again, mortgage lenders have completely overreacted and now a lot of highly qualified people can’t get a home loan.

This point was beautifully illustrated recently by one of our readers named John….

I was just turned down for a home loan. My credit score is 799, my wife’s 804. We had $40,000.00 to put down, which was almost 30%. BUT! Our bank turned down our application! Why? They required us to have 6 months “operating expenses” in the bank after all closing costs were covered. They came up with an arbitrary number on their own, based on our bills and such. We had that amount and more on top of our closing monies. Then why were we denied the loan? Several thousand dollars were from “cash” and the bank required that “cash” be in the bank for at least 60 days or they wouldn’t consider it fluid funding. Needless to say we didn’t make the closing date and are hiring an attorney to avoid being sued (by the seller).

A reader named distressedinbham on another website had an even more frustrating experience trying to get a home loan modification….

I am self-employed, have been all my life and have owned a home for 30 years. When I started my Loan Modification process in August of 09 I WAS NOT behind on any payments. I sent full documentation, over 150 pages, with the things they needed to verify my income. I am now 2 payments behind and I am getting nowhere. They keep flipping me between Loss Mitigation and Imminent Default, back and fourth month end month out. I made a habit of calling every week, then every two weeks just to be sure all was moving forward. From the middle of November I was told my file was with the underwriter and it would only be 30-60 days. I began automatically updating my income verification, verification that I still resided at the property and an updated 4506-T every month. In the middle of April a rep finally told me I was not in the loan modification process. In fact, that I had been denied on March 2. Keep in mind, I’m talking to these people every 2 weeks. She did a financial interview and sent me a new packet so that I could start all over, resubmitting all the documentation yet again. She told me she was my Account Manager. I completed the packet, called with a question (2 weeks later – over a week to receive the packet and another few days to complete it and gather all my documents again) and learned that my “Account Manager” was on maternity leave and I now didn’t have an account manager. Also, I was told that I had received the incorrect packet…it was the old version rather than the updated version. She asked me to fax four or five pieces of information in the hopes it would, quote, “jump start my file back into the process” and said she we send me another packet. That was mid April. Here we sit, 2-1/2 months later, I have still not received anything in writing about my rejection. And, though I’ve now had people tell me on three separate occasions that I would receive a new packet, it has yet to show up on my door step. I asked several times why my application was denied and the answer I finally got last week was that it was because I was DELIQUENT in my payments. Call me crazy but I thought that was the whole point??!! I almost hired a third party but am so hesitant to take that step. Every time I get on the phone with them it takes an hour out of my day and I am usually so upset I find it difficult to work, so I just don’t call. I’m going to sit back and regroup and decide what I need to do next.

The truth is that scenes such as these are being repeated over and over again across the United States right now.

Scott Stern, the CEO of Lenders One, says that a lot has changed since 2007….

“Lending standards have tightened dramatically between 2007 and 2009.”

In an attempt to avoid the mistakes of the housing bubble, the mortgage industry has now created a situation where standards are so tight that the entire industry is freezing up.

In May, sales of new homes in the United States dropped to the lowest level ever recorded. To be more exact, new home sales dropped 32.7 percent to a seasonally adjusted annual rate of 300,000.

Keep in mind that a “normal” level for new homes sales is an annual rate of about 800,000.

New homes have never sold this slowly ever since the U.S. Commerce Department began tracking this data back in 1963.

Now, a lot of the drop in new home sales has to do with other factors, but certainly the fact that people are having such a hard time getting approved for loans is playing a role.

If large numbers of qualified people are getting turned down for mortgages that is going to suck a lot of money out of the marketplace.

And without enough qualified buyers, the U.S. housing industry is simply not going to recover.

But it isn’t just a lack of qualified buyers that is the problem.

The truth is that the U.S. real estate market is a complete and total disaster right now and there is every indication that things are going to get even worse.

So what does all of this mean?

It means that it is going to remain very difficult to sell homes.

It means that prices are going to continue to come down.

It means that real estate agents will continue to suffer and there will continue to be high unemployment in the construction industry.

In fact, every industry that is highly dependent on the U.S. housing market is likely to continue to feel a lot of pain for a long time to come.

So do you have a mortgage horror story to share? If so, please feel free to leave it in a comment below…..

Pending home sales 'fell off a cliff'

NEW YORK ( -- The experts expected home sales to drop once the homebuyer tax credit lapsed at the end of April, but the depth of the decrease was shocking.

According to the National Association of Realtors (NAR), pending home sales fell a whopping 30% in May. Their index, which measures signed sales contracts but not closed sales, plunged to 77.6 from 110.9 in April. It's even off 15.9% from a year ago when the nation was barely emerging from the recession.

"The pending home sales report is a disaster," said Mike Larson, a real estate analyst for Weiss Research. "Sales fell off a cliff after the tax credit expired. It's the biggest monthly decline ever and the index is at its lowest level since NAR began tracking it in 2001."

Lawrence Yun, NAR's chief economist downplayed the damage a bit. According to him, customers rushed into deals to claim the credit, borrowing from May sales. Once the economic recovery comes into full swing, housing markets will heat up.

"If jobs come back as expected, the pace of home sales should pick up later this year," said Yun, "and reach a sustainable level of activity given very favorable affordability conditions."

Those conditions include much lower home prices and extremely favorable mortgage interest rates. The question is when -- or if -- the job market will ever bounce back.

"We're not creating jobs," said Larson. "The housing problems now are being driven by broad economic problems." To top of page

U.S. has not developed a plan to keep bomb materials from crossing border

Five years after Department of Homeland Security officials vowed to block the importation of radioactive materials that could be used to make a bomb, they still have not closed security gaps at U.S. borders, according to government auditors and researchers.

The failure to develop a strategic plan has delayed the creation of a "global nuclear detection architecture" that would guide a variety of federal agencies that share responsibility for preventing terrorists from detonating a nuclear bomb in the United States, the Government Accountability Office, the investigative arm of Congress, has found.

Instead of formulating a plan, the Domestic Nuclear Detection Office, part of DHS, spent more than $200 million on an ill-fated project to develop and deploy thousands of new high-tech detectors for screening vehicles and cargo at ports, according to the GAO.

In February, following one setback after another, officials abandoned full-scale deployment of the machines.

"Five years into its existence, it is apparent that the Domestic Nuclear Detection Office needs retooling," said Sen. Joseph I. Lieberman (I-Conn.), chairman of the Homeland Security and Governmental Affairs Committee, which will hold a hearing about the office on Wednesday.

DHS spokesman Chris Ortman said the department has taken steps in the past 18 months "to enhance our radiological and nuclear detection capabilities" and improve cargo screening. He said DHS also is using its own "detection architecture" as a "framework to guide our work with our interagency partners to strengthen our nation's security against nuclear threats."

For years, specialists in and out of the government have criticized federal initiatives to prevent terrorists from obtaining nuclear material as uncoordinated and ineffective. The detection office was established by presidential directive in 2005, partly in response to that criticism.

But soon after it was formed, the office began focusing heavily on a new kind of detection equipment known as the advanced spectroscopic portal machine, or ASP. George W. Bush administration officials announced the $1.2 billion project in 2006, saying it would dramatically improve the government's ability to screen for radioactive materials. But the GAO and other government investigators turned up evidence that the machines did not work as well as billed. They later discovered that they cost more than twice the amount that officials in the detection office had originally told Congress.

While focusing on the ASP machines -- which were primarily intended for ports of entry to screen cargo containers -- the office did not adequately address other security gaps, including those along rail lines from Canada and Mexico and along air cargo routes, according to the GAO.

Without an overall "detection architecture" to block gaps, the focus on ports of entry, even with new detection equipment, may simply "deflect adversaries, causing them to focus on other gaps in the nation's security that are identified as easier targets," Micah D. Lowenthal, director of the Nuclear Security and Nuclear Facility Safety Program at the National Research Council, said in a draft of his remarks to be delivered to the committee Wednesday.

Thousands in welfare cash tapped at California strip clubs

California welfare recipients have been able to get taxpayer cash -- meant to feed and clothe needy families -- from ATM machines at strip clubs across the state, including some well-known gentlemen’s cabarets in Los Angeles.

More than $12,000 from the Temporary Assistance for Needy Families program was dispensed from the start of 2007 to the end of 2009 at clubs including Sam’s Hofbrau, Seventh Veil and Star Strip, according to officials at the Department of Social Services.

Gov. Arnold Schwarzenegger has ordered the department to remove the clubs from the official list of businesses where welfare recipients can withdraw benefits using state-issued ATM cards.

The move came a day after The Times asked the administration how much welfare cash had been withdrawn at 17 adult clubs in recent years and less than a week after The Times reported that more than half the casinos and state-licensed poker rooms in California appeared on an official website showing welfare recipients where they can access cash benefits.

Following that report, Schwarzenegger ordered the casinos struck from the state’s ATM network and directed the Department of Social Services to produce a plan to reduce “waste, fraud and abuse” in the welfare program.

“We'll take a wide-ranging look and apply some common sense to the list of outlets where cash assistance should not be withdrawn,” Department of Social Services spokeswoman Lizelda Lopez wrote in an e-mail to The Times on Tuesday evening, announcing that her department had “taken steps to deactivate ATMs in adult entertainment clubs.”

Strip-club managers seemed shocked that welfare benefits were accessible through their ATMs. In most cases, the machines were provided by a third party, the managers said, and they had no way of knowing their ATMs are part of the state system.

The state contracts with the Quest ATM network.

“If there’s a way that the ATM can reject their card if they’re on welfare, I’m really and truly all for that,” said Merle Matias, manager at Sam’s Hofbrau in downtown Los Angeles, where $2,159 had been withdrawn, according to Department of Social Services officials. “I don’t think it will affect us at all.”

Star Strip manager Joey Mancini said state officials must be wrong about the $1,265 they said had been withdrawn from his club’s ATM. The Quest symbol isn’t on the machine, he said, adding that he thought any system that allowed access to welfare benefits at a strip club should be reformed: “This is not what that money is for.”

A manager at Seventh Veil declined to comment.

-- Jack Dolan in Sacramento

One million protest against Italy's austerity cuts

Protesters march against the Italian government's economic measures in Rome yesterday. Union leader Fulvio Mammoni said: "We say No to this budget. It is wrong, unjust, it stunts growth, it does not kick-start production, it doesn't touch the rich and it punishes workers." Photograph: Tony Gentile/Reuters

ROME – Italians marched through cities and towns yesterday in a general strike protesting an austerity budget they say bleeds workers but spares the rich.

The left-leaning CGIL union called the strike in an effort to force prime minister Silvio Berlusconi’s government to redraft a €25 billion austerity package he says is an essential part of European efforts to save the currency.

The website of the CGIL, Italy’s largest union, said more than one million people took part in various demonstrations in large and small cities around the country.

About 100,000 people, according to union estimates, demonstrated in the central city of Bologna, capital of a traditionally leftist area with a strong labour movement.

In Rome, a long line of protesters blowing whistles and waving red CGIL flags snaked past the Colosseum. Organisers put the turnout at 40,000 people.

In Milan, the CGIL said 80,000 attended a rally, but police estimated the figure at 35,000.

Many of Friday’s marchers also bore placards against car maker Fiat, which is wrangling with unions over plans to improve labour productivity at a plant in southern Italy.

“We say No to this budget. It is wrong, unjust, it stunts growth, it does not kick-start production, it doesn’t touch the rich and it punishes workers,” said union leader Fulvio Mammoni to a crowd of tens of thousands in Naples.

After months of telling Italians they were immune to a Greek-style debt crisis, Mr Berlusconi’s cabinet in May approved an austerity plan, including cuts to funding for municipalities and freezing of public sector salaries.

The government said a random poll of 30 per cent of state workers showed that fewer than 3 per cent of them had heeded the strike call as of early yesterday afternoon.

Support for the stoppage seemed mixed in some areas, despite the union’s judgment that adherence was “massive”. Several bus and metro services in Rome still ran.

The strike was a test of strength for Mr Berlusconi, whose poll ratings have sunk to new lows as unemployment has risen and the euro zone’s third largest economy has struggled to emerge from its worst post-second World War recession.

The strike has split Italy’s trade union movement, which is divided along political lines. The other two main unions have asked their members to stay on the job.– (Reuters)

Unemployment benefits for thousands in Idaho run out


COEUR D'ALENE-- Unemployment benefits for thousands of North Idaho workers have expired.

A federal stimulus law that allowed for an extension ended at in May and now Department of Labor officials are seeing an influx of people.

For the 4,000 people in Idaho, unemployment benefits have expired and at the Department of Labor in Coeur d’Alene, people are still coming in to find a job.

Officials say the feel more confident now because even though the economy is down, the number of job listings from employers has started to rise slightly.

Officials are hoping this will help the thousands who are no longer eligible for unemployment insurance.

Kim Renner-Roby is a supervisor at the Department of Labor. She says they are seeing people who are in hard situations scrambling to get a job. The agency can also assist with job openings, skill training, and resources for anyone currently looking for employment.

There are still only about two jobs for every seven people looking in Idaho. The unemployment rate is 9%.

US jobless claims surge more than expected

New claims for US unemployment benefits jumped more than expected last week, official data showed Thursday in a report highlighting persistent weakness in the troubled jobs market.

Initial claims for jobless benefits rose to 472,000 in the week ending June 26, an increase of 13,000 from the previous week's upwardly revised level of 459,000, the Labor Department said.

The average analyst forecast was 458,000 initial claims were filed.

The weekly claims data came on the eve of the department's key June jobs report, widely expected to show worsening conditions.

Most analysts expect the data Friday will show the unemployment rate rising to 9.8 percent from 9.7 percent in June, and the economy shedding 100,000 nonfarm jobs after adding 431,000 in the prior month.

G-20 is Relying on China To Drive the World Economy ... But China Isn't Looking So Hot

The G-20 is apparently relying on China to drive the world economy.

But as I (and many others) have previously pointed out, China isn't necessarily the unstoppable powerhouse that people assume.

The Telegraph notes that:

China's chief auditor has warned that high levels of local government debt could derail the country's economy, with some observers suggesting that a number of Chinese provinces are even more fiscally-troubled than Greece.
CEBM is also warning that Chinese exports and imports will decelerate in the third quarter and going forward.

And yesterday, Tyler Durden reported on a startling development:

This week's DTCC data [shows that] with a total of 456 million in net notional derisking, France was the top entity in which protection was sought in the past week. [For more on France see this.]


But what is probably most notable, is the sudden and dramatic appearance of China in the top 3rd position. Welcome China! And after tonight's surprise PMI miss [see this for details] and the resulting market drubbing, we are confident within a week or two, China will promptly become a mainstay of the top 3, and will quickly rise to the top position, where it rightfully belongs. We are also confident those perennial Eastern European underdogs, Romania and Bulgaria will shyly make an entrance in the top 10 next week.


Not shown on the table, but certainly in need of noting, was our very own state of California, which with 377 million in net derisking, was the 3rd most shorted entity of all. Is the last bastion of "all is well" propaganda about to fall?

Concerns rising that economic recovery is slowing

WASHINGTON – Concerns are rising that the economic rebound is stalling, but a strong jobs report on Friday would go a long way toward assuaging those fears.

Conversely, a report showing private employers failed to create many jobs in June will amplify worries that the recovery is weakening and won't be strong enough to put many of the 15 million unemployed back to work anytime soon.

"The economy is losing some momentum," said Ryan Sweet, senior economist at Moody's "We need to see private hiring really accelerate."

Analysts forecast that employers cut a net total of 110,000 jobs in June, which would be the nation's first loss of jobs in six months. But that figure includes the expected end of about 240,000 temporary census jobs.

Economists will focus more on private employers, who are forecast to have added 112,000 positions. That would be the sixth-straight month of gains and an improvement from a weak showing of 41,000 in May.

But the unemployment rate is forecast to tick up to 9.8 percent from 9.7 percent. The report will be released Friday at 8:30 a.m.

A gain of 112,000 in private payrolls would signal the recovery is on track, economists said. With added jobs boosting incomes and giving consumers more money to spend, the economy would be able to keep growing even as the impact of government stimulus programs wanes.

Still, a gain of about 100,000 jobs is barely enough to keep up with population growth. The economy needs to create jobs at least at twice that pace to quickly bring down the jobless rate.

The jobs figures will come after a raft of weak reports Thursday provided the strongest evidence yet that the recovery is slowing. The negative news added to concerns that the nation could be on its way back into recession.

Most notable was a rise in the number of people filing for unemployment benefits for the first time. The four-week average for jobless claims now stands at its highest point since March.

The bleak indicators come just after Congress adjourned for the holiday weekend without extending jobless benefits.

On top of that, the housing market appears to be slumping again, and the Dow Jones industrials closed down for the sixth trading day in a row. Add in slower growth in China and the European debt crisis, and economists are scaling back their forecasts for the U.S.

"When you add it all up, it doesn't imply a double-dip, but it does suggest that growth will be slower than we'd like to see," said Scott Brown, chief economist at Raymond James.

A double-dip recession happens when an economy shrinks, then begins to expand again before going back into reverse. Economists don't agree on a more precise definition.

Senate Republicans, expressing concerns about the ballooning federal deficit, this week blocked a bill that would have kept unemployment checks going to people who have been laid off for long stretches.

More than 1.3 million people have been left without federal jobless benefits after Congress adjourned without an extension. That number could grow to 3.3 million by the end of the month if lawmakers can't resolve the impasse when they return.

Among those waiting for a resolution is Nan Esparza, 59, a single mother of three in Smithfield, N.C., who lost her job as a legal secretary early last year. Her unemployment benefits expired last month. She plans to live off savings.

"After that, I'm in a world of trouble," she said.

States typically provide six months of unemployment help. During the recession, Congress added nearly a year and a half of extra benefits. Democrats want those terms extended through November, at a cost of $34 billion.

Less money in people's pockets could hamper economic growth. JPMorgan Chase economist Michael Feroli lowered his growth forecast for the third quarter to an annual rate of 3 percent from 4 percent, citing tighter government spending.

Other economists expect growth to slow to an anemic 2 percent in the second half of this year. That probably wouldn't reduce the unemployment rate, currently at 9.7 percent.

In a new sign of job-market weakness, initial claims for unemployment jumped by 13,000 last week to a seasonally adjusted 472,000. The four-week average, which smooths fluctuations, rose to its highest level in more than three months. Claims generally need to drop below 400,000 to signal that hiring is ramping up.

The rebound so far has been fueled mostly by government stimulus spending, manufacturing activity and business spending on new equipment and inventories, and those factors are fading.

It's happening as new threats emerge: Stock markets are falling and home prices could drop again, lowering household wealth. Americans could respond by cutting back on spending and weakening the recovery.

Manufacturers reported Thursday that export orders grew at a slower pace in June than the previous month. New surveys suggested growth in China is slowing, which could lead it to import fewer American products.

Meanwhile, governments in the United States and overseas are cutting spending and reining in stimulus measures. Some economists worry those steps are premature as long as the economy remains weak.

There was also another fresh sign of trouble in the housing market. The number of buyers who signed contracts to purchase homes tumbled 30 percent in May, the National Association of Realtors said. Construction spending also declined for the month. Both were affected by the expiration of government incentives to buy homes.


Associated Press Writers Stephen Ohlemacher and Tom Raum in Washington; Mike Baker in Raleigh, N.C.; Rachel La Corte in Olympia, Wash.; and Kathy Barks Hoffman in Lansing, Mich., contributed to this story.

(This version corrects style on towards to toward.)

MSNBC’s Ratigan: Stock market an ‘obviously corrupt’ fraud

On his afternoon show Tuesday, MSNBC host Dylan Ratigan explained why he believes the usual explanations given in the media for why the stock market went up or down on a given day are nonsense.

"Seventy percent of the volume [of trades on the stock market] is computers that are run by the banks playing ping pong with stocks for 10 seconds at at time," Ratigan said.

"The stock market at this point, which used to be a reflection of the future value of actual businesses in this country, has been turned by our government and our banks into little more than a paper shredding facility [about which] we can make up reasons why it goes up and down," Ratigan said. "But when the computers ... at the banks are controlling the action, most everything else is kind of silly."

Ratigan concluded that it's time to create an "alternative investment structure" that would allow people to invest their money without putting it "into the obviously corrupt stock market in this country."

Ratigan was referring to the relatively new phenomenon known as high-frequency trading: High-speed computer programs that are able to "peek" at stock trades less than a second before the trades are made. If the computer sees that a trade about to be made will raise the price of a particular stock, it can purchase the stock in the split-second before that trade is made.

Many market observers say this "games" the entire stock market in favor of the large banks that practice high-frequency trading. Indeed, there is evidence that HFT has made the large investment banks much more profitable. As Ratigan mentioned, HFT is estimated to account for 70 percent of all the trading on the New York Stock Exchange.

Mike Konczal at the Atlantic offers an analogy for high-frequency trading:

Imagine if eBay had a rule where you could cancel your bid within 1 second. I put up some stuff on ebay, and you place a bid for it. Then I place a bid that is higher than the current bid to see if that becomes the new highest bid. If it is, I cancel it within milliseconds. Remember, I don't want to buy the product -- I just want to drive the price higher! This is similar to what critics of HFT think is going on; HFT is able to ping prices with bids that exist for only milliseconds to see how much other buyers are willing to pay to squeeze out the maximum profit.

On May 6, 2010, when the Dow Jones unexpectedly plunged nearly 1,000 points, some observers blamed the sudden collapse -- which saw some companies' shares plummet to nearly zero within seconds -- on high-frequency trading. Among those advocating that theory was Larry Leibowitz, COO of NYSE Euronext. But some other observers argued that the HFT programs had nothing to do with it, because they were shut down when the market panic set in.

Among the leading voices opposing HFT is Sen. Chuck Schumer (D-NY), who last year called for restrictions on the practice.

“The hallmark of our markets are that they are open and above board and the little guy has as much of a chance as the big guy,” Schumer told the New York Times. “This takes a dagger to the heart of that concept.”

Earlier this month, the Commodity Futures Trading Commission announced that it's looking into placing restrictions on high-frequency trading.

The following video was broadcast on MSNBC's The Dylan Ratigan Show, June 29, 2010, and was uploaded to YouTube by MoxNews.