Thursday, July 15, 2010

UK long-term unemployment soars to 1997 levels

The number of people that have been without a job for more than 12 months has soared to its highest level since 1997, official figures have shown.

UK long-term unemployment soars to 1997 levels
UK long-term unemployment soars to 1997 levels Photo: Getty Images

Long-term unemployment has jump by 47.5pc over the year to 787,000 in the three months to May, according to the Office for National Statistics. Older workers were the worst hit group, with more than half of over 50s out of work now classed as long-term unemployed, the figures revealed.

Millions of people are now working part time either because they can't find a full-time job, or because employers have cut the number of days they work, the statistics found.

Nigel Meager, director of the Institute for Employment Studies, said: "It is of serious concern that long-term unemployment has increased again to over three-quarters of a million. Urgent policy action is needed to support this group back into work to avoid the damaging long-term social impacts experienced in previous recessions."

The Age and Employment Network, which represents older workers, said long-term unemployment would "get worse before it gets better" as public sector employers began to cut jobs. Chris Ball, chief executive, said: "We fear that over-50s will bear the brunt of these cuts. Against the backdrop of Government proposals to phase out the default retirement age and bring forward the date at which the state pension age will rise, we need to make sure that staying in work is a viable option for older people."

The Government is currently consulting on when to make it illegal for employers to force someone to retire at 65, and whether to increase the state pension age to 66 far sooner than planned.

Total unemployment fell by 34,000 to 2.47m in the three months to May, the ONS figures showed. The claimant count fell in June by 20,800 to reach 1.46m, and employment increased by 160,000 over the quarter to reach 29m.

But this was largely due to an extra 148,000 people in part-time working over the quarter, reaching 7.82m, the highest since records began in 1992. Recruitment companies also said many people were forced to accept jobs for which they were overqualified.

The Chartered Institute of Personnel and Development warned the upturn in hiring was the "calm before the storm". John Philpott, chief economist, said: "A big public sector jobs squeeze already under way and the pace of economic recovery uncertain, things may look a lot less rosy by spring 2011 than they do at present."

Howard Archer, chief UK economist at IHS Global Insight, said: "Major job losses are on the way in the public sector as the government slashes spending, and we doubt that the private sector will be able to fully compensate for this."

Further evidence that the labour market remains fragile can be taken from "muted" pay increases, economists said. Regular pay grew by 1.8pc year-on-year.

Hetal Mehta, senior economic adviser at Ernst & Young, said: "The underlying weakness of the labour market is reflected in the subdued average earnings figures."

Goldman, BP sued over alleged SemGroup conspiracy

NEW YORK: More than 80 independent oil and gas producers have sued units of Goldman Sachs Group Inc and BP Plc, alleging they conspired with SemGroup LP to defraud the plaintiffs of money owed for oil and gas delivered prior to the energy trader's 2008 bankruptcy.

The law firm McKool Smith announced the lawsuits by the Kansas, Oklahoma and Texas producers against Goldman's J. Aron & Co unit, BP Oil Supply Co and other defendants. It said the lawsuits were filed in Kansas and Oklahoma state courts. The complaints were not immediately available. Goldman and BP did not immediately respond to requests for comment.

According to the law firm, the producers are owed millions of dollars for oil and gas the defendants took from SemGroup as margin calls were driving that company toward bankruptcy. SemGroup, based in Tulsa, filed for Chapter 11 protection from creditors in July 2008 after suffering $3.2 billion in losses on energy futures and derivatives trades that it said were designed to protect its physical oil trading business.

Grover Norquist: Bush Tax Cut Expiration Will Cost Taxpayers $1 Trillion

Low-tax crusader and Republican strategist Grover Norquist tells Newsmax that letting the Bush tax cuts expire in January 2011 would amount to a $1 trillion tax increase — the largest boost in American history.

Norquist — president of Americans for Tax Reform — also warns that President Barack Obama and the Democrats are intent on pursuing the “very bad idea” of imposing a European-style value-added tax.

And he says the tea party movement arose when millions of Americans became “scared straight” by huge increases in federal spending and debt.
Americans for Tax Reform is a coalition of taxpayer groups, individuals, and businesses opposed to higher taxes at the federal, state, and local levels.

In an exclusive Newsmax interview, Norquist — who is also on the board of the American Conservative Union and a regular Newsmax contributor — was asked if Obama had reneged on his promise not to raise taxes on couples earning less than $250,000 a year.

Story continues below.

“Yes — 16 days into his presidency he signed a bill that raised taxes on tobacco,” he says.

“The first tax increase he signed hit Americans of all income levels.”

Allowing the Bush tax cuts to expire at the end of this year, as the Democrats plan, will in fact result in “about a trillion-dollar tax increase on the American people over the next decade,” Norquist says.

“It would be the largest tax increase in American history, and it would take every marginal tax rate and increase it. The taxes on businesses, on capital gains, would be very high.

“When these tax cuts went into effect in 2003, the economy and the stock market strengthened. As soon as people realized that those tax increases were going to come in in January of 2011, the stock market began its decline.”

Asked about proposals for a national sales tax known as a value-added tax, or VAT, Norquist tells Newsmax:

“A VAT is a very bad idea. It is true that it is what the Democrats plan to do. It is Obama’s goal.

“Obama and the Democrats have been moving the United States toward the European social welfare model. That has a VAT, on average in Europe, of 20 percent.

“If we were to adopt a value-added tax as Europe has, your salary would be worth 20 percent less because you could buy less with it. Your life savings would be worth 20 percent less. Your pension would be worth 20 percent less, because anything you bought would have a 20 percent value-added tax attached to it.

“It would be very bad for the American economy.”

The Democrats’ healthcare reform bill includes a mandate to purchase health insurance and severe penalties for noncompliance.

“It’s going to cost hundreds and eventually thousands of dollars a year,” Norquist declares.

“It is designed to force you to buy health insurance, but it is a tax. It will largely be put on low-income people since higher-income Americans already have health insurance.”

Norquist is also highly critical of the Democrats’ cap-and-trade plan to curb carbon emissions.

“There are a number of different versions of it, but all of them have the same thesis: They are taxing the energy that you and I use and subsidizing, giving corporate welfare, to industries that don’t yet exist or don’t produce energy at real prices,” he says.

“So it’s a massive tax increase on the energy you use generated by coal or natural gas or oil, electricity, and subsidies for expensive energy [wind, solar, etc.). Your energy costs will go up because of these taxes by thousands of dollars a year.

“It is not the unfortunate side effect of Obama’s policy. The goal of his policy is to make most energy, coal-generated energy, too expensive, so for similarly high prices you will use solar or wind energy — which you don’t use now because it’s too expensive.”

Asked for his view of the tea party movement, Norquist says: “The tea party movement is best understood as millions of Americans who have not been involved in politics for most of their adults lives but in the last two years got scared straight by Obama’s debt — trillions in higher taxes, higher debt, higher spending, and trillions more being threatened.

“And because they’re involved in politics, if the Republicans come back into power they will be a different party than they were in the past, because there are these new troops that have arrived with one thing on their mind — spend less.”

Norquist favors a plan to cut spending by setting up a congressional committee with subpoena powers to examine spending, with an eye toward reducing unnecessary federal expenditures. The plan is “getting good traction around the country,” he says, but the Democratic leadership opposes it.
He also says he would welcome a presidential campaign by former House Speaker Newt Gingrich, who is considering a run.

“Speaker Gingrich fought for lower taxes at all levels. The other thing Gingrich does is he’s a movement builder, a party builder, and so whether he’s a back-bencher, speaker of the House, or candidate for president, his goal has always been to advance liberty. I think it’s very helpful, very Reaganesque.”

© Newsmax. All rights reserved.

U.S. home foreclosures reach record high in second quarter

Bank repossessions increased 38% in the second quarter from the same period a year earlier for a record total of 269,952, according to data to be released Thursday by RealtyTrac.


Short sales are one way lenders have been striv

ing to avert foreclosures. Above, a house in Davie, Fla., in May. (J Pat Carter, Associated Press / May 12, 2010)

The number of U.S. homes taken back by banks through foreclosure hit a record high in the second quarter, even as lenders delayed more homes from entering the process through short sales and loan modification efforts, according to data to be released Thursday.

This growing supply of lender-owned properties could set back the nation's housing recovery but probably won't sink it completely if the nation's employment situation doesn't deteriorate further and the economy begins to pick up steam, experts said. Sales of homes have faltered nationally in recent months with the expiration of government tax incentives for buyers.

U.S. bank repossessions increased 38% in the second quarter from the same period a year earlier for a record total of 269,952, according to Irvine research firm RealtyTrac. That was also a jump of 5% from the previous quarter. If that pace continues through the year, the number of homes taken by banks is likely to top 1 million by the end of 2010, said Rick Sharga, RealtyTrac senior vice president.

"It is almost a certainty that we will see over a million over the course of the year, and that would definitely be a record," he said. "It's serious, but it doesn't appear to be that these levels will crater the housing market if the economy at least stabilizes and we do start to see some job creation."

A total of 895,521 foreclosure notices were filed on U.S. properties during the second quarter, an increase of less than 1% from the same quarter a year earlier and a 4% decrease from the first quarter, according to RealtyTrac. Notices of default — the first stage of the foreclosure process — were down 19% from the same quarter a year earlier and 11% from the first quarter.

"What is happening is that the number of loans that are going into delinquency is abating, but the number of loans that are moving through the foreclosure process is rising," said Mark Zandi, chief economist for Moody's "This is because many loans got piled up in the foreclosure process as mortgage servicers tried to figure out all the various loan modification plans and policy efforts to mitigate foreclosure activity. Now, at this point, servicers are figuring out these programs and are starting to push loans through the process."

Because housing has stabilized and banks have improved their financial positions since the start of the financial crisis, regulators are pressing them to get rid of their troubled loans.

"There is growing pressure on the banks to get problem residential loans worked out one way or another," said Bert Ely, an independent banking consultant. "And the sense is that, in most markets, we are through the worst of it to the extent the economy improves at all."

California homes received a total of 192,422 foreclosure filings in the second quarter, a 24% decrease from the same quarter a year earlier and an 11% drop from the first three months of the year. Notices of default were down 43% from the same quarter a year earlier and 15% from the first three months of the year.

California also appears to be bucking the trend in bank seizures, with that number up only 1% at the end of the second quarter from the year-earlier quarter and down 1.5% from the first quarter. That relatively moderate increase in home seizures in the Golden State is probably because banks are purposely postponing the auctions of homes to keep a flood of properties off the market, Sharga said, and will not last forever.

"California might be too saturated, in terms of what the banks are willing to put on their books right now," he said. "You will definitely see it coming later."

"Because of how out of control the prices and lending practices got during the boom, and now because of high levels of unemployment, California is probably going to be at the center of the foreclosure crisis until it's over," Sharga said.

Is Arnold the running man?

Tough-guy Arnold Schwarzenegger is a man more familiar with the red carpets of a movie premiere than a white collar business seminar, so the sight of the Terminator escorting Warren Buffet, the second-richest man on the planet, to the European Economic Round Table conference on Monday was slightly strange.
After a string of flops - remember Eraser, End of Days and Collateral Damage? Probably not - the actor needs next year’s Terminator 3 to hit paydirt. Should the film nosedive he plans to move into politics and run for the governorship of California, the platform from which Ronald Reagan propelled himself into the White House. A spokesman for NetJets, the corporate aircraft firm owned by Buffet - which sponsored the seminar - insisted Arnie was an ordinary delegate, as well as a customer, just there to listen. He was not there to talk nor paid to attend.

From the sidelines it seems a slick piece of synergy by the billionaire Buffet: organise a lavish conference at Waddesdon Manor in Buckinghamshire, the ancestral home of the Rothschild banking family, invite the world’s leading businessmen and financiers, and dazzle them with a major Hollywood star. Schwarzenegger, an astute businessman himself with a degree in business and economics from the University of Wisconsin, gains the wisdom and knowledge of guest speakers such as James Wolfensohn, president of the World Bank, Jorma Ollila, chief executive of Nokia and Roland Berger, a prominent consultant in global strategy. After two days of handshakes and drinks he’ll have boosted his credibility with the men who may one day bankroll his political ambitions. He might well also point out how happy he is with NetJets’ services. The company, whose other clients include Pete Sampras and Martina Hingis, sell an eighth or a 16th of a private jet to customers, entitling them to a certain number of flying hours without the expense of maintaining ground crews and hanger space.

A Republican - though one married to a Kennedy - Schwarzenegger signalled his support for Dubya Bush in his choice of footwear. While his follow guests shuffled around in their handmade Italian shoes, Arnie had the additional swagger bestowed by a pair of black cowboy boots with stainless steel tips.

What appeared to be a promotional stunt may instead be the actor’s next step towards joining the President’s political posse.

Hiroshima and Detroit 65 years later

Be sure to view all the way to the end! What happened to the radiation that’s supposed to last thousands of years??





Which is worse?


Rand Paul Faces Backlash After Suggesting That America's Poor Don't Have It That Bad (VIDEO)

AP/Huffington Post - Republican U.S. Senate candidate Rand Paul says the poor in America are "enormously better off than the rest of the world," citing an old Cold War film that showed even impoverished homes had color televisions.

Paul's recent remarks at his first forum with Democratic opponent Jack Conway stirred some anger in impoverished pockets of Kentucky, where as many as a third of residents live in poverty.

The libertarian-leaning Paul addressed the issue of poverty by alluding to a decades-old, anti-American propaganda film by the Soviet government designed to criticize the free-market system.

"They filmed a building in the poorer section of New York with some broken windows and they said, `Oh, this is how the poor in America lives,'" Paul said at last week's forum. "But it backfired on them because the Soviet citizens looked at that video closely and they saw flickering color television sets in all those windows."

Paul went on to say that "the poor in our country are enormously better off than the rest of the world. It doesn't mean we can't do better. But we have to acknowledge and be proud of our system of capitalism."

Conway did not respond directly to Paul's comments about poverty, but told the audience he thinks Kentucky's best days are ahead. He said he supports small business tax credits and other measures to boost job creation.

Charles Hardin, a Democratic judge-executive from eastern Kentucky's Magoffin County, said Monday that Paul's comments rubbed him the wrong way and he criticized Paul for relying on "anecdotal tales."

Dollar slides after Greek debt auction bolsters confidence in Europe, while US data weak

NEW YORK (AP) - The dollar has drifted lower after Greece successfully sold debt to investors while U.S. economic data remained weak.

The euro rose to US$1.2702 in late New York trading Tuesday, from US$1.2598 late Monday. The British pound rose to US$1.5156 from US$1.5033, and the dollar edged up to 88.57 Japanese yen from 88.54 yen.

The successful auction of Greek government debt helped allay some investor anxiety over a downgrade of Portugal's credit rating, lessening the dollar's safe-haven appeal.

Greece raised 1.625 billion euros in its first auction since getting emergency financing in May. The country could instead have used the bailout money for funds. Choosing to go to investors instead was a vote of confidence in Greece's ability to raise money in the markets after deep cuts to government spending.

- AP

Canadians falling short on saving

Ninety-four per cent of Canadians say they feel better when they have a safety net of savings to fall back on.

But nearly one-in-five, or 19 per cent, haven’t put any money aside for a rainy day, according to a survey released Tuesday by Scotiabank.

Personal finance experts say everyone should have an emergency fund that would cover one to three months’ worth of household expenses.

The bank’s survey found that one-quarter, or 25 per cent, of those surveyed have that much set aside. Another one-third have more than three months’ worth, and 23 per cent have squirreled away less than one month of expenses.

Sixty-eight per cent of Canadians say they have a plan in place to achieve their savings goals.

But nearly one-quarter, 23 per cent, say they like to live day-to-day and do not worry about saving money.

“We’re really become a consumer society and we are encouraged to spend. Having the discipline to put aside part of your income for the future or saving for discretionary needs are not things we are necessarily guided to do,” said Chris Hodgson, Scotiabank’s head of Canadian banking.

“There’s an opportunity to raise a level of awareness on how Canadians can build more of a nest egg. To us, this is an issue for Canada.”

Figures from Statistics Canada show that the personal savings rate was 2.8 per cent in the first quarter of 2010. That’s down 0.7 per cent from the last three months of 2009 and a decline of 2.4 per cent from the previous year.

Scotiabank released the survey as part of the kickoff to its Let the Saving Begin program. The goal is to “break the inertia around saving and help spark a movement among Canadians,” the bank said.

It has recruited broadcaster Valerie Pringle to travel across the country to speak with Canadians about the challenges they face when trying to put money aside.

“It’s like we’ve been living in a fool’s paradise of cheap money and buy, buy, buy, and our grandparents concept of saving to buy a refrigerator sounds like something from the dark ages,” Pringle said in an interview.

“There’s a lot of pressure on people, on families, and their wallets. We want to make Canadians aware that small steps can make a difference. Figure it out, get some advice, make changes and make yourself more financially healthy.”

Nearly three-quarters, or 72 per cent, of Canadians surveyed said that saving an additional $1,500 would improve their financial well-being.

“That’s about $4 a day. It’s not a huge amount,” Hodgson said.

Scotiabank will match 10 per cent of savings up to $150 accumulated between July 5, 2010, and Oct. 31, 2011 using automatic savings plans. Details are available on the bank’s website.

The online survey, conducted in late March, also found that the majority of Canadians, 83 per cent, said they would make some change to their spending habits to save more money, with 20 per cent saying they would make large changes and 63 per cent saying they would make small changes.

“We’re talking about creating a balance between borrowing and saving,” Hodgson said. “We’re not suggesting Canadians should be moving away from borrowing to buy a house or a condo or get an education, but there has to be a balance between the two.”

Is Military Spending Saving or Enslaving?

The latest announcement that the Pentagon's military research division, DARPA (Defense Advanced Research Projects Agency), has created shape-shifting robots sounds like another Terminator sequel, but this is mainstream news. Sure, this is still theoretical, as these robots are just half a millimeter thick, but it portends a future where, "it will be used to create full-sized cars and aircraft that morph as they move, or robots that can 'flow' like mercury into small openings, or multipurpose military uniforms that can adapt to different environments." There is no discussion in the article about the benefits to mankind, only the military applications.

Whether or not the categories listed below were conceived of by individuals who had a desire to contribute to Humanity's progress, the fact remains that between 45%-90% of American taxpayer money now goes to military spending. The U.S. has set the stage, but many other governments certainly have received their marching orders. The relationship between the foreign battlefield and civilian life at home can be traced back to the advent of world wars, as private research and development was often subsumed into the military mission. In our modern era of perpetual war on nebulous terror, it might be worthwhile to ask: Is our support of military spending helping humanity or enslaving us?

Surveillance -- Spy technology was naturally a military creation. One could certainly argue that every country has real enemies, and it would be profoundly naive not to conduct surveillance against potential saboteurs. However, the citizens of the world who have paid the bill for this technology have clearly had it turned upon us. The ways we are being tracked, traced, and databased certainly makes it seem like we the people are the enemy.

Communications -- High-tech surveillance is at its core pure communications. The military enhanced telephone, radio and TV technologies long ago. A joint working relationship with communications companies led to the eyes in the skies of satellite technology, which initially was designed to communicate with military units. It eventually had wide applications in the early space program. Radar is ubiquitous; another military application. And, yes, the Internet was conceived in a DARPA think-tank; it became a vehicle for secure communications between universities and military research sites in the early '60s. Since then, the Internet has positively affected the lives of billions of people, offering freedom to communicate to anyone, anywhere in the world. However, the new Cybersecurity Act calls for government oversight of not only the infrastructure, but of citizen-created content as well (noted in the bill as "data").

Transportation -- The military academy, West Point, was the first engineering school in the United States. It was denounced early on as being incompatible with democracy, as its graduates became key civil engineers and educators in every part of society. Those four-lane highways that we all love, as we cruise down them in cars that have come to signify American independence, were created by an Eisenhower directive in 1956 to accommodate military transport and escape from atomic attack. Naval passage has had wonderful uses, but funding by taxpayers has still led to "stealth, speed, and firepower" as an enduring submarine slogan. The first practical helicopters were used by the Germans in WWII. The Wright Brothers are American legends, but they had their military connections as well. We need only to compare the flight technology used in commercial travel vs. what was announced the other day by the British military: Taranis. Taranis (pronounced: Tyrannis, of course) is an unmanned stealth fighter that can hit any continent in the world and, "is built to carry out intelligence, surveillance and reconnaissance on enemy territory using onboard sensors." The cost is £143 million during the worst economic crisis of modern times.

Weapons and Security -- Tasers and sound cannons, are just two of the myriad weapons of modern war. And, yet, these torture technologies are now routinely appearing where citizens attempt to peaceably assemble. This militarization of domestic security functions can create an adversarial relationship between law enforcement and the people they are sworn to protect. One only has to walk through a naked body scanner at the airport, under the auspices of the abusive TSA, to learn what it feels like to live in a war zone.

Science -- Scientific research has always been the thread that binds all of the disciplines of modern warfare. The history is a byzantine one, but had its official origins in the Council of National Defense, 1916, which coordinated industry for national defense. This mindset led eventually to The Office of Scientific Research and Development in 1941. Vannevar Bush, the director of The Carnegie Institution at the time, was bothered by the "lack of cooperation between civilian scientists and the military." He was an early computer genius, a proponent of technocracy, and he advocated a system of connectedness called The Memex that was an absolute blueprint for the functions of the Internet that we see today. In short, a scientific dictatorship has been imagined, beta tested, improved upon again, and activated. Consider this quote from Bush in 1945:
Consider a future device for individual use, which is a sort of mechanized private file and library. It needs a name, and to coin one at random, "memex" will do. A memex is a device in which an individual stores all his books, records, and communications, and which is mechanized so that it may be consulted with exceeding speed and flexibility. It is an enlarged intimate supplement to his memory.

It consists of a desk, and while it can presumably be operated from a distance, it is primarily the piece of furniture at which he works. On the top are slanting translucent screens, on which material can be projected for convenient reading. There is a keyboard, and sets of buttons and levers. Otherwise it looks like an ordinary desk.
- Vannevar Bush; As We May Think; Atlantic Monthly; July 1945.

This is how behind the times we are as recipients of information from the elite circles. Perhaps, when we hear that terrahertz surveillance blimps are hovering above us; or that nanotech particles can control our minds from a distance; or there is a military-UFO connection in China; or weather modification arrays can ignite the atmosphere, we might do well not to immediately laugh at such "crazy" claims, but to investigate them.

Dwight Eisenhower succinctly warned us 50 years ago of a "Military-Industrial Complex."

Do we in fact have a military-industrial complex today? This list of companies fulfilling military contracts certainly is indicative. Maybe the question shouldn't be: Is military spending enslaving us, but are we enslaving ourselves when we support the concept of war itself?

by Michael Edwards
Original link from

White House hits the panic button on fall elections

Amid new polls showing Democrats losing momentum with voters, the White House is sounding less confident about its chances in November.

The new posture is one-half reality check, one-half calculated strategy -- aimed at waking the party's base from a state of general apathy.

"I think I did what is maybe uncommon in this town," said White House press secretary Robert Gibbs. "I opened my mouth and stated the obvious."

Gibbs over the weekend publicly acknowledged for the first time that Republicans could win control of the House.

It was not a far-fetched conclusion. A new Gallup poll found 38 percent of Republicans very enthusiastic about the midterm elections, compared to 25 percent of Democrats.

The pollsters also found the parties statistically tied heading into November, and noted that Democrats are unlikely to gain a substantial lead in the meantime.

That means for the White House, hitting the panic button for Democratic voters is now just as important as crafting an appealing message.

The Obama administration has struggled recently to calibrate its appeal -- by sounding confident but also injecting pragmatic notes and warning that Republicans don't have the answers.

"You're going to have a choice between the leadership that we have now and the leadership that that believes that BP should be apologized to, first and foremost, and that the type of calamity wrought by the financial meltdown in the end of 2008 is analogous to the size of an ant," Gibbs said.

President Obama has lost the support of many of the independent voters who helped him win two years ago. Many have told pollsters they now favor Republican candidates.

The Democratic Party is focusing its efforts on getting Obama's 2008 voters back to the polls in November -- a dicey prospect for a midterm election when Obama is not on the ballot.

A new NBC News/Wall Street Journal poll found 62 percent of Americans believe the country is moving in the wrong direction, and 57 percent said they disapproved of President Obama's job performance.

That's good news for Republicans, who want to make the election a referendum on the first two years of Obama's presidency. The NBC News/Wall Street Journal pollsters surmised that Republicans could claim both chambers of Congress.

"You look at the polls right now, and I think the rankings of the Democratic Party have softened; the rankings of the Republican Party have not gone up," said Sen. Evan Bayh, D-Ind. "The public is looking at Washington and saying, 'A pox on all of their houses.' "

Even among Democratic voters, however, 17 percent said they disapprove of Obama's policies, according to the poll.

Key issues are his handling of the economy and more recently, the BP oil spill. An emerging issue is immigration reform, which is always divisive even in a nonelection year.

Over the weekend, administration officials conceded that Guantanamo Bay prison may not close this year, and that hurdles still exist in prosecuting Sept. 11 terrorists -- once hot-button issues for the White House lately engulfed by more recent events.

U.S. banks laundering Mexican cartels' drug money

A report in the August 2010 issue of Bloomberg Markets magazine sheds light on the role that U.S. banks have played in helping to finance the violent drug trade that has plagued the U.S. - Mexico border for years, resulting in over 22,000 dead on both sides of the border since 2006. Among the dead are police, soldiers, journalists and ordinary citizens.

Last December, a statement by Antonio Maria Costa, head of the UN Office on Drugs and Crime, was largely dismissed by U.S. corporate media. He said he has seen evidence that the proceeds of organized crime were "the only liquid investment capital" available to some banks on the brink of collapse last year. He said that a majority of the $352 billion of illegal drug profits was absorbed into the economic system as a result.

A document obtained by Bloomberg seems to confirm Costa's statement. It is an agreement between Wachovia, now owned by Wells Fargo & Co., and U.S. Department of Justice prosecutors in which Wachovia officials admit the bank had not done enough to watch for money-laundering schemes among some $378 billion it transferred between its branches and Mexican currency-exchange houses from 2004 to 2007. Wachovia has admitted in court that its unit failed to monitor and report suspected money laundering by narcotics traffickers - including the cash used to buy four planes that shipped a total of 22 tons of cocaine.

Among some of the details reported by Michael Smith for Bloomberg:

  • On April 10, 2006, a DC-9 jet landed at the international airport in the port city of Ciudad del Carmen, 500 miles east of Mexico City. After the crew tried to shoo Mexican troops away, the troops became suspicious and searched the jet. They found 128 black suitcases, packed with 5.7 tons of cocaine, valued at $100 million. Law enforcement officials also discovered something else. The smugglers had bought the DC-9 with laundered funds they transferred through two of the biggest banks in the U.S.: Wachovia Corp. and Bank of America Corp.
  • Two front companies, Grupo ETPB SA and Grupo Rahero SC, made 12 cash deposits totaling $1 million at an HSBC Mexican branch, Mexican investigators found. The funds financed a Beechcraft King Air 200 plane that police seized on Dec. 29, 2007, in Cuernavaca, 50 miles south of Mexico City. For years, federal authorities watched as the wife and daughter of Oscar Oropeza, a drug smuggler working for the Matamoros-based Gulf Cartel, deposited stacks of cash at a Bank of America branch on Boca Chica Boulevard in Brownsville, Texas, less than 3 miles from the border. “Everybody in there knew who they were - the tellers, everyone,” said an investigator. “The bank never came to us, though.”
  • In Tijuana, 15 miles south of San Diego, Gustavo Rojas has lived for a quarter of a century in a shack in the shadow of the 10-foot-high (3-meter-high) steel border fence that separates the U.S. and Mexico there. He points to holes burrowed under the barrier. “They go across with drugs and come back with cash,” Rojas, 75, says. “This fence doesn’t stop anyone." Drug money moves back and forth across the border in an endless cycle. In the U.S., couriers take the cash from drug sales to Mexico - as much as $29 billion a year, according to U.S. Immigration and Customs Enforcement. That would be about 319 tons of $100 bills.

According to Bloomberg, US banks, including Wachovia, Wells Fargo & Co., HSBC and Bank of America are playing a crucial role in the running of the Mexican drug trade, allowing their facilities to be used to launder money.

Bloomberg also reports that a former Wachovia executive in charge of anti-money laundering operations "quit the bank in disgust" after managers ignored his reports that drug money was being laundered through its facilities. He said, “if you don’t see the correlation between the money laundering by banks and the 22,000 people killed, you’re missing the point."

“Wachovia’s blatant disregard for our banking laws gave international cocaine cartels a virtual carte blanche to finance their operations,” said federal prosecutor Jeffrey Sloman according to Bloomberg. Wachovia agreed to pay $160 million to settle the court case in exchange for charges being dropped, a move Sloman described as "historic." Historic, perhaps, but that is chump change for a bank that posted $7.79 billion in profits in 2006 - while engaging in these blatant violations of federal law.

If any American is caught with even a small amount of drugs in their possession in these border states, they are looking at a stiff prison sentence. Yet the people who finance the drug trade get off with a slap on the wrist while making huge profits from it. Perhaps instead of incarcerating Americans, tracking the "illegals" and talking about building worthless fences on the border, federal investigators should follow the money. It may lead to the real criminals.

Autos, Gasoline Drag Retail Sales Lower in June

WASHINGTON (Reuters) - Sales at retailers fell for a second straight month in June on weak receipts at automotive dealers and gasoline stations, further evidence the economic recovery has slowed in the past few months.

Retail sales slipped 0.5 percent after a 1.1 percent drop in May, the Commerce Department said on Wednesday. Analysts had expected a drop of just 0.2 percent in June.

The report was a latest in a series of weak data -- from homes sales to factory activity to hiring -- to suggest the recovery from the most severe recession since the 1930s is softening a bit earlier than economists had expected.

"You have seen a little bit of cooling on the consumer side of the ledger," said Kevin Flanagan, chief fixed income strategist at Morgan Stanley Smith Barney in Purchase, New York. Still, he said a "double dip" recession did not appear in the cards.

The broad Standard & Poor's 500 index <.SPX> opened lower, although the tech-heavy Nasdaq <.IXIC> rose modestly on better-than-expected results from Intel Corp. U.S. Treasury debt prices were higher.

After strong gains in the first quarter, consumer spending is losing steam as households grapple with a 9.5 percent unemployment rate and sluggish income growth. In June, earnings slipped as employers trimmed working hours.

Slackening demand may already be making businesses wary of building inventories, an exercise that has been largely behind the economic recovery that started in the second half of 2009.

Business inventories barely rose in May as sales fell for the first time since March 2009, the Commerce Department said in a second report.

The sluggish recovery and lofty unemployment have become a headache for President Barack Obama and his fellow Democrats on Capitol Hill, who face a struggle to maintain majorities in the House of Representatives and Senate in November elections.

Republicans charge that Obama's efforts to stimulate the economy have failed, although the White House argued on Tuesday that the $862 billion stimulus plan it backed has saved or created 3 millions jobs.