Is Communism the New Capitalism? Six Fortune 500 Companies Move HQ to China

The boat is leaving for China. Disney, Kraft Foods, and four more Fortune 500 companies are on board to move their Headquarters to Shanghai.

The mass exodus of American companies which will surely take thousands of jobs with them, is now commencing with mind-twisting irony. Apparently, America is no longer capitalistic enough to invest in, even for U.S-based companies.

The globalists love to quote free-market capitalistic principles, except when it comes to small things like competition and having your headquarters in a Communist quasi-enemy nation. A CNTV press release and accompanying video gloated:

24 multinational companies, have decided to move their regional headquarters to Shanghai, including 6 Fortune 500 companies such as Vale, Walt Disney and Kraft Foods.

This will push the total number of companies with regional headquarters in Shanghai to nearly 300. Nearly 500 have regional research and development centers there.

Shanghai has been China's top destination, for multinationals. Even during the world economic slump, the city's foreign direct investment still increased. Data shows Shanghai's foreign direct investment has already surpassed more than 5 billion US dollars in the first half of this year.

Presumably, for a truly global economy to transpire, all nations must play on a level playing field. Which would stand to reason that the same standard of living will eventually equalize around the globe. In other words, the U.S. way of life would have to be dramatically reduced to be on the same plane as China’s, India’s, or Central America’s under the globalist agenda.

Granted, the level of India and China is being raised slightly from dirt floors to cell phones and televisions in a single generation. So, no matter how bad things may get in the coming Greatest Depression by design, we can always hope to still have finished flooring and a telescreen, right? Stay Tuned!

Link .... http://tinyurl.com/2cwhszl

BP Has Stopped the Oil From Flowing ... But Is It Only Temporary?

BP has succeeded in capping the well and stopping oil from flowing into the Gulf of Mexico ... at least temporarily.

The official Deepwater Horizon Response Twitter feed noted as of a couple of minutes ago:

Update: NO OIL FLOWING INTO THE GULF

This can be confirmed by looking at the underwater video cams.

As of this writing, Skandi ROV 2's cam is showing the cap (no oil), and Skandi ROV 1's cam is showing sonar of the seafloor:

BP live feed from Skandi ROV 1

BP live feed from Skandi ROV 2

However, numerous industry experts have warned that there is no upside to temporarily capping the well as part of the well integrity test, and that it might actually cause the well to blow out.

Indeed, Don Van Nieuwenhuise - director of geosciences programs at the University of Houston - told CNN today:

We don’t know if there ae significant leaks deep in the well.

There’s a couple of weak points at 9,000 feet, and one at 17,000 feet, that they might be particularly interested in looking and watching in the seismic.

[With seismic testing, you can look beneath the seafloor. Sonar only tests at the seafloor itself].

Admiral Thad Allen previously said that the test will be considered a success if pressure in the well stays at 8,000 psi or higher for 48 hours. So we won't know for a couple of days whether the test has succeeded.

As AP correctly notes:

Now begins a waiting period to see if the cap can hold the oil without blowing a new leak in the well. Engineers will monitor pressure readings incrementally for up to 48 hours before reopening the cap while they decide what to do.

Interestingly, as CNN's Situation Room noted a couple of minutes ago, the cap might soon be re-opened, and closed again only during hurricanes:

Admiral Thad Allen releasing a statement to us just a short while ago…

He cautions “This isn’t over”…

Very interesting here. He talks about the cap as a temporary measure to be used for hurricanes…

“It remains likely that we will return to the containment process… until the relief well is completed”

So it looks like the plan is to go back to releasing the oil and letting it pump up to the surface.

So is the well integrity test a meaningless PR stunt, which is delaying completion of the relief wells, and failing to bring us any closer to permanently killing the oil gusher?

Or is it a valuable tool to see if the well can be protected from further damage during a hurricane?

Only time will tell ...

3-D Hawaii

Click this link .... http://3dhawaii.com/Welcome/

The U.S. Middle Class Is Being Wiped Out: Here's the Stats to Prove It

From The Business Insider

Editor's note: Michael Snyder is editor of theeconomiccollapseblog.com

The 22 statistics detailed here prove beyond a shadow of a doubt that the middle class is being systematically wiped out of existence in America.

The rich are getting richer and the poor are getting poorer at a staggering rate. Once upon a time, the United States had the largest and most prosperous middle class in the history of the world, but now that is changing at a blinding pace.

So why are we witnessing such fundamental changes? Well, the globalism and "free trade" that our politicians and business leaders insisted would be so good for us have had some rather nasty side effects. It turns out that they didn't tell us that the "global economy" would mean that middle class American workers would eventually have to directly compete for jobs with people on the other side of the world where there is no minimum wage and very few regulations. The big global corporations have greatly benefited by exploiting third world labor pools over the last several decades, but middle class American workers have increasingly found things to be very tough.

Giant Sucking Sound

The reality is that no matter how smart, how strong, how educated or how hard working American workers are, they just cannot compete with people who are desperate to put in 10 to 12 hour days at less than a dollar an hour on the other side of the world. After all, what corporation in their right mind is going to pay an American worker 10 times more (plus benefits) to do the same job? The world is fundamentally changing. Wealth and power are rapidly becoming concentrated at the top and the big global corporations are making massive amounts of money. Meanwhile, the American middle class is being systematically wiped out of existence as U.S. workers are slowly being merged into the new "global" labor pool.

What do most Americans have to offer in the marketplace other than their labor? Not much. The truth is that most Americans are absolutely dependent on someone else giving them a job. But today, U.S. workers are "less attractive" than ever. Compared to the rest of the world, American workers are extremely expensive, and the government keeps passing more rules and regulations seemingly on a monthly basis that makes it even more difficult to conduct business in the United States.

So corporations are moving operations out of the U.S. at breathtaking speed. Since the U.S. government does not penalize them for doing so, there really is no incentive for them to stay.

What has developed is a situation where the people at the top are doing quite well, while most Americans are finding it increasingly difficult to make it. There are now about six unemployed Americans for every new job opening in the United States, and the number of "chronically unemployed" is absolutely soaring. There simply are not nearly enough jobs for everyone.

Many of those who are able to get jobs are finding that they are making less money than they used to. In fact, an increasingly large percentage of Americans are working at low wage retail and service jobs.

But you can't raise a family on what you make flipping burgers at McDonald's or on what you bring in from greeting customers down at the local Wal-Mart.

The truth is that the middle class in America is dying -- and once it is gone it will be incredibly difficult to rebuild.

Click here for statistical proof of the Middle Class extermination.

How the Sneaky Hands of the Big Banks Are Working Overtime to Rip You off

After living through the Great Financial Crash of 2008, just about everybody recognizes that megabanks screwed the economy hard and were rewarded with big bailouts, which further screwed over, well, everybody, in the name of banker bonuses. But Big Finance has been waging its war on the middle class for decades, and many of its most destructive practices don't actually put the financial system in jeopardy. These tactics work because they are so effectively predatory. Banks gouge consumers and get rich—they don't create risks for the financial system, because they result in pure, risk-free profit, converting hard-earned middle-class wages into quick and easy bonuses.

One of the most pernicious of these predatory practices is the overdraft fee. It's one of the biggest revenue streams for banking behemoths today. In 2009, banks reaped over $38 billion in overdraft fees from their own customers, while posting a total combined profit of just $12.5 billion. Without overdrafts, many banks would have scored massive losses last year, and possibly gone under. Instead, they booked epic bonuses.

It can come as a huge shock to get hit with a rash of overdraft fees. You open a bank statement to find that you are not only broke, but deep in the hole thanks to several $30 or $40 charges. Your first reaction is shame. How could I have let this happen? But looking into the ways that banks conduct their overdrafts, you come to realize that you've simply been scammed.

"It abuses consumers and sucks money out of the economy that goes beyond any contribution to society that finance provides," says Rep. Brad Miller, D-N.C. "Overdraft fees are one of the worst abuses. For people living paycheck to paycheck, they have a serious effect on their everyday lives."

Banks are actively deceiving their own customers. According to an FDIC study, 75 percent of all banks don't even tell people they've been automatically enrolled in "overdraft protection" programs. Many consumers don't even realize that their accounts are subject to these charges—they assume that anything that puts them past zero will simply be denied.

It gets much worse. Once banks realized that overdraft fees could be a real cash cow, they developed "fee-harvesting" software, which reorganizes the order of your checking transactions to maximize the number of overdraft fees for the bank. In other lines of financial business, this is called "backdating," and it's considered "fraud."

How the Scam Works

Say you've got $80 in your checking account, and you decide to pay some bills and run some errands. You spend $30 on gas and another $20 on your water bill. Later, you head to the grocery store and spend $81—oops!—on groceries. Banks, of course, could notify you that your $81 purchase was going to send you over the edge and result in an overdraft fee. They don't, because they don't want to risk that you'll deny the purchase and reject the fee.

But in addition to neglecting this safeguard, the bank automatically processes your $81 purchase ahead of your previous charges. As a result, you do not get hit with one unwanted overdraft fee for your groceries—you get hit with three, because your costliest purchase was processed before the others—even though you made the cheaper purchases first.

"Overdrafts are a classic example of a potentially useful idea where the industry ends up going totally overboard," says Raj Date, a former Deutsche Bank executive who currently heads the Cambridge Winter Center for Financial Institutions Policy. "When you step back and ask, as a reasonable business person, would any customer want their fees to be itemized such that their fees would be maximized? No. No customer would ever want it."

This is not how banks are supposed to operate. They're supposed to fuel sustainable, healthy economic activity. That was, in fact, the rationale behind bailing them out. As President Obama said in April 2009: "The truth is that a dollar of capital in a bank can actually result in eight or ten dollars of loans to families and businesses."

Needless to say, that lending didn't happen. In a series of monthly reports, the U.S. Treasury Department noted that bank lending to small businesses fell dramatically from April 2009 through January 2010. After months of bad stats, Treasury simply stopped keeping track of the numbers altogether. The FDIC still tracks those numbers, and they don't look good. As Shahien Nasiripour has noted, the latest figures show small business lending down 4 percent from last year's already dismal levels, putting it lower even than early 2009, before the stimulus package kicked in.

Instead of supporting the economy, banks are making their money with cheap-shot fees, risky proprietary trading and secretive derivatives deals. It's worked, in a sense. By "earning" their way back to health, the nation's largest banks are at a much lower risk of collapse now than when Obama took office. But those earnings have not been good for the economy, as we were promised they would be.

"It's not good from a societal sense, but from a banking industry perspective, it's just a recognition of reality," says banking analyst Nancy Bush of NAB Research. Bush is a Wall Street veteran who supports overdraft programs, but acknowledges they indicate economic trouble. Banks have discovered a way to make money off of people without any money. When everybody's broke, that's a much less risky enterprise than lending to businesses that could use the funds to create jobs, but might default due to bad economic conditions. Banking analysts like Bush are charged with holding management teams accountable to their shareholders, and these fees are good for profits, which mean shareholders are getting what they want.

But this is the exact opposite of what anybody but a shareholder would want a bank to be doing. We don't want banks to be kicking society when it's down, we want banks to be helping us get back on our feet.

Setting The Banks Straight

Agencies have been voicing concerns about overdraft fees for years. The FDIC published a damning study on the practice in 2008, and the Federal Reserve began issuing warnings to the banking industry about unfair overdraft programs in 2004. But up until 2004, overdrafts were generally viewed as a form of short-term credit—the bank is basically lending the consumer money that is paid back with interest. But the interest rates are so egregiously predatory—the average overdraft fee amounts to 1,067 to 3,520 percent (PDF), according to the FDIC -- that they simply would not be tolerated if regulators had to think of them as loans.

So the banking lobby scored a tremendous coup in 2004 when it convinced the Fed that these were not "loans" but "fees," and therefore not subject to traditional consumer protections. The Fed warned that banks needed to change their marketing so that consumers wouldn't think of overdrafts as loans, but didn't require any changes in the way the programs actually operated.

Even this reclassification scheme wasn't enough for Wall Street, which managed to violate even the much weaker consumer protection rules on fees 335 times a year, according to a report by the Government Accountability Office. The GAO also found that consumers who went to an actual bank branch were unlikely to be able to obtain information about basic overdraft terms and conditions, much less comprehensive information about how their checking accounts could be gamed.

The Fed is offering another weak response to the overdraft insanity today. By mid-August, the Fed will require consumers to "opt-in" to overdraft programs, instead of being automatically enrolled without their consent. It's a step forward that will likely limit some of the overdraft profits banks currently enjoy. But it will not require that the programs be fundamentally changed. It will not cap the amount of the fees charged, or the number of fees charged, nor will it require consumers to be notified when a purchase or withdrawal will result in a fee. Banks will take a modest hit from the new rules as consumers choose to back out of the program—but the fundamentally obscene business model will remain.

A more promising development comes from the Wall Street reform bill. A new Consumer Financial Protection Bureau (CFPB) will take over nearly all of the consumer protection rules currently written and enforced by the Fed and the OCC (Rep. Miller was instrumental in getting strong consumer protection through the House). An aggressive director could write strong rules prohibiting abuses, so there is a great deal riding -- $38 billion a year, in fact-- on who President Obama appoints to the post. Right now the front-runner is Harvard University Law School professor Elizabeth Warren. Warren came up with the idea for a CFPB years ago, and has proven herself to be a strong reformist voice of reason as chair of the Congressional Oversight Panel for the Troubled Asset Relief Program. She deserves the post.

But without strong leadership, the banking swindles will continue. If recent history is any guide, there are few others in Washington, D.C. willing to take a stand for citizens when the banking industry comes to pillage our pocketbooks.

Zach Carter is an economics editor at AlterNet. He writes a weekly blog on the economy for the Media Consortium and his work has appeared in the Nation, Mother Jones, the American Prospect and Salon.

© 2010 Independent Media Institute. All rights reserved.

Wall Street recoups losses on BP and Goldman

NEW YORK (Reuters) - Stocks ended little changed on Thursday, recouping losses late in the day, led by a sudden turnaround in Goldman Sachs and BP.

BP's (NYSE:BP - News) U.S.-listed shares jumped 7.6 percent after the company said no oil is leaking from its blown-out well in the Gulf of Mexico for the first time since the accident began in April.

Goldman Sachs' (NYSE:GS - News) gains coincided with the Securities and Exchange Commission saying that it would make a "significant announcement" later in the afternoon. The announcement prompted speculation the SEC was going to settle fraud charges with Goldman Sachs, which proved to be true. Shares of Goldman rose 4.4 percent to

$145.22.

The potential resolution of two major overhangs -- BP's oil spill and fraud charges against Goldman Sachs by U.S. regulators -- was enough to turn market sentiment around in the last half hour.

"In essence, you'll have 'closure' on two issues," said Quincy Krosby, market strategist at Prudential Financial in Newark, New Jersey.

"An announcement along the lines of BP's announcement, and the Goldman Sachs issue closed, if that's what it is, that would help the tone of the market quite handsomely."

Goldman said it would pay $550 million to settle SEC charges that it misled investors in a subprime mortgage product. Goldman's shares continued to climb after the bell, rising 2.9 percent to $149.40.

The Dow Jones industrial average (DJI:^DJI - News) dipped 7.41 points, or 0.07 percent, to end at 10,359.31. The Standard & Poor's 500 Index (^SPX - News) added 1.31 points, or 0.12 percent, to 1,096.48. The Nasdaq Composite Index (Nasdaq:^IXIC - News) was off 0.76 of a point, or 0.03 percent, to 2,249.08.

Despite the turnaround, the Dow and Nasdaq both ended a hair lower, snapping a seven-day winning streak.

BP ended up at $38.92 after it said initial results showed a newly placed cap had completely contained the flow of oil from the ruptured well.

The three major U.S. stock indexes spent most of the day in negative territory, weighed down by a subdued outlook on the economy from JPMorgan Chase & Co (NYSE:JPM - News) and disappointing factory data.

An unexpected fall in regional factory activity and a third straight month of decline in producer prices raised concerns about deflation, cooling enthusiasm for the strong start to the earnings season that had lifted stocks off recent lows.

JPMorgan Chase & Co (NYSE:JPM - News) reported quarterly earnings that beat expectations, but offered a cautious outlook on the economy. Much of the company's gains came from areas that cannot be a stable source of income in the future.

The stock recovered to add 0.3 percent to $40.46, but its sober economic view hit the shares of competitors Citigroup Inc, (NYSE:C - News), down 1.2 percent at $4.16, and Bank of America Corp (NYSE:BAC - News), which dropped 1.8 percent to $15.39. Both report their earnings on Friday. The S&P Financial Index (^GSPF - News) dipped 0.1 percent.

GOOGLE DISAPPOINTS

Earnings and guidance from bellwethers such as Alcoa (NYSE:AA - News) and Intel (NasdaqGS:INTC - News) have been strong, but that has done little to counter the disappointing economic data, given that market leaders can do well even in a weak economy.

But Google Inc (NasdaqGS:GOOG - News) disappointed after the bell, reporting profit that missed expectations and driving its shares down 4.7 percent to $470.79 in extended-hours trading.

On the bright side for technology, Advanced Micro Devices Inc (NYSE:AMD - News) reported results after the bell that topped expectations as corporate spending on tech hardware strengthened. Its shares climbed 4.6 percent to $7.75 in extended-hours trading.

Meanwhile, the U.S. Congress approved a broad overhaul of financial regulation, sending it to President Barack Obama to sign into law. Senate Democratic Leader Harry Reid said he believes Obama will sign the bill into law later in the day.

In a busy day for economic news, the Philadelphia Federal Reserve Bank said factory activity in the mid-Atlantic region fell unexpectedly, while the New York Federal Reserve Bank said New York manufacturing hit the lowest since December 2009.

The U.S. Labor Department said the Producer Price Index declined for a third straight month. In June, the PPI fell 0.5 percent, compared with the dip of 0.1 percent expected by economists polled by Reuters.

About 8.11 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, below last year's estimated daily average of 9.65 billion.

Declining stocks slightly outnumbered advancing ones on the NYSE, with 1,523 shares falling and 1,459 rising. On the Nasdaq, two stocks fell for every one that rose.

(Additional reporting by Rodrigo Campos; Editing by Jan Paschal)

Why the Fed is Steering the Economy Into Deflation

The Fed is steering the economy into deflation. It's a political calculation that will keep unemployment high, increase excess capacity, and deepen the recession. The Comsumer Price Index continues to fall, bank lending is down 4 per cent year-over-year, housing prices are slipping, business investment is off, and consumer credit continues to shrink. On Wednesday, the Commerce Dept reported that retail sales fell 0.5 percent, more than analysts expected. This is the second drop in retail purchases in the last two months, signaling weakness in consumer demand. The slowdown hit nearly every sector including auto sales, furniture, computers, building materials, clothing and sporting goods. There was also bad news on housing on Wednesday. The Mortgage Brokers' Association reported that loans purchase applications fell to a 13-year low last week, and refinancing contracts continued to slide despite record-low mortgage rates. The housing depression is ongoing and is adding to deflationary pressures in the broader economy.

Federal Reserve chairman Ben Bernanke claims the recovery is still "on track", but more than 60 per cent of last quarter's GDP can be attributed to fiscal stimulus and inventory adjustments. That means demand will drop as the stimulus runs out and restocking ends. Then the economy will have to stand on its own. Expect negative growth by the forth quarter 2010 or first quarter 2011.

There are things the Fed can do to fight deflation. Bernanke can resume his bond purchasing program (quantitative easing), this time buying US Treasuries to increase inflation expectations and add to the money supply. Or the Fed can purchase corporate bonds to increase business investment and hiring. Even a bit of jawboning would help; like issuing a statement saying that the "extended period" for zero rates will last for at least two years or more. That will assure businesses that their long-term plans will not disrupted by unforeseen rate hikes. Instead, the Fed chooses to do nothing.

Last week, Richmond Fed President Jeffrey Lacker summed up the Fed's position, saying that any consideration of further monetary easing "is very far away....It would take a very substantial, unanticipated adverse shock" for the Fed to resume its QE program. This appears to be the prevailing view at the Fed; wait-and-see while the economy tanks and the GOP takes congress in a landslide in November. The Fed is essentially a political institution.

Here's a thought from economist Bradford DeLong who warned early-on that the Obama stimulus was too small to sustain a recovery and reverse the output gap and soaring unemployment:

"The Federal Reserve has already increased the monetary base to a previously unimaginable extent and has doubled its balance sheet to $2 trillion. Even though there is good reason to think that further increases in the money stock alone will have little effect on the economy--that conventional monetary policy is tapped out--the Federal Reserve could always further increase its balance sheet to $3 trillion or $4 trillion. Such quantitative easing would be highly likely to eliminate fears of possible deflation or other lower tail risks and act as a powerful spur to investment. Such an enormous expansion of the balance sheet would produce a qualitative improvement in the assets held by the private sector, which would greatly reduce risk spreads and make funding available to American companies on much more attractive terms." ("A Keynesian voice crying in the wilderness", Bradford DeLong, Grasping Reality with Both Hands)

Bernanke has more arrows in his quiver, but he chooses not to use them.

The stock market is sending mixed signals, but volatility on low volume tells us nothing about the state of the so-called "recovery". It's just noise. Personal consumption expenditures and housing typically lead the way out of recession, and both are still showing little sign of improvement. Housing is headed for a double dip while personal spending is down. Consumers face a long period of deleveraging and retrenchment. Consumer demand will likely be weak for a decade or more without wage growth and a better jobs market, neither of which are forthcoming.

This is from the IMF's "World Economic Outlook" report:

"Inflation pressures are expected to remain subdued in advanced economies. The still-low levels of capacity utilization and well anchored inflation expectations should contain inflation pressures in advanced economies, where headline inflation is expected to remain around 1¼–1½ percent in 2010 and 2011. In a number of advanced economies, the risks of deflation remain pertinent in light of the relatively weak outlook for growth and the persistence of considerable economic slack."

Inflation is not a problem. The economy is in a depression. The historic low yields on Treasuries indicate an appetite for high-quality liquid assets. The Fed should satisfy that need by issuing more debt, selling more Treasuries, increasing inflation expectations. That would increase spending and pull the economy out of the doldrums. Instead, Bernanke preaches austerity, because the real objective is political--dismantling Social Security and other popular programs. Bernanke (a Republican) has aligned himself with the GOP and Wall Street who seek to bury Obama in the midterms by trashing the economy, keeping unemployment high, and increasing the prospect of another vicious downturn.

Meanwhile, deflation looms larger by the day. Here's a clip from a recent article by John H. Makin in the Wall Street Journal:

"U.S. year-over-year core inflation has dropped to 0.9 percent--its lowest level in forty-four years. The six-month annualized core consumer price index inflation level has dropped even closer to zero, at 0.4 percent. Europe's year-over-year core inflation rate has fallen to 0.8 percent--the lowest level ever reported in the series that began in 1991....As commodity prices slip, inflation will become deflation globally in short order....By later this year, persistent excess capacity will probably create actual deflation in the United States and Europe....

The G20's shift toward rapid, global fiscal consolidation--a halving of deficits by 2013--threatens a public sector, Keynesian "paradox of thrift" whereby because all governments are simultaneously tightening fiscal policy, growth is cut so much that revenues collapse and budget deficits actually rise. The underlying hope or expectation that easier money, a weaker currency, and higher exports can somehow compensate for the negative impact on growth from rapid, global fiscal consolidation cannot be realized everywhere at once. The combination of tighter fiscal policy, easy money, and a weaker currency, which can work for a small open economy, cannot work for the global economy." ("The Rising threat of deflation", John H. Makin, Wall Street Journal)

Obama intends to double exports within the next decade. Every other nation has the exact same plan. They'd rather weaken their own currencies and starve workers than raise salaries and fund government work programs. Class warfare takes precedent over productivity, a healthy economy or even national solvency. Contempt for workers is the religion of elites.

When wages increase, spending increases, too. But wages cannot increase without investment, so investment is key to the process. The problem is that businesses are hoarding because consumers are deleveraging and repairing their balance sheets. So sales are off and consumption levels do not warrant further expansion, additional machinery, employees or products. The economy is in a holding pattern. True, the markets have improved and stocks have bounced off the bottom. But the real economy cannot move without extra stimulus.

The deficit hawks, the Bluedogs, the inflationistas and the Fed have taken us to the brink. We now face a general decline in wages and prices and the real prospect of a downward spiral. Digging out will not be easy.

JPMorgan profit leaps nearly 80%

NEW YORK (AFP) – US banking giant JPMorgan Chase on Thursday announced a net profit of 4.8 billion dollars in the second quarter, up nearly 80 percent from the same period last year.

Reporting solid performance across most business areas, the New York-based bank's profits included 1.5 billion dollars that had been set aside to cover bad loans.

"We continue to aggressively do all that we can reasonably and responsibly to contribute to the economic recovery," said CEO Jamie Dimon.

Earnings were "partially offset by a charge of 550 million dollars for the UK bonus tax," said Dimon, adding that upcoming US financial reform also posed potential pitfalls for the firm.

"Many challenges and uncertainties remain which may result in unintended consequences for our clients, the markets and our businesses," he said.

"Increased focus is critical in order to implement these reforms in a way that protects consumers and the competitiveness of the US financial system."

JPMorgan is the first large US bank to report second quarter earnings.

The announcement sent shares in the firm almost one percent higher in pre-opening trades.

But it was not all good news from the bank, which reported profits were down in its investment banking business.

That loss was more than offset by a surge in retail financial services, which saw a net profit of one billion dollars, versus 15 million dollars in the same period last year.

The bank took a 25 billion dollar bailout from the US government at the height of the financial crisis.

It has since repaid that sum, and last year saw its profits double for the full year to 11.7 billion dollars.

Banks repossess homes at record pace: RealtyTrac

NEW YORK (Reuters) – Banks repossessed a record number of U.S. homes in the second quarter, but slowed new foreclosure notices to manage distressed properties on the market, real estate data company RealtyTrac said on Thursday.

The root problems of job losses and wage cuts persist, making a sustained U.S. housing recovery elusive.

Banks took control of 269,962 properties in the second quarter, up 5 percent from the prior quarter and a 38 percent spike from the second quarter of last year, RealtyTrac said in its midyear 2010 foreclosure report.

Repossessions will likely top 1 million this year.

"The underlying conditions haven't improved," RealtyTrac senior vice president Rick Sharga said in an interview.

The housing market still grapples with "unemployment, economic displacement in general, and still sits on over 5 million seriously delinquent loans that in all likelihood will at some point go into foreclosure," he said.

In 2005, the last "normal" year in housing, Sharga said, about 530,000 households got a foreclosure notice and banks took over a comparatively minuscule 100,000 houses.

This year more than 3 million households are likely to get at least one foreclosure filing, which includes notice of default, scheduled auction and repossession, Irvine, California-based RealtyTrac forecasts.

In the first half of the year, foreclosure filings were made on 1.65 million properties. That was down 5 percent from the last half of 2009 but up 8 percent from the first half of last year.

One in every 78 households got at least one foreclosure filing in the first six months of this year.

Economic Recovery Showing New Signs of Losing Steam

Investors got a strong dose of sobering economic news Thursday as several key manufacturing indexes show that the recovery is losing steam.

The few bright spots: New claims for jobless benefits fell to their lowest level in nearly two years, while wholesale inflation remained tame.

AP

Among the negative indicators reported Thursday, the New York Federal Reserve's "Empire State" general business conditions index fell almost 15 points to 5.08 in July, the lowest since December 2009.

Also, industrial production edged up 0.1 percent in June, but manufacturing activity dropped amid fears that the economic recovery is stalling, the Federal Reserve said.

Finally, factory activity growth in the U.S. Mid-Atlantic region fell unexpectedly this month, a survey by the Philadelphia Federal Reserve Bank said.

"Overall, U.S. fundamentals are making the U.S. less attractive to investors and reinforcing the idea that investors want to move on from the fiscal problems in Europe," said Kathy Lien, director of currency research at GFT Forex in New York.

US stocks fell on the manufacturing data, while Treasury prices rose. The US dollar fell further against the euro and yen.

Though industrial output rose 0.1 percent, stronger than the 0.1 percent decline that economists polled by Reuters had forecast, it was still down sharply from May's 1.3 percent advance, another unusually hot month that boosted air conditioning usage.

In the Philly Fed report, economists had expected a reading of 10.0, based on the results of a Reuters poll, which ranged from 4.1 to 18.0. Any reading above zero indicates expansion in the region's manufacturing.

The survey covers factories in eastern Pennsylvania, southern New Jersey and Delaware.

It is seen as one of the first monthly indicators of the health of U.S. manufacturing leading up to the national report by the Institute for Supply Management, which is due next on Aug. 2.

Meanwhile, initial claims for state unemployment benefits dropped 29,000 to a seasonally adjusted 429,000 last week as seasonal layoffs at factories eased, the Labor Department said on Thursday.

Analysts polled by Reuters had expected claims to fall to 450,000 from the previously reported 454,000, which was revised up to 458,000 in Thursday's report.

The weak labor market, characterized by a 9.5 percent unemployment rate, is holding back the economy's recovery from the most painful recession since the 1930s.

Lack of income has caused consumer spending to turn sluggish in the past months, prompting economists to trim their growth forecasts for the second quarter.

New claims for jobless benefits normally rise this time of the year as manufacturers, including automakers, implement annual shut downs.

However, General Motors is keeping the majority of its plants open during the annual summer retooling shutdown to meet demand for some models.

A Labor Department official said layoffs that are normally scheduled for this time of the year did not appear to have materialized.

"This not just a General Motors thing, we are seeing this across a swathe of states, we did not see an increase in claims as we would normally," the official said.

Last week, the four-week moving average of new jobless claims, considered a better measure of underlying labor market trends, fell 11,750 to 455,250.

Federal Reserve policy makers, according to minutes of their June 22-23 released on Wednesday, felt they should be ready to consider additional steps to boost the economy if the already weak outlook worsened.

U.S. producer prices fell for a third straight month in June on weak food and energy costs, which should help the Federal Reserve maintain its low interest rate policy well into 2011 to nurse the sputtering recovery.

Last month, energy prices fell 0.5 percent after declining 1.5 percent in May. Gasoline prices dropped 1.6 percent, while food costs tumbled 2.2 percent - the largest decline since April 2002.

Stripping out volatile food and energy costs, core producer prices edged up 0.1 percent last month, matching expectations, after increasing 0.2 percent in May.

A combination of weak energy prices and low rates of resource utilization are keeping inflation subdued.

With domestic demand retreating and unemployment still stubbornly high, many economists do not expect the Fed to lift overnight interest rates, currently near zero, until at least the second half of next year.

Last month, core PPI was lifted by a 2.5 percent surge in the cost of heavy motor trucks, which was the largest increase since April 2007, the Labor Department said.

In the 12 months to June, the core producer price index rose 1.1 percent, in line with market expectations, following a 1.3 percent increase in May.

Copyright 2010 Reuters. Click for restrictions

Kilmeade: Maybe expiring unemployment benefits will make people ‘sober up’

Fox guest bashing benefits can't keep talking points straight

Covering the standoff on unemployment benefits, The Huffington Post's Arthur Delaney has complained about lawmakers on both sides of the aisle "who suspect the jobless of preferring not to work."

Pundits and guests on Fox News Channel, in particular, have been advancing similar opinions.

Bill Auchmoody, CEO of Partnership Staffing Inc., a temp agency in Richmond, Virginia, told Fox News' Brian Kilmeade Thursday that he has a hard time finding workers because so many are receiving unemployment benefits.

"We'll hire 200 to 300 people every month and about five percent of those folks may tell us that because of their unemployment benefits, it's not worth them taking a job," said Auchmoody.

Auchmoody apparently can't keep his talking points straight, because he was quoted in the Wall Street Journal -- which is also owned by Rupert Murdoch's News Corp. -- last week tossing off a different figure.

Auchmoody told WSJ's Sara Moody last week, "We only get about 2% or 3% who use the excuse to us, blatantly, face-to-face, 'You know, that's not enough money, I make more money on unemployment."

Auchmoody said on Fox Thursday, "You have to explain to them a $9 or $10 an hour job is really better for them to take it because when they get their unemployment benefits their taxes aren't being taken out of that and so when they see their net check, they think they're better off but the opportunity in taking a job and potentially moving up or going full time with one of my clients is far more upside to that than sitting at home on the dole."

"Some people say that's callous to think that if you don't extend unemployment benefits, one of the reasons you don't extend unemployment benefits is because people lose the incentive to get a job," said Kilmeade "It's easier to stay home. You're saying that's reality."

"That is reality. And we have people now in the last couple of weeks where their unemployment benefits are running out that I've spoken to personally who say I have to have a job next week. Why can't you send me to work? My question is why didn't you register a month ago and try to find work a month ago rather than you are running out of benefits and you need to get to work tomorrow," replied Auchmoody.

It's not the first time that opinion has been heard on the conservative network. Earlier this month, Nina Easton expressed a similar view. "In the past, what has happened is it actually extends unemployment because people wait till the last minute before their benefits run out to find a job, to relocate to take jobs that they really didn't want to take," she told Fox News' Major Garrett.

Unemployment benefits expired in June so if Auchmoody is right he may soon have all the workers he needs. Senate Majority Leader Harry Reid told reporters Wednesday that he would hold a vote next Tuesday on resuming those benefits. Because of its cost, Republicans along with Sen. Ben Nelson (D-NE) have been preventing a final vote on the bill.

However, Delaney counters "there are currently five people looking for work for every job opening, according to the Department of Labor, and only 67 percent of the nearly 15 million unemployed receive benefits in the first place."

For all the anecdotes about business owners having hiring trouble, there are job ads flatly stating that the unemployed need not apply. But suspicion of the unemployed, coupled with wariness of the deficit, has led to an epic holdup in Congress over reauthorizing benefits for people who've been jobless for six months or longer. The benefits lapsed at the end of May, causing some 2.1 million so far to miss checks.

"Now it looks like they're not going to get extended," said Kilmeade. "Maybe the [expiring] unemployment benefits will get people to sober up and take some of your offers," he told Auchmoody.

This video is from Fox News' Fox & Friends, broadcast July 15, 2010.

The U.S. Economy Is A Dead Horse And The American People Are Starting To Get Really Pissed Off And Frustrated

The economic frustration of the American people is reaching a fever pitch. Millions of Americans can't seem to get a good job no matter what they do. Millions of others are working as hard as they can but find that they keep coming up short at the end of the month. Record numbers of Americans are still going bankrupt. Record numbers of Americans are still losing their homes. Meanwhile, the U.S. economy is a dead horse at this point. It just doesn't have any more to give. At this point the U.S. economy is like an aging rock star that requires larger and larger doses of drugs each night just to be able to perform. The U.S. economy is addicted to "drugs" such as debt and government stimulus, and years ago those things really supercharged the U.S. economic system, but at this point they aren't provoking much of a response at all. In fact, the things that once "stimulated" the economy are now slowly killing it. But the vast majority of the American people do not understand this. All they know is that the economy is broken and they want someone to "fix" it.

For most Americans, all we have ever known is tremendous prosperity. All our lives we have been taught that America is the richest and most prosperous nation on the planet, and that while there will always be times of "recession", things will always bounce back and be better than ever before.

But this time things aren't bouncing back.

And Americans are starting to become extremely frustrated.

A couple of quotes that appeared in a recent article in The New York Daily News really embodied the growing frustration that so many are feeling at this point....

"My husband and I are fortunate to be able to move in with my 81-year-old mother-in-law. But how sad is that? I apply for jobs and nothing happens," writes Gayle Hanson. "Who wants to hire a 59-year-old woman? My answer is nobody. [I] have years of experience, excellent references. And nothing to show for it."

"I am soon to be 57 and considered too old, too expensive, etc. I can't get an employer to hire me at any salary," writes Mike Stiller. "I am BOILING MAD."

But Gayle Hanson and Mike Stiller are far from alone.

Millions upon millions of Americans are "boiling mad" about the economy at this point.

The truth is that the United States has lost 10.5 million jobs since 2007. Many of those jobs have been shipped off to countries like China and India where labor is much cheaper and they are never coming back.

There just are not enough jobs for everyone in America at this point. The number of "chronically unemployed" has been rising at a frightening pace. In fact, the average duration of unemployment in the United States has risen to an all-time high.

If you have never been unemployed and unable to find a job, then you just don't know how soul crushing it can be. This is especially true when you have a family to support.

America Plunging to Bankruptcy While DC Plays Politics as Usual

Eric Blair

Activist Post

More deficit uproar is coming out this week to reveal the quickening pace of the planned implosion of the U.S. economy while politicians wear out the same old arguments. The AP reported Tuesday that the Federal budget gap topped $1 trillion through June with the sub-headline amid GOP resistance to more gov't spending, which went on to state:

The federal deficit has topped $1 trillion with three months still to go in the budget year, showing the lasting impact of the recession on the government's finances.

In its monthly budget report, the Treasury Department said Tuesday that through the first nine months of this budget year, the deficit totals $1 trillion. That's down 7.6 percent from the $1.09 trillion deficit run up during the same period a year ago.

Worries about the size of the deficit have created political problems for the Obama administration. Congressional Republicans and moderate Democrats have blocked more spending on job creation and other efforts. Republicans also have held up legislation to extend unemployment benefits for the long-term jobless because of its effect on the deficit.

This story comes on the heels of the IMF pressuring the U.S. to reduce debt and China's top credit rating firm downgraded the United States and other western countries. The deficit panic mode is ramping up the rerun political show as fiscal conservatives echo the age-old mantra “cut taxes and spending” while the progressives pretend to be for the little guy and demand more public spending. However, every economist (and central banker) worth their salt knows that when the money supply contracts the economy goes into a depression, while expanding the money supply to the consumer class stimulates economic growth.

Incidentally, cutting taxes for the consumer and small business class will add money supply to the real economy, as will targeted spending programs on the least among us who must use those funds to consume. Both political parties are selling partial truths to the public based on their ingrained manufactured principles. Sadly, the Federal Reserve, the U.S. Treasury, and Cartel of private banks designed the system so that the money must funnel through them first, and thus they will decide how and when to inject it into the economy. To America’s demise, they’ve done nothing with this money but hoard, consolidate, and front-run for their own gain. Today, JP Morgan reported a 76% increase in profits for their second record-breaking quarter in a row while the real economy sputters to destruction. In other words, the banksters are looting and raping while the poorest and neediest Americans continue to suffer. Dylan Ratigan clearly and angrily explains the situation to Congressman Brady below:

The AP article, using the boilerplate mainstream answer, vaguely explains where all the money went:

The deficits have been driven higher by the lingering effects of the worst recession since the 1930s. About one-third of the higher deficits in this period are a result of a drop in government tax revenues.

The other two-thirds of the deficit increases reflect higher government spending to stabilize the financial system with the $700 billion bailout program and the $787 billion stimulus program that Congress passed in February 2009. The increased spending also reflected added demands for such programs as unemployment benefits and food stamps.

Through all this you may be asking yourself, since when did any politician really care about the deficit? Sure, some of them talk tough, but when it comes down to brass tacks, they all spend like it’s copper. Congress seems to always find the money for the criminal financial system, the unending unjustified wars, billions in foreign aid to unsavory “allies," billions more in subsidies to foolishly profitable oil companies or GMO giants, and of course plenty of funds to further track, trace, and database the “Perfect Citizens.” These programs, by design, don’t seem to leave much left for programs that actually benefit the taxpayer directly. In fact, it seems like our government chooses to fund programs that do nothing but harm and imprison the average taxpayers who fund them.

The depression-by-design is moving forward and the looting is continuing as planned. The one wild card is whether or not the controllers will keep giving the peasants enough crumbs so they don’t revolt, or if they indeed want and expect a revolt.

I’m reminded of Grover Norquist’s famous quote outlining the demolition by design, "Our goal is to shrink government to the size where we can drown it in a bathtub." Well, the Neo-con architects obviously grew government by leaps and bounds, in addition to the explosion of the use of private government contractors, which has only been expanded under Obama. Perhaps what Norquist really meant was they wanted to “reduce and weaken America” so that this small group can kill her completely.

Homes lost to foreclosure on track for 1M in 2010

LOS ANGELES (AP) - Rosalyn Dalebout rents out space in her home to three tenants, has cut off her phone service and canceled her earthquake and life insurance - all to pay her mortgage every month.

So far, she's one of the lucky ones.

More than 1 million American households are likely to lose their homes to foreclosure this year, as lenders work their way through a huge backlog of borrowers who have fallen behind on their loans.

Nearly 528,000 homes were taken over by lenders in thefirst six months of the year. If foreclosures continue at that rate, the yearly number would eclipse the more than 900,000 homes repossessed in 2009, RealtyTrac Inc., a foreclosure listing service, said Thursday.

"That would be unprecedented," said Rick Sharga, a senior vice president at RealtyTrac.

Lenders have historically taken over about 100,000 homes a year, he said.

The surge in foreclosures reflects a crisis that has shown signs of leveling off in recent months but remains a crippling drag on the housing market and the economy.

Many homeowners struggling to make their monthly payments have had little success in negotiating more deals.

Dalebout, a manager of a recreation center who lives in the Salt Lake City suburb of Holladay, said her lender has refused to refinance her loan with lower rates and payments.

The monthly payments on her $240,000 mortgage take more than half her salary.

"I'm just running into a lot of brick walls," Dalebout, 58 said.

Banks seem to be creating two classes of troubled homeowners. Those who are falling behind in their payments are being allowed to stay in their homes longer because lenders are reluctant to add to the glut of foreclosed homes on the market. At the same time, lenders are stepping up repossessions to clear out the backlog of bad loans.

"The banks are really sort of controlling or managing the dial on how fast these things get processed so they can ultimately manage the inventory of distressed assets on the market," Sharga said.

On average, it takes about 15 months for a home loan to go from being 30 days late to the property being foreclosed and sold, according to Lender Processing Services Inc., which tracks mortgages.

The number of homeowners that received a legal warnings that they could lose their homes in the first half of the year climbed 8 percent from the same period last year. But the rate dropped 5 percent from the last six months of 2009, according to RealtyTrac, which tracks notices for defaults, scheduled home auctions and home repossessions.

About 1.7 million homeowners received a foreclosure-related warning, one of several steps in the foreclosure process, between January and June. That translates to one in 78 U.S. homes.

Nevada posted the highest foreclosure rate in the first half of the year. Arizona, Florida, California and Utah were among the other foreclosure hotbeds. But the problem stretches to all parts of the country.

Sherri Leu of Lino Lakes, a suburb of Minneapolis, is unemployed and stopped receiving unemployment benefits earlier this year.

"I burned up my savings," she said. "The best thing that's going to help me is a job."

The software engineer has been living on what's left of a $120,000 home equity line of credit she took out shortly after she bought her house in 2006.

Leu estimates she's got enough money for another five or six mortgage payments.

"I might try to put it up for sale," Leu said. "The other option is to let the bank have it, but then I'll end up walking away losing money I put down on the house."

Assuming the economy doesn't worsen, RealtyTrac's Sharga projects lenders won't work through the backlog of distressed properties until the end of 2013. More than 7.3 million home loans are in some stage of delinquency, according to Lender Processing Services. The fastest-growing group of foreclosures is coming from people who took out conventional fixed-rate loans.

The prospect of lenders taking over more than a million homes this year is likely to push housing values down, experts say. Foreclosed homes are typically sold at steep discounts, lowering the value of surrounding properties.

"The downward pressure from foreclosures will persist and prices will be very weak well into 2012," said Celia Chen, senior director of Moody's Economy.com.

___

Associated Press writers Alan Zibel in Washington, Paul Foy in Salt Lake City and Jeff Karoub in Detroit contributed to this report.

Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Government for Sale: How Lobbyists Shaped the Financial Reform Bill

The following is an abridged version of an article that appears in the July 12, 2010 print and iPad editions of TIME magazine.

Two weeks ago, along a marble corridor in the Rayburn House Office Building in Washington, I watched about 40 well-dressed men (and two women) delivering huge value for their employers. Except that we, the taxpayers, weren't employing them. The nation's banks, mortgage lenders, stockbrokers, private-equity funds and derivatives traders were.

They were lobbyists — the best bargain in Washington. Capitol Tax Partners, for example, is one of 1,900 firms that house more than 11,000 lobbyists registered to operate in Washington. Last year, according to the Center for Responsive Politics (CRP), firms like Capitol Tax were paid a total of $3.49 billion for unraveling the mysteries of the tax code for a variety of businesses. According to Capitol Tax co-founder Lindsay Hooper, his firm provided "input and technical advice on various tax matters" to such clients as Morgan Stanley, 3M, Goldman Sachs, Chanel, Ford and the Private Equity Council, which is a trade group trying to head off a plan to increase taxes on what's called carried interest, a form of income enjoyed by the heavy hitters who run venture-capital and other types of private-equity funds. (Time Warner, the parent company of TIME magazine, is also a client of Capitol Tax Partners.)

Since 2009, the Private Equity Council has paid Capitol Tax, which has eight partners, a $30,000-a-month retainer to keep its members' taxes low. Counting fees paid to four other firms and the cost of its in-house lobbying staff, the council reported spending $4.2 million on lobbying from the beginning of 2009 through March of this year. Now let's assume it spent an additional $600,000 since the beginning of April, for a total of $4.8 million. With other groups lobbying on the same issue, the overall spending to protect the favorable carried-interest tax treatment was maybe $15 million. Which seems like a lot — except that this is a debate over how some $100 billion will be taxed, or not, over the next 10 years. (Read about lobbyists and health care.)

And what did the money managers get for their $15 million investment? While lawmakers did manage to boost the taxes of hedge-fund managers and other folks who collect carried interest as part of their work, they agreed to a compromise (tucked into a pending tax bill) that will tax part of those earnings at the regular rate and another part at a lower capital-gains rate. The result? A tax bite about $10 billion smaller than what the reformers wanted.

The battle over that carried-interest provision was dwarfed by the real action this year — the massive financial-regulatory-reform bill hammered out by a House-Senate conference committee and targeting what the White House says were the causes of the economy's near meltdown in 2008. The legislation, which would bring more change to Wall Street than anything else enacted since the New Deal, was a Super Bowl for lobbyists. (Read more about the financial reform bill.)

The 40 people I saw in that Capitol Hill corridor in mid-June were part of an army of approximately 2,000 monitoring the two-week-long conference committee between Senators and Representatives trying to reconcile their different versions of the bill. Just outside the House Financial Services hearing room, two dark-suited, slightly graying men madly BlackBerrying looked up and blanched at my press credentials. After being promised anonymity, they explained that they'd been dispatched by their boss, as one put it, "to grab one of the senior staff on the Republican side and give him an idea about how to reword something in the Volcker rule."

The Volcker rule, named for former Reserve chairman Paul Volcker, who was one of first to suggest it, would prohibit banks from putting their own money into risky ventures such as private-equity or real estate deals. It's a restriction that its advocates believe could prevent the next financial implosion. Bankers hate it, but their lobbyists have been unable to fight it off. Instead, they have been chipping away at it, suggesting provisions that would allow some percentage of those funds to go into high-risk deals, delay the rule's implementation or exempt some big players

The two lobbyists I encountered in the hall are working on a narrower Volcker-rule carve-out. They're representing "some green-energy interests," one said. What's that got to do with the Volcker rule? He explained that Washington is encouraging green-energy investments by granting tax credits, but only investment entities like banks that make consistent profits have predictable tax liabilities and therefore can make use of such tax credits.

By the time the bill was finished, lobbyists seeking Volcker-rule carve-outs had won complete exemptions for most mutual-fund companies and a provision allowing banks to manage funds and still make investments of up to 3% of their capital and to take up to seven years to sell off the investments they already had. Another highly technical tweak allowed banks to define their capital differently from what was originally proposed, meaning that 3% limit on how much they could invest suddenly got lots higher. And the clean-energy troops won a provision that, depending on how the implementation rules get written, might allow exceptions for investments in small or start-up businesses that "promote the public welfare."

Complexity is the modern lobbyist's greatest ally. Three lobbyists showed me three different proposals for rewording what may be the bill's biggest-money section: a provision in the Senate version that would force the five major banks that do most of the country's trillions of dollars of trading in derivatives — and make nearly $23 billion a year doing so — to spin off those operations. Even holding the dueling paragraphs side by side by side, I found it difficult on first read to appreciate the differences. But with some pointers from the lobbyists, it was clear that billions in profits depended on the variations in this nearly impenetrable language

"Complexity is our enemy," says Elizabeth Warren, chair of the congressional panel overseeing the Troubled Asset Relief Program, who conceived one of the legislation's marquee provisions — a consumer-protection agency to regulate mortgages, credit cards and other financial products. "The more complex these bills are," she complains, "the more they can outgun us."

See TIME's Pictures of the Week.

See the Cartoons of the Week.

How the Mozilla Sniffer Backdoor Was Discovered

An anonymous reader writes "Mozilla pulled one of their Firefox add-ons earlier this week for containing a backdoor which stole passwords from its users. Netcraft has taken a closer look at how the rogue extension worked, and how it was discovered by chance rather than through any code review process. Mozilla are working on a new security model to stop this kind of backdoor happening again."

FINANCIAL TAKEOVER BILL” SEEMS POISED FOR PASSAGE

UPDATE: Despite weeks of arm-twisting and deal-cutting, Senate Majority Leader Harry Reid and President Barak Obama still are not sure they have the votes needed to pass the Financial Takeover Bill. In other words - PASSAGE IS NOT A DOONE DEAL and the Democrats and the administration are worried.

This link from LibertyCentral.org quotes an email sent by a Democratic group urging the Democrats to step up the pressure on the Senators. The Democrats seem particularly concerned about those from Virginia.

As the activists at Liberty Central see it: “If the White House and the Democratic National Committee believe that a determined opposition can still stop this bill, then it’s crucial to weigh in now! Call your Senator today, and tell him or her to vote against the Dodd-Frank financial overhaul when it comes up for a vote this week.”

WASHINGTON – Thanks to three aisle-jumping Republicans, it looks like Senate Majority Leader Harry Reid will have the votes needed to push the Conference Report of the financial regulatory bill towards a final passage this week.

Officially titled the Dodd-Frank Wall Street Reform and Consumer Protection Act, after its chief sponsors, opponents are calling it the Frank-Dodd Financial Takeover Act because of its threatened overreach into all segments of the economy and pending control of businesses from Main Street to Wall Street.

Sen. Scott Brown, the Tea Party darling from Massachusetts who won the late Ted Kennedy’s seat in a special election last January, announced Monday he expects to vote for the highly controversial measure, along with Maine’s Republican senators Olympia Snowe and Susan Collins who have declared their support.

Brown said he supports it, in part because the conference committee eliminated a proposed tax on banks. "I decided that while the bill was far from perfect", it is a “vast improvement,” explains Brown in his Facebook post.

“In other words the bill still sucks, but I'm going to vote for it anyway because I don't have spine and I want to try and keep my liberal voters happy in my liberal run bankrupt home state of Massachusetts,” quips “Hershaw” (a Rantrave.com blogger in Seekonk, Mass.) paraphrasing the senator’s remarks.

The legislation is a priority for the Obama administration, and with Democrats in control of both houses of Congress Reid has enough votes for passage even if every Republican senator votes No. However, he needs 60 – a super majority -- to overcome a Republican filibuster that would hold up the legislation and possibly result in its defeat. The Snowe-Collins-Brown triumvirate could give Reid the votes necessary to shut down debate.

Worse than the Healthcare Bill

This is the bill that Rep. Michele Bachmann, R-Minn., warned last December was “even worse” than the healthcare bill, the climate control bill and other contentious measures on the president’s priority list, NewsWithViews reported.

“I know that’s hard to believe, but it is worse in the sense that every American makes financial transactions,” said Bachmann during a TV interview just hours before the House approved the measure. “We all use credit cards, we all write checks. This will all now be controlled by government, and government will ration credit. You can’t have capitalism without capital, and government will decide who gets capital and who doesn’t.”

“The entirety of this bill -- all pinned together like this -- hasn’t even gone through committees,” Bachmann exclaimed. “It just went on the floor for three hours of debate. It’s a complete government control of the financial services industry and no one knows about it!”

Bachmann was talking specifically about H.R. 4173: The Wall Street Reform and Consumer Protection Act of 2009, authored by Rep. Barney Frank, D-Mass., which the House passed on Dec. 11. In April, Sen. Chris Dodd introduced S. 3217: Restoring American Financial Stability Act of 2010, which the Senate passed on May 20.

Not a single Republican voted for the bill in the House, but on the Senate side Republicans were not united against S. 3217. In a move that surprised and disappointed many of his constituents, Sen. Scott Brown cast the deciding vote to defeat a filibuster that could have killed the bill at that point; he then joined Snowe, Collins and Sen. Chuck Grassley, R-Iowa, and most of the Democrats to approve the measure itself, 39-59, on May 20, sending it to a conference committee comprised of House and Senate members.

The legislation now before the upper house is therefore a merger by the conferees of the two versions, and is a whopping 2,315 pages long. The House passed the final report on June 30, 237-192.

Bachmann’s remarks, which some felt were hyperbolic at the time, at this point in time appear moderate and definitely on target. The bill itself has drawn fire from many quarters, as word its provisions and their ramifications become more widely understood and recognized.

A Tsunami of New Rules and Studies

“So what does the Dodd-Frank Act do?” asks Tom Donohue, president and CEO of the U.S. Chamber of Commerce, in an article he managed to get posted at the left-leaning Huffington Post.

“For one thing, it calls for more than 350 regulatory rulemakings, 47 studies, 74 reports, and counting, This tsunami of new rules and studies will cause tremendous uncertainty, making it harder for businesses to raise capital, make investments, and create jobs. To put this effort into context, the Sarbanes-Oxley Act required 16 rulemakings and 6 studies--which took more than two years to complete. In the meantime, businesses must contend with a bill of which Sen. Christopher Dodd (D-CT), one of its chief architects, remarked, "No one will know until this is actually in place how it works." If that's not a recipe for confusion, uncertainty, and litigation, I don't know what is!”

Donohue deplores the fact that instead of “reforming the regulators,” the Dodd-Frank Act creates “even more regulatory agencies on top of a fundamentally flawed, outdated system, instead of fixing the system itself.” One such body, he notes, is the Consumer Financial Protection Bureau, “a sprawling new bureaucracy with unchecked and far-reaching powers that could potentially regulate hundreds of thousands of non-financial businesses.” (emphasis added).

Shortly after S. 3217 was passed by the Senate, CNSnews.com reported that the Consumer Financial Protection Bureau – to be housed within the Federal Reserve -- would be empowered to “gather information and activities of persons operating in consumer financial markets” at any level, including the collection of personal transaction records from local banks, names and addresses of account holders, ATM and other transaction records, and the amount of money kept in each customer’s account.

The bureau will be allowed to “use the data on branches and [individual and personal] deposit accounts … for any purpose” and may keep all records on file for at least three years and these can be made publicly available upon request.

The new financial protection bureau is not the only data-collecting, privacy-destroying entity that the president would sign into existence. There’s also the Office of Financial Research, empowered to “collect, validate, and maintain all data necessary” to maintain the “financial stability of the United States.”

A Financial Intelligence Agency

According to an analysis by Americans for Limited Government, that information would be “obtained from member agencies, commercial data providers, publicly available data sources, and financial entities.” That is data on every financial transaction in the country the Office says that it needs to monitor, which gives rise to major privacy concerns.

The OFR would “’require the submission of periodic and other reports from any financial company for the purpose of assessing the extent to which a financial activity or financial market in which the financial company participates, or the financial company itself, poses a threat to the financial stability of the United States.’ The bill even grants the Director of the OFR subpoena power to require ‘the production of the data requested … upon a written finding by the Director that such data is required’ to maintain financial stability.”

ALG describes the new office as a “financial intelligence agency,” designed to “monitor and in extension, control all economic activity in this country without regards to an individual’s reasonable expectation of privacy.”

The Good News

From the conservative, libertarian, or constitutionalist perspective about the only good news in this welter of government-expanding provisions that Congress has created is that the infamous “Waxman Amendment” (reported by NewsWithViews.com) was kept out of the both the Senate’s S. 3217 and the final Conference Report.

This provision by Rep. Henry Waxman, D-Calif., is intended to extend the reach of the Federal Trade Commission over “virtually every sector of the American economy,” warns the U.S. Chamber of Commerce and other organizations in a letter to Sen. Reid and Senate Minority Leader Mitch McConnell of Kentucky.

Although the provision (Section 4901 in H.R. 4173) did not refer to dietary supplements, it was clear that the industry was the primary target that impelled Waxman to take advantage of his position as chairman of the House Energy and Commerce Committee and insert the section into the bill before it went to the House floor.

According to attorney Jonathan Emord, “Vitamins are one of the main reasons why Waxman was motivated to do this.”

“It’s not apparent from the face of the bill, but without question one of Waxman’s primary targets has been the supplement industry, and one of the things that could be done under this bill quite easily is to change the nature of what is required by supplements all across the board to justify any ad,” Emord told NewsWithViews.com.

The Alliance for Natural Health-USA played a major role in keeping Sec. 4901 out of the Senate version and Conference Report, by alerting its members and others in the movement and industry for dietary supplements.

“Last Friday, your voice was heard in Congress,” writes Darrel Rogers, communications director for the ANH-USA. “Thanks to your activism, the provision to expand the Federal Trade Commission’s powers – and with it, the likely restricted access to nutritional supplements – did not make it into the Wall Street ‘Reform’ bill.”

During the conference committee meetings, both Waxman and Frank tried without success to persuade the conferees to accept the FTC expansion, Rogers said.

The Bad News

Although the battle regarding the “Waxman Amendment” is over for now, it may not be completely finished, and Rogers warns that activists need to “stay vigilant.”

“Our allies on Capitol Hill believe he may slip the language into a miscellaneous amendment on some other bill,” he writes. “We have to be especially concerned about the lame duck session that will follow the fall election when defeated representatives have one last chance to vote. But now we know Waxman’s game plan, who his allies are in the Senate, and we will update you on any new developments.”

Rogers told NWV that the language of Sec. 4901 has been studied and those in other groups are on the lookout for it in case it’s slipped into some other legislation, perhaps an appropriation bill.

Earlier Stories:

1 - Jonathan Emord: The New Totalitarians: May 10, 2010
2 - Sarah Foster: Henry Waxman's Sneak Attack on Dietary Supplements: May 4, 2010
3 - Jonathan Emord: McCain to FDA: Regulate Joe the Plumber: Feb. 15, 2010
4 - Sarah Foster: Michele Bachmann Warns: "Financial Bill Worse than Healthcare Measure": Dec. 16, 2009
5 - Jim Kouri: Obama, Congress Strive to Bankrupt America: Dec. 13, 2009

Resources:

1 - Conference Report: Dodd-Frank Wall Street Reform and Consumer Protection Act
2 - Liberty Central Inc: a conservative information/activist 501-c-4 nonprofit organization at www.libertycentral.org. Founded and directed by Virginia “Ginni” Thomas. Website is frequently updated, especially during controversial congressional battles. Sign up for email alerts and check often for updates.
3 - S. 3217: Restoring American Financial Stability Act of 2010, introduced April 15 by Chris Dodd, D-Conn., with no sponsors. Passed by the Senate May 20, 59-39 (2 present/not voting)
4 - H.R. 4173: The Wall Street Reform and Consumer Protection Act of 2009, introduced Dec. 2 by Barney Frank, D-Mass., with no co-sponsors. Passed by the House Dec. 11, 223-202 (9 present/not voting)
5 - Robert Romano: Massive Government Overreach in Dodd-Frank Conference: Americans for Limited Government. Romano is senior editor of ALG News Bureau.
Also by ALG: Big Brother is Watching You: The Threat Posed by the Dodd Bill to Privacy, a report on the Office of Financial Research, May 2010, updated June 28 (three pages), and Down a Rabbit Hole: The Threat Posed by the Dodd Bill to the Private Sector, an analysis detailing the bailout and takeover powers. (six pages)

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