Monday, July 26, 2010

Chavez threatens to cut off oil to US


President Hugo Chavez has threatened to halt oil sales to the United States if Venezuela is attacked by its US-allied neighbour Colombia.

Chavez said during a speech to thousands of supporters that if there were an "armed aggression against Venezuela" from Colombia backed by the US, "we would suspend shipments of oil".

Chavez said "we wouldn't send one more drop" of oil to the United States, which is the top buyer of oil from the South American country.

The Venezuelan leader cut off diplomatic relations with Colombia on Thursday after outgoing President Alvaro Uribe's government presented photos, videos and maps of what it said were Colombian rebel camps inside Venezuela.

Chavez calls it a bogus show intended to smear his government and has said the Uribe could be trying to lay the groundwork for an armed conflict.

The Colombian government denies seeking a conflict. It says it went to the Organisation of American States with its evidence about the rebels' alleged presence in Venezuela last week because Chavez's government had not taken steps to address the situation.

Chavez said Sunday he is cancelling a trip to Cuba due to the tensions with Colombia.

He said separately in a newspaper column, however, he will wait to see if Colombian President-elect Juan Manuel Santos, who takes office next month, expresses willingness to ease the diplomatic conflict.

"We have to receive clear and unequivocal signals that there is a real political will in the new Colombian government to take up the path of dialogue again, without tricks," Chavez wrote.

© 2010 AP

Ellen Brown on Debt Money, Why Money is Collapsing and Why Central Banks Need Adult Supervision

The editors of The Daily Bell are pleased to present this exclusive interview conducted by Scott Smith with Web of Debt author Ellen Brown.

Introduction: Ellen Brown developed her research skills as an attorney practicing civil litigation in Los Angeles. In Web of Debt, her latest book, she turns those skills to an analysis of the Federal Reserve and "the money trust." She shows how this private cartel has usurped the power to create money from the people themselves, and how we the people can get it back. Brown developed an interest in the developing world and its problems while living abroad for eleven years in Kenya, Honduras, Guatemala and Nicaragua. She returned to practicing law when she was asked to join the legal team of a popular Tijuana healer with an innovative cancer therapy, who was targeted by the chemotherapy industry in the 1990s. That experience produced her book Forbidden Medicine, which traces the suppression of natural health treatments to the same corrupting influences that have captured the money system. Brown's eleven books include the bestselling Nature's Pharmacy, co-authored with Dr. Lynne Walker, which has sold 285,000 copies.

Daily Bell: Nice to meet you.

Brown: My pleasure!

Daily Bell: Can you tell us your book's thesis in a nutshell?

Brown: Our money is an illusion. Except for coins, which compose only one ten-thousandth of the money supply, all of our money today consists of debt to private banks. Banks always take back more money in principal and interest than they put into the money supply as principal, making the system basically a pyramid scheme. After 300 years, this scheme has spread around the world and has now reached its mathematical limits. The whole world has been captured in the debt trap of a private international banking monopoly.

Daily Bell: These are clearheaded deductions about economics. How did you get interested?

Brown: In my earlier books, which were on health and the politics of health, I saw the pharmaceutical industry as the force to be reckoned with and exposed. I was on the legal team of a Tijuana cancer therapist named Jimmy Keller, who showed Ed Griffin's documentary "World Without Cancer" to all his patients. I read Griffin's book of the same name and realized that the banking, drug and oil cartels were basically the same entities, and that their power came from the power to create money that they had usurped from the people themselves. This was such a mind-boggling insight that I felt I had to write about it.

Daily Bell: How did you make the jump from nutrition to finance?

Brown: My first book was on nutrition but my later books focused on the politics of health and what is wrong with our health care system. I feel we have been misled about drugs and healing, and I wanted to expose that and set it right. After reading "World Without Cancer," I read Ed Griffin's book "The Creature from Jekyll Island," which I thought was great right up to the end; but I felt his solution would not work. I then read other books on the subject and got my grounding in it. I actually got interested in writing on economics and the Federal Reserve in the seventies, but that was before the Internet, and I wasn't able to follow my hunches to the end. When that remarkable tool became available, the missing puzzle pieces fell into place and I could see the larger picture and had to write about it.

Daily Bell: Tell us some more about your background, where you grew up and when you traveled.

Brown: I was born in California, grew up in the Detroit and Denver suburbs, graduated from UC Berkeley in English and then from UCLA Law School. I met my husband Cliff in law school, and we worked as attorneys in L.A. for 10 years (11 for him), until he burned out on Beverly Hills law and decided to join the U.S. Agency for International Development. He always wanted to go abroad, and it gave me a chance to write and have more time with the kids (we have two). From 1989 to 2000, we lived in Kenya, Honduras, Guatemala and Nicaragua. Then I got divorced and returned to the States, where I discovered this most interesting of writing subjects. I'm still good friends with my ex; I just ran out of topics overseas! There was more to it than that, of course, but I do feel I had to come back to the States to find this topic du jour. My daughter now works for a U.N. N.G.O. and my son is a graduate student in economics in Michigan.

Daily Bell: What's been the reaction to your book?

Brown: Remarkably good. I get flooded with email, which is great. With my other books, I didn't have much contact with readers and felt like a ghostwriter. With this one, I feel like a lightning rod, attracting ideas from everywhere. I credit it to the Internet, an amazing historical development that has changed the game worldwide.

Daily Bell: Are you familiar with Austrian finance? What do you think of it?

Brown: I am, and I enjoyed reading Murray Rothbard; but I don't think the Quantity Theory of Money is correct. Prices do not benignly adjust to a contraction in the money supply; this has been shown historically. When the money supply contracts, workers get laid off, businesses shut down, and the economy goes into a recession or a depression. It's a fallacy to think you can control prices by controlling the money supply – or even that you can control the money supply ("you" meaning, of course, the central bank). In the 1970s and 1980s, when Milton Friedman's monetarism was popular, attempts were made to regulate prices by regulating the money supply, and they didn't work. Some major recessions resulted, and Third World countries got locked hopelessly in debt from a radical increase in interest rates, but the money supply couldn't be controlled.

The Federal Reserve doesn't create money; banks do. The Federal Reserve just responds by providing the reserves they need after the fact if they come up short. And adding money to the system doesn't raise prices – not if workers and materials are available to make goods. If you add money to the system, the money will go looking for goods, and merchants will respond by making more. Supply and demand will go up together and prices will remain stable. An increase in interest rates is more likely to raise prices. Merchants raise their prices to cover their costs, and interest is a major cost.

Daily Bell: Are you a free-market economist or something else?

Brown: I believe in free markets, but I don't believe we have them today. Virtually every market now is manipulated and controlled. We lost our free markets when we gave away the power to create money to a private banking elite. They got their power through sleight of hand, and it can be reversed only by reversing the sleight of hand. Ironically, to get back our free markets, we need some government intervention. The economy has been captured by thieves, and we need some rules and regulations to put the genie back in the bottle.

Daily Bell: What's wrong with a gold or silver monetary system?

Brown: To answer that question properly will take more than a few sentences, but I'll try to be succinct. There are three ways a precious metal system could be set up: (1) a "gold-backed" fiat currency, of the sort we had until 1933 domestically and until 1971 internationally; (2) 100% gold coins, as Ed Griffin recommends; or (3) gold, silver and anything else trading freely with dollars, as recommended by Ron Paul.

The first alternative failed historically and doesn't work mathematically. Nixon had to take the dollar off the gold standard internationally after DeGaulle traded in his dollars for gold and the British then tried to trade in theirs, and the U.S. was about to run out of gold. In a "fractional reserve" system, only a fraction of the gold necessary to cash in all the dollars "backed" by gold is actually held in the banks' vaults. When people figure that out, you get runs on the banks and the banks have to close their doors. Roosevelt was faced with the same problem. People had panicked and were trading in their dollars for gold at the banks. The dollar was then 40% backed by gold, so whenever anyone cashed in $2 in paper money, $3 in loans had to be called in. The result was a radical collapse in the money supply.

Option #2, an all-gold currency, won't work for a number of reasons, but I'll just mention one: where are you going to get the gold? To be fair, the government would have to swap all the dollars in the money supply for gold. Assume a $13 trillion money supply (M3) and that there is $4 trillion worth of gold in the world (per the last report I saw). Even if you could acquire every penny's worth of gold, you'd have to revalue the gold so that it was worth $3000/ounce. Goldbugs say that's doable, but here's my question: how are you going to get the gold? What are you going to buy it with? Your paper dollars are going to be worthless. What Indian woman wearing that gold around her neck is going to be foolish enough to trade it for your paper dollars?

Ed Griffin would just divide the outstanding money supply by the gold in Fort Knox, but we don't know if there's any gold left in Fort Knox, and even assuming there is, the dollar value per ounce is going to be so far from anything resembling the real market value of gold that tying the dollar to gold will lose all meaning. If you want a fixed money supply, why not just have Congress order up X number of dollars, forbid any more to be issued, and make it illegal for banks to create credit on their books? Let them lend what they have and no more. Even that won't work though; you'll quickly degenerate into recession or depression, because there won't be enough money for innovation, development and the like. The ability to create and extend credit is a good thing and is necessary to a thriving economy. It's just a question of who gets to create it, private banks (which then proceed to charge interest on it that they siphon off the top as profits) or public banks, drawing on the "full faith and credit of the United States" because they are the United States and can return the profits to the United States, maintaining a mathematically sound system?

The third idea – allowing people to trade in any currency they want – doesn't solve anything and just creates new problems. What's the exchange rate going to be between these various domestic currencies, and who is going to set it? Are you going to allow shortselling between currencies, derivative bets, etc.? If you have silver and gold coins trading together, what happens if gold goes up in value relative to silver? Will you have to change the face value of the coins? They could be left unstamped, but then you won't really have coins; you'll just have round gold bars. Then why not just keep your gold bars and sell them for paper dollars as needed? If the paper dollars lose value, as goldbugs are sure they will, the gold bars will fetch more dollars when sold, so value will have been preserved just as it would have been if the gold were actually turned into gold coins.

Daily Bell: You are somewhat cynical about government, yet your solutions feature government involvement. Can government really be trusted to do the right thing?

Brown: I have faith in the sort of government "of the people, by the people, for the people" described by Abraham Lincoln; but we don't have that now. What we have is government controlled by a few giant corporations, and they got their power by acquiring the power to create the national money supply. "Allow me to issue and control a nation's currency," Amschel Mayer Rothschild allegedly said in the 18th century, "and I care not who makes its laws." That statement may be apocryphal, but that is how they did it, and that is the power we have to get back if we want a just and trustworthy government that represents people rather than wealthy corporations.

Daily Bell: Do you believe in a business cycle – and that central banks aggravate it by printing too much money?

Brown: We had obvious business cycles in the 19th century when we were on the gold standard. Banks would issue banknotes that were many multiples of the gold they held in their vaults, until the paper money supply so far outstripped its backing that people realized the banks could not make good on all their gold-backed notes and there would be runs on the banks. "Fiat money" was not the problem though. The whole system was a ruse. The gold backing allowed private bankers to create paper money on a printing press and lend it at interest, pretending it represented gold the bankers did not really have in their vaults. Privately-issued paper money that is only partially backed by precious metals is a form of counterfeiting whether the sums are prudently managed or not.

Daily Bell: Was central banking over-printing of money the proximate cause of the economic crisis?

Brown: No. Alan Greenspan did lower interest rates to ridiculously low levels in 2001, precipitating the housing bubble that precipitated the current crisis; and he gave his blessing to derivatives, which allowed banks to move loans off their books, package them up, and sell them to investors, making room on their books for more loans and fanning the housing bubble. But it wasn't the central bank that over-printed money. It was the commercial banks, and of course they don't actually "print" it. They just create it as accounting entries on their books. The "crisis" came when there was a sudden shift in accounting rules, from "mark to fantasy" to "mark to market". The idea was to rein in the over exuberance\ of the banks; but the banks were just doing what they had to do to keep the Ponzi scheme going: create ever more loans. The real cause of the crisis was the Ponzi scheme itself: it just ran out of its food source.

Daily Bell: What are the best investments to make throughout the business cycle, and do they change over time?

Brown: They change over time, and because markets are so heavily manipulated, you can't really know what they are unless you're an insider. The rest of us just have to pay very close attention and ride the roller coaster. A case in point was a year ago, when gold was about to break through $1000, oil was hovering near $150/barrel, bank stocks were plummeting, and so was the dollar. Suddenly in July, everything miraculously reversed – the dollar and bank stocks shot up, and gold and oil plunged. What happened? The Japanese central bank later admitted in its local paper that the central banks had colluded to manipulate the markets.

Daily Bell: What do you think of the current economic crisis. Are Western countries handling it well?

Brown: Yes and no. The credit system has collapsed and Western central banks are trying to pump it back up with "quantitative easing," which is a better approach than President Hoover took when he tried to tighten the government's belt and "balance the budget" in the early 1930s. But bailing out the banks is the wrong approach. Governments should be using quantitative easing (essentially money-printing) to build infrastructure and pay the government's bills rather than trying to clean up the toxic books of failed banks. The problem is that the central banks are there to serve the banking system, not the people. We need truly national central banks. England and Canada technically own their central banks, but their governments still borrow from private banks. They don't use their central banks as if they owned them. China, Malaysia, and South Korea do; and they're faring quite well these days.

Daily Bell: Do you believe in the bailouts taking place in America?

Brown: No. We've been extorted into them. We've been made to believe the only way we can save our credit system is to spend our hard-earned taxpayer money to save the banks that got us into the mess, but that's not true. We can set up our own public credit system and let the private parasitic cartel fend for itself. They made billions in the free market; let them go down in the free market.

Daily Bell: Can you explain the genesis of the financial crisis?

Brown: Taking the long view, it's the end of a 300 year Ponzi scheme. Virtually all of our money is created by banks as loans; but banks create only the principal, not the interest necessary to pay their loans back. More is always owed back than is created in the first place, and new borrowers must continually be found to take out new loans to create the money to pay this extra interest. After 300 years, the whole world has been locked in debt, and the parasitic pyramid has run out of its food source.

All sorts of scams and schemes were devised to plunder the last dollar out of borrowers – securitization of subprime mortgages to move them off the banks' books and make room for more, derivatives to supposedly eliminate the risk of subprime default and induce investors to buy, etc. But the schemes have been exposed, and the "shadow lenders" – the investors induced to buy these bundles of subprime debt – have gone away and they aren't coming back any time soon.

The shadow lenders made up $10 trillion worth of the mortgage market. Virtually all of our money consists of credit (or debt), and a big chunk of this credit has disappeared. The money supply is collapsing, and that is what has caused the financial crisis. The solution is to put money back into the system; but the banks can't do it, because the Bank for International Settlements has imposed a tourniquet on lending with the Basel Accords.

We need to set up our own public banks, which cannot run short of "the full faith and credit of the United States" because they ARE the United States (or whatever local government is setting them up). In the U.S., we should nationalize the Federal Reserve and let it operate like a real government-owned bank, issuing money and credit on behalf of the public for infrastructure and other government expenditures. States could also set up their own credit mechanisms by setting up their own banks.

Daily Bell: Do you believe that some of your ideas will be taken up officially?

Brown: I keep trying, knocking at any doors I see; but it's a slow-moving machine. The first step is mass education and popular understanding.

Daily Bell: Have you heard from Wall Street about your ideas?

Brown: No.

Daily Bell: Are you at all worried about the reaction to your ideas?

Brown: I try to suggest solutions that are good for everyone. I think the private banking business has actually come to the end of the line. They're scrambling desperately to hold it all together, but there's not much more they can do. The whole multi-trillion dollar derivatives edifice was constructed in an attempt to bring business back that the banks were losing to their competitor non-bank institutions, but it didn't work in the end. I think the bankers might be relieved to pass the baton. Not that they want to lose their existing fortunes, but they might be ready to retire to their favorite islands and let the next generation tackle the problem; or to take jobs exercising their expertise in a new public banking arrangement with the stable backing of the government.

Daily Bell: You do a great deal of public speaking. What do you emphasize most in your talks?

Brown: Solutions, solutions, solutions. This nut can be cracked. We've been looking at the problem wrong. When we step outside the box and look again, it's all quite simple. Truth is simple.

Daily Bell: What are the most important – seminal -- articles of yours that you would encourage everyone to read? Where can they be found?

Brown: My articles can all be found on my website at I try to write one every week or two, and they're quite topical, but the most popular (per the OpEdNews ratings) have been "It's the Derivatives, Stupid!", written in September 2008 after the Lehman/AIG collapse; "Borrowing from Peter to Pay Paul: The Wall Street Ponzi Scheme Called Fractional Reserve Banking" (December 29, 2008); and "Toward a Solution to the Debt Crisis in California" (July 13, 2009). My latest article is "The Public Option in Banking: How We Can Beat Wall Street at Its Own Game" (August 8, 2009), posted on the Huffington Post among other places.

Daily Bell: On behalf of all of our readers we thank you for sharing your views with us – and for your courageous and important work.

Brown: You're welcome. I don't feel courageous; I just write. I live with my 90-year-old mother in a senior village. I need the excitement!

America's new debtor prison: Jail time being given to those who owe

Debtors prisons were federally abolished in the United States in the 1800's, yet in certain states, they seem to be making a comeback. Out of Minnesota come disturbing reports of Americans being thrown in jail due to outstanding bills -- sometimes for as little as $85. The Star-Tribune of Minneapolis profiles a number of people who say their debts got them jailed, including Joy Uhlmeyer a 57-year-old patient care advocate who was pulled over on her way home from visiting her elderly mother and put in jail for a night for missing a court hearing about unpaid debt.

The Star-Tribune reviewed the state's court documents and found that arrests like Uhlmeyer's are up 60% in Minnesota over the past four years. And Minnesota isn't the only state where this is happening. It's a turn of events Ed Mierzwinski, consumer program director at advocacy group U.S. Public Interest Research Groups (or PIRG), calls a "very bad situation for consumers." Mierzwinski attributes the practice to "bottom-feeder debt collectors [who] are very aggressive."
People who are imprisoned for their debts are technically locked up for contempt of court after failing to appear for a hearing pertaining to their debt. It's a legal loophole that debt-collection companies are increasingly using. Here's how it works: First, the collections company files a lawsuit against the debtor, which requires them to appear in court. If the debtor doesn't show up, the creditor wins a default judgment against them. This allows them to ask the court to schedule another hearing at which the judge can go through the debtor's assets and determine if actions such as wage garnishments or bank account seizures can take place.

If the debtor doesn't show up to that hearing, the hammer of justice can come down hard and fast. From there, the judge can order the debtor in contempt of court and issue a warrant for their arrest. If this seems unnecessarily punitive, the price to get out of jail is even more so, say consumer advocates: Generally, the judge sets the cost of bail at the amount of the disputed debt, an amount which is then turned over to the creditor.

"This is the private use of government resources to collect debt," Pete Barry, partner at law firm Barry & Slade LLC, told Walletpop. One of Barry's clients was arrested at her workplace for not filling out and sending back a form demanded by the creditor. The client, Barry says, suffered the humiliation of having to have her boss come to the jail and post a bond before she could be released. The bond money, he added, was turned over to the creditor. "They're using the court system as their collection agent," he says.

"There are big issues," says Ira Rhinegold, executive director of the National Association of Consumer Advocates. "Minnesota isn't the only place it's happening, but it seems to be the worst. They're leading the way," he says, noting that NACA has heard similar stories out of Wisconsin, New Jersey, Arkansas and Washington.

Rhinegold tells Walletpop that some unscrupulous debt collectors never even send debtors the required notification that the case is being taken to court. Then the debtor fails to show up and the collector wins a default judgment, which can pave the way for imprisonment until they post their bond.

What's behind all of this? "In some ways it stems from the growth of the debt buying industry," says Rhinegold. Collection agencies buy debt for pennies on the dollar, then hire lawyers to chase after even the smallest amounts. Of all of the unfair aspects of this chain of events, advocates say the most galling is that, in many cases, consumers may not even be legally responsible for the debts for which they're being jailed. In fact, the debt may not even be theirs, the amount may be inflated by penalties and attorney's fees, and it's almost certainly been written off by the original creditor -- who then resold it for pennies on the dollar to a debt-collection firm that plays hardball to get money from consumers. Often, says Rhinegold, the collector doesn't even have the paperwork that would prove that existence of the debt. In these cases, the judge will dismiss the case against the debtor. All the debtor had to do was show up for their day in court.For this reason, Gail Hillebrand, financial services campaign manager at nonprofit Consumers Union, says it's vitally important for consumers to respond if you get a letter threatening legal action and requiring a court appearance. The name of the collector can change because of how often debt is resold, she warns. So if you have an outstanding debt, don't assume that a notice that seems to come from a different company than the original lender is junk mail. "The problem is that people don't realize what it is," she says.

It's important to do some research first, though. If the debt isn't yours, you can dispute it. Even if it is, showing up to court can sometimes lead to an outcome in your favor if the collector can't prove you owe the debt. Either way, it will keep you from being hauled off in handcuffs.

The Wealth of the Commons and Public Benefit Financial Institutions

For OpEdNews: Michael Sauvante - Writer

More wealth has now become concentrated in the hands of the elite than in the years leading up to the stock market crash of 1929. The middle class has lost trillions of dollars in accumulated wealth, largely transferred to the top of the economic pyramid.

Much has been written about this phenomenon, but solutions are in short supply. Doesn't so much power concentrated in so few hands leave the rest of us powerless? Actually no, there are vast resources available to us.

Those resources reside in the "wealth of the commons," that is, the natural and human resources in our hands and heads. The key is figuring out ways to redeploy those resources to directly benefit society and the planet, not just the few.

The current system can survive only if we keep feeding it. By turning our energies in other directions, we can fundamentally change the world for the better.

The futurist Buckminster Fuller famously said "You never change things by fighting the existing reality. To change something, build a NEW model that makes the existing model obsolete." We at the Commonwealth Group have taken his words to heart.

Today we have unprecedented tools for collective efforts, like the Web, email, social networks and so on, that can rapidly assemble groups of likeminded people around a common goal. All it takes is a small, dedicated group to develop a plan and take it to the rest of the world. As Margaret Mead said, "Never doubt that a small group of thoughtful, committed citizens can change the world. Indeed, it is the only thing that ever has." We think it is time to change the world.

Below are a number of ways we have come up with that can help to change the world for the better.

Financial systems are the key

At the heart of all our institutions is the need for money. Money is directed and controlled by the world's financial systems -- ripe and ready for fundamental change. The near collapse of basic credit to small business and the artificial propping up of the "too big to fail" Wall Street banks are just some of the signs that those financial systems are already collapsing.

In the meantime, as in nature, other organisms spring up in the gaps left by the old dominant system and the more those new organisms nurture and support each other, the more likely their survival.

Applying those ideas to financial systems, we have identified the following areas where we can create new means by which the world of finance can serve us rather than the other way round. We refer to these replacements as Public Benefit Financial Institutions.

Stock exchange

No financial institution has come to epitomize the worst of the current system more than the speculation driven excesses of stock exchanges. Exchanges have been called nothing more than gambling casinos favoring insiders who increasingly appear to control the game.

Stock exchanges should fill a vital role in providing businesses with capital. Yet they seem consumed with the buying and selling of exotic financial instruments from which vast fortunes are made, often at the expense of others, rather than focus on that less profitable role of providing capital.

It is not just the financial manipulators that benefit while hurting the rest of society. We also find that companies listed on those exchanges are caught up in a similar "profit at all costs" game. Short-term profit-driven behavior that trumps all other objectives appears to be behind their unparalleled influence over our governments, the despoiling of our environment and the destructive cycles of our economies.

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Why the U.S. Need Not Fear a Sovereign Debt Crisis: Unlike Greece, It Is Actually Sovereign

Last week, a Chinese rating agency downgraded U.S. debt from triple A and number one globally, to "double A with a negative outlook" and only 13th worldwide. The downgrade renewed fears that the sovereign debt crisis that began in Greece will soon reach America. That is the concern, but the U.S. is distinguished from Greece in that its debt is denominated in its own currency, over which it has sovereign control. The government can simply print the money it needs or borrow from a central bank that prints it. We should not let deficit hawks and short sellers dissuade the government from pursuing that obvious expedient.

We did not hear much about "sovereign debt" until early this year when Greece hit the skids. Investment adviser Martin Weiss wrote in a February 24 newsletter:

On October 8, Greece's benchmark 10-year bond was stable and rising. Then, suddenly and without warning, global investors dumped their Greek bonds with unprecedented fury, driving its market value into a death spiral.

Likewise, Portugal's 10-year government bond reached a peak on December 1, 2009, less than three months ago. It has also started to plunge virtually nonstop.

The reason: A new contagion of fear about sovereign debt! Indeed, both governments are so deep in debt, investors worry that default is not only possible -- it is now likely!

So said the media, but note that Greece and Portugal were doing remarkably well only three months earlier. Then, "suddenly and without warning," global investors furiously dumped their bonds. Why? Weiss and other commentators blamed a sudden "contagion of fear about sovereign debt." But as Bill Murphy, another prolific newsletter writer, reiterates, "Price action makes market commentary." The pundits look at what just happened in the market and then dream up some plausible theory to explain it. What President Franklin Roosevelt said of politics, however, may also be true of markets: "Nothing happens by accident. If it happens, you can bet it was planned that way."

That the collapse of Greece's sovereign debt may actually have been planned was suggested in a Wall Street Journal article in February, in which Susan Pullian and co-authors reported:

Some heavyweight hedge funds have launched large bearish bets against the euro in moves that are reminiscent of the trading action at the height of the U.S. financial crisis.

The big bets are emerging amid gatherings such as an exclusive 'idea dinner' earlier this month that included hedge-fund titans SAC Capital Advisors LP and Soros Fund Management LLC.


There is nothing improper about hedge funds jumping on the same trade unless it is deemed by regulators to be collusion. Regulators haven't suggested that any trading has been improper.

Regulators hadn't suggested it yet; but on the same day that the story was published, the antitrust division of the U.S. Justice Department sent letters to a number of hedge funds attending the dinner, warning them not to destroy any trading records involving market bets on the euro.

Represented at the dinner was the hedge fund of George Soros, who was instrumental in collapsing the British pound in 1992 by heavy short-selling. Soros was quoted as warning that if the European Union did not fix its finances, "the euro may fall apart." Was it really a warning? Or was it the sort of rumor designed to make the euro fall apart? A concerted attack on the euro, beginning with its weakest link, the Greek bond, could bring down that currency just as short selling had brought down the pound.

These sorts of rumors have not been confined to the Greek bond and the euro. In The Financial Times, Niall Ferguson wrote an article titled "A Greek Crisis Is Coming to America," in which he warned:

It began in Athens. It is spreading to Lisbon and Madrid. But it would be a grave mistake to assume that the sovereign debt crisis that is unfolding will remain confined to the weaker eurozone economies.

America, he maintained, would suffer a sovereign debt crisis as well, and this would happen sooner than expected.

The International Monetary Fund recently published estimates of the fiscal adjustments developed economies would need to make to restore fiscal stability over the decade ahead. Worst were Japan and the UK (a fiscal tightening of 13 per cent of GDP). Then came Ireland, Spain and Greece (9 per cent). And in sixth place? Step forward America, which would need to tighten fiscal policy by 8.8 per cent of GDP to satisfy the IMF.

The catch is that the U.S. does not need to satisfy the IMF.

"Sovereign debt" Is an Oxymoron

America cannot actually suffer from a sovereign debt crisis. Why? Because it has no sovereign debt. As Wikipedia explains:

A sovereign bond is a bond issued by a national government. The term usually refers to bonds issued in foreign currencies, while bonds issued by national governments in the country's own currency are referred to as government bonds. The total amount owed to the holders of the sovereign bonds is called sovereign debt.

Damon Vrabel, of the Council on Renewal in Seattle, concludes:

The sovereign debt crisis... is a fabrication of the Ivy League, Wall Street and erudite periodicals like the Financial Times of London.. It seems ridiculous to point this out, but sovereign debt implies sovereignty. Right? Well, if countries are sovereign, then how could they be required to be in debt to private banking institutions? How could they be so easily attacked by the likes of George Soros, JP Morgan Chase and Goldman Sachs? Why would they be subjugated to the whims of auctions and traders? A true sovereign is in debt to nobody...

Unlike Greece and other EU members, which are forbidden to issue their own currencies or borrow from their own central banks, the U.S. government can solve its debt crisis by the simple expedient of either printing the money it needs directly, or borrowing it from its own central bank which prints the money. The current term of art for this maneuver is "quantitative easing," and Ferguson says it is what has so far "stood between the US and larger bond yields" -- that, and China's massive purchases of U.S. Treasuries. Both are winding down now, he warns, renewing the hazard of a sovereign debt crisis.

"Explosions of public debt hurt economies..." Ferguson contends, "by raising fears of default and/or currency depreciation ahead of actual inflation, [pushing] up real interest rates."

Market jitters may be a hazard, but if the U.S. finds itself with government bonds and no buyers, it will no doubt resort to quantitative easing again, just as it has in the past -- not necessarily overtly, but by buying bonds through offshore entities, swapping government debt for agency debt, and other sleights of hand. The mechanics may vary, but so long as "Helicopter Ben" is at the helm, dollars are liable to appear as needed.

Hyperinflation: A Bogus Threat Today

Proposals to solve government budget crises by simply issuing the necessary funds, whether as currency or as bonds, invariably meet with dire warnings that the result will be hyperinflation. But before an economy can be threatened with hyperinflation, it has to pass through simple inflation; and today the world is struggling with deflation. The U.S. money supply has been shrinking at an unprecedented rate. In a May 26 article in The Financial Times titled "US Money Supply Plunges at 1930s Pace as Obama Eyes Fresh Stimulus," Ambrose Evans-Pritchard observed:

The stock of money fell from $14.2 trillion to $13.9 trillion in the three months to April, amounting to an annual rate of contraction of 9.6pc. The assets of institutional money market funds fell at a 37pc rate, the sharpest drop ever.

So long as workers are out of work and resources are sitting idle, as they are today, money can be added to the money supply without driving prices up. Price inflation results when "demand" (money) increases faster than "supply" (goods and services). If the new money is used to create new goods and services, prices will remain stable. That is where "quantitative easing" has gone astray today: the money has not been directed into creating goods, services and jobs but has been steered into the coffers of the banks, cleaning up their balance sheets and providing them with cheap credit that they have not deigned to pass on to the productive economy.

Our forefathers described the government they were creating as a "common wealth," ensuring life, liberty and the pursuit of happiness for its people. Implied in that vision was an opportunity for employment for anyone wanting to work, as well as essential social services for the population. All of that can be provided by a government that claims sovereignty over its money supply.

A true sovereign need not indebt itself to private banks but can simply issue the money it needs. That is what the American colonists did, in the innovative paper money system that allowed them to flourish for a century before King George forbade them to issue their own scrip prompting the American Revolution. It is also what Abraham Lincoln did, foiling the Wall Street bankers who would have trapped the North in debt slavery through the exigencies of war. And it is what China itself did successfully for decades, before it succumbed to globalization. China got the idea from Abraham Lincoln through his admirer Sun Yat-sen; and Lincoln took his cue from the American colonists, our forebears. We need to reclaim our sovereign right as a nation to fund the common wealth they envisioned without begging from foreign creditors or entangling the government in debt.

Homeless increase on Hawaii's beaches, creating politicized debate on shipping them out

HONOLULU (AP) — Every morning, Tony Williams wakes to the sound of waves crashing on Hawaii's famed Waikiki beaches and has a spectacular view of the Pacific. But he's not paying a cent for his priceless vista.

Williams is among the growing number of homeless on Oahu taking advantage of inviting beaches and support services in the islands, where they never have to worry about freezing.

But homeless encampments on the beach could damage tourism, officials fear, and they are currently weighing several proposals that they say would help the homeless, while also moving them from public view.

The proposals include offering plane tickets to the mainland, creating a homeless "tent city" on less visible state land and providing more affordable housing in Honolulu, where rents are among the nation's highest.

"If you're going to be homeless anywhere, it's good to be here," said Williams, a 35-year-old tattoo artist from Long Beach, Calif., as he hung his clothes to dry between two palm trees. "I'm dealing with the cards I got dealt. I don't want to stay here forever."

There were 4,171 homeless on the island of Oahu when a census was taken in January, according to the report released last month, an increase of 15 percent from the same time last year.

"They don't seem to bother people, but it's probably not the image Hawaii wants," said Kathryn Novak, a tourist from Manchester, England, as she prepared to swim off Waikiki. "You'd imagine they'd have their own area, and not so much where the tourists are."

The most contentious of the proposals would use state money to fly the homeless back to wherever they came from, as long as they have family at the destination to take them in. Proponents say the program would cost far less money than what is spent on food stamps and welfare payments.

They weigh a $300 one-way ticket to the West Coast against what they say is a $35,000 per year cost for each person with services. But, some acknowledge, the scheme could also create problems.

Hawaii's homeless would become another state's problem. It might also provide an incentive for more homeless to travel to Hawaii if they knew they'd get a free ride home.

The idea is being scolded from afar.

"It's basically a callous, 'let's turn our back on the problem' approach to expect other cities to pick up and assume the responsibilities," said John Fox, director of the Seattle Displacement Coalition. "In your community, you're responsible and need to deal with the problem."

Help for the homeless shouldn't end with moving them out of sight, said Connie Mitchell, executive director for the Institute for Human Services, which runs two emergency shelters and offers support services.

"We need to find out what these people need to end their homelessness, not just put them in a place where people can't see them," Mitchell said. "What do these people need to make their lives better?"

Williams is proof that the plane ticket plan could be abused. He took advantage of a similar program in New York City that flew him to Hawaii in the first place after he had a friend here pose as a family member to take him in.

New York's program, called Project Reconnect, has assisted 18,800 households at a cost of $218 per person. Five people have returned to Hawaii through the program, according to program officials. Another program in Denver has reunited 45 homeless individuals with their families so far this year, but none were sent to the islands.

Several Hawaii lawmakers want to pass legislation next year to start the $100,000 plane ticket program.

"A lot of people think it's going to be easy living, but then when they get here, they realize maybe it wasn't such a good idea," said Debbie Kim Morikawa, director for the Honolulu Department of Community Services.

A more immediate solution would set aside "safe-zones" on government land where the homeless could camp in tents and have basic sanitary facilities.

Lawmakers are proposing that nonprofit organizations could offer social services in one place and security could be provided — as long as it's away from the tourist beaches.

"It's one thing to get people a place to stay, but we need to improve the quality of their lives," said Darlene Hein of the Waikiki Health Center, which provides homeless outreach. "We worry about it being a magnet, that people will come to Hawaii because there's a campground for them."

The concept of offering affordable housing to the homeless may be the most promising and have the fewest side effects. As with similar programs elsewhere, it's called "housing first." The $1 million program launched this year aims to get the chronically homeless into their own apartments.

The idea is that a stable housing environment would do more to help people survive on their own.

These plans could begin to make a difference, but long-term solutions including drug and mental health treatment, job training and employment opportunities are also needed, according to service providers.

Despite the beauty and weather, Hector Favela would jump at the opportunity to leave the beach.

"I'm tired of living on the street, getting my stuff stolen and getting beat up," said Favela, 48. "It's not that bad living out here, but it's been too long since I've slept on a bed."

US economy 'gradually' improving: Geithner

The US economy is "gradually" improving after the financial crisis, US Treasury Secretary Timothy Geithner said in an interview on NBC News' "Meet the Press" program, to be broadcast Sunday.

"I talked to businesses across the country, and I would say that is the general view, an economy that's gradually getting better," Geithner said in excerpts of the interview released in advance of its broadcast.

Geithner also downplayed the prospects of a "double-dip" recession, in which the economy sinks again after a short period of growth.

He said that given the specific drivers of the recent recession, including the US housing bubble, "what you would expect is a more moderate paced recovery... and that's what we're seeing."

Despite the slow pace "you are seeing a recovery. You're seeing private investment expand again, job growth starting to come back. And that's very encouraging," he said.

Federal Reserve chairman Ben Bernanke warned US lawmakers on July 21 that the outlook for the US economy was "unusually uncertain," saying the central bank could step in if the recovery fails.

Bernanke said the world's largest economy would see "moderate growth, a gradual decline in the unemployment rate and subdued inflation over the next several years."

Compounding fears of a painful exit from recession, he also warned that private sector hiring was growing at an "insufficient" pace.

You've Killed The Gulf Of Mexico

Floods Throughout Midwest

America's Economic Hari-Kari

Anyone with a lick of common sense will tell you that when you are in a hole, you need to quit digging. Continuing to dig will only create a larger problem. Do schools teach this?

Even President Obama's national debt commission recently told him that his continuing spending orgy is digging America into a gigantic fiscal hole.

America's total debt is expected to exceed $14 trillion next year. Each American's share of that debt totals just short of $50,000. If Fedzilla was honest and put all the figures on the table, we are in debt over $100 trillion due to the unfunded financial obligations for Social Security, Medicare and Medicaid.

That's $100 trillion. 100% predictable, 100% preventable.

This gigantic level of borrowing and spending is unsustainable by any measure, by any means. The only real reason Fedzilla would do such a thing would be that those currently in charge want to destroy America and turn us into a Third World nation. And the only possible explanation I can come up with is the admission that there has always been bad people who actually wish such horrors. Apparently, America is being run by just such bad people.

Erskine Bowles, a Democrat and one of the co-leaders of Obama's debt commission told a meeting of the National Governor's Association, "This debt is like a cancer. It is truly going to destroy the country from within."

Mr. Bowles also said that if we continue with this kamikaze borrowing and spending that by 2020 Americans will pay $2 trillion dollars a year just on the interest of the debt.

If that news wasn't bad enough, Tom Bell, chairman of the U.S. Chamber of Commerce, stated, "For the first time in my 40 years of observation, our free-enterprise system is truly at risk. If we allow Congress and the administration to spend, we're setting ourselves up to be the next Greece."

So there you have it. America is in a deep financial hole. President Obama's solution to this hole: keep borrowing and spending. Dig, baby, dig.

We shouldn't expect anything different from a President and administration who don't have a clue about how private industry works or how Fedzilla policies stifle growth. At least from my research, I still can't find anyone on the President's closest team who has actually started a successful business.

I can, however, find Che and Mao fans. Phenomenal.

While I believe that capitalism is the strongest man-made force on the planet, I don't believe the American economy can grow its way out of this mountain of self inflicted debt, especially with Obama's insane economic policies that seek to punish businesses (thereby limiting job creation) instead of enacting policies that would actually help businesses to grow and our economy to catch fire.

So how do we get out of this financial mess, if at all?

The first thing we need to do is to elect a fiscally conservative House and Senate this fall to serve as a dam against the Fedzilla tsunami of spending. And then we need to hold them accountable.

We absolutely must re-engage the "We the People" part of this American experiment in self government.

We need tax relief across the board, from businesses to individuals. Nothing will get the economy moving faster than keeping money in the hands of American businesses and people who earned it. America should have the world's most pro-business tax structure on the planet. We do not.

My home state of Texas has the best economy in America. Interestingly, Texas has no corporate income tax, capital gains tax or personal income tax. Don't tell me that reducing taxes across the board will not put people back to work. Plus my governor shoots coyotes. What does yours do?

The death tax should be permanently eliminated, capital gains slashed to next to nothing, and the Bush tax cuts be made permanent.

We need a fiscally conservative candidate for President in 2011 who will commit to cutting the size of Fedzilla by 25% over his or her first term and the savings be put towards eliminating the debt. Cutting spending is job No. 1, No. 2 and No. 3.

We need much less government, not more of it. We must be willing to drastically cut spending and put all Fedzilla programs and agencies on the chopping block to be trimmed to the bone or made permanently extinct.

We need politicians who will stand firm on balancing the budget. All others must be removed from office.

We have a monumental task in front of us—possibly the largest problem the nation has ever faced. Either we commit to doing what we can to fix it—and recognize that whatever we do is going to be painful—or we go under. The stakes have never been higher.

Repubs Plot Israel-Iran Apocalypse and the Collapse of the US Economy

July 24, 2010 "Information Clearing House" -- The move is reminiscent of the 1998 letter the Project for a New American Century signatories sent to President Clinton, putting pressure on him to initiate war on Iraq. They did maneuver him into pulling out UN weapons inspectors and bombing Iraq. The US removal of the inspectors made the West blind as to the lack of Iraqi weapons programs, since their absence could no longer be certified. In turn, Iraq’s opaqueness as a result of the Clinton actions allowed the Bill Kristol crowd and the rest of the Israel, war industry and oil lobbies to propagandize America into the fruitless and ruinous Iraq War. Now they are repeating this pattern with regard to Iran.

Think about how weird it is. Nearly half of Republicans in the House are from the South, which has relatively few Jewish Americans. So this resolution is likely emanating from the Christian Zionists like John Hagee (who once said that God sent Hitler to punish the Jews for being outside Israel). It is not impossible that the people behind this resolution are fervently hoping for the Judgment Day to come more quickly and look forward to a Middle East apocalypse as a step toward the Return of Christ and the end of that pesky but temporarily necessary Judaism. In other words, for these right wing Americans to call for Israel to go to war on behalf of America is just one more case of white Christians sacrificing Jews for their own interests and is a form of anti-Semitism.

The likely outcome of an Israeli military strike on Iran s as follows:

  • Iran will use Shiite operatives and militiamen to kill the increasingly vulnerable remaining US troops in Iraq (once there are less than 50,000 non-combat troops in that country, they are not troops, they are hostages).
  • Iran will stir up its substantial number of clients in Afghanistan to hit the United States, widening the insurgency from mainly Pashtun Taliban to include fundamentalist Tajiks and Hazaras. The US will remain mired in that war, perhaps for decades, as a result.
  • Iran will probably bide its time and act in covert and hard to trace ways against US interests in the region. There could be more operations like the Khobar Towers bombing of US troops in Saudi Arabia or the 1983 attack on a Marine barracks in Beirut. All US commercial and government offices in the region would become targets.
  • A fair likelihood exists that Hizbullah would do something to Israel in revenge, possibly provoking another Israel-Lebanon War. The last war did not go well for Israel, despite its massive military superiority. A fourth of Israelis were forced to move house, chemical gas facilities in Haifa were threatened (and the Dimona Nuclear plant that makes all those Israeli nuclear warheads could be), and Hizbullah had broken Israeli radio encryption and knew all the Israeli army plans beforehand.
  • Not only would the democratically inclined opposition movement in Iran evaporate, but Muslim fundamentalists in Egypt, Jordan and other US allies would mobilize and perhaps gain in popularity out of anti-imperial solidarity. (Only 6% of ordinary Arabs is worried about an Iranian nuclear bomb, whereas almost all are disturbed by Israel’s treatment of the Palestinians).
  • The price of oil would spike, likely to 2008 highs of $140 a barrel, throwing the world back into Depression.
  • Once such hostilities began, and given these likely responses, the US could well get sucked into a third major Middle East war, against a country geographically much bigger than either Iraq or Afghanistan, and more than twice as populous as each of them. At another $1 trillion, that cost would push the US into $14 trillion in indebtedness all by itself, and since that is American annual gross domestic product, it could trigger a downgrading of American credit, making the interest servicing on existing and future loans far more expensive and, along with crippling high oil prices, beginning America’s final spiral down into poverty and weakness.
  • Juan R. I. Cole is Richard P. Mitchell Collegiate Professor of History at the University of Michigan. For three decades, he has sought to put the relationship of the West and the Muslim world in historical context. His most recent book is Engaging the Muslim World (Palgrave Macmillan, March, 2009) and he also recently authored Napoleon’s Egypt: Invading the Middle East (Palgrave Macmillan, 2007).

  • 6.0 Quake hits Tonga

    10-degree map showing recent earthquakes Legend with age and magnitude scale

    Iowa Dam Fails Causing 'Catastrophic' Release of Water

    A 300-foot-long breach in Lake Delhi Dam Saturday sent water spilling downstream and hundreds of people fleeing for safety in eastern Iowa.

    David Fink, Lake Delhi dam operation manager, called the breach “a catastrophic release of water.”

    "It’s going to have a hell of a lot of velocity,” he told The Des Moines Register.

    The dam, which sits on the Maquoketa River about 45 miles north of Cedar Rapids, failed following massive amounts of rain.

    The road on top of the dam collapsed around 10:30 a.m., and water gushed over just before 1pm the newspaper reported.

    Some media outlets are reporting the water reached the eaves of several homes and businesses in the immediate vicinity. Others report rushing water flooding over railings and onto roads and fields.

    Authorities sounded flood warning sirens in nearby Hopkinton, a town of 700 residents, giving them five minutes to flee.

    One homeowner told Fox News that all he can do is wait until the water gets to his town.

    A flood warning was also announced in Monticello, which has a population of 3,700.

    Officials do not know if the entire dam will give way, but residents in low-lying areas have been ordered to leave their homes and avoid the debris-filled water, Fox News reported.

    There were no reports of injuries.

    NewsCore contributed to this report

    Update on Laredo Texas - Border War: Multiple Ranches Taken over by Mexican Insurgents?? -4 NEW SATURDAY NIGHT UPDATES - Breaking, Urgent, Reports: INSURGENTS SEIZE TWO RANCHES IN LAREDO, TEXAS

    UPDATE 4: Red State and Michelle Malkin have recently joined me in reporting the story.

    UPDATE 3: Laredo Morning Times: Officials "Know Nothing"

    UPDATE 2: to the Webb County Sheriff's and they would not confirm or deny that
    any ranches had been seized. They pleaded agnosticism.


    The Intel Hub
    – We have yet to independently confirm this situation, but are working at it now stay tuned for more information. As you can see, the sources seem like credible individuals.

    Update**Conflicting reports are coming in, one reporter stated that their was no flurry of activity in Laredo, Texas at all.

    Update *** – Due to the enormous amount of sites who have reported on this, we felt the need to at the very least put it out there. I have spoken to a few people in the area and one has indicated that nothing is going on and the other was unsure. Kimberly is standing by her story, and until we get more reports I think we should give her the benefit of the doubt due to her being a credible reporter and the connections she has established. Anyone with more information please email

    Los Zetas drug cartel seizes 2 U.S. ranches in Texas

    San Diego County Political Buzz ExaminerKimberly Dvorak

    In what could be deemed an act of war against the sovereign borders of the United States, Mexican drug cartels have seized control of at least two American ranches inside the U.S. territory near Laredo, Texas.

    Two sources inside the Laredo Police Department confirmed the incident is unfolding and they would continue to coordinate with U.S. Border Patrol today. “We consider this an act of war,” said one police officer on the ground near the scene. There is a news blackout of this incident at this time and the sources inside Laredo PD spoke on the condition of anonymity.

    Word broke late last night that Laredo police have requested help from the federal government regarding the incursion by the Los Zetas. It appears that the ranch owners have escaped without incident but their ranches remain in the hands of the blood thirsty cartels.

    Read Entire Article

    Update on Laredo

    Officials know nothing of rumored Zeta standoff on Mines Road
    Laredo Morning News

    Texas Border City on Lockdown


    No, Texas Hasn't Been Invaded

    back to
    Original Post

    Video: CNN Anchors Call For Crackdown on Bloggers...but wait ...there's more...

    Of all the occupations in the world - there is one - journalism - that one would expect to be at the vanguard in the battle to protect free speech. But in Amerika - "journalists," like Kyra Phillips and John Roberts from CNN, instead lead the public into panic over the "problem" with free speech on the internet.

    But why? What are they afraid of? Someone pointing out how staged this whole conversation really is?

    Take a look at the link below the video after you have a chance to watch the heated debate as these unbiased journalists of differing opinions tear each other to pieces over this pressing issue concerning pesky bloggers.

    Read entire article CNN's Kyra Phillips and John Roberts Engaged

    " Phillips, who's based in Atlanta and Roberts, who anchors American Morning from New York, were on a weekend getaway at the Greenbrier Resort in West Virginia. As they approached the 18th green, Phillips noticed something on the pin -- turns out it was a card and the engagement ring was in the cup."

    Conclusion: They are right - anonymous bloggers are a problem.
    Bonus Video: More annoying stuff we bloggers won't let go - while the CNN "journalists" prep the public for the next war based on lies:

    OMB's Latest Projections Estimate 250K Jobs Created Each Month Through End Of 2015

    Yesterday the OMB released its Mid-Season Review of the US Budget. In keeping with the encroaching Beijingization of all data releases, the administration now sees yet another decline in the 2010 budget deficit, this time a reduction of $84 billion compared to the February forecast. According to the budget office, despite a $33 billion projected drop in revenues, outlays will see an even greater haircut courtesy of "lower unemployment and government program" spending. Yet even so, the 2010 budget deficit is expected to hit $1.47 trillion and $1.42 trillion in 2011. Of course, all these numbers are flawed and irrelevant: the confirmation - the OMB's assumption about jobs projections. To wit: "With continued healthy growth in 2011 and beyond, the unemployment rate is projected to fall, but it is not projected to fall below 6.0 percent until 2015." One problem with this "assumption": for this projection to actually happen, it means the US government needs to start creating 245 thousand jobs every month beginning in July through the end of 2005 (and we give the OMB the benefit of the doubt: if their assumption means 6% by the beginning of 2015, it implies a ridiculous job creation rate of 300,000 per month for 54 months straight). Alas, in attempting to present the rosiest picture possible, the budget office is now completely ignoring such useless things as logic and merely discrediting itself with increasingly more ridiculous "analyses."

    Readers will recall that a few days ago we presented the summary findings of a CEPR paper which demonstrated that 2007 peak employment levels will not be met until 2021, even after assuming a job creation rate of 166,000 a month for eleven straight years. The reason for this is that all the very smart economists consistently miss the most glaringly obvious thing: demographics, or specifically population growth. As the CEPR indicated, "Based on CBO projections, we assume a monthly growth in the labor force of just over 90,000 workers per month from January 2008 forward." In other words, just the natural growth of America will have added 8.6 million vacancies to the labor force from December 2007 through the end of 2015. And since the economy is already in the hole to the tune of 7.5 million jobs from the 2007 peak (see chart below), the OMB is effectively stating that it can bridge the shortfall of 16 million jobs in the next 5 years. Why, sure they can - if they can somehow create 245k jobs each month for the next 66 months. Alas, as the data demonstrates, the only time during the tenure of the Obama administration where there was a positive NFP number, is when the census fudge factor added hundreds of thousand of (potentially double-counted) positions, which have now been unwound. And obviously each month that does not create a net positive add to the economy, means more and more jobs have to be back-end loaded. In a few months, the economy will need to be adding 300k amonth to get to the OMB projection, then 400k... then 500k... Soon after that even China will have to tip its hat to the US propaganda machine.

    Full chart summarizing the latest set of Goebbels-worthy data coming from the administration below:

    Alas, this utter lack of logical thinking is precisely what occurred in the European stress tests: we will have quite a few more things to say shortly about Germany's Street Test Urban Achievers, the Landesbanks shortly, and how using a little comparable logic and data mining also quite easily refutes yesterday's "stupendous news."

    Ex-US judge pleads guilty to child prison scam

    Former Pennsylvania judge Michael Conahan has pleaded guilty to a racketeering conspiracy charge for helping put juvenile defendants behind bars in exchange for bribes.

    He is accused along with former judge Mark Ciavarella of taking $2.8m (£1.8m) from a profit-making detention centres. Mr Ciavarella denies wrongdoing.

    The two pleaded guilty last year but a federal judge tossed out part of the plea agreement for being too lenient.

    Conahan faces up to 20 years in jail.

    US District Judge Edwin Kosik rejected the 87-month jail term set out last year in Conahan's agreement. Under that deal, the former judge would have been able to back out if he was dissatisfied with his sentence.

    Judge Kosik has accepted Conahan's current plea agreement with prosecutors, which has no such get-out clause.

    Cash for kids

    Prosecutors in a federal court in Scranton, Pennsylvania, said Conahan had closed a county-owned juvenile detention centre in 2002, just before signing an agreement to use a for-profit centre.

    Prosecutors say Mr Ciavarella, a former juvenile court judge, then allegedly worked with Mr Conahan to ensure a constant flow of detainees.

    The two men were originally charged in early 2009 with accepting money from the builder and owner of a for-profit detention centre that housed county juveniles in exchange for giving children longer, harsher sentences.

    A spokeswoman for the non-profit Juvenile Law Center alleges that Mr Ciavarella gave excessively harsh sentences to 1,000-2,000 juveniles between 2003 and 2006.

    Some of the children were shackled, denied lawyers, and pulled from their homes for offences which included stealing change from cars and failure to appear as witnesses.

    The indictment was part of a larger probe into corruption in Luzerne County, Pennsylvania, which has so far implicated more than 20 others.

    Peru declares emergency over cold weather

    The Peruvian government has declared a state of emergency in more than half the country due to cold weather.

    Most of the areas affected are in the south, where temperatures regularly drop below zero centigrade at this time of year.

    However, this time temperatures have dropped to as low as -24C.

    The state of emergency means regional authorities can dip into emergency funds to provide medicine, blankets and shelter to those most affected.

    Seasonal deaths

    The state of emergency was declared in 16 of Peru's 24 regions.

    This week Peru's capital, Lima, recorded its lowest temperatures in 46 years at 8C, and the emergency measures apply to several of its outlying districts.

    In Peru's hot and humid Amazon region, temperatures dropped as low as 9C. The jungle region has recorded five cold spells this year.

    Hundreds of people - nearly half of them very young children - have died of cold-related diseases, such as pneumonia, in Peru's mountainous south where temperatures can plummet at night to -20C.

    Poor rural populations living at more than 3,000m above sea level are the most affected.

    Doctors say malnutrition, extreme poverty and poor living conditions are major contributing factors to the seasonal deaths.

    Hizbullah Possible Culprit in Juarez Car Bomb

    A car bomb that exploded July 15 in Ciudad Juarez, Mexico, may indicate that Mexican drug cartels are being assisted by Hizbullah terrorists. This possibility means that the U.S. may be faced with a Muslim terror threat south of its border that is not completely unlike the terror presence Israel deals with on its southern and northern borders.

    The car bomb exploded near a federal police headquarters, killing four, after police had been lured to the scene by a ruse. The tragedy was captured on video (see above). It is the first recorded incident in which drug cartels used the car bomb tactic, and experts say it could be a sign of Hizbullah's involvement. Iranian proxy Hizbullah has used car bombs hundreds of times against its rivals, including Israeli forces.

    Erick Stakelbeck of the Investigative Project, a counterterrorism research group, told Investor's Business Daily that Hizbullah has established a base in what is known as the Tri-Border area, where Argentina, Brazil and Paraguay meet. He reported that "the area is home to roughly 20,000 Middle Eastern immigrants — mostly from Lebanon and Syria — and has long been a hotbed for terrorist fundraising, arms and drug trafficking, counterfeiting and money laundering."

    Rep. Sue Myrick, R-N.C., recently sent a letter to the Department of Homeland Security asking that a task force investigate Hizbullah's connection to the drug cartels. Hizbullah, she wrote, “operates almost like a Mafia family in the region, often demanding protection money and 'taxes' from local inhabitants."

    Earlier this month, Hizbullah official Jamel Nasr was reportedly arrested in Tijuana. Ray Walser of the Heritage Foundation wrote in a Fox News website that “Mexican authorities have released few details about his arrest, but they appear to have uncovered a network traceable back to the terrorist group’s headquarters in the Middle East.”

    “Last month,” Walser added, “Paraguayan police arrested Moussa Ali Hamdan, a naturalized U.S. citizen. He had been sought by the U.S. since last November, when he was indicted for involvement in bogus passports, counterfeiting, and selling fake merchandise to finance Hizbullah operations.”

    South and Central America attract terrorists for various reasons, the analyst explained. “Profits from the region’s lucrative drug trade help fuel many international terrorists,” he wrote. In addition, the Tri-Border region “boasts a high density of inhabitants of Arab descent. That, coupled with a robust smuggling trade, makes the Tri-Border a lawless breeding ground ideal for fueling international terrorism.”

    In the face of escalating bloodshed in the 42-month-old war between Mexico's security forces and drug cartels, the Obama administration is sending the National Guard to help patrol the southern border. The body count in the war on the cartels is approaching 25,000.

    “(Homeland Security) Secretary (Janet) Napolitano announced the active deployment of 1,200 National Guard troops on the southwest border,” said Alan Bersin of US Customs and Border Protection. “And that will begin on August 1.”

    New jets look like a bad bargain

    I am an 80-year-old retired airline transport pilot and aviation educator.

    On Feb, 20, 1959, then-prime minister John Diefenbaker announced the cancellation of the CF-105 Arrow program.

    He ordered five completed superb machines, in flying condition, to be torched into small pieces and junked.

    This appalling act of vandalism was perpetrated on five aircraft that the prime minister had indicated had cost the taxpayers approximately $60 million. This cancellation caused about 14,000 skilled employees at A.V. Roe's plants in Malton and another 15,000 employed by some 2,500 subcontractors to be put abruptly out of work.

    Now, 50 years later, Defence Minister Peter MacKay has announced a plan to buy 65 F35 fighters to replace 138 CF-18 fighters, which we have just spent $2.6 billion to upgrade.

    The F35s are to cost $9 billion.

    The Times Colonist provided the following comparison figures:

    The CF-18s currently in use have a top speed of Mach 1.8, range of 3,700 kilometres and 138 planes are available. They cost $29 million each.

    The F35s have a lower top speed, at Mach 1.67, reduced range at 2,200 kilometres and 65 planes will -- maybe -- be available for use in six years. They will cost $139 million each.

    It appears we are paying five times as much for a machine with poorer performance and, at the same time, cutting the size of our fleet by 50 per cent.

    Tom Brenan

    Campbell River

    Doubts surface on North Korea's role in ship sinking

    Reporting from Seoul — The way U.S. officials see it, there's little mystery behind the most notorious shipwreck in recent Korean history.

    Secretary of State Hillary Rodham Clinton calls the evidence "overwhelming" that the Cheonan, a South Korean warship that sank in March, was hit by a North Korean torpedo. Vice President Joe Biden has cited the South Korean-led panel investigating the sinking as a model of transparency.

    Containing China Is A Fool's Errand. Yet Obama's Deal with Indonesian Thugs Is Aimed at Exactly That

    Let’s call it SPITTO! That would be the all-Asia/Pacific military alliance that the United States would dearly love to have to contain China, the way it created NATO to contain the Soviet Union in the post-World War II era. The “South Pacific Treaty Organization” (SPITTO) has a nice ring to it, don’t you think?

    Yesterday’s announcement by the Obama administration that it is resuming military ties with the mass-murdering war criminals of Indonesia’s special forces ought to give us pause. Because the new relationship with Kopassus, the Indonesian thugs, has little or nothing to do with concrete U.S. interests in Indonesia – do we have any, anyway? – and everything to do with building a Great Wall around China.

    Indeed, the headline in John Pomfret’s perceptive analysis in the Washington Post today says it all: “U.S. continues effort to counter China.” He reports that the administration is strengthening or rebuilding security ties with a wide range of countries surrounding China, including Japan, South Korea, Indonesia, and Malaysia, and adds:

    “The Obama administration's announcement Thursday that it will resume relations with Indonesia's special forces, despite the unit's history of alleged atrocities and assassinations, is the most significant move yet by the United States to strengthen ties in East Asia as a hedge against China’s rise.”

    Indeed, while the American public is worried about the fearsome threat allegedly posed to U.S. national security by a few hundred ragged Al Qaeda operatives hiding in Pakistan, the real action in the long term will be U.S. efforts to inaugurate a new Cold War with China.

    The deal with Indonesia’s Kopassus drew fire from critics instantly. Sophie Richardson, Asia advocacy direction for Human Rights Watch, told the Post:

    “In the Bush administration we saw them seek military allies regardless of human rights abuses in pursuit of the war on terror. [Obama] will seek military alliances regardless of human rights abuses – in response to China.”

    Adding to the Red China paranoia, the New York Times helpfully points out that Indonesia was dropping hints “that the unit might explore building ties with the Chinese military if the [U.S.] ban remained.”

    The Times notes that Kopassus is still a bad actor, even though Geoff Morell, the Pentagon spokesman, says that Kopassus has cleaned up its “dark past”: “Clearly,” he said, “it had a very dark past, but they have done a lot to change that.” Reported the Times:

    “Indonesian rights organizations say that the unit has continued to commit abuses, especially in Papua, a mineral-rich island with a secessionist movement, since Indonesia began democratizing in 1998. They say that Kopassus has also been behind the kidnapping of human rights activists since 1998.”

    The simple fact is that as China grows stronger, it will emerge as the hegemonic force in East Asia, and there’s not much that the cash-strapped, declining power of America can do about that. Far better than to engage in misguided efforts to “contain” China, the United States ought to try to figure out what steps it can take to encourage China to loosen its internal system of political authoritarianism. I don't think that surrounding China with U.S. military allies will do much to convince China’s leaders that they ought to think about liberalizing. Just a hunch.

    US Rejects Chinese Claims to Spratly Islands

    The United States has rejected the claims of the Chinese government to territorial control of a number of tiny islands in the South China Sea, with Secretary of State Hillary Clinton insisting the US had a strong “national interest” in ensuring the islands remain open.

    Though long of little real value, the islands are said to have a significant oil and natural gas deposit, and the claims over the territorial waters around the islands could be valuable in expanding shipping in the region.

    The US declaration comes as Admiral Michael Mullen warned today that China is taking a “more aggressive” stance on the high seas, and that he has gone from being “curious” about Chinese claims to the Spratly Islands to “concerned.”

    The comments are a big victory for Vietnam, which has also claimed a number of the unpopulated islands. The Chinese and Vietnamese navies have previously clashed over the claims.

    But they aren’t the only two nations claiming some or all of the 100+ islands. Taiwan also claims the entire region for itself, while Malaysia and the Philippines also claim portions of the island chain. Roughly 45 of the islands have tiny military presences of one nation or another, and as their value rises officials warn it could become a source of conflict.

    Senate Rejects War Bill, Puts House on the Spot

    Last night the Senate voted 46-51 against the House of Representatives version of the emergency war funding bill, forcing the House to face a new, direct vote on the issue without the additional domestic spending sought by nominally “antiwar” Democrats as a compromise for funding the continuation of the war.

    Secretary of Defense Robert Gates had initially demanded the “emergency” war funds supplement bill by July 4. After a late night vote in the Senate, it looks like they might not even have them by the beginning of August.

    After the Senate had initially started the emergency bill in June, a series of July 1 votes in the House of Representatives approved the war funds, but also added a massive collection of other features, including $16 billion in new domestic spending and another set of sanctions against Iran. This sent the bill back to the Senate for reconciliation. But there was no reconciliation in the cards last night, and the ball is once again in the House’s court.

    The move will delay final approval of the bill yet again, until the House meets once again to vote on the bill. In the meantime the Pentagon is complaining that their war accounts are “drying up” as the costs of the endless war in Afghanistan continues to spiral.

    It is widely expected that the House will, in the end, approve the funds for the war, but it will likely come with another series of debates, and it is so far unclear when the House will take the issue up.

    Venezuela Warns Colombia Against Inciting a Conflict

    CARACAS, Venezuela (AP) — Venezuela’s defense minister on Friday warned Colombia against provoking a conflict after President Hugo Chávez severed ties with the nation and placed his military on alert.

    Speaking on state television, Defense Minister Carlos Mata promised “a strong response” if foreign forces crossed into Venezuelan territory.

    Mr. Chávez broke off all diplomatic relations with Colombia on Thursday, accusing it of fabricating evidence of Colombian rebel bases inside Venezuela.

    At a meeting of the Organization of American States in Washington on Thursday, the Colombian ambassador, Luis Alfonso Hoyos, presented photographs, videos, witness testimony and maps of what he said were rebel camps in Venezuela, and he challenged Venezuela to let independent observers visit them.

    Mr. Chávez suggested that Colombia’s president, Álvaro Uribe, who leaves office next month, could be trying to provoke a war, and that the photographs were fake. He insisted Venezuela did everything possible to prevent Colombian rebels from crossing into Venezuelan territory.

    In Washington, the State Department spokesman, P. J. Crowley called the dispute unfortunate and said it was a “petulant response by Venezuela to cut off relations with Colombia.”

    “Venezuela has clear responsibilities,” he said. “Colombia has put forward serious charges. They deserve to be investigated.”

    The conservative, American-allied Mr. Uribe has frequently feuded with the Socialist Mr. Chávez. Colombian officials have long complained that Mr. Chávez has harbored leaders of its main rebel groups.

    Mr. Chávez has argued that American officials are using Colombia to portray him as a supporter of terrorist groups to justify a United States military intervention in Venezuela.