Thursday, December 9, 2010

BREAKING: Ron Paul to Chair House Sub-Committee On Domestic Monetary Policy - Paul Calls It Official! (Video) »

Video - Ron Paul on Freedom Watch - Dec. 8, 2010

The good doctor can't stop smiling in this clip. This is great news!

Paul announces Wednesday night that Spencer Bachus has promised him the Chair of the House Sub-Committe on Domestic Monetary Policy. Let that sink in. Ron Paul will be killing Bernanke in committee every Friday for the next 2 years. A big win over the Fed's K Street warlords.

Ron Paul wipes the smile from Bernanke's face in 28 seconds - Hilarious...


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Now the Army moves in to clear away snow in coldest December for 100 years as fuel runs out at petrol stations in Scotland and East Anglia

  • Overnight lows of -15C in Scotland and -13C in England
  • Experts say cold snap is 'once in a lifetime'
  • Slight thaw this weekend but a return to snow predicted for next week

The Army was called in today to help clear away ice and snow as Britain headed towards its coldest December for 100 years.

As temperatures plunged to -15c (5f) David Cameron ordered the military to step in and help the UK's beleaguered local councils.

The Prime Minister also revealed Cobra-style emergency meetings of senior officials and Ministers had been held to discuss the Government’s response to the big freeze.

Edinburgh City Council was the first local authority to ask for help. Officials have held talks with the Ministry of Defence and the Scottish government to allow soldiers to remove built up snow and ice from roads and pavements.

Soldiers on the streets: Troops help to clear away ice and snow in Edinburgh today as Britain headed towards its coldest December for 100 years

Soldiers on the streets: Troops help to clear away ice and snow in Edinburgh today as Britain headed towards its coldest December for 100 years

To the rescue: Members of the armed forces share a joke as they get to work in Edinburgh

To the rescue: Members of the armed forces share a joke as they get to work in Edinburgh

The Scottish capital has seen the worst snowfall since 1963, leaving some of its most vulnerable residents unable to leave their homes. Up to 30ins of snow has fallen in parts of the city.

Under the plans, soldiers will be helping residents from the hardest hit areas of Edinburgh, as well as those who need to get access to medical help.

They will also help to clear special locations such as doctors’ surgeries, care homes and hospitals.

The mobilisation of the Army coincides with reports of fuel running out at petrol stations in Scotland and East Anglia.

In Scotland a third of the country's 900 forecourts were closed due to supply chain problems.


After a further 4in of snow fell yesterday the Met Office warned that – despite a brief respite this weekend – temperatures would stay ‘remarkably’ low for another fortnight.

If that happens, this month could replace 1981 as the coldest December since records began in 1910.

To do so, the average mean temperature for the month will have to be lower than 0.2c.

The coldest place in England overnight was Topcliffe in North Yorkshire, which saw a low of -12.8C.

As forecasters warned of more snow, sub-zero temperatures and ice for the Christmas period:

  • The Prime Minister urged homeowners to embrace the ‘we’re all in it together’ strategy of the Conservatives Big Society by being good neighbours
  • More than 100 motorists were rescued after being trapped as heavy snow fell on the A171 near Whitby, in North Yorkshire
  • The AA said it had responded to more than 230,000 incidents in just 14 days.
Dicing with danger: Three teenagers walk across a frozen lake in Bournville, Birmingham

Dicing with danger: Three teenagers walk across a frozen lake in Bournville, Birmingham

Christmas lamb: The freezing conditions didn't stop the birth of Snowy the lamb in Llangibby, north Wales

Christmas lamb: The freezing conditions didn't stop the birth of Snowy the lamb in Llangibby, north Wales

Beautiful cold: The sun sets over the village of Salsburgh in North Lanarkshire yesterday

Beautiful cold: The sun sets over the village of Salsburgh in North Lanarkshire yesterday


A newlywed couple's dream day soon turned into disaster after a blizzard left them trapped in their car for 16 hours on their wedding night.

Mike and Sarah Roots had celebrated tying the knot at a picture-perfect, snow-covered Gretna Green in southern Scotland.

But their honeymoon trip to a romantic wooden lodge at Loch Ness soon turned into the stuff of nightmares after they became trapped in their car on the M74 for 16 hours as temperatures plummeted to -16C.

The couple, from Braintree, Essex, were forced to spend the night outside Glasgow in the dark, cold conditions as they waited for the blizzard to lift.

Mrs Roots, 30, said: 'It was really the least romantic way to spend my wedding night.

'It was dark, it was cold. We didn't have so much as a cup of water. It was the worst time of my life.'

The couple said they never normally row, but on their wedding night they had four arguments and spent periods of their long-ordeal in silence.

They eventually made it to their honeymoon lodge and were given the good news that they could have an extra night's stay for free.

As soldiers were called in to help clear roads in Scotland, the Prime Minister told the Commons: ‘We stand ready to give any assistance.

'We have ministerial meetings at effectively the Cobra level that are going through what action needs to be taken.

‘There is a bigger strategic supply of grit than there’s been in previous years.

‘The military stand ready to help and whatever needs to be done, I can guarantee you will be done.’

But he urged people to do their bit as well. ‘There’s also something that we can all do to help neighbours and people that could suffer in this cold weather by being good neighbours.’

Philip Hammond, the Transport Secretary, went further and urged homeowners with access to grit and salt to tackle those roads and pavements not treated by councils.

‘People have always dug their way out of their own driveways...and I would encourage people who are able to do that kind of thing to continue doing it for themselves and for neighbours who are perhaps less able to,’ he said.

The weather across Scotland is forecast to warm up throughout today and some of the ice is expected to thaw, as the warmer winds blow in off the Atlantic.

Sub-zero temperatures have meant the snowfall has turned to thick ice, making travel treacherous and disrupting train services.

Natural ice sculpture: A man admires a huge cascade of icicles above Wensleydale

Natural ice sculpture: A man admires a huge cascade of icicles above Wensleydale

Convoy: Scotland's M8 westbound motorway reopened yesterday after being closed for 48 hours

Convoy: Scotland's M8 westbound motorway reopened yesterday after being closed for 48 hours

Bridge over troubled skies: The Clifton Suspension Bridge in Bristol lies shrouded in fog yesterday morning

Bridge over troubled skies: The Clifton Suspension Bridge in Bristol lies shrouded in fog yesterday morning

Some parts of the country have not seen a positive temperature reading for nearly two weeks.

Met Office forecaster John Hammond said: ‘December has got off to a remarkable start. It’s possible it could be the coldest on record.

‘We will have to wait and see but it’s going to stay cold for much of the rest of the month with widespread risk of ice, frost and snow showers.’

He said that the country would enjoy warmer temperatures - as high as 7c (45f) or 8c (46f) - over the weekend before the freeze returns.

‘There is scope for more snow showers to come in, particularly next week,’ he added. ‘Widespread ice and frost will return, particularly from the middle of the week onwards.’

Last winter, more than 25,000 people died in England and Wales as a result of the cold temperatures. Most of them were aged over 75.

Nigel Stafford, from the British Red Cross, said: ‘We all need to look out for each other during the severe weather and make sure those less able than ourselves are not forgotten.’

A man walks along a snow covered path in Penicuick, Midlothian
People wait for a bus in Whitburn, Scotland

No let-up: A man braves a path in Penicuick, Midlothian (left), while members of the public patiently wait for a bus at a snow-covered shelter in Whitburn, West Lothian (right)

The big freeze, up close: A high-resolultion shot of frost on the roof of a car in Worthing, England


Bernanke's Disclosure Bombshell - The FED Took Equities As Collateral During Crisis

Submitted by Chris Whalen.


Is Ben Bernanke driving the QEII or the Titanic?

By Christopher Whalen

Our colleagues in the media have been diligently pouring over the latest disclosure by the Federal Reserve on rescue loans made to banks and corporations around the world in the hope of uncovering a pearl. For one thing, the details of the extensive rescue operation by the Fed following the collapse of Lehman Brothers in 2008 confirms the role of the U.S. central bank as the global lender of last resort, a job description as yet unauthorized by Congress. But there are some rather subtle revelations which do deserve investigation.

A number of writers have noticed that the fact that the Fed did not reveal these operations until now doubtless effected how the Congress finally legislated in the case of the Dodd-Frank law. “The Fed’s current set of powers and the shape of the Dodd-Frank bill over all might have looked quite different if this information had been made public during the debate on the bill,”American Institute for Economic Research fellow Walker Todd told Gretchen Morgenson in the Sunday New York Times. “Had these tables been out there, I think Congress would have either said no to emergency lending authority or if you get it, it’s going to be a much lower number — half a trillion dollars in the aggregate.”

Perhaps more important is the fact that there is now confirmation that the Fed took in equities as collateral during the market liquidity operations in 2008 and 2009. As one of our favorite equity market observers wrote last week, the fact of the Fed financing equity positions was known in September of 2008, but as my colleague noted at the time, “you had to read between the lines.”

As it turns out, the Fed’s primary dealer credit facility or “PDCF” was essentially able to take any paper, debt or equity, proving once and for all that the Fed had abandoned any pretense at market discipline. For 25 pips over Fed funds, you could finance any equity security: “Eligible collateral will include all collateral eligible in tri-party repurchase arrangements with the major clearing banks as of September12, 2008,” said the Fed in a press release.

Previously I had heard from a number of large bulge bracket firms that there was no problem financing anything with the Fed during the crisis: office furniture, equities, whatever. So now this latest data dump from Chairman Bernanke seems to confirm that eye-opening fact and more, namely that during the crisis dealers were using the Fed to finance equity positions as well as Treasury bonds and mortgage-backed securities.

Thus the question becomes: Will the U.S. central bank continue to backstop equities when (not if) falling economic growth, rising employment and rising interest rates push equity valuations lower? There are a number of reasons to be concerned that a sustained increase in interest rates will not only make bonds and other interest rate instruments more competitive with stocks, but that an overly optimistic consensus behind the prospects for growth is about to be brought down to earth.

For one thing, the Fed’s zero interest rate policy has made the equity markets seem relatively attractive. Putting cash into blue-chip equities makes more sense, at least for some investors, than buying bonds at what may be the lowest yields that will be seen for a generation. Given the Fed’s purchases of Treasury debt via QE II, volatility is understated and thus the duration risk on bonds is likewise being understated in the markets. As one trader asked me recently: “Is Fed Chairman Ben Bernanke steering the QE II or the Titanic?”

The other issue that has made equities relatively attractive is liquidity. When investors are buying large-cap stocks, even financial names such as Citigroup, JPMorgan and Wells Fargo, they are buying size, not quality. Whereas most of the largest US banks have single digit or event negative risk-adjusted returns, smaller regional exemplars such as Cullen Frost, BB&T or US Bancorp have consistently out-performed the larger players when it comes to growing fundamental value at reasonable levels of risk.

When the Fed uses QEII to subsidize the largest players on Wall Street, it is disadvantaging the smaller, better run banks, and it is also playing with politics. Priyank Gandhi and Hanno Lustig, in a National Bureau of Economic Research working paper issued in November (No. 16553), suggest that the implicit collective guarantee extended to large U.S. financial institutions reflects an annual subsidy to the largest commercial banks of $4.71 billion per bank, measured in 2005 dollars. But, even more important, the paper notes that subsidies for the “too big to fail” banks shows the Fed’s willingness to support the equity markets, an extraordinary and ultimately political act that requires further hearings by the Congress.

Like it or not, indices such as the dollar, the Dow Jones Industrials and S&P 500 are a litmus test not only for the markets, but for the credibility of American political leaders. When the Fed deliberately bails out some banks but not others, and also relieves Congress and the White House from doing their collective jobs in terms of fiscal policy, Chairman Bernanke provides short-run stability via endless liquidity, but ultimately hurts the American people by short circuiting the political process.

It is time for Fed Chairman Bernanke and the other members of the FOMC to step back from crisis mode and demand that Congress and President Obama pick up the ball. Specifically, Washington needs to take an example from our friends in the United Kingdom and begin the process of economic and fiscal restructuring now, before the next phase of the economic crisis crests next year. That may require letting equity markets sag when the full truth of the remaining economic adjustment is accepted by the public.

As I wrote in Zero Hedge last week, “Loss Given Default: From Madrid to Los Angeles Foreclosures Set to Crest in 2011-2012”), next year, IMHO, we are going to see a further sharp decline in residential home prices as the tide of foreclosures begun in the past year starts to clear the courts and move to market via involuntary sales. The same thing is happening in Spain, by coincidence, “Foreclosed Homes May Flood Spanish Market as Banks Offload Unwanted Assets”. When this next deflationary leg in the “revenue side” of the economic equation ripples through the economy, both restructuring and aggressive action by the Fed to provide liquidity will be required.




Dead Cat Bounce - Bernanke Dumber Than Gold - Get Out Of Stocks - Mike Maloney

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New 9/11 photos 'prove WTC exploded from inside'

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Sentenced to Debt: 'EU bosses, not people must pay for Euro Fail'

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U.S. fiscal health worse than Europe's: China adviser

A customer counts U.S. dollar notes at a bank in Hanoi November 29, 2010. REUTERS/Kham

(Reuters) - The U.S. dollar will be a safe investment for the next six to 12 months because global markets are focused on the euro zone's troubles but America's fiscal health is worse than Europe's, an adviser to the Chinese central bank said on Wednesday.

Li Daokui, an academic member of the central bank's monetary policy committee, said that U.S. bond prices and the dollar would fall when the European economic situation stabilized.

"For now, market attention is still on Europe and for the coming 6-12 months, it will not shift to the United States," Li said, when asked about U.S. President Barack Obama's plan to extend tax cuts for all Americans.

"But we should be clear in our minds that the fiscal situation in the United States is much worse than in Europe. In one or two years, when the European debt situation stabilizes, attention of financial markets will definitely shift to the United States. At that time, U.S. Treasury bonds and the dollar will experience considerable declines."

U.S. Treasury prices fell sharply for a second day on Wednesday as the proposed tax deal sparked concerns over the government's ability to service its massive debt burden. Moody's Investors Service said it is worried the tax cuts could become permanent, hurting U.S. finances and credit ratings in the long run.

In Europe, Ireland's parliament passed the first in a series of resolutions underpinning its 2011 austerity budget on Tuesday, marking the first step in a lengthy approval process. But investors are now worried that the region's debt crisis could engulf Portugal next, or Spain.

China has a big stake in the performance of dollar assets. The country holds the world's biggest stock pile of foreign exchange reserves at $2.64 trillion and an estimated two-thirds of that is invested in dollar assets, including U.S. Treasuries.

The State Administration of Foreign Exchange (SAFE), an arm of the central bank, is responsible for managing the reserves.

Li was speaking on the sidelines of a financial forum in Beijing. He sits on the monetary policy committee of the central bank but does not have real influence on key decisions on interest rates and the yuan.


China's annual economic growth will exceed 9.5 percent in 2011 and will remain above 9 percent through the coming decade, Li told the forum.

The long-term growth outlook would be underpinned by the need to continue investing in infrastructure, he said.

"China has a vast domestic demand that is untapped, and that's the fundamental difference between China now and Japan in 1985," Li told a forum.

In addition, China would have to spend a lot on "low carbon" industries, lending more support for the economy, he said.

Li also predicted that global commodities prices, including oil, would rise sharply next year.

Speculation about a Chinese interest rate rise in the coming days has intensified after an official newspaper flagged the chances of an imminent move amid expectations of rising inflation in November.

National Inflation Association Response to Ben Bernanke's Bullshit on 60 Minutes.

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Irish Bank Protest

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Bank of America admits fraud in US antitrust case

WASHINGTON — US banking giant Bank of America has admitted it committed fraud in the municipal bond derivatives market and will pay 137.3 million dollars in damages, the government said Tuesday.

"Bank of America entities have agreed to pay a total of 137.3 million dollars in restitution to federal and state agencies for its participation in a conspiracy to rig bids in the municipal bond derivatives market," the Department of Justice said in a statement.

Bank of America entered into agreements with the US Securities and Exchange Commission, the Internal Revenue Service (IRS), the Office of the Comptroller of Currency and 20 state attorneys general, the department said.

The combined outcome provides for payment of restitution to the IRS and to municipalities harmed by the bank's anti-competitive conduct in the muni-bond derivatives market.

Bank of America employees engaged in illegal conduct, including bid rigging, in connection with the marketing and sale of tax-exempt municipal bond derivatives contracts, the department said.

The department also said the Charlotte, North Carolina-based bank, the biggest US bank by assets, had entered into a written agreement with the Federal Reserve Board "to address certain remedial measures."

The bank's board of directors is to submit a written plan within 90 days to the Federal Reserve Bank of Richmond in Virginia aimed at strengthening the board's oversight of the bank in competitively bid transactions, according to a document posted on the Fed's website.

The bank, which repaid a 45-billion-dollar government bailout in December 2009, also will have to file quarterly progress reports on its compliance program to the Fed.

Bank of America was the first and only entity to voluntarily report its wrongdoing before the department opened its investigation into antitrust activities in the municipal bond derivatives industry, the Justice Department said.

Payment of the damages is a condition of Bank of America's admission into the department's antitrust corporate leniency program, in which corporations and individuals can avoid criminal conviction and fines.

"As has been widely reported in the press, Bank of America is one of a number of financial institutions that are under investigation, but Bank of America was the first and only company to self-report and it was our company that the Justice Department has cited as being particularly helpful in its investigation," the bank said in a statement.

Bank of America shares were trading 0.34 percent higher at 11.67 dollars at 1900 GMT in New York.

Copyright © 2010 AFP. All rights reserved

Extension of U.S. Tax Cuts Will Prompt Congress to Discard Own Budget Law

Congressional Democrats and Republicans are preparing to set aside their budget constraints as they negotiate the extension of income tax cuts scheduled to expire this month.

Their plans to declare a budget emergency as they approve the extension of tax cuts will override a “pay-as-you-go” law that was structured to limit Congress’s ability to finance higher spending or tax relief by expanding the budget deficit.

Extending all income-tax rates for two years, along with renewal of business tax breaks, relief from the alternative minimum tax and other moves such as expanded unemployment insurance could add about $750 billion to the deficit over the next decade, about $300 billion of which is beyond the deficit- expansion which the “pay-as-you-go” law would allow.

For all the campaign-trail rhetoric about deficit reduction and recent attention focused on a bipartisan fiscal commission, Republicans and Democrats alike say the so-called “paygo” law won’t be a procedural or political obstacle to extending all of the tax cuts without offsets in spending.

“I never think paygo is out the window, in my own personal view,” said Representative Baron Hill of Indiana, who lost his bid for re-election last month. “But any rate, that’s what’s going to happen.” Hill co-chairs the Blue Dog Coalition, a group of House Democrats that pushed for the law.

Required Offsets

The paygo law, signed by President Barack Obama on Feb. 12, generally requires that tax cuts or increases in mandatory spending be offset by spending reductions or revenue-raising measures. The law allows Congress to exempt about $1.5 trillion if needed to extend many of the Bush-era tax cuts.

Offsets aren’t needed to make the income tax cuts permanent on the first $200,000 of gross income for individuals or the first $250,000 for married couples. Offsets also aren’t needed to prevent the expansion of the alternative minimum tax through 2011 or to extend the 2009 parameters of the estate tax (a $3.5 million per-person exemption and a 45 percent top rate) through 2011.

If, over the course of a year, Congress creates additional deficits under the law’s parameters, its enforcement mechanism triggers automatic spending cuts in mandatory programs such as most Medicare payments, farm price supports and social service block grants.

The law’s demand for offsets led Democrats to propose measures that were opposed by businesses, including higher per- barrel taxes on oil production and limits on several kinds of foreign tax-credit transactions.

Emergency Declarations

Still, emergency declarations can be used to exempt particular bills from the law’s enforcement rules.

Congress used such declarations this year to pass unemployment-insurance extensions without offsets. Democratic attempts to extend expired tax breaks failed because they were paired with revenue-raising offsets, such as higher taxes on the “carried interest” earned by private equity managers and real estate investors.

“That paygo law is just used to increase taxes,” said Senator Orrin Hatch of Utah, who is in line to become the top Republican on the Finance Committee next year. “It doesn’t make a hill of beans what the difference is as far as cutting back on spending and the overregulation that these Democrats have brought to this country.”

Spending Side

The law also has affected the spending side of the budget. The health-care overhaul, for example, increased spending on insurance for low-income people, and Democrats made it compliant with the paygo law, in part, by reducing future Medicare costs.

Historically, budget constraints have worked when they embodied an agreement about how to address fiscal policy, said James Horney, director of federal fiscal policy at the Center on Budget and Policy Priorities. Without that agreement, he said, the pay-as-you-go law is likely to be ignored or waived in the year-end tax bill.

“It’s more of a symptom of the lack of consensus about what to do on budgets and deficits,” Horney said.

The tax bill that the House passed Dec. 2 complied with the pay-as-you-go law, because it didn’t extend tax cuts on income above the specified thresholds. Senate Republicans have pledged to block that bill because they think tax cuts should be extended for taxpayers at every income level.

The main Senate Democratic alternative proposed by Finance Chairman Max Baucus on Dec. 2 features dozens of provisions that violate the pay-as-you-go law. They include a permanent extension of the 2009 estate tax parameters, extension of the “Making Work Pay” tax credit approved by President Barack Obama from the stimulus law and the extension of dozens of provisions favored by businesses such as a research tax credit.

Republicans voted unanimously against the pay-as-you-go law earlier this year, and they dismiss it as a Democratic gimmick.

Changes Sought

Republicans, who will control the House in January, can’t eliminate or change the law without agreement from the Senate and Obama. They are weighing changes to the separate pay-as-you- go rules that the House has adopted, said Representative Greg Walden of Oregon, who is leading the Republican transition team.

Republicans complain that the law doesn’t apply to discretionary spending, the main funding vehicle for federal agencies. They also say it ignores the positive economic effects of tax cuts.

“The thing about paygo is it was specifically designed by the Democrats to encourage spending and discourage tax reductions,” said John Campbell, a California Republican who sits on the House Budget Committee. “We hate it.”

Hapless Eurozone Emergency Meetings on How Big To Make New Bail-Out Funding? It Won't Matter!

Last night in Brussels, a meeting of the eurozone's 16 finance ministers took place, on the task of deciding how big or small to make the emergency eurofund for financial bailout to handle current and future crises. The Inter-Alpha system is coming down; the euro is in its death throes, but the clown show continues. They decided to leave in place their $1 trillion (EU750 billion) financial backstop mechanism (set up last May), saying that future increases can be agreed upon as needed. This decision now will go on Tuesday, Dec. 7, to a meeting of ministers representing all 27 member-states of the European Union.

Meantime, it was released that the European Central Bank, in the last weekly reporting period, bought up EU1.965 billion in government bonds, which is the largest such amount in months, and a leap over the week before, at EU1.345 billion.

Yesterday's meeting did not even begin until nightfall—perhaps to accommodate the werewolves present—because of the fracas during the day, including a dispute over a counter-proposal by Italian Finance Minister Giulio Tremonti and Jean-Claude Juncker, who chaired today's meeting. They proposed that pan-European bonds could be offered to support governments in shaky positions. Given absolute opposition from Germany, the Netherlands and Austria, this proposal was not even taken up.

In reality, discussions about "bailout" and "reassuring markets" are exercises in farce. Despite all the quacking, supposedly to calm the "bond markets," the bailout approach guarantees doom. Only financial reorganization through the Glass-Steagall principle can work.

But tonight's meeting concluded with the usual baseless, stock reassurances. "For the time being, there's no need to increase" the funding, said Jean-Claude Juncker, who chaired the meeting. For the $1 trillion in back-up, overseen by the European Financial Stability Facility, the division among the three sources is: EU60 billion from the European Commission; EU250 billion from the IMF; and EU440 billion to be backed up by eurozone governments.

Iceland exits recession

Decision to force bondholders to pay for banking system's collapse appears to pay off as economy grows 1.2% in third quarter

Professor Paul Krugman
Nobel prize winner Paul Krugman has repeatedly called on Ireland, Greece and Portugal to consider leaving the euro area and defaulting on debts. Photograph: Mike Clarke/AFP/Getty Images

Iceland's decision two years ago to force bondholders to pay for the banking system's collapse appeared to pay off after official figures showed the country exited recession in the third quarter.

The Icelandic economy, which contracted for seven consecutive quarters until the summer, grew by 1.2% in the three months to the end of September.

Iceland famously agreed in a referendum to reject a scheme to repay most of its debts that were once worth 11 times its total national income.

In contrast to Ireland, Iceland's taxpayers refused to foot the bill for the debts accumulated by the banking sector. Bondholders were told to accept dramatic reductions in the value of repayments on bank debt after the sector borrowed beyond its means to fund ambitious investments abroad.

The return to growth is likely to put pressure on Irish politicians to explain why Dublin rejected a more radical restructuring of its debts and a departure from the eurozone.

Iceland's currency has fallen by around a quarter, helping its exports.

Economists on the right and left have recommended country deep in debt restructure repayments with bondholders, in effect writing off much of the debt.

Nobel prize winner Paul Krugman (pictured) has repeatedly called on Ireland, Greece and Portugal to consider leaving the euro area and defaulting on debts.

Iceland's recession has proved less severe and shorter than many analysts and the International Monetary Fund had feared.

Iceland's OMX share index is up 17% this year, the third-biggest gain in Europe after Denmark and Sweden, though it remains, at 575, well below its peak of 7500.

Last year Iceland's president Olafur R Grímsson said: "The difference is that in Iceland we allowed the banks to fail. These were private banks and we didn't pump money into them in order to keep them going; the state did not shoulder the responsibility of the failed private banks."

« Tim Geithner Starts Blogging, Touts Transparency, But Still Won't Talk About Goldman Sachs Mystery Man Dan Jester »

My commentary is below.


Geithner's New Blog

A Welcome Note

Tim Geithner Dec. 6, 2010

Welcome to the new and the Treasury Department's official blog, “Treasury Notes.” We’ve redesigned to make it easier to navigate, added dynamic data visualizations and improved the site’s search capabilities. And to expand our dialogue with citizens like you, we’ve set up accounts on Facebook, Twitter, MySpace,Flickr and YouTube; added an Open Government forum; and created this blog.

On his first day in office, President Obama called for increased openness, participation and collaboration between the taxpayers and their government. That begins with greater transparency and greater access to information about government programs. The new is a place where you can easily find information published by the Department and its Bureaus and learn about Treasury programs.

On behalf of the Treasury Department, welcome – and please visit again soon.

Tim Geithner


DB here. Okay, Tim, since you offered, how about answering these questions about the mysterious former Goldman Sachs employee Dan Jester, who worked for you and Hank Paulson at Treasury, handling the AIG bailout, especially counterparty negotiations, where he made sure to botch negotiations with S&P and Moody's in order to guarantee that Goldman was paid $13 billion, at PAR, by taxpayers, for designed-to-fail synthetic CDOs that weren't worth the price of a weekend in Scranton.

LIST - AIG payments to counterparties


Stearns questions Paulson - Why so much secrecy about Dan Jester?

Who is Dan Jester #1

Who is Dan Jester #2

Who is Dan Jester #3

Janet Tavakoli on Jester & AIG #1

Janet Tavakoli on Paulson, Geithner cover-up #2

National Review editor: Parents of kids in school breakfast programs are criminals

Parents of children who participate in school breakfast programs are "criminally negligent," says the Washington editor of the conservative National Review.

Kate O'Beirne, who also appears as a pundit on MSNBC, made the comment at a Republican strategy session she moderated at the Hudson Institute Friday.

"My question is what poor excuse for a parent can’t rustle up a bowl of cereal and a banana?" O'Beirne asked. "I just don’t get why millions of school children qualify for school breakfasts unless we have a major wide spread problem with child neglect."

She continued, "If that’s how many parents are incapable of pulling together a bowl of cereal and a banana, then we have problems that are way bigger than -- that problem can’t be solved with a school breakfast, because we have parents who are just criminally ... criminally negligent with respect to raising children."

O'Beirne's comments come even as statistical evidence mounts that more and more Americans are struggling to eke out a living.

Last month, the US Census Bureau reported that the number of people living in poverty jumped to 14.3 percent of the population in 2009 -- a 15-year high, and up from 12.5 percent two years earlier. That means approximately 2.5 million people have fallen into poverty since the recession began.

The poverty rate last declined in 2000, and has been climbing since.

O'Beirne's comments go "far beyond the sacred right-wing cow of personal responsibility" and amount to "outright cruelty," argues the Crooks and Liars blog, which first flagged the comments.

These pigs are out there shouting to give zillionaires a fat year-end bonus and extend it for a couple of years while sticking it to poor people who rely on programs like the school lunch and breakfast program to survive....

Maybe she should shut up and listen to what's going on around her for a change. If she did, she might not, miss the fact that food banks are struggling to meet demand as more and more families struggle to keep roofs over their heads, sacrificing other necessities like food and clothing. Since 2006, the need for some form of assistance has tripled. Tripled.

O'Beirne joins a growing chorus of conservative commentators who have taken exception with the federal government's expansions to school meal programs in the wake of the recession.

Fox News in October introduced a segment on a new school dinner program in Washington, DC, by asking if it would "destroy American families."

In June, talk show host Rush Limbaugh responded to a report that 16 million children would go hungry over the summer holidays once school meals stopped by suggesting children check their refrigerator, and, failing that, a nearby McDonald's. Then Limbaugh added:

There's another place if none of these options work to find food; there's always the neighborhood dumpster. Now, you might find competition with homeless people there, but there are videos that have been produced to show you how to healthfully dine and how to dumpster dive and survive until school kicks back up in August.

O'Beirne currently appears on MSNBC's Hardball as a pundit, and has appeared on CNN's Crossfire and PBS' NewsHour with Jim Lehrer.

This video was broadcast on CSPAN, Friday, Dec. 3, 2010, and was uploaded to the Web by Crooks and Liars.

IMF chief due in Athens, protests planned

The head of the International Monetary Fund was due in Athens Tuesday on a two-day visit, as Greece negotiates the terms of extending the repayment of the three-year euro110 billion ($150 billion) bailout loan that saved the debt-ridden country from default.

Dominique Strauss-Kahn was to meet with Greece's prime minister, finance minister, opposition leader and central bank governor among others, while he was also to speak at Parliament's economic affairs committee.

Left-wing unions planned to hold demonstrations in Athens to protest Strauss-Kahn's visit and the strict austerity program the government has imposed to meet IMF and EU conditions to receive the bailout.

Facing a mountain of debt and a deficit that stood at 15.4 percent of gross domestic product in 2009, Greece's Socialist government has imposed stringent cost-cutting measures, including cutting civil service salaries, trimming pensions and increasing consumer taxes.

The country can receive funds from the bailout program until mid-2013, provided it meets specific targets in cutting its debt and budget deficit each quarter. However, it faced large debt repayments in 2014 and 2015, immediately after the program ends, and analysts had been concerned with Greece's ability to cope with the repayment.

Last month, European Union governments agreed to look into extending the deadline for Greece to repay its loans, from three years to 7 1/2 years, bringing the Greek loan package in line with one agreed recently for Ireland. The terms of the repayment -- the timing schedule and whether it will include the full euro110 billion or just the portion still to be disbursed -- have not been decided on.

Several European countries, including Germany, will have to submit the agreement to Parliament for approval over the next few months before it can be finalized.

Food Stamp Use Skyrocketing.


We already knew that food stamp use was growing because of the prolonged, sluggish recovery, but the Christian Science Monitor provides this handy chart to show exactly how dramatic the increase in need has been. More than 15 percent new recipients were added compared to last year. It's amazing, and illogical, that, given this need, there isn't more support for increasing food stamp benefits, which are uniquely stimulative. Of course, lawmakers are busy raiding any slight increases in food stamp funding instead.

Meanwhile, the conservative news site The Daily Caller is shocked, shocked, to learn that you can use food stamps to buy all manner of food. The government, apparently, doesn't restrict you from purchasing an $18-per-pound swordfish steak from Whole Foods. But that kind of discovery, like almost everything else in the "debate" over food stamp use, is the sort of ridiculous one that comes from a person who's never been hungry.

-- Monica Potts

« ALERT - Make This Go Viral - Federal Reserve Bankster Machine Maneuvers To Stop Ron Paul »

ALERT - Make This Go Viral - Fight The Banksters - Ron Paul MUST NOT Be Blocked - Raise Hell With John Boehner - Flood His Office With Phone Calls

ACTION REQUIRED - Contact John Boehner

Washington, D.C. Office
1011 Longworth H.O.B.
Washington, DC 20515
(202) 225-6205 begin_of_the_skype_highlighting (202) 225-6205 end_of_the_skype_highlighting
(202) 225-0704 fax

Raise Holy Hell - Make Sure He Hears Your Voice

Here is a sample emil sent by Amy:

Rep. John Boehner

'We the people' are fed up. We want accountability and transparency. We want the banksters and fraudsters responsible for the economic crisis to be held responsible - arrest them and throw them in jail! Stop protecting them. Stop representing only corporate and Wall Street interests. 'We the people' deserve better. Ron Paul is currently the ranking member of the House Subcommittee for Domestic Monetary Policy and Technology and is, therefore, in line to become chairman of the subcommittee. Stop trying to block Ron Paul. Get out of his way and let him take his rightful place as Chairman. 'We the People' want to be heard and we are screaming for Ron Paul to be chairman.

If you don't get out of his way, Mr. Boehner, we'll vote you out of the way.


If you have a GOP Congressman in your district, lay the heat on him/her to apply it to Boehner, Cantor, etc. The leaders are voted into their positions by the representatives and their voices will be more effective than citizens from other constituencies calling Boehner's office. Find your Rep.'s contact info here:


GOP Excludes Build America Bonds From Tax Plan to Force States Into Bankruptcy to Crush Public Employee Unions

Reuters, Secret GOP Plan: Push States to Declare Bankruptcy and Smash Unions, by James Pethokoukis:

Congressional Republicans appear to be quietly but methodically executing a plan that would a) avoid a federal bailout of spendthrift states and b) cripple public employee unions by pushing cash-strapped states such as California and Illinois to declare bankruptcy. This may be the biggest political battle in Washington, my Capitol Hill sources tell me, of 2011.

That’s why the most intriguing aspect of President Barack Obama’s tax deal with Republicans is what the compromise fails to include — a provision to continue the Build America Bonds program. BABs now account for more than 20 percent of new debt sold by states and local governments thanks to a federal rebate equal to 35 percent of interest costs on the bonds. The subsidy program ends on Dec. 31. And my Reuters colleagues report that a GOP congressional aide said Republicans “have a very firm line on BABS — we are not going to allow them to be included.”

In short, the lack of a BAB program would make it harder for states to borrow to cover a $140 billion budgetary shortfall next year. ...

Some Republicans hope the shock of the newly revealed debt totals will grease the way towards explicitly permitting states to declare bankruptcy. Indeed, legislation amending federal bankruptcy law is currently being prepared by congressional Republicans. Local municipalities do declare bankruptcy from time to time, most famously California’s Orange County in 1994. But states can’t. Allowing them the same ability to renegotiate obligations could enable them to slash public employees’ lavish benefits, a big factor in their financial woes.

Transport strike brings Athens to halt

Pensioners in Athens protest the Greek government's austerity measures, December 7, 2010.
Public transport has come to a halt in Athens as union workers slap the Greek capital with crippling strikes in protest to the government's austerity measures.

The 24-hour walkout stopped buses, trams and the subway as well as rail services in the Greek capital on Wednesday to become the latest in a series of protests to reform plans in crisis-hit Greece, the Associated Press reported.

The socialist government's austerity plans aim to restructure state-run transport companies, promoting calls by Greek unions for a nationwide general strike for December 15.

The workers are pressuring the Greek government to ease the austerity measures which will cut their wages and reduce their labor and pension rights.

Greece agreed to the plans in return for international bailout loans worth 110 billion euros (USD 147 billion) through 2013.

Athens is renegotiating the loan repayment schedule while both the European Union and International Monetary Fund voiced support for an extension.


The 7 Most Horrifying Cost Cutting Measures of All-Time

Money is tight, and everyone is cutting costs. But it's all about knowing where to cut; the family will skip the vacation, but doesn't try to save on clothes by turning the neighbor's cats into loincloths.

Unfortunately, when large organizations try to cut costs or figure out new sources of revenue, they tend to take the kitty loincloth approach. We're talking about ...

Child Protective Services That Operate Like the Mob

Everyone is thankful for Child Protective Services, which takes "let's think about the children" as an organizational slogan. But when a senator from Georgia admits that the organization tears families apart to hurriedly adopt children off for huge wads of cash, well, that's when CPS starts to look less like a government agency and more like a human trafficking ring.

Not the worst human trafficking case in Georgia's history. But still.

We want to make it clear that none of this is aimed at the child welfare system or all the caring, wonderful people working for it. The problem seems to lie with laws like the Adoption and Safe Families Act of 1997. According to it, for each child adopted into a foster family, the responsible state receives $4,000 to $6,000, with an additional $20 million bonus if it exceeds the average number of adoptions from previous years, which turns the practice of protecting children into a nationwide pie-eating contest.

On your mark, get set ... destroy a loving family!

So sure, you want to be known as the state that rescues the highest number of children in America, but the policy also encourages CPS to make an increasingly liberal interpretation of the term "rescue." Consider that, a few years ago, CPS employee Pat Moore was fired for refusing to put a child in a foster home simply because everyone in the foster family had a felony conviction, and the family occasionally hired a convicted sex offender to babysit. But hey, at least none of them had been convicted of genocide yet.

"Mr. Hitler? We understand you love children and have quite a lot of spare bunker space ..."

The situation is so bizarre that CPS whistleblowers have even reported foster parents putting in orders for other people's children, at which point the organization will reportedly investigate the shit out of that family until they hear someone use a cuss word, and then it's hello, new parents.

If you still don't buy the mob analogy, consider this: When Vanessa Shanks' child was taken away and she fought the decision in court, CPS responded rationally by taking away children of her relatives, and after Shanks finally won in court, they took away her attorney's children. And to think they could have saved themselves so much time by simply offering Shanks "child insurance."

"Wait, you mean there's a 'Get out of baby free' card?"

Airlines Cutting Fuel, Fixing Planes With Tape

We're constantly reassured that airline travel is perfectly safe, and they do have the stats to back it up. But airlines have been in financial trouble since before the economy went bad (their problems go back to 9/11), and what they don't tell you about while groping your junk for contraband is the ways in which the airlines sometimes gamble your life against their bottom line. They have to find ways to cut costs more and more, and we're not talking about switching in-flight meals from steak to chicken here.

"Sir, there hasn't been a steak on board an airplane in 20 years."

For instance? How about when they pressure pilots to take on just enough fuel to make their destination, against the pilots' protest? Extra fuel, you see, adds weight to the plane, so it makes the trip more expensive. And what do you need that extra juice for, anyway? Well, in April 2008, an airline captain complained that, after weather conditions slowed his flight to JFK, he asked for more fuel but was denied, and only just made it to the airport without crash-landing.

It wasn't an isolated incident; unions are complaining that pilots are being ranked and stigmatized by their companies according to how much surplus fuel they take on, pressuring them to take maverick risks and try to get across the Atlantic on the fumes from an oil-stained rag.

Unfortunately, everyone on board is Goose.

Then again, we can rest somewhat easier knowing that planes don't stall in midair very often, so we may be overhyping the ris- hang on, is that engine held on with duct tape?

Wow! Tape really can do anything! Right now, it's making us crap our pants!

What you're seeing here is called speed tape -- a temporary measure used to hold planes together long enough to get them safely back to the repair shop. We stress "temporary," because that's supposed to be the idea. But in 2002, struggling United Airlines used speed tape to patch up large holes in the wings of its Boeing 727s for a total of 193 goddamned flights. So, either United executives are a bunch of cheapskates, or 2002 was really heavy on gremlin attacks.

Steve, he's back! Get the tape!

When the Federal Aviation Administration caught wind of this, United was investigated and fined to the tune of $805,000. So it was apparently the first one.

Hospitals Outsourcing Medical Chart Transcription to India

Despite what you might have learned on TV, a doctor's job is really about one percent saving lives and 99 percent filling out paperwork. With less time than patience for this kind of grueling bureaucracy, a medical secretary often translates the doctor's scribbled notes into English. Then again, if you're in the U.K., you can just send that shit to India.

Thanks for making laziness possible, India.

By taking the "outsourced tech support" solution to the rising cost of human resources, hospitals decided to save money by laying off a large portion of their nonclinical staff, and with the U.K.'s health care system roughly $800 million in the red, many facilities were all over it. After all, anybody can be trained to write. Outsource that shit!

It seemed like a great idea until a doctor recommended a below-knee amputation, and the patient wound up scheduled for a "baloney amputation." If you're disappointed by that lame joke, it's because that really happened.

But hey, now he's technically a cyborg.

What they forgot in the race to cut costs was that properly trained medical personnel actually know something about medicine, or at least spent a hell of a lot of time hanging around doctors and sick people. Outsourced foreign secretaries, on the other hand, transcribe from audio files and just try to get it as close as they can to what they heard. Can you confidently tell the difference between hypertension and hypotension when you hear them spoken? You'd better, because if you get that wrong, someone's heart is going to explode.

Likewise, medical personnel have reported mix-ups between words like neurological and urological, and more frightening, medication dosages like "15" can be transcribed as "50."

Look, buddy, the chart says "50," and that's how many suppositories you are getting.

The hospitals themselves deny that there is any problem with the recordkeeping, but Andrew Lansley, the U.K. secretary of state for health, commented that it's "concerning that life-threatening mistakes are being made in an effort to cut costs." Of course, nobody's going to listen to a guy whose medical chart identifies him as the U.K. secretary of steak for elf.

Amputating Because It's Cheaper Than Treatment

Even if you can't find Greece on a map and learned everything you know about it from 300, chances are you might have at least heard about the country's disastrous debt problems. So it's perfectly understandable that the Greek government would want to make a few necessary cuts here and there. Unfortunately, what it wants to cut off is your legs.

Greece, circa 2010.

In a letter issued to the Pan-Hellenic Federation of People with Diabetes, the benefits division of the Greek Social Security Institute, or IKA, informed the organization that it would no longer pay for special diabetic footwear because amputations are just cheaper. No word on what was its proposed alternative to erectile dysfunction meds.

"Saws! Saws for EVERYTHING!"

The argument goes that diabetics with foot complications don't always get to keep their legs forever, even when they get the shoes, so they may as well just skip the middleman. It seems that due to the budget crisis, the IKA also had to let go of its company shrink, because intuitively, it would be cheaper still just to push diabetics down the stairs, but that's hardly the point.

The federation, as you would imagine, disputed the logic behind this decision to replace a pair of fucking shoes with complex surgery. Then again, maybe the IKA simply failed to mention that the "amputations" would take place in the company parking lot with a bottle of ouzo, an ax and an ex-inmate named Stavros.

Which is way more dangerous than an overworked surgeon who's been popping bars for 35 hours.

24 Signs That All Of America Is Becoming Just Like Detroit – A Rotting, Post-Industrial, Post-Apocalyptic Wasteland

For years, people have been laughing at the horrific economic decline of Detroit. Well, guess what? The same thing that happened to Detroit is now happening to dozens of other communities across the United States. From coast to coast there are formerly great manufacturing cities that have turned into rotting, post-industrial war zones. In particular, in America's "rust belt" you can drive through town after town after town that resemble little more than post-apocalyptic wastelands. In many U.S. cities, the "real" rate of unemployment is over 30 percent. There are some communities that will start depressing you almost the moment you drive into them. It is almost as if all of the hope has been sucked right out of those communities.

Meanwhile, the economic downturn has been incredibly hard on the finances of state and local governments across the United States. Unlike the federal government, state and local governments cannot use the Federal Reserve to play games with their exploding debt burdens. Facing horrific budget deficits, many communities have begun adopting "austerity measures" in an attempt to slow the flow of red ink. All over the nation, deep budget cuts are slashing police departments, fire departments and other basic social services, but it seems like no matter what many of these communities try the debt just keeps growing.

So when you combine economic hopelessness with drastic budget cuts, what you get are hordes of communities from coast to coast that are becoming just like Detroit. In the city of Detroit today, there are over 33,000 abandoned houses, 44 schools have been permanently closed down, the mayor wants to bulldoze one-fourth of the city and you can literally buy a house for one dollar in the worst areas. Many Americans thought that it was funny to make fun of Detroit, but little did they know that what happened there would soon start happening everywhere.

The following are 24 signs that all of America is becoming a rotting, post-industrial, post-apocalyptic wasteland just like Detroit....

#1 The second most dangerous city in the United States - Camden, New Jersey - is about to lay off about half its police.

#2 In the city of Camden, about the only "industries" that are truly thriving are drug-dealing and prostitution. It is estimated that there are literally dozens of open-air drug markets in Camden.

#3 The city of Newark, New Jersey laid off 13 percent of its police force just last week.

#4 Of 315 municipalities the New Jersey State Policemen's union recently surveyed, more than half indicated that they were planning to lay off police officers.

#5 At least 1000 people now live in the 200 miles of flood tunnels that exist under the city of Las Vegas.

#6 All over America, asphalt roads are being ground up and are being replaced with gravel because it is cheaper to maintain. The state of South Dakota has transformed over 100 miles of asphalt road into gravel over the past year, and 38 out of the 83 counties in the state of Michigan have transformed at least some of their asphalt roads into gravel roads.

#7 The number of Americans on food stamps has hit yet another new all-time record. 42.9 million Americans are now enrolled and federal authorities fully expect that number to continue to skyrocket.

#8 The city of San Jose, California recently laid off 49 firefighters.

#9 Over the past year, approximately 100 of New York's state parks and historic sites have had to cut services and reduce hours.

#10 In 2009 alone, approximately 4 million more Americans joined the ranks of the poor.

#11 The state of Arizona recently decided to stop paying for many types of organ transplants for people enrolled in its Medicaid program.

#12 Many of the police in Arizona that patrol communities near the border with Mexico say that they are "outmanned" and "outgunned" and now live in fear of being taken out by drug cartel assassins.

#13 Gang violence in America is getting totally out of control. According to authorities, there are now over 1 million members of criminal gangs operating inside the country, and those gangs are responsible for up to 80% of the violent crimes committed in the U.S. each year.

#14 Oakland, California Police Chief Anthony Batts has announced that due to severe budget cuts there are a number of crimes that his department will simply not be able to respond to any longer. The crimes that the Oakland police will no longer be responding to include grand theft, burglary, car wrecks, identity theft and vandalism.

#15 One out of every six Americans is now enrolled in at least one anti-poverty program run by the federal government.

#16 The state of Illinois is so far behind on its bills that not even schools and essential social services are getting their money on time.

#17 The sheriff's department in Ashtabula County, Ohio has been slashed from 112 to 49 deputies, and there is now just one vehicle remaining to patrol all 720 square miles of the county.

#18 As our local communities degenerate economically, it appears that they are falling apart morally as well. There are approximately 400,00 registered sex offenders in the United States as you read this.

#19 In a desperate attempt to save money, the city of Colorado Springs turned off a third of its streetlights and put its police helicopters up for auction.

#20 According to one recent study, approximately 21 percent of all children in the United States are living below the poverty line in 2010.

#21 According to the U.S. Department of Transportation, more than 25 percent of America's nearly 600,000 bridges need significant repairs or are burdened with more traffic than they were designed to carry.

#22 In Georgia, the county of Clayton recently eliminated its entire public bus system in order to save 8 million dollars.

#23 Things have gotten so bad in Stockton, California that the police union put up a billboard with the following message: "Welcome to the 2nd most dangerous city in California. Stop laying off cops."

#24 Major cities such as Philadelphia, Baltimore and Sacramento have instituted "rolling brownouts" in which various city fire stations are shut down on a rotating basis. So if you live in one of those cities and you have a fire, you had better hope that your local fire station is not scheduled for a "brownout" that day.

As I have documented in article after article, the "American Dream" is rapidly becoming the American Nightmare. We were once a nation that was endlessly expanding, endlessly growing and endlessly becoming more powerful, but now just the opposite is happening.

All of this didn't happen overnight. Back in 1982, Billy Joel could see what was starting to happen and he released a song entitled "Allentown" which captured the depression that many residents of once great steel cities were experiencing. The song started out with these two lines....

Well we're living here in Allentown
And they're closing all the factories down

Well, the United States has lost over 42,000 factories since 2001 and now all of America is turning into "Allentown".

Unfortunately, things are going to get even worse. Thousands more factories and millions more jobs will be sent overseas. The debt loads of our state and local governments will continue to skyrocket. The truth is that city after city after city is going to start looking like something out of a third world country.

But perhaps you disagree. Perhaps you believe that America's greatest days are just around the corner. Please feel free to leave a comment with your thoughts below....