Friday, December 24, 2010

Economy brightens as consumers spend, layoffs slow

WASHINGTON – Economic reports suggest employers are laying off fewer workers, businesses are ordering more computers and appliances, and consumers are spending with more confidence. Combined, the data confirm the economy is improving, and further job gains are expected in 2011.

The economy's outlook is brightening even though hiring has yet to strengthen enough to reduce an unemployment rate near 10 percent.

The number of people applying for unemployment benefits fell last week to a seasonally adjusted 420,000, the Labor Department said Thursday. That's the second-lowest level since July 2008.

Applications have fallen below 425,000 in four of the past five weeks — a significant improvement after hovering most of the year above 450,000.

But the unemployment rate rose in November to 9.8 percent. And employers added only 39,000 net new jobs.

The economy needs to generate more than 200,000 jobs a month consistently to make a dent in the unemployment rate. And applications for unemployment benefits need to fall to 375,000 or below before job gains are likely to get to that level, economists say. Applications peaked during the recession at 651,000 in March 2009.

Even when claims do fall to those levels, the unemployment rate will likely remain high. With 15 million people out of work, it will take years to gain enough jobs to bring unemployment back to a more normal level of around 5.5 percent.

"Don't forget how many people lost their jobs," said Tom Porcelli, an economist at RBC Capital Markets, a reference to the more than 7.3 million laid off during the worst recession since the Great Depression. "The unemployment rate is still going to remain high because of all the people out of work."

As of last month, more than 6.3 million people have been of work for six months or more, making up nearly 42 percent of the unemployed. That's near a record high of 6.76 million set in May.

And those out of work for long periods will find it particularly hard to get back to work, Porcelli said. Employers are less likely to hire the long-term unemployed, in part because many workers' skills deteriorate the longer they are out of work.

Despite months of sluggish hiring, the economy is headed in the right direction. Consumers spent more for the fifth straight month in November, the Commerce Department said. Their incomes rose, too. That was because of stock gains — not pay increases. But any spending increase is a sign of greater confidence in the economy. Affluent shoppers, whose spending carries outsize impact, are spending especially freely.

U.S. businesses, sitting on nearly $2 trillion in cash, are parting with a bit more of it. Companies increased their orders for long-lasting manufactured products, excluding volatile transportation goods, by the sharpest amount in eight months in November. Demand rose for computers, appliances and heavy machinery.

Both consumers and businesses are likely to spend more in the new year now that President Barack Obama has signed a broad package of tax cuts into law. Consumers can bank on a 2 percent cut in payroll taxes. That's another $2,000 a year to a person earning $100,000 a year.

The tax package also gives companies a break if they buy big machinery and other capital goods next year. That will likely spur more business investment, and could lead to more jobs.

"You need someone to operate the new equipment," said Jennifer Lee, an economist at BMO Capital Markets. "Businesses are running their work forces flat out already."

But the economy faces many challenges that could slow the current momentum.

Housing remains a major weight. In November, people bought new homes at a seasonally adjusted annual rate of 290,000 units, the government said. That's less than half the rate that economists consider healthy. And it's barely above the weakest pace in 47 years.

The market for previously owned homes is also struggling. Those are selling at the slowest pace in 13 years.

Meager home sales, along with millions of foreclosures, could dampen home prices further. That would make consumers feel poorer and possibly spend less, restraining economic growth.

Rising oil prices might also hurt the economy. On Thursday, prices rose above $91 a barrel — the highest point in two years. Gas prices have also jumped. That takes money from consumers that they would otherwise use to buy other goods.

And unemployment is likely to remain painfully high for all of next year. Most economists expect it to be near 9 percent by the end of 2011.

The number of people receiving unemployment benefits dropped 103,000 to little more than 4 million in the week ending Dec. 11, the government said. That doesn't include millions of additional laid-off workers who are receiving emergency aid under extended unemployment benefits programs set up during the recession. About 4.7 million people are receiving extended benefits for up to 99 weeks.

All told, about 8.9 million people obtained unemployment benefits during the week of Dec. 4, according to the latest data available. That was about 300,000 fewer people than in the previous week.


Fresh humiliation for eurozone as China says it will bail out debt-ridden nations

  • Portugal's credit rating downgraded by Fitch
Pledge: Chinese Premier Wen Jiabao offered to buy Greek bonds in October and the country has also agreed to buy Portuguese debt

Pledge: Chinese Premier Wen Jiabao offered to buy Greek bonds in October and the country has also agreed to buy out Portuguese debt

China has said it is willing to bail out debt-ridden countries in the euro zone using its $2.7trillion overseas investment fund.

In a fresh humiliation for Europe, Foreign Ministry spokesman Jiang Yu said it was one of the most important areas for China's foreign exchange investments.

The country has already approached struggling European countries with financial aid, including offering to buy Greece's debt in October and promising to buy $4billion of Portuguese government debt.

Today Portugal had its credit rating downgraded by the Fitch Ratings agency amid mounting concerns over the country's ability to raise money in the markets to finance its hefty borrowings.

Fitch said it was reducing its rating on the country's debt by one notch to A+ from AA- and warned that further downgrades may be in the offing by maintaining its negative outlook.

'To have any discernible effect China will have to buy a lot more than 5billion euros if they expect to have any impact on the negative sentiment surrounding Europe,' said Michael Hewson, currency analyst at CMC Markets.

China's astonishing economic growth has put it on track to overtake America as the world's economic powerhouse within two years, a recent report claimed.

But experts believed still be some years before America's leadership role is really challenged - largely because Beijing has given no indication it is ready to take on the responsibility of shepherding the world' economy.

Protest: Strikers carrying placards demonstrate outside the Greek Parliament in Athens. Greece is among a number of EU countries struggling financially

Protest: Strikers carrying placards demonstrate outside the Greek Parliament in Athens. Greece is among a number of EU countries struggling financially

This foray into the future of the euro could be a signal from Beijing that it is ready to change that perception.

The euro rose temporarily on the news of China's support - but was sinking again this morning to a three-week low against the dollar.

The single currency earlier fell to around $1.3050, below its 200-day moving average currently located at $1.3092 on trading platform EBS.

Investors have pushed the euro beneath this key support level for the past three sessions, only to see the currency bounce back later in the day.


China could overtake America as the world’s biggest economy within two years, according to a leading financial think tank.

As growth in the U.S. slows down to a virtual standstill, China’s economy is revving up into double digits, the Conference Board said in a report published today.

In purely dollar terms, it is going to take much longer than two years for China’s $5 trillion economy to match up to the $15 trillion output in the US.

Even if the Chinese can sustain their current growth, it would take another ten years.

But in terms of purchasing power, taking into account the goods and services a country actually buys at home, China is well on its way to outstripping its fading competitor.

Looking even further ahead, the Conference Board predicts China could account for almost one quarter of the global economy in 2020, compared to 15 per cent for the US and 13 per cent for Western Europe.

The board predicted China’s economy should grow 10 per cent this year and 9.6 per cent in 2011, while America’s 2.6 per cent growth in 2010 will sink to 1.2 per cent next year.

Analysts said the euro will likely hold above $1.30 in the coming days, with traders reluctant to place big bets before year-end.

The outlook for the single currency remains shaky, with fresh losses expected into 2011, they added.

The Financial Times reported yesterday that China had offered to take more 'concerted action' to support European financial stabilisation.

It cited unnamed senior European officials after talks with Chinese Vice Premier Wang Qishan.

Portuguese officials have said the government is trying to diversify its debt investor base, with China as a priority.

Finance Minister Fernando Teixeira dos Santos met Chinese Finance Minister Xie Curen and the head of the People's Bank of China during a visit to the country last week.

But it is unclear whether Beijing would be prepared to take on so much fresh exposure to Portugal, after domestic political pressure to invest the country's foreign reserves more carefully.

Chinese investment funds suffered from large, high-profile losses during the global financial crisis.

In October, during a visit to Greece, Chinese Premier Wen Jiabao offered to buy Greek bonds when Athens resumed issuing.

A month later, President Hu Jintao visited Portugal and offered 'concrete measures' to help the weak economy, but stopped short of promising to buy Portuguese bonds.

It is still believed that it will be some years before China actually overtakes the U.S. to become the world's largest economy.

Politicians argue that technology is still behind and much of the country still lives in poverty.

And in another economic measure, output per person, China lags way behind the US.

Last year, the International Monetary Fund calculated gross domestic product per head in the US at $46,000. The GDP breakdown in China was just $4,000 per person.

« Is JPMorgan The Mystery Trader Cornering The World's Copper Market? And Zinc, Aluminum & Nickel? »

The Cerro Verde copper mine in the Atacama desert near Arequipa, Peru.

Source - WSJ

Single Traders Hold 90% Of Total Copper & Aluminum, 50-80% Of Nickel, Zinc At LME

As commodity prices soar to new records, the ability of a few traders to hold huge swaths of the world's stockpiles is coming under scrutiny.

The latest example is in the copper market, where a single trader has reported it owns 80%-90% of the copper sitting in London Metal Exchange warehouses, equal to about half of the world's exchange-registered copper stockpile and worth about $3 billion.

Single traders also own large holdings of other metals. One trader holds as much as 90% of the exchange's aluminum stocks. In the nickel, zinc and aluminum alloy markets, single traders own between 50% and 80% of those metals, and one firm has 40%-50% of the LME's tin stockpiles.

While commodities exchanges scrutinize all holdings to ensure a single player isn't trying to corner the market, and many of the positions are owned by big firms on behalf of clients, the large holdings do result in a concentration of ownership that could skew prices.

At the same time, thousands of new investors are flooding into the commodities markets, either directly or through exchange-traded funds, seeking to take advantage of an expected rise in prices of raw materials as the global economy continues to recover.

While commodities regulators in the U.S. are considering restricting the amount of futures contracts any one trader can hold, they have no jurisdiction over physical holdings.

J.P. Morgan Chase & Co. recently had a large position in copper, though it is unclear whether the U.S. bank increased its holdings or whether a new player has taken a dominant position.

Continue reading at the WSJ...


DB here. The mystery trader is JP Morgan, even though they sheepishly deny the story below, claiming that they don't own more than 90% but declining further comment. They launched the industry's first copper ETF just last month, for which they need to own substantial physical quantities of the metal. Here's some background.

December 4

JP Morgan revealed as trader that bought £1bn of copper on LME

The $1.5bn (£1bn) trade was described in the LME's daily update as "between 50pc and 80pc" of the 350,000 tonnes in reserves. This pushed up the price for the immediate delivery of copper to $8,700 – its highest level since the financial crisis in October 2008.

A source close to the situation said that JP Morgan had bought the copper contracts, adding that amount is closer to the "lower portion of the range" disclosed by the LME.


Back on October 24

JPMorgan Files For Physical Copper ETF


December 14 - The day after the WSJ story

JPMorgan cuts silver short; denies 90 pct copper data

A spokesman for JPMorgan, asked by Reuters to comment on the market talk, said the company did not hold more than 90 percent but declined to comment further.


And you know what they're doing with Silver...

Recent related stories...


« PIMCO: Why The Eurozone Will Ultimately Fail »

Pimco says 'untenable' bailout policies will lead to eurozone break-up.

Source - UK Guardian

By Ambrose Evans-Pritchard

Pimco, the world's largest bond fund, has called on Greece, Ireland and Portugal to step outside the eurozone temporarily and restructure their debts unless the currency bloc agrees to a radical change of course.

Andrew Bosomworth, head of Pimco's portfolio management in Europe, said current policies are untenable in the absence of fiscal union and will lead to a break-up of the euro.

"Greece, Ireland and Portugal cannot get back on their feet without either their own currency or large transfer payments," he told German newspaper Die Welt.

"The euro crisis is not over by a long shot. Market tensions will continue into 2011. The mechanism comes far too late," he said.

"Can countries inside a fixed exchange-rate system like the euro grow and tighten budget policy at the same time? I don't think so. It didn't work in Argentina," Mr Bosomworth said.

"None of the policy responses put in place in Europe since the start of the crisis provides a credible backstop to prevent further contagion," Mr Cailloux said.

"We remain most concerned about an escalation of the sovereign debt crisis hitting larger economies in the euro area. Markets continue to underestimate the potential disruption via financial transmission channels that such an event could trigger."

Continue reading at the UK Guardian...


Why the Eurozone will ultimately fail...

Video - El-Erian on Squawk Box with Joe Kernen - Aired Nov. 30

More European countries will need bailouts until policy makers address the underlying causes of their financial problems, which include too much government debt and not enough spending controls, Pimco's Mohamed El-Erian told CNBC.

More detail on this clip is here...


« Video: The IMF, Global Banksters And You »

Outstanding work. The author sent this our way earlier this week. The Daily Bail gets a plug near the end. Jimmy Rogers and Max Keiser make appearances.

Topics are Ireland and the IMF bailout.


« Christmas In Spain means El Gordo hands out $3 BILLION »

Pupils of Madrid's Saint Ildefonso School sing out the number of the top prize of Spain's Christmas lottery, where $3 billion was handed out today.

Video, links and a very funny TV commercial from Spain promoting El Gordo.


Source - AP

MADRID – Spain's beloved Christmas lottery sprinkled 2.3 billion euros ($3 billion) in holiday cheer across the country Wednesday, handing out winnings eagerly welcomed by a nation facing 20 percent unemployment.

One of the most awaited days of the year in Spain served up merry moments for people struggling to make mortgage payments and pay bills, or those seeking jobs. One lottery vendor said he had hired a medium to lure good luck.

The government-run lottery billed as the world's richest has no single jackpot but operates a complex share-the-wealth system in which thousands of five-digit numbers running from 00000 to 84999 win at least something. It is known as El Gordo - the fat one - and dates back to 1812.

Tax-free winnings range from the face value of a 20-euro ($26.31) ticket — in other words, you get your money back — to a top prize of 300,000 euros ($394,650).

The sweepstakes, which goes on for three hours, informally ushers in the Christmas season. Many Spaniards spend the day glued to TV sets, radios and computers, waiting to see if they are among the lucky. People often team up to buy shares of tickets sold by bars, sports clubs and business offices.

One bar in Palleja, a town near Barcelona, sold 600 of the top-prize tickets — that top-fetching number was 79250 — worth a cool 180 million euros ($236.8 million). Its owner, Jose Antonio Maldonado, was ecstatic over being able to help people in need during hard economic times. He sprayed a bottle of sparkling white wine in the air as a jubilant crowd roared.

"I know a lot of people who are drowning in the economic crisis and who bought a ticket in my bar. I feel like Robin Hood," he said. "In my entire life I have never cried as much as I did this morning."

Continue reading...


This was a huge viral hit in Spain...

They call him Pancho - El Gordo TV ad from 2009...


Today's drawing...

The kids start singing at the 40 second mark...


'China cash patch too little, too late to stop Euro downward spiral'

Lawless Police State

As we police the world and become more of a police state each day, basic police functions are being neglected here at home. In Detroit, seven out of ten murders are unsolved. In Oakland, the police will no longer respond to a host of crimes, including burglary, theft, embezzlement and extortion. The problem is mostly manpower. Atlantic City has axed 60 cops this year, on top of 13 who retired without being replaced. Last year, Camden was rated as the second most dangerous city in America. Two years ago, the most deadly. Faced with this, Camden is about to lay off half of its cops. Flint, MI, has also fired nearly half of its police. Its murder rate is at record high. In Illinois, more than 300 policemen have been let go in 2010.

With unemployment getting higher and higher, there will be less tax revenues, meaning more cops will be laid off even as crime rises. In Newark, 167 cops have been let go. With more murders and carjackings, the National Guard has been proposed as a solution, yes, the same National Guard that occupied Newark’s streets with tanks during the 1967 riot, where 26 people were killed and 725 injured.
In Camden, Guardian Angels have shown up. In Oakland, there are private security guards patrolling downtown. Called “Ambassadors,” quaintly enough, they are unarmed, for now. Gun packing security guards are already all over America, however, though usually confined to private properties. Expect this to change. (In England, even bona fide cops are not armed as they patrol the streets!) After Hurricane Katrina, the Department of Homeland Security hired 150 Blackwater mercenaries to roam New Orleans. Wielding assault weapons, many were fresh from the mayhem of Iraq.

Recently, I was in Newark’s Ironbound, a working class neighborhood of mostly Portuguese, Brazilian and Latin American immigrants. Wandering around, I paused in front of a cartoon rooster towing a Volkswagen. Was this some weird allegory of our power-down future? A diss against the car? Against Hitler? A 40-ish man, Jose, appeared to explain that pollo al carbon, grilled chicken, has become Karpollo, the name of his restaurant. Thus, a chicken pulling a car. Jose has been in that location three years. So how’s business, I asked. Not too bad, Jose said, though he had expected it to be much better. Many people in the Ironbound do construction work, so they’re seriously hurting. A few years ago, a man could easily make $900 a week. Now they’re losing homes and apartments. Many have moved out. With fewer jobs and cops, crime has gone up even here, for long one of the safer parts of Newark. “Just a week ago,” Jose pointed down the street, “a guy was carjacked with a gun, right at that corner!”

Jobless, you can always sign up for flag-waving genocide and foddership. Granted, the starting pay isn’t all that great, but it sure beats McDonald’s. Plus, you’ll get grub, fox holes and trauma care au gratis. Discharged in pieces, you’d be done, but if you could come back sorta whole, you may luck into a well-armed job patrolling the good old USA and terrorize all these home-bound slobs, whether muggers, pickpockets or protestors, desperate and often angry folks, you know, just like you.
If only we could stop maintaining hundreds of military bases overseas, we could save trillions and have money to fix problems back home, but Big Brother needs his corruption and his wars, so in the meantime, America’s biggest export to China, our largest trading partner, is, guess what, soybeans! Our biggest imports from them are electrical machinery and computers. I should add that airplanes are our second largest export to the Chinese, so we’re not quite a banana republic, not yet, merely a tofu one.

In this gun and tofu economy, returning vets can also join gangs, or rejoin the ones they were already in. According to a 2007 report, “Gang-Related Activity in the US Armed Forces Increasing,” nearly all the major American street gangs are represented in our military. Gang members enlist to learn urban warfare tactics, steal weapons, sell drugs or recruit new members. After years of fighting two major wars, it’s hard to make recruiting quotas, I’m sure. Judges have also offered convicted gang members the option of joining the military instead of going to jail.

Enlist, gangbanger, and be part of the biggest gang of all! The Army of One recruiting slogan is obviously nonsense, except for Bradley Manning. A gay man, he’s the lone warrior against the Pentagon. Here’s hoping he doesn’t crack. A civil rights victory, the don’t ask, don’t tell repeal will nevertheless provide more bodies for the U.S. killing machine. I’m reminded of Edward Bernays’ devious scheme to get more women to smoke. Posing as suffragettes, fashionably dressed, svelte young ladies were told to lift “torches of freedom” from under their dresses, then puff them for the cameras.

Everywhere you look, there are smoking guns. Whether in Kandahar, Fallujah or Salinas, California, all these well-trained, well-armed men shooting at each other from all directions are a ka-ching nirvana for our military industrial complex. The more mass murders, the happier the CEOs and investors. As for collateral damages, well, better luck next life, dudes! If we don’t starve the Pentagon, carnage will be our last growth industry.

Linh Dinh is the author of two books of stories and five of poems, and a just released novel, Love Like Hate. He's tracking our deteriorating socialscape through his frequently updated photo blog, State of the Union. Read other articles by Linh.

Pension Checks Stopped in Alabama City

The pension fund of Prichard, Alabama has run dry. It only impacts a small number of retired town workers, but it provides a hint at what might happen on a larger scale when some biggies run out of dollars.

NYT provides a blow-by-blow of what's going down in Prichard:

This struggling small city on the outskirts of Mobile was warned for years that if it did nothing, its pension fund would run out of money by 2009. Right on schedule, its fund ran dry.

Then Prichard did something that pension experts say they have never seen before: it stopped sending monthly pension checks to its 150 retired workers, breaking a state law requiring it to pay its promised retirement benefits in full.
Since then, Nettie Banks, 68, a retired Prichard police and fire dispatcher, has filed for bankruptcy. Alfred Arnold, a 66-year-old retired fire captain, has gone back to work as a shopping mall security guard to try to keep his house...

Far worse was the retired fire marshal who died in June. Like many of the others, he was too young to collect Social Security. “When they found him, he had no electricity and no running water in his house,” said David Anders, 58, a retired district fire chief. “He was a proud enough man that he wouldn’t accept help.”

The situation in Prichard is extremely unusual — the city has sought bankruptcy protection twice — but it proves that the unthinkable can, in fact, sometimes happen. And it stands as a warning to cities like Philadelphia and states like Illinois, whose pension funds are under great strain: if nothing changes, the money eventually does run out, and when that happens, misery and turmoil follow...
“Prichard is the future,” said Michael Aguirre, the former San Diego city attorney, who has called for San Diego to declare bankruptcy and restructure its own outsize pension obligations. “We’re all on the same conveyor belt. Prichard is just a little further down the road.”...Last week several dozen retirees — one using a wheelchair, some with canes — attended the weekly City Council meeting, asking for something before Christmas. Mary Berg, 61, a former assistant city clerk whose mother was once the city’s zookeeper, read them the names of 11 retirees who had died since the checks stopped coming.

“I hope that on Christmas morning, when you are with your families around your Christmas trees, that you remember that most of the retirees will not be opening presents with their families,” she told them.

The budget did not move forward. Mayor Davis was out of town.

“Merry Christmas!” shouted a man from the back row of the folding chairs. The retirees filed out. One woman could not hold back her tears.
When the crisis gets to the biggies, they will probably print money, which of course will result in price inflation, and result in pensioners across the country with less buying power than they ever could have imagined. In other words, it will eventually impact us all.

How the Fed let small banks take on too much debt, then fail

Greg Gordon and Kevin G. Hall
McClatchy Newspapers

WASHINGTON — The Federal Reserve Board, chastised for regulatory inaction that contributed to the subprime mortgage meltdown, also missed a chance to prevent much of the financial chaos ravaging hundreds of small- and mid-sized banks.

In early 2005, at a time when the housing market was overheated and economic danger signs were in the air, the Fed had an opportunity to put a damper on risk taking among banks, especially those that had long been bedrocks of smaller cities and towns across the nation.

But the Fed rejected calls from one of the nation's top banking regulators, a professional accounting board and the Fed's own staff for curbs on the banks' use of special debt securities to raise capital that was allowing them to mushroom in size.

Then-Chairman Alan Greenspan and the other six Fed governors voted unanimously to reaffirm a nine-year-old rule allowing liberal use of what are called trust-preferred securities.

This was like a magic bullet for community banks that had few ways to raise capital without issuing more common stock and diluting their share price. The Fed allowed the banks to count the securities as debt, even while counting the proceeds as reserves. Banks were then free to borrow and lend in amounts 10 times or more than the value of the securities being issued.

The Fed supervised about 1,400 bank-holding companies, the bulk of them parent companies of community banks.

Data emerging from the carnage of collapsed and teetering banks leaves little doubt that the Fed rule, and regulators' failure to adequately police the issuance of these securities, created big cracks to the already shaky foundations of the nation's banking system.

Read Full Article

Census: Fast Growth in States With No Income Tax

Michael Barone
The Washington Examiner

For those of us who are demographic buffs, Christmas came four days early when Census Bureau director Robert Groves announced on Tuesday the first results of the 2010 census and the reapportionment of House seats (and therefore electoral votes) among the states.

The resident population of the United States, he told us in a webcast, was 308,745,538. That's an increase of 9.7 percent from the 281,421,906 in the 2000 census -- the smallest proportional increase than in any decade other than the Depression 1930s but a pretty robust increase for an advanced nation.

It's hard to get a grasp on such large numbers. So let me share a few observations on what they mean.

First, the great engine of growth in America is not the Northeast Megalopolis, which was growing faster than average in the mid-20th century, or California, which grew lustily in the succeeding half-century. It is Texas.

Its population grew 21 percent in the past decade, from nearly 21 million to more than 25 million. That was more rapid growth than in any states except for four much smaller ones (Nevada, Arizona, Utah and Idaho).

Texas' diversified economy, business-friendly regulations and low taxes have attracted not only immigrants but substantial inflow from the other 49 states. As a result, the 2010 reapportionment gives Texas four additional House seats. In contrast, California gets no new House seats, for the first time since it was admitted to the Union in 1850.

There's a similar lesson in the fact that Florida gains two seats in the reapportionment and New York loses two.

This leads to a second point, which is that growth tends to be stronger where taxes are lower. Seven of the nine states that do not levy an income tax grew faster than the national average. The other two, South Dakota and New Hampshire, had the fastest growth in their regions, the Midwest and New England.

Altogether, 35 percent of the nation's total population growth occurred in these nine non-taxing states, which accounted for just 19 percent of total population at the beginning of the decade.

Read Full Article

UK flood defence cuts leave 5m vulnerable homes 'at risk'

Funding for flood defences could be a 'classic example' of a false economy, says report

Flooding in Cornwall
St Blazey, Cornwall where flooding this month closed the village off and caused havoc. Photograph: Ben Birchall/PA

The government's cuts to the UK's flood defence budgets risk leaving the country's 5m at-risk homes less protected and the poorest communities losing out to richer areas, according to a critical report by MPs.

"Urgent action is needed to ensure that our communities are adequately and effectively protected from flooding," said Anne McIntosh, a Conservative MP and chair of the Environment, Food and Rural affairs select committee.

The increased risk of flooding, such as the floods that swamped homes in Cornwall last month, is due to climate change. Under the last government, spending on flood defences rose 33% in the four years to 2010/1. But the coalition government cut flood-defence spending in the comprehensive spending review.

"Simply to maintain the current level of protection in the face of increasing flood risks requires increased investment and the significant CSR cuts will increase concerns that funding on flood defences remains inadequate," the committee's report concluded, noting the cuts could be a "classic example" of a false economy.

McIntosh said the biggest challenge was whether local authorities would have sufficient money to protect their communities from flooding when the responsibility is passed to them on 1 April next year. Defra and the Department for Communities and Local Government suffered the largest budget cuts in Whitehall. "It's all very well for the government to say we're not ringfencing [local spending], but how do we know they are going to have the money for flood defences," said McIntosh.

Responding to the report, the environment minister Richard Benyon said: "The reality is that central government cannot foot the entire bill for flood defences. We are consulting on a fairer way of allocating funding for flood defences, and by allowing local and private contributions, we can pool resources and make sure projects that local communities want go ahead, and which otherwise wouldn't have happened at all."

But Jamie Reed, the shadow floods minister, said: "The report clearly vindicates our concerns that the level of cuts proposed by the government will leave many communities exposed and vulnerable to flooding. The committee has exposed the risk that the government is taking and how poorer communities will suffer the hardest."

McIntosh said new types of funding needed to be investigated, such as asking developers to contribute to works that benefited them. But the report said: "It is by no means certain that any shortfall in public funding can yet be made up by private contributions." It also said government plans to allow communities to pay part of the cost of flood defences that would not otherwise be funded failed to explain how poorer communities would not be disadvantaged. "It could be deemed to be unfair," said McIntosh. "What we are asking for is clear principles to be agreed to secure funding from all sources to meet the government's flood defences."

There were also concerns about the impact of other Defra cuts, said McIntosh, such as the proposed sell-off of Forestry Commission land , because forests are important in flood prevention. But she added that other projects could be important, including the creation of new bogs in upland areas which could store water. McIntosh represents the flood-prone constituency of Thirsk and Malton in north Yorkshire.

Last night the Met Office said there was a risk of flooding when the current cold spell ends and snow and ice thaws, but that it would depend how quickly temperatures rose and whether it also rained.

The availability of flood insurance has been a serious issue and the last government agreed a "statement of principles" with the insurance industry for universal coverage in return for rising spending on flood defences, which is now not happening. The report says the government must "urgently" reach a new agreement.

The prime minister and the environment secretary, Caroline Spelman, were previously accused of spinning the scale of the cuts, with David Cameron calling the budgets "roughly the same" as before. Spelman then had to clarify the changes were an 8% cut if the previous four years were compared with the next four years. The Environment Agency chair, Lord Chris Smith, and the National Floods Forum, which represents 200 local action groups, used the most recent year as a baseline, making the cuts roughly 25%, or £616m over four years.

16 Shocking Facts About The Student Loan Debt Bubble And The Great College Education Scam

As you read this, there are over 18 million students enrolled at the nearly 5,000 colleges and universities currently in operation across the United States. Many of these institutions of higher learning are now charging $20,000, $30,000 or even $40,000 a year for tuition and fees. That does not even count living expenses. Today it is 400% more expensive to go to college in the United States than it was just 30 years ago. Most of these 18 million students have been told over and over that a "higher education" is the key to getting a good job and living the American Dream. They have been told not to worry about how much it costs and that there is plenty of financial aid (mostly made up of loans) available. Now our economy is facing the biggest student loan debt bubble in the history of the world, and when our new college graduates enter the "real world" they are finding out that the good jobs they were promised are very few and far between. As millions of Americans wake up and start realizing that the tens of thousands of dollars that they have poured into their college educations was mostly a waste, will the great college education scam finally be exposed?

For now, the system continues to push the notion that a college education is the key to a good future and that there is plenty of "financial aid" out there for everyone that wants to go to college.
Recently, U.S. Secretary of Education Arne Duncan visited students at T.C. Williams High School in Alexandria, Virginia and encouraged them to load up on college loans....
"Please apply for our financial aid. We want to give you money. There’s lots of money out there for you."
So where will Arne Duncan be when those students find themselves locked into decades of absolutely suffocating student loan debt repayments?
What young high school students are never told is that not even bankruptcy can get you out of student loan debt. It will stay with you forever until you finally pay it off.
Today each new crop of optimistic college graduates quickly discovers that there are simply not nearly enough jobs for all of them. Thousands upon thousands of them end up waiting tables or stocking the shelves at retail stores. Many of them end up deeply bitter as they find themselves barely able to survive and yet saddled with tens of thousands of dollars in student loan debt that nobody ever warned them about.

Sadly, the quality of the education that most of these college students is receiving is a complete and total joke.
Take it from someone that has graduated from a couple of very highly respected institutions. I have an undergraduate degree, a law degree and another degree on top of that, so I know what I am talking about. Higher education in America has become so dumbed-down that the family dog could literally pass most college courses.
It is an absolute joke. The vast majority of college students in America spend two to four hours a day in the classroom and maybe an hour or two outside the classroom studying. The remainder of the time these "students" are out drinking beer, partying, chasing after sex partners, going to sporting events, playing video games, hanging out with friends, chatting on Facebook or getting into trouble. When they say that college is the most fun that most people will ever have in their lives they mean it. It is basically one huge party.

Of the little "education" that actually does go on, so much of it is so dedicated to pushing various social engineering agendas that it makes the whole process virtually worthless. Most parents would be absolutely shocked if they could actually see the kind of "indoctrination" that goes on inside U.S. college classrooms today.
A college education can be worth it for those in very highly technical or very highly scientific fields, or for those wanting to enter one of the very few fields that is still very financially lucrative, but for nearly everyone else it is just one big money-making scam.
Oh, but you parents please keep breaking your backs to put money into the college funds of your children so that they can be spoon-fed establishment propaganda all day and party like wild animals all night for four years.
It really is a huge scam. I was there. I saw it with my own eyes.
But if you will not believe me, perhaps you will believe some cold, hard statistics. The following are 16 shocking facts about the student loan debt bubble and the great college education scam....

#1 Americans now owe more than $875 billion on student loans, which is more than the total amount that Americans owe on their credit cards.
#2 Since 1982, the cost of medical care in the United States has gone up over 200%, which is horrific, but that is nothing compared to the cost of college tuition which has gone up by more than 400%.
#3 The typical U.S. college student spends less than 30 hours a week on academics.

#4 The unemployment rate for college graduates under the age of 25 is over 9 percent.
#5 There are about two million recent college graduates that are currently unemployed.
#6 Approximately two-thirds of all college students graduate with student loans.

#7 In the United States today, 317,000 waiters and waitresses have college degrees.
#8 The Project on Student Debt estimates that 206,000 Americans graduated from college with more than $40,000 in student loan debt during 2008.
#9 In the United States today, 24.5 percent of all retail salespersons have a college degree.

#10 Total student loan debt in the United States is now increasing at a rate of approximately $2,853.88 per second.
#11 There are 365,000 cashiers in the United States today that have college degrees.
#12 Starting salaries for college graduates across the United States are down in 2010.

#13 In 1992, there were 5.1 million "underemployed" college graduates in the United States. In 2008, there were 17 million "underemployed" college graduates in the United States.
#14 In the United States today, over 18,000 parking lot attendants have college degrees.
#15 Federal statistics reveal that only 36 percent of the full-time students who began college in 2001 received a bachelor's degree within four years.

#16 According to a recent survey by Twentysomething Inc., a staggering 85 percent of college seniors planned to move back home after graduation last May.

For sale: all of our forests. Not some of them, nor most of them – the whole lot

Tories have never been treehuggers, but their plans to sell off all state-owned forests are unwarranted, unwanted and unworkable

british woodland
All England's forests could be sold off to private corporations under coalition plans to offer them an easy – and legal – land-grab. Photograph: Alamy

We now know, thanks to the junior environment minister Jim Paice's frank evidence to a recent House of Lords select committee, that the government is considering the sale of not just "some", or even "substantial", amounts of woodland as the public was originally led to believe, but of all state-owned English trees across the commission's 635,000-acre Forestry Commission estate. This includes many royal forests, state-owned ancient woodlands, sites of special scientific interest, heathland, campsites, farms and sporting estates.

Here is Paice is in front of the House of Lords select committee:

Part of our policy is clearly established: we wish to proceed with very substantial disposal of public forest estate, which could go to the extent of all of it…

Paice also accepts that foreign companies might want to buy up the trees, and that foreign-owned energy companies might want to cut the whole lot down for renewable energy. This is clearly not going to be received well in the Tory shires, where the trees mostly are.

I have worries about two or three potential aspects of disposal, which we are looking at very carefully. Foreign purchases are one, although I do not think that they are automatically necessarily bad. Indeed, we could not prevent them under EU law. I am much more concerned about the possibility of established forest being bought by energy companies who would proceed to chip it all for energy recovery.

So if not the energy companies, who does that leave to buy the trees? Major charities like the Woodland Trust and the National Trust, who may be tapped up to buy chunks of the estate on the cheap as "preferred bidder", are not exactly beating on the commission's door; very few communities have the means to buy even 30 acres of woodland, let alone maintain it, and the idea that the "big society" can raise £2bn – the rough cost of buying the commission's 635,000 acres – is bizarre.

The answer clearly is that the government expects developers to step in to exploit the land for whatever profit they can.

But the opposition is mounting. By last night more than 98,500 people had registered their opposition to the sale with the group 38 degrees and more are joining the many local forest protection movements springing up as word spreads and people realise what is at stake. Many people want to protect access to "their" public woodland which is now at risk and they pose a real political threat to local Tory and LibDem MPs who never mentioned any of this in their separate or joint manifesto.

Opposition is particularly intense around the Forest of Dean, where the Tory MP and junior minister for consitutional reform Mark Harper presides over a small – 2,500 – majority, and who must must be sweating already. Former sustainable development commission chair Jonathon Porritt this week warned Harper of the folly of supporting privatisation of the local – or indeed of any – forest:

"When [Harper's predecessor] Paul Marland supported an earlier attempt by a Conservative government to sell off the forest estate in the 1980s, he was quickly persuaded as to the error of his ways. I'm sure Marland's words will be resonating with Harper today:
'I regard the possible sale of the Royal Forest of Dean and other Crown Forests to faceless investors as a national disaster. The Royal Forest of Dean is steeped in ancient history and tradition. Today's Forester is of the same independent mind and rugged character as were his forefathers. It is our duty to preserve his ancient rights and traditions.'"

Porritt also makes the good point that it is not the trees that the government wants to sell. The Forest of Dean has coal, and other resources. Other Forestry Commission land could be used for windfarms, holiday villages, the routes for new roads and so on.

And if the private sector can run the forests profitably, could it not also oversee the rivers and even the national parks?

The sale is clearly ideologically-driven, a statement that the private sector – traditionally the large landowner, but now the corporation – should maintain the environment.

As such, we should see the sale as further evidence of the dismemberment of conservation in England, the approach that has marked environmental stewardship in Britain and most European countries for the last 60 years.

US College is just another money-maker for the banks. Push is for selling loans, not teaching.

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The Flood Crisis in California’s Central Valley

California flood officials watched with dismay the destruction and despair created by Hurricane
Katrina, knowing that a myriad of such tragedies could easily come to California. While California does not generally suffer hurricanes, it receives significant precipitation and runoff from
warm winter storms. In fact, the odds of a catastrophic flood were higher in California because the levels of protection provided by most of its levees are much lower than those associated with the levees that protected New Orleans.
Last year, California’s Department of Water Resources (CDWR) released “Flood Warnings: Responding to the Flood Crisis in California.” This white paper was mandated by the California
Legislature to document challenges associated with a deteriorating levee system in the state’s Central Valley and outline possible solutions. Among the findings was that California’s Central
Valley flood control system is not only deteriorating, but in many places is literally washing away. At the same time, California’s growing population is pushing new housing developments and job centers into the floodplains of the Central Valley. Flood control funding cuts at many levels of government combined with increasing liabilities have created a ticking time bomb for
flood management in California. The Early Days Rimmed on the east by the Sierra Nevada and on the west by the Coast Range, California’s Central Valley is basically a large bowl collecting most of the state’s rainfall. Prior to the development of the West, the valley periodically would become a huge inland sea when valley flood waters overflowed their banks and spread across the floodplains. As farmers began moving into the Central Valley floodplains in the early to mid-1800s, they constructed small dikes or levees to provide some protection against flooding and reclaim the land for agricultural development. Soon, communities such as Sacramento, Marysville, and Stockton sprang up along the rivers. Limited flood control efforts failed to provide much protection and many communities and surrounding lands were repeatedly
flooded. Mining activity in the mountains worsened the situation by filling many river channels with so much silt and sand that navigation and flood carrying capacity were severely impacted.
In the late 1800s a system of new levees, weirs, and bypass channels was proposed. The federal government agreed in the early 1900s to lead efforts to construct flood control projects in the Central Valley, and a California State Reclamation Board was formed as the local sponsor.
The board provided land, easements, rights-of-way and, in some cases, a local cost share. It also agreed to accept ownership of the projects completed by the U.S. Army Corps of Engineers, maintain the system, and hold the federal government harmless. Much of the levee system was later turned over to local reclamation districts to maintain.

California's Budget Cuts Raise Flood Risk, Report Says.

By Stuart Leavenworth, The Sacramento Bee, Calif. Knight Ridder/Tribune Business News

Nov. 22--Sacramento and much of California faces an increased risk of catastrophic flooding because state budget cuts have slowed repairs of flood control structures and reduced staff needed for an emergency, according to a state report obtained by The Bee.

"The budget cuts significantly increase public safety risk and the state's liability exposure," says the Department of Water Resources report, which will be reviewed by the state Reclamation Board at a meeting today

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Bloomberg Files Lawsuit Against European Central Bank

Bloomberg LP, the parent of Bloomberg News, filed a lawsuit Wednesday that asks the European Union’s General Court in Luxembourg to overturn a decision by the European Central Bank not to disclose documents that show how Greece used derivatives to hide its fiscal deficit.

Bloomberg editor in chief Matthew Winkler appeared on Bloomberg Television on Wednesday to talk about the suit. Winkler said, “It’s very straight forward. We are seeking full disclosure of documents that show how Greece was able to finance itself into a predicament that became the European debt crisis as we know it. It’s entirely to the benefit of all the members of the EU, all of the citizens, all the taxpayers and for sure the financial markets. Transparency is something that has a way of enlightening perspective.”

Winkler also commented on the derivatives Bloomberg is seeking more information on: “In this case, very complicated, intricate financing techniques were deployed to essentially enable Greece to put off consistently any kind of transparent reckoning of its indebtedness. That’s really at the heart of this case and that’s really why we are seeking these documents.”

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