Thursday, January 20, 2011

China Restores Soviet Aircraft Carrier: Expert

BEIJING - China has nearly finished restoring an old Soviet aircraft carrier bought in 1998, which will be used for training and as a model for a future indigenously built ship, an expert said Jan. 19.

The Varyag, a Kuznetsov-class carrier, was originally built for the Soviet navy, but construction was interrupted by the collapse of the Soviet Union in 1991.

Its immense armored hull, with no engine, electrics or propeller, was bought by China in 1998 and towed from Ukraine's Black Sea coast to China.

"They have fixed the inside at 100 percent," said Andrei Chang, head of the Kanwa Information Centre, which monitors China's military.

According to Chang, the renovation process has included fixing the boilers, electricity, electronic systems, living quarters and engines. The hull and deck of the ship have also been refurbished, other experts have said.

China has never officially announced it was renovating the 990-foot long aircraft carrier.

The carrier, currently based in the northeast port of Dalian, could make its first sea trip "very soon," Chang told AFP, adding the refurbishment of the ship had taken place "at unexpected speed."

But he said the ship's radars still needed work, and the fighter planes that will train on the carrier are still being tested.

The refurbished ship will be used as a model for China's first indigenously built aircraft carrier, which, unlike the Varyag, will be nuclear-powered. Construction on this ship could start soon, he said.

The modernization of China's army has caused concern abroad.

Last week, the Chinese military sent its first stealth fighter - the J-20 - into the skies, just as U.S. Defense Secretary Robert Gates was in Beijing to patch up frayed defense ties.

Around the same time, Adm. Mike Mullen, head of the U.S. Joint Chiefs of Staff, warned that China's new weapons program, including the J-20, appeared to be directed against the United States.

The PLA - the largest army in the world - is hugely secretive about its defense programs, which benefit from a big military budget boosted by the nation's runaway economic growth.

China made trains may run on UK rail in 2012

China CNR Corp and CSR Corp, the nation's two largest trainmakers, surged by the daily limit in Shanghai trading after the South China Morning Post said that the companies were close to winning their first UK orders.

CNR jumped 10 percent to 8.77 yuan ($1.33), while CSR rose by the same amount to 8.66 yuan on Wednesday.

The trainmakers are in final negotiations for four deals worth 500 million pounds ($800 million), including a 200 million pounds contract with Alliance Rail Holdings Ltd, the Hong Kong-based newspaper said, citing the trainmakers' European representative and Alliance. The contracts would be the first for Chinese trainmakers in Western Europe, it said.

"This would help increase their global market share as CNR and CSR seek to expand outside China," said Han Weiqi, an analyst at CSC International Holdings Ltd in Shanghai.

CSR is also set to sign letters of intent for ventures with General Electric Co (GE) this week as China President Hu Jintao visits the United States. The deals may bring in $1.4 billion and add or preserve 2,000 US jobs, including an order for 500 exported locomotive kits and related services valued at $350 million, GE Transportation Chief Executive Officer Lorenzo Simonelli said in an interview.

Chinese trains may enter service in Western Europe in 2012, David Shipley, managing director of CSRE Ltd, the European partner of CSR and CNR, said in the South China Morning Post report. Deals may hinge on winning financing from Chinese banks, he said.

Alliance is in talks to lease 17 Polaris trains from CSR, the report said, citing Managing Director Ian Yeowart. The rail company plans to offer services between northern England and London from 2013, according to its website.

The Polaris train deal is pending approval from the UK rail regulator and from Alliance backer Arriva Group, a unit of Deutsche Bahn AG, according to the South China Morning Post report.

Shipley declined to comment on the other three possible UK deals, according to the report.

Source: China Daily/Agencies

Hu, Obama set new tone for relations

Chinese President Hu Jintao shakes hands with U.S. President Barack Obama during a bilateral meeting at the White House in Washington, the United States, Jan. 19, 2011. (Xinhua/Lan Hongguang)

Presidents of China and the U.S. pledged to increase cooperation between the world's two major powers, as they both believe the countries have enormous stake in each other's success.

Although differences remain between Washington and Beijing, President Hu Jintao and President Barack Obama said that they ought to nurture better relations, for the benefit of a stable and secure world.

Speaking at a welcome ceremony at the White House Wednesday, President Hu said it is China's hope to usher for a new chapter "in cooperation as partners" with the United States, as the two countries "share broad common interests and important common responsibilities."

With his eyes on re-election in 2012, President Obama is keen to fortify an anemic economic recovery at home. He repeatedly mentioned the touchy economic issues, saying at least twice that China's currency is "undervalued" and that bilateral trade ought to be conducted on a level playing field. Obama's top advisors have called on China to quicken currency appreciation, in their belief that a weaker U.S. dollar and a stronger Chinese yuan aid U.S. exports to China, the world's major market.

President Hu told a news conference that China's development benefits all, including the United States.

Chinese economists are already unhappy with U.S. Federal Reserve's excessive monetary easing policy, particularly the so-called "quantitative easing" policy, which has weakened U.S. dollar, leading to commodity price rises across-the-board and elevated inflation in the emerging economies, including China.

On a cold Wednesday morning, President Obama welcomed President Hu to the White House with an elaborate color-guard ceremony that included a colonial fife and drum band and a 21-gun salute.

The White House announced shortly after the welcome ceremony that the China's government had agreed to buy 200 airplanes from Boeing in a $19 billion deal, and multi-billion-dollar joint project to develop new energies.

"China and the U.S. should respected each other's choice of development path, and each other's core interests, " Hu said.

President Hu used his remarks to call for the United States and China to "adopt a long-term perspective, seek common ground while reserving differences and work together to achieve sustained, sound and steady development of our relations."

However, Obama sought to re-emphasize American views of human rights. "History shows that societies are more harmonious, nations are more successful and the world is more just, when the rights and responsibilities of all nations and all people are upheld, including the universal rights of every human being."

On Wednesday, as Obama escorted Hu around the South Lawn for the customary reviewing of troops, they stopped to shake the hands of a small crowd of schoolchildren — including President Obama's 9-year-old daughter, Sasha — who were waving tiny American and Chinese flags.

Obama began his remarks to reporters Wednesday by harking back to the visit of another Chinese leader, Mr. Deng Xiaoping, in the winter of 1979, when President Jimmy Carter was in the White House, and the two countries engaged in what Obama called "the historic normalization" of relations.

"What Deng Xiaoping said long ago remains true today: There are still great possibilities for cooperation between our two countries," Obama said.

"The 30 years since (Deng's visit) has been a time of growing exchanges and understanding," Obama said. "With this visit, we can lay the foundation for the next 30 years."

Obama touted U.S.-China relations: "We have an enormous stake in each other's success."

"We want to sell you all kinds of stuff," Obama said to his Chinese guests, prompting laughter. "We want to sell you planes. We want to sell you cars. We want to sell you software." He also made clear: "I absolutely believe that China's peaceful rise is good for the world and it's good for America."

Heavy snow wrecks havoc in SW China

Heavy snow that began falling in southwest China Tuesday night has disrupted traffic, shut airports and collapsed train station shelters, and freezing weather has left thousands of homes without tap water in Chongqing.

In the hardest-hit Guizhou Province, the Guiyang Longdongbao International Airport in the capital Guiyang was forced to shut from Tuesday night to Wednesday noon.

At the Guiyang Train Station, two people were hospitalized when the station's shelter collapsed under the weight of snow early Wednesday morning.

Neither of them were seriously hurt and one of them has been discharged from hospital, said the train station spokesman.

More snow is expected in Guizhou Thursday, according to the provincial Meteorological Observatory.

In the neighboring Chongqing Municipality, more than 10,000 people in Qianjiang District have been out of tap water since Monday afternoon as freezing temperatures have caused water meters and pipelines to break.

Repairmen are working round the clock to fix the facilities.

More than 800 vehicles over a length of 10 km were stranded on ice-coated Guiyang-Xinzhai Expressway Wednesday morning, according to the traffic police.

Snow and sleet has struck five provincial level localities, including Hunan, Guangxi, Chongqing, Guizhou and Yunnan since Monday.

The Ministry of Civil Affairs Wednesday distributed 10,000 cotton-patted quilts and 10,000 cotton-patted coats to Yunnan province.

Two sections along the expressway in Yunnan Province were cut off traffic, and traffic along expressways in Guizhou and Hunan provinces were also slowed down due to slippery roads as of 18:00 p.m. Beijing time, according to the Ministry of Public Security.

The Ministry of Public Security Wednesday held a tele-conference, urging police in the hard-hit areas to go all out to prevent major traffic accidents and long-time traffic clog.

U.S. dollar falls to eight week low versus euro

NEW YORK (MarketWatch) — The U.S. dollar lost ground Wednesday, helping the euro touch its highest level in two months, as investors became more comfortable with Europe’s debt situation and looked forward to economic data from China.

China is expected to release gross-domestic-product data Thursday, analysts said. Also, a news report from Hong Kong-based Phoenix Television said Chinese consumer prices rose at a 4.6% annual rate in December, cooling from a 5.1% pace in November.

Despite a seeming lack of other contributing factors, “the pro-risk mood is in full force and key technical breaks are happening across the board,” said Kit Juckes, head of forex strategy at Societe Generale.

“All concerns regarding EMU [Europe’s Economic and Monetary Union], inflation in emerging markets and particularly China are forgotten,” while the heightened sentiment toward risk threatens to overwhelm the bullish trading seen recently in the dollar, he said.

Chinese President Hu Jintao recently questioned the dollar’s reserve currency role in an interview before his official visit to the U.S. Hu, among other things, is scheduled to hold a joint news conference with U.S. President Barack Obama. Read more on Chinese President Hu’s visit to Washington.

Also Wednesday, data showed that December housing starts slowed more than expected, but permits jumped more than forecast. Read more on U.S. housing starts.

“Mixed U.S. housing-market data and a stronger [Chinese yuan] during the Sino-U.S. talks will probably allow for a slightly weaker U.S. dollar, as long as investors maintain their calm regarding euro-zone debt woes,” wrote strategists at UniCredit Bank in Milan.

Continue reading at Marketwatch...


I hesitate to post this clip, but it's damn funny...

Video - It's either the greatest thing ever, or you'll be offended...

Mature content and profanity warning. This clip is for adults only.


Lyrics and another clip are here...


Chinese Leader Disingenuous About Tibetan Issues, Improving Human Rights

OKLAHOMA CITY – As President Obama grovels before Chinese President Hu Jintao this week during the (to quote Sen. Harry Reid) dictator’s U.S. visit, the Communist Chinese government continues to crackdown on dissidents, Tibetan activists and anyone who gets in the way of Chinese dominance in the world.

We here in the U.S., those who care about a free Tibet and human rights for all are saddened by Obama’s weak stances in the face of tyrants like China’s Hu. Just look at all the Chinese flags in Washington and in New York’s Times Square. It’s as if we’re celebrating the fact that China has America in an ever-tightening economic vise.

In a Reuters article published today, Obama and Hu held a brief press conference together in Washington and when Hu was pressed on the issue of China’s horrible human rights record, Hu pretended that “technical difficulties” prevented him from understanding the question.


The Reuters report noted: “Obama used part of his opening statement at the news conference to say the United States supports dialogue between China and representatives of the Dalai Lama and wants Beijing to respect the religious rights of the Tibetan people.”

Embarrassingly, Hu had the gall to say that China respects the “universality of human rights” while telling the U.S. to stay out of their business.

And as pro-Tibetan and human rights activists dogged Hu and his entourage during the visit, reports coming out of Tibet and China show

A article headlined “Tibetans, Chinese protest Hu’s US visit,” it notes that much still has to be done if China expects to be respected internationally, particularly when it comes to human rights and Tibetan autonomy, which the Dalai Lama seeks.

“The activities of the Chinese government, the economic exploitation in Tibet and the resulting environmental devastation of Tibet have consequences beyond Tibet’s borders,” Tenzin Dorjee, executive director of Students for a Free Tibet, told AFP.

He accused China of damming rivers in Tibet that irrigate much of Asia, stripping the region of its mineral riches and killing off the nomadic and religious way of life on the remote plateau.

“It is the responsibility of the entire world, and particularly the US government under the leadership of President Obama, to speak directly to the leadership responsible for these actions, to ask President Hu Jintao to speedily negotiate a resolution to this issue,” Dorjee said.

In the meantime the Tibetan Centre for Human Rights and Democracy released a report for the year 2010 which notes that “the Chinese regime has targeted prominent Tibetan writers, bloggers, intellectuals and cultural figures” and wrongly labeled these Tibetans as “criminals.”

The report, it notes, also outlines further restrictions on the Tibetan way of life. It cites laws issued by the Chinese regime, aimed at controlling religious life in the primarily Buddhist region. It also cites plans of replacing the Tibetan language with Mandarin in local schools.

And then there is the elephant in the room, as noted by Paul Joseph Watson and Alex Jones writing for, the article “Meet the New Boss: China owns the United States.”

Pretty sobering stuff. Something tells me Hu, his unsmiling entourage and many in the Communist Chinese government don’t respect us all that much.

Unemployment grows with one fifth of youngsters out of work

Unemployment has hit 2.5million with one-in-five young people out of work, official figures show.

The jobless total rose by 49,000 in the three months to November as redundancies increased and the number of people classed as ‘economically inactive’ reached 9.3million.

One in five 16 to 24-year-olds is jobless after an increase of 32,000 to 951,000, according to Office for National Statistics data. It is the highest figure since records began in 1992.

However, the Department for Work and Pensions said 270,000 of those were in full-time education while they looked for work.

Labour leader Ed Miliband accused David Cameron of ‘complacency’ over the unemployment figures. At Prime Minister’s Questions he said: ‘The truth is you are cutting too far and too fast and it is British people who are paying the price.’

Mr Cameron replied: ‘Every increase in unemployment is a matter for huge concern and that is why we are launching the biggest back-to-work programme this country has ever seen in the Work Programme.’

Public sector employment fell by 33,000 to 6million between last June and September, while the number of private sector employees remained unchanged at 23million.

Nationally, the unemployment rate is now 7.9 per cent. But for 16 to 24-year-olds it is 20.3 per cent.

In the West Midlands, unemployment has reached 9.9 per cent, in the north-east it is 9.6 per cent while in London it is 9.2 per cent.

The figures are similar to those seen in European countries which are close to or have gone bankrupt.

Unemployment in Iceland is 7.3 per cent, in Italy it is 8.2 per cent, Greece is at 11 per cent and in Ireland it is 13.6 per cent.

BREAKING: House Votes To Repeal Obamacare

Just to be clear, as we've written many times before, our problem with Obamacare is the individual mandate, which is blatantly unconstitutional, and the egregious giveaways to Big Pharma & Big Insurance that are built into the law. It's a bad fix.


Source - Marketwatch

WASHINGTON (MarketWatch) -- Fulfilling a campaign pledge, House GOP members passed a bill Wednesday that would repeal President Barack Obama’s landmark health-care law, and sent the measure to an almost-certain death in the Democratic-controlled Senate.

The vote was 245-189 and came just two weeks after Republicans re-took control of the House following the midterm elections.

“We will continue this fight until Obamacare is no longer the law of the land,” said Rep. Michele Bachmann, a Minnesota Republican who is a favorite of the fiscally conservative tea-party movement.

Democrats have pledged to block any efforts to toss the law out or change its fundamental elements.

Shares of hospitals, health insurers and related companies fell on Wednesday as the vote approached.

With Republicans in control of the House, the repeal bill was expected to easily pass on Wednesday. But Senate Majority Leader Harry Reid, a Nevada Democrat, has vowed to block the bill in the upper chamber of Congress, and Obama has said he’d veto it.

“This is nothing more than partisan grandstanding at a time when we should be working together to create jobs and strengthen the middle class,” Reid said about the House vote.

For his part, Senate Republican Leader Mitch McConnell has said his party will make sure there’s an opportunity to vote on repeal in the Senate.

Republicans are expected to attack the health-care law piece by piece if they can’t repeal the measure outright.

One way would be to attempt to cut off funding for agencies that are responsible for putting the bill’s requirements in place. Republicans could, for example, target the Internal Revenue Service, which is charged with enforcing the requirement for most Americans to have insurance.

Opponents are also attacking the law in the courts, and a challenge about its constitutionality is expected to go all the way to the Supreme Court. In December, a U.S. judge in Virginia ruled that the law’s mandate for individuals to carry insurance is unconstitutional.

The White House, meanwhile, has been mounting an all-out PR campaign this week, touting the law’s benefits and highlighting stories from individuals the administration says have been helped by the law.


We hear the sincerity on regulation, but what about this..?..

In August, Missouri voters voted 'NO' overwhelmingly on Obamacare. And in December, Federal Judge Henry Hudson ruled on the constitutionality of the individual mandate, the cornerstone of Obama's plan. As this graphic shows, the new law creates 68 grant programs, 47 bureaucratic entities, 29 demonstration or pilot programs, 6 regulatory systems, 6 compliance standards and 2 entitlements. What could possibly go wrong with something so-well organized?

Full-size image inside.


Now watch this...

Video: Paul Ryan vs. Obama

More detail...


Ron Paul: We Can't Blame China for Our Mistakes

Lloyd Blankfein Took Home $425 Million In Goldman Stock & Cash Bonuses Over The Last 10 Years, While Shareholders Made Less Than 3% Per Year

Lloyd got lucky. He stole from shareholders and got away with it. Includes a classic clip from Michael Moore and Dylan Ratigan on Wall Street bonuses.

Look at the bottom right corner of the screenshot image above.

  • Total Return During Tenure.....-6%

The Bloomberg headline of $125 million just counts cash bonuses. Including stock bonuses given to Blankfein, the true number is $425 million.


Editor's Note: We are reposting this story from last Fall in light of Goldman's earnings reported today...

From Bloomberg

One-year certificates of deposit earned an average rate of 3.17 percent in the last 10 years, beating the 2.78 percent annual total return on Goldman Sachs. Buying a 10-year Treasury note in mid-September 2000 would have yielded 5.8 percent annually.

Wall Street firms have defended the pay of chief executive officers, including Blankfein, by pointing to the value they generate for shareholders. Yet over the last decade, the S&P 500 Financials Index, which includes 80 members, has dropped 49 percent. Bank of America Corp., Citigroup Inc. and Morgan Stanley have lost money for shareholders, while JPMorgan Chase & Co. returned an annual 1.23 percent, Bloomberg data show.

One investor who guaranteed himself a higher dividend was Warren Buffett, the billionaire chairman and CEO of Berkshire Hathaway Inc., who has produced an 8 percent annual return for shareholders over the last decade. When Buffett, 80, injected money into Goldman Sachs at the height of the financial crisis in 2008, he steered clear of the common stock and instead purchased a special class of preferred shares that pay him a 10 percent annual dividend.


Video: Ratigan and Michael Moore On Record Wall Street Bonuses


U.S. China Currency Rap Battle - Chimerican Gangstas

It's those very talented Taiwanese animators again...


Chimerican Gangsta' Rap

Text from youtube page - Check out our US-Sino Currency Rap Battle, featuring Chinese president Hu Jintao and American president Barack Obama.

China has mad stacks of US Treasury debt and fears America will inflate its way out the hole by weakening the greenback further. The US, on the other hand, says China is keeping its currency artificially undervalued to protect its exports.


Dr. Bernanke Gets a Phone Call From China...

Have you seen these...

New Slideshow - From Time Magazine - See a pic of Bernanke at age 13, hair slicked back, playing the saxophone - These are VERY RARE photos


Guest post from Gary North...

VIDEO is at the bottom of the story...


Zhou Xiaochuan is the Governor of the People’s Bank of China. Imagine that the following phone call were to take place.

Zhou: Hello. Dr. Bernanke?

Bernanke: Yes.

Zhou: I wanted to let you know about the decision that our board has taken, after consulting with the Premier and the Politburo’s Standing Committee. We hope you are sitting down.

Bernanke: I get it. A little Oriental humor.

Zhou: You could say that.

Bernanke: What can I do for you?

Zhou: You can abandon your plan to purchase $600 billion of Treasury bonds.

Bernanke: The Federal Open Market Committee voted ten to 1 for this policy. I cannot change it now.

Zhou: We think it is an unwise policy. It will lower the value of the dollar. Americans will then buy fewer goods from China.

Bernanke: That is not how we see it. We think the policy is required to put Americans back to work. They will buy more goods from China and everywhere else when they are once again working.

Zhou: You will increase the supply of dollars, which will lower the dollar’s price internationally. Imported goods will cost Americans more. An increased supply of dollars will mean a lower price for dollars. It’s supply and demand.

Bernanke: That is the old economics. That is the logic of Adam Smith and Milton Friedman and those kooks from Vienna. We are committed to the new economics.

Zhou: Who teaches it? Where?

Bernanke: I taught it for years at Princeton.

Zhou: Where Paul Krugman also teaches?

Bernanke: Yes.

Zhou: We see it differently here. We prefer the older economics.

Bernanke: Adam Smith’s economics?

Zhou: No, even older.

Bernanke: Mercantilism?

Zhou: That is what you call it. We call it the export-driven Asian miracle.

Bernanke: But mercantilist governments wanted to hoard gold. Your nation does not hoard gold. Your bank holds U.S. Treasury debt.

Zhou: That is the purpose of my call.

Bernanke: Gold?

Zhou: No. U.S. Treasury debt.

Bernanke: What about it?

Zhou: There is too much of it.

Bernanke: You sound like Ron Paul.

Zhou: Ah, yes. Congressman Paul. I understand that he is likely to be the next chairman of the Monetary Policy Subcommittee. You and he should have some interesting discussions.

Bernanke: I prefer to talk about Treasury debt.

Zhou: We have determined that an increase of $600 billion in your purchases of Treasury debt will lower the rate of interest on the debt.

Bernanke: That is our thought, too.

Zhou: We hold almost $1 trillion in Treasury debt.

Bernanke: You ought to buy more.

Zhou: We will be losing money on our holdings if rates fall.

Bernanke: You ought to buy more.

Zhou: The value of the dollar will fall. That will lower the value of our holdings.

Bernanke: Nevertheless, you ought to buy more.

Zhou: We have decided to own less.

Bernanke: How much less?

Zhou: $600 billion less.


Zhou: Dr. Bernanke?


Zhou: Are you still there?

Bernanke: I am still here.

Zhou: We have decided that every time the Federal Reserve purchases its monthly total of $75 billion, we will sell $75 billion.

Bernanke: Are you serious?

Zhou: You sound like Nancy Pelosi.

Bernanke: But that would raise interest rates on Treasury debt.

Zhou: That is our conclusion, too. But remember: we own lots of Treasury debt. We could use a better rate of return.

Bernanke: But higher rates might cause a recession in the United States.

Zhou: That is our conclusion, too.

Bernanke: But that will mean fewer imports from China.

Zhou: We think it will mean more bankrupt manufacturing facilities in the United States. Then Americans will come back to our manufacturers.

Bernanke: But this could cause unemployment in China if you are wrong.

Zhou: We are willing to risk that.

Bernanke: That is a big risk on your part.

Zhou: No bigger than the risk on your part by inflating the monetary base by 30%. That could raise prices in the United States.

Bernanke: We don’t think so.

Zhou: Why not?

Bernanke: Because our bankers are so frightened of recession in 2011 that they are not lending. They just turn the money over to the FED.

Zhou: Then you do not expect inflation?

Bernanke: Only a little. Maybe 2% to 3%.

Zhou: You sound like Milton Friedman.

Bernanke: Around here, we say, "Better 2% inflation than 9.6% unemployment."

Zhou: We think it is better for us not to hold onto Treasury debt that cannot be paid off.

Bernanke. Don’t worry. We owe it to ourselves.

Zhou: On the contrary, you owe it to us.

Bernanke: It’s only a figure of speech.

Zhou: We can figure. We are going to be left holding the bag, as you say. All we have is a pile of IOUs.

Bernanke: They’re as good as gold.

Zhou: Since they pay zero interest, we think gold is better.

Bernanke: It’s only a figure of speech.

Zhou: We can figure. Gold is over $1,350 an ounce. The dollar has been falling. We think the older mercantilism was right. We want to own more gold.

Bernanke: You can’t eat gold!

Zhou: We can’t eat T-bonds, either.

Bernanke: But if you sell dollars, their price will fall.

Zhou: Why?

Bernanke: It’s supply and demand.

Zhou: Gotcha!

Bernanke: You speak English very well.

Zhou: You see, I was educated in your country at UCRA.

Bernanke: Really?

Zhou: Not really. But I love those old Richard Loo World War II movies. He made a great Japanese officer.

Bernanke: But if you sell Treasury debt, that could start a fire sale. Central banks all over the world might start selling T-bonds.

Zhou: That is a possibility.

Bernanke: But that would make your holdings worth even less.

Zhou: That is true. So, if Japan starts selling, we will dump all of our holdings in one shot. We might as well get out before the rush.

Bernanke: But that could crash the dollar!

Zhou: That is a possibility.

Bernanke: You’re bluffing!

Zhou: That is a possibility.

Bernanke: But this is not the way that central banks operate.

Zhou: How do they operate?

Bernanke: They inflate.

Zhou: Always?

Bernanke: Of course always. That is the only policy tool we have.

Zhou: You could deflate.

Bernanke: Are you serious?

Zhou: You really have Nancy Pelosi down pat.

Bernanke: There is no way we can deflate.

Zhou: What about your exit strategy? That is deflation.

Bernanke: In theory, yes. But we don’t intend to execute it.

Zhou: That is not what you told Congress. You told Congress you have an exit strategy. Several, in fact.

Bernanke: We do have them. We just don’t intend to implement them.

Zhou: Do you think you can fool Congress?

Bernanke: Are you serious? Congress doesn’t know horse apples from apple butter.

Zhou: You mistake Barney Frank for Ron Paul. You will now have to deal with Ron Paul.


Zhou: Hello.


Zhou: Are you still there?

Bernanke: Yes, I’m still here.

Zhou: We are not asking you to deflate. We are asking you not to inflate.

Bernanke: But we must inflate.

Zhou: Why?

Bernanke: Because we have 9.6% unemployment.

Zhou: What has that got to do with your decision to inflate?

Bernanke: We must lower interest rates.

Zhou: For Treasury bonds.

Bernanke: Yes.

Zhou: What does that have to do with unemployment?

Bernanke: When mid-term rates are lower, businesses will start new projects and hire people.

Zhou: Mid-maturity T-bond interest rates are the lowest ever since what you call the Great Depression and what we call the old normal.

Bernanke: You can never have low enough T-bond rates.

Zhou: But, as Treasury bond investors, we don’t like low rates. We like high rates. We hold lots of T-bonds. If we get very low rates, we might as well own gold.

Bernanke: But you will like all that increased demand for made-in-China goods when all those unemployed Americans go back to work.

Zhou: But rates are lower than they have been in 80 years. You still have 9.6% unemployment.

Bernanke: But if the 10-year T-bond rate goes from 2.6% to 1%, American businessmen will hire millions of workers.

Zhou: Do you have evidence for this in one of those dozen Federal Reserve bank monthly bulletins? Or maybe in the Federal Reserve Bulletin?

Bernanke: Not really. But it’s the thought that counts.

Zhou: I don’t think we are getting anywhere. So, just to remind you. We will sell enough Treasury debt each month to match any net increase in the amount you buy.

Bernanke: Dollar for dollar?

Zhou: Dollar for dollar. But, I’ll tell you what. Buy them from us, and we’ll give you a discount for volume purchases.

Bernanke: You guys never miss a trick, do you?

Zhou: We’re really not inscrutable. We just offer discounts for volume purchases.

Bernanke: I will discuss this with the FOMC.

Zhou: Do that. Shalom!

Bernanke: That’s my middle name.

Zhou: You Americans have a saying for everything.

Bernanke: No. I mean it. That really is my middle name.

Zhou: If you start buying Treasury debt, you’ll have an honorary middle name over here.

Bernanke: What’s that?

Zhou: Paper Tiger.



The Fed and negative real interest rates...

There is a make-believe monster in the closet called a liquidity trap. Keynesian economists fear the liquidity trap almost as much as they fear not getting tenure. The liquidity trap takes place when prices fall. Yes, fall! You know, like the price of computer disk storage falls, which will destroy civilization if lots of other things are mass-produced and get cheaper. The horror!


The Fed’s ‘War on Wealth’ and the Risk of Default

Charles Ortel, managing director of Newport Value Partners, tells Accuracy in Media in an exclusive interview that the Federal Reserve plan to buy $600 billion of U.S. Government securities “borders on the criminal” because the impact will be the devaluation of the dollar by 20 percent and the destruction of $10 trillion of household net worth.


A look back at Ron Paul as he battles Bernanke:

Bernanke's Worst Nightmare - Ron Paul To Chair Monetary Policy Subcommittee (Bernanke-Paul Greatest Hits Video)


You can start to expect something like this on a weekly basis...

Video: Bernanke & Paul lovefest...

Here's another favorite - Paul lectures Bernanke on U.S. fascism...


Have you seen this huge youtube hit...

Video: The truth about QE and QE2....

This is brilliant, for those who still haven't seen it.


What Will Cause the Next Recession?

Has the recession really ended, we have been told spending is up, yet according to United States Department of Labor, jobless for 27 weeks or more was little changed at 6.4 million and accounted for 44.3 percent of the unemployed. The 0.4% decline from 9.9 in 11/2010 to 9.4 in 12/2010, include those employed during the holidays who are now unemployed again. Let’s not be fooled by the department 1/7/2011 Department of Labor report unemployment rose from 9.7 in 1/2010 to 9.8 in 11/2010. Seth Fiegerman, Mainstreet and Yahoo Finance give us the real truth about what to expect for 2011 and the “Next Recession

For every sign that the economy is improving, there is another hinting that the tough times are not over yet.

Sure, businesses are making money again and could stand to hire again after a long period of layoffs, but for months now many of these companies have sat on record amounts of cash and chosen not to bring on new employees. As a result, the unemployment level remains frozen near 10% and some predict it may get even higher this year. And yes, the housing market may be sorting itself out, but by some estimates, there are still 10 million or more homes in danger of foreclosure, which means we still may not have seen the worst of the housing crash.
With all these competing signals, it can be difficult to decipher whether the economy is on its way out of a recession or on its way back into one. So we surveyed a dozen leading economists to get their opinions on what, if anything, could lead to another recession down the road, whether in six months or six years. Here is what the experts are watching out for.

The Housing Market
If previous recessions are any indication, the housing market is the most likely to sink the economy.
“Historically, the main risk to the economy has come from the housing sector. With two exceptions, it’s led us into all the recessions we’ve ever had,” said Edward E. Leamer, director of the Anderson Forecast at the University of California, Los Angeles, which provides quarterly predictions about the direction of the U.S. economy.

Leamer personally believes that any threat posed by the housing market is still a long way off, but several other economists believe the threat is more immediate.
“Home prices are starting to sag again under the crushing weight of foreclosed properties,” said Sal Guatieri, senior economist and vice president at BMO Capital Markets, an economic research group. “A sharp drop in prices would undermine household wealth and confidence, and reverse the recent pickup in consumer spending. It would also fuel the vicious cycle of delinquencies and tight credit standards.”

Moreover, if 10 million more homes are still to be foreclosed on, this could hurt state and local economies, which are already on thin ice.

“Foreclosures will drive down values, which in turn will drive down local tax revenues (real estate taxes) affecting local government services,” said Mark Lieberman, a private economic consultant and former senior economist for Fox Business Network. “State and local governments will have to shrink payrolls” as a result.

Oil Prices
While the housing market may be the leading contender for triggering the next recession, it’s far from the only risk the economy faces. Several economists also expressed concerns that rising oil prices could stall our road to recovery.

“In the short run, the risk is from the oil sector. If oil prices top $125 [per barrel] and stay there for about three months, then the economy will have a mild recession,” said Rajeev Dhawan, director of the Economic Forecasting Center at Georgia State University. “Consumer spending will take a hit, followed by the capital spending plans of businesses, which will be cut back, leading to a recession.”

Others place the bar for trouble even lower. Bernard Baumohl, the chief global economist at the Economic Outlook Group and author of The Secrets of Economic Indicators, says if oil tops $120 a barrel for two months or longer, it will “cause serious problems for our economy.” Likewise, Baumohl says gas prices exceeding $4.50 a gallon would be an additional red flag for the economy.

So what are the odds of this actually happening?
At the moment, Baumohl’s group predicts a 90% chance that oil prices will shoot above $100 a barrel sometime in 2011. The real question is how much higher they will go after that.
National Debt

“If you ask what the most likely source of a recession is in the next two or three years, it’s the growing indebtedness of the United States,” said Leamer, the UCLA economist.

The national debt recently topped $14 trillion and is on pace to hit the government-imposed ceiling of $14.29 trillion by March of this year. Congress is currently gearing up for a battle over raising the debt ceiling, but even if they do, it won’t solve the basic problem: The U.S. is in over its head in debt and owes hundreds of billions to foreign creditors.

“The most pertinent threat to our economy is probably the sovereign debt horror show playing at a theater near you in the United States,” said Carl Leahey, senior managing director and global economist at Decision Economics, a financial consulting firm. “This year, we could see a loss of investor confidence, a spike in interest rates and a general rolling over in the economy” as a result of the rising debt.

Economists point to the recent debt crises in European countries like Greece and Ireland as a sign of what’s to come if the U.S. government does not get its house in order.

“The ongoing European debt crisis would provide a small window to what the U.S. could potentially face,” said Dian Chu, a chartered economist who runs the financial blog Economic Forecasts and Opinions. If the debt crisis did blow up, he says, “The U.S. government would most likely resort to austerity measures, and/or raise taxes, which could really plunge the economy into a recession or even a depression.”

The Bond Market
If there were a debt crisis, our economists say it would likely wreak havoc on the bond market, as the Treasury struggles to finance debt and raises interest rates on Treasury bonds.

But even if debt concerns are overblown, some economists believe there is still another risk to the bond market, and to the economy as a whole: At the end of 2010, the Federal Reserve decided to buy another $600 billion worth of bonds, in a second stimulus known as quantitative easing (or QE2) intended to provide a boost to the economy.

Yet, perhaps counter-intuitively, the Fed’s attempt to jumpstart the economy could actually end up destabilizing it.

“If the economy is showing fresh vigor, as it has in recent months, and the Federal Reserve insists on pumping more reserves into the economy, then it could lead to a potential crisis in the bond market, where investors begin to worry about future inflation risks,” said Baumohl of the Economic Outlook Group. This worry could potentially drive many investors to flee from the bond market.

“This stampede to get out of bonds could cause yields on longer term securities to rise very quickly, which could hut the economy, and certainly hurt real estate because of its impact on mortgage rates. So that’s one real scenario we need to keep an eye on in the next six months,” Baumohl said.
Commercial Banks

It may be hard to believe, given all the money that has been pumped into the financial sector in the form of bailouts, but the banking industry as a whole still faces big problems with their balance sheets.

“As the economy starts to recover and the government begins to tighten monetary policy a little bit, I’m not sure there’s enough capital in the financial sector at the moment to support robust growth,” said Douglas W. Diamond, an economist at the University of Chicago Booth School of Business.
Diamond is particularly concerned that smaller banks may not have enough resources to stay solvent, let alone to do much lending to businesses and homeowners.

“I think we could see a continuing number of failures in intermediate and smaller size banks,” Diamond said. “This is not a disaster because most of corporate America has strong balance sheets at the moment and could acquire the firms that don’t. But if there turns out to be solvency issues in the remaining firms, that’s definitely an issue.”

North Korea and Iran
Even if everything in the U.S. economy runs smoothly, there’s always a wild card threat, and right now that means North Korea or Iran.

According to Baumohl, any military action between North and South Korea could scare the global markets and hurt our economy as a result. Similarly, if the U.S. decides to take military action against Iran in the coming years, it could impact oil prices and negatively impact the world economy and our own.

For More information see the following:

6 Companies Thriving in the Recession

Why Homeownership Can Still Pay Off

10 Things Your Bank Won’t Tell You

China's too big to be bullied by the US

In Tuesday's summit with Hu Jintao, Obama must recognise new realities – however unpalatable

White House talks between Barack Obama and China's president, Hu Jintao, which begin on Tuesday night, are not just any old summit. The former US national security adviser Zbigniew Brzezinski summed up the mood, describing the meeting as "the most important top-level US-China encounter since Deng Xiaoping's historic trip more than 30 years ago". As some in China and the US see it, the choice boils down to one of future war or peace.

Historically speaking, empires always fight. Successive American administrations have struggled to define the relationship between the world's leading superpower and the rising star of Asia that threatens to supplant it. Past summits often produced little of substance. Now, facing critical public, congressional and business scrutiny, Obama is under pressure to stand up for US interests and obtain tangible results. The past year brought a series of public clashes, reinforcing a growing US belief that China was swapping its designated role as strategic partner for that of strategic rival. Specific issues – Beijing's supposed unfair trade practices and intellectual property theft, US arms sales to Taiwan and South China Sea security disputes, the attempted gagging of Google, and the continued detention of the Nobel peace prizewinner Liu Xiaobo – raised the bilateral temperature, sometimes to boiling point.

Some rightwing commentators claim the US and China are already at war, if not yet in the conventional sense, and accuse Obama of naivety. Through currency manipulation, commercial attrition and expanding overseas investment, Hu is pursuing "war by other means", said Irwin Stelzer in the Weekly Standard, adding: "The communist regime sees trade policy as merely one strategic weapon in a war aimed at overtaking the US as the world's pre-eminent economic and military power." He cited the boast of China's defence minister, General Liang Guanglie, that "in the next five years our military will push forward preparations for military conflicts in every strategic direction".

While firmly rejecting war analogies, the White House knows it has a fight on its hands on many fronts – economic, political, ideological. Hillary Clinton, the secretary of state, said last week that relations had reached a crucial juncture: "It is up to both nations to translate the high-level pledges of summits and state visits into action. Real action, on real issues."

Tim Geithner, the treasury secretary, Robert Gates at defence and Obama himself have all joined Clinton in setting out what the US expects from China. Their shopping list includes fuller co-operation on nuclear proliferation and climate change, stronger Chinese support on specific problems such as Iran and North Korea, and a more "responsible" exchange rate policy. White House aides say Obama also plans to publicly step up pressure on human rights.

Obama met leading US-based Chinese human rights advocates last week, discussing how best to influence attitudes from within. According to the Washington Post, Obama recalled his childhood in Indonesia, then governed by a dictatorship. "One thing he kept coming back to was – how does the omnipresence of the state, how does corruption, affect the lives of real people?" one official said. "And he asked how we should use our leverage … There was a lot of talk about how to reach into China to be heard."

The problem with America's exhortatory approach to human rights and other issues is that it rarely works. Clinton admitted that Beijing resented such interventions as an infringement of sovereignty. And trying to spread the civil liberties message Iran-style, behind the Communist party's back, is hazardous. It may only compound the problem, hurting those Obama seeks to help. China has its hardliners, too. They would undoubtedly exploit such action to weaken Hu and the party's reform wing.

This unpalatable reality reflects a bigger truth: the US must stop trying to tell China what to do. The time for that has passed. China is too big to be bullied, too canny to be conned, too complicated to be changed from without. And it cannot sensibly be blamed for America's declining global clout. Some self-awareness, a focus on practical, mutually beneficial measures, and a little circumspection would ultimately work better to stop a war of words turning into something worse. That's not to say human rights abuses can be ignored. But grandstanding will not help.

Hu wants a successful summit. He retires next year – and is enough of a politician to want to assure his legacy. But he's not going to roll over. Before getting on the plane, he warned Obama to tread carefully or risk deepening estrangement. "We both stand to gain from a sound China-US relationship, and lose from confrontation," Hu said. The two countries should "respect each other's choice of development path".

This summit marks a strategic turning point. Hu's constituency is the Communist party, the People's Liberation Army, and an increasingly nationalistic Chinese public. Bowing to America is not part of their 21st century script.

‘Fear and Love Make Gold Strong’

An interview with Frank Holmes, by Jeff Clark, BIG GOLD
For the BIG GOLD annual gold forecast survey published in January, Jeff Clark surveyed seven gold experts and nine top economists and fund managers, along with Doug Casey himself, to provide their best insight on what to expect in 2011 and how to invest.
One expert he interviewed was Frank Holmes, head of U.S. Global Investors, which manages 13 no-load mutual funds, many of them recognized for consistently high performance by Lipper Fund Awards. Last year, Frank’s Gold & Precious Metals fund returned 36.8% – more than triple the Dow – and the World Precious Minerals fund gained 45.4%, outgunning the S&P almost four-fold.
Read on for Frank’s thoughts on gold and precious metals stocks…
BIG GOLD: Gold was up 30% in 2010; to what do you attribute its rise?
Frank Holmes: Investors have to look at gold demand as both the fear trade and the love trade. What most media focus on is the negativity of government policies to drive gold prices. I characterize this as the fear trade — deficit spending and negative real interest rates for the G7 countries.
More significant is the love trade – where more than 60% of the world’s population is in emerging countries averaging over 6% GPD growth and 8% rising personal income, and they believe in giving gold as a gift for birthdays, weddings, religious holidays, etc. This love trade is entrenched, and it is not going away.
Fears over the European debt crises were a big driver of gold in the first half of the year, as investors bought both gold and the dollar for safety. However, by mid-year, the dollar started to break down as smoldering budget woes in the U.S. began to reignite concerns over the fiscal situation here.
Gold got a second lift by October as both the fear and love trade showed up together. We had the season of Diwali lights in India and we had QEII, so gold went to new highs. By year end almost all the gains made by the dollar were eroded away, while gold finished the year with a respectable rise of 29.5%.
BG: What forces will move gold this year? And what’s your price projection for 2011?
FH: U.S. equity strategists are way too complacent and so are risk measures such as the VIX, which is back to pre-Lehman lows despite government debt levels at even higher levels. The broad view is that there will be no inflation in the U.S., as labor markets are slack, with 10% unemployment; however, rising commodity prices, which are controlled by international demand, will remain strong.
A second wild card will be whether the German public will go along with the “transfer society” concept. European woes are not over.
Third, U.S. lawmakers will have a bitter potion to swallow, as the vote on raising the U.S. debt ceiling will be a rallying point for the Tea Party this year. And if inflation, such as rising oil prices, starts to sap spending, wages in the U.S. may have to rise, and then the cat would be out of the bag.
It’s been a great ten years for gold, which was fully justified due to the explosion in consumer credit and debt, but gold may still have a very important role to play going forward. I believe in the next five years the price of gold will double from current levels, and that means it has the potential to have a 15% annual compounded rate of return.
BG: How volatile do you expect gold to be?
FH: What is really key in understanding and managing expectations in the capital markets is that over any 12-month period, it is a non-event for gold to go plus or minus 15% in a year. This happens 68% of the time. The stocks of gold producers can go plus or minus 40% over any 12-month period, so they have greater risk but can also provide substantial returns. It is thus important to respect and look at volatility as an opportunity.
BG: Gold stocks as a group did not outperform gold in 2010 – does that change in 2011? And if the broader markets sell off, do gold stocks fall along with them or trade on their own?
FH: Actually, 2010 may have been a turning point, as major gold-producing companies, measured by the Gold Bugs Index (HUI), gained 34.1%. This hopefully has reversed the trend of the last couple years where bullion outperformed the stock. Junior gold mining companies, on average, returned roughly twice the gain of gold bullion, but some of those names were fairly silver rich, and we know how well silver did last year.
In the scenario of a market sell-off, gold stocks are still equities and can get pulled down with any surge towards liquidity. However, the price action since the 2008 credit crises showed us that gold stocks did very well for investors relative to the broader markets. In addition, while those of us in the gold business are very close to the story, there are a lot of people that are still coming around to investments in the precious metals sector.
When one looks at what has been some of the best-performing stocks over the last 10 years, gold and gold stocks may very well trade on their own as a preferred asset class.
BG: Silver was up 81.9% in 2010, but is still below its 1980 nominal high. What’s your outlook for silver in 2011?
FH: Silver may have gotten ahead of itself a bit. In the coin market, for instance, it is not uncommon to see certain gold coins sell for a 30% premium to the spot price, but in the last quarter we saw some collectable silver coins with asking prices as much as a 300% premium.
Silver does offer exceptional leverage to gold, almost 2 to 1. Right now, while it looks like the economy is getting stronger, silver could continue to benefit from a pick-up in industrial uses.
BG: What’s your best advice for precious metal investors in 2011?
FH: Investors should consider buying gold as insurance. We recommend having about 10% of their portfolio in gold and gold stocks, and rebalancing every year.
Two stocks that we like at current prices are Randgold (GOLD) and Silvercorp (SVM). Both companies focus on high-quality ore deposits that will be economic at prices substantially below current spot prices.
In Randgold’s case, their share price has fallen about 20% since the presidential elections in the Ivory Coast became locked in a stalemate. The company’s Tongon mine is their newest project and is currently being commissioned, but news flow has been slow and hasn’t drawn much attention. Look to see this issue resolved over the next couple of months.
Silvercorp is one of the few companies that has successfully navigated in China, and our models indicate there is much more upside available from these assets than where the stock is currently priced. SVM also has a very attractive relative valuation to its North American peers, where in some cases we have seen 5% of their market capitalization turn over fairly consistently everyday over the last month – those shareholders are obviously not around for the long term.
[To read the full edition and the interviews with 17 of the world’s leading investment pros – including Jim Rogers, John Hathaway, Peter Schiff, and Rick Rule – try BIG GOLD at just $79 a year, with 3-month money-back guarantee. Act today, and you’ll also get a FREE one-year subscription to Casey’s Energy Opportunities. Details here.]

Reynolds closing western Pa. food packaging plant

Reynolds Food Packaging is closing a western Pennsylvania plant in October, meaning 145 workers will lose their jobs.

The Sharon Herald says the company notified workers at its Pine Township plant near Grove City of its plans to close the plant about 50 miles north of Pittsburgh.

The closure marks the second looming batch of job losses to hit Mercer County in about a week. Thomas & Betts Co. last week announced it was moving 70 jobs at its Reznor heater manufacturing plant to Mexico.

Video: Neil Cavuto With Craig R. Smith On Food Riots in Algeria & Tunisia - While U.S. Farmers Make Record Profits

Smith discusses whether we'll see similar food shortages and unrest in the U.S.

Video - Jan 14, 2011 - Text from Youtube page - Craig Smith with Neil Cavuto discussing the Tunisian riots over food prices and whether America is headed for the same fate. US consumer prices have been surging in recent months and some wonder if we are headed for the biggest spike in inflation in our history. Craig discusses why the tools in our arsenal, traditionally used to fight inflation, will no longer work.


Food Prices Causing Riots in Africa Stoke Record U.S. Farm Economy Growth

The same record food prices causing riots in Algeria and export bans in India are allowing President Barack Obama to combine the biggest-ever U.S. farm exports with the tamest inflation since the 1960s.

Global food costs jumped 25 percent last year to an all- time high in December, according to the United Nations. Countries probably spent at least $1 trillion on imports, with the poorest paying as much as 20 percent more than in 2009, the UN says. In the U.S., the largest exporter, retail food rose 1.5 percent last year and will gain as little as 2 percent in 2011, the Department of Agriculture estimates.

Governments from Beijing to Belgrade are boosting imports, limiting sales or releasing stockpiles to curb food inflation. Higher prices will push U.S. agricultural exports up 16 percent to a record $126.5 billion this year, according to a USDA forecast. While U.S. consumers haven’t been squeezed so far, grocers from Winn-Dixie Stores Inc. to SuperValu Inc. have said they plan increases. Commodities will keep rising, according to a Bloomberg survey of more than 100 analysts and traders.

“We are absolutely spoiled,” said Jason Britt, president of Central States Commodities Inc., a research and analysis company in Kansas City, Missouri. “We have the luxury that we spend a small percentage on food. But I wouldn’t be surprised to see larger bites of our incomes used.”

Algeria, Tunisia

Unrest is starting again. Three people were killed and 420 injured in protests over milk and flour costs in Algeria this month. Tunisian President Zine El Abidine Ben Ali tried to end a month of protests by promising lower prices for bread, milk and sugar, before handing over power to his prime minister on Jan. 14 and leaving the country.

The Serbian government said Jan. 10 it will consider an export duty on wheat to discourage shipments. South Korea said the following day it plans to increase the supply of some food products to help damp prices.

India, home to 1.2 billion people, halted onion exports in December after prices more than doubled in a year. Opposition parties have said they plan nationwide protests. China sold commodities including sugar and corn from strategic reserves last year to contain inflation that reached 5.1 percent in November, the most in 28 months.

No such problems are emerging in the U.S. for now. Consumer prices will rise 1.5 percent this year, compared with 1.6 percent in 2010, according to the median of as many as 61 economists’ estimates compiled by Bloomberg. While the USDA is forecasting gains in retail food prices of 2 percent to 3 percent in 2011, even at the top of that range the gains would still be below the average over the last decade.

“We are a food-abundant country and the last place where food inflation is going to rise,” said Erick Erickson, an economist at the Washington-based U.S. Grains Council, which promotes crop exports. “We have such a rich and robust food- supply situation compared to other countries.”

Continue reading...


Riots over joblessness and food prices in Algiers...

Video - Food riots in Algeria...


Spoiler ALERT -- Do not miss #7:


Have you seen these photos...

New Slideshow - From Time Magazine - See a pic of Bernanke at age 13, hair slicked back, playing the saxophone - These are VERY RARE photos


Check out this one...

Editor's Note - Fans of women's swimming might want to make sure to see pic #4...


More slideshows...


Hedge Fund figure financed mosque campaign

POLITICO's Maggie Haberman emails that she's solved a lingering mystery from the now-nearly-forgotten summer storm around a planned Islamic center in Lower Manhattan.

Robert Mercer, the co-CEO of the giant hedge fund manager Renaissance Technologies, appears to have financed the ad campaign entirely himself, through a $1 million contribution on July 26 to the New York State Conservative Party, according to a filing today by the party's housekeeping account. Conservative Party Chairman Mike Long confirmed to Haberman that Mercer was the source of the ad money.

Mercer had maxed out to the account of Rick Lazio, but the Conservative Party's ads firmly attached the issue to Lazio and kept it top of mind in August in New York.

The account also shows a $40,000 payment to Arthur Finkelstein, Lazio's consultant.

Mercer's contribution is peanuts by the standards of Renaissance, which claims it manages $15 billion, but it's a large political contribution by any measure -- particularly to a longshot candidate in a primary fight -- and it was by far his largest of the cycle. Mercer's other effort of note was reportedly a $300,000 effort to unseat Rep. Pete DeFazio of Oregon, who wants to regulate the controversial high-frequency trades that are part of Renaissance's business.

Regulating Wall Street wasn't a central issue in the New York campaign, but Haberman writes that some hedge fund figures were worried that the state would intervene in trading, and the ad buy could have been a signal to Andrew Cuomo of their willingness to spend millions attacking him over the issue.

The campaign of Carl Paladino made an issue of the "secrecy" in funding the ads, but a source familiar with the buy insisted that Mercer aimed simply to support Lazio and wasn't "anti-" anyone.

Judge Napolitano - China Visit

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Goldman Sachs bankers to receive $15.3bn in pay and bonuses

• Goldman Sachs revenues fall 13% but pay pot down only 5%
• Average pay drops as number of Goldman employees rises
• 'Compensation ratio' rises to 40% from 35.8% last year

(FILES)Goldman Sachs CEO Lloyd Blankfein
Goldman Sachs's chief executive, Lloyd Blankfein. Photograph: Jim Watson/AFP/Getty Images

Goldman Sachs has set aside $15.3bn (£9.5bn) to pay its staff in 2010 – an average of $430,000 each – in a move that re-ignites the controversy over City pay and bonuses at a time when youth unemployment is hitting record highs in the UK.

The best known of all the Wall Street firms did not attempt to show the restraint of last year when it reduced the amount being paid into its bonus pool in the fourth quarter of 2009 to make a $500m public donation to a charitable foundation, Goldman Sachs Gives.

The $15.3bn set aside for bonuses and salaries was down 5% on the $16bn for the previous year but did not fall as fast as revenues, which dropped 13% to $39.1bn in 2010.

The bank set aside $2.2bn in the fourth quarter alone even though revenue halved to $2.4bn during this period. Goldman has used 40% of its revenue to pay staff, some 5,500 of whom work in the City and will begin to learn in the coming days about the size of their 2010 bonuses.

In 2009 the bank cut this so-called compensation ratio to 35.8% – the lowest since it went public in 1999 – in attempt to demonstrate restraint.

David Viniar, finance director of Goldman Sachs, defended the pay arrangements. "We don't target a ratio. We pay our people fairly, based on their performance," he said.

But the Goldman figures came just hours after data in the UK showed that youth unemployment had hit a record high of close to 1m, sparking fury from unions.

The general secretary of the TUC, Brendan Barber, said: "Goldman Sachs has stuck two fingers up to austerity Britain by shelling out mega bonuses again. These earnings would make Gordon Gekko blush.

"Bankers are toasting their telephone-digit bonuses while the rest of the country reels from more than a fifth of young people being out of work. This government is overseeing a fast return to the worst excesses of the 1980s. The chancellor must use the upcoming G20 meeting and budget to make good the coalition agreement to tackle unacceptable bonuses."

Goldman confirmed that its total bill for former chancellor Alistair Darling's one-off bonus tax last year was $465m. His successor, George Osborne, has decided not to implement another bonus tax.

Lloyd Blankfein, chairman and chief executive of Goldman, said: "Market and economic conditions for much of 2010 were difficult, but the firm's performance benefited from the strength of our global client franchise and the focus and commitment of our people.

"Looking ahead, we are seeing signs of growth and more economic activity, and we are well-positioned to help our clients expand their businesses, manage their risks and invest in the future."

The bank now employs 3,200 more staff that it did a year ago, an increase of 10%, which might explain why the compensation pool has not fallen by as much as revenue. Per head, the average payout has fallen from $498,000.

The firm said that $320m of its charitable contributions for 2010 were to Goldman Sachs Gives and that compensation had been reduced to fund this charitable contribution.

This year has not started well for Goldman: earlier this month it was forced to pull out of a private placement deal to enable its wealthy US clients to invest in Facebook.

In 2010, the firm was fined $550m by the Securities and Exchange Commission in the US, and £17.5m by UK's Financial Services Authority over the Abacus sub-prime mortgage product and the activities of Fabrice Tourre, a London-based employee.

Last April, Blankfein was subjected to a grilling by the US Senate over its activities in the mortgage market before the credit crunch in 2007.

The sharp fall in Goldman's revenues in the fourth quarter was the result of a 10% fall in the investment banking area – where fees from advising on mergers and acquisitions were down – and a 31% fall in revenue from fixed income, currency and commodities, where anxiety about a sovereign debt crisis in Europe may have held back activity.

Viniar said: ""In the month of December, things were just dead [in the fixed income division]. There was little activity".

The More Americans That Go On Food Stamps The More Money JP Morgan Makes

JP Morgan is the largest processor of food stamp benefits in the United States. JP Morgan has contracted to provide food stamp debit cards in 26 U.S. states and the District of Columbia. JP Morgan is paid for each case that it handles, so that means that the more Americans that go on food stamps, the more profits JP Morgan makes. Yes, you read that correctly. When the number of Americans on food stamps goes up, JP Morgan makes more money. In the video posted below, JP Morgan executive Christopher Paton admits that this is "a very important business to JP Morgan" and that it is doing very well. Considering the fact that the number of Americans on food stamps has exploded from 26 million in 2007 to 43 million today, one can only imagine how much JP Morgan's profits in this area have soared. But doesn't this give JP Morgan an incentive to keep the number of Americans enrolled in the food stamp program as high as possible?

There are just some things that are a little too "creepy" to be "outsourced" to private corporations. The JP Morgan executive in the interview below does his best to put a positive spin on all this, but it just seems really unsavory for a big Wall Street bank to be making so much money off of the suffering of tens of millions of Americans....

So if unemployment goes down will this ruin JP Morgan's food stamp business?

Well, apparently not. In the interview Paton says that 40% of food stamp recipients are currently working, and he seems convinced that there could be further "growth" in that segment.

So is this what America is turning into?

A place where tens of millions of the unemployed and the working poor crawl over to Wal-Mart and the dollar store every month to use the food stamp debit cards provided to them by JP Morgan?

It turns out that JP Morgan also provides child support debit cards in 15 U.S. states and they also provide unemployment insurance benefit debit cards in seven states.

Apparently states have found that they can save millions of dollars by "outsourcing" the provision of these benefits to big financial firms like JP Morgan.

So what happens if you have a problem with your food stamp debit card?

Well, you call up a JP Morgan service center. When you do this, there is a very good chance that you are going to be helped by a JP Morgan call center employee in India.

That's right - it turns out that JP Morgan is saving money by "outsourcing" food stamp customer service calls to India.

When ABC News asked JP Morgan about this, the company would not tell ABC News which states have customer service calls sent to India and which states have them handled inside the United States....

JP Morgan is the only one today still operating public-assistance call centers overseas. The company refused to say which states had calls routed to India and which ones had calls stay domestically. That decision, the company said, was often left up to the individual states.

JP Morgan has been moving some of these call center jobs back inside the United States due to political pressure, but this whole situation is a really good example of what the "global economy" is doing to middle class Americans.

Just try to imagine the irony - a formerly middle class American that has lost a job to outsourcing calls up to get help with food stamp benefits only to be answered by a call center employee in India.

Welcome to the global economy, eh?

But wait, there is more.

It has just been announced that JP Morgan has admitted that they wrongly foreclosed on over a dozen military families and that they have been overcharging "thousands" of other military families on their mortgages.


It is a really bad public relations move to mess with military families.

Is anyone over at JP Morgan even paying attention?

JP Morgan has also been one of the primary financial institutions involved in the foreclosure "robo-signing" scandal.

They just seem to be having all kinds of problems lately. But they are not alone.

The truth is that we have gotten to the point where big Wall Street banks such as JP Morgan, Goldman Sachs, Citibank and Morgan Stanley just have way, way too much power.

The biggest Wall Street financial institutions had no trouble begging for bailouts from the U.S. government during the financial crisis, but when the American people have needed a little grace and mercy from them they have been less than helpful.

So what do you think about how the big Wall Street banks have been behaving? Feel free to post a comment with your opinion below....